Supreme Court

SUPREME COURT OF NOVA SCOTIA

Citation: Hurst v. Gill, 2010 NSSC 366

Date: 20101008

Docket: 1207-003211(059939)

Registry: Truro

Between:                        

Christine Mary Hurst

Petitioner

v.

Christopher Valentino Gill

Respondent

                                                        Decision

Judge:                   The Honourable Justice Cindy A. Bourgeois

Heard:                  September 14, 15, 16 & 17, November 30, December 2, 2009, January 26, April 26, 27, 28, 2010 in Truro, Nova Scotia

Final Written

Submissions:         May 5, 2010 - Mr. Daley

May 12, 2010 - Mr. Yuill

Counsel:               Mr. Bradford Yuill,  for the Petitioner

Mr. Patrick MacMillan, for the Respondent  (Sept 14 -

 17, Nov 30, Dec 2, 2009)

Mr. Timothy Daley, for the Respondent  (April 26, 27, 28,

 2010)

By the Court:

I.       INTRODUCTION

[1]              The parties met in Newfoundland in 1989 and commenced a common law relationship shortly thereafter.  They married on August 5, 1995.  Except for a short stint in British Columbia and a brief return to Newfoundland, they have spent the majority of their relationship in Nova Scotia, and since 1991 in Truro.  Although Mr. Gill had two other children from a prior marriage, the parties were blessed with a child, Kaitlyn, who was born June 20, 1996.   In 1993, Ms. Hurst, a physiotherapist, opened her own clinic in Truro, which she still operates, and serves as her sole source of income.  Mr. Gill participated in the set up and ongoing operation of the clinic for a period of time.  The extent of his involvement is at issue, and will be addressed herein.

[2]              The parties separated on May 3, 2008.  Mr. Gill remained in the matrimonial home, with Ms. Hurst finding rental accommodations.  There has been a great deal of strife since that time, especially relating to the parenting arrangements relating to their daughter.  At present, and as a result of a prior order of this Court,  Kaitlyn is in the care of Ms. Hurst, with ordered access to Mr. Gill.  This Court must now determine the remaining outstanding issues between the parties, itemized below.

II.      PROCEDURAL HISTORY

[3]              There has been a complicated, and unfortunately, delayed determination of many important issues before the Court.  As such, it is important, prior to considering the merits of the positions put forward by the parties, to consider the procedural context.

[4]              The Petition for Divorce was filed on July 30, 2008.  An Answer and Counter-Petition was filed by Mr. Gill on August 22, 2008.  Through the evidence provided in the course of the hearing, I was made aware of several appearances before the Court, prior to my initial involvement in July of 2009.  Specifically, there were appearances on September 2, September 29, November 4 and November 12, 2008 relating to a motion seeking interim relief relating primarily to parenting arrangements, although it did address the status of the matrimonial home, spousal support and the payment of assessment costs. The resulting Interim Order issued by Scanlan, J. on November 21, 2008 provided detailed direction respecting parenting time, and also contained the following provisions:

12.  Dr. Carolyn Humphreys shall conduct a parent/child assessment of the Petitioner, the Respondent and Kaitlyn, including assessments of the parent/child relationship between both the Petitioner and Kaitlyn and the Respondent and Kaitlyn.  This assessment shall be a clinical psychological assessment of the Petitioner and Respondent.  If the assessor concludes that her parent/child assessment would be strengthened by psychometric testing being conducted on the Petitioner and/or the Respondent, she shall arrange for such testing to be conducted in conjunction with her parent/child assessment . . .

13.  Kaitlyn shall continue to receive counselling from ME Family Therapy . . .

15.  The cost of this assessment shall be borne equally by the Petitioner and the Respondent.  The Petitioner shall initially pay the costs of the assessment and shall be reimbursed by the Respondent for his share from his portion of the matrimonial property division.  The costs of this assessment shall be subject to the costs award to be made by this Honourable Court in this proceeding.

17.  The Petitioner shall maintain the Respondent as a beneficiary of the medical insurance policy of Fundy Trail Physiotherapy Clinic Limited and shall maintain the Respondent as a beneficiary of the same distribution entitlement under the Will of the Petitioner as had been the case prior to the parties' separation.

18.  The Petitioner and the Respondent shall take steps to arrange for the matrimonial home located at 65 Saxonhurst Drive, Bible Hill, Nova Scotia to be placed on the market for sale.

20.  The application of the Respondent for spousal support shall be adjourned without day.

[5]              Further, on May 5, 2009, the Court heard and granted the motion of Mr. McKinnon, to be permitted to withdraw as counsel for Mr. Gill.  Shortly thereafter, Mr. Gill retained Mr. MacMillan to represent him in relation to the proceedings before the Court.  The matter was subsequently set down for hearing before myself on July 21 and 22, 2009.  As a result of the Psychological Assessment being received only a day or two before the hearing was to commence, an adjournment was granted.  At that time, it was determined that in order for all issues to be dealt with, additional days would be required, and as such September 14, 15, 16, 17, 2009 was      scheduled to undertake the Divorce hearing, including all corollary matters and property division.

[6]              The hearing proceeded as scheduled in September, 2009, however after hearing evidence from a number of witnesses, including the psychological assessor and child's counsellor, it became apparent that documentation relevant to Mr. Gill's claim to the Physiotherapy Clinic, had not been provided to him.  The Court determined that it was in the best interest of the child to resolve the issue relating to the parenting arrangements, as opposed to adjourning the matter for a later determination.  As such, the balance of the hearing was dedicated to addressing the issues pertaining to the child's custodial arrangements, with other corollary matters, including division of matrimonial assets and the Respondent's claim relating to the Physiotherapy clinic being adjourned.   In an oral decision rendered September 17, 2009, the child was placed in the sole custody of her mother, Ms. Hurst, with specific provisions to address parenting time with Mr. Gill.  Given Mr. Gill's financial circumstances at that time, no child support was ordered.  Further, directions were given with respect to the sale of the matrimonial home.

[7]              Upon the conclusion of the September hearing, dates were arranged for a return to address the outstanding matters.  November 30, December 2, and 3, 2009 were so scheduled.  The Court sat, and heard evidence on November 30th, however, the matter did not continue on the subsequent dates as planned.  Mr. Gill did not attend at Court for the remaining two dates.  His Counsel advised that he was hospitalized and was either unwilling or unable to provide legal instructions to him.  Despite being in the midst of Ms. Hurst's cross‑examination, in light of the circumstances, the matter was again adjourned, with dates scheduled for January 26, 27 and 28 , 2010.  No evidence has been subsequently presented to the Court to document Mr. Gill's hospitalization in December of 2009, or to explain the reason for it.

[8]              Shortly before the return date of January 26, 2010, the Court received correspondence from Mr. MacMillan indicating his wish to withdraw as Counsel for Mr. Gill.  On January 26th, after hearing Mr. Gill's views that the solicitor ‑ client relationship had broken down, the Court permitted Mr. MacMillan to withdraw as Counsel, leaving Mr. Gill unrepresented.  Further, the Court was advised that Mr. Gill had recently suffered a broken leg, supported by his leg being casted, and that he felt that he was not able to represent himself in the circumstances.  With great reluctance, another adjournment was granted.  However, given the Court's other commitments, return dates could not be facilitated until April 26, 27, 28 and 29, 2010.

[9]              Mr. Gill was able to obtain new counsel shortly before the scheduled return dates.  Although Mr. Daley originally wrote to the Court the week prior to the return dates seeking an adjournment given his recent retainer, this request was withdrawn shortly before the matter was to commence.  The hearing proceeded as scheduled.  Given his late involvement, Mr. Daley was given the opportunity to provide the Court with post‑hearing written submissions.  The final written submissions were received by the Court on May 5 and 12, 2010, from Mr. Daley and Mr. Yuill respectively.

III.    ISSUES BEFORE THE COURT

[10]         The Court will address the following issues in the course of this decision:

a) Granting of the divorce

b) Does Mr. Gill have a claim to the business asset, Fundy Trail Physiotherapy Clinic, and if so, how should that be addressed and valued?

c) How should matrimonial assets and debts be divided between the parties?

d) What effect should the post‑separation judgment relating to Mr. Gill's legal fees have?

e) What award, if any, is appropriate regarding child support?

f) Is Mr. Gill entitled to spousal support, and if so, what is the appropriate quantum and duration?

g) Is a costs award appropriate in the circumstances?

IV.     BACKGROUND

[11]         Ms. Hurst is a physiotherapist and was working in this capacity in Newfoundland in 1989 when she met Mr. Gill.  He is approximately four years her senior.  Ms. Hurst has continued to work full time as a physiotherapist in Newfoundland, briefly in British Columbia, and for most of her career in Nova Scotia.

[12]         Ms. Hurst is the sole shareholder of Fundy Trail Physiotherapy Clinic Limited through which she draws income by way of dividends.  Mr. Gill was involved in the initial design and build out of the physical space occupied by the Clinic, and continued to work at the business following its opening.

[13]         The parties were married in 1995, and their daughter Kaitlyn was born June 20, 1996.  In 1997, Mr. Gill’s older daughter from a previous marriage came to reside with the parties.

[14]          In 2001, Mr. Gill commenced serious efforts to develop a music career as a singer/songwriter.  Ms. Hurst acted as his agent and promoter.  This involved the parties undertaking a number of trips to attend musical events in order to promote Mr. Gill, and a CD which he recorded.  Ms. Hurst was not compensated for her efforts relating to Mr. Gill’s music career.

[15]         Mr. Gill has, post-separation, continued to pursue his musical aspirations, having released a Christmas CD in late 2009.

[16]         In addition to his musical talents, Mr. Gill has a varied work history.  He had operated his own commercial sign business, he has trained for and been successful obtaining a commercial helicopter pilot license, he has undertaking major construction/renovation projects both for his family and for compensation from third parties.  Prior to the opening of the Fundy Trial Physiotherapy Clinic, Mr. Gill worked as an office manager for another physiotherapy clinic.

[17]         Mr. Gill has had some health difficulties, including three heart attacks.  He has had a stint replaced in 2007.  He broke his leg on January 1, 2010 and at the last day of the hearing, was still in a cast.  He testified that he suffers from occasional vertigo. 

V.      BURDEN OF PROOF AND CREDIBILITY

[18]         Given the number of issues and positions advanced by the parties in relation thereto, it may be prudent to review the burden of proof to be applied by this Court to the evidence.  In F.H.P. v. McDougall, 2008 SCC 53, it was confirmed that only one standard of proof exists in civil cases, that being on a balance of probabilities.  Rothstein, J. stated that there are no "degrees of probability" contained within the civil burden.  In every civil case, the judge is required to take into account the seriousness of the allegations before it, or the inherent improbabilities ‑ but such does not alter the standard of proof.  In all cases, the court must carefully consider the evidence before it when determining whether it is more likely than not that a fact, as alleged, is true.  The evidence must be clear, convincing and cogent to satisfy the burden of proof.  The testimony of parties and witnesses cannot be considered in isolation, but must be viewed in light of the totality of the evidence.

[19]         Determinations of credibility play an important role when assessing the burden of proof, and such is particularly so in the present case.  There are a number of factors which the court will consider in reaching credibility determinations.  These have been recently articulated in Baker‑Denault 2009 NSSC 59, where the court held as follows:

[18] For the benefit of the parties, I will review some of the factors which I have considered when making credibility determinations.  It is important to note, however, that credibility assessment is not a science.  It is not always possible to "articulate with precision the complex intermingling of impressions that emerge after watching and listening to witnesses and attempting to reconcile the various versions of events:" R.v. Gagnon 2006 SCC 17, para. 20.  I further note that "assessing credibility is a difficult and delicate matter that does not always lend itself to precise and complete verbalization:" R. v. R.E.M. 2008 SCC 51, para. 49.

[19] With these caveats in mind, the following are some of the factors which were balanced when the court assessed credibility:

a) What were the inconsistencies and weaknesses in the witness' evidence, which include internal inconsistencies, prior inconsistent statements, inconsistencies between the witness' testimony, and the documentary evidence, and the testimony of other witnesses: Re: Novak Estate, 2008 NSSC 283 (S.C.);

b) Did the witness have an interest in the outcome or was he/she personally connected to either party;

c) Did the witness have a motive to deceive;

d) Did the witness have the ability to observe the factual matters about which he/she testified;

e) Did the witness have a sufficient power of recollection to provide the court with an accurate account;

f) Is the testimony in harmony with the preponderance of probabilities which a practical and informed person would find reasonable given the particular place and conditions: Faryna v. Chorney [1952] 2 D.L.R. 354;

g) Was there an internal consistency and logical flow to the evidence;

h) Was the evidence provided in a candid and straight forward manner, or was the witness evasive, strategic, hesitant, or biassed; and

i)Where appropriate, was the witness capable of making an admission against interest, or was the witness self‑serving?

[20] I have placed little weight on the demeanor of the witnesses because demeanor is often not a good indicator of credibility: R. v. Norman (1993), 16 O.R. (3d) 295 (C.A.) at para. 55.  In addition, I have also adopted the following rule, succinctly paraphrased by Warner J. In Re: Novak Estate, supra, at para 37:

There is no principle of law that requires a trier of fact to believe or disbelieve a witness's testimony in its entirety.  On the contrary, a trier may believe none, part or all of a witness's evidence, and may attach different weight to different parts of a witness's evidence.  (See R. v. D. R., [1996] 2 S.C.R.291 at 93 and R. v. J.H., [2005] O.J. No. 39, supra).

[20]         I adopt the above approach and have applied the civil burden of proof in considering the arguments advanced by the parties.   Further, I have made findings of credibility based upon the principles above and the evidence before the Court.

VI.     DETERMINATIONS

a) Divorce:

[21]              Before turning to the issues of greatest contention, there is the preliminary matter relating to the status of the marriage.  The divorce is granted on the basis of a permanent break down in the marriage as evidenced by the separation of the parties in excess on one year.  All jurisdictional issues have been proven and I find that there is no possibility of reconciliation.  As required, in granting the divorce, I have considered the financial arrangements relating to the child of the marriage, addressed in further detail below.

b) Does Mr. Gill have a claim to the business asset, Fundy Trail Physiotherapy Clinic, and if so, how should that be addressed and valued?

Position of the Parties

[22]         Mr. Gill is advancing a claim to the physiotherapy Clinic.  In his evidence he referred to himself as the "co‑owner and operator" of Fundy Trail Physiotherapy when asked his occupation.  Mr. Gill asserts that the Clinic, from the planning to the implementation, to the actual operations, was a process jointly undertaken by himself and Ms. Hurst.  He described it as being "the family business".  Mr. Gill testified that he oversaw the design of the Clinic space as well as the construction, which was undertaken by a contractor.  After opening, Mr. Gill testified that he and Ms. Hurst both spent long hours at the Clinic, building the business.  Mr. Gill testified that he was the "Office Administrator", undertaking the managerial aspects of the business, leaving Ms. Hurst to providing the hands‑on physiotherapy services to clients.  Mr. Gill testified that he was better suited to the management aspect of running the business, given that he had successfully ran his own commercial sign business in Newfoundland in the past.

[23]         Mr. Gill asserts that he never drew a salary from the business.  In his submissions, Mr. Gill's counsel asserts that as opposed to awarding a percentage of the business to him, a preferable approach would be for this Court to provide a monetary payment reflective of his contribution to the business.  This would produce a "clean break" for these parties.  Mr. Daley asserted that for the years Mr. Gill worked at the Clinic, he should be entitled to payment in lieu of wages of $25,000.00 per annum, totalling $200,000.00.  This would not include any further compensation the Court felt appropriate for the supervisory role Mr. Gill asserted he took with respect to overseeing the operation of the Clinic, once he ceased working there regularly.

[24]         Ms. Hurst does not deny that Mr. Gill was very involved in the initial design and build‑out of the Clinic facilities, and that he supervised the construction.  Her description of his contribution to the ongoing operation of the Clinic however, significantly departs from that provided by Mr. Gill.  Ms. Hurst testified that although Mr. Gill mostly attended at the Clinic daily, his contribution was not nearly as instrumental, nor valuable as he asserts.  Specifically, Ms. Hurst testified that Mr. Gill's role was to answer telephones, make appointments, greet clients and oversee the ordering of supplies.  Mr. Gill did not have responsibility for the financial management of the business, other than collecting payment from clients.  She was solely responsible for all bookkeeping and financial management functions, as evidenced by the ledgers maintained in her handwriting.  Ms. Hurst further denied that Mr. Gill was involved in any marketing activities for the Clinic, as these types of activities are restricted by her professional organization.

[25]         Ms. Hurst testified that although physically present, Mr. Gill was not always of assistance in the Clinic.  He would often socialize with other merchants and staff in the mall where the Clinic is located, play his guitar to entertain clients awaiting their appointment, or nap on one of the Clinic beds.  On such occasions, Ms. Hurst would find herself juggling the telephone, readying clinic beds for the next appointment and undertaking other administrative tasks, while still providing physiotherapy services.  Because of this, Ms. Hurst testified she was relieved when Mr. Gill indicated that he would like to leave the Clinic to pursue other interests, most notably developing his music career.

[26]         Ms. Hurst asserts that Mr. Gill's contribution to the business was modest, and that he was compensated for the services that he provided.  She asserts that when the business first commenced, her accountant advised that Mr. Gill should draw a salary.  However, this was declined by Mr. Gill, as it would trigger an obligation to pay child support to his two minor children of a former marriage.  In later years, Mr. Gill, again at the urging of her accountant, was shown on the company financial statements as receiving funds by virtue of funds flowing to his music enterprise.  He did not however, at any time, draw a regular pay cheque.  Notwithstanding this, Ms. Hurst asserts that Mr. Gill received compensation for his efforts by virtue of all family expenses being paid through the business, including the purchase of his first motorcycle.  If Mr. Gill wanted money for something, it was withdrawn from the business account.

[27]         In the event this Court finds that Mr. Gill is entitled to an award for his unpaid labour relating to the business, Ms. Hurst asserts that he has been more than compensated by virtue of the funds spent from the Clinic in support of his music career, and Ms. Hurst's own unpaid efforts in that endeavour.  Significant evidence was presented to document the extent of the expenditures paid directly from the Clinic account in support and furtherance of Mr. Gill's music career.  Ms. Hurst claims that the funds withdrawn from the business for this purpose would be in excess of $135,000.00 and that the amount would be higher if she had been able to retrieve older documentation left at the matrimonial home.  Mr. Gill does not dispute that funds were diverted from the business to support his music career, however, he asserts that the amount is not as high as suggested by Ms. Hurst, and that because the parties had never viewed these funds as being "in payment" for his work at the Clinic, that such should not be considered as a set‑off against his contribution to the business.  He also led evidence which established that he did generate some earnings from his music career, in the range of $26,000.00 over a five year period, which was used for family purposes.  If the Court is inclined to consider the business funds put towards his music career, Mr. Gill asserts that these earnings should be deducted accordingly.  Ms. Hurst acknowledges that there were some funds generated in relation to CD sales and royalties, but views the documentary evidence as more appropriately establishing a sum of $20,000.00.

Determination

[28]         Section 18 of the Matrimonial Property Act, R.S.N.S. 1989, c. 275 provides the Court with authority to consider the claim advanced by Mr. Gill.  It reads:

18.  Where one spouse has contributed work, money or moneys worth in respect of the acquisition, management, maintenance, operation or improvement of a business asset of the other spouse, the contributing spouse may apply to the court and the court shall by order

(a) direct the other spouse to pay such an amount on such terms and conditions as the court orders to compensate the contributing spouse therefor; or

(b) award a share of the interest of the other spouse in the business asset to the contributing spouse in accordance with the contribution,

and the court shall determine and assess the contribution without regard to the relationship of husband and wife or the fact that the acts constituting the contribution are those of a reasonable spouse of that sex in the circumstances.

[29]         This section has been considered on many occasions by the court, resulting in a wealth of jurisprudence.  Forgeron, J. in Marshall v. Marshall 2008 NSSC 11 (S.C.) undertook a thorough, yet succinct review of the various approaches to the treatment of business assets, as follows:

62.  There are many cases in which the courts have considered a claim pursuant to section 18 of the Act.  The outcomes in these cases are based upon the unique facts which were presented.

63.  Courts have denied claims for contribution for two reasons.  First, where a spouse has already been paid for her/his contribution, then an award pursuant to section 18 is usually denied:  Rushton v. Rushton (2006), 244 N.S.R. (2d) 242 (N.S.S.C.) and French v. French (1997), 162 N. S. R. (2d) 104 (N.S.S.C.).  Second, claims are also denied where the contribution has been minimal: Crosby v. Crosby (2002), 207 N.S.R. (2d) 195 (N.S.S.C.) and Baggs v. Baggs (1997), 161 N.S.R. (2d) 81 (N.S.S.C.).  However, where the wife was paid an insufficient amount for her work, a further award of $15,000 was deemed appropriate: Mason v. Mason (1981), 47 N.S.R. (2d) 435 (N.S.C.A.).

64.  Some courts have preferred an unequal division as a method of achieving justice where there are business assets, rather than making an award pursuant to section 18 of the Act: MacDonald v. MacDonald (2007), 255 N.S.R. (2d) 270 (N.S.S.C.); Pelrine v. Pelrine (2006), 251 N.S.R. (2d) 29 (N.S.S.C.); and Todd v. Todd (1995), 144 N.S.R. (2d) 340 ( N.S.S.C.).  The Court of Appeal appears to have acknowledged the impact that unequal division awards have upon sec. 18 claims.  In Sproule v. Sproule (1986), 73 N.S.R. (2d) 131 (N.S.C.A.), the Court of Appeal affirmed a $20,000 s. 18 claim to a wife for her extensive contributions to the business, given that an unequal division had also been awarded in the wife's favour.

65.  In other cases, a cash payment is provided to the non‑owning spouse, the amount of which varies for the services provided.  In Lynk v. Lynk, [1989] N.S.J No. 265, supra, the wife was awarded a one‑third interest in the business because of the financial exposure she had accepted.  In MacDougall v. MacDougall (2005), 231 N.S.R. (2d) 270 (N.S.S.C.), the wife was awarded $10,000 for her contribution to the business. In Reid (Smith) v. Reid (1989), 99 N.S.R. (2d) 207 (N.S.T.D.) The wife was awarded one‑fourth of the value of the fishing operation for her contribution which consisted of painting the boat, acquiring and transporting bait, and bookkeeping.  In Campbell v. Campbell (1986), 74 N.S.R. (2d) 25 (N.S.T.D.), Nathanson, J., awarded the wife a 10% interest in the value of the business as she cosigned business loans.

[30]         The purpose of the above provision is to ensure that a spouse who contributes to the betterment of their spouse's business is compensated.  It is about fairness, and recognizing that within marriages, spouses often become involved in the business pursuits of their significant other, and through their efforts, the business is enhanced.  Upon marriage dissolution, it would be unfair for the business owning spouse to reap the benefit of the uncompensated efforts of their former spouse.  As noted above, the factual circumstances which give rise to such a claim is infinitely varied, and each must be assessed on their individual circumstances and merits.

[31]         Mr. Gill's claim seeks compensation from the commencement of the Clinic business in 1993.  Ms. Hurst testified that upon set up of the business, she received accounting advice that Mr. Gill should be placed on the company ledger as receiving a salary.  I accept her evidence in this regard, as such is a common strategy to legitimately lessen the tax consequences to the family income as a whole.  This was not done.  I further accept Ms. Hurst's evidence and find as a fact, that Mr. Gill specifically wanted to not appear as receiving a salary, as this would result in the payment of child support for the benefit of his two children in Newfoundland.  Nancy was born in 1985, and moved to Truro to reside with her father and Ms. Hurst in 1997.  Her brother Michael was born in 1983 and remained in the care of his mother in Newfoundland.  From the evidence, I find that Mr. Gill purposefully avoided a documented income for a number of years, when his children in Newfoundland would have been entitled to child support.  For Nancy, this appears to be 4 years (1993 to 1997), and for Michael, a minimum of 6 years and likely longer (1993 to the age of 16 or beyond).  Mr. Gill is now seeking $25,000 for each of those years, reflective of the wages he asserts he should have been paid from the Clinic business.  There is no indication that if successful in his claim, that Mr. Gill intends to retroactively address the issue of unpaid child support which would otherwise have accrued during that time period.

[32]         Given the factual finding above, should this Court accept the position advanced by Mr. Gill, it would, in effect be endorsing a child support avoidance scheme.  I have no doubt, that if not for the child support liability due to his children in Newfoundland, Mr. Gill would have drawn an appropriate salary from the business from the outset in 1993, until his departure in 2001, as recommended by the business accountant.  Ms. Hurst abided by his wishes in this regard, and as such, was a knowing participant in the scheme, however, the payment of child support was Mr. Gill's legal obligation, not hers.  The Courts cannot directly, or otherwise, encourage the purposeful avoidance of legitimate child support obligations.  Where the facts in a particular circumstance clearly establish that a spouse as part of a Section 18 claim is now seeking in effect, retroactive wages which were purposefully not drawn in order to avoid child support obligations, the Court should give serious consideration to either drastically reducing the amount which would otherwise have been ordered, or dismissing the claim entirely.  At a minimum, in the event of a Court awarding a claimant funds in such a case, it should consider the appropriateness of  imposing an obligation to advise the children, or their parent who would have been the recipient of support, of the award.

[33]         I now turn to consider whether Mr. Gill has a legitimate claim in relation to his participation in the Clinic business.  I accept his evidence, supported by that of Ms. Hurst that he was heavily involved in the set up of the Clinic, most notably overseeing the construction.  Similarly, I accept that Mr. Gill did, once operational, participate in the running of the Clinic by virtue of answering telephones and other administrative duties.  However, with respect to the extent of Mr. Gill's activities, I prefer the evidence of Ms. Hurst over that provided by him.  I find that his activities were not managerial in nature, but secretarial.  Further, I accept Ms. Hurst's evidence that although attending at the Clinic daily, Mr. Gill often did not attend to the duties expected of him.   I have considered the evidence of a number of witnesses who testified as to the extent of Mr. Gill's activities at the Clinic.  All were occasional visitors, and not in a position to be fully cognizant of the day to day activities undertaken in the Clinic.

[34]         As noted above, Mr. Gill was not paid a salary from the Clinic, however, the determinative issue is whether he received compensation for his efforts.  It is clear from the evidence, that many expenses which would not be considered as “business” in nature were paid from Clinic funds.  This included family vacations, household expenses and larger purchases.  Mr. Gill received the benefit of these withdrawn business funds as much as Ms. Hurst did.

[35]         I find that these were expenditures which were made in lieu of Mr. Gill drawing a formal wage from the business.  He received compensation for his labour, and it was intentionally structured in a form which would lessen the potential of attracting a request for child support.  Section 18 does not, in my view, require that a contributing spouse be paid in direct wages in order to consider that they have been compensated for their efforts.  The provision must be interpreted in a manner which reflects the multitude of situations in which spouses structure their affairs.  Just as a spouse can be considered to have contributed to a business in a number of ways, there can be various means in which a spouse can receive corresponding  compensation.  I find Mr. Gill was compensated adequately in relation to his efforts by virtue of various personal and family expenses being paid from the business, and such was in lieu of receiving a regular wage.

[36]         Should my above analysis be in error and in particular my view that the payment of family expenses can be considered to be in lieu of wages, I consider in the alternative, the relevance of Mr. Gill’s music career expenditures.  It is not disputed that significant funds were paid from the Clinic business towards the development and enhancement of Mr. Gill’s music career.  Although substantial, the evidence is not precise as to the exact total of the expenditures, nor the revenue recouped.  I have considered carefully Ms. Hurst’s evidence, the documentary evidence, as well as the evidence of Ms. Leier who undertook a review of the music expenditures and receipts on Mr. Gill’s behalf.

[37]         I am satisfied that the “net” amount paid from the Clinic business towards Mr. Gill’s music career is, at a minimum, $90,000.00.  Mr. Gill, according to his evidence, is building upon and still receiving the benefit of these funds by virtue of his ongoing commitment to pursue a career as a singer/songwriter.  If he is able to achieve success in his endeavours, it is clear that Ms. Hurst will not be able to reap the benefit of the moneys diverted from her business.

[38]         I cannot accept the argument advanced by Mr. Gill that these funds should not be taken into account when considering his claim to the Clinic as a business asset.  Surely, if a spouse can claim for money or moneys worth invested to the benefit of a business asset, it is only equitable to consider moneys withdrawn to the detriment of that business.  The $90,000.00 withdrawn from the Clinic which was applied to Mr. Gill’s music endeavours, more than compensated him for the efforts he expended at the Clinic.  In my respectful opinion, Mr. Gill has been significantly over-compensated in relation to his efforts.

[39]         I find that Mr. Gill’s claim pursuant to Section 18 of the Matrimonial Property Act is without merit for the reasons outlined above.

c)       Division of Matrimonial Assets and Debts

Position of the Parties

[40]         Neither party has advanced an argument that the matrimonial assets should be divided unequally.  Similarly, there was no argument put forward that the matrimonial debts should be attributed other than equally.  The real contest between the parties was the proper valuation to be placed upon various items by the Court.  In Lynk v. Lynk 1989 CarswellNS 60 (C.A.) at paragraph 16, the Court of Appeal stated that matrimonial assets should be valued at the date of the commencement of the action, with the Court having jurisdiction to vary the valuation date in accordance with the evidence elicited at trial.  I have followed that approach in determining the value of assets and debts.

Determination

[41]         Household Contents ‑ In September of 2009 an appraisal of the contents of the matrimonial home was undertaken by Pidgeon Auctions & Appraisals, over a year post‑separation.  The appraisal report was entered into evidence by Ms. Hurst without contest.  It places a value on the household contents as being $18,995.00.  Although higher than often seen in terms of content valuations, the Court heard evidence in the proceedings that the matrimonial home was large and well‑appointed.  Based on the evidence before me, I find that the above is a reasonable valuation.

[42]         In her evidence, Ms. Hurst testified that despite numerous requests to obtain items from the matrimonial home, she received few items from the appraisal list, those amounting in value to $245.00.  The rest of the contents remain with Mr. Gill who has remained in the matrimonial home not only since the date of separation, but following the sale of the home on October 30, 2009.  He testified that he has entered a rental arrangement with the new owner, leasing the basement of the home.  He further testified that due to having difficulty obtaining funds to pay the monthly rent of $900.00, he has given his landlord the contents of the matrimonial home as payment.  Mr. Gill testified that Ms. Hurst told him she did not want any additional items from the home.  However, this is in direct conflict with a number of letters entered into evidence where Ms. Hurst's counsel requests access to the home to retrieve items, as well as an email directly from Ms. Hurst to Mr. Gill.  I do not accept Mr.Gill's evidence that Ms. Hurst did not want any of the items remaining in the home.   There were any number of items, including those of insignificant monetary value, which would have made it significantly easier for Ms. Hurst and Kaitlyn to adjust to their new living arrangements post‑separation.

[43]         Based on the evidence, I find that Ms. Hurst has retained contents valued at $245.00 and Mr. Gill has retained contents valued at $18,750.00.

[44]         RRSPs ‑ During the marriage, funds were placed in a Registered Retirement Savings vehicle with CIBC Securities,  registered in Mr. Gill's name.  An investment summary dated June 30, 2009 was entered into evidence by Ms. Hurst showing a total portfolio balance of $17,695.72.  However, at the most recent hearing, Mr. Gill testified that he had removed $10,000.00 from the fund the previous day, an additional $10,000.00 in the previous two weeks, and that the approximate balance left was "around $8000.00", thus suggesting that the recent value of the account may be closer to $28,000.00.   The Court is mindful that investments can fluctuate greatly.  However, based on Mr. Gill's evidence it is clear that he has recently obtained the benefit of these matrimonial investments in the amount of $20,000.00, with a balance of several thousand dollars remaining.  In the circumstances, and also taking into account the tax consequences of de‑registering these funds, I determine an appropriate valuation to be $22,000.00.

[45]         Motorcycle ‑ At the time of separation, Mr. Gill owned a Vulcan motorcycle, which had been purchased the prior year for approximately $16,000.00.  The motorcycle was sold shortly after the parties separated.  Mr. Gill asserts that the motorcycle was sold to a third party for $8000.00.  According to his evidence and that of Mr. David Barnes who assisted with the sale, it took place within a week to 10 days following the separation.  No documentation was provided to the Court to corroborate the sale price.  Ms. Hurst takes issue with the sale price, and asserts that the motorcycle was worth at least $12,000.00.  Both Mr. Gill and Mr. Barnes acknowledged that $12,000.00 was a fair price for the motorcycle, but that it was sold quickly due to Mr. Gill's dire need for money.  They testified that a day or so following the separation when attempting to obtain cash from an ATM, Mr. Gill’s bank card was not returned by the machine, and he was directed to contact his branch.  He made no inquiries with his bank as to what may have prompted the problem with his bank card.  He testified he was forced to sell the motorcycle quickly to obtain funds.

[46]         At the time the motorcycle was sold, Mr. Gill was residing in the matrimonial home, with the vast majority of expenses being covered by Ms. Hurst. He did not consult with Ms. Hurst to advise her of the intended sale and his rationale behind it.  Ms. Hurst should not be penalized for Mr. Gill's "fire sale" approach to this asset.  For division purposes, I find it is reasonable to assign it a valuation of $12,000.00.

[47]         1996 Toyota truck ‑ At the time of separation the parties owned a 1996 Toyota truck.  Ms. Hurst has previously transferred title to Mr. Gill and the vehicle remains in his possession.  Valuation of this asset is troublesome.  In her Statement of Property sworn in July of 2008, Ms. Hurst asserts that the vehicle has a value of $7750.00.  She has not presented the Court with any evidence which corroborates her position.  Mr. Gill asserts that the asset should be valued at $3900.00 and he relies on an April 2010 internet sales advertisement for a similar truck.  Of course, such is of limited value, as it does not address the value of the parties' vehicle, nor does it take into consideration depreciation which would have occurred during the two years since the separation.

[48]         I cannot accept the valuation proposed by Ms. Hurst in an evidentiary vacuum.  Although the vehicle was in Mr. Gill's possession, nothing prevented her from obtaining a valuation, following the separation of this vehicle, or failing that, a valuation of a comparable vehicle in terms of year and model.  The truck, however, has a value which must fairly be considered.  Given that Mr. Gill has acknowledged a value of at least $3900.00, the Court finds that is the figure which should be appropriately applied in the circumstances.

[49]         Jewellery/Watches/Coin collection ‑ On her Statement of Property, Ms. Hurst asserts that the parties possessed a variety of items of personal jewellery, watches and coins which had a value in excess of $20,000.00.  This included three different diamond rings, an emerald ring, diamond and emerald earrings, and at least two gold men's watches, one of which was a Rolex.  Mr. Gill asserts that he cannot find the diamond rings, which were left in the matrimonial home.  Ms. Hurst has obtained an emerald ring and earrings as requested.  The Court has no evidence upon which to place any type of valuation on these items.  It would appear however, that like the other contents of the matrimonial home, Mr. Gill has retained the vast majority of these items which undoubtedly have some value.

[50]         RBC Visa ‑ Since the date of separation, Ms. Hurst has been solely responsible for the RBC Visa.  She testified that the account was at its limit at the date of separation, and since that time, she has only made minimum payments.  She asserts that she has not placed any additional charges on this account since May 3, 2008.  In terms of establishing the value of this debt, Ms. Hurst submitted a website print‑out dated September 14, 2009 showing a credit limit of $10, 500.00 and a current balance of $10, 796.52.  I accept Ms. Hurst's evidence with respect to this debt, and find that the current balance as noted above is an appropriate valuation for the purpose of the division between the parties.

[51]         BMO MasterCard ‑ Similarly, since the date of separation, Ms. Hurst has been solely responsible for this debt.  She has been able to make only minimal payments.  She submitted a website print‑out dated September 14, 2009 showing a balance of $8854.78, which I find to be an appropriate valuation for division purposes.

[52]         Citifinancial/Leon's Furniture Limited ‑ Ms. Hurst testified that the parties had an outstanding debt in relation to the purchase of furnishings for the matrimonial home, and presented an account dated May 6, 2008 showing a balance owing of $4439.02.  I find that this amount is an appropriate valuation for division purposes.

[53]         Motorcycle Loan ‑ During the course of her evidence, Ms. Hurst testified that she had, following the separation, continued to pay a loan relating to the purchase of Mr. Gill's motorcycle.  This was paid out at some point prior to the final hearing.  No evidence was provided to the Court to corroborate the amount of the loan paid by Ms. Hurst post‑separation.  This would be information within the control of Ms. Hurst, yet nothing was produced to quantify the debt claimed.  Ms. Hurst has not met the burden on proof in relation to this item, and accordingly, no value will be assigned for division purposes.

[54]         Revenue Canada Indebtedness ‑ The evidence readily established that for a number of years, including several prior to the separation, Ms. Hurst was struggling with the payment of her personal income tax attributable to the dividends withdrawn from Fundy Trail Physiotherapy.  She further testified that she is still not current in her payments, post‑separation.  In her Statement of Property, sworn in July of 2008, Ms. Hurst indicated that she had a personal indebtedness to Revenue Canada in the amount of $34, 245.00.  Subsequently, a judgment in the face amount of $58,885.81 was recorded against the matrimonial home.  This judgment was paid out at the time of sale, with $52,414.90 being forwarded to Revenue Canada by Ms. Lumsden, who acted as the vendors' lawyer on the transaction.  In correspondence dated April 22, 2010 from Ms. Lumsden, entered into evidence by Mr. Gill, she explains that the difference in the face amount of the judgment and the payout amount was attributable to Ms. Hurst making some payments towards the debt prior to the sale.  Ms. Hurst argues that the entire judgment should be considered a matrimonial debt, and equally divisible, as it was relating to income earned in taxation years prior to separation.  Mr. Gill asserts that it is not clear that the entirety of the judgment is related to pre‑separation income, and argues that the Court should view the figure initially used by Ms. Hurst in her Statement of Property as the appropriate valuation.

[55]         Based on the evidence of the parties, including the letter of Ms. Lumsden referenced above, I find that the entirety of the judgment was in relation to income earned by Ms. Hurst prior to 2008, and as such, is a matrimonial debt.  Although the majority of this debt was paid from the proceeds of sale of the matrimonial home and will be accounted for accordingly, that portion paid by Ms. Hurst prior to the disposition is a debt for which she is entitled to seek credit for in the matrimonial asset and debt set off.  This differential amounts to $6470.91.

[56]         Before leaving the issue of Revenue Canada indebtedness, the Court was advised of Ms. Hurst having recently received a "Requirement to Pay" dated March 29, 2010 asserting further indebtedness on her part in the amount of $17,943.58.  Ms. Hurst is not seeking this debt be apportioned with Mr. Gill.  It is likely from the evidence however, that this indebtedness arises from earnings in the 2008 taxation year, and as such, a portion of the debt could have been sought by Ms. Hurst against Mr. Gill.

[57]         Vanderbilt University Medical Center ‑ During a trip to Nashville in 2007, Mr. Gill suffered a heart attack requiring hospitalization.  Ms. Hurst testified that she had made arrangements for Blue Cross coverage prior to the trip, however, this was subsequently declined due to Mr. Gill having a pre‑existing health issue.  The bill for medical services, in excess of $53,000.00, has not been paid.  Mr. Gill testified that he has been contacted by a Collection Agency seeking payment, however, he was unable to state when the last contact occurred or the name of the agency.  This debt would clearly be matrimonial in nature. However, it is not at all certain that it will be pursued.  It would not be appropriate in my view to take this debt into consideration for the purposes of the present asset and debt division.  In the event that Mr. Gill does in future make payment on this debt, either voluntarily or otherwise, upon providing Ms. Hurst with proof of payment, she shall reimburse him 50 percent of the payment made.

[58]         Debt Regarding Psychological Assessment ‑ As was noted above, Scanlan J. ordered Ms. Hurst to pay for the costs associated with the psychological assessment and any necessary psychometric testing, with Mr. Gill's share being accounted for in the asset division.  Based on the evidence presented, most notably invoices of Dr. Humphreys and Robert Milks, I find that assessment costs of $5690.00 should be treated as a matrimonial debt.

[59]         The above findings are summarized in the Table below.

                                                         TABLE

Equity of Ms. Hurst = $245 - $36,251.23 = ($36,006.23)

Equity of Mr. Gill = $56,650.00

To equalize, each party should have $56,650.00 - 36,006.23 /2 = $10,321.88

[60]         Based on the above, Ms. Hurst, in order to be in the same equity position as Mr. Gill, should receive additional assets or an equalization payment from Mr. Gill in the amount of $46,328.11.  The only other asset which has not, as yet, been addressed is the matrimonial home.  The home was sold on October 30, 2009.   Based on the evidence before the Court, including the Statement of Adjustments in relation to the sale, and considering the Revenue Canada payout, there are funds being held in trust in the approximate amount of $136,314.00.

[61]         Typically, one would expect that the balance of the sale proceeds would be divided equally between the parties with Ms. Hurst then receiving her equalization payment from Mr. Gill’s share of the proceeds of sale. Based on the evidence, each party would initially be entitled to $68,157.00.  Ms. Hurst in order to equalize the overall division of assets and debts, would be entitled to a further $46,328.11 resulting in a net division of $114,485.00 to Ms. Hurst and $21,829.00 to Mr. Gill.  However, in this instance, the circumstances are complicated by virtue of a judgment being recorded against the matrimonial home by Mr. Gill’s former solicitor, relating to the legal fees generated in these proceedings.

d) Effect of Judgment for Post‑separation Legal Fees

[62]          Following Mr. MacKinnon’s removal as solicitor for Mr. Gill on May 5, 2009, his law firm filed a Notice of Taxation in the Small Claims Court relating to legal fees owed in relation to the dispute before the Court.  The matter was heard over two evenings in June of 2009, and the adjudicator rendered a decision on July 19, 2009, taxing fees owing by Mr. Gill to Wickwire Holm at $67,517.59.  A judgment was subsequently registered on August 5, 2009.  Ms. Hurst was unaware of the taxation proceedings and subsequent judgment until after its recording.

[63]         After becoming aware of its existence, Ms. Hurst  expressed grave concern relating to how this judgment, recorded against the matrimonial home pre-disposition, may impact upon her ability to realize upon her interest in the remaining matrimonial asset.  Given these concerns, upon sale of the home on October 30, 2009, funds were held back in an amount equivalent to the judgment to permit the Court to address the issue.  This was to be addressed during the hearing scheduled to conclude matters on November 30, December 2 and 3, 2009.  However, those dates, as described above, did not prove to be fruitful.  Regrettably, the timing of the resolution of this issue has extended much longer than the Court or parties had anticipated given the delays subsequently encountered.  The Court permitted Wickwire Holm to make submissions regarding the impact of its judgment, and to respond to Ms. Hurst’s position.

[64]         Ms. Hurst’s concern in relation to the Wickwire Holm judgment was that it would very likely have the practical effect of forcing her to pay for a significant portion of Mr. Gill’s legal fees.  Based on the determinations made earlier in this decision with respect to the required equalization of matrimonial assets and debts, this concern was well founded.

[65]         As noted in paragraphs [59] and [60] above, there is approximately $136,314.00 being held in trust from the sale of the matrimonial home.  If, as Wickwire Holm suggests, the judgment was paid directly from the proceeds, as is the normal course, this would result in a balance of $68,796.41 for possible division between the parties.  This Court has already determined that in order for Ms. Hurst to be in an equal position with respect to matrimonial property division, she should receive not only half of the proceeds of sale, but an additional equalization payment of $46,328.11.  Should the Wickwire Holm judgment be paid in priority from the sale proceeds, this will result in an obvious shortfall.  Simply, funds which otherwise would have gone to Ms. Hurst to equalize the matrimonial property division will go to Wickwire Holm in payment of Mr. Gill’s legal fees.  Ms. Hurst could, as suggested by Wickwire Holm, pursue the shortfall from Mr. Gill.  In the circumstances of this case, I have no hesitancy in finding that Ms. Hurst would have great difficulty in ever receiving from Mr. Gill the funds owed to her.

[66]         Counsel for Ms. Hurst in his submissions relies primarily upon the Court’s inherent jurisdiction to prevent an inequitable result.  It is asserted that this Court should take a negative view of lawyers having their accounts given priority in matrimonial property divisions without the knowledge of both parties.  Counsel for Wickwire Holm assert that its pursuit of Mr. Gill for payment and the subsequent recording of a judgment is a common commercial reality.  The judgment, like any other, would bind Mr. Gill’s interest in the matrimonial home at the time of recording.  At that time, Mr. Gill was presumed by legislation and the joint tenancy to have a one-half interest in the home, and the judgment should attach to it accordingly.

[67]         The position of Wickwire Holm is succinctly stated by Mr. McKinnon in his written submissions to the Court as follows:

Although Nova Scotia has no companion to Section 5(e) of Alberta’s Matrimonial Property Act, Wickwire Holm does not dispute the Court’s equitable jurisdiction to set aside encumbrances that have the effect of dissipating one spouse’s interest or potential interest in the matrimonial home.  However, in our respectful opinion the Court should not use its equitable discretion in this case because there has been, and will not be, any dissipation of assets to the detriment of Ms. Hurst as a result of the Wickwire Holm judgment.  The Court has not granted any Order with respect to Ms. Hurst’s interest in the matrimonial home so there is currently no vested interest to encumber.  As things currently stand, Mr. Gill is presumed by Section 21(1)(a) of the Nova Scotia Matrimonial Property Act to be entitled to half of the proceeds from the sale of the matrimonial home because he was a joint tenant owner of the property with Ms. Hurst.  Those proceeds are more than enough to satisfy Wickwire Holm’s judgment.

Wickwire Holm registered judgment against Mr. Gill’s interest in the matrimonial home prior to any Court Order confirming either spouse’s interest in the home and such an Order has yet to be granted.  At the time of registration, Mr. Gill was presumed to have a 50% interest in the matrimonial home pursuant to Section 21(1) of the Matrimonial Property Act.  The judgment is in priority to the only other judgment creditor, CRA, as well as debts owing to all other creditors, none of which have registered judgments.

In these circumstances, law and equity clearly support that Wickwire Holm’s judgment should be paid with the proceeds from Mr. Gill’s half interest in the home before any division of other property is carried out.  To reach any other conclusion will have far-reaching results and dangerous precedent will be set as creditors’ rights will be far from certain in a regime where certainty and predictability is required.

[68]         Further it is asserted that Maroukis v. Maroukis [1984] 2 S.C.R. 137 supports the proposition that until an order of a Court is rendered, each party holds an equal interest in the matrimonial home.  As such, a judgment recorded against one spouse prior to an order, binds that spouse’s one-half interest.  It is irrelevant that a Court may subsequently award title to the other spouse, or order that proceeds of sale be divided other than equally.

[69]         Mr. Yuill points out that Maroukis, supra, has been distinguished in subsequent cases, including in this Court (Trask v. Trask [1997] NSJ No. 557 (S.C.)).  He argues that the knowledge of the judgment creditor as to the spousal claim to the asset, readily distinguishes Maroukis.  This same reasoning appears to be accepted in a recent decision of the Albert Court of Queen’s Bench in Barnes v. Barnes 2006 ABQB 855 where Coutu, J. writes at paragraph 29 as follows:

29     I might add that Counsel for Mrs. Barnes relies on Maroukis v. Maroukis (1984), 41 R.F.L. (2d) 113 (S.C.C.) for the proposition that parties to a Matrimonial Property Act application retain their own property and have no interest in the other spouse’s property until such time as the Matrimonial Property Act order is issued.  I do not agree that Maroukis stands for that proposition.  The Supreme Court merely held that if parties own real property in joint tenancy, an execution creditor of the husband can file a writ against the husband’s one-half interest.  In that case, it appears no Certificate of Lis Pends was filed on title, so the creditor was bona fide and had no notice of the wife’s claim under the Matrimonial Property Act.  I distinguish Maroukis as here the Law Firm had notice of Mr. Barnes’ equitable interest in the property.  Further, the Court’s powers to prevent dissipation by one spouse was not an issue in Maroukis, as it is here, where it is the spouse who is ‘encumbering’ or ‘dissipating’ property, not an innocent bona fide creditor.

[70]         Interestingly, Barnes also involved the encumbrancing of a matrimonial asset, in that instance a motor vehicle, for the purpose of paying a spouse’s legal fees in a matrimonial dispute.  The Court declined to enforce the lien by selling the vehicle, as the non-owning spouse’s equitable interest in the asset had yet to be determined in the matrimonial litigation.  At paragraph 19, Coutu, J. outlines the Court’s rationale as follows:

19     Moreover, when the Law Firm took the Superbird as security, it clearly had knowledge that Mr. Barnes was claiming an equitable interest in it.  In this regard, the Law Firm is in a very different position from that of a secured creditor who has no knowledge that equitable ownership is in dispute.  The mere filing of a lien does not rectify that, or resolve the dispute over equitable ownership.  In my view, the security is only valid to the extent that the Court finds, at trial, that Mrs. Barnes has an ownership interest in the vehicle.  Therefore, as I stated earlier, I decline to order the sale of the vehicle at this time.         

[71]         It would have been clear relatively early in the litigation between the parties, that based on the positions being advanced by the parties, that the matrimonial home, or the proceeds of sale, may be divisible other than equally.  As joint owners, each party presumptively had a one-half legal interest in the home.  However, this does not preclude either from asserting a further equitable claim, resulting in the legal presumption of equal ownership being altered.  At the conclusion of the proceedings, this is precisely what resulted.  Ms. Hurst has been found to be entitled to not only her legal “share” but a greater proportion due to her equitable claim.

[72]         I have also considered several sections of the Matrimonial Property Act relating to the disposition or encumbrancing of the matrimonial home. Section 8 contains the following provisions:

8 (1) Neither spouse shall dispose of or encumber any interest in a matrimonial home unless

(a) the other spouse consents by signing the instrument of disposition or encumbrance, which consent shall not be unreasonably withheld;

(b) the other spouse has released all rights to the matrimonial home by a separation agreement or marriage contract;

(c) the proposed disposition or encumbrance is authorized by court order or an order has been made releasing the property as a matrimonial home; or

(d) the property is not designated as a matrimonial home and an instrument designating another property as a matrimonial home of the spouses is registered and not cancelled.

Disposition contrary to subsection (1)

(2) Where a spouse disposes of or encumbers an interest in a matrimonial home contrary to subsection (1), the transaction may be set aside by the other spouse upon an application to the court unless the person holding the interest or encumbrance acquired it for valuable consideration, in good faith and without notice that the property was a matrimonial home.

[73]         Section 9 is of interest to the Court.  It provides as follows:

9 (1) Where a person is proceeding to realize upon a lien, encumbrance or execution or exercises a forfeiture against property that is a matrimonial home, the spouse who has a right of possession by virtue of this Act has the same right of redemption or relief against forfeiture as the other spouse has and is entitled to any notice respecting the claim and its enforcement or realization to which the other spouse is entitled. (Emphasis added)

[74]         Finally, Section 10 provides the Court with a number of powers relating to the matrimonial home.  Section 10(1)(a) is particularly relevant and states:

10 (1) The court may by order, on the application of a spouse or any other person having an interest in property,

(d) direct the setting aside of any disposition or encumbrance of an interest in a matrimonial home and the revesting of the interest or any part of the interest upon such terms and subject to such conditions as the court considers appropriate.

[75]         In my view, the above statutory provisions are reflective of the Legislature’s intention to afford the interest of spouses in the matrimonial home with a high level of protection against unreasonable encumbrance or dissipation.  Wickwire Holm asserts that the present encumbrance is appropriate and enforceable as it was ordered by the Small Claims Court and thus falls within Section 8(1)(c).  However, Ms. Hurst was unaware of the Small Claims Court proceeding.  It is my view that Section 8(1)(c) requires not only the opportunity for both spouses to be permitted to make representations to the Court considering an order of disposition or encumbrance, and secondly, the Court itself must be fully cognizant that it is making an order which is specifically intended to have that result.

[76]         I find the reasoning adopted in Barnes compelling.  Although here Mr. Gill and the judgment creditor did not endeavour together to encumber a matrimonial asset to secure legal fees, the end result is the same.  I also find that Maroukis, supra, is distinguishable, as Wickwire Holm was fully aware of the litigation between the parties and the potential that the matrimonial home, or its value, may ultimately be divided unequally between the parties.  In the circumstances of this case, I order that the Wickwire Holm judgment shall only attach to Mr. Gill’s remaining equitable interest in the matrimonial home, namely, those funds remaining in trust after payment of Ms. Hurst’s one-half share and equalization payment.

[77]         With respect to the view expressed by Mr. MacKinnon to the contrary, this determination will not throw the usual course of business transactions into chaos when attempting to enforce legitimate judgments against matrimonial assets.  In the vast majority of instances, judgment creditors will be bona fides, with no knowledge of looming matrimonial disputes. Other than in exceptional circumstances, as the Court faced in this instance, the enforcement of judgments will continue in the usual course.

[78]         Lawyers are entitled to be reasonably paid for the services they provide to clients, and Wickwire Holm cannot be faulted for wanting to be so compensated by Mr. Gill.  However, it would create a fundamentally unfair and potentially chaotic situation if the lawyer or former lawyer of one spouse could find themselves in the midst of matrimonial litigation, in a better security position to matrimonial assets than the other spouse who may, as in the present case, be deserving of the encumbered asset, or its value.

e) What is an appropriate award of child support?

[79]         When the issue of Kaitlyn's custody was determined by this Court in September of 2009, child support was not ordered given Mr. Gill's circumstances at that time.  However, this Court made clear to Mr. Gill that his obligation to financially support Kaitlyn could not be deferred indefinitely.  He was encouraged to seek work, not only for Kaitlyn's sake, but for his own.  In his submissions, Ms. Hurst’s Counsel suggests that this Court should make a transitional award of child support, at some reasonable point of time in the future.

[80]         As will be discussed in further detail below in the context of spousal support, this Court finds that Mr. Gill has not acted reasonably in his employment attempts post‑separation, and that he has made the choice to focus on his music career, to the detriment of his current earning ability.  As is noted below, this Court has found that Mr. Gill is underemployed, and with reasonable effort given his considerable skill set, could be presently earning a minimum of $25,000.00 per annum.  This finding is not only relevant to the issue of spousal support, but also with respect to child support.

[81]         This Court is statutorily obligated to consider child support in the context of a divorce proceeding by virtue of section 11(1)(b) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) which provides:

11(1) In a divorce proceeding, it is the duty of the court

(b) to satisfy itself that reasonable arrangements have been made for the support of any children of the marriage, having regard to the applicable guidelines, and, if such arrangements have not been made, to stay the granting of the divorce until such arrangements are made.

[82]         It is also clear that considerations regarding child support take priority over that of spousal support.  Section 15.3(1) directs:

15.3(1) Where a court is considering an application for a child support order and an application for a spousal support order, the court shall give priority to child support in determining the applications.  

[83]         By virtue of Section 19 of the Federal Child Support Guidelines, a Court may, in appropriate circumstances, impute income for the purpose of a child support award.  Section 19(2)(a) is particularly relevant and states:

19. (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:

(a) the spouse is intentionally underemployed or unemployed, other than where the under‑employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

Determination

[84]         The parties have been separated in excess of 28 months.  For the majority of that time, Kaitlyn has been in the primary care of her mother, who has been solely responsible for her financial maintenance.  For the reasons addressed in greater detail below, I find Mr. Gill has imputed income of $25,000.00 per annum and that he should be obligated to pay child support for Kaitlyn's benefit as prescribed by the Child Support Guidelines.  Commencing January 1, 2011, and continuing every month thereafter until varied by an order of a Court of competent jurisdiction, Mr. Gill shall pay to Ms. Hurst for the benefit of Kaitlyn, the sum of $216.00.  Given the evidence before the Court, I am not at all assured that Mr. Gill will make regular payment of the above amount, as such, I direct that in order to assure that the child receives the benefit of the monies ordered, Ms. Hurst shall be entitled to deduct said amount from the spousal support order to be subsequently addressed.  Should spousal support be terminated in future, then the child support aspect of this Order shall be enforceable through Maintenance Enforcement, should Ms. Hurst so wish.  I further order that so long as a child support order is in effect, Mr. Gill shall, on or before May 1 of every year, provide to Ms. Hurst a copy of his Income Tax Return, whether filed or not, and Notices of Assessment received.

f) Is an award of spousal support appropriate, and if so, in what amount

and duration? 

Position of the parties

[85]         Mr. Gill is seeking an indefinite award of spousal support reflective of both his contribution to the marriage and to reflect his need for financial assistance.  He asserts that since the separation he has not received adequate support from Ms. Hurst and invites the Court to consider a retroactive adjustment.

[86]         Ms. Hurst asserts that she has, since the separation, financially supported Mr. Gill well beyond her means.  She asserts that any ongoing award from this Court should consider Mr. Gill’s complete failure post-separation to contribute to his own financial support.  Further, Ms. Hurst asserts that her own ability to pay must be realistically considered by this Court.  If support is awarded, it should be time limited.

Determination

[87]         Section 15.2(4) and (6) of the Divorce Act requires that I consider the following factors and objectives when determining whether a person is entitled to spousal support:

Factors

(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

(a) the length of time the spouses cohabited;

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

(c) any order, agreement or arrangement relating to support of either spouse.

Objectives of spousal support order

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

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

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

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

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

[88]         In Shurson v. Shurson, 2008 NSSC 264, Justice B. MacDonald provides a helpful review of the jurisprudence relating to the entitlement to spousal support as follows:

[9] In Bracklow v. Bracklow, supra, the Supreme Court analysed the statutory objectives and held that they create three rationales for spousal support:

1.   Compensatory support to address the economic advantages and disadvantages to the spouses flowing from the marriage or from the roles adopted in marriage.

2.   Non‑compensatory dependency based support, to address the disparity between the parties, needs and means upon marriage breakdown.

3.   Contractual support, to reflect an express or implied agreement between the parties concerning the parties' financial obligations to each other.

[10] These rationales take into account both the factors set out in s. 15.2(4) and the objectives set out in s. 15.2 (6) and s. 17(7)(1).

[11] The Supreme Court did recognized that many claims have elements of two or more of the stated rationales.  It confirmed that analysis of all of the objectives and facts is required.  Pigeonholing was to be avoided.

[12] McLachlan, J. in Bracklow, supra, indicated that the basis for a spouse's support entitlement also affects the form, duration, and amount of any support awarded.

[13] Examples of circumstances that may lead to a decision that a spouse is entitled to compensatory support are:

a) a spouses's education, career development or earning potential have been impeded as a result of the marriage because, for example:

‑        a spouse has withdrawn from the workforce, delays entry into the workforce, or otherwise defers pursuing a career or economic independence to provide care for children and/or a spouse;

‑        a spouses's education or career development has been negatively affected by frequent moves to permit the other spouse to pursue these opportunities;

‑        a spouse has an actual loss of seniority, promotion, training, or pension benefits resulting from an absence from the workforce for family reasons.

b) a spouse had contributed financially either directly or indirectly to assist the other spouse in his or her education or career development.

[14] Non‑compensatory support incorporates an analysis based upon need and ability to pay.  If spouses have lived fully integrated lives, so that the marriage creates a pattern of dependence, the higher‑income spouse is to be considered to have assumed financial responsibility for the lower‑income spouse.  In such cases a court may award support to reflect the pattern of dependence created by the marriage and to prevent hardship arising from marriage breakdown.  L'Heureux‑Dube, J. wrote in Moge v. Moge, supra, at p. 390:

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

[89]         I have considered the positions advanced by the parties and the evidence before the Court.  Although not married until 1995, the parties cohabited for a period prior to that time.  The relationship, in its totality, is not a long term, nor traditional marriage, but it is one of significant duration.

[90]         I have carefully considered the evidence relating to the roles the parties undertook during the marriage.  Each contributed to the marriage, albeit in different ways.  Clearly, Ms. Hurst was the greatest source of financial input to the marriage.  Mr. Gill on the other hand, took the lead with respect to the building of the matrimonial home, improvements undertaken over the years, and outside maintenance.  Both shared in other domestic duties.  Child care responsibilities were also shared, although I find that Ms. Hurst was primarily responsible to oversee Kaitlyn’s school work, health care, child care and activities.

[91]         I am mindful that Mr. Gill does not, at present, have the same earning ability as Ms. Hurst.  However, I do not find that this disparity is as a result of the types of circumstances which give rise to a spousal support claim which is compensatory in nature.  Mr. Gill did not give up employment opportunities in order to meet the needs of Ms. Hurst or child care responsibilities.  To the contrary, I find that it was Mr. Gill who made decisions which ultimately impacted on his earning capacity.  He chose to focus on his music career, an endeavour which has not proven profitable over the last five years.  Ms. Hurst testified she was supportive of Mr. Gill finding gainful employment during the marriage, but that he chose to pursue other interests.  I accept her evidence in that regard.

[92]         Turning to the second pillar of spousal support, that being non-compensatory in nature, I find that there was, at the time of the separation, disparity in the financial means of the parties.  During the marriage, Ms. Hurst was the breadwinner, and was supportive of Mr. Gill pursuing his music career, as opposed to insisting upon him exploring more financially rewarding employment pursuits.  Following the separation, Mr. Gill had no immediate means of providing for his financial requirements due to the pattern established in the marriage.  In such circumstances, Mr. Gill was entitled to non-compensatory support from Ms. Hurst to reflect the immediate disparity in their respective earnings.

[93]         I find that Ms. Hurst fully met that obligation by virtue of her continued payment of the vast majority of Mr. Gill’s living expenses from the date of separation until the sale of the matrimonial home - a time frame of 17 months.  I find that during this time frame, Ms. Hurst paid expenses in lieu of support in an amount exceeding $3,000.00 per month.  She was unable to claim any of these funds as spousal support for tax purposes.  Similarly, Mr. Gill received this financial contribution without the necessity of claiming it as taxable income.

[94]         Following the sale of the matrimonial home and specifically in December of 2009, this Court made an interim Order requiring Ms. Hurst to pay spousal support to Mr. Gill in the amount of $2,000.00 per month.  From the evidence, this payment has continued since that time.  The interim Order reflected Mr. Gill’s need at that interim stage, as well as Ms. Hurst’s ability to pay.  Although having been relieved from the expenses associated with maintaining Mr. Gill in the matrimonial home due to the sale, the evidence clearly established that Ms. Hurst was continuing to struggle with the heavy  load arising from her sole responsibility for the matrimonial debts and the mounting tax liabilities incurred.

[95]         In the circumstances, the past support arrangements balanced the needs and means of the parties.  There is no justification to award Mr. Gill additional retroactive support to cover either time frame noted above, nor should Ms. Hurst be provided with a “credit” in relation to any suggested overpayment of support to Mr. Gill.  Further, in his final submissions to the Court, Counsel for Ms. Hurst submitted that it would be appropriate for this Court to identify a portion of the funds paid by Ms. Hurst to support Mr. Gill in the matrimonial home, as spousal support for taxation purposes.  Given the retroactive tax liability such would create for Mr. Gill, I am not prepared to consider such an approach.

[96]         I now turn to the present, and in particular, Mr. Gill’s entitlement to ongoing spousal support.  I am particularly mindful of not only the needs and means of the parties but the obligation in Section 15.2(6) of the Divorce Act to “promote the economic self-sufficiency of each spouse within a reasonable period of time.”

[97]         I find that Mr. Gill, to date, has not been meeting his obligation to improve his own financial circumstances in order to achieve self-sufficiency.  His evidence, in many respects, was troublesome due to inconsistencies, most notably that relating to his employment attempts and present financial circumstances.  Mr. Gill asserts that he has been unable to find employment despite his diligent efforts.  In his affidavit sworn April 9, 2009, he asserts:

77.      I have received no cash in 10 months from the family business & bank accounts in which we both shared prior to Christine cutting me off 10 months ago.  I have not also received any money from Christine.  I have no money for basic necessities.  I have had to depend on monies borrowed frm family friends to survive and to provide for Kaitlyn while she is in my care.  My friends have struggled to help and cannot help any longer.  My financial situation is extremely desperate and I need immediate spousal support.  I am receiving ongoing career and educational counseling from Helen Dorrington-Price at the Nova Scotia Community College and I have been sending out resumes in hopes of finding some sort of supplemental income.  (80 have been submitted to date) After dedicating 20 years of my life to this family and working so hard I could never image a good dad and loving husband could be left in such a vulnerable position and so devastated after putting all my personal dreams and aspirations on hold for my family.  (Emphasis added)

[98]         However, during the course of his viva voce evidence in April, he acknowledged that he had only had a single preliminary meeting with Ms. Dorrington-Price, and did no further follow-up with her to pursue career training opportunities.  Mr. Gill further acknowledged that since September of 2009, he had made no further attempts to seek employment opportunities.  His affidavit evidence was misleading.

[99]         As opposed to putting an effort towards finding employment, Mr. Gill in accordance with his own evidence, spent three to four months working “full-time” on a CD which was released shortly before Christmas 2009.  This project was financially supported by Ms. Ray Leier who, in accordance with a contract between herself and Mr. Gill entered into in March of 2009, will be entitled to receive all profits generated from the CD, other than a small donation to the IWK from each CD sale.  Mr. Gill will receive no payment of any kind in relation to his efforts in this regard.

[100]     It is difficult to contemplate why Mr. Gill, who asserts he is in dire need of financial support, would place his re-employment efforts on the “back burner” and devote hours of labour to a project which will financially benefit Ms. Leier.  The Court questions whether Mr. Gill and Ms. Leier were forthright in their evidence regarding the financial arrangements between them.  It is clear that Mr. Gill is choosing to make decisions which serve to delay his financial self-sufficiency and prolong his dependency on Ms. Hurst.  His actions are not reasonable, and I find that he is purposefully under-employed.

[101]     Ms. Gill has also asserted that he is limited in his employment efforts due to his health concerns.  I do not accept this proposition.  Firstly, I do not accept that he has been diligent in attempting to find employment.  The evidence suggests the contrary.  Secondly, although I accept that Mr. Gill does have some health concerns, there is no evidence before the Court which suggests that Mr. Gill is precluded from gainful employment because of his physical or mental health.  Persons with all manner of disabilities are productive members of the work force.  It was incumbent upon Mr. Gill to present evidence, preferably that of a medical nature, to support his position that he is impeded from finding employment.  He has not met the burden on him in that regard.

[102]     A consideration of the evidence supports the conclusion that Mr. Gill has the ability and skills to become gainfully employed in any number of fields.  His work history has provided him with a number of skill sets.  His health has not prevented him from undertaking significant renovations to the matrimonial home or spending considerable time on the recent CD project.  I find that Mr. Gill, if he had made reasonable efforts, could have found full-time employment within months of the separation.  I further find, notwithstanding suffering a broken leg in January of 2010, that Mr. Gill could be gainfully employed at present.  Mr. Gill is entitled to pursue his music career if that is his wish, however, there will be consequences to that in terms of the issues of support.  Given the circumstances, and in particular Mr. Gill’s past office and business management experience, I find it is reasonable to impute an annual income to him of $25,000.00.

[103]     What is Ms. Hurst’s current income for support purposes?  The evidence established that in the three years pre-separation, Ms. Hurst withdrew income from the business in the following amounts:

2006 - $125,000.00

2007 - $154,500.00

2008 - $113,104.00

[104]     Mr. Gill asserts that her present income should be considered to be at the same level.  I reject that proposition.  As is evident from the level of debt incurred both before and after the separation, these parties were living well beyond their means.  This resulted in additional funds being withdrawn from the business, triggering yet more tax consequences.  I accept Ms. Hurst’s evidence that if not for the mounting debt obligations, funds would have remained within the business.  For the purpose of her ongoing income, I find that Ms. Hurst’s income is more reasonably in the range of $80,000.00 per annum.

[105]     With incomes of $80,000.00 and $25,000.00 respectively, there is still a current disparity in income which justifies continuing support to Mr. Gill.  I have considered the ranges suggested by application of the Spousal Support Advisory Guidelines.  Given the circumstances before the Court, I find it more appropriate to consider a quantum reflective of the various unique features of this matter.

[106]     Commencing November 1, 2010, Ms. Hurst shall pay spousal support to Mr. Gill in the amount of $2,200.00.  It is not reasonable, however, that the support be indefinite in nature given the circumstances.  Should Mr. Gill be awarded indefinite support, it is highly improbable he will undertake meaningful self-sufficiency efforts.  Support shall terminate on May 1, 2012, providing Mr. Gill with a total of four years of financial support, and an adequate opportunity to improve his own employment circumstances.  Additionally, if her plan so permits, Ms. Hurst shall maintain Mr. Gill on her medical plan for as long as spousal support is payable .

g) Is an award of costs appropriate in the circumstances?

[107]     Ms. Hurst is seeking this Court to exercise its discretion and award costs in this proceeding against Mr. Gill.  In his final oral submissions, Mr. Yuill outlined on his client’s behalf, the various applications before the Court, the adjournments, and several concerns in how the proceeding was conducted.  At the heart of much of the submission was the view that Mr. Gill had unreasonably and unnecessarily complicated and delayed the proceedings to the financial detriment of Ms. Hurst.  I view there being merit in much of what was advanced by Ms. Hurst’s counsel.

[108]     On behalf of Mr. Gill, Mr. Daley asserts that although some delay was due to his client’s health concerns in December of 2009 and January of 2010, in particular, that Ms. Hurst also bears responsibility.  This related primarily to disclosure issues surrounding the business ledgers in particular.  There is also merit in this argument.

[109]     It is difficult in such a matter involving numerous chambers appearances and multiple adjournments, to balance the relative “wins” and “losses” sustained by each party.  Undoubtedly both are “losers” with respect to the costs incurred in pursuing their respective claims before the Court.

[110]     In considering the issue of costs, I have found the recent decisions in Arab v. Izsak 2009 NSSC 275 and Mahaney v. Malone 2009 NSSC particularly helpful.  I adopt the approach outlined therein.

[111]     In the present instance, there are several factors which support an award of costs against Mr. Gill.  Two are particularly important in my view.  Primarily, Ms. Hurst has been successful in relation to the two issues which occupied the most significant amount of the Court time – Kaitlyn’s parenting arrangements and Mr. Gill’s claim to the physiotherapy business.  Secondly, this Court had found that Mr. Gill had not followed an earlier interim Order of Scanlan, J. with respect to the sale of the matrimonial home, thus unnecessarily prolonging its disposition for over a year.  During that time-frame, Ms. Hurst solely bore the financial brunt of maintaining the home, and Mr. Gill’s occupancy of it, well beyond her reasonable financial limits.

[112]     Mr. Gill has at present, limited resources for the payment of a costs award.  I do believe it is appropriate in the circumstances of this case to award costs against him in the amount of $5,000.00.  I am fully aware that such amount is more symbolic than a real contribution towards the actual costs incurred by Ms. Hurst.

VII.   CONCLUSION

[113]     In summary, the Court has determined as follows:

a)       The parties shall be divorced;

b)       Mr. Gill’s claim under Section 18 of the Matrimonial Property Act is dismissed;

c)       From the proceeds of sale of the matrimonial home, Ms. Hurst is entitled to receive one-half of the funds held in trust, plus an equalization payment of $46,328.11;

d)       The balance of sale proceeds shall be paid to Wickwire Holm, in partial payment of that firm’s judgment against Mr. Gill;

e)       Effective January 1, 2011, Mr. Gill shall pay to Ms. Hurst for the support and maintenance of the child Kaitlyn, the sum of $216.00 per month and provide income disclosure as directed;

f)       Ms. Hurst shall, effective November 1, 2010, pay spousal support to Mr. Gill in the amount of $2,200.00 each month, continuing each month thereafter until May 2012.  So long as child support continues to be payable, Ms. Hurst is entitled to deduct said amount from the monthly support paid to Mr. Gill.  If permitted by the terms of the plan, Ms. Hurst is to maintain Mr. Gill on her medical plan for such period of time that Mr. Gill is entitled to spousal support; and

g)       Ms. Hurst is entitled to costs in these proceedings of $5,000.00.

J.