R. v. J.R., 2018 NBCA 12

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 10-17-CA M.R. APPELLANT M.R. APPELANTE - and - - et - J.R. RESPONDENT J.R. INTIMÉ M.R. v. J.R., 2018 NBCA 12 M.R. c.

J.R., 2018 NBCA 12 CORAM: The Honourable Justice Quigg The Honourable Justice Green The Honourable Justice Baird CORAM : l’honorable juge Quigg l’honorable juge Green l’honorable juge Baird Appeal from a decision of the Court of Queen’s Bench: January 20, 2017 Appel d’une décision de la Cour du Banc de la Reine : le 20 janvier 2017 History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : inédite Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: September 26, 2017 Appel entendu : le 26 septembre 2017 Judgment rendered: February 22, 2018 Jugement rendu : le 22 février 2018

Reasons for judgment by: The Honourable Justice Baird Motifs de jugement : l’honorable juge Baird Concurred in by: The Honourable Justice Quigg The Honourable Justice Green Souscrivent aux motifs : l’honorable juge Quigg l’honorable juge Green Counsel at hearing: For the appellant: Jacqueline Marie Boucher J.R. on his own behalf Avocats à l’audience : Pour l’appelante : Jacqueline Marie Boucher J.R. en son propre nom THE COURT The appeal is allowed in part with costs of $5,000. LA COUR L’appel est accueilli en

partie avec dépens de 5 000 $. The judgment of the Court was delivered by BAIRD, J.A. I. Background [ 1 ] This convoluted and high conflict divorce proceeding meandered its way through the courts below for approximately six years before it was heard. Engaged are the provisions of the Family Services Act , S.N.B. 1980, c. F-2.2 (“ FSA ”), the Divorce Act , R.S.C. 1985, c. 3 (2nd Supp.), (“ Divorce Act ”), the Federal Child Support Guidelines , SOR-97/175, (“ Guidelines ”), the Spousal Support Advisory Guidelines (“ SSAG ”), and the Marital Property Act , R.S.N.B. 2012, c. 107 (“ Act ”).

As the facts and the procedural background are relevant to the ultimate disposition, I intend to review both in detail. [ 2 ] J.R. and M.R. cohabitated from 1993 until August 1996, were married, and then separated in May 2009. There are two children of the marriage, born in 1998 and 2002 respectively. Following the birth of their second child, the couple agreed M.R. would remain at home so she could home-school the children.

On separation, J.R. was employed full time as a junior accountant with Irving Oil Limited and M.R. had been out of the work force for approximately nine years. [ 3 ] In the immediate aftermath of the separation, J.R. vacated the marital home, took possession of the family vehicle, cancelled the joint credit card, and on December 24, 2009, withdrew his paycheck from the joint bank account, thus leaving M.R. with no financial means to support herself and the children. She testified the joint bank account was overdrawn and she was not able to meet her monthly obligations.

On December 30, 2009, she filed a Notice of Application (Form 73AA), pursuant to the FSA , in which she sought an order granting her exclusive possession of the marital home, sole custody of the children, spousal support, child support and costs.

[ 4 ] In January 2010, following an expedited hearing, J.R. was ordered to pay spousal support in the amount of $750.00 monthly and child support in the amount of $742.00 monthly, based on his 2009 income of $52,180.00. Costs were to be determined at the “return” of the motion. The interim order specified: [p]rovided that the Respondent pays his support payments, the Applicant shall make payments associated with the marital home, including the mortgage, insurance, taxes and utilities.

The parties have acknowledged, and it is therefore ordered, that for the month of January, they shall reconcile payments made within the month of January which have been paid by the Respondent in advance of this Order on account of the payments associated with the marital home. Any amount outstanding is payable forthwith by the Respondent”. [para. 6] [ 5 ] In April 2010, J.R. filed and served a Petition for Divorce, which effectively stayed the proceedings pursuant to the FSA ( s. 117 (1) ). J.R. agreed to a joint custody arrangement and to pay child support in the amount of $742.00 monthly.

He agreed to pay spousal support in “an amount agreed to” for a period of time, and he claimed an equal division of marital property and debt, as well as costs. In the accompanying financial statement, J.R. confirmed his income as $52,180.00 per annum, he listed a bank account which revealed an overdraft of $16,773.00 and RRSPs of $31,000.00, which he agreed should be divided equally. He valued the marital home at $150,000 and the family vehicle at $6,000. He did not record a value for his pension, his severance, or a vacant lot located in the Sussex area.

He listed the mortgage outstanding against the marital home at $133,827, the personal line of credit at $16,699, and a PC MasterCard at $3,573. [ 6 ] In her Answer and Counter-Petition, M.R. claimed sole custody of the children with supervised access and visitation to J.R., child support to be based on his income of $52,000, spousal support to be assessed retroactively, both sums to be secured through a life insurance policy, health insurance, a parenting capacity assessment, a restraining order, an equal division of marital property, alternatively, an unequal division of marital property, and costs.

She also claimed a contribution towards special expenses for the children, pursuant to s. 7 of the Guidelines . None of the above expenses were challenged by J.R. during cross-examination. More will be said with respect to these expenses later. [ 7 ] M.R. claimed an income of $26,554 per annum , which included the combined amount of spousal and child support as ordered, ($1,492 monthly), interest of $4,250 per annum , and rental income of $700 monthly from an apartment located in the marital home.

She claimed an equal division of the equity in the marital home, one half of the value of a vacant lot, one half the value of the family vehicle, one half of the value of a coin collection, one half of the value of the RRSPS, and one half of the cash surrender value of J.R.’s life insurance policy.

Under debts, M.R. claimed one half of the outstanding balance for a Scotiabank Visa, a Citibank Mastercard, one half of a CIBC overdraft, one half of a First Time Home Buyers loan (spousal RRSP), and one half of a PC Mastercard. [ 8 ] From the beginning of the proceedings the parties differed as to what assets and debts would be considered marital.

A review of the transcript reveals the proceedings rapidly deteriorated into a game of hide and seek, with M.R. constantly having to return to the court to request compliance with financial disclosure orders. [ 9 ] In July 2011, following his termination from Irving Oil Limited (April 2010), J.R. filed a Motion to Change child and spousal support (Form 81F). He claimed an annual income of $11,789.56 and sought a reduction in his spousal support to $200 monthly, retroactive to January 1, 2011, claiming he was employed part-time as a fitness trainer at a local gym.

He disclosed an annual income of $69,827.41 for 2010, which included severance pay of $20,456.66 and $13,888.88 from an RRSP withdrawal. His financial statement recorded the value of the marital home at $165,000, the vacant lot at $1,800 for which he claimed an interest of $600, and vacant lot with a value of $4,700, claiming it was a gift from his mother. He listed RRSPs in the amount of $20,000, and deposit receipts of $10,000, acknowledging these should be divided equally. He agreed the mortgage, the MasterCard and the personal line of credit were joint debts.

He also filed a Petition for Bankruptcy in 2011. [ 10 ] Following the separation, J.R. systematically withdrew funds from the RRSP accounts, and he deposited his severance pay in an account in his mother’s name. M.R. had requested an interim order restraining J.R. from divesting himself of any marital assets, however, the interim court orders made no provisions in this regard. In August 2016, when this matter came before the trial judge, there were no assets remaining, other than the marital home.

J.R. successfully requested a retroactive variation of both his spousal and child support payments to 2010 which, as will be observed further, created a credit in his favour. [ 11 ] When J.R. filed his Motion to Change in 2011, he was in arrears in his support payments in the approximate amount of $4,476. M.R. sought confirmation that both her child and spousal support payments would remain the same submitting that income of $52,180 per annum should be imputed to J.R. In addition, she sought an order requiring J.R. to pay $400 monthly towards the arrears of support, and she sought costs.

She deposed J.R. was working, had left two jobs, and had not disclosed his true earnings. J.R.

failed to complete undertakings which remained outstanding from an examination for discovery in June 2010. At a status hearing in December 2010, he advised he would complete them, yet they remained outstanding up to and including the eve of the trial in 2016. [ 12 ] On October 11, 2011, a judge issued a further interim order in which he assessed J.R.’s annual income at $35,000, varied child support to $515 monthly, and spousal support to $450 monthly, effective September 1, 2011, all until further order of the court.

J.R. was ordered to pay $150 monthly towards the arrears of child support, and $70 monthly towards the arrears of spousal support, commencing October 1, 2011. In para. 5 of the order, the judge reserved to J.R. the right to “argue” at trial, whether child and spousal support should be further reduced for the period between January 1, 2011, and August 2011. M.R. was obligated to continue to pay all of the expenses associated with the marital home. [ 13 ] I pause here to note that the amount of the arrears outstanding at the time the order issued were neither assessed, nor were they specified in the court order.

This makes enforcement of a court order for child support and/or spousal support impossible. It should go without saying that a court order which specifies a monthly payment towards outstanding arrears of child and/or spousal support must specify the amount of the arrears outstanding at the time the order is rendered. [ 14 ] On February 18, 2015, a judge issued a “Procedural Order” in which he observed J.R. had failed to answer “any of the undertakings provided at a discovery” in 2010, and he ordered him to comply within 30 days of the order.

In addition, he ordered both parties to provide a “fully completed and sworn financial statement together with full copies of their filed income tax returns and Notices of Assessment for the period of 2010-2013”, along with “current proof of income.” When this order issued, M.R. had secured a part-time position at the Saint John Free Public Library, earning $614.50 bi-weekly. Her total income from all sources (including child support), was recorded as $24,377.49; however, as observed, J.R. was in arrears in both his child and spousal support payments.

On her financial statement, M.R. claimed a contribution for the health and dental premiums she was paying for the benefit of she and the children ($1,100 per annum ), as well as health related expenses of $800 per annum , and extra-curricular activities for the children of $2,250 per annum . [ 15 ] On April 8, 2015, a further “Procedural Order” issued in which it was noted J.R. had failed to comply with any of the procedural requirements “associated with a hearing of this matter”. M.R.’s counsel requested to be removed and M.R. advised she would be self-represented. The matter was set down for a half-day trial.

On May 19, 2015, a further “Procedural Order” issued removing M.R.’s counsel as solicitor of record, and a trial date was set for July 6, 2015. On the return date, the trial was adjourned as J.R. had failed to comply with his disclosure obligations.

A further order issued requiring him to provide income tax returns for the years 2012, 2013 and 2014, his proof of income for 2015, and to provide proof of any pensions or RRSPs he “currently owns.” A status hearing was scheduled for three weeks later. [ 16 ] On August 17, 2015, a further order issued in which it was observed J.R. failed to complete his undertakings as ordered, and he had failed to provide the financial disclosure as ordered.

The order gave him two weeks to complete the undertakings which had been outstanding since 2010, and he was to provide the financial disclosure as previously ordered. [ 17 ] On October 15, 2015, J.R. filed a Notice of Motion (Form 37A), in which he sought a variation of spousal support retroactive to the date of separation (November 2009). In the alternative, he sought a suspension of spousal support until the trial, and he asked for costs.

On February 8, 2016, as a result of a Case Management Conference, an order issued requiring the parties to appear at a date and time to be set by the Supervisor of Client Services, to address the issue of the suspension of spousal support until trial, and the outstanding undertakings. Both parties were required to file their proof of their gross incomes from all sources for 2015, as well as proof of current income for 2016. [ 18 ] On June 21, 2016, almost six years after undertakings were given, a judge issued a further order in which he acknowledged J.R. had still failed to comply with “all” undertakings.

The enforcement of arrears of child and spousal support was suspended effective April 11, 2016, pending the outcome of the trial. [ 19 ] On August 22, 2016, this matter was finally heard. II. The Decision [ 20 ] The contentious issues at trial centered on the division of marital assets and debt, J.R.’s income for prospective support, and whether the existing court orders should be retroactively varied. The trial judge was asked to resolve the following

questions: 1) How should J.R.’s income be assessed bearing in mind he depleted marital assets and added their value to his income from which he was originally ordered to pay support; 2) Was M.R.’s life insurance policy a marital asset? 3) Was J.R.’s severance pay a marital asset or was it income for support purposes? 4) How should spousal support be paid and in what amount? 5) Should there be a retroactive variation of both child support and spousal support to the date separation? 6) What amount should be paid for special expenses? ( s. 7 of the Guidelines ); 7) Should the mortgage be valued as of the date of separation or the date of trial? 8) Was the vacant lot a marital asset? 9) Did M.R. have a legitimate claim for a contribution towards the debts she assumed on separation? [ 21 ] In para. 18 of her decision the trial judge acknowledged that some issues had been resolved as follows: 1) J.R.’s pension from Irving Oil Limited was a marital asset and should be equally divided; 2) the RRSPs with Great West Life had a value of $28,107.23 and would be divided equally; 3) J.R.’s life insurance policy had a cash surrender value of $4,236 and would be divided equally; 4) the marital home was valued at $147,000; 5) the family vehicle was valued at $2,500; 6) the contents of the marital home with the exception of some personal items belonging to J.R. had been divided. [ 22 ] In

summary, the trial judge concluded: 1) The RRSPs were “not considered as income for the purpose of the child support calculation” (para. 33 of the decision);

2) Spousal support was time limited to ten years, and assessed at the high end of the range of the Spousal Support Advisory Guidelines ( SSAG ), retroactively adjusted to 2010, and based on J.R.’s income as follows;

a) February to December 2010, the amount of $533 monthly using an income figure of $55,937;

b) for the year 2011, no spousal support to be paid using an income figure of $21,933 for J.R.;

c) for the year 2012, spousal support of $23 monthly based on J.R.’s income of $52,491;

d) for 2013, 2014 and 2015, no spousal support was ordered based on J.R.’s assessed income of $25,070, $26,107 and $29,056 respectively. 3) Turning to the marital property division, the trial judge determined the following assets would be divided equally;

a) the marital home;

b) the family vehicle;

c) J.R.’s pension;

d) the RRSPs;

e) the cash surrender values of both parties’ life insurance policies;

f) the proceeds from the sale of the vacant lot. [ 23 ] The trial judge excluded J.R.’s severance pay from the division of marital assets, on the basis it had already been included in the income calculation for spousal support purposes, and if it were divided, M.R. would benefit “from it twice” (para. 66 of the decision). She then discussed the marital debts, acknowledging J.R. declared bankruptcy in 2011, and he did not have any debt obligations other than the mortgage.

She reviewed the debts listed by M.R. in her financial statement; however, she opined “the court received no statement of accounts to conclude if these debts are marital or not” (para. 69 of the decision). The Scotiabank Visa, CIBC Visa, Amazon Visa, CIBC overdraft and the First Time Home Buyer’s Loan were excluded from the division. Relying on this Court’s decision in L.T.G. v. C.J.G ., 2011 NBCA 12 , 369 N.B.R. (2d) 202 , the mortgage outstanding against the marital home was assessed as of the date of the trial. Finally, the trial judge made no order with respect to costs.

She reasoned as the parties had agreed with respect to the custody of the children, the only issues before the court were the division of marital assets and debts, child support and spousal support, and the matter lasted one day only (paras. 76-78 of the decision). [ 24 ] In the Judgment Following Hearing or Trial (Form 60A), one finds the following provisions: 1. The parties may request a hearing on short notice in regards to the proper adjustments needed to be made on the amounts of child and spousal support; 2.

If there are any disagreements with respect to finalizing the division of marital property and debts taking into consideration the determination in regards to the property and debts, the parties can request a hearing on short notice to have those issues rendered. [ 25 ] On the latter point, I reiterate what this Court stated in M. C. v. J.O. , 2017 NBCA 15 , [2017] N.B.J. No. 56 (QL) , that litigants are entitled to know what amounts they are receiving or paying as a result of court proceedings. In this case, M.R. was self-represented and the matter had been prolonged for a period in excess of six years.

In my view, it was unrealistic to expect the parties to reach an agreement – post trial, concerning the calculations as noted. In my opinion, the order should have established the amount of the equalization payment, it should have determined the ownership of the marital home, it should have assessed the arrears of support, and there should have been an order for costs. III. Grounds of Appeal [ 26 ] M.R. seeks a reversal of the trial judge’s decision, or alternatively, a new trial. She asserts the trial judge erred

in law or in mixed fact and law when she varied and reduced, or rescinded the child support and spousal support orders to 2010, thuscreating a credit in J.R.’s favor, without consideration of the impact of such an adjustment. She submits further that income should havebeen imputed to J.R. pursuant to s. 19 of the Guidelines.

She alleges the trial judge erred in law or mixed fact and law when she found anentitlement to spousal support based on both compensatory and non-compensatory principles; however, there was no analysis to supporther conclusion that spousal support should be time limited to ten years. [27] M.R. asserts further the trial judge erred when she excluded the debt M.R. assumed on marriage breakdown.She contends the mortgage outstanding against the marital home should have been valued as of the date of separation, on the grounds itwas she who made the mortgage payments following separation, J.R. failed to make his support payments, fell into arrears, and he shouldnot have benefitted from the increase in the equity of the marital home. [28] For the following reasons I agree there were a number of errors in the trial judge’s analysis that warrant theintervention of this Court and I would remit the issues identified in para. 102 of these reasons.

IV. Standard of Review [29] I adopt the reasons of Quigg J.A. in Smith v. Smith, 2011 NBCA 66, 375 N.B.R. (2d) 208, where sheconcludes: In family matters, trial judges’ decisions are given considerable deference. In MacDonald v. MacDonald, 2011 NBCA 25, [2011] N.B.J.No. 81 (QL), Larlee J.A. says: The standard of review that applies to family matters generally is that the judge’s decision must be given considerable deference.

Anappellate court is empowered to set aside or vary a decision or order where it is the product of an error of law, an error in principle, asignificant misapprehension of the evidence or if it is clearly wrong (see Hickey v. Hickey, (SCC), [1999] 2 S.C.R. 518,[1999] S.C.J. No. 9 (QL) para. 11; Van de Perre v. Edwards, 2001 SCC 60, [2001] 2 S.C.R. 1014; Savoie v. Levesque, 2009 NBCA 47,[2009] N.B.J. No. 282 (QL); Ms. P.H. v. Mr. P.H., 2008 NBCA 17, [2008] N.B.J. No. 52 (QL); Milton v. Milton, 2008 NBCA 87, 338N.B.R. (2d) 300, para. 14.; J.E.J. v. S.L.M., 2007 NBCA 33, [2007] N.B.J. No. 249 (QL), para. 35; S.H. v.

V.B., 2007 NBCA 69, 321N.B.R. (2d) 314, para. 2). [para. 7] The standard of review in spousal support cases is discussed in Milton v. Milton, 2008 NBCA 87, 338 N.B.R. (2d) 300, where LarleeJ.A. stated: [...] In addition we will only interfere with a support order where there has been an error in principle, a significant misapprehension of theevidence, or the award is clearly wrong (see Hickey v. Hickey, (SCC), [1999] 2 S.C.R. 518, [1999] S.C.J. No. 9 (QL),at para. 11 and Pollock v. Rioux (2004), 278 N.B.R. (2d) 351, [2004] N.B.J.

No. 467 (QL), 2004 NBCA 98, para. 27). [para. 14] Richard J.A. discusses the standard of review respecting findings of fact in Lang v. Lang, [2007] N.B.J. No. 348 (C.A.) (QL): The law is equally clear that the Court of Appeal cannot re-try a case. The Court of Appeal may only overturn a trial judge’s finding offact [if] it is the result of a palpable and overriding error, and may only interfere with a discretionary order if it is founded upon an errorof law, an error in the application of the governing principles or a palpable and overriding error in the assessment of the evidence (seeHousen v.

Nikolaisen, 2002 SCC 33 , [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31 (QL), 2002 S.C.C. 33 and H.L. v. Canada(Attorney General), [2005] 1 S.C.R. 401, [2005] S.C.J. No. 24 (QL), 2005 SCC 25 with regard to findings of fact, and British Columbia(Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 , [2003] 3 S.C.R. 371, [2003] S.C.J.

No. 76 (QL), 2003 S.C.C.71, at para. 43, with regard to discretionary orders). [para. 3] Therefore, in New Brunswick, although this deferential standard of review has been applied in spousal support cases, appellate courts caninterfere when a trial judge’s key findings rest upon palpable and overriding errors of fact. [paras. 10-12] See also Grant v. Grant, 2012 NBCA 101, 397 N.B.R. (2d) 254; Doiron v. Haché, 2005 NBCA 75, 290 N.B.R (2d) 79, at para. 70; T.L.

v. A.C ., 2013 NBCA 24 , 402 N.B.R (2d) 373 , at para. 6 ; D.L.M. v. J.A.M ., 2008 NBCA 2 , 326 N.B.R (2d) 199 , at para. 7 ; Flieger v. Adams , 2012 NBCA 39 , 387 N.B.R. (2d) 322 , at para. 8 ; R.S.L. v. S.I.L ., 2013 NBCA 23 , 402 N.B.R. (2d) 199 , at para. 7 ; G.F. v. J.A.C.F ., 2016 NBCA 21 , [2016] N.B.J. No. 82 , at para. 8 . V. Analysis A .

Financial Disclosure and Support [ 30 ] The Guidelines entrench an obligation to provide financial disclosure on a continuous basis particularly when there is an existing court order requiring disclosure and where there has been a formal request for disclosure ( s. 25 ). When a request is made, the payor spouse has a statutory obligation to disclose those documents listed in s. 21(1) of the Guideline s within 30 days.

Failure to comply with the disclosure obligations set out in ss. 21(1) to (3), may result in a contempt order, an award of costs in favor of the recipient spouse, or an order requiring the disclosure of the documents (s. 25(7)). [ 31 ] Relevant to the matter at hand, are the powers given to a court pursuant to s. 24 of the Guidelines : Failure to comply with court order 24 Where a spouse fails to comply with an order issued on the basis of an application under paragraph 22(1)(b), the court may (

a) strike out any of the spouse’s pleadings; (

b) make a contempt order against the spouse; (

c) proceed to a hearing, in the course of which it may draw an adverse inference against the spouse and impute income to that spouse in such amount as it considers appropriate; and (

d) award costs in favour of the other spouse up to an amount that fully compensates the other spouse for all costs incurred in the proceedings. Défaut de se conformer à l’ordonnance 24 Si l’époux ne se conforme pas à l’ordonnance rendue par suite d’une demande faite en vertu de l’alinéa 22(1)b), le tribunal peut :

a) rejeter tout acte de procédure de l’époux en défaut;

b) rendre contre celui-ci une ordonnance d’outrage au tribunal;

c) procéder à l’instruction, au cours de laquelle il peut tirer une conclusion défavorable à celui-ci et lui attribuer le montant de revenu qu’il juge indiqué;

d) adjuger les dépens à l’autre époux, jusqu’à concurrence d’un montant couvrant tous les frais relatifs à la procédure. [ 32 ] When there is an existing application for child support, and the court has ordered financial disclosure to no success, the Guidelines , as do the Rules of Court offer guidance. Rules 72.14(5) and 72.14(6) state:

(5) Where a party fails to serve a FinancialStatement or income information requiredunder this subrule, the other party may apply,without notice, for an order requiring serviceof a Financial Statement or such incomeinformation within a specified time.

(6) Where a party fails to comply with anorder to serve a Financial Statement orincome information required under thissubrule (

a) the court may dismiss the party’s action orstrike out the party’s Answer or Answer toCounter-Petition; (

b) a judge may make a contempt orderagainst the party; and (

c) the court may draw an inference againstthe party and impute income to the party insuch amount as it considers appropriate.

(5) Lorsqu’une

partie omet de signifier unétat financier ou des renseignements sur lerevenu prescrits au présent article, l’autrepartie peut, sans préavis, demander uneordonnance prescrivant la signification del’état financier ou des renseignements sur lerevenu dans un délai déterminé.

(6) Lorsqu’une

partie ne se conforme pas àune ordonnance prescrivant la significationde l’état financier ou des renseignements surle revenu tel que prescrit au présent

article

a) la cour peut rejeter la cause de la

partie enquestion ou supprimer sa réponse ou saréponse reconventionnelle;

b) un juge peut émettre une ordonnance pouroutrage au tribunal contre la partie; et

c) la cour peut en tirer des conclusions contrela

partie et lui attribuer le montant de revenuqu’elle estime approprié. [33] The striking of pleadings is considered a measure of last resort and is exceptional; however, when there is aconstant theme of recalcitrant behaviour, with no excuse, as there was in this matter, the remedy is available. In my opinion, this Rulecan be a useful tool, and is a reminder to both counsel, and their clients, that, if they want to be heard, they must be prepared to followthe Rules. See Purcaru v. Purcaru, 2010 ONCA 92, [2010] O.J. No. 427 (QL); Chiaramonte v. Chiaramonte, 2013 ONCA 641, [2013]O.J.

No. 4790 (QL), at para. 32. [34] A review of the jurisprudence persuades me that the most common form of sanction is costs and/or theimputation of income, both of which were requested by M.R. and were not ordered (see D.L.H. v. J.V.H., 2016 BCPC 65, [2016] B.C.J.No. 543 (QL); Neff v. Neff, 2015 BCSC 2385, [2015] B.C.J. No. 2792 (QL); and Rana v. Rana, 2014 BCSC 530, [2014] B.C.J. No. 548).The production of accurate, complete and timely financial disclosure is not optional (see Sutton v. Kay, 2002 NBCA 33, 250 N.B.R. (2d)106, per Drapeau J.A., as he then was; O’Brien v.

O’Brien, 2007 NBCA 22, 312 N.B.R. (2d) 302, per Larlee J.A.; and D.L.M., per LarleeJ.A.). [35] In O’Brien, Larlee J.A. writes: Failure to comply with s. 21 of the Guidelines allows, without any other precondition, for the filing of a motion to obtain disclosure ofincome information pursuant to s. 22(1) of the Guidelines. The reason for disclosure is obvious: to ensure the process is fair. InChernyakhovsky v. Chernyakhovsky, (ON SC), [2005] O.J. No. 944 (QL), Rogers J. refers to this new attitude at para.6: The new approach to fact finding under the Family Law Rules has been to make disclosure a given.

Fact-finding is not to be abattleground. There ought to be an orderly, prompt request for disclosure with an organized speedy reply. The process is not to go onforever and the case is to move on because the facts point to a resolution or to the necessity of a trial. Obtaining the factual evidence isno longer a game of hide and seek. [para. 15]

[36] I echo the comments made in Roberts v. Roberts, 2015 ONCA 450, [2015] O.J. No. 3236 (QL), where thecourt states: The most basic obligation in family law is the duty to disclose financial information. This requirement is immediate and ongoing. Failure to abide by this fundamental principle impedes the progress of the action, causes delay and generally acts to the disadvantage ofthe opposite party. It also impacts the administration of justice. Unnecessary judicial time is spent and the final adjudication is stalled. Financial disclosure is automatic.

It should not require court orders – let alone three – to obtain production. [paras. 11-13] [37] In the case at bar, J.R. repeatedly failed to comply with his court ordered financial obligations. Despite eightcourt appearances where he was ordered to fulfill outstanding undertakings and to provide Guidelines compliant financial disclosure, J.R.was still only substantially compliant two weeks before the trial. In spite of this noncompliance, he suffered no penalty. In my opinionthis was an error.

The trial judge partially acknowledged the issue when she stated: The parties also appeared in front of this Court twice before trial. An order dated February 19, 2015 ordered the father to provideinformation to the mother. Another order dated August 17, 2016 also dealt with the need for further disclosure to be provided by thefather. [para. 7] [38] Public confidence in the judicial system is undermined when litigants are permitted to willfully disobey courtorders or statutory obligations without redress.

Parties who obtain court orders are entitled to take comfort in the knowledge the systemwill not let them down and that there will be consequences to the party who fails to comply. Respect for the administration of justice andthe rule of law is the cornerstone of our democracy, and court orders must be obeyed. This matter, in my opinion, is a textbook case ofthe scorched earth approach to family litigation which, sadly, is becoming all too common. [39] In Leskun v.

Leskun, 2006 SCC 25, [2006] 1 S.C.R. 920, the Supreme Court quoted with approval, thecomments of Fraser J. in Cunha v. da Cunha, (BC SC), [1994] B.C.J. No. 2573 (S.C.) (QL), regarding the impact ofnon-disclosure in family litigation: In all of these circumstances, the appellant has a poor platform from which to launch an attack against the trial judge’s conclusionregarding his assets and liabilities. As Fraser J. commented in Cunha v. Cunha (1994), (BC SC), 99 B.C.L.R. (2d) 93(S.C.), at para. 9: Non-disclosure of assets is the cancer of matrimonial property litigation.

It discourages settlement or promotes settlements which areinadequate. It increases the time and expense of litigation. The prolonged stress of unnecessary battle may lead weary and drainedwomen simply to give up and walk away with only a share of the assets they know about, taking with them the bitter aftertaste of areasonably-based suspicion that justice was not done. […] [para. 34] See also Gray v. Rizzi, 2016 ONCA 152, [2016] O.J. No. 958 (QL), at para. 31. [40] The judiciary plays an important role in maintaining public confidence in the system of justice and respect forthe law.

Regrettably, in this case, J.R.’s maneuvering was indulged too often, and without consequence. There were four motion judgesinvolved prior to the final hearing. Rule 62.21(1) allows this Court to render any decision and to make any order which ought to havebeen made (see P.R.H. v. M.E.L., 2009 NBCA 18, 343 N.B.R. (2d) 100, at para. 30; see also J.H. v. T.H., 2014 NBCA 52, 422 N.B.R.(2d) 388, at paras. 9-16). I conclude the numerous court appearances and adjournments which unnecessarily delayed these proceedingsshould not have gone without sanction.

I would award costs of $5,000 against J.R. for his clear violation of the Guidelines, the Rules andvarious court orders.

B. Marital Home [41] J.R. vacated the marital home on separation and he gave M.R. exclusive possession of it. He asserted he wasentitled to share in the increase in the equity post separation on the basis he was making support payments. The trial judge agreed. In myopinion, this logic is flawed, as I will explain. [42] On the date of separation, the mortgage balance outstanding against the home was approximately $133,826. Atthe time of the trial, it was $108,933. J.R. made no payments towards the mortgage, the home insurance, property taxes or the upkeepand maintenance of it.

The payment of child support is a statutory obligation which does not, nor should it, equate to the payment of amortgage. J.R.’s proffered submission on this point fails on the basis that child support is the right of the child. See D.B.S. v. S.R.G.,2006 SCC 37, [2006] 2 S.C.R. 231, per Bastarache J., at para. 104.

The payment of child support should not entitle a payor tosuccessfully argue he or she has an entitlement to share in the increased equity of a marital home on that basis. [43] Had J.R. truly wished to share in the increase in the equity of the marital home, post separation, he had aresponsibility to share the fixed expenses associated with it, such as the mortgage payments, house insurance, property taxes andnecessary repairs and maintenance.

Had he done so, he arguably may have had a claim for occupation rent, and the assessment of hisinterest in the marital home may have been calculated on that basis. [44] I turn now to the spousal support payments. They are ordered in consideration of the criteria set out in s. 15 ofthe Divorce Act. These payments are not exclusively limited to the economic need of the recipient spouse. They are ordered tocompensate the dependent spouse for economic disadvantages which arise as a result of the marriage or its breakdown. Spousal supportpayments are tax deductible to the payor, and taxable to the recipient.

It would be a mathematical absurdity if a payor spouse werepermitted, on the one hand, to deduct his or her spousal support payments for income tax purposes, and on the other hand, be granted acredit for the reduction of a mortgage, where the other spouse has had the sole financial responsibility for the property followingseparation.

I add further to the absurdity of this proposition by stating it would be inequitable, in my view, to consider the submission, atall, particularly in the situation where a payor is in arrears, and is then subsequently relieved of his obligation to pay spousal support indesignated years, as was the case here. Trial exhibit #7 reveals that, as of the date of the trial, J.R. was $15,867.99 in arrears in hissupport payments; however, there was a retroactive adjustment of his support payments to 2010, which eliminated spousal support forthe years 2011, and 2013-2016.

Recall, the first interim order was conditional, explicitly providing that M.R. would be responsible for allof the expenses concerning the marital home, “provided that the Respondent pays his support payments.” [45] In Ms. P.H. v. Mr. P.H., 2008 NBCA 17, 328 N.B.R. (2d) 245, Bell J.A. found the appropriate valuation datefor the assessment of the wife’s interest in business assets was the date of separation. See also Miller v. Miller, 2003 NBCA 37, 259N.B.R. (2d) 132, per Robertson J.A., at para. 60, where he acknowledges the typical date for valuation purposes is the date ofseparation.

I recognize there are also decisions which support a valuation date effective the date of trial (see Fraser v. Fraser (1983), (NB CA), 47 N.B.R. (2d) 364, [1983] N.B.J. No. 14 (C.A.) (QL)); however, in the circumstances of this case, Iconclude the valuation date for the purposes of calculating the respective interests in the marital home is the date of separation. Thus, theequity in the marital home should be valued effective the date of separation, and I would remit this issue to the trial judge forrecalculation, as there is insufficient evidence in the record to establish its value on the separation date.

In the absence of an appraisal,the parties may rely on the property tax assessment for 2009. See LeBouthillier v. LeBouthillier (1982), (NB CA), 39N.B.R. (2d) 20, [1982] N.B.J. No. 130 (QL), per Richard J.A. C.

Section 7 expenses [46] Section 7(1) of the Guidelines permits a court to order an amount to cover all or any portion of specificexpenses, which expenses may be estimated (underline is mine). The expense is prorated between the parents and is calculated net of anytax credits, subsidies or other third party payments (s. 7(1)(3)). [47] J.R. submitted at the end of the hearing that s. 7 expenses should not be assessed on the basis M.R. failed toprovide supporting documentation. The trial judge agreed.

On January 12, 2010, J.R. swore an affidavit in which he deposed: With respect to paragraph 13 of the Applicant’s affidavit, I have no recollection of making that statement. I have always been andcontinue to be supportive of my children and encourage them to participate in activities. I take my eldest son to Boy Scouts and myyoungest to Beavers on Mondays and Thursdays respectively and I have been a Scout/Beaver leader for the last six years. I had been

taking them for swimming lessons every Friday, but those are done for this season. I also coached both of my sons with the Saint John Soccer Club in the summer of 2009 and I have taught them martial arts. On Sundays I take both of my sons bowling and then we visit my mother.

It is my belief that my children should participate in activities both inside and outside of the school environment and I would continue to support my children in any reasonable activities they would like to participate in. [para. 10] [ 48 ] In her various financial statements, M.R. listed the expenses she claimed would be eligible for pro rata sharing, pursuant to s. 7 of the Guidelines . They included health and dental insurance premiums and child care expenses, as well as extra- curricular activities. Those expenses were not challenged by J.R. during cross examination.

I conclude these are expenses which should have been considered by the trial judge. In the right circumstances, facts not challenged may be accepted by the hearing or trial judge on the basis of a deemed admission (see Adams et al. v. Borrell et al. , 2008 NBCA 62 , 336 N.B.R. (2d) 223 ) . J.R. agreed the children should continue to participate in reasonable extra-curricular activities. The claims for a pro rata sharing of the “net” cost of day care, as well as that portion of the health and dental insurance premiums, which are for the benefit of the children, should have been granted.

It is true the onus is on the parent who seeks reimbursement for s. 7 expenses to provide proof to support the expense, as well as information concerning credits or subsidies he or she may receive, however, s. 7.1 of the Guidelines permits an estimate. A failure to provide receipts has, on occasion, resulted in a denial of these claims. See Ford v. Shuter , 2011 ONSC 4229 , [2011] O.J. No. 3278 (QL) ; Rondelet v. Neff , 2011 ONCJ 407 , [2011] O.J. No. 3911 (QL) ; Howe v. Lorette , 2017 NBQB 119 , [2017] N.B.J. No. 153 (QL) . As an example, in LRP v. BJP , 2012 ABQB 552 , [2012] A.J.

No. 1145 (QL) , the court granted an adjournment to give the claimant an opportunity to bring forward the required information. If we accept the principle that child support is the right of the child, it follows that the child’s rights should not be compromised as a result of a procedural oversight of a parent, particularly when the parent is self-represented. In Rebenchuk v. Rebenchuk , 2007 MBCA 22 , [2007] M.J. No. 130 (QL) , the court reiterated that children should not suffer because of parental conduct (paras. 76-79). In F.M. v.

T.H. , 2016 NBCA 29 , 449 N.B.R. (2d) 240 , it states “[a] child’s entitlement to receive the statutory amount of support due to him or to her should not be compromised, in the absence of a fatal procedural flaw which cannot be saved through the application of Rule 2.01” (para. 29). In P.B.M. v.

D.D.M. , 2016 NBBR 151 , per Robichaud J., even though the wife failed to provide receipts confirming her day care costs, the court pro-rated the expenses and applied a notional tax credit (para. 56). [ 49 ] The criteria set out in D.B.S . with respect to retroactive orders apply equally to orders made pursuant to s. 7 ( see Smith ; and Kase v. Bazinet , 2011 ONCJ 718 , [2011] O.J. No. 5670 (QL) . In this case, the following factors are relevant: i. M.R. was self-represented; ii M.R. claimed the expenses on her Financial Statements; therefore J.R. had notice; iii.

J.R.’s failure to make timely financial disclosure contributed to the court’s inability to properly calculate the pro rata shares; iv. the interim orders were silent with respect to s. 7 expenses. [ 50 ] As observed, s. 7 of the Guidelines permits a court to pro-rate the expenses that qualify, net of any subsidies, third party payments and tax credits. Court orders should be drafted so as to require the recipient parent to provide ongoing proof of the expense, as well as information concerning the tax credits or third party payments received.

The order should calculate the pro rata shares, and provide for annual adjustments. The Guidelines set out the information to be included in an order for child support.

When there are expenses that qualify pursuant to s. 7 , the court must include the particulars of the expense, the name of the child to whom it relates, the amount of the expense, or where the amount is undetermined, the proportions to be paid by each parent (s. 13(e)). [ 51 ] M.R. cannot be faulted for the failure of the interim orders to include a provision requiring a pro rata sharing of these expenses, as they were clearly listed and claimed on her Financial Statements, and, as noted, J.R. acknowledged he wanted the children to participate in extra-curricular activities.

In my view, it was disingenuous for J.R. to “wait in the weeds” until the conclusion of the trial to object to the sharing of these expenses on the basis M.R. failed to provide receipts. I would remit the retroactive and prospective assessment of the s. 7 expenses to the trial judge. D. Division of Marital Debt [ 52 ] As noted, when the proceedings began, J.R. acknowledged certain debts were marital. He then declared bankruptcy and he denied liability for debts which M.R. claimed were accumulated by her during the course of the marriage.

The trial judge refused to divide these latter debts on the basis M.R. failed to provide supporting documentation. I agree with her conclusion in this regard, except for the First Time Home Buyers’ Loan. As part of pre-trial disclosure, M.R. provided a copy of that statement to J.R., he was aware of it, and the debt should have been divided between them, and in my view it was an error to not do so. E. Division of Marital Property

[53] As noted, the value of the marital home should be assessed as of the date of separation. The mortgageoutstanding on the date of the separation was approximately $133,827.The sale price of the family vehicle was agreed to be $2,500. Thesale price of the vacant lot was $12,500. [54]

Schedule “A” to the decision shows how the trial judge divided the pension funds received by J.R., ($13,058),and the RRSPs, ($28,107). These are taxable assets and for the purposes of calculating a division between the parties, they should havebeen discounted as will be further discussed. In addition, the severance pay of $20,456 was included in the trial judge’s calculation ofretroactive support as noted (see B.P. v. A.T., 2014 NBCA 51, 423 N.B.R. (2d) 99, per Larlee J.A., at paras. 29-30).

In my opinion, theseverance, the pension and the RRSPs should have been treated as assets and divided net of tax for the calculation of the equalizationpayment. The severance and pension benefits paid to J.R. should have been calculated as of the date of separation on the basis there is noentitlement to post separation increases in their values, other than per diem interest which is normally calculated by the plan actuary (seeStapleton v. Stapleton (1991), (NB KB), 112 N.B.R. (2d) 181; [1990] N.B.J. No. 1042 (QL); St. Onge v. St. Onge,[1990] N.B.J. No. 526 (Q.B.) (QL); Adams v.

Adams, [1998] N.B.R. (2d) (Supp.) No. 7, [1998] N.B.J. No. 15 (Q.B.) (QL); Miller v.Miller, 2003 NBCA 37, 259 N.B.R. (2d) 132). [55] As stated, the taxable assets should have been discounted for tax purposes, and then divided equally betweenthe parties for the purposes of fixing the equalization amount. The notional discount rate commonly accepted by judges in the FamilyDivision, is 30% (see B.P. per Larlee J.A.; and Bastarache v. Bastarache, 2012 NBQB 75, 387 N.B.R. (2d) 152). In my view, the failureof the trial judge to discount these assets for tax purposes in her

Schedule “A” was an error. [56]

Schedule “A” shows a division of the cash surrender values of both life insurance policies listed in the samecolumn as the taxable assets. The cash surrender value of a life insurance policy is a non-taxable asset and it should have been divided onthat basis. M.R. contends her life insurance policy should not have been considered in the division of assets. Although she testified hermother purchased the policy for her when she was a young child, there was evidence the premiums were maintained by her during themarriage.

As the trial judge observed, there was no statement showing the value of the policy on the date of cohabitation; therefore, theasset was divided equally. I would not disturb the trial judge’s finding in this regard; however, values should have been divided as non-taxable assets. F. Imputation of Income [57]

Section 23 of the Guidelines provides: Where the court proceeds to a hearing on thebasis of an application under paragraph22(1)(a), the court may draw an adverseinference against the spouse who failed tocomply and impute income to that spouse insuch amount as it considers appropriate.

Lorsque le tribunal procède à l’instruction parsuite d’une demande faite en vertu de l’alinéa22(1)a), il peut tirer une conclusiondéfavorable à l’époux en défaut et luiattribuer le montant de revenu qu’il jugeindiqué. [58] M.R. submits the trial judge erred in law when she refused to impute income to J.R., either on the basis of hisfailure to disclose all sources of his income, or on the basis of his intentional unemployment or underemployment (s. 19 of theGuidelines).

Section 23 is seldom referred to in the jurisprudence; however, it does offer another useful “tool” in the trial judge’s arsenal.As well, ss. 18 and 19 of the Guidelines permit a court to deviate from the income declared on Line 150 of the payor’s income tax returnwhen the court is satisfied the claimed income does not adequately reflect the payor’s available income from all sources. [59] In those cases, a court cannot speculate; the finding cannot be arbitrary. In Bak v. Dobell, 2007 ONCA 304,[2007] O.J.

No. 1489 (QL), the court acknowledged the list of circumstances set out in s. 19(1) of the Guidelines is open-ended. InA.M.D. v. A.J.P., (ON CA), [2002] O.J. No. 3731 (C.A.) (QL), at para. 44, the court cautioned there must be arational basis which underlies the imputation of income and it must be grounded in the evidence. This Court has determined what thosecircumstances should be. See D.L.M., per Larlee J.A.; M.W.M. v. H.L.M., 2010 NBCA 86, 366 N.B.R. (2d) 142, per Quigg J.A.; LeBlancv. LeBlanc, 2013 NBCA 22, 401 N.B.R. (2d) 334, per Larlee J.A.; Campbell v.

Vaughan, 2016 NBCA 9, 447 N.B.R. (2d) 132 (QL), perGreen J.A.; Chiasson v. Doucet, 2014 NBCA 49, 422 N.B.R. (2d ) 304, per Larlee J.A.; and A.L. v. J.N., 2017 NBCA 25, [2017] N.B.J.No. 132 (QL), per Green J.A. The SSAG also permit the imputation of income for spousal support purposes (s. 13.2).

[ 60 ] In my opinion, the trial judge had insufficient evidence to support a claim of intentional unemployment or underemployment. There was no basis upon which the trial judge could articulate reasons supporting an imputation of income claim and I conclude the trial judge did not err when she declined to impute income to J.R. I would dismiss this ground of appeal. G. Time Limited Spousal Support Order [ 61 ] The trial judge’s reasons for ordering time limited spousal support are found in the following: In my opinion the mother is entitled to compensatory and non-compensatory spousal support.

The sporadic change in the father’s income from the years 2010 to 2016 makes it difficult for the Court to set the appropriate amount of support. Spousal support, unlike child support, is not set yearly. As the trial judge, I have the discretion to set the amount of support. Our Court of Appeal has established that it would be appropriate to use the SSAG to set spousal support and its duration.

Taking into consideration the years of marriage, the strong compensatory and non-compensatory entitlement to support of the mother, the age of the children at time of separation, the return to work of the mother, I will set spousal support for a duration of ten years and use the high range of support. [ 62 ] The trial judge did not advise whether she was using the “with child support formula”. There was no analysis as to how her order met the objectives set out in s. 15 of the Divorce Act .

See the Canada, Minister of Justice and Attorney General of Canada, Spousal Support Advisory Guidelines: The Revised User’s Guide by Carol Rogerson and Rollie Thompson (Ottawa: 2016): (The “ Revised User’s Guide ”). [ 63 ]

Section 15.2(6) of the Divorce Act states: 15.2

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a 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 any obligation for the support of any child of the marriage; (

c) 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. 15.2(6) L’ordonnance ou l’ordonnance provisoire rendue pour les aliments d’un époux au

titre du présent

article vise :

a) à prendre en compte les avantages ou les inconvénients économiques qui découlent, pour les époux, du mariage ou de son échec;

b) à répartir entre eux les conséquences économiques qui découlent du soin de tout enfant à charge, en sus de toute obligation alimentaire relative à tout enfant à charge;

c) à remédier à toute difficulté économique que l’échec du mariage leur cause;

d) à favoriser, dans la mesure du possible, l’indépendance économique de chacun d’eux dans un délai raisonnable. [ 64 ] In S.C. v. J.C ., 2006 NBCA 46 , 299 N.B.R. (2d) 334 , Larlee J.A. conducted an extensive review of the jurisprudence concerning time limited support orders. The SSAG were described as a “useful tool” or a “litmus test”. This decision was rendered before the Court’s decisions in Smith and D.L.M. As Larlee J.A. concludes in S.C . , “[s]elf-sufficiency is but one of four factors that must be examined” (para. 12). When considering the question of self-sufficiency, a trial judge has the option:

i.) to make an indefinite order; ii.) to time limit the award; iii) to order a review of the situation after the expiration of a fixed period of time. [ 65 ] It is generally accepted that a fixed term is inappropriate where the payee’s ability to attain economic self- sufficiency is uncertain and where the court has found strong compensatory reasons exist. In the case at bar, this was a medium term marriage where the wife was financially dependent on her husband for her support. The trial judge found entitlement based on both compensatory and non-compensatory factors.

By the time of trial, M.R. had found part-time employment, but there were no significant assets left from the marriage, as there were in S.C. [ 66 ] Larlee J.A. concludes the following in S.C . : “I favour the approach taken in the most recent cases to review the self-sufficiency of the payee after three years” (para.15). I agree. The parameters for such a review were discussed in Arsenault v. Arsenault , 2002 NBCA 101 , 254 N.B.R. (2d) 190 ; and, Bourque v. Bourque , 2004 NBCA 60 , 274 N.B.R. (2d) 72 .

See Leskun , where the Supreme Court framed the analysis for variations as contrasted with reviews pursuant to s. 17 of the Divorce Act . [ 67 ] Time limited spousal support should only be ordered when a trial judge is satisfied, from a clear evidentiary foundation, the goals and objectives of s. 15.2(6) of the Divorce Act will have been met within the time frame specified in the order. Reasons need to demonstrate the SSAG were considered, applied, or, if not applied, the reasons why. See MacLean v.

MacLean , 2004 NBCA 75 , 274 N.B.R. (2d) 90 ; S.C . , at paras. 14-15 ; Smith , at paras. 34-36 . [ 68 ] The trial judge provided no reasons why she decided to order time limited spousal support, therefore precluding a determination as to how this result met the objectives set out in s. 15 of the Divorce Act . It is my opinion the trial judge’s decision to time limit the spousal support payments was an error. See G.F. v. J.A.C.F. , 2016 NBCA 21 , 449 N.B.R. (2d) 34 . I would allow this ground of appeal. H. Retroactive Spousal Support [ 69 ] In Kerr v.

Baranow , 2011 SCC 10 , [2011] 1 S.C.R. 269 , Cromwell J. agreed there is a legal distinction between retroactive claims and prospective claims when he stated: Spousal support has a different legal foundation than child support. A parent-child relationship is a fiduciary relationship of presumed dependency and the obligation of both parents to support the child arises at birth. In that sense, the entitlement to child support is “automatic” and both parents must put their child’s interests ahead of their own in negotiating and litigating child support.

Child support is the right of the child, not of the parent seeking support on the child’s behalf, and the basic amount of child support under the Divorce Act , R.S.C. 1985, c. 3 (2nd Supp.), (as well as many provincial child support statutes) now depends on the income of the payor and not on a highly discretionary balancing of means and needs. These aspects of child support reduce somewhat the strength of concerns about lack of notice and lack of diligence in seeking child support.

With respect to notice, the payor parent is or should be aware of the obligation to provide support commensurate with his or her income. As for delay, the right to support is the child’s and therefore it is the child’s, not the other parent’s position that is prejudiced by lack of diligence on the part of the parent seeking child support: see D.B.S. , at paras. 36-39, 47-48, 59, 80 and 100-104 . In contrast, there is no presumptive entitlement to spousal support and, unlike child support, the spouse is in general not under any legal obligation to look out for the separated spouse’s legal interests.

Thus, concerns about notice, delay and misconduct generally carry more weight in relation to claims for spousal support: see, for example, M.L.

Gordon, “Blame Over: Retroactive Child and Spousal Support in the Post-Guideline Era” (2004-2005), 23 C.F.L.Q. 243, at pp. 281 and 291-92. [para. 208] [ 70 ] In Leskun the Supreme Court adopted an expansive approach to spousal support orders which includes a consideration of “all pecuniary resources, capital assets, income from employment or earning capacity, and other sources from which the person receives gains or benefits” (para. 29). [ 71 ] In the case at bar, the trial judge acknowledged she could not retroactively adjust the spousal support payments on a yearly basis, yet this is what she did.

She varied the payments in certain years and she terminated and rescinded arrears in other

years as shown in

Schedule “C”. It is not disputed that a trial judge has the authority to retroactively vary an interim order for childand/or spousal support (see Grant v. Grant, 2012 NBCA 101, 397 N.B.R. (2d) 254, per Larlee J.A.); however, in divorce proceedings,the analysis is governed by s. 15 of the Divorce Act. [72] The Support Enforcement Act, S.N.B. 2005, c. S-15.5, defines a “support order” as a provision for the paymentof support in an order or judgment and includes an “interim order for support” made pursuant to

Part VII of the FSA or under the DivorceAct. [73]

Section 10.2(1) of the Support Enforcement Act sets out the process for the enforcement of arrears whichincludes arrears that have accumulated pursuant to interim court orders. I conclude, therefore, that in New Brunswick, child and spousalsupport that accumulate pursuant to interim court orders can be rescinded on the same basis as final orders. The question whether arrearsare truly arrears when they have accumulated pursuant to an interim court order, was dealt with in Earle v. Earle, 1999 BCSC 283 , (BC SC), [1999] B.C.J. No. 383 (QL), by Martinson J.

This case has been cited with approval in 205 decisions, includingthe Court’s decision in P.M.B. v. M.L.B, 2010 NBCA 5, 353 N.B.R. (2d) 323. [74] Martinson J. concludes firstly, that the cancellation or reduction of arrears is in reality a form of variation,requiring the payor to establish that a long lasting material change has occurred and there is no prospect for payment in the future.Secondly, a court may postpone the payment of arrears for a reasonable time, rather than cancelling them, in consideration of the factualmatrix. [75] In

summary, an inability to pay here and now is not necessarily a valid reason to rescind arrears, whether theyhave accumulated pursuant to an interim court order or a final court order. [76] In P.M.B., per Robertson J.A., the Court concluded there is no distinction between the rescission of childsupport arrears and spousal support arrears, “because” the need for the distinction evaporates once it is accepted that fault plays no rolein cases where the payor seeks a retroactive order to decrease his or her support payments. Kerr was decided following P.M.B.

CromwellJ. iterated that the analysis employed in D.B.S., with some modifications, could be applied to the retroactive spousal support analysis(paras. 206-207). The date of effective notice plays an important role, as does the presence of blameworthy conduct, the circumstances ofthe recipient spouse and any hardship to the payor which may be occasioned by the retroactive award. [77] An interim order for support can always be reviewed at the time of the final hearing.

Much of the jurisprudencefocusses on those cases where the claimant asserts he or she is entitled to an increased amount of support, following a fresh inquiry. Inmy view, there is an important distinction to be made between orders that are retroactive ab initio, and those orders that vary existingawards retroactively. An ab initio award simply states the obvious: there was entitlement and an obligation to pay; the analysis need notbe constrained.

There needs to be a fulsome examination of the reasons for the delay in pursuing what the recipient was entitled toreceive on the breakdown of the marriage and the analysis is holistic. [78] Sections 15.2(4-6) and 17(7) of the Divorce Act provide the framework for the analysis when a payor or arecipient spouse seeks to vary, either retroactively or prospectively, an order for support, regardless whether the order was an interim or afinal order (see Grant at para. 12). The threshold was established by the Supreme Court in Willick v. Willick, (SCC),[1994] 3 S.C.R. 670, [1994] S.C.J.

No. 94 (QL), where Sopinka J. states the material change must be one which was not within thereasonable contemplation of the parties at the time the original order was made. In other words, an unexpected termination ofemployment, such as was the case in the matter before us, would qualify, but, this is a starting point only for the analysis. The analysisdoes not stop with “material change”. It must go further and reflect the objectives set out in ss. 15 and 17 of the Divorce Act. This wasrecognized by L’Heureux-Dubé J. in Willick at p. 179. [79] In P.M B.

Robertson J.A. observes the following: The jurisdiction to issue retroactive variation orders that reduce or cancel arrears of support has been carefully circumscribed under boththe provincial and federal legislation. In each instance, the order is contingent on the court finding a “change in circumstances” of one ofthe parties, or a child, between the time of the original order and the application for variation. Invariably, the law requires the change tobe “material”.

Actually, the court must rule on two discrete questions: Was there a material change in circumstances during the period ofretroactivity and, having regard to all other relevant circumstances during this period, would the applicant have been granted a reductionin his or her support obligation but for his or her untimely application? The concept of material change in circumstances has always beeninterpreted broadly. As a general proposition, the court will be asking whether the change was significant and long lasting; whether itwas real and not one of choice.

When deciding whether to grant a full or partial remission of arrears, courts need not be concerned with several factors often explored in the jurisprudence of other jurisdictions. Specifically, the court need not address why the applicant failed to make a timely application for retroactive variation. Correlatively, the court need not be concerned with the reasons underscoring the support recipient's failure to pursue timely enforcement measures thereby thwarting the accumulation of arrears.

In short, the notion of “fault” plays no role in the decision to grant retroactive variation orders involving support arrears. Admittedly, this narrowed approach appears to deviate from the analytical framework set down in D.B.S. v. S.R.G. , [2006] 2 S.C.R. 231 , [2006] S.C.J. No. 37 (QL) , 2006 SCC 37 . In that case, the Supreme Court outlined four factors to be considered when deciding whether to order a retroactive increase [underline in original] in child support, including the two factors just cited.

But the present case involves a retroactive order to reduce [underline in original] both spousal and a child support. The distinction between the two orders is not without difference and one which did not escape the Supreme Court. It is one thing to demand immediate payment of monies with respect to a past obligation that only recently matured and quite another to seek an order that recalculates and reduces the amount owing with respect to a debt never paid .

As will be explained, the understanding that "fault" plays no role in the adjudication of applications for retroactive variation of support arrears is consistent with both the majority and minority opinions delivered in D.B.S. v. S.R.G . Moreover, once the law disposes of the need to consider the reasons underscoring the support recipient's failure to pursue timely enforcement measures, there is no room for the antediluvian rule against support recipients “hoarding” arrears and the corollary rule limiting arrears to “one year”. In recent times, other courts have soundly rejected the validity of these rules.

The jurisprudence of this Province should reinforce that understanding of the law.

Similarly, there is no room in the law for retroactive variation orders that reduce or eliminate support arrears based on misconceived notions of “laches”, “acquiescence” and “waiver” on the part of the support recipient. [paras. 2-4] [ Emphasis added.] [ 80 ] As observed by Robertson J.A., the order is “contingent” on a finding there has been a change in circumstances; however, the Divorce Act does not define how those changes should be treated in the context of retroactive orders, particularly where there is a strong compensatory and non-compensatory claim for spousal support.

As noted, the analysis should not be exclusively focused on the material change in income, and I am bolstered in this opinion by the SSAG . The fact a payor has experienced a decrease in his or her income through no fault of their own, is but one consideration.

A court is required to review the objectives set out in s. 15 of the Divorce Act , the SSAG , and as well consider all of the other circumstances surrounding the request for relief whether it is a request for a retroactive increase, on the part of the recipient spouse, or a request for a retroactive decrease on the part of the payor. [ 81 ] Robertson J.A. concludes in P.B.M. : Finally, these reasons do not stand for the proposition that the ability to pay arrears is never relevant. It is relevant when it comes to the matter of arrears enforcement.

If payers of support truly lack the present and future financial resources to address the arrears problem, the court cannot be expected to craft an enforcement order that ignores the adage: “one cannot draw blood from a stone”. In this limited sense, the pleas of inability to pay and hardship cannot be ignored. But the pleas must fall deafly on judicial ears when the relief sought is a forgiveness of arrears.

As a matter of law, support recipients are entitled to cling to the faint hope of a future ability to pay . [para. 6] [Emphasis added.] [ 82 ] In Gray the court observed: To allow a party who ignores his or her financial disclosure obligations to later satisfy the requirement and argue that the late disclosure constitutes a material change in circumstances would eviscerate the financial disclosure regime. […] [para. 34] [ 83 ] In G.M.W. v. D.P.W. , 2014 BCCA 282 , [2014] B.C.J.

No. 1434 (QL) , the husband’s explanation for not presenting a timely application was rejected by the trial judge and a retroactive variation was denied. [ 84 ] In Colucci v. Colucci , 2017 ONCA 892 , [2017] O.J. No. 6146 (QL) , the court concluded the criteria set out in D.B.S. apply to original applications for support pursuant to s. 15 , and not to variation motions pususant to s. 17.1 of the Divorce Act .

Although the variation issue was not the same as the matter before us, Sharpe J.A. observes: […] The issue of arrears calls for special consideration: see D.B.S . at para. 98 , stating that the factors are not meant to apply when

arrears have accumulated. “[T]he payor parent cannot argue that the amounts claimed disrupt his/her interest in certainty and predictability; to the contrary, in the case of arrears, certainty and predictability militate in the opposite direction”. [para . 31] [ 85 ] In Punzo v. Punzo , 2016 ONCA 957 , [2016] O.J. No. 6533 (QL) , the court reiterates that a finding of material change in circumstances as contemplated in s. 17 of the Divorce Act is the “first hurdle” to meet when a payor seeks an order to vary support arrears.

He or she bears the onus to establish they are unable now, and they will be unable in the future to pay the arrears. Even if those two scenarios are established, a court must determine an appropriate retroactive date and amount of support. [ 86 ] The facts in Punzo are similar to those in the case at bar. Following the issuance of a consent order where both child and spousal support were ordered, the father filed a motion to change, asserting he had experienced a significant drop in his income as a result of being terminated.

The motion judge retroactively varied the support payments to the date the consent order took effect. Although the Court of Appeal agreed the husband had met the material change hurdle, it allowed the appeal noting that an analysis with respect to retroactive support, whether it is child or spousal support, begins with the D.B.S. criteria and those factors apply to retroactive support orders. [ 87 ] In the case before us, J.R. filed a Motion to Change in 2011 and he was granted interim relief, with the proviso he could also revisit the period of time between January and June 2011.

In 2015, he filed a further Motion to Change. In both, he asserted his spousal support payments should have been retroactively reduced based on his loss of employment and decreased income. The retroactive order made by the trial judge in 2016 was based exclusively on J.R.’s income. [ 88 ] The SSAG acknowledge an alternative to a straight income driven approach to retroactive orders for spousal support. In the “ Revised User’s Guide ” (“RUG”), the authors recognize that in some cases, the court could postpone the enforcement of the arrears or, alternatively, set a date for a reconsideration of the arrears.

The latter approach is taken when the existing child support obligation expires on a given date in relative proximity, thus permitting the court to address the arrears question. At p. 32, the authors observe that once the child support obligations diminish, then s. 15.3(3) of the Divorce Act (and the provincial equivalents) will resuscitate or increase the amount of the spousal support payments and lengthen the duration, so as to balance the competing interests as between child support and spousal support, in recognition of the compensatory and non-compensatory entitlement to spousal support.

In my opinion, to simply terminate and/or to retroactively vary the support payments based on income alone does not meet the objectives set out in s. 15 . [ 89 ] I add here, a retroactive order, such as the one made in this case, has tax consequences, and these were not considered by the trial judge. The effect of the order would require J.R. to refile his Income Tax Returns and undoubtedly be penalized for over payments in spousal support for the years in question, and, would require M.R. to refile her Tax Returns to reflect the decrease in her income for the years in question, thus creating tax credits for her.

In my view, the issue of the retroactive spousal support award must be remitted for the reasons given. I. Retroactive Child Support Order [ 90 ] There is no debate concerning whether, or not, the trial judge had the authority to retroactively vary an interim court order for child support. There is a debate, however, as to how far back the court should have reviewed the order, particularly when there was a consistent failure to produce proof of income. In this case, the retroactive adjustments were to 2010, a period in excess of six years post-separation.

The areas of concern focus on: i.) the income levels used by the judge; ii.) the lack of analysis as to whether the conduct of J.R.’s conduct throughout the proceedings should have been considered a factor; iii.) The effect the order would have on the financial needs of the children. [ 91 ] In D.B.S . , Bastarache J. recognized the crucial obligation that parents have to support their children in a way that is commensurate with their incomes (paras. 131-135).

In the context of retroactive support, he concludes this obligation will not be fulfilled when a parent who has had a change in his or her income does not move quickly to vary his or her payments. The Supreme Court was focused on the issue of increases in the payor’s income level; however, it left the door open to consider the circumstance

where there has been a decrease in the payor’s income in the context of the hardship factor. In those cases, the impact a retroactive order may have on either the payor or the recipient is a valid consideration. The Supreme Court discouraged the hoarding of child support payments.

In other words, when a parent knows there has been a change in his or her income, or the income of the other parent, they cannot expect to receive consideration beyond three years, unless there has been an exceptional circumstance, such as blameworthy conduct, failure to disclose income changes, or delay. [ 92 ] An application to retroactively decrease child support is not considered in the same way as an application to have arrears rescinded. In the former, the payor seeks to have the payments reduced retroactively on the basis his or her income has changed.

In the latter, the payor has accumulated arrears, agrees the order was appropriate, but argues an inability to pay. The Supreme Court in D.B.S. , acknowledged the principles set out therein did not apply to rescission of arrears cases ( see also Colucci ) .

The result in the case at bar was an order that rescinded arrears based on the fact J.R.’s income had materially changed, with no consideration of J.R.’s blameworthy conduct, or the effect such an order would have on the recipient spouse. [ 93 ] In D.B.S . the Supreme Court signaled to both the payors and the recipients they should not receive the generosity of the court when there is a finding of blameworthy conduct.

In that event, the payor should not expect the indulgence of the court when they seek rescission of their arrears, or retroactive adjustments in child support payments, beyond three years except in exceptional circumstances. A payor has an ongoing responsibility to disclose changes in his or her income, so that child support can be adjusted in a timely fashion. In my opinion, a payor should not be permitted to hoard their overpayments, and then seek a retroactive order at trial. [ 94 ] In Ford v. Ford , 2015 SKCA 23 , [2015] S.J.

No. 124 (QL) , the husband accumulated arrears of approximately $125,000 by the date of trial. On two occasions, he unsuccessfully applied to vary the interim court order for support, arguing he had experienced a significant decrease in his income. In dismissing his applications, a chambers judge determined he was unable, from the evidence provided, to find a material change in circumstances to support a variation. The court determined the chambers judge committed reversible error and allowed the appeal, relying on an excerpt from Julien D. Payne and Marilyn A.

Payne, Canadian Family Law, 5 th ed. (Toronto: Irwin Law, 2013) at pp. 453-454: With respect to interim child support orders, Payne and Payne have commented on trial judges' authority vis-à-vis existing interim child support orders. They state: ... Although

section 17 of the Divorce Act relates only to applications to vary permanent orders and

section 15.1 of the Divorce Act includes no express provision for the variation of interim orders, a court has inherent jurisdiction to vary an interim order. In ordering permanent child support, a trial judge is not bound by a pre-existing order for interim child support.

An amount payable under an interim order may be adjusted retroactively by a trial judge, if an erroneous assumption was made concerning the obligor’s income . [para. 26] [Emphasis in original.] [ 95 ] The court reasoned that “[w]hether or not there has been a material change of circumstances in the period since the interim order for child support had been made” was not the appropriate test. Herauf J.A. referred to Gill v. Gill , 2012 BCSC 1910 , [2012] B.C.J. No. 2672 (QL) ; Whelan v. Whelan , 2005 NLCA 24 , [2005] N.J.

No. 134 (QL) ; an d Grant v Grant , 2012 NBCA 101 , 397 N.B.R. (2d) 254 , in support of his conclusion. In

summary, a trial judge is not bound by an existing interim child or spousal support order, but he or she is called upon to make a fresh enquiry. This enquiry engages ss. 15 and 17 of the Divorce Act as noted. [ 96 ] No one disputes that J.R.’s income decreased following his termination from Irving Oil Limited; however, the net effect of the trial judge’s decision was a reduction in the child support payments to 2010 in the amount of $5,043, with no consideration of J.R.’s conduct or the effect such an order would have on M.R.’s financial circumstances.

The trial judge prepared two schedules, “B” (child support), and “C” (spousal support), in which she retroactively adjusted the payments in both to 2010, based on J.R.’s financial disclosure provided at trial. The result is an overpayment in his favour, as noted. M.R. asserts this was an error as there was no consideration of the economic consequences to her or the children. I agree. [ 97 ]

Section 3 of the Guidelines is a presumptive rule requiring the payment of child support to be based on the income of the payor.

Section 2 defines income as the “the annual income determined under sections 15 to 20 ”. The 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, subject to any adjustments in accordance with

Schedule III. A review of the Income Tax Returns as well as the Notices of Assessment provided to the court at the time of trial reveal discrepancies. There is a difference in some years, between the income figures applied and the financial documentation itself. In addition, it appears the trial judge recalculated J.R.’s income for child support purposes, without adding his RRSP income as a source. M.R. submits this was an error (see Crabtree v. Crabtree , [2009] O.J. No. 1466 (QL) ; Burzminski v. Burzminski , 2010 SKCA 16 , [2010] S.J. No. 64 (QL) ; Fraser v. Fraser , 2013 ONCA 715 , [2013] O.J. No. 5347

(QL), per J.M. Simmons, J.A.). [98] In Fraser, the court considered the treatment of RRSP income post equalization for child support purposes. InA.B. v. C.D., [2007] O.J. No. 4416 (Ont. S.C.) (QL), the trial judge found “the treatment of RRSP rec

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