How Disability and Double Dipping Affect Lump Sum Spousal Support

In Charlton v. Coburn, 2024 ONSC 3602, the Applicant sought to terminate his obligation to pay spousal support to the Respondent as of December 9, 2021, and sought reimbursement of all spousal support since that date. The Respondent argued that a material change in circumstances had not occurred and instead argued for an increase in support.

The parties began cohabitating in October 1993 and married in December 1996. They separated in January 2011, with no children from the relationship. In 2014, the parties consented to the Applicant paying $3,817 per month in spousal support, with the Applicant’s support obligation terminating upon either party’s death. In 2016, the Respondent brought a motion to change to vary the support agreement on the basis of an increase to the Applicant’s income of approximately $20,000. Following the 2016 proceedings, the Court ordered that spousal support be increased to $4,317 per month to account for the increase to the Applicant’s income. In January 2019, the Applicant was involuntarily terminated from his employment. He brought a motion to terminate or reduce spousal support due to his termination being a material change in circumstances. The Court then ordered that spousal support be reduced to $1,070 per month based on imputed income to the Applicant. Following his termination from employment in 2019, the Applicant did not secure new employment. In September 2022, the Applicant brought a motion seeking to terminate or further reduce spousal support based on a material change in circumstances, namely, that he reached the age of retirement.

The Court was to determine the following:

• Whether there had been a material change in circumstances; and
• If yes, the appropriate quantum of spousal support

The Applicant argued that reaching the age of retirement constituted a material change in circumstances that warranted a variation of spousal support. He stated that there should not be an expectation that he would earn any employment income, thereby necessitating a termination of spousal support payments. He also stated that he had been using his retirement assets since 2019 to pay support, and since these assets were equalized in 2015, further utilizing assets towards support payments would result in “double dipping”.

The Court considered the circumstances surrounding the Applicant’s retirement namely that he had not worked since 2019 and did not find alternate employment since his termination in 2019. The Applicant was trained in proprietary software language which was replaced by newer technology. He also suffered health issues including loss of hearing, nerve damage, and Lyme Disease. After his recovery from Lyme Disease, he decided to retire. The Court determined that given the circumstances, it was reasonable for the Applicant to retire, and his reasoning to retire was not in an attempt to avoid paying support. The Court determined that the Applicant established a material change in circumstance as he was 67 years old and was living on his investment income and RRSPs. It was determined that the Applicant’s retirement needed to be considered when fixing the amount and duration of support.

In assessing whether support ought to be termination and the appropriate quantum of spousal support, the Court declined to outright terminate spousal support. Part of the Court’s consideration was that the Respondent’s non-compensatory entitlement and the reality that she had not worked since her diagnosis of Multiple Sclerosis in 2004. The Court rejected the Applicant’s argument that the Respondent required support due to her lack of financial planning. However, the Court agreed that it was in both parties’ interest to create a finality and financial clarity of the support obligations. As such, the Court determined that a lump sum payment was appropriate. When determining the lump sum payment, the Court considered the assets that were equalized at separation. At the time, the Respondent received half of the net family property. When considering the lump sum amount, the Court acknowledged the need to adjust retirement assets which had already been equalized so as to avoid double recovery. When assessing quantum and despite factoring in the Respondent’s need for support based on her medical condition in assessing her entitlement to support, the Court declined to award spousal support in the higher range on that basis alone. When determining the duration of support, the Court considered the Applicant’s retirement and limited assets along with the Respondent’s financial situation, ruling that it was not reasonable to set the duration of support until the Respondent’s death.

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