One of the more complex issues a couple will face when divorcing or ending a common-law relationship is that of sorting out support obligations and equalizing the value of the net family property. A particularly complex issue around determining spousal support is that of ‘double-dipping’ with respect to income earned from property that has already been equalized, such as pension income. This comes down to the concept of the “tree” vs. the “fruit”. If the value of the “tree” has already been allocated, is it then fair to base ongoing support on the income generated by the “fruit” of that tree?

Leading Case: Boston v. Boston

The Supreme Court addressed this issue in 2001 in a case that remains the leading case in Canada on double-dipping and spousal support, Boston v. Boston. The circumstances of this decision remain an exception to the Spousal Support Advisory Guidelines (SSAG) when determining appropriate support awards.

The couple in the case divorced after 36 years of marriage. At the time of the divorce, the family net property was equalized with the husband being awarded $385,000 in assets which was largely comprised of the value of his pension. The wife, who had been a homemaker, was awarded the matrimonial home, its contents and RRSPs, totalling approximately $370,000. In addition, the husband was ordered to pay monthly spousal support in the amount of $3,200. At the time, the husband was still working and earning an annual salary in excess of $115,000, while the wife was not earning any income.

After the husband retired, he began collecting his pension income, which totalled $8,000 per month. Of this, $5,300 was attributed to the value of the pension at the time of the divorce, and $2,300 was based on earnings he accumulated after the split. The husband applied to reduce his support obligation. The Supreme Court ultimately found that the husband was entitled to reduce his support obligation on the basis that the pension now being received was previously considered in the distribution of matrimonial property.

Lessons Learned From Boston

There were three primary takeaways from the Boston case, which are still considered today when examining spousal support obligations across the country:

  1. When considering a payor’s spousal support obligations, a court should always try to remove any property from inclusion which has already been equalized. In the case of Boston, paying support based on pension income that had already been divided resulted in double recovery for the wife.
  2. Support recipients are obligated to use their share of the equalized property to generate their own income and provide for themselves to the degree that they are able. Failure to do so may result in income being imputed to the recipient.
  3. There are exceptions to the rule, in that double recovery may not always be avoided. In some cases, economic hardship or need may justify an exemption from the principles set out in Boston.

How the Boston Principles are Applied in Practice

The SSAG were created in 2005, four years after Boston was decided. In the years since there is still no easy way to avoid double-dipping in every case, but the general rule has been to reduce the payor’s income by the amount already included in the family property equalization, and determine support obligations based on that amount.

The starting point for determining support obligations under SSAG is to look at the income of both parties. From there, Boston then serves to create an exception in which the payor must establish valid reasons to reduce their SSAG income in order to avoid double-dipping or double recovery. This will necessitate that the payor prove that part of their income has already been divided via the equalization of the net family property.

If the payor is successful, the onus then shifts to the recipient to establish hardship or need that would necessitate creating an exception to the exception.

For Questions About Spousal Support Obligations, Contact an Experienced Family Lawyer

Even with the SSAG in place and the guiding principles established in Boston and other cases since then, the avoidance of double-dipping can become extremely complex. Especially for couples with complex income structures, it is crucial to seek the advice of family law lawyers with experience in the division and allocation of complex financial assets and income.

The family law lawyers at Mincher Koeman are exceptionally experienced with respect to support awards following the breakdown of a relationship. We will work with you to ensure that you receive a support award that accurately reflects the true financial positions of the parties. Contact our office today by calling us at 403-910-3000 or contact us online.

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