Director of Maintenance Enforcement v. Timmermans

2010 BCSC 347 Director of Maintenance Enforcement v. Timmermans

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Director of Maintenance Enforcement v. Timmermans, 2010 BCSC 347 Date: 20100318 Docket: E081980 Registry: Vancouver Between: The Director of Maintenance Enforcement for the benefit of Peggy Fricker Appellant And Peter Timmermans Respondent Before: The Honourable Madam Justice Dardi On appeal from: Provincial Court, November 29, 2006 (Vancouver 93-5279) Reasons for Judgment Counsel for Appellant: A. Lesley Counsel for Respondent: A. Dunn Place and Date of Hearing: Vancouver, B.C. June 4 and July 21, 2009 Written submissions received August 31, 2009, October 16, 2009 and November 20, 2009 Place and Date of Judgment: Vancouver, B.C. March 18, 2010

INTRODUCTION [1] This is an appeal from a judgment of the Provincial Court dated November 29, 2006. [2] Mr. Peter Timmermans is the biological father of Peggy Fricker, who was born September 16, 1971 in Germany. She remains resident in Germany. Mr. Timmermans, who moved to Vancouver, B.C. in 1979, has never had a relationship with his daughter. [3] The issue of child maintenance in this case has had a lengthy and protracted history of court proceedings in two jurisdictions: B.C. and Germany. [4] Three German support orders dated November 2, 1971, November 15, 1989, and December 18, 1990 in favour of Ms. Fricker were registered against Mr. Timmermans on July 22, 1993 in B.C. under the Family Relations Act, R.S.B.C. 1996, c. 128 [FRA]. [5] The Director of the Family Maintenance Enforcement Program (the "Director") subsequently started enforcement proceedings in B.C. against Mr. Timmermans. The 1971 and 1989 orders, which relate to support for Ms. Fricker up until her 18th birthday, are not an issue in this appeal as Mr. Timmermans has paid the amounts owing pursuant to those orders. [6] Mr. Timmermans, however, disputed the order of December 18, 1990 (the "1990 Order"), and after several hearings in both the B.C. Provincial and Supreme Court, the matter was eventually remitted to Germany. [7] The German court issued an order and reasons for judgment on February 4, 2005 (the "2005

Order"), pursuant to which Mr. Timmermans made a payment in the amount of $14,325.54 on May 13, 2005. This payment was made from the security he had deposited in Germany prior to the hearing there in 2005. [8] The Director claims that Mr. Timmermans still owes Ms. Fricker $6,835.05 (this was amended at the hearing from the original figure of $6,847.06) on account of interest on arrears. Mr. Timmermans maintains that the $14,325.54 he paid in Germany was in satisfaction of all that was owing to Ms. Fricker. [9] The parties again appeared before the B.C. Provincial Court to resolve their dispute. The learned Provincial Court Judge Yee (the "Trial Judge") found that Ms. Fricker was not entitled to claim interest as alleged by the Director: Director of Maintenance Enforcement v. Timmermans (November 29, 2006), Vancouver 93‑5279 (Prov. Ct.). [10] The Director appeals this decision on the basis that the Trial Judge incorrectly interpreted the 2005 Order of the German court and that he failed to properly consider B.C. legislation that allows interest to be charged on foreign maintenance orders registered in B.C.

RELEVANT STATUTORY PROVISIONS [11] The Interjurisdictional Support Orders Act, S.B.C. 2002, c. 29 [ISOA], allows for foreign support orders from reciprocating jurisdictions to be registered in B.C. Specifically, s. 18 of the ISOA provides: (1) On receiving a certified copy of an order under section 17 (2), the British Columbia court must register it as an order of that court. (2) On an order being registered under subsection (1), the order, from the date it is registered, has the same effect as a support order made by a court in British Columbia. (3) Subject to section 19, an order registered under subsection (1) may be enforced, with respect both to arrears accrued before registration and obligations accruing after registration, in the same manner as a support order made by a court in British Columbia, or may be varied under this Act. (4) Subject to section 19, an order registered under subsection (1) may be filed with the director. This section applies to a registered order whether it is made before, on or after the date this section comes into force. The ISOA applies to foreign support orders from reciprocating jurisdictions that were formerly registered under the FRA. [12] Section 42(1) provides as follows: (1) In a proceeding under this Act, (a) the British Columbia court must take judicial notice of the law of a reciprocating jurisdiction and, if required, apply it,

and (b) an enactment of a reciprocating jurisdiction may be pleaded and proved for the purposes of this Act by producing a copy of the enactment received from the reciprocating jurisdiction. Germany is a reciprocating jurisdiction for purposes of the ISOA. [13] Section 11.1 of the Family Maintenance Enforcement Act, R.S.B.C. 1996, c. 127 [FMEA], which came into force in 1997, provides: (1) Subject to the regulations, the debtor must pay to the creditor on any arrears of maintenance that accrue before or after this section comes into force simple interest calculated from the date and in the manner determined in accordance with the regulations. [14] In s. 1(1) "maintenance order" is defined as: ... a provision for the payment of maintenance in an order or judgment that is enforceable in British Columbia and includes ... (d) an order that is a support order under the Interjurisdictional Support Orders Act, but does not include a provisional order or a provisional variation order, as defined in section 1 (1) of the Interjurisdictional Support Orders Act; [emphasis added.]

BACKGROUND [15] The following summary is based upon my review of the transcripts of the proceedings in Provincial Court and the document briefs provided by counsel at the hearing of this appeal. [16] The 1971 German order confirmed Mr. Timmerman's paternity and set a monthly maintenance amount. In 1989, the German court ordered maintenance from April 1, 1987 to September 16, 1989, the date of Ms. Fricker's 18th birthday. Mr. Timmermans eventually made payments totaling $6,345.70 on account of the maintenance owing up to the date of Ms. Fricker's 18th birthday. [17] Counsel for the Director conceded in oral submissions that the 1971 and 1989 orders are not an issue in this appeal. [18] The 1990 Order was for maintenance payable after Ms. Fricker's 18th birthday. Ms. Fricker was 19 years old when the order was made. The German court ordered a lump sum for arrears from October 1989 to March 1990 and further maintenance payments of "600.00 DM per month" commencing April 1, 1990 with no end date. The further payments appeared to be for support while Ms. Fricker attended post-secondary school. [19] In 1996, the Director commenced enforcement proceedings in B.C. and issued notices of attachment against Mr. Timmermans' assets. In 1997, Mr. Timmermans applied in Provincial Court seeking withdrawal of the attachments and dismissal of the registration of the 1990 Order. Judge Auxier

adjourned the enforcement proceedings with respect to the 1990 Order and ordered the matter be remitted back to the German court for further evidence to be provided by Ms. Fricker and her mother. Apparently, because of an administrative error, the matter was not properly remitted back to the German court. In 1999, Judge Auxier found that, in the circumstances, it would not be equitable to enforce the maintenance arrears owing pursuant to the 1990 Order: Timmermans v. Fricker (April 8, 1999), Vancouver 93-5279 (Prov. Ct.). Judge Auxier set aside the attachment orders and dismissed the Director's default proceedings. [20] The Director appealed Judge Auxier's decision to the B.C. Supreme Court. In 2001, Madam Justice Morrison held that there are circumstances where a Provincial Court judge has jurisdiction to decline to enforce a foreign order registered in B.C., but in this case there was not sufficient evidence to do so. Madam Justice Morrison set aside Judge Auxier's decision, but she ordered that the matter be remitted to Provincial Court for a new hearing "with the benefit of evidence to be provided by the German court as ordered by the Provincial Court Judge on August 7, 1998": Director of Maintenance Enforcement v. Timmermans, 2001 BCSC 377 at para. 29. [21] At a hearing in Provincial Court on April 16, 2003 before the Trial Judge (Yee P.C.J.), Mr. Timmermans, through his

counsel, advised the Court that he would abide by whatever the German court decided in regards to the 1990 Order and, in particular, that he would make arrangements to pay any amount the German court ordered. [22] On June 3, 2003, the Trial Judge adjourned the hearing with respect to the enforceability of the 1990 Order because Mr. Timmermans was in the process of challenging the 1990 Order in the German court. At this hearing, the Director advised the Court that he agreed to the adjournment because only the German court could "determine exactly what the arrears are". [23] The parties finally did appear before the German court and on February 4, 2005 the Local Court of Tempelhof-Kreuzberg (Family Court Division) issued the 2005 Order, which states (as translated into English): 1. Execution of the enforceable default [1990 Order] is declared impermissible in as far as the defendant [Ms. Fricker] executes more than 102.86 €/month (201.18 DM) for the period from August 1991 until July 1992 and more than 90.23 €/month (176.47 DM) for the period from August 1992 until June 1993.

2. Further action is dismissed.

3. According to § 770 ZPO (German Civil Proceedings Code) the execution of the [1990 Order] is ceased in the extent of the operative provisions under 1. [which states the monthly maintenance amount owing] until the coming into legal effect of this judgment.

4. Of the costs of the legal proceedings, the plaintiff [Mr. Timmermans] has to pay 2/3 and the defendant 1/3.

5. The judgment is provisionally enforceable. The plaintiff is ordered to avert execution by depositing security in the amount of the collectible, unless the defendant deposits security over the same amount before execution. Adjudicated and pronounced: The value of the proceeding is defined as (27,600.00 DM) = 14,112.00 EUR. [24] Mr. Timmermans was liable for maintenance payments only up until June 1993 as Ms. Fricker had started working in July 1993. [25] In the reasons for judgment for the 2005 Order, the German court stated that Ms. Fricker had failed to disclose the receipt of student subsidies that she had obtained from August 1991 until June 1993. Therefore, it subtracted a proportion of the subsidies received each month from the maintenance amount owing by Mr. Timmermans pursuant to the 1990 Order. The court fixed the arrears at €8,975.90. There is no mention of interest in the 2005 Order or the accompanying reasons for judgment. [26] In compliance with the 2005 Order, Mr. Timmermans paid Ms. Fricker $14,325.54 on May 13, 2005 (which apparently was the equivalent of €8,975.90 in Canadian dollars at the time) from the security he had posted. TRIAL JUDGE'S REASONS FOR JUDGMENT [27] The Director takes issue with the Trial Judge's finding that Ms. Fricker is not entitled to interest on arrears. The Trial Judge stated as follows at paras. 23-25: [23] It is clear from a review

of the court documents from Germany that the parties were represented by lawyers and that the judgment dealt with all claims made by both sides. Aside from declaring Fricker's default judgment being impermissible or provisionally enforceable, the decision also dismissed further actions as well as ruled on the costs of the proceedings to be born by the parties. Furthermore, the final paragraph of the judgment that "an authorization to avert had not to be pronounced over the defendant as the plaintiff, after the required balancing of costs, has no enforceable claims" would suggest that all of the claims of the parties have been dealt with. [24] While it is unclear from the order of the German court as to whether Fricker sought interest on the amount awarded, it is certain that there is no order for Timmermans to pay any interest. Given the fact that Fricker had legal representation, it would be reasonable to assume that either the Court had simply denied granting any interest even though Fricker made a claim for it or Fricker's lawyer knew that the Court was not going to award interest and therefore did not bother to apply for it. More significantly, it is noted that the German court declared that the judgment was "impermissible" and "inoperative" until the judgment coming into legal effect suggests that Timmermans' obligation to satisfy the judgment takes effect only after the

decision was pronounced. [25] It is noted that the German court declared that the judgement filed by Fricker in our court before the date of the pronouncement to be invalid. This would imply that all three maintenance orders had been merged. Under the circumstances, it would be indeed arbitrary on our part and unfair to Timmermans if he is ordered to pay interest to Fricker for the period before the date of the judgement by the German court. [28] The Trial Judge stated in obiter that even if Ms. Fricker was entitled to interest, she would be relying on the provisions of the Court Order Enforcement Act, R.S.B.C., c. 78 [COEA], and not the FMEA. [29] The Trial Judge also found that Mr. Timmermans owed an outstanding balance of $543.93 in maintenance to Ms. Fricker. He stated that payment of this amount plus interest on it from February 4, 2005 would qualify as full and final satisfaction of the maintenance orders registered in the B.C. court. The Director conceded at the hearing of the appeal that the $543.93 plus interest has been paid and is not an issue in this appeal.

GROUNDS OF APPEAL [30] The first issue, as framed by the appellant Director, is whether the Trial Judge erred in deciding that payment of the amount awarded by the German court in the 2005 order represents full and final satisfaction of the maintenance orders registered against Mr. Timmermans in B.C. [31] In determining whether interest is payable as the Director alleges, the threshold issue is whether in light of the 2005 Order, the 1990 Order should be enforced in B.C. Only if this issue is answered in the affirmative does the issue of interest on the 1990 Order arise. Accordingly, I address this issue first. I will then address the issue of whether the Trial Judge erred by failing to properly consider B.C. legislation that allows interest to be charged on foreign maintenance orders registered in B.C.

STANDARD OF REVIEW [32] The authority for this appeal derives from the ISOA and FMEA. Section 36 of the ISOA provides: 36 (1) Subject to subsections (2) and (5) to (7), a party to a proceeding under this Act or the designated authority may appeal any ruling, decision or order of (a) the Provincial Court, made under this Act to the Supreme Court, and (b) the Supreme Court, made under this Act to the Court of Appeal, in accordance with the Court of Appeal Act. ... (10) If an appeal under this section is commenced in the Supreme Court, the Supreme Court may do one or more of the following: (a) confirm the order of the Provincial Court; (b) set aside the order of the Provincial Court; (c) make any order that the Provincial Court could have made; (d) direct the Provincial Court to conduct a new hearing. [33] Section 48 of the FMEA provides: (1) A person may appeal an order of the Provincial Court made under this Act to the Supreme Court and section 16 (3) to (7) of the Family Relations Act applies in respect of the appeal. (2) Section 14 of the Family Relations Act applies in respect of any order made under this Act. (3) If the director is authorized by this Act to act in a proceeding, including a proceeding commenced under another enactment, the director (a) has the same right as any other party to the proceeding to appeal or defend an appeal from an order or decision arising out

of the proceeding, and (b) must be served with notice of any appeal from such an order or decision. [34] Section 16(6) of the FRA sets outs the powers of the Supreme Court when reviewing a Provincial Court decision. They are the same as those listed in the ISOA at s. 36(10). [35] The standard of review on a question of law is one of correctness; thus, on a pure question of law, "the basic rule with respect to the review of a trial judge's finding is that an appellate court is free to replace the opinion of the trial judge with its own": Housen v. Nikolaisen, 2002 SCC 33 at para.

8. However, subject to certain exceptions, foreign law is treated like a fact: Old North State Brewing Co. v. Newlands Services Inc. (1998), 58 B.C.L.R. (3d) 144 (C.A.) at para. 39. [36] On matters of fact, the question is whether the trial judge is shown to have made a palpable and overriding error, which is an error that is plainly seen: Housen at para.

5. On matters of mixed fact and law, the standard is also palpable and overriding error "unless there is a clearly identifiable or 'extricable' error of law apparent from the reasons of the trial judge" in which case the standard is correctness: Keefer Laundry Ltd. v. Pellerin Milnor Corp., 2009 BCCA 273 at para. 60. [37] In the result, my review of the Trial Judge's interpretation of B.C. law must be done on standard of correctness. The interpretation of the German order and whether it impacts Ms. Fricker's legal rights in B.C. is a matter of mixed fact and law and should be reviewed with deference, unless there is a clearly identifiable or "extricable" error of law apparent from the reasons of the Trial Judge. His findings in this regard may only be set aside if the appellant can demonstrate palpable or overriding error.

ANALYSIS Issue 1: Whether in light of the 2005 Order, the 1990 Order should be enforced in B.C. [38] The Director argues that the Trial Judge erred in deciding that payment of the amount awarded in the 2005 Order represents full and final satisfaction of the maintenance order registered against Mr. Timmermans in B.C. The Director submits that interest is payable on $14,325.54 (the amount of arrears ordered by the German court on February 4, 2005) from January 1, 1997 (the date interest began to accrue under the FMEA) to the date of payment of those arrears in May 2005. [39] Before considering the matter of interest, I must determine whether the Trial Judge erred in finding that in light of the 2005 Order, the 1990 Order is not enforceable in B.C. Although not expressly articulated by the Trial Judge, it was a necessary finding upon which he grounded his conclusion regarding interest. [40] Counsel for the Director argues that in 2005, Mr. Timmermans did not ask the German court for an order resolving all the issues between him and Ms. Fricker; nor did he obtain such an order. Mr. Timmermans' application in Germany was specifically to seek a declaration that the 1990 Order was unenforceable; he did not seek a determination of whether interest applied to maintenance arrears prior to 2005. Counsel for the Director contends that neither the Director nor Ms. Fricker had any

obligation to raise the issue of interest. [41] Counsel for the Director further submits that while the 2005 Order restricted the enforcement of the 1990 Order to a lesser amount, this did not affect its registration in B.C. and, therefore, the 1990 Order is enforceable in B.C. He contends that Mr. Timmermans should pay interest on the arrears as recalculated and reduced by the 2005 Order. In submissions, he referred to this as a "retroactive variation or adjustment". [42] In particular, the counsel for the Director submits that the Trial Judge makes the following errors in his decision: 1) he misinterprets the 2005 Order as dealing with all of Ms. Fricker's claims; 2) he makes an assumption, not supportable on the evidence, as to the position of Mr. Fricker's counsel regarding interest at the German hearing and proceeds on this assumption; 3) he misinterprets that the German court finds the 1990 Order to be invalid and/or impermissible; 4) he misinterprets the declaration in the 2005 Order that "[f]urther action is dismissed" to mean that any claim or entitlement of Ms. Fricker is dismissed when really the German court is simply dismissing Mr. Timmermans' claim to wholly cancel the maintenance arrears under the 1990 Order; and 5) he errs in determining that it would be arbitrary and unfair for the B.C. court to order Mr. Timmermans to pay interest for the period before the

2005 Order. [43] I do not agree with all of the Trial Judge's comments regarding the 2005 Order; for instance, his statement in para. 28 that "[g]iven the findings of the German court, it would appear that the 1990 order was certainly made out in error if not being improperly obtained." [44] However, I do not find that the Trial Judge commits a palpable or overriding error in interpreting the 2005 Order. I agree with the Trial Judge that the phrases in the 2005 Order, "[e]xecution of the enforceable [1990 Order] is declared impermissible" and "execution of the [1990 Order] is ceased in the extent of the operative provision under 1. until the coming into legal effect of this judgment", support a finding that the 2005 Order effectively replaced or superseded the 1990 Order. Most significantly, the 2005 Order sets the "value of the proceedings" at €14,112 as of February 4, 2005. [45] The law of the jurisdiction in which the child ordinarily resides determines entitlement to child maintenance: s. 31(1)(a) of the ISOA; and Gale v. Gale, 2008 BCSC 476 at para.

52. Cancelling or reducing arrears affects entitlement to support and, thus, the law of the jurisdiction of the child applies in determining the quantum of arrears: C.J.S. v. R.R.S.S., 2003 BCSC 803 at para.19. Since Ms. Fricker resides in Germany, German law applies to the issue of her entitlement to child maintenance. Notably, the Director takes no issue with the quantum of maintenance set out in the 2005 Order. Rather, he properly concedes that Ms. Fricker cannot enforce the maintenance arrears as those arrears would be calculated under the 1990 Order. [46] Deference must be given to the German court's decision in 2005 to reduce the amount owing from the 1990 Order and to fix the quantum of the arrears. While the 2005 Order references the 1990 Order and confirms the enforceability of certain terms within it, it also replaces other terms of the 1990 Order and fixes an amount for arrears that is less than Mr. Timmermans would have owed under the 1990 Order. [47] In the result, I conclude that the Trial Judge did not err in holding that the 1990 Order should not be enforced in B.C. For completeness, I add that on a standard of review of correctness, I find that the Trial Judge was correct. There is no principled basis to support this Court's interference with his conclusion. Issue 2: Whether the Trial Judge errs by failing to properly consider B.C. legislation that allows

interest to be charged on foreign maintenance orders registered in B.C. [48] The Director submits that the Trial Judge failed to properly consider provisions of the ISOA and FMEA that allow interest to be charged on foreign maintenance orders registered in B.C. [49] As referred to earlier, the Director submits that because the 2005 Order does not make the 1990 Order unenforceable, interest is properly payable from the time s. 11.1 of the FMEA came into force until payment of the arrears by Mr. Timmermans. He also submits that the Court should consider public policy that supports the payment of interest on maintenance orders because it motivates a debtor to make timely payments. [50] Mr. Timmermans, on the other hand, argues that the German court did not order interest because Ms. Fricker did not apply for it. The German code for civil proceedings stipulates that a court cannot award interest without a party applying for it. Accordingly, he submits that the matter of Ms. Fricker's entitlement to interest is res judicata. He also argues that the German law with respect to interest should have priority over s. 11.1 of the FMEA. Finally, he argues that equitable principles favour Mr. Timmermans since it was Ms. Fricker's failure to disclose the subsidies that caused the delay in the enforcement of the maintenance order. [51] Given my findings, it is not necessary to deal with

issues raised by the parties with respect to German law, conflicts of law, public policy and equitable principles. As stated above, I do not find that Trial Judge erred in determining that, in light of the 2005 Order, the 1990 Order is unenforceable in B.C. Section 11.1 of the FMEA, upon which the Director relies, provides that a debtor must pay interest on arrears of maintenance. The German court determined the quantum of those arrears in its 2005 Order. The 2005 Order essentially replaces the 1990 Order and, thus, any issue surrounding the interest on the maintenance ordered pursuant to its original 1990 Order is no longer relevant. [52] However, I do not agree with the Trial Judge's comment in para. 28 of his decision that "even if interest is owing to Fricker under the earlier orders, she would be entitled to recover that through the reciprocal enforcement of court order section of the Court Order Enforcement Act." The Trial Judge relies on B.C. Attorney General v. Houle (1994), 1 B.C.L.R. (3d) 215 (S.C.), as authority for this proposition. However, this case pre-dates the coming into force of both the ISOA and s. 11.1 of FMEA, and it deals with the issue of costs, not interest. [53] In Majormaki Holdings LLP v. Wong, 2008 BCCA 422, the court observed at para. 21: The modern approach to statutory interpretation is well known, namely that "the words of an Act are to be read

in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament" ... [54] In reading the plain language of s. 18 of the ISOA and s. 11.1 of the FMEA, I conclude that interest on foreign maintenance orders registered in B.C. under the ISOA would be enforceable in B.C. pursuant to these provisions and not the COEA as suggested by the Trial Judge. At this juncture, it is important to observe that the applicability of s. 11.1 of the FMEA presupposes that according to "choice of law" rules, no contrary law of a reciprocating foreign jurisdiction would govern the disposition of interest. Since the Trial Judge's comment was in obiter, however, I do not find that any error he commits on this point of law has an adverse impact on his ultimate findings. [55] The issue of whether interest accrued on $14,325.54 from February 5, 2005, the date the German court fixed the arrears, to May 13, 2005, the date of payment of the arrears, is a matter for the German court, not the B.C. court. According to s. 18(2) of the ISOA, it is not until the date of registration that a foreign maintenance order has the same effect as a support order made by a court in British Columbia. The date stamp on the 2005 Order indicates that it was not filed in the B.C. Provincial Court until July 4, 2005. As of this date, Mr. Timmermans had paid the $14,325.54 to Ms. Fricker in Germany and, thus, there was no outstanding balance to be enforced in B.C. There is no evidence that the 2005 Order was registered in B.C. prior to May 13, 2005, the date Mr. Timmermans paid the arrears. As a result, I cannot consider awarding interest on this amount.

CONCLUSION [56] I am mindful that the FMEA and the ISOA are examples of what is sometimes referred to as "social legislation" and that the law ought to facilitate the enforcement of maintenance orders, including payment of interest on arrears where appropriate: British Columbia (Maintenance Enforcement) v. I.W.A. Forest Industry Pension Plan (1991), 61 B.C.L.R. (2d) 264 (C.A.) at para.

20. However, in the unique circumstances of this case, there is no remedy available to Ms. Fricker in this court.

DISPOSITION [57] For the reasons set out above the appeal is dismissed. [58] Mr. Timmermans is entitled to the costs of this appeal in accordance with Scale B. "Dardi J."