Case Commentary: Noel v. Butler, 2016 NBCA 49 – Implications for Pension Division in Common-Law Relationships

January 31, 2018

The Facts

The facts in Noel v. Butler, 2016 NBCA 49, [Noel] are not complicated.  This was a fourteen year common law relationship spanning from approximately 1998 until 2012.  Ms. Butler had been a teacher since 1985 and had pension with a commuted value of $909,286.51 as of the date of separation.  Mr. Noel was sporadically employed in IT throughout the relationship and moved from Montreal to New Brunswick for the relationship.  The couple purchased a home together in joint tenancy even though Ms. Butler paid the down payment and provided additional funds of her own for renovations.  They had no children together and were both in their late 50s at the date of separation.  When it came to Ms. Butler’s pension, the Trial Judge determined that the pension should not be divided on the basis that there was no evidence that Mr. Noel contributed in any meaningful way to Ms. Butler’s ability to work as a teacher and accumulate her pension during the course of the relationship.  The net proceeds from the jointly owned house were divided equally. Mr. Noel appealed.

Court of Appeal’s Finding

At the New Brunswick Court of Appeal, the appeal was denied.  The Court confirmed that the analysis from the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10 [Kerr], was applicable to the pension asset.  In Kerr, the Supreme Court of Canada formulated that the modern way of dealing with the division of property following the breakdown of common law relationships, where no legislation governs, is the doctrine of unjust enrichment.

Pension Legislation is a Mechanism

Mr. Noel had advanced that section 44(1) of the Pension Benefits Act, S.N.B. 1987, c. P-5.1 [Pension Benefits Act] was the authority to divide Ms. Butler’s employment pension.  Section 44(1) of the Pension Benefits Act, states:

Where a competent tribunal makes a decree, order or judgment in relation to the division of a benefit under a pension plan on the breakdown of a marriage or common-law partnership, the commuted value of the benefit shall be determined in accordance with this Act and the regulations as of the date of the breakdown of the marriage or common-law partnership and shall be divided in accordance with the decree, order or judgement of the tribunal.

The Court of Appeal for New Brunswick confirms that the Pension Benefits Act does not provide the authority to divide but simply provides the mechanism to divide.  This is consistent with the case law in other jurisdictions.  See, for example: Morash v. Morash, 2004 NSCA 20, at para. 28, and Gould v. Sandau, 2005 BCCA 190 at paras. 33-24, both of which confirm that provincial pension legislation and federal pension legislation provide the mechanics for division of a pension but not the entitlement.  The entitlement has to be grounded either in statute or common law principles.

Post-Separation Inheritance

The curious part about the decision in Noel is that the Court of Appeal supports the Trial Judge’s reasoning to have taken into account a 1.1 million dollar inheritance that Mr. Noel received post-separation in the analysis of unjust enrichment.  The context in which the Trial Judge did this was also somewhat unique.  The Trial Judge found that the Mr. Noel’s claim failed on the first two grounds of the test for an unjust enrichment (an enrichment and a corresponding deprivation) and therefore it would not be necessary to consider the third part to the test. The Trial Judge goes on to consider the third part of the test in the event he was incorrect on the finding with respect to the first two grounds.  The Trial Judge considered the equities in play given the full circumstances of the case and, it is on this point, that the Trial Judge found that the inheritance received by Mr. Noel post-separation was sufficient to deny recovery on that ground on a simple idea of fairness and what each party would be left with at the end of the relationship on the basis of what they had contributed.  The Court of Appeal affirmed the reasoning of the Trial Judge.

Costs

In a second important holding of Noel, on a cross-appeal brought by Ms. Butler wherein she sought disbursements in addition to her costs, the New Brunswick Court of Appeal clarified that it is an error of law to include disbursements in an order for costs (ex. “$2500 costs inclusive of disbursements”).  Accordingly, a party entitled to costs is also entitled to recover their disbursements on the same basis even if the Trial Judge says nothing.

Conclusion

The unique factual matrix in Noel makes it easy to distinguish yet also provides fertile and untrodden ground for new argument.  For example, Noel was distinguished in Jenkins v. James, 2017 NBBR 11where the Husband relied on Noel for the proposition that the Wife had not demonstrated any contribution to the pension or corresponding deprivation to herself.  The parties had two children and had emigrated from the UK to New Brunswick and were, the Court found, engaged in a joint family venture.  The Husband’s argument was unsuccessful.

The bottom line is that the division of property in common law relationships is not based in legislation in New Brunswick and the mechanism in the Pension Benefits Act does not provide entitlement outside the clearly defined equitable relief available through a claim for unjust enrichment.  It will always be wise to consider the full factual circumstances and financial positions of the parties before, during, and after the relationship, in order to determine any potential claim for a division of pension assets following a common law relationship.

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