2018 NBCA 45, 2018 NBCA 45

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 104-16-CA C.B. APPELLANT C.B. APPELANTE - and - - et - H.H., E.H. and G.H. RESPONDENTS H.H., E.H. et G.H. INTIMÉS C.B. v.

H.H. et al, 2018 NBCA 45 C.B. et H.H. et autres, 2018 NBCA 45 CORAM: The Honourable Justice Green The Honourable Justice Baird The Honourable Justice French CORAM : l’honorable juge Green l’honorable juge Baird l’honorable juge French Appeal from a decision of the Court of Queen’s Bench: November 23, 2016 Appel d’une décision de la Cour du Banc de la Reine : le 23 novembre 2016 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 19, 2017 Appel entendu : le 19 septembre 2017 Judgment rendered: July 30, 2018 Jugement rendu : le 30 juillet 2018

Reasons for judgment by: The Honourable Justice French Motifs de jugement : l’honorable juge French Concurred in by: The Honourable Justice Green Separate concurring reasons by: The Honourable Justice Baird Souscrit aux motifs : l’honorable juge Green Motifs concordants distincts : l’honorable juge Baird Counsel at hearing: For the appellant: Timothy M. Hopkins and Geneva C. McSheffery For the respondent, H.H.: Jamie J. Feenan For the respondents, E.H. and G.H.: Natasha J. MacKay Avocats à l’audience : Pour l’appelante : Timothy M. Hopkins et Geneva C. McSheffery Pour l’intimé, H.H. : Jamie J.

Feenan Pour les intimés, E.H. et G.H. : Natasha J. MacKay THE COURT For the reasons of the majority, the appeal is dismissed, and the cross-appeals are allowed. C.B. is ordered to pay costs to H.H. in the amount of $2,500 for the proceeding in the court below and $2,500 in this Court. C.B. is also ordered to pay one set of costs to G.H. and E.H. also in the amount of $2,500 for the proceeding in the court below and $2,500 in this Court. Baird J.A. would also have dismissed the appeal and allowed the cross-appeals but with different remedies and cost awards.

LA COUR Pour les motifs exposés par les juges majoritaires, l’appel est rejeté et les appels reconventionnels sont accueillis. C.B. est condamnée à verser à H.H. des dépens de 2 500 $ pour la procédure instruite devant la cour d’instance inférieure et des dépens de 2 500 $ pour celle instruite devant notre Cour. C.B. est aussi condamnée à verser à G.H. et à E.H. une seule masse de dépens de 2 500 $ pour la procédure instruite devant la cour d’instance inférieure et des dépens de 2 500 $ pour celle instruite devant notre Cour.

La juge Baird est aussi d’avis de rejeter l’appel et d’accueillir les appels reconventionnels. Toutefois, elle accorderait des mesures de redressement différentes et elle adjugerait les dépens autrement. The judgment of French and Green, JJ.A. was delivered by

FRENCH, J.A. I. Introduction [ 1 ] This appeal is the unfortunate product of a protracted dispute resulting from the 2012 separation of the parents of two children. The mother and father had cohabited since 1997. Their separation led to an initial application in the Court of Queen’s Bench, Family Division which led to, among other things, an order in June 2014 requiring the father to pay child and spousal support. Less than a month later, the father transferred his home and camp to his parents.

The mother applied to have the transfer declared void and set aside, contending the transfer had been made with the intent to defeat her claim as a creditor, pursuant to the Assignments and Preferences Act , RSNB 2011, c. 115. The mother was ordered to join the father’s parents as respondents to her motion. Before it was heard, the father brought a motion to vary the June 2014 support order on the grounds he had since become unable to work because of his major depressive disorder.

Before either of these motions was heard, the mother filed another motion, in June 2015, which consolidated her first motion and also sought an order that the father be found in contempt of the support order and to have the father pay half of the $118,000 she claimed he had withdrawn and hid prior to separation. [ 2 ] The motion judge dismissed all of the mother’s claims for relief. In particular, the judge found there was consideration for the property transfer and there was no intention to defeat the mother’s claim as creditor. The mother appeals the dismissal of her claim to have the transfer set aside.

For the reasons that follow, I would dismiss her appeal. [ 3 ] The motion judge also dismissed the father’s motion to vary, concluding it was barred by the principle of res judicata , a nd did not determine on the merits his claim that there had been a material change in circumstances since the making of the last order, as contemplated by s. 118(2) of the Family Services Act , S.N.B. 1980, c. F.-2.2 (“ F.S.A .”). B y cross-appeal, the father appeals this determination.

I would allow this appeal. [ 4 ] The motion judge did not address the parents’ claim for costs for successfully defending the mother’s motion to set aside the property transfer and, by cross-appeal, they claim the judge erred in failing to do so. I would allow their cross-appeal. II. Background [ 5 ] The June 24, 2014 decision rendered in connection with the initial application is an important part of the background to the appeals. First, it resulted in the order the father seeks to vary and the motion judge relied on it when she concluded the father’s motion was barred by the principle of res judicata .

Second, the decision chronicles the parties’ circumstances and conduct, including those on which the mother relies in making allegations of serious misconduct and contempt on the part of the father. It also sets out the judge’s findings in relation to these allegations, findings which have been repeated and emphasized by the mother, at the hearing of the motions appealed and on appeal, as evidence of impropriety on the part of the father, sometimes accurately and sometimes not.

Because of this, and in order to better appreciate the context of these submissions, I find it necessary to set out in some detail the factual and procedural background. A. The Application and the June 24, 2014 Order sought to be varied [ 6 ] When their relationship began, the mother was 24 and the father was 22. Their son was born in February 1997 and they began living together in Sussex in December 1997. Their daughter was born in October 2001. They did not marry and, throughout their relationship, they both worked and kept their finances separate. [ 7 ] Both parties worked throughout their relationship.

After graduating high school, the mother worked at Zellers and later Canadian Tire. Her income has varied over the years; it was approximately $19,000 in 2012, the year of separation. [ 8 ] The father is an electrician, having taken four years of training early in the parties’ relationship. In his June 24 decision, the application judge concluded the father’s training as an electrician, as well as his ability to operate heavy equipment, “has been generally lucrative for him although there have been periods when [he] has had to resort to unemployment insurance for some time”.

On more than one occasion, he has travelled to western Canada for work. His best years were during the refit of the Point Lepreau Nuclear Generating Station. The father was laid off from that project in June 2012, the month before he and the mother separated, and he received EI benefits for the following year.

[ 9 ] Following separation, on July 19, 2012, the legal proceedings initially moved quickly. In her application, the mother claimed the father had an annual income of $256,000 and requested interim child support of $1,830 per month, for the two children, and spousal support of $1,000. In his answer, the father reported he was receiving EI benefits of $485 per week (or $25,220 yearly); he maintained his child support obligation was $186 per month, based on split custody, one child with each parent.

Both parties claimed exclusive possession of the home. [ 10 ] On August 23, 2012, the Case Management Master ordered that the primary care of the children remain as it was, one child with each parent, and she ordered access. The Master also ordered that a half-day hearing be scheduled before a judge on a date prior to October 1 “if possible”, in order to address both custody and interim exclusive possession of the family home. [ 11 ] It is noteworthy that there was no interim order for either child or spousal support, not even the small amount of child support the father’s answer acknowledged he should pay.

While it is unclear from the record, this may have been because the matter was adjourned for custody to be addressed by a judge. Also, at the time, the father was receiving EI and it was expected he would return to work. In any event, the first interim order for child support was made only two months before the hearing of the application on June 17, 2014. No interim order for spousal support was ever made. [ 12 ] Court appearances in late 2012 are relevant to the appeal.

On October 17, 2012, the parties appeared for a case conference before a judge – the one who would hear the parties at all subsequent appearances leading up to and including the hearing of the application in June 2014. At this appearance, the parties reached an agreement respecting the family home. Their agreement, reflected in a Consent Order dated October 25, 2012, was that the home would be appraised and the father would pay the mother one half of the appraised value (on or before November 9, 2012). After this, the home would be the “sole property of [the father] free of any claim of [the mother]”.

This order and the father’s failure to pay until after December 19, 2012, feature prominently in the mother’s submissions before the motion judge and on appeal. [ 13 ] A lso part of the mother’s submissions on appeal are the judge’s findings resulting from this court appearance in relation to her allegations the father had made an improper use of, and/or was hiding, funds.

These allegations are addressed in the application judge’s decision of June 24, 2014 when he explains that, at the appearance on October 17, 2012, he heard unconvincing viva voce evidence regarding the father’s use of such funds, or at least he began hearing such evidence. The examination of a person, who had testified the father had paid him for construction work done on the family home, was not completed. During a break in the examination of this witness the parties concluded their agreement regarding the family home.

After the break, they advised the court of their agreement and the examination of the witnesses did not continue; the court appearance/hearing ended. Although the hearing adjourned before it ran its full course, the application judge had heard enough to conclude the father’s explanation of the use of funds in question and the evidence of the witness were unconvincing. In fact, in his June 2014 decision, the judge rejected the father’s explanation and this evidence weighed heavily in his finding that the father’s evidence was not credible.

In view of the Master having ordered a hearing regarding custody etc., it is not clear how it was that such evidence came to be heard and the record is not helpful; presumably, an oral motion for contempt had been made. [ 14 ] On December 3, 2012, the parties were before the court because the father had not paid the mother $68,500, the amount acknowledged to be due under the Consent Order following the appraisal of the family home.

In his June 2014 decision, the application judge explained the father was self-represented and “seeking an adjournment of the contempt hearing in progress so that he could find some money to pay [the mother]”. The judge also explained: “He told the court that he was having trouble getting a mortgage on the home property because the bank was requiring he first pay off the line of credit”. The parties returned on December 19.

At this appearance, the father’s new counsel advised that the father could not borrow from the bank until the line of credit was eliminated, but the father could borrow from his parents the $68,500 to pay the mother, if a portion of the funds were able to be paid into court. Describing his response to this position, the judge explains “I ordered [the father] to pay $68,500 to [the mother] […] or we would continue with the outstanding contempt hearing. [The father] arranged for that payment from his mother”.

The father’s parents advanced $68,500 to the father and he paid the mother. [ 15 ] The allegations regarding the father’s misuse of funds (as initially addressed at the October 17 hearing) and his failure to pay the $68,500 have been relied on by the mother as part of the factual basis for her claims, not only in the application but also in her subsequent motion for contempt and to set aside the property transfers, as well as on appeal.

Indeed, as will be seen, the father’s conduct in this regard was a factor in the application judge’s determination of certain elements of spousal support and his order that he pay solicitor and client costs. [ 16 ] After the father paid the $68,500, the application did not advance further – until October, 2013, when it was ordered to be set down for a one-day hearing. This is not to say all was quiet during the intervening period. There was a brief court appearance in May 2013, where both parties were ordered to produce income information.

Additionally, custody and access issues were a focus of the parties’ attention, at least until the father moved to Saskatchewan for work in the summer of 2013. There is little in the

record but it is plain there was conflict over allegations of harassment regarding the children and claims access was being frustrated. Itwas necessary for a Voice of the Child Assessment(

s) to be undertaken, as well as third party assistance to encourage access. Nothingfurther will be said about these disputes since they were not issues in the hearing of the application. [17] Also following the $68,500 payment in December 2012, the father’s parents took steps which they describe asbeing for the purpose of recording the $68,500 loan they had made to him. First, in March 2013, they were added as joint owners/losspayees on the father’s home insurance policy with Aviva Insurance.

Second, in May/June their lawyer sent a letter to the father’s lawyer,enclosing a draft promissory note in the amount of $68,500 and advising the parents “wish to secure their loan with a collateral mortgageonce title to the property is transferred from [the mother] to [the father]”. The father signed the promissory note in favor of his parents,but a mortgage was not completed. The father never made any payments under the promissory note.

The mother disputes the fundsadvanced were a loan; she maintains they were the return of a portion of the sum of $118,000 the father had given to his own mother inorder to hide that money. [18] By the summer of 2013, the father’s employment insurance benefits had run out and he and the parties’ sonwent to Humboldt, Saskatchewan. He began working as an electrician on September 17, 2013. [19] On October 23, 2013, counsel for the parties appeared before the application judge for a case conference. Thefather was in Saskatchewan.

On consent, the judge ordered the application be scheduled for a one-day trial and the father “provideincome information with respect to his employment in Saskatchewan forthwith or in any event prior to the opening of the trial”. Thehearing of the application was scheduled for June 17, 2014. [20] Since the father had not provided income information respecting his new employment, the mother requestedanother case conference.

In March 2014 the application judge ordered both parties to provide income information and he ordered bothparties to bring any outstanding requests for further and better disclosure to the next appearance. [21] At the next appearance, on April 16, 2014, the first order for interim child support was made.

Reflecting thereceipt of the father’s current income information (he was still in Saskatchewan), the order recites: the parties “stipulated for thepurposes of the guidelines, the income of [the mother] is found to be $16,600 per annum, and the income of [the father] is found to be$156,000 from a period commencing in September 2013”. The judge ordered the father to pay $9,480 no later than April 30, 2014, pluscosts of $1,500. This represented interim child support, from September 1, 2012, and ongoing monthly support was set at $1,185 amonth.

The father paid $12,165 on April 30, 2014. [22] On May 31, 2014, the father stopped working in Saskatchewan. He and the parties’ son returned to NewBrunswick for the hearing of the application. [23] The live issues at the hearing were limited to the quantum of child and spousal support and the mother’s claimfor a division of property. They had agreed to a division of some property, including the father’s RRSPs (as noted, the home had beenaddressed 18 months earlier).

Regarding spousal support, the judge explained “[t]he parties have acknowledged that [the mother] isentitled to receive a form of spousal support and I agree…”. [24] The judge dismissed the mother’s claim to an interest in the camp property and the $118,000 which shemaintained the father had hidden prior to separation. He concluded they had kept their finances separate and the mother had notestablished any interest in the father’s property.

He stated: It is ironic that the parties have confirmed in so much detail that their financial activities were kept separate and apart one from the other.Based upon the representations of [the father]’s counsel and the admissions of [the mother] it is clear that there is no basis to award [themother] any portion of [the father]’s estate other than through the RRSPs that the parties have agreed to share.

In this circumstance Iaccept that the definitive case that is mentioned by both counsel, Kerr v Baranow, 2011 SCC 10 , 2011 S.C.C. 10, […][para. 87] [25] For the purposes of child support, the judge determined the father’s income by relying on his income taxreturns for 2012 and 2013, and his earnings in Saskatchewan for 2014. He determined the father’s income to be:

• $121,254 in 2012 (income earned from the Point Lepreau refurbishment and EI), • $56,520 in 2013 (EI and the income of $38,863 from his employment in Saskatchewan), and • $156,000 in 2014 (the same income accepted in the April, 2014 interim order). [ 26 ] After determining the child support payable each year from separation, on a split-custody basis, the judge fixed the amount due at $ 15,724 ( less any payments made before June 24). Ongoing monthly child support, based on $156,000, was set at $1,185 commencing July 1, 2014.

The judge also ordered that child support was to be re-calculated annually, based on the father’s actual income, commencing June 30, 2015. [ 27 ] For the purposes of the Spousal Support Advisory Guidelines , the application judge determined the father’s income to be $138,500. Explaining how he arrived at this amount, he states: [the father’s] income is fluctuating between the substantial reward that he had when working at Point Lepreau in 2011 and the reduced amount he earned in 2012.

Because it is more reflective of his income for the past 4 to 5 years I will require that the [father’s] income for the purposes of support […] be set at $138,500. This is his salary for 2012 added to the salary of 2013, out of the first of those there is $121,254. The salary for 2013 is $156,000 divided by two and rounded to the nearest $500.

Counsel for the applicant shall be required to prepare a divorce mate calculation sheet and after submitting it to counsel for the respondent for verification shall file with the court for incorporation of the data in the final order. [para. 79] [Emphasis added.] [ 28 ] On its face, the amount of $138,500 is difficult to reconcile with the calculation described in the decision. The amount of $138,500 is the average of the father’s income in 2012 and 2014. It is not, as described, the average of the income in 2012 and 2013. His income for 2012 was $121,254 and for 2013 it was $56,520.

For 2014, it was determined to be $156,000. As a consequence, if the intention was to average the father’s income for 2012 and 2013, his income for spousal support purposes would be $88,887.31 ; if the intention was to average all three years, the amount is $111,258.20 .

There is no expressed rationale for averaging 2012 and 2014, which produces $138,500 . [ 29 ] To calculate the spousal support payable, the judge directed the parties to prepare Divorce Mate summaries under the Guidelines using income of $138,500, as well as the additional inputs determined by him, including the mother’s income, range and duration. The judge rejected the father’s submission that income should be imputed to the mother. The judge stated he was doing so based on the father’s conduct: I recognize that further training might be a financial benefit to this 40-year-old woman.

It might result in her obtaining a better position. However, given the conduct of the respondent throughout this hearing will not penalize [the mother] for her failure to seek a better paying job. [para. 75] [ 30 ] Also reflecting the father’s conduct, the judge determined support should be set at the high end of the range of the Guidelines . He stated: […] Again, [the father’s] conduct throughout this process gives me no hesitation in setting out that the range for the determination of support should be the high range as set out in the guidelines. The term of the support should be 14 years.

The claim for such support should be retroactive to the month following the filing of the notice of application or September 1, 2012. [para. 77] [ 31 ] As a final consequence of the application judge’s assessment of the father’s conduct, he ordered the father pay solicitor-client costs: Counsel for [the mother] requested that I award costs of not less than $25,000. With respect I have no basis to accurately or fairly assess whether such an amount would be an appropriate one in this matter.

Having said this I am convinced that but for [the father’s] subterfuge and his intentional attempts to avoid having this matter resolved fairly and honestly, it would have been accomplished far more quickly and with much less expense and anguish for [the mother]. [para. 89]

[ 32 ] While a ll arrears of child and spousal support were ordered to be paid in full within 30 days, the June 24 order did not quantify spousal support or solicitor-client costs. As noted, the spousal support calculations directed by the judge were yet to be prepared and solicitor and client costs would not be assessed until February 2015. [ 33 ] A written order, issued on September 2, 2014, provided for a monthly spousal support obligation of $2,719, payable for 14 years commencing September 1, 2012, and it set the amount of spousal support due at $59,818, as of June 30, 2014.

The ongoing monthly obligation of $2,719 would continue for a further 12 years and 2 months. [ 34 ] Finally, before leaving the June 24, 2014 decision, I will address one final order made by the application judge. It is an order which the mother characterizes, including in her submission on appeal, as a determination by the judge that the father intentionally misled the court regarding the $118,000 he withdrew from his account(

s) before separation. This is inaccurate for a number of reasons; however, w ithout a doubt, it reflects the application judge’s assessment of the father’s representations. The judge made, under Rule 76(4) of the Rules of Court – Contempt Proceedings, the following order: I do however consider that [ the father’s] statements to the court on December 3, 2012 seeking to avoid paying [the mother] her share of the family home did appear to constitute an attempt to intentionally mislead the court.

For that reason, and pursuant to Rule 76(4) I am requiring that [the father] appear before me on a date to be set by the Supervisor of Client Services not more than 60 days hence to explain his conduct. [para. 88] [ 35 ] T he judge said the father’s statements “ did appear to constitute” an attempt to mislead the court and he gave the father an opportunity to explain. Additionally, the judge’s reason for believing he may have been misled did not relate, as the mother claims, to the $118,000 at issue in the hearing.

The judge concluded he may have been misled because it appeared to him the father had access to approximately $30,000 in December 2012, at the same time the father had represented to the judge he could not pay $68,500 to the mother for the home. This is plain from the judge’s decision. T he basis for the judge’s concern is reflected in the following paragraphs of his decision: I note that in passing on December 3, 2012 when [the father] testified he was desperately short of money. He borrowed $31,000 from the line of credit . This resulted in his owing a total of $31,371.76 on the line of credit.

From these withdrawals [the father] deposited $16,000 to his tax-free savings account and he used $15,000 to increase the amount in one of his RRSPs. On that same date, December 3, 2012, [the father] appeared before me self-represented seeking an adjournment of the contempt hearing in progress so that he could attempt to find some money to pay [the mother].

He told the court that he was having trouble getting a mortgage on the home property because the bank was requiring that he first pay off the line of credit […]. [paras. 53-54] [Emphasis added.] [ 36 ] Significantly, the judge’s basis for his belief, that the father had access to cash when he represented he could not pay the mother as provided in the Consent Order, turned out to be mistaken. The father had access to cash from the line of credit in November/December 2011 – not in December 2012, as the judge suggested.

This is evident from another part of the decision where the judge noted that, in December 2011, the father had taken significant advances on the line of credit: […] The line of credit balance on the November 2011 statement was $6028.85 and this amount was paid in full by December 3, 2011.

There were two withdrawals totaling $31,313 from the line of credit made on December 2 and 3 and recorded on the December 2011 statement. […] [para. 17] [ 37 ] Also, the mistaken impression was later explained away by the uncontradicted evidence of the father – as the judge’s order, directing him to “explain his conduct”, contemplates could be the case.

This is addressed in an affidavit later filed by the father to dispute the mother’s allegation “it was found that [the father]’s statements to the court on December 3, 2012 were an attempt to intentionally mislead the Court” and the father had failed to appear before the judge as he had been ordered (allegations made in her motion for contempt and to set aside the property transfer). As the father explains:

I state that I did reappear before Justice […] following the trial and he ultimately found that the Court had simply misconstrued the December 3, 2012 statements by noting them down incorrectly as to the date of a certain event that was the subject of the statements. I provided a copy of my banking ledger that showed the transaction in question occurred in December 2011 and not December 2012 as the Court had thought.

There is no dispute this was addressed before the motion judge. [ 38 ] Despite all of this, the mother continued to maintain, even before this Court, that the father had been found to have misled the court on December 3, 2012 and that the application judge had ordered him to answer for his contempt. B. The Property Transfer and the Motions Appealed [ 39 ] In July 2014, the father transferred his home and camp to his parents. Not surprisingly, the mother viewed the transfer, less than a month after the June 24, 2014 order for support, as an attempt to put his assets beyond her reach.

This continues to be her position. The father’s position is the transfer had nothing to do with avoiding his obligations to the mother. He maintains that following the support order he was unemployed and, after previous unsuccessful attempts to sell his home, the transfer to his parents would allow him to satisfy all his debts – in particular, those due to his parents, the Bank of Nova Scotia and the mother.

The line of credit due to the Bank and the debt due to his parents would be satisfied by the transfer of his properties; the significant arrears which had been recently ordered, but not quantified, in favour of the mother would be satisfied by cashing his share of the RRSPs he had agreed to divide with the mother. [ 40 ] The mother applied by ex-parte Notice of Motion to set aside the transfers and for Certificates of Pending Litigation. The application judge directed the mother serve the father and his parents.

On October 27, 2014, the judge ordered the parents be joined as respondents to the motion and that “[e]ach of the Respondents is entitled to file responding documents on or before November 28, 2014”. I reproduce this language because the mother has claimed on a number of occasions the parents were “ ordered ” to file responding documents and they failed to do so.

The father’s parents filed a jointly sworn affidavit on November 20, 2014, which sets out the consideration for the transfer, namely, the satisfaction of the $68,500 loan they had made to the father in December 2012, the repairs of approximately $67,500 they had made to his home (and to a much lesser extent, the camp), and the approximately $50,000 they had paid to the Bank (to pay off the line of credit) and for property taxes, etc.

They also claimed costs. [ 41 ] The father filed a Motion to Change, on October 23, 2014, seeking to vary his child and spousal support claiming to be unable to work as a consequence of a major depressive disorder. The mother’s position was and is that the father’s circumstances have not changed since the June 2014 trial. [ 42 ] The mother filed another Notice of Motion, dated July 16, 2015, claiming (

i) a finding of contempt, as a consequence of the father failing to pay support and solicitor and client costs (assessed in February 2015); (ii) an order that the property transfer be declared void and set aside, and (iii) an order that $118,000 “transferred out of a joint account by [the father] prior to separation…be deemed family property” and the father be ordered to pay the mother “$59,000 in satisfaction of the same”. C. The Motion Judge’s Decision [ 43 ] The hearing of the motions occurred over 5 days (February 10, 11, July 13, 14 and 15, 2016) .

As a preliminary matter, the mother maintained the issue of the father’s contempt should be addressed first, submitting his motion should not be heard while he is in contempt of an existing court order(s). Alternatively, and also as a preliminary matter, she submitted the father’s motion should not be heard, claiming it was barred by res judicata since it sought to re-litigate issues previously determined by the application judge. [ 44 ] The judge dismissed all of the claims for relief made in the mother’s motion.

In connection with her claim for a finding of contempt based on the father failing to pay the child and spousal support that arose on June 24, 2014 ($15,272 and $59,818), the judge found these amounts had been substantially paid by October 2014. The father had paid $12,165 on April 30, 2014, following the interim order made on April 16, 2014 (he also paid $440 on August 1, 2014, $440 on August 29, 2014, and on September 23, 2014, a further $1073.17 was taken at source from his EI). As well, he paid $60,000 toward spousal support in October 2014.

In connection with the father’s failure to meet his ongoing support obligations, the judge noted he had not worked since May 31, 2014, (he was receiving EI), and in October 2014, he had applied for CPP disability benefits. She concluded that by filing his Motion to Change in October 2014,

the father demonstrated he wanted to address his ongoing support obligation. In relation to the claim of contempt for having failed to pay solicitor-client costs of approximately $25,000, the judge noted they had not been assessed until February 2015, months after he had filed his motion to vary because he was not able to work. Finally, in dismissing the motion for contempt and the request for the father’s incarceration, the judge observed there was no evidence the remedies under the Support Enforcement Act , S.N.B. 2005, c. S-15.5, had been exhausted.

As noted, the dismissal of the motion for contempt has not been appealed. [ 45 ] In dismissing the mother’s motion for an order setting aside the property transfer, the judge found there was consideration for the transfer and no intention to defeat or avoid creditors. This is the decision the mother appeals. [ 46 ] Finally, the motion judge dismissed the mother’s claim for a division of the $118,000 withdrawn by the father prior to separation since her claim to these funds had been previously denied by the application judge.

At the hearing of the motion, the mother acknowledged the application judge had dismissed her claim. As the motion judge explains, the mother testified “she has no claim to the money and she was uncertain…as to why and on what basis she was making the claim again”. A couple of observations are warranted. First, the funds were not transferred out of a joint account, as the mother’s motion alleges.

Second, she pursued the claim until she acknowledged she knew it had been previously dismissed by the application judge. [ 47 ] The motion judge did not assess or determine the merits of the father’s motion to vary ; she dismissed it, concluding the issues raised were res judicata since he had previously asserted, at the June 17, 2014 hearing, or he could have asserted, he was unable to work as a consequence of his major depressive disorder.

Central to this decision is the judge’s finding that evidence of the father’s depression was available to him at that time. [ 48 ] The motion judge decided the mother and father should bear their own costs; however, she did not address the father’s parents’ claim for costs. III. Grounds of Appeal [ 49 ] The mother’s appeal asserts the motion judge made numerous errors in fact and law. In

summary, she submits the motion judge failed to consider whether the property transfers were bona fide , claiming they were non-arm’s length with no or inadequate consideration. In particular, she submits there was no proof (or at least there was contradictory evidence) of the parents spending their own money on repairs and renovations to the properties transferred and further, the judge erred in finding they had spent approximately $67,500 doing so.

She submits the judge erred by failing to find the father was intentionally frustrating the enforcement of the judgment against him. [ 50 ] The father’s cross-appeal asserts the motion judge erred in her application of res judicata and she failed to consider whether there had been a material change in circumstances. [ 51 ] The parents’ cross-appeal asserts the judge erred in failing to address their claim for costs, despite dismissing entirely the mother’s claim against them. IV. Analysis A. The Mother’s Appeal – Assignments and Preferences Act

[ 52 ] It is not difficult to appreciate why the mother formed the opinion, at least initially, that the father transferred his home and camp to his parents with the intention to defeat her claim as a creditor. From her perspective, the road leading to the June 2014 order for support was long and shrouded with the perception that the father had hidden funds and had, with the assistance of his family, sought to avoid paying her anything.

The mother’s view is summed up by her allegation on the appeal: the father continues to avoid his support obligations with the complicity of his family; the transfer is only the latest manifestation of this conduct.

The timing of the transfer, within a month of the order for him to pay substantial spousal and child support, gave the mother cause to be suspicious. [ 53 ] However, after hearing the evidence and determining disputed allegations of fact regarding the circumstances surrounding the transfer, the motion judge was not persuaded the transfer was made with the intent of defeating, delaying or prejudicing the mother as a creditor.

To succeed before the motion judge, the mother was required to establish the property transfer: (1) was made at a time when the father was in insolvent circumstances (or was unable to pay his debts in full or knew he was on the eve of insolvency); and (2) was done with the intent to defeat, delay or prejudice his creditors (s. 2(1)) or to give one of his creditors an unjust preference over his other creditors (s. 2(2)). The provisions are as follows: Unjust preferences 2

(1) Subject to the provisions of

section 3, every gift, conveyance, assignment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other property, real or personal, made by a person at a time when that person is in insolvent circumstances, or is unable to pay that person’s debts in full, or knows that that person is on the eve of insolvency, with intent to defeat, delay or prejudice that person’s creditors , or any one or more of them, is void, as against a creditor injured, delayed or prejudiced. 2

(2) Subject to the provisions of

section 3, every gift, conveyance, assignment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other property, real or personal, made by a person at a time when that person is in insolvent circumstances, or is unable to pay that person’s debts in full, or knows that that person is on the eve of insolvency, to or for a creditor with intent to give that creditor an unjust preference over the other creditors , or over any of them, is void, as against a creditor injured, delayed, prejudiced or postponed. [Emphasis added.] Préférences injustifiées 2

(1) Sous réserve des dispositions de l’article 3, les donations, transferts, cessions, remises ou paiements, soit d’objets ou de biens personnels, soit de lettres, d’obligations, de billets ou de valeurs, soit d’actions, de dividendes, de primes ou de bonis d’une banque, d’une compagnie ou d’une personne morale, soit de tous autres biens réels ou personnels qu’effectue une personne qui se trouve en état d’insolvabilité ou dans l’impossibilité de payer intégralement ses dettes ou qui se sait sur le point d’être insolvable, avec l’intention de frustrer, de tenir en suspens ou de léser ses créanciers ou l’un quelconque ou plusieurs d’entre eux sont inopposables aux créanciers frustrés, tenus en suspens ou lésés. 2

(2) Sous réserve des dispositions de l’article 3, les donations, transferts, cessions, remises ou paiements, soit d’objets ou de biens personnels, soit de lettres, d’obligations, de billets ou de valeurs, soit d’actions, de dividendes, de primes ou de bonis d’une banque, d’une compagnie ou d’une personne morale, soit de tous autres biens réels ou personnels, effectués à un créancier ou à son profit par une personne qui se trouve en état d’insolvabilité ou dans l’impossibilité de payer intégralement ses dettes ou qui se sait sur le point d’être insolvable avec l’intention de lui procurer une préférence non justifiée sur les autres créanciers ou sur l’un quelconque d’entre eux, sont inopposables aux créanciers frustrés, tenus en suspens, lésés ou rétrogradés. [Le caractère gras est de moi.] [ 54 ] In her motion, the mother claims the transfer is contrary to the Assignments and Preferences Act , without identifying whether she is relying on either ss. 2(1) or 2(2) or both.

However, as she argued on appeal, either provision could apply – in view of the motion judge’s finding the $68,500 the parents advanced to the father was a loan, and therefore, they were creditors. That said, the mother has consistently disputed the claim that the father was indebted to his parents and the focus of her submissions before the motion judge related to s. 2(1), a transfer to defeat or prejudice her claim as a creditor. The judge’s decision explains her reasons for dismissing the mother’s claim primarily in the language of that

section but, in my opinion, it is clear her findings and determinations are applicable to both.

[ 55 ] The mother’s allegations of error relate largely to the motion judge’s assessment of the evidence. Notwithstanding her submissions to the contrary, the motion judge was well aware of the circumstances which the mother maintains are suspect and irrefutable badges of fraud. The judge recognized the obvious relationship between the father and his parents and the suspect timing of the transfer.

Importantly, she confronted directly the mother’s assertions that the $68,500 advanced to the father was not a loan and that his parents had not “prove[n]” they had undertaken renovations to his home; she also addressed the mother’s claim there was no or inadequate consideration for the transfer. [ 56 ] The motion judge found as a fact the father was indebted to his parents for the $68,500 they gave him to pay the mother for her interest in the family home.

She did not accept the mother’s submission the $68,500 was simply the father’s parents returning his own money, which the mother alleges he had hidden with their complicity. Important to the motion judge’s finding the parents had loaned the father $68,500 was the viva voce evidence of the father’s mother, who the judge found to be credible. Her evidence was consistent with the documentary evidence indicating the flow of funds.

A few months after the parents advanced the $68,500, they were added as owners/loss payees to the father’s home insurance policy and in June 2013, their legal counsel took steps to document the loan. The letter to the father’s legal counsel, including the draft promissory note, expressed the intention to secure the note with a collateral mortgage. The mother was justified to emphasize the fact this had not occurred until almost six months after the funds were advanced and also that the father had not made any payments on the note. However, all of this was before the motion judge.

Indeed the circumstances surrounding the $68,500 advance were very much a focus of the evidence and submissions in the motion, more so than at the hearing of the application where the father’s mother had not testified. Quite simply, the evidentiary record allowed the motion judge’s finding that the $68,500 was a loan. There is no palpable error in the judge’s analysis. [ 57 ] The judge did not accept the mother’s submission that the evidence presented was inadequate to prove the parents had made repairs to the properties, as they claimed to have done, or that the quantum of the repairs was as they claimed.

The judge’s assessment of the evidence led her to a different conclusion and the mother does not identify a palpable error in this assessment. The judge found there had been a plan to renovate the father’s home for sale and his parents had, at their own cost, undertaken considerable renovations, largely while the father was living and working in Saskatchewan. The motion judge accepted the uncontradicted evidence of the father’s mother in this regard, including that about $67,500 had been spent. The mother submits the judge erred in finding the evidence of the father’s mother credible on this issue.

This assertion is without merit. There was simply nothing to contradict this evidence on either the extent of the renovations completed or their cost. In fact, the mother candidly acknowledged she simply did not know what work was done, and that she could not offer any evidence to suggest the work described was not done. Nor do the alleged “inconsistencies” in relation to the timing of when the work was performed preclude the judge’s acceptance of this evidence without an exhaustive analysis and rationalization of each piece of evidence.

In view of the entirety of this evidence, it was not necessary for the judge to address every minor imperfection before accepting it as credible. The mother has not established the judge erred in finding the parents made significant repairs to the properties, with a value of approximately $67,500. [ 58 ] Finally, while the mother maintains the parents did not pay out the father’s line of credit with the Bank on the same day the transfer took place, there is no dispute that his parents had paid this and other amounts within days of the transfer.

It was not a stretch for the judge to find that the father’s parents paid, as part of the property transfer, the line of credit of approximately $46,000 (which was secured by the home) as well as the outstanding property taxes and transaction fees of approximately $4,000.

Her finding that the consideration for the property transfer included the payment of approximately $50,000 is beyond question. [ 59 ] Based on these findings of disputed questions of fact, the motion judge concluded there was consideration for the transfer, which included: the satisfaction/repayment of the $68,500 loan; the recovery of the funds spent to repair the properties (approximately $67,500); and a fresh advance of approximately $50,000 at the time of transfer. Effectively, the consideration accepted by the judge exceeded $180,000.

After acquisition, the home was rented by the parents and then sold in the spring of 2016 to the third party tenant. This occurred while the motions were in the process of being heard. Of the $150,000 sale proceeds, the net amount of $140,000 was paid into court, where the proceeds remain today. The parents continue to own the camp property.

While the father has stayed at the camp on occasion, the evidence does not support the mother’s submission that, despite the transfer of title, it continues to be treated as if it were still owned by the father. [ 60 ] After considering all of the circumstances, including her finding there was consideration for the transfer, the motion judge rejected the mother’s claim the transfer was contrary to the Assignments and Preferences Act ; she concluded there was no intent to avoid or prefer creditors.

The broader circumstances include the fact that the father had previously tried to sell the home, but had been unsuccessful, and the transfer to his parents was part of a plan to satisfy his debt to both the bank and his parents and he would satisfy the lump sum support payable to the mother from his RRSPs. The judge stated : The Court finds that there was consideration for the assets and that there is no evidence of any intent to frustrate creditors.

The Court does not conclude that the transfer of the camp and house from the father to his parents (that was later sold to a third party) was to frustrate payment of his child and spousal support obligations. [para. 71]

[ 61 ] The mother submits on appeal the judge’s finding there was consideration is inconsistent with the requirements of s. 3(1) of the Act. She submits consideration must be a “ present actual payment in money” which reasonably reflects the value of the property. The mother’s submission seeks to have us treat s. 3(1) as defining consideration for the purposes of the Act . This is not the purpose or intent of s. 3(1).

The provision “protects” certain transactions by specifically excluding them from the application of s. 2 – one of the requirements of which is the “present actual payment of money” as consideration. The other requirement is that it be made in good faith. The mother submits that if the requirements of s. 3(1) are not met, effectively, there is no consideration. I disagree. Section 3(1) provides: Assignments and payments protected 3

(1) Nothing in

section 2 applies to any assignment made under the Bankruptcy and Insolvency Act (Canada), nor to any sale or payment made in good faith in the ordinary course of trade or calling to innocent purchasers or parties, nor to any payment of money to a creditor, nor to any genuine gift, conveyance, assignment, transfer , or delivery over of any goods, securities or property of any kind as above mentioned, that is made in consideration of any present actual payment in money made in good faith, or by way of security for any present actual advance of money made in good faith, or in consideration of any present actual sale and delivery of goods or other property made in good faith, if the money paid, or the goods or other property sold or delivered, bears a fair and reasonable relative value to the consideration for it . [Emphasis added.] Protection des cessions et des paiements 3

(1) Les dispositions de l’article 2 ne s’appliquent ni à une cession faite en vertu de la

Loi sur la faillite et l’insolvabilité (Canada), ni aux ventes ou paiements faits de bonne foi, dans le cadre normal de l’exploitation d’une entreprise ou de l’exercice d’une activité, à des personnes ou parties de bonne foi, ni au paiement d’une somme à un créancier, ni aux donations, transferts , cessions ou remises d’objets, valeurs ou biens du genre susmentionné, qui sont effectués en contrepartie du paiement actuel, effectif et de bonne foi d’une somme ou en garantie du versement actuel, effectif et de bonne foi d’un acompte ou en contrepartie de la vente et de la livraison actuelles, effectives et de bonne foi d’objets ou autres biens, s’il existait un rapport juste et raisonnable entre la somme payée, les objets ou les autres biens vendus ou livrés et la contrepartie . [Le caractère gras est de moi.] [ 62 ] Essentially, the mother submits s. 3 is not satisfied in this case since there is only a “present actual payment” of approximately $50,000, which does not bear “a fair and reasonable relative value” to the properties conveyed.

She maintains the satisfaction of the $68,500 loan and the recovery of the $67,500 spent on renovations are not a “present actual payment in money” and do not amount to consideration. [ 63 ] However, these submissions are of no consequence since the motion judge did not determine the transfer to the parents was a protected transaction under s. 3(1), excluding the application of s. 2. The burden of establishing the transaction was protected by s. 3(1) rested with the father and/or his parents.

The judge did not decide s. 2 was rendered inoperative by the application of s. 3(1) and that it was therefore unnecessary to consider the mother’s request to set aside the transfer under s. 2. The judge undertook an analysis under s. 2 and dismissed the mother’s claim because s. 2 was not satisfied. [ 64 ] More broadly, the mother submits the motion judge erred in her assessment of the circumstances by failing to consider whether the property transfers were bona fide .

She maintains the judge failed to undertake a full and proper assessment of the badges of fraud, including: the transfer was non-arm’s length, for no or inadequate consideration, made in haste and in secret and following an order that imposed a significant obligation which the father could not satisfy. [ 65 ] There is no merit to any of these submissions. The judge determined disputed questions of fact – resolving the disagreement regarding the $68,500 loan, the renovations made by the parents and the timing of the payout of the line of credit.

After having done so, she assessed the totality of the circumstances, including the fact that there was consideration for the transfer, and determined the mother did not establish the criteria under s. 2(1) and/or s. 2(2). She was not satisfied there was an intention to delay or prefer creditors. This was not a case where a presumption arose under s. 2(3). That provision creates a presumption that a transaction has been made with the intent to give a preference where it is established that the transaction has the effect of giving a preference.

However, the presumption applies only if a proceeding is brought within 60 days of the impugned transfer. There is no suggestion the provision applies in the circumstances. Frankly, even if it did, the practical result of the judge’s findings of fact, and her determination there was no intent to prefer, would rebut any such presumption.

[66] The mother’s submissions invite the court to re-weigh the evidence without identifying a palpable error(leaving aside whether any such error would be overriding). The motion judge was aware of all material circumstances identified by themother. The judge made specific reference to the authorities relied on by the mother and distinguished them on the basis that, in thosedecisions, there was a transfer to a relative for no meaningful consideration (see Hayden v. Monteith (1987) (NB CA),81 NBR (2d) 273, [1987] N.B.J. No. 815 (C.A. (QL); and Wuhr-Howe v. Wuhr et al., (NB QB)).

Indeed, even in themother’s submission on appeal, the numerous additional cases relied upon similarly involve transactions where the circumstances werequite different from those of the present case and where there was no or little meaningful consideration (see Bank of Montreal v.Vandine, (NBCA); Turfquip Inc. v. 033478 N.B. Ltd. (1997), (NB KB), 193 NBR (2d) 165, [1997]N.B.J. No. 414 (QL), aff’ed (1998), (NB CA), 198 NBR (2d) 90, [1998] N.B.J. No. 98 (C.A.) (QL); Boudreau v.Marler, [2004] O.J. No. 1543 (ONCA) (QL); Pilot Insurance Co. v. Foulidis, [2005] O.J.

No. 2799 (ONCA) (QL); Mutual Trust Co. v.Stornelli, [1995] O.J. No. 4554 (ONCJ) (QL); and Re Scantlebury, [1996] P.E.I.J. No. 108 (C.A.) (QL)). This is not to suggest thepresence of consideration is determinative of whether there is an intent to defeat or prefer creditors; however, the absence ofconsideration is often a compelling factor in establishing such an intent. [67] In my opinion, there is no merit to the mother’s appeal.

The motion judge determined the facts, makingunassailable findings of credibility in doing so, and after considering all of the circumstances she concluded the property transfer was notmade with the intent to defeat or prefer creditors. How a less than full appreciation of the circumstances might strike a casual observer isof no relevance to the issues on appeal. B.

The Father’s Cross-Appeal – Res Judicata and Motion to Vary Child and Spousal Support [68] The father maintains his inability to work following the June 2014 order, due to a major depressive disorder, isa change in circumstances and the judge erred in dismissing his motion to vary based on the principle of res judicata. I agree the decisionreflects error and his motion should have been determined on its merits. The application of general principles of res judicata must giveway to the legislated authority to vary support orders.

Generally speaking, the statutory power to vary a prior support order is subject tothe condition precedent that there has been a change in circumstances. In this case, the res judicata analysis was undertaken as thoughthe support order sought to be varied is a final order for all purposes and it did not consider the unique character of support orders. [69] In her response to the motion to vary, the mother maintained the father was seeking to re-litigate issues whichhave been previously decided by the application judge.

She submitted the application judge rejected the father’s oral testimony thatdepression impaired his ability to work and therefore the issue has been determined. She also submitted that when the father was beforethe application judge, he could have led corroborating evidence of his depression but he had failed to do so, and that much of the medicalevidence he was now seeking to rely on had been available at the time the application was heard. Before the motion judge, the motherrelied on Nelson v.

Nelson, 2013 NBQB 359, 410 N.B.R. (2d) 388, to support her claim the father’s motion is estopped by res judicata.In Nelson, Walsh J. considered principles of res judicata in connection with a claim respecting RRSPs.

Quoting from Sopinka, The Lawof Evidence in Canada, Walsh J. explained the principle that any action or issue “which has been litigated and upon which a decision hasbeen rendered cannot be retried…[A] new action was permissible only if there was some new fact which totally changed the aspect ofthe case, and if that fact was not known before and could not have been known by reasonable diligence”. [70] The motion judge accepted the mother’s position; she concluded the “evidence of the father is that he nowsuffers from major depressive disorder and cannot work” and in “order for the court to make this conclusion it must base its decision onnew evidence that was not available at trial”.

The judge explained:

I believe no new facts were presented to this Court in relation to the incapacity of the father to work and facts that were presented wereknown or should have been known by him at the time of what I will call the first trial. If paragraph 56 of his decision of the judgemade the following comments: “…I will not accept [the father's] testimony about his ability to work having been impaired by a medical problem; depression, nervesand a possible ulcer because he has provided no corroboration for this claim”. The evidence of the father is that he now suffers from major depressive disorder and cannot work.

In order for the court to make thisconclusion it must base its decision on new evidence that was not available at trial. The evidence to support his present case wasavailable to him and known by him during the first trial. Bringing forward corroborating evidence through a Motion to Change wouldbe re-litigating this matter. […] It is clear the father knew about his medical condition and that he was diagnosed with major depressive disorder at the first trial. Hehimself testified that he suffered from depression at that time.

He chose not to present any documentary evidence at that time or callany witness to support his claim. The evidence regarding his condition was ascertainable at the time of the first trial not only by Dr.O’Neil but also by Dr. Donihee. The exception to the application of the doctrine of res judicata is the awareness of new facts notknown at the time of trial or that could not have been know[n] at the time of trial does not apply in this matter. The father knew of hiscondition and no new facts became known after. Dr. Satya’s confirmation of Dr. O’Neil's diagnosis does not change anything.

HisMotion to Change is dismissed. [para 77, 78 and 82] [Emphasis added.] [71] Focused on a res judicata analysis, the judge accepted the mother’s position that nothing new was offered onthe motion respecting the father’s depression since the medical evidence proffered confirmed his condition existed prior to the June 2014hearing and, with reasonable diligence, that medical evidence could have been made available at that hearing.

On this basis, the judgeconcluded the new evidence exception to the application of the principle of res judicata did not apply and the claim was barred. [72] I pause to make two observations regarding Nelson. First, at issue in Nelson was an order respecting property,to which the principles of res judicata apply in the ordinary course. It was not an order that may be varied based on a change incircumstances, such as an order for support or an order respecting custody and/or access.

Second, as Nelson identifies, an exception tothe general application of res judicata arises when there are new facts which were not known or could not have been known withreasonable diligence.

It appears the focus on this exception overtook the submissions and analysis at the hearing of the motion and this iswhere got it off track. [73] While a change in circumstances analysis and a res judicata analysis may both require consideration of the lastdecision or order, including, depending on the case, evidence of what was decided at that hearing, the issue to be determined and theconsequential analysis are quite different.

The issue raised by the father’s motion is whether his claim to be unable to work, as aconsequence of his depression (which was first diagnosed in November 2012), is a change in circumstances. The focus of the inquiry iswhether the father’s claimed inability to work due to his condition, if established, constitutes a change in circumstances since the ordersought to be varied. The issue is not, as it may be under a res judicata analysis, whether the claim currently made was or could havebeen adjudicated at the prior hearing.

Nor is it whether the medical information/evidence sought to be relied on to prove the father’scondition is new and was unavailable (through reasonable diligence) at the time of the last hearing. The distinction is significant. [74] Res judicata is a defence which must be pled and proven. Before the motion judge, the issue was addressedonly as res judicata, without identifying whether the plea relied on cause of action estoppel or issue estoppel. However, it is clear onlyissue estoppel might have had any application. A good

summary of the principles grounding res judicata, and particularly issue estoppel,is provided by Binnie, J. in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 , [2001] 2 S.C.R. No. 460, [2001] S.C.J. No.46 (QL). He states: The law has developed a number of techniques to prevent abuse of the decision-making process. One of the oldest is the doctrineestoppel per rem judicatem with its roots in Roman law, the idea that a dispute once judged with finality is not subject to relitigation:Farwell v. The Queen (1894), 1894 CanLII 72 (SCC), 22 S.C.R. 553, at p. 558; Angle v. Minister of National Revenue,

(SCC), [1975] 2 S.C.R. 248, at pp. 267-68. The bar extends both to the cause of action thus adjudicated (variously referred to as claim orcause of action or action estoppel), as well as precluding relitigation of the constituent issues or material facts necessarily embracedtherein (usually called issue estoppel): G. S. Holmested and G. D. Watson, Ontario Civil Procedure (loose-leaf), vol. 3 Supp., at 21 s. 17et seq.

Another aspect of the judicial policy favouring finality is the rule against collateral attack, i.e., that a judicial order pronounced bya court of competent jurisdiction should not be brought into question in subsequent proceedings except those provided by law for theexpress purpose of attacking it: Wilson v. The Queen, (SCC), [1983] 2 S.C.R. 594; R. v. Litchfield, (SCC), [1993] 4 S.C.R. 333; R. v.

Sarson, (SCC), [1996] 2 S.C.R. 223. […] In this appeal the parties have not argued “cause of action” estoppel, apparently taking the view that the statutory framework of the ESAclaim sufficiently distinguishes it from the common law framework of the court case. I therefore say no more about it. They havehowever, joined issue on the application of issue estoppel and the relevance of the rule against collateral attack. Issue estoppel was more particularly defined by Middleton J.A. of the Ontario Court of Appeal in McIntosh v.

Parent, (ON CA), [1924] 4 D.L.R. 420, at p. 422: When a question is litigated, the judgment of the Court is a final determination as between the parties and their privies. Any right,question, or fact distinctly put in issue and directly determined by a Court of competent jurisdiction as a ground of recovery, or as ananswer to a claim set up, cannot be re-tried in a subsequent suit between the same parties or their privies, though for a different cause ofaction. The right, question, or fact, once determined, must, as between them, be taken to be conclusively established so long as thejudgment remains.

This statement was adopted by Laskin J. (later C.J.), dissenting in Angle, supra, at pp. 267-68. This description of the issues subject toestoppel (“[a]ny right, question or fact distinctly put in issue and directly determined”) is more stringent than the formulation in some ofthe older cases for cause of action estoppel (e.g., “all matters which were, or might properly have been, brought into litigation”, Farwell,supra, at p. 558).

Dickson J. (later C.J.), speaking for the majority in Angle, supra, at p. 255, subscribed to the more stringent definitionfor the purpose of issue estoppel. “It will not suffice” he said, “if the question arose collaterally or incidentally in the earlier proceedingsor is one which must be inferred by argument from the judgment”. The question out of which the estoppel is said to arise must have been“fundamental to the decision arrived at” in the earlier proceeding.

In other words, as discussed below, the estoppel extends to the materialfacts and the conclusions of law or of mixed fact and law (“the questions”) that were necessarily (even if not explicitly) determined in theearlier proceedings.

The preconditions to the operation of issue estoppel were set out by Dickson J. in Angle, supra, at p. 254: (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel israised or their privies. [para. 20, 23, 24 and 25] [Emphasis added.] [75] The authority to vary a support order, based on a change in circumstances, is provided, in this case, by s.118(2) of the Family Services Act. It provides as follows:

118(2) Where an order for child support or anorder for the support of a child at or over theage of majority has been made and the courtis satisfied that a change of circumstances asprovided for in the regulations respectingorders for child support has occurred sincethe making of the order under subsection115(1) or since the making of the last orderunder this section, if any, in respect of thesupport of a child or a child at or over the ageof majority, the court may, upon theapplication of any person named in the orderor referred to in subsection 115(3) and subjectto paragraph 113(2)(b), subsections 115(1.1)to (1.6) and the regulations respecting ordersfor child support, as the case may be, (

a) discharge, vary or suspend any term of theorder, prospectively or retroactively, (

b) relieve the respondent from the paymentof part or all of the arrears or any interest duethereon, and (

c) make any order for child support or anyorder for the support of a child at or over theage of majority that the court could make onan application under

section 115 for thesupport of a dependant who is a child or achild at or over the age of majority. [Emphasis added.] 118(2) Lorsqu’une ordonnance de soutienpour enfant ou pour enfant majeur a étérendue et que la cour est convaincue qu’unchangement de situation prévu auxrèglements concernant les ordonnances desoutien pour enfant s’est produit depuisqu’elle a rendu l’ordonnance en vertu duparagraphe 115(1) ou la dernière ordonnanceen vertu du présent article, le cas échéant,relativement au soutien de l’enfant ou del’enfant majeur, la cour peut, à la demande detoute personne nommée dans l’ordonnance ouvisée par le paragraphe 115(3) et sous réservede l’alinéa 113(2)b), des paragraphes115(1.1) à (1.6) et des règlements concernantles ordonnances de soutien pour enfant, selonle cas,

a) révoquer, modifier ou suspendre toutecondition énoncée dans l’ordonnance, pourl’avenir ou à

titre rétroactif,

b) dégager le défendeur du paiement de toutou

partie des arriérés ou des intérêtsmoratoires y afférents, et

c) rendre toute ordonnance de soutien pourenfant ou pour enfant majeur que la courpourrait rendre lorsqu’elle est saisie d’unedemande en application de l’article 115 pour le soutien d’une personne àcharge qui est un enfant ou qui est un enfantmajeur. [Le soulignement est de moi.] [76] The application of principles of res judicata is subject to the exercise of the power to vary under s. 118(2).While this proposition requires little explanation, the Ontario Court of Appeal expressly addressed the intersection of the power to varysupport obligations with the principles of res judicata in DiFancesco v.

Couto, (ON CA), [2001] O.J. No. 4307 (C.A.)(QL). The issue in dispute was a motion to rescind arrears; however, for our purpose, the observations are apposite. As Simmons J.A.explained: I do not, however, view the dismissal of an application to rescind arrears as an absolute bar to future rescission of those same arrears,provided there is a change in circumstances sufficient to warrant a variation. First, I note that the language of the provisions authorizing a variation is very broad.

Although the Divorce Act stipulates that the changein circumstances necessary to trigger the right to seek a variation must occur after the date of the last variation order, there is no suchlanguage limiting the scope of variation available. Second, the issues presented on succeeding motions for rescission of arrears lack the identity necessary to give rise to issueestoppel. The first issue for determination on an application for variation of support payments or arrears is whether there hasbeen a change in circumstances sufficient to warrant the variation sought.

Once that threshold is met, the presenting issue iswhether rescission is justified in the context of the changed circumstances. The fact that a prior application did not meet the threshold forvariation does not, of necessity, determine the issue of whether rescission of those same arrears is justified in the context of subsequentchanged circumstances. In Setinas v. Setinas (1984), (ON CJ), 39 R.F.L. (2d) 43, 43 C.P.C. 44 (Ont. Prov. Ct.) at para. 18, Main Prov. Ct. J.

made the following comments about the application of issue estoppel to matrimonial litigation, and variation applications inparticular: Fundamental to the doctrine of estoppel by record including issue estoppel is that it is in the public interest that there should be an end oflitigation: interest reipublicae ut sit finis litium . . . However, it must be borne in mind that matrimonial litigation, as it relates to theissue of ongoing support, both as to enforcement and variation, differs from ordinary litigation.

Finality can be achieved onlywhere a support obligation ceases and when all outstanding arrears are either paid or rescinded. Until that point is reached, s. 21of the [Family Law Reform Act, R.S.O. 1980, c. 152] allows for applications to vary and to rescind. To that extent, the maximmust be modified. This is not to say that frivolous or vexatious proceedings will be tolerated.

The six-month limitation on applications tovary, without leave of the court, an award of costs on a solicitor and client basis and the power in the court to stay or dismiss as an abuseof process are sufficient to dissuade litigants from making such applications. Setinas involved a question of whether findings made in an enforcement proceeding could give rise to issue estoppel in a subsequentapplication to vary made pursuant to the Family Law Reform Act, R.S.O. 1980, c. 152.

Although not directly applicable here, thecomments are instructive in that they address a particular feature of family law legislation, namely the ability to seek a variationof a prior order based on changed circumstances. Finally, the requirement that there be a change in circumstances as a precondition to the right to seek a variation protects against abuseand signals that the scope of the variation available is very broad.

Once the threshold of changed circumstances is met, the court'sdiscretion to make the order that would have been appropriate, had those circumstances existed in the first instance is engaged. The factthat an order for rescission was inappropriate on an earlier date, may impact on the manner in which the discretion to grant a variation isexercised; for example, where a debtor was recalcitrant in fulfilling his obligations. It does not, however, bar the court's discretionaryauthority to make the appropriate order, based on the changed circumstances existing when a subsequent application is made.

The determination that issue estoppel does not bar subsequent rescission of arrears following an unsuccessful application to vary,is consistent with decisions relating to variation of orders for custody and access. Those decisions indicate that once the threshold ofchanged circumstances is met, the court must embark on a fresh inquiry into what is in the best interests of the child, not based on apresumption in favour of the custodial parent, but rather based on the findings of the judge who made the previous order, as well as theevidence of the new circumstances.

Ultimately, the issue to be determined is the best interests of the child: Gordon v. Goertz, (SCC), [1996] 2 S.C.R. 27, 19 R.F.L. (4th) 177. [paras. 26-32] [Emphasis added.] [77] The limits of res judicata in connection with support orders was also addressed by the British Columbia Courtof Appeal, in B.G.D. v. R.W.D., 2003 BCCA 259, [2003] B.C.J. No. 1098 (QL). The court dismissed an appeal of a judge’s decisionwhich concluded that a claim for spousal support was not barred by res judicata. In the decision appealed, Dorken v.

Dorken, 2002BCSC 1136, [2002] B.C.J., No. 1767 (QL), the judge explained: Husband’s counsel submits that the plaintiff’s claim for spousal maintenance was dismissed by the court in 1991 and is now resjudicata. He submits that the wife is now estopped from making this claim… […] In Carl Zeiss Stiflung v.

Rayner & Keeler Ltd. (No.2), [1967] 1 A.C. 853 at p. 935, Lord Guest defined the requirements needed toconstitute issue estoppel in the following way: ... (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) thatthe parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raisedor their privies.

It may well be said that in relation to the Order of Justice Dorgan that the same question, being that of spousal maintenance, was beforethe court and that the parties to the judicial decision are the same. In determining whether or not the court has jurisdiction to proceed it isnecessary to determine whether or not that order said to create the estoppel was final. See: Gessner v. Gessner (1990),

(SK KB), 24 R.F.L. (3d) 308 (Sask. Q.B.). In that regard it is necessary to turn to the provisions of the Divorce Act… […] In this proceeding the wife sought an order for spousal maintenance under s. 15 of the Divorce Act. She was granted both periodic andlump sum maintenance by the order which was made under s. 15.2. Section 17(1) gives the court the power to vary a support order. Theissue is whether or not the power to vary survives an order that specifically sets out that after the payments are made, the petitioner'sclaim for maintenance is dismissed.

In my opinion the terms of the order do not oust the court's jurisdiction to entertain the present application. Given the provisionsof s. 17(1) a spousal support order can never be truly final. See Pelech v. Pelech, (SCC), [1987] 1 S.C.R. 801. As the order is not final the doctrine of res judicata does not apply. For that reason the cases cited by the respondents are notapplicable in the circumstances of a spousal support order.

Accordingly, this court has the jurisdiction to hear the application.Whether in the circumstances of this case, the plaintiff is entitled to the relief she seeks is for the judge hearing the application on itsmerits. The preliminary objection is dismissed with costs to the plaintiff in the cause. [paras. 7-13] [78] Section 118(2) of the Family Services Act is a full answer to any effort to rely on res judicata, particularly inthe form of cause of action estoppel.

The issue of whether the father’s depression disables him from employment was not in issue beforeor determined by the application judge, and therefore issue estoppel has no application, even in connection with collateral issues. Thisrequires further explanation; it is important to be clear on what issues were before and decided by the application judge [79] It is my opinion the application judge was not asked to determine, and he did not determine, whether the fatherwas unable to work because of his depression.

The father did not take that position at the hearing of the application, nor did the judgemake any other determination which would be estopped in a motion to vary based on issue estoppel. The father’s position wassummarized by the application judge as follows: [The father] also said that because of major problems in the mine in Saskatchewan it is not renewing labour contracts for the next year.It might never reopen again and he might never have access to that job. [The father] provided no record of employment to establish whyhis job terminated.

He also did not provide any proof for his assertion that the big mine project was going to be shelved for at least ayear. [The father] said he wanted to return to New Brunswick to be with his current partner. He has, as a consequence, put his name in forwork at several locations but he does not have any indication that he will have a job soon. He acknowledged that a good wagehere would be $60,000 per year or less than 40% of his earnings at the job in Humboldt.

He also said that if he wanted to remainin the West he probably could get a new job on some other project relatively quickly. [The father] also said that the stress and depression he has suffered may have given him an ulcer and his doctor in New Brunswick hastold him that he will not be able to work for at least two months.

He did not have any documentation for this claim nor did he call thedoctor to verify this diagnosis. [paras. 40-42] [Emphasis added.] [80] While the application judge clearly rejected the father’s evidence regarding depression, stress and possibleulcers, this assessment of his testimony came as part of his canvassing the father’s evidence as a whole, which he did quite fully (atparas. 46 to 55). This

summary of the father’s evidence focused mainly on the father’s use of the $118,000 he removed from his accountbefore separation and the father’s inability to pay the mother $68,500 for the family home. Summarizing this evidence, most of which herejected, the judge stated:

While I have not reviewed all of [the father]’s testimony in this fashion I think I’ve considered sufficient detail to establish that I do not find his testimony credible in any material particular with respect to the possession and disbursement of funds. Similarly and without going into any detail I will not accept [ the father’s] testimony about his ability to work having been impaired by a medical problem; depression, nerves and a possible ulcer because he has p

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