SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Ella Dembeck, Applicant
AND:
Terence william wright, Respondent
BEFORE: C. Horkins J.
COUNSEL: Patrick Kraemer, for the Applicant
Elliot Berlin, for the Respondent
HEARD at Toronto: October 8 and 29, 2015
ENDORSEMENT
introduction
1The dispute between the parties proceeded to trial in March 2011. Pursuant to the final order of Justice Perkins dated July 5, 2011, the respondent was ordered to pay the applicant an equalization payment, child support and s. 7 expenses. The equalization payment owing to the applicant was increased on appeal.
2The respondent did not voluntarily pay the amounts owing. The Family Responsibility Office (“FRO”) was involved collecting the child support until June 2014. The applicant then withdrew from FRO. The applicant has pursued various efforts to seize property and garnish the respondent’s assets. These efforts have been successful in reducing the amount of the respondent’s debt.
3The respondent is now retired and has one remaining asset, his retirement savings. This money is invested in the ScotiaMcLeod Life Income Fund #485-52879 (“RLIF”).
4The applicant brings a motion for an order that the Bank of Nova Scotia (“BNS”) and Scotia Capital Inc. pay to her all of the remaining funds in the RLIF to satisfy the current arrears, what will be owed in the future under the final order and an amount for fees that she has incurred over the years to obtain satisfaction of her judgment. As of April 6, 2015, the RLIF had a value of $271,577.
5This motion raises two questions. Is there is a monetary limit on the amount that can be withdrawn from the respondent’s RLIF? If yes, does the limit apply to payment of what the respondent owes the applicant? As explained below, the answer to both questions is yes.
The October 8 2015 Attendance
6The applicant’s motion first came before the court on October 8, 2015. On this attendance, the court requested clarification from the parties concerning various points that I will now review.
7The amount the respondent has paid the applicant and what arrears are outstanding was unclear in the motion material. During the court attendance, the parties agreed that the money collected to date from the respondent totals $138,883.54. It was also agreed that this amount has satisfied the following obligations under the final order:
The full equalization payment ($98,348.62)
The child support arrears incurred as of July 2011 – $24,502 (para. 8 of the final order).
The s. 7 expenses arrears incurred as of July 2011 - $6,032.92 (para. 6(c) of the final order).
The costs - $10,000 (para. 9 of the final order)
8Lastly, it was also agreed that as of October 8, 2015, the respondent owes the applicant arrears of $28,780.77 for child support and s. 7 expenses. All of the above agreements are reflected in the court’s October 8, 2015 endorsement.
9The applicant’s motion material includes various communications between her counsel and Martin Sclisizzi, counsel for BNS. The communication from Mr. Sclisizzi indicates that by law there is a monetary limit on what can be withdrawn from the RLIF. However, because the nature and extent of the limitation was unclear in the communication, I adjourned the motion and requested that BNS provide a letter addressing the questions set out in my October 8, 2015 endorsement. I add that BNS is not a party and did not attend the motion. Through Mr. Sclisizzi, BNS had been very cooperative in providing the parties with information concerning the RLIF. BNS continued to assist. In response to the court’s request, counsel for BNS provided a five page letter dated October 27, 2015. The parties filed this letter with the court for the return of the motion.
10In addition to the arrears of $28,780.77 that are owed, the applicant seeks an order that $154,355.81 be paid to her from the RLIF. She states that this amount will satisfy all future child support, future s. 7 expenses and recovery of the fees and expenses that that she incurred during the garnishment and collection process. The applicant provided no breakdown, details or supporting documents. In my endorsement, I ordered the applicant to provide a clear breakdown of what she says should be paid for each category with proof. The applicant filed a further affidavit responding to this request.
analysis
11For the reasons set out below, I find that there is a monetary limit on what the respondent can withdraw from his RLIF and this limit applies to payment of what the respondent owes the applicant. This is consistent with the law and BNS’s position as explained in their letter dated October 27, 2015.
12The RLIF is a type of registered retirement income fund that is used to hold locked-in money transferred from a pension fund.
13The Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) requires minimum and maximum annual withdrawals from the RLIF. The minimum level of payments from an RLIF is calculated based on a formula contained in the Income Tax Act. The minimum withdrawal amount calculation depends on the age of the annuitant at the beginning of each year. The maximum withdrawal amount varies by jurisdiction and is based on a formula established by the Federal and Provincial pension legislation. The maximum payment changes each year. The aggregate amount of all payments made from the plan for the year must be equal to at least the minimum amount as set in s. 146.3(1) of the Income Tax Act and must not exceed the maximum amount allowed under s. 20.3 of the Pension Benefits Standards Regulations, 1985, except if the maximum amount is less than the minimum amount, then the minimum amount must be paid.
14There is no dispute that the RLIF is subject to execution, seizure or attachment, including garnishment, for orders for support to “a maximum of one-half of the money payable” (s. 66(4) of the Pensions Benefits Act, R.S.O. 1990, c. P.8.) This applies to all support orders enforceable in Ontario made under the Family Law Act, R.S.O. 1990, c. F.3 or the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.).
15It is clear that the starting point under s.66 (4) is identifying the money “payable” to the debtor. Half of that amount, net withholding tax, is subject to execution, seizure or attachment, including garnishment, for orders for support. This was confirmed by the Ontario Court of Appeal in Trick v Trick, 2006 CanLII 22926 (ON CA), [2006] O.J. No. 2737, leave to appeal refused [2006] S.C.C.A. No. 388 as follows:
35 Section 66(1) of the PBA exempts money payable under a pension plan from "execution, seizure or attachment". For convenience, I repeat s. 66(4):
Despite subsection (1), payments under a pension ... are subject to execution, seizure or attachment in satisfaction of an order for support enforceable in Ontario to a maximum of one-half the money payable.
36 This subsection, enacted in 1988, provides that monies payable under a pension plan are subject to execution, seizure and attachment to a maximum of 50 per cent to satisfy support orders. This exemption applies to all support orders "enforceable in Ontario", which includes both orders made under the FLA and orders made under the DA, such as the one in this case.
37 The 50 per cent exemption is replicated in the Wages Act, R.S.O. 1990 c. W-1, at ss. 7(2) and 7(3) (WA). However, unlike the PBA, ss. 7(4) and (5) of the WA give a court jurisdiction to increase or decrease the percentage exemption "if the judge is satisfied that it is just to do so, having regard to the nature of the debt owed to the creditor, the person's financial circumstances and any other matter the judge considers relevant." The legislature did not give a court the same discretion with respect to exemptions in the case of pensions.
38 The objective of pension preservation is reflected in s. 23(1) of the FRSAEA, which precludes the Director bringing enforcement proceedings under a Support Deduction Order from garnisheeing more than 50 per cent of a payor's pension. While the legislature also proposes to provide a judicial discretion to increase or decrease that exemption, that amendment has not yet been proclaimed in force.
39 Since there is no similar proposed amendment to the PBA, the legislature can be taken to have determined that, at least currently, there should be no judicial authority to increase the 50 per cent exemption.
40 Accordingly, I conclude that, for the purpose of support enforcement, at law, s. 66(4) of the PBA permits execution against money payable under a pension plan to a maximum of 50 per cent.
[Emphasis added.]
16The applicant relies on s. 67.3(6) of the Pensions Benefits Act to support her position that up to 50% of the imputed value of a pension can be transferred to a spouse to satisfy equalization. The section states:
(6) The order, family arbitration award or domestic contract is not effective to the extent that it purports to entitle the eligible spouse to the transfer of a lump sum that exceeds 50 per cent of the imputed value, for family law purposes, of the pension benefits or deferred pension, as updated for the purposes of this subsection if the regulations require the imputed value to be updated
17This section does not apply. Equalization in this case has already happened. It was decided by Justice Perkins. Further, the respondent has paid the equalization in full. The court is now dealing with enforcement of the final order as it relates to outstanding child support and s. 7 expenses and s. 66(4) of the Pensions Benefits Act applies.
18BNS confirms that the minimum and maximum annual amounts that the respondent can withdraw from the RLIF each year will vary based on the value of the plan and the respondent’s age.
19In 2015, BNS confirms that the respondent can withdraw a minimum of $10,956.33 and a maximum of $21,192.04. BNS is set to pay the respondent the minimum amount on December 14, 2015 unless a request is made to withdraw a greater amount. A decision to withdraw the maximum amount must be communicated to BNS before December 31, 2015. The amount payable to the respondent is less the statutory income tax withholding required to be withheld and remitted by BNS on the amount.
20The order that the court can make on this motion is limited to 50% of the money “payable” and the maximum payable this year is $21,192.04, net withholding tax. The applicant seeks an order against BNS and Scotia Capital Inc. These institutions are not parties to this motion. It is the respondent that must be ordered to request payment of an amount from the RLIF. Subject to the monetary limitation, BNS will pay what they are directed to pay. It is unclear in the correspondence from Mr. Sclisizzi whether the direction should be given to BNS, Scotia Capital Inc. or both.
21The respondent owes the applicant arrears of $28,780.77 for child support and s. 7 expenses. He agrees that the maximum amount should be withdrawn from the RLIF for 2015. This will be less the statutory withholding tax. The amount of the withholding tax is not before the court. The applicant is entitled to be paid 50% of this net amount. It is obvious that this will not fully satisfy the arrears.
Fees/costs and Future Expenses
1. Fees/Costs
22The applicant’s motion material includes evidence about future anticipated s. 7 expenses and the fees that the applicant has incurred to collect money from the respondent. The applicant was requesting payment of the full value of the RLIF to cover fees incurred and child support and s. 7 expenses not yet incurred. She is concerned that there is a risk of non-payment because the respondent has not made any voluntary payments and according to her is not in good health. I make no finding on these future risks. The monetary limit on what the respondent can withdraw exists, regardless of the applicant’s concerns.
23Since I have decided that there is a monetary limit on what the respondent can withdraw from his RLIF, there is no ability to order that an additional amount be released to cover fees incurred. However, both parties made submissions regarding the fees and the court was requested to assess them and fix an amount. It is understood that these fees will be paid in the future from the money that is released from the RLIF. The fees are an incident of support that the respondent is obliged to pay.
24The fees total $75,662 and are documented through copies of various accounts from applicant’s counsel. It is apparent that the total amount includes work that was done to appeal the final order. For this reason, applicant’s counsel has reduced the claim by $1,745 to $73,917. The fees also include the work done for this motion.
25The respondent points out that the reduction does not fully reflect the extent to which the fees include work done for the appeal. I agree. For example, the fees for work done in 2011 and 2012 total $5,761.76. The Court of Appeal released its decision on December 4, 2012. Further fees were incurred in the early part of 2013 that dealt with the issuance of the Court of Appeal order.
26The respondent states that no fees should be awarded or, alternatively, something far less than what is requested. In his view, the fees are excessive. He points out that his assets were known to the applicant and such extensive fees cannot be justified. While I agree with this argument, the fact is that the applicant had to pursue various steps to recover payment.
27Based on the record before me, it is difficult to assess whether any particular step taken in the garnishment and collection process was reasonable and/or if the fees are excessive. I observe that extensive work was undertaken to draft and redraft documents and research law. The amount allowed must be reasonable in the circumstances. Collection of what was owed to the applicant was obviously important to her. However, the collection process was not complicated. The amount requested is excessive when one notes that the fees represent about 50% of the value of what was collected. Further, the applicant was not entirely successful on this motion.
28I have taken the relevant factors in Rule 24 of the Family Law Rule into account. As well, I am guided by the requirement that fees must be “fair and reasonable” (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) at para. 24).
29I fix the applicant’s costs at $30,000. This is a fair and reasonable amount. It covers the fees incurred to collect monies owed under the final order and fees for this motion. The respondent shall pay this amount as funds are released from the RLIF.
2. Section 7 Expenses
30The remaining issue deals with s. 7 expenses. The court was requested to provide direction concerning this issue.
31During the motion the applicant asked the court to order an amount for future s. 7 expenses. Payment of ongoing s. 7 expenses is governed by para. 6 of the final order as follows:
6 The final order of the Honourable Madam Justice Horkins dated November 20, 2009, which provided for section 7 expenses, is varied as follows:
a) The Applicant and the Respondent shall each pay fifty percent of all section 7 expenses for Neona. This includes but is not limited to eyeglasses and dance lessons. The Respondent shall pay his proportionate share of section 7 expenses to the Applicant within thirty days of receipts being provided to the Respondent. Such obligation shall commence and be effective from April 19, 2007, the date of separation.
b) The Respondent shall pay twenty-five percent of all section 7 expenses relating to the university attendance of Tamoril Dembeck Kerekes, born March 11, 1990, to be paid to the Applicant within thirty days of receipts being provided to the Respondent. Such obligation shall commence and be effective from April19, 2007, the date of separation.
c) The arrears for section 7 expenses owed by the Respondent from the date of separation to July 5, 2011 is set at $6,032.92, having accounted for all payments made by the Respondent directly to the Applicant but not accounting for any payments made through FRO.
32The applicant estimates that future s. 7 expenses for Neona will total $70,153. This covers $7,500 for extra-curricular activities, $15,000 for medical, dental and eye care and $47,653 for a four year degree at university. These types of expenses are captured by the final order even though they are not all specifically referred to.
33I refuse the applicant’s request that the court approve and order payment of these specific amounts in advance. The applicant may not incur all of these expenses and the respondent’s 50% share is due within thirty days of receipts being provided. Furthermore, any amount that becomes due can only be collected from funds in the RLIF pursuant to the above law.
34I offer the following guidance concerning these anticipated expenses with the expectation that this will assist in avoiding a dispute about payment when the receipts are provided.
35Neona is now 12 years old. It is not unreasonable to expect that there will be expenses in all of the above categories. If she does not attend dance lessons, some other activity should be allowed if Neona pursues an activity and an expense is incurred. The amount anticipated for University is fair and reasonable for tuition fees and books. The amount for medical, dental and eye care is $2,500 a year (over 6 years). This does not appear to be unreasonable.
36As the s. 7 expenses are incurred, the respondent’s 50% share shall be added to what he owes and shall be paid from his RLIF as the money becomes available each year.
37There is one dispute that involves the son, Tamoril, and payment of his University expenses. Tamoril graduated in July 2013. The respondent states that he has not been provided with copies of the receipts.
38The order requires the respondent to pay 25% of the expenses related to Tamoril’s university attendance within 30 days of being provided with the receipts. I have no evidence that this was done. Copies of the receipts were not provided on this motion. I encouraged the parties to try and resolve this issue. After the motion, they advised the court that the applicant seeks 25% of $15,673.59. The respondent agrees to pay 25% of $11,941.94. There is no evidence to explain why they disagree on the actual cost. The issue is straightforward and should be resolved on the basis of receipts that will confirm the expenses related to Tamoril’s university attendance. Once these receipts are provided, the respondent’s 25% contribution will be identified and added to what he must pay the applicant from the RLIF.
conclusion
39I make the following orders:
The respondent shall pay the applicant costs in the amount of $30,000. These costs are payable by November 16, 2015.
No later than November 30, 2015, the respondent shall in writing notify the Bank of Nova Scotia and Scotia Capital Inc. that he elects to withdraw from his RLIF the maximum amount for the 2015 year. A copy of this notification shall be provided to the applicant. Fifty percent of the maximum amount, net withholding tax, shall be paid directly to the applicant to reduce what the respondent owes her.
On an annual basis and for as long as the respondent owes money to the applicant pursuant to the final order and/or for costs ordered herein, he shall notify the Bank of Nova Scotia and Scotia Capital Inc. in writing no later than November 1 each year that he elects to withdraw an amount for the year in question that will allow maximum payment of what the respondent owes to the applicant. A copy of the election shall be provided to the applicant.
The respondent shall also direct the Bank of Nova Scotia and Scotia Capital Inc. to pay 50% of the annual withdrawal, net withholding tax to the applicant, Ella Dembeck, for as long as such payment is required to satisfy in full the amount that the respondent owes the applicant pursuant to the final order and for costs ordered herein.
C. Horkins J.
Date: November 10, 2015