



COURT OF APPEAL FOR ONTARIO

CITATION: Van Delst v. Hronowsky, 2020 ONCA
    329

DATE: 20200529

DOCKET: C66973

Rouleau, Hourigan and Roberts JJ.A.

BETWEEN

Lynda Mary Van Delst (Hronowsky)

Respondent

and

Thomas John Hronowsky

Appellant

Rodney Cross, for the appellant

Katherine Shadbolt and David
    Migicovsky, for the respondent

Heard: March 11, 2020

On appeal from the order of Justice Tracy
    Engelking of the Superior Court of Justice, dated April 24, 2019, with reasons
    reported at 2019 ONSC 2569, 23 R.F.L. (8th) 306.

Hourigan J.A.:

Part I: Introduction

[1]

Certainty in the resolution of financial issues
    flowing from the dissolution of family relationships has been a policy
    imperative underlying much of the recent reform of family law in Canada. Child
    support, spousal support, and the division of family property have all been clarified
    through legislative and regulatory reform. While certainty should be tempered
    by limited judicial discretion to ensure fairness, certainty facilitates two
    essential policy objectives of family law: the encouragement of settlement and
    the avoidance of costly litigation to resolve financial issues.

[2]

The Government of Ontario enacted legislation that
    came into effect in 2012 amending the
Pension Benefits Act
, R.S.O.
    1990, c. P.8 (the 
PBA
) and the
Family Law Act
, R.S.O. 1990,
    c. F.3 (the 
FLA
), to simplify the valuation of pensions for purposes
    of calculating net family property. This legislation brought much-needed
    certainty to the valuation of what, in many cases, is the most significant
    asset held by litigants on their valuation date. A formula was established for
    pension valuations and the responsibility for calculating that value was
    imposed on pension administrators. Thus, courts largely got out of the business
    of pension valuation. For litigants this provided both certainty and fairness.
    It also allowed them to avoid the costly process of retaining actuarial experts
    and litigating competing pension valuations.

[3]

The Ontario rules for valuating provincially
    regulated pensions for equalization purposes are relatively clear and easily
    applied. However, the valuation of federally regulated pensions is not as
    certain. Parliament has not reformed the law regarding pension valuations to
    bring it in line with the Ontario legislation. Until it does, Ontario courts must
    apply, to the extent reasonably possible, the provincial approach to valuing federal
    pensions for family law equalization.

[4]

In the present case, the most significant issue
    at trial was the valuation of the parties federally regulated pensions for
    equalization purposes. Three
aspects of the trial
    judges reasons on this issue are challenged on appeal: (i) the determination
    of the parties normal retirement dates; (ii) the decision not to include in
    the respondents net family property the contingent interest she held in the
    appellants pension; and (iii) the inclusion of a contingent survivor benefit
    in valuating the parties pensions. While the trial judge reached the right conclusions
    on the survivor benefit and contingent survivor benefit issues, she erred in
    her approach to all three issues by failing to
heed
    the requirement of s. 10.1(2) of the
FLA

that, in
    valuating pensions that are not provincially regulated, the Ontario method of
    valuation should be applied, with only necessary modifications.

[5]

In my view, the correct approach to pension
    valuation issues such as those on appeal is for parties to obtain valuations
    from their pension administrator where possible. Where this is not possible or
    issues remain as to the proper application of the Ontario regime to a federal
    pension plan, the parties should refer such issues to a trial judge for
    determination, usually with the aid of a jointly appointed expert. However in
    this case, given what has transpired, I would suggest, as will be explained
    below, a different process to resolve these issues.

[6]

In addition to the pension valuation issues, the
    appellant also appeals certain date of marriage deductions and notional
    disposition costs used by the trial judge in calculating net family property. Further,
    he seeks an order permitting him to pay part of his equalization payment by
    means of the transfer of a lump sum from his pension. I would dismiss these
    grounds of appeal, as they are meritless.

Part II: Background Facts

[7]

The appellant and respondent were married in
    October 1995 and separated in September 2016. Both spouses worked for entities
    governed by the federal
Public Service Superannuation Act
, R.S.C.
    1985, c. P-36 (the 
PSSA
). The appellant became a pension member on
    December 4, 1984, and retired on December 17, 2016. The respondent started working
    for the Royal Canadian Mounted Police in 2008 and continues to be employed.

[8]

The respondent commenced an application in the
    Superior Court in May 2017 seeking orders for spousal support, child support
    and custody, along with the equalization of net family property. In August
    2017, the appellant filed his answer. In September 2018, the respondent amended
    her application to include a claim for divorce. The appellant was alerted to
    the respondents intention to divorce at least as early as November 2017. The
    parties were able to resolve all issues except equalization, which proceeded to
    trial. The calculation of net family property was based on a series of findings
    made by the trial judge that are challenged on appeal.

[9]

The most significant component of the net family
    property calculation was the values of the parties pensions. According to s.
    10.1(1) of the
FLA
, the imputed value for family law purposes of a
    spouses interest in a pension plan is determined in accordance with s. 67.2 of
    the
PBA
.

[10]

If, as here, the pension plan is a plan to which
    the
PBA
does not apply, s. 10.1(2) of the
FLA

nevertheless
    requires the
PBA
approach be used, with necessary modifications. One
    element of the valuation calculation under the
PBA
is the normal
    retirement date under the plan. Provincially regulated plans are required to
    provide a normal retirement date, which permits a straightforward valuation
    calculation. The
PSSA
does not list a normal retirement date.

[11]

Both parties tendered reports by experts
    valuating their respective pension plans. The respondents expert used 65 as
    her normal retirement date because, although retirement with an unreduced
    pension is possible at 60, a fair amount of civil servants work past 60. The
    appellants expert calculated the value using ages 60 and 65. He used 60
    because this is when all members who joined prior to 2013 are entitled to
    unreduced benefits. The appellants expert opined that 65 was also reasonable for
    several reasons, including because it was not unusual for members to retire
    after 60 and the majority of pension plans in Canada define the normal
    retirement age as 65.

[12]

The trial judge concluded that the normal
    retirement date for the appellant was age 60 and for the respondent age 65.
    These conclusions were based on the pre-separation evidence of the parties
    intended retirement dates. In approaching the issue this way, the trial judge
    relied on the method for determining the likely retirement date from
Di
    Francesco v. Di Francesco
, 2011 ONSC 3844, at para. 31. The trial judge
    found that the respondent continues to work and intends to do so until age 65.
    The appellant, meanwhile, planned to retire when he was entitled to an
    unreduced pension. There was evidence that he remained in his job slightly
    longer than that in order to settle a grievance with his employer.

[13]

When she calculated net family property, the
    trial judge excluded the respondents survivor benefits under the appellants
    pension, because the respondent would lose her entitlement to those benefits at
    the time of divorce. The value of the appellants survivor benefit was not
    provided and was not included in his net family property. Contingent survivor
    benefits were included in the net family property calculation, over the
    appellants objection. The trial judge also made several findings on the
    appellants date of marriage deductions and the parties notional disposition
    costs.

[14]

Ultimately, the trial judge calculated net
    family property of $1,834,578 for the appellant and $707,458 for the
    respondent. Accordingly, she ordered that the appellant must pay the respondent
    $563,560 to equalize their net family properties.

Part III: Analysis

[15]

There are five main issues on this appeal: (i)
    the appellants motion to tender fresh evidence; (ii) objections to the pension
    valuations; (iii) objections to the
date of marriage deductions; (iv) objections to notional disposition
    costs used by the trial judge in calculating net family property; and (v) a
    request for an order that part of the appellants
equalization payment be made by means of a transfer of a lump sum out of his
    pension plan.

(i)

Fresh Evidence Motion

[16]

The appellant brought an application to tender
    fresh evidence. I would dismiss that application, other than with regard to the
    documents at tabs 12, 13, 14, and 15 of the appellants materials, which were
    trial exhibits.

[17]

The appellant has not met his onus under
Palmer
    v. The Queen
, [1980] 1 S.C.R. 759, to establish that the remaining
    evidence could not have been adduced at trial with due diligence.

(ii)

Pension Valuation Issues

(a)

The General Approach

[18]

The process for valuating pensions is set forth
    in s. 67.2 of the
PBA
, the relevant provisions of which provide as
    follows:

67.2
(1)
    The preliminary value of a members pension benefits, a former members
    deferred pension or a retired members pension under a pension plan, before
    apportionment for family law purposes, is determined by the administrator in
    accordance with the regulations and as of the family law valuation date of the
    member, former member or retired member and his or her spouse.  2010, c. 9, s. 44
    (1).

*
    * *

(5) The imputed value, for family
    law purposes, of each spouses pension benefits, deferred pension or pension,
    as the case may be, is that portion of the preliminary value that is attributed
    by the administrator, in accordance with the regulations,

(a) to the period beginning with
    the date of the spouses marriage and ending on their family law valuation
    date, for the purposes of an order under Part I (Family Property) of the
Family
    Law Act
; or

(b) to the period beginning with
    the date determined in accordance with the regulations and ending on the
    spouses family law valuation date, for the purposes of a family arbitration
    award or domestic contract.  2009, c. 11, s. 49.

[19]

The other critical legislative provisions for
    the purposes of the valuation of pensions in the family law context are
    subsections 10.1(1) and 10.1(2) of the
FLA
:

10.1
(1)
    The imputed value, for family law purposes, of a spouses interest in a pension
    plan to which the
Pension Benefits Act
applies is determined in
    accordance with section 67.2 or, in the case of a spouses interest in a
    variable benefit account, section 67.7 of that Act.  2009, c.11, s. 26; 2017,
    c. 8, Sched. 27, s. 21 (1).

*
    * *

(2) The imputed value, for family
    law purposes, of a spouses interest in any other pension plan is determined,
    where reasonably possible, in accordance with section 67.2 or, in the case of a
    spouses interest in a variable benefit account, section 67.7 of the
Pension
    Benefits Act
with necessary modifications.  2009, c.11, s. 26; 2017, c. 8,
    Sched. 27, s. 21 (1).

[20]

The use of the phrase with necessary
    modifications in s. 10.1(2) of the
FLA
indicates a legislative intent
    that the substance of s. 67.2 of the
PBA

be applied, while
    recognizing that some details may require modification. As the Supreme Court of
    Canada has recently observed, the words with necessary modifications are a
    contemporary reformulation of the Latin phrase
mutatis mutandis
: see
R.
    v. Penunsi
, 2019 SCC 39, 378 C.C.C. (3d) 37, at para. 49. They mean that
    the rules to be applied are read with necessary changes in points of detail,
    while the matter remains the same:
Penunsi
, at para. 50.

[21]

In a recent decision considering s. 10.1(2) of
    the
FLA
, Raikes J. held that any departure from the
PBA

methodology
    must be justified as necessary by the party seeking that departure:
Kelly
    v. Kelly
, 2017 ONSC 7609, at paras. 161-162. I agree with and adopt that
    statement. This approach is consistent with the language of necessary
    modification. If one of the parties can show that, because the plan is not
    regulated under the
PBA
, a modification to the approach is necessary,
    departure will be warranted. Otherwise, the default position is that the
PBA

approach is to be used.

[22]

This approach is also consistent with the
    legislative intent in reforming pension valuation on marital breakdown. The
    purpose of the new legislation was to create a uniform approach that would
    create certainty and avoid costly litigation over pension valuations: see Ontario,
    Legislative Assembly,
Official Report of Debates (Hansard)
, 39th
    Parl., 1st Sess., No. 92 (24 November 2008) at 4156 (Hon. Christopher Bentley);
    and Ontario, Legislative Assembly,
Official Report of Debates (Hansard)
,
    39th Parl., 1st Sess., No. 111 (19 February 2009) at 4891 (Hon. Christopher
    Bentley).

[23]

In summary, the legislature has signalled a
    clear intention in s. 10.1(2) of the
FLA
that a non-Ontario pension be
    valuated wherever possible in the same manner as an Ontario regulated pension.
    This means that the valuation formula in the
PBA
regulation
Family
    Law Matters
O. Reg. 287/11 should be applied to a non-Ontario pension with
    modifications only where necessary. In addition, a purposive interpretation of
    s. 10.1(2) of the
FLA

requires that, to the extent that other
    Ontario statutory provisions or regulatory requirements impact the valuation of
    a pension for family law purposes, they too should be applied to the valuation
    of a non-Ontario pension.

[24]

In other words, a pension administrator should,
    to the extent possible, valuate a non-Ontario pension as if it were an Ontario
    pension. This is consistent with the purpose of the valuation exercise, which
    is to obtain a fair, predictable, and consistent division of net family
    property. Thus, it is important that provincial and federal pensions be
    valuated in the same manner, to the extent reasonably possible.

[25]

The problem with the trial judges analysis of
    the parties pensions is that she did not default to the requirement that a
    federally regulated pension should be valuated in the same manner as a provincially
    regulated pension unless a departure from the methodology was necessary in the
    circumstances. Instead, she applied the pre-legislative-reform approach of
    tailoring the pension valuation to the parties specific circumstances. I turn
    now to consider the specific objections to the trial judges valuation of the
    parties pensions.

(b)

Did the trial judge err in determining the
    parties normal retirement date?

[26]

As noted, the term normal retirement date is
    one of the variables included in the pension valuation methodology prescribed
    under the
PBA
. In this case, in order to calculate the value of the
    parties pensions in accordance with this methodology, the parties actuaries
    had to fix a value for this variable. Fixing a value for the normal retirement
    date for the plan at issue requires a modification. This is because normal
    retirement date is a defined term in the
PBA

meaning the date
    or age specified in the pension plan as the normal retirement date of members:
    see s. 1(1). Plans regulated by the
PBA

must specify a normal
    retirement date: s. 10(1)4. However, the plan at issue is not regulated by the
PBA

and therefore is not required to, and does not, specify a normal retirement
    date. The definition is therefore not helpful and must be modified when
    applying the
PBA

rules to valuate these pensions for family law
    purposes.

[27]

The question is what modification is necessary.
    As discussed above, the legislature signaled a desire, in prescribing the
PBA

methodology with necessary modifications, that the substance of this
    methodology be followed, even though the details of a federally regulated plan
    may not map perfectly onto provincially regulated plans.

[28]

In the absence of a fixed value referenced in
    the definition, the meaning of the term normal retirement date can nonetheless
    be determined by reference to how it is used in the provincial scheme. An
    analysis of its use in the
PBA
and other regulated pension plans shows
    that the normal retirement date is not a case-specific value reflecting when a
    given member is likely to retire. Rather, it is a generalized value
    representing the date at which the pension plan entitles any given member to
    unreduced pension benefits.

[29]

After reaching the normal retirement date,
    working members become entitled on terminating employment to the benefits to
    which they are entitled under their plan:
PBA
, s. 35(3). The
PBA

requires that this date be no later than one year after the member turns
    65: s. 35(1). However, members do not necessarily all retire at the normal
    retirement date. The
PBA

foresees that members may work past
    the normal retirement date and potentially earn additional pension benefits,
    but these additional amounts can be capped by the terms of the plan:
PBA
,
    s. 35(3).

[30]

This analysis is confirmed by the terms of
    various major pension plans. Across pension plans, members normal retirement
    date is the date at which any member is entitled to retire with unreduced
    pension benefits: see OMERS Primary Pension Plan, s. 16; University of Toronto
    Pension Plan, s. 6.01; Healthcare of Ontario Pension Plan, ss. 6.1, 6.2; OPSEU
    Pension Plan, s. 10.1; Rules and Regulations of the Multi-Sector Pension Plan,
    s. 3.01; and The College of Applied Arts and Technology Pension Plan, s. 6.01.

[31]

This is consistent with guidance from the
    Financial Services Commission of Ontario (FSCO), the agency responsible for
    the regulation of Ontario pensions. In their policy,
Retirement Dates
,
    R700-101
,
they define the normal retirement date this way:

As a minimum standard under the PBA the normal
    retirement date is the date or age specified in the pension plan as the normal
    retirement date of members. The PBA requires every plan to specify a normal
    retirement date. Section 10(1) of the PBA specifies the documents that create
    and support a pension plan shall set out the normal retirement date under the
    plan. Section 35(1) requires this date be no later than one year after the
    member reaches age 65.
A member has the right to retire and begin receiving
    an unreduced pension at the normal

retirement date, if the member so
    chooses.
The PBA does not require a pension plan member to cease employment
    and begin receiving a pension at the normal retirement date or age. A former
    member or other person who is entitled to a deferred pension is also eligible
    to begin receiving an unreduced pension at the normal retirement date.
    [Emphasis added.]

[32]

Thus, the functional meaning of the term normal
    retirement date in the
PBA

scheme is the date or age at which
    any given member of a pension plan is entitled to retire with unreduced pension
    benefits.

[33]

The trial judge did not ask what modification
    was necessary in order to calculate the value of the pension in accordance with
    the
PBA

methodology. Instead, she determined the parties
    respective normal retirement dates based on their case-specific intentions.

[34]

This approach is inconsistent with s. 10.1(2) of
    the
FLA
, which provides that the
PBA

formulae be used
    subject to necessary modifications. As discussed above, this language connotes
    the legislative intent to preserve the substance of the referenced rules, while
    providing for inevitable adjustment on points of detail. Though a modification
    was required here because the federal pension did not stipulate a normal
    retirement date as required under the
PBA
, the trial judge was
    required to adopt the

functional
meaning of normal retirement
    date in the
PBA
 namely the date or age at which any given member is
    entitled to retire with unreduced pension benefits.

[35]

The
PSSA

pension benefits are
    structured in a similar way to pension benefits under Ontario plans. Upon
    reaching a specified age, a contributor who ceases to be employed in the public
    service is entitled to unreduced benefits (an immediate annuity): ss. 12(1),
    12.1(2), 13(1)(a), 13.001(1)(a). Unreduced benefits are also available by
    reason of disability:
PSSA
, ss. 12(1)(a,c), 12.1(2)(a,c), 13(1)(b), 13.001(1)(b).
    Contributors who cease to be employed in the public service earlier may
    nonetheless be entitled to unreduced benefits based on their years of service,
    and otherwise are entitled to reduced benefits: ss. 13(1)(c), 13.001(1)(c).

[36]

It is discernable from the terms of the
PSSA

at what age all contributors are entitled to retire with an unreduced
    pension, which is equivalent to the normal retirement date in the provincial
    plans. Using this date preserves the substance of the
PBA

rules
    in applying them to plans that do not explicitly specify a normal retirement
    date. This is consistent with the intention underlying s. 10.1(2) of the
FLA
.

[37]

The trial judge erred by replacing the generalized
    concept of normal retirement date, as defined under the provincial scheme, with
    a case-specific value for which there is no statutory authority. This was not
    necessary because a functional equivalent to the normal retirement date is
    apparent on the face of the parties pension plan. The trial judges approach
    is undesirable because it implements a case-specific approach that is likely to
    involve more litigation, and is exactly what the legislature sought to avoid in
    enacting s. 10.1(2) of the
FLA
.

[38]

Applying an approach based on the terms of the
    pension plan rather than the intentions of the parties, the normal retirement
    date for both parties is age 60. The parties benefits are outlined in s. 13 of
    the
PSSA
. It

provides different sets of pension benefits
    depending on when the person began contributing and the amount of pensionable
    service they have accumulated. Contributors are entitled to s. 13 benefits
    where they are Group 1 contributors with two or more years of pensionable
    service: s. 13(1). Both parties in this case are Group 1 contributors because
    they worked for the public service before 2013:
PSSA
, s. 12(0.1). They
    both also have at least two years of pensionable service. Therefore, s. 13
    applies to both parties.

[39]

The functional equivalent of the normal retirement
    date in s. 13 is the date on which the contributor reaches 60 years of age.
    Section 13 provides any contributor who has reached 60 years of age and has
    credited two years of pensionable service with immediate unreduced benefits on
    retirement:
PSSA
, s. 13(1)(a). As in the provincial plans, there are
    circumstances in which certain contributors may be entitled to unreduced
    benefits at an earlier date due to disability or having credited a threshold of
    pensionable service. However, at age 60, any contributor who retires is
    entitled to unreduced benefits, as with the normal retirement date in the
    provincial scheme.

[40]

For these reasons, applying the
PBA

valuation
    methodology with necessary modifications to the pension benefits provided by s.
    13 of the
PSSA

requires the substitution of the definition of normal
    retirement date with the date that the parties reach age 60.

[41]

I add the following regarding the process to be followed when valuating
non-Ontario pensions. Generally, the same process should be followed as
    with a provincially regulated plan. The parties should request that the pension
    administrator generate a value based on the Ontario law. If a pension
    administrator, who is not regulated by the provincial legislation, refuses to
    calculate the value, or if issues arise regarding the necessary modifications
    to be made, directions from the court may be sought. The preferable approach is
    that a single jointly-appointed

expert provides expert
    evidence. The appointment of competing valuators should be avoided because it
    encourages the type of costly valuation litigation that the new legislation was
    designed to avoid.

[42]

I note the
Family Law Rules

were recently changed to
    encourage the use of joint litigation experts. Rule 20.2(8)2 now requires joint
    litigation experts wherever the court so orders. Rule 17(4)(d.1) prompts the
    court to explore expert evidence issues at case conferences and make related
    orders. The joint expert can set out for the court the relevant decisions that
    need to be made in order to apply Ontario law to a federal pension, as well as potentially
    necessary modifications. It would then be for the court to determine whether
    any of the suggested modifications meet the high threshold of necessary
    mandated by the
FLA
.

[43]

What remains to be done in this case is a calculation of the
    equalization payment owing based on a correct normal retirement date of age 60
    for both parties. The appellants expert provided a calculation assuming a
    normal retirement date of age 60, and it appears that the respondents expert
    prepared this calculation as well. In the circumstances of this case, where
    important arguments regarding normal retirement date were not clearly made
    before the trial judge, and where further cost and delay should be minimized, I
    would direct the matter back to the trial judge to determine the equalization
    payment owing based on the experts age 60 calculations plus the parties
    further equalization calculation submissions.

(c)

Should the trial judge have included the survivor
    pension in the respondents net family property?

[44]

The appellant submits that the trial judge erred
    in not including in the respondents net family property the contingent
    interest she had in the appellants pension in the event that he died while
    they remained married. The parties positions on appeal on this issue mirror
    their arguments at trial.

[45]

The appellants position is that the respondent
    was entitled to a survivor pension from him that was valued at $392,270 on the
    valuation date and that this asset should be included in her net family
    property calculation. As of the date of separation, he argues, there was no
    intention to divorce and he notes that the respondent did not claim a divorce
    in her original application.

[46]

In response, the respondent submits that under
    the terms of the
PSSA
she is not entitled to a survivor pension from
    the appellant if she is not his spouse at the time of his death. Therefore, she
    submits that this contingent right cannot count as an asset of hers at the date
    of separation. She takes the position that the fact that she did not claim a
    divorce in her original pleadings is irrelevant, as she subsequently sought and
    was granted leave to amend her pleadings to include that claim.

[47]

The trial judge accepted the respondents submission
    that this amount should not be included. Her reasoning was that the respondent
    had asked for a divorce, which was consented to by the appellant, and therefore
    the appellant would not fall within the definition of a survivor within the
PSSA
.
    In making this ruling, the trial judge relied on
Humphreys v. Humphreys
(1987), 1987 CarswellOnt 309, 7 R.F.L. (3d) 113, and
Martin v. Martin
,

2018 ONSC 6804.

[48]

In my view, the trial judge reached the correct
    result on this issue but erred in her analytical approach. She determined that
    the most equitable result would be that the survivor pension should not be
    included because the respondent would lose the benefit of this asset as soon as
    the divorce was granted. The correct approach was to treat this issue the same
    way it would be treated if this were an Ontario pension by first asking: What
    would the law require if this were an Ontario pension? Once that has been
    determined, the next question is whether any modifications of that approach are
    necessary in the circumstances.

[49]

The appellants expert provided the following
    opinion in his report:

The Ontario Pension Benefits Act and
    regulations only assigns a family law value to a survivor pension payable to
    the former spouse if the separation occurs after retirement. This is logical for
    Ontario regulated pension plans since a spouse who is separated from the member
    prior to retirement will not be entitled to a survivor pension on the member's
    retirement. However, this does not necessarily reflect the survivor pension
    entitlements in the case of pension plans from other jurisdictions, such as the
    PSSA, where a separated married spouse is entitled to the survivor pension if
    the marriage commenced prior to retirement and the member and spouse are not
    divorced at death.

[50]

In the present case, neither spouse had retired
    as of the date of separation. The appellants expert testified that inclusion
    of the survivor benefit, and exclusion of the contingent survivor benefit, would
    be modifications of the usual approach but they might be necessary:

Q. What necessary modifications did you have
    to make?

A.  The other issues of necessary
    modifications are the two issues we've discussed in Section 2.1 and 2.2. And
    whether those modifications are necessary is for the court to decide, but one
    modification could be to remove the contingent survivor benefits from the value
    in this case.
Another modification could be to ascribe some value for the
    survivor pension payable to Ms. Hronowsky - her current entitlement to it I
    should say, not payable.
But other than that, I haven't made any, any
    modifications to the rules per se, aside from making a judgment on the normal
    retirement age. But
I provided Section 2.1 and 2.2 due to the unique nature
    of the survivor benefits in this plan. The Court might deem it appropriate to
    make an, an adjustment to the standard rules, so I provided sufficient - tried
    to provide sufficient information to allow the court to make that judgment.
[Emphasis added.]

[51]

The appellants expert was of the view that including
    some value for the survivor benefit in these circumstances would represent a modification
    of the usual approach, and an adjustment of the standard rules. He suggested
    that this might be necessary because, unlike with an Ontario pension, the respondent
    remained technically entitled to the survivor benefit post-separation until the
    parties divorced.

[52]

I do not see modification of the usual approach
    to include this benefit as necessary on the facts of this case. The expectation
    is that the Ontario regime will be applied where reasonably possible, unless
    there are compelling reasons not to. In these circumstances, where entitlement
    to the survivor benefit terminates upon divorce, and the respondent sought a
    divorce early on in proceedings, and the appellant consented to the granting of
    a divorce, there is no compelling reason to depart from the requirements of the
    standard rules to include the full value of an asset never to be realized in
    the hands of the respondent.

[53]

Based on the forgoing, I would dismiss this
    ground of appeal.

(d)

Did the trial judge err in including a
    contingent survivor benefit in the appellants net family property?

[54]

The appellant argues that the trial judge erred
    in including a contingent survivor benefit in valuating his pension. A
    contingent survivor benefit is payable to a pension members future potential
    spouse. Some value for a contingent survivor benefit is included in the value
    of a pension based on the probability of the member having an eligible spouse
    at death and based on the age of the spouse. The appellant took the position
    that this figure should not be included in the value of his pension, whereas
    the respondents expert included the figure in her pension valuation. The trial
    judge included these figures in calculating the value of both parties
    pensions.

[55]

Again, the trial judge reached the correct
    result on this issue but erred in her analytical approach. As with the other
    pension issues, the correct approach was to determine what the law would
    require if this were an Ontario pension and then determine whether any
    modifications of that approach are necessary in the circumstances.

[56]

The appellants expert stated that the
Standards
    of Practice of the Canadian Institute of Actuaries
require actuaries to
    include contingent survivor benefits in the commuted value of a members
    pension benefits on termination. He further stated that the FSCO has instructed
    pension plan administrators to include the value of contingent survivor
    benefits in the family law value in the same way the pension plan includes this
    value when determining the commuted value for terminated pension plan members.
    He described the inclusion of this benefit in the appellants net family
    property as in accordance with the regulations and the generally accepted
    methodology for calculating Ontario family law values.

[57]

The appellants expert opined that,
    notwithstanding the foregoing, including the survivor pension payable to a
    possible future spouse was unfair because the member may not have an eligible
    spouse, and even if the member does have an eligible spouse, the survivor
    pension would be an asset of the future spouse, not an asset of the member.

[58]

According to even the appellants expert, if this
    were an Ontario pension the pension administrator would have been obliged to
    follow the FSCO direction and include these figures. In the testimony quoted
    above, the appellants expert acknowledged that exclusion of the contingent
    survivor benefit would represent a modification of the standard methodology.
    Again, I see no compelling reason why the usual valuation approach should be
    modified for the parties federal pensions. The ability to confer a survivor
    benefit on a future partner is of value to a pension member even if the member
    does not receive these funds personally. In any event, no changes are necessary
    for the court to apply the usual provincial approach to these federal pensions.
    The appellants retirement was a post-separation event, and such events
    generally will not affect the valuation of assets on valuation day according to
    the standard methodology. I would, therefore, dismiss this ground of appeal.

(iii)

Date of Marriage Deductions

[59]

The issue here is the treatment of interest in
    the appellants net family property statement. In his date of marriage
    property, he included prorated figures for interest earned on his Scotiabank Guaranteed
    Investment Certificate, Canada Savings Bonds, and Bank of Nova Scotia RRSP. The
    trial judge found that it was permissible for the appellant to include the
    interest earned on his pre-marriage assets. However, in order to include this
    interest as property owned on the date of marriage, she found that the
    appellant was obliged to include interest for the property he owned on the date
    of separation. The trial judge found that he did not undertake this exercise
    for these date of separation assets and stated that the appellant cannot
    benefit by including interest in his calculations when it is advantageous to
    him and not including it when it is not.

[60]

The appellant submits that the trial judge erred
    in fact in finding that he did not include interest in his date of separation
    assets. I am not persuaded by this argument. The appellants net family
    property statements suggest that he did not include interest in his date of
    separation assets. For example, in his December 10, 2018 statement, his
    Scotiabank Guaranteed Investment Certificate is assigned a value of $85,000 as
    of the valuation date and the same figure is used for the current value. This
    strongly suggests that interest was not included, as there is no increase in
    the value between the two dates. The onus is on the appellant to show that the
    trial judges factual findings should be overturned. This would require
    evidence of the inclusion of interest in his date of separation values, and the
    methodology used to reach such figures, sufficient to displace the trial
    judges findings against him on this issue.

[61]

Having found as a fact that the appellant did
    not include interest in these date of separation asset values, I see no legal
    error in the trial judges decision to disregard the date of marriage interest
    values for the sake of consistency. I would, therefore, dismiss this ground of
    appeal.

(iv)

Notional Disposition Costs

[62]

The appellant has raised a number of alleged
    errors regarding the treatment of notional disposition costs. Specifically, he
    submits that the trial judge erred in:

·

not using a marginal tax rate of 26.9% for the
    pre-marriage portion of his retiring allowance;

·

using a 25.8% marginal tax rate at age 60 instead
    of a rate of 26.9%;

·

not using a 45% marginal tax rate for the
    retiring allowance as at the date of separation;

·

not applying a notional disposition cost for his
    non-registered SSI account; and

·

using an 18% disposition rate for the respondents
    remaining contribution deficiencies.

[63]

I am not persuaded that there is a basis to
    interfere with the trial judges calculation of notional disposition costs. The
    appellant failed to meet his onus of adducing sufficient evidence to establish
    these costs. For example, the appellant led no evidence regarding the
    appropriate tax rate to apply to his date of marriage severance pay, and the
    only information the court had with regard to the appellants marginal tax rate
    as at the date of separation was the agreement of the parties that the tax rate
    on the retroactive pay he received should be 45%. Moreover, the 25.8% rate used
    was the same one used by the appellants actuary assuming a retirement age of
    60. In addition, the 18% rate was the same rate the appellant used in his Net
    Family Property Statement dated December 10, 2018, and he did not challenge
    this rate at trial. Deference is owed to the trial judges assessment of the
    evidence relating to costs of disposition: see
Berta v. Berta
, 2015
    ONCA 918, 128 O.R. (3d) 730, at para. 82.

[64]

For these reasons, I would dismiss this ground
    of appeal.

(v)

Method of Equalization Payment

[65]

The appellant submits that the trial judge
    should have permitted him to satisfy part of his equalization payment by
    transfer of a lump sum out of his pension plan. He submits that the requirement
    to make such a large equalization payment means that he will have to arrange
    financing to satisfy the equalization payment.

[66]

I would not give effect to this submission. The
    appellant stated explicitly in his amended answer, in the context of his
    argument that the respondent should have his survivor pension added to her net
    family property, that he would not apply for division of his pension under the
Pension
    Benefits Division Act
, S.C. 1992, c. 46, Sch. II, as this would terminate
    her entitlement to the survivor benefit. Thus, he made a strategic decision not
    to seek an order for a lump sum transfer.

[67]

In addition, the evidence at trial established
    that he had the ability to make the required equalization payment without the
    need to rely on a lump sum transfer from his pension. His financial statement
    showed substantial liquid assets, including cash, proceeds from the sale of the
    family home, and securities.

[68]

In his closing argument, the appellants counsel
    summarized his clients position this way:

The last point I will bring up, Your Honour,
    is splitting - my friend alluded to splitting Mr. Hronowskys pension of the
Pension
    Benefits Division Act
. He does not want to do that, hes able to pay, and
    therefore theres no need to make that order. Certainly, in light of the fact
    that he has enough liquidity, that, within a matter of a month or so, he should
    be able to pay the  whatever the equalization payment, Your Honour, thinks is
    appropriate.

[69]

The trial judge cannot be criticized for doing
    exactly what the appellant invited her to do. In taking the strategic position
    he did at trial, the appellant was no doubt aware of the possibility that the
    trial judge would be making an order for a substantial equalization payment.

[70]

I would dismiss this ground of appeal, as I see
    no basis for appellate interference. The cross-appeal seeking an order that any
    lump sum payment be grossed up need not be addressed, given the result on this
    issue.

Part IV: Disposition

[71]

I would allow the appeal in part and order that
    the parties pensions be valuated in accordance with these reasons, and that
    the resulting adjustment be made by the trial judge to the equalization order.
    If the parties cannot agree on the costs of the appeal and the trial, they may
    serve and file written submissions of no more than five pages, plus bills of
    costs, within two weeks of the date of these reasons.

Released: P.R. May 29, 2020

C.W. Hourigan J.A.

I agree. Paul Rouleau J.A.

I agree. L.B. Roberts J.A.


