T.D.B. v. L.B.

IN THE SUPREME COURT OF BRITISH COLUMBIA IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: T.D.B. v. L.B., 2005 BCSC 1041 Date: 20050708 Docket: E040865 Registry: Vancouver Between: T.D.B. Plaintiff And: L.B. Defendant Before: The Honourable Madam Justice MacKenzie Ruling Counsel for Plaintiff: G.A. Lang Counsel for Defendant: F.A. Schroeder Date and Place of Hearing: June 14, 2005 Vancouver, B.C. [1] There are two rulings outstanding from the applications heard on June 14, 2005. They are: (1) the defendant's application to cancel or reduce arrears of child support accumulated from October 1, 2004 to June 30, 2005; and (2) the plaintiff's application for special costs for all the appearances and hearings to enforce the orders made at trial on May 6, 2004. 1. The Defendant's Application to Cancel Arrears of Child Support [2] On May 6, 2004, I delivered Reasons for Judgment in this family matter: see 2004 BCSC 605. The background is set out in that judgment. I fixed child support payable by the defendant, Mr. L.B., for the youngest two of the parties' four daughters at $ 717 per month to start June 1, 2004. Although the defendant's Guideline income was $258,000.00 per year, I exercised my discretion under s. 4(b)(ii) of the Child Support Guidelines not to order child support for the income over $150,000.00 because the plaintiff was not working and was thus unable to contribute to the support of the two older daughters living with the defendant. [3] However, the defendant failed to pay any child support at all, even though he continued to work at the same employment until October 1, 2004 when his contract with K.[ ] ended. [4] The defendant has agreed to pay the arrears of child support from May 1, 2004 to September 30, 2004, which amounts to $6,868.00 plus $800.00 outstanding from May 2004. [5] The defendant will start work on July 1, 2005 with another airline. He will earn the equivalent of $84,000.00 Canadian gross from $20,000 Real per month. Mr. Schroeder, defendant's counsel, says Canadian income tax must be paid on that income, but the defendant has produced no evidence about his new salary, tax obligations or employment benefits. [6] Ms. Lang, counsel for the plaintiff, agreed to proceed with this application based on counsel's submission that the defendant would start work again on July 1, 2005 at a gross annual salary of $84,000.00 Canadian. If that figure changes on material that will be produced by the defendant, counsel will either agree to adjust the child support, or will address the court on it. [7] However, Ms. Lang does not agree that the financial information before the court provides an adequate basis to find the defendant has satisfied the onus of proving it would be grossly unfair not to cancel or reduce his arrears. [8] At the hearing, I set interim child support at $1,154.00 per month for the two children in the plaintiff's care. This figure was based on the total of the defendant's income from two sources totalling $93,141.00: $84,00000 Canadian gross per year from his new job and $9,141.00 (non-taxable) per year from his Workers' Compensation pension. I dismissed the defendant's application for support for the two children in his care as the plaintiff has no income. I decline to impute income to the plaintiff on the basis that the defendant has delayed more than a year in paying the $50,000.00 lump sum spousal support award I made on May 6, 2004. This deprived the plaintiff of the opportunity to invest it in a Curves franchise or into another income-earning business, as she intended. Furthermore, even if I had discretion to reduce the child support payable by the defendant, I would decline to do so in all the circumstances. [9] At this point, the court recognizes the defendant's progress in complying with the order of May 6, 2004, and the positive involvement of new counsel, Mr. Schroeder, since March 11, 2005. [10] As for the other circumstances, in April 2004, the defendant bought out the plaintiff's half interest in the matrimonial home. He expected to sell it immediately at a higher price, but that anticipated sale collapsed in July 2004. However, the defendant received the forfeited tax-free deposit of $60,000.00. He says he used it to support himself and the two girls with him during his nine month period of unemployment. [11] The sale of the matrimonial home is now scheduled to close June 15, 2005. The net proceeds will be placed in Mr. Schroeder's trust account so that outstanding amounts can be paid to the plaintiff. [12] The defendant has also agreed finally to divide the assets as ordered on May 6, 2004. [13] Mr. Schroeder has submitted (Ex. 2) medical reports from two specialists under a covering letter from the defendant's family doctor regarding his health. [14] Counsel submitted the defendant found the last year very stressful as he was given notice on September 5, 2004 that his contract with K.[ ] would end on October 1, 2004. He also submitted that a financial crisis generated health problems. Counsel also says the defendant has not enjoyed a lavish lifestyle. Rather, he has been making the large mortgage payments incurred to buy out the plaintiff's interest in the matrimonial home and to support his two older children. To do this, he says he borrowed $70,000.00 from his mother. [15] The difficulty with this position is that the only evidence of the defendant's financial situation is that contained in his affidavits of February 23, 2005 and April 1, 2005. The material before the court is insufficient as it fails to disclose the defendant's assets, liabilities, income and expenses. An updated (Form 89) Financial Statement is conspicuously absent here. The most recent one is from December 24, 2002, outdated even at trial. Discussion [16] Counsel for the plaintiff relied upon the following cases to support the proposition that the governing test is whether it would be grossly unfair not to cancel or reduce the arrears: Longstaff v. Longstaff, [1993] B.C.J. No. 1911 (C.A.); Campbell v. Campbell, [1993] B.C.J. No. 155 (C.A.); and Earle v. Earle, [1999] B.C.J. No. 383 (S.C.). [17] The court in Longstaff observed that s. 17 of the Divorce Act, R.S.C. 1985, c. 3 and s. 20 of the Family Relations Act, R.S.B.C. 1979, c. 121 (which is essentially unchanged in the current Act) provide the statutory authority for this application. The court also referred to Oakley v. Oakley (1985), 48 R.F.L. (2d) 307 (B.C.C.A.) where Mr. Justice Macfarlane said (at p. 313): An application to vary or rescind maintenance payments will proceed on the basis of the following principles: the court is to take the amount of the maintenance originally ordered as the correct amount at the time the order was made and then consider to what extent the circumstances of the parties have altered or changed since the decree nisi was granted. The onus to show that such changes have occurred lies on the applicant. [18] The court in Longstaff, at para. 36, also referred to whether the applicant presented any evidence to show that he had actually tried to find a job as being an important factor. [19] In this case, I have no evidence that the defendant actually sought other employment during the period in question, although he did find work commencing July 1, 2005. Instead, he deposes in his affidavit of February 23, 2005 (at para. 8) that he developed "health issues" that, "could interfere preventing me now from looking for work elsewhere as a pilot ". However, the letter of June 8, 2005 from his family physician, Dr. Scott, and the attached medical reports do not support any serious interference at all with attempts to find work. Moreover, it does not appear anything changed in the defendant's health when, at some point, he sought and obtained new employment as a pilot to start July 1, 2005. [20] In Longstaff, at para. 40, the court made the following critical observations regarding the respondent's failure to establish his earnings by means of tax returns: To meet the onus upon him, it was essential that the respondent make full disclosure of his means and financial circumstances. The material on which the respondent relied to show what his income had been was deficient in a number of respects. In the court below, counsel for the appellant took issue with the respondent's failure to provide copies of his tax returns when making his application [21] Here, the defendant filed Korean tax returns at trial for his work which terminated on October 1, 2004. The return for 2004 was not before the court on this application. The plaintiff does not dispute the defendant was unemployed from October 1, 2004 to July 1, 2005. However, she emphasizes correctly there is no sworn evidence to disclose how and where the defendant spent his money as the last financial statement before this court more than two years old. [22] Furthermore, the defendant was left with a significant capital asset base upon the division of assets at trial. His investments would most likely have increased in the positive economic climate this past year. [23] As noted, the defendant also received the $60,000.00 tax free deposit from the aborted sale of the matrimonial home in July 2004. The tax-free $60,000.00 used for the nine months of unemployment would amount to $80,000.00 tax-free in annual income. When the $80,000.00 is added to the nine month portion of the defendant's tax-free WCB pension of $6,855.00, one can say the defendant received a tax-free equivalent to $86,855.00 for one year. When this is conservatively grossed up for taxes and statutory deductions, one can say the defendant had access to at least a $100,000.00 Guideline income from which to pay child support to the plaintiff. But he made no effort whatsoever to do so, or even to address the matter, before March 11, 2005. [24] Indeed, even on March 11, 2005, the matter went unaddressed as the defendant's then counsel chose to withdraw from the case because of what she perceived to be a conflict with her client. I note that the defendant was not prepared to proceed with this application at that time, in any event, as the long awaited medical reports were not produced until June 14, 2005 under a covering letter dated June 8, 2005. I note, however, that two of the three reports were available last summer (dated July 7, 2004 (cardiologist) and August 12, 2004). The cardiologist's report of course would not have helped the defendant as it discloses his cardiac exam was normal. [25] As set out in Longstaff, Campbell and Earle, it is essential, in order to meet the heavy onus, that the applicant make full disclosure of his or her means and financial circumstances. That has not occurred here. [26] Counsel's submissions indicate the defendant will soon receive approximately $367,000 or $320,000 net proceeds, after paying what he owes the plaintiff, from the sale of the matrimonial home. As stated, the defendant retained half of the Scotia McLeod RSP and the two Wood Gundy accounts. Thus, the defendant certainly did not leave this marriage in the grim financial circumstances he represented to his family doctor, as reflected in the doctor's letter of June 8, 2005. [27] It is particularly disturbing that when confronted with the question of why he failed to pay child support ordered between May 2004 and September 30, 2004, when he was working, the defendant offered a lame excuse regarding the $1,100.00 a month collateral mortgage he paid on the Mazda van until it was addressed in court this spring. It was to have been transferred to the plaintiff after trial, but that did not occur. [28] Plaintiff's counsel attempted early on to sort out the van issue with defendant's counsel but to no avail. It cannot now be used in a boilerplate excuse of "confused finances". [29] Moreover, while the defendant has agreed to pay the arrears from May 2004 to September 2004, his earlier failure indicates a poor attitude to this serious obligation that also reflects upon the current application. I agree with counsel for the plaintiff that it is not just the income, but also the means of the applicant that is relevant. Means are broader than income. The sum of $1,717.00 per month child support is modest in the context of the defendant's means to pay, including his capital asset base referred to earlier. [30] Counsel for the defendant could also offer no explanation for the defendant's delay in bringing on this application when he knew on or about September 5, 2004 that his contract with K.[ ] would expire on October 1, 2004. When asked the question of why was there such a long delay, counsel, to his credit, simply said, "I don't know." In fairness, the defendant's current counsel only came on this file after March 11, 2005. [31] I turn to the medical evidence. I agree with counsel for the plaintiff that the defendant's description of his "health issues" in his affidavit of February 23, 2005 (paras. 8 to 10) conflicts significantly with what his family doctor and the respiratory specialist and cardiologist, describe in their reports. [32] The defendant deposes as follows: 8. I developed health issues that could interfere preventing me now from looking for work elsewhere as a pilot which I had hoped I could resolve. The issues are cardiac-respiratory problems combined with internal problems that I was advised by my doctor and verily believe his preliminary view are due to stress from the trial result and which in part have resulted in me being hospitalized twice on an emergency basis - once from my own doctor's offices showing symptoms of a heart attack during the early Fall. Also, notwithstanding these serious health issues, I had (during the Fall 2004) hoped to regain my employment with K.[ ] however those hopes were to be fulfilled and I am now faced with the reality of unemployment with the benefit of EI or CPP or any other pension. I have not contributing to CPP in Canada for years. My health issues are at present in a state of flux as I am presently scheduled for a slate of tests at hospital commencing March 3, 2005 in addition to those to which I have already been subject. I am at present medically unable to obtain employment at all in my field. Until the tests are concluded and I have a definitive diagnosis I will not be in a position to take employment or vocational testing to determine what else I can do as I have been a pilot since 1970 and have not worked in any other profession since then. Due to the global glut of pilots, and my own investigations into the field I do not believe that there is much of an opportunity in pilot education either should I be able obtain such qualifications. 9. I have been attempting to find other employment but until the tests are concluded I cannot, in fairness, apply for positions without disclosing my present state of health and to do so in this profession would be fatal to any application. My current medical certification for flying expires at the end of March. I have spent considerable time searching for employment and the prospects are very limited. Those few opportunities which I have found, I have investigated are unsuitable as requiring residence in primarily Muslim countries and for limited income which I do not believe would be in the best interests of the children. 10. The loss of my employment has also caused almost unbearable stress. I am seeking counselling to deal with the effects of stress. I have gained about 25 pounds since the trial. My doctor has told me on no uncertain terms to avoid all stress as it may jeopardize my clinical situation. [33] The defendant's "medical issues" are not supported by the medical reports the Court received on this application. As noted, these include the letter from the defendant's family doctor, Dr. Scott, who confirms the defendant first became a patient of his in December 1998. Dr. Scott states: Mr. R.B. first became a patient of mine in December 1998.... Everything was essentially normal until May, 2002. Then situational anxiety, marital discord, job stress, and frequent international travel began taking a very discernible toll on Mr. L.B.'s physical and emotional health.... Mr. L.B. carried on as best he could until his visit on May 13, 2004 at which time he described lower retrosternal chest discomfort associated with gastrointestinal upset. Marital disharmony and divorce proceedings were clearly affecting his health. Because he is a senior airline pilot it was deemed imperative that he be referred to Dr. Mark Hendersen, Cardiologist in N.[ ], whom he saw on July 7, 2004. Fortunately Mr. L.B.'s cardiac testing proved reassuring.... Mr. L.B.'s mental health really began to deteriorate early in 2005. His job with K.[ ] had been abruptly terminated in September, 2004. This left him at age 55 with no job, the prospects for a 55-year-old senior pilot not especially good, failing health, and being depleted of almost all financial resources. In my opinion, if it was not for Mr. L.B.'s total commitment to his four daughters' well-being he would have experienced even more serious physical and emotional problems. He has tried to take events day by day and see what happens. It has been very frustrating for him to be thoroughly compromised financially. [34] It is significant that Dr. Scott states there was no cardiac problem and that when the defendant swore his February 23, 2005 affidavit, he knew there were no cardiac problems because the cardiac tests were performed in the summer of 2004. These documents were therefore in his possession since July of 2004. [35] Regarding Dr. Scott's comment that, "Mr. L.B.'s mental health really began to deteriorate early in 2005", and that the defendant's job had been abruptly terminated, that he was in failing health and being depleted of almost all financial resources, I observe of course that these comments appear to be based entirely on the defendant's self reporting because there is no other medical evidence of deteriorating mental health. Furthermore, it is an exaggeration to say that almost all the defendant's financial resources were being depleted when he had the $60,000.00 tax free forfeited deposit and had earned income for the first nine months of 2004. We also have no detailed evidence of what he was spending other than providing a nanny for the two girls in his care during the fall of 2004. Also, when the defendant left in May 2004 to work, still with K.[ ], he left the two older children without money, without a nanny, and the plaintiff paid herself for a nanny for two months. The plaintiff has not made any claim to recover those monies. [36] The defendant's attitude and decision not to produce any medical documents or reports until June 14, 2005 contradicts what he said in his affidavit. These matters bear directly on both his efforts, or lack thereof, to obtain other employment and the expense to the plaintiff of the approximately eight court appearances since the trial date where she sought to enforce the orders made at trial and address the issue of costs, amidst the defendant's numerous delays. [37] The hearings that had been set down post-trial were all adjourned because the defendant's counsel, then Ms. Boles, sought adjournments as she was waiting for the medical records now before the court. The plaintiff's frustration is understandable when one reviews the medical reports and the dates. The report from Dr. Turner, the respiratory specialist, refers to having seen the defendant on August 6, 2004 for assessment of his respiratory problems. The notes referred to by Dr. Turner were not disclosed to the court and obviously the defendant could have obtained this report well before now since it is dated August 12, 2004. Dr. Turner notes that the defendant had asthma as a child. He was well until two to three months before August 12, 2004, when he was in Guam playing tennis and had an episode of severe chest constrictions. The symptoms resolved within minutes, when he stopped playing. [38] Dr. Turner described the defendant as, "a robust gentleman in no respiratory distress," but with a history that suggests " poorly controlled asthma at this time is certainly a strong possibility. He is travelling again." The defendant was given the medication, Flovent, for his asthma. [39] The next letter is dated July 7, 2004, even earlier. It is written to Dr. Scott by the cardiologist, Dr. Hendersen, who writes, "his cardiac exam was normal . We did a treadmill test today and he was able to walk for 11/min. of the full Bruce Protocol He had no chest discomfort and absolutely no ST segment deviation . This is a very negative test." In other words, the defendant revealed no heart problems. The doctor opined that shortness of breath on the treadmill sounded more like asthma than anything to do with his heart and that any alleged heart situation did not have to be pursued further at this time. [40] Thus, it does not seem to me that there was any health impediment to the defendant seeking other employment after his contract with K.[ ] expired as he deposed in his affidavit on February 23, 2005, well after these medical reports were written and no cardiac problems were found. With the respiratory issues, these are the result of the defendant's pre-existing asthma that he had had as a child and managed throughout his work as a pilot. Moreover, there is nothing in the medical records to confirm the defendant was hospitalized twice and had heart attack symptoms in his doctor's office as described in his affidavit of February 23, 2005. [41] In all the circumstances, including the principles set out in Longstaff, Campbell and Earle, I find the defendant has failed to discharge the onus upon him to show that it would be grossly unfair not to eliminate or reduce his arrears of child support for the nine month period between October 1, 2004 to June 30, 2005. They amount to (9 x $1,717) $ 15,453.00. 2. The Plaintiff's Application for Special Costs of Post Trial Appearances [42] The plaintiff seeks an order for special costs of the all the proceedings since the trial judgment was delivered on May 6, 2004. As noted, there have been seven or eight appearances scheduled to address post-trial applications for costs and enforcement of the orders made at trial. Counsel for the plaintiff says she has been ready to proceed on every occasion, so the defendant's conduct in delaying the hearing of the matters has caused significant expense to the plaintiff. She submits it amounts at least to reprehensible conduct deserving of rebuke. [43] The defendant has also had outstanding applications since trial. The applications began when the plaintiff sought an order for costs of the trial and for further directions and orders to give effect to the division of property. The post-trial matters expanded to include the defendant's cross-application for costs of the trial, his application to reopen the trial on the issue of the lump sum spousal support order, and his application to reduce or eliminate arrears of child support and to cancel ongoing child support. [44] My recollection is that the plaintiff's applications were first scheduled for August 31, 2004. Although Ms. Lang, on behalf of the plaintiff, delivered to Ms Boles all her material in support of the plaintiff's application, Ms Boles neither replied to the correspondence nor appeared at the August 31, 2004 hearing. The matter could not proceed and was adjourned September 15, 2004. [45] I do not recall the explanation, if any, for Ms Boles' non-appearance on August 31. However, my notes of September 15, 2004 reflect that the defendant had been working out of the country in the summer, was to return home September 30, and had lost his employment effective September 30. Ms Boles sought an adjournment so that the defendant could be medically assessed and so that she could get full instructions and prepare material in support of his applications. [46] On September 15, I ordered disclosure by September 24, 2004 of the defendant's banking, financial and investment records, and by October 8, 2004, payment by the defendant to the plaintiff of the shortfall of $6,581.90 for her interest in the matrimonial home. Those orders were not complied with, but later, on April 1, 2005, new counsel, Mr. Schroeder, said that the defendant's financial records had been misplaced in the defendant's then counsel's office, and the matter had "fallen through the cracks." He asked that the defendant not be penalized for this mishap. I accept that explanation, although it does not account for the delay in paying the plaintiff the $6,581.90. However that was one of the matters addressed efficiently by Mr. Schroeder in late March, 2005. [47] On September 15, 2004, I also ordered the defendant to deliver to the plaintiff his written submissions and authorities two weeks before the next hearing, which was scheduled, by consent, for December 9, 2004. By December 6, 2004, the plaintiff had still not received the defendant's material but because of my own sitting schedule, the December 9, 2004 date had to be reset. [48] On December 7, 2004, I directed the matter be heard the week of January 17, 2005. Counsel were free to agree to another day that week, but it would be heard January 19, 2005 if I heard nothing further. [49] Then, on January 17, 2005, two days before that hearing date, Ms. Lang faxed to Ms. Boles the material for the plaintiff's new application to have the defendant found in contempt of court for his failure to pay child support, the lump sum spousal support, the compensation payment and his failure to comply with other orders from trial. The defendant had been personally served with this material on January 4, 2005. In her faxed covering letter, Ms. Lang asked Ms. Boles to advise whether she required an adjournment of the application and suggested it be rescheduled to February 2, 2005. [50] On February 2, 2005, the trial registry advised me that both counsel had agreed to an adjournment of the hearing, so the matter did not proceed. [51] The hearing came on before me on February 18, 2005 when Ms. Lang described that an error had occurred on February 2; she apparently had only agreed to an adjournment on certain conditions that she wanted to address in court that morning. [52] Unfortunately, that was not the message conveyed to the registry by Ms. Boles, but I do not know all the communications that took place between counsel. In any event, Ms. Lang was ill on February 2. [53] On February 18, 2005, I ordered the plaintiff's contempt application and all outstanding matters proceed on March 11, 2005, and that Ms. Boles deliver all the materials she had, except the medical information or reports which were to be provided by March 3, 2005. However, the matters were to proceed even if medical information was unavailable because this matter had been outstanding for so long. [54] On March 11, 2005, Ms. Boles, withdrew from the case. After plaintiff's counsel had made her submissions on all her applications, an issue arose about whether the defendant had been personally served with the plaintiff's application to have him found in contempt of court and supporting materials. Ms. Boles had submitted that there was no proof of service before the court. It transpired that the defendant had been personally served on January 4, 2005. Ms. Boles knew this because Ms. Lang had so advised her in a faxed letter of January 17, 2005, by which she also enclosed the materials for Ms. Boles. So on March 11, 2005, Ms. Boles asked the matter be stood down, received advice from the Benchers, told me that she found herself in a conflict with her client, and had counsel appear on her behalf to seek an adjournment of the hearing. Mr. Schroeder, new counsel for the defendant, said the matter could proceed at the end of March, and it did proceed on March 30 and April 1, 2005. Many of the issues were efficiently and successfully addressed on those dates. [55] By April 1, 2005, therefore, I had heard both the applications for costs. I awarded the plaintiff her costs of trial at Scale 3, less 20%, as suggested by her counsel, to reflect her lack of success on one issue. I dismissed the defendant's application to reopen the trial on the issue of the lump sum spousal support and the application for contempt of court because new counsel had resolved some of the outstanding matters and was in the process of attempting expeditiously to resolve the remaining (the defendant's applications to eliminate arrears and to reduce ongoing child support which have been addressed in this ruling). The Test for Special Costs [56] Special costs are a penalty for reprehensible conduct. Such conduct is described in Leung v. Leung (1993), 77 B.C.L.R.(2d) 314 (B.C.S.C.) where Esson C.J.S.C. (as he then was) said that "reprehensible" is a word of wide meaning that can include conduct which is scandalous, outrageous or constitutes misbehaviour; but it also includes milder forms of misconduct. It means simply "deserving of reproof or rebuke." [57] In speaking for the court in Garcia v. Crestbrook Forest Industries Ltd. (1994), 119 D.L.R. (4th) 740 (B.C.C.A.), Lambert J.A. agreed that the standard represented by the word "reprehensible" was a general and all encompassing expression of the applicable standard for the award of special costs. Discussion [58] I do not consider that the defendant's conduct since and including March 11, 2005 justifies an order for special costs. I was told that Ms Boles had received advice from two Benchers to withdraw from the case because of a conflict with her client. After that, everyone benefited from Mr. Schroeder's involvement in this matter. [59] I also do not find that the delay that occurred post-trial from August 31, 2004 to March 11, 2005 justifies an order for specials costs. I have already considered this delay in dismissing the defendant's application to eliminate arrears of child support. [60] In all these circumstances, I find it would not be fair to penalize the defendant by making an award of special costs in addition to ordering him to pay all the arrears of child support. It would amount to chastising him twice for the delay in resolving these matters. However, the plaintiff is entitled to her costs thrown away for the March 11, 2005 hearing, and all other post-trial proceedings at Scale 3, except this hearing on which success has been divided. "A.W. MacKenzie, J." The Honourable Madam Justice A.W. MacKenzie