Virc v. Blair
Ontario Reports Ontario Superior Court of Justice, Jarvis J. March 20, 2017 137 O.R. (3d) 61 | 2017 ONSC 1766
Case Summary
Debtor and creditor — Garnishment — Pensions — Applicant making request for garnishment of respondent's retirement compensation arrangement — Retirement compensation arrangement not exempt from garnishment pursuant to Pension Benefits Act as it was "prescribed" pension plan under s. 47(3) of Reg. 909 under Act — Pension Benefits Act, R.S.O. 1990, c. P.8 — R.R.O. 1990, Reg. 909 (Pension Benefits Act).
The applicant made a request for garnishment of a pension in pay to the respondent, specifically, a retirement compensation arrangement ("RCA") which was administered by Royal. The respondent took the position that the RCA was a pension exempt from garnishment pursuant to the Pension Benefits Act.
Held, the respondent's dispute to the notice of garnishment should be dismissed.
Section 47(3) of Reg. 909 under the Act exempts from the application of the Act and the regulations a "retirement compensation arrangement as defined in subsection 248(1) of the Income Tax Act". According to the affidavit of a Royal Trust officer filed by the applicant, in the trust agreement's recitals, the respondent's company represented and warranted that the respondent's retirement plan was a retirement compensation arrangement as that term is defined in the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) and was not subject to pension benefits standards legislation. There was no merit to the respondent's dispute.
Counsel
DISPUTE to the notice of garnishment.
Sarah Conlin, for applicant. Respondent, self-represented.
Endorsement
[1] JARVIS J.: — Pursuant to reasons for decision dated May 31, 2016 [2016] O.J. No. 2813, 2016 ONSC 49 (S.C.J.), the husband was ordered to pay $1,055,578 for an equalization payment to the wife. In addition to ongoing child and spousal support, he was also ordered to pay $820,000 on account of retroactive child and spousal support, litigation costs of $936,125 and prejudgment interest of $195,000.
[2] The husband appealed the order made. On February 23, 2017, the Court of Appeal heard the husband's appeal and reserved its decision [2017] O.J. No. 2535, 2017 ONCA 394.
[3] Before the appeal was heard, the husband sold the matrimonial home. On August 16, 2016, Blair J.A. ordered that, among other things, the net proceeds of sale of the matrimonial home be paid into court after payment of child and spousal support arrears. That was done. On October 25, 2016, Juriansz J.A. lifted the automatic stay of the trial order and restrained the husband from disposing of or encumbering his assets except to comply with a court order or to satisfy the outstanding judgment.
[4] The wife seeks to enforce the order. As of February 24, 2017, the outstanding amount due to the wife was $1,283,595.86. No voluntary payments have been made by the husband.
[5] On December 1, 2016, the wife made a request for garnishment of a pension then in pay to the husband. The notice was issued to Royal Trust Corporation of Canada ("Royal Trust"), as trustee of Automodular Corporation RCA ("Automodular"). Automodular is a company owned and controlled by the husband and the pension is a retirement compensation arrangement ("RCA") which Royal Trust administers. No other person or group is a participant in the RCA: it is a one-person plan or arrangement.
[6] The husband contends that the RCA is a pension exempt from garnishment pursuant to the Pension Benefits Act, R.S.O. 1990, c. P.8 ("PBA"). The wife says that the PBA does not prevent garnishment of all pensions and that, in this case, the husband's RCA is not exempted from garnishment as it is not a protected pension plan as defined by the legislation.
Statutory Framework
[7] The PBA defines "pension plan" as follows:
"pension plan" means a plan organized and administered to provide pensions for employees, but does not include,
(a) an employees' profit sharing plan or a deferred profit sharing plan as defined in sections 144 and 147 of the Income Tax Act (Canada),
(a.1) a pooled registered pension plan registered under the Pooled Registered Pension Plans Act, 2015,
(b) a plan to provide a retiring allowance as defined in subsection 248 (1) of the Income Tax Act (Canada),
(c) a plan under which all pension benefits are provided by contributions made by members, or
(d) any other prescribed type of plan.
(Emphasis added)
[8] A "prescribed" pension plan is defined as meaning prescribed by the regulations.
[9] Section 47(3) of Reg. 909, made under the PBA, exempts from the application of the PBA and the regulations a "retirement compensation arrangement as defined in subsection 248 (1) of the Income Tax Act (Canada)".
[10] Subsection 248(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ("ITA") defines a retirement compensation arrangement as
. . . a plan or arrangement under which contributions . . . are made by an employer or former employer of a taxpayer, or by a person with whom the employer or former employer does not deal at arm's length, to another person or partnership . . . in connection with benefits that are to be or may be received or enjoyed by any person on, after or in contemplation of any substantial change in the services rendered by the taxpayer, the retirement of the taxpayer or the loss of an office or employment of the taxpayer . . . and, for the purposes of this definition, where a particular person holds property in trust under an arrangement that, if the property were held by another person, would be a retirement compensation arrangement, the arrangement shall be deemed to be a retirement compensation arrangement of which the particular person is the custodian.
[11] Filed by the wife in response to the husband's dispute is an affidavit sworn February 28, 2017 by James O'Reilly, a senior trust officer for Royal Trust. Paragraphs 2 and 3 of that affidavit state the following:
Royal Trust Corporation of Canada administers the Automodular Corporation Retirement Compensation Arrangement (RCA) trust (the "trust") pursuant to a written trust agreement. Mr. Blair is currently the only beneficiary of the trust.
In the trust agreement's recitals, Automodular Corporation has represented and warranted that Mr. Blair's retirement plan is a retirement compensation arrangement as that term is defined in the Income Tax Act and is not subject to the pension benefits standards legislation in Canada. As such, we have been administering it as an RCA trust.
[12] The husband maintains that the Automodular RCA is a protected pension plan and that the legislation exempts a "retiring allowance", not a "retirement compensation arrangement" from garnishment. The husband provides no authority for this proposition relies on his expertise as a member of pension committees of several public companies, fails to explain his rationale and leaves unchallenged Mr. O'Reilly's evidence. In light of the clear wording of the legislation and the evidence about the Automodular RCA, the husband has not persuaded the court that there is any merit to his dispute. Accordingly, the husband's dispute to the notice of garnishment is dismissed.
[13] If the parties are unable to resolve costs, then they shall file on or before March 31, 2017 in the continuing record their submissions limited to three double-spaced pages. Any offers to settle, bills of costs and authorities upon which either party may be relying shall be filed by that date as well, although not form part of the continuing record.
Dispute dismissed.