Separation Agreements and Spousal Support

Taber v. Taber, 2010 CarswellOnt 3760, 2010 ONCJ 81

The facts of the Case

This case was a Motion brought by the Husband in the matter to vary the spousal support arrangements in place under a Separation Agreement signed by the parties in October 2003.  Based on the terms of the agreement the Husband was to pay the wife $1,200.00 per month in spousal support.

This Motion was brought as the Husband was seeking to terminate his spousal support obligations due to a material change in circumstances contemplated as part of the parties’ Separation Agreement. The basis for his claim was that he had fully retired from his employment as a C.P. Rail police officer and therefore, his income had diminished substantially. Furthermore, the Husband argued that as his pension was included as part of the Equalization calculation completed, he should not be required to make spousal support payments from his future pension income.

The Wife argued that although the parties had previously agreed that the Husband would retire at the age of 55 as he had, during the negotiations regarding the Separation Agreement, he had expressed that he could not afford to retire at age 55 and therefore, she assumed that he would retire when he was 65 years old instead.

 

The Court’s Decision

The Court looked at the parties’ Separation Agreement and came to the conclusion that the parties had come to a comprehensive resolution to their matter by way of a Separation Agreement after both parties’ had received Independent Legal Advice. Based on this conclusion, the Court was free to look to the terms of the Separation Agreement to govern their decision for the Husband’s request for a variation of spousal support.

As per the terms of the Agreement, the parties agreed that spousal support could be varied based on a material change in circumstances including either party’s retirement or the Wife beginning to cohabit with another person in a relationship resembling a marriage. Because of this, the Court held that it was clear that the parties had contemplated that the Husband’s retirement would constitute a material change in circumstances which could lead to a variation of spousal support. Therefore, the fact that the Husband had retired meant that there was no question in this instance that his spousal support obligation should be changed. The only question therefore, was the amount of spousal support per month that should be owed from the Husband to the Wife.

In order to determine this amount, the Court had to look at what the Husband’s income would be each month. As mentioned, the Husband argued that his pension income should not be considered to be income for support purposes as his pension had formed part of the Equalization calculation and therefore, the Wife had already received the benefit from it. In Boston v. Boston, a Supreme Court of Canada Decision from 2001, the Court held that in situations regarding pensions, the inequity associated with what is known as “Double Recovery” should be considered carefully. Double Recovery can be explained as the situation where “a pension, once equalized as property, is also treated as income from which the pension-holding spouse…must make spousal support payments.” The Supreme Court of Canada ruled that “To avoid double recovery, the court should, where practicable, focus on that portion of the payor’s income and assets that have not been part of the equalization or division of matrimonial assets when the payee spouse’s continuing need for support is shown.”

In this case, the Court had to focus on the fact that the Equalization calculation included a value for the Husband’s Pension based on a retirement age of 65 even though the Husband actually retired at 55. Therefore, the difference between the value of the pension at the retirement age of 55 and 65, should to be taken into consideration when determining the Husband’s monthly income for support purposes. This difference worked out to be of $136,564.00 or 44.62% of the Husband’s total pension. The Court ultimately held that the concept of Double Recovery was not at issue for the differential amount of $136,564.00 as this amount had not been equalized. In order to avoid Double Recovery, the Court considered the pension income amount that was not originally included in the Equalization calculation. Each month the Husband earned $4,114.34 as pension income. Using the fact that 44.62% of the Husband’s total pension had not been included in the original Equalization calculation, the Court decided that 44.62% of $4,114.34, or $1,835.81, should be considered to be the Husband’s income which could be taken into consideration for the purposes of determining spousal support owing to the Wife.

Once the Court had determined the Husband’s monthly income for support purposes, they had to turn their attention to the Wife’s corresponding need for support. As mentioned the parties’ Separation Agreement stated that the Wife beginning to cohabit with an individual in a relationship resembling marriage was a material change in circumstances that could lead to a support variation. The Wife had been living with a new partner for 7 years at the time of this Motion and had admitted that the situation was financially beneficial to her. In addition, although the Wife had health issues, the Court determined that this did not inhibit her ability to work at all. The Court also considered the fact that the Husband’s income was actually slightly less than the Wife’s. Based on the above factors, the Court determined that the Wife did not have a need for support at this time.

The Court ultimately held that the Husband was successful in showing that a variation in spousal support was required and determined that he should be required to pay the Wife nominal support in the amount of $1.00 per month based on the fact that the couple was in a long-term marriage of 22 years.

Andrew Feldstein

The Feldstein Family Law Group (FFLG) is one the largest family law firms that practices Family Law exclusively in Greater Toronto, with ten lawyers and counting. The boutique law firm has won the Top Choice Award for Family Law™ in Toronto for the past eleven years (2007 to 2017 inclusive).

Managing Partner Andrew Feldstein has been practicing family law for more than 20 years and frequently comments on Family Law issues through the media. The Feldstein Family Law Group offers vast written, video, and media resources on its website to those who find that they need to end their relationship.

This Post Has One Comment
  1. This case is an interesting one as it addresses the problem that can arise regarding retirement dates for individuals who are payor spouses and who have pensions. Often, a party who has a pension uses a later retirement date when providing the value of a pension for equalization purposes. However, this later becomes a problem when the party decides to retire earlier than they had represented during the settlement discussions as is what happened in this case. The decision in this case recognizes the inequity that can arise and the repercussions that the differing pension values can have for support purposes. It also provides the legal community with direction as to how a party’s pension income should be determined for support purposes when they decide to take an earlier retirement date than the date used for equalization purposes. This case provides counsel with an interesting analysis to use in cases such as this one.

    Further to the pension issue, I agree with this decision regarding material change in circumstance. The material change in circumstances was clearly proven and a variation in spousal support was necessary. The Court’s decision to award support for a nominal value of $1.00 highlights the fact that based on the background of this case, the wife is still entitled to spousal support, but there was no corresponding need at the time. By awarding support of a nominal value it does not terminate support altogether and it leaves the door open for a variation of spousal support in the future should there be another change in circumstances which warrants it.

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