Knowlan-Manley v. Manley

2013 BCSC 1508 Knowlan-Manley v. Manley

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Knowlan-Manley v. Manley, 2013 BCSC 1508 Date: 20130820 Docket: E35201 Registry: New Westminster Between: Tammy Janine Knowlan-Manley Claimant And Christopher John Manley Respondent Before: The Honourable Mr. Justice Armstrong Reasons for Judgment Counsel for the Claimant: W.M. Shkwarok Counsel for the Respondent: M. Campbell Place and Date of Hearing: New Westminster, B.C. May 3, 2013 Written Submissions of the Claimant: May 31, 2013 Written Submissions of the Respondent: May 17, 2013 and June 6, 2013 Place and Date of Judgment: New Westminster, B.C. August 20, 2013 [1] Christopher Manley and Tammy Manley lived together from January 1979 and separated on July 12, 2009. They were married May 1, 1981 and divorced April 2011. [2] The parties had three children all of whom are independent adults. [3] On February 9, 2011 Justice Kelleher made an order by consent (the "Order") under the Divorce Act; R.S.C. 1985, c. 3 settling spousal support and division of family assets. The important terms of that order include the following: 1. The Respondent, Christopher John Manley, shall pay spousal support to the Claimant Tammy Janine Knowlan-Manley, in the sum of $1,550 per month, commencing October 15, 2010 and continuing on the 15th day of each month thereafter; 2. Neither party may seek to vary spousal support unless there is a material

change in circumstances that affects the financial needs or abilities of either party. A material change in circumstances includes the retirement or onset of a disability of either party; 3. Each party is under an obligation to notify the other immediately upon becoming aware of a material change of circumstances that may affect the other's support obligations and entitlement to apply for variation under this Order; 6. The Respondent, Christopher John Manley, shall transfer to the claimant, Tammy Janine Knowlan-Manley, his interest in the family residence located at 12187 - 203 Street, Maple Ridge, British Columbia within 60 days of entering of this consent order. As part of the transfer, the claimant shall cause the existing mortgage to be discharged and she shall obtain her own financing to cover the existing mortgage on the family residence.

7. Immediately following the above noted transfer, the claimant, Tammy Janine Knowlan-Manley shall pay the sum of $7,849.50 to the respondent upon being provided with proof that she has no liability on the Sears card; 8. Immediately following the above noted transfer, the Claimant shall pay to the respondent, the sum of $12,000. [4] The order did not state the amount of the respondent's income for Guideline purposes. The respondent now applies to vary the Order for support because his ability to earn income has materially worsened since the Order was made. [5] The respondent swore two affidavits in support of his application to vary the spousal support order and tendered an affidavit of a Nick Vinciquerra. [6] I was also provided with a copy of the claimant's financial statement made May 27, 2010. [7] The claimant relied on affidavits sworn November 18, 2011, April 13, 2012, April 26, 2012, January 15, 2013, January 21, 2013 and January 30, 2013. She also relied on an affidavit of her daughter, Krista Pender, sworn January 27, 2013. [8] The respondent's financial statement filed November 1, 2012 and the claimant's statement was filed January 15, 2013. I. Procedural Background [9] This application follows two previous applications made by the respondent to vary the spousal support obligation under the Order. The first application was made November 1, 2011 and was dismissed on or

about December 5, 2011. The second application was made on April 30, 2012 and was refused by Mr. Justice Masuhara; he said the following: It's just the evidence isn't at the level as I have already indicated to you that it needs to be for you - to get the relief. [10] Mr. Manley was not represented by counsel on the April 30, 2012 application but now makes an application to reduce spousal support with more fulsome evidence on the issue of his reduced financial circumstances. [11] When the Order was made, Mr. Manley was a joint owner of a proprietorship carrying on business under the name Classic Games and Billiards Partnership (Classic Games). His financial statement made July 21, 2010 estimated the value of that business at $85,000. [12] Although his taxable income from self-employment in 2009 was $38,646, Mr. Manly said that between 2007 and 2010 he received between $40,000 and $50,000 annually from the business. He said that at the time of the Order he anticipated he would earn $58,000 annually from the business and estimated the claimant's income at $11,000 per year. The claimant said that after making their agreement, she expected Mr. Manley's income to be between $58,000 and $75,000 per annum. [13] The respondent did not explain the apparent discrepancy between his line 150 income for 2009 at $38,645, 2008 at $22,333, and his stated income of $40,000 to $50,000 per year

from 2007 and 2010. [14] The claimant, although trained as a legal secretary, currently earns a modest income as a greeter at a local Great Canadian Superstore. She has suffered from depression, insomnia, and anxiety since 2009 and these conditions are partially disabling and limits her ability to earn income. [15] The claimant's financial statement made May 27, 2010 disclosed that her annual income was $18,604.96. That amount included rental income of $2,730 (net) and other income of $2,571. She earned $15,491 from employment in 2010 and $14,717 in 2011. Her 2013 Financial statement records expected income of $20,515 per year. [16] For the purposes of this application I accept that the parties' respective Line 150 incomes reflected in their tax returns accurately state the economic circumstances of each party at the time of the Order. [17] On separation, the claimant received title to the family home and until February 2013 had rented one suite in the basement to her son, James. In May 2010 she disclosed net monthly income of $227 from that suite, the gross monthly income being $400. In January 2013 she disclosed rental income of $400 per month. There was little evidence to explain the difference between gross 2010 rental income of $400 and net income of $227 per month. I assume that the claimant had apportioned $173 to the taxes and utilities attributable to the suite but, in

2013 she did not make the same claim. She said that she was attempting to rent a second suite in her home for an additional $400 per month. [18] At the time of the Order the parties had anticipated the claimant would be able to rent the two bedroom suite in the family home for approximately $1,000 per month though she discloses current annual rental income of only $4,800. [19] Mr. Manley based this application on the decline in his income from Classic Games that occurred through 2011 and 2012 and the disposition of his interest in the business. As a result his income prospects have declined from an anticipated target of $58,000 to $75,000 per annum to $30,000 per annum. [20] The claimant vigorously questioned the veracity of Mr. Manley's assertions regarding the reduction in his income. [21] When the parties settled their differences after separation the claimant retained the equity in the family home. In exchange, it appears the respondent was able to keep his interest in Classic Games which he valued at $85,000 in 2010. The respondent estimated the family home to be worth $415,000 in his 2010 financial statement, but the assessment authority opined that the market value was only $376,000. He reported the mortgage balance at the time as $176,000. Thus, at the time, it appears that the estimated equity was between of $200,000 and $240,000. Accordingly the claimant's estimate is

$143,000 in 2013. [22] The respondent said that the general economic downturn in 2011/2012 affected the billiard business. The partnership owed $40,000 to their supplier, Brunswick Billiards (Brunswick). In February 2012 Brunswick made a demand on Classic Games' outstanding debt; Mr. Manley did not have the capital or resources to pay his share of that debt. Mr. Vinciquerra, his partner, was able borrow $40,000 from his family and he paid the entirety of the outstanding Brunswick debt. As a condition of Mr. Vinciquerra's cash infusion into the business, the respondent gave up his interest in the business and was released from any further debt obligations of Classic Games. After this the respondent became an employee. [23] The evidence indicated that between 2009 and 2011 the gross sales from Classic Games and Billiards dropped 30% and that for December 31, 2011 income of the business had dropped to$64,444. [24] In the spring of 2012 Mr. Manley and Mr. Vinciguerra had incorporated two holding companies and a new operating company to carry on the business of Classic Games and Billiards. [25] However, because Mr. Manley was unable to raise the funds to pay his share of the debt he transferred his shares in those companies to Mr. Vinciguerra or companies owned by him. [26] Mr. Manley's employment with Classic Games earned him a salary of $2,500 per month. The business did not

prosper and on December 31, 2012, Mr. Manley was laid off and given a notice of termination. [27] On this application the respondent argued that I should consider the merits on the basis that he will earn an income of $30,000 per year notwithstanding the fact he had lost his previously secure employment. [28] The controversy in this application is that the claimant does not accept the assertion that Mr. Manley no longer has an interest in Classic Games nor that he has suffered a loss of income; she argues he is able to support her in accordance with the existing order and that I should impute income to the respondent. II. The Claimant's Position [29] Ms. Manley argues that the Spousal Support Guidelines represent an aid to the court to consider the amount and duration of support. She says that the Guidelines are not to be applied inflexibly. [30] She argues that her employment and income from breeding dogs is barely $20,000 and without spousal support she will not be able to maintain her residence. She said she will become indigent if deprived of support. [31] She argues that under s. 96(4) of the Family Relations Act, R.S.B.C. 1996, c. 128, she has made reasonable efforts to become self-sufficient and that the results of those efforts do not warrant a reduction in support. [32] She argues that I should be guided by s. 17 of the Divorce Act, which directs the court to consider

means and needs of each spouse when considering a variation application. She argues that the respondent has the means to pay spousal support and has provided insufficient evidence to demonstrate that he has divested himself of the Classic Games and Billiards business or is not otherwise able to pay support at the current level. She says even if he has divested himself of his interest in that business, then a question arises as to whether he is deliberately under employed. [33] The claimant argues that Mr. Manley lives in a residence owned by he and his current spouse. She claims that he is not a covenant on the mortgage against the house and he has no responsibility for that debt. [34] The claimant disbelieves the respondent's claim that he has divested himself of his interests in the Classic Games business or that his income is depressed because of the change in circumstances of the business. She argues that he ceased to be a director of one holding company, Brunswick Home Recreational Ltd. on April 20, 2012. She argues that the respondent entered into an employment contract with Classic Games three weeks after the initial hearing of this application. She argues that this change of events was contrived by the respondent to obtain relief from his support obligations. [35] She responded to Mr. Vinciquerra's affidavit and pointed out that there was no evidence to show a decrease

in the sales or profits from the business. In the alternative, if the records show a reduced profit, the reduction results from cash jobs that were not being recorded in the business declared. [36] She challenged the veracity of almost every allegation in Mr. Vinciquerra's affidavit and attached a Facebook entry indicating that Mr. Vinciquerra was on holiday in Miami; she seeks an inference from this fact that the business was prospering. [37] In summary, she argues that Mr. Manley has the means to continue paying spousal support at the agreed upon amount and that her needs are acute and pressing. She argued that without support at the current level she will become indigent. III. The Business [38] The claimant recognizes that Mr. Manley has earned his living as a billiard mechanic for as long as she has known him. He had been a partner in Classic Games since 2003 when it first opened a storefront operation. Classic Games was a distributor/contractor for Dufferin Games where he had worked prior to entering into his own business. IV. The Respondent's Position [39] Due to the general economic downturn of 2011-2012 the Classic Games business suffered and was on the verge of receivership. The company owed $40,000 to its supplier and without an infusion of new cash it could not continue. [40] The respondent disposed of his interest in Classic Games and was reduced to an annual income

of $30,000 per year. He now faces further uncertainty in his employment but accepts that his income will be $30,000 into the future. [41] The respondent asserts that all revenue to Classic Games was recorded in the company's records; there was no under the table cash sales. V. Financial Statements [42] In the respondent's financial statement he alleges income of $30,000 per year based on a $2,500 per month payment from his employer. The respondent is married and lives with his current spouse; he did not provide particulars of her income or circumstances. His financial statement discloses total monthly expenses of $2,133 ($26,500 per year). In that statement he has recorded a rent or mortgage payment of $709.23, $125 for utilities and $230 for household expenses including $200 for food. He discloses an American Express monthly payment of $200 and a monthly payment towards income tax arrears of $200. [43] His current debt to American Express is $4,000 and his income tax debt is $5,600 (for the years 2009 - 2011). [44] In June 2012 he sold a motor vehicle for $11,500; the proceeds were used to pay off the balance of the debt. In April 2011 he owned a 1978 GMC truck which was sold for $3,100. [45] His income tax statements for 2010 reveal a Line 150 income of $34,002 and in 2011, $32,259. [46] The claimant's financial statement discloses income of $20,515 not including her spousal

support. She receives $4,800 per year as rental income and $320 per year from a dog breeding business. She discloses debts as follows: (a) Mortgage on residence $273,000; (b) TD Canada Trust line of credit $3,285; (c) VanCity Visa $6,403; (d) TD Canada Trust Emerald Visa $11,159.21. [47] The claimant owns five motor vehicles with a value of $10,900, various deposit accounts with a value of $1,730, the family home valued at $416,000. She holds several life insurance policies but there are no details about those. VI. Law [48] Applications to vary spousal support orders are governed by s. 17 of the Divorce Act which states: 17. (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively, (a) a support order or any provision thereof on application by either or both former spouses; or . . . (4.1) [Factors for spousal support order] Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration. . . . (7) A variation order varying a spousal support order should (a) recognize any

economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown; (b) apportion between the former spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the former spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time. [49] The respondent must establish that there has been a material change in the conditions, means, needs or other circumstances of either spouse since the making of the February 9, 2011 order. A material change is one that, if known at the time of the original order would likely have resulted in different terms. L.M.P. v. L.S., 2011 SCC 64 at paras. 29, 30 and 32. [50] Under s. 17(4.1) a change in the circumstances of the party is the sole factor to be considered on a variation application. Section 17(4.1) does not refer to agreements and the court must be satisfied that a "change in the condition, means, needs or other circumstances of either former spouse had occurred" since the making of the prior order or the last variation order: L.M.P. at para. 23. [51] At para. 33 of L.M.P. the court also said: The focus of the analysis is on the prior order and the

circumstances in which it was made. Willick clarifies that a court ought not to consider the correctness of that order, nor is it to be departed from lightly (p. 687). The test is whether any given change "would likely have resulted in different terms" to the order. It is presumed that the judge who granted the initial order knew and applied the law, and that accordingly, the prior support order met the objectives set out in s. 15.2(6). In this way, the Willick approach to variation applications requires appropriate deference to the terms of the prior order, whether or not that order incorporates an agreement. [52] It is essential that the court consider the circumstances in which the support order was made. The threshold question described in L.M.P. does not change because the support order incorporated an agreement between the parties. That agreement is important, insofar as it addressed the parties' expectations about their future circumstances and predetermined which party bears the risk of any changes. See L.M.P. at para 38. [53] If the evidence establishes that there has been a material change in circumstances, the court must limit any changes to the amount payable to what is justified by that change in circumstances; L.M.P. at para.

47. The court is not allowed to weigh all of the factors in order to make a fresh order unless the circumstances require rescission, rather than variation of the order. The analysis does not engage the same considerations as an initial application [54] It is essential that the material change in circumstances relied on by the respondent reflects a continuing situation and not a temporary setback. [55] The respondent's application should include documentary evidence establishing the specific financial circumstances which are now changed for him; R.P. v. R.C., 2011 SCC 65 para. 44. [56] In Walters v. Walters, 2011 BCCA 331 the Court of Appeal reiterated the principles to be addressed on an applications to vary spousal support, noting that the factors in s. 17(7), relevant to both initial and variation applications, involve both compensatory and non-compensatory factors relevant to striking a balance for an appropriate award. See para. 39. [57] In Walters the payor/respondent was the primary income earner in a marriage that had lasted 23 years. The parties entered into a consent order establishing the applicant's spousal support obligation at $1,850; his income was approximately $85,000. He lost his employment in 2009, and the chambers judge below had determined that his income for support purposes was $30,000. The chambers judge also imputed income to the recipient based, in

part, on an inference that the recipient's expenses exceeded her income and that she must have had more income than she disclosed. At the time of the hearing the parties' capital assets were comparable although the appellant had increased her debt obligations to offset a reduction in a unilateral reduction in her support. [58] On appeal the appellant was found to have significant financial need for non-compensatory support and also had a claim for compensatory support arising from her role in the marriage and the economic disadvantages she suffered as a result of its breakdown. [59] The court summarized several important features that must be considered on this type of application: a. a variation of a support order replaces one final order with another final order and cannot be made unless a material change in circumstances has occurred or a review condition is attached to the variation order, b. the respondent\payor must provide the court with sufficient evidence to support the variation to an amount that reflects the principle that the economic consequences of the marriage and the separation should be equitably shared between the former spouses, c. the respondent's obligation was to provide a proper evidentiary basis for the variation request , d. the court is to take the amount of maintenance originally ordered as the correct amount at the time the order was made, e. the

court then considers to what extent the circumstances of the parties have altered or changed since the decree nisi was granted, f. the onus to show that changes have occurred lies on the applicant, g. support will be varied where the balance between the parties has become so distorted it has become unjust, h. where the original order was obtained by consent and incorporated support provisions contained in a separation agreement between the parties, the court should not lightly disturbed the order and the changes must "arouse the conscience of the court and call for action". VII. Analysis and Decision [60] This case involves a dispute over the credibility of the respondent. The claimant has provided some information to suggest that the claimant is untruthful and that Mr. Vinciquerra's evidence cannot be relied on. [61] The claimant wishes me to disbelieve the respondent's claims that his economic circumstances have changed significantly and refuse his application. On applications of this type, the conflicts in the evidence are difficult to resolve. The affidavit evidence may be less than compelling and challenging credibility issues can be difficult to resolve. When this application was first heard I concluded it was one of those cases where I was not able to resolve the dispute based only on the affidavits filed. The claimant's material is not robust, but, combined with the

evidence of Mr. Vinciquerra, there was a sufficient evidence to support his claim. However, the claimant argued that the respondent and Mr. Vinciquerra were not to be believed [62] I decided that if I considered the respondent's evidence reliable and truthful, I would be satisfied that he demonstrated a substantial change in circumstances that would justify a variation of the original order. [63] Therefore I made an order under Rule 10-3(4)4(a) that there be cross-examination of the parties and Mr. Vinciquerra before the court. [64] Mr. Manley confirmed that on April 1, 2012 he transferred his interest in classic billiards to Mr. Vinciquerra because he could not afford to invest further in the business in order to respond to the supplier's demand for payment of their outstanding balance owing. He acknowledged that the company had a small line of credit and that they had regularly made payments to the supplier in January 2012. [65] He confirmed that communications with the supplier were generally over the telephone in that they had received a call that contained the demand and threat to make good their outstanding debt. [66] The respondent said that the imbalance in their accounts payable occurred because the company had placed a large order for tables for a buyer who backed out of their sales agreement. The company was stuck with the inventory. [67] He testified that in 2003 it

obtained an interest-free loan from Amex to allow him to pay the debt owed to Canada Revenue Agency. He testified that he currently works for Classic Games an on-call basis and is receiving 20 to 40 hours worked per week. He made efforts to find alternate employment at Rona and Home Depot without success. [68] The respondent was cross-examined on bank records reflecting checks and payments of accounts. He explained seasonal nature of the business as reflected in those banking records. [69] Mr. Vinciquerra explained the demand from the company's supplier for payment. Although he was uncertain as to which employee from Brunswick Billiards called him, his evidence was consistent with the general explanation given by Mr. Manley. I did not find any reason to disbelieve Mr. Vinciquerra's evidence. [70] After consideration of the testimony of Mr. Vinciquerra and Mr. Manley and their affidavit evidence, I am satisfied that they were both truthful. I must now consider whether the change in Mr. Manley's employment situation amounts to a change in circumstances from the time the initial order was made. [71] Although there has been a minor improvement in the claimant's circumstances since the order, I do not take those changes into account in the analysis of this application. She may be able to obtain a second tenant in the house which will increase her annual income by $4,800. [72] I was

not asked to address any issue regarding the duration of support; there was no limit referred to in the parties' agreement or the order and I accept that claimant's entitlement was to receive support for an unlimited duration. [73] In Walters the court addressed the problem of considering an application to vary in circumstances in which the applicant's asset value had increased after a consent support order but was not to be considered in a variation application. I am required to consider all of the factors set out in s. 17(7) of the Act in considering this application to vary. [74] The starting point to this analysis is to consider the circumstances extant when the consent order was made. [75] This information is not well presented in the material but, on a review of the materials filed I have reached the following conclusion: a) the respondent's Line 150 income for the years indicated was: 2008 - $22,333 2009 - $38,645 2010 - $34,002 2011 - $32,259 [76] The net profit earned by Classic Games was: 2009 - $74,302 on gross sales of $611,000 2010 - Information not available 2011 - $64,444 on gross sales of $413,000 2012 - for the period January 1 to March 31, income $16,418 on gross sales of $110,000 [77] The latest Statement of Assets and Liabilities for Classic Games was dated April 30, 2010. In that summary the partnership's total assets were valued at $169,784. The company

had accounts payable of $67,620 and cash deposits of $37,928. It also had accounts receivable of $10,783 and inventory of $96,383. [78] Although the retained earnings of the company were recorded at $203,927, each of the partners appears to have drawn out sums between $68,000 and $72,000. The total equity at that time was $97,413. [79] I also reviewed the gross income for Classic Games as disclosed on the bank records for 2011. Mr. Manley was cross-examined on these documents and total 2011 deposits appear to be approximately $486,424. [80] I am able to conclude from the records that between 2009 and 2011, there was a reduction in gross sales for the partnership of approximately $200,000. [81] It is significant to note that the 2011 gross income of $413,000 generated profit to the respondent of $32,259 (one-half of the total profit of $64,444). Extrapolating the data for 2012 for a complete year, gross sales could be anticipated to be $444,000 resulting in a profit of $64,000. [82] Absent the sales figures for Classic Games for 2010, I accept that the partnership's total profit would have been approximately $68,000; this is double the amount of $34,000 which was the respondent's Line 150 income for that year. [83] L.M.P. informs the court that an assessment of the change in the respondent's circumstances must focus on his 2010 financial circumstances, the year when the consent

order was arranged. [84] It is my view that the respondent's income for 2012, but for the sale of his partnership interest during that year, would have been $32,800. That is the best assessment that can be done on the data put into evidence. [85] The respondent has suggested that, in the analysis of his application, I should use or impute income to him of $30,000 per annum. He said that his 2012 income was $2,500 per month or $30,000 per year and he expected to receive that amount in the future. [86] The respondent's evidence is that when making the spousal support agreement with the claimant, he anticipated his annual income to be approximately $58,000. He also deposed that his income between 2007 and 2010 ranged from $40,000 to $50,000 from the business. The claimant anticipated even higher net income for the respondent. [87] It is clear to me that the respondent's Line 150 income represented his share of the profit from Classic Games. Other monies that he may have taken from the business resulting in cash received above his Line 150 income represented erosion to the shareholders' equity in the business. [88] The documents indicate that there was $97,000 in equity in March 2010 and most of that amount would have been in current assets of the business. Thus, it is my view that the respondent's historical practice was to draw out more money from the partnership than the

business actually earned. [89] The respondent's explanation for change in circumstances was a reduction in the partnership sales between 2010 and 2012. [90] In the respondent's 2010 financial statement he included a profit and loss analysis for January through April 2010. In that time, the partnership's gross income was $159,469. After expenses the partnership net income was $33,580. If those results are extrapolated for 12 months, the company's gross sales would have been $478,407 and profit $100,580. This is consistent with data from other years. [91] If the respondent had been entitled to one-half of that amount his Line 150 income would likely have been $50,000. [92] The limited financial information made available by the respondent makes a detailed analysis of his change in circumstances difficult. [93] The difficult question is to determine the basis on which the parties reached their agreement and the factors applied to set the support obligation at $1,550 per month. The evidence required to complete the analysis mandated by L.M.P. is lacking in detail. [94] There was evidence to suggest that the consent order reflected different expectations of the respondent's future income. I accept that the spousal support order was arrived at as a function of the respondent receiving $58,000 in income in the future. However, the claimant deposes that the respondent always received

money in excess of his allocated share of the partnership profits and she believed the amount could have been in the range of $75,000 per year. Both parties seem to have misjudged the respondent's income expectations after making their agreement. [95] I conclude that the agreement to pay spousal support at $1,550 per month was based on an understanding of the parties that the respondent would receive income in the range of $58,000 per year. I conclude that both parties misunderstood the respondent's ability to draw money from Classic Games. [96] It is likely the partners withdrew cash from the business that eroded their equity as a means of putting them in funds which were not properly characterized as income. [97] The respondent urges me to consider the fact that the claimant received a disproportionate share of the family assets at the time of the agreement and that she continues to generate income from her share of the assets. Conversely his interest in the business is gone [98] The evidence discloses that the family residence was assessed at $382,000 subject to the mortgage of $176,000. The business had partnership equity of $97,000 in March 2010. That value is to some degree supported by the fact that Mr. Vinciguerra purchased a one-half interest in the partnership for $40,000. [99] In the circumstances of this case, I am restricted to considering the impact of the change

in the respondent's circumstances between November 2010 and the present. I am not permitted to weigh all of the factors that are engaged in considering s. 15.2 orders for support. [100] However, in L.M.P. the court order said this, at para. 40: [40] Alternatively, an agreement incorporated into an order may include a general provision stating that it is subject to variation upon a material change of circumstances, such as the agreement and subsequent order in Hickey v. Hickey, [1999] 2 S.C.R.

518. In such a case, the agreement incorporated into the s. 15.2 order does not expressly give the court any additional information as to whether a particular change would have resulted in different terms if known at the time of that order. The presence of such a provision will require a court to examine the terms of the s. 15.2 order and the circumstances of the parties at the time that order was entered into to determine what amounts to a material change. [101] Accordingly, I am able to consider the circumstances of the parties at the time only to determine if there has been a material change in circumstances. [102] I accept the respondent's evidence that he has disposed of his interest in the business because of some measure of financial crisis that he was unable to respond to with his own resources. The claimant questions the veracity of the respondent's evidence and assertions on this point. The company's business does not appear to have deteriorated to the extent suggested by the respondent and Mr. Vinciguerra. However, I accept that demand was made by their lead supplier and that a cash infusion was necessary in order to keep the company in business. Nonetheless, I conclude that if the respondent had remained a partner of Classic Games, his 2012 income would likely have been in the order of $32,800. This is marginally higher than the income he has said should be the

amount he had earned since becoming an employee of Classic Games and into the future. [103] In the result, it seems to me that the respondent's income has been reduced from its 2010 level of $34,000 to 2013 at $328,000. More importantly, the party's expectations of the respondent's income extent at the time of agreement consent order did not come to fruition. This is a material change in his circumstances but warrant the extent of relief he anticipates. [104] It is obvious that the party's agreement to the claimant's support at $1,550 was based on an erroneous expectation of his ability to earn income. In my view, I must take into account the error made when the parties settled on an expectation that the respondent would earn $58,000 per year or more. [105] At the time of separation claimant received the full equity in the family home which now stands at approximately $143,000. Conversely the respondent's economic circumstances have deteriorated and he no longer has the estimated equity in the business. [106] It seems to me that considering advantages and disadvantages to the spouses arising from the marriage breakdown and the economic hardship connected to that breakdown, respondent's ability is substantially worse today than at the time of agreement and consent order. [107] Although the reduction in the respondent's circumstances will impact both parties, it is not

appropriate in the circumstances of this case for the full impact of that to be visited on the respondent. [108] In my view, the balance between the parties has become distorted to a measure that now results in an injustice. The parties have misapprehended respondent's ability to pay at the time they entered into a consent order, there is a basis for re-evaluating respondents obligation based on the evidence that becomes available. See D.S.M. v. D.F.M., 2005 BCSC 7 at paras. 21 and 22. [109] The claimant argues that her standard of living is somewhat dependent on continued ownership of the family home. If she is deprived of a substantial portion of support she currently receives, she will suffer deprivation. [110] On the evidence I am satisfied that the claimant qualifies for compensatory and non-compensatory support. The order resulting from this application must reflect the objectives from Bracklow v. Barcklow [1999] 1 S.C.R. 420 and repeated in Walters at para.

39. The claimant has demonstrated need, a limitation in her ability to become self-sufficient. Nevertheless her share of the family assets survives and provides her with the prospects of continuing income as well as a residence. [111] I am satisfied that the respondent's change in circumstances have affected his ability to earn the income contemplated by the parties in 2010. I am satisfied that the claimant remains entitled to support but that the financial resources available are substantially reduced from the parties' expectations in 2010. [112] I am mindful of the warning that consent orders should not lightly be disturbed but this is a case to "arouse the conscience of the court and call for action." Oakley v. Oakley (1985), 48 R.F.L. (2d) 307 (B.C.C.A.) at 313. [113] The respondent provided Divorce Mate calculations suggesting the ranges of support from $403-$480 per month. These calculations assume that the respondent's guideline income is $36,000 and the claimant's $23,090. [114] The onus of proof is on the party seeking to impute income to show on a balance of probabilities that income should be imputed; see Windle v. Windle at para. 88. [115] On the basis of the evidence before me I am not prepared to impute income to the claimant above $20,515 per year. On balance, the evidence does not satisfy me that the claimant's income has, or will be, greater than set out in her

statement. [116] I have also rejected the claimant's invitation to impute a higher income to the respondent insofar as the evidence does not meet the burden of proof required of the party asserting that the other party's income is other than as set out in the evidence. I have concluded that the respondents guideline income for the purposes of this application is $32,800 and the claimant's guideline income $20,515. Ranges of support based on this calculation are between $384 per month and $462 per month. [117] Taking into account the claimant's circumstances and the changes in the respondent's circumstances the spousal support will be reduced to $460 per month. "Armstrong J."