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.