ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Liliane Boudreau
Applicant
– and –
Darcy Boudreau
Respondent
Thomas Wallis, for the Applicant
Marc Coderre, for the Respondent
HEARD AT OTTAWA: December 8, 2015
DECISION ON MOTION
PHILLIPS J.
1The Respondent brings a motion seeking a termination or reduction of his obligation to pay spousal support and a change in his life insurance obligations as a result of a material change in circumstances.
2The motion is brought under section 17 of the Divorce Act to change a prior order, made June 15, 2006 in the context of a divorce proceeding.
The Facts:
3The parties were married October 5, 1974. They separated February 1, 2004. The marriage lasted, therefore, approximately 30 years. There are no children.
4At the time of separation, the Respondent was 51 years old and the Applicant was 50 years old. Presently, he is 62, while she is 61.
5In 2006, the parties were able to resolve their issues on consent, giving rise to an order with several significant components relevant to present purposes:
First, with respect to property, the parties signed minutes of settlement which provided, in general terms, that the Applicant would retain her 50% share of the net proceeds of sale from the matrimonial home.
Secondly, it was agreed that she would receive 50% of the accrued value of the Respondent’s federal government pension. As a result, the Applicant received $149,112 from his pension pursuant to the Pension Benefits Division Act. That evaluation was based on a retirement age for the Respondent of age 60.
Finally, it was agreed that the Respondent would pay spousal support in the amount of $2,000 per month. I accept that the spousal support in question was non-compensatory, based on need.
6Throughout the marriage and since separation, the Respondent has been an employee of the federal government. His annual income at the time of the 2006 order was approximately $72,000 per annum. As of December 2015, his annual income is approximately $90,500.
7The Applicant also worked, at least for the most part. Since separation, she has held employment as a part-time and temporary full-time worker in the retail sales and general administrative office support field. She is said to currently have physical limitations, including arthritis-related mobility issues that restrict her employability.
8The Applicant has not re-partnered. The Respondent is presently in a common-law relationship.
9The Respondent will be retiring effective January 2016. Health concerns have arisen which motivate his decision. In any event, the Respondent has reached the maximum 35 years of pensionable service.
10The Respondent has obtained a report from an actuary dated October 31, 2014 which shows that the value of his pension increase from date of separation to his anticipated retirement is $22,221 before tax. Parenthetically, I note that mid-range spousal support on that amount alone would call for an award of $174 per month. Also, the actuarial report confirms that his annual projected retirement income will be approximately $52,144.44 before the age of 65 and $43,485.48 thereafter. That pension has obviously been reduced as a result of the 2006 division outlined above. The bottom line is the Respondent’s cash flow will be reduced by approximately $44,000 per year as a result of his 2016 retirement when he ceases to work and instead supports himself by way of an asset that was equalized in 2006.
Legal Principles:
11A motion to vary spousal support provisions of an agreement or Order can be made pursuant to Rule 15 of the Family Law Rules. Section 17(1) of the Divorce Act provides that a court may make an order varying, rescinding or suspending, prospectively or retroactively, the support order or any provision thereof, on application by either of the former spouses. More particularly, section (17(4.1) of the Divorce act directs that:
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 of that order, and, in making the variation order, the court shall take that change into consideration.
12Further, I note that section 17(7) of the Divorce Act reads as follows:
Objectives of variation order varying spousal support order
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;
(b) apportion between the former spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
(c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and
(d) insofar as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.
13In determining the Respondent’s support obligation, the court must be mindful of his ability to pay, an assessment that must include the fact that his income will soon be significantly diminished. Equally, the court must take into account the needs of the Applicant, which need is the amount of shortfall between the cost to her of maintaining an appropriate lifestyle and her ability to contribute to such lifestyle.
14I agree that the result of the 2006 property equalization settlement must be incorporated into the present assessment of the Applicant’s need for support. The more capital one has, the less income one should need to maintain themselves. In fact, income may be imputed if a support payee is not reasonably utilizing her resources, including encroaching on capital as appropriate.
15I am mindful of the Supreme Court of Canada decision in Boston v. Boston, 2001 SCC 43, [2001] 2 SCR 413, where direction was given on the subject of double-dipping. As a general rule, courts should not include a pension stream that was capitalized and included in the equalization accounting when determining a payor’s ability to pay. As a rule, therefore, only the income stream from pension arising after separation is used in determining a support payor’s ability to pay. Moreover, if a court concludes that the pension stream acquired after separation is not enough to provide adequate support, the dependent may be expected to convert her capital into income for the determination of her need to be done fairly.
16I accept that as a general rule, a dependent should not be allowed to maintain capital, while a support payor is forced to draw down on equalized capital (the pension) to support both of them.
17However, there are exceptions to this general rule. As outlined in Boston, double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset. 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, economic hardship from the marriage or its breakdown persists.
Analysis:
18I accept that the Respondent’s pending retirement is a material change in circumstances warranting variation of the spousal support order. His retirement will reduce his income by almost 55%. I observe that his retirement was always expected, and indeed is happening three years later than predicted back in 2006.
19I also accept that presently the Applicant’s ability to support herself through employment is significantly diminished by physical disability. However, even in the face of that, I do not agree that the Applicant has made fully reasonable efforts toward self-sufficiency. In my view, her employment record reveals her to be overly selective in terms of what sort of work she would do.
20I find to some degree that the Applicant’s position on this motion fails to incorporate use of her equalized assets in a reasonably income producing way. I agree, for instance, that she should have to access her RRSP savings at this time as a bridge to CPP and OAS eligibility. I note also that, unlike the Respondent, she has equity in the place where she lives. While that equity is not readily accessible to her, I see unfairness in the fact that the Applicant is able to accrue it for her future (or that of her heirs) off an income stream which emanates from an asset of the Respondent that was equalized long ago.
21On the other hand, I accept that the Respondent has the ability to pay a modest amount. His income, while diminished, remains more than capable of meeting his needs. This is particularly true given that his re-partnering results in him having someone with whom to share living expenses.
22It is clear that some economic hardship from the marriage or its breakdown persists with respect to the Applicant. She has never fully managed to overcome the reality that the marriage left her in a state of need for spousal support. I assign some of the responsibility for that to her, but not all of it. While she has been overly choosy in her employment resourcefulness and is unduly reluctant to use her capital for income purposes now, it is not as if she has made no effort to work or mismanages her assets in a wholly unreasonable way.
23Ultimately, it is a judgment call. I must balance competing perspectives and interests, each legitimate in its own way. An equitable assessment of the Respondent’s ability to pay, the Applicant’s efforts to both attain self-sufficiency through employment or through use of her assets in an income producing way, as well as the degree of economic hardship from the marriage breakdown that persists, leads me to the conclusion that the Respondent should continue to pay non-compensatory spousal support over and above what could be founded solely upon his post separation pension value as income. I also conclude, however, that such support should be reduced significantly given that his income has dropped as all understood that it would.
24I order that henceforth the Respondent pay to the Applicant the sum of $1,000 per month in spousal support. The Respondent’s life insurance obligations shall be reduced accordingly.
Mr. Justice Kevin Phillips
Date: December 18, 2015
COURT FILE NO.: 06-FL-219-1
DATE: 2015/12/18
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Liliane Boudreau
Applicant
– and –
Darcy Boudreau
Respondent
Decision on motion
K. PHILLIPS J.
Released: December 18, 2015