B E T W E E N : |
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EDWINA RUTH TRICK |
D. Smith and Brinley Evans |
- and - |
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JOHN ANTHONY TRICK |
Jacqueline M. Mills |
Heard: March 31, 2006 |
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[1] This appeal raises the primary question of the court’s jurisdiction to vest a payor spouse’s private pension in a recipient spouse to enforce a support order made under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) (DA). This appeal also raises the question of the court’s jurisdiction to order the diversion by garnishment of 100 per cent of a payor’s Canada Pension Plan (CPP) and Old Age Security (OAS) benefits.
[2] In this case, the motion judge, Fragomeni J., vested 100 per cent of the appellant’s pension in the respondent wife, Edwina Trick, and ordered the garnishment of 100 per cent of the appellant’s CPP and OAS benefits. These orders, and other relief, were granted because the appellant husband, John Trick, was in substantial arrears of child and spousal support. The appellant seeks to set aside both orders as well as the order made against him to pay $10,000 in costs. The appellant, however, does not pursue his appeal of the dismissal of his motion to vary, in which he sought to reduce his child support obligations and rescind all support arrears.
[3] For the reasons that follow, in my view, the motion judge erred in granting a vesting order of the appellant’s private pension plan because such an order would contravene s. 66(4) of the Pension Benefits Act, R.S.O. 1990, c. P.8 (PBA). Section 66(4) permits execution against a pension benefit to enforce a support order but to a maximum of 50 per cent of the benefit. Further, the vesting order contravened s. 65(1) of the PBA, which voids every transaction purporting, among other things, to assign a pension. The order in issue does not fall within the exception provided by s. 65(3). The motion judge also erred in ordering the diversion or garnishment of more than 50 per cent of the appellant’s CPP and OAS benefits. Finally, in the circumstances of this case, I would not interfere with the costs order below or award any costs for this appeal.
[4] In 1991, the parties entered into a separation agreement that provided for both child and spousal support. The parties’ 1992 divorce judgment, although silent on the issue of spousal support, provided for child support for the parties’ two children.
[5] At the time of separation, the appellant was employed by Nortel, earning approximately $120,000 annually. Months later, Nortel terminated his employment, thereby triggering payment of the appellant’s $31,000 annual Nortel pension. Within four months, the appellant accepted employment in Texas at an income much greater than he earned at Nortel. From 1995 to 2001, the appellant earned an average annual income of $194,258 CAD, including his Nortel pension. He did not disclose his increased income to the respondent.
[6] In the meantime, the respondent’s health deteriorated to the point that she was unable to earn any significant income. When the respondent eventually learned of the appellant’s actual financial circumstances, she sought a retroactive and ongoing variation of support.
[7] After an eight-day trial of the variation application in 2003, the trial judge, Seppi J., awarded the respondent retroactive spousal and child support totaling $225,675 and $117,936.41 in costs. She also ordered ongoing monthly spousal support as well as child support under the Federal Child Support Guidelines, S.O.R./97-175.
[8] Following the variation judgment, the appellant appealed to this court. However, his appeal was late and the appellant decided not to review the order refusing him an extension of time. Instead, he simply reduced his support payments and, according to the respondent, “judgment-proofed his U.S. assets.” In Canada, the appellant’s only assets are his Nortel pension and his CPP and OAS benefits.
[9] The variation judgment concluded with the usual paragraph providing for the enforcement of the support order by the Director of the Family Responsibility Office pursuant to the provisions of the Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31 (FRSAEA). On the record before this court, it appears that the Director has not withdrawn from enforcement the 2003 support variation judgment and the related Support Deduction Order, which was made under FRSAEA.
The motion below
[10] By March 2005, the appellant owed the respondent $422,192.17, including arrears of support, interest and costs. In May 2005, the respondent brought a motion for, among other relief, the two orders at issue on this appeal: one vesting the appellant’s Nortel pension in her name and the other directing the garnishment of 100 per cent of the appellant’s CPP and OAS benefits. In response, the appellant brought a cross-motion to vary Seppi J.’s judgment to reduce his support obligations.
[11] After reviewing the parties’ circumstances and the reasons for the 2003 variation, the motion judge dismissed the appellant’s motion to vary. He concluded that, in essence, the appellant was asking the motion judge to sit on appeal from the earlier variation judgment. I agree. In any event, as I have mentioned, the appellant does not appeal this part of the motion judge’s order. In argument, the appellant advises that he pursues only his challenge of the motion judge’s jurisdiction to make the diversion orders.
[12] It is clear from paragraph 35 of the motion judge’s reasons that both the vesting order and the garnishment relief were granted “to enforce” the support order.[1] In support of his jurisdiction to grant the enforcement relief, the motion judge relied on s. 100 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA), s. 34(1)(c) of the Family Law Act, R.S.O. 1990, c. F.3 (FLA), and those provisions of the DA that permit a court ordering support to “impose terms, conditions or restrictions in connection with” a child or spousal support order. The motion judge, after commenting on the appellant’s extensive history of non-payment and on the appellant’s argument that diversion would be inequitable in light of the appellant’s age and financial circumstances, concluded that the relief should be granted.
[13] With respect to the 100 per cent garnishment of the appellant’s CPP and OAS benefits, the motion judge’s reasons were brief: “I am also satisfied that the full amount payable from CPP and OAS pensions ought to be garnished.”
Issues
[14] The appellant raises three issues on this appeal:
1. Did the motion judge err in vesting 100 per cent of the appellant’s Nortel pension in the respondent?
2. Did the motion judge err in ordering the garnishment of 100 per cent of the appellant’s CPP and OAS benefits?
3. Did the motion judge err in awarding costs of $10,000 against the appellant?
1. Did the motion judge err in vesting 100 per cent of the appellant’s Nortel pension in the respondent?
Summary
[15] The appellant argues that the PBA restricts execution against a pension to 50 per cent for spousal support. The respondent argues that any such statutory restrictions are not relevant to the court’s exercise of its equitable jurisdiction under s. 100 of the CJA, a jurisdiction that is akin to the appointment of an equitable receiver under s. 101 of the CJA.
[16] In my view, s. 100 of the CJA does not provide stand-alone jurisdiction to grant the relief claimed. Section 100 only provides a mechanism to vest title to a property in respect of which there is a separate, valid claim to ownership. Although the motion judge relied on the FLA as conferring such a valid claim, the support order was made under the DA and not under the FLA. Further, the Family Law Rules, O. Reg. 114/99 (FLR), which provide the procedure for the enforcement of DA support orders, do not list vesting orders as an available enforcement mechanism. The DA, however, does give a court jurisdiction to secure a spousal support order. In that sense, it may be construed as providing the CJA s. 100 authority to “encumber” an asset. However, even if that is so at law, the PBA prohibits the granting of such a vesting order. Consequently, in my opinion, even if a vesting order is available in equity, that relief should be refused where it would conflict with specific provisions of the PBA. This is particularly so because the exigibility of pensions is fraught with social and political policy issues, issues that are better-suited for the legislature than the courts. Accordingly, I would allow the appeal and set aside the vesting order.
[17] These conclusions follow from a consideration of the legislation, although the wording of the legislation and the interaction between the applicable statutes are by no means straightforward.
Legislative Provisions
[18] The following provisions are relevant to the question of the court’s jurisdiction to make a vesting order with respect to a pension:
Courts of Justice Act
s. 100 A court may by order vest in any person an interest in real or personal property that the court has authority to order be disposed of, encumbered or conveyed.
s. 101(1) In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just or convenient to do so.
Family Law Act
s. 34(1) In an application under section 33 [for support], the court may make an interim or final order,
…
(c) requiring that property be transferred to or in trust for or vested in the dependant, whether absolutely, for life or for a term of years;
Divorce Act
s. 2(1) “support order” means a child support order or a spousal support order.
s. 15.1(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage.
s. 15.2(1) A court of competent jurisdiction may … make an order requiring a spouse to secure or pay, or to secure and pay … such…sums, as the court thinks reasonable for the support of the other spouse.
s. 15.1 (4) and s. 15.2(3) The court may make an order … and may impose terms, conditions or restrictions in connection with the order … as it thinks fit and just.
s. 17(3) The court may include in a variation order any provision that under this Act could have been included in the order in respect of which the variation order is sought.
s. 20(3) An order that has legal effect throughout Canada pursuant to subsection (2) may be
(a) registered in any court in a province and enforced in like manner as an order of that court; or
(b) enforced in a province in any other manner provided for by the laws of that province, including its laws respecting reciprocal enforcement between the province and a jurisdiction outside Canada.
Federal Child Support Guidelines
s. 12 The court may require in the child support order that the amount payable under the order be paid or secured, or paid and secured, in the manner specified in the order.
Family Law Rules
r. 2(1) In these rules, “payment order” means a temporary or final order, but not a provisional order, requiring a person to pay money to another person, including,
(a) an order to pay an amount under Part I or II of the Family Law Act or the corresponding provisions of a predecessor Act,
(b) a support order,
(c) a support deduction order,
(e) a payment order made under rules 26 to 32 (enforcement measures) or under section 41 of the Family Responsibility and Support Arrears Enforcement Act, 1996,
(j) the costs and disbursements in a case;
“Support order” means an order described in subsection 34(1) of the Family Law Act or a support order as defined in subsection 2(1) of the Divorce Act (Canada) or in section 1 of the Family Responsibility and Support Arrears Enforcement Act, 1996.
r. 26(2) An order that has not been obeyed may, in addition to any other method of enforcement provided by law, be enforced as provided by subrules (3) and (4).
r. 26(3) A payment order may be enforced by,
(a) a request for a financial statement (subrule 27(1));
(b) a request for disclosure from an income source (subrule 27(7));
(c) a financial examination (subrule 27(11));
(d) seizure and sale (rule 28);
(e) garnishment (rule 29);
(f) a default hearing (rule 30), if the order is a support order;
(g) the appointment of a receiver under section 101 of the Courts of Justice Act; and
(h) registration under section 42 of the Family Responsibility and Support Arrears Enforcement Act, 1996.
Pension Benefits Act - Benefits
s. 51 (1) A domestic contract as defined in Part IV of the Family Law Act, or an order under Part I of that Act is not effective to require payment of a pension benefit before the earlier of,
(a) the date on which payment of the pension benefit commences; or
(b) the normal retirement date of the relevant member or former member.
(2) A domestic contract or an order mentioned in subsection (1) is not effective to cause a party to the domestic contract or order to become entitled to more than 50 per cent of the pension benefits, calculated in the prescribed manner, accrued by a member or a former member during the period when the party and the member or former member were spouses.
Pension Benefits Act – Locking In
s. 65(1) Every transaction that purports to assign, charge, anticipate or give as security money payable under a pension plan is void.
(3) Subsections (1) and (2) do not apply to prevent the assignment of an interest in money payable under a pension plan or money payable as a result of a purchase or transfer under section 42, 43, clause 48(1)(b) or subsection 73(2) (transfer rights on wind up) by an order under the Family Law Act or by a domestic contract as defined in Part IV of that Act.
s. 66(1) Money payable under a pension plan is exempt from execution, seizure or attachment.
(4) Despite subsection (1), payments under a pension or that result from a purchase or transfer under section 42 or 43, clause 48(1)(b) or subsection 73(2) are subject to execution, seizure or attachment in satisfaction of an order for support enforceable in Ontario to a maximum of one-half the money payable.
[19] The starting point referenced by the motion judge is s. 100 of the CJA, which provides a court with jurisdiction to vest property in a person but only if the court also possesses the “authority to order [that the property] be disposed of, encumbered or conveyed.” Thus, s. 100[2] only provides a mechanism to give the applicant the ownership or possession of property to which he or she is otherwise entitled; it does not provide a free standing right to property simply because the court considers that result equitable.
[20] Accordingly, the question is whether, at law or in equity, the motion judge had that necessary authority to dispose of, encumber or convey the appellant’s interest in his pension.
[21] The FLA, which the motion judge relied upon, permits the diversion of pensions for two purposes. First, Part I, specifically s. 9(1)(d)(i), gives a court the jurisdiction to make a vesting order as a means to effect the equalization of net family property, including pensions. This section, however, does not apply because equalization was not the issue in this case.
[22] Second, Part III of the FLA, specifically s. 34(1)(c), gives a court jurisdiction, when dealing with support, to transfer or vest property “in the dependant, whether absolutely, for life or for a term of years”.[3] In this case, however, the judgment sought to be varied was not granted under the FLA, but under the DA.
[23] Consequently, it was an error to rely on the FLA as the authority necessary to vest the appellant’s Nortel pension in the respondent.
(c) Family Law Rules
[24] The FLR, which set out the procedures available for the enforcement of a support order, apply whether the order is made under the FLA or under the DA. Rule 26 sets out the enforcement mechanisms available, including garnishment, seizure and sale, equitable receivership under s. 101 of the CJA, and, finally, by registration against land under the FRSAEA. A vesting order under s. 100 of the CJA, however, is not included among Rule 26 enforcement methods. Accordingly, the FLR, which in any event are only procedural in nature, do not provide the additional authority to dispose of, encumber or convey the appellant’s pension as required by the CJA.
[25] The motion judge also referred to the DA s. 15 jurisdiction to “impose ‘terms, conditions, or restrictions in connection with’ a child or spousal support order.” In addition, s. 17(3) provides, on a variation application, that a court may make an order that “could have been included in the order in respect of which the variation order is sought.”
[26] In my view, these provisions do not assist the respondent. The phrase, “in connection with,” only modifies the terms of the support being ordered so that a judge may impose various terms and conditions on the payments being ordered. The provision does not go so far, however, as to provide jurisdiction for the judge to order enforcement of the order or to order security for the payments. I say this because both enforcement and security are specifically addressed elsewhere in the DA.
[27] The DA gives a court jurisdiction to require a spouse “to secure and pay” spousal support pursuant to s. 15.2(1) and s. 17(3) of the DA. Jurisdiction to secure an order for child support is provided by s. 12 of the Federal Child Support Guidelines. The securing of support, which has been available since the 1985 DA amendments, was addressed in Long v. Long (1993), 1 R.F.L. (4th) 110 (Alta. Q.B.). In that case, Veit J., held that because “there is specific authority in the Divorce Act allowing the courts to secure the payment of support,” she had the jurisdiction to order support payments deducted from the payor’s wages. She explained at para. 18 that such an order “is like a receivership order and is therefore within the category of securing orders that also contains mortgages, bonds, and pledges.”[4]
[28] Such an order for security arguably could provide the necessary additional authority upon which to found a subsequent CJA s. 100 vesting order because such an order could be interpreted as providing the “authority” to “encumber” property. In any event, apart from the fact that this analysis was not argued by the respondent, in my view, the provisions of the PBA, which I will now discuss, preclude such an order, at least at law.
(e) Pension Benefits Act
[29] To encourage the establishment of pensions, and to ensure that they are available to workers for their retirement years, the pension legislation provides that pensions are non-assignable and non-exigible[5], subject to certain exceptions.
[30] Accordingly, certain provisions are included in the PBA to preserve pensions. The legislation distinguishes between the protection given to pension benefits which a member will receive in the future and protection for pension moneys actually being received, i.e. a pension in pay. The Act also distinguishes between what a pensioner or court can do by way of assigning a pension and the extent to which a creditor can execute against a pension.
[31] However, preserving a member’s interest in his or her pension can conflict with other important objectives reflected in family law legislation. From a property perspective, the value of the pension accumulated during marriage is part of the spouses’ net family property subject to equalization. From a support perspective, a pension in pay is an income source relevant to the ongoing needs of the family members. Thus, pension income may be a source of revenue to enforce support and equalization obligations.
[32] Predecessor legislation, the Pension Benefits Act, R.S.O. 1980, c. 373, generally prohibited both assignment of and execution against a pension. However, that Act made an exception and permitted execution against 100 per cent of a pension in pay to enforce a support order:
27(1) Moneys payable under a pension plan shall not be assigned, charged, anticipated or given as security and are exempt from execution, seizure or attachment, and any transaction purporting to assign, charge, anticipate or give as security such moneys is void.
(2) Subsection (1) does not apply to the execution, seizure or attachment of moneys payable under a pension plan in satisfaction of an order for support under the Family Law Reform Act.
[33] In 1988, the legislature amended the legislation to cap execution to enforce a support order at 50 per cent of the payor’s pension and to permit the assignment of a maximum of 50 per cent of a pension to satisfy an equalization order. In this way, the current PBA balances the competing interests of support enforcement and pension preservation.
[34] I begin with the current legislative provisions restricting execution against pensions for support enforcement because they benefit from greater clarity of language than those restricting the assignment of pensions. Apparently none of these provisions was brought to the attention of or argued before the motion judge.
[35] Section 66(1) of the PBA exempts money payable under a pension plan from “execution, seizure or attachment”. For convenience, I repeat s. 66(4):
Despite subsection (1), payments under a pension … are subject to execution, seizure or attachment in satisfaction of an order for support enforceable in Ontario to a maximum of one-half the money payable.
[36] This subsection, enacted in 1988[6], provides that monies payable under a pension plan are subject to execution, seizure and attachment to a maximum of 50 per cent to satisfy support orders. This exemption applies to all support orders “enforceable in Ontario”, which includes both orders made under the FLA and orders made under the DA, such as the one in this case.[7]
[37] The 50 per cent exemption is replicated in the Wages Act, R.S.O. 1990 c. W.1, at ss. 7(2) and 7(3) (WA). However, unlike the PBA, ss. 7(4) and (5) of the WA give a court jurisdiction to increase or decrease the percentage exemption “if the judge is satisfied that it is just to do so, having regard to the nature of the debt owed to the creditor, the person’s financial circumstances and any other matter the judge considers relevant.”[8] The legislature did not give a court the same discretion with respect to exemptions in the case of pensions.
[38] The objective of pension preservation is reflected in s. 23(1) of the FRSAEA, which precludes the Director bringing enforcement proceedings under a Support Deduction Order from garnisheeing more than 50 per cent of a payor’s pension. While the legislature also proposes to provide a judicial discretion to increase or decrease that exemption, that amendment has not yet been proclaimed in force. [9]
[39] Since there is no similar proposed amendment to the PBA, the legislature can be taken to have determined that, at least currently, there should be no judicial authority to increase the 50 per cent exemption.
[40] Accordingly, I conclude that, for the purpose of support enforcement, at law, s. 66(4) of the PBA permits execution against money payable under a pension plan to a maximum of 50 per cent.
[41] I now turn to the question of whether a contrary result follows from an interpretation of s. 65(3) of the PBA.
(ii) PBA - Assignment of pensions
[42] Despite the clear wording of s. 66(4), the respondent argues that execution to enforce a DA support order is permitted by the operation of s. 65(3). This section, however, must be considered in light of its purpose and its context. Section 65(1) begins by providing that “[e]very transaction that purports to assign, charge, anticipate or give as security money payable under a pension plan is void.” Section s. 65(3), at first blush, appears to describe a very broad exception to that prohibition:
(3) Subsections (1) and (2) do not apply to prevent the assignment of an interest in money payable under a pension plan or money payable as a result of a purchase or transfer under section 42, 43, clause 48(1)(b) or subsection 73(2) (transfer rights on wind up) by an order under the Family Law Act or by a domestic contract as defined in Part IV of that Act [emphasis added].
[43] Based on this broad language, the respondent argues that a court is not precluded from assigning 100 per cent of a pension to satisfy a support order. I disagree for several reasons.
[44] First, the order in this case, to the extent it otherwise comes within s. 65(3) at all, is not an order made under the FLA. Rather, it was made under the DA. Accordingly, s. 65(3) cannot provide relief from the s. 65(1) general prohibition against pension assignment.
[45] Second, the interpretation put forward by the respondent is inconsistent with the clear legislative intention of s. 66(4). Execution to satisfy support orders is specifically dealt with by s. 66(4) of the Act. If, by virtue of s. 65(3), a recipient spouse could by court order force the assignment of 100 per cent of a payor’s pension, then s. 66(4) would be rendered meaningless. This would run afoul of the presumption of coherence in statutory interpretation. In essence, it is presumed that the legislature did not intend to make contradictory statements within the same statute. See 2747-3174 Quebec Inc. v. Quebec (Regie des permis d’alcool), [1996] 3 S.C.R. 919 at paras. 207-08 (per L’Heureux-Dube concurring) and R. Sullivan, Sullivan and Dreidger on the Construction of Statutes, 4th ed. (Markham: Butterworths, 2002) at 168. In my view, s. 65(3) should not be interpreted to strip s. 66(4) of its purpose if other rational and consistent interpretations can be applied.
[46] Third, such an interpretation is inconsistent with the legislative history of the provision. In 1988, the legislature deliberately moved from 100 per cent exigibility of pensions for support enforcement to 50 per cent. It would not be logical to cap pension exigibility at 50 per cent in s. 66(4), but leave it 100 per cent exigible under s. 65(3).
[47] Fourth, s. 65(3) exempts only the assignment of pensions. An assignment of a pension is a transfer of rights to the pension. The Act continues to void all other transactions such as those that purport to “charge, anticipate or give as security money payable under a pension plan”. Such transactions are akin to enforcement under s. 66 of the PBA and continue to be prohibited. These continued prohibitions reflect the legislature’s continuing objective to preserve pensions.
[48] Fifth, I acknowledge that s. 65(3) does not explicitly say that it is “subject to s. 51,” or that its scope is confined to Part I FLA equalization orders. Legislative intent would have been clear were these points express. However, s. 65(3) cannot be read in isolation from s. 51. See p. 168 of Dreidger: “It is presumed that the provisions of legislation are meant to work together both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework.”
[49] When read in conjunction with s. 51, it is apparent that s. 65(3) was intended to provide the mechanism to permit the assignment of a pension to equalize property or, perhaps, for the purpose of lump sum spousal support, but not as an additional mechanism intended to denude s. 66(4) of meaning. I say this because s. 65(3) is necessary to provide a mechanism to satisfy a s. 51 equalization of a pension. The legislature addresses equalization of pensions in two parts of the PBA. First, the part entitled “Benefits” defines what benefits can be equalized and when:
51 (1) A domestic contract … or an order under Part I of [the FLA] is not effective to require payment of a pension benefit [i.e. a benefit to which a pensioner will become entitled] before [the pension becomes available to the pensioner].
(2) A domestic contract or an order mentioned in subsection (1) [i.e. for equalization] is not effective to cause a party to the domestic contract or order to become entitled to more than 50 per cent of the pension benefits … accrued . . . when the party and the member or former member were spouses.
[50] Section 51, however, does not provide a mechanism to accomplish that equalization. That mechanism is provided in that part of the PBA entitled “Locking In,” which permits an assignment or transfer of money in pay under a FLA order.
[51] The relationship between s. 51 and s. 65(3) is confirmed by the reference in s. 65(3) only to an order under the FLA; there is no reference to an order under the DA. This must be because an equalization order can only be made under the FLA and is not available under the DA. If the legislature intended an assignment order to be available to enforce support orders, it would have included a DA order in addition to a FLA order. However, the legislature chose not to do so, even though it amended s. 66 to address orders “enforceable in Ontario”. As I have said, this phrase includes both DA and FLA orders for the purpose of execution.
[52] By s. 51, the earliest payment of a pension benefit for equalization purposes must take place after the pension is payable and an equalization order cannot assign more than 50 per cent of the benefits accrued during the relevant period.
[53] In this case, the respondent is not seeking an assignment of the appellant’s pension for equalization purposes or even for the purpose of lump sum support. Rather, she is seeking to execute, seize or garnishee 100 per cent of the appellant’s pension to enforce the appellant’s outstanding obligations. In my view, she is precluded from doing so at law by s. 66(4) of the PBA.
(f) Equitable Execution
[54] The respondent argues, however, that she is not seeking execution at law, but in equity, and that the PBA, unlike federal pension legislation that I will discuss later, does not preclude equitable relief. In support of her position, the respondent argues that a vesting order under s. 100 of the CJA is “equitable relief along the lines of the appointment of an equitable receiver” under s. 101 of the CJA.[10] I disagree for the following reasons.
[55] A vesting order and an order for equitable receivership are fundamentally different. While a vesting order conveys ownership to the recipient, an equitable receiver-ship does not. Such an order merely allows the receiver to collect and control the asset.
[56] In any event, even if a vesting order is equivalent to a claim for equitable relief, as is argued by the respondent, this argument cannot succeed. I say this for two reasons. First, the authorities on which the respondent relies are distinguishable. Second, a court should decline to grant equitable relief that would run directly counter to a prescribed legislative scheme.
[57] On appeal, the respondent relies on Nicholas v. Nicholas (1998), 37 R.F.L. (4th) 13 (Ont. Gen. Div.), Re Simon and Simon (1984), 45 O.R. (2d) 534 (Div. Ct.), and Saric v. Saric, [1996] O.J. No. 2810 (Gen. Div.). In his reasons, the motion judge relied on Kennedy v. Sinclair (2001), 18 R.F.L. (5th) 91 (Ont. S.C.J.), aff’d (2003), 42 R.F.L. (5th) 46 (Ont. C.A.). [11]
[58] Nicholas came before a court only because the pension plan administrator refused to comply with the parties’ settlement agreement and, to effect that settlement, the wife sought her appointment as equitable receiver. That case involved extraordinary circumstances where the husband agreed to vest 100 per cent of his pension in his wife: 50 per cent to satisfy an equalization order and the remaining 50 per cent for outstanding support. The PBA contains no prohibition against this type of order, which is known as a “stacking” order.[12] Since the arrangement did not offend against either of the PBA’s 50 percent rules, Nicholas is of no application to this case.
[59] In Simon, the Divisional Court dismissed an appeal from an order that appointed an equitable receiver to collect 100 per cent of the defaulting payor’s future pension benefits to satisfy an order made under the former Family Law Reform Act, R.S.O. 1980, c. 152 (FLRA). Simon was decided before 1988, when the PBA still permitted 100 per cent garnishment of pensions for an FLRA support order. Since the equitable relief granted in Simon did not conflict with the provisions of the PBA legislation then in effect, it does not provide authority in the instant case.
[60] The court in Saric ordered the payor’s house and RRSP vested in the recipient spouse “on account” of support arrears. The motion judge, however, had jurisdiction to make this order under s. 34(1)(c) of the FLA. Her obiter reference to the provisions of the DA included no analysis of those provisions, particularly in relation to the prohibitions of the PBA. Accordingly, Saric is also not helpful for the determination of this case.
[61] Kennedy, supra, the case referenced by the motion judge, was heard as an uncontested motion for judgment. In that circumstance, the motion judge did not have the benefit of submissions by the respondent payor and undertook no analysis of the issues alive in this appeal. Furthermore, the vesting order granted in Kennedy was a stacking order, allocating 50 per cent of pension payments for support and 50 per cent for equalization. As was the case in Nicholas and Simon, this order did not come into direct conflict with the provisions of the PBA.
[62] Beattie v. Ladouceur (1995), 23 O.R. (3d) 225 (Gen. Div.) and Hooper v. Hooper (2002), 59 O.R. (3d) 787 (C.A.) are the leading cases on the appointment of an equitable receiver in the pension context. [13] In Beattie, which considered federal legislation, an argument was raised by the recipient spouse similar to the one in this case - that the claim was not for execution but for an equitable receiver to be appointed to receive and apply 100 per cent of the payor’s pension benefits to the outstanding support. In setting aside the order appointing the receiver, Justice Rutherford held that the equitable relief claimed was beyond the court’s jurisdiction. He came to that conclusion based on the particular wording of the federal legislation that exempted pensions from execution either “at law or in equity.” He held that the relief granted below amounted to indirect attachment or extra-legislative garnishment, in the sense that it contemplated the government exceeding the garnishment authority conferred by statute. Justice Rutherford explained at pp. 231-232:
[I]t should be remembered that the courts of equity fashioned "equitable" remedies to achieve justice which was unat-tainable largely because of the rigidity of legal remedies which were the creatures of the courts of law. Here, where Parliament has fashioned statutory remedies and placed limitations on those remedies with great specificity, I think it is the proper role of the courts to apply and maintain those remedies, including their limitations.
[63] Hooper cited Beattie with approval when considering a court’s jurisdiction to appoint a recipient spouse as equitable receiver of a payor’s provincial pension to enforce outstanding FLA orders under the PBA and under the Public Service Pension Act, R.S.O. 1990, c. P.48, which also governed the pension at issue. Hooper considered an order made against the payor’s pension to enforce an earlier unsatisfied equalization order. This court held that, although a court had jurisdiction under the PBA to make an assignment order as part of an equalization order, it had no jurisdiction to subsequently enforce an earlier equalization order by appointing the recipient spouse as equitable receiver of the payor’s pension payments. Specifically, the court concluded, on the basis of similar legislation, that the court below erred in ordering equitable receivership where the PBA specifically prohibits the diversion of a pension for enforcement purposes.
[64] In arriving at his conclusion at para. 44, Goudge J.A. commented on the rationale for statutory constraints on execution against pensions:
The only exceptions relate to certain orders made against the pensioner pursuant to the Family Law Act, namely support orders or equalization orders that operate to entitle another to receive the pension benefits. With each of these exceptions, there is a cap. The legislative objective is to assure that, so far as possible, an employee’s participation in a pension plan over the years will make available benefits to provide the sustenance he or she needs upon retirement. Even in those exceptional cases where an incursion is permitted on that assurance because of the overriding imperatives of family law, an upper limit is in place to preserve this objective at least to some extent.
[65] Further, Goudge J.A. distinguished between equitable relief employed to overcome unfair common law principles and such relief employed to contravene the clear intention of the legislature. He observed at para. 51:
The order appointing the respondent as equitable receiver is not an example of the court using its equitable jurisdiction to circumvent a common law obstacle of its own making. Rather, that order would effect a result which, for clear policy reasons, the legislation prohibits, namely the enforcing of the equalization order of Fedak J. against the appellant’s pension payments. In my view, however strong the equities might otherwise be, it is not just or convenient in these circumstances to appoint an equitable receiver to achieve a result which is in direct conflict with the applicable legislation. In this I agree with Rutherford J. in Beattie v. Ladouceur (1995), 23 O.R. (3d) 225 (Gen. Div.), who came to the same conclusion in the context of similar federal legislation.
[66] In my view, the analyses in Beattie and Hooper apply to the support issue in this case. Subsection 66(4) of the PBA clearly restricts execution to enforce a support order to 50 per cent of the payor’s pension. Had the legislature intended to grant the court jurisdiction to increase that exemption, it would have so provided, as it has in the WA and as it proposes to do in the FRSAEA. It did not do so.
[67] Even if available, equitable remedies should not be employed in this case. This is not a situation of invoking equity to overcome limitations in the common law system of enforcement. In this case there is no common law impediment to preclude garnishment. The impediment is a specific statutory one, crafted by the legislature, which was alive to and balanced the competing policies of pension preservation and the enforcement of support obligations in the family law context. In those circumstances, it cannot be either just or convenient to allow the result sought by the respondent.
[68] In light of this conclusion, it is unnecessary to discuss the other grounds of appeal raised by the respondent with respect to this issue, such as the fact that a failure to provide for the actuarial value of the pension precluded a vesting order.
[69] In the result, I would set aside the vesting order and the paragraphs ancillary to that order so that the respondent is entitled only to the garnishment of 50 per cent of the appellant’s Nortel pension and is not entitled to a vesting order with respect to the Nortel pension.
[70] I turn now to the second issue raised on this appeal: whether the motion judge had jurisdiction to order the garnishment of 100 per cent of the appellant’s CPP and OAS benefits.
[71] This is also a question of statutory interpretation because both CPP and OAS benefits are creatures of statute, namely the Canada Pension Plan, R.S.C. 1985, c. C-8 and the Old Age Security Act, R.S.C. 1985, c. O-9, respectively. Generally, this legislation provides that neither CPP or OAS benefits may be assigned and neither are subject to execution:
CPP s. 65 (1) A benefit shall not be assigned, charged, attached, anticipated or given as security, and any transaction purporting to assign, charge, attach, anticipate or give as security a benefit is void.
OAS s. 36 (1.1) A benefit is exempt from seizure and execution, either at law or in equity [emphasis added].
[72] Since both these provisions explicitly prohibit execution both in equity as well as at law, the respondent did not seek equitable relief with respect to these benefits. Instead, she limited her claim to 100 per cent garnishment.
[73] Although CPP and OAS benefits are generally protected from execution, they are subject to garnishment for support enforcement in the terms set out in Part II of the Family Orders and Agreements Enforcement Assistance Act, R.S.C. 1985, c. 4 (2nd Supp.) (FOAEAA):
24. Notwithstanding any other Act of Parliament preventing the garnishment of Her Majesty, Her Majesty may, for the enforcement of support orders and support provisions, be garnisheed in accordance with this Part in respect of all garnishable moneys [emphasis added].
25. Subject to section 26 and any regulations made under this Part, garnishment under this Part shall be in accordance with provincial garnishment law [emphasis added].
26. In the event of any inconsistency between this Part or a regulation made under this Part and provincial garnishment law, the provincial garnishment law is overridden to the extent of the inconsistency [emphasis added].
[74] On the facts of this case, this legislation raises four questions: first, whether the order in this case is a “support order”; second, whether the CPP and OAS benefits are “garnishable moneys”; third, whether there is any contradiction between the FOAEAA and provincial garnishment law such as to attract the override provision of s. 26; and fourth, whether 100 per cent garnishment of these benefits accords with Ontario’s garnishment law.
[75] On the first question, the order in this case comes within the FOAEAA definition of a “support order” as one “enforceable in any province”. This is so because the DA specifies that a support order made under that Act may be “enforced in a province in any other manner provided for by the laws of that province.”[14] Thus, with such an order, the recipient spouse may garnishee “all garnishable moneys.”
[76] On the second question, the appellant’s CPP and OAS benefits are “garnishable moneys” subject to garnishment in accordance with the other provisions of the FOAEAA. By definition, “garnishable moneys” are moneys authorized to be paid by federal statute or designated by regulation.[15] Apart from certain exceptions that are not germane to this case, CPP and OAS benefits are so designated by ss. 3(g) and (h) of the Family Support Orders and Agreements Garnishment Regulations, S.O.R./88-181. Accordingly, these benefits are garnishable, subject to “provincial garnishment law.”
[77] On the third issue, I see no conflict between the FOAEAA and Ontario’s garnishment law, which I will review, such as to attract the override provision of FOAEAA’s s. 26. First, I cannot accept the respondent’s argument that the “all” in “all garnishable moneys” reflects a parliamentary intention to render all payments garnishable at 100 per cent under s. 24. If Parliament had intended this result, it would have said so clearly.
[78] Second, the Garnishment, Attachment and Pension Diversion Act, R.S.C. 1985, c. G-2 (GAPDA) relied upon by the appellant provides for 100 per cent garnishment for support, but it applies only against pension benefits payable under “Acts and like enactments referred to in the schedule.” Since neither the CPP nor the OAS legislation is included in that schedule, the GAPDA has no application to this case.
[79] Third, the Pension Benefits Standards Act, 1985, R.S.C. 1985, c. 32 (2nd Supp.) governs private pension plans in connection with certain federal works, undertakings and businesses such as interprovincial and international transportation, radio broadcasting and banking. It does not apply to the appellant’s CPP or OAS benefits. Finally, counsel did not cite any other federal legislation that impacts on the garnishment of these benefits.
[80] On the fourth question, in my view, Ontario law caps garnishment at 50 per cent. I say this for the following reasons.
[81] “Provincial garnishment law” is defined in s. 23(1) of the FOAEAA as “the law of a province relating to garnishment as it applies to the enforcement of support orders and support provisions”.
[82] The FLR do not specify a quantum of garnishment with respect to pensions or benefits. In any event, because the FLR are procedural in nature, as I have emphasized, they cannot constitute “provincial garnishment law” since they do not confer substantive jurisdiction.
[83] One statute in Ontario, however, specifically defines itself as a “provincial garnishment law” for the purposes of support enforcement: the FRSAEA. Section 20(5) of that Act provides that a support deduction order “shall be deemed to be a notice of garnishment made under provincial garnishment law for the purposes of the Family Orders and Agreements Enforcement Assistance Act (Canada)”. Section 23(1) of the FRSAEA caps garnishment at 50 per cent of the payor’s “income source”, which is defined in s. 1 as including a “disability, retirement or other pension”. In Ontario (Director, Family Responsibility Office) v. Johnson, [2003] O.J. No. 2318 (O.C.J.), the Director took the position that only 50 per cent of CPP and OAS benefits are garnishable.[16] I conclude that s. 23(1) of the FRSAEA restricts the Director’s garnishment to 50 per cent of the appellant’s CPP or OAS benefits.
[84] As I noted earlier in these reasons, the record before this court indicates that the support order and the Support Deduction Order in this case remain filed with the Director. In this circumstance, by ss. 6(7), 6(8), and 9(1) of the FRSAEA, support enforcement rests exclusively with the Director and, in the result, garnishment is capped at 50 per cent.
[85] However, in my view, even if the respondent is seeking garnishment on her own behalf, garnishment must still be capped at 50 per cent.
[86] The principle behind s. 66(4) of the PBA, which is the only other provincial statute that addresses garnishment for the enforcement of support, lends support to this conclusion. I refer to the principle behind s. 66(4) because, arguably, s. 66(4) has no direct application to the benefits at issue in this appeal. This is so because the PBA applies only to private pension plans that are organized and administered to provide pensions for employees, whereas the CPP and OAS benefits are provided by the government.
[87] However, it is unnecessary to consider this argument because, even if the PBA’s s. 66(4) does not apply, I am of the view that a court should exercise its discretion to limit garnishment to 50 per cent of CPP and OAS benefits. Such a discretion is provided by r. 29(19) of the FLR, which permits a court at a garnishment hearing to change “how much is being garnished” on account of either a periodic or non-periodic payment order. That discretion, in my view, should be exercised in a manner consistent with the FRSAEA, the FOAEAA and s. 66(4) of the PBA to restrict individual garnishment to 50 per cent, the same restriction as is placed on garnishment by the Director. It is a matter of common sense that the Director and the individual payee should have the same remedies available to enforce support orders.
[88] Accordingly, I conclude that garnishment of CPP and OAS benefits ought to be restricted to 50 per cent and that the motion judge erred in garnisheeing 100 per cent of these benefits. I would set aside the order of the motion judge to the extent that it provides for 100 per cent garnishment.
[89] The appellant also appeals the costs award of $10,000 made by the motion judge.
[90] I would not interfere with the costs order below. In my view, the motion judge did not err in the exercise of his discretion regarding costs for two reasons. First, the respondent was entirely successful in defending against the appellant’s application to vary support and to rescind all arrears. Second, the respondent remains entitled to orders for garnishment of 50 per cent of the Nortel pension and the CPP and OAS benefits. In this sense, the respondent was successful below and is entitled to her costs.
[91] Given the particular circumstances of this case, including the novelty of the issues raised before this court, I would make no order as to costs of the appeal.
Result
[92] On the issues that were argued, I would allow the appeal. I would set aside the order below with the exceptions of paragraph 1 relating to the appellant’s support arrears, paragraph 2 relating to the dismissal of the appellant’s cross-motion to vary his child support obligations and to rescind his spousal support arrears, and paragraph 5 relating to beneficiary designation. Though the appellant seeks to “[set] aside the order made by Justice Fragomeni on September 14, 2005 in its entirety,” as mentioned previously, the appellant did not appeal from the dismissal of his motion to vary. Further, neither party addressed whether the motion judge erred in designating the respondent as the sole beneficiary of the appellant’s pension plans in Canada. Absent submissions made by counsel on this issue, I would decline to set aside this portion of the order.
RELEASED: “JUL –7 2006” “EAC”
“S.E. Lang J.A.”
“I agree John Laskin J.A.”
“I agree E.A. Cronk J.A.”
[1] He stated: “In all of the circumstances of this case I am satisfied that a vesting order of the Nortel Pension is appropriate in order to enforce the terms of the judgment of Seppi J. I am also satisfied that the full amount payable from CPP and OAS pensions ought to be garnished.”
[2] This description of a vesting order also follows from a reading of the predecessor to s. 100, s. 79 of the Judicature Act, R.S.O. 1980, c. 223:
Where the court has authority to direct the sale of any real or personal property or to order the execution of a deed, conveyance, transfer or assignment of any real or personal property, the court may by order vest the property in such person and in such manner and for such estates as would be done by any such deed, conveyance, assignment or transfer if executed; and the order has the same effect as if the legal or other estate or interest in the property had been actually conveyed by deed or otherwise, for the same estate or interest, to the person in whom the property is so ordered to be vested or, in the case of a chose in action, as if it had been actually assigned to the last-mentioned person [emphasis added].
[3] For examples of cases involving the vesting of realty, see Crump v. Crump (1984), 38 R.F.L. (3d) 92 (Ont. H.C.J.); Perrier v. Perrier (1987), 12 R.F.L. (3d) 266 (Ont. H.C.J.); and Hohn v. Hohn, [1995] O.J. No. 2754 (Gen. Div.).
[4] See also Alexander v. Alexander (1997), 31 R.F.L. (4th) 131 (Ont. Gen. Div.); Koyama v. Leigh (1998), 36 R.F.L. (4th) 64 (B.C.C.A.); and Nicklason v. Nicklason (1989), 22 R.F.L. (3d) 185 (B.C.S.C.).
[5] The Ontario Law Reform Commission, Report on the Enforcement of Judgment Debts and Related Matters, Pt. II (Toronto: Ministry of the Attorney General, 1981) at 104.
[6] Pension Benefits Act, 1987, S.O. 1987, c. 35.
[7] See s. 20(3) of the Divorce Act and s. 1(2)(a)(iv) of the Family Law Rules.
[8] Wages Act, s. 7(2) Subject to subsection (3), 80 per cent of a person's wages are exempt from seizure or garnishment.
(3) Fifty per cent of a person's wages are exempt from seizure or garnishment in the enforcement of an order for support or maintenance enforceable in Ontario.
(4) A judge of the court in which a writ of execution or notice of garnishment enforceable against a person's wages is issued may, on motion by the creditor on notice to the person, order that the exemption set out in subsection (2) or (3) be decreased, if the judge is satisfied that it is just to do so, having regard to the nature of the debt owed to the creditor, the person's financial circumstances and any other matter the judge considers relevant.
(5) A judge of the court in which a writ of execution or notice of garnishment enforceable against a person's wages is issued may, on motion by the person on notice to the creditor, order that the exemption set out in subsection (2) or (3) be increased, if the judge is satisfied that it is just to do so, having regard to the person's financial circumstances and any other matter the judge considers relevant.
[9] See proposed s. 23(4) of the FRSAEA, which has not yet come into force.
[10] Indeed, it seems that a vesting order has been used in certain family law cases as a less expensive substitute for the appointment of an equitable receiver.
[11] In Kennedy, the court noted at para 45: “[I]t is clear that the exercise of the court’s discretion to make such [a vesting] order should be founded on the basis that the respondent’s previous actions and reasonably anticipated future behaviour indicate that the order granted will likely not be complied [with] without additional, more intrusive provisions, see for example: Rostek v. Rostek, [1994] O.J. No. 1606 (Gen. Div.) and Alldred v. Alldred, [1998] O.J. No. 3606 (Gen. Div.).” Those authorities, however, offer no analysis of the issue beyond the type of conduct required to trigger such an order. As well, neither case addressed the jurisdiction to make a vesting order with respect to pensions.
[12] For a discussion of stacking orders, see Hooper, infra, at para. 63
[13] See also Bielanski v. Bielanski, [2005] O.J. No. 2171 at paras. 21-25 (S.C.J.), where Gauthier J. declined to vest 100 per cent of the payor’s private pension in the name of the recipient spouse to satisfy equalization and support arrears.
[14] DA, s. 20(3)(b).
[15] FOAEAA, s. 23(1)
[16] This 50 per cent cap is subject to two proposed but unproclaimed amendments. First, s. 23(2) would allow for garnishment of not “less than the amount of ongoing support specified in the support order, even if that amount is greater than 50 per cent of the net income owed by the income source to the payor, unless the court [making the support order] orders otherwise”. Second, s. 23(4) would authorize the Director to bring a motion to increase the quantum of moneys garnisheed up to the amount of the ongoing support ordered.