Wife Cannot Compel Husband to Sign “Non-Compete” in Sale of Family Business

In Lun v. Lun 2020 BCSC 871 the court considered whether the sale of the family insurance business, as ordered by the court, provided the court with jurisdiction to order the husband to sign a Non-Compete Agreement, as part of the sales contract, in circumstances where the husband resisted signing.

The parties owned a business that sold commercial insurance products and motor vehicle insurance. The wife brought an application to court for the sale of the business, which was contested. The court granted the order sought, with joint conduct of sale to the parties.

A condition of the sale was that Mr. Lun sign a non-competition agreement that would prevent him from being involved in the insurance industry for a period of two years. The clause read:

“… directly or indirectly, either alone or in conjunction with any individual, firm, corporation or any other entity (except for or on behalf of the Protected Entities), whether as principal, agent, employee, shareholder or in any other capacity whatsoever carry on, be engaged in, concerned with or interested in any Person carrying on any business that is competitive in whole or in part with the Business anywhere in the Territory, or advise, lend money to, or guarantee the debt or obligations of any Person that is carrying on any business anywhere in the Territory that is competitive in whole or in part with the Business.”

Mrs. Lun brought an application asking the court to order Mr. Lun to agree to the non-compete term in the contract. Mr. Lun opposed the application as he had been in the insurance industry for 20 years and wished to continue in the industry.

The court posed this question: “On what basis could the court prevent Mr. Lun from engaging in legal business activities?” and remarked that the answer would be found in the Family Law Act. However, the court determined that Part 5 of the Act did not provide jurisdiction to make the order sought

The wife then argued that Supreme Court Family Rule 15-8 (3) applied, which permitted a court to order terms of sale, including “a direction that any document necessary to complete the sale be executed on behalf of any person by a person designated by the court”. The court disagreed saying that an order allowing Mrs. Lun to sign the non-compete on behalf of her husband fell outside the purpose and intent of the rule.

Finally, Mrs. Lun argued that S. 222 (b) of the Family Law Act could be used
to make the order sought, as it authorized a court to manage behaviours that might frustrate the resolution of a family law dispute. Again, the court ruled that Mr. Lun’s refusal was a legally justifiable position and declined to accede to Mrs. Lun’s argument.

Mrs. Lun was left with renegotiating the sale to exclude a non-competition clause or entertain other offers.

Lawdiva aka Georgialee Lang

JESUS WAS A PROTESTER

To see great American cities ravaged in flames with marauding bands of black-clothed youth is startling, and so very sad…the violence and looting shocks the conscience. Yet protesting injustice is honorable and is what Jesus himself did during his time with us.

Jesus was an ardent protester. He publicly denounced the commercialization of the temple in Jerusalem, overturning tables and driving people and animals out, with whip in hand. He condemned the greed and corruption of the Jewish leaders. John 2: 13-25

We read in Luke 4 that in his hometown of Nazareth Jesus rose in the synagogue and read from Isaiah:

“The Spirit of the Lord is on me,
because he has anointed me
to proclaim good news to the poor.
He has sent me to proclaim freedom for the prisoners
and recovery of sight for the blind,
to set the oppressed free,
to proclaim the year of the Lord’s favor.”[

The crowd was amazed at his youthful eloquence, but his message was so countercultural and radical that a mob chased him to the edge of town, threatening to throw him over a cliff. Jesus was not afraid to stand up for righteousness and justice.

Jesus ignored societal norms, performing miracles and healing people on the Sabbath, activities that inflamed the Jewish leaders.

16 So, because Jesus was doing these things on the Sabbath, the Jewish leaders began to persecute him. 17 In his defense Jesus said to them, “My Father is always at his work to this very day, and I too am working.” 18 For this reason they tried all the more to kill him; not only was he breaking the Sabbath, but he was even calling God his own Father, making himself equal with God.” John 5:16

Jesus did not court the famous or influential, rather he surrounded himself with sinners and even tax collectors, consider the lowest of the low in his day, men who collaborated with the Romans and became rich off the backs of Jews.

“ While Jesus was having dinner at Levi’s house, many tax collectors and sinners were eating with him and his disciples, for there were many who followed him. When the teachers of the law who were Pharisees saw him eating with the sinners and tax collectors, they asked his disciples: “Why does he eat with tax collectors and sinners?”
17 On hearing this, Jesus said to them, “It is not the healthy who need a doctor, but the sick. I have not come to call the righteous, but sinners.” Mark 2:15-17

He boldly spoke to a Samarian woman who was at the town well in Sychar drawing water.

“The Samaritan woman said to him, “You are a Jew and I am a Samaritan woman. How can you ask me for a drink?” (For Jews do not associate with Samaritans.)
Jesus answered her, “If you knew the gift of God and who it is that asks you for a drink, you would have asked him and he would have given you living water.” John 4: 9-10

Jesus was a protester who broke all the rules. He called people to account and rebuked the unrighteous, especially those who saw his miracles and yet refused to repent.

“Then Jesus began to denounce the towns in which most of his miracles had been performed, because they did not repent. “Woe to you…”Matthew 11: 20

Jesus created a movement based on justice, love, and hope and his disciples became surrogate protesters. Jesus cautioned them:

“I am sending you out like sheep among wolves. Therefore be as shrewd as snakes and as innocent as doves.17 Be on your guard; you will be handed over to the local councils and be flogged in the synagogues. On my account you will be brought before governors and kings as witnesses to them and to the Gentiles. But when they arrest you, do not worry about what to say or how to say it. At that time you will be given what to say, for it will not be you speaking, but the Spirit of your Father speaking through you.” Matthew 10:16-20

Because Jesus was a protester he was ridiculed, taunted, humiliated and finally murdered, taking on the sins of the world. Martin Luther called his death “the great exchange”. “God made him who had no sin to be sin for us, so that in him we might become the righteousness of God.” 2 Corinthians 5:21

Jesus spent his life bringing awareness to gender inequality, religious hypocrisy, political corruption, racism, hatred, segregation, and social injustice. Through His power we can advocate for the poor, shelter the homeless, sustain widows and children, show hospitality to strangers, encourage the weary, and spread the love of Christ to our neighbours.

Lawdiva aka Georgialee Lang

Judge Grants Adjournment of Trial With Blameless Plaintiff

GeorgiaLeeLang025The BC Supreme Court recently considered whether a lawyer who failed to prepare his client’s case for trial should be granted an adjournment of the trial.

In Raniga v. Poirier 2020 BCSC 780 the plaintiff was injured in a motor vehicle accident and sued Mr. Poirier, who had admitted liability for the accident, which occurred in 2015. The plaintiff filed the claim in 2017 within the limitation period, and had retained counsel shortly after the accident.

In 2018 examinations for discovery were conducted and plaintiff’s counsel scheduled a five-day trial to commence in June of 2020. In late 2019 the defendant arranged for an independent medical examination for the plaintiff which was completed in February 2020, and a report, unfavourable to the plaintiff, was delivered to plaintiff’s counsel in March of 2020.

So far, so good, but then the file started going sideways….it happens and covid-19 did not assist the matter.

In contemplation of an early June 2020 trial date, counsel for the plaintiff began his trial preparation in the first week of May 2020, not an unreasonable time to dive back into the file. However, to counsel’s shock he quickly realized that the only expert evidence with regards to the plaintiff’s injuries was the ICBC report that did not support the plaintiff’s case.

Counsel for the plaintiff explained to the court that in February 2020 his paralegal asked him whether he wanted to commission an expert medical report. Unfortunately, he mixed up this plaintiff’s case with another he was working on and told her “no”. His law office closed and he began working remotely in mid-March 2020. The pre-trial conference scheduled for April 7, 2020 was adjourned due to the court closure. Because he only realized his error in early May 2020 he was not able to arrange an independent medical examination, and hence his application for an adjournment.

Again unfortunately, counsel for Mr. Poirier decided to take advantage of the plaintiff’s misfortune and opposed the adjournment application.

Mr. Justice Kent reviewed the law with respect to the court’s discretion with respect to adjournments, citing Navarro v. Doig River First Nation 2015 BCSC 2173 where the court said:

“There are numerous factors to be considered on an adjournment application. However, the paramount consideration is the interest of justice in ensuring that there will remain a fair trial on the merits of the action… Because the overall interests of justice must prevail at the end of the day, courts are generous rather than overly strict in granting adjournments, particularly where granting the request will promote a decision on the merits… The natural frustration of judicial officials and opposing parties over delays in processing civil cases must give way to the interests of justice, which favours a claimant having his day in court and a fair chance to make out his case…”

Judge Kent had just criticism for both counsel. For plaintiff’s counsel he said he was not impressed with the material that accompanied the adjournment application and did not condone his conduct, which caused the need for an adjournment…but he granted the adjournment, without awarding costs. He also said he expected that counsel’s firm would absorb all fees and expenses incurred in relation to the application and would not bill his client.

As for the defendant, Judge Kent stated that the defendant sought to visit the “sins of his lawyer” upon a blameless plaintiff to whom liability had been admitted and that “it should have been obvious from the outset that an adjournment would be granted.”

I do believe in the golden rule, that is,”Do unto others as you would have them do unto you”. No lawyer is perfect and mistakes are made, but they are magnified when counsel do not subscribe to the ethics of reciprocity.

Lawdiva aka Georgialee Lang

Family Arbitrator’s Jurisdiction Challenged

B9316548187Z-1.1_20150314202542_000_GFTA6A1QO.1-0A family arbitration case from Ontario raises several interesting issues for arbitrators and counsel alike. In Giddings v. Giddings, 2019 ONSC 7203 a couple entered into mediated Minutes of Settlement after several years of litigation.

One of the terms of the Minutes was that an appraiser would be retained to appraise certain real property and if the parties could not agree on the division of the property, an arbitrator would deal with the issue of equalization of family property.

Perhaps predictably, the parties could not agree on the value of one property referred to as Chartwell, and the mediator, Stephen Grant, put on his arbitrator’s “hat” and determined that he had the authority to override the opinion of the appraiser, a finding that led Mr. Giddings to appeal the arbitrator’s decision and file an application to set aside the award.

One of the grounds advanced by Mr. Giddings was that the parties had not signed an arbitration agreement and hence, the arbitrator had no authority to proceed with the matter.

The relevant term in the Minutes of Settlement read:

“Counsel shall resolve all outstanding issues with respect to the parties’ respective Net Family Property, save and except for the present-day value of the properties, real estate commission and capital gains, which will be resolved once the value for the properties listed in paragraph 23 and 27 are determined as provided for in this agreement. In the event the parties are unable to resolve the Net Family Property issues by September 30, 2018, the issue of equalization shall be summarily arbitrated by Mr. Stephen Grant, by way of written submissions. The parties shall proceed to domestic violence screening and thereafter execute an Arbitration Agreement with Mr. Stephen Grant.”

Arbitrator Grant invited submissions with respect to the dispute over the value of Chartwell and the invitation was answered by Ms. Giddings who alleged bias in the report based on Mr. Gidding’s interference with the appraiser. She took the position that the arbitrator was not bound by the appraiser’s opinion but could himself make a decision with respect to value. She also relied on a second appraisal that she commissioned.

With respect to the absence of a signed arbitration agreement, the arbitrator opined that based on the conduct of the parties and their engagement with him on the outstanding issues, they were estopped from challenging his jurisdiction.

The first question considered by the court was whether the arbitrator had jurisdiction where the parties had not executed an arbitration agreement. Justice Gray ruled that the arbitrator did not have jurisdiction, confirming that the formal requirements set out in the Arbitration Act were not discretionary.

The Court then considered whether the arbitrator had the authority to determine the ambit of his jurisdiction and whether the arbitrator’s decision was reviewable. Gray J. found that the arbitrator had ample authority to express his view that he had jurisdiction and authority to determine the value of Chartwell for the purpose of equalization. The Court noted that he interpreted the Minutes of Settlement as a whole and considered the surrounding circumstances.

He remarked that the language of the Minutes “that the issue of equalization shall be summarily determined by Mr. Grant” provided the arbitrator with the ultimate authority to determine the value of the property and that he was not inexorably bound to accept the appraiser’s opinion for the very reasons identified by Ms. Giddings, namely that certain weaknesses may affect the appraiser’s analysis.

The Court also confirmed that the standard of review of an arbitrator’s award will be “reasonableness” unless the question is one that would attract the “correctness” standard, such as a constitutional question or questions of law of central importance to the legal system as a whole and outside the arbitrator’s expertise.

Finally, the Court considered whether it had the authority to order the parties to enter into an arbitration agreement and confirmed that the Court had that authority. In the Minutes of Settlement the parties agreed to enter into arbitration. Relying on Lopatowski v. Lopatowski, 2018 ONSC 824, 140 O.R. (3d) 731 (S.C.J.), the Court cited the following passage:

“In this case, the parties had entered into a clear agreement to the use of a parenting coordinator with broad powers to assist them in parenting disputes, which was to include arbitral authority if necessary. The principle of good faith and honest contractual performance would require that the parties take the steps necessary to make that agreement operative. In a case such as this, the parties, represented by experienced counsel, would know that certain formalities would be required, including statutory formalities.”

Justice Gray commented that the only reason offered for refusing to execute an arbitration agreement was the fact that the arbitrator advised the parties that he had the authority to decide the value of Chartwell, an insufficient reason to breach the contractual terms of the Minutes of Settlement.

The Court dismissed Mr. Gidding’s appeal and application and ordered the parties to sign an arbitration agreement with Mr. Grant.

Lawdiva aka Georgialee Lang

Does a Court Order Barring Facebook Posts During Divorce Infringe Free Speech?

GEO_edited-1It is not unusual for parties in high conflict divorce to use social media, such as Facebook, to gain support for their cause or vent their frustration with their spouse or the court system, particularly when children are involved.

In Butchart v. Pannell 2019 BCSC 599 Mr. Pannell complained to the court of his wife’s Facebook posts where she referred to him as a “deadbeat dad” and aired their divorce issues, arguably undermining his reputation and contributing to his stress.

The court remarked that Ms. Butchart showed little insight into the negative impact of the posts, her solution was to tighten her privacy settings so her husband would no longer be able to read her disparaging missives. She further defended her position by saying there was no court order preventing her from talking about her case.

The parties had two children, ages 11 and 9. The court held that the posts were not in the children’s best interests, and barred Ms. Butchart from posting comments about Mr. Pannell or her children’s counselling on Facebook or any other social media.

I have yet to see a challenge to this type of order based on constitutionally protected free speech, however, the Massachusetts Supreme Judicial Court, sitting with seven judges, recently released an appeal decision declaring that an order limiting a litigant from posting comments, photos of his children, or other information regarding the parties’ divorce litigation online was an “impermissible restraint on speech”. Shak v. Shak SJC #12748 May 7, 2020.

The appeal court said:

“As important as it is to protect a child from the emotional and psychological harm that might follow from one parent’s use of vulgar or disparaging words about the other, merely reciting that interest is not enough to satisfy the heavy burden of restricting free speech.”

The judges noted that there was no evidence that the Shak’s child had been exposed to, or would even understand the speech that gave rise to the non-disparagement orders as the child was too young to read or access social media. The concern about future harm if the child were to later discover the posts was speculative and could not justify a restraint on speech, they said.

“Harm to the child should not be simply assumed or surmised; it must be demonstrated in detail”.

In conclusion the court suggested that judges could make it clear to parties that their behaviour, including intemperate social media postings, may impact child custody determinations and that the best outcome was to rise above acrimonious feelings and simply refrain from making disparaging remarks.

The Massachusetts’ court determined that platitudes about “the best interests of the child” were not sufficient to undermine freedom of speech.

Lawyer Sues Complainant in Law Society Matter After Complaint Dismissed

DSC00280In 2014 Pieter Verbeek, an Ontario lawyer called in 1984, acted for a client in a construction lien matter and in the course of his retainer, contacted a contractor who had failed to pay his client’s bill.

He corresponded with the contractor but on instructions from his client turned the matter over to a collection agency and ignored later telephone calls from the contractor.

Several months later the contractor received collection agency letters, and believing them to be a “sham”, he complained about Mr. Verbeek to the Law Society, alleging fraud and unprofessionalism in failing to return his earlier phone calls.

In April 2015, the Law Society determined they had no jurisdiction to investigate the fraud allegation, but considered Mr. Verbeek’s failure to return calls to the contractor, cautioned Mr. Verbeek about communication obligations, and closed their file.

Mr. Verbeek was upset by the assertion that he participated in a “sham” and in October 2015 filed a lawsuit against the contractor/complainant in Small Claims Court seeking compensation for loss of reputation, defamation and injurious falsehood.

In January 2016 the parties attended an unsuccessful settlement conference in Small Claims Court and Mr. Verbeek was expected to book trial dates. However, he failed to continue with his lawsuit and the suit was dismissed for delay.

In June 2018 the complainant, who had retained counsel to defend him, again complained to the Law Society alleging that due to Mr. Verbeek’s actions he had lost the opportunity to obtain costs in respect of the failed lawsuit.

In January 2020 Mr. Verbeek sent an apology to the complainant and a cheque to cover some of his costs.

The Law Society reprimanded Mr. Verbeek saying:

“Suing the complainant because he complained to the LSO, in our view, may erode public confidence in the legal profession. Such conduct could create a “complaint chill” if members of the public believed making a complaint could put them at risk of retaliatory litigation. It also fails to inspire the confidence, respect and trust of the community and gives an appearance of impropriety. In essence, such conduct does not reflect favourably on the legal profession.”

We’ve all been there…unfounded allegations, indiscreet criticism, but as lawyers, it is necessary to develop a “thick skin”…clients come in all shapes and sizes, some adore their lawyers, others walk away displeased….a sober second thought is required when one thinks that retaliation is an appropriate response to difficulties…

Law Society of Ontario v. Verbeek 2020ONLSTH 52 Canlii

Ex-Husband’s “Retirement” Does Not Pass the “Smell” Test, So No Termination of Spousal Support

GeorgiaLeeLang057George Dooley, of Nova Scotia, came to court seeking to be relieved of his monthly spousal support obligation, which came into effect in May 2014, to his ex-wife, Bernice Dooley. The Dooley’s had been married for 34 years, and at the time he sought to vary the spousal support of $5,000 a month, each of them was in their mid-sixties. Dooley v. Dooley 2020 NSSC 109

Mr. Dooley alleged four material changes in his circumstances, as follows:

a) Canada Revenue Agency had reassessed him and he was required to pay $295,000 in taxes;

b) he had retired;

c) he had separated from his second wife, Laurie;

d) he had financial obligations to the three children of his second marriage.

The court considered each alleged material change in turn, beginning with his CRA reassessment. The evidence indicated that the reassessment took place in 2017 and that he had additional debts including a $375,000 mortgage and $60,000 in consumer debt. As a result he had declared bankruptcy on May 1, 2017 and was entitled to an automatic discharge in January 2018.

Rejecting the CRA reassessment as a material change sufficient to invoke section 17 of the Divorce Act, the court remarked that with his bankruptcy, all of his debts disappeared, leaving him in a better position to pay support than before the bankruptcy. The court also noted that arrears of support are not cancelled by a bankruptcy.

With respect to his retirement, the parties’ earlier agreement provided that retirement would be considered a material change in circumstance, however, Bernice Dooley maintained that her ex-husband had not retired. Mr. Dooley opened Dooley’s Pharmacy in 1984 and retained it after their divorce. He began receiving his Canada Pension Plan in 2015 and sold his interest in Dooley’s Pharmacy in September 2015, receiving $455,000 from the sale. He alleged that all of this money was now gone.

He had also retained the family home after the 2014 divorce, which he renovated shortly thereafter. However, after receiving the funds from the sale of the pharmacy he tore down his newly-renovated home and built two homes on the property, one home for himself, his second wife and her three children; and one for Laurie Dooley’s parents.

After the sale of his business he remained working for the new owner as a pharmacist, with no guaranteed hours. In an affidavit dated August 2016 he deposed that he had not worked since May 2016, however, in a November 2019 affidavit he swore that he continued to work part-time during 2017. He had also worked at several other pharmacies in Nova Scotia prior to his move to Nunavut in September 2017. Throughout the period he maintained his pharmacy license.

Two months after his divorce from Bernice, he married Laurie Dooley, separating from her 19 months later, but not before he adopted her three children, 10-year old twins, and a 16 year-old. The adoptions were finalized shortly after the date of their separation. His new in-laws lived rent-free in the second home he built.

The court rejected his assertion that he was retired, remarking that his acquisition of additional financial obligations, including a second wife and three children, led to the conclusion that he could not afford to retire.

Moving on to consider whether the separation from his second wife and assumption of financial obligations with respect to his three adopted children, constituted a material change, the court noted that Mr. Dooley failed to provide evidence to establish the circumstances of his newly acquired family at the date of his divorce, making it impossible to determine if a change of circumstance had occurred.

Mr. Dooley and his second wife executed a separation agreement in February 2017, wherein each of them waived spousal support and each kept their own property. They agreed that they would both reside in the family home and either of them could, at a later date, apply to court to divide the home. There were no provisions for custody or child support in the agreement. However, he swore that he paid child support to Laurie Dooley for the three children, in the amount of $2,729, a sum that pursuant to the Nunavut guidelines required an annual income of $137,000.

Mr. Dooley’s evidence was inconsistent as he alleged that Laurie Dooley had claimed spousal support in their divorce petition, but later said she had not. Despite a request to provide a copy of the divorce petition, he failed to do so.

The court determined that Mr. Dooley had not proved, on a balance of probabilities, that his separation from Laurie Dooley had affected his ability to pay spousal support to his first wife:

“because there is no evidence they were in a relationship or, if they were, the nature of their relationship when the support order was granted…I don’t know whether the children were part of his household and being support by him when the spousal support order was granted. Certainly, if they were, then the current obligation to support them (even if now formalized in adoption orders) isn’t a material change”.

Not surprisingly, the first Mrs. Dooley queried whether her ex-husband’s alleged separation from his new wife, after 19 months, was bonafide, and I agree that her suspicions were well-founded. This sounds like a classic “sweetheart” deal and does not pass the smell test. Unfortunately, for him, his ill-conceived strategies were too far-fetched for even his QC lawyer to overcome and his application was dismissed.

In Mr. Dooley’s current financial situation, his retirement is years away, which is in keeping with Statistics Canada’s findings that 49% of Canadians 60 years or older are working “out of necessity”.

20-Year Spousal Support Battle Comes to an End

GAL & PAL #2jpgJoan and Michael Beninger have occupied considerable court time in British Columbia and are notable frequent flyers in British Columbia courts dating back to 2000.

With ten reported cases, including three in the Court of Appeal, they have likely spent a small fortune litigating spousal support, most recently in 2019.

In Beninger v. Beninger 2019 BCSC 366 the court entertained an application by Mr. Beninger who sought to terminate spousal support. His former wife cross-applied for retroactive spousal support based on her position that her ex-husband had not paid sufficient support as his Canada Pension income has not been included in the calculation of his total income.

The Beninger’s were married in 1975, separated in 2000, had a trial in 2003, and were now in their sixties. Mrs. Beninger was a traditional housewife and homemaker, raising four girls. Her ex-husband was a tax lawyer who retired in June 2018, hence his application to be relieved of his support payments.

At the time of separation the parties had limited assets due to business investments that had collapsed and in 2001 Mr. Beninger became a bankrupt. He was also on disability leave from his law practice. He returned to full-time employment in 2006 and remarried a woman with significant inherited assets.
Over the years,

Mr. Beninger’s payment of spousal support ebbed and flowed in varying amounts. At trial he was ordered to pay $6,500.00 a month and child support of $2,000 a month for one dependent child, on income of $312,000 per annum. In 2004 his spousal support payment was reduced to $2,000 a month, but by 2006 his income had again increased, and the British Columbia Court of Appeal ordered him to pay $9,000.00 a month. In 2008 he was ordered to pay $10,000.00 a month, an amount confirmed by the BC Court of Appeal.

Over the years he continued to pay support for his dependent daughter in ever increasing amounts. In a 2010 application Mr. Beninger succeeded in terminating his daughter’s support as she was now in graduate school. During the child support application referred to above, Mrs. Beninger sought to have her former husband’s new wife’s income included in the court’s assessment of income, but the court declined to do so.

In 2011 Mrs. Beninger brought an application to increase spousal support based on the termination of child support payments. The court agreed that this was a material change and ordered Mr. Beninger to pay $12,965.00 monthly retroactive to November 1, 2010. The intent of the order was to ensure that Mrs. Beninger received 45% of her former husband’s net disposable income.

In 2012 the parties consented to reduce spousal support to $10,155.00 per month. In 2014 Madam Justice Fenlon, who had remained seized of the case since 2008, established a formula that provided that each year Mrs. Beninger would be paid 45% of Mr. Beninger’s net disposable income.

Despite the court’s attempt to put an end to annual court hearings, the parties could not agree and in 2013 and 2014 they again appeared before Judge Fenlon. At the time of his application to terminate support he was paying support of $11,202.00 a month.

The evidence showed that at the age of 66, in February 2018, Mr. Beninger advised his law firm that he would retire in October 2018. The firm accepted his retirement but requested that he leave in June 2018. Mr. Beninger testified that his practice had been winding down for several years as his hours and billings decreased, making his practice less financially viable for the firm given the significant overhead. Mr. Beninger had commuted to his work at Bennet Jones in Calgary from Vancouver for twelve years while his second wife remained living in Vancouver.

He also deposed that the commute and general demands of a law practice were more than he could manage at his age, particularly given his health conditions, namely, high blood pressure, high cholesterol, and osteoarthritis. His family doctor had recommended retirement in order to reduce his stress level.

He also reported that shortly after his June 2018 retirement he and his wife had moved to Mexico and were living in a condo purchased for $445,000.00. His retirement income was less than $10,000 per annum in Canada Pension Plan payments. He owned assets valued at $200,000 and a Canada Revenue tax debt of $45,000. He had negotiated a without prejudice reduction in spousal support with Mrs. Beninger and was paying $5,000.00 at the time of the termination hearing.

Mrs. Beninger’s retirement income amounted to approximately $21,000 per annum and she owned assets valued at $345,000 and had no debt.

The chambers judge determined that Mr. Beninger’s retirement was entirely reasonable given his age, of 67 at the time of the hearing, the decline in his practice, and ongoing health issues. She also remarked that Mrs. Beninger acknowledged, as early as 2011, that “time was running out”.

Finding a material change led the court to move to the next step of the analysis as to whether spousal support ought to be paid post-retirement. She reviewed the principles of compensatory support and found that after 20 years of support amounting to $1.8 million dollars, Mrs. Beninger had been fully compensated for the disadvantages arising from the marriage and the marriage breakdown. However, on the basis of need, she accepted that Mrs. Beninger would face hardship. However, anything more than a nominal payment would find the second Mrs. Beninger responsible for her husband’s support payments. She said:

“ I am not aware of any basis in principle or precedent to consider the separate financial means of a payor’s new spouse in establishing the quantum of non-compensatory support.”

Ultimately, the court balanced the equities between the parties and ordered Mr. Beninger to pay transitional spousal support of $2,500.00 a month for a period of six months, to terminate thereafter. The application that Mr. Beninger pay retroactive support based on CPP income was dismissed based on a double dipping argument.

Based on the Beninger’s track record, it would not surprise me if this decision is appealed by one of the parties, but that remains to be seen.

The upshot is that after a 25-year marriage and 20 years of spousal support, this high-income earning spouse shared his income with his ex-wife and child in a fair manner. Both parties suffered from the fact there were no assets to divide at the end of their marriage. I expect the family debt was erased with Mr. Beninger’s bankruptcy in 2001.

The parties separated when Mrs. Beninger was in her late 40’s when she might have obtained some kind of employment, but earlier decisions indicate that after several failed attempts she was not employed after the demise of her marriage.

From her current asset disclosure it appeared she had not tucked away any monies from the considerable amount of support she received over the years. Mr. Beninger will enjoy the benefit of a financially stable partner, while his ex-wife will unfortunately join the ranks of elderly women who live near the poverty line, which BC government data indicates is less than $20,000 per annum for a single person.

Sixty-Year Old Retired Spousal Support Payor Must Continue to Pay Support

McPherson v. McPherson 2019 BCSC 933 is one of the many cases where an ex-husband paying spousal support voluntarily retires and then asks the court to terminate his spousal support obligation. In this case the retiree was 60 years old and had 24 years of contributory service, thus earning an unreduced pension of $2,300 a month. His ex-wife’s share of the pension was $800 a month.

The parties were married for just over 20 years and were divorced in 2005. Their mediated settlement terms were incorporated into the divorce order and compelled Mr. McPherson to pay spousal support of $1,200 a month with no end date.

However, oddly, there was a provision that he could bring on a review application in 2007 in the event of a material change in financial circumstances. He brought an application to terminate support in the spring of 2007 and his former wife sought an increase in support, however, both applications were dismissed, and he continued to pay support.

The Court learned that the marriage had been a traditional one with the wife working as a hairdresser at the outset of the marriage but later remaining at home to care for children. At the time the support was negotiated Mr. McPherson earned $56,000 per annum. At the date of his 2019 application he had retired from a position that paid him $112,000 per year. The Court remarked on his good health and his stated desire to spend time training rescue dogs.

The Court confirmed that “Law Courts have no power to compel people to work” but also stated that if a healthy individual with a spousal support obligation retires at an earlier-than-expected age, the question to be answered is “Is that decision reasonable in the circumstances?”

The Court held that given Ms. McPherson’s ongoing entitlement to compensatory support, and Mr. McPherson’s age, health, occupational history, and other circumstances, his decision was unreasonable and unfair. His application was dismissed.
The Court also recited Professors Rogerson and Rollie, from the Spousal Support Advisory Guidelines: The Revised User’s Guide April 2016, as follows:

“When will a retirement be described as “early”? The courts are not always clear. For our purposes, an “early” retirement is either a retirement on a reduced pension or a retirement on a full or unreduced pension before 65 years of age, in the absence of health issues or other special circumstances. If the court sees the early retirement as “voluntary” and not necessary or reasonable, then it is likely that spousal support will not be changed. …”

This is but one of the many cases where voluntary retirement before the age of 65, where there are no health issues, but a mere wish to “stop and smell the roses” does not fly with the BC Supreme Court. I presume that Mr. McPherson’s receipt of a full pension prompted him to believe that his retirement at age 60 would not be questioned. He learned differently.

Tort of Conspiracy Has a Place in Family Law Says Appeal Court

GeorgiaLeeLang057Jennifer Leitch and Anthony Novac cohabited for 17 years, had one child, and separated in September 2012. Ms. Leitch was a litigator for 9 years, but after Mr. Novac’s sale of his online gaming platform for $11.5 million, she went back to university for graduate work in law and began teaching part-time at Osgoode Hall and the University of Toronto Law School, earning about $30,000 a year.

Anthony Novac was an entrepreneur who worked in the casino and gaming industry for 20 years. Anthony’s father, Michael Novac, incorporated Sonco Group Inc. which held real estate and various gaming enterprises. Anthony worked as an executive for Sonco. However, by the time of the parties’ separation, Jennifer and Anthony’s wealth had been significantly depleted.

During the disclosure phase of their matrimonial litigation, Anthony said his income was $125,000 per annum. Ms. Leitch took the position that Anthony had hidden assets in the casino industry and had additional income he failed to disclose.

She sued Anthony, his father Michael, other Novac family members, the company Sonco, and two Novac family trusts for six separate tortious conspiracies and engaged in a nine-day summary trial in Ontario’s Superior Court of Justice.

Mr. Justice Gilmore dismissed her conspiracy claims, and made the following findings:
a. There is no evidence of an agreement;
b. Inaccurate representations by Anthony about his income were not made in concert with Michael;
c. The steps taken by Michael were not intended either actually or foreseeably to harm Jennifer; and
d. None of the actions of Michael or Anthony were wrong at law.

The chambers judge held that Jennifer could still pursue her theory of undisclosed income by seeking imputation of income at trial. Jennifer was ordered to pay costs of $340,000 to her husband and costs of $900,000 to the other defendants. Her assets were frozen when the court acceded to Anthony’s application for security for costs.

On appeal Jennifer asserted that “the factual footprint of the conspiracy claim is substantially the same as the support issues that remain for trial.” Her submission was that, by finding that her father-in-law had the right to allocate to himself the entire proceeds of the buyout, but also that it was open to a trial judge to impute to Anthony part of those proceeds as a remedy for the artificiality of Michael’s allocation to himself, the motion judge created a material risk of inconsistent results. The appeal court agreed, finding an error in law, and noted the absence of any legal analysis for the chambers judge’s decision to bifurcate this issue from the trial issues.

Jennifer’s main appeal centred on Judge Gilmore’s order focusing on one particular allegation of conspiracy involving the River Cree Casino, owned by the Enoch Cree Nation, where her husband, Anthony, was the project manager on behalf of Sonco and was to be personally paid 40% of the management fees payable to Sonco over the term of the contract.

In 2015 the Enoch Cree Nation decided to take over management of the casino and bought out Sonco’s contract for $5.75 million. At the heart of the conspiracy was the fact that Anthony’s father, Michael, retained the entire buy-out payment. Jennifer asserted that her husband and her father-in-law conspired to temporarily divert Anthony’s share of the proceeds so she would receive less in spousal support.

In support of her position she submitted three memos drafted by Sonco’s external accountants, documents that were only disclosed when Jennifer commenced her conspiracy action naming multiple parties. Portions of the memos read:

“Michael Novac takes his tax free proceeds and lends to Antony [sic] his portion as a loan that will be forgiven when Anthony’s divorce is final…
This keeps income out of Anthony’s hands….So based on this model the complete after tax cash flow, both corporate and personal, will be $5,030,772? This will be the cash available personally for distribution between Michael and Anthony?”

The appeal court found that the lower court’s hesitation to permit a tort action to invade the realm of family law was misconceived, recognizing that the Superior Court was clearly motivated by the view that the family law statutory scheme was a complete code and that “conspiracy was too blunt an instrument to use to get at the buyout proceeds for support purposes”.

The appeal court determined that the tort of conspiracy was a valuable tool in the judicial toolbox to respond to the type of misconduct alleged by Jennifer and if it was not available, co-conspirators would have “no skin in the game.” The court rejected the notion that compensation paid by the defendants for conspiracy was contraindicated because it was akin to “punitive damages”.

The appeal court also observed that while nondisclosure in family law cases was the “cancer” of family litigation, equally problematic was the issue of “invisible litigants”, namely family members and friends willing to break both the spirit and letter of the law by facilitating the deliberate hiding of assets or income.

The court allowed the appeal, set aside Judge Gilmore’s order and vacated the costs orders against Jennifer. She was awarded costs of the appeal in the amount of $50,000. Leitch v. Novac 2020 ONCA 257

Lawdiva aka Georgialee Lang