Family Law: Dual spouses case a reminder to designate pension beneficiary

An important but perplexing decision recently came out of the Court of Appeal for Ontario interpreting the definition of spouse under s. 48 of Ontario’s recently amended Pension Benefits Act.

In Carrigan v. Carrigan Estate, Ronald Carrigan passed away leaving behind his current common law spouse, Jennifer Quinn, and his wife, Melodee Carrigan, who he had separated from approximately a decade ago but never divorced. Melodee had been living in the matrimonial home right up until her husband’s death and he had been paying her living expenses since their separation. Melodee was also the executrix of his estate and she and their two children were named beneficiaries under Ronald’s pension plan at the time of his death.

The only issue was determining who was Ronald’s spouse according to the act in order to decide who would receive his lump-sum pension benefit.

The trial judge held that Quinn was his spouse for the purposes of receiving the pension benefit because she was in a spousal relationship with him at the time of death and he and Melodee, while still married, had separated.

On appeal, Justice Russell Juriansz, with concurring reasons by Justice Gloria Epstein and a dissent from Justice Harry LaForme, held that neither woman qualified under the definition of spouse for the purposes of the Pension Benefits Act provisions. Accordingly, because Melodee was the named beneficiary, she was entitled to receive the pension along with the two children.

The act defines spouse as either of two persons who are married to each other or are not married to each other but are living together in a conjugal relationship continuously for a period of not less than three years. Clearly, the act allows a common law spouse living with the plan member at the time of death to receive the pension. But a dual spouse situation clouds the issue.

Subsection 48(1) of the act provides that if the member dies, the spouse on the date of death is entitled to receive a lump-sum payment equal to the commuted value of the deferred pension. This is where the trouble begins as subsection 48(3) provides that subsections 1 and 2 “do not apply where the member, former member or retired member and his or her spouse are living separate and apart on the date of death.”

Finally, subsection 48(6) allows members to designate a beneficiary if they didn’t have a spouse or were living separate and apart from their spouse at the time of death.

Juriansz concluded that in a case where there’s one married spouse (albeit separated from the member) and a common law spouse, neither person, by virtue of subsection 48(3), can be a spouse for purposes of the act.

Therefore, the designated beneficiary will get the benefit because subsection 48(3) could never apply to a common law spouse. In order to fit the definition of spouse, the common law couple can’t have separated because the law defines a common law spouse as someone who is, not was, living with the member at the time of death.

Therefore, if both married and common law spouses exist, given that subsection 3 can only apply to a married person, once you have a dual spouse situation and the married couple has separated, subsections 1 and 2 of s. 48 have no applicability at all and the benefit goes to the designated beneficiary.

If we alter the facts of the case somewhat and say that the member had one common law spouse he was living with and a second common law spouse he had recently separated from, the one he lives with would get the pension. Why should this change if there exists a married but separated spouse, particularly if she also loses the pension by virtue of the separation?

Or take another situation in which the plan member was married to spouse No. 1 when he became a member of the pension plan and designated her as the beneficiary. The member and spouse No. 1 later divorce. The member marries spouse No. 2 and they later separate but don’t divorce. The member then enters into a common law relationship with spouse No. 3 and dies later on. On these facts, spouses No. 2 and 3 don’t get the benefit simply because the plan member and his married spouse had separated at the time of death, which rendered subsections 1 and 2 inoperable to anyone. Instead, spouse No. 1, who the plan member may have had no relationship with in decades, gets the pension benefit. It’s a seemingly odd result.

It will be interesting to see if there’s any legislative effort to clarify the law on this issue. I encourage lawyers to read this case as the ultimate point for our purposes at present is to tell our clients to always designate a beneficiary of their pension plans and to remain mindful of who that person is.

Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O’Brien Payne LLP in Ottawa. She can be reached at [email protected].

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