Clarke v. Clarke

Clarke v. Clarke
Collection
Supreme Court Judgments
Date
1990-10-04
Report
[1990] 2 SCR 795
Case number
20151
Judges
Dickson, Robert George Brian; Wilson, Bertha; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Cory, Peter deCarteret; McLachlin, Beverley
On appeal from
Nova Scotia
Subjects
Family law
Notes
SCC Case Information: 20151
Decision Content
Clarke v. Clarke, [1990] 2 S.C.R. 795
Grace Lorraine Clarke Appellant
v.
Franklyn Vernon Clarke Respondent
indexed as: clarke v. clarke
File No.: 20151.
1989: December 6; 1990: October 4.
Present: Dickson C.J.* and Wilson, La Forest, L'Heureux‑Dubé, Sopinka, Cory and McLachlin JJ.
on appeal from the court of appeal for nova scotia
Matrimonial law ‑‑ Property ‑‑ Pensions ‑‑ Husband receiving monthly pension payments following his retirement from the armed forces ‑‑ Whether pension payments a "matrimonial asset" and therefore subject to equal division ‑‑ Canadian Forces Superannuation Act, R.S.C. 1970, c. C‑9 ‑‑ Matrimonial Property Act, S.N.S. 1980, c. 9, ss. 2, 4, 12, 13.
The parties were married in 1955. Respondent elected to receive his pension in the form of monthly payments when he retired from the armed forces in 1976. After the parties separated in 1980, respondent petitioned for divorce and appellant counter‑petitioned, seeking a division of pension benefits as matrimonial assets, inter alia. Section 12 of the Nova Scotia Matrimonial Property Act provides for the equal division of matrimonial assets upon the dissolution of a marriage and s. 13 allows the court to make an unequal division where a division in equal shares would be "unfair or unconscionable". The trial judge included respondent's pension in calculating the equal division of property between the spouses. He included the value of the pension payments respondent received between the date of separation and the time of trial in his matrimonial assets, and ordered that he pay appellant one half of the pension payments received in future. The Court of Appeal found that the periodic pension payments constituted income, not a matrimonial asset. It varied the calculation of the matrimonial assets by deleting from respondent's assets the pension payments he had already received and deleted from the trial judge's order the monthly pension payments to be paid to appellant in the future. The issue before the Court is the appropriate means by which appellant may participate in respondent's pension benefits.
Held: The appeal should be allowed.
Pensions should be included as matrimonial assets subject to equal division. This interpretation of the legislation is clearly more consonant with the spirit and intent of the Act than s. 13, which will not be an effective option where the only substantial asset is the pension. Maintenance is not an acceptable alternative to a share of a capital asset since maintenance is contingent both on the continuing need of the appellant and on the ability to pay of the respondent. Discretionary support payments are an inadequate and unacceptable substitute for an entitlement to share in the assets accumulated during the marriage as a result of the combined efforts of the spouses.
Pensions, because they are not business assets and therefore not included in the list of exceptions in s. 4(1), are matrimonial assets to be divided equally. The weight of appellate authority in several provinces supports this classification of pensions. Pensions are not "income" in the sense of payments for present work, nor are they income to be earned in the future. Rather pensions are benefits earned throughout the period of the pension. It would be unjust to find that, because respondent elected to take monthly payments rather than a lump sum, the pension ceases to be a matrimonial asset.
The difficulty in valuing pensions is not a bar to concluding that they are property for the purposes of equal division. The prohibition against alienation found in s. 8(6) of the Canadian Forces Superannuation Act does not prevent respondent's pension benefits from being characterized as matrimonial assets. There is no conflict between s. 8(6) and the Matrimonial Property Act.
There is no reason to interfere with the trial judge's findings in this case. His order reflects the spirit and intent of the legislation, and while it does not result in a "clean break" between the parties, it enables both of them to enjoy the benefits of the pension as and when they fall due.
Cases Cited
Approved: Lawrence v. Lawrence (1981), 25 R.F.L. (2d) 130, leave to appeal to S.C.C. refused 49 N.S.R. (2d) 209; disapproved: Isbister v. Isbister (1981), 22 R.F.L. (2d) 234; referred to: Rutherford v. Rutherford (1981), 23 R.F.L. (2d) 337, aff'g (1979) 14 R.F.L. (2d) 41; Harwood v. Thomas (1981), 45 N.S.R. (2d) 414; Lefort v. Lefort (1988), 13 R.F.L. (3d) 359; Tataryn v. Tataryn (1984), 38 R.F.L. (2d) 272; Curren v. Curren (1987), 81 N.S.R. (2d) 118; Lemmon v. Lemmon (1987), 77 N.S.R. (2d) 113; Stevens v. Stevens (1987), 7 R.F.L. (3d) 127; McNulty v. McNulty (1989), 24 R.F.L. (3d) 41; Herchuk v. Herchuk (1983), 35 R.F.L. (2d) 327; McAlister v. McAlister, [1983] 2 W.W.R. 8; George v. George (1983), 35 R.F.L. (2d) 225; Geisel v. Geisel (1981), 24 R.F.L. (2d) 424; Hierlihy v. Hierlihy (1984), 48 Nfld. & P.E.I.R. 142; Cleaves v. Cleaves (1982), 27 R.F.L. (2d) 239; Muise v. Muise (1982), 30 R.F.L. (2d) 296; Nolet v. Nolet (1985), 46 R.F.L. (2d) 388; Bank of Montreal v. Hall, [1990] 1 S.C.R. 121; Derrickson v. Derrickson, [1986] 1 S.C.R. 285; Multiple Access v. McCutcheon, [1982] 2 S.C.R. 161; Rawluk v. Rawluk, [1990] 1 S.C.R. 70; Rafferty v. Rafferty (1984), 39 R.F.L. (2d) 374.
Statutes and Regulations Cited
Act to amend the Pension Benefits Act, S.N.S. 1987, c. 11, s. 61(2).
Canadian Forces Superannuation Act, R.S.C. 1970, c. C‑9, s. 8(6) [rep. & sub. 1980‑81‑82‑83, c. 100, s. 41].
Civil Code of Quebec, Arts. 462.2, 2nd para., 462.3.
Divorce Act, R.S.C. 1970, c. D‑8.
Family Relations Act, R.S.B.C. 1979, c. 121.
Garnishment, Attachment and Pension Diversion Act , S.C. 1980‑81‑82‑83, c. 100, ss. 22, 41.
Marital Property Act, S.M. 1978, c. 24, C.C.S.M., c. M45, s. 1(b).
Matrimonial Property Act, R.S.A. 1980, c. M‑9.
Matrimonial Property Act, R.S.S. 1979, c. M‑6.1.
Matrimonial Property Act, S.N.S. 1980, c. 9, ss. 2, 4, 12, 13.
Pension Benefits Act, R.S.A. 1980, c. P‑3.
Pension Benefits Act, S.M. 1975, c. 38 [am. 1982‑83‑84, c. 79, s. 19].
Pension Benefits Act, S.N.S. 1975, c. 14.
Public Service Superannuation Act, R.S.B.C. 1960, c. 57.
Authors Cited
Bissett‑Johnson, Alastair. "Three Problems of Pensions ‑‑ An Overview" (1990), 6 C.F.L.Q. 137.
Campbell, Neil. "Division of Pensions Under the Ontario Family Law Act: A Comment on Marsham v. Marsham and Humphreys v. Humphreys" (1988), 7 Can. J. Fam. L. 79.
Hogg, Peter W. Constitutional Law of Canada, 2nd ed. Toronto: Carswells, 1985.
Knight, Philip A. "Splitting and Sharing Pension Assets on Marriage Breakdown" (1985), 14 Man. L. J. 419.
Marmer, Jack. "Valuing Registered Retirement Savings Plans" (1987), 2 C.F.L.Q. 97.
McBean, Jean M. "The Treatment of Pensions Under the Alberta Matrimonial Property Act: Some Unresolved Issues". In Payne's Divorce and Family Law Digest. Edited by Julien D. Payne. Don Mills: De Boo, 1986, p. E‑25.
Patterson, J. B. "Determining a Realistically High Value of the Spouse's Interest in the Employee's Pension" (1987), 1 C.F.L.Q. 345.
Pollock, Michael L. "Division of Pension Rights on Marriage Breakdown in Alberta: A Review of some Proposed Amendments to the Alberta Matrimonial Property Act" (1987), 2 C.F.L.Q. 83.
Roche, Evita M. "Treatment of Pensions upon Marriage Breakdown in Canada: A Comparative Study" (1987), 1 C.F.L.Q. 189.
Winokur, Paul M. and Stephen A. Eadie. "Current Pension Valuation Issues from an Ontario Perspective" (1988), 3 C.F.L.Q. 197.
APPEAL from a judgment of the Nova Scotia Court of Appeal (1986), 72 N.S.R. (2d) 387, 173 A.P.R. 387, 29 D.L.R. (4th) 492, 1 R.F.L. (3d) 29, allowing an appeal from an order of MacDonnell J. ordering a division of pension benefits as matrimonial assets. Appeal allowed.
Bruce Errol McKay, for the appellant.
Richard Johnson, for the respondent.
//Wilson J.//
The judgment of the Court was delivered by
WILSON J. -- The main issue in this appeal is whether a periodic pension benefit paid pursuant to the Canadian Forces Superannuation Act, R.S.C. 1970, c. C-9, as amended, is a "matrimonial asset" within the meaning of the Nova Scotia Matrimonial Property Act, S.N.S. 1980, c. 9, as amended, and therefore subject to equal division thereunder.
1. The Facts
The parties, Grace Lorraine Clarke (appellant) and Franklyn Vernon Clarke (respondent), were married on August 6, 1955. At the time of the marriage Mrs. Clarke was 21 years of age and Mr. Clarke was 26. They lived and cohabited in various places in Canada, mainly on or near Canadian Armed Forces Bases, until the end of July, 1980. At the commencement of the marriage both parties were employed by the Royal Canadian Air Force. During the course of the marriage the parties had five children. From the date of marriage until the youngest child reached the age of five, which was in 1968, Mrs. Clarke raised the children and cared for the home. In 1968 she began working outside the home as a cleaner and at various other jobs as well as maintaining the home and caring for the children. All the money she earned was used for household and living expenses. Mr. Clarke remained a member of the Armed Forces until his retirement on February 2, 1976. He was then entitled to an annuity pursuant to the Canadian Forces Superannuation Act and had the option of receiving either a cash settlement or monthly payments. Mr. Clarke elected to receive monthly payments which amounted to $564.21 per month. The election is final. He cannot now re-elect to take a cash settlement.
After the parties separated Mrs. Clarke moved to Thunder Bay, Ontario, and lived in an apartment owned by her mother and another relative. Mr. Clarke moved out of the matrimonial home as well and subsequently entered into a common law relationship. He resided in Shelburne County, Nova Scotia. Only the children remained in the matrimonial home in Berwick, Nova Scotia. Mr. Clarke continued to pay the mortgage and the taxes on the matrimonial home and Mrs. Clarke sent money to the children to help with expenses.
Neither party has a significant income. At the time of separation Mrs. Clarke was doing seasonal work but at the time of the trial she was unemployed and receiving $860.00 per month in unemployment insurance. At the time of the trial Mr. Clarke was employed at a lumber company earning $7.50 per hour. During the year of the trial he made approximately $8,200.00. He was also receiving the monthly pension benefit.
The jointly owned matrimonial home had an assessed value of $56,500.00, subject to a mortgage with an outstanding balance as of May 31, 1985 of $18,623.26, or a net value to each party of $18,938.37. The home was sold in July of 1986. Excluding the pension benefit the remaining matrimonial assets amounted to just over $40,000.00. Thus, the only assets of substance were the matrimonial home and the pension benefit.
Mr. Clarke petitioned for divorce in the Supreme Court of Nova Scotia, Trial Division. Mrs. Clarke counter‑petitioned and sought as corollary relief an order for maintenance, a division of property and a division of pension benefits as matrimonial assets. In granting a decree nisi of divorce MacDonnell J. included Mr. Clarke's pension in calculating the equal division of property between the spouses. He included in Mr. Clarke's matrimonial assets $27,815.56, being the value of 58 months of pension payments received by him between the date of separation and the time of trial. He ordered that one half of the monthly pension payments received by Mr. Clarke in the future should be paid to Mrs. Clarke. After adjusting for income tax the amount to be received by Mrs. Clarke amounted to $239.79 per month.
Mr. Clarke appealed and the Appeal Division of the Supreme Court allowed the appeal and varied the order of the trial judge by deleting from it the monthly pension payments to be paid to Mrs. Clarke. The Appeal Division further ordered that the calculation of the matrimonial assets made by the trial judge be varied by deleting from Mr. Clarke's assets the pension payments he had already received, or $27,815.56. Mrs. Clarke was granted leave to appeal to this Court.
2. The Issues
This appeal is limited to the treatment in the courts below of the pension benefits being received by Mr. Clarke under the Canadian Forces Superannuation Act . The main issue is whether the pension is a "matrimonial asset" within the meaning of the Nova Scotia Matrimonial Property Act and therefore subject to equal division thereunder.
Section 12 of the Act provides for the equal division of matrimonial assets upon the dissolution of a marriage. It reads:
12 (1) Where
(a)a petition for divorce is filed;
(b)an application is filed for a declaration of nullity;
(c) the spouses have been living separate and apart and there is no reasonable prospect of the resumption of cohabitation; or
(d)one of the spouses has died,
either spouse is entitled to apply to the court to have the matrimonial assets divided in equal shares, notwithstanding the ownership of these assets, and the court may order such a division.
Matrimonial assets is defined in s. 4(1) as follows:
4 (1) In this Act, "matrimonial assets" means the matrimonial home or homes and all other real and personal property acquired by either or both spouses before or during their marriage, with the exception of
(a) gifts, inheritances, trusts or settlements received by one spouse from a person other than the other spouse except to the extent to which they are used for the benefit of both spouses or their children;
(b) an award or settlement of damages in court in favour of one spouse;
(c) money paid or payable to one spouse under an insurance policy;
(d) reasonable personal effects of one spouse;
(e) business assets;
(f) property exempted under a marriage contract or separation agreement;
(g) real and personal property acquired after separation unless the spouses resume cohabitation.
Should this Court find that the pension is not a matrimonial asset, the appellant seeks in the alternative an unequal division of the matrimonial assets under s. 13 of the Act on the basis that equal sharing would be "unfair or unconscionable" having regard to the respondent's exclusive entitlement to the pension.
Section 13 of the Act provides:
13 Upon an application pursuant to Section 12, the court may make a division of matrimonial assets that is not equal, or may make a division of property that is not a matrimonial asset, where the court is satisfied that the division of matrimonial assets in equal shares would be unfair or unconscionable taking into account the following factors:
(a) the unreasonable impoverishment by either spouse of the matrimonial assets;
(b) the amount of the debts and liabilities of each spouse and the circumstances in which they were incurred;
(c) a marriage contract or separation agreement between the spouses;
(d) the length of time that the spouses have cohabited with each other during their marriage;
(e) the date and manner of acquisition of the assets;
(f) the effect of the assumption by one spouse of any housekeeping, child care or other domestic responsibilities for the family on the ability of the other spouse to acquire, manage, maintain, operate or improve a business asset;
(g) the contribution by one spouse to the education or career potential of the other spouse;
(h) the needs of a child who has not attained the age of majority;
(i) the contribution made by each spouse to the marriage and to the welfare of the family, including any contribution made as a homemaker or parent;
(j) whether the value of the assets substantially appreciated during the marriage;
(k) the proceeds of an insurance policy, or an award of damages in tort, intended to represent compensation for physical injuries or the cost of future maintenance of the injured spouse;
(l) the value to either spouse of any pension or other benefit which, by reason of the termination of the marriage relationship, that party will lose the chance of acquiring;
(m) all taxation consequences of the division of matrimonial assets.
The appellant raises a third issue. She objects to the Court of Appeal's suggestion that she is not being deprived of any interest in the pension by its being excluded from matrimonial assets since it may still be used to form the basis of a maintenance order. She submits that a contingent right to obtain support is not an acceptable substitute for the absolute ownership of property arising from a division of matrimonial assets.
3. The Courts Below
Supreme Court of Nova Scotia, Trial Division
In dealing with the pension payments MacDonnell L.J.S.C. first stated that the leading case on whether entitlements under pension and retirement plans are matrimonial assets subject to distribution under the Matrimonial Property Act is Lawrence v. Lawrence (1981), 25 R.F.L. (2d) 130 (N.S.S.C., App. Div.), leave to appeal to this Court refused, 49 N.S.R. (2d) 209 (S.C., App. Div.). Hart J.A. held in that case that the pension benefit at issue was a matrimonial asset as opposed to a business asset. MacDonnell L.J.S.C. followed this authority. He rejected the submission that because the pension had been capitalized and was being received as income it could not be viewed as an asset. In his opinion it would be highly inequitable and unjust if, just because Mr. Clarke elected to take the pension benefit by way of monthly income rather than as a lump sum benefit, it should cease to be a matrimonial asset so that Mrs. Clarke could not benefit therefrom. MacDonnell L.J.S.C. further stated that:
During the 25 year duration of this marriage the evidence clearly indicates that the wife contributed to the up-keep of the home, the accumulation of matrimonial assets, and matrimonial benefits in all respects and at least an equal portion, if not more than the husband. The ability of the husband to accumulate the pension benefits which he is now enjoying on a monthly basis was very definitely made possible in a great part by the contribution of the wife. It would be highly unjust to deprive her of her proper benefit accruing from the said pension payments on the specious argument that having vested the said benefits do not have a value. The pension benefits most certainly have a value, namely, $564.21 monthly, less whatever income tax the same attracts.
MacDonnell L.J.S.C. therefore ordered that the pension benefits received by Mr. Clarke between the date of separation and the date of trial be added to his matrimonial assets and that one half of the future pension payments he received be paid to Mrs. Clarke. He found that both the past and future payments should be discounted by 15 percent for income tax purposes.
Turning to the issue of maintenance, MacDonnell L.J.S.C. noted that Mrs. Clarke was collecting unemployment insurance at the time of trial and found that no need had been proved. He added that, if Mrs. Clarke did not obtain employment in the future, it may be that her circumstances will have changed to such a degree that an application for maintenance could be successfully pursued.
Nova Scotia Court of Appeal (1986), 1 R.F.L. (3d) 29
Pace J.A., for the court (Hart, Jones and Pace JJ.A.), noted that the monthly pension payments received by Mr. Clarke were being received long before the separation and stated that the evidence revealed that the payments were not treated as matrimonial assets but rather as income in his hands. He distinguished the decision in Lawrence, supra, on the basis that Hart J.A. was referring to a return of pension contributions made by a husband who had changed his vocation from one university to another and whose pension was not transferrable and had to be withdrawn as a cash sum. In this case the pension payments were made on a periodic basis and constituted income, not a matrimonial asset. He observed as well that, as no evidence was adduced as to the capitalized value of the pension, it appeared that the trial judge had treated the pension benefit as income even although he had divided it as a matrimonial asset.
Pace J.A. recognized that some pensions might be matrimonial assets but expressed concern about classifying pensions as matrimonial assets in circumstances where the legislature had declared them to be inalienable and free from seizure or execution as was the case here. He stated at pp. 39-40:
Accepting as I must the judgment of this court in Lawrence, supra, that some pensions under certain circumstances are to be classified as matrimonial assets, the problem then arises as to the type of pension to be so classified and the valuation of the benefit. I must confess that I have grave difficulty classifying any type of pension as a matrimonial asset where there is an express legislative prohibition declaring the pension benefits inalienable and free from seizure and execution.
He found no authority in the Matrimonial Property Act which would permit the courts to override the express provisions of the Nova Scotia Pension Benefits Act, S.N.S. 1975, c. 14, or the federal Canadian Forces Superannuation Act .
Pace J.A. then reviewed Isbister v. Isbister (1981), 22 R.F.L. (2d) 234, wherein Monnin J.A., for the Manitoba Court of Appeal, commented on the difficulty of valuing pensions and held that non-assignable pensions had no calculable present value but could be used in calculating monthly or yearly maintenance. Pace J.A. stated at p. 42:
I agree with Monnin J.A. that the amount of monthly earnings received from a pension may be used in calculating the amount of maintenance to be paid to the other spouse. However, this does not mean that under our provincial Matrimonial Property Act a trial judge can divide the proceeds of the pension between the spouses, but rather he may treat it as income in the hands of the recipient in deciding the issue of maintenance.
Earlier in his reasons Pace J.A. had noted that Mrs. Clarke was not precluded from applying for maintenance at a future time if the need arose.
Jones J.A. agreed with the conclusion of Pace J.A. but added, inter alia, the following remarks at p. 44:
In Isbister v. Isbister . . . Monnin J.A. noted the impossibility of valuing pension benefits as anticipated by the Ontario Law Reform Commission report. Subsequent cases have simply confirmed that view where, legislatively or through judicial precedent, the definition of matrimonial assets has been extended to include pension benefits. The problem cannot be solved by simply including pension benefits under the Matrimonial Property Act and leaving it to the discretion of the judge to determine the value of those benefits. The legislative policy should be clearly expressed, preferably in pension legislation, so that spouses will know exactly what benefits they are entitled to in the event of a marriage breakdown.
4. Analysis
The appellant submits that Mr. Clarke's pension was the security for their retirement. The appellant's contribution to the marriage partnership enabled Mr. Clarke to maintain his employment and accumulate the pension benefits he has received and continues to receive. The appellant further submits that the pension was built up by a diversion of funds that otherwise would have been available on a current basis to the family. Indeed, the appellant points out that these were factual findings made by MacDonnell L.J.S.C. at trial which were not disturbed by the Court of Appeal. The appellant therefore submits that it would be inequitable and unjust, as well as inconsistent with the policy of the Act, to prevent her from sharing in the pension benefits that the respondent is receiving on a monthly basis.
The objective of the Act found in the preamble supports the appellant's position. The preamble reads:
WHEREAS it is desirable to encourage and strengthen the role of the family in society;
AND WHEREAS for that purpose it is necessary to recognize the contribution made to a marriage by each spouse;
AND WHEREAS in support of such recognition it is necessary to provide in law for the orderly and equitable settlement of the affairs of the spouses upon the termination of a marriage relationship;
AND WHEREAS it is necessary to provide for mutual obligations in family relationships including the responsibility of parents for their children;
AND WHEREAS it is desirable to recognize that child care, household management and financial support are the joint responsibilities of the spouses and that there is a joint contribution by the spouses, financial and otherwise, that entitles each spouse equally to the matrimonial assets;
Thus the Act supports the equality of both parties to a marriage and recognizes the joint contribution of the spouses, be it financial or otherwise, to that enterprise. The Act goes further and asserts that, due to this joint contribution, both parties are entitled to share equally in the benefits that flow from the union -- the assets of the marriage. The Act is accordingly remedial in nature. It was designed to alleviate the inequities of the past when the contribution made by women to the economic survival and growth of the family was not recognized. In interpreting the provisions of the Act the purpose of the legislation must be kept in mind and the Act given a broad and liberal construction which will give effect to that purpose.
In this case, as the trial judge found, it was in large part due to Mrs. Clarke's contribution that Mr. Clarke was in a position to receive the pension. Prima facie, therefore, in light of the object and purpose of the Act, her contribution should be recognized by awarding her a share in the benefits accruing to the respondent from the pension. Having regard to the reality that in the case of many Canadian families a pension is their only substantial asset, it would seem inequitable to place pension benefits outside the scheme of equal division: see Rutherford v. Rutherford (1981), 23 R.F.L. (2d) 337 (B.C.C.A.), per Seaton J.A., at p. 342. I appreciate that there are differences in the Matrimonial Property Acts of the several provinces but each supports the equal partnership concept of marriage and the equal division of property. Accordingly, judicial comments from other jurisdictions can provide helpful guidance.
From this starting point of equality of treatment, it is my view that the issue raised by this appeal is really the appropriate means by which the appellant may participate in the benefits of the pension. The options appear to be: (1) finding that the pension is a matrimonial asset and subject to equal division; (2) ordering an unequal division of the matrimonial assets if the pension is not a matrimonial asset in order to achieve equality; or (3) taking the pension into consideration in making a maintenance order. The first two solutions rely upon the division of property provisions of the Matrimonial Property Act while the latter depends upon the maintenance provisions of the Divorce Act, R.S.C. 1970, c. D-8, as amended.
From the appellant's perspective the first option is undoubtedly the most attractive. When assets fall within the ambit of "matrimonial assets" s. 12 mandates equal sharing. There is no discretion at this stage of the inquiry. It is only when equal sharing would result in unfairness that s. 13 comes into play and a trial judge has a discretion to make an unequal division of the matrimonial assets. This discretion may or may not be exercised in favour of the non-recipient spouse. The non-recipient spouse bears the onus of "satisfying" the court within the meaning of s. 13 that equal sharing is unfair or unconscionable. That this is not an easy onus to meet is made clear by the Nova Scotia Court of Appeal in Harwood v. Thomas (1981), 45 N.S.R. (2d) 414, at p. 417:
Equal division of the matrimonial assets, an entitlement proclaimed by the preamble to the Act and prescribed by s. 12 should normally be refused only where the spouse claiming a larger share produces strong evidence showing that in all the circumstances equal division would be clearly unfair and unconscionable on a broad view of all relevant factors. That initial decision is whether, broadly speaking, equality would be clearly unfair -- not whether on a precise balancing of credits and debits of factors largely imponderable some unequal division of assets could be justified. Only when the judge in his discretion concludes that equal division would be unfair is he called upon to determine exactly what unequal division might be made. [Emphasis added.]
Moreover, s. 13 will not be an effective option where the only asset of substance is the pension. Hall L.J.S.C. was faced with this situation in Lefort v. Lefort (1988), 13 R.F.L. (3d) 359 (N.S.S.C.T.D.), a case arising after the Court of Appeal's decision in the present case. Hall L.J.S.C. distinguished Clarke and concluded that in these circumstances the pension had to be treated as a matrimonial asset in order to give effect to the purpose of the Act. He stated at p. 365:
The problem here, however, is that there are not adequate assets to respond to an order for an unequal division that would be of any practical benefit to the wife. The only asset of any consequence, matrimonial or otherwise, owned by the parties other than the rather modest household goods and furnishings and the husband's automobile is the husband's pension fund. In my opinion it would be intolerable and contrary to the intent of the Matrimonial Property Act to permit the husband to claim for himself sole entitlement to this asset with the benefit of future security accruing only to him, while the wife, who has the principal responsibility of the care of the children, is left with a few sticks of furniture.
I would add that even in cases where another asset of substance exists, an unequal division due to the existence of a pension that has not yet matured may result in one partner being "present asset rich" while the other is "present asset poor".
In my view therefore, as between the two options under the Matrimonial Property Act, including pensions as matrimonial assets subject to equal division is clearly the most consonant with the spirit and intent of the legislation.
Turning to the maintenance option, which is the appellant's third issue, I note that it arises out of the statements made by Pace J.A. in the Court of Appeal. He expressed the view that even although the pension benefit was not a matrimonial asset, the appellant might still be entitled to participate in it through an award of maintenance should the need for maintenance arise. The pension in this context would be income in the hands of the recipient spouse.
The appellant submits that maintenance is not an acceptable alternative to a share of a capital asset, the former being contingent on continuing need on the one hand and ability to pay on the other. I think the appellant's submission is sound. Cameron J.A., in Tataryn v. Tataryn (1984), 38 R.F.L. (2d) 272 (Sask. C.A.), clearly identified the difference between the two interests at pp. 285-86:
In my respectful view, the term "maintenance asset" has no place in determining whether a right to a pension is, or is not, matrimonial property within the meaning of s. 2(h) of the Act. Nor can a pension entitlement, if it constitutes matrimonial property, be excluded from distribution on the footing it is a source of income from which alimony or maintenance obligations can be paid.
A matrimonial property right is not to be confused with a right to alimony or maintenance. The two differ fundamentally. Not only do they depend for their existence on different enactments and spring from different assumptions, their legal character is wholly dissimilar; the first is proprietary in nature, and concerns capital and its division: the other is personal, and involves income and the support of one spouse by the other.
The statutory right of a married woman to share in the property accumulated during her marriage is rooted in the modern view of marriage as a partnership, and derives from the presumption of the Matrimonial Property Act that each of the partners contributed equally and independently to the acquisition of the marital property. Neither the conduct or condition, nor the needs or means, of either of the partners to the marriage have anything to do with the earned right of each of them to share in the property of the marriage -- except to the limited extent that these factors may incidentally touch upon the existence and extent of an exemption, exception, or equitable consideration mentioned in the Act. Generally speaking this Act, which provides for an orderly dissolution of the economic partnership on marriage breakdown, envisages a complete accounting and final sharing of the marriage capital following the breakdown.
A married woman's right to alimony and maintenance is, of course, a very different matter. It is anchored, historically, in the notion that marriage imposed a duty upon the husband to support his dependent wife according to his means as long as she did not absent herself without cause. The rights to alimony and maintenance . . . remain altogether dependent upon the behaviour of the wife, and on the condition, means and other circumstances of each of the spouses. And, generally speaking, there is little finality to the right of support; if it exists it survives separation and divorce, and remains, at all times, subject to review as circumstances change.
All of this is not to say that the two rights are altogether unrelated, for obviously they are not, but in my respectful opinion they have to be kept separate when determining whether a given thing is or is not matrimonial property. [Emphasis added.]
I agree with Cameron J.A.'s analysis. Discretionary support payments are a wholly inadequate and unacceptable substitute for an entitlement to share in the assets accumulated during the marriage as a result of the combined efforts of the spouses.
Having concluded that the preferred option is to characterize the pension as a matrimonial asset, we must consider whether this option is open to the Court. This would appear to be the first time the issue has come before us.
"Pension" is a colloquial term rather than a term of art. There are a wide variety of pensions payable under a variety of plans. Pension plans may be contributory or non-contributory and the employee's interest under the plan may be vested or contingent. When the pension is vested the employee has a guaranteed right to receive his or her entitlement even if the employment relationship terminates prior to the fixed retirement date. The employee may also have a choice as to mode of payment, as was the case here, or a choice as to when to begin receiving the pension if early retirement is available.
Over the past several years lower courts have frequently been faced with the question whether pensions are matrimonial assets and they have discussed the various kinds of pension plans and their peculiar characteristics. Thus, even although there is a discernible trend in Canada in favour of pensions as a form of matrimonial property subject to equal division upon divorce, there are also a number of decisions in which the courts have been at pains to restrict their decisions to the particular kind of plan before them. For example, in Tataryn, supra, the Saskatchewan Court of Appeal unanimously held that a vested pension should be considered matrimonial property within the meaning of the Saskatchewan Matrimonial Property Act, R.S.S. 1979, c. M-6.1, but went out of its way to restrict its decision to vested pensions. Quoting from p. 288:
None of this is to say that every interest in a pension scheme will constitute matrimonial property. Some may not. Indeed, I would say that generalization is more hazardous than usual when it comes to pension rights because there are so many kinds of pension plans, containing such a wide variety of provisions.
Accordingly, while I think the policy of the Act supports the trend towards treating pensions as matrimonial property for purposes of the division of matrimonial assets, it may not be possible to establish a general principle to that effect given the variety of plans under which pension entitlements may arise. It is with this caution in mind that I approach the question whether this particular pension is a matrimonial asset under this particular legislation.
The Canadian Forces Superannuation Act
Under the Canadian Forces Superannuation Act it was mandatory that Mr. Clarke contribute a certain percentage of his wages toward his pension. This contribution was matched by his employer. Under the Act the amount of the annuity to be received when the named recipient ceased to be a member of the regular force or died is based on a formula which takes into account the number of years of pensionable service to the credit of that person and an average annual income based on the "best" six years of service. The pension in this case matured prior to the parties' separation. Before the respondent retired he had the option of taking a cash settlement which would have been payable to him less the income tax payable on it, or a monthly benefit of $564.21. Mr. Clarke chose the latter option and is currently receiving the monthly payments. There is a possibility that these pension benefits will be indexed to cost of living increases.
The wording of the Matrimonial Property Act
I turn first to the relevant provisions of the Act in order to determine whether its language prevents pensions generally from being considered matrimonial assets. Section 4(1), of course, is relevant to this question as it provides a definition of matrimonial property. The definition is very wide in scope. It includes all real and personal property other than that listed in the exceptions. The Court of Appeal in Lawrence gave a broad interpretation to this definition, Hart J.A. stating at p. 141:
Matrimonial assets include all assets acquired by the spouses either before or during the marriage, but certain types of property are excluded. The principal exclusions are business assets and property received by gift which is not used as a family asset. Unless property can be brought within one of the exclusions in s. 4, however, it remains a matrimonial asset no matter what its kind or use. [Emphasis added.]
Aside from its breadth, however, the definition does not provide much guidance on the subject of pensions specifically. They are neither included nor excluded.
The respondent submits, however, that pensions are excluded from the definition of matrimonial assets by virtue of their inclusion in the "business assets" exception. The definition of business assets is found in s. 2(a) of the Act which reads:
2In this Act,
(a) "business assets" means real or personal property primarily used or held for or in connection with a commercial, business, investment or other income or profit producing purpose, but does not include money in an account with a chartered bank, savings office, loan company, credit union, trust company or similar institution where the account is ordinarily used for shelter or transportation or for household, educational, recreational, social or aesthetic purposes;
Hart J.A., for the court, considered this section in Lawrence and concluded that pensions were not "business assets". He noted that too broad an interpretation of s. 2(a) could result in removing virtually all assets from the classification of matrimonial assets except the matrimonial home. He concluded that the only assets which fall within the definition of business assets are those that are purpos