R.L.H. v. A.A.H., 2018 BCSC 939

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: R.L.H. v. A.A.H., 2018 BCSC 939 Date: 20180608 Docket: 16-2297 Registry: Victoria Between: R.L.H. Claimant And: A.A.H. Respondent Before: The Honourable Mr. Justice Johnston Reasons for Judgment Counsel for the Claimant: T. L. Brown, Q.C. Counsel for the Respondent: A. J. Duncan Place and Date of Trial: Victoria, B.C. March 7-9, 2018 Place and Date of Judgment: Victoria, B.C. June 8, 2018 [ 1 ] This action raises issues of divorce, family property and debt, and child support. Mr. and Ms. H. began living together either in 2006 or 2007.

In her Notice of Family Claim Ms. H. pleads that a marriage-like relationship began January 1, 2006; in his Response Mr. H. pleads it began February 1, 2007. In early May 2007 the parties signed a marriage agreement within the meaning of the Family Relations Act , R.S.B.C. 1996, c. 128, that recites that they intended to begin cohabiting “in or about February 2007.” Mr. H. testified that he and Ms. H. started living together in December 2006. Ms. H. was not asked when she started to live with Mr. H. Mr. and Ms. H. appear to have started negotiating their marriage agreement in early 2007.

I conclude that the parties started to live together as husband and wife at the beginning of 2007. [ 2 ] Their daughter, M.R.H., was born May 30, 2007. The parties have resolved parenting issues and they need not form part of this decision. [ 3 ] Mr. and Ms. H. married August 22, 2009. In contemplation of their marriage, on July 1, 2009 they signed an agreement terminating their marriage agreement. Although no longer in effect, some provisions of the marriage agreement remain helpful in ascertaining the financial situation of the parties at the start of their relationship. [ 4 ] Mr. and Ms.

H. separated April 14, 2016, and have lived separate and apart since that day, with no prospect of reconciliation. [ 5 ] When the relationship began, Mr. H. owned a home at 1646 Hollywood Crescent in Victoria. In their marriage agreement, the parties agreed that the home’s value was $625,000 and that it was encumbered by a first mortgage valued at $335,361.44 and a second mortgage valued at $70,000, made up of a conventional mortgage of $45,000, and a line of credit for $25,000. [ 6 ] The agreement provides that in addition to the real estate, Mr.

H. brought to the relationship a vehicle valued at $18,000, a bank account with approximately $10,000 in it, Canada Pension contributions and household furnishings, personal effects and family antiques of unascertained values. [ 7 ] The marriage agreement lists as an asset recognized by the parties as brought by Mr. H. to the relationship, a promissory note payable by Ms. H. to Mr. H. for $28,790. That represented Ms. H.’s half of the purchase price of a Land Rover vehicle.

A recital to the marriage agreement states that $55,652.50 of the $70,000 second mortgage registered against the Hollywood Crescent home represented the Land Rover purchase price. [ 8 ] The marriage agreement lists Ms. H.’s assets as a vehicle worth $3,000, CPP contributions, household furnishings and effects, a bank account, shares in a family company, shares in family trust, and a GIC held jointly with her son by a previous marriage, all stated to be of unascertained value. Ms. H.’s debts were agreed at $30,000 in student loans as well as the promissory note in favour of Mr. H. That Ms.

H. brought little financial value to the relationship may be inferred from the fact that she made an assignment in bankruptcy at about the time she moved in with Mr. H.

[ 9 ] At the beginning of the relationship both Mr. and Ms. H. worked as investment advisors at Investors Group. Ms. H. moved to work as an associate with Scotia McLeod. It appears that Mr. H.’s career was well established, whereas Ms. H.’s had yet to become established, so Mr. H.’s income, at least in the beginning, was more than Ms. H.’s. [ 10 ] Alcohol use and abuse have been a significant feature of the relationship between the parties. Mr. H. testified that both he and Ms.

H. went to Vancouver shortly before their marriage in August of 2009 where they spent two days with someone he called an interventionist to deal with their alcohol consumption. While Ms. H. did not deny drinking, she denied that she had a problem with alcohol. Mr. H. testified that his alcohol addiction became worse starting in 2011, seemingly inconsistent with the need for an intervention in 2009. [ 11 ] Ms. H. took maternity leave from her position at Scotia McLeod when M. was born in May 2007. [ 12 ] Mr.

H. testified that there was an upheaval in financial markets in the autumn of 2008, and his income significantly reduced as a result. His expenses did not lessen to match the decline in his income and Mr.

H. testified that as a result he began to rely on credit, in the form of credit cards and a bank line of credit, to meet expenses. [ 13 ] The parties started their relationship by attempting to keep their finances separate, both income and expense, perhaps as a result of the terms of their marriage agreement which generally provided any property acquired or bank account opened by either of them that was not specifically made joint property would remain the sole property of whichever of them had acquired or arranged it. [ 14 ] In July 2009, Mr. and Ms.

H. agreed to terminate their marriage agreement in contemplation of their marriage in August 2009. [ 15 ] The termination agreement provides, among other things, that each was satisfied that conditions and debts provided for in the marriage agreement were fulfilled, and that Mr. H. released Ms. H. from any and all claims he may have had prior to July 1, 2009. [ 16 ] Ms.

H. suggested in evidence that the parties agreed that their assets and debts were equal at the time of signing the termination agreement, but that she later discovered that a line of credit had been increased and there were significant credit card debts, including $30,000 on Mr. H.’s MasterCard. The termination agreement did not materially alter the pre-existing arrangement concerning the Hollywood Crescent house. Both parties considered that Mr. H. was responsible for the expenses associated with Hollywood Crescent, with what remained registered in his name alone.

They continued to maintain separate bank accounts and credit cards as well as having at least one joint bank account. [ 17 ] In 2011 Ms. H. began again to work at Investors Group. She was considered a new employee although she had worked there in the past, and so Ms. H.’s commission structure was more favourable than Mr. H.’s, as an encouragement to her to increase her business. To take advantage of the disparate commission structure, Mr. and Ms. H. arranged their affairs at Investors’ Group to channel the commissions each earned through Ms.

H.’s commission account so that she would take 99% of the commissions and Mr. H. would receive 1%. [ 18 ] By this point, what had started out as separate finances was becoming blended, at least as to income: although they continued to maintain separate bank accounts and credit cards, and while Ms. H. maintained that Mr. H. remained responsible for the mortgage and taxes on the Hollywood Crescent home, this was at best a notional responsibility, as Mr. H.’s ability to satisfy those obligations out of 1% of the commissions they jointly earned at Investors Group was illusory at best. [ 19 ] Things changed when Ms.

H. became a division director at Investors Group. The evidence is not clear on what that position entailed, although she seemed to have had supervisory duties over other investment advisors. In September 2014 Mr. and Ms. H. signed an Associate Agreement, which provided that Mr. H. would work under the mentorship and guidance of Ms. H. in providing services to Ms. H.’s clients in return for 30% of the commissions. Mr. H. testified that as a division director Ms. H. could not be seen to work under him as his associate.

Among other advantages, this reduced the amount they paid to Investors Group for office fees. [ 20 ] On October 2, 2014 Mr. H. resigned his position as a servicing consultant with Investors Group. In doing so, he assigned or sold his “book” of clients’ investments to Investors Group on the basis that Investors Group would pay him just over $100,000 over five years, at $1,679 per month, to assist in shifting his clients to a new Investors Group advisor. Ms. H. then acquired a significant part of Mr. H.’s client “book”, and presumably, part of what Investors Group was to get from Mr.

H. in return for the monthly payments was Mr. H.’s assistance in moving his former clients to Ms. H. still as Investors Group clients. [ 21 ] Mr. H. testified that he and Ms. H. continued to arrange their family finances in such a way that he remained responsible for the expenses of the Hollywood house, including mortgage, taxes, and insurance, while Ms. H. was responsible for her vehicle expenses such as fuel, and she took on responsibility to pay for heat, hot water, television and telephone at the Hollywood Crescent home. [ 22 ] It is fair to say that throughout their relationship Mr. and Ms.

H. lived beyond their means, whatever those means were. [ 23 ] Mr. H. testified that by 2014 he had a substantial debt load and was struggling to make the mortgage payments on Hollywood Crescent, as well as to meet his credit card payments. He testified that when he explained the difficulties to Ms. H., she recommended he explore making a consumer debt proposal. [ 24 ] Ms. H., on the other hand, entered into an agreement to buy a travel trailer in May 2014.

She financed the entire purchase, which amounted to $46,541 including financing charges, agreeing to pay $362.26 per month for five years, then a balance of $24,805.94 on May 15, 2019. Mr. H. agreed that the trailer was used for family vacations. [ 25 ] In 2014 Mr. and Ms. H. decided to move to a rented house, and to rent out Hollywood Crescent. Ms. H. testified that this was because Hollywood Crescent was too small to share with an alcoholic Mr. H., whereas Mr.

H. testified that the move was to save money, which made economic sense to him at the time as the rent received on Hollywood Crescent would almost cover its mortgage. He testified they could gain some further advantage by having Ms. H.’s mother move into their new rental home with them, with her rent payments adding to the family income. As well, the family took in foreign students in their new rented home, adding a small amount to their

monthly income. [ 26 ] By the fall of 2014, their finances were becoming perilous. Mr. H.’s only income was the payments under his agreement with Investors Group, and what Ms. H. paid him as her associate. He remained responsible for the payments necessary to keep the Hollywood Crescent house going, mortgage, taxes, and other expenses, and it was becoming increasingly difficult to meet his monthly obligations. At some point, Ms. H. reduced Mr. H.’s share of commissions from the 30% called for in the agreement, to 10%. Mr. H. testified that he was not consulted on this. [ 27 ] Ms.

H.’s 2014 income tax return shows she earned $134,260 in gross commissions, and $79,984 after expenses. It also shows that she paid $19,996 to Mr. H. that year, recorded as his partnership share. [ 28 ] Mr. and Ms. H. each described an incident in early 2015 when they both had too much to drink, quarrelled, and police attended at their home. Ms. H. testified that was the last time she drank with Mr. H. [ 29 ] The move to rental housing did not solve Mr. H.’s financial problems and in April 2015 he made a consumer proposal under s. 66 of the Bankruptcy and Insolvency Act , R.S.C. 1985, c.

B-3, in which he declared consumer debt of $43,526 and proposed to pay a lesser amount to unsecured creditors. A draft proposal shows $10,800 to be repaid at $180 per month for six years, but Mr. H. testified that the final proposal requires him to pay $13,000 at $225 per month over six years. If he misses the equivalent of three payments, the proposal is deemed to be annulled under s. 66.31. It is only if he makes all the payments required under the proposal that the debt will be capped at $10,800, otherwise it is only a contingent reduction of his debt: see K.M.J. v.

J.H.D.N. , 2014 BCSC 1895 at paras. 150–151 . [ 30 ] In September 2015 Ms. H. prepared a

summary of the family monthly budget that showed that with her earnings estimated at $130,000 per year, Mr. H.’s at $37,000 per year, and Ms. H.’s mother contributing $900 per month in rent, they were spending just over $1,800 more than they brought in each month. [ 31 ] Mr. and Ms. H. decided that a solution to the problem might be found if Mr. H. stopped working for commissions in the financial services field and instead got a salaried job, and if at the same time Ms. H. moved from Investors Group to another company called Investia Financial Services. In early October 2015 Mr.

H. resigned from Investors Group and Ms. H. registered a sole proprietorship she called H. & H. Wealth Management. In November 2015 Ms. H. moved from Investors Group to Investia. [ 32 ] Ms. H. was counting on her clients following her from Investors Group to Investia, and during the transition, she and Mr. H. met with many of Ms. H.’s clients to explain the move to them. Many of those clients had once been Mr. H.’s clients, before his “book” was sold to Investors Group, and much of it acquired by Ms. H. [ 33 ] Investors Group learned what Mr.

H. was doing and apparently viewed it as soliciting the clients he had sold to Investors Group, and contrary to the terms of their agreement whereby Mr. H. was to assist in moving his clients to another Investors Group financial advisor and Investors Group stopped paying Mr. H. the $1,679 per month under the agreement. [ 34 ] Mr. H. was unable to find the salaried position he hoped for, although he began to search for work in November 2015. Both parties expected that it would take up to two years after Ms.

H. moved to Investia before her commission income grew to equal or exceed what she was earning at Investors Group. In the meantime, Mr. H.’s income was reduced to nothing, unless he were to find employment, and Ms. H.’s income dropped dramatically, while their expenses remained the same. According to Ms. H., the Hollywood Crescent home was under threat of foreclosure. [ 35 ] In December 2015, Ms. H. bought a new Harley Davidson motorcycle, trading in her used motorcycle and financing the balance of $18,708 plus interest at 10.35%, agreeing to pay just under $314 per month. [ 36 ] Both the trailer Ms.

H. bought in 2014 and the motorcycle she bought in 2015 are registered in her name alone. [ 37 ] One consequence of Ms. H.’s move to Investia was that Ms. H. was paid a deferred sales charge when she succeeded in moving clients from Investors Group to Investia. She was obliged to rebate this to the client, but not immediately. In the meantime, Ms. H.’s 2015 income was artificially inflated by about $180,000, so that her 2015 income tax return showed gross income of about $348,000. On the strength of this high reported income Mr. and Ms.

H. decided to remortgage Hollywood Crescent. [ 38 ] At about the same time, in early 2016, Mr. H. attempted to sell the home, but an agreement to sell for $850,000 did not complete. [ 39 ] As the house was in Mr. H.’s name but the income that would qualify for a higher mortgage was earned by Ms. H., they arranged to transfer title to Hollywood Crescent from Mr. H. to Ms. H. The application to register the title transfer was submitted April 5, 2016, and registered April 14, 2016. A new mortgage for $700,000 was registered at the same time, and the mortgage proceeds paid off the existing mortgages. [ 40 ] Mr.

H. agreed that his drinking became worse after he stopped working in the fall of 2015. He applied for and was accepted into a 60 day residential treatment program near Cranbrook prior to separating from Ms. H. [ 41 ] That separation occurred as a result of an argument between Mr. and Ms. H. that started on April 13, 2016. When Ms. H. went to work the following day, Mr. H. sent her a message indicating that he was going to go to her office to continue their discussion. Ms. H. viewed the message as containing a threat and called police. When Mr. H. arrived at Ms.

H.’s office and saw the police, he attempted to leave. He was charged with offences, which he described as obstruction and threatening, and was ordered to have no contact with Ms. H. [ 42 ] Mr. H. left immediately for the residential treatment program, and while there he sent Ms. H. a letter of apology and followed it up with a telephone call to find out how their daughter was doing. Mr. H. was then charged with breaching a no contact order imposed as a result of the charges against him. Mr. H. pleaded guilty to one or more of the offences and was given a conditional discharge, with six months of probation.

His probation was extended after an allegation by Ms. H. that he breached a term of the probation order that he not

go near Hollywood Crescent, so it was not until August 2017 when a charge of breach of probation was stayed by counsel for the Crown that he says he felt able to look for work. Income for Child Support Purposes [ 43 ] When Mr. H. was discharged from the treatment program he went to live with his parents in Vancouver. He did not look for a job immediately as he testified that he preferred to work on his recovery, and had been told that it would take about a year to develop new habits. [ 44 ] Mr.

H. testified that the criminal charges have impeded his ability to find employment, and he has produced a letter from Canada Post, where he was applying for a job, stating that they were unable to assess his reliability in light of his recent charges, and commenting on his breaches of undertaking. This lends some support to Mr. H.’s assertion that the legal troubles arising out of the separation and what followed have had some impact on his employability. [ 45 ] Since separation, Mr.

H. has lived on money given him by his parents, about $2,000 per month, which started when he was allowed parenting time with M. in December 2016, and was reduced to $1,000 per month. Mr. H. says that these payments will stop entirely when his employment earnings reach $2,000 per month. From this money Mr. H. has paid the $225 per month due under his consumer proposal, and, since September 2017, $247 per month in child support. He also contributed $242 per month toward extraordinary expenses for M.’s dance, gymnastics, piano lessons and swimming. [ 46 ] Mr.

H. did not work at all until late in 2017, when he was hired to pilot a small passenger ferry in False Creek. He is paid $16 per hour, and his number of hours are dependent on weather and the season. He suggests that $31,200 be imputed to him as an annual income for child support purposes, which he bases on an assumption of full-time work as a small ferry pilot. Mr. H. had stopped working in September 2015, and did not work in 2016 or most of 2017. His income in 2015 was largely based on what Ms.

H. paid him as her associate, added to the payments from Investors Group under the agreement which has now been repudiated by Investors Group because of Mr. H.’s admitted breach. [ 47 ] I accept that Mr. H. is a recovering alcoholic, and that his attempts to find employment were hindered by the criminal proceedings that were not concluded until August 2017. I have some difficulty accepting that there was no form of employment available to him in the Greater Vancouver area. While it may have been reasonable in all of the circumstances that Mr.

H. not seek work in the financial services area, I have little other than the Canada Post letter and Mr. H.’s evidence that he did not start his job search until the final stay of proceedings on his breach of probation charge. I find that Mr. H. has been less than diligent in his efforts to find a job. He owed it to his daughter to put a better effort into finding work, in order to contribute to her support. I find that Mr. H. has been deliberately underemployed since April 2017. That allows Mr.

H. some time to cement his recovery, and I impute an income of $31,200 to him for the purpose of child support, beginning May 1, 2017. [ 48 ] Ms. H.’s submits that the money Mr. H. has been given by his parents is income in his hands. There was no evidence that the $2,000 per month is a loan that Mr. H. must repay to his parents, nor that he has earned it by providing goods or services to his parents in return for the payments. The money Mr. H.’s parents have given him is a gift, not income. [ 49 ] As some of the evidence, particularly from Ms.

H., seemed intended to establish that she had been the primary earner in the relationship, it is appropriate to bear in mind that s. 81 (

a) of the Family Law Act , S.B.C. 2011, c. 25, provides that entitlement to share in family property, or obligation to share in family debt is not dependent on which spouse contributed what portion to property, or is responsible for what portion of debt: 81. Subject to an agreement or order that provides otherwise and except as set out in this Part and

Part 6 [Pension Division] , (

a) spouses are both entitled to family property and responsible for family debt, regardless of their respective use or contribution, and (

b) on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt. [ 50 ] Differences in contribution may be considered under the unequal division provisions of s. 95, if significant unfairness can be shown. [ 51 ] As to what constitutes the family property and family debt, s. 84 provides: 84 .

(1) Subject to

section 85 [excluded property] , family property is all real property and personal property as follows: (

a) on the date the spouses separate, (

i) property that is owned by at least one spouse, or (ii) a beneficial interest of at least one spouse in property; (

b) after separation, (

i) property acquired by at least one spouse if the property is derived from property referred to in paragraph (a)(

i) or from a beneficial interest referred to in paragraph (a)(ii), or from the disposition of either, or (ii) a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a)(

i) or from a beneficial interest referred to in paragraph (a)(ii), or from the disposition of either.

(2) Without limiting subsection (1), family property includes the following:

… (

b) an interest in a partnership, an association, an organization, a business or a venture; … (

d) money of a spouse in an account with a financial institution; (

e) a spouse's entitlement under an annuity, a pension plan, a retirement savings plan or an income plan; … (

g) the amount by which the value of excluded property has increased since the later of the date (

i) the relationship between the spouses began, or (ii) the excluded property was acquired. [ 52 ] At separation, the family property was: • 1646 Hollywood Crescent; • H. & H. Wealth Management; • 2013 Prime Time LaCrosse travel trailer; • 2015 Harley-Davidson motorcycle; • RRSP in name of Ms. H.; • RESP; • Land Rover registered to Ms. H.; • BMW motor vehicle registered to Mr. H.; • Ford pickup truck registered to Ms. H. 1646 Hollywood Crescent [ 53 ] This is indisputably family property. It was not valued when it was transferred by Mr. H. to Ms. H. at the time of separation. Mr.

H.’s evidence that a sale for $850,000, arranged in late 2015 or early 2016, failed to complete, is of little assistance in arriving at a value at separation. [ 54 ] The home was appraised in November 2016 at $800,000, and appraised again in December 2017 at $1,130,000. I am not persuaded that any improvements between the appraisals affected the property’s value, and I conclude that the increase has been the result of market forces. H. & H. Wealth Management [ 55 ] Ms. H. registered this sole proprietorship in September 2015. It is family property. Ms.

H. values the sole proprietorship at $5,500 at the time of separation, with no independent evidence of its fair market value to support her opinion. Her December 2017 Form F8 states it has no value, and her estimate as at the date of trial is $118,000. [ 56 ] I understand that this proprietorship exists as a vehicle through which Ms. H. acts as an investment advisor with Investia. I do not have enough evidence to allow me to conclude that the proprietorship “owns” any of the investors Ms. H. advises, nor of the financial arrangements among those investors, Investia and Ms.

H. to enable me to value the proprietorship. In the absence of better evidence of value, I accept that the value to H. & H. Wealth Management at the time of separation was $5,500 as claimed by Ms. H. 2013 Prime Time LaCrosse Travel Trailer [ 57 ] This chattel was acquired during the relationship and is family property. There is no evidence of the current fair market value of the travel trailer beyond Ms. H.’s opinions, but it is likely that this asset is worth less than is owed on it. Ms.

H. estimates its value at the time of separation at $12,000, and at the date of trial at $10,000, the amount she swore to in her December 11, 2017 Form F8. Ms. H.’s Form F8 states the debt on the trailer at $29,000. The contract of purchase provides that a final payment of approximately $24,805.94 will be payable on May 15, 2019. [ 58 ] In the absence of any other evidence of value, or any real challenge to Ms.

H.’s estimates, I accept that the trailer was worth $12,000 at separation, and is now worth $10,000. 2015 Harley-Davidson Motorcycle [ 59 ] Like the trailer, this chattel was acquired during the relationship and is family property. There is no evidence of current fair market value of the Harley Davidson motorcycle other than Ms. H.’s estimate of $13,000 as of the date of trial and in her Form F8. Ms. H. purchased this motorcycle in mid-December 2015 using a motorcycle she already owned and had acquired during the relationship, as

a trade-in. The purchase price of the new motorcycle stated on the sales document was $21,654. After allowing for a trade-in value of $7,899.00, and the cost of borrowing the balance at 10.35%, her final price was $26,374.32. Ms. H. did not list the motorcycle as an asset in a mortgage application she signed January 19, 2016. [ 60 ] A motorcycle is a depreciating asset, and depreciation begins the moment it is transferred to and licensed by a purchaser. That much I can find as a notorious fact. Ms.

H. estimates the balance owing at date of separation as $23,962, and at trial $15,500, a figure I accept as the trial date value. RRSP [ 61 ] This is or was in Ms. H.’s name, and mostly represents a contribution of $50,000 she made at the end of 2015, when she received the extraordinary income and before she was required to reimburse her clients. It was family property at the time of separation, which Ms. H. values at $53,203 at separation, and nothing at trial, as Ms. H. has taken out all of the money to meet her expenses. RESP [ 62 ] This was family property, worth $5,000 at separation. Ms.

H. has used it for living expenses, and Mr. H. is entitled to be compensated by Ms. H. for half its value, or $2,500. Land Rover [ 63 ] This vehicle was registered in Ms. H.’s name, and is the same vehicle that was the subject of the promissory note referred to in the marriage agreement. It was clearly family property. This vehicle was sold pursuant to a court order, and subsequent orders have allowed for payments for an initial retainer for a parenting coordinator, as well as the cost of a report under s. 211 of the Act to be taken from the proceeds of sale of the vehicle.

The balance remains in the trust account of Ms. H.’s counsel. Ms. H. testified that there is $5,200 remaining from the sale proceeds, and that is family property. This is more than the amount estimated as its value in Mr. H.’s April 2015 consumer proposal, which was $4,312.50. Ms. H. testified that she sold it under the court order, that she told Mr. H. it sold for $9,000, then amended that to $8,000. BMW [ 64 ] For the reasons set out below, I find that this vehicle, registered to Mr. H., is excluded property. Its current value is unknown, but not likely significant, as Mr.

H. testified that when he sold the Lexus given him by his father, he put $10,000 toward the purchase of the BMW. He lists it in his Form F8 sworn December 31, 2017 as worth $5,000, and I accept that as a reasonable estimate. Ford Pickup Truck [ 65 ] This is registered in Ms. H.’s name, and was a gift to her from her father, over which she claims an exclusion. Excluded Property [ 66 ] Ms. H.’s claim to exclude the Ford pickup truck, given her by her father, is not contested by Mr. H. I agree that the truck is excluded property. [ 67 ] Mr.

H. does not pursue a claim for exclusion of the equity in the Hollywood Crescent home he brought into the relationship. That was agreed in the marriage agreement to have been $219,639, but argued by Mr. H. at trial to have been $289,639. Rather than claim an exclusion, Mr. H. argues that this concession on his part should colour his assertion that property and debt should be divided equally. [ 68 ] How much credit Mr. H. should get for being reasonable on this question of exclusion is influenced by the strength of a claim to exclusion he might have maintained. [ 69 ] Mr.

H. argues that the value of the equity he brought to the relationship should be valued at $289,639 rather than the $219,639 stated in the marriage agreement because when he and Ms. H. started living together, the $70,000 second mortgage had not been borrowed, making it a family debt. This mortgage was registered January 10, 2007, and so the start date of cohabitation becomes important: Ms. H. did not testify to that date, although her counsel had said in her opening (not evidence in the trial) that the couple began to live together in December 2006.

The marriage agreement they signed recites: “A. [A] and [R] are planning to cohabit in a relationship resembling that of husband and wife in or about February 2007.” [ 70 ] Recitals M and N refer to the $70,000 second mortgage comprised of a conventional mortgage and a secured line of credit, then recites at N, “$55,652.50 of the Second Mortgage was incurred to facilitate the parties’ purchase of a jointly owned 2005 Land Rover LR3 (the “Land Rover”) in December 2006.” There has been no attempt to explain how a mortgage registered in January 2007 could have been used to purchase a vehicle the month before, but it is possible that the mortgage was granted to secure a loan already advanced.

Recital N persuades me that $55,652.50 of the $70,000 second mortgage represented family debt, and so the potential exclusion that Mr. H. is abandoning is more like $275,000. [ 71 ] But Mr. H. transferred all of his interest in Hollywood Crescent to Ms. H. at around the time of separation in April 2016, raising the question of whether any possible claim to exclude his equity was then lost. [ 72 ] There was no evidence touching on the intention that accompanied Mr. H.’s transfer of title to Hollywood Crescent, beyond Ms.

H.’s statement that if title were in her name, she could and did persuade a lender to lend more on the security of title because of her higher income in 2015 based in part on the unusual income attributed to her on her move from Investors Group to Investia.

[ 73 ] There was some suggestion that foreclosure might have been threatened at around the time of this transfer, but it was not made clear whether a mortgagee had made such a threat, or that Mr. and Ms. H. were worried about being able to keep payments current, and so it is not possible to colour this transfer as an attempt to avoid creditors, such as was discussed in Tinker v. Tinker , [1970] 1 All E.R. 540 (C.A.) , as quoted in V.J.F. v. S.K.W., 2016 BCCA 186 at para. 52 . [ 74 ] The evidence as to Mr. H.’s intent in transferring title to Ms.

H. in April of 2016 was so spare as to qualify as equivocal, enabling application of the presumption of advancement. I find that whatever equity Mr. H. had brought to the relationship lost its character as excluded property by the transfer of title to Ms. H. in April 2016. [ 75 ] 1646 Hollywood Crescent is family property as of the date of separation. [ 76 ] Mr. H. was given a Lexus motor vehicle by his father during the marriage. He sold it for $30,000 and put part of the proceeds towards paying debts, and part towards the purchase of a BMW motor vehicle of lesser value.

I find that the BMW motor vehicle is excluded property. [ 77 ] The Ford pickup truck given to Ms. H. by her father during the relationship is excluded property. Family Debt [ 78 ] Family debt is defined by s. 86 of the Act : 86. Family debt includes all financial obligations incurred by a spouse (

a) during the period beginning when the relationship between the spouses begins and ending when the spouses separate, and (

b) after the date of separation, if incurred for the purpose of maintaining family property. [ 79 ] Like family property, family debt is bracketed by the beginning and the end of the relationship, unless a spouse has assumed obligations after separation in order to maintain family property. [ 80 ] The record is unsatisfactory with respect to some of the debts said to exist on the date of separation. Those debts at separation on which the evidence is clear and reliable were: 1. The Mortgage against Hollywood Crescent The transfer to Ms. H. and the new mortgage were within days of separation.

The amount of the mortgage at separation was $700,000. The amount owed at trial is $680,000. 2. Mr. H.’s Consumer Proposal Debt This conveniently assembles various debts owed by Mr. H. a year before separation. The amount of the debt captured by the proposal was $43,526 and is contingently reduced to $10,800. That Mr. H. made the consumer proposal is not seriously questioned: Ms. H. questions the reliability of the amount of debt it captured or the payments he has committed to, largely because Mr. H. has produced only a draft proposal rather than the final documents.

I conclude that the amount of consumer debt covered by the proposal in April 2015 was $43,256, that if Mr. H. makes all payments as required, it will be reduced to $10,000, and that his payments are $225 per month. Separation occurred a year after the proposal, and in the absence of any other evidence of what remained owing at separation, a one-sixth reduction would be appropriate, so that at separation the total debt had been reduced by $1,667, and there remained owing on the proposal $8,333. 3. $180,000 Owed by Ms. H. to her Clients This is the amount Ms.

H. had to pay to her clients at the time of separation, which corresponded to the similar amount she received as income in 2015 when she moved her clients to Investia. The income was received during the relationship, and the debt became payable during the relationship. At trial, this debt had been reduced to $40,000, without any contribution from Mr. H. 4. Investia Overpayment Ms. H. was inadvertently overpaid $29,252 by Investia, and which she is required to repay.

Of that sum, $26,695.51 was overpaid in 2015, the balance some time between January 1 and September 13, 2016, the latter being the date of the email confirming that Ms. H. must repay the total. Two Thousand, Five Hundred and Fifty-Six Dollars and Eighty Cents ($2,556.80) was overpaid in 2016, and it is not possible on the record to say how much of it became owing during the relationship. A rough allowance for 2016 would reflect that the separation occurred halfway through the period of overpayment, so $1,280 was overpaid in the first four months of 2016.

I accept that the total of $27,975 ($26,695 plus $1,280) is family debt owed at date of separation. The amount owed at trial is $28,000. 5. The Trailer Loan The amount owing on the trailer was $32,051 at separation, and is $28,257 as of trial. 6. Harley-Davidson Loan On the motorcycle, $18,708 was owed at separation, $15,500 remains owing at trial. [ 81 ] There are other amounts claimed by Ms. H. as family debt in Exhibits 1 and 2. To support her claims Ms. H. has produced statements dated mid-September 2016.

That creates significant difficulty, as during the relationship both parties relied heavily on credit cards and bank loan facilities to meet their obligations, so that balances owing fluctuated month to month. I have little confidence that

balances owing on credit cards, lines of credit or other debt vehicles as at mid-September 2016 accurately reflect what was owing at the mid-April separation. Another problem arises because the debts listed in Exhibits 1 and 2 are not identified by account or card number, making it impossible to determine whether the Scotia Visa debt of $5,430, or the Scotia Visa debt of $2,958, both shown on Exhibit 1 as owing at separation, are the same Scotia Visa debts shown at $8,903 at trial and $2,901 at trial. That might not present much problem if they were the only Scotia Visa accounts, but they are not.

The documents do show a Scotia Visa number xx9380, with $5,339.08 owing and a Scotia Visa number xx2012 with $2,997.56 owing, both as of September 14, 2016. I infer from the similarities in amounts owing that these two Visa accounts are the ones Ms. H. claims in Exhibit 1 are for family debt as of separation. [ 82 ] There are four other Scotia Visa accounts, numbered xx2020, xx90132, xx0039 and xx9849 for which I have seen no records close to the date of separation, and I find that amounts owing on these accounts are not family debt.

If any of what is owing on any of these accounts might arguably have been borrowed to maintain family property under s. 86(b), the connection has not been made in the evidence. [ 83 ] Yet another reason to question the reliability of September 2016 credit card statements as evidence of April 2016 debt is Ms. H.’s evidence that after separation she would use one card to pay off or pay down the balance on another card, then the next month use the card she had just paid down. 7. Scotia Bank Line of Credit Number xx0028 This loan is in Ms. H.’s name.

She testified that this line of credit xx0028 was “likely around” $23,962, a figure she listed in Exhibit 1, a figure that is close to what is shown on a bank statement produced in mid-September 2016. I accept that the line of credit was a family debt owing at the time of separation. As to the amount owed on this line of credit, Ms. H. testified that she continued to use it after separation for M.’s school fees, household expenses and her business. Ms. H.’s estimate of what was owing at separation may be rather widely off the mark: Mr.

H. has produced a statement showing that $14,424 was owed at separation, and I accept that as a more contemporaneous record of what was owing at separation. The current balance owing is $27,657. 8. Capital One MasterCard In Exhibit 1, Ms. H. asserts that at separation, this card, numbered xx7389, had a balance owing of $4,577. In support, she has produced a statement for the billing period of August 27, 2016 to September 26, 2016. That document shows an opening balance of $1,767.53, payments of $1,787.53, and purchases of $4,362.17 during the billing period.

I am unable to find on that evidence that family debt at separation included any balance on Capital One MasterCard. 9. American Express Ms. H. claims that there was $4,000 owing on this card at separation. Mr. H. listed American Express account number xx1001 in his consumer proposal, showing a balance owing of $6,908.07, a debt that is captured in the consumer proposal. Ms. H. has produced an American Express statement, without a card number, showing a balance owing of $2,812 in February 2018, which does not assist.

I am unable on the evidence to find an American Express balance owing at the time of separation as family debt. 10. TD Visa Ms. H. claims that a TD Visa card, again not numbered, had a balance owing of $4,718 at separation. Records show that card number xx1683, in Ms. H.’s name, had a zero balance as of June 20, 2016, and $4,803.98 at September 14, 2016, and is now at $8,519. In her reconciliation marked Exhibit 1, Ms. H. asserts that at separation there was a debt of $4,718 owing to TD Visa, again without a card number reference.

She tendered a statement from mid-September 2016 on TD Visa card number xx1683 showing $4,803.98 owing as of September 14, 2016 in support. Mr. H. has produced a statement on that same TD Visa showing a zero balance as of June 20, 2016, and $3,959.04 in charges between then and July 18, 2016. I conclude that none of the debt claimed under TD Visa number xx1683 has been shown to be family debt. 11. Canada Revenue Agency Mr. H. owed Canada Revenue Agency $3,942.00 at the time of separation, a debt that was not captured by his consumer proposal. This is family debt.

It has not changed in amount since separation, and remains at $3,942.00. Valuation Date [ 84 ]

Section 87 of the Family Law Act presumes that the date on which to value family property or family debt is the date of trial, while conferring a discretion to select a different date if circumstances warrant such. While the Act does not set out any criteria to be considered when a different date is urged by one of the parties, this court has held that the party seeking to have family property valued on a date different than the trial date must show significant unfairness will result from accepting the presumptive trial valuation date. See Blair v. Johnson , 2015 BCSC 761 at para. 69 ; J.D.G. v.

J.J.V. , 2016 BCSC 2389 at para. 139 . [ 85 ] One factor that has been considered significant is that one or the other party has alone preserved and maintained the family property that has increased in value since separation. That was the case in Slavenova v. Ranguelov , 2015 BCSC 79 . In this case, Ms. H. has made all payments for mortgage, taxes and insurance since separation, with no contribution from Mr. H. But Ms. H. has had the benefit of living in the home since she moved back into the house in August 2016. She had all of the benefit from the rental revenue before that, $2,900 per month.

The measure of the benefit Ms. H. has had from sole occupancy since August 2016 may be taken from the $2,900 rental paid by tenants while the family, and then Ms. H. and her daughter, were living in rental housing. It is also the case that the terms of Mr. H.’s interim release and then probation orders have kept him away from the home. This is the result of orders or directions imposed by the justice system, not by Ms. H., so I do not view this case as bearing great factual similarity to Puchelak v. Wootton , 2017 BCSC 715 , where one party had effectively excluded the other from the property after separation.

[ 86 ] Ms. H. has testified that she has spent an estimated $10,000 on repairs and maintenance for the house, and has produced receipts to support somewhat less than $7,000 of that. The receipts are not organized in any coherent fashion, and a cursory review of the receipts that have been produced indicates that some are duplicates, some represent ordinary household purchases for consumable items, some are for maintenance and home improvement items such as paint, gutter cleaning and deck repairs. Other receipts are for disposal fees or rental charges for gardening equipment.

My own admittedly rough estimate of the receipts that represent expenses that can fairly be characterized as repairs or improvements to the Hollywood Crescent home is $2,000. [ 87 ] For some time after she returned to Hollywood Crescent, Ms. H. rented out the basement suite on AirBnB. Ms. H. produced a spread sheet indicating she collected just over $10,800 in AirBnB revenue, while spending over $17,680 in what she attributes to AirBnB-related expenses. Ms.

H. now rents the basement suite to a friend for $1,000 per month, which includes utilities on which there is no evidence, and so it is not possible to determine the net benefit from the suite rental. [ 88 ] The value of Hollywood Crescent is now $1,130,000. I accept the most recent appraisal as the best evidence of value, and do not agree that Ms. H.’s criticisms of that appraisal are well-founded. For example, Ms.

H.’s opinion on the condition of the roof of the house is not buttressed by a letter from someone in the business of removing moss from roofs, describing a problem he had on another roof entirely, and expressing his fears that Hollywood Crescent might have similar problems.

In this case, the appraiser, who I point out was jointly instructed by the parties, has stated that the roof is in average condition, and I infer that the appraiser has taken roof condition into account in arriving at the opinion of value. [ 89 ] The increase in the value of Hollywood Crescent has been almost entirely the result of a general rise in the real estate market, and is not attributable to any significant degree to Ms. H.’s efforts, at least to an extent that makes it significantly unfair to deviate from the presumptive date of valuation set out in the Act .

I find that Hollywood Crescent, as family property, is valued at $1,130,000. [ 90 ] Ms. H. has paid the mortgage since separation, $2,587.48 per month from May 16, 2016. That totals $62,099.52 to the date of judgment. Mortgage payments by a spouse who occupies family property is not in itself significantly unfair so as to warrant a change in valuation date; see K.A.L. v. K.J.L. , 2017 BCSC 651 ; E.H.H. v. C.L.M. , 2017 BCSC 1299 . Ms. H. has paid property insurance of $2,344 for 2017/2018, and I infer a similar amount for 2016/2017, for a total of $4,688.

Any appearance of unfairness resulting from these payments can be remedied through an accounting in which the amounts paid by Ms. H. for mortgage, property tax and property insurance since separation will be determined. Mr. H. will pay half of those amounts to Ms. H., subject to a set-off for half of any suite rental payments received by Ms. H. since separation, plus half of the value of Ms. H.’s occupation of Hollywood Crescent, for as long as she continues in occupation.

That last amount I fix at the $2,900 per month for which the home was rented to others during the relationship. [ 91 ] If the parties cannot agree on the result, I direct a reference to the Registrar to inquire into and report on the amounts paid by Ms. H. since separation for mortgage, property tax and property insurance, as well as the amounts received by Ms. H. for rent of the suite in the home. [ 92 ] I have not been persuaded that it would be significantly unfair to value Hollywood Crescent, as of the trial date. [ 93 ] H. & H.

Wealth Management, however, is different in that it was newly formed at the time of separation, and any increase in its value has been solely as a result of Ms. H.’s efforts. H. & H. Wealth Management is valued at the $5,500 estimated at the date of separation. For opposite reasons, it would be significantly unfair to value the RRSP and RESP, both of which have been entirely depleted by Ms. H. since separation, at the date of trial. The RRSP is valued at the $53,203 it was worth at separation, and the RESP at $5,000. Ms. H. must account to, and compensate Mr.

H. for, half of the value of each. [ 94 ] The question arises whether a case has been made by Ms. H. under s. 95 of the Act that it would be significantly unfair to divide the family property equally.

Section 95 provides: 95

(1) The Supreme Court may order an unequal division of family property or family debt, or both, if it would be significantly unfair to (

a) equally divide family property or family debt, or both, or (

b) divide family property as required under

Part 6 [Pension Division] .

(2) For the purposes of subsection (1), the Supreme Court may consider one or more of the following: (

a) the duration of the relationship between the spouses; (

b) the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division] ; (

c) a spouse's contribution to the career or career potential of the other spouse; (

d) whether family debt was incurred in the normal course of the relationship between the spouses; (

e) if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt; (

f) whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends; (

g) the fact that a spouse, other than a spouse acting in good faith, (

i) substantially reduced the value of family property, or (ii) disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would

have been family property into another form, causing the other spouse's interest in the property or family property to be defeated or adversely affected; (

h) a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order; (

i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.

(3) The Supreme Court may consider also the extent to which the financial means and earning capacity of a spouse have been affected by the responsibilities and other circumstances of the relationship between the spouses if, on making a determination respecting spousal support, the objectives of spousal support under

section 161 [objectives of spousal support] have not been met. [ 95 ] There is nothing arising from the length of this relationship, just over nine years, to indicate significant unfairness in equal division of property. Although the parties started the relationship attempting to keep assets and debts separate, by the time they separated the major asset, Hollywood Crescent, had shifted from Mr. H. to Ms. H. as a matter of convenience in securing financing, and the chattels purchased by Ms. H., except perhaps for the motorcycles, were shared.

I have already found that the increase in value of Hollywood Crescent is due to market forces, and changes in value of other family property, particularly Ms. H.’s efforts in bringing about an increase in the value of H. & H. Wealth Management, can be recognized by moving the valuation date to the date of separation. [ 96 ] I have not been persuaded that significant unfairness would flow from equal division of family property. [ 97 ] Family debt is another matter. It would be significantly unfair if Mr. H. benefitted from the reduction in the client debt that was $180,000 at separation, and which Ms.

H. has reduced to $40,000 at trial. The separation date value of this debt eliminates the significant unfairness. Mr. H. is therefore responsible for one-half, or $90,000 of this debt. [ 98 ] The debt represented by Investia overpayments to Ms. H. is not significantly different now than it was at separation, so there is no significant unfairness in valuing it at the $28,000 now owing. [ 99 ] The mortgage against Hollywood Crescent is not so clear-cut. Ms. H. has made the payments without contribution from Mr. H., but she has enjoyed the benefits of rental income and occupation to the exclusion of Mr. H.

All of this can be accounted for as set out above. It is not significantly unfair to value this debt at the date of trial. [ 100 ] The loans for the travel trailer and motorcycle are appropriately valued at trial as although Ms. H. has paid them down somewhat since separation, again without assistance from Mr. H., she has had the exclusive enjoyment of each. [ 101 ] The amount owing on the Scotia Bank line of credit, number xx0028, a family debt at separation, will be valued at the date of separation. It would be significantly unfair to value this debt at the date of trial because Ms.

H. has continued to resort to it to finance her living expenses. A debt that continually fluctuates after separation due to the actions of one spouse should be crystallized at the date of separation, when any benefit derived by the other spouse ceases. That is the case here. I value this family debt at $14,424. [ 102 ] Scotia Visa number xx938 and Scotia Visa number xx2012 present greater difficulties. Like the line of credit, Ms. H. has continued to use them since separation, while Mr. H. has not.

They have no doubt fluctuated on a monthly basis, given the way in which both spouses used their credit cards before separation. It is clear that it would be significantly unfair to value the debt on these credit cards at trial, but it is not possible to ascertain what was owing at separation. As earlier indicated, I have little confidence that the amounts owing in mid-September 2016 accurately represent what may have been owing in mid-April 2016. [ 103 ] The two cards had just under $8,400 owing as of mid-September 2016.

I have little doubt that each had a balance owing at separation, given the parties’ penchant for living beyond their means by using their credit cards. I fix an admittedly arbitrary $6,000 as owing between these two credit cards at the date of separation. [ 104 ] With these adjustments, it would not be significantly unfair for the parties to bear the burden of family debt equally. Child Support [ 105 ] Each of the parties has earned or has had the capacity to earn income. Each has had difficulty maintaining their incomes, for different reasons. Mr.

H. has reasonably dealt with his recovery from alcohol addiction, and impediments to finding employment resulting from his criminal charges and conditions of release or probation. Yet Mr. H. is well educated, and his professed inability to find work before the end of 2017 rings somewhat hollow. [ 106 ] Although he actually earns less, Mr. H. invites a finding of imputed income of $31,200, perhaps in recognition that his current employment is below his earnings potential. Mr. H.’s pre-separation earnings are clouded by the arrangements he had with Ms. H. as her associate, which allowed Ms.

H. to unilaterally reduce his share of commissions from 30% to 10% in 2015, and by his steady decline into alcoholism that same year. His total income in 2015 was $27,858 according to his notice of assessment. His total income in 2014 was assessed at $45,626, and in 2014 at $40,300. [ 107 ] I find that Mr. H., by virtue of his education and work experience, should be earning more than $16 per hour as a commuter ferry operator, and impute an income of $40,000 for the purposes of child support.

That is less than what he earned as an investment advisor before the economic problems of 2014, and before his alcoholism worsened to the point that his work was affected. [ 108 ] Mr. H. had an obligation to put more effort into his job search, and earlier, and thus a retroactive child support is warranted. [ 109 ] Mr. H. is ordered to pay child support in the amount of $376 per month retroactive to April 1,

Section 7 Expenses [ 110 ] Both parties testified that M. attends Christ Church Cathedral school, a private institution that costs $660 per month for ten

months each year. Both parties support the continuation of this education plan. [ 111 ] Additionally, M. benefits from extracurricular activities of dance $50 or $60 per month, gymnastics at $65 per month, piano lessons at $40 per month and swimming (no amount stated). [ 112 ] Ms. H. has also paid for various camp programs, which seem to run between May and August. On one of these programs M.’s registration indicates she has no father. [ 113 ]

Section 7 of the Child Support Guidelines provides for payment of special or extraordinary expenses, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and to the family’s spending pattern before separation. [ 114 ] None of the expenses are necessary in the strict sense, although the extracurricular activities listed are probably beneficial to M. I find that the extracurricular activities are reasonable in relation to the means of Mr. and Ms.

H., particularly given their pre-separation pattern of spending more than they earned. [ 115 ] I will not order that the cost of Christ Church Cathedral School is an expense payable under s. 7 because I do not believe the parents can afford it on their current incomes. It will be up to the parties to decide whether they agree to continue this expense in spite of this finding. [ 116 ] Ms. H. had just changed investment companies and was re-establishing a commission income stream when the parties separated.

Her 2016 tax return declares total income of negative $134,546, on gross commission income of $66,126 and expenses of $189,546. Her notice of assessment for 2016 shows total and net income of $134,187. Her 2015 tax return shows gross commissions of $332,103, net commissions of $139,678, but that was the extraordinary payment year, with a large liability that ensued. Ms. H.’s 2014 tax return shows total income of $60,137. [ 117 ] I find that for the purposes of extraordinary expenses, Ms.

H.’s income is fixed at $70,000. [ 118 ] The parties will contribute accordingly to the extraordinary expenses on which they agree, Ms. H. 64%, Mr. H. 36%. [ 119 ] The parties shall each provide the other with full income tax returns, including supporting documents, as filed each year, by May 30, and will adjust their contributions to s. 7 expenses as of June 1 each year. [ 120 ] Neither party shall commit to an expense other than those referred to in this judgment without notice to and agreement of the other. If agreement cannot be reached, either party has liberty to apply. [ 121 ] Mr.

H. does not seek spousal support. Ms. H. does seek spousal support, but the disparity in earnings in her favour negates that claim and it is dismissed. [ 122 ] The parties are divorced on the usual terms. “R.T.C. Johnston, J.” The Honourable Mr. Justice Johnston