Bruell v. Bruell, 2010 BCSC 1992

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Bruell v. Bruell, 2010 BCSC 1992 Date: 20101214 Docket: 09-2513 Registry: Victoria Between: Norbert Niklaus Bruell Plaintiff And: Sheryl Lynne Bruell Defendant Before: The Honourable Mr. Justice Dley (appearing via teleconference) Oral Reasons for Judgment In Chambers Counsel for the Plaintiff: N. Reid Counsel for the Defendant: J. Legh Place and Date of Trial/Hearing: Victoria, B.C. December 10, 2010 Place and Date of Judgment: Victoria, B.C.

December 14, 2010 [ 1 ] THE COURT: This is an appeal from a Master’s decision dated October 22, 2010, for the respondent's application requiring the disclosure of the claimant's mortgage filed with the Royal Bank of Canada. [ 2 ] The claimant commenced this action seeking a divorce, spousal support, and the division of family assets. He also seeks to set aside a separation agreement. [ 3 ] The respondent counterclaimed for child support for their now 17-year-old daughter. [ 4 ] The parties were married in 1989 and separated in 2008. During the marriage, the respondent was the primary breadwinner.

The claimant was employed part-time and earned about $17,000 per annum. At the time of separation, the parties entered into a separation agreement. The agreement provided for the claimant the opportunity to purchase the matrimonial home. He did that with the assistance of mortgage financing of $336,000 from the Royal Bank. The documents related to that financing are central to this appeal. [ 5 ] In the hearing before the learned Master, the respondent argued that the documents within the mortgage file would disclose the claimant's income.

In order to qualify for the mortgage, it was argued that the claimant would have had to provide information relating to either his earned income or the ability to service the mortgage debt. The learned Master referred to the disclosure requirements in Rule 9-1, and then analyzed the issue at paras. 30 to 37, and I quote from the Master's decision: [30] Of course, the production of documents under the Supreme Court Family Rules is no longer governed by the so-called Peruvian Guano test.

Rather, the documents to be produced are those that could, if available, be used by any party at trial to prove or disprove a material fact. [31] As recently stated by Punnett J. in Biehl v. Strang , 2010 BCSC 1391 , “the requirement that [the] disclosure relates to a material fact limits the breadth of what is relevant”: para 16. [32] Biehl v. Strang also reaffirms the principle that discovery on the issue of credibility is not permitted. Or, put another way, credibility is not a material fact: see also Roberts v.

Sing h, 2006 BCSC 906 . [33] Thus, the question that the court must ask is whether the documents sought relate to a material fact.

[34] The issues between the parties are defined by the pleadings. Those issues include whether N.B. is entitled to spousal support and the validity of the separation agreement. [35] A material fact on the issue of spousal support would include the claimant’s capacity or ability to earn income. The medical evidence voluntarily disclosed by the claimant might prove or disprove this material fact. [36] However, the claimant’s reporting of income to a third party does not, in my view, go to a material fact at issue in the proceeding.

Rather, such reporting relates to the claimant’s truthfulness or credibility and, as the authorities provide, is not the subject of discovery. Accordingly, the application for production of records in the possession and control of the RBC is dismissed. [37] For the same reasons, the application for production of records from the unknown mortgage broker (or from the claimant regarding his application to this broker) is dismissed. [ 6 ] The respondent argues that the learned Master erred in deciding that the amount reported as income by the claimant did not go to a material fact.

The respondent argues that the Royal Bank documents relate directly to the income being earned and with respect to the claimant's ability to earn income, and those are material facts which will go to the very issue before the trial judge. [ 7 ] The respondent submits that the learned Master was clearly wrong in the determining of the Royal Bank documents being restricted to credibility only. [ 8 ] The claimant argued that the respondent has always been aware of his earnings and his ability to generate income.

He says that the respondent was complicit in preparing documentation that inflated his income during their married years. He submits that the application is simply intended to intimidate him and goes beyond the bounds of disclosure as contemplated by Rule 9-1. [ 9 ] The standard of review is whether the decision was clearly wrong. The narrow issue is whether the Royal Bank documents would form a material fact that would relate to a matter in question in this family law case. [ 10 ] The claimant's capacity or ability to earn an income is a central issue.

It will go to determining whether the claimant is entitled to or the quantum of spousal support. It will also be determinative of the amount of child support. [ 11 ] The ability of the claimant to service a $336,000 mortgage on an annual income of $17,000 will be a highlight of the evidence before the trial judge. The realities of everyday commerce would indicate that a bank would need to be satisfied that a borrower has the capacity to service his debts. Representations made by the claimant would outline his financial wherewithal as it related to his ability to make the mortgage payment.

Those representations go beyond mere credibility as contemplated in the Biehl decision of Mr. Justice Punnett. [ 12 ] The decision of Madam Justice Kirkpatrick (as she then was), in MacDonald v. MacDonald , [1995] B.C.J. No. 786 , is persuasive authority. In paragraph 10 of the decision, the court said the following: Applications such as this are difficult enough without the added burden of having to determine issues in an informational vacuum. The parties should be encouraged to fully disclose their financial circumstances.

Not only does full disclosure promote the possibility of a negotiated agreement by the parties, but also, particularly where the maintenance of children is involved, the court must ensure all relevant information is available to assist in achieving a result which best meets the needs of the children. That was the obvious purpose in providing for Form 89. However, it is evident in certain cases that the parties' financial circumstances are not straightforward, simple, or routine. In those cases, the discovery procedures contained in the Rules may, of necessity, be invoked. [ 13 ] The court proceeded to order Mr.

MacDonald to produce any loan applications provided to mortgagees of the properties listed in his Form 89. [ 14 ] In my respectful view, the documents held by the Royal Bank would relate directly to the claimant's income and assets. Income and assets are material facts to be considered with respect to the issues of spousal and child support. Those facts would also be relevant to the issue of setting aside a separation agreement and for any property issues. The disclosure of the documents will likely be of assistance to prove or disprove the claimant's income.

That falls within the class of documents referred to in Rule 9-1(1)(i). [ 15 ] While the Royal Bank documents will undoubtedly have some utility in issues of truthfulness, they are not restricted to credibility matters alone. Accordingly, I conclude that the Royal Bank documents are material facts which must be disclosed. Likewise, the records held by any mortgage broker used by the claimant for the mortgage on 2428 Valleyview Place, Sooke, British Columbia, must also be disclosed. [ 16 ] In the result, the appeal is allowed.

The order of production shall be in accordance with the application as it was filed on September 23, 2010. [ 17 ] The respondent shall be awarded costs of this appeal in any event of the cause. “S.D. Dley J.” DLEY J.