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A recent Ontario Court of Appeal decision explored how courts address requests made by a spousal support payor who wishes to eliminate their support obligations towards their ex-spouse following retirement.

What Happened?

The parties in question were married for more than 24 years, and separated in 1990. They had one child together who, at the time of the hearing, was an independent adult. At the time of the appeal, the ex-wife was 68 years old, and the husband was 70 years old.

The ex-wife lives in Ontario and had not worked outside of the home since before the parties’ separation. The ex-husband lives in Kentucky where he had worked as a successful general surgeon. In June 1996, a judge ordered the ex-husband to pay the ex-wife $7,500 CAD per month in spousal support, and to maintain insurance policies in her name. This order was based on both need and compensation, and recognized their long marriage, the ex-wife’s sacrifices in supporting the ex-husband while he completed medical school, and the ex-wife’s physical and psychological difficulties. At the time the order was made the ex-husband was working as a general surgeon and earning an income of $275,000.

In January 2014, the ex-husband brought an application to terminate his spousal support and life insurance obligations effective June 2016 in contemplation of his planned retirement. He also sought to reduce his obligations leading to the retirement date.

The Original Decision

The application judge heard the ex-husband’s request in August 2015, approximately ten months before his intended retirement date. The application judge accepted that the ex-husband was acting in good faith in seeking to retire, and, further, that his timing was “a responsible approach to the issue”. The application judge also accepted that the ex-husband’s income would be reduced from an all-time high of $275,000 to approximately $35,000 to $40,000 (comprised of savings, pension income, etc.).

The application judge concluded that the ex-husband’s pending retirement and subsequent reduction in income was a material change in circumstances, and terminated his spousal support and insurance obligations effective June 2016.

The ex-wife appealed this decision.

The Appeal Decision

On appeal, the court found that the ex-husband’s application to terminate his support obligation was not premature. The application judge had been satisfied on the evidence presented that the husband’s retirement was a certainty. There was sufficient evidence available at the time of the hearing to find that the ex-husband would retire in June 2016 as planned. This was not a case where an alleged material change in circumstances was speculative.

Moreover, the court also found that the application judge had correctly deemed the ex-husband’s retirement as a material change in circumstances. The retirement had been contemplated by the judge who make the original spousal support order in 1996 who had noted, to the ex-wife, that if the ex-husband were to stop working “the money stops”.

However, the court agreed with the ex-wife and found that the application judge had erred in concluding that the financial circumstances of the parties at the time of the application were relatively equal such that spousal support should be terminated.

The court noted that the application judge appeared to have been unduly focused on the net worth of each party. In taking this approach, the application judge made a significant error by failing to appreciate the disparity between their expected incomes. The application judge mistakenly believed that the ex-wife’s assets and government pensions would allow her to have a similar income to the ex-husband. In addition, the application judge had not converted the ex-husband’s net worth into Canadian dollars and could not therefore assess whether the parties were in similar financial positions. The application judge also miscalculated the ex-husband’s potential investment income and excluded the potential income that could be generated from the equity of the ex-husband’s home.

The court concluded:

Given the [ex-husband’s] materially larger assets and potential income, it was an error for the application judge not to assess whether the spousal support and insurance should be reduced rather than terminated.

The court ruled that the application judge’s spousal support termination order should be overturned. The issue of what appropriate reduction in support should be made instead was remitted back to the Superior Court for another application judge to review. In the meantime, the ex-husband was ordered to pay $1,000 a month in spousal support, retroactive to June 2016, while the parties waited for a final determination of what the amount should be going forward.

Lessons Learned

In this case, a large factor in the appeal court’s ultimate decision was the relative disparity in income as between the parties. The court noted that the evidence had established that the initial compensatory and need bases for the ex-wife’s entitlement to support continued to exist. The disparity in the parties’ potential incomes and income-producing assets indicated that the ex-wife suffered economic disadvantage arising from her role in the parties’ long marriage and subsequent breakdown. In contrast, the ex-husband gained a significant economic advantage from the marriage that was not later affected by the marriage breakdown. Therefore, instead of upholding the decision removing the spousal support entirely, the court decided it should simply be reduced instead.

At Gelman & Associates, our family lawyers provide clients with the information they require to make educated decisions about spousal support. Where needed, we will also litigate on your behalf to ensure the best possible outcome for you. With six offices throughout Aurora, Barrie, Downtown Toronto, Mississauga, North York and Scarborough, our offices are easily accessible by transit and off-highway. Call us at (416) 736-0200 or 1-844-736-0200 or contact us online for an initial consultation.


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