M.W.B. v. A.R.B.

2014 BCSC 2309 M.W.B. v. A.R.B.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: M.W.B. v. A.R.B., 2014 BCSC 2309 Date: 20141205 Docket: 20547 Registry: Cranbrook Between: M.W.B. Claimant And A.R.B. Respondent Before: The Honourable Mr. Justice N. Brown Reasons for Judgment The Claimant, appearing In Person: M.W.B. The Respondent, appearing on her own behalf via videoconference: A.R.B. Place and Date of Hearing: Chilliwack, B.C. October 29, 2014 Place and Date of Judgment: Cranbrook, B.C. December 5, 2014 [1] These brief interim reasons are meant to be read with M.W.B. v. A.R.B., 2011 BCSC 1663 ["the 2011 trial"] and M.W.B. v. A.R.B., 2013 BCSC 885, ["the 2013 trial"]. They are interim reasons because since the last hearing that occurred on this protracted family litigation on October 29, 2014, I have become engaged in other matters, including a family case scheduled to last twenty days. It is not possible to deliver full reasons for judgment to dispose of the issues raised at the last hearing before January 2015. A further practical reason is that a pending bankruptcy discharge hearing, currently scheduled in Nelson, B.C. on December 17, 2014, may have some relevance to final dispositions in this case, and findings made in this case on dispositions in the bankruptcy case. The respondent is a bankrupt and is seeking discharge of all her debts pursuant to her April 2013 assignment. [2] Any litigation orders

made in this court since the respondent's April 2013 assignment are outside the bankruptcy, and of course those will have to await final reasons. [3] This family litigation has gone on now for 4½ years, dated from the date of the trial in August 2011, even longer, when pre-trial hearings and proceedings are included. Since the 2011 trial, this court has engaged in four additional hearings, including the most recent one. [4] These reasons will focus primarily on matters potentially relevant to the pending discharge hearing. [5] I will briefly note for now that the change of residence for B.B., ordered as on May 21, 2013 did turn out. The court did not become aware of this until the most recent hearing. The change of residence covered only a one-year period, with B.B. having the election of a review in August 2014, to see if he wanted to remain in Vancouver or to return to the southeast of B.C. to complete high school. The order provided, as well, that he would spend Christmas with his mother. Although this was hardly an earth-shattering or permanent change, for reasons too drawn out to recount here, the children became increasingly hostile towards the father. Given the circumstances, he eventually decided not to pursue the change of the change of residence further and to try to keep lines of communication with the children open as much as possible. [6] I should note that it has

become increasingly obvious the children have been carrying with them a distorted view of the litigation, of why there has been so much of it, and of the true nature and extent of the court's previous findings. This is despite the court's having given the parties clear directions not to involve the children in the litigation matters. The children appear to have increasingly adopted and carried with them the version of events that mirror the respondent's litigation narratives. The applicant has been consistently strenuous in opposing involvement of the children in the litigation, and has complained, with some justification, about the respondent having given the children false information regarding it. For his part, with the exception of a significant lapse of judgment with respect to a text he sent to J.B. in 2013 about an article about this case; a lapse he advised the court he instantly regretted and unreservedly apologized to the court for having done, he has attempt to separate the litigation from the children. This has been difficult at times as they have questioned him about the litigation. [7] While it is generally acknowledged that it is in the best interests of the children that the courts judgments on family matters remain a matter for the parents, where a party distorts the facts and the work of the court with children, this becomes a matter of serious concern for the

court, one that may call for remediation. I will consider that matter further at later time. Meanwhile, however, I specifically caution the parties that they are under specific direction not to discuss these reasons with the children or to show them to them. A. Apportionment of costs [8] The applicant seeks an order that 50% of the costs awarded to him in the 2011 trial be allocated to the issues of support and maintenance issues, and that 100% of the costs awarded to him in the May 21, 2013 decision be allocated to the issue of child support. He seeks this order inasmuch as 178(1)(c) of the BIA provides that an order for discharge will not release the bankrupt from "any debt or liability arising under a judicial decision establishing affiliation or respecting support or maintenance". [9] The applicant referred the court to two cases: Sandhu v. Sandhu, 2012 BCSC 1183; and Cain v. Hodgson, 2013 BCSC 310. [10] In Sandhu, at para. 17, Fisher J. noted that costs incurred in obtaining an order for child or spousal support are part of the award for the purposes of s. 178(1)(c) of the BIA. At para. 38, she then considered the limiting wording under Rule 15-1(18) of the Supreme Court Family Rules where a judge who has made a costs order has to subsequently apportion costs to support and maintenance issues. Rule 15-1(18) provides: "The court may at any time correct a clerical mistake in

an order or an error arising in an order from an accidental slip or omission, or may amend an order to provide for any matter that should have been but was not adjudicated on." Fisher J. then held that a judge may apportion costs to maintenance issues in circumstances where, had the court known of the bankruptcy, apportionment would have been determined. [11] At the time of the August 2011 trial, following which the December 5, 2011 reasons were given, obviously there was no bankruptcy assignment. [12] At the time of the February 7 and 8, 2013 hearing, following which the May 2013 reasons were given, the respondent advised the court at the tail end of the hearing that she was looking into bankruptcy, or was going to declare bankruptcy, or words to that effect. The assignment actually took place on April 11, 2013. With a view to this prospect, the respondent sought and was granted an order to obtain bankruptcy records from the Trustee, although this was likely a needless order, because the applicant, as a creditor, would be entitled to receive bankruptcy documents anyway. Before the February 7 and 8 hearing, the self-represented applicant had no prior notice of the respondent's intention to take an assignment into bankruptcy, and no opportunity before the February 2013 hearing to consider possible implications. [13] The court has ordered the respondent to pay costs, and is

functus on the question of which party must pay costs. Apportionment of costs, however, becomes relevant only when an assignment has occurred and s. 178 of the Act may come into play. However, as noted, there was no assignment until April 11, 2013. [14] It is also somewhat noteworthy that not all matters dealt with in the May 21, 2013 reasons have been disposed of, such as possible penalties for civil contempt. Further, it is possible that the apportionment of costs between issues relating to child support could have some bearing on the court's determination of what would be an appropriate penalty, considering all the circumstances. [15] In Sandhu at para. 43, Fisher J., after noting that much of the trial had involved property issues, concluded that 25% of the costs should be apportioned to maintenance issues. [16] In Cain, Justice Blair found at para. 31 that while a number of issues were dealt with at trial, 50% of the costs awarded were attributable to the claims for child support and that related costs would survive the defendant's bankruptcy. [17] It is clear the court has authority to apportion an award for costs between support and maintenance issues in these circumstances. [18] The judge must consider all of the issues canvassed at trial and apportion costs in proportion to the time and preparation likely devoted to those issues and to their relative importance. In

this regard, it is important to be sensible to the fact that other issues, such property division, family debt and family assets may be connected, directly or indirectly, to child support and spousal maintenance questions: for example, a party's negligent conduct with respect to the preservation and maintenance of family property could diminish a payor parent's capacity to pay child support. The facts in each case will produce infinite variations and an apportionment assessment will not usually lend itself well to simple arithmetic. The apportionment should not incorporate a punitive dimension, an element reserved for special costs and other punitive measures. December 5, 2011 costs [19] I commented on costs at paras. 286 to 308 of the December 5, 2011 reasons for judgment. Not all of them are germane, but I have left all the paras. in: XIII. Costs, Special Costs and Penalty for Non-Disclosure [286] Both parties seek costs. In addition, the Husband seeks special costs against the Wife and a monetary penalty pursuant to s. 92(1) of the Family Relations Act. A. Legal principles [287] In B.K.A v. D.M.A., 2011 BCSC 17, Mr. Justice Pearlman summarized the legal principles governing costs in family law cases: [32] The principles governing the award of costs in family law proceedings are the same as those applicable to other civil litigation. Costs normally follow the event unless the

court orders otherwise: Gold v. Gold (1993), 82 B.C.L.R. (2d) 180 (C.A.) at para. 19; Karpodinis v. Kantas, 2006 BCCA 400 at para. 4. ... [33] The court's discretion to order otherwise must be exercised judicially, and arises under Rule 16-1(7) of the Supreme Court Family Rules, which provides: (7) Subject to subrule (9), costs of a family law case must be awarded to the successful party unless the court otherwise orders. [34] The Court of Appeal in Gold at para. 20 discussed the factors that a trial judge might take into account in exercising the court's discretion: The question, then, is: when should the Court order otherwise? With respect, when the court should order otherwise is a matter of discretion, to be exercised judicially by the trial judge, as directed by the Rules of Court. To lay down any strict guidelines or even to attempt to give exhaustive examples is not, I think, helpful because the facts and issues in each family law case vary so greatly. Factors such as hardship, earning capacity, the purpose of the particular award, the conduct of the parties in the litigation, and the importance of not upsetting the balance achieved by the award itself are all matters which a trial judge, quite properly, may be asked to take into account. Assessing the importance of such factors within the context of a particular case, however, is a matter best left for determination by

the trial judge. [35] In determining whether costs should follow the event, the court must consider whether one party has been "substantially successful", which requires an objective comparison of the relief granted and results obtained by the parties with the submissions made at trial: Fotheringham v. Fotheringham, 2001 BCSC 1321 at paras. 28, 60; Rattenbury v. Rattenbury, 2001 BCSC 593 at paras. 20, 21. [288] The basis for awards of special costs in family cases were stated by Fisher J. in Sandhu v. Sandhu, 2011 BCSC 853, at para. 57: [57] Special costs may be awarded when a party has engaged in reprehensible conduct. This encompasses conduct that is scandalous, outrageous or simply misconduct deserving of reproof or rebuke. Something more than the fact that a claim has little merit is required, such as an improper allegation of fraud, an improper motive for bringing the proceedings or improper conduct of the proceedings, such as deliberately misleading the court: Garcia v. Crestbrook Forest Industries Ltd. (1994), 119 D.L.R. (4th) 740, and Rozen v. Rozen, 2004 BCCA 537. [289] Finally, s. 92(1) of the Family Relations Act creates a monetary penalty that a court may order to punish non-disclosure of financial information under Rule 5-1 of the Supreme Court Family Rules, B.C. Reg. 169/2009. If a party does not comply with these disclosure rules, the court may order that the

person pay up to $5,000 to the spouse who made the disclosure request. Pursuant to s. 92(2), such an award is additional and not in place of any other remedy. B. Discussion of special costs [290] In his opening statement, the Husband said: Every accountant that the [Husband] retained to look at the issue [of the Computer Business's finances and tax returns] was dismissed by the [Wife] as "incompetent". The [Wife] has and remains convinced of her own infallibility on the bookkeeping despite the clear and compelling evidence to the contrary. Even though the [Wife] has deposed that she was considerably involved in the business and that it was a family venture, she refuses to take any responsibility for the debts that have now come to light. In her bookkeeping, the [Wife] allocated all of the business income to the [Husband], with the exception that she allocated a small contracting wage to herself. The net result of this was to leave all of the liability that has come to light in the sole name of the [Husband]. The [Wife] has been forthright in asserting her belief that because all of the debt is in the [Wife's] name, it is his sole responsibility and she should bear no burden with respect to same. This is the true issue that has driven the parties to trial on this matter, as [the Husband] simply cannot shoulder all of the responsibility. [Emphasis added]. [291] Apart from the

issue of liability for the family debts, summarized in the Consumer Debt Proposal, it is hard to see what issues should have driven the parties to a nine day trial. The parties did not face an unbridgeable gulf on custody, guardianship and access; the parties reached agreement on most of the difficult parenting issues by the time the trial had started. The only outstanding custody question was whether there should be a review of the Son's principal residence before he enters middle school. [292] The Wife did not provide all the documents in her possession as ordered, and the Husband did not see many of the documents she intended to rely on until after the trial had started. As a result, the full nature of the relief sought by the Wife, apart from a 75% allocation of family assets and an order that she would not be held responsible for any of the Computer Business's debts, remained unclear until the trial began. [293] Spousal support, child support, extraordinary expenses and arrears were also at issue in this trial, but if the Wife had not denied responsibility for the Computer Business's debts and baselessly challenged the professional opinion of the accountants, agreement on those issues would have been much easier to achieve. [294] The Husband has been successful on virtually all the significant outstanding issues. He made reasonable concessions where they were called

for. [295] The Wife mentioned more than once during the trial that she did not want to be in court. Yet apart from some initial efforts towards resolution and two attempts at mediation, which sputtered out after she refused to participate further, the evidence reveals little effort on her part to engage the litigation process in a reasonable and responsive manner. Had she done so, it should not have been difficult for the parties to settle this case. [296] At pgs. 28-29 of his opening statement, the Husband stated the evidence would show that the Wife: i. Refused to communicate directly with the [Husband] regarding virtually any issue and failed to return numerous e-mails and phone calls since the date of separation; ii. Refused to answer the questions of CRA regarding her bookkeeping or provide documentation that would assist in the completion of the tax returns in a timely manner; iii. Ignored requests and orders for document disclosure from the Court; iv. Failed to respond to correspondence through her counsel for months at a time regarding key issues such as sale of the house, a Section 15 Report and other key matters requiring the [Husband] to serve an application simply to obtain a response; v. Failed to show up for her Examination for Discovery scheduled for July 5, 2011, advising the [Husband] and his counsel on the morning of the discovery and costing the [Husband]

$5,000 in wasted legal fees and travel costs; vi. Failed to respond in the time ordered by the Court to the Interrogatories delivered upon her pursuant to a Court Order to replace the examination for discovery she did not attend within the timeframe ordered by the Court. Further, the answers to the Interrogatories finally delivered were minimal and filled with sarcastic comments showing the [Wife] has no intent to take any of these proceedings seriously. [297] The evidence at trial reflects the tenor of these opening remarks. The interrogatories do convey a somewhat dismissive attitude by the Wife towards some of the questions, especially considering it was her failure to attend her examination for discovery that necessitated them. [298] Because the future financial security and well-being of divorcing couples and any dependent children often depends on an orderly dissolution of their economic partnership, the law expects parties to address the differences that divide them in a responsible way. An irresponsible party, especially someone whose conduct has caused financial harm to their spouse, may face the sanctions of special costs as well as a penalty under s. 92 of the Family Relations Act. [299] In this case, I have no reason to say that either party lacked the mental capacity to conduct the litigation in a responsible way. I find the reasonableness of the parties' post

separation conduct is a relevant consideration in this case. [300] Before separation, the parties had accumulated assets with a gross value likely exceeding $1.4 million. By the time of trial, the value of their major assets had greatly decreased and both parties had accumulated substantial debts. Although some financial diminishment was inevitable for the parties, the Husband was left facing possible bankruptcy and the Wife ended up needing social assistance. As will be evident from findings already made, the Wife's irresponsible conduct during the separation is responsible for a significant portion of the parties' capital losses. C. Findings on non-disclosure penalty [301] I am satisfied that this is an appropriate case to penalize the Wife for her unreasonable and obstructive litigation conduct. In Bradshaw v. Bradshaw, 2011 BCSC 1103 [Bradshaw], a case in which one of the parties "repeatedly failed to make full and frank disclosure" (para. 157), the Court imposed a $2,500 penalty against the offending party. I make the same order against the Wife. D. Findings on costs and special costs [302] The Husband has succeeded on the important outstanding issues. The Wife is clearly not entitled to costs. [303] I have commented on the Wife's conduct at various points in these reasons. Some of her conduct following separation and commencement of the litigation could be characterized

as outrageous and some of it, including some of her conduct during the hearing, was worthy of rebuke. Some of her conduct has effectively caused both parties significant financial harm. The Wife spoke of the emotional impact of the separation and actions of the Husband such as closing off her access to the Computer Business's accounts. She attempted to make this a focus of the trial. However, it was not difficult to discern that the Wife's own actions had caused the Husband considerable emotional suffering, an immense amount of frustration, and fear for his financial reputation and the well-being of the children. [304] Even so, the Court should also consider the impact a full award of special costs would have on the fair balance it has tried to achieve between the parties. Further, I have already imposed a s. 92 penalty on the Wife. [305] In my view, the Husband should receive an award of special costs for his financial losses associated with the Wife's failure to attend, without acceptable excuse, at her examination for discovery on July 5, 2011. The Husband documented his costs thrown away at approximately $5,000, and I award the Husband this amount in special costs. [306] I award the Husband 60 % of his Appendix B costs at Scale B, except those relating to the examination for discovery, plus 60% of his taxable disbursements, exclusive of those relating to the aborted

examination for discovery. [307] Including the s. 92 penalty, the Husband is entitled to a total costs award of $7,500 plus 60% of his Appendix B costs at Scale B and 60% of his taxable disbursements. He is entitled to deduct this amount from the residue remaining from the family assets, all of which will come from remaining proceeds of the commercial property. [308] The Husband also applied for double costs. I have not considered his written submissions in that regard yet. The Wife has not responded to them. In my view, the provisions I have made thus far are suitable. However, if the Husband wishes me to consider an order for double costs, that will have to await any written submissions from the Wife and a separate and later set of reasons. [20] I note that s. 178(1)(a) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 [BIA], provides that an order of discharge does not release the bankrupt from "any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence, or any debt arising out of a recognizance or bail". [21] It will be for the court sitting in bankruptcy to ascertain which, if any, portions of the penalties, Appendix B costs and the special costs of $7,500 survive. It is this court's role to apportion the costs. I find 50% of costs should be apportioned to child support

and maintenance. May 21, 2013 costs [22] Turning now to the May 21, 2013 reasons, at paras. 282 to 291, I concluded: [282] The Claimant correctly points out that at trial the parties were advised they had to dissolve their marriage in a financially responsible way. The Respondent's actions, however, have consistently increased the Claimant's liabilities. [283] He has spent, since February 2012, $4,200 on legal fees and approximately $3,000 on servicing outstanding court fees from trial. This resulted in further financial debt and made paying for parenting time travel costs very challenging. [284] The Respondent is awarded additional special costs of $4,000, plus taxable disbursements. XII. Summary of orders for principle residence, costs, compensation for damages since the December 2011 trial and lessening of child support [290] Judgment accordingly. Variation orders for communication and parenting time are set out in Part VIII.F.9. [291] For change in principle residence, costs, and compensation for the effects of the Respondent's actions since the August 2011 trial, in summary: ▪ The Claimant is entitled to an order for costs and for disbursements, with lump sum costs fixed at $1,000, for the June 1, 2012 hearing. ▪ The Claimant is also entitled to costs for all other hearings since August 2011, which I set at $2,000 in total plus taxable disbursements. ▪ For the financially

damaging effects on the Claimant's financial well-being, his capacity to achieve financial security and independence since the August 2011 trial caused by the Respondent's irresponsible, oppositional and interfering conduct, and for breach of the fiduciary duty she owed the Claimant, I award the Claimant $20,000. ▪ The existing custody order is varied to provide that, effective August 1, 2013, B.B.'s principle residence shall be with the Claimant. ▪ Effective June 1, 2013, I order a reduction in the Claimant's child support obligation from $900 to $700. Beginning July 1, 2013, it will lessen to $500. Starting August 1, 2013, when B.B. starts to live with his father, child support will be payable pursuant to s. 9, of the Guidelines. Child support obligations are stipulated in Part IX. [23] The procedural history set out between paras. 47 and 55 of the reasons are also instructive, but I will not recount them here. [24] Paras. 62 to 145 of the reasons dispose of matters relating to the commercial property jointly owned by the parties, and the finding reached by this court that the respondent wife owed a fiduciary duty to the husband with respect to the commercial properties. [25] The fate of the award of $20,000 for the financially damaging effects on the claimant's financial well-being, his capacity to achieve financial security and independence since the August 2011 trial

caused by the respondent's irresponsible, oppositional, and interfering conduct, and for breach of the fiduciary duty she owed the claimant, and the question of whether any portion of it is outside the bankruptcy, will be determined by the judge or master sitting in bankruptcy. [26] While this latter issue is indirectly connected to questions relating to child support because it diminished the applicant's earning capacity and financial resources, and to his increase of accessing parenting time, in this case, I would not apportion such indirectly related costs to child support and maintenance in this case. As noted, there is reason to argue that they would be outside the bankruptcy. But that is for the court sitting in bankruptcy to decide. [27] Drawing a bright line between child support and closely related matters issues, such as residency changes, interference with parenting time, the costs of accessing parenting time, and the recipient parent's employability, is somewhat simplistic because they are interconnected and linkable, directly or indirectly, to the parties' financial resources, incomes, and the parties' obligation and capacity to pay child support, etc.. In my view, costs related to such issues can be considered in the apportionment of costs, but with moderation. [28] I apportion 70% of costs awarded in the May 21, 2013 reasons to child support. Other orders [29]

Turning now to some other issues not directly relevant to the ins and outs of the bankruptcy, but which need to be addressed on an interim basis. a) Pursuant to s. 225 of the Family Law Act, S.B.C. 2011, c. 25, all direct communication from the respondent to the applicant shall cease immediately. This includes, but is not limited, to all communication by telephone, texting, and email, to the applicant; directly, or to his place of employment, with the exception of contact that occurs directly between the applicant and the children from the respondent's place of residence. The applicant may communicate with the children at the respondent's residence. Further exception is service of court documents. b) The claimant is obligated to ensure the children have always available to them a functioning cell phone and operable contract, in good repair, with a charged battery, and ensure the applicant has current contact information. Proof of intentional failure to do so shall be deemed civil contempt. c) Proof of an intentional breach of the non-communication order by the respondent shall be deemed civil contempt, and subject to a fine of $500. d) If an emergency involving the children occurs, the respondent shall forthwith inform the claimant by directing her mother or father, or a responsible third party, to contact the applicant; and at such time to provide him all details concerning

the emergency. e) Any health care professional providing care to the children shall contact the applicant, (the claimant, M.W.B.) at telephone numbers to be incorporated into the interim order, and they shall relay to him all their health concerns regarding the children. f) Further, the respondent or third party caring for the children at a given time, are ordered to direct any such health care provider to contact the applicant to provide such information. g) On an interim basis, until further order of this court, to be determined in pending reasons, the applicant shall pay child support for each child of $250 monthly. This amount is inclusive of special and extraordinary expenses. The applicant is not responsible to pay any additional amounts for special and extraordinary expenses. h) On an interim basis, the applicant is at liberty to pay directly to either child such additional amounts as he decides in his sole discretion. This may be accomplished by electronic transfer to an account registered in the children's names and owned by them. i) The applicant shall maintain the children on his medical and dental plan at his current place of employment. If the respondent elects to not use the claimant's extended health and dental services, the respondent shall be solely responsible for all medical and dental costs incurred as a result. j) If the respondent has a medical plan at her current place of employment, she shall register the children on the plan. [30] Outstanding matters will be dealt with in further reasons, following receipt by the court of the decision in the bankruptcy. "N. Brown J."