M.A.B.B. v. J.G.B., 2003 BCSC 489

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: M.A.B.B. v. J.G.B., 2003 BCSC 489 Date: 20030401 Docket: F991247 Registry: Vancouver Between: M.A.B.B. also known as M.A.B.B. Plaintiff And J.G.B. Defendant Before: The Honourable Mr. Justice Cole Reasons for Judgment Counsel for the Plaintiff Lawrence A. Kahn Counsel for the Defendant Moses Kajoba Date and Place of Hearing: February 21, 2003 Vancouver, B.C.

Introduction [ 1 ] This is an application by the defendant for the following relief: - A reapportionment of family assets based on a $60,000 debt that was incurred by the defendant for taxes owing on undeclared income; - An order that spousal support be terminated; - Cancellation of arrears of spousal support in the amount of $9,500. Background [ 2 ] The parties were married on the 1 st of June 1966.

The plaintiff, who is now 67 years of age, played the traditional role of raising the children, while the defendant, who is now 74, is a retired professor of architecture. [ 3 ] After the parties lived in the United Kingdom for 15 years, they moved to Vancouver in October of 1981 and

purchased a home on W.[…] Avenue. The defendant worked as an architect until 1985 when he moved to Winnipeg to commence teaching at the University of Manitoba. The plaintiff remained in Vancouver, but moved to Winnipeg in 1986 as the defendant was having difficulties maintaining a residence in Vancouver and in Manitoba. [ 4 ] In 1990, the plaintiff and the defendant met J.B., who was a 20-year-old Ugandan citizen. They offered to sponsor him for one year to finish his high school in Canada.

When the plaintiff and defendant returned to Canada, the plaintiff indicated that she no longer wished to be part of helping Mr. J.B., as she felt it was too much responsibility. The defendant proceeded to assist Mr. J.B., who moved to Canada, completed high school, and then commenced university. He worked part-time and had student loans. The defendant indicated that he wished to allow Mr.

J.B. to move into the Winnipeg home; the plaintiff objected and she turned to Vancouver and lived in the W.[…] property. [ 5 ] In May of 1997, the plaintiff was injured in a motor vehicle accident, and in/around the same time she indicated to the defendant that she wished to formally separate. In July of 1997, the defendant returned to British Columbia and lived in a condominium which the parties owned, known as the M.1[…] condominium. The other condominium, known as the M.2[…], was rented out. [ 6 ] The plaintiff’s concern about the defendant spending money on J.B. was a long-outstanding issue.

In a letter dated 12 th August 1993, the plaintiff writes to the defendant and states in part: What is urgent now is the management of our finances. You know very well that I have never agreed with you about taking J.B. as a responsibility. You certainly spend monies that rightfully belong to me against my wishes. [ 7 ] Further on, she states: I would like any major decisions about finances not directed with the family to be discussed and agreed upon before they are undertaken. In particular, I would like to know what responsibility you have for J.B. now that he is settled in the country.

I also wish to say I am not willing for us to spend any more money on him or his family until I have a clear financial picture. [ 8 ] According to the plaintiff’s affidavit, she alleges that the defendant “lavished money and attention on J.B.”. The actual amount of money that was spent on Mr. J.B., however, has never been disclosed by the defendant. He makes a blanket denial, denying that he “lavished money and attention on J.B.”. [ 9 ] The parties, commenced division of their assets in 1998, on a more or less equal basis. The […] Avenue property was sold in December of 1998 for $260,000.

The mortgages on the M.2[…] and M.1[…] properties were paid off, the plaintiff receiving clear title to the M.2[…] property in April of 1999 and the defendant receiving clear title to the M.1[…] property at the same time. The bank accounts were divided equally, as was a U.K. pension and the defendant’s University of Manitoba pension. The plaintiff used her share of the proceeds of $123,331 for a locked-in RRSP.

The defendant retained his pension; he now receives $1,175 per month from that pension, while the plaintiff only receives $475. [ 10 ] The plaintiff commenced these proceedings and on the 20 th of May, 1999 a consent order was made for a declaration under s. 57 of the Family Relations Act and an order that the defendant pay interim support to the plaintiff in the amount of $1,000 per month. [ 11 ] It was after this interim order was made in 1999 that the defendant discovered that he was required to pay income tax on a $22,000 annual pension he received from the United Kingdom.

The defendant admits that the plaintiff was not aware of the amount of money he was receiving from the United Kingdom and it is clear that she was not aware of the fact that the defendant was not disclosing to Canada Customs and Revenue Agency (CCRA) that he was receiving the U.K. pension. As a result, he was reassessed, CCRA claimed that he owed $160,000. In July, 2000, the defendant made an assignment into bankruptcy, and in November of 2001, he applied for variation of the spousal support and cancellation of any arrears.

That application had been adjourned for many reasons, one of which was the fact that the plaintiff received a motor vehicle settlement in the amount of some $50,000, $20,000 of she used to pay her solicitors for the matrimonial action, leaving a net sum of approximately $32,000. She then received an inheritance in the summer of 2002, some $10,000 to $15,000.

The balance of her inheritance was received January 9 th , in 2003, in the amount of $247,000. [ 12 ] After the bankruptcy, the defendant made an agreement with Canada Customs and Revenue Agency and paid them $60,000, money which he obtained from re-mortgaging the M.1[…] condominium. The M.1[…] condominium is presently being occupied by Mr. J.B. and his family, who is paying an annual rent of $2,100 per year which is less than fair market value. The defendant is now living with his daughter. Major Assets of the Plaintiff [ 13 ] The plaintiff has the following assets: (

a) M.2[…] condominium $114,700

(

b) Cash and Securities $267,000 (

c) RRSP $14,000 ________ Total: $385,700 ________ Major Assets of the Defendant (

a) M.1[…] condominium $106,500 Less mortgage $ 65,000 Net $41,500 ________ [ 14 ] The income of the plaintiff is as follows: Nesbitt Burns annuity (University of Manitoba pension) $475.00 U.K. – Old Age Pension - $460.00 CPP - $220.00 OAS - $213.00 _________ Total $1,368.00 _________ Husband’s income: University of Manitoba $1,175.00 United Kingdom pension $1,952.00 U.K. Old Age pension $510.00

OAS $436.00 CPP $426.00 _________ Total $4,499.00 _________ [15] The parties have agreed that all assets have been equally divided. The only outstanding issue in terms ofreapportionment then is the $60,000 debt paid by the defendant to CCRA. [16] Although the Family Relations Act does not specifically provide for sharing of liabilities, liabilities that are incurredfor a family purpose are taken into account by reapportioning family assets under s. 65 of the Family Relations Act.

The real issue is,was this debt incurred for a family purpose? [17] It would be unreasonable in most circumstances to require a strict accounting of the mangled financial affairs ofmost families. It is reasonable to assume that in these circumstances where I am satisfied that the defendant was in control of thefinances, that he would pay the family debts as they were incurred. He failed to declare his U.K. pension as income, when I wouldassume that a man of his qualifications, even if he completed his tax returns himself, would be aware that he had to declare that income.

It would seem to me to be patently unfair to require the plaintiff to assume half the debt to CCRA when she was not aware of the debtbeen incurred, and consequently, can neither consent nor reject the scheme to avoid the paying of income tax. If in fact she was a partyto the scheme of avoiding tax, then under normal circumstances, I think she would be liable for her share of that debt. That, however, isnot the case here. [18] Furthermore, I am not convinced that the monies that the defendant retained by failing to declare all his incomewere in fact used for a family purpose.

The plaintiff clearly puts in issue the fact that he spent lavishly on J.B., yet he only offers a blankdenial. The defendant is the one that has the information that could clearly indicate approximately how much money he in fact did spendon Mr. J.B., but he has chosen not to provide that information. It is clear that this was a bone of contention back in April of 1993 whenthe plaintiff wrote the above-noted letter to the defendant. Therefore, I conclude that the debt is not a family debt.

Spousal Support [19] The plaintiff rightfully concedes that in considering the income of the parties, the annuity that the plaintiff receivesfrom Nesbitt Burns in the amount of $475 should be taken out of the equation, as well as the husband’s University of Manitoba pensionin the amount $1,175 per month, based on the principles set out in Boston v. Boston [2001], 2 SCR 413, 2001 SCC 43, which deals withthe concept of double-dipping. [20] The plaintiff argues that I should impute income to the defendant because he is renting out his condominium at agreatly reduced rate to Mr. J.B.. I decline to do so.

What the defendant does with his matrimonial home is not relevant to the calculationof his income. The defendant has chosen to rent out his condominium, which means that he will have to spend additional sums livingelsewhere and that should not act to his detriment. [21] A party seeking to vary an earlier order for support must show there was a material and unforeseen change in theneeds, means, capacities and economic circumstances of the parties since the original order was made: Willick v. Willick (SCC), [1994], 3 SCR 670.

I am satisfied that the filing of the bankruptcy in July of 2000 was a material change of circumstances. [22] The plaintiff takes the position that she should not have to consume any of the capital of her inheritance which totalsjust over $250,000. As a general principle, parties are not required to use their capital, either for living expenses or to pay support. However, once the parties are retired, it seems to me to be reasonable and fair to require a party to utilize their liquid assets, such asstocks, bonds and bank accounts, including consuming some of that capital.

That is not to suggest that the fixed assets, such as aprincipal residence should be required to be liquidated or mortgaged in order to meet living expenses. RRSPs are required by law to beturned into an annuity or RRIF at age 69, and it seems to me that the plaintiff should be required to generate income from liquid assets,including dipping into her capital. I am satisfied that plaintiff could obtain a $250,000 life annuity with a ten-year guarantee that wouldgenerate $1,674 for month. [23] The plaintiff would have, excluding the University of Manitoba pension, an income of approximately $2,567.

Thedefendant’s income, not including his University of Manitoba pension, would be $3,224 per month. From that, however, he is paying$600 per month on $65,000 mortgage and that is interest payments only. On the other hand, the plaintiff has RRSPs of approximately$14,500 in addition to a RRIF in the principal sum of $23,000. There is no indication of the income derived from RRIF, which Iunderstand only came into her possession recently because of the bankruptcy. [24] After considering the objectives set forth in s. 15.2(6) of the Divorce Act, balancing those factors in s. 15.2(4), I am

of the view that the incomes of the parties should equalize in order to provide for similar standards of living and, on that basis, the plaintiff, considering her substantial assets and the income derived from those assets is, in my view, not entitled to any further support.

In view of the application for cancellation of arrears, which was first filed in November of 2001, and in considering that these matters have been adjourned and that the defendant has made some payments ordered by the Court, that it is appropriate that the arrears of maintenance be cancelled. [ 25 ] Because of the divided success, both parties should bear their own costs. “F.W. Cole, J.” The Honourable Mr. Justice F.W. Cole