Linke v McCullough, 2023 ABKB 277

Court of King’s Bench of Alberta Citation: Linke v McCullough, 2023 ABKB 277 Date: 20230508 Docket: 4803 180154 Registry: Edmonton Between: Andrew William Linke Plaintiff - and - Debbie Louise McCullough Defendant _______________________________________________________ Reasons for Decision of the Honourable Justice M.E. Burns _______________________________________________________

I. Background [ 1 ] The parties were married on May 10, 2003. They separated in or about November 2016, after 13 years of marriage. The parties did not cohabitate prior to marriage. [ 2 ] There are two children of the marriage, namely D, age 15, and G, age 13. [ 3 ] The issues before this Court are numerous, including an application for a divorce, parenting, child support, spousal support and property division, including claimed exemptions. Mr. Linke was self-represented, while Ms. Linke, who now goes by the last name McCullough, was represented by Ms. Palmer at trial. II.

The Evidence [ 4 ] This trial was heard before me from November 28 th , 2022 until December 2 nd , 2022. Both parties testified. Carmen Linke was called by Mr. Linke. Cameron Brinkman, who was qualified as an expert to value the parties’ shares in ADL Developments Ltd. (“ADL”), and Lesley Hopegoerz, were called as witnesses by Ms. McCullough. [ 5 ] In addition, I was provided with volumes of documents and exhibits, including the Calculation Valuation Report, prepared by Pisko Brinkman LLP for Ms.

McCullough, dated June 2, 2021, filed as Exhibit 91, and his lengthy update letter dated December 1, 2022, filed as Exhibit 92. [ 6 ] I have considered the reliability and credibility of the witnesses’ respective testimony, bearing in mind the principles for assessing credibility outlined by Justice Renke in MM v DM , 2017 ABQB 532 at para 6 . [ 7 ] Where there is a divergence of facts between the parties, that I was not able to reconcile with the exhibits, I prefer the evidence of Ms. McCullough. I do this for many reasons. Firstly, I find that there are many examples of where Mr.

Linke’s reliability was in question. On several occasions, the documentation conflicted with Mr. Linke’s oral evidence and recall of the events. For example, the source of funds for the purchase of property in Arizona. There were other events or documents for which Mr. Linke had no recollection. [ 8 ] As to Mr.

Linke’s, credibility, while I understand that he is very invested and passionate about these proceedings, he contradicted himself between his trial and his questioning evidence, he exaggerated and he failed to provide full and complete financial disclosure, including for example, the source of funds for the purchase of the Citrus Grove Way property. His exaggerations were numerous such as “she left him with nothing,” “she ransacked the house,” “she abducted the children” and “she did nothing to contribute.” These kinds of exaggerations made it very difficult to accept the evidence Mr.

Linke did provide as it was apparent he was prepared to say what he felt he needed to say to get to the result he hoped to achieve. [ 9 ] On the other hand, I found Ms. McCullough’s evidence to be more consistent with the documentary evidence and less prone to exaggeration. III. Divorce [ 10 ] Based upon the Agreed Statement of Facts filed by the parties and the evidence I heard during the trial, I am satisfied there has been a breakdown in Mr. Linke’s and Ms. McCullough’s marriage. They have been living separate and apart for well over one year.

I am satisfied the other requirements of the Divorce Act , RSC 1985, c 3 (2nd Supp ) have been met including that there has been no collusion and there is no possibility of reconciliation. [ 11 ] I grant the divorce judgment sought in the pleadings and direct it be included in the formal order that flows from this decision. IV. Parenting [ 12 ] The parties are the parents of D and G. After Ms. McCullough moved out of the matrimonial home, the parties commenced a week-on-week-off shared parenting arrangement.

Their usual parenting time arrangement, together with a vacation and holiday parenting time schedule, were incorporated into the Consent Parenting Order pronounced by the Honourable Justice J T Neilson on July 10, 2018. These arrangements were subsequently varied by means of a Consent Parenting Variation Order pronounced by the Honourable Justice A Kirker on February 7, 2019 (“Kirker Order”). [ 13 ] The parties followed the usual shared parenting arrangement, with exchanges taking place on Tuesdays every week, until the Spring of 2021, when D started living a couple of extra days with Mr. Linke during Ms.

McCullough’s parenting week and G started living a couple of extra days with Ms. McCullough during Mr. Linke’s parenting week. As of the date of trial, D had been living with Ms. McCullough Thursday to Tuesday during her parenting week and G had been living with Mr. Linke Thursday to Tuesday during his parenting week, rather than Tuesday to Tuesday as contemplated in the Kirker Order. [ 14 ] Section 16(3) of the Divorce Act specifies what factors the Court should consider when determining what parenting time and decision-making arrangements are in the best interests of children:

Factors to be considered

(3) In determining the best interests of the child, the court shall consider all factors related to the circumstances of the child, including (

a) the child’s needs, given the child’s age and stage of development, such as the child’s need for stability; (

b) the nature and strength of the child’s relationship with each spouse, each of the child’s siblings and grandparents and any other person who plays an important role in the child’s life; (

c) each spouse’s willingness to support the development and maintenance of the child’s relationship with the other spouse; (

d) the history of care of the child; (

e) the child’s views and preferences, giving due weight to the child’s age and maturity, unless they cannot be ascertained; (

f) the child’s cultural, linguistic, religious and spiritual upbringing and heritage, including Indigenous upbringing and heritage; (

g) any plans for the child’s care; (

h) the ability and willingness of each person in respect of whom the order would apply to care for and meet the needs of the child; (

i) the ability and willingness of each person in respect of whom the order would apply to communicate and cooperate, in particular with one another, on matters affecting the child; (

j) any family violence and its impact on, among other things, (

i) the ability and willingness of any person who engaged in the family violence to care for and meet the needs of the child, and (ii) the appropriateness of making an order that would require persons in respect of whom the order would apply to cooperate on issues affecting the child; and (

k) any civil or criminal proceeding, order, condition, or measure that is relevant to the safety, security and well-being of the child. [ 15 ] For brevity purposes, I will not engage in a written analysis of each listed factor. I have considered all the factors and note, in the case at bar, the children’s views and preferences are an important factor, given their current respective ages of 15 and 13; however, they are not determinative.

The overarching consideration is what parenting arrangement this Court feels is in the best interests of the children after considering all the factors related to their circumstances. [ 16 ] Although I have not ascertained D’s wishes directly from D, I accept that D would like to spend more time with his father, and that he wishes to live primarily with his father. Having considered the factors set out in s 16(3) of the Divorce Act , I am prepared to make an order that D live primarily with Mr. Linke. [ 17 ] Mr. Linke has requested that D not have a set parenting time

schedule with Ms. McCullough and instead that any parenting time be arranged directly between D and Ms. McCullough in accordance with D’s expressed wishes. [ 18 ] I am not convinced that having no set parenting time with Ms. McCullough is in D’s best interests. It is in D’s best interests to maintain a relationship with his mother and to keep that relationship strong. I have not heard any evidence which suggests to me that there has been a breakdown of their relationship since D began living informally with Ms. McCullough alternate weekends from Thursday evening to Tuesday morning.

Nor have I heard evidence which suggests that Ms. McCullough is not able to care for or meet the needs of D while he is in her care. [ 19 ] D’s expressed preference to do things in the outdoors with his father when the weather is beautiful outside, such as fishing, rather than spending time with his mother, is not a reason for D not to have a set parenting time

schedule with his mother. His parenting time with his mother should not be dependent upon the weather. [ 20 ] It is also in D’s bests interest to maintain a strong relationship with his sister G, which could be compromised if he was to live 100% of the time with Mr. Linke. [ 21 ] I conclude it is in D’s bests interests to live primarily with Mr. Linke and to have parenting time with Ms. McCullough every second weekend from Thursday afterschool until drop-off at school on Tuesday morning. [ 22 ] I reach a similar conclusion with respect to G. I order that G live primarily with Ms.

McCullough and that she have parenting time with Mr. Linke every second weekend from Thursday afterschool until drop-off at school on Tuesday morning. I am not convinced on the evidence that G’s mental health issues are attributable to her spending more time with Ms. McCullough. [ 23 ] I therefore set the following parenting time schedule, based upon a Tuesday-to-Tuesday week: Week 1 – D shall reside with Mr. Linke from Tuesday morning to Tuesday morning; G shall reside with Ms. McCullough from Tuesday morning until afterschool on Thursday and with Mr.

Linke from afterschool on Thursday until Tuesday morning; and Week 2 - G shall reside with Ms. McCullough from Tuesday morning to Tuesday morning; D shall reside with Mr. Linke from Tuesday morning until afterschool on Thursday and with Ms. McCullough from afterschool on Thursday until Tuesday morning. [ 24 ] If it is a non-school day, parenting times shall begin on Tuesday mornings at 8:00 a.m. and on Thursday afternoons at 4:00 p.m.

[ 25 ] As to decision-making responsibility, I am satisfied that the parties should be able to make important decisions respecting their children together; they both clearly love their children and have been actively involved in their lives. The parties need to openly communicate with each other about all important decisions that are being made with respect to their children, including any decisions with respect to name changes. They should also be keeping each other abreast of what is going on in their children’s day-to-day lives. [ 26 ] The exception is with respect to health, dental and medical treatment. Mr.

Linke contends that whichever parent a child is primarily with should be primarily responsible for making basic medical decisions regarding the child in their primary care. I agree that the parent with whom a child is primarily residing should make day-to-day and routine medical and dental decisions for that child. However, Mr. Linke has proven that he is nonresponsive when a medical emergency arises. He appears uninterested and disengages. [ 27 ] I order that Ms.

McCullough have final decision-making responsibility regarding the children’s major/non-routine health, dental and medical treatment, after first consulting with Mr. Linke. If Mr. Linke has not responded to her request to discuss an important health related issue within 4 days of the request being made or if they have not been able to reach a consensus within 4 days, Ms. McCullough may make the final decision without Mr. Linke’s consent. She must keep Mr. Linke informed as to what decisions she has made. [ 28 ] Notwithstanding the foregoing, I specifically order that Ms.

McCullough may make arrangements for psychological counselling for both children without Mr. Linke’s consent; Mr. Linke’s consent is hereby dispensed with. V. Child Support A. Interim Support Order [ 29 ] On June 7, 2017, an Interim Without Prejudice Consent Order was pronounced by the Honourable Justice A W Germain, in Action No FL03 53153 (“Germain Order”). The Claim - Family Law Act was filed by Ms. McCullough before Mr. Linke filed his Statement of Claim for Divorce in Action No 4803 180154. [ 30 ] The Germain Order required Mr. Linke to pay uncharacterized support payments of $1,000 per month to Ms.

McCullough commencing June 5, 2017 and on the first day of each month thereafter. The Germain Order has not been varied. Mr. Linke has complied with his obligations under the Order. [ 31 ] Mr. Linke has asked that ongoing child support be based upon the Federal Child Support Guidelines, SOR/97-175 (“ Guidelines ”) and his income reflected in his Income Tax Returns.

It is his position that he has overpaid child support based upon his income and that he should receive a credit to be applied at the discretion of the Court. [ 32 ] I note that from separation until April 2021 the parties were in a shared parenting arrangement where each parent had each child for at least 40% of the time. In such cases s9 of the Guidelines is engaged: 9 If each spouse exercises not less than 40% of parenting time with a child over the course of a year, the amount of the child support order must be determined by taking into account (

a) the amounts set out in the applicable tables for each of the spouses; (

b) the increased costs of shared parenting time arrangements; and (

c) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought. [ 33 ] The key principles applicable to the analysis were outlined by the Supreme Court of Canada in Contino v Leonelli-Contino , 2005 SCC 63 and summarized by the Alberta Court of Appeal in MacDonald v Brodoff , 2020 ABCA 246 at para 12 [ MacDonald ] and Destine v Cloutier , 2022 ABCA 331 at para 29 . As stated in MacDonald at para 12 : • The language of s 9 is imperative.

The courts must determine child support in accordance with all three factors; • No one factor should prevail, but the weight to be given to each factor depends on the particular facts of the case; • There is no presumption that the Guidelines Table amount, or the set-off amount calculated under the Tables will be awarded. Similarly, there is no presumption that something other than the set-off amount should be awarded; • The analysis is necessarily contextual, so a sound evidentiary foundation, including the parties’ budgets and actual expenses of both parents, is critical to the court’s analysis.

Courts cannot and should not make assumptions about the parties’ situation, and courts should demand information relating to s 9(

b) and (

c) when the evidence filed is deficient; • The analysis under s 9 reflects a stated objective of the Guidelines : to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation; • A critical inquiry is whether the children experience a difference in the standard of living as they move between the two households, as one of the overall objectives of the Guidelines is, to the extent possible, to avoid great disparities between households; • The goal under s 9(

b) is to apportion actual expenses between the parents in accordance with their respective incomes; • In shared parenting arrangements, the court has great discretion when assessing the three factors. In particular, the court has full discretion under s 9(

c) to consider “other circumstances”.

[ 34 ] I also note that the parties were in a split parenting regime after March 2021 to the date of trial.

Section 8 of the Guidelines is applicable and provides: Split parenting time 8 If there are two or more children, and each spouse has the majority of parenting time with one or more of those children, the amount of a child support order is the difference between the amount that each spouse would otherwise pay if a child support order were sought against each of the spouses. [ 35 ] With this framework I will consider the amount of child support that should be payable. B. Guidelines Income of Mr. Linke [ 36 ] First, Mr. Linke’s Guidelines income must be determined. Mr.

Linke is by trade a journeyman plumber and a gasfitter. Throughout the parties’ marriage, and since separation, he has managed rental properties owned by ADL and provided services to various clients through AWL Developments Ltd. (“AWL”). The parties are 50% shareholders in ADL. Mr. Linke has an interest in AWL. Ms. McCullough had a 10% interest in AWL but at some point, after separation, her interest seem to vanish. [ 37 ] Ms. McCullough argues Mr. Linke is intentionally underemployed and that income should be attributed to him pursuant to ss 19(1)(a), (

e) and (

f) of the Guidelines and Peters v Atchooay , 2022 ABCA 347 [ Peters ]. She contends that Mr. Linke has chosen to concentrate on operating AWL and acting in his position of President of ADL rather than work for an independent employer, and that he is making far less than his earning capacity. [ 38 ] Ms. McCullough argues that Mr. Linke has sustained a drop in his income since the parties separated. In the pre-separation years 2012 to 2015, his line 150 income was as follows: 2012 - $83,299 2013 - $62,261 2014 - $44,604 2015 - $115,758 [ 39 ] His average line 150 income during these four years was $76,480.

It was derived primarily of taxable dividends from a Canadian corporation, namely AWL. [ 40 ] Mr. Linke’s Line 150/15000 income, as reflected on his Income Tax Return, are as follows for the period 2016 to 2021. 2016 - $41,723 2017 - $31,720 2018 - $25,950 2019 - $26,195 2020 - $21,666 2021 - $29,400 [ 41 ] Mr. Linke’s average income over this 6-year period was $29,442. Mr. Linke’s income in 2018 was derived entirely from RRSP income. In 2019, he had employment income of $3,500 and RRSP income of $22,695. In 2021, his employment income was $29,400. [ 42 ] Mr.

Linke did not draw any dividends from AWL in the years 2018, 2019, 2020 and 2021. Mr. Linke testified that he was working for AWL since 1996 and yet there is very little T4 income being reported from AWL. He testified that he is working less for AWL due to conflict with his father, yet he had been receiving some taxable dividend income. I find that dividend income is how Mr.

Linke is remunerated for his work with AWL and I find that such income is properly income for child support purposes. [ 43 ] The Alberta Court of Appeal in its decision in Peters reconsidered the test for imputation of income in Hunt v Smolis-Hunt , 2001 ABCA 229 , which had required evidence of deliberate evasion before income could be imputed to a payor for child support purposes.

The Court of Appeal in Peters concluded the reasonableness test utilized in other Canadian provinces should now be the test for imputation of income in Alberta. [ 44 ] At para 60 of Peters , the Court of Appeal stated that a person is “intentionally under-employed” for the purposes of s 19(1)(

a) of the Child Support Guidelines where their income is less than they are capable of earning. The factors for earning capacity include qualifications such as age, education, experience, skills and health and other criteria, for example, the availability of work, choice to relocate and other obligations. [ 45 ] The Court will also consider whether the under-employment or unemployment is beyond the control of the payor, that is it is involuntary, for example, by layoff, reduced hours and termination without cause.

The exceptions which may avoid imputation are not automatic or permanent, but dependent on the circumstances of each case: Spring v Spring , 2022 ABCA 19 at para 18 , cited in Peters at para 60 .

[ 46 ] If under-employment or unemployment arises from a voluntary choice, and listed exceptions do not apply, the Court should consider imputing income to a party. [ 47 ] Justice Neilson in Shumate v Patrick , 2023 ABKB 98 [ Shumate ] recently summarized the framework for determining imputation of income at paras 45 - 48: [45] The framework for determining imputation of income applies to s 3 base child support and s 9 shared parenting child support, in both initial applications or variation applications. The onus remains throughout on a party seeking the variation.

However, once material change in circumstances is met, the party opposing imputation must prove on a balance of probabilities that: 1. The under-employment or unemployment was not voluntary; or 2. The under-employment or unemployment is as a result of one of the s 19(1)(

a) exceptions.

If neither of those two factors apply, that party must establish on a balance of probabilities that their under-employment or unemployment is reasonable having regard for all the existing circumstances. [46] The evidence should focus on the payor’s capacity to earn income at all points in the applicable timeframe: the date of the order in effect, the date of the variation application, and during the years in between for which a variation is sought. [47] At a minimum, establishing employment capacity includes evidence of: payor’s age, technical skills, education, health, work history, and realities of the labour market. [48] As the Court of Appeal stated at para 67 of Peters , under-employment or unemployment due to the payor’s health concerns would generally require medical evidence for the entire duration of time in question.

Furthermore, in considering circumstances beyond the payor’s control, the payor must provide evidence of efforts to find alternate employment. An employment decision that results in a significant reduction of child support needs to be justified in a compelling way. [ 48 ] The Court of Appeal in Peters summarized s 19(1)(

a) principles at para 92. Neilson J cited three of the principles that were particularly pertinent to the issue of imputing income to the father in Shumate at para 49 . These three principles are also applicable in the circumstances of this case: 1. General Duty to Work. There is a duty to seek employment where a parent is healthy and can work. A parent’s limited work experience or job skills do not justify a failure to pursue lower skilled employment or employment in which the necessary skills can be learned on the job.

While this may mean a job at the lower end of the wage scale, parents cannot refuse to take reasonable steps to support their children simply because they cannot obtain interesting or highly paid employment. Nor can a high-earning or highly skilled parent refuse employment indefinitely by holding out for employment commensurate with their skills and previous level of earning, job title or seniority. 2. Earning Capacity Used to Assess Reasonableness. When determining whether to impute income on the basis of under-employment or unemployment, a court must consider what is reasonable in the circumstances.

The starting point is the payor’s earning capacity, which is the objective measure by which the reasonableness of the parent’s decision or conduct is assessed. Earning capacity is determined based on factors like age, education, experience, skills, and health of the payor, along with availability of work, the freedom to relocate, and other obligations. *** 4. Obligation to Support Children is the Overarching Goal. The reasons for under-employment or unemployment must be objectively scrutinized.

A parent is required to act in a manner reflective of his or her obligations and cannot be excused from support obligations in furtherance of unrealistic, unproductive or non-remunerative career aspirations. Persistence in unremunerative employment or repeated education initiatives may also entitle the court to impute income. Parental self-fulfillment is a consideration but does not trump child support requirements. [ 49 ] The difficulty in this case is that Mr. Linke historically did not work for an independent organization throughout the parties’ marriage.

His Income Tax Returns show no employment income during many of the years between 2009 to 2016. He submits he was working during those years on the properties in Arizona and did not receive any income for his work on those properties. He was not receiving any funds other than what was coming from his personal savings or his capital dividends. [ 50 ] I am satisfied that Mr. Linke is under-employed and that he has not established his under-employment is reasonable. None of the recognized exceptions such as responsibility for the care of children, education or health reasons are applicable in this case.

While he attested to having shoulder and knee issues, he did not provide any medical evidence demonstrating that these issues impair his ability to work or restrict the jobs available to him. As well, Mr. Linke has made no meaningful efforts to find more lucrative employment. [ 51 ] Although he acknowledged an obligation to work, based upon Mr. Linke’s closing submissions on the parenting issues, I got the impression that he would prefer to spend time doing activities with his children, such as camping and fishing, then working. He essentially criticized Ms.

McCullough for being at work and away from her home, leaving G primarily alone in her room when G is in Ms. McCullough’s care. [ 52 ] Mr. Linke is trained as a journeyman plumber and a gasfitter. His specialities include plumbing, gas fitting and heating. He also has skills in construction management, project planning, property management and real estate development. [ 53 ] I accept Ms.

McCullough’s evidence that the average salary of a plumber in Alberta is between $70,000 and $80,000 annually and the average salary of a gasfitter is $75,000 to $90,000 annually and that positions are available in the Edmonton area. [ 54 ] I find that Mr. Linke had and continues to have the capacity to be engaged in gainful employment on a full-time basis. I accept that Mr. Linke is capable of earning at least $75,000 annually. [ 55 ] I also accept that Mr. Linke should be deriving some rental income from the rental properties owned by ADL in Arizona.

According to Ms. McCullough’s counsel’s calculations, the properties can generate gross rental income of $120,000 CDN annually. Factoring in expenses averaging $80,000 CDN, and not taking into consideration any personal component to these expenses, according to counsel’s estimation, the properties should be generating net rental income of $40,000 annually. [ 56 ] The Income Statement Information for ADL’s Corporate Income Tax Return for the year end March 31, 2015 shows rental revenue of $61,051 in 2015 and $59,199 in 2014.

The Income Statement Information for the year end March 31, 2017 shows rental revenue of $80,132 in 2016 and $71,306 in 2017. For the year end March 31, 2018, the rental revenue was $78,220. The average rental revenue over this 5-year period was $69,981. [ 57 ] As to the expenses claimed each year, it is likely that the amounts claimed as travel and meals & entertainment include a personal component. As well, the amount claimed as maintenance and repairs appears inordinately high, ranging from $20,561 to $32,969.

A sizeable amount is also claimed as amortization. [ 58 ] Not taking into consideration the claimed amortization, and not making any adjustments to the aforementioned questionable expenses, the Statement of Rental Income for the years ending March 31, 2017 and March 31, 2018 show net rental income of $13,788 and $16,978 respectively. The average is $15,383. I am prepared to impute net rental income to Mr. Linke of $15,000 annually. [ 59 ] Mr. Linke’s failure to provide full and complete financial disclosure has also led this Court to its conclusion to impute income to Mr. Linke.

He has failed to provide the Financial Statements and Corporate Tax Returns for ADL for the years ending March 31, 2019-2022, which may have assisted the Court in assessing whether he is running any personal expenses through ADL that should be added back to his Guidelines income. [ 60 ] While I do acknowledge that Mr. Linke has provided the Financial Statements for AWL up to the year ending January 31, 2021, he has failed to provide an honest accounting of the expenses run through AWL for which he receives a personal benefit. [ 61 ] I agree with counsel for Ms.

McCullough that there are expenses reported in the Financial Statements for AWL which appear to be unreasonably high given the reported income. For example, in 2021, the reported revenue is $21,825. AWL has claimed supplies of $30,973, salaries and wages of $12,230, vehicle expenses of $11,497, travel expenses of $3,054 and telephone expenses of $1,656. In 2020, the claimed supplies totalled $17,961, the vehicle expenses $19,690, the telephone expenses $1,403 and the advertising expenses $3,785.

It is likely that much of these expenses contain a personal component. [ 62 ] In the years 2014 to 2016, AWL recorded the following revenue: $181,297, $204,325 and $250,898. Ms. McCullough acknowledges that Mr. Linke lost a major client toward the end of 2016. This client loss is reflected in AWL’s reduced revenue in 2017, which was $135,784. From then on, AWL’s Financial Statements show a net income loss year after year. It is not reasonable for Mr. Linke to continue running AWL at a loss when he has child support obligations. [ 63 ] There are also inconsistencies between the income that Mr.

Linke is reporting to the Canada Revenue Agency and his standard of living. Despite an alleged sizeable reduction of his income since 2016, Mr. Linke has not increased his debt load. He appears to be living a comfortable life where his financial needs are somehow provided for, which includes owning a boat, a snowmobile and a quad and regularly going camping and fishing with his children. [ 64 ] In all the circumstances, I find it is reasonable to impute employment income to Mr.

Linke of $75,000 and rental income of $15,000, for total Guidelines income of $90,000. [ 65 ] I am not prepared to impute additional income amounts to Mr. Linke on account of non-taxable yearly repayment of ADL’s shareholder’s loan or taxable dividends from a Canadian corporation. Firstly, there is insufficient rental income being generated by ADL to repay the shareholder’s loan at the rate of $35,000 per year suggested by Ms. McCullough’s counsel. Secondly, if I were to impute as income to Mr.

Linke a yearly repayment of the shareholder’s loan from 2017 onwards, there would need to be a corresponding yearly reduction of the shareholder’s loan value calculated to the date of trial. [ 66 ] Thirdly, for AWL to pay dividends to Mr. Linke on a yearly basis it would need to be generating sufficient revenue to do so. The last time that AWL paid out a dividend was 2017 when AWL had revenue of $135,784. I am not prepared to expect Mr.

Linke to earn self-employment income through AWL over and above the $75,000 being imputed to him as employment income. [ 67 ] The next issue to determine is when should the imputation of income to Mr. Linke commence. [ 68 ] In 2017, Mr. Linke had taxable Canadian dividends of $30,771 and RRSP income of $949. As I have concluded below to treat his RRSP income as a dissipated asset, I will not take it into consideration. [ 69 ] I am cognizant of the fact that Mr. Linke lost a major client towards the end of 2016 and the parties separated in November 2016, the latter of which may have had an emotional impact on Mr.

Linke given the love he professed for his wife and children during his closing submissions. As a result, I will not impute employment income to Mr. Linke in 2017. I will, however, impute net rental income of $15,000. After adjusting his taxable dividends under s 5 of

Schedule III to the Guidelines , I set Mr. Linke’s Guideline income in 2017 at $37,298. [ 70 ] His Guidelines income for the years 2018 to 2023 shall be set at $90,000. Given the lack of evidence before this Court, I will not be adjusting his income in the years 2020 and 2021 on account of the COVID-19 pandemic. C. Guidelines Income of Ms. McCullough [ 71 ] To continue my Guidelines ss 8 and 9 analysis, I must also determine Ms. McCullough’s income. During the marriage, Ms. McCullough worked as a hair stylist and makeup artist for MAC Cosmetics. After the birth of the parties’ children, she worked out of the matrimonial home as a hair stylist.

[ 72 ] Following separation, Ms. McCullough continued to provide hair styling services as a sole proprietor until September 2020 when she commenced an Office Assistant Program at Grant MacEwan University. She was enrolled as a student in this program until June 2021, the latter two months being part-time. Ms. McCullough received Canada and Alberta Student Grants and Loans totaling $21,200. [ 73 ] In 2021, Ms. McCullough commenced employment with Intact Financial Corporation as an administrative support in their legal department. She continues in this role, earning just over $25 per hour. [ 74 ] Ms.

McCullough’s Line 150/15000 income, as reflected on her Income Tax Return, are as follows for the period 2016 to 2021: 2016 - $35,799 2017 - $27,564 2018 - $31,123 2019: $27,900 2020: $24,748 2021: $21,670 [ 75 ] Ms. McCullough’s Line 150 income in 2016 included $4,036 in taxable dividends from a Canadian corporation, and in 2017 it included $3,159 in taxable dividends. [ 76 ] Exhibit 89 is a list of Ms. McCullough’s income and expenses in 2016 for Debbie Linke Femme Fatale Salon. It appears she did not run any personal expenses through her salon in 2016.

Her expenses, which total $5,054.15, are largely comprised of beauty supplies. She was no longer working out of the matrimonial home in 2017; as a result, her 2017 expenses include rent. I find that Ms. McCullough was reasonable in reporting her business income. She had a reasonable and clear system to keep track of her income and expenses and it is straightforward. There does not appear to be any personal benefit from the business expenses, and I so find. I will not make any adjustments to her claimed business income. [ 77 ] I do not have a copy of Ms. McCullough’s T4 or Income Tax Return for 2022.

Her last pay stub submitted into the evidence is for the period October 1, 2022 to October 14, 2022. It shows year to date earnings of $38,856.55. This prorates to a projected annual earning of $49,589 ($38,856.55/286 days x 365 days = $49,589 ). I will therefore set Ms. McCullough Guidelines income in 2022 and 2023 at $49,589. D. Quantum of Child Support Payable [ 78 ] Based upon the Guidelines incomes I have attributed to each party, the set off amounts for the period when there was shared parenting (to March 2021) and split parenting (post March 2021) are as follows. Year Set-Off Monthly Amount Owed by Mr.

Linke Total Amount 2017 $123 $1,353 2018 $842 $10,104 2019 $882 $10,584 2020 $932 $11,184 Jan-Mar 2021 $970 $11,640 Apr-Dec 2021 $604 $5,436 2022 $386 $4,632 2023 $386 $1,544 Total Retroactive Support $48,077 [ 79 ] I used the 2011 Tables to determine the amount of child support payable in 2017. As the parties indicated that their split parenting arrangement commenced in the Spring of 2021, I have selected April 1 st as the date their arrangement switched from shared to split. [ 80 ] Given this information I must determine whether there is evidence of increased costs of shared parenting as provided in s 9(

b) of the Guidelines and the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought as provided in s 9(c). I was provided with some budget information from Ms. McCullough, but no budget was ever forthcoming from Mr. Linke. I do note that Ms. McCullough was not in the matrimonial home and had to find an alternate housing arrangement. She ended up with significant debt post separation and Mr.

Linke did not increase his debt load. [ 81 ] That said, the analysis is based on what a fair standard of support is for the children that ensures that they continue to benefit from the financial means of both parents after separation. The evidence does suggest that there was some disparities between the households – but this does not appear to be reflected in the children experiencing a difference in the standard of living as they moved between the two households.

There was some disparity, but I would not categorize it as “great”. [ 82 ] This is not a circumstance where there is/was a great discrepancy in the incomes of the parties, and I am satisfied that the objectives of the Guidelines are met by using the set off amounts for the shared parenting period and for the split parenting time.

[ 83 ] I order that Mr. Linke pay the set-off amounts of s 3 child support set out above, for the period February 1, 2017 to the date of these Reasons for Decision. E.

Section 7 Expenses [ 84 ] Ms. McCullough is claiming a retroactive contribution by Mr. Linke towards the children’s s 7 expenses in the total amount of $12,146. [ 85 ] At Tab 9 of Exhibit 72, Ms. McCullough has included a number of expenses that she feels constitute s 7 expenses. Her list, however, includes a number of expenses that would not typically fall within one of the categories listed under s 7(1) of the Guidelines and instead could be considered to be subsumed in the Table amount of child support payable.

These include school field trips, school fees and extra-curricular activity expenses, such as running, Red Cross swimming lessons and WECA membership, all of which have a modest cost. [ 86 ] The term “special or extraordinary expenses” must be understood within the particular family’s means and circumstances. Expenses are “extraordinary” if they exceed an amount that the requesting parent can reasonably cover, taking into account the income of the requesting parent and any child support received.

If the expenses do not exceed an amount the requesting parent can reasonably cover, then the court will consider the factors listed in s 7(1.1)(

b) of the Guidelines to determine whether the expenses can still be classified as extraordinary in the circumstances. See: Delichte v Rogers , 2013 MBCA 106 at para 26 and s 7(1.1) of the Guidelines . [ 87 ] Given the parties’ shared parenting arrangement from the date Ms. McCullough moved out of the matrimonial home until the Spring of 2021, and my retroactive child support award, I find it would be fair and reasonable for the parties to share the following expenses incurred during this period equally: 1. Field trip expenses; 2. School supplies; 3. Cross-country running/running club expenses; 4.

WECA Boys Club; 5. Red Cross swimming lessons; 6. Volleyball expenses; 7. Hot lunches; 8. Clothing; 9. D’s bike; 10. Cell phones. [ 88 ] Although some Canadian courts have treated a child’s cell phone expenses to be a s 7 expense, cell phone expenses generally do not clearly or squarely fall into any of the listed categories under s 7(1) of the Guidelines . Whether they should be included is dependent upon the circumstances of the child and the parties, such as the child having special medical needs and the phone being needed for emergency purposes. See: BNM v PJM , 2017 SKQB 331 at paras 154 and 158 .

I am not satisfied that they should be considered a s 7 expense in the circumstances of this case. Instead, I order that these expenses be shared equally by the parties during the period that they shared parenting of the children. [ 89 ] The parties advised that their split parenting arrangement commenced in the Spring of 2021. For simplicity purposes, I previously selected April 2021 as the month in which the split parenting arrangement commenced. Commencing April 1, 2021, Mr. Linke shall be solely responsible for the above-noted expenses incurred on behalf of D. Ms.

McCullough shall be solely responsible for the above-noted expenses incurred on behalf of G. [ 90 ] The balance of the expenses listed in Ms. McCullough’s chart shall be considered a s 7 expense, with the cost being shared by the parties in proportion to their respective Guidelines incomes. These include: 1. Medical and dental insurance premiums; 2. Health-related expenses that exceed insurance reimbursement by at least $100 annually, including dental and orthodontic expenses; 3. Out of school care, 4. Soccer expenses, including equipment and clothing; and 5.

Synchronized swimming expenses, including equipment and clothing. [ 91 ] Based upon the Guidelines incomes this Court has attributed to the parties, the parties’ respective proportionate share of the children’s immediately aforementioned s 7 expenses is as follows for the years 2017 to 2023: Year Mr. Linke’s Share Ms. McCullough’s Share 2017 58.29% 41.71%

2018 74.30% 25.70%$2019 76.34% 24.66%2020 78.43% 21.57%2021 80.59% 19.41%2022 64.47% 35.53%2023 64.47% 35.53% [92] I will leave it to counsel for Ms. McCollough, in consultation with the parties, to calculate how much is owed by each partytoward all of the expenses contained in Ms. McCullough’s list, in accordance with my directions above as to who is responsible for whatexpense and for what proportion. [93] Mr. Linke shall receive a credit for any amounts he has paid towards the expenses contained in Ms.

McCullough’s list. [94] Going forward s 7 expenses will include soccer for D, synchronized swimming for G, non-insured orthodontic expenses for Gand any other medical and dental expenses not covered by insurance, including counselling fees, and the children’s portion of medicaland dental insurance premiums. VI. Spousal support A. Entitlement [95] Ms. McCullough is seeking retroactive spousal support on both compensatory and non-compensatory grounds. She is notseeking ongoing spousal support. Mr. Linke is opposed to an order for spousal support being made.

It is his position that Ms.McCullough is not entitled to spousal support. He argues the parties’ incomes were virtually the same during their marriage. The onlytime it was different was when properties were sold or capital dividends were included in his income [96] The Divorce Act codifies the doctrine of equitable sharing, which “seeks to recognize and account for both the economicdisadvantages incurred by the spouse who makes such sacrifices and the economic advantages conferred upon the other spouse”: Moge vMoge, (SCC), [1992] 3 SCR 813 at 853 [Moge]. [97]

Section 15.2(4) of the Divorce Act provides that the Court shall take into consideration the condition, means, needs and othercircumstances of each spouse, including the following factors: (

a) The length of time the spouses cohabitated; (

b) The functions performed by each spouse during the cohabitation; and (

c) Any order, agreement or arrangement relating to support of either spouse. [98]

Section 15.2(6) provides that an order for spousal support should take into consideration the following objectives: (

a) Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (

b) Apportion 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) Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (

d) In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. [99] As stated in Moge at p 852, “all four of the objectives defined in the Act must be taken into account when spousal support isclaimed or an order for spousal support is sought to be varied. No single objective is paramount.” [100] Compensatory spousal support addresses non-monetary contributions to a marriage that are generated by, for example,interruptions to employment as a result of parenting or childcare responsibilities: Keen v Christian-Keen, 2015 ABCA 314 at para 11[Keen].

Relevant to the circumstances of this case, the decision in Moge emphasizes at pp 867-868 the economic consequences arisingfrom the birth of children: The most significant economic consequence of marriage or marriage breakdown, however, usually arises from the birth of children. Thisgenerally requires that the wife cut back on her paid labour for participation in order to care for the children, an arrangement whichjeopardizes her ability to ensure her own income security and independent economic well-being.

In such situation, spousal support maybe a way to compensate such economic disadvantage. [101] Non-compensatory spousal support “is intended to alleviate economic hardship arising from the breakdown of the marriage.The focus is not on compensation for what the spouses have contributed to or gained from the marriage but rather on post-marital need”:Keen at para 12.

Non-compensatory spousal support “recognizes the artificiality of assuming that all separating couples can move fromthe mutual support status of marriage to absolute independence status of single life, indicating the potential necessity to continue support,even after the marital ‘break’”: Bracklow v Bracklow, (SCC), [1999] 1 SCR 420 at 437-8. [102] I conclude that Ms. McCullough is entitled to compensatory spousal support. This was a marriage of 13.5 years. Following thebirth of the parties’ children and until the parties separated, Ms.

McCullough worked part-time out of the matrimonial home so that shecould focus on her household responsibilities and the welfare of the parties’ family, including looking after the children.

[ 103 ] I am also satisfied that Ms. McCullough has a claim for non-compensatory/needs based spousal support. She lost her home salon when she moved out of the matrimonial home as well as customers. Her accommodation costs and business expenses increased. She had to borrow money to pay for her legal fees to defend these proceedings. She accumulated student loans in an effort to move towards economic self-sufficiency. She is now working as an assistant at Intact Financial Corporation in their legal department. [ 104 ] Ms.

McCullough, however, is not seeking ongoing spousal support; she is seeking retroactive spousal support for the period February 1, 2017 to June 30, 2022, which is a period of 5 years and 5 months. B. Duration and Quantum [ 105 ] In the circumstances of the case, I find that it would be reasonable for Mr. Linke to pay spousal support to Ms. McCullough until June 30, 2022, as requested by her counsel. I note the Childview calculations prepared by this Court, as well as the DIVORCEMATE calculations prepared by Ms.

McCullough’s counsel suggest a minimum duration of 6.75 years. [ 106 ] Selecting the mid-range suggested by the Spousal Support Advisory Guidelines, and assuming that the parties’ split parenting arrangement commenced April 1, 2021, I order that Mr. Linke pay to Ms.

McCullough the following amounts of spousal support for the period February 1, 2017 to June 30, 2022: Year Monthly Amount Total Amount 2017 $162 $1,782 2018 $842 $10,104 2019 $900 $10,800 2020 $890 $10,680 January to March 2021 $990 $2,970 April to December 2021 $1,036 $9,324 2022 $654 $4,422 Total Retroactive Support $49,584 [ 107 ] As the amount of support Mr. Linke was ordered to pay by Justice Germain was uncharacterized, he has not been able to claim any of it on his Income Tax Returns as spousal support.

I will discount the amount of retroactive spousal support owing for 2017 by 15% and the amount owing for the years 2018-2022 by 20.5%, which percentages are based upon the tax bracket for the Guidelines income attributed to Mr. Linke. I therefore set arrears of spousal support at $39,517 rounded down. VII. Set-Off Against Total Retroactive Support Owed [ 108 ] Based upon this Court’s calculations, Mr. Linke owes retroactive s 3 child support of $48,077 and retroactive spousal support of $39,517, for a grand total of $87,594. The Germain Order required Mr.

Linke to pay uncharacterized support payments of $1,000 per month to Ms. McCullough commencing June 5, 2017 and on the first day of each month thereafter. It is my understanding that he has been compliant with the Germain Order and that no arrears of support are owing. [ 109 ] Mr. Linke is therefore entitled to have the total amount of $71,000 ($1,000 x 71 months) credited against the retroactive amounts he owes on account of s 3 child support and spousal support. This leaves a balance owed of $16,594. [ 110 ] Counsel for Ms. McCullough is seeking judgment interest on the retroactive support owed by Mr. Linke.

This Court’s general authority to award pre-judgment interest is found in s 2 of the Judgment Interest Act , RSA 2000, c J-1 . [ 111 ] While there are some reported Alberta decisions where interest was awarded on child and/or spousal support arrears (see for example Haisman v Haisman , 1994 ABCA 249 ; Dupris v Dupris , 2003 ABQB 232 , Rizo v Rizo , 2003 ABQB 814 , Rheault v Hammond , 2013 ABQB 530 , Kowalski v Kowalski , 2009 ABQB 294 , Farnsworth v Thorp , 2001 ABQB 98 , ARJ v DLJ , 2009 ABQB 22 ), it is rare for a court in Alberta to award pre-judgment interest on retroactive support.

It is usually only ordered in exceptional situations: Torbey v Torbey , 2001 ABQB 1129 at para 37 . I therefore decline to order pre-judgment interest on the retroactive child and spousal support I have determined to be owing by Mr. Linke. VIII. Division of Matrimonial Property A.

Statutory Framework [ 112 ] In Hodgson v Hodgson, 2005 ABCA 13 [ Hodgson ] , the Alberta Court of Appeal interpreted ss 7 and 8 of the Matrimonial Property Act, RSA 2000, c M-8 and established the following 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: 1. Determine all property owned at the date of trial 2. 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. 3. 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. 4. Divide the balance of the property (i.e., property acquired during the marriage which is not exempt) equally unless it would be unjust and inequitable to do so considering the factors in s 8. B. Parties’ Assets and Liabilities Owned at Date of Trial [ 113 ] The parties’ assets and liabilities owned as at the date of trial are set out in the Matrimonial Property Statement prepared by this Court and attached to these Reasons for Decision as

Schedule “A”. I have excluded any asset having a value of less than $100. 1. Matrimonial Home [ 114 ] I accept the real estate appraisal completed of the matrimonial home located in Edmonton, Alberta in October 2022, by Ms. Gordon, filed as Exhibit 60, provides the best evidence of the current market value of the matrimonial home. I therefore set its date of trial value at $560,000.00. [ 115 ] Title to the matrimonial home is currently registered in both parties’ joint names. I understand that Mr. Linke wishes to retain the matrimonial home and Ms. McCullough does not wish to retain her interest in the home.

I therefore order that Ms. McCullough’s interest in the matrimonial home be transferred to Mr. Linke within 45 days of the equalization payment contemplated by paragraph 182 of this decision being paid in full to Ms. McCullough. Title to the matrimonial home shall thereafter be in Mr. Linke’s name alone. Mr. Linke shall be solely responsible for the costs associated with transferring title of the property into his sole name. Ms. McCullough shall promptly sign any documents required of her to affect the transfer. [ 116 ] The entire value of the matrimonial home shall be included on Mr.

Linke’s side of the ledger in the Matrimonial Property Statement to reflect this transfer of Ms. McCullough’s interest in the home. [ 117 ] Mr. Linke is claiming an exemption with respect to the matrimonial home. This exemption will be addressed later in my decision. 2. Corporate Interests [ 118 ] Mr. Linke owns shares in and operates AWL, which is an Edmonton based corporation, incorporated on December 23, 1999. He held these shares at the time of the parties’ marriage. He also owned 10% of the shares in Linco Developments Ltd. (“Linco”), a company incorporated by Mr.

Linke’s parents. [ 119 ] At some point during the marriage, Ms. McCullough was given 10% of the shares in AWL. I note she was removed as a shareholder following the parties’ separation in 2017 or 2018 and no explanation of why she was removed was given to this Court, nor was there any indication that she received consideration for the share transfer. There is no evidence before this Court with respect to the value of Mr. Linke’s shares in AWL or Linco. Ms. McCullough has not made a claim in respect of these two corporations in any event. [ 120 ] The largest asset of value is ADL.

ADL was incorporated on March 12, 2011 and is registered in the Province of Alberta. Each party currently owns 50% of the shares of ADL. I understand that Ms. McCullough has not been involved with the corporation since the parties separated and that she does not wish to retain her shares in ADL. I therefore order that Ms. McCullough transfer her shares in ADL to Mr. Linke within 45 days of the equalization payment contemplated by paragraph 182 of this decision being paid in full to Ms. McCullough. [ 121 ] Mr. Brinkman valued the shares of ADL at $1,644,500 in his update letter dated December 1, 2022. Mr.

Brinkman previously valued the shares of ADL at $893,000 as of March 31, 2018, not including the value of a sizeable shareholder loan in the amount of $622,040. The increase in value of the shares is largely due to the increase in value of the rental properties owned by ADL, described below. [ 122 ] ADL was incorporated as a holding company, which became the registered owner of rental properties located in Avondale, Arizona. During the parties’ marriage, they rented the Arizona properties to third parties.

Certain of the properties were used as long- term rentals and others were used as vacation rental properties. Post-separation, the vacation rental properties were converted to long- term rental properties. ADL, through Mr. Linke, has continued to rent out the properties. [ 123 ] I will address each property in turn. a. 11591 West La Reata Avenue [ 124 ] The property located at 11591 West La Reata Avenue was purchased on July 7, 2010 for $110,000 USD by Linco Developments U.S. Inc., a corporation owned by Mr. Linke’s father Walter Linke. It was subsequently quit claimed from Ms.

McCullough and Linco to ADL on April 12, 2011. It is an asset of ADL to be incorporated into the appraisal of the ADL shares. [ 125 ] An appraisal dated October 2022 appraises the property at $450,000 USD. Based upon an exchange rate of 1.3578 as of November 29, 2022, that equates to a value of $611,000 CDN. It was previously appraised at $345,000 USD as of March 31, 2018. b. West Alvarado [ 126 ] This property was purchased on or about July 28, 2010. It has been sold.

c. 11605 West La Reata Avenue [127] The property located at 11605 West La Reata Avenue was purchased on July 27, 2011 for $100,000 USD. Its purchase wasfunded by a loan of $100,000 provided by Ms. McCullough’s mother, Mary Ann McCullough. The amount of $60,000 was repaid to Ms.McCullough’s mother following the sale of the West Alvarado property, inclusive of $10,000 in interest. According to Mr. Linke, herepaid Ms. McCullough’s mother the remaining $50,000 in or about December 2016, post-separation. I find the funds for this repaymentwere derived from the parties’ joint line of credit.

It is an asset of ADL. [128] An appraisal dated October 2022 appraises the property at $455,000 USD. Based upon an exchange rate of 1.3578 as ofNovember 29, 2022, that equates to a value of $618,000 CDN. It was previously appraised at $305,000 USD as of March 31, 2018. d. West Ashland Way [129] The West Ashland Way property was acquired in August 2012 for $157,000 USD. It was originally acquired by LinklandDevelopment Inc., a corporation owned by Mr. Linke’s father, Walter Linke. It was subsequently quit claimed to ADL on September 19,2012. [130] Mr.

Linke submits that this property was purchased using funds he received as capital dividends from AWL, as demonstrated inhis personal Income Tax Returns. This income was joint matrimonial income and therefor jointly paid. This is an asset of ADL. [131] An appraisal dated October 2022 appraises the property at $510,000 USD. Based upon an exchange rate of 1.3578 as ofNovember 29, 2022, that equates to a value of $692,500 CDN. It was previously appraised at $355,000 USD as of March 31, 2018. e. Citrus Grove Way [132] Mr.

Brinkman’s appraisal of the value of the shares in ADL includes the value of a property located on Citrus Grove Way. Mr.Linke contends that the Citrus Grove Way property is legally registered in his name and it is not owned by ADL; therefore, Mr.Brinkman has overvalued the value of ADL’s shares. [133] It is Ms. McCullough’s position that ADL is the beneficial owner of the Citrus Grove Way property, though title to the propertyis in Mr. Linke’s name. I agree. [134] The Financial Statements for ADL, filed as Exhibit 50, list the Citrus Grove Way property as one of the assets of ADL. See theTrial Balance sheets.

It was Mr. Linke who instructed his accountant to list the Citrus Grove Way property as one of the propertiesowned by ADL. Correspondence from the US accountant, Frederic Fischer, dated December 5, 2018 includes a statement for ADL’sshareholders’ loan. The statement shows $140,000 of the funds used to acquire the property came from the shareholders’ loan. See:Exhibit 50, Tab 5. [135] The Citrus Grove Way property was purchased for $145,000 USD on or about May 10, 2012. An appraisal dated October 2022appraises the property at $490,000 USD.

Based upon an exchange rate of 1.3578 as of November 29, 2022, that equates to a value of$665,500 CDN. It was previously appraised at $315,000 USD as of March 31, 2018. [136] Even if I had found that the Citrus Grove Way property was Mr. Linke’s asset, its value would have been included on his sideof the ledger in the Matrimonial Property Statement and would have been taken into consideration in determining the amount of moneyowed by Mr. Linke to Ms. McCullough. f. Jurisdiction Over US Property [137] During his closing submissions, Mr.

Linke questioned whether Canada has jurisdiction over the properties owned in Arizona. [138] The word “foreign” does not appear in the Matrimonial Property Act. However, paragraph 9(1) of the Matrimonial PropertyAct states: Power of the Court 9(1) If part of the property of the spouses is situated in Alberta and part elsewhere, the Court may distribute the property situated inAlberta in such a way as to give effect to the distribution under

section 7 of all the property wherever it is situated. [139] The specific issue of what jurisdiction Alberta courts has over foreign property owned by a party has not been directlyconsidered in the jurisprudence. Absent Alberta jurisprudence, I draw from jurisprudence decided elsewhere in Canada. [140] In Potter v Boston, 2014 ONSC 2361 [Potter], the Ontario Superior Court explained at paras 20-21: 20 Generally speaking, Canadian courts do not have the jurisdiction to make an order concerning right, title or interest to a foreignproperty: Tezcan v. Tezcan (1987), (BC CA), 11 R.F.L. (3d) 113 (B.C. C.A.); Macedo v.

Macedo (1996), (ON SC), 19 R.F.L. (4th) 65 (Ont. Gen. Div.). There are no reported cases that analyze and clarify the scope of the court’s powersin respect of foreign immovables within the context of the Act [Ontario’s Family Law Act]. Specifically, there are no cases that have everfully considered whether the remedy of exclusive possession is an in personam right.

In Macedo, Beaulieu, J. found he did not havejurisdiction to make an order vesting property located in Portugal in the non-titled wife, but because the court retained in personamjurisdiction against the husband, the court could, and did, order him to sell the property and share the net proceeds equally. In hisannotation to Macedo, the late Professor James G. McLeod expressed why the case should be approached with caution. He wrote: If the husband refused to sell the land, the court could not make an order selling the land or vesting title: Duke v. Andler,

(SCC), [1932] S.C.R. 734. The scope of the courts’ power over foreign immovables and the possible orders in matrimonial propertyproceedings have not been fully considered under the Family Law Act. Nor has there been a comprehensive analysis by the SupremeCourt of Canada on the effect of the jurisdictional limitation from British South Africa Co. v. Mocambique, [1893] A.C. 602 (H.L.) onproceedings under any of the current matrimonial property statutes. It is unfortunate that given the opportunity Beaulieu J. did not dealmore fully with the point. Beaulieu.

J. noted that the order concerning the land in Portugal might be difficult to enforce. A court should not make an in personamorder that affects foreign land unless it is able to supervise and enforce the order: Penn v. Baltimore (Lord), supra. As well, a courtshould not make an in personam order concerning foreign land if the act ordered would be prohibited in the lex situs of the land: cf.Norton v. Florence Land & Public Works Co. (1877), 7 Ch. Div. 332. There is no indication that the latter point was even considered inthe case. In Macedo v.

Macedo the court could enforce its sale and rental orders only through its contempt powers. If that is not an effectivemeans of enforcing the order, it is questionable whether there is any value to the order. 21 While it is clear that the Ontario court does not have jurisdiction to make orders that affect the title of lands in a foreign jurisdiction,the Ontario Court of Appeal has confirmed that Canadian courts do have jurisdiction to enforce rights affecting land in foreign countriesif those rights are based on contract, trust or equity, and the defendant resides in Canada.

Enforcing this jurisdiction is an exercise of inpersonam jurisdiction, which is the exception to the general rule that our courts have no jurisdiction to decide title to foreign lands:Catania v. Giannattasio, (ON CA), 1999 CarswellOnt 950, 174 D.L.R. (4th) 170 (Ont. C.A.). See also Webster v.Webster (1997), (ON SC), 37 R.F.L. (4th) 347 (Ont. Gen. Div.) at para. 87. In Catania, the Court of Appealconfirmed that four criteria must be met before an Ontario court may exercise its in personam jurisdiction. These prerequisites are asfollows: 1. The court must have in personam jurisdiction over the defendant.

The plaintiff must accordingly be able to serve the defendant withoriginating process, or the defendant must submit to the jurisdiction of the court. 2. There must be some personal obligation running between the parties. The jurisdiction cannot be exercised against strangers to theobligation unless they have become personally affected by it...An equity between the parties may arise in various contexts. In all cases,however, the relationship between the parties must be such that the defendant’s conscience would be affected if he insisted on his strictlegal rights... 3.

The jurisdiction cannot be exercised if the local court cannot supervise the execution of the judgment... 4.

Finally, the court will not exercise jurisdiction if the order would be of no effect in the situs...The mere fact, however, that the lex situswould not recognize the personal obligation upon which jurisdiction is based will not be a bar to the granting of the order. [141] The Superior Court in Potter continued at para 27: 27 As earlier indicated, there are many decisions rendered by the courts in Ontario and throughout Canada which cast doubt upon thejurisdiction of a court to order a legal interest in property located outside of Canada.

It is the general rule that courts do not have thejurisdiction to deal with rights in foreign property. Second, there are cases in which in personam orders have been made that affectproperty rights in foreign jurisdictions, although no case has dealt with such an order in the context of exclusive possession.

Theseconflicting decisions must be analyzed to provide clarity to the issue of whether an Ontario court is entitled to order exclusive possessionof a property located in a foreign jurisdiction, and to reconcile s. 28(1) of the Act in such a decision if necessary. [142] Three years later the issue was briefly considered in Nauth v Bijai, 2017 ONSC 2022 at para 93: ... Not considered either was the issue whether an Ontario court has the jurisdiction to make an Order affecting title to foreign realty. Asnoted by the Ontario Court of Appeal in Catania v.

Giannattasio10, “the general rule is that Canadian courts have no jurisdiction todetermine title to or an interest in foreign land”. A limited in personam jurisdiction over foreign property may apply provided that fourprerequisites are satisfied:

a) the court must have in personam jurisdiction over the defendant. The plaintiff must accordingly be able to serve the defendant withoriginating process, or the defendant must submit to the jurisdiction of the court.

b) there must be some personal obligation running between the parties. The jurisdiction cannot be exercised against strangers to theobligation unless they have become personally affected by it . . . An equity between the parties may arise in various contexts. In allcases, however, the relationship between the parties must be such that the defendant's conscience would be affected if he insisted on hisstrict legal rights . . .

c) the jurisdiction cannot be exercised if the local court cannot supervise the execution of the judgment . . .

d) finally, the court will not exercise jurisdiction if the order would be of no effect in the situs . . . The mere fact, however, that the lexsitus would not recognize the personal obligation upon which jurisdiction is based will not be a bar to the granting of the order. [143] More recently in GK v CK, 2021 BCSC 96, the Court addressed the wife’s claim for a division of property owned in India. TheCourt’s decision on the issue is found at paras 8-14: 8 In her opening statement, C.K. said that she wished to address, and intended to call evidence about, property in India that she allegedwas family property.

G.K. objected on the basis that C.K.’s pleadings did not claim an interest in property in India and it had not been thesubject of disclosure or discovery, all of which occurred while C.K. was represented by counsel. It was also not outlined specifically asan issue in C.K.’s trial brief.

9 While an interest in Indian property was not specifically pleaded, C.K. did seek a general order for property and debt division in heramended counterclaim and in her trial brief. 10 As I explained to C.K., with respect to the jurisdiction to deal with real property in India, it is settled law that this Court has nojurisdiction pursuant to the Family Law Act, S.B.C. 2011, c. 25 [FLA], or otherwise, to make an order in respect of property held inanother country. In Tezcan v. Tezcan (1987), (BC CA), 20 B.C.L.R. (2d) 253 (B.C. C.A.) at 256, McLachlin J.A., asshe then was, held: ...

The general rule is that the courts of a country have no jurisdiction to adjudicate on the right and title to lands not situate within itsborders. Only the courts of the jurisdiction in which lands are situate may adjudicate on the rights and title to such lands: Duke et al. v.Andler, (SCC), [1932] S.C.R. 734. The rule is not confined to the formalities of transfer of title, but extends to alldisputes touching the land, including debt, trust, or tort: see Deschamps v. Miller, [1908] 1 Ch. 856; Purdom etc. v. A.E. Pavey & Co.(1896), 1896 CanLII 17 (SCC), 26 S.C.R. 412; The British South Africa Company v.

The Companhia de Mocambique, [1893] A.C. 602(H.L.). 11 It is possible for this Court to consider the issue of ownership of foreign property with respect to an unequal division of property inCanada and to make appropriate compensation orders. In Tezcan v. Tezcan (1992), (BC CA), 62 B.C.L.R. (2d) 344(B.C. C.A.), Justice Cumming, for the Court, wrote: [85] In Laurence v.

Laurence (1991), (BC CA), 56 B.C.L.R. (2d) 254 (B.C.C.A.), Hutcheon J.A. considered whethera British Columbia court has the jurisdiction to order that a sum of money be made payable under the Family Relations Act in respect ofa half interest in property situated in New Zealand. Speaking for the court, Hutcheon J.A. stated, at 257-258: [The judgment in the court below] is an effective judgment so that the principle impeding an exercise of jurisdiction is not involved.Unlike the circumstances in Duke v.

Andler, [supra], no steps are required to be taken in the foreign jurisdiction to carry out the orders ofthe court. The court is exercising its personal jurisdiction over Mr. Laurence ... [T]o carry out the objectives of the Family Relations Act, we should recognize the right to a compensation order in the circumstances ofland located in a foreign jurisdiction. See also: Moradkhan v. Mofidi, 2013 BCCA 132 (B.C.

C.A.) at paras. 52-53. 12 Thus, the court may consider a compensation order for property held in another jurisdiction as part of carrying out the objectives ofthe FLA. 13 However, in this case, G.K. and C.K. do not own real property in BC. As a result, there is no real property here that could beunequally divided to compensate C.K. for G.K.s alleged ownership of Indian property. Nor does it appear that there is other familyproperty against which a compensation order could be made.

Both parties have bank accounts, but there is no evidence of how or whenthe funds in those accounts were acquired or whether they are family property. 14 Further, there has been no request for disclosure of documentation with respect to Indian property on which I could determine C.K.’sentitlement to a compensation order to offset the value of any Indian property. For example, I do not know whether G.K. owned theIndian property prior to the parties’ marriage. I do not know whether he owned it jointly with other family members. There was nodisclosure about the value the property.

All of these issues should have been explored through discovery and/or disclosure. As a result, Idid not hear evidence with respect to the Indian property. [144] In Liu v Zhao, 2022 BCSC 1991, the Court said at para 17: … While Canadian courts will not adjudicate a right, title, or interest to immovable property in a foreign country (Tezcan v. Tezcan, 20B.C.L.R. (2d) 253 at 256, (C.A.)), Canadian courts will in certain circumstances exercise in personam jurisdiction overa party in a family law proceeding to direct the disposition of foreign property: Macedo v. Macedo, 19 R.F.L. (4th) 65 at paras. 18-19, (Ont.

S.C.). [145] In this case, I have found that the properties owned in Arizona are either owned in title or beneficially owned by ADL, which isan Alberta based corporation. [146] I cannot direct that title to any of the Arizona properties be transferred to Ms. McCullough as part of the distribution of theparties’ matrimonial property. I can, however, take the current market value of the properties into account when determining the value ofthe ADL shares to be divided and in determining the amount of money Mr. Linke is to pay Ms.

McCullough to equalize their respectivenet family property under ss 9(1) and (2) of the Matrimonial Property Act. g. Shareholders’ Loan [147] As of March 31, 2018, there was a loan outstanding and due to the shareholders of ADL in the amount of $622,040. [148] Mr. Linke did not produce the Financial Statements for the years ending March 31, 2019, 2020, 2021 and 2022, which wouldhave enabled a tracing of the shareholders’ loan. No other evidence was submitted which suggests that part or all of the shareholders’loan has been repaid to the shareholders by ADL. [149] As I have ordered that Ms.

McCullough transfer her 50% interest in the shares of ADL to Mr. Linke, the entire balance of theshareholders’ loan shall appear as an asset on his side of the ledger in the Matrimonial Property Statement as it reflects money owed tohim as the company’s sole shareholder as at the date of trial.

3. RESP [150] Mr. Linke alleges that Ms. McCullough has taken control of the RESPs since the parties separated. Mr. Linke contends it shouldbe treated as matrimonial property on her side of the ledger in the Matrimonial Property Statement. [151] The RESPs will not be included in the Matrimonial Property Statement. I accept Ms. McCullough’s submissions that this assetis intended to benefit the children and their post-secondary education. The RESPS are not matrimonial property divisible between theparties. Ms.

McCullough will continue to act as a trustee of the amounts. [152] In the event that any funds remain in the RESPs after both children have completed their respective post-secondary education,the amounts then remaining should be divided equally amongst the children. [153] Alternatively, if G reaches the age of 21, and neither child is enrolled in a post-secondary program at the time, any amountsremaining in the RESPs should be divided equally amongst the children. 4.

Miscellaneous assets [154] With respect to the aluminum boat, the snowmobile and the Quad, I find their values are $600, $600 and $800 respectively asthose were the only values testified to in the trial. 5. Debts and Liabilities [155] As of the date of trial, I find that Mr. Linke had the following debts: • HELOC secured against the matrimonial home with an outstanding balance of $174,397.72 as of October 2022; • Contingent personal taxes payable on the realization of the value of the shares in ADL. [156] Mr.

Brinkman estimated a contingent personal tax liability in his letter dated December 1, 2022, in respect of the realization ofthe vale of the shares in ADL, using a contingent tax rate of 13.5%. This equates to a contingent personal tax liability of $222,007.50. [157] Mr. Linke is seeking to include additional debts on his side of the ledger of the Matrimonial Property Statement. These includecontingent late penalties and interest owing on account of ADL’s failure to file its Corporate Tax Returns and a debt purportedly owingto his father Walter Linke. [158] Mr.

Linke has had full control over ADL since the parties separated in 2016. Ms. McCullough has not been involved with thecorporation. Mr. Linke shall be solely responsible for any late penalties or interest that have accrued or will accrue as a result of hisfailure to file the Corporate Tax Returns for ADL since the date of separation. They shall not be included as a family debt on theMatrimonial Property Statement. They were not incurred for the benefit of the family. [159] Mr. Linke also submits there is a real and true debt owed to his father, Walter Linke, in the amount of $136,305, that remainsoutstanding.

I am not satisfied that the existence and enforceability of this debt has been proven on a balance of probabilities. Thedocument purportedly confirming this debt was dated the same date as the date of the parties’ separation, which is suspicious. [160] Mr. Linke only testified that the document was signed, He could not give any details about where it was signed and could onlygive vague details about why it was incurred. He originally stated it was for “materials” then he stated it was for “numerous services.”Ms.

McCullough testified that after the date the document was allegedly signed, she met her father-in-law on several occasions; he didnot once mention that there was a debt owing. [161] There is otherwise no backup documentation. It was not included in the Financial Statements for ADL for the year endingMarch 31, 2017. There is no evidence that any payments have been made toward this debt since it was allegedly incurred in November2016, over 6 years ago, and thus any claim in respect of this debt is likely statute barred.

As a result, this alleged debt owing to WalterLinke will not be included in the Matrimonial Property Statement. C. Determine Property Exempt from Distribution [162] In Harrower v Harrower (1989), 21 RFL (3d) 369, (Alta CA) [Harrower], the Court of Appeal heldexemptions are permitted for property brought into the marriage which can be traced either directly or indirectly (376). Tracing can beinferred, implied, or presumed (376). The exemption applies to the original property or its substitute, which is still owned by the partieson the date of trial. [163] Mr.

Linke is claiming an exemption with respect to the matrimonial home located in Edmonton, Alberta. According to Mr.Linke, it was built and paid for by Mr. Linke and his parents. The parties moved into the matrimonial home together shortly after themarriage and lived there together until January 28, 2017, when Ms. McCullough moved out of the home. Mr. Linke has maintainedexclusive occupation of the matrimonial home since that time. [164] On the date of the parties’ marriage, I accept the matrimonial home had a market value of $300,000.

It was indebted by a non-revolving construction mortgage in favour of the Canadian Western Bank, registered on September 4, 2002, in the original principalamount of $163,900 (the “CWB mortgage”), leaving equity of $136,100. [165] The matrimonial home was originally registered in Mr. Linke’s sole name. Title was transferred into the joint names of theparties, Mr. Linke and Mrs. Linke, on or about July 17, 2003. At the time of the title transfer, the parties entered into a new mortgage

with the Alberta Treasury Branches (“ATB”), with an original principal amount of $175,000 (the “ATB mortgage”). This has now evolved into the HELOC mentioned above that is currently registered against the property. [ 166 ]

Section 36 of the Matrimonial Property Act directs courts to not apply the doctrine of the presumption of advancement to a transaction between spouses (s 36(1)). However, the fact that property is registered in the name of both spouses as joint owners is proof, in the absence of evidence to the contrary, that a joint ownership of the beneficial interest in the property is intended (s 36(2)(a)).

The s 36(2) presumption is not rebutted in this case. [ 167 ] In Jackson v Jackson , 1989 ABCA 197 [ Jackson ], the Court of Appeal considered whether an exemption is lost to the extent of a joint interest in the exempt property when that interest was transferred, without consideration, to a spouse (para 1).

In other words, the Court tackled the question of whether an exemption could be subject to a gift. [ 168 ] In Jackson , the husband’s mother gave the husband $61,500 cash, which was placed in the parties’ joint names and used to pay down the mortgage on a jointly owned matrimonial home and to make a down payment on a duplex bought in the husband’s name alone. The amount placed towards

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