Often when parties separate, they include a clause in their separation agreement that says spousal support can end or be reviewed when there is a “material change of circumstances”.  What does this mean if the payor chooses to retire?

In the case of Walts v. Walts, Justice Minnema of the Ontario Superior Court of Justice found that the husband’s planned voluntary retirement at age 55 was not a material change of circumstances, and that spousal support was still payable at the same rate as if he did not retire.

In this case, the parties had been married for 29 years.  The husband was now 55 years old and the wife was now 53 years old.  They separated in 2008, and agreed to spousal support of $1,584 per month based on his employment income of $87,763, and her disability income of $24,771.  There were some minor adjustments over the years to keep up with the cost of living.  The husband’s pension entitlement had been divided after separation, however, the wife could not yet access it.

The husband stated that he had always intended to retire at age 55.  Since separation, he had a heart attack, and that reinforced his wish to retire.

The judge found that the medical evidence did not establish that the husband needed to retire for health reasons.  The retirement was voluntary.

The test for a “material change of circumstances” is set out by the Supreme Court of Canada in Willick v. Willick as,

a change, such that, if known at the time, would likely have resulted in different terms. The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied on as the basis for variation.

In this case, because the husband’s retirement was anticipated at the time of separation, it was not a material change of circumstances, and therefore could not be the basis for a change in spousal support.

To the husband’s credit, he brought this motion before he actually retired, so that he still had employment income from which to pay support.

The lesson here is that, especially in long-term marriages with indefinite spousal support obligations, it is extremely important to deal with the issue of retirement in the separation agreement.  Retirement is foreseeable, and therefore the parties’ intentions about the timing of retirement and its effect on spousal support need to be dealt with when the agreement is negotiated.