Is it a Loan or a Gift?

A classic problem that frequently occurs in family law disputes is whether the funds given to a married adult child are a gift or a loan. In Rivas v. Milionis 2018 ONCA 845 the Ontario Court of Appeal upheld a judge’s order that found that a mortgage placed by parents on their married daughter’s home did not secure a legitimate debt to the parents, as the monies advanced to the couple were a gift.

The couple purchased their family home in 2000, financing the purchase with a bank mortgage. In 2004 they encountered financial problems and the wife’s parents provided financial assistance and later agreed to pay off their mortgage, thus alleviating their tight financial circumstances. Discussions between the wife and her parents took place in 2004. The mortgage was discharged in February 2005 and in July 2005 the wife’s parents placed a new mortgage on the family home.

The husband testified that he was baffled when his wife’s parents asked them to execute a mortgage in their favour, but he realized that resisting their overture would cause conflict in the family, so he signed the mortgage documents. He also said that he cooperated to keep his wife happy and relied on her assurance that the house would always be theirs.

All was well until ten years later, when the couple separated and the wife’s parents sought to enforce their mortgage security. The court referred to the presumption of a resulting trust in a situation where there is a transfer of property from a parent to an adult child. The presumption is that property transferred from a parent to an adult child is not a gift but is held in trust by the adult child for his or her parent. Pecore v. Pecore, 2007 SCC 17. That presumption can, of course, be rebutted.

It is noteworthy that the court at first instance did not hear oral evidence, thus, none of the parties were cross-examined. The judge ruled:

“I do not accept Tasos’ [the wife’s father] evidence that the many transfers of money were loans. He stated that each of the transfers constituted a loan however, as noted earlier, there was no evidence that the parents at the very least told their daughter and son-in-law that those transfers were loans or that he communicated the loan terms of each transfer to them. I accept the husband’s evidence that the parents never suggested to him until June or July 2005 that the transfers made from 2000 to 2005 were loans.”

An important factor in the judge’s decision was the “mortgage-freedom” celebration that the parties testified about when the conventional mortgage was paid off by the wife’s parents in 2005.

Parents who generously support their adult children must understand that it is too late after the fact to suggest that monies provided are a loan, unless there is evidence, such as a promissory note, signed by the parties at the time of the advance of funds, with each party having independent legal advice.

Lawdiva aka Georgialee Lang

Back Door Approach to Obtain Deceased Husband’s Estate Dismissed

The British Columbia Supreme Court has dismissed a wife’s application to obtain the remaining personal injury compensation paid to her husband before his untimely death via an application for lump sum child support.

Mr. Bouchard received a $1.9 million dollar award for injuries he suffered in a serious car accident, following a trial and an appeal. He received the funds in 2012, the same year he and his wife separated. Unfortunately, Mr. Bouchard became a drug addict and died without a will in 2015, still holding $322,000 from the compensation he received. The balance of the award was not accounted for.

Ms. Bouchard sought to obtain the personal injury funds being held by her husband’s lawyers in a trust account pursuant to an order of the Provincial Court which provided the funds would be held in trust as security for future child support payments. Prior to Mr. Bouchard’s receipt of the judgment, the Provincial Court found that Mr. Bouchard’s annual income was $19,000 and ordered that he pay child support for two children in the amount of $300 per month.

Ms. Bouchard made an application for child support, asking the court to order that the trust funds be paid to her in their entirety as lump sum support, but the chambers judge found that in the absence of an administrator for the estate, her application was premature.

Despite this warning, Ms. Bouchard brought a second application (Bouchard v. Bouchard 2018 BCSC 1728) in the summer of 2018, again seeking an order for lump sum child support in the amount of the trust funds held by her deceased husband’s PI lawyers, pursuant to S. 170 (g) of the Family Law Act.

Among the submissions made by Ms. Bouchard was the argument that the funds held in trust did not form part of Mr. Bouchard’s estate; that there were no creditors of the estate; and that Mr. Bouchard’s family was “fine” with her application. With respect to the quantum of the lump sum support she sought, she submitted that her “rough calculation” of the costs of raising her two children, and her “approximate average family costs” should suffice as evidence in support of her claim for the entirety of the trust funds.

The court reviewed the applicable sections of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 (WESA), namely, sections 150 and 151 of WESA and Supreme Court Family Rules 8-2 and 20-6.

The court declined to accede to Ms. Bouchard’s claim saying:

“Ms. Bouchard’s attempt to obtain these funds using this approach really asks the court to circumvent the proper procedural and substantive law.

Procedurally, Ms. Bouchard is improperly attempting to obtain orders in the absence of any representation of Mr. Bouchard’s estate. The orders she seeks could only be orders against his estate and no one has been appointed as a personal or litigation representative.”

The court also found that Ms. Bouchard’s reliance on s. 170 of the Family Law Act was misconceived as the legislation contemplated an order for child support against a living payor, not a deceased one.

What is most apparent about this case is that counsel for Ms. Bouchard had already been told by a judge of the court that without the appointment of a personal representative for the estate of her deceased spouse, no orders would be made. Clearly, it should have been obvious that Ms. Bouchard either needed to apply to be appointed administrator or some other relative of Mr. Bouchard’s should have been recruited. I can’t imagine that she could be happy about her multiple unsuccessful court applications, with the same reasons for the dismissal of same.

Lawdiva aka Georgialee Lang

Negotiated Settlement Means No Costs Award

After several motions and a series of settlement discussions, the parties were able to settle all the issues in their family dispute and ultimately, signed a settlement agreement.

However, after the settlement the respondent, Mr. Dwyer, asked the court to award costs to him in the range of $27,000 to $35,000 representing a partial indemnity of his legal fees.

His former wife disagreed, positing that costs could not be awarded since the parties had settled their differences outside of a trial. She cited the case of Ball v. Ball 2014 ONSC 5754 where the court said:

“I accept the following summary statement from Orkin, The Law of Costs, 2nd Ed. (2014 Looseleaf) at paragraph 403: “Costs are generally not appropriate for a consent order on the reasoning that the order was not made as a result of adjudication on the merits of the application.” Without adjudication it can be very difficult to know who has had success. As noted in Barber vs. McGee, [2013] O.J. No. 4657 (O.C.J.) at paragraph 23:

Consideration of success is the starting point in determining costs. However, any attempt to determine a “winner” or “loser” in a settlement, is in most cases, complex if not impossible. … Unless there are compelling reasons to do so, costs in the circumstances of the settlement between parties ought not to be awarded by the court.”

Based on the material filed, the court said that it could spend hours and hours trying to determine which rendition of the facts provided by each party were accurate and chose instead to apply the principle found in Ball, declining to order costs.

The reality is that outside of a trial or a chambers application it is nigh impossible for a judge to determine who was reasonable, what positions ought to have been advanced, and when, and generally the conduct of the litigation….all factors that come into play in a costs decision.

Where parties settle their cases, the norm is to either negotiate costs as part of the settlement, or more commonly agree that each party will pay their own costs. Day v. Dwyer 2018 ONSC 5018

Lawdiva aka Georgialee Lang

Can A Couple Orally Agree Not to Divide Their Property? Will a Court Respect that Agreement?

Today’s decision of Mr. Justice Kelleher of the British Columbia Supreme Court  provides an answer to the two questions posed above.

If a couple decide to live together, have no children, and confirm with one another that everything each of them owns or will own will always remain separate if the couple separate, will a court interfere?  In the case of Doell v. Prentice 2018 BCSC 1115 the Court said “yes” it will.

This common law couple lived together for 23 years on property purchased with Mr. Prentice’s savings. He was a highly skilled bricklayer and stone mason, while Ms. Doell, who had a university degree, worked in menial positions taking care of dogs and horses. Her annual income was less than a full-time minimum wage job.

Many witnesses testified they were aware of the couple’s financial arrangements which were apparently openly discussed with their friends and relatives. Ms. Doell reputedly said that if their relationship ended she would leave with her belongings but nothing of her husband’s. However, after she left the home she shared with Mr. Prentice she changed her mind and brought a court action seeking an equal division of property and spousal support. Mr. Prentice argued that she should receive no property and no spousal support despite her status as a common law spouse under the law.

The judge reviewed the evidence finding they never shared property, had no joint accounts or joint credit cards; she paid for her expenses and he paid for his. When they ate at a restaurant they each paid their way. Mr. Prentice bought several other properties and fixed them up. When he sold a property he did not share the sale proceeds with  his wife.  Ms. Doell was of the view that she would not work on the properties as they were not hers and she would get nothing back for her services.

Later, during the relationship, Ms. Doell purchased a property in joint tenancy with her mother and made it clear that it was not intended to be shared with Mr. Prentice. At that point she moved her dog care business to her new property. Unfortunately, Ms Doell fell off her horse and had a concussion which caused migraine headaches. Still later several of her animals unexpectedly died which caused her upset and depression. She changed her will deleting any gift to Mr. Prentice.  By this time the relationship was clearly coming to an end.

The Court was satisfied that the parties entered into an oral contract to keep their property separate. As for spousal support, there was no definitive evidence that Ms. Doell had agreed to give up that claim.

The Court reviewed s. 95(2)  of the Family Law Act to determine if it would be “significantly unfair” not to deviate from the oral agreement:

(2)        For the purposes of subsection (1), the Supreme Court may consider one or more of the following:

(a)        the duration of the relationship between the spouses;

(b)        the terms of any agreement between the spouses, other than an agreement described in section 93 (1) [setting aside agreements respecting property division];

(c)        a spouse’s contribution to the career or career potential of the other spouse;

(d)        whether family debt was incurred in the normal course of the relationship between the spouses;

(e)        if the amount of family debt exceeds the value of family property, the ability of each spouse to pay a share of the family debt;

(f)         whether a spouse, after the date of separation, caused a significant decrease or increase in the value of family property or family debt beyond market trends;

(g)        the fact that a spouse, other than a spouse acting in good faith,

(i)  substantially reduced the value of family property, or

(ii) disposed of, transferred or converted property that is or would have been family property, or exchanged property that is or would have been family property into another form, causing the other spouse’s interest in the property or family property to be defeated or adversely affected;

(h)        a tax liability that may be incurred by a spouse as a result of a transfer or sale of property or as a result of an order;

(i)         any other factor, other than the consideration referred to in subsection (3), that may lead to significant unfairness.

After reviewing similar cases, the Court ordered that the property of the parties would be divided 80/20 in favour of Mr. Prentice, however, he would pay indefinite spousal support of $850 per month.

Would it have made a difference if this couple had written down their agreement? Probably not. After 23 years together it is unlikely that an agreement not to share assets, where one party has an abundance and the other, very little, would be upheld by a court in British Columbia.

Lawdiva aka Georgialee Lang

Appeal Court Says Judges Cannot Avoid Determinations of Grave Risk of Harm in Hague Convention Cases

The Ontario Court of Appeal recently reversed a Hague Convention order that a mother from England must return to England with her two children, failing which her British husband would have custody of their children. (Zafar v. Saiyid (2018) ONCA 352)

As is becoming typical in Hague cases, the mother and her two young children who had Canadian citizenship,travelled to Canada for a summer holiday, with the permission of her spouse, and the intention of returning to England by a prescribed date.

On August 23, the mother advised the children’s father that their marriage was over and that she would remain in Ontario with the children. He promptly filed a Hague Convention application seeking the return of the children.

At the court hearing the mother conceded that the children’s habitual residence was England, which is the primary question when a Hague application is brought. The law is very clear that children must be returned to their habitual residence where the question of their residence will be determined.

However, Article 13 (b) of the Hague Convention permits a removing parent to argue that the child should not be returned where the other parent poses a grave risk of physical or psychological harm to the child or the spouse. Ms. Saiyid alleged that her husband was “threatening, verbally abusive, financially controlling” and presented “intolerable behaviour towards the mother, smoke and drank”, which reflected an inability to create ” a safe environment free of danger for the children.”

The hearing judge ordered the mother to return the children to England by December 1, failing which the children’s father would have sole custody of the children. He said:

“In a Hague application, I am not to determine the best interests of the children, only jurisdiction. In any event, on affidavits I cannot determine who is telling the truth about Mr. Zafar’s conduct.”

On November 27 the mother obtained a stay of the judge’s order, however, shortly thereafter she voluntarily returned to England with the children and brought an application to the British court seeking orders that she may relocate to Canada with the children.

Nonetheless, she wished to continue with her appeal in Ontario on the basis that the judge’s alleged errors of law could be used against her in the new British proceeding.

The appeal court agreed that her appeal was not moot for the reason she identified and held that the hearing judge erred in stating that he could not determine whether the children were at grave risk of serious harm, delegating that issue to the English courts. The court held that the hearing judge ought to have made a decision based on the record; or considered whether it was appropriate to hear oral evidence from the parties. The hearing judge’s decision to explicitly decline to consider the matter was an error in law.

While the task is enormous, where conduct allegations are thrown back and forth haphazardly, it is a judge’s duty to sift the wheat from the chaff. Oral evidence, with cross-examination is often the best way of doing that. These cases are the most difficult, particularly when young children are involved, when the question becomes “which parent is most believable?”

Lawdiva aka Georgialee Lang

Should a Child Have His/Her Own Lawyer in Custody Cases?

The Ontario Court of Appeal has recently answered the question posed above in a case where a father asked the court to appoint a private lawyer for his two children, where he also sought to increase his parenting time with them. (Mader v. McCormick 2018 ONCA 340)

The parties separated in 2010 and negotiated a parenting schedule that gave the children’s mother primary residence with the father having overnight access every second weekend and after school access 4 nights a week. In 2013 the father sought additional parenting time and the Office of the Children’s Lawyer (“OCL”) was appointed by the court to represent the children. The OCL is a government agency in Ontario that is available by court appointment to act on behalf of children in family law, child protection and estate cases.

The OCL advised the children’s father that after speaking with their clients they ascertained the children were not in favour of additional time with their father. The father then abandoned his application.

In 2015 the father retired and with more leisure time again advanced a claim to have additional parenting time. He also requested the appointment of the OCL but his request was denied.

In 2016 the father took another stab at his desire to have more parenting time, however, this time he asked the court to appoint a private lawyer to represent his children who were both now young teenagers. Two lower courts denied his request for the appointment of a private lawyer for multiple reasons including their reliance on the children’s feelings about additional access as conveyed to the OCL two years earlier; the absence of any behavioural or academic issues that might indicate unhappiness with the current schedule; and the possible embarrassment of a further investigation involving their teachers and other collaterals.

The lower courts also expressed concern that the father’s request for private counsel was not “child-focused” and would burden the children with questions when they had already expressed their wishes.

On appeal from the lower courts the father cited the United Nations Convention on the Rights of the Child, arguing that the Convention obliged the court to appoint counsel for them. Article 12 of the Convention reads:

1. State parties shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child.

2. For this purpose, the child in particular be provided the opportunity to be heard in any judicial or administrative proceedings affecting the child, either directly, or through a representative or appropriate body, in a manner consistent with the procedural rules of natural law.

The appeal court confirmed that the appointment of counsel for children is a discretionary decision which should focus on the best interests of the child and deference should be afforded to a motion judge’s assessment of such an appointment. Ultimately, the appeal was dismissed.

The Court referred to Reynolds v. Reynolds 1996 ONSC 7273 where Fleury J. said:

“This remedy [appointing a lawyer for the children] should not be available only for the asking. In as much as it implicates the children very directly in the entire litigation, it is a very blunt instrument indeed. It can cause untold harm to impressionable children who may feel suddenly inappropriately empowered against their parents in a context where the children should be protected as much as possible from the contest being waged over their future care and custody. All actions involving custody and access over children should be governed by one paramount consideration: no one should be allowed to act in a way that might endanger their well-being. The test of “the best interests of the children” as insipid and fluid as it might be, still remains the benchmark against which any person wishing to interfere in their lives should be measured.”

Lawdiva aka Georgialee Lang

Professional Who Changes His Career Focus Receives Minimal Spousal Support Relief

In my view the heaviest family litigation traffic amongst aging boomers will be in reviews, variations, and applications to terminate spousal support, based on section 17 of the Divorce Act. The Hepburn case is illustrative of this prediction. (Hepburn v. Hepburn 2013 BCCA 383)

Dr. Hepburn, age 55, was a family physician that had a modest sideline writing a syndicated medical column for local newspapers from which he earned about $30,000.00 per annum. After 26 years of marriage the Hepburn’s separated in 2006. Mrs. Hepburn, age 65, had raised their four children and occasionally performed bookkeeping and administrative duties for her husband’s medical practice.

The parties negotiated a settlement, agreeing that Dr. Hepburn’s income for the purpose of a Spousal Support Advisory Guideline calculation was $220,000 while his wife’s was nil. He agreed to pay his wife $8,000.00 a month indefinitely with no review.

In 2008 Dr. Hepburn decided to amp up his media career and spend less time seeing patients and more time developing a media platform. Eventually he signed a contract with the Oprah Winfrey Network to produce a television show called Wisequacks. He would be paid a modest $1,250.00 per episode. As a minority owner of a group of medical clinics, in 2009 he was asked to transfer his practice to another clinic location, and he agreed.

His pursuit of a media career was not lucrative and entailed many hours of networking and creating opportunities for potential success. In 2011 he advised his ex-wife that because of a downturn in his income he would reduce her monthly support from $8,000.00 a month to $5,000.00 a month.

At a variation hearing in 2012 he deposed his annual income was only $145,000, while his former wife’s income had grown from nil to $12,000.00 a year, on account of rental income and Canada Pension Plan benefits. Dr. Hepburn argued that his change of workplace resulted in fewer patients and less income. He also suggested that the media industry was changing rapidly and that other media forms had displaced a weekly newspaper column. He contended that income should be imputed to his ex-wife because she had not taken reasonable steps to become self-sufficient.

The chambers judge dismissed his variation application opining he had not met the onus of proving a material change in circumstances. The judge found that the change in the location of his workplace was not mandatory; the fact Dr. Hepburn now spent almost fifty per cent of his time on media activities, with no commensurate financial benefit, was also a personal choice that should not give rise to a change in his spousal support obligations.

On appeal Madam Justice Neilson agreed with the chambers judge that Dr. Hepburn’s relocation in his workplace was voluntary and that he ought reasonably to have known that the change would translate to a lower income. She also found that Dr. Hepburn had failed to show that his media activities had a reasonable prospect of financial success, a factor that could have justified the hours he devoted to it.

However, the appeal court allowed the appeal recognizing that the decrease in his media income and the increase in Mrs. Hepburn’s income post-separation, albeit moderate, were nevertheless material. Dr. Hepburn’s income was found to be $200,000.00, a reduction of $20,000.000 per annum and Mrs. Hepburn’s $12,000.00 per annum, an increase from nil income.

Dr. Hepburn was ordered to pay $6,850.00 in spousal support.

IMPORTANT “TAKE-AWAYS” FROM HEPBURN

1. Although far from startling, the fact remains there is a very heavy onus on a variation applicant to prove a material change in circumstance that is not characterized as voluntary or self-serving. Any change in a payor’s income that comes as a matter of choice is fatal to a successful variation application.

2. Where an applicant has a high-paying, long-term professional position, his or her desire to “stop and smell the roses” is permitted, but not at the expense of a reduction in a dependent spouse’s spousal support.

3. There is no doubt that Mrs. Hepburn’s age was an important factor although it was not specifically mentioned by either court. Dr. Hepburn’s suggestion that his former wife had not taken serious steps to become self-sufficient garnered little comment from the courts.

Lawdiva aka Georgialee Lang

Grey Divorce: Spousal Support for Husbands?

Is it more difficult for a husband to obtain a spousal support order? Mr. Lee would likely say that it is….(Lee v. Lee, 2014 BCCA 383)

The Lee’s were married for 20 years with no children and were ages 56 and 49 at the time of the appeal. Mr. Lee spent ten-years as a “car man” with Canadian National Railways and part-time as a doorman at a bar. Mrs. Lee spent these years earning a bachelor and master’s degree at her own expense and eventually became a high school principal earning $120,000 per annum. Mr. Lee’s CNR income topped out at $48,000, but came to an end as a result of a car accident that “made it impossible for him to wear a hard hat”. He then began to work part-time as a personal trainer earning $10,000 per year. However, he never filed tax returns, citing his nominal income as the reason.

Mr. Lee received an ICBC settlement of $320,000 that he said was used for family expenses, including a payment of $240,000 against the mortgage on their first family home. The evidence showed that the parties lived well beyond their means and repeatedly remortgaged their home to pay down credit card debt and overdraft lines of credit.

Mr. Lee suddenly told his wife that the marriage was finished and moved in with a policewoman who earned a base salary of between $75,000 and $90,000, before overtime. While his new partner’s income records were subpoenaed she did not produce them.

Mr. Lee claimed spousal support pointing to the significant disparity in income between he and his wife. He agreed to an imputation of income in the amount of $40,000 per annum and sought monthly support of $2,100.00 for seven and one-half years when he would receive a CNR pension of $1,490.00 per month.

Mr. Lee received a modest reapportionment of the net family assets of $186,485.00 and a Part 6 division of their respective pensions. The Court discounted his argument that his contribution to the pay down of the mortgage supported a larger reapportionment. The judge did not accept that his contribution was greater than his wife’s, given her high income, and noted that much of his settlement was used to purchase a Subaru vehicle, a Corvette including $20,000 in modifications, another Subaru, and a Harley-Davidson motorcycle, all for himself.

The trial judge held that Mr. Lee was not entitled to spousal support in addition to 54% of the net family assets, finding there was no basis for compensatory or needs-based support. Mr. Lee had received about $19,000 in voluntary interim support that he was ordered to repay to his wife.

The husband’s spousal support appeal was essentially about his entitlement to the standard of living that Mrs. Lee would continue to enjoy post-divorce.

Madam Justice Newbury remarked that Mr. Lee had not forgone any educational or career opportunities or made any other “sacrifice”. He also did not make a substantially greater contribution to the family than did Mrs. Lee.

She identified the “question of principle” raised by Mr. Lee’s appeal succinctly:

“Whether it can be said that by virtue only of the disparity between his and Mrs. Lee’s income going forward, he can be said either to have suffered a disadvantage by reason of breakdown of the marriage, or to have a claim to spousal support on the basis of need.”

Madam Justice Newbury acknowledged the generalized comments of Madam Justice L’Heureux-Dube in Moge v. Moge that suggested the question before her could be answered in the affirmative, however, she also averted to the oft-cited proposition that “marriage per se does not automatically entitle a spouse to support.”

The Court cited extensive portions of Professor Carol Rogerson’s article from 2001 titled “Spousal Support Post-Bracklow” 19 CFLQ 185, including where Ms. Rogerson referred to a quote from the Ontario Supreme Court in Keller v. Black (2000) 182 DLR 4th 690:

“It seems that Bracklow has taken us to the point where any significant reduction in the standard of living of a spouse, resulting from marriage breakdown will warrant a support order—with the quantum and/or duration of the support being used to tweak the order so as to achieve justice in each case.”

Madam Justice Newbury agreed that the Court’s comments in Keller v. Black aptly described the approach adopted in British Columbia as well, however, she found there was no precedent for an award of spousal support based “solely on the disparity of incomes, or even solely on the basis of the non-compensatory model” referring to several cases including Chutter v. Chutter 2008 BCCA 507; Hodgkinson v. Hodgkinson 2006 BCCA 158; and Fisher v. Fisher 2008 ONCA 11.

She also noted that in Farrar v. Farrar 2003 63 OR 3d 141 the trial judge ordered Mrs. Farrar to pay her spouse the sum of $12,000.00 solely on the basis he was in need and she had the ability to pay, an order overturned by the Ontario Court of Appeal stating that “the differential in income alone did not provide a basis for awarding spousal support.”

Equalization of income was also considered in Griffiths v. Griffiths 2011 ABCA 359 where the appeal court said:

“Equalization of incomes, or even of lifestyles, is not a basis alone for non-compensatory spousal support. Still less is equalization of incomes each year. Loss of access to the fruits of the respondent’s future labour is not a recognized underpinning to entitlement to spousal support, absent other considerations.”

Most notably, the Court found that if Mr. Lee had not formed a new relationship the current case law in British Columbia would have permitted an award of spousal support, given 20 years of marriage, but:

“whether it would have been a material error in law or a wrong exercise of discretion to refuse support in such circumstances is another matter…To rule as a matter of law that Mr. Lee should be compensated indefinitely for the “loss” of the ability to share in Mrs. Lee’s income and lifestyle would, taken to its logical conclusion, mean that support must be ordered on one model or the other in virtually every case that comes before the court.”

The majority held that the only appropriate change to the trial judgment should be the elimination of Mr. Lee’s obligation to repay his wife for the interim support. Dissenting on this point alone, Madam Justice Bennett held that the repayment order was sound in law based on the economic effect of Mr. Lee’s new relationship with a partner who owned her own home and earned a substantial income.

Mrs. Lee was awarded 90% of her costs.

IMPORTANT ‘TAKE-AWAYS” FROM LEE

After reading Lee v. Lee I got the sense that the trial judge did not like or respect Mr. Lee. The trial judge referred to Mr. Lee’s admission that he had been selling steroids and growth hormones illegally; earning $200.00 a month, a modest sum that was contradicted by third party evidence. The Court also acknowledged that money Mr. Lee had borrowed or assets acquired remained undocumented or incompletely explained. The Court also found that the standard of living enjoyed by the Lees was illusory as it was accommodated with borrowed money.

The trial judge expressed skepticism that Mr. Lee’s employment choices were limited to part-time personal training, referring to a video recording taken surreptitiously by a private investigator that filmed Mr. Lee at his gym lifting heavy weights with considerable agility. There was also expert evidence that a full-time trainer with only a high school education could earn up to $60,000 a year.

Mr. Lee’s assertion that his financial contribution to the marriage exceeded his wife’s received short shrift with the Court of Appeal emphasizing that it was neither desirable or necessary to carry out an accounting of “who paid what” during the marriage.

Undoubtedly gender played a role in the court’s ultimate conclusion. Madam Justice Newbury referred to “transitional support” allowing that:
“Such awards have regularly been made in favour of women, but rarely in favour of men, perhaps reflecting that, as Rogerson suggests, “Non-compensatory support is significantly structured by social norms of what is fair and just. The economic dependency of husbands on wives is not reinforced and naturalized by strong cultural norms, as is the dependency of wives on husbands…”

Divorce Drives Litigant into Depression and Bankruptcy

You may have heard of the “good divorce”, a concept explored by Psychology Today in 2009 where they suggested that “it is possible if you know how to do it”. Unfortunately, as a divorce lawyer I rarely see the good ones, only the tragically destructive ones.

In worst case scenarios, divorce can be the trigger for personal bankruptcy as it was for Miroslaw Kuczera from Ontario. (Kuczera (Re), 2018 ONCA 322 CanLII)

In an Ontario Court of Appeal decision we read that Mr. Kuczera was a happy family man with two children, employed as an electrician, until his marriage ended in 2007, leading to an acrimonious divorce that included allegations that he was an abusive spouse.

As is typical in high conflict divorces, he had no access to his property and when his legal fees overwhelmed his financial resources he took to using credit cards and borrowed $16,000 from his brother. The loan was to be paid back in 2009 failing which a property owned by Mr. Kuczera in Poland would be forfeited to his brother.

By May 2009 bankruptcy was inevitable and he retained a bankruptcy trustee, made the required monthly payments and was discharged from bankruptcy in October 2010.

Meanwhile the family law litigation continued unabated and his discharge was revoked when the bankruptcy trustee alleged that he had not disclosed the Poland property. He then made a consumer proposal to escape the bankruptcy proceedings which required him to pay $66,0000 over 5 years.

By this time his mental health sadly deteriorated with the combination of soul-destroying family litigation and the exhausting bankruptcy proceedings. His psychiatrist diagnosed him as clinically depressed and suffering from “Dissociative Identity Disorder”.

In January 2012 the family home issue was finally resolved and he received $72,000, but when asked where the money went he had little to say, except that his teenage daughter, who lived with him, was a drug addict, and that he purchased expensive Chinese medicines for his ill son. He said that he always carried cash and that quite likely the children had helped themselves as well. His mental and emotional state left him unable to cope.

The bankruptcy registrar refused to grant an immediate discharge to Mr. Kuczera, delaying it by six months and ordering that he pay the sum of $61,000, writing:

“I appreciate that the bankrupt will find an order of payment of this magnitude difficult in light of the circumstances present at the date of the hearing. However, it is my view that this situation could have been avoided had the bankrupt acted reasonably with his creditors. He clearly did not wish to pay his creditors under the proposal when he received significant funds in 2012. His current situation is his own doing.”

Mr. Kuczera’s appeal from the registrar was dismissed with the court refusing to admit updated psychiatric reports. But then the case came to the Ontario Court of Appeal, who took an entirely different view of his situation.

To begin, the highest court admitted the psychiatric report and affirmed that even though it was only filed after the registrar’s initial hearing and that it came from the bankrupt’s personal therapist, it met the legal test for admission, contrary to the registrar and first appeal court’s views.

While the missing funds were problematic, the Ontario Court of Appeal accepted that Mr. Kuczera’s mental condition affected both his “thinking and his actions”. The Court also found there was no evidence that he had benefitted personally from the sale proceeds. The finding that he had not disclosed the property in Poland was found to be erroneous. The Court said:

“The condition imposed by the Registrar that the appellant pay $61,000 as a condition of his discharge, given his personal history, was more than just “difficult” for the appellant. It was crushing.It does not reflect the rehabilitative objective of the”…(bankruptcy legislation).

While not all family litigants suffer from the dire consequences recounted here, there can be no doubt that family litigation, particularly in high conflict cases and proceedings that carry on for many years after the initial separation, are the cause of mental and physical impairment, financial devastation, and even suicide.

There is a better way and that is to move family law cases out of the courtroom and into Family Law Centres with dedicated judges, lawyers, counsellors, financial experts and other professionals, with a focus on negotiation, mediation and arbitration. Will any government dedicate the funds to try this better way? Don’t hold your breath!

Lawdiva aka Georgialee Lang

The Public Has the Right to Know: JP v. British Columbia

In the tradition of open courts and transparency, the BC Court of Appeal has ordered that affidavits, written submissions, and other material filed in the Court be released to the media, in this case CKNW and the Vancouver Sun, a decision I applaud.

The case of JP v. British Columbia has occupied many pages of local newspapers and a multitude of radio and TV reports. It is, of course, the case concerning the groundbreaking decision last summer after a 147 day trial, when Mr. Justice Paul Walker of the British Columbia Supreme Court found that B.C.’s child protection authorities had negligently permitted a father to sexually abuse his children while the youngsters were in the custody of the Ministry. The Court found that the government’s failure to protect the children was “egregious, negligent, and a breach of duty” and government social workers showed a “reckless disregard to their obligation to protect children.”

The evidence before Mr. Justice Walker included expert evidence from Californian Dr. Claire Reeves who had been an expert witness at the 90 day family law trial that preceded the action against the Ministry by several years. Dr. Reeves’ expert opinion played a significant role in the original finding that this father had sexually abused his children.

The legal profession was shocked when the Court of Appeal reviewed the evidence and determined that the so-called expert had defrauded the court. Their awe was not a criticism of the high court’s findings, but that the lower court has been so taken in by Dr. Reeves and the utter disregard for proper procedure.

Last year in a 411 paragraph decision, the Court of Appeal (JP v. British Columbia 2017 BCCA 308) held that Dr. Reeves’ fraud impacted the integrity of the entire judicial process, leading to a gross miscarriage of justice. The trial findings that the father was guilty of sexual abuse of his children were thrown out and a new trial ordered. The scathing denouncement of BC’s child protection authorities was also dismissed, the appeal court finding that the alleged misfeasance was the product of procedural unfairness.

With the Court of Appeal’s order made today, more details of this extraordinary case will be forthcoming. Last week, the Supreme Court of Canada refused to hear JP’s appeal of the BC Court of Appeal decision. It is her lawyer that introduced Dr. Reeve’s evidence into the trial process and who has been soundly criticized in the media for the debacle that occurred. JP was the only participant in today’s appeal that resisted the principle of open access to the courts….not surprising!

Lawdiva aka Georgialee Lang