An interesting case has just been released in Abitbol v. Abitbol, 2020 ONSC 4619 by Justice Hebner.
This case raises two important issues – the definition of property, which is the subject of this blog and the issue of double dipping related to pension, which is the subject of the next blog.
The question in this case is whether or not WSIB benefits and contingency fees are property or not.
The Court started off by analyzing the legislation and then, went on to analyze the case law on this subject. This part of the judgement is written in simple and easy to understand language, which I am quoting here.
Legislation -
I start with the definition of property set out in the Family Law Act, R.S.O. 1990, c. F.3, s. 4(1):
“property” means any interest, present or future, vested or contingent, in real or personal property and includes,
(a) property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,
(b) property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and
(c) in the case of a spouse’s rights under a pension plan, the imputed value, for family law purposes, of the spouse’s interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date; (“bien”)
Case law -
[24] The definition of “property” casts a wide net. It includes a tractor and construction equipment dealership business, as in Poirier v. Poirier, 2005 CanLII 38106 (ON SC), [2005] O.J. No. 4471 (S.C.), where Charbonneau J. said:
Here the dealership represents a real asset which continues not only to provide a lucrative income stream, it also continues to have a real value which can be sold, transferred or otherwise disposed. I fail to see any unfairness. Mrs. Poirier has her half of the value of the shares converted into a liquid asset earning interest and Mr. Poirier has his half of the value of the shares invested in a business earning business income. It is only the parties' respective incomes, not the divided asset, which are considered for the purpose of fixing spousal support.
[25] The definition of “property” includes a book of business of a self-employed financial advisor: see Mavis v. Mavis, 2005 CarswellOnt 1649 (S.C.).
[26] The definition of “property” includes a medical practice: see Forest v. Hill, 1991 CarswellOnt 272 (Gen. Div.).
[27] The definition of “property” includes a real estate commission, even though the transaction closed after the date of separation: see Cosentino v. Cosentino, 2015 ONSC 271.
[28] The Court of Appeal, in Lowe v. Lowe (2006), 2006 CanLII 804 (ON CA), 206 O.A.C. 293, dealt with the question of whether workers compensation payments ought to be included as “property” in the equalization calculation. The parties were married in 1984 and separated in 2003. The husband was injured in 1985 and received a permanent disability pension from WSIB in the amount of $221.15 per month for life. The Court of Appeal began with a review of the proper way to interpret the definition of “property” in the Family Law Act.
At paras. 12 – 15 the court said:
The definition of "property" in the FLA, s. 4 is admittedly broad. It includes, for example, a stream of income derived from a trust: see Brinkos v. Brinkos (1989), 1989 CanLII 4266 (ON CA), 69 O.R. (2d) 225 (Ont. C.A.). However, the definition of property is not without limits. In Pallister v. Pallister (1990), 1990 CanLII 12272 (ON SC), 29 R.F.L. (3d) 395 (Ont. Gen. Div.), at 404-405, Misener J. acknowledged the apparently “all-encompassing nature of the definition of ‘property’” but pointed out that as “property in law is simply a right or collection of rights” identified by “no single criterion or even a discrete number of criteria”, interpretation is required to contain the category of property within limits appropriate to achieve the purpose and object of the legislation as a whole:
It seems to me therefore that when the word appears in legislation defined in the broadest possible way, the limits are to be found through a consideration of the scope of that legislation, and the objects it seeks to accomplish. If the definition of the right or rights as property is consistent with the scheme of the legislation and advances its objects, then it should be so defined. If either of those attributes is absent, then, unless the right or rights under consideration fall within a category that has been legally recognized as property heretofore, it should not be so defined.
I agree with this approach. It is consistent with the “modern approach” to statutory interpretation, set out in R. Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Toronto: Butterworths, 2002) at p. 1 and adopted by the Supreme Court of Canada (see Bell ExpressVu Ltd. Partnership v. Rex, 2002 SCC 42 (CanLII), [2002] 2 S.C.R. 559 (S.C.C.) at para. 26):
the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
I agree with Misener J. that the definition of property itself must be given meaningful content and that meaningful content imposes limits on the definition of property limits apart from the specific exclusions. Misener J. held, at 405, that the wife's monthly benefits from an Armed Forces Disability Pension, found on the facts to amount to a permanent pension, were not “property” within the meaning of s. 4:
The Family Law Act purposely eschews any attempt to equalize all the assets owned at the date of separation. Rather it seeks only to equalize the assets the accumulation of which occurred during the marriage, and then only those assets that can fairly be said to bear some relationship to the partnership that the marriage is said to create. Accordingly, there is provision in Section 4(1) for the deduction of the value of property owned on the date of the marriage on the ground that that value was acquired prior to the marriage, and in Section 4(2) for the exclusion of property acquired by gift or inheritance after the date of the marriage and for the exclusion of the right to damages for personal injuries suffered after the date of the marriage, on the ground that the acquisition of that property bears no relationship to the marriage partnership.
The disability pension bore no relationship to the marriage partnership but rather arose because of a disability that impeded the recipient's capacity to earn a livelihood. It followed, reasoned Misener J., that the stream of benefits to be received post separation should not be capitalized and included as family property for purposes of equalization. The benefits would be taken into consideration with respect to spousal support, but they fell outside the category of “property” and could be distinguished from a pension earned as part of a spouse's remuneration during the marriage.
[29] The distinction in Lowe was between income and property. In this case, the income received by Abitbol PC is based on contracts between Mr. Abitbol and his clients. Although the amount payable is calculated as a percentage of WSIB benefits received by the clients, the character of the amount payable to Abitbol P.C. does not change. In this case, the contracts are akin to Accounts Receivable. They are payable under contract. They are not uncertain and they are not discretionary.
[30] The amount payable to Abitbol PC does not arise because of a disability that impeded Mr. Abitbol’s capacity to earn a livelihood, such as was the case in Lowe. It cannot be said that the acquisition of the contracts between Mr. Abitbol’s professional corporation and his clients was not acquired during the marriage or that it bears no relationship to the marriage partnership, as was the case in Lowe. The contracts were acquired by Mr. Abitbol in his business during the course of the marriage, indeed they were the entirety of Mr. Abitbol’s professional business. The monies receivable within the contracts is the business income. Given the distinction described above, although the WSIB benefits may not be “property” in the hands of Mr. Abitbol’s clients, the contingency fees owed to Mr. Abitbol are property in his hands.
Analysis –
This judgement is a very important one for the following reasons –
The judgement gives a clear categorization of what property is…this includes all types of items that are property, but at the same time, benefits from a pension are not property. The Court categorized contingency fees owed as being property. The basis for this was the difference between income and property.
Matrimonial law can be complex. Property issues are among the most complex. It takes a great deal of research, and analysis to determine what is rightfully property or is not. This takes skill, time and experience. A client needs to be have confidence in having a lawyer analyze these types of complex issues. At Shankar Law, we will analyze, research the latest trends and give you feedback on what is property or is not. You may not like what you hear from us, but at least it will be honest feedback.
At Shankar Law, we are happy to assist and guide you through whatever challenges you have in your spousal life. We work all over Ontario but primarily in three counties: Huron, Bruce, and Grey and span several cities (Southampton, Kincardine, Goderich, Wiarton, Hanover, Dundalk, Walkerton, Meaford, Markdale, Chatsworth), through our two locations in Port Elgin and in Owen Sound.