IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Giebelhaus v. Giebelhaus, |
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2012 BCSC 1100 |
Date: 20120724
Docket: E64125
Registry: Nanaimo
Between:
Jeremy Scott Giebelhaus
Claimant
And
Betti Jane Giebelhaus
Respondent
Before: The Honourable Mr. Justice Williamson
Reasons for Judgment
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Counsel for the Claimant: |
P.W. Avis |
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Counsel for the Respondent: |
B.R. Vining |
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Place and Date of Trial: |
Nanaimo, B.C. April 30, May 1-4, 8 and 10, 2012 |
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Place and Date of Judgment: |
Nanaimo, B.C. July 24, 2012 |
[1] In this proceeding, the claimant, Jeremy Scott Giebelhaus, seeks an order that a separation agreement signed by the parties after their marriage failed should be set aside as unfair and that the Court should divide the relevant assets in a manner which establishes fairness.
[2] Essentially, the claimant says that when he signed the agreement he understood that he would be liable for substantial payments of spousal support to the respondent, Betti Jane Giebelhaus, unless he agreed that she would keep the matrimonial home in her name as well as all her pension benefits as a retired RCMP officer.
[3] The claimant is 41 years old, the respondent 56. They met in 1990 and were married December 26, 1992.
[4] They separated possibly as early as January 30, 2007, but certainly by February 15, 2007. The parties discussed the division of assets and the respondent retained counsel to draw up a separation agreement which reflected their discussions. Her counsel, Brenda Kaine, properly insisted that the claimant have independent legal advice. As he had no lawyer, she found a lawyer willing to advise him.
[5] The claimant, who had said all along he did not want to retain a lawyer, did attend at the office of the lawyer and, after obtaining legal advice, signed the agreement. It was returned to the respondent’s lawyer and the respondent executed the agreement on March 26, 2007. I note this was accomplished relatively quickly.
[6] The claimant is a heavy duty mechanic. He has worked in that capacity since the late 1980’s, although he did not obtain his certificate as a journeyman mechanic until 1993. His employers included a number of trucking companies and the municipality of North Cowichan.
[7] All of these positions were on Vancouver Island until 2007 when he worked briefly in Fort McMurray, Alberta. He returned after a few weeks to Vancouver Island where he continues to reside and is presently employed in Campbell River for a welding and marine company.
[8] The respondent became an RCMP officer in 1986. In May 1989 she was injured when the police car she was driving was involved in an accident. She sustained a number of physical injuries and after some time it was concluded that she had also sustained a mild traumatic brain injury. Nevertheless, she continued to work for the RCMP in detachments on Vancouver Island.
[9] It is apparent from the evidence that from time to time she had difficulties with fellow officers and supervisors. She went on stress leave in October 2002 and went back to work on a graduated basis in 2003. However, she returned to stress leave in early 2004.
[10] In November 2006 she was notified the RCMP intended to discharge her. She did not oppose this process, a medical discharge, and she was discharged on March 17, 2007. Since that time she has not worked. She is in receipt of three pensions. First, her superannuation pension from her years with the RCMP, second, a Canada Pension Plan disability pension, and third, a Veterans Affairs pension.
[11] It is the position of the claimant that these three pensions provide the respondent with an income of $64,746 per year. Counsel for the claimant compares this to the four year average of $54,004 earned by the claimant. The largest amount in those four years was $58,240. As such, the claimant submits he would not be required to pay spousal support.
[12] The claimant submits that a separation agreement which provides that the matrimonial home and all of the respondent’s pensions remain with her is unfair.
[13] This situation arose in part, he submits, because he believed from discussions with friends that he would be liable to pay a very substantial amount of spousal support. This belief was not dispelled by the lawyer who provided him with independent legal advice, for on hearing that his prime concern was that he not pay spousal support, she failed to determine whether in fact he would be so liable, and if so in what amounts. The claimant submits that had he known he was not obliged to pay spousal support he would not have signed an agreement which turned over the matrimonial home to the respondent and left all her pensions untouched.
[14] In April 1992 the parties purchased a lot at 5946 Cathedral Crescent. In 1993 they built a home on the property. They eventually sold that home and purchased the matrimonial home on Chilco Road in Crofton, B.C. Subsequently, they made considerable improvements to the property, including building a large workshop/garage.
[15] In December 2005 the respondent purchased, in her own name, a cabin in Fearon Cross Road in New Brunswick for $14,335. The evidence is that she purchased this with funds from her retroactive Veterans Affairs pension, a pension which she receives as a result of the injuries received while at work as an RCMP officer.
[16] The respondent challenges the position of the claimant. She says that in the circumstances, including their difference in ages, his earning potential, and her inability to work, the separation agreement is not unfair.
[17] The recent decision of Madam Justice Arnold-Bailey, J.K.T. v. A.J.T., 2012 BCSC 491, considers an application for reapportionment of an allegedly unfair separation agreement. She summarized the principles the Court should keep in mind at paras. 88-91:
[88] In H.E.D.C. v. R.M.C., 2003 BCCA 420, the Court of Appeal held that under s. 65 of the FRA, the onus is on the party seeking to vary the agreement to establish that it is unfair; fairness is not to be equated with equality or near equality. ...
[89] This is consistent with the longstanding statement of principle of McEachern C.J.B.C. in Gold v. Gold, [1993] B.C.J. No. 1799 (C.A.), in relation to the division of family property, that such a division may have to be unequal in order to be fair. ...
[90] In Clarke v. Clarke (1991), 55 B.C.L.R. 2(d) 273 (C.A.), per curiam, the Court of Appeal held that the question of fairness in family property matters ought not to be approached from a commercial perspective. It is necessary to examine whether the agreement reached was actually fair. ...
[91] Clarke (at para. 33) is also authority for the general proposition that s. 65 of the FRA (then s. 51) does not permit the Court to set aside agreements; it only authorizes reapportionment on the basis of unfairness.
[18] The test and the proper approach is set out in Hartshorne v. Hartshorne, 2004 SCC 22:
[47] The ultimate point then is this: in determining whether a marriage agreement operates unfairly, a court must first apply the agreement. In particular, the court must assess and award those financial entitlements provided to each spouse under the agreement, and other entitlements from all other sources, including spousal and child support. The court must then, in consideration of those factors listed in s. 65(1) of the FRA, make a determination as to whether the contract operates unfairly. At this second stage, consideration must be given to the parties’ personal and financial circumstances, and in particular to the manner in which these circumstances evolved over time. Where the current circumstances were within the contemplation of the parties at the time the Agreement was formed, and where their Agreement and circumstances surrounding it reflect consideration and response to these circumstances, then the plaintiff’s burden to establish unfairness is heavier. Thus, consideration of the factors listed in s. 65(1) of the FRA, taken together, would have to reveal that the economic consequences of the marriage breakdown were not shared equitably in all of the circumstances. This approach, in my view, accords with the underlying principle of the FRA, striking an appropriate balance between deference to the parties’ intentions, on the one hand, and assurance of an equitable result, on the other.
[19] Based on Hartshorne, then, this Court must first apply the separation agreement. As a result of that agreement, the claimant received the following:
a) Boat and trailer - $20,350;
b) GMC pick-up truck - $7,500;
c) RRSP CIBC #1 - $36,092.90;
d) RRSP CIBC #2 - $18,390.06;
e) Municipal pension - $20,018.73;
f) IWA pension - $721.55;
g) CIBC joint account - $7,192.05.
[20] Some of these figures differ from what was submitted by the respondent. First, she takes the position that the claimant’s second RRSP with CIBC (which was not taken into account at the time of the separation agreement) should be valued at $28,000, its value as of February 12, 2011. I think a more accurate representation is that found in the bank statement submitted by the claimant dated March 31, 2007 where the RRSP is valued at $18,390.06 (see Ex. 4) as this is closer in time to when the agreement was made.
[21] Second, the CIBC statement of account dated March 20, 2007 (at Ex. 10 in the respondent’s book 1 of exhibits) shows the following sums were credited to the account: $5,201.47, $545.76, and $1,444.82, totalling $7,192.05. I accept this as the sum retained by the husband from the CIBC joint account.
[22] To this I would add the tools, which the claimant has acquired over the years in his work as a heavy duty mechanic. I accept that a realistic assessment of the value of these tools is $20,000.
[23] As a result, the total assets retained by the claimant are $130,265.29.
[24] I turn to the assets, excluding her pensions, retained by the respondent. They are:
a) Matrimonial home - $198,222.04
(assessed value - $333,000 less outstanding mortgage $134,777.96 equals equity of $198,222.04);
b) Jeep - $13,500;
c) RRSP ING - $15,214.68;
d) CIBC savings - $73.75;
e) ING savings - $154.13.
[25] There are two other assets retained by the wife. Whether they are family assets is disputed. The first is the cabin and property, known as “the Fearon Cross Road property” in New Brunswick, which was purchased in December 2005 for $14,335. The funds used for this came from the respondent’s retroactive Veterans Affairs disability pension monies. The property is in her name only.
[26] The respondent takes the position that because she was the person who found the property and purchased it in her own name from funds which she received from Veterans Affairs, and because it was to be a place where she would stay when she visited her friends and relatives in New Brunswick, it is not a family asset.
[27] I am not persuaded. The property was purchased over a year before the marriage breakdown. The claimant visited the location on two occasions in that period, during one of which he participated in some repairs to the roof. I am satisfied that it was the intention to use this for a family purpose, which is to say, visiting the respondent’s relatives and spending time in New Brunswick. I therefore would add $15,400 to the assets retained by the wife.
[28] The second asset retained by the wife which is in dispute is the gross severance pay which she received from the RCMP after she was discharged for medical reasons. I conclude that this is not a family asset. The situation here is similar to that in Jenkins v. Jenkins (1993), 47 R.F.L. (3d) 219 (B.C.S.C.) in which Saunders J. (as she then was) concluded that a similar severance package was not a family asset. She came to that conclusion because the sum was not received and accordingly not used, by any member of the family prior to separation. That is the circumstance here.
[29] The total value of the assets retained by the respondent, then, excluding her pensions, is $242,564.60.
[30] Thus, the total assets to be divided amounted to $242,564.60 plus $130,265.29 which equals $372,829.89. I emphasize that these figures exclude the respondent’s pensions.
[31] If this were divided equally, each party would receive $186,414.94. In order to receive 50% of these assets and as the claimant received only $130,265.29, $56,149.65 would have to be transferred to him from the respondent.
[32] I turn to the second stage of the Hartshorne analysis to determine whether, keeping in mind the factors listed in s. 65(1) of the Family Relations Act, R.S.B.C. 1996, c. 128, the agreement operates unfairly. Section 65 (1) states:
65(1) If the provisions for division of property between spouses under section 56, Part 6 or their marriage agreement, as the case may be, would be unfair having regard to
(a) the duration of the marriage,
(b) the duration of the period during which the spouses have lived separate and apart,
(c) the date when property was acquired or disposed of,
(d) the extent to which property was acquired by one spouse through inheritance or gift,
(e) the needs of each spouse to become or remain economically independent and self sufficient, or
(f) any other circumstances relating to the acquisition, preservation, maintenance, improvement or use of property or the capacity or liabilities of a spouse,
the Supreme Court, on application, may order that the property covered by section 56, Part 6 or the marriage agreement, as the case may be, be divided into shares fixed by the court.
[33] In the circumstances of this case, the most relevant factors are: s. 65(1)(a) - the duration of the marriage; s. 65(1)(e) - the needs of each spouse to become or remain economically independent and self sufficient; and s. 65(1)(f) - any other circumstances relating to the capacity or liabilities of a spouse.
[34] This was a 14-year marriage and the parties have lived separate and apart since February 2007. The matrimonial home and the bulk of the pensions were acquired during the marriage.
[35] The respondent has been medically discharged by the RCMP. I accept that she depends upon her pensions as a means to support herself. The Court, then, must take into account not only the respondent’s pensions, but her limited capacity to earn income in the future and the capacity of the much younger claimant to earn a reasonable income for many years into the future. The Court must strike a balance which both recognizes the economic needs of the parties and is fair.
[36] As I have noted, it is the question of whether the agreement would be unfair having regard to the factors set out in s. 65(1). With respect to factor (f) I conclude, based upon the evidence, that the claimant did not have a proper understanding of the respondent’s income. He had no idea whatsoever of the value of her pensions. He was misinformed about his liability for spousal support. Based on what friends had told him, he thought he would be liable for a substantial amount each month. I accept that he believed that in giving up his right to a portion of her pensions and the matrimonial home he was gaining much, as he would not have to pay what he thought would be large amounts in spousal support. In reality, he would not have had to pay significant spousal support, if any.
[37] I note that both parties agree the circumstances herein support a division in favour of the respondent. She submits that the division set out in the separation agreement giving her all of her pensions plus the matrimonial home is fair. She points to the age of the claimant and his capacity to earn a good income for many more years.
[38] The claimant, however, submits that the result achieved by this agreement is far outside of what is a reasonable range.
[39] Unfortunately, the claimant’s misunderstanding of both the respondent’s pension income and his liability for spousal support was not corrected when he obtained independent legal advice. The respondent’s counsel, as I noted above, after drafting the separation agreement, quite properly took the position that the claimant had to receive independent legal advice before signing the agreement. As he did not have a lawyer, she arranged for him to meet with another lawyer in Nanaimo. He did so.
[40] The fact that the claimant did not initially want to get legal advice is not a significant factor here. According to the lawyer he did meet, she spent 1.4 hours with him discussing the separation agreement. Thus, he did attend her office for a considerable period of time and he did receive legal advice.
[41] The lawyer, unfortunately, was inexperienced at the time. She failed to take into account the relative circumstances of the parties and she failed to ensure that the claimant accurately understood what he was receiving and what he was giving up.
[42] The lawyer testified. She conceded that at the time she did not know how to gross up the un-taxed Veteran Affairs pension that the respondent was receiving. She did not know that the superannuation pension had a capitalized value which could have been obtained from the respondent’s pension administrator. As a result, she was unable to inform her client of the value of the respondent’s pensions. And importantly, she substantially overestimated the claimant’s income for the purposes of calculating spousal support. In the previous year, the claimant had worked somewhat less than six months and had earned $43,905. The lawyer simply doubled this figure to estimate what he would earn if he had worked 12 months, and used the figure of $86,000 in considering whether he would have to pay spousal support.
[43] She failed to enquire into his actual income in the preceding years. The evidence disclosed that the claimant has never earned that amount. His four year average as set out above is $54,004. The result is that the claimant was not fully and properly informed of the ‘personal and financial circumstances’, to use the words from Hartshorne, para. 47, of the parties.
[44] The meaning of independent legal advice in the family law context was well described by Pitlfied J. in Gurney v. Gurney, 2000 BCSC 6:
[29] In the family law context, providing independent legal advice must mean more than being satisfied that a party understands the nature and contents of the agreement and consents to its terms. The solicitor should make inquiries of the party so as to be fully apprised of the circumstances surrounding the agreement. The party should be advised of his or her legal rights and obligations in relation to the subject matter of the agreement and advised of the consequences associated with a refusal to sign. The solicitor should offer his or her opinion on the question of whether it is appropriate for the party to sign the agreement in all of the circumstances. It is only with that kind of advice that the party can make an informed decision about the advisability of entering into the agreement as opposed to pursuing some other course. In this regard, the cases of Turyk v. Derby, [1980] B.C.J. No. 773 (B.C.S.C.), Inche Noriah v. Shaik Allie Bin Omar, [1929] A.C. 127 (H.L.) and Brosseau v. Brosseau (1989), 63 D.L.R. (4th) 111 (Alta. C.A.) are of assistance.
[45] In Bradshaw v. Bradshaw, 2011 BCSC 1103, which refers to Gurney, the Court summarized the principles concerning independent legal advice in the family law context as follows:
[49] Independent legal advice, in the family law context, is important because it ensures that the spouses are fully aware of their statutory and common law rights and obligations. It safeguards against one spouse taking unfair advantage of another and redresses or at least minimizes disparity of bargaining power between them: see, for example, Gurney v. Gurney, 2000 BCSC 6 at para. 29, [2000] B.C.J. No. 13. In Gurney, supra, Pitfield J. found that "the lack of independent legal advice in this case is not fatal and the agreement should not be set aside because of its absence" (at para. 30). Indeed, the absence of independent legal advice will not, by itself, invalidate an agreement: Chepil, supra, at para. 45, citing Rosen v. Rosen (1994), 3 R.F.L. (4th) 267, 72 O.A.C. 342, leave to appeal ref'd [1994] S.C.C.A. No. 392. Nor will the receipt of independent legal advice automatically cure or neutralize one or both spouses' vulnerabilities; in other words, it will not protect an otherwise invalid or unfair contract: see, for example, Stark, supra; Davidson v. Davidson (1986), 2 R.F.L. (3d) 442, [1986] B.C.J. No. 505 (C.A.); Gold v. Gold (1993), 49 R.F.L. (3d) 41, 82 B.C.L.R. (2d) 165 (C.A.), leave to appeal ref'd [1993] S.C.C.A. No. 441.
[46] I return to s. 65(1)(f) and the factors of the capacities or liabilities of a spouse. I have found the claimant did not have an accurate understanding of the respondent’s income as he had no idea of the value of her pensions. Further, he wrongly thought he would be liable for substantial spousal support payments. In the words of Bradshaw, he was not “fully aware” of his rights and obligations. When these facts are taken into account, I conclude the agreement is unfair. The respondent received the matrimonial home and retained all her pensions. She gave up little. The claimant gave up much. In the result, the statute permits the Court to divide the property appropriately.
[47] As noted above, both parties accept that the property should be divided in a manner favourable to the respondent. The claimant submits it would be appropriate and fair to leave the respondent’s pension income entirely to her, and in consideration of the remaining combined assets, there should be a reapportionment in his favour of $100,000 to $115,000.
[48] The respondent submits the agreement is not unfair. She calculates the assets retained by her, excluding her pensions, at $227,164.60, and the assets retained by the husband at $139,905.45. Her position is that taking into account the fact that she is retired and for medical reasons not capable of returning to lucrative employment, and given the much younger age of the claimant and his potential earning power, the reapportionment achieved by the separation agreement is within a reasonable range.
[49] While I find the agreement unfair for the reasons above and, therefore, the resulting division of assets to be outside of a reasonable range, I do not accept that the reapportionment advocated by the claimant is appropriate in the circumstances. Rather, with the changes I have made, I accept most of the figures put forward by the respondent and find the total value of the assets to be divided is $372,829.89. One-half of that figure is $186,414.94. As the value of the assets retained by the claimant is $130,265.29, a reapportionment in his favour of $56,149.65 would divide the assets equally, while leaving the matrimonial home with the respondent, and leaving her pension income intact. Rounding out these figures, the respondent would be liable to the plaintiff in the amount of $56,000.
[50] However, accepting the age difference and the claimant’s earning potential, I do not find such a division fair. After careful consideration, I conclude it would be fair to leave the respondent’s pension income with her, and to divide the remaining assets in such a manner that the claimant’s portion would be increased by $45,000. I award, therefore, that amount to the claimant.
[51] The parties seek a divorce. All of the statutory requirements in this regard have been met. They will be divorced, subject to s. 12 of the Divorce Act, R.S.B.C. 1985, c. 3 (2nd Supp.).
[52] While the claimant has succeeded inasmuch as I have found the agreement unfair, I have awarded less than half the amount he was seeking. Success, then, has been mixed. Given that, as well as the circumstances of the parties, and exercising the discretion which remains with the Court pursuant to R. 16(1)(7) of the Supreme Court Family Rules, each side will bear his or her own costs.
“The Honourable Mr. Justice Williamson”