



COURT OF APPEAL FOR ONTARIO

CITATION: Fawcett v. Fawcett, 2018 ONCA 150

DATE: 20180215

DOCKET: C62808

Rouleau, Trotter and Paciocco JJ.A.

BETWEEN

Charlene Victoria Fawcett

Applicant (Appellant)

and

Timothy Robert Fawcett

Respondent
    (Respondent)

Adam Pantel, for the appellant

John F. Black, for the respondent

Heard: November 14, 2017

On appeal from the judgment of Justice Timothy Minnema of
    the Superior Court of Justice, dated August 23, 2016, with reasons reported at
    2016 ONSC 5331.

Trotter J.A.
:

A.

introduction

[1]

This appeal deals with the division of a federal pension as family
    property under the
Family Law Act
, R.S.O. 1990, c. F.3 (the 
FLA
).

[2]

The appellant has a Canadian Forces pension, provided by the
Canadian
    Forces Superannuation Act
, R.S.C. 1985, c. C-17 (the 
CFSA
). The
    parties agreed that the commuted value of the pension was $747,200. The pension
    has matured and is in pay, meaning that the appellant receives monthly payments.

[3]

To satisfy an equalization payment of $313,002, the trial judge ordered
    that an application be made to the pension administrator of the Canadian Forces
    pension to transfer this amount to the respondent. The appellant would have
    preferred to pay the respondent on a monthly basis by having her pension
    payments split at source. The respondent wanted an immediate lump-sum transfer.
    The trial judge held that the
Pension Benefits Division Act
, S.C.
    1992, c. 46, Sch. II (the 
PBDA
), under which the
CFSA

pension
    is administered, only allows for a lump-sum division.

[4]

As explained below, I agree with the trial judges interpretation of the
PBDA
 it contains no provision that would enable the pension administrator
    to divide monthly payments. Moreover, the trial judges order was not precluded
    by the pension division provisions of the
FLA
. I would dismiss the
    appeal.

B.

the facts

(1)

The Parties

[5]

The parties are both in their 50s. They cohabited for three years
    before marrying in 1994. They separated in July of 2013. They have three
    children who were ages 21, 19, and 17 at the time of trial.

[6]

The appellant was the primary income-earner during the marriage. She
    joined the Canadian Forces before she married the respondent. She retired in
    2008 and started drawing her Canadian Forces pension. The appellant now enjoys
    success as a financial planner/advisor with the Royal Bank of Canada. She has
    pensions from the Royal Bank Pension Plan and RBC Dominion Securities Pension
    Plan, but they have yet to mature.

[7]

During the relationship, the respondent qualified as a teacher. He
    became a substitute teacher in 2005, and then a permanent, full-time teacher in
    2011.

(2)

Proceedings at Trial

[8]

The parties were able to settle many of the issues arising from the
    breakdown of their marriage. They went to trial to resolve questions of child
    support, special expenses, and property issues. This appeal is only concerned
    with the division of the appellants Canadian Forces pension.

[9]

In ascertaining the value of this pension, the parties relied upon a
    letter sent to the appellant by National Defence. This letter, dated August 28,
    2014, is significant because it also highlights the restrictions placed upon
    the administrator of the
CFSA
pension. As the letter states:

Below you will find the financial information you requested
    under Section 13(2) of the Pension Benefits Division Act (PBDA), with respect
    to your pension entitlement under the Canadian Forces Superannuation Act.

Mr. Tim Fawcett would receive approximately $373,600.00 as a
    result of the division of your pension for the cohabitation period of 14 May
    1994 to 24 July 2013.
This one-time lump sum payment
must
be
    deposited into his locked-in RRSP account.
There would be a corresponding
    reduction to your pension of approximately $1,145.56 per month. For the
    cohabitation period of 14 May 1994 to 8 March 2014 the approximate amount is
    $374,900.00. The corresponding reduction to your pension is 1,149.67 per month.
    When indexed, the increase to your pension would be based on the amount
    remaining after the reduction,
which is for life.
[Emphasis in original.]

[10]

The
    trial judge heard evidence from an actuary, Guy Martel. Mr. Martel prepared a
    report on the family law value of the appellants other pension benefits. He
    also provided an opinion on the appropriate tax rate to be applied to discount
    the appellants Canadian Forces pension.

[11]

During
    his testimony, Mr. Martel was asked about the administration of the Canadian
    Forces pension. He explained the differences between a division of
CFSA
pension benefits and pensions governed by provincial legislation. Mr. Martel
    testified that the
PBDA
only allows for a lump-sum division. As he
    said:

The Canadian Forces pension that falls under the
Pension
    Benefits Division Act
, that would also cover the
Public Service
    Superannuation Act
, [the]
RCMP Superannuation Act
, the Members of
    Parliament Retirement Allowance  those, those plans under the [
PBDA
],
the only option basically is to transfer a lump-sum amount up to 50 percent
    of the maximum transferable amount, regardless of whether  the separation is
    before or after retirement
. [Emphasis added.]

[12]

In
    follow up questions, Mr. Martel confirmed that the only way to divide the
CFSA
pension is through a lump-sum transfer, and if the parties wished to do things
    differently, the Forces will [be] unable to persist [
sic
] in that.
    As discussed below, the trial judge interpreted the applicable legislation the
    same way.

[13]

The appellant argued that the
FLA

determines how her Canadian Forces pension should be treated
    as family property. Because her pension is in pay, s. 10.1(5) of the
FLA
precludes a lump-sum division; she could only be ordered to split
    her monthly pension payments. The appellant argued that the
Pension
    Benefits Standards Act, 1985
, R.S.C. 1985, c. 32 (2nd
    Supp.) allowed for the division of her monthly pension payments. The trial
    judge disagreed.

[14]

The appellant made the alternative submission
    that, if the trial judge were to order a lump-sum transfer, he should exercise
    his discretion under s. 9(1)(c) of the
FLA
to
    delay payment for 10 years, based on a claim of hardship. The trial judge
    flatly rejected this request, at para. 15:

However, her counsel did not explain how or
    why the immediate lump sum payment would create hardship. Not only did she not
    address it, but it is hard to understand the basic argument given that her lead
    position was to split the income stream at source.
The pension income that
    the applicant is currently receiving would be similarly reduced in both
    scenarios.
Further, the applicants counsel did not provide any plan or
    proposal; she simply made the argument without detail or thought as to how it
    would work. Specifically she did not address how the respondent would be fairly
    compensated for such a delay.
My sense was that rather than wanting to avoid
    hardship, which was not established, the applicant was seeking to gain an
    advantage for herself at the respondents expense. I decline to make that
    order.
[Emphasis added.]

[15]

The
    trial judge ordered the appellant to make an equalization payment of $313,002
    by way of a PBDA transfer from her Canadian Forces pension, which is the
    $281,224 equalization payment grossed-up for taxes by 11.3 percent.

C.

analysis

(1)

Introduction

[16]

At
    trial and on appeal, counsel focused their submissions on whether the administrator
    of the Canadian Forces pension could be ordered to split monthly payments at
    source. I agree with the trial judge that the
PBDA
, in conjunction
    with related federal statutes, does not enable a judge to order the
    administrator to split monthly payments for the purposes of dividing family
    property.

[17]

I
    disagree with the appellants submission that s. 10.1(5) of the
FLA
precluded
    the trial judge from ordering a lump-sum division because her pension was in pay.
    I would not interpret s. 10.1 of the
FLA
in this manner.

(2)

Federal Pension Legislation

[18]

There
    are numerous statutes that create and govern the administration of federal
    pensions. The appellants Canadian Forces pension entitlement derives from the
CFSA
;
    however, it does not determine how the pension is dealt with as family or
    matrimonial property.

[19]

The
PBDA
governs the division of
CFSA
pensions, as well as pensions
    granted under many other federal statutes.
[1]
By virtue of s. 3 of the
PBDA
, Parliament has signalled the primacy of
    this Act:

3
In the event of any inconsistency between this
    Act and the regulations made under this Act
and any other law
, this Act
    and the regulations shall prevail to the extent of the inconsistency. [Emphasis
    added.]

The respondent contends that the section trumps all provincial
    law, including the
FLA
. I disagree. Section 3 merely prioritizes the
PBDA
over other federal enactments. Conflicts between provincial and federal
    legislation must be resolved by the federal paramountcy doctrine. However, the
    issue on this appeal may be resolved without resort to this doctrine.

[20]

As
    discussed below, the relationship between the
PBDA
and the
FLA
is not seamless. Nevertheless, courts must strive to interpret related federal
    and provincial enactments in a harmonious manner. As Ruth Sullivan observes in
Statutory
    Interpretation
, 3rd ed. (Toronto: Irwin Law, 2016), at p. 184, the
    Supreme Court of Canada has shown a strong inclination to harmonize the
    legislation of federal, provincial and territorial jurisdictions dealing with
    the same subject matter in a number of areas, including matrimonial property
    rights. By way of example, she refers to
Clarke v. Clarke
, [1990] 2
    S.C.R. 795, a leading matrimonial property case, in which the Court read the
CFSA
and the
Matrimonial Property Act
, S.N.S. 1980, c. 9 harmoniously,
    thereby avoiding a conflict and the need to invoke the paramountcy doctrine. In
Quebec (Attorney General) v. Canada (Human Resources and Social
    Development)
, 2011 SCC 60, [2011] 3 S.C.R. 635, Deschamps J. referred
    favourably to
Clarke
and said, at para. 22: A federal provision that
    appears to be prohibitive may, upon consideration of its legislative purpose,
    prove to be compatible with a permissive provision. See also
Alberta
    (Attorney General) v. Moloney
, 2015 SCC 51, [2015] 3 S.C.R. 327, at para.
    26. Employing the same approach, the
FLA
and the
PBDA
may be
    interpreted harmoniously in this case.

[21]

The
PBDA
only provides for a lump-sum division of a members pension,
    whether the pension is in pay or not. A division is triggered by an application
    under s. 4, which provides:

4 (1)
A member of a pension plan or a spouse,
    former spouse or former common-law partner of a member may, in the
    circumstances described in subsection (2), apply to the Minister to divide the
    members pension benefits between the member and the spouse, former spouse or
    former common-law partner.

(2)
The circumstances in which an application may
    be made are:

(a)
where a court in
    Canada of competent jurisdiction, in proceedings in relation to divorce,
    annulment of marriage or separation, makes an order that provides for the
    pension benefits to be divided between the member and the spouse, former spouse
    or former common-law partner.

[22]

The
    manner in which the pension is divided is addressed in s. 8. It does not
    facilitate a simple cash payment to the non-member spouse; it provides for a
    one-time transfer of funds into locked-in financial instruments. As s. 8
    provides:

8

(1)
A
division
of pension
    benefits
shall be
effected by

(a)
subject to subsection (4),
transferring an
    amount representing fifty per cent of the value of the pension benefits
that have accrued to the member of the pension plan during the period subject
    to division, as determined in accordance with the regulations, to the spouse,
    former spouse or former common-law partner, if that pension plan is a
    retirement compensation arrangement, or, in any other case, to

(i)
a pension plan
    selected by the spouse, former spouse or former common-law partner that is
    registered under the
Income Tax Act
, if that pension plan so
    permits,

(ii)
a retirement
    savings plan or fund for the spouse, former spouse or former common-law partner
    that is of the prescribed kind, or

(iii)
a financial
    institution authorized to sell immediate or deferred life annuities of the
    prescribed kind, for the purchase from that financial institution of such an
    annuity for the spouse, former spouse or former common-law partner;
and

(b)

adjusting, in accordance with the
    regulations, the pension benefits that have accrued to the member of the
    pension plan under that pension plan
, notwithstanding the provisions of
    that pension plan or the Act under which it is established or by which it is
    provided.
[2]
[Emphasis added.]

[23]

The
    trial judges conclusion that s. 8 only provides for lump-sum divisions is
    borne out by the plain language of the provision. It is in accord with the
    National Defence letter in para. 9, above. It is consistent with Mr. Martels
    understanding of the
PBDA
. Moreover, this feature of the
PBDA
has long been recognized: see Ontario Law Reform Commission,
Report on
    Pensions as Family Property: Valuation and Division
(Toronto: Ontario Law
    Reform Commission, 1995), at pp. 62, 171-172; Thomas G. Anderson, Q.C., Pension
    Basics for Family Lawyers Part II: Canadian Models for
    Dividing Pensions When a Relationship Ends (2007) 26 Can. Fam. L.Q.
    91, at pp. 114, 118-119; and
R. v. Francis
, 2017 SKQB 28, 31 C.C.P.B.
    (2nd) 242, at paras. 25 and 30.

[24]

The
    appellant submits that the
Garnishment, Attachment and Pension Diversion
    Act
, R.S.C. 1985, c. G-2 (the 
GAPDA
) permits pension payments
    to be split at source as family or matrimonial property. I disagree. This Act
    only applies to the enforcement of support orders.

[25]

Section
    90 of the
CFSA
incorporates the operation of the
GAPDA
:

Diversion of payments to satisfy financial support order

90(1)
When any court in Canada of competent jurisdiction
    has made an order requiring a recipient to pay financial support,
amounts
    payable
under Part I, I.1 or III to that recipient are subject to being
    diverted to the person named in the order in accordance with Part II of the
Garnishment,
    Attachment and Pension Diversion Act
. [Emphasis added.]

Part II of the
GAPDA

is titled,
    Diversion of Pension Benefits to Satisfy Financial Support Orders. Section 31
    clarifies the limited scope of this Part of the Act:

31
This Part applies
only
in respect of the
enforcement
    of financial support

orders
against pension benefits payable
    pursuant to the superannuation Acts and like enactments referred to in the
    schedule. [Emphasis added.]

[26]

A
    financial support order is defined in s. 32(1) in the following way:

financial support order
means, subject to
    subsection (2), an order or judgment for maintenance, alimony or support,
    including an order or judgment for arrears of payments, made pursuant to the
Divorce
    Act
or pursuant to the laws of a province relating to family financial
    support or the enforcement of family financial support.
[3]

Near identical provisions were considered in
Clarke
.
    Writing for the Court, Wilson J. held, at p. 832, that a financial support
    order does not encompass matrimonial property.

[27]

To
    conclude, federal legislation does not clothe the
PBDA
administrator
    with the power to split pension payments as a method of dividing family
    property. Consequently, the administrator cannot be ordered to do so. Parliament
    could create such a power. It has chosen not to. Indeed, in the recent case of
Francis
,
    the federal Crown successfully argued that there is no jurisdiction to order
    the administrator to divide pension payments as family property under the
PBDA
.
    I agree with the analysis in that decision.

(3)

Provincial Legislation

[28]

Part
    I of the
FLA
addresses issues of family property. Section 5 creates a
prima
    facie
entitlement to an equal division of net family property. Section 9
    empowers a court to order equalization payments, and to make collateral orders to
    secure their performance.

[29]

The
    interest of one spouse in anothers pension benefits has long been recognized
    as a matter of matrimonial or family property: see
Clarke
, at p. 824. In
    2009, the
FLA

was amended (s. 2009, c. 11) to create specific
    rules, contained in s. 10.1, about the division of pension entitlements.
    Subsections 10.1(3), (4), and (5) provide:

(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 spouses
    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 spouses 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.

(5)
If payment of the first instalment of a spouses
    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 spouses interest in the plan.
[Emphasis added.]

[30]

The
    appellant argues that the combined operation of ss. (3) and (5) precludes a lump-sum
    division when a pension is in pay. Some cases support this interpretation (see,
    for example,
Jovanovic v. Jovanovic
, 2013 ONSC 7132, [2014] W.D.F.L.
    461, at para. 40). However, I would not read these provisions so restrictively,
    especially without clear statutory language that prohibits a lump-sum transfer when
    a pension is in pay.

[31]

Subsection
    10.1(3) creates a general power to order an immediate lump-sum division. The
    availability of this permissive option is guided by the non-exhaustive criteria
    in s. (4). Subsection (5) addresses pensions in pay. In these circumstances, a
    judge
may
make an order for the division of pension payments, but not
    for
any other
division of the spouses interest in the plan (emphasis
    added). I do not read this section as prohibiting a lump-sum transfer for a
    pension in pay. Instead, s. 10.1(5) simply provides courts with another option
     division of payments. However, just like s. 10.1(3), s. 10.1(5) only allows a
    judge to order one form of division  lump-sum or pension payments  not both,
    and not any other form of division of the interest.

[32]

The
    combined operation of ss. 10.1(3) and (5) leads to the following options.
    Before a pension is in pay, only a lump-sum division is available. This makes
    sense because there is no monthly payment stream to divide. Once a pension is
    in pay, a judge may choose between the two options, depending on all of the
    circumstances of the case. Whether or not a pension is in pay, the factors set
    out in s. 10.1(4) provide guidance.

[33]

The
    appellants restrictive interpretation of s. 10.1 potentially compromises an
    important goal of the
FLA
 to achieve a division of assets that is fair
    to both parties. In
Best v. Best
, [1999] 2 S.C.R. 868, Major J. said, at
    para. 109: The choice of a method for settlement of the equalization
    obligation is highly contextual and fact-based. A payment method that is
    preferable in one case might be grossly unjust in another. The interpretation
    favoured by the appellant would undermine this approach by precluding resort to
    an option (a lump-sum payment) that may be critical in achieving a fair and
    just division of property.

[34]

A
    broader interpretation s. 10.1(5) of the
FLA
is more compatible with
    the
PBDA
. Returning to the paramountcy jurisprudence, Gascon J. said
    in
Moloney
, at para. 27: It is presumed that Parliament intends its
    laws to co-exist with provincial laws. This presumption must also apply in
    reverse, and with at least equal force  it is presumed that the province
    intends its laws to co-exist with federal laws. I am unable to find that the
    Legislature intended to undermine or limit the operation of the
PBDA
.

[35]

When
    Ontario amended the
FLA

in 2009 to create s. 10.1, it would
    surely have known that the
PBDA
only provides for a lump-sum division:
    see Ontario Law Reform Commission,
Report on Pensions as Family Property
,
    at pp. 62, 171-172. See also, Law Commission of Ontario,
Division of Pensions
    Upon Marriage Breakdown  Final Report
(Toronto: Law Commission of
    Ontario, 2008). As noted in para. 18 above, the
PBDA
applies to
    pensions created by many federal statutes, no doubt affecting the pensions of
    countless Ontarians. I would avoid an interpretation of the
FLA
that
    frustrates the
PBDA
. A broader interpretation of s. 10.1(5) advances
    the goals of the
FLA
, while achieving harmony with federal pension
    legislation.

[36]

This
    is not say that it will always be appropriate to order a lump-sum division of a
    pension in pay. It will depend on the nature of the underlying pension
    legislation, the application of the criteria listed in s. 10.1(4) of the
FLA
,
    and such other matters as the court considers appropriate to achieve a just
    result in the case: see
VanderWal v. VanderWal
, 2015 ONSC 384, 54
    R.F.L. (7th) 410, at para. 9.

(4)

Application to This Case

[37]

The
    trial judge did not err in ordering a lump-sum transfer of the appellants
    pension. This method of division involves little downside to the appellant. She
    does not have to find the money or arrange financing to satisfy the equalization
    payment: see
Boston v. Boston
, 2001 SCC 43, [2001] 2 S.C.R. 413, at
    paras. 51 and 60. The pension is divided at source. Moreover, as the trial judge
    recognized, a lump-sum division puts the appellant in the same monthly position
    had her pension payments been split at source.

[38]

On
    the other hand, under the
PBDA
, the respondent will benefit from an
    immediate, one-time transfer of the property to which he is entitled: see
Symmons
    v. Symmons
, 2012 ONCA 747, 298 O.A.C. 224, at paras. 37-39. This, in turn,
    will better facilitate a clean break between the parties, avoiding the
    potential for future disputes: see
Clarke
, at p. 836; and
Best
,
    at paras. 109 and 111.

[39]

As
    the trial judge observed, the appellant is not interested in this arrangement;
    she seemed intent on putting the respondent at a disadvantage. To a certain
    extent, this posture continues on appeal. In the circumstances, an order that requires
    the appellant to pay the respondent each month is a recipe for conflict and
    more litigation. This is avoided by the trial judges order.

D.

disposition

[40]

The
    trial judge did not err in the manner in which he interpreted applicable
    provincial and federal legislation. The order that he made was both available
    to him under the law and appropriate in the circumstances. Accordingly, I would
    dismiss the appeal and order costs to the respondent in amount of $10,000,
    inclusive of disbursements and HST.

Released: PR FEB 15 2018

G.T. Trotter J.A.

I agree. Paul Rouleau J.A.

I agree. David M. Paciocco J.A.





[1]
Section 2 of the
PBDA
defines a pension plan for the purposes of the
    Act. In addition to the
CFSA,
the
PBDA
governs the division of
    pensions established under the following statutes: (i) the
Public Service
    Superannuation Act
, R.S.C. 1985, c. P-36 (which provides for persons
    employed in the public service); (ii) the
Defence Services Pension
    Continuation Act
, R.S.C. 1970, c. D-3 (which provides for certain persons
    enrolled as members of the Regular Forces before the 1st day of April 1946);
    (iii) the
Royal Canadian Mounted Police Superannuation Act
, R.S.C. 1985,
    c. R-11 (which provides for members of the Royal Canadian Mounted Police);
    (iv) the
Royal Canadian Mounted Police Pension Continuation Act
, R.S.C.
    1970, c. R-10 (which provides for certain persons appointed as members of the
    Royal Canadian Mounted Police before the 1st day of March 1949); (v) the
Diplomatic
    Service (Special) Superannuation Act
, R.S.C. 1985, c. D-2 (which provides
    for senior appointees of the Department of Foreign Affairs, Trade and
    Development serving outside Canada); (vi) the
Lieutenant Governors
    Superannuation Act
, R.S.C. 1985, c. L-8 (which provides for Lieutenant
    Governors); (vii) the
Governor Generals Act
, R.S.C. 1985, c. G-9 (which
    provides for the Governor General); (viii) the
Members of Parliament
    Retiring Allowances Act
, R.S.C. 1985, c. M-5 (which includes provisions for
    a pension plan or retirement compensation arrangement to persons who have
    served as Members of Parliament); and (ix) the
Special Retirement
    Arrangements Act
, S.C. 1992, c. 46, Sch. I (which provides for a special
    pension plan or retirement compensation arrangement to any person or class
    of persons designated by order of the Governor in Council, on the
    recommendation of the President of the Treasury Board).



[2]

Subsection (4) provides for lump-sum transfers of less than
    fifty percent.



[3]
Subsection (2) is irrelevant to the issues on
    appeal; it deals with orders that fail to sufficiently specify the dollar
    amounts at stake.


