Court File and Parties

COURT FILE NO.: FS-16-85575-00 DATE: 2019 04 09 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Richard Miaskowski, Applicant AND: Jacqueline MacIntyre, Respondent

BEFORE: Justice G.D. Lemon

COUNSEL: Anita K. Kania, Counsel for the Applicant Jason Isenberg, Counsel for the Respondent

HEARD: March 19 and 20, 2019

Judgment

The Issue

[1] The parties have been able to resolve all of their outstanding issues except two. I am first asked to determine the value of Mr. Miaskowski’s pension. Having done so, I am asked to determine how the resulting equalization payment should be made to Ms. MacIntyre.

[2] Of greatest significance is the question of whether Mr. Miaskowski’s pension should be valued from the date of marriage or from the date that the parties reconciled after seven years of separation?

Background

[3] A joint statement of agreed facts was filed at trial. The following facts are not in dispute.

[4] It is agreed that the parties first resided together in 1992. They then married on October 16, 1997 and separated July 22, 1999. They entered into a separation agreement dated January 18, 2002. The issue between the parties is the effect of that agreement.

[5] The parties then reconciled as of March 1, 2006. In the intervening seven years, both had formed and ended new relationships. Both had apparently entered into agreements with those partners to end their obligations.

[6] After their reconciliation, the parties separated for a second time on December 7, 2014.

[7] The parties had no children from their relationship.

[8] It is agreed that the value of Mr. Miaskowski’s pension for the time period March 2006 to December 2014 is valued at $139,356.14. That is the value using only the period between the 2006 reconciliation and the 2014 separation. Mr. Miaskowski’s position for trial is that this value should be used when calculating an equalization payment.

[9] The parties agree that the value of Mr. Miaskowski’s pension from their marriage in October of 1997 to their final separation in December of 2014, has a value of $272,161.55. Ms. MacIntyre’s position for trial is that the equalization payment should be calculated using this value.

[10] It is agreed that Ms. MacIntyre’s pension is valued at $68,063.60. She did not pay into that pension until after the parties reconciled in March of 2006. The period of separation does not affect that value.

[11] Prior to trial, the jointly held home was sold. There is approximately $332,998 (plus interest since October 25, 2017) held in trust by the real estate lawyer. That amount is to be shared equally, except for two issues. First, from Mr. Miaskowski’s share, it is agreed that he must pay $14,000.00 to equalize their assets aside from the pensions. Second, the equalization payment with respect to the pensions must be determined and paid.

Positions of the Parties

[12] It is Mr. Miaskowski’s submission that, by the terms of the 2002 agreement, Ms. MacIntyre released her interest in his pension. He is content to share the increase in the value of the pension from the date of reconciliation; however, he submits that it would be unjust for her to effectively have “two spouses” during the intervening period and be able to share in the division of both sets of assets.

[13] Alternatively, Mr. Miaskowski submits that by the time the parties reconciled, the provisions of the Limitations Act prevented Ms. MacIntyre from making any claim against the pension as they had been separated for more than six years.

[14] Mr. Miaskowski submits that he should satisfy the equalization by rolling over the determined payment in issue to Ms. MacIntyre’s pension rather than to make a cash payment to her. In this way, he would have a greater cash pay out to him in the immediate future. Mr. Miaskowski submits that he has a number of outstanding debts and requires all of his available cash from the house proceeds to pay off those debts and, perhaps, buy his own residence.

[15] In response, Ms. MacIntyre submits that by the terms of the 2002 agreement, the parties have cohabited more than 90 days and the terms of that agreement are null and void. As a result, the release of her interest in Mr. Miaskowski’s pension is unenforceable. She submits that when the parties reconciled, she placed Mr. Miaskowski on title of her home with the intention of sharing their assets like any other married couple. They had reconciled and therefore he should share his pension in the same fashion.

[16] Ms. MacIntyre submits that if Mr. Miaskowski wished to protect his pension, he could have requested a new agreement. Since he had experience with the separation agreement between themselves and a further cohabitation agreement with his partner during their separation, he would be well aware of his obligations and his ability to contract out of them.

[17] In particular, she points to a letter Mr. Miaskowski’s lawyer sent to him upon the reconciliation. That letter pointed out the potential legal ramification of his reconciliation that would, in fact, make the prior agreement null and void.

[18] In any event, whatever the value is, she seeks to have the equalization payment made in cash rather than a pension roll over. Her health is failing and she too wishes to buy a new home.

[19] During argument, it was agreed that if there was to be a cash payment, the after tax value of the amounts in issue would be reduced by 20.6%. Accordingly, if there is to be a cash payment to equalize the pensions and Ms. MacIntyre is successful, she is owed $81,026.89. On the other hand, if Mr. Miaskowski is successful, and there is a cash payment, he will owe Ms. MacIntyre $28,303.14.

[20] This case was not argued on the basis that Ms. MacIntyre should have a share in the pension from the date of the agreement through to the date of the final separation. That is to say, over the first, interim, period of separation. Rather, I was asked to determine whether Mr. Miaskowski’s or Ms. MacIntyre’s interpretation of the agreement was correct.

Authorities

[21] Pursuant to paragraph 6 of s. 4(2) of the Family Law Act, R.S.O. 1990, c F.3, a domestic contract may exclude the value of property from the net family property of separating spouses. The question here is whether the 2002 agreement excluded the value of Mr. Miaskowski’s pension prior to reconciliation.

[22] In Sydor v. Sydor, [2003] 178 O.A.C. 155 (C.A.), Feldman J.A. said at paras. 22-27 that the common law rule is that a separation agreement is void upon reconciliation, “subject to a specific clause in the agreement that would override the common law”. She further noted that “a specific release of all rights to a particular property can be viewed as evidence that the parties considered the disposition of that property final and binding, regardless of what may occur in the future”.

Analysis

Valuation

[23] From Sydor, I must look to the agreement first. The relevant paragraphs of the agreement read (I have highlighted the details of significance):

Method of Payment

8.1 Contemporaneously with the execution of this agreement, the parties agree to release the funds presently held in trust from the proceeds of the sale of the matrimonial home, to be distributed as follows:

(a) $13,157.51 to the wife, with $500.00 of the wife’s share to remain in the trust account of her solicitor, R. Paul Millman, pending receipt of a copy of the Divorce Judgment;

(b) $7,754.00 to the husband;

(c) The wife undertakes to pay the husband’s solicitor the $500.00 held in trust in contribution to the cost of obtaining the divorce upon receipt of a copy of the Divorce Judgment.

Equalization of Payment

10.1 Each party has given the other all data requested by the other to resolve their respective rights and obligations under Part 1 of the Family Law Act. Neither party requires any more data, and each is fully satisfied with the level of disclosure given. In satisfaction of all obligations under the said Part 1, the husband, as a payment equalizing their net family properties, shall pay to the wife the sum of $13,157.51 from the funds held in trust pursuant to section 9.1, and the husband will be paid $7,754.00.

Equalization of Net Family Property

15.1 Each of the parties acknowledges that each has been advised of his or her rights to the equalization of their net family properties under the Family Law Act.

15.2 Subject to the payments set out in section 8 and 10, each party affirms that the benefits which each is receiving pursuant to this agreement fully satisfy any and all entitlement each party has or may have to an equalization of their net family properties.

Pensions

19.1 The husband and the wife hereby release and discharge each other from any rights or claims each now has or may hereafter acquire pursuant to the Family Law Act, the Divorce Act, or the Pension Benefits Act, or any other successor, provincial or federal legislation, presently in force of hereinafter enacted whereby a spouse is entitled to a division of or a share in the pension of the other, present or future, vested or invested by way of a lump sum, future payments, any other benefits, or spousal support.

19.2 Neither the husband nor the wife will make a claim to share in any pension, vested or invested, of whatsoever nature, including, but not limited to, any registered retirement savings plan, deferred profit sharing plan, company pension plan, or annuity registered in or for the benefit of the other. This release is intended to apply regardless of any future changes in provincial or federal legislation.

19.3 The wife specifically releases any rights or claims she may have to a share of the husband’s Canada Post pension.

Ninety Day Trial Cohabitation

25.1 If at any future time the parties, with their mutual consent, cohabit as husband and wife for a period of or periods totalling not more than ninety days with reconciliation as the primary purpose of the cohabitation, the provisions contained in this agreement will not be affected except as provided in this paragraph. If the parties, with their mutual consent, cohabit as husband and wife for a period or periods totalling more than ninety days with reconciliation as the primary purpose of the cohabitation, the provisions contained in this agreement will become void, except that nothing in this paragraph will affect or invalidate any payment, conveyance or act made or done pursuant to the provisions in this agreement.

[24] In my view, the releases in the agreement executed by the parties in the 2002 agreement are in the nature of a “specific release” considered in Sydor. The parties had made specific transfers and acted on the basis of those releases. Pursuant to the terms of their agreement, Ms. MacIntyre had already received her share of the pension, or, at least, was satisfied with that amount. The equalization payment to her was the sort of “payment, conveyance or act” envisioned by the agreement. By the terms of the agreement, Ms. MacIntyre had released her interest in Mr. Miaskowski’s pension and that release survived the reconciliation.

[25] I must then consider whether the “subsequent conduct” of the parties corroborates that interpretation.

[26] There was evidence about what the parties understood the agreement to mean. I do not find that after-the-fact evidence helpful. For this issue, it is not what the parties in 2019 think the agreement meant. Rather, I must consider whether their conduct during reconciliation assists.

[27] Both parties say that their own failure to act is consistent with their interpretation of the contract. On its terms, they were not required to do anything for the outcome that they submit. Accordingly, failing to take steps is not corroboration of either position.

[28] I then look to Mr. Miaskowski’s conduct to see if it is different than the agreement would otherwise support.

[29] While the parties were separated, Mr. Miaskowski commenced, but did not serve, a divorce application. When the parties reconciled, he asked his lawyer to withdraw the application.

[30] By letter dated March 6, 2006, Mr. Miaskowski received correspondence from his lawyer. That letter read:

We confirm your instructions not to proceed any further with the divorce application at this time. We understand that you and Ms. MacIntyre have reconciled and that everything is working out well between the two of you. I am pleased to hear this news.

As my assistant has already advised you, we remind you to review the terms of your Separation Agreement, which you both signed in January of 2002. In particular, paragraph 25 of the Agreement states that:

“If at any future time the parties, with their mutual consent, cohabit as husband and wife for a period of or periods totally not more than ninety days with reconciliation as the primary purpose of the cohabitation, the provisions contained in this agreement will not be affected except as provided in this paragraph. If the parties, with their mutual consent, cohabit as husband and wife for a period or periods totally more than ninety days with reconciliation as the primary purpose of the cohabitation, the provisions contained in this agreement will become void, except that nothing in this paragraph will affect or invalidate any payment, conveyance or act made or done pursuant to the provisions in this agreement.”

Any releases exchanged regarding spousal support or estates will be void after the 90 days period. Accordingly, all the usual rights and obligations of married parties are back in force.

[31] Ms. MacIntyre submits that since Mr. Miaskowski took no steps in response to this letter, he must have acquiesced in allowing the release to come to an end.

[32] Mr. Miaskowski testified that he did not discuss this with his lawyer since he thought that the pension had been “protected” by the earlier agreement. Further, his lawyer did not refer to his pension to raise any concerns in that regard. I have no reason to reject that evidence; it provides an answer to Ms. MacIntyre’s submission.

[33] Further, the letter refers only to “releases exchanged regarding spousal support or estates”; neither are in issue here. For the reasons set out above, the reconciliation would not void the pension terms.

[34] Finally, this letter is simply a matter of good practice of a cautious counsel. It is not an opinion of law without facts to support it. Mr. Miaskowski’s failure to respond to this letter does not set aside the terms of the agreement.

[35] Ms. MacIntyre points to the fact that she shared her house with Mr. Miaskowski to suggest that he must have agreed to share his pension with her. The evidence on this topic is unsatisfactory. Both parties relied on their memories of the 2006 transaction with few documents to support their evidence.

[36] What evidence and documents I do have do not support Ms. MacIntyre’s position. From the documents in evidence, I can find the following.

[37] During the separation, Ms. MacIntyre resided with Mr. Kent. They owned a house together. By the terms of their separation agreement, Ms. MacIntyre purchased Mr. Kent’s interest in the home for $27,500. That was to be done by December 8, 2006. By then, Ms. MacIntyre and Mr. Miaskowski had been residing in that house since March 1, 2006.

[38] The records show that on December 8, 2006, the outstanding mortgage was discharged for $210,382.26. On the same day, the house was transferred to Ms. MacIntyre and Mr. Miaskowski jointly. At the same time, the parties entered into a new mortgage for $306,000.

[39] Ms. MacIntyre testified that the value of the home at that time was $305,000. She led no expert evidence on that point. The only evidence of value was her recollection but Mr. Miaskowski did not dispute that evidence.

[40] Out of the mortgage proceeds, Ms. MacIntyre testified that, among other debts, she paid her settlement funds to Mr. Kent and the parties paid Mr. Miaskowski’s debts of approximately $16,000.

[41] The end result is that while Mr. Miaskowski shared in the value of the home, he also shared in an equal amount of debt. From what I have before me, he apparently obliged himself to pay for more of Ms. MacIntyre’s debt than his own. This sharing of the home was of no benefit to him as of the date of reconciliation. It does not corroborate that he was sharing his unencumbered pension with Ms. MacIntyre as of that date.

[42] Ms. MacIntyre points to the fact that Mr. Miaskowski added her to his pension and benefits plan when they reconciled. Again, this is equivocal evidence. Mr. Miaskowski concedes that Ms. MacIntyre can share in his pension after reconciliation; adding her name after that date does not support agreeing to give her an interest before that date.

[43] On the evidence, I cannot find anything in the parties’ conduct that sets aside the clear terms of the agreement. I therefore find that those terms are a complete answer to Ms. MacIntyre’s claim to share in Mr. Miaskowski’s pension prior to reconciliation.

Manner of Payment

[44] To reiterate, Mr. Miaskowski seeks to have this equalization payment rolled over from his pension to Ms. MacIntyre’s. Ms. MacIntyre seeks an immediate payment of cash to equalize their property. Depending on the form of payment, the amount differs. For the following reasons, this part of the equalization payment should be made to Ms. MacIntyre in cash from Mr. Miaskowski’s share of the sale proceeds. As agreed, that payment would be $28,303.14.

[45] Once the equalization of the net family property is calculated, ss. 9 and 10.1 of the Family Law Act provide options to make the equalization payment. Pursuant to s. 9 (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.

[46] Section 10.1 (3) – (4) of the Act states:

(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:

1. The nature of the assets available to each spouse at the time of the hearing.
2. 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.
3. The liquidity of the lump sum in the hands of the spouse to whom it would be transferred.
4. Any contingent tax liabilities in respect of the lump sum that would be transferred.
5. The resources available to each spouse to meet his or her needs in retirement and the desirability of maintaining those resources.

[47] In Jackson v. Mayerle, 2016 ONSC 72, para. 597, Pazaratz J. summarized this area.

Pension values are still factored in to the equalization calculation. Section 10.1 merely creates options as to how equalization is to be satisfied.

a. There is no presumption or statutory onus under s 10.1 of the Family Law Act that an equalization payment will be made by a transfer of a lump sum out of a pension plan.

b. Section 10.1 merely creates another way for an equalization payment to be made. There is no presumption, one way or the other, that it is the right way.

c. Each case depends on its own facts.

d. The pension holder should not be able to automatically force the other party to accept a deferred payment of a share in his pension, to ease his own liquidity position.

e. A transfer of a lump sum from a pension plan may be appropriate, for example, where a cash payment would leave the payor with no liquid assets. [Citations removed.]

[48] This summary was confirmed by the Ontario Court of Appeal in Fawcett v. Fawcett, 2018 ONCA 150, at paras. 31-36.

[49] While I agree with Mr. Miaskowski that Ms. MacIntyre has failed to file a financial statement, that is only one factor for me to consider. Her evidence of her financial situation was not challenged. She, like most people, is in need of the judgment owing to her.

[50] With the proceeds of sale in trust, there are ample liquid assets available to Mr. Miaskowski to pay the judgment immediately.

[51] On my arithmetic, he will be able to pay the settlement funds of $14,000 and this amount of $28,303.14 and still have more than $124,195 from the proceeds of sale. He sets out debts just over $61,400. Those can be paid and he will still have substantial cash in the bank. He is 48 years old with a good job, benefits and pension.

[52] The parties have agreed on the tax liability to be taken into account in coming to the above figure.

[53] I see no reason to keep Ms. MacIntyre waiting for her equalization payment.

[54] Based on the agreed facts as set out above, I find that Mr. Miaskowski owes to Ms. MacIntyre a further equalization payment of $28,303.14.

Costs

[55] If costs cannot be agreed upon, Mr. Miaskowski shall provide his costs submissions within the next 15 days. Ms. MacIntyre shall provide her response within 15 days thereafter. No reply submissions shall be filed unless I request them.

[56] Each submission shall be no more than three pages, not including any Bills of Costs or Offers to Settle.

[57] Written submissions shall be forwarded to me at my office at the Superior Court Office, 74 Woolwich Street, Guelph, Ontario, N1H 3T9. I shall ensure that the submissions are filed in Brampton when I am finished with them.

Interest

[58] In argument, the parties agreed that pre-judgment interest may be an issue on the sums as found by me. If that issue cannot be resolved, the parties shall make written submissions on the following terms. I cannot tell who should go first so I will ask that Mr. Miaskowski provide his submissions within 30 days followed by Ms. MacIntyre’s submissions within 15 days thereafter. Mr. Miaskowkski may reply within 15 days thereafter. Those submissions shall be forwarded to me at my office at the Superior Court Office, 74 Woolwich Street, Guelph, Ontario, N1H 3T9. I shall ensure that the submissions are filed in Brampton when I am finished with them.

Lemon J. Date: April 9, 2019