Harder v. Harder

2001BCSC0919 Citation: Harder v. Harder Date: 20010621 2001 BCSC 919 Docket: E006587 Registry: New Westminster

IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN:

DEBRA JEAN HARDER

PLAINTIFF AND:

KENNETH WAYNE HARDER

DEFENDANT

REASONS FOR JUDGMENT

OF THE HONOURABLE MR. JUSTICE JOYCE Counsel for the plaintiff Rodney Ellard Counsel for the defendant Michael Eeles Date and Place of Hearing/Trial: June 8, 2001 New Westminster, BC

NATURE OF THE APPLICATION [1] The plaintiff applies pursuant to Rule 18A for the following relief pursuant to the Divorce Act, the Family Relations Act and the Name Act: (a) a divorce; (b) child support for the child Jennifer Delores Harder, born January 19, 1982, including retroactive support; (c) spousal support, including retroactive support; (d) a determination and division of assets, including reapportionment in her favor and an order delaying the sale of the former family home; (e) an order that the plaintiff's name be changed to Debra Jean Thompson; and (f) costs.

BACKGROUND [2] The parties were married January 14, 1977. The defendant was working at that time at a labouring job. The plaintiff, who was pregnant with the parties' first child, dropped out of school after grade 11. The first child was born March 14, 1977. The parties had two other children, born July 6, 1980 and January 19, 1982. [3] In 1984 the defendant obtained employment with his present employer, a company that supplies auto parts. The defendant progressed with that company and by the time the parties separated he held the position of Maintenance Co-ordinator. He still holds that position. The plaintiff is a student at a local computer college, completing a course of studies in computer programming. [4] On August 31, 1999 a Master made an order declaring that there was no reasonable prospect of reconciliation and restraining both parties, by consent, from disposing of family assets. That order has not yet been entered. On September 17, 1999 a master made another order requiring the defendant to pay interim spousal support of $2,500.00 per month and interim child support for Jennifer of $750.00 per month, based on a finding that the defendant's guideline income was $98,525 per year. That order has never been entered although there was an appearance before the master on October 19, 1999 to settle its terms. It is unclear why that appearance did not result in a settlement

of the terms of the order. [5] The defendant fell into arrears with respect to maintenance and on December 13, 1999 the court made an order that one half of the defendant's RRSP's be paid into the trust account of the plaintiff's solicitor to be applied to arrears and to stand as security for future payments. The sum of $11,014.05 was paid to the plaintiff's solicitor pursuant to that order. [6] Subsequently, in February 2000 the defendant cashed in remaining RRSP's in his name totalling $13,997.47 in breach of the restraining order. The defendant says he required those funds in order to meet his obligations because he did not have the benefit of any tax deduction on account of the spousal support because the order had not been entered. [7] The plaintiff also breached the terms of the restraining order in September 1999 by cashing in RRSP's in the amount of approximately $16,400 when the defendant failed to pay the maintenance he was ordered to pay. She further breached the order in October 2000 by trading a family vehicle for another car and $5,000.00 cash. [8] On April 4, 2000 the court reduced the defendant's interim child support obligation to $560.00 per month and his interim spousal support obligation to $1,600.00 per month. That order was based on a finding that the defendant's guideline income was $68,700.00 per year. [9] At the time of trial there were no arrears of maintenance. [10] With this background I will deal with the various claims for relief.

DIVORCE [11] The evidence filed in support of the application entitles the plaintiff to a divorce on the ground that the parties have lived separate and apart for a period of at least one year and there will be an order accordingly. THE LEGAL EFFECT OF THE MEMORANDUM OF UNDERSTANDING DATED NOVEMBER 16, 2000. [12] At this stage is will be convenient to deal with an issue concerning the effect of a document executed by the parties that the defendant relies on as constituting an agreement. The parties attended mediation as a result of which they signed a document entitled Memorandum of Understanding that was prepared by the mediator. The defendant seeks to rely on that document as a valid agreement. The plaintiff takes the position that it is not a binding agreement. The memorandum contains the following provision: 16. The Parties acknowledge and agree as follows: (c) that this Memorandum of Understanding does not constitute a binding legal agreement between the Parties but rather records the good faith consensus reached through mediation which may form the basis of a subsequent legally binding agreement; [13] In my opinion the foregoing provision is clear. The memorandum is not a binding contract.

CHILD SUPPORT [14] There is no issue that the parties' two oldest children are independent and are no longer children of the marriage within the meaning of the Divorce Act. The plaintiff seeks support for the youngest daughter, Jennifer, who turned 19 on January 19, 2001. The plaintiff has the onus to establish that Jennifer is unable by reason of illness, disability or other cause to withdraw from the support of her mother. [15] Jennifer graduated from high school some time ago. The plaintiff deposed that Jennifer has been accepted by a college in England to study audio engineering but has been unable to attend because of lack of money. The plaintiff deposes that Jennifer hopes to be able to attend in the fall of 2001. In the meantime Jennifer is residing with the plaintiff. She is currently working part-time in the evenings as a telephone receptionist. There is no evidence of the amount of income she is earning. The plaintiff deposes that Jennifer has applied for a student loan but has not drawn it down and will not do so until she starts classes. There is no evidence of the amount of the student loan. The plaintiff has not provided particulars of the course that Jennifer wishes to take. There is no evidence of the school, the nature of the program, the degree, diploma or certificate that it would provide, the length of the program, the cost of tuition, books and supplies or

Jennifer's anticipated living costs. Jennifer has not provided an affidavit confirming her intentions or her wishes. [16] On the material that has been filed I am not satisfied the plaintiff has established that Jennifer is still a child of the marriage. The affidavit evidence is simply not sufficient to make that determination. However, rather than dismiss the application entirely I will adjourn it to give the plaintiff an opportunity to provide further evidence, if it is available.

FAMILY ASSETS AND DEBTS 1. Determination and valuation of assets [17] At the time of the triggering event, August 31, 1999, the parties' assets consisted of the following: (a) Matrimonial home [18] The 2000 tax assessment for the former matrimonial home indicates a value of $212,000. The defendant has provided a realtor's opinion that the home has a value of between $215,000 and $228,000. The home is encumbered by a mortgage in the approximate amount of $152,000. (b) Home furnishings [19] The plaintiff has estimated that household furnishings, exclusive of the appliances that would be sold with the house and exclusive of a stereo system, CD collection and tools that the defendant wishes to retain, have a value of about $7,000. She estimates the stereo system, CD's and tools have a value of $8,300.00. The plaintiff does not set out the basis for her valuation. There are no appraisals. (c) 1988 Jaguar automobile [20] Following the making of the restraining order the 1988 Jaguar has disappeared under the following circumstances. In October 1999 the plaintiff placed the car in storage with a Mr. Friesen, a bailiff. At some point Mr. Friesen took the engine out of the car and later apparently gave the engine away. At some point the chassis was taken from Mr. Friesen's yard and later recovered by him. Subsequently the plaintiff had the police tow the car from Mr. Friesen's

property. [21] The parties paid $15,000 for the 1988 Jaguar but when they were attempting to settle their financial affairs they valued it at $10,000.00. That is probably a fair value as it stood before the engine was removed. However, there is no proper basis upon which I can value the chassis today (if it is still capable of being retrieved) or the value of any chose in action that may exist in relation to this car. I suspect they are of little if any real value. (d) 1977 Jaguar automobile [22] The 1977 Jaguar is still in existence. The parties agree it is probably worth not more than $2,000. The defendant has indicated he would like to have that vehicle as a hobby car. (e) 1996 Toyota Forerunner automobile [23] In October 2000 the plaintiff traded in the Pathfinder automobile for another car worth $11,995 and $5,000 cash for a total of $16,995. (f) RRSP's in the name of the plaintiff [24] In breach of the order restraining the disposition of assets, in September 1999 the plaintiff disposed of RRSP's in her name having a value of $16,411.38. The plaintiff says she had to dispose of the RRSP's to meet living expenses because the defendant did not pay the maintenance as ordered. (g) RRSP's in the name of the defendant [25] A portion of the RRSP's in the defendant's name were disposed of pursuant to court order to provide for the plaintiff's maintenance. The defendant disposed of other RRSP's in breach of the restraining order. The value of the Vancity RRSP's disposed of was $27,772.53 according to the Vancity records. In addition, the defendant cashed in RRSP's held with Wood Gundy in the approximate amount of $4,500. (h) Defendant's employment pension in the form of RRSP's [26] The defendant's pension has a value estimated to be $80,000.

2. Debts [27] In addition to the mortgage debt, the plaintiff asserts that the following debts were incurred for a family purpose and ought to be taken into consideration in the division of family assets: (a) Bank of Montreal Judgment - $6,270.00 [28] This judgment relates to a student loan that the plaintiff obtained in the summer of 1999 to finance her computer course. The defendant guaranteed the loan. On August 10, 1999, after the loan had been partially drawn down, the defendant cancelled his guarantee and the loan was cancelled. The defendant deposed that he cancelled his guarantee because the plaintiff applied only $995 of the money advanced towards the cost of her course. The plaintiff used $300 for living expenses and $2,000.00 to retain her lawyer. It appears that as of August 6, 1999 only $3,295 had been drawn down. However, when the bank eventually sued it recovered judgment against the parties in the amount of $6,000.00. That claim was not defended and neither party has provided a copy of the judgment nor an explanation as to the amount of the judgment. This debt relates to monies borrowed prior to the triggering event, which the defendant agreed to guarantee. I conclude that the portion of the judgment in excess of the $2,000.00 that the plaintiff used to retain a lawyer should be taken into account as a family debt in dividing the family assets. (b) Royal Bank

loan - $9,500.00 [29] This is a student loan obtained by the plaintiff to replace the Bank of Montreal loan. It was drawn down after the triggering event. Even though it may have been used entirely for the plaintiff's education it cannot be said that it was used for a family purpose as there was no longer a family. In my view this debts cannot be deducted directly from the family assets, although the cost of the plaintiff's retraining is a matter that can be considered in the reapportionment of family assets (the need to become economically self-sufficient) or as a matter for lump sum spousal support.

3. Plaintiff's claim for reapportionment and delay in the sale of the matrimonial home [30] Counsel for the plaintiff submits there should be reapportionment of the equity in the family home 75/25 in her favour. While counsel did not provide extensive submissions on this issue, I understand the primary ground upon which reapportionment is sought is the need to become and remain economically self-sufficient. He also sought a delay in the sale of the matrimonial home to December 2001 to enable the plaintiff to finish her course and find employment. [31] I am of the view that a disposition that would result in an equitable sharing of the economic consequences of the breakdown of this marriage would be a reapportionment of the assets in favour of the plaintiff in an amount equal the amount of her student loan and by an award of period spousal support that will be subject to review once the plaintiff has had the time to complete her retraining and to secure employment. In that way the plaintiff will be compensated for the disadvantage she has suffered as a result of the roles adopted by the parties during the marriage and the loss of her opportunity to operate a daycare business. The reapportionment will address her need to become economically self-sufficient. Further, the plaintiff will be able to meet her current needs until she finds suitable employment. [32] I am not satisfied

that there should be a delay in the sale of the former family home. The RRSP's having been dissipated by the parties, there is no other asset that is available to pay the debts and achieve a division of assets. There are no young children to consider. I am not satisfied the plaintiff will be unable to complete her studies and look for new accommodation at the same time. The house is to be listed for sale immediately. The parties are to have joint conduct of sale, with liberty to apply in the event of any disagreement as to listing agent, list price or selling price. The plaintiff has failed to keep the mortgage and taxes current. The taxes are to be deducted from the sale proceeds but it is my view that any arrears of mortgage interest ought to be borne by the plaintiff who has had the benefit of the use of the home. [33] I conclude, therefore, that the assets should be divided in the following manner to achieve the reapportionment that I have concluded is appropriate: 1977 Jaguar [34] This asset is to be the property of the defendant. The plaintiff is to provide a signed transfer for the car. 1988 Jaguar [35] The defendant will be entitled to the chassis, if it can be retrieved and to any chose in action that the parties may have in connection with the loss of the engine. Forerunner Automobile [36] The plaintiff will retain the replacement automobile and will be credited with

the $5,000 cash she received on the trade. She is credited with a total of $16,995 on account of this family asset. Plaintiff's RRSP's that she cashed in [37] The plaintiff is credited with $16,441 on account of these former family assets. Defendant's RRSP's that he cashed in [38] The defendant is credited with $32,272 on account of these former family assets as a result of the foregoing division, the plaintiff will have received assets having a value of $33,406 while the defendant will have received assets having a value of $34,272. A payment of $433 from the defendant to the plaintiff is required to equalize a division of these assets. Defendant's employment pension [39] This asset is to be divided equally between the parties. They have liberty to apply for further directions, if necessary, with respect to the manner of division. Household furnishings The defendant is to receive his stereo system, CD collection and tools. The plaintiff is to retain the balance of the household effects. I am satisfied that will effect a reasonably equal division of the household effects. Matrimonial Home [40] The home is to be sold and the net proceeds of sale, after payment of the usual adjustments together with outstanding taxes, the amount secured by the mortgage and the Bank of Montreal judgment, is to be divided into two equal shares which are to be adjusted as follows: (a) the

plaintiff's share shall be decreased and the defendant's share increased by $1,000, being the amount of the Bank of Montreal judgment that is not a family debt; (b) the plaintiff's share shall be decreased and the defendant's share increased by one-half of the arrears of interest on the first mortgage; (c) the plaintiff's share shall be increased and the defendant's share decreased by the sum of $9,500 representing the amount of the plaintiff's student loan; (d) the plaintiff's share shall be increased and the defendant's share decreased by $433, representing the payment necessary to equalize the division of the other assets.

INTERIM SPOUSAL SUPPORT [41] During the marriage, from about 1979 until June 1999, the plaintiff operated a day care from the family home. In early 1999, when the parties' marriage was failing, the plaintiff decided that it would be prudent to train for a position that would support her and would have some prospects of benefits and advancement. This retraining program was undertaken with the knowledge and consent of the defendant. [42] The plaintiff began her studies in August 1999. Initially her courses were in the field of networking but in the fall of 1999 she transferred into programming. The plaintiff originally planned to complete her course by May 2000. Subsequently, she deposed that she expected to complete the course work by the end of April 2001, followed by a two month unpaid practicum. In her most recent affidavit sworn June 4, 2001 the plaintiff deposes that she has received an extension until October 2001, including the practicum, within which to complete the requirements for her diploma. [43] The plaintiff's evidence is that starting salaries for persons who have the training she is taking are about $25,000 per year although the long term prospects are promising. That is less than she earned when operating the daycare but I do not consider that her decision to retrain was unreasonable. Indeed, the defendant supported that decision. She is no longer in a position

to return to the daycare business. Further, it is sensible for her to look to something that has greater benefits and more potential for advancement now that she is a single person. [44] Taking into account the length of the marriage, the uncertainty with respect to the plaintiff's future employment and the defendant's income I am of the opinion that the plaintiff is entitled to periodic spousal support. [45] Counsel for the plaintiff submits that the defendant's annual income is $83,000 per year and that the plaintiff is entitled to periodic support in the amount of $2,500 per month. [46] The defendant denies that he will earn $83,000 this year. In the past the defendant earned substantial amounts because of overtime and because of supervisory work. The defendant's income during the past five years was as follows: 1996 $ 90,620 1997 $ 95,016 1998 $105,331 1999 $ 88,625 2000 $ 83,240 [47] The defendant's pay stub for the period ended May 25, 2001 indicates total gross employment earnings to that date of $33,766. Counsel for the plaintiff submits that extrapolating those earnings for twelve months would lead to a gross annual income of over $81,000. The defendant deposes that he worked some overtime in the early part of 2001 but that his employer imposed an overtime ban in February or March. He says his base salary is now $2,572 every two weeks or $66,872 per year. He provides

no corroboration from his employer that there is an overtime ban or that it will continue indefinitely. [48] Counsel for the plaintiff urges the court to reject the defendant's evidence that his income in the future will as low as he suggests. He submits that the defendant previously understated his income in April 2000 when he applied for a reduction in spousal support. At that time the defendant provided a letter from his employer dated March 17, 2000 that stated that his rate of pay was $31.37 per hour and that he averaged 40 hours per week. It stated that the defendant's gross annual income was $65,250, which is the amount calculated at the hourly rate based on 40 hours per week. What the letter did not state was that the defendant had in fact worked some overtime. The defendant did provide his pay statement for the period ended March 31, 2000 which indicated overtime earnings of approximately $2,000 for the three month period. As it turned out, the defendant's 2000 income was over $83,000 as a result of additional overtime that he worked in the latter part of the year. [49] The plaintiff has not provided a current Form 89 Property and Financial Statement setting out her anticipated expenses. I consider that a reasonable monthly budget for the plaintiff is in the area of $1,800 to $2,000 per month. [50] If the defendant's income is in fact $67,000 per year, he would be left

with about $2,400 per month, after payment of income tax, CPP and EI premiums if he were to pay spousal support of $2,000 per month. If his income is $81,000 per year, he would be left with $3,200 per month. [51] The defendant claims monthly expenses of $34,780 per year, not including income tax, CPP and EI premiums. There is some room for reduction in his budget. His car insurance seems unreasonably high. He could cut his expense for entertainment, recreation, alcohol and tobacco. Further, he ought to be able to retire or reduce some of his personal debt. I think the defendant can reduce his monthly expenses to something in the order of $2,400 per month. [52] I conclude that the appropriate level of spousal support under this order is $2,000.00 per month. [53] Counsel for the defendant submits that the defendant's obligation to pay spousal support ought to cease December 31, 2001, the date specified in the Memorandum of Understanding. The plaintiff is hopeful that once she completes her retraining she will find suitable employment. However, in my view the uncertainties with respect to her future employment prospects are such that it would not be just to impose a precise cut off date with respect to spousal support. Instead, I think it would be appropriate to provide for a review of the issue of spousal support once the plaintiff finds employment and, in any event, on or after October 31, 2002.

RETROACTIVE SUPPORT [54] Counsel for the plaintiff submits that there ought to be an order increasing the quantum of support retroactive to April 2000 on the ground that the defendant misled the court and understated his income when he applied to reduce the quantum of support. [55] At that time the defendant provided his most current income information including a recent pay stub that clearly indicated some overtime. The defendant deposed that most of the overtime was earned at the beginning and at the end of 2000. I am not satisfied the defendant intentionally misled the court. I am not satisfied that the circumstances here establish a degree of misconduct on the part of the defendant that would justify a retroactive variation of the amount of support that was ordered on an interim basis.

NAME CHANGE [56] There will be an order that the plaintiff will henceforth have the surname Thompson.

COSTS [57] Unless there is some circumstance of which the court is not aware the plaintiff is entitled to her costs of the proceeding. "B.M. Joyce, J." The Honourable Mr. Justice B.M. Joyce July 16, 2001 -- Corrigendum to the Reasons for Judgment [with neutral citation number 2001 BCSC 1045 refers to Reasons for Judgment with neutral citation number of 2001 BCSC 919] issued by Mr. Justice Joyce advising the following: On Page 4, Paragraph 7, third line should read: "The plaintiff also breached the terms of the restraining order in September 1999 by cashing in RRSP's in the amount of approximately $16,400 when the defendant failed to pay the maintenance he was ordered to pay ..." On Page 9, Paragraph 22, first line should read: "The 1977 Jaguar is still in existence ..." This Judgment was released from the New Westminster Registry on June 25, 2001 and is date stamped accordingly. The Corrigendum to the Reasons for Judgment was released from the New Westminster Registry on July 19, 2001 and is date stamped accordingly.