Boston v. Boston,  2 S.C.R. 413, 2001 SCC 43
Willis Barclay Frederick Boston Appellant
Shirley Isobel Boston Respondent
Women’s Legal Education and Action Fund Intervener
Indexed as: Boston v. Boston
Neutral citation: 2001 SCC 43.
File No.: 27682.
2001: January 17; 2001: July 12.
Present: McLachlin C.J. and L’Heureux‑Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel JJ.
on appeal from the court of appeal for ontario
Family law -- Spousal support -- Variation on retirement -- Double recovery -- Pension income -- Whether retired payor spouse entitled to seek reduction of support payments to former spouse on basis that pension being received was previously considered in equalization of matrimonial property -- Whether spouse who received assets in exchange for capitalized value of other spouse’s pension has obligation to invest those assets in order to produce income – If assets not invested, whether court will impute income to payee spouse, based on what those assets could produce if invested, thereby reducing spousal support obligation.
The parties separated in 1991 after a 36-year marriage in which the wife was a homemaker with primary responsibility for raising their seven children, while the husband pursued his career in education and financially supported the family. In 1994, the husband and wife consented to a judgment dividing their accumulated assets. The husband received approximately $385,000 in assets, of which $333,329 was attributable to the value of his pension. The wife received the matrimonial home, surrounding lands, household contents and RRSPs as her share of the assets, amounting to approximately $370,000. In addition, the husband agreed to pay the wife $3,200 per month in spousal support, indexed annually to the cost of living. At the time of judgment, the husband was earning $115,476 as Director of Education, while the wife had no income from employment. The husband, who had remarried, retired in 1997, and his total pension income thereafter was $8,000 per month. The larger portion of the pension, $5,300 per month, came from assets he retained on equalization, while the smaller portion, $2,300 per month, was earned since separation and not part of the equalization of net family property. The balance of $431 per month the husband receives as a CPP benefit. The wife invested her assets prudently and they are now worth over $493,000. By contrast, the husband’s capital assets exceed his debts by $7,000. In 1998, the husband applied to reduce the amount of spousal support provided for in the consent judgment, claiming that his retirement, reduced income, and systematic depletion of his pension as capital amounted to a material change in circumstances. The husband submitted that, considering the earlier division of assets, the wife had an obligation to contribute to her own support and only the unequalized portion of his pension should be considered when determining support on a variation application. The motions judge accepted the husband’s position, and reduced the amount of monthly support from $3,433.12, indexed, to $950, unindexed. The Court of Appeal raised this amount to $2,000 per month, indexed to the cost of living. The husband appealed from this decision.
Held (L’Heureux-Dubé and LeBel JJ. dissenting): The appeal should be allowed. The motions judge’s award should be reinstated, with the further order that the monthly amount be indexed and arrears, if any, of spousal support paid to the wife.
Per McLachlin C.J. and Gonthier, Iacobucci, Major, Bastarache, Binnie and Arbour JJ.: The retired payor spouse was entitled in this case to reduce his support obligation to his former wife on the basis that the pension now being received was previously considered in the distribution of matrimonial property.
A pension is “property” under the Ontario Family Law Act and must be included in the equalization of net family property. Where, as here, a pension is divided by the lump sum method under a compensatory spousal support order or agreement, the pension-holding spouse must transfer real assets to the payee spouse in order to equalize matrimonial property. The payee spouse must use the assets received on equalization to create a “pension” to provide for her future support based upon the principle that the payee spouse should attempt to generate economic self-sufficiency as far as it is reasonable. For spouses who remained at home during a long marriage, self-sufficiency will not be practicable, but where the payee spouse receives assets on equalization in exchange for a part of her former spouse’s pension entitlement, she must use those assets in a reasonable attempt to generate income at least by the time the pension starts to pay out. Failure to make a reasonable attempt to produce an income from equalized assets may result in the imputation of income to the payee spouse, based upon actuarial evidence. The obligation on the payee spouse to generate income from her assets would be satisfied by investing in a capital depleting income fund which would provide a regular annual income.
The support payments should provide a level of income sufficient to maintain a lifestyle that is comparable to that enjoyed during the marriage. Here, the spousal support was mainly compensatory, the purpose of which is to relieve economic hardship suffered by reason of the marriage or its breakdown. When spousal support plays a compensatory role on marriage breakdown, it may be unreasonable to expect the payee spouse to generate investment income from the matrimonial home, as the ability to remain in it usually assists the payee spouse and children to maintain their previous lifestyle. When support is based on need, different considerations apply, so that where the value of the family home has become disproportionate to the means of the parties, equity may require that it be sold and replaced appropriately.
There is no reason per se that spousal support cannot continue past the retirement date of the pension-holding spouse, but need, ability to pay and double recovery must all be considered. It is generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset and then again as a source of income, particularly where the payee spouse receives capital assets which she uses to grow her estate. To avoid double recovery, the court should, where practicable, focus on the portion of the payor’s income and assets which have not been a part of the equalization division when the payee spouse’s continuing need for support is shown. This would include the portion of the payor’s pension earned after separation and not subject to equalization. Double recovery cannot always be avoided, and a pension previously divided can also be viewed as a maintenance asset, where the payor has the ability to pay, where the payee has made a reasonable effort to use equalized assets in an income-producing way and despite this, economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based upon need as opposed to compensation.
In the case at bar, the amount of support should be reduced based on the material change in circumstances and the ability of the wife to reasonably produce an income from her investments. The motions judge’s award of $950 per month was carefully assessed by her and deference must be paid to that decision. The motions judge considered the relevant factors and properly concluded in this case that the unequalized portion of the husband’s pension was the principal consideration in the support to be paid. The Court of Appeal erred in determining that the amount of support awarded was outside the realm of reasonableness, overlooking the obligation to fairly avoid double recovery. The wife would not suffer hardship if double recovery were not permitted, based on the asset position of both parties at the time of the application to vary.
Per L’Heureux-Dubé and LeBel JJ. (dissenting): The Court of Appeal judgment should be upheld. The case is a straightforward matter of assessment of the needs and means of the former spouses in the context of the dynamic relationship that arises from the marriage and its breakdown. The law of support must address a wide spectrum of life experiences. Although the courts have identified models of marriage, none of the classifications can account for all situations. The categories must not be closed and inflexible, and none of the legislative purposes behind spousal support should take precedence over the others. The three bases for support are contract/consent, compensation for economic hardship, and a non-compensatory model related to the concrete needs of the spouses. In this case, support must rest on an assessment of the means and needs of the parties, and the need to compensate the wife, who stayed at home, and gave up economic independence. The first objective is to ensure that the dependent spouse has enough to live on, taking into consideration the past income and living standards of the parties.
The view that the income stream arising out of an already equalized pension should be insulated from contribution to support, because this amounts to double dipping, is rejected. It is mistaken to limit the availability of the pension asset for spousal support and to view the pension as a finally allocated asset, ignoring that it operates primarily as a source of income. The Ontario Family Law Act does not alter the complex factors and objectives governing spousal support before or after the retirement of the debtor spouse. Spousal support continuing past the payor’s retirement does not give the dependent spouse a double benefit of the pension. Even though the income stream belongs to the husband, this does not mean it cannot be accessed in order to redress the economic disadvantages of the wife that continue to flow from the marriage or its breakdown. All income streams are relevant in the assessment of means and needs and of the proper level of support considering the lifestyle and the living experience of the couple.
Upon the husband’s retirement, it was fair in the process of support determination for the courts to consider the assets of both parties and the income that could be generated from them if they were used efficiently. The husband had kept his entire pension rights with the financial and personal security that flows from them, while his wife, by reason of her moderate lifestyle, had made safe investments and had a substantial asset base under her control. The Court of Appeal imputed an income from the assets controlled by the wife but, nevertheless, given the circumstances of the parties, held that the variation of support by the motions judge was unreasonable and raised the amount of support to $2,000 per month. The Court of Appeal judgment acknowledges the lack of independence flowing from the wife’s married life and its breakdown, factoring in her former lifestyle, living standards and her need to acquire financial security. The husband, with a pension of about $100,000 per year, retains a fairly comfortable lifestyle. Under these circumstances, the wife is entitled to a reasonable standard of living without having to engage in a massive program of liquidation of assets.
An analysis based on the nature of the assets may skew the proper approach to support. Here, the needs were established, after making allowance for the efficient use of assets under the wife’s control. These needs should be evaluated reasonably, given the standard of living of the parties during the marriage and the imperative of long-term financial protection.
By Major J.
Applied: Hickey v. Hickey,  2 S.C.R. 518; referred to: Best v. Best,  2 S.C.R. 868; Shadbolt v. Shadbolt (1997), 32 R.F.L. (4th) 253; Veres v. Veres (1987), 9 R.F.L. (3d) 447; Butt v. Butt (1989), 22 R.F.L. (3d) 415; Linton v. Linton (1990), 1 O.R. (3d) 1; Strang v. Strang,  2 S.C.R. 112; Flett v. Flett (1992), 43 R.F.L. (3d) 24; Rivers v. Rivers (1993), 47 R.F.L. (3d) 90; Grainger v. Grainger (1992), 39 R.F.L. (3d) 101; Nantais v. Nantais (1995), 16 R.F.L. (4th) 201; Rintjema v. Rintjema,  O.J. No. 4717 (QL); Hutchison v. Hutchison (1998), 38 R.F.L. (4th) 377; Campbell v. Campbell (1998), 40 R.F.L. (4th) 462.
By LeBel J. (dissenting)
Bracklow v. Bracklow,  1 S.C.R. 420; LeMoine v. LeMoine (1997), 185 N.B.R. (2d) 173; Nantais v. Nantais (1995), 16 R.F.L. (4th) 201; Moge v. Moge,  3 S.C.R. 813; Droit de la famille--1688,  R.J.Q. 2797; Ross v. Ross (1995), 168 N.B.R. (2d) 147; Iurincic v. Iurincic (1998), 40 R.F.L. (4th) 258; Strang v. Strang,  2 S.C.R. 112; Shadbolt v. Shadbolt (1997), 32 R.F.L. (4th) 253; Dolman v. Dolman (1998), 38 R.F.L. (4th) 362; Carter v. Carter (1998), 42 R.F.L. (4th) 314; Linton v. Linton (1990), 1 O.R. (3d) 1.
Statutes and Regulations Cited
Civil Code of Québec, S.Q. 1991, c. 64, art. 426.
Family Law Act, R.S.O. 1990, c. F.3, ss. 4(1) “property”, 5(1), (6), 7, 9, 33, 37.
Pension Benefits Act, R.S.O. 1990, c. P.8.
Goubau, Dominique. “The Clear and Clouded World of Spousal Support in Canada” (2000-2001), 18 C.F.L.Q. 333.
Hogg, Peter W., and Joanne E. Magee. Principles of Canadian Income Tax Law, 2nd ed. Scarborough, Ont.: Carswell, 1997.
Hovius, Berend, and Timothy G. Youdan. The Law of Family Property. Scarborough, Ont.: Carswell, 1991.
McLeod, James G. Annotation to Shabdolt v. Shadbolt (1997), 32 R.F.L. (4th) 253.
Payne, Julien W., and Marilyn A. Payne. Canadian Family Law. Toronto: Irwin Law, 2001.
Walker, Tom. “Double Dipping: Can a Pension Be Both Property and Income?”, in Best of Money & Family Law, vol. 9, No. 12, 1994.
APPEAL from a judgment of the Ontario Court of Appeal (1999), 126 O.A.C. 296,  O.J. No. 4140 (QL), allowing the respondent’s appeal from a judgment of the Ontario Court (General Division) reducing the amount of spousal support. Appeal allowed, L’Heureux-Dubé and LeBel JJ. dissenting.
J. Yvonne Pelley and Susan Tindal, for the appellant.
Maurice J. Neirinck, for the respondent.
Nicole Tellier and Joanna Radbord, for the intervener.
The judgment of McLachlin C.J. and Gonthier, Iacobucci, Major, Bastarache, Binnie and Arbour JJ. was delivered by
1 Major J. – “Double recovery” or “double dipping” are terms that have come to describe the situation where, after an equal division of assets on marriage breakdown, one spouse claims continued support from the previously divided or equalized assets of the other spouse. This usually arises, as here, when a pension is involved. In place of the common designations of “appellant” and “respondent”, the use of the terms “husband” and “wife” from time to time in these reasons might add to the clarity of what follows.
2 Pension rights give rise to special difficulties in questions of spousal support. Under the Ontario Family Law Act, R.S.O. 1990, c. F.3, a pension right must be valued as a capital asset that is an entitlement to a future income stream. After retirement, the pension changes from a capital asset into an income asset. When the pension is in pay, in a sense, the pension asset is being liquidated.
3 When a pension changes from an asset into income the “double recovery” difficulty can arise, usually in the following way. On marriage dissolution, the parties equalize the matrimonial assets. The pension-holding spouse (the husband in this appeal) must include the future right to his pension as part of his net family property. For the husband to retain his pension, the payee spouse (the wife in this appeal) must get other assets of the same value, in order to equalize their net family property. While the husband is still employed, he may be obliged to make spousal support payments to the wife. When he retires, however, and his pension comes into pay, the wife is said to be making a double recovery if she continues to receive spousal support from the husband’s pension income, as she received assets equal to the capital value of the pension at the time of settlement. If support payments from the pension are maintained, she is collecting twice from the same source.
4 Is the husband therefore entitled to reduce the support obligation to his former wife when he retires on the basis that his pension was previously part of the agreed division of the matrimonial property?
5 In this appeal, the appellant husband sought to reduce the amount of spousal support provided to the wife because he had retired, his pension was in pay and his income was reduced. He also argued that his ability to pay support should not be determined using his pension income, as this was the same pension that was previously divided with the wife on the equalization of net family property.
6 The motions judge reduced the amount of spousal support from $3,433.12 per month (indexed annually to the cost of living) to $950 per month (not indexed). The Court of Appeal varied this amount to $2,000 per month (indexed). The husband appealed to reinstate the spousal support award of the motions judge. For the reasons outlined, this appeal is allowed and the $950 per month award of the motions judge reinstated with indexing and arrears, if any, added.
7 Willis Boston and Shirley Boston separated in 1991 after a 36-year marriage. At the time of separation, the husband was employed as a Director of Education. The wife was a homemaker throughout the marriage and was never employed outside the home. She took care of their seven children and the household and, to that significant extent, assisted with the husband’s career.
8 On October 21, 1994 the parties consented to a judgment which settled property and support matters. The total of the combined assets, while not precise, was approximately $750,000. On equalization, the husband retained his Ontario Teachers’ pension, which was valued at $333,329 after tax on the valuation date. He also received one half of the proceeds of the sale of the family cottage of $23,694 as well as items from a farming business, some furniture, personal property and a 1991 Oldsmobile totalling about $65,000. As well, the husband assumed payments of all debts arising out of the marriage amounting to approximately $65,000.
9 The wife received the mortgage-free matrimonial home on 168 acres of land and its contents, all valued at $213,000. She received one half of the proceeds of sale of the family cottage of $23,694 and a 1992 Honda worth $2,000. She also received payments of $18,000 and $25,000 that were transferred by the husband in RRSPs, in partial discharge of the equalization payments owing to her.
10 Three parcels of vacant lands were sold to the parties’ son in trust for $68,500 of which the wife received $64,000. She collected half of the proceeds of sale amounting to $34,250 and also received $24,000 from the husband as another installment to her equalization payment which was deducted from his half of the proceeds of sale of the vacant lands. The amount of $6,100 was also deducted from the husband’s half of the proceeds and paid to the wife by way of arrears for spousal support. The husband retained approximately $4,000 in total from the proceeds of sale of the vacant lands.
11 Four remaining vacant lots were sold after the hearing of the motion in March 1999 but before the appeal in November 1999. The parties sold one parcel to their daughter and divided the proceeds of $16,000 equally. The other three lots were transferred to the wife, who sold to a third party and paid the husband one half of the proceeds amounting to $16,000.
12 In summary and in general terms, the consent judgment provided an almost equal division of matrimonial assets. The husband received net assets of approximately $385,000 ($333,329 being the capitalized value of his pension) and the wife received assets of approximately $370,000.
13 At the time of the consent judgment in 1994, the husband’s income from employment was approximately $115,476 per year as a Director of Education. He agreed to pay the wife $3,200 per month in spousal support, indexed annually to the cost of living.
14 The parties divorced in 1995 and the husband remarried in 1996. He resides with his new wife, who works part time as a nurse, and with her two sons from a previous marriage.
15 On January 31, 1997 the husband retired but continued to work for the School Board as a consultant until the end of December 1997. He began receiving his indexed pension from the Ontario Teachers’ Pension Plan Board of almost $7,600 per month in February 1997 and his Canadian Pension Plan (CPP) benefits of around $431 per month in August 1998. His total pension income at the hearing date was approximately $8,000 per month.
16 Since the consent judgment the wife has not earned any employment income. However, since that time she has invested her assets prudently and they are now worth over $493,000. She has no debts. By contrast, the husband’s capital assets exceed his debts by $7,000.
17 In January 1998 the husband applied to reduce the amount of spousal support provided for in the consent judgment of October 1994. He claimed that his retirement, his reduced income and the systematic depletion of his pension as capital amounted to a material change in circumstances.
18 The husband’s Ontario Teacher’s pension had two components. The larger portion of the pension, $5,300 per month, came from the asset he retained on equalization of the matrimonial assets and, according to the husband, should not be considered in assessing spousal support. The second component of the pension, $2,300 per month, was earned since separation and was not part of the equalization of assets. The husband’s submission was that, considering the earlier division of assets, the wife had an obligation to contribute to her own support and only the unequalized portion of his pension should be considered when determining support on a change in circumstances.
II. Judicial History
A. Ontario Court (General Division), Family Court -- Order of Robertson J., March 16, 1999
19 The motions judge reduced the amount of support from $3,433.12 per month (indexed annually to the cost of living) to $950 per month (not indexed).
20 She found jurisdiction to vary the spousal support order in s. 37 of the Family Law Act which provides, in part, that the court may vary an order where it is satisfied that there has been a material change in circumstances. The motions judge found two material changes: “the husband has experienced a 13% overall income decrease and the bulk of his income is derived from the liquidation of an asset”. According to Robertson J., without variation, the wife would receive some double recovery as she had already received 50 percent of the matrimonial assets.
21 The motions judge considered the length of the marriage, the roles assumed by the parties during the marriage, and the fact that the wife had wisely invested her share of the matrimonial assets. She noted that the wife had not earned an income from employment but had undertaken “impressive community positions of responsibility” including chairing a hospital board during a period of restructure. She commented that:
[The wife’s] lawyer expects me to assume she cannot find paid employment or that she need not look. . . . A lack of paid employment does not equate to a lack of skill. There is no evidence that her ability to secure paid employment has been addressed.
Robertson J. concluded that this was a “small factor” which she addressed only because her failure to do so “may undermine the value of [the wife’s] role during the marriage”.
22 Robertson J. then reviewed the parties’ financial positions. The husband had, in addition to his pension of approximately $8,000 per month, assets of $7,000. The wife had assets of $493,486. The husband earned some pension credits since separation resulting in a higher pension value and these credits had not been equalized. The motions judge considered that this unequalized portion of the pension was a factor in the amount of continuing support to be paid. As previously noted, the unequalized portion of the pension amounted to $2,300 of the $7,600 per month of the Ontario Teachers’ pension.
23 The motions judge concluded that the wife had an obligation to use her assets in an income-producing way. The husband, by contrast, was “asset poor” because his pension (Ontario Teachers’ pension and CPP benefits) was his only source of income. He had no ability to accumulate assets. She found that:
The law discourages double recovery. Without relief, the husband would be paying twice. He has no ability to accumulate assets presently. The wife’s obligation to attempt self-sufficiency extends beyond employment income. On these facts, she has an obligation to look towards her assets in an income producing way. The husband has done this. She does not have to sell her home and the husband does not seek this. The reality is she cannot continue to save her money and live on the liquidation of the husband’s main asset from the marriage, namely his pension. [Emphasis added.]
24 After finding that “[w]ithout relief, the result will be that the wife accumulates an estate and the husband liquidates his estate”, Robertson J. concluded that there was a significant material change in circumstances sufficient to reduce the support order to $950 per month, not indexed. Any arrears were rescinded. She also provided for a review of the quantum of support when the wife reached 65 in 2002.
B. Ontario Court of Appeal (Catzman, Labrosse and Moldaver JJ.A.) (1999), 126 O.A.C. 296
25 The Court of Appeal set aside the motions judge’s order, varied the amount of spousal support to $2,000 per month, indexed, and ordered the payment of arrears.
26 In the Court of Appeal, the parties conceded that there was a material change in circumstances. The court found that there was a need on the part of the wife for support while the husband had the ability to pay it.
27 The court examined the total assets of the wife that could be liquidated and estimated that she could earn a yearly investment income of approximately $15,000 plus CPP benefits. The court found that the motions judge erred in factoring into her decision an ability on the part of the wife to earn employment income. In addition, the amount of variation allowed by the motions judge was “outside the realm of reasonableness” (para. 10).
28 1. Is a retired payor spouse entitled to seek to reduce the support obligation to a former spouse on the basis that the pension now being received was previously considered in the distribution of matrimonial property?
2. Does the spouse who received assets in exchange for a share of the capitalized value of the other spouse’s pension have an obligation to invest those assets in order to produce an income? If those assets are not invested to produce an income, should the court impute to the spouse an income based on what those assets could produce if invested and thereby reduce the spousal support obligation?
A. The Nature of Pensions
29 On marriage breakdown, pensions present special difficulties in determining spousal support. In case of long-term marriages, one spouse often gives up a career in the workforce to take care of the household and/or the children and thereby assist with the other spouse’s career. As a result, the non-employed spouse is dependent upon the employed spouse for income on which to live. Obviously, unlike the employed spouse, the non-employed spouse has no pension. On separation or divorce, within the concept of a compensatory order, one issue is how to fairly distribute the value of the employed spouse’s pension.
30 The nature of a “pension” complicates matters. A pension right arises as an asset or a contingent bundle of rights to a future income stream. After retirement, when the pension produces an income, the pension asset is, in a sense, being liquidated. This has caused debate about whether a pension is property (a capital asset) or income (a maintenance asset), or a combination of both.
31 Pension rights are sparsely dealt with in Part I of the Family Law Act. In s. 4(1) “property” is defined as follows:
“property” means any interest, present or future, vested or contingent, in real or personal property and includes,
. . .
(c) in the case of a spouse’s rights under a pension plan that have vested, the spouse’s interest in the plan including contributions made by other persons.
32 As property, a pension must be included in the equalization calculations and valued along with the spouses’ other net family property. A pension entitlement involves a determination of the present value of a future income stream. Thus, the valuation of a pension is a matter of educated guesswork, undertaken by actuaries.
33 Once a pension is valued, there are different ways in which the equalization of net family properties can be implemented. With respect to pensions, the two methods are the “lump sum” and the “if and when” method (see Best v. Best,  2 S.C.R. 868). The issues in the present case arise when a pension is equalized by lump sum, the method chosen by the parties in this appeal.
B. The Double Recovery Problem
34 The term “double recovery” is used to describe the situation where a pension, once equalized as property, is also treated as income from which the pension-holding spouse (here the husband) must make spousal support payments. Expressed another way, upon marriage dissolution the payee spouse (here the wife) receives assets and an equalization payment that take into account the capital value of the husband’s future pension income. If she later shares in the pension income as spousal support when the pension is in pay after the husband has retired, the wife can be said to be recovering twice from the pension: first at the time of the equalization of assets and again as support from the pension income.
35 Double recovery appears inherently unfair in cases where, to a large extent, the division or equalization of assets has addressed the compensation required. In equalizing the spouses’ net family properties, the husband or wife as the case may be must include the future right to the pension income as “property” on his or her side of the ledger. This means that the pension-holder must, on separation or divorce, transfer real assets of equal value to the pension to the other spouse in order to retain the pension under the property accounting.
36 The pension-holder cannot divide the actual pension as it cannot be accessed until retirement. The pension entitlement cannot be sold or transferred. The apparent unfairness arises when the other spouse receives support payments from the pension income after the pension-holder retires. Professor James G. McLeod stated in his annotation to Shadbolt v. Shadbolt (1997), 32 R.F.L. (4th) 253, at p. 253: “Put another way, [the pension-holding] spouse receives nothing in return for the real assets transferred to his or her partner in order to retain his or her pension under the property accounting.”
37 The double recovery issue here arises if the wife is permitted to seek further support from her former husband where the ability to pay support is determined by including the same pension, the value of which was previously used to determine the value of the husband’s net family property, and to calculate the equalization payment owing to the wife. It is this issue which remains unsettled.
C. Review of Early Case Law
38 The first approach to double recovery was rigid. In making spousal support orders on marriage breakdown, two Ontario trial courts found that spousal support should cease entirely when the pension-holding spouse retires so that support payments would not continue from the already-equalized pension asset (see Veres v. Veres (1987), 9 R.F.L. (3d) 447 (Ont. H.C.), and Butt v. Butt (1989), 22 R.F.L. (3d) 415 (Ont. H.C.)).
39 Subsequent decisions provided that spousal support could continue beyond retirement. Neither Linton v. Linton (1990), 1 O.R. (3d) 1 (C.A.), nor Strang v. Strang,  2 S.C.R. 112, are considered to be true “double recovery” cases as the pension comprised only a small part of the total assets to be divided or equalized on marriage dissolution. The court in each case stated that even if there was some overlap between the inclusion of a small portion of the pension in the matrimonial property division and using its income as a source for maintenance payments, the overlap was so minimal that it should not be considered.
40 Other decisions went further, providing that a pension should be one of the factors that a court could consider in determining a spouse’s ability to pay (see Flett v. Flett (1992), 43 R.F.L. (3d) 24 (Ont. U.F.C.), and Rivers v. Rivers (1993), 47 R.F.L. (3d) 90 (Ont. Ct. (Gen. Div.))). In Grainger v. Grainger (1992), 39 R.F.L. (3d) 101 (Sask. C.A.), the court found at para. 8 that:
The pension asset, even though it is a right to an income stream, should not, because of its uniqueness, be excluded from being considered as one of the factors in determining an ability to pay. If the asset was a business, the income from the business could be considered in assessing the business-owning spouse’s ability to pay maintenance.
D. Trends in Recent Case Law
41 The issue of whether a retired spouse is entitled to seek to reduce his or her support obligation to the former spouse on the basis that the pension was previously considered in the distribution of property arose squarely in Nantais v. Nantais (1995), 16 R.F.L. (4th) 201 (Ont. Ct. (Gen. Div.)), per Brockenshire J. The court found no difficulty with the continuation of support beyond retirement. Brockenshire J. stated at para. 32:
In short, I do not look upon the pension income now being received as the realization of an asset, but rather as a contractual replacement of an income. This income, like the wages received before retirement, is fully available for the support of a needy former spouse.
In Rintjema v. Rintjema,  O.J. No. 4717 (QL) (Gen. Div.), the court stated that it had “considerable sympathy for the view [that] there should not be ‘double dipping’” (para. 9). However, the court felt bound by Nantais to consider the capital that the payee received on equalization as a factor in her support maintenance.
42 The problem with the Nantais decision was identified in the Ontario trial court decision Shadbolt v. Shadbolt (1997), 32 R.F.L. (4th) 253 (Ont. Ct. (Gen. Div.)), per Czutrin J., at para. 35:
With all due respect to Brockenshire J. [in Nantais] I do not share his view that pension is only a replacement of income and not a realization of an asset. If that were the case then why should it be considered as part of the equalization payment calculation?
43 Czutrin J. offered a reasonable solution to the problem of double recovery. He enunciated a general rule, a rule which in my opinion should be the starting point for double recovery issues: “The challenge for the court is to determine how to fairly avoid ‘double recovery’” (para. 46 (emphasis added)). Czutrin J. stated that property and support issues are “somewhat intertwined” (para. 48) and that cases recognize the need to take double recovery into consideration in determining support, need and ability to pay.
44 Czutrin J.’s approach has received academic approval. See Professor McLeod’s annotation to Shadbolt, supra, at p. 255:
Czutrin J. applies the logic of the if-and-when division cases to cases where a pension benefit has been divided as capital in the property accounting. Pension income is not simply an income replacement. Rather, pension income represents the realization of a capital asset into an income stream. The pension changes from a capital asset into an income asset. A court deciding support after a payor’s retirement should force a payee to change its pension capital replacement into income in order to fairly compare the parties’ positions. In this way, reasonable deterioration in property will be recognized and one party will not be allowed to retain capital and live off another’s income while the other consumes its capital (the pension).
If a pension is divided on an if-and-when basis, each spouse is required to live off his or her capital, and that capital is converted to income upon the employee’s retirement. Czutrin J. holds that a spouse who receives his or her pension entitlement as real capital under the matrimonial property accounting, he or she must convert the capital to income when the other spouse retires and live off capital, as the other is required to do. As a result, a court can compare the capital available at retirement and the income available from capital at retirement to decide whether a further adjustment is needed to promote inter-spousal fairness.
Czutrin J.’s reasoning and analysis are sound and recognize that pensions are different from other assets. He balances the competing policies and comes up with a solution that treats both spouses fairly. His solution to the double-dipping problem is so obvious that it is surprising that no one has adopted it before. [Emphasis added.]
45 Subsequent case law has applied the reasoning to avoid double recovery in Shadbolt. See Hutchison v. Hutchison (1998), 38 R.F.L. (4th) 377 (Ont. Ct. (Gen. Div.)), and Campbell v. Campbell (1998), 40 R.F.L. (4th) 462 (Ont. Ct. (Gen. Div.)). In Campbell, Mazza J. stated at para. 4 that:
It is clear from both the Shadbolt and Hutchison cases, that the trend of recent cases is away from “double-dipping”, and any determination of support in the future, after equalization, should be restricted to unequalized amounts.
E. Pension Implementation
46 As stated above, a pension is “property” under the Family Law Act and must be included in the equalization of net family properties. The equalization entitlement can be implemented by the “if and when” method or by the lump sum method.
47 An “if and when” implementation may be ordered by the court under s. 9(1)(d) of the Family Law Act. Briefly, an “if and when” implementation means that the pension-holding spouse would pay the other spouse a share of the pension benefits “if and when” he or she received them.
48 There are advantages and disadvantages to an “if and when” implementation in cases where the pension has been given a specific value for the purpose of the division of assets. It is advantageous when a major part of the difference in net family properties is attributable to the capitalized value of a pension. The pension-holding spouse cannot use the pension asset to satisfy the equalization burden on marriage dissolution because the pension cannot be accessed until retirement. He or she must use assets other than the pension to equalize the net family property. This could expose the pension-holding spouse to hardship if the pension is his or her main or only asset. The “if and when” scheme alleviates this hardship by carving the equalization payment from the pension itself.
49 A significant disadvantage of the “if and when” method is the requirement that the ex-spouses must continue financial association after separation or divorce. Also, there is the risk of underpayment to the non-pension-holding spouse if the pension-holder dies before the full equalization amount has been paid (see Best, supra, at para. 113).
50 The present case and the cases mentioned above deal with lump sum implementation. With a lump sum implementation, in order to retain his pension, the pension-holding spouse (here the husband) must transfer real assets to the wife to equalize matrimonial property. The wife can use these real assets immediately. The husband cannot use the pension entitlement until retirement.
51 There are accompanying advantages and disadvantages to both parties with implementation by the lump sum method. There is an advantage to the payee spouse (here the wife) by making an immediate provision of assets to address her needs. She need not wait until the payor spouse’s pension matures and the payments commence. There is a disadvantage to the husband who must make an immediate payment in exchange for his pension rights, but cannot use the pension rights to make that payment.
52 Another advantage to the wife is that a lump sum payment is not dependent upon the risks affecting the husband’s pension. The husband must bear the risk that the pension income might be less than the value that was placed on it. This depends on the type of pension, whether it is guaranteed-benefits or otherwise. There is also the risk that the pension is undervalued or broke, although by increased government regulation it is becoming less likely that the pension fund will be insolvent when called upon. The advantage to the husband is that, ideally, he can keep his pension income as provision for when he retires. Also, the lump sum method attempts to place a final resolution on the parties’ economic relationship (see B. Hovius and T. G. Youdan, The Law of Family Property (1991), at pp. 510-14, for a detailed review of lump sum implementation).
53 The issue of how a payor spouse is to settle his equalization obligation would benefit from overdue and much-needed legislative attention (see Best, supra, at para. 2 and 116). The double recovery problem likely would not arise if the pension was divided between the parties on an “if and when” basis; however, various disadvantages to the “if and when” implementation prevent it from providing the final solution to the problem of double recovery. The parties agreed to a lump sum method of implementation so the merits of it compared to the “if and when” method are not relevant in this appeal.
F. Payee Spouse’s Obligation to Use Equalization Assets
54 I agree with Czutrin J.’s reasons in Shadbolt and Professor McLeod’s comments in annotation to that case. When a pension is dealt with by the lump-sum method, the pension-holding spouse (here the husband) must transfer real assets to the payee spouse (here the wife) in order to equalize matrimonial property. The wife can use these real assets immediately. Under a compensatory spousal support order or agreement, the wife has an obligation to use these assets in an income-producing way. She need not dedicate the equalization assets to investment immediately on receiving them; however, she must use them to generate income when the pension-holding spouse retires. The ideal would be if the payee spouse generated sufficient income or savings from her capital assets to equal the payor spouse’s pension income. In any event, the payee spouse must use the assets received on equalization to create a “pension” to provide for her future support.
55 This requirement is based on the principle that, as far as it is reasonable, the payee spouse should attempt to generate economic self-sufficiency. Self-sufficiency is only one factor of many that is weighed. It is obvious that in most cases of long-term marriage, the goal of self-sufficiency is decidedly difficult to attain, particularly for spouses who remained at home during the marriage. Self-sufficiency will often not be practicable largely due to the residual effects of being outside the labour market for a protracted period of time. In addition, there are factors to consider such as age, education and parenting responsibilities. Consequently, it is often unreasonable to expect the payee spouse to earn an income from employment after separation or divorce.
56 However, where the payee spouse receives assets on equalization in exchange for a part of her former spouse’s pension entitlement, she must use those assets in a reasonable attempt to generate income at least by the time the pension starts to pay out. The reason for this requirement is clear. The payee spouse cannot save the assets that she receives upon equalization and choose instead to live on the liquidation of the payor spouse’s pension when he retires. If she were permitted to do so, the payee spouse would accumulate an estate while the payor spouse’s estate is liquidating.
57 Pension income is obviously different from business income or income from an investment. See T. Walker, “Double Dipping: Can a Pension Be Both Property and Income?”, in Best of Money & Family Law, vol. 9, No. 12, 1994, in which the author argues that pensions should not be treated as other assets subject to equalization consideration. When a pension produces income the asset is being liquidated. The same capital that was equalized is being converted into an income stream. By contrast, when a business or investment is producing income, that income can be spent without affecting the asset itself. In fact, the business or asset may continue to increase in value. The value of the business or investment can be equalized, but neither is depleted solely by producing income.
58 The obligation of the payee spouse to generate investment income from the assets that she received on equalization is not an onerous one. It is not predicated upon insensitive standards on how the payee spouse should have managed her finances from the point of separation. Nor does it require investment-savvy decisions, premised upon an extensive knowledge of the marketplace. The obligation on the payee spouse to generate income from her assets would be satisfied by investing in a capital depleting income fund which would provide a regular annual income.
59 When spousal support plays a compensatory role on marriage breakdown, it may be unreasonable to expect the payee spouse to generate investment income from the matrimonial home. As far as is practicable, the support payments should provide a level of income sufficient to maintain a lifestyle that is comparable to that enjoyed during the marriage. The ability to remain in the matrimonial home usually assists the payee spouse and the children in maintaining their previous lifestyle.
60 Each case depends on its own facts. Generally, the payee spouse would not be expected to sell or leave the matrimonial home, particularly if there are dependent children. However, in cases where the support order is based mostly on need as opposed to compensation, different considerations apply. It is not impossible to envisage circumstances where the value of the family home has become disproportionate to the means of the parties so that equity requires that it be sold and replaced appropriately. Such considerations do not arise in this appeal as the support agreement was mainly compensatory.
G. Variation on Retirement
61 The purpose of spousal support in cases such as this is to relieve the economic hardship suffered by reason of the marriage or its breakdown. There is no reason per se that spousal support cannot continue past the date of retirement of the pension-holding spouse. However, several factors must be considered in making that decision. On retirement, the pension-holding spouse may apply to vary the support order if his ability to pay support is compromised (see Linton, supra, at p. 31, and Rivers, supra, at para. 17). The decision of whether to vary support depends on whether the applicant can demonstrate that there has been a material change in circumstances pursuant to s. 37(2) of the Family Law Act.
62 The payee spouse’s need and the payor spouse’s ability to pay are always factors which a court considers when determining spousal support (see s. 33(9) of the Family Law Act). Another issue is the extent, if any, of “double recovery”.
63 How is double recovery fairly avoided? (See Shadbolt, supra, per Czutrin J., at para. 46.) It is generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset and then again as a source of income. This is particularly true where the payee spouse receives capital assets which she then retains to grow her estate. The comments of Walker, supra, at p. 233, bear echoing:
It is well-recognized that a borrower should not be compelled to continue monthly loan payments to the lender if the borrower has previously paid the full amount owing. “Double dipping” is analogous to such a situation and is logically and mathematically indefensible.
64 To avoid double recovery, the court should, where practicable, focus on that portion of the payor’s income and assets that have not been part of the equalization or division of matrimonial assets when the payee spouse’s continuing need for support is shown (see Hutchison, supra, at para. 9). In this appeal, that would include the portion of the pension that was earned following the date of separation and not included in the equalization of net family property.
65 Despite these general rules, double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset. Double recovery may be permitted where the payor spouse has the ability to pay, where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation, which is not the case in this appeal.
H. Imputing Income
66 Finally, if the payee spouse receives assets in exchange for a share of the capitalized value of the other spouse’s pension and she does not invest those assets in an attempt to produce an income, the court should impute an income to the payee spouse based on what those assets could reasonably produce if invested. This should not be based on artificial assumptions but on professional actuarial advice.
I. Application to Case at Bar
67 As outlined in the facts, after his retirement, the husband brought an application to vary the amount of spousal support provided for in the earlier consent judgment. The motions judge granted the application and reduced the amount of support from $3,433.12 per month (indexed annually to the cost of living) to $950 per month (not indexed). The Court of Appeal varied the amount of spousal support to $2,000 per month (indexed). The husband seeks the reinstatement of the order of the motions judge.
68 A court has jurisdiction to vary a support order where there is a material change in circumstances. The motions judge noted two material changes in circumstances. After retirement, the husband experienced a 13 percent overall decrease in income and the bulk of his income derived from the liquidation of his pension asset. While employed as Director of Education, he was earning employment income of $115,476 per year. After retirement, his pension income was approximately $96,000 per year, a reduction of about 13 percent in income. The material change in circumstances arose out of the fact that his reduced income after retirement was derived from his pension, the same pension which was previously subject to an equalization of net family property with the wife.
69 Before the Court of Appeal it was conceded that there was a material change in circumstances. The court also found that the wife still had a need for support and, as his reduction in income was only 13 percent, the husband retained the ability to pay. The husband was not requesting a termination of the support order, but a reduction in amount given his retirement.
70 The wife’s stated needs were $3,400 per month. She invested her assets wisely and they are now worth almost $493,000. She has an obligation, as far as it is reasonable, to attempt self-sufficiency by using those assets to produce an income. Douglas C. Townsend, an actuary, calculated the annual income which the wife could expect to receive if she converted her current assets into an income payable to her for life. If the wife invested $250,000 in a life annuity, it would produce $18,025 per year for life. If she invested $500,000 it would produce $36,050 per year for life.
71 I agree with the motions judge that the amount of support should be reduced based on the material change in circumstances and the ability of the wife to reasonably produce an income from her investments, but by how much?
72 In Hickey v. Hickey,  2 S.C.R. 518, L’Heureux-Dubé J. for the Court set out the approach to be taken by appellate courts in reviewing spousal support and child support orders made at trial (at para. 11):
Our Court has often emphasized the rule that appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong.
73 We are left to determine whether the motions judge’s decision to vary the spousal support order to $950 per month (not indexed) was an error in principle, a significant misapprehension of the evidence, or clearly wrong. She took into account the fact that some of the husband’s pension credits were earned following the date of separation and, as such, were not equalized with the other net family property. This unequalized portion is approximately $2,300 per month of the total Ontario Teachers’ pension income of $7,600. The previously equalized portion amounts to approximately $5,300 per month. The motions judge correctly found that the unequalized portion of $2,300 per month should be “factored into the support to be paid”.
74 The motions judge concluded that because the wife has assets of over $493,000 while the husband is “asset poor” with assets of $7,000 , the wife must look to her assets in an income-producing way. She found that the support order should be varied to $950 per month. One of her stated considerations was that, without relief, the wife would accumulate an estate while the husband’s estate would be depleted.
75 It would be inequitable in this case to allow the wife to reap the benefit of the pension first on the division of assets and again as a source of income. The wife received capital assets on equalization which she is saving and accumulating presumably for her beneficiaries. By contrast, the husband’s only tangible asset, his pension, is diminishing.
76 The motions judge concluded that the wife still had a need for support and the husband still had an ability to pay, and focussed on that portion of the husband’s income that had not been the subject of division with the wife in the past. I agree with her conclusion that the unequalized portion of the husband’s pension was the principal consideration in the support to be paid.
77 With respect, I disagree with the Court of Appeal’s brief reasons in concluding that the motions judge’s decision was “outside the realm of reasonableness”. The motions judge’s decision was not an error in principle, a significant misapprehension of the evidence, or clearly wrong. I conclude that the Court of Appeal erred in changing the motions judge’s award of $950 to $2,000 per month, an amount more than double that awarded in the lower court. In addition, while the motions judge clearly considered the issue of double recovery, in my view, the Court of Appeal overlooked its obligation to do so and failed to consider the earlier division of matrimonial property.
78 Although the Court of Appeal imputed a yearly investment income of $15,000 plus $3,240 in CPP benefits to the wife, it is unclear on what basis the court derived this figure. It is also unclear on what basis the Court of Appeal awarded $2,000 per month in spousal support. It is possible that the Court of Appeal was attempting to provide a level of support over and above the imputed income which would meet the wife’s stated needs of $3,400 per month. However, the award of $2,000 per month plus the yearly income of $18,240 imputed by the Court of Appeal provided the wife with an amount of support greater than her stated needs of $3,400 per month.
79 It is my opinion, based on the asset positions of both parties viewed at the time of the application to vary, that the wife would not suffer hardship if double recovery from the previously equalized portion of the pension was not allowed.
80 Finally, the Court of Appeal erred in finding that the motions judge mistakenly factored into her decision an ability on the part of the wife to earn employment income. The motions judge stated in her reasons, and I accept, that the purpose in addressing this “small factor” was because to fail to do so might not recognize the wife’s abilities and her role during the marriage. It played no part in the motions judge’s financial allocations and was not a suggestion that the wife, now close to age 65, seek employment.
81 The adjusted amounts of spousal support reached by both the motions judge and the Court of Appeal are not detailed, as calculations were not provided by either court. Both parties proceeded on the apparently rounded amounts. The motions judge’s award of $950 was carefully assessed by her and deference must be paid to that decision. Double recovery can be fairly avoided in this case. In the result, the appeal is allowed and the judgment of the motions judge is reinstated with the further order that the monthly amount be indexed and arrears, if any, of spousal support be paid to the wife.
82 Based on the divided success of this appeal, each party shall bear its own costs in all courts.
The reasons of L’Heureux-Dubé and LeBel JJ. were delivered by
LeBel J. (dissenting) –
83 This appeal concerns spousal support after the breakdown of a marriage. It requires a discussion of the impact of the retirement of the supporting spouse on support and the problems raised by the allocation of pension rights, at the time of the division of the family assets and at the moment of retirement.
84 Justice Major’s reasons fully review the facts, and I will return to them only as required by these reasons. The appellant and the respondent were married for a long time. Mrs. Boston worked only inside the home where she raised a large family. The marriage broke down after some 30 years, a division of family assets intervened, and, by agreement, spousal support was set at $3,200 per month, indexed annually to the cost of living. At the time the family assets were divided, arrangements were made to value and divide the appellant’s pension rights. Three years later, Mr. Boston retired, started to draw his pension and asked for a review of the support order.
85 Robertson J. of the Ontario Court (General Division) reduced the amount of support to $950 per month, not indexed. The Ontario Court of Appeal raised the amount of spousal support to $2,000 per month. With respect for the contrary view, the judgment of the Court of Appeal should be upheld and the appeal dismissed. Albeit concise, this judgment seems grounded on a proper application of the legal principles governing the equalization of net family property of family assets and spousal support.
86 In the end, this case remains a very straightforward matter of assessment of the needs and means of the former spouses in context of the dynamic relationship that arises from the marriage and its breakdown. This relationship is governed by a set of legal principles common to the Family Law Act, R.S.O. 1990, c. F.3, and the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.).
87 Analysis in such a case should not be overly influenced by catch words like “double dipping”and its alleged unfairness in the determination and the process of support, where none really exists, once the relevant legal principles are identified and applied. On the other hand, a lack of fairness should be found when a wife does not receive a level of support congruent with the lifestyle she enjoyed, although a separation or divorce may lower the living standards of both parties. A spouse should not be penalized mainly because she adopted a moderate lifestyle and prudently invested her assets. The argument raised by the appellant, to a certain extent, reverts to the old idea that, after the breakdown of the marriage, the supported spouse is not really entitled to much more than a subsistence level income. The process of the division of assets and determination of spousal support must remain fair, but should also attempt to address in a realistic way the consequences of the breakdown of a marriage, in the context of the life experience of the spouses.
88 After the breakdown of a marriage, the process of settling financial matters may appear complicated. Two basic stages must be distinguished: first, the division of family assets and, second, deciding whether spousal support will be warranted and determining its quantum.
A. Equalization of Net Family Property
89 Under the Family Law Act, the equalization of net family property differs fundamentally from the determination of the quantum of support payments. The Act does not provide for a re-apportionment of assets. Rather, it creates a debtor/creditor relationship resulting in a payment obligation. Section 5(1) makes clear that the equalization of net family property is an entirely mechanical process. The spouses calculate their respective net family properties under s. 4 of the Act. An application is then made under s. 7 to equalize the net family properties. The spouse with the lesser net family property must receive a payment equal to half the difference between the two net family properties, subject to the discretion of the Court to vary this entitlement under s. 5(6) in case of unconscionability.
90 After the determination of the entitlement, the Court must then decide how payment will be made, having regard to s. 9 of the Act. Pension rights, like all family assets, are thrown into the pot and must be equalized. Despite their importance for a number of couples, the Act contains no provision addressing the specific problems arising out of the division and allocation of pension rights. At the end of the process of division and equalization, the creditor spouse will be left with certain assets including, sometimes, a claim against the other spouse.
B. Spousal Support
(1) Legislative Purposes
91 The process of determining support, by contrast, remains anything but mechanical. It requires an often subtle analysis, based on complex factors set out in s. 33 of the Family Law Act. Specifically, the Act identifies a number of purposes: any support order must recognize the spouse’s contribution to the relationship and its economic consequences, the burden of child support, and must provide assistance to the spouse to gain autonomy and to relieve financial hardship, if this has not been done by the equalization of net family property. These are enumerated as follows:
(8) [Purposes of order for support of spouse] An order for the support of a spouse should,
(a) recognize the spouse’s contribution to the relationship and the economic consequences of the relationship for the spouse;
(b) share the economic burden of child support equitably;
(c) make fair provision to assist the spouse to become able to contribute to his or her own support; and
(d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home).
92 This approach does not differ substantially from the objectives of support and variation orders under the Divorce Act. Under both statutes, any final order of support will have factored in what assets come under the control of each spouse and what income they can generate from their property, work or other sources.
93 As is well known, the determination and application of the principles governing the law of support have given rise to a considerable amount of controversy and litigation in Canadian courts. The question keeps coming back. This Court has rendered several judgments in this area, the most important in recent years remaining Moge v. Moge,  3 S.C.R. 813, and Bracklow v. Bracklow,  1 S.C.R. 420.
94 The law of support must address an almost infinite number of situations and life experiences. Nevertheless, courts have attempted to define models of marriage. As McLachlin J. (as she then was) pointed out in Bracklow, supra, it appears useful to try to identify some basic models. She suggested, for example, a distinction between the “basic social obligation” model (para. 23) in which the primary responsibility falls on the former spouse to provide for his or her ex-partner and the “independent” model (para. 24) in which each party is viewed as an autonomous actor retaining his or her economic independence during the marriage. She then associated each type of marriage with a model of spousal support. In the end, though, McLachlin J. noted that none of these classifications would really account for all situations or allow the development of an entirely just law of spousal support (para. 32).
95 The spectrum of situations remains wide. This Court should be careful not to establish closed and inflexible categories that might bear little relationships with the actual life experiences and needs of Canadian couples. This case would certainly not be an appropriate one for such an attempt. As can be seen from the facts of the case, it is clear that the parties had a traditional long-term marriage. Absent legislative schemes like the equalization process under the Family Law Act and the right to support, the respondent would have been left with no assets, no experience in the job market and no income. She would have found herself in a situation of utter dependency, arising out of the way of life and the allocation of responsibilities, accepted by the couple during a long marriage. On the other hand, Mr. Boston would have been left with most of the assets including his pension and the income stream arising out of them.
96 One of the primary objectives of the modern law of spousal support is to address such unfairness. In Moge, however, L’Heureux-Dubé J. pointed out that the legislative purposes behind spousal support are various, and that none should take precedence over any other. She made this point at p. 853 as follows:
Many proponents of the deemed self‑sufficiency model effectively elevate it to the pre‑eminent objective in determining the right to, quantum and duration of spousal support. In my opinion, this approach is not consonant with proper principles of statutory interpretation. The objective of self‑sufficiency is only one of several objectives enumerated in the section and, given the manner in which Parliament has set out those objectives, I see no indication that any one is to be given priority. Parliament, in my opinion, intended that support reflect the diverse dynamics of many unique marital relationships. [Emphasis added.]
97 The same four legislative objectives articulated in the Divorce Act form part of the Family Law Act. Thus, the treatment of those four objectives under the Divorce Act in Moge and Bracklow applies to the provincial statute, mutatis mutandis. In both of those cases, however, this Court has treated the four objectives in the larger context of three bases for support payments. Accordingly, I will review this approach.
(2) Bases for Spousal Support
98 The major issue in Bracklow was whether there was a basis for spousal support beyond (i) contract/consent and (ii) compensation for economic hardship suffered as a result of the marriage or its breakdown. Based on a close reading of the relevant statutory provisions, McLachlin J. held at paras. 37 et seq., that a third, non-compensatory, basis could be found, related to the very concrete needs of the spouses.
99 At para. 40, McLachlin J. asserted there must be a non-compensatory ground for spousal support in the following terms:
While the statutes contemplate an obligation of support based on the grounds of contract and compensation, they do not confine the obligation to these grounds. The “ability and capacity of, and the reasonable efforts made by, either or both spouses to support themselves” (Family Relations Act, s. 89(1)(d)), suggests a concern with need that transcends compensation or contract. . . . Similarly, “economic circumstances” (s. 89(1)(e)) invites broad consideration of all factors relating to the parties' financial positions, not just those related to compensation. The same may be said for the broad injunction of the Divorce Act that the court consider the “condition, means, needs and other circumstances of each spouse”. [First emphasis added; second emphasis in original.]
100 This analysis entails very significant consequences. Some academic comments viewed them as potentially far-reaching but as yet uncertain. For example, Professor D. Goubau (in “The Clear and Clouded World of Spousal Support in Canada” (2000-2001), 18 C.F.L.Q. 333) suggests that this decision opens the door to an award of spousal support wherever there is need on the part of one spouse and an ability to pay on the part of the other, regardless of whether or not that need was occasioned by the marriage. To remove the connection between the need and the marriage, he argues, forces one spouse to pay for another’s misfortune, even though it has nothing whatsoever to do with him.
101 Instead of removing the causation requirement altogether, Professor Goubau argues that a relaxing of the causation requirement – so that not only needs that are caused by the marriage but also those that are caused by its breakdown are compensable – is sufficient. As an example of this strategy, he points to a decision of the Quebec Court of Appeal, rendered shortly before Moge, which rejected a reading of the Pelech-Richardson-Caron trilogy that would require an unduly mechanistic application of the requirement of causation (Droit de la famille – 1688,  R.J.Q. 2797). Simply relaxing the requirement, rather than removing it altogether, allows the court to maintain the conceptual link between the payment of support and the marriage without limiting recovery by unduly legalistic categories.
102 In my view, Bracklow does not discard altogether the requirement of a causal connection between the needs of the payee spouse and the marriage, its history and its breakdown. McLachlin J.’s reasons, which build upon prior judgments of the Court, emphasize the diversity of the factors affecting the right to support and its quantum, but do not appear to reject the consideration of a broad form of causal connection, as a requirement for some categories of support orders.
103 Julien and Marilyn Payne argue that it “is amply demonstrated by Bracklow v. Bracklow [that] needs and capacity to pay as the basis of spousal support have not been superseded by the notion of compensatory support. They have been complemented by it” (J. D. Payne and M. A. Payne, Canadian Family Law (2001), at p. 207). This much seems clear from the following passage from Bracklow, at para. 32: “. . . Parliament and the legislatures have decreed otherwise by requiring courts to consider not only compensatory factors, but the ‘needs’ and ‘means’ of the parties”. Julien and Marilyn Payne also laud this decision as making clear what should have been so all along: that simply because courts have examined the sacrifices made by women in a marriage and have sought to compensate them for such sacrifices, this does not mean that all other considerations should be ignored after the breakdown of a marriage.
104 Finally, the reality faced by family court judges should be recognized. Although the compensation rationale remains very important, in most cases it will not be clear exactly how much compensation is required and how to compute it. (See Payne and Payne, supra, at p. 209.) Thus, even when compensation is acknowledged as an important rationale, the means and needs of the parties are often used by courts simply because they supply the only available numbers. Bastarache J.A. (as he then was) recognised this reality in Ross v. Ross (1995), 168 N.B.R. (2d) 147 (C.A.), at para.15, as follows:
It is in cases where it is not possible to determine the extent of the economic loss of the disadvantaged spouse that the court will consider need and standard of living as the primary criteria, together with the ability to pay of the other party.
105 In the case at bar, any order of support must address both the consequences of the marriage and of its breakdown. It must rest on an assessment of the needs and means of the parties and it should acknowledge the need to compensate the spouse who stayed home, worked there and gave up any idea of a career and the economic independence it allows.
106 The first objective of any order is to make sure that the dependent spouse, after the breakdown of the marriage, has enough to live on. In assessing the adequacy of support, the courts must consider the past income and living standards of the parties. (See Payne and Payne, supra, at p. 205; Moge, supra, at pp. 866 and 870.) The creditor spouse remains entitled to an income proportionate to her former living standards, although some economic disadvantages and costs often arise out of the splitting up of the family unit. It is also fair and consistent with the objectives of the Family Law Act to include an element of compensation for the consequences of the breakdown of a marriage where a spouse has given up any possibility of a career outside the home.
107 Then, in assessing the needs of a spouse, a judge must factor in the need of both spouses for security. This factor may very well have become of critical importance for a dependent spouse like the respondent. Absent an actual division of pension credits, she will be left entirely on her own, if her spouse predeceases her, and she will have to rely on the asset base and income rights she may have acquired at or since the breakdown. Such factors seem to have been considered when the parties separated and agreed on the amount of support. The law and the courts have recognized that such arrangements should not be tampered with, unless a material change occurs. I abstain from expressing any opinion as to whether such a material change actually happened here. Given the concession in the Court of Appeal, I will dispose of the matter, assuming, without deciding, that such a change happened when Mr. Boston retired.
C. The Pension Problem
108 As an Ontario judge put it: “I confess that there is one word which, given the choice, I would prefer not to hear in a matrimonial proceeding: ‘pension’” (Iurincic v. Iurincic (1998), 40 R.F.L. (4th) 258 (Ont. Ct. (Gen. Div.)), per Quinn J.), at para. 1. Much as we may prefer to forget about this problem, it is a live issue, in respect both of the process of family property equalization and of determination of support. When Mr. and Mrs. Boston separated, the pension rights acquired under the Ontario Teachers’ Pension Plan were an important family asset. As indicated above, the Family Law Act does not provide for any specific rules on the splitting of pension credits, contrary to what is found in other provincial laws dealing with the equalization of family assets, like the Civil Code of Québec, S.Q. 1991, c. 64, art. 426. The Pension Benefits Act, R.S.O. 1990, c. P.8, though, sets out a number of rules governing the splitting of several credits or rights, but was not discussed or considered in the present case. Absent any other rule than the principle of an equal division, the parties and the courts are left to their own devices. The problem becomes: shall we split now or later, if and when the spouse holding the pension rights retires? I will not attempt to discuss which approach should be preferred. Both have their advantages and their downsides. Each involves an element of risk. For example, the “if and when” formula sometimes may require complex legal arrangements, in order to protect the creditor spouse until the time of retirement and to provide also for the possibility of an early death. The parties here chose another commonly used method, as explained in Justice Major’s reasons. It requires an immediate transfer of assets or money in order to extinguish a claim in respect of pension rights which will be exercised only later.
109 In the separation agreement, the parties put a value on Mr. Boston’s pension rights and then the total marital assets were split. Mr. Boston dealt with the claim arising out of this arrangement through the transfer of a number of assets to his wife. The process allocated Mrs. Boston most of the matrimonial property. On the other hand, Mr. Boston retained his full pension rights and the right to the entire income stream arising out of it. Although the parties did not discuss this aspect of the case, it remains probable that such a public service pension ensures him a substantial degree of protection against inflation, periodic revisions of pension payments and an almost ironclad protection against any economic risks. The respondent got her long-term security through the management of assets that must be used efficiently and remain exposed to a degree of market and economic risk.
110 Mr. Boston paid off his wife’s claim, transferred assets and avoided a division of his pension rights and credits, hence the problem when he retired. He took the view that the payment of support out of the income stream generated by his pension was inherently unfair, and that this amounted to double dipping. He asserts that the income stream arising out of an already equalized pension should be insulated from contribution to support. This problem has never been addressed directly by this Court, although it was mentioned in Strang v. Strang,  2 S.C.R. 112, at p. 120, where Cory J. considered it irrelevant, given the facts of that case. Interestingly enough, it appears that counsel for the debtor spouse, in that case, advanced a distinction between property assets and maintenance assets. The former would be free from contribution to spousal maintenance. Pension rights would fall within this category (see p. 119). A basically identical argument is raised in this appeal.
(1) Double Dipping
111 The issue of “double dipping” in respect of pension rights has generated controversy in Canadian courts. Some case law supports the view that spousal support should be paid only from the portion of the pension that was unequalized at the time of the separation and from other sources of income. (See Shadbolt v. Shadbolt (1997), 32 R.F.L. (4th) 253 (Ont. Ct. (Gen. Div.)).) Nevertheless, this process of limiting the availability of the pension asset for spousal support purposes is mistaken. It views the pension as a finally allocated asset and ignores that it operates primarily as a source of income. Also, it should not be forgotten that, while spousal support and property division may be ordered or agreed to as part of an overall settlement package, they serve different purposes. In some situations, support is designed both to compensate the dependent spouse and to address essential economic needs arising out of the marriage breakdown. This rationale remains distinct from the property division, with which it should not be confused. Assets made available to a spouse after the equalization process should be factored in when considering the needs and means, as they will sometimes allow the dependent spouse to reach a degree of independence, which reflects one of the objectives of the Family Law Act and her essential human dignity. On the other hand, the Act does not modify the nature of the complex factors and objectives governing spousal support before, as well as after the retirement of the debtor spouse. A number of judgments make this clear.
112 For example, in Dolman v. Dolman (1998), 38 R.F.L. (4th) 362 (Ont. Ct. (Gen. Div.)), Philp J. found that the Family Law Act of Ontario allows spousal support to continue after an equalization payment if the dependent non‑pensioned spouse remains in need, and if the payer remains able to pay. Shadbolt was referred to in the case of Carter v. Carter (1998), 42 R.F.L. (4th) 314 (Ont. Ct. (Gen. Div.)), dismissing a motion to suspend existing support obligations. Kozak J. held that, although the initial jurisprudence under the Family Law Act stood for the principle that, after equalizing the pension, the pension should not again be the basis of spousal support payments, the later case law confirmed that spousal support continuing past the payer’s retirement did not give the dependent spouse a double benefit of the pension.
113 As Bastarache J.A. said in LeMoine v. LeMoine (1997), 185 N.B.R. (2d) 173 (C.A.), at para. 29, referring to Linton v. Linton (1990), 1 O.R. (3d) 1 (C.A.), it is not improper “to extend support beyond the payor spouse’s retirement simply because of the inclusion of the pension in the property division”. He went on to say (at para. 30):
Although the pension income stream may belong to the husband . . . this does not mean that it cannot be accessed in order to redress the economic disadvantages of the wife that continue to flow from the marriage or its breakdown. It is not a case of re-dividing an asset, but of ordering a person to continue paying support.
114 Finally, Brockenshire J. made clear in Nantais v. Nantais (1995), 16 R.F.L. (4th) 201 (Ont. Ct. (Gen. Div.)), that the mere fact that the source of a payor or spouse’s income is a pension rather than employment should not prima facie exclude such income from consideration when determining the quantum of spousal support. Brockenshire J. viewed it as “a contractual replacement of an income [and], like the wages received before retirement, is fully available for the support of a needy former spouse” (para. 32).
(2) The Process of Fixing Support After Retirement
115 No assets or income streams should be set aside or treated differently after a debtor spouse starts drawing a pension. This Court should not entertain in any manner the view that we should draw a distinction between what some would call property assets and maintenance assets. All income streams are relevant in the assessment of means and needs and of the proper level of support considering the lifestyle and the living experience of the couple. Pension payments remain income. Indeed, the Income Tax Act views them as fully taxable for income tax purposes (see P. W. Hogg and J. E. Magee, Principles of Canadian Income Tax Law (2nd ed. 1997), at pp. 357-58). The problem to be addressed in a question of spousal support is not the nature of the assets available to the parties, but how they should be used by each party.
116 I agree that a spouse may not sit on a pot of gold, while fleecing his or her former life partner. As the trial judge and the Court of Appeal found, by reason of her moderate, if not frugal lifestyle, Mrs. Boston had made safe investments and, therefore, had a substantial asset base under her control. On the other hand, Mr. Boston had kept his entire pension rights with the financial and personal security that flows from them, but few other assets. No information as to the nature and conditions of the Teachers’ Pension Plan of Ontario is available in the record. Normally, this kind of pension guarantees lifelong economic security for the pensioner, and beyond this for designated surviving companions. Mr. Boston gave up assets, but retained this security. This arrangement did not amount to trading assets for nothing, as some academic or judicial comment asserts. On the other hand, Mrs. Boston has substantial assets, and has taken insurance on the life of her husband, but will be left on her own if her former spouse predeceases her. In the circumstances of the case, the reasoning of the Court of Appeal implies that the calculation of support payable to her had to factor in her former lifestyle and living standards and also her need to acquire some financial security throughout her life. The appeal judgment acknowledges the lack of independence that flows from her married life and its breakdown.
117 Upon the appellant’s retirement, it was fair, in a process of support determination, that courts considered the assets of both parties and the income that could be generated from them if they were used efficiently. The Court of Appeal decided to impute an income from the assets controlled by the respondent. The Court of Appeal based this income on the value of the assets considered as liquid, which amounted to about $250,000 and deducted a notional income of some $15,000 a year, which appears as accurate as can be. Given the circumstances of the parties and the ambiguous reference in the trial judge’s order as to the respondent’s ability to take care of herself, it held that the variation of support by Robertson J. was unreasonable. Indeed, the support fixed by the Court of Appeal might appear somewhat conservative, considering the income left to Mr. Boston. After all, he draws a pension of about $100,000 per year. Although he has few assets, he retains a fairly comfortable lifestyle. Mrs. Boston is entitled to a reasonable standard of living, as contemplated by the separation agreement. She should not have to engage in a massive program of liquidation of assets, based on an assumption that her lifestyle is frugal, and hence her needs modest.
118 Pension rights deplete over time, but they provide, especially in this case, a stable and protected income. By any means, income arising out of the pension rights of a pensioner remains income and may be subject to contribution for maintenance, if the circumstances warrant it. Neither the Family Law Act nor the Divorce Act supports the drawing of a distinction between categories of assets and particular income streams for the purpose of spousal support. Support should remain governed by the factors and objectives defined in the law and applied by the jurisprudence of the Court.
119 An analysis based on the nature of the assets may skew the proper approach to support. In this case, needs had been established, after making allowance for the efficient use of assets under the respondent’s control. These needs should be evaluated reasonably, given the standard of living of the parties during the marriage and the imperative of long-term financial protection.
120 For these reasons, I would dismiss the appeal.
Appeal allowed, L’Heureux-Dubé and LeBel JJ. dissenting.
Solicitor for the appellant: J. Yvonne Pelley, Kingston.
Solicitors for the respondent: Maurice J. Neirinck & Associates, Toronto.
Solicitors for the intervener: Nicole Tellier and Epstein Cole, Toronto.