Category Archives: Case Commentary

Conditional Custody Orders, Mobility, and Children’s Wishes

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In Decaen v. Decaen, the Ontario Court of Appeal upheld a trial judgement granting sole custody of 8-year-old twins to a mother on the condition that she relocate from Mississauga, Ontario (where she was living) to Sudbury, Ontario (where the children were living).

The parties resided in Sudbury during the marriage and the mother was the primary caregiver of the children.  After separation the mother moved to Mississauga with the parties’ 18 year-old daughter, but the father did not allow the twins move.

The mother applied for sole custody and an order allowing her to relocate the twins to Mississauga. The father applied for joint and shared custody and an order requiring the twins to remain in Sudbury.

The judge trial concluded that it would be in the children’s best interests to remain in Sudbury.  He granted sole custody to the mother on the condition that she returns to Sudbury, and if the mother decided to remain in Mississauga the father would have sole custody. Both parents appealed.

Neither party objected to the relocation condition in the custody order; both parents argued that the order should be set aside entirely, and each parent sought the relief he/she originally asked for at trial. In a jointly-written decision by a 3-judge panel, the Court of Appeal dismissed both parents’ appeals and upheld the trial decision.

By deciding to uphold the trial judgement in Decaen,  the Court of Appeal accepted (at least tacitly) that judges in Ontario can make custody orders that are conditional on a parent’s willingness to relocate, and this decision of the Court of Appeal is very noteworthy.

While section 16(10) of the Divorce Act  empowers judges to “impose any terms, conditions, and restrictions” on custody orders that they see “fit and just”, case law indicates that judges rarely use this discretion when making custody orders. In mobility cases, judges do  restrict a parent’s ability to move to another jurisdiction (by prohibiting that parent from relocating with a child to another jurisdiction.  It is very uncommon to see orders that place a positive obligation on a parent to move to or from a jurisdiction as a prerequisite to being awarded custody of a child.

The Nova Scotia Court of Appeal has found that requiring a parent to relocate as a condition of custody is permitted but unusual, and such orders should only be made in rare circumstances when it is the children’s best interests (see Reeves v. Reeves and MacRae v. Hubley). In contrast, the British Columbia Court of Appeal found  that courts “do not have the power to dictate where a parent must live, even if the result would be in furtherance of the best interests of the children.” (see Stav v. Stav).

The trial judge’s order in Decaen did not explicitly compel the mother to relocate to Sudbury, however in light of the mother’s interest in sole custody of the children, it could be argued that the actual effect of the order was compulsory from her perspective. It will be interesting to see how this decision will be used and interpreted in  future mobility (and custody) cases in Ontario.

In addition to raising an interesting point of law about conditions of custody, the Court of Appeal’s decision contains a helpful analysis of mobility issues and helpful comments about the weight that should be  accorded to children’s wishes in custody disputes. The mother in Decaen argued that the trial judge did not conduct a proper analysis of the children’s best interests with respect to mobility, and that he did not give sufficient weight to evidence that the children wished to relocate to Mississauga.

In finding that the trial judge properly conducted his analysis, the Court of Appeal cited the leading case on parental mobility, Gordon v. Goertz, [1996] 2 SCR 27:

[23]       In Gordon v. Goertz, Justice McLachlin (as she then was), writing for the majority, identified a number of factors relevant to a child’s best interests in the context of possible relocation:

(a) the existing custody arrangement and relationship between the child and the custodial parent;
(b) the existing access arrangement and the relationship between the child and the access parent;
(c) the desirability of maximizing contact between the child and both parents;
(d) the views of the child;
(e) the custodial parent’s reason for moving, only in the exceptional case where it is relevant to that parent’s ability to meet the needs of the child;
(f) disruption to the child of a change in custody; and
(g) disruption to the child consequent on removal from family, schools, and the community he or she has come to know.

[24]       At para. 50 of Gordon v. Goertz, McLachlin J. stated that, “[i]n the end, the importance of the child remaining with the parent to whose custody it has become accustomed in the new location must be weighed against the continuance of full contact with the child’s access parent, its extended family and its community.

In dismissing the mother’s argument with respect to the children’s wishes, the Court of Appeal listed the factors that are relevant to such a determination:

[42]        In assessing the significance of a child’s wishes, the following are relevant:

(i) whether both parents are able to provide adequate care;
(ii) how clear and unambivalent the wishes are;
(iii) how informed the expression is;
(iv) the age of the child;
(v) the maturity level;
(vi) the strength of the wish;
(vii) the length of time the preference has been expressed for;
(viii) practicalities;
(ix) the influence of the parent(s) on the expressed wish or preference;
(x) the overall context; and
(xi) the circumstances of the preferences from the child’s point of view: See Bala, Nicholas; Talwar, Victoria; Harris, Joanna, “The Voice of Children in Canadian Family Law Cases”, (2005), 24 C.F.L.Q. 221.

It is apparent that the trial judge considered all of these relevant factors.

Annual Income-based Readjustments of Final Spousal Support Order

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Guttmann v. Guttmann, a unanimous decision of the British Columbia Court of Appeal, deals a husband’s appeal from a final spousal support order. The parties in this case were married for 22 years, and the spousal support order was issued as part of their divorce.

The portion of the support order that was contested by the husband read as follows:

To calculate the quantum of spousal support to be paid by the [husband] to the [wife], the mid-range spousal support payable on the Spousal Support Advisory Guidelines shall be used. The [husband]’s income for the calculation on the Spousal Support Advisory Guidelines is $70,000.00 per annum and the [wife]’s income to be used is $31,700.00 per annum. The spousal support amount payable by the [husband] to the [wife] shall be adjusted annually based on the actual amounts paid to the [husband] for the year, which amount shall include the [husband]‘s bonus.

The husband put forward several grounds for appeal, all of which were rejected by the Court of Appeal.  Justice Frankel dismissed the husband’s appeal in this brief, but notable, judgement.

The husband first argued that the trial judge erred because he did not assess the wife’s entitlement to spousal support prior to making the support order. Justice Frankel disagreed. He found that the wife’s entitlement to spousal support was not put before the trial judge as an outstanding issue for determination. Rather, the trial judge was only asked to determine the husband’s income for 2012 and the resulting spousal support obligation.

The husband next argued that the trial judge erred when he fixed the husband’s 2012 income for support purposes at $70,000. Specifically, the husband claimed that:

  1. there was no basis for the $70,000 figure, and;
  2. the trial judge should have averaged the husband’s income from 2009, 2010, and 2011 to determine his income for support purposes.

The Court of Appeal was not persuaded by either of these arguments. Justice Frankel first noted that fixing the income at $70,000 was actually beneficial to the husband, because the evidence available at trial suggested that the husband was actually on track to earn over $100,000 in 2012. Justice Frankel concluded that:

[7]       The chambers judge was asked to determine [the husband’s] income for the purposes of his 2012 spousal support obligations. On the limited information available to the judge, a good indicator of [the husband’s] ability to earn income on a going-forward basis was his actual income for 2011, which included substantial bonuses. While the judge did not provide a mathematical basis for arriving at the $70,000.00 figure – and counsel were unable to provide us with one – that amount cannot, as submitted by [the husband], be said to be either unfair or unreasonable.

Justice Frankel’s findings on this point are in line with the leading authorities on the issue of determination of income for support purpose (see for example: Dickie v. Dickie, 2001 CanLII 28203 (ON SC); Bell v. Bell, 1999 BCCA 497; Jakob v. Jakob 2010 BCCA 136; Dabrowska v. Bragagnol, 2008 ONCJ 360.

General principles borne out of these cases include the following:

  • The determination of income for support purposes is based on a payor’s capacity to pay;
  • Income for support purposes should be based on the payor’s current income, unless current income does not accurately reflect a payor’s capacity to pay;
  • A payor’s income from the previous year is generally a good indicator of his/her current income;
  • When determining ongoing support obligations, courts should not average a payor’s income from prior years as a matter of course, especially if current and reliable income information is readily available and there are no other mitigating considerations;
  • In certain circumstances it may be more appropriate to average a payor’s income to determine ongoing support, even when current income information is available. Courts have averaged income in circumstances where:
    • the payor’s income is unpredictable or fluctuates significantly from year to year (for ex: if the payor works on commission, or if the payor’s income depends on external factors such as company performance or market performance);
    • the payor’s current income does not accurately reflect his/her capacity to pay support (for ex: the payor’s income in the previous year was uncharacteristically high or uncharacteristically low, and is unlikely to be repeated in the near future), or;
    • The payor’s current financial circumstances are anomalous and likely to change in the near future

The husband next argued that the trial judge’s erred because he did not specify an end date for spousal support. Justice Frankel noted that, prior to the appeal, the husband never asked for an end date to be included in the order. He also noted that nothing prevents the husband from applying for a variation of the order in the future, if he ever feels that a material change in circumstances has occurred to warrant a termination of his support obligations. Justice Frankel concluded that the trial judge did not err in making a support order without a termination date.

Finally, the husband argued, unsuccessfully, that the trial judge erred in fixing spousal support in the mid-range of Spousal Support Advisory Guidelines (SSAGs). After reviewing the husband’s evidence, Justice Frankel concluded the husband failed to show any basis upon which the Court could interfere with the trial judge’s decision about quantum. Justice Frankel’s conclusion on this point illustrates the broadly accepted principles set out in the Supreme Court of Canada’s decision in Hickey v. Hickey ([1999] 2 SCR 518, at para 10-12), namely that:

  • Trial and motions judges have broad discretion to determine the appropriate level of spousal support in each case before them, and this discretion is limited only by legislation (for example: section 15 of the Divorce Act or the relevant sections of applicable provincial legislation);
  • Appeal courts should not interfere with a trial or motions judge’s decision about quantum of spousal support, unless (1) there is clear evidence that the judge made a mistake about the law and/or facts of the case, and (2) the judge’s decision would have been different if he/she did not make the mistake.

Guttmann is most noteworthy because the Court of Appeal in this case explicitly upheld the portion of the trial judge’s order that required the parties to adjust spousal support every year based on the husband’s actual income in that year. Unlike with child support orders, it is highly unusual for spousal support orders to require payment readjustments to account for the annual changes in a payor’s income.

Only a handful of reported cases that contain orders similar to Guttmann. These cases all appear to originate in British Columbia (like Guttmann), and in some cases, the annual readjustment order is made only because the parties have agreed to such an arrangement. See for example: Jones v. Jones, 2012 BCSC 1231; Vallée v. Vallée, 2012 BCSC 1780; K.S.F. v. S.M.F., 2011 BCSC 1563.

It is much more common for spousal support orders to be ‘fixed’ for a period of time, with a right seek a variation if there is a material change in circumstances, and sometimes also a right to review the support arrangements after a specific date without having to demonstrate a material change.

It should be noted that courts across Canada do sometimes order annual spousal support adjustments to account for annual increases in the cost of living increases. However, such adjustments are generally based on increases in the Consumer Price Index (CPI) and result in only minor changes to support payments (an increase of 2-3%/year). In contrast, the type of support order that has been upheld by the Court of Appeal in Guttmann can potentially result in much more significant variations in spousal support payments from year to year.

An annual, income-based readjustment of spousal support has the potentially to benefit both recipients and payors:

  • it would allow a support recipient to automatically share in, and benefit from, increases in the  payor’s income, without being put to the cost of seeking a variation, and without having to demonstrate that an increase in the payor’s income meets the threshold of “material change”; and
  • It would largely eliminate the financial burden faced by a payor whose income has decreased by an amount that does not meet the threshold of a “material change”, but may nonetheless have a significant impact on the payor’s ability to pay support and meet other financial obligations.

However, such an order could also result in several serious issues:

  • the unpredictable payment pattern may be contrary to some of the objectives of spousal support awards, including the important objectives of certainty and finality (see Miglin v. Miglin, 2003 SCC 24;
  • Annually adjusted support awards may deter payors from seeking or accepting opportunities to increase earnings in order to avoid sharing the benefit with the recipient;
  • Sharing in post-separation increases in income may not be appropriate (See Pendleton v. Pendleton, 2010 BCSC 1167, for a good review of this issue);
  • While “fixed” support awards encourage payors to maintain income at a level sufficient to meet financial obligations, annual readjustments may incentivize payors to minimize their earnings in order to reduce support payments. This could potentially lead to increased litigation about intentional underemployment; and
  • The necessity for annual interaction may result in increased potential for conflict, especially in highly contentious cases.

Guttmann appears to be the first appellate decision in Canada to uphold a spousal support order that requires annual, income-based readjustments. It will be interesting to see whether courts in other provinces will use this appellate authority to issue similar orders, and what the long-term effect of such orders might be.

Contributions to Costly Section 7 Expenses (Owens v. Owens)

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In Owens v. Owens, Justice Ramsay of the Ontario Superior Court of Justice considered a motion by a mother to vary a final child support order on the basis of material changes to the children’s child care, orthodontic, dental, and tutoring expenses. This case provides a good illustration of the type of analysis judges undertake when considering the reasonableness and necessity of costly child care expenses, particularly where the parties’ incomes are relatively modest.

The parties’ final support order was issued in 2010. The father was ordered to pay Table child support and a fixed monthly contribution toward the children’s section 7 expenses that existed at the time.

The Table support portion of the final order was varied in 2011 to account for the father’s increased income in that year. In 2012, both parties’ incomes decreased, and the mother incurred additional section 7 expenses, including tutoring expenses, orthodontics, and a nanny expense (this expense doubled from the time of the original order). Although Justice Ramsay did not specifically state this, it is clear that these circumstances were sufficiently “material” in nature to warrant a variation of the final order.

Based on the father’s income of $34,500 and the mother’s income of $42,000, Justice Ramsay found that the father should, “in principle”, contribute 40% toward the children’s section 7 expenses. Interestingly, a strict proportionate sharing based on the parties’ incomes would require the father to contribute 45% toward the children’s expenses; however, Justice Ramsay does not provide a rationale for his decision to deviate from the “straight” apportionment.

Justice Ramsay accepted the orthodontic expenses ($5,300) and tutoring expenses ($150/month) as reasonable and necessary, and ordered the father to contribute his proportionate share both retroactively, and on a go-forward basis. Justice Ramsay did not order the father to contribute to previous dental expenses claimed by the mother, because there was insufficient evidence before him about the exact amounts paid by the mother and the exact amounts covered by insurance. This should serve as a reminder to all litigants about the importance of providing the court with enough information to make a determination about an outstanding issue. In the context of section 7 expenses, the court will always need to see evidence of the amounts paid to date, the amounts owing on a go-forward basis, and evidence of any subsidy or insurance coverage that may reduce or eliminate the expense.

Justice Ramsay then went on to consider the nanny expenses claimed by the mother, which were very high ($20,000/year after a subsidy), and accounted for 50% of the mother’s gross yearly earnings.  He noted that the two older children (ages 14 and 12) had significant psychiatric issues (anxiety, depression, and anger management, etc) and made the following observations about the cost of the nanny [emphasis added]:

[8]       The daughter is home schooled by a tutor provided by the school board. A nanny watches the children while the mother works. As a result of the children’s special needs and the mother’s work schedule, this is the most practical option. After school day care would be impractical. Neither of the older children is an apt caregiver for the youngest child, who is only five years old. It is expensive, but if not for the nanny, the mother would probably not be able to work. The net benefit of the arrangement is an additional $20,000 a year for this family. The father’s suggestion that the two older children should watch the youngest child is, to my mind, callous and unrealistic in the circumstances.

…

[10]     I do not blame the mother for providing this care for her daughter. Hiring the nanny and the tutor were reasonable decisions. I accept that the child has benefitted from the tutor. Hiring the nanny has allowed the mother to bring in more money. I simply think that the father cannot afford it. As a result, I think s.7 requires me to award much less. The unfortunate fact is that the family’s resources are limited and hard choices have to be made. It is a fact of life in this case that the hard choices, like the hard work, fall to the mother.

As a result of his findings above, Justice Ramsay ordered the father to pay $350/month toward the children’s tutoring and nanny expenses. It is noteworthy that the father was originally ordered to pay $350/month toward these expenses, but at the time the original order was made, the cost of the nanny was only half the current cost.

Owens v. Owens illustrates the challenges that courts often face when the parties’ financial realities are at odds with the needs of the children. As the primary caregiver in this case, the mother was left to pay a significantly higher portion of the children’s child care expenses, out of necessity. This result that may be unfair, but it is, unfortunately, not at all uncommon.

Families going through separation or divorce will often experience a decrease in their standard of living as a result of the increased cost of running two separate households. It is not unusual for courts to find that an expense is necessary and clearly benefits the child(ren), while at the same time finding that the cost of the expense is financially unfeasible for the family. Under the Child Support Guidelines, only expenses that are both necessary and reasonable will be considered proper section 7 expenses.

Spousal Support: General Principles, Variation, and Termination of Support (Stanley v. Stanley)

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Stanley v. Stanley from the British Columbia Supreme Court provides a helpful summary of the leading authorities on spousal support, especially in the context of a long-term but non-traditional marriage.

The parties were married for 21 years. They had no children, and both worked during the marriage. The wife was unemployed at the time of separation, but was the higher income earner during the marriage. The parties entered into a separation agreement that required the husband to pay the wife $1,500/month in spousal support.  The separation agreement also required the wife to take reasonable steps to become economically self-sufficient. Five years after the separation, the husband applied to terminate spousal support, or, in the alternative, to reduce monthly payments. At the time of application, the husband was 66 years old, and the wife was 59 years old.

The husband took the position that the wife made virtually no efforts to become self sufficient. He claimed that the wife was able to work, but chose to relocate to a rural area with limited employment opportunities to focus on her hobbies, including a horse farm. The wife claimed that she her ability to work was limited due to her age, lack of qualifications, and depression. She claimed that she had attempted to make her horse farm profitable, but that the income from the farm was insufficient to cover her monthly expenses. Finally, she claimed that the parties agreed that the wife would continue to receive spousal support in lieu of sharing one of the husband’s pensions.

Justice N. Brown reviewed section 15 of the Divorce Act and the leading jurisprudential authorities on spousal support entitlement, including the Supreme Court of Canada decisions in Bracklow v. Bracklow, Moge v. Moge, and Leskun v. Leskun.

The Court examined the three bases of spousal support entitlement, and the differences between compensatory spousal support and non-compensatory or “needs based” spousal support. Compensatory spousal support compensates a spouse for economic disadvantage suffered as a result of the marriage and/or its breakdown. non-compensatory or “needs based” spousal support involves a “needs and means” analysis, and “embraces the idea that, upon dissolution of a marriage, the primary burden of meeting the needs of the disadvantaged spouse falls on his or her former partner, rather than the state”, even in the absence of a compensatory or contractual foundation for the obligation to pay.

Justice Brown then considered the obligation of spousal support recipients to achieve economic self-sufficiency, and cited the following principles:

  1. “Self-sufficiency, with its connotation of economic independence, is a relative concept.  It is not achieved simply because a former spouse can meet basic expenses on a particular amount of income; rather, self-sufficiency relates to the ability to support a reasonable standard of living.  It is to be assessed in relation to the economic partnership the parties enjoyed and could sustain during cohabitation, and that they can reasonably anticipate after separation.”
    (see Fisher v. Fisher, 2008 ONCA 11 at para. 53)
  2. It is critical to recognize and encourage the self-sufficiency and independence of each spouse, however, it is also important to recognize that sometimes the goals of actual independence are impeded by patterns of marital dependence, and that too often self-sufficiency is an impossible aspiration at the time of separation
    (see Bracklow)
  3. A spouse has a positive obligation to make reasonable efforts to become self-sufficient, but does not have an absolute obligation to become self-sufficient. The goal of self-sufficiency is to be accorded equal weight and consideration among the objectives set forth in the Divorce Act (see Munro vs. Munro, 2006 BCSC 1758)
  4. A spouse’s failure to achieve economic self-sufficiency does not constitute a breach of a duty. It is one of the factors to be considered in determining entitlement and the appropriate level of spousal support (see Leskun)
  5. The duty to become self-sufficient is never extinguished (see Munro)

In applying the legal principles to the case at bar, Justice Brown noted that, while the parties had a long-term marriage, it was not a traditional one. He found that neither party was economically disadvantaged by the marriage or its breakdown, and that there was no compensatory basis for an award of spousal support in this case. Justice Brown concluded that spousal support in this case was “intended to be an interim measure; directed towards giving the [wife] time to settle in after her move and to her finding employment again… to which end the respondent agreed she would make all reasonable efforts.”

Justice Brown agreed with the husband’s position that the wife did not make sufficient efforts to become economically self-sufficient. However, in considering the length of the parties’ marriage, the wife’s age, and her health concerns (including a serious leg injury), the judge found that the wife continued to be in need of spousal support. The judge ordered the husband to continue to pay support for an additional 2 years, with a specified gradual drop down of the monthly amounts, at which point spousal support would be terminated.

Appeals, Custody and Access, Mobility in Deguchi v. Deguchi

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The Alberta Court Appeal recently upheld the decision of a chambers judge, who granted a father primary care and control of his two young sons (ages 3 and 5), and allowed him to relocate the children from Alberta to British Columbia, notwithstanding that the mother was found to be the primary caregiver of the children during the marriage and until the date the order was made.

The Court of Appeal’s reasons in Deguchi are contained in just 6 short paragraphs. The Court relies heavily on the reasons of the chambers judge, which, unfortunately, have not been reported. As a result, only the most basic facts of this case are available, and they are as follows:

The parties were married in 2008, and had two sons (ages 3 and 5 at the time of appeal). The mother was a stay-at-home parent, and was the primary caregiver of the children throughout the marriage. The father was in the banking business. During the marriage, the parties agreed to accept numerous transfers to advance the father’s career, and one such transfer required relocation to Salve Lake, Alberta. It is unclear how long the family lived in Slave Lake, but the parties resided there at the time of separation. After separation, the father was transferred to Aldergrove, British Columbia. The mother refused to relocate to Aldergrove, and stayed with the children in Slave Lake. The mother’s position prompted the father to apply for an order granting him primary care and control of the children (with generous access to the mother), and for an order allowing him to take the children to British Columbia. The father was successful and both the parenting and mobility orders were granted.

The mother appealed, claiming that the chambers judge “misapplied the law and failed to consider some of the evidence”. The Court of Appeal dismissed the mother’s appeal, finding that there was no basis upon which to interfere with the order.

Although the Court of Appeal did not provide any detail about the chambers judge’s analysis, the Court of Appeal noted (and apparently accepted) the chambers judge’s findings that:

  1. The parties both understood that their stay in Slave Lake would not exceed three years; and
  2. Neither party had family in Slave Lake, but both parties had extended family in Aldegrove.

In this case, the Alberta Court of Appeal upheld what appears to be a fairly drastic change in the parenting status quo of two very young children, and such a change of parenting arrangements is somewhat unusual, especially in light of the finding that the mother was the children’s primary caregiver.

From a pragmatic standpoint, however, the Court was not left with many options, given the father’s work obligations and the mother’s refusal to relocate to British Columbia. The “best interests of the child” continues to be the overriding test in determining parenting issues, including residence and mobility.

Unfortunately, the Court of Appeal does not describe the chambers judge’s analysis of the children’s best interests, and it is unclear how the chambers judge weighed the existing parenting status quo against other considerations.

The chambers judge’s findings regarding the temporary nature of the family’s move to Alberta, and her findings regarding the strength of the children’s ties to each province, likely had a significant impact on the decision at both court levels to allow the father to relocate the children to British Columbia.

Deguchi is yet another example of the often unpredictable nature of mobility cases. The leading case on mobility is the Supreme Court of Canada’s decision in Gordon v. Goertz, 19 R.F.L. (4th) 177 (S.C.C.). Although the legal framework in Gordon has led to inconsistent results in mobility cases across Canada, the Supreme Court of Canada has thus far declined to re-visit the issue. The federal government has also been reluctant to establish a Canada-wide legislative framework for mobility issues. It should be noted that, on March 18, 2013, British Columbia’s new Family Law Act came into force, replacing a number of family law statutes in that province.

The new Family Law Act includes specific provisions dealing with mobility and relocation (see sections 65-71 of the Act), making British Columbia the first province in Canada to establish a legislative framework for mobility. It will be interesting to see how the new legislative framework is applied, and whether other provinces will follow suit with similar amendments to their own provincial legislation.

Retroactive Child Support for Hitfar Founders (Fargey v. Fargey)

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The Supreme Court of British Columbia recently released the decision in Fargey v. Fargey, dealing with retroactive child support based on the success of a Vancouver-based cellphone company.

The couple founded the company in 1989, the same year they were married. The mother’s involvement in the company diminished when the children were born, but she retained half of the shares of the company. After separating in 2005, a separation agreement in 2006 provided all of her shares to the father.

The father’s current income from the cellphone business as a sole shareholder increased from $580,000 in 2008 to about $1,900,000 in 2012, and the mother claimed she did not know of the increase until very recently. On Aug. 24, 2011 she emailed:

There is really no discussion on the child support issues Troy. You (We) are legally to be providing each other with our corporate and personal returns every year to determine what child support you are to be paying. You have neglected to do this until July 2011 at which time, a complete set of documents has not been provided. At this point, I am finding this very difficult and if you are not going to cooperate, I have no choice but to set a court date. Below are the guidelines for Child support. If you can prove to me that you are paying what you should be paying, then it will be easy to move forward. To date, however, you have not proven that nor have you provided me with the correct support payments over the past 3 years…according to the recent incomplete documents. So in saying that, I suggest you provide me with all the documents required, including your 2010 Hitfar Financials, which should be complete by now if not soon, and we move from there. I have been very patient with this and I have provided for the kids in every aspect of care and upbringing and gone beyond my means to do so. If I do not receive proof of income and or potential income by September 15th, then I will proceed to BC Courts. I have been to the BC Justice Court House to confirm by them as well, that you are breaking the law by not abiding by these details.

She then made an application on May 25, 2012 for retroactive support. The personal salary he provided in response on August 28, 2012 was as follows:

2008

$365,000

2009

$306,000

2010

$401,000

2011

$471,000

2012

not yet determined at the time of the hearing

Justice Affleck noted that the father had voluntarily increased child support by $12,000 since the spousal support payments ended, but should have updated the mother about his company’s financial situation. However, he found that the $600,000 she claimed in retroactive support was excessive:

[22] …The children enjoy a relevantly high standard of living. There has been no financial hardship for which they should be compensated from their father’s increased prosperity and a payment of $600,000 would, in my view, constitute a windfall in the hands of the claimant.

[30]   …When the parties were together they did not take all the net profit of Hitfar for themselves. Hitfar needs considerable capital. Hitfar operates in a volatile market with many uncertainties. It is not in the interests of the children that the business be put at risk through substantial withdrawals of cash or by extending its line of credit. There were satisfactory business reasons for the respondent to retain earnings in Hitfar and those earnings should not all be imputed to him for the purposes of paying child support. That is particularly the case when there has been no hardship suffered by the children.

Justice Affleck calculated the retroactive support from the time of effective notice and reduced the amount to $261,000.

 

Parents are Not Perfect People (Jarvis v. Jarvis)

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In Jarvis v. Jarvis, released last week by the Ontario Superior Court of Justice, Justice Gray considered a contentious access case between a couple.

The parties lived together since April 2004 and married on July 16, 2005. They separated in May 2011, and have two children, born in 2006 and 2007.

However, they continued to live together after the separation, and things got heated. An altercation between the two resulted in a private criminal complaint by the mother alleging a physical assault. The Crown made the election not to proceed with the charges, but the father incurred over $3,000 in legal fees.

To protect himself from further allegations of assault the father installed 24-hour video cameras in the matrimonial home. He was unable to obtain consent from the mother to do so. He became concerned about the contents of the videos, including the children being left unattended for long periods where they had access to knives or talking on her cell phone.

An assessor recommended that sole custody be provided to the father. The children had suffered minor injuries in the care of both parents, but the father sought supervised access for the mother.

Justice Gray indicated that supervised access through an access centre is reserved for special cases. He cited V.S.J. v. L.J.G. to point out that it is rarely an indefinite or long-term solution. Although the mother’s parenting abilities were less than ideal, he concluded,

[32]                 Parents are not perfect people.  Nevertheless, we rely on them to raise children.  Unless there are safety issues, or other serious issues involving the welfare of children, in which case Children’s Aid Societies will become involved, we leave it to parents to raise children.  In the case of parents who are separated, Parliament has made it clear that maximum contact with each parent is generally in the best interests of children.

 

Canucks Co-Owner Can Keep His Wine

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wine collection matrimonial property

In a pre-trial motion out of the British Columbia Supreme Court in Aquilini v. Aquilini, a  US$789,000 wine collection was not considered a family asset which could be sold to finance litigation costs. The husband in the litigation, set for trial later this year, is a co-owner of the Vancouver Canucks.

Under the matrimonial property provisions of the Family Relations Act the family assets can be divided if they are ordinarily used for a family purpose. The Supreme Court Family Rules allow for the sale of family assets where it is “necessary or expedient” to do so. Justice Smith referred to the two-part test in Jiwa v Jiwa, [1992] BCJ No 3024:

(1) Is the advance required to mount a challenge to the other spouse’s position at trial;
(2) Will the advance or the payment on an interim distribution basis jeopardize the other spouse’s position at trial?

The husband claimed the wine collection was a personal hobby, and his wife never had anything to do with it. He did agree that they had been sold at one point to pay off some family debt.

Justice Smith concluded he did not have jurisdiction to order the sale, and that even if he did have jurisdiction that he could not order the sale of the specific asset:

[22]         There are a number of possible orders about the wine collection that could be made at trial. If the respondent is successful in arguing that it was not ordinarily used for family purposes and is not a family asset, he will be entitled to retain it to do with as he wishes. If it is found to be a family asset, there may be an order for sale and division of proceeds, or the respondent may still be able to retain it intact, provided that the claimant receives other assets of equal value. The eventual result will depend on full evidence, including oral testimony and cross-examination, about the history and use of the wine collection, along with consideration of its value in the context of all other property that may be found to be family assets.

[23]         There is no doubt that valuation of other assets at issue will be a complicated and expensive process. However, nothing in the claimant’s affidavit evidence suggests that she will be unable to obtain the necessary expert evidence without an advance payment. Even if she could establish the need for an advance payment, there is no authority for requiring that such a payment be funded by sale of a specific asset where, as here, there are multiple assets and potential sources from which the party paying the advance could potentially choose to obtain those funds.

The new Family Law Act which comes into force March 18, 2013 defines “family property” as all property owned by at least one spouse at the date of separation, which would have rendered this wine collection subject to division. But under the old Act, which governs all actions before this date, the wine collection could not be sold on direction of the wife.

 

B.C. Court Awards “Trophy Husband” $157,000 Spousal Support

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Trophy Husband Spousal SupportJustice Wong of the B.C. Supreme Court recently released a decision in Walker v. Brown which awarded a self-represented man $157,000 lump sum in spousal support.

Although the couple had never been married they had a domestic relationship which spanned 14 years. He was 50 years old, 21 years younger than she was, when he moved into her home in 1997. She was a former world class figure skating champion who had amassed a sizeable fortune, in particular from her late husband’s estate.

They first met when he was working part-time at a Federal polling station, and she was a volunteer scrutineer for the Conservative Party of Canada. Within days she took him to lunch and started purchasing him gifts, including a $10,000 Rolex watch.

She claimed that the relationship was a platonic one, but he claimed it was a “marriage like relationship” which made him a “spouse” within the meaning of s. 1(1)(b) of the Family Relations Act. The extent of sexual activities between them was highly disputed.

Throughout this time she paid for all his living expenses, provided him $400-500 a month in pocket money, and took him on 60 holidays and trips around the world. They had separate bedrooms at home, but shared hotel and cabin rooms on their travels, and were perceived by friends to be a couple. He did not work at all for the entire duration of the relationship.

Nearly a year into the relationship she provided him a “Residency Agreement” document which stated the following:

WHERE AS:

A.     Valerie is retired and is aged 72 years and is financially independent. She is single and has five children, none of whom are dependent upon her.

B.     Gordon is currently unemployed and is aged 51 years and is financially independent. He is single and has no dependents.

C.    Gordon commenced residing in Valerie’s home at Yacht Road, Sechelt, British Columbia on September 1, 1997.

D.    Valerie and Gordon are friends and travelling companions and do not have a relationship which is spousal in nature.

E.     Both Valerie and Gordon have their own individual net worths and each of them is financially independent of the other.

F.     Neither Valerie nor Gordon have made any contributions, either financial, legal or equitable to the net worths or underlying assets of the other.

G.    By this Agreement, both Valerie and Gordon intend to define the nature of their relationship and their mutual obligations thereunder.

                        NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the mutual covenants hereinafter contained, the parties hereto agree as follows:

1.     Relationship.         Both parties acknowledge that their relationship is that of friends and travelling companions and that their relationship is not spousal in nature.

2.     Valerie’s Property.             Gordon acknowledges that the 5236 Yacht Road, Sechelt, British Columbia (“Valerie’s Home”) and all other assets owned by Valerie are Valerie’s sole property and that he has no interest, legal or equitable, whether by constructive trust or otherwise, in Valerie’s Home or any of her other property.

3.     Gordon’s Property.            Valerie acknowledges that all assets owned by Gordon are Gordon’s sole property and that she has no interest, legal or equitable, whether by constructive trust or otherwise, in any of Gordon’s property.

4.     Residence.            Valerie agrees that Gordon may reside in Valerie’s Home until Valerie, upon 30 days’ notice, requests his departure.

5.     Room and Board.  Valerie agrees that Gordon is not obligated to pay room and board during the period he resides in Valerie’s Home, nor is he required to contribute financially to the upkeep of the property and grounds.

6.     Employment.         Valerie acknowledges that Gordon may seek and accept employment or training.

7.     Mutual Acknowledgment.  Valerie and Gordon separately acknowledge that:

(a)             their relationship is not spousal in nature;

(b)             neither party intends to share legal or beneficial ownership of his or her property, owned before or acquired after the making of this Agreement; and

(c)             neither party will rely on the oral expression, or conduct that may suggest the expression, of the intention by one party to share his or her separate property or a portion of that property with the other, except in accordance with the terms of this Agreement.

Although he initially refused to sign the document, he claimed he eventually acquiesced when she insisted and started crying.

Justice Wong applied the 7-part test found in Takacs v. Gallo, which was adopted from the Ontario case in Molodowich v. Penttinen:

  1. Shelter:
    1.  Did the parties live under the same roof?
    2.  What were the sleeping arrangements?
    3.  Did anyone else occupy or share the available accommodations?
  2.  Sexual and Personal Behavior
    1. Did the parties have sexual relations? If not, why not?
    2. Did they maintain an attitude of fidelity to each other?
    3. What were their feelings towards each other?
    4. Did they communicate on a personal level?
    5. Did they eat their meals together?
    6. What, if anything, did they do to assist each other with problems or during illness?
    7. Did they buy gifts for each other on special occasions?
  3. Services:
    What was the conduct and habit of the parties in relation to:

    1. preparation of meals;
    2. washing and mending clothes;
    3. shopping;
    4. household maintenance; and
    5. any other domestic services?
  4. Social:
    1. Did they participate together or separately in neighborhood and community activities?
    2. What was the relationship and conduct of each of them toward members of their respective families and how did such families behave towards the parties?
  5. Societal
    What was the attitude and conduct of the community toward each of them and as a couple?
  6. Support (economic):
    1. What were the financial arrangements between the parties regarding the provision of or contribution toward the necessaries of life (food, clothing, shelter, recreation, etc.)?
    2. What were the arrangements concerning the acquisition and ownership of property?
    3. Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?
  7.  Children:
    What was the attitude and conduct of the parties concerning children?

Justice Wong cited Austin v. Goerz to indicate that financial dependency alone is not a pre-requisite for a marriage-like relationship, but looked at the totality of the factors to conclude that he was indeed her spouse. He was economically dependent on her, and had limited job prospects for the future. His analysis of spousal support was as follows:

[71]         Counsel suggested that if maintenance is ordered that it be on a monthly periodic basis for a duration of 9 years. He said that this would both recognize the diminishing assets of Ms. Brown and the fact that Mr. Walker did receive $600,000 shortly after separation attributable to his relationship with Ms. Brown.

[72]         Applying the Spousal Support Advisory Guidelines based upon the parties’ respective annual incomes, counsel submitted the resulting monthly award ranges between $2,151 and $2,867 per month. He suggested an award of $2,151 per month for a period of 9 years is appropriate.

[73]         He also suggested that if a lump sum award is considered by the Court then the capitalized value of $2,151 per month should be discounted by 7% present value and future contingencies of 20% resulting in a lump sum payment of $116,184.

[74]         Because of a need for a clean break for the parties and Ms. Brown’s ample means, I think a lump sum award is preferable in this case.

[75]         I also think the high end range of $2,867 per month should be the starting point of the calculation for capitalized value, after present value discount of 7% resulting in $196,128. After applying 20% contingencies, the lump sum award is then approximately $157,000, which is the amount I fix as appropriate in this case.

Justice Wong declined to award him costs given he had communicated with her through litigation in a degrading manner and had threatened publication of a book to extract a settlement.

 

Supreme Court of Canada Upholds Quebec Spousal Support Rules

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The Supreme Court of Canada released the decision in Quebec (Attorney General) v. A today, also known as the “Lola” case.

In a deeply divided court, the decision held that the sections of the Civil Code of Québec did not violate the Charter.

Justices LeBel, Fish, Rothstein and Moldaver JJ. held that articles 401 to 430, 432, 433, 448 to 484 and 585 of the Code did not violate s. 15. of the Charter. Justices McLachlin C.J. and Deschamps, Abella, Cromwell and Karakatsanis JJ held that it did violate s. 15.

Only Justice Abella held that it was not saved by s. 1. McLachlin C.J. indicated that it was, and Justices Deschamps, Cromwell and Karakatsanis JJ. stated that only article 585 is not justified under s. 1.

The majority stated:

The legislature has not established a hierarchy between the various forms of conjugality, nor has it expressed a preference for marriage and the civil union at the expense of the de facto union.  It has merely defined the legal content of the different forms of conjugal relationships. It has made consent the key to changing the spouses’ mutual patrimonial relationship.  In this way, it has preserved the freedom of those who wish to organize their patrimonial relationships outside the mandatory statutory framework.  Express, and not deemed, consent is the source of the obligation of support and of that of partition of spouses’ patrimonial interests.

The majority concluded that although the Code created a distinction between married and common law couples in Quebec, it did not create a disadvantage through prejudice or stereotyping, and therefore did not violate s. 15.

Justice Abella’s dissent stated:

The spousal support and family property provisions in Quebec are aimed at recognizing and compensating spouses for the roles assumed within the relationship and any resulting interdependence and vulnerability on its dissolution.  Many de facto spouses share the characteristics that led to the protections for spouses in formal relationships.  They form long‑standing unions; they divide household responsibilities and develop a high degree of interdependence; and, critically, the economically dependent, and therefore vulnerable, spouse, is faced with the same disadvantages when the relationship is dissolved.  Yet de facto dependent spouses in Quebec have no right to claim support, no right to divide the family patrimony, and are not governed by any matrimonial regime.