J.P. v. P.V.L. Date:, 2015 BCPC 283

Citation: J.P. v. P.V.L. Date: 20151005 2015 BCPC 0283 File No: E04583 Registry: Port Coquitlam IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: JP APPLICANT AND: PVL RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE M. BULLER Counsel for the Applicant: T. Watkins for the Minister of BCEAA

and on behalf of JP Counsel for the Respondent: H. Rubin, Q.C. Place of Hearing: Port Coquitlam , B.C. Dates of Hearing: August 26 and August 27, 2015 Date of Judgment: October 5, 2015 Introduction [ 1 ] As a result of an appeal, PVL’s Notice of Motion to cancel or reduce arrears of child support was returned to Provincial Court for rehearing. [ 2 ] At the commencement of this rehearing, PVL and JP consented to an order that PVL’s on-going support for one child be cancelled effective November 19, 2014. Background [ 3 ] PVL was raised in North Vancouver, B.C.

He completed high school and immediately went to work for his father, who had a painting business. PVL learned “on the job”. He did not enter into any apprenticeship program. He did not have any training in any other trades. PVL will be sixty-three years old in about two months. [ 4 ] JP and PVL have two daughters: K, born in November 1990; and, J born in February 1992. First Issue [ 5 ] The first issue to resolve is the time frame for the arrears of child support.

Counsel for PVL submitted that the order made on February 15, 2007, fixing arrears at $10,000 was an interim order, as “Interim Order” is the heading on the order.

Therefore, PVL is entitled to a review of that amount and a further reduction in arrears prior to February 2007. [ 6 ] The order in question states the following: Upon PVL having been found to be a resident of British Columbia and to have an annual imputed income of $30,000 for the purpose of determining the table amount of child support; This court orders that the arrears owing be reduced and fixed at the sum of $10,000, inclusive of statutory interest, effective March 1, 2007, This court further orders that default fees be cancelled; This court further orders that the Order made by the Honourable Judge Stone on July 31, 2001, is varied such that PVL shall pay to JP the sum of $472 per month for the support of the children. [ 7 ] There were orders for imprisonment on defaults and an adjournment of the default hearing for a review.

The court also ordered further financial disclosure by PVL to the Director of Maintenance Enforcement. [ 8 ] These orders were made after a hearing. The arrears were reduced from $15,000 to $10,000. Submissions [ 9 ] PVL’s counsel referred to the following decisions regarding ex parte orders: 1. Ibrahim v. Habte , [2006] BCSC 840. This decision was about the division of family assets and the issue of res judicata . The plaintiff commenced an action for division of family assets and other relief. The parties reached an agreement about their assets.

As a result, the defendant applied for and obtained an order dismissing the plaintiff’s claim. After that, the plaintiff commenced a new action seeking similar relief and to have the earlier order vacated. The application to vacate the earlier order was dismissed. The defendant brought a motion to have the plaintiff’s second action dismissed on the basis that the issue was res judicata. In considering res judicata, the court wrote: “In that respect, a number of authorities were referred to considering the court’s jurisdiction to revisit matrimonial issues.

Pursuant to the terms of the Divorce Act and the Family Relations Act, matters of child or spousal support are matters which may be revisited from time to time, depending on the circumstances of the parties.

Section 17 of the Divorce Act allows for the varying, rescinding or suspending,

prospectively or Relations Act with reference to spousal support orders made under that statute. Consequently, those authorities that deal with spousal and child maintenance make it abundantly clear, as do the other relevant statutes,that res judicata is not in issue in that respect.

The issue in the case at bar is whether or not the dismissal of the action of the plaintiff following settlement amounts to a finaldetermination of property issues between the parties.” (para. 11-13) [10] The court concluded that the dismissal of the prior action involving property claims is a bar to further proceedings by theplaintiff in respect to that subject. 2. Schlichting v. Gauld (1999), (Ft. St. John, 12204) (B.C.S.C.). The facts are that the father agreed by way of consent order to pay spousal and child support. A review date was set for those amounts.

At the review, the judge was not satisfied with the financial disclosure by the father. However, based on the information available, thejudge determined that as the father had significant assets, he was able to pay child support. The judge increased child support based onone half of the child’s monthly needs, without reference to the guidelines. The judge set a further review date for both spousal and childsupport. The father appealed that order. The court held: “In my view, the order of the provincial court judge was an interim order. It was not an order that would finally settle the matterbetween the parties.

This is supported by the fact that the provincial court judge set a review date of both the spousal and child support.”(para. 12) 3. Penner v. Niagara, [2013] 2 S.C.R. 19. This was a decision concerning a civil action arising from a police disciplinary hearing. One of the questions before the court was theapplication of issue estoppel. The court held: “The one relevant on this appeal is the doctrine of issue estoppel. It balances judicial finality and economy and other considerations offairness to the parties.

It holds that a party may not relitigate an issue that was finally decided in prior judicial proceedings between thesame parties or those who stand in their place. However, even if these elements are present, the court retains discretion to not applyissue estoppel when its application would work an injustice. The principle underpinning this discretion is that “[a] judicial doctrine developed to serve the ends of justice should not be appliedmechanically to work an injustice”; Danyluk at para. 1; see also Toronto (City) v.

CUPE, 2003 SCC 63 , [2003] 3SCR77 atparas 52-53.” (paras 29-30). [11] Counsel for the Minister submitted that the heading, “Interim Order”, was a simple drafting error. By fixing arrears, the orderwas meant to be a final determination of arrears. Even if it was an interim order, there is not sufficient new evidence to change thearrears. Further, if it was an interim order, I can increase the arrears of child support. Analysis [12] The court file shows that PVL did not apply for an interim order. The issue of the quantum of arrears was not ordered for areview.

As a result, this case is distinguishable from Schlicting, (above). On later dates, there were orders made for payment of thefixed arrears, which further indicates a final order. [13] According to the transcript of the proceedings on February 15, 2007, there was a hearing at which PVL testified. At theconclusion of the hearing, the arrears were, indeed, reduced from $15,000 to $10,000. The order fixing arrears was not stated as being aninterim order on the record. [14] I accept that the matters of child and spousal support may be revisited. (Ibrahim, above) Parents’ incomes can and do change.

In this case, though, on the plain reading of the transcript and the order, the judge meant the fixing of arrears at $10,000 as a finalsettlement. I add that it simply does not make sense to fix arrears on an interim basis. [15] PVL’s counsel submitted that I ought to exercise my discretion, not apply issue estoppel and cancel all arrears of child support,as to do otherwise would render an injustice to PVL, (Penner, above). It was proven in evidence that PVL has lived in poverty andcontinues to do so.

Assuming that there is such discretion with respect to arrears, I interpret Penner, (above), to also require aconsideration of whether exercising such discretion would cause injustice to others. In this case, PVL acknowledged his obligation tosupport his children. They are entitled to his support. Re-visiting arrears prior to 2007 would be unjust to his children. Further, PVL didreceive a remedy - the reduction of arrears. Also, even if there was a legal basis for re-visiting the arrears, PVL did not provide sufficientevidence for review.

Evidence of his income for all relevant years prior to 2007 was not in evidence at this rehearing. Weighing all ofthese factors, it would be unjust not to apply issue estoppel. [16] I conclude that the order fixing arrears was a final order. Therefore, res judicata applies and the application for reduction of the

arrears prior to February 15, 2007 order is dismissed. Arrears of child support from 2007 to Present The Facts [ 17 ] On August 7, 2007, PVL was ordered by consent to pay $28 per month towards the arrears. In 2007, PVL’s line 150 income was $14,101.07. He had an appendectomy which kept him from work for about six weeks.

PVL paid a total of $2,596 for child support in that year. [ 18 ] On November 20, 2008, after a hearing at which PVL had counsel, the following orders were made: Reducing child support to $150 per month, from December 1, 2008 to and including May 1, 2009, after which the payments revert to the amount under the maintenance order. The amount by which the payments were reduced on this interim basis shall be added to the aggregate of the arrears.

PVL shall pay the additional sum of $50 per month towards the arrears of maintenance, commencing December 1, 2008 and each month thereafter up to and included May 1, 2009, and until further order of this court, for a total monthly payment of $200. PVL shall bring on an application to change or cancel the arrears and maintenance on or before May 1, 2009. [ 19 ] In 2008, PVL’s income was $6,803. He had some intestinal problems that required a colonoscopy. There is no medical evidence that he was unable to work.

PVL paid $2,101.64 for child support in that year. [ 20 ] On June 9, 2009, there was the following order: The order of November 20, 2008, as to the $200 per month payments, shall continue until September 8, 2009. All other terms of the order remain in effect. [ 21 ] On October 27, 2009, there was an order varying the February 15, 2007, order: PVL shall pay $150 per month for support of one daughter, J, retroactively to April 1, 2009 and continuing on the first of each month thereafter.

PVL’s obligation to support K was cancelled as of April1, 2009 PVL shall pay an additional amount of $100 per month towards the arrears of maintenance commencing on November 15, 2009 and on the 15 th of each month thereafter. [ 22 ] In 2009, PVL’s income was $10,786. He paid $2,878.88 for child support. [ 23 ] In 2010, PVL’s income was $8,081 and he paid a total of $3,088.25 for child support. [ 24 ] In 2011, PVL’s income was $13,760. He paid $1,250 for child support. PVL’s last payment was on June 29, 2011. He did not make a voluntary payment until December 2013.

As of this rehearing, he had no idea why he stopped making payments. [ 25 ] In 2012, PVL’s income was $12,365. He paid no child support in that year. [ 26 ] In 2013, PVL’s income was $11,105.02 and he paid $100 for child support. [ 27 ] In 2014, PVL estimated his income was $10,203. He paid a total of $2,025.43 for child support. In November 2014, PVL had a heart attack. He has been unable to work since then and provided medical evidence in support. As a result, he has received income assistance of $610 per month since then. [ 28 ] In January 2015, PVL’s father passed away.

After his father’s estate is settled, he will receive an inheritance. PVL anticipates that he will receive an inheritance ranging from $120,000 to $160,000. This would be sufficient to pay the arrears in full. [ 29 ] As of August 13, 2015, PVL paid $106.11 for child support, by federal interception. The arrears total $16,612.13. Adding interest and fees, PVL owes a total of $22,278.21. [ 30 ] PVL owes money to the Canada Revenue Agency (the “CRA”). He did not file income tax returns, or pay the taxes he owed when he did file. PVL is not certain about the amount he owes, as some of the debt is statute-barred.

He is not certain whether the CRA will try to collect what he does owe. [ 31 ] Currently, PVL lives in an apartment in North Vancouver. The income assistance he receives does not cover his rent. As a result, PVL has been selling his tools and will sell his truck in order to make ends meet. One of PVL’s daughters brings him pre-cooked meals. He has basic cable television and internet. He does little for entertainment. He still carries a business debt of about $1,600.

[ 32 ] When PVL turns sixty-five years old, he will receive financial supplements that will bring his monthly income to about $1,300 per month. He intends to use his inheritance to buy a small condominium so that he can have a modest lifestyle in his retirement. Submissions [ 33 ] Counsel for PVL submitted that the evidence shows that there has been a material and long-lasting change in PVL’s income. PVL has never actually earned the income imputed to him. His incomes have been below the threshold for paying child support under the Guidelines.

PVL has never had the ability to pay the amounts that have been ordered, although PVL acknowledges his obligation to support his children. PVL does not have any hidden income or assets. The amount that PVL will inherit is uncertain. He may face collection of his owed income tax.

PVL lives in poverty and his only hope for a home in his retirement is his inheritance. [ 34 ] PVL’s counsel submitted that I ought to take a poverty-based approach, being consideration of PVL’s standard of living and conclude that it would be grossly unfair to PVL not to cancel the arrears. [ 35 ] Counsel for the Minister submitted that PVL is, indeed, a low-income payor parent. He has not hidden assets or income. However, PVL did not prove that he was incapable of earning more. Rather, PVL agreed that he was capable of earning minimum wage, perhaps in a different line of work.

PVL has been underemployed without a reasonable explanation. That, alone, is fatal to his application. [ 36 ] Further, PVL’s evidence about a change in circumstances is vague and non-compelling. PVL did receive some relief from the courts for his health issues. He could not provide a reason why he stopped making the payments. [ 37 ] Also, it is unfair to PVL’s children to reduce arrears further. They should not suffer due to potential CRA action. With the inheritance, PVL will be able to pay his arrears of child support.

Counsel for the Minister submitted that it would not be grossly unfair to dismiss PVL’s application as PVL will be able to pay the arrears when he receives his inheritance. [ 38 ] Counsel for the Minister referred to case law. Those decisions are included in my analysis. Analysis [ 39 ] The relevant law is found in

Section 174 of the Family Law Act (the “ Act ”): 174

(1) On application, a court may reduce or cancel arrears owing under an agreement or order respecting child support or spousal support if satisfied that it would be grossly unfair not to reduce or cancel the arrears.

(2) For the purposes of this section, the court may consider (

a) the efforts of the person responsible for paying support to comply with the agreement or order respecting support, (

b) the reasons why the person responsible for paying support cannot pay the arrears owing, and (

c) any circumstances that the court considers relevant.

(3) If a court reduces arrears under this section, the court may order that interest does not accrue on the reduced arrears if satisfied that it would be grossly unfair not to make such an order.

(4) If a court cancels arrears under this section, the court may cancel interest that has accrued, under

section 11.1 of the Family Maintenance Enforcement Act , on the cancelled arrears if satisfied that it would be grossly unfair not to cancel the accrued interest. [ 40 ] The application and

interpretation of the similar

section under the Family Relations Act , is found in Earle v. Earle , [1999] BCSC 283, the seminal decision by Justice Martinson: “22. Because cancellation or reduction of arrears is a form of variation, there is a substantial onus (a heavy duty) on the person asking for a reduction or a cancellation of arrears to show that there has been a significant and long lasting change in circumstances. 23.. The courts are generally reluctant to reduce or to cancel arrears. Under the Family Relations Act arrears will not be reduced or cancelled unless it is grossly unfair not to do so.

This principle is similar to the one applied to the Divorce Act , which requires a material and long lasting change…” 26. Not being able to pay now is not a valid legal reason to cancel or reduce arrears. They will only be cancelled if the person is unable to pay now and will be unable to pay in the future. 27. People making this argument have a heavy onus. It is not good enough just to say that they could not pay because they earned less.

They can only get a reduction or a cancellation of arrears if they present detailed and full financial disclosure, under oath (usually in the form of an affidavit) that: • the change was significant and long lasting and • the change was real and not one of choice and • every effort was made to earn money (or more money) during the time in question, and those efforts were not successful.”

[ 41 ] In addition to Earle , (above), counsel for the Minister referred also to Beavis v. Beavis , [2014] BCSC 422. This was an appeal of a Provincial Court decision about reducing child support arrears. The grounds for appeal were as follows: 13. Mr. Beavis asserts the trial judge made the following errors of law: A. Gross Unfairness - The appellant submits that the learned judge did not consider elements necessary in order to determine gross unfairness existed. B. Change in Circumstances - In order for the court to reduce or cancel arrears the applicant must prove a material change in circumstances.

The appellant submits that the learned judge did not rule that the conditions necessary existed, and in fact ruled that some of the conditions which disqualify a reduction or cancellation of arrears were present in this case. C. Financial Disclosure - To be successful in the application to reduce or cancel child support arrears complete financial disclosure must be made. The appellant submits that the Learned Trial Judge erred by imputing an income amount retroactive to 2004 without sufficient evidence upon which to make that decision. D.

Obligation to Earn to Capacity - It is a basic [tenet] of child support that both parents are obligated to earn to their capacity in order to provide for their children. The appellant submits that the Learned Trial Judge erred by not considering this obligation when ruling to impute income, reduce support arrears, and cancel support arrears. [ 42 ] In Beavis , (above), The court adopted the following analysis: 14. All four grounds of appeal are rooted in the test for cancelling or reducing child support arrears. In Semancik v.

Saunders , 2011 BCCA 264 at para. 25 , the Court of Appeal states that when applying for the cancellation or reduction of child support arrears: [25] …The applicant must prove a material (… defined as a “significant and long lasting”) change in circumstances and that it would be grossly unfair not to cancel the arrears. [Emphasis in original.] 15. Grounds A (Gross Unfairness) and B (Change in Circumstances) relate to the two main elements of this test.

Grounds C (Financial Disclosure) and D (Obligation to Earn to Capacity) fall within ground B: they are two factors to consider when assessing whether the applicant has proven a significant and long-lasting change in circumstances due to a reduction in income. Accordingly, I address the four grounds of appeal within the structure of this two-part test. [ 43 ] Counsel for the Minister also referred to Holmstrom v. Holmstrom , [2014] BCSC 545. Justice Romilly applied Earle (above) and other decisions for the principles of law concerning arrears of child support.

Justice Romilly applied the two criteria: a material change in circumstances; and, that it would be grossly unfair not to reduce or cancel arrears. In that case, the payor parent left a stable job for a position with a “start-up” company that soon failed. As a result of this job change, arrears under an existing order accrued. Justice Romilly found, that given the nature of the payor parent’s job change, it would not be grossly unfair to leave the arrears in place. [ 44 ] Since taking over his father’s business, PVL did little, or nothing, to seek new customers and develop the business.

He agreed that at all relevant times, he was capable of earning a minimum wage. He did have some health issues, but the evidence proves that those issues did not amount to disabilities. The exception, of course, is his heart attack. PVL did receive relief from the court as his child support amounts were reduced and, eventually cancelled. [ 45 ] PVL will inherit some money from his father’s estate. Although the exact amount is not known, the range provided would be sufficient to pay the arrears.

PVL’s obligation to the CRA is not clear on the evidence. [ 46 ] Since the February 15, 2007, order, PVL’s income was always lower than the $30,000 imputed to him. However, during the same time period, he was always able to earn at least the minimum wage. These two factors have remained unchanged. Therefore, PVL has not proven a change in circumstances, as required in Earle (above), Beavis (above) and Holmstrom (above). [ 47 ] Further, PVL was capable of earning a higher income up to the time of his heart attack. PVL did little or nothing to develop his painting business. He chose not to change his line of work.

Throughout this time, he had a legal obligation to support his children. Therefore, PVL has not proven that, if there was a change in circumstances, it was neither real nor not of choice. He also did not prove that he made every effort to earn money and he was not successful, ( Earle , above). [ 48 ] Alternatively, if PVL’s low income may be characterized as a “significant and long lasting” change in circumstances, is it grossly unfair not to cancel the arrears? [ 49 ] Since 2007, PVL would have had to pay some amount of child support, with the exception of 2014.

The amounts for those years ranged from $1 per month to $102 per month. Therefore the law is clear: a payor parent with a very low income is still required to support his or her children. This points to the importance of this legal obligation and precludes a poverty approach to the unfairness analysis. [ 50 ] While it is true that PVL did not always have legal representation in court, that is not in and of itself a reason to reduce or cancel arrears. ( Earle , para.43) [ 51 ] I accept that PVL does not have the present ability to pay the arrears. He will, however, be able to pay the arrears in the future.

Nonetheless, would it be grossly unfair to require that PVL pay the arrears from his inheritance and forego his retirement plans? In L.B.

v. J.K. , [2012] BCPC 231, my colleague Judge Hamilton wrote: “So, when a parent comes to court having failed in their duty to their child, deprived the child of that which the child is entitled to receive but cannot enforce, and disobeyed a court order, our courts will not condone that parent’s behaviour unless, and only unless, to insist that the parent fulfil his or her duty would be grossly unfair. For these reasons the grossly unfair test is not an easy test to meet.” (para. 59) [ 52 ] In my view, the importance of PVL’s obligation to support his children outweighs the importance of his plans for retirement.

His obligation to support his children precludes a “poverty approach”. It would be grossly unfair, especially to PVL’s children to reduce or cancel the arrears of child support. Orders [52] PVL’s application to reduce or cancel arrears is dismissed. [ 53 ] By consent, PVL’s on-going support for one child is cancelled effective November 19, 2014. M. Buller, P.C.J.