IN THE SUPREME COURT OF NOVA SCOTIA
[cite as: Surch v. Surch, 2003 NSSC 208]
Date: October 24, 2003
Docket: FK 02-0062
Registry: Kentville
BETWEEN:
PENNY MARY SURCH
PLAINTIFF
- and -
JOHN TRACY SURCH
DEFENDANT
HEARD: At Kentville, Nova Scotia on July 17, 2003
BEFORE: The Honourable Justice Charles E. Haliburton
SUBJECT: Division of Matrimonial Property and Debt
DECISION: October 24, 2003
ATTENDING: Caroll Daniels, for the Plaintiff
John Tracy Surch, self-represented
D E C I S I O N
[1] Penny Surch has initiated this action against John Surch, her husband, by an Originating Notice dated March 21, 2002. On the basis of “separation” the Originating Notice claims:
(1) an equal division of matrimonial assets and debts
(2) a division of Armed Forces pension earned by the husband
(3) costs
[2] The parties separated March 13, 2002 after 12 years of cohabitation. There are three children. Two of the children are the natural children of Mr. Surch. An older child was brought into the marriage by the wife.
[3] The parties cohabited briefly before marriage.
[4] The husband was a member of the Armed Forces.
[5] Penny Surch had completed a grade 11 program in high school and a secretarial course in 1987. The evidence is that she was, at the beginning of their relationship, an unemployed single mother who brought with her into the union a student debt which the husband now puts at $3,000 and which she says was $1,200. Throughout the marriage she was a stay-at-home mother.
[6] It was the husband’s second marriage. His uncontradicted evidence is that when the relationship began he had $28,000 in net assets. He had a motor vehicle and a fully furnished mobile home, somewhat offset by a credit card debt of $2,000 and a mortgage owing on the mobile of $15,000. The mobile home was subsequently sold for $24,000 at which time he testified the parties were debt-free.
[7] The couple lived in various places as a result of transfers in the Armed Forces. The husband’s trade was electronics. Subsequent to retiring from the Armed Forces, he has obtained employment in that field in Alberta with Spar Aerospace.
[8] The last posting the husband had outside the province of Nova Scotia was in
Germany. There was testimony from both parties with respect to wood carvings and furniture which they purchased in Europe. There was particular reference to “shranks”
for which they paid $4,000 and $6,000 respectively and a “cuckoo clock” which cost them $2,000. One of the great discrepancies between the parties in terms of the evidence is as to the value of the furnishings shipped back to Nova Scotia from Germany in 1997. A lengthy and detailed list of possessions has been produced to the court, all of which was valued by John Surch, for insurance purposes at that time, at $100,000.
[9] Upon returning to Nova Scotia the parties acquired a home on the Morden Road (Morden being north of Kingston/Aylesford). With it came a substantial mortgage debt. The evidence indicates that there were excess proceeds from the mortgage which was arranged. These funds amounting to approximately $6,000 were divided between the two parties and expanded by each of them as they respectively determined.
[10] It is apparent from the file materials that at approximately the same time as this action was commenced, a parallel action was commenced in family court which resulted in an order awarding custody of the children to Mrs. Surch and ordering maintenance in the “table amount” to be paid for the children ($960 a month) together with $300 a month for spousal support. An Interlocutory Order was apparently made (although there is no copy in the file) awarding Mrs. Surch exclusive possession of the matrimonial home as of April 4, 2002. This action, which was commenced March 21, 2002, apparently lay dormant until a Notice of Intention to Proceed was filed on May 13, 2003. A date assignment conference was then held at which time the judge’s notes indicate that the parties agreed upon an “equal division”.
ISSUES
[11] The only issue to be dealt with then in this action is to determine what the assets are and how an equal division of assets and liabilities may be given effect.
[12] A fair determination is rendered difficult in the circumstances because of an unusual level of bitterness between the defendant on the one hand and the plaintiff and her counsel on the other. The content of the extensive affidavits and the representations made by or on behalf of Mrs. Surch in the context of the oral testimony do not reflect well on her credibility.
WHAT ARE THE ASSETS?
[13] Exhibit 8 is a Statement of Property filed by the Plaintiff. The husband, who is not represented, has not filed a Statement of Property. Accordingly Exhibit 8 will serve as my starting point for a property evaluation.
Matrimonial home
[14] Exhibit 8 indicates that the home was purchased for $99,900 and in foreclosure the property was “bought in” by the mortgagee. It was subsequently sold in February of 2003 for $87,000 resulting in a deficiency judgment in the amount of $32,386.32.
Household goods and furnishings
[15] Exhibit 8 is of no assistance on this evaluation. It indicates simply that the furniture and contents of the home “have been divided between the parties on an approximately equal basis.” The evidence given at the trial of this matter makes it clear that neither party believe that the household goods and furnishings were divided equally. It is the position of the wife that Mr. Surch had his opportunity to come and take his share of goods and furnishings. He failed to do that and thus anything which she did not remove from the house or sell at a yard sale remained in the house upon foreclosure and would have been inherited by their successors in title. The husband, on the other hand, contends that Mrs. Surch prevented him from gaining access to the house as and when he had arranged some means of transporting his share of the contents, and except for a very few items of little monetary value, he received nothing.
The truth is difficult to divine. He says that what he received was a fridge which had been left in the house by the previous owners, a cupboard, only some of his tools, a stereo system from his previous marriage and a waterbed which he purchased when he was “seventeen years old”. He says that some time after picking up this initial “load” he was accused of “break and enter”. He could not return without prior notice and consent because he did not want any further complaints. Arranging for a small truck and a friend to assist him appears to have been a “hit or miss” effort. Certainly, on the basis of his own testimony, he did not choose an effective way of obtaining his share of the extensive and valuable furnishings which he says the parties possessed at the time.
[16] The wife concedes that she retained one shrank, a chesterfield set, coffee and end tables, kitchen and dining room sets, dishes, clothes washer and dryer and sewing machine. She retained also the china and children’s furnishings. She sold a piano, a slate billiards table for $300, a cuckoo clock for $1,000, a two-piece shrank set for $200, as well as two guns and a rifle which she sold to her brother for $350. Her evidence was that she sold some other things at one or more yard sales.
[17] There can be no doubt that there is a wide discrepancy in the value of the household goods and furnishings actually in the possession of the parties. Except for personal clothing and tools, I conclude that Mr. Surch actually came into possession of nothing of value. The question is should he be compensated in some way for that discrepancy.
[18] My first problem is that there really is no means of getting a firm grasp on either the value of the goods and furnishings as they existed at the time of separation nor on the ones which were either sold or retained by the wife. I am satisfied that Mrs. Surch did deny her husband the opportunity to come and pick up his things in the several trips on the occasions he wanted to do so. However, that being so, then it seems he was negligent in protecting his own interests by not hiring a moving van to move and store his share of furnishings in a business-like and impersonal fashion. Obviously, the situation was aggravated by the fact the parties immediately adopted an adversarial attitude. The husband, as the sole wage earner, seems to have resisted providing the necessary financial support for the family during this period, treating his own need to make adjustments as a priority. The absence of support no doubt encouraged the wife to raise money by holding yard sales or disposing of furnishings at sacrifice prices. When the mortgage payment obligation was not met it must have been apparent to her that alternative housing would be necessary and she did eventually end up in assisted housing.
[19] In the circumstances I think it inappropriate to attempt any equalization of the household goods and furnishings and would simply order that each party retain those goods presently in their possession.
Two motor vehicles
[20] At the time of separation there were two motor vehicles. There was a 1995 Ford Windstar GL van with an odometer reading of 175,600 kilometers was left in the possession of Mrs. Surch. The other was a 1995 Chrysler Intrepid.
[21] Mr. Scott Freeman of Ralph Freeman Motors Limited testified as to the value of these vehicles. His valuation of the Ford van was based on his having inspected it; his valuation of the Chrysler Intrepid was based simply on the assumed value of such a vehicle in normal condition with a similar odometer reading to the Windstar. Before trial Mr. Freeman had valued each of the vehicles at $3,000. He had not been advised by Mrs. Surch that there had recently been installed, in the van, a rebuilt engine. He testified that that would increase its value by $1,500 over his earlier estimate. I therefore find, on the basis on his evidence, that the van in possession of Mrs. Surch had a value of $4,500, the car in possession of Mr. Surch a value of $3,000.
Severance payment upon retirement
[22] Sergeant Deborah Casey testified as to the value of the severance pay received by Mr. Surch upon his retirement. It was $22,848.70 less deductions including income tax which reduced the net payment to $15,955.29.
[23] This payment is a matrimonial asset received by the husband which he has not shared. He agrees that it is a matrimonial asset and is prepared to share the net payment received. Plaintiff’s counsel argues that it is the gross payment of $22,848 which must be shared and not the net payment.
[24] I accept that the difference between the gross value and the net received is essentially accounted for by the income tax obligations and I accept the proposition that the tax obligations might have been postponed by a “rollover” of this amount into a RRSP or some form of retirement fund which could then be divided equally between the parties. I would observe, however, that there is no evidentiary basis for that proposition. “What might have been”, is merely speculation or wishful thinking. There is evidence from both parties that they were without funds. Mr. Surch said he had no choice but to take the cash because he was faced with the cost of relocating to Alberta, he was obliged to buy clothing for his new job, he had a debt which he felt obliged to satisfy promptly which arose, he said, from bills incurred by Mrs. Surch, and other debts. He was, he said, two months without receiving any income; and that leaving the Armed Forces to pursue the job in Alberta with Sparr Aerospace was a wise decision because he is now in a position “to support my children”. In the meantime the clear implication from the materials and the evidence of Mrs. Surch that she was struggling desperately to make ends meet. She was holding yard sales, was disposing of furnishings and other items, she was applying for assisted housing. The proposition that she would have chosen to invest her share of his severance pay in a locked-in retirement fund is advanced by her counsel. There is no evidence from Mrs. Surch that she had either the desire or the ability to do so. I think it fantasy to suggest that an unemployed mother of three children not in receipt of regular support would think that delaying income tax until retirement would be a sensible priority for her.
[25] I fix the value of the severance pay at $15,955 which will be divided equally between the parties.
Armed Forces pension
[26] It is again agreed that the Armed Forces pension entitlement of the husband should be divided equally. The wife’s entitlement accrued during the period of cohabitation. That is between June 15, 1990 and March 13, 2003. A letter from the “benefits” manager of the National Defence Headquarters in Ottawa filed as Exhibit #9 estimates the value of her interest to be $100,690. The disagreement between the parties is in the manner of division.
[27] The pension is already in “pay”. The defendant is receiving a pension at an annual rate of $20,900. This amount is subject to 40% hold back for a net pension income of roughly $12,000. He represented to the court that his wife’s entitlement under the pension rules is 28% or $488 a month which she could receive from the pension administrator if she were to make application to do so. He proposes the pension be divided in this fashion.
[28] It is proposed on behalf of the Plaintiff that the pension be divided at its separation day value and paid out when Penny Surch attains age 60.
Debts
[29] There are debts to be divided between the parties as enumerated in Exhibit 8. They are:
Visa $3.82
MasterCard 8,891.25
Canada Customs and Revenue Agency 2,280.00
Bank of Nova Scotia 5,706.71
Total $16,881.78
[30] The Statement of Property of Mrs. Surch, Exhibit 8, makes it clear that the parties were essentially insolvent at the time of separation. They were living “hand to mouth” as it were. The financial stresses and strains of the separation and the adjustments that had to be made significantly aggravated their impecuniosity. Adding to their debt load was the deficiency judgment arising on the mortgage foreclosure. After giving effect to his resignation from the Armed Forces and the mortgage foreclosure, their joint assets were:
two motor vehicles $7,500
his severance pay 15,955
Total $23,455 $23,455
plus household goods and furnishings
Their liabilities were:
deficiency judgment $32,386
other debts 16,881
$49,267 ($49,267)
- 23,455
Total - $25,812 $25,812
Neither party has suggested to the court how these debts are going to be paid. It seems apparent that Mrs. Surch has no prospect of making any payment on these debts. That being the case, if the creditors are to enforce their claims, it will be against the husband.
[31] An equal division of the assets and liability results in the following scheme:
Asset/Debt Both Her Him
matrimonial home ($32,386) ($32,386)
household goods & furnishings 0 0 0
severance pay $15,955 + $15,955
motor vehicles:
Windstar +$4,500 $4,500
Intrepid - $3,000 +3,000
miscellaneous debts ($16,881) ($16,881)
Totals ($25,812) $4,500 ($30,312)
Balancing payment required is $17,406 $17,406
($12,906) ($12,906)
[32] There is only one asset available to equalize the assets and liabilities of the parties and that is the Armed Forces pension. Accordingly, the Armed Forces pension is to be divided at source with an equal share to each of the parties subject however, that the share of the pension to be managed or paid out, as the case may be, to Mrs. Surch will be reduced by $17,406 to effect the matrimonial property adjustment.
[33] As a concomitant to this resolution, Mr. Surch will, of course, be obligated to satisfy the enumerated debts and will indemnify his wife from any further claim made by these creditors or reimburse her for any claim that she may have paid or may in the future be obliged to pay.
Costs, etc.
[34] Mrs. Surch as Plaintiff seeks party and party costs. Each of the parties will bear their own costs of this action.
[35] As noted in paragraph one, the action related to a claim for an equal division of matrimonial assets and the defendant’s Armed Forces’ pension. The Defendant had agreed to such a division at the pre-trial conference held very shortly after the Notice of “Intention to Proceed” was filed. The Defendant did dispute the value of the household goods and furnishings and I have found his concerns to be valid. A considerable asset value was no doubt lost but, in the circumstances, it is not recoverable. In my view he succeeded in that claim, but there is no remedy. The only potential source of recovery would be to deprive Mrs. Surch of some greater interest in the Armed Forces Pension. In my view there are two good reasons for not doing that; firstly that Mr. Surch has agreed that it be divided and secondly there is no evidence upon which to quantify the extent of the discrepancy in the division of household goods and furnishings. Further, with respect to costs, I note that one or other of the parties will in all likelihood be filing a petition for divorce. The necessary period of residence and separation had exceeded one year before this matter came on for trial. The Defendant will therefore suffer considerable duplication of expense if there should be any further contest arising in that proceeding.
[36] I have not attempted to construct a precise balancing of accounts between the parties, having concluded that there is not the kind of precision in the evidence which would make such a balancing of accounts accurate. I would observe, however, that there is no practical way to alter what is in fact the status quo achieved by the parties themselves. Mrs. Surch has ended up with the bulk of the remaining household goods and furnishings and she will have the benefit of a tax-free rollover of a portion of her husband’s Armed Forces pension. As between the two of them, she will be relieved of any obligations to pay the outstanding matrimonial debts. Ordering the husband to satisfy those obligations is simply a recognition of the practical impossibility for her to pay her share; and at the same time recognizing that with his present income, the husband will be unable to avoid those obligations. If he should do so and if, in spite of this determination, those creditors attempt to recover the outstanding amounts from Penny Surch, then she would be in a position to claim an increased spousal allowance in compensation. I have taken into account as well the fact that the outstanding matrimonial debts to be paid by John Surch will be coming from his after-tax income.
Dated at Digby this 24th day of October, 2003
_______________________
Justice Charles E. Haliburton