Executive Summary: Key Legal and Evidentiary Issues

• Earle Douglas Pasquill was ordered to pay, jointly and severally with others, $36.7 million in monetary sanctions for perpetrating one of the largest frauds on capital markets in British Columbia.

• Payments from Pasquill's life income fund (LIF) accounts were ordered forfeited to the BC Securities Commission, and the central dispute is whether those payments are exempt from attachment under s. 70(1) of the Pension Benefits Standards Act.

• The Court of Appeal determined that LIF payments to retirees cannot be characterized as "benefits" or "money transferred under Division 7" within the meaning of s. 70(1), removing the exemption shield Pasquill relied upon.

• A prior 2021 BCCA decision overturning a preservation order did not settle whether payments from LIF accounts are protected, as that earlier case addressed the contents of the accounts as a whole.

• Legislative amendments in 2023 to s. 70 of the PBSA specifically allowed pension payments to be attached by Securities Act preservation or forfeiture orders, or in furtherance of any other process to enforce an order under the Securities Act.

• The Commission's cross appeal seeking a receiver was dismissed because the broad powers requested extended beyond the authority to attach payments from the LIF accounts, and no evidence showed the existing forfeiture order would be ineffective.

The facts of the case

Earle Douglas Pasquill worked for Eaton's until 1994, during which time he accrued pension entitlements. Upon leaving, the value of his pension was transferred to two locked-in RRSP accounts (also known as locked-in retirement accounts or LIRAs). When Pasquill reached the age of 71, those locked-in RRSP accounts were automatically transferred to LIF accounts as required by the Income Tax Act. As of March 31, 2024, Pasquill held $551,349.63 in his LIF accounts and was receiving regular payments from them in accordance with the applicable regulations.

In 2014, Pasquill was found to have perpetrated one of the largest frauds on capital markets in British Columbia, in violation of the Securities Act, R.S.B.C. 1996, c. 418. He was ordered to pay, jointly and severally with others, $36.7 million in monetary sanctions. The Commission's decision imposing the sanctions was upheld by the Court of Appeal in Poonian v. British Columbia Securities Commission, 2017 BCCA 207. The sanction orders were registered as orders of the Supreme Court of British Columbia in 2015. To date, Pasquill has made no payment in satisfaction of the orders.

The legislative landscape and prior proceedings

In 2020, the Court Order Enforcement Act, R.S.B.C. 1996, c. 78 was amended. Under the legislation, registered plans, including LIFs, are exempt from any enforcement process, but the amendments provided that this exemption would no longer apply to enforcement proceedings arising from an order made under the Securities Act. Upon the amendments coming into force, the Commission made a preservation order for the purpose of freezing Pasquill's LIF accounts and also filed a petition in the Supreme Court of British Columbia seeking forfeiture of the funds in the accounts. Pasquill appealed the preservation order, arguing that LIFs remained exempt under s. 70 of the Pension Benefits Standards Act (PBSA), which exempts certain funds from execution, seizure, or attachment. Notably, the legislation at the time contained an exception for certain orders made under the Family Maintenance Enforcement Act, but not for orders made under the Securities Act. In Pasquill v. British Columbia (Securities Commission), 2021 BCCA 424, the Court of Appeal overturned the preservation order, holding that it fell outside the Commission's statutory authority. As a result, the preservation order was revoked and the Commission discontinued its petition seeking forfeiture of the funds in the LIF accounts.

The 2023 amendments and the Commission's renewed application

In 2023, s. 70 of the PBSA was amended such that "any payment in the series of payments that constitutes a pension" could be attached "by a preservation order or a forfeiture order under Part 18.1 of the Securities Act" or "in furtherance of any other process to enforce an order under the Securities Act." In February 2024, the Commission sought the orders that are the subject of this appeal. First, it sought an order pursuant to s. 164.12 of the Securities Act and s. 70(4) and (4.1) of the PBSA that any payment, return, or withdrawal payable to Pasquill from his LIF accounts be forfeited. Second, the Commission sought the appointment of a receiver with powers to exercise all of Pasquill's rights and privileges in relation to the LIF accounts, to withdraw the maximum amounts payable from the accounts, and to remit those payments to the Commission.

The lower court decision

The chambers judge granted the forfeiture order, concluding that the payments from the LIF accounts could be characterized as "any payment in the series of payments that constitutes a pension," and were therefore captured by s. 70(4.1) of the PBSA. He declined to order the appointment of a receiver, finding no evidence that the forfeiture order against the holder of the LIF accounts would be ineffective.

The appeal: whether s. 70(1) protects LIF payments

On appeal, Pasquill argued that the chambers judge erred in his interpretation of the PBSA. His position was that, under the PBSA, a LIF is not a "pension," such that s. 70(4.1)(a) does not apply. During the hearing, the Court of Appeal identified a more fundamental question: whether payments from a LIF account fall within the scope of s. 70(1) at all. Pasquill advanced two arguments. First, he contended that the payments are exempt as "money transferred under Division 7" under s. 70(1)(c)(ii). The Court rejected this, holding that Division 7 addresses the transfer of the commuted value of benefits by a member of a pension plan, including into another pension plan or prescribed vehicle. Section 88, which addresses how a transfer may be made, clearly provides that the default is a transfer in full at one time. The series of payments being made from the LIF accounts to Pasquill cannot be characterized as transfers under Division 7.

Second, Pasquill argued that LIF payments are "benefits" under s. 70(1)(a). The Court noted that the term "benefit" is defined in s. 1(1) of the PBSA in relation to a pension plan, meaning a pension or other monetary amount that a person is or may become entitled to receive under the plan. The Court found that the statutory text of s. 70 does not lend itself to such a liberal reading of "benefits," observing that the Legislature has explicitly defined the term and the statute alone uses the word "benefit" nearly 300 times. The Court further held that the approach proposed by the appellant would render s. 70(1)(a) amorphous and open-ended, as there would be no evident basis to limit what might constitute a "benefit" under the section, creating uncertainty inconsistent with the role of s. 70 in the overall scheme of the PBSA. Even accepting that the source of funds in a LIF is the "commuted value of benefits" from a pension plan, the Court held there was no basis to conclude that the funds in a LIF would maintain their character as "benefits" to such an extent that payments from a LIF to a retiree would be "benefits" as defined in s. 1(1) of the PBSA.

The Court acknowledged that its interpretation puts payments to retirees like Pasquill on a different footing only because their pension plans were converted into LIFs for reasons beyond their control, and that this is at odds with the other protections afforded to LIFs. However, the Court noted that the interpretation being put forward by the appellant would give him greater protection than he would have had if the payments were coming directly from a pension plan. Ultimately, the Court stated it is not its role to draft legislation and that it is up to the Legislature to decide whether LIF holders should be placed on the same footing as pensioners.

The cross appeal: the receiver question

On the cross appeal, the Commission alleged that the chambers judge erred in declining to appoint a receiver under s. 179.1(1) of the Securities Act. The Commission had sought a receiver with express powers to exercise all of Pasquill's rights and privileges over the LIF accounts, withdraw the maximum amounts payable, receive and hold all payments, remit funds to the Commission, and exercise all incidental powers necessary to hold and manage the accounts. The Court of Appeal found that the appointment of a receiver with the ability to receive payments and remit them to the Commission would add nothing to the efficacy of the forfeiture order. As noted by the chambers judge and conceded by counsel for the Commission on appeal, there was no evidence that Canaccord Genuity Corp., the LIF issuer, would not comply with the forfeiture order. The Court further held that the powers the Commission sought to have granted to a receiver extended well beyond the authority to attach payments from the LIF accounts, as the Commission explicitly sought to have the receiver take control of the accounts to maximize the amounts withdrawn. The minimum and maximum amounts payable from a LIF are set by regulation, and the Court noted that should the Legislature have intended that maximum payments be made in circumstances where they are attached, it could have done so.

The ruling and outcome

The Court of Appeal, in a unanimous decision written by Justice Edelmann and concurred in by Justices Griffin and Warren, dismissed both the appeal and the cross appeal. The appeal was dismissed on the basis that s. 70(1) of the PBSA, as currently drafted, does not apply to the payments made from Pasquill's LIF accounts, meaning those payments are not exempt from attachment. The forfeiture order requiring that any payment from the LIF accounts be directed to the BC Securities Commission was upheld. The cross appeal was dismissed because the powers the Commission sought to have granted to the receiver extended beyond the authority to attach payments from the LIF accounts, and there was no basis to conclude that the forfeiture order as it stands would not be effective in securing those payments. The BC Securities Commission was the successful party in maintaining the forfeiture order over Pasquill's LIF payments toward the $36.7 million sanction. No specific dollar amount was awarded or ordered on appeal; the forfeiture applies to any payment from the LIF accounts, the amounts of which are governed by regulatory minimums and maximums.