Elfar v. Elfar, 2011 ABQB 444

Court of Queen ’ s Bench of Alberta Citation: Elfar v. Elfar, 2011 ABQB 444 Date: 20110707 Docket: 4803 146212 Registry: Edmonton Between: Hesham Waleed Elfar Plaintiff Defendant by Counterclaim - and - Asmahan Adel Elfar Defendant Plaintiff by Counterclaim _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice D.A. Sulyma _______________________________________________________ Introduction [ 1 ] As I have outlined in a previous judgment, these parties were set to proceed to a four day trial in April of 2010. Just before that date, Mrs.

Elfar changed counsel and sought an adjournment. Ms. Ares, counsel for Mr. Elfar opposed the adjournment application, and as a result Justice Hillier split the trial issues of matrimonial property from the support and parenting issues. I heard the property issues in April and rendered an oral judgment on September 23 th , 2010. [ 2 ] In November, I heard further evidence with respect to child and spousal support, parenting, and some unresolved issues from

my previous judgment. [ 3 ] In my first judgment, I covered the parties’ marital history, Mr. Elfar’s employment and business history, and other financial issues. I will not re-recite those facts unless there are specific facts that I must reiterate to make findings here. Facts [ 4 ] Briefly, this was an 11 year marriage, and there are two young children who were ages four and eight at the time of separation in April 2008. Mrs. Elfar did not work outside the home during the marriage and is now 34 years of age. [ 5 ] Mr.

Elfar is a qualified engineer and a partner, through sole ownership in his own company Form Group, in A & E Engineering Company. A & E has operated for many years as a prosperous business. Mr. Elfar’s income history includes draws from both A & E and Form Group, which in the years before the separation amounted to annual six-figure incomes. A constant theme in the property trial was the draws Mr. Elfar made from A & E that went into the building of a “dream home” from 2004-2008. Lines of credit were established, but were not significantly drawn upon until after the date of separation.

As discussed in my previous judgment dealing with matrimonial property, that dream home was eventually sold, at a loss. I note at this point that the relevance of those draws is that they indicate the kind of income Mr. Elfar was able to generate from his partnership in A & E. [ 6 ] These draws for the construction of the dream home resulted in a significant tax liability. A tax plan was developed and implemented through a consent order that split that income between the parties and treated the draws as dividends and shareholder loans.

This tax plan affected ultimate balance sheets of both Form and A & E for those years. [ 7 ] Mr. Elfar has not paid any spousal support since separation, however, he continued to make the mortgage payments and some other payments on the matrimonial home until it was sold. Macklin J ordered him to pay child support based on income of $140,000.00; later Germain J ordered child support based on an income of $150,000.00. Germain J’s order required Mr. Elfar to continue to make the mortgage payments on the matrimonial home ($1300.00), and to pay the property taxes and utilities in lieu of spousal support.

He complied with the order, except he did not pay the taxes for some periods of time. [ 8 ] Mr. Elfar’s partner in A & E is Mr. Nunas. He testified in the trial that while he and Mr. Elfar were equal partners, in the years following the separation Mr. Elfar was committing less time to the business in order to finish the dream home (2008) and to deal with this litigation (2009). As a result, the partners agreed to adjust their respective shares in draws and income to reflect Mr. Elfar’s reduced participation. Mr. Nunas received two thirds and Mr. Elfar, one third.

While in my property judgment I commented on the coincidental timing of this change to the date of the parties’ separation, I found that Mr. Nunas was an independent and reliable witness. Issues [ 9 ] The issues here are: 1. Is retroactive spousal support appropriate in these circumstances? 2. What income should be attributed to Mr. Elfar for the purposes of current and prospective support? This question includes the following sub-issues: A. Have amounts drawn already been considered as property and therefore should not be considered to determine income? B. What was Mr. Elfar’s income post-separation? C.

Retroactive child-support

3. Spousal support A. Entitlement B. Quantum C. Duration 4. Mr. Elfar seeks a true shared parenting regime. Mrs. Elfar opposes such a change. Obviously a true shared parenting arrangement would alter the quantum of Mr. Elfar’s child support obligations. 5. Miscellaneous property issues. Issue 1 - Retroactive Support [ 10 ] Mrs. Elfar has not received any spousal support since the time of separation in 2008. Mr. Elfar did pay child support based on court orders deeming his income at $140,000.00 per year and then $150,000.00. He also paid amounts to maintain Mrs.

Elfar and the children in the matrimonial home by paying expenses such as mortgage, utilities and some taxes. I note that by making these payments, Mr. Elfar was also increasing the value of the asset. [ 11 ] Mr. Elfar maintains that on a true analysis of his income since separation, he has overpaid amounts on account of both child support and what could have been deemed to be spousal support. However, he is content to not make a claim for over-payment. [ 12 ] Counsel for Mrs.

Elfar has urged upon me a number of alternative methods of calculating arrears of child support and spousal support depending upon several different assumptions. One set of assumptions would result in arrears being payable in the sum of $153,213.00. [ 13 ] Ms. Ares on behalf of Mr. Elfar submits that this analysis constitutes prohibited double dipping, given that all funds drawn as income ultimately went into the dream house or to family expenses. She also notes that if Mr.

Elfar is saddled with such a debt for retroactive support he would be, according to some financial evidence and by her submission, bankrupt at the time of my judgment. [ 14 ] I note that the cases submitted to me by both counsel are not of particular assistance as the facts are not consistent or comparable to those before me. I further note the examples given to me in argument regarding how a couple or a spouse deals with income in saving it or putting it into assets are not of great assistance. [ 15 ] I found in my earlier judgment that Ms. Elfar was not informed about money drawn and put into the dream house.

However, there was a tracing of such money and ultimately the money was traced into a joint asset that was eventually divided (although the couple did not recover their original investment). In this case, I find that fact, along with the fact that Mr. Elfar was paying amounts such as mortgage and utilities, to be significant enough that an award for retroactive support to the time of separation would be inappropriate. [ 16 ] However, Mr. Elfar’s payments on house expenses were less than anticipated by Justice Germain’s order and he has not paid amounts that could be attributed to spousal support since Ms.

Elfar vacated the matrimonial home July 1, 2010 and he ought to have. There will be an order for retroactive spousal support from that date. Thus I must consider his income for the purpose of awarding spousal support since July of 2010. Issue 2 - What income should be attributed to Mr. Elfar for the purposes of current and prospective support? A. Have amounts drawn already been considered as property and therefore should not be considered to determine income?

[ 17 ] Counsel for Mrs. Elfar submits that the question of past draws is relevant both to the division of matrimonial property and to the issue of income having been used for investing in matrimonial property, and to the calculation of income for past and future support purposes. [ 18 ] However, counsel for Mr. Elfar insists that this approach constitutes prohibited “double dipping”. She submits that the increase in Mr. Elfar’s income in 2008 was not a true reflection of his income, but rather the result of previous draws and the effect of the tax plan. She submits income during that period reflects sums Mr.

Elfar drew out of the company in the previous three or four years, and invested in the dream home. Further, she notes that this income is anomalous and falls within the Court of Appeal ruling in Ewing v. Ewing , 2009 ABCA 227 .

At paragraph 35 the Court states the test: “Is the increase in income due to the sale of assets which have already been divided between the spouses, so that including them as income might be akin to redistributing what has already been shared?” or “Did the non-recurring gain even generate cash, or was it merely the result of a restructuring of capital for tax or other legitimate business reasons?” [ 19 ] I do not find that the facts here meet the test and do not find a consideration of income for spousal support would in any way constitute double dipping. The increase in Mr.

Elfar’s income was not due to a non-recurring sale of assets already divided, and while there was attribution of sums drawn implicitly in the tax plan, those sums represented actual cash drawn out of A & E over a period of years. The past draws that were paid into the building of the dream home undoubtedly constitute property. However, those draws are also indicative of Mr. Elfar’s income in the years before separation and post-separation.

Considering these funds for the purpose of imputing income is a function of estimating current and future income, not a division of money earned and already distributed as property. [ 20 ] Further, counsel for Mr. Elfar argues that these draws do not reflect income, because if one traces the monies drawn and spent, the family lived on considerably less than the draws, that is, about $90,000.00 a year and not the six-figure income Mr. Elfar was drawing from his company. In my view this is a flawed position not supported by law.

Where and how the family spent the money is irrelevant to calculating the income drawn from source. Rather than building the dream home, Mr. Elfar could have drawn the same amount and lived a more lavish lifestyle, but the income drawn and properly to be considered for support purposes would be the same. [ 21 ] I reject the contention that support should be calculated on lifestyle choice versus true income.

I must consider, however, the quantum of the draws and what should be considered as income for calculating current and future income given the evidence that A & E has suffered some loss of business due to the recent recession, that it still maintains sums in the company on account of deferred revenue, and there continues to be significant cash remaining in the company despite a balance sheet reflecting negative equity and two years of losses. B. What was Mr.

Elfar’s income from post-separation to date of trial? [ 22 ] The following are the relevant provisions of the Federal Child Support Guidelines , SOR/97-175 (the Guidelines): 16. Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. 17.

(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.

(2) Where a spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the spouse’s annual income under

section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of

Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate. 18.

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under

section 16 does not fairly reflect all the money available to the spouse for the payment of

child support, the court may consider the situations described in

section 17 and determine the spouse’s annual income to include (

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or (

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. [ 23 ] Counsel for Mrs. Elfar argues that ss. 17 and 18 of the Guidelines apply here, as Mr.

Elfar’s income has varied over time, with the “peaks and valleys” of the economy, and therefore he submits it would be appropriate to consider three years’ income to determine an amount of attributed income that is fair to both parties. Further, as the sole shareholder in Form Group and equal partner by shareholding in A & E, Mr. Elfar’s annual income as determined under

section 16 does not fairly reflect all the money available to him for the payment of child or spousla support. [ 24 ] I agree that simply relying on income as reported in Mr. Elfar’s tax return would not be the fairest determination of income, and I am of the view it is proper for me to consider his income over the last three years to determine what is fair and reasonable in light of any income patterns and fluctuation in income. In particular, I note that for the years 2008 and 2009, Mr. Elfar and Mr.

Nunas agreed to divide their income from A & E on 1/3 and 2/3 basis, rather than a 50/50 split. [1] There may have been good and valid reasons for the change in the percentage of draws during some of this period but the evidence does not disclose a continuing reason; Mr. Elfar is past his personal woes and by the evidence has always been a strong managing partner outside of these particular woes. Further, the evidence is that Mr. Elfar drew significant income in addition to his salary from the company and had access to credit cards paid by the company and Air Miles through the company.

There also remains a significant amount of cash in this company, notwithstanding that the financial statements as drawn for A & E show a loss for the years 2009 and 2010. [ 25 ] Counsel for Mrs. Elfar suggests several possible approaches to calculate income: a. The average amount of drawings available to Mr. Elfar from April 1, 2005 to March 31, 2009, less the amount paid to A & E to reflect re-payment of that portion characterized as loans: $253,561.75 [2] ; or b. Calculate income for each year, using an average of the previous three years based on the following possible formulas: i. Salary only; ii.

Salary plus a share of corporate income; iii. Draws; iv. Draws less loans. [ 26 ] The following is a

summary of Mr. Curtis’ analysis of income using each of the above methods: 2007 2008 2009 2010 Salary only $196,990.00 $482,000.00 $75,000.00 $93,649.00

Salary plus 1/2 corporate income $201,168.00 $481,742.00 $159,797.00 $21,716.00 Draws $324,846.00 $770,814.00 $130,227.00 $158,458.00 Draws less loan $273,140.00 $269,739.00 $256,895.00 [ 27 ] Attributing income to Mr. Elfar for purposes of support remains a very difficult and complex issue. As with property, the issue is complicated by Mr. Elfar’s practice of drawing from A & E for a number of years without accounting properly for loans and dividends. The tax plan and eventual sale of the dream home solved this problem, at least from a tax perspective. But the practice itself, which Mr.

Elfar seems to be inclined to continue, complicates the task of determining the accurate amount of income available to him for support purposes. [ 28 ] From the history of amounts drawn by Mr. Elfar over the years both before separation and to date, it is clear Mr. Elfar drew substantial amounts that were available to him as income. As I stated in my property judgment, it is also clear that over the years A & E’s revenues and Mr. Elfar’s drawn income increased, at least until 2008.

My previous judgment concluded that on a proper calculation and consideration of the financial statements, there was more value to Mr. Elfar’s interest in A & E than was contended by Mr. Elfar and reflected in the financial statements. Those statements for the last two years reflect some loss of revenue. However, they also indicate a substantial amount of retained earnings in the company. [ 29 ] Mr. Curtis on behalf of Mrs. Elfar concedes that a calculation of income must take into account the portion of the draws attributable to loans and that these should be excluded in determining Mr.

Elfar’s income for support purposes. Mr. Curtis also concedes that there were hills and valleys in the revenue of this business, and certainly that was reflected in evidence in the property trial regarding the recession which occurred commencing around 2008. [ 30 ] Ms. Ares, on behalf of Mr. Elfar, continues to argue that Mrs. Elfar’s calculations do not properly reflect future costs payable on personally held deferred earnings based on Mr. Farrell’s evidence and her cross examination of Mr. Thoman.

She also has presented a set of calculations which would indicate, in her words, that the actual analysis of their lifestyle spending would put his available income for support purposes at $90-$100,000.00. She opposes any averaging of incomes as she submits that this does not in any way properly take into account the mountains and valleys of earnings in this business as attested to by Mr. Nunas. In particular, she argues that the 2008 income is skewed because it merely reflects the basis of the tax plan which showed as income the extraordinary draws over the preceding three or four years. [ 31 ] Mr.

Curtis, briefly in response, points out that if he had applied for support in June of 2008, and relied on the March 31 st , 2008 statement indicating Mr. Elfar earned $482,000.00, that counsel for Mr. Elfar would have responded equally vehemently with a submission that Mr. Elfar’s income ought to be averaged. Just as it would have been an appropriate submission then, he submits that is also now the proper method of dealing with income. [ 32 ] In my view, the most accurate way to analyse the income available to Mr. Elfar is by using the footnotes and premises in Mr.

Farrell’s document, and calculating income annually based on three year averages of the draws less the loan amount applicable to the year in question. Where there are differences in calculating the 2009 draws (Mr. Farrell’s numbers are higher), I have used the number proposed by Mr. Curtis. [ 33 ] I find that this approach properly takes into account the fact that beyond his salary, Mr. Elfar has the ability to access significant income such as by use of credit card expensing and properly takes into account the fact that there continues to be a significant amount of cash left in this company.

Moreover, by averaging out the draws over the preceding three years, the calculation takes into account the fact that the large amount of income attributed to 2008 under the tax plan, that brought draws from previous years into income, was evidence of income available to Mr. Elfar. [ 34 ] I do not accept the argument by Ms. Ares that Mr. Elfar’s income should be calculated solely on the salary he chose to pay

[ 34 ] I do not accept the argument by Ms. Ares that Mr. Elfar’s income should be calculated solely on the salary he chose to pay himself, nor do I accept that the appropriate level of income should be calculated on the basis of “lifestyle” spending. Ms. Ares argues that the prospective income calculation should be based on the income being drawn from the company currently and notes that recently Mr. Elfar drew only $5,000.00 a month as compared to Mr. Nunas’s draw of $10,000.00 a month.

She suggests that even if the draws were equal, then the total for partners’ draws available from the company for a year would be $180,000.00, and a 50% share to Mr. Elfar would amount to $90,000.00. That is the sum she submits is appropriate to consider as income for support purposes. [ 35 ] I find it appropriate to apply ss. 17 and 18, rather than to rely solely on Mr. Elfar’s declared income on his tax returns.

I found in my previous judgment that A & E is a prosperous company that suffered some decrease in income after the recession, but that in 2010 there was ten-fold increase in cash in the company, that accounts receivable were up $226,000.00 over the previous year, and that income, even before considering so-called deferred revenue, was only reduced from $1.7 million to $1.5 million. [ 36 ] I must accept Mr. Nunas’s evidence with respect to a present change in the split of income from A & E. I would expect that to change at this time given that the dream home has been sold and the divorce litigation is ending. Mr.

Elfar has always been, as his ex- wife described, a “workaholic” and appears from the whole of the evidence to be invaluable in this partnership. Also, this so-called change was in salary drawn and not income totally drawn. Thus, I accept that draws, not just salary draws, is the preferable and most accurate method of analyzing guideline income here. [ 37 ] I have chosen this method as one which is based on the historical draw pattern.

This pattern differs from attributions of former and reduced salary draws (i.e., one-third, two-thirds) and given that I have accepted this method, the change in salary draw loses relevance. This is appropriate re Mr. Elfar’s support obligations. Mr. Elfar’s arrangement with Mr. Nunas is between the two of them. [ 38 ] Mrs.

Elfar has set out the yearly calculations: Guideline income as at April 1, 2008 (Avg. of 2006, 2007, and 2008 draws less loan (2007 and 2008)) 273, 140.00 Guideline income as at April 1, 2009 (Avg. of 2007, 2008, and 2009 draws less loan (2007 and 2008)) 269,739.00 Guideline income as at April 1, 2010 (Avg. of 2008, 2009, and 2010 draws less loan (2008)) 256,895.00 [ 39 ] The evidence from the most recent financial statements show that in addition to salary of $93,649.00, Mr. Elfar drew a further $61,027.00 from A & E to Form Group as a shareholder’s loan for a total of $154,676.00. At some point, Mr.

Elfar will either have to pay back the shareholder’s loan or once again take it into income and pay tax on it. In any event, it is evidence of the amount of money Mr. Elfar is able to draw out of the company. On a go-forward basis, I find that the guideline income for the next three years should be calculated on the average of the draws for years ending March 31, 2009, March 31, 2010 and March 31, 2011. Moreover, the parties may not apply to Court vary the Guideline amount for at least three years.

There needs to be some finality to this drawn-out litigation. [ 40 ] When calculating the amount of child support, Mrs. Elfar’s income arising from the tax plan is not to be taken into account as this was never income in her hands. C. Retroactive child support [ 41 ] Child support must be re-calculated for each of the years it has been paid based on the lower guideline incomes set by Macklin J and Germain J and the difference shall be paid as a lump sum.

Issue 3 - Spousal support A. Entitlement [ 42 ] I have already held that there is entitlement to retroactive spousal support only from July, 2010. I must now consider whether spousal support is appropriate on a go forward basis. [ 43 ] Counsel for Mrs. Elfar submits that this was a traditional, mid- length marriage, in which Mrs. Elfar stayed home to care for the two children. She married without ever working outside the home and has no training.

She is enrolled in a Grant McEwen course, taking one or two, but it will clearly take some time before she can upgrade her education and qualifications and approach self- sufficiency. I conclude spousal support in this case is warranted on both the basis of need and compensatory principles. B. Quantum [ 44 ] I see no reason to set a different guideline income than for child support. Once the calculation of the go-forward income has been made, I would award the mid-range of spousal support under the Spousal Support Guidelines, commencing immediately.

The retroactive portion of this support will be payable as a lump sum based on the child-support guideline income, again at the mid-range of the Spousal Support Guidelines for the period July 1, 2010 to date. C. Duration [ 45 ] In doing so, I am taking into account the fact that Mrs. Elfar will need to attend several years of schooling and enter the work force really for the first time before becoming self-sufficient, and that it will likely be some time before she will be earning a supportive income for herself and children.

At this point I order the duration of the support to be indefinite, with the right of either party to apply to vary without a material change in circumstances, but no sooner than three years from the date of this decision. Issue 4 - Mr. Elfar seeks a true shared parenting regime. Mrs. Elfar opposes such a change. Obviously a true shared parenting arrangement would alter Mr. Elfar’s child support obligations [ 46 ] Mr. Elfar proposes changing the present parenting arrangement from Friday and weekend access to alternating weekly. Mrs. Elfar seeks sole custody and alternatively no change to parenting time. Mr.

Elfar states he wants equal time as he is devoted to his children and more than able to care for them. Mrs. Elfar notes the continuing conflicts and Mr. Elfar’s controlling behaviour in the past and states that given that behaviour, shared parenting is unworkable. [ 47 ] Despite Mr. Elfar’s evidence that he loves his children and conflict with his ex-wife is in the past, I find that by his evidence his view of parenting continues to centre on his own opinions, principles and needs, rather than on compromise.

The parties were not in agreement on their daughter’s schooling and required a court determination on that issue just last fall. [ 48 ] However, this is not fatal to a full shared parenting regime. But such a regime must recognize that Mr. Elfar’s parenting views ought not to be the only ones to apply to the upbringing of the two children of the marriage. I therefore grant Mr. Elfar’s application for shared parenting, on alternating weeks, including vacations. [ 49 ] I realize this puts the parties in perhaps an ongoing conflict.

It has been some time since trial, and I am prepared to be updated, but at this point I believe there should be a mechanism in the parenting regime to avoid continued fights over parenting issues, a moratorium re school issues, and a regime where appointments are made to be attended by the parent making them.

Issue 5 - Miscellaneous property issues [ 50 ] The remaining issues are: A. The RBC loan [ 51 ] Germain J had ordered that this account be closed out, but Mrs. Elfar drew additional funds from the account. Her argument that she needed the funds to survive was rejected by Hillier J and he ordered that the debt be treated as her debt alone and should be excluded from any future reconciliation of matrimonial property. [ 52 ] The debt was incurred by Ms. Elfar post-separation. I have concluded that there is no basis for ordering retroactive spousal support until July, 2010 since Mrs.

Elfar was receiving child support and Mr. Elfar was paying the mortgage and utilities. There was no evidence at trial that would lead me to interfere with Hillier J’s order. The RBC loan remains payable by Mrs. Elfar alone. B. Payment of Mr. Elfar’s taxes from matrimonial property [ 53 ] Mrs. Elfar submits that the amount of income tax payable for the years 2008 and 2009 that were in excess of the taxes paid on the dividends drawn and which were paid from the matrimonial property on behalf of Mr. Elfar, should be shown as an amount he received on the matrimonial property ledger.

This Court’s previous direction was that the sale proceeds of the joint property be used to pay the taxes incurred by both parties – that is the taxes on the dividends received by both parties and the taxes on Mr. Elfar’s income. As a result, more income taxes were paid on his behalf than hers. Counsel for Mr. Elfar takes the position that taxes on post-separation income should not be paid from matrimonial property. [ 54 ] In 2008 and 2009, the parties were wrestling with a serious tax issue that arose from draws taken by Mr. Elfar during the course of the marriage.

The dividends to each of them (and the shareholder loan re-payment) resolved those issues and the taxes on that income were appropriately paid out of matrimonial property. Although taxes on income earned after separation are arguably unrelated to the draws taken during the marriage and therefore should not be paid for from matrimonial property, I do not find that to be a basis in this case for reconsidering the previous court order. C. Furniture [ 55 ] The parties disagreed about which items of furniture should be received by each of them. Mrs. Elfar says that based on the original cost of items, Mr.

Elfar received a greater distribution. Counsel for Mr. Elfar notes that Mrs. Elfar was to provide two lists of the contents and Mr. Elfar was to choose which list of items to take. This did not happen because Mrs. Elfar did not prepare the lists. Mr. Elfar says Mrs. Elfar took everything of value, including the grand piano, the pots and pans and small appliances, and virtually all the furniture. Mr. Elfar has two expensive rugs over which there has been significant dispute. [ 56 ] Counsel for Mr. Elfar suggests that at this point, Mr. Elfar is prepared to leave things as they are or, as originally proposed, Mrs.

Elfar could prepare two lists and Mr. Elfar could then make a choice of items. [ 57 ] In the interests of finality, and given the fact that Mrs. Elfar initially failed to make the two lists, I find that the question of furniture is now settled. Everyone keeps what they have. D. Air Miles [ 58 ] Mrs. Elfar submits that A & E Air Miles constitute matrimonial property to be distributed; in particular she relies on the evidence of Mr. Nunas that he used the Air Miles points for a personal trip to Europe. Mr. Elfar asserts that the Air Miles card is A & E

property, and that Mr. Nunas’ European trip was made for both personal and business purposes. [ 59 ] Based on the evidence, I conclude that the Air Miles points are properly A & E property and are not matrimonial property to be divided. E. Missing ring [ 60 ] Mrs. Elfar submits that Mr. Elfar took a $7,000.00 ring. Mr. Elfar denies taking the ring, suggests that Mrs. Elfar likely lost it, and submits that there is no evidence otherwise. [ 61 ] Given the fact that all the other jewellery was returned by Mr. Elfar, and that there is no evidence that Mr.

Elfar took the ring, I conclude that there is no basis to include it in the property equalization. F. Accounting fees [ 62 ] Mr. Elfar incurred significant accounting fees billed by Myers Norris Penny for the services of Mr. Farrell. Mr. Farrell provided a break-down of what he considered to be fees for the personal, as opposed to A & E business, purposes. The fees for the years 2007, 2008, and 2009 preparation of Form Group’s financial statements and of Mr. and Mrs. Elfar’s personal tax returns amounts to $30,880.00.

The fees for the developing the tax plan, for acting as facilitator for both sides’ lawyers, and for “divorce work” totalled $38,208.00. [3] Mr. Elfar proposes that Mrs. Elfar be responsible for half of the $30,880.00, and for one half of 70% of the second – $26,746.00. This totals $57,626.00, or $28,813.00 each. [ 63 ] Counsel for Mrs. Elfar suggests that it is difficult to separate how much of the accounting work was for personal and how much for business, but he does not suggest any basis to disagree with the amounts suggested by Mr. Farrell.

I find that the evidence suggests that this is a fair division of the accounting costs that should be borne by each. G. Value of Form Group [ 64 ] The parties have not been able to agree on a value for Form Group as joint property, and in particular raise two issues: the amount of sub-contract costs to be deducted from A & E deferred revenue brought into Form income and whether these amounts should be discounted for taxes. This issue necessarily is related to what could have been drawn from A & E.

That is, draws from A & E inform the value of Form. [ 65 ] In my earlier reasons, I indicated that it was appropriate to bring a portion of deferred revenue into A & E’s distributable income, leading to a consequent increase in retained earnings. Mr. Thoman concluded that the amount of appropriately retained earnings in A & E ought to be $279,000.00 taking into account a discount for sub-contract costs. Mr. Thoman arrived at that amount using a 34% discount. I noted that Ms. Ares cross-examination of Mr.

Thoman ably demonstrated that calculation of deferred revenue and retained earnings must take into account both direct and subcontractor costs calculated on a percentage basis. I also noted that I found Mr. Thoman’s analysis to be “truly independent”, and that he proceeded on and accepted Mr. Elfar’s anlysis of appropriate amounts for deferred revenue and percentages. [ 66 ] Counsel for Mr. Elfar notes that the evidence on cross-examination of Mr. Thoman was that sub-consulting costs amounted to 42% for 2009 and 43% for 2010. She asks that I re-consider the amount to be deducted. Mr.

Farrell, she argues, corrected her own misapprehension regarding the true sub-consultants’ costs, and looking at the financial statements, demonstrated that the calculation should use only the four sub-contracts that use a percentage - civil, mechanical, electrical, and structural. [ 67 ] Having clarified the nature of the expert evidence, I now find that the appropriate discounts to apply to deferred revenue, to bring into retained earnings, is 42% in 2009 and 43% for 2010. As will be seen, for property valuation purposes, only 2010, the date of trial, becomes relevant.

[ 68 ] In regards to whether “notional” tax should be deducted from this amount, counsel for Mrs. Elfar argues that it should not, since this will be an accounting “paper” transaction and no tax will actually be paid on the amount, assuming that the money will be retained in the company. He compares this to the situation in which one of the parties keeps the matrimonial home. It would be inappropriate in that case to deduct real estate commission on a “notional” sale from the value of the home when dividing the property. [ 69 ] Counsel for Mr.

Elfar disagrees, noting that in order to take the retained earnings out of A & E to pay to Form Group, and then distribute to the parties, they would have to be dividended out to the parties, thereby incurring tax. She also argues that only 1/3 of deferred revenue should be brought in retained earnings and paid out, since Mr. Elfar and Mr. Nunas have agreed on the 1/3 to 2/3 split. [ 70 ] I agree that the retained earnings should be discounted for tax; it will eventually be paid out as a dividend and tax will be owing. This is not a “notional’ event, but rather an inevitable one. [ 71 ] Although Mr.

Elfar’s arguments dealt with 2008 and 2009 arrangements with Mr. Nunas, by valuation principles I am bound to value property, that is the value of Form, as at the date of this trial. I find that value to be based on a fifty/fifty draw of what I have found ought to have been available from A & E to Form. Mr. Elfar and Mr. Nunas were entitled to structure A & E’s affairs in any way they choose, but not in a manner that improperly diminishes his support or property division obligations.

I recognize that I have no authority to alter the arrangements agreed to by the partners, but I can adjust the calculations for the purposes of determining value for the property distribution. H. Loans for Padrino Drywall [ 72 ] On review of the transcript, it appears that this issue was resolved. However, for clarity’s sake, I will repeat that the re- payment of $30,000.00 to Mr. Elfar’s mother for payments she made to Padrino Drywall should be allowed as a proper matrimonial debt, but the $20,000.00 supposedly from Mr. Elfar’s mother for a 2002 loan to buy a car is not.

Conclusion [ 73 ] The parties are responsible for preparing calculations based on this judgment. Costs may be spoken to. Heard on the 21 st day of November, 2010. Dated at the City of Edmonton, Alberta, this 7 th day of July, 2011. D.A. Sulyma J.C.Q.B.A. Appearances:

L.M.E. Ares, Q.C. for the Plaintiff/Defendant by Counterclaim R.M. Curtis, Q.C. for the Defendant/Plaintiff by Counterclaim [1] Mr. Curtis points to certain anomalies between the evidence in that regard and the actual salary taken. For instance in 2009 although Mr. Nunas stated that the income was divided two thirds/one third, the actual numbers reflect that Mr. Elfar only drew 25% of what Mr. Nunas drew. [2] This amount corresponds to the average calculated by Mr. Elfar’s expert, Mr. Farrell, in his expert report (Ex. 55), but as noted by counsel for Mr. Elfar, Mr.

Farrell did not suggest that this was an appropriate figure for income calculations. [3] In the three years, that totals $69,088.00, or over $23,000.00 per year in personal accounting expenses. That seems high for someone with a professed income of $70,000.00 - $90,000.00 per year.