L.A.H. v. B.D.H. Date:, 2014 BCPC 184

Citation: L.A.H. v. B.D.H. Date: 20140728 2014 BCPC 0184 File No: F6747 Registry: Courtenay IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: L.A.H. APPLICANT AND: B.D.H. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE GOUGE

Counsel for the Applicant: K. E. Tinmouth Counsel for the Respondent: C. Hay Place of Hearing: Courtenay , B.C. Dates of Hearing: June 16, 17, July 24, 2014 Date of Judgment: July 28, 2014

Summary [ 1 ] Ms. H applies for spousal support. [ 2 ] Mr. & Ms. H lived together for 14 years, and were married for 12 of those years. They have been separated for 11 years. Divorce proceedings are pending, but have not yet been adjudicated. [ 3 ] Mr. & Ms. H have three children, all of whom have left home and are living independently. [ 4 ] When Mr. & Ms. H separated, they were both impecunious. They are not now wealthy, but their financial circumstances have improved significantly since separation. The improvement derives from two sources: (

i) after separation, Mr. H worked for 9 years in northern Alberta, where wages are high and the work week is long; (ii) Ms. H received an inheritance in 2012. [ 5 ] After the close of the evidence, I heard submissions from Ms. Tinmouth, counsel for Ms. H. During her submissions, both counsel expressed concern at the length of the proceedings, and the consequent cost to the parties. I think it incumbent upon me to do what I can to expedite the proceedings so as to minimize the costs to Mr. & Ms. H, each of whom is of modest means. For that reason, I adjourned the case at the conclusion of Ms.

Tinmouth’s submissions to allow me time to consider those submissions carefully. As a result of that consideration: a. I do not think it necessary to hear from Ms. Hay; b. I will address only those issues which are necessary to decide the application. A number of other issues were addressed in Ms. Tinmouth’s detailed and able submissions. Because they need not be decided, I make no further reference to them. [ 6 ] The dispositive issues are: a.

In what circumstances, and to what extent, should spousal support be ordered where the effect would be to enable the recipient spouse to enjoy a higher standard of living than that enjoyed by the spouses prior to separation? b. In considering that issue, in what circumstances is the recipient spouse entitled to benefit from steps taken, after separation, by the payor spouse to enhance his income-earning capacity? Narrative [ 7 ] Ms. H is now 51 years of age. Mr. H is 49. They met in 1988, began living together in 1989, and married in 1991.

Divorce proceedings are pending, but no order for divorce has yet been pronounced. They have two daughters, now ages 21 and 19, and a son, now age 18. All three children have left home and are living independently. [ 8 ] When they met in 1988, Mr. & Ms. H worked at the same hotel in Whistler, British Columbia, he as a chef and she as a desk clerk. About a year later, they moved to Vancouver, where each found similar employment. In 1990, they moved to Nanaimo because housing there was less expensive. Mr. H found full-time work immediately as a chef. There were fewer employment opportunities for Ms. H in Nanaimo.

She found part-time work, intermittently, as a retail sales clerk and as an office receptionist. [ 9 ] Mr. & Ms. H married in August, 1991. Their first child, a daughter, was born in August, 1992. After parental leave, Ms. H returned to part-time work. Their second daughter was born in July, 1994. After that birth, Ms. H did not return to work, the rationale being that day-care costs for the two children would exceed Ms. H’s after-tax earnings, so it was more efficient for her to stay home with the children.

That imperative became more clear after the birth of their son in November, 1995. [ 10 ] In 1996, Mr. & Ms. H purchased the restaurant, in Nanaimo, in which Mr. H had been working. As owner, Mr. H’s normal workday was from 9:00 a.m. to 11:00 p.m. Ms. H worked part-time managing the “front end” of the restaurant. They paid for child care during Ms. H’s working hours. [ 11 ] In 1998, the mall in which the restaurant was located underwent renovation, and the landlord bought out the H’s lease. The proceeds were sufficient to retire the debt which Mr. & Ms.

H had incurred when they purchased the restaurant, but left little, if any, surplus. Mr. H found full-time employment as a chef at a local hotel. [ 12 ] In 1999, Mr. & Ms. H moved to Comox, where they opened a new restaurant. As he had in Nanaimo, Mr. H worked very long hours, and Ms. H assisted part-time. Despite those efforts, the restaurant was not a success. As a result, they closed the restaurant and declared personal bankruptcy on December 6, 2000. [ 13 ] After the failure of the restaurant, Mr. H decided to change careers, and entered an apprenticeship program to qualify as a

plumber. Ms. H found a limited amount of part-time work as a retail sales clerk. Mr. H worked at plumbing jobs on Vancouver Island, some in the Comox Valley and some elsewhere. [ 14 ] Mr. & Ms. H separated in January, 2003. At that time, their assets consisted of a townhouse worth about $65,000, two vehicles, each worth less than $5000 and personal effects of nominal value. Their only debt was a mortgage on the townhouse, on which about $35,000 was owing. [ 15 ] During her evidence. Ms.

H described certain cash advances, totalling about $15,000, made to her by her mother, which she characterized as debts which she owed to her mother. Her recollection of the use which she made of the money was vague, but, in general terms, she said that she and Mr. H used the money to purchase the townhouse and to invest in their failed restaurant ventures. The documentary evidence does not support the characterization of these advances as loans. Rather, the documents reflect an intention and agreement among Ms.

H, her mother and her siblings that the distribution of the mother’s estate after her death should be adjusted to reflect the fact that Ms. H had received part of her share of the estate during her mother’s lifetime. Such an arrangement differs from a loan in the following ways: a. Ms. H’s mother would not have been entitled to sue to recover the “debt” during her lifetime. b. If the advances had been loans, giving rise to debts, they would have been extinguished by Ms. H’s bankruptcy. The documents clearly evince a contrary understanding among Ms.

H and her siblings, because the estate was distributed, after the bankruptcy, as originally planned (i.e. by deducting the amount of the advances from Ms. H’s share of the estate). c. Neither Mr. nor Ms. H was ever liable to repay the advances. The only consequence which they faced was a reduced share in the estate upon distribution. [ 16 ] After separation, the children remained in the care of Ms. H. [ 17 ] On February 21, 2003, Mr. H conveyed to Ms. H his interest in the townhouse. She arranged a new mortgage, thereby achieving his release from his obligations under the old mortgage.

Each took title to one of the vehicles. No written separation agreement was executed. [ 18 ] Mr. H said that the question of spousal maintenance was discussed only once, at a mediation session with a Family Justice counsellor in early 2003. Mr. H said that, during a discussion of child maintenance, Ms. H expressly said that she had no interest in pursuing a claim for spousal maintenance. [ 19 ] Mr. H’s counsel sent Ms. H a draft separation agreement under cover of a letter dated June 4, 2003. The draft agreement comprises 11 pages of dense prose.

Article 12 of the draft is entitled “Waiver of Spousal Maintenance”.

Article 12 is a very thorough piece of work, consisting of 96 lines of text. If Ms. H had signed the document, it would be a clear bar to her present claim. [ 20 ] Ms. H says that she declined to sign the draft separation agreement, and that she told Mr. H that she considered it to be unfair because he was living in Alberta, and earning a substantial income there, while she was at home looking after the children. Mr. H does not recall that conversation, but acknowledges that the draft agreement was never signed, and says that the subject never came up again. [ 21 ] After the parties separated, Mr.

H sought work as a plumber on Vancouver Island. However, opportunities were limited. He was not earning enough to pay his living expenses and was drinking heavily. Some friends persuaded him to try his luck in Fort McMurray, Alberta, to which he moved in August, 2003. He prospered in Fort McMurray, but continued to drink heavily. In 2006 - 2007, and again in 2009 - 2010, he returned to Vancouver Island for brief periods, but was unable to earn enough to support himself and to meet his child support obligations, so he returned to Fort McMurray.

The evidence did not include detailed particulars of his time on Vancouver Island and his time in Fort McMurray, but I am left with the impression that he spent several months on Vancouver Island in each of 2006 - 2007 and 2009 - 2010. While working in Fort McMurray, his average work week was about 70 hours. He describes life in Fort McMurray as “… sleep, work, drink, sleep, work …”. In 2009, he met a new intimate partner, [name redacted for publication], who lived on Vancouver Island. In 2011, she agreed to move to Fort McMurray with him for a trial period of one year.

After a year, she insisted that they move from Fort McMurray, and they moved to a small town near Red Deer, Alberta, where Mr. H found work as a plumber. He earns significantly less in Red Deer than he did in Fort McMurray, but his expenses are lower and he has regained control of his alcohol consumption. He is happy in Red Deer, and intends to remain there. In 2013, working in Red Deer, he earned gross employment income of just over $68,000. By contrast, in 2011, working in Fort McMurray, he earned gross employment income of $118,000. [ 22 ] Mr.

H suffers from rheumatoid arthritis, which has grown more severe in recent years. As a result, he is no longer physically able to do the kind of work which he used to do in Fort McMurray. There are employment opportunities available to him in Fort McMurray, which would pay better than his present employment, but he would be required to retrain for those opportunities, and has taken no steps to look into his retraining options. [ 23 ] During the period between 2003, when Mr. & Ms. H separated, and 2012 - 2013, when the children left home, the children lived with Ms. H in Comox. Mr.

H lived and worked in Alberta for most of that time. During the early part of that period, Ms. H earned a modest income by working part-time at the local recreation centre and school during the school day, and providing after-school care in her home for the children of others. Latterly, she has found work as a receptionist at a local accounting firm, which is part-time during most of the year and full-time during tax season (March and April). She is now paid $18 per hour. Ms. H says that she has sought other work, but that employment opportunities are few in the Comox Valley.

My experience as a family court judge tends to confirm that assessment. [ 24 ] Except for brief periods when Mr. H lived on Vancouver Island, Ms. H provided all of the day-to-day care for the children. [ 25 ] In June, 2007, Ms. H sold the townhouse at a price of $171,000, and realized net proceeds of $139,000 after paying out the mortgage. In January, 2008, she purchased a new home at a price of $215,000. It is subject to a mortgage, on which the balance now

owing is about $62,000. [ 26 ] Ms. H’s mother died early in 2012. After deduction of the advances mentioned in paragraph 15, she received a cash bequest of about $85,000. In August, 2013, she received an additional bequest of $15,453.32 from the estate of her grandfather. She used part of those bequests to purchase a rental property next door to her home. The present value of the rental property is about $215,000, and the balance owing on its mortgage is about $178,000. During her brief tenure as a residential landlord, her experience has been that her gross rental income is barely sufficient to cover her costs.

She has no other assets. [ 27 ] Mr. H owns a small recreational motorboat and a vehicle. He has no debts or other assets of any significance. He and [name redacted] live in a rented house near Red Deer. Child Support [ 28 ] On September 26, 2003, following a mediation session at the Family Justice Centre, Mr. & Ms. H executed a written agreement on the subjects of custody, access and child support. The agreement recites that Mr. H had then an annual income of $55,380 and that Ms. H had an annual income of $4611. Child support was agreed at the rate of $1000 per month.

The agreement is silent on the subject of spousal support. The agreement was filed in the court registry on November 12, 2003, and, upon filing, became enforceable as an order of the court under

section 121 of the Family Relations Act RSBC 1996, c 128 (since repealed and replaced by the Family Law Act SBC 2011, c 25). [ 29 ] As noted below, the agreement described in paragraph 28 was amended on five later occasions. Ms. H’s complaints about the way in which the agreement was first negotiated and later amended are material to her present application. She says that, during each negotiation: a. she asked for, but did not receive, copies of Mr. H’s annual tax returns; b. the estimates of Mr.

H’s annual income provided to her, and recorded in the agreement or amendment, were based on pay stubs provided by Mr H to the mediator at the Family Justice Centre, but not shown to her; c. Mr. H misled both the mediator and Ms. H by understating his annual income; d. she became aware of the understatements of income only after Mr. H made financial disclosure, in the context of the present application, in 2014. [ 30 ] The evidence provides the following particulars in relation to Ms. H’s complaint. a. In the agreement dated September 26, 2003, Mr. H’s annual income was estimated at $55,380.

In fact, he earned $42,809 in 2003 and $69,050 in 2004. b. In an amendment dated October 7, 2005, Mr. H’s annual income was estimated at $44,280. In fact, he earned $69,050 in 2004 and $90,728 in 2005. c. In an amendment dated June 12, 2006, Mr. H’s annual income was estimated at $90,224. In fact, he earned $90,728 in 2005 and $91,075 in 2006. d. In an amendment (by consent order) dated January 2, 2008, Mr. H’s annual income was estimated at $52,780. In fact, he earned $75,278 in 2007 and $113,673 in 2008. e. In an amendment (by consent order) dated June 12, 2008, Mr. H’s annual income was estimated at $88,000.

In fact, he earned $75,278 in 2007 and $113,673 in 2008. f. In an amendment (by consent order) dated September 11, 2011, Mr. H’s annual income was estimated at $110,000. In fact, he earned $111,979 in 2010 and $118,848 in 2011. The estimates of Mr. H’s annual income were important because they determined the quantum of his child support obligation under the Child Support Guidelines . [ 31 ] The original agreement and the amendments fixed the quantum of Mr. H’s child support obligations from time to time. Ms.

H enrolled in the Family Maintenance Enforcement Program (“FMEP”), and FMEP took enforcement measures against Mr. H from time to time. His payment record is reflected in the following table, which records the arrears of child support which he owed at the end of each calendar year: 2004 $4768.72 2005 $7893.53 2006 $11,240.46 2007 $10,224.56 2008 $4458.30 2009 $7930.00 2010 $6090.94

2011 $13,156.18 2012 $15,188.97 [32] The issues of child support were resolved by agreement in December, 2013, the agreement being implemented by a consentorder dated December 4, 2013, which fixed the arrears of child support at $12,000, ordered that Mr H pay the arrears at the rate of $625per month, and rescinded the child support obligation on a go-forward basis (because the children now live independently). Mr. H isnow making those payments.

Principles & Jurisprudence [33] Because of the wide variety of marital relationships and circumstances, claims for spousal maintenance cannot be fairlyadjudicated by the application of inflexible rules. So, for example, it cannot be said that post-separation increases in the income of one spouse are always irrelevant to spousal support: Hartshorne vs Hartshorne 2009 BCSC 698; [2009] BCJ #1050; 70 RFL (4th) 106 @paragraphs 107 - 117. However, it is important that spousal maintenance cases be adjudicated by reference to some settled principles,rather than by reference to the individual values of individual judges.

The principles which I must apply were stated by Punnett, J inJudd vs Judd 2010 BCSC 153 @ paragraph 23: The resolution of the issue of post-separation wage increases is clearly fact based. The principle that appears to emerge from current caseauthority is that the connection the increase in salary has to the recipient's contribution during the marriage is determinative.

If theincrease in salary is founded in expertise and seniority established during the marriage and no intervening event or events are the causeof the increase, then the increase is to be included unless the recipient's role during marriage necessitates a different determination. If anevent after separation is the reason for the increase, in whole or in part, then the increase may be excluded from consideration, also inwhole or in part. [34] In this case, the evidence is clear. Until he moved to Alberta in 2003, Mr. H’s plumbing career was a financial failure. It didnot generate enough money for him to live on.

It is only because he took a new job, with a different employer, in a remote communitythat he was able to earn an enhanced income. The increase in his income, upon which Ms. H bases her claim to spousal maintenance, isentirely due to Mr. H’s move to Alberta, which was an “intervening event” after separation. For that reason, the increase in his incomeshould not be taken into account in determining Ms.

H’s entitlement to spousal support. [35] I think that the same conclusion is reached if one considers the issue of spousal support by reference to the needs of therecipient spouse, rather than by reference to the means of the payor spouse. In Bracklow vs Bracklow (SCC), [1999] 1SCR 420, McLachlin, J said that there are three grounds upon which spousal support may be awarded: (

i) contractual; (ii) compensatory;and (iii) non-compensatory. It is clear that an award on a contractual basis may result in an enhanced standard of living for the recipientspouse. Where the claim is made in contract, the quantum of support is determined by the contract and the recipient spouse is entitled toany benefit for which the contract provides. It has also been judicially determined that an award of spousal support on a compensatorybasis may result in an enhanced standard of living for the recipient spouse - Leask, J so held in Hartshorne.

As noted below, there isdivergent authority on the question where spousal support is sought on a non-compensatory basis. [36] There are good reasons for the conclusion that awards of spousal support on a contractual or compensatory basis may result inan enhanced standard of living for the recipient spouse. Parties should, generally, be required to perform their contracts. Awards ofcompensatory spousal support are most often made to compensate the recipient spouse for loss of career opportunities which she wouldhave pursued had she not devoted herself to matrimonial duties, most commonly child care.

It seems clear that the payor spouse shouldcompensate her for such losses, subject to a number of factors (including, but not limited to, his ability to pay), because he benefittedfrom the work which she performed at his request. The analogy to quantum meruit is apt. [37] As discussed below, awards of non-compensatory spousal support are based on “need”. The questions are: a. How should one assess the “needs” of the recipient spouse after separation? b. What societal values apply to the obligation of the payor spouse to meet those needs, after separation?

On this point, I refer toBracklow @ paragraphs 19 – 33. [38] There is no basis for a contractual award in this case - it is not suggested that Mr. H ever agreed to pay spousal support. [39] Awards of compensatory support are often made to compensate the recipient spouse for career opportunities which mightotherwise have been pursued, but were not because of the demands of marital duties (most commonly child care). In this case, there is noevidence that Ms. H would have pursued a different career path if she had been free of child-care responsibilities.

Although the childrenhave left home, she appears to be content with her present employment, and is not seeking any other. At age 51, it is not too late for herto pursue a new career if she chooses. Awards of compensatory spousal support are also made where the recipient spouse has made amaterial contribution to the income-earning capacity of the payor spouse.

I think that the governing principle in such cases was correctly stated in D.B.C. vs R.M.W. 2006 ABQB 905; [2006] AJ #1629; 69 Alta LR (4th) 170 @ paragraph 22: To succeed in her application, the wife must show that she contributed to the husband's skills or to the credentials he acquired that led tohis ability to earn his now increased income …. There is no such evidence in this case. Mr. H acquired his plumbing qualifications entirely by his own efforts. [40] Awards of non-compensatory spousal support are made “… where need is established that is not met on a compensatory or

contractual basis …”: Bracklow @ paragraph 49 . The question is whether “need” is to be assessed by reference to the parties’ standard of living at the time of separation, or by reference to their relative standards of living at the time that the application is made (or decided). There is conflicting authority on the point: a. In Chalifoux vs Chalifoux 2006 ABQB 535 ; [2006] AJ #883 @ paragraph 109, Read, J said that, in this context, “need” is to be assessed “ … relative to the standard of living enjoyed prior to the collapse of the marriage …”.

Although other aspects of the judgment were reversed on appeal, the Alberta Court of Appeal expressly approved the analysis of spousal support principles in the trial judgment: Chalifoux vs Chalifoux 2008 ABCA 70 ; [2008] AJ #174; 425 AR 361 @ paragraph 26. b. In Sawchuk vs Sawchuk 2010 ABQB 5 ; [2010] AJ #18; 79 RFL (6 th ) 135 @ paragraphs 19 - 26, Langston, J proposed a more flexible approach, based on a “… presumptive claim to equal standards of living upon … dissolution …” of the marriage, at least in the case of a long-term marriage where one spouse carried the primary burden of child-care.

In Sawchuk , as in this case, the husband earned a much larger income after separation than before. [ 41 ] It seems to me that Chalifoux and Sawchuk may be reconciled in the following way. As was held in Sawchuk , there is, in cases of long marriages where one spouse carried the responsibility for child care, a presumption in favour of awards of spousal maintenance to provide roughly equivalent standards of living for the spouses for a reasonable time after separation.

That standard of living may be higher than the standard enjoyed before separation, in some cases because of increases in the payor spouse’s income after separation. However, the presumption may not apply, or may apply only to a limited extent, in some circumstances. Leask, J provided some examples of such circumstances in Hartshorne @ paragraph 111 . One of those circumstances is “… where the payor spouse changed positions or employers since separating, often making lifestyle sacrifices to do so …”, as occurred in Chalifoux and in this case.

In particular, both in Chalifoux and in this case, the increase in the income of the payor spouse was possible only because he chose to accept a difficult job, with long hours, in a remote and inhospitable location far from his family. In such cases: a. the presumption should not apply, or should be restricted in its application; b. the default position is that stated in Chalifoux ; i.e. spousal support should be limited to that necessary to maintain the standard of living enjoyed by the spouses prior to separation. [ 42 ] When Mr. & Ms. H separated, they were impecunious.

The evidence clearly demonstrates that Ms. H’s standard of living over the past 11 years has been higher than it was in 2001 - 2002. For that reason, spousal support should not be awarded. [ 43 ] Ms. Tinmouth submitted that spousal support should be ordered to compensate Ms. H for Mr. H’s underpayment of child support (paragraphs 28 - 31, above). I pointed out that Mr. and Ms. H agreed to a settlement of that issue in December, 2013. Ms. Tinmouth replied that the settlement was made before Ms. H received full disclosure of Mr. H’s income history.

If that is so, the appropriate remedy is to apply to set aside the settlement agreement as one induced by misrepresentation. No such application has been made. It would be most inappropriate to award spousal support as a remedy for underpayment of child support. The two are distinct entitlements, governed by different principles, and should not be compounded. Disposition [ 44 ] The application is dismissed. July 28, 2014 ___________________________________ T. Gouge, PCJ