COURT FILE AND PARTIES

COURT FILE NO.: C-978-11
DATE: 2012-05-24
SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Gordon James Johnsen, Applicant

and

Cheryl Ann Johnsen, Respondent

BEFORE: The Honourable Mr. Justice R.D. Reilly

COUNSEL: Richard M. Van Buskirk, for the Applicant

Amy Priestley, for the Respondent

HEARD: April 18, 2012

ruling on an application

by the honourable mr. justice r.d. reilly

Reasons for Decision

[ 1 ] By this application, the applicant/husband makes application for:

1. A declaration that the pension of the respondent under the Canadian Forces Superannuation Act (Canada) be divided and one-half be paid to the applicant.

2. An order directing the respondent to sign all documents required to give effect to the pension division.

3. Together with costs to the applicant on a substantial indemnity basis.

The Facts

[ 2 ] The applicant and the respondent were married on January 17, 1981. The applicant is now 59 years of age and the respondent is 55 years old. There were two children born of the marriage, Kristy, born January 4, 1982 and Kory, born April 16, 1986.

[ 3 ] The parties’ affidavit evidence differs with respect to the date of separation. The applicant states the date of separation was May 29, 2000. The respondent testified by affidavit that the separation was on May 26, 1999. The approximate one year difference becomes largely irrelevant for purposes of the determination which I have to make with respect to the claims of the applicant.

[ 4 ] The respondent/wife joined the Canadian Armed Forces on July 16, 1974. She retired from her then active service on July 31, 1995. At that time she began drawing her pension, pursuant to the Canadian Forces Superannuation Act. Otherwise expressed, the respondent’s pension was “in pay” at the time of separation.

[ 5 ] When the respondent retired from the Canadian Forces, the family moved back to St. Catharines where both their families resided. The respondent continued to work at two jobs until February 1997 to support the family. The applicant worked for approximately one year at Canadian Tire, until his employment was terminated following allegations of theft from his employer.

[ 6 ] On February 27, 1997, the respondent re-entered military service with the National Defence Reserves with the Lincoln and Welland Regiment in St. Catharines. Apart from other part-time employment, the respondent continued to serve with the Reserve Force for some 14 years, ending in 2011. During the time of her Reserve service, she did not pay into a pension plan. She continued to receive her Canadian Forces pension from 1995 until this day, which pension amounts to $1,251 per month (before taxes), which will continue until she attains the age of 60, in some four years when her pension will be indexed. The respondent testified by affidavit that she is unable to work at other employment because of health issues.

[ 7 ] I might note that to the extent there is any conflict between the affidavit evidence of the applicant and that of the respondent, I prefer the evidence of the respondent. It is more logical and is largely uncontested by the applicant.

[ 8 ] During the marriage, the applicant testified by affidavit that he was largely the “stay at home parent” for the children. The respondent disagrees. Apart from two occasions, when as a result of her military duties she was posted elsewhere (to Alert in the Northwest Territories for six months and for six weeks when she attended a course in Borden), the respondent testified, by her affidavit, that she worked on a regular basis from 8:00 a.m. to 4:00 p.m. and was home every evening and every weekend caring for the children.

[ 9 ] The applicant has not contested the evidence of the respondent (by her affidavit), that after separation, she continued to raise the children on her own with no financial or any other help from the applicant. Specifically, she did not receive any child support. Since separation there has been little, if any, contact between the applicant and his children. Their son, Kory (now 26 years of age) now has two children of his own, ages 5 and 1 and the applicant has never met his grandchildren. There has been, in effect, no contact between the parties since separation. As noted above, the respondent has raised the children by herself since separation. She has received no child support and has paid for her daughter, Kristy’s, college education on her own. The applicant pleads he is now on disability benefits and is without employment and therefore has made this application for a portion of the respondent’s pension benefits pursuant to the Pension Benefits Division Act 1992 (PBDA). The applicant pleads that the PBDA is a “stand alone” piece of legislation that entitles him to a declaration from this court that the respondent’s pension be divided between the applicant and the respondent.

The Law and Analysis

[ 10 ] The PBDA does indeed apply to a number of pensions granted pursuant to Federal authority, including the Canadian Forces Superannuation Act, which is the source of the Respondent’s pension. The PBDA states in part:

4. (1) A member of a pension plan or a spouse, former spouse or former common-law partner of a member may, in the circumstances described in subsection (2), apply to the Minister to divide the member’s pension benefits between the member and the spouse, former spouse or former common-law partner.

(2) The circumstances in which an application may be made are:

(b) where the member and the spouse, former spouse or former common-law partner are living separate and apart, having lived separate and apart for a period of at least one year and, either before or after they commenced to live separate and apart,

(i) a court in Canada of competent jurisdiction make an order that provides for the pension benefits to be divided between them,

(4) An application must

(a) be made in writing and contain the prescribed information; and

(b) Be accompanied by a certified true copy of the court order or agreement and such other documents as are prescribed.

[ 11 ] Subsection 5. provides that the Minister, upon receiving an application, shall send notice of the receipt to each “interested party” which includes the spouse. Subsection 6. provides for an objection by any interested party. Section 7. provides for the division of the pension benefits by the Minister. Section 8 provides as follows:

8. (1) A division of pension benefits shall be effected by

(a) Subject to subsection (4), transferring an amount representing fifty per cent of the value of the pension benefits that have accrued to the member of the pension plan during the period subject to division, as determined in accordance with the regulations, to the spouse, former spouse or former common-law partner, if that pension plan is a retirement compensation arrangement ...

(i) a pension plan selected by spouse, former spouse or former common-law partner that is registered under the Income Tax Act, if that pension plan so permits,

(ii) a retirement savings plan or fund for the spouse, former spouse or former common-law partner that is of the prescribed kind, or

(iii) a financial institution authorized to sell immediate or deferred life annuities of the prescribed kind, for the purchase from that financial institution of such an annuity for the spouse, former spouse or former common-law partner; and

(b) adjusting, in accordance with the regulations, the pension benefits that have accrued to the member of the pension plan under that pension plan, notwithstanding the provisions of that pension plan or the Act under which it is established or by which it is provided.

(2) For the purposes of subsection (1) but subject to subsection (3), the period subject to division is

(a) the period specified by the court order or agreement as the period during which the member of the pension plan and the spouse, former spouse or former common-law partner cohabited; or

(b) where the court order or agreement does not specify a period as described in paragraph (a), such period as may be determined by the Minister, on the basis of evidence submitted by either of the interested parties or by both, as being the period during which the member of the pension plan and the spouse, former spouse or former common-law partner cohabited.

[ 12 ] Section 8(3) provides that the court may specify in the order for division the period over which the pension benefits have accrued. Section 8(4) provides for the possibility of a lump sum payment to satisfy their other provisions of the Act that are not directly relevant to my determination of the application.

[ 13 ] The equalization of net family properties following a separation or divorce is governed essentially by section 5 of the Family Law Act, R.S.O. 1990, which states:

5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.

[ 14 ] A claim for equalization of net family property is subject to a limitation period set out in section 7 (3) which states:

7 (3) An application based on subsection (5) (i) or (ii) shall not be brought after the earliest of,

(a) two years after the day the marriage is terminated by divorce or judgment of nullity;

(b) six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation;

(c) six months after the first spouse’s death.

[ 15 ] The respondent’s position is that the applicant/husband’s claim is essentially a claim for equalization of a family asset and thus is barred by the six year limitation period set out in section 7 (3) (b) of the Family Law Act. The applicant’ husband’s position essentially is that the PBDA is an independent piece of legislation that is not governed by or subject to the Family Law Act and that the PBDA entitles him to claim a division of the respondent/wife’s pension completely separate and apart for any claim for equalization of net family assets. The respondent wife’s position is that the PBDA simply provides a mechanism for equalization of the wife’s Canadian Forces Superannuation pension. Such claim is still subject to an equalization determination by the court and is governed in Ontario by the Family Law Act. It may be noted in the cases referred to below that the Provincial legislation, in dealing with equalization of net family property, may be somewhat different from province to province. However, the principles that flow from the jurisprudence are clear and instructive to the court.

[ 16 ] From the jurisprudence, I conclude that first and foremost, any pension earned by a party to a marriage is part of net family property and subject to equalization upon separation of the parties. Secondly, I conclude that the Pension Benefits Division Act (PBDA) is simply a mechanism whereby upon a claim for equalization one of the parties may claim from the Minister an equalization of pension benefits, in this case subject to the Pension Benefits Division Act.

[ 17 ] It should be noted that in reading and analyzing the cases noted below, the provincial legislation for equalization of net family property is somewhat different in different provinces (specifically the Matrimonial Property Act of Nova Scotia).

[ 18 ] In McKay v. McKay, 200 SKQB 113, the court stated at para. 5:

Under the Family Property Act pension plans are divisible assets. Tataryn v. Tataryn (1982), 22 Sask. R. 95 (Q.C.); Fisher v. Fisher (1983), 21 Sask. R. 235 (Q.B.). The court has the jurisdiction to value the pension plan and determine how it is to be divided or the family property equalized. The Court is not bound to apply the PBDA although it is a method of division open to the Court. There is no fixed method of valuation. The Court’s have used a variety of approaches to meet varied circumstances.

[ 19 ] In Morash v. Morash, 2004 CarswellNS (C.A.), Justice Bateman stated at para. 18:

Pension benefits and pensions and payment are matrimonial assets subject to division (Lawrence v. Lawrence (1981), 47 N.S.R. (2d) 100 (N.S. C.A.) and Clarke v. Clarke, [1990] 2 S.C.R. 795 (S.C.C.)).

[ 20 ] After referring to the earlier case of Clarke v. Clarke, Justice Bateman stated, referring to the appeal of the original trial decision:

“That court allowed the appeal and restored the judgment at trial stating, clearly, that pensions are matrimonial assets subject to division in accordance with the Matrimonial Property Act.”

[ 21 ] In that case the court had to determine the entitlement to pension benefits pursuant to the Matrimonial Property Act or the Pension Benefits Act. The Pension Benefits Act may be viewed as roughly equivalent to the Federal Pension Benefits Division Act. Justice Bateman stated at paras. 28 and following:

28 The PBA, in my view, provides no more than a mechanism for division of pension credits at source, with a limit on source division to fifty percent of the pension benefits earned during the marriage. It is obvious from the wording of the PBA that it does not report to govern entitlement.

29 Similarly, the related PBA Regulation expressly recognizes that the spouse’s share of the pension benefit must be determined by court order or agreement and, as well, recognizes the court’s jurisdiction, under the Matrimonial Property Act, to order an asset trade-off in settlement of pension benefits.

[ 22 ] The court went on to consider the application of Clarke v. Clarke, supra and ultimately determined at para. 33:

Since the decision of the Supreme Court of Canada in Clarke, supra, this Court has consistently held that pension credits earned before and during the marriage (subject to valuation date issues) are a matrimonial asset and subject to equal division, but for the operation of s. 13 of the Matrimonial Property Act.

[ 23 ] In REDC v. RMC 2003 BCCA 420 () (BCCA), Chief Justice Finch stated at para. 18:

Relying on Baker v. Baker (1998), 34 R.F.L. (4th) 364 (B.C.S.C.), the learned trial judge held that a pension plan created by the Canadian Forces Superannuation Act, R.S.C. 1995 c.C-17, was an “extraprovincial plan”.

[ 24 ] Chief Justice Finch disagreed. He stated on behalf of the court at paras. 41-44 the following:

[41] The PBDA was enacted in 1992 and came into force in September 1994. The purpose of the PBDA and Regulations ... is “to provide a mechanism for making payments out of the pension funds, not to fix the value of the pension as between spouses in property settlements made upon the breakdown of their relationships.”

[42] The PBDA provides direction to the Minister in order to facilitate transfers out of pension funds. It does not, by its own terms, govern property rights as between former spouses falling within provincial jurisdiction.

[ 25 ] Chief Justice Finch, on behalf of the court, concluded at para. 78:

In the absence of the agreement, the federal PDBA would have applied ... However ... an order under s.77 in respect of an extra-provincial plan is still subject to judicial reapportionment on the basis of fairness.

[ 26 ] All of the jurisprudence supports the conclusion that the PBDA does not operate as a “stand alone” piece of legislation which excludes the application of provincial legislation with respect to equalization of net family property. Therefore, I conclude that s.7(3) of the Family Law Act, which provides for a six year limitation period to bring an application for equalization of net family property bars the applicant from bringing an application for equalization of the respondent/wife’s pension, which she receives pursuant to the Canadian Forces Superannuation Act.

[ 27 ] Applying my common sense and my appreciation of the jurisprudence, it would be both contrary to law and to equity to permit the applicant to bring a claim for participation in or equalization of the respondent/wife’s pension entitlement some 12 or 13 years after separation.

[ 28 ] It would appear on the evidence (or the lack of evidence) that the parties simply decided to sever their relationship in 1999 or 2000. Neither party made any claims pursuant to the Family Law Act. Indeed, a divorce has never been granted.

[ 29 ] To repeat my comments noted above, I conclude that the respondent/wife’s pension is a matrimonial asset that might have been subject to equalization (together with other assets) if either of the parties had sought appropriate relief in a timely fashion.

[ 30 ] As noted above, in my view, it would be wrong, both in law and in equity to permit the applicant/husband to now pursue his claim for a share in the respondent/wife’s pension some 12 or 13 years following separation.

[ 31 ] For the above reasons, I dismiss the application and deny the applicant/husband the relief which he seeks.

[ 32 ] The parties may make brief submissions in my writing (no longer than five pages) in writing to me at my Kitchener chambers, within 30 days of publication of this ruling.

[ 33 ] I wish to thank both counsel for their helpful submissions on this application.

R.D. Reilly J.

Released: May 24, 2012