Brown v Brown, 2023 ABKB 117

Court of King’s Bench of Alberta Citation: Brown v Brown, 2023 ABKB 117 Date: 20230718 Docket: 4803 190625 Registry: Edmonton Between: Anita Lynn Brown Plaintiff - and - Dale Arthur Brown Defendant Corrected judgment: A corrigendum was issued on July 18, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Decision of the Honourable Justice S. Leonard _______________________________________________________ [ 1 ] The parties seek a judgment for divorce and the division of matrimonial property and a final spousal support order. This matter was heard by way of

summary trial on the basis of affidavit evidence and transcripts of questioning. The following issues are before the Court: (

i) Whether the parties can be granted a divorce; (ii) Whether spousal support is payable to either party; a. Entitlement; b. Determination of income;

c. What amount of spousal support is payable, if any? (iii) Division of matrimonial property; a. Is a personal injury settlement received by Ms. Brown exempt? b. Were funds totalling $7,000, given to Mr. Brown, an advance on property? c. Should property management fees allegedly owed to Mr. Brown be included on the Family Property Statement? d. What is the value of the property in dispute? Divorce [ 2 ] The divorce proceeded on the ground that there has been a breakdown of the marriage in that the parties have been separated for more than one year.

Based on the evidence before me, 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. The parties agree there are no children of the marriage as defined by the Divorce Act . Mr. and Ms. Brown are therefore entitled to a divorce judgment. Spousal support Entitlement [ 3 ] Both parties seek spousal support from the other. Ms. Brown’s position is that she has both a compensatory and a non- compensatory claim to spousal support.

She argues she is entitled to compensatory spousal support because of the traditional role she played in the marriage: taking care of the family and the children. She also claims she has entitlement to non-compensatory spousal support because she is currently not working and her ability to work is limited. [ 4 ] Mr. Brown’s position is that he is entitled to non-compensatory spousal support because he is unable to work due to health issues. Currently, his sole income is Assured Income for the Severely Handicapped (AISH) and Canada Pension Plan (CPP) benefits. Mr.

Brown also argues he is unable to pay spousal support. His position is that Ms. Brown can work, and income should be imputed to her. [ 5 ] The parties began to live together in September 1986 and were married on May 18, 1990. According to Ms. Brown, the parties separated on November 15, 2019, after over 29 years of marriage and 33 years of cohabitation. The parties agree that they continued to reside separate and apart in the matrimonial home until December 2019 when Ms. Brown physically left the matrimonial home. It is unclear from Ms. Brown’s affidavit evidence when in December she moved out. Mr.

Brown says they had a discussion about separating on November 25, 2019 and they ceased cohabitating on December 21, 2019. [ 6 ] The parties have two children together who are now grown adults and are no longer children of the marriage. [ 7 ] The parties agree that during their marriage, Mr. Brown supported the family by working various jobs including in the cabinet industry, as a truck driver and managing the parties’ rental properties. Ms. Brown was a hair stylist throughout the marriage. When the children were born, Ms. Brown took time off to care for the children while Mr. Brown continued to work full-time.

Thereafter, Ms. Brown worked both part-time and full-time, depending upon the needs of the family and the children. [ 8 ] The parties built a hair salon in the matrimonial home so that Ms. Brown could work from home. She worked in the home salon from 2007 until separation in November 2019. Ms. Brown worked approximately 4 days per week from 2007 to July 2011. In July 2011, Ms. Brown was in a car accident that left her with injuries to her feet, back and neck. This affected her ability to work while she recovered from her injuries. The parties disagree about how long Ms.

Brown was off of work following her car accident and how many days per week she worked after Ms. Brown returned to working in the home salon. Ms. Brown says she worked 2-3 days per week and Mr. Brown says it was 4 days per week. [ 9 ] Ms. Brown asserts she stopped working after the parties separated because she left the matrimonial home in December 2019 and no longer had access to the home salon. Mr. Brown remained in the matrimonial home. Ms. Brown’s evidence is that she took the holiday trailer to British Columbia and lived in the trailer on her daughter’s property “for a bit.” Mr. Brown’s evidence is that Ms.

Brown lived elsewhere immediately following their separation and that Ms. Brown did not live in the holiday trailer, on their daughter’s property in B.C., until after she returned from Mexico in March 2020. [ 10 ] Ms. Brown lived in Mexico in a rented apartment during the winter months in 2020 and 2021. According to Mr. Brown, Ms. Brown flew to Mexico on January 1, 2020 “to start her new life.” Ms. Brown’s evidence is that she has friends in Mexico and is comfortable there. She claims the cost of living is lower, making it more affordable for her.

She did not have a permit to work in Mexico during these periods. [ 11 ] Ms. Brown’s evidence is that during the summer months, she returns to Canada and stays on the couches of friends and family. She says she has no ability to work, no money to rent a place in Canada and no ability to sustain herself. In 2020, Ms. Brown was unable to work because of the COVID-19 pandemic. She withdrew money from her RRSP account and, in or about March 2020, $30,000 from a joint ATB Financial HELOC registered against one of the parties’ former rental properties, to support herself. [ 12 ] Ms.

Brown advises she has not worked in a salon since 2007. She has not kept up on any professional development as a hair

stylist. Her position is that it would be “extremely difficult” for her to find employment at a salon. Further, Ms. Brown states she iscurrently 59 years old and “even if she could find work, it would be part time as [she] cannot stand all day anymore due to [her] age.” [13] According to Mr. Brown, Ms. Brown worked one day per week between the fall of 2017 and the spring of 2018, in a salonlocated in the Lacombe Mall. Ms. Brown denies this allegation. I note she was not questioned on it. [14] Because of health issues, Mr.

Brown stopped working in the cabinet industry in March 2018 and began looking after theparties’ two rental properties (the Westlock property and the Lexington property). The Weslock property was sold in December 2020 andthe Lexington property was sold in August 2021. [15] On May 28, 2021, Mr. Brown was diagnosed with leukemia. Since that time, he has been in and out of hospital for treatment.In January 2022, Mr. Brown was diagnosed with Crohn’s Disease. I was recently advised that Mr.

Brown is currently in the hospital, inpalliative care, and that his prognosis unfortunately is poor. [16] As he was unable to work, in October 2021, Mr. Brown applied for AISH and was accepted in the spring of 2022. Hecurrently receives $1,117 from AISH and $568 in CPP benefits, for a total of $1,685 monthly. [17] 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]. [18]

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. [19]

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 andabove any obligation 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. [20] 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.” [21] Compensatory spousal support addresses non-monetary contributions to a marriage that are caused 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. [22] 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. [23] In this case, I have no difficulty concluding that Ms. Brown is entitled to compensatory spousal support. This was arelationship of 33 years where Mr. Brown worked to support the family financially while Ms. Brown took on domestic duties.

Althoughshe worked part-time as a hair stylist, her focus was on household responsibilities and her work varied with the needs of her family. [24] When the parties separated, Mr. Brown remained in the matrimonial home and continued to manage the parties’ rentalproperties. Although he stopped working in the cabinet industry 2018, the money he received from the rental properties went into achequing account that he used for household expenses. Ms. Brown did not have access to these funds nor was she provided with financialsupport to relieve the economic hardship arising from the breakdown of the marriage.

According to her evidence, since separation,during the winter months she lives in Mexico, where the cost of living is lower, and during the summer months, she lives with family andfriends. [25] One of the objectives of spousal support is to promote economic self-sufficiency, within a reasonable time. While I accept thatthe initial breakdown would have been a tumultuous time and that she would have had to take time to stabilize her living situation, Ms.Brown chose a lifestyle where she spends winters in Mexico and summers in Canada.

While I accept that it may be more affordable tolive in Mexico, there is no evidence that she has made any efforts to earn an income, whether in Canada or in Mexico, or to otherwise

become self-sufficient. [ 26 ] I accept that Ms. Brown is entitled to spousal support on a compensatory basis, for an indefinite period; however, this does not end the inquiry. Mr. Brown is ill will cancer. He is 64 years old. He does not work. His sole sources of income are AISH and CPP benefits. His position is that he is also entitled to spousal support, albeit on a non-compensatory basis. I also accept that Mr. Brown has a need for spousal support. Determination of the parties’ incomes [ 27 ] To assess whether either party can or should pay the other spousal support, I must determine their respective incomes.

Mr. Brown’s income [ 28 ] Mr. Brown’s evidence is that he relies on his family to survive, as well as the food bank and income support with subsidised housing. In 2021, Mr. Brown says his income consisted of $6,836 from CPP benefits and $14,895.00 from an RRSP he cashed out. His evidence is that the RRSP cash-out was a one-time payment to support himself. He argues his income for 2021 should be based solely on his CPP benefits of $6,826. His Tax Return

Summary also shows his retroactive AISH payments totalling $1,494 in 2021. [ 29 ] Inclusion of RRSPs in income is fact specific. After summarizing guiding principles from the jurisprudence, the British Columbia Court of Appeal in McKenzie v Perstrelo , 2014 BCCA 161 [ McKenzie ] opined at para 83 : ... it seems clear from the jurisprudence that there is a presumption that RRSP withdrawals should be included in income for the purpose of calculating child support and, depending on the decision with respect to the division of that asset, in the calculation of spousal support.

The presumption may be displaced by an array of circumstances. [ 30 ] Where RRSP withdrawals are regular and a spouse’s only source of income, they are more likely to be included as income for the purpose of determining support, subject to a double-dipping argument, as the withdrawals are more akin to pension income.

See: Edgar v Edgar , 2012 ONCA 646 and LS v DS , 2017 ABQB 584 at para 73 . [ 31 ] However, in circumstances, for example, where RRSPs have already been accounted for in the division of family property or where they have been used to pay for joint debt, it may not be appropriate to include them as income: McKenzie at para 82 . [ 32 ] I will treat Mr. Brown’s RRSP withdrawals in 2021 as income because he used this money to fund his personal expenses, and in fairness to Ms.

Brown who had to make yearly RRSP withdrawals to fund her own personal expenses, partly because she has not received any financial support from Mr. Brown. [ 33 ] Sometime after September 30, 2022, Mr. Brown made a further withdrawal of $12,500 from his RRSPs to pay for legal fees. His evidence is that the remainder of his RRSPs will be spent on lawyer fees as well as paying back a debt he owes to his sister. I therefore find that his income in 2021 was $22,377.19 but that his income on a go-forward basis is comprised solely of the government benefits he receives. [ 34 ] In March 2022, Mr.

Brown was approved to receive AISH, effective November 1, 2021. The AISH benefit is $1,117.00 per month. Combined with his CPP benefits in the amount of $588.00 per month, Mr. Brown’s total monthly income in 2022 was $1,685.00 per month or $20,220 per year. [ 35 ] According to Mr. Brown, he is only entitled to receive AISH until he turns 65 years of age in May 2023. Should income be imputed to Ms. Brown? [ 36 ] Ms. Brown claims she cannot work because she does not have a permanent place to live in Canada, she resides 6 months per year in Mexico and does not have a car.

She further claims she is unemployable as a hair stylist because she is unable to stand all day and has not kept up with developments in her field. Counsel for Ms. Brown argues that Ms. Brown is almost 60 years old, and she should be able to retire. [ 37 ] Mr. Brown’s position is that Ms. Brown can work. In his materials, he has provided information from a Government of Alberta website indicating that the average wage of a hair stylist in Alberta is $25.92 per hour and that the average salary is $42,819.00. This information also indicates that 29% of employers have unfilled vacancies over 4 months. [ 38 ] Ms.

Brown’s only source of income over the relevant period was her RRSP withdrawals. No arguments were raised regarding Ms. Brown’s RRSP income, but because it is her only source of income, it is appropriate to include her RRSP withdrawals as income. In addition to RRSP income, in March 2020, Ms. Brown withdrew $30,000 from the ATB Financial HELOC registered against one of the parties’ rental properties to pay for personal expenses. Mr. Brown also claims that Ms. Brown received an inheritance in the amount of $17,500 in December 2021 and has access to a personal line of credit with RBC. [ 39 ] Section 19(1)(

a) of the Federal Child Support Guidelines relates to imputing income for the calculation of child support. The Spousal Support Advisory Guidelines recognize that

section 19 is “often the basis for these imputing claims” in the context of spousal support.

Section 19(

a) allows the Court to impute “income to a spouse as it considers appropriate in the circumstances...” including where “the spouse is intentionally under employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse.” [ 40 ] Ms. Brown’s unemployment is not “through circumstances truly beyond [her] control”: Peters v Atchooay , 2022 ABCA 347

at para 60 . She has not been laid off or terminated. Instead, she has chosen to live part-time in Mexico, which makes it difficult for her to stabilize her living situation and to secure employment. [ 41 ] Ms. Brown is currently 59 years old. Although she does not want to work and would like to retire, this is not reasonable in the circumstances, particularly given Mr. Brown’s ill health. Ms. Brown will not be able to collect Old Age Security until she turns 65 years of age. [ 42 ] I accept that it might be difficult for Ms.

Brown to work in the hairstyling industry, full-time, particularly because her skills may be out of date, and she has difficulty standing for long periods of time. However, I am not convinced that she has no ability to earn an income as contended by her counsel. There is nothing in the evidence to suggest that she cannot secure part-time, minimum wage employment of some kind.

She says she cannot secure employment because she does not own a vehicle but there is nothing to suggest she could not rely on public transportation or find a place to work where she can walk or bike to work. [ 43 ] There is also no evidence that Ms. Brown has attempted to find any work as a hair stylist or in any other job during the months that she has resided in Canada post-separation. [ 44 ] I am of the view that Ms. Brown’s unemployment arises from voluntary choices. [ 45 ] After factoring in closures and reduced income earning opportunities because of the COVID-19 pandemic and giving Ms.

Brown a couple of years post-separation to move toward economic self-sufficiency, I believe income should be imputed to Ms. Brown commencing January 2022. [ 46 ] As such, I impute her 2022 income at $15,000 per year based on a minimum wage ($15 per hour), part-time (20 hours per week) job.

Absent a change in circumstances, her income shall be imputed at $15,000 per year until she turns 65 years of age. [ 47 ] Not factoring in any personal expenses that may have been run through the home-based hair salon and the rental properties, I conclude that the parties’ incomes over the relevant period was/is as follows: 2019 2020 2021 2022 2023 Ms. Brown $9,296 $24,679 $8,459 $15,000 $15,000 Mr. Brown $27,601 $17,395 $20,883 $7,056 $7,056 [ 48 ] The parties’ respective 2020 income does not include the taxable capital gains reflected on each party’s Tax Return

Summary as the proceeds of sale remain in trust. Nor have I included the net rental income included in Ms. Brown’s taxable income in 2020 as I accept her evidence that she did not receive this income. [ 49 ] I have not included Mr. Brown’s AISH payments in the calculation of his income as Line 14500 social assistance payments are not factored into the calculation of a party’s income by the Childview software and they are deducted from a person’s taxable income on their Income Tax Return. What amount of spousal support is payable to Ms.

Brown? [ 50 ] The initial period following the separation in late 2019 and 2020 would have been the most difficult time for Ms. Brown. She moved out of the matrimonial home in December 2019, no longer had access to the hair salon in the home and no longer had access to any of the rental income from the parties’ properties. [ 51 ] I acknowledge that Mr. Brown’s income was modest during this period. After the rental properties were sold in 2020 and 2021, Mr. Brown no longer had rental income. In 2021, he resorted to paying for living expenses using his RRSPs.

However, he remained in the matrimonial home and had greater control over the matrimonial assets. [ 52 ] Ms. Brown is claiming spousal support at the high end of the range for the month of December 2019, in the amount of $715, asserting she left the matrimonial home with next to nothing and no ability to work. As previously indicated, it is not clear from her affidavit evidence when Ms. Brown moved out of the matrimonial home in December 2019. Mr. Brown claims it was not until December 21, 2019. Mr. Brown also disputes that Ms. Brown left with next to nothing, claiming Ms.

Brown left with the $3,000 she had earned working in the home salon, she had money in a credit union bank account, cash she had accumulated from her business and selling clothes, as well as salon equipment. [ 53 ] Typically, spousal support is not payable to a spouse while parties continue to cohabitate under the same roof and that spouse’s accommodation and other expenses are being paid for by the other spouse. Absent a definitive date on which Ms. Brown moved out of the matrimonial home and given the contrary evidence of Mr. Brown regarding what Ms. Brown left the home with, I am not prepared to award Ms.

Brown spousal support for the month of December 2019. [ 54 ] I am prepared to set spousal support toward the high end of the SSAGs for the year 2020 in the amount sought by Ms. Brown in her Application for

Summary Trial, being $282 per month, which equates to $3,384 for the year. I have selected the higher end of the range due to the strength of Ms. Brown’s compensatory claim, her financial needs and her age. [ 55 ] In May 2021, Mr. Brown was diagnosed with leukemia, compromising his ability to work. His income in 2021 is comprised primarily of RRSP withdrawals and CPP benefits. I set spousal support for 2021 at the midpoint of the recommendations contained in the SSAGs . That is, $453 per month, for a total of $5,436 for the year. The midpoint recognizes that Ms.

Brown should have started to make some efforts towards becoming self-sufficient in 2021. [ 56 ] In 2022, Ms. Brown’s income is set at $15,000 while Mr. Brown’s income is set at $7,056 exclusive of his AISH payments. No spousal support is payable by either party to the other.

[ 57 ] Although neither party is required to pay spousal support for 2022, the parties’ entitlement to spousal support is not terminated. The issue of spousal support may be revisited upon there being a material change in either party’s circumstances. [ 58 ] My decision not to award spousal support to either party effective 2022 also takes into consideration my award with respect to the division of matrimonial property. As a result of my award, Ms. Brown will be receiving $208,484.12 out of the proceeds of sale currently being held in trust (inclusive of my retroactive spousal support award) and Mr.

Brown the amount of $115,947.88. [ 59 ] I set the total amount of retroactive spousal support owed by Mr. Brown to Ms. Brown at $8,820 for the period January 2020 to December 2021. This amount shall be paid to Ms. Brown out of Mr. Brown’s share of the sale proceeds from the sale of the matrimonial property currently being held in trust. Division of matrimonial property The Personal Injury Settlement [ 60 ] On May 3, 2017, Ms. Brown received a personal injury settlement of $166,148.59 resulting from the 2011 car accident, discussed above (the Settlement Funds). Ms.

Brown claims an exemption of a portion of these funds. Mr. Brown’s position is that these funds compensated both spouses and can no longer be traced as it was used to pay down joint family debt. [ 61 ] Section 7(4) of the Family Property , RSA 2000, c M-8 provides that property acquired during the marriage is the product of the marriage and presumptively must be shared. However, there are certain categories of property that are exempt. Section 7(2)(

d) of the Family Property Act states “an award of settlement for damages in tort in favour of a spouse..., unless the award or settlement is compensation for a loss to both spouses...” is exempt from distribution. [ 62 ] Mr. Brown also argues that he is entitled to a portion of the Settlement Funds because he suffered when Ms. Brown was injured. There is little evidence to support this position. Mr. Brown claims in his Affidavit, sworn October 31, 2022, that Ms.

Brown “insisted that although she was the one in the accident, that it had affected everyone in our family and that she was depositing it into a joint account that would pay down family debt.” However, this is a new assertion that was never put to Ms. Brown. Because of the filing deadlines, Ms. Brown did not have an opportunity to respond to this allegation. I therefore reject it. [ 63 ] Similarly, Mr. Brown’s own evidence is that Ms. Brown was only off work for a month following the accident. There is no evidence that Mr.

Brown’s employment suffered, that he had to take on more of the household chores, or that he was otherwise impacted by Ms. Brown’s accident. I therefore reject Mr. Brown’s argument that the Settlement Funds were compensation for loss to both spouses. [ 64 ] To retain the exemption, the property must be traceable into existing assets. On May 10, 2017, the Settlement Funds were deposited into the parties’ joint RBC bank account. On May 17, 2017, $165,000 was deposited into the parties’ joint Home Equity Line of Credit (HELOC) with BMO, which was secured against the former matrimonial home.

In 2021, the former matrimonial home was sold and $200,289.85 is being held in trust from the sale proceeds. [ 65 ] According to Mr. Brown’s submissions, the BMO HELOC was opened by the parties and drawn from when personal living expenses of the marriage were needed to be paid for. This is consistent with Ms. Brown’s evidence. [ 66 ] Ms. Brown acknowledges that because the Settlement Funds were deposited into a joint bank account and then transferred to the joint BMO HELOC, secured against the matrimonial home, she presumptively gifted half of the Settlement Funds to Mr. Brown. Ms.

Brown is claiming an exemption of $82,500.00. Again, Mr. Brown’s position is that these funds were used to pay down family debt. As such, they do not attract an exemption. [ 67 ] As discussed below, at the time Ms. Brown transferred the Settlement Funds from the joint bank account into the line of credit, the BMO HELOC had an outstanding balance of approximately $320,000. In her questioning, Ms. Brown explained that her intent with respect to paying down the BMO HELOC “was to have ready access to it for when I needed it.” She acknowledged that Mr.

Brown was not working at that point and there would have been withdrawals of “around $10,000 possibly to just help support us.” [ 68 ] Mr. Brown’s position is that the $165,000 deposit into the BMO HELOC was done to retire a portion of the debt owed. Further, according to Mr. Brown, the credit gained from the deposit of the $165,000 was partially withdrawn in small increments over time. [ 69 ] The filed materials include two statements from the BMO HELOC account. The first is the statement dated June 13, 2017.

This shows a previous balance owing of approximately $326,000 and the deposit of $165,000 into the account. Other than one automatic payment received, and an interest charge, this statement does not contain any other activity on the account. [ 70 ] The second BMO HELOC statement included in the filed materials is from April 2020. This statement shows a $20,000 cash advance on March 17, 2020. According to Mr.

Brown, $18,000 of these funds were used to support the rental properties that the parties owned and $2,000 was used to pay an initial retainer for a lawyer. [ 71 ] The BMO HELOC was closed on June 18, 2021, being the same date as the closing of the sale of the matrimonial home. [ 72 ] I accept Mr. Brown’s position that the debt owing on the BMO HELOC resulted from the parties using this account for their family’s personal living expenses.

I also accept that following the deposit of $165,000, there were only a few withdrawals from the BMO HELOC consisting of approximately $10,000 to support the family’s living expenses and a cash advance of $20,000 by Mr. Brown to support the parties’ rental properties. Presumably, when the matrimonial home was sold in 2021, the sale proceeds would have been used to retire any further debt owing on the BMO HELOC.

[73] According to the Alberta Court of Appeal in MacFarlane v MacFarlane, 2016 ABCA 183 at para 12, “[w]hile it is wellunderstood that tracing exemptions is not a perfect science and can be inferred, implied or presumed, there must be an evidentiary basisto support the exemption.” [74] Typically, one cannot maintain exemptions where the exempt assets are dissipated having been spent on living expenses anddebts: Smith v Smith (1997), 76 ACWS (3d) 343 (ABQB) at para 58.

However, where otherwise exempt funds are used to pay offmatrimonial debt, those funds may still be subject to an exemption, if they can be traced into an existing, identifiable asset. See:Brokopp v Brokopp, 1996 ABCA 4 at paras 9-11 [Brokopp] and O’Neil v Yaskowich, 2018 ABQB 599 at para 33. [75] The Court of Appeal in Brokopp specified that the tracing would have to be to “identifiable assets acquired directly orindirectly through the secured loans” (para 11). The most obvious example being a mortgage used to finance the purchase of a home.

Seefor example: Katay v Katay (1995), 168 AR 31, (ABKB) at paras 19 and 24; Lobo v Lobo, 1999 ABQB 107 at para74; Low v Robinson, 2000 ABQB 60 at paras 87-101; Bzdziuch v Bzdziuch, 2001 ABQB 306 at para 42 [Bzdziuch]; Nuttall v Rea, 2005ABQB 151 at paras 261-268; Klinck v Klinck, 2008 ABQB 526 at para 29; and Mulick v Mulick, 2012 ABQB 592 at paras 81-83.

Alump sum payment applied toward the mortgage on the home would increase the equity in the home: Bzdziuch at paras 43 and 44. [76] More recently, my colleague Justice Rothwell in Sumka v Ethier, 2022 ABQB 485, conducted a tracing analysis involvingexempt funds that were applied towards a HELOC, which was used to purchase a property, and also used to renovate the property. Atpara 65, Justice Rothwell explains: Turning to 112, Tracy argues that her exemption in 170 should be traceable into 112.

The evidence clearly establishes that the proceedsfrom the sale of 170 flowed into 112 (sale proceeds were applied toward the HELOC that was used to assist with the purchase of 112 andtowards renovations made to 112). I find that both the exempt value of Tracy’s date of marriage interest in 170 and any increase in thevalue of her interest in 170 during the marriage is traceable to 112. I value her date of marriage exemption at $54,014 based upon herposition that she had a 0.3687 interest in 170 (date of marriage value of $146,500 x 0.3687 = $54,014).

I note that she asserted a 0.3687value in 170 as a result of Hilda making a $25,000 down payment and Hilda matching her mortgage payments. [77] Here there is no evidence that the BMO HELOC was used to finance the initial purchase of the matrimonial home or that itwas used to replace a mortgage that the parties had used to finance the purchase of the home.

The evidence before me is that the BMOHELOC was used to pay for the parties’ personal and household expenses and expenses related to their rental properties. [78] While reducing the amount of money owed on the BMO HELOC would have had an indirect impact on the equity availablefollowing the sale of the matrimonial home, the BMO HELOC was not used by the parties in this case in a manner equivalent to amortgage. The fact that the BMO HELOC was secured against the matrimonial home does not change the character of the debt. Itherefore conclude that Ms.

Brown is not entitled to an exemption of any of the Settlement Funds. Were funds totalling $7,000 given to Mr. Brown as an advance on property? [79] Ms. Brown claims that the $7,000 Mr. Brown received from the net proceeds of the sale of the rental properties and thematrimonial home was an advance on property. Mr. Brown’s position is that these funds were advanced as compensation formanagement fees for the parties’ rental properties and to cover household expenses. [80] Counsel for Ms. Brown argues there is an agreement in writing between counsel that shows the $7,000 was intended as anadvance of property.

Counsel for Mr. Brown disagrees with the

interpretation of that correspondence. The relevant correspondence isreproduced below. I note the correspondence refers to an advance of $5,000 rather than $7,000. Neither party commented on thisdifference, and I can only conclude that there was an initial advance of $5,000 followed by a further advance of $2,000. Given the lack ofargument on this point, I accept that whether it was $5,000 or $7,000, the money was advanced for the same purpose. [81] In a letter dated July 7, 2021, Counsel for Mr.

Brown wrote: Further to these matters, my client is requesting a further $5,000.00 be released from the net sale proceeds held in trust [from] theWestlock property to cover the cost of payments on the Lexington property given the failure of the sale, which includes: Taxes - $3,192.25 Tax penalty - $159.61 ATB June payment - $498.39 plus late fee of $15.00 House insurance - $136.76 Anita and Dale life insurance - $191.17 Dale’s auto insurance - $143.17 RBC bank fee - $6.50 I have been advised that your client consents to the release of the conditions and understood that this is to be an advance out of the finaldetermination of division of matrimonial property.

Kindly advise soonest with respect to the proposed release of these monies. [82] On July 12, 2021, Counsel for Ms. Brown responded: I confirm that my client agrees to the release of $5,000 as an advance out of the final determination of division of property.

[ 83 ] Ms. Brown argues that Mr. Brown has not put into evidence any receipts to claim compensation for any management or maintenance fees for the rental properties. She asserts that in response to an undertaking, Mr. Brown provided handwritten notes with respect to his maintenance log but has not put any receipts into evidence demonstrating any costs that he incurred. [ 84 ] Apart from “Dale’s auto insurance” the remaining items listed in the letter dated July 7, 2021, are joint expenses. Further, the items listed in Mr. Brown’s handwritten notes all relate to management of the rental properties.

I am unable to draw any conclusions from the fact that Mr. Brown did not provide receipts for these expenses. I do not know if he was asked for receipts or not. [ 85 ] The parties both describe the funds as being “an advance out of the final determination of division of matrimonial property.” While this phrase is unclear, given the purpose for which the funds were used, I find that the $7,000 received by Mr. Brown was intended to cover joint debts related primarily to the Lexington property, which was eventually sold in August 2021. It was not an advance of Mr. Brown’s share of the property division.

Should rental property management fees be included in the property statement? [ 86 ] Mr. Brown argues that he is entitled to $7,000 from Ms. Brown as payment for the management of the parties’ rental properties. Ms. Brown counters this assertion by pointing out that Mr. Brown had full use of the matrimonial home and did not pay occupation rent. [ 87 ] Mr. Brown collected all of the rent from the rental properties. He kept this money to pay for expenses associated with the rental properties as well as for his own personal expenses.

Presumably any management fee would be built into the monthly rental rate of the properties. On that basis alone, Mr. Brown is not entitled to any further compensation for his management of the parties’ rental properties. In the circumstances, $7,000 in rental property management fees will not be included in the Family Property Statement. What is the value of property in dispute? [ 88 ] The parties disagree on the value of three assets: a utility trailer, a 2007 Arctic Cat and a 2014 Chevy High Country truck. [ 89 ] Mr. Brown says there was an agreement between the parties that Mr.

Brown would keep a utility trailer, quad and household furniture and Ms. Brown would keep a holiday trailer and a 2006 Trailblazer SUV. Ms. Brown has since sold the holiday trailer and the SUV. She used the money to purchase cryptocurrency, the value of which she has included on her version of the Family Property Statement. Because of this, Mr. Brown argues some of the assets should be valued as at separation and other assets should be valued at the date of trial. [ 90 ] Ms. Brown has not had an opportunity to respond to Mr. Brown’s assertion that they had an agreement regarding the division of these assets.

As such, I am unable to rely on his version of events in this regard. Further, while Mr. Brown argues that the value of the items he kept have now gone up, given that the assets kept by Ms. Brown are traceable into the cryptocurrency, it is reasonable, and consistent with the law in Alberta, to value all of the matrimonial property as of the date of trial. [ 91 ] Ms. Brown has provided what she asserts are comparables from online marketplaces to establish the values of the utility trailer, the 2007 Arctic Cat and the 2014 Chevy High Country truck. [ 92 ] Mr.

Brown has possession of each of these items and has given his opinion as to their value. He has also provided some information as to the state of these items in terms of damage and wear and tear. None of these items were appraised by a third-party appraiser. [ 93 ] Counsel for Ms. Brown argues that her proposed values should be accepted, and Mr. Brown’s estimates should be rejected because they are unsubstantiated opinions. I accept that the values must be determined on a balance of probabilities. As I will discuss, there are frailties in the evidence given by both parties.

In arriving at values, I have carefully considered the position and the evidence of each party including the nature and quality of the information I was provided. Utility trailer [ 94 ] This is a 16-foot enclosed utility trailer. There is no evidence as to how old the trailer is. Ms. Brown values the utility trailer at $20,000 while Mr. Brown values it at $4,000. [ 95 ] Ms. Brown has provided printouts from an online marketplace containing a list of five 16-foot enclosed utility trailers. These range in price from $15,700 to $26,298. Ms. Brown suggests that the mid-range of these figures is $20,000.

None of the utility trailers included in Ms. Brown’s comparables are used. They are all new 2022 trailers. [ 96 ] Mr. Brown’s evidence is that he purchased the trailer new for $8,000. He says it has a bent jack, a damaged hitch latch, multiple dents and rust. Mr. Brown claims that the comparables used by Ms. Brown are of higher quality. [ 97 ] Counsel for Ms. Brown urges me to reject Mr. Brown’s evidence because it is not corroborated by photos or receipts. Mr. Brown has the utility trailer and had the ability to provide photos, provide the receipt for its purchase and have it appraised.

He did none of these things. [ 98 ] I agree that Mr. Brown had the ability to provide evidence as to the value of the utility trailer. His failure to do so entitles the Court to reject the value he proposes. However, Ms. Brown’s comparables are too high by virtue of them being for new 2022 trailers. I accept Mr. Brown’s evidence that the trailer is in used condition with some damage. Given these circumstances, and the fact that I have no evidence as to the age of the trailer, I am prepared to split the difference and set the value of the utility trailer at $12,000.

2007 Arctic Cat [ 99 ] Ms. Brown values the Arctic Cat at $5,000, while Mr. Brown values it at $3,000. Mr. Brown says that it has broken plastic fenders and needs new tires. He also claims it has been appraised by Arctic Cat dealers in Barrhead and Edmonton at $3,000. Mr. Brown has not provided any evidence of these appraisals. [ 100 ] Ms. Brown has provided four comparables from an online marketplace. Two of the comparables are 2007 Artic Cats for sale for $4,750 and $3,000. The third and fourth comparables are a 2005 Yamaha Grizzly, for sale for $6,000, and a 2007 Polaris Sportsman, for sale for $6,500.

I have no evidence that the Yamaha Grizzly and the Polaris Sportsman are similar enough to an Arctic Cat so as to be comparables. I therefore disregard them from the analysis. Ms. Brown has also provided the blue book value of a 2007 Arctic Cat. This printout indicates that the typical listing price is $2,995 if purchased from a dealer. [ 101 ] I set the value of the 2007 Arctic Cat at $3,000. This is consistent with the for-sale price of one of the two comparables she provided and with the Blue Book Value. 2014 Chevy High Country Truck [ 102 ] Ms. Brown values the Chevy at $35,000 while Mr.

Brown values it at $20,000. [ 103 ] Ms. Brown has provided six comparables from an online marketplace. Each comparable is a 2014 Chevy High Country. The price of each of these comparables is as follows: $29,992 $31,890 $34,000 $36,000 $38,996 $58,500 [ 104 ] I disregard the last comparable of $58,500 because it falls significantly outside of the range of the other listed vehicles. [ 105 ] Ms. Brown has provided a comparison graph from an auto sales website indicating a range of $27,057 - $31,662. [ 106 ] Mr. Brown says that most of Ms. Brown’s comparables are vehicles that are being sold by dealers.

He says that these vehicles would ultimately be sold for less than their listed sale price. His position is that the Chevy should be valued at $20,000 because this is what Ms. Brown was willing to sell the vehicle for after she got an estimate from her brother. This evidence is of little probative value, and I give it no weight. [ 107 ] Based on Ms. Brown’s comparables, I attribute a value of $30,000 to the 2014 Chevy High Country truck. This value falls within the range contained on the auto sales website and recognizes that the comparables provided by Ms.

Brown would likely be sold for less than their listed sale price. ATB Financial HELOC, Post-Separation Debts and RRSP Withdrawals [ 108 ] Both parties included on Ms. Brown’s side of the ledger of the Family Property Statement the $30,000 she withdrew from the ATB Financial HELOC.

Her evidence was that she used this money to pay for her personal expenses post-separation. [ 109 ] The Court of Appeal explained in Stuve v Stuve , 2019 ABCA 142 at para 34 : The onus is on the party incurring debt after separation to demonstrate that the debt was used for the benefit of the family unit and not solely for the debtor’s own purposes. If that cannot be established, s 8 of the MPA permits unequal distribution of the debt, including sole responsibility for the debt falling to the party that incurred it: Busenius v. Busenius , 2006 ABQB 162 (Alta. Q.B.) at paras 2 , 27, 29; Esquirol v.

Esquirol , 2018 ABQB 487 (Alta. Q.B.) at para 39 . [ 110 ] See also: Linke v Linke , 2015 ABCA 367 at para 11 ; Mesmar v Mesmar , 2009 ABQB 32 at para 58 ; Beaudry v Beaudry , 2010 ABQB 119 at 62 [ Beaudry ]. [ 111 ] Here Ms. Brown used the money for her sole purposes. However, as both parties included this debt in their respective Family Property Statements and Mr. Brown did not raise any objection to its inclusion, I conclude it would be just and equitable to include this debt on Ms. Brown’s side of the ledger. [ 112 ] In one of the Family Property Statements prepared by Mr.

Brown, he included as one of his liabilities an ATB line of credit. It is my understanding that it has been paid off in full and therefore it will not be included in the Family Property Statement prepared by this Court.

[ 113 ] With respect to the RBC credit line, the RBC VISA and RBC Mastercard debts included in the Family Property Statements prepared by each party, I share the sentiments of the Court in Beaudry at para 62 : There was no evidence from either party that any of the charges to their various credit cards represented liabilities incurred by them which somehow benefited the other party. The parties since the date of separation have both been self-supporting and as set out later in these Reasons for Judgment, neither party has a spousal support obligation to the other.

In my view, it would not be just and equitable to require the parties to share in these debts incurred by the opposite party which were, essentially, all incurred for the personal reasons of each of the parties. [ 114 ] However, as I have no evidence as to for what purpose these debts were incurred, and both parties have included them on their respective Family Property Statements, I will include them in the Family Property Statement prepared by this Court. [ 115 ] Mr. Brown’s RRSP had a balance of $23,732.33 as of September 30, 2022.

According to his evidence, he subsequently withdrew $12,500 to cover his legal fees for these matrimonial proceedings. The case law is clear that legal fees are not a divisible matrimonial debt: Peregrym v Peregrym , 2015 ABQB 176 at paras 115-116 and AIR v MPW , 2007 ABCA 188 at para 40 . However, as I am including the $30,000 that Ms. Brown withdrew from the ATB HELOC to cover her personal expenses, I find it is fair and equitable to include the date of trial value of Mr. Brown’s RRSP being $11,232.33 in the Family Property Statement prepared by this Court.

Conclusions [ 116 ] A divorce judgment shall be issued in this matter. [ 117 ] Mr. Brown shall pay to Ms. Brown retroactive spousal support set in the amount of $8,820 for the period January 2020 to December 2021. This amount shall be paid to Ms. Brown out of Mr. Brown’s share of the funds that are held in trust by counsel from the sale of the matrimonial home. [ 118 ] Ms. Brown is not entitled any exemption in respect of the Settlement Funds. [ 119 ] The funds received by Mr. Brown in the amount of $7,000 were not an advance on property. These funds were advanced to cover the parties’ joint debts. [ 120 ] Mr.

Brown is not entitled to property management fees in relation to the parties’ rental properties. [ 121 ] I set the values of the property in dispute as follows: (

i) The utility trailer: $12,000 (ii) 2007 Arctic Cat: $3,000 (iii) 2014 Chevy High Country Truck: $30,000 [ 122 ] A Family Property Statement is attached at Appendix “A” to this decision. As a result of the findings made by the Court, as well as previous agreements between the parties, Ms. Brown is entitled to an equalization payment of $37,448.12. This equalization payment shall be paid to Ms. Brown out of Mr.

Brown’s share of the funds that are held in trust by counsel from the sale of the matrimonial home. [ 123 ] The funds held in trust from the sale of the matrimonial home shall be distributed as follows: Current balance: $200,290 Ms. Brown to receive one-half: $100,145 Ms. Brown to receive (retroactive spousal support): $8,820 Ms. Brown to receive (equalization payment): $37,448.12 Total to be paid to Ms. Brown: $146,413.12 Balance of $53,876.88 to Mr.

Brown [ 124 ] The funds held in trust from the sale of the rental properties shall be distributed as follows: From the sale of the Westlock property, each to receive $5,107 From the sale of the Lexington property, each to receive $56,964 [ 125 ] These calculations result in Ms. Brown receiving a total of $208,484.12 and Mr. Brown receiving a total of $115,947.88 from the proceeds from the sale of the three properties currently being held in trust. Heard on the 1 st day of December, 2022.

Dated at the City of Edmonton, Alberta this 2 nd day of March 2023. S. Leonard J.C.K.B.A. Appearances: Lauren D Hanon Bruyer & MacKay LLP for the Plaintiff John Kudrinko Ackroyd LLP for the Defendant _______________________________________________________ Corrigendum of the Reasons for Decision of The Honourable Justice S. Leonard _______________________________________________________ Correction made to Ms. Hanon’s last name, along with change in appearances.

Appendix A Family Property Statement ASSETS Him Her Total Deposit Accounts RBC Account $407.00 $407.00 TD Account $133.00 $133.00 BMO Chequing $87.00 $87.00 RBC Chequing $12.00 $12.00 CIBC Chequing $26.00 $26.00 Servus Credit Union $1.00 $1.00 Personal Vehicles 2014 Chevy High Country 1500 $30,000.00 $30,000.00 2006 Trailblazer SUV (sold-post separation)

Real Property Net sale proceeds from 46 Pickwick Lane $100,145.00 $100,145.00 $200,290.00 Net sale proceeds from 6 Lexington Close $56,964.00 $56,964.00 $113,928.00 Net sale proceeds from Westlock property $5,107.00 $5,107.00 $10,214.00 Investments $0.00 RRSP $11,232.33 $11,232.33 Cryptocurrency $8,202.00 $8,202.00 16' Enclosed Utility Trailer $12,000.00 $12,000.00 2007 Arctic Cat TRV $3,000.00 $3,000.00 Firearms $1,500.00 $1,500.00 2006 Holiday Trailer (sold post-separation) TOTAL ASSETS $220,488.33 $170,544.00 $391,032.33 Family Property Statement LIABILITIES Him Her Total Notional Deduction on Retirement Assets (25%) $2,808.08 $2,808.08 RBC Credit Line ($2,488) $2,488.00 $2,488.00 RBC Mastercard ($951) $951.00 $951.00 ATB Line of Credit ($30,000) $30,000.00 $30,000.00 RBC Visa $1,199.00 $1,199.00 TOTAL LIABILITIES $6,247.08 $31,199.00 $37,446.08 NET ASSETS $214,241.25 $139,345.00 $353,586.25 Family Property Statement EXEMPTIONS Him Her Total TOTAL EXEMPTIONS $0.00 $0.00 TOTAL ADJUSTMENTS $0.00 $0.00 $0.00 NET MATRIMONIAL ASSETS $214,241.25 $139,345.00 $353,586.25 Each Party Entitled To $176,793.12 EQUALIZATION PAYMENT $37,448.12 $37,448.12 Final Position $176,793.12 $176,793.12