A panel of three judges found that a proposed amendment to the lawsuit's statement of claim, which would have allowed Williams' pension to be targeted, was "premature."
Williams, once a rising star in the Canadian Forces, was sentenced to life in prison in October 2010 after pleading guilty to the murders of Jessica Lloyd and Cpl. Marie-France Comeau.
In early August, he reached an out-of-court settlement with some of his victims, but a suit by sexual assault victim Laurie Massicotte remains active.
Massicotte, who has chosen to reveal her identity and speak publicly about her ordeal, filed a nearly $7-million lawsuit in late 2011 against Williams, his wife and the province of Ontario.
In her claim she said the attack against her left her fearful, humiliated, depressed, suicidal, unable to function in society and she will require extensive therapy.
Massicotte made an effort to amend her statement of claim in November 2013 to go after Williams' pension for potential damages, but the matter was turned down by a lower court, at which point she took the issue to the appeal court.
Her lawyer argued that a section of the Pension Act violated part of Massicotte's Charter rights by depriving her the right to be compensated for physical and psychological losses. He also argued that it denied her the ability to acquire the assistance and amenities required to improve her life, liberty and security of person.
"We're satisfied that we need access to pension to cover the damages that we believe will be awarded," Massicotte's lawyer, Philip Healey, told the appeal court on Monday. "We have a plaintiff here who went through a horrendous sexual assault, she's a young woman, she's 52, she probably won't be able to work again."
Williams' lawyer, Pasquale Santini, argued that allowing the pension-related amendment would delay the progress of the case.
He said it was an issue Massicotte could advance later, once she had received a judgement.
"What consequence will it have to inject these arguments into these issues? There's only one, it will lead to delay," he said in court.
After hearing arguments on both sides, the appeal court panel agreed with the earlier decision on the pension matter.
"The motion judge denied leave on the basis that the amendments would complicate and lengthen proceedings and constitute an impediment to time and efficient disposition of the issues as currently framed," said Justice William Hourigan.
"We see no basis to interfere with the motion judge's conclusion."
The panel also found it was too soon to deal with the matter of whether William's pension ought to be targeted and suggested the federal government was the party that ought to be targeted.
"The issue of whether Mr. Williams' pension is exigible does not arise until after the final determination of the issues as currently pleaded," Hourigan said. "In that context, if warranted, it will be open for the appellant to assert a Charter argument."
The panel of judges did however allow Massicotte to amend her statement of claim to allege that the province of Ontario violated her charter rights to security and equality when police investigated her assault in a manner "which placed the value of the criminal investigation above their duty to protect" her.
The amendment to the statement of claim alleged police chose not to warn potential victims like Massicotte. It also alleges police failed to expend an adequate degree of energy and resources to apprehend Williams. The allegations have not been proven in court.
Massicotte's lawyer called Monday's ruling a "divided success."