CITATION: Roy v. Roy, 2015 ONSC 45
COURT FILE NO.: FC-12-298-2
DATE: 2015/01/07
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: David Gerald Roy, Applicant
AND
Cynthia Andrews Roy, Respondent
BEFORE: Justice L. Ratushny
COUNSEL: Rod A. Vanier, for the Applicant
Christian Pilon, Agent for Rita Godin, for the Respondent
HEARD: November 28, 2014
ENDORSEMENT
[1] The applicant brings a motion to change a separation agreement so as “to terminate his spousal support obligations due to his retirement and his future income deriving from his already divided pension.”
[2] The threshold issue is whether the applicant’s voluntary retirement constitutes a material change in circumstances to allow a variation order in respect of spousal support. I have determined that it does not.
1. Background Facts
[3] The parties separated in June 2007 after a twenty-five year marriage. Their two children were adults by that time.
[4] During the marriage the respondent was a stay at home mother, caring for the children and the home and enabling the applicant to dedicate himself to full-time work. She started working outside the home in 2005 when the children were older however, health problems inhibited her ability to work full-time.
[5] The parties signed a Partial Separation Agreement in November 2007 (the Partial Separation Agreement) and a further Separation Agreement in January 2009 (the Final Separation Agreement). The Final Separation Agreement incorporated by reference the Partial Separation Agreement.
[6] In the Partial Separation Agreement the parties agreed the applicant would pay monthly spousal support to the respondent in the amount of $2200.00, based on a number of factors including, as expressed in the Agreement, the applicant’s total income of $70,000.00, the respondent’s total income of $8000.00 and her physical limitations restricting her ability to obtain full-time employment.
[7] In paragraph 5 of the Partial Separation Agreement the parties agreed to review spousal support in July 2010, “to reflect material changes, if any, in the income, conditions, needs, means or other circumstances of either party. A voluntary reduction in income or a difference of more or less than $5000.00 for the Husband’s income shall not be deemed a material change in circumstances.”
[8] The Final Separation Agreement adopted the provisions of the Partial Separation Agreement including the spousal support provisions and dealt with the division of the applicant’s federal government pension. The parties agreed, as stated in paragraph 8, that the applicant owed an equalization payment of $150,000.00 to the respondent and, as stated in paragraph 9, that the applicant’s pension benefits would be divided “in order to equalize the value of his pension benefits attributable to the period subject to division and satisfy the equalization payment required.”
[9] A lump sum of $150,000.00 was subsequently paid to the respondent as an equalization payment out of the applicant’s pension benefits.
[10] The equalization payment amount was the result of the parties agreeing to accept the sum of $317,649.00 as a capitalized value of the applicant’s accumulated pension entitlements during the marriage. This was its highest value based on the applicant retiring at the earliest possible age of 55. The capitalized value of the pension at later retirement ages was substantially less, amounting to approximately $227,000.00 for retirement at age 60 and $151,000.00 for retirement at age 65.
[11] In November 2007, five months after the parties separated, the respondent moved to New Brunswick so she could reside with her parents. She continues to live with them. Her parents assist her financially and she in turn helps them. In 2009 she invested all of her equalization payment amount and continues to receive approximately $7000.00 per year as investment income. Her main source of income is the spousal support payments from the applicant totaling approximately $26,400.00 annually. She lives modestly and her monthly expenses are around $1100.00.
[12] The respondent has been unable to find regular employment in New Brunswick even though she had a hip replacement in 2010. She is unilingual English and that has also detrimentally affected her employability.
[13] In July 2010, as provided for in the Partial Separation Agreement, the parties discussed the possibility of a variation of spousal support and ended up agreeing that the applicant would continue the payments without variation.
[14] The applicant retired at age 55 on February 27, 2014, approximately five years after signing the Final Separation Agreement. He paid monthly spousal support payments of $2200.00 pursuant to the Partial Separation Agreement until notifying the respondent on February 26, 2014, the day before his official retirement date that he would not be making further spousal support payments unless ordered by the court. The parties then agreed, on a without prejudice basis so as to avoid legal fees on another motion, to a reduced spousal support amount of $1100.00 until the disposition of the present motion.
[15] The applicant’s income in 2013 was $67,720.00. In 2014 it will be a similar amount due to receipt of a one-time severance pay amount and an unused vacation pay amount in connection with his retirement. In subsequent years, if the applicant only receives income from his pension, his income will be approximately $35,600.00 per year as indicated in his July 2014 Financial Statement.
2. The Applicable Law
The [Divorce Act](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-3-2nd-supp/latest/rsc-1985-c-3-2nd-supp.html)
[16] Section 17 (4.1) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), (the Act), establishes the material change in circumstances threshold referred to in both Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670, and Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303 that an applicant must meet before a variation order in respect of spousal support can be made.
s. 17(4.1) Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect to that order, and, in making the variation order, the court shall take that change into consideration.
[17] Section 17(7) of the Act states the objectives of an order varying spousal support as referred to in Miglin and applicable to the present situation.
s. 17(7). A variation order varying a spousal support order should
(a) recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown;
(c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.
The Material Change in Circumstances Test
[18] In Willick, at para. 21, the Supreme Court of Canada described the s. 17(4.1) test in the Act as follows:
In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. This means a change, such that, if known at the time, would likely have resulted in different terms. The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied on as the basis for variation.
[19] As reviewed in Walts v. Walts, 2013 ONSC 6787 and referring to Bullock v. Bullock (2004), 2004 16949 (ON SC), 48 R.F.L. (5th) 253 (S.C.J.), Innes. v. Innes, 2013 ONSC 2254 and Hesketh v. Brooker, 2013 ONSC 1122, the material change in circumstances test has evolved to allow a focus not only on whether the change itself was reasonably foreseeable but also on whether the impact of the change was reasonably foreseeable.
Miglin Principles
[20] Notwithstanding factual differences, basic principles enunciated in Miglin continue to infuse the material change of circumstances issue before this Court:
“[A] fairly negotiated agreement that represents the intentions and expectations of the parties and that complies substantially with the objectives of the Divorce Act as a whole should receive considerable weight.” (para. 4)
“The parties’ intentions, as reflected by the agreement, are the backdrop against which the court must consider whether the situation of the parties at the time of the application makes it no longer appropriate to accord the agreement conclusive weight…[I]t is unlikely that the court will be persuaded to disregard the agreement in its entirety but for a significant change in the parties’ circumstances from what could reasonably be anticipated at the time of negotiation. Although the change need not be “radically unforeseen”, and the applicant need not demonstrate a causal connection to the marriage, the applicant must nevertheless clearly show that, in light of the new circumstances, the terms of the agreement no longer reflect the parties’ intentions at the time of execution and the objectives of the Act. Accordingly, it will be necessary to show that these new circumstances were not reasonably anticipated by the parties, and have led to a situation that cannot be condoned.” (para. 88, underlining added)
“We stress that a certain degree of change is foreseeable most of the time…The test here is not strict foreseeability; a thorough review of case law leaves virtually no change entirely unforeseeable. The question, rather, is the extent to which the unimpeachably negotiated agreement can be said to have contemplated the situation before the court at the time of the application.” (para. 89)
“Although we recognize the unique nature of separation agreements and their differences from commercial contracts, they are contracts nonetheless. Parties must take responsibility for the contract they execute as well as for their own lives. It is only where the current circumstances represent a significant departure from the range of reasonable outcomes anticipated by the parties, in a manner that puts them at odds with the objectives of the Act, that the court may be persuaded to give the agreement little weight.” (para. 91, underlining added)
3. The Applicant’s Position
Voluntary Retirement
[21] The applicant does not intend to work at other employment. He intends to live off of his pension income in future years. He states he always intended to retire at age 55 and the respondent has known this since the signing of the Final Separation Agreement in 2009.
[22] He remarried shortly before his retirement date. His spouse earns $33,500 per year and contributes equally to their household expenses. His monthly expenses are approximately $1780.00.
Material Change in Circumstances
[23] The applicant submits the basis for the spousal support amount he agreed to in the Partial Separation Agreement was his income level of $70,000.00. He says retirement and the subsequent dramatic drop in his income was not reasonably foreseeable at the time of the Partial Separation Agreement in 2007 when the spousal support payment amount was set. He says that this subsequent drop, however, was reasonably foreseeable at the time of the Final Separation Agreement as demonstrated by the choice of age 55 by both of them as the date of retirement for the determination of the deferred pension value and the equalization payment of $150,000.00 to be taken out of his pension.
[24] He argues that because he made clear his intention to retire at age 55, his retirement is in no way a tool to avoid spousal support obligations. He says the drop in his income meets the threshold test of amounting to a material change in circumstances that was not reasonably foreseeable at the time he agreed to spousal support payments in 2007. Because of this drop he says he is no longer able to pay spousal support.
Self-Sufficiency
[25] The applicant also argues that the respondent has made insufficient efforts in the last seven years since separation to become economically self-sufficient through employment income. He says it has been her choice to live in a community with a difficult economy and a bilingual population so as to receive the benefit of living with her parents and now it is her responsibility to turn to and use the capital she received through equalization as a means to support herself.
[26] He also argues he chose the most expensive valuation of his pension so that the respondent received a premium of $45,386.00 extra tax free dollars than if the applicant had retired at age 60 and that premium came out of his future retirement income.
Double Dipping/Recovery
[27] The applicant submits it is unfair to allow “double dipping” by continued spousal support payments to the respondent that will have to be paid out of his half share of his pension entitlement when she has already received her half share of that pension.
4. The Respondent’s Position
Voluntary Retirement
[28] The respondent agrees that during their marriage the applicant’s dream had been to retire at age 55. However, she remembers no mention of this at the time of either the Partial Separation or the Final Separation Agreement and as the applicant had agreed to a continued obligation to pay spousal support, she was surprised when he opted to retire at 55, the first available date for retirement.
Material Change in Circumstances
[29] The respondent submits that as the applicant has chosen to voluntarily retire and be underemployed and is thereby seeking to avoid his spousal support payment obligations, this ought not be a basis for finding a material change in circumstances: Hooper v. Hooper (2002), 2002 44963 (ON CA), 59 O.R. (3d) 787 (Ont. C.A.), at para. 29; Bullock, at para. 13; Innes, at para. 34; Hesketh, at paras. 32 and 34; Walts, at para. 47.
[30] She argues that the applicant chose to voluntarily retire without any consideration of the impact that decision would have on her.
[31] The respondent also relies on paragraph 5 in the Partial Separation Agreement that says “a voluntary reduction in income or a difference of more or less than $5000.00 for the Husband’s income shall not be deemed a material change in circumstances”.
Self-Sufficiency
[32] The respondent has provided evidence of her efforts to obtain employment after her hip surgery in 2010. She says she lives modestly and has not travelled extensively since the parties’ separation as she understands the applicant has been able to do. She has been prudent in investing her equalization payment and protecting its capital.
Double Dipping/Recovery
[33] The respondent relies on statements contained in Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413, at para. 65, that double recovery cannot always be avoided, that in certain circumstances a pension which has previously been equalized can also be viewed as a maintenance asset and that double recovery may be permitted where the payor spouse has the ability to pay, where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage breakdown persists.
5. Analysis
Voluntary Retirement
[34] The applicant has chosen to retire at the earliest possible date that he was eligible for his pension. He has chosen not to seek replacement income and to rely only on his pension income. The applicant is able to continue to work but as the respondent remembers, it was always his dream to retire at age 55 and now he has achieved that dream. He is assisted in his lifestyle by his spouse’s income and assets.
[35] The change in circumstances relied upon by the applicant resulting from his retirement and reduced income are clearly all voluntarily self-imposed.
Material Change in Circumstances
[36] On the evidence, it is also clear that at the time of the Partial Separation Agreement in 2007 and the Final Separation Agreement in 2009 the applicant knew he could retire at age 55 and wanted to retire at that age. I accept the respondent’s evidence, however, that she knew of his dream to retire early but that after the marriage breakdown and their agreement that he would pay spousal support to her, she understood he might have to change his plans.
[37] This evidence, even that from the applicant alone, carries with it the strong inference that when the applicant agreed to pay spousal support for an unlimited period of time in 2007, when he agreed to continue to pay that spousal support in 2009 and also to divide his pension entitlement at the maximum capitalized value for the purposes of satisfying the respondent’s equalization payment, his retirement at the earliest possible time for purposes of receiving his pension was a future event known to him at both of those times. Its impact on his salary level after retirement was certainly reasonably anticipated and reasonably foreseeable.
[38] Additionally, the terms of the Partial Separation Agreement can be interpreted as contradicting the applicant’s position that his reduced retirement income was not reasonably foreseeable when he agreed to spousal support payments. In its paragraph 5 he agreed to a review of spousal support in July 2010. There is no reference however, to the event of retirement requiring a similar review and instead, paragraph 5 expressly says “a voluntary reduction in income… shall not be deemed a material change in circumstances”.
[39] No matter how I turn the applicant’s submissions to the light to understand how his retirement could not have been a reasonably foreseeable event having a reasonably foreseeable impact on his financial affairs, I cannot come to any different conclusion. This is particularly so on the applicant’s own evidence, that in 2009 at the time of the Final Separation Agreement when he also agreed to continue spousal support terms from the Partial Separation Agreement, he then intended to retire at age 55 and this was also evidenced by the choice of the capitalized value of his pension at that age.
[40] While I do not go so far as to attribute bad faith to the applicant’s decision to retire at 55 and to discontinue spousal support at the last minute before retirement, it certainly was made in full consideration of his own financial interests and without consideration of its financial impact on the respondent.
Self-Sufficiency
[41] It is clear on the evidence that the applicant disparages the respondent’s efforts to find employment and feels she could do better and do more. He also takes the position she should not be living off the interest on her invested equalization payment but should also be using and depleting its capital.
[42] I do not agree. The respondent has acted prudently in both her decisions to invest and protect that capital and move to New Brunswick and live with her parents. She lives modestly. She is not trained in French or for a specific job. She is no longer young. Her prospects for self-sufficiency are slight.
[43] I consider this issue because of the need to consider the impact of the applicant’s retirement on the parties and whether that impact constitutes a material change in circumstances.
[44] The parties’ respective financial situations have been reviewed in brief outline above. Suffice it to say that the applicant is in a far better position than the respondent considering, for example, that the applicant’s future annual pension income without the 2014 bump-up due to severance and vacation pay amounts, will be approximately $35,600.00 and the respondent’s annual income, without spousal support payments, will be approximately $7000.00 to $8000.00.
[45] On the evidence, this financial disparity arises in large part out of an economic disadvantage and hardship for the respondent from the breakdown of the marriage. It requires relief, as stated in s. 17(7) of the Act. That relief is well provided for in both the Partial Separation Agreement and the Final Separation Agreement. In this context, to allow the applicant to voluntarily reduce his income and thereby terminate spousal support would not only upset the parties’ intentions as reflected in those Agreements but would also not reflect the objectives of the Act and would lead to a “situation that cannot be condoned”: Miglin, at para. 88 as quoted above.
[46] The principles enunciated in the Act and in the cases referred to above come into play in considering the fairness of the situation for both parties at the present time. I return in particular to Miglin at para. 91 also as referred to above, to the effect that parties must take responsibility for the contract they execute and for their lives. The applicant contracted to pay spousal support at a certain level for an unlimited period of time. His retirement was not “a significant departure from the range of reasonable outcomes anticipated by the parties” at the time of those contracts and neither was the respondent’s inability to become self-sufficient. There is no material change in circumstances allowing for a termination of spousal support.
Double Dipping/Recovery
[47] I turn to the applicant’s submission that it is unfair in the situation of his reduced pension income for the respondent to continue to draw on his share of his pension income by way of continued spousal support payments and especially so given the premium she has already received from his pension entitlement.
[48] I find this is one of those cases where, as referred to in Boston at para. 65, double recovery cannot be avoided. In comparing the parties’ financial situations, the applicant has the ability to pay, although less comfortably than before, and while the respondent has made reasonable efforts towards self-sufficiency, an economic hardship from the marriage breakdown persists for her.
6. Conclusions
[49] As is evident from this endorsement, I decline to consider the applicant’s evidence submitted in his supplementary affidavit that was filed late and with prejudice to the respondent arising out of that lateness. As a result, the only ground for the applicant’s motion is the issue of retirement.
[50] For the reasons reviewed above, I find the applicant has not established that a material change in circumstances has occurred by his decision to retire. His motion to terminate spousal support on that basis is dismissed.
[51] I order the applicant to pay spousal support in the amount of $2000.00 each month starting March 1, 2014 and on the 1st of every month thereafter pursuant to paragraph 8 of the Partial Separation Agreement. The applicant shall receive a credit for the spousal support paid during this time.
[52] Costs are awarded to the respondent. If the parties cannot agree on their quantum, written costs submissions, a maximum of three pages from each party exclusive of attachments, may be provided to me before January 30, 2015.
Justice L. Ratushny
Date: January 7, 2015
CITATION: Roy v. Roy, 2015 ONSC 45
COURT FILE NO.: FC-12-298-2
DATE: 2015/01/07
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: David Gerald Roy, Applicant
AND
Cynthia Andrews Roy, Respondent
BEFORE: Justice L. Ratushny
COUNSEL: Rod A. Vanier, for the Applicant
Christian Pilon, Agent for Rita Godin, for the Respondent
ENDORSEMENT
Ratushny J.
Released: January 7, 2015