/jmj Date: 010329 Docket No. S.K. 1204-001995 IN THE SUPREME COURT OF NOVA SCOTIA [Cite as: Vermeulen v. Vermeulen 2001NSSC49] BETWEEN: ANDREW GERALD VERMEULEN and JANET FRANCINE MACDONALD (VERMEULEN) RESPONDENT HEARD: At Windsor, Nova Scotia on December 6, 2000 and January 17, 2001 before the Honourable Justice Allan P. Boudreau. DECISION: March 29, 2001 COUNSEL: Jean M. Dewolfe, Counsel for the Petitioner. Caroll Daniels, Counsel for the Respondent. Boudreau, J. INTRODUCTION [1] The parties have made counter applications to vary spousal and/or child support and lump sum spousal support less than two years after being divorced and less than one year after the Court of Appeal decision which settled the support awards of the trial judge. Mr. Vermeulen originally claimed material change in circumstances based on his poor farming results in 1999 and Ms. Macdonald’s improved employment and income situation. Mr. Vermeulen now relies on change in Ms. MacDonald’s income position only. Ms. MacDonald has counter-claimed on the basis that Mr. Vermeulen’s income has improved since the trial in 1998, primarily because better up to date financial information is now available and because of Mr. Vermeulen’s receipt of significant farm aid. She seeks to increase child support and maintain spousal support at the current level, at least to 2002. She also seeks a lump sum support payment of $20,000.00 to reimburse her for the RRSP’s she cashed for the down payment on a home and for moving expenses, etc. [2] This proceeding involves applications to vary the Corollary Relief Judgement dated November 16, 1998, resulting from the trial decision of Justice Hall dated October 1, 1998, and the Court of Appeal decision dated June 4, 1999. will therefore only recite and review the facts outlined in those decisions together with the alleged material changes in circumstances since that time. There are two children of the marriage presently, as was the case in October of 1998, and they continue to reside with Ms. MacDonald. [3] At the time of trial, Mr. Vermeulen was found to have income of $30,000.00 for the purposes of paying child support and he was ordered to pay $438.00 per month in accordance with the Federal Child Support Guidelines. The trial judge also ordered Mr. Vermeulen to pay $562.00 per month spousal support as he found Ms. MacDonald and the children had total support need of $1,000.00 per month. At that time Ms. MacDonald was living in the matrimonial home which was and remains part of the encumbrances to secure debts to the Farm Loan Board. Mr. Vermeulen was making monthly payment to the Board which, in regard to that home, included payment calculated to be $460.00 per month. Mr. Vermeulen was to be credited the amount of that payment against the monthly spousal support as long as Ms. MacDonald remained in the home. Ms. MacDonald moved and purchased her own home in August of 1999. [4] At the date of the Corollary Relief Judgement (November 16, 1998) Ms. MacDonald had gross annual income of $18,000.00 from her employment with the Royal Bank of Canada. She was basically debt free. On that basis, the trial judge found that she and the children had total need of approximately $1,000.00 per month. This determination was in essence accepted by the Court of Appeal. By the time of the hearing on January 17, 2001, Ms. MacDonald was earning $30,800.00 annual salary with the Royal Bank. She had been promoted to personal financial services representative. Last year, 2000, she also received bonus of $2,000.00. She testified that bonuses will be harder to earn in the future because goals have been set very high. She states that the salary range for her position is $30,000.00 to $48,000.00 and that she has room to move up. She also gets minor benefits by way of discounts on loans and mortgages, anywhere from 3/4 to 1%. [5] Ms. MacDonald purchased home in August of 1999 at price of approximately $86,000.00. She paid $13,500.00 down payment by cashing in some of her RRSP’s. She presently has approximately $11,500.00 in RRSP’s with the Royal Bank. [6] Mr. Vermeulen originally filed his application to vary because 1999 had been disastrous year for many farmers in Nova Scotia because of drought. His farming operation originally showed loss of some $108,000.00 for 1999; however, he has since qualified for government farm aid of approximately $112,000.00. This would more than erase his operating loss for 1999. The final figures for the year 2000 were not yet determined at the time of the hearing. At the divorce hearing, the trial judge reviewed the farming income over the years, and also the family’s and Mr. Vermeulen’s standard of living and concluded it would be reasonable to impute or set Mr. Vermeulen’s income at $30,000.00 for support purposes. Mr. Vermeulen takes no real issue with this amount because he readily concedes his net average income over the past eight years or so has been between $28,500.00 and $29,000.00. At the variation hearing, Mr. Vermeulen’s accountant, Mr. Bishop, testified that it would be unreasonable to add some $14,000.00 per year depreciation to Mr. Vermeulen’s farm income, as argued by Mr. Duffet, the accountant who testified on behalf of Ms. Macdonald. accept Mr. Bishop’s evidence that capital payments should also be taken into account in this calculation. Mr. Bishop said he reviewed the depreciation recaptured over the years, which would be indicative of excessive depreciation when assets were disposed of, and that the average recapture was approximately $2,000.00 per year. accept Mr. Bishop’s evidence in this regard and would add $2,000.00 per year to Mr. Vermeulen’s income. [7] There is the often difficult question of what, if any, additional income should be imputed because of the benefits derived from operating ones own business, particularly, farm. There are the more obvious benefits such as the use of motor vehicles and related expenses, and the less obvious ones such as some food and house expenses related to the business such as part of the utilities, etc. Mr. Duffet testified the use of vehicle and related expenses alone would equate some $9,000.00 per year. Mr. Bishop disagreed with that estimation and said it would be closer to $5,000.00 per year. There is no magic formula to arrive at figure of imputed income to account for this aspect of operating farming business. One can look at the financial statements and the person’s standard of living and determine that the amount is material rather than inconsequential. In the present case it is material and should be taken into account. determine that amount to be somewhere between $8,000.00 and $12,000.00 per year and set the benefit amount at $10,000.00 per year. [8] Mr. Vermeulen’s income for support purposes is not an easy thing to determine because he is farmer subject to the ups and downs of that business. Pin point accuracy is not possible. Therefore, one must strive to average or even out Mr. Vermeulen’s ability to pay; otherwise the parties would be before the courts every year, seeking adjustments up or down, depending on the ups and downs in the farming business. This is obviously not desirable and will only serve to further diminish and strain the resources of the parties. There should be stability of payments, both for the recipient and the payor. [9] When one takes Mr. Vermeulen’s acknowledged pattern of net income of $29,000.00, add to that $2,000.00 average excessive depreciation and $10,000.00 of imputed income because of the benefits mentioned above, determine and set his annual income for support payment purposes at $41,000.00 per year. [10] The questions to be decided in this case are the following: 1. Is there material change in circumstances with either party which satisfies the threshold test of applications to vary? 2. If the answer to question is yes; what is the income and ability to pay of Mr. Vermeulen and the reasonable need of Ms. MacDonald regarding continued monthly spousal support? 3. Does Ms. MacDonald qualify for lump sum spousal support award, and if so, should one be ordered? (a) Material Change in Circumstances [11] Both parties argue that there are material changes in their own and the other’s circumstances which should favour their respective applications. Therefore, there is no dispute in this regard. It is what those changes are that is in dispute. However, I would be loathe to entertain applications to vary, simply on the basis of the usual ups and downs of the farming business. This would lead to the undesirable results which mentioned earlier. [12] (b) Question regarding incomes, ability to pay and need is primarily question of fact and will discuss this in my analysis. (c) Lump sum spousal support on application to vary [13] The trial judge at the divorce hearing awarded Ms. MacDonald lump sum spousal award of $10,000.00 on the basis that she planned to buy home in the near future for which she would need $5,000.00 for down payment and on the basis that she would be seeking to expand her career potential so as to obtain greater income and become self-sufficient. The Court of Appeal reversed the trial judge on this issue and said the following at paragraphs 17 and 18 of its judgement (See Vermeulen v. Vermeulen, June 4, 1999, Docket No. C.A. 152546) As to the issue of seeking to expand her career potential, the evidence was that if Ms. Vermeulen took certain training course through the Bank which might be available to her, she would be paid while training and would receive substantial increase in pay. There was no evidence that she required money for retraining. As for the need for down payment for house, there is no evidence of an immediate need. Ms. Vermeulen has not seriously looked for accommodations to purchase, she does not have information on how much she would require to make purchase viable, there was no evidence that she could obtain the necessary mortgage money to complete purchase, nor is there any information on what it would cost her to move. would find that at this time, Ms. Vermeulen has not established an immediate need for lump sum award. If and when she is in that position and can show change in circumstances, she is entitled to apply for variation as provided in the Divorce Act. 17(1) Order for variation, rescission or suspension 17.(1) court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively, (a) support order or any provision thereof on application by either or both former spouses: 17(4.1) Factors for spousal support order (4.1) Before the court makes variation order in respect of spousal support order, the court shall satisfy itself that change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration. [14] It would appear the Court of Appeal clearly contemplated that Ms. MacDonald could make an application to vary when she moved and purchased her own home. Does this mean that she had to make the application before moving and cannot make it after the move? think not. To rule otherwise would be to place an undue and arbitrary restriction on the Court of Appeal’s decision. However, one would have to consider the circumstances and reasons advanced for making the request after the move, in this case, approximately one year after the purchase. (i) Child Support [15] Based on my finding and determination that Mr. Vermeulen’s income for support purposes is $41,000.00 he shall pay child support of $ 567.00 per month in accordance with the Federal Child Support Guides, effective April 1, 2001. [16] Ms. Macdonald has advanced claim for several items of extraordinary expenses. find the only ones which qualify as extraordinary expenses in the circumstances are the hockey registration fee for Ben of approximately $435.00 and the Young Driver Course for Andrea. The cost of this course has been estimated at approximately $575.00. Mr. Vermeulen shall pay one-half of these costs upon the fee being payable. Other items such as art supplies, soccer and other hockey costs are not extraordinary expenses unless they are at an elite level and materially more expensive than the ordinary and find they are not. (ii) Lump Sum Spousal Support [17] Ms. MacDonald has claimed the amount of $20,000.00 as lump sum spousal support. As stated previously, the Court of Appeal left the door open for her to make such an application when she moved from the matrimonial home and purchased her own home. The trial judge had apparently accepted Ms. MacDonald’s representation that she estimated at that time that she would require approximately $5,000.00 for down payment on home valued at approximately $80,000.00. She has since purchased home worth approximately $86,000.00 and applied down payment of $13,500.00 obtained by cashing in some of the RRSP’s which assume she obtained on the division of matrimonial assets. She now requests that the court award her lump sum of $20,000.00 to replace those RRSP’s and to pay for moving expenses, etc. She is now asking for approximately three times more than the amount she requested at trial and twice what the trial judge ordered. [18] While there may, in certain circumstances, be some merit to the argument that Ms. MacDonald should not have to use the assets or RRSP’s she received on the matrimonial division in order to re-establish herself, one has to be careful that this claim does not have the result of effecting significant redistribution of the division of matrimonial property, which had apparently been settled. If the division was agreeable to the parties at that time, and have no indication that it was not, then whether those assets remain in the form they were in at the time of division or are transformed to another asset, such as equity in home, should not automatically entitle party to compensation. Otherwise the effect could be a significant redistribution of the matrimonial property division. When one looks at the remaining assets of the parties, especially their RRSP’s, Ms. MacDonald’s request would have precisely that effect. [19] On the other hand, having said that, one should look at the reasons advanced for justifying the request for the belated lump sum. The reasons advanced in this case are to restore Ms. MacDonald’s RRSP’s for the down payment on the home and to pay moving expenses, etc. Certainly moving expenses do not create an asset and could be justifiable expense. Also the income tax consequences of cashing in RRSP’s would to some extent be an expense, although understand the intention of Ms. MacDonald is to reinstate those or part of those. [20] In the circumstances I find there is a current need for a lump sum award to compensate Ms. MacDonald for her relocation expenses for the reasons mentioned above. This was contemplated by the trial judge and the Court of Appeal, but not nearly to the extent requested because to do so would give effect to significant redistribution of matrimonial property. The circumstances do not justify this expanded request. Considering the moving expenses and the tax consequences of cashing some RRSP’s and other expenses such as furniture, etc., I find a lump sum spousal support award of $8,000.00 is warranted. This amount shall be payable on or before October 30, 2001. (iii) Continued Monthly Spousal Support [21] Ms. MacDonald requests that monthly spousal support, as set at the divorce hearing in October of 1998, of $562.00 be continued, at least until 2002, implying that she may be presently self-sufficient. The main reason advanced for continued monthly support is that Ms. MacDonald’s position with the Royal Bank is not secure because she has to continue upgrading her qualifications by taking courses through the Bank, relative to her position. There is no evidence that this is problematic for her. On the contrary, the evidence shows that she has progressed remarkably well since 1998. She has successfully completed her job related courses. She has been promoted and her income has increased by 71% in two years. She is at the bottom of her salary range, having just recently been promoted to her new position. Indications are that Ms. MacDonald is very capable and there is no reason to believe she will not continue to progress. [22] With regard to need, Ms. MacDonald’s present monthly income, including child support will be $3,500.00, or $42,000.00 annually. She now shows total monthly expenses for herself and the children of $3,785.75, plus income tax and other deductions of $732.00 for total of $4,517.75. Included in those expenses are Christmas, birthdays, etc of $100.00; children’s mutual funds $90.00; children’s spending money $80.00; holidays $50.00; savings $50.00; property taxes of $80.00 (included in mortgage payment); loans incurred after separation and legal fees payments totaling $675.00. These monthly expenses total $1,125.00. Most of these are not Mr. Vermeulen’s responsibility. The children of the marriage can work for their father on the farm extensively each summer. They are paid regular wage and Mr. Vermeulen tops up their pay by about 50% which goes towards savings for the children. Nevertheless, the children can certainly earn more than their pocket money. [23] When one looks at Ms. MacDonald’s monthly income with increased child support and reduced income tax consequences without spousal support, find that Ms. MacDonald has no reasonable need for spousal support at this time. She was able to spend most of her $2,000.00 bonus on Christmas last year and to send her daughter, Andrea, on trip to Europe at cost of approximately $2,600.00. While these decisions are clearly up to Ms. MacDonald, it supports the finding that she cannot establish reasonable need at this time. This is also supported by the fact her proposed budget of 1998 has now been increased by 50%. She claims her need for $562.00 spousal support has not diminished since 1998, but her monthly income (including child support) has now increased by approximately $1,200.00 during that period. [24] In the final analysis, I find that Ms. MacDonald has now achieved self-sufficiency. One can understand her concern that she may not consider her income position with the Royal Bank to be secure and that ongoing spousal support may be comfortable cushion for her, but that is not the test for continuing monthly spousal support. also find that Mr. Vermeulen would, in all probability, not have the ability to pay the increased child support ordered above, plus spousal support. While his “pattern of income” has been set at $41,000.00 for the purposes of paying “regular” and dependable child support, the “downs” in the farming operation the last couple of years certainly adversely affect Mr. Vermeulen’s ability to pay. [25] In the present circumstances, find that ongoing spousal support is not justified. have also considered the lump sum spousal support which have ordered. Having said that, I would not terminate spousal support entirely until the $8,000.00 lump sum is paid because that money is required by Ms. MacDonald to meet her immediate requirements created by the need for the lump sum. I would, therefore, order that spousal support of $250.00 per month, effective April 1, 2001, continue until the $8,000.00 lump sum is paid. The $250.00 payments shall not be deducted from the lump sum awarded. It simply provides some time for the parties to adjust and arrange their finances pending payment of the $8,000.00 lump sum. [26] The parties have not addressed the question of costs directly, pending my decision. If the parties can’t agree on the issue of costs, will entertain written or oral submissions, as the parties may prefer. Having said that, it would appear that success has been divided and that accordingly each party should prima facie bear their own costs. will leave it to the parties to decide if they want to make representations on this issue. [27] In any event, it appears to me that great deal of expense has been incurred by both parties on these applications to vary, with experts and much documentation which may be difficult to justify considering the issues which were litigated approximately two years and one and half years ago. There will obviously be need for future adjustments as circumstances evolve with growing children, etc. would encourage the parties to explore some form of mediation if they have difficulty reaching agreement in the future. [28] There will therefore be an order setting child support at $567.00 per month with Mr. Vermeulen contributing one half of Ben’s annual hockey registration and one half of Andrea’s one time driving course. [29] Mr. Vermeulen shall pay $8,000.00 lump sum spousal support to Ms. MacDonald, as indicated earlier. Monthly spousal support shall terminate April 1, 2001, subject to the conditions mentioned earlier. [30] will issue an order accordingly, consented as to form by both parties, and consented as to costs if agreed upon. Boudreau, J.
The parties were divorced two years ago and the matter had been finalized by an appeal decision in June, 1999. Both parties made application to vary child support on the basis of changes (ups and downs) in the farming business. The respondent wife, who recently purchased a house, also applied for lump sum spousal support which claim had been disallowed by the Court of Appeal. Monthly spousal support terminated as wife now self-sufficient; child support increased due to increase in husband's income; lump sum payment of $8,000 awarded to wife to help pay her relocation expenses from move with husband given six months to pay lump sum, but monthly spousal support to continue until the $8,000 was paid in full. Applications to vary should not be entertained simply because of the usual ups and downs of the farming business; the court must strive to average out the individual's ability to pay in such circumstances in order to ensure stability of payments for both parties. Lump sum spousal support payments must not have the effect of a significant redistribution of the division of matrimonial property but the reasons for the belated application must be examined.