Prokosh v. Kemp

2015 BCSC 2360 Prokosh v. Kemp

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Prokosh v. Kemp, 2015 BCSC 2360 Date: 20151022 Docket: E150071 Registry: Vancouver Between: Natasha Lee Prokosh Claimant And Jason Frederick Kemp Respondent Before: The Honourable Madam Justice Fleming Oral Reasons for Judgment In Chambers Counsel for Claimant: J. Nelson Counsel for Respondent: A.J. Rose Place and Date of Trial/Hearing: Vancouver, B.C. October 21, 2015 Place and Date of Judgment: Vancouver, B.C. October 22, 2015 [1] THE COURT: The parties to this family law proceeding are the parents of Alexa, born in 2003, and Gabriel, born in 2005. Their youngest child, Faith, born in 2006, passed away in September 2013. [2] The parties separated in October 2008. They entered into a comprehensive separation agreement in August 2009, and an order for divorce was granted in January 2010. The agreement provides the claimant has sole custody of Alexa and is the primary caregiver to Gabriel. Alexa has significant special needs. [3] Under the agreement, the respondent is required to pay the claimant $1,550 in monthly child support and approximately $616 in spousal support from the date of separation. Since the divorce order the respondent has remarried. The claimant also remarried and had another child. She is now separated from that spouse. [4] In July 2012, the claimant registered the parties' separation agreement with the Family

Maintenance Enforcement Program. In that same month, the respondent started an action in Provincial Court seeking to reduce his child support obligation and terminate spousal support. [5] In response, the claimant brought a Supreme Court action, which she discontinued some time following the death of Faith. In October 2014, the respondent renewed his Provincial Court action. In January 2015, the claimant commenced this action. Her notice of family claim seeks increased child support and s. 7 expenses for two children, retroactively and prospectively, based on a higher income for the respondent than the income he was apparently earning at the time the separation agreement was executed. She also seeks increased spousal support. [6] The parties have agreed to schedule a trial in this matter commencing March 21, 2016. They also have applications set for two days of hearing in December 2015. At that hearing, the claimant will seek interim child and spousal support and the respondent an order that reduces and fixes his arrears of support based on an overpayment he says preceded the claimant's registration with the Family Maintenance Enforcement Program. The Program's calculation of the total arrears owing to the claimant as of yesterday's date is $9,656.69, including approximately $4,000 accrued this year. The respondent and his wife have just sold their residence. The property is

subject to a lien filed by the Director of Family Maintenance. [7] Before me were three applications, two brought by the claimant and one by the respondent. To their credit, the parties resolved much of what was in dispute by way of consent orders or agreements to adjourn. What remains are the following. [8] The claimant seeks an order that some of the net sale proceeds from the sale of the respondent's property be held in trust as security for prospective support. In her oral submissions, she expanded the scope of the order sought to include security for retroactive support as well. The respondent applies for an order requiring the claimant to produce all bank and credit card statements from January 2014 to the present within 14 days. [9] Turning to the claimant's application first, I note the Director has been served and takes no position. The parties agree that an order should be granted requiring the Director to hold in trust net proceeds received pursuant to the lien over the respondent's property in the amount of $8,000 with respect to outstanding arrears until further order of this court. [10] The claimant identifies two statutory bases for her application for further security in relation to her claims for retroactive and prospective support. The first is s. 170(c) of the Family Law Act, S.B.C. 2011, c. 25 which provides the court may order the payment of a lump sum in

trust in an order for child or spousal support. However, the claimant does not seek an order for child and spousal support at the hearing, nor payment of support in lump sum, so in my view this section does not provide an appropriate mechanism for ordering security for payment of support. [11] The claimant also relies upon s. 30.1 of the Family Maintenance Enforcement Act, R.S.B.C. 1996, c. 127 which allows the court to order, as security for payments of support in arrears or subsequent payments, the debtor to provide security in any form the court directs. The respondent does not dispute the claimant's right to seek such an order, the Director having authorized her to do so. [12] The claimant argues, given the respondent's present arrears of support, his significant underpayment in 2015, the significant financial stress he deposes to in his affidavit evidence and the instability in his current employment, security should be ordered to ensure funds are available to pay any award of retroactive and prospective support made in the future. [13] I note that s. 30.1 does not provide the court with the power to order security for payment of retroactive support, and so I shall not consider that aspect of the claimant's argument further. [14] In submissions the claimant indicated counsel for the Director has recently advised she may seek an amount from the net proceeds of sale pursuant

to the lien as security for payment of prospective support. There is no evidence of this before me, nor has it been explained on what authority the Director could do so absent a court order. However, the submission leaves me concerned the claimant's application may overlap with the efforts that will soon be made by the Director. [15] The authorities provided by the parties set out a number of factors the courts have considered in determining whether to order security for prospective support. Those factors include a history of dissipation of assets, an inability to handle money, a likelihood the payor will leave the jurisdiction and become an absconding debtor, where the payor has in the past refused to honour his support obligations, including refusing to pay at all, where the payor has poor employment history or indicates he will leave his employment and where the payor has declared he will not pay an eventual support order. [16] Considering all of these factors and the evidence, in my view the claimant has not established an order for security is appropriate here. While the respondent is currently in arrears, he strongly disputes the amount of those arrears and has been attempting to have that issue resolved by a court since July 2014. [17] Although the respondent has underpaid in relation to the requirements of the separation agreement on a number of occasions this year, he

has continued to make fairly regular payments. The amount of child support set out in that agreement is based on three children, and there is a serious dispute about his annual income. [18] Although the respondent deposes that his current employer, a company owned by his mother, is in significant financial difficulty and his salary has been reduced as a result, there is no evidence to suggest the respondent would remain unemployed if the company were to fail entirely. Nor does the evidence establish that he would be without the ability to pay a future order for support. In his most recent affidavit, he deposes he expects approximately $320,000 in net equity from the sale of his property. Although he claims significant debt, some of which he intends to pay off, he also plans to rent housing for some time. There is absolutely no reason to believe the respondent would leave the jurisdiction. Accordingly, the claimant's application is dismissed. [19] Turning to the respondent's application for production of the claimant's bank and credit card records, Rule 5-1 of the Supreme Court Family Rules is the starting point for financial disclosure in family law proceedings where support and property division claims are made. [20] An exchange of sworn Form F8 financial statements provides the method of financial disclosure required by Rule 5-1. The rule requires parties making or responding

to claims for child and spousal support to depose to their incomes and expenses, debts and assets, and to supply applicable income documents, but not bank or credit card records. Rule 5-1(13) allows the other party to demand particulars if the Form F8 financial statement lacks sufficient information. Rule 9-1 governs each party's obligation to list and produce documents. It requires parties to prepare a list of documents that are or have been in the parties' possession or control and could be used by a party at trial to prove or disprove a material fact, as well as any document the party intends to refer to at trial. [21] The question then is, are the claimant's bank and/or credit card statements documents that could be used to prove or disprove a material fact? The respondent argues the records are relevant to the claimant's assertion of need and grave financial distress, particularly in relation to her application for increased interim spousal support. The respondent seeks the records in order to assess the claimant's household income as well. The claimant may be receiving child and spousal support from her other former spouse. I note that any such child support could not form part of her Guideline income, but spousal support would. The claimant's updated financial statement is not before me, so I am uncertain if she has claimed receipt of such income. The respondent also

argues the records are relevant to the determination of her income, which is required given her claims for increased retroactive and prospective s. 7 expenses and spousal support. He submits the law allows for financial gifts to be imputed as income in particular circumstances. In this case the claimant has received gifts from family members, including her grandmother and her mother, which may provide a basis for such imputation. Absent the records, the respondent is prevented from effectively exploring and advancing this position. [22] I am not persuaded the records ought to be produced because of an upcoming interim spousal support hearing alone. The law with respect to interim support does provide the applicant's needs and the payor's ability to pay assume greater significance than at trial. However, the court does not embark at such a hearing on an in-depth analysis. The court achieves rough justice at best. [23] The case of S.R. v. B.E., 2011 BCSC 1586, provides that in some circumstances the court will impute income on the basis of gifts received, although not in the normal course. The court examines the regularity of the gifts, their duration, whether they were and are an entrenched part of a particular lifestyle, and whether they do more than provide a basic standard of living. There is little to no evidence before me about the gifts the claimant has received. She

asserts they have done little more than provide a stopgap measure for her financial distress. [24] I am of the view the fact that she has not disputed that she has received a series of gifts from family members makes her bank records perhaps of assistance in determining or disproving a material fact, namely, her income. More importantly, however, is her claim for retroactive child support, which could very well lead to her bank records being used to prove or disprove a material fact. Retroactive claims for child support are subject to a broad, holistic application of four factors none of which are individually decisive. Those factors include the circumstances of the child. In D.B.S v. S.R.G., 2006 SCC 37, the Supreme Court of Canada provided the court must assess the benefit to the child that may arise from a retroactive award. In doing so the court looks at the child's standard of living in the retroactive period as well as currently. Where a child has gone through hardship, he or she may benefit from and be compensated through a retroactive award. [25] In this case, the claimant is asserting a significant hardship and an inability to meet her expenses and financial obligations as a result of the current arrangements, as well as the respondent's underpayment. In my view, her banking records ought to be disclosed because they may contain information material to the impact of

the "retroactive" arrangement on the children's standard living. [26] Absent a better foundation, I am not persuaded her credit card statements may offer the same assistance. Ordering their production at this time runs the risk of suggesting as a matter of principle the claimant is required to account for her spending as a recipient of child support. [27] Accordingly, I order the claimant to produce all bank statements from January 2014 until present within 14 days of today. [28] Do you have any questions, counsel? [29] MS. ROSE: My Lady, just one question with respect to the application my client made regarding the monies being held in trust, the $8,000. I did hear Your Ladyship say 8,000. In submissions I have said my client would be prepared to agree to ten given the account received. Just to be clear as to what your order is, if you could clarify that. [30] THE COURT: Well, if you are agreeing to ten, if both parties are agreeing to ten, then it can be ten. [31] MS. ROSE: We're agreed to ten. I think ten is fine. [32] THE COURT: I think technically that may be an order that the clerk recorded yesterday. So it appears that the two of you will have to sort out drafting two orders, one from yesterday and one from today. [33] MS. ROSE: Right. [34] MR. NELSON: My Lady, the court's clerk's notes indicate that - [35] MS. ROSE: Sorry, I didn't hear what my friend said? [36] THE

COURT: He is just looking at the clerk's notes. [37] MR. NELSON: I don't think that they actually assist us. In any regard, the parties agree on 10 and that can be for the amount that's to be held until the December 2nd hearing. [38] MS. ROSE: Okay. [39] THE COURT: Well, until the issue of the arrears is resolved, yes, which may be December 2. I am not sure. So do the clerk's notes not indicate that order at all? Because if they do not, I will pronounce it today. [40] MS. ROSE: My Lady, I think it was because that issue we still agreed that we would argue, because my friend had not consented to that in the application. We had simply brought it up. It was intermingled with the security issue. [41] THE COURT: So why do I not make that order today by consent. [42] MR. NELSON: But for clarity sake, there is nothing tying the Director's hands on what he does? [43] THE COURT: Yes, the order does - [44] MS. ROSE: They will. [45] THE COURT: -- require the Director to hold $10,000 in trust until further court order in relation to the arrears. [46] MR. NELSON: Yes. No, I understand that, My Lady. I'm thinking is the Director then restrained from setting aside funds for prospective? [47] THE COURT: No, but I do not see how they can do that without a court application. No, I am dismissing your client's application. I certainly think that the Director should be advised of my decision. [48]

MR. NELSON: Of course, My Lady. [49] THE COURT: So if they are making an application on the same basis, then that is not really appropriate in my view, but I am not going to say from the outset they cannot. [50] MR. NELSON: Thank you, My Lady. [51] MS. ROSE: So the order that you're pronouncing judgment on, My Lady, to be clear, is the issue of security, which is being dismissed? [52] THE COURT: The issue of security, yes. [53] MS. ROSE: And the bank records, which is just the bank records, not the credit card statements? [54] THE COURT: Correct. [55] MS. ROSE: So just the two orders essentially? [56] THE COURT: Right. Security with respect to prospective and retroactive support. [57] MS. ROSE: Okay. Thank you, My Lady. So as to the issue of costs today, I am not sure if Your Lady is interested in entertaining any submissions on costs as to yesterday's appearance. We were there for the bulk of the day. Is it appropriate for me to make some submissions, or should that be ordered to December? [58] THE COURT: I would think so. I would be inclined to order you to both bear your own costs given that most of the relief sought was adjourned or agreed to and there is divided success on this application, although not necessarily. [59] MS. ROSE: My Lady, most of the relief sought that was adjourned was my friend's relief, two applications, and the only thing that we were not successful

on was the issue of the credit card. The costs of my client to respond to two applications in such short period of time and to spend the day were significant. I understand what you're saying, but I just wanted to note that the bulk of the issues with respect to what was consented to with my friend's application was adjourned with my friend's application because he hadn't notified the correct parties. [60] THE COURT: Let me hear from your friend. [61] MR. NELSON: My Lady, my thought is that we each bear own costs, is I think the right approach, but if my friend is insisting on a costs hearing, then there are a variety of things I would like to raise, which include that she has withdrawn her application to remove me as counsel, an application that I feel never had any foundation or likelihood of success and was for strategic reasons. The affidavit content that was in Mr. Kemp's affidavit was of opinion, belief, and had no place even being in an affidavit, making accusations that were vexatious and personal against me. [62] More importantly, I thought it was inappropriate the court be advised that he has made a Law Society complaint. The Law Society prefers that those sort of things be done at the end of litigation, not in the middle, and I don't think there was any particular reason for that to be made known to the court, because it has no relevance to the hearing. [63]

Furthermore, she was asking for my client's financial statement, which I handed her back in April, April 28. So there was no need for that application ever to be made. There is also the issue that I was never advised that the house had sold and could be going ahead, or else I wouldn't have bothered doing that, and that could have been done by consent. And I think that there is also the issue that both of us were making short leave. My feeling is that I think Your Ladyship is right that there was more or less equal success, but if we're going to be having a costs hearing, then I don't think it should be just based on the issues heard but on what issues weren't heard and why. [64] THE COURT: I think what I will do, given the December date, is adjourn the issue of costs to that hearing. If for any reason there are no hearings in December, then you have leave to appear before me if you are not able to resolve the issue of costs between the two of you. All right. [65] MS. ROSE: Thank you, My Lady. [66] MR. NELSON: Thank you, My Lady. [67] THE COURT: Thank you. "Madam Justice M. Fleming"