ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12307-12
DATE: 20120803

BETWEEN:

Lindsay Laframboise Applicant – and – Terry Laframboise, Bonnie Laframboise, Craig Laframboise and Aaron James Laframboise Respondents

Linda Laakso, for the Applicant

Leo P. Arseneau, for the Respondents

HEARD: June 5, 2012

DECISION ON MOTION

Hennessy J.:

[1] The applicant, Lindsay Laframboise brings this motion for an order extending the time for filing an election under s. 6(1) of the Family Law Act (the “FLA ” ) and for the court’s direction with respect to the inclusion or exclusion of a lump sum pension payment (pre-retirement death benefit) in the Net Family Property (the “NFP”) of the Estate of her deceased husband.

Background

[2] Lindsay Laframboise is the widow of Adam Laframboise who died July 24, 2011. At the time of his death Adam Laframboise was married to Lindsay Laframboise. Adam Laframboise left a will in which he left the bulk of his estate to his parents and his brothers and otherwise did not provide for his wife. Adam Laframboise also purported to designate his father as the beneficiary of his employment benefits. However, in a letter dated May 18, 2012, the Ontario Teachers Pension Plan (the “Plan”) advised that the will did not make a valid beneficiary designation of the pre-retirement death benefit.

[3] The Plan provides that if Lindsay Laframboise is an eligible spouse on the date of Adam’s death, she would be the beneficiary of the pre-retirement death benefit which has a commuted value of $64,000. If Adam and Lindsay were living separate and apart for family law purposes on the date of Adam’s death, Laframboise would not be an eligible spouse. The respondents, being the father and brothers of the deceased assert that Lindsay and Adam Laframboise were separated at the time of Adam’s death.

[4] There is a dispute between Lindsay Laframboise and the deceased’s family on the spousal status of Lindsay and Adam on the date of death. This is obviously a factual dispute that is fraught with difficulties. Counsel on behalf of the family submitted that this was an inappropriate motion for directions as it asked the court to assume a hypothetical, i.e. if the pension benefit were paid to the Estate would it be included in Adam’s NFP. The question as posed is for directions. The applicant spouse is required to make an election which will trigger the operation of the FLA and thereby determine how the benefit will be treated in the subsequent FLA process to divide NFP. By answering this question now, it is possible the parties may ultimately avoid having to ever resolve the factual issue.

[5] There had been a consent extension of the applicant’s statutory deadline to file her election granted as a term of an adjournment of the original application to hear this question. As part of that consent adjournment, the respondents agreed that there would be no further distribution of the estate prior to the application being heard. Today was the return date following that adjournment. The respondents submit that no further extension should be granted to the applicant, based in part on the prejudice to them if they were required to maintain the assets. The decision on this motion was reserved. The respondents were relieved of their agreement to make no distribution of the estate during the period that the matter was under reserve.

Extension of times

[6] On a request for an extension of time, the court shall consider the strength of the case, whether any delay was incurred in good faith and the question of prejudice.

[7] The applicant submits that she has tried to get particulars from the respondents, that any delay has been caused by them and that there is no prejudice to them since they have received the full proceeds of a life insurance policy through which they can cover any expenses associated with holding the house and the car until this question is resolved.

[8] As noted above, the respondents were permitted to sell or otherwise deal with the two assets (house and car) so that there are no further expenses associated with them following the hearing of this motion. I am satisfied therefore that the extension to make the election would not cause further prejudice to the respondents.

[9] The applicant requests direction from the court on the treatment of the pension payment if it goes to the estate. The argument in favour of the preferred position of the applicant is also the argument in support of her position that there are apparent grounds for relief in this case. I deal more fully with that question below.

[10] With respect to delay, I am satisfied that the applicant has not been the cause of any delay on this matter. Counsel for the respondents was unavailable for a period as a result of health issues. At this time, I am satisfied that delay is not an issue that weighs in favour of either party.

The Family Law Act Question

[11] Under the FLA, the surviving spouse is entitled to make an election to receive her entitlement under the will or to receive her entitlement under equalization of property provisions of the FLA. The surviving spouse must make the election within six months of the death, unless the time is further extended. The deadline for making the election has now been extended pending the release of this decision. The applicant submits that she is unable to make the election until she knows the consequences of her decision. She seeks the direction of this court before she makes her election as to the treatment of the pension payment if it is made to the estate.

[12] In a letter dated May 18, 2012, the Plan advised the parties as follows:

If it is determined by a court or an arbitrator, or if the Estate and Mrs. Lindsay Laframboise agree, that Lindsay and Adam were living separate and apart for family law purposes on the date of Adam’s death, the Estate would be entitled to the entire pre-retirement death benefit payable under the Plan and Lindsay would have no entitlement to any payment under the Plan.

[13] If Lindsay receives the pre-retirement death payment from the Plan, she would be required to include the amount as an asset in her NFP statement if she elected to take an equalization payment.

[14] The following provisions of the FLA are relevant to the discussion.

Equalization of net family properties

Divorce, etc.

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. R.S.O. 1990, c. F.3, s. 5 (1) .

Death of spouse

(2) When a spouse dies, if the net family property of the deceased spouse exceeds the net family property of the surviving spouse, the surviving spouse is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (2) .

Election

Spouse’s will

Amounts to be credited

6. (6)The rules in subsection (7) apply if a surviving spouse elects or has elected to receive an entitlement under section 5 and is,

(a) the beneficiary of a policy of life insurance, as defined in the Insurance Act , that was taken out on the life of the deceased spouse and owned by the deceased spouse or was taken out on the lives of a group of which he or she was a member;

(b) the beneficiary of a lump sum payment provided under a pension or similar plan on the death of the deceased spouse; or

(c) the recipient of property or a portion of property to which the surviving spouse becomes entitled by right of survivorship or otherwise on the death of the deceased spouse. 2009, c. 11, s. 23 .

Same

(7) The following rules apply in the circumstances described in subsection (6):

1. The amount of every payment and the value of every property or portion of property described in that subsection, less any contingent tax liability in respect of the payment, property or portion of property, shall be credited against the surviving spouse’s entitlement under section 5.

2. If the total amount of the credit under paragraph 1 exceeds the entitlement under section 5, the deceased spouse’s personal representative may recover the excess amount from the surviving spouse.

3. Paragraphs 1 and 2 do not apply in respect of a payment, property or portion of property if,

i. the deceased spouse provided in a written designation, will or other written instrument, as the case may be, that the surviving spouse shall receive the payment, property or portion of property in addition to the entitlement under section 5, or

ii. ii. in the case of property or a portion of property referred to in clause (6) (c), if the surviving spouse’s entitlement to the property or portion of property was established by or on behalf of a third person, either the deceased spouse or the third person provided in a will or other written instrument that the surviving spouse shall receive the property or portion of property in addition to the entitlement under section 5. 2009, c. 11, s. 23 .

Manner of making election

(10) The surviving spouse’s election shall be in the form prescribed by the regulations made under this Act and shall be filed in the office of the Estate Registrar for Ontario within six months after the first spouse’s death. R.S.O. 1990, c. F.3, s. 6 (10) .

Position of the Parties

[15] Ms. Laframboise asserts that the parties were not separated at the time of death. She acknowledges that this is a question of fact. However, if this court directs that the estate must include the pension payment in the NFP, the applicant is prepared to concede that the parties were separated at the time of death.

[16] The applicant submits that she cannot make the election of whether to take under the will or pursuant to a division of NFP without knowing beforehand how the pension payment will be treated if it received by the estate.

[17] Counsel for the applicant submits that although the FLA is silent on the treatment of the pension payment to the Estate, she argues that it should be included in the deceased’s NFP, and that the Act should be interpreted to include such a requirement. In support of this position, she argues that the FLA preamble states that one of the goals of the legislation is to provide for the orderly and equitable settlement of the affairs of the spouses upon the breakdown of the partnership. Further she argues that the Interpretation Act , R.S.O. 1990, states that all legislation shall receive fair, large and liberal construction and shall be deemed to be remedial. (see s. 10)

[18] Effect of preamble

8. The preamble of an Act shall be deemed a part thereof and is intended to assist in explaining the purport and object of the Act. R.S.O. 1990, c. I.11, s. 8 .

[19] All Acts remedial

10. Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of any thing that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit. R.S.O. 1990, c. I.11, s. 10 .

[20] Pursuant to s. 6(6) of the FLA, the surviving spouse must identify those assets that flow to her as a designated beneficiary, including pension, retirement savings plan and designated life insurance proceeds. Those amounts shall be credited against her entitlement as calculated under the NFP. Therefore, if Lindsay Laframboise is successful in obtaining the pension payment, it shall be credited against anything owing to her after the calculation of the NFP.

[21] The respondents submit that existence of the pre-retirement death benefit is obviously triggered by the death of the member of the pension plan. Prior to his death, Adam Laframboise did not own an asset called the pre retirement death benefit. His pension asset, which he did own and which is an asset is separate and distinct from the pre retirement death benefit.

[22] The assets which must be included in the NFP for the deceased for the purpose of calculation of an NFP are those which exist as of the valuation date. In this case, the valuation date will be either the date of separation or the date before the day on which one of the spouses dies leaving the other spouse surviving (see s. 4 FLA). As of the day before the date of death, Adam Laframboise neither owned the asset in question nor was he entitled to it. The legislation is very specific with respect to assets flowing to the surviving spouse and how they are to be used to off-set or credit the amount that would otherwise be owing to the surviving spouse. The respondents submit that the payment that goes to the estate does not figure into the deceased’s assets. The estate is not involved as a party in the equalization of property under the FLA. The respondents argue that the position of the applicant confuses the estate’s assets with the assets of the deceased as of the valuation date.

Analysis

[23] I cannot agree with the position of the applicant with respect to the interpretation she asks this court to make. The legislation does not support the proposed interpretation that the payment of the pre-retirement death benefit to the estate be used to off-set or be used as a credit against any amount owed by the surviving spouse after calculation of the NFP. The FLA seeks an equitable distribution of assets as between spouses but not between a surviving spouse and the estate of the surviving spouse.

[24] I will not make the direction sought by the applicant. The applicant now has information that may assist her in making her election. The dispute with respect to whether the plan will find that the spouses were separated at the date of death remains outstanding. I see from the letter of May 18, 2012, from the Plan that there is an arbitration provision that can be used to resolve this dispute.

[25] In order to allow the applicant time to make a fully informed election, I shall allow an extension of time. The extension shall be for a further 90 days from the date of this decision to allow her to participate in the arbitration process.

[26] If the parties cannot agree on costs they may make written submissions to me through the trial coordinator as follows: The respondents by September 15, 2012; the applicant by September 30, 2012; and in reply if necessary from the applicant by October 15, 2012. Submissions are to be no more than two pages.

Madam Justice Patricia C. Hennessy

Released: August 3, 2012

COURT FILE NO.: 12307-12

DATE: 20120803

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Lindsay Laframboise Applicant – and – Terry Laframboise, Bonnie Laframboise, Craig Laframboise and Aaron James Laframboise Respondents DECISION ON MOTION Hennessy J.

Released: August 3, 2012