IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Morgan v. Morgan, |
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2018 BCSC 1992 |
Date: 20181113
Docket: E48148
Registry: New Westminster
Between:
Ann-Marie Morgan also known as Ann Marie Morgan
Claimant
And:
Norman Washington Morgan
Respondent
Before: The Honourable Mr. Justice Riley
Reasons for Judgment
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Counsel for the Claimant: |
M. Brandon |
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Counsel for the Respondent: |
A.S. Kerslake |
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Place and Date of Trial: |
New Westminster, B.C. February 5-9, 2018 March 28, 29, 2018 June 29, 2018 |
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Place and Date of Judgment: |
New Westminster, B.C. November 13, 2018 |
The Parties and the History of their Relationship
(2)(a) Determination of Income for Purposes of Calculating Child Support
(2)(a.3) Income Tax Obligations
(2)(b) Prospective Child Support
(2)(c) Retroactive Child Support
(2)(d) Special and Extraordinary Expenses
(3) Division of Family Property and Debt
(3)(d) Vehicle Equalization Payment
(3)(g) Mr. Morgan’s Outstanding Credit Card Debts and Line of Credit
(3)(h) CitiFinancial Business Loans
(3)(j) Household Property and “Undisclosed or Wasted Cash”
(3)(j.3) “Undisclosed or Wasted Cash”
(3)(l) Summary of Adjustments Required to Achieve Equal Division of Family Property and Debt
(3)(m) Ms. Morgan’s Plea for Unequal Division of Family Property and Debt
(4)(i) Entitlement to Spousal Support
(4)(b) Quantum and Duration of Spousal Support
(4)(c) Prospective Spousal Support
(4)(d) Retroactive Spousal Support
[1] The claimant Ann Marie Morgan and the respondent Norman Washington Morgan were married in Jamaica on 29 December 1993. They lived together in British Columbia for almost the entirety of their 21-year relationship. They have two daughters, who are now 21 and 17 years of age and have been living with Ms. Morgan since the breakdown of the relationship. These reasons for judgment address all outstanding issues in this divorce action.
[2] In her notice of claim, Ms. Morgan seeks a divorce. Mr. Morgan agrees that a divorce order should issue.
[3] Ms. Morgan also seeks retroactive and prospective child support for the two children of the marriage. Mr. Morgan agrees that he is obliged to pay child support, both retroactively and prospectively, but takes issue with the quantum. The major issue insofar as child support is concerned is the determination of income for the purposes of calculating the amount of Mr. Morgan’s child support obligations.
[4] Ms. Morgan further seeks retroactive and prospective spousal support. She says she is entitled to support on a compensatory basis. Mr. Morgan disputes Ms. Morgan’s entitlement to spousal support. If the Court determines that Ms. Morgan is entitled to support, the income of both parties will also be relevant for the purposes of calculating the amount of support.
[5] Finally, there are a number of issues with respect to division of family property and debt. The former family home has been sold, and the balance of the proceeds are held in trust. The parties agree that there should be certain adjustments to the net proceeds payable to each of them, but disagree on the particulars of those adjustments. Ms. Morgan also seeks unequal division of family property and debt. Mr. Morgan is opposed. He says there is no basis for departing from the presumption in favour of equal division of family property and debt.
[6] In his counterclaim, Mr. Morgan seeks an order for joint guardianship of the youngest child, who is still under the age of majority. Ms. Morgan does appear to be opposed to joint guardianship.
[7] Ms. Morgan is 47 years old. She was born in Jamaica and immigrated to Canada in 1991.
[8] Mr. Morgan is 48 years old. He was also born in Jamaica. He immigrated to Canada in 1995.
[9] The parties were married in Jamaica on 29 December 1993. For the first year of the marriage, Ms. Morgan was living in Canada, while Mr. Morgan continued to live in Jamaica. Mr. Morgan moved to Canada in 1995, and thereafter the parties took up residence together in a basement suite in a house owned by Ms. Morgan’s stepmother.
[10] Throughout their relationship, both parties worked in the hairstyling industry. Mr. Morgan also ran a number of businesses, as described in greater detail below.
[11] Their first child, Vanessa, was born in 1997. Ms. Morgan took one year of maternity leave, while Mr. Morgan continued to work as a barber.
[12] Their second child, Crystal, was born in 2001. Once again, Ms. Morgan took one year of maternity leave, and Mr. Morgan continued to work as a barber.
[13] In 2001, the parties purchased their first family residence, a townhouse in Cloverdale. They bought it for $185,000. They had saved up about $30,000 for a down payment, and obtained a mortgage to cover the balance.
[14] In 2006, the parties sold the townhouse and purchased a single family home in Cloverdale. The purchase price was $556,000. The parties paid for the house with $315,000 from the sale of the townhouse, and the balance of the funds coming from a mortgage.
[15] In 2012, Ms. Morgan took steps to sever the joint tenancy in the family home. She had serious concerns about Mr. Morgan’s business dealings, gambling, and irresponsible credit practices, and feared that he might encumber the property with his debts.
[16] The parties separated on 31 March 2014. Both of them continued to live in the family home, separate and apart from each other. Mr. Morgan occupied the master bedroom and Ms. Morgan moved into the guest room.
[17] These family law proceedings were commenced when Ms. Morgan filed a Notice of Family Claim on 30 January 2015.
[18] In April 2016, the family home was sold. The sale price was $932,000. The net sale proceeds were approximately $431,000, after paying out real estate commissions and conveyancing costs, the mortgage, and a debt registered against the property. Both parties took an interim distribution of $20,000. The balance, in the amount of some $392,000 has been held in trust by Mr. Morgan’s former counsel pending the conclusion of these proceedings.
[19] Ms. Morgan and the children continued to live in the family home until May 2016, when they moved into a house in Surrey. Ms. Morgan pays $2,200 per month in rent.
[20] Mr. Morgan continued to live in the family home until June 2016, when he moved into a house in Surrey, paying $2,700 per month in rent. In September 2017, Mr. Morgan moved again. There is some dispute about where he now lives, and whether he pays rent.
[21] There is also a dispute about how much child support Mr. Morgan has paid. Mr. Morgan claims to have made regular child support payments of $300 per month, since the sale of the former family home. Ms. Morgan says she only received two voluntary child support payments prior to the interim order made by Master Keighley on 18 May 2017, under which Mr. Morgan was required to pay $758 per month. Both parties agree that since the date of Master Keighley’s order, Mr. Morgan has made the required monthly child support payments.
[22] After arriving in Canada in 1991, Ms. Morgan went to hairdressing school. She started working as a hairdresser in 1993. She has worked at a number of different salons over the years. She took one year of maternity leave in 1997 to care for Vanessa, and another year of maternity leave in 2001 to care for Crystal. Ms. Morgan also worked from time to time as a hairdresser and as a bookkeeper at Mr. Morgan’s business, Afra Hair Design.
[23] At the time of separation in 2014 and up until the present time, Ms. Morgan has been working as a hairdresser at Bond Street Hair Design. She also supplements her salon income by cutting hair for clients at home.
[24] After graduating from high school in Jamaica, Mr. Morgan obtained work as barber. He learned his hair cutting skills on the job.
[25] Within a few months of his arrival in Canada in 1995, Mr. Morgan got a job as a barber at a salon in Burnaby called Abantu. Some time in 2002 or 2003, Mr. Morgan and an associate, Ms. Amaguru, bought the hair salon for $10,000, and renamed it Afra Hair Design. In 2004, Mr. Morgan purchased Ms. Amaguru’s share of Afra Hair Design, and since then he has been the sole owner and operator of the business.
[26] Afra Hair Design’s salon is located on Kingsway in Burnaby. The salon has seven to eight hair cutting stations, and generally operates with one or two full time barbers and two to three hair stylists.
[27] Although Afra Hair Design has been and continues to be Mr. Morgan’s primary source of income, Mr. Morgan has also been involved in a number of other businesses over the years. These included a restaurant called the Island Grill, and a beauty products store called Bijou Beauty Supply. Mr. Morgan also claims to have earned substantial sums of money playing poker.
[28] Mr. Morgan became involved in Bijou Beauty Supply in about 1999, when he purchased the business with two partners, Mr. James and Ms. Sinnaboula. At some point Mr. James left the business, and Mr. Morgan and Ms. Sinnaboula continued to run it together until they had a falling out in 2010 or 2011. Ms. Sinnaboula filed a law suit against Mr. Morgan, alleging that he had taken money out of the business, and Mr. Morgan counter-sued, alleging she had done the same. The dispute was resolved and Mr. Morgan then ran the business on his own until about 2016, when he finally shut it down.
[29] Mr. Morgan started playing poker some time in 1998 or 1999. He says he has never had a losing streak, and there have been periods of time in which he was winning thousands of dollars each week. This stopped in 2016, when the British Columbia Lottery Corporation sent Mr. Morgan a notice banning him from entering all casinos in British Columbia. The reason for the ban was never established in evidence. Mr. Morgan speculated that when you bring a lot of money into a casino, the staff think you are doing something wrong. After the ban, Mr. Morgan started hosting after-hours poker games at his hair salon, from which he consistently earns about $500 to $600 per month.
[30] All of the requirements for a divorce under ss. 8 to 11 of the Divorce Act, R.S.C. 1985 c. 3 (2nd Supp.) have been established. The divorce is granted, to take effect 31 days following the date of this judgment.
[31] Ms. Morgan’s Amended Notice of Family Claim seeks child support under both the Divorce Act and the Family Law Act, S.B.C. 2011, c. 25. The parties did not make submissions on which statute should be applied. At a substantive level, there is often little difference between the two regimes in terms of determining child support obligations. Both statutory schemes rely upon the Federal Child Support Guidelines, SOR/97-175 [Child Support Guidelines]. In this particular case, since child support is sought as corollary relief in a divorce proceeding, I will address it under the Divorce Act.
[32] Recall that the parties have two children, Vanessa who is 21 years old, and Crystal who is 17 years old. Although Vanessa is over the age of majority, it is common ground that she continues to be a “child of the marriage”, as that term is defined in s. 2(1) of the Divorce Act, because she is in full time studies and unable to withdraw from the charge of her parents. It is also common ground that both children have been residing with Ms. Morgan since the parties separated on 31 March 2014. Mr. Morgan therefore does not dispute that he is obliged to pay child support.
[33] There are two contentious issues insofar as child support is concerned. The first is the determination of income for the purposes of calculating child support. The second is the determination of the amount of retroactive child support Mr. Morgan is required to pay.
[34] Under s. 16 of the Child Support Guidelines, each spouse’s income is to be determined by the “total income” set out in that spouse’s most recent tax return. Additional income may be imputed in various circumstances as set out in s. 19 of the Child Support Guidelines. This includes circumstances where the spouse has “diverted” income as contemplated in s. 19(1)(d), where the spouse has “failed to provide income information when under a legal obligation to do so” per s. 19(1)(f), or where the spouse “unreasonably deducts expenses from income” as described in s. 19(1)(g) and s. 19(2). In the case before me, both parties have filed financial statements indicating income above the amounts referred to in their respective tax returns. Both parties therefore accept that additional income should be imputed to each of them.
[35] Ms. Morgan’s income is not particularly contentious. In 2016, she earned employment income of $19,537 from her work as a hairdresser at Bond Street Hair Design. Ms. Morgan estimates in her financial statement that she earns a further $25,000 in annual income in cash, from a combination of tips from clients at Bond Street Hair Design and self-employment income from cutting hair for clients out of her own home. Thus, Ms. Morgan says her total income is $44,537 per year.
[36] Ms. Morgan admitted that she does not declare the cash component of her income for tax purposes, although she added that she also does not claim any business-related expenses against the self-employment income for her home-based hairdressing work. Ms. Morgan does not keep any formal record of cash receipts. She does keep meticulous handwritten notes of the tips she receives at Bond Street Hair Design. The figures are not out of line with the total income asserted in her financial statement.
[37] I cannot ignore the fact that Ms. Morgan does not declare a significant proportion of her income for tax purposes. This is something that bears on Ms. Morgan’s credibility. I am nonetheless satisfied that Ms. Morgan took her oath to tell the truth in court seriously. Ms. Morgan was cross-examined at length, but her testimony on the amount of income she earns was not seriously challenged. There is no evidence that Ms. Morgan has any other sources of income, and nothing before me to indicate that the total income of $44,537 per year as set out in her financial statement is wrong.
[38] I conclude that Ms. Morgan’s income is $44,537 per year. However, the child support calculations will have to be conducted on the basis that $25,000 of Ms. Morgan’s income is untaxed.
[39] Determining Mr. Morgan’s income is a much more contentious and complicated matter. This is partly because his income is derived entirely from self-employment in a small business. The task is further complicated by Mr. Morgan’s poor record keeping, his limited knowledge of the financial aspects of his own business, his lack of regard for the obligation to truthfully and accurately report income for tax purposes, and his failure to respect the distinction between personal and business expenses.
[40] Mr. Morgan filed his first financial statement in this matter on 23 April 2015. In it, Mr. Morgan swore that his income in 2013 was $12,807, and his total annual expenses were $105,918. This, of course, would be an entirely unsustainable financial situation. Mr. Morgan’s financial statement identifies Afra Hair Design as his principal source of income. The attached 2013 tax return indicated that the business had gross sales of $146,036 with a net profit of only $11,303. These figures are inconsistent with a Citibank credit application dated 28 November 2013, in which Mr. Morgan stated that he had a monthly salary of $5,416.67 from Afra Hair Design, equating to an annual salary of $65,000. Mr. Morgan says this was not a real income figure; it was suggested to him by the Citibank employee who helped him complete his credit application, and Mr. Morgan just agreed with it.
[41] In an updated financial statement filed on 29 January 2018, Mr. Morgan swears that his income is “[e]stimated at $50,000” per year, and his total annual expenses are $63,546.48. Again, if true, this is completely unsustainable. It is telling that Mr. Morgan was able to state his expenses to the dollar, while only prepared to “estimate” his income.
[42] In his updated financial statement, Mr. Morgan makes no effort whatsoever to specify his source or sources of income. He testified under cross-examination that the $50,000 estimate includes not only income from Afra Hair Design, but also income from hosting a regular poker game at his place of business, and a small amount of cash from tips. When pressed for specifics, Mr. Morgan testified that he made between $500 and $600 per month hosting poker games. This would equate to some $6,000 to $7,800 per year. With regard to cash from tips, Mr. Morgan said it would be a very small amount, perhaps $2,000 per year. Taking into account income from these two sources, this would mean Mr. Morgan’s “estimated” annual income from Afra Hair Design is $40,200 to $42,000.
[43] The most recent tax return attached to Mr. Morgan’s updated financial statement is from 2016. It lists Mr. Morgan’s sole source of income as self-employment income from Afra Hair Design. It does not list any income from hosting poker games or from cash tips. Afra Hair Design’s gross sales in 2016 were reported to be $191,688, but after deductions and expenses the net income was only $13,746.
[44] There is compelling evidence that Mr. Morgan’s 2016 tax return understates his income. To begin with, Mr. Morgan acknowledges that he receives additional income from cash tips. These are not listed on his return and I do not see any way in which this source of funds is accounted for in Afra Hair Design’s statement of business activities.
[45] In addition, Mr. Morgan’s tax return does not include any income from hosting poker games. Mr. Morgan testified that he started hosting games after he was banned from playing poker in British Columbia casinos in February of 2016. If, as Mr. Morgan maintains, he earns $500 to $600 per month hosting poker games, I would have expected to see at least some amount of income from that source listed in his 2016 return. It is not necessary to undertake a detailed discussion of whether Mr. Morgan’s former poker winnings would have been taxable on the basis that he was a professional poker player. Since the casino ban, Mr. Morgan has been earning money hosting poker games at his place of business. Mr. Morgan clearly regards this as a business activity and I would therefore treat the proceeds as income for the purposes of determining child support.
[46] Mr. Morgan’s 2016 tax return also does not include the $700 per month in rental income Mr. Morgan collected from his brother from January to June of 2016, when the parties vacated the former family home. The failure to report this income would not impact on Mr. Morgan’s income going forward, since the family home has now been sold and Mr. Morgan is no longer collecting rent. However, the failure to report this income bears on Mr. Morgan’s credibility, and on the reliability of the income figures set out in Mr. Morgan’s tax returns.
[47] There is also compelling evidence that Mr. Morgan’s 2016 tax return significantly understates gross revenue and overstates expenses from Afra Hair Design. The understated revenues and overstated expenses give a wholly unreliable and inaccurate picture of the income available to Mr. Morgan from this business.
[48] Dealing first with the unreported revenue, there are several indications of this in the evidence. For one thing, the deposits into Mr. Morgan’s business bank account during the 2016 calendar year totalled $268,366. This is significantly higher than Afra Hair Design’s reported gross profit of $191,188. Even after deducting a substantial amount to account for funds loaned to Mr. Morgan through a commercial arrangement with a company called “Business Pad”, there are still tens of thousands of dollars of additional deposits into Afra Hair Design’s account. The bank records indicate that many of these are cash deposits. Mr. Morgan says the cash deposits are from loans provided by family and friends, but the bank records suggest to me that the vast majority of the funds from these personal loans were deposited into Mr. Morgan’s personal account, which reflects deposits from bank branches in Ontario where Mr. Morgan’s family members live. All of this tells me that a significant proportion of the tens of thousand of dollars in additional deposits into the Afra Hair Design business account are derived from unreported cash sales, the proceeds of which were then deposited into Mr. Morgan’s business bank account.
[49] There is evidence of a history of unreported revenue from Afra Hair Design, going back to the years 2009 to 2012. Ms. Morgan testified that some time after the breakdown in her relationship with Mr. Morgan, she found several ledgers in the garage of the former family home. She recognized them because she was the one who prepared them, back when she handled the payroll for Afra Hair Design. She stopped doing the payroll after the breakdown of the relationship. Ms. Morgan testified that when she found the ledgers in the garage of the family home, she took them and held onto them because she “knew she would need them” for this family law case.
[50] The ledgers were marked as exhibits at trial. Each page contains a handwritten bi-monthly tabulation of daily revenues in two columns, one for cash and the other for debit and credit payments. The ledgers reflect that each hairdresser is then paid partly in cash and partly by cheque, with a calculation of payroll deductions only from the cheque portion of the earnings. Each page also contains a handwritten bi-weekly summary of operating profit, that is, total bi-weekly sales revenue received less total bi-weekly wages paid out.
[51] When Mr. Morgan was asked about these ledgers in the course of his testimony, he claimed that he had never seen them before and that they were completely made up. However, he acknowledged that Ms. Morgan used to handle the payroll for Afra Hair Design, and that she stopped doing this work after the relationship broke down. I note that there is independent evidence showing that at some point after Ms. Morgan stopped doing the payroll, Mr. Morgan fell behind in his payroll remittances. Mr. Morgan now has a debt to the CRA of at least $52,899 for payroll taxes, and a further debt of $24,751 to the Canada Revenue Agency for GST arrears. Mr. Morgan also stated in his examination for discovery that he paid employees in both cheque and cash, which is consistent with the ledgers tendered in evidence by Ms. Morgan. In his trial testimony, Mr. Morgan initially denied that he paid workers partly in cash. When pressed, he equivocated, suggesting first that he has not paid workers in cash since 2016, then suggesting that he does not pay regular workers in cash but that he may pay casual workers in that fashion, and finally suggesting that workers might get tips in cash, but that their wages were paid by cheque. When pressed on the fact that none of these explanations square with the unequivocal statements in his examination for discovery, Mr. Morgan said maybe he made a mistake in his examination for discovery. Mr. Morgan insisted in his testimony before me that he does not “top off” his worker’s pay with cash. I do not find Mr. Morgan’s testimony on this point credible. His testimony changed several times, does not fit with his statements under oath at the examination for discovery, and is inconsistent with the ledgers tendered by Ms. Morgan, which I accept as genuine based on all of the evidence I heard.
[52] For Mr. Morgan’s contention that the ledgers are complete fakes to be true, it would mean that Ms. Morgan concocted them out of thin air, years after the fact. There are 72 pages with over 200 figures per page, for a total of more than 15,000 handwritten entries, with payroll deductions calculated consistently throughout. I cannot accept that Ms. Morgan concocted the ledgers. Considering the testimony of Ms. Morgan, the testimony or Mr. Morgan, the content of the ledgers, and all of the relevant documentary evidence, I conclude that the ledgers are genuine and they give a fair picture of the revenues received by the business during the period to which they relate.
[53] These ledgers indicate that Afra Hair Design received a significant proportion of its revenue in cash, divided equally between the hairdressers and the salon, with no deductions or taxes. When one compares the figures contained in the ledgers for the 2011 calendar year with the amounts reported in Mr. Morgan’s 2011 tax return, it appears that actual revenues received by the business are as much as two times the total revenue reported in the tax return. Even allowing for the fact that some of the unreported cash revenue was paid out to hairdressers, the salon’s portion of the unreported revenue would increase the net profit by some $70,000 to $90,000. This is entirely in line with bi-weekly operating profit figures for the 2011 calendar year as set out in the handwritten ledgers.
[54] The inference I draw from all of the evidence is that the total revenues in Mr. Morgan’s 2016 tax return are similarly under-reported. Recall that at some point after Ms. Morgan stopped doing Afra Hair Design’s payroll records, Mr. Morgan stopped making any payroll remittances whatsoever. I infer from this that the extent of Mr. Morgan’s compliance with tax reporting and payroll remittance obligations has not improved over time.
[55] Mr. Morgan argues that the historical figures are unhelpful because Afra Hair Design’s business is in decline due to deregulation of the hairdressing industry and increasing competition. There may well be increased competition, but Afra Hair Design’s gross sales figures as reported in Mr. Morgan’s 2011 to 2016 tax returns appear to have remained more or less constant, and indeed have risen slightly over that time frame. The deposits into the business’s bank account in the past three years also appear to have remained relatively constant. The total deposits were over $219,000 in 2015, over $268,000 in 2016, and over $250,000 in 2017. Some of the deposits were from loans Mr. Morgan obtained from “Business Pad” and thus not reflective of revenue, but even accounting for this I see no evidence of a drop in revenues.
[56] The evidence also indicates that Afra Hair Design’s expenses are overstated. Mr. Morgan did not tender evidence to support the business expenses in his 2016 tax return, but he did tender such evidence in relation to the expenses in his 2015 return. The documents tendered to support these expenses indicate that some of them are unjustified or significantly overstated. These include: (a) meals and entertainment expenses which are clearly personal and not business-related, (b) insurance expenses for Mr. Morgan’s residence, when Ms. Morgan in fact paid the monthly house insurance, and (c) vehicle expenses, the vast majority of which relate to vehicles not used in the business or are otherwise not proper business expenses. These expenses go well beyond what Mr. Justice Punnett has referred to as “the boundaries of what is a legitimate business expense”: D.M.B. v. D.W.A.L., 2018 BCSC 1254 at para. 155. Without recounting all of the numbers, my calculations suggest that Mr. Morgan’s business expenses are overstated by some $3,000 to $6,000 per year.
[57] In summary, I have concluded that Mr. Morgan has significantly understated his income and overstated his business expenses. As a result, I am unable to accept Mr. Morgan’s “estimated income” of $50,000. I must determine what amount of additional income should be imputed to him for the purposes of calculating his support obligations. Based on the figures set out above, I am satisfied on a balance of probabilities that in addition to $13,000 in tax-reported income set out in his most recently-filed tax return, Mr. Morgan earns an additional $70,000 per year in untaxed income, from Afra Hair Design and from hosting regular after-hours poker games at his place of business.
[58] To the extent that the parties have not accurately reported their incomes for tax purposes, I have taken this into account in assessing the credibility of their testimony. Beyond this, as explained in Wong v. Li, 2018 BCSC 745 at para. 145, it is not the Court’s role to address the tax responsibilities of litigants in a family law proceeding. I will simply refer to Mason v. Mason, 2014 ONSC 4290 at para. 46, wherein Wilcox J. aptly noted that “[p]eople who pay their income taxes and live within their after-tax means have every right to be upset at those who fail to declare their incomes according to the rules, pay less than their fair share of tax, and enjoy a relatively higher standard of living as a result”.
[59] My conclusion is that Ms. Morgan has annual tax-paid income of $19,537 and additional untaxed income of $25,000 per year, and that Mr. Morgan has annual tax-paid income of $13,000 and additional untaxed income of $70,000 per year. Using those figures, the Child Support Guidelines indicate that Mr. Morgan is obliged to pay $1,657 per month to Ms. Morgan for the support of the two children so long as they continue to be “children of the marriage”.
[60] The parties ceased living under the same roof in May 2016. Ms. Morgan seeks retroactive child support from June 2016 until the date of judgment. At $1,657 per month, Mr. Morgan was obliged to pay a total of $51,367 in child support over that 31-month time frame.
[61] There is no dispute Mr. Morgan has made regular child support payments of $758 per month since May 2017, pursuant to the interim order made by Master Keighley. This is a total of 20 months. The retroactive child support amount should be reduced by $15,160 to account for these payments.
[62] There is a dispute about how much child support Mr. Morgan paid before Master Keighley’s interim order took effect. Ms. Morgan testified that from the point at which the parties moved out of the family home in June 2016 through to the point when Master Keighley’s order took effect in May 2017, Mr. Morgan made only two payments of $300 each, for a total of $600. The first was in August 2016 and the second was in October 2016. Ms. Morgan went on to explain that when her lawyer wrote to Mr. Morgan requesting child support, Mr. Morgan’s response was that he would pay $300 per month if Ms. Morgan agreed to make the payments on their daughter’s car. Ms. Morgan declined this offer because the car payments would have been more than $300 per month.
[63] For his part, Mr. Morgan testified that he was originally giving Ms. Morgan $300 per month in cash for child support. Mr. Morgan explained that after paying the mortgage, he would give Ms. Morgan an additional $300 per month by leaving it on the kitchen counter where he regularly left money for Ms. Morgan to pay the bills. Mr. Morgan says he stopped giving Ms. Morgan $300 per month in child support because Ms. Morgan refused to provide him with receipts.
[64] Mr. Morgan’s testimony on this point does not fit with the undisputed timeline. The period of time that is in issue commenced in June 2016, after the parties moved out of the family home. By that point in time, Mr. Morgan was no longer making any mortgage payments, and he was most certainly not in a position to give Ms. Morgan $300 per month by leaving it for her on the kitchen counter of their former family residence, since the house had been sold and neither of them was living there any more. I cannot accept Mr. Morgan’s testimony on this point. I must prefer the testimony of Ms. Morgan that, prior to Master Keighley’s order in May of 2017, Mr. Morgan only made two “voluntary” child support payments of $300 each, for a total of $600.
[65] To sum up, Mr. Morgan was obliged to pay a total of $51,367 in child support. He has already paid $15,760. He must pay Ms. Morgan a further $35,607 in retroactive child support.
[66] There is no claim for outstanding or unpaid special or extraordinary expenses. The parties agree that, going forward, they will each be responsible for one half of all of the medical and dental expenses for each of the children for as long as they continue to be “children of the marriage”.
[67] Counsel for Ms. Morgan argues that there should be an unequal division of family property and debt. Mr. Morgan’s counsel disagrees, arguing that “the general rule of equal division” must prevail, unless it would result in “significant unfairness”.
[68] Before determining whether there should be an unequal division of family property and debt, it is first necessary to determine what an equal division would look like: Hamill v. Dunlop, 2016 BCSC 1337 at para. 102. Another way of putting it is to say that, “[i]n order to determine if it would be significantly unfair to divide the family property equally, the court must notionally divide the family property”: Remmem v. Remmem, 2014 BCSC 1552 at para. 47.
[69] The principal family asset was the former family home. It sold in April 2016 for $932,000. After deducting approximately $13,000 for commission and conveyancing costs, just over $481,000 for the mortgage, and $19,317 for a judgment registered against the property arising from credit card debt, the net sales proceeds were $424,882. (Ms. Morgan asserts that the net proceeds should be adjusted in her favour to reflect that the judgment was a result of credit card charges incurred solely by Mr. Morgan, for non-family purposes. I will deal with this argument below). Both parties took an interim distribution of $20,000. The balance, in the amount of $384,882 is being held in trust by Mr. Morgan’s former counsel pending the conclusion of the family law proceedings.
[70] If the net proceeds from the sale of the family home were divided equally, each party would receive $192,441. Both parties take the position that this figure should be adjusted to account for various post-separation events or transactions. In particular, the parties agree that the division of net proceeds should be adjusted to account for certain post-separation expenses or transactions related to family property and debt. The adjustments which are in dispute, and my findings in respect of those adjustments, are set out below under sub-headings. The undisputed adjustments are simply listed item-by-item in the table set out under heading 3(l) below.
[71] A judgment in the amount of $19,317.85 was registered against the former family home, in connection with a BMO MasterCard obtained by Mr. Morgan in his sole name on or about 12 January 2012. Ms. Morgan testified that she knew Mr. Morgan had the credit card because she saw the statements arrive in the mail, but she was unaware of the details. Ms. Morgan says she did not use the card, and Mr. Morgan used it for his sole benefit, for matters including personal travel and the purchase of jewellery and luxury items for himself and others, but not for the family. The card was “maxed out” to its $15,000 credit limit within eight months, and later resulted in registration of the judgment against the title to the family home. Ms. Morgan says she was unaware of the outstanding debt or the resulting judgment until the family home had been sold and it was necessary to pay out the judgment to give clear title to the purchaser.
[72] Ms. Morgan says these credit card charges were wholly unrelated to the family and that the resulting judgment should not be characterized as a “true family debt”. Mr. Morgan disputes this factual assertion. He says the credit card was used to cover family expenses and to purchase property and goods for the benefit of the family. Mr. Morgan denied that he used the credit card to purchase jewellery for anyone other than himself or Ms. Morgan.
[73] My review of the BMO MasterCard statements (Ex. 6, Tab 8; Ex. 9, Tab 27) indicates that certain charges relate to matters that would normally be considered family expenses, such as purchases of gas, vehicle lease payments, and food purchases. The card was also used to purchase an expensive stereo system for the family home. There are some charges for matters that arguably would not be viewed as legitimate family expenses, including luxury items such as jewellery that may or may not have benefitted the family unit. Nevertheless, I am satisfied that a significant proportion of the credit card charges relate to matters that would normally be regarded as family expenses. Beyond this, the extent to which Mr. Morgan may have used the credit card imprudently, selfishly, or even secretively, is not relevant insofar as the legal characterization of the credit card debt and resulting judgment is concerned, given the definition of “family debit” in the Family Law Act.
[74] The definition of “family debt” is found in s. 86 of the Family Law Act. Under s. 86(a), “family debt” includes all financial obligations incurred by a spouse from the beginning of the relationship until the date of separation. Thus, “family debt” incurred during the currency of the relationship is not defined or limited by use or contribution. This can be contrasted with s. 86(b), which provides that “family debt” also includes debt incurred by a spouse after the date of separation, but only “if incurred for the purpose of maintaining family property”. Read as a whole, s. 86 of the Family Law Act makes it clear that any debt incurred by either spouse during the currency of the relationship, regardless of use or contribution, is “family debt”. Any unfairness in the characterization of debt as family debt could, of course, be considered under s. 95 of the Family Law Act in determining whether an equal division of family property and debt would be “significantly unfair”.
[75] Applying that statutory definition to the facts of this particular case, it is not helpful to engage in a line-by-line inquiry into the uses to which Mr. Morgan put his credit card during the currency of the relationship. Quite apart from whether Mr. Morgan used the card prudently or imprudently, openly or secretively, or selfishly or unselfishly, the bottom line is that the resulting debt constituted “family debt” within the meaning of the Family Law Act.
[76] After separation, the credit card debt was retired when the associated judgment registered against Mr. Morgan’s one-half interest in the family home was paid out from the proceeds of sale, to secure clear title to the property. Thus, as at the date of trial, this credit card debt is no longer in existence and it is not necessary to address it as a discrete item in the division of family property and debts. However, as noted above, the financial implications of this debt may have some bearing on Ms. Morgan’s argument that it would be “significantly unfair” to order an equal division of family property. I will deal with the issue of significant unfairness below, after determining the net result that would flow from an equal division of all family property.
[77] I have thus concluded that the BMO judgment related to “family debt”. Putting aside Ms. Morgan’s argument about significant unfairness, there is no basis for adjusting the net proceeds from the sale of the family home to account for the BMO judgment.
[78] Ms. Morgan claims that after the parties separated, she had to incur certain repair costs to make the family home ready for sale, and that Mr. Morgan refused to pay his share of these costs. Ms. Morgan submitted receipts totalling $1,894.00 (Ex. 6, Tab 6). In his testimony, Mr. Morgan agreed that the repairs were necessary to make the family home ready for sale. He claims to have paid for his share of at least some of these repair costs. The evidence indicates that Mr. Morgan paid for one half of the $460 incurred to repair the garage door. Deducting this amount, this leaves a total of $1,434 in home repair costs. I am satisfied that Ms. Morgan incurred these costs and that there should be a corresponding adjustment to the net proceeds of sale.
[79] Mr. Morgan further testified that he assumed sole responsibility for other home repair costs, including $700 in repairs to the porch. Mr. Morgan says he kept receipts for these repairs, but that that he can no longer find them, and Ms. Morgan must have taken them from the home. I am not satisfied that this is so and I do not accept Mr. Morgan’s testimony on this point. There is no direct evidence that Ms. Morgan stole any receipts, and Ms. Morgan denied doing so. (Ms. Morgan did take payroll ledgers and empty pay envelopes from the garage at some point, but her testimony was that she was the one who originally created the ledgers; she believed they were important for her case, and if she did not take them they would have been unavailable for trial.) There was no effort by Mr. Morgan to obtain duplicate copies of any receipts for home repair costs, including receipts for the alleged $700 in repairs to the porch.
[80] Ms. Morgan says she had to pay $77.70 for a locksmith, to gain access to the master bedroom after Mr. Morgan put a lock on the door. Ms. Morgan provided a receipt (Ex. 6, Tab 14) and gave a detailed account of the incident. She explained that she needed access to the master bedroom to get personal effects and documents, including the children’s passports. In his testimony, Mr. Morgan admitted that he placed a lock on the master bedroom, but explained that he only did so after Ms. Morgan took property from the family home. Mr. Morgan further explained that he removed Ms. Morgan’s things from the master bedroom before he locked it. Regardless of what precipitated Mr. Morgan’s placement of the lock on the master bedroom door, I am satisfied that Mr. Morgan acted unilaterally in doing so, without notice to Ms. Morgan, and that Ms. Morgan was required to pay a locksmith to gain access to the room in order to obtain personal effects. There will be an adjustment accordingly.
[81] At the date of separation, Mr. Morgan had a 2009 BMW X5. On 3 August 2017, he traded it in for a value of $13,000. Ms. Morgan points out that when Mr. Morgan traded the vehicle in, he received an additional $10,000 credit toward the purchase of a new vehicle. Ms. Morgan says this credit should be considered part of the value of the trade-in. I do not accept this submission. The vehicle purchase agreement clearly identifies the trade-in value of the 2009 BMW X5 as $13,000.
[82] At the date of separation, Ms. Morgan had a 2005 Acura TL. She still owns this vehicle. She estimates that it has a current value of $5,000. Mr. Morgan says it is worth $6,000 to $7,000. All of these amounts are within the range of what is reasonable, but considering that the vehicle has had to have significant engine repairs I would not put it on the high end. I find that the vehicle’s current value is $5,500.
[83] The net result is that the value of Mr. Morgan’s vehicle is $7,500 greater than the value of Ms. Morgan’s vehicle. Ms. Morgan is entitled to one-half of the difference, and the net proceeds from the sale of the family home will be adjusted accordingly.
[84] Ms. Morgan recounted an incident in which the engine in her car was damaged. Ms. Morgan did not personally see what happened. She gave a hearsay account of what her daughter Vanessa told her, which is not admissible for the truth of its contents. Ms. Morgan tendered invoices for vehicle repairs and towing costs totalling $2,020. The car repair invoice indicates that Ms. Morgan “suspected” damage by Mr. Morgan, and indicates possible contaminants in the fuel tank. I would consider the invoice to be admissible for proof of the repair costs incurred but not for proof of the cause of the damages. The circumstances surrounding the damage to Ms. Morgan’s car are highly suspicious, particularly considering Ms. Morgan’s evidence of other incidents in which Mr. Morgan took the keys to Ms. Morgan’s car or otherwise withheld it from her, which I accept. However, there is no admissible evidence that Mr. Morgan caused the damage to the engine of Ms. Morgan’s car. Accordingly, I cannot find in Ms. Morgan’s favour on this point.
[85] Ms. Morgan testified that there were several occasions on which Mr. Morgan took her car keys. Ms. Morgan said she phoned the police, but Mr. Morgan took the position that the car was his and that he was not required to give the keys to Ms. Morgan. In one instance, Ms. Morgan had to rent a car until she got her keys back from Mr. Morgan. Ms. Morgan tendered a receipt for $152.25. For his part, Mr. Morgan admits that there was at least one instance after separation in which he refused to give Ms. Morgan the keys to the Acura; he explained that he took the keys because Ms. Morgan would not say where she was going. This was no basis for withholding the keys to the car of which Ms. Morgan was the principal operator and beneficial owner. Considering all the testimony, I accept Ms. Morgan’s evidence that she incurred $152.25 to rent a car when Mr. Morgan improperly kept her car keys from her. There will be an adjustment to the net proceeds from the sale of the family home to account for this expenditure.
[86] As of the date of separation, Mr. Morgan had a number of credit cards with significant outstanding balances, as well as an outstanding line of credit. In particular, as of the date of separation, Mr. Morgan had the following outstanding credit card and line of credit debts: (i) CIBC Dividend Platinum card, with a credit limit of $2,500, maxed out; (ii) TD First Class Travel Visa, with a credit limit of $5,000, maxed out; and (iii) RBC line of credit, with a credit limit of $25,000.
[87] Ms. Morgan says there is no evidence that Mr. Morgan has paid these debts or that he intends to do so, and that “it would be unfair to make [Ms. Morgan] compensate Mr. Morgan” for 50% of debts which Mr. Morgan has “no intention to pay”. I agree that since there is no evidence that Mr. Morgan has paid these debts, there should be no adjustment to the net proceeds from the sale of the family home.
[88] Nevertheless, these credit card debts are family debts for which each party is equally responsible under s. 81 of the Family Law Act. The proper remedy or disposition insofar as these debts are concerned is a declaration that Mr. Morgan and Ms. Morgan bear equal responsibility for these debts, provided that there is some mechanism to ensure that they are actually paid: Family Law Act s. 97(1); Unger v. Conrad, 2018 BCSC 507 at para. 64. The relevant date for determining family debt is the date of separation, and the relevant date for valuation of the debt is the date of trial. This means that upon proof of payment of the debts by Mr. Morgan, Ms. Morgan will be responsible for 50% of the amount owing on these credit card accounts as of the date of separation, plus any interest accruing on those debts up to the date of trial.
[89] At the time of separation, Mr. Morgan had two CitiFinancial loans. The first loan, bearing account number ending in digits 078, had a balance of $5,050 as of the date of separation. The second loan, bearing account number ending 127, had a balance of $5,816 as of the date of separation. Ms. Morgan says these were not family debts, but rather business debts. I do not agree. Afra Hair Design is a proprietorship with no separate legal existence. The actual debts are in Mr. Morgan’s name and thus properly characterized as family debt. Mr. Morgan has assumed responsibility for these debts since the date of separation. He is therefore entitled to corresponding adjustments to the net proceeds from the sale of the family home.
[90] Ms. Morgan maintains that, over the course of the relationship, Mr. Morgan acquired undisclosed property in Jamaica, using family funds. In particular, Ms. Morgan testified to a belief that Mr. Morgan owns or has an interest in two pieces of real property and a car rental business in Jamaica. The particulars of Ms. Morgan’s testimony on these issues can be summarized as follows:
a) Ms. Morgan believes that Mr. Morgan purchased the first piece of real property in the early 2000s, and that it was registered in the name of Mr. Morgan, his father, and his brother. Ms. Morgan believes this property was a one-half acre plot with a small house on it. Ms. Morgan believes the property was subsequently used by Mr. Morgan’s brother to run an auto body shop, but that Mr. Morgan’s brother has since moved to Canada and she does not know what use is presently being made of the property.
b) Ms. Morgan believes that Mr. Morgan purchased the second property in 2012 or 2013. Ms. Morgan described it as a vacant plot, a short distance from the home where Mr. Morgan grew up. Ms. Morgan testified that the purchase of this property was financed with U.S. funds which Mr. Morgan wire transferred to Jamaica. Ms. Morgan referred to banking records tendered as Ex. 6, Tab 55, discussed in greater detail below. According to Ms. Morgan, she asked Mr. Morgan to make sure her name was on the title to the property, but he never provided her with any documents to confirm this. Ms. Morgan tendered a photocopy of a Jamaican Certificate of Title document indicating that Norman Morgan and Norris Morgan are joint owners of a 2,300 square meter parcel of property in Howell’s Content, Jamaica. I will refer to the property hereafter as the Howell’s Content property. Ms. Morgan believes that the Howell’s Content property is the second property, purchased by Mr. Morgan in 2012 or 2013.
c) Ms. Morgan also testified that over the course of the relationship Mr. Morgan sent money to Jamaica to set up a vehicle rental business. Ms. Morgan did not have any direct involvement in any such business; her evidence on this point is based on statements made to her by Mr. Morgan, and the single bank record entry described in more detail below. She said that during the relationship, she and Mr. Morgan spoke about running a vehicle rental business in Jamaica. Ms. Morgan’s understanding was that Mr. Morgan purchased one or more cars in Jamaica and that his brother and father were to be responsible for running the vehicle rental business. Ms. Morgan referred to bank records showing that in June of 2014, Mr. Morgan wired $4,000 in US dollars (USD) to the parties’ Jamaican bank account. The records reflect a withdrawal of approximately $4,000 USD for what is described as an “MV purchase”. Ms. Morgan says this is proof that Mr. Morgan purchased at least one vehicle in Jamaica for use in a vehicle rental business.
[91] For his part, Mr. Morgan denied owning any property in Jamaica. I would summarize his testimony concerning his financial connections with, and alleged ownership of property in Jamaica as follows:
a) Mr. Morgan testified that both parties have, from time to time, sent or delivered money to relatives in Jamaica. Mr. Morgan points to the testimony of Ms. Morgan, who admitted that at one point she delivered or transferred a substantial sum of money to her mother in Jamaica, although Ms. Morgan also testified that she later retrieved the vast majority of those funds and used them to pay down family debt.
b) When asked about the Jamaican land title document in his name, Mr. Morgan initially testified that he had never seen it before and he had no idea whether it was a real document or whether it had been doctored or altered. Later in his testimony, Mr. Morgan was referred to his financial statement, indicating that he holds property worth $5,000 in trust for his brother, in response to which Mr. Morgan testified that his brother put his name on the title to the property so that if his brother died, Mr. Morgan would become the owner of the property without having to worry about estate laws.
c) Mr. Morgan flatly denied that he had any involvement in a car rental business and denied that he owned any vehicles in Jamaica. Mr. Morgan said he had no knowledge of the meaning of the words “MV purchase” on the bank records as described below.
[92] There is objective evidence that, over the course of their relationship, the parties sent money to Jamaica and conducted financial transactions in Jamaica through various means. In particular:
a) The parties have two Jamaican bank accounts, one in USD, and the other in Jamaican dollars (JAD). The records for each account were marked in evidence.
b) The records of the US funds account were marked as Ex. 6, Tab 54. The account records are in the names of Mr. Morgan, Ms. Morgan, and Mr. Morgan’s brother Norris. Ms. Morgan says Mr. Morgan opened this account on his own and put her name on it; she claimed to have no control over the account. The dates and times on the account records are difficult to interpret. It appears that at some point in 2012, Mr. Morgan deposited some $3,955 USD into the account, and that $4,000 USD was subsequently debited from the account for a transaction described as “M/V purchase”. By the end of 2012, the balance in the account was $2.41 USD, and the account has been closed since 31 December 2012.
c) The records for the Jamaican funds account were marked as Ex. 6, Tab 55. The account records are in the names of Mr. Morgan, Ms. Morgan, and Mr. Morgan’s mother. Mr. Morgan testified that he opened this account and that he, his mother, and Ms. Morgan all deposited money into it from time to time. Mr. Morgan testified that the account was used for two purposes. First, it was used by his mother, for the purposes of buying and selling clothing and other goods in what Mr. Morgan described as an “eagling” business. Second, the account was to be used by Mr. Morgan and Ms. Morgan to obtain money when vacationing in Jamaica. For her part, Ms. Morgan testified that she does not have access to this account and she does not know who has been making withdrawals from it. Once again, the dates and times in these records are difficult to interpret. The records indicate that deposits were made from time to time, and that at one point there was some $527,000 JAD in the account. This equates to $5,119 in Canadian dollars (CAD). As at the date of separation on 31 March 2014, the balance in the account was $491,303 JAD, which equates to roughly $5,000 CAD. The most recent balance in the Jamaican funds account is $43,593 JAD, which equates to $423 CAD.
d) There are also bank records relating to Mr. Morgan’s transfer of rather substantial amounts of US funds by wire transfer from Canada to Jamaica, tendered as Ex. 6, Tab 55. These records indicate that Mr. Morgan transferred $6,000 USD to Jamaica in April 2010, and a further $4,000 USD to Jamaica in June of 2010. There is no clear evidence as to what became of these funds, although as noted below I have concluded on a balance of probabilities that a substantial proportion of this money was used by Mr. Morgan to acquire the Howell’s Content property. I accept Ms. Morgan’s testimony on this point.
[93] Having considered all of the evidence with respect to the financial connections of the parties to Jamaica, and Mr. Morgan’s alleged property ownership in Jamaica, I am satisfied that Mr. Morgan is a joint owner of the Howell’s Content property. There is reliable evidence that Mr. Morgan made at least two significant transfers of funds totalling $10,000 USD to Jamaica. There is also a Jamaican land title document showing that Mr. Morgan and his brother Norris are joint owners of the Howell’s Content property. Quite apart from whether this document is, in the form in which it was tendered, dispositive proof that Mr. Morgan owns the property, Mr. Morgan has admitted in his testimony that his name is on the title to a property in Jamaica. I find that he must be referring to the Howell’s Content property.
[94] Mr. Morgan claims he is merely on title to the property, and he holds title in trust for the benefit of his brother for estate planning purposes. If that were so, then then Mr. Morgan’s bare legal ownership of a one-half interest in the Howell’s Content would not be “family property”: J.D.G. v. J.J.V., 2016 BCSC 2389 at para. 178. However, I do not accept Mr. Morgan’s testimony on this point. In his trial testimony, Mr. Morgan was initially unwilling to admit that he had any interest in land in Jamaica, until directed by his counsel to his own financial statement, which states under oath that he holds title to a piece of property in Jamaica in trust for his brother. Mr. Morgan was not forthcoming about his connection to this property, and the concession in his financial statement and subsequent admission in his trial testimony both appear to have been prompted by the land title document for the Howell’s Content property, obtained by Ms. Morgan. In the end, I am satisfied that Mr. Morgan is a joint owner of the property in question and I do not accept Mr. Morgan’s testimony that he holds bare legal title as a trustee.
[95] As for the value of the Howell’s Content property, there is very little admissible evidence. Mr. Morgan asserts in his financial statement that his one-half interest in the property is worth $5,000. This is probably a conservative valuation, considering the evidence that Mr. Morgan wired at least $10,000 USD to Jamaica in a relatively short period of time, during the relationship. However, I have no other basis on which to value the property. Accordingly, the net proceeds from the sale of the family home will be adjusted to give Ms. Morgan credit for one-half of Mr. Morgan’s interest the Howell’s Content property, which interest is valued at $5,000.
[96] I am not satisfied that Mr. Morgan has any other assets of a substantial nature in Jamaica, aside from a bank account with a nominal balance as discussed below. Although Ms. Morgan says Mr. Morgan acquired an interest in a second real property in Jamaica over the course of the relationship, there is no independent evidence of this. Ms. Morgan was able to obtain a Jamaican land title document with respect to the Howell’s Content property; if Mr. Morgan had title to any other real property in Jamaica, I expect Ms. Morgan would have been able to find the associated land title documents. With respect to Ms. Morgan’s claim that Mr. Morgan has an interest in a car rental business in Jamaica, there is no documentary or other objective evidence to support this claim. Ms. Morgan’s testimony that she and Mr. Morgan discussed the possibility of setting up a car rental business does not convince me that Mr. Morgan actually acquired any interest in such a business. The reference to an “MV purchase” transaction in the Jamaican bank records is not enough to convince me otherwise. There is no explanation for the term “MV purchase” on the bank record, and no other evidence that Mr. Morgan purchased any vehicles in Jamaica. If Mr. Morgan actually had an interest in a car rental business of any substance in Jamaica, I would have expected to see some documentation, or evidence of financial activity associated with it.
[97] This leaves only the two Jamaican bank accounts referred to above. One of the accounts was closed at the end of 2012, prior to the separation of the parties. The other account is apparently still active and the most recent balance is $43,593 JAD, which equates to $432 CAD. The account records marked in evidence are in the names of Mr. Morgan, Ms. Morgan, and Mr. Morgan’s mother or sister. Despite this, Ms. Morgan testified that she has no access to the account. Mr. Morgan clearly has access, claiming in his testimony that each of the parties have equal access. In the circumstances, the most appropriate disposition is to order that Mr. Morgan will retain this Jamaican account, that Ms. Morgan will be required to transfer any interest she has in the account, and that the proceeds of sale from the former family home will be adjusted to give Ms. Morgan credit for her one half interest in the account, valued at $432 CAD.
[98] Ms. Morgan seeks a further adjustment of $100,000 on account of “household contents”, “undisclosed or wasted cash”, and various items of personal property which she says Mr. Morgan took from the former family home after the parties separated. I would group these claims into several categories, namely (i) furniture, (ii) jackets and wigs, (iii) jewellery, and (iv) “undisclosed or wasted cash”.
[99] Claims regarding division of household property are often difficult to resolve at trial. There must be admissible evidence to establish not only the existence of the property, but also its value. More specifically, there must be admissible evidence of the market value of the property at the time of trial. In many cases, where the parties separated long before trial and some or all of the property has been disposed of, objective and reliable evidence of this sort is hard to obtain; often the cost of doing so would be disproportionate to the value of the property in issue. The parties sometimes seek to rely on estimates of value given through their own viva voce testimony. There are some decided cases where the trial judge did not consider such evidence to be sufficiently objective, precise, or reliable to make a finding as to the existence and value of the property, and no order is made: S.D. v. C.D., 2014 BCSC 952 at para. 64; Mohammadi v. Mohammadi, 2016 BCSC 1873 at para. 78-79. In other cases, the trial judge has been able to make a determination that one party retained or liquidated substantially more household property than the other, and has been prepared to order an equalization payment based on estimates of the property value: Hill v. Hill, 2017 BCSC 2117 at para. 108, 117; Lahdekorpi v. Lahdekorpi, 2016 BCSC 2143 at para. 108.
[100] In this particular case, Ms. Morgan identified, in her testimony, a letter dated 28 April 2016 from her counsel to Mr. Morgan’s counsel, suggesting that the disagreement regarding division of household furnishings could be resolved by preparing a list and then agreeing to the disposition of each listed item. Ms. Morgan testified that she was not aware of any response to this proposal. In cross-examination, Ms. Morgan admitted that she retained some of the personal property from the house, but maintained that it was not an equitable division. Ms. Morgan now seeks an adjustment to account for household property which Mr. Morgan took for himself after separation. Mr. Morgan’s response was that both parties took property from the former matrimonial home, and the evidence does not establish that Mr. Morgan took an unequal share of it.
[101] Recall that after separation, the parties continued to live in the family home, separate and apart from each other. Mr. Morgan occupied the master bedroom and Ms. Morgan occupied a guest room. At a certain point, each of them unilaterally placed items of personal property beyond the reach of the other. Mr. Morgan says that he noticed Ms. Morgan had taken some things, and this prompted him to place a lock on the door to the master bedroom door and then place certain property to which he laid claim in that room, out of Ms. Morgan’s reach. Although I am satisfied that each party unilaterally retained property including household furnishings without agreement of the other, I am not satisfied that the arrangement was equitable or resulted in an equal division of the family’s household property.
[102] Ms. Morgan testified that in 2012, Mr. Morgan wanted to buy $4,000 worth of furniture on credit. Ms. Morgan was opposed but ultimately acceded to the entreaties of Mr. Morgan, who wanted the furniture as a birthday gift for himself and promised to pay off the debt within one year. Mr. Morgan never paid off the debt, which became a family responsibility. After the breakdown of the relationship, Mr. Morgan retained possession of the furniture. Mr. Morgan did not deny that he retained the furniture, explaining that he only took it after Ms. Morgan started removing other property from the house. Without accounting for each and every item of household property that was retained by either party (which I am not invited to do), I am satisfied that Mr. Morgan retained for himself or liquidated the most valuable pieces of household furniture. The value of this furniture was $4,000 at the time it was purchased, and it must have depreciated considerably since that date. I would assign a value of $1,000 to this property at the time of their disposition by Mr. Morgan or the time of trial, as the case may be. There will be an adjustment to compensate Ms. Morgan for her half of the value of this property.
[103] Mr. Morgan also retained a number of leather jackets and expensive wigs, which Ms. Morgan says were acquired during the relationship and are therefore family property. Ms. Morgan took photographs of these items, in the back of Mr. Morgan’s car. It was suggested in cross-examination of Ms. Morgan that she staged the photographs by placing these items in Mr. Morgan’s car herself, and then photographed them. Ms. Morgan denied this and I accept her testimony on this point. Ms. Morgan explained that at some point after the Judicial Case Conference in this matter, she saw a collection of leather jackets and expensive wigs in the back of Mr. Morgan’s car. Rather than risk a confrontation with Mr. Morgan by trying to take the items back, Ms. Morgan decided to take photographs for use in court.
[104] Quite apart from how these items got into Mr. Morgan’s car, Mr. Morgan admits that he retained them after the separation. He testified that the wigs belonged to him because they were property of Afra Hair Design or Bijou Beauty Supply. I note that both parties were involved in the hairdressing industry, so there is no reason to assume that the wigs were inventory in Mr. Morgan’s business. Mr. Morgan also testified that the leather jackets did not belong to Ms. Morgan and he had them in his possession because he was intending to sell them. Mr. Morgan never explained how or why he came into possession of a number of ladies jackets if not from Ms. Morgan. Whatever the circumstances in which these items were acquired, I am satisfied that all of these items – both the jackets and the wigs – were property acquired during the marriage and as such they are family property. I am not satisfied that any of these items are excluded property. As far as the value of these items is concerned, Ms. Morgan says there were a total of six items worth $200 each. Mr. Morgan did not dispute Ms. Morgan’s testimony regarding the value. I find that the total value of this family property is $1,200, and that Ms. Morgan is entitled to an adjustment of $600 for her half of the value of this property.
[105] Ms. Morgan also claims that after the parties separated Mr. Morgan removed valuable jewellery from the former family home, and has retained or disposed of it. Ms. Morgan explained in her testimony that over the course of the relationship, the parties purchased a considerable amount of men’s and women’s jewellery. She referred to rings worth $8,000, a single set of earrings which Mr. Morgan told her were worth $5,000, and several necklaces with unspecified values. Ms. Morgan also referred to credit card statements reflecting jewellery purchases made by Mr. Morgan, and she tendered photographs of Mr. Morgan wearing jewellery. Ms. Morgan alleged that some of the women’s jewellery purchased by Mr. Morgan was never given to her, suggesting that Mr. Morgan must have purchased it for Tamar Lloyd, a hairdresser at Afra Hair Design. Ms. Morgan alleges that Mr. Morgan and Ms. Lloyd have been in a relationship, they live together, and that they have a child together. Ms. Morgan estimated that Mr. Morgan took some $35,000 to $40,000 worth of property out of the family home. Excluding the leather jackets and wigs addressed above, this would mean Mr. Morgan removed at least $33,800 in jewellery from the home.
[106] In cross-examination, Ms. Morgan admitted that some of the jewellery Mr. Morgan had purchased was given to her, but maintained that other pieces were not given to her and that Mr. Morgan must have given them to someone else. With regard to timing, Ms. Morgan testified in cross-examination that she discovered the jewellery had gone missing from the family home in November 2015. It was put to Ms. Morgan that this did not square with an affidavit sworn in October 2015, in which she claimed to have become aware that the jewellery had gone missing in October of 2014. After this exchange, Ms. Morgan explained that some of the jewellery went missing in October 2014, and she later discovered that more jewellery – along with the leather jackets and wigs – went missing in November 2015.
[107] For his part, Mr. Morgan testified that all of the women’s jewellery he purchased was for Ms. Morgan. He referred to credit card statements showing that the jewellery was purchased with a credit card used to cover family expenses. Mr. Morgan denied purchasing women’s jewellery for anyone other than Ms. Morgan, and flatly denied taking any of Ms. Morgan’s jewellery after separation. He also testified that he left some men’s jewellery in a jewellery box, which Ms. Morgan then took from the matrimonial home after separation. When referred to photographs showing him wearing certain items of men’s jewellery, Mr. Morgan testified that he still has some of it, and that he pawned other pieces and used the money to cover his expenses.
[108] Taking all the evidence together, I am satisfied that the parties purchased a significant amount of jewellery during the marriage. However, there is no cogent evidence that Mr. Morgan removed more than $33,000 in jewellery from the family home as Ms. Morgan alleges. The evidence as to who retained the jewellery, and the value of the jewellery, is not specific or reliable enough for me to make any conclusive finding regarding Ms. Morgan’s claim.
[109] Counsel for Ms. Morgan contends that through his involvement in poker and other cash-based enterprises, Mr. Morgan accumulated a significant amount of undisclosed cash, or alternatively that Mr. Morgan has “wasted” a significant amount of cash through gambling. To some extent, these are mutually inconsistent positions.
[110] Although the bank records indicate that a fair amount of cash went through Mr. Morgan’s accounts, I am not satisfied that he ever managed to accumulate any significant amount of cash, much less that he has secreted this cash and placed it beyond the reach of Ms. Morgan. And if Mr. Morgan in fact “wasted” the cash during the marriage, then the cash did not exist at the date of separation. It is therefore not family property, and it need not be accounted for in the division of family property and debt. I will return to Ms. Morgan’s argument about “wasting” when I address her plea for an unequal division of family property and debt.
[111] Both parties agree that the remainder of the adjustments, referred to as points (k.1) to (k.24) in the following table, should be made to the net proceeds from the sale of the former family home to achieve an equal division of family property and debt.
[112] I have summarized my conclusions regarding the adjustments required to achieve an equal division of family property and debt in the table below. I note that all of this is subject to Ms. Morgan’s argument that there should be an unequal division of family property and debt. I will deal with this argument below, after settling the adjustments necessary to achieve an equal division of family property and debt.
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Asset, Debt, or Transaction |
Mr. Morgan |
Ms. Morgan |
|
Gross Proceeds |
$192,441 |
$192,441 |
|
(a) BMO judgment |
No adjustment |
No adjustment |
|
(b) Home repairs paid by Ms. Morgan |
($717) |
$717 |
|
(c) Locksmith paid by Ms. Morgan |
($78) |
$78 |
|
(d) Vehicle equalization payment |
($1,875) |
$1,875 |
|
(e) Vehicle repairs paid by Ms. Morgan |
No adjustment |
No adjustment |
|
(f) Car rental fees paid by Ms. Morgan |
($153) |
$153 |
|
(g.1) CIBC Dividend Platinum credit card, account ending 588 (dormant) |
No adjustment; declaratory order to issue |
No adjustment; declaratory order to issue |
|
(g.2) TD First Class Travel Visa card, account ending 343 (dormant) |
No adjustment; declaratory order to issue |
No adjustment; declaratory order to issue |
|
(g.3) RBC line of credit, account ending 7002 (dormant) |
No adjustment; declaratory order to issue |
No adjustment; declaratory order to issue |
|
(h.1) CitiFinancial business loan account ending 078, assumed by Mr. Morgan |
$2,525 |
($2,525) |
|
(h.2) CitiFinancial business loan account ending 127, assumed by Mr. Morgan |
$2,908 |
($2,908) |
|
(i.2) One-half interest in real property at Howell’s Content, Jamaica, retained by Mr. Morgan |
($2,500) |
$2,500 |
|
(i.3) Jamaican $USD bank account ending 966, to be retained by Mr. Morgan |
($216) |
$216 |
|
(j.1) Furniture taken from family home by Mr. Morgan |
($500) |
$500 |
|
(j.2) Jackets and wigs taken from family home by Mr. Morgan |
($600) |
$600 |
|
(j.3) Jewellery allegedly taken from family home by Mr. Morgan |
No adjustment |
No adjustment |
|
(k.1) Mortgage payments made by Ms. Morgan (July, Feb, Apr 2016) |
($3,900) |
$3,900 |
|
(k.2) Rental income received by Mr. Morgan |
($4,900) |
$4,900 |
|
(k.3) Shaw cable bills paid by Ms. Morgan |
($700) |
$700 |
|
(k.4) Fortis bill paid by Ms. Morgan |
($595) |
$595 |
|
(k.5) Hydro bills paid by Ms. Morgan |
($614) |
$614 |
|
(k.6) Telus bills paid by Ms. Morgan |
($606) |
$606 |
|
(k.7) ADT security bill paid by Ms. Morgan |
($128) |
$128 |
|
(k.8) House insurance paid by Ms. Morgan |
($1,788) |
$1,788 |
|
(k.9) Car transfer tax paid by Ms. Morgan |
($600) |
$600 |
|
(k.10) CIBC account ending 639 retained by Ms. Morgan |
$6,507 |
($6,507) |
|
(k.11) CIBC account ending 269 retained by Ms. Morgan |
$500 |
($500) |
|
(k.12) TFSA account ending 014 retained by Ms. Morgan |
$13,408 |
($13,408) |
|
(k.13) GIC ending 741 retained by Ms. Morgan |
$800 |
($800) |
|
(k.14) GIC ending 422 retained by Ms. Morgan |
$389 |
($389) |
|
(k.15) CIBC TFSA mutual fund ending 092 retained by Ms. Morgan |
$413 |
($413) |
|
(k.16) BMO MasterCard payments made by Ms. Morgan |
($3,413) |
$3,413 |
|
(k.18) BMO MasterCard debt retained by Ms. Morgan |
($8,611) |
$8,611 |
|
(k.19) Amex credit card payments made by Ms. Morgan |
($4,257) |
$4,257 |
|
(k.20) President’s Choice credit card debt assumed by Ms. Morgan |
($633) |
$633 |
|
(k.21) Citizen’s Bank Visa credit card debt assumed by Ms. Morgan |
($351) |
$351 |
|
(k.22) Hudson’s Bay credit card debt assumed by Ms. Morgan |
($335) |
$335 |
|
(k.23) RRSP account ending 302 retained by Ms. Morgan (see Ex. 6, Tab 49) |
$1,522 |
($1,522) |
|
(k.24) RBC business account ending 0574 retained by Mr. Morgan |
($1,162) |
$1,162 |
|
Total of adjustments to achieve equal division of family property and debt |
____________ ($12,544) |
____________ $12,544 |
|
Net proceeds to each party |
$182,181 |
$202,701 |
[113] Ms. Morgan argues for an unequal division of family property and debt. She contends that throughout the relationship, she took care to ensure that her bills were paid and her debts were under control, all while attempting to build savings for the children (through RESPs) and the parties (through TFSAs, mutual funds, and other savings). Since separation, Ms. Morgan has made great efforts to pay down the family debt, and continue to save. By contrast, throughout the marriage and afterward, Mr. Morgan has “racked up exorbitant personal and business debts” and has made “no serious effort to pay his bills or debts”, despite his access to significant amounts of cash. Ms. Morgan also complains that Mr. Morgan’s gambling has had a serious adverse impact on her post-separation financial position.
[114] Mr. Morgan argues that no basis has been shown for an unequal division of family property and debt. He argues that “the general rule of equal division” must prevail “unless persuasive reasons can be shown for a different result”. Unequal division can only be ordered where there is significant unfairness within the meaning of s. 95 of the Family Law Act. The unfairness must be “weighty, meaningful, or compelling”, having regard to the factors set out in s. 95(2): Remmem v. Remmem, 2014 BCSC 1552 at para. 44. The threshold of “significant unfairness” will only be met in limited circumstances where equal division would produce “obvious or compelling unfairness”: Hodel v. Adams, 2016 BCSC 910 at para. 37. Mr. Morgan says there is no such “significant unfairness” in the case at bar.
[115] The thrust of Ms. Morgan’s claim for unequal division seems to rest on the assertion that, throughout the relationship, Mr. Morgan was financially imprudent in the extreme. There are a number of facets to Mr. Morgan’s alleged financial imprudence. Among other things, there is evidence indicating that Mr. Morgan has had, and continues to have, a serious problem with managing his spending habits and paying his debts. There is also evidence that Mr. Morgan was heavily involved in gambling for a significant period of the relationship. I will address each of these points below, in considering the factors listed in s. 95(2) of the Family Law Act.
[116] Section 95(2) sets out a list of factors for the court to consider in determining whether equal division of family property and debt would be significantly unfair. The factors which appear to be most relevant in this particular case are as follows:
a) First, there is the length of the relationship, as contemplated in s. 95(2)(a). The case law suggests that equal division has the potential to produce unfairness in particularly short relationships. In this case, the relationship lasted 21 years. There is nothing about the length of the relationship that would suggest or contribute to any unfairness arising from an equal division of family property.
b) Next, I will consider Ms. Morgan’s contribution to the career or career potential of Mr. Morgan, as contemplated in s. 95(2)(c). When the relationship began, Mr. Morgan was working as a barber in Jamaica. By the end of the relationship, Mr. Morgan had become the owner of a hairdressing business in Canada with five or six employees, generating almost $200,000 in revenue per year. I have no doubt that the relationship between the parties, their collective efforts, sharing of burdens, and pooling of resources, played a role in the relative success of Mr. Morgan’s business. All of this weighs in favour of an equal division of family property; it does not suggest that an equal division would be unfair to Ms. Morgan.
c) I must also consider whether family debt was incurred in the normal course of the relationship between the parties, as contemplated in s. 95(2)(d). Over the course of the relationship, the parties accumulated significant credit card debt. The credit card statements show that the parties used credit cards to cover normal family expenses, to make purchases of property including luxury items like jewellery, and to pay for trips. As Mr. Morgan’s counsel put it, the credit card statements reflect lavish spending, apparently beyond the means of the parties. However, the parties handled their credit obligations quite differently. The evidence shows that throughout the relationship Mr. Morgan was irresponsible and reckless in his use of credit. Ms. Morgan explained in her testimony that in 2010, the parties took out a $140,000 line of credit against their home to consolidate their debt and pay off credit cards that had been “maxed out” by Mr. Morgan. As of December 2011, all of the family debt had been consolidated via the line of credit, and the parties had no outstanding credit card debt. Less than one year later, two credit cards jointly held by the parties had accumulated balances of $10,990 (CIBC Visa) and $24,000 (BMO MasterCard) respectively. Mr. Morgan had also had an outstanding balance of $13,506 on a separate credit card registered in his name (BMO MasterCard). Ultimately, Mr. Morgan failed to make any payments on his BMO MasterCard, and the bank obtained a judgment against him in the amount of $19,317, which was then registered against his one-half interest in the property. I have already concluded at paragraph 75 to 77 above that the BMO MasterCard judgment related to family debt. I am now dealing with Ms. Morgan’s contention that it would be “substantially unfair” to require her to bear half the cost of the BMO judgment, because the judgment was the product of Mr. Morgan’s irresponsible credit practices. I cannot accept this submission. The underlying debt from Mr. Morgan’s BMO MasterCard was clearly family debt, since the card was used to cover various family expenses, and to purchase items, including an expensive stereo system, that were family property. And although Ms. Morgan later sought to insulate herself against Mr. Morgan’s credit card debt by severing the joint tenancy, she did not take that step until December 2012, after most if not all of the credit card debt on Mr. Morgan’s BMO MasterCard had been incurred.
d) Next I will consider the contention that Mr. Morgan, acting other than in good faith, substantially reduced the value of family property, or disposed of or dealt with property in a way that caused Ms. Morgan’s interest in it to be defeated, as contemplated in s. 95(2)(g). Here, Ms. Morgan would appear to have two submissions. The first is that Mr. Morgan’s failure to deal with his credit card debt led to an accumulation of interest and ultimately a judgment registered against the former matrimonial home. However, the vast majority of the debt in question – some $16,000 of the total judgment of $19,000 – related to credit card charges incurred before Ms. Morgan severed the title to the former matrimonial home. It is true that Mr. Morgan’s failure to deal with the debt led to a further accumulation of interest and registration of the judgment against the property, to the tune of some $3,000. I am not inclined to the view that this amounts to a “substantial reduction” in family property within the meaning of s. 95(2)(g). Ms. Morgan’s second submission is that Mr. Morgan’s involvement in gambling caused a dissipation of family property, not in good faith. There is evidence that for a significant part of the relationship, Mr. Morgan spent a great deal of time gambling, specifically playing poker. Mr. Morgan did not deny that he spent a lot of time at casinos playing poker up until the time that the British Columbia Lottery Commission banned him. However, Mr. Morgan did deny that he lost money at it; Mr. Morgan’s position was that he generally won more than he lost. In the end, considering the testimony of both Ms. Morgan and Mr. Morgan, together with the relevant financial records, I cannot conclude that Ms. Morgan has met the burden of establishing that Mr. Morgan’s poker playing “substantially reduced” family property within the meaning of s. 95(2)(g).
[117] Having discussed each of the factors listed above individually, I must ultimately consider whether these factors taken cumulatively meet the standard of “significant unfairness” contemplated in s. 95(1). My conclusion is that they do not. This is not a case where, after making all of the adjustments required to achieve an equal division of property and debt as described above, there is some weighty, meaningful, or compelling basis on which to hold that equal division would result in significant unfairness.
[118] Ms. Morgan’s Amended Notice of Family Claim seeks spousal support under both the Divorce Act and the Family Law Act, and the parties did not make any submissions on which statute should be applied. While there are differences in the two statutes, the governing principles discussed in the case law are largely if not entirely the same, and under both regimes courts have taken considerable guidance from the federal Spousal Support Advisory Guidelines [SSAG]. Since spousal support is sought as corollary relief in a divorce proceeding, I will address it under the Divorce Act.
[119] Spousal support is dealt with under s. 15.2 of the Divorce Act. Under s. 15.2(3), the court is required to take into account the condition, means, needs and other circumstances of each spouse, including their length of cohabitation, and the functions performed by each of them, and any agreement or order regarding support. The objectives of spousal support as set out in s. 15.2(6) are: (a) the recognition of any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown, (b) the apportionment of the financial consequences pertaining to the care of the children over and above each spouse’s child support obligations, (c) relief of economic hardship arising from the breakdown of the marriage, and (d) insofar as it is possible, promoting the economic self-sufficiency of each spouse within a reasonable period of time.
[120] In Bracklow v. Bracklow, [1999] 1 S.C.R. 420, the Court stated at para. 49 that, “[i]n summary, the statutes and the case law suggest three conceptual bases for entitlement to spousal support: (1) compensatory, (2) contractual, and (3) non-compensatory”. In this particular case, Ms. Morgan argues that she is entitled to spousal support on a compensatory basis.
[121] Compensatory support “is intended to provide redress to the recipient spouse for economic disadvantage arising from the marriage or the conferral of an economic advantage upon the other spouse”: Chutter v. Chutter, 2008 BCCA 507 at para. 50. The compensatory model of spousal support often focuses on economic disadvantages from “sacrifices made by a recipient spouse in assuming primary childcare and household responsibilities”: Chutter at para. 50. However, compensatory support may also address economic advantages enjoyed by one spouse as a result of the other spouse’s efforts: Chutter at para. 51, citing Moge v. Moge, [1992] 3 S.C.R. 813 at 864. In the case at bar, both economic disadvantages to Ms. Morgan and economic advantages to Mr. Morgan are at play.
[122] I will deal first with the economic disadvantages suffered by Ms. Morgan flowing from the relationship and its breakdown. Ms. Morgan left the work force following the birth of each of the children. On each occasion, she returned to work after taking maternity leave, seeking hairdressing work that was compatible with her family obligations. While Mr. Morgan was able to set up and run a hairdressing business with his own clientele, Ms. Morgan returned to work as an employee, working for wages and tips. Accordingly, I conclude that Ms. Morgan suffered at least some degree of economic disadvantage arising from her child care responsibilities. Ms. Morgan also suffered significant and lasting economic disadvantage owing to Mr. Morgan’s poor handling of both family and business finances. Throughout the relationship, Ms. Morgan tried to save for both the children and for herself and Mr. Morgan. Her efforts were largely thwarted or frustrated by Mr. Morgan’s repeated accumulation of credit card debt.
[123] I also find that Ms. Morgan’s role in the relationship served to support or contribute to the economic advantages realized by Mr. Morgan over the course of the relationship. At the beginning of the relationship, Mr. Morgan was working as a barber in Jamaica. By the end of the relationship, he was the owner and operator of a hairdressing business with five or six employees and almost $200,000 in annual revenues. In addition to her child rearing and family responsibilities, Ms. Morgan worked from time to time at the business, and she handled the business’s payroll accounts. There is no evidence that the payroll remittances were in any disorder when Ms. Morgan handled them. There is clear evidence that after Ms. Morgan stopped handling the books, the payroll remittances were not properly managed and went into arrears, to the detriment of the business. Considering all of this evidence, I am satisfied that Ms. Morgan contributed to the relative success of the business. There is ample support for the proposition that a contribution toward a spouse’s business can be a basis for compensatory spousal support: Moge at p. 869; Chutter at para. 70.
[124] I would sum all of this up by noting that after a relationship of some 21 years, Ms. Morgan has emerged with an annual income of some $44,537 per year, while Mr. Morgan comes out of the relationship as a proprietor of a business and has an annual income of some $83,000 per year. I am satisfied that Ms. Morgan has established a compensatory entitlement to spousal support.
[125] In calculating the amount of support, I will apply the income findings described at paragraph 59 above, namely that (i) Ms. Morgan’s income is $44,537 per year, with $25,000 of that total being treated as untaxed income, and (ii) Mr. Morgan’s income is $83,000 per year, with $70,000 of that total being treated as untaxed income. Taking into account the principles discussed in the SSAG, I find that the appropriate level of support is at the mid-point of the suggested range as determined by the with-child formula. The net result is that Mr. Morgan will be obliged to pay $339 per month in spousal support to Ms. Morgan.
[126] With regard to duration, the SSAG suggests that spousal support should be ordered for an unspecified period of time to be determined. Considering the length of the relationship and the age of the parties, that is an appropriate disposition in this case.
[127] Mr. Morgan is ordered to pay spousal support in the amount of $339 per month, commencing on 1 November 2018, and continuing each and every month, thereafter until further order of the Court.
[128] Ms. Morgan has also asked for retroactive spousal support, from June of 2016 until the date of judgment. However, as the arguments at trial were focused on entitlement and quantum, I did not have the benefit of submissions from either party concerning the considerations in awarding retroactive support as discussed in D.B.S. v. S.R.G., 2006 SCC 37 at para. 99-116. The D.B.S. factors were developed in the context of claims for retroactive child support, but have been adapted and applied to claims for retroactive spousal support: Kerr v. Baranow, 2011 SCC 10 at para. 207; T.N. v. B.N., 2018 BCSC 201 at para. 93-95.
[129] I am reluctant to attempt any conclusion on Ms. Morgan’s claim for retroactive spousal support without further submissions from the parties on the principles discussed in the case law referred to in the preceding paragraph. Accordingly, I invite further written submissions from the parties on the issue of whether retroactive spousal support should be ordered. Ms. Morgan, as the party seeking retroactive support, may file a written argument of no more than four pages in length, within three weeks of these reasons. Mr. Morgan, as the respondent, may file a written response of no more than four pages, within two weeks of receipt of Ms. Morgan’s submissions. Ms. Morgan will then be permitted to file a reply submission of no more than two pages, within one week of receipt of Mr. Morgan’s submissions.
(5) Joint Guardianship
[130] In her counterclaim, Ms. Morgan seeks joint guardianship of the children. Mr. Morgan does not oppose this. The older child, Vanessa, is now over the age of majority and no order of guardianship is required for her. I note that both children currently reside with Ms. Morgan, and that this arrangement is agreeable to Mr. Morgan. Accordingly, neither of the parties seek any orders with respect to custody or access under the Divorce Act. Without delving into the question of whether custody and access orders under the Divorce Act may in some instances be incompatible with orders dealing with guardianship under the Family Law Act, in this case an order confirming that both parents are joint guardians of the younger child would clearly not create any incompatibility or inconsistency. I therefore order that Ms. Morgan and Mr. Morgan are joint guardians with respect to the younger child, Crystal.
[131] If the parties are unable to agree on costs, they can file written submissions. Counsel for Ms. Morgan may file written submissions of four pages or less (plus an affidavit containing any supporting materials) within three weeks of the release of these reasons. Counsel for Mr. Morgan may file written submissions of four pages or less (plus an affidavit containing any supporting materials) within two weeks of receiving Ms. Morgan’s written submissions. Counsel for Ms. Morgan may file a reply of two pages or less (plus any reply affidavit material) within one week of receiving the written submissions of Mr. Morgan. If either party takes the view that submissions on costs cannot effectively be dealt with in writing, that party may, within the time limits set out above, submit a request to schedule a further appearance for oral submissions on costs.
[132] I would summarize my findings and determinations as follows:
(1) Divorce
(1.1) The parties are divorced, the divorce to take effect on the 31st day after the date of judgment.
(2) Income for the Purposes of Support Obligations
(2.1) Ms. Morgan’s income is imputed at $44,537 per year, with $25,000 of that income characterized as “untaxed” income for the purposes of calculating support obligations.
(2.2) Mr. Morgan’s income is imputed at $83,000 per year, with $70,000 of that income characterized as “untaxed” income for the purposes of calculating support obligations.
(3) Child Support [Granted under the Divorce Act]
(3.1) Mr. Morgan is required to pay $1,657 per month to Ms. Morgan for the support of the two children, Vanessa and Crystal, commencing on 1 December 2018 and continuing each month thereafter so long as the children continue to be children of the marriage.
(3.2) By agreement, the parties will equally share responsibility for all special and extraordinary expenses for the two children, Vanessa and Crystal, so long as they continue to be children of the marriage.
(3.3) Mr. Morgan is required to pay a further $35,607 in retroactive child support from June 2016 until the date of judgment.
(4) Property Division [Family Law Act]
(4.1) The family property and debt is to be divided equally. Subject to adjustments for retroactive support payments as discussed in point (6) below, the net proceeds from the sale of the former family home are to be divided as follows: Mr. Morgan is to receive $182,181, and Ms. Morgan is to receive $202,701.
(4.2) It is hereby declared that, provided that debt(s) is/are actually paid, Ms. Morgan is responsible for 50% of the outstanding debt owed by Mr. Morgan as of the date of separation, plus 50% of the interest on any such debt up to the date of this judgment, on (i) his CIBC Dividend Platinum card account ending 588, (ii) his TD First Class Travel Visa card account ending 343, and (iii) his RBC Line of Credit account ending 7002. Upon proof of payment of any of these debts by Mr. Morgan, Ms. Morgan shall within 30 days of receipt of such proof, reimburse Mr. Morgan for 50% of the debt outstanding as of the date of separation, plus 50% of the interest up to the date of this judgment.
(4.3) Ms. Morgan is to transfer her interest in the Jamaican USD bank account ending in digits 966 to Mr. Morgan, and shall execute any documents necessary to achieve this by 31 December 2018.
(5) Spousal Support [Granted under the Divorce Act]
(5.1) Mr. Morgan is required to pay to Ms. Morgan spousal support in the amount of $339 per month, commencing on 1 December 2018, and each and every month thereafter until further Order of the Court.
(5.2) The parties may file supplementary written submissions on the issue of retroactive spousal support, as discussed in paragraph 129 above.
(6) Adjustment to Net Proceeds on Account of Retroactive Support Payments
(6.1) The net proceeds from the sale of the former matrimonial home are to be further adjusted to account for retroactive child support owed by Mr. Morgan to Ms. Morgan as provided for in sub-paragraph (3.3) above, and for any retroactive spousal support based on further submissions as discussed in paragraph 129 above. Subject to further Order of the Court, the adjustment is to be made before any proceeds are paid out to either party.
(7) Joint Guardianship [Family Law Act]
(7.1) Ms. Morgan and Mr. Morgan will be joint guardians with respect to Crystal.
(8) Costs
(8.1) If the parties are unable to agree on costs, they may make written submissions as discussed in paragraph 131 above.
“Riley J.”