ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Heather Lynn VanderWal
Terry W. Hainsworth for the applicant
Applicant
- and -
Kenneth Peter VanderWal
W. Scott Gallagher for the respondent
Respondent
HEARD: January 15, 2015
MARSHMAN J.
[1] The parties, to their credit, agreed on everything but how the equalization payment is to be made.
[2] The applicant adduced the evidence necessary to grant a divorce and a divorce order will go in the usual form.
[3] The parties agree that if the applicant pays the respondent an equalization payment in cash from the sale proceeds of the matrimonial home, then the applicant’s NFP is $291,287 and the respondent’s is $219,967, resulting in an equalization payment of $35,660. If, on the other hand, the applicant makes the equalization payment by way of a transfer of a portion of her pension, then the figure is $55,336.
[4] The parties were married on July 14, 2001. According to their agreed upon net family property statements, they separated on August 9, 2012. The applicant has been in the possession of the matrimonial home since that date. There is an outstanding order for the sale of the matrimonial home and, after payment of a charge and monies owing to the applicant’s parents, each party will receive approximately $145,000, less real estate commission and legal fees.
[5] The respondent purchased another home shortly after the separation at a cost of $283,000. That home bears a mortgage of $200,000.
[6] The parties share custody of their children, Carmen and Natalie, now 11 and 9 years of age respectively, and neither pays child support or spousal support to the other since their incomes are approximately equal.
[7] The applicant is a school teacher with a pension valued at $271,768 for family law purposes. The respondent is employed at Western University Canada and has a pension with the university valued at $77,434.
[8] I agree with the respondent that the proper way to deal with the matter is to calculate the net family properties of each party, equalize them and then implement the equalization payment. Implementation is set out in sections 9 and 10.1 of the Family Law Act, R.S.O. 1990, c. F.3, the relevant sections of which read as follows:
- (1) In an application under section 7, the court may order,
(a) that one spouse pay to the other spouse the amount to which the court finds that spouse to be entitled under this Part;
(d) that, if appropriate to satisfy an obligation imposed by the order,
(i) property be transferred to or in trust for or vested in a spouse, whether absolutely, for life or for a term of years, or
(ii) any property be partitioned or sold.
10.1 …
(3) An order made under section 9 or 10 may provide for the immediate transfer of a lump sum out of a pension plan but, except as permitted under subsection (5), not for any other division of a spouse’s interest in the plan.
(4) In determining whether to order the immediate transfer of a lump sum out of a pension plan and in determining the amount to be transferred, the court may consider the following matters and such other matters as the court considers appropriate:
The nature of the assets available to each spouse at the time of the hearing.
The proportion of a spouse’s net family property that consists of the imputed value, for family law purposes, of his or her interest in the pension plan.
The liquidity of the lump sum in the hands of the spouse to whom it would be transferred.
Any contingent tax liabilities in respect of the lump sum that would be transferred.
The resources available to each spouse to meet his or her needs in retirement and the desirability of maintaining those resources.
[9] As can be seen, even before the legislation was changed, the court was empowered to transfer property from one spouse to the other in order to satisfy the obligation imposed by the order. However, courts could seldom transfer pensions without the consent of the parties because of various statutes governing those pensions. Now s. 10.1 has been enacted in order to overcome that problem. That does not mean that a transfer of a lump sum will always be granted. In fact, the court has discretion and should consider the matters outlined in subsection (4) together with “such other matters as the court considers appropriate.”
[10] Vogelsang J. considered the matter in Tupholme v. Tupholme, 2013 ONSC 4268. It is important to note that Vogelsang J. was dealing with whether or not a matrimonial home ought to be sold and therefore his comments with respect to the ultimate equalization payment are obiter. Nonetheless, he is a very respected judge and had this to say:
[16] In my view, Mr. Tupholme should not be able to force his wife to accept a deferred payment of a share of his pension to ease his own liquidity position in the face of the clear words of s. 9(1) of the Family Law Act. Also, in my view, there is no statutory onus on a spouse entitled to an equalizing payment to show that the new pension division mechanism brought into force by the Family Law Statute Amendment Act, 2009 S.O. 2009, c. 11, s. 26 should not be called into play in favour of immediate payment.
[11] I agree with him that there is no presumption or statutory onus that an equalization payment will be made by a transfer of a lump sum out of a pension plan. Each case depends on its own facts.
[12] In Nadendla v. Nadendla, 2014 ONSC 3796, Sproat J. held at para. 18:
… If the pension is not divided at source, the Applicant will have to deplete virtually all his liquid assets. In the result, his assets will be tied up in the pension while all of the Respondent’s assets will be liquid. In contrast if the pension is divided at source both the parties will have a reasonable balance between liquid assets and savings for retirement.
[13] He considered the other factors outlined in subsection (4) and said at para. 22:
These factors strongly favour division of the pension at source and I so order. As such 50% of the Family Law Value of the pension shall be transferred to the Respondent plus applicable interest, if any. …
[14] It is interesting to note that, presumably at the instance of counsel, Sproat J. did not make an actual finding as to an equalization payment but rather carved out the pension and held that it was to be dealt with as outlined above. He left it to the parties after reviewing the other portions of his judgment to determine what the equalization payment would be and ordered it paid in a lump sum.
[15] In the case at bar, it is clear that the applicant’s pension value constitutes a great proportion of her net family property, partially because the applicant had assets going into the marriage. However, I also find that the equalization payment which she is required to pay, that is $35,660, represents only about one-quarter of the net proceeds of sale which she will receive when the matrimonial home is sold. She will still have over $100,000 to invest in a new home. This is important when considering the “assets available to each spouse at the time of the hearing.”
[16] As both parties are in their early 40s, the liquidity of an amount transferred will not be of immediate benefit to the respondent but, on the other hand, the pension is not liquid in the hands of the applicant either. With respect to condition 4, the parties have taken into account contingent tax liabilities and, with respect to condition 5, I am satisfied that each of these parties will be able to meet their needs in retirement which at this stage is a great ways off.
[17] To summarize, I am of the opinion that s. 10.1 merely creates another way for an equalization payment to be made and there is no presumption, one way or the other, that it is the right way. Each case depends on its own facts and, in this particular case, while I recognize that the proportion of the applicant’s net family property which consists of the imputed value of her interest in her pension is great, I find it more compelling that the amount of the equalization owed is small compared to the assets available. The applicant shall therefore pay to the respondent an equalization payment of $35,660.
[18] I trust that the parties will be able to resolve the issue of costs. If not, written submissions shall be provided by the party seeking costs within 30 days of the release of this decision and the other party shall have 30 days thereafter to respond.
“Justice Mary Marshman”
Justice Mary Marshman
Released: January 21, 2015
CITATION: VanderWal v. VanderWal, 2015 ONSC 384
COURT FILE NO.: FD1278/12
DATE: January 21, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Heather Lynn VanderWal
Applicant
- and -
Kenneth Peter VanderWal
Respondent
REASONS FOR JUDGMENT
MARSHMAN J.
Released: January 21, 2015