Pension Benefits on Death – Who is a “spouse”?

A recent Ontario Court of Appeal decision in Carrigan v. Carrigan deals with the issue of married versus common law spouses for the purpose of entitlement to pre-retirement death benefits under the Ontario Pension Benefits Act (“PBA”).  

Section 48(1) of the PBA entitles the spouse of a pension plan member to the value of the member’s pension where the member dies before commencement of pension payments except where the member and spouse are living separate and apart on the date of death (s. 48(3)).  If the s. 48(3) exception applies, s. 48(6) provides that the benefit goes to any beneficiary named by the member.

At the time of death in this case, the deceased was legally married to A but was living separate and apart from her.  He was living with B in a common law relationship.  The deceased had designated A and their daughters as beneficiaries of the death benefit in his pension plan.  A brought an action for a declaration that she was entitled to the deceased’s pre-retirement death benefit under s. 48 of the PBA.  B opposed, claiming the right to same as a “spouse” under s. 48(1).  The trial judge found that both the plaintiff and the defendant fell within the definition of “spouse” in s. 1 of the PBA but that only one spouse can be entitled to a member’s death benefit under s. 48(1).  She interpreted s. 48(3) of the PBA as requiring that a spouse be living with the member in order to be entitled to the death benefit and that because the deceased and A were living separate and apart at the time of death, held that B was entitled to receive the death benefit because she was a spouse and was living with the deceased at the time of his death.

The Court of Appeal overturned this decision with one of three judges dissenting.  The majority held that while both A and B fell within the definition of “spouse” under s. 1 of the PBA, the word “spouse” in s. 48 must always refer to the legally married spouse, because it makes no sense under s. 48(3) to conceive of a common law spouse living separate and apart from the member.  When s. 48(1) does not apply, there is no provision that the “spouse” of the member is entitled to the death benefit.  As there is no spousal entitlement, the member’s designated beneficiary was therefore entitled to the death benefit under s. 48(6), with the result that A and her two daughters were entitled to the death benefit as the deceased’s designated beneficiaries.

Justice LaForme dissented, holding that, as the definition of “spouse” in the PBA includes both legally married and common law spouses, to read “spouse” as having only one meaning in s. 48(3) (ie. a married spouse) would be to give “spouse” a different and more restrictive meaning under s. 48(3) than under s. 1.  He held that while A qualified as a spouse on the date of death, she was living separate and apart from the deceased on the relevant date.  As a result, s. 48(1) did not apply to her.   B was also a spouse on the date of death, and was not living separate and apart from the deceased.  Accordingly, B was not disqualified from receiving the death benefit by virtue of s. 48(3).

It is not clear if this result was intended (or even contemplated) by the Legislature.  However, if the intention is that the benefit go to a common law spouse over a named beneficiary where a married spouse is otherwise not entitled under the PBA, an ammendment to the legislation will be required.

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2 Comments to “Pension Benefits on Death – Who is a “spouse”?”

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