When will a court order "double dipping"?
In an earlier blog post, we discussed the role of pensions in support obligations. In this post, Daniel Duyvelshoff, a Fresh Legal intern from the University of Ottawa law school, looks at Melis v Zwanenburg to see what a court considers before allowing double dipping.
After 18 years of marriage, Caroline Melis and Cornelis Zwanenburg separated in 2006. In their divorce order, Cornelis received a substantial equalization payment from Caroline’s federal pension, and also received spousal support from Caroline.
Almost ten years after this order, Caroline retired. With her income significantly decreased, she brought a Motion to Change to terminate her spousal obligations. Cornelis countered that the spousal support should not be terminated but decreased. Thus, the court had to consider whether the unequalized portion of Caroline’s pension should be incorporated in calculating the amount of support of which Cornelis may be entitled. In other words, was Cornelis allowed to double dip?
Could double dipping occur in this case?
As per Boston v Boston, double dipping may be permitted if three things occur:
- The spouse who receives an equalization payment must have made a reasonable attempt to invest the payment to generate an income which will allow them to be self-sufficient by the time the paying spouse retires.
- The paying spouse must have the ability to pay
- The recipient spouse must show that they are still entitled to support
Further, before allowing double dipping, courts must first focus on the portion of the paying spouse’s income and assets that have not been equalized. If these can provide an appropriate amount of support for the recipient spouse, double dipping should not occur.
The court found double dipping could occur. After receiving the equalization payment, Cornelis invested much of it into an RRSP which, at the time of the decision, would have provided him with a modest income before exhausting at the end of his lifetime. Further, Cornelis was still entitled to support for giving up his career and because Caroline’s income provided a surplus and Cornelis had a continuing shortfall. Caroline also had the ability to pay.
Did Caroline have to share her pension?
With the three factors met, the Court considered the appropriate support amount before including the unequalized portion of Caroline’s pension. To do so, the Court calculated Caroline’s income and support obligations based upon her already equalized pension income and her other investments. The Court concluded that the amount of support payable based on this income would meet Cornelis’ needs. As such, although double dipping would have been permitted if needed, it was not required in this case.
Though double dipping did not occur in this case, it can still be permissible depending on the facts. If Caroline did not have additional investments, the court may have had no other option. One lesson to be learnt from Melis v Zwanenburg is that even though a recipient spouse has an obligation to become self-sufficient, it is not absolute; it is wise for the paying spouse to also make additional investments if they want to protect their pension from further division.