SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 49-2009
DATE: 2012/09/18

RE: DENISE J. TROYER

-and -

ANDREW G. TROYER

BEFORE: JUSTICE A. D. GRACE

COUNSEL: Glenn R. Carey , for the applicant

Andrew Troyer , in person

Quinn M. Ross, as agent for Osler, Hoskin & Harcourt solicitors for Growmark Inc. and FS Partners

HEARD: July 11, 2012

E N D O R S E M E N T

A. Background

[ 1 ] Desotti J.’s March 28, 2011 consent order (the “Order”) appeared to resolve the financial and non-financial issues which arose following the breakdown of Denise and Andrew Troyer’s marriage.

[ 2 ] Unfortunately, implementation of the Order raised other issues. Those relating to Mr. Troyer’s pensions are the subject of this endorsement.

[ 3 ] Mr. Troyer has been an employee of GROWMARK, Inc. (“Growmark”) for some time. He became a member of its registered pension plan on May 1, 2009.

[ 4 ] Previously, Mr. Troyer was employed by a related entity, FS Partners. He became a member of its registered pension plan on June 1, 2005.

[ 5 ] Two provisions of the Order relate to Mr. Troyer’s pension. [^1]

[ 6 ] Paragraph 8 directed as follows:

8. One half of the Respondent’s employment pension...held through Great West Life, shall be transferred to the Applicant in accordance with the provisions of the Pension Benefits Act . Great West Life shall complete such transfer in favour of the Applicant, and she shall become the owner of one half of the current value of the Respondent’s pension asset with Great West Life...

[ 7 ] Later, it provided:

11. The transfer...of the Respondent’s RRSPs, LIRA and...Great West Life pension, shall be on account of lump sum spousal support in favour of the Applicant.

[ 8 ] On April 12, 2011, Mr. Carey, Denise Troyer’s lawyer, sent a copy of the order to Great West Life Assurance Company (“GWL”) and asked GWL to complete the transfer contemplated by the Order.

[ 9 ] In fact, Growmark and FS Partners are the pension administrators and not GWL. The transfer has not taken place. Ms. Troyer moves for an order directing Growmark and FS Partners to “forthwith comply” with the Order.

B. The Position of the Parties Responding to the Motion

[ 10 ] I should make a preliminary point: the Order was made without notice to and therefore without input from Growmark and FS Partners.

[ 11 ] Growmark and FS Partners take the position the Order was made without jurisdiction insofar as Mr. Troyer’s pension is concerned. They note that the Order was made before January 1, 2012 when provisions added to the Pension Benefits Act [^2] to address the consequences of marriage breakdown came into force. Mr. Troyer’s employers maintain that any earlier attempt to compel an immediate transfer of an interest in a pension plan was void even if required by court order. [^3]

[ 12 ] Growmark and FS Partners say they proposed a practical solution to the problem. They invited Ms. Troyer’s solicitor to draft a domestic contract with the current provisions of the Pension Benefits Act in mind. They envisioned an assignment of fifty per cent of the “imputed value” of benefits payable under the FS Partners pension plan. They also contemplated exclusion of the Growmark pension plan because Mr. Troyer did not become a member until after the breakdown of the parties’ marriage. The parties to this motion were unable to finalize the terms of such an agreement.

[ 13 ] Mr. Carey takes the position that the terms of the Order do not fun afoul of the Pension Benefits Act because they were made under Part III of the Family Law Act . [^4] He argues Growmark and FS Partners were wrong to refuse to do what the Order required.

[ 14 ] Mr. Carey’s analysis started with section 51 (1) of the Pension Benefits Act . Before its repeal on January 1, 2012, it provided as follows:

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 the payment of the pension benefit commences; or

(b) the normal retirement date of the relevant member or former member.

[ 15 ] Stopping here, Mr. Carey observed that section 51 made no mention of an order under Part III of the Family Law Act . That portion of the statute deals with support obligations and allows the court to “order a person to provide support for his or her dependents and determine the amount”. [^5]

[ 16 ] Mr. Carey then turned to the broad powers given to the court by section 34 (1) of the Family Law Act . That section is found in Part III. The court may require payment of amounts periodically or in a lump sum. [^6] The court may compel the support payor to transfer property to the support recipient “whether absolutely, for life or for a term of years”. [^7]

[ 17 ] Mr. Carey acknowledged that section 65 (1) of the Pension Benefits Act invalidates “[e]very transaction that purports to assign, charge, anticipate or give as security money payable under a pension plan”. However, he relies on a later subsection. Section 65 (3) provides in part:

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 , by a family arbitration award or by a domestic contract.

[ 18 ] He maintains that the provisions of the Order in issue were the product of a proper exercise of the jurisdiction the Family Law Act confers. In other words, he says that the Court had the power to compel Mr. Troyer – and hence the pension administrator – to transfer one-half of his pension to Ms. Troyer under Part III of that statute.

C. Analysis and Decision

[ 19 ] A significant portion of the argument was spent on the recent amendments to the Pension Benefits Act and related amendments to the Family Law Act . They came into force January 1, 2012. The amendments postdate the Order.

[ 20 ] In my view, whether the Order can or should be enforced against the pension administrator(s) must be determined without reference to statutory amendments enacted after its making.

[ 21 ] Almost all of the cases to which I have been referred addressed pensions in the context of Part I (Family Property) of the Family Law Act . [^8]

[ 22 ] That Part requires the valuation of each spouse’s property following breakdown. Prior to January 1, 2012, the definition of “property” in Part I included “in the case of a spouse’s rights under a pension plan that have vested, the spouse’s interest in the plan including contributions made by other persons”. [^9]

[ 23 ] Once the process of identifying and valuing property is complete, the court has to address how an equalization obligation is to be satisfied. In considering the range of enforcement powers set forth in s. 9 (1) of the Family Law Act , Major J. wrote in Best v. Best :

The choice of method for settlement of the equalization obligation is highly contextual and fact-based. [^10]

[ 24 ] Prior to the recent amendments, satisfaction of an equalization payment was particularly problematic if the payor spouse’s principal asset was a pension.

The spouse who bears the equalization burden cannot use the pension asset to satisfy it; one cannot sell an interest in one’s pension or borrow money against it. If ordered to make an immediate payment, the spouse must sell or transfer other property. If the employee spouse’s equalization burden is owing to a valuable pension, an order for immediate payment of a lump sum could conceivably expose the employee spouse to severe hardship. [^11]

[ 25 ] The Pension Benefits Act limited the range of permissible orders under the family property regime. As noted, section 51 of that statute provided that an order under Part I of the Family Law Act could not require payment of a pension benefit before the earlier of the scheduled date for the commencement of pension benefit payments or the member spouse’s normal retirement date. [^12] While now mandated, before January 1, 2012, orders directing the immediate transfer of a lump sum out of a pension plan were almost never made under Part I of the Family Law Act . [^13]

[ 26 ] Faced with the practical reality that many spouses had significant obligations they simply could not fully satisfy except over time, alternative mechanisms were used. “If and when” orders were often made. They required payment of a specified portion of the pension benefits to the payee spouse “if and when” the support payor was entitled to receive them.

[ 27 ] The Order in this case is unusual. The portion that addresses Mr. Troyer’s pension does not arise in the context of an equalization payment and was not made pursuant to Part I of the Family Law Act .

[ 28 ] On its face, the Order seems designed to go further than orders usually granted under Part I of the Family Law Act .

[ 29 ] Mr. Carey relies on Nicholas v. Nicholas (“ Nicholas ”). ^14 In that case, LaForme J. (as he then was) ordered that one spouse transfer his entire pension to the other “to equalize their net family property and as a lump sum payment for damages for assault and battery and lump sum support ”. [Italics added] As here, the terms of the order made in Nicholas reflected the parties’ settlement and was made without notice to the pension administrator.

[ 30 ] When served with LaForme J.’s order, the pension administrator took the position it exceeded the court’s jurisdiction. A second order was issued – again without notice to the pension administrator. To satisfy the equalization obligation, it directed that fifty per cent of the pension [^15] be paid to a locked in R.R.S.P. in the name of the other spouse. Future support obligations were to be satisfied through the appointment of an equitable receiver. Once in pay, the receiver was empowered to receive the benefits from the remainder of the pension on the support recipient’s behalf. The pension administrator argued that order also went too far.

[ 31 ] LaForme J. disagreed. He referred with approval to the Ontario Law Reform Commission’s Report on Pensions as Family Property: Valuation and Division. [^16] With respect to a spouse’s support obligation the Report concluded:

…under the Pension Benefits Act , it is possible to assign one hundred percent of the pension where the assignment is made pursuant to a court order relating to support, or where the assigned benefit is in the form of a lump-sum payment on death, termination, or plan wind-up.

[ 32 ] After reviewing that passage and sections 51 and 65 of the Pension Benefits Act , LaForme J. concluded:

…the court is not prevented from ordering that one-half of the pension is to (sic) payable to satisfy the Petitioner’s equalization claim (i.e. pursuant to s. 51 ) and that the remaining one-half is to be paid to the Petitioner as lump sum support pursuant to s. 65 . [^17]

[ 33 ] In a short annotation, Professor James G. McLeod recommended that LaForme J.’s reasons in Nicholas “be approached with caution.” He questioned whether the court had jurisdiction to make the broad order it did and observed:

Parties cannot vest a court with power that it does not have under its enabling legislation…It is submitted that a court should review any settlement to ensure that the parties have not agreed to a “support” order that is really a property order…to avoid the Pension Benefits Act . [^18]

[ 34 ] The question of whether the Court had jurisdiction to order an immediate transfer of a pension plan or a lump sum from a pension plan under Part III of the Family Law Act before January 1, 2012 is an interesting one. [^19] However, for the reasons that follow, the facts of this case make it unnecessary to answer it.

[ 35 ] As noted, the Order in this case was made on consent. Other provisions bear mention. DeSotti J. fixed arrears of child and spousal support at $31,832 and provided that amount “shall be treated as a lump sum payment relative to child and spousal support.” [^20] That is the only “lump sum” payable under the Order. It was to be repaid by way of forty eight monthly payments of $663.17 each. The Order allowed the Family Responsibility Office (F.R.O.) to garnishee more than fifty per cent of Mr. Troyer’s wages to recover past and future support.

[ 36 ] The transfer of one-half of Mr. Troyer’s pension, together with certain RRSP’s and a LIRA (a locked in retirement account), was, as noted earlier, “to be on account of lump sum spousal support”.

[ 37 ] I do not know what amounts were collected by F.R.O. or how payments were allocated. There has been some recovery. In her May 16, 2012 affidavit, Ms. Troyer said only that FRO “is collecting some…but certainly not all” of the spousal and child support arrears.

[ 38 ] Nor do I know the value of Mr. Troyer’s RRSP’s or LIRA. However, Ms. Troyer’s affidavit indicated that Mr. Troyer’s RRSPs with Sun Life Financial and Bank of Montreal had already been transferred to her. On June 27, 2012, Thomas J. ordered that Scotiabank transfer three more RRSP’s to Ms. Troyer.

[ 39 ] Ms. Troyer attributed a value of between $130k and $140k to Mr. Troyer’s pension. Ignoring F.R.O.’s collection efforts and Mr. Troyer’s RRSPs and LIRA for a moment, one-half of that value alone would far exceed the lump sum due under the Order for spousal support.

[ 40 ] A detailed examination of the Order brought another portion of Professor McLeod’s annotation to mind. He wrote:

Although the conclusion that the court can transfer…a spouse’s pension benefits in family law proceedings is appealing, a court should not do so if the effect is to undermine the integrity of the Pension Benefits Act . In particular, a court should not divide property under the guise of support… [^21]

[ 41 ] I return to the facts of this case. Had the payment of lump sum support been the basis for the terms of the Order relating to Mr. Troyer’s pension, I would have expected the transfer to be limited to the spousal support component of the lump sum payment of $31,832 plus interest and, potentially, an amount on account of costs. The scope of the transfer, by asset type and value and in the face of repayment terms to be enforced by F.R.O., suggests that Part III of the Family Law Act was not the sole basis for the pension provision. In passing I note the Order gave Ms. Troyer a $100,000 equalization claim in Mr. Troyer’s ongoing bankruptcy.

[ 42 ] I am concerned that the Order in this case did what Professor McLeod rightly said it should not do: “rubber stamp an inter-spousal agreement which circumvents the Pension Benefits Act . ” ^22

[ 43 ] Even if the portion of the Order in issue here was appropriately made, an order of the kind sought by Ms. Troyer ought not to be made except to the extent, if at all, that there is an outstanding balance on account of lump sum spousal support after crediting amounts collected on Ms. Troyer’s behalf and the value of the RRSP’s and LIRA transferred to her. Otherwise, Ms. Troyer will receive more than the Order contemplated.

[ 44 ] Unless and until Ms. Troyer establishes that some portion of the lump sum attributable to spousal support is unpaid, it is, in my view, inappropriate to consider granting any relief against the pension administrators.

D. Conclusion

[ 45 ] For the reasons given, on this record it is not appropriate to grant the relief sought in Ms. Troyer’s notice of motion against Growmark and FS Partners. If Ms. Troyer wishes to supplement the record to address paragraphs 43 and 44 of this endorsement, I ask that Mr. Carey advise Mr. Troyer and the solicitors for Growmark and FS Partners forthwith. Mr. Carey is then asked to contact the Trial Coordinator in London by no later than October 2, 2012 to arrange a teleconference so that scheduling issues can be discussed with counsel and Mr. Troyer.

[ 46 ] If silence reigns I will assume that Ms. Troyer will not be proceeding any further with her motion. In that event, I encourage the parties to attempt to resolve the issue of costs. If they are unable to reach agreement, short written submissions not exceeding three typed pages each may be provided to me through Judges’ Administration, 80 Dundas Street, 12 th Floor, Unit “K”, London, Ontario N6A 6B2. Those of the pension administrators should be provided by October 12, 2012 and those of Ms. Troyer by October 22, 2012.

“ Justice A. D. Grace”

Justice A. D. Grace

DATE: September 18, 2012

[^1]: I have used the singular intentionally. The Order simply refers to Mr. Troyer’s “employment pension through his employment with GrowMark Inc (FS Partners)”.

[^2]: R.S.O. 1990, c. P.8 as amended.

[^3]: Ibid. s. 65(3).

[^4]: R.S.O. 1990, c. F.3 as amended.

[^5]: Ibid. s. 33 (1).

[^6]: Ibid. s. 34 (1) (a) and (b).

[^7]: Ibid. s. 34 (1) (c).

[^8]: See, for example, Boston v. Boston , 2001 SCC 43 , [2001] 2 S.C.R. 413; Best v. Best , 1999 700 (SCC) , [1999] 2 S.C.R. 868.

[^9]: Ibid. s. 4(1). Effective January 1, 2012, the definition was amended to provide “in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date”.

[^10]: Supra, note 8 at para. 109.

[^11]: Ibid. at para. 110.

[^12]: Section 51 was repealed on January 1, 2012. Section 51 (2) also limited the entitlement of the payee spouse to fifty per cent of the pension benefits calculated as prescribed and accrued during the specified period.

[^13]: However, see the discussion concerning Nicholas v. Nicholas (1998), 1998 14871 (ON SC) , 37 R.F.L. (4 th ) 13 (Ont. Gen. Div.) below.

[^15]: After a small deduction of $1k.

[^16]: (Toronto: Queen’s Printer, 1995). See, more recently, Law Commission of Ontario, Division of Pensions Upon Marriage Breakdown Final Paper – January 2009 at www.lco-cdo.org/en/pensions-final-paper.

[^17]: Supra, note 13 at p. 22.

[^18]: Ibid. at p. 15.

[^19]: Section 34 (1) (j) of the Family Law Act makes specific mention of pensions. It allows the court to require that a spouse who has an interest in a pension plan irrevocably designate the other spouse as beneficiary.

[^20]: The Order does not allocate that amount between child and spousal support.

[^21]: Supra, note 13 at p. 16.