J. D.I.V. A.D. J.C. R. IN THE QUEEN'S BENCH (FAMILY LAW DIVISION) JUDICIAL CENTRE OF REGINA BETWEEN: SCOTT CAVERS and KAREN CAVERS RESPONDENT D.J. Kovatch for the petitioner R.B. Hunter for the respondent JUDGMENT HUNTER J. January 24, 1996 The petitioner, Scott Cavers ("Scott") and the respondent, Karen Cavers ("Karen") were married April 7, 1973, and separated in October 1994. The petition was issued on February 21, 1995. There are two children of the marriage, Chad (born in 1976) and Ryan (born in 1978). The judgment for divorce was granted at the conclusion of the trial. Theissues left to be determined are division of the petitioner'spension, the quantum, if any, of child support and spousalsupport and whether the matrimonial home should be transferredto the respondent or be sold and the proceeds divided. Scott commenced employment with the Regina Police Services in 1971 and continues to be employed there in the rank of Sergeant. He has worked in various units in the police service and in the later years from 1988 until December, 1994, he was assigned to the robbery-homicide unit. In this unit he often worked significant overtime hours and his salary, including overtime during those years was approximately $71,000. In December, 1994, he was transferred to the position of co-ordinator of the Domestic Violence unit. In this position, Scott works four 10-hour days per week and is not scheduled for week-end or evening shift work. He seldom, if ever, works overtime in this unit. His salary (including all add-ons) will approximate $63,000 for the 1995 calendar year. This current work schedule suits Scott as the two sons, Chad and Ryan have continued to reside with Scott since the date of separation. Scott is limited in the units to which he can be assigned because of previous back injury. He cannot transfer to unit which may involve any confrontation. Karen was certified nursing assistant and continued this employment after her marriage. Early in the marriage, Karen completed her nurses training program. In 1976, just prior to writing her exams to become registered nurse, Karen suffered cerebral hemorrhage. Karen required surgery and rehabilitation and as result she was unable to work outside for home for year or two. Karen did in-home babysitting during this time and while Chad and Ryan were infants. Karen suffered memory loss and she continues to suffer aphasia, dyslexia and seizures as result of this hemorrhage. After Ryan was born in 1978, Karen went back to work at the Pasqua Hospital on casual basis. Later, Karen worked part-time at three separate institutions and then again tried to take classes toward her registered nurse certification. Karen found the lingering problems with her lack of short-term memory from the hemorrhage affected her exam-writing ability and she discontinued taking classes. In 1983, Karen commenced work at Myers House and worked there for years. When her employment was terminated, she received unemployment insurance benefits until she started work in 1992 at New Dawn, treatment facility located outside Fort Qu'Appelle. Today, Karen continues to be employed there as full time assessment counsellor. During the marriage, Karen developed chemical dependency on Gravol and she suffered an incident of drug overdose. In 1992, Karen went through drug rehabilitation following which she has not experienced any further incidents. Scott and Karen separated twice before October, 1994, when Karen left the matrimonial home for the last time. Karen has since resided in Fort Qu'Appelle which is closer to her place of employment. Scott and Karen were not in healthy financial situation when they separated. They owed approximately $55,000 on the house mortgage and $26,000 to the Bank of Montreal for two car loans. There was debt to Canada Trust in excess of $9,000 to consolidate loans including credit card loans. In addition, there were other small debts. After separation, Scott continued to pay the mortgage loan and utilities for the matrimonial home. The monthly payment to the Bank of Montreal approximated $800. Scott attempted to pay on all the debts except for the Bank of Montreal car loans, which he expected Karen to pay. Karen attempted to renegotiate this loan to smaller monthly payment. The Bank's final proposal was to accept $554 monthly payment but Karen viewed this as too much. In the course of her negotiations, Karen learned from the bank representative that she had not signed for the loan and that it was in Scott's name alone. Accordingly, Karen ceased making any payments on this loan. As result of this, Scott was unable to handle the debt load and in May, 1995, he filed an assignment in bankruptcy. In the statement of affairs, Scott disclosed unsecured debts of $42,607 and secured debts of $56,995. The significant secured debt was the mortgage on the matrimonial home. The only joint unsecured debt for which Karen was signatory was the Canada Trust debt which Scott showed as $7,797 at the date of the assignment. Scott is eligible to apply for his absolute discharge in February, 1996. Accordingly, he is still an undischarged bankrupt at the date of trial. Because the loan for Karen's car was solely in Scott's name, the debt for her car has been eliminated through the bankruptcy process. Scott's car was repossessed and he repurchased it from the Bank of Montreal on terms set by the Bank. Scott's regular salary to November 28, 1995, was $52,406 but with additional amounts paid to him, his total salary to this date was $57,902.98. He anticipates his final salary for the year 1995 will approximate $63,000. Karen's gross salary is $2,194 per month or approximately $26,300 annually. Commencing May 1, 1995, an interim child support order was granted whereby Karen was ordered to pay $300 per month (net of tax) for the support of Ryan. Karen has 1992 Sundance car which she values at $5,500 and two RRSP's which at trial have been cashed in. When the petition was issued Karen stated the RRSP's were $2,182.09 and $3,819.62 respectively. Karen's pension from employment is in the form of an RRSP and is worth $3,819.52. The liabilities for which Karen has some responsibility are the Canada Trust joint loan with current balance of $7,730 and she owes $2,187 on her Mastercard for expenses incurred on trip to Saskatoon that she and Scott took in September 1994. Currently, Karen is not making any payments on the debts. She rents house in Fort Qu'Appelle for $300 per month and also pays all the utility costs. Scott and Karen have divided the household goods to their satisfaction. The matrimonial home has only small equity at best and that will probably not exist after payment of real estate fees when the home is sold. Scott's unsecured debts have been eliminated through the bankruptcy process but he is still an undischarged bankrupt. Scott's primary asset is his pension plan for his 24 years in the police service. The period of the marriage for purposes of pension entitlement is 21.4928 years. Scott's earliest retirement date under the plan is when he reaches 25 years of service which will occur in September, 1996. How to divide this pension is the main issue in this action. Scott and Karen were employed throughout the majority of their marriage, and each contributed the income earned to support the family. Most of the earnings were spent and few assets were acquired. Both parties received the benefit of this lifestyle. In hindsight Scott and Karen may now wish they had limited their children's sports activities so that more assets could have been acquired, but the lifestyle was choice made by them at the time. The plan administrator for the Regina City Police Pension Plan testified that he understood that The Pension Benefits Act, 1992, S.S. 1992, c. P-6.001, ss. 46(3) requires that the division of pension on the breakdown of the marriage of the member of plan "must not reduce the member's commuted value to less than 50% of the member's commuted value prior to the division". The commuted value is $113,900 for the 21 years of marriage. There is current liquidity problem with the pension plan and the plan members are required to make additional contributions. Also there are restrictions on the amounts that can currently be paid out of the plan and portion of any lump sum payout must be deferred for years. The calculation performed by the administrator in accordance with his understanding of the pension plan is that the maximum amount available for transfer to spousal RRSP by reason of the marriage break-down is 1/2 of $150,600 (calculated to the date of trial) or $75,300. This is based on the total time Scott has contributed to the plan (not just for the period of the marriage) and is calculated to the date of trial, not the date of the petition or date of separation. Because of the solvency requirements only $64,000 could be paid out now and the remainder could be paid out in years. The lump sum payout must be transferred into locked in RRSP and the spouse can begin to receive pay-out on monthly basis on the earliest eligible date for retirement of the plan member, i.e. September, 1996. If Scott actually terminated his employment now rather than waiting until the earliest eligible retirement date, the amount payable would be the higher of commuted value or the contributions with interest. Scott has excess contributions of $73,097. When there is marriage break-down, the plan administrator divides the pension on the basis of the commuted value only and excess contributions are not considered for the purpose of the lump sum transfer to locked in spousal RRSP on marriage breakdown. The total pay- out on termination would be the commuted value ($113,930.) and excess contributions ($73,097.) for total of $187,027. Ontermination Scott would have the option of leaving the fundsin the plan and the payment would be deferred until Scott isage 65. Alternatively, Scott could have the commuted valuetransferred to a locked-in RRSP. If Scott should retire at his earliest eligible date, i.e. September, 1996, he would receive monthly pension of approximately $3,000 until age 65 at which time it would be reduced to $2,500 because of the integration with the Canada Pension Plan that is provided for under the terms of the Regina City Police pension plan. If Scott works beyond his earliest eligible date, he will increase the amount of his monthly pension benefit on retirement. Scott testified that he has considered the possibility of retiring when he has 30 years of service in 2001. He cannot afford to retire in 1996. David Keat ("Keat"), consulting actuary from Saskatoon testified on behalf of Karen. He calculated the actuarial present value of the pension accrued during the marriage as at October 4, 1994 (the date of separation) assuming retirement age of 45 at $331,100 and at age 55 at $129,341. In doing these calculations, he did not assume any future salary increase and no discount was factored in for the effect of income tax. He did assume that Scott will not die, retire or quit his employment before September 1996. Therefore the three values that have been suggested in the evidence for the purpose of valuation and distribution of the pension plan are $150,600, $187,027 and $331,100. The method of distribution is complicated in this case because Scott is an undischarged bankrupt. The choices presented are valuation in accordance with The Pension Benefits Act, 1992, or the commuted value plus excess contributions or present day valuation assuming retirement after 25 years of service. The statutory limitations apply with respect to any amount which can be transferred out of the pension plan. There is no issue that the maximum that can be transferred immediately to locked-in RRSP in Karen's name is $64,000. In Fisher v. Fisher (1983), 1983 CanLII 2021 (SK QB), 21 Sask. R. 235 (Sask. Q.B.) Scheibel J. examined the issue of valuation of the Regina City Police Pension Plan for the purposes of the matrimonial property division. In that case, the husband had already reached the earliest eligible retirement date but had not retired. The husband was age 47 and the wife age 49. Scheibel J. canvassed extensively the many factors to be considered in the methods of valuation of pensions which apply as well in this case. Scheibel J. allowed the option to the husband to either pay lump sum amount or periodic payments based on valuation assuming the earliest retirement date of the husband. More recently, in Knippshild v. Knippshild, [1995] W.W.R. 257 (Sask. Q.B.), Klebuc J. held that the retirement method of calculating the value of the pension will yield the fairest value as often the termination method does not. (Termination method means calculating the present value based on accrued benefits to which the employee is entitled assuming participation in the pension plan on specified date. Retirement method means calculating the present value under which portion of the value of the employee's projected future pension entitlement on retirement is deemed to be related to the period of the marriage). Klebuc J. noted the negative aspects of using the retirement method of valuation but determined that these could be overcome by the use of applicable contingencies. Also, he held that the "most likely retirement date" rather that the earlier retirement date should be used in calculating value. In this case, there is further consideration. The only marital asset of any value is Scott's pension. There are no funds available for any lump sum payment. Even if such funds were available, Scott is an undischarged bankrupt and any funds in his possession belong to the trustee for the benefit of Scott's creditors subject to the applicable exemptions. In my view, the only fairness that can now be employed in valuation and distribution of Scott's pension plan is an "if and when order". Scott may retire as early as 1996 but that is unlikely as he will not be able to afford to do so. He hopes to retire after 30 years of service but given his present financial situation that may prove to be unlikely as well. Since he is limited to the kind of police work he is able to do because of his physical disability, there is reasonable prospect that he may work until he reaches 35 years of service. Karen wants the retirement method used to calculate the value of the pension. She then wants the maximum allowable transferred immediately to locked- in RRSP ($75,300 of which $64,000 can be paid immediately and the remainder in years in order to comply with the liquidity requirements of the Regina Police Service Pension Plan). Then to circumvent the fact that there are no other assets for lump-sum pay out and to avoid the effect of Scott being an undischarged bankrupt, Karen wants monthly sum paid to her disguised as spousal support but which is in effect, the balance of the value of Scott's pension adjudged owing to her. Then when Scott actually retires, Karen will receive percentage of his monthly pension benefit. In my view, there are too many uncertainties in this case and because Scott is an undischarged bankrupt, the retirement method is not acceptable to calculate the value of the pension. There are only two options, i.e. an order that the maximum commuted value calculated in accordance with The Pension Benefits Act, 1992, be transferred to locked-in RRSP in Karen's name or an "if and when" order. Perhaps the only way fairness can beachieved in these circumstances is to allow Karen to make thechoice between the only two options which are available. Accordingly, if Karen desires to have funds in her name immediately, she shall on or before March 1, 1996, provide Scott with written notification that she wants the maximum allowable commuted value transferred to RRSP. If Karen fails to provide the written notice in the time provided, then there will be an order that when the monthly pension benefit commences to be paid to Scott, the plan administrator shall pay to Karen portion of the monthly pension benefit calculated as follows: years of marriage monthly pension benefit 1/2 years of service Karen's monthly entitlement This leaves the issue of child support. Ryan is in high school and is dependant. Karen is obligated to pay child support for so long as Ryan is registered as full-time student at recognized educational institution for reasonable period following the completion of high school. Chad is registered for an EMT course which should commence in the spring of 1996. The course is approximately months in length. Only if Chad is registered and attending recognized educational institution as full-time student, is Karen obligated to pay child support. Because Chad's anticipated course is of short duration, have determined in these circumstances that no child support is payable in respect of Chad. Karen shall pay to Scott, as child support for Ryan,$260 per month commencing January 1, 1996, and continuing onthe 1st day of each month thereafter for so long as Ryan is achild within the meaning of the Divorce Act, R.S.C. 1985, c. 3(2nd Supp.) Karen has applied for spousal support. Karen was employed throughout the marriage and continues to be so employed. The parties were "spenders" not "savers". Through the circumstances of the debts and Scott's bankruptcy, Karen has car available to her. Karen's primary difficulty in up-grading her skills is affected by her illness in 1976 and the lingering disabilities, not because of the marriage. Karen says she subordinated her employment demands to her family obligations. It is not unusual in family situation where both parents are employed that one of the parents must carry out the primary parenting duties. These duties shift between the parents as the children grow older. That is what occurred in this family and as the boys got older, Scott became more involved as parent. Both Scott and Karen shared the parenting duties in varying degrees throughout the term of the marriage. In the circumstances, there will be no orderfor spousal support. With respect to the matrimonial home, there will bean order that the home shall be sold and the proceeds, if any,divided equally between the parties. The matrimonial home shall be listed for sale on or before April 1, 1996. All other contents of the home, other than those ordered at the conclusion of trial to be transferred to Karen, shall vest absolutely in Scott. There will be no order as to costs.
Issues included the division of a pension, child and spousal support and whether to transfer or have sold the matrimonial home which had a small equity. The petitioner was an undischarged bankrupt and any funds in his possession belonged to the trustee. The only marital asset of any value was the petitioner's pension but lump sum payment was not available for five years as there was a liquidity problem. The parties had been 'spenders' not 'savers'. HELD: 1)The respondent was to pay child support for one child. 2)Spousal support was denied. 3)The matrimonial home was to be sold and proceeds were to be divided equally.  4)Three values were suggested for valuation and distribution of the pension plan. The retirement method of calculating the value of the pension yields the fairest value as opposed to the termination method. The practice by the plan administrator on marriage breakdown was to divide the pension on the basis of the commuted value only and excess contributions were not considered for the purpose of the lump sum transfer to a locked in spousal RRSP. The options were to leave the funds in the plan and defer payment until age 65 or have the commuted value transferred to a locked-in RRSP. The respondent was to make the choice between the only two options. If she wished to have the funds in her name immediately, she was to provide written notification otherwise there would be an order that the respondent is to receive a portion when the monthly pension benefit commences.