Earl v. McAllister, 2019 ONSC 7288 (CanLII), http://canlii.ca/t/j46lc

One of the issues that the court had to determine in this case was whether a surviving spouse pension from the deceased’s pension plan should be included in the assets of the estate under s. 72(1)(g) of the Succession Law Reform Act (“SLRA”) for the purpose of determining dependent support. In 2018, The Ontario Superior court of Justice seemed to have answered the question in Cotnam v. Rousseau,[1] by deciding that “the spousal priority for a pre-retirement death benefit in s. 48 of the Pensions Benefit Act [2] (”PBA”) did not shelter pre-retirement death benefits paid to a spouse from being clawed back under s.72(1)(g) of the SLRA.”[3] However, the court refused to follow the Cotnam decision and came to the opposite conclusion.

Leo McAllister (the “Deceased”), left behind two minor children (the “Boys”) from his relationship with the Applicant, whom he was supporting immediately prior to his death, and was survived by his wife, the Respondent.

On the date of death, the Deceased’s liabilities exceeded his assets. However, outside of his estate, the Deceased had assets, one of them being a Canada Pension Plan which provided a pre-retirement surviving spouse benefit in the sum of $88,117.40. The pension is administered in the U.S (herein referred to as the “US Pension”).

In respect of determining whether the Pension could be clawed back into the estate of the Deceased pursuant to section 72 of the SLRA, the court looked at the pre-retirement Surviving Spouse benefit described in the US Pension Plan’s Booklet, as follows:

If you are vested and die before you retire, your spouse (providing he/she meets the definition of spouse as defined by law) is entitled to a pre-retirement spouse’s benefit. The benefit is payable as an immediate monthly pension for the lifetime of your spouse. The value of this monthly pension is equal to the lump sum value of the benefits you have earned to the date of your death.[4]

The Surviving Spouse benefit was in accordance with s. 48 of the PBA.

The court looked at case law which concluded that the right to the survivor benefit accrues to the spouse not by designation by the deceased but because of marital status,[5] as well as case law that came to the opposite conclusion.[6]

At the end, the court decided that “Section 72(1)(g) of the SLRA is clear in its wording and only includes amounts payable under a designation of beneficiary. The amount payable under the pre-retirement Surviving Spouse benefit in the US Pension is not pursuant to a designation of beneficiary but rather to the Respondent as the surviving spouse. Given the clear wording of s. 72(1)(g), an explicit exclusion of the surviving spouse benefit is not required. Further, the “balancing” required by s. 62 is something that occurs after the net assets of the estate have been identified. It is not used to determine inclusion.”[7]

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[1] 2018 ONSC 216 (CanLII) (S.C.J.)

[2] R.S.O. 1990, c. P.8

[3] Earl v. McAllister, 2019 ONSC 7288 (CanLII) Para 25

[4] Ibid, para 20

[5] Smallman v. Smallman Estate, [1994] O.J. No. 1718 (OCJ-Gen Div.)

[6]  Cotnam v. Rousseau, 2018 ONSC 216 (CanLII).

[7] Earl v. McAllister, 2019 ONSC 7288 (CanLII), Para 26

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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.