Double Dipping in Spousal Support: The Impact on BC Family Law

Double dipping in spousal support can be a big consideration for individuals navigating divorce or separation in British Columbia.

In some cases, courts may tell people not to “double dip” but in others, they have said that double dipping is acceptable.  Take a read below to find out what double dipping is in the family law context, and whether this is something you should be aware of in your family law dispute.

What is double dipping in spousal support?

Double dipping refers to the potential for one party to receive multiple financial benefits from the same income source, resulting in unfair outcomes.

For example think of a couple who have divided their property upon the breakdown of their marriage.  In this example one spouse would claim continued support based on the income generated from the previously divided assets (think a pension) of the other spouse. Generally, it is considered unfair to allow the claiming spouse to reap the benefit of both the asset upon property division as well as a source of income.

What do the courts say about double dipping in spousal support?

The leading case on the issue of double dipping in spousal support is the Supreme Court of Canada (SCC) case Boston v. Boston (2001 SCC 43). In this case, the husband’s pension was worth over $300,000. The parties entered into a separation agreement that allowed him to keep this pension and a few personal belongings, while the wife kept the family home, farm, cottage and most of the savings. The agreement also set out the husband’s spousal support obligation to the wife.

Three years after the separation agreement, the husband retired, and most of his income came from his pension. He applied to have his spousal support payments reduced because of his reduced income. He argued that he should not have to pay spousal support based on his pension income, as the pension was already considered when the parties divided their marital property. The wife argued that she was still entitled to spousal support, as she had grown used to a standard of living based on her spousal support payments and would not be able to find employment now after being a traditional homemaker her entire life.

The SCC held that there should be no double dipping, stating that “it is generally unfair to allow the [recipient] spouse to reap the benefit of the pension both as an asset and then again as a source of income.” The Court also stated that the wife had an obligation to use the assets she had acquired through the division of property to generate a stream of income for her own support.

The British Columbia Court of Appeal (BCCA) cited Boston when considering the issue of double dipping in Puiu v. Pui (2011 BCCA 480). The parties previously divided their assets by consent, including pension funds. The lower Court decided that there should be no continuation of spousal support payable, which the wife appealed. The BCCA upheld the lower Court’s decision, recognizing that the husband was 66 years old and unable to find a new job, and he was reliant on his pension and savings. The BCCA held that the wife had received her share of family assets, and to allow her now to seek a share of the income from the husband’s assets would be to allow the form of “double dipping” that was found to be improper in Boston. This would essentially result in re-dividing assets that had already been divided.

Does double dipping apply to all assets that produce an income stream, or just pensions?

Double dipping with a pension has been distinguished from that of business assets, because pension income depletes the pension asset, while typical business assets continue to produce income without devaluing the assets themselves. The BCCA has stated that the pension analogy for double dipping does not apply to cases in which the payor would not have to liquidate assets to pay ongoing support.

In M.C.D. v. D.A.D. (2017 BCSC 1832), the husband claimed that the wife should not be permitted to claim spousal support based on all of the income he generated from his business, as the wife already received compensation for her interest in the company through the division of family assets. He argued that this would constitute double dipping. The Court did not accept this argument. The husband’s business produced income that could be spent without depleting the value of his business. Therefore, the husband’s spousal support payments were to be determined based on an income number that considered the income generated from his business.

Double dipping is typically not considered for income earned from capital assets that did not exist at the time of the division of property. In the Supreme Court of Canada case, Leskun v. Leskun (2006 SCC 25), the Court considered the husband’s appeal regarding the consideration of his capital in determining his ability to pay spousal support. The SCC upheld the lower court’s decision to consider the husband’s capital assets acquired following separation. Double dipping did not exist because these capital assets did not exist at the time of the division of property.

In what circumstances will double dipping be allowed by the Court?

Although the Supreme Court of Canada in Boston v. Boston did not allow double dipping in that case, the Court did note that there can be an exception to the rule against double dipping, where it cannot be “fairly avoided.” For example, double dipping may be permitted in cases where the payor can afford to pay additional spousal support, and the recipient still needs the money even though she has made a reasonable effort to produce income from her assets received upon the property division, as an economic hardship from the marriage or its breakdown persists.

Does double dipping apply to child support too or only spousal support?

Double dipping more commonly arises as an issue for spousal support purposes and is not considered as frequently when determining income for child support purposes. Child support is the right of the child, and the Federal Child Support Guidelines require income for child support purposes to be determined based on all sources of income, meaning that it is less likely that income streams such as pension income are not considered for the purposes of child support.

If you may be dealing with an issue of double dipping, contact our spousal support lawyers to set up a consultation and learn more.