Injured in a car accident while working?

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If you were working at the time of the accident it is very important to determine if the other motorist involved in the accident was also working. According to the laws of British Columbia, special rules apply where both you and the other motorist involved in the accident were both working. In such a scenario, if you were injured and suffered loss and expense including a loss of income you can only seek compensation through WorkSafe BC.

There are strict timelines associated with your potential claim. The Workers Compensation Act of British Columbia places a three month limitation on claiming compensation through WorkSafe BC. This means that there is a short time frame to act to preserve your legal rights.

If the other motorist was not working at the time of the accident, then you can elect to make a claim through WorkSafe BC or make a claim against the other motorist through ICBC. The compensation systems under WorkSafe BC and ICBC generally yield very different results. If you have been in a car accident, you should contact Heath Law LLP to discuss your options.

Call 250-753-2202 or Toll Free: 1-866-753-2202

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Family Law – Beneficiary Designations

In the recent case of Moore v. Sweet, 2018 SCC 52 [“Moore”], the Supreme Court of Canada considered whether a new common law spouse became unjustly enriched as a result of her beneficiary designation under her husband’s life insurance plan.

In Moore, the deceased’s ex-wife was designated as revocable beneficiary of her ex-husband’s life insurance policy. After separation, the ex-wife agreed to continue to pay policy premiums with a view to maintaining the beneficiary designation.  The ex-husband subsequently designated his new common law spouse as irrevocable beneficiary without the ex-wife’s knowledge.  When the ex-husband passed away, the insurance proceeds became payable to the new common law spouse.

The ex-wife sued the common law spouse, claiming that the common law spouse had been unjustly enriched and held the amounts paid from the life-insurance policy pursuant to a constructive trust for the ex-wife.

In its analysis, the Court found that the common law spouse had received a “tangible benefit” and became enriched by becoming beneficiary of the insurance policy (paras. 41 and 42). The Court also found that the ex-wife had been deprived of a benefit under the insurance policy (para. 52).  The Court continued on to find that there was no legal reason for the common law spouse’s enrichment at the expense of the ex-wife (para. 88).

The Court found that the monies from the insurance policy were held in trust by the common law spouse for the ex-wife and ordered that the funds be paid to the ex-wife (para 96).

If you would like to book an appointment with any of our family law lawyers, namely Kathleen Sugiyama, Christopher Murphy or Nathan Seaward, please contact Heath Law LLP at 250-753-2202 or TOLL FREE: 1-866-753-2202.

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Is a Gift from a Parent Subject to Division Between Separating Spouses?

Family Law – A Gift of Money from a Parent may still be Subject to Division between Separating Spouses

Under section 85 of the Family Law Act (the “Act”), gifts to a spouse from a third party are excluded property – meaning that they are not divided between the spouses at separation.  However, if a gift from a third party was intended to be made to both spouses, then the gift will qualify as family property and is subject to division at separation.

In Delaurier v. Massicotte, 2018 BCSC 1857, the Respondent sought to assert that a significant portion of the former family home was excluded property, including $100,000.00 which was a gift from the Respondent’s father. The Claimant took the position that the $100,000.00 was a gift to both the Respondent and the Claimant, and was therefore not excluded property.

In every case where a party is claiming that a gift or property is excluded property, the party asserting that position must prove, on a balance of probabilities, that the gift was only intended for them (para 124).

In Delaurier, the Respondent could have called his father to testify, however, he refused to do so on the grounds that his father did not speak English and was blind in one eye (para 132).

Madam Justice Fleming wrote that where a party to litigation fails to call a witness who would have knowledge of the facts and would be assumed to be willing to assist that party, the Court can draw an adverse inference that the failure to call that person amounts to an implied admission that the evidence of the absent witness would be contrary to the parties’ case or at least would not support it (para 130).

In the circumstances, Justice Fleming chose to draw an adverse inference against the Respondent, and found that the gift of $100,000.00 was intended to be given to both the Claimant and the Respondent, and therefore constituted family property.

If you would like to book an appointment with any of our family law lawyers, namely Kathleen Sugiyama, Christopher Murphy or Nathan Seaward, please contact Heath Law LLP at 250-753-2202 or TOLL FREE: 1-866-753-2202.

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Dividends and Determining Child & Spousal Support: Part 2

Part 1 of our article “Dividends and Determining Child & Spousal Support” explained what dividends and grossing up are. Part 2 explains how these lines on the income tax form affect child and spousal support payments.

For child support, the primary concern is estimating the means which the paying parent has available for child support. The more income a paying parent has, the more they will likely be required to pay. For spousal support, the court may award support to a spouse to provide for their needs or to relieve economic disadvantage or hardship resulting from the relationship. The difference in incomes of the spouses will be a critical factor in this determination.

The rules for child and spousal support come from the Federal Child Support Guidelines (the “Guidelines”). While there are many factors and formulas, the court will always want to know the spouses’ gross incomes. For dividends, section 5 of Schedule III requires that the actual amount, rather than the taxable amount, be used to determine a spouse’s annual income. This is a critical difference since the taxable amount is significantly greater than the actual amount. However, section 19(1)(h) of the Guidelines states that the court may add to a spouse’s income when the spouse derives a significant portion of income from dividends. This is to ensure consistency between a spouse earning a salaried income and a spouse who receives dividends instead of a salary.

When a spouse receives a significant part of their income from dividends, the court will determine if that accurately reflects their ability to pay for support. In many cases, people restructure their income by using solely owned corporations, trading their salary for dividends. After this transition, the spouse’s gross income is much lower because the corporation paid the tax, but their net income will be relatively similar to their previous net income.

For example, Widgets Ltd. has an annual profit of $41,000. Last year the sole shareholder, Kim, took home a salary of $40,000 and a dividend of $724.64. Her net income was $33,217. This year she decides to replace all of her salary with dividends. After the corporate tax, she is left with a dividend of $29,710.14. Due to dividend tax credits, her net income is also $29,710.14.

Where a spouse is the sole shareholder of a company and elects to receive dividends from the company in lieu of salary, courts will usually use the taxable dividend amount for the spouse’s gross income when calculating child support. If the spouse does not control any dividends paid to them, then the courts are more likely to use the actual dividend amount.

Things change when the courts consider spousal support. Courts have repeatedly stated that the purpose of adding income in this way is to enhance the resources available for the benefit of the children. While not ruling out the possibility of imputing income to dividends when determining spousal support, court have been extremely hesitant to do so.

Altogether, corporations and dividends can be useful tools in structuring your income and taxes. For spouses that try and use dividends to reduce their child support payments, courts have the tools and are willing to add income in order to provide greater resources for the children. When determining spousal support, courts are more likely to use the actual dividend amount.

If you have questions about incorporation, child or spousal support, or any other legal matter, please call Toll Free:1-866-753-2202 or 250-753-2202 to contact Heath Law LLP Barristers & Solicitors for your consultation.

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Dividends and Determining Child & Spousal Support – Part 1

For anyone who may be paying or receiving child or spousal support, if the spouse paying support receives part or all of their income as dividends, it is important to understand how support payments are calculated. This can be a complicated process, so this blog will be divided into two parts. Part 1 will deal with dividends, grossing up dividends, and dividend tax credits. Part two will explain how much of those dividends will be paid as child or spousal support.

This blog is a simplification and does not represent a complete overview of dividends and income tax. If you want to know more, please seek professional accounting and legal advice.

Salaries are paid by a company to employees before tax is calculated. Dividends are paid out to shareholders from a company’s after-tax profits. So when dividend income is placed on a tax return, the company has already paid tax on that money. However, the Canada Revenue Agency (the “CRA”) wants to estimate how much money an individual would have received as a salary, so the dividend will be grossed up by 38% to reflect the amount of the company’s pre-tax profit was needed to provide a shareholder with the dividend.

For example, Widgets Ltd. has a pre-tax profit of $1,000, and Kim is the sole shareholder. Widget Ltd. could pay Kim a salary of $1,000 and have no profits to pay tax on. Kim would then have to pay income tax on the $1,000. However, Widget Ltd. instead decides to pay corporate tax on the profits and is left with $724.64. The company then pays Kim a dividend of $724.64. When Kim files her income tax, she will have to gross up her dividend by 38% ($724.64 x 1.38 = $1,000).

Now at first look, it may appear that this is unfair to Kim. She now has to pay income tax on more money that she received, but this is where the dividend tax credit (the “DTC”) comes in. The DTC is designed to prevent the CRA from double dipping. It gives the recipient credit for the tax already paid by the company. For 2017, the federal DTC was 15.0198% and the British Columbia DTC was 10%, for a combined DTC of 25.0198%. The DTC drastically lowers the tax rate on dividends.

Kim’s taxable dividend is $1,000. She will get a DTC of ($1,000 x 25.0198%) = $250.20. Kim has $40,000 in employment income, so the marginal tax rate is 22.7%. The income tax she will pay on her dividend the taxable dividend multiplied by the marginal tax rate, less her DTC.

($1,000 x 22.7%) – $250.20 = -$23.20

Kim’s income tax on her dividend is negative (-$23.20 ÷ $724.64 = -3.2%), and while she will not receive a cheque for the DTC (it is non-refundable), it can be used to offset other taxes.

The theory behind grossing up dividends and providing the DTC that an individual should pay the same amount of tax, regardless of whether the money was earned directly (salary) or indirectly (dividend). However, the way in which money is earned and how dividends are paid can significantly affect child or spousal support (see Part 2).

If you have questions about incorporation, child or spousal support, or any other legal matter, please contact Heath Law LLP at 250-753-2202.

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Family Law – Interim Spousal Support

Family Law – Am I Entitled to Interim Spousal Support?

If you are separating or divorcing, you may be entitled to an order for interim spousal support – an order for spousal support before a final order settling divorce, property, support, childcare and other matters.

In Zhang v. He, 2018 BCSC 1622, the court detailed the principles that the Court must consider and applied those principles to find that the claimant was entitled to interim spousal support.

The Court began the spousal support analysis by stating the objectives in determining spousal support from both the Family Law Act (BC) and the federal Divorce Act:

(a) to recognize any economic advantages or disadvantages to the spouses arising from the relationship between the spouses or the breakdown of that relationship;
(b) to apportion between the spouses any financial consequences arising from the care of their child, beyond the duty to provide support for the child;
(c) to relieve any economic hardship of the spouses arising from the breakdown of the relationship between the spouses;
(d) as far as practicable, to promote the economic self-sufficiency of each spouse within a reasonable period of time (at para 19).

The Court then noted that the principles applicable on an application for interim spousal support are:

  1. The applicant’s needs and the respondent’s ability to pay assume greater significance;
  2. An interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor’s ability to pay warrants it;
  3. On interim support applications the court does not embark on an in depth analysis of the parties’ circumstances which is best left for trial;
  4.  The courts should not unduly emphasise any one of the statutory considerations set out above;
  5. On interim orders the need to achieve self-sufficiency is often of less significance; and
  6.  Interim support should be ordered within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise (at para 23).

In applying the above principles, the Court awarded the Claimant interim spousal support on the grounds that:

  • the claimant left a well-paying job in China to move to Canada, and the decision to move was a joint decision after the parties married;
  • the claimant’s English was lacking and she intended to upgrade her education to acquire employment skills and improve her English;
  • neither party would be able to continue living to the same standard as when they were still together; and
  • the respondent was well educated and the parties’ child was in daycare, so the respondent would be able to work while the claimant attended school (at paras. 24 – 30).

In all the circumstances, the claimant was found to have income of $18,000.00 and the respondent was found to have income of $118,968.00 (at para 31). The court found that the respondent must pay the claimant interim spousal support in the “low range” and awarded the claimant $1,105.00 per month until agreement of the parties or further order of the Court.

If you would like to book an appointment with any of our family law lawyers, namely Kathleen Sugiyama, Christopher Murphy or Nathan Seaward, please contact Heath Law LLP at 250-753-2202 or TOLL FREE: 1-866-753-2202.

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Jurisdiction of Small Claims Court in British Columbia

There are three levels of Courts in British Columbia; Provincial Court, Supreme Court, and the Court of Appeal.  Each Court plays a different role in our legal system. For example, provincial Court is set up to adjudicate smaller claims of value up to $35,000.00. Whereas, Supreme Court is generally for claims above $35,000.00 in value. Supreme Court is also where Provincial Court decisions are appealed. The Court of Appeal is specifically for appealing the decisions of the Supreme Court.

It is important to consider the level of Court when considering the type of remedy or solution that would work best within your specific circumstances, as only the Supreme Court can provide certain orders. For example, in order to stop a party from causing further damage to your property, it may be best to ask the Court for injunctive relief, and order, meaning that the Court will order a party to stop from performing a certain action. However, only the Supreme Court has the jurisdiction to offer injunctive relief, as Provincial Small Claims does not have the inherent jurisdiction required to make these orders.

Section 3(1) of the Small Claims Act [RSBC 1996] Chapter 430 outlines the specific orders that the Small Claims Court is able to make:

3  (1) The Provincial Court has jurisdiction in a claim for

(a) debt or damages,
(b) recovery of personal property,
(c) specific performance of an agreement relating to personal property or services, or
(d) relief from opposing claims to personal property

if the amount claimed or the value of the personal property or services is equal to or less than an amount that is prescribed by regulation, excluding interest and costs.

The inability of the Provincial Court to grant an injunction or make a declaratory order was confirmed in Bi et al. v. City of Surrey, 2017 BCPC 386. The Court in Bi et al also confirmed that the Provincial Court does not have the authority to grant damages in lieu of an injunction or a declaratory order. This means that the type of interim orders that the Provincial Court can grant differs greatly from the Supreme Court.

To avoid wasted time and costs, it is important to consider the type of order, and by extension the level of Court that is best for your circumstances.

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Court Considerations in Wills Variation Claims

Wills and Estate Law – Court Considerations in Wills Variation Cases

In the recent case of Peterson v. Welwood, 2018 BCSC 1379 (“Peterson”), a son sought, amongst other things, to vary his father’s will for failing to make provision which was adequate, just, and equitable in the circumstances.

In making its analysis, the Court stated that the following considerations have been accepted as informing the existence and strength of a testator’s moral duty to independent children:

  • the relationship between the testator and claimant, including abandonment, neglect and estrangement by one or the other;
  • the size of the estate;
  • contributions by the claimant;
  • any reasonably held expectations of the claimant;
  • the standard of living of the testator and claimant;
  • gifts and benefits made by the testator outside the will;
  • the testator’s reasons for disinheriting;
  • financial need and other personal circumstances, including disability, of the claimant;
  • misconduct or poor character of the claimant; and
  • competing claimants and other beneficiaries (para 190).

Relevant to the inquiry in Peterson was the fact that the plaintiff’s father had put the plaintiff on title to the father’s residence as a joint tenant, and the plaintiff became the sole owner of the property after his father died. The Plaintiff also received certain Canada Savings Bonds directly from the Deceased.

In balancing the factors noted above, the Court ultimately refused to vary the Deceased’s Will and found as follows:

[246] The plaintiff undoubtedly believes that his father has treated him unfairly. The Deceased’s disappointment and mistrust in his son, whether justified or not, appears to have precipitated the change in his estate planning. However, even with the change, the plaintiff received approximately 51% of the Deceased’s assets as of the date of death. This disposition was one of a range of possible dispositions of his assets. In all the circumstances, I am unable to conclude that the Deceased chose an option that fell outside the range of options that might be considered appropriate by a contemporary judicious parent. The appellate authorities have repeatedly cautioned that if a will-maker arranges his affairs in a manner that falls within the range of options that might be considered appropriate by a contemporary judicious parent, the will-maker’s testamentary autonomy must be respected.

If you have a question about a wills variation issue, please contact Heath Law LLP at 250-753-2202 and ask to speak to someone in the Wills and Estates Department.

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Separation/Divorce: Who gets the family pet?

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A separation can be difficult for all members of the family; the family pet is no exception. Many people may be surprised when they go to court seeking to find a fair way to share the family dog, cat, or other pet, that it is treated like property, not family. The courts have set out several factors that will determine how pets are treated (Oh v City of Coquitlam, 2018 BCSC 986):

  1. pets will not be treated in a manner such as children;
  2. courts are unlikely to consider interim applications for pet ownership;
  3. Canadian Courts are unlikely to find that joint sharing or some form of constructive trust remedy is appropriate; and
  4. that pets are a variant of personal property.

While pets are personal property, they are treated differently than a car or a piece of furniture. There is a requirement that animals, especially cats and dogs, be treated humanely. A court will not award ownership of a pet to a person if it would result in abuse or neglect. Apart from that, the courts will only consider who has legal ownership, not who has the most affection for the pet or treats it better. Courts will not create visitation or joint custody arrangements for pets.

Legal ownership will usually be determined by who owns the pet or who brought it into the relationship. This usually is done by looking at who is the registered owner on the pet’s certificate or who paid for the pet. A person can also show legal ownership if they prove that the pet was gifted to them.

This cut and dry approach might make people think that all judges are heartless, but there are dog lovers on the bench too. In 2018, Justice Lois Hoegg of the Newfoundland and Labrador Court of Appeal dissented when the majority of the court relied on the above approach for determining who got the family dog (Baker v Hamina, 2018 NLCA 15). She thought that when two people contest the ownership of a pet, the court should consider additional factors, including:

  1. who bore the burden of the care and comfort of the animal;
  2. who paid for the expenses of the animal’s upkeep; and
  3. what happened to the animal after the relationship between the contestants changed.

The best way to ensure that your pet is treated like family and not property is to resolve that issue before it goes to court. If you would like to book an appointment with any of our family law lawyers, please contact Heath Law LLP at 250-753-2202.

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Suing your Contractor

Hiring a contractor to perform work around your house or property can be a long and complicated process. It is worse when the work is not done properly, resulting in delays or requiring repairs to the work completed by the contractor. If a contractor refuses to remedy the defects, a lawsuit might be the best option to ensure that you are compensated appropriately for the breach of contract. If you ultimately decide to sue the contractor, a Court will determine if the contractor acted negligently when performing the work.

The Provincial  Court of British Columbia provides a good summation of the law in the case of Morgan and Gaiga v. Pacific Coast Floor Covering Inc., 2018 BCPC 236. In that case, the Court was considering if flooring had been installed negligently. When determining if the flooring had been installed negligently, the Court opined that a contractor is required to perform the work to a usually ascertained objective standard. A contractor, when completing a job, must ensure that:

  1. The materials are of proper quality
  2. The work is performed in a good and workmanlike manner;
  3. The materials and work, when completed, must be fit for their intended purposes; and
  4. The work must be completed without undue delay.

When determining if work is completed to the standard required by law, a Court will consider a broad category of factors. A Court will consider the industry standards associated with that particular type of construction, any regulatory standards for the work performed, or the manufacturer’s installation instructions for the product. When considering these elements, no one element will be determinative, but a Court will attempt to determine if the contractor performed the work negligently. Ultimately, the Court did find that the flooring was not installed with generallyaccepted practices and standards in the industry.For example, the Court reviewed the manufacturer’s Installation Instructions and the industry standards adopted by the Canadian Wood Flooring Association. Consequently, the Court awarded a judgment to repair the negligent flooring.

If you have concerns regarding work completed in or around your home, please give us a call to discuss the matter. Deciding on the best course of legal action will require a careful analysis of the specific circumstances.

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