Jensen v. Jensen, 2013 ABQB 98

Court of Queen ’ s Bench of Alberta Citation: Jensen v. Jensen, 2013 ABQB 98 Date: 20130220 Docket: 4803 144882 Registry: Edmonton Between: Kirk Knud Jensen Plaintiff - and - Lindsay Ann Jensen Defendant Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ I. Introduction

[ 1 ] Kirk and Lindsay Jensen were married on June 28, 2003. Kirk was 43, Lindsay 22. The couple separated in January, 2008. While a divorce judgment was granted in March, 2011, a trial of the corollary issues followed only in June, 2012, some 4 ½ years after separation. [ 2 ] The following issues are to be resolved: A. The parties' matrimonial property available for division; B. The parties ’ incomes for child support s. 7 purposes from separation to the date of trial, and ongoing; C. Spousal support payable, if any. II.

Facts [ 3 ] The parties agreed to certain facts and I have found others based on all of the evidence. Altogether, the facts are as follows. [ 4 ] There are two children of the marriage, born October [...], 2003 and April [...], 2005. [ 5 ] Kirk was 52 at the time of trial. He created a company, Jencess Software and Technologies Inc. in 1983. He was the sole shareholder of the company. He was employed by Jencess until April 30, 2007. At that time he sold the Jencess business to The Active Network. [ 6 ] As part of the sale Kirk stayed on with Active for 18 months. He earned $160,000/year.

That continued until February 28, 2009. He then consulted to Active part-time for $32,000/year. That continued until August 31, 2010. [ 7 ] Since August, 2010 Kirk has looked into other business opportunities, and managed the Jencess investment portfolio. He has been less than full-time employed in these endeavours. He has filled the balance of his time with recreational and child-centred activities.

At trial he remained otherwise unemployed. [ 8 ] When the parties met, Kirk owned a fully furnished home in the Riverbend area, some RRSPs, and all of the issued shares of Jencess. [ 9 ] Lindsay was 31 at the time of trial. She obtained her B.Sc. in the spring of 2003 in the areas of cognitive neuropsychology and philosophy. She had an interest in post graduate work in the neurosciences. [ 10 ] Lindsay had worked for her father's company in Toronto.

While she declared no earned income, in exchange for her services her father covered her living and undergraduate education expenses. [ 11 ] Kirk and Lindsay met on an airplane in late November, 2002. At the time Lindsay was in school and living with her father and brother in Ontario. She had no assets. Further encounters between Kirk and Lindsay followed. In January, 2003 Lindsay learned she was pregnant. In due course the couple were married on June 28, 2003.

[ 12 ] After learning of the pregnancy, the parties eventually agreed Lindsay would relocate from Toronto to Edmonton. Lindsay was uncontradicted in her evidence that she committed to move to Edmonton for just three years, as she wished to continue her education. [ 13 ] After the wedding and a brief honeymoon Kirk returned to work while Lindsay travelled frequently to Toronto. She then travelled to London, England to have the couple's first child. She was in London for about six weeks before the October [...], 2003 delivery. She then stayed in London with her mother and sister until early December, 2003.

She then returned to Edmonton. [ 14 ] Lindsay stayed at home from then on and cared for the child and household while Kirk, though he contributed to work outside the house and helped parent, he also continued to work long hours at Jencess, including frequent business-related travel. [ 15 ] In his evidence, Kirk pointed to early tensions in the relationship, as early as around the time of the wedding.

He assumed much of the wedding planning when Lindsay was not getting things organized. (Lindsay had been lukewarm about marriage as compared to living together, and agreed that Kirk was “ ticked off ” about her ambivalence toward the wedding; at five months ’ pregnant, she would have preferred a smaller affair.) Post-marriage, things were sometimes tense as, in Kirk ’ s view, Lindsay was failing to get things organized, was not getting bills paid on time, and the like. [ 16 ] Before the marriage Kirk and Lindsay agreed that Lindsay would continue with her education after the first child was born.

Lindsay was also supported in this by her father, Allan Tremblay. Both Lindsay and her father spoke with Kirk regarding Lindsay's desire to continue her education. Both testified they found Kirk supportive. At trial Kirk seemed more equivocal, agreeing he was supportive, yet having little apparent recollection of Lindsay ’ s education background or ambitions. [ 17 ] After the first child ’ s birth, Lindsay enrolled in one course in the fall, 2004 semester at the University of Alberta. [ 18 ] Lindsay learned of her second pregnancy on the eve of attending university in the fall, 2004.

She was uncontradicted in describing having difficult pregnancies, including acute morning sickness. [ 19 ] Given her first pregnancy, Lindsay told Kirk she was not prepared to go through the second pregnancy without assistance. To her, that could mean a move back to Toronto, or to London, to be around members of her family.

Or it could mean hiring a nanny. [ 20 ] A nanny was in fact hired in February, 2005, a couple of months before the second child's birth on April 18, 2005. [ 21 ] Lindsay took no further university courses after the fall, 2004 because of issues around her pregnancy, and because of the stress she perceived Kirk was feeling around the Riverbend house failure and Jencess issues in the 2005 time frame. In her view at least it was a tumultuous time, even financially.

She concluded it was not a good time to continue her part-time studies. [ 22 ] By March, 2006 the parties determined the Riverbend house was unsafe owing to foundation/subsidement issues. The house sold with Kirk realizing some $20,000-$25,000 in equity. He kept no particular track of where these funds ended up.

It appears on the evidence it went either toward expenses associated with further moves, back to Jencess, or towards the purchase of a new home. [ 23 ] In March, 2006 Kirk and Lindsay moved with the children to Camrose, Alberta and lived at Kirk's father's residence for about three months. [ 24 ] In early July, 2006, Kirk and Lindsay became joint registered owners of what was the parties' matrimonial home at the time of separation. Kirk was able to obtain financing on the home purchase only with evidence of Lindsay's employment.

[ 25 ] Kirk gave little thought about who was to be on title to the new house. He was anxious to get the purchase done, and the parties were growing weary of living in Camrose. Jencess provided funds for a $160,000 deposit on the house. In turn, Kirk arranged to have Jencess pay him additional monies in 2007 with which he repaid the company. [ 26 ] Just after the family moved to Camrose, Lindsay obtained paid work with Enterprise Rentals in April, 2006. It was again her uncontradicted evidence that Kirk had indicated he would prefer a professional wife rather than a stay at home mom or student.

Lindsay eventually became a manager in various Enterprise locations. As a manager she worked up to 12 hour days during weekdays. She earned between $50,000-$58,000. She was also provided with a company vehicle and reimbursed for any repairs, insurance, maintenance and gas. [ 27 ] In October, 2007 she took on a sales role with the same company. In sales she had more flexible hours, yet travelled more. Lindsay remained with Enterprise until May 2012.

She then went on with Steeplejack, at a salary of $120,000/year, plus a $1,200 per month car allowance, plus the potential for performance bonuses. [ 28 ] Once going on with Enterprise in April, 2006, Lindsay began to pay 100% of the cost of the nanny. She kept the balance of her earnings and spent it largely on her own needs, leaving Kirk to take care of the rest of the family's needs including the couple's joint credit card. Separation [ 29 ] In August, 2007, within four months after the Jencess sale and while Lindsay remained employed at Enterprise, Lindsay testified she found a message on Kirk's cell phone.

The message was a communication with a third party and of a sexual nature. From the evidence called at trial on this point, it is enough to find that these events led Lindsay to conclude the marriage was over. That was the basis for her position at trial that the effective date of separation was August, 2007 rather than January, 2008. [ 30 ] Lindsay testified she and Kirk were just ‘ going through the motions' between August, 2007 and January, 2008, including spending Christmas, 2007 with Kirk's family in Red Deer and in other respects representing themselves as still married.

On the other hand, as Kirk notes, other evidence more convincingly points to the later January, 2008 date of separation. Lindsay swore an affidavit to that effect in July, 2009. She also declared on her 2007 tax return that she was "married". On all the evidence, I find the parties in fact separated in January, 2008. [ 31 ] Following separation the parties remained in the same home until August 2008. Lindsay continued to pay for the nanny, with the exception of three cheques totalling $3,434.42 which Lindsay wrote on Kirk's account. With regard to these cheques, I find no dishonest intent as alleged at trial.

I accept Lindsay ’ s explanation for writing the cheques, supported by a read-in by Kirk confirming that during the marriage he consented to Lindsay writing cheques on his account. [ 32 ] On August 27, 2008 the parties entered into an interim without prejudice consent order confirming, amongst other things, a shared parenting arrangement, child support to Lindsay of $2,800 per month inclusive of the costs of the nanny which Lindsay continued to pay, and an interim distribution of matrimonial property of $100,000 to Lindsay to enable her to purchase a new home. [ 33 ] As noted above, after the Jencess sale Kirk remained employed in various capacities with the Active Network until August 31, 2010.

From that point until trial, a period of just short of two years, Kirk was without employment income.

He took money out of Jencess as he needed it by way of accessing retained earnings or his shareholder's loan. (For example, he drew from the shareholder's loan to advance the $100,000 to Lindsay in August, 2008.) He stayed home, helped look after kids, played golf, ran marathons, and became involved in community activities in which he had not previously engaged, such as serving on boards, the parent council at school, and the like. [ 34 ] While he was so engaged, it was also Kirk's evidence however that he felt ‘ paralysed' by the divorce proceedings, in the sense that he was unable to move on to new business ventures given the uncertainty over matrimonial property division. [ 35 ] Not long after the August, 2008 consent order and $100,000 advance, Lindsay purchased 1139-113 Street for $420,000.

Some three years later, in June 2011 she sold that property for $427,501. She realized net sale proceeds of $107,928.04. She used that sum together with a $10,000 deposit to purchase 713-173B Street for $593,400. A mortgage of $466,000 is owing on that property. At trial she had some $123,900 in equity in her home. [ 36 ] Kirk remained in the matrimonial home and continued to pay its associated costs. At trial the mortgage balance was $393,368. [ 37 ] On November 1, 2012 Kirk was to take possession of a new house in Edmonton worth $780,000. He withdrew $25,000 from Jencess for a deposit on that property.

Nothing was before me with regard to other financing. [ 38 ] Pursuant to the August, 2008 consent order Kirk continued to pay $2,800 per month in child support/nanny costs until November 1, 2009. At that time he was directed to pay $2,714 per month, consisting of $1,421 in base child support, and $1,293 as his contribution towards the nanny costs. This continued until March 2011, when he began paying the costs of the nanny directly.

As such, he also began to claim the nanny expense as a deduction against income, which Lindsay had previously done. [ 39 ] As at trial Kirk has paid the following expenses for the children since January 2008: (

a) Extended health care benefits; (

b) Uninsured medical/dental for Michael - $1,291.22; (

c) Uninsured medical/dental for Kira - $844.56; (

d) Camps and sports for Michael - $5,203.02; (

e) Equipment for Michael - $1,402.09; (

f) Camps and sports for Kira - $4,099.90; (

g) Equipment for Kira - $204.35; (

h) Preschool for Michael - $600 (Jan 2008 – June 2008); (

i) Montessori for Kira - $1,330 (2009) [ 40 ] Lindsay has paid the following expenses for the children since January 2008: (

a) Piano lessons (2012) - $100; (

b) Ski lessons (2009) - $93.45; (

c) Montessori for Kira (2010) - $1,800 [ 41 ] There was some other evidence at trial regarding Kirk's other expenditures on the children but exactly how much and over what period of time was not particularly clear or calculable. [ 42 ] Lindsay has received the entire amount of the Universal Child Care Benefit since separation, in the sum of $1,200 per year per child, notwithstanding the August, 2008 consent order which appears to split this and other dependent tax benefits equally between the parties. [ 43 ] Lindsay received interim costs of $20,000 in October 2009, and $30,000 in April 2012.

She set up a further $25,000 line of credit to cover legal expense. She further claimed an unspecified part of the $56,000 she owes her father went to cover legal expense.

[ 44 ] The retained earnings of Jencess at December 31st were as follows: December 31st Year End Amount 2003 $ 815,790 2004 $ 938,093 2005 $ 1,174,640 2006 $ 1,300,221 April 30 2007 $ 1,317,299 2007 $ 2,288,132 2008 $ 2,244,340 2009 $ 2,503,120 2010 $ 2,303,963 [ 45 ] Kirk's shareholders loan with Jencess changed over time as evidenced by the following: December 31st Year End Amount 2003 $ 0.00 2004 $ 0.00 2005 $ 17,367 2006 $ (177,633) April 30 2007 $ (197,624) 2007 $ (197,556) 2008 $ 818,548 2009 $ 710,277 2010 $ 571,477 [ 46 ] As indicated on filed returns/notices of assessment, the parties respective incomes from 2003 to trial were as follows: Year Kirk Lindsay 2003 117,521 2004 152,030 (inc/ $68,750 dividends) 2005 $194,156 2006 $76,758 2007 $550,335 (inc/ $72,500 dividends) $53,498

2008 $163,629 $57,982 2009 $61,945 $58,141 2010 $27,994 $57,104 2011 $168,216 (inc/ $155,216 dividends) $55,174 2012 $106,525 [ 47 ] Lindsay's father, Allan Tremblay, loaned funds to Lindsay he understood to assist her with a basement renovation, living expenses, debt reduction and legal fees. Lindsay is indebted to her father in the sum of approximately $56,000. [ 48 ] It is unfortunate that Tremblay neglected to produce his running total of funds loaned to Lindsay in the years since the parties' separation.

He insisted at trial however that he kept track of the loans, to Lindsay and similar loans to her siblings, most of which if not all have been paid back to him. Likewise, he expected to be repaid by Lindsay in due course. Tremblay was not seriously challenged in cross examination on the threshold question of whether he advanced the funds in the first place, or his expectations going forward.

I accept his evidence on these points. [ 49 ] For her part, Lindsay was referred to details of the funds lent by her father for such items as basement renovations ($24,745), part of a down payment on her new house ($5,000), and unspecified "debt reduction" ($26,500). I will return to whether I am satisfied on the evidence those funds all represent matrimonial debt. [ 50 ] Tremblay also confirmed Lindsay's aspirations to continue her education in the 2002/2003 time frame. She had expressed interest for example in post-graduate studies in the U.K.

He was aware she lacked some course prerequisites but believed she could remedy that. If she was unable to obtain scholarship funding, he would have supported her financially. [ 51 ] As at December 31, 2011 Lindsay had an RRSP with RBC of $3,400. She considers her RRSP matrimonial property to be divided equally. [ 52 ] As at February 29, 2012 Kirk had an RRSP with RBC of $332,829.28, and an RRSP with TD Waterhouse of $4,230.00, for a total of $337,059.28. He argued for an RRSP exemption of $250,011.16 based on what appears to be a bare undertaking response included in the parties' agreed exhibit book at trial.

Kirk thus argued the $250,011.16 figure was agreed upon for truth. Lindsay disagreed, arguing no agreement was reached regarding entering exhibits necessarily for the truth of their contents.

Lindsay argued the only proven RRSP exemptions are $99,910 (Manulife) and $1,135 (RBC) for a total of $101,045. [ 53 ] Kirk contributed a further $58,921 in RRSPs during the marriage and $79,244 post-separation, for a total of $138,165. [ 54 ] While he acknowledged having no evidence at trial for his claimed $250,011.16 exemption, Kirk argued it is unrealistic to assume his holdings gained in value by $137,849.28, being the difference between $101,045 + $138,165 (= $239,210) and the current value of $377,059.28. [ 55 ] On the other hand, Kirk's claimed $250,011.16 exemption, taken together with the post-marriage/separation contributions of $138,165, would result in a $51,116.88 loss in value to his RRSP holdings overall ($250,011.16 + $138,165 (= $388,176.16) - $337,059.28). [ 56 ] There was no evidence at trial regarding the nature of the RRSP holdings or of the increases/losses to one or another of the holdings.

As such, and given the onus on Kirk to prove his claimed RRSP exemption, I am unable agree the gain is so unrealistically high that I should therefore conclude the exemption is in fact $250,011.16, and ignore the $101,045, which is the only figure in fact supported by direct evidence.

[ 57 ] At trial Kirk had cash in the bank estimated at $6,000 and a $10,000 tax free savings account. [ 58 ] Kirk owns Jaguar and Range Rover vehicles. Jencess bought him the Jaguar for $98,000, and the Land Rover for $41,606. Kirk drew on his shareholders loan to pay for the Jaguar when Jencess in due course transferred it to him. The shareholder ’ s loan also paid for the Land Rover. At trial the Jaguar was worth $30,000 and the Range Rover $15,000. [ 59 ] At trial Kirk also owned a travel trailer worth $13,500 and a quad worth $5,000. [ 60 ] At trial Lindsay no longer had an employer-provided vehicle.

She had purchased a 2011 Ford Edge which is financed, and in which she had no equity. [ 61 ] Together with her debt to her father of $56,000, at trial Lindsay claimed the following as matrimonial debt: credit balance owing with RBC and CIBC of $1,000 and $15,000 respectively; RBC loan balance owing of $30,330.00 (representing the consolidation of an earlier RBC line of credit balance owing of $15,000 and CRA debt of about $14,300); and a second RBC line of credit balance owing of $25,000. [ 62 ] The evidence shows Lindsay's legal expense of at least $75,000, based on the two court-ordered advances and the second RBC line of credit just mentioned.

It is less clear what additional amounts went to cover legal expense. There is relatively little evidence regarding Kirk's legal expense, although little dispute it was paid by Jencess. [ 63 ] Lindsay testified that when she was working for Enterprise she netted about $3,500/month. She was not seriously challenged on this estimate in cross examination. She also received child support of about $1,000/month after nanny expenses. She received the universal child benefit of $200/month. She had the use of a company vehicle. [ 64 ] Her estimated budget as at November, 2010 was just under $9,000.

That budget however included the $1,800 nanny expense, nanny CPP/EI of $350/month, monthly $400 payments for legal expense, and monthly payments of $250 for "gas and oil", even though there was also evidence her work-related car expenses were covered, and a careful review of her credit card statements failed to verify consistent personal expenditures in that regard. Finally the budget included $1,600 in combined credit card and loan payments although in cross examination Lindsay acknowledged these items likely constitute significant duplication of items she was already spending on.

At the end of the day, once contentious items are removed from the budget, the case for monthly budget shortfalls is weakened considerably. Jencess [ 65 ] Lindsay had no involvement in Jencess. She had little understanding of the challenges the company faced, or when, although she understood from Kirk's occasional venting that he was stressed and upset at having to scrap what she came to know as the ".NET/SGL conversion". [ 66 ] As noted, Jencess sold its business to Active on April 30, 2007.

Kirk kept the Jencess corporate entity and managed its assets going forward. [ 67 ] Jencess was sold for $3 million, plus $50,000 in expenses and 60,000 Active shares with a book value of $1 each. Taking into account the net value of a $500,000 escrowed amount, Kirk's accountant at trial pointed to Jencess' 2007 financial statement which

shows net sale proceeds of $2,776,917. [ 68 ] There was no evidence at trial as to the basis for Kirk's offer to sell Jencess for $3 million, or why Active accepted that particular offer. Active had first offered $1 million. Kirk found that figure unrealistically low. He testified that Active made further offers but just what they were was not in evidence.

Kirk came up with his $3 million position - an amount his lawyer and business advisor warned him was unrealistically high - yet Kirk insisted that was his offer, take it or leave it, he no longer wanted to be distracted by further negotiations. [ 69 ] Kirk testified that in years past others had expressed interest in buying Jencess or its business. There was little or nothing in the evidence however that before the April 30, 2007 deal Jencess had any credible cash offers that it was seriously prepared to consider. [ 70 ] Jencess began developing and selling golf industry software in 1983.

At first the software was based on a DOS platform. In the early 2000's Jencess embarked on a conversion to what came to be known as the .NET/SQL conversion. [ 71 ] After much research, work began in earnest as 2002 continued to unfold. By spring/summer 2002 Jencess had hired 12 programmers dedicated to the .NET/SQL conversion. It was hoped the new system would be up and running by the end of 2003/early 2004. [ 72 ] Things went initially well. Jencess was "rocking and rolling", Kirk testified, life was good, there was no indication of a problem.

Yet by the spring, 2003 Jencess was experiencing more and more data corruption issues. Business was down, clients were harder to come by, as were references from existing clients in favour of the products Jencess then offered. [ 73 ] In March, 2003 Jencess lost a major customer, the Ontario Golf Association, owing to software issues. Later in 2003, the company lost its UK distributor and closed it European office. By the end of 2003, sales had fallen to $1.6 million, down 9.5% from the year previous.

In contrast, sales in 2001 and 2002 had increased 75% and 19.5% respectively. [ 74 ] By mid-2003 Jencess was putting out fires as much as anything. Competitors were ahead of Jencess in terms of software technology. Jencess was promising existing clients a new software solution was coming.

Notwithstanding the uncertainty, Kirk testified that in mid-2003, he would not have entertained even a $10 million offer for what he described, in Jencess, as "probably the number one golf software company in the world..." and "... one of the most dynamic companies in the world". [ 75 ] Kirk testified that by at least the late summer, 2003, he was informed the new .NET/SQL system was not functioning as planned. Symptomatic of the problem, perhaps amongst other things, was the fact it would take a minute and a half to two minutes to open a "T-sheet". As Kirk described it at trial, "panic set in...

It was the beginning of the end." [ 76 ] A series of meetings was held to address the issue. Kirk testified at trial that : "At that point I can start to smell the smoke because one of the lead programmers quits - Lejune [the first programmer he had hired] - and I thought ‘ oh great' - so obviously this is worse than I thought because he doesn't think he can fix it." [ 77 ] There was some conflict in the evidence as to when Lejune left the company. Jencess ’ former general manager Matt Welliver placed it in late 2003.

I prefer Kirk ’ s evidence which puts it around late summer, 2003. [ 78 ] Welliver testified that Lejune left because “ He saw a sinking ship, I ’ m sure. ” [ 79 ] Then in the late fall/early winter of 2003 a second lead programmer quit. Not long afterwards, in a December, 2003 meeting Jencess formally abandoned the .NET/SQL conversion as a "total loss". Kirk quantified the loss as 20-30 man-years of programming, at

a cost of an estimated $1 million. [ 80 ] With the .NET/SQL conversion abandoned, Jencess' fall-back position was to continue to rely on its FoxPro database but to access it through a series of new on-line suites. It was, as Kirk described at trial, a "facade" - what he jokingly referred to as "lipstick on a pig" - that would enable clients to access Jencess' resources still formatted in a pre-.NET/SQL environment. This ‘ facade' apparently met with some success in that Jencess stayed in business until its sale to Active in April, 2007.

The business valuation reports [ 81 ] A great deal of time was spent at trial attempting to quantify Jencess' value as at June 28, 2003, the date of the parties' marriage. [ 82 ] In his report of May 12, 2010 Gordon Smith for the Defendant (Lindsay) estimated the fair market value of Jencess at December 31, 2003.

Using a primary "income approach - capitalized cash flow approach" he put the value at between $870,000 to $980,000 with a mid-point of $925,000. [ 83 ] In her report of February 3, 2012 Brenda Pisko for the Plaintiff (Kirk) concluded that as of June 28, 2003 Jencess had a fair market value, based on the same primary earnings-based approach adopted by Smith, of between $1,801,000 and $1,862,000 with a mid-point of $1,832,000.

Her mid-point was thus $907,000 higher than Smith's. [ 84 ] For reasons which follow I prefer Smith ’ s evidence. [ 85 ] After considering the Jencess history essentially as summarized above, Smith concluded: The failure of the company to successfully update its products for technological changes, customer requirements and competitor upgrades would negatively impact its competitive position and outlook and is a negative consideration in our valuation of Jencess. [ 86 ] Key to Smith's income approach was his opinion regarding the appropriate capitalization rate for Jencess.

Smith estimated a cap rate range of between 20.69 and 24.49 per cent, while Pisko estimated a range between 10.33 and 11.13 per cent.

The difference between these two experts can be found in their divergent approaches to estimating small company risk premium (Smith - 9.16 per cent; Pisko - 0 per cent) and specific company risk premium (Smith - 5 to 9 percent; Pisko 2 to 4 per cent). [ 87 ] I agree with Smith's approach to estimating the small company risk premium based as it was on his review of an Ibbotson Associates study into risk premiums over time, whereas no apparent explanation existed in the evidence for Pisko's use of 0 per cent in this risk category. [ 88 ] As to the difference in specific company risk, I agree with Smith's critique that Pisko's figures underestimated the impact on Jencess' risk of profitability of such factors as declining sales, loss of customers, and the uncertainty around the software conversion, amongst other things.

One specific example helps illustrate the point: in relating the company's history, Pisko noted Jencess lost the Ontario Golf Association as a major client in late 2003. In fact the evidence shows that client was lost in March, 2003. In cross examination Ms. Pisko readily agreed the loss of the Ontario Golf Association in early 2003 would cause her concern regarding Jencess specific company risk as at June 28, 2003. [ 89 ] Like Smith, Pisko considered Jencess' history and its 2003 experience in particular.

She concluded amongst other things that in December, 2003 "... it became evident that the programming design had failed and that the conversion [to .NET/SQL] would be discontinued. The company was unable to upgrade its product while their competitors were successful in doing so."

[ 90 ] Pisko came to few if any conclusions regarding the viability of the software conversion as at June 28, 2003. She relied on the assumption that: Jencess had been a leader in the industry and was in the process of upgrading its technology in 2003.

In mid 2003, management was still of the view that it would be successful in upgrading its software technology and that it would continue to be a leader in the industry by offering new products ahead of its competition. [ 91 ] Amongst other assumptions she made: In discussions with Kirk Jensen, we understand that there were certain purchasers in the marketplace who may have been considered special purchasers.

Special purchasers are those who for particular reasons such as competitive advantages or economics of scale may pay a premium above fair market value to purchase the outstanding shares or assets of the company. Any such purchasers may impact the eventual selling price. We have assumed that any special purchasers that existed would have existed throughout the period from June 28, 2003 to April 30, 2007. [ 92 ] She assumed, based on information provided by Kirk, that before the April 30, 2007 sale, "...there had been prior opportunities" to sell the company.

There was, however, no evidence of "special purchasers" at June 28, 2003 and as such Pisko's assumption in that regard was unsafe. Equally, whether to “ special purchasers ” or otherwise there was no evidence of Jencess sale opportunities as at June 28, 2003. [ 93 ] Finally, I find that in her report and evidence, Pisko failed sufficiently, if at all, to take into account Jencess ’ true state of affairs at June 28, 2003.

In contrast, as noted Smith concluded, and I agree, that with proper due diligence, any prospective buyer would have noted as at June 28, 2003 the clear uncertainty that existed around the still-unfolding software conversion. [ 94 ] None of this relies on any questionable use of "hindsight", the notion of which was much discussed and argued at trial.

My assessment of the experts' evidence is based on what each of them knew and accounted for as at June 28, 2003. [ 95 ] As I am unable to accept certain key assumptions made in her report, I have considerable doubt regarding Pisko's estimate of Jencess' value on a market-value approach as of June 28, 2003. [ 96 ] At the end of the day, the higher capitalization rate estimated by Smith, which I accept, supports his opinion regarding Jencess' value at June 28, 2003, and equally undermines Pisko's. [ 97 ] As an aside, Pisko also provided a business valuation opinion regarding the worth of the business at the time it was sold on April 30, 2007.

Mr. Smith did not provide such a valuation. I do not fault him in that regard. In my view, the experts were called to assist the court with Jencess' likely value as of June 28, 2003. That expert opinion evidence was necessary for purposes of calculating the exemption value of the business for matrimonial property purposes. No expert opinion evidence was necessary to determine Jencess' value at April 30, 2007.

That value was established unequivocally by the net sales proceeds in the Active sale. [ 98 ] On a related point, Kirk argued the $3 million sale price in April, 2007 should inform whether Jencess was worth just $950,000 less than four years earlier, on June 28, 2003. Kirk argued that Active did its due diligence and would not have made a “ stupid ” decision to pay more than three times that value less than four years later. But there was no evidence from Active to explain why it bought Jencess ’ business on the terms it did.

There was some evidence Active was a “ special purchaser ” for which price may have been only one of several factors in the Jencess acquisition. On the limited evidence before me, the April 30, 2007 sale tells me nothing about the likely value of Jencess on June 28, 2003. [ 99 ] Both experts ‘ tested' their primary earnings-based approach conclusions with a corroborative market-based approach.

[ 100 ] Smith relied on the same 2003 history outlined earlier in his report and summarized here.

He concluded based on that history that Jencess' "maintainable EBITDA (earnings before interest, taxes, depreciation, and amortization) margin and sales are somewhat lower that [sic] the historical levels it once achieved." He estimated maintainable EBITDA of $250,000 to $270,000. (Pisko estimated maintainable EBITDA of $285,000 to $290,000 - the difference between the two experts being whether Kirk's 2003 salary should have been pegged at $160,000 or $141,000.) Based on that conclusion and other factors Smith concluded the corroborative approach yielded a calculated fair market value of the company of between $750,000 to $1,150,000, with a mid-point of $950,000. [ 101 ] As part of her own corroborative approach Pisko relied in part on information provided to her by Plaintiff witness James Keegan, including his estimate that in golf software company transactions it is common to use a multiplier of 6-10 x EBITDA, or 1-2 x gross revenues, as a valuation rule of thumb. [ 102 ] I ruled mid-trial that Keegan was not qualified to give expert opinion evidence.

He went on to testify factually about his knowledge of the golf industry and golf software in particular. [ 103 ] To the extent Keegan's evidence on the EBITDA and gross revenues multipliers was based on opinion, it was of course inadmissible and thus compromises the foundation of Pisko's own opinion. [ 104 ] To the extent Keegan ’ s evidence purported to be based simply on facts, I still have concerns. Keegan testified about what he knew of a variety of golf-related transactions. Yet in his

summary of the same transactions at page 18 of his report he acknowledged that with perhaps one or two exceptions "All other sales prices, revenue and multiples presented are based on conversations within the industry and have not been verified for accuracy".

And as to the exceptions, he stated in his report, in my view ambiguously, that "The author [himself] of this report was either a principal in the Fairway Systems transaction or served as a consultant representing seller". [ 105 ] At the end the day even Keegan's factual evidence about typical golf-related transactions fails to underpin Pisko's corroborative approach to valuation. [ 106 ] Numerous other issues divided the business valuation experts. [ 107 ] Pisko was critical of Smith's use of year-end 2003 figures rather than focusing in on June 28, 2003.

Her critique was based in part on her understanding that it was only later in 2003 that significant changes occurred detrimental to Jencess' valuation.

I reject Pisko's critique on the basis that as noted, by June 28, 2003 the changes which became manifest later in 2003 were already unfolding, and would have been apparent to any prospective purchaser, as at June 28, 2003. [ 108 ] For his part, Smith was critical of Pisko's June 28, 2003 point-in-time approach as it was based on an average of the Jencess year-ends of 2002 and 2003 and, by all accounts, 2002 was a better year than 2003. [ 109 ] Pisko's approach brought 2002 performance into the picture, which arguably may have distorted things.

Smith's approach brought second-half 2003 performance into the picture, which arguably may have distorted things. It was not clear in the evidence what real difference one imperfect approach made over the other. I can only conclude the experts are at a draw on their respective year-end critiques. That draw does not cause me to revisit my preference overall for Smith ’ s evidence. [ 110 ] Smith was also critical of Pisko's conclusion that the value of goodwill could be as high as $1,230,000.

He noted that all else being equal in her analysis, that value of goodwill would result in a prospective purchaser foregoing profits for more than eight years. He concluded, and I agree, that no buyer would forego profit for that long with a company with the low growth projected by Pisko in her report. [ 111 ] As to Pisko's corroborative approach, Mr. Smith noted it generated a value almost 1.6 times higher than her primary approach. He concluded and I agree that such a large disparity, without more, should cause one to question the validity of the corroborative approach in the first place.

[ 112 ] On the above analysis and for the reasons stated I prefer the opinions expressed by Smith over those of Pisko. Giving Kirk the benefit of the doubt on the primary and corroborative approaches, I find Jencess was worth $950,000 as at June 28, 2003. III. Analysis [ 113 ] As stated at the outset, the issues are: A. The parties' matrimonial property available for division; B. The parties ’ incomes for child support/s. 7 purposes from separation to the date of trial, and ongoing, C. Spousal support payable, if any. A.

The parties' matrimonial property available for division [ 114 ] The relevant Matrimonial Property Act ("MPA") provisions are: 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. [ 115 ] The relevant consideration of these legislative provisions is as follows. [ 116 ] The first principles of division of matrimonial property under the MPA are as set out in Hodgson v. Hodgson 2005 ABCA 13 at paras 18-21 : 18 Along with the specific wording of the statute, the overall statutory scheme supports using the date of trial as the point for valuation and division. Sections 7 and 8 of the MPA describe a four-step process of exclusion and qualification that begins at the most inclusive point, as far as available property is concerned, the date of trial.

The process begins with a consideration of all of the property owned by both spouses, providing special treatment for certain assets (7(2) and 7(3)) and then applying a presumption of equality to the remaining assets (7(4)). 19 The first step is to determine all property owned at date of trial. The trial judge then moves on to the second step which is to discern the property that is exempt from distribution under section 7(2), or that can be traced to section 7(2) property. The value of that property, as at date of acquisition, or date of marriage, is then excluded from distribution.

This exemption is understandable when one considers the types of property included in section 7(2). These assets, generally, are not connected to the marriage. 20 The third step requires the trial judge to determine what property falls under section 7(3). This includes the increase in the value of exempt property, from the date of acquisition or marriage, to the date of trial. That property is then distributed between the parties in a manner that is just and equitable. No statutory presumption of equality exists with respect to this property, and the trial judge's discretion is exercised by taking the

section 8 factors into consideration. Over the years, jurisprudence has developed to assist judges in the exercise of that discretion. For instance, where a gift, inheritance, or other section 7(2) property is acquired after separation, Mazurenko provides that any increase in the value of that property is also exempt. In addition, Mazurenko suggests that where exempt property, or a portion of otherwise exempt property, is brought into the marriage it may attract the presumption of equality. 21 Finally, the trial judge is obliged to divide the balance of the remaining assets equally, unless it would be unjust and inequitable to do so considering the factors set out in

section 8. The courts are properly reluctant to interfere with the principle of equality on section 7(4) property. It is open to the trial judge to do so, however, where equal division would be unjust and inequitable.

22 In the end, therefore, it is apparent that the statutory scheme, when viewed as a whole, is aimed at achieving a just and equitabledivision of property owned by the parties at date of trial. Issues such as the length of separation, or the independence of the parties - theissues that concerned the trial judge here - are to be dealt with by considering the exemptions set out in section 7(2) (along with theapplicable case law) and the factors set out in

section 8. [117] This approach was recently revisited in Jensen v. Jensen, 2009 ABCA 272 wherein the court emphasized at the outset of itsdecision that the MPA's purpose was to "legally recognize marriage as an economic partnership, founded on the presumption that theparties intend to share the fruits of their labour during and as a result of it, on an equal basis." [118] The court in Jensen went on to say: 17

Section 7 of the MPA sets out a scheme for the distribution of property between spouses. Certain property, including propertyacquired by a spouse before marriage, is classified as exempt from distribution under that section: s. 7(2). Any increase in the value ofexempt property during the course of the marriage may be distributed in a manner that the court considers just and equitable: s. 7(3).Section 8 sets out the factors to be taken into consideration in making such a distribution. 18 Section 7(4) deals with the distribution of non-exempt matrimonial property.

It sets forth a legal presumption of equal distribution.Only where, after considering the factors in s. 8, the court concludes it would be unjust or inequitable to divide the property equally mayan unequal distribution of non-exempt property be made. There is no formula for applying the s. 8 factors. The presumption of equalityfor non-exempt property acquired during marriage is the closest the Legislature came to imposing a rule for matrimonial propertydistribution. (See Dwells v. Dwells (1982), 1982 ABCA 349 , 46 A.R. 1, 31 R.F.L. (2d) 113 (C.A.)). 19 In Mazurenko v.

Mazurenko (1982), 1981 ABCA 104 , 30 A.R. 34, 124 D.L.R. (3d) 406 (C.A.), application for leave toappeal dismissed, [1981] S.C.C.A. No. 108 ("Mazurenko"), Stevenson J.A. (as he then was) emphasized that rebutting the presumptionof equal distribution is an exception to the rule of equal distribution (at para. 20): The court must, in my view, look at the relevant facts under s. 8 and then ask itself if it would be unjust or inequitable to divide theproperty equally. That conclusion would not be lightly reached.

There must be some real imbalance in the contribution having regard towhat was expected of each or attributable to the other factors in s. 8. In establishing the presumption I take the Legislature to havedecided that in ordinary cases equality is the rule. ... The legislation introduces a discretionary system with the presumption of equalsharing, which is similar to a deferred sharing scheme with a power of adjustment.

The important point is that both of these schemesrecognize "... the principle that a husband and wife carry on their married life, including their economic functions, for their mutualbenefit and account and according to arrangements accepted by both for that purpose. That principle, if accepted, requires that the lawprovide in some way for the sharing of their economic gains between the husband and wife". (p. 26) That is done by the legislation anddone with the presumption of equality[.] 20 Mazurenko remains the law in Alberta.

The presumption of equal distribution is the rule and unequal distribution the exception. Thelegislation is designed to protect against inequities arising from dissolution of marriage and to recognize a social and economicpartnership. The respective contributions of the parties will rarely be identical or measure equally. Partners allocate expectations andresponsibilities in a manner satisfactory to them. Those responsibilities may change and evolve over time.

Put simply, it is not arequirement (nor is it a realistic view of marriage) that the contributions of each party be equal for there to be an equal division... 21 The Supreme Court of Canada made clear in LeBlanc v. LeBlanc, (SCC), [1988] 1 S.C.R. 217, 47 D.L.R. (4th) 1, thatthe presumption of equal division in matrimonial property legislation should not be disturbed lightly. The SCC specifically rejected anapproach that analyses whether the contribution of each spouse is equal in order to apply the presumption of equal distribution.

La ForestJ. wrote at 222-23: In applying [the equality] principle, courts are not permitted to engage in measurements of the relative contributions of spouses to amarriage.

... While a court should, in the words of Galligan J. in Silverstein v. Silverstein (1978), (ON SC), 20 O.R. (2d) 185(H.C.), at p. 200, "be loath to depart from [the] basic rule [of equal division]", it should nonetheless, as he indicates, exercise its power todo so "in clear cases where inequity would result, having regard to one or more of the statutory criteria set out in cls. (

a) to (f)." This doesnot, as previously indicated, mean that a court should put itself in the position of making fine distinctions regarding the respectivecontributions of the spouses during a marriage.

Nonetheless, where the property has been acquired exclusively or almost wholly throughthe efforts of one spouse and there has been no, or a negligible contribution to child care, household management or financial provisionby the other, then, in my view, there are circumstances relating to the acquisition, maintenance and improvement of property that entitlea court to exercise its discretion under s. 7(f). [119] No one disagrees that valuation of matrimonial property is as of trial: Mazurenko, supra, reaffirmed in Hodgson, at para. 10.There was some dissatisfaction reasonably expressed at trial for the absence of year-end 2011 Jencess financial statements.

The solutionwas not to speculate about year-end 2011, but to rely on the best evidence as of trial being year-end 2010 statements. [120] With the legislation and cases in mind, I will deal first with what property is exempt, how the increase in the value of thatproperty is to be divided, if at all, then finally what property is not exempt and presumptively to be divided equally between the parties. Exemptions Jencess [121] Kirk owned his shares in Jencess at the date of marriage. As noted, I have concluded Jencess' value at June 28, 2003 was$950,000. That is the value of his exemption.

RRSPs [122] Kirk is entitled to an at-marriage exemption of RRSPs of $101,045. I will deal in due course with the division, if any, offurther contributions and market value increases. Equity from Riverbend home [123] Kirk realized approximately $20,000 to $25,000 in equity from the home he owned before the marriage. As noted, if appearsthose funds were used in some fashion by the family to live and/or to acquire the matrimonial home. Those funds are not traceable andtherefore are not exempt.

Deposit on matrimonial home/acreage [124] Kirk argues the $160,000 deposit taken from Jencess/re-paid by him should be exempt. He argues the evidence is clear themonies came from/went back to Jencess, which is an exempt asset in the first place. He acknowledges Lindsay's income position waskey to obtaining financing, and that he gave no thought about the implications of having her on title. Nevertheless, he points out thatduring the marriage and throughout the parties had kept their finances separate. [125] As noted, the Jencess exemption was at June 28, 2003.

It was more than three years later, however, in early July, 2006, thatthe company effectively made the $160,000 deposit. By that time, Jencess' value had increased significantly. In my view, Kirk can thendo no better than argue the deposit came from Jencess' increased value, and should perhaps be divided as MPA s. 7(3) property.

[ 126 ] More fundamentally, however, I reject the claimed exemption in its entirety. I am persuaded by Lindsay's argument that while Jencess initially loaned the deposit funds, Kirk then drew non-exempt salary to pay the company back. I agree that salary is not exempt. [ 127 ] I also reject the exemption on the basis that the evidence leads me to conclude Kirk intended the deposit to become joint matrimonial property.

That intention exists by operation of law: s. 36(2) MPA , given the joint title, and given an absence of evidence to the contrary. [ 128 ] Granted, there is some evidence of the party's separate finances at the outset of the marriage. On the other hand, there is more evidence of Kirk taking responsibility for joint finances. As she was reminded repeatedly at trial, Lindsay came into the marriage penniless. Kirk paid for everything, the credit card debt, all wedding and family-related expenses, Lindsay's tuition, and initially, the nanny expense.

It was not until the Enterprise job close to three years into the marriage that Lindsay assumed the nanny expense and her own personal spending, and even then Kirk covered all other household expenses. Lindsay had only just started working around the time the matrimonial home was acquired. Before then it was largely a fiction to describe the parties as keeping their finances separate, as Lindsay did not have any. [ 129 ] Finally, by all accounts in early 2006 when the house was being acquired the marriage was a happy one.

It was a "beautiful family" in Kirk ’ s words at trial, that comment being made in the context of his decision in 2006 to think seriously about selling Jencess to spend more time with the family amongst other things. And as noted, he gave no thought to the state of the title, and needed Lindsay's income to obtain financing for the matrimonial home. In all, there was nothing in the evidence to suggest Kirk wished to protect the $160,000 deposit from then-unforeseen matrimonial strife and property division. [ 130 ] For these reasons I consider the $160,000 deposit to be non-exempt for MPA purposes.

Relinquishment issue [ 131 ] While not an exemption issue as such, I will deal with this issue now for the sake of convenience. [ 132 ] Kirk argues that by virtue of the order of August, 2008 Lindsay relinquished her rights to the matrimonial home. [ 133 ] The order however is on its face and in substance both interim and without prejudice. It deals with a variety of matters including parenting, child support, s. 7 expenses, and child tax benefits. It then provides that: The Plaintiff shall advance to the Defendant $100,000 as an interim property distribution.

Which payment shall be without prejudice to either party to recalculate and adjust the equities under the Matrimonial Property Act ... [ 134 ] Granted, the very next paragraph of the order states: The Defendant shall transfer to the Plaintiff all of her interest, right and release her dower rights in the former matrimonial home... [ 135 ] But read as a whole, and being interim and without prejudice, I cannot agree the order deprives Lindsay from any claims in the matrimonial home. Other exemptions

[ 136 ] Kirk claims his vehicles, trailer and quad, all acquired post-separation, should be exempt as they were acquired with Jencess assets. Lindsay argues these assets are all matrimonial and should be divided equally. [ 137 ] The evidence discloses that the Jaguar and Land Rover vehicles were paid for by Kirk's shareholder's loan in 2007 or 2008, either during the marriage over very shortly after separation. If only for that reason I would treat them as shareable under s. 7(4) of the MPA . The evidence is less than clear just when the trailer or quad were obtained.

If only given that uncertainty, but assuming they were acquired with Jencess assets, I would treat these assets as part of the increase in value of exempt property, and divided in the same manner as the other increased-value assets. Increase in value of exempt property Jencess [ 138 ] The 2010 financial statements show Jencess' retained earnings of $2,303,963 and shareholder's loan balance of $571,477. The value of the company for MPA purposes is then $2,875,440. [ 139 ] To be added to that sum is the value of the 60,000 Active shares that formed part of the Jencess acquisition.

As noted, those shares show up at cost on the December 31, 2010 statements at their initial value of $1/share, or $60,000. [ 140 ] The evidence is clear however that at points in 2011 and 2012 Kirk sold about 55,000 of the Active shares at an average sale price of $14/share, resulting in proceeds of some $770,000. As at trial Kirk had roughly 5,000 unsold Active shares worth presumably the same $14/share, worth another $70,000. After netting out the $60,000 book value from the 2010 year-end statements, the Active shares' value is $780,000.

For MPA purposes that increases Jencess' value at the time of trial to $3,655,440. Net of the $950,000 exemption, $2,705,440 is available for s. 7(3) division, if any. RRSPs [ 141 ] As noted, in addition to the at-marriage exempt $101,045 sum, another $58,921 in RRSPs was contributed during the marriage, and $79,244 post-separation. The $58,921 plus market increase is clearly subject to the presumptively equal s. 7(4) MPA division. [ 142 ] It is less obvious that the post-separation $79,244, plus market increase, should be similarly treated, or if those sums should be exempt entirely.

I will defer that question for just a moment. [ 143 ] I first wish to decide how to deal with the overall increase in value of $137,849.28. The evidence does not help me distinguish between gains on the exempt RRSPs as distinct from those which are or may be non-exempt. Nevertheless I must decide. In my view fairness suggests the increase in value be pro-rated.

As such, the increase in value results in the $101,045 exempt sum attracting a $58,310 share of the gains (= $159,355); the $58,921 attracting $33,910 (= $92,831), and the $79,244 attracting $45,628 (= $124,872). [ 144 ] While the $101,045 is exempt, the $58,310 increase in value is subject to s. 7(3) MPA division, if any. [ 145 ] Returning to the status of the post-separation sum of $79,244 and gains thereon, I have considered the following pattern of contributions. In 2008 Kirk earned about $160,000 from Active. He made new 2008 RRSP contributions of at least $46,867 in 2008 and early 2009.

Logically those contributions may well have been funded by Kirk's 2008 salary rather than Jencess withdrawals, although it is hard to be certain. In any case, if funded by income, it was income earned within a year of separation. In 2009-2011, Kirk declared increasingly low earned income figures but continued to invest new money into RRSPs in the sums of $9,800, $10,317, and $4,238. Given the low earned income, logic suggests those contributions were made from Jencess assets, although again it is hard to be certain.

[146] Overall whether or not they were made from earnings, I am not convinced the 2008/09 RRSP contributions should be exemptas they were made very soon after separation.

Other than child support, Lindsay had seen no apparent benefit from Kirk's $160,000earnings in that first year post-separation. (The evidence is sparse as to what benefit she saw of the $160,000 or Jencess sale proceedseven before separation, although coincidentally the marriage began to fall apart within months of the sale to Active.) [147] I have also noted with interest that Kirk made no RRSP contributions in 2007, notwithstanding a $422,000 income in thatyear. That income gave him 2007 RRSP contribution room of $22,056. Yet he used that contribution room only post-separation, in2008/2009.

Of course the same $22,056 in RRSPs, if purchased in 2007, would have been presumptively divided equally. [148] Accordingly the 2008 RRSP contribution and a portion of the post-separation gains on it should then be shareable as s. 7(4)MPA property.

The balance of the post-separation contributions and gains should be treated as property coming about as an increase invalue of otherwise exempt property, subject to s. 7(3) MPA division, if any. [149] As to discounting the value of funds held as RRSPs to adjust for tax implications, I did not have the benefit of full argumenton what the cases agree is a difficult issue. It may be that a 20% discount on the value of RRSPs is in order. On the other hand, it may bethat an RRSP rollover would be preferable.

On this point, I do not have to decide, at least without giving the parties an opportunity tomake further submissions, if they cannot agree amongst themselves.

Section 8 MPA analysis [150] Having decided what property is exempt, and what increases in value exist on exempt property, I must next deal with thedifficult issue of what if any division of that increase in value should follow. That of course requires consideration of relevant s. 8 MPAfactors to determine what is just and equitable. [151] The parties referred to a great many authorities on s. 8 factors.

I was also aided by the two papers put before me by Kevin E.Hannah "Section 8 Factors, Fairness and Fruit of the Marriage Tree" (Legal Education Society of Alberta, October 10/17, 2007), updatedin March, 2012 in "Problematic Matrimonial Property Issues" (unpublished). [152] The cases of course are fact-specific, some declining to award little (e.g., 10%) or no division, others awarding nearly equal(e.g., 45%) division. On the other hand, courts routinely award division of 30% to 40% to the claiming spouse in many different factualcontexts including quite short marriages (e.g., K.E.W. v.

C.R.M. 2005 ABQB 426 , [2005] A.J. No. 694), or based on minimalevidence of contribution (e.g., Sparrow v. Sparrow 2006 ABCA 155; Oddan v. Oddan 2005 ABQB 786 , [2005] A.J.No. 1579;W.J.W. v. B.J.W. 2006 ABQB 19). [153] With this range of authorities in mind, my s. 8 analysis follows. (

a) The contribution made by each spouse to the marriage and to the welfare of the family, including any contribution made as ahomemaker or parent [154] In the relatively brief Jensen marriage two children were brought into the family. The pregnancies were difficult. The first ofcourse pre-dated the marriage in that Lindsay learned she was pregnant in January, 2003. This at least notionally extends to five years theperiod in which she contributed to the marriage and welfare of the family as a parent. [155] Lindsay was away a good deal of the time before the wedding, and afterwards until December, 2003.

Kirk argues thissomehow diminishes her contribution to the marriage and family. I disagree. More than Kirk, both before and after the weddingLindsay’s world was turned upside down. She was only just finishing school in the spring, 2003. She was planning a move to Edmonton.She reasonably preferred a quiet wedding but was in effect overruled. After the wedding and honeymoon and as the delivery neared she

preferred to have the support of her family in Ontario and in the UK. Kirk aside, she had no connection to or support in Edmonton. [ 156 ] In due course, toward the end of 2003, the couple assumed a more conventional marriage and household. Kirk, a self-professed workaholic, spent a good deal of his time working. Lindsay stayed home to look after the baby and to some extent, the household.

While Kirk was involved at home and in parenting, through counsel he acknowledges that Lindsay contributed more at home than he did the first 3 ½ years of the marriage. [ 157 ] Lindsay had only just started to continue her education when she learned of her second pregnancy. The couple's second child was born in April, 2005. Mindful of her first difficult pregnancy and the lack of support, the parties agreed to hire a nanny, in February, 2005. The nanny was hired only after news of the second pregnancy, and not to give Lindsay more time to pursue her own interests.

That said, the nanny did relieve Lindsay of some family responsibilities she would otherwise had to cope with. [ 158 ] Problems with the Riverbend house came to a head in 2006. Lindsay was not much involved in foundation/subsidement controversies, though Kirk certainly was. Of course by mid-2006 the family had moved to the matrimonial home, Lindsay was by then working full time, and the nanny was otherwise looking after the children and some of the household ’ s needs. [ 159 ] The evidence was uncontradicted that by early 2006 Kirk wanted Lindsay to start working outside the home.

For her part, as noted Lindsay at least perceived, I find reasonably. that to continue her studies would be untenable at that point in time. [ 160 ] This state of affairs continued until the parties' separation in January, 2008. The exception was that by May 1, 2007 Kirk was no longer a Jencess business owner but rather an Active employee, with at least some more regular if not diminished work demands.

The evidence was not clear to me that Kirk became significantly more involved with the family much before the time he began consulting part-time in early 2009. [ 161 ] Lindsay started work in April, 2006 at a low-to-mid $50,000 salary, together with a company vehicle. (There was no evidence at trial whether she had a vehicle or the use of one at any earlier point in the marriage.) The parties agreed Lindsay would look after the nanny expense 100%, and could spend the balance on her own needs. Kirk continued to look after all other family/household expenses.

There was little concrete evidence at trial as to just what those expenses were. [ 162 ] A year after Lindsay started working, Kirk sold Jencess for just under $2.8 million, then began earning about triple Lindsay's salary, some $160,000/year. Lindsay continued to pay the nanny to look after the couples' children. There was no concrete evidence regarding how, if at all, the marriage or the family benefited from Jencess sale and/or Kirk's salary between May 1, 2007 and January, 2008. [ 163 ] On all the evidence, I find that Lindsay ’ s contribution to the marriage and welfare of the family was significant.

It was significant as a stay-at-home mom who brought two children into the family. It was significant as well as a working mom/professional wife. I find that before Lindsay met Kirk, she intended to and would have carried on with her university education. She entered the marriage intending to carry on that ambition. As time passed the ambition slipped away. Granted, she might well have pushed harder to keep it alive.

But as I have accepted, Lindsay perceived in 2005 that further education was not then a realistic option, and in 2006 Kirk prevailed upon her to enter the workplace. [ 164 ] It is significant that once having entered the workforce earning some $50,000, Lindsay took on 100% of the expense of the family ’ s nanny. This notwithstanding Kirk ’ s superior assets and earnings/earnings power.

While he paid himself modestly in 2006, for most of 2007 Kirk earned more three times Lindsay ’ s salary and had at his disposal almost $2.8 million in net assets. [ 165 ] These circumstances speak in favour of a significant s. 7(3) MPA division in Lindsay ’ s favour. [ 166 ] I am mindful of the fact that from 2008 until trial Kirk's income for child support purposes was set at $160,000 while his declared earnings were much less than that. As will be apparent from my reasons regarding child support, I am not prepared to decrease Kirk's obligations retroactively, nor increase Lindsay ’ s.

With regard to concerns for double-counting, however, I do take into account for s. 7(3) MPA purposes that Kirk has used Jencess assets since at least 2009 to fulfill his child support obligations.

[ 167 ] I also take into account the possible double-counting arising from the use of Jencess assets to make some of the post- separation RRSP contributions and matrimonial home mortgage payments, all of which is dealt with in greater detail later in these reasons. [ 168 ] Finally, I take into account that notwithstanding the August, 2008 consent order, Lindsay has taken the advantage of the UCB of $2,400/year. Over time the parties have shared the tax deductibility of the nanny expense. (

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)Tthe 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; [ 169 ] I will deal with ss. 8(

b) and (

c) together: no one disputes that Lindsay made no contribution financial or otherwise to Jencess either before or after separation. [ 170 ] On the other hand, I do not ignore that Lindsay moved her life to Edmonton, not Kirk ’ s to Toronto. It obviously made financial sense in terms of preserving an Edmonton-based company. But the move was not pre-ordained and should not be taken for granted when measuring its benefit to Kirk and his solely-owned company, at least in the short-term. Perhaps with the Active sale the family could have moved.

There was some evidence at trial regarding other opportunities for Lindsay in Ontario and in the U.S. Of course within months of the Active sale however the marriage was unfolding. [ 171 ] At the end of the day, the financial sense it made to Jencess for Lindsay to move to Edmonton is a factor I am entitled to measure when assessing her contribution in some other form to the company. (

d) The income, earning capacity, liabilities, obligations, property and other financial resources that each spouse had at the time of marriage, and that each spouse has at the time of the trial [ 172 ] At the time of marriage Lindsay had no income and realistically no income earning capacity as she was shortly expecting the couple's first child. That aside, at the time of marriage she was 22, newly graduated from university, and experienced in the job market only through her father ’ s company and some casual family therapy.

But for the upcoming delivery, she was certainly employable, although she had a clearly-expressed interest also in furthering her education. [ 173 ] By the time of trial Lindsay had a $120,000 annual income plus a $1,200/month car allowance. That income started just months before trial.

I accept the earnings at face value, but wonder about their sustainability, given they are more than double her historical earnings. [ 174 ] Lindsay had equity of some $130,000 at trial but she also had significant debts. [ 175 ] At the time of marriage Kirk had a company worth $950,000 and income as he saw fit to pay himself by salary and/or dividends. He owed money on the Riverbend house. [ 176 ] During the marriage Kirk opted to retain earnings in Jencess of some $600,000 rather than take some or all of those monies out of the company at least in part for family purposes.

There was no evidence at trial going to any business imperative to hold that level of retained earnings in the company.

[ 177 ] By the time of trial, I have found Kirk had income earning capacity of $160,000. He had Jencess property before exemptions of more than $3.6 million. While it was mortgaged, he had substantial equity in the matrimonial home. He owned outright two expensive (if depreciated) vehicles, a trailer and a quad. [ 178 ] This factor weighs to some extent in favour of division. Granted, Lindsay entered the marriage with no income, and now earns $120,000/year. But she left the marriage making about $55,000.

And on the asset side, the equity in her house is not so much the result of being able to save, but rather appears to be largely the result of investing most of the $100,000 she already took as an advance on matrimonial property. (

e) The duration of the marriage [ 179 ] The couple's marriage lasted just 4 ½ years. Reviewing the s. 8 MPA cases that is certainly toward the short end of things. A short marriage is a factor pointing away from significant division. (

f) Whether the property was acquired when the spouses were living separate and apart [ 180 ] Lindsay was able to acquire and save no property during the marriage. [ 181 ] Kirk acquired significant assets during the marriage.

In broad strokes, Jencess increased in value from $950,000 to its April, 2007 net sale proceeds figure of just under $2.8 million. [ 182 ] A review of the financial statements produced from 2003 to the 2007/2008 period suggests that between retained earnings and shareholder ’ s loan balances the value of the company steadily increased during the marriage, and not just on account of the Active sale.

From 2008 until year-end 2010 if anything the value of the retained earnings and shareholder ’ s loan declined. [ 183 ] The company aside, the equity in the matrimonial home also presumably increased from July, 2006 until separation, although exact figures are not in evidence.

RRSPs together with market gains during the marriage came to just over another $92,000. [ 184 ] It was clearly post-separation that Jencess realized the significant gains on Active stock as described above, a gain of some $780,000, including the likely market value of the minority of unsold shares at the time of trial. [ 185 ] Likewise, post-separation Kirk accumulated further equity in the matrimonial home, and RRSPs and gains thereon of just under $125,000. [ 186 ] Increase in value of an exempt asset during the marriage weighs in favour of division. (

g) The terms of an oral or written agreement between the spouses [ 187 ] Other than perhaps the agreement that Lindsay would pay the nanny expense during her own employment, there was no other evidence of any oral or written agreement between the parties. (

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; [ 188 ] Not applicable. (

i) a previous distribution of property between the spouses by gift, agreement or matrimonial property order [ 189 ] I have already dealt with the outcome of the $160,000 matrimonial home deposit. There is no other evidence relevant to this factor. (

j) a prior order made by a court; [ 190 ] As noted, there is evidence of a $100,000 advance on Lindsay ’ s share of matrimonial property, and though not the subject of an order, an earlier $1,000 to Lindsay from Kirk on or about August 9, 2008. As will be apparent from what follows, I have also found that advances for legal fees are to be treated as advances on Lindsay ’ s share of matrimonial property, and not therefore shareable on a matrimonial property statement. (

k) A tax liability that may be incurred by a spouse as a result of the transfer or sale of property [ 191 ] There was little concrete evidence at trial in this regard. It was suggested a tax rate of some 20% may be applied to reduce the value of assets Kirk may have to liquidate to meet his matrimonial property obligations after trial. It was also noted Kirk had a tax-free $571,477 balance on his shareholder ’ s loan as of 2010, use of which would cushion any adverse tax consequences. [ 192 ] I agree with Lindsay who argues through counsel that it was Kirk ’ s obligation to bring evidence of tax implications forward. There was no such evidence. For s. 8(

k) MPA purposes therefore I am not persuaded that tax liabilities are a significant factor going to division or the extent of it. (

l) That a spouse has dissipated property to the detriment of the other spouse and any fact or circumstance that is relevant . [ 193 ] As mentioned under s. 8(f), Lindsay to stop short of suggesting ‘ dissipation' but argues I should have regard for the evident use by Kirk post-separation of Jencess assets as a “ fact or circumstance that is relevant ” . [ 194 ] As noted, Lindsay made no real effort to trace Kirk's use of Jencess' assets. On the other hand, Kirk's shareholder's loan did decline by some $108,000 tax-free in 2009. That was a year in which Kirk ’ s earned income was roughly equal to Lindsay ’ s.

Kirk agreed through a read-in at trial that he drew down the shareholder ’ s loan to pay for "day to day" expenses. That doubtless included child support payments, and again I am mindful of double-counting.

But Kirk ’ s child support obligations pale in comparison to the balance of funds taken from the shareholder ’ s loan not just in 2009 but also in 2010, when he withdrew another tax-free $139,000 (on top of earnings he declared to himself of just $27,994). [ 195 ] Taking 2009 and 2010 together, even net of child care expense, it is not a stretch to conclude that Kirk used close to $200,000 of arguably divisible Jencess property solely for his own purposes. [ 196 ] No 2011 figures for the shareholder ’ s loan were available at trial.

However, Kirk ’ s 2011 income was $168,216, all from Jencess, most of which was $155,216 in dividends. The 2011 figures of course are of limited relevance given that company financial

records were produced only to year-end 2010. [ 197 ] I agree with Lindsay ’ s position that, while I must always be mindful of double-counting, I should take into account the ample evidence of Kirk's use of the increased value of the otherwise exempt Jencess asset in the years since the parties ’ separation, when I go about deciding the appropriate division of that increased value. (

m) any fact or circumstance that is relevant. [ 198 ] The parties did not bring any other relevant fact or circumstance to my attention, and I can think of none not already captured above. Conclusion on s. 8 MPA analysis [ 199 ] Having considered the s. 8 MPA factors and the authorities before me, I conclude for reasons already set out that ss. 8(a), (

b) and (c), (d), (f), and (

l) weigh in favour of a significant division while ss. 8(

e) and perhaps (

i) suggest a smaller division. Altogether I conclude that a just and equitable division of the increase in value of exempt assets should be 30% to Lindsay, 70% to Kirk. [ 200 ] I do not include however the increase in value of the Active shares in 2011 and 2012. That increase occurred too long after separation, was driven purely by market forces, and is not sufficiently connected to the marriage. [ 201 ] Jencess ’ value as at December 31, 2010 is $2,875,440. Net of the $950,000 exemption, the increase in value is $1,925,

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