COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Lam v. Chiu,

2014 BCCA 32

Date: 20140129

Docket:  CA040615

Between:

Miguel Lam

Respondent

(Plaintiff)

And

May Mee Ling Chiu

Appellant

(Defendant)

Before:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Bennett

On appeal from:  An
order of the Supreme Court of British Columbia, dated July 25, 2013 (
Lam
v. Chiu
, 2013 BCSC 34, Vancouver Docket No. S118154).

Counsel for the Appellant:

W.J. McMillan and
  D.M. Field

Counsel for the Respondent:

E.G. Wong

Place and Date of Hearing:

Vancouver, British
  Columbia

October 17, 2013

Place and Date of Judgment:

Vancouver, British
  Columbia

January 29, 2014

Written Reasons by:

The Honourable Mr. Justice Frankel

Concurred in by:

The Honourable Madam Justice Newbury

The Honourable Madam Justice Bennett

Summary:

Appeal by C. from a judgment
based on her failure to repay an undocumented loan for $100,000.00 in cash.  C.
denied the existence of the loan.  The trial judge accepted the evidence of J.
and L. that the loan was made from a large amount of cash J. kept in L.s safe.
When C. refused to repay the loan, it was repaid by L. who took an assignment from
J.  L. then sued C.

On appeal, C. argued that
the trial judge: (a) erred in admitting notes L. testified he made to keep
track of the money in the safe; (b) failed to consider or misapprehended
evidence; (c) failed to properly assess the credibility of J. and L.; and (d)
failed to provide sufficient reasons.  Held:  Appeal dismissed.

Having failed to object to
the admissibility of the notes at trial, C. was not entitled to do so on
appeal.  The trial judge neither failed to consider nor misapprehended any
evidence.  It was open to the judge to make the credibility findings she did.
She provided sufficient reasons for those findings.

Reasons for Judgment of the Honourable
Mr. Justice Frankel:

Introduction

[1]

This appeal concerns an undocumented loan between strangers for
$100,000.00 in cash.  It is an example of how at times the truth can be
stranger than fiction.

[2]

May Mee Ling Chiu appeals from a judgment in favour of Miguel Lam, based
on a finding that she borrowed money from Alan Johnson.  When Ms. Chui did
not repay the loan, Mr. Johnson assigned it to Mr. Lam, who then sued
Ms. Chiu.

[3]

The loan was arranged by Mr. Lam at a time when he and Ms. Chiu
were involved in a romantic relationship.  The circumstances of the loan can be
described as unusual, in part because Ms. Chiu was not asked to
acknowledge it in writing and because the funds came from a much larger amount
of cash Mr. Johnson kept in the safe at Mr. Lams pharmacy.  Mr. Johnson
and Ms. Chiu did not know each other.

[4]

The central issue at trial was credibility.  Mr. Lam and Mr. Johnson
gave evidence concerning cash being kept in the safe.  Both testified the loan
was made to Ms. Chiu and later repaid by Mr. Lam (in cash).  Ms. Chiu
testified she did not know Mr. Johnson kept money in Mr. Lams safe
and denied the existence of the loan.  The trial judge, Madam Justice Gray of
the Supreme Court of British Columbia, rejected Ms. Chius evidence.
Although the evidence of Mr. Lam and Mr. Johnson was not without
difficulties, the judge was satisfied, on a balance of probabilities, that the
loan had been made.

[5]

Ms. Chiu seeks a new trial on the basis that the trial judge erred
in several respects.  She says the judge wrongly relied on a prior consistent
statement of Mr. Lams, being notes he testified he made to keep track of
the money he was holding for Mr. Johnson.  Ms. Chiu also says the
judge failed to consider or misapprehended evidence, failed to properly assess
the credibility of Mr. Lam and Mr. Johnson, and failed to provide
sufficient reasons for her decision.

[6]

For the reasons that follow, I would dismiss this appeal.

Factual
Background

[7]

What follows is a general outline of the case.  Other aspects will be
discussed in relation to the grounds of appeal.

[8]

Mr. Johnson became a customer at Mr. Lams pharmacy in 1998.  Over
the years, a friendship developed between them.

[9]

In 2006, Mr. Johnson asked Mr. Lam if he could store cash in
the pharmacys safe.  Mr. Lam agreed, on the basis that he would not be
responsible if any of the money were stolen.  Mr. Johnson testified that
the cash came from his savings and an automobile accident settlement of
approximately $65,000.00.  The cash had been in a safety deposit box at a bank
before Mr. Johnson took it to the pharmacy.  Mr. Johnson moved the
money in part so his then girlfriend would not find out about the settlement
proceeds and because he was concerned that having a large amount of money would
affect his entitlement to government benefits.

[10]

Mr. Johnson brought cash to the pharmacy, usually in $5,000.00
bundles.  Mr. Lam kept a running total of the money he kept in the safe
for Mr. Johnson on pieces of scrap paper.

[11]

Ms. Chiu (a divorcee) is a little older than Mr. Lam (a
widower).  They met in December 2007, started dating in early 2008, and, in the
spring of 2008, became engaged to be married.  Before meeting Mr. Lam, Ms. Chiu
successfully speculated in real estate.  She owns Ultimate 24K Gold Co. Ltd.
(Ultimate), a retail jewellery store which she opened in 1992.  (As discussed
later in these reasons, there was confusion in the evidence as to when Ms. Chiu
and Mr. Lam met.  This resulted in a successful mid-trial application by Mr. Lam
to amend his pleadings with respect to when the loan was made.)

[12]

Mr. Lam testified Ms. Chiu was present in the pharmacy on at
least one occasion when Mr. Johnson brought in cash and that he explained
to her the arrangement he had with Mr. Johnson.  Ms. Chiu denied
knowing Mr. Johnson kept cash in the safe.

[13]

According to Mr. Lam, in the spring or summer of 2008 Ms. Chiu
asked him if Mr. Johnson would lend her $100,000.00, to be repaid in one
year with 10% interest, as she needed money to restock her store.  She said she
would be attending an annual jewellery show in Hong Kong that September.

[14]

Mr. Lam approached Mr. Johnson, who agreed to loan the money
to Ms. Chiu.  Mr. Johnson testified he did not ask Ms. Chiu to
sign any document evincing the loan as he and Mr. Lam were friends and Mr. Lam
had agreed to repay the money if Ms. Chiu did not.  Mr. Lam said he
took the $100,000.00 from the safe in August 2008, and delivered it to Ms. Chiu
in a paper bag.  Ms. Chiu denied receiving the money.

[15]

Ms. Chiu testified she attended the jewellery show in Hong Kong where
she purchased only some figurines.  She also visited her mother.

[16]

According to Mr. Lam, in early August 2009 he asked Ms. Chiu
about repaying the loan.  Mr. Lam testified Ms. Chiu asked for a
further six months to pay.  Mr. Johnson testified that Mr. Lam told
him Ms. Chiu wanted a further six weeks.

[17]

In late 2009 the relationship between Mr. Lam and Ms. Chiu
began to fall apart; they became upset with each other for various reasons.
Eventually, their relationship ended.

[18]

Mr. Johnson testified he expressed his concern about the non-repayment
of the loan to Mr. Lam.  They both said that Mr. Lam repaid the loan,
in cash, in December 2009.

[19]

Mr. Johnson assigned the loan to Mr. Lam in early 2010.  They
signed a written assignment in January 2010 which reads (in part):

A.         The Assignor
[Mr. Johnson] agreed, in or about August 2007, to lend $100,000 in cash to
Ms. May Mee Ling Chiu, borrowing either on her own behalf or as an agent
for Ultimate 24K Gold Co. Ltd (Ms. Chiu and Ultimate collectively
being the Borrower); and

B.         The Borrower
and the Assignee [Mr. Lam] were to be jointly liable to repay to the Assignor,
within one year, $100,000 together with an additional $10,000 in interest (the
Contract); and

C.        Following default under the Contract
by the Borrower, the Assignee paid $100,000 to the Assignor in or about
December 2009[.]

[20]

Mr. Lam testified that his efforts to have Ms. Chiu repay the
loan failed.  On August 15, 2010, after Mr. Lam and Ms. Chiu had
been estranged for several months, he went to her store and, using a pen video
camera, secretly recorded their conversation.  The trial judge found what
Ms. Chiu said during this conversation to be equivocal with respect to
the existence of the loan.

[21]

On August 16, 2010, Mr. Lam commenced an action against
Ms. Chiu.

[22]

On March 10, 2011, Mr. Johnson swore an affidavit setting out
the circumstances in which the loan was made and repaid.  It is inconsistent
with the evidence he gave at the trial in a number of respects.  In particular,
Mr. Johnson deposed that the loan was made in 2007.  When confronted with
the inconsistencies he said he was unhappy about having to swear the affidavit
and read it quickly, without paying attention to details.

The
Pleadings with Respect to When the Loan was Made

[23]

Mr. Lams original notice of civil claim filed August 16,
2010, alleged that on or about August 2007 he agreed to loan Ms. Chiu
$100,000.00 (at 10% interest) with repayment to begin in August 2008.  It was
further alleged the loan was to be paid in full by August 2009, and that
although Mr. Lam had demanded repayment, Ms. Chiu had neglected or
refused to pay.

[24]

In her response to civil claim, filed September 3, 2010, Ms. Chiu
generally denied the facts set out in Mr. Lams notice.

[25]

On February 9, 2011, Mr. Lam filed an amended notice of civil
claim in which he alleged that on or about August 2007 he agreed to help Ms. Chiu
obtain a $100,000.00 loan from a friend/customer named Allan, whose last
name he wished to keep confidential.  The notice further alleged that Allan
lent the money to Ms. Chiu who did not repay it; and that Mr. Lam
repaid it, without interest, in the fall of 2009.

[26]

In her amended response, filed on February 25, 2011, Ms. Chiu denied
having borrowed money from either Mr. Lam or Allan.

[27]

On November 7, 2011, Mr. Lam filed a further amended notice of
civil claim, in which he alleged that on or about August 2007 he agreed to
facilitate Ms. Chiu or Ultimate borrowing $100,000.00 from Mr. Johnson.
It was further alleged that Mr. Lam repaid the loan, without interest, in
the fall of 2009, and that Mr. Johnson assigned to Mr. Lam any and
all causes of action against [Ms. Chiu] and Ultimate.

[28]

Ms. Chiu filed a further amended response on December 2, 2011,
in which she denied having borrowed money from either Mr. Lam or Mr. Johnson.

[29]

The trial commenced on January 23, 2012.  Mr. Lam was the
first witness.  His testimony was based on a chronology in which he and Ms. Chiu
started dating in early 2007.

[30]

After Mr. Lam completed his evidence the trial judge allowed his
counsel to call Ms. Chiu as an adverse witness:
Lam v. Chiu
, 2012
BCSC 441, 30 C.P.C. (7th) 403.  Ms. Chiu initially testified she met Mr. Lam
in early 2007, which was consistent with her evidence on discovery.

[31]

During Ms. Chius testimony documents were produced concerning her
purchase of a condominium in October 2007.  As that purchase took place before
she met Mr. Lam, she realized she had been mistaken in her previous
testimony as to when certain events occurred.  In particular, based on the
condominium purchase, she now testified they started dating in early 2008, not in
early 2007.  This occurred on the ninth day of the trial.

[32]

After Ms. Chiu completed her evidence the trial judge adjourned the
matter for approximately two months for the calling of further witnesses.
Before that occurred, Mr. Lam applied to amend his pleadings based on his
having met Ms. Chiu in 2006 or 2007.  The trial judge granted that
application:
Lam v. Chiu
, 2012 BCSC 677, 98 C.B.R. (5th) 153.  The
judge ordered Ms. Chiu to produce further documents and to attend further
examinations for discovery.

[33]

Mr. Lam filed an amended notice of civil claim on April 30,
2012, alleging that the loan was made in 2007 or 2008.

[34]

When the trial resumed, both Mr. Lam and Ms. Chiu were
recalled.  Mr. Lam testified that some of the dates he had given in his
previous testimony were incorrect because, at the time he testified, he
mistakenly believed he first met Ms. Chiu in December of 2006 and that
they had started dating early in 2007.  He said he now realized they met in
December 2007 and that the loan was made in August 2008.  He said that the date
of the loan set out in the assignment was wrong because he gave the wrong date
to the lawyer who prepared it.  Ms. Chiu was examined with respect to her
financial circumstances and those of her company, particularly after September
2008.

[35]

Mr. Johnson was called as a witness by Mr. Lam after the
pleadings were amended.

Trial
Judges Reasons

[36]

The primary issue for the trial judge was credibility.  She reviewed the
evidence of Mr. Lam, Mr. Johnson, and Ms. Chiu in some detail.
In the end, she was satisfied as to the existence of the loan.  She concluded
the portion of her reasons headed Credibility and Factual Conclusions as
follows:

[84]      Overall, I found Mr. Lams evidence on the key
matters to be credible and consistent with the relevant documents. His answers
were careful but responsive and complete.  His answers did not appear to be
tailored, and did not go as far as one would expect a story to go if it were
fabricated.

[85]      [Mr. Johnson]s evidence is not conclusive on
the question of whether Ms. Chiu borrowed the funds, because [Mr. Johnson]
did not deal directly with Ms. Chiu about the making of the alleged loan.
It would be possible at least theoretically for Mr. Lam to have lied to [Mr. Johnson]
about Ms. Chius request for the loan.  However, it is improbable that Mr. Lam
would have wanted to borrow money from [Mr. Johnson] and fabricated the
explanation that it was for Ms. Chiu.  At the time of the alleged loan, Mr. Lam
and Ms. Chiu were engaged to marry.  The evidence suggests that Mr. Lam
was in a strong financial situation, and there was no reason for Mr. Lam
to wish to borrow funds personally and pretend that they were for Ms. Chiu.
As a result, there would not have been any reason for Mr. Lam to have
concocted a story that Ms. Chiu wanted to borrow money.

[86]      [Mr. Johnson]s evidence supports Mr. Lams
evidence that Mr. Lam was keeping cash for [Mr. Johnson] at the
pharmacy, that Mr. Lam asked for the loan saying that it was for Ms. Chiu,
that there was a delay in repayment, and that Mr. Lam ultimately paid [Mr. Johnson]
$100,000.

[87]      On
balance, I considered [Mr. Johnson]s evidence to be unreliable concerning
details, but generally reliable about the most significant events.  It is
improbable that [Mr. Johnson] would invent the story about storing money
at the pharmacy because it is an unusual story, because there is an explanation
based on his illness, and because the Scrap Ledger Notes provide some support.

[88]      As
stated, Ms. Chius evidence was difficult to assess because she testified
as an adverse party witness and through an interpreter. I found her evidence to
be incomplete and unsatisfactory regarding her own and Ultimates financial
circumstances.

[89]      The most compelling evidence on the overall
question of credibility is the evidence of [Mr. Johnson], which supports Mr. Lams
evidence, and the evidence of the improvement in Ultimates financial
circumstances following the making of the alleged loan. It is improbable that [Mr. Johnson]
and Mr. Lam concocted the story about Mr. Lam storing money for [Mr. Johnson]
because it is an unusual story, and because the Scrap Ledger Notes are more
likely to have been created at the times [Mr. Johnson] deposited money
than later for the purposes of supporting a concocted story. It is improbable
that Mr. Lam would have borrowed money personally from [Mr. Johnson]
because Mr. Lam did not appear to have any need for money at the relevant
time.  It is more probable that Ms. Chiu borrowed the money.  Ultimate had
been losing money, giving Ms. Chiu a reason to borrow cash.  Ms. Chiu
continues to believe that Mr. Lam treated her badly and owes her something
for what he got from her during the relationship, which gives her a motive to
retain the borrowed funds.

[90]      On the balance of
probabilities, I prefer Mr. Lams evidence except on details like dates,
and conclude that in August 2008, Ms. Chiu asked Mr. Lam to arrange
the loan for her and received the $100,000 loan funds in cash.  I also accept
the evidence of Mr. Lam and [Mr. Johnson] that Mr. Lam repaid
the principal amount of $100,000 in late 2009, and that [Mr. Johnson] did
not require any payment of interest.

Grounds
of Appeal

[37]

In her factum, Ms. Chiu raises the following grounds of appeal:

The trial judge erred in law by relying on a prior consistent
statement for the truth of its contents.

The trial judge erred in law by failing to consider relevant
evidence.

The trial judge erred in failing to properly assess the
credibility of Mr. Lam and [Mr. Johnson].

The trial judge misapprehended the evidence on the 2009
Financial Statements.

The trial judge failed to provide
sufficient reasons for judgment.

Analysis

Prior
Inconsistent Statement/Scrap Ledger Notes

[38]

This ground relates to the admissibility of what the trial judge
referred to as Scrap Ledger Notes, being notes Mr. Lam testified he made
to record the movement of money in and out of the safe.

[39]

During examination in-chief, Mr. Lam gave the following answer when
asked how he kept track of Mr. Johnsons money:

I kept track of the money in a
piece of paper.  Whenever he brought the money, I would add it up.  Whenever he
requested some money back, I would subtract it.

[40]

Mr. Lam identified two pieces of paper as being ones on which he
had recorded money received from and returned to Mr. Johnson.  Both were portions
of invoices for purchases for his pharmacy, one dated May 9, 2008, the
other June 11, 2009.  On the back of each, Mr. Lam had written a plus
or minus amount beside which he wrote the current balance.  In some cases the
date of a transaction was also recorded.

[41]

With reference to the notes, Mr. Lam stated:

A          Okay.  It shows here that in December 2007 I
facilitated to the loan of a hundred thousand dollars to May.  And there is
another notation from Allan on the -- in the middle top of the page which shows
that he had $95,000 with me at the pharmacy at the moment.  The total amount
$195,000 is the hundred thousand dollars from the loan plus the 95,000 that was
stored at the pharmacy at that time.  As he kept bringing money, $5,000, I
would just add it up from 195 - to $200,000, and it went on all the way until December
17th when I repaid the hundred thousand dollars loan to him, and I gave him the
$75,000 I was storing in the pharmacy.

Q         Mr. Lam, what is that at the end?

A          At the end
theres a circle with a slash.  It just means that -- that Allan didn't have
any more money stored in the pharmacy, and I have given the hundred thousand
dollars to him.

[42]

At this point, Mr. Lams counsel asked that the notes be marked as
an exhibit.  In response to a question from the trial judge, Ms. Chius
counsel stated he had no objection and asked that the originals, as opposed to
copies, be marked.  This was done.

[43]

Mr. Lam went on to testify, in-chief, that there had been similar
pieces of paper that he had discarded when there was no longer room for a new
entry.  He said that when he ran out of room he would write the then current
balance on the top of a new piece of paper and throw the old one away.

[44]

Ms. Chius counsel used this exhibit in cross-examining Mr. Lam
and Mr. Johnson.  For example, when Mr. Lam was questioned about the
notation (Given to May Chiu) Owe 100,000, at the top of the first piece of
paper, he said it was not made at the time of the loan and that he could not
recall when he made it.  Mr. Johnson was questioned about the notation
Sept 2007 in his handwriting which appears under (Given to May Chiu) Owe
100,000.  He could not recall when or why he made it.

[45]

Ms. Chiu now objects to the notes becoming evidence at trial.  She
submits their admission offends the rule that generally prohibits the
introduction of a prior consistent statement:  see
R. v. Stirling
, 2008
SCC 10 at paras. 5  7, [2008] 1 S.C.R. 272;
R. v. Dinardo
, 2008
SCC 24 at paras. 36, 37, [2008] 1 S.C.R. 788.

[46]

In my view, it is too late for Ms. Chiu to raise this objection.
It is clear from the trial record that her counsel affirmatively chose not to
object to the notes becoming evidence.  Further, I do not accept Ms. Chius
submission that after the amendment to Mr. Lams pleadings was permitted
it was too late to object.  She suggests, albeit indirectly, that if the
original pleadings had alleged a loan in 2008, then an objection would have been
made when the exhibit was tendered.  However, if the amendment changed her
position with regard to her trial strategy and the admissibility of the notes, then
it was open to her to apply to the trial judge to exclude the notes or declare
a mistrial.  Ms. Chiu did neither.  Rather, after the pleadings were
amended she continued to use the notes in cross-examination and, in closing
submissions, relied on answers given by Mr. Lam and Mr. Johnson
concerning some of the notations in challenging their credibility.

[47]

If a party objects to the admissibility of evidence, then that objection
should be made in a timely manner, namely at the time the evidence is tendered.
This is particularly so in civil cases.  As Chief Justice Macdonald stated in
Hall
v. Geiger
, [1930] 3 D.L.R. 644 at 644 (B.C.C.A.), The Court assumes that
where no objection is taken to evidence, it is not regarded as of any prejudice
to the defendant, the person who might have taken the objection.  See also:
McBryde
v. Womack
, 2013 BCCA 260 at paras. 52  57, 44 B.C.L.R. (5th) 209;
Bransford
v. Yilmazcan
, 2010 BCCA 271 at para. 24, 320 D.L.R. (4th) 535;
Mallet
v. Alberta (Motor Vehicle Accident Claims Act, Administrator)
, 2002 ABCA
297 at paras. 62  65, 15 Alta. L.R. (4th) 231.  Indeed, this Courts
jurisprudence reflects a reluctance to permit a party to raise an objection to
a jury charge in a civil case for the first time on appeal:
Basra v. Gill
(1995), 99 B.C.L.R. (2d) 9 at para. 15 (C.A.), leave refd [1995] 2
S.C.R. v.

[48]

Another consideration is that had a timely objection been taken, Mr. Lam
might have been able to establish a basis for admitting the notes.  In his
factum, Mr. Lam advances several such arguments to which Ms. Chiu has
filed a reply.  However, because of the position taken by Ms. Chiu at
trial, this Court does not have available the record necessary to deal with all
of those arguments.  The following statement by Mr. Justice Doherty in
R.
v. Bero
(2000), 151 C.C.C. (3d) 545 (Ont. C.A.), is equally apt in civil
cases:

[12]      It would be wrong for
this court to undertake the analysis required to decide whether the evidence
was admissible based on a record in which none of the relevant considerations
were explored because the defence chose not to litigate the admissibility of
the evidence at trial.  Absent any suggestion of ineffective representation at
trial, or some other adequate explanation for the absence of any objection to
admissibility at trial, I would not give effect to an argument that comes down
to the contention that an accused should receive a new trial on the ground that
had he chosen to challenge the admissibility of evidence at trial he might have
been successful.

[49]

I would not accede to this ground of appeal.

Misapprehension
of Financial Statements

[50]

Mr. Lam tendered financial statements for Ms. Chius company,
Ultimate, through her as an adverse witness.  Those statements had been
prepared by an accountant from information provided by Ms. Chiu.

[51]

Ms. Chiu was examined extensively about the changes in the
companys financial position from 2007 through 2009.  The unaudited financial
statements for the year ending December 31, 2009, were of some
significance to the trial judge.  Ms. Chiu contends the judge
misapprehended that evidence and, as a result, improperly drew inferences
adverse to her.

[52]

In discussing the financial statements, the trial judge said this:

[57]      Ultimates unaudited financial statements show inventory
purchases in 2009 of about $159,000, being about $100,000 more than the
inventory purchases recorded for 2008.  They show inventory at the end of 2009
of about $186,000, which is similar to the year end of 2008 which was reported
at $188,000.  The bank loans (including overdraft) at the end of 2009 have been
reduced by about $12,000 from 2008 (leaving a $1,000 balance), and the amount
due to the shareholder at the end of 2009 has been reduced by about $30,000 to
about $275,000.  This represents an improvement of about $42,000, which is more
than the reported operating profit of only about $23,000.
The financial
statements do not explain how Ultimate was able to reduce these other figures
by a total of about $19,000 more than the operating profit.

[58]      The operating profit appears in the financial
statements to be the result primarily of the reduction in expenses in 2009 of
about $53,000 compared to 2008.  The reduction results primarily from two line
items.  The advertising and promotion expenses in 2009 are reported as about
$20,000 less than 2008, and the management wages in 2009 as about $31,000 less.

[59]
The discrepancy between the operating profit of
about $23,000 and the reduction in liabilities of about $42,000 is consistent
with Ultimate having the benefit of cash which is not reported in the financial
statements
, although it could also relate to errors such as misreporting of
inventory.

[Emphasis added.]

[53]

The trial judge referred to the financial statements in assessing Ms. Chius
credibility:

[83]      I considered the following regarding Ms. Chius
evidence:

. . .

b)   Ultimates
financial statements show operating losses in 2007 and 2008.  Ultimates
customers might have been more attracted to new inventory, and so new inventory
might have led to increased sales.  Ultimates financial statements show both a
significant increase in purchases of inventory in 2008 and 2009, and a profit
in 2009 of about $23,000.  The operating profit is insufficient to explain the
reduction in liabilities of about $42,000.
The financial statements do not
fully explain Ultimates financial position, and that is consistent with cash
transactions failing to appear in Ultimates books.
Ultimate bought a
significant amount of inventory on a consignment basis, such that Ultimate paid
for the inventory only if Ultimate sold the inventory.  However, Ultimate did
not need to purchase all inventory in this way.  As a result, it is plausible
that Ultimate needed funds to purchase more inventory and that Ms. Chiu
wanted funds to do so, even if Ultimate paid most of its suppliers over time;

c)   Ms. Chius
personal living expenses significantly exceed the salary she takes from
Ultimate.  Some of Ultimates business transactions are in cash.  As a result,
it is plausible that she is frequently involved in cash transactions, and mixes
up Ultimates cash with her own;

d)   Ultimates
financial statements show an increase in inventory purchases in 2009 compared
to 2008 of about $100,000
.  While the financial documentation did not show Ultimate
receiving those funds, neither was there any explanation of the source of the
additional $100,000 in inventory purchases.
Ms. Chiu testified that
she received periodic sums of cash from her children and ex-husband, but she
called these sums pocket money and suggested that they were relatively
modest;

e)   Ultimates
financial records were confusing and incomplete, and Ms. Chiu did not
appear to understand them.  However, Ultimate is a relatively small business,
and Ms. Chiu relied on someone else to maintain the financial records;

f)
Ms. Chius
evidence about inventory purchases at particular times was inconsistent and
confusing.
However, she has operated Ultimate for about twenty years.  It
is not surprising that it would be difficult for her to remember particular
years and particular purchases;

g)   Around the
time of the alleged loan, Ms. Chiu took advances from a line of credit.
This would not likely have been necessary if Ms. Chiu had received
$100,000 from [Mr. Johnson] or Mr. Lam, and therefore supports Ms. Chius
denial of the making of the loan.  However, she may have chosen to keep her
cash transactions separate from banking transactions;

h)   There is
no record of a deposit in the range of $100,000 into any account of Ms. Chius
or Ultimates around the time of the alleged loan.  However, it appears that Ms. Chiu
often deals in cash;

. . .

m)  Ms. Chiu
and Ultimate made significant document disclosure, but there were problems with
it, including the production of documents during trial, the creation of
documents during trial, and the production of a portion of a bank statement
regarding her older sisters account.  While this could be an attempt to
suppress evidence, it appeared to be related to Ms. Chius lack of
sophistication about the court process and business documents.

[Emphasis added.]

[54]

Ms. Chiu submits that the trial judge misread the 2009 financial
statements, particularly in respect to the apparent improvement in Ultimates
financial position in 2009.  She says that as she did not prepare those statements
or the documents on which they were based, she could not give reliable evidence
as to their contents.  She also notes that no other witness gave evidence with
respect to the statements.

[55]

Ms. Chiu contends that in finding there had been an unexplained
improvement in Ultimates financial position in 2009, the trial judge failed to
have regard to such things as the reductions in the expenses from 2008 to 2009 for
advertising and promotion, and management wages.  She says that it is not clear
whether the statements were prepared on a cash or accrual basis.  In effect,
she argues that nothing in the financial statements supports an inference there
was an injection of cash into her business in 2009.

[56]

I am unable to accept Ms. Chius submission.  To begin, it is clear
from para. 58 of the trial judges reasons that she was aware of the
decrease in the expenses for advertising and promotion, and management wages.

[57]

The trial judge was also aware that the financial statements were
unaudited and did not fully explain Ultimates financial position.
Nevertheless, she was entitled to draw reasonable inferences from the evidence
before her.  On its face, the 2009 statements evinced an improvement in
Ultimates financial picture for which Ms. Chiu could not fully account.  As
well, Ms. Chiu did not call evidence to address issues arising from the
financial statements.

[58]

In my view, the trial judge did not misapprehend the financial
statements and made no palpable and overriding error in the inferences she
drew.  Accordingly, I would not accede to this ground of appeal.

Failure to
Consider All Relevant Evidence/Assessment of Credibility

[59]

These two grounds are intertwined and can be dealt with together.

[60]

Ms. Chiu submits that the trial judge failed to address a number of
inconsistencies in the evidence of Mr. Lam and Mr. Johnson and did
not meaningfully address their credibility.  Citing this Courts judgment in
Mariano
v. Campbell
, 2010 BCCA 410 at para. 50, 9 B.C.L.R. (5th) 318, Ms. Chiu
says that the judge did not seize the substance of the critical issues.  I disagree.

[61]

The critical factual issue for the trial judge was whether the loan had
been proven on a balance of probabilities.  The narrative of events concerning
the making and repayment of the loan related by Mr. Lam and Mr. Johnson
was, as the judge aptly described it, unusual and improbable.  Ms. Chiu
denied the existence of the loan.  The testimony given by each of them was fraught
with inconsistencies.

[62]

To determine whether there was a loan, the trial judge had to deal with
credibility; what she stated in para. 2 of her reasons as being the
primary issue in this case.  Later, she described the question of what
evidence to accept as being particularly difficult:  para. 77.

[63]

As I have already mentioned, the trial judge reviewed the evidence of
each witness in some detail.  She noted inconsistencies and contradictions,
some of which she found more troubling than others.  In the end she rejected
the evidence of Ms. Chiu and accepted the evidence of Mr. Lam and Mr. Johnson,
not in its entirety, but with respect to the significant events.

[64]

It cannot be denied that trial judges are best placed to determine
issues of credibility; they occupy a singular perch in that regard:
R. v.
C.L.Y.
, 2008 SCC 2 at para. 21, [2008] 1 S.C.R. 5.  As Mr. Justice
Dickson (as he then was) stated in dissent in
Taylor v. Asody
, [1975] 2
S.C.R. 414 at 423, a trial judge has

the great advantage of seeing and
hearing the witnesses, of observing demeanour, noting nuances of expression,
detecting dissimulation.  These are aids to judgment which cannot be reflected
in the written record of a case and are, therefore, aids denied to an appellate
court.

[65]

More recently, in
F.H. v. McDougall
, 2008 SCC 53, [2008] 3 S.C.R.
41, Mr. Justice Rothstein stated:

[70]

The trial judge was not obliged to find that
F.H. was not credible or that his evidence at trial was unreliable because of
inconsistency between his trial evidence and the evidence he gave on prior
occasions.
Where a trial judge demonstrates that she is alive to the
inconsistencies but still concludes that the witness was nonetheless credible,
in the absence of palpable and overriding error, there is no basis for
interference by the appellate court.

[71]      All of this is not to say that the concerns
expressed by Rowles J.A. were unfounded.  There are troubling aspects of F.H.'s
evidence.  However, the trial judge was not oblivious to the inconsistencies in
his evidence. The events occurred more than 30 years before the trial.
Where
the trial judge refers to the inconsistencies and deals expressly with a number
of them, it must be assumed that she took them into account in assessing the balance
of probabilities.
Notwithstanding its own misgivings, it was not for the
Court of Appeal to second guess the trial judge in the absence of finding a
palpable and overriding error.

[72]      With respect, I cannot interpret the reasons of the
majority of the Court of Appeal other than that it disagreed with the trial
judges credibility assessment of F.H. in light of the inconsistencies in his
evidence and the lack of support from the surrounding circumstances.  Assessing
credibility is clearly in the bailiwick of the trial judge and thus heightened
deference must be accorded to the trial judge on matters of credibility.  As
explained by Bastarache and Abella JJ. in
R. v. Gagnon
, [2006] 1 S.C.R.
621, 2006 SCC 17 at para. 20:

Assessing credibility is not a science.  It is very
difficult for a trial judge 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.  That is
why this Court decided, most recently in [
H.L. v. Canada (Attorney General
,
2005 SCC 25, [2005] 1 S.C.R. 401], that in the absence of a palpable and
overriding error by the trial judge, his or her perceptions should be respected.

[Emphasis added.]

[66]

Further, as stated by Chief Justice McLachlin in
R. v. R.E.M.
,
2008 SCC 51 at para. 64, [2008] 3 S.C.R. 3, a trial judge is not obliged
to discuss all of the evidence on any given point, provided the reasons show
that he or she grappled with the substance of the live issues on the trial.

[67]

In my view, the trial judges reasons reflect that she did grapple
with the credibility of each witness.  That she did not discuss every matter
that could possibly be said to relate to the credibility of Mr. Lam or Mr. Johnson
does not mean she misapprehended or ignored aspects of the evidence.

[68]

Ms. Chiu also submits that the trial judge erred in her credibility
findings by failing to appreciate the inherent improbabilities in Mr. Lams
story, and by improperly [relying] on the unusualness of [Mr. Lams]
story as evidence of his and [Mr. Johnsons] credibility.  Once again, I disagree.

[69]

The trial judge considered the circumstances as related by Mr. Lam
and Mr. Johnson to be unusual.  Immediately before discussing their
evidence and that of Ms. Chiu she said this:

[78]      The fact of Mr. Lam
keeping cash for [Mr. Johnson] at the pharmacy is unusual, as is a cash
loan of $100,000 and the absence of any documentation of the loan at the time
it was allegedly made.  The evidence of Mr. Lam, Ms. Chiu, and [Mr. Johnson]
was that they all often engage in cash transactions, which is unusual and makes
it more difficult to determine what conduct is most probable in this case.

[70]

Ms. Chius position was (and remains) that Mr. Lam and Mr. Johnson
concocted their evidence of an undocumented cash loan so that they could, by
means of a lawsuit, cheat her out of $100,000.00.  In my view, it was open to
the trial judge to consider,
as but one factor in her analysis
, the
improbability that two persons intent on cheating another would set about to do
so in such an unusual way:  see paras. 84  90 of the trial judges
reasons set out in para. 36 above.

[71]

I would not accede to these grounds of appeal.

Failure to
Provide Sufficient Reasons

[72]

Ms. Chiu submits that the trial judges reasons were not
responsive to the issues and the parties key arguments.  In her factum she
says that:

It is not possible for this court
to discern how the trial judge arrived at her assessment of the facts nor is it
evident the trial judge recognized and dealt with the most significant
contradictions in, and confusing elements of, the evidence.

[73]

This ground can be dealt with summarily.  It is but a variation of the grounds
challenging the trial judges credibility findings which I have already
rejected.

[74]

In
Shannon v. Shannon
, 2011 BCCA 397, 22 B.C.L.R. (5th) 296,
Madam Justice Smith reviewed the authorities dealing with a trial judges
obligation to provide reasons that explain the result, tell the losing party
why he or she lost, provide a basis for appeal, and satisfy the public that
justice has been done.  In the course of that discussion, Smith J.A. stated:

[5]        The function of reasons for judgment is to explain
what
the trial judge has decided and
why
he or she reached that
decision:
R. v. Morrissey
(1995), 22 O.R. (3d) 514 (C.A.) at p. 525;
and
[
R. v. R.E.M.
2008 SCC 51 [2008] 3 S.C.R. 3] at para. 17.
 Reasons for judgment should demonstrate a logical connection between the
what  the verdict [the decision]  and the why  the basis for the verdict
[the decision], when they are read as a whole in the context of the evidence
and the live issues at trial, and the submissions of counsel:
R.E.M.
at
paras. 16 and 17.  Reasons for judgment do not require a judge to show
how
his or her decision was reached by expound[ing] on evidence which is
uncontroversial, or detail[ing] his or her finding on each piece of evidence or
controverted fact, so long as the findings linking the evidence to the verdict
can be logically discerned (
R.E.M.
at para. 20).

[Emphasis in original.]

[75]

In the present case, the reasons given by the trial judge explained both
what she found and why she found it.  Accordingly, this ground also fails.

Disposition

[76]

I would dismiss this appeal.

The
Honourable Mr. Justice Frankel

I AGREE:

The Honourable Madam Justice
Newbury

I AGREE:

The Honourable Madam Justice
Bennett


COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Powell v. Levesque,

2014 BCCA 33

Date: 20140129

Docket: CA039041

Between:

Wendy Elaine
Powell

Respondent

(Claimant)

And

Helene Mary Alice
Levesque

Appellant

(Respondent)

Corrected
Judgment: The heading on the front page
was corrected on January 30, 2014.

Before:

The Honourable Madam Justice D. Smith

The Honourable Madam Justice Bennett

The Honourable Mr. Justice Willcock

On appeal from:  An
order of the Supreme Court of British Columbia, dated
April 20, 2011 (
Powell v. Levesque
, Victoria Docket No. 99-3109).

Counsel for the Appellant:

N.J.W. Reid

Counsel for the Respondent:

R.L. Taylor

Place and Date of Hearing:

Victoria, British
  Columbia

December 3, 2013

Place and Date of Judgment:

Vancouver, British Columbia

January 29, 2014

Written Reasons by:

The Honourable Madam Justice D. Smith

Concurred in by:

The Honourable Madam Justice Bennett

The Honourable Mr. Justice Willcock

Summary:

The appellant and respondent
separated after an eight-year marriage-like relationship. They executed

a
separation agreement that divided their assets, allocated their debts, and
provided that the appellant would pay the respondent spousal support on terms.
Subsequently the respondent commenced an action to vary the agreed upon support
and for a share of the appellants Canadian Armed Forces pension. The parties
resolved the action in a consent order that expressly set aside the terms of
the separation agreement and provided for the respondents spousal support and
a division of the appellants pension. After twelve years of paying spousal
support and upon her retirement from the military after 26 years of service, the
appellant applied to vary her support obligation. The chambers judge dismissed
the application on the basis that the appellant had failed to establish a
material change in circumstances. Appeal allowed. The appellants retirement
from the military with its attendant reduction in income was a material change
of circumstances. Her earning capacity was also diminished as a result of
health issues. Although the respondent had an ongoing need for support as a
result of her disabilities and serious health issues, the appropriate order,
after a consideration of SSAG, was the termination of the appellants spousal
support obligation.

Reasons for Judgment of the Honourable
Madam Justice D. Smith:

A.
Overview

[1]

This appeal revisits the threshold issue of when a change of circumstances
is material for variation of a spousal support order under s. 96(1) of the
Family Relations Act,
R.S.B.C. 1996, c. 128 [
FRA
], and, if established,
what is an appropriate variation of the previous order. It should be noted that
in this case the variation application was determined before the March 18,
2013 implementation of the
Family Law Act,
S.B.C. 2011, c. 25 and
therefore was governed by the provisions of the
FRA.

B.
Background

[2]

The appellant and respondent lived together in a marriage-like
relationship for eight years, between June 1990 and June 1998. At the date of
separation the appellant was 34 and the respondent was 43. During their
relationship, the appellant was a member of the Canadian Armed Forces (CAF) and
worked as a steward in the navy. The respondent is disabled and has a number of
medical problems which render her unemployable.

[3]

In June 1998, following the breakdown of their relationship, the parties
executed a separation agreement in which they agreed to: (i) a division of
their assets; (ii) the repayment of debts totalling $64,537.80 by the
appellant; (iii) the payment of monthly spousal support of $500 by the
appellant to the respondent, with an annual cost of living (COLA) increase of
four percent to commence on the 1
st
day of the month after the debts
of $64,537.80 were fully paid; (iv) the continuation of the appellants spousal
support obligation until such time as the respondent died, married or commenced
cohabitation with another in a marriage-like relationship; and (v) a
prohibition to the respondent from seeking a settlement with respect to [the
appellants] pension plan for as long as [the appellant] provides monthly
support payments  or if [the respondents] situation changes.

[4]

On July 6, 1999, the respondent commenced an action in the Supreme
Court of British Columbia against the appellant seeking, among other things, a
variation of the agreed upon spousal support and a share of the appellants military
pension. The action resulted in a final order, by consent, granted on
July 23, 2001 (the Consent Order). By the date of the Consent Order the
appellant had made substantial payments on the debts she was obliged to pay under
the agreement and had paid contractual spousal support for three years.

[5]

The first paragraph of the Consent Order provided:

THIS COURT ORDERS:

1.         That the separation agreement
entered into by the parties on June 14, 1998, is hereby set aside and is
replaced in [its] entirety by the terms as follow herein

[6]

In particular, the Consent Order also provided for a division of the
appellants pension:

9.         That the plaintiff is entitled
to one half of the [Defendants] pension available through her employment with
the Department of National Defence for the period during which the parties
cohabited, that being from June 15, 1990 to June 14, 1998 and the
Defendant shall execute and deliver such further assurances, acts, deeds,
authorities and all such further instruments as may be reasonably required for
the purposes of carrying out and giving full effect to the division.

[7]

The remaining joint debts and certain other personal property were
allocated to each of the parties, the appellant was required to maintain the
respondent as a beneficiary on the term life insurance policy of $80,000 that
was available to her through her CAF employment, and the appellant was ordered
to pay the respondent the sum of $8,000 forthwith. The appellant complied with
all of these terms.

[8]

In regard to spousal support, the Consent Order required the appellant
to pay spousal support on the following terms:

7.         That
the Defendant shall pay to the Plaintiff a monthly sum of spousal support as
set out herein:

a)         Commencing
January 1, 2002 and continuing on the first day of each and every month
thereafter the amount of $500.00; and

b)         Upon complete payment of the debts
as set out in Paragraph 3 herein [$64,537.80], the spousal support shall be
varied to include a cost of living increase of four percent per year calculated
from the date of this Order.

[9]

Several years after the Consent Order the appellants circumstances
changed.

The
appellants circumstances

[10]

In August 2008, after 26 years of service, the appellant, at age 44, retired
from the military on a full pension. She had completed her contracted 25 years
of service and had begun to experience health issues. In 2003 she required
brain surgery. Subsequently she sustained a knee injury while in active service
in the Golan Heights. The injury led to symptoms of stiffness, cramping and
swelling, which were aggravated by running (to the point of becoming swollen
and causing her to limp). She was referred to physiotherapy but was unable to
continue with that program upon being posted to sea. This in turn caused her symptoms
from the knee injury to reoccur. She now has degenerative arthritis in the knee
joint and has been advised that surgery is unlikely to provide her any benefit.
She also suffers from iron-deficiency anemia.

[11]

Around this time, the appellant had a desire to be closer to her father
who resided in Ontario and was ill. Following her retirement, she moved to
Ontario where she obtained part-time employment with Tim Hortons.

[12]

In 2006 the appellants military pension was divided in accordance with
the terms of the Consent Order. The division was effected by way of a transfer to
the respondent of a lump sum of $44,562.99 into a locked-in RRSP. The
consequence of the division was a reduction in the appellants gross monthly
pension benefit of $237.57.

[13]

Immediately before her retirement, the appellant had a gross annual
employment income of $66,000 (or $5,500 monthly). Following retirement, her
annual income included her divided pension benefit (at a gross monthly amount
of $2,577 and net amount of $1,456.56) and some part-time employment. The chambers
judge found the appellants total annual income to be $52,000, which was comprised
of annual pension income of $29,000 and annual employment income of $23,000 (in
2010). He also found the appellant had $49,000 in an RRSP (from her military
severance) and owed about $28,000 in debt.

The respondents
circumstances

[14]

Throughout the relationship, and after its breakdown, the respondent has
experienced a number of health issues. At the hearing of the variation
application she tendered evidence that her health was deteriorating and her
prognosis was guarded. She now also suffers from an ambulatory disability.

[15]

In 2006 the respondent cashed in her locked-in RRSP from the pension
division. Those monies have since been spent. She has no assets to speak of and
has debts of $25,000. Her monthly income (as of January 2011) was a combination
of Canada Pension disability benefits ($936.60), social assistance ($169.82)
and spousal support ($657.97) totalling $1,764.39. The four percent annual COLA
provision has increased her monthly support from $500 to $657.97 (as of
December 2010).

[16]

There is no issue that the respondent has a significant need for
support.

C.
The
Judgment

[17]

The chambers judge dismissed the appellants variation application on
the basis that she had failed to establish the threshold issue of a material
change of circumstances. He found that while she had paid spousal support for
12 years, first under the separation agreement and then pursuant to the Consent
Order, the medical reason for her early retirement was not sufficiently compelling
(para. 9). He stated:

[26]      I accept that retirement, while its inevitability
hardly qualifies as unexpected, can constitute a substantial and continuing
change sufficient to entitle a court to vary or rescind a maintenance
obligation.

[27]      The authorities tendered by counsel, when read
together, persuade me that whether retirement does support a variation or
rescission in any case depends upon, to some extent the timing and the reason
for retirement. That is, a person who retires at an age when retirement is
reasonably to be expected, or who must retire early for medical or other
sufficient reasons, may well be in a position to persuade a court that the
change triggered by retirement is substantial, unforeseen and of a continuing
nature, in the language of Proudfoot J.A. in
Carter v. Carter
[(1991),
34 R.F.L. (3d) 1 (B.C.C.A.)]
,
as quoted in
T. v. T.
[
T.(T.L.A.)
v. T.(W.W.)
(1996), 24 R.F.L. (4
th
) 51] at paragraph 34.

[28]      Here, Ms. Levesque retired at a relatively
young age. While her knee condition no doubt made some aspects of her military
employment quite uncomfortable, the evidence falls short of establishing that
her knee condition was sufficiently disabling as to amount to a medically
reasonable explanation for
early retirement
.

[29]      In any event, Ms. Levesque can, and has been,
supplementing her military pension with civilian employment. Again, her knee
condition may make some aspects of employment uncomfortable, and may preclude
other employment completely, that is employment for which she would otherwise
be suited by reason of education, training or experience, however the evidence
falls short of establishing that the work she is doing, I understand at a Tim
Hortons outlet, is the only work available or that she may be unable to
continue such work because of medical concerns.

[Emphasis added.]

[18]

The chambers judge also considered the role of the parties separation agreement
in the variation application, stating:

[32]      It is relevant, in considering whether a material
change has been shown, to bear in mind that the order for which variation or
rescission is sought is one that the parties bargained between them and agreed
to incorporate into a consent order. This is not inconsistent with finding that
the court can vary or rescind, it merely points to the contractual nature of
the provisions now under review as a circumstance to be considered.

[33]      This means, among other
things, what might otherwise seem a generous spousal support obligation, at
least in its duration, should not be reopened because of its generosity, and
that the court should be careful to apply the material change test properly, in
spite of the apparent generosity of the consent order.

[19]

In the result, the judge concluded that [a]llowing for what I have
already said about when retirement of the payor might constitute material
change, I have not been shown that such a change on the evidence in this case
exists.

D.
Issues
on Appeal

[20]

The appellant lists 12 grounds of appeal; however, for the purpose of this
appeal I am satisfied they may be reduced to the following:

1.       Did
the chambers judge err in finding that the appellants retirement from the CAF
did not constitute a material change in circumstances?

2.       Did
the chambers judge err in finding that the appellants reduced income after
retirement did not constitute a material change in circumstances?

3.
      Did the chambers judge err in giving weight to the parties separation
agreement on the variation application?

4.       Did the chambers
judge err in failing to consider the double recovery aspect of the respondents
continued receipt of spousal support at a level based in part on the
appellants divided pension income?

[21]

The appellant further submits that had the chambers judge found the
appellant had established a material change of circumstances, he would have
been guided by the
Spousal Support Advisory Guidelines
(
SSAG
) and
determined that an appropriate variation order would have been to terminate the
appellants spousal support obligation after 12 years.

[22]

I do not propose to address the last ground of appeal as I find it
unnecessary to do so in order to determine this appeal. The appellant also
seeks to adduce fresh evidence in the appeal regarding the effect of her ongoing
and additional health issues on her employability and attendant diminishment in
her financial circumstances. Again, I do not propose to address that
application as I find it unnecessary to the determination of this appeal.

E.
Discussion

[23]

In
L.M.P. v. L.S.,
2011 SCC 64, [2011] 3 S.C.R. 775, a decision
that was rendered after the decision under appeal, the Supreme Court of Canada
reiterated the two-fold test for variation of a support order under the
Divorce
Act,
R.S.C. 1985, c. 3 (2d Supp.) from
Willick v. Willick,
[1994]
3 S.C.R. 670 (for child support orders) and
G.(L.) v. B.(G.),
[1995] 3
S.C.R. 370, (for spousal support orders). The Court stated:

[31]
Willick
described the proper analysis as
requiring a court to determine first, whether the conditions for variation
exist and if they do exist what variation of the existing order ought to be
made in light of the change in circumstances (p. 688). In determining whether
the conditions for variation exist, the court must be satisfied that there has
been a change of circumstance since the making of the prior order or variation.
The onus is on the party seeking a variation to establish such a change.

[32]      That change of
circumstances, the majority of the Court concluded in
Willick,
had to
be a material one, meaning a change that, if known at the time, would likely
have resulted in different terms (p. 688).
G.(L.)
confirmed that this
threshold also applied to spousal support variations.

[24]

The Court added that whether a material change of circumstances has been
demonstrated will depend on the
actual
circumstances of the parties at
the time of the order (para. 34) and in general will require some degree
of continuity, not merely a temporary set of circumstances (para. 35).

[25]

The Court further confirmed that the threshold test for variation is the
same whether or not the previous support order incorporated provisions from an
agreement between the parties. It reiterated (at para. 36) that the question
remains: Has a material change of circumstances occurred since the making of
the order? (See
Willick; G.(L.); Leskun v. Leskun,
2006 SCC 25, [2006] 1
S.C.R. 920.)

[26]

The circumstances in
L.M.P.
involved an application to vary a
spousal support order pursuant to s. 17(1)(a) of the
Divorce Act
.
The issue was whether the separation agreement executed by the parties before
the divorce proceedings was a factor to be considered in determining the former
husbands application to vary the initial spousal support order. The majority
concluded that it was not because s. 17(4.1) did not include agreement
in the list of factors to consider in determining if the threshold test of a
material change in circumstances had been established.

[27]

The Court distinguished the test for variation in s. 17(4.1), which
refers only to whether a change in the condition, means, needs or other
circumstances of either former spouse has occurred, from the test for an
initial order in s. 15.2(4), which requires the court to consider any
order, agreement or arrangement relating to support of either spouse. If an
agreement specifies or defines what type of change will or will not give rise
to variation, courts should attempt to give effect to the parties intention
where those provisions are incorporated into the initial or previous order, as
those provisions are presumed to have met the objectives for spousal support in
s. 15.2(6) (paras. 33, 38-39). The Court further clarified:

[39]       Even significant changes
may not be material for the purposes of s. 17(4.1) if they were
actually
contemplated by the parties by the terms of the order at the time of the order.
The degree of specificity with which the terms of the order provide for a
particular change is evidence of whether the parties or court contemplated the
situation raised on an application for variation, and whether the order was
intended to capture the particular changed circumstances. [Emphasis added.]

[28]

While the variation application in this case was made pursuant to
s. 96(1) of the
FRA,
the relevant provisions of the
FRA
are
similar to those in the
Divorce Act
. In granting an initial order,
s. 89(1) of the
FRA
directs the court to consider, among other
factors, an express or implied agreement between the spouses that one has the
responsibility to support and maintain the other. However, in determining a
variation application, s. 96(1) states that the court must consider
changes in the needs, means, capacities and economic circumstances of each person
affected by the order and make the appropriate change, if any. Thus, in both
enactments there is no provision for the court to consider the terms of the
parties separation agreement on a variation application.

[29]

As to the appropriate order to be made if a material change of
circumstances is established, the court must limit itself to making a variation
order that is justified by that change unless the circumstances require the
rescission, rather than a mere variation of the order (
L.M.P.
at paras. 47,
50).

F.
Application
to this Case

[30]

Cases involving sick or disabled spouses are challenging as the payee
spouse generally has an ongoing if not permanent need for support. However,
need is not the sole criterion for entitlement to ongoing spousal support. Section
96(1) requires the court to consider changes in the needs, means, capacities
and economic circumstances
of each person affected by the order
 sought
to be varied (emphasis added).

(i)       Did
the chambers judge err in finding that the appellants retirement from the CAF
did not constitute a material change in circumstances?

[31]

With respect, in my view the chambers judge erred in finding that the
appellants retirement from the military was not a material change of
circumstances. This error likely occurred due to the judges misapprehension of
the evidence that the appellant had elected to take early retirement when in
fact she had elected to retire after completing 25 years of service. Thereafter,
she had no obligation to continue with her military employment and after 26
years of service was entitled to retire and receive her full pension. By then,
the respondent had also received and spent her proportionate share of the
appellants pension.

[32]

The judges misunderstanding of the basis upon which the appellant decided
to retire is also evident in his remarks (at para. 26) in which he
acknowledged that retirement (as opposed to early retirement) can constitute a
material change in circumstances. The judge further observed that while retirement
in general is inevitable and therefore not unexpected, the date of
actual
retirement is not typically known in advance of its actual occurrence. The date
of the appellants actual retirement was clearly not known to the parties when
they entered into the July 23, 2001 Consent Order.

[33]

In
Ross v. Ross
(1994), 7 R.F.L. (4
th
) 146 (B.C.C.A.),
this Court held (at para. 15) that the law does not require payor spouses to
maintain spousal support at a level that forces them to continue to work after
becoming eligible for full retirement benefits. The appellant in this case,
although only 44 years of age at the time of her retirement, could not be
compelled to remain at that employment after she had completed her 25 years of
service in order to maintain her spousal support obligation under the Consent
Order. Moreover, the appellants increasing physical limitations arising from
her knee condition, which the judge acknowledged no doubt made some aspects of
her military employment quite uncomfortable (para. 28), clearly
influenced her decision to retire despite her attempt to continue with her military
employment for an additional year after she had completed her obligatory
service.

[34]

The evidence did not support the judges finding that the appellant took
early retirement. Nor was there any evidence that the appellant chose to retire
in order to avoid her support obligation or any of her other financial
commitments under the Consent Order, all of which she had met. In my view, her
retirement was a material change in circumstances as the primary source of her
income changed from employment to pension and her level of income decreased
significantly thereafter.

(ii)      Did
the chambers judge err in finding that the appellants reduced income after
retirement did not constitute a material change in circumstances?

[35]

The appellants level of income for the purpose of the variation
application was found by the chambers judge to be $52,000 (being $29,000 pension
income and $23,000 part-time employment income). The trial judge appeared to
conclude (at para. 29) that the appellants earning capacity was greater
than her annual employment income of $23,000 from Tim Hortons. However, the evidentiary
basis for this finding is unclear to me and it would seem that based on this
finding the judge imputed a higher level of income to the appellant that was
never identified or explained.

[36]

The appellants $43,000 decrease in annual employment income was clearly
a material change in circumstances. Even if her annual pension income of
$29,000 is factored into the income analysis, and the double recovery issue and
its exceptions (as discussed in
Boston v. Boston,
2001 SCC 43, [2001] 2
S.C.R. 413 at paras. 61-65) are ignored, the appellants income, after
retirement, decreased by $14,000 (from $66,000 to $52,000). In my view, such a
decrease, in the context of these parties standard of living, was sufficient
to meet the threshold test of a material change in circumstances.

[37]

In summary, the appellants decision to retire after 26 years, having completed
25 years of service in the CAF, and in the face of increasing health issues,
was not in my view unreasonable. This resulted in a decrease in her level of
employment income of $43,000 and in her total income (after her pension benefit
had been divided with the respondent) of $14,000. There was no evidence to
support a finding that she had a greater earning capacity than what she was
able to earn at Tim Hortons. In my view, the appellant met the threshold test
of a material change in circumstances for variation of the spousal support provisions
of the Consent Order.

(iii)      Did
the chambers judge err in giving weight to the parties separation agreement on
the variation application?

[38]

L.M.P.
limits the consideration to be given to a separation
agreement on a variation application. While the parties separation agreement was
a relevant factor in granting the Consent Order, the chambers judge in my view
erred in giving it any further weight in determining the variation application.
It is unnecessary to consider a separation agreement in a variation application,
as the agreement is presumed to have been fully considered when the initial
order was made.

[39]

In this case, there was a compelling reason for giving no weight to the
parties separation agreement: the parties had expressly agreed in the Consent
Order that the provisions of the separation agreement were to be set aside and
replaced by the provisions of the Consent Order.

[40]

In these circumstances, I am of the view the judge erred in considering
the parties separation agreement in determining whether the appellant had
established a material change of circumstances.

(iv)     What
is an appropriate variation order?

[41]

The respondents entitlement to spousal support is based on need. During
the parties relationship, the appellant supported the respondent and the
respondent became financially dependent upon that support. Following the
parties separation, the respondents contractual support and the court-ordered
support in the Consent Order was necessary in order to assist the respondent in
addressing the economic hardship that she experienced as a result of the
breakdown of the relationship. The issue, then, is whether, after 12 years, and
in face of the appellants material change in circumstances and the
respondents continuing need, the appellant should be required to pay some
amount of spousal support.

[42]

The quantum of support includes both amount and duration. In considering
an appropriate order, this Court has cautiously applied
SSAG
in variation
and review proceedings following a fact-specific inquiry: see
Beninger v.
Beninger,
2007 BCCA 619
,
47 R.F.L. (6th) 11
; Domirti v. Domirti,
2010
BCCA 472, 10 B.C.L.R. (5th) 281;
Morck v. Morck,
2013 BCCA 186, 44
B.C.L.R. (5th) 235. The circumstances that gave rise to the respondents initial
entitlement to support remained essentially the same for the variation
application. The respondent continues to have few assets, she is unable to work
by reason of her disability and other serious health issues, and she has an
ongoing need for support. The appellant continues have the larger income albeit
it has significantly decreased since the Consent Order. In these circumstances,
I am satisfied
SSAG
can offer guidance in determining the appropriate
order.

[43]

Assuming an eight-year relationship, an annual income of $52,000 for the
appellant, and an annual income of $13,277 for the respondent, the
SSAG
without child support formula yields a range of spousal support in the amount
of $387-$516 and a duration in the range of 4-8 years. At the time of the
application, the appellant had paid spousal support of $500, which had
increased to $658 (as of December 2010), for a period of 12 years. In these
circumstances, I am of the opinion that the appellants obligation to pay
spousal support has been discharged and the respondents entitlement to spousal
support is at an end.

[44]

In the result, I would allow the appeal, set aside the order of the
chambers judge, and order that the provisions of the Consent Order relating to
spousal support be rescinded and the appellants spousal support obligation be terminated.

The
Honourable Madam Justice D. Smith

I AGREE:

The Honourable Madam Justice
Bennett

I AGREE:

The Honourable Mr. Justice
Willcock