Heringer v. Heringer; OPTrust (Party to Motion)

[Indexed as: Heringer v. Heringer]

Ontario Reports

Ontario Superior Court of Justice,

Fregeau J.

December 17, 2014

124 O.R. (3d) 195 | 2014 ONSC 7291

Case Summary

Family law — Property — Pensions — Parties agreeing to settle matrimonial litigation for global payment of $137,000 from respondent to applicant by means of transfer of his portion of his pension — Final order which incorporated terms of settlement saying nothing about interest — Pension plan administrator having no jurisdiction to add interest to specified amount in absence of specific court order.

The parties agreed to settle their matrimonial litigation by a global settlement of $137,000 payable by the respondent to the applicant by means of transfer of his portion of his pension. The final order which incorporated the terms of settlement made no mention of interest. The pension plan administrator refused to add interest to the agreed-upon transfer amount. The applicant brought a motion for an order that the respondent and the administrator pay interest on the $137,000.

Held, the motion should be dismissed.

Under the Pension Benefits Act, R.S.O. 1990, c. P.8 and O. Reg. 277/11, where the court order provides for the transfer of a lump sum expressed as a specified amount, there is no legislative provision to adjust the amount to be transferred on account of interest. The plan administrator has no jurisdiction or authority to add interest to the specified amount unless the court order requires that it be added.

Statutes referred to

Family Law Act, R.S.O. 1990, c. F.3 [as am.], s. 10.1(1)

Pension Benefits Act, R.S.O. 1990, c. P.8 [as am.], ss. 19, 67.2 [as am.], (5), 67.3(1), (1)4, (1)5 [page196]

Rules and regulations referred to

O. Reg. 287/11 (Pension Benefits Act), ss. 30(4), (5), 33, (2), (3)2

MOTION for an order compelling the paying of interest.

Mr. Smith, for applicant.

Ms. Stam, for respondent.

Mr. Scotchmer, for OPTrust, respondent for this motion only.

FREGEAU J.: —

Nature of the Motion

[1] The applicant and the respondent were married on August 30, 1980 and separated on January 9, 2007. The parties resolved their matrimonial litigation on December 11, 2012 by way of minutes of settlement (the "minutes"). The respondent was a member of OPSEU. His defined benefit pension plan was administered by OPTrust.

[2] In the minutes, the parties agreed to "a global settlement payment of $137,000.00 payable by the husband (Respondent) to the wife (Applicant) by means of transfer of his portion of his (OPTrust) pension pursuant to Bill 133". The final order dated December 11, 2012 stated that "there shall be a global settlement payment of $137,000.00 payable by the Respondent . . . to the Applicant . . . by means of transfer of his portion of his pension pursuant to Bill 133".

[3] On March 22, 2013, pursuant to the applicant's request, OPTrust transferred the sum of $137,000 to the applicant's Manulife Financial LIRA. By letter dated April 11, 2013, from OPTrust to the applicant, the applicant was informed that "your court order does not address the issue of interest, so a payment in the amount of $137,000.00 has been forwarded to (your) Manulife Financial Account".

[4] On this motion, that applicant requests an order that the respondent and OPTrust pay the applicant interest on the $137,000 transferred from the respondent's pension plan on March 22, 2013. The applicant's motion also requests an order that OPTrust be added as a party to this motion. OPTrust and the respondent have consented to OPTrust being added as a party for the purposes of this motion only.

Background

[5] During the course of the matrimonial litigation, the applicant requested a valuation of the respondent's OPTrust pension. On March 22, 2012, the applicant received a Statement of Family Law [page197] Law Value Active Plan Member with a Defined Benefit (the "statement of family law value") from OPTrust. The Pension Benefits Act, R.S.O. 1990, c. P.8 ("PBA") requires pension plan administrators in Ontario to utilize Financial Services Commission of Ontario ("FSCO") family law forms approved by the Superintendent of Financial Services. OPTrust, and other pension plan administrators, provide the requested information on the standard forms, but have no input as to the pre-printed text contained on the forms.

[6] The statement of family law value provided to the applicant from OPTrust states the following, on p. 1:

The Family Law Value that is specified under Part A of this Statement is the value of the pension that relates to the period of the spousal relationship for a Plan Member and the spouse of the Plan Member. If the Plan Member and former spouse proceed with a division of the Family Law Value, the former spouse of the Plan Member must provide the Plan Administrator with a certified copy of a court order . . . that provides for the division of the Family Law Value. The information provided in the court order . . . must clearly identify the former spouse's share of the Family Law Value and the Family Law Valuation Date.

[7] On p. 2 of the statement of family law value provided to the applicant by OPTrust, the family law value is indicated to be $429,967. The form also states the following:

Page 2 -- Interest will be added to the Family Law Value from the Family Law Valuation date to the beginning of the month in which the transfer is made to the former spouse.

Page 15 -- The maximum amount of the Family Law Value that may be assigned and transferred to the former spouse . . . is $214,983.50.

[8] The applicant deposes that she had a conversation on November 6, 2012 with Ms. Rita Aretusi, benefits specialist with OPTrust. The applicant deposes that Ms. Aretusi advised her of the following:

(1) interest would be added to whatever transfer amount was agreed upon but the total transfer amount could not exceed the amount stated in the valuation;

(2) the rate of interest to be paid in the applicant's case would be 1.40 per cent as of November 2012 (corrected in a later conversation to 2.5 per cent, the rate applicable to a January 2007 separation).

[9] The fact of this conversation and the information provided to the applicant during it are neither disputed nor admitted by the OPTrust on this motion. [page198]

[10] On January 21, 2013, the applicant signed an Application to Transfer the Family Law Value (Financial Services Commission of Ontario Family Law Form 5) directed to OPTrust. In the section of this form entitled "Part D, Transfer Information", the form states that

Interest will be added to the Family Law Value from the Family Law Valuation Date to the beginning of the month in which the transfer of your share of the Family Law Value is made.

[11] Also in Part D of this form, where the applicant was required to indicate whether the court order expressed her share of the family law value to be transferred as a specified amount or as a percentage of the family law value, the applicant indicated that the court order expressed it as ". . . the following specified amount . . . $137,000.00". The applicant directed that these funds be transferred to her LIRA with Manulife Financial.

[12] On March 8, 2013, Ms. Aretusi wrote to the applicant, confirming that OPTrust had received her application to transfer the family law value. Ms. Aretusi advised the applicant that "a payment in the amount of $159,412.34 ($137,000.00 plus interest of $22,412.34) will be forwarded to (your) Manulife Financial Account".

[13] Contrary to the March 8, 2013 correspondence, on March 22, 2013, OPTrust transferred $137,000 to the applicant's LIRA. By letter to the respondent dated April 11, 2013 and signed by Ms. Aretusi, OPTrust advised the respondent that the court order did not address the "issue of interest" so interest was not added to the funds transferred.

Position of the Applicant

[14] The applicant submits that the manner chosen by the parties to complete a transfer of a portion of a pension plan member's pension should not determine whether or not the transfer attracts interest. The applicant submits that interest should be payable on the jointly requested transfer of a specified amount just as it is payable on the transfer of a percentage of the imputed value of the member's pension benefits.

[15] The forms used by family law litigants to obtain pension valuations and to apply for transfers from a member's pension must be approved by the Superintendent of the FSCO. The FSCO also publishes user guides and Q and A forms to assist in the interpretation and completion of the forms. The applicant submits that the FSCO forms, user guides and Q and A documents are consistent in representing that interest will be added to the amount to be transferred to a non-member, former spouse, [page199] from the valuation date to the date of transfer, regardless of whether the amount to be transferred is expressed as a specified amount or as a percentage of the family law value of the member's pension.

[16] The applicant submits that s. 33 of O. Reg. 287/11 provides authority for OPTrust to add interest to the specified amount transferred to her. The applicant submits that s. 33(3)2 of this regulation requires that the respondent's pension benefits be reduced for the period beginning on the family law valuation date. This is submitted to be accomplished by increasing the portion transferred to the applicant.

Position of the Respondent

[17] The respondent submits that the "global settlement amount" agreed to by the parties included multiple components and represented an equalization of the values of the various components, consistent with the equalization scheme provided for in the Family Law Act, R.S.O. 1990, c. F.3. The respondent submits that the applicant is in essence asking this court to award post-separation interest on one asset owned by him ? his pension. The respondent submits that this is contrary to the property equalization scheme in the Family Law Act and contrary to what the parties agreed to in the minutes.

[18] The respondent submits that he and the applicant agreed that the total settlement amount, which included the value of the respondent's pension and the value of other assets equalized, would be satisfied from his pension plan. It is submitted that the applicant is now requesting that interest be ordered paid on the total settlement amount simply because the respondent's pension was used as a vehicle to satisfy the equalization payment.

[19] The respondent submits that, to the extent that the FSC forms imply that interest is payable on any pension transfer, they are simply incorrect. The fact that the FSC, in drafting their forms, may have misinterpreted the PBA and its regulations is irrelevant to the proper legal interpretation of the legislation.

Position of OPTrust

[20] OPTrust submits that there is no authority under the Pension Benefits Act or its regulations which allows OPTrust to pay interest on the amount that is transferred to a former spouse where the court order requiring the payment of a portion of a member's pension does not provide for the payment of interest or where the amount provided for in the order is not expressed as a percentage of the imputed value of the member's pension. [page200]

[21] OPTrust submits that imputed value is a defined term under s. 67.2(5) of the Pension Benefits Act:

67.2(5) The imputed value . . . of each spouse's pension . . . is that portion of the preliminary value that is attributed . . .

(a) to the period beginning with the date of the spouse's marriage and ending on their family law valuation date[.]

[22] OPTrust submits that the Pension Benefits Act provides for the transfer of a lump sum for the benefit of a former spouse if authorized by court or domestic contract. OPTrust further submits that the amount to be transferred as a lump sum must, pursuant to s. 67.3(1)5 of the PBA, be expressed as a "specified amount" or "as a proportion on the imputed value . . . of the member's pension benefits . . .".

[23] OPTrust acknowledges that s. 30(4) and s. 30(5) of O. Reg. 287/11 made under the Pension Benefits Act requires that the imputed value of pension benefits be updated to reflect interest accumulated from the family law valuation date to the beginning of the month in which the lump sum is transferred. However, OPTrust submits that there is no provision under the PBA or its regulations providing for a lump sum expressed as a specified amount to be updated on account of interest. As a result, where the court order provides for the transfer of a lump sum expressed as a specified amount, as in this case, interest is not payable unless the court order expressly requires same.

[24] Addressing the fact that the FSCO family law forms imply that interest would be added to the transfer of any portion of a member's pension to a former spouse regardless of how the transferred portion is described or expressed in the transfer request from, OPTrust submits that the form's reference to the "family law value" is not to the former spouse's share of the pension but to the "imputed value" of the member's pension entitlement. This is said to be disclosed in the FSCO user guide and Q and A document. In any event, OPTrust submits that the FSCO pre-printed forms cannot alter the legislative scheme nor assist this court in interpreting the relevant legislation.

[25] OPTrust submits that their plan administrator is bound by s. 19 of the Pension Benefits Act, which provides: ". . . the administrator of a pension plan shall ensure that the pension plan and the pension fund are administered in accordance with this Act and the regulations".

[26] Thus, the administrator does not possess discretion to pay an additional amount representing the requested interest payment absent a court order or domestic contract providing for same.

[27] OPTrust submits that a court order or domestic contract can provide for the payment of interest, either as part of the specified amount that will be the subject of the lump sum transfer or in addition to the lump sum transfer. If it is the latter, it must be expressly and specifically set out in the order. OPTrust submits the parties in this case agreed to the transfer of a specified amount pursuant to "a global settlement" and that the December 2012 final order did not provide for the payment of interest. OPTrust submits that it has no way of knowing if the "global settlement amount" did or did not include interest. OPTrust submits that they could not know that the specified amount set out on the application for transfer form did not already include interest.

[28] OPTrust submits that requiring them to make the requested interest payment based on the facts in this case would be tantamount to this court amending the PBA and regulations.

[29] OPTrust submits that s. 33(3)2 of O. Reg. 287/11 does not provide authority for adding interest to the transfer made to the applicant. It is submitted that s. 33 of this regulation refers to the adjustment of a member's defined benefit pension benefits subsequent to a transfer of a lump sum to the former spouse. It is submitted that s. 33 of O. Reg. 287/11 concerns only the benefits of a member or former member of a plan after the transfer of a lump sum. It is submitted to be irrelevant to the issue of the amount to be transferred to a former spouse.

Discussion

[30] The applicant and respondent resolved their matrimonial litigation by way of a consent final order dated December 11, 2012, para. 1 of which states: "There shall be a global settlement payment of $137,000.00 payable by the Respondent . . . to the Applicant . . . by means of a transfer of his portion of his pension pursuant to Bill 133."

[31] The applicant then completed the required Application to Transfer the Family Law Value, FSCO Family Law Form 5. In Part D of Form 5, entitled "Transfer Information", the applicant indicated that the authority for the transfer of her share of the "Family Law Value" was set out in a court order in which the lump sum was expressed "as the following specified amount ($137,000.00)". The applicant chose to have her share of the family law value transferred to her Manulife LIRA.

[32] OPTrust, when acknowledging receipt of the applicant's transfer request, initially expressly advised her that interest would be added to the $137,000. Soon thereafter, OPTrust reversed their position and advised the applicant that interest had not been added to the $137,000 transferred to her LIRA because the final order did not provide for the payment of interest.

[33] I do not accept the position of the applicant that the relevant legislation supports an interpretation that allows this court to order that interest be added to the $137,000 that the parties agreed be transferred from the respondent's pension plan to the applicant's LIRA. The applicant's motion is dismissed for the following reasons.

[34] The terms of the December 11, 2012 final order are clear and unambiguous. The parties settled all issues on the basis that the respondent would pay the applicant $137,000. All other claims were dismissed. There is no way to determine, and no reason to attempt to determine, whether this settlement figure did or did not include interest. The parties further agreed to complete the settlement by utilizing the respondent's pension.

[35] In the required transfer document, the applicant, consistent with the final order, indicated that the specified amount of $137,000 was to be transferred to her Manulife LIRA. This transfer was completed on March 22, 2013.

[36] In my opinion, the alleged misrepresentations as to the payment of interest made to the applicant by Ms. Aretusi of OPTrust are not relevant to the resolution of this motion. While these representations may, if substantiated, support an action by the applicant directly against OPTrust, they do not assist in the interpretation of the legislation or in determining the intent of the legislature in drafting the legislation.

[37] Further, the express content of the FSCO standard forms do not assist with interpreting the legislation or in determining legislative intent. The forms were created after and pursuant to the legislation. In my opinion, to the extent that these forms suggest or imply that interest is payable from the valuation date to the date of a transfer of a portion of a member's pension to a former spouse regardless of how that transfer amount is expressed they are, quite simply, incorrect. The interpretation guides and Q and A forms are also incorrect in this regard. While this is extremely unfortunate to the applicant, it does not assist me in interpreting the supporting legislation.

[38] The Family Law Act and the Pension Benefits Act provide the legal framework for the equalization of property and the division of pension benefits following marriage breakdown. I find the relevant provisions of these acts to be clear and unambiguous in their application to this case. [page203]

[39] Section 10.1(1) of the FLA provides that the imputed value, for family law purposes, of a spouse's interest in a pension plan is determined in accordance with s. 67.2 of the Pension Benefits Act, which provides:

67.2(1) The preliminary value of a member's pension benefits, a former member's deferred pension or a retired member's pension under a pension plan, before apportionment for family law purposes, is determined by the administrator in accordance with the regulations and as of the family law valuation date of the member, former member or retired member and his or her spouse.

(5) The imputed value, for family law purposes, of each spouse's pension benefits, deferred pension or pension, as the case may be, is that portion of the preliminary value that is attributed by the administrator, in accordance with the regulations,

(a) to the period beginning with the date of the spouses' marriage and ending on their family law valuation date, for the purposes of an order under Part I (Family Property) of the Family Law Act.

[40] The preliminary value of a member's pension benefits is based on the period of the spousal relationship. The imputed value of a plan member's benefits is a portion of the preliminary value of the member's benefits. The FSCO has chosen to use the term family law value in the family law forms rather than the term imputed value, as used in the Pension Benefits Act.

[41] Section 67.3(1) of the Pension Benefits Act provides that a spouse of a member of a pension plan is eligible to apply for an immediate transfer of a lump sum from the plan if certain circumstances exist. Relevant for the purposes of this motion are s. 67.3(1)4 and 5:

67.3(1) . . .

4. The transfer is provided for by an order made under Part I (Family Property) of the Family Law Act or is authorized under a family arbitration award or domestic contract.

5. In the order, family arbitration award or domestic contract, the amount to be transferred as a lump sum is expressed,

i. As a specified amount, or

ii. As a proportion of the imputed value, for family law purposes, of the members' pension benefits or the former member's deferred pension.

[42] Section 30(4) of O. Reg. 287/11 requires that the imputed value of pension benefits accumulates interest from the family law valuation date to the date of transfer under s. 67.3 of the Pension Benefits Act. There is no provision in the PBA or its regulations that provide for a lump sum expressed as a specified amount to be updated on account of interest.

[43] The result of these legislative provisions is as follows:

(1) where the court order provides for the transfer of a lump sum which is expressed as a percentage of the "imputed value", interest is added to the amount to be transferred because the imputed value is required to be adjusted pursuant to s. 30(4) of O. Reg. 287/11;

(2) where the court order provides for the transfer of a lump sum expressed as a specified amount, there is no legislative provision to adjust the amount to be transferred on account of interest. The plan administrator has no jurisdiction or authority to add interest to the specified amount unless the court order requires that it be added.

[44] The December 11, 2012 final order expressly provided for the transfer of a lump sum payment of the specified amount of $137,000. There was no provision in the order for the payment of interest in addition to the $137,000. There is nothing in the legislation that would allow the plan administrator to pay interest in these circumstances.

[45] I do not accept that this results in inconsistency or that it is inequitable, as submitted by the applicant on this motion. If the spouse's share of the family law value to be transferred has been expressed as a percentage of the family law value, the pension asset of the member (the value of which was determined as of the valuation date) has been isolated from the equalization process. In this case, interest is automatically added to the spouse's percentage share of the member's pension benefits from the valuation date to the date of transfer.

[46] If the spouse's share of the family law value to be transferred is expressed as a specified amount, up to a maximum of 50 per cent of the family law value, the transfer of the specified amount is completed to satisfy the terms of the court order or domestic contract. The specified amount may include only the member's pension asset, or as in this case it may represent an overall resolution of many assets and issues. The specified amount may or may not include interest. The plan administrator has no way of knowing if interest has been included in any particular specified amount requested to be transferred. A court order, by consent or otherwise, or a domestic contract, can require that interest be added to the specified amount. If so, the plan administrator must do so. If not, the plan administrator has no authority or discretion to do so. [page205]

[47] Finally, I accept the position of OPTrust, and reject the position of the applicant, as to the application of s. 33(3)2 of O. Reg. 287/11 in this case. Section 33 of O. Reg. 287/11 mandates the adjustment of a plan member's defined benefits pension benefits subsequent to a transfer of a portion of the member's benefits to a former spouse.

[48] Section 33(2) of O. Reg. 287/11 requires that all calculations required by this section are to be made as of the date on which the member terminates employment or membership. Section 33(3)2 speaks to the adjustment of a member's defined benefit pension benefits if the plan is indexed and only after a transfer of a lump sum to the member's former spouse. It does not provide for the payment of interest on a lump sum transferred to a former spouse. Pursuant to this section of the regulation, the benefits and entitlements of the member are adjusted to take into account the transfer of a portion out to the former spouse.

[49] The motion of the applicant is dismissed. OPTrust submits that there should be no order as to costs. I agree.

Motion dismissed.

End of Document