Early Retirement – What Happens to Spousal Support?
An interesting case out of the B.C. Supreme Court this year dealing with a party responsible for spousal support deciding to retire early. In Szczerbaniwicz v. Szczerbaniwicz, 2010 CarswellBC 759, 2010 B.C.S.C. 421, the Plaintiff and the Defendant separated in 2006 after a 31 year marriage. In 2007, the parties entered into a consent order setting out that the Defendant was to pay to the Plaintiff $3300.00 per month in interim spousal support. The Defendant was a Lieutenant Colonel with the Canadian Armed Forces and earned an income of approximately $118,000.00 a year. The Plaintiff’s income earning abilities during the marriage had been hampered by the frequent moves required by the Defendant’s military career. After separation, the Plaintiff began working as a receptionist and later as a processing technician at a hospital, earning approximately $31,000.00 a year.
In 2009, at the age of 52, the Defendant decided to retire. He wished to pursue a PhD and took the position that, “… he had 30 years of service so his severance pay was maximized and any further work would not increase his pension significantly.” (paragraph 19) Upon retirement, he received pension income of $4700.00 per month.
The Plaintiff sought a permanent order for spousal. At issue was whether the Defendant’s obligation to pay the Plaintiff maintenance would be lessened due to his unilateral decision. The short answer is, ‘not by much’.
In making his decision, Mr. Justice Punnett reviewed the case of Gajdzik v. Gajdzik, 2008 BCSC 160, 50 R.F.L. (6th) 390 (B.C.S.C. [In Chambers] in which the court, somewhat nebulously, found that, “…there are no general principals applicable to variation of spousal support on voluntary retirement, that it depends on the individual circumstances of each case” [paragraph 21] The case does, however, provide some direction in that the court did review the motivation for retirement and whether it was reasonable in light of the ongoing obligation.
In applying this guidance to the case before him, Mr. Justice Punnett stated that if the decision to retire was motivated by a desire to avoid maintenance, it would most likely impute income [paragraph26]. He further found that if the retirement was not voluntary – that is, due to illness, economic circumstances, or employer actions, maintenance would likely be reduced [paragraph 27]. He found that Mr. Szczerbaniwicz’s decision was discretionary and based upon his personal wishes and inferred that the decision was at least partly motivated by a desire to avoid his maintenance obligation. The court found that, though the Defendant could not return to his previous income level, he would certainly be able to obtain of $90,000.00 per annum and imputed income to him on that basis. It is interesting that the court, in finding that the Defendant’s decision to retire was partly based on a desire to avoid maintenance, did not assess his income back to its original level, but rather to what the Defendant could be earning were he to return to the workforce.
Posted: June 11th, 2010 under Case Analysis, Spousal Support.
Tags: Gajdzik, Maintenance, Retirement, Spousal Maintenance, Spousal Support, Support, Szczerbaniwicz, Voluntary Retirement
Financial Statement Assumptions
Some thoughts about Financial Statements: The Form 89 financial statement is divided into major sections – income, expenses and property. Generally, income and property pose few conceptual problems. Parties might disagree with values of assets or with characterization of income, but there little room for assumptions (ie, you would not include a Ferrari in section 2 of Part 3 (Vehicles) premised on “IF I had a Ferrari, THEN I would have a Ferrari”).
The same cannot be said for the expense section of the Form 89, which is rife with assumptions. It is not clear on the face of the document what, exactly, is called for. Is one being asked to say what one’s expenses have been for the past year? What one expects them to be in the coming year? What they will be if one gets what one is proposing that the court order, or what one will be paying if the other party is successful? Does one calculate expenses on the most one believes one should be spending or the least? The answer to all of these questions is, unfortunately, yes.
Because there is so much grey in the Financial Statement, it is important that one clarifies for the court any assumptions and decisions that you make. If one is filling out the document based upon what one expects to pay if one receives what one is seeking, that assumption should be set out in affidavit material and brought to the attention of any judge hearing a related matter. Clarifying affidavits are very helpful for the court and helps them to see exactly what logic lies behind the income and expense calculations you or your counsel may be promoting.
Posted: February 24th, 2010 under Child Support, Procedure, Property Division, Spousal Support.
Tags: Financial Statement, Forms, Procedure, Supreme Court
What to do about non-disclosure
What can you do when the other side won’t give you the documents you need to determine his or her income? Rule 60D of the British Columbia Supreme Court Rules dictates the disclosure that a party must make in a family law proceeding. In the case of Cunha v. Cunha (1994), 99 B.C.L.R. (2d) 93 (S.C.)) Mr. Justice Fraser quite appropriately stated that,
“Non-disclosure of assets is the cancer of matrimonial property litigation. It discourages settlement or promotes settlements which are inadequate. It increases the time and expense of litigation. The prolonged stress of unnecessary battle may lead weary and drained women simply to give up and walk away with only a share of the assets they know about, taking with them the bitter aftertaste of a reasonably-based suspicion that justice was not done. Non-disclosure also has a tendency to deprive children of proper support.
It is not enough to respond to non-disclosure by an award of costs. Nor is it enough, in a case like this one, to deal only with what is known. Either of these approaches, or both together, may still reward the non-disclosing litigant for his conduct, depending whether his concealment has been successful.”
What then is to be done? Luckily, the courts provide some resources to the party seeking information. They include:
Presumptions Against the Non Disclosing Party: If someone does not disclose assets in accordance with the Rules, the court may presume that there is continuing non-disclosure and the onus will be on the non-disclosing party to satisfy the court that he or she has complied.
Penalties Against the Non-Disclosing Party: If a proper demand has been made for disclosure and it has not been complied with, the court is able to assess up to $5000.00 against the non-disclosing party, to be paid for the benefit of the spouse, child or parent on whose behalf the request for financial information was made.
Dismissal of the Non-Disclosing Party’s Action: If a party does not provide a financial statement, the court under Rule 60D of the rules of court, under Rule 2(5) is able dismiss the offending party’s proceedings or order that the proceeding go ahead as if no appearance had been entered or no defense had been filed.
Contempt: The court can, in certain circumstances, make findings of contempt of court against someone hiding income or assets. This could result in fines against the offending party or even jail time.
Mr. Justice Fraser’s words still ring very true, and it is vital that each party provide full disclosure so that each has full knowledge of the other’s finances.
Posted: November 25th, 2009 under Child Support, Procedure, Property Division, Spousal Support.
Tags: Cunha v. Cunha, disclosure, non-disclosure
