Dobrovolsky v Dobrovolsky, 2021 ABQB 62

Court of Queen’s Bench of Alberta Citation: Dobrovolsky v Dobrovolsky, 2021 ABQB 62 Date: 20210125 Docket: 4803 164335 Registry: Edmonton Between: Elizabeth Ann Dobrovolsky Plaintiff - and - Walter Dobrovolsky Defendant _______________________________________________________ Reasons for Decision of the Honourable Madam Justice D. J. Kiss _______________________________________________________ I. Introduction [ 1 ] The Plaintiff, Elizabeth Ann Dobrovolsky (“Liz”) and the Defendant, Dr. Walter Dobrovolsky (“Wally”) were married in 1983 and separated 29 years later, on December 28, 2012.

In the 8 years since their separation, they have been unable to resolve the issues of spousal support and the division of their matrimonial property. [ 2 ] Liz is seeking an unequal distribution of matrimonial property on the basis that Wally has dissipated assets since the date of

separation. There is no dispute that the parties’ individual, and combined, net worth decreased between the date of separation and the date of trial. [ 3 ] Liz submits that the decrease in her net worth, since the date of separation, is attributable primarily to the fact that she was not receiving adequate spousal support and therefore, she has had to encroach on her capital to meet her ongoing expenses.

Wally suggests the decrease in his net worth post-separation is because, after separation, he simply continued to live the same extravagant lifestyle that the parties had enjoyed throughout their marriage. [ 4 ] Liz also advances a claim for retroactive spousal support. However, both parties acknowledge that this claim should only be considered after the matrimonial property division has been determined by the Court. [ 5 ] Only Wally and Liz testified at the trial. There are very few important disputed facts. Even the differences between the parties’ respective Expert Reports are not significant.

Where the parties disagree is in the application of the law to those facts. II. Brief History of Relationship [ 6 ] Liz and Wally began cohabiting in April, 1983 and were married on August 19, 1983 in Toronto, Ontario. When the parties married, Liz was working at the Toronto General Hospital as a head nurse.

Wally was working as an oral surgeon. [ 7 ] The parties have three children who are now all self-supporting: Erik, born June 26, 1985 (35 years old); Elena, born December 5, 1986 (34 years old); and Lauren, born September 8, 1988 (32 years old). [ 8 ] After the birth of their second child in 1986, the parties jointly decided that Liz would remain at home to care for the children. [ 9 ] Wally was presented with the opportunity to purchase the practice of an oral surgeon with the Kingsway Oral Surgery Group in Edmonton, Alberta.

Liz and Wally agreed it would be best for their family to relocate to Alberta from Ontario. On December 23, 1988, the parties and their three young children (aged 3 years, 2 years, and 3 months at the time) relocated to Edmonton. [ 10 ] Wally worked as an oral surgeon with the Kingsway Oral Surgery Group until he sold his practice on July 1, 2018. Throughout the marriage, Wally was also actively involved with various oral surgery associations and taught at the University of Alberta dental school. [ 11 ] After relocating to Edmonton, Liz continued to be the children’s primary caregiver.

She began to receive a salary from Wally’s professional corporation called Walter Dobrovolsky Professional Corporation (“WD PC”) and assisted with the bookkeeping and other administrative tasks. Liz also received dividends from a company called Unicorn Management Ltd, of which she was the sole shareholder (“Unicorn”). Unicorn owned 25% of the issued shares of another company, Peace Junction Investments Ltd (“Peace Junction”). Peace Junction owned a commercial condo unit in Grande Prairie, Alberta, where the Kingsway Oral Surgery Group also had an office.

The spouses of the partners in the Kingsway Oral Surgery Group were the shareholders in Peace Junction. Liz also became involved in a number of volunteer activities. [ 12 ] The parties separated on December 28, 2012. Both Wally and Liz were 62 years of age. Liz moved out of the matrimonial home. She resided in a number of different properties post-separation, eventually purchasing a condo in Calgary in 2016. Wally has continued to live in the matrimonial home (“Rio Terrace House”) in Edmonton. [ 13 ] Liz continued with her volunteer work after the separation; however, she has not sought any other paid employment.

Since selling his practice on July 1, 2018, Wally has effectively retired, although he has done some consulting work and sometimes reviews case files. [ 14 ] Both parties were 70 years of age at the date of trial. III. Matrimonial Property Division [ 15 ] Between the date of separation, December 28, 2012, and the date of trial, December 10, 2020, a number of events occurred that impact the division of matrimonial property. They include the following: a.

Partial Property Agreement dated June 14, 2014 - pursuant to the terms of this agreement, Liz received a condominium owned by WD PC, located at 10649 Saskatchewan Drive, Edmonton (“Saskatchewan Drive Condo”) as an advance of matrimonial property, for an agreed upon value of $410,000.00. WD PC was obligated to pay out and discharge the mortgage prior to transferring title to Wally. Wally then transferred title to Liz.

The parties agreed that the taxes payable by WD PC and Wally as a consequence of these transfers would be treated as liabilities to WD PC and Wally respectively in the calculation of their net matrimonial property. b. Partial Property Agreement dated December 12, 2015 - pursuant to the terms of this agreement, Walter retained the Rio Terrace House for an agreed upon value of $1,900,000.00 as an advance of matrimonial property. Further, Liz received a residence at 7727 – 156 St, Edmonton (“156 Street House”). The equity in the 156 St House was agreed to be $229,478.60. c.

Sale of WD PC – WD PC sold its assets, which were involved in Wally’s oral surgery practice with Kingsway Oral Surgery

Group, as of July 1, 2018. The purchase price was $1,800,000.00. Of this total purchase price, $300,001.00 was attributed to the inventory, purchased assets and leasehold improvements and the remaining $1,499,999.00 was paid for goodwill. d. Consent Interim Interim Support Order – November 15, 2013 – Justice Lee granted a Consent Interim Interim Support Order on November 13, 2013 which provided that Wally would pay interim spousal support to Liz of $10,000.00 per month (“Lee Order”). e.

Consent Order – July 3, 2019 - Justice Ouellette granted a Consent Order on July 3, 2019 which varied the Lee Order and provided that, commencing July 1, 2019, the parties would restrict their spending to $20,000.00 each per month (“Ouellette Order”). Wally was to withdraw $20,000.00 per month from WD PC and Liz was to withdraw $20,000.00 per month from Unicorn Management Ltd. The Ouellette Order further provided that the parties were not to incur any further debt or encroach on their capital beyond this $20,000.00 per month each. f.

Pre-Trial Conference Order – September 12, 2019 - At a Pre-Trial Conference held September 12, 2019, Justice Manderscheid extended the terms of the Ouellette Order until trial (“Manderscheid Order”). 1. Legislation and General Legal Principles [ 16 ] A Statement of Claim for Divorce and Division of Matrimonial Property was filed by Liz on May 21, 2013.

Pursuant to s 39(4) of the Family Property Act , RSA 2000, c F-4.7 , which came into force on January 1, 2020, the provisions of the former Matrimonial Property Act , RSA 2000, c M-9 (“ MPA ”) will continue to apply unless the parties agree that the matter should be dealt with and disposed of under the new legislation. As there was no such agreement in this case, the MPA applies. [ 17 ] Sections 7 and 8 of the MPA set out how property is to be distributed between spouses upon marriage breakdown. [ 18 ]

Section 7 of the MPA identifies various types of property which are treated differently by the Court when making a final distribution between spouses upon marriage breakdown.

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

(2) If the property is (

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

b) property acquired by a spouse by inheritance, (

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

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

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

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

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

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

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

i) or (ii); (

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

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

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

section 8 . [ 19 ]

Section 8 of the MPA provides a comprehensive list of the factors for the Court to consider in making the property division. The factors most relevant in this case are as follows: (a)the contribution made by each spouse to the marriage and to the welfare of the family, including any contribution made as a homemaker or parent; … (

e) the duration of the marriage; (

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

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

h) that a spouse has made (

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

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

j) a prior order made by a court; (

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

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

m) any fact or circumstance that is relevant. [ 20 ] In Hodgson v Hodgson , 2005 ABCA 13 [ Hodgson ], at paras 19-21 , the Alberta Court of Appeal interpreted ss 7 and 8 of the MPA and established the four-step process to be followed to achieve a just and equitable division of the matrimonial property owned by the parties at the date of trial: (

a) Determine all property owned at the date of trial. (

b) Determine the property that is exempt from distribution under s 7(2), or that can be traced to s 7(2) property. The value of this property, as at the date of acquisition, or date of marriage, is excluded from distribution. (

c) Determine what property falls under s 7(3). This includes the increase in value of exempt property, from the date of acquisition or marriage, to the date of trial. This property is distributed between the parties in a manner that is just and equitable taking into consideration the s 8 factors. (

d) Divide the balance of the remaining property equally, unless it would be unjust and inequitable to do so considering the factors in s 8. 2. Property at Trial Date [ 21 ] The first step in the Hodgson analysis is to identify all of the property owned by the parties at the date of trial. [ 22 ] Wally’s assets and liabilities at trial can be summarized as follows: a. Rio Terrace House – Pursuant to the terms of the Partial Property Agreement dated December 12, 2015, the agreed upon value was $1,900,000.00. Wally accepted this property as an advance of matrimonial property. b.

WD PC – Based on the January 31, 2020 Financial Statements, the following values were agreed upon at trial: • Share value - $1,068,672.00; • Excess value of CIBC investment portfolio over book value identified on the Financial Statement - $100,528.00; and • Bonus/Capital dividend – Wally used a bonus payable to him and a capital dividend to clear debt he owed to WD PC - $596,895.00. c. Non -Registered Investment – Manulife Investment - $3,731.00. d. Registered Investments – Wally’s registered investments had the following agreed upon values:

• CIBC RRSP $1,203,145.00; • CIBC TFSA #1 - $56,889.00; and • CIBC TFSA #2 - $29,258.00. e. Bank Account – CIBC - $24,949.00. f. Vehicles • 2011 Mercedes – The agreed upon value at trial for this vehicle was $150,000.00; and • 2019 Mercedes GLE – leased. g. Golf Memberships – Wally has golf memberships at the Mayfair, the Edmonton Golf and Country Club and Bear Mountain Golf and Country Club. At trial, the parties agreed to value the Edmonton memberships at $39,500.00. Wally advised that Bear Mountain was in receivership. h.

Miscellaneous – Wally confirmed that he had a number of other assets in his possession at trial. These included the following: • 3 sets of Chinese replicas of Japanese swords; • 15 or so shotguns and other firearms; • Pens; • Wine; • Art; • Golf Club Sets; and • Household Effects. No values were assigned to any of these items and Liz was not seeking the return of any of these items. I am therefore not including them in the calculation of matrimonial property. i. Liabilities – The only 2 liabilities identified at trial for Wally relate to contingent taxes, with respect to Wally’s RRSP’s and WD PC shares.

Both parties used 20% for their calculations and therefore, I am prepared to accept that figure as well. The contingent tax liabilities were estimated to be as follows: • RRSP (20%) - $240,629.00; and • WD PC - $233,840.00. [ 23 ] Liz’s assets and liabilities at trial can be summarized as follows: a. Calgary Condo – The agreed upon value of this residence, based on a November, 2020 appraisal, was $485,000.00. b. Non-Registered Investments – Richardson GMP Account - $48,694.00. c. Promissory Notes – Liz has loaned money to both her son and son-in-law. Promissory notes have been executed for both.

The amounts owed to Liz are as follows: • Erik Dobrovolsky - $60,000.00; and • Nauzer Forbes - $100,000.00. d. Registered Investments : Liz’s registered investments had the following agreed upon values at the date of trial: • Richardson GMP RRSP - $571,041.00; and • Richardson TFSA - $30.00. e. Unicorn – There was a shareholder loan balance owing to Liz as at December 31, 2019. The amount was agreed to be $173,786.00. However, as a result of the terms of the Manderscheid Order, these funds had all been depleted by the date of trial. f. Bank Accounts :

• CIBC Savings - $27,000.00. These were funds that Liz had saved from the $20,000.00 per month she was required to draw fromUnicorn in compliance with the Ouellette and Manderscheid Orders; and • CIBC USD – ($14.00 US) - $18.00 g. Miscellaneous – The parties agreed upon the following values for these items: • Jewellery - $20,000.00; and • Watches - $5,000.00. h. Liabilities – Liz had the following liabilities at the date of trial: • Contingent Tax on RRSP (20%) - $114,208.00; and • CIBC Line of Credit - $293,000.00. 3.

Exemptions [24] The second step is to identify any property which is exempt from distribution under s 7(2) of the MPA and to establish theamount of the exemption. [25] A party claiming an exemption under s 7(2) of the MPA has the onus of demonstrating that the property is exempt, on abalance of probabilities: Stockall v Stockall, 2020 ABQB 229 at para 201. Even if the original asset no longer exists, the exemption canstill be established if it is traceable to other property that exists at the date of trial.

The tracing can be inferred, implied or presumed:Harrower v Harrower, 68 Alta LR (2d) 97, (Alta CA) at page 4. [26] Liz is claiming an exemption with respect to funds and assets gifted to her from her father. [27] Wally claims that the funds he received from the settlement of an action arising out of a motor vehicle accident are exempt.Although all of these funds had been spent by the date of trial, the determination of whether the funds were exempt is relevant to Liz’sclaim for an unequal division of property.

Liz’s argument that the funds have been dissipated by Wally will be irrelevant if they wereexempt from distribution.

a) Liz – House From Father [28] Liz claims an exemption in the sum of $453,486.00 for monies she received from the sale of a residence at 15603 – 76Avenue, Edmonton (“76 Avenue House) that was gifted to her by her father prior to his death. The funds are traceable to Liz’s currentresidence at 3711 – 17 Street, Calgary (“Calgary Condo”) and to a non-registered investment account with Richardson GMP. [29] At trial, Wally conceded this exemption claim and therefore, I accept that Liz is entitled to an exemption for this full amount.

b) Liz – RRSP [30] Liz claims a further exemption for the sum of $80,000, which she submits she received as a gift from her father and theninvested in her RRSP. [31] Liz’s evidence was that both she and her father had bank accounts at the Bank of Montréal. She testified that all of the fundsin her account were gifted to her from her father. Liz was able to produce a bank statement which confirmed that as of January 18, 2007,the account had a balance of $61,455.90. On January 18, 2007, a further $19,000 was deposited to the account bringing the total balanceto $80,455.90.

On January 19, 2017, Liz wrote a cheque in the amount of $80,000 payable to RBC Dexia, which Liz stated was thecompany that held her RRSP account at that time. [32] Liz confirmed that these funds still formed part of her RRSP at the date of trial. [33] Wally was not asked about this exemption claim at trial. I therefore do not know if it is disputed by him or not. [34] Overall, I found Liz to be a very credible witness. Her evidence, on all matters, was very even-handed.

On more than oneoccasion, without prompting, she commented on how excellent Wally was at his job and she appeared quite proud of his professionalaccomplishments. If she was not able to remember something, she readily acknowledged that. There was nothing to suggest that any ofher evidence was exaggerated or embellished. When Liz did take a firm position on a particular issue, she was able to clearly articulateher reasoning and the information she was relying on.

At no time did Liz come across as defensive, or as someone with “an axe to grind.” [35] I acknowledge that the documentation establishing and tracing Liz’s exemption claim is not the strongest. However, given theabsence of any concerns or objections having been raised by Wally in relation to this exemption, and in light of the fact that I found Lizto be a credible witness, I am satisfied that Liz has established, on a balance of probabilities, that she is entitled to an exemption of$80,000.00 for funds gifted to her from her father.

As these funds were invested in an RRSP, there will be a 20% adjustment forcontingent taxes in the final matrimonial property statement.

c) Wally – Motor Vehicle Accident Settlement

[ 36 ] On August 24, 2004, Wally’s vehicle was struck from behind while stopped at an intersection. Wally’s evidence at trial, regarding his injuries and other damages suffered by him as a result of the accident, can be summarized as follows: • initially, Wally experienced headaches and nausea. He had pain in both his shoulder and sternum; • he took off 1-2 days after the accident, but then returned to work and used pain medication to “power through”; • his headaches, nausea and whiplash symptoms resolved in 3-4 months; however, he continued to experience pain in his shoulder and sternum.

There were no fractures to his sternum, but he was diagnosed with a rotator cuff tear or “slap injury” to his shoulder; • the pain in his shoulder continued and he began experiencing difficulties sleeping; • on December 18, 2008, Wally underwent arthroscopic surgery on his shoulder. He was kept in the hospital overnight; • after the surgery, he did not return to work for five weeks.

He began physiotherapy three times per week and he improved to the point where the pain was tolerable; and • Wally continues to have a background level of pain in his shoulder at all times and manages it with medication. [ 37 ] A Statement of Claim was filed on August 9, 2006 on Wally’s behalf by the law firm of Brownlee LLP (“MVA Action”).

The Statement of Claim sought the following relief: a. general damages for pain and suffering - $100,000.00; b. past loss of income - $2,000,000.00; c. loss of earning capacity - $5,000,000.00; d. unspecified damages for future cost of care; e. unspecified special damages; f. unspecified damages for past and future loss of housekeeping capacity; g. accelerated depreciation of vehicle - $15,000; h. judgment interest; and i. costs. [ 38 ] In 2016, Wally settled this claim for the total sum of $1,637,000.00 (“MVA Settlement”).

This amount was comprised of a base amount of $1.5 M and prejudgment interest of $137,000.00. In addition to the settlement amount, Wally was reimbursed for taxable costs and disbursements totaling $102,077.71. Wally received a cheque for $1,240,650.00 in July, 2016. [ 39 ] Wally is claiming that the MVA Settlement he received is exempt as most, if not all, of the funds should be characterized as damages paid to him for pain and suffering, rather than for loss of income.

Alternatively, he suggests that if the Court determines that some, or all, of the MVA Settlement was not exempt, that a maximum sum of $628,378.00.38 should be attributed back to him. This is the amount of the MVA Settlement that Wally claimed was still remaining when he swore a

Schedule A – Statement of Income, Assets & Liabilities in these proceedings in February, 2019. [ 40 ] The burden of proof rests on Wally to establish that the damages he received should not be included in the calculation of divisible matrimonial property. Damages paid for pain and suffering and costs of future care or special damages are exempt from distribution as they are personal to the individual who receives them. Compensation for future loss of income or earning capacity for the period of time that extends past the currency of the marriage is also exempt.

However, where funds are received as compensation for care costs incurred and income lost during the period in which the marriage was intact, these funds form part of the matrimonial property to be divided upon marriage breakdown, as they relate to a loss suffered by both parties: Nuttall v Rea , 2005 ABQB 151 at paras 239 – 242 ; Williams v Williams , 2020 ABCA 15 at paras 15-17 , 21 and 24-25 [ Williams ]. [ 41 ] By the date of trial, the only documents Wally had produced concerning the MVA Action were a copy of the Statement of Claim and an incomplete copy of a letter dated July 18, 2016, from Brownlee LLP to Wally, which had enclosed his settlement cheque of $1,240,650.00 (“July 18, 2016 Letter”).

The July 18, 2016 Letter from his lawyer states that they are enclosing “again” a copy of the Bill of Costs, and notes that most of the taxable costs (over $80,000.00) related to amounts paid to Leonard Boon for his services. A copy of the July 18, 2016 Letter was only provided to Liz’s counsel a week or so before the trial. [ 42 ] Wally testified that he did not have a copy of the Bill of Costs referenced in the July 18, 2016 Letter.

When Wally was asked to explain who Leonard Boon was, and what services he provided for over $80,000.00, Wally confirmed that Leonard Boon was “a financial, forensic, accountant-type guy or actuary or something in that nature.” Wally indicated that he did not know exactly what Leonard Boon had done for him; however, he was sure that he was “working on some kind of numbers” for him.

When it was suggested to Wally during cross-examination that Leonard Boon was someone often hired to prepare Loss of Income Reports, Wally’s response was “if you say so.” [ 43 ] Wally was also asked whether he could recall whether any medical experts were hired during the course of the litigation. Wally did not remember meeting with any independent medical experts, although he indicated if he had, those reports would be “on the file.”

[44] Wally confirmed that he was aware that Liz’s counsel had been requesting production of his lawyer’s file relating to the MVAAction since 2016. He recalled being asked to produce the file during his Questioning for Discovery in 2016 and again during his Cross-Examination on Affidavit in September 2019. Wally stated that he understood both his previous lawyer and his current lawyer in theseproceedings had contacted Brownlee LLP to request the file.

Further, Wally indicated that since 2016, he had made one telephone call tohis lawyer at Brownlee LLP to ask for the file and was told “we’ll get to it.” [45] Wally was asked to explain why he believed most of the MVA settlement was damages for pain and suffering and thereforeexempt.

He maintained that his recollection was his income did not decrease to any significant degree after the accident and therefore, itwould not make sense for the settlement to have included a large loss of income component. [46] Documentation confirming Wally’s income in the years immediately prior to, and after, the accident were not produced to Lizat any time prior to the trial and Liz’s counsel therefore objected to their production and admission after the trial had commenced.However, Wally testified that, based on his recollection, his gross income would have been around $3,000,000.00, both during the yearbefore, and the year of, the accident.

The year after the accident, in 2005, he estimated his income dropped by $100,000.00 or so.However, in 2008, the year of his surgery, his productivity increased as he knew he was going to have to take some time off to recoverand so he “put the pedal to the metal.” After 2008, Wally stated that his annual income “normalized” at about $3,000,000.00 again. [47] Liz’s evidence was not inconsistent with this.

She recalled only that there would have been a decrease in revenue when Wallywas off work, after surgery, for “at least a month.” [48] I am prepared to accept that a portion of the MVA Settlement received by Wally was damages for pain and suffering andtherefore exempt. There is no doubt that Wally was injured in the accident and I accept his evidence that he continues to experience somepain in his shoulder to this day.

However, I do not agree that Wally has established, on a balance of probabilities, that a significantportion of the funds are exempt, including that any portion was exempt on account of being lost income covering the period of time afterthe parties’ marriage was no longer intact. [49] In my view, Wally did not make a reasonable effort to secure the release of the legal file relating to the MVA Action from thelaw firm of Brownlee LLP. One telephone call to his lawyer to ask for the file between 2016 and 2020 is inadequate.

Wally has clearlybeen aware, since 2016, that Liz was seeking disclosure of this file. [50] Even if I were to accept that Wally was unable to obtain the release of a copy of the file from his counsel (which I do not),there were certainly other options available to Wally to ensure that the information necessary to prove his exemption was put before theCourt. For example, as was suggested by Liz’s counsel, Wally could have had his lawyer at Brownlee LLP testify at trial.

Instead, Wallyappears to have made every effort to remain uninformed, thereby avoiding having to disclose any information, or produce anydocumentation, that might be adverse to his claim that the MVA Settlement he received was primarily damages for pain and suffering. [51] It is also evident that Wally is incorrect in his assessment of the quantum of damages he received for pain and suffering.

Acap on non-pecuniary damages was established in a trilogy of Supreme Court of Canada cases in 1978: Andrews v Grand & Toy AlbertaLtd, (SCC), [1978] 2 SCR 229; Thornton v School Dist No 57 (Prince George), (SCC), [1978] 2 SCR267; Arnold v Teno, (SCC), [1978] 2 SCR 287. Absent exceptional circumstances, the maximum amount for generaldamages is $100,000, adjusted for inflation. This sum is typically reserved for the most tragic and sympathetic of cases.

For example,Andrews involved a young, healthy adult who was rendered a quadriplegic. [52] In KS v Willox, 2016 ABQB 483 at para 597, aff’d 2018 ABCA 271, leave to appeal refused (SCC),Justice Moreau (as she then was) accepted the expert evidence of an economist who confirmed that in 2016 dollars, the maximumamount of non-pecuniary damages available under the Supreme Court of Canada trilogy was $361,000.00.

Moreau J awarded this sum tothe Plaintiff, who was born severely premature, weighing only 1.5 lbs. and then developed a neurological condition resulting in loss ofhis white brain matter, blindness in one eye, and other injuries. By the time of trial, at age 15, the Plaintiff had severe cognitive deficits,limited vision in one eye, hypersensitivity to external stimuli, and severe Autistic Spectrum Disorder. [53] I recognize that pre-judgment interest would increase the amount paid for pain and suffering even further beyond this 2016cap of $361,000.00.

However, as Wally’s injuries are not even close to being in the same category as the cases where the maximumamount for general damages has been paid, I see no point in carrying out those calculations as well. [54] Wally’s evidence was that he had no idea of the basis for the specific relief sought in the MVA Action and further, that hehad no idea of how the final settlement amount was arrived at. He stated that he did not review the Statement of Claim before it wasfiled.

He had a very “good friend” he trusted at Brownlee LLP and he was told they would “take care of him.” [55] The Statement of Claim did seek some specific dollar amounts. It was prepared almost 2 years after the accident. The claimsthat were particularized in the Statement of Claim totaled $7,115,000.00. Wally was seeking $100,000.00 for damages for pain andsuffering, or 1.4% of this total. The MVA Settlement ultimately received by Wally was $1,637,000.00, of which 1.4% is $22,918.00. [56] The most significant damages claimed were for past and future loss of income.

I am satisfied that the majority of the MVASettlement ultimately received by Wally related to his claim for loss of income and further that it covered the period of time while theparties’ marriage was still intact. As noted previously, during the course of the MVA Action, Wally paid over $80,000.00 to LeonardBoon. Wally acknowledged having met Mr. Boon once and that he was an “accountant-type guy or actuary.” When asked specifically ifhe knew that Mr. Boon prepared Loss of Income Reports, Wally’s response was evasive. [57] I am convinced, after hearing Wally’s evidence on this issue, that not only was Mr.

Boon involved in some way in assessingWally’s past and future income loss claims, but also that Wally was well aware of this fact. I do not accept that Wally would pay over$80,000.00 to Mr. Boon without knowing exactly what Mr. Boon was being hired for, and what his final report concluded. [58] I also note the fact that Wally does not recall ever hiring an independent medical expert himself, or being examined by one,supports a finding that the most significant claims being advanced by Wally related to loss of income, rather than damages related to the

physical injuries themselves. [ 59 ] At trial, Liz indicated that she was prepared to concede that $100,000.00 of the MVA Settlement was paid to Wally for his pain and suffering. [ 60 ] Based on the foregoing, subject to its traceability as at the date of trial, I am prepared to set the exemptible portion of Wally’s MVA Settlement at $100,000.00.

I appreciate this is somewhat arbitrary; however, I suggest it is an appropriate, even generous amount, given the well-established cap on general damages, the original claims as outlined in the Statement of Claim filed in the MVA Action, and Wally’s evidence as to the nature and extent of his actual injuries. The balance of the funds received by Wally in July, 2016, being $1,140,650.00, was therefore divisible matrimonial property. 4.

Section 7(3) Property [ 61 ] The third step in the Hodgson analysis is not applicable in this case. [ 62 ] Liz is seeking only the amounts of her initial exemptions – $453,486.00 from the house gifted from her father and the $80,000.00 (pre-tax) in cash gifted from her father and deposited to her RRSP. [ 63 ] Wally had none of the $1,240,650.00 from his MVA Settlement remaining at the date of trial.

Therefore, although I have found he would have been entitled to an exemption of $100,000.00 on account of the damages he received for pain and suffering, the funds have been spent or were otherwise gone by the date of trial; this exemption is therefore lost. 5.

Section 7(4) Property – Equal or Unequal Division [ 64 ] The final step in the Hodgson analysis requires the Court to divide the balance of the remaining property between the parties equally, unless it would be unjust or inequitable to do so after taking into account the factors set out in s 8 of the MPA . [ 65 ] As noted by our Court of Appeal in Jensen v.

Jensen , 2009 ABCA 272 , at para 1 , the purpose of the MPA is to recognize “marriage as an economic partnership, founded on the assumption that the parties intend to share the fruits of their labour during and as a result of it, on an equal basis.” [ 66 ] This presumption of equal distribution of non-exempt property is therefore the rule and unequal distribution the exception: Jensen at para 20 .

It is only in the clearest of cases, after considering s 8 factors, that the presumption will be rebutted. [ 67 ] When considering the s 8 factors, the Court is not to engage in the weighing of each party’s individual contribution to the marriage and make divisions of property proportionate to those relative contributions of each spouse. It will be rare for the contribution of each spouse to be the same and the purpose of the MPA is to avoid a detailed analysis of the respective roles played by each of the parties to determine who did more.

The principle of equality should only be departed from if it would be unjust and inequitable not to do so: Jensen at paras 20, 23 . [ 68 ] Liz argues that there should be an unequal distribution of the non-exempt property owned by each of them at the date of trial as Wally has spent excessive amounts of money since separation, has dissipated assets, and has made substantial gifts to their children, all without her consent. These arguments engage s 8(h)(

i) and s 8(

l) of the MPA . [ 69 ] Wally’s response is that he has simply maintained the same lifestyle post-separation. He argues that he did not dissipate assets, but rather relied upon his income stream to fund this lifestyle. He suggests that a review of his expenditures demonstrate that they were all “normal” expenses and that there was nothing similar to the reckless spending, gambling or improvident investing that is evident in many of the cases where the courts have found there to be dissipation.

Wally did not dispute making various gifts to the children; however, he suggested the parties have always been generous to their children. [ 70 ] I will address the matter of the gifts and the dissipation argument separately. However, before I do so, I wish to consider the fact that the MVA settlement was paid out to Wally in July, 2016, several years after the parties had separated.

a) Wally’s MVA Settlement – s 8(f) [ 71 ] One of the matters to be taken into consideration by the Court in making a distribution under s 7 of the MPA is whether a spouse’s property was acquired when the spouses were living separate and apart: s 8(

f) of the MPA . Here, Wally did not receive his MVA Settlement until July, 2016, 3 ½ years after the parties separated. [ 72 ] Property acquired post-separation is property that the MPA puts under a presumption of equal distribution, unless it appears to the Court that it would not be just and equitable to do so. [ 73 ] I do not find there is anything about the MVA Settlement that suggests the non-exempt portion of Wally’s net settlement proceeds should be excluded from the division of matrimonial property under the MPA .

The motor vehicle accident that gave rise to Wally’s Statement of Claim, and thus the MVA Settlement, took place in 2004 when the parties were married. The Statement of Claim was commenced in 2006 when the parties were married. The injuries suffered by Wally, including any loss of income, was suffered during the marriage. Any compensation paid for past loss of income was compensation for a loss to both spouses: Williams at para 21 . The settlement offer was accepted by Wally in the midst of the divorce proceedings.

b) Substantial Gifts – s 8(h)(i) [ 74 ] There are two particular transfers made by Wally post-separation that Liz seeks to have taken into account by the Court under

s 8(

h) of the MPA . [ 75 ] At the date of separation, Wally retained possession of a 2009 Toyota Tundra truck. In a

Schedule A – Statement of Income, Assets and Liabilities sworn by Wally in February, 2014, Wally estimated the truck had a value of $25,000.00. At some point after the separation, Wally transferred the truck to his son-in-law for the sum of $1.00. At trial, he acknowledged this was, in essence, a gift. [ 76 ] The second transfer Liz takes issue with was the payment of $120,180.00 to one of their daughters in October, 2016, shortly after Wally received his MVA Settlement.

Wally confirmed that the monies were gifted to their daughter to help her pay off her mortgage. [ 77 ] The question then is whether these gifts, both of which were made by Wally post-separation and without consulting Liz, are significant enough that it would be unjust and inequitable for there to be an equal division of their remaining assets. While on their face, both of these gifts appear excessive, it is necessary to provide some further context in terms of the lifestyle their children had become accustomed to. [ 78 ] Both parties acknowledged that their children had a very privileged upbringing.

Growing up, their parents supported them in any activity they showed interest in. Their son was involved in a number of sports including skiing and rep soccer. Their daughters were both equestrians. Wally stated that they typically owned no less than three horses at a time. There were ongoing expenses for stabling, veterinarian bills, ferriers, tack, and considerable travel. [ 79 ] As the children got older and were able to drive, vehicles were provided for them. At the time of trial, Wally was still paying the monthly lease payment on a Cadillac Escalade for one of their daughters.

He estimated the payment to be a “couple thousand” per month. [ 80 ] Two of their children attended a prestigious private school on Vancouver Island, with one daughter completing her entire high school there. All three children attended post-secondary school and their education costs were paid entirely by Wally and Liz. These costs were not insignificant. For example, their son attended the University of Toronto for an undergraduate degree and then completed an MBA in Brussels.

One of their daughters attended Acadia University in Nova Scotia. [ 81 ] The parties also assisted their children by purchasing accommodation for them to live in at various times, often when they were attending post-secondary school. For example, when their son was attending the University of Toronto, they purchased a small condominium there which was sold upon his graduation. The Saskatchewan Drive Condo was initially acquired for their daughter, Alana, to live in when she attended the University of Alberta.

When their daughter, Lauren, returned from Acadia University, they purchased the 156 th Street House for her and her boyfriend to live in. Wally and Liz even acquired a residence in Victoria, British Columbia when Lauren was attending private school, to be able to visit her and provide support, and as a vacation property. [ 82 ] Their children have also travelled extensively. Wally and Liz and the three children travelled as a family. There were also many occasions when Wally and Liz travelled individually with one or more of the children.

Wally confirmed that he has continued to pay for trips with the children post-separation. These have included trips to Hawaii and to Europe. [ 83 ] Given this background, I cannot conclude that the transfer of the 2009 Toyota Tundra for the sum of $1.00 to Wally’s son-in- law represents a gift significant enough to rebut the presumption of an equal distribution of the non-exempt property between the parties. Although I appreciate that Wally did not consult Liz before doing so, I find it hard to accept that Liz would have raised any objection if Wally had sought her prior approval.

These parties were extremely generous to their children throughout their marriage. Although this gift was not made directly to one of their children, it is reasonable to conclude that their daughter was also the beneficiary. The amount of this gift, estimated at $25,000 in 2014, falls well within the range of many of the other expenses the parties routinely agreed to cover for their children. [ 84 ] I take a different view, however, of the sum of $120,180.00 gifted by Wally to their daughter in October, 2016.

Even considering the spending history that was acknowledged by both parties in relation to their children prior to their separation, it is clear that this gift far exceeded any other one time payment that had been made to the children previously.

I am not including the various residences purchased over the years for the children to live in, as the equity in those properties was always retained by Wally and Liz and realized when the properties were eventually sold. [ 85 ] There is no evidence to suggest that their daughter was experiencing any financial difficulties or other circumstances which might offer some justification for Wally making such a large payment to her. I am also far less convinced that Liz, had she been consulted by Wally, would have agreed to this gift.

At the time of this gift, Wally was paying interim spousal support of $10,000.00 per month. The funds gifted by Wally to their daughter therefore exceeded the amount Liz received as spousal support from Wally for an entire year. [ 86 ] I find that it would be unjust and inequitable to Liz if this substantial gift of funds by Wally to their daughter, made without her knowledge or approval, was not taken into account in some way in the distribution of matrimonial property.

The most common approach is to simply add back the value of the gifted asset to the gifting party’s list of divisible assets, as though it still existed at the date of trial: McCulloch v McCulloch , 2003 ABQB 432 at paras 58-61 .

However, I have decided to take a slightly different approach, which in my view is the most equitable way to resolve the matter . [ 87 ] I have already determined that, of the total MVA Settlement received by Wally in July, 2016, Wally would have been entitled to an exemption of $100,000.00 as damages received for pain and suffering had the monies been traceable to an existing asset owned by Wally on the date of trial. Exempt funds are just that – they are funds which need not be accounted for by a party when matrimonial property is being divided.

They belong solely to that party once he or she has proven the exemption. [ 88 ] Wally was therefore entitled to do whatever he wanted with this $100,000.00, including gifting the funds to a third party. The balance of $20,180.00 is not outside the realm of the many other expenses the parties routinely agreed to pay for their children and therefore I decline to add back this value to Wally’s list of divisible assets.

c) Dissipation – s 8(1) [89] Paperny J, as she then was, summarized the general principles relating to dissipation in Cox v Cox, 1998 ABQB 987, at para46, as follows: 1. Section 7(4) creates a presumption of an equal distribution of non-exempt matrimonial property, unless it would not be just orequitable to do so.

Section 8(

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

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

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

The total amount actually dissipated “to the detriment” of the spouse is one-half of the amount by which the asset was reduced. 9.

Ultimately it is in the discretion of the trial judge, based on consideration of all the facts, to determine whether or not dissipationexists. [90] More recent cases have provided additional clarification as to how dissipation may be demonstrated, who bears the burden ofproof, and what remedies are available once dissipation has been established. [91] In Fleming v Fleming, 2016 ABCA 88, at para 30, the Court of Appeal confirmed that the party arguing for an unequaldistribution must prove the other spouse dissipated matrimonial assets. [92] In SLT v AKT, 2007 ABQB 701, at para 58, Justice Veit noted that any consideration of dissipation must begin with anassessment of what the situation was prior to separation.

Dissipation, in matrimonial property litigation, is a relative term. It is usuallyused to describe an imprudent pattern of spending after separation that is different from the spending pattern prior to separation. It wouldbe arbitrary and unfair for the Court to punish a spouse after separation for a spending pattern that was historically accepted, evencondoned, during the marriage: McAdam v McAdam, 2009 ABQB 109 at para 34. [93] The degree to which the dissipating spouse must be found to have acted in bad faith is less well-defined and will varyaccording to the facts.

In Metz v Metz, 2004 ABQB 528, at para 37, dissipation was held to be another word for “waste” and that to showdissipation, there had to be an element of bad faith or neglect.

However, in Bakken v Bakken (1992), 132 AR 356, (QB), dissipation was used in a much broader sense in relation to funds used by the wife largely to pay for her personal debts (includinglegal fees, income tax, and credit cards) and for other miscellaneous expenses, none of which benefitted the husband, directly orindirectly, or discharged any financial obligation of his. [94] Liz’s arguments in support of her claim that there has been dissipation by Wally focused primarily on 3 areas – (

i) WD PC;(ii) Wally’s MVA Settlement; and (iii) Wally’s income in the years after separation. (

i) WD PC [95] As of January 31, 2013 (a month after separation), the Financial Statement for WD PC confirms that the company hadretained earnings of $1,717,146.00. This amount was pre-tax and included the Saskatchewan Drive Condo ($410,000.00) which waseventually removed from the corporation and transferred to Liz. As of January 31, 2013, there was also a bonus payable to Wally in thesum of $600,000.00.

These retained earnings did not include any amount for the value of the goodwill of WD PC. [96] When Wally sold his practice, the Asset Purchase and Sale Agreement Wally entered into on July 1, 2018 allocated thepurchase price of $1,800,000.00 as follows: • Inventory and assets - $300,000.00; • Goodwill - $1,499,999.00; and • Leasehold Improvements - $1.00. [97] The Financial Statement for WD PC completed January 31, 2019 indicated the retained earnings for the company were

$1,924,072.00. Therefore, almost all of the retained earnings that remained by then were from the sale that had taken place 7 months prior, and the bulk of the sale price ($1.5 million) had been paid for the goodwill of WD PC. Put another way, there was very little left of the retained earnings that had existed at the date of separation. [ 98 ] A year later, the January 31, 2020 WD PC Financial Statements showed that the retained earnings of the company had been reduced to only $1,068,762.00. Therefore, in only a 12 month period, Wally had eroded the value of the company by $855,310.00.

For at least 7 months of this year (July 1, 2019 – January 31, 2020), Wally was supposed to be limiting his spending to $20,000.00 per month pursuant to the Ouellette and Manderscheid Orders. (ii) Wally’s MVA Settlement [ 99 ] As outlined previously, Wally settled his MVA Action and received a cheque for $1,240,650.00 in July, 2016. All of the funds had been spent by Wally by the date of trial. I have already determined that only a portion of these funds, $100,000.00, was exemptible.

The majority of these funds, $1,140,650.00, were divisible matrimonial property. [ 100 ] Other than making a gift of approximately $120,000.00 to his daughter, Wally was unable to point to any specific assets acquired with these funds. [ 101 ] Although Liz’s counsel sought disclosure from Wally of information relating to the MVA Action from at least 2016 onward, nothing at all was produced by Wally until a week or so before trial.

Even then, the disclosure ultimately provided was minimal. [ 102 ] However, there are two additional matters relating to Wally’s use of these funds that are even more concerning to me than his failure to provide reasonable and timely disclosure to Liz. [ 103 ] The first concern relates to evidence Wally gave previously, under oath, regarding these funds. On February 15, 2019, Wally swore a

Schedule A – Statement of Income, Assets and Liabilities. That document referenced his RBC bank account, which held the funds from his MVA Settlement. The sworn

Schedule “A” notes, in relation to this account, “pain and suffering post MVC settlement” and indicates a balance of “$628,378.38 – Dec. 2018.” [ 104 ] While being cross-examined on Affidavit on September 6, 2019, Liz’s counsel provided Wally with a copy of this

Schedule A and asked Wally, very specifically, whether the $628,378.38 referenced on the document still existed. Wally responded affirmatively – indicating that the funds still existed and they were still in that account (Transcript, page 57, lines 3 – 15). The bank account statements for this account, which were eventually produced by Wally, showed otherwise. They indicate that on the date that Wally was cross- examined, the balance in the account had already been reduced by a further $275,783.81, leaving only $352,594.57 remaining.

Wally had continued to access funds from this account regularly. [ 105 ] My second concern relates to Wally’s decision to disregard the very specific terms of the Ouellette Order, the terms of which were continued by the Manderscheid Order.

The Ouellette Order provided as follows: And upon being advised that until the Special Chambers Application is heard the parties have agreed that they will each draw a specific amount of funds from the corporations which they control … Commencing July 1, 2019, and on the first day of each and every month thereafter until October 30, 2019 the Defendant may withdraw $20,000.00 per month from Walter Dobrovolsky Professional Corporation … The parties, until October 30, 2019, will not incur any further debt and will not encroach on any of their capital and will not spend funds in excess of the amount withdrawn by them from their respective corporations. [ 106 ] The Manderscheid Order directed that the phrase “until October 30, 2019” in the Ouellette Order was replaced with “until Trial.” [ 107 ] Wally chose to completely disregard the terms of these Orders.

Instead of drawing funds from WD PC to pay for his personal expenses, Wally acknowledged that he continued to access the money from his MVA Settlement instead. He testified that he did so after receiving tax advice from his accountants. He was aware that he would not incur any tax liability if he spent the MVA Settlement, whereas any funds withdrawn from WD PC would be taxable.

Even after the Manderscheid Order was granted in September, 2019, extending the spending restrictions to the date of trial, Wally continued to draw funds from his MVA Settlement until the funds had been completely exhausted. [ 108 ] Further, Wally confirmed at trial that there was never any effort made on his part to restrict his spending to the $20,000.00 limit per month imposed by both Orders.

In fact, during cross-examination, when it was suggested to Wally that he continued to spend approximately $45,000.00 after-tax per month, his response was “it’s possible.” (iii) Income Post-Separation [ 109 ] Both parties engaged experts to assist in determining the after-cash flow available to each of the parties and to quantify draws made by Wally from WD PC post-separation. Liz’s Expert Report was prepared by Rob Kozakowski, CPA, CA, CBV and dated July 14, 2020 (“RK Report”). Wally’s Expert Report was prepared by Lisa Majeau Gordon, FCPA, FCA, CA-IFA, CFE, CFF of MNP and dated December 3, 2020 (“MNP Report”).

Both reports were entered at trial by agreement and neither expert was called to testify. This was because there were only minor differences between the two reports.

[ 110 ] Both reports covered a period of just over 6 years - from December 28, 2012 to January 31, 2019. [ 111 ] During this time period, the RK Report concluded that Wally received pre-tax draws and benefits totaling $6,573,879.00 from WD PC. The MNP Report arrived at a figure of $6,423,481.00, with the difference between the two reports being only $150,397.00. Most of this discrepancy related to funds which had been transferred to a joint account. These amounted to $138,068.00.

The RK Report included these joint account funds in Wally’s total, while the MNP report noted that these amounts might have been paid to Liz. At trial, Wally indicated he did not know if Liz had used the joint account after separation. Liz’s evidence, which I accept, was that she did not access the joint account after separation.

Therefore, if the $138,068.00 is properly attributed to Wally, the difference between the totals arrived at in the RK Report and the MNP Report is reduced to under $13,000.00. [ 112 ] Both reports also included calculations of each party’s after-tax cash flow during this same time period. The MNP Report contained three charts which were helpful in identifying the differences between the two reports.

The information from those charts has been summarized below: Wally’s Estimated After-Tax Cash Flows RK Report $5,077,879 MNP Report $5,143,302 Difference ($65,424) Wally’s Estimated After-Tax Spousal Support Payments RK Report ($291,200) MNP Report ($313,100) Difference $21,900 Total Difference ($43,524) Liz’s Estimated After-Tax Cash Flows RK Report $373,248 MNP Report $351,607 Difference $21,641 Liz’s Estimated After-Tax Spousal Support Payments RK Report $336,000 MNP Report $361,700 Difference ($25,700) Total Difference ($4,059)

Summary of After-Tax Cash Flows Description Wally Liz Difference Estimated After-Tax Cash Flow $5,143,302 $351,607 $4,791,695 After-Tax Support Payments Made ($313,100) After-Tax Support Payments Received $361,700 MNP Report Total After Tax Cash Flows $4,830,202 $713,307 $4,116,895 RK Report Total After Tax Cash Flows $4,786,679 $709,248 $4,077,431 Variance Between MNP and RK Reports $43,523 $4,059 $39,464 [ 113 ] The differences between the two reports are not significant, particularly when the figures are viewed in light of the overall total of the parties’ income during this time period.

As there was no reason suggested by either party for me to accept one report over the other, I have decided it is most appropriate to simply split the difference. [ 114 ] I therefore conclude that Wally had after-tax cash flow between December 28, 2012 and January 31, 2019 of $4,808,441.00 and Liz had after-tax cash flow during this same period of $711,278.00. These amounts reflect the spousal support paid by Wally and received by Liz.

Wally therefore had access to 87% of their combined after-tax cash during these years. [ 115 ] Both Wally and Liz noted that while the gross income of WD PC may have fluctuated somewhat over the years, it had been over $3,000,000.00 per year for quite some time prior to separation. This is confirmed by the WD PC Financial Statements, which were produced for the 2 years prior to separation. They show gross revenue of $3,617,716.00 (year ended January 31, 2011) and $3,545,692.00 (year ended January 31, 2012) respectively.

This income was maintained by Wally post-separation until he sold his practice half way through 2018. The WD PC gross revenue that year was reduced to $1,626,541.00.

[ 116 ] Liz argues that Wally continued to earn a significant income post-separation, similar to what he had earned during much of the marriage. This income was sufficient to support their entire family of 5 during the marriage. Since separation, Wally has had the benefit of the majority of this income. He has not only spent that income, but has also eroded his assets. She suggests there is no way this would have happened if Wally was simply maintaining the lifestyle he had during the marriage. [ 117 ] Wally stated that the death of his brother in 1994 had a significant impact on him.

He said that it changed his approach to life. He decided that life was short and from that point on, he was going to live it to the fullest. Both Wally and Liz confirmed that they had no real philosophy or shared approach during the marriage to saving money. If they needed money for something, it was generally there. They were both prepared to describe their lifestyle during the marriage as “extravagant”.

However, I find that Wally’s suggestion that he just maintained the same lifestyle post-separation defies logic. [ 118 ] Despite being asked to do so, Wally never produced a budget outlining his personal monthly expenses during the course of this litigation. The only evidence of Wally’s expenses before the Court was a

summary of expenses for the years 2014 - 2018 prepared by the bookkeeper who took over from Liz after the separation, Virginia Koo. This

summary was included in the MNP Report. However, the MNP Report clearly stated that the accuracy and completeness of Ms. Koo’s

summary had not been confirmed and that no supporting documents had been reviewed. [ 119 ] Ms. Koo did not testify at trial. It is unclear from the summaries what expenses she included in each of the various categories, what information she relied upon to create them, or even why these summaries were prepared in the first place. There was no way to assess whether the information contained in the summaries was reliable or accurate. Wally confirmed he had only scanned the report briefly and did not know what was included in the various expense categories either.

The only other evidence at trial as to how all these funds were expended came from Wally himself, who simply claimed they were all used for “normal” expenses. [ 120 ] However, there was no evidence presented at trial to suggest that Wally’s expenses post-separation increased to the extent that would be necessary to justify him having to expend not only his significant earnings, but also to have to encroach on capital assets to maintain his pre-separation lifestyle.

It was clear, and undisputed, that the parties’ net worth between the date of separation and the date of trial had decreased, despite Wally’s significant earnings and the injections of large lump sums of cash from the sale of his practice and his MVA Settlement. Liz suggested that their combined net worth had decreased from approximately $7.58 million to approximately $5.58 million during these 8 years.

Wally did not challenge these figures. [ 121 ] In my view, any increase in Wally’s “normal” expenses post-separation (relating to such things as house repairs, having to hire a bookkeeper to take over the responsibilities previously handled by Liz, and paying spousal support to Liz) would have been more than offset by the decrease in many of Wally’s other expenses. By way of example only, Wally’s expenses associated with maintaining the houses in Victoria, the Saskatchewan Drive Condo, and the 156 Street House came to an end.

The Victoria house was sold by Wally in 2014 and the other two were transferred to Liz in 2014 and 2015. As well, the children were ages 27, 26 and 24 by the date of separation and the significant costs associated with the children’s activities and education had basically come to an end by that point. [ 122 ] Wally did not seem prepared to accept any responsibility for the financial situation that the parties found themselves in at trial. Despite his obvious intelligence, he appears to have gone to great lengths to remain uninformed, or at least willfully blind, about his financial matters post-separation.

Regarding most of the financial documents he was referred to, his evidence was either that he may have “scanned them briefly,” that “he would have to ask his accountant” or that he “could not recall.” He indicated he chose not to follow the terms of the Ouellette and Manderscheid Orders because he took his accountant’s advice. He could not recall whether he had even seen the Manderscheid Order.

With respect to his MVA Action, he claimed not to have read his Statement of Claim or the Leonard Boon Report (which cost him in excess of $80,000.00), indicating that he “trusted” his lawyer. [ 123 ] I find that Liz has established, on a balance of probabilities, that there has been dissipation of matrimonial assets since the parties separated, to her detriment. I also conclude that Wally acted intentionally or at a minimum, recklessly, in doing so. [ 124 ] In my view, the most clear evidence of Wally’s bad faith was demonstrated by his deliberate and continued disregard for the terms of the Ouellette Order.

Wally blatantly ignored the Court’s direction that he was to withdraw funds only from WD PC. Instead, he accessed funds from his MVA Settlement, to avoid having to pay taxes. Neither did he make any apparent effort to comply with the $20,000.00 per month spending limit that was imposed by both the Ouellette and Manderscheid Orders, or their direction that he was not to encroach any further on capital.

Instead, Wally continued to spend amounts far in excess of this limit, despite the fact he was effectively retired, and no longer had income coming in. [ 125 ] Another very troubling aspect of Wally’s behavior post-separation that leads me to conclude his excessive spending behavior post-separation involved some deliberate forethought on his part, and was also something that Wally realized was improper, is the fact that Wally gave false evidence, under oath, relating to his MVA Settlement funds while being cross-examined on Affidavit. [ 126 ] The RBC account statements for the account where the MVA Settlement funds were deposited clearly demonstrate that Wally had been making regular withdrawals right up to the date of his cross-examination.

Wally did not offer any explanation at trial for the incorrect evidence he gave during this prior questioning. I am left with no doubt that Wally was fully aware, at the time he gave that evidence, that it was inaccurate. Had Wally told the truth at the time of his cross-examination, it would have become readily apparent that he was not complying with the terms of the Ouellette Order and so I can only conclude that Wally purposefully lied to avoid this outcome. [ 127 ] It was also apparent at trial that Wally still bore some feelings of resentment towards Liz, despite their almost 8 year separation.

Unlike Liz, Wally did not seem prepared to acknowledge any meaningful contributions made by Liz to the marriage. Instead, Wally took every opportunity to downplay or minimize her role, and to try and present her as someone who spent her days shopping, or perhaps getting “cosmetic surgery,” although Liz’s evidence was that she disliked shopping and Wally had no basis for his claim that she had cosmetic surgery other than his own observation in court that Liz had “fewer wrinkles” now than in prior years.

Whether these feelings were strong enough to influence Wally’s spending post-separation, I cannot say; however, they were sufficient to affect my assessment of Wally’s credibility.

[ 128 ] I set the value of the assets dissipated by Wally at $2,186,375.00. This sum will be added back to his column in the matrimonial property statement. In my view this is an appropriate amount and is intended to reflect primarily: the erosion of the retained earnings in WD PC at the time of separation (less the value of the Saskatchewan Drive Condo) and the non-exemptible portion of the MVA Settlement spent by Wally.

I have calculated these amounts as follows: • Retained Earnings - $1,717,156.00 less $410,000.00 for Saskatchewan Drive Condo less 20% contingent tax on shares = $1,045,725.00; and • MVA Settlement – Non-Exempt Portion = $1,140,650.00. [ 129 ] I recognize that this figure is inexact and conservative. There are other amounts received by Wally that I have chosen not to take into account in this calculation. However, I am also mindful of the fact that all of this money has been spent, there is now only a finite amount left available for distribution, and both parties are retired.

The practical realities of the parties’ current situation must be considered and, if Wally is not left with sufficient assets to support himself in his retirement, this will create further problems for both parties. [ 130 ] There are further adjustments that need to be made to the final division of matrimonial property after other s 8 factors have been taken into account.

These include: addressing the post-separation debt incurred by Liz; accounting for contingent tax liabilities on certain assets; adjusting for the assets that the parties distributed by agreement through the terms of two Partial Property Agreements in 2014 and 2015; and accounting for the funds that each of the parties were directed to withdraw from their respective companies commencing in July, 2019 as confirmed in the Ouellette and Manderscheid Orders. I will comment on these matters briefly as they were not, for the most part, in dispute.

As well, I am of the view that an adjustment needs to be made for the extra $25,000.00 per month Wally acknowledged having spent in breach of the Ouellette and Manderscheid Orders.

d) Property (Debt) Acquired Post-Separation – s 8(f) [ 131 ] At trial, Wally suggested that Liz should be solely responsible for the $293,000.00 Liz owed on her personal line of credit. The onus is on the party incurring debt after separation to demonstrate that the debt was used for the benefit of the family unit and not solely for the debtor’s own purposes. If that cannot be established, s 8(

f) of the MPA permits unequal distribution of the debt, including attributing sole responsibility for the debt to the party that incurred it: Stuve v Stuve , 2019 ABCA 142 at para 34 . [ 132 ] As outlined in both expert reports, the difference between the parties’ respective incomes post-separation was significant. Further, there was a period of 12 months commencing June 30, 2018 when Liz had no income at all.

Wally had ceased paying spousal support of $10,000.00 per month and Liz was no longer receiving dividends from Unicorn as she had to sell her shares in Peace Junction when Wally left Kingsway Oral Surgery Group.

It was not until a year later, as of July 1, 2019, that the Ouellette Order directed each of the parties to start withdrawing $20,000.00 per month from their respective corporations to pay for their living expenses. [ 133 ] I find that Liz has established she required funds from her Line of Credit to pay for her reasonable personal living expenses since the separation, particularly during the period after Wally ceased paying spousal support. I see no basis to exclude this debt from the calculation of the parties’ net matrimonial property.

However, as I will discuss later, this does have an impact on Liz’s claim for retroactive spousal support.

e) Previous Distribution by Agreement – s 8(i) [ 134 ] As noted previously, Wally retained the Rio Terrace House at an agreed upon value of $1,900,000.00. There was some evidence at trial to suggest that Wally had made some significant improvements to the property since separation. However, both parties had independent legal advice at the time the Agreement was executed and the terms of their Agreement were clear. It was intended be a final settlement of Liz’s interest in the Rio Terrace House.

Regardless of any increase or decrease in value after the date of the agreement, Wally and Liz were agreeing to accept the figure of $1,900,000.00 as the value of the house. [ 135 ] There are a couple of issues that arise in relation to the two properties that Liz acquired pursuant to the terms of the two Partial Property Agreements. [ 136 ] The Saskatchewan Drive Condo residence was sold by Liz in August, 2015. However, pursuant to the terms of the Partial Property Agreement dated June 14, 2014, Liz accepted this Condo as a $410,000.00 advance of matrimonial property.

In Liz’s Notice to Admit Facts, Liz claims that substantially all of the proceeds of sale ($411,235.00) were invested with Richardson GMP in a non- registered investment account (Notice to Admit Facts, para J5). This was not disputed by Wally. [ 137 ] The 156 Street House was sold by Liz in December, 2016. However, pursuant to the terms of the Partial Property Agreement dated December 12, 2015, Liz accepted the equity in this residence at the time of transfer, $229,479.00, as an advance of matrimonial property.

Liz’s Notice to Admit Facts again claimed that substantially all of the proceeds of sale ($332,319.00) were invested with Richardson GMP in a non-registered investment account (para J6) and again, this was not disputed by Wally. [ 138 ] At the date of trial, Liz only had one non-registered investment account left with Richardson GMP, with a value of only $48,694.00. [ 139 ] Both of the advances of matrimonial property to Liz must be included, in the amounts that were agreed to between the parties, in the final division of matrimonial property.

However, to avoid any double counting of these monies, the following adjustments are appropriate and were not opposed by Wally. First, the value remaining in Liz’s Richardson GMP account will be deducted. Second, the funds loaned to her son ($60,000.00) and to her son-in-law ($100,000.00) will be deducted as these funds also formed part of the proceeds received from either the sale of these homes, or from the house that was gifted to Liz by her father.

f) Prior Order Made by Court – s 8(j)

[140] As noted previously, in Unicorn, there was a shareholder loan balance owing to Liz as at December 31, 2019. The amount wasagreed to be $173,786.00. However, this asset had been completely depleted by the date of trial as a result of the Ouellette Order and theManderscheid Order, both of which directed that Liz was to withdraw $20,000.00 per month from Unicorn to pay for her personalexpenses.

Therefore, the entire amount of the shareholder loan balance should be deducted from the matrimonial property statement. [141] As well, the $27,000.00 that Liz had in her savings account at the date of trial will be deducted as the parties agreed that thesewere monies that Liz had managed to save from her $20,000.00 per month draws. [142] Similarly, Wally was supposed to have started withdrawing $20,000.00 per month from WD PC as of July 1, 2019 to cover hispersonal expenses. Instead, he chose to take the money from his MVA Settlement.

As I have determined that the non-exempt portion ofthe MVA Settlement should be added back to the matrimonial property statement, it is necessary to make an adjustment to the value ofWD PC for the funds that Wally ought to have been withdrawing pursuant to the two court Orders from July 1, 2019 onward. Theadjustment amount will be $320,000.00, which is a further $20,000.00 per month for the period July 1, 2019 to October 1, 2020 (16months).

g) Tax Liability – s 8(k) [143] The contingent tax liabilities for both parties relating to their RRSP’s and also the shares in WD PC and Unicorn have alreadybeen identified and were not in dispute. These will be reflected on the matrimonial property statement.

h) Any fact or circumstance that is relevant – s 8(m) [144] Commencing July 1, 2019, Wally was supposed to restrict his spending to $20,000.00 per month from WD PC and he was notpermitted to encroach any further upon capital. He showed complete disregard for the terms of both the Ouellette and ManderscheidOrders.

When it was suggested to him during cross-examination that he actually continued to spend about $45,000.00 per month, Wallysimply responded by stating “it’s possible.” Wally offered no explanation, and showed no regret, for having clearly breached theseOrders. [145] I am of the view that Wally’s breach of these Orders is a fact or other circumstance that should be taken into consideration indetermining whether it would be equitable to distribute the matrimonial property equally between the spouses.

I have concluded that itwould not be and further that Wally should pay Liz an additional $200,000.00 to account for his breaches of these two Orders. This isequal to one half of the extra $25,000.00 per month that Wally is estimated to have spent between July 1, 2019 and October, 2020 (16months). I am not discounting this for any taxes incurred by Wally on this additional income for the reasons outlined hereafter in mydiscussion regarding Liz’s retroactive spousal support claim. 6. Matrimonial Property Division – Conclusion [146] Attached as

Schedule “A” is a

summary of the matrimonial property division arising from the various determinations I havemade. Each party will retain the assets, and be solely responsible for the liabilities, detailed in his or her respective column. I have onlyincluded the most significant assets on the statement. Any other assets not identified (i.e. golf clubs, wine, art, etc.) shall remain theproperty of the party who had possession of the item at the date of trial. [147] Wally is required to make an equalization payment to Liz in the sum of $2,971,299.50. IV.

Spousal Support [148] Liz seeks retroactive spousal support from the date of separation until March, 2019. She is not requesting ongoing spousalsupport. Both parties acknowledged that the matrimonial property division would impact Liz’s spousal support claim. [149] After the parties separated, Liz continued to receive $6,000.00 per month from WD PC as employment income until the end ofOctober, 2013. [150] Commencing November 1, 2013, Wally commenced paying spousal support to Liz in the sum of $10,000.00 per monthpursuant to the terms of the Lee Order. These payments were to continue until the earlier of (

a) further order or written agreement; or (b)30 days after written notification of either party to the other party. The Lee Order was expressly without prejudice to the right of eitherparty to argue the issues of both entitlement and quantum at any future spousal support application. [151] Wally unilaterally terminated his spousal support payments to Liz after making a final payment on June 1, 2018. Wally did notserve Liz with a formal notice to terminate, pursuant to

section 1(

b) of the Lee Order, until February 15, 2019. 1. Divorce Act –

Section 15 [152]

Section 15.2 of the Divorce Act, RSC 1985, c 3 (2nd Supp) authorizes the Court to make spousal support orders. Spousal supportis part of an overall scheme intended to ensure the “fair and equitable distribution of resources to alleviate the economic consequences ofmarriage or marriage breakdown”: Moge v Moge (SCC), [1992] 3 SCR 813 at 849 [Moge].

The Court must determineentitlement, quantum, and duration of spousal support, taking into consideration the “condition, means, needs and other circumstances ofeach spouse,” including the length of cohabitation, the functions performed by each spouse while cohabiting, and any order, agreementor arrangement relating to support: s 15.2(4). [153] Pursuant to s 15.2(6) of the Divorce Act, the objectives of a spousal support order include:

a. recognizing any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; b. apportioning between the spouses any financial consequences arising from the care of any child of the marriage over and above anyobligation for support of any child of the marriage; c. relieving any economic hardship of the spouses arising from the breakdown of the marriage; and d. in so far as practicable, promoting the economic self-sufficiency of each spouse within a reasonable period of

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