Date: 19990809 Docket: E351 Registry: Chilliwack IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: DIANA MALENA HENDERSON PLAINTIFF AND: AUSTIN MICHAEL SCARBOROUGH and 433428 B.C. LTD. carrying on business under the firm name and style of BUSTER & ASSOCIATES HAULING DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE W.G. GRIST Counsel for the Plaintiff: John Lee Counsel for the Defendants: Tom Weiss Place and Date of Hearing: Chilliwack, B.C. April 12 - 15, 1999 [1] Ms. Henderson seeks a declaration of a constructive trust in relation to assets accumulated from September 1987 to May 1996 when she and Mr. Scarborough lived together. These assets include a business known as Buster & Associates Hauling, the home the parties resided in at Lillooet, British Columbia, R.R.S.P.s and several vehicles. Ms. Henderson suggests she is entitled to a 20% to 25% share of these assets. Mr. Scarborough disputes she has any entitlement to a declaration of trust. [2] Ms. Henderson also claims spousal maintenance under the provisions of the Family Relations Act, R.S.B.C. 1996, c. 128. HISTORY: [3] Ms. Henderson and Mr. Scarborough knew each other for a number of years prior to 1987. Each of them had previously been involved in a long term marriage and they and their spouses lived for most of their married lives in Port Hardy. By early 1987 each of the marriages had broken down and the parties had become separated from their respective spouses. Ms. Henderson had tried to develop a business in Langley working as a beautician. This had failed and she was dependent on assets from her marriage. These included funds in bank accounts and R.R.S.P.s totalling approximately $30,000. She also had the furniture from her previous matrimonial home and an automobile. Mr. Scarborough had moved to Lillooet where he operated a flatbed truck hauling rough cut logs. He resided in a home he formerly occupied with his wife. In the summer of 1987 he invited Ms. Henderson to come to Lillooet for a week. She enjoyed her stay there and in September 1987 he invited her to move in with him. [4] Mr. Scarborough had little furniture apart from some appliances. Ms. Henderson moved her furniture into the home. The house had become somewhat run down and she and her daughter spent several days making it more habitable. [5] A property and financial statement filed in the matrimonial action commenced by Mr. Scarborough's former wife revealed that neither the house nor Mr. Scarborough's business represented any significant equity. [6] Mr. Scarborough worked long hours. Many of the trips were from the Lillooet area to the coast. During the early years of their relationship Ms. Henderson often came with him. She helped in securing the load, packed lunches and at times helped with truck maintenance. In the most part this was not work that directly contributed to the operation of the business to any great degree. However, the companionship was enjoyable to both and made it easier for Mr. Scarborough to put in the long hours he worked. [7] Cash flow from the business was modest and I accept as a fact that at this stage Ms. Henderson was making significant contributions to household and recreational expenses from her resources. These expenditures plus what Mr. Scarborough contributed made it possible for both to enjoy a better standard of living. It also enabled Mr. Scarborough to apply earnings to his business. Correspondingly, Ms. Henderson's financial resources were steadily depleted during this period. [8] In the spring of 1988, Ms. Henderson found part-time employment with a video rental store. Her earnings were put in the C.I.B.C. account from which she paid household and recreational expenses. In March 1988, she received $56,000 as a cash settlement from her entitlement to assets accumulated during her prior marriage. In June 1988, Ms. Henderson bought her uncle's motorhome for $8,000. This was used on recreational outings to lakes in the Lillooet area. Mr. Scarborough was an avid fisherman. [9] In July 1988, Ms. Henderson advanced $10,000 to Mr. Scarborough as an interest free loan to aid in the purchase of an additional truck. Mr. Scarborough was involved in litigation with his former wife and an order had been made prohibiting him from encumbering assets. This made it difficult to secure financing from a bank. There was ready work for the truck and the loan was promptly repaid in December of that year. In August of 1988, following the truck loan, Ms. Henderson advanced $11,000 for the purchase of a logging trailer. This was put into her name but used as a company asset. It was used for a few years but has since been in storage at the company's place of business. [10] Ms. Henderson continued to work at the video store for a time and then found work at a florist shop and finally at a local pharmacy. Her income was modest. The years for which she was able to provide records indicate the following income: 1989 - $5,174 1990 - 6,494 1991 - 7,993 1993 - 13,487 1994 - 15,021 1995 - 14,417 1995 was the last year she was employed before the parties separated. Then Ms. Henderson developed a problem with her arm which caused her to take time off work during much of 1996. [11] Ms. Henderson's financial assets depleted steadily during the term of the relationship. By December 1989 the $56,000 settlement had been virtually depleted. From December 1989 on Mr. Scarborough supplemented her account to aid with expenses, initially contributing $500 per month. That sum eventually grew to $1,500 per month. [12] Both Ms. Henderson and Mr. Scarborough described their relationship as living as husband and wife. Early in the relationship Mr. Scarborough proposed marriage. However, he was not divorced until October 1990. By that time Ms. Henderson said he seemed unwilling to discuss any definite prospect of marriage. [13] Mr. Scarborough's business expanded during the years 1990 and 1991. He began to take on logging contracts as well as hauling logs and lumber. In 1990, his year end showed a negative equity of $58,000. By the end of 1991 this had become a positive equity of $208,000. By 1993 Mr. Scarborough had incorporated the business and Ms. Henderson was nominally paid $31,000 by the company as part of an income splitting plan to reduce income tax on money taken from the company. This continued each year in a like sum until the parties separated. After separation this income splitting arrangement worked to Ms. Henderson's detriment as she was precluded from claiming unemployment insurance. [14] Ms. Henderson stated that there was a large change in her involvement in the trucking business about the time Mr. Scarborough moved to a new building he had built for the company, replacing a rented shop. This likely occurred during 1992. She said that she was at this facility less frequently than the old shop and she and Mr. Scarborough were not so often together during Mr. Scarborough's working hours. [15] In June 1995, Mr. Scarborough bought the Orchard Drive home. Ms. Henderson knew of the property and had told him she liked the home. She also thought it provided an opportunity to develop a bed and breakfast business. When the home came up for sale, Mr. Scarborough thought the property would likely appreciate or at least retain its value over time and bought the home knowing Ms. Henderson would be pleased with its acquisition. The parties lived in the home for approximately one year before they separated. Ms. Henderson did some decorating and generally maintained the home during this period. A bed and breakfast business was attempted but Mr. Scarborough did not like others present in the home. [16] On separation Ms. Henderson returned to the Fraser Valley. She was able to rent a mobile home and subsequently found part- time work at a pet store. She and her daughter share the mobile home. She retains a 1994 GMC Van, that she used while together with Mr. Scarborough in Lillooet. She also has a fifth wheel trailer which she acquired on disposition of her uncle's motor home. She could not move all of her furniture and some of it remains in the home in Lillooet. [17] After separation, Mr. Scarborough paid support in the amount of $1,500 for a number of months. His last voluntary payment was in September 1996. In April 1997, $1,500 per month was ordered as interim maintenance. This was varied to $600 per month in October 1997. THE CONSTRUCTIVE TRUST CLAIMS: [18] In Peter v. Beblow, [1993] 1 S.C.R. McLachlin J. set out the elements of a constructive trust at p. 984: The basic notions are simple enough. An action for unjust enrichment arises when three elements are satisfied: (1) an enrichment; (2) a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment. These proven, the action is established and the right to claim relief made out. At this point, a second doctrinal concern arises: the nature of the remedy.... the remedy of constructive trust arises, where monetary damages are inadequate and where there is a link between the contribution that founds the action and the property in which the constructive trust is claimed. [19] The plaintiff says that during their relationship, Mr. Scarborough gained the benefit of Ms. Henderson's direct contributions to the business, as well as her management of the home. This is the first element in the three step analysis to determine unjust enrichment. Corresponding to this, Ms. Henderson says her assets were depleted and no direct compensation was received for her domestic services. Without some juristic reason to accommodate this benefit and corresponding deprivation, an unjust enrichment will be found and the declaration of constructive trust becomes an available remedy. [20] The direct contributions in this case include the $10,000 truck loan in 1988 and the $11,000 advanced in August 1988 to buy the logging trailer. The first loan was promptly repaid but was significant as it was tendered without interest and at a time when other financing would have been awkward. The $11,000 loan was not repaid and has to be considered as a direct contribution to the business. [21] The time Ms. Henderson spent accompanying Mr. Scarborough on various hauls and her help with maintenance of the trucks were features of the first years of the relationship. They were activities enjoyable to both but nonetheless made Mr. Scarborough's long hours easier to accommodate. [22] In Peter v. Beblow, supra, the Supreme Court of Canada made it clear that, in addition to any direct contributions to assets, the courts will recognize and put a value on household services provided by one party to another during a domestic relationship. Here I am satisfied Ms. Henderson provided a comfortable home and contributed to recreational activities. Both of these features were of value to Mr. Scarborough during the time the parties lived together. I am mindful that the relationship was not without value to Ms. Henderson herself in that the joint earnings of the parties allowed each to maintain a higher standard of living and, towards the end of the relationship, she had the advantage of Mr. Scarborough's much improved earning ability. On balance, however, I am of the view that her efforts and contributions support a legitimate expectation of a share in the assets accumulated during their relationship. [23] The assets accumulated during the time the parties lived together include the trucking business, R.R.S.P.s in Mr. Scarborough's name, the home the parties occupied at 996 Orchard Drive, the shop building on Industrial Place, the fifth wheel trailer and two vehicles, a 1981 Trans Am and a 1994 GMC Safari van. The total value of these assets is not entirely clear on the evidence but a statement of net worth tendered by Mr. Scarborough to the Royal Bank dated December 1997 showed a net worth of approximately $1.5 million. [24] Mr. Scarborough's evidence was that the major ingredient in the success of his business was the good business relationships he was able to develop with the forest companies he contracted with. When one sold out to another, his priority in receiving contracts was assured by the purchasing company. Mr. Scarborough's company grew with the steady work, allowing him to add trucks, equipment and employees. [25] In a comparative sense, Mr. Scarborough's efforts in building the business were the greatest contributing factor. The other assets were funded in large part from this source. I value the parties' respective contributions to the creation of the assets, on a value sustained basis, as 80% due to Mr. Scarborough's efforts and 20% attributable to Ms. Henderson's contributions. The parties have not provided sufficient evidence of asset value to order a more specific allocation of assets and an order for compensation, if appropriate. There will be liberty to apply in this regard. THE CLAIM FOR SPOUSAL SUPPORT: [26] This claim is advanced under s. 89 of the Family Relations Act. Ms. Henderson meets the definition of spouse under s. 1 of the Act. [27] In Bracklow v. Bracklow, (1999), 44 R.F.L. (4th) 1 (S.C.C.), the Supreme Court of Canada held that the principles giving rise to an obligation under the provincial statute are the same as those applicable under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.). In particular, in appropriate cases support will be based on compensatory or contractual principles, or based upon social obligation. [28] In this case, the strongest claim is based upon the social obligation founded on the interdependent relationship between the parties during the period of cohabitation. Both parties viewed their relationship as traditional, notwithstanding they were not married. Both said they were viewed by others as husband and wife. At the outset, Ms. Henderson's contributions from her resources provided significant support for their joint lifestyle. As the business became more lucrative, Mr. Scarborough paid the greatest proportion of expenses and ultimately became the parties' sole support. [29] The expectations and obligations of a spousal relationship of this sort are recognized under s. 89 (d) and (e) of the Family Relations Act: 89(1) A spouse is responsible and liable for the support and maintenance of the other spouse having regard to the following: . . . (d) the ability and capacity of, and the reasonable efforts made by, either or both spouses to support themselves; (e) economic circumstances. [30] It is also recognized in Bracklow that the quantum and duration of support may also be determined by features of the relationship. Here, the duration of the relationship and the fact that each party generally maintained employment are suggested as determining factors. [31] Ms. Henderson's present employment provides $1,080 per month. She is fifty-five years of age and has little training or experience which would enable her to obtain better paying employment. Her reserves of R.R.S.P.'s have been depleted since separation and she has been obliged to live modestly. [32] The eight year relationship is not a short one by contemporary standards. It is true that Ms. Henderson maintained employment through the relationship and she continues to be employed in a like capacity. She is not able, however, to attain a reasonable level of self-sufficiency. In my view, there is an obligation on Mr. Scarborough to assist in helping to provide Ms. Henderson with a reasonable standard of living. It is conceded that Mr. Scarborough has an ability to pay and I assess ongoing maintenance at $1,000 per month. [33] I see no present reason to limit these payments or to set a time for review. [34] Costs at scale 3 should follow the event. "W.G. Grist, J." W.G. Grist, J.