IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	Salminen v. Garvie,
	2012 BCSC 407

Date: 20120321

Docket: 09-3134

Registry: Victoria

Between:

Liisa Marie Salminen

Claimant

And

Paul Garvie

Respondent

Before: The Honourable Mr. Justice R. Punnett

Reasons for Judgment

Counsel for the Claimant:	D.A. Todd
Counsel for the Respondent:	R.C. Doell
Place and Date of Trial:	Victoria, B.C. October 31, 2011 and November 1, 2, 3 & 4, 2011
Place and Date of Judgment:	Victoria, B.C. March 21, 2012

[1] The parties are husband and wife.  They separated in 2009 after 12 years of marriage and one year of cohabitation prior to marriage.  They were 30 years of age when they commenced residing together.  They have no children.  The claimant seeks reapportionment of family assets and spousal support.  The respondent seeks an equal division of family assets and dismissal of the claimant’s spousal support claim.

Background

[2] In 1995 the parties met at a bar in Saanichton, B.C. where the claimant was a waitress.  She was earning approximately $27,000 per annum.  The respondent was a “shaper” who at the time worked around the world on golf courses.  The nature of his work has led him to have a peripatetic existence.  He has a longstanding business relationship with Jack Nicholas Design respecting the designing and building of golf courses.  He has had a pattern of employment followed by periods of unemployment of 2-3 months until the next golf course was developed.  He described his existence as “nomadic” with no principal place of residence for over 10 years as he moved from country to country and job to job.

[3] He summarized his employment history in the period from 1996 to 2000 as follows:

1996 -- Shaping position in China;

1997 -- Completion of golf course in China;

1998 -- Employed on salary in Japan shaping a golf course that was not completed due to lack of funds followed by a further 3 months in China, a project which also was underfunded and did not complete;

1999-2000 -- One and one half years working on a golf course in Kansas, with periods of winter shut down but other jobs elsewhere in the US during that period.

[4] The parties commenced residing together April 1, 1996 and were married on September 27, 1997.  They were divorced during the trial on November 3, 2011.

Assets Prior to Marriage

[5] Neither had assets of substance when they met.  The claimant had a five year old Ford pickup and an RRSP valued at approximately $16,000.  She was renting a house that she shared with others.  The respondent was unemployed and without assets.

[6] In 1999 the parties purchased their first home in Central Saanich, B.C.  They borrowed funds for the down payment and financed the balance through a mortgage.  They purchased it for approximately $200,000 and renovated and sold it in 2002 at a profit.  They then purchased a home in Brentwood Bay, B.C. where they resided until 2004 which they also sold at a profit.  The next and final home for which they paid $392,000 was in Central Saanich.

[7] The respondent did not specifically address his income in the 1990’s however the claimant testified, and it was not disputed, that it was in the range of $8,000 to $10,000 a month when he was working.

[8] The respondent’s work in the early years of the marriage required substantial absences from B.C.  That changed however with an increase in real estate development projects in British Columbia, described by the respondent as a “boom” opening “unprecedented” opportunities for the respondent.  He said it was a “crazy” time.  The respondent testified that these were real estate developments with golf courses as one of their amenities rather than golf courses that lead to real estate developments.  In his experience standalone golf course projects were rare.

[9] In late 2001 or early 2002 the respondent was hired for project management at Bear Mountain near Victoria, B.C.  At the time he operated as a proprietorship.  However, as the opportunity for other developments arose the respondent chose to incorporate Cutting Edge Golf International Ltd. (the “Company”) on July 18, 2003 and became an independent contractor constructing golf courses for developers.

[10] From 2001 to 2008 the respondent and his Company worked on two courses at Bear Mountain in Langford, B.C., The Cliffs Over Maple Bay at Mill Bay, B.C. and Wyndansea at Ucluelet, B.C.  Between 2003 and 2008 the Company grew substantially employing at times up to 40 to 50 people.  It accumulated significant equipment.

[11] Initially, the claimant continued to work as a waitress however over time the operations of the Company became very much a joint venture of the claimant and the respondent.  Both parties testified it was a joint venture, notwithstanding the shares were held by the respondent.  By 2005 the respondent had ceased working as a waitress and they were both employed full-time by the Company.  The respondent was responsible for negotiating and securing contracts and managing the day-to-day physical operations of the Company.  The claimant assumed responsibility for office management.  She did the bookkeeping, entertained business associates, accommodated employees and ran errands.  She continued to perform these functions until the parties separated.

[12] As the business grew the parties realized that they also required the assistance of an accountant.  They had earlier retained a chartered accountant, Mr.  Thiessen, who prepared their year-end statements and tax returns.  In January 2007 he came to work for the Company full-time and did so until July 2008.

[13] In the first five years the business appeared to be a substantial success as is evidenced by the gross earnings for the Company for the years 2004 to 2011 shown below:

	2004	2005	2006	2007	2008	2009	2010	2011
Revenue	49,542	896,980	4,418,171	5,341,604	1,885,403	96,916	74,987	102,851
Expense	96,974	759,082	4,163,726	5,352,387	2,656,136	288,391	70,946	46,629
Income	-47,432	137,898	254,445	10,783	-770,733	-191,733	4,041	56,222

[14] Unfortunately the high earnings shown for the years 2006 to 2008 were illusory as neither the Wyndansea Oceanfront Golf Resort in Ucluelet nor the The Cliffs Over Maple Bay at Mill Bay paid their accounts.  The Cliffs Over Maple Bay has gone into foreclosure with order absolute having been obtained.  The respondent testified the debt of $775,546 from the Cliffs has been written off.  On the evidence before me, there is no possibility of that receivable ever being collected.

[15] The Wyndensea project also foundered for financial reasons.  The developers owe the respondent’s Company approximately $1,853,369.  According to the respondent and Mr. Thiessen it is highly improbable that this debt will be recovered from the developers.  Their evidence is that other creditors have significant debt with priority over their debt.  I accept that the Wyndensea debt is highly unlikely to ever be paid.  For tax purposes and for all practical purposes, it is a write-off.

[16] Indicative of the precarious nature of real estate and golf course development projects the parties on two occasions attempted to secure payment of their accounts.

[17] In the first instance they received as part payment for work on the Bear Mountain project a vacant real property at 2038 Troon Court in Victoria.  That property was registered in the names of the parties.  It was sold in September 2009 for $335,000.  The net sale proceeds along with funds from the sale of a property in Ucluelet were $60,596.84.  Those funds remain in trust with solicitors for the claimant.  The funds are subject to capital gains tax, responsibility for which will be addressed later in these reasons.

[18] The second attempt to secure their accounts receivable involved the Wyndansea project.  They had secured a lien on one of the properties in the development.  Its value at the time of acquisition was in the range of $3,000,000.  The respondent’s expectation was that from its sale the Company would recover the receivable and profit from its sale.

[19] However they received a request from solicitors for the developer of Wyndansea that they release the lien and that in due course the property would be transferred into their names.  The respondent testified that he understood the release of the lien was required in order to have the property registered and then transferred to the Company.  He alleges that is not what occurred.  The lien was released and the property was encumbered by a mortgage in favour of the developer.  As a result they commenced action against the solicitors involved.  The action is currently in abeyance as the parties and the Company have lacked the funds necessary to pursue it.

Family Assets

Family Home

[20] The family home was sold on May 31, 2010.  The net sale proceeds of $285,437.83 are held in an interest bearing trust account by the claimant’s solicitors pending resolution of this trial.

Vehicles

[21] The claimant has a 2007 Honda Ridgeline worth approximately $20,000.  The truck driven by the husband was a corporate asset and has been sold for the balance owing on it.

RRSPS

[22] The claimant has a RRSP currently valued at $82,808.55.  Its value at the time the parties commenced cohabitation was approximately $16,000.  Its increase in value consists primarily of contributions made by the claimant from during the marriage.  The respondent at separation had an RRSP with a balance of $33,453.37.  He cashed in his RRSP in 2009.

Household Goods

[23] The respondent agrees that the former household furnishings in the possession of the claimant are to be retained by her.

Line of Credit

[24] When the parties separated they had a line of credit with Coast Capital Savings.  It had been used throughout for both personal and corporate purposes as the corporation did not have a line of credit.  Shortly after separation and without the knowledge or the consent of the respondent the claimant withdrew a total of $85,000 from the line of credit.  That was the maximum that was capable of being withdrawn.  As the line of credit was secured by a mortgage on the former matrimonial home it was paid out and closed at the time the home was sold.  The funds so received by the claimant are in issue and will be addressed later in these reasons.

Company Shares

[25] The respondent holds 100 Class A shares in Cutting Edge Golf International Ltd.  The Company has minimal assets but substantial debts.  It does however have a large unfunded shareholders loan account and a large non-capital loss account.

[26] All of the above are agreed to be family assets.

Shareholder’s Loan

[27] The accountant testified that there is a shareholder loan of $447,620 owing to the respondent shareholder.  Against that loan he estimated Company assets of less than $20,000 hence the Company is in a deficit position and is “worth less than zero.”  As a result the shareholder loan is considered unfunded.  If the Company did collect its receivables or recover through the Wyndensea litigation the shareholder(s) of the Company would receive the shareholder loan repayment tax free.

[28] In addition to the unfunded shareholder loan account the Company has a non-capital loss account.  Such an account is an allowable business investment loss (“ABIL”) that may be deducted by a shareholder from all sources of income.

[29] The claimant seeks orders that she receive all of the funds in trust, that the respondent retain the corporate shares and that any repayment of the shareholder loan be shared.  She also argues, in support of both her claim for reapportionment and spousal support, that the non-capital loss be utilized by the respondent to avoid the payment of income taxes on his personal income.

[30] This raises the issue of what the claimant is entitled to have declared to be a family asset.  It is rightly not disputed that the shares in the Company are a family asset.  It is the shares that are the family asset, not the assets of the Company (Hodgkinson v. Hodgkinson, 2006 BCCA 158).  At the time of the triggering event the Company shares had no value.  Under the Family Relations Act (the “FRA”) the court is to value the shares only, not value and divide the assets within the Company.  (Kurcz v. Kurcz (1989), 20 R.F.L. (3d) 206 (B.C.C.A.)).

[31] Indeed, it is not in dispute that the shares are without value, even if all liabilities were paid as no market was shown to exist for the sale of the shares in order that a purchaser could gain access to the shareholder loan and the ABIL.

[32] In Chapman v. Summer, 2007 BCCA 103, the court held that a shareholder’s loan account was not a family asset to be valued.  It was characterized as “a bank account for the parties” (para. 23).  The court at para. 24 said this:

[24]      Like a bank account, a shareholder’s loan account can have only one value, negative or positive, on any given date.  When it comes to determining compensation for its retention by one party, that value may include an allowance for the contingency of non-payment, …

[33] In this instance the shareholder loan has no value as it is, as described by Mr. Thiessen, unfunded.  That is, the Company is without assets or income and as a result the shareholder loan will not be repaid unless it continues to operate in some fashion and generates revenue or otherwise receives funds.

[34] As I have determined that the receivables, on the balance of probabilities, will not be repaid the only possible avenue for recovery of funds by the Company is the corporate litigation against solicitors for Wyndensea, an action that may or may not proceed and may or may not be successful.

[35] In addition, it is the respondent’s evidence that he is now residing in Scotland, that he has a new common-law spouse there and he does not propose to operate the Company or use it for tax planning in the future.  I accept that the respondent does not intend to continue to operate the Company.  Even if he wished to, the Company has disposed of all of its equipment.  Additionally, on the evidence, opportunities to continue to build golf courses appear limited.

Non-Capital Loss (Allowable Business Investment Loss (“ABIL”))

[36] The Company has a large non-capital loss that is capable of being claimed against future income of a shareholder.  The accounting evidence is that a non-resident, for tax purposes, cannot take advantage of the non-capital loss.

[37] The evidence respecting possible use of the non-capital loss was not satisfactory.  In particular the question of the residence of the respondent was not answered.  While he has lived in Scotland since June 2009 his accountant testified that in his view the respondent remained a resident of Canada as of the date of trial because the mind and management of the Company was still in Canada, he had as well a motor vehicle, bank account, accountant and lawyer here.  As a result he could use the Company to reduce taxes otherwise payable on his income.  However the respondent testified that in the future he intended to no longer be a resident of Canada and therefore would not have access to the tax savings available in the corporation, particularly for example, if he obtained employment in the United Kingdom as an employee.

[38] In rebuttal on the tax implications of residency, the claimant called Mr. George Frobeen, a Chartered Accountant with expertise in international taxation.  The gist of his evidence was that on the information available a determination of the respondent’s residency and ability to use the Company to reduce taxes was not possible.  He stated that without additional information such as the respondent’s employment, its location, tax treaties that apply and the interaction between the country of residence and Canada it was not possible to give an opinion on whether the non-capital losses could be used to reduce the respondent’s income taxes.

[39] What is clear is that the issue of residency is not a simple matter.  On the evidence presented no conclusion can be reached.  While it appears that the respondent is still considered a resident of Canada for tax purposes his evidence is that once his various matters revolving around this litigation are resolved he will cease to be a resident of Canada.  Because of the uncertainty surrounding the residency of the respondent for tax purposes I am unable to determine whether the respondent will or will not be able to utilize the allowable business investment loss in the future.

[40] The claimant seeks to have the ABIL and shareholder loan treated as assets of considerable value.  She proposes that she retain the funds in Canada and that the respondent’s share of family assets be his ability to benefit from his one half of the shareholder loan and the ABIL.

[41] The respondent’s position is that the ABIL should be to the benefit of the claimant.  While the claimant asserts that is a ploy on his part to justify equal division and avoid paying spousal maintenance it must be recognized that if the court accepts his proposal it has a potentially significant cost to him in the sense that had he chosen to remain a resident of Canada he would have paid little in the way of income tax for a number of years.

[42] In effect the claimant seeks to have the ABIL valued by reference to the potential tax savings to the respondent.  The claimant in her written argument addressed the Shareholder Loan account and ABIL account as follows:

There is however evidence that the Respondent can and is using the company to earn income and there is no reason that he will not continue to do so in the future.

The claimant further submits that it is reasonable to assume that the Respondent, who is now 45, will continue to work at his current job for at least the next 10 years and that he will earn sufficient income to use up all of the shareholder’s loans and the non-capital losses which total $1,198,147.00 ($10,500 x 12 months = $126,000 per year x 10 years = $1,260,000.00).

[43] This analysis ignores that the respondent, other than during the operations of the Company, has not regularly worked 12 months a year.  In addition, the availability of tax-free income does not make it an asset.  At best if available it may support a grossing up of future income for support purposes, assuming the claimant is entitled to such.

[44] The claimant refers to a number of authorities respecting the shareholder’s loan and the ABIL all of which involve companies that had assets and were going concerns.  As a result the shareholder loans had value.  The cited authorities therefore do not assist as the debts of the Company exceed the asset values.

[45] The respondent proposes that all of the shares vest in the claimant without accounting for any value.

[46] In my view the claimant is seeking to give value to an asset that is without value by attempting to embrace the respondent’s future income and redefine that income as an asset.  While the respondent’s potential ability to reduce or eliminate income taxes through the use of the shareholder loan and non-capital loss may affect his income tax payable and ability to pay spousal maintenance, it does not make that income an asset.  The argument of the claimant is an attempt to use future income as an asset of the respondent in order to seek reapportionment of the funds held in trust in the claimant’s favour.

Alleged Family Assets

[47] The parties do not agree that a Jaguar automobile owned by the respondent and a certain property in Thunder Bay, Ontario, at one time registered in the name of the claimant, are family assets.

Jaguar

[48] In April of 2007 the respondent purchased a 2007 Jaguar XKR Coupe for $126,300.  He financed $106,300 of the purchase price plus applicable taxes.  The total cost including financing charges was $147,584.99.  At the time of purchase he already had the use of a Company truck.  He purchased the vehicle without discussion with the claimant.  When she was informed of it she disapproved of its purchase.  The claimant never drove it and only rode in it once.  It was clearly a personal purchase by the respondent; one that he now acknowledges was “foolish.”

[49] The evidence of its value submitted by the claimant consists of a report dated January 21, 2010 from T.C. Consultants (Tom Cino) providing an opinion of value at $65,000.  The respondent on the other hand does not provide an expert opinion but simply a recent hand written note from the Jaguar Victoria dealer from whom it was purchased stating that they would purchase the vehicle for $40,000.  Presumably that purchase would be for resale at a higher price hence I do not accept the $40,000 as the market value nor do I accept the value provided by the complainant as it was almost two years old by the time of trial and further depreciation has occurred.

[50] The respondent testified that he has listed it for sale on E Trade or Autotrader for $55,000 without success and anticipates it selling for less.  It is not clear from his evidence how long it has been listed for sale nor does it appear he has made other efforts to sell it that would potentially assist in determining its market value.  In my view the current value of the Jaguar is $50,000.  As a result the issue of this vehicle is really an issue of who is responsible for its debt.

[51] The balance due on the car loan as of August 30, 2011 was $56,017.36.

[52] Given the claimant had no knowledge of the purchase, she objected to the purchase once it came to her attention, she did not benefit from the purchase and it has never been used for a family purpose, I am satisfied that the Jaguar is not a family asset.  The Jaguar remains the asset of the respondent and he remains solely liable for the debt registered against it.

Thunder Bay Property

[53] The second asset in dispute is property in Thunder Bay, Ontario.  The evidence of the claimant was that in February of 2006 her father, for estate planning purposes, registered his residence in Thunder Bay in joint tenancy with the claimant.  This was supported by a trust declaration dated February 20, 2006 that provided that in transferring part of his interest in the property to the claimant it was his “intention that she hold one half of the property as a joint tenant so that in the event of [his] death she [would] be the sole owner of the property, by right of survivorship and that the property [would] not be the subject of any probate proceedings.”

[54] The transfer occurred in April 2006.  As before the transfer, the claimant’s father continued to reside in the home and paid all of the expenses and maintenance.  There was no rent payable to the claimant and she received no other income from it nor was she responsible for any expenses related to the property.

[55] On October 22, 2009 the claimant signed the land transfer documents required to transfer her joint tenancy interest back to her father.  Both transfers were made without financial consideration.  According to the claimant the reason for the transfer back to her father of her interest in the property was her father’s plan to sell his home given his age and its distance outside town.

[56] The respondent asserts that the claimant’s interest in the Thunder Bay home was a family asset.

[57] I am satisfied that any interest in the Thunder Bay property was limited to bare title with no beneficial interest.  It was a revocable right to inherit.  This is supported both by clear documentation to that effect and the presumption of resulting trust.  The father is presumed to have intended to retain beneficial ownership of the property (Pecore v. Pecore, 2007 SCC 17).

[58] No evidence was led by the respondent to meet the burden that lies on a transferee to prove that a gift was intended.  In addition, the evidence fails in any event to establish that it was a family asset because it was never used as such and the parties never contributed any funds to it or received any income from it.

Debts

Personal

[59] Mr. Thiessen estimated the capital gain on the sale of the lot at Bear Mountain property (Troon Court) at $30,500.  Based on the parties’ incomes for 2010 the claimant owes $14,000 in capital gains tax and the respondent owes $16,500.

[60] Visa and Mastercard debts totalling $76,000 were incurred by the respondent after the separation of the parties.

[61] The claimant has an American Express and a TD Visa debt of $6,321.32 also incurred after separation.

[62] The line of credit funds in the total sum of $85,000 withdrawn by the claimant after the parties’ separation were used by her as follows:

a)	Mortgage and Line of Credit Payments	$28,242.42*
b)	Household Maintenance and Labour	$2,880.00
c)	Household Repairs	$6,505.70
d)	Dog Expenses	$3,851.49
e)	Ucluelet Moving Expenses	$700.11
f)	Personal Expenses of Claimant	$41,180.22

*(This figure includes in excess of $6,600.00 in interest payments due to draw down of the line of credit by the claimant).

[63] The respondent disputes the necessity for some of the house maintenance and repair costs however the evidence does not establish whether they bettered the property and its eventual sale price or not.

[64] The respondent asserts that the claimant delayed the sale of the former matrimonial home and as a result had the benefit of that asset from June 2009 when the respondent moved out until its sale in May of 2010.  The use by her of the line of credit funds to pay the mortgage on the former matrimonial home was therefore to her benefit and his detriment.

[65] In addition, the effect of the claimant’s taking of the funds left the respondent without funds to address the debts of the Company.  In part that necessitated the respondent’s post-separation borrowing of $30,000 from a family friend, Mr. Vantreight.

[66] The line of credit was paid out of the sale proceeds of the former matrimonial home.  Prior to any consideration of reapportionment each party was responsible for one half of that repayment.  As a result the respondent contributed to 50% of the claimant’s personal expenses.

Corporate Debts with Personal Liability

[67] Due to the inability of the Company to collect the funds owed to it combined with the economic downturn and the lack of work, the respondent endeavoured to liquidate corporate assets and honour payments due to their corporate and personal creditors.  The bulk of the Company’s assets have been sold, the majority through Ritchie Bros. Auctioneers.  At trial the remaining assets of the Company consisted of office equipment, a Kabota excavator, a small sand plow and office furnishings.  By the trial date the majority of the corporate debts had been paid with the exception of a Volvo rock truck loan and the debt to Mr. Vantreight.

[68] The Volvo rock truck owned by the Company at the time of separation was of particular concern given the monthly payments were almost $12,000.  The respondent was unable to sell it through the auction process as it was encumbered to too great an extent.  He did manage some bare rentals for it.  He was unable to auction it given its debt exceeded its value.  It was eventually sold by Volvo.  There is a deficiency outstanding of $161,178 as of October 31, 2011 with interest accruing at 18% per annum.  The respondent has personally guaranteed the debt.  However, the respondent believes once he has funds in hand he may be able to negotiate a settlement of that debt for substantially less than the current balance.

[69] As mentioned, after their separation the respondent arranged a loan from a friend and neighbour of the parties, Mr. Vantreight.  They had previously borrowed from him.  The purpose of the loan was to fund the daily running of the Company.  The loan was for $30,000 and was made to Cutting Edge Golf International Ltd. and to the respondent personally.  Interest was payable at 9% per annum.  The promissory note is dated May 15, 2010.  It was due and payable May 15, 2011.  The funds were borrowed at a time when the respondent anticipated an early resolution of this action.  He testified that he has paid down $4,500 of it leaving a balance owing of $25,500 plus interest at 9%.  In error the debt is recorded on the Corporate Financial Statement as a $25,500 loan.  As a result the present balance was not in evidence but it can be calculated.  It appears to have an approximate balance of $28,000.  It was arranged without the knowledge of the claimant.

[70] The FRA does not explicitly address division of debts (Popp v. Popp (1985), 46 R.F.L. (2d) 441 (B.C.C.A.); Mallen v. Mallen (1992), 40 R.F.L. (3d) 114 (B.C.C.A.)).  The respondent wishes to have the debts considered in the division of property.  He bears the onus of demonstrating that the debts were incurred for a family purpose.

[71] In Moore v. Moore, [1988] B.C.J. No. 740 at para. 5, Huddart J. held the following guidelines should be used in determining whether a particular debt should be considered in the reapportionment of assets:

5.         …

(a)        the extent to which each spouse has benefited from the incurring of the debt or from the dilatory payment of it, before or after separation;

(b)        the intention of the spouses when the debt was incurred as to who would be responsible;

(c)        whether the debt was incurred before or after separation;

(d)        with regard to income tax liability, the date of receipt of the income by reason of which the liability has been incurred.  (Citations omitted)

[72] These guidelines have been refined by later decisions such as Mallen v. Mallen (1992), 40 R.F.L. (3d) 114, 65 B.C.L.R. (2d) 241 (C.A.).  In Mallen, Lambert J. held the following at para. 6:

6          The proper focus for the examination of a debt should be a focus on the nature and purpose of the borrowing and on the expenditure of the borrowed funds. If the funds were used to acquire a family asset, to maintain a family asset, to discharge a family burden, or to maintain the family members, then it is likely that equality and fairness will require an equal sharing of the debt or liability and its adjustment in the division of the assets in such a way as to carry out the principles of equality and fairness. If the funds were used entirely for the personal purposes of the spouse who borrowed them it is likely that equality and fairness will require that spouse to bear the whole burden of the debt after the triggering event. … [Emphasis added]

[73] Later, in Stein v. Stein, 2008 SCC 35, it was found that both parties had benefited from certain tax shelters under reassessment and at para. 10 the following was noted:

[10]      Indeed the term "family debt" has evolved in the jurisprudence out of a recognition that spouses jointly contribute to not only the accumulation of assets, but also debt. Although the phrase has no statutory significance, it has been used with increasing regularity by trial courts, (particularly in British Columbia) to describe "a liability of either or both of the spouses which has been incurred during the marriage or for a family purpose" (Mallen, at para. 26). The very existence of the term "family debt" underlines the reality that in order to ensure fairness, both debts and assets must be considered after the breakdown of the marriage.

[74] The Volvo loan was a business decision made during the parties’ relationship.  The Company was very much a joint effort.  The parties had used their personal line of credit for corporate purposes and personally held properties such as the Troon Court land to secure loans used for business purposes.  There was an ongoing intermixing of corporate and personal debt as evidenced by the use made of the shareholder loan.  As a result the Volvo debt remains a debt to be accounted for in the division of assets.

[75] With respect to the Vantreight loan it occurred after the parties separated.  However, it was incurred by the respondent in order to deal in an orderly fashion with the liabilities of the Company.  Had the claimant not taken all of the available line of credit those funds would presumably have been available and the Vantreight loan unnecessary (although the issue of who was responsible for it would remain).

[76] This is consistent with the scheme of the FRA as described by Lambert J.A. in Mallen:

5          In my opinion, the equality of treatment of the spouses as required by the scheme of the Act is intended to be a true equality in real terms, and not an artificial equality reached by ignoring some of the facts and emphasizing others. In order to bring about a true equality it is necessary that debts and other liabilities of the spouses at the time of the triggering event and earlier be examined in a way that will illustrate the true relationship between the debts, on the one hand, and the attainment of equality and fairness, on the other. The examination of the debts should not be confined to classifying them into one category or another and so consigning them to treatment in one way or another, without regard to the underlying scheme of the Act.

[77] Hinkson J. in Bryan v. Chapman, 2011 BCCA 278, in referencing the above passage in Mallen said, at para. 43, that “whether any particular debt is a family debt or not depends upon whether there is a discernible nexus between the debt itself, and some family purpose or benefit.”

[78] I find that the Volvo and Vantreight debts, both of which were incurred in the operation of the family business, are “family debts” and to do so is consistent with the principles of equality and fairness which guide this Court’s role when dividing property on marital breakdown (Hartshorne v. Hartshorne, 2004 SCC 22).

[79] The end result for this couple is unfortunate.  Despite apparent substantial growth in their Company at the end it was without value.  The assets therefore for division consist of:

a)       Honda truck registered to the claimant.  It is not disputed it is a family asset with a value of $20,000.

b)       RRSPs of the claimant while having a value prior to the parties’ relationship ($16,000) now have a value of approximately $82,808.55.  The significance of the claimant’s initial contributions diminished with each year of the marriage (Upton v. Upton, 2002 BCSC 201).

c)       The respondent liquidated his RRSP of $32,773.83 in 2009 and after tax the respondent received approximately $24,000, $10,000 of which was contributed by him to the Company and now forms part of the shareholder’s loan account.

d)       Sale proceeds of the Central Saanich property $288,318.62.

e)       Sale proceeds of Troon Court and Barclay Place properties $60,596.42.

f)        100 Class A Shares in Cutting Edge Golf International Ltd.

g)       Canada Pension Plan benefits.

Law

Property Issues

[80] The division of property is to be considered prior to consideration of spousal maintenance claims.  The purpose of this approach is to avoid double recovery.  (Toth v. Toth (1995), 17 R.F.L. (4th) 55 (B.C.C.A.))

[81] The triggering event in this case is the date of trial when the divorce order was made.  As of that date each party became entitled to an undivided one half interest in the family assets as tenants in common.  Given the triggering event is the same as the trial date the date of valuation is the same.  (Blackett v. Blackett (1989), 63 D.L.R. (4th) 18 (B.C.C.A.))

Reapportionment

[82] The claimant seeks reapportionment of the family assets in her favour pursuant to s. 65(1) of the FRA.  Reapportionment requires a finding that an equal division would be unfair based on the criteria listed in s. 65.

[83] In Stein v. Stein, 2008 SCC 35, the Supreme Court of Canada held the following:

[9]        It seems self-evident that, generally speaking, both assets and debts need to be considered in order to ensure fairness upon the breakdown of a marriage. As the British Columbia Court of Appeal noted in Mallen v. Mallen (1992), 65 B.C.L.R. (2d) 241:

… the equality of treatment of the spouses as required by the scheme of the Act is intended to be a true equality in real terms, and not an artificial equality reached by ignoring some of the facts and emphasizing others. In order to bring about a true equality it is necessary that debts and other liabilities of the spouses at the time of the triggering event and earlier be examined in a way that will illustrate the true relationship between the debts, on the one hand and the attainment of equality and fairness, on the other. …

…

[11]      In my view, the fact that it is not feasible to precisely value an asset or debt at the time of separation does not alter the principle that the complete financial situation of both spouses needs to be considered in order to ensure a just result. In the context of assets, courts have concluded that spouses have a right to claim an interest even where the asset itself is "inchoate, contingent, immature, or not vested" (Rutherford v. Rutherford (1981), 23 R.F.L. (2d) 337 (B.C.C.A.), at p. 342. See also Grove v. Grove, [1996] B.C.J. No. 658 (QL) (S.C.), and Webb v. Webb (1994), 135 N.S.R. (2d) 161 (S.C.)). I believe the same approach ought to apply to debts -- the principle of fairness requires that debts be considered even where they cannot be fully valued at the time of separation.

[84] The claimant is critical of the respondent’s business decisions while they were together.  Her submissions state that the respondent made “several irresponsible business decisions from 2006 to 2009.”  Those include equipment purchases for the Company operations and allowing the Wyndansea debt to escalate to $1,853,369.00.  On the evidence I cannot find that the equipment purchases were not necessary for the Company operations.  With respect to the Wyndansea debt the respondent testified that the financial collapse in 2008 was the real cause of the default and that collapse was not something predicted by anyone.

[85] Firstly, these criticisms relate to the operations of the Company while the parties were still together.  The evidence does not show that the decisions were irresponsible.  To the contrary the business was risky but potentially rewarding.  In Jacobson v. Jacoubsen (1991), 60 B.C.L.R. (2d) 40, 2 A.C.W.S. (3d) 515 (C.A.), while dealing with activities after separation but before the triggering event Taylor J.A. said at para. 20:

20.       …In the end, in a free enterprise system, high risk is very often simply the price which must be paid for the chance of high profit, and conduct which will be described laudably if it turns out to be profitable tends as readily to be characterized as “imprudent” and “reckless” when it happens that losses are incurred instead.

[86] I have no doubt that had all of the receivables been collected the complainant would not be criticizing the business decisions of the respondent.  I do not place blame on the respondent as the claimant invited me to do.  I do not accept that the respondent’s current lack of assets is “largely his own fault.”

[87] The claimant also argued that the respondent has lived an extravagant life style since they separated.  She calculates that he has spent over $140,000 since their separation as compared to her $98,000 (which includes the $41,000 from the line of credit spent by her for personal expenses).

[88] The evidence of the respondent is that to a substantial degree his expenditures related to the operation and winding up of the Company.  The claimant has not established that the respondent has dissipated or improperly dealt with either assets or his income.  His conduct has been consistent with the pattern followed during their relationship.  There is no basis for compensation to the claimant, particularly in light of the fact that during the post-separation winding up of the Company the claimant drew down the line of credit (Jacobsen, supra).

[89] The respondent does not seek an accounting of the funds that the parties received or used between separation and the triggering event.  In the words of his counsel he is seeking an order that “winds this matter up reasonably.”

[90] The claimant has benefited from her post-separation possession of the former matrimonial home and the funds drawn by her from the line of credit.  No claim was made for occupational rent although notional occupational rent can be considered as a factor respecting unequal division, (Pasnak v. Pasnak, 2000 BCSC 1374; Donovan v. Donovan (1986), 5 R.F.L. (3d) 1 (B.C.S.C.).  The claimant remained in the home for approximately one year after the parties separated.  It was listed for sale for the last several months of that period.  Since separation the claimant did maintain the home albeit using the line of credit funds to do so.

[91] I am satisfied that any benefit to the claimant from the line of credit and the use of the family home is balanced by the benefits received by the respondent from the post-separation use of the Company despite the fact that many may have been deductible for tax purposes as corporate expenses.

Analysis

[92] Since the claimant seeks reapportionment of family assets in her favour the burden of proof lies on her (MacNeil v. MacNeil (1995), 14 R.F.L. (4th) 24 (B.C.S.C.)).  She submits that she has suffered an economic disadvantage arising from the marriage breakdown and the failure of the family business.  She states that she and respondent had combined their skills to run their home and business and earn a significant income and that by leaving the marriage the respondent has not only ended the relationship but has “taken the Claimant’s job away from her.”

[93] She also testified that had she not married the respondent when she was 29 years old she would have pursued a career that was more lucrative than her employment as a waitress.

[94] The claimant submits that her economic disadvantage and need to become economically self-sufficient should be addressed by reapportionment of family assets as well as by the payment of compensatory and non-compensatory spousal maintenance.

[95] Her claim for reapportionment is founded in s. 65(1)(e) and (f) of the FRA.

[96] Given my findings respecting the shareholders’ loan and the non-capital tax issue and the remaining debts, the respondent is not, as suggested by the claimant, receiving a tax-free income stream nor is he receiving an asset of value if the shares remain with him.  As a result the assets under consideration for reapportionment do not include the shareholder loan and the non-capital tax loss.  In my view the latter are only relevant to the issue of spousal support.

[97] A consideration of the financial resources of each party including their capital assets is required along with their income earning capacity.  I emphasize that s. 65 requires that the court consider how each spouse is to emerge from the marriage as economically independent as resources and income permit.

[98] The claimant emphasizes her need to purchase a home and re-establish herself.  In fact, she submits that she requires all of the funds in trust as she proposes to purchase a home worth $500,000.  That however is not the test.  Rather the economic circumstances of each party are to be considered.

[99] The court must find that equal division would be unfair.  (Murchie v. Murchie (1984), 39 R.F.L. (2d) 385 (B.C.C.A.))

[100] In Lockhart v. Lockhart (1989), 19 R.F.L. (3d) 359 at 362, 14 A.C.W.S. (3d) 136 (B.C.C.A.), Lambert, J.A. for the majority said this:

The general rule is the rule provided by the legislature in s. 43. The family assets must be divided equally. The exception to that rule occurs only where equality of division would be unfair and then only when the unfairness arises from the specific factors set out in the lettered paragraphs of s. 51

In my opinion, in this case, equality of division would not have given rise to unfairness. The question of whether equality is unfair is not to be decided on the basis of narrow distinctions. The determining factor is whether equality is offensive to a sense of fairness and justice, having regard to the circumstances of the parties.

In my opinion, equality would not have been wrong in this case. In particular, I say with respect to s. 51(e) that it is not intended that that paragraph should be applied to try to make the financial circumstances of each of the former spouses the same as each other. Nor is it intended, through the application of that paragraph, to destroy the economic independence and self-sufficiency of one spouse in order to try to bolster the economic independence and self-sufficiency of the other. It is only where leaving equality alone would be unfair, having regard to the need of one of the spouses or both of the spouses to become or remain economically independent and self-sufficient, that that section should be applied.

[101] Both the claimant and the respondent have the ability to be self-sufficient.  Section 65(1)(e) is not “neutralized” by that fact.  What is required is “a more comprehensive analysis of the needs of both parties …” (Bain v. Bain, 2008 BCCA 49).

[102] In this instance, as will be discussed with respect to spousal support, I am satisfied that the claimant has the ability to work full-time as a bookkeeper earning in the area of $25.00 per hour or $52,000 per annum.  Her assertion that the breakdown of the marriage has “taken her job away from her” fails to recognize that the Company was essentially bankrupt.  Her job loss arises from that fact, not the breakdown of the marriage.

[103] Both parties are at an age where they require assets to re-establish themselves.  Given the abilities of the claimant she undoubtedly can obtain full-time employment if she chooses to do so.  Both her evidence and that of Mr. Thiessen indicates that she will, in time, earn in the range of $25.00 per hour.

[104] I do not accept that the assets must be reapportioned in order for the claimant to be economically independent and self-sufficient.  She has the capacity to become so without reapportionment.

[105] The respondent while suffering some medical difficulties is clearly an individual who will pursue employment.  However, I do not accept the claimant’s submission that he will earn $126,000 per annum.  I reject that suggestion because, other than the unusual years of operation of the Company he has never done so and further, given the recession and the decline in opportunities, it is probable that he will not, if he remains in the golf course business, work full-time.

[106] The needs of the claimant are set out in her financial statement and evidence as approximately $37,000 per annum.  The respondent’s shows expenses of $42,570 on his financial statement.

[107] While there is income disparity (on the assumption the claimant fulfills her earning potential and on the assumption that the respondent obtains employment) I am not satisfied that that disparity is sufficient to overcome the presumption of equal division.  I am also not persuaded that the disparity is a consequence of the marriage.

[108] This is not a case where a claimant wife has been out of the job market for significant periods of time and thereby has suffered a loss of income earning capacity nor is it a case where the care of children have had a similar effect.  Nor does the evidence indicate that she requires reapportionment in order to pursue educational opportunities or to upgrade her job skills.

[109] As a result I am not persuaded that the claimant has satisfied the burden on her to show that equal division would be unfair.  The total funds held in trust are $348,915.04 plus additional accrued interest.  From those funds the Volvo loan is to be repaid (in such sum as the respondent may settle the debt) as well as the Vantreight loan.  The remaining funds are to be divided equally between the parties.  Each party shall be responsible for their share of the capital gains tax arising from the Troon Court and Barclay Place property sales.

[110] The claimant’s RRSPs and the respondent’s RRSP (now collapsed) are family assets and are to be divided equally except that the $10,000 contributed by the respondent to the Company from his RRSP shall not be included in the equalizing calculation.

[111] All remaining family assets shall be divided equally except for the shares in Cutting Edge Golf International Ltd. which shall vest in the claimant.

[112] According to the financial statements filed in October 2011 their personal debts total approximately $6,300 for the claimant and $76,000 for the respondent and shall remain the responsibility of the party in whose name they were incurred.

Spousal Support

[113] The claimant seeks spousal support pursuant to s. 15.2 of the Divorce Act.  Her claim is advanced on both compensatory and non-compensatory grounds with an emphasis on the latter.  She seeks such support pursuant to the Spousal Support Advisory Guidelines (the “Guidelines”) in the sum of $1,680 for a period of 12 years based on her income of $30,000 and the respondent’s alleged tax-free income to $126,000.  The respondent opposes the payment of spousal maintenance on the basis of his ability to pay and on the basis that neither was disadvantaged by the marriage or its breakdown.  The preliminary issue for resolution is that of entitlement.

[114] The issue of entitlement to spousal maintenance was addressed in Moge v. Moge (1992), 3 S.C.R. 813 and Bracklow v. Bracklow (1999), 1 S.C.R. 420.

[115] Bracklow v. Bracklow (1999), 1 S.C.R. 813, 169 D.L.R. (4th) 456, requires that entitlement to support be found on a contractual, compensatory or needs basis.  At para. 27 McLachlin J. states:

27        The mutual obligation model of marriage stresses the interdependence that marriage creates.  The clean-break model stresses the independence of each party to the union.  The problem with applying either model exclusively and stringently is that marriages may fit neither model (or both models).  Many modern marriages are a complex mix of interdependence and independence, and the myriad of legislative provisions and objectives discussed below speak varying to both models.  As Payne on Divorce (4th ed. 1996), at pp. 269-70, puts it, “the economic variables of marriage breakdown and divorce do not lend themselves to the application of any single objective.”

[116] And at para. 49, the following was held:

49        In summary, the statutes and the case law suggest three conceptual bases for entitlement to spousal support: (1) compensatory, (2) contractual, and (3) non compensatory. Marriage, as this Court held in Moge (at p. 870), is a “joint endeavour”, a socio-economic partnership. That is the starting position. Support agreements are important (although not necessarily decisive), and so is the idea that spouses should be compensated on marriage breakdown for losses and hardships caused by the marriage. Indeed, a review of cases suggests that in most circumstances compensation now serves as the main reason for support. However, contract and compensation are not the only sources of a support obligation. The obligation may alternatively arise out of the marriage relationship itself. Where a spouse achieves economic self-sufficiency on the basis of his or her own efforts, or on an award of compensatory support, the obligation founded on the marriage relationship itself lies dormant. But where need is established that is not met on a compensatory or contractual basis, the fundamental marital obligation may play a vital role. Absent negating factors, it is available, in appropriate circumstances, to provide just support.

[117] Further, the Supreme Court of Canada addressed the issue of compensatory support as follows at para. 39:

39        The compensatory basis for support finds its source in a number of factors mentioned in the statutes. In the British Columbia Family Relations Act, these include s. 89(1)(a) and (d). “[T]he role of each spouse in their family” embraces the contributions made by the spouses to the family for which compensation may be appropriate on the collapse of the marriage. Similarly, “the ability and capacity of ... either or both spouses to support themselves” permits a court to examine whether spouses have foregone opportunities to develop the ability to support themselves because of the marriage, or have been rendered less able to support themselves by adverse effects of the marriage or the marriage breakdown. “[C]ustodial obligations respecting a child” (Family Relations Act, s. 89(1)(c)) may relate to compensation. While spousal support is distinct from child support, the need to care for children has an impact on factors relevant to spousal support. Under the Divorce Act, compensation arguments can be grounded in the need to consider the “condition” of the spouse; the “means, needs and other circumstances” of the spouse, which may encompass lack of ability to support oneself due to foregoing career opportunities during the marriage; and “the functions performed by each spouse during cohabitation”, which may support the same argument. In sum, these compensatory statutory provisions can be seen to embrace the independent, clean-break model of marriage and marriage breakdown.

[118] On the issue of needs based or non-compensatory support the court said this:

40        While the statutes contemplate an obligation of support based on the grounds of contract and compensation, they do not confine the obligation to these grounds. The “ability and capacity of, and the reasonable efforts made by, either or both spouses to support themselves” (Family Relations Act, s. 89(1)(d)), suggests a concern with need that transcends compensation or contract. Even if a spouse has foregone no career opportunities or has not otherwise been handicapped by the marriage, the court is required to consider that spouse’s actual ability to fend for himself or herself and the effort that has been made to do so, including efforts after the marriage breakdown. Similarly, “economic circumstances” (s. 89(1)(e)) invites broad consideration of all factors relating to the parties’ financial positions, not just those related to compensation. The same may be said for the broad injunction of the Divorce Act that the court consider the “condition, means, needs and other circumstances of each spouse”. To be sure, these factors may support arguments based on compensation for what happened during the marriage and its breakdown. But they invite an inquiry that goes beyond compensation to the actual situation of the parties at the time of the application. Thus, the basic social obligation model may equally be seen to occupy the statutory provisions. (Emphasis added)

41        Section 15.2(6) of the Divorce Act, which sets out the objectives of support orders, also speaks to these non-compensatory factors. The first two objectives -- to recognize the economic consequences of the marriage or its breakdown and to apportion between the spouses financial consequences of child care over and above child support payments -- are primarily related to compensation. But the third and fourth objectives are difficult to confine to that goal. “[E]conomic hardship . . . arising from the breakdown of the marriage” is capable of encompassing not only health or career disadvantages arising from the marriage breakdown properly the subject of compensation (perhaps more directly covered in s. 15.2(6)(a): see Payne on Divorce, supra, at pp. 251-53), but the mere fact that a person who formerly enjoyed intra-spousal entitlement to support now finds herself or himself without it. Looking only at compensation, one merely asks what loss the marriage or marriage breakup caused that would not have been suffered but for the marriage. But even where loss in this sense cannot be established, the breakup may cause economic hardship in a larger, non-compensatory sense. Such an interpretation supports the independent inclusion of s. 15.2(6)(c) as a separate consideration from s. 15.2(6)(a). Thus, Rogerson sees s. 15.2(6)(c), “the principle of compensation for the economic disadvantages of the marriage breakdown as distinct from the disadvantages of the marriage”, as an explicit recognition of “non-compensatory” support (“Spousal Support After Moge”, supra, at pp. 371-72 (emphasis in original)).

42        Similarly, the fourth objective of s. 15.2(6) of the Divorce Act -- to promote economic self-sufficiency -- may or may not be tied to compensation for disadvantages caused by the marriage or its breakup. A spouse’s lack of self-sufficiency may be related to foregoing career and educational opportunities because of the marriage. But it may also arise from completely different sources, like the disappearance of the kind of work the spouse was trained to do (a career shift having nothing to do with the marriage or its breakdown) or, as in this case, ill-health.

[119] The respondent submits that the claimant has not established entitlement to spousal maintenance, firstly on the basis that she was not disadvantaged by the breakdown of the marriage, nor suffered hardship, nor is she in need of support to promote her self-sufficiency, and secondly, assuming he continues to earn more than she does, she is not entitled to support merely because of his greater earning capacity.

[120] The issue of entitlement is not addressed by the Guidelines.  It is only after entitlement is found that the Guidelines come into play.

[121] The claimant’s evidence of plans prior to the marriage was that when she met the respondent she had been considering returning to school, perhaps to train as an accountant or she may have met some other man.  She did not testify to ever looking into such training before the marriage.  She stated that she could not return to waitressing because of a bad hip.  She did not provide any medical evidence of such.  She stated she had taken an interior decorating course but acknowledged it did not and would not lead to employment.  She continued to work as a waitress for some years after they met and married.  There was no evidence that she even contemplated other training or schooling or sources of employment while the parties were together.  Nor was any evidence led that during the marriage she wished to pursue further training and was somehow thwarted in that desire.

[122] Additionally, she made the decision to work full-time with the respondent voluntarily (although she did state that the respondent preferred that she no longer waitress) as at the time the Company was rapidly expanding and both parties anticipated it would provide for their economic future.  They both had realized that their joint pursuit of the golf course business was the best economic prospect available to them.

[123] The claimant testified that after the parties separated she remained in the home in order to make it ready for sale.  She said that she did some maintenance and repair work and also hired others to do so.  She also stated that it was a two acre property that she weeded and mowed.  The home was listed for sale in November of 2009.  It sold in May of 2010.

[124] She said that after they separated she prepared her resume and sent it off to various employers.  Given the experience she had developed as a bookkeeper in the family business she sought work as an office administrator or bookkeeper.  She listed a handful of employers that she had applied to.  She was interviewed for at least two jobs but was not successful.

[125] She testified that Mr. Thiessen contacted her in August of 2009 about a possible position for her with a company related to his then employer.  She said that he told her that the hours were 8:30 am to 5:00 pm and that the hours were not flexible.  The initial pay was to be $18.00 per hour.  She testified she did not pursue it because she was waiting to hear about another position she had applied for and that in any event the family dog could not be left alone that long given the hours of work and the travel time that would be involved.

[126] She stated that Mr. Thiessen just raised the possibility of an interview for her for the position and that it was not an offer of the job.  Mr. Thiessen testified that the claimant was an excellent bookkeeper who kept the bank accounts balanced, had a good filing system and was well organized.  For that reason he offered her a job as a bookkeeper in the spring of 2009.  He said that there was the opportunity to earn more as she gained experience in the company.  He recalled her telling him that she could not take the job because of the dog.  Given the rural location of the employer had she asked he was of the view that the dog could have been brought to the work site.

[127] Instead she commenced working as a painter for a friend for $16.00 per hour and then chose to move to Comox being of the view that she might find work there and as well could reside initially with a friend and then at her parent’s home while they were out of the country.  She commenced residing in their home in May of 2011.

[128] Her efforts to find employment do not appear to have been particularly vigorous.  Of concern as well is her insistence on staying home with the dog or working shorter workdays in order to spend time with the dog.  She did not provide evidence of a concerted, ongoing effort to seek out full-time employment.

[129] As of the trial date she continued to reside in Comox but she wishes to return to Victoria and purchase a home there.

[130] Had the claimant taken the position offered by Mr. Thiessen she would be earning a minimum of $38,000 per annum.  Mr. Thiessen’s evidence was that this was simply a starting salary.  I accept his evidence that the claimant did not raise the issue of the dog and its care with him.  In any event, her willingness to use that as an excuse for not pursuing the position illustrates her level of commitment to seeking employment after the parties separated.  Even if the dog could not have been accommodated by the employer it would have been reasonable for her to seek out alternate dog care arrangements while she was at work.

[131] In my view, had the claimant been more focused on supporting herself she would have either accepted the position or pursued other employment.  To a certain extent the “need” of the claimant is self-created.  Mr. Thiessen testified that bookkeepers can earn $15.00 to $30.00 per hour and that employers struggle to get good bookkeepers.  That is supported by the claimant’s evidence respecting at least one position she applied for which was in that range ($25.00 per hour).  (In that case the employer’s wife took the position).  She has secured some bookkeeping work in Comox, at $25.00 per hour.

[132] While the claimant’s current income is $30,000 per annum I am satisfied that she will, if she pursues full-time employment as a bookkeeper, be capable of earning $52,000 per annum.

[133] The respondent is currently being treated for Atrial Fibrilation.  That will require that he avoid travel for the next several months as he undergoes treatment.  No evidence however was presented indicating that the condition renders the respondent incapable of working.  It may however impose some restrictions on where he can work given issues that may arise with respect to obtaining medical coverage.  He did however concede that he would be covered if working in the United Kingdom, Canada or Europe.  Employment in the US was in his view unlikely given his health and the difficulties it creates in obtaining insurance coverage.

[134] Aside from his medical difficulties the respondent testified that he did not anticipate the global recession to recover any time soon and as a result the construction of new golf courses is also anticipated to remain slow.  In addition because of the stress of such work he stated his preference is to seek employment in a salaried position in the UK in the construction industry.

[135] The claimant seeks to attribute significant earning potential to the respondent however I am not satisfied that the past is necessarily indicative of the future.  The respondent’s earnings while the Company was operating were specific to that remarkable time.  In addition, they were illusory in the sense that they built up a substantial shareholder loan account in the Company that the Company was and is unable to pay.

[136] After separation the respondent sought to obtain work in India but ran into difficulties with his visa and as a result did not pursue further.  He was successful in getting work in Spain that was scheduled to commence in 2009 and but did not do so until 2010.

[137] The respondent was unemployed at the time of trial.  He was also unemployed after the parties separated however he was expending his time and energy on liquidating and winding up the Company.  His total income in 2009 was the withdrawn RRSP funds.

[138] The claimant alleges that his lifestyle after separation indicates he lives an extravagant lifestyle.  She points to his post-separation expenses.

[139] The claimant purported to review the records of the respondent and to identify those expenses that were personal in comparison to those that were legitimately corporate in order to support her allegation that the respondent lives extravagantly.  Those records consisted substantially of his various credit card statements.  Her attempt to categorize expenses was not of great assistance as she was not directly aware of what they related to.  Instead, she made various assumptions and guesses based on the merchant identification and the other limited information contained on a monthly credit card statement.  The actual Visa receipts were not produced, nor apparently was the respondent examined in detail on the expenses on discovery.

[140] I am of the view that the most reliable information on the division of expenditures between personal and corporate, at least for tax purposes, was that of Mr. Thiessen, the former accountant for the parties and the present accountant for the respondent and the Company.

[141] Mr. Thiessen testified that the respondent, between March and December 31, 2009, received $50,000 from the Company but assumed $54,000 of credit card debt as a result of a decision that that amount was a fair estimate of the respondent’s personal as opposed to corporate expenses during that time.

[142] In 2010 the respondent obtained employment in Spain on a golf course.  His earnings totalled $74,987.  On the recommendation of his accountant the earnings were reflected as corporate income given the tax savings available to him in the Company.

[143] In 2011 the respondent continued to work on the Spanish golf course and his total earnings of $102,851 comprised the total income for the Company in 2011.  Corporate expenses were $46,629.

[144] In Wallace v. Wallace, 2000 BCCA 81, the payor husband was unemployed at the time of the order under appeal and he had stated that he did not expect to find employment at any better salary than somewhere in the range of $125,000 annually.  In prior years he had been earning in the area of $225,000 per annum but that employment was terminated.  The court stated at para. 17 that “[n]otwithstanding this uncertainty, the trial judge fixed the husband’s salary for the purposes of the Child Maintenance Guideline at $225,000, to be reviewed by a judge of the Court in 15 months.”  The court then said at para. 19:

[19]         In Bell v. Bell (1999), B.C.C.A. 497, this Court said that, wherever possible, salaries should be fixed for guideline purposes on the basis of amounts actually earned. In my view, the projected annual salary of $225,000 as of the date of trial is not supported by the evidence. At the forthcoming review, the husband's actual salary and other circumstances will be determined. In my view, it will be better to leave the question of child maintenance to be fixed at that review. …

[145] The court as a result imputed an apparently more realistic income of $150,000.

[146] I take it from Bell and Wallace that where there is significant uncertainty respecting the income of a payor based on a lack of evidence the court should not fix an amount for income except to the extent that evidence supports an income figure.

[147] The respondent testified that he has not turned down any projects since separation.  He also stated that he did not think his health could take more years like the past with the stress involved in golf course construction and development.  He has been seeking employment in the United Kingdom, preferably in a construction management position without success.  Financially he does not foresee attempting to create and run a golf course construction business again.  It was his view that it could be 5-10 years before there was significant recovery in the construction of golf courses.  In any event, such an endeavour is clearly one of high risk and I accept and find it reasonable that the respondent given his age and health does not wish to pursue such employment in the future.

[148] Faced with the present uncertainty respecting the respondent’s income the claimant seeks an order with payments commencing in the spring of 2012.  In order to make such an order I would have to speculate rather than make findings based on evidence of when the respondent will actually commence working, in what position and at what income.  I am prepared to find and do find that the respondent will in all probability earn more than the claimant.  Their income disparity may be substantial.  However, given the claimant as a resident of Canada has access to the non-capital tax loss to reduce or eliminate her income tax her income may well be tax free with the respondent’s income being subject to tax.

[149] Counsel cited a number of authorities on the issue of entitlement to compensatory and non-compensatory maintenance.  I have also reviewed additional authorities.

[150] In Bellman v Bellman (1999), 46 R.F.L. (4th) 414, 88 A.C.W.S. (3d) 837 (B.C.S.C.), Beams J. at para. 41 said the following of the three grounds of entitlement for spousal support:

41        … Compensatory support may arise in a situation where losses have accrued as a result of the marriage or the marriage break up which would not have been suffered but for the marriage.  Contractual support may flow from express or implied agreements between the parties with respect to the responsibility to support and maintain the other.  Non-compensatory support appears to be founded in the principles of basic social obligation.

[151] Although pursued, compensatory support was not the main thrust of the claimant’s argument, which was based on non-compensatory principles.  Contractual support was not claimed nor justified.

[152] The respondent relies on Elias v. Elias, 2006 BCSC 124, for the propositions that neither was disadvantaged and that the claimant is not entitled to support merely because the respondent earns more than she does (in our case his potential to earn more at the moment).  In Elias the parties were married for 24 years.  At separation the wife was 48 years of age and the husband 50.  They had two children.  They both worked throughout the marriage.  The wife’s income was greater than the husband’s.  On that basis he sought maintenance.  The court held at para. 58 that “both parties worked throughout the marriage.  Neither party was economically disadvantaged as a result of the marriage.  Both parties are self-supporting.”  It was however a long-term marriage with the result that equality of standard of living was a factor.

[153] In Elias the husband earned $50,000 per annum and the wife a base of $60,000 and up to $87,000 with overtime.  The court held that “the incomes [were] not so disparate that either party will have a significantly higher or lower standard of living.”  The conclusion of Bennett J. was that “[w]hile a disparity in lifestyle will need to be addressed, no cases have held that lifestyle or incomes have to be equalized.”

[154] In Dubey v. Dubey, 2008 BCSC 413, the parties were married for 11 years and had two children.  The husband claimed spousal maintenance on the basis that he had historically and likely would continue to earn less than his wife.  The court noted that it was a mid-length marriage but the parties were still relatively young as the wife was 33 and the husband 37.  Both worked throughout the marriage.  The court did not find any economic advantages or disadvantages to either spouse from the marriage or its breakdown.  The court found that “[e]ach party has suffered some economic hardship as a result of the breakdown of the marriage, but it cannot be said that that of Mr. Dubey is any greater than that of Ms. Dubey” and that “… each are now economically self-sufficient.”  As a result the court found that the husband had established an entitlement to spousal support.

[155] In S.R.G. v. D.L.G., 2004 BCSC 11, a marriage of 26 years, the husband had an income of $73,795 per year and the wife an income of $42,000.  They had three children.  Both parties were in their 50’s.  Lamperson J. described their relationship as a “modern marriage.”  The wife sought permanent spousal maintenance.  Lamperson J. said this at paras. 23-25:

[23]      First of all, I wish to consider the criteria set out in the Divorce Act.  The parties were married for 25 years.  Their marriage was a modern one, in that both pursued their respective careers.  Neither suffered any significant advantage or disadvantage arising from the marriage or its breakdown insofar as their professional careers are concerned.

[24]      It is well recognized that there is a distinction between modern marriages, where the wife pursues her career, and traditional marriage, where the wife stays out of the work force for many years.  In the latter case economic disadvantage arising from the marriage and its breakdown can almost be presumed, but that is not the situation here.  The disability pension and the property settlement should provide the plaintiff with a reasonable standard of living, even when measured against the parties’ standard of living during their marriage.  The goal of economic self-sufficiency has been met.

[25]      The suggestion is that the defendant will, as a result of his higher income, enjoy a significantly higher standard of living than the plaintiff.  The evidence does not indicate that will necessarily be so.  This is not a situation where there is such a dramatic difference in lifestyles that it calls for some form of equalization.  The most important consideration here is that both parties move on with their lives without depending on one another.

[156] In S.J. v. J.J., 2005 BCSC 1180, Joyce J. dealt with a 24 year marriage with 2 children and parties who at trial were 41 and 48.  They both had careers during the marriage although the plaintiff wife earned, after tax, approximately $17,000 more than the husband.  The court found that the husband had not given up any career opportunities in order to support the career of the wife.  Joyce J. held there was no basis for compensatory support nor did the difference in their income justify a finding of entitlement on non-compensatory grounds.

[157] In Graves v. Graves, 2001 BCSC 1081, aff’d 2002 BCCA 508 the following was stated at para. 23:

[23]      The wife's claim for permanent spousal support cannot succeed under any of the so-called conceptual grounds alluded to in Bracklow, supra. This is a case in which both parties were employed during the marriage and continue to be employed after the breakdown of the marriage. Each earns a better than average income. Each is in a relatively stable financial position. The sole subject of concern is her outstanding credit line. The law does not state that there has to be a precise equalization of incomes following a marriage breakdown.

[158] In Merth v. Merth, [1993] B.C.J. No. 2782, the wife was a dentist and the husband an architect.  The wife’s income was $140,000 per annum and the husband’s $40,000.  Lambert J. said this for the court at paras. 76-78:

76        Both Mr. Merth and his wife did work outside the home, pursuing economic opportunities in a similar manner. The domestic labour was divided between them, but not evenly - - the greater burden was not borne by Mr. Merth who now seeks support, but by Dr. Merth.

77        Mr. Merth did not sacrifice his career at all. During the periods when he was unemployed or marginally employed, he and his wife remained committed to minimizing his responsibilities at home so that his opportunities would not be impaired. They employed nannies and baby sitters for the children so that Mr. Merth would always be free to look for work. At no time did he undertake domestic duties that served to compromise his employment. To the contrary, Dr. Merth was always supportive of his career, as he was of hers.

78        In my view, it cannot be said that Mr. Merth has been economically disadvantaged by reason of the marriage or its breakdown such that he is entitled to be compensated by Dr. Merth for compromises he made in the family's interest. Indeed, the marriage was for him economically advantageous. He chose a professional career in which income expectations are somewhat modest and employment is uncertain. His marriage to Dr. Merth has not impeded the advance of his career; rather, it enabled him to enjoy a higher standard of living, and to create more capital, than the income to be earned in his profession would have permitted. He is currently earning an income commensurate with his training, ability, and experience. Neither the marriage nor its breakdown have adversely affected the economic opportunity he has now.

[159] In Merth the court also addressed the issue of financial need as follows at para. 80:

80        The third consideration is about financial need: Has the separation resulted in an economic hardship for Mr. Merth that his wife must relieve? In my view, it has not. I do not accept that, in terms of a standard of living, Mr. Merth's circumstances can be described as catastrophic. Further, I do not consider there to be any support in the authorities for the contention that the standards of living in the two homes must be equalized. Indeed, it appears to me to be to the contrary. Mr. Merth is entitled to a reasonable standard of living not necessarily related to that which his wife may enjoy: Heinemann v. Heinemann (1989), 20 R.F.L. (3d) 236 at 274 (N.S.S.C. App. Div.).

[160] The result was the respondent husband’s claim for spousal support failed.

[161] In Bracklow the court considered the entitlement of an ill spouse to maintenance on marriage breakdown.  In this case it is the potential payor spouse who faces health difficulties, not the proposed recipient.  In addition, Bracklow addressed the issue of non-compensatory support in the context of need or hardship arising from the loss of the standard of living of the parties during the marriage.

[162] The loss of the parties’ marital standard of living is predominantly due to the financial collapse of the Company.  While there has been a decline for both of the parties that is because of the failure of their joint endeavour.  Any separation, except for the very wealthy, in practical terms necessarily reduces household income where one household supported by two incomes becomes two households each supported by one income source.  Both standards of living are affected.

[163] These parties met as two independent adults.  The parties’ marriage was a modern marriage.  They had no children.  They both were employed prior to the marriage.  They each remained employed during the marriage.  This couple operated as financial partners.  As such they expected to share the benefits -- benefits that for a period of time appeared to be considerable.  While they may not have anticipated the negative financial outcome that risk was something they shared.  This was a true joint effort.

[164] The wife did not sacrifice a career for the marriage.  I am not satisfied that she had any career plans of substance at the time of their marriage.  Certainly there was no evidence that she had taken steps to pursue any change in her career.  Given her role during the marriage her employability was enhanced by the relationship.

[165] In my view the wife does not have a claim for compensatory maintenance.  Section 15.2(6)(a) of the Divorce Act refers to any “economic advantage or disadvantages to the spouses arising from the marriage or its breakdown” (emphasis added).  Given the nature of their relationship and their joint financial endeavours both spouses have suffered economic disadvantages from the marriage and its breakdown.

[166] Section 15.2(6)(c) also refers to relief of “any economic hardship of the spouses arising from the marriage breakdown.”  (Emphasis added).  Again, both parties have suffered economic hardship however that has been due for the most part to the failure of their Company, not the breakdown of the marriage.

[167] The claimant however emphasizes her need.

[168] If the respondent remains working as a shaper in the golf course business it is probable that his earnings will be $8000 to $10,000 a month, for an average of 8-10 months a year.  If, as he testified, he secures a position in the United Kingdom as an employee in the construction industry his income is unclear.

[169] As previously discussed it has not been established that the respondent will be able to use the Company to earn that income tax free.  Even if that were the case I am not satisfied that the difference in the parties’ incomes on the facts of this case entitles the claimant to spousal maintenance.

[170] As a result the claimant’s spousal maintenance claim is dismissed.

Orders

[171] The orders are as follows:

a) The Jaguar automobile is not a family asset.  The respondent shall retain it and is solely responsible for the debt relating to its purchase.

b) The Thunder Bay property was not and is not a family asset.

c) The family assets shall be divided equally as follows:

i. The claimant shall retain the Honda Ridgeline motor vehicle.

ii. Although the 100 common shares in the Cutting Edge Golf International Ltd. would normally be divided equally the proposal of the respondent in both his evidence and his submissions is that the shares all vest in the claimant.  Given the position of the respondent that shall be the order.  That is subject to an order that any shareholder loan repayment arising from the outstanding receivables or the lawsuit against the solicitor is to be divided equally between the parties.

iii. The non-capital loss shall, subject to the Income Tax Act, be available to reduce the personal income tax of the claimant.

iv. If the Wyndensea litigation is pursued the parties shall share equally in the cost of doing so and in any sums recovered.

v. The Volvo loan is to be paid from the funds in trust in the amount that respondent can negotiate in settlement of the Volvo debt.

vi. The claimant shall retain the household furnishings.

vii. The Kabota excavator, sand plow, Company furniture and office equipment shall be sold and applied to the Vantreight and Volvo debts.  Each party shall be responsible for their share of the capital gains payable arising from the Troon Court and/or the Barclay Place property sales as calculated by Mr. Thiessen.

viii. The parties Canada Pension Plan benefits are to be divided in accordance with the Canada Pension Plan.

ix. The parties RRSP’s shall be equally divided except that the $10,000 from the respondent’s RRSP advanced to the Company shall not be included in the calculation of that division.

x. The balance of the trust funds are to be divided equally between the parties after crediting the respondent for one half of the value of the Honda Ridgeline.

xi. Each party shall be solely responsible for their post-separation personal debts.

xii. The claimant’s claim for spousal maintenance is dismissed.

[172] The parties shall be at liberty to provide written submissions on costs in the event they are unable to agree.

Punnett J.