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BACKGROUND

The Applicant and the Respondent were married on November 15, 2008, with two children being born in 2009 and 2011 respectively. The parties separated on March 15, 2021. It was previously determined that the Respondent was entitled to half of the Applicant’s pension as part of the equalization of net family property. While the Respondent wished to purchase the Applicant’s equity in the matrimonial home, she could only do so by receiving the transfer of the Applicant’s pension in the form of a cash payment. The parties agreed that if 50% of the applicant’s pension was not immediately transferred via lump sum to the Respondent a notional tax rate of 25% would be deducted from its value. Thus, were 50% of the pension immediately transferred out of the plan to the Respondent, the equalization payment to the Respondent would increase to $107,240.29.

ISSUES

  1. Should 50% of the Applicant’s pension be immediately transferred from his pension plan to the Respondent or should it be paid in cash?

ANALYSIS

The Applicant asked the Court to allow him to immediately transfer the funds out of his pension plan in a lump sum rather than in cash payment. The Applicant’s largest asset was his equity in the matrimonial home given his other assets included some RRSPs and a locked in registered account that he could not access. The Applicant would thus be left with very little liquid cash if he were required to pay the Applicant her share of his pension in cash. The Respondent argued that paying her share of the pension in cash would be in the best interests of the children, as it would give her the ability to retain the matrimonial home. Furthermore, the Respondent stated that the Applicant had more borrowing power as his income was higher than her own.

The Court acknowledged that there is no presumption that an equalization payment be made by a transfer of a lump sum out of a pension plan. Rather, each case depends on its own facts per VanderWal v. VanderWal 2015 ONSC and Fortier v. Lauzon 2017 ONSC. The Family Law Act (“FLA”) s. 10.1(4) also lays out matters to consider as follows:

  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 consist of the imputed value, for family law purposes, of hi 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.

Under factor 1), the Applicant’s pension constituted 44% of his total assets. If the pension were to be transferred via cash payment, the Respondent would retain much more liquidity of assets then the Applicant. Were the pension to be divided via lump sum transfer out of the plan, the parties would have a reasonable balance in the liquidity of their respective assets.

Per factor 2), the net disposable income of the parties was almost equal before the payment of s. 7 expenses due to child support being set off against the agreed upon incomes listed in the parties’ settlement. Factors 3) and 4) were deemed to be neutral for the parties as neither would be able to currently access the pension plan as it is a locked vehicle.

As it related to factor 5) the Court found that determining the retirement resources of the spouses was a speculative exercise, as they have approximately 15 years until they reach retirement age. However, the Court ruled that in terms of underfunding the pension, it would be unfair to the Applicant for him to pay 50% of an underfunded asset in cash to the Respondent.

S. 10.1 (4) of the FLA also allows the Court to consider “such other matters as the court considers appropriate” to determine whether to order the immediate transfer of a lump sum out of a pension plan. The Court was not satisfied that the “best interests of the child” was a proper consideration to be included per s. 10.1 (4). This is because the other matters listed for consideration in s 10.1 (4) were financial. The cannon of statutory interpretation which states that general wording is limited to things of the same type or ejudsem generis, would thereby imply that “other such matters” be of a similar financial nature.

Even if the best interests of the children were considered, the Court deemed these interests would be better served if both parents could provide them a home. Leaving the Applicant pension rich, yet cash poor by denying him the lump-sum method of transfer, would decrease the Applicant’s ability to provide such a home.

CONCLUSION

The Court ordered that the Applicant’s pension be divided at the source in the maximum transferable amount of $109,943.69 plus interest accrued since the date of separation and transferred to the Respondent as a lump sum.

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