P. Double Recovery or Double Dipping

Author:Julien D. Payne - Marilyn A. Payne

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Court-ordered spousal support rights and obligations may survive the payor’s retirement. In some instances, the payee will have received an equal share of the value of the payor’s pension upon their separation or divorce, either by way of a lump sum or a trade-off of assets such as the pension against the matrimonial home. If that is the case, when addressing the issue of spousal support after the payor’s retirement, the court should seek to avoid "double dipping" or "double recovery." Consequently, the court should not take account of an already divided pension, except insofar as its value to the pension-holding spouse may have increased since the separation or divorce.367A spouse who receives money or assets in satisfaction of his or her pension-sharing entitlement on separation or divorce must use those resources in a reasonable attempt to generate income, at least by the time pension benefits begin to be paid to the pensioned spouse. Failure to do so may result in the judicial imputation of income to the support payee, based on actuarial evidence. It is unfair to allow a support payee to reap the benefit of the pension both as a divisible asset and thereafter as a source of income to the payor, particularly when the payee previously received capital assets that have appreciated in value. To avoid double recovery, the court should, where practicable, focus on the portion of the payor’s income and assets that have not been a part of the property 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 and 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. Subject to the obligor’s ability to pay, double recovery may also be permitted in spousal support orders based upon need as opposed to compensation.368

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After reviewing the response to Boston v Boston in subsequent judicial decisions, Philp JA, who delivered the judgment of the Manitoba Court of Appeal in Cymbalisty v Cymbalisty,369expressed the following opinion:

The general principles that the court enunciated in Boston were founded on unique factual circumstances that...

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