Air Canada Ordered to Comply to Pension Legislation – Former Spouses

Family Law

For 16 years, since pension splitting legislation for the benefit of former spouses was introduced in British Columbia, Air Canada has refused to comply with the legislation. Ex spouses of Air Canada pilots, and other employees, have had to rely on the good will of their former spouses to comply with Court Orders requiring them to pay their ex spouse a share of the pension. In some cases, after the death of the pension recipient, the ex spouse has even had to rely on a new spouse to pay them a portion of survivor’s benefits.

Air Canada has been remarkably unconcerned with the rights of ex spouses. It claims that Air Canada employees’ pensions are not technically “ pensions” and are not subject to either Federal or Provincial pension splitting legislation. It says that it can set internal policies requiring ex spouses to do complicated and expensive actuarial calculations and draft specialized Court Orders to even get a share of the employees’ pensions. It also says that whether or not employees and former employees comply with their court ordered obligations to divide pensions, and whatever the problems that former spouses have collecting what the Court ordered they were entitled to, is not relevant to Air Canada’s legal obligations. On those and other grounds, Air Canada has simply refused to comply with standard BC court orders, that other employers in BC routinely accept, to divide employees’ pensions at source.

In 2009, a Court in Alberta ruled that Air Canada was wrong and that it was legally required to divide a certain pension at source. Lindsay Kenney partner, Angela Thiele, acting for the ex spouse of an Air Canada pilot who was not being paid a court ordered amount by her ex spouse, applied to BC Supreme Court for an Order that Air Canada divide the relevant pension and pay her share directly to her. Air Canada opposed and argued that no such Order should be made.

On August 25th, 2011, the Honorable Mr. Justice Savage issued Reasons for Judgment and ordered Air Canada to divide the pension at source. His Lordship found that Air Canada’s pension was subject to the pension splitting provisions of the Family Relations Act and that Air Canada’s internal administrative policies, “add significant costs and complexity, and difficulty, to the litigating parties.” Ms Thiele echoed the Court’s concerns. She said that, in her opinion, “This case is a major victory for the ex spouses of Air Canada employees and serves notice to Air Canada and other Federal employers that they are not immune to the laws governing the pension rights of ex spouses. For years, Air Canada’s refusal to divide pensions at source has caused ex spouses, primarily ex wives, to incur significant expenses that shouldn’t have been necessary. In some cases, because of the refusal to divide the pension at source, the payor has managed to avoid payment entirely. I hope that now, with Courts in two provinces holding that Air Canada is subject to both Federal and Provincial pension splitting legislation, that will become a thing of the past.”

Angela Thiele
Partner in Family and Matrimonial Law and Litigation
Lindsay Kenney LLP – Vancouver Office