CITATION: Stephenson v. Stephenson, 2012 ONSC 1867
COURT FILE NO.: DC-11-00349-00
DATE: 20120404
ONTARIO
SUPERIOR COURT OF JUSTICE (DIVISIONAL COURT)
Cunningham A.C.J., Matlow and Baltman JJ.
B E T W E E N:
WAYNE STEPHENSON
Applicant/Appellant in Appeal
Wylita Clark for the Appellant
- and -
SHARON STEPHENSON
Brent Walmsley for the Respondent
Respondent/Respondent in Appeal
Heard at Oshawa: March 9, 2012
REASONS FOR JUDGMENT
Baltman J.:
OVERVIEW
[1] After a 25 year marriage Wayne and Sharon Stephenson separated and signed minutes of settlement wherein they equalized their assets, which included the matrimonial home and his pension. They also agreed that the husband would pay the wife spousal support of $1,500 per month, variable upon a material change in circumstances.
[2] Upon his retirement in 2010 the husband moved to reduce spousal support to reflect his drop in income. The motions judge allowed only a portion of the reduction sought, and included the husband’s full pension income when determining his income for spousal support purposes.
[3] The husband appeals, claiming the motions judge failed to accurately account for the portion of the husband’s pension that had been equalized upon separation, effectively “double dipping”.
FACTUAL BACKGROUND
[4] The parties were married in 1971 and separated in January 1996. They have two children, who were 22 and 18 years old at the time of separation.
[5] In their separation agreement of July 1996 the husband agreed to pay the wife spousal support of $1,500 per month, indexed to inflation. The agreement provided that spousal support could be reviewed upon a material change in circumstances.
[6] The parties also valued and equalized their assets, the two major ones being the matrimonial home and the husband’s pension. The agreement provided for the transfer of the matrimonial home from the wife to the husband and a payment of $100,070 from the husband to the wife. The agreement stipulated that each party released the other from any future claim upon any pension.
[7] On November 17, 2010 the husband brought a motion to vary in which he sought to have spousal support payments and medical coverage for the wife terminated effective December 1, 2010. He deposed that he was planning to retire on December 22, 2010, for what he claimed were serious health issues. At that point the husband was 63 years old, and would earn $2,410 per month as his pension payout. Of that figure, $899 per month – i.e. approximately one third – related to the portion of the pension that had already been equalized upon separation, leaving $1,570 per month ($18,845 annually) as the unequalized portion.
[8] The wife was then 64 years old and had not worked since approximately 1994, prior to the separation of the parties. She provided a letter from her treating psychiatrist indicating she suffers from schizophrenia and is not capable of gainful employment. In addition to spousal support, she was receiving income from CPP and Old Age Security of approximately $10,000 annually.
[9] The husband’s motion to vary was heard on August 31, 2011. By that point, through indexing the amount of spousal support had increased to $1,962 per month. The husband sought to have his spousal support reduced to $471.00 per month beginning January 1, 2011. The parties agreed that the husband’s retirement constituted a material change in circumstances.
[10] In his order of August 31, 2011, the motions judge reduced the spousal support payable to $1,000 per month as of March 1, 2011, and reduced it further to $750.00 per month as of September 1, 2011. It is undisputed that both those figures significantly exceed what the Spousal Support Advisory Guidelines stipulate is payable based on the unequalized portion of the husband’s post-retirement pension income, i.e. $18,845 annually; at the high end the amount payable would be $471.00 per month, reflecting 50% of net disposable income. In his reasons, released on September 21, 2011, the motions judge explained as follows:
The fact that the pension was so small at the time of equalization, in addition to the possibility that it was undervalued at the time of equalization, minimizes the impact of double-dipping, i.e. requiring Mr. Stephenson to pay support from his half of the equalization.
In determining a figure for Mr. Stephenson’s income, his full pension income was included, because:
a) most of the benefit came after the separation, and so that would not be double-dipping, and
b) his rental income was not included in his income.
ANALYSIS
[11] In Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413, the Supreme Court determined that it would be inequitable to allow a wife to twice reap the benefits of her husband’s pension. Major J., on behalf of the court, stated that to avoid double recovery the court should focus on the portion of the pension-holding spouse’s income and assets that were not part of the equalization or division of matrimonial assets: para. 64.
[12] In this case, that would include the portion of the husband’s pension that was earned after the date of separation and not included in the equalization of net family property. In my view the motions judge clearly erred when he instead included the husband’s full pension income. In the reasons excerpted above, he relied on two factors that ostensibly “minimize” the impact of double dipping, but neither is persuasive.
[13] His first point, namely that “the pension was so small at the time of equalization”, is irrelevant. The pension was what it was. And whatever was there was equalized. The husband could not be expected to equalize anything more than what he had.
[14] The second point, being “the possibility that it was undervalued at the time of equalization”, is incorrect. The evidence produced on the motion included the original calculations with respect to the equalization. The valuation report valued the pension fully to age 65, and that is the amount that was used to calculate the equalization that the parties agreed to at the point of separation.
[15] Consequently, despite the motion judge’s assertion that those factors “minimize” the impact of double dipping, the effect of his decision is the opposite: in determining the husband’s income for spousal support purposes he included the portion of the pension that had already been divided. That is precisely what Boston cautioned against and is, in my view, the type of “palpable and overriding error” that is subject to reversal: Housen v. Nikolaison, 2002 SCC 33, [2002] 2 S.C.R. 235, paras. 19-22.
[16] It is true that in Boston the court recognized certain exceptions to the generally undesirable double recovery, i.e. where the spousal support is to a significant extent based on need rather than compensation. I appreciate that the wife is disabled and has limited income. However, that is the same situation that existed when the couple separated and she accepted an equalization of $100,000 in lieu of any further claim upon the unequalized portion of the husband’s pension.
[17] Moreover, despite noting that the wife had a duty to support herself, the motion judge did not engage in any analysis as to what she did with the $100,000 she received upon equalization. In Boston the court observed that the recipient spouse must demonstrate that she made a reasonable effort to use the equalized assets in an income-producing manner. However, in this case there was little if any evidence on that point. I note that the wife received the $100,000 in a cash payout; it was not like the situation in Meiklejohn v. Meiklejohn, 2001 21220 (ON CA), [2001] O.J. No. 3911 (C.A.), where the wife retained the matrimonial home and therefore could not capitalize on the asset.
[18] Further, and also unlike Meiklejohn, there was no reduction in the husband’s pension benefits due to the early retirement, nor were there any further enhancements to his pension post-separation.
[19] Finally, the motion judge’s reliance on the husband’s failure to include rental income in his calculations was also misplaced, as the husband’s uncontradicted evidence was that he in fact incurred a loss in that regard.
CONCLUSION
[20] For the reasons set out above the appeal is allowed. The husband’s spousal support shall be reduced to $491 per month commencing March 1, 2011. The husband shall recover costs fixed at $3,500, inclusive of disbursements and applicable taxes.
Baltman J.
__________________________
Cunningham A.C. J.
Matlow J.
Released:
CITATION: Stephenson v. Stephenson, 2012 ONSC 1867
COURT FILE NO.: DC-11-00349-00
DATE: 20120404
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Cunningham A.C.J., Matlow and Baltman JJ.
B E T W E E N:
WAYNE STEPHENSON
-and-
SHARON STEPHENSON
REASONS FOR JUDGMENT
Released: April 4, 2012