r v. Adams, 2012 NBCA 39

COURT OF APPEAL OF NEW BRUNSWICK 122-11-CA GARY DOUGLAS FLIEGER APPELLANT GARY DOUGLAS FLIEGER APPELANT - and - - et - MARGARET DOREEN LEIGH ADAMS RESPONDENT MARGARET DOREEN LEIGH ADAMS INTIM ÉE Flieger v. Adams, 2012 NBCA 39 Flieger c.

Adams, 2012 NBCA 39 CORAM: The Honourable Justice Larlee The Honourable Justice Quigg The Honourable Justice Green CORAM : L’honorable juge Larlee L’honorable juge Quigg L’honorable juge Green Appeal from a decision of the Court of Queen’sBench: September 9, 2011 Appel d’une décision de la Cour du Banc de la Reine: Le 9 septembre 2011 History of Case: Historique de la cause : Decision under appeal: 2011 NBQB 237 Décision frappée d’appel : 2011 NBQB 237 , 2011 NBBR 237 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: February 20, 2012 Appel entendu : Le 20 février 2012 Judgment rendered: April 26, 2012 Jugement rendu : Le 26 avril 2012

Reasons for judgment by: The Honourable Justice Larlee Motifs de jugement : L’honorable juge Larlee 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: J. William Cabel For the respondent: Jennifer L. Donovan Avocats à l’audience : Pour l’appelant : J. William Cabel Pour l’intimée : Jennifer L. Donovan THE COURT The appeal is dismissed with costs. LA COUR Rejette l’appel avec dépens.

The judgment of the Court was delivered by LARLEE J.A. [ 1 ] The appellant, Gary Douglas Flieger, contests an order for variation of spousal support in favour of his ex- wife, Margaret Doreen Leigh Adams , rendered by a judge of the Court of Queen's Bench, pursuant to s. 17 of the Divorce Act , R.S.C. 1985, c. 3 (2nd Supp.). The motion judge’s decision is published at 2011 NBQB 237 , 379 N.B.R. (2d) 110 . I. Background [ 2 ] In 2005, the parties separated after 35 years of marriage. In 2006, they signed a consent order regarding division of property and debts, as well as spousal support.

In 2008, they divorced; the husband consented to pay monthly spousal support of $1,750 pursuant to a corollary relief order. At the time, he was earning about $53,000 a year; the respondent had been unemployed since 2003. In 2010, the appellant went on sick leave and ultimately retired on October 31 st of that year. Retirement reduced his income by over 50%. He applied to the Court for a variation of his support obligation, based on a material change in circumstances, since the separation agreement had been based on his income of $53,000 a year.

In anticipation of the hearing of the motion to vary spousal support, the appellant tried to negotiate a settlement. Unable to do so, and notwithstanding the order, he arbitrarily reduced his monthly

payment to $405 bi-weekly to the respondent until the matter could be judicially determined. Albeit there was no enforcement proceeding in this matter, the respondent stated in an affidavit that she had complained to the enforcement officer about the reduction. [ 3 ] At the hearing, the motion judge found the appellant’s retirement constituted a material change in circumstances. However, she would not impute any income to the respondent on the basis of accounting for money realized from the division of marital assets.

She further found the appellant still had the means to pay some support and that the respondent fell within an exception to the presumption against “double-dipping” allowed by the Supreme Court of Canada in Boston v. Boston , 2001 SCC 43 , [2001] 2 S.C.R. 413. Further, the judge refused to apply the Spousal Support Advisory Guidelines (the “ Guidelines ”), and explained why she did not. She fixed spousal support at $405 bi-weekly. She also awarded the respondent $1,500 costs on the motion. II. Judge’s Findings [ 4 ] It should be noted that this motion was based on documentary evidence only.

So when the motion judge was asked to impute income to both the appellant and the respondent, she had difficulty. She made the following telling comments: “Neither party sought leave to adduce oral evidence or cross examine any of the deponents on their affidavit evidence. Counsel made oral submissions on the facts and assertions contained in the affidavits and the law” (para. 2). “Ms. Adams deposed generally, without any particulars, how she spent her share of the proceeds of the sale of the marital home.

She said she used some of the money for moving expenses on two occasions, the purchase of furniture, household goods and necessities and to supplement her income” (para. 20). “Although Ms. Adams has not fully accounted for the capital she received and spent from the division of property I cannot conclude that a significant amount of income should be imputed to her as a result. No evidence was led nor were any submissions made on how much income should be imputed in the event that the Court found it reasonable that part, if not all, of the capital assets should have been kept intact” (para. 28).

Referring to the appellant, the motion judge stated: “Furthermore, no evidence was led, nor submissions made, as to what amount of income should be imputed” (para. 30). “Mr. Flieger did not explain what he had done with the $53,277.89 that he received from the sale of the marital home” (para. 32). Despite these comments the motion judge reached the following conclusions: To borrow the words of McLachlin J, as she then was, in Moge , Ms.

Adams sustained a substantial economic disadvantage from the marriage or its breakdown, a fact that the parties recognized when they consented to an order for spousal support without time limitation. Ms. Adams still suffers economic hardship as a result of the breakdown of the marriage. It is neither practicable nor possible that Ms. Adams can achieve economic self-sufficiency. Having regard to the standard of living the parties enjoyed during cohabitation as well as the cost of living, with an annual income of $10,598.00 Ms. Adams remains in need of spousal support. Mr.

Flieger has the means to continue to pay support to Ms. Adams. Ms. Adams falls within the exception to the general rule in Boston against double recovery. The spousal support order should be reduced but not terminated. [para. 51] III. Appellant’s Position [ 5 ] The appellant relies on six grounds of appeal. He argues the motion judge erred: 1) in finding the support received by the respondent was not adequate to meet her daily needs, thereby justifying her expenditure of equalized assets;

2) in finding that the respondent fell within the exception to the general rule against double recovery; 3) by misapprehending the evidence regarding the appellant’s ability to pay spousal support; 4) by misapprehending the evidence in finding that the appellant had the capacity to continue to earn income; 5) in awarding an amount of spousal support which is excessive, given the appellant’s ability to pay; 6) in awarding costs, as the appellant had been successful in his request to have support reduced. IV.

Respondent’s Position [6] The respondent conceded at trial there had been a material change of circumstances because of the appellant’sretirement. She insists she was always ready to accept the arbitrary amount the appellant used to reduce the spousal support order andasks the appeal be dismissed with costs. V. Standard of Review [7] In Smith v. Smith, 2011 NBCA 66, 375 N.B.R. (2d) 208, Quigg J.A. reiterated what this court stated in Miltonv.

Milton, 2008 NBCA 87, 338 N.B.R. (2d) 300, regarding spousal support orders; we will only interfere with a support order wherethere has been an error in principle, a significant misapprehension of the evidence, 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 NBCA 98, 278 N.B.R.(2d) 351, at para. 27). [8] In Smith, Quigg J.A also referred to the standard of review with respect to findings of fact and discretionaryorders: 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. 12] VI. Analysis A. Misapprehension of evidence [9] At trial, the respondent conceded there had been a material change of circumstances and the quantum of theoriginal spousal support order should be varied.

The motion judge found there had been such a change and nothing suggested theappellant retired in order to avoid paying spousal support. The parties also agree the respondent still has a need for support. The firstground of appeal alleges the motion judge erred in finding the support received by the respondent before Mr. Flieger’s retirement wasnot adequate to meet her daily needs, thereby justifying her expenditure of equalized assets. At the hearing before us, the appellantframed this argument by saying that, because the motion judge found the amount of spousal support was inadequate, she failed to

acknowledge the correctness of the original consent order. [ 10 ] After examining the respondent’s income tax disclosure between 2005, the year the parties separated, and 2009, here is exactly how the motion judge worded it: Ms. Adams paid significant amounts in income tax on the withdrawals she made from her LIF. Her financial statements sworn September 21, 2007 and March 22, 2011 indicate deficits of $465.00 and $643.00 per month in her budget.

Her 2009 income tax information shows medical expenses approaching $1,200.00 per year, an expense which has increased substantially since she lost the benefit of coverage on Mr. Flieger's medical insurance plan. I am satisfied that the spousal support that she received from Mr. Flieger prior to his retirement was not adequate to meet her day-to-day needs and as a result she found it necessary to encroach on her capital. Although Ms.

Adams has not fully accounted for the capital she received and spent from the division of property I cannot conclude that a significant amount of income should be imputed to her as a result. No evidence was led nor were any submissions made on how much income should be imputed in the event that the Court found it reasonable that part, if not all, of the capital assets should have been kept intact. In reaching my conclusion that no income should be imputed to Ms. Adams because she has encroached on her capital I have also taken into consideration the fact that Mr.

Flieger has expended a substantial amount of money on an enterprise that has not been profitable. I refer to that expenditure later in these reasons. [paras. 27-28] [ 11 ] These comments in no way impugn the correctness of the original consent support order; the respondent had medical expenses in the period after the order was made that forced her to encroach on her capital.

This state of affairs supports the finding that the respondent is in continuing need of spousal support and that it would have been inappropriate for the judge to make a finding that income should be imputed to the respondent by reason of capital encroachment. The original order is deemed to have been correct when it was made and the motion judge made no comment that would challenge its correctness (see R.P. v. R.C. , 2011 SCC 65 , [2011] S.C.J. No. 65 (QL), at para. 25 ).

In my opinion, this ground of appeal is without merit. [ 12 ] Similarly, the appellant argues the motion judge misapprehended the evidence regarding the appellant’s ability to pay spousal support. In fact, the motion judge made the following findings with respect to the appellant. He could increase his means by applying for CPP benefits; the medical evidence did not verify that he was unable to work; since his departure from the job market was recent, he had the capacity to earn income and income could be imputed to him.

However, she was unable to do so because she did not have the evidence to put a dollar amount on his earning capacity. The appellant and his new partner have a hobby farm, raising and selling horses and dogs, which consistently loses money. The appellant shares living expenses with his partner and re-partnering usually is not a ground for reduction of spousal support. In Chamberlain v. Chamberlain , 2003 NBCA 34 , 259 N.B.R. (2d) 309, this Court stated that the presence of a new partner, and the new partner's income, are relevant factors to consider in determining the ability to pay (para. 34).

These facts support the finding of the motion judge that the appellant continues to have an ability to pay spousal support and the conclusion that she did not misapprehend the evidence regarding the appellant’s ability to pay. Similarly, she did not misapprehend the evidence with respect to the finding that the appellant had the capacity to continue to earn income because the medical evidence did not support the contrary view. B. Boston v. Boston application [ 13 ] The appellant also relies on the case of Boston v.

Boston , with its presumption against double recovery, to assert the respondent is not entitled to continued spousal support. The burden rests upon the party claiming “double-dipping” to prove the specifics of the pension division and to allocate the payor’s current income. Once proven, the burden shifts to the recipient to show why one of the exceptions might apply. The exception in this case to the Boston “rule” is the one based on need. As this Court pointed out in Chamberlain v. Chamberlain : Major, J. did not make it mandatory to avoid double recovery. He left discretion to motions judges.

He explained that there is an exception to the rule against double recovery, whereby a court may consider the equalized portion of a pension as a maintenance asset, and double recovery may be permitted, in cases where spousal support orders are based mainly on need. He states at para. 65, p. 439: Despite these general rules, double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset.

Double recovery may be permitted where the payor spouse has the ability to pay , where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation, which is not the case in this appeal. [para. 25]

[Emphasis added.] See also Brown v. Brown, 2012 NBCA 11, 382 N.B.R. (2d) 380, paras. 13-22. [14] The question for us then is whether this motion judge exercised her discretion judicially. She described thedouble recovery issue in this manner: Mr. Flieger deposed that he used $12,186.35 of his gross share of the retirement allowance to purchase 3.282 years of pensionableservice and contributed the remaining $5,149.76 to his RRSP. The purchase of 3.282 years of pensionable service increased his monthlypension by almost $299.00 per month. Since Ms.

Adams received her share of the pension and retirement allowance he contends that anaward of continued spousal support in excess of that portion which was earned after the date of separation would result in a doublerecovery to Ms. Adams. Although no evidence was led as to the amount by which his monthly pension increased as a result of his continued employment for aperiod in excess of 5.25 years following the parties' separation the issue of double recovery is in play in this instance because the$405.00 biweekly support sought by Ms.

Adams exceeds the undivided portion. [paras. 41-42] [15] The motion judge then considered the caselaw: in particular, the relevant principles as enunciated in themajority opinion in Boston and the objectives of a spousal support variation order under the Divorce Act. She relied on the conceptsfound in Gallant v. Gallant, 2002 NBQB 180, 250 N.B.R. (2d) 380, per Wooder J.; Meiklejohn v. Meiklejohn, (ONCA), [2001] O.J. No. 3911 (C.A.) (QL), per Rosenberg J.A.; and Beninger v. Beninger, 2007 BCCA 619, [2007] B.C.J. No. 2657 (QL),per Prowse J.A.

I summarize them as follows: where any “economic hardship from the marriage or its breakdown” persists, the award ofspousal support on a variation application must give effect to the objectives of spousal support in s.17(7) of the Act; where thesatisfaction of the objectives in s. 17(7) of the Act can only be achieved by “double dipping”, then the practice is, and should be,condoned; the spousal support award must include a significant compensatory factor arising from the length of the marriage, the fact thatthe spouse gave up a career to raise children, and a significant needs-based component, taking into account the relative means and needsof the parties.

It should also attempt to adjust to some degree for the disparity in the standards of living of the parties, taking into accountthe standard which they enjoyed during the marriage. [16] In this case, the motion judge applied the principles to the facts and, in so doing, found this case was anexception to the rule in Boston because the spousal support order was based on need, as opposed to compensation, and the respondentcontinued to suffer economic hardship from the breakdown of the marriage. I would not give effect to the ground of appeal based uponalleged double recovery. C.

Spousal Support Advisory Guidelines [17] After a very thorough analysis of the documentary evidence before her respecting the needs and means of theparties, the motion judge decided the respondent was entitled to support and the appellant had the means to pay. She then turned hermind to the quantum of spousal support to be awarded (see L.M.P. v. L.S., 2011 SCC 64, [2011] S.C.J. No. 64 (QL), at paras. 47-50 forthe direction from the Supreme Court to make an appropriate variation). The judge reviewed the jurisprudence, including Smith v.

Smith,in which Quigg J.A. cautioned trial judges it would “be wise to follow the [Spousal Support Advisory] Guidelines” (para. 37). Themotion judge then considered the ranges for monthly payments provided by the parties using both Divorcemate calculations (high end ofthe range: $431) from the appellant and Chequemate (high end of the range: $759) from the respondent.

However, the motion judgedecided not to apply the Guidelines and the appellant submits she is in error in not doing so. [18] Here is the judge’s explanation why the Guidelines cannot be applied in this case: In my opinion the quantum provisions of the Guidelines cannot be applied in this case because: 1. There is insufficient evidence to determine Mr. Flieger's income. I would have imputed income to him taking into consideration hisearning capacity. Furthermore, the Canada Pension benefits available to Mr. Flieger undoubtedly exceed those estimated by Ms.

Adamsbecause he continued to contribute to the plan for more than five years after the parties separated. See the comments about imputingincome in Paragraph 6.1 of the Guidelines, the Starting Point for Income Determination.

2. As I read Paragraph 14.6 of the Guidelines they contain no formulaic adjustment for the economic advantage Mr. Flieger derives fromsharing expenses with his current partner, a factor which our Court of Appeal has determined is relevant to the ability to pay spousalsupport. I recognize that some may argue that movement within the ranges would suffice. 3. Double dipping issues are not taken into account in the guideline formulae. Notwithstanding that since the Corollary Relief Order was made he paid $21,000.00 per year for Ms. Adams' support and consistentlyendured losses from the hobby farm enterprise Mr.

Flieger's capital has increased. [paras. 55-56] [19] I agree with the motion judge that it can be argued the economic advantage the husband derives from sharingexpenses with his current partner and the double dipping issue can be addressed by movement within the ranges of the Guidelines.Nonetheless, in my opinion, the motion judge’s first reason, which describes the insufficient evidence to determine the husband's income,and his entitlement to receive Canada Pension benefits which would add to his income, was sufficient to deviate from the Guidelines andadjust the amount upwards.

As Quigg J.A. pointed out in Smith: Although the Guidelines are not law per se, following them can enhance the legitimacy of a spousal support award, as the Guidelinespromote consistency and therefore aid in the avoidance of arbitrary decision-making. However, while the Guidelines had beenconsidered in over 350 reported decisions nationwide by 2008 (see Rogerson, Carol & Thompson, Rollie, Spousal Support AdvisoryGuidelines: Report on Revisions, July 2008, Department of Justice Canada), they are still a relatively recent development.

Constrainingthe discretion conferred upon judges by the Divorce Act with regard to spousal support awards is best left to Parliament. The Guidelines are intended to promote consistency but are not meant to usurp the discretionary powers of trial judges. Indeed, it is tooearly to know whether an over-dependence on the Guidelines may present problems.

The Guidelines have not been subjected to therigorous debate to which legislation is typically subjected, nor have they been in use by courts long enough to warrant their incorporationinto the common law. [paras. 34-35] [20] In this case, the motion judge was justified in deviating from the Guidelines. She fixed the amount of spousalsupport at $405 biweekly, the amount to which the appellant had arbitrarily reduced his court-ordered payment. This results in a monthlypayment of $877.50, which is approximately $118 a month above the high range Chequemate calculation. D.

Alleged error in awarding costs [21] In my opinion, it was also within the motion judge’s discretion to interpret the result at trial as one favourableto the respondent and, therefore, award her $1,500 in costs. The respondent had conceded the material change in circumstances,acknowledged there would be a variation of the original spousal support order and favoured the status quo. The decision of the motionjudge confirming the amount the appellant was paying arbitrarily, and not reducing it further, is probably the most favourable result shecould have achieved.

The appellant, on the other hand, wanted spousal support terminated or further reduced according to theGuidelines, so he clearly was not successful on the motion. [22] In MacLellan v. MacLellan, 2001 NBCA 82, [2001] N.B.J. No. 266 (QL), the trial judge found that since therewas a mixed result at trial, there should not be an award of costs. In MacLellan, I commented that it was curious that the appellantargued she was more successful at the hearing below than the respondent and therefore deserved to have costs awarded, yet she appealedthe most important rulings made by the judge.

The appellant in this case does the same thing. He argues he was more successful than therespondent at the hearing, thus he should have been awarded costs, not her, and so he appeals the cost order. He then attacks the motionjudge’s decision in five other grounds of appeal. I cannot possibly see how it can be said he was successful below. [23] I would reiterate the comments of Drapeau J.A. (as he then was) in Acadia Marble, Tile & Terrazzo Ltd. v.Oromocto Property Developments Ltd. (1998), (NB CA), 205 N.B.R. (2d) 358, [1998] N.B.J.

No. 412 (C.A.) (QL)on the issue of the awarding of costs following an event: It is undoubtedly true that, where the trial judge has exercised his or her discretion as to costs, this court will not intervene unless it issatisfied that the exercise of discretion was manifestly wrong. See Williams et al. v. Saint John (City), [N.B.] and Chubb Industries Ltd.(1985), (NB CA), 66 N.B.R. (2d) 10 (C.A.). …

The general rule is that the successful party is entitled to costs. It is said that "costs follow the event". In Distributeur Norbec Enrg. andGagnon v. Daigle (Clarence) & Fils Ltée (1984), (NB CA), 57 N.B.R. (2d) 269, this Court expressed the rule asfollows at p. 277: ... Normally, the party who recovers judgment is entitled to his costs, although there is no doubt that a judge may exercise his discretionby refusing to make such an award.

However, this discretion must be exercised in accordance with the purposes of the law. [paras. 34-35] [24] In the present case, the motion judge addressed the issue of costs, determined the respondent was thesuccessful party and awarded costs of $1,500; that award included disbursements and HST. Her inclusion of disbursements in the awardof costs is of doubtful correctness, but it is not challenged on appeal. In my opinion, the motion judge’s exercise of discretion is notimpeachable. This ground of appeal is without merit. VII. Disposition [25] Clearly the respondent is successful on the appeal.

I would award her $1,500 in costs. Her counsel asked thatthey be paid to her law firm in trust; I would deny that relief. For these reasons, I would dismiss the appeal with costs of $1,500 payableby the appellant to the respondent. ____________________________________ M.E.L. LARLEE, J.A. WE CONCUR: _____________________________________ KATHLEEN A. QUIGG, J.A. ______________________________________ BRADLEY V. GREEN, J.A.