Other Canada Pension Plan (CPP)

Decision

[1] The appeal is allowed.

[2] The Appellant, J. B., is entitled to a reversal of the Division of Unadjusted Pensionable Earnings (“credit split”, or “DUPE”). The Minister granted the credit split in July 2021. This credit split was with respect to the relevant Canada Pension Plan (“CPP”) contributions of the Appellant and the late B. M. (“B. M.”). This decision explains why I am allowing the appeal.

Overview

[3] The Appellant is 63 years old. She started living with B. M. in February 1979. She married B. M. in October 1980, but they separated in September 1993. They signed a Separation Agreement on December 10, 1993 (the “December 1993 Agreement”). A divorce order was issued on September 27, 1994.^{Footnote 1}

[4] B. M. died on May 19, 2020.^{Footnote 2} His estate is the Added Party in this appeal. D. L. (“D. L.”) appeared at the hearing as the Estate’s representative.

[5] In October 2020, the Appellant applied for a credit split with respect to B. M.^{Footnote 3} If granted, the credit split would evenly split the CPP credits earned during her cohabitation with B. M. Without the credit split, the credits would stay with the person who earned them. The Minister granted the application and performed the credit split. As the Appellant had more earnings than B. M. during their relationship, the credit split resulted in a lower CPP retirement pension for the Appellant.^{Footnote 4}

[6] The Appellant asked the Minister to reconsider the credit split. She wanted to have it reversed, so she would get her original retirement pension amount. She said she didn’t know that the credit split could reduce her CPP pension. She thought her CPP pension could only improve or stay the same. However, the Minister upheld its original decision. As a result, the Appellant appealed to the Tribunal’s General Division.

[7] The Appellant says she received bad advice from the Minister. She also said that the closure of Service Canada Centres during the pandemic led her to make the wrong decision about applying for the credit split. She was unable to talk to anybody “in person.” She also said that the credit split was unfair. She had worked for 47 years and now had to give up a substantial part of her CPP retirement pension. Finally, the Appellant said neither she nor B. M. expected to get each other’s pensions. She produced the December 1993 Agreement as evidence of this intention. She said the December 1993 Agreement explicitly prevents the credit split.  

[8] The Minister says that its agents were always available for discussion. The Minister said the decision to apply for the credit split was the Appellant’s alone. The Minister adds that the December 1993 Agreement did not contain a clause preventing the credit split. The December 1993 Agreement did not explicitly say that there could be no credit split. Nor did it say that the parties had waived their right to apply for a credit split. As a result, the Minister says it was compelled to perform the credit split. Further, the Minister says the credit split can’t be withdrawn.

What the Appellant must prove

[9] For the Appellant to succeed, she must prove that the Minister should not have performed the credit split.

Matters I have to consider first

I didn’t accept the document sent in by the Appellant after the hearing

[10] As set out in the Tribunal’s letter of December 8, 2022 (GD7-1), D. L. (acting for the Added Party) had technical issues at the videoconference hearing. She could not get her microphone to work. As a result, she could not make oral submissions. This meant she was unable to participate fully. To ensure procedural fairness, I gave D. L. until December 22, 2022, to make written submissions on the December 1993 Agreement and the applicable parts of the CPP legislation only. D. L. did not file anything by that deadline.

[11] However, the Appellant filed additional submissions on December 14, 2022. In the Tribunal’s letter of December 15, 2022, I explained why I did not accept the Appellant’s additional submissions. Both before and during the hearing, she’d already had a full opportunity to present any additional evidence or submissions. She had taken advantage of that opportunity. She also responded to the Minister’s submissions at the hearing.

[12] In the December 15, 2022, letter, I added that the Appellant would have a chance to respond to any post-hearing submission by the Added Party. I said most or all of the Appellant’s post-hearing submission consisted of information she already gave at (or before) the hearing. Finally, her post-hearing submission also focused on the erroneous advice issue. As I explain later in this decision, that issue is outside the Tribunal’s jurisdiction.

[13] The Appellant’s post-hearing submission was refused because she already had many opportunities to make it before and during the hearing. However, her post-hearing submission could also be refused on the basis that it was not relevant.     

Reasons for my decision

[14] The underlying facts of this appeal are not in dispute. The Appellant married B. M. on October 24, 1980. However, the Appellant started living with B. M. before their marriage. They lived together from February 10, 1979, until their separation on September 5, 1993. They divorced on September 27, 1994. They signed a separation agreement on December 10, 1993. 

Should the credit split be maintained?

[15] For the reasons given below, I find that the credit split should not be maintained.

General obligation to perform the credit split

[16] The Canada Pension Plan governs credit splits. This legislation says the Minister shall perform a credit split when it receives a copy of the divorce judgment and the “prescribed information.”^{Footnote 5} In this case, the Minister had a copy of the divorce judgment and the prescribed information.^{Footnote 6} The Appellant did not provide the Minister with a copy of the December 1993 Agreement, so the Minister couldn’t consider it in its previous decisions. However, that agreement was later filed with the Tribunal. As a result, I have considered that agreement in making this decision.

[17] The mandatory credit split is usually subject only to the exceptions set out in the Canada Pension Plan. The potentially applicable exceptions in this case are the “Minister’s Discretion” and “Spousal Agreement” exceptions.^{Footnote 7} I will look at each of these. 

The “Minister’s Discretion” exception

[18] The Minister may refuse to make the credit split if it would decrease both benefits.^{Footnote 8} However, in this case, I see no evidence that B. M.’s CPP pension or credits decreased. Nor does anybody suggest that B. M.’s CPP pension or credits decreased due to the credit split. This exception does not apply.

The “Spousal Agreement” exception

[19] The December 1993 Agreement may qualify for the Spousal Agreement exception.

[20] For written agreements or court orders made after June 4, 1986, the Minister cannot make a credit split if the following four conditions are all met:

1. (a) The written agreement contains a provision that specifically mentions the Canada Pension Plan and indicates the intentions of the persons that there be no credit split under section 55 or 55.1,
2. (b) That provision is expressly permitted under the provincial law that governs the agreement,
3. (c) The agreement was entered into before the divorce or nullity judgment, and
4. (d) The agreement has not been invalidated by a court order.^{Footnote 9}

[21] The last three conditions are clearly met for the December 1993 Agreement. The December 1993 Agreement was made in British Columbia. British Columbia is one of the provinces which permits the Spousal Agreement exception.^{Footnote 10} The December 1993 Agreement preceded the September 1994 divorce order. I see no evidence that a later court order invalidated the December 1993 Agreement.^{Footnote 11} The parties never suggested that any of the last three conditions were unmet.

[22] It is less clear that the December 1993 Agreement met the first condition. The Appellant says the agreement met that condition. The Minister says it didn’t. To decide which approach is correct, I must consider the wording and context of the December 1993 Agreement.

Does the December 1993 Agreement wording qualify for the Spousal Agreement Exception?

[23] For the reasons set out below, I find that the December 1993 Agreement meets the requirements set out in the Spousal Agreement Exception. This means that the Minister must reverse the credit split that was performed in July 2021.

[24] The December 1993 Agreement’s only reference to the Canada Pension Plan is in paragraph 14. This paragraph has a heading of “Bank Accounts, Savings and Pensions.” It says:

14. Except as elsewhere in this Agreement provided, the Husband and Wife shall each keep his or her own monies, savings, investments, insurance, pensions or the like as his or her sole property and without limiting the generality of the foregoing, each of the parties hereto shall keep any and all annuities, or pensions, including Canada Pension Plans, registered homeowner savings program deposits and retirement savings plans of any nature whatsoever that each has or will have in her or her own name as the case may be.

[25] This clause clearly mentions the Canada Pension Plan. The question is whether it indicates the parties’ intention that there be no credit split under section 55 or 55.1.

Review of relevant decisions

[26] The Tribunal and the Pension Appeals Board have considered similar cases. In a 2020 decision called “SJ”, the Tribunal’s Appeal Division refused to reverse a credit split because of a spousal agreement. The key provision in the SJ agreement said the “benefits paid to each party under the Canada Pension Plan and the Old Age Security pension are their own individual property.” The Appeal Division said this did not indicate an intention to prevent a credit split.^{Footnote 12}

[27] In SJ, the Tribunal said the spousal agreement merely dictated that the monthly CPP payments (as opposed to the pensions themselves) must remain the property of the person to whom they were paid. Neither spouse had to pay any portion of their monthly benefits to the other. The Tribunal based this conclusion on the “plain meaning” of the paragraph in question. The Tribunal also found that the parties had not turned their minds to the issue of whether a credit split should occur.^{Footnote 13}

[28] The SJ decision accepted that a spousal agreement didn’t have to “specifically mention that there be no DUPE.”^{Footnote 14} Decisions like “Osadchuk”^{Footnote 15} (from the Pension Appeals Board) and “ML”^{Footnote 16} (from the Tribunal’s Appeal Division) reinforce that principle. But the SJ decision then said such decisions were fact-dependent.^{Footnote 17} I will now look at those decisions and how they differed from the situation in SJ.

[29] In ML, the key provision in the spousal agreement was more detailed. It said:

“Subject to [paragraphs 5-9], the Husband and the Wife acknowledge that all assets including any business, monies, savings, investments, pensions (including the Canada Pension Plan and the Wife’s Altamira Group R.S.P.), real property, insurance, or the like in the name and/or possession of the Wife shall be the sole and exclusive property of the Wife with the Husband having no interest whatsoever in and to the same...”^{Footnote 18}

[30] The ML spousal agreement then repeated the same text for the property of the husband. The ML decision relied in part on the Osadchuk decision.

[31] In Osadchuk, the spousal agreement said:

“The wife agrees to release the Husband from any claim which she may have against the Husband’s pension plans, namely the Alcan Pension Plan and the Canada Pension Plan…”^{Footnote 19}

[32] In ML and Osadchuk, the decision makers found that the failure to specifically mention a credit split or DUPE was not fatal. The spousal agreements were still clear that the parties did not intend to have a credit split. The surrounding language was sufficient to discern that intention.^{Footnote 20}

Applying the law and past decisions to this case

[33] The decisions in SJ, ML and Osadchuk are not binding on the Tribunal. However, they can have persuasive value. As noted, each says that a spousal agreement can show the necessary intention even if there is no explicit reference to a credit split or a DUPE. I accept this principle. I now need to look at the December 1993 Agreement, to decide whether the Appellant and B. M. did not intend to allow a CPP credit split.

[34] I asked the Appellant about the talks that took place when the December 1993 Agreement was drafted and signed. She did not recall any specific discussion of a credit split or DUPE. But she also said that “we each figured we would have our own pensions ... we’d move on from there.”

[35] This account is supported by the fact that she did not apply for a credit split for nearly 27 years after the December 1993 Agreement. Even then, her application was only prompted by a friend’s suggestion that she might be entitled to part of B. M.’s pension after he died.^{Footnote 21} This suggests she personally thought that the December 1993 Agreement precluded any pension split.  

[36] Lawyers represented the Appellant and B. M. when the December 1993 Agreement was drafted and signed. However, the SJ decision affirmed that the presence of counsel does not necessarily mean that they negotiated or considered the credit split issue. In SJ, the Tribunal considered the quality of drafting in the spousal agreement.^{Footnote 22} While the December 1993 Agreement could have been improved by a specific reference to a credit split, it was still 11 pages long and relatively thorough.^{Footnote 23}  

[37] In particular, paragraph 14 of the December 1993 Agreement clearly shows that the Appellant and B. M. wanted to keep the balance of their assets (including their “Canada Pension Plans”) to themselves. The only financial assets not protected by this clause were set out elsewhere in the December 1993 Agreement.

[38] The rest of the December 1993 Agreement shows that the Appellant and B. M. had carefully turned their minds to the division of their possessions. This care extended to smaller assets such as B. M.’s gun collection. The agreement also dealt clearly with a 1987 Hyundai car and a 1979 Ford truck.^{Footnote 24} But, other than paragraph 14, I see no other reference to the Canada Pension Plan or a credit split.

[39] I turn now to the key clause in paragraph 14 of the December 1993 Agreement. It refers to the “Canada Pension Plans.” This clause also refers to “registered homeowner savings program deposits and retirement savings plans of any nature whatsoever”. This emphasizes an important distinction from SJ. By referring to “deposits” rather than payments or dividends, the agreement shows that the parties wanted to protect their contributions to the various plans. As that same clause also refers to the Canada Pension Plan, it is reasonable to infer that the parties wanted this protection to apply to their CPP contributions too.

[40] I have considered the text of the December 1993 Agreement, the Appellant’s understanding of the agreement, and the intention of the parties to move on from their separation. I find the December 1993 Agreement indicates that the Appellant and B. M. did not want a CPP credit split in the future. This is consistent with the approach taken in the ML and Osadchuk decisions.

[41] While the SJ decision points to a different outcome, it can be distinguished from the Appellant’s situation. The key provision in SJ lacked detail. As noted, it also referred to payments under the CPP rather than the underlying pension itself. The SJ decision placed a lot of emphasis on this point.^{Footnote 25} The SJ situation also involved an ongoing pension sharing arrangement.^{Footnote 26} This is very different from the Appellant’s situation.

The erroneous advice issue

[42] As I have found that the December 1993 Agreement can reverse the credit split in this case, I do not need to consider whether the Appellant received erroneous advice from the Minister. However, the issue of erroneous advice is outside the Tribunal’s jurisdiction anyway.^{Footnote 27}

Conclusion

[43] I find that the December 1993 Agreement prevents a credit split on the relevant CPP contributions of B. M. and the Appellant. The July 2021 credit split must therefore be reversed.

[44] This means the appeal is allowed.