Reducing your Support Retirement as a Material Change Double Dipping Again

Date: 10 Jan, 2018| Author: Fred Streiman

It is not unusual for one, upon retiring and finding their income correspondingly reduced, coming to the logical conclusion that their spousal support payments be reduced.

However as usual in family law, nothing is that straight forward. The Divorce Act pursuant to section 17(1)(a) gives the court the ability to change an existing order either retroactively or prospectively. However the test is a two-step one (the courts love dividing tests into steps and stages).

The Supreme Court of Canada in Willick said:

“The approach which a court should take is to determine first whether the conditions for variation exists and if they do exist, what variation of the existing order ought to be made in light of the change in circumstances. In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances.”

This is further interpreted by the Ontario Divisional Court in Hickey v. Princ. Has there been a material change in anybody’s situation. For the interpretation of “material”the test is restated; if the change was known at the time of the original order, it would likely have resulted in a different order. However, if the change and its likelihood was known at the time of the original order or agreement, it cannot be relied on as basis of the variation. The onus of proving the material change is on the party looking for the change.

So in other words, if at the time that the order or agreement was made, it was imminent that the payor was about to retire, it is going to be almost impossible to later tell the court that there has been a material change. The change was obvious and anticipated when the original order or agreement was made. One of the steps we take at our office is to look at what is on the immediate horizon and specifically to find whether or not it is or will not be a material change.

In the recent Ontario Superior Court decision of Hanniman, Justice Ryan Bell heard the variation application of Mr. Hanniman. He had entered into a Separation Agreement in 2011 and retired a few months later in July 2012 at the age of 61. He had spent more than 35 year working for the RCMP. He wanted a reduction in spousal support.

While Mr. Hanniman had retired on a full pension, the court did not accept that this was anything other than a voluntary retirement.

The courts are not particularly impressed with retirements prior to the age of 65, whether or not one is entitled to a full pension or not. One’s personal choice to retire is generally not viewed as a material change in circumstances for the purposes of payment of spousal support. Officer Hanniman found himself facing the very same response by Justice Bell.

If there is going to be a Separation Agreement in which a retirement at the earliest opportunity to do so on a full pension is to be deemed to be a basis upon which support is to be reduced, it had better be very specifically spelt out, failing which, one is not likely to find an empathic ear.

The second step should the court find that there has been a material change in circumstances is to look at all the objectives set out in either the Divorce Act or Family Law Act to determine what order should now be made.

Officer Hanniman was a double loser when he brought up the very reasonably argument of double dipping as described in the Supreme Court of Canada decision inBoston v. Boston. At the time of separation, Officer Hanniman equalized his work pension, by transferring one half of his pension credits to his wife (it’s good to be a police officer, Officer Hanniman’s pension was valued at $713,000.00).

Officer Hanniman argued that it was unfair once he had shared his pension with his wife that that same pension income should be used as a source of determining ongoing spousal support obligation. The Supreme Court of Canada in Boston generally held that that was the appropriate position.

Officer Hanniman here again found no sympathy from the court.

Justice Bell quite properly stated “as a general rule double recovery should be avoided where possible…it is generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset and as a source of income. 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…of matrimonial assets when the payees continuing need for support is shown”.

BUT this cannot always be avoided and is permitting in limited circumstances. One of those circumstances is an economic hardship. The income disparity between Mr. and Mrs. Hanniman was great. She was living barely above the poverty line while Officer Hanniman’s income even after retirement was well over a $100,000.00 per year.

One might call this palm tree justice, but the rules of equity and fairness in this author’s mind often first lead to a judicial conclusion forwhich the court then look for a legal justification.