IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Wakefield v. Owen, |
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2018 BCSC 1160 |
Date: 20180712
Docket: E162731
Registry: Victoria
Between:
Mary Elizabeth Wakefield
Claimant
And
Hugh John Owen
Respondent
Corrected
Judgement: spelling of the Claimant’s first name on
the cover page has been corrected on August 16, 2018
Before: The Honourable Madam Justice Iyer
Reasons for Judgment
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Counsel for Claimant: |
M. Norton |
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Counsel for Respondent: |
B. Bate |
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Place and Date of Trial: |
Victoria, B.C. December 19,
2017 and |
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Place and Date of Judgment: |
Vancouver, B.C. July 12, 2018 |
Table of Contents
CLAIM FOR UNEQUAL DIVISION OF FAMILY PROPERTY
[1] Ms. Wakefield and Mr. Owen were in a common law relationship for three and a half years from June 2012 to January 2016. They are both in their fifties, both own their own businesses and have no children with each other. At the hearing, they confirmed that neither claims an interest in the other’s business, and Ms. Wakefield abandoned her claim for spousal support. The main issues between them are whether the family property should be divided unequally in Mr. Owen’s favour and whether Ms. Wakefield is entitled to occupational rent. The parties agree that the family property consists of the house they lived in together on Dawe Road (“Dawe house”) and the increase in value in Mr. Owen’s RRSPs and bank accounts during the relationship. There is also some dispute about the calculation of the value of the family property.
[2] Ms. Wakefield and Mr. Owen have known each other since high school and their families were close. They began dating in the fall of 2011. At that time, Mr. Owen’s 17-year marriage to Grace Owen had ended and the separation process was acrimonious. Mr. Owen had little or no access to his assets for some time. Mr. Owen moved in with Ms. Wakefield and her adult son on June 1, 2012. He took over paying the rent for the home. The parties cohabited there until they took possession of the Dawe house in May 2014.
[3] Each of the parties owns their own business: Mr. Owen owns Owen Contracting Ltd., a general contracting company. Ms. Wakefield owns a jewellery supply and design business. Each had several bank accounts and credit cards associated with their respective businesses. However, their spending patterns did not differentiate between family and business. For example, Ms. Wakefield made many family-related purchases on her various corporate credit cards, and Mr. Owen “ran through the company” a number of family-related expenses and, on at least one occasion, expenses related to Ms. Wakefield’s business. Mr. Owen says he assisted with construction on Ms. Wakefield’s stores associated with her business, and provided interest free loans.
[4] The parties opened a joint bank account on December 12, 2011, before they began living together. Most of the significant family-related expenses (such as the mortgage) were paid from this account. The parties had no joint credit cards or joint debts.
[5] Ms. Wakefield and Mr. Owen entered into the contract for purchase and sale of the Dawe house on April 12, 2014. By agreement with the vendor, the parties rented the Dawe house until the purchase closed in December 2014. The purchase price was $600,000 (or $612,407.23 with taxes).
[6] Problems in the relationship began in the fall of 2015. The parties separated on January 1, 2016. Ms. Wakefield testified that they reconciled after that date. However, her Notice of Family Claim initially filed on June 23, 2016 states the date of separation as January 1, 2016, and Ms. Wakefield acknowledged that she was actively looking to move out of the Dawe house between January and July 2016. I find that the date of separation is January 1, 2016.
[7] Under s. 81 of the Family Law Act, S.B.C. 2011, c. 25 (the “Act”) all property that is “family property” is divided equally (as is “family debt”), regardless of respective contribution or use.
[8] If equal division of family property is objectively unjust, unreasonable or unfair in a substantial sense, or in other words, will cause “significant unfairness”, s. 95 grants the court a discretion to order an unequal division: Kumagai v. Campbell Estate, 2018 BCCA 24 at para. 83. Section 95 lists a number of factors that may be considered in this assessment. As the Court of Appeal noted in Kumagai, “significantly unfair” establishes a higher threshold for the person seeking unequal division than simply “unfair”: para. 84; see also Jaszczewska v. Kostanski, 2015 BCSC 727 at paras. 162-163, 2016 BCCA 286 at paras. 3536.
[9] Mr. Owen argues that s. 87 of the Act provides another vehicle for dividing family property unequally. That section establishes the date of hearing (or the date of a settlement agreement) as the date for valuation of the family property, unless a court orders otherwise.
[10] However, unlike s. 95, s. 87 does not contain a “significant unfairness” requirement. Recognizing this, the Court of Appeal clarified in Kumagai that s. 87 is not available as an alternative to s. 95:
[76] A departure from the presumptive date for valuation of family property is effectively a reapportionment or unequal division of the family property, which can only be done under s. 95 of the FLA. Section 95 expressly provides for the reapportionment of net family property if an equal division would be “significantly unfair.” Under the former FRA, a change in the valuation date from the date of hearing was determined to be an effective reapportionment of the family assets. See Martelli v. Martelli (1981), 33 B.C.L.R. 145 at para. 28 (C.A.); Toth v. Toth (1995), 13 B.C.L.R. (3d) 1 at para. 55 (C.A.); McPhee v. McPhee (1996), 22 R.F.L. (4th) 302 at paras. 10--13 (B.C.C.A.); and Fisher v. Fisher, 2009 BCCA 567 at para. 61. The same reasoning, in my opinion, should be applied to the comparable provisions of the FLA. Any departure from the presumptive equal division of net family property under s. 81 of the FLA must therefore be made pursuant to s. 95(1) of the FLA, which imposes a threshold finding that an equal division of the net family property would be “significantly unfair” before any reapportionment of the net family property can be ordered.
[Emphasis added.]
[11] Accordingly, Mr. Owen must demonstrate that equal division of the family property is “significantly unfair” under s. 95 and the factors it lists. They are:
(a) the duration of the relationship between the spouses;
(b) the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];
(c) a spouse’s contribution to the career or career potential of the other spouse;
(d) whether family debt was incurred in the normal course of the relationship between the spouses;
(e) if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt;
(f) whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;
(g) the fact that a spouse, other than a spouse acting in good faith,
(i) substantially reduced the value of family property, or
(ii) disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse’s interest in the property or family property to be defeated or adversely affected;
(h) a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order;
(i) any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.
[12] Mr. Owen points to the following as establishing that an equal division of the family property would be significantly unfair to him:
a) the length of the relationship was 3½ years starting in 2012, and the Dawe house was not purchased until 2014;
b) Mr. Owen paid for most of the expenses during the relationship which enabled Ms. Wakefield to pay down her business debts and he and his company provided an interest-free loan to Ms. Wakefield’s company and helped with some improvements to her stores;
c) all mortgage payments were paid from the joint account, and although Ms. Wakefield’s salary from Owen Contracting was deposited directly into that account, it is really Mr. Owen’s money because it was an income-splitting vehicle and Ms. Wakefield performed no real work for Owen Contracting;
d) post-separation, Mr. Owen made improvements to the Dawe house after separation and paid the mortgage, property taxes and home insurance; and
e) Ms. Wakefield did not contribute to Mr. Owen’s other assets such as his RRSP’s and other investments.
[13] Considering these factors individually and collectively, I find that the evidence falls short of establishing the degree of unfairness that would justify an unequal division under s. 95.
[14] I accept that the relationship was relatively short; however, unlike the cases upon which Mr. Owen relies, this was not a situation where Mr. Owen brought the Dawe house into the relationship. Rather, Mr. Owen and Ms. Wakefield decided to purchase the property and did so during the relationship. Mr. Owen did not dispute that Ms. Wakefield found the property and arranged the private sale through her realtor. Although each belittled the contributions of the other, it is clear that they both put time, work and money into renovating the Dawe house. Mr. Owen’s was the only name on title, but the presumption of equal division applies regardless. Neither the length of the relationship nor the timing of the acquisition of the Dawe house establishes that equal division of the family property would be significantly unfair.
[15] There is no question that Mr. Owen’s financial contributions were greater than Ms. Wakefield’s.
[16] Beginning on May 3, 2013, Owen Contracting paid Ms. Wakefield a salary that was deposited directly into the joint account. Mr. Owen characterizes Ms. Wakefield’s employment by Owen Contracting as an “income-splitting scheme” and testified that she did not perform any meaningful work for the company. Ms. Wakefield says that she worked for Owen Contracting both directly and indirectly by taking on more household responsibilities and freeing up Mr. Owen to devote more time to his company.
[17] The purpose underlying the presumptive equal division of family property is to recognize that spouses make different kinds of contributions to the relationship. The evidence is clear that Mr. Owen made a greater financial contribution. However, even leaving aside the question of her salary from Owen Contracting, it also establishes that Ms. Wakefield made contributions that reflect a traditional gendered division of labour. This is the kind of situation in which the presumption of equal division was intended to apply.
[18] Mr. Owen’s argument that an equal division of the family property would be unfair rests on his assertion that the salary Ms. Wakefield received from Owen Contracting was simply an “income-splitting scheme.” He says that she performed no work for that salary, so he was making all of the financial contributions to the Dawe house and Ms. Wakefield’s contributions were limited to what Mr. Owen describes as minor assistance with renovations and housekeeping.
[19] Mr. Owen testified that he adopted the income-splitting scheme during his marriage to Grace Owen on the advice of his accountant. He decided to carry it on to Ms. Wakefield when he was living with her, and has since implemented it with his current partner, testifying that, unlike Ms. Wakefield, she is genuinely performing work for the company. Mr. Owen’s evidence on this point is self-serving and not credible. During the relationship, it suited his interests to represent to the Canada Revenue Agency that Ms. Wakefield was performing reasonable services to Owen Contracting in exchange for the wages she received, and to use that money for their family expenses, including mortgage payments on the Dawe house. Now, it suits his interests to claim that Ms. Wakefield did no work for Owen Contracting and therefore it would be significantly unfair to divide the Dawe house equally. Having represented through Owen Contracting to the Canada Revenue Agency (including by issuing her T4s) that Ms. Wakefield was performing reasonable services in return for her salary, it does not lie in Mr. Owen’s mouth now to deny the employment relationship. Mr. Owen has not established that it would be significantly unfair to divide the family property unequally on this basis.
[20] Ms. Wakefield attempted to catalogue in detail her various financial contributions and some of that evidence was shaken on cross-examination. As a whole, the evidence established that neither of the parties clearly distinguished between their personal and business finances, including their personal and business debt. Corporate credit cards were used for both business and personal expenses, some charges were run through the company or done off the books. In these circumstances, I am not persuaded that the assistance that Mr. Owen provided to Ms. Wakefield’s business ventures was different in character or magnitude than the assistance one spouse normally gives to the other in support of their career. It does not make equal division of family property significantly unfair in this case.
[21] After the date of separation, Mr. Owen added a shop to be used as a home office for Owen Contracting. Owen Contracting paid for the addition and Mr. Owen deducted its cost as a business expense. Mr. Owen values the post-separation renovation increased at $193,000. However, there was no corresponding increase in value of the Dawe house between the date of separation and the date of the hearing. The joint expert appraisal reports demonstrate that the whole increase in market value during this period is attributable to the increase in land value. In fact, the value of the house itself decreased from $240,000 in the January 1, 2016 valuation, to $225,000 at the December 18, 2017 valuation. While Mr. Owen paid the expenses associated with the Dawe house, he has had the benefit of living in it. I conclude that this factor does not support Mr. Owen’s claim for unequal division of the family property.
[22] I accept that Ms. Wakefield made no financial contribution to Mr. Owen’s RRSPs and other assets during the relationship. While that is true, it is not in itself sufficient to displace the presumption of equal division of the increase in value of these assets during the relationship. I have found that Ms. Wakefield made financial contributions to the family as the whole of her salary was deposited into the joint account and that she made non-monetary contributions to the welfare of the family. In my view, dividing the increase in value of these assets over the period of the relationship is not significantly unfair.
[23] The joint expert appraisal established the value of the Dawe house as $1,050,000. The mortgage balance was $429,129.80 at the agreed-upon valuation date. The parties agreed that Mr. Owen paid the down payment out of monies from his divorce settlement, but provided different amounts. Support for Mr. Owen’s stated figure of $105,867.45 is in the statement of adjustments and his bank account statement. Ms. Wakefield has not pointed to documentary evidence in support of her figure of $90,000. I find that Mr. Owen paid $105,867.45 as a down payment.
[24] Mr. Owen also claims that he paid the deposit of $25,000. Ms. Wakefield disputed this; however, her counsel did not press the point. Although Mr. Owen’s testimony of receiving a loan of $25,000 from a friend named “Bob” was unconvincing, his bank records show that this sum moved through his account, with the repayment made after he received his divorce settlement. I accept that Mr. Owen paid the deposit on the Dawe house from excluded property.
[25] Deducting the mortgage balance, the deposit and down payment from its market value, the total equity in the Dawe house is $490,002.75. Ms. Wakefield is therefore entitled to $245,001.38.
[26] Both parties produced tables setting out the increase in value of Mr. Owen’s various accounts. However, for reasons not explained, Mr. Owen’s table calculates the increase in value as commencing in June 2014, two years after the date the parties agree they began cohabiting. Section 84(2)(g) of the Act defines “family property” as including “the amount by which the value of the excluded property has increased since (i) the relationship between the spouses began, or (ii) the excluded property was acquired.”
[27] In her closing submissions, Ms. Wakefield claimed one-half of the increase in value Mr. Owen’s RRSPs between June 2012 and December 2015, less a 30% discount rate, for a total of $14,380.42. She also claimed one-half of the increase in value of his two personal bank accounts over the same period, totalling $2,139.64. Although s. 87 of the Act would permit Ms. Wakefield to extend her claim to the date of trial, she has chosen to restrict her claim. I award Ms. Wakefield the full amount she claims with respect to the increase in value of Mr. Owen’s excluded assets, which is $16,520.06.
[28] After the date of separation, friction between Mr. Owen and Ms. Wakefield increased. At some point in May or June 2016, the parties began negotiating a settlement agreement. While they may not have disclosed this to each other, each had access to and did obtain legal advice.
[29] Mr. Owen had started seeing someone else in June 2016, and he and his new partner were away on the July long weekend. Although Mr. Owen’s and Ms. Wakefield’s accounts of the weekend conflict in a number of respects, they agree that Ms. Wakefield was going to move out very soon and that she was in the process of renting a home to move into with the dog. When Mr. Owen returned to the Dawe house, he found that Ms. Wakefield had not yet moved out. While Ms. Wakefield was taking the dog to the vet, Mr. Owen emailed her that he had changed the locks on the house, as follows:
Mary,
Due to your increasingly aggressive behaviour towards me, I do not feel that I am safe with you continuing to live in my home. So I have changed the locks.
I will arrange to have your personal belongings delivered to you, once I know where you want them sent. In addition, I am prepared to pay to rent a hotel room for you at the Accent Inn on Maple St. for a week to help you.
Please have your lawyer contact Bea Bate to make arrangements. Please do not contact me or come to the house.
Hugh
[30] At the hearing, Mr. Owen argued that his actions were justified because, in addition to what he characterized as Ms. Wakefield’s “aggressive behaviour”, he believed that she might be taking assets from the home and he was worried that Ms. Wakefield might “fake a bruise” and call the police who would kick him out of his home.
[31] Ms. Wakefield did not stay at the Accent Inn, but she acknowledges that Mr. Owen gave her $4,000.00 to assist her with relocating.
[32] Even accepting that Mr. Owen genuinely had the concerns he identified (the basis for which was contested) they do not justify his conduct. The evidence shows that Mr. Owen was in active contact with his lawyer throughout this time. He could have applied to court for a restraining order and/or an order for exclusive possession on short notice or ex parte if the circumstances warranted. That would have been the appropriate action. Instead, Mr. Owen took matters into his own hands and chose to eject Ms. Wakefield from the Dawe house in a manner that was demeaning to her. She had to contact the police to escort her to the Dawe house that day so she could get what she required overnight.
[33] While Mr. Owen’s conduct in ousting Ms. Wakefield from the Dawe house was reprehensible, it does not necessarily entitle her to occupational rent.
[34] McFarlen v. McFarlen, 2017 BCSC 1737 reviews the principles governing occupational rent claims in British Columbia. Occupational rent is an exceptional discretionary remedy that may be used to achieve justice and fairness in appropriate circumstances. Relevant factors include:
· the conduct of both spouses, including failure to pay support, the circumstances under which the non-occupying spouse left the home, and if and when the non-occupying spouse moved for a sale of the home;
· where the children are residing and who is supporting them;
· if and when a demand for occupational rent was made;
· financial difficulty experienced by the non-occupying spouse caused by being deprived of the equity in the home;
· who is paying for the expenses associated with the home. This includes who is paying the mortgage and the other upkeep expenses (maintenance, insurance, taxes, etc.);
· whether the occupying spouse has increased or decreased the selling value of the property;
· any other competing claims in the litigation that may offset an award of occupational rent.
(McFarlen at para. 13, quoting Ross v. Ross, 2013 BCSC 1716, at para. 47, citations omitted)
[35] Ms. Wakefield claims $33,000 in occupational rent, representing $3,000/month rent from July 2016 to April 2018. There is no dispute about the monthly rental amount. Ms. Wakefield’s claim is based on the following factors: she was ousted, she has not been paid any spousal support, and Mr. Owen has enjoyed the use of the Dawe property and has not increased its value through his effort.
[36] Considering the exceptional nature of the remedy and the relevant factors, I find that an award of occupational rent is not appropriate in this case.
[37] Regardless of the respective allocation of blame for their conduct, it is clear that Mr. Owen and Ms. Wakefield were not going to be able to both stay in the Dawe house for much longer. The parties had agreed that Ms. Wakefield would move out; she was actively looking for a place and either had just rented or was quickly able to finalize rental of a property that she had already identified when she was ousted. The parties were actively engaged in settlement discussions with the advice of counsel during this time. Ms. Wakefield has not pursued her claim for spousal support. Mr. Owen paid Ms. Wakefield $4,000 at or around the time of the ouster. While Ms. Wakefield testified that she has been living with financial constraints post‑separation, it is not clear whether this is due to her business debts; in any event, some reduction in standard of living is to be expected upon separation.
[38] The only factor supporting an occupational rent award is the manner of Ms. Wakefield’s ejection. Although I acknowledge that the experience was very distressing for Ms. Wakefield, considering all of the circumstances in this case, I am not persuaded that I should exercise my discretion to make a monetary for the sole purpose of penalizing Mr. Owen for his conduct.
[39] I make the following orders:
a) Mr. Owen shall pay Ms. Wakefield $245,001.38, which represents her entitlement to the Dawe house;
b) Mr. Owen shall pay Ms. Wakefield $16,520.06, which represents her claim to the increase in value of Mr. Owen’s excluded property during the relationship; and
c) as success was divided, each party shall bear its own costs.
“IYER J.”