Spousal Support: Seeking Variation Upon Retirement

Many provisions for spousal support, whether originating from a Separation Agreement or a Court Order, provide that there can be an Application for a variation of the quantum of support in the event of a material change in circumstances. One common possible material change in circumstance is the retirement of the payor spouse. In the absence of an agreement between the parties, it is for the Court to decide whether or not the timing of the retirement is reasonable and therefore what, if any, reduction in the amount of support should be allowed.

In many cases the issue is not contentious: where the payor has surpassed age 65, has accumulated a full pension the value of which will not increase by continuing employment, or has health reasons justifying the retirement. But in a surprising number of other situations whether or not the retirement is “reasonable” is far from clear-cut, particularly as “early retirement” becomes more common. And even in cases where the payor has passed the age of 65 and has a full pension, arguments have been mounted that the retirement was still not reasonable and therefore could not justify a reduction of spousal support.

Although not absolutely binding, Courts are now directed to follow the relatively newly created “Spousal Support Guidelines” in determining the quantum of spousal support, whether in the first instance or upon a variation Application.

The Revised User’s Guide to the “Spousal Support Advisory Guidelines” states:

 “When will a retirement be described as “early”? The courts are not always clear. For our purposes, an “early” retirement is either a retirement on a reduced pension or a retirement on a full or unreduced pension before 65 years of age, in the absence of health issues or other special circumstances. If the Court sees the early retirement as “voluntary” and not necessary or reasonable, then it is likely that spousal support will not be changed.”

 The case law indicates that the Court will look at considerations such as:

  1. Was the intention to retire at a given age discussed by the spouses before the separation?
  2. Is there any medical or physical reason why an early retirement would be reasonable?
  3. Is the payor spouse acting in good faith in seeking to retire or is he simply seeking to lower his spousal support obligations.

Not surprisingly, the parties respective recollections as to what, if anything, was said during the course of the relationship about the planned timing of retirement is almost invariably a contentious issue.

While just what constitutes an early retirement is not by any means clear, there seems to be a trend in the recent case law to look more favourably and leniently upon a payor’s wish to retire.

In the British Columbia Supreme case of Cramer v Cramer, the payor’s retirement at age 60 was found to be reasonable, given that he had diabetes and was encouraged to retire by his doctor. In that case one further factor was that the recipient’s spouse had not made any realistic attempts to become self-sufficient.

In a further British Columbia case, Hague v Hague, the payor wanted to retire at age 65 with a fully vested and unreduced pension. Although he was neither ill nor disabled and could have continued working past 65, the Court found retirement at that age to be entirely reasonable, not surprisingly.

In a recent Ontario case, Macdonald-Hills v Hills, the payor’s retirement at age 55 was held to be reasonable. He was suffering from the stress of his work and had a variety of personal health issues, although none of them were debilitating. In that case, the Court found as a fact that the parties had discussed the payor’s intention to retire at about the age of 55.

On the other hand, in Hickey v Princ, a recent Ontario case, the payor spouse was a police officer. He had retired at the age of 51 with a full pension and sought to reduce his spousal support payments. The Court refused any reduction in the spousal support payments.

It will be interesting to see how the law develops in this area, particularly if we continue to experience significant inflation or an economic downturn that may leave recipient spouses more vulnerable.