Vallée v. Vallée

2012 BCSC 1780 Vallée v. Vallée IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Vallée v. Vallée, 2012 BCSC 1780 Date: 20121129 Docket: E082995 Registry: Vancouver Between: Sophie Vallée Claimant And Eric Joseph Vallée Respondent Before: The Honourable Madam Justice Humphries Corrected Judgment: The text of the judgment was corrected at paragraph 25 on June 3, 2013 Supplementary Reasons Counsel for the claimant: D.J. Barker Counsel for the respondent: Magal Huberman Place and Date of Hearing: Vancouver, B.C. October 24, 2012 Place and Date of Judgment: Vancouver, B.C. November 29, 2012 [1] Following a twelve day trial which was bifurcated over a gap of many months, the parties seek clarification of certain matters regarding the determination of income and spousal support. [2] At the outset of the hearing, the respondent listed a number of issues on which the parties disagree: 1. Communications between the claimant and her counsel to third parties 2. What years the income of the claimant, determined at trial to be $23,000, applies to, and other issues re spousal support 3. How to set the respondent's income for 2012 4. Dates for future financial disclosure 5. How to determine future income 6. The disbursal of $5,000 held in trust 7. Costs [3] At the hearing, the matter of costs was not pursued on either part and the parties agreed the $5,000 should be divided equally, although the claimant requests the respondent's portion to be set off against any moneys owing to her. I agree that this should occur, if justified when the calculations are done. Communications between the claimant and/or her counsel and third parties [4] I will now turn to the matter of communications between the claimant or her counsel and third parties. [5] This issue has been a matter of concern throughout this litigation. Counsel for the claimant has communicated with the respondent's employers and other third parties in ways that have allowed doubt to be cast on the respondent's character, reliability, and honesty. I expressed concern about this when the first part of the trial had to be adjourned, and subsequently, I made an order that counsel for the claimant was to disclose no information to third parties that would be covered by the protections that adhere to family files in general. [6] As is clear from my reasons for judgment at trial, communications to employers that affect the respondent's ability to work profitably and without distraction are to no one's benefit. [7] These communications have affected the working relationships between the respondent, who is a realtor, and his employers, who are brokerages, at least twice, and the respondent is now with a new company. [8] The claimant's lawyer recently wrote to that company expressing scepticism about the income information provided to him, resulting in the manager first providing some information and then advising him she would only deal with him through a lawyer. [9] On the other hand, the respondent, who underwent a twelve day trial on the issue of his income and the validity of his expenses, was extremely careless and cavalier in his recent income disclosure, leaving out three months of income, and then advising the court that no detailed information was available from his new company when it clearly is. [10] In order to avoid future conflicts and the potential for more communication between the claimant's lawyer and the respondent's employer, the respondent must obtain from the new company his monthly tax worksheets and those of his wife and partner, Juliana Lam Vallée, and provide them to the claimant, with the covering letter from the employer, on the date of the annual financial disclosure. It should go without saying that if Mr. Vallée is receiving additional income through the work of employees or agents, he must disclose that income, but in view of the continuing difficulties in this case, that will form part of the order as well. He is not required to disclose the income of independent agents from which he receives no benefit. If he does receive benefit from independent agents, he must disclose that income, but the financial affairs of the independent agents themselves need not be disclosed. [11] The order of Hyslop J. requires production of business receipts, but that was for purposes of establishing expenses. The expense rate has now been set. If Ms. Vallée wishes to see copies of receipts in addition to the tax worksheets, she will pay for the copying charges. [12] Since Mr. Vallée's new company now refuses to deal with Mr. Barker without a court order, I would expect there to be no further communications from Mr. Barker or the claimant directly to the employer. Issues respecting spousal support [13] I will now turn to the fourth issue listed above - that is, what years the imputed income for Ms. Vallée applies to. [14] At trial, I set Ms. Vallée's income at $23,000. Counsel differ as to whether that amount should apply to the three years in issue (2010, 2011, and 2012), or only the last year. Ms. Vallée did not work for much of 2010 because she was taking an interior design course in the hope of setting up her own business. These plans did not come to fruition but Ms. Vallée was putting in some effort towards obtaining employment in 2010 and was therefore not working. Her income for 2010 should be set at $0. [15] In 2011, Ms. Vallée was working at a design company and trying to start her business. Although she made only about $9,000 that year, the imputed income of $23,000 should apply to 2011 and 2012 because she could have been making more if she had not been attempting to run a business that made no money. [16] Ms. Vallée has recently moved to Kelowna to work, taking the children with her after four days' notice to Mr. Vallée. Her new employment, which she had been offered by the time she advised Mr. Vallée of her plans, is not related to interior design. [17] Next, the parties differ on whether spousal support is to be adjusted annually. [18] Hyslop J.'s consent order set child and spousal support amounts and provided: 7. The plaintiff Sophie Vallée and the defendant Eric Joseph Vallée shall be at liberty to apply for a review of the child support and spousal support on an annual basis on condition that any such application is brought after July 1 in any given calendar year; such an application shall be in the nature of a hearing de novo in relation to the review of respective guideline incomes of the plaintiff Sophie Vallée and the defendant Eric Joseph Vallée. So as to facilitate the determination of the parents' guideline incomes, the parents will provide each other with: (A) a financial statement Form 89 by no later than August 1, of each year commencing 2010; (B) a copy of their respective income tax returns filed on or about April 30 of each year and notices of assessment; (C) copies of their business expense receipts for the previous year ending December 31; (D) copies of primary records from their respective employers, evidencing their gross and net income for the preceding calendar year and for the first six months of the year in question. [19] Mr. Vallée, who was unrepresented at the time of the consent order, eventually objected to an annual trial de novo through counsel. He sought a trial on the issue of his income and the validity of his expenses. [20] Kelleher J., who ordered the hearing on income when the first mutual applications for review came before him in the fall of 2010, noted in his reasons of December 2, 2010 that Mr. Vallée's counsel had submitted that Hyslop J.'s order, though final, was not based on a determination of income. It was premised on a yearly review. Therefore the material filed before her order, which had been prepared for interim applications, ought not to be accepted as setting support on an ongoing basis. [21] Kelleher J. agreed with that proposition and said there needed to be a more thorough examination of the respective incomes, with cross-examination on affidavits. However, he also decided that there should no longer to be any annual variation of spousal support as provided for in the original consent order, and ordered: Paragraph 7 of the Order of Madam Justice Hyslop made August 17, 2009 (the "Order") is hereby varied to provide that child support will be adjusted annually in accordance with the Respondent's Guideline income and any further review of spousal support will be based on a material change of circumstances. This amendment to paragraph 7 of the Order will take effect after the hearing to be scheduled no sooner than February 15, 2011 under paragraph 1 of this Order. [22] Thus, the basic agreement of yearly adjustments of spousal support, which had been incorporated into a final order, was changed to allow for adjustment only on a material change in circumstances. [23] Mr. Vallée now seeks to have spousal support subject to yearly adjustments. [24] Ms. Vallee takes the position that spousal support must be fixed once and for all (although it terminates, subject to review by the claimant, in 2014 pursuant to the original order in any event) and there can be no adjustment for fluctuations in income, except for a material change in circumstances. Counsel for the claimant did a review of the various orders and circumstances since the divorce to show that child and spousal support have always been about $4,000. [25] At trial, Mr. Vallée's income was determined for 2010 and 2011. Mr. Vallée did not produce an expert report on expenses. Ms. Vallée did. Expenses were set at 60% for those years. [26] The relevant sections of the Divorce Act (s. 17(4.1) and Family Relations Act (s. 96(1)) set out the statutory considerations for variations of support. Both statutory schemes refer to changes in circumstances (and conditions, means and needs in the Divorce Act, and needs, means and capacities in the Family Relations Act). [27] However, in this case, the parties had originally agreed to have spousal support as well as child support adjusted every year. The order of Kelleher J. varied that final order to provide for variation only on a material change in circumstances, but I do not have any indication that that particular term was addressed by the parties. I have now heard many days of evidence at trial about income in the real estate business. I think the original approach, absent the trial de novo, makes more sense and is in line with the parties' original agreement. [28] Therefore both child and spousal support for each year will be based on the previous year's earnings, which will be disclosed through the financial information provided on July 1, and adjusted accordingly back to January 1, as suggested by counsel for Mr. Vallée. [29] The remaining issue, addressed briefly by counsel for Mr. Vallée, was whether the mid range or low range of the Spousal Support Advisory Guidelines should be used. In her submissions, Ms. Vallée's unsatisfactory efforts to become self-sufficient and Mr. Vallée's obligations to support four children (two from his present relationship) militate in favour of the low range. Counsel for Ms. Vallée did not address this point. [30] From the tables provided to me, the difference in amounts would be about $500 for the year in which Ms. Vallée's income is set at $0; thereafter the difference is about $300 per month. [31] Ms. Vallée's entitlement to spousal support was agreed, in 2009, to last for five years, that is, until 2014. It will be up to her to attempt to establish any further entitlement. However, the initial recognition of entitlement has a compensatory basis. Mr. Vallée pursued his real estate career during the marriage and Ms. Vallée primarily looked after the children, although she did take some courses and began her interest in interior decorating through their mutual enterprise of buying and selling condominiums. [32] The pursuit of both spousal and child support has been hard fought and long lasting. While Mr. Vallée does have two young children from his present marriage, this does not lessen the needs of the Ms. Vallée, who has had the responsibility of raising the two daughters since the breakup of the marriage. [33] It is my understanding that Ms. Vallée has accepted the responsibility of and expenses associated with making the children available for access visits since her sudden move to Kelowna without consultation with Mr. Vallée. Apparently this move is to facilitate her efforts to become self-sufficient over the next year and a half before spousal support terminates under the order of Hyslop J. I should mention that at a previous conference I invited Mr. Vallée to bring on an application in respect of that move if he wished to, but none has been brought. [34] In my view, the mid-range is an appropriate approach to spousal support at this time. If the respective incomes or other circumstances change significantly during the next two years, different considerations might apply. [35] Counsel have advised that with these determinations, they can calculate the amounts of spousal support with reference to the Spousal Support Advisory Guidelines. Method of Determining Mr. Vallée's income [36] The parties disagree on the method by which Mr. Vallée's income is to be determined. [37] In the original consent order entered into before Madam Justice Hyslop, a financial statement was to be provided by August 1st by both parties, along with "copies of primary records from their respective employers evidencing their gross and net income for the preceding six months." Applications to review could be made after July 1st. Production for July has now taken place, as set out above. [38] As I understand the position of counsel for the claimant, it is that Mr. Vallée's earnings for the first half of 2012 should simply be doubled to set an income for the entire year. [39] Mr. Vallée objects to that approach because he says his income in the fall is expected to be materially less than in the first half of the year. Counsel for Mr. Vallée suggests that documents for the previous year be exchanged in July, after the financial year end, and support be adjusted retroactively back to January, based on the known income for the previous year. [40] After having heard the evidence at trial, I agree with counsel for Mr. Vallée that simply doubling the first six months' income will not provide the best method of determining annual income. As already mentioned in the discussion of spousal support, income should be based on the previous year's income tax return. Full financial disclosure should be made by July 1 of each year, as provided in Hyslop J.'s order, unless the parties agree on a more appropriate date. Amounts of support will then be adjusted back to January 1 of that year. [41] Both counsel have asked that I seize myself of further applications in this case. I am willing to hear applications if I am available, but I have elected supernumerary status and may not be able to accommodate hearing dates on an expeditious basis so will not seize myself. "M.A. Humphries J." The Honourable Madam Justice M.A. Humphries