Like many issues in the area of spousal support (also known as “alimony”), the final cutoff date for this obligation can be a thorny issue in family law proceedings. This is especially the case where a party has been ordered to pay “indefinite” support after a long marriage with children. In this blog post, we review the law of retirement and spousal support termination or variation, as applied in British Columbia.
In this context, it is important to remember that the length of time a spouse has to pay support is not defined in family law legislation – either under the federal Divorce Act, or the provincial Family Law Act. Both statutes speak in general terms and rely on principles that do not provide clear rules. Per the paramount Divorce Act, the legislation includes the following provisions:
15.2Spousal support orders – Terms and conditions
(3) The court may make an order under subsection (1) …for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just.
Factors
(4) …the court shall take into consideration the condition, means, needs and other circumstances of each spouse ….
Objectives of spousal support order
(6) An order made under subsection (1) … that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
Order for variation, rescission or suspension
17(1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,
(a) a support order or any provision thereof on application by either or both former spouses; or …
Factors for spousal support order
(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 of that order, and, in making the variation order, the court shall take that change into consideration.
Objectives of variation order varying spousal support order
(7) A variation order varying a spousal support order should [a – d: identical considerations for making an original order under s.15.2(6)]
As is evident, the language in respect of original orders (s.15.2) and variation orders (s.17) is discretionary (“fit and just”, “reasonable”, “may”). There are no provisions dealing with specific scenarios, including retirement. At the end of the day, courts have a wide latitude in deciding how much and, especially, for how long support will be paid. As for how much, or “quantum”, that issue is its own thorn patch deserving its own blog post. This posting focuses on the more limited question of whether an external event that may or may not be within a payor’s control – retirement – will relieve the obligation.
As the legislation is entirely silent on this question, we have to rely on our common law system of judge-made law – that is, actual, reported and published decisions of the courts deciding real cases, which in turn make their own law. It is critical to ensure that you fully research the jurisprudence and secure case law that will apply to your own particular facts. Failing to do so is the equivalent of showing up for battle with both arms tied behind your back. Even worse is presenting case law that has been overturned or overtaken by subsequent decisions. For these reasons, you need the savvy and seasoned spousal support variation / retirementfamily law lawyers at Grandview Law LLP, including Carlos Garcia and his colleagues to guide you through this process.
A recent case from British Columbia Supreme Court that summarizes some of the retirement and spousal support termination / variation jurisprudence is Greco v. Greco, 2017 BCSC 172. Here, the payor spouse wanted to end his spousal support of $4,500 per month after about 3 years, notwithstanding a 26 year marriage. He had first applied to vary, rather than terminate, based on a voluntary retirement and lifestyle move from rough northern BC to Vancouver Island. Eventually, he modified his position during his application and asked that the order be terminated completely. At the time of the application he was approximately 60 years old and had been earning approximately $200,000 over the previous 3 years. As noted at para. 23:
[23] …As he stated in submissions, he is retired, he wants to live wherever he wishes, he will not return to the work force and he plans to live on his present income of $2,000 per month (largely pension income). He submits that he is without the means to pay support.
Presiding Justice Madame Justice Dorgan did a thorough review of the case law, ultimately deciding that Mr. Greco could not entirely avoid his spousal support obligations by simply retiring, and instead imputed income to him of $65,000 per year (approximately 1/3 of what he had been earning), and requiring him to pay only $250 per month until he reached 65. All in all, a very fair result for Mr. Greco given what one sees in other, comparable court decisions.
In reaching her decision, the court considered other prominent retirement and spousal support decisions, including Szczerbaniwicz v. Szczerbaniwicz, 2010 BCSC 421 and Vennels v. Vennels (1993), 76 B.C.L.R. (2d) 69. In Szczerbaniwicz, the payor had been paying $3,300 per month by consent for 18 months when he voluntarily retired from his military career at aged 52, leaving behind a salary of $118,000 per year. He had spent 30 years in the military; his pension was maximized (and was split with his spouse); he wanted to complete a Ph.D and work in another field; and was not eligible for further promotions.
The court had little sympathy for the payor and imputed income in the amount of $90,000 per year, effectively transferring back the economic consequence of his retirement decision to him and requiring him to pay $2,300 per month until he reached 60, when he was given a right to apply for a review. In so doing, Mr. Justice Punnett concluded that his reason for retiring was at least in part motivated by his wish to avoid his support obligations, but also stated the following:
[26] … Even if the party’s motivation was not to avoid maintenance, the court will likely impute income so long as the party has the ability to earn an income.
[27] If the retirement is not voluntary because of economic circumstances, medical reasons, or an employer’s actions and the payor is unable to work, the court will tend to reduce the maintenance payable; otherwise, if the payor is still capable of earning an income, his application to terminate or vary spousal support will likely fail: …
In reaching these conclusions, Mr. Justice Punnett noted the earlier Vennels decision and its strong language and caution involuntary retirement situations:
The retirement of a payor under a maintenance order usually results in a significant reduction of income; that is so in this case. Courts are not guided by legislation to inquire into the circumstances of retirement. Courts have no power to compel people to work. However, courts should, in the interests of justice, refuse to consider a reduced income resulting from retirement to be a material change in circumstances justifying a variation of a support order, where a payor spouse has intentionally put him or herself out of the money in order to frustrate a maintenance order. Any such deliberate self-induced impecuniosity constitutes deceit.
What do these and the countless other decisions mean in the context of retirement and termination or variation of spousal support? The first observation is that each of these cases is fact-driven and there is no easy formula for predicting how a court will rule. Assuming again a long marriage where the recipient has a strong claim to lengthy support, certain kinds of payors will face an uphill battle trying to retire before a “normal” retirement age. In the context of someone who is earning an employee pension, “normal” retirement might typically mean the age at which a full pension is available – usually 60 or 65.
But what about those more difficult scenarios, for example, someone who has been self-employed since his or her early 20s, working hard and under any number of stresses, who never had a particular retirement plan other than to make enough money to be able to retire comfortably, and ideally, early. If that point in time comes in his early to mid-50s, and s/he decides it is time to enjoy life before Father Time or health issues make that impossible, that person may well be faced with a situation where spousal support is mandated even after a good faith retirement. The effect of a judicial ruling denying an application to terminate spousal support in these circumstances may well constitute some the “courts … compel[ling] people to work”.
There are means and strategies to avoid this predicament or to at least lay the groundwork for the best chance of securing a retirement under your terms. Contact the spousal support variation termination lawyers at Grandview Law LLP now at (604) 560-1400 for a consultation.
Like many issues in the area of spousal support (also known as “alimony”), the final cutoff date for this obligation can be a thorny issue in family law proceedings. This is especially the case where a party has been ordered to pay “indefinite” support after a long marriage with children. In this blog post, we review the law of retirement and spousal support termination or variation, as applied in British Columbia.
In this context, it is important to remember that the length of time a spouse has to pay support is not defined in family law legislation – either under the federal Divorce Act, or the provincial Family Law Act. Both statutes speak in general terms and rely on principles that do not provide clear rules. Per the paramount Divorce Act, the legislation includes the following provisions:
(3) The court may make an order under subsection (1) …for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just.
(4) …the court shall take into consideration the condition, means, needs and other circumstances of each spouse ….
Objectives of spousal support order
(6) An order made under subsection (1) … that provides for the support of a spouse should
(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
Order for variation, rescission or suspension
(a) a support order or any provision thereof on application by either or both former spouses; or …
(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 of that order, and, in making the variation order, the court shall take that change into consideration.
(7) A variation order varying a spousal support order should [a – d: identical considerations for making an original order under s.15.2(6)]
As is evident, the language in respect of original orders (s.15.2) and variation orders (s.17) is discretionary (“fit and just”, “reasonable”, “may”). There are no provisions dealing with specific scenarios, including retirement. At the end of the day, courts have a wide latitude in deciding how much and, especially, for how long support will be paid. As for how much, or “quantum”, that issue is its own thorn patch deserving its own blog post. This posting focuses on the more limited question of whether an external event that may or may not be within a payor’s control – retirement – will relieve the obligation.
As the legislation is entirely silent on this question, we have to rely on our common law system of judge-made law – that is, actual, reported and published decisions of the courts deciding real cases, which in turn make their own law. It is critical to ensure that you fully research the jurisprudence and secure case law that will apply to your own particular facts. Failing to do so is the equivalent of showing up for battle with both arms tied behind your back. Even worse is presenting case law that has been overturned or overtaken by subsequent decisions. For these reasons, you need the savvy and seasoned spousal support variation / retirement family law lawyers at Grandview Law LLP, including Carlos Garcia and his colleagues to guide you through this process.
A recent case from British Columbia Supreme Court that summarizes some of the retirement and spousal support termination / variation jurisprudence is Greco v. Greco, 2017 BCSC 172. Here, the payor spouse wanted to end his spousal support of $4,500 per month after about 3 years, notwithstanding a 26 year marriage. He had first applied to vary, rather than terminate, based on a voluntary retirement and lifestyle move from rough northern BC to Vancouver Island. Eventually, he modified his position during his application and asked that the order be terminated completely. At the time of the application he was approximately 60 years old and had been earning approximately $200,000 over the previous 3 years. As noted at para. 23:
[23] …As he stated in submissions, he is retired, he wants to live wherever he wishes, he will not return to the work force and he plans to live on his present income of $2,000 per month (largely pension income). He submits that he is without the means to pay support.
Presiding Justice Madame Justice Dorgan did a thorough review of the case law, ultimately deciding that Mr. Greco could not entirely avoid his spousal support obligations by simply retiring, and instead imputed income to him of $65,000 per year (approximately 1/3 of what he had been earning), and requiring him to pay only $250 per month until he reached 65. All in all, a very fair result for Mr. Greco given what one sees in other, comparable court decisions.
In reaching her decision, the court considered other prominent retirement and spousal support decisions, including Szczerbaniwicz v. Szczerbaniwicz, 2010 BCSC 421 and Vennels v. Vennels (1993), 76 B.C.L.R. (2d) 69. In Szczerbaniwicz, the payor had been paying $3,300 per month by consent for 18 months when he voluntarily retired from his military career at aged 52, leaving behind a salary of $118,000 per year. He had spent 30 years in the military; his pension was maximized (and was split with his spouse); he wanted to complete a Ph.D and work in another field; and was not eligible for further promotions.
The court had little sympathy for the payor and imputed income in the amount of $90,000 per year, effectively transferring back the economic consequence of his retirement decision to him and requiring him to pay $2,300 per month until he reached 60, when he was given a right to apply for a review. In so doing, Mr. Justice Punnett concluded that his reason for retiring was at least in part motivated by his wish to avoid his support obligations, but also stated the following:
[26] … Even if the party’s motivation was not to avoid maintenance, the court will likely impute income so long as the party has the ability to earn an income.
[27] If the retirement is not voluntary because of economic circumstances, medical reasons, or an employer’s actions and the payor is unable to work, the court will tend to reduce the maintenance payable; otherwise, if the payor is still capable of earning an income, his application to terminate or vary spousal support will likely fail: …
In reaching these conclusions, Mr. Justice Punnett noted the earlier Vennels decision and its strong language and caution involuntary retirement situations:
The retirement of a payor under a maintenance order usually results in a significant reduction of income; that is so in this case. Courts are not guided by legislation to inquire into the circumstances of retirement. Courts have no power to compel people to work. However, courts should, in the interests of justice, refuse to consider a reduced income resulting from retirement to be a material change in circumstances justifying a variation of a support order, where a payor spouse has intentionally put him or herself out of the money in order to frustrate a maintenance order. Any such deliberate self-induced impecuniosity constitutes deceit.
What do these and the countless other decisions mean in the context of retirement and termination or variation of spousal support? The first observation is that each of these cases is fact-driven and there is no easy formula for predicting how a court will rule. Assuming again a long marriage where the recipient has a strong claim to lengthy support, certain kinds of payors will face an uphill battle trying to retire before a “normal” retirement age. In the context of someone who is earning an employee pension, “normal” retirement might typically mean the age at which a full pension is available – usually 60 or 65.
But what about those more difficult scenarios, for example, someone who has been self-employed since his or her early 20s, working hard and under any number of stresses, who never had a particular retirement plan other than to make enough money to be able to retire comfortably, and ideally, early. If that point in time comes in his early to mid-50s, and s/he decides it is time to enjoy life before Father Time or health issues make that impossible, that person may well be faced with a situation where spousal support is mandated even after a good faith retirement. The effect of a judicial ruling denying an application to terminate spousal support in these circumstances may well constitute some the “courts … compel[ling] people to work”.
There are means and strategies to avoid this predicament or to at least lay the groundwork for the best chance of securing a retirement under your terms. Contact the spousal support variation termination lawyers at Grandview Law LLP now at (604) 560-1400 for a consultation.