2014 NBCA 6, 2014 NBCA 6

54t5 COURT OF APPEAL OF NEW BRUNSWICK 9-13-CA JAMES VAUGHAN (Respondent) APPELLANT JAMES VAUGHAN (Intimé) APPELANT - and - - et - SUSAN AMANDA VAUGHAN (Applicant) RESPONDENT SUSAN AMANDA VAUGHAN (Réquérante) INTIMÉE Vaughan v. Vaughan, 2014 NBCA 6 Vaughan c.

Vaughan, 2014 NBCA 6 CORAM: The Honourable Justice Larlee The Honourable Justice Robertson The Honourable Justice Quigg CORAM : l'honorable juge Larlee l'honorable juge Robertson l'honorable juge Quigg Appeal from a decision of the Court of Queen'sBench: December 19, 2012 Appel d'une décision de la Cour du Banc de la Reine: le 19 décembre 2012 History of Case: Historique de la cause : Decision under appeal: 2012 NBQB 411 Décision frappée d’appel : 2012 NBQB 411 2012 NBBR 411 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: September 16, 2013 Appel entendu : le 16 septembre 2013 Judgment rendered: February 20, 2014 Jugement rendu : le 20 février 2014

Reasons for judgment by: The Honourable Justice Quigg Motifs de jugement : l'honorable juge Quigg Concurred in by: The Honourable Justice Larlee Souscrivent aux motifs : l’honorable juge Larlee Separate concurring reasons by: The Honourable Justice Robertson Motifs concordants distincts : l’honorable juge Robertson Counsel at hearing: For the appellant: Kenneth W. Martin For the respondent: Sheila J. Cameron, Q.C. Avocats à l'audience : Pour l’appelant : Kenneth W. Martin Pour l’intimée : Sheila J. Cameron, c. r.

THE COURT The appeal is allowed in part and the portion of the order respecting the amount of spousal support payable post-retirement is set aside. The spousal support amount is to be reviewed when Mr. Vaughan retires. Due to theunusual circumstances of this case no costs are awarded. The judgment of Larlee and Quigg, JJ.A. was delivered by QUIGG, J.A. I. Introduction [1] This case presents an interesting question: whether a judge possesses the authority to issue anadvance ruling with respect to spousal support in circumstances where the payor spouse announces “an intention to retire”. At thedivorce hearing, Mr.

Vaughan requested a pre-determination of spousal support as he wished to retire. At that time, he was still engagedin full-time employment, earning a six-figure salary. A judge of the Family Division granted the request by fixing an amount of spousalsupport payable if and when Mr. Vaughn retires. At the appeal hearing, counsel were asked whether the judge possessed the authority tomake the advance ruling. Both parties were given the opportunity to submit post-hearing briefs and both parties did in fact makesubmissions having regard to the Supreme Court decision Messier v.

Delage, (SCC), [1983] 2 S.C.R. 401, [1983] S.C.J.No. 80 (QL). In the circumstances of this case, the response has to be “no”. But this appeal raises other issues such as the imputation of

income, whether veteran’s disability payments and retirement pensions may be included in calculations of spousal support, and whether retirement income and income generated from the division of assets should be included in the calculation of the amount of life insurance necessary to secure spousal support payments. II. Background [ 2 ] James Vaughan and Susan Amanda Vaughan were married in May 1972. They separated on August 19, 2010, after 38 years of marriage. They are the parents of two adult children. Mr. Vaughan is presently 61 years of age and Mrs. Vaughan is 60 years of age.

An interim hearing was held on February 2, 2011. On March 15, 2011, a judge of the Court of Queen’s Bench, Family Division, determined Mr. Vaughan’s employment income to be $140,568, his disability income to be $12,588 and his pension income to be $27,900, for a total of $181,056. As a result, the judge ordered interim spousal support payments of $6,601.00 retroactive to October 1, 2010. The parties had effected an equalization of marital property. This equalization resulted in the husband receiving $350,348 and the wife receiving $347,823. The next hearings were held on May 9 and 10, 2012.

The parties took an all or nothing approach, with Mr. Vaughan claiming he wished to retire and wanted to terminate the spousal support and Mrs. Vaughan requesting that spousal support continue. On December 19, 2012, the Court made the following order respecting spousal support and life insurance to secure spousal support: A) $1300 per month commencing the 1 st day of the first month subsequent to retirement is ordered until further order of the court.

B) The within determination of $1300.00 is of course premised on Mr. Vaughn retiring forthwith. He indicated December 31 st . The within determination of Spousal Support upon retirement is valid for six months from the date of this decision.

C) So, if retirement does not occur within six months of the filing of the within decision, spousal support shall revert to the pre- retirement amount of $6,500 (based on the pension having been divided) each and every month thereafter until further order of the court. Mr. Vaughn’s shall have life insurance of twice his salary payable to Ms. Vaughn in relation to ongoing spousal support obligations pre- retirement. However, post-retirement, Mr.

Vaughn’s monthly spousal support obligations are significantly reduced, and accordingly so should his life insurance obligation is significantly reduced. […] [paras. 265-267] [ 3 ] The judge determined that Mr. Vaughan’s request to be permitted to retire from his “current position” was reasonable but that it “was not reasonable given the entirety of the circumstances for Mr. Vaughan to entirely leave the workforce at this time”. The judge imputed post-retirement income to Mr. Vaughan in the amount of $40,000 and imputed income to Mrs.

Vaughan in the amount of $6,000, although neither party had raised the prospect of imputation of income. Mr. Vaughan was ordered to maintain a life insurance policy in the amount of $140,000 to the benefit of Mrs. Vaughan to secure the spousal support. He was at liberty to reduce the rate of insurance by $7,000 per year which would conclude the requirement for insurance by the time he attained the age of 81. In determining the spousal support payments, the judge included as income the disability payments received by Mr. Vaughan from the Canadian Forces due to his service-related hearing loss and disc issues.

In addition, Mrs. Vaughan was to receive the amount of $299,728 upon the division of Mr. Vaughan’s military pension. Counsel for Mr. Vaughan filed the Judgment Following Hearing or Trial. [ 4 ] On February 22, 2013, Mrs. Vaughan filed a Notice of Motion seeking to have the December decision set aside as there were errors in the calculation of prospective spousal support. In his decision dated December 19, 2012, the judge had not grossed up the amount of disability pension in accordance with paragraph 212 of the decision.

In his corrigendum, he stated that he had utilized an incorrect figure in the imputation of income for Ms. Vaughan. After these corrections were made, the amount of spousal support increased to $1,859. On July 8, 2013, a new Judgment Following Hearing or Trial was filed reflecting the contents of the corrigendum. III. Issues on Appeal [ 5 ] Mr. Vaughan submits the judge erred in law in four instances by:

(1) Imputing post retirement income to him without a finding of fact that his anticipated retirement was unreasonable;

(2) Including the Canadian Forces Service Income Security Insurance Plan (SISIP) payments as income in the computation ofspousal support, both pre- and post-retirement;

(3) Including pension income in the calculation of post–retirement support, when the pension had been included in the equalizationof marital property; and

(4) Including the pension income and the income generated from marital property asset division in his calculation of the amount oflife insurance required post-retirement. [6] In my view, there is an error in law which could not have been included by Mr. Vaughan in hisgrounds of appeal but perhaps should have been raised by Mrs. Vaughn. The issue is whether the trial judge had jurisdiction to order anamount for prospective spousal support when Mr. Vaughan retires. IV. Standard of Review [7] This Court does not re-try cases, nor does it substitute its views for those of the applicationjudge.

In family law matters we take the view that considerable deference must be shown to a judge’s decision. Of course, we willintervene when there is an error of law, a significant misapprehension of the evidence or if the decision is clearly wrong. This principlehas been restated often in our decisions, among them LeBlanc v. LeBlanc, 2013 NBCA 22, 401 N.B.R. (2d) 334; P.R.H. v. M.E.L., 2009NBCA 18, 343 N.B.R. (2d) 100, at paras. 8 and 9; Smith v. Smith, 2011 NBCA 66, 375 N.B.R. (2d) 208, at para. 10; Doiron v. Wilcox,2012 NBCA 70, 393 N.B.R. (2d) 183, at paras. 9 to 11 and C.M.H. v.

J.R.H., 2012 NBCA 71, 393 N.B.R. (2d) 154, at para. 8. [8] In MacLean v. MacLean, 2004 NBCA 75, 274 N.B.R (2d) 90, this Court further held that thesame standard of review must be applied when reviewing support orders (see Hickey v. Hickey, (SCC), [1999] 2 S.C.R.518, [1999] S.C.J. No. 9 (QL); J.E.J. v. S.L.M., 2007 NBCA 33, 318 N.B.R. (2d) 119, at para. 35; Milton v. Milton, 2008 NBCA 87, 338N.B.R. (2d) 300, at para. 14; Scott v. Scott, 2011 NBCA 7, 368 N.B.R. (2d) 281, at paras. 15 and 16; Smith v. Smith, at para. 11; C.M.H.v. J.R.H., at para. 11 and Grant v.

Grant, 2012 NBCA 101, 397 N.B.R. (2d) 254 at paras. 4 and 5). In my view, this is a case thatwarrants appellant intervention. V. Analysis A. Spousal Support Post-Retirement

(1) Advance Ruling Regarding Spousal Support [9] The case before us has evolved from a request by Mr. Vaughan for a pre-determination of theamount he would pay in spousal support, after his retirement, to a situation where Mr. Vaughan submits the judge included inappropriateincome in order to determine the speculative spousal support. In my view, the judge erred in law in determining the amount of spousalsupport payable should Mr. Vaughan retire. Here is the essence of his determination: The Court notes that Justice Sirois’ interim order was just that, an interim order.

There is further and better evidence available on thisdate with respect to the 2011 income. By the same token, and following extension of the same logic when in fact Mr. Vaughan doesretire, it is anticipated that his spousal support payments would be based on his retirement income in his first year of retirement, ratherthan his anticipated much higher income for the previous taxation year.

[…] Mr. Vaughan clearly indicates he wishes to retire December 31st, this year and secondly, from the evidence before us, we know what the parties’ respective income would be. The court’s decision as to spousal support upon retirement effective December 31st would be basedon the existing factors now known and the parties’ potential income from retirement now known.

I do not believe it is reasonable, pragmatic, or principled to refuse to indicate what spousal support would be on retirement when thereare definitive plans for retirement on a specific close date and sufficient evidence as to circumstances impacting spousal support levelsupon retirement such as income and means. In effect, the Court would be putting persons in the position of retiring with all its finalityand then seeking a decision from the Court as to what their obligations may be. This arbitrary lack of provision of certain[t]y has to be contrary to public policy.

Of course the situation would be different if we weredealing with something entirely speculative such as a person tilting at windmills with respect to the possibility of retirement, and seekingin effect an advance ruling from the court. For instance a person not having the necessary information for an appropriate analysis of theparties’ income or position at retirement, or if the intent to retire was a unspecified time frame, or a time frame not being in theimmediate future.

In these cases then the degree of speculation inherent in a decision may prevent the Court from making a decisionbased on such speculation and such lack of certainty. [paras. 211, 224-226] [10] Messier v. Delage concerned an appeal of a motion to vary spousal support. At the time of thedivorce, the wife, who had not worked outside the home for 12 years, obtained custody of the couple’s two children. She had returned touniversity to pursue a master’s degree in translation.

Four years subsequent to the divorce, the husband applied to vary the amount ofspousal support on the basis that the wife had obtained her master’s degree and had commenced working on a part-time basis. Thechildren were older and one had moved in with the husband. Despite the fact the wife was only working part-time, the judge of firstinstance reduced the amount of spousal and child support and ordered a termination date for the spousal support. The Quebec Court ofAppeal reversed this in part by setting aside the termination date but allowing the reduction in child support.

The Supreme Courtconsidered the provisions of the Divorce Act, R.S.C. 1970, c. D-8 that provided for spousal support. The Court concludes : The decision must therefore be made on the facts of each case. The facts may change with time: that is the way of life.

This is why s.11(2) provides that an order may be varied from time to time; but in my opinion, the judge must arrive at his decision on each occasion[TRANSLATION] ) "having regard to the present circumstances, as Albert Mayrand J.A. of the Quebec Court of Appeal suggests in astudy titled "L'obligation alimentaire entre époux séparés ou divorcés depuis le Bill 8 et la Loi fédérale sur le divorce", Lois nouvelles II,P.U.M., 1970, p. 41, at p. 61.

The decision therefore must not be made in accordance with events which may or may not occur. [pages415-416] [11] The last sentence of the above quote states the decision “must not be made in accordance withevents which may or may not occur”. In this case, the judge erred in making a determination regarding spousal support as Mr. Vaughanhad not retired at the time of trial. Therefore, any order made with respect to post-retirement support was premature and in conflict withMessier. Furthermore, the judge’s imputation of income for both parties post-retirement lacked any evidentiary foundation.

In Messier,the Court, quoting McKay v. McKay, (MB KB), [1970] M.J. No. 155 (QB) (QL), continues: [...] it is the financial position of the parties as it exists today that governs, and not as it might exist a year or a year and a half from now.Any changes in circumstances can be dealt with at the appropriate time. [page 416] [12] The Supreme Court determined the trial court erred in speculating and disregarding the actualcircumstances of the parties at the time of the hearing.

The Supreme Court is clear that courts should make support determinations basedupon actual income: After their marriage the parties lived together for twelve years. They had two children, whose education was [the] respondent's constantconcern. She never worked outside the home. Immediately after the divorce, she began studies in translation and took her Master'sdegree. She has since then been able to obtain part-time employment, which in the year preceding the trial judgment brought her some$5,000.

Appellant's means enable him to pay the pension awarded, which in fact was reduced by the Court of Appeal in the sameproportion as it was by the Superior Court to take into account respondent's earnings and the fact that one of the children is no longerdependent on her. If other changes occur, it will be for appellant to apply to the Court again. [page 417] [Emphasis added.]

[13] In Butler v. Butler (1998), (NB CA), 195 N.B.R. (2d) 156, [1998] N.B.J.No. 75 (C.A.) (QL), this Court followed the rationale of Messier, which is: judges should not speculate about “future employmentprospects” (see also, O’Donnell v. O’Donnell, 2002 NBQB 148, [2002] N.B.J. No. 154 (QL); Clark v. Cooper–Clark, 2002 NBQB 26,[2002] N.B.R. (2d) (Supp.) No. 3; Ferguson v. Ferguson (2001), 237 N.B.R. (2d) 330, [2001] N.B.J. No. 196 (Q.B. Fam. Div.) (QL)).Although the majority of these cases concern the prospect of a payee wife obtaining self-sufficiency, the situations are analogous to theone before us.

In this case, Mr. Vaughan wishes to retire in the near future and is asking for a predetermination of spousal supportpayable when, or if, he retires. In my view, this calls for speculation on the part of the judge and, as such, does not fall within theparameters of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp). In LeMoine v. LeMoine (1997), (NB CA), 185 N.B.R.(2nd) 173, [1997] N.B.J. No. 31 (C.A.) (QL), this Court considered Messier: The appellant admitted that evidence of the expenditures submitted by him in 1991 was not dependable.

The respondent used these sameexpenditures to argue that the disposable income of the appellant had in fact increased. The arguments on disposable income andcomparisons of total revenue of each party must also be addressed in light of the fact that Mrs. LeMoine has no job security and nopension plan. If she retires at 65, her income will be reduced while that of her former spouse will remain the same. On future […] In Linton v.

Linton (1990), (ON CA), 30 R.F.L. (3d) 1, the Ontario Court of Appeal decided that the best approachwas to take the equalization payments into account before the quantum of support is determined, and to treat all income as "means" afterthe division of assets. With respect to pensions and future retirement, it held that it was not improper to extend support beyond the payorspouse's retirement simply because of the inclusion of the pension in the property division. A payor spouse could always apply to varyif, after retirement, the ability to pay was compromised. This solution was also adopted in Vennels v.

Vennels, supra, at p.175, Graingerv. Grainger, supra, at pp. 105-106, and Nantais v. Nantais, supra, at pp. 210-11. [paras. 22 and 29] Recently, in Rondeau v. Rondeau, 2011 NSCA 5, [2011] N.S.J. No. 10 (QL), Hamilton J.A. succinctly summarized: As Dr. Rondeau has not yet retired, or even suffered a material reduction of income toward retirement, the application of the LeMoineprinciple is premature.

It is important to remember that determinations as to whether there has been a material change in circumstancesare based on the facts as they exist or are known at the time of the application, not on speculation as to what may happen in the future;Messier v. Delage, (SCC), [1983] 2 S.C.R. 401; Casey v. Casey, 2008 NSSC 56, para. 8; Meade v. Meade, [1990] N.S.J.No. 453; Skelly v. Skelly, 2007 BCSC 810; LeBlanc v. LeBlanc (1995), (NB KB), 163 N.B.R. (2d) 192. Dr.

Rondeau is entitled to make a further application to vary if there is a material change in circumstances in the future. [paras. 31-32] It is apparent from this jurisprudence that trial judges must consider the financial positions of both parties at the time they make originalspousal support orders or vary them. [14] Time limitations on spousal support have not generally been imposed in long-term traditionalmarriages such as the one before us. It is my view that, in this case, spousal support may be reviewed if and when Mr. Vaughan retires.Because it is probable that Mr.

Vaughan will retire in the near future, it would be appropriate to impose a review hearing after Mr.Vaughan’s retirement so that he is not obliged to prove his retirement is a “change in circumstances” in order to justify a variation (seeFrancis v. Sappier, 2004 NBCA 70, [2004] N.B.J. No. 452 (QL)). Also, at such time, all other relevant factors (means, needs and othercircumstances) must be considered in order to undertake a proper analysis under s. 17 of the Divorce Act. Re-partnering and health issuesmay also be factors in the determination.

The proper time to decide what the appropriate amount of spousal support is, in a case such asthis, after Mr. Vaughan’s income has changed; it is only then that all of the relevant factors can be put before the decision-maker. [15] Mr. Vaughan submits the judge erred in law by imputing post-retirement income to him withouta finding of fact that Mr. Vaughan’s potential retirement was unreasonable. I agree. A review of the decision does not reveal any findingsof fact with respect to the imputation of income that would be entitled to deference on our part. With respect to Mrs.

Vaughan, there wasabsolutely no evidence that the $6,000 imputed to her was from an income-producing asset from the marriage. In imputing income to her,the judge believed she was able to find employment for one third of the year at minimum wage. Not only was there no evidence tosupport this imputation, but Mrs. Vaughan was also not obliged to accept minimum wage part-time work. She had suffered a substantial

economic disadvantage from the marriage and its breakdown. Mrs. Vaughan had been removed from the workforce for far too long toconsider that she would ever establish any measure of self-sufficiency (see Flieger v. Adams, 2012 NBCA 39, 387 N.B.R. (2d) 322). [16] I understand that counsel for Mr. Vaughan was attempting to take a pragmatic approach to theretirement/spousal support issue in order to determine whether or not Mr. Vaughan had the financial means to retire or, perhaps, to avoida future hearing respecting retroactive arrears of spousal support. Further, had Mr.

Vaughan continued to pay support at the current rate,he may have been faced with having to collect overpayment from Mrs. Vaughan if he retired and then proceeded to court for a hearingregarding a retroactive and prospective reduction in support.

Regardless, in my view it was impossible, in the circumstances of this case,to provide an advance ruling as to what his spousal support payment would be on a speculative retirement: not only was the date ofretirement unknown at the time of the trial, but there was also no evidence regarding his post-retirement earning capacity or theappropriateness of imputing $40,000 a year in income to him. [17] There may be situations in which a trial judge can fix post-retirement income but this is not sucha case.

The trial judge erred in law in proceeding to fix a post-retirement spousal support award when there was no evidence before himto support the award. This error warrants appellate intervention. I would set aside that portion of the judge’s order and order that the pre-retirement amount of spousal support, $6,500 per month, be paid until such time as Mr. Vaughn actually retires. At that point, spousalsupport may be reviewed by a judge of the Court of Queen’s Bench, Family Division, in order to determine the appropriate level ofsupport based upon the parties’ actual incomes, Mrs. Vaughan’s need, Mr.

Vaughan’s ability to pay and the objectives of spousal supportas set out in the Divorce Act.

(2) Reasonableness of Retirement [18] Another issue that the judge attempted to address was whether or not it was “reasonable” forMr. Vaughan to retire from his current position. As previously stated, Mr. Vaughan is 61 years of age. He retired from the military in1996 as a Captain. Upon his retirement, the parties relocated to Saint John, where Mr. Vaughan resumed working, this time as a“handyman” at Profact. In 1998, Mr. Vaughan commenced employment with Barrington Industrial as a Supervisor and progressed toGeneral Manager. At the time he left Barrington Industrial, Mr.

Vaughan’s income was approximately $50,000-$60,000 a year. Mr.Vaughan then began to work for Gulf Operators, a division of Irving Equipment, as Safety Coordinator. Subsequent to this, Mr. Vaughanworked for Cavendish Farms as a Health, Safety and Environment Director in Prince Edward Island, for four years. At that time, hisincome increased to $80,000-$85,000 a year. The parties relocated when Mr. Vaughan accepted employment as a Vice-President ofEmployee Health and Safety Corporate for Irving in Moncton. At the time of the hearing, the judge determined that Mr. Vaughan’semployment income was $157,868. [19] Mrs.

Vaughan submits it is not reasonable for Mr. Vaughan to retire at this time and, in sodoing, he is attempting to reduce the amount of spousal support being paid to her. She states in her written brief that “the judge held itwas unreasonable for Mr. Vaughan to fully retire from the workforce”. In the decision the judge says: Given the entirety of the circumstances, the Court is satisfied that it is reasonable that he retire from his current position at this particularpoint in time, and that there be a corresponding adjustment in spousal support.

Following the court’s analysis herein the court has determined the parties in the entirety of the circumstances are left in a reasonablefinancial position considering their past living situation, their past retirement goals, etc. with the order I make herein. As can be seen I have ultimately arrived at the decision that it is not reasonable given the entirety of the circumstances for Mr. Vaughn toentirely leave the workforce at this time. Further as will be seen I have ultimately imputed a very marginal future income to Ms. Vaughn.[paras. 174-176] [20] In LeMoine v.

LeMoine, this Court held that a court should only look behind the decision to retire when aspouse is acting in bad faith: Mr. LeMoine's decision to accept early retirement is not relevant to determining the issues in this case. I agree with the decision of theBritish Columbia Court of Appeal in Ross v. Ross (1994), (BC CA), 7 R.F.L. (4th) 146 at p.150, where it found that,generally, a supporting spouse cannot be required to continue working.

It is only when a spouse is acting in bad faith in order to frustratethe right of a former spouse to support that the Court should look behind the decision to retire (see Vennels v. Vennels (1993), 1993

446 (BC SC), 45 R.F.L. (3d) 165 at p. 175 (B.C.S.C.)). In this case, there is no evidence of bad faith. [para. 10] [21] In my view, a trial judge attempting to set spousal support once a payor spouse has retired mustundertake an analysis of the situation, comparing the finances of both parties taking into consideration their means, needs and ability topay. Trial judges should also consider whether the support ordered was compensatory in nature.

In order to make this determination, thetrial judge should have all relevant financial information at his or her disposal, including but not limited to: pertinent income taxdocumentation (i.e. T4s or Notices of Assessment), financial statements, and pre- and post-retirement budgets of both parties. I wouldencourage judges to review financial information respecting any new partners of the parties, as well as evidence respecting the parties’utilization of their capital assets, if applicable. In this case, I would order that either party be permitted to request a review at the time ofMr.

Vaughan’s actual retirement, which would avoid the necessity of finding a change of circumstances. In cases without court-orderedreview, where parties must make motions to vary and indicate a change in circumstances, I would propose that courts engage in the sameanalysis as that undertaken in Hoar v. Toner, 2010 NBQB 167, 361 N.B.R. (2d) 94. Therein, Walsh J. suggests the fairest method toachieve the purposes of spousal support in the present circumstances of the parties is to compare their monthly budgetary surpluses(para.63). [22] Mr.

Vaughan submits the judge erred in law by imputing post-retirement income to him withouta finding of fact that his potential retirement was unreasonable. I agree. As stated earlier, a review of the decision does not reveal anyfindings of fact with respect to the imputation of income that would be entitled to deference on our part. With respect to Mrs. Vaughan,there was absolutely no evidence that the $6,000 imputed to her was from an income producing asset from the marriage. In imputingincome to her, the judge believed she was able to find employment for one third of the year at minimum wage. B.

Veterans Disability Payments [23] Manuge v. Canada, 2012 FC 499, [2012] F.C.J. No. 512 (QL), dealt with a class action lawsuitbrought by Mr. Manuge on behalf of approximately 4,500 members and former members of the Canadian Forces. At issue was thelegality of the Crown’s policy of reducing long-term disability benefits payable to disabled members under the Canadian Forces ServiceIncome Security Insurance Plan (SISIP) by the monthly amounts payable to members under the Pension Act, R.S.C. 1985, c P-6.

TheFederal Court determined that the benefit was not intended to be a form of income replacement and, therefore, the Crown’s policy ofoffsetting the pension payments from the long-term disability payments was not contractually justified. Relying on Manuge, Mr.Vaughan argues the judge erred in including his veterans disability payment in the calculation of spousal support. There are presentlytwo conflicting cases at the superior court level regarding the inclusion of veterans disability payments as income to be used in thecalculation of spousal support. In Storey v. Simmons, 2013 ABQB 168, [2013] A.J.

No. 271 (QL), Veit J. determined, after invokingManuge, that a father’s veterans disability payment should not be included as income under the Federal Child Support Guidelines,SOR/97-175, on the basis that it does not replace income. In her view, the disability pension paid to veterans was not a form of incomereplacement and was, therefore, not income to be included for child support purposes. However, the portion of the pension the fatherreceived because he was the parent of two children was considered to be income for the calculation of child support.

This decision wasreleased March 21, 2013. [24] When Storey was released there was one other case which dealt with the same issue, Darlingtonv. Moore, 2013 NSSC 103, [2013] N.S.J. No. 205 (QL). That decision was released on March 15, 2013. (The case before us was filed onDecember 19, 2012). In Darlington, O’Neil A.C.J.S.C. (F.D.) came to the opposite conclusion reached in Storey by distinguishingManuge. The central issue in Darlington was whether the husband’s disability income should be considered for the purpose ofdetermining spousal and child support obligations.

The husband was a member of the RCMP, working full-time yet receiving disabilitypayments from Veterans Affairs Canada. Relying on Manuge, he argued the disability payment was not income for spousal supportpurposes. The wife submitted there are many situations where a financial benefit received by a spouse, common law or otherwise,although not taxable as income under the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), is considered to be income for the purpose ofcalculating child and spousal support. Furthermore, the amount should be grossed up as it is non-taxable.

The judge distinguishedManuge on the basis that the decision to exclude the disability benefits from the definition of income was based on “an

interpretation ofthe governing contract of insurance” (para. 67). He further notes that “[t]he calculation of child and spousal support requires the Court tointerpret statutory instruments that address broad policy objectives” (para.69), going on to say: When determining the quantum of spousal support, the Court has wider latitude to consider disability income received by a payor. Forexample, s.15.2(4) of the Divorce Act directs that spousal support, if any, will reflect the "condition, means, needs or othercircumstances" of either spouse. The MCA at s.4(

l) directs the Court to consider the payor's ability to pay when considering the amountof "spousal" maintenance to be ordered. In my view, this broad language requires the Court to consider the fact a payor has disability income when called upon to determine aquantum of spousal/partner maintenance.

The case for considering a payor's disability income is made more obvious when one asks whether disability income in the hands of a prospective recipient of "spousal" support should be considered when determining the quantum of "spousal" support to award. It should. In conclusion, I am satisfied that both the Divorce Act and ' MCA ' direct that income for child support and spousal/partner maintenance purposes includes tax free disability income. The disability income should be grossed up. [paras. 70-73] [ 25 ] I agree the Divorce Act allows for tax free disability income to be included in any determination of child and spousal support.

Section 15.2(4) directs as follows: Factors 15.2(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (

a) the length of time the spouses cohabited; (

b) the functions performed by each spouse during cohabitation; and (

c) any order, agreement or arrangement relating to support of either spouse. Facteurs 15.2(4) En rendant une ordonnance ou une ordonnance provisoire au

titre du présent article, le tribunal tient compte des ressources, des besoins et, d’une façon générale, de la situation de chaque époux, y compris :

a) la durée de la cohabitation des époux;

b) les fonctions qu’ils ont remplies au cours de celle-ci;

c) toute ordonnance, toute entente ou tout arrangement alimentaire au profit de l’un ou l’autre des époux. [ 26 ] I am persuaded by the ratio in Darlington . This is not a situation where benefits should be excluded because of the

interpretation of a contract of insurance. Rather, trial judges should endeavour to determine support payments based on the broad policy objectives contained in the Divorce Act . When fashioning a spousal or child support order, the court is obligated to consider the “condition, means, needs and other circumstances of each spouse”. This includes the tax-free disability payments, and, in future, these payments should be taken into consideration in the calculation of child and spousal support. (The same conclusion was reached in Ste-Marie v. Ste-Marie , 2013 NBQB 375 , [2013] N.B.J. No. 399 (QL) ). C.

Effect of Boston v. Boston [ 27 ] In Boston v. Boston, 2001 SCC 43 , [2001] 2 S.C.R. 413 , the majority held that double-dipping into a payor spouse’s pension should generally be avoided. In Boston , the husband’s pension was included in the calculation for spousal support but the wife’s pension was not. Furthermore, the wife had received assets in excess of $493,000 while the husband had assets of $7,000. This Court had the opportunity to apply Boston in Chamberlain v. Chamberlain , 2003 NBCA 34 , 259 N.B.R. (2d) 309 : Nonetheless, the motions judge refused to vary the amount of spousal support payable by Mr.

Chamberlain to Mrs. Chamberlain. The motions judge maintained the support award, payable at the rate of $225.00 per week. He concluded as follows: Under the general rule when practicable courts are not to resort to an asset such as a pension that has already been used in a division of property to produce spousal support. However, in my opinion every case must be dealt with on its own merits and a spouse should not be left on the fringes of economic viability in order to allow a person's pension to remain sacrosanct. That is not appropriate in this case.

I have heard the evidence of the parties on two occasions. They have been afforded a fair opportunity to be heard. Having consideredcounsels' submissions, written and oral, the evidence of the parties and the implications of Boston, I have determined that my judgmentshould stand without further variation. [para. 11] [28] The facts in Boston are not the facts of the present case. As mentioned, this case is unique inthat after the equalization of the marital assets and debts, the parties are on equal ground. Mr. Vaughan submits that Boston disapprovesof “double-dipping”. Mr.

Vaughan has the ability to pay (means) and Mrs. Vaughan faces economic hardship as a result of thebreakdown of the marriage. Boston, however, allows exceptions to the rule against double-dipping. In Flieger, this Court explained: The motion judge then considered the caselaw: in particular, the relevant principles as enunciated in the majority opinion in Boston andthe objectives of a spousal support variation order under the Divorce Act. She relied on the concepts found in Gallant v. Gallant, 2002NBQB 180, 250 N.B.R. (2d) 380, per Wooder J.; Meiklejohn v. Meiklejohn, (ON CA), [2001] O.J.

No. 3911 (C.A.)(QL), per Rosenberg J.A.; and Beninger v. Beninger, 2007 BCCA 619, [2007] B.C.J. No. 2657 (QL), per Prowse J.A.

I summarize themas follows: where any "economic hardship from the marriage or its breakdown" persists, the award of spousal support on a variationapplication must give effect to the objectives of spousal support in s. 17(7) of the Act; where the satisfaction of the objectives in s. 17(7)of the Act can only be achieved by "double dipping", then the practice is, and should be, condoned; the spousal support award mustinclude a significant compensatory factor arising from the length of the marriage, the fact that the spouse gave up a career to raisechildren, and a significant needs-based component, taking into account the relative means and needs of the parties.

It should also attemptto adjust to some degree for the disparity in the standards of living of the parties, taking into account the standard which they enjoyedduring the marriage. In this case, the motion judge applied the principles to the facts and, in so doing, found this case was an exception to the rule in Bostonbecause the spousal support order was based on need, as opposed to compensation, and the respondent continued to suffer economichardship from the breakdown of the marriage.

I would not give effect to the ground of appeal based upon alleged double recovery.[paras. 15–16] [29] The case before us is one in which the exception can be applied. The spousal support order isbased on need and Mrs. Vaughan continues to suffer economic hardship from the breakdown of the marriage. Thus, the trial judge didnot err in fashioning the pre-retirement spousal support order as he did. D. Life Insurance to Secure Post Retirement Spousal Support [30] Mr.

Vaughn’s final ground of appeal is that the trial judge erred in calculating the amount of lifeinsurance required to secure the spousal support payable, post-retirement, by including pension income and income generated frommarital property which had been previously divided. As I would set-aside the portion of the order respecting the amount of spousalsupport payable if and when Mr. Vaughn retires, it is not necessary to address this issue. VI.

Conclusion [31] In the result, I would set aside the amount determined for post-retirement spousal support andconfirm the amount of $6,500 be paid monthly, until such time as Mr. Vaughn retires. At that time, either party may request a review ofspousal support without the requirement of proving a change in circumstances. I would set aside the portion of the decision where thetrial judge imputes income to both parties.

I would uphold the trial judge’s inclusion of the veterans disability payment in hisdetermination of pre-retirement spousal support as well as his finding that this case meets the exception as described in Boston. I wouldalso uphold the portion of the decision where the trial judge ordered insurance to secure the spousal support payments. VII. Disposition [32] I would allow the appeal in part and set aside the portion of the order respecting the amount ofspousal support payable post-retirement. I would further amend the order to incorporate a provision for a review of spousal support whenMr. Vaughan retires.

Due to the unusual circumstances of this case I would not make an order of costs.

The following are the concurring reasons delivered by ROBERTSON, J.A. [33] I have had the advantage of reading my colleague’s comprehensive reasons and agree with herdisposition of the appeal. I take this opportunity to elaborate on two fundamental issues underscoring this appeal. The first relates to thequestion of whether judges of the Family Division possess the discretion to make “advance rulings” with respect to post-retirementspousal support obligations. I address this issue because the trial judge advanced compelling policy reasons in support of his decision todo so.

The second issue relates to the analytical framework for determining post-retirement spousal support. This brings into issue thisCourt’s decision in LeMoine v. LeMoine (1997), (NB CA), 185 N.B.R. (2d) 173, [1997] N.B.J. No. 31 (C.A.) (QL)and the trial judge’s application of an incompatible framework, but admittedly one that finds support in the jurisprudence.

While thereare aspects of the other frameworks with which I am troubled, I recognize that the application of LeMoine is potentially problematicwhen it comes to the “Freedom 55” cases. [34] It is important to recognize that cases involving post-retirement spousal support invariablyfollow a shared factual pattern. Typically, the court is faced with a long-term marriage in which the husband has worked outside thehome and the wife has worked from within.

Typically, the marriage is twenty to thirty years in duration and separation occurs when thechildren are no longer considered children of the marriage; the parties are ordinarily between 55 and 65 years of age at the time ofseparation or divorce. And, typically, the husband has been working for 30 years or more and retirement occurs before his 65th birthdaysuch that the allegation of “early retirement” resonates throughout the pleadings.

The retirement generally brings about a dramaticdecrease in disposable income which is suggestive of a case in which the husband has had several employers, there being no singledefined benefit pension plan. [35] The paradigm continues. Inevitably, the husband’s decision to retire, and the corresponding loss

of income, results in a dramatic and diminished capacity to pay spousal support and, correlatively, places the wife in a precarious financial situation, even though the property of the marriage has been divided equally. More often than not there is no reasonable prospect of her entering the workforce post-divorce, and the plea of continued “need” is invoked under the principles of Boston v. Boston , 2001 SCC 43 , [2001] 2 S.C.R. 413.

There is frequently a perception that any financial hardship which the husband faces, as a result of the retirement, can be remedied by his reentering the workforce. [ 36 ] The paradigm outlined above forces the question of whether it is in the best interests of both parties to have an advance ruling with respect to the post-retirement support obligation. While the decision to award continuing spousal support is appealable, the decision to retire will be perceived as final. While neither of the parties questioned whether the trial judge possessed the authority to make an advance ruling with respect to Mr.

Vaughan’s post-retirement support obligation to Mrs. Vaughan, the trial judge was acutely aware of the issue. The relevant passages from his reasons for decision are worthy of replication: I do not believe it is reasonable, pragmatic, or principled to refuse to indicate what spousal support would be on retirement when there are definitive plans for retirement on a specific close date and sufficient evidence as to circumstances impacting spousal support levels upon retirement such as income and means.

In effect, the Court would be putting persons in the position of retiring with all its finality and then seeking a decision from the Court as to what their obligations may be. This arbitrary lack of provision of certainly has to be contrary to public policy. Of course the situation would be different if we were dealing with something entirely speculative such as a person tilting at windmills with respect to the possibility of retirement, and seeking in effect an advance ruling from the court.

For instance a person not having the necessary information for an appropriate analysis of the parties’ income or position at retirement, or if the intent to retire was a unspecified time frame, or a time frame not being in the immediate future. In these cases then the degree of speculation inherent in a decision may prevent the Court from making a decision based on such speculation and such lack of certainty. [paras. 225-226] [ 37 ] Inevitably, those contemplating retirement will assess the financial impact of that decision on their present standard of living.

More so in those instances where the person is under a present legal obligation to pay substantial spousal support and retirement will result in a substantial reduction of disposable income. The present case is on point. Mr. Vaughan was earning in the vicinity of $150,000 to $160,000 per year and paying Mrs. Vaughan spousal support of $6,500 per month (her only source of income). However, his employment was such that he would not be in receipt of a company pension. Having regard to Mr.

Vaughan’s post-retirement pension income of approximately $40,000, it is evident that he could not reasonably afford to continue paying support at the pre-retirement rate. After imputing income to both parties, the trial judge reduced the support obligation to $1,300 per month. Whether or not the trial judge’s decision to award that amount was infected with legal error is a matter dealt with below. What is of immediate concern is the fact Mr.

Vaughan sought an advance ruling with respect to his post-retirement support obligation, thereby preserving the option of continuing with his present employment should the monthly support obligation be deemed too onerous. [ 38 ] In theory, both parties should benefit from an advance ruling with respect to post-retirement spousal support. Mrs. Vaughan would not be faced with the prospect of Mr. Vaughan being unable to meet his post-retirement support obligation if the existing support obligation remains intact following his actual retirement. And Mr.

Vaughan would not be faced with the financial realities tied to the irreversible decision to retire. In short, an advance ruling allows the spouse contemplating retirement to make an informed decision as to whether it is best to continue with employment having regard to the post-retirement support obligation. Of course, the need for an advance ruling is greatly diminished if the legal framework for determining post-retirement spousal support is firmly established and easy to apply. But where there is uncertainty in the law, the attractiveness of an advance ruling is even more alluring.

This is particularly true in those jurisdictions where the decision to elect “early retirement” is subjected to a “reasonableness” test and courts are prepared to impute income to the retiring spouse. [ 39 ] The trial judge in this case was also aware that the law does not favour the crafting of support orders that require “speculation” on the part of courts. Hence, he put a time limit on the “if and when order”. Mr. Vaughan would have six months to retire, failing which spousal support would continue at the pre-retirement rate. The trial judge was also aware of the need for Mr.

Vaughan to produce accurate statements with respect to his post-retirement income and expenses, together with a statement of capital assets, fixed and income-producing. Presumably, benefits available, for example, under the Canada Pension Plan (CPP) or Old Age Security would be disclosed.

The objective is to avoid criticism that the applicant is engaging in speculation when it comes to calculating post-retirement income. [ 40 ] While the trial judge made a compelling argument in favour of judges possessing the discretion to provide advance rulings with respect to post-retirement spousal support, I suspect there is opposition to recognizing such a discretionary right, save in those cases where both parties agree that an advance ruling is desirable.

However, there is always the fear that the advance ruling will be motivated by tactical considerations which are antagonistic to the legitimate interests of those in receipt of spousal support. The motion for an advance ruling could be perceived as threatening retirement for the purposes of re-negotiating a spousal support order (see, for example, Brown v. Brown , 2013 NBQB 369, at para. 41 ). In fact, the threat of retirement may have the badge of bad faith conduct, which is generally difficult to establish. Hence, it would not be surprising in cases where the advance ruling

involves an application for variation of an existing support order, that skeptics will properly shelter behind the question of whether thereis room in family law for such a discretionary power. After all, s. 17(4.1) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) provides thata variation may be granted only in cases where a change of circumstances has “occurred”. Nothing is said of circumstances which areabout to occur. [41] There is case law to support the understanding that an “intention” to retire is not sufficient totrigger the right seek a variation (invariably a reduction) in spousal support.

As was stated in Rondeau v. Rondeau, 2011 NSCA 5, [2011]N.S.J. No. 10 (QL): “It is important to remember that determinations as to whether there has been a material change in circumstances arebased on the facts as they exist or are known at the time the of the application, not on speculation as to what may happen in the future”(para. 31). On the other hand, the authorities being cited are dealing with matters that are truly “speculative” in nature. For example, inLeMoine this Court cited Messier v. Delage, (SCC), [1983] 2 S.C.R. 401, [1983] S.C.J.

No. 80 (QL) for the propositionthat: “[on] future contingencies, the Court must not look too far in the future, but it must take into consideration what is known” (para.22). In LeMoine, this Court was looking at the possibility of the payee spouse retiring when she reached age 65, and in Messier, theSupreme Court was dealing with the question of whether the wife would be able to obtain future employment.

See also LeBlanc v. ”for retirement. [42] The question remains whether s. 17(4.1) of the Divorce Act leaves room for a discretionarypower to make advance rulings with respect to post-retirement spousal support obligations. In short, is it permissible to read into thestatutory requirement such that it refers to changes of circumstances that have occurred or are imminent? Of course, we know that as amatter of interpretative principle it is permissible to read words into a statute. This accounts for the reality that s. 17(4.1) makes noreference to a “material change of circumstances”.

But everyone reads in the word “material” for reasons that are obvious. If it werenecessary to decide the issue, I would align myself with those willing to interpret to s. 17(4.1) so as to embrace advance rulings. But asmy colleague has pointed out in her reasons, on the facts we need not provide an answer to the question posed. [43] This case does not involve the application of s. 17(4.1) and a request to vary spousal support. Mr. Vaughan’s request for an advance ruling was made at the time of the final divorce hearing.

Accordingly, there is no potentialstatutory impediment to holding that trial judges possess the discretionary authority to make advance rulings with respect to post-retirement spousal support. However, as would be expected, the exercise of that discretion in favour of the applicant will depend on thefacts of each case. At the very least, the court must be presented with financial statements that accurately disclose both pre-retirementand post-retirement monthly income together with a statement of actual and projected monthly expenses that are not the product of self-induced inflation (“no padding allowed”).

As will be explained, the significance of this requirement is critical to the outcome to thisappeal. [44] Putting aside the issue of advance rulings, the legal framework to be applied in regard to post-retirement spousal support obligations is set out in LeMoine. That case stands for several propositions. First, it must be determinedwhether the possibility of retirement was considered at the time the initial support order was made.

However, as one court pointed out,had the matter of retirement been contemplated at the time of the earlier hearing, one would expect the resulting order to provide forreview on retirement (see Hoar v. Toner, 2010 NBQB 167, 361 N.B.R. (2d) 94). Second, the court must decide whether the decision toretire constitutes a material change in circumstances, thereby warranting consideration of a variation. In cases where the retirementresults in a substantial drop in the payor’s income, this criterion is easily satisfied.

Third, the court must then consider the merits of theapplication in accordance with established principles, including those set out in LeMoine. [45] LeMoine affirms that courts should not go behind the decision of a spouse to retire early unlessthat spouse is “acting in bad faith in order to frustrate the right of a former spouse to support” (para. 10). Of course, LeMoine is reflectiveof the law prevailing at that time it was decided. The reasoning in Vennels v. Vennels, (BC SC), [1993] B.C.J.

No. 378(S.C.) (QL) is representative: Retirement of a payor under a maintenance order usually results in a significant reduction of income; that is so in this case. Courts are notguided by legislation to enquire into the circumstances of retirement. Courts have no power to compel people to work. However, courtsshould, in the interests of justice, refuse to consider a reduced income resulting from retirement, to be a material change in circumstancesjustifying a variation of a support order, where a payor spouse has intentionally put him or herself out of the money in order to frustrate amaintenance order.

Any such deliberate self-induced impecuniosity constitutes deceit. [46] In LeMoine, this Court affirmed the above proposition by relying on the decision of the BritishColumbia Court of Appeal in Ross v. Ross, (BC CA), [1994] B.C.J. No. 1526 (C.A.) (QL). The facts in Ross areinteresting. Mr. Ross was 70 when he stopped working. But Mrs. Ross insisted that his monthly support obligation should not bereduced; otherwise she would be unable to retain her condominium.

The Court of Appeal disagreed and reduced the support obligation tozero while crafting an order that would require the payment of spousal support “if and when” Mr. Ross decided to reenter the workforce.

Under that order, Mr. Ross would retain the first $200 earned each month and pay Mrs. Ross half of what he earned monthly between$200 and $1,200. [47] It is not surprising that the law makes no attempt to define what is meant by early retirement.All that one can say with a degree of confidence is that a spouse or former spouse who retires before age 65 will be faced with the plea ofearly retirement. In short, it is commonly assumed that retirement before age 65 qualifies as early retirement. Certainly, there can be nodoubt that LeMoine was a case of early retirement.

But it was also a case in which the decision to retire made eminent good sense. Mr.LeMoine’s election to retire at age 55 was precipitated by health considerations, an employment severance package, and a pensionbenefit pegged at 70% of his yearly salary (the “golden handshake”). [48] While LeMoine establishes that courts should not go behind good faith decisions to take earlyretirement, this Court also held the onus remains on the paying spouse to show that continuation of support at the same level imposes onhim an inequitable sharing of the benefits and disadvantages of the marriage and its breakdown.

In short, the payor spouse bears the onusof showing that a variation in support is required to maintain an equitable sharing and that adherence to the same level of support willcause him undue hardship (see Caverhill v. Caverhill, 2013 NBQB 69, 401 N.B.R. (2d) 155). Of course, all of this is consistent withMoge v. Moge, (SCC), [1992] 3 S.C.R. 813, [1992] S.C.J. No. 107 (QL) and this Court’s ruling in Ross v. Ross (1995),(NB CA), 168 N.B.R. (2d) 147, [1995] N.B.J. No. 463 (C.A.) (QL) (per Bastarache J.A., as he then was), cited withapproval in Bracklow v. Bracklow (SCC), [1999] 1 S.C.R. 420, [1999] S.C.J.

No. 14 (QL), at para. 36. [49] Above all, LeMoine firmly establishes that spousal support cannot be varied simply because theincome differential of the parties has changed since the time of the original support order. Hence, there is no legal requirement that theratio which resulted from the original order be maintained. On the facts, the Court held Mr. LeMoine had not met the onus of showingthat a variation was required to maintain an equitable sharing. This was true even though his yearly income fell from $40,000 to $29,000.Moreover, it was held Mrs.

LeMoine was entitled to maintain a reasonable standard of living. With support payments of $600 per monthand employment income, her total income was $24,000. [Note: Both spouses ended up with approximately the same annual income.] [50] While LeMoine provides one analytical framework for determining post-retirement spousalsupport, it is not the only one. Reference is made in Hoar v. Toner to two other frameworks and the relevant jurisprudence.

Bothframeworks look at the reasonableness of the decision to retire, even though it is found that the decision to retire is not motivated by adesire to frustrate the payment of spousal support. [51] The first of the two frameworks is set out in Francis v. Logan, 2008 BCSC 1028, [2008] B.C.J.No. 1455 (QL). Therein, the husband elected to retire, at age 63, for personal reasons. Consequently, his annual income dropped from$100,000 to $27,000.

As the husband’s decision to take early retirement was not dictated by health or economic exigencies, but ratherpersonal preferences, the drop in income was found not to constitute a material change of circumstances. Hence, the original spousalsupport order remained in place without consideration of any other issue. In brief, Francis stands for the bald proposition that a voluntarydecision to elect early retirement does not qualify as a material change in circumstances. However, the reasoning in Francis isproblematic.

It leaves the impression that a former spouse can be legally pressed into working past age 65 to honour a support obligationbased on pre-retirement income. The notion is that former spouses who are 65 years of age or older will continue to pay support at thepre-retirement level unless they establish that the decision to retire was reasonable. This may explain why the decision has attracted fewfollowers.

While it is obvious that I am troubled by the precedential scope of Francis, I am equally troubled by a case in which a payorspouse has voluntarily reduced his income by 75% and yet gives no apparent explanation as to how the payor will cope with thediminution in income (see discussion infra). [52] The second additional framework for assessing post-retirement spousal support is articulated inBullock v. Bullock, (ON SC), [2004] O.J. No. 909 (Ont. Sup. Ct.) (QL), a case which Mrs. Vaughan relied on in thecourt below and which the trial judge found persuasive.

The framework adopted in Bullock represents an implicit rejection of the oneoutlined in Francis. In Bullock, the court was prepared to accept that a substantial decrease in income, arising from a decision to retireearly, qualifies as a material change in circumstances. However, in those cases where the decision to retire early is prompted by personalconsiderations, the court is entitled to impute income to the retiree on the basis he is “voluntarily underemployed”. [53] The facts of Bullock are somewhat similar to those in Francis.

Upon retirement at age 62, Mr.Bullock’s annual income from his business dropped from $120,000 to $47,000. At that time he was paying spousal support of $2,500 amonth. While the judge did not fault Mr. Bullock for his decision to retire “early”, because of the demands flowing from self-employment, the judge found that Mr. Bullock was still capable of engaging in work as a consultant or as an employee. The judge citedseveral cases in support of that holding while declining “to follow” a decision of the Saskatchewan Court of Appeal to the extent it“reaches a different conclusion” (para. 13) (see Scory v.

Scory, [1999] S.J. No. 644 (C.A.) (QL)).

[ 54 ] There are two other aspects of Bullock that cannot be overlooked. First, the judge declined to impute income to Mr. Bullock in a fix amount. Instead, the judge declared that Mr. Bullock had the capacity to earn at least $120,000 per annum and, accordingly, he was more than capable of continuing to pay spousal support at the rate of $2,500 per month. [Note: Same result as in Francis : retiree pays spousal support at pre-retirement rate.] [ 55 ] The second aspect of Bullock worthy of note is that the judge “declined” to put a “stop date” on Mr.

Bullock’s obligation to pay support, as he had failed to ask for such relief. The judge goes on to state there is no evidence as to when the parties expected Mr. Bullock to retire. Finally, the judge holds that Mr. Bullock must pay support until such time as he no longer has the capacity to earn sufficient income to cover the cost of the support obligation. Of course, this finding runs contrary to the general principle that a supporting spouse cannot be required to continue working.

It follows that Bullock is inconsistent with the law of this Province. [ 56 ] The understanding that voluntary and early retirement can result in the imputation of income to the party paying spousal support is incompatible with this Court’s holding in LeMoine . However, it is apparent that the option of imputing income to those who retire early for personal reasons has gained hold in the jurisprudence of provinces such as British Columbia: see Szczerbaniwicz v. Szczerbaniwicz , 2010 BCSC 421 , 2010 B.C.J. No. 562 (QL) and Gajdzik v. Gajdzik , 2008 BCSC 160 , [2008] B.C.J.

No. 206 (QL). [ 57 ] The trial judge in this case imputed income to both Mr. and Mrs. Vaughan should Mr. Vaughan elect to retire ($40,000 to Mr. Vaughan and $6,000 to Mrs. Vaughan). However, there is no evidential record to support the imputation of either amount. It is one matter to impute income to a spouse who refuses to work or is acting for the singular purpose of frustrating the other spouse’s ability to receive support. It is quite another to impute income solely on the basis of judicial intuition or abstract considerations of fairness.

For example, in the present case the trial judge imputed yearly income of $6,000 to Mrs. Vaughan on the following grounds: “As stated earlier, the court is satisfied that given the circumstances concerning Mrs. Vaughan, her age, absence from the workforce, lack of experience and health conditions one cannot expect her to earn anything more than a very minimal amount” (para. 179). Similarly, there was no evidential foundation for imputing $40,000 of income to Mr.

Vaughan. [ 58 ] To the extent that LeMoine remains the law of this Province, it can be fairly asked whether that legal framework is flawed to the extent it fails to take into consideration the reasonableness of the decision to retire. What of the situation where a spouse in the military elects to “retire” at age 42 and returns to university, as was the case in Beaudoin v. MacDonald , 2004 NBQB 56 , [2004] N.B.J. No. 43 (QL). While Mr.

Beaudoin’s income went from $51,000 to $16,000, his application to vary his support obligation (fixed at $600 per month) was rejected even though his former spouse was presently earning $21,000 from her employment. The motion judge concluded the retiree had failed to establish that continuing to pay support payments at the present level imposed on him an inequitable sharing of the benefits and disadvantages of the marriage and its breakdown. The underlying facts of that case fully support that conclusion. At the same time, I find it difficult to place this case in the “retirement” category.

The appropriate category is “career change”. [ 59 ] While most of the cases discussed in these reasons involve persons who elected to retire somewhere between the ages of 60 and 65, there is a cluster of cases that fall within the “Freedom 55” category. LeMoine is one such case, as is Hoar v. Toner. The latter involved a spouse who, five years after his divorce, elected to retire at age 55. Although Mr. Hoar could have worked till 65, he decided to retire early after working at the same pulp and paper mill for over 35 years.

Consequently, his yearly income went from $148,000 to $55,000, which generated an application to reduce the monthly support obligation, earlier fixed at $1,400. At the time of Mr. Hoar’s retirement, his former spouse’s annual income, including spousal support, was $40,000. Applying LeMoine , the judge reduced the support obligation to $1,050.

In reaching that determination, the judge looked at each spouse’s monthly budget and concluded that the downward adjustment from the present support level would result in a monthly surplus to the husband of $909 and to the wife of $1,200. [ 60 ] Looked at holistically, the results in both LeMoine and Hoar v. Toner are consistent. Both were preoccupied with ensuring that both former spouses shared equitably in the benefits and disadvantages of the marriage and its breakdown. This was accomplished by looking at income streams and the financial needs of each party. In my view, the option of imputing income to Mr.

LeMoine or Mr. Hoar would not have advanced the interests of the parties. Equity will never be achieved if judges arbitrarily impute income to one or both parties. On the other hand, perhaps it is time for this Court to revisit the entire issue of post-retirement spousal support. It has been over 15 years since LeMoine was decided, and there is now a substantial body of jurisprudence that warrants further reflection. [ 61 ] Against the above background, I am left to consider whether the trial judge erred in making an advance ruling with respect to Mr.

Vaughan’s pending decision to elect so-called early retirement at age 62. Correlatively, it is necessary to decide whether the trial judge erred in imputing income to the parties, thereby looking at the reasonableness of Mr. Vaughan’s decision to retire early. The answer to the corollary question is outlined above. But, I am also of the view that the trial judge erred in making an advance ruling with respect to post-retirement spousal support. The error stems from the failure of Mr. Vaughan to meet an

evidential burden. He did not file with the court any sworn financial statements that clearly delineate his post-retirement income and reasonable expenses (existing or projected). The only documents presented to the trial judge were the financial statements submitted in regard to the interim order for support. In those documents, Mr. Vaughan declares an annual income of $162,000 which, in turn, provides for monthly revenue of $13,500 with projected monthly expenses of $14,500. That document is dated November 2010. Two years later, Mr.

Vaughan seeks a final support order based on his pending decision to retire early. [ 62 ] From the record on appeal, it is apparent that Mr. Vaughan’s annual income will fall to somewhere around $40,000 (plus CPP) and yet he offers no evidence as to how he will cope with monthly expenses that two years earlier were projected at over $14,000 per month. Quite properly, counsel for Mrs. Vaughan asked Mr. Vaughan to explain how he intended to adjust his standard of living such that he could afford to live on less than 30% of what he was presently earning. Mr.

Vaughan’s replies to the line of questioning are at best unsatisfactory and, at worst, evasive. Either he failed to carefully consider the financial implications of retirement or he was totally indifferent to them. In either case, his request for an advance ruling should have been rejected. In the circumstances, it was proper for Mrs. Vaughan to persist with the argument that the decision to retire was motivated by a desire to bring Mr.

Vaughan’s support obligation to an end without regard to any of the financial realities surrounding his decision to retire. [ 63 ] For these reasons, I would dismiss the appeal in the manner outlined in my colleague’s reasons.