2005 BCCA 406err2 Yemchuck v. Yemchuk

Before:	The Honourable Madam Justice Prowse
	The Honourable Mr. Justice Hall
	The Honourable Madam Justice Saunders

K. Pepper	Counsel for the Appellant
P. Daltrop	Counsel for the Respondent
Place and Date of Hearing:	Vancouver, British Columbia
June 9, 2005
Place and Date of Judgment:	Vancouver, British Columbia
August 5, 2005

Written Reasons by:

The Honourable Madam Justice Prowse

Concurred in by:

The Honourable Madam Justice Saunders
The Honourable Mr. Justice Hall

Reasons for Judgment of the Honourable Madam Justice Prowse:

NATURE OF APPEAL

[1] Mr. Yemchuk is appealing from the decision of a trial judge, made October 29, 2004, pursuant to Rule 18A of the Rules of Court, B.C. Reg. 221/90, as amended, dismissing his claim for spousal support on the basis that he had not established any need for such support. Mr. Yemchuk is seeking spousal support, including retroactive support, until Ms. Yemchuk’s anticipated retirement date in November 2007.

ISSUES ON APPEAL

[2] Counsel for Mr. Yemchuk has raised eleven grounds of appeal, many of which involve a detailed analysis of the financial evidence which the trial judge was not asked to undertake. I do not find it necessary, or useful, to engage in such an analysis, not the least because the financial evidence is unsatisfactory in many respects.

[3] Suffice it to say that the principal issue on appeal is whether the trial judge erred in finding that Mr. Yemchuk was not entitled to spousal support. The determination of that issue requires this Court to consider whether the trial judge erred in:

(a) failing to properly consider and apply the provisions of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), as amended, (the “Act”) and the relevant authorities relating to spousal support;

(b) failing to properly take into account the significant disparity in respective standards of living of the parties following the breakdown of the marriage;

(d) finding that Mr. Yemchuk had not established any need for support by adopting an unduly restrictive interpretation of the concept of “need” and by imputing income to Mr. Yemchuk with respect to the lump sum payment Mr. Yemchuk received as his share of Ms. Yemchuk’s employment pension.

[4] In the event this Court concludes that Mr. Yemchuk is entitled to spousal support, there is an issue as to the quantum of that support. With respect to that issue, counsel provided submissions regarding the use, if any, this Court should make of the proposed Spousal Support Advisory Guidelines: A Draft Proposal, (Ottawa, Dept. of Justice: 2005) (the "Advisory Guidelines") in determining the issue of quantum.

[5] If spousal support is awarded, there is also an issue as to the date on which payments should commence.

[6] Finally, there is an issue as to costs.

BACKGROUND

[7] The parties were married in July 1966 and separated in May 2001 after 35 years of marriage. On December 10, 2001, Master Doolan made a declaration pursuant to s. 57 of the Family Relations Act, R.S.B.C. 1996, c. 128 that the parties had no reasonable prospect of reconciliation (the “triggering event”). There is a divorce proceeding outstanding, but no divorce order had been made by the time the appeal was heard.

[8] At the time of the order under appeal, Mr. Yemchuk was 63 years of age and Ms. Yemchuk was 61. (They are now 65 and 63.) Their only child is in his 30's and is self-supporting.

[9] Mr. Yemchuk retired in 1997 after having been employed for 32 years as a chemical engineer. Ms. Yemchuk, who is a registered nurse, works full-time for the federal government as a Labour Affairs Officer. She faces mandatory retirement in November 2007 when she turns 65. Both parties worked throughout the marriage.

[10] On October 16, 2002, Madam Justice Satanove made an order dividing the family assets equally between the parties as of the triggering event. The results of that order are summarized in the following chart prepared by counsel for Mr. Yemchuk which appears to accord with the order and the evidence:

Description	Ms. Yemchuk	Mr. Yemchuk
House Proceeds - Interest Refund	$75,431.77 + $600.00	$75,431.77 + $600.00
Vehicle	$ 6,750.00	1996 LE Camry valued at $13,500 ($ 6,750.00 paid to Ms Yemchuk)
RRSP Division	$93,867.76	$93,867.76
Subtotal	$176,649.53 (gross)	$176,649.53 (gross)
Pensions:	50%	50%
RRSP Compensation Payment	($15,126.07)	Included above
Pension Compensation (Dec/01 – Oct 31/02)	$15,663.75	($15,663.75)
Pension Compensation (Nov. 1/2002 – Aug. 30/2003	$14,789.80	($14,789.80)
TOTAL	$191,977.01	$146,195.98

[11] The order for division of assets provided that the employment pensions of the parties should be equally divided as of the triggering event. Mr. Yemchuk was then receiving his pension in the amount of approximately $45,000 per year. In May or June 2003, Ms. Yemchuk’s pension was divided by way of a rollover of $132,000 from Ms. Yemchuk's pension plan into an RRSP in Mr. Yemchuk’s name. Mr. Yemchuk was permitted by the order to retain his full pension income until he received the $132,000 lump sum payment. Thereafter, he was required to pay Ms. Yemchuk a total of $30,500 to compensate her for her share of his pension income for the period December 10, 2001 to August 30, 2003.

[12] The overall result of the division of assets (after taking into account the various adjustments referred to above) was that Ms. Yemchuk was to receive approximately $192,000 and Mr. Yemchuk was to receive approximately $146,000, exclusive of the $132,000 lump sum pension payment. Ms. Yemchuk also retained one half of her pension (which, at that time, must also be taken to be valued at $132,000 since it was accumulated entirely during the marriage).

[13] Because the mechanism for the division of Ms. Yemchuk’s pension had not yet been resolved, Madam Justice Satanove adjourned generally Mr. Yemchuk's application for spousal support. That application originally came before the trial judge in February 2004 and led to the order under appeal.

DECISION OF THE TRIAL JUDGE

[14] The trial judge set forth the history of the marriage and the litigation and the positions of the parties, including their positions with respect to the relevant provisions of the Act and supporting authorities. He noted that Mr. Yemchuk was seeking support in an amount approaching equalization in the incomes of the parties based primarily on the length of the marriage and the disparity of standards of living experienced by the parties on marriage breakdown. Ms. Yemchuk took the position that income should be attributed to Mr. Yemchuk as if he had invested the $132,000 pension payout in an annuity, rather than in the short-term investments recommended by his investment counsellors. In her submission, if income was attributed to Mr. Yemchuk on that basis, he was able to meet his expenses with the income available to him. It followed, in Ms. Yemchuk's view, that Mr. Yemchuk had no need for support, and, therefore, no entitlement to support.

[15] The trial judge accepted Ms. Yemchuk's position that Mr. Yemchuk's entitlement to support could only be justified on the basis of need. He went on to attribute income of between $800 and $1,000 to Mr. Yemchuk on the basis that this is the amount Mr. Yemchuk would have received if he had invested the $132,000 in an annuity. The trial judge did not accept that Mr. Yemchuk was entitled to account only for the interest he actually received on his investment of that fund. In that regard, the trial judge made the following comments at paras. 45 and 49 of his reasons for judgment:

I agree with [counsel for Ms. Yemchuk], that by electing to receive his share of [Ms. Yemchuk's] pension in a lump sum payment rather than payments from the purchase of an annuity the plaintiff has organized his affairs to maximize his capital asset at the expense of spousal support. In other words, he ought not be permitted to count on [Ms. Yemchuk] to make up the difference between the income from the purchase of an annuity and what his investment of the lump sum generates on a monthly basis.

…

In my opinion, an annuity was most definitely an option for the plaintiff to obtain a better financial return on his share of [Ms. Yemchuk's] pension. I agree with [Ms. Yemchuk's] counsel that to award spousal support to the plaintiff would allow the plaintiff to accumulate capital and that is not its purpose: See Hanuse v. Hanuse (1984), 40 R.F.L. (2d) 250 [B.C.S.C.]. In the result, I do not think that the plaintiff has established a need for spousal support.

[16] The trial judge also found that the fact that Mr. Yemchuk had retired early from employment, and the reasons for his retirement were irrelevant to the issue of spousal support.

DISCUSSION

(a) Standard of Review

[17] The standard of review applicable to orders of spousal support is set forth in Hickey v. Hickey, [1999] 2 S.C.R. 518 (at paras. 11 and 12). In summary, an appellate court should not interfere with a support order (or an order refusing support) unless the reasons for judgment disclose an error in law or in principle, a serious misapprehension of the evidence, or unless the judgment is clearly wrong.

(b) The Act, Moge and Bracklow

[18] An original application for spousal support is dealt with in s. 15.2 of the Act which provides, in part, as follows:

15.2(1) Spousal support order – A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay… such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

…

(3) Terms and conditions - The court may make an order under subsection (1) … for a definite or indefinite period or until a specified event occurs, and may impose terms conditions or restrictions in connection with the order as it thinks fit and just.

(4) Factors – In making an order under subsection (1)…, the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

…

(6) Objectives of spousal support order – An order made under subsection (1) … that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[19] The two leading authorities which are almost invariably referred to in cases dealing with spousal support are Moge v. Moge, [1992] 3 S.C.R. 813 and Bracklow v. Bracklow, [1999] 1 S.C.R. 420, both of which were referred to in the reasons of the trial judge. In brief, the Moge decision focuses primarily on the compensatory aspects of spousal support, but makes it clear that need continues to be a basis for an order of spousal support in appropriate cases. The Bracklow decision expands upon the discussion of spousal support in Moge and identifies three fundamental bases for an award of spousal support: compensatory, contractual and non-compensatory (needs-based). There are many authorities and learned articles which discuss these decisions at length. I will refer to them only to the extent necessary to dispose of this appeal. Suffice it to say at this point that the trial judge found that the compensatory and contractual bases for spousal support did not apply in this case, and that the only basis upon which an award of support could be founded was need. Having determined that income in the range of $800-$1,000 per month should be attributed to Mr. Yemchuk, the trial judge found that Mr. Yemchuk was not in need of spousal support.

(c) Application of the Act and the Authorities

[20] In Bracklow, Madam Justice McLachlin (as she then was), speaking for the court, noted (at para. 18) that trial judges "must exercise their discretion in light of the objectives of spousal orders as set out in s. 15.2(6), and after having considered all the factors set out in s. 15.2(4) of the Divorce Act." As a matter of convenience and clarity in this case, I will discuss the factors in s. 15.2(4) first, since the evidence in relation to those factors lays a foundation for determining whether the objectives set out in s. 15.2(6) mandate an order of support in this case. Clearly both s. 15.2(4) and (6) have to be considered in determining whether an order of support should be made, and if so, the quantum and duration of that support.

[21] Under s. 15.2(4) of the Act, in making an order for spousal support, the court is directed to take into account the means, needs and other circumstances of each spouse including the length of the time the spouses cohabited (15.2(4)(a)) and the functions performed by each spouse during cohabitation (15.2(4)(b)). (There is no agreement relating to support in this case, so ss. 15.2(4)(c) is not relevant.)

[22] Here, the relatively modest assets of the parties were divided equally between the parties as of the date of the triggering event as set forth in the order of Madam Justice Satanove. The results of that division are described in paras. 10 and 11, supra. I note that those amounts had diminished by the date of the spousal support application for reasons which are not entirely clear (particularly in the case of Ms. Yemchuk), but which are probably referable, in part, to the fact that both parties were living beyond their income.

[23] Mr. Yemchuk also received a lump sum payment of $132,000 for his one half share of Ms. Yemchuk's pension, which must be regarded as offset by an equal value of the pension to her as of the date of the triggering event. Ms. Yemchuk and Mr. Yemchuk also shared the income stream from Mr. Yemchuk's pension from which they each received approximately $22,000 (gross) per year ($1,833 per month).

[24] In terms of income, the trial judge found that Ms. Yemchuk's income for spousal support purposes was $75,000, of which $55,500 was income from employment. Because of the uncertain state of some of the financial evidence, including some confusion between the use of net and gross income, I am not prepared to find that the trial judge erred in finding that Ms. Yemchuk's income was $75,000 for the purpose of determining spousal support.

[25] The trial judge found that Mr. Yemchuk's total income for spousal support purposes, apart from attributed income, was $37,632, including payments of $300 per month from his elderly mother for rent on the two bedroom apartment they share and $300 per month investment income relating to his share of Ms. Yemchuk's pension.

[26] The trial judge noted that Mr. Yemchuk claimed expenses of $46,000 per year and that Ms. Yemchuk claimed expenses of $69,000 per year. Counsel for Mr. Yemchuk invited the trial judge not to embark on a detailed analysis of the parties' expenses and he accepted that invitation. I, too, am satisfied that no benefit will be derived from a detailed analysis of those expenses and I do not propose to conduct one. I note, however, that Mr. Yemchuk's listed expenses are very modest. At the level of expenses claimed by both parties, each of them is encroaching on capital. It is clear, however, that Ms. Yemchuk has had considerably more income at her disposal than has Mr. Yemchuk, attributable mainly to the fact that she is employed and he is not. It is also apparent that Ms. Yemchuk has been disposing of her capital at a greater rate than Mr. Yemchuk for reasons which are not disclosed in the evidence.

[27] I turn now to the length of the parties' cohabitation and the functions played by both spouses during cohabitation. As earlier noted, the parties cohabited as a married couple for 35 years prior to their separation. This is a long marriage by any measure. They both worked throughout the marriage and progressed in their careers. Ms. Yemchuk deposed that she worked part-time for three years early in the marriage after the birth of their son, but, apart from that, there is no evidence that the child-rearing or household responsibilities fell more on one party than the other. The exception is the period following Mr. Yemchuk's retirement when he deposes he took over primary responsibility for selling their homes and running the household for the four years they lived together thereafter prior to the separation. Mr. Yemchuk contributed his income to a joint account from which most household expenses were paid and Ms. Yemchuk also maintained a separate account from which she paid personal expenses and made contributions to their adult son. In general terms, it appears that both parties contributed their time, efforts and income to their mutual benefit and that they were able to maintain a comfortable, but not extravagant, standard of living.

[28] With these considerations in mind, I turn to the objectives of a spousal support order set out in s. 15.2(6) of the Act. While the authorities are clear that all objectives must be considered in determining whether an order of support is warranted, the most relevant factors in this case are: (a) the economic advantages or disadvantages to the spouses arising from the marriage or its breakdown (a provision described in Moge as "expressly compensatory in character"); and (c) relieving any hardship of the spouses arising from the breakdown of the marriage (described in Moge as not being exclusively compensatory.)

[29] Here there is a significant disparity in the economic circumstances and standard of living of the spouses which I am satisfied arises directly from the marriage breakdown and resulted in hardship to Mr. Yemchuk disproportionate to that experienced by Ms. Yemchuk. Mr. Yemchuk is living in a rented two-bedroom apartment with his elderly mother who contributes to her room and board. His listed monthly expenses are modest. Ms. Yemchuk is living on her own in a rented apartment. Her listed monthly expenses are not extravagant, but are considerably higher than those of Mr. Yemchuk ($5,800 as compared with $3,800). Only a portion of this discrepancy in expenses can be related to the fact that she is working and he is not. Both parties are living beyond their means and at a standard of living lower than that they enjoyed during the marriage. A chart prepared by an expert retained by Mr. Yemchuk indicates that at his current income and expense level, projected forward with modest cost of living increases, Mr. Yemchuk will probably have disposed of his capital base by the time he is 76 years of age. The same projection indicates that Ms. Yemchuk's capital base will have increased over the same period, but it is based on figures and projections which are not reflected in the evidence and I do not find it helpful.

[30] When Ms. Yemchuk retires, it appears that the disparity between the parties' means and needs and their respective standards of living will narrow, and it is for that reason Mr. Yemchuk is not seeking support once Ms. Yemchuk has retired.

[31] It is apparent that the principal reason for the disparity in the means and circumstances of the parties upon marriage breakdown was Mr. Yemchuk's retirement in 1997. While the trial judge considered the reason for Mr. Yemchuk's retirement to be irrelevant, I do not agree. In my view, it is apparent that Mr. Yemchuk retired in large part because his wife had to relocate in order to maintain her employment with the Federal Government and had been offered employment in Manitoba. Subsequently, she was offered similar employment in British Columbia. The parties sold their homes and moved to accommodate the wife's employment situation on both occasions. The second move also enabled them to be closer to their son. There is no suggestion that Ms. Yemchuk objected to Mr. Yemchuk's retirement, or that he had the opportunity which she enjoyed of readily finding employment in a new jurisdiction, particularly given the fact that he was 57 years of age at the time of their first move.

[32] At the time of his retirement, Mr. Yemchuk received a pay-out of $60,000 and a generous pension reflecting his 32 years of service. Ms. Yemchuk received the benefits from his retirement during the time they continued to live together, and from the division of assets upon their marriage breakdown.

[33] As a result of the marriage breakdown, there is no question that Mr. Yemchuk was significantly disadvantaged in relation to Ms. Yemchuk. She continued to enjoy the benefit of a full salary, the ability to continue to contribute to her pension and other benefits, and, in addition, the benefit of sharing in Mr. Yemchuk’s pension upon the division of assets. Her income of $75,000 was more than twice that of Mr. Yemchuk at $37,000. (I have already referred to her disproportionately higher level of monthly expenses.) She was also enjoying a higher standard of living than was Mr. Yemchuk. To reiterate, the breakdown of the marriage had a disproportionately negative effect on Mr. Yemchuk than it did on Ms. Yemchuk.

[34] Thus, after considering the objectives and factors mandated by the Act, and having particular regard to the length of the marriage, and the working partnership the parties enjoyed during the marriage (as best that can be determined from the evidence), it is difficult to rationalize the trial judge's conclusion that Mr. Yemchuk was not entitled to spousal support.

[35] In that regard, I adopt, as apposite, the following extract from the judgment of Madam Justice L'Heureux-Dubé, speaking for the majority, at p. 870 of the Moge decision:

Although the doctrine of spousal support which focuses on equitable sharing does not guarantee to either party the standard of living enjoyed during the marriage, this standard is far from irrelevant to support entitlement (see Mullin v. Mullin (1991), supra, and Linton v. Linton, supra). Furthermore, great disparities in the standard of living that would be experienced by spouses in the absence of support are often a revealing indication of the economic disadvantages inherent in the role assumed by one party. As marriage should be regarded as a joint endeavour, the longer the relationship endures, the closer the economic union, the greater will be the presumptive claim to equal standards of living upon its dissolution (see Rogerson, "Judicial Interpretation of the Spousal and Child Support Provisions of the Divorce Act, 1985 (Part I)", supra, at pp. 174-75).

In short, in the proper exercise of their discretion, courts must be alert to a wide variety of factors and decisions made in the family interest during the marriage which have the effect of disadvantaging one spouse or benefiting the other upon its dissolution. In my view, this is what the Act mandates, no more, no less.

[Emphasis added.]

[36] This statement from Moge was made in the context of a judgment which was primarily focused on compensatory support. In Bracklow, however, where the issue before the court was one of entitlement, Madam Justice McLachlin makes it clear that an application for spousal support should not be analyzed on the basis that there is only one model of support that applies. In other words, the courts should not seek to pigeon-hole the application before them into one of the three predominant models of support identified in Bracklow, but should bear in mind all of the factors and objectives listed in the Act in determining whether there is an entitlement to support. The Bracklow decision also points out that there is a close relationship between entitlement to support and quantum of support. This is evident from the following passage at para. 50 of the decision where Madam Justice McLachlin stated:

The parties segregate entitlement and quantum for purposes of analysis in their submissions on how the Court should exercise its discretion. While I am content to deal with the case in this manner, it must be emphasized that the same factors that go to entitlement have an impact on quantum. In terms of the underlying theories, there is no strong distinction. The real issue is what support, if any, should be awarded in the situation before the judge on the factors set out in the statutes. For practical purposes, however, it may be useful to proceed by establishing entitlement first and then effecting necessary adjustments through quantum. As Rogerson notes, "What is emerging as the dominant approach offers a very broad basis of entitlement, with quantum operating as the only obvious limitation" ("Spousal Support After Moge", supra, at p. 383 (footnotes omitted)). …

[37] In this case, the trial judge accepted the submission of counsel for Ms. Yemchuk that "need" was the sole basis upon which a spousal support order could be based. In my view, he erred in so doing. By finding that the reason for Mr. Yemchuk's retirement was irrelevant, he ignored Mr. Yemchuk's retirement as a compensatory factor in determining entitlement to support.

[38] In my view, Mr. Yemchuk's retirement is highly relevant as it is the single most important factor which resulted in the disproportionate effect of the marriage breakdown on the parties. Had Mr. Yemchuk foreseen that marriage breakdown was on the not-so-distant horizon at the time he retired, he may well have reconsidered his decision to forego his full salary and benefits and follow Ms. Yemchuk to Manitoba and British Columbia so that she could further her career. While this event happened in the late stages of the marriage, it is no less relevant to the fact that upon the termination of the marriage, Ms. Yemchuk retained her employment and ongoing earning power, while Mr. Yemchuk did not. The subsequent equal division of assets did not make up for that loss, as is evident from the parties' respective financial circumstances following their separation. In my view, the cause and effect between Mr. Yemchuk's retirement and the subsequent disparity in economic circumstances of the parties is obvious and should have been taken into consideration by the trial judge.

[39] This is so whether or not Ms. Yemchuk actively encouraged Mr. Yemchuk to retire. She took the benefits of his retirement and, in my view, she must also share in the drawbacks.

[40] The circumstances and effect of Mr. Yemchuk's retirement raised a compensatory aspect to his claim for spousal support which was overlooked by the trial judge, perhaps because it was not the focus of the submissions before him.

[41] I am also satisfied that the trial judge erred in viewing Mr. Yemchuk's "need" for support from too narrow a perspective. He treated "need" as solely a question of whether Mr. Yemchuk could meet his stated expenses with the income available to him. After attributing $800-$1,000 per month to Mr. Yemchuk, the trial judge found that Mr. Yemchuk could meet his expenses and, therefore, was not entitled to support.

[42] Before elaborating on the concept of “need”, I will discuss the question of whether the trial judge erred in the manner in which he attributed income to Mr. Yemchuk.

[43] As earlier noted, Mr. Yemchuk invested the $132,000 lump sum payment he received for his share of Ms. Yemchuk's pension in short term investments yielding approximately $3,600 over the first year (June 2003-June 2004). He did so, on the advice of investment counsellors, on the basis that it would not make economic sense to invest it in an annuity at that time given the low interest rates. The trial judge, however, imputed income to Mr. Yemchuk based on the rate of return which he would have received had he invested the lump sum in an annuity. In that regard, I am satisfied that there is evidence to support the trial judge's finding that the rate of return on an annuity would have been in the range of $800-$1,000 per month.

[44] The question is whether the trial judge erred in the circumstances of this case in imputing income to Mr. Yemchuk on the basis of the rate of return he could have received if he had purchased an annuity, rather than on the actual rate of return he achieved based on investment advice. Mr. Yemchuk's argument is that if he had purchased an annuity, not only would he have jeopardized his future security in relation to that of Ms. Yemchuk by locking in this investment at a low rate of return (contrary to the advice he has received from experts), but he would also have been forced to encroach on the capital of that sum. Given the length of the marriage, the fact that he is no longer employed and able to contribute to a pension, and the fact that Ms. Yemchuk's interest in her own pension is growing by virtue of her continued contributions and increases in her earnings (her pension is based on her best five consecutive years of earnings), Mr. Yemchuk submits that the trial judge's decision in this regard has placed him in a disadvantaged position in terms of his future security in relation to Ms. Yemchuk. In other words, while Ms. Yemchuk is accumulating capital in relation to her pension, his capital is being depleted. He is seeking an order to enable him to maintain his capital in this asset for the relatively short period until Ms. Yemchuk retires.

[45] It is not uncommon for a court to impute income to a spouse who has received a lump sum as part of the division of family assets between the parties and who is seeking spousal support. There are circumstances, however, in which the court will decline to do so. One example is where a party (usually the wife) wishes to use the proceeds, or a portion thereof, to purchase a home for herself and a child or children of the marriage, does not have other funds available to do so, and the court is satisfied that it is reasonable to permit her to use her capital for that purpose rather than to produce income.

[46] In my view, this case presents another example of a situation in which the imputation of income is not justified. Here, the length of the marriage, the age of the parties, and their overall financial circumstances, support the proposition that both of them should be permitted to preserve the capital in Ms. Yemchuk's pension, to the extent possible, until Ms. Yemchuk retires. Mr. Yemchuk is seeking to do so by investing in short term investments until interest rates rise or until Ms. Yemchuk retires so that he will not be forced to encroach on capital. Ms. Yemchuk is doing so by her continued contributions to her pension and her ongoing years of service which will accrue to her benefit alone. Mr. Yemchuk finds himself in a disadvantaged position in relation to Ms. Yemchuk only because he retired early. Ms. Yemchuk shared in the benefit of the $60,000 lump sum payment he obtained at that time, and she now shares in his pension income. In my view, the decision of the trial judge to impute income to Mr. Yemchuk in these circumstances resulted in Mr. Yemchuk bearing the full burden of a decision made by the parties which, at the time it was made, was intended to be for their mutual benefit.

[47] I also note that, in imputing income to Mr. Yemchuk of between $800-$1,000 per month, the trial judge appears to have overlooked the fact that Mr. Yemchuk's statement of gross income took into account the $300 on investments that he had actually earned on the lump sum (which he did not object to being included in his income). In other words, if any amount was to be imputed to Mr. Yemchuk, it should only have been $500-$700 per month. On the trial judge's analysis of need, increasing Mr. Yemchuk's income (before tax) by that amount would not have enabled him to meet his modest expenses without a further incursion into capital.

[48] Further, even if attribution of income were justified in these circumstances, the trial judge's treatment of Mr. Yemchuk's need for support was unduly restrictive. In Myers v. Myers (1995), 17 R.F.L. (4th) 298 (B.C.C.A.), for example, Mr. Justice Finch (as he then was), speaking for the Court, stated at para. 10:

… "Need" or "needs" are not absolute quantities. They may vary according to the circumstances of the parties and the family unit as a whole. "Need" does not end when the spouse seeking support achieves a subsistence level of income or any level of income above subsistence. "Needs" is a flexible concept and is one of several considerations which a trial judge must take into account in deciding whether any order for spousal support is warranted.

[49] In considering the concept of "need" in the context of a long-term marriage involving a sharing of resources, I am satisfied that it should take into account the relative standards of living of the spouses following the marriage breakdown. In many cases, like this one, where the parties have relatively modest assets at their disposal and no realistic prospect of increasing those assets given their retirement (and pending retirement), it is often not possible to replicate the standard of living enjoyed by the parties when they were living together. The most a support order can do is to attempt to alleviate a significant disparity in their relative standards of living following marriage breakdown.

[50] While equalization of the standards of living of the parties is not a stated objective of spousal support, in long-term marriages in which the parties have approached their roles as a partnership where each contributed their various resources, both economic and non-economic, to the relationship, equality of standard of living (which is not the same as equality of income) may well be the just result. (I leave aside those cases in which the parties, or one of them, are wealthy, since other considerations may apply.)

[51] In the result, I am satisfied that, not only was there a compensatory aspect to Mr. Yemchuk's claim for support which was overlooked by the trial judge, but that Mr. Yemchuk also demonstrated a need for support, taking into account the economic consequences of the marriage breakdown, and the significant disparity in the relative standards of living of the parties following the breakdown.

[52] In summary, I conclude that Mr. Yemchuk has established entitlement to spousal support.

[53] The next issue, therefore, is the quantum of support. (Duration is not in issue since Mr. Yemchuk is seeking support only until Ms. Yemchuk retires, which, as earlier noted, is anticipated to be in November 2007.)

(d) Quantum of Support

[54] Given the rather unsatisfactory nature of the financial information in this case, and the fact that the trial judge did not consider the issue of quantum, I was concerned whether it was appropriate for this Court to determine quantum, or whether the Court should remit that issue (and the question of retroactivity) to the Supreme Court for determination. In that regard, counsel for Mr. Yemchuk asked this Court to determine these issues, while counsel for Ms. Yemchuk sought only to have the appeal dismissed.

[55] On balance, I conclude that the expense and delay of remitting the matter to the Supreme Court is not warranted, and that it is in the interests of the parties for this Court to make that determination.

[56] In approaching the issue of quantum, one of the questions I considered was whether Ms. Yemchuk’s income from Mr. Yemchuk's pension should be taken into account. The concern I had was whether including that income in Ms. Yemchuk's overall income gave rise to the possibility that Mr. Yemchuk was seeking to "double dip". In other words, having "lost" 50% of his pension income to Ms. Yemchuk through the division of assets, was he seeking to regain it though an order of spousal support?

[57] After considering this issue, I conclude that Mr. Yemchuk's pension income should be treated in the same manner in the hands of both parties. Either it should be included in income, because it is in fact an income stream in the parties' hands, or it should be excluded from both parties' income on the basis that it had already been divided between them as property. In these circumstances, I am satisfied that it should be included as income to both parties since that accords with practical realities. I do not consider that this results in "double dipping" as that concept is discussed in the leading case of Boston v. Boston, [2001] 2 S.C.R. 413.

[58] For the purposes of determining the quantum of spousal support, therefore, I accept the trial judge's finding that Ms. Yemchuk's income is $75,000 and Mr. Yemchuk's income is $37,000.

[59] Based on my earlier analysis, I conclude that an award of spousal support in this case should attempt to alleviate the disproportionate economic hardship Mr. Yemchuk suffered as a result of the marriage breakdown reflected in the disparity between the relative standards of living of these spouses. I must also have regard, however, to the fact that Ms. Yemchuk is still employed and has expenses related to employment which Mr. Yemchuk does not. Any award I make must be in keeping with this fact.

[60] This brings me to the question of whether, and to what extent, I should rely on the Guidelines in determining the quantum of support. In answering that question, I will briefly describe the Guidelines, as I understand them.

(e) The Spousal Support Guidelines

[61] In my view, the best source of the history and nature of the Advisory Guidelines is the report prepared by Professors Carol Rogerson and Rollie Thompson dated June 2005 entitled Spousal Support Advisory Guidelines: A Draft Proposal (which I commend for its clarity to any writer embarking on this subject).

[62] An important point to make at the outset of this discussion is that the proposed Advisory Guidelines are just that — proposed advisory guidelines. They are in a draft form and are subject to ongoing consultation with various interest groups. Further, unlike the Federal and Provincial Child Support Guidelines (which, in fact, are not guidelines at all, but form part of the substantive law), there is no plan to draft legislation to implement these Advisory Guidelines as law. Rather, their purpose is to be advisory only, with a view to bringing more certainty and predictability to the determination of spousal support under the Act. They are a response to what has been perceived as a significant lack of predictability in spousal support awards, which commentators suggest are even less predictable following the Bracklow decision.

[63] It is also important to note that the Advisory Guidelines do not deal with entitlement to support, but are only relevant to issues of quantum and duration of support once entitlement has been resolved. Nor do they address situations in which there are prior agreements between the parties dealing with spousal support.

[64] It should also be stressed that the Advisory Guidelines are intended to reflect the current law, rather than to change it. They were drafted by the authors after extensive analyses of the authorities regarding spousal support across the country, particularly the Moge and Bracklow decisions and those following thereafter. As recently as July 2005, in the recent decision of W. v. W., 2005 BCSC 1010, [2005] B.C.J. No. 1481 (QL), Madam Justice Martinson reviewed numerous decisions in British Columbia following Moge and Bracklow and stated (at para. 25) that in her view, the Advisory Guidelines were in accordance with those authorities. While decisions can undoubtedly be found in which the result would not accord with the Advisory Guidelines, I am satisfied that their intention and general effect is to build upon the law as it exists, rather than to present an entirely new approach to the issue of spousal support. For that reason, like Madam Justice Martinson and many other judges, I have no hesitation in viewing the Advisory Guidelines as a useful tool to assist judges in assessing the quantum and duration of spousal support. They do not operate to displace the courts' reliance on decided authorities (to the extent that relevant authorities are forthcoming) but to supplement them. In that regard, they do not constitute evidence, but are properly considered as part of counsels’ submissions.

[65] The Advisory Guidelines set out two basic formulas for the determination of spousal support: the "without child support formula" and the "with child support formula". Since Mr. and Ms. Yemchuk have no dependent children, the "without child support formula" is the relevant formula in this case. Both formulas use income sharing as the method for determining spousal support, rather than budgets. Given the dubious and unhelpful nature of the budgets which are presented in many cases (a fact commented upon in the authorities from time to time), the move away from a budget-laden analysis is appealing. This is particularly so in cases, such as this one, in which compensatory and non-compensatory factors come into play.

[66] The formulas set out in the Advisory Guidelines are also useful in that they provide ranges for the quantum and duration of support, rather than precise numbers. This is designed to provide flexibility by permitting individual factors relevant to spousal support to be taken into account.

[67] The "without child support formula" is described in the executive summary to the report as follows (p. v):

The without child support formula is built around two crucial factors: the gross income difference between the spouses and the length of the marriage. Both the amount and the duration of support increase incrementally with the length of the marriage…. The idea that explains this formula is merger over time: as a marriage lengthens, spouses more deeply merge their economic and non-economic lives, with each spouse making countless decisions to mould his or her skills, behaviours and finances around those of the other spouse. The gross income difference measures their differential loss of the marital standard of living at the end of the marriage. The formulas for both amount and duration reflect the idea that the longer the marriage, the more the lower income spouse should be protected against such a differential loss. Merger over time captures both the compensatory and non-compensatory spousal support objectives that have been recognized by our law since Moge and Bracklow.

[Emphasis in the original]

[68] The without child support formula is set forth as follows (at vi):

The Without Child Support Formula

Amount ranges from 1.5 to 2 percent of the difference between the spouses' gross incomes (the gross income difference) for each year of marriage (or, more precisely, years of cohabitation), up to a maximum of 50 percent. The range remains fixed for marriages 25 years or longer at 37.5 to 50 percent of income difference.

Duration ranges from .5 to 1 year for each year of marriage. However, support will be indefinite if the marriage is 20 years or longer in duration or, if the marriage has lasted 5 years or longer, when the years of marriage and age of the support recipient (at separation) added together total 65 or more (the rule of 65).

[Emphasis in original.]

[69] In using this formula, a spouse's income is determined in the same manner as in the Federal Child Support Guidelines.

[70] Under these proposed Advisory Guidelines, the amount of support which would be payable by Ms. Yemchuk to Mr. Yemchuk ranges from $1,190 per month to $1,580 per month (in rounded figures). At the low end of the range, Mr. Yemchuk's annual gross income would be $51,250 and Ms. Yemchuk's income would be $60,750. At the high end of the range, Mr. and Ms. Yemchuk would each have income of approximately $56,000.

[71] The only authorities to which the Court was referred with respect to the quantum of support relate to the basic principles of support which I have referred to earlier in these reasons. As Madam Justice McLachlin indicated in Bracklow, the considerations in determining quantum of support are interrelated to those applied in determining entitlement. In that regard, I have found that Mr. Yemchuk's claim for support rests on both compensatory principles (relating to the circumstances and consequences of his early retirement) and need. I have also found that equitable sharing of the economic hardship arising from the breakdown of the marriage, including a reduction of the disparity in relative standards of living of the parties is the most important principle applicable to spousal support in this case. The ranges of support set out in the Advisory Guidelines are a factor which I have considered in attempting to give effect to these principles, after taking into account the overall financial circumstances of the parties. In that regard, the expense lists of the parties are of limited assistance, particularly since Mr. Yemchuk has clearly restricted his expenses to a very basic level reflecting the significantly reduced standard of living he is experiencing as a result of the breakdown of the marriage. Ms. Yemchuk's list may more closely reflect the standard of living during the marriage, but it involves a running and increasing deficit which reflects her attempt to maintain a standard of living which is not sustainable now that the parties are living separate lives. Unfortunately, both parties have reason to be concerned about their future security.

[72] Taking into account the fact that Ms. Yemchuk has increased needs for additional income to support her expenses relating to employment (including clothing, transportation expenses and significant compulsory employee deductions, not including pension and income tax), I conclude that the appropriate quantum of support in this case is $1,100 per month, reduced to $800 per month as of June 1, 2005 when Mr. Yemchuk became entitled to his Old Age Security Pension. These payments shall be made on the first day of each and every month (or in equal instalments on the first and fifteenth day of every month if Ms. Yemchuk is paid bi-monthly) up to and including the last day of the month preceding Ms. Yemchuk's retirement.

(f) Retroactivity

[73] The next question is the commencement date for support payments. Mr. Yemchuk has asked that the support orders commence as of January 1, 2002. I am unable to find any rationale for this commencement date in the materials. The chronology provided to the Court, however, indicates that the application for spousal support was contained in a Notice of Motion dated September 26, 2002. Madam Justice Satanove did not deal with this application in her decision of October 16, 2002 because it was then unknown what form the division of Ms. Yemchuk's pension would take. It appears that Mr. Yemchuk received his share of Ms. Yemchuk's pension in May or June, 2003, but that he retained the benefit of his full pension until August 2003. For unknown reasons, the application for spousal maintenance did not come on for hearing until February 2004, and it was continued in October 2004, leading to the order under appeal dated October 29, 2004. In addition to dismissing Mr. Yemchuk's claim for spousal support that order provided for further compensation payments to be made by Mr. Yemchuk to Ms. Yemchuk, including a lump sum payment of $14,789.80 relating to Mr. Yemchuk's pension, and a rollover of $57,000 from Mr. Yemchuk's RRSP to Ms. Yemchuk's RRSP. It appears that those transfers were to give effect to Madam Justice Satanove's earlier order for the division of property.

[74] In determining the appropriate date for the commencement of spousal support, I have taken into account the factors relating to retroactivity of child support set forth by Madam Justice Rowles, speaking for the Court, in S.(L.) v. P.(E.) (1999), 67 B.C.L.R. (3d) 254, modified as necessary to take into account the circumstances of this case. The state of the evidence makes it difficult to apply some of those factors with any degree of confidence, but, in essence, I am satisfied that Mr. Yemchuk has established a need for some relief by way of a retroactive order and that Ms. Yemchuk has a corresponding ability to pay.

[75] Unfortunately, there have been many delays in this matter which have resulted in prejudice to both parties. It is impossible to fully assess the causes for delay based on the materials and submissions before this Court. Certainly, Ms. Yemchuk has been aware from the outset that Mr. Yemchuk has been seeking spousal support.

[76] While the matter is not free from doubt, I conclude that it would be appropriate in all of the circumstances to order the payments to commence as of February 2004 when this application first came on for hearing. This would result in an accumulation of arrears of support up to and including August 1, 2005 of $20,800 (16 months at $1,100 per month and 3 months at $800 per month.) The effect of this order is to place the consequences of the delay on both parties and to take into account the overall financial circumstances of the parties. I acknowledge that there is more art than science involved in this exercise, but it is the best I can do on the information available, which includes financial information in a continuous (and in many cases, unexplained) state of flux. I would direct that the arrears of support payments arising as a result of this order be paid by Ms. Yemchuk to Mr. Yemchuk on or before November 1, 2005.

(g) Costs

[77] Given Mr. Yemchuk's success on this appeal, I would grant him his costs of the appeal and of the application for spousal support.

CONCLUSION

[78] I would allow the appeal and set aside the order of the trial judge. I would make an order that Ms. Yemchuk pay spousal support to Mr. Yemchuk in the amount of $1,100 per month commencing February 1, 2004 and continuing on the first day of each and every month thereafter (or in equal instalments on the first and fifteenth day of each month if Ms. Yemchuk is paid bi-monthly) up to and including the first day of June, 2005, at which time the payments shall decrease to $800 per month, to be paid up to and including the last day of the month preceding Ms. Yemchuk's retirement. I would order that the arrears of spousal support arising under this order in the amount of $20,000 be paid by Ms. Yemchuk to Mr. Yemchuk on or before November 1, 2005. I would also grant Mr. Yemchuk the costs of the appeal and of the application for spousal support in the Supreme Court.

“The Honourable Madam Justice Prowse”

I AGREE:

“The Honourable Madam Justice Saunders”

I AGREE:

“The Honourable Mr. Justice Hall”

Corrigendum: 13 September 2005

In paragraph 78, the following sentence should read: “… to be paid up to and including that last day of the month preceding Ms. Yemchuk’s retirement.

Corrigendum: 19 October 2005

The anticipated date of Ms. Yemchuck’s retirement, referred to at paragraphs 1, 9 and 53 should be “November 2007”, rather than April 2007.

Citation:	*Yemchuk v. Yemchuk,*
	2005 BCCA 406