November 06, 2017

Case Commentary: Does the rule against “double-dipping” apply to a judicial annuity?

Parrett v. Parrett, 2016 BCCA 151

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The Facts

As the Honourable Madam Justice Newbury states in the opening paragraphs of the decision in Parrett v. Parrett, 2016 BCCA 151, the facts of this case are “unremarkable.”  It was a 30-year traditional marriage lasting from 1971 to 2000.  The Wife was a homemaker throughout the marriage, the parties had 4 children, and the Husband was a lawyer and then a judge, appointed in 1990.  Seven years post-separation, the parties reached an agreement that would have the Husband’s judicial annuity divided in accordance with s. 52.11 of the Judges Act, RSC 1985, c. J-1, when that section came into force.  That section provided the mechanism for a judicial annuity to be divided (much like the Pension Benefits Act, Pension Benefits Division Act, and other acts regulating the division of pensions).  Prior to that section coming into force, there was no ability to divide a judicial annuity.  The relevant provisions were proclaimed in 2008.  

The Husband agreed to pay spousal support in the amount of $6,500.00 per month.  The parties agreed that the Husband’s retirement would be a material change in circumstance and would allow for a variation of the spousal support amount. 

The Husband’s Retirement and Variation Application

The Husband retired in 2015 and applied to vary his support.  The Wife had assets valued at approximately $716,000.00, most of which was accumulated as a result of the division of marital property, the judicial annuity, and RRSPs.  Her only income was CPP and OAS.  The Husband had re-partnered and had assets valued at approximately $421,537.15.  His income consisted of his annuity of $177,696.00 per annum and CPP.  

The Chamber’s Judge hearing the variation request found that there should be no double recovery and the Husband’s income for spousal support should not include his portion of the annuity. The Chamber’s Judge did not effectively address the annuity earned between 2000 and 2015, which turned out to be an error.  The Chamber’s Judge accepted the Husband’s argument that section 52.16 of the Judges Act, which states also follows, prohibited double-recovery:

52.16             Where a division of annuity benefits is made in respect of a period subject to division under section 52.14, no further divisions may be made under that section in respect of that period.

[Emphasis Added]

The Chamber’s Judge found that this section of the legislation was included in order to protect the judicial annuity which was integral to maintaining judicial independence.  Spousal support was terminated on the basis that the Husband had no income for spousal support purposes as there could be no double recovery.

The British Columbia Court of Appeal

The Court of Appeal overturned the ruling.  They clarified that section 52.16 of the Judges Act is not unique and that the second division is only prohibited for the same period of time.  The Husband also tried unsuccessfuly to argue that because the annuity had not physically been divided until 2010 (due to the proclamation of the legislation) that the only portion undivided was from 2010-2015. The Court of Appeal confirmed that this was a fundamental misunderstanding in the manner in which the pension was divided.  The Wife received the portion of the annuity up to 2000, with interest to when it was paid in 2010.  She did not receive anything that was accrued after 2000.  The Court of Appeal continued on to find that the rule against double-recovery is not violated by considering the portion of the Husband’s pension earned between 2000 and 2015, citing the Supreme Court of Canada’s seminal decision in Boston v. Boston, 2001 SCC 43.  

Finally, the Court of Appeal determined that spousal support should continue and that the Spousal Support Advisory Guidelines should be applied to determine the on-going quantum of support.  The Husband’s income was found to be his current annuity less the annual amount it had been reduced by the division (approximately $20,000) and CPP, and the Wife’s income from CPP and OAS plus the amount of $30,000.00 which she could reasonably generate from her assets. 

Conclusion

This case confirms that the law as it relates to “double-dipping” is often misunderstood and there must be a nuanced analysis that will likely require actuarial support in determining the “undivided” portion of an annuity or pension. 

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Case Commentary: Does the rule against “double-dipping” apply to a judicial annuity?

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