Nelson v. Nelson, 2013 BCSC 1498

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Nelson v. Nelson, 2013 BCSC 1498 Date: 20130819 Docket: 10-2873 Registry: Victoria Between: Marie Pauline Alila Nelson also known as Marie Pauline Alila Richard Claimant And: Robert Ross Nelson Respondent Before: Master Bouck Reasons for Judgment Counsel for the Claimant: B.J. Kitzke Counsel for Respondent: G.M. Lidstone Place and Date of Hearing: Victoria, B.C. July 23, 2013 Place and Date of Judgment: Victoria, B.C.

August 19, 2013 The Application [ 1 ] This family law proceeding concerns the division of relatively significant family assets as well as the quantum and duration of spousal support. [ 2 ] The claimant believes that the respondent is not fully disclosing all of the assets under his control and might be underreporting income.

The respondent rejects these suggestions and says that he has provided documents and information over and above that which is required to resolve the action. [ 3 ] The claimant seeks a variety of interim orders, including that: a. the respondent’s personal corporation be added as a party; b. the Bank of Nova Scotia provide directly to the claimant historical and current banking records for the joint and individual accounts of each party as well as the respondent’s personal corporation; and c. the respondent produce various banking records verifying the use of monies received upon his retirement (but before separation). [ 4 ] The respondent has now produced much of the documentation sought in the notice of application.

The relief sought in paragraphs 4 a., b., d., e. and 5 c., 6, 7 and 9 through 11 of the notice of application was not pursued. [ 5 ] The Bank of Nova Scotia did not file a response to the application and presumably takes no issue with producing the requested records if so ordered. The notice of application does not address the costs of production. [ 6 ] Following submissions, I made certain orders including that the personal corporation be added as a party and the notice of family claim be amended accordingly. [ 7 ] I reserved judgment on the following orders sought: 3.

The Bank of Nova Scotia also known as Scotiabank be directed to provide to the Claimant any and all information, including bank records, bank statements, debit memos, photocopies, account information and any other documentation or information it has with respect to accounts in the names of the Claimant, the Respondent, the Respondent’s professional company, Ross Nelson Profession Corporation, or any joint accounts in one or more of the above named parties. 4. The Respondent provide to counsel for the Claimant the following documents within 30 days of an Order of this Court:

…. c. Copies of all of the Bank of Nova Scotia bank statements for the account #0156008524 from January 1, 2007; 5. The Respondent provide to counsel for the Claimant the following documents within 30 days of an Order of this Court: a. Bank statements showing when and where the sum of $129,585 was deposited, which was paid as profit distribution following the Respondent’s retirement ; b.

Bank statement showing where and when the sum of $230,674 was deposited, which was paid as profit distribution following the Respondent’s retirement and was reported in 2009; [ 8 ] The respondent’s position with respect to these outstanding matters is that either the documentation has been produced or is available to the claimant as a joint account holder; the requests are overly broad or irrelevant; or, in any event, the information is more properly pursued at the respondent’s examination for discovery.

Background Facts [ 9 ] The claimant and respondent had been married for thirty years when they formally separated in 2010. [ 10 ] Mr. Nelson is a chartered accountant and formerly a partner with Deloitte and Touche LLP (“Deloitte”). [ 11 ] Ms. Richard is a registered nurse by training but has not worked in that field since 2005. For the last ten years or so of the marriage, Ms. Richard took on the role as bookkeeper for the respondent’s personal corporation and most, if not all, family financial holdings. [ 12 ] The parties enjoyed financial success, with the respondent retiring from the workforce before age 55.

In 2007, the parties sold their home in Calgary for approximately $1.7 million and moved to Victoria along with one of their now adult sons. [ 13 ] The claimant moved permanently to New Brunswick after separation. The respondent remains in the family home with one of the couple’s sons. The question of child support did not arise on this application. [ 14 ] The claimant commenced this proceeding in June 2010. Some progress has been made in dividing certain assets but a comprehensive agreement has eluded the parties. Ms. Richard claims an interest in both land and financial assets.

The amount involved in this proceeding was not specifically addressed but it is fair to surmise that the value of the assets subject to division exceeds $1.5 million. [ 15 ] Examinations for discovery have yet to be conducted. A trial scheduled for September 2012 was adjourned when Ms. Richard retained new counsel.

The trial of the action is now scheduled to proceed in April 2014. [ 16 ] Since this action was commenced, the respondent has produced voluminous financial records, although the claimant says that there remain gaps and deficiencies in those records. [ 17 ] Not surprisingly, the organization of the parties’ finances during the marriage was somewhat complicated.

The respondent’s interest in the Deloitte partnership was acquired through the use of a trust instrument and borrowed monies. [ 18 ] In the simplest of terms, the respondent was required to purchase a partnership interest by providing both working capital and “cumulative timing differences” capital. The details of that arrangement are more fully explained in the respondent’s affidavit material.

The claimant was directly involved in the acquisition process as she was a borrower of the funds. [ 19 ] In June 2007 -- about three years before the parties’ separation -- the respondent entered into a retirement agreement with Deloitte. The agreement describes the respondent’s entitlement to both a retirement allowance as well as re-payment of the cumulative timing differences capital. [ 20 ] The respondent receives the retirement allowance through his personal corporation.

In his affidavit material, the respondent explains that the income “is a portion of the Deloitte and Touche LLP earned income paid to retired partners out of Deloitte and Touche LPP current income”. The personal corporation in turn pays Mr. Nelson a salary. The arrangement is intended to take advantage of low B.C. personal income tax rates.

It is this income which forms the basis of current interim spousal support payments made to the claimant. [ 21 ] As further deposed by the respondent, the monies received from Deloitte for the cumulative timing differences capital went to repay the loans for that capital. [ 22 ] The respondent says that all bank accounts to which he deposited funds during the marriage were held jointly with the claimant.

In other words, there are no secret accounts and no monies received either during the marriage or since separation have been “squirreled away”. [ 23 ] The claimant expresses suspicions of the respondent’s financial dealings both during the marriage and certainly since separation. For that reason, Ms. Richard has requested details of various accounts directly from the Bank of Nova Scotia.

Such details include information on certain transfers of monies made during the marriage from the parties’ joint account held here in Victoria. [ 24 ] In support of the relief sought in item 3 above, the claimant relies on a February 6, 2012 letter from the bank in which a request for that detail is denied “due to privacy regulations”.

The letter confirms that the money was transferred by the respondent on the particular day in question (in 2008) and that “with any joint account, each owner of the account can do what they wish with the funds”. [ 25 ] The letter from the claimant making the information request to the Bank of Nova Scotia was not before the court.

Discussion [26] In the recent decision of J.D.G. v. J.J.V., 2013 BCSC 1274, the court addresses the parties’ obligations to make full financialdisclosure in family law proceedings. The court reiterates the oft-cited judicial comment that “non-disclosure is the cancer ofmatrimonial litigation”: Cunha v. Cunha (1994), (BC SC), 99 B.C.L.R. (2d) 93 (S.C.). [27] That comment should be the starting point of any discussion on disclosure.

However, there must still be both a factual and legalfoundation for making any document production order. [28] With respect to the legal foundation, the claimant’s notice of application cites Rules 5-1 (Financial Disclosure), 9-1 (Discoveryand Inspection of Documents), 15-4 (Enforcement of Orders), 15-6 (Subpoena to Debtor) and 19-1 (Canadian Judgments) of the SupremeCourt Family Rules. These rules are relied on generally and no specific submissions were made on their use in this application.

Some ofthe rules cited have no relationship to the relief sought. [29] The claimant also relies on s. 15 of the Divorce Act, R.S.C. 1985, c. 3 as well as ss. 9 (interim orders), 89 (obligation to supportspouse) and 93 (order for support) of the Family Relations Act, R.S.B.C. 1996, c. 128. Again, these statutory provisions might have somegeneral application but a specific order for support is not made in the notice of application. [30] It would appear that the legal foundation for the relief sought is found specifically in Rules 5-1 and 9-1.

As such, the object ofthose rules must be considered: Rule 1-3 — Object of Rules Object

(1) The object of these Supreme Court Family Rules is to (

a) help parties resolve the legal issues in a family law case fairly and in a way that will (

i) take into account the impact that the conduct of the family law case may have on a child, and (ii) minimize conflict and promote cooperation between the parties, and (

b) secure the just, speedy and inexpensive determination of every family law case on its merits. Proportionality

(2) Securing the just, speedy and inexpensive determination of a family law case on its merits includes, so far as is practicable,conducting the family law case in ways that are proportionate to (

a) the interests of any child affected, (

b) the importance of the issues in dispute, and (

c) the complexity of the family law case. [31] As there are no children involved in this proceeding, the rules ought to be applied in a manner that not only minimizes conflictbut also promotes just, speedy and inexpensive determination of the case on its merits. In this case, the concept of proportionately mightweigh in favour of greater document production given the value of the assets involved, the parties historical incomes and the suggestedcomplexity of the parties’ financial dealings. [32] That does not mean that all of the information or documentation sought by the claimant ought to be ordered produced.

Requestsfor production of financial information in family law cases can still be deemed overly broad: Gruber v. Gruber, 2012 BCSC 1647. [33] I find that the requests made by the claimant are overly broad. Furthermore, I am not persuaded that the claimant has laid thenecessary factual foundation for the disclosure sought. [34] Dealing firstly with item 3 of the notice of application, the relief sought could arguably encompass any information relating tojoint accounts held by the parties over the past thirty or more years. Mr.

Kitzke fairly suggests that the records held by the bank wouldonly go back some eight or nine years but still, that is a considerable volume of documentation. In any event, I agree with the respondentthat the parties’ use of the joint account during the marriage is irrelevant to the determination of this action on its merits unless there issome evidence of a “secret” account held by the respondent. The request for such broad disclosure should be based on more than meresuspicion by the opposing party.

It must be remembered, moreover, that the claimant was the spouse responsible for administering thejoint accounts during the marriage. [35] Furthermore, the respondent has produced personal banking records and further disclosure was ordered on July 23rd. [36] Overall, I find that the relief sought in paragraph 3 represents a “fishing expedition” and ought to be dismissed. [37] Nevertheless, in the interest of promoting resolution of this dispute, I will order that the Bank of Nova Scotia provide theclaimant with copies of all statements for the account #015600824 from January 1, 2007.

The respondent has already agreed to providebanking records from other accounts for a similar period. There is a dispute over whether this account actually exists but that questionwill be answered when the order is served on the bank. [38] Curiously, the bank takes no position with respect to its costs related to production of documentation. If the bank makes this

demand and the parties are unable to agree on the sharing of such costs, there is liberty to apply. I am seized of any such application. [ 39 ] With respect to the relief sought in paragraphs 5 a. and b. of the notice of application, I find that the claimant has not established the factual foundation for the relief sought. The addition of the professional corporation and corresponding amendments opens the door for document disclosure regarding the respondent’s retirement benefits.

There remains a live issue as to whether the monies received under the retirement agreement constitute a form of pension to be divided (according to the claimant) or merely an income stream based on Deloitte’s performance year to year (according to the respondent). That issue can only be decided by the trial judge. [ 40 ] However, the respondent has explained that the monies described in paragraphs 5 a. and b. went directly to repay loans and was not received as income. The claimant acknowledges that loans taken out in her name to acquire the Deloitte partnership interest were repaid in 2007.

Other than the claimant’s statement that the monies were “received” by the respondent after retirement, there is no evidence to suggest that these monies fell within the exclusive control of the respondent or that the respondent is misleading the court in his affidavits. If that question remains open, it is better left to be explored at the respondent’s examination for discovery. In the result, the relief sought in paragraphs 5 a. and b. is also dismissed. [ 41 ] In

summary, the relief sought in paragraphs 3, 5a. and b. is dismissed. With respect to the relief sought in paragraph 4 c., the order will go that the Bank of Nova Scotia, rather than the respondent, produce the records (if they exist). [ 42 ] Success on the application has been divided. The parties shall bear their own costs. “C.P. Bouck” Master C.P. Bouck