Factual Background In 2005, the husband was ordered to pay spousal support of $3,100 per month based on his annual income of $120,000. In 2011, he suffered a stroke, became incapacitated, and his annual income dropped to $53,000 from non-taxable…
Roy v Roy, 2015 ONSC 45
The issue in this case is whether a spousal support payor’s voluntary retirement is a material change in circumstances which justifies varying a spousal support order. As many retirees live on fixed incomes and/or reduced income, this is a highly relevant issue in family law that warrants consideration by existing or potential spousal support payors or recipients when negotiating the terms of a support order, planning retirement, and sometimes post-retirement.
The parties were married 25 years before separating. The parties negotiated and signed a Partial Separation Agreement in November 2007 and a Final Separation Agreement in 2009. As part of a Separation Agreement, they also equalized the value of Mr. Roy’s pension entitlement based on his retiring at age 55.
At that time the parties signed both agreements, Mr. Roy wanted to retire at that age 55 and he knew he would likely be able to do so. Ms. Roy also knew of Mr. Roy’s dream to retire early, however, she understood that he might have to change his retirement plans in view of the parties’ separation and their agreement regarding spousal support.
When negotiating the Separation Agreement, the parties agreed that Mr. Roy would pay Ms. Roy spousal support of $2,000.00 per month based on Mr. Roy’s annual income of $70,000.00 and Ms. Roy’s limited earning capacity due to disability.
The parties also specified in their Agreement that a voluntary reduction in income would not be considered a material change in circumstances.
In February of 2014, Mr. Roy retired at age 55. Mr. Roy subsequently brought a motion to change the parties’ separation agreement such that Mr. Roy’s spousal support obligations would be terminated based on his reduced future income resulting from his retirement and the fact that the parties had already divided his pension entitlement in equalization.
The court denied Mr. Roy’s motion and held that his decision to retire did not constitute a material change in circumstances to justify varying spousal support.
The Court found that Mr. Roy’s retirement was voluntary based on the following:
Mr. Roy was able to continue working, but had chosen to retire at the earliest possible time without seeking any source of replacement income.
The Court considered the impact of Mr. Roy’s retirement on the parties and the fairness of the situation for both parties as section. 17(7) of the Divorce Act requires relief where there is great disparity between the parties’ incomes.
The Court found that such disparity would arise from Mr. Roy having future annual pension income of approximately $35,600.00 and Ms. Roy having annual income of approximately $7000.00 to $8000.00 without spousal support payments.
The Court held that it could not condone the situation that would arise if Mr. Roy were allowed to voluntarily reduce his income and terminate spousal support.
The Court also held that Mr. Roy’s retirement was not a material change in circumstances for the following evidence that his retirement at age 55 was foreseeable at the time the Agreement was signed:
- Mr. Roy clearly contemplated retiring at age 55 when he signed the Agreement wherein he also agreed to equalize the value of his pension entitlement based on his retiring at age 55.
- The Agreement provided for other events to trigger a review of spousal support, however, retirement was not indicated as a possible trigger for a review or variation of support.
- A provision in the Agreement expressly stated that “a voluntary reduction in income… shall not be deemed a material change in circumstances”.
- The impact that Mr. Roy’s retirement at age 55 would have on Mr. Roy’s post-retirement income was reasonably anticipated and foreseeable at the time the parties signed their Agreement.