E.M.O. v. W.R.O., 2003 BCCA 191

Court of Appeal for British Columbia Citation: E.M.O. v. W.R.O. 2003 BCCA 191 Date: 20030327 Docket: CA27370 Between: E.M.O. Appellant ( Plaintiff ) And W.R.O. Respondent ( Defendant ) Before: The Honourable Chief Justice Finch The Honourable Madam Justice Ryan The Honourable Madam Justice Levine J.G. Martin Counsel for the Appellant J.S.

Sheppard Counsel for the Respondent Place and Date of Hearing: Vancouver, British Columbia February 10, 2003 Place and Date of Judgment: Vancouver, British Columbia March 27, 2003 Written Reasons by: The Honourable Chief Justice Finch Concurred in by: The Honourable Madam Justice Ryan The Honourable Madam Justice Levine Reasons for Judgment of the Honourable Chief Justice Finch: [ 1 ] The plaintiff wife appeals the order of the Supreme Court of British Columbia pronounced 31 May 2000 in matrimonial proceedings.

She contends that the learned trial judge erred: in his finding of the defendant’s income under s.16 of the Federal Child Support Guidelines; in the amount he awarded for child support; in the amount and duration of the award for spousal support; in failing to reapportion family assets; and in his refusal to order payment of certain tuition, and special and extraordinary expenses for the couple’s two children.

The defendant husband cross-appeals the learned trial judge’s finding of the plaintiff’s Guideline income. [ 2 ] Counsel for the defendant concedes that the trial judge erred in his calculation of the defendant’s Guideline income, and that a consequent adjustment in the amount of child support is required. The defendant also concedes that there was a miscalculation of the family assets to the extent that the plaintiff is owed a further $10,235.27.

Apart from these errors, the defendant says the orders made by the trial judge were supported by the evidence, and that there is no proper basis upon which this court can interfere. I. THE DEFENDANT’S GUIDELINE INCOME [ 3 ] The defendant owns and operates “Northern Alarm Systems Ltd.”, a company which installs and maintains alarm systems. The trial judge found that the defendant’s income from this business was as follows:

1997 - $69,623 1998 - $60,995 1999 - $49,896 [ 4 ] The defendant concedes that the 1999 amount is incorrect because it does not include payroll deduction amounts totalling $10,148.73. If this amount is included his income for 1999 would be $60,044.73. The defendant concedes that child support payments would be $816 per month. [ 5 ] The plaintiff says the defendant’s Guideline income for 1999 should be $61,148.73. The difference between the parties’ two positions, $1,104, is an additional amount the plaintiff says should be imputed to the defendant’s income for 1999 in respect of amortization.

The trial judge included $2,000 for amortization in the 1999 calculation, but the plaintiff says it should have been $3,104, the same as the amount of amortization used in calculating the defendant’s 1998 income. [ 6 ] In the absence of any evidence, the trial judge estimated amortization for 1999 at $2,000.

At ¶19 of his reasons, he states: “No such sum is available for 1999 but on the assumption that less revenue allows less amortization I assess that at $2,000 for 1999.” His estimate of amortization was therefore dependant upon a reduced income for 1999 of $49,896, which the defendant concedes to be incorrect. [ 7 ] The actual income of $60,044.73 for 1999 is close to the 1998 income of $60,995. The company showed the sum of $3,140 for amortization in 1998.

In the absence of any direct evidence, it would appear appropriate to impute the sum of $3,140 to the defendant’s 1999 income in respect of amortization, given the equivalence of the 1998 and 1999 incomes. [ 8 ] The plaintiff also argued that the defendant’s income should include amounts he might earn on his share of an inheritance from his mother, Mrs. G.L.O., who passed away in February 2000. At the time of her death, the trial of these proceedings had commenced, but by the time of the trial’s conclusion in April, the amount of the defendant’s inheritance was still unknown.

I would not vary the defendant’s Guideline income to account for any inheritance income, the amount of which was not then, and is not now, in evidence. [ 9 ] I would allow the appeal on this issue to the extent of fixing the defendant’s Guideline income in the sum of $61,148.73. II. CHILD SUPPORT [ 10 ] On the defendant’s revised Guideline income of $61,148.73, the Guideline child support amount for two children is $826, rather than the $695 awarded by the trial judge. [ 11 ] I would allow the appeal under this head by varying the amount of child support payable by the defendant to $826 per month. III.

SPOUSAL SUPPORT [ 12 ] The trial judge awarded spousal support of $800 per month for 18 months, then reduced the amount to $500 for a further 18 months. [ 13 ] The plaintiff says these awards are too low because they were based on an erroneous assessment of both the defendant’s and plaintiff’s incomes, and because the trial judge failed to take into account the defendant’s improved financial position by reason of the inheritance from his mother.

The plaintiff also says the award of spousal support should not have been time-limited. [ 14 ] Spousal support is determined in accordance with the statutory criteria set out in s.15.2 of the Divorce Act . It may include income from employment, investment income, child tax benefits, and child support payments. [ 15 ] The learned trial judge found the plaintiff’s monthly income to be $3,322 per month, comprised of income from employment of $1,416, child support of $695, government child tax benefits and Baby Bonus of $211, and income from her share of the family assets of $1,000.

The plaintiff says this latter amount is too high. At the time of trial, the plaintiff had received her share of the proceeds from the sale of the matrimonial home, and her income on those proceeds of $186,397 was about $20 a day, or approximately $600 per month. [ 16 ] It appears that the trial judge’s estimate of investment income included income on the further sum of $85,511.02 which he ordered as an equalization payment in respect of asset division. The defendant now concedes that sum must be increased by a further $10,235.27.

In my view, the trial judge did not err in this regard, and there was a basis in the evidence on which he could find investment income available to the plaintiff of not less than $1,000 per month. I would not give effect to this ground of appeal. [ 17 ] Adjusting the plaintiff’s monthly income determined by the trial judge to be $3,322 for the increase in child support from $695 to $826, the plaintiff’s monthly income would be $3,453. The learned trial judge found the defendant’s monthly income from employment to be about $4,000.

Adjusting for the error conceded by counsel, this amount should be about $5,000. [ 18 ] The learned trial judge set the amount of spousal support in a sum he considered sufficient to meet the needs of the plaintiff, without being so generous as to remove any incentive for her to continue efforts to become self-sufficient.

Considering the evidence as to her efforts in that regard, and the lump sum payable to her upon the division of assets, this would appear to have been an appropriate order. [ 19 ] I have not been persuaded the trial judge erred in his award of spousal support either as to the amounts or as to its duration. IV. FAMILY ASSETS AND LIABILITIES

[ 20 ] The plaintiff challenges the learned trial judge’s identification and valuation of various family assets and debts, and says further that the assets should have been reapportioned in her favour. The assets in question are R.R.S.P.s, an investment fund (Trimark), some mineral rights owned by the defendant, personal possessions belonging to the defendant’s mother, and a recreational property on Thormanby Island.

The liabilities are a London Life loan and a line of credit. [ 21 ] Leaving aside the miscalculation of asset value totalling $10,235.27, which the defendant concedes, it appears to me that what the plaintiff seeks is a retrial of the issues as to what constitute family assets and liabilities, and the values to be assigned to them. I have not been persuaded that the learned trial judge made any error of fact or law that would permit this court to intervene beyond the extent that the defendant concedes. [ 22 ] The asset with the greatest apparent value is a recreational property on Thormanby Island.

This property was owned by the defendant’s mother up to the time of her death. It did not fall within the statutory definition of “family asset”. The plaintiff advanced an argument that because the defendant held a power of attorney over his mother’s estate before she died, this made the estate a family asset. No authority was cited to support this proposition, and in my opinion, it is clearly untenable. [ 23 ] I also do not consider the learned trial judge erred in failing to take into account the defendant’s prospective inheritance.

The trial judge had no evidence as to the value of the inheritance, or when it might be received. It would have been wrong of him to speculate on these issues. [ 24 ] I would dismiss the appeal in respect of asset valuation. [ 25 ] In declining to reapportion the division of family assets, the learned trial judge said this: [18] … I am satisfied that she will require assistance from the defendant in the short term to enable her to become self-sufficient and follow the opportunity available to her now, or retrain.

In the short term she will have increased costs as the custodial parent beyond those covered by child support. She will have greater security if she obtains marketable skills or if she becomes employed full time by her present employer. In the short term she will require support to overcome the economic disadvantage she has suffered by reason of the marriage. The appropriate solution for her situation is to make an order for spousal support rather than reapportionment. That will be fair to both parties as the defendant has the ability to pay spousal support now, but has a limited liquid asset base.

The plaintiff has greater flexibility with a large cash asset base, and needs an increased income in the short term to meet her and the children’s needs. For those reasons I order that the family assets be divided equally. … [ 26 ] The plaintiff has not demonstrated any error on the part of the trial judge in declining to reapportion the assets. I would not accede to this ground of appeal. V. SPECIAL OR EXTRAORDINARY CHILD EXPENSES [ 27 ] During her lifetime, Mrs.

G.L.O., the defendant’s mother, agreed to pay the expense of the parties’ son, B., attending a private school because he had been bullied in public school. Their daughter C. was also sent to the same private school, although she had been doing well in the public school system. The defendant offered to pay one-half of C.’s school costs if matched by the plaintiff.

The trial judge said that that offer was “eminently fair”. [ 28 ] I have not been persuaded that the cost of sending C. to a private school is shown by the evidence to be necessary, and I would not interfere with the trial judge’s refusal to make an order on that account. [ 29 ] The other special expenses claimed were for orthodontic work for the parties’ son B., and a skin cream for their daughter C. The trial judge found these claims not established on the evidence.

I see no basis on which we can disturb that finding. [ 30 ] I would increase the amount of child support to $826 per month, and alter the division of assets to the extent conceded by the defendant. Otherwise I would dismiss this appeal. VI. CROSS-APPEAL [ 31 ] The defendant cross-appeals against the trial judge’s conclusion that the plaintiff’s Guideline income was $17,000 per year.

He says the amount of the plaintiff’s Guideline income should have been set at $31,524 per year. [ 32 ] In his reasons for judgment at ¶16, the learned trial judge noted that the plaintiff had income from employment of $17,000 per year. In dealing with the issue of spousal support, he found the plaintiff’s total income before tax to be $3,322 (reasons at ¶22), as noted at ¶15 above. This total included child support payments. If child support payments are excluded the plaintiff’s monthly income is $2,627, or $31,524 annually. [ 33 ] In his

summary at ¶27, the learned trial judge said this in part: [27] In

summary I make the following orders and declarations: … 3. The plaintiff’s income for Guideline purposes is $17,000 as of 1 June 2000.

[ 34 ] “Guideline income” is a spouse’s income calculated according to the rules set out in the Child Support Guidelines.

Section 16 of the Guidelines provides: 16 Subject to

section 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Customs and Revenue Agency and is adjusted in accordance with

Schedule III. [ 35 ] It is to be noted that Guideline income excludes some sources of income that may be included in determining income for the purposes of spousal support, such as child support payments. [ 36 ] The defendant concedes that under s.2 of

Schedule III of the Guidelines, a parent receiving child support otherwise included in income in the T1 General form can deduct the amount in determining Guideline income. However, the defendant contends the other two sources of income, the child tax benefits and investment income, ought to have been included in the plaintiff’s Guideline income. [ 37 ] Although the issue was not adequately addressed either in the parties’ factums, or in oral submissions, it would appear that it may not be correct to include child tax benefits in calculating Guideline income: see Reber v. Reber , [2002] B.C.J.

No. 1281 (Q.L.)(S.C.), 2002 BCSC 884 ; Stokes v. Stokes (2002), 2002 CanLII 54043 (NL SC) , 217 Nfld. & P.E.I.R. 81 (Nfld. SCTD). Without expressing any final opinion on the issue, as it makes no difference to the disposition of this appeal, I would exclude child tax benefits in calculating the plaintiff’s Guideline income. [ 38 ] However, I agree that the learned trial judge appears to have overlooked the plaintiff’s investment income in stating his

summary at ¶27. The plaintiff’s income should therefore be taken as $1,416 from employment, and $1,000 from investment, or $2,416 per month, or $28,992 annually. [ 39 ] I would amend declaration number 3 to read: The plaintiff’s income for Guideline purposes is $28,992 as of 1 June 2000.

SUMMARY [ 40 ] I would allow the appeal only to the extent of increasing the amount of child support to $826 per month, and by correcting the calculation of asset division by $10,235.27 in the plaintiff’s favour. Otherwise I would dismiss the appeal. [ 41 ] I would allow the cross-appeal by amending the plaintiff’s Guideline income to be $28,992 per year. [ 42 ] As the defendant was almost entirely successful in resisting the appeal (save only for $10 per month child support) and succeeded on the cross-appeal, I would award him the costs of both the appeal and cross-appeal. __________________________________ The Honourable Chief Justice Finch I AGREE:

_________________________________ The Honourable Madam Justice Ryan I AGREE: ___________________________________ The Honourable Madam Justice Levine