Prohl v Prohl, 2017 ABQB 410

Court of Queen’s Bench of Alberta Citation: Prohl v Prohl, 2017 ABQB 410 Date: 20170629 Docket: 4801 145712 Registry: Calgary Between: Brenda Lynn Prohl Plaintiff - and - Edward Franklin Prohl Defendant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice M.H. Hollins _______________________________________________________ [ 1 ] This matter came before this Court as a

Summary Trial of two issues: division of matrimonial property and variation of spousal support. Background [ 2 ] The parties married in 1989 after a brief cohabitation and they separated in August 2010. There are no children of the marriage. For most of their 21 year marriage, Mr. Prohl (“Edward”) worked as an independent contractor, consulting on international oil and gas projects. Ms.

Prohl (“Brenda”) primarily worked at home, although she did work part time to supplement their family income. [ 3 ] At the time of separation, the parties jointly owned a home in Didsbury (the “Didsbury House”), a property in Arizona (the “Maricopa Property”), various vehicles and savings/RRSP accounts. The Maricopa Property was sold in 2016, the proceeds of which

(the “Maricopa Proceeds”) have been kept in trust along with an insurance payment, pending this decision. Brenda has lived in theDidsbury House since the separation. Sometime around August 2015, Edward purchased a home in Puerta Penansco, Mexico where hecurrently resides (the “Mexico House”). [4] From 2010 to 2011, Edward paid Brenda spousal support ranging from $3,000-$3,500 per month. In July 2011, Brendaobtained a Court Order for the payment of $7,000 per month in spousal support. In January 2016, Edward lost his consulting contract dueto the decrease in oil prices and activity.

Spousal support was reduced to $3,000 per month in April 2016. On December 5, 2016, afurther Court Order terminated spousal support but allowed Brenda to take $3,000 per month out of the Maricopa Proceeds “to beconsidered to be paid from [her] share of such proceeds”, although the Order was made on a “without prejudice” basis. [5] Having lost his consulting job in January 2016 and not having secured any alternative employment since that time, Edward,61 years old, has been living off various small savings and RRSP accounts, as well as the proceeds of sale of some vehicles he kept atseparation.

He admits that it does not cost him much to live in Mexico and he picks up occasional ranching work for "pocket cash" orfood. Brenda, 67 years old, is similarly restricted in her ability to earn income. She works part time for the R.C.M.P. and receives severalother small monthly payments from Old Age Security and pensions. Both have little income to live on and the matrimonial assetsavailable for division are limited. [6] Edward applies for an Order terminating spousal support, which application is opposed by Brenda. Both parties have appliedfor a division of matrimonial property.

Matrimonial Property [7] The parties were largely in agreement on the assets at issue and the value ascribed to them. They disagree, however, aboutEdward's claim that the Mexico House is not matrimonial property or alternatively, that it ought to be subject to unequal division since itwas acquired after separation. The Mexico House [8] The law in Alberta is that matrimonial property is to be valued for the purposes of division at the time of trial, not at the timeof separation (Hodgson v Hodgson, 2005 ABCA 13 at para 10).

Further, there is a presumption in s. 7(4) of the Matrimonial PropertyAct that all non-exempt matrimonial property existing at the time of trial will be divided equally (Hodgson, supra at para 18) and here,neither party claimed any exemptions under 7(2) of the Matrimonial Property Act.

The presumption of equal division is only overcomewhere it is unjust or inequitable to divide the property equally, which would require “some real imbalance in the contribution havingregard to what was expected of each or attributable to other factors in s.8” (Mazurenko v Mazurenko (1981), 1981 ABCA 104 ,30 AR 34 (CA) at para 21). [9] This Court must consider all the applicable factors listed in s. 8 of the Matrimonial Property Act and indeed, one of thosefactors is whether the property was acquired after separation (s. 8(f)).

However, it is only one of the factors and is not, of itself,determinative (Moulson v Moulson (1987), (AB KB), 80 AR 105 (QB) at paras 44-45). There is no priority given toone enumerated factor over another (Mazurenko, ibid). [10] Edward acquired the Mexico House while he and Brenda were living separate and apart.

Brenda made no direct contributionto its acquisition, which presumably came from Edward’s income earned and saved in the post-separation years between 2010 and 2015.Nevertheless, I must also consider the broader view of the parties’ marriage and their respective contributions to the marriage and to theirjoint finances and property, as well as the extent to which they have lived financially independently since separation. [11] This was a long-term and traditional marriage.

In the years prior to separation, Edward worked all over the world whileBrenda worked as a homemaker, did all the family accounting, provided care for her stepson and spent many years working on theirjointly-owned farm. In addition, she worked part-time to supplement the family income. I find that Edward and Brenda contributedequally to the marriage during its long duration. It was her part of this labour allocation that allowed Edward to build up his reputation,client base and experience, which in turn resulted in continued significant income to him after separation. [12] In G(

R) v G(M), 2007 ABQB 273, Justice Romaine considered the division of the husband’s stock options which had beengranted to him as part of new employment obtained after separation. She said this new employment opportunity was a “naturalprogression of his past employment experience” while living with his wife and awarded her 35% of the value of the stock options (atparas 55-59).

I find that Brenda indirectly, if not directly, contributed to Edward’s ability to purchase the Mexico House based on hersupport and contributions to their marriage, specifically the physical, emotional and financial support that allowed Edward to workoverseas for long periods of time. [13] In cases where the spouse acquiring property after separation has done so at the expense of his or her spouse, directly orindirectly, it may properly be considered matrimonial property subject to equal division.

For example, in Lenner v Lenner (1991), (AB KB), 118 AR 99 (QB), affirmed (1991), 1991 ABCA 293 , 125 AR 231 (CA), Justice Veit found that thehusband's post-separation investments were made possible, in part, because of his minimal contribution to the family assets afterseparation.

Given the long term marriage in that case (also 21 years) and the wife's inability to earn income due to disability, Justice Veitfound it reasonable to divide the investments equally (Lenner, supra at paras 21-23). [14] Brenda suggests that Edward was paying inadequate spousal support during separation and that may be true, His incomeperhaps ought to have generated more in spousal support than the variable $3,000-$7,000 per month that Brenda received although thatfinding is not necessary for my decision, nor was any argument advanced for a retroactive adjustment to the spousal support received.More importantly, in my view, while Edward was using his income to acquire debt-free real property, Brenda was left with 100% of thepayments required to preserve the other matrimonial property, namely the Didsbury House.

In this way, the parties have not been

financially separated or independent during their separation. [ 15 ] Since 2012, Brenda alone has been responsible for all costs associated with the Didsbury House, which no one suggests is not matrimonial property and equally divisible. She has made the monthly payments (most of them interest-only) on a line of credit (the "LOC") originally taken to fund the purchase of the Maricopa Property. She has also paid the property taxes, insurance and has been solely responsible for the repairs and maintenance to the Didsbury House for almost the entire period of separation.

Her limited income has gone largely to preserving that asset for the benefit of both parties. [ 16 ] In addition to the LOC of $233,000 registered against the Didsbury House, there is also a lien registered by Canada Revenue Agency ("CRA") for a $125,000 tax liability in Edward's name. In other words, virtually all the marital debt is registered against the only significant asset in Brenda's possession.

Rather than service any of the marital debt registered against the Didsbury House (including his own tax debt), Edward used his income to acquire a debt-free asset which he now says should not be equally divided. [ 17 ] Based on the length of this marriage, the nature of the parties’ extensive and mutual contributions to their assets and income- earning potential and the disparate way in which Edward and Brenda have dealt with existing assets since separation, I find the Mexico House to be matrimonial property properly divided between the parties.

This finding is also supported by my decision on spousal support which follows, namely reducing Edward’s obligation to pay spousal support, leaving Brenda with primarily only her share of the matrimonial assets to provide for herself. Dissipation [ 18 ] The only other issue raised by the parties in respect of the division of matrimonial property was Brenda's claim that Edward had dissipated the following matrimonial assets, to which Edward gave the following responses at trial: (

a) The GMC Truck – Edward retained this vehicle after separation. Brenda valued it at $12,000 at the time of trial and Edward valued it at $6,000, neither of which valuations are relevant unless I find dissipation. Edward "sold" the truck to his son for $18,000, but his son died unexpectedly before any payments were made and his son's girlfriend kept possession of the truck and would not return it to Edward nor pay for it. (

b) The 2006 Larson Boat – Edward retained the boat after separation but sold it a few years before trial for $11,000. When he lost his job, he used this money to live on. (

c) The PFA Pension – again, Edward cashed this in sometime after losing his job and used the proceeds of approximately $12,000 for living expenses. [ 19 ] Brenda argues that Edward ought to have saved more money while he was earning a large income. This argument has already, in part, been taken into account in the equal division of the value of the Mexico House as part of the overall property division. [ 20 ] In dividing matrimonial property,

section 8(

l) of the Matrimonial Property Act compels me to consider whether either spouse has dissipated property to the detriment of the other spouse. However, dissipation is not the mere depletion of assets by one spouse prior to trial. A finding of dissipation sufficient to justify an unequal division of property requires a degree of intent to deprive the other spouse of value and must involve an element of bad faith, neglect or extravagant spending ( Bentley v Bentley , 2017 ABQB 53 at paras 67-68 ). [ 21 ] Admittedly, the evidence on all these events is virtually non-existent on both sides.

There is no reliable evidence that Edward dissipated any of the aforementioned assets with the intent to disadvantage Brenda. His explanations regarding the loss of the truck following his son's death, the sale of the boat and the use of his pension funds to pay living expenses once he lost his job are all plausible and reasonable explanations of the depletion of matrimonial assets in his possession. These circumstances are not sufficient to displace the presumption of equal division.

Division of Property [ 22 ] Accordingly, I calculate the matrimonial property subject to division as follows (all amounts hereinafter are in Canadian dollars (CAD), converted from U.S. Dollars (USD) where necessary at the rate of 1.35 which was the applicable rate of conversion on the date of trial, June 2, 2017); EDWARD (in possession) PROPERTY BRENDA (in possession) Didsbury House 300,840 Chevy Tahoe (2007) 4,000 750 Honda Bike (2007) 2,500 Didsbury Furniture 5,000 11,971 Cash/RRSP’s/Pension Accounts 55,128 337,500 Mexico House 10,125 U.S. real property (lots) (Edward estimated 7-8 lots at $1,000 USD each)

Maricopa Proceeds 224,452 Nil 2007 GMC Truck 6,000 2007 Motorbike Nil 2006 Boat Insurance Cheque 24,039 356,596 Subtotal Assets 615,959 DEBTS Line of Credit 233,161 Canada Revenue Agency 125,505 365,596 NET ASSETS 257,293 EDWARD (in possession) PROPERTY BRENDA (in possession) [ 23 ] The total net assets are $622,889, which I order distributed equally ($311,445) subject to the following adjustments and directions: (

a) the $27,000 received from Brenda from the Maricopa Proceeds between January and June, 2017 is characterized as an advance on her distribution of matrimonial property for reasons that follow later in this Judgment. As matrimonial property, Brenda would have been entitled to one-half the $27,000 in any event. Therefore the amount of 13,500 is deducted from her one-half of the proceeds, making her share $297,945 and his share $324,945; (

b) Brenda is entitled to receive all the funds currently held in trust by her solicitor comprised of the Maricopa Proceeds and the insurance cheque ($248,491) and she assumes all debt registered against the Didsbury Property. Of the trust monies paid to Brenda, she is directed to use $125,505 to pay the CRA debt. If Edward and Brenda are able to negotiate with CRA to reduce that debt, then they will share equally in the amount by which it is reduced from its current figure of $125,505.

If, by December 31, 2017 or such other date as is agreed upon by the parties, they have not been able to obtain CRA’s agreement to reduce the debt, then Brenda will use the funds in trust to pay that debt in full. Subject to a $125,505 holdback for this purpose, the balance of the trust funds are releasable to Brenda immediately; (

c) Edward owes Brenda the further amount of $40,651, payable within 90 days of the date of this Judgment; (

d) I could find no definitive evidence as to whether Brenda currently owns the Didsbury House or if it is jointly owned by Brenda and Edward. If the latter, Edward will execute all documentation necessary to transfer title to Brenda alone; and (

e) Each party will retain the vehicles, cash/RRSP/pension accounts, real property interests and furniture currently in their respective possession. Spousal Support [ 24 ] Edward’s application, directed to this

Summary Trial, was to vary spousal support, specifically to terminate ongoing spousal support. Edward, as a result of the loss of his job in January, 2016, has effectively no income. Brenda has income of approximately $15,700 per year from her part-time work and various pension benefit payments. [ 25 ] Section 17(4.1) of the Divorce Act (Canada) requires that this Court must satisfy itself that there has been a change in the condition, means, needs or other circumstances of either former spouse before entertaining an application to vary spousal support.

I am satisfied that Edward losing his employment in January 2016 constitutes a requisite change, specifically in his means to pay ongoing spousal support. In determining what change in spousal support is warranted, I am directed to the factors listed in s.15.2(4) of the Divorce Act (Canada) which requires me to consider the condition, means, needs and circumstances of both parties, including during the marriage. [ 26 ] According to their respective budgets, both Edward and Brenda are living fairly frugally.

Counsel for Brenda conceded that some further expenses could be conceptually trimmed down but that she is still short $1,400 monthly on even a "bare bones" budget. He also fairly conceded that Edward, while he enjoyed a high level of earning in the past, no longer has that income available to him.

As Brenda's materials still ask this Court to impute income to Edward based on her belief that he is intentionally underemployed, I will briefly review the evidence relevant to that request. [ 27 ] Edward deposes in several Affidavits to having poor health generally and that, between his health and his age (61), he believes it will be difficult to find new work. Despite this, he has been actively searching for work and exhibited to his Affidavits many examples of emails unsuccessfully seeking work from his former contacts and colleagues, which inquiries continued right up to the time of trial.

Edward says he has made hundreds of such inquiries about new work since his last contract was cancelled in 2016. There was no serious attempt made by Brenda to contradict this evidence.

Based on this evidence, there is no basis on which to find that Edward is purposefully evading his spousal support obligations ( Hunt v Smolis-Hunt , 2001 ABCA 229 at para 70 ; MacNeill v MacNeill , 2008 ABQB 535 at paras 24-28 ). [ 28 ] Taking into account Edward's health, his age and the relatively slow recovery of the oil and gas industry, I find that he has made reasonable attempts to find re-employment but that his chances remain low, at this time, of finding work paying him an income at or close to his previous level. Because of this, I decline to impute any income to Edward.

[ 29 ] While I similarly accept Brenda's evidence of her means and needs and her ongoing shortfall, given the fact that Edward simply has no current ability to pay spousal support at this time and the fact that Brenda has retained virtually all liquid assets in the matrimonial property division, I find that it is reasonable to vary the spousal support payable to nil at this time.

I direct, however, that Edward must notify Brenda in the event that he obtains any future employment or consulting work providing him with gross income over $15,000 (CAD) per annum, within 30 days of such event. [ 30 ] There is an issue of the $27,000 received by Brenda from the Maricopa Property proceeds of sale, specifically whether that should now be treated as an advance of her share of the matrimonial property or whether it should be treated as spousal support. Edward lost his job in January 2016 and yet has paid support as ordered until December 2016.

Given my findings on Edward’s attempts and inability to become re-employed, spousal support is reduced to nil effective January 1, 2017. Costs [ 31 ] While it appears that success was divided on the two primary issues between the parties, either party has leave to speak to costs if they wish within 60 days of the issuance of this Judgment. Heard on the 2 nd day of June, 2017. Dated at the City of Calgary, Alberta this 29th day of June, 2017. M.H. Hollins J.C.Q.B.A. Appearances: Daniel C. Harder for the Plaintiff Edward Franklin Prohl Self-Represented Litigant