VIVIAN JEAN SOUDER Plaintiff/Petitioner - v. -, 2003 ABQB 258

Souder v. Wereschuk, 2003 ABQB 258 Date: 2003 03 20 Action Nos. 9403 22857; 4803 97697 IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL DISTRICT OF EDMONTON BETWEEN: VIVIAN JEAN SOUDER Plaintiff/Petitioner - and - STANLEY GEORGE WERESCHUK Defendant/Respondent _______________________________________________________ MEMORANDUM OF DECISION of the HONOURABLE MR. JUSTICE E. A. MARSHALL _______________________________________________________ APPEARANCES: K. Linton for the Plaintiff/Petitioner H. Henderson for the Defendant/Respondent

Introduction [ 1 ] The parties were married in 1989 and separated in 1994. They executed a Separation Agreement on April 25, 1997. It provided for sale of the Matrimonial Home and division of the proceeds. The Plaintiff waived her claim for spousal support. [ 2 ] Although the parties were divorced in December 2001, the matrimonial home has never been sold nor have the settlement monies been paid to the Plaintiff. The Plaintiff alleges that the Defendant failed to disclose the winning of a $500,000 lottery prize in June 21, 1995.

As a result, she alleges material misrepresentation and claims a matrimonial property order reflecting all the assets of the Defendant. She is also disabled and receiving long term disability benefits, so she claims spousal support. [ 3 ] The Defendant asserts that the Plaintiff is bound by the terms of the Separation Agreement and that he has paid substantial sums to her toward the property settlement agreed upon. He wants credit for such payments. He desires an opportunity to pay the Plaintiff the balance which would have been due to her from the sale of the home at the 1995 value.

The Relevant Facts [ 4 ] During the marriage both parties were employed: the wife was a clerk for IPL and the Defendant an aircraft mechanic for Canadian Airlines International. They each contributed $10,000 for the down payment on a house they purchased in Edmonton. Their only other significant assets were some RRSPs and modest vehicles. [ 5 ] They separated in August 1994. She issued a Petition for Divorce and Statement of Claim for a Matrimonial Property Order on December 20,1994. In June 1995, he won the lottery prize. The Defendant never told the Plaintiff of his good fortune.

On January 4, 1996, the Defendant swore a Statement of Property in the Matrimonial Property action before his then solicitor. It set out the property he owned in

Schedule A. It also referred to property disposed of within one year prior to or since the commencement of the action. There was no indication of any funds or investments that were the result of his receiving the prize. [ 6 ] The Defendant was examined at Discovery on March 1, 1996. Part of the examination was as follows: Q Okay. This may sound like a strange question, but you haven’t won a lottery or anything like that in the last year? A It might be a strange question. Yeah, I won 10 bucks here and 10 dollars there and – Q You haven’t won a substantial amount of money over a thousand dollars in a lottery?

A Not that I know of. [ 7 ] The Plaintiff subsequently learned of the lottery win when an acquaintance sent her a newspaper clipping that set out the news. The evidence did not show when this occurred. In any event the only assets disclosed by the Defendant in his Statement of Property were the home, household items, a 1985 truck, a $7,000 motorhome acquired after separation and a life insurance policy of uncertain value. He also admitted to disposing of a 1984 van, $7,000 in RRSPs and Canadian Airlines shares worth $3,000.

[ 8 ] When questioned in testimony before me about his omission of any mention of the lottery funds from his Statement of Property, the Defendant stated that he did not consider money to be property. When confronted with his dishonesty in the Discovery, he insisted that the Court Reporter had erred in the recording of the testimony he gave. He claimed that he had actually testified that he had not received any lottery funds in a calendar year. The Defendant became quite hostile and confused in trying to explain the inaccuracy in his testimony.

He brought forward no evidence to support his contention that the Court Reporter erred. [ 9 ] The Defendant was also asked why he never complied with the terms of the Separation Agreement in selling the house and dividing the proceeds. He stated first of all, that the Agreement was incorrect in that it should have provided five years for the sale. It allowed three. He alleged five years was the actual agreement. When he was reminded that over five years have elapsed, he said that there was a verbal agreement with his wife that she would look after the house and water the plants in his absence.

She failed to carry out these terms so he felt quite justified in breaching the agreement for sale of the house. It is apparent that he has little regard for the terms of a lawful written agreement or the court process, including the obligation to be truthful in sworn testimony and affidavits. The Defendant’s perjury makes the assessment of his evidence of the disposition of the lottery funds and his present financial status difficult. [ 10 ] The Defendant has been the subject of several orders requiring him to disclose his assets.

While the Defendant admits receipt of the lottery funds, he claims they have all been spent. He states that he gave seven nephews and nieces $5,000 each. He loaned over $10,000 to his brother which has not been repaid. He purchased a Jeep for $13,000 which he subsequently gave to the Plaintiff, apparently for a Christmas present. He purchased two balloons, one a hot air and the other helium, for something like $25,000 each. He also loaned some money to an acquaintance in the Okanagan to engage in the balloon business, which has not been repaid, although legal action has been taken.

The Defendant claims that he has spent approximately $100,000 per year over the last few years when his income averages $50,000 per year. This appears to be his major explanation for the dissipation of the prize money. [ 11 ] As a result of the lack of honesty of the Defendant in his Discovery, in his Statement of Property and his testimony before me, I cannot accept his testimony on many key matters. I am confident he never disclosed the lottery win to his counsel at the time the Statement was prepared and sworn. I add that the counsel who prepared the statement is not the counsel appearing at the trial.

Can the Separation Agreement be Set Aside? [ 12 ] The Plaintiff does not allege fraud on the part of the Defendant; she alleges material misrepresentation. The Separation Agreement states in the

preamble that: “Whereas each party is fully advised and informed, to their satisfaction, of the property, estate and prospects of the other party....” It is apparent that the scheme of the Matrimonial Property Act of this Province is to require each party to divulge their assets in the Statement of Property which must be prepared and sworn by each of them. This procedure was followed long before the parties agreed to contract out of the provisions of the Act and divide their property.

The Plaintiff entered into the Separation Agreement only after she gained evidence under oath of the assets of the Defendant. [ 13 ] The law provides that a contract which divides the assets of married parties will not be set aside on the ground of unfairness alone. However, the law provides that where full disclosure is required, the contract can be set aside where there is material misrepresentation by one of the parties. Failure to provide disclosure where an obligation to provide such exists is a misrepresentation which constitutes a breach of contract. See Moore v.

Moore 2000 ABCA 102 . [ 14 ] There can be little doubt that the acts of the Defendant in refusing to disclose or admit to his lottery winnings amounted to material misrepresentation. He was obliged by the provisions of the Act to list his assets. Such a disclosure is regularly part of the steps taken in a matrimonial action before the parties conclude the division of their assets by Separation Agreement.

It is evident that the Defendant was deceptive and obstructive with the legal process in the division of the couple’s possessions. [ 15 ] The Plaintiff’s counsel urged one of two courses as a remedy; this Court can declare the agreement at an end due to the material misrepresentation and divide the property anew. Alternatively, a breach of the agreement can be found and damages awarded for the non-disclosure and concealment.

It appears to me that while the same financial quantum might well result, the better course is to divide the property as contemplated by the Matrimonial Property Act , which permits the transfer of actual assets, rather than a judgment for damages only. The Matrimonial Property

[ 16 ] The value of the pensions of each party has been calculated and is included in reports in evidence. The only significant difference in the position of the pensions is that the employment of the Defendant commenced 4.07 years before his marriage so a portion of his pension is exempt. The Plaintiff’s employment commenced after her marriage so no portion of her pension is exempt. The pension of the Plaintiff continues to accumulate, notwithstanding her leave from work, and her receiving long term disability benefits.

I fix the present value of the Plaintiff’s pension at $40,226 and the Defendant’s at $122,626. In each case I have assumed the earliest date the pension can be received. The Defendant testified of his intention to retire in one and a half years at 60. It seems clear the Plaintiff will not return to work and she can take her pension at age 55.

In both cases I have used the value, without a discount for tax. [ 17 ] The matrimonial property in the possession of the Defendant consists of the following: Scotiabank RRSP $ 2,558 Royal Trust RRSP (redeemed) $ 7,031 Two Hot Air Balloons $ 7,500 Equity in 1999 Ford Truck $ 3,000 Canadian Airlines Shares (redeemed) $ 4,164 Air Canada Shares (redeemed) $ 1,275 Air Canada Pension $122,626 TOTAL $148,154 The house is held in joint tenancy.

The appraised value is $145,000 and the mortgage is $30,604, for an equity of $114,396. [ 18 ] The matrimonial property in the possession of the Plaintiff is as follows: Scotia McLeod RRSP $ 5,339 TD RRSP (redeemed) $ 2,035 Scotiabank RRSP $ 21,690 IPL Pension $ 40,226 TOTAL $ 69,290 I will not give the Defendant credit for any debts. He claims a $25,000 bank overdraft and about $2,000 to Trans-Canada Credit but I have no corroboration of these debts. They may have been incurred for legal bills or simply profligate spending. He travelled to New Zealand last year for balloon competitions.

I will consider his paying out a loan of $23,386 to the Bank of Montreal after the parties separated, apparently from the lottery funds.

[ 19 ] This leaves the matter of the lottery prize. It was acquired ten months after the separation of the parties. Burrows J. considered the status of lottery winnings in R.A.N v. L.A.N. 1998 ABQB 402 . He concluded that a deviation from the principle of equality was proper since the property was acquired after separation. However, in that carefully considered decision, he concluded it was only one aspect of s. 8 of the Matrimonial Property Act which needed to be considered.

He ordered that the wife receive one-quarter of the total of nearly $8 million won in the lottery. [ 20 ] In the present case, it could be argued that the length of the marriage is a factor to be considered. They were married about five years when the prize was won. There was, however, not a significant “degree of separation,” as considered in the decisions set out by Burrows J. The parties were nearly two years short of entering into a separation agreement and the Plaintiff began receiving interim spousal maintenance a few months later.

I conclude that the Plaintiff should receive one quarter of the lottery proceeds. [ 21 ] From this amount there should be deducted the Plaintiff’s one half share of the Bank of Montreal loan, being $11,693. The Plaintiff also received the Jeep. The value of the Jeep at the time of the transfer was not clear in the evidence. Nor was the date. It was well after divorce proceedings began. The Jeep’s present value is $7,000 to $10,000. I fix the value of the Jeep at transfer as $10,000. The loan payment and Jeep were part of the lottery prize the Defendant did not share otherwise.

So the Defendant’s liability of $125,000 to the Plaintiff should be reduced to $103,307. The Defendant also claimed to have paid various other amounts to the Plaintiff. These were denied by the Plaintiff and no proof of payment was provided. Those claims are not allowed. [ 22 ] The result is that without consideration of the house or the lottery proceeds, the Defendant has $78,864 more in assets than the Plaintiff. Under an equal division of the matrimonial property he is obliged to pay her $39,432. In addition to this he must pay her $103,307, representing part of the lottery prize.

His total obligation to her is $142,739. [ 23 ] The only asset on which the Plaintiff could realize an immediate return is the house of the parties. The value is $114,396. Half of that is the property of the Plaintiff and she will incur expenses in selling the property. I will allow $7,000 for the expenses in selling the house. The remaining $107,396 represents $53,698 to the credit of the Defendant. The house will be transferred to the Plaintiff forthwith. The Defendant will vacate the house by June 30, 2003. I am mindful of the fact that Defendant wants to purchase the house at 1995 value.

The short answer is that he had years from the Separation Agreement to buy out the Plaintiff, when he also had the money. He failed to do so. The assets are being divided at the date of trial, which is the well established law of this province. The Defendant also claims that he has spent substantial amounts on renovations such as new carpet, fireplace and vanity. He paid the mortgage through the years but has had the benefit of a home. He also received rent for over two years from renting a portion of the premises. He is not entitled to any further credit relating to the house, in all the circumstances.

The remaining amount due the Plaintiff is $89,041. [ 24 ] The significant remaining asset of the Defendant is his pension. I give leave to the Plaintiff to make application for attachment of the pension. [ 25 ] The Plaintiff will have a judgment against the Defendant for the balance of $89,041. She will have the property listed in para. 18 and may realize her judgment on the assets in para. 17, as she chooses.

Spousal Support [ 26 ] There is no doubt that due to the debilitating nature of the Crohn’s Disease, from which she suffers, the Plaintiff will likely never be gainfully employed again although she is just 49. She has had this disease since she was in her early 20's. She has had numerous surgeries which have resulted in the removal of most of her large intestine. Is she entitled to maintenance under the Divorce Act of Canada ? [ 27 ] The primary authority from the Supreme Court of Canada on the subject is the decision of Bracklow v. Bracklow , 1999 CanLII 715 (SCC) , [1999] 1 S.C.R. 420 .

The Divorce Act provides for spousal support in three different models of marriages. The compensatory model contemplates a union where a spouse has sustained an economic loss through marriage, as in foregoing a career. The contractual or consensual model is found where there is an express or implied agreement between the couple to pay support. The third model is non-compensatory and arises from the social obligation that may arise from the marriage itself. In these marriages it can be apparent that the parties conducted themselves in a situation of mutual interdependence such as in assisting each other with

extraordinary expenses or assisting financially while the other party was ill. [ 28 ] Under the Divorce Act there must be (1) recognition of the economic advantage or disadvantage arising from the marriage or its breakdown, (2) relief of economic hardship arising from the breakdown of the marriage, and (3) promotion of economic self- sufficiency of the parties. No single objective is paramount.

The court must consider the condition, means, needs, and other circumstances of the parties, including the length of cohabitation, the functions each spouse performed, and any order, agreement or arrangement relating to support. [ 29 ] The Plaintiff’s present income is $21,500 per year, from long term disability benefits. The Defendant’s is about $53,000. The present marriage and cohabitation period was five years. It is not clear exactly what the functions were of each party during their marriage. They were both employed and neither had children. They contributed equally to the down payment of their home.

They each paid household expenses; the proportions are not clear. There can be no doubt that the parties are each somewhat poorer as a result of the marriage breakup but this is what normally occurs where expenses for costs such as shelter no longer are shared. There was an order for interim spousal support for $500 per month which the Defendant paid for much of 1995 and 1996. However, the Plaintiff agreed to waive any right to maintenance in the 1997 Separation Agreement and this would appear to balance that consideration. [ 30 ] It is evident there is no basis for a contractual model of support here.

The establishment of a compensatory model is difficult. The marriage was fairly short; the Plaintiff can point to no economic disadvantage arising from the marriage. It was not shown that the Plaintiff ever earned more than she did during the marriage. Her inability to be employed at present arises from her chronic illness. She is able to support herself although not as well as she did previously, when they shared some expenses. [ 31 ] Insofar as the social obligation model is concerned, there is no evidence that the parties lived in a mutually dependent state during their marriage.

The Plaintiff was paid when she was too ill to work because of her employment benefits. It was not a matter of the Defendant providing assistance to her in her need. [ 32 ] I conclude that the Plaintiff has not established entitlement to spousal maintenance. It may well be that some short term assistance was proper but this has been paid through the interim order. The application for spousal maintenance is dismissed. Costs [ 33 ] The Plaintiff is entitled to her costs. When the course of litigation is examined, it is evident, as I already stated, that the Defendant has been obstructive throughout.

His deceit and perjury are worse, however. In these particular circumstances it is appropriate that the Defendant should be penalized in costs. I conclude that the Plaintiff should have costs on the basis of her and her own solicitor from the date of his swearing his Statement of Property, which was January 4, 1996. [ 34 ] Counsel will check my calculations. They may see me about any matters arising and I request that they do so within thirty days. HEARD on the 13 th and 14 th day of March 2003. DATED at Edmonton, Alberta this 20 th day of March 2003. __________________________ J.C.Q.B.A.