Loberg v Loberg, 2021 ABQB 927

Court of Queen’s Bench of Alberta Citation: Loberg v Loberg, 2021 ABQB 927 Date: 20211118 Docket: 4804 012221 Registry: Grande Prairie Between: Patrick Ryan Loberg Applicant / Cross-Respondent - and - Jeannette Mae Loberg Respondent / Cross-Applicant _______________________________________________________ Memorandum of Decision of the Honourable Chief Justice M.T. Moreau _______________________________________________________ I.

Introduction [ 1 ] The Applicant, Patrick Ryan Loberg applies for an order enforcing an agreement he alleges was made with his spouse, the Respondent, at a mediation held on April 7, 2021 and releasing funds held in trust pursuant to the agreement. Ms. Loberg denies that an enforceable agreement was reached at the mediation, opposes the release of the trust funds, and cross-applies for an order that Mr.

Loberg complete his financial disclosure. [ 2 ] The application and cross-application were set to be heard on July 20, 2021, at which time a Consent Order was granted directing each party to provide financial disclosure within 14 days and providing that in the event the parties were unable to come to an agreement following the exchange of outstanding disclosure, the application and cross-application would proceed as a desk application with written submissions. Disclosure is still outstanding and no agreement has been reached between the parties. II. Background Facts

[ 3 ] The parties were married in July 2004 and separated in October 2019. They have two children, currently aged 16 and 14. [ 4 ] Each of the parties signed a Mediation Agreement prior to attending the mediation on April 7, 2021. I find that their respective counsel accompanied them to the mediation. This was noted at paragraph 3 of Mr. Loberg’s Affidavit filed in support of his application and was not refuted by Ms. Loberg in her Reply Affidavit.

After a full day mediation session, the mediator prepared a Mediation Report that stated: “The parties have agreed as follows” and set out terms relating to parenting and custody, property distribution, and child support. The Mediation Report also provided that Ms. Loberg’s lawyer would draft the Separation Agreement and Mr. Loberg’s lawyer would complete the divorce. [ 5 ] Four days after the mediation, the following email exchange occurred between the parties: Applicant (April 11, 2021 at 2:47 PM): Yes Jeannette.

As The Roxy [referring to the mediator Roxanne Petts] said, everything that we agree on Wednesday and she puts into her report is legally binding moving forward. Patrick. Respondent (April 11, 2021 at 3:13 PM): Yes, I agree. [ 6 ] Ms. Loberg’s counsel drafted a Separation Agreement reflecting the terms of the Mediator’s Report. In response, Mr.

Loberg’s counsel requested some changes related to child pick-up time, passport exchange, the mechanics of the net zero child support payment and s. 7 expense payments based on their shared custody arrangement, and the “correct” ATB line of credit amount. [ 7 ] According to Ms. Loberg, following the mediation she and her counsel reviewed the financial disclosure that had been provided by Mr. Loberg. She stated at paragraph 5 of her Reply Affidavit: It became clear there was a considerable amount of material that had not been disclosed, which made it impossible for my counsel to properly advise me as to what Mr.

Loberg’s guideline income should constitute. [ 8 ] Ms. Loberg further stated in her Reply Affidavit that after the parties’ separation, Mr. Loberg transferred the assets of their corporation, Loberg Construction Inc., to a new corporation, Sitka Builders Inc., for which he is the sole director and shareholder. She indicated that she had received no information about the new corporation. [ 9 ] Ms. Loberg instructed her counsel on May 13, 2021 to request Mr.

Loberg’s 2019 and 2020 Income Tax Returns and Notices of Assessment, the Financial Statements for Sitka Builders Inc., bank statements for Loberg Construction Inc., bills of sale relating to all sales of Loberg Construction Inc. or by Mr. Loberg personally of personal property following their separation, and bank statements relating to the line of credit. [ 10 ] Ms. Loberg had received the 2019 Notice of Assessment and Tax Return

Summary but wished to receive the full Income Tax Return. As of the date of her Reply Affidavit she had not received the 2020 tax documents and had only received a handwritten document relating to Loberg Construction Inc. The balance of the disclosure requested on May 13 remained outstanding and is the subject of her cross-application. [ 11 ] Starting on May 27, 2021, the parties exchanged text messages and emails in which Ms. Loberg indicated an unwillingness to finalize the Separation Agreement. She stated: Nothing signed, mediation was voluntary and any more mediation is voluntary too.

And I’m not doing any more until I see the documents that I am legally entitled to see. Period. … And tell Matty Boy there is no more mediation with Until I get to see all the proper documents… [ 12 ] In a June 2, 2021 email to Mr. Loberg, Ms. Loberg stated: And as far as the divorce goes you are holding everything up once again. You have a long list of documents that need to be disclosed. The ridiculous items you have requested from me is a smokescreen and we all know it. Hurry up and get everything submitted so we can get back to the mediation and draw up a fair agreement.

We can’t do this until you have fully disclosed everything on the list. The list that you received last week will have a few more items on it now as well. Refer to Matt for this. Also important to keep in mind that I was over generous about suggesting to pay back gift money. That generosity has now dwindled. [ 13 ] The Mediation Report referred to the parties paying $85,000 from funds in trust “to Patrick’s parents in satisfaction of their loan to them.” The Separation Agreement drafted by counsel for Ms. Loberg also provided for the payment of $85,000 to Mr.

Loberg’s father as “a full and final payment of the debt owed by the parties to Roger Loberg.” [ 14 ] On July 20, 2021, Ms. Loberg obtained a Consent Order requiring Mr. Loberg to provide within 14 days the items of disclosure earlier requested by her counsel. The Consent Order also required Ms. Loberg to provide within 14 days her bank statements for a period preceding the parties’ separation, her Notices of Assessment for 2019 and 2020, her RRSP and GIC statements and a T4 from her employer. [ 15 ] Some of the financial disclosure relating to Sitka Builders Inc. remains outstanding. Ms.

Loberg submits that this disclosure is necessary to determine Mr. Loberg’s Guideline income for child support and potentially spousal support purposes and to determine the value of Sitka Builders Inc. as part of the division of matrimonial property. She noted that while the Mediation Report referred to Mr. Loberg’s Guideline income being $70,000, his subsequently produced 2020 income tax return records show his Line 150 income as $81,573.88, $77,523.74 of which is dividend income from Sitka Builders Inc. III. Issues

[16] The issues in this application are: 1. Is the Mediation Report prepared and signed by the mediator on April 7, 2021 a formal and binding agreement of all outstandingissues in the divorce and matrimonial property action? 2. If so, should the agreement be set aside as a result of the incomplete disclosure? IV. Arguments of Counsel [17] Mr. Loberg submits that a binding agreement was reached on all issues at the mediation, as confirmed by Ms. Loberg in herApril 11, 2021 email and reflected in the draft Separation Agreement prepared by her counsel. Counsel for Mr.

Loberg referred toBawitko Investments Ltd v Kernels Popcorn Ltd (1991), 79 DLR (4th) 97, (Ont CA) at para 17: …[Parties] frequently agree upon all the terms to be incorporated into the intended written document before it is prepared. Theiragreement may be expressed orally or by way of memorandum, by exchange of correspondence, or other informal writings. The partiesmay “contract to make a contract”, that is to say, they may bind themselves to execute at a future date a formal written agreementcontaining specific terms and conditions.

When they agree on all of the essential provisions to be incorporated in a formal documentwith the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of acontract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the bindingvalidity of the original contract. [Emphasis in original.] [18] Mr.

Loberg maintains that the Mediation Report was comprehensive, no element of the Mediation Report was an “agreementto agree,” it made specific provision for the formalization of its terms, and its terms were fully reflected in the draft SeparationAgreement. Counsel for Mr. Loberg described Ms. Loberg’s subsequent refusal to formalize the agreement as “buyer’s remorse.” [19] Mr. Loberg noted that each party was represented by counsel at the mediation. Ms. Loberg was free to speak to her counseland seek further disclosure, but instead agreed to the terms of the Mediation Report.

She continues to hold to the terms of their agreement as regards the parties’ parenting arrangements, as evidenced by her May 2, 2021 email reminder to Mr. Loberg of the May 9th (Mother’s Day) 10 a.m. drop-off, which was a term of the Mediation Report. [20] Counsel for Mr. Loberg observed that parties will be discouraged from embarking on mediation to avoid litigation if they cansubsequently avoid what they agreed to. [21] As for the disclosure concerns raised by Ms. Loberg, Mr. Loberg noted that a breakdown of assets transferred to the newcorporation was provided a second time as Ms.

Loberg had been earlier involved with the corporate roll-over. He stated that financialdisclosure is ongoing and will be used for the adjustment of his Guideline income in 2022. He argues Ms. Loberg had ample opportunityto seek more information prior to agreeing to the terms of the Mediation Report, but chose to accept the respective incomes used at themediation. [22] Ms. Loberg maintains that the mediation was a purely voluntary process and the parties at no time bestowed upon themediator decision-making powers or the power to impose a settlement.

While acknowledging that in some cases an exchange ofcorrespondence between counsel can be binding, in this case Mr. Loberg’s continuing financial non-disclosure has prevented counsel forMs. Loberg from properly advising her. [23] Ms. Loberg referred to the disclosure provisions of the Mediation Agreement: Without Prejudice/Confidentiality 4. The parties undertake to make full disclosure of all relevant information reasonably required for the mediator to understand theissues presented by them, even though such disclosure may subsequently be used against them during the litigation.

Failure to properlydisclose may mean that any subsequent agreement could be set aside. 5. Any negotiations occurring during mediation are confidential and take place on a without prejudice basis. This means:

a) The mediator cannot discuss the negotiations with any person without both parties’ permission;

b) The parties agree not to call the mediator as a witness in any proceeding at any time, and

c) The parties will not seek to have any written records, notes or reports relating to the mediation produced in any proceedings. [24] Ms. Loberg also referred to paragraph 10 of the Mediation Agreement regarding the preparation of the Mediator’s Report: 10. If any agreement is reached, the mediator will prepare a report. The parties will review this with their counsel, who willincorporate the terms into a Consent Order or binding legal Agreement [25] Ms.

Loberg submits that paragraph 10 of the Mediation Agreement provided her with the opportunity, following themediation, to review the proposed terms of the agreement with her counsel and that there was no binding agreement until the review wascompleted. During that review, it became apparent Mr. Loberg had not complied with the disclosure requirements of paragraph 4 of theMediation Agreement. Her counsel proceeded to request the missing disclosure and assured counsel for Mr. Loberg that upon review ofthe missing disclosure, settlement could be revisited. Instead, Mr.

Loberg elected to bring his application to enforce the MediationAgreement. [26] Ms. Loberg states that financial non-disclosure is of significance in this case as Mr. Loberg transferred all the assets of Loberg

Construction Inc. to Sitka Builders Inc., after their separation, without her knowledge and consent. As well, there was no disclosure of the revenue and expenses relating to Sitka Builders Inc. for the purposes of determining her matrimonial property entitlement and Mr. Loberg’s Guideline income. Disclosure is still required relating to corporate expenses to determine whether they contain a personal component. Disclosure is critical to properly address child and spousal support and the division of matrimonial property. [ 27 ] Ms.

Loberg noted that while she has received only partial disclosure pursuant to the July 20, 2021 Consent Order, the disclosure she received indicates Mr. Loberg’s income to be more than $11,000 higher than disclosed at the mediation, consisting largely of dividend income. [ 28 ] Ms.

Loberg further maintains that the funds provided to the parties from Roger Loberg were a gift, not a loan, as supported by an ATB document entitled “Gift Letter from Relative” signed by Roger Loberg that clearly stated the gift of $85,000 was for the purpose of providing a down payment on their home and that “the money is a genuine gift and does not ever have to be repaid.” [ 29 ] Ms. Loberg states that adherence to parenting arrangements recorded in the Mediation Report is not evidence of a binding agreement as the parties had been operating for several months under that arrangement. [ 30 ] Ms.

Loberg maintains that no binding agreement was reached. In the alternative, if a binding agreement was reached, it should be set aside given Mr. Loberg’s continuing failure to comply with Court-ordered disclosure. Given the income disparity revealed from partial disclosure, Ms. Loberg is no longer able to rely on financial representations made by Mr. Loberg at mediation. She noted that as the corporate year-end for Sitka Builders Inc. was May 31, 2021, its Financial Statements should be available along with updated income and expense information for the period since then. Mr.

Loberg has disregarded his clear court-ordered disclosure obligations and seeks to impose terms of settlement favourable to himself. V. Analysis [ 31 ] The Mediation Agreement signed by each of the parties prior to the mediation explains the role of the Mediator at paragraphs 2 and 3. Paragraph 2 confirms that her role is to help the parties reach their own voluntary agreement. Paragraph 3 reflects the parties’ acknowledgment that the mediator is not legal counsel for either party and cannot advise either of them as to their legal entitlements or obligations. Paragraph 7 confirms that: 7.

The mediator will not be giving legal advice. Each party has his or her own independent legal counsel who can advise them of their rights and obligations. [ 32 ] The wording of paragraph 10 of the Mediation Agreement is mandatory: if an agreement is reached, the mediator will prepare a report, the parties will review the report with their counsel who will incorporate the terms into a Consent Order or binding legal Agreement.

The clear intention of paragraph 10 is that the terms of the agreement are to be incorporated into a legally binding document. [ 33 ] The following matters support a finding that the parties reached a binding agreement, the terms of which are reflected in the Mediation Report, leaving only the formality of an executed Separation Agreement: (

a) each of the parties was represented by counsel throughout the mediation; (

b) the Mediation Report was comprehensive, setting out in detailed terms agreements reached on parenting and child support, property division, and responsibility for debts; (

c) paragraph 10 of the Mediation Agreement, signed by both parties prior to the mediation, provides for the terms of the Mediation Report being incorporated into a Consent Order or binding legal Agreement; (

d) the Mediator’s Report assigned to counsel for Ms. Loberg the drafting of the Separation Agreement, which he complied with and delivered to counsel for Mr. Loberg and which contained all the terms of the Mediation Report; and (

e) in their April 11, 2021 email exchange four days after the mediation, Ms.

Loberg acknowledged the binding nature of their mediated agreement. [ 34 ] Based on these circumstances, I find that the parties reached the agreement reflected in the Mediator’s Report and that their execution of a formal Separation Agreement was a mere formality: Martin v Busenius , 1999 ABQB 100 at para 16 . [ 35 ] However, paragraph 4 of the Mediation Agreement is clear as to the requirements of full disclosure “of all relevant information reasonably required for the mediator to understand the issues presented by [the parties]” and that “[f]ailure to properly disclose may mean that any subsequent agreement could be set aside.” [ 36 ] There are some exceptional features to the financial disclosure that was requested by Ms.

Loberg subsequent to the mediation: - Mr. Loberg’s transfer of assets from Loberg Construction Inc. to Sitka Builders Inc. after their separation; - Ms. Loberg had not received formal Financial Statements for Sitka Builders Inc. prior to the mediation or details of any sales of Loberg Construction Inc.; - Mr. Loberg’s Income Tax Returns indicated a disparity between his reported 2020 income and the Guideline income he reported at the mediation. While Guideline income can be adjusted retroactively, in this case Mr.

Loberg’s income is bound up with his sole ownership of Sitka Builders Inc. and the calculation of his Guideline income requires access to the Financial Statements of the corporation, which had not been produced as at the filing date of Mr. Loberg’s application.

[ 37 ] As noted in Colucci v Colucci , 2021 SCC 24 at para 51 : Full and frank disclosure is also a precondition to good faith negotiation. Without it, the parties cannot stand on the equal footing required to make informed decisions and resolve child support disputes outside of court. Promoting proactive payor disclosure thus advances the objectives – found in s.1 of the Guidelines – of reducing conflict between the parties and encouraging settlement. [ 38 ] Ms. Loberg stated in her Reply Affidavit that following the mediation she and her counsel reviewed the financial disclosure provided by Mr.

Loberg and “it became clear there was a considerable amount of material that had not been disclosed.” The information requested by Ms. Loberg is relevant to the issues of support and property distribution. As noted by counsel for Ms. Loberg, Mr. Loberg could have provided the requested financial disclosure, but elected instead to bring an application to enforce the agreement reached at mediation. As of the date of filing of the application, financial disclosure was not complete despite Mr.

Loberg being under a specific court-ordered obligation to do so pursuant to the July 20, 2021 Consent Order. [ 39 ] I find that there are exceptional circumstances in this case that justify setting aside the agreement set out in the Mediator’s Report based on Mr. Loberg’s failure to disclose all relevant information reasonably required for the mediator to understand the issues, particularly where his failure relates to his new corporation Sitka Builders Inc. VI. Conclusion [ 40 ] Mr. Loberg’s application to enforce the terms of the Mediation Report is dismissed. Ms.

Loberg’s counter-application to enforce the terms of the July 20, 2021 Consent Order is granted. The parties are directed to complete their respective financial disclosure within 14 days, failing which the matter may be returned to Chambers for an application to have the non-complying party cited in contempt. [ 41 ] Ms. Loberg has indicated her willingness to re-open settlement discussions once her counsel is in receipt of the financial disclosure directed in the Consent Order.

The parties are therefore strongly encouraged to return to mediation to resolve their outstanding corollary relief and property issues, each equipped with full and frank disclosure from the other. [ 42 ] Costs may be spoken to if an agreement regarding same has not been reached within 30 days. Argument of the Respondent Jeannette Mae Loberg filed on September 21st, 2021. Dated at the City of Grande Prairie, Alberta this 18 th day of November, 2021. M.T. Moreau C.J.C.Q.B.A.

Appearances: Mathew Wirove Crossroads Law for the Applicant Patrick Ryan Loberg Joseph Canavan Dobko & Wheaton for the Respondent Jeannette Mae Loberg