Decision Date:2001/05/02
Docket No. S.H. 1201-52235
IN THE SUPREME COURT OF NOVA SCOTIA
[Cite as: Wambolt v. Wambolt, 2001 NSSC 63]
BETWEEN:
JOAN MAUD WAMBOLT
PETITIONER
- AND -
JOHN BRUCE WAMBOLT
RESPONDENT
D E C I S I O N
HEARD BEFORE: The Honourable Justice Margaret J. Stewart
PLACE HEARD: at Halifax, N.S. on February 7th and 8th, 2001;
(last filing April 9, 2001)
DECISION DATE: May 2, 2001.
COUNSEL: Kay L. Rhodenizer, for the Petitioner
Mark T. Knox, for the Respondent
[1] In early February 2001, the Nova Scotia Court of Appeal reserved its decision in Gaetz v. Gaetz 2001 N.S.C.A. 57. As in the case at bar, at issue was child support based on a payor's undue hardship argument with Mr. Wambolt's counsel also representing the respondent in the Gaetz appeal. At conclusion of trial, I reserved my decision pending the Court of Appeal rendering its decision which occurred on April 6, 2001.
[2] Joan Maude Wambolt (Petitioner) and John Bruce Wambolt (Respondent) were married on November 6, 1976 and after 21 years of marriage, separated on September 7, 1997 some three and a half years ago. Mrs. Wambolt physically moved out of the matrimonial home on December 31, 1997 and at that point, the parties stopped intermingling their income sources. The two children of the marriage, Dawson John born November 15, 1984 now age 16 and Jacqueline Nicole born July 26, 1987 now age 13 have been in Mr. Wambolt’s day to day care since December 31, 1997. Interim custody hearings were held on November 20, 1997, December 9th and 23rd 1997 and March 11, 1998 with the latter hearing resulting in Mr. Wambolt having interim custody and day to day care of the children and Mrs. Wambolt having extensive access arrangements under an Order granted by Justice MacAdam dated April 28, 1998.
[3] All jurisdictional and Divorce Act requirements have been complied with and fulfilled. The Divorce Decree shall be granted pursuant to s. 8(2)(a) of the Divorce Act, R.S.C., 1985, c.3 (2nd Supp.).
[4] Any number of issues have been resolved or agreements reached specifically with respect to joint custody, parenting time provisions, valuations of some assets and debts, division of contents and entitlement to spousal and child support. Very specific issues remain to be determined and they are as follows:
1. Valuation of the matrimonial home and mortgage calculation date.
2. Valuation of the 1989 Ford Probe motor vehicle and 1993 Dynasty motor vehicle.
3. Entitlement to a “possible future” severance pay package from MT & T/Aliant.
4. The number of MT & T shares at separation.
5. Prejudgement interest on equalization payment since December 31, 1997.
6. Payment of specific accounts: Sharon Cruikshank; pensions payout calculation and house appraisal fee.
7. Method of equalization payment.
8. Amount of child support in light of undue hardship argument.
9. Amount of spousal support with security and retroactive to January 1, 2001 or alternatively, lump sum payment for income tax liability.
1. Valuation of the Matrimonial Home and Mortgage Calculation Date
[5] I accept Al-TECH Appraisals Consultants Limited, April 5, 1999 professional appraisal on the matrimonial home at $145,000.00 as reliable. In the circumstances of this case, there is no reason not to set the mortgage amount at $92,839.21 as of January 24, 2001, (Exhibit “8") being the date of division (Stoodley v Stoodley (1997), 172 N.S.R. (2d) 101 at 108 par.29). Disbursement costs are not contentious and I set them at $10,505.00. Thus, the equity in the matrimonial home for equal division is $41,655.79.
2. Valuation of the Motor Vehicles
[6] At separation each party retained a motor vehicle. Mr. Wambolt retained the 1989 Ford Probe which had been purchased three years earlier for $3,750.00. Six months later it was written off when another car side swiped Mr. Wambolt. He received $1,866.95 from the insurance company. I am satisfied his estimated value of $2,500.00 at separation is fair and realistic.
[7] Mrs. Wambolt retained the 1993 Dynasty which she valued at $7,500.00 on her September 1997 Statement of Property but now estimates to be more realistically valued at $5,000.00 as of separation and division. This is a sum she equates to Mr. Wambolt’s vehicle so that in the final analysis all that remains to be accounted for in equalization of the vehicles is the $519.55 outstanding car loan on her vehicle. Mr. Wambolt by comparing the values of similar motor vehicles in the newspaper, arrived at an estimated valuation of $6,500.00 in his November, 1997 statement of property and at trial. He acknowledges the outstanding loan. I fix the value of the 1993 Dynasty after deduction of $520.00 at $5,230.00
3. Future Entitlement to Severance Pay Package at MT & T
[8] On the evidence, no entitlement to “possible future” severance packages arose during cohabitation. There is no postponement or deferral of payment. Applying Goodfellow, J. analysis in Smith v. Smith (2001), N.S.S.C. 5, the possibility that Mr. Wambolt might, at some time in the future, face a downsizing package by his employer MT&T/Aliant so that his employer can avoid future employment income and benefits is not an entitlement related in any way to the period of cohabitation even though the formula for calculating it might incorporate the number of years of employment, some of which would have been during cohabitation.
4. Number of MT & T Shares at Separation
[9] As of December 31, 1977, 99 shares of MT & T were held by Mr. Wambolt. They were sold in February of 1998 for $3,242.25 with no tax implications. In June of 1997 Mr. Wambolt stopped contributing ten percent of his salary to purchasing shares and for the last six months of 1997 contributed the nominal amount of $25.00 so as not to lose the option to purchase. I am unclear on the evidence as to whether or not he paid $25.00 per pay or per month, i.e. $150.00 or $300.00 towards share purchases or $75.00 or $150.00 subsequent to separation in September of 1997. Pay stubs or documentation reflecting the number and value of shares purchased in October, November and December were not available but his financial statement indicates $50.00 per month for stocks. I fix the number of shares at 99 and order $3,242.25 less $150.00 be divided equally between the parties as of the date of sale, acknowledging the possibility that four to five shares may not be matrimonial assets.
5. Prejudgement Interest on Equalization since December 31, 1997
[10] Bearing in mind that the major asset to be divided was the matrimonial home and both its value and the mortgage payout were calculated as of trial, I make no award of prejudgement interest.
6. Payment of Specific Accounts
Sharon Cruikshank Account:
[11] Acknowledging some portion of Sharon Cruikshank’s $4,847.00 account relates to counselling for the children and not to actual assessments ordered by the Court in January 1998, I am satisfied under the circumstances, it is a cost that should be shared equally by the parties. The custody issue was a live issue and the assessment was instrumental in avoiding overall lengthy litigation as well as providing the parties with insight into their family dynamics. I direct Mr. Wambolt to inquire as to whether any portion of this account can be claimed through his health plan and, if so, that both parties receive the benefit of that contribution. Mrs. Wambolt’s $2,423.00 portion shall be factored into the equalization payment and any refunds by Mr. Wambolt through his health plan shared equally between them and immediately paid to her upon receipt.
Actuarial Account Re: Pension and House Appraisal Fee
[12] Under the circumstances, I consider both the actuarial account and appraisal fee to be Mr. Wambolt's expense and not to be factored into the equalization.
7. Method of Equalization Payment
[13] Once the noncontentious assets and liabilities, i.e., Mr. Wambolt’s 1997 performance bonus after tax $1,516.16; Mr. Wambolt’s 1997 tax refund prorated $1,261.20; Division of Employment Pension at source; Mrs. Wambolt’s 1997 tax debt prorated $ 362.88 are factored into the above findings an equalization payment of $20,156.00 on my calculations is owing to Mrs. Wambolt (Division Schedule attached.) and is subject to correction if I have misinterpreted counsels' agreement to values.
[14] By way of letter dated February 5, 2001, the Bank of Montreal advised Mr. Wambolt that he would be able to acquire $37,600.00 in new funds upon remortgaging the property at 90% of its $145,000.00 value provided he was not responsible for monthly spousal support payments of $450.00. With this funding, besides making the equalization payment, he would be able to attribute some of the remaining $17,500.00 to his existing $28,500 loan thereby having the opportunity to decrease his present monthly loan payment of $730.00. As noted by counsel for Mr. Wambolt, approximately 73% of the original $33,741.00 loan made by Mr. Wambolt in December of 1999 relates to legal fees or $532.70 per month and the rest to the purchase of another motor vehicle. As well, for immediate consideration of some portion of the new funds would be a Master Card debt fluctuating between $3,600 and the maximum limit of $5,000 and a bank overdraft of $1,800. An unpaid loan of $9,500 from his mother and friend would still exist with no immediate demand for payment.
[15] Appreciating Mr. Wambolt projects his monthly deficit in the $1,000 range with a $450.00 spousal contribution, Mrs. Wambolt's counsel points out that a recalculation of Mr. Wambolt's income tax figures, so his financial statement reflects the present tax regime and not just a twelve month division, a savings of approximately $351.00 per month in taxes is available, thereby eliminating most of the bank's concerns about a $450.00 per month payment. He is still left with a deficit.
[16] Mrs. Wambolt does not wish to see the matrimonial home sold but naturally is concerned about her own tight financial circumstances and would prefer not to wait for payment of the equalization.
[17] If possible, Mr. Wambolt would like to make a full equalization payment to Mrs. Wambolt. As it is my intention to award spousal support, I would direct Mr. Wambolt to again approach the bank with the total picture of his present circumstances and acquire in writing from them, with a copy to Mrs. Wambolt’s counsel, what they would be prepared to lend on the equity in the home, in order that he could at the very least make a partial but preferably full equalization payment forthwith to Mrs. Wambolt. His inquiries should not be limited to the bank, as on the evidence there was at least a hint at private finances being available on a separate issue and there are other lending institutions.
[18] If after a vigorous and conscientious effort of canvassing all sources and possible permutations of acquiring full or, if need be, partial payment for equalization and reporting same, the refinancing and or acquiring funds proves impossible and bearing in mind under the circumstances the best interest of these children is to remain in the matrimonial home, and that the postponement of payment or the sale of the matrimonial home is an unequal division, [Matrimonial Property Act, S.N.S., 1990 c. 9 s. 13(h); Bennett v. Bennett (1992), 112 N.S.R. (2d) 79 N.S.C.A.; Fisher v. Fisher (1994), 131 N.S.R. (2d) 367 N.S.C.A.], I order a postponement of the payment and a mortgage back from Mr. Wambolt to Mrs. Wambolt under the following terms;
1. Upon Mrs. executing a deed conveying her interest in the matrimonial home to Mr. Wambolt. Mr. Wambolt who is responsible for all existing mortgage payments shall execute and deliver a mortgage in favour of Mrs. Wambolt on the property for $20,156.00 bearing an interest of seven percent (7%) at simple interest and not compound interest.
2. Mr. Wambolt shall at all times maintain fire insurance coverage on the matrimonial home payable to Mrs. Wambolt equal to the amount postponed.
3. The mortgage shall be payable at the earliest of Mr. Wambolt remarrying or living in a common-law relationship, the sale of the home on Jacqueline's 19th birthday or when all the children cease to be children of the marriage as defined in s.2 of the Divorce Act, R.S. 1985 c. 3. Mr. Wambolt shall have the right to repay all or part of the mortgage without bonus or penalty and Mrs. Wambolt shall postpone the mortgage in favour of any renewal of the first mortgage now in place, provided the principal amount of the first mortgage shall not be increased without Mrs. Wambolt's consent.
4. Mr. Wambolt will each and every year on the anniversary date of the corollary relief judgement make application to a recognized mortgage lender for a mortgage and/or refinancing of the existing first mortgage sufficient to pay Mrs. Wambolt her postponed interest in the matrimonial home or any portion thereof. If he receives funds from the lender, they are to be transferred to Mrs. Wambolt to the extent of his indebtedness under the mortgage. If he is unsuccessful in receiving funds, the mortgage signed by Mr. Wambolt continues, subject to the conditions outlined herein. Mr. Wambolt shall supply documentation to Mrs. Wambolt to prove the application for the funds was refused and the application was made bona fide.
8. Child Support:
[19] Over the last three years, Mr. Wambolt has not requested child support from Mrs. Wambolt. Since February 1998, he has been the recipient of the children's Canada Pension Benefit totalling $348.14 each month or $4,177.68 tax free per year flowing from Mrs. Wambolt's disability status. This is an amount of money separate and distinct from a payor's obligation under the Federal Child Support Guidelines. Mrs. Wambolt maintains she can not pay child support because it will create undue hardship for her.
[20] In keeping with the Nova Scotia Court of Appeal recent comments in Gaetz v. Gaetz supra, and determining none of the undue hardship criteria in subsection 10(2)(a) and (e) of the Federal Child Support Guidelines apply to these circumstances, I fix Mrs. Wambolt's income at $1,228.92 per month or $14,747.04 per year (comprised of her monthly Canada Pension Plan disablity pension of $721.38, wage loss insurance $483.53 and G.S.T. refund $24.00) and order her to pay child support payments, as per the Guidelines, of $227.00 per month effect May 1, 2001. Mrs. Gaetz, who was ordered by the Appeal Court to pay $640.49 per month child support for her three children earned $30,000 per year with little job security. Her gross income after child support was $22,764.12, as spousal support by Mr. Gaetz who had an income package worth $80,000 was suspended.
9. Spousal Support
[21] There is no issue of entitlement. The parties were married for 21 years. In 1982, prior to deciding to have children, Mrs. Wambolt was diagnosed with multiple sclerosis. Since early 1983, she has been the recipient of Canada Disability Pension and receives wage replacement insurance, having been employed with Royal Insurance from 1977 to 1982. As noted, her annual income is $14,747.04. Early in 2000 she was diagnosed with hyperthyroidism causing weight gain, hair loss and tiredness. She has not been able and continues to be unable to work. This is unlikely to change given her health history.
[22] By way of Supreme Court interim order dated March 24, 1998, I ordered spousal support of $450.00 per month as of April l, 1998 or $20,147.00 per year. Having found it difficult to address her needs, even without child support payments, she is requesting support of $825.00 per month retroactive to January 1, 2001 in order to purchase a more reliable car than her 1993 Dynasty at an estimated cost of $250.00 per month and fire insurance at $20.00 per month and use her $110.00 per month, now paid out loan payment towards savings and pay outstanding income tax. Motion sickness prevents any regular use of the bus system and she has no laundry facilities in her apartment.
[23] At present, with her $110.00 per month loan payment ending in February of 2001, the new tax regime decreasing her monthly income tax and paying no child support, she has, given her basic no frills budget, a $24.00 surplus after allotting $20.00 to fire insurance and making no provision for savings, holidays, counselling, new car purchase, and spending a nominal amount of $50.60 on cable and entertainment. She will also have legal fees and unlike Mr. Wambolt, has made no substantial contribution towards the estimated $15,000.00. She is not living an isolated life in the sense she has a specific male friend and spends some weekend time with him and his family but it is not a financial commitment situation. In this context, she will have $203.00 per month deficit once child support payments commence. Her $560.00 per month two bedroom apartment with $103.00 per month heating costs was acquired to accommodate access visits. For the last year or so neither child has been receptive to interacting and or visiting. She has no access costs. If there is an area in her budget to accommodate the child support payments this is where it is to be found either by downsizing or sharing accommodations by taking in a boarder or becoming one. On a straight equalization payment, she will have some additional income through interest earned and be able to purchase another modest car. Pension provision is provided through a division of Mr. Wambolt's pension at source. Her wage loss insurance will end at age 65. Her present gross yearly income after payment of child support of $2,724.00 and receipt of spousal support of $5,400.00 is $17,523.00 as compared to $20,147.00 without paying child support and $12,023.04 without spousal support and paying child support.
[24] Mr. Wambolt stresses and I accept his opportunity for extensive overtime is no longer available and unlike last year his income this year will be in the $59,422.00 range. His total household income with Canada Disability Pension payment of $4,177.68 for the children and the Child Tax Benefit of $513.24 is calculated at $64,113.00. Unlike Mrs. Wambolt, through his mandatory employment pension deduction and minimal stock option payment, some $147.00 per month ($97.00 and $50.00 respectively) goes toward future security. With a $450.00 per month spousal support payment his estimated monthly deficit after recalculating his income tax, is $645.00 or $624.00 less loan insurance duplication. A deficit which Mrs. Wambolt's counsel stresses almost exclusively relates to payment of the lawyer fee portion of the combined loan.
[25] Like Mrs. Wambolt's budget, Mr. Wambolt's budget for himself and two growing teenagers does not have excessive expenses. No provision is made for specific Christmas or birthday amounts, for holidays, for allowances, or savings outside pension and stock calculations. There may be some nominal provision under miscellaneous. The childrens' cadet involvement provides for a substantial amount of the young persons' recreational activities as well as personal development at a very nominal expense for a very large return. Amounts allotted to other expenses for example, clothing, gas, etcetera, given the size and age of the children and their commitments, allows for the deficit to reflect mostly the loan issue, when in essence, it should realistically be higher. Sacrifices are being made and a deficit remains as does unpaid private loans.
[26] I am satisfied Mrs. Wamboldt needs support and Mr. Wambolt is in a position to continue paying spousal support and his cash flow will be assisted but not cured by refinancing and ultimate loss of equity. By increasing the monthly payment by $200.00, Mrs. Wambolt will continue to have a gross yearly income of $19,823.00 which will be slightly effected by an increase in income tax and upon immediate equalization payment, will experience a small increase through earning interest on the funds remaining after the purchase of another motor vehicle. If she chooses to reassess her living accommodation, she will experience further cash flow for savings, etcetera, and if the equalization payment is postponed, cash flow for a car payment. She, like Mr. Wambolt, faces legal fees. Mr. Wambolt will receive some income tax relief on the additional $200.00 per month spousal support which otherwise is neutralized, given Mrs. Wambolt's child support payment of $227.00 per month. I fix spousal support at $650.00 per month. I make no lump sum award.
[27] Given the length of the marriage and her health, Mrs. Wambolt's request for security with respect to her spousal support is not unreasonable. Mr. Wambolt presently has term group life insurance through his employment and I order that she be added as a beneficiary, while receiving spousal support, provided that the children are also named.
[29] If necessary, I will hear counsel on costs by way of submissions.
Justice Margaret J. Stewart