Logan v Logan, 2022 ABKB 755

Court of King’s Bench of Alberta Citation: Logan v Logan, 2022 ABKB 755 Date: 20221115 Docket: 4803 190942 Registry: Edmonton Between: Deanna May Logan Plaintiff/Applicant - and - William Stacey Logan Defendant/Respondent _______________________________________________________ Reasons for Decision of the Honourable Justice S.M. Bensler _______________________________________________________ Introduction [ 1 ] The Plaintiff and Defendant separated in 2018 after a long-term marriage where they raised four children together.

The parties were able to resolve most issues between them, including child support and property division. The one exception is a disagreement regarding the Defendant’s pension. The parties appeared before me, represented by counsel, for a

summary trial on the issue.

Background [ 2 ] The Defendant has a pension through the Asbestos Workers’ Pension Plan of Alberta that has vested but is not yet in pay. He started paying into the pension in December 1990 and is currently 57 years old. The parties have agreed that the joint accrual period for the pension is from the date of cohabitation in April 1990 through to March 31, 2022.

The parties also agree that the pension should be divided equally, pursuant to the presumption that property acquired during a marriage is distributed equally under Alberta’s Matrimonial Property Act, RSA 2000, c M-8 , s 7(4) (the “ MPA ”). [ 3 ] The parties’ disagreement centers around the valuation of the pension. The Asbestos Workers’ Pension Plan is subject to legislation which defines how a pension is valued and paid out upon marriage breakdown. Pursuant to the legislation, up to 50 percent of the commuted value may be paid out at source to a separating spouse.

As of October 2021, the commuted value of the Defendant’s pension was approximately $308,000, which would result in the Plaintiff receiving a $154,000 pay out. As of the date of trial, the commuted value was closer to $320,000, for a $160,000 pay out. [ 4 ] The Plaintiff argues that the commuted valuation undervalues the true worth of the pension. She argues that the pension should be divided equally based on its present value, or “capitalized” value, based on actuarial standards. An actuary has valued the pension at $435,557, which if divided equally would result in her receiving approximately $217,000.

As the pension plan cannot pay out more than half of the commuted value, the Plaintiff argues that the shortfall should be paid by the Defendant out of other matrimonial assets. Otherwise, the Plaintiff will not be receiving an equal distribution of property under the MPA . [ 5 ] The Defendant agrees that there is a difference between the commuted value calculated by the pension administrator and the capitalized value that is determined in accordance with the standards of practice of actuaries.

However, considering that the division of the pension can only occur pursuant to the pension legislation, he argues that it would be inequitable to require him to personally pay an additional sum from other funds. He argues that there is no case law that has required a pension be divided at source and directed a top- up also be paid. Discussion [ 6 ] The majority of the

summary trial was dedicated to hearing the expert testimony of two actuaries, Mr. Johnston, hired by the Plaintiff and Mr. Jocsak, hired by the Defendant. Both were qualified as experts in pension valuation. [ 7 ] The opinions of the experts did not differ as to the valuation of the pension. This is because the actuarial standard of practice for determining the value of a pension is the same. [ 8 ] The actuaries determined what amount would be needed now to reproduce the expected lifetime pension payments for the recipient at retirement. According to Mr.

Johnston’s figures, the lifetime pension anticipated for the Defendant is $27,021 per year. Using various factors, Mr. Johnston determined that the amount of money that needs to be invested to now reproduce those lifetime pension payments is $435,557. For the Plaintiff to reproduce the Defendant’s anticipated pension, she would therefore need just over $217,000, according to the actuarial standards of practice. [ 9 ] Mr.

Johnston explained that under the Asbestos Workers’ Pension Plan, valuation and division of a pension are governed by provisions in the Alberta Employment Pension Plan Act, RSA 2012, c E-8.1 , and its related regulations. The legislation permits the pension to be paid out in a lump sum on the break down of a marriage and requires the commuted value assumptions prescribed in the legislation be used to determine the value. Mr. Johnston explained that the standard of practice for commuted value in the legislation differs from the standard of practice issued by the Canadian Institute of Actuaries for commuted values.

As a result, a different interest rate is used to reflect the time value of money, which results in a lower lump sum value being paid out. This is done to assist the pension plan with its long-term funding. [ 10 ] Mr. Johnston indicated that prior to March 2020, the pension plan used the same method for calculations as the Canadian Institute of Actuaries, so this is a relatively new issue. [ 11 ] Mr.

Johnston noted that the difficulty with the resulting lump sum payment is that the recipient (the Plaintiff) is required to invest that sum in higher-risk investments to try to match the anticipated payout for the spouse remaining in the plan (the Defendant). This places an unfair risk and burden on the Plaintiff that the Defendant does not face and may result in the Plaintiff receiving less value from the pension. [ 12 ] On cross-examination, Mr.

Johnston agreed that the Plaintiff will have the option of investing the lump sum payment in a LIRA of her choice, and could choose to invest her LIRA aggressively, potentially receiving more than the Defendant, though this would be a high-risk strategy. [ 13 ] Mr. Jocsak agreed with the calculations done by Mr. Johnston, as they are based on standards set by the actuarial profession. He agreed that whatever calculations are used, they are a projection, and the eventual reality of the payout will likely differ to some degree. [ 14 ] Mr.

Jocsak agreed that the Defendant may be subject to some risk that his pension will be reduced due to fluctuations in investments, though it would be a diffused risk that all plan members could face if the target payout is not achieved, and not the same level of risk that the Plaintiff incurs as an individual investor. [ 15 ] Counsel for the Defendant asked Mr. Jocsak to explain how a division of the Defendant’s pension at source plus an additional payment is inequitable.

He responded that under this scenario the Defendant will lose half of his pension earned during the marriage, which is expected and equitable, but will also be required to make an additional payment on top, which appears inequitable. However, he

agreed on cross-examination that a division of the pension at source with no top-up would result in an unequal division of the “presentvalue” of the asset. [16] In order to address the potential inequity, Mr. Jocsak outlined a proposed hybrid approach whereby the pension is divided atsource and the top-up payment is 50% of the top-up proposed by the Plaintiff, so that each party faces some risk and some loss.Practically this would result in the Defendant paying a top-up of over $28,000 to the Plaintiff.

I note that counsel for the Defendantclarified this proposal was made for settlement purposes before trial and is not the Defendant’s current position or proposal. [17] Mr. Jocsak admitted that the question of how pension legislation and matrimonial property legislation interact is ultimately aquestion for the court to decide. [18] Both parties noted that there was little case law addressing this issue.

Counsel for the Plaintiff did provide two cases,Knippshild v Knippshild, (SK KB), [1995] 5 WWR 257 and Buckler v Buckler, 2009 ABQB 175. [19] In Knippshild the Saskatchewan Court of Queen’s Bench was tasked with answering a similar question to the present case.The parties had agreed to an equal sharing of their matrimonial property but could not agree on the value of the husband’s pensionentitlement. The wife proposed that the present value of the husband’s future pension income be used to determine the value.

Thehusband’s position was that the value of his pension should be made according to the provisions in the Teacher’s Superannuation andDisability Benefits Act. The Act prescribed a method for the division of a pension on marriage breakdown, based on a commuted valuefor the period of the marriage. [20] The Court held that in its view, the Act did not direct the court to use any specific valuation method, nor did it restrict thecourt’s ability to divide the underlying value of the pension benefit equitably according to Saskatchewan Matrimonial Property Act, atpara 12.

The Court addressed the interplay between pension legislation and matrimonial property legislation. It held that the matrimonialproperty legislation prevails as between divorcing spouses, in reliance on Rutherford v Rutherford (1981), (BC CA),127 DLR (3d) 658, from the B.C. Court of Appeal, at para 13: The interplay between pension legislation limiting the transferability of pension assets to the non-member spouse and legislationgoverning the division of matrimonial property was considered in Rutherford v. Rutherford, (BC CA), 127 D.L.R.(3rd) 658; [1981] 6 W.W.R. 485 (B.C.C.A.), 23 R.F.L. (2d) 337 (B.C.C.A.).

At p. 342 Seaton J.A. states: As between Mr. Rutherford and the superannuation commission and the government, the pension legislation prevails; as between Mr.and Mrs. Rutherford, the family legislation prevails. [21] The Court in Knippshild concluded that “the same interplay, or lack thereof, exists between the provisions of The Teacher'sSuperannuation and Disability Act and The Matrimonial Property Act.

Therefore, those approaches and methods will which result inequitable valuations, divisions and distributions of a pension benefit should be applied notwithstanding the provisions of the pensionlegislation noted” at para 13. [22] Buckler is a more recent case from Alberta. The Court there also considered the valuation of a pension upon marriagebreakdown and the interplay between pension legislation and the Matrimonial Property Act. The Court accepted the valuation of anexpert and rejected the husband’s position that his pension should be valued as mandated by pension legislation.

Similarly toKnippshild, the Court held that the pension legislation only limits what a pension administrator can do, at para 15: Mr. Buckler argued that I should value his pension in the way it was valued by the Alberta Pensions Administration Corporation. Heargues that that value is mandated by the Alberta Regulation 365/93 passed under the Public Sector Plans Act. He argues that s. 23precludes any other manner of distribution. In my view, that

interpretation of the regulation is not accurate. The regulation limits whatthe authority can be compelled to do. It does not speak to the equities which have to be assessed relative to entitlement between theparties. The regulation does not purport to interfere with the authority and the discretion granted to the court under the MatrimonialProperty Act.

The regulation has no application to determining the appropriate distribution of matrimonial property of which Mr.Buckler's pension is part. ... [23] The Plaintiff submitted that these cases support her request to accept the calculation of the pension based the present value ofthe pension of $435,557, entitling her to $217,778. She submitted this division would most closely align with the spirit of theMatrimonial Property Act.

She further submits that if the Defendant wishes to keep his pension intact, he can do so by using assetsoutside of the pension to provide her with her equal share, such as using household proceeds, RSPs and savings to provide for theapproximately $57,000 discrepancy. [24] Alternatively, she proposes taking 50 percent from the plan at the commuted value of $320,000, equalling $160,000, plus thetop-up payment.

The top-up payment would consist of the difference between the Defendant’s share of the pension’s present value($217,000) minus the commuted value the Plaintiff will receive ($160,000), which is $57,000, then divided by two, for a top-up payoutof $28,500. Again, the Plaintiff submits the Defendant can pay for the top-up through other matrimonial assets.

This would result in thePlaintiff and Defendant each receiving $180,500. [25] The Defendant did not present any case law, but relied on the fact that the MPA provides that the court shall distribute theproperty acquired during the marriage equally: Distribution of property 7(1) The Court may, in accordance with this section, make a distribution between the spouses of all the property owned by both spousesand by each of them. ...

(4) If the property being distributed is property acquired by a spouse during the marriage and is not property referred to in subsections (2) and (3), the Court shall distribute that property equally between the spouses unless it appears to the Court that it would not be just and equitable to do so, taking into consideration the matters in

section 8. [ 26 ] Section 7(3) of the Act also provides that the valuation date is the date of trial, though the parties have agreed to a date of March 31, 2022. [ 27 ] The Defendant submits that the equal division of his pension at source is an equal distribution. He will lose 50 percent of his pension, and each party will receive 50 percent of the pension’s commuted value according to the legislation. The pension law prescribes this type of valuation on marriage breakdown and should be considered a full division of the Defendant’s pension benefits. It will then be up to the Plaintiff to decide on her investment strategy. [ 28 ] Further, the Defendant submits that there are no factors under

section 8 of the MPA that would make it just and equitable to deviate from the equal division which occurs when the pension is divided at source. The Defendant will be losing 50% of the value of his pension and will have met his obligation under the Act to provide an equal division of the pension asset. Decision [ 29 ] Although the Plaintiff’s argument is compelling, I find that the pension legislation is determinative in this case, not because it trumps the Matrimonial Property Act , but because the two pieces of legislation should be, and can be, read as part of a cohesive scheme. [ 30 ] A principle of statutory

interpretation is that statutes from the same legislature, dealing with the same subject matter, are presumed to make up a coherent scheme. This presumption of coherence is applied to interpret legislation harmoniously where possible, see Ruth Sullivan, in The Construction of Statutes , 7 th ed., Ch. 13, ss. 13.04 ( QL ): Statutes enacted by a legislature that deal with the same subject are presumed to be drafted with one another in mind, so as to offer a coherent and consistent treatment of the subject. The governing principle was stated by Lord Mansfield in R. v.

Loxdale : Where there are different statutes in pari materia though made at different times, or even expired, and not referring to each other, they shall be taken and construed together, as one system, and as explanatory of each other. In Point-Claire (City) v. Quebec (Labour Court), Lamer C.J. wrote: There is no doubt that the principle that statutes dealing with similar subjects must be presumed to be coherent means that

interpretations favouring harmony among statutes should prevail over discordant ones.... ... The provisions of related legislation are read in the context of the others and the presumptions of coherence and consistent expression apply as if the provisions of these statutes were part of a single Act.

Definitions in one statute are taken to apply in the others and any purpose statements in the statutes are read together. [ 31 ] The statutes at issue here are the MPA and the Employment Pension Plans Act , (the “ EPPA ”). I note that the MPA has been replaced by the Family Property Act , RSA 2000 c F-4.7 the “ FPA ”), but as the parties separated prior to January 1, 2020, the MPA applies unless the parties agree otherwise: see s 39 of the FPA .

I note as well that a “matrimonial property order” under the MPA is now referred to as a “family property order” under the FPA , but the change in language has no substantive effect otherwise to this case. [ 32 ] The parties referred to the MPA during the oral hearing, so I have assumed the MPA applies. I further note that the parties did not make specific arguments on the interplay between the EPPA and the MPA , other than to agree that these were the relevant statutes at play.

However, in the interests of justice and providing a timely decision to the parties, the Court has considered how these statutes should be interpreted and applied. [ 33 ] It is clear from the wording of the EPPA that the drafters of the statute were aware of the interplay with matrimonial property legislation as family property orders (or matrimonial property orders in previous iterations) are mentioned throughout its provisions, as well as in the related provisions of the Employment Pension Plans Regulation , Alta Reg 154/2014 (the “ EPPA Reg ”).

A sampling of relevant provisions follows, which shows a scheme whereby a court is responsible for determining entitlement to a pension under the MPA (or FPA ), and the valuation and payout of the pension is then governed by the pension legislation. [ 34 ]

Part 8, Division 4 of the EPPA specifically addresses pension division after the breakdown of a relationship: Division 4 Relationship Breakdown

Definitions 78 In this Division, ... (b) “family property order” means a family property order within the meaning of the Family Property Act , or a similar order enforceable in Alberta of a court outside Alberta, that affects the division and distribution of a benefit;

... Prevalence of this Division in relation to benefits 79(1) Despite the Family Property Act or any other rule of law or equity to the contrary, a family property order or an agreement shall not divide or distribute a benefit or any portion of a benefit except in a manner that complies with this Division.

(2) Nothing in subsection (1) prevents the Court from distributing, under the Family Property Act , property that is not a benefit in a manner that takes account of how a benefit is to be divided or distributed in compliance with this Division. ... Application of family property orders and agreements 80(1) This Division applies with respect to the division and distribution of benefits where, as between a member pension partner and the non-member pension partner, a family property order or agreement is filed with an administrator, and this Division applies despite any other provision of this Act, except as specifically stated, and despite any other rule of law or equity to the contrary.

(2) In respect of persons who are pension partners within the meaning of section 1(3)(a), this Division applies only with respect to a family property order made or agreement entered into (

a) on or after March 1, 2000, or (

b) before March 1, 2000 if there is filed with the administrator a written election by both pension partners to have this Division apply.

(2.1) In respect of persons who are pension partners within the meaning of section 1(3)(b), this Division applies only with respect to a family property order made or agreement entered into (

a) on or after January 1, 2020, or (

b) before January 1, 2020 if there is filed with the administrator a written election by both pension partners to have this Division apply. ...

(4) Subject to this Division, the entitlement of any person to a benefit is subject to entitlements arising under a family property order or agreement filed with the administrator. Division and distribution of benefits 81 Benefits must be divided between the member pension partner and the non-member pension partner, and the non-member pension partner’s share distributed, in accordance with this Division and the prescribed conditions, in the prescribed manner and, subject to the foregoing, in accordance with the applicable family property order or agreement.

Valuation of benefits 82(1) The value of the total pre-division benefit and the non-member pension partner’s share must be calculated in the prescribed manner.

(2) Where a benefit is to be paid from a pension plan, the division of a benefit between the pension partners must not reduce the member pension partner’s share of the total pre-division benefit by more than 50% of the actuarial present value of the benefit earned during the joint accrual period. [ 35 ] Similarly,

Part 7, Division 3 of the EPPA Reg specifically considers and addresses family property orders, while prescribing how pension benefits are to be distributed and calculated based on commuted value, see sections 79 - 84 . [ 36 ] The EPPA and EPPA Reg operate so that after a matrimonial (or family) property order is made, the provisions of the EPPA and the Regulation apply. This means that the EPPA works in conjunction with the matrimonial property legislation to govern the way in which pension assets are transferred (at source) and valued upon marriage breakdown.

However, the issue of entitlement, and whether the pension is divided equally (50/50), or not, is strictly a matter which is decided under the matrimonial property legislation.

Accordingly, I find that the legislature has turned its mind to the interplay between these two statutes and should be interpreted as a cohesive scheme. [ 37 ] A similar conclusion was reached by the Manitoba Court of Appeal in Foster v Foster , 2007 MBCA 96 , relating to the interplay between Manitoba’s Marital Property Act and Pensions Benefit Act , at paras 37, 42: As explained earlier, both the PBA and the FPA have provisions that address the sharing of pension benefits upon marriage breakdown.

Therefore, in my view, the court must strive to interpret these two pieces of legislation as part of a coherent, uniform and harmonious whole. This makes sense because both Acts are motivated by a policy rationale of equitable sharing.

... What is important to remember is that s. 31(2) of the PBA is only engaged once a court order is made under the FPA (or an agreementregarding the division of assets is reached by the parties).

This, in my view, combined with the fact that the pension division scheme ofthe PBA was originally implemented in order to allow for a division of pension benefits in accordance with The Marital Property Act,supports the conclusion reached by the judge that the PBA is only the vehicle by which the equalization mandated by the FPA isaccomplished. [38] The provisions in Alberta and Manitoba’s legislation may differ in parts, but I find the general principle expressed by theCourt in Foster applies equally to Alberta’s legislative scheme. [39] Although the cases presented by the Plaintiff appear to come to a different conclusion, I note that Knippshild relied onRutherford for its conclusion.

A review of Rutherford reveals that was decided in 1981, at a time where it was still controversialwhether a pension could be divided as matrimonial property or not. At that time, pension legislation did not allow for the division of apension as matrimonial property and there was no interplay between the two types of legislation, which operated in their own distinctspheres. The Court’s choice in Knippshild to ignore the pension provisions was based on the lack of interplay between the pension andmatrimonial property legislation, at para 13.

Pension legislation has evolved considerably since that time, such that the EPPA nowspecifically considers how a pension is to be divided on marriage breakdown. [40] The Buckler case considered different pension legislation, the Public Sector Plans Act, which was not excerpted in thedecision. It is unknown whether that pension legislation referred to the Matrimonial Property Act or matrimonial property orders, and nostatutory

interpretation analysis was done in the case. [41] In my view, the EPPA does not interfere with the court’s role in determining entitlement and division of a pension under theMatrimonial Property Act. Once the court issues a matrimonial property order dividing the pension, the EPPA is then responsible fordetermining the mechanics of how that division will occur, including valuation and the method of division.

The provisions in the EPPAhave chosen to use commuted value and specified how it is to be calculated based on policy decisions relating to pensions and their long-term funding. [42] If this Court were to find that the provisions of the EPPA on valuation did not apply, the result would be that upon marriagebreakdown, parties would be required to hire actuarial experts at considerable cost to argue how the pension should be valued anddivided, and arguments over top-up payments or additional asset divisions will continue to plague the parties and the courts, atconsiderable expense to the parties once more. [43] Whether the commuted value is determined by actuarial standards, or by the commuted value standards prescribed under theEPPA, the valuation reached is speculative.

As the Supreme Court noted in Best v Best, (SCC), [1999] 2 SCR 868,“[b]ecause of the many contingencies involved in any effort to value a pension before it is “in pay”, all valuation methods will involvesome degree of artificiality” at para 61.

The degree of difficulty in choosing an appropriate valuation method, among competingmethods, is apparent in the Rutherford decision where the court was required to spend considerable time and effort weighing twocompeting methods with multiple varying contingencies and predictions. [44] I agree with the Defendant that an equal division of his pension at source, according to the provisions of the EPPA, EPPAReg, and his pension plan, constitutes a just and equitable distribution of the pension under the MPA. [45] Although the method for calculating commuted value may differ from the standards used in the actuarial profession, thelegislature has chosen a different method to balance the needs of pension administrators and parties facing marriage breakdown.

TheDefendant does not control how his pension is transferred or calculated and should not be required to make a top-up payment after hispension has been evenly divided. Both experts conceded that the actual payout of the Defendant’s pension is unknown. The Plaintiff willreceive a lump sum to invest, and her investment strategy could result in her receiving more or less than the Defendant. Conclusion [46] For the reasons given, I order an equal division of the Defendant’s pension at source pursuant to the provisions in theAsbestos Workers Pension Plan of Alberta and the EPPA, and EPPA Reg.

The joint accrual period is from April 1990 through to March31, 2022. [47] The order should also include a provision that the parties have agreed to divide their CPP credits from the date of cohabitationto the date of separation. The parties originally wished to address this issue at trial but came to an agreement before the hearing. [48] If the parties are unable to agree on costs, they may make written submissions within 60 days of this judgment. Heard on the 12th day of May, 2022. Dated at the City of Calgary, Alberta this 15th day of November, 2022.

S.M. Bensler J.C.K.B.A. Appearances: Tiffany S. Stokes for the Plaintiff/Applicant Diana J. Gosselin for the Defendant/Respondent