Court File and Parties
COURT FILE NO.: FC-23-00000011-0000 DATE: 2024/03/06
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
WILLIAM RUSSELL BIRMINGHAM Applicant
Geoffrey Carpenter, Counsel for the Applicant
- and –
MARIANNE C. TOMKINS Respondent
Richard Noll, Counsel for the Respondent
T.B. and P.B. Leanne E. Way, OCL for the Children
HEARD: February 13, 14 and 15, 2024
The Honourable Justice Piccoli
REASONS FOR DECISION
[1] This court heard a three-day trial on February 13, 14 and 15, 2024. The parties were able to resolve a number of issues in advance of the trial. They filed a Statement of Agreed Facts, as well as an agreed upon Net Family Property (“NFP”) Statement, a Summary of Adjustments and an Agreement on Issues.
[2] The court was left to decide the following issues:
(a) The impact of non-disclosure on the Respondent’s income as set out in the Statement of Agreed Facts; (b) The income of the parties in the years 2022 and 2023; (c) How support for 2023 should be calculated (i.e. Whether the children were in the care of the Applicant more than 40% of the time); (d) Post-separation adjustments as it relates to retroactive child support, spousal support and s. 7 expenses; (e) Whether the horse-related expenses incurred for the children from March 2021 to December 31, 2023, are s. 7 expenses; (f) Whether the court should order occupation rent; (g) Whether 50% of the Applicant’s pension should be immediately transferred from his pension plan to the Respondent or whether it should be paid for in cash; (h) The final equalization payment, which is dependent on how the Applicant’s pension is treated; (i) Costs
[3] On February 23, 2024, the court was advised that the parties had resolved all issues save and except the manner in which the Applicant’s pension was to be divided and costs. A draft consent order was filed as it relates to the agreement reached. The order was signed on March 3, 2024.
Background and Agreed Upon Facts
[4] The Applicant Father was born July 20, 1978 and is 45 years of age. The Respondent Mother was born January 9, 1977 and is 47 years of age.
[5] The parties married on November 15, 2008, and separated on March 15, 2021. There are two children of the union, namely Alexis Jade Birmingham, born April 21, 2009 (“Alexis”), and Rylie Elizabeth Birmingham, born February 13, 2011 (“Rylie”), and collectively, the children.
[6] The parties are both T4 salaried employees but have additional funds they receive beyond their salaries. The matter of their income, and retroactive adjustments, has now been resolved on consent.
[7] Subsequent to separation, the parties resided together in the matrimonial home. Since January 6, 2022 the Respondent has resided in the matrimonial home to the exclusive of the Applicant. The children were in the primary care of the Respondent until the summer of 2023.
[8] Commencing in the summer of 2023, the children resided with their parents on an equal basis. Parenting issues were resolved on a final basis by Justice Tweedie on August 31, 2023. The parenting schedule since that time has been 2/2/3 with special provisions for holidays.
[9] It is undisputed that the Respondent wishes to retain the matrimonial home. The parties have agreed on a manner in which the Respondent can purchase the matrimonial home if she is able to, and the manner in which it will be listed for sale if she is unable.
[10] It is undisputed that in order for the Respondent to be able to qualify to purchase the Applicant’s interest in the matrimonial home, she must be successful on the issues including the manner in which the Respondent’s pension is equalized. The Respondent cannot qualify for a mortgage of more than $440,000.00.
[11] The parties have agreed that for the purposes of the Respondent purchasing the Applicant’s interest in the home, the home is valued at $850,000.00 and the mortgage as of January 19, 2024, is $287,982.69.
[12] The parties have agreed that if the Applicant’s pension is divided at source, the Applicant will owe to the Respondent $24,782.62 as an equalization payment.
The Applicant’s Pension
[13] The Applicant has a pension. The plan administrator is The Board of Trustees of the Millwright Pension Trust Fund. Exhibit 4 is the Statement of Family Law Value (“FLV”).
[14] The parties have agreed that the pension has a FLV of $219,887.38. The transfer ratio of this pension for the purposes of the statement is 73.8 %. The maximum amount of the FLV that may be transferred to the Respondent is $109,943.69.
[15] The parties have agreed that if 50% of the Applicant’s pension is not immediately transferred by lump sum out of the plan to the Respondent, a notional tax rate of 25% ($54,971.85) would be deducted such that the net value of the pension would be $164,915.54.
[16] If 50% of the pension were immediately transferred out of the plan to the Respondent, the equalization payment owing by the Applicant to the Respondent would increase to $107,240.29. This is because the Applicant’s NFP would increase to $536,114.92 ($371,199.38 + $164,915.54), whereas the Respondent’s would remain at $ 321,634.35 Therefore the equalization payment would proceed as follows: $536,114.92 minus $321,634.35 which equals $214,480.57, divide that by two to receive an equalization payment of $107, 240.29.
[17] It is the Applicant’s position that the pension be divided by way of immediate lump sum transfer out of his pension plan to the Respondent. There is no dispute that other than his equity in the matrimonial home, this is the most significant of his assets. He has more RRSPs than the Respondent and has a locked in registered account (“LIRA”) which he cannot access. He maintains that to require him to pay for his pension in cash will result in unfairness. He asserts that he would be left with very little in liquid cash, as two thirds of his net worth would be retirement savings. The Applicant claims that this outcome would be shocking in any situation but especially where the children reside with the parties equally. It is his further position that he should be in the same position as the Respondent as it relates to liquidity, and the ability to purchase a home for the children. Overall, the parties should share in the underfunding of the pension.
[18] It is the Respondent’s position that the value of the pension should be paid for in cash rather than the pension being divided by way of lump sum transfer from the Applicant’s pension plan. She maintains that that is the most fair and equitable solution. She asks the court to consider that it would be in the best interests of the children that she retains the home. Further, since the Applicant has a higher income, the Respondent asserts without evidence that the Applicant has more borrowing power. As such, the Respondent asserts that the court should weigh the Applicant’s liquidity in light of his circumstances, and her ability to keep the home for the children. Overall, she argues the court’s decision will impact everyone.
[19] For the reasons that follow, the court orders that the Applicant’s pension be transferred by immediate lump sum out of the Applicant’s pension plan to the Respondent together with interest that has accrued since the date of separation.
[20] The relevant legislation is ss. 9.1 and 10.1(4) of the Family Law Act, R.S.O. 1990, c. F. 3 (“FLA”).
[21] Section 10.1 of the FLA creates another method of satisfying an equalization payment by dividing the pension through an immediate lump sum payment.
[22] Both parties agree that there is no presumption, or statutory onus, that an equalization payment be made by a transfer of a lump sum out of a pension plan. Each case will depend on its own facts: see Vanderwal v. Vanderwal, 2015 ONSC 100 at para. 11 and Fortier v. Lauzon, 2017 ONSC 7503 at para. 38, aff’d 2018 ONCA 1086.
[23] The FLA was amended in 2009 by the Family Statute Law Amendment Act, 2009, S.O. 2009, c. 11. Section 26 of the amending Act created the specific rules contained in s. 10.1 of the FLA about the division of pension entitlements. Subsections 10.1(3), (4), and (5) provide that:
(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.
(5) If payment of the first instalment of a spouse’s pension under a pension plan is due on or before the valuation date, an order made under section 9 or 10 may provide for the division of pension payments but not for any other division of the spouse’s interest in the plan.
[24] The Applicant cites the case of Fawcett v. Fawcett, 2018 ONCA 150 at para. 33 to support his position that the division of the pension must be dealt with in a manner that is fair to both parties.
[25] The Respondent cites the case of Taus v. Harry, 2016 ONSC 219 at para. 28, which was reiterated by Hassan J. in Gielen v. Gielen, 2023 ONSC 4157 at para. 33 and states that “the Family Law Act is a debtor-creditor statute, and each spouse is free, subject to court order, to deal with his or her property as he or she sees fit. Gray v. Gray, [1990] O.J. No. 2518, 31 R.F.L. (3d) 97 (Ont. Gen. Div.).” She uses this to support her position that the value of the pension should be paid out in cash.
[26] With respect to factors 1 and 2 outlined in subsection 4 above, the pension constitutes 44% of the Applicant’s assets. If the pension is paid for in cash, the Applicant is left with very little liquid assets ($6,000 in his bank account and $41,655.84 in his RRSP) and the majority of his asserts, will be tied up in the pension. On the other hand, the Respondent will have more liquid assets. In contrast, if the pension is divided by immediate lump sum transfer out of his plan, both parties will have a more reasonable balance between liquid assets and savings for retirement.
[27] With the payment of child support based on the set off amount of the agreed upon incomes listed in the settlement, the Net Disposable Income (“NDI”) of the parties are almost equal before the payment of s. 7 expenses.
[28] As it relates to factor 3, the court considers this a neutral factor as neither party is able to access this pension at this time. It is not a liquid asset to the Respondent as it will be transferred into a locked in vehicle which can be accessed at age 55.
[29] As it relates to factor 4, the court would consider this to be generally neutral and, both parties agree, it is not applicable here.
[30] As it relates to factor 5, the Respondent has modest savings. It was her evidence that when this case is over and she is able to regroup, she plans to start saving in her investments. At this time, the parties are approximately 15 years away from retirement and it is speculative to determine what resources each spouse will have to meet his or her needs in retirement. As stated by Sproat J. in Nadendla v. Nadendla, 2014 ONSC 3796 at para. 21, “in this case and in virtually all cases, it is desirable that the Respondent have resources for her retirement.”
[31] As it relates to the underfunding of the pension, the court agrees with the Applicant that this factor weighs in his favour; it would be unfair for him to pay 50% of an underfunded asset in cash. The court did not hear any evidence as it relates to a contingency discount.
[32] It is not clear whether “such other matters as the court considers appropriate,” outlined in subsection 4, might extend to include a consideration as to whether the best interests of the children would be a consideration as it relates to the Respondent being able to retain the matrimonial home. While “such other matters” is very broad language, all the other listed considerations in s.10.1(4) are financial in nature. Certainly, the ejusdem generis (general wording is limited to things of the same type) cannon of statutory interpretation would suggest that “such other matters” be limited to similar categories of financial consideration: Atlantic Paper v. St. Anne-Nackawic Pulp, [1976] 1 S.C.R. 580.
[33] While I am not convinced that “the best interests of the child” would be a proper consideration of “such other matters as the court considers appropriate” in this particular context; regardless, in this instance, that consideration would not change my decision. In this case, the children are sharing their residence on an equal basis and, as such, even if the court accepted that the children remaining in the home were in their best interest, it is more in their best interests that both parents be able to provide them with an appropriate home – and leaving the Applicant “pension rich and cash poor” would not accomplish that goal.
[34] These factors favour division of the pension by way of immediate transfer of a lump sum from the Applicant’s pension plan to the Respondent. As such, 50% of the pension is divided in this manner, plus applicable interest. The forms to affect the transfer shall be completed forthwith. The court directed the Applicant’s counsel to provide a draft order that would meet the requirements of the pension administrator given the underfunded pension. Para. 1 of this court’s order reflects the wording provided by the Applicant’s lawyer.
[35] This court orders:
- The Applicant’s pension with Millwrights Pension Trust Fund shall be divided at source in the maximum transferrable amount of $109,943.69, plus interest accrued since the date of separation, will be transferred to the Respondent. The parties shall sign all necessary documents to affect the transfer forthwith.
- The Applicant shall make an equalization payment to the Respondent in the amount of $24,782.52.
- I encourage the parties to resolve the issue of costs. If they are unable to do so: (a) The Applicant shall have until March 25, 2024, to serve and file costs submissions; (b) The Respondent shall have until April 8, 2024, to serve and file responding submissions; (c) The Applicant shall have until April 12, 2024, to serve and file brief reply submissions. Submissions are not to exceed 4 pages double spaced, not including the bill of costs and copies of offers to settle, which must also be provided by each party. Reply submissions shall not exceed 2 pages double spaced. If a party does not serve and file submissions respecting costs in accordance with these deadlines, there shall be no costs payable to that party, although costs may still be awarded against that party. Cost submissions shall be sent to Kitchener.SCJJA@ontario.ca If no submissions are received on the schedule provided, the parties shall be deemed to have resolved costs on consent.
D. Piccoli J. March 6, 2024
COURT FILE NO.: FC-23-00000011-0000 DATE: 2024/03/06
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
WILLIAM RUSSELL BIRMINGHAM Applicant
- and –
MARIANNE C. TOMKINS Respondent
Reasons for decision D. Piccoli, J. Released: March 5, 2024