SUPREME COURT OF NOVA SCOTIA
(Family Division)
Citation: Ferguson v. Ferguson, 2012 NSSC 377
Date: 20121031
Docket: 1201-056323
Registry: Halifax
Between:
Leslie Jean Ferguson
Petitioner
and
William Allen Ferguson
Respondent
Judge: Associate Chief Justice Lawrence I. O’Neil
Date of Hearing: September 7 and September 12, 2012
Counsel: Jennifer Schofield, counsel for Ms. Ferguson
Kenzie MacKinnon, counsel for Mr. Ferguson
By the Court:
[1] This is a decision following a divorce hearing on September 7th, 2012 and concluded on September 12th, 2012.
Background
[2] The parties married July 14, 1984 and separated September 13th, 2001. They have two children, currently aged 25 and 23. The younger child lives with her father, the Respondent. The Respondent is an unemployed accountant who shares an apartment with his brother.
[3] Ms. Ferguson, the Petitioner, lives on her own. The older child is independent.
[4] Ms. Ferguson filed her petition in 2001. As a result of that phase of the proceeding, an interim order was issued on a consent basis. That order recognized primary care of the children to be with Ms. Ferguson and required Mr. Ferguson to pay child support of $971 and spousal support of $500 per month. There was no further court proceeding, other than that which brought the matter to this hearing. The order from 2002 remains unchanged.
[5] In November of 2009, Mr. Ferguson stopped paying the child and spousal support ordered. He took the position that he could not afford to make the payments given that he was without earnings and secondly that neither child was living with Ms. Ferguson.
Issues
[6] The issues for the Court's consideration are:
(1) Whether spousal support should be ordered on an ongoing basis;
(2) Whether arrears of spousal support exist;
(3) Whether there has been an equal division of matrimonial assets, principally an equal division of RRSPs; and
(4) Whether there has been an equal division of the debts of the marriage.
Spousal Support
[7] The principles governing spousal support are well established. In the case of Burchill v. Savoie, 2008 NSSC 307, I discussed the principles that I must apply. These principles also govern when the Court is considering an Application to Vary an earlier order for spousal support. For ease of reference, I repeat that discussion:
[31] Section 15.2 (4) (a)‑ (c), (5) & (6) (a)‑ (d) of the Divorce Act, supra, requires the court to consider the condition, means and circumstances of each spouse and provides that a spousal support order should address four statutory objectives:
15.2(1) Spousal support order ‑ A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse
(4) Factors ‑ In making and 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
...
(6) Objectives of spousal support order ‑ 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 from the care of any child of the marriage over and above an 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.
[32] The words of Justice McLaughlin in Bracklow [1999] S.C.J. No. 14 at paras. 30‑31 are on point:
(30) The mutual obligation theory of marriage and divorce, by contrast, posits marriage as a union that creates interdependencies that cannot be easily unravelled. These interdependencies in turn create expectations and obligations that the law recognizes and enforces ...
(31) The mutual obligation view of marriage also serves certain policy ends and social values. First, it recognizes the reality that when people cohabit over a period of time in a family relationship, their affairs may become intermingled and impossible to disentangle neatly. When this happens, it is not unfair to ask the partners to continue to support each other (although perhaps not indefinitely). Second, it recognizes the artificiality of assuming that all separating couples can move cleanly from the mutual support status of marriage to the absolute independence status of single life, indicating the potential necessity to continue support, even after the marital "break". Finally, it places the primary burden of support for a needy partner who cannot attain post‑marital self‑sufficiency on the partners to the relationship, rather than on the state, recognizing the potential injustice of foisting a helpless former partner onto the public assistance rolls.
[33] Justice L'Heureux Dube in Moge v. Moge 1992 CanLII 25 (SCC), [1992] 3 S.C.R. 813, [1992] S.C.J. No. 107 directed that spousal support must strive to achieve some equitable sharing upon the dissolution of the marriage. At paragraph 73, she stated:
The doctrine of equitable sharing of the economic consequences of marriage or marriage breakdown upon its dissolution which, in my view, the Act promotes, seeks to recognize and account for both the economic disadvantages incurred by the spouse who makes such sacrifices and the economic advantages conferred upon the other spouse .
Nevertheless, in the words of Justice MacLachlin in Bracklow, 1999 CarswellBC 532 :
21. When a marriage breaks down, however, the situation changes. The presumption of mutual support that existed during the marriage no longer applies . Such a presumption would be incompatible with the diverse post‑marital scenarios that may arise in modern society and the liberty many claim to start their lives anew after marriage breakdown. This is reflected in the Divorce Act and the provincial support statutes, which require the court to determine issues of support by reference to a variety of objectives and factors.
[69] In Bracklow, supra, MacLachlin J. defined the concept of quantum in reference to spousal support to include both the amount and duration of the support. She stated further that the factors relevant to entitlement also have an impact on quantum. At para. 53, when addressing the significance of any agreement the parties had, she states:
“. . . Finally, subject to judicial discretion, the parties by contract or conduct may enhance, diminish or negate the obligation of mutual support . . . “
[70] Having decided that the Respondent owes a duty to the Petitioner to provide spousal support I must decide the amount of support that is currently payable; when that obligation arose; what form it should take; what arrears if any are payable and when the obligation terminates.
[71] As earlier noted The Divorce Act s. 15.2 (4) & (6), supra, requires the court to consider a number of factors and objectives when determining the quantum of spousal support:
Spousal Support Orders
15.2(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.
(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 from 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.
[8] Herein there is no question that entitlement is established. This couple were married for approximately 17 years and clearly shared a commitment to each other financially. The 2002 order recognized this reality.
- change of circumstances
[9] I am satisfied that a change of circumstances occurred in 2004 when Mr. Ferguson’s income changed significantly. The change of circumstance is also evidenced by the change in the status of the children. The older child became independent in August 2005 when she left her mother’s residence to attend university. The older child began living with Mr. Ferguson in the fall of 2008. She is a student at St. Mary’s University in Halifax.
- imputing income
[10] Ms. Ferguson does not challenge the fact of Mr. Ferguson’s decreased earnings. She argues that the Court should impute an income to him because he is not doing everything he can to achieve a higher income. She wants the Court to find that Mr. Ferguson’s imputed income is $75,000. She argues that since 2007, Mr. Ferguson knew that the family business could not provide him with an income. It is argued on behalf of Ms. Ferguson, that Mr. Ferguson did not diligently pursue other employment beginning in 2007. She submits that he relied upon an inheritance of more than $250,000 to support himself and essentially neglected his obligation to become gainfully employed.
[11] The Child Support Guidelines, SOR/97-175 outline the criteria to be applied when determining whether income should be imputed to a ‘payor’. The ‘Guidelines’ were discussed by this Court in (Williams) Pellicer v. Williams, 2012 NSSC 267. I repeat my comments on this subject as stated in that decision beginning at paragraph 22:
[22] The Federal Child Support Guidelines, at section 19(1)(a) provide:
Imputing Income
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 under‑employed 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;
[23] Justice Forgeron, in a recent decision, thoroughly reviewed case law on the meaning, effect and application of Section 19 of the Child Support Guidelines. For convenience, I reproduce the following from her decision in MacDonald v. Pink, 2011 NSSC 421 (CanLII), 2011 NSSC 421:
[24] Section 19 of the Guidelines provides the court with the discretion to impute income in specified circumstances. The following principles are distilled from case law:
a. The discretionary authority found in sec. 19 must be exercised judicially, and in accordance with rules of reasons and justice, not arbitrarily. A rational and solid evidentiary foundation, grounded in fairness and reasonableness, must be shown before a court can impute income: Coadic v. Coadic 2005 NSSC 291 (CanLII), 2005 NSSC 291.
b. The goal of imputation is to arrive at a fair estimate of income, not to arbitrarily punish the payor: Staples v. Callender, 2010 NSCA 49 (CanLII), 2010 NSCA 49.
c. The burden of establishing that income should be imputed rests upon the party making the claim, however, the evidentiary burden shifts if the payor asserts that his/her income has been reduced or his/her income earning capacity is compromised by ill health: MacDonald v. MacDonald, 2010 NSCA 34 (CanLII), 2010 NSCA 34; MacGillivary v. Ross, 2008 NSSC 339 (CanLII), 2008 NSSC 339.
d. The court is not restricted to actual income earned, but rather, may look to income earning capacity, having regard to subjective factors such as the payor's age, health, education, skills, employment history, and other relevant factors. The court must also look to objective factors in determining what is reasonable and fair in the circumstances: Smith v. Helppi 2011 NSCA 65 (CanLII), 2011 NSCA 65; Van Gool v. Van Gool, [1998] 113 B.C.A.C. 200; Hanson v. Hanson, [1999] B.C.J. No. 2532 (S.C.); Saunders‑Roberts v. Roberts, 2002 NWTSC 11 (CanLII), 2002 NWTSC 11; and Duffy v. Duffy, 2009 NLCA 48 (CanLII), 2009 NLCA 48.
e. A party's decision to remain in an unremunerative employment situation, may entitle a court to impute income where the party has a greater income earning capacity. A party cannot avoid support obligations by a self‑induced reduction in income: Duffy v. Duffy, supra; and Marshall v. Marshall, 2008 NSSC 11 (CanLII), 2008 NSSC 11 (CanLII), 2008 NSSC 11 (CanLII), 2008 NSSC 11.
[25] In Smith v. Helppi 2011 NSCA 65 (CanLII), 2011 NSCA 65, Oland J.A. confirmed the factors to be balanced when assessing income earning capacity at para. 16, wherein she quotes from the decision of Wilson J. in Gould v. Julian 2010 NSSC 123 (CanLII), 2010 NSSC 123. Oland J.A. states as follows:
16 Mr. Smith argues that the judge erred in imputing income as he did. What a judge is to consider in doing so was summarized in Gould v. Julian, 2010 NSSC 123 (CanLII), 2010 NSSC 123 (N.S. S.C.), where Justice Darryl W. Wilson stated:
Factors which should be considered when assessing a parent's capacity to earn an income were succinctly stated by Madam Justice Martinson of the British Columbia Supreme Court, in Hanson v. Hanson, [1999] B.C.J. No. 2532, as follows:
1. There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is "no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor". ...
2. When imputing income on the basis of intentional under‑employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to be considered in addition to such matters as availability to work, freedom to relocate and other obligations.
3. A parent's limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills, or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at a lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment.
4. Persistence in unremunerative employment may entitle the court to impute income.
5. A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.
6. As a general rule, a parent cannot avoid child support obligations by a self‑induced reduction of income.
. . . .
[33] In Nova Scotia, the test to be applied in determining whether a person is intentionally under‑employed or unemployed is reasonableness, which does not require proof of a specific intention to undermine or avoid child maintenance obligations.
[26] In Gill v. Hurst 2011 NSCA 100 (CanLII), 2011 NSCA 100, Bryson J.A. affirmed the trial judge’s decision to impute income where the father’s attempt to justify his underemployment for health and educational reasons was rejected: paras. 30 and 31. In addition, Bryson J. held that the trial judge made no error by imputing the “modest sum” of $25,000 to the father.
[12] I apply this analysis herein.
[13] I am satisfied that Mr. Ferguson is genuinely without an income. That is to say he is not intentionally unemployed. I am satisfied that he has diligently pursued gainful employment since his earnings ceased.
[14] Mr. Ferguson qualified as a chartered accountant early in his career. He returned from Toronto to Halifax to work in the family business, which the Court is told was a real estate business. In the years 2002, 2003 or thereabouts, the company incurred losses in excess of $3,000,000 because of an unsuccessful venture into the building supply business. Mr. Ferguson gave detailed evidence on this development. I accept his evidence. Coincidental with these losses, the company faced cash shortages and ultimately Mr. Ferguson's salary was decreased. Eventually the assets of the company were distributed. Currently the company is not operational and has no assets.
[15] At paragraph 11 of Mr. Ferguson’s affidavit (Exhibit #10), he gives a history of his earnings from 1998 to 2011 inclusive. I accept this summary as correct.
[16] Beginning in 2007, Mr. Ferguson has had the benefit of an inheritance from his grandfather’s and father's estate. His share of that inheritance was in excess of $230,000. At the time of the hearing he had spent these funds and had no income. To date in 2012, he had three months of employment at an annual salary of $45,000. He testified that in the last two years he has applied for more than 190 positions and was interviewed for only several of these. I accept his evidence on this point.
[17] When questioned on cross examination as to his employability, Mr. Ferguson explained that accounting firms tend to hire their students. In the current environment, many firms do not have work for all their students and in this situation, there is little or no chance that an office would hire someone of his seniority, particularly given he would come from outside the company.
[18] I was impressed with Mr. Ferguson's candour. I found him to be responsive and complete in his answers. He made no effort to colour his evidence or in any way tailor his evidence to suit what he might perceive to be his self interest. He explained that he continued to pay the court ordered spousal and child support well after his income had decreased because in his mind, he was supporting his children and the mother of his children and if he currently had resources, he would continue to do so.
[19] I am satisfied that this was his attitude and this continues to be the case. On the issue of spousal and child support, Mr. Ferguson has no ability to pay, nor did he have an ability to pay after 2004. Any arrears that are shown to exist on the record of the maintenance enforcement office because of non compliance with the 2002 order are cancelled. I am satisfied that these arrears accumulated at a time when he was not in a position to make child or spousal support payments. It would be inequitable and unjust for him to be required to make payments as arrears. Both of these parties avoided the courtroom after 2002. As Mr. Ferguson explained, he did not find the Court process particularly helpful in resolving the issues initially. He found the process time consuming and non productive. He therefore did not return to court and continued to make the payments until he could no longer do so.
[20] Ms. Ferguson is qualified to do lower paying jobs in retail, for example. She agreed with that suggestion. She was very emotional throughout her testimony. She believes that Mr. Ferguson has resources that should be available to her. Notwithstanding the dire circumstances he has lived through in recent years, she has the view that he has money somewhere. There is no evidence to support that conclusion. I find that he does not have other resources.
[21] Ms. Ferguson is in very difficult circumstances herself and does not appreciate that Mr. Ferguson's circumstances are similar if not more dire. In addition, Mr. Ferguson is supporting one of the two children.
[22] I have considered whether Ms. Ferguson is healthy enough to accept employment. I am satisfied that she can accept employment and she does have the capacity to earn the minimum wage, which would yield an income of $15 ‑ $20,000 per year for her.
Division of Assets and Debts
‑ Canada Revenue Agency Debt (paid from proceeds from the sale of the matrimonial home)
[23] Exhibit #15 is a letter to Mr. Fiendel, who represented the parties when they sold their matrimonial home, post separation. That letter confirms that some monies from the proceeds of that sale were to be paid to the Canada Revenue Agency to meet the parties’ respective debts. The evidence of the parties is not crystal clear as to the origin of those debts, that is whether they arose pre or post separation. Ms. Ferguson argues that the greater portion of the debt is attributable to Mr. Ferguson and Mr. Ferguson believes that most of the debt, if not all, is attributable to the period of time the parties lived together. I am satisfied on a balance of probabilities that the combined income tax debt is a matrimonial debt. It is therefore equally divisible and some proceeds from the sale of the home were appropriately directed to the Canada Revenue Agency. The fact that there might be two cheques sent to Revenue Canada by the real estate solicitor is consistent with the need or desire to identify the respective tax accounts to which the funds were directed.
[24] I have concluded that the Canada Revenue debt is matrimonial because the evidence from Mr. Ferguson is that debts would not become subject to garnishment until they were unpaid for two years. These debts were subject to garnishment and therefore, arose during the period the parties lived together. I am satisfied the subject Canada Revenue Agency debt arose during the period the parties lived together.
- Division of RRSPs
[25] The statements of property of the parties declare the values for their RRSP assets and investments as of September 2002. Mr. Ferguson’s were valued at $71,554.00 and Ms. Ferguson’s at $50,929.37. Each retained their RRSPs. Ms. Ferguson now seeks one half of the difference in the value of the RRSPs each retained, i.e. one half of $20,624.00. Mr. Ferguson says they agreed to divide the RRSPs in this way. Regardless, he says the funds were liquidated and funds were used to support Ms. Ferguson and the children. This occurred during the period when he lacked an income but nevertheless paid child and spousal support.
Conclusion
[26] Exhibit #14 is a record of the Maintenance Enforcement Program ‘MEP’ for the period April 14, 2011 to July 13, 2012. The record shows a $10,000 payment by Mr. Ferguson on June 29, 2011. He testified that this was the entire disbursement then available from his inheritance.
[27] I am satisfied that a review of his earnings over the previous three years and the circumstances of the parties would have relieved him of any obligation to pay child or spousal support and therefore, this $10,000.
[28] After June 29, 2011, the ‘MEP’ account balance was again $0.00 but began to grow again at the rate of $500 per month. It reached a balance due of $5,684.36 on June 28, 2012. I am satisfied that had Mr. Ferguson returned to Court, this obligation would not have existed.
[29] Arrears shown on the ‘MEP’ are found to not exist and the ‘MEP’ record is to be amended to reflect this conclusion.
[30] I am satisfied that Ms. Ferguson is entitled to spousal support but that Mr. Ferguson is not in a position to pay it. I am further satisfied that he has not been in a position to pay spousal support since 2004. He made substantial payments of spousal and child support as required by the 2002 order after his obligation would have terminated had the matter returned to Court. Notwithstanding Mr. Ferguson paid child and spousal support when he was without an income and derived in part from an inheritance, I am not prepared to conclude there is an over payment. There is no order that funds should be returned to him as an overpayment. Payments were voluntarily made by him with the knowledge that the obligation could have been suspended or terminated by a Court. He did not want that done.
[31] I am satisfied that the Canada Revenue Agency debt paid from the proceeds of the sale of the matrimonial home in 2003 was a joint matrimonial debt for which the parties were equally responsible.
[32] I am further satisfied that with respect to the RRSPs the parties owned at the time of separation, any unequal share retained by Mr. Ferguson was redirected to the support of Ms. Ferguson and the children. I am also satisfied that the parties’ agreed that each would retain their own RRSPs.
[33] Alternatively, should the foregoing analysis be in error, I am satisfied that this is an appropriate case to find an unequal division of matrimonial assets is appropriate as provided by s.13(b) of the Matrimonial Property Act, R.S.N.S. 1989 c.275. I come to this conclusion because Mr. Ferguson directed these assets to the support of Ms. Ferguson and the children. He also paid most of the matrimonial debts following separation, with the exception of the mortgage debt, which was paid from the proceeds from the sale of the matrimonial home.
[34] I accept the record of payments to Ms. Ferguson listed in Exhibit ‘A’ to Exhibit #10 herein. Many of these payments were in excess of Mr. Ferguson’s obligation and were made possible because he accessed his inheritance and his RRSPs.
[35] Finally, with respect to the cash surrender value of life insurances, I am satisfied that these life insurance policies no longer exist. As explained by Mr. Ferguson, these policies were borrowed against over the years and their value was realized in this manner. The evidence does not establish clearly when the values were taken from the life insurance policies. As a consequence, the Court cannot conclude whether that occurred pre or post separation. I am satisfied that the benefits of these policies were directed to meeting the needs of both the Petitioner, the Respondent and the children. Mr. Ferguson did not appropriate the entire benefit of these assets to himself. The quality of the evidence on this issue is poor. The claims of the Petitioner on the issues of spousal support and division of property are dismissed. However, the Divorce is granted and the name change of the Petitioner is authorized, if sought.
[36] Ongoing spousal support is set at $1.00 to preserve the jurisdiction of the Court to vary the obligation should Mr. Ferguson obtain employment. The parties will be subject to an ongoing obligation to provide their income tax returns and notices of assessments to each other on or before June 1, for the previous year.
ACJ