COURT FILE NO.: Divisional Court 406/00
DATE: 20021205
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: Ontario Teachers’ Pension Plan Board Applicant (Respondent in Appeal)
and
Superintendent of Financial Services Respondent (Respondent in Appeal)
and
Anne Stairs Respondent (Appellant in Appeal)
HEARD: May 24; September 3, 2002.
BEFORE: Lane, Farley and Then JJ.
COUNSEL: Ari Kaplan, for the Appellant, Anne Stairs
Freya J. Kristjanson, Anne Slivinskas and Markus F. Kremer, for the Respondent Board
Deborah McPhail, for the Respondent Superintendent
S U P P L E M E N T A R Y R E A S O N S F O R J U D G M E N T
LANE J.:
[1] This is a motion to amend our Order of June 18, 2002, in order that we might adjudicate upon certain matters not dealt with in our reasons of that date. The central issue in this appeal was the extent to which the terms of a Separation Agreement were effective to grant to the former wife, the appellant Anne Stairs, a share in the death benefit payable upon the death, before retiring, of her former husband, Roger Mowbray, who had remarried. Despite the timely filing of the Separation Agreement with the Plan Board, it paid the whole of the death benefit to the surviving wife, Catherine Mowbray.
[2] Ms. Stairs brought the matter to the attention of the respondent Superintendent and in May, 1999, it served the Board with a notice that it proposed to order the Board to pay to Ms. Stairs a portion of the death benefit with respect to the deceased’s service after December 31, 1986. Ultimately, the Financial Services Tribunal ruled that no part of the death benefit should be paid to Ms. Stairs. She appealed to this Court. On June 18, 2002, we reversed the decision of the Tribunal and directed the Superintendent to direct the Board to “.. make the payment to the appellant according to the formula in the domestic contract, subject to the restrictions in sections 51(1) and (2).” [of the PBA]. We did not confine this Order to that portion of the death benefit accrued after certain amendments to the PBA which became effective January 1, 1987.
[3] In its Factum, at paragraph 25, the Board summarized the problem which it submitted existed with our reasons of June 18th:
The “formula in the domestic contract” referred to in the Divisional Court’s disposition did not limit Ms. Stairs’ entitlement to benefits accrued by Mr. Mowbray after December 31, 1986. The quantum issues which were argued before the Tribunal (but not before this Honourable Court) included whether “the Tribunal’s jurisdiction [was] limited to considering benefits accrued by Mr. Mowbray after December 31, 1986.” As a result, this Honourable Court’s disposition, as it currently reads, has effectively decided this issue in Ms. Stairs’ favour, without the issue having been raised in the Notice of Appeal, nor any of the parties having addressed it before this Honourable Court. Similarly, the quantum issues argued before the Tribunal also included the question of whether or not section 51 of the PBA applied to the death benefit so as to limit Ms. Stairs’ entitlement to 50% of the benefit accrued during the period of her married co-habitation with Mr. Mowbray. This Honourable Court’s disposition, as it currently reads, appears to have decided this issue in the Board’s favour.
[4] In July of 2002, the Board sought our directions concerning the proper manner in which to proceed with a Rule 59.06 motion to have the Judgment amended or varied with respect to the quantum of relief. On July 3, 2002, the president of the panel issued an endorsement, on the request of the parties, that this panel would reconvene to consider the appropriate quantum of Ms. Stairs’ entitlement. The Board subsequently brought its motion.
[5] The Board submits that this motion raises the following issues:
(A) Has the Board met the test under Rule 59.06 of the Rules of Civil Procedure for amending or varying an order, or for obtaining relief other than that originally awarded?
(B) To what portion of the death benefit is Ms. Stairs entitled? Three questions arise:
Do sections 37 and 48 of the PBA limit the statutory claim of Ms. Stairs to benefits accrued after December 31, 1986?
Does section 51 of the PBA further limit Ms. Stairs to 50% of benefits accrued after December 31, 1986? and,
Is Ms. Stairs’ claim further limited to a valuation date of July 1, 1988?
[6] Issue A was not contested and we proceeded directly to the substantive issues.
[7] Before turning to the Board’s submissions, we reproduce for convenience portions of our previous reasons:
- Under the Plan, section 61, if a member entitled to a pension dies before the first payment is due, “the person who is the spouse of the member on the date of death” is entitled to receive the death benefit if they were not living apart. However, the Plan must be administered in accordance with the PBA and if anything in that Act requires a different result, the Act prevails.
and later:
We agree with the submissions of the appellant and the Superintendent. The statutory scheme is straightforward. The surviving spouse is entitled to the benefit unless the spouses were living apart at death or the survivor had waived the right by a written waiver, but the entitlement to it is subject to a prior domestic contract or order as provided in sec. 48(13). Sub-section 13 specifically contemplates the existence of a previous marriage breakdown and the allocation of a share in the benefit to a former spouse. That is what section 51, referred to in subsection 13, is all about.
Section 51 recognizes and enforces domestic contracts splitting pension benefits between spouses on marriage breakdown. It is not confined to pre-retirement death benefits, but includes them. By section 51(3), where a pension benefit is “divided between spouses” by a domestic contract, the plan administrator is discharged by making payment accordingly. We observe that the legislation uses the phrase “between spouses”. We read the language as including domestic contracts involving the member and a person who was a spouse at the time of the domestic contract, but is not one at the time of death, which is consistent with the clear overall intent of this section. Section 51(4) requires the plan administrator to revalue the member’s pension in accordance with the provisions of a domestic contract affecting it. By section 51(5) the options available to a member on termination of employment are available to the spouse who has filed a copy of the relevant domestic contract with the administrator. Here again, we read the term spouse as including one who was a spouse of the member at the time of the contract, but is not at the time of death.
These sections, as we interpret them, cast no onerous burden on plan administrators for they cannot be expected to react to domestic contracts of which they have no notice. In the present case, they had the Separation Agreement well before Mr. Mowbray’s death.
We also note that section 65(1) of the PBA makes void every transaction that purports to assign money payable under a pension plan, but by section 65(3) this prohibition does not apply to assignments made in a domestic contract.
These provisions are all enacted to deal with marriage breakdown and show that the interests of a member in pension benefits are transferable in part to a spouse under a domestic contract on marriage breakdown. It is no use arguing that such benefits are not property and so not transferable when the Legislature has made them transferable.
[8] The Plan provides for the situation where a member dies before drawing on the pension. The spouse of the member at the time of death is entitled to receive death benefits calculated in accordance with sections 61, 62 and 63. Section 62 deals with the calculation for service before 1987. The survivor benefit was one-half of the pension earned by the member at death. Mr. Mowbray had 21.39705 years of service prior to 1987, all of which was accumulated during his marriage to Ms. Stairs. This service gave rise to an annual pension for the survivor of $12,181.18. For service post-1986, the survivor benefit became equal to the benefit earned by the member, in compliance with section 48 of the PBA which became effective January 1, 1987. Mr. Mowbray had 8.3116 years of service of which 1.5 years were accumulated between January 1, 1987 and their separation on July 1, 1988, and a little over 4 years between January 1, 1987 and their divorce on March 7, 1991. The issue of which date is appropriate is dealt with later. The commuted value of the post-1986 death benefit is estimated at $146,961.17, based on an annual pension to the survivor of $11,356.61, but such a value will vary depending on the life expectancy of the recipient.
[9] The central pieces of legislation in this case are sections 48, 51 and 65 of the PBA. Section 48 deals with the consequences of the death of a member prior to the date on which he or she would have been able to draw upon the pension. Because of the reference in the opening words of section 48(1) to section 37, the Board submitted that its effect was confined to post-1986 service. So far as relevant it reads:
s. 48(1) If a member or former member of a pension plan who is entitled under the pension plan to a deferred pension described in section 37 (entitlement to deferred pension) dies before commencement of payment of the deferred pension, the person who is the spouse of the member or former member on the date of death is entitled,
(a) to receive a lump sum payment equal to the commuted value of the deferred pension; or
(b) to an immediate or deferred pension the commuted value of which is at least equal to the commuted value of the deferred pension.
(3) Subsections (1) and (2) do not apply where the member or former member and his or her spouse are living separate and apart on the date of the death of the member or former member.
(6) A member or former member of a pension plan may designate a beneficiary and the beneficiary is entitled to be paid an amount equal to the commuted value of the deferred pension mentioned in subsection (1) or (2) if,
(a) the member or former member does not have a spouse on the date of death; or
(b) the member or former member is living separate and apart from his or her spouse on that date.
(7) The personal representative of the member or former member is entitled to receive payment of the commuted value mentioned in subsection (1) or (2) as the property of the member or former member, if the member or former member has not designated a beneficiary under subsection (6) and,
(a) does not have a spouse on the date of the member or former member’s death; or
(b) is living separate and apart from his or her spouse on that date.
(13) An entitlement to a benefit under this section is subject to any right to or interest in the benefit set out in a domestic contract or an order referred to in section 51 (payment on marriage breakdown).
(14) A member and his or her spouse may waive the spouse’s entitlement under subsection (1) or (2) in the form approval by the Superintendent and, for the purpose, subsections (6) and (7) apply as if the member does not have a spouse on the date of the member’s death.
[10] Sections 51 and 65(1) and (3) provide:
51(1) A domestic contract as defined in Part IV of the Family Law Act, or an order under Part I of that Act is not effective to require payment of a pension benefit before the earlier of,
(a) the date on which payment of the pension benefit commences; or
(b) the normal retirement date of the relevant member or former member.
(2) A domestic contract or an order mentioned in subsection (1) is not effective to cause a party to the domestic contract or order to become entitled to more than 50 per cent of the pension benefits, calculated in the prescribed manner, accrued by a member or former member during the period when the party and the member or former member were spouses.
(3) If payment of a pension or a deferred pension is divided between spouses … by a domestic contract or an order mentioned in subsection (1), the administrator is discharged on making payment in accordance with the domestic contract or order.
(4) If a domestic contract or an order mentioned in subsection (1) affects a pension, the administrator of the pension plan shall revalue the pension in the prescribed manner.
(5) A spouse …. on whose behalf a certified copy of a domestic contract or order mentioned in subsection (1) is given to the administrator of a pension plan has the same entitlement, on termination of employment by the member or former member, to any option available in respect of the spouses’ … interest in the pension benefits as the member or former member named in the domestic contract or order has in respect of his or her pension benefits.
65(1) Every transaction that purports to assign, charge, anticipate or give as security money payable under a pension plan is void.
(3) Subsections (1) and (2) do not apply to prevent the assignment of an interest in money payable under a pension plan ….. by an order under the Family Law Act or by a domestic contract as defined in Part IV of that Act.
[11] The Plan acknowledges the right of assignment by paragraph 86a:
No pension or benefit shall be capable of being assigned, charged, anticipated, given as security or surrendered, except* as provided for in section 65 of the Pension Benefits Act.
- the parties agreed that “except” was accidentally omitted and should be read in.
Sections 36, 37 and 48:
[12] The respondent Board submits that Ms. Stairs’ entitlement is limited to a share in the benefits accrued in relation to the deceased’s post-1986 employment. Neither prior to 1987, nor since, is there entitlement to a former spouse under the Plan itself; the right is that of the current spouse. The Separation Agreement could not confer such a right upon her. Therefore her claim depended upon the statutory benefit created by the Act which only created such an entitlement after 1986. The Board points to the different treatment accorded to vesting and benefits under sections 36 and 37 of the PBA. Section 36, it submits, deals with pre-1987 employment accruals, and section 37 to the post-1986 period. Its submissions are as follows:
Section 36 of the PBA governs the vesting of benefits and entitlement to a deferred pension prior to normal retirement date with respect to employment prior to January 1, 1987. The three qualifications for vesting under s. 36(2) are:
*10 years of continuous employment or plan membership
*age 45
*termination prior to normal plan retirement date.
The benefit relating to pre-1987 employment is set out in section 36(3) as follows:
- (3) The benefit is a deferred pension equal to the pension benefit provided under the pension plan as it existed on the 31st day of December, 1986 in respect of employment before the 1st day of January, 1987 in Ontario or in a designated province,
(a) under the terms of the pension plan, with respect to employment on or after the qualification date;
(b) by an amendment to the pension plan made on or after the qualification date; and
(c) by the creation of a new pension plan on or after the qualification date.
[emphasis added by Board]
In contrast, section 37 of the PBA deals with the vesting of benefits and entitlement to a deferred pension prior to normal retirement date with respect to employment after December 31, 1986. The qualifications for vesting under s. 37(2) are different, namely:
*member on or after January 1, 1988;
*24 months continuous membership in plan; and
*termination prior to normal plan retirement date.
The section 37 benefit to which a member is entitled is set out in section 37(3) as follows:
(3) The benefit is a deferred pension equal to the pension benefit provided in respect of employment in Ontario or in a designated province,
(a) under the pension plan in respect of employment by the employer after the later of the 31st day of December, 1986 or the qualification date;
(b) under any amendment made to the pension plan after the 31st day of December, 1986; and
(c) under any new pension plan established after the 31st day of December, 1986 for members of the pension plan.
[emphasis added by Board].
[13] The Board goes on to submit that there are numerous other instances in the PBA where there is a distinction made between the benefits accrued prior to 1987 and those accrued after 1986: sections 63, 64 and 84(1)(3) are cited as are sections 53 and 58(2) of the Regulations.
[14] In essence, therefore, the Board submits that there was no pre-retirement death benefit available under the Plan or the PBA to a former spouse prior to January 1, 1987 when section 48 created the pre-retirement statutory death benefit. While that section applies to the deceased, as a person entitled to a deferred pension under section 37, it applies only in respect of employment after January 1, 1987. The priority given under section 48(13) to the former spouse claiming under the domestic contract is over the benefit under section 48 and so limited to post 1986 accruals. Therefore, prior to January 1, 1987, without section 48(13) to give priority to an assignment by way of domestic contract, there was no possibility of an effective assignment to a former spouse of the death benefits which existed under the Plan. The effect of this analysis is to limit Ms. Stairs’ entitlement to the period of some 18 months after January 1, 1987, when she was still the spouse of the deceased.
[15] The respondent Superintendent submitted that section 48 was a complete code as to pre-retirement death benefits, but that in some respects it was not limited to post-1986 accruals. The effect of section 48(13) was to create a lien upon the death benefits equal to 50% of the pension benefits accrued by the deceased member from 1965 to 1988 (date of separation) but it could only take effect to the extent of the surviving spouse’s entitlement under section 48 for the accruals from January 1987 to April 17, 1995. In other words, the Superintendent recognized the assignment in the Separation Agreement as effective and as given statutory protection by section 48(13), but as enforceable only to the extent of the assets accrued after 1986. In other respects, the Superintendent supported the Board.
[16] The appellant, Ms. Stairs, submitted that the central thesis of the Board’s case was wrong:
The Board states at paragraph 32 of its factum that the terms of the Plan do not entitle the appellant to any portion of the death benefit and “in the absence of a statutory claim, the Separation Agreement by itself cannot confer rights she does not have under the Plan”. Contrary to this assertion, the appellant has both a statutory basis for her claim as well as one arising from the Plan. The statutory claim arises, inter alia, from Sections 51 and 65 of the PBA. [Later, the appellants’ factum notes that the claim also arises from the Plan’s acknowledgement of the right of assignment of benefits in section 86a of the Plan, importing sec. 65 of the PBA into the Plan.]
[17] The appellant submits that section 65(3) of the PBA permits the assignment by a domestic contract of any interest in money payable under a pension plan, without requiring that the assignee have any other interest in the plan. It is the assignment itself that gives the assignee the interest assigned. Any interest in money payable under a Plan, including the future contingent interest of a surviving spouse is capable of assignment by a domestic contract. The Plan by section 86a acknowledges assignments to the extent permitted by section 65. Hence, it is one of the terms of the Plan that such assignments will be accepted and enforced. Sections 51(3) and (4) of the PBA impose upon Plan administrators the duty of dividing, revaluing and paying the benefit in accordance with the domestic contract. The appellant referred us to Best v. Best (1999), 1999 700 (SCC), 174 D.L.R. 235 (S.C.C.) where Major J. for the majority of the Supreme Court, dealt with issues as to the valuation of a husband’s pension in the equalization context, and whether the courts below had erred in refusing to allow the appellant to satisfy his equalization obligation under the FLA by an ‘if and when’ sharing of pension benefits. He observed, at page 279, that Ontario courts had enacted such arrangements using a trust, but that: “Ontario’s pension legislation also allows a court to order the pension plan administrator to pay over a portion of the pension benefit directly to the non-employee spouse. See [PBA] section 51.” It followed, the appellant submitted that, as we said in our earlier reasons, after Mr. Mowbray had made this assignment to his former spouse, what was left for the surviving spouse was what had not been assigned, subject to the limitations in sections 51(1) and (2). The appellant also referred to Suchostawsky cited by us in our original reasons, where the order made was not confined to post-1986 benefits.
[18] The appellant submitted that after the Separation Agreement was filed with the Plan, assigning a portion of the pension to the appellant, sections 51(3) and (4) imposed a statutory duty on the Plan to divide, revalue and pay the pension benefit upon the basis of the domestic contract. By operation of these provisions, the appellant acquired a vested interest in the value of Mr. Mowbray’s deferred pension and in effect became a Plan beneficiary in her own right. In the appellant’s submission, this legal result did not depend upon section 48, but upon the other sections cited and the assignment contained in the Separation Agreement. Mr. Mowbray’s deferred pension was based on a total of 29.70865 years of service, payable in two components: a base pension of $24,362.36 derived from 21.39705 years of service prior to 1987; and a base pension of $11,356.61 derived from 8.3116 years of service post-1986. Both of these components carried survivor death benefits, the first was a pension of one-half the amount that the member would have received; the second was the full amount. These benefits must be revalued and divided to take into account the assignment of 25 years of service to the appellant. Nothing in any of these sections or in paragraph 86a of the Plan limited the effect of the assignment, and the Superintendent’s duty to enforce it, to benefits accruing after 1986.
[19] The appellant further submitted that section 48 of the PBA is not a code establishing the full scope of permitted pre-retirement benefits, but is minimum benefits legislation establishing the minimum benefit that a Plan can offer. This is established by section 40(1)(2) which expressly allows the provision of death benefits in excess of those set out in section 48. Section 40(2) provides that an ancillary benefit for which the member has become eligible to exercise the right shall be included in calculating the pension or the commuted value of the pension. In the context of pre-retirement death benefits, where the member himself can never exercise the right to obtain the payment, the section must be read to refer to anyone eligible to receive the payment, which would include the appellant as assignee of a portion of the death benefits. The Plan provides for death benefits in excess of those set out in section 48, in particular, a death benefit based upon pre-1987 service. The combined effect of section 40(1)(2), section 40(2), 48, and the Plan paragraphs 61-63 is that the appellant’s full interest under the assignment in the domestic contract has priority over the claim of the second, surviving spouse.
[20] In its factum at paragraph 46, the Board concedes that Mrs. Mowbray’s entitlement to a death benefit is not limited to the amounts accrued after 1986, because the Plan gives her a death benefit in excess of that required by the PBA, by taking pre-1987 service into account. It argues that this does not affect the appellant’s entitlement under section 48.
[21] In Bell ExpressVu Limited Partnership v. Rex et al. 2002 SCC 43, [2002] SCJ No. 44 the Supreme Court once again enunciated the crucial role played by context in the interpretation of statutes:
- In Elmer Driedger's definitive formulation, found at p. 87 of his Construction of Statutes (2nd ed. 1983):
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
Driedger's modern approach has been repeatedly cited by this Court as the preferred approach to statutory interpretation across a wide range of interpretive settings: see, for example, Stubart Investments Ltd. v. The Queen, 1984 20 (SCC), [1984] 1 S.C.R. 536, at p. 578, per Estey J.; Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, 1994 58 (SCC), [1994] 3 S.C.R. 3, at p. 17; Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, at para. 21; R. v. Gladue, 1999 679 (SCC), [1999] 1 S.C.R. 688, at para. 25; R. v. Araujo, [2000] 2 S.C.R. 992, 2000 SCC 65, at para. 26; R. v. Sharpe, [2001] 1 S.C.R. 45, 2001 SCC 2, at para. 33, per McLachlin C.J.; Chieu v. Canada (Minister of Citizenship and Immigration), 2002 SCC 3, at para. 27. I note as well that, in the federal legislative context, this Court's preferred approach is buttressed by s. 12 of the Interpretation Act, R.S.C. 1985, c. I-21, which provides that every enactment "is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects".
- The preferred approach recognizes the important role that context must inevitably play when a court construes the written words of a statute: as Professor John Willis incisively noted in his seminal article "Statute Interpretation in a Nutshell" (1938), 16 Can. Bar Rev. 1, at p. 6, "words, like people, take their colour from their surroundings". This being the case, where the provision under consideration is found in an Act that is itself a component of a larger statutory scheme, the surroundings that colour the words and the scheme of the Act are more expansive. In such an instance, the application of Driedger's principle gives rise to what was described in R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867, 2001 SCC 56, at para. 52, as "the principle of interpretation that presumes a harmony, coherence, and consistency between statutes dealing with the same subject matter". (See also Stoddard v. Watson, 1993 59 (SCC), [1993] 2 S.C.R. 1069, at p. 1079; Pointe-Claire (City) v. Quebec (Labour Court), 1997 390 (SCC), [1997] 1 S.C.R. 1015, at para. 61, per Lamer C.J.)
[22] Accordingly, it is necessary to place these sections in their full context. In 1986 the FLA came into effect and instituted a regime of marriage as an economic partnership. Upon termination of a marriage, the net value of the assets accumulated during the marriage, including the growth in the value of assets brought into the marriage, was to be valued and divided equally as of the valuation date. For these purposes, property includes the value of a pension, which value is therefore intended to be divisible between the spouses. The FLA does not give a right to the pension itself, but only to a share in the value. In many cases, the value of the pension is by far the largest single asset of the marriage, perhaps in company with the matrimonial home. This may create great difficulty in finding the cash necessary for the pension-holding spouse to pay his or her equalization debt. The utility of being able to assign some of the pension benefits is obvious. However, if the pension alone is divided, the creditor spouse is being asked to wait and see what, if any, benefit will actually be received. She may die before receiving anything; the assignor spouse may die without retiring; the creditor spouse is at risk. The assignment of a pre-retirement death benefit as part of the division of the pension helps to alleviate that risk.
[23] Examining the PBA against this background, we find provisions that appear to be designed to work with the FLA scheme. It provides, by section 65 a continuation of the previous prohibition of assignment of pensions, but with new provisions excepting from that prohibition assignments made in domestic contracts pursuant to the FLA. It provides the scheme of section 51 referred to already. At least part of the rationale for this legislation was to permit the very thing done by the appellant and Mr. Mowbray in the present case. Both the FLA and the sections of the PBA at issue here are deserving of a broad and purposive interpretation to give effect, so far as the language will permit, to the need for them to interact to achieve their mutual objectives: the orderly and fair allocation of assets, including pension assets, on marriage breakdown.
[24] The Board contended that sections 37 and 48 could not be relied on by the appellant because to do so would be to give them retroactive effect. Statutes were not to be given retrospective operation nor be read as interfering with existing rights as regards person or property unless such a construction is expressly or by necessary implication required by the language: Gustavson Drilling (1964) Ltd. v. Canada (M.N.R.) 1975 4 (SCC), [1977] 1 S.C.R. 271, 282. Here, the Board submitted, Mrs. Mowbray, as surviving spouse, had a contractual right to receive the entire death benefit. It was conceded that section 48(13) reduced that right by the assignment of the post-1986 benefit, but the language did not extend to the pre-1987 benefit. Further, it would subject Plans to additional costs in respect of past events.
[25] The appellant responded that there is no retrospectivity problem because the principles referred to by the Board had no application to statutes conferring a benefit: Brosseau v. Alberta (Securities Commission) (1989), 1989 121 (SCC), 57 D.L.R. (4th) 458 (S.C.C.) at 470:
The so-called presumption against retrospectivity applies only to prejudicial statutes. It does not apply to those which confer a benefit.
[26] We agree with the appellant’s position. The new sections conferred on Mr. Mowbray the benefit of an ability to order his separation from Ms. Stairs better by giving him the right to assign a portion of his already vested pension benefits to her, including those relating to pre-1987 employment. Sections 37, 48, 51 and 65 did not attach prejudicial consequences to the prior act of Mr. Mowbray in entering the pension plan, nor to the prior act of the Board in offering the plan. There is no evidence that the new right of assignment would have prejudicial consequences to the Plan and Mr. Mowbray already possessed the vested rights which he assigned. The Separation Agreement was executed with knowledge of the sections and the second Mrs. Mowbray came to the situation long after both the new legislation and the Separation Agreement. Even though her ultimate entitlement has been reduced, there is no interference with a vested right.
[27] In our previous reasons, especially at paragraphs 36 to 43, we dealt with the broad thrust of sections 51 and 65, concluding that the Separation Agreement between Mr. Mowbray and the appellant was a valid transfer of some of Mr. Mowbray’s rights under the Plan and that there remained for the second spouse only that which remained unassigned, subject to the provisions of sections 51(1) and (2). We remain of that view.
[28] In paragraph 35 of our previous reasons, we treated section 48(13) more broadly than it seems to deserve. It does protect the interests of the appellant under the domestic agreement, but only with respect to the post-1986 death benefit. That does not alter the effectiveness of the Separation Agreement as a valid assignment of both pre-1987 and post-1986 death benefits because sections 51 and 65 and paragraph 86a of the Plan make the domestic contract effective as to the pre-1987 period without the aid of section 48(13). None of those sections make any distinction between the assignment of rights under a pre-1987 plan or a post-1986 plan. Obviously, it would have been open to the Legislature to confine the permitted assignments to benefits arising post-1986 if it had intended to do so.
[29] Section 48 did not introduce a death benefit into the Teachers’ Plan; such a benefit already existed in the pre-1987 Plan and continued, at a higher rate, in the post-1986 Plan. Section 48 is, as the appellant contended, minimum standards legislation and not a code. Any constraints in it are relevant only to the statutory minimum death benefit and not to such benefits in pre-1987 plans. The pre-1987 death benefit continues and the Board recognized its continuance by calculating Mrs. Mowbray’s payments using the service accumulated prior to January 1, 1987, as well as that accumulated after that date. Similarly, Ms. Stairs’ rights as assignee are not confined to the post-1986 accumulated credits. Section 48(13) which is intended to ensure that a domestic contract prevails over the surviving spouse’s statutory minimum entitlement in the post-1986 period, cannot be read so as to impair the rights of an assignee under a domestic contract relating to the pre-1987 period. Indeed, the very presence of section 48(13) indicates that there is no legislative policy against assigning up to 50% of the benefit away from the future surviving spouse to a divorcing spouse in a domestic contract.
Section 51:
[30] The Board submits that the entitlement of the appellant under the Separation Agreement is limited by section 51(2) to no more than 50 per cent of the pension benefits, calculated in the prescribed manner, accrued by Mr. Mowbray during the period when he and the appellant were spouses. In our original reasons, we had so found, but it was submitted that the matter had not been fully argued before us. The appellant submitted that although the section “arguably” applied to her entitlements, the Separation Agreement had already limited her entitlement to no more than the section allows. A number of problems arise.
[31] First, the PBA defines ‘spouse’ as either of a man or a woman who are married to each other [remainder of definition is not relevant]. By that definition the relevant accrual of credits would end with their divorce on March 7, 1991. But section 56 of the Regulations provides that for the purposes of section 51(2) of the Act, the period of accrual ends on the “valuation date”, a term which is not defined in the Act or in the Plan. It is defined in the Regulations, but in terms referable to solvency tests only and manifestly inapplicable. What does it mean? The Board adopts the definition from the FLA, referring to the date of separation as the earliest of the possible dates. That would be July 1, 1988. In support it cites a commentary from the Ministry of Financial Institutions taking the position that the appropriate date was that of separation.
[32] The appellant submits that the proper interpretation of the Regulation is that it refers to the FLA but as modified by the Separation Agreement. Section 2(10) of the FLA provides that “a domestic contract dealing with a matter that is also dealt with in this Act prevails unless this Act provides otherwise.” The domestic contract here modifies the valuation date and nothing in the FLA prevents this. Paragraph 10(4) of the Separation Agreement provides that the interest of the wife (appellant) is calculated as: 25 years of marriage divided by the total years of contributions to date of death times the benefit payable. Since the years to death are unknown until it happens, it follows that the valuation date has been altered to the date of death.
[33] We agree with the appellant that it is open to the spouses to choose a different valuation date as between themselves for establishing their equalization obligations. Neither the PBA nor the FLA require valuation in any specific manner and a number of methods have been discussed in the cases as appropriate in varying contexts. The difficulty with the appellant’s argument in the present context is that it overlooks the language of section 51(2) “during the period when the party and the member … were spouses”. The regulation cannot conflict with the Act and the Act limits the period of accrual to, at the latest, the day of the divorce. Whatever ‘valuation date’ may mean in the regulation, it cannot be later than the divorce, March 7, 1991. Given the uncertainty as to the meaning of the regulation, and the clear intention of the parties to postpone the date as long as possible, we hold that the accrual of credits applicable to the calculation of the portion assigned to the appellant terminated on March 7, 1991.
[34] The next problem to be dealt with is the application of section 51(2) to the facts of this case. The death benefit has two components and they must be looked at separately.
[35] The pre-1987 benefit is found in paragraph 62 of the Plan. It is a deferred pension equal to one-half of Mr. Mowbray’s pension had he not died. Prior to 1987, Mr. Mowbray accumulated 21.39705 years of service, all while the spouse of the appellant. The Separation Agreement assigned 25 years of service to the appellant and accordingly she submits that she is entitled to the whole of this benefit. There should be no reduction caused by section 51(2) because the benefit payable to her is already only half of the benefit that Mr. Mowbray had accumulated and which would have been paid to him in respect of his pre-1987 service, had he lived.
[36] While this submission has some support in the analysis of the Act put forward by the appellant, it cannot succeed when measured against the context and objectives of sections 51 and 65. In our view, the Legislature intended to preserve at least 50% of each benefit provided by the Plan to a member, including benefits to persons deriving a claim to a benefit through a relationship with the member. A potential future second and surviving spouse, although non-existent when the Separation Agreement was made, is nevertheless a person for whose benefit the 50% rule was enacted. Therefore we find that Ms. Stairs is entitled to not more than 50% of the pre-1987 death benefit. Given the fact that Mr. Mowbray and Ms. Stairs were married during the whole of Mr. Mowbray’s pensionable employment prior to January 1, 1987, she is entitled to the full 50%.
[37] The second component of the death benefit is in respect of post-1986. The appellant and the Board agree that she is entitled to a portion of the pension benefits accrued by Mr. Mowbray while she and he were spouses and that section 51(2) applies to the calculation. The post-1986 benefit is the whole of the pension benefits which Mr. Mowbray accrued after January 1, 1987. There must therefore be an adjustment to reduce the appellant’s entitlement to 50% of the benefit accrued while they were spouses; that is, as we have found, to March 7, 1991.
[38] Mr. Mowbray joined the Plan September 1, 1965 when he was already married to the appellant, and they were divorced March 7, 1991, some 25.51 years. The Separation Agreement uses the numerator 25 as representing the years of service while married. The number of years of service while married in the post-1986 period is thus (25 – 21.39705) or 4.113 years. The appellant calculates the entitlement as one-half of the pension generated by 4.113 years of service or $2809.91 annually. Assuming the arithmetic is correct, the appellant is entitled to that sum.
[39] Much discussion took place in the factums on the issue of whether the Superintendent had the authority to make orders enforcing any rights that we might find Ms. Stairs possessed for the period prior to 1987, due to the statutory nature of this appeal and the fact that the original proposal of the Superintendent was confined to post 1987 rights. It is our view that the parties, having invited the court to hear the motion which we have now decided, will abide by the ultimate result of these proceedings and it is therefore unnecessary to deal with this question.
[40] There will be an Order directing the Superintendent to direct the Plan to honour Ms. Stairs’ entitlements in the post-1986 Plan as we have found them. There will be a declaration that the Plan is bound to honour the entitlements of Ms. Stairs in the pre-1987 Plan as we have found them. Submissions as to costs may be made in writing within 30 days of the release of these reasons.
LANE J.
FARLEY J.
THEN J.
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