Sydor v Keough, 2019 MBCA 119

Citation: Sydor v Keough , 2019 MBCA 119 Date: 20191204 Docket: AF18-30-09193 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Mr. Justice William J. Burnett Madam Justice Karen I. Simonsen BETWEEN : SANDRA LEE SYDOR ) S. L. Sydor ) on her own behalf ) (Petitioner) Appellant ) K. P. Land and ) J. M.

Hersey - and - ) for the Respondent ) JOHN JAMES KEOUGH ) Appeal heard: ) September 16, 2019 ) (Respondent) Respondent ) Judgment delivered: ) December 4, 2019 SIMONSEN JA [ 1 ] The petitioner (the wife) appeals a decision of a trial judge dismissing her claims for retroactive child support, retroactive spousal support and increased prospective spousal support.

Central to the wife’s position is that the trial judge erred by refusing to attribute income to the respondent (the husband) as a consequence of significant pre-tax income generated, post-separation, by Cousin’s Freight Services Ltd. (Cousin’s), of which the husband is (through his numbered company) a 50% shareholder. Background [ 2 ] The parties commenced cohabitation in November 1989, married on October 6, 1990, and separated on August 2, 2010.

They have one child together, who was born on March 1, 1996 (the child). [ 3 ] During the marriage, the wife was employed full time as a social worker and latterly as a family therapist. In February 2014, she ceased her full-time employment and worked only in her private practice and teaching, as a result of which her income significantly declined. Her income again declined in 2017 after she decided to further reduce her workload to focus on this litigation. [ 4 ] The husband worked full time as a heavy-duty mechanic during the marriage.

In 2007, he and his cousin incorporated Cousin’s, a freight brokerage business. After a brief attempt to work full time for the company, he returned to his employment as a mechanic in January 2008 and continued part time at Cousin’s. Post-separation, starting in the summer of 2011, he has devoted himself entirely to the operations of Cousin’s. Since then, his income from Cousin’s has fluctuated, and in only one year was it higher than his 2010 income. Cousin’s, however, has prospered and has been able to create a substantial pool of retained earnings.

In addition, Cousin’s has paid dividends to its shareholders, as a consequence of which the husband’s numbered company too has significant retained earnings. [ 5 ] A consent interim order pronounced on May 3, 2011 (the 2011 order) provided for shared custody and ordered the husband to pay set-off child support of $595 per month, based on his income of $139,684.23 (as shown on line 150 of his 2010 income tax return and comprised of income from both full-time work as a mechanic and part-time work for Cousin’

s) and the wife’s income of $64,969 (consisting in part of $60,200.13 as shown on line 150 of her 2010 income tax return). On September 6, 2012, a motion judge set interim spousal support at $1,000 per month starting on January 1, 2012, concluding that the facts as presented to him did not warrant attributing income to the husband beyond what the parties had agreed for the 2011 order relating to child support. On April 28, 2015, a consent interim order terminated child support effective August 31, 2014, and cancelled any arrears payable under the 2011 order. [ 6 ] The only issues at trial were the wife’s requests for retroactive child support, retroactive spousal support and increased

prospective spousal support. The thrust of her position on all issues was that the husband’s income should be determined at a levelbeyond that shown in his income tax returns. The Trial Judge’s Decision [7] The trial judge rejected the wife’s request to attribute income to the husband arising from the pre-tax income ofCousin’s.

She also declined to impute income to him on any other basis suggested by the wife. [8] In any event, the trial judge concluded that the test for entitlement to retroactive child support, as set out in DBS vSRG; LJW v TAR; Henry v Henry; Hiemstra v Hiemstra, 2006 SCC 37 (DBS), had not been met. [9] With respect to spousal support, the trial judge agreed with the husband that the wife had established entitlement on anon-compensatory basis only.

Guided by the factors set out in Thompson v Thompson, 2013 ONSC 5500 at para 103, she held that thewife was not entitled to benefit from any post-separation increase in the husband’s earnings for the purpose of determining the amount ofnon-compensatory spousal support. [10] The trial judge considered the governing principles outlined in Kerr v Baranow, 2011 SCC 10, and concluded that thewife had not established entitlement to retroactive spousal support.

Furthermore, assisted by the Spousal Support Advisory Guidelines,she determined that spousal support of $1,000 per month was “at the high end of the low range and was a completely appropriateamount”. She stated that spousal support of $1,000 per month was appropriate, even recognising the termination of child support in2014. [11] An award of Class III tariff costs plus disbursements, in the total amount of $25,851.52, was made in favour of thehusband.

Grounds of Appeal [12] Although several grounds of appeal are raised, the key arguments advanced by the wife are that the trial judge erred by: 1. deciding the wife’s claims without full financial disclosure from the husband; 2. failing to properly determine the husband’s income; 3. concluding that the wife is not entitled to retroactive child support; 4. concluding that the wife is not entitled to retroactive spousal support; 5. dismissing the wife’s claim for increased prospective spousal support; and 6. awarding costs.

Motion for Fresh Evidence [13] The wife’s motion for the admission of fresh evidence on appeal was dismissed at the appeal hearing with brief oralreasons, and more complete written reasons to follow.

These are those written reasons. [14] The fresh evidence sought to be introduced was: two affidavits sworn by the wife which she had unsuccessfullyattempted to tender at trial in lieu of viva voce evidence; an email that deals with sharing of expenses while the child was still a “child ofthe marriage”; the bill of costs submitted by counsel for the husband at trial, as well as a without prejudice offer to settle made by thehusband with its attached ChildView printouts; two pages of email exchanges between the wife, the husband and counsel for thehusband, along with a letter that the wife sent to the case conference judge, the main subject of which was the RESP for the child; and anappraisal of the parties’ former family home. [15] The test for the admission of fresh evidence is well established and governed by the criteria set out in Palmer v TheQueen, (SCC), [1980] 1 SCR 759.

Before fresh evidence may be admitted, it must be shown that the evidence was notavailable at the trial, that the evidence is relevant, credible, and if believed, could reasonably have affected the result. [16] The evidence sought to be tendered meets none of these criteria, and the interests of justice would not be furthered byadmitting it. All of the documents were available at the trial. Many were either submitted during the trial or are irrelevant. [17] Therefore, the fresh evidence motion was dismissed.

Analysis Standard of Review [18] The applicable standard of review was recently summarised in JDG v SLG, 2018 MBCA 51 (at para 11): The standard of review in relation to support orders attracts significant deference to the motion judge. This Court should not overturn asupport order unless the reasons disclose an error in principle, a significant misapprehension of the evidence or unless the award wasclearly wrong (see Hickey v Hickey, (SCC), [1999] 2 SCR 518 at paras 11-12). See also Aquila v Aquila, 2016 MBCA33 at para 37; and Horch v Horch, 2017 MBCA 97 at para 50.

The same is true of an order of costs (see G (JD) at para 80).

[19] The standard outlined in Hickey v Hickey, (SCC), [1999] 2 SCR 518 applies equally to retroactivesupport orders (see DBS at para 136; and Graham v Graham, 2013 MBCA 66). Disclosure [20] The trial judge characterised the disclosure by the husband as “extensive, voluminous, thorough, complete”. Therecord filed on appeal confirms this assessment. This ground of appeal fails. Determination of Income of the Husband [21] The trial judge’s conclusion that there should be no attribution of income to the husband on the basis of Cousin’s pre-tax income turned on her credibility assessments and findings of fact.

Accepting the evidence of the husband, she found that: • it was reasonable to retain corporate earnings.

The husband testified that the earnings of his numbered company wereretained for the purpose of capital expansion because the brokerage business is declining and that in order to continue to succeed,Cousin’s must change the focus of its operations from freight brokerage to purchasing its own trucks and building a warehouse and hubfrom which to operate a trucking company; and • the retained earnings were not an attempt by the husband to reduce his income to avoid his obligations to the child or thewife. [22] In declining to attribute or impute income to the husband on other grounds suggested by the wife, the trial judge foundthat: • there was nothing inappropriate about Cousin’s claiming as a business expense costs associated with the husband’s use of avehicle; and • the husband’s failed investment in Excellent Ventures Limited Partnership No. 3 was not intended to reduce his income toavoid paying support. [23] Nonetheless, the trial judge did, in effect, impute some income to the husband, to which he takes no objection onappeal.

For all issues, she used his 2010 income of $139,684.23 (she misspoke in connection with spousal support by saying $139,624),despite his having earned less than that amount in each of the three years prior to and all but one of the years since separation, and his2017 income being $93,292.05. [24] The factual findings that form the foundation for the trial judge’s determination of the husband’s income are oweddeference absent palpable and overriding error, which has not been demonstrated. [25] There are two aspects of the trial judge’s reasons for decision that warrant comment: • The trial judge stated that the wife had not met her onus of demonstrating why the dividends and retained earnings shouldbe included in the husband’s income.

She added that if that onus had been met, the husband would then bear the onus of explaining whyit was reasonable for Cousin’s to add its pre-tax income to retained earnings rather than withdrawing and adding it to his income. I notethat there is jurisprudence which indicates that the onus would properly be on the husband to show why these profits should be excludedfrom his income (see Nesbitt v Nesbitt, 2001 MBCA 113 at paras 19-21; Reid v Faubert, 2019 NSCA 42 at para 29; and Helle v Helle,2019 BCCA 97 at para 32, leave to appeal to SCC refused, 38619 (26 September 2019)).

However, in this case, that distinctionregarding onus does not materially affect the trial judge’s decision since she held that the husband had shown that the retention ofearnings was a reasonable business decision. • The trial judge stated that, “I believe there is close to a half a million dollars in retained earnings” in “the company”(referring to Cousin’s), but did not mention the undisputed evidence that there was also in excess of $1,000,000 of retained earnings inthe husband’s numbered company which resulted from the payment of dividends by Cousin’s between 2011 and 2017.

The trial judge’sreasons must, however, be read in the context of the submissions. Her exchanges with the wife and counsel for the husband during finaladdresses make apparent that she understood the full extent of the retained earnings: [THE WIFE]: Right. So we have, saying you’ll look and you’ll see that between Cousin’s, which he is now 50 percent owner, he has --sorry, I’ll just use this number. THE COURT: Shareholder. [THE WIFE]: A shareholder. He has -- MR. LAND: This number.

MS. HERSEY: This number. [THE WIFE]: Five hundred and fifty-seven thousand dollars roughly. MR. LAND: Half. [THE WIFE]: And half that. THE COURT: Retained in the company. . . . THE COURT: She -- and [the wife] is saying that in [the husband’s] company alone, the numbered company, his numbered company, there’s over a million dollars in 2017. MR. LAND: The total retained earnings in the company is 2017, were one million one hundred and three thousand two hundred and ninety-six dollars. THE COURT: In [the husband’s] numbered company. MR. LAND: That’s correct. THE COURT: Thank you. And that’s 2017, correct? MR.

LAND: That’s correct, yeah. [THE WIFE]: Okay. [ 26 ] In any event, the trial judge’s determination of the husband’s income is only material to her decision if the test for entitlement to retroactive child support was met or any increases in his post-separation income were relevant to spousal support. Retroactive Child Support [ 27 ] The four basic considerations with respect to entitlement to retroactive child support, as set out in DBS , were restated by this Court in Sawatzky v Sawatzky , 2018 MBCA 102 (at para 62 ): 1.

Whether the recipient parent has supplied a reasonable excuse for the delay (see also DBS at paras 100-104 ); 2. The conduct of the payor parent (see also DBS at paras 105-109 ); 3. The circumstances of the children (see also DBS at paras 110-13 ); and 4. The hardship the retroactive award might entail (see also DBS at paras 114-16 ).

[ 28 ] The trial judge concluded that the wife had not provided a reasonable excuse for the delay in seeking the support. The 2011 order is silent as to arrears. Furthermore, no request was made for retroactive support when, on April 28, 2015, the consent interim order was made, cancelling any arrears of child support payable under the 2011 order.

These orders were consented to when both parties had the benefit of counsel. [ 29 ] Finding that the husband’s conduct had been “exemplary”, the trial judge noted that, after May 2011, he paid all of the child support as ordered (and may have been entitled to a reduction given what his financial disclosure revealed). The child turned 18 on March 1, 2014, and it is common ground that he has not been a “child of the marriage” since then. Nonetheless, the husband continued to pay child support until August 2014. At age 16, the child had his own child, for whom the husband has voluntarily been paying support.

The trial judge was satisfied that the husband had made all of the necessary financial disclosure. [ 30 ] The trial judge was also satisfied that the child had been properly supported by both parents until he reached 18, and she did not see how a retroactive support payment to the wife would now benefit the child. She emphasised the importance of predictability and certainty in family matters. [ 31 ] In my view, the trial judge made no error in principle nor any palpable and overriding error of fact in concluding that the wife had not established entitlement to retroactive child support.

Her decision is entitled to deference. This ground of appeal is dismissed.

Retroactive and Prospective Spousal Support [ 32 ] Being cognizant of the standard of review expressed in Hickey , I have also not been persuaded that the trial judge erred when she dismissed the wife’s claims for spousal support, both retroactive and prospective. [ 33 ] A determination as to the basis for entitlement is the starting point for the spousal support analysis. [ 34 ] The trial judge reasonably concluded that the wife had not established a compensatory basis for entitlement as “by the end of the marriage, [she] had a greater education and financial earning ability than at the beginning of the marriage” and the husband’s career had been secondary to the wife’s career and educational goals.

In an answer from her examination for discovery that was read in at trial, the wife acknowledged that she had suffered no impairment to her earning capacity nor any economic disadvantage from the marriage or the role she played in the marriage. [ 35 ] The trial judge then proceeded to consider non-compensatory spousal support, based on the means and needs of the parties. The husband acknowledged that entitlement had been established.

As for whether the wife is entitled to share in any post- separation increase in the husband’s income for the purpose of setting the amount of that support, the trial judge began her analysis by stating that, “The general rule . . . is that post-separation increase would not be shareable in a non-compensatory claim, given that such increase is irrelevant to the lifestyle of the parties during the marriage.” She addressed Thompson to determine whether this case warranted a departure from “the general principle”.

In my view, the issue of whether post-separation increases in income on the part of a payor spouse are shareable is more complex and nuanced than the trial judge’s statement about “[t]he general rule” may suggest. This Court has not yet considered Thompson , and this is not the case in which to do so. [ 36 ] Regardless , the trial judge appropriately addressed the relevant circumstances in concluding that the wife was not entitled to benefit from any post-separation increase in income on the part of the husband due to his involvement in Cousin’s.

She found that, during the marriage, the wife had done nothing to contribute to the business other than agreeing that the marital home could be used as security for a business loan and providing a loan from a line of credit that was in her name.

The loan was repaid within a number of months and the security against the home was removed when the house was transferred to the wife post-separation. [ 37 ] With respect to entitlement to retroactive spousal support, the Supreme Court of Canada, in the leading case of Kerr , confirmed that its previous ruling on retroactive child support orders in DBS also generally applied to spousal support claims.

The Court stated that the considerations with respect to retroactive spousal support orders were “the needs of the recipient, the conduct of the payor, the reason for the delay in seeking support and any hardship the retroactive award may occasion on the payor spouse” (at para 207). [ 38 ] Each of these factors was weighed in the trial judge’s decision. [ 39 ] The trial judge was troubled by the wife’s choice to substantially reduce her income.

Although the wife’s income on line 150 of her 2017 income tax return was $25,723.38 (comprised in part of spousal support of $12,000), the trial judge imputed income of $60,200 (the amount shown on line 150 of her 2010 income tax return), finding that it was open to her to work more, particularly since, with the conclusion of the trial, she no longer needed to make the level of commitment she claimed was required for her family law litigation.

The wife testified that she still had the skill and ability to increase her practice and that she intended to do so after the completion of the litigation. [ 40 ] Also taken into account by the trial judge were: her finding that the wife’s high estimate of her monthly expenses was not credible; the wife’s debt was comparable to her debt at the time of separation; and the wife had been awarded the marital home plus $50,000 through the family property accounting. [ 41 ] As for delay, the issue of retroactive spousal support proceeded to trial more than six years after the interim spousal support order and eight years after separation.

Observing the delay and that “minimal evidence was called before this court at the trial about the financial arrangements that existed between the parties from August 2010 up until January 2012”, the trial judge concluded that the wife had not established a need dating back to August 2010. Although not persuaded that delay should bar a claim for increased support starting on January 1, 2012, given the wife’s consistent indication that she was seeking a retroactive increase, the trial judge nonetheless concluded that, in all of the circumstances, there was no entitlement to a retroactive increase since then.

[ 42 ] It followed from the trial judge’s findings and her conclusion that there was a dearth of evidence about the wife’s need that the claim for increased prospective spousal support would also be dismissed. [ 43 ] There is no basis for appellate intervention on this ground of appeal.

Costs [ 44 ] Not only was the wife unsuccessful at trial, but the trial judge noted that the length of the trial had been extended because much of the evidence she tendered was “not relevant, not helpful, and not cogent.” Furthermore, the husband had made a pre- trial settlement offer of $80,000 (albeit not under Manitoba, Court of Queen’s Bench Rules , Man Reg 553/88 , r 49), which was rejected by the wife. [ 45 ] These are all relevant considerations in the exercise of the trial judge’s discretion on costs. The award is not unjust.

Self-Represented Litigant [ 46 ] The overarching theme of the wife’s submissions at the appeal hearing was that, as a self-represented litigant, she was unable to understand how to present her case at trial. For example, she expressed concern about some late disclosure on the part of the husband and about the husband’s decision, once the trial had begun, not to have an accountant testify despite a previous indication that he planned to call him as a witness. The wife did not seek an adjournment on account of either concern, and says that she did not know what to do when these problems arose.

I understand the difficulty in presenting a case like this, but the jurisprudence makes clear the scope of the duty of a judge to a self-represented litigant and the obligations of such a litigant. This jurisprudence was recently reviewed by this Court in Dewing v Kostiuk et al , 2017 MBCA 22 at paras 18-19 , 21-22. A trial judge must provide some assistance and accommodation to ensure that a self-represented litigant has a fair opportunity to present a case to the best of his or her ability. However, a trial judge cannot become an advocate for a self-represented litigant or provide legal advice.

Self-represented individuals have a responsibility to “familiarize themselves with the relevant legal practices and procedures pertaining to the case and to ‘prepare their own case’” (at para 21). [ 47 ] The trial record reveals that the wife struggled with presenting her position and tendering supporting evidence, despite considerable assistance from the trial judge. However, as the case law indicates, that obligation rested with her. [ 48 ] The wife’s inability to articulate her position continued on appeal.

She filed appeal books comprised of more than 3,000 pages, but was unable to specify evidence which would support her position that the trial judge erred. Disposition [ 49 ] Therefore, I would dismiss the appeal. I would order costs (plus disbursements) in this Court in favour of the husband on a Tariff C basis. JA I agree: JA I agree: JA