Splett v Splett, 2017 ABQB 658

Court of Queen’s Bench of Alberta Citation: Splett v Splett, 2017 ABQB 658 Date: 20171103 Docket: 4810 022738 Registry: Red Deer Between: Richard Arthur Splett Plaintiff - and - Gwen Margaret Splett Defendant - and - Arthur and Leora Splett Third Party _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice M.R. Bast _______________________________________________________

Table of Contents I. Introduction and Outline of the Issues . 3 II. Law and Analysis . 4 A. The Parties . 4 1. Rick and Gwen Splett 4 2. Arthur and Leora Splett 6 B. The Divorce . 9 C. Matrimonial Property . 9 1. The Matrimonial Home . 9 2. Rick’s Exemption Claim/Matrimonial Chattels: House, Garage and Acreage . 9 3. RRSPs and LIRA .. 12 4. Vehicles . 12 5. Corporate Interests: FESL, Enertech and The Development Group . 13 6. The Sylvan Lake Lot, the Red Deer House and the Bank Bermuda monies . 17 7. Silver coins . 26 8. The Kruggerrands . 27 9. Matrimonial Debts . 29 10.

Miscellaneous Matrimonial Property Claims . 33 D. Corollary Relief 35 1. The Incomes of Rick and Gwen . 35 2. Rick’s Go-forward Guideline Income . 38 3. Gwen’s Go-forward Guideline Income . 39 4. Spousal Support 40 5. Child Support 42 E. The Counterclaim of Arthur Splett 45 III.

Summary and Costs . 45 F. Divorce Relief 45 G. Matrimonial Property . 46 H. Arthur’s Counterclaim .. 47 I. Introduction and Outline of the Issues [ 1 ] This trial was required to resolve the Divorce and Matrimonial Property claims of the Plaintiff, Rick Splett (Rick), and the Defendant, Gwen Splett (Gwen). Gwen’s Amended Counterclaim added Rick’s parents, Arthur Splett (Arthur) and Leora Splett (Leora) as Defendants pursuant to

section 10 of the Matrimonial Property Act , R.S.A. 2000, c.

M-6 (“MPA”), based upon her claim that Rick had gifted or transferred matrimonial property to them for the purpose of defeating her matrimonial property claim. [ 2 ] Extensive Case Management and numerous Case Management Orders (CMOs) were required in advance of trial as a result of: the significant acrimony between Rick and Gwen, examples of which include the parties being ordered not to communicate directly with each other; Rick’s failure to provide access to corporate accounting materials and records and all ordered disclosure; and, Rick’s reporting of Gwen to the RCMP for taking money from their corporation.

Their acrimony is so great that they appeared to be willing to send all their matrimonial chattels to auction, despite the cost, rather than permit the other party to retain desired chattels. Their only child, Carly, has also become embroiled in the conflict and has been estranged from Rick since the fall of 2012, to the point that she now is expressing a desire to change her last name from Splett.

[ 3 ] Both parties seek a divorce, based upon their separation of more than one year. Carly is an adult, pursuing post-secondary education and she continues to be dependent on her parents for support. The corollary relief issues are limited to child and spousal support. Rick agrees to pay child support until the completion of Carly’s first university degree in the Spring of 2018 and he acknowledges Gwen’s entitlement to spousal support.

Once Rick and Gwen’s go-forward incomes are determined, the support issues are narrowed to quantum and duration. [ 4 ] Both parties seek an equal distribution of matrimonial property. Rick has claimed an entitlement to certain “exempt” property and as well occupation rent based upon Gwen's occupation of the matrimonial home since separation. Gwen seeks a finding that Rick dissipated matrimonial assets, and also transferred or gifted matrimonial property to his parents. She made no formal exemption claim in her pleadings. [ 5 ] The evidence with respect to matrimonial property was incomplete and conflicting.

The contentious issues involve both the identification and valuation of a number of different assets and debts. In 2008, and then in the year preceding separation, Rick engaged in conduct relating to monies provided by Arthur and real property that Arthur put Rick’s name on. Based on my findings below, it is clear that this conduct was directed at keeping the assets he held jointly with Arthur from being characterized as matrimonial property. He did not defend Arthur’s Counterclaim, including the claims relating to the promissory notes which have a potential limitations issue.

Gwen is essentially seeking to have any asset Rick is or has been associated with along with Arthur, characterized as matrimonial property, thereby expanding the pool of matrimonial property available for distribution. [ 6 ] Arthur lost capacity in February 2015, prior to the filing of Gwen’s Amended Statement of Claim which added Arthur and Leora as Third Party Defendants.

Less than three weeks prior to trial, a CMO gave Arthur’s litigation representative leave to file a Counterclaim seeking the recovery of two demand loans secured by promissory notes, and a determination as to the ownership of gold and silver coins and a piece of land located in Sylvan Lake that Gwen seeks to have characterized as matrimonial property. The Counterclaim, defended by Gwen, makes no reference to the silver coins. II. Law and Analysis A. The Parties 1. Rick and Gwen Splett [ 7 ] Rick and Gwen Splett commenced co-habitation in April 1990, married on August 14, 1991 and separated on June 23, 2012.

They have one child, Carly, born July 16, 1994. Carly, graduated from high school in June 2011 and is still working on her first post- secondary degree. At the time of trial in March 2017, Rick was 56 years of age, Gwen 51 years and Carly 22. [ 8 ] When they met Rick and Gwen were both independently employed. Rick worked as a two-ticketed red seal journeyman electrician and Gwen was a trained dental assistant. [ 9 ] In April 1990, the Gwen quit her job in Calgary and moved in with Rick in Red Deer. She worked briefly for a Red Deer dentist, and then pursued a business administration program at Red Deer College.

After completion of that program in 1991, she worked as accounting technician, and pursued additional accounting coursework until just before Carly's birth. [ 10 ] By agreement, Gwen was a stay-at-home mother and she managed the household. She cared for Carly, took Montessori training and actively homeschooled Carly by providing educational assistance through to the end of Grade 12. She also transported Carly to her numerous and varied extracurricular activities [ 11 ] Around 1994, Rick tired of his employment with Novacor and began looking for and pursuing entrepreneurial opportunities.

In early 1994, he acquired the shares of a holding company called Arthur Ventures Ltd. (“Arthur Ventures”) from Arthur so he had a corporate entity to use for these pursuits. [ 12 ] In the Spring of 1995, Rick took a buyout package from Novacor and embarked on his first entrepreneurial venture, in which Arthur Ventures purchased the Lost Lemon Campground (“the campground”) in Blairmore, Alberta in April/May 1995. The family relocated to the campground and operated it on-site for three years until they sold it in the spring of 1998.

During this time, Rick continued to perform electrical subcontracting work on the side through Arthur Ventures; the name of which was changed to Enertech Power Ltd. (“Enertech”). Gwen was issued her shares in Enertech around the time of the name change. [ 13 ] After the campground sold, Rick and Gwen bought the matrimonial home (“Kayton Estates”) near Sylvan Lake.

They were generating income through the purchase and development of real estate projects, and Rick continued to do electrical subcontracting on the side. [ 14 ] Between 2002 and 2005, Rick took a job working for Flint in Calgary, so the family relocated to Cochrane and lived in a home owned by Enertech.

They kept Kayton Estates for weekends, and returned there permanently in 2005 after Rick received a buyout from Flint. [ 15 ] Foothills Energy Services Ltd. (FESL) was incorporated in 2006 and around that time Rick stopped doing electrical contract work and devoted himself full-time to the development of FESL which matured from a trucking company into an oilfield service business.

Enertech is the sole shareholder of FESL. [ 16 ] Over the years, Gwen used her accounting technician skills to keep their personal books and the books for their business ventures, starting with the Lost Lemon campground and Rick’s electrical sub-contracting work which were first run through Arthur Ventures and then Enertech. She continued to do the books related to their many business ventures over the years, including the books

for The Development Group & Associates Inc. (“the Development Group”), which was a holding company incorporated by Rick and used for real property development projects. As the corporations grew, Gwen’s involvement in corporate accounting work decreased but she continued to do summer vacation relief in the corporate accounts receivable-payable department of FESL until 2011, when Rick told her she was no longer welcome in the corporate offices.

She also worked with their personal and corporate accountant and provided the necessary information for the preparation of their personal income tax returns. [ 17 ] After separation in July 2012, Rick assumed sole control over all business operations and decisions and gave Gwen no opportunity to participate. Gwen retained cheque writing authority on an Enertech account and wrote the cheques for regular draws payable to her and Rick.

In the Fall of 2014, Rick terminated her cheque writing ability by closing that account, and reported her to the RCMP for taking corporate money by cheques without his approval. [ 18 ] According to Rick there was little in the way of communication between he and Gwen as far back as 2008. In June 2008, a few weeks after Arthur had a stroke, Rick handwrote a Promissory Note in favor of Arthur, purporting to bind both he and Gwen, despite his doing this without Gwen’s knowledge or consent.

Rick began orchestrating Arthur’s affairs in the fall of 2011 in preparation for his separation from Gwen. [ 19 ] During her testimony, Gwen was at times unresponsive to questions, and used her answers as an opportunity to provide an account, for her own purposes, about something else that was not necessarily always related to the original question. In cross- examination she was at times argumentative, and, incredulously, was able to recall dates and contents of correspondence that favored her position but was unable to recall things which did not support her position.

She was also able to quote on more than one occasion statements made by the Case Management Justice. In cross-examination, on the topic of Carly’s post-secondary education, Gwen was evasive and would not provide even basic yes or no answers to questions about the number of classes Carly was taking or about Carly working. When asked if she agreed that Rick should be entitled to certain information about Carly’s course of studies, Gwen’s response was that she did not know what he was entitled to under the law, but that if the law actually gave him entitlement to certain information then so be it.

She denied that she was fixated with this litigation, which is inconsistent with her conduct and failure to pursue employment since separation. She used her answer to this line of questioning to go off topic and ramble on about her shareholdings and Rick’s failure to provide corporate disclosure to the valuator. When asked about her bookkeeping skills, she was evasive and expounded on what she believed to be Rick’s improper use of corporate credit cards. [ 20 ] Rick’s pre- and post- separation conduct as well as the nature of some of his testimony negatively impacted his credibility.

While his conduct was not technically prohibited or illegal, it showed the extent to which he was prepared to go in attempting to create circumstances or evidence that would favor his position. His impugned testimony and conduct is reviewed in more detail in the relevant sections of this decision, but some of the evidence which put his overall credibility into question includes: • His manipulation of Arthur and his affairs prior to separation, including his getting Arthur “up to speed” by informing him that Gwen was coming after Arthur’s assets.

This I find was for the purpose of discrediting Gwen, keeping Arthur firmly on his side.

I find this conduct played a role in Arthur’s estrangement from with Gwen, with whom he has previously had a close relationship; • His preparation and execution of a Promissory Note in favor of Arthur in June 2008, without Gwen’s knowledge or consent, purporting to bind both of them; • The rejection of his trial evidence that only $55,000 of the $116,256 in expenses identified by Gwen’s forensic accountant as paid by FESL were personal to him; • His failure to provide voluntary disclosure of the corporate documents required by Gwen’s experts, resulting in at least two orders requiring him to provide them with access to the documents; • His failure to make the credit card expense source documents available for forensic analysis, despite his court ordered obligation to do so; • His use of the corporations to purchase assets for his personal interest and enjoyment, but had questionable or no ascertainable business use, including a corvette engine and accessories; an antique gas pump; a motorhome he claimed was intended for a corporate field office, but which was insured only for pleasure use with Rick listed as the primary driver; and, the Wheelhouse Garage condo unit for use by FESL when there was no evidence of the necessary unanimous condo board approval for business use; • His taking the sale proceed for 2016 sale of the 1972 GMC truck owned by The Development Group in his personal name; • His late production of the 1994 and 1995 Promissory Notes to Counsel for Arthur very shortly before trial; • His sham of formally declining to act as Arthur’s attorney under an Enduring Power of Attorney (“EPA”), when based upon Leora’s testimony he is performing that role as Leora’s agent; and, • His evidence given at questioning that he way paying paid rent of $1,500 per month to Arthur, which he was required to retract when asked to provide proof of payment. 2.

Arthur and Leora Splett [ 21 ] Rick is the only child of Arthur and Leora, who divorced in 1982. Arthur and Leora kept their finances completely separate during their marriage, when Arthur saved and invested his income from steam engineering to earn money through financial and property investments, and Leora paid for family expenses. Arthur shared none of his assets with Leora upon their divorce, and was a wealthy may by the time he retired. [ 22 ] Leora relocated from Alberta to British Columbia many years ago.

She and Arthur did not communicate after their acrimonious divorce and had essentially no contact with each other for almost 30 years, except perhaps once or twice when visiting Rick

and Gwen. [ 23 ] After Arthur retired he travelled internationally, and he brought 50 gold Krugerrand coins back to Canada after a trip to South Africa. In the early 1990s Arthur began putting Rick’s name on real estate that he purchased and on the bank and investment accounts he held in Canada, the United States and Bermuda. [ 24 ] On June 8, 2008, Arthur suffered a stroke that required hospitalization for several weeks followed by rehabilitative care until the end of the year.

It was during his initial hospitalization, in fact two weeks after his stroke, that Rick, without Gwen’s knowledge, presented him with the Promissory Note purporting to bind the two of them. [ 25 ] The stroke took away Arthur’s independence and left him in a wheelchair due to some paralysis. After the stroke he was also left with speech, hearing, and memory problems. At the time of Arthur’s stroke, Rick and Gwen were both named as attorneys on Arthur’s Enduring Power of Attorney (EPA).

Although Rick described his father’s mental state after the stroke as still pretty lucid and with it, albeit with good and bad days, Gwen described Arthur as having difficulty accepting the loss of his independence and at one point taking a cab to his residence and being found wandering there, as a result of his unrealistic belief that he could go home and live independently again.

I find that the evidence establishes that Arthur had good and bad days, as a result of his stroke, and that included memory issues. [ 26 ] Despite Rick’s evidence that it was Arthur’s idea that Leora replace him on title, I accept Leora’s evidence that in 2011, Rick asked her if she would let her name replace Arthur’s on two Sylvan Lake properties. She had no personal knowledge of Arthur’s financial affairs as they occurred between 1982 and 2011.

The limited knowledge she now has about Arthur’s financial affairs has been provided to her by Rick since 2011. [ 27 ] In September 2011, Rick orchestrated a transfer land which replaced Arthur with his mother on title to two Sylvan Lake properties that were previously held jointly by he and Arthur.

I do not accept Rick’s claim that Arthur’s suggested Leora be involved, for a number of reasons, including the fact that Arthur had not shared any assets with Leora during or after their separation and they had been essentially estranged for about 30 years since their divorce. [ 28 ] Although the collection of de bene esse evidence from Arthur was contemplated prior to Arthur becoming incompetent, no steps were taken after the lawyer initially retained to assist with that passed away.

Six months prior to separation Rick made an appointment for Arthur to meet with Alan Sully, who was a lawyer Arthur had known and used for years. Rick directed Mr. Sully to talk with Arthur about Arthur’s assets in light of Rick’s upcoming separation, which Mr. Sully was already aware of. I accept Mr. Sully’s evidence that when he met with Arthur on January 13, 2012, Arthur was already aware of and unhappy about the breakdown of Rick’s marriage.

Arthur was aware that they were meeting to discuss his assets because of the breakdown of Rick’s marriage. [ 29 ] In June 2012, less than one month prior to separation, Rick instructed Mr. Sully to prepare a new EPA for Arthur, replacing Leora for Gwen as Arthur’s alternate attorney. Mr. Sully, on his own initiative also drafted a Statutory Declaration for Arthur based upon the notes he had taken at their January 2012 meeting. On July 3, 2012, Mr. Sully visited Arthur at his care facility, met with Arthur alone, and satisfied himself that Arthur knew what he was doing.

During that visit Arthur signed the new EPA and swore the Statutory Declaration. [ 30 ] Gwen had a close, father-like relationship with Arthur up until 2012. She regularly visited Arthur in hospital after his stroke. Prior to his stroke Arthur frequently visited the matrimonial home to see Gwen and Carly, to have coffee with her there and, prior to his stroke, he even helped her with yard chores. Since the parties’ separation, Gwen has had no contact with Arthur.

While Rick claims this was solely at Arthur’s insistence, it is clear that he discredited Gwen to Arthur prior to separation, and that he did nothing to foster any relationship between them after separation. This is consistent with Rick wanting to restrict Arthur's information about the separation to that which only he provided. [ 31 ] On February 25, 2015, Arthur’s doctor found him to be incompetent.

On March 4, 2015, Rick formally declined to act as Arthur’s attorney. [ 32 ] After Leora took over as Arthur’s attorney, she reported Gwen to the RCMP in respect of gold coins that were missing from the Kayton Estates safe. This was despite Rick and Arthur doing nothing over the previous three years since they both became aware that Gwen had removed the coins from the safe. [ 33 ] Despite this action being commenced in 2012, Arthur and Leora were not added as Defendants until September 2015, which was about 6 months after Arthur became incompetent.

The notes taken by Arthur’s lawyer, Alan Sully, at their January 2012 meeting were entered as Exhibit 25. The Statutory Declaration prepared by Mr. Sully and sworn by Arthur on July 3, 2012 became Exhibit 24. Arthur’s incapacity prevented him from testifying at the trial. As such, the evidence to support his Counterclaim and his intentions for past acts must be derived from documentary exhibits, and the description of his actual conduct as reported by Leora, Mr. Sully, Rick and Gwen. However, those reports must be considered in light of Arthur’s vulnerability and reliance on Rick. I find that Mr.

Sully’s notes as to Arthur’s words during their interview to be the best evidence, and not the words of the Statutory Declaration drafted by Mr. Sully based upon his

interpretation of Arthur’s words. [ 34 ] The documents relevant to Arthur’s counterclaim were not provided by Rick or collected from Mr. Sully until about 4 months prior to trial, and were not provided to Gwen’s counsel until very shortly before the trial commenced. [ 35 ] Leora was 79 years of age when she testified. In her testimony, she was fiercely loyal to her son Rick. She expressed her utmost trust in him, even in the face of conduct which might suggest that her trust in him was misplaced. She has appointed Rick to fulfil her obligations as Arthur's attorney on her behalf.

When Rick’s use of corporate funds for personal benefit was put to her in cross- examination, she refused to acknowledge even the possibility that this might not be appropriate, saying that she trusts Rick uses corporate money in a wise manner in order to continue to survive in business. She painted her post-divorce relationship with Arthur in a surprisingly good light.

[ 36 ] Leora had virtually no independent knowledge or information about Arthur’s finances other than that provided to her by Rick. She had no personal knowledge of the Promissory Notes, and it was through Rick, and not her own investigations into Arthur’s financial affairs, that she recently became aware of them. She says she is only pursuing them through the Counterclaim because Arthur needs the money for his living expenses and legal fees.

However, it is unclear how she knows that Arthur cannot afford his own legal fees or his own monthly expenses, given her admission that she has not seen any of Arthur’s bank account statements. She has never done an inventory of Arthur’s estate and she has not done any accounting in respect of Arthur’s money since assuming her role under the EPA.

Since assuming her role as Arthur’s attorney under the EPA, Leora has made Rick her agent, and so Rick has continued to handle Arthur's financial affairs and provide Leora with the information she has about Arthur's financial affairs. [ 37 ] Although she professed to being aware that Arthur had an interest in a business called Soapy’s Car Wash Ltd. (“Soapy’s”), Leora admitted that she knew nothing, until the week of trial, about the over $600,000 Rick repatriated from a joint bank account he held with Arthur at Bermuda Bank.

Since gaining that information she had not asked Rick about it, saying that she trusted he would have acted appropriately. [ 38 ] Her claim, even if true, that she has been required to mortgage her own home to pay Arthur’s legal fees in this action, is difficult to believe given her historical estrangement from Arthur.

Her evidence that she saw the gold coins in Blairmore at least 20 years ago, must be treated with extreme caution given her age, the passage of time, her fierce trust and belief in Rick, and the fact that she has almost no independent knowledge about the issues in this trial and the knowledge she does have was for the most part provided to her by Rick. B. The Divorce [ 39 ] Both Rick and Gwen seek a divorce, based upon the facts set out in the Agreed Statement of Fact.

They were married on August 14, 2001, they separated in July 2012 and have remained so for more than one year, and they admit the impossibility of reconciliation. [ 40 ] Based on these admissions, the Divorce is granted, subject only to timing, if it is necessary to delay its granting and filing in order to achieve or preserve any tax treatment or advantage that would benefit one or both of the parties in the distribution of matrimonial assets. The Corollary Relief Order will be dealt with later in the reasons. C. Matrimonial Property 1.

The Matrimonial Home [ 41 ] The matrimonial home had an estimated value at the time of trial of $795,000. At trial, counsel advised that the parties had reached an agreement to list the home for sale and share the net sale proceeds, after payment of the Home Equity Line of Credit (“HELOC”) registered on title. That agreement was reflected in the terms of a Consent Order granted on June 14, 2017. After payment of the HELOC (approximately $149,312.49), and ordinary adjustments and estimated real estate commission, there should be net sale proceeds of approximately $600,000 to distribute between the parties.

There was no evidence that Gwen would not continue to remain at Kayton Estates until it is sold. Therefore, until sale she and Rick will continue to share the monthly HELOC payment as previously ordered, and they shall also equally share the municipal taxes and insurance for the house. Gwen shall be solely responsible for the utilities and other regular costs for the home. No improvements or repairs shall be made pending the sale of the home without the express consent of both parties or by Court Order. 2.

Rick’s Exemption Claim/Matrimonial Chattels: House, Garage and Acreage [ 42 ] Rick’s Statement of Claim assert that he is entitled to certain exempt property, pursuant to sections 7(2) (a)-(

c) of the MPA . At trial, Gwen sought a finding that she was entitled to, as exempt property, the string of pearls she brought into the relationship plus two paintings she bought with cash Christmas bonuses that she had received from one of the corporations. There is no exemption claim in her pleadings. An exemption claim must be pled, and where that is done, the onus is on the claimant to prove and/or trace the exemption. Gwen provided no tracing with respect to the Christmas bonus. [ 43 ] Rick brought an interlocutory application for a declaration that certain property was exempt.

The resulting October 4, 2016 CMO permitted him to attend at Kayton Estates to take possession of the list of items and left the issue of whether the items were exempt to be determined at trial. That CMO further directed that when he took possession of the listed items, he was to obtain appraisals for those items, as well as appraisals, for the purpose of trial, of the matrimonial home and matrimonial property chattels including furnishings, artwork and tools located in the matrimonial home, garage and outbuildings valued for the purpose of trial. Rick never took possession of the items referred to in the CMO.

The home appraisal was not ready and available when the trial commenced, because the home appraiser was not sent to Kayton Estates until just before trial. The personal property appraiser was sent away because he arrived at Kayton Estates without notice, and Rick made no arrangements for a second visit. As a result, there was no complete inventory or a current valuation for the matrimonial chattels available for trial. [ 44 ] Rick provided a current sworn Matrimonial Property Statement; Gwen did not.

The evidence regarding the parties’ chattels came from Rick, Gwen and Leora who testified about the gifts she gave to Rick. Exhibits relevant to the parties’ chattels included two dated jewelry appraisals from 1995, and a 2012 appraisal of Kayton Estates’ yard equipment and garage contents. Randy McDougall, an old acquaintance of Rick, testified to his knowledge of Rick’s tools prior to meeting Gwen and he identified items pictured in the 2012 appraisal.

Exhibit 4 is the list prepared by Rick at the time of his interlocutory application titled “Personal Items belonging to Rick of items in Kayton Estates around the time of separation.” [ 45 ] After Gwen began testifying about her opinion as to the division of the parties’ CD collection, counsel advised the Court that they were confident that the parties would be able to sort out the division of their personal property chattels on their own, failing which

the items in dispute would be sent to auction. Gwen’s Counsel advised the Court that the property that Rick could pick up from Kayton Estates would be particularized in a

schedule attached to a Consent Order which would also provide that all the other items of personal property, equipment and household contents that the parties could not distribute between themselves would go to auction, where the parties could bid on and purchase items that they desired, and thereafter distribute the net proceeds equally. Gwen’s counsel submitted that if the Consent Order was not provided within a specified period of time, the Court would have the right to make its own Order directing that it all go to auction.

On June 14, 2017, I granted a Consent Order provided to me by Counsel for the parties, paragraph 6 of which states: Distribution of the personal property not subject to exemptions and to be auctioned by Allen B. Olsen, shall be set out in a separate Consent Order. [ 46 ] The parties were unable to reach an agreement, therefore no separate Consent Order was provided.

Counsel for the parties appeared before me in July 2017 and made further submissions on the issue of the parties’ matrimonial chattels. [ 47 ] At my request, Gwen’s Counsel provided me with one document which identified and set out the items listed on Exhibit 4 and

Schedule A to the October 4, 2016 CMO, as well as a list of items that appeared on both lists. Gwen’s Counsel went further and provided a new proposed distribution for the items on the lists, indicating which items Gwen agreed that Rick could take as exemptions and which items he can take without accounting for their value. These lists were not part of the evidence presented in the trial. Rick’s Counsel provided a letter indicating a change Rick’s position with respect to two items listed on Exhibit 4, and Rick’s refusal to make any other proposal with respect to anything else listed on Exhibit 4 or

Schedule A. Rick’s Exemption Claim [ 48 ] Rick initially testified that all the items listed on Exhibit 4 should be exempt because they were either gifts to him from third parties, inherited by him, or owned by him prior to the parties marriage. Some of the items on that list are exempt property under

section 7 of the MPA . However, it was clear from his later testimony that many items are not exempt but instead were on the list because he wanted them, including his Rolex watch and the Morris Chairs, both of which were acquired after he and Gwen were together. [ 49 ] The onus of proving an exemption is on the person claiming it, and I find it impossible, based upon the poor quality of the evidence, to identify, for instance, which “miscellaneous tools” are the ones that are exempt.

The evidence established that there were a large number of tools in existence including the numerous tools Rick purchased during the marriage, particularly while they were in Blairmore, and there is no inventory or accounting of the tools that Rick took after separation. [ 50 ] The evidence with respect to other items listed on Exhibit 4 is insufficient to establish that they are exempt. The evidence of Rick, Leora and Randy McDougall, establishes that Rick is entitled to the following property, which is exempt from distribution: (

a) the top and bottom many-drawered Beach tool chests shown in the top picture on page 9; (b) 2 steel workbenches one of which is shown to the right of the table saw in the middle picture on page 6, and the other on page 8; (

c) the craftsman compressor and table with vice shown in the bottom picture on page 8; (

d) the inherited wagon wheels and anvil from his grandfather, the tap and Die set, and the old hand woodworking tools and lumber saws and concrete finishing tools from his grandfather; (

e) the anvil from his paternal grandfather; (

f) the Saskatchewan Wheat Board bird house, and the antique shoe maker’s kit, the old tractor seats (4), the antique cabbage shredder and the Case residence signs from Arthur and Gustav Splett; (

g) the cedar wren house, and the “Companions” limited edition print, and the “Midnight Black Wolf” which his mother confirmed were all gifts from his mother; (

h) the 100 day Clock from his maternal grandparents, the Mission style antique clock from his Aunt May, and pictures of his grandparents, and a framed pipe and vase; and (

i) the inherited old watches, tie clips and cufflinks, and his grandparent's immigration papers. Matrimonial Chattels [ 51 ] Gwen’s Counsel argued that there were other available options for the distribution of these assets, given the parties’ stalemate, including a direction that the issue of the distribution of the chattels could be directed to a trial of an issue or alternatively be resolved in the Civil Claims division of Provincial Court. I reject those options.

The Order consented to by the parties after trial already provides a method of distribution for non-exempt property if they could not informally distribute this property between themselves. [ 52 ] The evidence with respect to the parties’ personal property or chattels is lacking. There is no comprehensive inventory of these assets. There is no valuation for them. The June 2017 Consent Order provides that whatever property the parties were not able to distribute between themselves was to go to auction. [ 53 ] The two dated jewelry appraisals list a number of items of men’s and women’s jewelry.

The difference in value between the men’s items, including the men’s Rolex watch, and the women’s items is about $3,000. However, the appraised values are over 20 years old. No current valuation of these items was provided. In these circumstances, Rick shall retain the Rolex, the men’s gold diamond ring, and the men’s yellow gold comfort fix diamond wedding band listed in the two appraisals. Gwen shall retain all the other jewelry there

listed. Neither party will be required to account to the other for the value of the jewelry they retain. [ 54 ] The Consent Order anticipated by counsel in their closing arguments, and granted after the trial permits the parties to negotiate the distribution of their non-exempt personal property or chattels, failing which all was to go to auction. Their failure to negotiate that distribution triggers the sale of the chattels, not another opportunity to re-litigate the issue.

As a result, the matrimonial chattels including the contents of the matrimonial home and garage, and the chattels and equipment found on the surrounding lands or in the outbuildings of Kayton Estates shall be transported to auction for sale by Allen B. Olson, on or before January 30, 2018. The parties are at liberty to attend at the auction and buy back any chattel(

s) they want for themselves. The net sale proceeds from the auction, after the payment of all costs associated the auction, shall be divided equally between the parties. 3. RRSPs and LIRA [ 55 ] Rick has two retirement investments at the Bank of Montreal in his sole name: one RRSP (approximately $155,010) and one LIRA (approximately $38,053). Gwen has one RRSP (approximately $6,895) in her sole name. All three investments are matrimonial property and subject to equal division, which shall be accomplished on a tax free basis by way of an RRSP rollover.

The parties shall each be entitled to one-half of the value of each of these three investments, which shall be equalized by way of Rick retaining the LIRA and transferring an equalizing sum from his RRSP into Gwen’s RRSP. 4. Vehicles [ 56 ] At the time of trial, Rick and Gwen each had a new vehicle with little equity because of financing. Gwen received $11,000 under the December 13, 2016 CMO to secure a replacement vehicle and she was ordered to account for the sale or trade of her “existing vehicle”.

The dealership would not take the existing vehicle on a trade-in because of its low value, so it remains in her possession. [ 57 ] Rick received $17,500 personally for the sale of a 1972 truck owned by the Development Group. While Gwen argued this sale was for less than fair market value, the evidence she relied upon was dated, and the sale price was close to that set out in the June 2016 appraisal provided by Rick. There is no dispute that Rick also sold another vehicle, perhaps the 2009 GMC truck listed on the matrimonial property

summary provided to me by counsel for ease of reference, although the evidence was unclear. Gwen received an additional $11,500 from Rick which represented one half of the sale proceeds from those two vehicles. [ 58 ] Rick’s sworn Statement of Matrimonial Property also refers to a Geo Tracker with a value of $500, but no evidence was called regarding that vehicle. The matrimonial

summary provided during closing argument also referred to the Cadillac owned by Rick’s girlfriend, which is clearly not matrimonial property. No appraisals or financing documents were provided for any of the vehicles. [ 59 ] In the absence of evidence as to the net fair market value of any vehicle other than the 1972 truck, it is impossible to determine the net overall value of the parties’ vehicles. In these circumstances, the parties shall each retain as their sole property any vehicle registered in their sole name, along with any debt associated with it.

If the Geo Tracker or Ridgeline remain registered in the joint names of the parties, then Rick shall immediately take possession of them, and arrange for their sale. Thereafter, he shall provide Gwen with copies of the sale documents, and one-half of the net sale proceeds. 5. Corporate Interests: FESL, Enertech and The Development Group [ 60 ] In 2014, Enertech disposed of all its fixed assets and allocated the sale proceeds as dividends to Rick and Gwen. Rick and Gwen hold 51% and 49% of the shares of Enertech, respectively. Enertech is the sole shareholder of FESL, and those shares are now its only asset.

Enertech’s only business activity involves the invoicing of Rick’s management services to FESL, and thereafter the collection of that income and its distribution to Rick and Gwen. [ 61 ] FESL carries on business in the oil and gas industry. The nature of its business matured over time. Currently its core competency is in the regional transport of production fluids. By 2013-2014, just prior to the drop the price of oil which caused an industry wide downturn, FESL had 20-30 employees, including subcontractors, and provided services to 40 companies from two locations.

FESL’s Drumheller location was shut down when business in that area dried up. FESL is a cash business that has no debt, and at the time of trial it derived 69% of its revenue from a contract with Conoco-Phillips, which according to Rick intends to liquidate its Central Alberta assets. Rick is working hard to expand FESL’s line of business into pipeline hydro-testing in order to continue to utilize his equipment, because while over the last four years work in production fluid trucking has been trending down, work in pipeline hydro-testing has been trending up.

Rick projected that competition for contracts will go down in 2017, leading to more work for FESL. [ 62 ] When revenues dropped beginning in 2013, Rick testified that FESL addressed its operating costs and parked some equipment to reduce expenses. Despite industry slowdown and a professed lack of business, FESL purchased Unit 85 at a cost of $225,000, and incurred over $57,000 in additions to Unit #84. Less than $4,000 was generated by these two pieces of equipment in the 2015 fiscal year.

Rick’s belief that business will come back provided his rationale for the purchase of these two pieces of equipment when business was down these investments and his decision to retain FESL’s many idle and redundant assets. Rick claimed that keeping the redundant assets would put FESL in the position to immediately provide service to customers when the industry rebounds. [ 63 ] FESL currently conducts its base operations out of a building and surrounding lands owned by The Development Group and located at Kusimo in Red Deer County.

The Development Group holds a few specific assets, and Rick is the sole shareholder. The Kusimo land was purchased in in 2008 and the construction of the building was completed in 2009. The building contains offices, a shop, service bays and space for vehicle storage. Enertech also has its offices in this Kusimo building. There is little equity in The Development Group due to its assets being heavily financed. [ 64 ] Despite reduced revenues, in 2015 The Development Group purchased a condo garage bay for $284,396 in a Red Deer County development called Wheelhouse Garage.

It made leasehold improvements of almost $13,000 to the condo after purchase, including an epoxy coat shop floor. According to Rick, this Red Deer site is more convenient to employees living in Red Deer than

FESL’s Kusimo site, as it shortens travel to and from work. However, the Wheelhouse Garage website markets the condos as “your dream garage space” and states that the condo units are to be for personal use. Low impact business use may be considered by the condo board, but requires unanimous approval. There was no evidence that FESL had sought or obtained this required unanimous approval. [ 65 ] The Development Group rents the Wheelhouse condo unit to FESL for $2,500 per month. The forensic accounting expert retained by Gwen opined that that nature of this condo unit does not appear to complement FESL business.

Rick denied Gwen's characterization of this condo as a “man cave”, that is used to store property Rick buys through the corporations buy for his personal benefit, including the antique gas pump owned by FESL, and the 1972 refurbished classic truck owned by The Development Group. That truck was appraised in January 2008 for $30,250. Gwen argues that the cash, not collector, value set out in the 2016 appraisal obtained by Rick does not take into consideration all the money invested in the truck after its purchase.

Rick sold that truck to an acquaintance for $17,500 and took payment by cheque payable to Rick Splett personally. The truck is still at the Wheelhouse Garage. The Development Group also owes Rick a shareholder loan of $427,624 which has been in existence since 2005. [ 66 ] Rick and Gwen agree that the value of FESL is reflected in and accounted for in the value of Enertech, and that all three corporations (FESL, Enertech and The Development Group) are matrimonial property the value of which is available for equal distribution between them regardless of share ownership.

Rick believes FESL is still viable and he wants to keep the business group and buy out Gwen's interest in the three corporations. [ 67 ] It is the value of these three corporations that is at issue, and in particular a determination of the specific dollar amount that Rick must pay to Gwen to distribute the value of these corporations equally between them.

Counsel advised that all that was required in the trial was a determination as to this dollar figure, and thereafter the parties would determine, with accounting and legal advice, the method by which that value would be transferred to Gwen. [ 68 ] Gwen called two experts, whose reports were marked as exhibits in the trial. Chartered accountant, Leo Kelly, conducted a forensic accounting analysis of the financial records of the three corporations and his report, (“the Kelly Report).

Chartered business valuator, Scott Lawritson, M.B.A., C.F.A., C.B.V., provided an opinion as to the value of FESL, Enertech and The Development Group, after many months and extensive hours of analysis and research. [ 69 ] Rick called one expert, Trevor Kawka, C.P.A., C.A., C.B.V., C.F.A. who provided a Rebuttal Report with respect to Lawritson's valuation of FESL, and Limited Critique Reports, in respect of Lawritson's valuations of Enertech and The Development Group.

Kawka's reports were marked as Exhibits 16-18. [ 70 ] The opinions or information in the Kelly Report that relate to the identification of matrimonial property, the valuation of the three corporations or Rick’s conduct in operating these corporations includes:

(1) The opinion that the Wheelhouse Garage condo bay owned by The Development Group and for which FESL pay $2,500 per month to rent, does not appear to complement FESL business activities.

(2) No inter-company transactions between Development Group and Soapy’s Car Wash or Arthur Splett were identified;

(3) FESL was reimbursed by Arthur for the paid eight invoices, totaling $48,694.67, that FESL paid in relation to the Red Deer house built for Rick to live in;

(4) FESL bought a 2008 Fleetwood Motor Home for $75,000 to use as a field office despite its competitors generally using an ATCO or holiday trailers for that same purpose;

(5) Rick expensed significant expenses that appeared to be personal to him through the corporations, including credit card expenses; and,

(6) FESL acquired Unit 85 in the 2014 and 2015 fiscal years for a cost of $225,000 but that unit only generated revenue of $3,867 for the fiscal year ending July 31, 2015. In addition, FESL made additions to Unit 84 of $56,682 in the 2015 fiscal year when that unit generated no income. [ 71 ] Both Kawka and Lawritson were qualified as experts capable of providing opinion evidence as to the valuation of the three corporate entities.

Despite not being retained by Rick until the month before trial and being required to prepare his reports within 11 days, Kawka testified that he feels he had sufficient time to review all the necessary material and reach the conclusions set out in his reports. Kawka confirmed that he did not look at FESL revenues in 2017 as Lawritson had, and therefore was less inclined to accept that the economy and revenues were on the comeback. Kawka also only looked at financials back to 2012, whereas Lawritson went back all the way to 2009.

Counsel for Gwen argued since at least 2013 Rick has expensed his personal professional legal and accounting fees through FESL, and that the elimination of those expenses which he estimated were in the range of $80,000 in each of the last 2 years, would have a positive effect on FESL’s bottom line. [ 72 ] Both Kawka and Lawritson did their valuation calculations for FESL using the capitalization of normalized discretionary after-tax cash flows, and the largest difference between the two valuations relates to the values each of them used for sustainable normalized cash flows.

Lawritson used the full value of agreed add-backs, and obtained a range of $700,000 to $950,000, while Kawka used only 50% of the add-backs and obtained a range of $400,000 - $500,000. Neither valuator relied upon the value of the assets of FESL in their value determinations. [ 73 ] Both Kawka and Lawritson recognized that there had been a downturn in oil and gas industry in late 2014 and that FESL had recently derived 69% of its revenues from one client, namely Conoco-Phillips, that underwent an asset disposition in 2016, including a number wells in the FESL service area.

Some wells were sold to a company that was an FESL client in 2015 and 2016. The experts both recognized that a loss of a significant number of the Conoco-Phillips wells would have a material impact on FESL’s revenues and earnings, but Kawka found this to have a more significant effect on FESL’s valuation than Lawritson.

[ 74 ] Kawka and Lawritson provided the following valuation conclusions with respect to FESL: Valuation Range Mid Range Lawritson $2.5M-$3.2M $2,850,000.00 Kawalka $2.2M-$2.4M $2,300,000.00 [ 75 ] There is a $550,000 difference between the mid-points of Kawka and Lawritson’s valuations ranges for FESL. [ 76 ] Enertech is a holding company that owns all the shares of FESL. Kawka and Lawritson provided valuation ranges with respect to Enertech. The mid-point of Lawritson’s valuation range set out on page 5 of Exhibit 20 in paragraph 7.7, should actually read $2,950,000 based upon the other numbers in his report.

The valuation ranges and correct mid-points for Kawka and Lawritson’s valuations are: Valuation Range Mid Range Lawritson $2.6M-$3.3M $2,950,000.00 Kawalka $2.05M-$2.75M $2,400,000.00 [ 77 ] There is a $550,000 difference between the midpoints of the two valuations.

The mid-point valuations appear to be about $100,000 higher than the mid-point valuations of FESL, presumably in recognition of the additional $85,905 of value in Enertech over and above the shares of FESL. [ 78 ] Kawka’s was very cautious in respect to his valuation, and his failure to examine FESL revenues since the 2016 corporate year end prevented consideration of current revenues and Rick’s hard work in expanding FESL’s service delivery options and markets.

His caution is also to some extent inconsistent with Rick’s belief in the company and its ability to make a comeback, perhaps because in part he did not consider the positive current 2017 financial information. On the other hand, I am satisfied that Lawritson was too optimistic with respect to the rebound in both the economy and potential new future revenues. The mid-points of both valuations provide a basis of comparison, but bring with them the issues I have identified.

In order to recognize the findings of Kawka’s overly cautious valuation and Lawritson’s perhaps too optimistic valuation, the value of Enertech will be set at $2,675,000, which strikes a balance between the two opinions at the mid-point between their two mid-points, [ 79 ] Both Lawritson and Kawka provided valuations of The Development Group which were obviously based upon the value of its assets, given it is a holding company. The Development Group owns the Kusimo land and building, The Wheelhouse Garage and owes Rick $415,782 in shareholder’s loans.

Both valuations reduce value of this corporation as a result of the shareholder’s loan owing to Rick, and so it will be necessary to either add the value of the shareholder’s loan to the value of the corporation determined below, or ignore the value of the shareholder’s loan in the valuation of the corporation and reflect its value as an asset retained by Rick.

The value of The Development Group determined below assumes that Rick keeps the value of the shareholder’s loan as an asset in his column. [ 80 ] Both Kawka and Lawritson provided revised summaries of their valuation of this corporation after their testimony had concluded, and counsel provided the revised summaries which were directed to be appended to their original reports. In his revised

summary, Lawritson provided a new fair market value range for Development Group $173,000 to $191,000, with a mid-point of $182,000.00. Kawka opined that a number close to the mid-point should be reduced by $47,809, primarily to take into consideration the accumulated depreciation of certain assets or improvements which are permitted for CRA purposes. Lawritson used the undepreciated purchase cost of the 1972 truck, plus the amount of repairs done to it, while Kawka excluded it entirely because it had been sold and will no longer be on the books.

I have already discussed the details of the sale of the 1972 truck and its value and will not repeat them again here.

Given that the truck is now gone and the $17,500 in sale proceeds were accounted for between the parties when they informally distributed the sale proceeds from two vehicles, the Lawritson mid-point will be reduced by the $20,000 resulting in a value of $162,000 for the shares of The Development Group. [ 81 ] In conclusion, subject to any agreement as to an alternate method of distribution of value of these three corporate assets, Rick will retain the shareholder’s loan from The Development Group with a value of $415,782, and the value of this asset shall be distributed between the parties equally in the ultimate distribution of matrimonial property. [ 82 ] Gwen will transfer her shares in Enertech to Rick or the corporate entity, in exchange for one half of the combined value of The Development Group and Enertech, which based upon the valuation determinations above is one-half of $2,837,000, or in other words $1,418,500. 6.

The Sylvan Lake Lot, the Red Deer House and the Bank Bermuda monies [ 83 ] In 1990s, Rick’s name was added to Arthur’s Canadian and off-shore bank accounts and Arthur put Rick’s name as a joint tenant on real estate that he purchased. According to Rick, this started a few years after marriage, when Arthur told Rick he was going to add Rick’s name to his assets for estate planning purposes.

Gwen was aware during the marriage that Rick’s name was added to Arthur’s assets and bank accounts, but she was not a party to any of those conversations. [ 84 ] The evidence disclosed that Rick was, up until September 2011, listed as a joint tenant with Arthur on two pieces of property in Sylvan Lake. In 2001, Leora signed a trust agreement and replaced Arthur on title with Rick.

One of those properties sold in July 2012 and the proceeds were used to construct the home in Red Deer that Rick lives in, but which is registered in Arthur's sole name. [ 85 ] Arthur and Rick were jointly named on Arthur’s Canadian bank accounts, as well as bank accounts at Washington Trust in Spokane, US Bank, and HSBC Bank Bermuda.

A credit card that was linked to the Bank Bermuda accounts was issued to and used by Rick, and that credit card used to pay for Rick’s hair follicle treatment and a trip Rick took to Bermuda after separation, and for Carly’s on-line high school through Stanford University, among other things. The outstanding monthly balance on this credit card was automatically paid from the bank and investment account(

s) it was associated with.

[86] Gwen seeks a finding that Rick has a beneficial interest in the Sylvan Lake Lot registered the names of Rick and Leora Splettas joint tenants, and an order that he account to her for one half of the value of his interest in that property, based upon a finding thatRick’s interest is matrimonial property.

Arthur’s Counterclaim seeks a declaration that Rick and Leora hold that property in trust forArthur. [87] Gwen also seeks a finding that Rick has a beneficial interest in the Red Deer house he lives in, and seeks an order that heaccount to her for one half of the value of his interest in that property based upon a finding that his interest is matrimonial property. [88] Finally, Gwen seeks a finding that Rick was the owner of or had a beneficial interest in the $629,805.84 in the accounts at theBank of Bermuda in September 2012 before he repatriated that money to Canada, and based upon that finding Gwen seeks an order thathe account to her for one half of the value of his interest in that property based upon a finding that his interest in the funds is matrimonialproperty. [89] Rick is Arthur’s only child.

Arthur started adding Rick’s name to his assets in the early 1990's, when he was still travellinginternationally after his retirement. This was long before Arthur’s health and independency were compromised. Rick has had alongstanding close relationship with Arthur, who has relied heavily upon Rick since his stoke in 2008.

After Arthur’s stroke Rick took amore active management role in Arthur's financial affairs, by actively paying Arthur's bills for him out of the Canadian joint bankaccount. [90] Over the years Arthur was very generous with Rick’s family, paying for many things like trips, a vehicle and most if not all ofthe costs associated with Carly’s Stanford University Online High School. Arthur would ask how the parties were doing financially andif they needed anything, and he would often provide them with funds to satisfy the need.

It is logical, based upon all this evidence, thatas Arthur’s only child, Rick is his heir apparent with or without any informal estate planning. [91] Arthur was very protective of his assets and he was inclined to part with or share them, as evidenced by the fact that whilemarried to Leora he kept his assets separate from her and shared nothing with her upon their separation and divorce. [92] Rick does not deny that Arthur put his name on assets. He does deny that he made any financial contribution to them.

He hasmade no express exemption claim in respect of the Sylvan Lake lot or the Bank Bermuda monies that he held jointly with Arthur. However, he has made a general exemption claim in his pleadings, and it is likely that any proven gift from Arthur that was notincorporated into the matrimonial property regime would be exempt, in any event. Rick has not defended Arthur’s Counterclaim. Instead, Rick claims that his name was placed on these assets, which were acquired with funds belonging to Arthur, solely for estateplanning purposes.

Rick testified to his belief that where he was named jointly with Arthur, be it on real property or banking/investmentdocuments, he holds that interest in trust for Arthur. [93] Arthur’s intention at the time he named Rick as a joint tenant or joint owner that is key to the issues raised with respect tothese assets.

Since Arthur lacked the capacity to testify at trial, his intention at the relevant time must be determined based upon theevidence of the circumstances surrounding the transfers, and thereafter, including the documentary evidence entered in the trial and thetestimony of the witness who had personal knowledge related to these issues. The Law [94] Counsel for Gwen provided the cases of S.A.T v A.A.T., 2004 ABQB 36, and Wasylyshyn v Wasylyshyn, (ON SC), 1987 OJ 2306 (Ont. Dis. Crt.), which involved parties who failed to trace the exemption they were claiming, thereby failing tomeet their onus to prove the exemption.

In this case, the issue with respect to the three assets in this

section is different, because Rick hasnot made any exemption claim with respect to any of the assets that Arthur put into their joint names. Instead, Rick claims that Arthur’sgratuitous transfers to him create the presumption of a resulting trust, and the onus of rebutting that presumption is on Gwen and not onRick. [95] The SCC clarified the law relating to gratuitous transfers from a parent to a child in Pecore v Pecore, 2007 SCC 17, [2007] 1S.C.R. 795 (S.C.C.): (

a) A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no valuefor the property, is under an obligation to return it to the original title owner. Advancement is a gift during the transferor's lifetime to atransferee who, by marriage or parent-child relationship, is financially dependent on the transferor. (

b) The presumption of advancement only applies to a transfer from a parent to a financially dependent minor child. The presumptionof advancement does not apply to transfers to independent adult children since it is common nowadays, “for aging parents to transfertheir assets into joint accounts with their adult children so that the children can assist in the management of the parent's financial affairs,resulting in the child holding the property in trust for the parent” (Pecore, at para 36). Instead, the presumption of resulting trust isgenerally applied to gratuitous transfers to independent adult children, unless it is displaced by proof that the transfer was intended to bea gift. (

c) The resulting trust imposes an obligation on the transferee to return the property to the transferor on request; (

d) When the nature of a gratuitous transfer is challenged, the person alleging that the transfer conferred an immediate beneficial or gift,bears the onus of rebutting the presumption of resulting trust on the civil standard of a balance of probabilities (Pecore, at para 44). (

e) The presumption of resulting trust also applies to joint financial accounts, meaning that it falls to the surviving joint account holderto prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise,the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will (Pecore, at para 53). (

f) Where it is proven that the transferor’s “intention in opening the joint account was to gift withdrawal rights to the transferee during

his or her lifetime (regardless of whether or not the transferee chose to exercise that right) and also to gift the balance of the account tothe transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resultingtrust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor’s death” (Pecore, at para 45). (

g) The task of the trial judge is to determine which presumption applies, and then weigh all the evidence relation to the transferor’sintention at the time of the transfer in order to determine whether the presumption has been rebutted. (Pecore, at para 55).

Evidence ofintention that arises subsequent to a transfer is not automatically excluded, but provided it is relevant to the transferor’s intention at thetime of the transfer, its reliability must be weighed in order to guard against self-serving evidence or evidence that tends to show a changeof (Pecore, at para 59). [96] Gwen provided two further authorities. Chambers v Chambers, 2012 BCSC 82, is distinguishable, because there were nojoint contributions to the Red Deer house in Arthur’s sole name.

Kamajian v Kamajian, (1995) (AB KB), 172 A.R.321 (ABQB), related to monies that the wife held in her sole name but claimed were held in trust for others. This is different from thepresumption of resulting trust, which arises from a gratuitous transfer of a parent to an independent adult child. The Sylvan Lake Properties [97] Around 1993, Rick was added as a joint tenant to the title of Arthur’s Sylvan Lake condo.

According to Rick, he made nofinancial contribution towards the purchase of this of this condo, and there was no evidence that would contradict the conclusion that allthe monies for this purchase and ongoing costs associated with the condo came from Arthur. I find the evidence establishes that up untilat least 2009, the parties had modest income, which on a combined basis did not exceed $150,000 until 2010. Gwen, relying on heraccounting training and experience, performed the role of bookkeeper for the parties’ personal income tax information as well as theircorporate and entrepreneurial ventures.

She was therefore in a position to be aware of whether Rick was diverting money into the assetshis name was being placed on. I am therefore satisfied that this first placement of Rick’s name on the title of real property purchased byArthur was a gratuitous transaction to an independent adult child. [98] A few years later, Arthur became interested in a parcel of land in Sylvan Lake, Alberta. There was no evidence that themonies used to purchase this lot came from anyone other than Arthur, despite title being registered in the names of Arthur and Rick asjoint tenants.

Rick remained on the new title with Arthur when the lot was subdivided into two parcels. A house was built for Arthur onone of the subdivided lots. The other lot remained bare. Rick denies he made any capital, development or regular ongoing financialcontributions these lands, and there was no evidence to the contrary. Further, as I have already found Rick and Gwen had a modestfamily income from their entrepreneurial ventures and Rick’s electrical-subcontracting work all of which was run through their corporateholdings, whose books were kept by Gwen.

She would have been aware if Rick made any contributions towards these lands. Further,there was no evidence that Arthur and Rick were ever shareholders of any other corporate entity or business enterprise which could havecloaked contributions from Rick. [99] Arthur lived in that Sylvan Lake house until his stroke on June 8, 2008.

In 2009, when it became apparent that Arthur wouldnever be able return to that house, both the house and bare lot were put up for sale. [100] In the Fall of 2011, the registered owners on title for the two subdivided parcels changed, with Leora replacing Arthur as a jointtenant with Rick. There was no evidence that Arthur had any personal reason to instigate this transfer and Leora testified that it was Rickwho asked her to participate.

It defies logic that Arthur would decide on his own initiative to place his interest in these lands in the nameof his ex-wife who he had been estranged from for 30 years, even if she was to be a mere trustee. The evidence established that in theFall of 2011 Rick told his lawyer, Allan Sully, that his marriage was breaking down.

The inference which arises from all these facts, isthat the change in the registered owners was undertaken at Rick’s instigation because he was already aware of his intention to separatefrom Gwen and he was busy trying organize his and Arthur’s financial affairs to make sure that Gwen did not share in anything that hadoriginated with Arthur. [101] Arthur’s Sylvan Lake house sold in July 2012 for $550,000 after Rick and Gwen separated. The net sale proceeds went into abank account that Arthur had added Rick’s name to years before.

The bare Sylvan Lake property remains undeveloped and registered inthe names of Leora and Rick as joint tenants. [102] Leora’s testimony that she never made any financial contribution to get her name on title was not contradicted. Nor was herevidence that she made any contribution towards the ongoing costs of either of these lands. Her status as trustee for Arthur’s interest inthe lands was reflected in the Trust Agreement that she signed when her name went on title.

It is curious that Exhibit 10 is not an originaland bears only Leora’s signature, but clearly Arthur would have had to sign the transfer of land in order to affect the title change. I amsatisfied he was aware of the transfer. I therefore find Leora had no beneficial interest in the house that sold in 2012 and that she doesnot have any beneficial interest in the bare lot. [103] There was no direct evidence that contradicted Rick’s testimony that he made no financial or other contributions towards theSylvan Lake properties.

Despite his manipulative and questionable conduct in orchestrating the change in registered owners on title, thatchange occurred years after Arthur gratuitously added his name as joint tenant. That gratuitous transfer from an aging parent to anindependent child creates the rebuttable presumption of a resulting trust.

The onus of rebutting that presumption is placed upon theperson challenging it, which means that Gwen has the onus of establishing on a balance of probabilities, that when Arthur put Rick’sname on title he did so with the intention of gifting him an immediate beneficial interest the property. [104] While Rick’s actions before and after separation negatively impact his credibility and demonstrate the lengths he was preparedto go to in order to prevent Gwen from ever receiving a share of anything that originated with Arthur, they do not definitively prove heholds a beneficial interest in the property. [105] In light of all the circumstances surrounding these two parcels of land, it not possible to draw the inference that Rick held abeneficial interest in them because Arthur put his name on title or because of his conduct.

It is Arthur’s intention at the time of thegratuitous transfer that is key to this issue, and I accept Rick’s evidence, in light of all the circumstances, that Arthur put his name on

title to real property and bank and investment accounts for estate planning purposes. I am unable to reach the inferences Gwen requires to rebut the presumption of resulting in relation to these assets. [ 106 ] As a result, I find that neither Rick nor Leora hold, or ever held, any beneficial interest in either of the Sylvan Lake properties. Arthur was the sole beneficial owner of the Sylvan Lake house that was sold and is the sole beneficial owner of the remaining bare lot.

There will be a declaration that Arthur is the beneficial owner of the bare Sylvan Lake lot, and that Leora and Rick hold the property in trust for Arthur. The Red Deer House [ 107 ] Since Arthur was the sole beneficial owner of the Sylvan Lake house at the time it sold in July 2012, Rick had no beneficial interest in the net sale proceeds. The net sale proceeds were deposited into a bank account that Arthur had put Rick’s name on.

Since Arthur was the sole beneficial owner of the net sale proceeds, their deposit into the joint bank account resulted in another gratuitous transaction in which a parent put a sole asset into a joint account that was held in the joint names of the parent and an independent adult child, thereby creating the presumption of a resulting trust.

In 2012 Arthur was wheelchair bound, had been living in an assisted living facility for at least three years and during that time Rick had been managing Arthur’s financial affairs, by paying Arthur’s bills, including the ongoing costs of the two Sylvan Lake properties, out of a joint account that Arthur’s monthly income and other deposits went into. [ 108 ] After Rick separated from Gwen he lived in a hotel for a time, and later in a furnished accommodation in Sylvan Lake.

According to Rick when he discussed his living arrangements with Arthur, his father was quick to suggest that could use the money from the sale of the Sylvan Lake house to buy a house that Rick could rent back from him, so that Rick would be paying rent to him instead of a stranger.

I find this proposition is consistent with Arthur’s long standing strategy of acquiring real estate investments that would generate income, like the trailer parks he owned prior to retirement. [ 109 ] According to Rick, he and Arthur looked for a house to buy in Red Deer, and eventually settled on an old house that was purchased for $182,500 in Arthur's name alone. The old house was immediately torn down and new house built in its place, with the funds coming from the sale proceeds of Arthur’s Sylvan Lake house. Upon completion Rick moved into this home and he continues to reside there.

According to Rick he made no contributions toward the purchase of the old house or the construction of the new house.

It is clear from Pecore that where a resulting trust is found to exist, the resulting trust imposes an obligation on the transferee to return the property to the transferor on request, and so provide the sale proceeds in the joint bank account were the subject of a resulting trust, which I find they are, Arthur was entitled to demand the Red Deer house be registered in his name alone and no negative inference can be drawn from that. [ 110 ] Gwen argued a number of facts lead to the inference that Rick probably has a beneficial interest in this new house, thereby rebutting the presumption of resulting trust.

The facts that she relies upon include: (1) the purchase and construction monies came from a joint bank account held in the names of Arthur and Rick; (2) the Purchase Agreement executed for the old house was made out in Rick’s name alone;

(3) Rick had extensive involvement with the construction of the house; (4) a number of invoices relating to the construction of the house and totalling almost $50,000 were initially invoiced to Rick and paid by FESL; and,

(5) Rick’s credibility is suspect, because he was untruthful in questioning when he said he paid rent to Arthur, and had to later admit, when asked about proof of the payments, that he had not paid rent to Arthur to that point in time.

Gwen also argues that Rick has failed to provide complete disclosure of all of the banking records for all the joint accounts he held with Arthur. [ 111 ] I have already found that a resulting trust was created when Arthur put his Sylvan Lake house in joint names with Rick, and the Trust Agreement with Leora provided evidence that she too was a trustee of Arthur’s interest in that home, leaving Arthur as the sole beneficial owner of all of the net sale proceeds.

The deposit of the net sale proceeds into a joint bank account with Rick, was consistent with Arthur’s long standing estate planning purposes, and by 2012 this inevitably provided ease of management given that Arthur was not independently mobile. This gratuitous transfer to an independent adult child created the presumption of a resulting trust with respect to the funds in the joint bank account. As the beneficial owner of the money in the joint bank account, Arthur was entitled to demand that the old house purchased and new house constructed with those monies be registered in his sole name.

Gwen has the onus of rebutting the presumption of resulting trust, and I find that she had not established that Rick has any beneficial interest in the Red Deer home for the following reasons. [ 112 ] While Rick’s credibility was negatively impacted by his evidence that he paid rent to Arthur when in fact he had not, Gwen’s forensic accountant found no evidence of any corporate gifts or transfers to Leora or Arthur. There was no direct evidence that contradicted Rick’s claim that he made no personal contributions towards this new home.

Furthermore, given Arthur’s confinement in a wheelchair and extended care facility, it makes sense that it fell to Rick was the one who managed the purchase and the construction of the new home.

It is also understandable that Arthur would want the home registered in his sole name, given Gwen’s claim and Rick’s description of Gwen coming after Arthur’s assets. [ 113 ] While on its face, FESL’s payment of construction invoices issued to Rick, there was no evidence that contradicted Rick’s evidence these contractors were doing concurrent work for FESL and the invoicing and payment of these invoices was an inadvertent error, and that Arthur repaid FESL.

While Gwen argued that this claim of repayment was unsupported by documentary proof, I accept that the repayment was made based upon the report from Gwen’s forensic accountant which said it was. [ 114 ] While Gwen argued that all Arthur’s banking records were not produced, there was no evidence at trial to indicate that production of those documents from Arthur was ever sought informally or by court application. [ 115 ] Finally, the fact that Rick may not actually pay rent to Arthur for the right to live in the Red Deer house is not proof that he has a beneficial interest in the home.

Arthur was the beneficial owner of the net sale proceeds from the Sylvan Lake home, and he retained beneficial ownership of the net sale proceeds even after they were put into the joint account. He was entitled to demand the “return” of those funds and direct that they be invested in a home in his sole name. As the owner of the house was entitled to permit his only child to live in rent free. Further, even if Arthur had put the house in Rick’s name alone, Rick would have likely had an exemption claim with respect to that gift.

[ 116 ] There is no evidence that Rick gifted or transferred any property to Leora and as such Gwen’s claim against Leora is dismissed. Arthur is the sole beneficial owner of the Red Deer house, and Rick has never had any beneficial interest in it. The Bank Bermuda monies [ 117 ] Arthur had bank and investment accounts at HSBC Bank Bermuda that were registered in his Arthur and Rick’s joint names. The first bank statement for these accounts is dated in 2005, and it is addressed to Arthur alone but bears both Rick and Arthur’s names.

Rick admits, and transaction documents in Exhibit 3 show, that over the years Rick provided instructions to the bank regarding activity in the accounts. A very limited number of banking statements were included in Exhibit 3, for the years between 2005 and 2011, and the account statements showed many different account numbers. According to Rick, he provided all the statements he could find, because some account statements went to his father’s home or a P.O.

Box address, and others that came to Kayton Estates were left at the time of separation and he doesn't know what happened to them. [ 118 ] Gwen acknowledged that the initial monies put into the Bank Bermuda originated from Arthur. She also testified that she was aware that “much” of the money in the Bermuda accounts came from Arthur, but I find that her use of the word “much” is misleading, since it is clear that she had no direct or indirect knowledge of Rick making any deposits into any of the Bermuda accounts. [ 119 ] Rick moved the Bank Bermuda money back to Canada in 2012, after separation.

According to him, the repatriated money was deposited into Arthur’s Canadian account. That account must have been one that Rick held jointly with Arthur, because Rick was to make an investment in a numbered Alberta company, which later underwent a name change to Soapy’s Car Wash Ltd. (“Soapy’s”) in Arthur’s name. Arthur owns 25% of the shares in Soapy’s, which Rick described as a corporation that runs a cash generating car wash and also owns a commercial building that it rents out.

Rick is a director of Soapy’s, and he sees his director’s role as one in which he represents Arthur’s interests. [ 120 ] While at questioning, which occurred prior to Arthur being added as a Third Party Defendant in this action, Rick refused to produce Arthur’s banking records to demonstrate what happened to the money after it was repatriated on the basis that Arthur was not a party to the action, there was no evidence at trial to indicate that production of those documents from Arthur was ever sought informally or by court application after he was added as a Third Party Defendant. [ 121 ] Gwen argued that Rick had a beneficial interest in $629,805.84 balance reflected on the last Bank Bermuda statement for the period ending September 30, 2012, and again relies upon Kamajian which dealt with exemptions and tracing.

However, Rick has made no exemption claim with respect to these monies, and instead maintains that Arthur is the beneficial owner and as such tracing is irrelevant. [ 122 ] Rick denied making any contributions to the Bank Bermuda accounts and there was no direct evidence that established he had done so.

Until 2011, Gwen’s book keeping activities kept her up to date with respect to the monies the parties and their corporation had coming in and going out. [ 123 ] A credit card associated with the Bermuda Bank accounts was issued to Rick, and according to him Arthur permitted him to use it, and the monthly statements were automatically paid out of the account the card was associated with. Charges on that card included some of Carly’s Stanford University expenses, and travel. [ 124 ] The Bank Bermuda statements that are found in Exhibit 3 can be summarized as follows: (

a) Seven account statements for customer number B067702, and addressed to Rick &/OR Arthur Splett at the Kayton Estates address are found in Exhibit 3. The first six statements that cover a period between August 1, 2005 and January 31, 2008, and the last statement was for the period ending March 31, 2009. It appears that

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