Supreme Court

 

 

SUPREME COURT OF Nova Scotia

FAMILY DIVISION

Citation: Gouthro v. Gouthro, 2017 NSSC 246

Date: 2017-09-18

Docket: Sydney No. 1206-006910

Registry: Sydney

Between:

Brenda Gouthro

Applicant

v.

Martin Gouthro

Respondent

 

 

 

Judge:	The Honourable Justice Theresa M. Forgeron
Heard:	November 14, 15, 18, and December 30, 2016; May 24, June 28, and September 18, 2017, in Sydney, Nova Scotia
Oral Decision Written Release:	September 18, 2017 December 7, 2017
Counsel:	Damien Barry, for the Applicant Darlene MacRury for the Respondent

             

 

By the Court:

Introduction

[1]             After 22 years of marriage, Brenda Lee Gouthro and Martin Leonard Gouthro separated.  They have two sons, Martin and Devon. Martin is attending university and Devon is in high school.  The boys live with their mother and visit their father.

[2]             Ms. Gouthro is employed with Citizenship Canada. Although not employed on a permanent basis, Ms. Gouthro has been consistently working as her contract is regularly renewed.

[3]             Mr. Gouthro is a truck driver. He was employed locally and out west. In addition, Mr. Gouthro operates a business which he states he is trying to sell. Mr. Gouthro suggests that his income is reduced because of a downturn in the economy.  Mr. Gouthro says that he is financially drained. He recently filed for consumer protection. His consumer proposal was accepted.

[4]             The parties’ separation was not amicable. The hostility was compounded by ongoing disclosure issues which in turn hampered settlement discussions and protracted the time required to resolve the matter.

[5]             I am now tasked with the job of determining issues surrounding parenting, property division and maintenance, all of which must be decided in the face of conflicting, and at times, inadequate evidence. 

Issues

[6]             To resolve the outstanding issues, I will answer the following eight questions:

•                    Is Mr. Gouthro a credible and reliable witness?

•                    What parenting arrangement is in the best interests of the children?

•                    What are the assets and debts of the parties?

•                    Did Ms. Gouthro prove that an equal division of the matrimonial assets would be unfair or unconscionable?

•                    Should income be imputed to Mr. Gouthro?

•                    What prospective child support order should issue?

•                    Should a retroactive child support order be granted?

•                    Should a spousal support order issue?

Background

[7]             The parties met in 1986, began to cohabit in 1992, and married on June 19, 1993. They were living in Ontario at the time.  While in Ontario, Mr. Gouthro began to operate his own business after he lost his job at an electrical plant. The parties’ sons were born in Ontario, one in 1996 and the other in 2000.

[8]             Mr. and Ms. Gouthro decided to return to Cape Breton to raise their children. Ms. Gouthro and the children moved to Glace Bay in 2004, while Mr. Gouthro followed after their Ontario home was sold in 2005.  A profit of $69,000 was realized from the sale of their Ontario home - $11,000 of which was used as a down payment on their current home; $10,000 was used for renovations; $35,000 was used for Mr. Gouthro’s business; and the balance to assist with the mortgage payment over the years.

[9]             After returning to Glace Bay, Ms. Gouthro found causal work and then eventually a job with Citizenship Canada.  She is not, however, a permanent employee, rather, she works on a contract basis which contracts are frequently renewed.

[10]        Once settled in Glace Bay, Mr. Gouthro worked in his business, initially out of the home with trucks and equipment often stored in the yard. In 2011, he refinanced and purchased land on Grand Lake Road as his operation base. The business continued to go into debt. Eventually, Mr. Gouthro decided to list the business property for sale and work seasonally out west.  In 2014, his income was $123,830.31. It would have been greater but for the claimed $2,456.03 in business losses. In 2015, Mr. Gouthro’s reported income was $90,379.86.

[11]        The parties separated in May 2015.  Mr. Gouthro moved to the downstairs apartment, while Ms. Gouthro and the children lived upstairs.

[12]        The divorce petition issued on September 15, 2015. Case management conferences were held on November 16 and 30, 2015 before Justice MacLellan.  A $1,000 cost award issued against Mr. Gouthro because of his failure to disclose.

[13]        An interim hearing was held on January 8, 2016. Justice MacLellan imputed income of $103,350 to Mr. Gouthro and ordered him to pay $1,380 in child support effective February 1, 2016.  Mr. Gouthro is substantially behind in his child support payments. MEP has taken enforcement action.

[14]        A date assignment conference was held before me on April 11, 2016, during which dates were assigned for a settlement conference and trial. Mr. Gouthro withdrew from the settlement conference shortly before it was held. Justice Gregan assessed costs of $250.

[15]        The divorce trial was held on November 14, 15, and 18 and December 30, 2016.  In 2017, Mr. Gouthro filed a Consumer Protection application; the parties agreed to reopen the case.  Further evidence was heard on May 24 and June 28, 2017. Only the parties testified; there were no other witnesses. Extensive written submissions were filed and reviewed by the court. The oral decision was rendered on September 18, 2017.

Analysis

[16]        Is Mr. Gouthro a credible and reliable witness?

Position of the Parties

[17]        Ms. Gouthro claims that Mr. Gouthro’s evidence cannot be believed because he is neither credible nor reliable. She states that when there is a conflict in the evidence, the court should accept her evidence.  In addition, she states that the court must make negative inferences against Mr. Gouthro because of his lack of timely financial disclosure.

[18]        Mr. Gouthro vehemently denies Ms. Gouthro’s allegations. He states that he was upfront and did his best at providing disclosure. He states that his memory is not always the best, but that does not mean that he was providing inaccurate or incomplete evidence to the court. He says that his evidence is both credible and reliable.

Law

[19]        When assessing credibility and reliability in the civil context, I must apply the civil standard of proof, which is proof on a balance of probabilities. The evidence, in its totality, must be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test: C. (R.) v. McDougall, 2008 SCC 53 (S.C.C.).

[20]        Guidelines applicable to credibility assessment were canvassed by this court in paras. 18 to 21 of Baker-Warren v. Denault, 2009 NSSC 59, as approved in Hurst v. Gill, 2011 NSCA 100, which guidelines include the following:

•     Credibility assessment is not a science. It is not always possible to "articulate with precision the complex intermingling of impressions that emerge after watching and listening to witnesses and attempting to reconcile the various versions of events:" R. c. Gagnon, 2006 SCC 17 (S.C.C.), para.20. … "[A]ssessing credibility is a difficult and delicate matter that does not always lend itself to precise and complete verbalization:" R. v. M. (R.E.), 2008 SCC 51 (S.C.C.), para. 49.

•    There is no principle of law that requires a trier of fact to believe or disbelieve a witness's testimony in its entirety: Novak Estate, Re, 2008 NSSC 283 (N.S.S.C.). On the contrary, a trier may believe none, part or all of a witness's evidence, and may attach different weight to different parts of a witness's evidence, Novak Estate, Re, supra.

•     Demeanor is not a good indicator of credibility: R. v. Norman (1993), 16 O.R. (3d) 295 (Ont. C.A.) at para. 55.

•    Questions which should be addressed when assessing credibility include:

a) What were the inconsistencies and weaknesses in the witness' evidence, which include internal inconsistencies, prior inconsistent statements, inconsistencies between the witness' testimony and the documentary evidence, and the testimony of other witnesses: Novak Estate, Re, supra;

b) Did the witness have an interest in the outcome or were they personally connected to either party; 

c) Did the witness have a motive to deceive; 

d) Did the witness have the ability to observe the factual matters about which they testified;

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

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

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

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

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

[21]        Further, courts have held that one of the consequences for the failure to provide disclosure is a negative inference.

Decision

[22]        I have significant concerns about the reliability and credibility of Mr. Gouthro for many reasons, including the following:

•           He was evasive, strategic and vague throughout his evidence.

•           He provided inconsistent evidence, such as when he initially said that he sold the 1999 International Dump Truck for $5,000 and then later acknowledged that he sold it for $6,000. He was further unable to explain with any conviction why there were two different sale figures noted on the Bill of Sale that he had filled out. On another occasion, he said that Ms. Gouthro approved of the refinancing for business purposes, but later agreed that she was against his plan.

•           Despite having significant advance warning, Mr. Gouthro was unable to give an accurate accounting of where the proceeds from the sale of the various trucks were directed after separation. Instead, he made vague, inadequate and unconvincing comments.

•           He treated his obligation to provide timely and complete disclosure in a cavalier manner leaving out assets or important information, not valuing some assets, and failing to provide proof of value of other assets.

•           He did not provide accurate information in the documents which he filed in support of his consumer proposal. For example, he responded “no” when asked whether he sold or disposed of any of his property in the last 12 months or within the last five years. He had earlier testified that he sold several trucks post-separation. In addition, he misrepresented the amount of child support that he was paying as a monthly non-discretionary expense, swearing that it was $2,759 per month and not the $1,380 that was ordered payable in February 2016, and knowing that he was in fact not paying either amount.

•           Much of Mr. Gouthro’s evidence lacked an internal consistency and flow.

•           Mr. Gouthro’s self-professed poor memory occurred at convenient times. For example, he had great difficulty explaining what happened with the truck sale proceeds, but had no difficulty rhyming off how much he paid for various garage contents.

[23]        In contrast, Ms. Gouthro was able to provide consistent evidence, with appropriate paper work. She was not vague, hesitant or strategic. Where there is a conflict in the evidence, I prefer the evidence of Ms. Gouthro over the evidence of Mr. Gouthro. I treat much of Mr. Gouthro’s evidence with  suspicion.

 

[24]        What parenting arrangement is in the best interests of the children?

Position of the Parties

[25]        Both parties agree with a joint custody order; they dispute whether the arrangement should be based on a primary care or a shared parenting model.

[26]        Ms. Gouthro seeks primary care. She wants a continuation of the current living arrangements whereby the children live with her and visit their father.

[27]        Mr. Gouthro’s suggestion of a shared parenting arrangement was not really developed in the evidence. Mr. Gouthro acknowledges that the children have been in the primary care of Ms. Gouthro and that he currently does not have a stable residence. Mr. Gouthro appears to recognise that given the ages of the children, 17 and 21, they will likely determine their own living arrangements.

Law and Decision 

[28]        The Divorce Act provides the court with the jurisdiction to grant a parenting order that is in the best interests of the children. There is no evidence to suggest that the children are not happy and flourishing under the current living arrangement. I have no evidence that the children wish to live in a shared parenting arrangement. I have no evidence that an alternate living arrangement would be in the best interests of the children.  I therefore find that it is in the best interests of the children to be in the primary care of their mother with the ability to communicate and visit with their father based on the children’s wishes.

[29]        What are the assets and debts of the parties?

I.                   Matrimonial Assets

[30]        I find that the following are the matrimonial assets and their values for division purposes:

Matrimonial Home	$130,800 [$140,000 less notional real estate commission and legal fees]
HOPP Pension Wife	$91,538 [Both parties seek a payout; discount for income tax set at 35%]
Public Service Wife	$46,850 [Both parties seek a payout; discount for income tax set at 35%]
CLAC Pension Husband	$644 [Both parties seek a payout; discount for income tax set at 35%]
Primerica RRSP’s Wife	$58,177 [Both parties seek a payout; discount for income tax set at 35%]
Scotiabank RRSP’s Wife	$2,038 [Both parties seek a payout; discount for income tax set at 35%]
Joint Bank Accounts	$3,668.59
American Money	$1,750
Corvette	$10,000 [Most recent offer indicated by Mr. Gouthro]
2014 Sante Fe	$xxxx [To be given to son; value offset by corresponding loan]
2005 Honda Civic	$1,500
Travel Trailer	$6,000
Household Contents	$5,000
Garage Contents	$9,000
Total Matrimonial Assets	$366,965.59

II.                 Family/Joint Debt

[31]        The following is the family debt, which existed at separation, plus one business debt that Ms. Gouthro is now obliged to pay given Mr. Gouthro’s successful Consumer Protection Application:

CIBC Mortgage	$62,500
Time Share	$1,400
Scotia Bank LOC/Visa	$35,625 [Business Debt in Joint Names]
Total Joint/Family Debt	$99,525

III.              Matrimonial Equity

[32]        The matrimonial equity $267,440.59. It would have been $303,065.59 had the business debt not been included.

IV.              Business Assets

[33]        I find the following are the non-leased business assets, excluding cash and shale, that existed at separation:

1725 Hwy 4 Reserve[1]	$86,502.50 [$93,000 less notional real estate commission and legal fees]
1989 Western Star	$9,000
1999 International	$6,500
2008 F250	$5,000
Three Older Vehicles	$2,000
Excavator	$12,500 [I find it was sold after separation]
Total Business Assets	$121,502.50

 

IV        Business Debt

[34]        The outstanding business debt, other than the joint business debt and lease payments, is as follows:

Mortgage	$45,904.77
Consumer Proposal	$18,000
Property Tax Arrears	$9,000
Total Debt	$72,904.77

 

VI.       Business Equity

[35]        The equity in the business is at least $48,597.73, together with the value of cash and shale.

 

[36]        Has Ms. Gouthro proved that an equal division of the matrimonial assets would be unfair or unconscionable?

Position of the Parties

[37]        Ms. Gouthro states that an equal division would be both unfair and unconscionable because of Mr. Gouthro’s financial misconduct, such as accumulating unnecessary personal and business debt, impoverishing the matrimonial assets, and diverting and hiding money earned through the sale of goods and services.  She states that Mr. Gouthro’s reckless financial misconduct stands in stark contrast to her frugal and responsible financial management. Ms. Gouthro states that her contributions far exceeded those of Mr. Gouthro. Ms. Gouthro seeks a division on a 75/25 basis.

[38]        Mr. Gouthro is opposed to the unequal division claim. He states that they both contributed equally to the marriage and that he is not responsible for the down turn in the economy. He further states that he gave his all to the marriage and family. An equal division is fair. The family enjoyed a comfortable lifestyle because of their joint efforts. It would be inappropriate for Mr. Gouthro to be denied his equal share in the circumstances.

Law

[39]        Before giving my decision, I will provide an overview of the law so that the parties have a better appreciation of the legal foundation upon which my order is based. The legal principles which I considered include the following: 

•        The MPA 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 MPA affords significant rights to spouses. Asset division is not based on a strict economic analysis.  To the contrary, the MPA recognizes the intrinsic value of noneconomic contributions and views marriage as a partnership. In Young v. Young, supra, 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” para 15. 

•        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, per Bateman, J.A. at para 16.

•        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”: Bateman, J.A., Young v. Young, supra, para 15; 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 “‘unfair’ and ‘unconscionable’ do not have a precise meaning”, “unfair” “evokes ethical considerations and not merely legal ones:” para 18, Young v. Young, supra, per Bateman, J.A.

•        Unconscionable means "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.), per Richard, J. at para 10.

•        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.  Marriage is not a business arrangement.

•        When focusing on claims grounded in s. 13 (d) of  the MPA, 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.).

 

•        The determination of whether an equal division will produce an unfair or unconscionable result is a fact-based decision. 

 

Decision

[40]        I find that Ms. Gouthro proved, on a balance of probabilities, that an equal division of the matrimonial assets would be unfair or unconscionable based on ss. 13 (a), (b), and to a lesser extent, (f), (g), and (i) of the MPA. I reach this conclusion for five reasons.

Impoverishment

[41]        First, Mr. Gouthro impoverished the matrimonial assets by diverting and directing family funds to pay for business expenses, and he did so at least since the family moved to Glace Bay as shown by the following facts:

•           Fifty percent of the sale proceeds from the Ontario family home was used to pay for business expenses. I accept the evidence of Ms. Gouthro when she said of the $69,000 realized from the sale, $20,000 was placed on the CIBC Line of Credit which was used for business purchases, and a further $15,000 was used to buy a Kubota truck for the business.

 

•           Mr. Gouthro stubbornly refused to listen to Ms. Gouthro when she repeatedly advised him against cashing in his RRSP’s, valued at about $53,000. Had he not cashed in the RRSP’s, these investments would have continued to grow. Instead, Mr. Gouthro, only received $37,000 after tax, which he then injected into the business. Ironically, Mr. Gouthro now complains that he has no retirement savings.

 

•           Mr. Gouthro’s income, including when he was working out west, was often used to pay for business expenses, leaving Ms. Gouthro’s income to primarily pay for the needs of the family.

Debts and Liabilities

[42]        Second, Mr. Gouthro incurred unnecessary debt and liabilities. Much of the business debt, including the joint business debt, could have been avoided if Mr. Gouthro reported all his business income and accounted for the sale of the various business assets.  I do not believe Mr. Gouthro when he suggests that his tax returns properly report all of his income. I find that they do not for the following reasons:

•           The business involves many cash transfers, especially for the shale. Cash was also used to buy some of the business vehicles that Mr. Gouthro sold after separation.

 

•           Mr. Gouthro was unable to show where most of the post-separation sale proceeds were deposited. I find that he kept this money, like many of the other cash payments that the business earned, separate from the business and personal accounts. In so doing, he artificially increased the need of the business and unnecessarily incurred business liabilities, which in turn were paid by money that was diverted from the family.

 

•           I do not believe that Mr. Gouthro’s first foray into hiding cash arose when he sold vehicles post-separation. 

 

•           Ms. Gouthro is now responsible for a business debt in excess of $35,000 because of Mr. Gouthro’s successful consumer protection application.

Diversion of Assets

[43]        Third, the business assets were acquired through the use of family funds. Business assets are presumptively not divided under the Nova Scotia MPA regime.  An equal division will deprive Ms. Gouthro of an asset which was financed, in a large part, by the diversion of family money.

Comparison of Contributions

[44]        Fourth, Ms. Gouthro’s contributions exceeded those of Mr. Gouthro because of the following:

•           Ms. Gouthro was the primary care giver of the children and the home.

 

•           Ms. Gouthro was employed outside of the home and her money was used for the home and family, while the income Mr. Gouthro earned was used to fund the business.

 

•           Ms. Gouthro’s financial management skills allowed the family to save for the future and maintain the family assets in spite of the lesser contributions from Mr. Gouthro.

 

 Loss of Benefit

[45]        Mr. Gouthro’s business assets have an equity of at least $48,000, which equity can be traced to family funds. Business assets are not presumptively shared.

Summary

[46]        Despite the burden upon her, Ms. Gouthro has nonetheless proven that an equal division of the matrimonial assets would produce an unfair or unconscionable result based upon my review of the totality of the evidence and all of the circumstances. I find that a 70/30 split in Ms. Gouthro’s favour would produce a fair and conscionable result. The following table accomplishes that result:

Asset	Value	Husband	Wife
Matrimonial Home	$130,800		$130,800
HOPP Pension Wife	$91,538		$91,538
Public Service Wife	$46,850		$46,850
CLAC Pension Husband	$644	$644
Primerica RRSP’s Wife	$58,177		$58,177
Scotiabank RRSP’s Wife	$2,038		$2,038
Joint Bank Accounts	$3,668.59	$1,834.30	$1,834.29
American Money	$1,750	$1,750
Corvette	$10,000	$10,000
2005 Honda Civic	$1,500	$1,500
Travel Trailer	$6,000	$6,000
Household Contents	$5,000		$5,000
Garage Contents	$9,000	$9,000
Total	$366,965.59	$30,728.30	$336,237.29
Debt	Balance	Husband	Wife
CIBC Mortgage	$62,500		$62,500
Time Share	$1,400	$700	$700
Scotia Bank LOC/Visa	$35,625		$35,625
Total	$99,525	$700	$98,825

 

 

 

Equity in Assets                  $366,965.59           - $99,525 = $267,440.59

Husband                               $30,728.30 - $700 = $30,028.30

Wife                                       $336,237.29 - $98,825 = $237,412.29

[47]        As I ordered Ms. Gouthro to have 70% of the net matrimonial assets, she should receive $187,208.41, while Mr. Gouthro should receive $80,232.18. Thus, Ms. Gouthro must provide an equalization payment to Mr. Gouthro of $50,203.88, subject to monies due to Ms. Gouthro as a result of the maintenance obligation and all outstanding costs awards. Mr. Gouthro will retain all business assets, including any cash, and pay the business debt as required pursuant to the Consumer Proposal.

[48]        Should income be imputed to Mr. Gouthro?

Position of the Parties

[49]        Ms. Gouthro seeks to impute income, prospectively and retroactively, to Mr. Gouthro for child and spousal support purposes.  She states that Mr. Gouthro’s reported income does not represent his income earning capacity.  She further states that Mr. Gouthro is no longer working out west to artificially reduce his income and support obligation.  She also notes that Mr. Gouthro participates in the cash economy by underreporting income. Ms. Gouthro asks that an annual income between $85,000 and $103,000 be imputed to Mr. Gouthro.

[50]        Mr. Gouthro strenuously objects.  He denies working for cash and underreporting income. He is adamant that his reported income represents both his actual income and his income earning capacity.  He states that he is doing everything in his power to find long term employment locally and out west. When he is not working for someone else, he operates his own business and collects EI. He states that he is not responsible for the down turn in the economy.

Law

[51]        In Smith v. Helppi, 2011 NSCA 65 (N.S.C.A.), para 16, Oland J.A. approved the factors outlined by Dr. Julien D. Payne, in Imputing Income, "Determination of Income; Disclosure of Income", Child Support in Canada, Danrab Inc., August 3, 1999 as quoted by Martinson, J. in Hanson v. Hanson, [1999] B.C.J. No. 2532 and by Wilson J. in Gould v. Julian, 2010 NSSC 123 (N.S.S.C.).  These factors are as follows:   

•                    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." (V. (J.A.) v. V. (M.C.) at para 30.)

 

•                    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 of work, freedom to relocate and other obligations.

 

•                    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 the 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.

 

•                    Persistence in unremunerative employment may entitle the court to impute income.

 

•                    A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.

 

•                    As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income.

[52]        In Parsons v. Parsons, 2012 NSSC 239, paras 32 and 33, this court distilled other principles applicable to s. 19 imputation claims as follows:

•                    The discretionary authority found in s.19 must be exercised judicially, and in accordance with rules of reason 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 (N.S.S.C.).

 

•                    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 (N.S.C.A.).

 

•                    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 (N.S.C.A.); MacGillivary v. Ross, 2008 NSSC 339 (N.S.S.C.).

 

•                    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 (N.S.C.A.); Van Gool v. Van Gool (1998), 113 B.C.A.C. 200 (B.C.C.A.); Hanson v. Hanson, [1999] B.C.J. No. 2532 (B.C.S.C.); Saunders-Roberts v. Roberts, 2002 NWTSC 11 (N.W.T.S.C.); and Duffy v. Duffy, 2009 NLCA 48 (N.L.C.A.).

 

•                    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 (2007), 2008 NSSC 11 (N.S.S.C.).

 

•                    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.

Decision

[53]        I have applied the law to the evidence presented at the hearing.  In so doing, I impute an annual income of $75,000 to Mr. Gouthro for the period commencing January 1, 2017.  I do so for the following reasons:

•                    Mr. Gouthro is not credible.

•                    Mr. Gouthro’s income earning capacity exceeds what he reports to Canada Revenue Agency. Further, he earns income which is not reported, such as cash shale sales. I find that he underreported income in the past and likely will continue to do so on an ongoing basis.

•                    Mr. Gouthro produced little documentation to support his income and expenses, other than as shown in his tax returns, which is insufficient in the circumstances of this case. Mr. Gouthro’s suggestion that all is in order because an accountant prepared his returns has little merit. The accountant could only prepare a return based on factual particulars provided by Mr. Gouthro. If Mr. Gouthro hid cash payments, they would not be reported. The accountant would have no knowledge of the cash payments. The accountant did not perform an audit. 

•                    Mr. Gouthro has the ability to earn an income greater than he suggests.  For example, in 2014 he earned $123,829, even after declaring a business loss of $2,456.  In 2015, the year of separation, Mr. Gouthro earned $90,379.86 with no business income or loss reported. In 2016, Mr. Gouthro reported an income of $39,870.35, after declaring a business loss of $4,704. 

•                    In 2017, Mr. Gouthro worked in the local area at various jobs, fishing for $1,000 a week, driving trucks and working in his own business.

•                    After separation, Mr. Gouthro made minimal efforts to seek employment out west because Mr. Gouthro wants to artificially reduce his income so that he pays less support to Ms. Gouthro.

•                    Mr. Gouthro refused to pay the interim child support order, even when he worked out west and earned $22,743 between August 14 and October 6, 2016; when he received a $10,000 cash payment for an unlawful arrest claim; when he sold business vehicles; or when he collected an income tax refund of $3,662.28 for the 2016 taxation year.

[54]        What prospective child support order should issue?

[55]        Mr. Gouthro’s ongoing child support obligation equals $1,035 per month commencing September 15, 2017 and continuing on the 15 of every month thereafter unless otherwise ordered.

[56]        Both parties agreed to equally pay for hockey and orthodontic expenses, which is thus ordered. Mr. Gouthro must pay his share of any unpaid s. 7 expenses from the equalization transfer owed to him. In addition, I will not order school supplies as part of the s.7 expenses because they are included within the table amount. Further, there are no postsecondary expenses yet because of Martin’s RESP’s and employment income.

[57]        Should a retroactive child support order be granted?

Position of the Parties

[58]        Both parties seek a retroactive support payment. Ms. Gouthro seeks retroactive child support from the date of separation until the interim order was put into place.  In contrast, Mr. Gouthro seeks a retroactive forgiveness of maintenance based on his income earned and not as determined by Justice MacLellan at the interim hearing. 

Law

[59]        Two separate tests are involved with these competing claims. For a retroactive increase in child support, the test is set out by the Supreme Court of Canada in S. (D.B.) v. G. (S.R.), 2006 SCC 37. Bastarache J., for the majority, states as follows:

•                    Child support is the right of the child and such right survives the breakdown of the relationship of the child's parents [para 38].

•                    The child loses when one parent fails to pay the correct amount of child support [para 45].

 

•                    Parents have an obligation to support their child according to their income and this obligation exists independent of any statute or court order [para 54].

 

•                    The payment of a retroactive award is not an exceptional remedy [para 97]. 

 

•                    A retroactive maintenance award should be payable from the date the custodial parent gave effective notice to the non-custodial parent [para 118]. 

 

•                    It is generally inappropriate to make a retroactive award more than three years prior to the date when formal notice was provided to the non-custodial parent [para 123].

 

•                    The quantum of a retroactive award must be tailored to fit the circumstances of the case [para 128]. 

 

•                    The court must examine and balance four factors when determining the issue of retroactivity [para 99].

 

•                    The first factor concerns the reasonableness of the custodial parent's excuse for failing to make a timely application in the face of the nonpayment of child support, or in the face of an insufficient payment of child support [paras 101 and 104].

 

•                    The second factor relates to the conduct of the non-custodial parent. If the non-custodial parent engages in blameworthy conduct, then the issuance of a retroactive award is usually appropriate. The determination of blameworthy conduct is a subjective one based on objective indicators [para 108] and the court should take an expansive view as to what constitutes blameworthy conduct in the face of the nonpayment or insufficient payment of child support [paras106 and 107].

 

•                    The third factor to be balanced focuses on the circumstances, past and present [para 110] of the child, and not of the parent [para 113], and include an examination of the child's standard of living [para 111].

 

•                    The fourth factor requires the court to examine the hardship which may accrue to the non-custodial parent because of the non-custodial parent's current financial circumstances and financial obligations [para 115], although hardship factors are less significant if the non-custodial parent engaged in blameworthy conduct [para 116].

[60]        The test for a retroactive decrease in child support is set out in Smith v. Helppi, 2011 NSCA 65 (N.S.C.A.). The Nova Scotia Court of Appeal reviewed the applicable legal test when a retroactive reduction in child support is sought, together with a forgiveness of arrears.  Oland, J.A. adopted the reasoning set out in Brown v. Brown, 2010 NBCA 5 (N.B.C.A.) wherein the test is stated as follows at para 21:

21      In summary, the jurisdiction to order a partial or full remission of support arrears is dependent on the answer to two discrete questions: Was there a material change in circumstances during the period of retroactivity and, having regard to all other relevant circumstances during this period, would the applicant have been granted a reduction in his or her support obligation but for his or her untimely application? As a general proposition, the court will be asking whether the change was significant and long lasting; whether it was real and not one of choice.

 

Decision

[61]        Ms. Gouthro proved that a retroactive child support order should be paid between June 2015 and January 2016 based on Mr. Gouthro’s income of $90,379.86, less credit for some of the contributions that he made. I make this finding for the following reasons:

•                    There was no delay in Ms. Gouthro seeking child support.

•                    Although Mr. Gouthro made some contributions, it was below the level that was required.  Mr. Gouthro was content is having Ms. Gouthro pay the lion’s share of the children’s expenses. In so doing, Mr. Gouthro placed his own needs above the needs of the children.

•                    The children can use the retroactive child support; Ms. Gouthro will use the retroactive support for their direct and indirect expenses.

•                    Mr. Gouthro has a greater income earning capacity than he reports. He has the ability to pay a retroactive award; it will be paid from the equalization transfer.

[62]        In the circumstances, I set a lump sum award of $5,000 for the period between June 2015 and January 2016. 

[63]        I will also adjust the support that was ordered to be paid since February 2016 and will base the child support award on an imputed income $75,000.  I do so hesitantly because Mr. Gouthro was the author of his own misfortune when he failed to produce timely income information during the interim hearing.  Further, he failed to pay child support according to the interim order, even when he had large sums of cash available to do so.

[64]        Child support from February 2016 until the September 2017, will be based on an income of $75,000 which translates into a payment of $20,700 less credit for all payments collected through the MEP program. Any outstanding balance will be paid from the equalization transfer.

 

 

[65]        Should a spousal support order issue?

Position of the Parties

[66]        Ms. Gouthro seeks spousal support based on compensatory factors, including a lump sum payment. Mr. Gouthro denies entitlement, quantum and an ability to pay.

Law

[67]        Section 15.2(1) provides the court with the jurisdiction to order periodic and lump sum spousal support.  The factors and objectives to be balanced in any support claim are set out in s. 15.2(4) and (6).  In addition, the Supreme Court of Canada confirmed that there are three foundational grounds to warrant the payment of spousal support: contractual, compensatory and non-compensatory.

[68]        Further, courts have jurisdiction to grant lump sum maintenance in cases where there is a specific or immediate need.  Lump sum payments are not to be used to increase an asset base or to pay for a spouse’s retirement: MacNeil v. MacNeil, 1994 NSCA 70, per Jones, J.A.

Decision

[69]        I find that although Ms. Gouthro has proven a compensatory base for a spousal support order, I am unable to order any payment given Mr. Gouthro’s income, child support obligation, and the unequal division of assets in Ms. Gouthro’s favor. If I erred in the unequal division, I would have ordered spousal support.

Conclusion

[70]        The following relief is granted:

•                    A divorce

•                    An unequal division of assets, together with an equalization payment due from Ms. Gouthro to Mr. Gouthro of $50,203.88 less all child support arrears after retroactive support is recalculated and credit is given for payments made through MEP.

•                    A prospective and retroactive order for child support, including hockey and health expenses, based on annual income of $75,000 to Mr. Gouthro from February 2016 to present at a monthly rate of $1,035, and a lump sum payment of $5,000 for the period between June 2015 and January 2016.

[71]        If either party wishes to be heard on the issue of costs, written submissions are to be provided by October 15, 2017.  Mr. Barry is to draft the divorce and corollary relief orders.

 

 

 

Forgeron, J.