ERNEST WILLIAM SIMMONS APPELLANT AND: ALVINA GRACE SIMMONS RESPONDENT, 2016 NLCA 28

IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL Citation : Simmons v. Simmons , 2016 NLCA 28 Date : 20160615 Docket : 201401H0028 BETWEEN: ERNEST WILLIAM SIMMONS APPELLANT AND: ALVINA GRACE SIMMONS RESPONDENT Coram: Welsh, Rowe and Harrington JJ.A. Court Appealed From: Supreme Court of Newfoundland and Labrador Trial Division (F) 201102F0312 2014 NLTD(F) 10 Appeal Heard: May 11, 2016 Judgment Rendered: June 15, 2016 Reasons for Judgment by Welsh J.A. Concurred in by Rowe and Harrington JJ.A. Counsel for the Appellant: Ernest L. Gittens and Katrina R. M.

Hanlon Counsel for the Respondent: Katrina A. Brannan Q.C. Welsh J.A.: [ 1 ] This is an appeal against an order consequent upon the divorce of the parties. At issue are the repudiation of a marriage contract, occupation rent, the division of debts, the division of business assets, and spousal support. BACKGROUND

[ 2 ] The parties, who are both in their early sixties, were married on October 29, 1989 and divorced by order dated March 13, 2012. Prior to being married, they entered into a marriage contract. The applications judge described the parties in this way ( 2014 NLTD(F) 10, 348 Nfld. & P.E.I.R. 30 ): [30] The parties are an industrious couple who were driven by a compelling entrepreneurial spirit and an equally strong work ethic during the three decades they spent together. Thus, they fished together in Mr.

Simmons’ enterprise; they operated school buses; they ran a seasonal holiday resort, featuring rental cabins, a restaurant and water sports and offering other recreational activities; and they built and sold and rented houses. I would describe Mr. Simmons as a “jack-of-all trades”, of whom I would say, “He can turn his hand to anything”; and in particular, I find that he is competent in the mechanical, electrical, carpentry and fishing trades and can also operate heavy equipment. [ 3 ] The applications judge concluded that the marriage contract was no longer in force at the time of the separation and divorce.

He made an order dividing the matrimonial assets and debts and the business assets, and requiring Mr. Simmons to pay occupation rent while he remained in the matrimonial home. In addition to the arrears of spousal support, the judge ordered Mr. Simmons to pay spousal support indefinitely. Finally, he ordered Mr. Simmons to pay costs. ISSUES [ 4 ] At issue is whether the applications judge erred in: (1) finding that the marriage contract had been repudiated; (2) awarding occupation rent to be paid by Mr.

Simmons while he resided in the matrimonial home; (3) ordering equal division of business assets; (4) assessing the evidence regarding the allocation of debt; and (5) awarding spousal support to be paid to Ms. Simmons indefinitely. ANALYSIS The Marriage Contract [ 5 ]

Section 62 of the Family Law Act , RSNL 1990, c. F-2, provides for parties to enter into a marriage contract: Two persons who are married to each other or intend to marry may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation, on the annulment or dissolution of the marriage or on death, including (

a) ownership in or division of property; (

b) support obligations; … (

d) other matters in the settlement of their affairs. [ 6 ] In assessing the effect of the marriage contract in this case, the applications judge concluded that, while the parties had entered into a valid and binding contract when it was signed, it no longer had any force or effect because it had been repudiated. In September 2000, at a time when the parties had separated, Mr. Simmons wrote to Ms. Simmons returning to her the agreement, which was enclosed, as a birthday gift. He indicated that he would have any other copies of the agreement destroyed if she would reconcile. Ms.

Simmons agreed to return to the marriage. She retained the letter and enclosed agreement. [ 7 ] Mr. Simmons submits that the applications judge erred in concluding that the contract had been validly repudiated and was of no force or effect at the time of the parties’ separation and divorce. He concedes that he made an offer to repudiate the agreement when he sent it to Ms. Simmons with the letter. However, he submits that Ms. Simmons, having retained the agreement, had failed to take the steps necessary to accept his offer. [ 8 ] This submission is not persuasive. While Ms.

Simmons did not destroy the agreement or Mr. Simmons’ letter, she indicated her acceptance of his offer by reconciling. She did not return the agreement to Mr. Simmons nor did she say anything to him which would have indicated that, rather than accepting the cancellation of the marriage contract, she considered the agreement to be continuing in effect. It is understandable, and was accepted by the applications judge, that Ms.

Simmons retained the documents in her possession in case she may need to rely upon them in the future for the very purpose of establishing that the agreement had been repudiated. [ 9 ] In the circumstances, there is no basis on which to conclude that the applications judge erred in determining that the marriage contract had been validly repudiated and that it had no force or effect at the time of the parties’ separation and divorce. Occupation Rent [ 10 ] The applications judge ordered Mr. Simmons, who remained in the matrimonial home, to pay to Ms.

Simmons occupation rent of $250 per month until the house was sold. He explained: [82] Mr. Simmons has had exclusive possession of the matrimonial home since the parties separated in January 2011; and during the time Ms. Simmons let alternate accommodations from her sister, albeit at a reduced rent. Mr. Simmons has maintained the matrimonial home during the same time and is due credit for some of the costs he incurred to their mutual benefit; for which I reduce the monthly amount [$350] that Ms. Simmons requested. I allow Ms.

Simmons occupation rent of $250 a month, for the period February 2011 to (and including) March 2014. [ 11 ] Mr. Simmons submits that the applications judge erred in the exercise of his discretion to award an amount of occupation rent to Ms. Simmons. The basis of his submission is that Mr. Simmons was required to bear the burden of an unfair distribution of the financial effects of the divorce. He pointed to the order for spousal support and the manner in which the judge dealt with the parties’ debts.

[ 12 ] This submission is not persuasive. The judge explained the basis on which he ordered the payment of occupation rent and the amount. Account was taken of costs Mr. Simmons incurred in maintaining the matrimonial home as well as the extra expense Ms. Simmons bore in obtaining alternate accommodation. There is no basis on which to conclude that the applications judge erred in the award of occupation rent. The Business Assets [ 13 ]

Section 29 of the Family Law Act provides for distribution of business assets upon dissolution of a marriage: Where one spouse has contributed work, money or money’s worth in respect of the acquisition, management, maintenance, operation or improvement of a business asset of the other spouse, the contributing spouse may apply to the court and the court shall by order (

a) direct the other spouse to pay an amount that the court orders to compensate the contributing spouse; or (

b) award a share of the interest of the other spouse in the business asset to the contributing spouse in accordance with the contribution, and the court shall determine and assess the contribution without regard to their spousal relationship or the fact that the acts constituting the contribution are those of a reasonable spouse in the circumstances. [ 14 ] The applications judge summarized the involvement of Ms. Simmons in their various enterprises: [71] … Mr. Simmons benefited from the commitment that Ms.

Simmons made to their businesses and the businesses would never have succeeded unless she contributed as she did. [72] Ms. Simmons was not only Mr. Simmons’ crewmate in the boats that he fished from, she helped him build them. She worked as a host, a domestic and a restauranteur in their holiday resort. She drove one of the two school buses when they had contracts and she helped as she could with the carpentry, plumbing and electrical work on the houses they built and sold. [ 15 ] The judge concluded: [74] Generally, I find that Ms. Simmons is entitled to a share of such business assets that Mr.

Simmons and/or the companies, Island Enterprises Limited and Random Enterprises Company Limited owned when the parties separated. I will direct how specific assets will be divided shortly. [ 16 ] The fishing enterprise included a twenty-foot speedboat, one hundred lobster pots and six nets. Each of the parties held a fishing licence. Each was paid his or her share of the proceeds as they sold their fish. The applications judge explained that Ms. Simmons’ involvement in the fishing enterprise, which he accepted based on her evidence, entitled her to an equal division of the value of the fishing assets. Given Ms.

Simmons’ contribution, found as a fact by the applications judge, there is no basis on which to interfere with his determination. [ 17 ] Regarding the ordered equal division of a building called the cabin or the cottage and one referred to as the lobster shack, at the hearing, Mr. Simmons conceded that the value of the buildings and the land, to the extent he had an interest in the land, would be subject to equal division. If Mr. Simmons has no interest in the land, there would, of course, be no division of it as an asset. [ 18 ] Regarding the two companies, the applications judge accepted: [85] … [Ms.

Simmons] carried out executive duties for both Island and Random Enterprises; and she joined with Mr. Simmons in guaranteeing two substantial loans that Island Enterprises obtained from FBDB to fund Lupin Resort. … … [87] I note one further point about the business assets: It is true that Island Enterprises Limited and/or Random Enterprises Company Limited held the legal title to the school buses and operating assets to Lupin Resort; … Mr. and Ms. Simmons and their immediate family members owned (with limited and inconsequential exceptions) all outstanding shares of both companies.

It would be contrary to the spirit and intent of the Family Law Act to allow Mr. Simmons to hide the business assets to which Ms. Simmons has a claim behind the corporate veils of either company; and I will not allow it. [ 19 ] Mr. Simmons submits that the applications judge erred by failing to limit Ms. Simmons’ share of the business assets to a calculation based on the number of shares she held. The reference to shares in the circumstances is not of assistance to Mr. Simmons. The applications judge concluded that Ms.

Simmons had contributed to the business enterprises in a manner that would entitle her to an equal interest under the Family Law Act . The Court could have ordered Mr. Simmons to transfer shares to Ms. Simmons so as to equalize the number of shares for each. However, since the businesses had been wound up, and Island Enterprises Limited was revived only for the purpose of selling a property, the transfer of shares would simply be an additional step to achieve the same result, equal division of the proceeds of sale of the property, that is, the value of the business asset.

If there was, for example, a tax benefit to be gained by transferring the shares first, before dividing the money received on sale of the property, that could have been requested by either party. Further, there was no evidence that, at this stage, any other party had an interest in the proceeds from the sale. [ 20 ] Applying

section 29 of the Family Law Act in these circumstances, there is no basis on which to conclude that the applications judge erred in ordering that Ms. Simmons was entitled to an equal share of the proceeds of sale of the property sold by Island Enterprises. Division of the Debts

[21] The Family Law Act does not deal specifically with the question of the division of debts upon dissolution of a marriage. However, it follows from a reading of the Act as a whole and, in particular,

Part II regarding “Matrimonial Assets”, that the division ofdebts must be considered in light of the fundamental premise that marriage is an economic partnership. In Nova Scotia (AttorneyGeneral) v. Walsh, 2002 SCC 83, [2002] 4 S.C.R. 325, Bastarache J., for the majority, explained: [46] ...

As a whole, then, the [Matrimonial Property Act] is designed to ensure the economic partnership between married persons byaffording protections to the non-title holding spouse both during the marriage and at its end, whether due to divorce or death. … [48] … Moreover, even the division of matrimonial assets brings with it significant obligations to the spouses.

The manner in whichthe property division is achieved is to calculate the total value of the matrimonial assets and subtract from that amount the total value ofthe matrimonial debts, without regard, in both cases, to the title in whom these assets or liabilities rest. Thus the [Matrimonial PropertyAct], by deeming all marriages to be economic partnerships, imposes a significant alteration to the status quo of an individual’sproprietary rights and obligations. … [22] In Martin v. Martin (1998), (NL CA), 168 Nfld. & P.E.I.R. 181 (Nfld.

C.A.), Cameron J.A., for the Court,discussed the Court’s approach to the division of matrimonial debt: [21] There is no specific guidance provided by the Act on the treatment of debts arising during the course of the marriage. Morgan,J.A., of this court said in Wells v. Wells (1988), (NL CA), 69 Nfld. & P.E.I.R. 186; 211 A.P.R. 186 (Nfld. C.A.), at191: The Act makes no provision for the sharing of liabilities.

It would be inequitable, however, to saddle one spouse with the payment ofdebts incurred during the marriage from his or her one-half interest in the matrimonial assets and make the other one-half interest free ofdebt liability. That, in my view, could not have been the intention of the legislature. It does not follow, however, that all debts incurredduring marriage are automatically ‘family’ debts for which both parties are equally responsible.

Whether or not an income tax debt, orindeed any debt, has to be satisfied from matrimonial assets can only be determined on the facts of the particular case and the prevailingequities. The person seeking exemption from sole liability for debts must establish it. [22] … When one party assumes responsibility for certain joint expenses associated with the matrimonial home after a separation,there is generally an accounting on sale or final resolution of their matrimonial property issues so that from the time of separation to salethe expenses related to the property are shared.

There are, of course exceptions, which are dictated by, in the words of Morgan J.A., “theprevailing equities.” [23] Applying these principles, a debt that is clearly joint will be shared, absent some overriding consideration. A debt incurred byone party that is not clearly a matrimonial debt must be analyzed to determine how it is to be characterized for purposes of the division ofproperty. For example, the fact that a credit card is held in one party’s name does not necessarily lead to the conclusion that the debtincurred was not a matrimonial debt.

The requirement for evidence will depend on the circumstances. [24] The comment in the Wells decision, and referenced in the Martin decision, that the “person seeking exemption from soleliability for debts must establish it”, must be read in the context of the circumstances of the particular case and the equities involved. Itmay well be that, for example, the person whose name is on a credit card or line of credit is in the best position to establish the nature ofthe debt, a necessary step in characterizing the debt as matrimonial or not.

However, as stated in Walsh, marriage is an economicpartnership, which includes both assets and liabilities. In some situations, the circumstances may be such that the burden of establishingthat a debt is the sole responsibility of the other party will be on the party seeking to characterize the debt as non-matrimonial. [25] In this case, the applications judge concluded that Ms. Simmons did not have to contribute to certain costs related to the newhouse which was under construction, intended as their retirement home, and which burned down after they separated.

The judgeexplained: [89] … Bill from Alda Electric for electrical work done on the “new house” which was $2,167.10: … Mr. Simmons paid off this account beforethe house burned down. Ms. Simmons says she never lived in the property, and she didn’t; and that she derived no benefit from theaccount; and she didn’t. I will not order her to contribute to it. Bill from Irving Oil Limited for a furnace in the “new house” in Mr. Simmons’ name: Mr. Simmons submits that Ms. Simmons isresponsible for 38 payments of $20.70, for a total of $786.60.

She says that only one amount, of which $20.70 is half, is for the periodbefore separation. I agree and will not order Ms. Simmons to pay any of those amounts, even $20.70 or half of the one amount that pre-dates separation. It is too inconsequential to consider. Bill from NL Power for $91.33 in Mr. Simmons’ name for the “new home”: Ms. Simmons submits, and I agree, that she never lived inthe home and derived no benefit from the expenditure. She says Mr. Simmons should be solely responsible for it; and I agree. [26] The fact that Ms.

Simmons never lived in the property does not provide a rationale for concluding that the debt was not amatrimonial debt. The house was, in fact, being built for their joint use and enjoyment. Any costs incurred in relation to the house priorto the parties’ separation would properly be characterized as matrimonial debt. Had the house not burned down, Ms. Simmons wouldhave been entitled to a share of that asset.

It follows that she should also share in responsibility for the liabilities incurred before theparty’s separation. [27] Regarding the Visa credit card, based on the parties’ separation at the end of January 2011, the applications judge wrote: [89] …

Scotialine Visa in Mr. Simmons’ name with a balance of $15,208.18 on January 31, 2011: Mr. Simmons submits that the parties used the money for matrimonial purposes and claims that each is responsible for half the balance, or $7,604.09 and half of the interest that accrued since they separated. Ms. Simmons denies that they used this account for matrimonial purposes. She says generally that Mr. Simmons never accounted to her for his spending and the statements from the account that he provided do not confirm his claims that he used it to pay Ms.

Simmons’ rent in Alberta, to move her furniture, or for any other purposes from which Ms. Simmons benefited. I note, as Ms. Simmons does, that many of the charges Mr. Simmons made to the account after the parties separated are of questionable character, at the very least, and otherwise have nothing to do with joint matrimonial purposes. I will not order Ms. Simmons to contribute to this account. [ 28 ] The proper question is not whether Ms. Simmons benefitted from the expenditures, but rather, whether the expenses were for matrimonial purposes; that is, whether Ms.

Simmons benefitted from the amounts charged on the credit card as a partner in that economic relationship. That said, the judge found as a fact that, faced with Ms. Simmons’ challenge, Mr. Simmons did not provide adequate evidence to establish that the amount claimed constituted matrimonial debt in the sense that the debt was incurred for matrimonial purposes. [ 29 ] No basis has been shown on which to conclude that the applications judge erred in making this factual determination. I note that Ms. Simmons did not ask, and the judge did not order, Mr.

Simmons to contribute to the debt of $4,320.54 owing on January 7, 2011 on the Scotialine Visa that was in Ms. Simmons’ name. [ 30 ] Finally, regarding the Scotialine Personal Line of Credit in Mr. Simmons’ name, the applications judge concluded: [89] … … Mr. Simmons provided only one year’s statements for the account and they, and none of the materials he offered, support Mr. Simmons’ statement that the parties incurred the debt when they lived in Alberta in 2007 or 2008. I will not order [Ms.] Simmons to contribute to this account.

Overall, as to debts the parties incurred when they were together, they shared neither the expenditures nor the benefits of their credit purchases. Mr. Simmons was generally secretive about his personal financial dealings and engaged Ms. Simmons only when he could not avoid involving her. He says the same thing about Ms. Simmons. So, for the most part, they incurred their own debts and serviced them from their own means. It is appropriate to leave it that way now that they are apart. [ 31 ] Given the judge’s finding that Mr.

Simmons failed to provide evidence to establish his submission that the debt incurred under the line of credit was for matrimonial purposes, no basis has been shown on which to determine that the judge erred in his conclusion regarding the line of credit. Mr. Simmons was clearly in control of the relevant evidence and, given Ms. Simmons’ challenge, it was his responsibility to provide the records necessary to establish his position. [ 32 ] In

summary, with the exception of the NL Power and Alda Electric debts, Mr. Simmons failed to establish that the above debts were subject to equal division. Regarding the Irving Oil debt, the applications judge accepted Ms. Simmons’ evidence that only one payment pre-dated separation, and that that amount was too inconsequential to consider. [ 33 ] In the result, only the NL Power and Alda Electric debts are subject to equal division. Spousal Support [ 34 ] The applications judge ordered Mr. Simmons, commencing April 1, 2014, to pay spousal support of $677 per month indefinitely. The judge did not accept Mr.

Simmons’ evidence that he was disabled such that he was unable to earn an income that would supplement his disability payments of $8,246.40 per year. Support was calculated on the basis of the parties’ incomes in 2012, $44,094 for Mr. Simmons and $22,428 for Ms. Simmons. The order provides for annual recalculation of spousal support based on his income. As well, he may apply for a variation should his circumstances change significantly. Mr. Simmons was also ordered to pay the arrears of interim spousal support that had been previously imposed. [ 35 ] Mr.

Simmons was described by the judge as a capable “jack-of-all trades”. During their marriage, Ms. Simmons worked along- side Mr. Simmons. Since the separation and divorce she has worked as a cashier and, in 2012, earned an annual income of less than $23,000. [ 36 ] The judge explained the basis on which he made factual determinations regarding Mr. Simmons’ ability to earn income. He followed an accepted manner of calculating the amount of support to be paid based on the most recent tax information Mr. Simmons had filed.

There is no basis on which to conclude that the applications judge erred in making the spousal support order. Costs [ 37 ] The applications judge ordered Mr. Simmons to pay costs of the application: [100] Ms. Simmons has been generally successful in her claim, despite Mr. Simmons’ intense and sometimes unfair resistance to it, to which I alluded when I discussed her claim for spousal support. I order Mr.

Simmons to pay costs to be taxed on a party-and-party basis, under Column 3 of the Scale of Costs; and for greater certainty this order for costs is in addition to my earlier order for costs and does not supplant it.

[ 38 ] On appeal, Ms. Simmons has been successful except for a minor adjustment regarding matrimonial debt. I would affirm the order for costs in the Court below and make the same order for costs on the appeal.

SUMMARY AND DISPOSITION [ 39 ] In

summary, the applications judge did not err in: (1) finding that the marriage contract had been repudiated; (2) awarding occupation rent to be paid by Mr. Simmons while he resided in the matrimonial home; (3) ordering the equal division of business assets; and (4) awarding spousal support to be paid to Ms. Simmons indefinitely.

It has not been shown that the applications judge erred in his order regarding the division of debts at issue in this appeal, with the exception of the NL Power and Alda Electric debts, which are subject to equal division. [ 40 ] Accordingly, I would dismiss the appeal, except to order that the NL Power and Alda Electric debts are subject to equal division. I would affirm the applications judge’s order subject to the following amendments: 16.

Ernest Simmons is solely responsible for the following debts: bill from Irving Oil Limited for furnace in new house; Scotialine Visa in Ernest Simmons’ name; and Scotialine Personal Line of Credit in Ernest Simmons’ name. 22. The NL Power and Alda Electric debts described above are subject to equal division. [ 41 ] I would order Mr. Simmons to pay Ms. Simmons’ costs for the appeal under column 3 of the scale of costs. ____________________________________ B. G. Welsh J.A. I Concur: ___________________________________ M. H. Rowe J.A. I Concur: ___________________________________ M. F. Harrington J.A.