The 2010 Year in Review.

Date22 March 2011
AuthorMcGoldrick, Kathryn


i. Division of Property

Phillips v Phillips

In Phillips v Phillips, (192) the Saskatchewan Court of Appeal considered several provisions of the province's Family Property Act (193) ("the Act") regarding the distribution of family property on marriage breakdown. The appellant husband appealed the trial judge's decision to order an unequal distribution of the family home and other family property on the basis that he had gambled away a substantial amount of the family property. He had squandered $156,000 over 10 years, which included 60-75% of his pay and nearly all of his retirement assets, forcing the respondent wife to singlehandedly meet the household's financial obligations. (194)

Section 11 of the Act permits an unequal distribution where it would be unfair and inequitable to make an equal distribution having regard to several enumerated factors, one of which is the fact that a spouse has "dissipated" family property. Similarly, under section 11 the family home may be to be divided unequally if an equal split would be unfair and inequitable based on an "extraordinary circumstance." (195)

A unanimous Court of Appeal held that the appellant's squandering was sufficient to jeopardize the financial security of the household and meet the test for "dissipation" of family property under the Act, even though he primarily gambled away his own assets. (196) The Court further held that the high magnitude of the appellant's gambling expenses relative to his income and the resulting financial consequences to the respondent constituted an extraordinary circumstance. (197) It held that in the context of gambling, a trial court should calculate the value of the dissipation by subtracting an "appropriate entertainment expense" from the total sum gambled by a spouse, as a reasonable amount of legal gambling is a valid form of entertainment. (198)

The Court also considered the proper limitation period for claims made under sections 11 and 11 of the Act. The Court held that the limitation period of two years, set out in section 28, applies to these claims, and thereby resolved a conflict in the prior case law on this issue. Spouses may thus only claim dissipation or wasteful giving of family property for the two-year period prior to the filing of a property division application. However, Klebuc CJS, writing for the Court, commented in obiter dicta that a possible exception to this limitation period may exist if the dissipation or giving was unknown to the claimant during the period and not reasonably discoverable. (199)

ii. Jurisdiction

Shortridge-Tsuchiya v Tsuchiya

In Shortridge-Tsuchiya v Tsuchiya, (200) the British Columbia Court of Appeal considered the interpretation and application of Part 3 of the Family Relations Act (FRA) (201) in circumstances where a child in the joint care of his parents has been removed by one parent from a jurisdiction that is not a signatory to the Hague Convention on the Civil Aspects of International Child Abduction. (202) Justice Prowse, writing for the majority, found that the trial judge was incorrect in concluding that he did not have jurisdiction to make an order for custody and parenting rights under section 44 of the FRA. However, the trial judge was correct in finding that if he did have jurisdiction, he should decline it pursuant to section 46 of the FRA in favour of Japan.

The appellant mother, a Canadian who was a permanent resident of Japan, married the respondent father, a Japanese citizen. They had a son and lived in Japan until their marriage broke down. In 2008, while engaged in mandatory mediation sessions, a precursor to divorce proceedings in Japan, the appellant brought the child to Canada without telling the respondent. The child was a dual Japanese-Canadian citizen and had been primarily residing in Japan. (203) The trial judge ordered that pursuant to section 47 of the FRA, the appellant was to have interim custody of the child until the matter could be resolved in Japan. The judge stayed his order that the appellant should return to Japan with the child until the respondent paid the appellant reasonable travel expenses for the return trip as well as a deposit for the mother and child's reasonable living expenses during the estimated two years the case might take to conclude in Japan. (204)

Justice Prowse found that the trial judge erred in treating section 44 of the FRA as if it were a jurisdiction-conferring provision. Section 44(b), which concerns cases in which the child is "not habitually resident in British Columbia" contains six conditions, which if all are present, require the Court to exercise jurisdiction to make a custody or access order. However, if the situation does not meet all six conditions, the court may still have jurisdiction. (205) Courts must read this provision along with section 46, which provides that a court may decline to exercise its jurisdiction if there is a more appropriate location for the matter to be heard. (206) Both the majority and dissent found that this is to be interpreted in line with section 11 of the Court Jurisdiction and Proceedings Transfer Act (207) (CJPTA), which codifies the doctrine of forum non conveniens in British Columbia. (208)

The majority held that the trial judge's analysis of section 3 of the FRA encompassed the considerations in section 11 of the CJPTA. (209) Since there was no conclusive evidence that cultural differences would keep Japan from administering due process in the dispute, Justice Prowse found no reason to interfere with the trial judge's decision to decline jurisdiction pursuant to section 46. (210) Justice Rowles, in dissent, held that such evidence would have been required to disprove the assumption that failure to sign the Hague Convention is decisive in the section 11 analysis of whether or not Japan would be a better forum for the dispute. (211)

The Supreme Court of Canada denied leave to appeal on July 8, 2010. (212) On March 18, 2013, the British Columbia legislature repealed the Family Relations Act and replaced it with the Family Law Act. (213)

iii. Child Support

Greene v Greene

In Greene v Greene, (214) the British Columbia Court of Appeal considered (1) whether access costs should offset increased spousal income when varying child support payments and (2) whether a consent agreement creates a contract between the parties. Mr. Greene's income had increased by 60 percent during the period between the signing of the consent agreement and the mother's action to increase support. (215)

Section 10(2)(b) of the Federal Child Support Guidelines (216) ("Guidelines") provided special support rules applicable if "undue hardship" will be imposed on the child due to parental access costs. Justice Prowse, writing for the court, held that access costs should not be included in calculating child support payments unless "special provisions" under section 17(6.2) of the FRA apply. The provisions did not apply in this case, so the Court could not offset access costs from child support payments. (217) Justice Prowse considered that the new section 10 of the Guidelines might support application of section 16(6) of the FRA, which relates to mobility cases and access costs. However, Mr. Greene did not found his claim on this basis, so the Court did not decide the issue. (218)

Justice Prowse held that Mr. Greene could not rely on the consent agreement with the mother in order to justify a smaller child support obligation. This would convert child support provisions into a contractual right between the parents when, in fact, child support is the right of the children. (219)

As was noted above, on March 18, 2013, the British Columbia Legislature replaced the Family Relations Act with the Family Law Act. (220)


i. Procedural Fairness

Heron Bay Investments Ltd v Her Majesty the Queen

In Heron Bay Investments Ltd v Her Majesty the Queen, (221) the Federal Court of Appeal ruled that the Tax Court judge breached the rules of procedural fairness and ordered a retrial by a different judge. (222) Justice Sharlow, writing for a unanimous Court, pointed to the judge's intervention in the questioning of witnesses as giving rise to the reasonable apprehension of bias. (223)

The appellant, Heron Bay Investments Inc ("Heron Bay") is a member of the Conservancy Group of real estate development corporations. It made a non-recourse loan to a fellow member of the Conservancy Group so that it could purchase property. Section 20(1)(1)(ii) of the Income Tax Act allows for the deduction of a "doubtful" loan, where "doubtful" is defined as reasonable doubt that the loan would be repaid. (224) Heron Bay considered the loan doubtful since the purchase price was greater than the value of the property purchased and deducted the loan. The Minister disallowed the deduction. (225) Heron Bay appealed to the Tax Court where the judge concluded that the loan did not meet two of the criteria for doubtfulness. (226) Heron Bay appealed to the Federal Court of Appeal.

Justice Sharlow found that Heron Bay was not deprived of procedural fairness when the Tax Court judge referred to authorities not cited by either of the parties without allowing the parties to make submissions on them. (227) In her view, the judge was permitted to refer in his deliberations to cases not cited by either party and not referred to in his reasons. (228) The judge was also not precluded from referring to cases or to excerpts of articles not cited by either party in his reasons if they were relevant to a legal issue raised by a party. (229) If, however, the judge had used those authorities to introduce a principle of law not raised by either party expressly or by necessary implication, or had used them to take the case on a different path, it might have constituted a breach of procedural fairness. (230)

Justice Sharlow agreed that a breach of procedural fairness was committed when the Tax Court judge introduced section...

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