1999 BCCA 437, 1999 BCCA 437

Thornett v. Thornett Date: 19990616 1999 BCCA 437 Docket: CA023206 Registry: Vancouver COURT OF APPEAL FOR BRITISH COLUMBIA ORAL REASONS FOR JUDGMENT : Before: THE HONOURABLE MR. JUSTICE ESSON June 16, 1999 THE HONOURABLE MADAM JUSTICE RYAN THE HONOURABLE MR. JUSTICE MACKENZIE Victoria, B.C. BETWEEN: ANNETTA HEATHER THORNETT also known as ANNETTA HEATHER BONNIE THORNETT PETITIONER (RESPONDENT) AND: ALAN EDWARD THORNETT RESPONDENT (APPELLANT)

Mavis Ray appearing for the Appellant Brett R. Vining appearing for the Respondent [ 1 ] MACKENZIE, J.A.: The issues on this family law appeal involve division of pension benefits, a retirement allowance and spousal maintenance. [ 2 ] The parties were married for over 28 years. The appellant husband, a ship's pilot, is 55. The respondent wife is 54. She has a Grade 9 education and has had little occupational training or experience outside the home. For most of her married years she was the primary caregiver for the children of the marriage and, in addition, had the usual household duties and responsibilities.

The two children of the marriage are now adults and self-sufficient. The husband worked on tugboats until 1992 when he became a ship's pilot after an apprenticeship. [ 3 ] The first issue is the matter of the husband's pension. The husband has a pension entitlement through his employment by the British Columbia Coast Pilots Ltd. The trial judge directed that the pension benefits shall be divided pursuant to the Family Relations Act provisions as of 14 March, 1997, the date of trial.

The husband contends that the correct date for determination of the pension division is the date of the declaration of no reasonable prospect of reconciliation, often referred to as the "triggering event", which was 16 June, 1994. The husband argues that the trial judge erred in ordering the trial date instead of the date of the triggering event. [ 4 ] Because of the short period of pensionable service as a pilot prior to separation, the effect of setting 14 March, 1997 rather than 16 June, 1994 effectively doubles the wife's share of the husband's pension.

The husband submitted that the trial judge's order represented a re-apportionment of the pension in the wife's favour without considering the only proper basis for such a re-apportionment, namely, the factors set out in what is now s.65 of the Family Relations Act . Counsel are agreed that the declaration date is the entitlement date for division of the pension contemplated by the Division of Pension regulations incidental to the statute. [ 5 ] I am satisfied that the fixing of the later date by the trial judge amounts to a re-apportionment.

The trial judge has not made any reference to s.65 in his determination and it is not clear that he was aware he was making a re-apportionment when making the order that he did. [ 6 ] The wife has a cross-appeal, asking that this Court invoke s.65 to re-apportion the pension to accord with the trial judge's order, in the event that we conclude that the trial judge failed to do so.

The reasons of the trial judge lead me to the conclusion that he did not consider the issue as one of re-apportionment and I am satisfied that a s.65 re-apportionment is the only basis for a departure from the declaration date as the entitlement date. It therefore becomes necessary to address the cross-appeal. [ 7 ] The husband advanced to his present occupation as a ship's pilot, with its attractive pension scheme, as a result of his years of experience in B.C. waters on tugboats. Those prior years were years of the marriage.

In my view those years helped to lay the foundation for the pilot's pension and it would be unfair to restrict the basis of the wife's share only to the 2 to 3 years of actual pensionable service before the triggering event. The trial date division remedies that unfairness. [ 8 ] Accordingly, I would confirm the trial date as the date for determination of the wife's pension entitlement as a re-apportionment of that family asset pursuant to s.65. I think re-apportionment in this manner is supported in principle by the decision of this Court in Toth v.

Toth (1995), 1995 CanLII 1917 (BC CA) , 13 B.C.L.R. (3d) 1 . [ 9 ] I turn now to the issue of the retirement allowance. The trial judge ordered that the wife immediately be paid the sum of $13,500, representing one-half of $27,000 described by the trial judge as a "salary holdback". The trial judge recognized that the holdback would only be received by the husband in the future.

On the basis of additional material placed before us as new evidence, it is properly characterized as a "retirement allowance". [ 10 ] The husband contends that the trial judge erred in directing an immediate payment of a share of a future benefit. The retirement allowance will be subject to income tax when received and payment is "at the discretion of the directors" of B.C. Coast Pilots Limited. The allowance is stated to be one-quarter of the salary and bonus received by a pilot in the 12 months preceding death or retirement. As

the husband's current annual income is in the range of $175,000, the allowance will be in the range of $40,000 to $45,000 gross of tax, on a projection of his current income. However, it is related to past service, compensation for reduced salary in the period when the husband was a Class 2 pilot before fully qualifying as a ship's pilot. There is no reason to conclude that the discretion of the directors to pay the allowance is not exercised routinely in favour of payment on retirement.

The wife's payment of $13,500 is less than 50% of the amount of the husband's projected allowance on retirement, although the tax impact will be substantial if the allowance cannot be rolled over to a tax sheltered retirement account. On balance, the immediate payment to the wife is probably more than half of the eventual benefit to the husband, considering the taxation impact and the deferral. Nonetheless, I do not think it is so disproportionate that we should vary the disposition of the trial judge. The wife left the matrimonial home and required cash to purchase alternative accommodation.

Her other assets convertible to cash were limited. Accordingly, I would not vary the trial judge's disposition of this item. [ 11 ] The item remaining in dispute is spousal maintenance. The trial judge awarded the wife $5,000 per month in spousal maintenance. The husband submits that the amount is excessive and the trial judge erred in several respect in reaching that figure. [ 12 ] The appellate standard of review of an award of maintenance has very recently been considered by the Supreme Court of Canada in Hickey v. Hickey , 1999 CanLII 691 (SCC) , [1999] S.C.J. No. 9 , reasons delivered 10 June, 1999.

That Court re-affirmed that a support order should not be overturned unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong. [ 13 ] The trial judge estimated the husband's earning capacity as $175,000 per year. The husband contends this estimate is too high as his 1998 income was only $168,000 and a significant portion of his income is bonus rather than salary. The trial judge based his estimate on the 5 years' income preceding the trial.

I do not think that there was any error in his approach and his estimate is not substantially about the husband's 1998 income. Significantly, the husband did not provide his 1996 and 1997 tax returns on this appeal. There is no reason why bonuses should not be included in his income, even though they are apparently paid quarterly rather than monthly. [ 14 ] The husband also contends that the support should be reduced because of the wife's relationship with a Mr. Miller. The wife is maintaining a separate residence and there is no persuasive evidence that she is receiving any financial support from Mr. Miller.

I think the trial judge was correct in declining to make any reduction in maintenance otherwise appropriate for the wife's relationship with Mr. Miller. [ 15 ] The trial judge imputed an earning capacity to the wife of $1,000 per month. The husband contends that $1,000 is too low and the wife contends that it is too high.

I am not persuaded that the trial judge made any error in evaluating the evidence on which the estimate was based and I would not vary that estimate. [ 16 ] The trial judge reduced the wife's expenses from her property and financial statement at trial from $4,600 to $3,600, substantially as a result of reduced mortgage payments anticipated when the wife left the matrimonial home for other accommodation.

The updated property and financial statement filed as fresh evidence on this appeal confirms the accuracy of the trial judge's estimate. [ 17 ] The trial judge then went on to conclude that the wife required $3,500 per month in support from the husband to cover her expenses, after accounting for the $1,000 per month in earning capacity imputed to her.

I pause to note that the $1,000 imputed to her is $1,000 gross of tax and that, therefore, the net amount of that $1,000 received by her after tax will be somewhat less than $1,000. [ 18 ] The trial judge then appeared to have overlooked that he had reduced the estimated expenses of the wife to $3,600 from $4,600 as discussed above. Deducting $1,000 from the $3,600 estimated produces an after tax expense contribution from the husband of $2,600. The discrepancy is significant and clearly wrong by the Hickey v.

Hickey standard of review. $2,600 after tax requires a pre-tax amount of $3,500 in accordance with the tax table. However, the trial judge, in coming to his $3,600 figure, took the gross amount of the wife's imputed income and not the net, after tax, amount. The net contribution of the $1,000 to the wife's after tax income will be significantly less than $1,000. Taking that factor into account, in my view, the proper award of spousal support should have been $4,000. [ 19 ] In the result, I would dismiss the appeal as to the pension division and retirement allowance.

I would allow the appeal as to spousal support to the extent of reducing the amount of spousal support from $5,000 a month to $4,000 a month. [ 20 ] As success has been substantially divided, I would direct that the parties each pay their own costs of the appeal.

ESSON, J.A.: I agree with the order proposed by Mr. Justice Mackenzie. I would add only this, I am not persuaded that the matter of tax on the imputed income of $1,000 would in itself be of much significance but I consider that $4,000 is the appropriate amount in order to give some recognition to the element of compensation which, in cases of long marriages such as this, falls to be considered. RYAN, J.A.: I agree with both my colleagues. ESSON, J.A.: The appeal is allowed on the question of spousal maintenance, by reducing the monthly amount from $5,000 to $4,000.

It is dismissed with respect to the two other issues. The cross-appeal is allowed to the extent of invoking s.65 in order to uphold the awards on those other two issues. Each side will bear its own costs on the appeal. "The Honourable Mr. Justice Mackenzie"