DRS v DLS, 2013 ABQB 474

Hr ouCourt of Queen ’ s Bench of Alberta Citation: DRS v DLS, 2013 ABQB 474 Date: 20130819 Docket: 4803 134833 Registry: Edmonton Between: DRS Plaintiff - and - DLS Defendant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice L.D. Acton _______________________________________________________ I. Nature of the Matter [ 1 ] The trial in this matter, in which Mr. S was self-represented, was heard to determine the outstanding financial matters between these parties, who were married on April 9, 1988, separated on August 2, 2004 and divorced on June 17, 2011.

The facts of the case speak to the tragedy experienced by all parties touched by the events and circumstances leading up to the dissolution of this marriage.

II. Background [ 2 ] Ms. S is currently 53 years old and Mr. S is 50. Both parties are high school graduates. Ms. S has some further college education. [ 3 ] After dating for approximately seven years, the parties married in 1988 at a time when both were working and had careers. Mr. S was a financial planner and investment advisor. He was involved in his father’s financial business, SFI. Ms. S continued to work after the birth of their first child, but after their second child was born the parties decided it was in the family’s best interests under the circumstances that she stay at home to parent the children.

Mr. S was putting in long hours at the time as his work was increasingly demanding. [ 4 ] Ms. S testified that for the first 10 years of their marriage she was living in a dream relationship with an amazing husband and father. She was very proud of Mr. S. They worked as a team to attain their aspirations and goals. They had three wonderful children (RS, born on April 3, 1990; KS, born on May 10, 1992; and DS, born on June 8, 1996) and her husband was very involved as a father to the children. When he was at home, he assisted in household activities. [ 5 ] Mr.

S and his brother bought SFI from their father in 1994. Ms. S agreed to this investment, which required that they borrow $70,000.00 for their share of the company. The loan was secured by a $70,000.00 encumbrance against the matrimonial home. [ 6 ] Life was good to this family, both personally and professionally, from 1988 until approximately 1999. [ 7 ] In 1999, SFI was reorganized. Mr. S and his brother each incorporated holding companies, which in turn took over their share ownership in the business. Mr. and Ms. S had a two-thirds interest in SFI through their holding company, 807925 Alberta Ltd., and Mr.

S’s brother had a one-third interest. SFI was extremely successful - so successful the parties decided to set up a family trust in 1999 (DS Family Trust) with the two of them acting as trustees and the children as beneficiaries. They used 807925 Alberta Ltd. to move money into the DS Family Trust. Both Mr. and Ms. S received salaries from SFI. When it came to finances, Mr. and Ms. S made decisions jointly. They maintained a joint account. All of their money went in and out of that account. [ 8 ] Life started to take a different turn in 1999 when Mr. S began having sleep problems and issues with depression.

In 2001, he went to a convention in Hawaii where he was diagnosed as having a bi-polar disorder. Mr. S testified that he was prescribed various medications to assist with his disorder but after about a year he chose not to continue with his prescribed medication plan. He now follows a more natural, largely organic diet that is high in protein. He feels this is a better approach to take to his condition than the pharmacological solution favoured by traditional medicine, although he does take certain prescribed medications to help him to sleep. [ 9 ] Mr. and Ms. S separated for a while in 2001. According to Ms.

S, Mr. S was very challenging to deal with from 2002 onwards. He was in and out of hospitals and provincial gaols. She testified that their family life went from bad to worse, and SFI began to suffer as Mr. S and his brother started to have disagreements and confrontations. Mr. and Ms. S separated again in 2002 for a time, before their final separation in August 2004, when Mr. S moved out of the matrimonial home. The parties’ eldest son was only 14 when they separated; the youngest 8. [ 10 ] Ms.

S’s parents moved in with her to help her care for the children so she could go back to school to train as a licensed practical nurse. [ 11 ] Since August 2004, Mr. S has received disability income from Great West Life through a disability policy acquired by him in 1989, and also has received disability income from the Canada Pension Plan. [ 12 ] Problems arose between Mr. S and his children. The children started to withdraw from their father because of his behaviours. On July 26, 2006, Macklin J issued an interim order granting Ms. S sole custody of the children, with Mr.

S to have supervised access with the two younger boys. Mr. S’s older brother was to provide the supervision. Unfortunately, that ended up in a physical conflict

between Mr. S and his brother. Physical conflicts also arose between Mr. S and other mutual friends. [ 13 ] Macklin J granted Ms. S exclusive possession of the matrimonial home in St. Albert. Mr. S was restrained from attending within 100 metres of the matrimonial home. This aspect of the order was to end on the trial of this matter. [ 14 ] During this time, the three boys were growing up and continuing in their various recreational pursuits.

The oldest son was an extremely talented Ukranian dancer, the middle son a gifted hockey player, and the youngest son a skilled basketball player. [ 15 ] On July 16, 2007, Verville J held that Ms. S was entitled to list the former matrimonial home at the appraised value of $585,000 and dispensed with Mr. S’ consent to the sale. He ordered that the outstanding line of credit in the sum of about $135,600 be paid out in full from the sale proceeds of the home and that the account then be closed. He allowed Ms.

S to use the net sale proceeds of the home ($327,115) to purchase another residence, which she did with additional mortgage financing. [ 16 ] On October 4, 2007, Lee J granted an interim order requiring Mr. S to pay Ms. S $2,425 per month for the support of the children of the marriage, beginning on October 1, 2007, and to pay Ms. S $2,500 per month in spousal support commencing December 1, 2005 until further court order. [ 17 ] On June 5, 2008, Topolniski J enjoined Mr. S from approaching or contacting Ms. S or DS or being within 100 metres of Ms. S’ home or place of employment.

The order was to cease to have any force or effect on the trial of this matter. [ 18 ] Topolniski J authorized Ms. S to contact any financial institution with which Mr. S or 807825 Alberta Ltd. had accounts or financial dealings to obtain information concerning Mr. S’ financial affairs. She also ordered that there be an updated business valuation of SFI and “the St. Albert land” (by which I take her to have meant a valuation of the Mark Messier Trail property), with Mr. S to pay his share of the cost of these appraisals. Ms.

S was ordered to provide updated information concerning her assets, liabilities, income, budget and s 7 expenses. The order provided that Mr. S could obtain an appraisal of Ms. S’ new home. Topolniski J further ordered that Ms. S’ counsel and Mr. S provide a list of five names of psychologists known to the court to be experts in child custody matters from which the Court would select one to meet with DS about Mr. S having access. [ 19 ] By 2008, Mr. S was causing great difficulty at SFI, even breaking down doors. On February 4, 2009, Topolniski J granted an ex parte interim order enjoining Mr.

S from attending at the business premises of SFI or contacting any of its employees or clients. She also enjoined him from withdrawing any funds from bank accounts held by SFI, 807925 Alberta Ltd or SV. On February 10, 2009, the previous order was extended until March 10, 2009 while the whereabouts of Mr. S was determined. [ 20 ] Ultimately, without Ms. S’ knowledge, Mr. S sold SFI to his brother for $416,350 after receiving earlier offers to purchase the business at $762,000, $644,500 and $500,000. Mr. S had accepted the offer of $500,000.

However, several months after doing so, he had a physical altercation with his brother and his brother withdrew the offer. Mr. S failed to follow the accountant’s advice as to how to structure the sale of the company in order to minimize tax. As a result, the parties received a $110,000.00 tax bill from Revenue Canada the following year. [ 21 ] On June 17, 2011, Topolniski J ordered that Mr. S obtain a copy of his disability insurance policy and that he provide any further financial disclosure required by Ms. S. She allowed counsel for Ms.

S to contact the listing realtors for the Mark Messier Trail property owned by the parties’ holding company to obtain listing information for it. Mr. S’ counsel was ordered to transfer the funds he was holding in trust for the parties to Ms. S’ counsel. Those funds were to be placed in an interest bearing trust account and not to be distributed without further Court order. [ 22 ] Topolniski J ordered that Mr. S’ solicitor’ account be paid from Mr. S’ share of the matrimonial property proceeds, without prejudice to Mr. S’ right to have the account taxed. [ 23 ] Mr.

S was ordered to pay arrears in spousal support of $4,687.77 forthwith. Topolniski J ordered that the arrears in s 3 and s 7 child support in the sum of $62,361 be paid from Mr. S’ share of the matrimonial property division, but without prejudice to his right to raise the issue at trial as to whether his proportionate share of DS’ s 7 expenses ought to have been paid from the DS Family Trust. Mr. S

was ordered to pay s 3 child support of $1,832 per month to Ms. S, commencing July 1, 2011. He was also ordered to pay his proportionate share (59.27%) of s 7 expenses within 30 days of being provided with receipts by Ms. S. The matter was ordered to be set down for trial. [ 24 ] Finally, on March 27, 2013, Topolniski J ordered that by April 5, 2013 the parties exchange updated financial disclosure with values as of February 28, 2013, and that they exchange matrimonial property statements intended to be used at trial no later than April 12, 2013. [ 25 ] Ms.

S testified that she has neither remarried nor does she live common-law with anyone. Her evidence was that her sons all live with her in the house she purchased as a result of Mr. Justice Verville’s order of July 16, 2007. III. Matrimonial Property [ 26 ] Under the Matrimonial Property Act , RSA 2000, c M-8 ( MPA ), matrimonial property includes property owned by both spouses and by each of them. The MPA contains a presumption that matrimonial property will be divided equally unless there are circumstances arising as set out in the statute.

Sections 7 and 8 of the statute read as follows: 7(1) The Court may, in accordance with this section, make a distribution between the spouses of all the property owned by both spouses and by each of them.

(2) If the property is (

a) property acquired by a spouse by gift from a third party, (

b) property acquired by a spouse by inheritance, (

c) property acquired by a spouse before the marriage, (

d) an award or settlement for damages in tort in favour of a spouse, unless the award or settlement is compensation for a loss to both spouses, or (

e) the proceeds of an insurance policy that is not insurance in respect of property, unless the proceeds are compensation for a loss to both spouses, the market value of that property at the time of marriage or on the date on which the property was acquired by the spouse, whichever is later, is exempted from a distribution under this section.

(3) The Court shall, after taking the matters in

section 8 into consideration, distribute the following in a manner that it considers just and equitable: (

a) the difference between the exempted value of property described in subsection (2), referred to in this subsection as the "original property", and the market value at the time of the trial of the original property or property acquired

(

i) as a result of an exchange for the original property, or (ii) from the proceeds, whether direct or indirect, of a disposition of the original property; (

b) property acquired by a spouse with income received during the marriage from the original property or property acquired in a manner described in clause (a)(

i) or (ii); (

c) property acquired by a spouse after a decree nisi of divorce, a declaration of nullity of marriage, a judgment of judicial separation or a declaration of irreconcilability under the Family Law Act is made in respect of the spouses; (

d) property acquired by a spouse by gift from the other spouse.

(4) If the property being distributed is property acquired by a spouse during the marriage and is not property referred to in subsections (2) and (3), the Court shall distribute that property equally between the spouses unless it appears to the Court that it would not be just and equitable to do so, taking into consideration the matters in

section 8. 8. The matters to be taken into consideration in making a distribution under

section 7 are the following: (

a) the contribution made by each spouse to the marriage and to the welfare of the family, including any contribution made as a homemaker or parent; (

b) the contribution, whether financial or in some other form, made by a spouse directly or indirectly to the acquisition, conservation, improvement, operation or management of a business, farm, enterprise or undertaking owned or operated by one or both spouses or by one or both spouses and any other person; (

c) the contribution, whether financial or in some other form, made directly or indirectly by or on behalf of a spouse to the acquisition, conservation or improvement of the property; (

d) the income, earning capacity, liabilities, obligations, property and other financial resources (

i) that each spouse had at the time of marriage, and (ii) that each spouse has at the time of the trial; (

e) the duration of the marriage; (

f) whether the property was acquired when the spouses were living separate and apart; (

g) the terms of an oral or written agreement between the spouses; (

h) that a spouse has made

(

i) a substantial gift of property to a third party, or (ii) a transfer of property to a third party other than a bona fide purchaser for value; (

i) a previous distribution of property between the spouses by gift, agreement or matrimonial property order; (

j) a prior order made by a court; (

k) a tax liability that may be incurred by a spouse as a result of the transfer or sale of property; (

l) that a spouse has dissipated property to the detriment of the other spouse; (

m) any fact or circumstance that is relevant. [ 27 ] The Alberta Court of Appeal in Hodgson v Hodgson , 2005 ABCA 13 , 361 AR 190 directed that the date of division under the MPA is the date of trial. Events occurring between the date of separation and the date of trial can be taken into consideration under s 8 of the MPA . [ 28 ] The financial affairs of the parties have been entangled from the date of separation to the present time. Assets obtained and debts incurred by the parties during the course of the marriage create a rebuttable presumption that they are marital property and debts and must be factored into the division of property. In accordance with s 7(3)(

c) of the MPA , I have included in the Appendix A property statement certain assets purchased post-divorce if they were acquired using matrimonial property. In essence, the matrimonial property has been followed into those current assets. Debts incurred post-divorce have not been included unless they relate to an asset that is included in the property statement. [ 29 ] Ms. S submits that Mr. S’s actions and lack of action cost the family over $300,000.00 by virtue of his failure to manage the transfer of the family business in a fiscally responsible manner.

She asks the Court to consider an unequal distribution of the matrimonial property under s 8 of the MPA to take this dissipation of assets into account. [ 30 ] The majority of assets owned by the parties are ones that fall under s 7(4) of the MPA . For the reasons given below, I have found that it would be just and equitable that they be divided unequally in favour of Ms. S. A. Great West Life Disability Policy and Investment Account [ 31 ] In 1989, prior to the birth of their first son, Mr. and Ms.

S each purchased a disability insurance policy to protect the family income in the event one of them could not work during the marriage. Each was the named owner of their own policy. The premiums on these policies were paid out of their joint account. On April 15, 1994, for reasons which are unclear, Mr. and Ms. S transferred ownership of the two (life insurance) policies to SFI, which assumed responsibility for the payments. However, each policy had an endorsement from the insurer, defining the owner of the policy as the insured or his estate for purposes of any payments to be made under the policy. Ms.

S’s policy was discontinued in 2005, without any advice to her and without her knowledge. After Mr. S’s brother bought SFI, the company transferred ownership of Mr. S’ policy back to him on or about February 2, 2011. [ 32 ] Mr. S became disabled from working as a result of mental health issues in December 2002. He received full disability benefits of $8,800 per month from December 21, 2002 to September 16, 2003 and partial benefits from September 17, 2003 to August 24, 2004. Since August 2004, he has again been receiving full disability benefits of $8,800 per month. The payments are taxable.

[33] Under the policy, the monthly benefit is payable to age 65 as long as the insured remains disabled. The policy cannot becancelled or modified prior to age 65 as long as the insured remains disabled. [34] The insurer also pays a future earnings protector rider of $1,000 per month held in a non-registered investment plan withGreat-West Life. The evidence indicates Mr. S took $10,000.00 out of the future earnings protection investment in 2008. As of February28, 2013, there was $113,821.47 in this investment. [35] Ms. S takes the position the disability policy is matrimonial property. She argues that she and Mr.

S decided to buy this policytogether for their mutual benefit and paid for it initially out of their joint bank account. When the premiums were being paid out of SFI,the beneficiary was still Mr. S. When Mr. S sold his interest in SFI to his brother, Mr. S. made sure that the ownership of the policy forall purposes was transferred back to him. Ms. S also points out that long before she and Mr. S separated, the family was living on thebenefits from this policy. She contends the proceeds are compensation for a loss to both her and Mr. S and, therefore, they are notexempt from distribution.

She asks the Court to divide the policy between them unequally but in such a manner that it results in eachreceiving the benefit contemplated when they purchased the two policies in the first instance. She suggests this will accomplish the goalin s 15(2) of the Divorce Act of both parties having a similar standard of living after the marriage breakdown. [36] Mr.

S maintains the disability benefits he receives are income replacement rather than property. [37] Section 7(1) of the MPA states that the Court may, in accordance with that section, make a distribution between the spouses ofall of the property owned by both of them and by each of them. Section 7(2)(

e) provides that if the property is the proceeds of aninsurance policy that is not insurance in respect of property, unless the proceeds are compensation for a loss to both spouses, the marketvalue at the time of marriage or on the date on which the property was acquired by the spouse, whichever is later, is exempted from adistribution under this section. [38] There is no doubt that Mr. S’ disability policy was purchased by the parties, at least in part, to secure the family income in theevent he became disabled, an eventuality which did occur. The question is whether the proceeds should be characterized as property and,if so, whether they fall under s 7(2)(

e) of the MVA as “compensation for a loss to both spouses.” [39] I note that care must be taken when considering decisions from other jurisdictions given the differences in matrimonialproperty legislation between the various provinces. [40] In Pallister v Pallister (1990), (ON SC), 29 RFL (3d) 395 (Ont Ct (Gen Div)), Misener J consideredwhether the wife’s right, acquired before the marriage, to apply for a disability pension, a right she did not exercise until after the date ofseparation, was property that was subject to distribution under The Family Law Act.

She took note of the all-encompassing nature of thedefinition of "property" in s 4(1) of The Family Law Act. However, she determined that a disability pension in receipt was not propertyfor purposes of that Act as it had none of the traditional indicia of property and its inclusion in the definition of property would not beconsistent with the scheme of the Act. She reasoned that the acquisition of the pension arose solely due to a disability suffered by thewife and was entirely unconnected with any of the incidents of the marriage partnership.

It was of no consequence whether she sufferedthe disability during the marriage or before the marriage.

It had no relationship to the marriage partnership. [41] Shortly after Pallister was decided, Lally J of the Ontario Court (General Division) in Mead v Mead (1990), (ON SC), 2 OR (3d) 49 held that monies paid and payable to the husband under a long term disability policy should not be regardedas property under s 4 of the Family Law Act. [42] In Hughes v Hughes, 1998 ABCA 409, 232 AR 224, the Alberta Court of Appeal commented that the scheme of the MPA isinclusive in relation to property acquired during the course of the marriage, except for the five exemptions set out in s 7(2) of the Act.Watson J (as he then was) in Nuttall v Rea, 2005 ABQB 151 expressed the view those exemptions should be given a narrowinterpretation.

[43] In Webb v Webb (1985), (BC SC), 70 BCLR 15 (SC), the husband became entitled during the course of themarriage to disability benefits under the Canada Pension Plan and a disability insurance policy that was contributory in nature. Lysyk Jnoted at para 11 that payments made pursuant to a contributory scheme in respect of involuntary retirement due to disability are in thenature of income replacement on termination of employment but that so are pensions triggered by retirement due to age. He concludedthe entitlement under these policies was a "pension" within the meaning of s 45(3)(

d) of the Family Relations Act, RSBC 1979, c 121and, therefore, was a family asset that would be subject to equal apportionment. [44] In Rohl v Rohl (1993), (AB KB), 140 AR 229, the husband received a lump sum payment of Workers’Compensation Act benefits relating to a 10 percent partial disability he had suffered as a result of an injury which occurred on the jobduring the course of the marriage. McMahon J held the payment was not exempt under s 7(2)(

d) of the MPA as “an award or settlementfor damages in tort in favour of a spouse” given the husband did not have to establish any tort before receiving compensation. He alsoheld it was not exempt under s 7(2)(

e) as that subsection deals with the proceeds of a private insurance contract and “[i]nterpretation byanalogy is not sufficient to gain the exemption” (para 12). The husband, who suffered manic depression, also received a monthlydisability benefits through his employer as part of his vested pension. At para 25, McMahon J commented: “[i]n principle, a pensionentitlement is certainly an asset.

When it is a result of pensionable service occurring during the marriage it is property subject todivision.” As no actuarial evidence was presented, he took the pension entitlement into consideration in addressing the division ofproceeds from the sale of the matrimonial home. [45] As in Webb, the husband in Inverarity v Inverarity (1993), (AB KB), 146 AR 389 (QB) also was in receiptof two disability pensions, one from his union and the other from the Canada Pension Plan. Both plans were contributory and thedisability occurred during the marriage.

Rawlins J agreed with the statement made by Professor Diane Pask and Cheryl A Hass in theirlooseleaf text Division of Pensions (Toronto: Carswell, 1990) at what is now p II-39 that: “[t]reatment of a disability benefit asmatrimonial property depends on the reason for its award and the source of the funds." She also cited (at para 30) the followingdiscussion by the authors (at pp 11-44 to 11-45) of the ratio in Webb: ... where entitlement to a benefit such as a disability pension arises because of the pensioner's past service or some direct or indirectcontributions to a plan, or under the terms of a contract between employer and employee or union and management, and that entitlementarose during the course of the marriage, the entitlement should be characterized as matrimonial property to be divided between thespouses. [46] Rawlins J concluded that both disability pensions were matrimonial property that was subject to division.

Before judgmentwas entered, an application was brought for reconsideration of the pension issue on the basis of new and further evidence (Inverarity vInverarity (1996), (AB KB), 182 AR 1 (QB). The issue was referred to Egbert J, who found that the disabilitypensions were not matrimonial property. By that time, the Alberta Court of Appeal had rendered its decision in Murray v Murray (1994),1994 ABCA 325 , 119 DLR (4th) 46. After the parties in Murray entered into a matrimonial property settlement, the husbandqualified for a disability pension.

The trial judge and Court of Appeal refused to set aside the agreement, holding the husband had notwithheld information from the wife about the pension and the agreement was not unconscionable. The Court of Appeal in obiter agreedwith the trial judge that the disability insurance policy and its benefits were exempt from distribution under s 7(2)(

e) as they were a formof income replacement insurance and not insurance in respect of property. [47] McClung JA, who delivered the judgment of the court, approved (at para 36) of the reasoning of the trial judge that adisability benefit does not depend on the ongoing accumulation of contributions as does a retirement pension and is not the product ofassets accumulating or diverted from a matrimonial source.

He agreed at para 37 with the court in Leger v Leger (1993), (NB KB), 45 RFL (3d) 142 (NBQB) that it would be inequitable to divide the disability benefits given the recipient could notsupplement his disability income without risking a loss or suspension of benefits.

He also noted the trial judge’s comment that: "theability to work and earn income is a personal attribute; it is not divided as property upon marriage breakdown, but is used as a basis forawarding support, if any." At para 38, McClung JA stated: Retirement pensions are divided on the basis that only those benefits arising from contributions during the life of the marriage are split.This is not the case in disability benefits. In them payout does not depend on the length or amount of premium contribution.

Thatdescribes this policy. [48] Many of the cases cited above were reviewed by Watson J (as he then was) in Nuttall v Rea, 2005 ABQB 151. The husbandin that case had become disabled as a result of a motor vehicle accident. He argued that the settlement proceeds he received following theaccident should be exempt from distribution pursuant to s 7(2)(

d) of the MPA, which provides an exemption for “an award or settlementfor damages in tort in favour of a spouse, unless the award or settlement is compensation for a loss to both spouses." Watson J concluded

that only the general damages portion of the husband's settlement proceeds was exempt as it related to personal aspects of the accidentand his required care, and was not intended to benefit the family as a whole. However, that portion of the settlement proceeds attributableto lost income during the marriage was not exempt.

The husband also received UNAM non-taxable disability insurance payments andtaxable Canada Pension Plan disability payments, both of which were treated as income by Watson J., who held that for purposes ofdetermining the husband’s Guidelines income, the UNAM disability payments must be grossed up. [49] In Hotton v Hotton, 2006 ABQB 10, the husband argued that the wife’s Manulife disability payments were matrimonialproperty.

Wilson J noted at para 5 that the disability pension was subject to annual review by the insurance company and possibly thewife’s employer and that payments would be discontinued if her condition improved so that she could return to work. At para 31, he heldthat: It is clear from the evidence that the amounts being paid to the wife replace an income stream that she lost when she had to leave workby reason of her disability. This is not matrimonial property. The decision in Hamilton v. Hamilton, (ON SC),[2005] O.J.

No. 3050, Ontario Court of Justice contains an excellent analysis of the argument that such benefits should be consideredmatrimonial property. The Court there concluded that it was not to be so considered, and I agree with that analysis. The wife's disabilitybenefits will not be divided as matrimonial property. Those benefits may have some impact on the question of support when it isconsidered. [50] In Hamilton, the wife was in receipt of two disability pensions: one a private disability pension and the other a CPP disabilitypension.

For five years prior to trial, the husband’s interim support obligations had been calculated on the basis that the wife’s disabilitypayments were income. [51] Aitken J reviewed case law from Ontario and other provinces dealing with the proper characterization of disability payments.She came to the conclusion that a disability plan, funded at least in part by contributions from the worker, is a form of insurance.

Unlessthe plan is a hybrid retirement/disability pension plan, no rights or benefits are accumulated as a result of regular payments made fordisability coverage other than current protection in the event of disability before the next payment is due. The premiums paid are not aform of savings. Nothing is payable under the plan if the worker never becomes disabled or if the worker quits, retires or dies.

At para107, Aitken J expressed the view that: “... the speculative nature of a spouse's entitlement to receive disability benefits in the futuremilitates against that entitlement being considered a "right" that is "owned" on the valuation date, to be valued and included in net familyproperty.” At para 124, she stated: Future disability benefits to be paid following the valuation date fall outside the concept of net family property for many reasons.

Theyare paid due to an on-going personal characteristic or condition of a spouse, namely that spouse's state of health and impairment.Entitlement must be earned each day after the valuation date through the disability continuing. In that sense the rights are created on avery current basis, they are not created in advance of the period for which they relate. Entitlement has not gelled as of the valuation date;there is no accumulation of benefits as of that date. Disability benefits are not payable to a spouse due to the joint contributions of bothspouses in one form or other to the marriage partnership.

Disability benefits are intended to replace income on an on-going basis, as andwhen the need for such an income replacement arises; they are not intended to be a form of savings available regardless of what thefuture holds. They exist to support the person who cannot work, and that person's dependents. They are of the same nature as the incomethat the person would earn, if not disabled.

Just as we do not consider that a person owns on the valuation date his or her futureemployment or self-employment income not yet earned or the ability to earn that income, we should not consider that a person owns onthe valuation date his or her future disability payments not yet earned or the inability to earn an income with the concomitant entitlementto receive the disability benefits. We should treat those future disability benefits just as we treat future employment insurance benefits,social assistance benefits, student loans, payments from health care insurance plans and the like.

These are all potential income sourcesthat are payable if certain conditions exist. All of these potential income sources following the valuation date will be relevant to the issueof support, just as the earned income of the parties will be relevant to the issue of support. [52] The Ontario Court of Appeal in Lowe v Lowe (2006), (ON CA), 78 O.R. (3d) 760 approved of the approachtaken by Misener J in Pallister in interpreting “property” for the purposes of the Family Law Act by giving the term meaningful contentthat imposed limits on the definition apart from the specific exclusions in the Act.

It also agreed with Aitken J’s analysis of the issue inHamilton and with her conclusion that disability benefits should not be considered family property for equalization purposes. The courtnoted at para 20 that: Academic commentators and writers appear to favour the exclusion of disability benefits from family property: see J. McLeod,Annotation, Iurincic v. Iurincic (1998), (ON SC), 40 R.F.L. (4th) 258; E.D. Pask and C.A. Hass, Division ofPensions (Toronto: Carswell, 1996) at II-34 and II-47; J. Patterson, Pension Division and Valuation: Family Lawyers' Guide, 2nd ed.

(Aurora: Canada Law Book, 1995) at 287; compare G.E. Burrows, "Disability Benefits and Other Assets" (2004-2005) 23 C.F.L.Q. 145... [ 53 ] In Locke v Locke , 2006 ABQB 452 , Watson J (as he then was) held that a disability pension the husband was receiving as a result of his previous employment with Canadian National Railways was a disability insurance payment rather than a form of pension and, therefore, it was not eligible for division as matrimonial property within the meaning of s 7(2)(

e) of the Matrimonial Property Act . He was of the view (at para 33) the payments were meant as a form of income substitution and not prepayment out of an asset the husband had acquired or developed over time through contributions. [ 54 ] Finally, in Grant v Grant , 2010 ABQB 553 , 89 RFL (6th) 366, Veit J considered how to characterize proceeds received by the wife from a critical accident recovery group insurance policy after the husband was injured. The policy compensated the owner for any critical injury suffered by either spouse.

Veit J held the proceeds were property and as they constituted "compensation for a loss to both spouses" they did not come within the exemption described in s 7(2)(

e) of the MPA . [ 55 ] Having reviewed the case law, I am of the view that Mr. S’ ongoing disability benefits in the present case are a form of income replacement rather than matrimonial property. Accordingly, they will be taken into account in calculating child and spousal support. [ 56 ] The question remains as to how to treat the accumulated funds in the Great-West Life future earnings protection investment. Employment income earned and saved in a bank account during the course of a marriage is regarded as divisible matrimonial property.

I find that the future earnings protection investment accumulated during the marriage is now also matrimonial property and is divisible between the parties. The only evidence on what amount that would be is that the investment was worth $113,821.47 as at February 28, 2013 and that $1,000 was deposited into the account each month. Given that the parties were divorced on June 17, 2011, and as the interest amount earned on the account over the years was not provided, I find that the amount which is matrimonial property is $93,800.00. B.

Former Matrimonial Home and Parties ’ New Homes [ 57 ] In 1992, the couple bought an acreage property in Sturgeon County, Alberta for $176,350. In 2002, it was transferred to Ms. S’s name alone purely for tax and financial planning purposes. In 2004, the parties obtained a line of credit for $240,000.00 secured by a second mortgage taken on the home. [ 58 ] Ms. S was granted interim exclusive possession of the matrimonial home by order of Macklin J on July 26, 2006. She paid the annual property taxes on the home from 2005 to 2007, totalling $5,400.

She also paid for home insurance on the house during that same period, amounting in total to $3,966. Given she paid those expenses, no occupation rent is owing. [ 59 ] The home was appraised in June 2007 at $585,000. By order of Verville J dated July 15, 2007, Ms. S was authorized to sell the former matrimonial home and to use the proceeds to purchase a new home for herself and the children. The Sturgeon home was sold on November 20, 2007 for $485,000. Mr. S questions why the former matrimonial home was sold for almost $100,000 less than it had been appraised at five months earlier. Ms.

S testified it was on the market for four months before being sold. I accept that the price at which it was sold was the price obtainable for the home at the time. The net proceeds after paying out the joint line of credit ($138,694, inclusive of $8,300 in payments made by Ms. S from August 2004 to November 2007) and expenses relating to sale of the home were $327,115. The funds withdrawn from the joint line of credit had financed the parties’ purchase of land in Mexico ($70,000) and also had been used to inject funds into SFI in the late 1990's. [ 60 ] In December 2007, Ms. S purchased a new home for $390,000.

She financed this purchase using the sale proceeds from the matrimonial home and by obtaining a mortgage for the balance ($62,885). The 2012 property assessment and tax notice showed the assessment value for the land and house was $336,000. The 2013 assessment shows a value of $332,000. A realtor has recently conducted a comparative market analysis and provided Ms. S with a letter indicating that a fair list price for the home would be between $345,000 and $355,000. I am prepared to find the home has a current value of $345,000. The mortgage on the new home currently stands at $123,111. Ms.

S testified she took out a larger mortgage because Mr. S was not paying spousal support or proper child support. She has made the mortgage payments and paid the property taxes and home insurance on the home since purchasing it.

[ 61 ] For purposes of the matrimonial property division, Ms. S will be shown as owning a house valued at $345,000. The $62,885 mortgage required to finance that purchase will be shown as a matrimonial debt. Of course, this does not reflect any payments made on the mortgage of $123,111 which may have reduced the amount attributable to the initial mortgage amount. The full mortgage cannot be considered a matrimonial debt as it was incurred because Mr. S had not been paying support. I will deal with support arrears later in this decision. To award arrears as well as to include the amount borrowed by Ms.

S beyond the initial mortgage would be to make Mr. S doubly accountable for those funds. [ 62 ] Mr. S purchased a new home in Edmonton in August 2012 for $122,450. The down payment was $28,599. Mr. S testified he took $25,000 out of RRSPs to put towards the down payment. He has made all mortgage and other payments associated with this property. Mr. S’s home property tax assessment for 2013 was $185,000.00. He is of the view his home is worth between $135,000.00 and $145,000.00 as is, or $185,000 if he puts $20-40,000 in renovations into it.

His estimates come from opinions he obtained from different real estate agents he has talked to about his home. Based on the very limited evidence relating to this home, I find the home has a current value of $140,000. As of February 28, 2013, the mortgage on the home was $92,346. I find that his equity in the home is $47,654. Given that about one-fifth of the home was paid for with money from the RRSP, which was matrimonial property, in my view one-fifth of the current value of the home should also be considered matrimonial property. That amount would be $28,000. C.

Los Barriles, Mexico Commercial/Residential Property [ 63 ] Ms. S says that in February 1999, she and Mr. S purchased a raw piece of land in Baja, Mexico for approximately $65,000.00 CND ($45,000 USD). However, with the fees incurred to buy it, including the registration and trust fees, the actual cost was approximately $80,000 to $90,000 CND. Mr. S contends the purchase price was $44,000 USD. [ 64 ] This property was listed for sale on November 3, 2005 for $60,000.00 USD. An offer was received for $50,000.00 USD. Ms. S was prepared to accept the offer, but Mr. S was not. In July 2011, Ms.

S received a letter from a realtor indicating the lot had an approximate value of $50,000 USD. There were parcels on the market at the time of comparable size that were listed at $60,000 to $89,000 USD. The last sale of a comparable lot had been for $55,000 USD. The lot next to the property in question, a smaller lot, was listed as of March 28, 2013 at $69,000 USD, but according to Mr. S it has not sold. Ms. S is of the view that $59,000.00 CND is the fair market value for the property. [ 65 ] I find that the lot has a value of $59,000 CND.

The 2005 listing agreement refers to the total cost of sale being 11 percent of the sale price, plus Mexican capital gains tax. Given the land appears to be worth less than what it cost, presumably there will be no capital gains tax owing. I will discount the $59,000 value by 11 percent to reflect possible sales costs. As a result, the house will be shown as being worth $52,510 CND. [ 66 ] Mr. S has had the sole use of the property since the parties’ separation in 2004 and wants to retain the property.

He testified he has paid the annual property taxes and other costs associated with the property since separation, totalling $10,000. No evidence was entered at trial to verify this amount. In any event, the expenses he says that he has paid on the property appear to be roughly equivalent to the expenses paid by Ms. S on the matrimonial home before it was sold. D. 807925 Alberta Ltd. 1. Shareholdings [ 67 ] 807925 Alberta Ltd. is a holding company in which Mr. S owns 50 Class A voting shares and Ms. S owns 25 Class B voting shares.

The DS Family Trust (of which the parties’ three children are the beneficiaries and of which Mr. and Ms. S are the trustees) owns 25 Class C non-voting shares in the company. My understanding is that Mr. S is the sole director of the company. [ 68 ] The company has not been professionally valued and the 2013 financial statements were not available at the time of trial. The 2012 financial statements do not reflect the market value of the Mark Messier Trail property. Ms. S suggests that valuing the company could be put over until the 2013 financial statements are available.

In the property statement prepared by counsel for Ms. S, Mr. S is shown as owning the assets in the company and dividends paid out to him while Ms. S is shown as owning the dividends issued to her

since the date of separation. Presumably, Ms. S is suggesting that Mr. S should purchase her interest in the company. I note, however, that the property statement she submitted does not include any of the liabilities of the company, which would also have to be taken into consideration in determining a value for Ms. S’ interest in the company. [ 69 ] Given the present value of the company is not known, I cannot order at this time that one party buy out the interests of the other in the company for a particular amount as part of the matrimonial property division.

Instead, I order that within two months of the issuance of this decision, Mr. S transfer 25 of his Class A voting shares in the company to Ms. S. and Ms. S transfer 12 of her Class B shares to Mr. S so that Ms. S will have 38 voting shares to his 37. While this share structure is somewhat unequal, it is in the shareholders’ best interests at this time given Mr. S’ mental health condition, chosen treatment protocol, the difficulty Ms. S had in obtaining disclosure from him and the history of dividend distribution.

Until such time as these share transfers occur, I declare that each party holds one-half of their shares in the numbered company in trust for the other party. The parties are each entitled to 50 percent of 75 percent of the net value of the company, notwithstanding the share structure. For the same reasons as set out above, if the Class C non- voting shares of the DS Family Trust are held in Mr. S’ name as trustee, he is to transfer 13 of those shares to Ms. S, who is to hold them as trustee of the DS Family Trust. He is to do so within two months of the date of this decision.

Until such time as he does so, he may not deal with those 13 shares without Court order. [ 70 ] I also order that the parties obtain a professional valuation of 807925 Alberta Ltd. (one that takes into account the market value of the Mark Messier Trail property and potential capital gains tax which will be payable on eventual sale of that property), the costs of which are to be paid from the monies currently held in trust by Ms. S’ counsel.

If the parties, within one month of the issuance of this decision, cannot agree on a valuator, they are each to submit the names of two proposed valuators together with their qualifications and estimated fees to the Court, which will select one of the valuators. Within two months of the parties’ receipt of that valuation, if there is not an accepted offer by one of the parties to purchase the others’ interest in the company, they are to make arrangements to appear before me to make submissions on liquidation and dissolution of the company under s 215(1) of the Alberta Business Corporations Act . 2.

SV and the Mark Messier Trail property [ 71 ] On October 21, 2002, Mr. S and his brother purchased 3.44 hectares of land on Mark Messier Trail in Edmonton for $405,000, each as to an undivided one-half interest. The purchase was financed in part by way of a mortgage for $302,500. Mr. S entered into a trust declaration declaring he held his interest in the property in trust for 807925 Alberta Ltd. Mr. S’ brother entered into a trust deed declaring he held his interest in the land in trust for his holding company, 807932 Alberta Ltd.

Their partnership is called SV. [ 72 ] The business office of SFI is located on the property. SFI pays rent to SV. [ 73 ] At various times since the parties’ separation, Mr. S has lived in a small house which also is located on the property. [ 74 ] In June 2010, the brothers listed the property for sale for $3.5 million. The realtor was of the opinion at the time that the land was worth between $2.5-$3.255 million but should be listed for $3.5 million. The 2011 property tax assessment for the property was $3,039,500.Two offers were received for this property.

On August 31, 2011, an offer of $1.2 million was made but neither brother was in favour of accepting it. On November 2, 2011, a new offer of $1.9 million was made by the same prospective purchaser. Mr. S refused to accept the offer. The 2013 property tax assessment indicates an assessed value of $1.955 million for the property. [ 75 ] The 2012 financial statements for SV show property, plant and equipment assets of only $522,853 (the 2012 financial statements of 807925 Alberta Ltd. reflect property, plant and equipment assets of one-half that amount, $261,426).

They show a long term debt of $172,567 (the 2012 financial statements of 807925 Alberta Ltd. show a long term debt of $86,284), presumably relating to the mortgage on the property. The financial statements for 2012 also disclose that $78,518 is due to related parties by SV. No evidence was presented at trial as to whether one of the related parties referred to is 807925 Alberta Ltd. or Mr. S. If the money or part of it is owing to 807925 Alberta Ltd., Ms. S will be entitled to a portion of the money through her shareholdings in the company. If the money or part of it is owing to Mr. S, Ms.

S is entitled to one-half of that money. The SV balance sheet for 2012 shows participants’ equity of $290,179. [ 76 ] Ms. S asks the Court to consider directing that one-half of 807925 Alberta Ltd.’s interest in the property be transferred to her so that any offer received on the property must be provided to her for approval. She wants an opportunity to apply to the Court if Mr. S refuses what she and his brother consider to be a reasonable offer.

If the Court is not prepared to direct a transfer of one-half of 807925 Alberta Ltd.’s interest in the property to her, she asks that the Court order that once the Mark Messier Trail property is sold and tax

advice obtained, her share of the net sale proceeds is to be paid out to her by way of dividend. [ 77 ] Ms. S’ primary concern appears to be that she be given notice of any offer made on the property and have the opportunity to make a court application if Mr. S refuses a reasonable offer for it. At present, Mr. S holds legal title to a one-half interest in the property in trust for 807925 Alberta Ltd. Given Mr. S’ failure to advise Ms.

S of the sale of his and 807925 Alberta Ltd.’s shares in SFI, his failure to follow tax advice and his other behaviour, as outlined below, I am prepared to order that any sale or encumbrance of the numbered company's interest in the Mark Messier Trail lands is subject to prior approval by the Court on notice to Ms. S. [ 78 ] As noted above, once the numbered company is professionally valued, the parties will have an opportunity to make an offer to purchase the other’s shares in the company, failing which they are to appear before me to make submissions on liquidation and dissolution of the company.

Consideration can be given at that time as to whether the numbered company’s interest in the property should be transferred to the parties, with each of them receiving one-half of that interest on their own behalf and as a trustee of the DS Family Trust, in the appropriate proportions (i.e. 75% on their own behalf and 25% for the Trust). 3. Sale proceeds of SFI [ 79 ] SFI provides financial products, insurance and investments. [ 80 ] Mr.

S (2/3 shares) and his brother (1/3 share) purchased their father’s interest in SFI in February 1994 for $300,000, to be paid over eight years. [ 81 ] In 1998, SFI was reorganized with Mr. S and his brother retaining Class E and Class F preferred shares and the common voting shares being held by holding companies. 807925 Alberta Ltd. owned 66.5 percent (200 Class

A) of the voting shares and Mr. S’ brother’s holding company, 807932 Alberta Ltd., owned 33.5 percent (100 Class

B) of the voting shares. [ 82 ] On August 17, 2004, Mr. S’ brother offered to buy out Mr. S’ and 807925 Alberta Ltd’s interests in SFI. Mr. S refused to sell. His brother made another offer of about $620,000 on June 25, 2005, valuing SFI at $854,952. Mr. S refused the offer. A business valuator valued the issued and outstanding shares in SFI as at August 31, 2006 to be $762,313. An updated valuation concluded the shares in SFI were worth $644,500 as at June 30, 2008. [ 83 ] On July 27, 2009, Mr. S’ brother made a conditional offer to buy out Mr. S’ and 807925 Alberta Ltd’s shares in the company for $500,000. Mr.

S signed the offer. Ms. S agreed in principle pending a review of the sale documents. The accountant advised the parties how to best structure the transaction to minimize the tax consequences for both of them. Mr. S subsequently had an altercation with his brother and the brother took the position Mr. S had broken their agreement by not complying with the conditions of the offer. [ 84 ] On March 22, 2010, Mr. S’ brother made a reduced offer of $416,350 for the shares in SFI owned by 807925 Alberta Ltd. and Mr. S. In December 2010, without the prior knowledge or consent of Ms. S, Mr.

S signed a contract with his brother on behalf of himself and 807925, selling his preferred shares and the shares owned by 807925 in the company to his brother for $416,350 plus the payout of a shareholder’s loan from 807925 Alberta Ltd. of $8,650. Of the purchase price, $200 was attributed to 807925's voting shares and the remainder to Mr. S’ preferred shares. [ 85 ] On June 17, 2011, Topolniski J directed that the net proceeds of the sale of the shares in the company, $418,927.41, be held in trust by Ms. S’ counsel. [ 86 ] In April 2011, Mr. S advised Ms.

S that $101,350.74 of tax was payable on the transaction as a result of the way it had been structured. The parties agreed to a consent order by Michalyshyn J on May 4, 2012 that the taxes be paid from the funds held in trust.

[ 87 ] As of February 28, 2013, the balance in the trust account was $314,093. If that amount includes the repayment of the shareholder’s loan by 807925 Alberta Ltd., that money and any interest earned on it is to be paid out to the numbered company. Of the remaining amount, $200 and any interest on that $200 is to be paid to 807925 Alberta Ltd. as its share of the sale proceeds. The remaining money is matrimonial property, which is subject to division between Mr. and Ms. S. 4.

Other assets and liabilities of 807925 Alberta Ltd. [ 88 ] 807925 Alberta Ltd. holds a number of life insurance policies with the following cash surrender values: (1) $39,917; (2) $2,000; and (3) $1,443.97. As at February 28, 2013, there was $6,665 in the company’s bank account. No evidence was presented as to the amount of accounts receivable the numbered company had as of that date. According to the evidence of Mr. S, the company owns a 2001 Polaris worth about $1,500. [ 89 ] As at March 2012, there was a shareholder’s loan of $31,125 owing, although it is not apparent to which shareholder(

s) that amount is due. If the shareholder’s loan is one owing to Mr. or Ms. S, it too is matrimonial property and is to be paid out equally to both of them. As at March 2012, there was also $25,503 owing to SFI. In addition, the 2012 financial statements of the numbered company show a long term debt of $86,284, presumably representing the mortgage on the Mark Messier Trail property. 5. Dividends [ 90 ] The company has paid the following dividends since the date of the parties’ separation: Year Mr. S Ms.

S 2006 $10,000 $10,000 2007 $44,000 $22,000 2008 $33,000 $11,000 2009 $ 8,500 Nil [ 91 ] In 2006, the parties apparently made an error on their tax returns, with Mr. S declaring $26,000 more in dividends than were paid to him by the company and Ms. S. declaring $15,500 more. [ 92 ] Mr. S controlled the numbered company and determined who got money from it and how much they obtained. He testified that it was his view that the person who did more work should get more in the way of dividends from the company and that was why there were different classes of shares.

He testified that he divided what he felt was appropriate and had the dividends paid out accordingly. He said that with all of the turmoil and aggravation, he was less motivated to pay out dividends for the Class “B” shares (those belonging to Ms. S). The evidence is that from 2004 to 2013, Mr. S received $95,500.00 in dividends and Ms. S received $43,000.00. Mr. S also wrote himself a cheque from the company in January 2013 for $5,000.00. It is unclear whether this was a form of dividend or was repayment of a shareholder’s loan. In any event, I consider the dividends and the $5,000 amount Mr.

S took out of the company in 2013 to be matrimonial property. In the alternative, the unequal distribution of dividends justifies an unequal division of matrimonial property in favour of Ms. S. [ 93 ] Ms. S asks that the dividends be equalized, which would mean that she should receive $28,500 extra from the division of matrimonial property. She suggests this amount be discounted by 20 percent to reflect the tax on dividends. The resulting amount would be $23,000.

[94] There was no evidence before the Court as to the amount of work undertaken by Mr. S in regard to the numbered companypost-separation. This is a holding company. Mr. S did not receive a salary from 807925 Alberta Ltd., but he was receiving disabilitybenefits during the period when the dividends were issued. Even though the dividends that were paid out are included in the parties’incomes when calculating Guidelines income, I conclude that it would be fair and equitable that Ms.

S receive $23,000 extra on thedivision of matrimonial property. [95] I note that the DS Trust did not receive any dividends over the period in question. Mr. S said that was because the “C” classshares were designed for future planning and because the children never did anything for the company. In my view, this is a companyrather than a matrimonial property issue. E.

Tax Liability and Dissipation [96] The matters to be considered under s 8 that are relevant to the parties’ interests in 807925 Alberta Ltd. include whether there isa tax liability that was incurred as a result of the transfer or sale of a property (s 8(k)) and whether a spouse dissipated property to thedetriment of the other spouse (s 8(l)). [97] Ms. S submits that the interests of 807925 Alberta Ltd. and Mr. S in SFI could have been sold in 2005 to Mr. S’ brother for$620,000 and that Mr. S’ refusal of the offer was unreasonable. She points out that a subsequent offer made by the brother waswithdrawn after Mr.

S assaulted his brother on the SFI premises, which led to criminal charges being laid against Mr. S. She says that atthe time the sale was proposed, the accountant advised how it should be structured to avoid any adverse tax consequences and that Mr. Swas aware of this information. [98] Ms. S points out that Mr. S was the majority shareholder in 807925 Alberta Ltd. He controlled when that company’ interest inSFI would be sold. Ms. S argues that when Mr.

S ultimately agreed to sell the company to his brother for $416,350, he did it without herknowledge and not in accordance with the procedures suggested to be followed by the accountants. As a result, he triggered a tax liabilityof $105,000.00. She contends his actions cost the family $300,000 (about $200,000 in the reduced purchase price and $100,000 in tax).She relies on the Alberta Court of Appeal decision in Hauck v Hauck (1991), 1991 ABCA 332 , 120 AR 120, submitting thatthis improvident deal is reason for the Court to make an unequal split of the assets in the numbered company under s 8(

m) of the MPA inorder to be fair to her. She proposes a 75/25 or 66/33 split of 807925 Alberta Ltd’s assets in her favour, pointing out that had the salebeen concluded at $620,000 with the accountant's direction, she would have received $310,000, but there is now only $314,093 left to bedivided. [99] The evidence before this Court is that Mr. S refused to accept offers for the sale of SFI and, when he finally sold the propertywithout using the method suggested by the family and corporation accountant, a significant tax liability was incurred.

Does thatconstitute dissipation in the circumstances of this case? [100] In Cox v Cox, 1998 ABQB 987 at para 46, 233 AR 258, Paperny J distilled the following principles from her review of the caselaw on dissipation: 1. Section 7(4) creates a presumption of an equal distribution of non-exempt matrimonial property, unless it would not be just orequitable to do so.

Section 8(

l) provides one of the factors that can lead to an unequal distribution where one spouse dissipates assets to thedetriment of the other. 3. Dissipation does not necessarily result where an asset is worth less at trial than it was at separation. Dissipation requires a degreeof intent although that intent does not necessarily have to extend to intentionally depriving the other spouse of a fair distribution ofmatrimonial property. It is sufficient if one spouse intends to dissipate the assets (usually for their own enjoyment), and that dissipationarises in detriment to the other spouse. 4. There must be actual detriment to the other spouse.

5. The law generally does not find dissipation if the reduction in assets was due to reasonable expenditures made on behalf of the family or to maintain existing matrimonial assets. However, the court will look to see if the spouse could have paid those expenses out of income rather than by depleting assets. Purely personal expenses which do not benefit the other party that are paid out of matrimonial property may also be considered dissipation (even though prior to separation they might have been matrimonial expenses). 6.

If an asset is sold or otherwise reduced, the courts will not consider this dissipation if the proceeds can be traced to another asset. The replacement assets form part of the assets available for distribution. 7. If assets are sold for less than fair market value, the courts may determine whether the sale was done improvidently, hastily or fraudulently in deciding whether it was dissipation. If the sale is effected in accordance with pre-separation negotiations it may not be considered dissipation. 8.

The total amount actually dissipated "to the detriment" of the spouse is one-half of the amount by which the asset was reduced. 9. Ultimately it is in the discretion of the trial judge, based on the consideration of all the facts, to determine whether or not dissipation exists. [ 101 ] The 2004 proposal by Mr. S’ brother was that one of them buy out the other’s shares in SFI. I am not prepared to find that Mr. S’ refusal of the offer in 2005 was unreasonable given there does not appear to have been a professional valuation of the shares in the company at that time. Also, the offer required that Mr.

S not be involved in the industry for five years. Apparently, he wanted to take over the company himself. While that may not have been entirely realistic given his condition, his refusal of the offer in my view does not amount to dissipation. He accepted the 2009 offer of $500,000, after a valuation had been obtained. A condition of the offer was that Mr. S must refrain from entering the offices of SFI. Approximately three and one-half months after the offer was made and accepted, Mr.

S withdrew funds from the company and had an altercation at the office with his brother, which lead to his brother withdrawing the offer. Mr. S’ actions in this regard do amount to dissipation, even though they may have been the result of his bipolar condition. If not dissipation, it is a circumstance that is relevant and which justifies an unequal division of property. [ 102 ] The Hauck decision is directly on point with the present case. The husband in Hauck was bipolar and after the parties’ separation, during severe manic phases, entered into a number of improvident transactions involving family assets.

After hearing medical evidence, the trial judge accepted that the husband could not be considered “morally responsible for his actions” due to his condition. As a result, he made an equal distribution of assets. Kerans JA, who delivered the judgment of the Court of Appeal, granted the wife an unequal distribution on the basis that due to the cyclical nature of the husband’s condition, there must have been times over the two year period involved when he could have properly dealt with his deteriorating condition, particularly when he was already in hospital.

He concluded the court should take into consideration that the husband could have done something to stop the disastrous consequences of his condition. [ 103 ] I reach the same conclusion in this case. By 2009, Mr. S knew that his medical advisors were recommending he take various medications to assist with his disorder, but Mr. S chose to ignore their advice. He too could have done something to stop or minimize the unfortunate consequences of his condition. [ 104 ] When Mr. S agreed to the final offer, he chose to ignore tax advice, with the result that a greater tax liability was incurred. Mr.

S. was under medical care for some of the period between 2005 and the present. Indeed, he was in Alberta Hospital for a time. However, there is no evidence that he was mentally incompetent at the time leading up to the final sale of SFI or that his disability prevented him from making reasoned decisions at that time. I also note that he had legal representation for the sale of SFI and Mr. S has admitted that tax planning issues had previously been brought to his and his lawyer’s attention by the accountant and by counsel for Ms. S. At trial, Mr. S admitted he knew Ms.

S had to consent to the sale of SFI but he elected to make the sale behind her back. This is sufficient to establish the necessary degree of intent for dissipation in terms of the tax liability incurred. Again, if this is not dissipation, it is a circumstance which justifies an unequal distribution of property. [ 105 ] There is some evidence that if the sale of the SFI shares had been structured to minimize the tax consequences, $55-74,000 would have been saved.

[ 106 ] I find that as a result of his breach of the conditions of the 2009 offer to purchase and his failure to follow tax advice, Mr. S dissipated $150,000. In the alternative, his actions in that regard justify an unequal division of matrimonial property with Ms. S to receive an additional amount of $75,000. F. Investment Assets 1. RRSPs [ 107 ] In August 2004, Ms. S’s RRSPs were worth $254,487.20. On February 28, 2013, her RRSPs were worth $348,141.77. Ms. S continued to contribute to her RRSPs from 2004 onward in a total amount of $29,750.00. [ 108 ] Mr. S’s RRSPs in August 2004 were worth $217,353.33.

He too continued to make contributions, amounting to $7,668.00. However, he also borrowed $25,000.00 from his RRSPs to use as a down payment on his new home. As of February 28, 2013, his RRSPs were worth $317,066. However, one of his RSPs, worth $22,972, was purchased by him post-divorce out of his line of credit. It is not matrimonial property. As a result, neither it nor the line of credit debt to purchase the RSP will be included in the matrimonial property statement. [ 109 ] Counsel for Ms.

S suggests that rather than rollover all of the RRSPs, they be discounted by 25 percent for future tax for purposes of the property statement. I agree with that proposal. 2. Life insurance policies [ 110 ] At the date of separation each spouse owned life insurance policies. Ms. S continued to pay the premiums on the policies after the date of separation. As of April 2, 2013, the net surrender value of Ms. S’s life insurance policy was $21,497.28. [ 111 ] According to Mr.

S, his three life insurance policies have cash surrender values of approximately $8,784 (the DS Family Trust is the beneficiary); $8,037; and $10,499. The polices were not entered into evidence. On the property statement prepared on behalf of Ms. S, these three insurance policies were all shown as his property. [ 112 ] On the assumption that the parties are entitled to surrender the life insurance policies and receive the cash surrender value if they do so, I regard them all to be matrimonial property.

If that is not the case, the parties are to calculate the necessary adjustment to be made to the property statement in Appendix A, including the equalization payment to be made by Mr. S. If they are unable to agree on that calculation, they may arrange to appear before me within two months of the issuance of this judgment to resolve the matter. 3. Joint Great-West Life savings account [ 113 ] The parties have a joint non-registered annuity with Great-West Life. As at July 1, 2004, that investment was worth $755.21. By December 31, 2004, it was worth $1,760.65. As at February 28, 2013, it was worth $19,337.24. Ms.

S testified that to the best of her knowledge Mr. S did not contribute to the account after their separation. She paid the tax on the interest earned on the account and contributed $12,000 to the account from the date of separation until September 2008. Although Mr. S seemed to agree that this account, except for the $755.21 value at the date of separation, should be Ms. S,’ in my view the account is matrimonial property. Ms. S’ contributions to the account post-separation will be taken into consideration in determining the appropriate division of matrimonial property. 4. Ms. S ’ Great-West Life investment

[ 114 ] Ms. S had another Great-West Life investment, which she cashed out for $3,417 on February 8, 2012 to pay life insurance premiums. That investment is no longer considered matrimonial property. However, the cash surrender value of the life insurance policy is matrimonial property. 5. Q-Trade account [ 115 ] There is $23,628.90 in Ms. S’ Q-Trade account. Ms. S made no contributions to this account after the date of separation, but she did pay the tax on the investment gains on the account. 6. Registered disability savings plan [ 116 ] Mr.

S. purchased this plan in May 2010 with money from his personal line of credit. It is now worth $6,077. The current value of the plan and the liability Mr. S incurred on his line of credit to purchase it are included in the property statement below. G. Vehicles and Items of Personal Property [ 117 ] Each of the parties has one or more vehicles. Ms. S has a new Hyundai which she purchased by trading in a 2000 Mazda and obtaining financing. Her equity in the vehicle is $3,050.00. [ 118 ] Mr. S has 1998 Ford van which he values at $2,500 and a holiday trailer he values at $2,300.

Post-separation, he purchased a 1992 Sunrunner and 1997 Sandma he values at $3,000. Apparently he is in possession of a 1996 Infiniti, but no evidence of its value was provided. [ 119 ] Mr. S lists several recreational vehicles, gear and tools, which he values at $5,000. [ 120 ] In 2004, Mr. S withdrew $15,000 from the joint line of credit for a horse, tack and antiques. The line of credit was paid out using the proceeds from the sale of the matrimonial home. H. Ms. S ’ LAPP Pension [ 121 ] Ms. S began contributing to the LAPP pension on September 12, 2011, after she and Mr. S were divorced.

The pension does not vest until September 12, 2013. Until then, the Plaintiff is only entitled to the return of her contributions. The value of the pension plan as at March 10, 2013 is: 2011 $ 736.29 2012 $3144.97 2013 $ 744.96

2013 $ 744.96 Total $4,626.22 [ 122 ] While matrimonial property is to be divided as at the date of trial, in my view Ms. S’ LAPP pension is not matrimonial property as all contributions were made after the date of divorce and there is no evidence matrimonial property can be traced into the LAPP pension account. I. Mr. S ’ Solicitor ’s Account [ 123 ] As noted above, in 2011 Topolniski J ordered that Mr. S’ solicitor’ account be paid from his share of the matrimonial property proceeds.

I have taken this payment into consideration in the property statement at Appendix A and in determining the appropriate equalization payment. J. Debts [ 124 ] Ms. S submits that the money Mr. S testified that he borrowed from his father to pay arrears in child support and the money he borrowed on his line of credit (other than to purchase matrimonial assets) are not matrimonial debt. To be fair, she also concedes her debts to her parents and friends also are not matrimonial debt. She argues that debts incurred by the parties post-separation should be considered personal debts. [ 125 ] If Mr.

S. received credit for paying child support, he cannot claim the money he borrowed for that purpose as a debt. Otherwise, he would be receiving a double benefit. [ 126 ] Even though it was incurred post-separation, Ms. S does claim as a debt the amount of the original mortgage on her new home. She also lists as a debt the $6,077 taken by Mr. S from the line of credit to purchase the disability plan post-separation and the $22,972 taken from the line of credit by him to purchase a 2012 registered savings plan.

Further, she lists the $1,024 Mowbrey Gill debt incurred to obtain documents relating to 807925 Alberta Ltd. I agree that all of these are matrimonial debts, with the exception of the money borrowed by Mr. S to buy his 2012 RSP. That RSP was purchased post-divorce and in my view it is not a matrimonial asset, Accordingly, neither the RSP nor the associated debt will be included in the property statement. K. Funds Held by the Parties in Trust 1. Investments for the children held in Ms. S ’s name in trust [ 127 ] Ms. S holds the following mutual fund investments in trust for the children.

These have an asset value as at February 28, 2013 of: RS $5,628.19 KS $3,581.92 DS $4,382.68 [ 128 ] Ms. S also has life insurance for them, with the following net surrender values:

RS $3,879.63 KS $3,047.47 DS $2,028.39 [ 129 ] Ms. S submits that the boys should get these funds when they are 25 years of age. Mr. S takes the position the funds should be held in trust until the boys come up with a worthwhile proposal for how the money should be spent. [ 130 ] There is no evidence before the Court which would indicate if there is a requirement that the funds be paid out or the investments transferred to the beneficiaries once they reach the age of 18. If there is such a requirement, it should be complied with. Otherwise, given that the children having been living with Ms.

S since the parties’ separation, she is in the best position to assess their level of maturity and need for the money. It will be up to her to decide when each of the children should receive the funds or investments held in trust for them by her. 2. DS Family Trust [ 131 ] In January 1999, the parties and Mr. S’ father established the DS Family Trust, an irrevocable trust in favour of the parties’ three children. Mr. and Ms. S were the original trustees and continue to be the trustees.

However, it appears the DS Family Trust funds are in an account held by him. [ 132 ] In November 1999, 807925 Alberta Ltd. declared a dividend of $71,250 payable to the trust, the holder of the 25 Class C common non-voting shares in the company. [ 133 ] As of February 28, 2013, there was $16,413.98 in the DS Family Trust account. The DS Family Trust also has a 25% interest in 807925 Alberta Ltd., which holds a half-interest in property that may have a value approaching $2 million. [ 134 ] Mr.

S’s position is that the money in the DS Family Trust account should be used to retire any s 7 expenses he owes in respect of the youngest child. He notes that monies from the account previously were expended for the benefit of the other two children. Ms. S’s position is that the monies should be divided between the two parties and Mr.

S can then apply the portion of the DS Family Trust monies held by him against his s 7 expenses and she can apply the share held by her against the s 7 expenses she has incurred, or they can otherwise use the funds to benefit the children. [ 135 ] As noted above, my understanding is that Mr. and Ms. S are both trustees of the DS Family Trust. I therefore order that Mr. S transfer one-half of the amount held in the DS Family Trust account to Ms. S, to be held by her in trust for the DS Family Trust.

Any future money to which the DS Family Trust is entitled (i.e. from SV or as a result of its shareholding in 807925 Alberta Ltd.) is to be equally split between Mr. and Ms. S and to be held in trust by them for the DS Family Trust. They are to account to each other annually as to all of the DS Family Trust funds for which they are responsible. They will each be entitled to apply the DS Family Trust monies held by them to their share of future s 7 expenses or to otherwise decide how the money will be spent to benefit the children. 3. RESPs (plan for all three children) [ 136 ] Mr. and Ms.

S decided to put money into an RESP for all three children. At the date of separation, the RESP (in Mr. S’ name) was valued at $29,488.79. After their separation and until December 20, 2010, Ms. S continued to put $150.00 per month ($11,000 in total) into this RESP from funds in the joint savings account. However, there have been withdrawals of $8,160.22 for the education of the two older boys. As of February 28, 2013, the RESP was valued at $34,393.87.

[ 137 ] Ms. S has had difficulty in terms of the RESP money in that the cheques are sent to Mr. S. For example, for RS’s funds, Mr. S put the money directly into RS’s CIBC account. Ms. S had to ask RS to write a cheque to her for the money since she was the one paying his school expenses. Ms. S is seeking an order transferring the RESP account into her name as she is the one who pays the education expenses. She testified she will undertake to account to Mr. S for the expenditures rather than having Mr.

S account to her in light of the three court orders which she had to obtain to get financial information from Mr. S. The court orders actually allowed her to contact Mr. S’s financial institutions to get information because he was not forthcoming with the information himself. [ 138 ] Given that DS and the other two children are living with Ms. S and have done so since the date of separation and given that Ms. S has had to obtain Court orders to obtain financial information from Mr. S, I agree that it would be more practical that the RESP be in her name. I therefore order that Mr. S transfer the RESP to Ms.

S’ name. She is to account to him on an annual basis for any monies taken out of or put into the account. If there is money left in the plan when it ends, that money is to be divided equally between the parties or as otherwise required by the plan itself. L. Final Division of Property [ 139 ] In argument, counsel for Ms. S indicated her client is not looking for compensation for the additional amounts she contributed to certain assets such as the joint of line of credit before it was paid out on the sale of the matrimonial home, the joint savings plan and her RRSPs.

Rather, she mentioned these contributions to illustrate her submission that although the parties have been separated since 2004, they continue to be financially intertwined. In large part, they have remained a single financial unit since the date of separation. [ 140 ] I have determined that, excluding their interests in 807925 Alberta Ltd., their share of any shareholder’s loan owing by 807925 Alberta Ltd. to Mr. and/or Ms. S.,their share of the SFI sale proceeds held in trust by Ares Law, their share of any monies owed to Mr.

S by SV, and the assets they hold in trust for their children, the parties’ total matrimonial property amounts to approximately $1,060,344. I have determined that an unequal division in Ms. S’ favour is appropriate in the circumstances of this case. Ms. S will receive additional amounts as set out above and in Appendix A to compensate her for the dissipated funds and the extra dividends taken by Mr. S. from t

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