Eyking v. Eyking, 2012 NSSC 409

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Citation: Eyking v. Eyking, 2012 NSSC 409 Date: 20121128 Docket: 1206-005979 Registry: Sydney Between: Karen Ann Eyking Petitioner v. Christopher Luke Eyking Respondent Judge: The Honourable Justice Darryl W. Wilson Heard: August 29, 2011; August 30, 2011; August 31, 2011 and February 6, 2012, in Sydney, Nova Scotia Final Submissions Filed May 30, 2012 by Petitioner Final Submissions Filed June 1, 2012 by Respondent Counsel: Lisa Fraser-Hill, for the Petitioner William L.

Ryan, Q.C., for the Respondent By the Court: [ 1 ] The Petitioner, Karen Eyking, and the Respondent, Christopher Eyking, were married in 1987. They stopped living together as husband and wife in December of 2005 but continued to reside separately in the matrimonial home until March, 2006 when the Respondent moved to the family cottage. The procedural and jurisdictional requirements for a Divorce have been met. The grounds have been established. The parties have not resumed cohabiting since March of 2006 and there is no possibility of reconciliation. A

Divorce Judgement shall issue. [ 2 ] Proceedings were initiated by Karen Eyking filing applications pursuant to the Maintenance and Custody Act and the Matrimonial Property Act in January 2007. In July of 2007 the parties reached an agreement with respect to custody and access and interim child and spousal support, which was incorporated into an Interim Consent Order. The parties also agreed to an equal division of the value of the matrimonial home, cottage, furnishings and contents, vehicles and RRSP ’ s.

Divorce proceedings were initiated by filing a Petition in February, 2010. [ 3 ] There are three dependent children of the marriage, Elsie, Nicholass, and Katrina. The children resided with the Petitioner in the matrimonial home after the Respondent relocated to the family cottage in March, 2006. [ 4 ] The Petitioner is self-employed as a registered nurse. The Respondent is a minority shareholder in two businesses, Hilly Acres Farms and Eyking Under Glass. The companies are privately held and family owned and operated.

The Respondent owns 1/3 of the shares, his father owns 1/3 of the shares and his brother, the remaining 1/3. [ 5 ] The Petitioner and Brian Keough, a Business Valuator, testified on behalf of the Petitioner. [ 6 ] The Respondent, Theodore Eyking, and George Unsworth, Chartered Accountant, testified on behalf of the Respondent. ISSUES [ 7 ] The following issues were raised at trial requiring determination by the court.

(1) The amount, if any, of child support for the dependent children of the marriage, pursuant to the Federal Child Support Guidelines.

(2) The amount, if any, of retroactive child support for the dependent children of the marriage;

(3) Is the Petitioner entitled to any spousal support and, if yes, should retroactive spousal support be awarded?

(4) Are the shareholder loans of the Respondent matrimonial assets subject to an equal division between the parties?

(5) Is the Petitioner entitled to any division of the companies, being Hilly Acres Farms and Eyking Under Glass, pursuant to Sections 13 or 18 of the Matrimonial Property Act ? If so, what is the appropriate division. CHILD SUPPORT: [ 8 ] The Interim Consent Order was agreed to by the Petitioner on a without prejudice basis.

Paragraph 5 of the Interim Order provided: The parties agree that the terms of this Interim Order with respect to child support and spousal maintenance has been agreed to on a without prejudice basis to either parties' position at the final trial of the within matter and shall in no way determine the issue of any entitlement of Karen Eyking to receive spousal support, which entitlement shall remain a contested issue. [ 9 ] The Interim Order provided that the Respondent pay child support for three (3) children in the amount of $2,480.00 monthly beginning July 1, 2007, based on an estimated annual income of $150,000.00.

It further provided that child support would be reduced to $1,913.00 per month for two children, beginning September, 2007, when the oldest child Elsie started university away from home.

[ 10 ] The Interim Order was varied to $1,205.00 per month for one child beginning September, 2009, when Nicholass began university. Katrina was the only child remaining at home with the Petitioner. The Respondent has continued to pay child support of $1,205.00 per month even though Katrina is attending university away from home. [ 11 ] At the start of the trial the two oldest children were over the age of majority. They had been attending university away from home. Katrina was about to begin her first year of university in Antigonish in September, 2011. She would not turn 19 until August, 2012.

Elsie had completed her fourth year of study but had plans to travel rather than return to university in September, 2011. Nicholass was entering his third year of studies toward an Engineering Degree at Dalhousie University in Halifax. The children ’ s tuition, books and university fees including meals and accommodations, are paid for by RESP ’ s accumulated by the parties throughout the marriage and by the Eyking Family Trust Fund set up by the children ’ s grandparents. Also, the children are required to contribute 1/3 of the cost of their university expenses from their own resources, if possible.

Elsie and Nicholass had contributed their share while attending university. Because of special circumstances, it was uncertain whether Katrina would be able to contribute her 1/3 share. The Respondent was prepared to assist Katrina if she could not meet this obligation. [ 12 ] After separation, the Petitioner maintained the family home and the children resided with her when they were not at university.

The Petitioner claims she incurred many other expenses while the children were attending university such as travel costs to and from university, local transportation, vehicle repairs, spending money, clothing, and other miscellaneous costs without assistance from the Respondent . The Respondent states that he also contributes towards the children ’ s living expenses while they were attending university including the cost of travel.

He has taken each of them on a trip as a high school graduation gift and provided other supports such as making work available for them during the summer months. [ 13 ] The following is a

summary of the parties' incomes reported on their income tax returns since 2006.

PETITIONER RESPONDENT 2006 $28,705.00 $344,375.00 2007 $29,563.00 (+ Spousal Support of $16,800.00) $344,760.00 2008 $52,270.00 (+ Spousal Support of $16,800.00) $364,596.00 2009 $64.493.00 (+ Spousal Support of $16,800.00) $309,726.00 2010 $83,537.00 (+ Spousal Support of $16,800.00) $175,000.00 2011 $70,734.00 (+ Spousal Support of $16,800.00) $225,000.00 [14] The Respondent testified that the reduction in his income, which occurred in 2010 and 2011, was the result of working less due to stress and problems with his back, which will eventually require surgery.

He is not on any medication for stress and he did not provide a medical report to substantiate a disability that would limit his ability to work. However, the Petitioner acknowledged that the Respondent does have back problems, which has caused him difficulties in the past. [15] At the time the Interim Consent Order was issued in 2007, the Respondent maintained that his annual income for determining the amount of child support was $150,000.00, although Line 150 of his tax return indicated that his income was $313,967.00.

The Respondent maintained that the tax return income did not reflect his true income available for child support purposes. The Respondent claims that neither he nor his family had access to all the income reported on Line 150 of his tax return because he was required to invest a significant portion of his bonus into the company in the form of a shareholder loan. He had been doing this for several years prior to the separation of the parties.

[16] George Unsworth, FCA, Accountant for the Companies, testified about a shareholder loan account. When asked to explain the procedure to determine how company funds go into shareholder loan accounts he replied: A. Well, the funds virtually don’t come out of the business ever.

The funds are – there’s a journal entry prepared basically – the journal entries are actually prepared prior to the two brothers seeing the financial statements or seeing the draft financial statements, and financial statements are produced based on – or draft financial statements based on certain salary levels and certain income levels for them. There’s journal entries made then to these shareholder’s accounts, and that’s how the accounts are created. And there’s – a pot of money goes into retained earnings, and some goes into these accounts. Q.

What can you say as to whether or not these are kept separate and apart from the operating funds of the companies? A. There is no distinction, there’s no account that’s set up and said these are going to be invested any differently or go anywhere any differently. They don’t see them – they just see them – you know, everybody in the family just sees them as part of the equity of the business. [17] The Respondent and other shareholders are paid a minimum base salary during the year and a bonus at year end. Draft financial statements are reviewed by Mr.

Unsworth and John Eyking, the Respondent ’ s father, who determine what is the appropriate amount of personal income and business income. A journal entry is made debiting salaries and crediting shareholder loan without any money being paid out by the company. However, the Respondent has access to the shareholder ’ s loan account to pay personal income tax and other personal expenses subject to an agreement among the shareholders to maintain a certain balance in the account that would be available for risks that may occur in the business. As Mr.

Unsworth explains, John Eyking is very conservative in his business dealings. He likes to have a good balance sheet. You have proper insurance but you always provide for a little bit of extra money in case things come up. The criteria for determining how much of the bonus stays with the company or is available for personal use of the Respondent was not satisfactorily explained. [18] Sections 15.1(1) and (3) of the Divorce Act provide: 15.1

(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage. ...

(3) A court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with the applicable guidelines. [19] The Nova Scotia Guidelines are the applicable guidelines for the determination of child support pursuant to the Maintenance and Custody Act and the Federal Child Support Guidelines, NS Tables, for determinations made pursuant to the Divorce Act . The following guideline provisions are the same whether determining child support pursuant to the Maintenance and Custody Act or the Divorce Act : 3.

(1) Unless otherwise provided under these Guidelines, the amount of a child support order for children under the age of majority is (

a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the spouse against whom the order is sought; and (

b) the amount, if any, determines under

section 7.

(2) Unless otherwise provided under these Guidelines, where a child to whom a child support order relates is the age of majority or over, the amount of the child support order is (

a) the amount determined by applying these Guidelines as if the child were under the age of majority; or (

b) if the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child. 15.

(1) Subject to subsection (2), a spouse’s annual income is determined by the court in accordance with sections 16 to 20. 16. Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. 17.

(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. 18.

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under

section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in

section 17 and determine the spouse’s annual income to include (

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or (

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income. 19.

(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: (

a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse; 4 . Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is (

a) the amount determined under

section 3; or (

b) if the court considers that amount to be inappropriate, (

I) in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;

(ii) in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and (iii) the amount, if any, determines under

section 7. [20] At issue is the appropriate basic amount of child support payable for the dependent children. Essentially there are two approaches set out in the proceeding provisions to assist the court in making this determination. The first approach is the presumptive rule in which child support is determined by reference to a table taking into account the number of children and the income of the payor. The second approach is the needs and means approach referred to in s. 3(2)(

b) and 4(

b) of the Guidelines cited above in which child support is determined having regard to the condition, means, needs and other circumstances of the children entitled to support and the financial ability of each spouse to contribute to their support. Determination of Income [21] The parties cannot agree on the amount of the Respondent ’ s income for purposes of determining his child support obligation. The Petitioner requests that the amount of child support be based on the income of the Respondent reported on line 150 of his income tax return for the years 2006 through 2009.

The Petitioner submits that the Respondent is capable of earning income in the vicinity of $300,000.00 to $350,000.00 per year as he did from 2006 to 2009.

She requests the court impute an income of at least $309,725.00 based on his 2009 income for the purposes of making a child support award for the years 2010 onward. [22] The Petitioner seeks ongoing child support for Nicholass and Katrina on a monthly basis at a reduced table amount while they are attending university and at the full table amount when they are residing with her from May to August. [23] The Plaintiff claims retroactive child support of $232,368.00 for the period January 1, 2006 until August 31, 2011.

She claims the table amount of $184,668.00 based on the Respondent ’ s income reported on line 150 of his income tax return for the years 2006 through 2009 and imputed income of $309,725.00 for 2010 onwards, while the children were residing with her full-time. She also claims $32,000.00 for Emily and $16,000.00 for Nicholass while they were attending university away from home during this period. The calculations of these amounts were provided in her written submission. [24] As previously stated, the Respondent wants his annual income fixed at $150,000.00 for purposes of determining the amount of child support.

Counsel for the Respondent submits that: (

a) the amount paid by the Respondent for child support to-date was appropriate and no retroactive child support should be awarded. (

b) no child support is necessary on a go-forward basis, given the level of independence achieved by the children through the family trust and RESP ’ s. When the children are attending university, financial arrangements are in place for the payment of their tuition, books and living expenses through a family trust, RESP ’ s or interest free loans from the Respondent. Their needs are being met and they are not deprived of anything. © Child support should not be awarded when the children are residing with the Petitioner during school breaks.

Nicholass is in a Co-Op university program and employed during the summer months while Elsie wishes to travel. The children are beginning their lives independent of their parents and sporadic presence in the family home should not result in an award of child support. Any shortfall in the needs of the children are met by the Respondent offering interest free loans or gifts of money.

[25] I agree with the Petitioner ’ s submission that the table amount of child support should be determined by reference to the sources of income set out under the heading “ total income ” in the T1 General Form issued by the Canada Revenue Agency. There are no

Schedule III adjustments. Sections 15 - 19 of the Guidelines , supra, establish the considerations for determining the Respondent ’ s income for purposes of fixing the amount of child support. [26] I acknowledge the Respondent ’ s evidence of the existence of an agreement among the shareholders of the Corporation to annually return part of their bonus to the Corporation as shareholder loans as a means of extra capital in case funds are needed to address unexpected risks or anticipated capital requirements.

However, in my opinion, this business practice does not justify a reduction in the income amount used for the calculation of child support pursuant to the presumptive rule found in s. 16 of the Guidelines. If there is a basis for reducing the line 150 income for purposes of determining child support, it must be found in s. 17 - 20 of the Guidelines. [27] It should be noted that the Respondent is not asked to make available all of his income that exceeds $150,000.00 for child support purposes.

The total income on line 150 of the Respondent ’ s income tax return is used to fix his annual income which becomes the basis on which the amount of child support is determined. In assessing fairness in determining annual income pursuant to s. 16 - 20 of the Guidelines the court must consider fairness to the children and both spouses and not just to the Respondent. [28] As stated, a substantial amount of the Respondent ’ s annual income is paid in the form of a bonus at year ’ s end.

The financial circumstances of the company are reviewed between the Corporation ’ s auditor and the Respondent ’ s father and a determination is made of the appropriate income for the shareholders commensurate with services to the Corporation and the success of the Corporation. A review of the Corporation ’ s financial statements indicates the Corporation still has significant profit after the payment of shareholder bonuses. This profit goes in to retained earnings which becomes part of the equity of the business.

The shareholder loans are additional capital based on the conservative business practices of the shareholders. Bonuses are often used as a tax planning device to allow owners to reap the benefit of the businesses success. [29] In determining parental income, a court may also consider the parents fluctuating income over the last three years.

Section 17 of the Guidelines does not help the Respondent since his annual income has been substantially in excess of $150,000.00 since 2006 (see paragraph 14), [30] Likewise, s. 18 of the Guidelines which deals with payors who are shareholders, etc. does not assist the Respondent. This

section may be utilized to increase a spouse ’ s annual income if the income determined under s. 16 does not fairly reflect all the money available to the spouse for the payment of support. In my view the phrase “ does not fairly reflect all the money available to the spouse for the payment of child support ” refers to pre-tax income of the Corporation which is not paid out to the shareholder. It does not refer to the income of the Respondent which he returns to the Corporation as a shareholder loan.

Once the Respondent ’ s bonus has been determined and reported as a salary of the Corporation, it is not part of the pre-tax corporate income. [31] Therefore, for the years 2006 - 2009 the annual income of the Respondent for purposes of determining the amount of child support is the amount reported on his income tax returns and is found at paragraph 13 of this Decision. [32]

Section 19 of the Guidelines empowers the court to impute income to a payor if s. 16 fails to provide the fairest determination of current and future annual income. [33] The Respondent ’ s income was $175,000.00 in 2010 and $225,000.00 in 2011, a significant reduction from his 2009 income of $309,726.00 and his 2008 income of $364,596.00. He remained a shareholder / employee of Hilly Acre Farms and Eyking Under Glass during this time period. According to the Respondent, his reduced income was a result of working less due to stress and back problems.

There was no suggestion that the Corporations were earning less. [34] Counsel for the Petitioner submits that the Respondent is deliberately underemployed and is capable of earning at least $309,725.00 per year as he did in 2009 and every year prior from 2002 - 2008.

Counsel for the Petitioner submits that the Respondent failed to establish a justifiable reason for the reduction in his income since he acknowledged that he was not on medication for stress and he did not file a medical report to substantiate a disability that limits his ability to work due to back problems. [35] Counsel for the Respondent did not make any submissions on this issue aside from the general submission that the Respondent ’ s annual income for determining child support should be fixed at $150,000.00.

[36] Forgeron, J. in the recent decision of MacDonald v. Pink 2011 NSSC 421 at paragraph 24 stated: 24

Section 19 of the Guidelines provides the court with the discretion to impute income in specified circumstances. The followingprinciples are distilled from case law: a. The discretionary authority found in sec. 19 must be exercised judicially, and in accordance with rules of reasons and justice, notarbitrarily. A rational and solid evidentiary foundation, grounded in fairness and reasonableness, must be shown before a court canimpute income: Coadic v. Coadic, 2005 NSSC 291. b. The goal of imputation is to arrive at a fair estimate of income, not to arbitrarily punish the payor: Staples v.

Callender, 2010 NSCA49. c. The burden of establishing that income should be imputed rests upon the party making the claim, however, the evidentiary burdenshifts if the payor asserts that his/her income has been reduced or his/her income earning capacity is compromised by ill health:MacDonald v. MacDonald, 2010 NSCA 34; MacGillivary v. Ross, 2008 NSSC 339. d. The court is not restricted to actual income earned, but rather, may look to income earning capacity, having regard to subjectivefactors such as the payor’s age, health, education, skills, employment history, and other relevant factors.

The court must also look toobjective factors in determining what is reasonable and fair in the circumstances: Smith v. Helppi, 2011 NSCA 65; Van Gool v. VanGool, (BC CA), [1998] 113 B.C.A.C. 200; Hanson v. Hanson, (BC SC), [1999] B.C.J. No. 2532(S.C.); Saunders-Roberts v. Roberts, 2002 NWTSC 11; and Duffy v. Duffy, 2009 NLCA 48. e. A party’s decision to remain in an unremunerative employment situation, may entitle a court to impute income where the party has agreater income earning capacity. A party cannot avoid support obligations by a self-induced reduction in income: Duffy v. Duffy, supra;and Marshall v.

Marshall, 2008 NSSC 11. [37] The Plaintiff has the capacity to earn between $300,000.00 and $350,000.00 annually based on the income reported on hisincome tax returns from 2006 through 2009. He was also earning in excess of $300,000.00 from 2002 through 2005 - just prior to theparties separation. There was no change to his employment or shareholder status during 2010 and 2011. The Respondent’s claim that hewas not able to work as much in 2010 and 2011 for health reasons and therefore was unable to earn the income he did in those previousyears was not supported by any medical evidence.

I put very little weight in the Respondent’s assertions that he was unable to workbecause of health problems. While he has experienced back problems in the past which has affected his ability to work, there was noevidence presented that his income earning capacity was reduced during this time. The Respondent being a shareholder of theCorporation has the ability to influence his level of income. [38] The test for the judicial imputation of income to a parent pursuant to s. 19(1)(

a) of the Guidelines is reasonableness. See Smithv. Helppi, 2011 NSCA 65. [39] The Petitioner’s request to impute income of $309,726.00 is reasonable considering it is the lowest amount of the incomeearned by the Respondent from 2002 through 2009. [40] Therefore, I find it is reasonable in the circumstances to impute income of $309,726.00 to the Respondent pursuant to s. 19(1)(

a) of the Guideline for the years 2010 and onward.

Presumptive Rule - Adult Children - Income Exceeding $150,000.00 [41] In fixing the amount of child support payable by the Respondent, the court must consider a number of circumstances including: 1. The amount payable for children under the age of majority residing with the Petitioner. 2. The amount payable for children under the age of majority who are attending university away from home 3. The amount payable for adult children attending university away from home 4. The amount payable for adult children residing with the Petitioner during breaks from university;.

In each of the above circumstances, the court must consider the impact of s. 4 of the Guidelines since the court has determined the Respondent ’ s annual income exceeds $150,000.00. Minor children - at home - at university [42] The age of majority in Nova Scotia is 19. Elsie turned 19 in February, 2008, while in her first year of university in Ontario; Nicholass turned 19 in March, 2010, while in his first year of university in Halifax; and Katrina will turn 19 in August, 2012, after the completion of her first year of university in Antigonish.

The children resided with the Petitioner before they attended university and during breaks from their university studies. [43] When a parent ’ s income exceeds $150,000.00 a year and the child is under the age of majority, the court must consider whether the amount of support should be determined under s. 3 by reference to the table or if that amount is inappropriate under s. 4(

b) by reference to a needs and means analysis. However the court has no discretion to interfere with the table amount of support in respect to the first $150,000.00 of the spouse ’ s income [sec.4(b)(I)].

If the court decides the amount of child support determined under s. 3(1) for a child under the age of majority is inappropriate then it can determine the amount for child support in respect of the balance of the spouse ’ s income that exceeds $150,000.00 not by reference to the table amount payable on this part of his income but by having regard to the means and needs and other circumstances of the children and the abilities of each spouse to contribute to the support of the children. [44] In his submission counsel for the Respondent does not address the issue of whether the table amount payable on his income that exceeds $150,000.00 is inappropriate for children under the age of majority before their attendance at university.

He argues his income for the determination of child support should not exceed $150,000.00. Since the Respondent has not satisfied the court the amount of child support determined under s. 3(1) is inappropriate, I conclude the amount of child support for the children while under the age of majority should be determined by reference to the table amount taking into account his entire income reported on line 150 of his tax return.

The actual calculation of this amount will be set out later in the decision. [45] The next circumstance for consideration is determining the amount payable for children under the age of majority who are attending university away from home. A similar fact situation was considered by Nova Scotia Court of Appeal in Lu v. Sun, 2005 NSCA 112 , leave to appeal to the Supreme Court of Canada refused.

The Appeal Court confirmed the Trial Judge ’ s determination that a non- custodial parent pay the table amount of support for a child under the age of majority while that child is attending university in a city other than where the custodial parent resides. The court also held that when applying the presumptive rule with respect to children under the age of majority who are attending university away from home, the Order for the payment of

section 7 expenses pertaining to their post-secondary education should not include an amount for accommodation and food expenses which are included in the table amount of child support ordered. The Petitioner is not claiming an amount for

section 7 post-secondary education expenses. There is no suggestion that any of the children withdrew from their parent ’ s charge once they began attending university away from home even though they were still under the age of majority. [46] There is some evidence that the Petitioner ’ s costs of caring for the minor children while they are attending university is

[46] There is some evidence that the Petitioner ’ s costs of caring for the minor children while they are attending university is reduced because some of those costs are included in the table amount and are being paid through other means. Remember, the court has no discretion to interfere with the table amount of support in regards to the first $150,000.00 of income. However, the court may consider the needs and means analysis on that part of the Respondent ’ s income that exceeds $150,000.00 if the table amount on that income is inappropriate.

The Petitioner seems to recognize a reduction is warranted based on her counsel ’ s submission seeking a reduced table amount while the children are attending university. Based on the evidence presented it is difficult to determine the amount that should be payable. I have decided to allow a reduction of $500.00 per child per month from the table amount payable on the Respondent ’ s income that exceeds $150,000.00. Elsie attended university for 6 months while a minor, Nicholass for 7 months and Katrina for 8 months.

The court will give effect to this reduction in calculating the amount of child support payable later in the decision. Adult children at university - residing at home [47] When a child reaches the age of majority, support is determined according to s. 3(2) of the Guidelines. When a spouse ’ s income exceeds $150,000.00, the court must consider s. 4.

The court is asked to determine the amount of child support payable for an adult child when that child is attending university and when the child is residing with the Petitioner. [48] The table amount is usually not ordered when an adult child is attending university away from home,. The means and needs approach identified in s. 3(2)(

b) and 4(

b) when the payor ’ s income exceeds $150,000.00 is more commonly used to determine the amount of child support payable. Both parties agree in this circumstance the amount of child support determined by applying the guidelines as if the children were under the age of majority is inappropriate. On a retroactive basis, the Petitioner seeks $500.00 per month per adult child attending university away from home and $1,000.00 per month per child residing at home. On a go-forward basis the Petitioner seeks 50% of the table amount and the full table amount respectively.

I see no reason to make a distinction in these circumstances. [49] The Respondent submits that no amount is payable for the children as adults while at university since all their needs are being met by contributions from both of the parties, RESP funds, trust funds set up by the grandparents and the children ’ s own resources. [50] The Respondent does not disagree with the children's attendance at a university away from Cape Breton.

The Petitioner submitted financial statements providing information about her income and expenditures including expenses incurred on behalf of the children and not covered through their own resources, RESP's and trust funds. [51] The Respondent filed a statement of money paid to the children while attending university. Details of the children's income were not provided. However, I have considered that some of that income was used to pay a share of their university expenses.

The Respondent and the children fix a budget independent of the Petitioner for their expenses while attending university and funds are allotted to cover the budgeted amounts from RESP funds, family trusts, and the children's resources. The Respondent controls the payout of money from RESP's and family trust. [52] I am satisfied that the Petitioner has incurred reasonable extra costs on behalf of adult children including travel costs, start up costs, clothing, telephone and internet, etc. not covered by these other sources.

She is also required to maintain a home for the children when they are in university as a place to return during school breaks. I find her financial ability to contribute to these expenses limited in comparison to the Respondent's financial capacity. In 2007 when Elsie began university, the Petitioner's income was $29,563.00 while the Respondent's income was $344,760.00.

While the Petitioner's income has increased since then, her financial capacity to contribute to these expenses is significantly less than the Respondent's capacity. [53] When the adult child is residing with the Petitioner during breaks from university, the Petitioner requests that support be determined by reference to the table amount and not the means and needs approach. This differs from her submission on retroactive support.

The Respondent's submission that no amount is payable since the adult child ’ s needs are being met implies the court determine that the table amount is inappropriate and that no amount is appropriate having regard to the means, needs, and other circumstances of the child and the abilities of each spouse to contribute to the support of the child. [54] In Lu v. Sun , supra , the court stated: 26 The Father argued that the judge erred in ordering him to pay one-half of the table amount for the months his daughter attended university for her second and ongoing years.

He argued this amount was arbitrary; that there was insufficient evidence of the mother's incremental costs of keeping a home available for their daughter for the trial judge to determine this amount....

... 28 The father has not satisfied me that the judge erred in her approach of using the table amount as a guide when she determined theamount of child support to be paid in addition to the post secondary education costs for the months when their daughter attendeduniversity in her second year and onward. Setting support involves the exercise of discretion.

There was evidence before the judge onwhich she could exercise her discretion, including the mother's income and budget and the detailed financial information of thedaughter's post secondary education costs, indicating for instance that these enumerated costs did not include an amount for her food,telephone and Internet charges. The judge's approach of ordering an amount equal to one-half the table amount recognizes that there areongoing costs to the mother of maintaining the daughter's permanent home and of covering incidentals that she as the parent with whomher daughter lives has to provide for her daughter.

It also recognizes the reduction in some expenses such as food and utilities at homethat result from her daughter being away during the months she attends university. Armaz v. Van Erp, (ON SC),[2000] O.J. No. 1544, para 12. [55] The Petitioner's costs are increased when the adult children are residing with her during the school breaks. The Petitioner’sbudget included costs incurred on behalf of the children. The amounts claimed fall short of the table amount based on the Respondent'sincome. The Respondent’s claim that no support is appropriate is not reasonable. The court in Lu v.

Sun, supra approved the trialjudge's order of the full table amount of support for adult children while residing with the custodial parent during the summer. Thepayor's income in Lu v. Sun, supra, did not exceed $150,000.00. [56] I find the amount of child support requested by the Petitioner of $500.00 per month per adult child while attending universityaway from home and $1,000.00 per month per child while residing with her during breaks from school to be reasonable.

I note that theseamounts are only 27% and 54% of the table amount for two children based on the Respondent's income. [57] The Petitioner requests that child support payments be effective January 1, 2006. The parties continued to reside in the sameresidence until March, 2006. Presumably the children's needs were being met by the financial means of both parties during this time. Amore appropriate start date would be April 1, 2006 when the Respondent left the home.

This was nine months prior to the Petitionerfiling her application for child support. [58] I am satisfied that it is appropriate to order retroactive support effective April 1, 2006. The Respondent had the capacity topay child support, a retroactive order would not cause him undue hardship, the children did not have the benefit of an appropriate level ofsupport during this time and the Petitioner's financial resources were limited.

She assumed a disproportionate share of child relatedexpenses at this time. [59] The ordering of a retroactive amount of child support will result in some transfer of wealth to the Petitioner. This is becausethe Respondent did not pay the appropriate level of child support in a timely manner. Also, the Petitioner was not responsible for delaysin a final hearing being held in a timely manner.

The Respondent is more responsible for the hearing not proceeding in a timely mannerdue to disclosure delays and changing counsel. [60] While the Petitioner's Pre-Trial Brief suggested support be effective the date of the Interim Order, I am satisfied theRespondent was not prejudiced by this. It was clear that he wanted support based on an income level of $150,000.00 per year and thePetitioner wanted child support based on his income reported for income tax purposes. The children were minor children residing withthe Petitioner from April, 2006, until July, 2007, when the Interim Order was issued.

The Respondent’s financial contribution duringthis time will be considered in the court’s assessment of the amount of spousal support.. [61] The total amount of child support payable for the children while they were minors and either residing at home or at universityfrom April 1, 2006, until August, 2012 is $289,100.00 calculated as follows: 1. April, 2006, to December, 2006 - three children Income - $344,375 = $5,284 x 9 months = $47,556.00 2. January, 2007, to December, 2007 - three children

Income - $344,760 = $5,284 x 12 months = $63,408.00 3. 2008 - January and February - three children Income - $364,596 = $5,570 x 2 months = $11,140.00 4. 2008 - March - December - two children Income - $364,595.93 = $4,317 x 10 months = $43,170.00 5. 2009 - January to December - two children Income - $309,725 = $3,702 x 12 months = $44,424.00 6. 2010 - January to March - two children Income - $309,725 = $3,702 x 3 months = $11,106.00 7.

April, 2010 to August, 2012 - one child Income - $309,725 = $2,355 x 29 months - $68,295.00 Total: $289,100.00 (rounded) [62] Accepting the submission of counsel for the Petitioner that a reasonable amount of support for the children as adults is $500.00 per month per child while in attendance at university and $1,000.00 per month per child when not attending university, the total amount of child support payable for adult children from March, 2008, when Elsie turned 19 until November, 2012 is $52,500.00 calculated as follows: 1. Elsie - 26 months @ $500.00 = $13,000.00 16 months @$1000.00 = $16,000.00 2.

Nicholass - 20 months @$500.00 = $10,000.00 12 month @$1000.00 = $12,000.00 3. Katrina - 3 months @ $500.00 = $1,500.00 Total $52,500.00 [63] The total amount of child support payable from April, 2006 until November, 2012, is $341,600.00. The Petitioner is entitled to credit for the amount of child support paid which I have calculated based on the submissions of counsel for the Petitioner to be $106,591.00 leaving a balance of $235,000.00 (rounded).

This amount is to be further reduced by $10,500.00 to allow for a reduction in the table amount payable on the Respondent ’ s income that exceeds $150,000.00 while the minor children attended university away from home.

This leaves a balance of $224,500.00 (rounded) in retroactive support owed by the Respondent to the Petitioner. [64] Ongoing support of $500.00 per month per child is due and payable beginning December 1, 2012 and each month thereafter while the children are attending university and $1,000.00 per month per child during the months they are residing with the Petitioner while they remain dependent children. SPOUSAL SUPPORT:

[65] The Petitioner seeks ongoing spousal support of $5,000.00 per month and retroactive spousal support from the date of theInterim Order in July, 2007, of $172,800.00 based on an imputed annual income of $309,000.00. Prior to the issuance of the InterimOrder, the Respondent had been contributing financial assistance of $1,600.00 per month, as well as providing in kind services andproducts from the farm. He also paid for orthodontic expenses for one of the children. In addition to child support, the Interim Orderprovides for spousal support of $1,400.00 per month based on an annual income of $150,000.00.

The Respondent’s submission is thatno ongoing spousal support should be awarded given the circumstances of the parties and that no retroactive spousal support should beordered. [66] The court is governed by s. 15.2 of the Divorce Act with respect to spousal support. [67] Subsection 15.2(4) and (6) provide,

(4) FACTORS - In making an order [for spousal support] the court shall take into consideration the condition, means, needs and othercircumstances of each spouse, including (

a) the length of time the spouses cohabited; (

b) the functions performed by each spouse during cohabitation; and © any order, agreement or arrangement relating to the support of either spouse. ...

(6) OBJECTIVES OF SPOUSAL SUPPORT ORDER - An order [for spousal support] that provides for the support of spouse should (

a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (

b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above anyobligation for the support of any child of the marriage; © relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (

d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. [68] Counsel for the Respondent referred the court to Baker v. Baker, 2003 NSSC 203 at paragraph 17: 17 In attempting to determine the issue of spousal support the Supreme Court of Canada's analysis in Moge v. Moge(SCC), [1992] 3 S.C.R. 813 and Bracklow v. Bracklow (SCC), [1999] S.C.J. No. 14 are at the forefront. A number ofprinciples or basics exist such as: 1. There are now three basis for spousal support; compensatory; non-compensatory, i.e. need alone; and contractual. 2. There is no one philosophy of support; i.e. mutual obligation vs. clean break. They co-exist.

3. Issues of entitlement and quantum/duration are weighed by consideration of all of the factors and objectives in s. 15.2(4) and (6)and specifically s. 17(4.1) which is the application to vary

section of the Divorce Act. "The method to follow in determining a support dispute starts with the objectives and all must be considered. Noone objective is paramount (see Moge v. Moge, (SCC), [1992] 3 S.C.R. 813 and Bracklow v. Bracklow, (SCC), [1999] 1 S.C.R. 420 at page 440). The factors are looked at against the background of the objectives. (Bracklow, p. 440, par.36)." Higgins v. Higgins, [2000] N.S.J. No. 48 N.S.C.A. 4. It is a matter of applying the relative factors in striking the balance that best achieves justice in the particular case before the Court.(Bracklow, supra par. 32). 5.

The duty of a Court called upon to exercise discretion under s. 15.2(1) and s. 17(1) of the Divorce Act is to have regard to all of thefactors in s. 15.2(4) and s. 17(4.1) in order to achieve the objective set out in s. 15.2(6). 6. Quantum of support does not always equal the amount of the need. [69] The Petitioner was 24 years old when she married the Respondent in 1987. They resided together for 18 ½ years. ThePetitioner had earned a R.N. Diploma from the VG Hospital in 1982 and worked full time as a nurse prior to returning to Cape Breton in1987.

The Respondent earned a Plant Science Degree from NS Agricultural College in 1987 and returned to Cape Breton to work in thefamily business. [70] Initially the parties resided in a home located on the Respondent’s family farm . With the assistance of a no interest loan fromthe Respondent’s father they constructed a log home near the farm and resided there throughout their marriage. The Petitioner wasemployed full time as a nurse with the Northside General Hospital until the birth of Elsie in 1989.

She took maternity leave after thebirth of each of her children - 4 months for Elsie; 6 months for Nicholass; and one year for Katrina. The Petitioner found it very difficultcoping with full time employment and providing care to her children. She gave up her full time nursing position to work part time. Shelost pension benefits The Respondent worked full time on the family farm and his income increased over the years from $20,000.00 toin excess of $300,000.00.

He was given shares in the family’s businesses by his father in the 1990's. [71] During the marriage the Petitioner was primarily responsible for child care, housework, as well as yard work. TheRespondent’s child care role was limited but he did assist on some occasions. He attended school meetings if the Petitioner was notavailable and coached the children’s soccer teams. He took them on trips when they graduated from school as well as vacations. [72] The youngest child, Katrina, developed serious health problems when she was 3 or 4 years old which required a great deal ofcare and attention.

Although the Petitioner provided most of the care for Katrina, both parties were affected by her illness. They agreedthe Petitioner would stop working to stay home and care for the children. As a result, the Petitioner did not work from 1997 - 2001. [73] The parties agreed that they did not need the Petitioner’s income as the Respondent’s income from the farm was enough to lookafter the family’s financial needs. The Respondent began contributing to a spousal R.R.S.P. The Petitioner claims the Respondent wasinvesting money in the family business for their future security and retirement.

The Respondent denies this and stated that he wasrequired to invest part of his income in the business for business purposes. [74] When Katrina’s health improved, the Petitioner wanted to return to work in order to get out of the home as well as to make acontribution to the family finances. Her ability to work was affected by arthritis and other health issues. She began working as casualrelief in the emergency department of the Northside General Hospital 8 - 20 hours per week. She later began working at a private clinicin the hospital. That position has grown and she no longer works in emergency.

She has her own business and is able to work fromhome. Her work provides flexibility and it does not interfere with her health too much. Her income has increased from $28,705.00 in2006 to $83,537.00. in 2010. She anticipates a loss of some of this income due to changing work circumstances. The Petitioner’s budgetshows a monthly deficit of approximately $2,800.00.

[75] The Petitioner has developed a very close relationship with Jim Gillis. Although they purchased land and constructed a hometogether, located on the Bras d’Or Lakes, she denies they are living in a common law relationship. Each has their own residence. Neither pays the other’s ongoing monthly expenses. She enjoys spending time with Mr. Gillis but she is not ready to make acommitment to a full time relationship. She purchased the property with him to provide a summer place for her children. She visits oncea month in the winter but more often in the summer. Mr. Gillis spends a lot of his time there.

They do spend time together at eachother’s residence. They hosted a house warming party after the home was constructed. They had a shared joint bank account whileconstructing the home but it has not been used since the cottage was finished in 2009. She obtained a line of credit on her own propertyto assist with the construction financing. She signed a release in June, 2011, to allow Mr. Gillis to get funds to pay off lines of credit aswell as financing the building of another structure on the property.

The total amount of her contribution towards the cost of the propertyhas not been finalized. [76] Since separation the Petition has been able to obtain employment commensurate with her training and education which hasassisted her in achieving a degree of self sufficiency. However, her employment does not provide for pension benefits or medicalbenefits. The Petitioner depended upon the Respondent’s income during the marriage. There is a significant disparity in their incomeearning capacity and personal wealth at the time of separation. [77] The Respondent’s income exceeded $300,000.00 until 2009.

It fell to $175,000.00 in 2010 and $225,000.00 in 2011 as a resultof working less due to disc problems in his back. For many years, both prior to and after the separation, the Respondent, pursuant to anagreement among shareholders returned a portion of his bonus to the Corporation in the form of a shareholder loan. The purpose of theloan was to provide funds to ensure the ongoing viability of the farm operation. Unanimous shareholder consent is required for him toremove these funds.

Therefore, the Respondent claims his ability to pay support is limited and should not be based on his reportedemployment income for income tax purposes. The Respondent also claims his capacity to earn an income similar to the income earned inthe years prior to and after the separation is limited by medical concerns related to his back. He continues to be involved in the familybusinesses. [78] Cromwell, JJ.A. in Fisher v. Fisher, 2001 NSCA 18 stated: 82 The fundamental principles in spousal support cases are balance and fairness. All of the statutory objectives and factors must beconsidered.

The goal is an order that is equitable having regard to all of the relevant considerations. As was stated in Bracklow, supra, at[paragraph] 36: ... There is no hard and fast rule. The judge must look at all the factors in the light of the stipulated objectives of support, and exercise hisor her discretion in a manner that equitably alleviates the adverse consequences of the marriage breakdown. ... 85 Of course, marriage is not a guarantee of support upon divorce. As L'Heureux-Dubé J. put it in Moge v.

Moge,(SCC), [1992] 3 S.C.R. 813 at 864, "[m]arriage per se does not automatically entitle a spouse to support" and the support provisions ofthe Divorce Act are not a "...general tool of redistribution which is activated by the mere fact of marriage." Nor does the law relating tospousal support guarantee to either spouse the standard of living which they had during the marriage: Moge at 870; Thompson v.Thompson (1998), (NS SC), 172 N.S.R. (2d) 50 (S.C.) at p. 68 - 69; Read v. Read (2000), 2000 NSCA 33 ,183 N.S.R. (2d) 181 (C.A.).

However, in a long term marriage, particularly where one party took on primary responsibility for child careand other domestic matters, a significant disparity in standards of living absent support will be a strong indicator that a support orderwould be appropriate. This point was put by L'Heureux-Dube J. in Moge in these words at p. 870: Although the doctrine of spousal support which focuses on equitable sharing does not guarantee to either party the standard of livingenjoyed during the marriage, this standard is far from irrelevant to support entitlement. ...

Furthermore, great disparities in the standardof living that would be experienced by spouses in the absence of support are often a revealing indication of the economic disadvantagesinherent in the role assumed by one party. As marriage should be regarded as a joint endeavour, the longer the relationship endures, thecloser the economic union, the greater will be the presumptive claim to equal standards of living upon its dissolution. ... [79] The Petitioner is entitled to support on a compensatory and non compensatory basis. She assumed primary responsibility for

the care of the children before and after the parties separation. They were married for 18 years. She gave up a career and benefits to care for the parties children. This economic loss or disadvantage was a direct result of the role she assumed in the marriage. Her standard of living was dependent on the financial resources of the Respondent. Two objectives of a support order found in s. 15.2(6)(

a) and © are to “ recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown ” and “ relieve any economic hardship of the spouses arising from the breakdown of the marriage ” . [80] The Petitioner ’ s relationship with Mr. Gillis has some attributes of a common law relationship but, in my opinion, overall does not meet the requirements for a finding that they are living in a common law relationship. This relationship does not disentitle her to support. However, the Petitioner ’ s association with Mr.

Gillis should be considered in determining the amount of spousal support since her standard of living benefits from this association. [81] I have reviewed the Petitioner ’ s means as well as her needs. The Petitioner ’ s financial statements disclose a monthly deficit of approximately $2,800.00. [82] The extent of the Respondent ’ s ability to pay has to be determined. The Petitioner claims the Respondent ’ s income should be imputed at the amount the court imputed for child support purposes while the Respondent claims support, if it is to be paid, should be based on $150,000.00 per year. [83] P.

Bryson, JJ.A in Richards v. Richards

(2012) NSCA 7 at paragraphs 41 and 45 stated: 41 Founding the imputation of income on Child Support Guidelines for the purposes of awarding spousal support may be appropriate where child support is in issue and it would be problematic to have two spousal incomes imputed: one for child support purposes and the other for spousal support purposes. But the purpose of each is different. Here I would endorse the comments of Justice Greckol in Jean v.

Jean, 2006 ABQB 938 , at paras. 108 and 109 : 108 The underlying rationale for a child support order is that the children of the marriage should not be worse off as a result of the marriage breakdown and that both parents should bear the responsibility of child-rearing despite the marriage breakdown. Entitlement to child support is automatic if the child is determined to be a child of the marriage. Quantum is determined by the Guidelines, which is a Regulation that has the force of law, and which requires the ascribing of a "hard and fast"number to the income of a payor spouse.

This may explain the strictness and severity of the imputation provisions found in s. 19 of the Guidelines, particularly as they relate to the payor spouse's underemployment or unemployment. 109 By contrast, the objectives of a spousal support are to: (

a) recognize any economic advantages or disadvantages arising from the marriage or its breakdown; (

b) apportion any financial consequences arising from the care of any child of the marriage over and above the obligation for support of any child of the marriage; © relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (

d) promote, as far as practicable, the economic self-sufficiency of each spouse within a reasonable period of time. .... 45 Like Justice Greckol, I would prefer to base an imputation of income on the "means factor" in s. 15.2(4) of the Divorce Act . Means is a broad term and should be generously interpreted to give effect to the statutory purposes of spousal support. Certainly, "means" would include all financial resources, capital and income, as well as earning capacity. In this case, that would extend to a salary that Mr. Richards could receive from JEL with Ms.

Richards' consent -- effectively given by her resort to the court. [84] Taking into account the Respondent ’ s means as defined in the preceding paragraph and that income of approximately $300,000.00 had been imputed for the purposes of determining child support, I am satisfied he has an earning capacity of approximately

$300,000.00 per year for purposes of determining spousal support.

I would fix the Petitioner ’ s earning capacity at $80,000.00 per year. [85] Having considered the condition, means, needs and other circumstances of each spouse, including the factors and objectives set out above, the court finds that the Petitioner should receive spousal support on a compensatory and non compensatory basis in the amount of $4,000.00 per month commencing December 1, 2012. [86] The spousal support advisory guidelines suggest a range of $4,348.00 - $5,797.00 per month for the parties incomes with two adult children receiving child support of $1,333.00 per month.

The guidelines suggest a duration of 9.25 - 18.5 years from the date of separation subject to variation or possibly review. The Petitioner has been receiving spousal support for 5-1/2 years. [87] The amount determined by the court is slightly below the low end of the guidelines range. The court determines this amount to be appropriate considering the Petitioner ’ s standard of living benefits from her association with Mr. Gillis. The amount of this benefit is difficult to quantify but it should be considered as it impacts her non compensatory needs.

The Petitioner also benefits from the children ’ s post secondary education expenses being paid without contribution by herself. [88] The Petitioner indicates a willingness to accept a lump sum in lieu of ongoing support. If the parties want to pursue this option, I will defer making the spousal support order. If no agreement is reached, the Order will issue subject to the right of either party to apply to vary the order in the future based on a material change of circumstances.

Retroactive Spousal Support [89] The Petitioner seeks an adjustment to the amount of the interim spousal support order more in line with her needs and the Respondent ’ s ability to pay. The interim order contemplated such an adjustment if appropriate. The interim order was issued in 2007 and there have been numerous changes in the parties circumstances including the circumstances of the children since that order was issued.

The court is satisfied that the Respondent did not pay an adequate amount of spousal support from July, 2007, onward when he had the ability to pay a greater amount. [90] Applying the spousal support advisory guidelines as a guide in calculating the amount of retroactive spousal support has been difficult because of the change in circumstances of the children and the changing income of the parties over the last 5 years. [91] I have considered the condition, means, needs and other circumstances of each of the spouses during this time.

The payment of on-going spousal support is tax deductible to the payor and tax inclusive to the payee. The Petitioner would have been entitled to claim an equivalent to married deduction for one of the children during part of this time. The Petitioner has benefited indirectly from the full table amount of child support paid for children under the age of 19 while they were attending university where their costs, including living costs, were paid. The Petitioner ’ s standard of living benefited from her association with Mr. Gillis.

I have also considered the Respondent was making interim spousal support payments of $1,400.00 per month which was tax deductible to him but included in the income of the Petitioner. [92] I find the Respondent should pay the Petitioner $70,000.00 in spousal support for the period July 1, 2007 - November 30, 2012 by way of a lump sum. This lump sum payment would not be tax deductible to the Respondent or included in the taxable income of the recipient. DIVISION OF ASSETS: [93] The parties agreed to the following division of matrimonial property:

1) Ms. Eyking has sole ownership of the matrimonial home situate at 311 Millville Highway, Millville, Nova Scotia, with an agreed upon market value of approximately $132,000.00. 2) Mr. Eyking has sole ownership of the cottage situate at 1611 Hillside Boularderie, Nova Scotia, with an agreed upon market value of approximately $178,000. 3) Mr. Eyking paid an equalization payment to Ms.

Eyking in the amount of $22,500 equalizing the division of the matrimonial home and cottage between the parties. 4) The RRSP ’ s held by the parties in the total amount of $355,175 at December, 2005, shall be divided equally between the parties by a tax free spousal rollover. ($274,431 registered in name of Chris Eyking and $80,744 registered in name of Karen Eyking) 5) Ms. Eyking retained ownership of the furniture and contents of the matrimonial home. 6) Mr. Eyking retained ownership of the furniture and contents of the cottage. 7) Ms. Eyking retained the 2004 Passat Volkswagen. 8) Mr.

Eyking retained a Toyota Tacoma four wheel drive truck and a 1995 boat valued at $2,500. 9) There were no matrimonial debts at the time of separation. [94] The parties were unable to agree on a division of the Respondent ’ s shareholder loans and equity interest in the family businesses. The Petitioner seeks a determination that shareholder loans of $861,503.00 are matrimonial assets which should be divided equally between the parties.

The Petitioner claims an unequal division of the Respondent ’ s equity interest in the family businesses in the form of a lump sum payment equal to 40% of the value of the Respondent ’ s shares pursuant to s. 13 of the Matrimonial Property Act or alternatively based on the Petitioner ’ s contributions to the Respondent ’ s businesses pursuant to s. 18. The value of this claim would exceed $1,500,000.00, based on a business valuation prepared by Brian Keough. [95] The Matrimonial Property Act , R.S.N.S., 1989, c 275 (the Act) governs the division of property between spouses on the dissolution of marriage.

The relevant provisions of the Act include s. 2 (a) , s. 4(1) , s.13 and s. 18 2 In this Act , (a) "business assets" means real or personal property primarily used or held for or in connection with a commercial, business, investment or other income-producing or profit-producing purpose, but does not include money in an account with a chartered bank, savings office, loan company, credit union, trust company or similar institution where the account is ordinarily used for shelter or transportation or for household, educational, recreational, social or aesthetic purposes; ... "matrimonial assets" defined 4

(1) In this Act , "matrimonial assets" means the matrimonial home or homes and all other real and personal property acquired by either or both spouses before or during their marriage, with the exception of

(

a) gifts, inheritances, trusts or settlements received by one spouse from a person other than the other spouse except to the extent to which they are used for the benefit of both spouses or their children; (

b) an award or settlement of damages in court in favour of one spouse; © money paid or payable to one spouse under an insurance policy; (

d) reasonable personal effects of one spouse; (

e) business assets; (

f) property exempted under a marriage contract or separation agreement; (

g) real and personal property acquired after separation unless the spouses resume cohabitation. ... Factors considered on division 13 Upon an application pursuant to

Section 12, the court may make a division of matrimonial assets that is not equal or may make a division of property that is not a matrimonial asset, where the court is satisfied that the division of matrimonial assets in equal shares would be unfair or unconscionable taking into account the following factors: (

a) the unreasonable impoverishment by either spouse of the matrimonial assets; (

b) the amount of the debts and liabilities of each spouse and the circumstances in which they were incurred; © a marriage contract or separation agreement between the spouses; (

d) the length of time that the spouses have cohabited with each other during their marriage; (

e) the date and manner of acquisition of the assets; (

f) the effect of the assumption by one spouse of any housekeeping, child care or other domestic responsibilities for the family on the ability of the other spouse to acquire, manage, maintain, operate or improve a business asset; (

g) the contribution by one spouse to the education or career potential of the other spouse; (

h) the needs of a child who has not attained the age of majority; (

I) the contribution made by each spouse to the marriage and to the welfare of the family, including any contribution made as a homemaker or parent; (

j) whether the value of the assets substantially appreciated during the marriage; (

k) the proceeds of an insurance policy, or an award of damages in tort, intended to represent compensation for physical injuries or the cost of future maintenance of the injured spouse; (

l) the value to either spouse of any pension or other benefit which, by reason of the termination of the marriage relationship, that party will lose the chance of acquiring; (

m) all taxation consequences of the division of matrimonial assets. ... Contribution to business asset by spouse 18 Where one spouse has contributed work, money or moneys worth in respect of the acquisition, management, maintenance, operation or improvement of a business asset of the other spouse, the contributing spouse may apply to the court and the court shall by order (

a) direct the other spouse to pay such an amount on such terms and conditions as the court orders to compensate the contributing spouse therefor; or (

b) award a share of the interest of the other spouse in the business asset to the contributing spouse in accordance with the contribution,

and the court shall determine and assess the contribution without regard to the relationship of husband and wife or the fact that the acts constituting the contribution are those of a reasonable spouse of that sex in the circumstances. [96] First, I will consider the Petitioner ’ s claim pursuant to s. 18 of the act. In order to base a claim pursuant to this section, the Petitioner must show that she has contributed work, money or money ’ s worth in respect to the acquisition, management, maintenance, operation or improvement of the business asset of the other spouse.

The Petitioner ’ s assumption of the housekeeping, child care and other domestic responsibilities while the Respondent was working in the business is more appropriately considered under s. 13 and not s. 18 under the guise of a contribution of “ money ’ s worth ” . See Ryan v.

Ryan , 2010 NSCA 2 . [97] Under s. 18, the division of a business asset is made solely in accordance with the contribution of the non owning spouse to the business, which in this case consisted of hosting dinners for farm employees, going with the Respondent on Sunday afternoons while he fed the chickens, and participating in a community egg festival sponsored by the Eyking businesses.

The Petitioner indicated her contributions were limited and not large. [98] I agree with the submission of counsel for the Respondent that the Petitioner did not make any significant or direct contribution to the businesses that warrant compensation pursuant to s. 18 of the Act . Classification/Division of Shareholder Loans and Equity Investment [99] Campbell J. in Tynes v. Tynes , 2011, NSSC 18 at paragraph 86 stated: “In addressing a claim pursuant to the Matrimonial Property Act , supra, there are various well known steps to be taken.

First the assets are classified as between matrimonial and non matrimonial assets by reference to the definition

section of the Act. Then they are valued, assigned to each of the parties and, with respect to the matrimonial assets, an equalization payment is calculated to be paid by one spouse to the other to make the overall division of matrimonial assets equal. If any of the factors in

section 13 demand an unequal division of matrimonial or non matrimonial assets, the court has discretion to do so.” [100] The parties agreed that the Respondent ’ s equity investment in the family businesses are business and not matrimonial assets. However, the Petitioner asks the court to consider s. 13 (d), (e), (f), (g), (I), (

j) and (

l) of the Act and order a division of this equity investment since a division of the matrimonial assets only in equal shares would be unfair or unconscionable. I will have more to say on this later in the decision. [101] The parties are not able to agree on the classification of the shareholder loans. The Respondent would classify the loans as business assets. The Respondent claims the purpose of the loans is to ensure the continued operation of the business. Each shareholder is required to contribute and is unable to remove funds unless by unanimous consent of the other shareholders.

Witnesses on behalf of the Respondent testified that there was a long standing business practice for each shareholder to return a portion of their bonus each year to the company as additional equity in order to ensure the financial stability of the company, provide funds for future capital expenditures and meet unexpected risks in the business. The Respondent was questioned about the purpose of the loans and whether he viewed the loans as a retirement plan. He replied: “ A. Well, it was never ever set up for the purposes of saying we’re going to draw this money out later and have it tax free in our hands.

It was never ever set up that way. It was never mentioned that way. It was always mentions about – because of the future of the farm. Whether it was for the purposes of the downfalls that are coming, whether something could happen, or whether it’s to buy out father his shares, right. We have – you know, he’s getting up in age. We’re very fortunate that he’s still involved.

But you know, he’s getting – mother’s health is not as good as it was, and it’s just that he’s going to be going out, so we just got to get prepared.” And again: "Well I said it was future years for - you know, for the farm, that the farm be healthy, and if we're still involved, or I'm still involved, then we'd be involved in that and the benefit of that. But I never ever said it was for anything else. I never said it was a retirement fund or anything like that.

Q. Did you ever view it as a retirement fund? A. I viewed it as future planning for a sound, privately-owned business. Future planning for the transition from one family generation tothe next and that to the next. It's the legacy. The Eyking farm is a legacy. It's part of the heritage, right?

And we have a -- I have alegacy to uphold ...." [102] The Petitioner claims the loans are matrimonial assets because they were acquired with income earned during the marriage,funds were withdrawn from the shareholder loan account for personal expenses and the balance remaining was intended for their futuresecurity and retirement.

The Petitioner also claims the after tax income returned to the corporation without interest each year was notrequired by the company or invested to generate an income in the entrepreneurial sense and therefore is not a business asset. [103] The Petitioner was aware of the arrangement to return a portion of the Respondent’s bonus to the family business. However, sherelied upon the Respondent’s assurance that funds would be there for their future security and retirement.

Both parties agreed theRespondent’s involvement with the farm would provide for the financial needs of the family while the Petitioner stayed at home to carefor the children. She gave up full time employment and the right to her own pension. [104] Business assets are defined in s. 2(

a) of the Act. The onus of proving an asset is exempt is with the party who claims theexemption, see Best v Best (1991) (NS CA), 102 NSR (2d) 61 (CA). A determination of whether an asset meets thedefinition of a business asset requires an

interpretation of that definition. [105] In Clarke v. Clarke (1991), (SCC), 101 N.S.R. (2d) 1 (S.C.C.), the Supreme Court of Canada stated that theMatrimonial Property Act, supra, must be given a liberal

interpretation in keeping with the intention of the Act at pages 15 and 16: [22] Thus the Act supports the equality of both parties to a marriage and recognizes the joint contribution of the spouses, be it financialor otherwise, to that enterprise. The Act goes further and asserts that, due to this joint contribution, both parties are entitled to shareequally in the benefits that flow from the union – the assets of the marriage. The Act is accordingly remedial in nature.

It wasdesigned to alleviate the inequities of the past when the contribution made by women to the economic survival and growth of thefamily was not recognized. In interpreting the provisions of the Act the purpose of the legislation must be kept in mind and theAct given a broad and liberal construction which will give effect to that purpose. [106] In Tibbetts v.

Tibbets (1992), 1992 NSCA 17 , 119 N.S.R. (2d) 26 (C.A.), the Nova Scotia Court of Appeal noted thatas a result of the Supreme Court of Canada decision of Clarke, supra, earlier restrictive decisions respecting the classification of assets asbusiness exemptions must be re-examined. Hallet J.A. states at page 33: [18] The earlier decisions in this Province, such as Lawrence v. Lawrence, supra, must be read in light of this binding statement of theSupreme Court of Canada in Clarke v. Clarke, supra, with respect to the

interpretation of the term "business assets" as defined in theAct. Considering that the definition of matrimonial assets includes all property of the spouses, unless exempted from thedefinition, the term "business assets" has been fairly confined by the Supreme Court of Canada to assets that are truly of abusiness character. An investment portfolio is not a business asset in the true sense of that word as interpreted by the SupremeCourt of Canada notwithstanding its purpose is to earn income.

The husband's investment portfolio was accumulated from earningssurplus to his family's needs and although one of the purposes of investing was to earn money, the primary purpose was to secure areasonable level of retirement income for the family therefore these funds were properly classified as matrimonial assets by thetrial judge; he applied the decision of the Supreme Court of Canada in Clarke v. Clarke, supra. [107] Hallett, J.A., also noted in Tibbetts, that to be a true business asset within the meaning of the Act, the asset must be working inthe entrepreneurial sense at page 33:

[17] Notwithstanding the broad scope of the words used in the definition of business assets in the Act and the decision of Mr. JusticeHart in Lawrence v. Lawrence, supra, generally speaking, an investment portfolio of stocks, bonds, GICs, mutual funds or the like doesnot involve the employment of capital for the purpose of generating income in an "entrepreneurial sense". [108] Further, Hallett, J.A., also noted that one must examine how the funds were acquired in the classification determination.

Hallett,J.A., noted that the investment protfolio was comprised of funds diverted from family use, and thus were properly classified asmatrimonial and not business at page 33: [16] It would appear that the legal distinction between capital property (commonly referred to as assets in accounting terminology) andincome has been discarded by the Supreme Court of Canada in classifying pension income as a matrimonial asset following marriagebreakdown. Madam Justice Wilson agreed with Mr. Justice Hart that pensions are "funds comprising income diverted from the date onwhich it was earned". In Lawrence v.

Lawrence, (1981), (NS CA), 47 N.S.R. (2d) 100 (A.D.) Mr. Justice Hart hadstated that money invested in savings certificates, stocks or bonds would be business assets. The evidence in this case would indicatethat the stocks and mutual funds held by the husband were acquired from earnings from his employment and thus were, in asense, funds comprising income diverted from other family uses. [109] The Nova Scotia

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