SUPREME COURT OF Nova Scotia
FAMILY DIVISION
Citation: Cunningham v. Cunningham, 2017 NSSC 244
Date: 2017-09-18
Docket: Sydney No. 1206-007018
Registry: Sydney
Between:
Darryl Cunningham
Applicant
v.
Claudia Cunningham
Respondent
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Judge: |
The Honourable Justice Theresa M. Forgeron |
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Heard: |
May 17 and 18, and September 18, 2017, in Sydney, Nova Scotia |
|
Oral Decision Written Release: |
September 18, 2017 September 21, 2017 |
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Counsel: |
Alan Stanwick for the Applicant Greg Englehutt for the Respondent |
By the Court:
Introduction
[1] Darryl and Claudia Cunningham were married for eight years following two years of cohabitation. Ms. Cunningham had four children from another relationship before cohabitation began; three of those children formed part of the Cunningham family. Throughout their relationship, Mr. Cunningham emotionally and financially supported the children. The children had a limited relationship with their biological father.
[2] Mr. Cunningham was in his thirties when the family began to live together. He was a long-haul truck driver, usually spending significant time on the road. Further, Mr. Cunningham had already saved some money for his retirement by investing in RRSP’s and penny stocks.
[3] Before cohabitation, Ms. Cunningham upgraded her education. She then began to work in the retail field and is currently a manager. Ms. Cunningham’s salary is, and always was, considerably less than Mr. Cunningham’s. In contrast, Ms. Cunningham spent more time caring for the home and family than did Mr. Cunningham.
[4] After ten years of cohabitation, Darryl and Claudia Cunningham separated. Unresolved issues concern the division of property and spousal support. For his part, Mr. Cunningham seeks an unequal division through the exclusion of his RRSP’s and stocks. In contrast, Ms. Cunningham seeks an equal division of all assets. In addition, Ms. Cunningham seeks spousal support based on compensatory and non-compensatory grounds. Mr. Cunningham disputes entitlement, quantum and duration.
[5] This divorce trial was held on May 17 and 18, 2017, with final submissions being filed on June 2 and June 6, 2017. Only the parties testified. The oral decision was delivered on September 18, 2017.
Issues
[6] To resolve the contested issues, I will answer the following questions:
• What are the assets and debts for division purposes?
• Would an equal division be unfair or unconscionable?
• Is Claudia Cunningham entitled to spousal support?
• If so, what is the appropriate spousal support order?
Analysis
[7] What are the assets and debts for division purposes?
[8] At the time of separation, the parties owned a modest amount of assets and a manageable amount of debt. I will identify and value each of the assets before discussing the debts.
Matrimonial Home
[9] Both parties agree that the appraised value of the home, less notional real estate commission and legal fees, is the correct value of the home. I therefore adopt the figure of $64,825. Both parties agree that Mr. Cunningham will retain the home.
Vehicles
[10] I accept the parties’ agreement that values Mr. Cunningham’s vehicle, a Ford F 150, at $11,000 and Ms. Cunningham’s vehicle, a 2008 Ford Escape, at $5,000.
RRSP’s
[11] I find that Mr. Cunningham’s RRSP’s are valued at $72,217.27 as of trial.
Stocks
[12] I find that Mr. Cunningham’s penny stocks are valued at $5,376.92 as of trial.
CSV of Life Insurance
[13] I find that the cash surrender value in Ms. Cunningham’s insurance policy is $5,382.42 as of trial.
Pensions
[14] I accept the parties’ agreement that Mr. Cunningham’s pension is to be valued at $20,706 and Ms. Cunningham’s pension is to be valued at $6,331.96.
Garage and Household Contents
[15] I accept the parties’ agreement that the garage contents are valued at $1,500 and that the household contents are valued at $1,500. I accept that Ms. Cunningham will retain the household contents and Mr. Cunningham will retain the garage contents, subject to any negotiations to enable Mr. Cunningham to retain some of the appliances.
Tent Trailer
[16] The parties value the tent trailer at $1,500. As neither party wants to retain the tent trailer, they shall sell it and equally share in the sale proceeds. Both parties must agree to the listing and sale price before the trailer is sold.
Mortgage
[17] The mortgage balance as of separation was $35,086.91 and the balance at trial was $28,750.52. The parties agree that I should use the balance that was due as of trial for division purposes, but subject to Mr. Cunningham asking for two additional credits. First, he seeks a discount of $1,250 for a pre-payment penalty discharge fee. Second, he seeks a 50% credit for the mortgage payments that he made after separation and while Ms. Cunningham occupied the home in keeping with MacNaughton v. MacNaughton (1991), 103 N.S.R. (2d) 356 (N.S.C.A.).
[18] I decline to grant Mr. Cunningham’s requests. In relation to the discharge fee, I note that the mortgage matures on August 1, 2019 - less than two years. I also note that the mortgage is held solely in Mr. Cunningham’s name. I am not satisfied that Mr. Cunningham will necessarily refinance to pay Ms. Cunningham the equalization transfer. Even if he does, I am satisfied that in the circumstances of this case, any refinancing charge is more properly borne by Mr. Cunningham who is retaining the home.
[19] In addition, I decline to provide Mr. Cunningham any discount for the mortgage payments that he made post-separation. He correctly and voluntarily made the payments to ensure the preservation of a matrimonial asset. He was fully aware that Ms. Cunningham did not have the ability to make the mortgage payments given the significant disparity in their incomes. By making the mortgage and related payments, an interim hearing on spousal support was avoided. Further, no retroactive support claim needs to be determined.
Vehicle Loans
[20] Loans encumbered both vehicles at separation. The loan balance on the F 150 at separation was $23,721.60, with a 2017 balance of $14,358.78. The loan balance on the Escape was $10,280.32, with a 2017 balance of $4,305.18.
[21] Mr. Cunningham wants the court to use the separation balance of the loans, while Ms. Cunningham seeks to use the current balance. I am using the current balance of the loans for equalization purposes for the following reasons:
• The vehicles were not appraised until February 2017. I infer that the vehicles would have been appraised at a higher value if they had been appraised at the time of separation in 2015.
• Mr. Cunningham continued to voluntarily pay the loan on the Escape post-separation which thus reduced Ms. Cunningham’s need and thereby avoided an interim motion for support or a retroactive spousal support claim.
Miscellaneous Bills
[22] Mr. Cunningham seeks to include the following bills for division:
• Fire Insurance of $1,196
• Water bill of $1,029.10
• Appraisal of $225
[23] I allow the cost of the appraisal because both parties relied on the valuation. I accept that the fire insurance bill should be equally shared and that Ms. Cunningham is solely responsible for the outstanding water bill as she occupied the home when it was incurred.
[24] Would an equal division be unfair or unconscionable?
Position of Mr. Cunningham
[25] Mr. Cunningham seeks to exclude the value of the RRSP’s and stocks from the division of assets. His says that their inclusion would produce an unfair or unconscionable result. In support of his position, Mr. Cunningham relies on s. 13 (1) (d) and (e) of the Matrimonial Property Act; Connolly v. Connolly, 1999 CanLII 1172 (NSCA), per Roscoe, J.A.; French v. Adams, 2007 NSSC 57 per Wilson, J. and Falkenham v. Falkenham, 2003 NSSC 163 per LeBlanc, J. In addition, Mr. Cunningham summarized the relevant facts in support of his position which include the following:
• The marriage was not lengthy.
• The RRSP’s and stocks were owned by Mr. Cunningham before the parties cohabited.
• Ms. Cunningham did nothing to increase the value of the RRSP’s and stocks. They were passive assets which increased because of market fluctuations.
• Ms. Cunningham and her children benefitted from the financial support provided by Mr. Cunningham.
• The couple had no biological children.
• Ms. Cunningham was in receipt of social assistance before she lived with Mr. Cunningham. She became employed at the time of cohabitation and remained so throughout the marriage. Ms. Cunningham’s financial circumstances were enhanced because of the marriage.
• The relationship was nontraditional and Ms. Cunningham did not make sacrifices for Mr. Cunningham’s benefit.
Position of Ms. Cunningham
[26] Ms. Cunningham opposes the unequal division request. She states an equal division would not be unfair or unconscionable. She relies on the presumptions embedded within the Matrimonial Property Act and case law in support, including MacNeil v. MacNeil, 2007 NSSC 321, per Wilson, J. which relies on Young v. Young, (2003), 216 NSR (2d) 94 (N.S.C.A.) per Bateman, J.A. Ms. Cunningham states that the evidence does not support a displacement of the presumption in favor of equality.
Law
[27] Before giving my decision, I will provide an overview of the law so that Mr. and Ms. Cunningham have a better appreciation of the legal foundation upon which my order is based. The legal principles which I considered include the following:
• The Matrimonial Property Act must be given a liberal interpretation in keeping with its remedial purpose: Clarke v. Clarke, [1990] S.C.J. No. 97 (S.C.C.).
• The Matrimonial Property Act affords significant rights to spouses. Asset division is not based on a strict economic analysis as often occurs in unjust enrichment claims. To the contrary, the Matrimonial Property Act recognizes the intrinsic value of noneconomic contributions and views marriage as a partnership. In Young v. Young, supra, at para 15, Bateman, J.A. confirmed that the “predominant concept under the Act is the recognition of marriage as a partnership with each party contributing in different ways”. Marriage is neither a business nor an economic enterprise.
• All real and personal property acquired by either spouse is presumed to be a matrimonial asset, unless falling within certain narrow exceptions, and is subject to a presumptive equal division: Morash v. Morash, 2004 NSCA 20, para 16, per Bateman, J.A.
• Section 4(1) of the Matrimonial Property Act confirms that pre-marriage assets are captured within the definition of matrimonial assets; “… the mere fact of prior acquisition does not remove the asset from prima facie equal division:” Young v. Young, supra, para 20, per Bateman J.A.
• The burden of establishing entitlement rests upon the spouse who seeks an unequal division.
• An unequal division is only permitted where “there is convincing evidence that an equal division would be unfair or unconscionable”: Young v. Young, supra, para 15, per Bateman, J.A.; or where there is “strong evidence showing that in all the circumstances an equal division would be unfair or unconscionable on a broad view of all relevant factors:” Harwood v. Thomas (1981), 45 N.S.R. (2d) 414 (A.D.) at para 7, per MacKeigan, C.J.N.S.
• Although the word “unfair” and “unconscionable” do not have “a precise meaning”, they nonetheless evoke “ethical considerations and not merely legal ones:” Young v. Young, supra, para 18, per Bateman, J.A.
• Unconscionable has been held to mean "unreasonable", "unscrupulous", "excessive" and "extortionate" and when “coupled with the requirement that "strong evidence" must be produced to support an unequal division, the burden upon the party requesting an unequal division of matrimonial assets is somewhat onerous:” Jenkins v. Jenkins (1991), 107 N.S.R. (2d) 18 (T.D.), at para 10, per Richard, J.
• The question to be asked is “whether equality would be clearly unfair – not whether on a precise balancing of credits and debits of factors largely imponderable some unequal division of assets could be justified:” Harwood v. Thomas, supra, para 7, per MacKeigan, C.J.N.S.
• Courts are instructed to examine all the circumstances, and not to simply weigh the respective material contributions of the parties, except in unusual circumstances: Young v. Young, supra, paras 15 and 19, per Bateman, J.A.
• When focusing on a claim grounded in s.13 (e) of the Matrimonial Property Act, the court must examine relevant factors including “the timing of the contribution”, “the parties’ use of the asset”, “the length of the marriage”, “the significance of the asset relative to the entire pool of matrimonial assets”; and “the age and stage of the parties at separation:” Young v. Young, supra, para 20, per Bateman J.A.
• When focusing on claims grounded in s. 13 (d) of the Matrimonial Property Act, the length of cohabitation is a reference to short term, not long term unions: Briggs v. Briggs (1984), 64 N.S.R. (2d) 40 (N.S. T.D.) as affirmed at (1984), 65 N.S.R. (2d) 126 (N.S. C.A.) and Donald v. Donald (1991), 103 N.S.R. (2d) 322 (N.S. C.A.) per Chipman, J.A.
• The determination of whether an equal division will produce an unfair or unconscionable result is a fact-based decision, as shown in the divergent results reported in the various cases relied upon by counsel, which I reviewed.
Decision
[28] I find that Mr. Cunningham did not meet the burden upon him. He did not prove, on the balance of probabilities, that an equal division of the matrimonial assets would be either unfair or unconscionable for the following reasons:
• The marriage was not short term. Cohabitation was for ten years. The marriage was mid-length. Section 13(d) is not applicable.
• The fact that there were no biological children does not assist Mr. Cunningham with his claim. Canadian families are diverse. The nuclear family is not the only model. Families come in many shapes, sizes and permutations. Families are no less families because children are not biological. Mr. Cunningham was aware that Ms. Cunningham had four children before the marriage – indeed three of the children started living with them before the marriage. The Cunningham family was composed of the parties and their children, even if a biological connection was lacking. I infer that Mr. Cunningham derived much pleasure and satisfaction from his role as a father and he participated in many activities with the children. I find that Mr. Cunningham was emotionally and financially responsible for the three children who lived with him during the parties’ relationship and as part of the family unit.
• The parties contributed to the marriage in different ways. Mr. Cunningham, who had more savings and income, contributed more financially. In contrast, Ms. Cunningham made a greater non-economic contribution. She provided more care to the home and children, especially given Mr. Cunningham’s absences for work purposes. Ms. Cunningham’s contribution was no less valuable because it was not financial.
• There is no evidence to suggest that Ms. Cunningham did not contribute all that she had to the marriage. There is no evidence of gambling or asset impoverishment or a diversion of matrimonial funds. To the contrary, the evidence confirms that Ms. Cunningham was a capable and industrious wife and mother who did her best for her husband and children. This finding is not meant to minimize Mr. Cunningham’s significant contribution, rather it is meant to place both contributions in perspective, based on a totality of the evidence.
• Mr. Cunningham did not supply proof of the balance of the RRSP’s and stocks prior to separation. It is therefore difficult to state conclusively the amount of savings that existed at the time of cohabitation, or to conduct a comparative analysis. Further, Mr. Cunningham stated that in 2014 and 2015, he was still repaying the RRSP’s that he had borrowed against to make a down payment on a home which he had bought and sold in Saskatchewan.
• The current, after-tax value of the RRSP’s is about $50,000. The value of the stocks is $5,376.92. These assets represent about 45% of the net matrimonial assets. Their exclusion would cause Ms. Cunningham to experience financial hardship.
• Ms. Cunningham was 48 years old at separation. She earns a modest income. Her pension is almost negligible. She will likely have little opportunity to save for her future retirement given her circumstances and life-stage. Conversely, Mr. Cunningham has a greater ability to save given his income and circumstances.
[29] In summary, marriage is neither a business nor an economic enterprise; it is a partnership involving many tangible and intangible contributions where spouses ordinarily work towards the best interests of the family. This premise rings true for the Cunninghams. When the evidence is viewed from this perspective, and given the totality of the evidence, I find that an equal division would not produce an unfair or unconscionable result. To the contrary, an equal division is both fair and conscionable. The following division is thus ordered:
|
Asset |
Value |
Husband |
Wife |
|
Home |
$64,825 |
$64,825 |
|
|
Vehicles |
$16,000 |
$11,000 |
$5,000 |
|
Stocks |
$5,376.92 |
$5,376.92 |
|
|
CSV |
$5,382.42 |
|
$5,382.42 |
|
Pensions |
$27,037.96 |
$20,706 |
$6,331.96 |
|
Contents |
$3,000 |
$1,500 |
$1,500 |
|
Total |
$121,622.30 |
$103,407.92 |
$18,214.38 |
|
Debt |
Balance |
Husband |
Wife |
|
Mortgage |
$28,750.52 |
$28,705.52 |
|
|
Loans |
$18,663.96 |
$18,663.96 |
|
|
Fire Insurance |
$ 1,196 |
$ 1,196 |
|
|
Appraisal |
$ 225 |
$ 225 |
|
|
Total |
$48,835.48 |
$48,835.48 |
$0.00 |
Equity Husband $103,407. 92 Wife $18,214.38
$ 48,835.48 $0.00
$ 54,572.44 $18,214.38
[30] Mr. Cunningham owes Ms. Cunningham $18,179.03 as an equalization payment less $1,029.10 for the water bill and all increases in the water account incurred during Ms. Cunningham’s occupation of the matrimonial home. Ms. Cunningham will deliver a Quit Claim deed to Mr. Cunningham upon receipt of the equalization payment in 30 days.
[31] The RRSP’s will be equally divided at source and both parties will sign all documentation necessary to affect the tax-free rollover. The total amount to be divided will be less all post-separation contributions and the interest accruing on the post-separation contributions.
[32] The tent trailer will be listed and sold for a price acceptable to both parties and the proceeds from the sale will be equally divided between them.
[33] Is Claudia Cunningham entitled to spousal support?
Position of the Parties
[34] Ms. Cunningham seeks periodic spousal support. She states that entitlement arises on both compensatory and non-compensatory grounds. She notes that Mr. Cunningham’s income is significantly greater than her income and that she is unable to meet her reasonable needs. She states that the marriage created a financial interdependence. She also says that Mr. Cunningham’s career was enhanced because she assumed child care and household duties, thus allowing Mr. Cunningham the freedom to continue with his job as a long-haul trucker.
[35] Mr. Cunningham disputes Ms. Cunningham’s spousal support claim for several reasons including the following:
• The relationship did not inhibit Ms. Cunningham’s economic independence, but rather enhanced it. Ms. Cunningham was in receipt of social assistance benefits when they met and through his encouragement, she upgraded her education and found employment.
• The marriage did not interrupt Ms. Cunningham’s career path. Had the marriage not occurred, Ms. Cunningham would not be in as good a financial position as she currently finds herself.
• Ms. Cunningham is leaving the relationship with a car and savings. She entered the relationship with no car or savings.
• If Ms. Cunningham is experiencing any financial dependency, such dependency flowed from her relationship with the children’s biological father. Neither Mr. Cunningham, nor the marriage created the dependency. The marriage was non-traditional and there were no children from their union.
Law
[36] Section 15.2(1) of the Divorce Act provides the court with the jurisdiction to grant a spousal support award. The claimant bears the burden of proof and that is based on a balance of probabilities as supported by clear, convincing, and cogent evidence; C.R. v. McDougall, 2008 SCC 53.
[37] In Bracklow v. Bracklow, 1999 1 S.C.R. 420, the Supreme Court of Canada confirmed that entitlement to spousal support is grounded in one, or all, of the following three principles:
• Compensatory support to address economic advantages and disadvantages flowing from the marriage, or the roles adopted during the marriage.
• Non-compensatory support to address the disparity between the needs and means of the parties, and arising from the marriage breakdown.
• A contractual spousal support obligation, either expressed or implied.
[38] The factors which a court must consider in a spousal support determination are set out in s. 15.2(4) of the Divorce Act, which state as follows:
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.
[39] The objectives to be considered in respect of a spousal support order are set out in s. 15.2(6) of the Divorce Act which provides as follows:
15.2(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.
Decision
[40] Ms. Cunningham has proven entitlement to spousal support, but primarily on non-compensatory grounds and for the following reasons:
• The parties cohabited for 10 years.
• The marriage was one of financial interdependence where there was a pooling of resources and a sharing of expenses.
• Mr. Cunningham’s income is about 2.4% greater than Ms. Cunningham’s income. I find that Mr. Cunningham’s income is about $65,000 and Ms. Cunningham’s income is $27,000. I decline to impute income to Ms. Cunningham based on a notional rent payment from her two children. One child just graduated and is looking for work; the other child is experiencing serious health difficulties and is in no position to contribute. Further, Ms. Cunningham will be vacating the home and getting her own apartment. It is likely only the youngest child will be in her care. The youngest child lacks an ability to contribute.
• Ms. Cunningham continued to rely on the financial assistance of Mr. Cunningham after the separation. For example, Mr. Cunningham paid the mortgage and car loan, thus providing Ms. Cunningham with shelter and transportation.
• The marriage had some traditional elements in that Ms. Cunningham was primarily responsible for the home and the children, while Mr. Cunningham traveled for work.
• Given her age and skills, Ms. Cunningham has likely reached the outer limits of her ability to achieve economic independence.
• Ms. Cunningham has a definite need. Ms. Cunningham is frugal, but struggles to maintain her reasonable day to day living expenses.
• Mr. Cunningham has a corresponding ability to pay.
[41] As entitlement has been proven, I must now examine issues surrounding quantum and duration.
[42] What is the appropriate spousal support order?
Position of the Parties
[43] Mr. Cunningham suggests a spousal support payment of $300 per month for three years. Ms. Cunningham seeks ten years of support according to the SSAG’s. Counsel for Ms. Cunningham states that the SSAG’s produce a monthly award between $500 and $666, payable between five and 10 years.
Law
[44] In Shen v. Tong, 2013 BCCA 519, in a concurring judgement, Smith, J.A. discussed the impact that a non-compensatory order has on quantum and duration. Smith, J.A. notes the following in paras 97 and 98:
97 … The objective of non-compensatory support is to narrow the gap between the needs and means of the spouses following marriage breakdown (Chutter v. Chutter, 2008 BCCA 507, 60 R.F.L. (6th) 263 (B.C. C.A.) at para. 54, leave to appeal ref'd [2009] S.C.C.A. No. 41 (S.C.C.)). The concept of "needs" in the case of non-compensatory support may also require consideration of the marital standard of living depending on the length of the relationship and the other spouse's post-separation standard of living: Chutter at paras. 55-61, and 88.
98 While compensatory support should continue until compensation for the economic disadvantages of marriage and its breakdown are achieved (Chutter at para. 79 citing Tedham v. Tedham, 2005 BCCA 502, 20 R.F.L. (6th) 217 (B.C. C.A.) at para. 60), non-compensatory support is less straightforward, as it is based on the "social obligation model" of support that views marriage as an interdependent union and places the burden for meeting the financial needs of the disadvantaged spouse on the other spouse, not the state (Chutter at para. 54 citing Bracklow v. Bracklow, [1999] 1 S.C.R. 420 (S.C.C.) at para. 23).
[45] When assessing quantum based on a noncompensatory award, I must adjust the amount and duration. When noncompensatory support is granted, the quantum of the award does not have to meet the need, even if there is an ability to pay: Bracklow v. Bracklow, supra, para 54. Need is only one of the factors to be balanced.
[46] Further, the SSAG’s do not replace the obligation of the court to review, examine, and balance the unique facts of each case in conjunction with the legislative requirements. I have done so.
[47] I also note that Mr. Cunningham financially supported Ms. Cunningham since the 2015 separation by the payment of certain matrimonial debt. Mr. Cunningham is to receive credit for these payments as the payments were, in effect, a substitute for spousal support.
[48] I therefore find that Mr. Cunningham must pay Ms. Cunningham monthly spousal support of $550 payable for five more years, as opposed to a seven or eight year obligation that I would have otherwise imposed. Spousal support is due on the 1st of each month commencing on October 1, 2017 and continuing the 1st of every month. Such a payment meets the factors and objectives set out in the Divorce Act in the circumstances of the parties.
Conclusion
[49] The following relief is hereby ordered:
• A divorce.
• An equal division of the assets and debts as stated, including an equalization payment of $18,179.03 to be transferred by Mr. Cunningham to Ms. Cunningham, and a roll-over of one-half of the RRSP’s.
• A spousal support payment of $550 per month commencing on October 1, 2017 and payable for five years.
[50] If either party wishes to be heard on the issue of costs, written submissions are to be provided by October 15th. Mr. Englehutt is to prepare the orders.
Forgeron, J.