Ghebremeskel v Tesfu, 2021 ABQB 341

Court of Queen’s Bench of Alberta Citation: Ghebremeskel v Tesfu, 2021 ABQB 341 Date: 20210430 Docket: 4801 146990 Registry: Calgary Between: Tsgeweini Ghebremeskel aka Tsegeweini Ghebremeskel aka Tsgeweini Tesfu Plaintiff - and - Issak Tesfu, 1190410 Alberta Ltd., 1345437 Alberta Ltd., A-Plus Building Maintenance Ltd. Defendants - and - Tsgeweini Ghebremeskel aka Tsegeweini Ghebremeskel Plaintiff - and - Leya Gebrehewet and Daniel Berhe Defendants

_______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.P. Sullivan _______________________________________________________ INTRODUCTION [ 1 ] The Plaintiff, Tsgeweini Teanara Ghebremeskel, and the Defendant, Issak Tesfu, were married in 1993 in Asmara, Eritrea. By 1995, both parties had moved to Canada. Initially, they settled in Saskatoon and began working in the commercial cleaning business. They both worked hard. After a short time, they moved to Calgary where Mr. Tesfu incorporated a cleaning company, Acclaim Building Maintenance Limited (“Acclaim”).

In 2004, the parties incorporated a second company in the cleaning industry, A-Plus Building Maintenance Ltd. (“A-Plus”). By 2005, Mr. Tesfu was quite successful with his business enterprises and by 2006, the family had accumulated substantial wealth. During this period of time, between 1997 and 2003, they had four children, two daughters and then two sons. [ 2 ] Through their connections in the broader Eritrean community in Alberta, they expanded their business to include the buying and selling of real estate during a period of growth in the Alberta real estate market.

This venture provided significant financial resources well in excess of the money being earned through A-Plus. Mr. Tesfu had to work far less to earn far more. In essence, A-Plus became a cash flow vehicle that supported a real estate flipping enterprise that generated significant wealth for Mr. Tesfu and Ms. Ghebremeskel. [ 3 ] By January 2011, the parties had amassed a significant estate worth about $2.5 million. The bulk of that estate was acquired as a result of the very successful real estate dealings from 2005 through to early 2011. It is important to note, however, that Ms. Ghebremeskel and Mr.

Tesfu were both surprisingly naive. Mr. Tesfu was successful in the real estate business because of the opportunities presented, the advice given, and the advice taken from Mr. Dewit Tsegai. It was Mr. Tsegai, who along with various other members of the Eritrean community, assisted Mr. Tesfu in these sketchy real estate transactions. I am satisfied that Ms.

Ghebremeskel was generally aware of her husband’s business affairs, although she was not aware of the specifics, nor was she expected to be. [ 4 ] In 2008, A-Plus lost its main contract with several Superstores, following which the business went into rapid decline. By 2009, and certainly by 2010, the value of A-Plus had been reduced to nearly zero, as had its income. At the same time, the real estate market started to close out after the financial crisis of 2008. [ 5 ] In January 2011, while Mr. Tesfu was on a business trip to Eritrea, Ms. Ghebremeskel filed for divorce and division of matrimonial property.

At the same time, she filed Certificates of Lis Pendens on all the parties’ properties. When Mr. Tesfu returned to Canada, he says the locks were changed on the matrimonial home and he went to live with his nephew, where he lives to this day. [ 6 ] Ms. Ghebremeskel went on to file three subsequent Amended Statements of Claim, one of which brought Mr. Daniel Berhe, Mr. Tesfu’s nephew, and Ms. Leya Gebrehewet, Mr. Tesfu’s sister, into the action. Ms. Ghebremeskel claims that some of Mr. Berhe’s and Ms. Gebrehewet’s properties were purchased with funds flowing from the matrimonial regime.

She alleges, in essence, that Mr. Berhe and Ms. Gebrehewet hold their properties in trust for her and Mr. Tesfu. [ 7 ] On separation, the four children continued to reside with Ms. Ghebremeskel in the five-bedroom, mortgage-free matrimonial home. In 2017, the two boys moved in with Mr. Tesfu. The oldest child, Maaza, is severely disabled and began receiving AISH payments when she turned 18. [ 8 ] After the filing of the original Statement of Claim, almost all of the parties’ substantial real estate holdings were sold and since then the funds have been held in trust by Ms. Ghebremeskel’s counsel, Ms.

Elizabeth Stock. The income stream from A-Plus ended and the funds from real estate dealings terminated as well. For some time after separation, Ms. Ghebremeskel received uncharacterized payments from the funds held in trust in the amount of $3,000 per month. The total amount transferred to her was not in evidence before the court, although my understanding is that it was quite substantial. [ 9 ] Mr. Tesfu’s sources of income vanished with the dissolution of A-Plus and the sale of all the parties’ income properties. He was reduced from being a successful businessman to a minimum-wage earning employee.

He worked for about three months after separation with a property management and cleaning company called Sea View Management, but he reported that he was unable to continue with that employment for physical reasons. He currently subsists on social assistance. [ 10 ] At the heart of this case are allegations of inappropriate financial dealings and inadequate disclosure. Ms. Ghebremeskel alleges that Mr. Tesfu and his accountant, Mr. George Josephson, kept very poor paperwork and records. As will be seen in the discussion below, there is some truth to this specific allegation.

The family’s finances were significantly integrated with their community and corporate interests and there was extensive co-mingling between personal and business funds. This said, all major transactions, including real estate transfers, were handled by Calgary law firms. As such, all funds transferred in relation to real estate were recorded and accounted for in the appropriate trust ledgers at these firms. Furthermore, throughout the relevant time, A-Plus and Mr. Tesfu relied on his accountant to reconcile the books.

[ 11 ] Over the past nine years, the Plaintiff has continued to allege that Mr. Tesfu has been hiding funds, in particular, that he has transferred properties into third party hands that are, in fact, matrimonial property and, that she has suffered financial detriment as a result. She seeks to establish that properties held by Mr. Berhe and Ms. Gebrehewet were purchased with matrimonial funds and that these assets, including a trucking company, should be added to the total distributable matrimonial property. [ 12 ] Mr. Tesfu submits that at no time did he have any intention of deceiving his wife.

He points to the fact that Ms. Ghebremeskel was a 50% shareholder in several of their corporations, including A-Plus and a company known as 119. He states that if there are any gaps in the record-keeping, they result from a lack of sophistication on his part. Further, as explained by Mr. Josephson, it is likely that the significant comingling of funds used for personal and corporate purposes has led to a misunderstanding of how the family’s assets were used.

In fact, it is fair to say from the evidence I heard that the parties and their children “lived large” during the relevant years of their marriage up to 2011, while also generously supporting their extended family and the broader Eritrean community in Alberta. [ 13 ] Mr. Tesfu was adamant that there has been full disclosure and that he has provided numerous documents to Ms. Ghebremeskel and her counsel. I note that the disclosure in this file exceeds ten large volumes and over 6,000 pages of documents. Ultimately, to satisfy Ms. Ghebremeskel’s demands for ever more disclosure, Mr.

Tesfu signed letters giving her and her counsel authority to write to all financial institutions in Alberta requesting any and all information of his financial dealings. [ 14 ] This lengthy trial raises all the usual questions in a matrimonial action, including the division of matrimonial property and the appropriate amount of child and spousal support.

More specifically, this case raises the question of what is the matrimonial property and how should it be divided. [ 15 ] Before turning to the legal aspects of the case, it is necessary to explain how the parties acquired (and then lost) their wealth, including the involvement of Mr. Dewit Tsegai; their broad definition of family and their involvement in family and the Eritrean community; and, my conclusions regarding disclosure and credibility.

HOW THE PARTIES ACQUIRED (AND THEN LOST) THEIR WEALTH [ 16 ] The parties arrived in Canada as refugees and accumulated an astonishing wealth over a period of less than 20 years. They began by working hard and incorporating companies in the field of commercial cleaning and then used the cash flow from these businesses to buy real estate. Eventually, the real estate flipping enterprise was self-financed through property sales, as the value of the real estate holdings increased.

At its peak, it seems the parties owned approximately $2.5 million in net assets. [ 17 ] Acclaim was incorporated and registered on March 17, 1999 with Mr. Tesfu as the sole shareholder and it become a quite successful cleaning business. In January 2005, Mr. Tesfu received an offer to purchase the business for $298,000. He sold the company in February and agreed to become a consultant manager for the subsequent purchaser for a period of six months from the closing date at a monthly salary of $2,000/month for the first two months and $1,500/month for each month thereafter. Mr. Tesfu was paid in full for that sale.

He explained that these funds became the seed money for the buying and selling of properties with Mr. Tsegai. [ 18 ] In 2004, before he sold Acclaim, Mr. Tesfu incorporated A-Plus. Notwithstanding a non-competition agreement entered into with the purchasers of Acclaim, Mr. Tesfu continued in the building maintenance and commercial cleaning business through A-Plus. Mr. Tesfu and Ms. Ghebremeskel each held 50% of the voting shares in A-Plus. Mr. Tesfu was the director and the registered office was in the matrimonial home. [ 19 ] Mr. Tesfu explained that A-Plus started small.

He had a small commercial contract and he worked very hard, usually 16 hours per day. As the business grew, he had more people working for him, often recently immigrated family members, as will be discussed in more detail below. He bought equipment, his income grew, and he hired supervisors and managers. [ 20 ] A-Plus was providing services in Drumheller, Olds, Innisfail, Fort McMurray, Sylvan Lake, Medicine Hat, Airdrie, Cochrane, Strathmore and Fort Macleod. Mr. Tesfu would start work at 8:00 p.m. and finish at 6:00 a.m.

He stated that he would try to sleep from 6:00 to 9:00 and then work the rest of the daylight hours before he went to a jobsite at 8:00 p.m. He was working seven days a week. Eventually, he started to take Saturdays off. [ 21 ] Mr. Tesfu said he did maintenance on the buildings himself and he would service what he could on the machines. He described “a big stress.” He was tired and did not have time to spend with his family as he wished. He said his health was not doing well. [ 22 ] Mr. Tesfu testified that the spots and the discoloration on his face are the result of using chemicals in cleaning.

He said that his doctor advised him to stop using those chemicals because they contained a corrosive ingredient, “Atak”. It is an acid used for stripping wax and when mixed with water creates some smoke. [ 23 ] In November 2005, after the sale of Acclaim, Mr. Tesfu and his wife bought their first rental property, which was registered in joint tenancy. It was sold in January 2006 and the affidavit of execution associated with the transaction confirms that both parties participated in the sale. [ 24 ] This was the first of many real estate transactions orchestrated by Mr. Tsegai. Mr.

Tsegai met the parties at a wedding reception. He is a realtor, a mortgage broker and a lender. He knew about the success of their cleaning business and he suggested that they consider investing in real estate, using the cash flow from A-Plus. Mr. Tsegai essentially told Mr. Tefsu, “just bring me the money and I will do the buying and selling for you.” [ 25 ] They started out their business relationship with a one-bedroom condo where Mr. Tesfu made a $13,000 profit and he began to realize that he could make easy money from real estate. He began dealing exclusively with Mr. Tsegai.

It became clear from all the evidence at trial that Mr. Tsegai was the main operator in the real estate business and I’m satisfied that all of the enterprises and numbered companies, plus the personal involvement of Ms. Ghebremeskel and Mr. Tesfu, were orchestrated and directed by Mr. Tsegai. (Ms. Ghebremeskel testified that she also knew Mr. Dewit Tsegai as Mr. Dewit Zeramarian, but for the purposes of this decision, he will

be referred to as Mr. Tsegai.) [ 26 ] Mr. Tsegai also introduced Mr. Tesfu to the law firm, LeClair Thibeault. The law firm produced its files and records relevant to this action. The documents reveal that Mr. Tsegai was present for all the real estate transactions, as listing broker and agent for sale. There are no references to other realtors, nor is there a real estate transaction that does not involve Mr. Tsegai. [ 27 ] Mr. Tsegai often acted as the realtor on the sale, the realtor on the purchase, and the broker for the financing. When asked specifically, Mr.

Tesfu replied that, “when it came to locating the properties, it was Mr. Tsegai. He would find it. I would buy it. I never lost. I always made a profit.” Mr. Tesfu further explained his basic and core understanding of the real estate transactions when he said, “I write him a cheque, he buys a property and he gives me a bigger cheque” or elsewhere in his testimony, “I gave Mr. Tsegai a cheque and he gave me back a bigger one.” [ 28 ] It is clear that Mr.

Tesfu’s understanding of the market improved over time, but I find that it never rose to the level that would be expected of a successful real estate investor and rental property owner. He was naïve, particularly with respect to accounting and maintaining the properties. Fortunately, he was very successful notwithstanding these shortcomings. It is clear that Mr. Tesfu’s “first family” (Ms. Ghebremeskel, Mr. Tesfu, and their children), benefitted greatly from his efforts. [ 29 ] I pause here to note that all of the witnesses in this trial, with the exception of the forensic accountant Ms.

Rivard, required an interpreter. There was nothing to suggest that any of these parties ever read or understood a mortgage or real estate contract. [ 30 ] Mr. Tesfu next bought a house and started obtaining mortgage money through Morgan National Corporation. He explained that Mr. Tsegai introduced him to this mortgage company and it became an important part of his financial success in buying and selling properties. Today, he does not owe Morgan National any money. At one time, he invested $100,000 with Morgan National. He says this money was returned when he needed it.

He said Morgan National never denied him a loan and all such loans have been paid off. Although Morgan National no longer exists, evidence of Mr. Tesfu’s investments was produced at trial. It shows that $100,000 was invested under the A-Plus account and then the money was returned when he needed it to cover expenses. [ 31 ] Mr. Tesfu stated that he received $1,000,000 profit from an Edmonton real estate deal. It was then, of course, that he realized that he was making much better money flipping real estate, and much more easily, than through cleaning.

Over time, the properties were bought in the names of individuals and in the names of two numbered companies, 1190410 Alberta Ltd. (the previously referenced “119”) and 1132544 Alberta Ltd. (“113”). [ 32 ] 119 was registered on September 2, 2005 showing Mr. Tesfu as the director, and he and Ms. Ghebremeskel as 50% voting shareholders.

This corporate entity conducted numerous business transactions involving land over the years from the date of its incorporation until the parties’ separation in 2011. [ 33 ] 113 was incorporated earlier, on October 14, 2004, showing a registered office at 918 Panorama Hills Drive NW, with the directors being Samuel Fesshatsion, Dewit Tsegai and Elita Ghebre. The voting shareholders were Samuel Fesshatsion, Elita Ghebre and Issak Tesfu.

They owned 23 shares each out of a total 100, while Medhane Tsegai and Dewit Tsegai had 15.5 shares each. [ 34 ] 113 is the corporation that very successfully invested in what became known as the McDougall property, purchased on April 14, 2005 for a shown value of $722,500 and sold on March 19, 2007 to 1292624 Alberta Ltd. Mr. Tesfu received his share of the profit without knowing who owned 1292624 Alberta Ltd. [ 35 ] The property was later sold two more times, with Mr. Tsegai making a significant profit of over $500,000. Mr.

Tesfu’s evidence, while testifying about this transaction, was that “he tricked us,” referring to Mr. Tsegai. Although it is not entirely clear from the evidence, it appears that Mr. Tsegai either owned one of the companies involved in this real estate transaction or had an interest in one or more of them. [ 36 ] Despite Mr. Tsegai’s actions in relation to this property, overall Mr. Tesfu, Mr. Fesshatsion, and others benefitted from Mr. Tsegai’s influence. Other members of the Eritrean community also were able to take advantage of a growing real estate market and Mr. Tsegai’s genius.

Notwithstanding that many of these transactions were on the edge of legality, I note and accept that Mr. Tesfu was able to participate, along with his wife, in this most prosperous enterprise because of the cash flow from A-Plus. [ 37 ] At various times, the parties owned properties in Lethbridge, Calgary, Drumheller, Red Deer and Edmonton. All properties were bought and sold in the Province of Alberta using local banks, companies and Mr. Tsegai. Ms. Ghebremeskel testified that she had no knowledge of the details of all these business transactions. Mr.

Tesfu was specific in cross-examination, however, that he did not do anything without Ms. Ghebremeskel’s knowledge. He said, “we agree together.” He also testified that funds from sales went into trust accounts at the law firm. The money was then used for the purchase of other properties, which were continuously rolled over as inventory in the company. Regarding a Lethbridge property in Ms. Ghebremeskel’s name, the documents show her participation and completion of the affidavit regarding the value of land. [ 38 ] Throughout the trial when presented with documentary evidence, Ms.

Ghebremeskel claimed either to know little or nothing about the property or not to remember. When shown documents containing her signature, she either did not recognize it as hers or was unsure or said it was not her signature. She also suggested that Mr. Tesfu signed her name on documents. Although Ms.

Ghebremeskel’s name appears on the property in Lethbridge, she said that to her knowledge she never bought such a property and knew nothing with respect to its purchase or sale, even though this purchase and sale was handled in the normal fashion through lawyers, with appropriate affidavits of execution. [ 39 ] Furthermore, notwithstanding her involvement as 50% shareholder in 119, Ms. Ghebremeskel advised the court that she knew nothing of the details and does not know anything about company documents or records. In her evidence she said “I completely trusted [Mr.

Tesfu].” Yet in other testimony she indicated that she was aware and fully advised by Mr. Tsegai of the purchase of a 21-unit apartment building in Edmonton by 119. She stated that “the realtor explained it to me” and after the explanation she signed the appropriate documentation. She then testified as to not knowing anything about the sale of this Edmonton property to Jaswinder Hotai,

other than that Mr. Tsegai told her that Mr. Tesfu “made a million dollars on the deal.” Ms. Ghebremeskel also indicated an awareness that after the sale of the Edmonton property, Mr. Tesfu bought the Red Deer property, this time with Mr. Fesshatsion. As usual, the Agreement for Sale was signed by Mr. Tesfu with Mr. Tsegai as the witness. [ 40 ] Similarly, the documentary evidence reveals a mark reported to be Ms. Ghebremeskel’s signature on an initial disclosure statement for a second mortgage from Morgan National Corporation on the matrimonial home (which has subsequently been paid off). Ms.

Ghebremeskel said she does not remember signing that initial disclosure statement, nor does she remember signing the mortgage document above her typed name on the last page. She so testified notwithstanding that there is an affidavit of attestation witnessed by a commissioner for oaths indicating that she and Mr. Tefsu signed the documents in the presence of the witness (although that document is not properly completed). The witness’s signature appears to be that of Ronald J. Thibeault, Barrister and Solicitor in the Province of Alberta. [ 41 ] I am prepared to accept that, to the extent Ms.

Ghebremeskel alleges ignorance regarding the details of the business and property transactions, her evidence is truthful. She was a partner in a traditional marriage: her role was to care for the family, while Mr. Tesfu took care of the business and the inventory in the business. [ 42 ] But, while it is clear Ms. Ghebremeskel did not understand the mechanics and operations of the real estate transactions, I do not accept her evidence when she says that she did not have a general understanding of what was happening.

I am satisfied she knew a lot more about the operation of the cleaning business and the different corporate enterprises than she related to the court. She knew about the success of Acclaim, the first cleaning business and its sale. She knew of the success of A-Plus and the even greater success of the real estate business. She knew that Mr. Tesfu collected rent from tenants every month and that he took care of all of the financial affairs of the family. [ 43 ] She said she remembers Mr. Tesfu’s purchase of 79 Beddington Way NE in April 2008.

She said “I remember him buying this” and “he had $100,000 to invest.” In cross-examination, however, when talking about this same time period, she said that she was worried about the loss of the Superstore contract and she thought that Mr. Tesfu might be going bankrupt. Later in these reasons, it will be shown that it was Ms. Gebrehewet, and not Mr. Tesfu, who purchased the Beddington property. [ 44 ] Coincidentally, at about this time, in December 2007, A-Plus did invest $100,000 with Morgan National Corporation. Ms.

Ghebremeskel believes instead that the $100,000 was used to buy one of the properties owned by Ms. Gebrehewet. A letter dated September 23, 2011 indicates, however, that the $100,000 investment was returned to Mr. Tesfu and that all of the second mortgages granted by Morgan National have been repaid (a total of $630,000). [ 45 ] In general, I find that Ms. Ghebremeskel watched as her husband became more and more financially successful with less and less effort in the cleaning business and became closer and closer to Mr. Tsegai.

And although she testified that on more than one occasion she went to land titles, what she referred to as a “government office” where a clerk showed her some properties on a list of land and which had no meaning to her, it is clear that she fully appreciated Mr. Tsegai’s involvement in the parties’ affairs. Ms. Ghebremeskel arranged to meet with him in early 2011 to obtain a list of the parties’ property holdings. According to her, they met in a Tim Horton’s coffee shop and Mr. Tsegai, without hesitation, gave her the list of properties that were currently registered in her and/or Mr. Tesfu’s name.

This list of properties appeared in the Original Statement of Claim, alongside which Ms. Ghebremeskel filed twenty-six certificates of lis pendens against all the properties owned, or alleged to be owned, by Mr. Tesfu. [ 46 ] The decline in the real estate market in Alberta and the loss of the Superstores contract effective January 2009 seem to have been the beginning of the financial troubles that contributed to the parties’ eventual separation. Mr. Tesfu stored the A-Plus cleaning equipment in the garage of his residence in Panorama Hills.

He explained that his plan after losing the Superstores contract was to return to Eritrea to see if he could start some businesses there. He obtained a personal loan from Mr. T.H. Kelati for US $480,000, with the intention of starting an import and export business involving food stuffs, particularly spices. [ 47 ] He explained that he and Mr. Kelati tried very hard for a long time to make the business work. At one-point, Mr. Tesfu went to Dubai and on other business trips to Africa.

Their intention was to import dates, spices and juice, with Eritrea and Uganda as equal parts of the market for their business. [ 48 ] Mr. Tefsu said he tried for three months to obtain a visa to enter Uganda. He was unsuccessful and their business property was seized by the Ugandan authorities for breaching local laws - they lost everything. Mr. Tefsu has repaid only US$50,000 of the US$480,000 borrowed from Mr. Kelati. US$430,000.00 remains outstanding. Mr.

Tesfu has not asked for this debt to be included in the matrimonial property calculation, even though he identified it in his statement of Income, Assets and Liabilities, dated April 7, 2011, which was forwarded to Ms. Stock by Mr. Tefsu’s then-counsel, Kate Wood, Q.C. [ 49 ] A-Plus was dissolved on September 2, 2011. Mr. Tesfu said that his sources of income were reduced to a small amount of money from the rental properties, but even this source of income dried up once the properties were sold. Mr. Tesfu was clear that he never wanted to sell the parties’ rental properties.

He said, “they were pushing me, forcing me and it was not my will. …They had finalized everything.” His reference to “they” is to Ms. Ghebremeskel and Ms. Stock. By way of example, he said that property 16A was sold for $720,000, but he had previously declined an offer of $900,000 for that same property. He stated that all the property that they owned personally and through their corporate entities, other than the matrimonial home, was sold and all the proceeds were received, not by him personally, but placed into Ms. Stock’s trust account. [ 50 ] With the business dissolved and the rental revenue eliminated, Mr.

Tesfu said, “I had no income.” Mr. Tesfu constantly and consistently had difficulty paying income tax and always had taxes owing, both personally and corporately. These taxes went unpaid for years because he had no money after 2010/2011. He requested adjustments from Canada Revenue Agency (CRA), but he was denied. He could hardly afford a car and the Maintenance Enforcement Program (MEP) garnished funds that in fact belonged to Mr.

Berhe out of their joint account. [ 51 ] The evidence suggests that the only property remaining from the parties’ once significant holdings is the matrimonial home and less than $500,000 of funds in Ms. Stock’s trust account.

NATURE OF FAMILY AND COMMUNITY [ 52 ] As will become evident in the course of these reasons, family played a big role in the development and promotion of the parties’ wealth. It is clear that for Mr. Tesfu the concept of “family” has three distinct and separate meanings. First, there is his immediate family of wife and children, for whom he cared and supported financially. Second is his extended family, who he also financially supported, including Mr. Berhe and Ms. Gebrehewet and their families, as well as Ms. Ghebremeskel’s brother and sister, whose immigration he sponsored.

Finally, there is the third family of the Eritrean community in Calgary, in which the parties were prominent players. This third community family included Mr. Tsegai and other business associates, such as Mr. Fesshatsion. The relationship between each of these different levels of family was one of complete trust and understanding. [ 53 ] Listening to Mr. Tesfu’s evidence, I am satisfied that he considered family to include, depending on the specific circumstances, all of the above groups.

He supported his immediate family generously with vacations to Disney Land and return visits to their homeland, and by generally providing them with an above average standard of living and remarkable social advancement considering where he and Ms. Ghebremeskel started in 1996. [ 54 ] He also generously supported his extended family, by sponsoring their immigration to Canada, providing them with jobs and ample work upon their arrival, and in numerous other ways. In 2006, six members of Mr. Tesfu’s extended family, including Mr. Berhe and Ms.

Gebrehewet, came to Canada as refugees with landed immigrant status allowing them to commence work and employment immediately. Mr. Berhe’s brothers were young men in their 20s, physically capable of long hours of hard work. The entire family worked for cash and barter and what might be called “sweat equity.” [ 55 ] Ms. Ghebremeskel stated that she met all of these relatives at her wedding in 1993, but otherwise she had no contact with them prior to their arrival in Canada. Knowing that they were coming, she stated that she and Mr.

Tesfu made plans as to where they would live upon their arrival. [ 56 ] She testified that Mr. Tesfu bought a house for them at 147 Covington Close NW. This is one of the properties in dispute. At one point she said “I got this house for them” and they furnished it for the new arrivals. In addition, she prepared food on the day of their arrival and met them at the airport. A Transfer of Land document shows that Mr. Tesfu purchased the property on March 8, 2007 and on October 23, 2009 it was transferred to Mr. Berhe for the same posted value as what Mr. Tesfu first paid. Ms.

Ghebremeskel testified that she knew nothing of this latter transaction, but she acknowledged that Mr. Berhe and his family, all six of them, worked for A-Plus. They worked from 9:00 p.m. to 9:00 a.m. most nights at Superstore and Totem stores. Mr. Berhe became the de facto head of his family. [ 57 ] The documentary evidence includes a service agreement between A-Plus and Mr. Berhe, but its effect is rather limited. It suggests the six family members were subcontractors and Mr. Tesfu paid Mr. Berhe lump sum amounts through 119 for their work. The pay, as recorded in the books, was irregular as Mr.

Tesfu explained that payment from Loblaws itself was irregular. The amounts paid out by A-Plus to the Berhe family reflect minimum wage plus over-time for 12-hour days. [ 58 ] Overall, Mr. Berhe, Ms. Gebrehewet and their siblings became very successful, thanks to the start they got by working with A-Plus. Mr. Berhe and Ms. Gebrehewet also learned quickly about the benefit of owning real estate from watching Mr. Tesfu. [ 59 ] In the broader Eritrean community, Mr. Tesfu and Ms. Ghebremeskel were accepted as leading members.

They provided employment through their cleaning business and participated in social events of the community. The documentary evidence reveals that many members of the community participated in Mr. Tesfu’s real estate enterprises, in addition to his cleaning business. Further evidence of the family’s involvement in the Eritrean community can be seen from Mr. Tesfu’s relationships with Eritrean business leaders, including Mr. Tsegai, Mr. Fesshatsion and others. I have no doubt that Mr. Tesfu, along with Ms.

Ghebremeskel, enjoyed status and prestige as a result of their position in the community. [ 60 ] Equally important, is the parties’ involvement with two significant sponsorship programs, the Saint Michael Group and Group Five. The Saint Michael Group sponsorship is evidenced by documents from the Canadian Immigration Service and by CIBC. The Saint Michael Group bank account was opened in December 2008 and closed in September 2011. Its primary purpose was to save money for the Saint Michael Group Five Sponsorship and Trust. Mr. Tesfu was one of the directors.

This group sponsored a total of 16 people who arrived in Canada as permanent residents; funds were held in trust at the CIBC in the amount of $225,724.46. [ 61 ] There was also a second entity called Group Five, set up and run by Mr. Berhe. Mr. Berhe participated in the Saint Michael Group and in Group 5. He described the development of Group 5 in his testimony and explained that its purpose was to bring refugees to Canada. He identified the participating members of Group 5. He reiterated how Mr. Tesfu was responsible for the money in the first Saint Michael Group and that Mr.

Tesfu had no responsibility for any of the funds in Group 5, the second program. [ 62 ] The banking transactions indicate the funds in the account were returned to the depositors and were never Mr. Tesfu’s property. Mr. Tesfu said that his wife knew of the Saint Michael Group and that she was happy about his involvement. In fact, her brother and sister came to Canada on this program. [ 63 ] Mr. Tesfu sponsored them through the Saint Michael Group and he said he helped them with everything: they stayed at their home for three months and he bought a Jeep Grand Cherokee for Ms. Ghebremeskel’s brother.

He gave them work at A-Plus and he took money out of A-Plus to support them. Mr. Tesfu explained that they were family and that he was working very hard and doing very well. Eventually, they moved to 23 Country Hills View NW, Calgary, which was purchased by Mr. Tesfu in 2007. He later sold the property to Ms. Gebrehewet. The beneficial ownership of this property is also in dispute. [ 64 ] When questioned about his roles as a husband and father, Mr. Tesfu said, “they are my life.” Mr. Tesfu said he worked hard so that his children would have a good and bright future. He was struggling to make good for them.

He was helping his wife’s family and his own family. He stated that there were ever more people in refugee camps and that they were doing all these sponsorships together. He went on to say that he hid nothing from his wife. He said he achieved all his success by hard work. He hired people for his businesses, they had a nanny who lived with them and would travel with them.

[ 65 ] In cross-examination, Ms. Ghebremeskel confirmed that she knew about the Saint Michael Group sponsorship program and that Mr. Tesfu had sponsored her brother and sister. She also testified that during the years when the family was successful, Mr. Tesfu would send money home to their relatives on both sides of the family for holidays and holy days. She does not know how much money was sent to support the families back in Eritrea but she thought it might be two or three hundred dollars at a time, between once to three times a year. [ 66 ] Mr.

Tesfu discussed his community and church and how he sent money to refugees and to sponsor refugees to bring them to Canada. He said that when the refugees first arrived, like Ms. Ghebremeskel’s siblings, he would show them around Calgary, ensure that they had access to a doctor, and gave them substantial support. He also talked about sending money using “Hawala,” which was a process for sending money to refugees in refugee camps. He said that his wife knew of this process and that some of the money went to her family.

Another vehicle for sending money was through Dahabshiil and there are records regarding these types of transactions in evidence. [ 67 ] Ms. Ghebremeskel testified that she had no knowledge of how money was exchanged, but she knew that Mr. Tesfu sent money to his own family and to her brother and sister in Kenya. He also sent money to his relatives in Sudan and Uganda. She said that she never went to the money changer herself for this purpose. [ 68 ] On the whole of the evidence from Ms. Ghebremeskel and all of the Defendants, I am satisfied that Mr.

Tesfu was a generous and dependable husband, father, uncle and community member. I am also satisfied that Ms. Ghebremeskel was aware and approved of the many ways in which Mr. Tesfu supported extended family members and the Eritrean community more broadly throughout the marriage. DIFFICULTIES WITH DISCLOSURE [ 69 ] Throughout this litigation, Ms. Ghebremeskel’s counsel has alleged that Mr. Tesfu has failed to comply with his disclosure obligations. The narrative above regarding Mr. Tesfu’s fluid understanding of family explains some of the challenges of documenting this case.

It is clear that while things were going well during their marriage, the parties lived large, sharing their wealth broadly with extended family and the Eritrean community alike. They intermingled funds between their personal and corporate accounts, their relatives, and the broader Eritrean community. The separation, however, put a full stop to all of Mr. Tesfu’s money-making activities. A- Plus was in decline prior to the separation and dissolved entirely not long thereafter. The certificates of lis pendens filed by Ms.

Ghebremeskel and the forced sale of their properties further reduced, and eventually terminated, the parties’ income stream. [ 70 ] Mr. Tefsu swears that he complied with his disclosure obligations and that he provided everything he possibly could to Ms. Ghebremeskel’s counsel. He said that he kept all documents regarding the businesses and real estate, including income tax information and demands for filing, in the matrimonial home in Panorama Hills. He explained that his wife seized all these documents while he was in Eritrea and gave them to her counsel. Upon returning to Canada, Mr.

Tesfu received permission to go to the matrimonial home with police escort to collect his paperwork, but he found that it was all gone. There was no paper, he said, “not one piece of paper.” He said he looked for about fifteen minutes and left with nothing. He said that he no longer has keys to the home and that Ms. Stock has all of his paperwork. [ 71 ] Thereafter, Mr. Tesfu arranged for documents to be sent to his new address, which is his nephew’s house on Covington Close. Mr. Tesfu explained that he gave all the documents he acquired since separation to Vogel or his previous counsel, and/or to Ms. Stock.

He said, “I gave all papers to lawyers. They have to know everything.” And in other testimony, he was adamant - “I gave them everything.” [ 72 ] As the parties’ personal and business accountant, Mr. Josephson kept great volumes of documentation, all of which was produced to Ms. Rivard, whose forensic report will be discussed below. Also, as noted above, all real estate transactions were conducted by a Calgary law firm and the law firms’ records have been produced. [ 73 ] When Ms.

Ghebremeskel and her counsel demanded ever more disclosure, it was produced, until in the end the burden of ever more demands for disclosure became fruitless, but none the less incessant. Eventually, as described above, Mr. Tesfu gave blank authorizations to his wife’s counsel to pursue and obtain whatever information she sought from any financial institution in Alberta. [ 74 ] I fully accept that inadequate disclosure is the “cancer of matrimonial litigation,” as Ms. Stock repeatedly reminded me.

In this case, however, I find that the requests for ever more documents were like a dog chasing its own tail – an unattainable objective due to the unorthodox manner in which the parties dealt with their assets and co-mingled personal, business, and even community funds. The reality is that the personal and corporate record-keeping in this case is highly irregular. It is virtually impossible to follow the transactions, particularly since so many transactions were pure cash. Mr. Tesfu himself said that most of the time, in fact, 95% of the time, their tenants gave cash for rent that was not documented.

He said he would go to each property in person to obtain the money. He said that “cash is the way we deal with this in our community.” Furthermore, the passage of time has made it impossible to request records from banks directly. [ 75 ] Despite the absence of perfect disclosure, I found Mr. Tesfu was a forthright witness. For example, he explained how he paid his employees. He described how most of them were paid as subcontractors and went into some detail regarding how that took place. One document in evidence lists numerous subcontractors and payments in and out of the company. Mr.

Tesfu described his arrangement with the subcontractor who looked after the Medicine Hat Superstore, Samuel Woldmichael. Mr. Tesfu would pay him in lump sums. Mr. Woldmichael would then pay his employees in Medicine Hat. Later, Mr. Josephson would adjust for GST and such. This is how many corrected numbers ended up in the trial balance. Mr. Tesfu explained that “he had no control over preparation of the trial balance.” [ 76 ] He also explained some of the co-mingling between corporate accounts.

In some cases, a subcontractor would do work for him and then he would go to another job where that subcontractor was the lead. They would exchange in this way back and forth - he would come in to the company for services for which they provided money, or would pay for services provided by others. There also was extensive comingling between the corporate accounts and the family’s personal expenses. He talked about how the family had three

automobiles. They all belonged to the company and the company maintained and provided fuel for these cars and covered other expenses. [ 77 ] Mr. Tesfu also described some of the joint accounts in his name. He says Ms. Ghebremeskel was aware of them, including the CIBC account for Saint Michael Group. He said all the funds in that account belonged to third parties and were returned to those third parties on or before September 8, 2011. All these funds were held in trust to support refugees coming to Canada. [ 78 ] Mr.

Tesfu’s explanation with respect to the Saint Michael Group trust account is supported by the documentary evidence. The court received in evidence a letter dated January 19, 2009 from the Country Hills Branch of CIBC. The letter is signed by a financial advisor representing CIBC and states in part: This letter is to confirm that Issak Tesfu and Daniel Berhe have opened a trust account for Saint Michael Group which requires both individuals to sign for all withdrawals. The funds in this account are for the purpose of sponsoring refugees under the Group Five Refugee Sponsorship application.

The current balance in this account as of January 19, 2009 is $225,724.45. [ 79 ] The evidence also included a record of deposits and debits commencing on December 15, 2008, which indicate that between that date and January 30, 2009, the total funds deposited were $225,803.45. By December 22, 2009, substantially all the funds had been removed by debit withdrawals, the final amount of $77,706.47 on December 22. There is a handwritten note that these funds were given to Ms.

Gebrehewet, and another note indicates that these funds were forwarded to Jivraj Knight and Pritchett, Barristers and Solicitors, who were counsel of record for Ms. Gebrehewet on her purchase of the 23 Country Hills property. I note, however, that a letter from Citizenship and Immigration Canada dated June 18, 2009, lists 18 individuals as members and financial contributors to the Saint Michael Sponsorship and Ms. Gebrehewet is among them. [ 80 ] On September 26, 2011, the immigration office wrote to Saint Michael Group, specifically to Mr.

Tesfu, to confirm that the Saint Michael Group had provided adequate proof of financial support through its letter from the CIBC with the stipulated amount of funds, just over $225,000. On November 7, 2011, CIBC wrote a letter “To Whom It May Concern” confirming that “the signing authorities on the trust account for Saint Michael Group (Group Five) opened on January 19, 2009 are now Genet Mahari and Daniel Berhe. The account requires both individuals to sign for all withdrawals.

The funds in this account are for the purposes of sponsoring refugees under the Group Five Refugee Sponsorship application.” The letter goes on to advise that “the current balance in this account as of November 7, 2011 is $231,102.85 CDN.” [ 81 ] An account statement for September 1 to September 30, 2011 includes deposits starting at a zero balance and ending on September 30 with a balance of $231,040.47 and by December 28, 2011 the account has been reduced by debit withdrawals to $19.65. [ 82 ] There is a further letter from CIBC to Mr.

Tesfu, dated March 26, 2012, which confirms that the Saint Michael Group account was opened in December 2008 and closed in September 2011. The letter explains “the account was opened for the purpose of saving money for the Saint Michael Group Five sponsorship in trust. As Issak Tesfu was one of the directors. This account was then closed and re-opened with a different account number as new directors took over.” [ 83 ] Mr. Tesfu and Mr. Berhe testified as to the source of funds deposited into the Saint Michael Group and the Group Five accounts.

They explained the money came from members of the Alberta Eritrean community, including Ms. Gebrehewet, to satisfy government requirements that sponsors had sufficient financial ability to support refugees coming to Canada. Eventually, the funds were returned to those whose contributed. The list of sponsors also included Mr. Tsegai, Mr. Fesshatsion, Mr. Berhe, Mehry Terke, and Genet Mehari. The evidence shows that the funds deposited to support these sponsorships were given to Mr.

Tesfu, who deposited them into the separate trust accounts, and that the funds were returned to the sponsors at the conclusion of the mandatory period as required by Immigration Canada. Mr. Tesfu was adamant in his evidence that the funds held in these trust accounts were for the refugees “it is not my money.” [ 84 ] I accept Mr.

Tesfu’s evidence in this regard and find that it accords with the nature of the evidence overall: he was a generous leader within his family and community when he found himself with ample resources. [ 85 ] On the whole, I am satisfied that substantially, if not all, the banking, corporate, and bookkeeping records that were available in this case were in the possession of Ms. Ghebremeskel’s counsel. I find that the lack of entirely fulsome and accurate documentation (to generally accepted accounting principles standards) in this case does not support the inference that Ms. Stock asks me to draw, namely that Mr.

Tesfu is hiding money or has dissipated assets to his wife’s detriment. [ 86 ] As will be discussed below, the fact that Ms. Rivard was unable to find any substantial or unknown transfer of funds after a hugely expensive and detailed search lends further credibility to Mr. Tesfu’s evidence, as does her confirmation of Mr. Fesshatsion’s properly asserted ownership interest in the Red Deer property. MS. BAILEY MARIE RIVARD – INDEPENDENT FORENSIC AUDITOR [ 87 ] The generous and expansive nature of Mr.

Tesfu’s understanding of family and the consequent intermingling of personal, business, and community funds, is confirmed by the court appointed forensic accountant, who carried out an audit of Mr. Tesfu’s financial and real estate dealings. In early 2016 the case management justice appointed Ms.

Bailey Rivard, a partner in Valuation, Forensics and Litigation Support at MNP LLP, “to provide this Honourable Court with an Expert Report containing opinions and useful summaries of data for the Court regarding the income and assets of the parties, including such income and assets which may be apparent directly and indirectly, as well as a history of the acquisition and disposition of matrimonial property, including a tracing thereof.” The purpose of the forensic accounting was set out at paragraph 3 of the order pronounced January 15, 2016: The Forensic Accountant shall review financial data including but not limited to tax returns, paystubs, bank statements, financial statements and corporate records to provide an opinion to the Court with respect to the incomes of the parties from 2011 onwards.

[ 88 ] At paragraph 4, the forensic accountant was further ordered to: …provide a report to the Court with respect to the matrimonial property owned directly, indirectly and beneficially by the parties during and after the marriage and to trace major expenditures . [Emphasis added.] [ 89 ] Paragraph 6 indicated that the forensic accountant may: …identify additional information that is required to complete their assessment and may request this information from the parties.

To the extent this information is not available, the Forensic Accountant will disclose the potential significance in their report. [ 90 ] Early in her preliminary report, at paragraph 2.1, Ms.

Rivard explained the scope of her review: …[It] dates back to the earliest period available since the date of marriage with respect to understanding the parties’ matrimonial property, and back to 2011 with respect to the incomes of the parties. [ 91 ] At paragraph 2.2, she set out the nature of the parties’ property holdings: In the years leading up to separation, the parties had ownership interests in various companies and real property.

Third parties involved in business dealings (as subcontractors, lenders, shareholders) were also often involved in real property transactions (involved in financing, purchasing or selling within the group, assuming mortgages, etc.). [ 92 ] At paragraph 2.3, Ms.

Rivard described the intermingled nature of the parties’ finances and property holdings: The parties’ matrimonial property and income are complicated not only by the integration of business and investment deals with their social community, but also because their personal and business spending appear to have been extensively co-mingled with personal items paid by corporate accounts and/or accounts used as intermediaries for personal items . Finally, from our discussions with Mr. George Josephson, the accountant for two of Mr.

Tesfu’s companies, we understand that transactions were often in cash with little supporting documentation. Often times, hand-shake deals would be done with Mr. Tesfu “helping out members of his community” through his companies or properties. The accounting in the companies is therefore largely based on

summary information provided by Mr. Tesfu and not necessarily the actual transactions reflected in corporate bank accounts or formal agreements. [Emphasis added.] [ 93 ] She went on to state at paragraph 2.4: This issue is exacerbated by the fact that members of the parties’ community and more specifically members of Mr. Tesfu’s family may have also assisted him by paying for expenses and accepting cash on his behalf at a time of financial difficulty, similar to what he had done for them in the past. … [ 94 ] In paragraph 2.8, Ms.

Rivard explained once again the limitations on the scope of her review: While some information is available prior to the parties’ separation, the parties have indicated that they do not have much of the older information in their possession and there is limited access to much of the historical banking records that are critical to a tracing of major expenditures as stipulated in the order...

Our analysis will also be limited because of the issues with how the parties’ finances have been historically managed as these are significantly integrated with their community and corporate interests. [ 95 ] And paragraph 2.13 she reiterated how the scope limitations impacted her ability to reach a conclusion in some areas: The concept of materiality, where we were asked to trace “major expenditures” in the Order but the financial disclosure we have reviewed suggests a pattern of potentially significant transactions for small amounts, often involving cash ; and, Cash transactions and amounts paid for or transacted through accounts in the names of individuals who are not a party to this action may be difficult to identify and incorporate into our analysis. [Emphasis added.] [ 96 ] In her oral evidence, Ms.

Rivard said that there was “personal comingling and it is extensive throughout the history of the parties.” By comingling, she refers to personal funds comingled with corporations and vice versa involving the family - all three levels thereof discussed above. [ 97 ] Ms. Rivard’s preliminary report dated February 15, 2018, sets out the details of her terms of reference, as quoted above. She lists the names of the parties and corporations included in her review, including A-Plus, which was owned equally by Mr. Tesfu and Ms. Ghebremeskel; 1345437 Alberta Ltd., a company owned 50% by Mr. Tesfu and 50% by Mr.

Fesshatsion; and, 1190410 Alberta Ltd., a company owned 50% by Mr. Tesfu and Ms. Ghebremeskel. She also reviewed the dealings of 1132544 Alberta Ltd., a company in which Mr. Tesfu owned 23% of the shares, as explained earlier in these reasons. [ 98 ] Although Ms. Rivard did not meet with Mr. Tesfu (his exact words were, “she never consulted me”), she did meet extensively with Mr. Josephson. Mr. Josephson acted as Mr. Tesfu’s accountant for A-Plus and 119 from 2004 until 2012. He prepared all corporate and business documents, including income tax returns for Mr. Tesfu personally and for his corporations. Mr.

Tesfu testified that he has no formal accounting training and no formal bookkeeping training. He said that he just organized his documents and handed them to Mr. Josephson at year end. He would put them in two or three bankers’ boxes and bring them to Mr. Josephson who then sorted everything out. He and the accountant would have discussions and Mr. Tesfu would obtain any needed materials from the bank. [ 99 ] According to Mr. Tesfu, they had a good relationship until he could no longer pay Mr. Josephson, at which point the latter sued him. Eventually Mr. Josephson was paid from the funds held in trust by Ms.

Ghebremeskel’s counsel. Mr. Tesfu and Mr. Josephson had no further contact, although Mr. Tefsu knew that Mr. Josephson had spoken to and cooperated with Ms. Rivard. [ 100 ] Mr. Josephson led Ms. Rivard through all the documentation that was in her possession and that had been provided to Ms. Ghebremeskel’s counsel. Mr. Josephson discussed at length the nature of the bookkeeping and the nature of the businesses of A-Plus,

119, etc. He described the practice of dealing in cash, the blending of funds, and comingling of corporate and personal assets and expenses, and the extensive attempts to avoid attracting attention. Ms. Rivard noted that in her discussions with Mr. Josephson, it became clear that many transactions were in cash, with little supporting documentation, and that “[o]ften times, hand-shake deals would be done with Mr. Tesfu helping out members of his community” through his companies or properties. [ 101 ] At paragraph 2.13 of her report, Ms. Rivard noted that much information remains outstanding.

She explained that many financial institutions only maintain or provide supporting documents for a seven-year period. She also explained that the terms of her engagement required her to trace “major expenditures”, but the financial disclosure revealed a pattern of a potentially significant number of transactions for small amounts, often involving cash. [ 102 ] Ms. Rivard continuously sought further disclosure from the Defendants, despite her own awareness that the bank records were no longer available. Although much of Ms. Rivard’s report was inconclusive, it is particularly important on two points. [ 103 ] Ms.

Ghebremeskel disputed Mr. Fesshatsion’s ownership interest in the Red Deer property. She alleged that he could not have purchased this property with his own funds and that he was holding it as trustee for Mr. Tesfu, whom she claims financed its purchase. [ 104 ] By way of letter dated April 12, 2017, Ms. Rivard wrote to counsel for Mr. Fesshatsion demanding information to assist her forensic search. Specifically, she sought to identify the source of the $1,012,977.04 paid into trust by Mr.

Fesshatsion on October 4, 2007 and asked for “agreements or such other documents that support the explanation” for the source of these funds. [ 105 ] By further order of the case management justice in May 2018 (filed July 2018), the Court directed Ms. Rivard to prepare a sub- report to determine the shareholders’ respective legal and equitable interests in 134, the company that had purchased the Red Deer property.

The order also directed her to investigate the interests of 119, A-Plus and 113. [ 106 ] I pause here to note that MNP never completed a final report, so what was presented in evidence was a preliminary report and a sub-report. The sub-report specifically dealt with the question of Mr. Fesshatsion’s ability to fund the purchase of the Red Deer property. It was a stand-alone complete report on this issue; the broader forensic analysis remained incomplete. [ 107 ] Ms. Rivard carefully analyzed the purchase and sale of the Red Deer property.

At the end of her exhaustive research, as outlined in her report dated August 1, 2018, she concluded that Mr. Fesshatsion had provided the funds. In her oral evidence, she stated that Mr. Fesshatsion “did have the means to contribute his share” to purchase the Red Deer property. [ 108 ] It turns out this was a fairly straightforward transaction. 134 purchased the real property in Red Deer on October 7, 2007 for $2.5 million dollars, which included among other funds, a mortgage from 1253153 Alberta Inc. (Mr. Tsegai’s company), shareholder financing from Mr. Tesfu of $740,000, and shareholder financing from Mr.

Fesshatsion of $772,977 (Mr. Tesfu and Mr. Fesshatsion were each 50% shareholders in 134). [ 109 ] Mr.

Tesfu’s share of funds seems to have come from the recent sale of the Edmonton apartment building. 119 had purchased the Edmonton apartment building in December 2006 for $1,260,000, by way of $196,902 from the sale of 26 th Avenue, $167,258 from a mortgage against 16A granted by Morgan National, $118,000 from Coverdale, and $719,977 from the CWB Mortgage (which approved $800,000 for a mortgage, but subsequently did not fully fund it), plus $20,000 from A-Plus and $5,000 from TD Bank. [ 110 ] In September 2007, 119 sold the Edmonton apartment building for $2,411,000. $751,086 went to pay the CWB Mortgage, $637,249 was forwarded to discharge the Morgan mortgages on the matrimonial home, the 16A Street property and the 26 th Street property. $740,000 was put towards the purchase of the Red Deer property, while the remainder was forwarded to 119 and/or to A-Plus. [ 111 ] In May 2008, the mortgage to 1253153 Alberta Inc. against the Red Deer property was paid out as a result of new mortgage financing that amounted to $1,350,000.

In March 2016, the property was sold for $2,700,000, with net sales proceeds after disbursements of $1,685,199. These net proceeds have remained in trust and were transferred from the vendor’s lawyer’s trust account to Ms. Stock’s trust account. After expenses and advances to the parties and payments of legal fees, among other items, $915,687 remained in trust at the time of the preparation of Ms. Rivard’s sub-report. [ 112 ] Ms. Ghebremeskel took the position that the entirety of these funds were matrimonial property and that Mr.

Fesshatsion could not have contributed any of the funds towards its purchase. [ 113 ] After extensive and detailed research on the purchase and the source of the funds used to finance the Red Deer property, it became clear to Ms. Rivard that Mr. Fesshatsion had a bona fide interest. She concluded that he and Mr. Tesfu were each entitled to 50% of the net proceeds, with $450,090 allocated to Mr. Tesfu and $465,598 to Mr. Fesshatsion.

She wrote at paragraph 4.8 of her sub-report: Based on our review of the shareholder loan accounts … and the initial contributions made by each shareholder … it appears the parties intended to each be 50% shareholders to the company with approximately equal contributions. [ 114 ] Therefore, the allegations made by Ms. Ghebremeskel against Mr. Fesshatsion and Mr. Tesfu were completely unfounded. [ 115 ] I note that although this report was prepared on August 1, 2018, for the following two years Ms. Ghebremeskel continued to maintain her position that Mr.

Fesshatsion was not a bona fide investor in the Red Deer property. She and her counsel did not settle with Mr. Fesshatsion until approximately two weeks into the trial of this matter, after Ms. Rivard gave her oral evidence. Only then did they agree to pay Mr. Fesshatsion the balance of his funds owing from the sale of the property and release him from this action. In sum, I find that the forensic accounting done for the Red Deer property demonstrated the bona fides of Mr. Fesshatsion’s ownership interest and supports Mr.

Tesfu’s credibility. [ 116 ] The forensic accounting came to similar conclusions in relation to the Edmonton and McDougall properties, which were also in issue. Essentially, Ms. Rivard confirmed that the biggest real estate transactions, in which there was the largest profit, were bona fide transactions.

[ 117 ] The pursuit of Mr. Fesshatsion and the retention and withholding of the funds arising from his interest in the Red Deer property is illustrative of the aspirational nature of this litigation. It seems to have started with the belief that Mr. Tesfu manipulated, withheld and hid substantial matrimonial assets from his wife. Yet, when the largest and clearest financial routes were traced, when the big transactions including the McDougall property, the Edmonton property and the Red Deer property were examined, they were all shown to be valid. [ 118 ] Over the years, Mr.

Tesfu, and on occasion his wife, or a numbered company, entered into numerous other real estate transactions. I am satisfied that all the transactions were done in the course of Mr. Tesfu’s business as a real estate investor and speculator. On many occasions he was quite successful, even very successful; on other occasions, less so. In the end, he managed to amass a significant estate with the assistance of Mr. Tsegai and other members of his community.

It is not necessary or warranted to consider all the individual transactions, as they were merely inventory and created the parties’ substantial wealth. [ 119 ] The reality is that after an extensive and detailed analysis, and such time and effort that the fees for her work well exceeded $100,000, Ms. Rivard was unable to come to any conclusion that showed dissipation of matrimonial property outside the cash and co- mingling nature of how the parties operated their corporate enterprises and personal affairs throughout their marriage. In other words, there was no clear evidence of misappropriation of funds by Mr.

Tesfu, contrary to Ms. Ghebremeskel’s interests. CREDIBILITY [ 120 ] This entire trial was conducted with the substantial assistance of interpreters. The only witness to testify in English unassisted was Ms. Rivard. Mr. Tesfu, Mr. Berhe, and Ms. Gebrehewet spoke quite a bit of English, but still required assistance from translators.

In making arguments about the parties’ credibility, counsel pointed to inconsistencies between the answers given by witnesses in their sworn testimony during questioning and what they said on the stand at trial. [ 121 ] I find that the inconsistencies are in large measure the result of difficulties with the translation, in that the details in an answer either were lost in translation or the inconsistencies can be attributed to misunderstandings with respect to the nature of the question.

Also, in some cases, the translator and their relationship or friendship with the person being examined contributed to the unreliability of some of the evidence. Despite these difficulties with the testimony, I was able to form the following credibility assessments at trial. [ 122 ] With respect to Mr. Tesfu, I accept and believe his evidence in relation to the real estate transactions, Saint Michael Group and Group Five and about the loss of the Superstore contract and the profitability of A-Plus. [ 123 ] When Mr. Tesfu gave evidence with respect to borrowing US$480,000 from Mr.

Kelati, and only repaying $50,000 of that amount, I also accept and believe his evidence. It is all the more believable since he does not ask that this debt become a matrimonial debt. This leaves only one outstanding issue, that being the US$200,000 that Mr. Tesfu says he sent to Ms. Ghebremeskel’s sister. I will discuss that later. [ 124 ] The Defendants, Mr. Berhe and Ms. Gebrehewet, also testified at trial. As previously mentioned, Mr. Berhe is Mr. Tesfu’s nephew. He worked for Mr. Tesfu’s cleaning enterprises, assisted with the Saint Michael Group, and bought and sold properties with Mr. Tsegai. [ 125 ] Ms.

Gebrehewet is Mr. Tesfu’s sister. He sponsored her immigration to Canada. She operated a currency trading business with her husband who remained in Eritrea. [ 126 ] Mr. Berhe and Ms. Gebrehewet were added as defendants in this trial by Ms. Ghebremeskel based on her allegation that property registered in their names was purchased with matrimonial funds. She sought to establish that Mr. Berhe and Ms. Gebrehewet hold these properties in trust for herself and Mr. Tesfu. [ 127 ] I will discuss the accusations against each of these defendants below. For now it suffices to say that I accept Mr.

Berhe’s testimony without reservation with respect to his dealings with Mr. Tesfu and Mr. Tesfu’s family. I also accept his evidence with respect to the purchases of 147 Covington Close NE and 636 34 Avenue NE. [ 128 ] I also accept Mr. Tesfu’s and Mr. Berhe’s evidence with respect to how renumeration was paid from A-Plus to Mr. Berhe and the members of his family, as well as their evidence about the operations of the Saint Michael Group and Group 5. The documentary evidence is clear and supports their testimony. [ 129 ] With respect to Ms.

Gebrehewet, I accept her evidence about her currency exchange business and her dealings with her brother, Mr. Tesfu. Noting how all these families related one to another, the close familial and community bonds, I am not surprised and I accept how these business transactions occurred and how family assets were distributed among family members equitably and justifiably. [ 130 ] Furthermore, Ms. Gebrehewet’s evidence was supported by the testimony of Mr. Tesfaldet Tekie and Mr.

Tekestew Woldu Ghirmay, who have sent money to relatives using her currency exchange business and whose testimony I accept. [ 131 ] As stated earlier in these reasons regarding Ms. Ghebremeskel, I accept that she did not know about the details of the family’s business and property transactions, but I reject her evidence when she said that she did not have a general understanding of the parties’ various business enterprises. MATRIMONIAL PROPERTY [ 132 ] It is well established law that matrimonial property is divided at the time of trial: Hodgson v Hodgson , 2005 ABCA 13 at para 2 .

It is also clear on the evidence in this case that the property that remains at trial is far less than what existed at separation. The question is whether the reduced total value of the property remaining at trial is the result of dissipation by Mr. Tesfu or improper

transfers of matrimonial property, as Ms. Ghebremeskel asserts, or whether the parties have depleted their assets through somecombination of living beyond their means and spending on this protracted litigation. Property not in dispute [133] The only property remaining at trial that is not in dispute is the matrimonial home and the funds in Ms. Stock’s trust account.Beyond these primary assets, the parties each own a vehicle of nominal value, which are not in issue in these proceedings. Ms.Ghebremeskel owns an RRSP that was valued at $36,787 on December 31, 2019.

She has named Maaza as the beneficiary of thisregistered account and intends to hold it for her benefit. Ms. Ghebremeskel also holds an RDSP in trust for Maaza. I find that neither ofthese two registered accounts is divisible matrimonial property. Property in dispute [134] With respect to the properties in dispute, Ms. Ghebremeskel alleges that Mr. Berhe and Ms. Gebrehewet are the legal ownersonly of their respective properties and hold beneficial title as trustees for herself and Mr. Tesfu. She seeks to rely on

section 10 of theMatrimonial Property Act, RSA 2000, c M-8 [the “MPA”]. [135]

Section 10 of the MPA allows the court to consider property transferred to or gifted by a spouse, not more than one year prior tothe application for a matrimonial property order, to be part of that spouse’s share of the matrimonial property when the court makes itsorder: see Shaikh v Shaikh, 2020 ABQB 336 at paras 180 to

Section 10 provides as follows: 10(1) When an application has been made for a matrimonial property order and the Court is satisfied that (

a) a spouse has (

i) transferred property to a person who is not a bona fide purchaser for value, or (ii) made a substantial gift of property, (

b) the spouse making the transfer or gift did so with the intention of defeating a claim that the other spouse may have under this Part, (

c) the transferee or donee accepted the transfer or gift when the transferee or donee knew or ought to have known that the transfer or giftwas made with the intention of defeating a claim a spouse may have under this Part, and (

d) the transfer or gift was made not more than one year before the date on which either spouse commenced the application for thematrimonial property order, the Court may do any one or more of the things referred to in subsection (2). [Emphasis added.] [136] Subsections 10(4) and 10(5) require that the legal owners of the property be given notice of the action. Although Mr. Berhe andMs. Gebrehewet were added as defendants to this action, I find that

section 10 does not apply. Subsection 10(1)(

d) requires that theimpugned transfer must have been made not more than one year before the date on which either spouse commenced the application forthe matrimonial property order. Ms. Ghebremeskel filed her Statement of Claim seeking a matrimonial property order in January 2011,thus the transactions in question must have occurred no earlier than January 2010. As will be seen from the discussion below, theimpugned transactions occurred before this date, so the requirements of

section 10 are not met. [137] Furthermore, I also find on the evidence that Ms. Ghebremeskel has not satisfied the necessary element of intention by Mr.Tesfu to defeat her matrimonial property claim, as required by subsection 10(1)(b). [138] Even though

section 10 does not apply,

section 8 of the MPA requires the court to consider whether gifts and/or dissipation ofassets should result in an unequal division of matrimonial property: MPA, ss 8(

h) and (

i) and Mazurenko v Mazurenko (1981), 1981ABCA 104 , 30 AR 34 (CA) at para 15. [139]

Section 8(

h) directs the court to consider whether a spouse made a substantial gift of property to a third party or a transfer ofproperty to a third party other than a bona fide purchaser for value. Where there is a finding of a gift or transfer to a third party who is nota bona fide purchaser for value, the court can order an unequal distribution of the matrimonial property or include the amount of the giftor transfer as part of the property of the spouse and consider it in the overall property distribution: Wright-Watts v Watts, 2005 ABQB708 at para 57, citing Cox v Cox, 1998 ABQB 987 at paras 66-67, MT v DLT, 2000 ABQB 582, and Potter v Potter, 2001 ABQB 810 atpara 93. [140]

Section 8(

i) requires the court to consider whether one party has dissipated assets to the detriment of the other. In O’Neil vYaskowich, 2018 ABQB 599 at paras 50-53, Justice Shelley sets out a helpful review of the law of dissipation. Dissipation requires anintention to destroy or waste matrimonial property or to expend funds foolishly. Merely disposing of property is not dissipation; itrequires an element of bad faith. Dissipation often involves one party spending matrimonial assets to their own benefit to the exclusion ofthe other spouse.

Foolish economic decisions, reckless or spiteful spending, or squandering money on addictions are examples ofdissipation from the case law. Selling assets below market value could be dissipation if the sale was done improvidently, hastily orfraudulently. [141] In Fleming v Fleming, 2016 ABCA 88 at para 30, the Court of Appeal reiterated that section 7(4) of the MPA presumes equaldivision of non-exempt matrimonial property unless that presumption can be rebutted by demonstrating the existence of one or morefactors in

section 8. As such, it is Ms. Ghebremeskel’s burden to prove that Mr. Tesfu dissipated matrimonial property in a manner thatjustifies an unequal distribution, or that other

section 8 factors point to this same result. [142] I will consider the allegations against each property below to determine whether their value, or a portion thereof, should be

considered as part of the parties’ matrimonial assets or whether the allegations against Mr. Tesfu justify an unequal distribution of the parties’ remaining matrimonial property. 147 Covington Close NE [ 143 ] The evidence in relation to Covington Close came primarily from Mr. Tesfu and Mr. Berhe. From the totality of the testimony and the documentary evidence, I can piece together the following information. On April 5, 2006, Daniel Gebrekidan purchased 147 Covington Close NE for $335,100. Mr. Berhe and his family (two brothers, one sister, and his mother) and Mr. Tesfu’s sister, Ms.

Gebrehewet, arrived in Canada in September 2006. They immediately moved into 147 Covington Close NE upon their arrival, when it was still owned by Mr. Gebrekidan. On March 8, 2007, Mr. Gebrekidan sold and transferred the property to Mr. Tesfu for the original purchase price of $335,100. Mr. Tesfu assumed the $284,580 CIBC mortgage on title. On October 23, 2009, Mr. Tesfu transferred title to the property to Mr. Berhe for the same price. The details of this transaction will be discussed in more detail below. [ 144 ] Mr. Berhe and his family members started working for A-Plus.

All six of them worked from around 9:00 p.m. until 9:00 a.m. doing general cleaning of the A-Plus stores. Mr. Berhe worked 10-11 hours stripping and washing floors and did so for two years. He explained that when Mr. Tesfu acquired title to Covington it was everyone’s intention that Mr. Tesfu would be holding it for the Berhe family. He said that Mr. Tesfu and Ms. Ghebremeskel “bought the house for us.” He also described how Ms. Ghebremeskel helped purchase furniture for the home when his family arrived.

He said he is very grateful for this helpful start to their life in Canada, which included the home, being given jobs, etc. [ 145 ] Throughout his testimony, Mr. Berhe referred to a letter written by his one-time counsel, Ms. Mercy A. Amonoh, which is included in the binders of evidence. The letter set out his position with respect to Ms. Ghebremeskel’s claim against him and his property. Mr. Berhe adopted this letter in his oral testimony. The letter states: “Tesfu acquired title to Covington by assumption of the mortgage of $276,902.70 and payment of a cash balance of $58,193.30.

Berhe and his family repaid this amount by working it off through their combined services to the business,” referring to A-Plus. [ 146 ] The family was never paid on time, partly due to the payment structure from Superstore. Mr. Berhe said that he and Mr. Tesfu would sit down and discuss how to structure payment and then a cheque would come from A-Plus to Mr. Berhe. Essentially, the cheque covered whatever was left after the expenses for the maintenance of himself and his family, including the mortgage associated with the Covington property.

He would receive one cheque, with no employment deductions, that would cover the whole family, as they were all subcontracted to A-Plus. [ 147 ] Mr. Berhe explained that he and his family worked for Mr. Tesfu and Ms. Ghebremeskel and saved for two solid years in the expectation that their work would be properly credited in their acquisition of Covington. He went on to say in his letter that “all matters described above concerning Berhe’s interest in Covington were done openly and with the full knowledge of the Plaintiff.” [ 148 ] On October 23, 2009, Mr. Tesfu transferred the property to Mr. Berhe.

The transfer of land to Mr. Berhe from Mr. Tefsu was witnessed by Abraham Gebrehiwot. The affidavit re: value of land sworn by Mr. Berhe states that the value of the property is $320,000 and that he assumed or purchased the land by way of $20,000 cash and intended to assume the mortgage. Essentially, after all the deductions for his family’s pay, he still owed Mr. Tesfu $20,000. It turns out, however, that the mortgage was non-transferrable, so while the property transferred to Mr. Berhe, the mortgage remained in Mr. Tesfu’s name. The affidavit of value of land, dower affidavit stating that Ms.

Ghebremeskel never lived in the property, and affidavit of execution were all commissioned by Mr. Tsegai. It is also worth noting that on May 23, 2008, Enmax started sending the energy and utility statements for Covington Close to Mr. Berhe. [ 149 ] Mr. Berhe explained that he opened a joint account in both his and Mr. Tesfu’s name so that he could pay the mortgage. The purpose of this account, according to Mr. Berhe and Mr. Tesfu, was to allow Mr. Berhe to make the mortgage payments on Covington Close in a way that permitted the bank to view those payments as coming from Mr. Tesfu.

A CIBC mortgage statement setting out principal payments, total interest paid and principal balance for the following years was sent to Mr. Tesfu, as account holder. As of July 1, 2019, CIBC reported to Mr. Tesfu that there was $160,707.52 owing on the mortgage on this property. [ 150 ] The evidence also reveals that the Covington property was recorded on the books of 119 starting in 2007. This aligns with other evidence that indicates the Berhe family was paid through 119.

In 2007, 119 reported a gross rental income of $12,000, with total expenses of $15,332; in 2008, it reported a gross rental income of $16,200, with total expenses of $16,679; and in 2009, it reported a gross rental income of $17,010, with total expenses of $16,382. This evidence reveals that 119 was making calculations with respect to rental income from this property until it was transferred to Mr. Berhe. The evidence also shows that the property was operating at close to or near a loss, which supports Mr.

Berhe’s testimony that part of his family’s remuneration for their work for A-Plus was the provision of accommodation at Covington Close. [ 151 ] Mr. Berhe also discussed the complications associated with the joint account, in particular, that he had to close it because MEP had dipped into it to satisfy Mr. Tesfu’s child support obligations, even though the funds being taken belonged to Mr. Berhe. Notwithstanding these bank account complications, Mr. Berhe swore that he has been making the mortgage payments on Covington Close since it was transferred to him in October 2009. [ 152 ] In sum, it is Mr.

Berhe’s position that Mr. Tesfu acquired Covington Close with the inte

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