The case concerns the interpretation of a court order made in 1981
The Saskatchewan Court of Appeal has ruled that a survivor benefit plan under a pension plan formed part of the family property that was subject to division in 1981, even though the survivor benefit did not become payable until many years later.
The issue in Greenwood v Greenwood, 2023 SKCA 87 concerns interpreting a court order made during a family law proceeding in 1981. The parties to the original proceeding were Doris Greenwood and Stanley Greenwood. They were married for more than 27 years. Stanley worked for Canadian National Railway (CN) and earned a federally regulated pension. Throughout the parties' marriage, Stanley paid into an employer-run pension plan.
During their divorce proceeding in 1981, a judge made an order vesting a 47 percent interest in Doris, as tenant-in-common, in Stanley's pension benefits whenever received.
After the parties' divorce, Stanley married Colette Greenwood. Five years after, Stanley retired and began to draw his pension. Before he retired, Stanley had elected to receive his pension payments as a "Joint Survivor Pension." He named Collette as the sole beneficiary of the survivor benefit.
When Stanley passed away, he had been married to Colette for 37 years. After his death, Colette began receiving the survivor benefit under Stanley's pension plan. Doris then brought an application for an order requiring Colette to pay her a share of the survivor benefit. Doris argued that the survivor benefit was part of the pension benefits in which the 1981 order had granted her a vested interest.
A Court of Queen's Bench judge, sitting in Chambers, dismissed Doris's application because she concluded that the 1981 order had not contemplated that a potential future survivor benefit comprised part of the pension benefits being divided when the order was made.
Doris raised the matter to the Saskatchewan Court of Appeal, arguing that the chamber's judge failed to interpret the 1981 order correctly. Doris asserted that the chamber's judge failed to properly recognize or account for the significance of the fact that the 1981 order had treated Stanley's pension benefits as a property asset to be divided rather than as an income source available for the payment of maintenance.
The appeal court noted that in assessing Doris's argument, it is essential to understand that at the of the 1981 order, federal pension legislation did not allow for a pension to be split at source by the pension administrator. Furthermore, the court noted that CN's 1959 pension plan, the one under which Stanley's pension was earned, did not allow Stanley to assign any portion of his pension benefits to Doris voluntarily.
Approaches to the division of pension
The appeal court recognized two valid approaches to the division of pensions—a division based on immediate valuation and a deferral of distribution to account for future contingencies, if that was necessary achieve justice.
Accordingly, the appeal court found that by treating Stanley's pension as a property asset whose value could not be properly ascertained until the future contingencies about how it would be paid out were realized, the 1981 family court judge meant to divide the total value of the asset represented by Stanley's pension benefits, in whatever form those benefits might take, whenever they might be received.
The appeal court stressed that the 1981 family court judge did not intend to simply divide the value of the income stream it produced for Stanley during his lifetime if that did not represent the entire value of the asset that was created through the input of family property. As a result, the appeal court ruled that the chamber's judge committed an error by not recognizing this.
1990 Order did not vary 1981 Order
The appeal court found that the chamber's judge likewise made an error by concluding that an order issued in 1990 had varied the nature, as opposed to merely quantum, of Doris's interest in Stanley's pension benefits. In 1990, Doris brought an application seeking an order declaring Stanley in contempt for failing to pay out her monthly share of the pension benefits he was then receiving from CN. Stanley then sought the court's clarification respecting the percentage of Doris's interest in the amounts he was receiving, given that he had continued to contribute to his pension between the breakdown of their marriage and his retirement. The parties negotiated an agreement which became a consent order that recognized the post-separation, but pre-retirement, contributions Stanley had made to the plan.
One of the reasons the chamber's judge gave for concluding that Doris was not entitled to a share of the survivor benefit from Stanley's pension was that, in her view, the 1990 order varied from the 1981 order. However, the appeal court found this incorrect because courts have narrow power regarding the variation of orders for the division of family property. The law does not permit courts to vary the substance of an order unless there are exceptional circumstances.
Considering the appeal court's conclusion that the 1981 order divided the total value of Stanley's pension benefit, the court held that the chamber's judge could not vary that order to provide otherwise. Accordingly, the court granted Doris's appeal.