Smith v. Anderson, 2013 BCSC 2009

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Smith v. Anderson , 2013 BCSC 2009 Date: 20131104 Docket: 12-1865 Registry: Victoria Between: Jeffrey Charles Smith Claimant And: Donna Heather Anderson Respondent Before: Master Bouck Reasons for Judgment Counsel for the Claimant: N. Reid Counsel for the Respondent: C. Murray Place and Date of Hearing: Victoria, B.C. October 30, 2013 Place and Date of Judgment: Victoria, B.C.

November 4, 2013 The Application [ 1 ] The claimant seeks leave to further amend his notice of family claim, primarily to include property claims under the Family Law Act, S.B.C. 2013, c. 11 (the “ FLA ”). In concert with the amendments being allowed, the claimant asks for a restraining order pursuant to s. 91 of the FLA and Rule 12-1 of the Supreme Court Family Rules (the “ SCFR ”). [ 2 ] The respondent opposes both aspects of the relief sought on various grounds, including that the sought-after amendments are statute-barred and that significant prejudice will result if the amendments are allowed.

The Facts [ 3 ] The background facts to this application have been addressed in a judgment issued in this proceeding concerning interim spousal support: 2013 BCSC 1997 . [ 4 ] To put this application in context, some of the facts described in that earlier judgment will be repeated. However, it is not necessary to describe the entire history of either the parties’ relationship or indeed this proceeding. [ 5 ] This action was commenced in May 2012. [ 6 ] The parties are former common law partners. Mr. Smith says that the parties’ marriage-like relationship ended on or about January 15, 2012. Ms.

Anderson deposes, and pleads in her counterclaim, that the relationship ended in September 2010. [ 7 ] The notice of family claim seeks trust remedies with respect to property acquired by the parties since their marriage-like relationship began over twenty years ago. The respondent denies that Mr. Smith is entitled to any remedy whatsoever with respect to that property. [ 8 ] The parties’ only jointly-held asset is their respective interests in a company called Bel Canto. That company was used as an investment vehicle to acquire real property and financial assets. [ 9 ] The former family home is registered in Ms.

Anderson’s name only, but secures debt instruments under which the parties are jointly liable. [ 10 ] The notice of family claim was amended in June 2012 to include a claim for spousal support under the Family Relations Act , R.S.B.C. 1996, c. 128. The proposed amendments will include a claim for such support under the FLA . [ 11 ] A notice of trial was taken out by the respondent for a trial to take place on October 7, 2013. That trial was adjourned, with the

five-day trial now set to commence on January 20, 2014. [12] While not mentioned in the affidavit material, Ms. Reid advised the court that the respondent was put on notice in December2012 that further amendments to Mr. Smith’s claim were anticipated once the FLA was proclaimed in force. [13] An examination for discovery of the claimant was conducted in early January 2013. [14] The FLA came into force on March 18, 2013. [15] Again, while not in evidence, Ms. Reid says that she was ill and away from her office for an extended period of time in thespring of 2013. This assertion was not challenged by the respondent.

Once Ms. Reid was able to direct her attention to this matter, theapplication before the court was drafted and subsequently filed on July 29, 2013. [16] Due to the series of events described in the earlier judgment, the application to amend the pleadings and obtain the restrainingorder was not heard until October 30, 2013. Discussion Amendment of the Pleadings [17] With the introduction of the FLA, common law partners now have the same rights and remedies with respect to property aslegally married partners. The amendments sought by Mr.

Smith assert those newly legislated rights and remedies. [18] In resisting the orders sought, the respondent says that the FLA can have no retroactive or retrospective effect on these parties.Moreover, even if the FLA might apply, Mr. Smith has missed the limitation period for bringing his claim. As such, the claims proposedto be pled are bound to fail.

Furthermore, there is significant prejudice to the respondent if the proposed amendments are allowed as allof the discovery processes and trial preparation conducted to date has focused on the constructive trust/unjust enrichment claim and willbe effectively wasted time and money. There is also a risk that the trial date will be lost as additional discovery addressing the newclaims will need to be concluded. The delay in making the application, says the respondent, is not justifiably explained. [19] The claimant says that he is entitled to bring the property and spousal support claims pursuant to s. 198(2)(

b) of the FLA whichprovides that: 198(2) A spouse may start a proceeding for an order under

Part 5 [Property Division] to divide property or family debt,

Part 6 [PensionDivision] to divide a pension, or

Part 7 [Child and Spousal Support] for spousal support, no later than 2 years after, … (

b) in the case of spouses who were living in a marriage-like relationship, the date the spouses separated. [20] The claimant submits that if leave is not granted, a separate claim will be initiated at greater expense to both parties andcontrary to the objectives of the SCFR. In any event, the claimant argues that the threshold for allowing amendments is relatively lowand has been met. [21] While I agree that amendments to pleadings are generously allowed, different considerations might apply if these amendmentsassert claims made after the two-year period stipulated in s. 198(2)(b).

The limitation period will have expired if the court finds that theparties separated in September 2010. [22] As discussed in my earlier judgment, the parties’ disputed separation date should not be determined on an interim application.Nevertheless, for the purpose of this decision and to ensure that all submissions are addressed, I will consider whether leave ought to begranted where proposed amendments make claims which are potentially statute-barred. [23] The decision of Ross J. in G.A.D. v. B.C. Children’s Hospital, 2003 BCSC 443 (appv’d in Chouinard v.

O’Connor, 2011 BCCA121), contains one of the best iterations of the law to be applied on these kinds of applications: [17] The general principles to be applied in the consideration of an application to amend are as follows: (

a) amendments should be permitted as are necessary to determine the real question in issue between the parties The basic rule, set out expressly in the former Rules and no doubt still applicable, is that such amendments should be permitted asare necessary to determine the real question in issue between the parties. Rule 1(5) requires an

interpretation of the rules which permitthe just and speedy determination of the dispute on its merits. Similarly, the Law and Equity Act, R.S.B.C. 1979, c. 224, s. 10, requiresthe court to grant all such remedies as any of the parties may appear to be entitled to "so that, as far as possible, all matters in controversybetween the parties may be completely and finally determined. Victoria Grey Metro Trust Co. v. Fort Gary Trust Co. (1982) (BC SC), 30 B.C.L.R. (2d) 45 (S.C.); (

b) the court will not give its sanction to amendments which violate the rules that govern pleadings, including the prohibition ofpleadings which disclose no reasonable claim. In considering this question, the court will apply the same tests and considerations asapplicable on an application to strike claims already pleaded, see Victoria Grey Metro Trust Co. supra; (

c) a party is not required to adduce evidence in support of a pleading before trial, see McNaughton v. Baker (1988), (BC CA), 25 B.C.L.R. (2d) 17 (B.C.C.A.); (

d) on an application to amend the facts alleged are taken as established, see Canada (Attorney General) v. Ellis-Don Ltd., 2000 BCCA111 , 2000 B.C.C.A. 111;

(

e) the discretion is to be exercised judicially, in accordance with the evidence adduced and the guidelines of the authorities. Factors tobe considered include: the extent of delay, the reasons for delay, any explanation put forward to account for the delay, the degree ofprejudice caused by the delay, the extent of the connection between the existing claims and a proposed new cause of action. The over-riding consideration is what is just and convenient, see Teal Cedar Products

(1977) Ltd. v. Dale Intermediaries Ltd. (1996), (BC CA), 19 B.C.L.R. (3d) 282 (C.A.). [24] The present application is not the first, nor will it likely be the last, in which a common law partner seeks to amend pleadings totake advantage of remedies now available under the FLA. [25] There are at least two reported decisions of this court which address applications to include relief under the FLA in an actioncommenced before March, 18, 2013: P.N.K. v. C.L., 2013 BCSC 1856, and Reynolds v. Huard, 2013 BCSC 1882. The claimant alsocites Asselin v.

Roy, 2013 BCSC 1681, but in that case the parties agreed at the commencement of trial that the FLA applied to theproperty claims as permitted under s. 252(2). [26] The retroactive or retrospective application of the FLA was first commented upon by Griffin J. in Bresette v. Henderson, 2013BCSC 166. In that case, the claimant had already amended her pleading to include claims under the FLA by the time the matter came totrial. The plea was in addition to a trust claim with respect to property acquired during the marriage-like relationship.

In thesecircumstances, the court was left to address whether the FLA remedies should be applied.

The court found it unnecessary to decide theissue, but made the following observations: [125] The FLA provides for a two-year limitation period for unmarried spouses bringing property claims after separation: s. 198(2)(b).The claimant's amendments to this proceeding, pleading the FLA, were brought within that limitation period. [126] The respondent argues that the clear intention of the legislature must have been to exclude any existing proceedings betweenseparated spouses, whether unmarried or married, from the provisions of the FLA. However, this position raises many questions.

If thatis the case, why did the legislature only expressly exclude property proceedings brought under the Family Relations Act? Was there alegislative intention to immediately confer benefits on unmarried spouses and to provide clarity in the law, so that resort to moreuncertain common-law remedies would be unnecessary?

Was the two-year limitation period and "significant unfairness" basis forreapportionment thought to be a sufficient protection for unmarried spouses whose relationship had either begun or run its course beforethe FLA was brought into force? [127] A decision on the transition provisions will have significant implications on the rights of common-law spouses who separatedwithin two years of the FLA coming into force.

One can imagine all kinds of variations in circumstances: those whose relationshipsstraddled the FLA, starting before but not ending until after the FLA came into force; those whose relationships ended and who obtaineda decision in litigation over their property rights or who reached an agreement with the other unmarried spouse all before the coming intoforce of the FLA; and those whose relationships ended, but who remained in active litigation and had not resolved their property disputebefore the coming into force of the FLA. There are arguments available for different treatments of these various circumstances.

Ofcourse, the parties here are in the latter category. [128] I note that by the time of the appeal hearing in Ibbotson, the parties there were in a somewhat similar position to the parties here.Their unmarried spousal relationship had ended before the coming into force of the FLA, but before the conclusion of the litigationwhich was based on common-law principles, the FLA came into force. [129] The Court of Appeal's judgment in Ibbotson was issued after the coming into force of the FLA and noted this fact in passing atpara. 14.

The Court of Appeal in Ibbotson did not suggest that the FLA might now apply to the couple. However, the issue did not appearto be argued or determined. In Ibbotson, a trial judgment had been rendered based on the common-law claims before the FLA wasbrought into force, which of course is different from the present situation. [130] Unfortunately, I do not feel that I have had the benefit of as full a legal argument as is necessary to resolve the issue of whether ornot the property provisions of the FLA apply to these parties.

The reality is that one party was unrepresented at trial, although had somelegal assistance before trial and in the background, and the other party who was represented did not have the benefit of developedargument by the party advancing the claim. The differences between the parties with respect to the property at issue here are not of largemonetary value, and this no doubt affected the resources put to addressing new legal issues. [131] I am concerned about deciding the issue of the applicability of the FLA in the absence of full legal argument. [27] In both P.N.K. v. C.L. and Reynolds v.

Huard, the application to amend pleadings to include property claims under the FRA wasdenied. In both cases, the court determined that the parties had separated more than two years before the FLA had come into force andthus any such claims were statute-barred. [28] Despite this finding, the court in P.N.K. v. C.L. further decided that the applicant could have invoked the provisions of s. 4(4) ofthe Limitation Act, R.S.B.C. 1996, c. 266. The applicant failed to do so at trial and instead sought the relief in written submissions.

Thecourt observes that “… arguably had the application under s. 4(4) been made in a timely manner … the amendment might have beenallowed …”: para. 50. [29] The retrospective application of the FLA property provisions is discussed in both cases, but more expansively in Reynolds v.Huard: see paras. 22-37. B.

MacKenzie J. decided that while the FLA has some retrospective application, “… the Legislature did notintend an immediate and wholesale displacement of pre-existing legal regimes as they pertain to … common law spouses … the momentthe FLA came into force.”: para. 30. [30] In neither case, however, does the court rule that the FLA will not apply to the circumstances in which Ms. Anderson and Mr.Smith find themselves. That is, an action already commenced but with a separation date arguably within the two-year period stipulated ins. 198(2)(b).

[ 31 ] Thus, I am unable to conclude that the claims made in the proposed amendments are bound to fail. It will be up to the trial judge to decide the whether the FLA remedies can be applied. [ 32 ] That leaves for consideration whether it would be just and convenient to allow the amendments. [ 33 ] First, I accept the claimant’s submission that denying the amendments would simply result in another action being commenced. A multiplicity of proceedings is to be avoided.

A second action will certainly not lead to a speedy resolution of the parties’ dispute: Rule 1-3 of the SCFR. [ 34 ] Second, I find that no fault lies with the claimant for the suggested delay in bringing this application before the court. The application could not have been made before the FLA came into force.

The delay in having the application heard can be attributed to a number of factors, including both counsel’s other commitments and the vagaries of Supreme Court chambers time. [ 35 ] As well, I accept that the respondent was given reasonable notice that these amendments were going to be pursued. [ 36 ] Third, while it is appreciated that the amendments may lead to further discovery (and probably additional expert reports), any resulting prejudice to the respondent can be remedied by the trial judge in a costs award. [ 37 ] Weighing all of these factors, I find that it would be just and convenient to grant leave to amend the notice of family claim in accordance with the draft pleading appended as

Schedule “A” to these reasons. It is to be noted that this document includes a plea not found in the originally proposed further amended notice of family claim, namely a claim against the respondent for occupational rent. Claimant’s counsel did not believe that such a plea was necessary at law. The respondent takes a different position.

Thus, it is just and convenient to allow this amendment to ensure that all matters between the parties are properly adjudicated upon at trial. [ 38 ] The original further amended notice of family claim will be returned to the claimant as the document should be appended to the order submitted to the registry. Property Preservation Order [ 39 ] The claimants seeks an order restraining the respondent from disposing of property at issue in the proceedings pursuant to s. 91 of the FLA and Rule 12-1 of the SCFR. [ 40 ]

Section 91 provides as follows: Temporary orders respecting protection of property 91

(1) On application by a spouse, the Supreme Court must make an order restraining the other spouse from disposing of any property at issue under this Part or

Part 6 [Pension Division] until or unless the other spouse establishes that a claim made under this Part or

Part 6 will not be defeated or adversely affected by the disposal of the property.

(2) The Supreme Court may make one or more of the following orders: (

a) for the possession, delivery, safekeeping and preservation of property; (

b) for the purpose of protecting the applicant's interest in property from being defeated or adversely affected, (

i) prohibiting the other spouse from disposing of, transferring, converting, or exchanging into another form, property in which the applicant may have an interest, or (ii) vesting all or a portion of property in, or in trust for, the applicant.

(3) The Supreme Court may make an order under this

section before notice of the application is served on the other spouse, or may order that notice of the application be served on the other spouse.

(4) Despite section 215 (2) [changing, suspending or terminating orders generally] , the Supreme Court may change, suspend or terminate an order made under this section. [ 41 ] The respondent suggested in submissions that a master has no jurisdiction to make the order sought. The Practice Direction relied on by the respondent has been replaced with PD-42, which specifically provides that a master has jurisdiction to make restraining orders under the FLA. [ 42 ]

Section 91 is a reverse onus provision. Given that property at issue has already been disposed of or encumbered, I am unable to conclude that the respondent has met that necessary onus. [ 43 ] The relief sought in para. 10 of the claimant’s notice of application is granted on the following terms: The respondent is restrained from disposing of any property at issue in the proceeding except to comply with an order of the court or with written agreement signed by both parties Costs [ 44 ] The claimant submits that this application should not have been necessary and seeks an award of costs in any event of the cause.

Given the current uncertainty in the law regarding the application of the FLA to these proceedings, I find that the application was indeed necessary. Costs of the application will be in the cause.

“C.P. Bouck” Master C. P. Bouck

SCHEDULE “A”