C.P. v. K.W.A.

2018 BCSC 332 C.P. v. K.W.A.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: C.P. v. K.W.A., 2018 BCSC 332 Date: 20180305 Docket: E144589 Registry: Victoria Between: C.P. Claimant And K.W.A. Respondent Before: The Honourable Madam Justice Choi Reasons for Judgment Counsel for Claimant: D. Todd Counsel for Respondent: Z. Tabaczuk-Porter Place and Date of Trial/Hearing: Victoria, B.C. May 2-6 & 9-13, 2016 February 20-24, 2017 April 18-21 & 26-28, 2017 June 26-30, 2017 Place and Date of Judgment: Victoria, B.C. March 5, 2018 Table of Contents Introduction.. 5 Background.. 5 The Parties' Histories. 5 Date of Separation. 6 Parenting Time and Support 7 German Court Decisions. 7 Property Division. 9 Issues. 10 Length of Relationship. 11 What are the dates of cohabitation and separation?. 11 Legal Framework. 12 Analysis and Conclusion. 13 Parenting Regime. 14 Should M be able to determine his parenting time with Mr. A?. 17 Legal Framework. 17 Analysis and Conclusion. 18 How should parenting time and responsibilities be shared between the parties?. 20 Property Division.. 23 Currency Conversion. 23 Legal Framework. 24 Can any of Mr. P's excluded property be traced to a currently held asset?. 28 Can Mr. A claim excluded property in the German house?. 31 Was there equity in Mr. A's original half interest in the German house?. 33 Did Mr. A purchase the rest of the house with excluded funds?. 33 Did Mr. A maintain an

exclusion over all or a portion of the German house after the first mortgage was repaid?. 34 What portion of the sale proceeds is excluded property?. 37 Can Mr. A trace excluded property to his shares in Mother Nature's?. 39 Analysis and Conclusion. 40 What is the value of Mr. A's shares in Mother Nature's?. 42 The Parties' Positions. 46 Legal Framework. 46 Analysis and Conclusion. 48 Is the payment to Ms. A on account of the Gerling pension family debt, and how should family debt be divided?. 50 Legal Framework. 50 Analysis and Conclusion. 51 How should Mr. A's ERGO pension be divided?. 53 Legal Framework. 53 Analysis and Conclusion. 56 Should the parties sell the Newport house?. 57 Is either party entitled to reapportionment?. 57 Legal Framework. 59 Analysis and Conclusion. 62 How should the household contents and vehicles be divided?. 66 Does either party have to account for funds?. 68 Withdrawals from the Parties' Bank Accounts. 68 J's debt 68 Income Determination and Support. 69 What is Mr. A's income for support?. 69 Legal Framework. 69 Pension Payments. 72 Analysis and Conclusion. 73 Dividend Income. 74 Imputing Income. 75 Analysis and Conclusion. 76 Should the ERGO pension allocated to Ms. P be deducted from Mr. A's income?. 77 Should Mr. A's payments to his former wife be deducted from Mr. A's income?. 78 Conclusions on Mr. A's Income. 78 What is Ms. A's income for

support?. 79 How much spousal support is payable and for what duration?. 79 Legal Framework. 81 Quantum, Duration, and Review.. 83 Retroactive Support and Arrears. 85 How much child support is payable and what amounts are included as section 7 expenses?. 87 Basic Child Support 87 Section 7 Expenses. 88 Registrar.. 88 Costs. 88 Introduction [1] Ms. P and Mr. A were married in Germany on October 15, 2004, after cohabiting for over a year. They have two children, twin boys B and M, who turned 13 years old in December 2017. The family immigrated to Victoria, British Columbia in August 2011 and were divorced on May 13, 2016. Ms. P is now 54 years old and Mr. A is 65 years old. [2] Ms. P seeks orders under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) [Divorce Act] and the Family Law Act, S.B.C. 2011, c. 25 [FLA] for shared parenting time for B and primary parenting time for M, child support, and spousal support. She also seeks an order for unequal property division under the FLA. [3] Mr. A seeks orders for primary parenting time of the children, child support, and unequal division of property in his favour. Background The Parties' Histories [4] The parties met in Germany while working at ERGO, a German insurance company. Ms. P was Mr. A's administrative assistant, and he was employed as an actuary in the Research Department. Mr. A had recently separated from his previous spouse,

Ms. A, in 2002. [5] Mr. A studied mathematics and earned a master's degree in Germany. He worked as an actuary at the German firm Gerling from 1979 until 1996, and commenced work at ERGO in 2001. Mr. A was well remunerated by his employers. In 2002, Mr. A's base salary at ERGO was €154,800 per year, and his bonus was €32,000. His 2003 bonus was €90,000. [6] Ms. P graduated from high school in Brazil. She attended five years of university, but did not graduate with a diploma or degree. She has a gift for languages and is fluent in German, English, and Portuguese, and has a working knowledge of French. [7] Ms. P worked as an assistant prior to her employment at ERGO. She left the workforce when the children were born in December 2004. She took primary responsibility for raising the children and operating the family's home during the marriage. [8] From around October 2006 until December 2009, Mr. A worked for ERGO International as the CEO of ERGO Turkey and served on the Board of ERGO International. The family lived in Turkey during that time, and returned to Germany after Mr. A's employment at ERGO was terminated. They lived in Germany until their move to Victoria in 2011. [9] The parties purchased a home in Victoria on Newport Avenue and registered it in joint tenancy. Mr. A purchased shares in a business in Victoria known as Mother Nature's Market and Deli ("Mother Nature's")

in 2012. Mr. A is on the Board of Directors of Mother Nature's and is involved with its management. [10] Throughout the parties' relationship, the family lived an affluent lifestyle due to Mr. A's employment income. Their children attended private school, and the family vacationed luxuriously. Although Mr. A retired from the workforce when he left ERGO International at the end of 2009, the family continued to live comfortably on income from Mr. A's Gerling and ERGO pensions. In 2015, Mr. A received €17,174, or $24,000, per month from pension income. [11] Mr. A has two children from his previous marriage to Ms. A: J, who is now 32 years old, and C, who is now 30 years old. J is married; he lives in Victoria and works for Mother Nature's. C lives in Germany. J lived with the parties for periods of time. Date of Separation [12] The parties differ on the date of separation. Mr. A submits the parties separated on June 30, 2013, around the time Ms. P left the parties' bedroom. Ms. P submits the parties separated on February 4, 2015, when she left the family residence with the children and moved into a rental accommodation. Parenting Time and Support [13] Until January 2017, the parties shared parenting time with their children on an equal basis pursuant to a consent order made on March 23, 2015. The parties' son, M and Mr. A had a number of disagreements over homework and

extracurricular activities, resulting in M refusing to spend time with his father. For this reason, Ms. P now seeks primary parenting time for M, and says that M should be allowed to decide if and when he sees Mr. A. Ms. P seeks to maintain shared parenting time for B. [14] Mr. A seeks primary parenting time for both boys. He proposes that he has parenting time during the week and Ms. P has parenting time on the weekends. Mr. A argues he is better suited to assist with schooling and general guidance, and that he can be available to them during the week because he is retired. [15] Ms. P seeks spousal support for the duration of her life, and child support on a shared parenting basis for B and as primary parent for M. In addition to Mr. A's pension income, she seeks to impute an additional $70,000 annually to Mr. A for his unpaid work at Mother Nature's. [16] At the beginning of the trial, Mr. A sought to impute income to Ms. P, who was looking for work. However, in April 2017, Ms. P obtained a full-time position with the children's school as an administrative assistant with a salary of $48,480 per annum excluding benefits. German Court Decisions [17] A number of German court decisions, which deal with the separation between Mr. A and his former wife, were tendered by Mr. A. Mr. and Ms. A were married in 1974, separated in 2002, and divorced in 2004. The German court decisions

provide evidence that is relevant to property division and support issues. I outline them below. [18] Mr. A submits that Ms. A was entitled to half of his pension from Gerling after their separation. The pension could not be divided by the administrator. Therefore, Mr. A was ordered to compensate Ms. A for her portion of the pension, while he remained entitled to its full value. In a decision dated February 20, 2003, the German court ordered Mr. A to set up a federal pension for Ms. A, which will pay her €757.34 per month after she turns 65. The decision states that on January 31, 2002, this annuity was equivalent to a payment of €162,960.40. [19] Mr. A submits the German court ordered him to set up a federal pension of €757.34 per month because he had sufficient assets to do so. However, Mr. A did not have to set up the pension until Ms. A was 65 years old. Mr. A preferred to use the assets he had in 2003 for investment and to pay family expenses, choosing to pay the debt later; he says this was more cost-effective than paying the debt and borrowing money for his own use. However, the amount necessary to establish the annuity varies every year. While it would have cost €162,960.40 to set up the pension in 2002, Mr. A says that in 2015, it would have cost €195,806.40. [20] A German court decision dated June 12, 2003, determined that Mr. A would pay Ms. A spousal support in the

amount of €1,618 per month. According to Mr. A, spousal support to Ms. A will end in 2019. [21] A German court decision dated April 25, 2008, divided the assets between Mr. A and Ms. A. That decision retrospectively valued Mr. A's net worth at €299,348.48, or $525,284, on February 12, 2002. A house in Germany was valued at €350,000 and showed no liability. The decision left Mr. A and Ms. A with a half interest in the house valued at €175,000 each. Mr. A eventually purchased Ms. A's half interest in 2004. The decision also found that in 2002, Mr. A owned a corporation worth €163,829. [22] While Mr. A translated these decisions, along with many other German documents, by himself, Ms. P did not dispute the accuracy of the translations. Ms. P is fluent in German and English, and had been employed as an interpreter and translator. I infer the parties agreed the court may accept Mr. A's German translations, including the German court decisions, as accurately representing the German language documents on the points in issue in this litigation. [23] Neither party presented evidence from a German legal expert on the import of the German court decisions. Therefore, the decisions, as translated into English, are accepted as representing the orders of the German court. Property Division [24] The primary assets currently held by the parties are as follows: funds from German and Canadian

bank accounts; Mr. A's two pensions; the home on Newport Avenue; and shares in Mother Nature's. [25] Prior to cohabitation, Mr. A owned other property. A major issue in this litigation is whether any of that property can be traced to currently held property. Mr. A asserts that some property in existence at separation, in particular the German house sold in 2014 and Mother Nature's shares, are excluded property because they existed prior to cohabitation or are derived from assets he owned prior to cohabitation. [26] As set out above, Mr. A has not yet set up the annuity for Ms. A in lieu of her portion of the Gerling pension. Between August 1, 2011, and May 31, 2015, he received €403,069 from the Gerling pension. Mr. A submits that the family benefitted from the income he has received from Gerling, part of which could have been put aside to fund his debt to Ms. A. For this reason, Mr. A argues his debt to Ms. A should be characterized as family debt and divided equally. [27] Ms. P argues that Mr. A's debt to his former wife which crystallized prior to their cohabitation is properly characterized as excluded debt. She argues this should be solely Mr. A's liability. [28] Ms. P argues that Mr. A has not proven that he had equity in any excluded property at cohabitation besides his Gerling pension. Alternatively, she argues that any excluded property owned by Mr. A at cohabitation

has since been dissipated or co-mingled with family funds. [29] In any event, Ms. P seeks a reapportionment, alleging non-disclosure and that significant family property is missing, for which she should receive compensation. [30] Mr. A disputes that any other family property exists, and he seeks a reapportionment in his favour because he entered the relationship with approximately €369,918, while Ms. P entered the relationship with debt. Mr. A paid around €6,816 of Ms. P's debt and seeks to have family property reapportioned to give him credit for this amount. [31] The parties also dispute the method of valuation for Mother Nature's shares. The parties jointly retained Chris Ounsted whose report dated September 15, 2016, valued the total shares of Mother Nature's at $845,000 and Mr. A's shares at $423,000 on September 30, 2015. Ms. P also tendered evidence of a potential purchaser, David Arnsdorf. Mr. Arnsdorf made two offers to purchase Mother Nature's shares for $1.5 million, subject to a number of conditions. [32] There are other less contentious disputes on the division of other family property, including Ms. P's entitlement to a portion of Mr. A's pension from ERGO, the disposition of the Newport residence, and the division of household contents. Issues [33] The issues for the court are as follows: Length of Relationship 1. What are the dates of cohabitation and separation? Parenting Regime 2. Should M be able to determine his parenting time with Mr. A?

3. How should parenting time and responsibilities be shared between the parties? Property Division 4. Can any of Mr. P's excluded property be traced to a currently held asset?

5. What is the value of Mr. A's shares in Mother Nature's?

6. Is the payment to Ms. A on account of the Gerling pension family debt, and if so, how should that family debt be divided?

7. How should Mr. A's ERGO pension be divided?

8. Should the parties sell the Newport house?

9. Is either party entitled to a reapportionment?

10. How should the household contents and vehicles be divided?

11. Does either party have to account for funds? Income Determination and Support 12. What is Mr. A's income for support?

13. How much spousal support is payable and for what duration?

14. How much child support is payable and what amounts are included as s. 7 expenses? Length of Relationship What are the dates of cohabitation and separation? [34] The parties differ slightly on the date of cohabitation. Ms. P submits the date is May 1, 2003. Mr. A submits it is June 30, 2003. [35] Ms. P testified that the parties made the decision to live together around May 2003. Mr. A testified that the parties started to look for shared accommodation in May and that Ms. P moved into an apartment Mr. A had rented at the end of June 2003. I accept that even though they had decided to live together at an earlier date, the parties actually began to live together on June 30, 2003. [36] The parties seriously contest the date of separation. Ms. P submits the date of separation is February 4, 2015, when she left the family residence with the children. Mr. A submits the date is June 30, 2013, when the parties stopped sharing a bedroom. [37] The dates of separation put forth by the parties at trial differs from the dates each used in their pleadings. Further, Ms. P also swore an affidavit on April 27, 2015, that deposed, "Since June 2013, [Mr. A] and I had multiple conversations during which I repeated again and again that there was no possibility of returning to a relationship as a couple any longer". Legal Framework [38] Section 81(b) of the FLA states: 81 Subject to an agreement

or order that provides otherwise and except as set out in this Part and Part 6 [Pension Division], (b) on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt. [39] Section 3(4) of the FLA sets out: (4) For the purposes of this Act, (a) spouses may be separated despite continuing to live in the same residence, and (b) the court may consider, as evidence of separation, (i) communication, by one spouse to the other spouse, of an intention to separate permanently, and (ii) an action, taken by a spouse, that demonstrates the spouse's intention to separate permanently. [40] When determining the date of separation under the FLA, the parties' intention is central. It may be sufficient for one party to have the intention to separate, if that intention is communicated through words or actions, and there is some form of physical separation: see Nearing v. Sauer, 2015 BCSC 58 at para.

59. In Nearing, at para. 56, the court outlined a number of factors to consider when determining the date of separation: [56] Typically when the parties dispute the date of separation, the court's analysis focuses on the generally accepted characteristics of marriage including the intention to remain married, having sexual involvement, carrying on activities in public, sharing financial resources and sharing significant family events: [Sachdeva v. Sachdeva, 2013 BCSC 313] at para.

87. The court will also consider a range of other factors, including a clear statement by one of the parties of his or her desire to terminate the relationship. Sexual involvement, or lack thereof, is not conclusive: Newth v. Booth, 2011 BCSC 317 at para.

17. Analysis and Conclusion [41] It is undisputed that around June 2013, the parties stopped sharing a bedroom. However, Ms. P testified that the couple continued to present themselves to the outside world as a couple and that she continued to manage the household after June 2013. [42] Further, Ms. P submits the parties continued to have a sexual relationship. While it is a relevant factor, the fact of having sexual relations is not determinative of whether spouses have separated. Also relevant is the fact that Ms. P had a romantic relationship with another person that began around June 2013. [43] In 2013, Ms. P went to Brazil on vacation with the children and asked Mr. A not to join them. The parties did not go on any vacations together after June 2013. In 2013, Ms. P also opened her own bank account at HSBC and transferred $6,000 from the parties' joint HSBC account to her sole account. She used the joint account to fund her vacation to Brazil with the children. In response, Mr. A also opened up a sole account and transferred $150,000 into it on August 15, 2013. He paid the parties' taxes with those funds. Ms. P did not dispute this evidence. [44] In 2014, Mr. A sought to move some family property into a family foundation or trust in Germany. According to Ms. P, Mr. A intended that only he and his children would be beneficiaries of the trust. [45] Ms. P believes that Mr. A

wanted to set up a trust to keep family property out of her reach in case the parties divorced. In response, Ms. P contacted a lawyer in Germany and then retained Ms. Todd, counsel in the present action. Ms. Todd sent a letter to Mr. A on June 24, 2014, informing him that Ms. P disagrees with the establishment of a family trust or putting assets obtained during the marriage into a trust. [46] Although Ms. P physically left the family home on February 4, 2015, I find that the parties were living separate and apart long before that date. From June 2013 onward, the parties' relationship permanently deteriorated. There is no evidence of reconciliation after June 30, 2013. Instead, I find the parties intended to and lived separate lives in the same household from June 30, 2013, until February 4, 2015. Parenting Regime [47] The parties are the proud parents of two twin boys, M and B, who are now 13 years of age. Before Mr. A's retirement in 2009, Ms. P was clearly the primary caregiver. Since Mr. A's retirement, both parents have been actively involved in parenting the children and both children have spent equal time with each party, until recently. [48] The children attend a private school. Ms. P seeks that the children remain there and that the cost of tuition and school fees are s. 7 expenses. The 2017-2018 tuition and fees were $19,425 for each child. Mr. A disagreed with the

children remaining at this school because of the high cost. Once Ms. P began working at the school and received a tuition discount of $23,310, Mr. A agreed that the children remain at the school. Including the staff discount and a sibling discount, the fees were $8,120 for M and $7,148 for B. [49] At the commencement of the trial, Mr. A sought parenting time with the children during the week and with Ms. P on weekends, and Ms. P sought equal parenting time, although her pleadings sought primary parenting of the children. [50] At the continuation of the trial in February 2017, Ms. P testified that as a result of disagreements the month before, M no longer wished to spend any time with his father. She applied to re-open the trial to adduce this evidence. Ms. P felt it was up to M to determine the parenting time with Mr. A. [51] The conflict centered around M's performance in school and wanting to quit some extra curricular activities. From mid-January 2017 to June 30, 2017, when the trial concluded, M refused parenting time with Mr. A. Mr. A's strong position is that one should not quit activities as soon as they are difficult, but when the activity is over. [52] Another incident involved M reporting to his father that he attended his school's home work club when, in fact, he had not and spent the time in the playground. Mr. A was concerned M spends too much time on video games,

and may be addicted to them. [53] On June 29, 2017, in the last days of the trial, counsel came to a consent order providing equal time for the summer with both boys, including vacations out of the jurisdiction. All parenting time for M, with his dad, was subject to M's agreement. There is no evidence before the court whether the parenting time occurred. [54] Two "Hear the Child" letters were prepared by Ms. Trudi Brown Q.C. The first is dated May 9, 2016 when the boys were 11, and the second is dated February 21, 2017, when they had recently turned 12. Both boys reported in the May 2016 letter that they were fine with whatever parenting time regime was ordered. The boys were spending equal time with both parents, rotating every few days. In particular, Ms. Brown reported the following about M: [M] tells me that he can live with this schedule and, if he didn't like what was going on, he could tell his parents and he thinks they would listen because they both care about what is best for the boys. He did say that neither of his parents have talked to him about what is going and what is happening in Court but he can always find out from his Mom about what is happening by playing Truth or Dare with her. [M] tells me that one of the things he used to love doing with his Dad was going to the climbing gym. He said that the way it used to work when his Mom and Dad lived together was

that his Dad would take [B] on Thursdays and [M] on Fridays and that was really good. It is not good when he and [B] go together and currently they don't have the opportunity to have any separate time with Mom or separate time with Dad. [M] tells me that he believes that both Mom and Dad are looking out for their best interests. He has no problems in that when he is with Mom he can phone or Skype with Dad and when he is with Dad he can phone or Skype with Mom if he wanted to do that although he explained that Mom wasn't very excited about him getting his own Skype account. [55] The May letter concluded with the following observation: In fact, neither of them seems to know what it is their parents are fighting about and both of them seem rather philosophically resigned to whatever parenting schedule is created. [56] The February 21, 2017 letter was prepared after M refused to spend time with his father. M relayed the disputes he had with his father: He explained to me that he was fighting about everything with his father and he has been exclusively at his mother's house for approximately one month. During that period he told me that he hasn't seen his father at all except when he sees his father pickup [B]. He explained to me that he had thought about this change for quite a while and after a weekend of fighting with his father about everything he discussed it with his Mom. It

was supposed to be his Mom's lawyer who explained his decision to his Dad but she didn't get the email so it was [B] who had to tell Dad that [M] wasn't coming which he said was not the best way to deal with it. I asked [M] what kinds of things he was fighting with his father about. He said he'd always been told that if he wanted to quit climbing he could do so but when he said he wanted to quit his Dad got mad. He said while he enjoyed some of the outdoor things he did with his father, doing them every single weekend was not enjoyable. [M] said that when things don't go his way his Dad tries to force things. The difference for [B] is that [B] just naturally agrees with things but [M] does not. [M] explained to me that at his Mom's house some time ago they moved things around so that he now has a bedroom - which was the dining room. He said that it is good to have his own room and good to be next to the kitchen. I asked [M] what kind of arrangements he could envision with his father in the future and he explained to me that he doesn't see dinners or meeting with Dad unless Dad could stop fighting and make sure that he could listen to him and not have everything his own way. Until that could happen, he is not prepared to return. [57] In February 2017, Ms. P amended her position, seeking primary care of M, with parenting time between M and Mr. A at M's choosing. [58] Mr. A

maintained his position, seeking care of the children on the weekdays with him and weekends with Ms. P. Should M be able to determine his parenting time with Mr. A? Legal Framework [59] Both parties originally sought orders respecting the children under the Divorce Act and the FLA. However, in submissions both counsel relied only on the FLA and sought FLA orders. Therefore, I will only be making orders pursuant to the FLA. [60] Section 37 of FLA is the operative section and sets out that the only factor the court must consider is what is in the best interests of the children. Section 37(2) sets out a number of factors that must be considered when determining the best interests of the children, including: (a) the child's health and emotional well-being; (b) the child's views, unless it would be inappropriate to consider them; (c) the nature and strength of the relationships between the child and significant persons in the child's life; (d) the history of the child's care; (e) the child's need for stability, given the child's age and stage of development; (f) the ability of each person who is a guardian or seeks guardianship of the child, or who has or seeks parental responsibilities, parenting time or contact with the child, to exercise his or her responsibilities; (i) The appropriateness of an arrangement that would require the child's guardians to cooperate on issues affecting

the child, including whether requiring cooperation would increase any risks to the safety, security or well-being of the child or other family members; I note that family violence is not an issue in this case. [61] Section 40 of the FLA specifically provides that no particular arrangements are to be presumed to be in the best interests of the children. [62] The child's views must be considered by the court, unless it would be inappropriate to do so. While it is important for the child's views to be heard, their views will not be determinative and the weight attributed to their views may vary in each case. In S.M.M. v. J.P.H., 2016 BCCA 284, the Court of Appeal held that at para. 22: 22 While a child's views and wishes are not determinative, courts should give considerable weight to the views of an older child, proportionate to their age and level of maturity: O'Connell v. McIndoe (1998), 56 B.C.L.R. (3d) 292 (C.A.), leave to appeal ref'd (1999), [1998] S.C.C.A. No. 576; T.(T.) v. H.(J.M.), 2014 BCSC 451 at para. 54. [63] In Alexander v. Alexander (1988), 15 R.F.L. (3d) 363 (B.C.C.A.), the court held the following about a 14-year-old boy: This court is now faced with the decision as to what is best for this boy who has been in the middle of a protracted custody battle between two parents who are both equally well qualified to parent and who would each offer him a good home. What

the child wishes is not necessarily best for the child, but there does come a point when at near adult years a child capable of responsible thought must now be deemed to be able to settle his own future in this important matter. Concomitant with that he must take the responsibility for his own actions. I think that that point has now been reached. For three years or more he has been unswerving in his wishes and no change is to be expected. It is not fair to push this boy to the point of rebellion and, consequently, I think that the change should be made sooner rather than later. [64] In K.L.P. v. J.F.P., 2009 BCSC 484 at para. 21, the court held that: [21] Children's views are important, but they are not the deciding factor. That is because their short-term and long-term best interests do not always coincide with their wishes: L.E.G v. A.G., 2002 BCSC 1455. Analysis and Conclusion [65] I find that Ms. P was the primary caregiver during the marriage while Mr. A was working. Since his retirement and after the family moved to Victoria in 2011, I find that Mr. A has had much more time and involvement with the children, but that Ms. P has a better understanding of the children's emotions and is better able to connect with them. I find that Mr. A is a very active father, in particular with schooling and extra curricular outdoor activities. [66] I do not accept Mr. A's submission that

he should have primary care of the children such that they should reside only with him during weekdays. However, I also do not accept Ms. P's contention that M should make the decision if and when he wishes to see his father. [67] There is clearly a breakdown in communication between Mr. A and M. The parties' relationship has also severely deteriorated. Ms. P testified in June 2017 that she will not communicate with Mr. A except through counsel and would not respond to his summer vacation request with the boys directly. [68] Ms. Brown's May 2016 letter did not identify any concerns voiced by the children regarding parenting time allocation or their relationship with either parent. Unfortunately, the continued litigation between the parties has strained the relationship between the parties further, which has affected the children negatively. [69] I find that Mr. A has not listened to M to the degree that M needs to feel respected. I also find that Ms. P has not encouraged M sufficiently to overcome the conflict with Mr. A, evidenced by leaving the decision to M whether parenting time would take place. While Mr. A's relationship with M has deteriorated, it is still early enough to fix the relationship. However, in order to do so, Mr. A needs to recognize the role he has played in the relationship and accept that to move forward, some changes may need to be made. If he cannot do

so, there is a risk that the relationship will only continue to deteriorate, and at some point M's wishes will carry more weight with the court. Ms. P also needs to set aside her animosity towards Mr. A, so she can better support a relationship between Mr. A and M. [70] I order the parties and M to attend counselling together for the next year. The counsellor should be acceptable to both parties, and the cost of the service is to be born equally. B may also attend if the parties and counsellor agree that will be beneficial. The counselling sessions will be weekly for the first two months, after which they may take place every two weeks for the next two months. After that, they may take place every three weeks. [71] The following schedule is intended to introduce M and Mr. A to a graduated parenting time schedule leading to a schedule of equal parenting time within six months of these reasons. The schedule is based on evidence before the court that M and Mr. A had no communication for six months, which may have changed since the conclusion of the trial. The parenting time schedule below represents minimum amounts of time. The parties are at liberty to reach their own schedule provided that the following minimum parenting time between Mr. A and M is achieved: a) within two weeks of these reasons, three hours per week; b) within two months of these reasons, 36 hours per week,

including overnight; c) within three months of these reasons, 48 hours per week; and d) within four months of these reasons, 60 hours per week. [72] Either party is at liberty to bring any applications on parenting time with M or on any issues respecting counselling within a year of these reasons, and for that period of time, I will be seized of those applications. How should parenting time and responsibilities be shared between the parties? [73] I find that both parties are loving parents, who are both capable of raising the children to be healthy, disciplined, happy children. Each has a different style from the other, which can be a benefit to the children. [74] Having considered all the factors of s. 37 and the best interests of the children, I find that the parents should continue to have equal parenting time of B and, as set out above, equal parenting time of M within six months of these reasons. [75] Ms. P proposed a 5-2-2-5 schedule for B as follows: a) with Parent A from Monday after school until Wednesday morning before school; b) with Parent B from Wednesday after school until Friday before school; c) on alternating weeks, with Parent A from Friday after school until the following Wednesday morning before school; and d) on alternating weeks, with Parent B from Wednesday after school until the following Monday before school. [76] Ms. P proposes that the parent with

time after school is responsible for picking up the child, and the parent whose time ends on a school morning is responsible for taking the child to school. She proposes the exchange time would be 3:15 p.m. even if the child is not in school. [77] There are a number of advantages to this schedule: the parties will have alternating weekends and will each have two regular weekdays with B (either Monday and Tuesday or Wednesday and Thursday), which will allow each parent to plan regular activities on their days. [78] I order that the parties adopt this proposed parenting schedule for B. Until M is on equal parenting time with Mr. A, the parties will determine M's specific dates and times with Mr. A, subject to the parameters set out in these reasons. Once the parties have equal parenting time of M, it should be on the same schedule as B. [79] The parties are in agreement, and I order the following schedule for holiday time: a) alternating Thanksgiving Day, with Mr. A having the children in 2018; b) alternating Remembrance Day, with Mr. A having the children in 2018; c) alternating fall reading break, with Ms. P having the children in 2018; d) Ms. P will have the children for first half of winter break with the exception of December 24, at which time they will go to the Mr. A's home at 8:30 a.m. The children will return to Ms. P's home on December 25 at 8:30 a.m. Mr. A will have

the last half of Winter Break; e) alternating spring reading break, with Mr. A having the children in 2018; f) the parties will share equally the spring break, with Mr. A having the children the first half and Ms. P the second half; g) every year Mr. A will have the children on his birthday, September 28, including overnight; h) every year Ms. P will have the children on her birthday, December 19, including overnight; i) the parents will alternate having parenting time on the children's birthday, with Mr. A having the children in 2018. The parent who does not have the children that year will have time with children on their birthday for two hours after school or from 2:00 p.m. to 4:00 p.m. if school is not in session; j) Ms. P will have the children for Mother's Day from 8:30 a.m. to 3:30 p.m. if Mother's Day falls on a day when she does not have parenting time; k) Mr. A will have the children on Father's Day from 8:30 a.m. to 3:30 p.m. if Father's Day falls on a day when he does not have parenting time; l) Mr. A will have the children from the last day of school in June for four consecutive weeks and Ms. P will have the children for the last four weeks of summer break before school resumes in September. The regular parenting time schedule will be in effect for all other periods during the summer break; and m) the regular parenting schedule will resume immediately after the

aforementioned holiday periods. [80] The parties are at liberty to agree on alternative schedules for regular and holiday parenting time. Either party is at liberty to bring any applications on parenting time within a year of these reasons, and, for that period of time, I will be seized of those applications. [81] I order, by consent, the following: 1. pursuant to s. 39 of the FLA, both parties are guardians of the children; and 2. the parties will share equally all of the s. 41 parental responsibilities for the children under s. 40(2) of the FLA. [82] In the event that the parties cannot reach an agreement on a significant decision despite their best efforts, Ms. P will be entitled to make those decisions, and Mr. A will have the right to apply for directions on any decision he considers contrary to the best interests of the child, under s. 49 of the FLA. [83] The children may remain at their current school as long as Ms. P remains employed there and receives a substantial tuition discount. The remaining tuition and other school fees, such as uniforms and supplies, are expenses pursuant to s. 7(1)(d) of the Federal Child Support Guidelines, SOR/97-175 [Guidelines]. [84] Neither party sought the assistance of a parenting coordinator. Both parties asked the court not to order one at this time. They reached a consent order giving them liberty to apply for the appointment of a

parenting coordinator in the future. Property Division Currency Conversion [85] Ms. P submits that for the sake of clarity and simplicity, it is appropriate to use one rate of conversion between euros and Canadian dollars. I agree. I accept Ms. P's submission that the average rate of conversion based on the Bank of Canada exchange rates during the relevant period of time is 1.4. I have applied the conversion rate of 1.4 in these reasons. Legal Framework [86] The FLA creates an excluded property regime: anything owned by either or both spouses at separation is family property unless a party can show that it ought to be excluded. Section 81 gives each spouse a presumptive right to an undivided, one-half interest in any family property, and a presumptive obligation for half of the family's debt. [87] Section 84 of the FLA sets out an expansive definition of family property: 84 (1) Subject to section 85 [excluded property], family property is all real property and personal property as follows: (a) on the date the spouses separate, (i) property that is owned by at least one spouse, or (ii) a beneficial interest of at least one spouse in property; (b) after separation, (i) property acquired by at least one spouse if the property is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either,

or (ii) a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either. (2) Without limiting subsection (1), family property includes the following: (a) a share or an interest in a corporation; (g) the amount by which the value of excluded property has increased since the later of the date (i) the relationship between the spouses began, or (ii) the excluded property was acquired. [88] A party may dispute that property falling under s. 84 is family property by showing that it falls within s. 85: 85 (1) The following is excluded from family property: (a) property acquired by a spouse before the relationship between the spouses began; (g) property derived from property or the disposition of property referred to in any of paragraphs (a) to (f). (2) A spouse claiming that property is excluded property is responsible for demonstrating that the property is excluded property. [89] In order to make a determination under s. 85(1)(g), the court must consider whether presumptively family property was "derived" from an excluded asset during the relationship. In other words, the FLA allows the court to trace excluded property. [90] The case law under s. 85(1)(g) is in the early stages of development. In

particular, the issues of what evidentiary record is necessary to prove that currently owned property is derived from the original excluded property, and what tracing methods the court should employ, is far from settled law. [91] In Shih v. Shih, 2017 BCCA 37, our Court of Appeal held that tracing does not require precision, but does require cogent evidence capable of establishing the derivation on a balance of probabilities, stating at paras. 41-44: [41] The inherent challenge which confronts litigants under the FLA is that in many relationships of any significant length, documents will have been destroyed and memories dimmed. A legal standard that demands mathematical certainty or precision risks defeating legitimate claims. [42] In my opinion, the proper test for establishing a claim to excluded property under s. 85 of the FLA is the same as in any civil case - proof on a balance of probabilities. The requirement of certainty and precision in my view improperly tips the standard closer to the criminal standard of proof beyond a reasonable doubt. [43] I do not quarrel with the proposition that, in order for a party to establish excluded property, he or she must do so with clear and cogent evidence. If documentary evidence is not available, the party bearing the onus of proof will need to testify as to their recollection of the transactions in dispute. That evidence will be

scrutinized for credibility. [44] However, in balancing the evidence as a whole, the trial judge must be permitted to draw reasonable inferences from evidence that is less than certain or precise in order to do justice between the parties. [92] When the excluded property model was promulgated in the FLA, the purpose was, in part, to align with people's notion of fairness. At para. 45 of Shih, Kirkpatrick J.A. referred to the case of P.G. v. D.G., 2015 BCSC 1454 at para. 76, which considered the policy behind the reform of family law legislation in BC: [45] In P.G. v. D.G., 2015 BCSC 1454, Madam Justice Fenlon (as she then was) discussed the purpose of the excluded property model of the FLA and emphasized the need to fit with parties' expectations of fairness. [76] ... In the British Columbia Ministry of Attorney General's White Paper on Family Relations Act Reform: Proposals for a new Family Law Act, (2010), online:< http://www.ag.gov.bc.ca/legislation/shareddocs/fra/Family-Law-White-Paper.pdf> the reason for introducing an excluded property regime was described as follows (at 81): The most compelling reasons for moving to an excluded property regime are to make the law simpler, clearer, easier to apply, and easier to understand for the people who are subjected to it. The model seems to better fit with people's expectations about what is fair. They "keep what is theirs," (such

as pre-relationship property and gifts and inheritances given to them as individuals) but share the property and debt that accrued during their relationship. [93] The new model places the onus on the party seeking an exclusion to prove with clear evidence that property is excluded. However, this exercise was not meant to be overly complicated or burdensome. The objectives of the new model must be considered together with the reality that many parties will co-mingle excluded property with family property over time, including using excluded property to purchase other property or refinancing excluded property to purchase other property. The court must also consider evidentiary difficulties inherent in family law actions, as the Court of Appeal noted in Shih. Where documents are less than complete, the credibility and reliability of the parties' and other witness' testimony will become critical in the overall assessment. [94] This accords with the "primary policy objective guiding the courts' role in division of assets on marital breakdown in British Columbia" noted by the Supreme Court of Canada in Hartshorne v. Hartshorne, 2004 SCC 22, which is fairness between the parties. While Hartshorne considered the former Family Relations Act, R.S.B.C. 1996, c. 128, the FLA has not departed from this goal. [95] The Court of Appeal has also raised the possibility that the FLA does not

require the court to apply the formal rules for asset tracing. In Jaszczewska v. Kostanski, 2016 BCCA 286, Harris J.A. wrote for the court: [59] It may be that the use of the phrase "derived from" in s. 85(1)(g) allows for a more flexible approach to identifying excluded property than would the formal rules of tracing: V.J.F. at footnote 1. The meaning of 'derive' has been said to be broader than the meaning of 'receive' and equivalent to 'arising' or 'accruing': V.J.F. at para. 56. [96] While the FLA does allow parties to keep "what is theirs", it also accepts that families are a joint endeavour, not a business between arm's-length parties. As a relationship grows longer, the responsibilities, capacities, and assets of the spouses will often grow more intertwined. This is recognised in other areas of family law, such as awards for spousal support. The role of the court on the breakdown of a relationship is not to tease apart these threads and restore the parties ab initio, but rather to address the consequences of the relationship's breakdown and seek fairness in that light. [97] In the case at bar, both parties contemplate a precise and mathematical tracing that runs against the object of an excluded property regime. If, as Shih notes, the object is to balance ease, clarity, and simplicity with fairness, the tracing methods that the parties borrow from contract law and

commercial disputes are not appropriate. It would make for a departure from the simplicity and clarity that underlie the excluded property regime. [98] There are a number of ways that property can be derived from other excluded property. Courts have found that property secured with the equity of excluded property is "derived" from that excluded property: see Shih at paras. 59-65. Courts have also traced excluded property that is used to pay down a mortgage to the equity of the house: see H.C.F. v. D.T.F., 2017 BCSC 1226 at para. 183. [99] Tracing excluded property can be a relatively simple exercise when excluded property co-mingles with other property in an asset that appreciates in value. In such cases, the value of the excluded property at cohabitation can often be deducted in full from the value of the currently held property. However, the tracing exercise is more difficult when excluded property co-mingles with other property, and the value of the asset depreciates. In that case, the party claiming an exclusion may not be able to claim the full value of the excluded property at cohabitation. [100] Further, the FLA limits a spouse's interest in excluded property to the value of the property at cohabitation or the date it was received; it does not provide an interest in that specific value if the property has depreciated or been dissipated: Remmem v. Remmem, 2014 BCSC 1552, at paras. 30, 42; Asselin v. Roy, 2013 BCSC 1681 at para.

222. In Remmem at para. 29, Butler J. states, "where excluded property has depreciated in value since one party brought it into the relationship, that party has no ability to look to other family property to make up the loss in value." Can any of Mr. P's excluded property be traced to a currently held asset? [101] Mr. A claims that he entered the relationship with €369,918 in excluded funds. Mr. A calculated this figure by adjusting the value of his assets in February 2002 (€299,348.48) set out in the 2008 German court decision based on events that occurred between February 2002 and cohabitation. [102] Ms. P submits all exclusion were lost. [103] In December 2004, Mr. A purchased Ms. A's half interest in the German home for €125,000, although each half interest was valued at €175,000 in 2002 in the 2008 German court decision. [104] Mr. A values his half interest in the German house at cohabitation with Ms. P in 2003 at €150,000; he averages the €175,000 value in 2002 and the €125,000 purchase price of Ms. A's half interest in 2004. Although Ms. P submits there was very little equity in the German house at the time, the parties generally agree that Mr. A's half interest was his excluded property at cohabitation. [105] Whether Mr. A's purchase of Ms. A's interest in the home in December 2004 became Mr. A's excluded property is a thornier issue. Mr. A purchased Ms. A's half

interest during his relationship with Ms. P and the parties disagree on the source of the funds used to purchase the half interest. Ms. P argues Mr. A obtained a €300,000 mortgage against the home to purchase the half interest and finance renovations. Mr. A argues the half interest was purchased with excluded funds and that the €300,000 mortgage was used to finance renovations and pay for other family expenses. [106] In any event, the parties agree that the €300,000 mortgage was paid off by the end of 2011. In August 2011, the parties moved to Victoria. It is Mr. A's evidence that in April 2012, the German house was mortgaged for a second time in the amount of €228,000 to purchase Mother Nature's shares worth $250,000. Ms. P disputes that the monies to purchase the shares of Mother Nature's came from the second mortgage. Alternatively, Ms. P argues that the mortgage proceeds were family property. [107] In August 2012, Mr. A provided a shareholder's loan to Mother Nature's of $120,000. He withdrew the funds from the parties' joint HSBC account. The loan was later converted into shares. At first, Mr. A argued that he funded the loan with Gerling pension income, an excluded asset. Later, he argued he also funded the loan with proceeds from the second mortgage on the German house. [108] Ms. P submits that the shareholder's loan was funded with family property from the parties'

joint HSBC account. She argues that German mortgage proceeds are family funds and that income from the Gerling pension lost its excluded status when it was co-mingled with family funds. [109] Ultimately, the German house sold for €390,000 in October 2014. There was no substantial change in the principle amount owing under second mortgage before the sale of the German home. The net proceeds of the sale were €129,796.49 or $181,715.09. The parties disagree whether the proceeds of sale constitute family property or excluded property. [110] Mr. A's principal argument is that the German house remained excluded property despite the fact that it was mortgaged in 2005 and the mortgage was paid off, in part, with family property. He argues that the shares of Mother Nature's were purchased with excluded property, thereby rendering the shares his excluded property. Mr. A also asserts that he is entitled to 100% of the net proceeds of the sale of the German house. [111] Ms. P argues that Mr. A had no equity in the German house at cohabitation, and if he did, then he lost any exclusion when the €300,000 mortgage was obtained and paid off with family property. Alternatively, she submits that if Mr. A maintained some exclusion in the German house, it cannot be traced to currently held assets financed by the German house because the funds lost their exclusion when they were co-mingled in the

parties' joint HSBC account. [112] In order to determine whether Mr. A can claim an exclusion in any of the currently held assets, I must determine the following: 1. Can Mr. A claim excluded property in the German house? a. Was there equity in Mr. A's original half interest in the German house? b. Was Ms. A's half interest in the German house purchased with excluded funds? c. Did Mr. A maintain an exclusion over all or a portion of the German house after the first mortgage was repaid? d. Are any of the sale proceeds excluded property?

2. Can Mr. A trace excluded property to his shares in Mother Nature's? Can Mr. A claim excluded property in the German house? [113] Mr. A argues that assets from his corporation, valued at €163,829 in the 2008 German court decision, and the savings from his 2002-2003 bonuses were used to purchase Ms. A's interest in the German house. Therefore, the German home was entirely excluded property as it was purchased with excluded property. [114] Ms. P submits that Mr. A has not proven that he purchased Ms. A's interest in the house with excluded assets, because he has not produced any documents evidencing his corporation's assets at the time of cohabitation, or in December 2004 when Mr. A purchased Ms. A's half interest. [115] Instead, Ms. P submits the €300,000 mortgage was obtained to purchase Ms. A's half interest and to finance a renovation to the German house, which occurred in 2005. In support of her argument, Ms. P relies on Mr. A's July 2013 letter to the BC Provincial Nominee Program, which indicates that Ms. A's interest was purchased by way of a mortgage. [116] Mr. A argues that the July 2013 letter is inaccurate and the €300,000 mortgage was used to finance the 2005 renovation and pay for other family expenses. [117] Ms. P also argues that Mr. A may have had a mortgage on the German house at cohabitation. She relies on a German registry document, which indicates that a

1985 mortgage of 436,000 DM was cancelled on March 3, 2005, during the parties' relationship. Ms. P asks that I infer from the German registry document that the house had no, or almost no, equity in it when the relationship began. [118] Mr. A testified that the house was free and clear of any mortgages at the time of the German court decision. He says the mortgage was obtained in 1985 when he and Ms. A purchased the home and the registry document was not updated to show the mortgage discharge. [119] It is undisputed that the German house fell into disrepair from 2002 to 2004 due to a lack of maintenance. The home was a three story, five-bedroom, four-bathroom home in a desirable location. There is no dispute that the renovations were extensive, and the intention was to rebuild the entire house. The work included a new heating and draining system, special tiles, marble and hardwood floors, new kitchens, and bathrooms. The house finishings were of high quality and expensive. [120] It is also undisputed that Mr. A took out a mortgage of €300,000 and that at least a portion of the mortgage funds were used to fund the renovations. The German registry document indicates that a €300,000 mortgage was approved on December 9, 2004, and was registered on January 19, 2005. [121] The parties agree the €300,000 mortgage was paid off by the end of 2011. The 2008 German court decision

indicated that Mr. A had owned life insurance valued at €72,368. Mr. A testified that he cashed in this policy in around 2010, when it was tax free to do so, and applied the proceeds towards the balance on the mortgage in 2010. He said the life insurance policy was worth around €76,000 when he withdrew it. While there was some confusion in the parties' submissions regarding the date Mr. A cashed in the policy, I accept Mr. A's sworn testimony that the proceeds were applied to the mortgage. [122] I infer that after the mortgage was retired in 2011, the German house was owned free and clear, until April 2012. Other than the proceeds of the life insurance policy, the €300,000 mortgage was clearly paid with family property. [123] In 2012, Mr. A re-mortgaged the German house. Mr. A testified the house was re-mortgaged in the amount of €228,000 to purchase shares in Mother Nature's. Little evidence was produced regarding subsequent payments to the mortgage taken out in 2012. The house was sold in October 20, 2014, for €390,000. At that time, the balance on the mortgage was €238,382. [124] The evidence on some aspects of the German house is less than complete, and some of the evidence and arguments are inconsistent. Where possible, I will make findings of fact based on documentary evidence, taking into account what is likely probable, given the surrounding circumstances. Was there

equity in Mr. A's original half interest in the German house? [125] For the reasons that follow, I find that Mr. A's net worth at cohabitation was €369,918 or $517,885, excluding the Gerling pension, for the following reasons: a) I accept Mr. A's evidence that his net worth increased in the period from February 2002 to June 2003 as he did not "go to Vegas" or have a "bon fire" to dispose of his property; b) his substantial salary of €154,800 and bonus of €32,000 in 2002, was more than ample to support his expenses; and c) I find Mr. A tried to be forthright and accurate in his evidence. [126] I also accept that on a prima facie basis, Mr. A's half interest in the German house worth €150,000, was excluded property at cohabitation, setting aside any subsequent changes. [127] I do not accept that the German house had little or no equity in it when the relationship began. I reject that the house had a mortgage at cohabitation. The comprehensive assessment of Mr. and Ms. A's assets and liabilities in the 2008 German decision makes no mention of an outstanding mortgage. If there was substantially no equity in the house in 2004, then Mr. A would not have paid a substantial sum for Ms. A's half interest. Did Mr. A purchase the rest of the house with excluded funds? [128] I find that Mr. A purchased Ms. A's half interest in 2004 with excluded property for the following reasons. [129] I

find it unlikely that Mr. A could have secured a mortgage on the German house for €300,000 if Mr. A's equity in the house consisted only of his half interest, being worth €125,000 in 2004 or even €175,000 using the February 2002 value. I also find that Mr. A owned excluded property sufficient to fund the purchase. [130] The fact that Mr. A did not produce documents showing the value of his consulting company in December 2004 does not foreclose the court from inferring that he continued to hold this asset in 2004 and that its value had not significantly decreased since February 2002. I accept Mr. A's evidence in this regard and infer that he purchased Ms. A's interest in the German house with funds derived from company assets or other excluded property. [131] I accept Mr. A's evidence that the letter for the BC Nominee program contained many errors. The letter is dated July 2013, yet it refers to a balance of €145,000 on the €300,000 mortgage, which the parties agree was paid off in 2011. [132] The German registry document indicates that a €300,000 mortgage was approved on December 9, 2004, and was registered on January 19, 2005. This is also consistent with the evidence that Ms. A's interest was purchased before the mortgage was obtained. [133] I find that in December 2004, after purchasing Ms. A's share, the entire German house was Mr. A's excluded property. Whether the house

retained its excluded status is the next issue for the court. Did Mr. A maintain an exclusion over all or a portion of the German house after the first mortgage was repaid? [134] The essence of Mr. A's argument is that, since he entered the relationship with excluded property of a half interest in the German house and then used his excluded equity to purchase Ms. A's half interest, the equity in the home was his excluded property, even after the house was financed and paid off with family property. [135] Ms. P argues that Mr. A's method of tracing is arbitrary and that she could just as easily argue the reverse: that the first property into the asset, being Mr. A's equity, is the first out of the asset. Since the house was financed in 2005 for an amount approximately equal to the value of Mr. A's original excluded property in the German house, Mr. A's excluded property was dissipated or lost through financing, leaving only equity generated by family property. [136] Ms. P suggests that a pro-rata method of tracing would produce the fairest result. She argued that, using the pari passu method of tracing, the court could determine the ratio of the excluded property contributed to the German house in relation to all other contributions. The court could then apply this ratio to the value of the asset, or property derived from it, in order to determine the value of excluded property

at the valuation date. However, Ms. P argues that the pro-rata method cannot be utilized because of Mr. A's incomplete disclosure, and the lack of evidence on mortgage payments and the value of the German house at various points in the relationship. [137] I agree with Ms. P that there are serious difficulties in applying a pro-rata tracing method in this case. In my view, the primary difficulty is tracing Mr. A's original excluded property to the equity of the house after 2005 when the €300,000 mortgage was taken out. [138] Based on Mr. A's own evidence, by the end of 2004, the value of the house had decreased to around €250,000. For this reason, after the €300,000 mortgage was registered against it, there was no equity remaining in the house. The original excluded property in the German house did not co-mingle with family funds used to pay down the mortgage. The excluded property was dissipated first. [139] In some situations, the court may trace the value of excluded property used to secure a mortgage into the mortgage proceeds. Here, the parties are in agreement that at least a portion of the mortgage proceeds were used to renovate the house. However, there is no evidence that would allow the court to determine what portion of the mortgage proceeds funded the renovations. [140] Further, there is insufficient evidence to allow the court to determine how much, if any, equity

was generated by the renovations. In her submissions, Ms. P estimated the value of the house in 2006, after the renovations were completed, at around €600,000. However, this estimation was based on the listing price of the house when it was on the market between 2006 and 2009. It was both parties' evidence that the house was on the market for tax purposes and was listed above fair market value. [141] Most importantly, in 2014, the German house sold for €390,000 - only €90,000 more than the amount of the 2005 mortgage. [142] This situation is similar to the one in Polard v. Polard, 2017 BCSC 1963. In that case, Mr. Polard owned a house before cohabitation and claimed that pre-cohabitation equity of $13,000 was his excluded property and could be traced to the proceeds of the sale of the house. However, the value of the house had depreciated, and the house was sold for less than it was purchased. Justice MacKenzie determined, at para. 10, that Mr. Polard had not established that his contribution should be excluded property because: [10] the only reason Mr. Polard realized any equity as a result of that sale was because the mortgage was reduced, partly because Mr. Polard's father forgave his $20,000 mortgage and partly because Ms. Polard contributed during the course of the relationship to reducing the principle amount of the mortgage. [143] Similarly, the parties have only

retained equity in the German house because the first mortgage had been paid off in full, mostly with family property. [144] In these circumstances, it would be too speculative to determine what portion of Mr. A's original excluded property in the house generated equity by acting as security to finance the renovations. Instead, I find that Mr. A's original excluded property in the German house was dissipated when the house was financed. [145] However, I accept that Mr. A cashed in his life insurance policy, which is excluded property, and applied the proceeds to the payment of the mortgage. Since any increase in the value of the life insurance after cohabitation was family property, I find that €72,368 of the proceeds applied to the payment of the €300,000 mortgage was excluded property. [146] The net proceeds of the sale of the German house in 2014 are greater than €72,368. In these circumstances, it is fair to assume that excluded property worth €72,368 remained in the house after the second mortgage was taken out in 2012 and to trace the full value of this exclusion to the sale proceeds. [147] Since I have determined that the full value of Mr. A's excluded property remained in the German house, none of the €72,368 can be traced to the proceeds of the mortgage taken out in 2012. I have determined that the second mortgage was secured on the equity in the house generated by

family property. Therefore, the family funds used to pay off the remainder of the €300,000 mortgage are traceable to the mortgage proceeds that were invested in Mother Nature's. What portion of the sale proceeds is excluded property? [148] The German house sold for €390,000 in October 2014. The parties owed the following payments: a) €238,382.21 on the mortgage; b) €321.30 in notary costs; and c) €21,500 in real estate agent commissions. [149] The net proceeds of the sale were €129,796.49 or $181,715.09. [150] I have found that €72,368 or $101,315.20 of the net proceeds was Mr. A's excluded property, with the balance of the proceeds (€57,428.49 or $80,399.89) being family property. [151] Accordingly, Mr. A is entitled to €101,082.25 or $141,515.15 of the net proceeds of the sale. Ms. P is entitled to €28,714.25 or $40,199.94 of the net proceeds of the sale. [152] The proceeds of the sale, in the amount of $214,245.21, were deposited into Mr. A's sole HSBC account on February 5, 2015. I accept that this amount was higher than the net proceeds of sale by $32,530.12, because the real estate agent's fees had not yet been deducted. Mr. A later paid these fees. Ms. P should account for her portion of the family debt paid by Mr. A. [153] On February 6, 2015, Ms. P obtained an ex parte restraining order restraining Mr. A from using any property, including all bank accounts. On April

30, 2015, Mr. A's HSBC account contained $276,453.14, with $214,245.21 of the funds being sale proceeds. The parties were generally in agreement that the balance of the funds in Mr. A's account in April 2015 of $62,207.93 was family property. [154] Therefore, Mr. A is entitled to $205,149 of the funds in his bank account. Ms. P is entitled to $71,304 of the funds in Mr. A's bank account. [155] In April 2013, the court ordered that funds could be disbursed from Mr. A's HSBC account as follows: a) $175,000 to Ms. P's counsel, MacMinn and Company (now Deborah Todd Law); b) $59,292.40 towards the parties' 2014 taxes; c) $25,000 to Mr. A's counsel, McCullough Blazina Dieno and Gustafson; and d) the balance of the account (being $17,160.74) was released to Mr. A for his sole use. [156] The $175,000 deposited in trust at Deborah Todd Law has been equally allocated to the parties in the following manner: a) Ms. P received $45,000; b) Mr. A received $45,000; c) $1,400 was paid to Trudi Brown's account; d) a joint retainer of $6,000 was paid to Chris Ounsted; e) $11,587.50 was paid to Chris Ounsted's account; and f) $10,000 retainer was paid to Chris Ounsted. The remaining funds in trust, as of February 20, 2017, were $57,540.95 ($56,012.5 remaining from the original balance plus interest). [157] During the litigation, the parties split the balance of the funds in trust. The payment to

Canada Revenue Agency, Mr. Ounsted, and Ms. Brown all constitute family debt which should be divided equally. These debts total $88,279.90. [158] Accordingly, Mr. A received a total of $159,306.94: $25,000 was paid to his law firm; $17,160.74 was distributed from the account pursuant to Mr. Justice Leask's order of April 30, 2015; $45,000 from the trust account was distributed to Mr. A; $44,139.95 of the payment of family debt is allocated to him; and half of the remaining balance of the trust funds in April 2017, being $28,006.25 (not including interest generated while the funds were in the account). [159] Ms. A received a total of $117,146.20: $45,000 from the trust account; $44,139.95 of the payment of family debt is allocated to her; and half of the remaining balance of the trust funds in April 2017, being $28,006.25 (not including interest generated while the funds were in the account). [160] Therefore, Ms. P received more than her share of the funds in Mr. A's HSBC bank account. She received an additional $45,842.20 ($117,146.20 - $71,304) and must account for this in the final equalization payment. Can Mr. A trace excluded property to his shares in Mother Nature's? [161] On April 24, 2012, Mr. A purchased 100 class A shares and 150 class C shares in Mother Nature's for $250,000. Mr. A submits that the shares were purchased with the mortgage proceeds secured by the German

house. A bank statement indicates that $295,541.31 was deposited to the joint HSBC account on April 13, 2012, and that $250,000 was transferred to Mother Nature's on April 24, 2012. [162] In August 2012, Mr. A provided a shareholder's loan to Mother Nature's in the amount of $120,000. The $120,000 was later converted into class C shares. Mr. A argues that all the currently held Mother Nature's shares can be traced to excluded property and should not be divided. [163] Ms. P made a number of arguments with respect to the original $250,000 investment on April 24, 2012. She argues that the German house lost its excluded status when it was re-financed and, therefore, any property derived from it is family property. Alternatively, she argues that even if a portion of the mortgage funds secured on the German house are excluded property, the exclusion was lost when the funds were deposited into the parties' joint account and gifted to Ms. P. [164] With respect to the $120,000 investment, Ms. P argues that it was not purchased solely from excluded property, but rather with a mix of funds deposited into the parties' joint account. She submits that the mortgage funds and the Gerling pension payments lost their excluded status when they were transferred into the account. [165] Even if the funds did not lose their excluded status, Ms. P says that the court should apply a pro-rata tracing

method to determine the portion of excluded funds that can be traced to the $120,000 investment. Using the pro-rata tracing method, only a small portion of excluded funds are traceable to the investment. Analysis and Conclusion [166] I accept Mr. A's testimony that the funds deposited in the parties' joint account on April 13, 2012, were derived from a mortgage on the German house and that these funds were used to purchase shares in Mother Nature's worth of $250,000 on April 24, 2012. [167] However, as stated above, I have found that the 2012 mortgage was secured on equity generated by family property. Since I have traced the full value of Mr. A's excluded property from his life insurance to the sale proceeds of the German house, none of this exclusion can be traced to the mortgage proceeds taken out in 2012. [168] Therefore, I need not consider the legal effect of placing the mortgage funds into the parties' joint bank account because I have determined that the funds are properly characterized as family property. For this reason, the shares purchased with the mortgage proceeds on April 24, 2012, are family property. [169] With respect to the $120,000 shareholder's loan, as I have already found that the mortgage proceeds were family property, I need only determine whether Mr. A can trace excluded funds from the Gerling pension into the $120,000 investment. It is common ground

that the Gerling pension vested before cohabitation and that income from the Gerling pension is excluded property. [170] Ms. P's argument is that the Gerling pension lost its exclusion when it was deposited into the joint account because they became a gift to Ms. P. This argument relies on the common law principle of the presumption of advancement, the application of which under the new FLA is a controversial issue: V.J.F. v. S.K.W., 2016 BCCA 186; H.C.F. v. D.T.F., 2017 BCSC 1226; C.J.B. v. A.R.B., 2017 BCSC 1682. However, in this case it is not necessary for me to determine whether the presumption of advancement applies. [171] Around September 2011, Mr. A began receiving regular monthly payments from the Gerling pension. The monthly payments from Gerling, along with monthly payments from the ERGO pension, were deposited into Mr. A's German bank account. Around December 2011, Mr. A set up an automatic monthly transfer of €6,000 from his German bank account into the parties' joint HSBC account. Any portion of those deposits attributable to the Gerling pension was, therefore, mixed with family funds in the HSBC account. In April 2012, the mortgage proceeds were deposited into this same account. [172] I find that Mr. A did not specifically earmark Gerling pension payments as funds to invest in Mother Nature's. It is difficult to determine exactly which funds from the joint

account were used towards payment of the shareholder's loan, given that there were both Gerling pension payments and ERGO pension payments in this account at the time. The ERGO pension payments could just as easily been used to pay the shareholder's loan, along with the remaining mortgage funds which I have already found to be family property. In these circumstances, it is not necessary for me to determine whether the presumption of advancement applies to the Gerling pension funds. Instead, I find it is not appropriate to trace Mr. A's excluded income from the Gerling pension to the $120,000 withdrawal from the parties' joint account in August 2012, due to the lack of clear evidence that these funds were paid with the Gerling pension monies. [173] I am also cognizant that Mr. A has asked this court to characterize the debt to his former wife, for her portion of the Gerling pension, as family debt on the basis that Ms. P benefitted from the Gerling pension payments. Mr. A seeks to rely on the fact that the Gerling pension payments were used to support the family but also asks this court to trace the full value of the excluded funds into another asset. Mr. A cannot have it both ways. If Ms. P was benefitting from the Gerling pension payments, then the full amount of the payments cannot be traced into the shareholder's loan. Mr. A has the onus of proving what amount of the funds

were used for each purpose, and I find that he has not met this burden. [174] In these circumstances, it would be overly technical and formalistic to apply a pro-rata tracing method to determine that a portion of the Gerling income is traceable to the $120,000 withdrawal from the parties' joint HSBC account. Accordingly, I find that the $120,000 investment in Mother Nature's was funded with family property. What is the value of Mr. A's shares in Mother Nature's? [175] Mr. A owns 150 preferred shares and 220 voting shares in Mother Nature's. He owns 52.4% of the voting shares issued by the company. [176] The parties dispute the fair market value of Mr. A's shares and provided the court with evidence of a range of values. [177] In May 2014, a report by Grant Thornton determined the net asset value of the company in 2013 was $376,047. It appears this valuation was produced in the context of a dispute between Mother Nature's and Mr. Hermanson, a shareholder of Mother Nature's, in which the company sought to buy out Mr. Hermanson's shares. The buy out never occurred, and Mr. Hermanson and Mother Nature's were still in arbitration as of the trial. [178] Chris Ounsted was jointly retained by the parties and issued a valuation report dated September 15, 2016, which made the following determinations. On September 30, 2013 the shares of the company had a total fair market value of

$55,000; the redemptive value of Mr. A's shareholder's loan exceeded this amount, and, therefore, the total value of the company on September 30, 2013 was $65,000. On September 30, 2015, the fair market value of the company's shares was $845,000; Mr. A's 150,000 preferred shares were worth $150,000; and the total value of Mr. A's shares was $423,000. [179] In September 2015, David Arnsdorf, an entrepreneur who owns two organic grocery stores, made an offer to buy Mother Nature's shares for $1.5 million, subject to review of the company's financial and operational records, and legal documents. Another condition of the offer was that there be no legal proceedings extant against the company at the time of closing. This offer did not include a deposit. While Mr. Arnsdorf spoke with a few shareholders, there appeared to be little interest in his offer. [180] On February 17, 2017, Mr. Arnsdorf made a second offer to buy Mother Nature's shares for $1.5 million. This offer was also subject to due diligence and the condition regarding legal proceedings, but included a term for a refundable $5,000 deposit. Mr. Arnsdorf testified that the conditions regarding due diligence and legal proceedings are standard in the industry. He conceded that the proceedings between Mr. Hermanson and Mother Nature's would need to be resolved before any potential deal could close. He testified there is a

standard adjustment clause in the offer, which protects the buyer from liabilities. [181] Mr. Arnsdorf says the purchase price of $1.5 million is based on his estimation of Mother Nature's inventory, gross revenue, and major expenses. He acknowledged that he did not have insight into the operational aspect of Mother Nature's, but was confident that he would be able to align Mother Nature's operations with his expectations, post-acquisition. Mr. Arnsdorf had not viewed Mr. Ounsted's valuation, but said that if there was a valuation that was lower than his offer price, it might help him with negotiations. [182] Mr. Arnsdorf acknowledged that Mr. Hermanson is an employee of his company. He said he was aware of the legal proceeding between Mr. Hermanson and Mother Nature's, and of this family proceeding. However, he stated that neither proceeding influenced his decision to make an offer to purchase Mother Nature's. Rather, Mr. Arnsdorf testified that he wants to expand his business in Victoria by buying an existing business and that Mother Nature's has an excellent location. [183] Mr. Arnsdorf also testified that he would consider buying only Mr. A's shares at a pro rata price because it is his understanding that Mr. A is a controlling shareholder. He said that a discount for buying less than the total shares may not be necessary, but specified that this was subject to a review of

Mother Nature's share structure. [184] Mr. A testified that he did not believe that Mr. Arsndorf's first or second offer were bona fide. He believes the offers are related to the dispute with Mr. Hermanson; the first offer was made shortly after the Grant Thornton valuation, which was not in favour of Mr. Hermanson. Mr. Arnsdorf had no obligation to purchase Mother Nature's and could walk away for any reason, including the ongoing legal proceedings with Mr. Hermanson. He believes that Mr. Arnsdorf also made the offer in order to look at Mother Nature's financial records and gain a competitive advantage. [185] Mr. A said that at the time the first offer was made, he told Mr. Arnsdorf that the business was not for sale, in part because it was a work place for his son and daughter-in-law. He testified that prior to the second offer in February 2017, Mr. Arnsdorf had taken no other action since his first offer in September 2015. [186] Mr. A testified that, based on Mr. Arnsdorf's oral evidence, Mr. Arnsdorf relied on a number of inaccurate assumptions when he estimated the company's purchase price. Therefore, Mr. A says the purchase price does not reflect the fair market value of the Mother Nature's. Furthermore, he says if the current liabilities of the company were deducted from the $1.5 million purchase price, as per the adjustment clause, the actual purchase price would be much

lower. [187] Mr. Ounsted was cross-examined on his report and his opinion of Mr. Arnsdorf's offer. Mr. Ounsted testified that, while he would have liked to have seen a larger and non-refundable deposit, he believed Mr. Arnsdorf's offer of February 2017 was bona fide. He believed Mr. Arnsdorf had the ability to pay the offer price, in part, because Mr. Arnsdorf had purchased a similar store in Nanaimo for around $2 million in 2016. [188] However, Mr. Ounsted testified that Mr. Arnsdorf may not fit the definition of "a prudent and informed party" for the purposes of determining fair market value. He believes that Mr. A is a "special purchaser" in valuation terms. Mr. Ounsted cautioned the business could have a greater value for Mr. Arnsdorf than it would for anyone else, in part because, as Mr. Arnsdorf testified, he would be able to distribute the costs of operating Mother Nature's over his other two stores. Mr. Ounsted stated the amount a special purchaser is willing to pay affects the fair market value, but it often takes up to two special purchasers to build up the value of a company. While Mr. Ounsted took Mr. Arnsdorf's first offer into consideration in his report, it only increased the valuation of the company by around $43,000. [189] Mr. Ounsted explained that his own report took into account a marketability discount of 25% when valuing the company's shares. He explained

that, based on the shareholder's agreement, there are certain restrictions on the sale of a shareholder's shares. Therefore, a shareholder's percentage of shares is worth less than the percentage of the company's total value, because it is more difficult to sell only a portion of a company's shares. The Parties' Positions [190] Mr. A argues the shares should be valued at the separation date and not at the date of trial, because of the extraordinary efforts he has made to increase the value of Mother Nature's since 2013. [191] Mr. A urges the court not to rely on Mr. Arnsdorf's offer, which he says is not a bona fide, non-binding, and made without extensive research. [192] Ms. P asks the court to rely on Mr. Arnsdorf's offer to purchase the shares of Mother Nature's for $1.5 million in order to determine the value of Mr. A's shares. She says the total value of Mr. A's shares is $857,400. [193] Ms. P argues the Grant Thornton valuation is not independent because it was prepared by Mr. A and then placed on Grant Thornton's letterhead. Ms. P argues that because of the dispute with Mr. Hermanson, it was in Mr. A's interest to keep the value of the business as low as possible [194] Ms. P also says Mr. Ounsted's report, which values Mother Nature's as of September 30, 2015, is now out of date and does not reflect the value of the shares. However, if the court finds the value of the

shares is $423,000, Ms. P asks for an opportunity to purchase Mr. A's shares at this price. [195] Ms. P further submits that Mr. A is not entitled to any increase in the value between the separation date and the date of the hearing. While she concedes that Mr. A has done a good job building the business, she says there is no evidence that Mr. A has made extraordinary efforts post-separation. Legal Framework [196] Section 87 of the FLA states: 87 Unless an agreement or order provides otherwise (a) the value of family property must be based on its fair market value, and (b) the value of family property and family debt must be determined as of the date (ii) of the hearing before the court respecting the division of property and family debt. [197] In Maguire v. Maguire, 2016 BCCA 431, the Court of Appeal discussed the meaning of "fair market value" under the FLA, stating at para. 30: 30 In my view, there is nothing in the FLA that suggests or entails that the meaning of "fair market value" is anything other than its ordinary meaning. Fair market value is the price at which a transaction would occur, in an open and unrestricted market between informed and prudent parties acting at arm's length, where neither party is acting under compulsion. [198] The definition of "fair market value" was also at issue in Nelson v. Vanier, 2013 BCSC 2464. In Nelson, the parties owned a high-quality

fishing lodge and the husband sought to buy out the wife's shares, pursuant to a consent order. The consent order stated that the buy out could occur at the price set out in an expert report, which valued the shares at $1.32 million, or either party could apply to the Court for a determination of the "fair share value". There had been a third party offer for the business for $1.45 million, but on the condition that neither party work as a fishing guide within a 400 km radius of the lodge for 4 years. The husband rejected the offer because of this condition. The wife obtained a supplementary expert report which concluded that the offer was a bona fide one and "met the accepted definition of fair market value in business valuation." Therefore, the fair market value of the shares was the same as the offer of $1.45 million. However, at the request of the parties the expert went on to determine a notional value for the shares on a theoretical basis and determined their value to be $1.016 million. [199] The wife sought the fair market value to be set at $1.45 million and the husband sought the value to be set at $1.016 million. Mr. Justice Schultes determined that the fair market value was $1.45 million based on the following: 28 the absolute gold standard for business valuators in deciding what shares in a business are worth is what a genuine purchaser is actually willing to pay for

them. It only makes sense, when considering the terms of the order as a whole, to permit one party to buy out the other if the price paid corresponds to the amount for which they could collectively sell the business to a third party. Buyout clauses based on the valuation reports would have no meaning otherwise. 32 Most fundamentally, Mr. Vanier's argument confuses the price the shares are capable of fetching from a genuine buyer with the conditions under which the seller is willing to part with them. Fair market value is a measure of what the business can be sold for based on market negotiations. Conditions personal to the seller that might thwart such a sale from ultimately taking place are not part of that analysis. [200] In Nelson, the court was considering the wording of an agreement between the parties and not the definition of "fair market value" as set out in FLA. However, the analysis is instructive with regards to the factors a judge can look to determine whether an offer represents the "fair market value" of an asset under the FLA. In that case, the fact that the $1.45 million included a non-competition clause was not fatal to the offer representing the fair share value under the agreement. Analysis and Conclusion [201] The law is clear that the proper date for valuation is the date of trial. The issue of whether Mr. A has made extraordinary efforts to increase the

value of Mother Nature's post-separation may be considered under the provision for unequal division of family property, s. 95(2)(f). [202] While I agree with Ms. P that Mr. A has done a good job building the business, Mr. A did not provide sufficient evidence for me to find that his efforts post-separation were extraordinary as compared to his efforts pre-separation, nor that the increase in value in the company from 2013 to trial could be solely attributed to his efforts. For this reason, I will not consider Mr. A's argument regarding valuation date as a factor going to reapportionment under s. 95. [203] I do not accept the Grant Thornton valuation or Mr. Ounsted's valuation of Mother Nature's in 2013. Neither of these valuations attempted to determine the value of Mr. A's shares at or close to the date of trial. [204] Mr. Arnsdorf made a second offer in February 2017. If I accept that it represents fair market value of the shares, Mr. Arnsdorf's offer would provide the best evidence of the value at the date at trial. The relevant question, therefore, is whether I accept Mr. Arsndorf's offer as an accurate indicator of the fair market value of Mr. A's shares. For the following reasons, I am unable to find that it is. [205] I am cognizant of this court's finding in Nelson that the gold standard for fair market value is what a genuine purchaser is willing to pay. I accept Mr.

Arnsdorf's evidence that he has a genuine desire to purchase Mother Nature's because he wants to expand his business into Victoria and because Mother Nature's has an excellent location. I do not accept Mr. A's argument that the Mr. Arnsdorf's offer was motivated by another reason. [206] However, in these circumstances, I am not able to rely on Mr. Arnsdorf's offer for $1.5 million as an accurate reflection of the purchase price of all the shares of Mother Nature's after being fully informed of the company's finances and operations. As Mr. Arnsdorf testified, the offer was based on his own knowledge of the health food industry and not on any financial or operational information specific to Mother Nature's. The conditions of Mr. Arnsdorf's offer make it non-binding: Mr. Arnsdorf could walk away from the deal for almost any reason. Further, Mr. Arnsdorf admits that the company does not meet the conditions of the offer right now because of the ongoing dispute with Mr. Hermanson. In these circumstances, I find the offer is a starting point for negotiation between the parties, it is not a binding offer that accurately sets a final purchase price. For these reasons, I am not able to rely on Mr. Arnsdorf's offer as a reflection of what he would be willing to pay. [207] Further, I am not able to rely on Mr. Arnsdorf's offer for all the shares of the company as an accurate indication of

the value of Mr. A's shares in particular. Mr. Arnsdorf was equivocal about whether Mr. A's shares would be worth less to him if sold alone. There is no evidence that all the shareholders in Mother Nature's are willing to sell. [208] I find that Mr. Ounsted's valuation is a more accurate reflection of the fair market value of Mr. A's shares. Mr. Ounsted's report takes into account Mr. Arnsdorf's first offer. It also takes into account that Mr. A's shares are worth less when sold alone than with the other shares. Therefore, I accept Mr. Ounsted's valuation and find the total value of Mr. A's shares is $423,000. Since the shares are family property, Ms. P is entitled to an interest in the shares worth $211,500. [209] I order that Mr. A buy out Ms. P for her value of the shares. I will not order that Ms. P buy out Mr. A's shares for the same price. Mother Nature's is a small business with only four shareholders. It would not be fair to the other shareholders for this court to substitute one shareholder for another person. Ms. P has not played a role in the company to date. Further, there is evidence of animosity between Ms. P and J, who is a director of the company. Is the payment to Ms. A on account of the Gerling pension family debt, and how should family debt be divided? [210] The parties disagree as to whether the federal pension annuity Mr. A must set up for Ms. A is family

debt. Mr. A argues that Ms. P has benefitted from the Gerling pension payments and therefore the debt should be shared equally. The cost of setting up the annuity pursuant to the German court decision was €162,960.40 or $228,144.56 in 2002, but as of 2015, it cost €195,806.40 or $274,128.96, resulting in an increase of $45,984.40. The annuity is a German federal pension which pays Ms. A monthly payments of €757.32 as required by the German court decision. How much capital is required for the monthly amount is determined by the German government and changes over time. [211] Ms. P argues that the Gerling pension was vested prior to the relationship and is Mr. A's sole debt. She also submits that any payments from the Gerling pension into the HSBC joint account of the parties were gifted to her and became family property. Legal Framework [212] Section 86 defines family debt as follows: 86 Family debt includes all financial obligations incurred by a spouse (a) during the period beginning when the relationship between the spouses begins and ending when the spouses separate, and (b) after the date of separation, if incurred for the purpose of maintaining family property. [213] This definition was discussed in Maguire v. Maguire, 2016 BCCA 431, where the Court of Appeal stated: [32] A family debt is defined in s. 86 as including matters coming under two branches. The first branch,

which describes financial obligations incurred during a period between the beginning of a relationship and separation is clearly not applicable. The second branch refers to "all financial obligations incurred by a spouse after the date of separation, if incurred for the purpose of maintaining family property". The second branch does not apply because, in my view, corporate or distributive taxes payable on the disposition of property allocated to one spouse do not qualify as being incurred "for the purpose of maintaining family property". [33] In my opinion, a family debt must be described by one of the two branches of s.

86. Neither applies here. Analysis and Conclusion [214] Mr. A's obligation to set up an annuity for Ms. A arose pursuant to a German court decision made on February 20, 2003. I have found that the parties started cohabitating on June 30, 2003. Therefore, the obligation arose prior to the start of the parties' relationship and would not fall under either of the two branches of s. 86 as discussed by the Court of Appeal in Maguire. [215] I have also considered whether the increase in the debt which occurred during the relationship may be family debt between the parties. In B.M.P. v. S.L.B., 2015 BCSC 448, the claimant had a child from a previous relationship. When he began his second relationship he was in arrears of child support of $18,000. These arrears were being repaid through garnishment of his wages. At the time the second relationship ended, after seven years, the claimant still owed some arrears of child support. Mr. Justice Silverman held: [161] With respect to any current arrears for M.J.E. which may be outstanding and were incurred during the relationship, I am satisfied that it would be significantly unfair to divide this debt equally between the parties. In consideration of the factors set out in s. 95(2), including s. 95(2)(d), of the FLA, I am satisfied that B.M.P. will be solely responsible for any outstanding arrears. [216] Therefore, any child support arrears

which accumulated during the course of the relationship were found to be family debt, but in this case the court reapportioned the debt entirely to the husband. [217] However, in Oleksiewicz v. Oleksiewicz, 2017 BCSC 228, Mr. Justice Armstrong held that a CRA debt accrued by the husband during the course of the parties' 25-year marriage was a family debt to be shared equally between the parties: [70] I am satisfied that the claimant's tax debt accrued from the period between 2004 and 2010; this time is well within the time the parties were together. Presumably, the debt resulted from the claimant's failure to report income or pay taxes related to his business. Had he attended to timely payment of this debt to Canada Revenue, however, those funds would have come from the family finances and would have reduced the family's standard of living. The evidence does not suggest that the claimant's tax debt increased after separation beyond the accrual of interest and penalties. There was nothing in the respondent's evidence or submissions suggesting that the CRA debt was incurred, otherwise than in the normal course of the parties relationship or that he in any way reduced the value of family property. Consequently, the respondent has not demonstrated that it would be significantly unfair to divide the CRA debt equally having regard to ss. 95(2) of the FLA. I will not order unequal

division of the proceeds of sale on this ground. [218] Accordingly, I find that the debt Mr. A owes to set up the annuity for Ms. A cannot be characterized as family debt. However, the increase in the debt during the course of the relationship is family debt. The German court decision ordered Mr. A to establish an annuity for Ms. A and it was his choice to set it up at that time or to wait and set it up at a later date, knowing it may cost more to do so. Similar to the case of Oleksiewicz, while Mr. A could have set up the annuity at an earlier date this would have reduced the family's standard of living and their family property. Instead, Mr. A chose to invest his assets which resulted in an increase in family property and use his income to fund the lavish lifestyle of Ms. P and the children. In these circumstances, I find that the increase of $45,984.40 is a family debt to be shared equally between the parties. [219] There is also the issue that the parties were in a relationship from 2003 to 2013 while the values in evidence are for the increase in the family debt from 2002 to 2015. However, given that this is the best evidence available for determining the increase in the debt and that during this period Mr. A continued to use his income and assets to maintain the family property instead of setting up the annuity, I find $45,984.40 to be the fairest value for the family

debt. How should Mr. A's ERGO pension be divided? [220] The parties dispute how Mr. A's ERGO pension should be divided. Mr. A argues that Ms. P is entitled to 39% of the ERGO pension, which is her proportionate share of the income taking into consideration the period of time the parties cohabited while he worked for ERGO. Ms. P argues that she is entitled to 50% of the ERGO pension for her lifetime. Legal Framework [221] Pension division is addressed under Part 6 of the FLA, and the Division of Pensions Regulation, B.C. Reg. 348/2012. [222] The ERGO pension is an "extraprovincial plan" as defined in s. 110 of the FLA: "extraprovincial plan", subject to the regulations, means a plan that is not a local plan, and includes a supplemental plan to an extraprovincial plan; The pension was formed by contract in another jurisdiction; therefore, the rules for dividing extraprovincial plans in s. 123 of the FLA apply. [223] An extraprovincial plan will be divided by the law of the jurisdiction in which it was created, unless that would not satisfy the interests of the spouses. If the division based on foreign rules would yield an unfair result, then the court may substitute a division based on proportionate share under the FLA. [224] Section 123 has been applied once to divide a foreign pension under foreign rules. In Henry v. Newton, 2014 BCSC 2106, Mr. Justice Gaul applied Alberta's

division rules to an Albertan pension. This case, however, presents greater challenges. Here, the pension is not from another common-law province, over the laws of which the court can take judicial notice (Evidence Act, R.S.B.C. 1996, c. 124, s. 24), but from another country. While the parties could have lead expert evidence to prove the foreign law (Huang v. Silvercorp Metals Inc., 2016 BCCA 100; Pettkus v. Becker, [1980] 2 S.C.R. 834 at 854), neither party has done so. [225] When litigants have failed to prove foreign law as a fact, it is presumed that the law of the foreign jurisdiction is identical to the lex fori: Canadian National Steamships Co. Ltd. v. Watson, [1939] S.C.R. 11; Gronlund et al. v. Hansen (1969), 4 D.L.R. (3d) 435 (B.C.C.A.). [226] Therefore, the pension should be divided under BC law. [227] Sections 114-117 of the FLA deal with the division of pensions between spouses. First, the court must determine if the pension is a defined benefit plan, a defined contribution plan, or a hybrid of the two. [228] In this case, the ERGO pension is a defined benefit and because the benefits have already begun to be paid, the pension should be divided under s. 117: Local plans after pension commencement 117 (1) This section applies if (a) the benefits to be divided (i) are under a local plan, and (ii) are not in a defined contribution account, and (b) the pension has

commenced. (2) A spouse is entitled, by giving notice in accordance with section 136 [notice or waiver], to receive a proportionate share of benefits payable under the plan during the member's lifetime until the earlier of (a) the death of the spouse, and (b) the termination of benefits under the plan. (3) The references in subsection (2) to "benefits" do not include a member's phased retirement benefit under the Pension Benefits Standards Act. (4) If the member dies before the limited member and the limited member is entitled to survivor benefits under the plan, the limited member's entitlement is to be determined in accordance with section 124 (5) [death of member or limited member]. [229] Section 17 of the Pension Division gives the formula for calculating proportionate share under s. 117. 17 (3) Subject to sections 18 and 19, the proportionate share referred to in subsection (1) of this section must be calculated in accordance with the following formula: proportionate share = 1/2 (pensionable service during entitlement period ÷ total pensionable service) where "pensionable service during entitlement period" means the pensionable service accumulated under the plan by the member in the entitlement period; "total pensionable service" means the pensionable service accumulated by the member to the earliest of (a) the date that the limited member's share is transferred from the

plan, (b) the beginning of the month in which the limited member begins to receive a separate pension, (c) the beginning of the month in which the limited member begins to receive a payment of benefits from the member or the administrator, and (d) the day immediately preceding the day of the member's death. [230] The Pension Division further defines "entitlement period" in s. 1: "entitlement period" means the period that begins on the commencement date and ends on the entitlement date; [231] Commencement date and entitlement date are also defined terms in s. 1: "commencement date" means (a) the date that, in a section 127 agreement or a Part 6 order, is specified as the date on which the relationship between the member and the spouse began within the meaning of section 3 of the Act, or (b) if another date is specified in a section 127 agreement or a Part 6 order as the beginning date of the period in relation to which the spouse's proportionate share of the member's benefits is to be calculated under the Act, that specified date; "entitlement date" means (a) the date that, in a section 127 agreement or a Part 6 order, is specified as the date on which the spouse became entitled under section 81 (b) of the Act to an interest in the member's benefits under the plan, or (b) if another date is specified in a section 127 agreement or a Part 6 order as the end date of the period in

relation to which the spouse's proportionate share of the member's benefits is to be calculated under the Act, that specified date; Analysis and Conclusion [232] In this case, Mr. A began his pensionable service when he began working with ERGO on August 1, 2001; this is the beginning date for his total pensionable service. He is no longer accumulating pensionable service, having left ERGO on September 30, 2009. This is the end-date for both his total pensionable service. Therefore, the total pensionable service is eight years and two months, or 98 months. [233] As I found earlier, the relationship began on June 20, 2003. This is the commencement date under the Pension Division. [234] The entitlement date, per s. 81(b), is at the parties' separation. While the parties dispute this, the dispute is not relevant here, since Mr. A stopped accumulating pensionable service long before separation. The pensionable service during the "entitlement period" ended on the day that Mr. A left ERGO: September 30, 2009. [235] Since cohabitation began on June 30, 2003, Mr. A accumulated 6 years and 3 months, or 75 months, of pensionable service during the entitlement period. [236] Therefore, according to the formula set out in s. 17 of the Pension Division, proportionate share = (0.5)(75/98) = 38.27% [237] Ms. P is entitled to her proportionate share, 38.27%, of all benefits paid out under the

ERGO pension. [238] I note that the parties did not give evidence about whether s. 136 on "notice or waiver" can be satisfied for the ERGO pension. The FLA envisions that pension division payments will flow to each spouse from the plan administrator. It seems likely that, in this case, this will not be possible. [239] There is insufficient evidence to determine what procedure, if any, is available to have the administrator of the ERGO pension pay Ms. P her entitlement directly. Therefore, to ensure that there are no unforeseen procedural barriers to Ms. P's entitlement, I will order that the obligation is personal, against Mr. A. Should the parties sell the Newport house? [240] The parties own a home on Newport Avenue in Victoria, BC. In 2015, the house had a mortgage of $374,100.49 and in 2017, the value of the property was assessed at $1,218,000. The Newport house is a significant asset. By the end of the trial, the parties seemed to be in agreement that the property should be sold. Mr. Justice Leask made a order on January 28, 2016, that the house be sold. That did not occur. [241] I order that the parties sell the Newport house and, after payment of the mortgage and other expenses associated with the sale, the net proceeds are to be divided equally between the parties. [242] The parties shall have joint conduct of the sale. Either party is at liberty to apply to this court

for directions. Is either party entitled to reapportionment? [243] Both parties seek a reapportionment of the family property to their benefit. [244] Ms. P is seeking reapportionment of the family property on the basis of non-disclosure and argues that the court should find that Mr. A is hiding a significant amount of family property, which Mr. A disputes. Ms. P submits that Mr. A has not accounted for all of the income he has earned during the relationship, and that he is hiding assets. [245] In order to support this argument, Ms. P took the court through the family's finances over two periods of time. First, Ms. P calculated the difference between Mr. A's net income from his employment at ERGO and the family's expenses from 2006 to 2011. Based on her calculations, the difference between Mr. A's income earned and expenses paid is $793,461, which Ms. P says are unaccounted for funds. [246] Second, Ms. P submits that savings from Mr. P's pension income accrued in their joint HSBC account between 2013 and 2015 and that, during this time, Mr. A transferred lump sums from the joint account to his sole HSBC account. Ms. P argues that Mr. A has not adequately accounted for $152,897.80 withdrawn from his sole HSBC account in 2014, and asks the court to infer that these savings are now hidden. [247] Ms. P also argues that the court ought to draw an adverse inference because of Mr. A's

incomplete disclosure and find he has hidden assets. Ms. P submits that Mr. A did not comply with the Supreme Court Family Rules when preparing his list of documents, because it was not in the prescribed form and did not list all of the documents he should have disclosed. Mr. A also breached two court orders requiring him to produce documents, a list of documents, and an updated financial statement. She alleges the following documents are still missing: a number of bank statements from both German and Canadian bank accounts; all of his German tax returns and attachments; and all of the mortgage statements for the German house, except one. Ms. P says all of these documents are less than seven years old and should have been readily available. [248] Based on the evidence of missing funds and Mr. A's failure to disclosure all relevant documents, Ms. P asks this court to find that Mr. A has hidden assets at least equal to the value of known family property. She is seeking a reapportionment of 100% of the family property in her favour. In addition, Ms. A is seeking a fine pursuant to s. 213 for non-disclosure. [249] Mr. A emphatically rejects Ms. P's allegation that he has hidden funds in Canada or anywhere else. Mr. A's general position is that a family is not a company and only professional accounting could produce a reliable audit on the scale attempted by Ms. P. Mr. A also takes

issue with the figures Ms. P has used to calculate his income and family expenses from 2006 to 2011. Further, Mr. A says that the income he earned from ERGO is accounted for by the family assets held in 2011. [250] With respect to the $152,897.80 withdrawn from his sole HSBC account, Mr. A admits that, on cross-examination, he could not remember where some of the funds were transferred. However, he says that the court should not draw an adverse inference from this because it is unfair to expect a witness to remember every transaction and bank account number listed on a bank account statement. Mr. A argued the court should accept his testimony that the bulk of the withdrawn funds were transferred back to the parties' joint account and used to pay their taxes. Submissions were made that some of the funds were loaned to Mother Nature's and repaid. [251] Mr. A does not appear to rebut the allegation that he did not properly list his documents. He did provide a list but it was not in the right form under the Rules. He further argues that almost all of the documents Ms. P used as evidence in trial were delivered to her by Mr. A and that the court file contains only 20% of the documents he delivered. However, he does not appear to dispute that he has not disclosed all of his German tax returns and mortgage statements for the German house. [252] Mr. A seeks a reapportionment on the

basis that he entered the relationship with approximately €369,918 in assets, while Ms. P entered the relationship with a student debt of approximately €6,816 that he paid off. Therefore, Mr. A argues that there should be a reapportionment of family property to credit him for the repayment of Ms. P's debt and to account for the assets he brought into the relationship. Legal Framework [253] Pursuant to s. 95, the court may order an unequal division of family property or debt in cases of "significant unfairness" taking into consideration the following factors set out in s. 95(2)-(3): (2) (a) the duration of the relationship between the spouses; (b) the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division]; (c) a spouse's contribution to the career or career potential of the other spouse; (d) whether family debt was incurred in the normal course of the relationship between the spouses; (e) if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt; (f) whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends; (g) the fact that a spouse, other than a spouse acting in good faith, (i) substantially reduced the value of

family property, or (ii) disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse's interest in the property or family property to be defeated or adversely affected; (h) a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order; (i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness. (3) The Supreme Court may consider also the extent to which the financial means and earning capacity of a spouse have been affected by the responsibilities and other circumstances of the relationship between the spouses if, on making a determination respecting spousal support, the objectives of spousal support under section 161 [objectives of spousal support] have not been met. [254] The case law is clear that the test for significant unfairness is more stringent than the "unfairness" test set out in the prior Family Relations Act, R.S.B.C. 1996, c.

128. In Remmem v. Remmem, 2014 BCSC 1552, Mr. Justice Butler held that "significant" meant something that is "weighty, meaningful or compelling", requiring a level of unfairness that is "compelling or meaningful having regard to the factors set out in s. 95(2)". In Jaszczewska, the Court of Appeal stated at para. 42 that a finding of reapportionment "will require something objectively unjust, unreasonable or unfair in some important or substantial sense." [255] Ms. P also relies on non-disclosure as a factor under s.95(2)(i), and s. 5 and s. 213 of the FLA are also applicable to this discussion: 5 (1) A party to a family law dispute must provide to the other party full and true information for the purposes of resolving a family law dispute. 213 (1) This section applies if a person (a) fails to comply with (i) an order for disclosure made under section 212 [orders respecting disclosure], or (ii) a requirement to disclose information in accordance with the Supreme Court Family Rules or the Provincial Court (Family) Rules, within the time or in the manner required by the order or Rules, or (b) provides information that is incomplete, false or misleading. (2) In the circumstances set out in subsection (1), the court may do one or more of the following: (a) make an order under section 212; (b) draw an inference that is adverse to the person, including attributing income to that

person in an amount that the court considers appropriate, and make an order based on the inference; (c) require a party to give security in any form that the court directs; (d) make an order requiring the person described in subsection (1) to pay (i) a party for all or part of the expenses reasonably and necessarily incurred as a result of the non-disclosure of information or the incomplete, false or misleading disclosure, including fees and expenses related to family dispute resolution, (ii) an amount not exceeding $5 000 to or for the benefit of a party, or a spouse or child whose interests were affected by the non-disclosure of information or the incomplete, false or misleading disclosure, or (iii) a fine not exceeding $5 000; (e) make any other order the court considers appropriate. [256] The law relating to non-disclosure and hidden assets with relation to reapportionment was recently summarized by Madam Justice Dardi in M.C.V. v. F.V., 2018 BCSC 96: [123] In my view, a spouse's failure to disclose financial assets may be considered as a factor under section 95(2)(i) in ordering an unequal division of family property. In certain circumstances, a failure to order unequal division in the face of a failure to disclose assets or debts may lead to significant unfairness: E.H.H. v. C.L.M., 2017 BCSC 1299 at para. 119. [124] Ms. C. relies on the approach taken by Mr. Justice

Fraser in Cunha v. Cunha, (1994), 99 B.C.L.R. (2D) 93 (S.C.), a case decided under the FRA. The Cunha approach urged a robust exercise of the adverse inference power when one party in matrimonial litigation conceals assets: at paras. 11-13. [125] In Laxton v. Coglon, 2008 BCSC 42, Mr. Justice Kelleher clarified that the Court in Cunha did not reapportion family assets pursuant to s. 65 of the FRA. Rather, the Court, having not been satisfied that adequate disclosure had been made, inferred that the value of the undisclosed assets was at least equal to the value of the disclosed assets: at paras. 27-29. It is key that the principle in Cunha only applies where there is a sound evidentiary basis to support the notion that one of the parties to the litigation has hidden assets. See also Nearing v. Sauer, 2015 BCSC 58, at para. 126. [126] In Wu v. Sun, 2011 BCCA 239, the Court of the Appeal, while affirming that strong measures are justified in discouraging nondisclosure, cautioned that there must be sufficient evidence upon which the court may draw any adverse inferences regarding the existence of undisclosed family assets: at paras. 40-42. [127] In Nearing, the Court concluded, at para. 132, that the adverse inference referred to in Cunha and the subsequent authorities continues to be applicable to the new regime for property division under the FLA. I agree. [257] In summary, if

there has been non-disclosure by a party and there is a strong evidentiary basis for the proposition that the party has hidden assets, the court may infer the value of undisclosed assets is at least equal to the value of disclosed assets. The outcome of such an inference is to ensure equal division of the family assets. Analysis and Conclusion [258] I will first deal with Ms. P's argument with respect to non-disclosure and hidden family property. There must be a strong evidentiary basis to support Ms. P's allegation for unaccounted funds in order to make the finding Ms. P urges on me. [259] For the reasons that follow, I do not accept Ms. P's submission that this court should find Mr. A has not accounted for or has hidden $793,461 of the income he earned from ERGO, based on her calculation of the family's expenses between 2006 and 2011. I also do not accept that Mr. A has been hiding assets since 2011, after the family came to Canada. [260] Ms. P's analysis demands a level of precision in the records of the family's finances that is not consistent with the general principles of the FLA. Even if I accept Ms. P's general proposition that Mr. A should be required to "balance the books" from 2006 to 2011, Mr. A was not given an adequate opportunity to do so. [261] In tallying the family's expenses, Ms. P relied on Mr. A's answers to specific questions in cross-examination. However,

Mr. A did not purport to give a full account of the family's expenses. I agree with Mr. A that the numbers he provided were only estimations and it is likely expenses were higher or lower at any given time, and that there may have been other expenses over the years that were reasonably unaccounted. [262] I find that it is highly probable that Ms. P's calculations do not take into account all of the family's expenses. Based on the testimony of the parties regarding the family's comfortable lifestyle, I find it probable that the family's expenses were significantly higher. Few people can reliably remember all their expenditures. [263] Therefore, while Mr. A earned a significant income at ERGO, the documentary evidence and testimony of the parties does not lead me to believe that Mr. A hid any of this income earned before 2011. [264] The parties agree Ms. P had access to all of the family's bank accounts. This is a very different situation than in Cuhna, where the wife had no access to the family's finances during the marriage. Further, Mr. A was an employee of ERGO, not a self-employed person. [265] With respect to the unaccounted for funds from 2011 - 2015, Ms. P's allegation is based on, what she says are, unexplained withdrawals from Mr. A's sole HSBC account. [266] Based on bank statements from April 2014 and June 2014, $117,897.80 was withdrawn from Mr. A's account in April

2014. I accept that this amount was transferred to the joint chequing account and used to pay the parties' taxes which totalled $116,394. [267] Considering the totality of the evidence, I do not accept that Mr. A withdrew funds to hide them from Ms. P. [268] I turn now to my analysis of Ms. P's allegations of non-disclosure. I find that Mr. A has breached court orders compelling him to produce documents, a list of documents, and an updated financial statement. [269] With respect to four of his German bank accounts, Ms. P says that Mr. A only disclosed statements up until August 2011. Ms. P also says Mr. A only disclosed the statements for the German bank account ending in "652" (where the pension payments were deposited) from August 2011 to August 2012 and February 2015. In his written submissions, Mr. A appears to argue that the first four German accounts were consolidated into the account ending "652." However, he does not appear to dispute the fact that he has not disclosed a complete record of the bank statements for the account ending "652" after 2012. [270] Ms. P submits that Mr. A has only disclosed certain statements for the parties' joint HSBC chequing account. As this was a joint bank account, Ms. P should have been able to access these statements. Ms. P also argues that some months are missing from the bank statements for Mr. A's sole HSBC account. [271] I find that

a number of documents were not disclosed: statements from Mr. A's German bank account after 2012, sections of the bank statements from Mr. A's sole HSBC bank account; Mr. A's German tax returns; and most of the mortgage statements for the German house. [272] Ms. P asks this court to draw an adverse inference from Mr. A's incomplete disclosure and seeks 100% reapportionment of the known family property. I do not agree. There must be more than non-disclosure to find that a party has hidden assets. [273] Although Mr. A has failed to disclose statements, which is behaviour deserving of reprimand, I find no evidence of any other source of income or funds. [274] In order to determine the consequence of and appropriate remedy for Mr. A's non-disclosure and breach of court orders under s. 213, it is appropriate to look at the relevant circumstances and the extent of Mr. A's non-disclosure. [275] Mr. A provided a thorough financial statement in March 2015. Mr. A listed his German bank account ending in "652," the parties' joint HSBC chequing and savings accounts, and his sole HSBC account. He attached records showing the balance of all of these accounts as of February 2015. [276] An order made after the trial management conference on March 29, 2016, required Mr. A to serve Ms. P with an updated financial statement and an updated list of documents. Ms. P brought a further application for

disclosure of specific documents on April 12, 2016, only three weeks before the trial on May 2, 2016. Mr. A has an obligation to disclose relevant documents. However, Ms. P first requested the documents by letter between counsel on March 15, 2016, less than seven weeks before the commencement of the trial. It is significant that a number of these documents would have to be requested from German institutions. [277] Mr. A did have additional time to request documents from third parties, as the trial did not finish in May 2016 as anticipated. However, only Mr. Ounsted's valuation report and any cross-examination on that report, plus closing argument was expected in the continuation. [278] Based on the above, I do not find that Ms. P has met the onus of significant unfairness to support a finding of reapportionment. However, in these circumstances, I do find that a fine of $5,000 pursuant to s. 213 is an appropriate consequence for the non-disclosure and other breaches of court orders, which Mr. A must pay to Ms. P. [279] With respect to Mr. A's position for reapportionment, while he did enter the relationship with substantial assets, the marriage was of a medium length for a period of 10 years, during which Ms. P contributed to the family and Mr. A's career by caring for the children and relocating to Turkey. The family debt, constituting the increase in the annuity to be

established for Ms. A, does not exceed the value of family property and both parties have the ability to pay their share. Mr. A did not make any significant contributions to Mother Nature's post-separation. Ms. P has agreed to repay any monies that she removed from the children's bank accounts and the joint account. [280] Accordingly, I find that Mr. A has also not met the threshold of significant unfairness. The family property and the family debt will be divided equally between the parties. How should the household contents and vehicles be divided? [281] There was some dispute between the parties with respect to chattels. The major items include two vehicles and an antique Steinway grand piano worth around €29,000 or $40,600. [282] Ms. P submits that Mr. A should keep as his property electronic files containing all the pictures of the children, six settings of Robbe & Berking silver cutlery, the coloured wine glasses, the stereo system, two televisions, the computers, one leather armchair, and the Eurovan car. [283] Ms. P submits that she should keep a number of chattels, including the Mercedes car. She provided a full list in her written submissions. She says that the parties should sell the remainder of the household items, including the Steinway piano, and divide the proceeds equally. [284] It appears that Mr. A would like to keep some of the items Ms. P sought,

specifically six settings of Robbe & Berking silver cutlery. It is unclear, based on the parties' description of the chattels, whether Mr. A. also seeks the German children books, carpets, and artwork that Ms. P seeks to retain. [285] Mr. A submits that he should keep the following items: all 12 settings of Robbe & Berking silver cutlery; the stereo system and his music collection; his book collections; one leather arm chair from the library; the art work he brought into the relationship and the Roy Vickers print; the outdoor gear; the hand knit carpets belonging to J and C; pictures book he bought for the children; and one set of kitchenware (plates, cutlery and pots) for daily living. Mr. A said that Ms. A could keep the remainder of the household chattels, including the piano, and keep 100% of the proceeds of everything she sells. [286] In my view, it is fair and reasonable for the chattels to be divided as follows: · Mr. A may keep six settings of Robbe & Berking silver cutlery; the stereo system and his music collection; his book collections; one leather arm chair from the library; the art work he brought into the relationship and the Roy Vickers print; the outdoor gear; the hand knit carpets belonging to J and C; pictures book he bought for the children; and one set of kitchenware (plates, cutlery and pots) for daily living. He may also keep the coloured wine glasses, two

televisions, and the computers. Mr. A may keep electronic files containing all the pictures of the children. · Ms. P may keep the items listed in her written submissions with the exception of the 12 settings of Robbe & Berkley silver cutlery. Given that Ms. P seeks the bulk of the household chattels, I order that if any of the items listed in her written submissions conflict with the items I have allocated to Mr. A, Mr. A receive those items. [287] I order that the parties sell the remaining items and divide any proceeds equally between themselves. The main chattel to be sold is the Steinway grand piano. Does either party have to account for funds? Withdrawals from the Parties' Bank Accounts [288] Ms. P agreed that she would be responsible for repaying the funds removed from the children's account and the parties' joint account, which totalled $67,329. [289] The parties are in general agreement with respect to the balance of the other bank accounts not already accounted for as of February 2015: a) Mr. A had a balance of €16,180.09 or $22,975.73 in his German bank account; b) There was a small balance remaining in the children's German bank account (€2,778.73 or $3,890.22) and Ms. P was the only parent to have a password to this account; c) The parties' joint HSBC account had a balance of $243.14 after Ms. P withdrew $46,000. Mr. A eventually used these funds; and d) Ms. P had a

balance of $6,041.51 in a TD Canada trust account. J's debt [290] Mr. A submits that he loaned $55,000 to his son, J, and that J owed $35,500 in February 2015. [291] Ms. P submits that Mr. A actually loaned $70,000 to J and that J owed $50,500 in February 2015. [292] Based on the available documentary evidence, I accept Ms. P's submission. I find that Mr. A must account to Ms. P for half of the family funds loaned to J, which J had not repaid to the parties when they separated their finances. Therefore, Mr. A must compensate Ms. P for $25,250 of family funds loaned to J. Income Determination and Support What is Mr. A's income for support? [293] The parties disagree on the methodology of determining Mr. A's income. [294] Ms. P submits that Mr. A's income consists of four components: the Gerling pension, the ERGO pension, dividend income from his shares in Mother Nature's, and imputed income. Specifically, Ms. P says that this court should impute income of $70,000 to Mr. A for his work at Mother Nature's. [295] Ms. P says it would be fair and reasonable for this court to average Mr. A's income between the years 2017 and 2020 for the purpose of spousal and child support. She submits that Mr. A's average income over these years is $336,000, including $70,000 in imputed income. [296] Mr. A argues his income should include the Gerling pension, the ERGO pension and dividend income.

However, he says spousal support payments to Ms. A and payments from the ERGO pension allocated to Ms. P, should be deducted from his income. [297] Mr. A says that no income should be imputed to him for services provided to Mother Nature's. His work there has been reduced since his son J started working at the company, and he would like to retire soon. Legal Framework [298] The court has a broad discretion to impute income in family law cases and will look at all the relevant circumstances when determining whether income should be imputed to a spouse who is either under-employed or unemployed. [299] The framework for determining income was set out in Lahdekorpi v. Lahdekorpi, 2016 BCSC 2143 at paras. 24 -25: [24] Section 6 of the [Spousal Support Advisory Guidelines] refers to the Federal Child Support Guidelines, SOR/97-175 framework to determine income. Section 15 of the Federal Child Support Guidelines stipulates that a spouse's annual income should be determined in accordance with ss. 16 to 20 and Schedule III. [25] Further, under the Federal Child Support Guidelines, the court has a broad discretion to impute income. Section 19 provides that the court may impute any income it considers appropriate in the circumstances and sets out examples of such circumstances: [300] Section 19 of the Guidelines states: 19.(1) The court may impute such amount of income to a spouse as it

considers appropriate in the circumstances, which circumstances include the following: (a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse; (b) the spouse is exempt from paying federal or provincial income tax; (c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada (d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; (e) the spouse's property is not reasonably utilized to generate income; (f) the spouse has failed to provide income information when under a legal obligation to do so; (g) the spouse unreasonably deducts expenses from income; (h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and (i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust. [301] In situations where a spouse has retired, courts will look to the circumstances of the retirement to determine whether income should nevertheless be imputed. In

Greco v. Greco, 2017 BCSC 172, Dorgan J. stated at para. 28: [28] A payor spouse who has reached the expected age of retirement, or who retires for medical reasons, may fairly be relieved of an obligation to continue spousal support payments, or have that obligation reduced. However, a payor spousal may not be relieved of their spousal support obligations if the retirement is voluntary and the retirement was motivated by the desire to avoid maintenance payments: see Young v. Young, 2011 BCSC 887 at paras. 38-39. [302] However, a court does not need to conclude that a spouse is acting in bad faith or intentionally evading support obligations in order to impute income. Instead, the court must determine whether a spouse is earning to his or her capacity: see Beissner v. Matheusik, 2015 BCCA 308 at paras. 30, 44. The court in Beissner stated at para. 44: The test for a finding of underemployment from Donovan v. Donovan, 2000 MBCA 80, was adopted by this Court in Watts v. Willie, 2004 BCCA 600 at para. 16, and followed in McCaffrey v. Paleolog, 2011 BCCA 378 at para. 46: [16] In Donovan v. Donovan (2000), 190 D.L.R. (4th) 696, 2000 MBCA 80, Madam Justice Steel gave the judgment of the court and wrote at para. 21: 1. There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is "no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor" (Van Gool v. Van Gool (1998), 166 D.L.R. (4th) 528 (B.C.C.A.)).

2. When imputing income on the basis of intentional under-employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to be considered in addition to such matters as availability of work, freedom to relocate and other obligations.

3. A parent's limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills, or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at the lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment.

4. Persistence in unremunerative employment may entitle the court to impute income.

5. A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.

6. As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income. [Emphasis in original.] Pension Payments [303] It is common ground that the two main sources of income for Mr. A are payments from his Gerling and ERGO pension. [304] Both pensions are payable during Mr. A's lifetime. The parties agree that Mr. A's estate is not entitled to continuing payments from either pension. The parties also generally agree that, on the event of Mr. A's passing, 2/3 of the pension payments are payable to a spouse and 1/3 to any children under the age of 30 if they are in school. Ms. P will not be entitled to any portion of the pensions upon Mr. A's passing. [305] The monthly pension payments from both companies have fluctuated in the last couple of years and will fluctuate to some degree in the future. The parties substantially agree on the monthly and yearly income from the pension payments up until 2017. However, there is some disagreement about the amount of pension payments going forward. [306] Before Mr. A turned 65 years old, his entitlement to monthly pension payments from Gerling was set off by his income from employment. Mr. A started receiving regular payments from the Gerling pension around the summer of 2011, at which time the pension paid €8,435 /month. [307] In 2015, the Gerling pension paid €9,014/month and a total of

€108,176.88/year. Mr. A testified that the monthly payment decreased by €180/month when he turned 63 in September, 2015, but would increase by €180/month after he turned 65 in 2017. The pension payments will be relatively stable after 2017, at around €8,860.37/month. However, he testified the pension payments will increase every year to account for the cost of living adjustments [308] Mr. A started receiving a pension from ERGO in October, 2011. The base amount of the ERGO pension is €56,875/year. However, ERGO agreed to pay Mr. A higher yearly payments while he was between the ages of 60 and 65. From 2013 to 2017, the pension payments would decrease by an amount between €11,000 and €13,200/year. The pension payment would increase by €370.28/month in October, 2017, after he turned 65. At this time, the monthly payments would stabilize at around €4,962/month. [309] Ms. P calculates Mr. A's pension income from the years 2015 to 2018 as follows, arguing that his 2018 income should be used going forward to 2020: 2015 2016 2017 2018 Gerling Pension €108,176.88 €106,324.44 €106,324.44 €108,484.44 ERGO Pension €97,811.52 €85,948.08 €72,748.08 €77,191.44 Mr. P calculates his income from the years 2015-2019 as follows: 2015 2016 2017 2018 2019 Gerling Pension €108,176.88 €106,324.44 €106,866.96 €107,935.64 €109,014.99 ERGO Pension €97,811.52 €85,948 €72,748.08 €59,548 €59,548 [310] I

have underlined figures where Ms. P and Mr. A are in substantial agreement. Analysis and Conclusion [311] The parties agreed on the income from the Gerling pension in 2015 and 2016, and the ERGO pension from 2015 to 2017. I accept these figures as accurate. [312] With respect to the Gerling pension in 2017, I have used the figure provided by Mr. A (€106,866.96) as it accounts for the increase of €180/month after Mr. A turns 65 years old. [313] For the Gerling pension amounts from 2018 onwards, I have used a base amount which accounts for the €180/month increase over a whole year (€106,324.44 + (€180 x 12) = €108,484), as set out by Ms. P, and calculated a 1% increase for the cost of living adjustment (€108,484 x 1.01 = €109,569). [314] I prefer and have accepted Mr. A's figure for the ERGO income from 2018 onwards, because he takes into account the last deduction, which lowers the yearly pension payments to around the base amount, which is supported by documentary evidence. [315] My findings are summarized below: 2015 2016 2017 2018 - 2019 Gerling Pension €108,177 or $151,448 €106,324 or $148,854 €106,867 or $149,614 €109,569 or $153,397 ERGO Pension €97,812 or $136,937 €85,948 or $120,327 €72,748 or $101,847 €59,548 or $83,367 Dividend Income [316] Ms. P submits that, in the future, Mr. A will receive around $6,514.50/year in dividend income from his Mother Nature's

shares. [317] Mr. A submits that, in the future, he will receive $6,800/year in dividend income. [318] I have accepted Mr. A's projected dividend income of $6,800, which I find is supported by the documentary evidence (his 2015 tax return). Imputing Income [319] From 2017 onwards, Ms. P. imputes income of $70,000/year based on Mr. A's involvement in Mother Nature's. She says that Mr. A has worked in the company every day since he purchased the shares and has only refrained from taking a salary because this would have reduced his Gerling pension payment. After Mr. A turns 65 years old in September 2017, he will be able to receive income without affecting his pension payments. [320] Ms. P relies on an email from Mr. A to the valuator, Mr. Ounsted, in which Mr. A says that he included a $70,000 salary for himself in the cash flow projections of the company for 2014 and 2015. In the email, Mr. A states that this is the fair market value of the services he provides for free. [321] Further, Ms. P says the company had not been paying dividends because it had been saving capital to open a second store, which is now open. For this reason, Ms. P submits the court can infer there will be more capital available in the company for Mr. A to receive both a salary and dividends. [322] Mr. A does not dispute that he was not able to take a salary from Mother Nature's before October 2017 because

it would have reduced the amount of his Gerling pension payment. However, he submits that he will not be paid in the future for the advice and skill that he brings for a number of reasons. [323] First, Mr. A testified that any salary over $36,000 must be proposed by the store manager and then approved by the Board of Directors of Mother Nature's. Mr. A is one of the four directors and cannot unilaterally approve a salary. [324] Second, Mr. A submits that the business could not grow if he was paid a salary. He submits that the $70,000 salary included in his cash flow projections for 2014 and 2015 has been subsumed in the salary of J who has taken over the financial aspect of Mr. A's work for the company. [325] Mr. Ounsted's valuation report included a notional salary of $30,000 for Mr. A. He testified that Mr. A's work for the company in 2015 was only worth that amount because J took over the finance and accounting for the company in 2014. [326] Third, Mr. A submits that it was never his intention to take a salary from the company, which he meant to build up for his children, and that he intends to retire. Analysis and Conclusion [327] The parties agree that Mr. A has undertaken un-remunerative employment in Mother Nature's since 2012. However, Mr. A was nevertheless earning to capacity: Mr. A was receiving a substantial income from the Gerling pension that would have been

reduced by the amount of any salary from Mother Nature's. Further, it is reasonable that Mr. A would not draw a salary during the first few years of the company's operation, when it would have been important to retain capital. [328] The issue is whether Mr. A will persist in un-remunerative employment by working at Mother Nature's, now that he has turned 65 and could receive an income without affecting his pension payments. If so, the court must determine whether, by doing so, Mr. A is not working to his earning capacity. Another relevant issue is whether it would be possible or reasonable for Mr. A to direct Mother Nature's to pay him a salary. [329] I find that J has taken over many of the financial and accounting jobs as a director of the company, previously performed by Mr. A. Therefore, I do not find that Mr. A has continued to work as much as he did during the first few years. [330] I accept Mr. Ounsted's testimony on cross-examination that in 2015 Mr. A's work as a shareholder should be valued at around $30,000. [331] I also accept Mr. A's testimony that he wishes to retire in the near future. Mr. A is now 65 years old, an age when many people retire. Mr. A gave evidence and I accept that he intended to build up Mother Nature's to create an asset for the benefit of his children. I do not believe that Mr. A intended to create a long-term job for himself at Mother

Nature's. Further, as one of four shareholders, Mr. A cannot unilaterally give himself a salary. [332] In these circumstances, I believe it is unfair to impute an income to Mr. A. Mr. A will earn a substantial income from his two pensions. Further, I do not find that Mr. A will continue to work for Mother Nature's in a substantial capacity or that he is able to unilaterally take a salary for any work he does perform. Should the ERGO pension allocated to Ms. P be deducted from Mr. A's income? [333] Mr. A submits the portion of the annual income from the ERGO pension allocated to Ms. P should be deducted from his total annual income and added to Ms. P's annual income. I agree. [334] The issue of "double dipping" or "double counting," discussed by the Supreme Court of Canada in Boston v. Boston, [2001] 2 S.C.R. 413, can occur when the income from a divided pension is included, for the purposes of the support, in the income of one of the parties and not the other. This leads to an unfair result where one party receives the benefit of the income twice. For this reason, the divided pension income must be taken out of both sides or out of neither. [335] A number of decisions from this court have included each party's share of an employment pension in their respective incomes when determining spousal support: Parton v. Maro, 2015 BCSC 2250 at paras. 123-124; Kranenburg v. Kranenburg,

2007 BCSC 921 at para. 87; Pepper v. Pepper, 2016 BCSC 1542 at para. 79; and T.(P.) v. T.(M.), 2016 BCSC 316 at para. 20. [336] If Ms. P's share of the pension is not deducted from Mr. A's income, then she will receive a double benefit by having it included in Mr. A's income to receive a larger payment of spousal support and receiving her share of the pension. [337] Since Ms. P seeks to rely on Mr. A's pension income from ERGO when determining spousal support, her portion of the ERGO pension must be deducted from Mr. A's income and allocated to her own. Should Mr. A's payments to his former wife be deducted from Mr. A's income? [338] The parties agree that Mr. A will pay spousal maintenance to his former wife of €1,618.02 /month or €19,416/year ($27,182/year) until 2019, when Ms. A turns 65 years old. Mr. A argues that the court should deduct this amount from his income for determining support in the current action. [339] The Guidelines stipulate that when determining child support, courts will use each parties' "gross" income before taxes and other deductions. For this reason, Mr. A cannot deduct his spousal support payments to Ms. A from his income for determining child support. [340] The Spousal Support Advisory Guidelines [SSAG]: The Revised User's Guide (April 2016) states, at p. 18, that the definition of "income" under the SSAG is the starting point for determination of

income for spousal support. However, there are exceptions. Under the SSAG, parties can adjust income based on prior support obligations. Indeed, there is a field in the DivorceMate software for determining spousal support where the parties enter prior support obligations. The purpose for this exception is to recognize that the support payments to the prior spouse are reducing the net disposable income that is available to the payor. [341] While prior spousal support payments are an exception under the SSAG, the SSAG does not purport to deduct the amount from the payor's income. Instead, the prior spousal support obligations are factored into the payor's available income for paying spousal support to the current spouse. Accordingly, I will not deduct the prior support amounts from Mr. A's income, but they will be factored into determining the appropriate amount of spousal support payable to Ms. P. Conclusions on Mr. A's Income [342] I find that Mr. A's income for the purpose of support calculations from 2018 onwards is $211,659.45. I have determined the break-down of Mr. A's income as follows: Gerling Pension €109,569 or $153,397 ERGO Pension €59,548 or $83,367 Dividend Income $6800 Sub-Total $243,564 38.27% of ERGO pension allocated to Ms. P ($31,904.55) Total $211,659.45 What is Ms. A's income for support? [343] In April 2017, Ms. A began working as an executive assistant at

the children's private school. Ms. A's income consists of a salary of $48,480 per year, and taxable benefits of $8,612 for extended health care, RSP contributions and $23,310 for tuition discount. Ms. A's total employment income, including all taxable benefits is $80,402. [344] For support purposes, Ms. A's income must also include her portion of Mr. A's ERGO pension ($31,904.55). Based on these amounts, Ms. P's total income is $112,306.55. [345] However, since the tuition discount is a benefit to both parties, I find it would be unfair to include the tuition in Ms. P's income for the purposes of determining support. Deducting the tuition discount, her income is $88,996.55. As set out below, the tuition discount benefit significantly increases Ms. P's income and decreases her support payments. Ms. P submitted that she would owe an additional tax of $8,417 in 2017 because of the tuition benefit. [346] In determining whether there was any overpayment in support between 2015 and 2017 below, I have not imputed any income to Ms. A. However, I find that Ms. A unnecessarily limited her job opportunities during this time by looking for work within narrow parameters by only considering part-time work during school hours. How much spousal support is payable and for what duration? [347] Ms. P seeks spousal support on a compensatory and non-compensatory basis. She argues that she gave up

her job as an administrative assistant in Germany to have children, and then followed Mr. A to Turkey and then to Canada. She asserts that she could not work in Turkey. She argues that she was the primary caregiver to the parties' two sons and there was never an expectation during the relationship that she work. [348] Ms. P seeks spousal support for the duration of her life, with the support binding on Mr. A's estate. Alternatively, she seeks 50% of Mr. A's ERGO pension income after spousal support is no longer payable for the duration of either her life or Mr. A's life. She seeks an annual review of spousal support until at least 2020. [349] Ms. P also seeks retroactive spousal and child support for the months of February, March and April 2015. She filed a notice of application on March 30, 2015 for child and spousal support. The application was heard on April 30, 2015 by Mr. Justice Leask. An order was made on that day that Mr. A pay $3,000 per month in spousal support and $6,000 per month in child support, commencing May 15, 2015. [350] Mr. A does not dispute entitlement, although it is unclear if he agrees entitlement is based on both compensatory and non-compensatory support, as he does contend that he arranged a job for Ms. P at a related company to ERGO in Turkey. He also asserts that Ms. P searched for a job half-heartedly in Canada after the separation. Mr. A opposes

the annual review, the retroactive payment and any payments greater than 39% on the ERGO pension during his life. He seeks to pay support for six years. [351] While Mr. Justice Leask's interim support order does not specify that the spousal and child support order was made by consent, some aspects of the order may have been made by agreement. There is no finding on income for either party as the basis for the order and the support ordered is outside of the Guidelines table amount and the SSAG ranges. The child support is far in excess of the Guidelines and the spousal support is lower than the low end of the SSAG using the incomes listed in the Form 8 Financial statements filed at the time of the interim order. Mr. A's Financial Statement, dated March 17, 2015, listed his income at $296,771.23, based on $290,771.23 in pension income and $6,000 in dividend income. The notes to the Financial Statement explained his pension amounts in some detail. Mr. A also set out that the German court ordered spousal support of €1,618.02 per month to his first wife, but that by agreement, that amount was reduced to €1,100 per month because of voluntary payments to their daughter Claire of €1,200 per month. Ms. P's Financial Statement made on January 26, 2016, listed her income at zero. [352] If the interim support order was based on Mr. A's income to be at $296,771 with no income attributed to

Ms. P, the child support award was more than $2,100 higher than it would have been on the table amount. The $3,000 in spousal support is significantly lower than the ranges being, $4,386 on the low end, $6,216 on the mid end and $6,815 at the high end. [353] The interim award had the effect of increasing child support far beyond the table amount and reducing spousal support well below the low end of the range. I assume the party's submissions sought that result. Legal Framework [354] Ms. P relies on s. 15.2 of the Divorce Act and ss. 160-162 of the FLA. [355] Ms. P also referred me to the leading cases of Moge v. Moge, [1992] 3 S.C.R. 813 and Bracklow v. Bracklow, [1999] 1 S.C.R.

420. In Bracklow, the Supreme Court of Canada established that a party's entitlement to spousal support may be based on either contractual, compensatory or non-compensatory factors. The relationship between these grounds for entitlement was recently discussed in Madam Justice Dardi in M.C.V.: [198] There are three conceptual models for determining entitlement to spousal support: compensatory, non-compensatory, and contractual. The authorities establish that these models are not mutually exclusive and there is no single basis of support or objective under the Divorce Act that supersedes another: T.N. v. J.C.N., 2015 BCSC 439 at para.

144. While there may be more than one basis for a spouse's entitlement to support, the award is single and indivisible: Zacharias v. Zacharias, 2015 BCCA 376 at para.

39. The basis for spousal support, being contractual, compensatory or needs-based, or a combination thereof, will impact the quantum and duration of an award: A.K. v. N.K., 2012 BCSC 1499 at para. 115. [199] The fundamental underpinning for an order of spousal support is the doctrine of equitable sharing of the economic consequences of marriage and marriage breakdown: Chutter v. Chutter, 2008 BCCA 507 at para. 49. [201] The objective of compensatory support is to provide redress to the recipient spouse for his or her efforts which conferred an economic benefit or advantage on the other spouse and for his or her economic disadvantage arising from the marriage or its breakdown: Chutter at paras. 50-51; T.T. v. J.M.H., 2014 BCSC 451 at para. 120. [203] In Chutter, the Court of Appeal expressed the objective of non-compensatory support at para. 54: ... Non-compensatory support aims to narrow the gap between the needs and means of the spouses upon marital breakdown, and as such, it is often referred to as the "means and needs" approach to spousal support. [204] The assessment of the recipient's needs should be informed by the standard of living enjoyed by the parties prior to separation. In McEachern v. McEachern, 2006 BCCA 508, the Court of Appeal affirmed at para. 47 that, while the doctrine of spousal support does not guarantee to either party the standard of living enjoyed

during the marriage, consideration of the marital standard of living is a relevant factor in assessing the "needs" of the recipient spouse. This factor should be weighed in light of the length of the marriage. [356] With respect to retroactive support, the leading case is D.B.S. v. S.R.G., 2006 SCC 37, which requires the court to consider four factors: the conduct of the payor; the recipient's delay in seeking retroactive support; the circumstances of the children; and potential hardship to the payor. [357] In Ducharme v. Rempel, 2016 BCCA 198, the Court of Appeal confirmed that the D.B.S. factors apply in the context of orders for retroactive spousal support as well as retroactive child support: [17] I begin by noting that the same factors are to be taken into account whether retroactive child or spousal support is in issue. It is the weighing of those factors that will differ: concerns about the applicant's delay and misconduct "carry more weight" in relation to spousal support (Kerr at para. 208). In contrast, the entitlement of a child to support is generally so compelling that those factors will be less significant in the exercise of the court's discretion to make a retroactive award. The underlying facts are, however, relevant to both types of support applications. [18] It is to be remembered as well that although the majority in D.B.S. identified four factors to be

considered, Mr. Justice Bastarache began by saying: 99 I will now proceed to discuss the factors that a court should consider before awarding retroactive child support. None of these factors is decisive. For instance, it is entirely conceivable that retroactive support could be ordered where a payor parent engages in no blameworthy conduct. Thus, the British Columbia Court of Appeal has ordered retroactive support where an interim support award was based on incorrect financial information, even though the initial underestimate was honestly made: see Tedham v. Tedham (2003), 20 B.C.L.R. (4th) 56, 2003 BCCA 600. At all times, a court should strive for a holistic view of the matter and decide each case on the basis of its particular factual matrix. [Emphasis added in Ducharme.] Quantum, Duration, and Review [358] I accept Ms. P's testimony that she was not expected to work outside the home during the relationship after the children were born. Mr. A could easily provide for the family. While it was Ms. P who wanted to have children, Mr. A supported this decision and both spent time and resources in order to make Ms. P's dream of having children a reality. Thereafter, Ms. P was the primary caregiver for the children until Mr. A retired. Ms. P followed Mr. A to Turkey and then to Canada. She supported his career. While the parties moved to Canada after Mr. A's retirement, it was

primarily Mr. A who desired to emigrate from Germany. Ms. P asserts that she could not find work after the separation in Canada until April 2017. However, I have found that Ms. P's ability to find work successfully was impeded by the parameters of her search. [359] I find that Ms. A is entitled to support on a compensatory and non-compensatory basis. [360] Based on Ms. P's income of $112,306.55, which includes the tuition benefit, and Mr. P's income of $211,659.45, the SSAG range for spousal support for the next six months, during which Ms. P would have primary parenting time of M, is zero at the low end, $234 at the mid point, and $942 at the high end. In my view, these figures do not align with the principles of compensatory and non-compensatory spousal support. [361] Using Ms. P's adjusted income of $88,996.55, without the tuition benefit, the range for spousal support is $376 at the low end, $1,025 at the mid point, and $1,677 at the high end. This range better reflects the principles underlying spousal support. It is also a fairer result because it does not prejudice Ms. A for an employment benefit that provides an advantage to both parties. [362] In six months, when M returns to shared parenting time with both parents, the range for spousal support increases, based on Ms. P's income of $88,996.55 and Mr. A's income of $211,659.45, to $464 at the low end, $1,099 at the mid

point, and $1,754 at the high end. [363] Finally in 2019, when Mr. A ceases to pay spousal support to his former wife, Ms. A, the range for spousal support increases further, based on Ms. P's income of $88,996.55 and Mr. A's income of $211,659.45, to $1,346 at the low end, $2,059 at the mid point, and $2,779 at the high end. [364] Taking into account the principles underlying compensatory and non-compensatory spousal support, and based on Ms. P's income of $88,996.55 and Mr. A's income of $211,659.45, I order Mr. A to pay Ms. P spousal support of at $1,350 per month commencing March 1, 2018, and continuing on a monthly basis for a period of six months, or until M returns to a shared parenting regime with both parents. When M returns to a shared parenting regime, Mr. A shall pay to Ms. P spousal support of $1,425 per month until December 31, 2019. Commencing January 1, 2020, Mr. A shall pay to Ms. P spousal support of $2,400 per month until May 31, 2023. At this point, Mr. A will have paid Ms. P spousal support for a period of eight years and the payments for spousal support will terminate. [365] I will not order the annual review requested by Ms. P because I am concerned this will cause the parties to engage in perpetual litigation, which is harmful to their children. The income of both parties is stable, and the changes, which are foreseeable, have been taken into account,

including the termination of Mr. A's spousal support payments to Ms. A in 2019. The parties are always at liberty to apply for a variation of the quantum and duration of spousal support based on a material change in circumstances. [366] I will also not order that spousal support be binding on Mr. A's estate. This is prejudicial to his estate and his beneficiaries, which is not warranted on a ten-year relationship. There is no basis for Ms. P to receive 50% of the ERGO pension income after the spousal support terminates for the duration of either party's life. In my view, the objectives of the legislation and case law will have been met by the award that has been ordered. [367] Ms. P will pay for any tax consequences arising form the tuition discount. I have taken this payment into account for this year and future years in the overall assessment of support. Retroactive Support and Arrears [368] Ms. P is seeking retroactive child and spousal support for February, March and April 2015.With respect to the factors set out in D.B.S., there has been some delay by Ms. P in seeking this retroactive support. In her Notice of Application, filed March 2015, Ms. P did not request retroactive support and she did not seek retroactive support until trial. [369] However, Mr. A has engaged in blameworthy conduct throughout the proceeding. While Mr. A did begin paying child and spousal support

shortly after being served with the notice of family claim and notice of application, he also unilaterally reduced his court ordered payments. Mr. A's reason for doing so was because he claimed to not have the funds to pay the full amount because he paid for expenses he attributed to Ms. P. The arrears that Mr. A accumulated were subsequently paid in full by April 2017. [370] Mr. A claims that he overpaid support pursuant to Mr. Justice Leask's interim order. However, as set out above, the total monthly amount of support paid by Mr. A, of $9,000, was within the range of combined support payable under both the Guidelines and SSAG, not taking into account the tax consequences. I find that he did not overpay support from May 2015 to April 2017. [371] In April 2017, Ms. P did begin working and based on the parties' respective incomes from April 2017 onwards, Mr. A appears to have overpaid support by approximately $2,000 per month based on the high end of the SSAG range for spousal support. Ms. P submits that after April 2017, Mr. A continued to unilaterally reduce his support payments. However, there was no evidence before me as to the amounts of support Mr. A paid after April 2017. Mr. A also breached a number of other court orders during the litigation, including failing to take the children to counselling classes, and refusing to pay for some of the children's special

expenses. [372] Finally, while I do not find there would be much hardship to Mr. A to pay retroactive support for this three month period, there would also be little benefit to the children who have continued to live a similar lifestyle post-separation. Accordingly, I find that any overpayment of support by Mr. A from April 2017 to the date of these reasons are set off by any retroactive support that would be ordered for the months of February, March, and April 2015. Therefore, there will be no order for retroactive support. [373] I make this order assuming Mr. A has paid the full amount of support payable pursuant to the interim order of Mr. Justice Leask, which continued to be in effect to the date of this order. Therefore, if Mr. A has in fact underpaid support pursuant to that order he would be in arrears of that order. [374] Ms. P also requests that Mr. A pay retroactive support for special expenses. Pursuant to the interim order, the parties shared special expenses equally. Ms. P argues that, based on the parties actual incomes, Mr. A should have paid an additional $742 per month in 2015 and 2016, which is a total of $17,808, for the children's school expenses. This calculation is based on Ms. P receiving a lower amount of spousal support than set out by the SSAG ranges. However, this figure provides an adequate estimate and allows me to determine an appropriate lump sum

payment. For this reason, I order that Mr. A make a retroactive support payment for special expenses of $15,000. How much child support is payable and what amounts are included as section 7 expenses? Basic Child Support [375] As with spousal support, I find that it is fair to determine child support payments based on a Guidelines income for Ms. P of $88,996.55, which excludes the tuition benefit, and a Guidelines income for Mr. P of $211,659.45. [376] Commencing March 1, 2018, I order Mr. A to pay Ms. P child support of $2,864 per month and Ms. P to pay Mr. A child support of $851 per month, with a set off of $2,013 payable by Mr. A to Ms. P, and continuing on a monthly basis for a period of six months, or until M returns to a shared parenting regime with both parents. [377] When M returns to a shared parenting regime, Mr. A shall pay to Ms. P child support of $2,864 per month and Ms. P shall pay to Mr. A child support of $1,373 per month, with a set off of $1,491 payable by Mr. A to Ms. P. This support shall continue as long as the children are "children of the marriage", further court order or a review. [378] By June 30, 2018 and each year thereafter, the parties will provide each other with the documents as set out in s. 21(1) of the Guidelines for the prior year. The parties shall review the child support payable and any adjustment will be made effective July 1 of each and

every year commencing in July 2018. If the review is not settled by December 1 of each year, the parties are assumed to agree that no adjustment is required. Until a review of child support has taken place, Mr. A will continue to pay the monthly support as set out herein. Either party is at liberty to seek directions or make an application to the court. [379] If the parties have not exchanged personal tax returns and financial statements for 2014-2016, they are required to do so within 60 days of these reasons. Section 7 Expenses [380] The parties shall share s. 7 expenses proportionate to their incomes. The parties' proportional shares are 70% for Mr. A and 30% for Ms. P. These expenses include school tuition of $8,120 for M and $7,148 for B, and any other school related fees such as uniforms, supplies, and cafeteria fees. Special expenses will also include health care expenses, including the extended healthcare premiums for the children, and extra-curricular activities, such as Scouts and football. [381] The party incurring the expense shall provide the other party with a receipt for reimbursement. [382] No other expenses will be considered special or extraordinary unless agreed to by the parties in advance or by further court order. Registrar [383] If the parties cannot agree on the reconciliation of the amounts to be paid from one to the other pursuant to these reasons,

they are directed to appear before the Registrar for an inquiry and accounting as to what amounts are due from one party to the other. [384] The Registrar will certify the results of the inquiry and accounting pursuant to Supreme Court Family Rules, R. 18-1(2). [385] Prior to appearing before the Registrar, the parties must schedule a pre-hearing conference. Costs [386] Unless there are other circumstances of which I am unaware, given that there was mixed success, each party should bear their own costs. If either party wishes to bring other matters to my attention that may affect costs, they must contact Scheduling within one month of today's date to set down a hearing. "Choi J."