Background

This case involves a Motion to Change filed by the father regarding his spousal support obligations. The father sought to terminate his monthly payments of $800 and be relieved of the requirement to maintain life insurance with the mother as the beneficiary.

The parties were married for 23 years and separated in 2005. In 2009, they reached an agreement on their monthly support payments, which were set to continue indefinitely. At that time, the husband, aged 47, had an annual income of $49,000, while the mother, aged 45, was earning $25,000. Using the Spousal Support Advisory Guidelines (SAAG), the parties agreed to a mid-range support obligation of $800 per month.

The father, who was voluntarily retiring at the age of 60, argued that his retirement constituted a material change in circumstances that warranted a review of his spousal support obligations.

The mother, aged 59, contended that the father's retirement was not a material change since it was earlier than the normal retirement age of 65.

Issue

1. Is voluntary retirement a material change in circumstances under the Divorce Act?

Analysis

Material change in circumstances under the Divorce Act

The leading authority on the correct approach to determine a change in circumstances for a review of a spousal support order under section 17(1) of the Divorce Act is L.M.P. v. L.S., 2011 SCC 64. A change in circumstances is deemed material if it would likely have resulted in different terms had it been known at the time of the original agreement.

The focus of the inquiry is on the nature and sufficiency of the change to determine if the moving party has satisfied the threshold test for a variation consideration.

In the case of Hickey v. Prince, 2015 ONSC 5596 (Div. Ct.), the court concluded that early retirement does not constitute a material change in circumstances. The court considered the father's income-earning capacity and overall wealth when determining that a material change had occurred in his condition.

The court reviewed the parties' previous agreement, which was incorporated into a final order known as the Minutes of Settlement. Paragraph 3 of the final consent order states: "The spousal support payable by the Respondent is subject to review in the event of a material change in circumstance, and a material change in circumstance may include but not be limited to the retirement of the husband."

The plain meaning of this provision indicates that the parties contemplated that the husband's retirement might trigger a review of the support obligation. Therefore, the threshold was met to review.

When retirement is involuntary due to health reasons, cogent medical evidence is required. (Cosette v. Cosette, 2014 ONSC 4667). In cases where retirement is involuntary because of employer demands, the court must consider the payor's alternative income-earning capacity and overall wealth to determine if there is a material change in conditions, means, and other circumstances justifying a reduction or termination.

The court found that the father had been planning his early retirement for some time. He had jointly purchased a condominium in Mexico with his new partner and was financially supporting her since she was unemployed. The financial statement included in the Trial Record, sworn on December 3, 2018, depicted a net worth of $380,000, but it was considered outdated.

The father testified that he could continue working until the age of 65 and the court found no medical impediment preventing him from doing so, despite the strain of his outdoor work. He did not provide any medical evidence to suggest that his health status required early retirement. Based on his technical and administrative skills acquired during the marriage, he may be employable elsewhere with less strain.

As articulated in Boston v. Boston, 2001 SCC 43 (S.C.C.) and other cases which have applied it, income may be attributed to a spouse as if an asset, such as a home, were liquid and available to create a capital fund, which generates investment income and is available to drawn upon to meet living expenses.

A dependent spouse certainly has a duty to generate as much income as possible from any settlement to discharge his or her statutory obligation to promote or achieve self-sufficiency. Income may be attributed to a spouse who is underemployed or otherwise not maximizing his or her income earning potential. But this does not require the dependent spouse to liquidate or

encroach on capital to meet reasonable needs, relieving the payor or of the appropriate support obligation based on all the circumstances (Chatter v. chatter, 2008 CarswellBC 2661 (B.C. C.A.)).

The court found it was premature then to attribute the mother’s income based on the notional liquidation of her former matrimonial home, especially after receiving less than 14 years of support following 23 years of marriage.