Banks v. Snee

2014 BCSC 1700 Banks v. Snee

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Banks v. Snee, 2014 BCSC 1700 Date: 20140910 Docket: E092231 Registry: Vancouver Between: John Michael Banks Claimant And: Rachel Jane Snee Respondent Before: The Honourable Mr. Justice Grauer Reasons for Judgment The Claimant appearing on his own behalf: J. M. Banks Counsel for the Respondent: J. J. Hittrich Place and Date of Trial: Vancouver, B.C. June 23-27, 2014 Place and Date of Judgment: Vancouver, B.C. September 10, 2014

INTRODUCTION [1] The parties were both born and raised in England. Mr. Banks is now 57, while Ms. Snee is 55. They began cohabiting in England in 1989. They had one child, Emily, born June 28, 1992. They emigrated to Canada in 1997, settling in Vancouver, where they jointly purchased a house (the "former family home"), subsequently transferred into Ms. Snee's name. They separated either in June 2006 (according to Ms. Snee), or March 2007 (according to Mr. Banks). [2] Apart from the date of separation, the issues that fall to be determined in this case are, first, the extent of Mr. Banks's interest (if any) in the former family home, and, second, whether Mr. Banks should pay, or account for, retroactive child support and a share of Emily's educational expenses. The second issue involves the question of what, if any, income should be imputed to Mr. Banks over a lengthy period of time during which he maintains he earned nothing. [3] Mr. Banks represented himself in this matter. He currently lives in China, and came to Vancouver for the purpose of this trial. He complained about being at a disadvantage, and not very well prepared. I would remind him that it was his case, which he commenced five years ago, and that it was his obligation to be prepared.

BACKGROUND [4] Both Mr. Banks and Ms. Snee worked as consultants. Mr. Banks has a Master of Science degree in Organisation Development and Change Management from Sheffield Business School. Ms. Snee started the same program, but chose not to complete it. She developed a consulting business delivering training in project management and information technology skills. Ms. Snee has a degree in microbiology from Imperial College, London. [5] I find that during their time together in England, they contributed essentially equally to the expenses of their life together, with the exception that Ms. Snee maintained sole ownership of a flat she had purchased in London well before they met. They also contributed approximately equally in terms of income. [6] In Vancouver, Mr. Banks and Ms. Snee purchased the former family home for just over $355,000 with monies from the sale of their jointly-owned property in England, together with the proceeds of the sale of Ms. Snee's apartment. The balance was financed - approximately $230,780. Mr. Banks contributed additional funds after the purchase. Title was registered in their joint names. [7] They bought an additional property in 1999, an apartment on Burnaby Street in Vancouver ("305"), which was rented out. [8] After they moved to Vancouver, Mr. Banks became the principal income earner while Ms. Snee concentrated on raising Emily. Ms. Snee's

failure to develop a consulting business in Vancouver that produced meaningful income became a source of resentment to Mr. Banks, although they both had to recognize that the scope for such employment in Vancouver was very much reduced compared to larger centres. Indeed, in 2000, they moved back to England temporarily so that Mr. Banks could find more lucrative contracts. [9] Ms. Snee and Emily returned to Vancouver shortly after the fateful day of September 11, 2001, while Mr. Banks remained in England to finish his contract with Marconi, where he was Project Change Director. That project came to an end in April 2002 due to the collapse in the telecommunications market, and Mr. Banks rejoined his wife and daughter in Vancouver. [10] Ms. Snee and Mr. Banks set up a British Columbia company together, Catalyst Consulting, through which they billed their consulting fees, and from which they drew income and paid expenses. [11] Mr. Banks subsequently worked on a contract with the BC Hydro. Ms. Snee also did some short-term consulting work for BC Hydro that later led to more remunerative employment. But in the meantime, the parties sought to increase their income through investment in start-up companies. This did not work out well. [12] Then, in early 2004, Mr. Banks became involved with a publicly traded company, Consolidated Ecoprogress Technology Inc. ("CET") that was on the verge

of insolvency. CET had the rights to Flushaway™, a patented range of absorbent biodegradable and flushable products, particularly tampons. Mr. Banks was impressed with the technology, and hoped that, with his expertise, he could turn the company around. He became the company's chief executive officer. [13] Because of Mr. Banks's position as the CEO of a publicly traded company, both the former family home and 305 were transferred into Ms. Snee's name alone as a cautionary measure. For the same reason, a second apartment they purchased in June 2005 ("608") was registered only in Ms. Snee's name. It was, however, a joint investment. [14] As CEO of CET, Mr. Banks's remuneration was essentially self-financed. He would buy shares in the company to increase its capital, borrowing from the line of credit secured by the former family home. CET would then use that capital to pay Mr. Banks's salary and expenses. The payoff would be in any gain in the shares. There were both gains and losses, but a net gain overall. [15] Regrettably, notwithstanding Mr. Banks's efforts, the company did not flourish, and ultimately failed. [16] There is no doubt that the parties' relationship began to deteriorate after Mr. Banks became involved with CET. In April 2005, Mr. Banks went to China where he remained for about six weeks without any contact. Ms. Snee testified, and I accept, that on his return, he

indicated that he no longer wished to be physically intimate. [17] Mr. Banks testified, and I find, that CET began encountering serious business and financial difficulties in 2006, impacting his already unconventional income, and adding pressure to his relationship with Ms. Snee. [18] I find, that from March 2006, Mr. Banks ceased making any contributions to Catalyst Consulting, their joint accounts, or family expenses including interest on the mortgage and credit line, and Emily's expenses. [19] In June 2006 Mr. Banks chose to move out of the bedroom he shared with Ms. Snee into another room on the same floor of the former family home. Ms. Snee puts this forward as the date of their separation. [20] In September 2006, Ms. Snee sold the 608 property. The net proceeds of $76,919 were applied to reduce the balance of the debt registered against the former family home. [21] As 2006 wore on, Ms. Snee had had enough of the drain on their finances caused by CET. She forbade him from advancing any further funds from their line of credit to CET. Mr. Banks agreed, but nevertheless, that autumn, he withdrew a total of $74,506 from the credit line registered against the former family home and advanced it to CET. When Ms. Snee reviewed the statements and questioned Mr. Banks about the withdrawals, he denied knowing anything about them. The bank confirmed, however, that he had made

them. [22] In January 2007, Ms. Snee sold the 305 property. Again, as I understand it, the net proceeds of $71,326 were applied against the debt on the former family home. Ms. Snee paid the capital gains taxes on the sale of both properties in the amount of $8,929. [23] In March 2007, Mr. Banks borrowed $58,570 from Ms. Snee, which he promised to pay back within a week. He did not, and agrees that he must account for this debt. At that same time, he discovered upon returning from China that his belongings had been moved from the spare bedroom on the main floor down to the basement bedroom. He considers this the date of separation. [24] From 2006, Mr. Banks spent much of his time in China where he met M, the woman who is now his wife and with whom he lives in Guangzhou. In late 2006, Mr. Banks consulted an immigration lawyer about bringing M into Canada. He married her in China on August 21, 2007. They now have two children.

DISCUSSION 1. Date of separation [25] The parties spent a good deal of time disputing their date of separation, arguing that it impacts the issue of the valuation of their joint assets for the purpose of division. I do not see it as relevant to that issue. This case is not subject to the Family Law Act, SBC 2011, c 25, and the concept in the Family Relations Act, RSBC 1996, c 128, of a triggering event is inapplicable to the circumstances before me. Accordingly, I can see no basis in law or equity for using a date of separation as a valuation point, although it may have an impact on accounting issues. [26] The date of separation is also relevant to the question of retroactive child support, as any obligation to pay support and contribute to expenses would date from that event - see section 1(a) of the Federal Child Support Guidelines (SOR/97-175). [27] I find that the appropriate date of separation is that for which Ms. Snee contends, being June 2006. Although it is not by itself determinative, it is in that month that Mr. Banks chose to leave the bedroom he shared with Ms. Snee, and move into his own bedroom, having already chosen to refrain from intimate relations. I accept Ms. Snee's evidence that from that time, the relationship was over and they interacted very little. Mr. Banks was away most of the time, and when he was in Vancouver he would return late in the day, grab

food and take it into his bedroom. They did not take meals together, nor did they interact as a couple publicly or otherwise. I prefer her evidence in this regard to that of Mr. Banks, whose testimony in this regard was at odds with his actions at the time. [28] When I view those circumstances together with Mr. Banks's lack of communication during his lengthy travels in China, his failure to contribute financially from just before that time, and his immigration inquiries a few months later about bringing M into Canada, I have no difficulty concluding that they were no longer a couple as of the time of that physical separation. Mr. Banks, I am satisfied, was already looking elsewhere.

2. Division of Assets [29] There is no doubt, and neither party disputes, that Mr. Banks and Ms. Snee comingled their assets, and owned them jointly. When the former family home was transferred into Ms. Snee's name, it was to protect the asset from the possibility of claims against Mr. Banks arising out of his new business interests. Accordingly, Ms. Snee holds the property in trust for herself and Mr. Banks to the extent of his remaining interest in it. [30] Since the completion of the trial of this action, counsel for Ms. Snee advised that she has agreed to sell the former family home with a completion date of September 30, 2014. This came as something of a surprise given her complaint during the trial that she was unable to sell the property due to two certificates of pending litigation filed against it, one by Mr. Banks, and a second by a company (Highford Holdings Ltd.) that is suing in relation to CET business, and claims that the transfer of the property into Ms. Snee's name constituted a fraudulent conveyance. [31] In any event, I am satisfied that the proper basis for determining the value of the parties' interests in the former family home is the amount for which Ms. Snee has agreed to sell it. Obviously no evidence about that was tendered at trial, but at my request, Mr. Hittrich, as an officer of the court, has advised me that the sale price is $1,075,000 from which

must be deducted commission and taxes of $22,575, and the balance remaining on the line of credit of $306,292.38. Bearing in mind the goal of proportionality, I accept this as evidence. [32] This yields net proceeds of $746,132.62, subject to the legal expenses to be incurred in removing the two CPLs [33] The other relevant assets are the two apartments (305 and 608) that were in Ms. Snee's name but which, I have found, were joint assets. As noted, the net proceeds from the sale of these properties were used to pay down the joint debt on the former family home, benefiting both parties, and therefore need not be further taken into account, other than the payment by Ms. Snee of all of the capital gains tax. [34] Ms. Snee purchased a third apartment, on Harwood Street in Vancouver, in September 2009. She subsequently sold it for a minimal gain. I find that this apartment was not a joint asset. [35] In my view, the proper starting point for analysis is an equal division of the net proceeds from the sale of the former family home. But I am also satisfied that Mr. Banks's interest must be reduced from 50% to take into to take into account a number of matters. [36] The first such matter is the costs incurred by Ms. Snee in maintaining and preserving the property since Mr. Banks stopped contributing in 2006, to be offset by 50% of rent actually received by Ms. Snee since that

time. [37] According to the evidence of Ms. Snee, which I accept, the net expense to date, after deducting rental income, comes to $72,613. Mr. Banks must account for half of this amount, or $36,306. He must also account for 50% ($4,465) of the $8,929 paid by Ms. Snee in capital gains tax on the two apartments. [38] The second is Mr. Banks' debt of $58,570. [39] The third relates to monies connected to CET. There is no doubt that Mr. Banks put a good deal of money from the line of credit secured by the former family home into CET, but I do not agree that he must account to her for all of this. Much of it really consists of what at the time must have been considered a family investment into this business. Ms. Snee stood to share in the profit if the investment proved successful, and must also share in the losses that in fact took place. But there were transactions to which this does not apply. [40] With respect to the losses, I am satisfied that Mr. Banks must account to Ms. Snee for the withdrawals he made in the fall of 2006 and invested into CET, in the amount of $74,506, after separation and after Ms. Snee had made it clear that she was not prepared to contribute anything further to CET. He must account for 50% of this amount, or $37,253. [41] With respect to the profits, Mr. Banks concedes that Ms. Snee is entitled to a credit of $25,000, being half of the balance in a

trading account representing proceeds from the sale of CET shares in the amount of $50,000. Ms. Snee seeks further credit in relation to proceeds from the sale of shares of $21,000 that took place in November 2007. On the evidence, it appears likely that this profit arose from the sale of shares to the purchase of which Ms. Snee contributed. It follows that that Mr. Banks must account for 50% of this as well, or $10,500. [42] The fourth relates to expenses of Mr. Banks paid by Ms. Snee. Ms. Snee filed income tax returns for Mr. Banks for 2006 and 2007, given their joint corporate enterprise, and paid CPP and EI benefits on his behalf totaling $4,799. Mr. Banks must account to her for this expenditure in its entirety. He must also account for expenses he incurred through CET for which CET did not reimburse him, and which, in the end, were covered entirely by Ms. Snee through Catalyst Consulting. These total $37,725. In my view, Mr. Banks must account for 50% of this amount ($18,862) as they were equally at risk for the failure of CET to reimburse Mr. Banks. [43] Ms. Snee submits that Mr. Banks should also account for funds totaling $33,500 that came from Catalyst Consulting's line of credit and were lent to CET in November 2005. I disagree. This was before Ms. Snee drew the line about further loans to or investments in CET; they constitute a family loss. [44] Finally, Ms. Snee

seeks an accounting for monies received by Mr. Banks from CET in 2007 totaling $84,685. I find on the evidence that $70,000 was paid by CET into accounts of Mr. Banks in April 2007. I am satisfied on a balance of probabilities that this amount relates to obligations arising earlier to which Ms. Snee contributed through the line of credit, and that that Mr. Banks should accordingly account to Ms. Snee for 50% of this amount. The evidence does not lead me to the same finding in relation to the balance of $14,685. [45] The total of these amounts is $231,055. [46] Mr. Banks took the position that he ought to be able to credit against any such accounting the monies he brought into the relationship during the time that he was the principal income earner and Ms. Snee earned little. I disagree. Although Ms. Snee was not contributing the level of income to which the couple had been accustomed in England, she had contributed the proceeds from the sale of her London flat, and, more importantly, was contributing a great deal to the welfare of the family through her care of their daughter Emily, the responsibility for which was principally hers, and increasingly so as Mr. Banks spent more and more time in China. [47] This leads to the second issue, whether Mr. Banks should further account to Ms. Snee for retroactive child support and the costs of Emily's education.

3. Retroactive Child Support and Education Expenses [48] Mr. Banks saw little of Emily after separation. His time was increasingly occupied by business interests in China, and in 2007 he moved there permanently. [49] In 2009, Emily enrolled in a program in world theatre studies at the University of Essex, from which she graduated at the age of 19 in June 2012. Mr. Banks was unable to recall what university she attended, and I accept Ms. Snee's evidence in this regard. I did not hear from Emily, who is now independent. [50] According to Ms. Snee, Mr. Banks agreed to pay half of Emily's expenses while attending university in the United Kingdom. In fact he did not contribute anything towards that education, and paid no child support to Ms. Snee. [51] Mr. Banks testified that he earned no income whatsoever in the years 2008 through 2012, except for a small amount in 2008 in relation to expenses. He maintains that he did his best to find employment, but was unable to do so in the circumstances that existed in the world economy from 2008 on. Instead, he was obliged to live on loans from his wife's family and friends. Companies, he maintained, were simply no longer interested in contracts in his field, at least until 2013 when he did find work with the Royal Bank of Scotland. He tendered evidence of his efforts to find employment. [52] Throughout this time, Mr. Banks lived with his

wife and children in Guangzhou. He further maintains that being required to pay retroactive child support would result in undue hardship as one of his children suffers from autism. The evidence tendered to support that proposition, to which Ms. Snee did not object, concludes that the child demonstrates "autistic-like features" and, with some reservations, meets the criteria for autism spectrum disorder. [53] Ms. Snee submits that I should impute at least some income to Mr. Banks on the basis that he was intentionally under-employed or unemployed. [54] There is no doubt that Mr. Banks tried hard to find work over the period in question. There were, Ms. Snee asserts two problems with his efforts. First, he lived in Guangzhou, which limited his options. He was prohibited from working in China except under contract to foreign corporations carrying on business there. This meant he could not take work other than in his chosen field of consulting in relation to organization development and change management. Second, many of the jobs in his area for which he applied with corporations headquartered in Europe and North America were positions with billing rates in the range of £500 per day. He was unsuccessful in obtaining such positions. [55] I accept that Mr. Banks, through no fault of his own, was unable to find work in his chosen field in 2008-2012. The question is whether he should

have sought other employment to put himself in a position where he could support all of his children, including Emily. Weighing all of the facts, I am unable to conclude that this is a situation where the circumstances justify imputing income to Mr. Banks for those years. He was prepared to travel anywhere to work, and indeed maintained a London telephone number and mailing address to avoid being passed over because of residing in Guangzhou. It is true that he was unable to take on menial jobs in Guangzhou, but he did not limit his applications only to jobs with high billing rates. Given his family circumstances, I consider that he acted reasonably. [56] With respect to the latter half of 2006 and 2007, the accounting for CET expenses and income already undertaken sufficiently covers contribution from his income over that time, which, as I have noted, was largely self-financed. [57] The situation is different, however, when it comes to Emily's education expenses. I find that Mr. Banks agreed with Ms. Snee to contribute to these. Had they not separated, they would have used their joint capital to cover his share of expenses, and it is appropriate to deduct that share from his interest in the family home. Accepting Ms. Snee's evidence of the costs of Emily's education, travel and living expenses in the United Kingdom, net of RESP contributions, I find that Mr. Banks's share at 50% comes to $30,852 (Tab 42 of Exhibit 6).

4. The Highford Litigation Expenses and other matters [58] Ms. Snee further seeks reimbursement from Mr. Banks's share of the assets for legal expenses she incurred in dealing with litigation commenced by Highford Holdings Ltd. [59] Highford commenced action against CET and Mr. Banks on October 4, 2007. The litigation arises out of a distribution agreement between the Highford and CET, and claims against Mr. Banks in his capacity as CEO of CET. [60] On November 16, 2010, Highford commenced action against Mr. Banks and Ms. Snee, alleging that Mr. Banks's transfer of his interest in the former family home to Ms. Snee was a fraudulent conveyance, made to delay, hinder or defraud creditors including Highford. Ms. Snee defended the action and brought an application to have it dismissed against her. That matter remains outstanding. [61] Ms. Snee argues that it was Mr. Banks who chose to take his name off title to the former family home and 305 property, and she ought to be compensated for the costs she has incurred in dealing with the subsequent litigation. [62] Ms. Snee was unable to articulate any legal basis for this aspect of her claim. Had the couple never separated, nothing would be different. They would still have had to deal with the Highford claim, and Ms. Snee would still have had to respond to that portion of it brought against her. I therefore allow nothing for these

costs. [63] Ms. Snee further claims compensation on the basis that the interference caused by the CPLs with her ability to sell the property caused her loss. She testified that she would have refinanced the property at lower interest rates, and might have sold the property earlier and moved to England, but for the filings. As a result, she asserts, she suffered a loss as a result of paying higher interest, and a further loss due to the decline of the value of the Canadian dollar in relation to the British pound which, her counsel submitted, "could be as high as $100,000". [64] Although Ms. Snee referred in her testimony to these effects, she led no evidence to indicate the amount of any such loss, and I am unable to speculate about what it might be, assuming that such a loss was in fact incurred.

CONCLUSION [65] In the context of the pending sale of the former family home, Mr. Banks has a beneficial interest in the proceeds to the extent of what remains after deducting $261,907 from 50% of the those proceeds once the legal costs of clearing title have been paid. [66] Mr. Banks's portion is to be paid into Mr. Hittrich's trust account until further order of the Court, pending the resolution of any remaining issues from this litigation, including costs, and Highford's claim against Mr. Banks. [67] Mr. Banks's CPL is to be removed. Ms. Snee is of course at liberty to apply for removal of Highford's CPL, but that should be upon notice to counsel for Highford. [68] The parties are at liberty to make written submissions concerning costs. "GRAUER, J."