C.R.P Applicant v. N.D.P, 2023 NBKB 197

2023 NBKB 197 COURT FILE: FDF-265-2021 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK FAMILY DIVISION JUDICIAL DISTRICT OF FREDERICTON BETWEEN: C.R.P Applicant and N.D.P Respondent Before: Madam Justice Krista L. Colford Dates of hearing: February 27, February 28, March 1, and March 15, 2023 Post Hearing Submissions: March 31, 2023 and April 14, 2023 Post trial Oral Submission: October 20, 2023

Date of Decision: November 17, 2023 Appearances: Applicant – C.R.P Ms. Natacha I. Bosse Respondent – N.D.P Mr. Michael S. Dean DECISION COLFORD, J.: I. Introduction [ 1 ] The Petitioner wife commenced proceedings pursuant to the Divorce Act , R.S.C. 1985, c.3 (2nd Supp.) with a joinder of relief under the Marital Property Act , S.N.B. 1980, c. M-1.1 on December 14, 2020. The Respondent husband filed an Answer and Counter- Petition on February 7, 2022.

The dispute revolves around the determination of income for both parties, retroactive and prospective spousal support obligations and the division of marital property and debt. Central to the relief claimed pursuant to the Marital Property Act is the Respondent’s shareholdings in four businesses. II. Facts [ 2 ] The Petitioner, Ms. P was born on […], 1969 and is 54 years old. The Respondent, Mr. P was born on […], 1970 and is 53 years old. The parties only began cohabitating at the time of their marriage on August 15, 1992. They separated on June 6, 2016 after 24 years of marriage.

They have one child, a daughter born in 1997. She was 19 years old at separation currently lives independently of her parents. Child support was not an issue in these proceedings. A. Education / Employment History Ms. P [ 3 ] Ms. P worked as a registered nurse for 21 years. She graduated with a Bachelor of Nursing degree in May of 1992 just a few months prior to the couple’s marriage. In the early years of the marriage she worked full time hours as a casual employee in various departments at the Dr. Everette Chalmers hospital including Orthopedics and the Emergency Department. Ms.

P testified that she loved the work but found shift work a challenge. She also soon developed plantar fasciitis and varicose veins. As a result, she transitioned to a position in the psychiatry unit. At some point early in her nursing career she was employed by the nursing faculty at the University of New Brunswick, teaching labs to nursing students. She also taught some night courses. [ 4 ] Additionally, Ms. P testified that prior to the birth of the couple’s daughter she considered job opportunities in Florida and Texas. She testified that she declined both at the request of Mr.

P who asked that she give him time to grow his contracting business. She agreed. For his part Mr. P does not recall these job opportunities or any detailed discussions about them. [ 5 ] At one point she contemplated going back to school for a Master’s degree. She indicates this also was discussed with Mr. P and it was collectively decided that they needed her full-time income while Mr. P’s business continued to grow. Again, Mr. P had no recollection of any opportunity for Ms. P to engage in master’s studies. B. Education/Employment History Mr. P [ 6 ] Mr.

P graduated from high school in 1988 and relocated to Ontario to work as a mason in his father’s business . He remained in Ontario until approximately the fall of 1989 at which time he returned to New Brunswick and for a short time operated his own business selling hockey cards. He ended that business when he felt the Hockey Card fad had come to an end. The venture was successful in providing him with approximately $35,000 in profit. He testified that these funds and Ms. P’s full-time income as a registered nurse allowed the couple to secure their first mortgage on their first home. [ 7 ] Mr.

P made the decision to try his hand at building the home himself. The process although it wasn’t an altogether smooth one, ultimately convinced Mr. P that building homes may be his career path going forward. He had been enrolled in night courses at the University of New Brunswick and was considering a career in engineering. Those efforts were put to rest and Mr. P moved forward with building and flipping homes and contracting pre-sold homes. In his testimony he provided detailed evidence with respect to how he learned the business of building and selling real estate. C.

The Businesses [ 8 ] Throughout the course of the marriage Mr. P acquired shareholding in four separate corporations: 1. N.P. Contracting Ltd. [ 9 ] N.P. Contracting Ltd. was the first company incorporated by Mr. P in 1995. The company’s registered office was the couple’s home. Mr. P was the sole shareholder director and officer. The nature of the business was initially building pre-sold homes. Between 1995 and 2007 his business grew significantly and ultimately morphed into other aspects of real estate development. In 1997 he

purchased a 27 unit rental property on the south side of Fredericton. His brother moved into that building and managed the property for him looking after rent collection and maintenance which included snow plowing and lawn mowing etc. [ 10 ] He ultimately flipped that building a few years later making a significant profit. [ 11 ] Mr. P stated that in the beginning he was very driven, describing himself as a “workaholic” who worked between 60-80 hours a week. He managed all aspects of the business from organizing and working on the jobsite, dealing with customers and subtrades and managing the banking.

Ultimately, he stated he was building approximately 10-12 pre-sold homes a year. In some years it was as many 15. He had a crew of approximately four men and testified they worked very efficiently. [ 12 ] The couple often would live in a newly constructed home for short periods of time until the house sold. At times they lived in apartments or hotels while waiting for the next home to be constructed. The couple’s last move was to a 6000 square foot home built by N.P. Contracting Ltd. in 2005. They maintained this residence until they separated in June of 2016. [ 13 ] Mr. P testified that Ms.

P had very little involvement in N.P. Contracting Ltd, but concedes she was primarily responsible for preparing for the move each time the family relocated. [ 14 ] Mr. P testified that as the business grew so did the related paperwork. He was finding that part of the business overwhelming. He testified he was waking at 4:00 and 5:00 a.m. to get it done before the work day started. He asked Ms. P to consider taking over that aspect of the business for him. She declined. In her testimony she stated that there were two reasons for this. Firstly, she didn’t agree with Mr.

P doing “work for cash,” which she felt was, “morally” wrong. Further, she stated the company’s receipts were disorganized and she felt taking on this role would lead to discourse between the two. She did not want to exacerbate some already existing tensions in the relationship. [ 15 ] The evidence of Ms. P is that Mr. P did not draw a salary from N.P. Contracting Ltd. Rather, the couple lived off the income generated by her nursing career. Any surplus funds generated from the company she believed went back into the business. Mr. P neither confirmed nor refuted the point in his evidence. [ 16 ] Mr.

P testified that it was his practice to work side by side with his crew until back and knee issues arose between the years 2004 through to 2009. In 2008 the pain was more than he could handle, so he considered an alternative to building houses. He opened an auto sales business with his brother. He only stayed with the company for a few years realizing that selling used cars was not for him. His brother ultimately bought him out and he went back to building homes through N.P. Contracting Ltd. in 2009. [ 17 ] On his return to N.P.

Contracting Ltd. he reconnected with a former employee and together they decided to develop a parcel of property in Penniac New Brunswick. That decision launched a series of spec homes being built by N.P. Contracting Ltd. The business prospered with the sale of these spec homes between 2010 and 2013. [ 18 ] Mr. P testified that Ms. P did have some involvement in the Penniac project. He corroborated her evidence that she would assist in picking out colors for paint, siding, countertops, cabinets, flooring and the like. Her involvement he characterized as being limited to “aesthetics.” [ 19 ] Ultimately, N.P.

Contracting Ltd. transitioned from a construction/contracting business into a holding company for the shares in De Novo Construction Inc. which was incorporated in 2013. 2. 511755 NB Inc. [ 20 ] In April 2000 Mr. P incorporated 511755 N.B. Inc. Both Mr. P and Ms. P were directors and officers of the company. Mr. P was the sole shareholder. This company was incorporated mainly for the purpose of operating as a holding company. The registered office of the company was again the couple’s home. Ms. P as an officer of the company was authorized to sign cheques and pay company bills.

The company held one passive asset, a life insurance policy which was cashed out in 2018. The company dissolved shortly thereafter in October 2019 for failure to file annual returns. 3. De Novo Construction Inc. [ 21 ] In January 2013 De Novo Construction Inc. was incorporated. This company was created jointly by Mr. P and a business partner, Mr. B. They each contributed cash and assets to the business. In the end Mr. B owned 50% of the shares, N.P. Contracting Ltd. owned 49% and Mr. P owned 1%. For Mr. P’s part, N.P.

Contracting Ltd. and 511755 NB Inc. collectively contributed cash and assets totaling $659,526.00. [ 22 ] The evidence establishes that De Novo Construction Inc. has constructed and managed several residential/commercial properties in the city of Fredericton. [ 23 ] Early on the company contracted with a construction company identified as Taneo. That company was interested in developing property in Fredericton. De Novo invested heavily in the project buying the land and the necessary heavy equipment needed.

Unfortunately, Taneo subsequently went bankrupt, which resulted in De Novo suddenly finding itself cash poor with no income coming in. This occurred in or around late 2013. In 2014 the company constructed a multi-unit apartment complex on Bowlen Street in Fredericton in an effort to generate rental income. Mr. P’s health issues and surgeries impacted his ability to work on the Bowlen street project. He testified that in the end it added approximately $150,000.00 to the cost of the project. [ 24 ] Mr.

P testified that his health issues, the failed Taneo deal and the impact of Covid on renting commercial space resulted in De Novo, “struggling for many years.” During this time, Mr. P was not drawing a salary from the business. [ 25 ] A lack of cash and resources after the failed Taneo deal, forced De Novo into high interest loans to keep other projects moving forward. A property on the city’s north side, “The Main Street Property”, was one of them. Mr. P stated that this project took a long time

to get started and ultimately complete. It was finally ready in 2020 just as Covid hit which impacted the ability to rent out the commercial space. [ 26 ] To keep De Novo afloat, the decision was made sell a commercial building on St. Mary’s Street/Union street that housed an optometrist office and a law firm. That building was sold to Mr. P’s brother for 1.25 million in or around March of 2020. Mr. P testified this was the fair market value of the building at the time of sale and tendered evidence relating to the formula used to arrive at the purchase price for the building, ( Exhibit R-4 ).

There was $819,918.38 owing on the building at the time. The remaining equity of $318,804.32 was paid to De Novo and divided equally between Mr. P and Mr. B. [ 27 ] From these funds Mr. P paid $25,000.00 to Ms. P. He did not disclose in his evidence why he paid her those funds, other then he testified that he offered Ms. P financial assistance, “when he could.” [ 28 ] Mr. P further testified he was hopeful these funds would provide a cushion for him until the Main Street property was fully rented. [ 29 ] Ms.

Drost was employed as De Novo’s bookkeeper between the summer of 2013 and December of 2016 when she transitioned to G-8 Way Convenience. She was called as a witness by Ms. P to provide evidence with respect to Ms. P’s involvement in the business. She testified that Ms. P acted as the “interior designer” on the Bowlen Street project, picking out colors and materials for the units. She also corroborated Ms. P’s evidence that she operated as an on call nurse for the company if needed. [ 30 ] Ms.

Drost, in response to direct examination questions stated that while she was privy to the company’s financing of projects she did not recall Ms. P’s financial information ever being considered or relevant in any of the company’s applications for financing. 4. G-8 Way Convenience Ltd. [ 31 ] In September 2014 G-8 Way Convenience Ltd. was incorporated. G-8 Way Convenience is a convenience store with a liquor license also located in Penniac New Brunswick. The business owns the building from which the community store operates. Mr. P is one of three shareholders owning 33% of the business. Ms.

P testified that she was not excited about the business having a liquor license. She was opposed to bearing any responsibility for the negative impact it may have on families in the area. She testified that she felt God would not bless them and she communicated this to Mr. P. [ 32 ] Collectively, the evidence establishes that Ms. P had little to no involvement with this particular company. Mr. P testified that at this time, in or around 2014, Ms. P was preoccupied with issues related to her parents. He stated that, “other than voicing her objection to the liquor license, she let me deal with it.” [ 33 ] Ms.

P’s evidence corroborates this. D. Valuation of the Businesses ▪ Expert Testimony of Tony Goguen CA, CBV [ 34 ] Valuation of the businesses is relevant to Ms. P’s claim for a division of assets and required expert testimony. For that purpose, Ms. P called Mr. Goguen to testify. His curriculum vitae was before the Court ( Exhibit JE-1, Vol.5, Tab 6 ) and indicates he is an accredited Chartered Accountant ('CA') and Chartered Business Valuator ('CBV'). Mr. Goguen has significant experience valuing businesses in matrimonial and shareholder disputes. Mr.

Goguen has testified as an expert in his field previously on several occasions before the New Brunswick Court of Kings Bench. Specifically, he has provided opinion evidence in the areas of business valuation, economic loss quantification, corporate finance, tax and accounting. [ 35 ] Mr. Goguen was qualified as an expert before the court in this matter in the area of business valuation and corporate finance. [ 36 ] Mr. Goguen prepared a number of reports for use in this trial. They were all tendered into evidence on the consent of the parties, (Exhibit JE-1, Volume 1-5). As referenced in his testimony, Mr.

Goguen determined the fair market value of Mr. P’s shares or his equity in the companies, along with the value of the Shareholder Loan accounts as of June 2016 and December 31, 2021. The first date reflects the separation date. The second one, calculates a value that admittedly is not the trial date, but is a date the parties agreed to use for the purposes of division of the assets. Those values are reproduced from Mr. Goguen’s report (Exhibit JE-1, Volume 5) as follows: Ownership by Mr. G.P. Prorated Prorated Values Shares % Owned Owned By 2016 2021 G-8 Way Convenience 33.33% Mr.

P $14,667.00 $279, 997.00 De Novo Construction 49.9% NP Contracting Ltd. Included in NP Contracting Value Included in NP Contracting Value De Novo Construction Inc. 0.100% Mr. P $315.00 $1,700.00 511755 NB Inc. 100.00% Mr. P $7,000.00 - N.P. Contracting Ltd. 100.00% Mr. P $138,000.00 $822,000.00

Total $159, 982.00 $1,103,697.00 Share holder Loans De Novo Construction Inc. Mr. P $275,497.00 $46,977.00 511755 NB Inc. Mr. P $71,019.00 - N.P. Contracting Ltd. Mr. P $659,526.00 $674,875.00 Total $1,006,042.00 $721,852.00 Combined Value $1,166,024.00 $1,825,549.00 [ 37 ] The parties agree with the valuations as presented by Mr. Goguen. E. The Birth of the Couple’s Daughter /Roles within the Marriage [ 38 ] At various times during their testimony, the parties gave lengthy and sometimes contradictory descriptions of their roles during the marriage.

As the evidence is particularly relevant to both the basis and strength of Ms. P’s claim for spousal support (compensatory and/or non-compensatory) and for the division of property, it is necessary to summarize the evidence that is most material. [ 39 ] The couple’s daughter was born in 1997. This was two years after N.P. Contracting Ltd. was incorporated. Ms. P testified that the couple were living in, “house three when she was pregnant and house four when their daughter was born.” Ms. P took an initial six months of maternity leave.

Subsequently the couple agreed that she would take an additional one year leave of absence from work to stay at home with their daughter. [ 40 ] Collectively the couple confirm that their daughter was a colicky baby and the first several months after her birth were very difficult. Ms. P testified this was the driving force behind her taking an extended maternity leave. It was decided that one parent had to stay home so that the other parent could sleep and continue working. Ms.

P testified that she agreed to stay home in part because she believed she responded better to the challenges presented by their daughter’s colic. She was more patient and did not respond with anger as Mr. P did. Mr. P disputes that evidence and states Ms. P wanted to be the stay at home parent. [ 41 ] Ms. P returned to full time hours at the hospital in or around 1999. The transition back to two parents working full time proved to be a challenge for the young couple. The struggle to balance home and work responsibilities caused tensions in the relationship. In short, Ms. P felt that Mr.

P was not doing his fair share of the parenting. She testified that he was golfing excessively and that she was being left with the burden of maintaining the home and looking after their daughter. [ 42 ] Ms. P testified that she did all the cooking and cleaning throughout the marriage. Eventually the couple did have a cleaner, “for the basics” but she continued to maintain the home doing grocery runs, laundry and day to day maintenance. She testified that she also often looked after the outdoor maintenance of the home including the gardening and the pool area. She concedes that Mr.

P did some lawn mowing and snow shoveling until he underwent back surgery in 2014. [ 43 ] Mr. P on balance accepted Ms. P’s description of the division of labour in the home. He also conceded that golfing was a point of contention between the couple but stated that he typically golfed in the mornings before work. In his view it was the long hours required to build his business that resulted in Ms. P being primarily responsible for many household chores and child care responsibilities. [ 44 ] When asked questions on redirect about his involvement in the home, he paused and stated, “if I was a person hearing Ms.

P’s evidence for the first time, I would think this person is a monster.” He disagrees with much of Ms. P’s description of him and their life together. While he concedes Ms. P was the primary care parent and primarily responsible for maintaining the home he is adamant that he did contribute to the home and was a very invested father. [ 45 ] Mr. P took issue with Ms. P’s description of the relationship generally. He testified they had their issues and he concedes he, “struggled with the relationship.” However, in contrast to Ms. P’s often disparaging depiction of Mr. P, he described Ms.

P as, “a good mom, a good woman and he had no complaints.” [ 46 ] Ms. P testified that Mr. P wanted her to quit nursing to lessen the stresses at home and give her more flexibility for travel, something the couple enjoyed. She stated she was resistant to the idea. Fortunately, a compromise presented itself in September of 2000. Ms. P was offered a part-time position with the Health Center at the University of New Brunswick. This was a good fit for the family in that it eliminated her working nights and weekends and was restricted to 2 days a week. She accepted the position.

She testified that while she, “loved nursing” her top priority was always being a mother and a wife. [ 47 ] Ms. P continued on in her position at UNB until 2013 at which point she resigned. The impetus to the decision according to Ms. P was that she was juggling more responsibilities than she could manage. She was power of attorney for her parents who were

experiencing significant health issues, she was actively involved in Mr. P’s contracting business, she was working part-time at UNB and teaching noon hour fitness classes and one on one personal training sessions. [ 48 ] Ultimately, something had to give. Morale at the university was not good, she wanted to leave. She testified that she and Mr. P had a heart to heart about her giving up her UNB position. She testified that she had been hanging on to her nursing career as a financial security blanket throughout times of trouble in the marriage. She remained nervous about giving it up.

She testified that in the end Mr. P assured her, “they would be together until the day they died,” and if not, “she would be taken care of.” [ 49 ] She testified that ultimately she was ready to let her nursing career go and, Mr. P was supportive. In her view it was a “mutual decision.” [ 50 ] Mr. P disagrees and states that the decision was hers and her alone. He testified that over the years they definitely had discussions about Ms.

P’s career and, “what would make the family run more smoothly.” However, in his view at the end of the day the decisions were always hers to make and he did not control her on this front. [ 51 ] He testified that in the years leading up to 2013, the couple were financially very comfortable. The business was doing well and the couple had a surplus of cash. Certainly, in his view the couple was well positioned for Ms. P to give up her position at UNB if she wanted.

He testified that he believed the impetus to her decision was the fact she had grown tired of nursing, employee morale was low at the Health Center and she had a passion for fitness and wanted to grow her personal training business. All of this he states is what ultimately factored into her decision to resign her position at UNB. [ 52 ] He told her that they were in a good place financially, but ultimately, “it’s up to you.” [ 53 ] Ms. P resigned her position at UNB in October 2013.

She testified that she was not worried about her future in that she considered herself resourceful and her personal training sessions were going well. F. Mr. P’s Health Issues/ Surgeries – 2013 -2015 [ 54 ] As stated, a number of factors contributed to a downward spiral in the couple’s financial situation in or around mid to late 2013. At that time and continuing into 2015, Mr. P began a string of surgeries related to historic back and knee issues. Those issues he testified were significant enough that they impacted his, “frame of mind” and his ability to function.

Specifically, to work and earn income for a period of time. [ 55 ] An inability to get timely surgical intervention for both issues in country took Mr. P to Germany and the United States. He travelled to Germany on two separate occasions, in October 2013 and January 2014 for his knee repair. His recovery had him on crutches for approximately four months subsequent to the January 2014 procedure. [ 56 ] He underwent back surgery in Florida in December 2014. That surgery however did not go well.

He subsequently had to endure another surgery three months later in Texas to remedy the issues caused by the initial surgery. He was essentially bed ridden in between. This was between December of 2014 and March of 2015. [ 57 ] At trial Mr. P estimated the costs of the knee surgery to be $30,000.00 for the procedure and $10,000.00 for travel and accommodation costs. The back surgery he stated cost $15,000.00 US. with approximately $2,000.00 in travel related expenses.

To finance the surgeries he testified that some costs were initially placed on a visa but ultimately he borrowed funds from his business partner Mr. B and his brother to satisfy the credit card balance. [ 58 ] These health issues combined with an unfortunate turn of events for De Novo Construction with the Taneo deal, had a significant impact on the couple’s financial situation from 2013 forward. Ms. P testified that she was very concerned and stressed about the couple’s mounting debt load during this period. The couple were, according to Ms.

P living off her income from her Beach Body Fitness business, personal training/fitness classes and Mr. P’s poker winnings. [ 59 ] Mr. P’s evidence corroborated these financials struggles. He testified that De Novo Constructions financial situation did not really start to improve until after Covid, in or around 2021. G. Line 150 Income of the Parties [ 60 ] Ms. P is asking for the recalculation of spousal support obligations dating back to the date of separation in June of 2016.

Accordingly, she provided Notice of Assessments and T-1 General‘s for the years 2017-2022. [ 61 ] For the year 2016, the complete T-1 General was not provided. As a result, while the Line 150 income is discernible, the sources of income from which it is derived is not. [ 62 ] The financial information tendered establishes her Line 150 income is comprised of business income, taxable dividends, rental and “other” income. It is summarized as follows: Income Source 2016 2017 2018 2019 2020 2021 2022 Business Income $2,918.99 $8,114.23 ($6238.00) $13,261.25 $30,185.00 $20,733.00

Income Source 2016 2017 2018 2019 2020 2021 2022 Employment Income $25,000. $8,121.83 $56,800.00 $62,400.00 Taxable Dividends $38,610.00 $27,436.10 $5,626.00 $9,200.00 $25,300.00 $34,500.00 Business Income $7,500.00 Total Line 150 $38,610.00 $27,436.10 $13,126.00 $25,000.00 $17,321.83 $82,100.00 $96,900.00 Other $1558.32 $1,328.09 $4,900.00 Rental Income $474.77 $ 888.54 $794.95 $3717.35 $3,664.00 Taxable Dividend $2073.53 Total Line 150 $15,294. 00 $4,952.08 $10,330.86 0 $18,956.20 $35,975.88 $33,938.00 [ 63 ] Mr. P also provided income tax filings for the years 2016 through to 2022. Mr.

P’s sources of income as identified in the summaries establish that the mainstay of his income is generated by employment income from De Novo Construction and dividend income from G-8 Way Convenience. The following chart is a

summary of Mr. P’s Line 150 income as reproduced from his tax returns: H. Agreed Marital Property and Debt on Separation [ 64 ] At trial the parties agreed on much of the marital property and debt existing at the date of separation. They further agreed an equal division was equitable. The following summarizes the evidence on this front: Assets After Tax Assets Value Petitioner/Ms. P Respondent/Mr. P 1. Marital Home $ 625,000.00 $ 312,500.00 $ 312,500.00 2. 2008 Mercedes ML350 $ 3,000.00 $ ------------ $ 3,000.00 3. CIBC Bank Account $ 5,000.00 $ 2,500.00 $ 2500.00 4.

Sun Life Insurance $ 3,000.00 $ 3,000.00 $ ----------- 5. Sun Life (N.P.) $ 8,638.00 $ 4,319.00 $ 4,319.00 6. Sun Life (N.P.) $ 9,337.12 $ 4,614.09 $ 4,614.09 7. Receivables from C.S. $ 44,000.00 $ ---------------- $44,000.00 8. Receivable from G.P. $ 5,000.00 $ ---------------- $5,000.00 9.

Receivable from B.B. $ 20,000.00 $ --------------- $20,000.00 Total $722, 975.12 $ 326, 933.09 $ 395, 933.09 Debts Value Petitioner Respondent 1.Mortgage/Marital Home $ 421,847.00 $ 210,923.50 $ 210,923.50 2.Visa $ 3,657.78 $ 1828.89 $ 1,828.89 3.Costco Master Card $ 2,209.00 $ 1,104.50 $ 1,104.50 Total Debts $ 427,713.78 $ 213, 856.89 $ 213,856.89 I. Property and Debts in Dispute 1. The Businesses [ 65 ] The central issue in dispute is whether Mr. P’s interest in the businesses is marital property presumptively subject to equal division, or non-marital property.

If non-marital property, is there an inequity in the division of the marital property that triggers

section 8 of the Marital Property Act . The issue of the appropriate valuation for these assets is also in dispute. Ms. P asks that the value as at December 31, 2021 be utilize. Mr. P advocates for the date of separation being the more appropriate. 2. D[…] Avenue Property

[ 66 ] The parties also disagree on the division of a home jointly purchased by the couple after separation. Post separation Mr. P began residing in an apartment unit in a building owned by De Novo Construction. He continued to reside there as of the date of trial. [ 67 ] Ms. P however did not want to rent long term. She wanted a house for herself and her daughter. Mr. P agreed. Unfortunately, neither had sufficient assets to qualify for a mortgage on their own. Accordingly, it was decided they would together purchase a home on D[...] Avenue for Ms. P and the couple’s daughter.

Each party from their respective share of the proceeds of sale from the marital home contributed $30,000.00 to the $275,000.00 purchase price of the D[...] Avenue property. The property closed on August 22, 2016, (Exhibit P-1, Tab 5 at p. 338) . The couple’s daughter lived at the home with Ms. P until the fall of 2020 at which time she relocated to Toronto. [ 68 ] The property is an income earning one. At the time of purchase it was rented to a long term tenant for $850.00 monthly including all utilities. Ms. P increased the rent in 2021 to $1095.00 monthly. Ms.

P‘s income tax returns for the years 2016 to present establish that the rental unit has never generated a significant positive cash flow once expenses were offset. [ 69 ] Ms. P testified that from the outset the agreement was that Mr. P’s involvement in this property was, “in name only” and it was understood that once on her feet she would repay the $30,000.00 to Mr. P and he would transfer his interest in the property over to her. In her view any increased equity in the property would be hers alone. To that end, Ms.

P testified that she has paid the mortgage and all related fixed expenses and repairs on the home since it was purchased in 2016. [ 70 ] Mr. P disagrees that this was the arrangement. He testified that the equity in the home was not discussed. He testified that neither party anticipated it would take seven years for marital property issues to be resolved. He testified that he believed they would at some point, “make a further deal” as it related to this property. [ 71 ] The parties do agree renovations were carried out on the property at the time of purchase. Mr.

P testified that De Novo Construction Inc did the work and covered the cost which he estimated at approximately $10,000.00. He testified that neither he nor the company were ever paid for the work done. [ 72 ] Ms. P acknowledges that Mr. P assisted with the work but maintains the associated costs which she estimated at approximately $7,000.00, were covered by her from her share of the proceeds of the marital home. [ 73 ] Neither party provided any corroborating documentation related to the renovation costs or who paid them. 3.

Manual Life Insurance Policy owned by 511755 NB Inc. [ 74 ] A Manual Life insurance policy #8776534, insuring the life of Mr. P was tendered into evidence ( Exhibit P-1,Tab 3 at p.307). This policy was owned by 511755 N.B. Inc. The company was also the named beneficiary under the policy. In 2018 Mr. P surrendered the policy for its cash value of $75,410.00 and gave Ms. P $25,000.00. He kept the remainder for himself, “to live on.” [ 75 ] In Mr. P’s view this policy was a corporate asset, not a marital one. Ms. P disagrees.

She argues that the insurance policy was initially purchased with marital assets and subsequently transferred into the holding company. As a result it is a marital asset. She tendered no evidence corroborating that fact and Mr. P was not cross examined on the issue. 4. CRA Debt [ 76 ] In keeping with her position that Mr. P’s interest in the businesses is marital property, she accepts responsibility for half of a $105,000.00 debt owed to owed to the CRA by N.P. Contracting Ltd. during the marriage.

That debt was paid out on the sale of the marital home in 2016. [ 77 ] In keeping with his position that the businesses are non-marital property, Mr. P states the CRA debt is solely his responsibility and that Ms. P is to be compensated for the additional $52, 500.00 in equity in the marital home that should have been paid to her on its sale in 2016. 5. Loans taken from Mr. P’s brother and Mr. B [ 78 ] Mr. P testified that in or around the date of separation he borrowed $30,000.00 from his brother and $50,000.00 from his business partner Mr. B, to satisfy family credit card debt.

In his testimony, he pointed to a $34,104.49 balance owing on CIBC Aero Gold Business Visa account # 9341 as of June 27, 2016, (Exhibit P-7). [ 79 ] In the course of his testimony he confirmed the $50,000.00 loan secured from Mr. B occurred post separation on July 29, 2016. In terms of the loan from his brother he testified it was necessary to pay off credit card debt so he could assist Ms. P with the purchase of the D[...] Avenue property. The closing date on that property occurred only in late August of 2016.

He provided no further clarification in his evidence with respect to the date that the loan was taken, other than to say it was, “pre-separation.” [ 80 ] For her part Ms. P was unaware of either loan and denies they were used to satisfy marital debt. Ms. P argues the family credit card debt was paid off in 2015 when the marital home was remortgaged. It is her position that this credit card account was closed when the $28, 966.00 balance was paid out in 2015. She states that any balance on CIBC Aerogold Visa #9341 was not marital debt.

In support she pointed to the number of transactions on the account that relate to online gambling. [ 81 ] Interestingly, Mr. P conceded in post-trial submissions that the balance owing on this credit card at separation is not marital debt. J. Lifestyle During the Marriage and Retirement Plans [ 82 ] The couple’s lifestyle was generally a comfortable one. They lived in a 6000 square foot home. Mr. P testified that when his business was prospering and the couple were doing well they reinvested much of this wealth into upgrading the family home. By way of

DATE AMOUNT November 24, 2020 $3,000.00 December 9, 2020 $1,000.00 January 14, 2021 $2,500.00 January 18, 2021 $1,000.00 example he pointed to paving the driveway, installing a pool, a stamped concrete deck and hot tub, a movie theater and an updated home gym. He estimated the couple spent approximately $50,000.00 - $60,000.00 on home renovations before their financial position changed subsequent to 2013. [ 83 ] They drove a Mercedes and as a family travelled extensively. Destinations included the Caribbean, South Africa, Northern Europe and Mexico to name a few. Ms.

P testified they typically travelled at least twice a year. Mr. P also did solo trips with friends to China and Vegas for gambling tournaments. [ 84 ] In terms of planning for the future, Ms. P testified that their dream was that they would retire early, become snowbirds and that their real estate investments would provide them the ability to do that. Ms. P testified that she “trusted this, it made sense to her.” She went along with Mr. P’s vision on this front, trusting that the contracting business was the couple’s retirement plan. She testified she was always concerned about not having a pension but Mr.

P reassured her throughout the marriage that the business would provide for them in the long term. For this reason, she did not invest in RRSPs. It was an issue she stated that they revisited each year. [ 85 ] Mr. P conceded only that he did not like investing in RRSP’s. He felt real estate was the better investment but again denies he controlled her choice. K. Life Post Separation [ 86 ] Ms. P testified at the point of separation she made it very clear to Mr. P that she needed support. She testified that she continued to reiterate this until she filed the Petition for Divorce in December 2020.

She stated that her delay in filing the Petition was based on a string of promises provided by Mr. P asking her to, “hang on” until he (and his businesses) became more financially stable. Ms. P at all times believed that Mr. P was going to provide her a percentage of the business that would address her financial needs. This she states is why she waited so long to file the Petition for Divorce.

Evidence tendered on the consent of the parties establishes the couple did have these discussions, (Exhibit P-1, tab 6) . [ 87 ] The evidence also confirms she initially sought out counsel in 2016 and consulted a few others along the way. Ultimately, these discussions did not end in any agreement. She now feels she wasted that time. [ 88 ] She testified that she has struggled financially since the separation. She continues to live in the D[...] Avenue property, but states that she lives a modest lifestyle. She does not have any funds for travel and has not enjoyed the same lifestyle she did pre-separation.

She testified that she buys her clothes at a second hand shop and has resorted to selling her clothes on consignment. This bothers her greatly. She described her lifestyle post separation as, “just enough.” She is tired of, “just enough.” [ 89 ] She has not traveled but for her business. She discovered, “Life Coaching” after separation and decided this was a career path she wanted to explore. She became certified as a life coach, travelling to Houston Texas to obtain that certification. She has also travelled with her Life Coaching business to L.A. and New Orleans.

She has also had opportunity to travel with her Beach Body business, earning trips based on her accomplishments through the business. [ 90 ] The cost to become certified as a life coach was $24,000.00. She testified that she has been working full time at the coaching business but recognizes it is not yielding much in income. She needs capital to grow the business. [ 91 ] She was clear that she did not want to return to nursing after separation. To do that she would need to complete approximately a year of online coursework plus a practicum. The cost involved she testified is approximately $3500.00.

Her reasons for not wanting to return to nursing were essentially twofold. Firstly, her age and health were barriers in her view. She cited varicose veins along with feet and neck issues. In short, physically she believes she would find it too demanding. Secondly, she turned the page on nursing a long time ago stating that Mr. P, “understood,” and told her you, “don’t have to go back.” [ 92 ] Mr. P agrees there were many discussions about money initially on separation, but that they lessened with time. He testified that he did what he could to assist Ms. P.

He was clear that in his view they were both struggling financially on separation. The evidence confirms life insurance policies were cashed out 2017 and 2018 and divided between the couple in an effort to tide them over as they detangled their finances and their lives. [ 93 ] In terms of the specifics of the financial assistance provided prior to the filing of the divorce petition Mr. P pointed to the $30,000.00 he loaned to Ms.

P for the down payment on her current home, the costs of the renovations to the home, $25, 000.00 from the payout of the corporate insurance policy in 2018 and $25,000.00 from the proceeds of the St. Mary’s Street property in 2020. He also referenced the personal expenses that continued to be paid post separation by De Novo Construction Inc. Specifically, Ms. P’s car and cell phone expenses along with her blue cross premiums. [ 94 ] Mr. P stated that his own financial position only improved when the business started to prosper again, in or around 2021.

It was at that point that he began drawing a salary from the businesses. [ 95 ] The evidence confirms that subsequent to the filing of the Divorce Petition Mr. G.P. paid sporadic amounts of spousal support to Ms. G.P. beginning in November 2020 (just prior to the filing of the Divorce Petition). Between November 2020 and July 2021 he paid a total of $ 22,000.00 as follows:

February 1, 2021 $2,500.00 March 3, 2021 $3,000.00 March 30, 2021 $1,000.00 April 23, 2021 $4,000.00 June 4, 2021 $2,000.00 July 4, 2021 $1000.00 July 17, 2021 $1,000.00 TOTAL $22,000.00 [ 96 ] Ms. P motioned the court for interim spousal support on March 1, 2022. By way of order and based on an agreed 2022 income for Ms. P of $35, 957.00 and an imputed income of $62,400.00 for Mr. P, monthly spousal support in the amount of $1257.00 was ordered commencing May 1, 2022. [ 97 ] The evidence confirms that amount has been paid in accordance with the order and no arrears were owing as of the date of trial.

A total of $12,500.00 has been paid pursuant to the Interim Order. [ 98 ] Mr. P states that since separation he too has lived a modest lifestyle. He continues to reside in the two bedroom apartment owned by De Novo Construction and he drives a 2013 Hyundai Tucson. He testified that he, “has no toys, he doesn’t drink or smoke and he rarely eats out.” [ 99 ] He has continued to work long hours in the business during the summer. He stated that he is typically at the job site as early as 6:00 a.m. and works long into the evening picking up supplies for the next day.

He is also on 24/7 when it comes to managing the De Novo Construction’s rental properties. [ 100 ] He concedes the winter months are slower and testified that essentially he works to travel during the off season. To that end he gave detailed evidence about his travels post separation. Since he and Ms. P separated, he has continued to travel south each year. In the initial years after separation he traveled to the Dominican for approximately a week to ten days. In 2018 he went to Bali/Philippines and stayed for a month. He used airmiles to travel and stated things are very cheap once you are there.

He repeated this trip in 2019. He estimated each trip at between $5-$6,000.00. In 2020 he also went to Bali but his trip was cut short due to Covid -19. In 2021 he returned to the Dominican for two weeks. This trip he estimated at $3,000.00. [ 101 ] In 2022 he travelled to Mexico and Columbia for a week at a time. In 2023 he travelled for eleven weeks. He was in the Philippines for three weeks. He suffered injuries due to a motorcycle accident that prevented travel for a few weeks. He also travelled to Thailand for about a month and Mexico for a few weeks.

He testified that while travelling this year he sublet his apartment for approximately three months at $1700.00 a month. III. The Issues [ 102 ] The issues to be determined can be framed as follows: A. Judgment for Divorce B. Division of Marital Property and Debt C. Division of Non-Marital Property 1. The Businesses 2. The D[...] Avenue Property D. Final Reconciliation of Property and Debt E. Spousal support 1. Position of the Parties 2. Determination of the Income of Mr. P 3. Determination of the Income of Ms. P 4. Quantum and Duration 5. Prospective Support 6. Retroactive Support F.

Life Insurance as Security for Support Payments

G. Pre-Judgement Interest H. Costs IV. Evidence and Analysis A. Judgment for Divorce [ 103 ] The parties testified they separated on June 6, 2016 and have lived separate and apart since that time. They have not resumed cohabitation and there is no possibility of reconciliation. Accordingly, I grant to the Petitioner a judgment for divorce pursuant to paragraph 8(2) (

a) of the Divorce Act . B. Division of Marital Property and Debt [ 104 ] As a matter of both logic and law it is necessary to begin the required legal analysis by determining the parties' entitlements and obligations under the Martial Property Act before turning to the issues of prospective and retroactive spousal support. The amount of any equalization payment and the impact of any income generating potential associated with the assets with which each party is left will almost invariably affect the support analysis.

As a matter of law, therefore, the calculation of the division of assets and resulting equalization payment must precede any support analysis, ( Thurrott v. Thurrott , 2011 NBQB 125 at para. 226 , citing Glencross v. Glencross , 2010 ONCA 675 ). 1. Marital Assets in Dispute [ 105 ] The shared responsibilities expected of spouses in the context of our matrimonial property regime are set out at

section 2 of the Marital Property Act . A spouse who fulfills those responsibilities is presumptively entitled to an equal division of marital property and is required to assume an equal burden of the marital debt.

It reads as follows: s.2 Child care, household management and financial provision are joint responsibilities of spouses and are recognized to be of equal importance in assessing the contributions of the respective spouses to the acquisition, management , maintenance, operation or improvement of marital property; and subject to the equitable considerations recognized elsewhere in this Act the contribution of each spouse to the fulfillment of these responsibilities entitles each spouse to an equal share of the marital property and imposes on each spouse, in relation to the other, the burden of an equal share of the marital debts. [ 106 ] As stated, the parties agree on an equal division of marital asset and debts existing at the time of separation.

I have, for the reasons that follow determined that Mr. P’s interest in the businesses is non-marital property. That analysis along with the parties’ interest in the D[...] Avenue Property will be addressed subsequently. [ 107 ] There remains only one marital asset in dispute. The Manual Life Insurance policy. That policy was in the name of the holding company. While Ms. P argues marital funds were used to purchase that policy there was no evidence tendered that confirmed that. On the face of the policy it is a corporate asset.

That and the lack of any evidence tying marital funds to its purchase leads me to decline to consider the policy in the division of marital property. [ 108 ] The remaining assets and their respective values are agreed upon. They are as set out in the facts portion of this decision. 2. Marital Debt in Dispute [ 109 ] Marital Debt is defined in

section 1 of the Marital Property Act as follows: “ Marital debts ” means the indebtedness of either or both spouses to another person: (

a) for the purpose of facilitating, during cohabitation, the support, education or recreation of the spouses or one or more of their children, or (

b) in relation to the acquisition, management, maintenance, operation or improvement of marital property. • Debts owed to Mr. P’s brother and business partner Mr. B [ 110 ] In Post -Trial submissions Mr. P maintains that he borrowed $80,000.00 collectively from his brother and his business partner, “for his surgeries.” This sum he argues is marital debt and asks that it be divided equally between the parties as such. Ms. P opposes this request arguing that she was not aware of either of these loans existing on separation.

In her view, the majority of the couples unsecured debt was satisfied on the remortgaging of the marital home in 2015. Any residual amounts owing on credit cards for Mr. P’s medical interventions in 2014 and 2015, would have been satisfied at that time. [ 111 ] In the end I decline Mr. P’s request to include these loans in the division of marital debt. Ultimately what is fatal to Mr. P’s claim is the lack of evidence confirming these loans existed pre-separation or are tied in any way to a debt or expense that arose during

cohabitation. [ 112 ] Mr. P concedes the $50,000.00 loan from Mr. P occurred on July 29, 2016 but argues it relates to his pre-separation medical expenses. He pointed to no other reason for the loan. In terms of the $30,000.00 loan from his brother, he testified that loan did occur pre-separation but could not provide the actual date. He testified that the loan was necessary to satisfy credit card debt so that he could assist Ms. P with the purchase of the D[...] Avenue property. The closing date on that property was two months post separation.

No further corroborating evidence was presented confirming the date the loan was secured. The evidence confirms only that he repaid his brother the sum of $30,000.00 on March 15, 2018, ( Exhibit R-7). [ 113 ] Mr. P did not establish that the costs of his medical interventions for the period of October 2013 through to March of 2015, remained outstanding on separation. I agree with Ms. P, the couples unsecured debt was largely satisfied in 2015 on the remortgaging of the marital home.

But for two nominal balances owing on a visa (unidentified #) and a Costco master card, the evidence is clear the only remaining credit card debt as of the date of separation, was the balance owing on the CIBC Aero Gold Business Visa acc #9341. [ 114 ] It was this account that Mr. P referred to in his evidence when asked what credit card debt the two loans were used to satisfy. However, Mr. P subsequently conceded that the balance owing on this account at separation was not marital debt. [ 115 ] Accordingly, if Mr.

P’s medical costs were initially paid for by credit card as he testified, based on the evidentiary record before it, the Court can come to no other conclusion than that those expenses were satisfied on the remortgaging of the couple’s home in 2015. [ 116 ] On balance, Mr. P’s evidence surrounding these loans and their application to his medical expenses was inconsistent and lacked detail. Mr. P, while he testified to the estimated costs of the medical procedures and their related travel expenses, did not tender any documentation corroborating his estimates.

Specifically, there were no invoices tendered from the respective hospitals engaged to carry out the procedures or receipts for airfare, accommodation, etc. Additionally, while he stated the costs were initially paid for by his visa he did not tender the visa statements evidencing the transactions or identify the visa account used. [ 117 ] He did testify that he borrowed funds form Mr. B to pay the 15,000.00 US cost of the back surgery. He provided some vague details about arrangements with Mr. B and De Novo Construction surrounding the transaction.

Ultimately however, his evidence did not sufficiently connect the dots such that the court could tether the post separation loan to that pre-separation marital debt. [ 118 ] Unfortunately, Mr. P pointed to no other reason for the borrowing of the monies from Mr. B or his brother. He did not connect the funds borrowed to any other pre-separation marital debt. I remain unconvinced the loan from Mr. P’s brother occurred pre-separation. [ 119 ] Mr. P had difficulty throughout his evidence remembering dates and details with respect to the couple’s finances. This was but one example.

In the end, based on the lack of credibility in the evidence Mr. P presented, I decline to accept the $80,000.00 borrowed by Mr. P was marital debt as defined by s.2 of the Marital Property Act . 3. Conclusion on Marital Property and Debt [ 120 ] Based on what has been agreed to between the parties and the determinations above, the following attribution and equalization chart reflects the marital property and debt as follows: Assets (After Tax) Value Petitioner/Ms. P Respondent/Mr. P 1. Marital Home $ 625,000.00 $ 312,500.00 $ 312,500.00 2. 2008 Mercedes ML350 $ 3,000.00 $ --------------- $ 3,000.00 3.

CIBC Bank Account $ 5,000.00 $ 2,500.00 $ 2,500.00 4. Sun Life Insurance (CP) $ 3,000.00 $ 3,000.00 $ --------------- 5. Sun Life (NP.) $ 8,638.00 $ 4319.00 $ 4319.00 6. Sun Life (NP) $ 9,337.12 $ 4614.09 $ 4614.00 7. Receivable from C.S. $ 44,000.00 $ --------------- $ 44,000.00 8. Receivable from G.P. $ 5,000.00 $ --------------- $ 5,000.00 9. Receivable from B.B. $ 20,000.00 $ --------------- $ 20,000.00 Total Assets $ 722,975.12 $ 326,933.09 $ 395,933.00 Debts Value Petitioner Respondent 1.Mortgage/Marital Home $ 421,847.00 $ 210,923.50 $ 210,923.50 2.Visa $ 3,657.78 $ 1828.89 $ 1,828.89 3.

Costco Master Card $ 2,209.00 $ 1,104.50 $ 1,104.50 Total Debts $ 427,713.78 $ 213, 856.89 $ 213,856.89 Total Net Value $ 295,261.34 $ 113,076.20 $ 182,076.11 Equalization Payment (+$ 34,499.95) (-$ 34,499.95) $ 147,576.15 $ 147,576.16

[121] The net value of the marital assets retained by Mr. P is $182, 076.11 while those retained by Ms. P is $113,076.20. Thedifferential is $68,999.91. Accordingly, Mr. P shall pay to Ms. P an equalization payment of $34,499.95 ($68,999.91 x .5 = $34, 499.95),on the division of marital property and debt. [122] One adjustment must be made to the above calculated equalization payment. The evidence confirms that Mr. P paid $1000.00 tothe corporate bookkeeper, Mr. Pitre, from Ms. P’s share of the Insurance proceeds, (Exhibit P-1, Tab 3, at p. 324). This sum will beadded to the equalization payment owed.

Accordingly, the equalization payment owed from Mr. P to Ms. P is $35,499.95. C. Division of Non-Marital Property 1. The Businesses • Marital or Non- Marital Property [123] Ms. P advances a claim for an equal division of the value of Mr. P’s shareholdings in the businesses along with the value of the“Shareholder Loan Account,” as marital property. Alternatively, she argues for an equal division of these assets as non-marital propertypursuant to

section 8 of the Marital Property Act and on the equitable principles of constructive trust. [124] Mr. P. opposes any characterization of his business interests as marital property. He does concede that an equal division of maritalproperty in this instance is inequitable and accepts that a division of his shareholdings in the businesses will address the inequity. [125] In his view the appropriate division is between the range of 12%-25% in favor of Ms.

P. [126] In my view the purpose and effect of the equalization provisions contained in the Marital Property Act is to address any unjustenrichment that arises as a result of a marriage, (see Halliwell v. Halliwell 2017 ONCA 349 , [2017] O.J. No. 2230).The analysis therefore begins and ends with the Marital Property Act. [127] There are three

definitions that must first be examined: "Marital Property" means (

a) family assets; (

b) property owned by one spouse or by both spouses that is not a family asset and that was acquired while the spouses cohabited, or incontemplation of marriage, except (i)a business asset, “Business Asset" means property owned by one spouse and used principally in the course of a business carried on by that spouse, eitheralone or jointly with others, and includes shares that the spouse owns in a corporation through which he or she carries on a business; "Family Assets" means property, whether acquired before or after marriage, owned by one spouse or both spouses and ordinarily usedor enjoyed for shelter or transportation or for household, educational, recreational, social or aesthetic purposes by both spouses or one ormore of their children while the spouses were cohabiting, and includes: (

c) shares in a corporation or an interest in a partnership or trust owned by a spouse having a market value equal to the value of thebenefit the spouse has in respect of property owned by the corporation, partnership or trustee that would if it were owned by the spousebe a family asset. [128] Accordingly, by definition, a business asset is not marital property and therefore prima facie is not subject to division at the end ofthe marital relationship. [129] Ms.

P argues that the businesses were developed by the parties over the course of the marriage as a “family venture” aimed atproviding a “family lifestyle” and a retirement income. She states therefore that Mr. P’s shareholdings in the four companies are familyassets subject to equal division as marital property. [130] In support of her position she relies on Milton v. Milton, 2008 NBCA 87 (CA). In that case, the husband was a medical doctorwho incorporated a professional corporation for the purpose of deferring payment of income taxes and for estate planning and retirementpurposes.

The trial judge concluded that the professional corporation was, marital property subject to division under the MaritalProperty Act. The Court of Appeal affirmed the trial judge's conclusion. At paragraphs 16 to 18 of the decision the Court of Appealidentified a two-step analysis to determine whether a given asset is a business asset or marital property: 16.

By definition, under the Marital Property Act, a business asset is not marital property and therefore prima facie is not subject todivision at the end of the marital relationship (subject of course to the discretion of the judge to unequally divide assets pursuant to s. 8).

17. To determine if an asset can properly be defined as a business asset Gordon R. Kelly in "A Review of Selected Provisions ofthe Matrimonial Property Act" (Paper presented to the National Judicial Institute, May 2006) proposes a useful twofold analysis. Thefirst question to ask is whether the asset was used principally in the course of the business carried on by that spouse. If the answer at thisstage of the analysis is "no" then the asset is not a business asset but marital property. If the answer at this stage is "yes", then the item inquestion is a business asset that requires further examination.

If the business asset includes money held in an account that is "ordinarilyused or enjoyed for shelter or transportation or for household, educational, recreational, social or aesthetic purposes by both spouses orone or more of their children while the spouses were cohabiting" a further analysis is required. 18. To resolve the issue of whether the asset was used principally in the course of the business carried on by that spouse, trial judgesoften refer to the definition from the leading decision of the Supreme Court of Canada in Clarke v. Clarke, (SCC),[1990] 2 S.C.R. 795, [1990] S.C.J. No. 97 (QL).

In discussing whether pensions are business assets Wilson J. stated at p. 814, "It seemsto me that business assets are assets which have as their purpose the generation of income in an entrepreneurial sense." (Emphasis Added) [131] At para. 25 of Milton, the Court of Appeal describes the purpose and use of the professional corporation as follows: 25. Another significant distinguishing characteristic relates to the purpose and the use of the professional corporation. The dominant, ifnot sole, purpose of the P.C., as testified by Dr. Milton and Mr. Thornton and acknowledged by Dr.

Milton's counsel, is to retain theprofessional's income and defer tax otherwise payable by the professional. There was considerable evidence regarding the use of the P.C.and professional corporations generally. Dr. Milton testified that the P.C. was incorporated on the advice of his accountant for the purpose of "retaining earnings in thecorporation and deferring tax". It was submitted by counsel for Dr. Milton that this is the purpose of any business corporation. However,it is not typically so singularly or dominant a purpose.

Another way of describing the utility or purpose is to say that the professionalcorporation does not have any significant purpose or advantage for the professional if he or she intends to receive personally or makepersonal use of, all of his or her net annual income from practice. The corporation is a tool that the professional uses to allow him todelay the full tax consequences on that portion of his income that is not required for current consumption and is left in the corporationand invested until it is subsequently withdrawn for use.

The point is not that there is something wrong with this, but rather that itillustrates that the professional corporation, by its very nature, is absolutely subordinate to the professional who uses it as a personal taxplanning instrument or device to delay the flow of his or her income and therefore delay the tax he would otherwise pay. It has little, ifany, independent or enterprise value. The professional regulates the flow of funds passing through the corporation in virtually the sameway he manages their other liquid assets.

In this respect, the professional corporation may be viewed as one of the pots in which theprofessional "holds" his investments, along with such other assets as registered retirement savings plans and non-registered investments.As noted in many of the reported decisions, such passive funds are not in play or at risk in the same manner as surplus funds in anenterprise that is entrepreneurial in nature. (Emphasis added) [132] The Court applied this analysis and concluded that the professional corporation at issue was marital property. At paragraph 27,Larlee, J.A. states: 27.

Adopting the two-step approach set out above, I would first conclude that the professional corporation in this case is not usedprincipally in the course of a business since there is no entrepreneurial aspect to it; it is used to defer the payment of income tax and is,therefore, like a first cousin of the RRSP.

Having regard to the intention, statements, and actions of the parties it has been established,and the trial judge so found, that the retained earnings were used or enjoyed for shelter or transportation or for household, educational,recreational, social or aesthetic purposes by both spouses or one or more of their children while the spouses were cohabiting. Therefore,the professional corporation is a family asset and, consequently, marital property subject to an equal division.

In light of thisdetermination, there is no need to proceed to the second step of the analysis. [133] Subsequent to the decision in Milton, it has become well settled in the jurisprudence that professional corporations are commonlyconsidered a family asset and therefore marital property subject to division, (see also G.M. v. M.R. [2015 N.B.J No. 119 NBQB 79], V.C.v. P.R. [2016] N.BJ. No. 135). [134] Ms. P also relies on the decision of Hart J.A. in Hebb v. Hebb (N.S.C.A) (NS CA), [1991] N.S.J.

No.100 (QL), wherein the Court emphasized the fact that whether an asset is properly characterized as a marital one is controlled largely bythe intention of the parties. In that case the asset at issue was a holding company that operated a professional building. At paragraph 153of the decision the Court states: 153. It is quite obvious that this holding company which operated the Bridgewater Professional Building on a rental basis wouldnormally fall into the classification of a business in the ordinary sense of the meaning of that word.

Whether it should be classified as abusiness or matrimonial asset, however, under the Matrimonial Property Act is, in my opinion, controlled by the intention of the parties.

There are many ways in which married persons can provide for their old age and retirement. Depending upon the financial circumstancesof the parties, future security may be accomplished by pensions, insurance, annuities, RRSP's, coin collections, or the accumulation ofassets which will produce future income when it is necessary for the maintenance of the parties after their income-producing years.

If itis intended by the parties to use these techniques to provide a future nest egg or security in retirement then it cannot, in my opinion, besaid that the asset chosen was primarily used or held for or in connection with a commercial, business, investment or other income-producing or profit-producing purpose. A business asset, in my opinion, is one which is used for relatively immediate gain and not onethat is merely held for the purpose of future security.

Many investments are primarily used to obtain income from surplus capital and fallinto the category of business assets under the Act but the parties may be holding them for other purposes which may take them out of thebusiness classification and allow them to fall back into the category of matrimonial assets. 154. This court has already held that it is the intention of the parties that governs the classification of an asset which could be eitherbusiness or matrimonial. See Herritt v.

Herritt (1990), (NS CA), 95 N.S.R. (2d) 357; 251 A.P.R. 357; 25 R.F.L. (3d)273 (C.A.), where it was found by the trial judge and approved on appeal that an asset in the name of a husband was really being kept forthe future and retirement of the family and, therefore, not a business asset. (Emphasis Added) [135] The Court of Appeal in Milton considered the comments in Hebb and confirmed that the intention of the parties is relevant to theanalysis, (Milton, supra at para. 23). The Court of Appeal also endorsed the comments of Cameron J.A. in Hickey v. Hickey (1999), (NL CA), 179 Nfld. & P.E.I.R. 242, [1999] N.J.

No. 259 (QL), In Hickey the court stated that to determine thepurpose for which an asset is held, one may have regard to both the actions and the statements of the parties vis-à-vis the asset. In thatcase the appellant argued that a term deposit held by him was a business asset and not subject to division. Cameron J.A. explained atparagraph 25: 25. In determining the purpose for which the assets are held one may have regard to both the actions and the statements of the partiesvis-à-vis the asset.

Neither method of holding the funds, nor the statement of one party or the other as to his or her specific intentionrespecting the funds, is determinative of the issue. The question is whether the asset is held for the purpose of generating income in anentrepreneurial sense. The general attitude of a party regarding the sharing of his or her income is irrelevant to this exercise.

Income fromemployment placed for security and to earn interest in a savings account is a matrimonial asset whether the individual sees it as his or herasset or as a family asset and whether he or she intends to use it for the general benefit of the family or not. Here, the appellant's purposewas to hold the asset for future needs - albeit in a way which would earn interest. However, that entrepreneurial sense of the use of theasset is absent. While the trial judge's reasoning is not entirely consistent with the current views on the

interpretation of the Act, hisconclusion that the term deposit was a matrimonial asset was correct. (Emphasis Added) [136] In the end I do not find Ms. P’s position persuasive. Mr. P’s business interests relate to equity in four corporations that all operated,“in an entrepreneurial sense.” None of the corporations at issue were incorporated for the purpose of being used as a personal taxplanning instrument or a device to delay the flow of Mr. P’s income and therefore delay the tax he would otherwise pay. Each of the fourcompanies has had an independent or enterprising value. [137] Mr.

P answers to shareholders in the two corporations that now ultimately generate revenue, namely, De Novo Construction Inc.and G-8 Way Convivence Ltd. He does not have the ability to regulate the flow of funds passing through any of the corporations in thesame way he would manage other liquid assets. The companies do not “hold” his investments like registered retirement savings plansand non-registered investments. Mr.

P’s shares, just like the value in his Shareholder Loan Account are “in play” and always at risk inthe same manner that surplus funds are at risk in any enterprise that is entrepreneurial in nature. [138] In the end none of the companies are “absolutely subordinate” to Mr. P in the manner a professional corporation is to theprofessional who generates the revenue that flows through the corporation. Accordingly, applying the first of the two-step analysis inMilton to the facts in this case, I am easily persuaded that Mr.

P’s interest in the businesses at issue have been and are currently usedprincipally in the course of the business carried out by each corporation. Their purpose, (those still active is to generate [139] It is acknowledged that does not end the inquiry.

The Court must go on to inquire if any of the corporations hold assets that are"ordinarily used or enjoyed for shelter or transportation or for household, educational, recreational, social or esthetic purposes by bothspouses or one or more of their children while the spouses were cohabitating.” [140] In this instance the primary and overwhelming purpose of the business assets including the rental properties and the businessaccounts is to operate the contracting/construction (now real estate development) and convenience store businesses.

The funding ofcertain personal expenses through the businesses, in my view is merely incidental use that does not diminish the essential character of thebusiness accounts as business assets. [141] Further, unlike the scenario which presented in Hebb and Hickey, the assets in these corporations were not being held “merely forthe purpose of future security”. While it is conceded that the parties were hopeful rental properties owned by N.P.

Contracting Ltd. and/or De Novo Construction Inc. may at some point generate an income for the parties in their retirement years, the evidence does notestablish that those properties were being held and preserved solely for that purpose. The assets are held for the purpose of generatingcurrent income in an entrepreneurial sense. [142] I conclude that Mr. P’s shareholdings in the businesses along with the funds contained in the Shareholder Loan Account are

not marital property. • Is Mr. P’s Interest in the Businesses Subject to Division under

Section 8 of the Marital Property Act? [143] Having concluded that Mr. P’s interest in the businesses is not marital property, the question then becomes whether Ms. P isentitled to a share of that business asset pursuant to

section 8 of the Marital Property Act. [144]

Section 8 of the Marital Property Act provides as follows: 8. In determining any application for a division of marital property, the Court may make a division of any property of either spouse thatis not marital property if (

a) a spouse has, through transfer, indebtedness, mismanagement or other means, unreasonably impoverished the marital property, or (

b) the result of the division of marital property would be inequitable in the circumstances having regard to (

i) the considerations set out in paragraphs 7(

a) to (f), and (ii) the effect of the assumption by one spouse of any of the responsibilities set out in

section 2 on the ability of the other spouse toacquire, manage, maintain, operate or improve property that is not marital property. [145] The considerations to be taken into account as listed in

section 7 are: 7. Despite sections 2, 3 and 4, the Court may make a division of marital property resulting in shares that are not equal if the Court is ofthe opinion that a division of the marital property in equal shares would be inequitable, having regard to: (

a) any agreement other than a domestic contract, (

c) the duration of the period of cohabitation under the marriage, (

d) the duration of the period during which the spouses have lived separate and apart, (

e) the date when the property was acquired, (

f) the extent to which property was acquired by one spouse by inheritance or by gift, or (

g) any other circumstances relating to the acquisition, disposition, preservation, maintenance, improvement or use of property renderingit inequitable for the division of marital property to be in equal shares. [146] In Fraser v. Fraser (NB CA), [1983] N.B.J. No. 14, Stratton, J.A. (as he then was) opined that the powerconferred upon the Court under sections 7 and 8 of the Act is not limited in scope.

He expressed in broad terms the manner in which theCourt's discretion may be exercised to determine the interest of the non-owning spouse in the non-marital property where inequity ariseson the division of marital property only. At paragraph 14 he states: The scheme of the New Brunswick Act is similar to the Ontario Act and the functions of ss. 3, 7 and 8 are akin to those of ss. 4(1), 4(4)and 4(6) of the Ontario Act.

Section 3 of the New Brunswick Act provides for a prima facie equal division of the marital propertybetween the spouses upon the dissolution or breakdown of their marriage.

Section 7 then empowers the court, upon a consideration ofthe factors set out in that section, to make a division of the marital property which is not equal.

Section 8 empowers the court to haverecourse to non-marital property if a division limited to the marital property would be inequitable having regard to the considerations setout in that

section including the total property, marital and non-marital, held by the parties or either of them.

Thus, in my view, ss. 7 and 8of the New Brunswick Act are not limited in their scope but rather give to the court a discretion, upon proof of an inequitable result, torectify the inequity either by an unequal division of the marital property under s. 7 or by a division of the non-marital property under s. 8,or both, having regard to the nature and extent of the assets and the circumstances of the particular case. (Emphasis added) [147] There is no evidence in this case that either spouse has unreasonably impoverished marital assets.

Accordingly, the threshold ortriggering question is whether the division of marital property alone is inequitable. As stated, Mr. P in both his pre and post trialsubmissions concedes that

section 8(

b) of the Marital Property Act is triggered. [148] I agree. As can be seen from the marital property division, there was very little equity left to divide when considering the lifestylethe parties enjoyed for the mainstay of their marriage. It was a lifestyle significantly more comfortable than most families in the area.

Isay this considering the home they lived in, the vehicles they drove and the extensive traveling they did as a family. [149] Despite the standard of living enjoyed by the couple over 24 years of marriage, the net value of the marital property on separationwas limited to $295,261.34, ($70,000.00 of which related to unpaid loans given to Mr. P’s family and friends). Equally divided that onlyprovides Ms. P with $147,630.67 in marital property on separation.

Further, it is notable that on separation the parties had no investmentsin the nature of retirement planning such as RRSP’s or any other significant tangible assets.

[ 150 ] The marital home while it sold on separation for $625,000.00 was highly leveraged. The history of the financing of the home is relevant. The couple built the home in 2005. Collectively it was described by the parties as a 6000 square-foot home with 4 bedrooms, 4 ½ bathrooms a movie room and a gym. A stated earlier, subsequent to building the home the couple added a pool, landscaping, a hot tub, a movie room and a significant gym. [ 151 ] The initial mortgage on the home in October 2005 was $225,000.00.

That was paid off and the home was subsequently re- mortgaged a year later in September 2006 for $426,000.00 and again nine years later in September of 2015 for $425,500.00, ( Exhibit P- 2 ). [ 152 ] The evidence did not confirm what the re-mortgaged funds in 2006 were used for but it does confirm that the re-mortgage in 2015 addressed the following debts: • First line Mortgages (CIBC) - $359,261.37 • CIBC Personal Line of Credit - $14, 597.00 • CIBC Visa (Acc#?) - $28, 996.00 • CIBC Overdraft account – $42, 227.00 • CIBC Visa 2152 - $2,271.00 • CIBC Visa 4602 - $15,148.00 [ 153 ] Mr.

P testified that some of this debt related to the additions and renovations to the home. However, there was little to no corroborating evidence from either party identifying whether the balances on the Credit Cards, Line of Credit or the overdraft related to family or business related expenses. Mr. P testified that the businesses did not have a corporate credit card and that he routinely used his personal credit cards for business related expenses.

While his practice was to ultimately be reimbursed through his Due To Shareholder accounts, I accept that it was probable some of the debt addressed in the 2015 re-mortgaging included business related expenses. [ 154 ] Additionally, when the marital home was sold on separation in August of 2016 a portion of the proceeds were used pay a CRA debt of N.P. Contracting Ltd. in the amount of $105, 386.33. This payout along with the remaining balance owed on the 2015 remortgage of $421,847.00 left the parties, after adjustments with only $70,000.00 in equity to divide. [ 155 ] While Mr.

P now concedes the CRA debt is a business debt that Ms. P is not responsible for, the fact the proceeds of sale were used to cover this debt initially (without protest from Ms.

P) lends significant weight to Ms. P’s position that Mr. P used marital assets throughout the marriage to financially support the business. [ 156 ] Another example of this was his use of the surrendered cash out value of the couple’s life insurance policy’s to pay corporate debt. Recall the amounts paid to the company book keeper from the couple’s insurance policy in 2017. [ 157 ] The evidence satisfies me that the line between personal and business funds was not a well defined one throughout the marriage. In large part this is attributable to Mr.

P’s admitted shortcomings when it comes to bookkeeping and related details. [ 158 ] Accordingly , considering the length of cohabitation and the increase in his investment in the businesses that had an agreed value of $1,166,024 at separation, it cannot be said that the division of the marital property alone is, from a purely accounting point of view, either significant or equitable in the circumstances. [ 159 ]

Section 7 of the Marital Property Act instructs that the court must assess elements in addition to the financial ones. Determining whether the division of marital property is inequitable also requires consideration of the remaining criteria enumerated in

section 7(

a) to 7(

f) of the Act and includes the effects of the assumption by one spouse of any responsibility defined in

section 2 on the ability of the other spouse to acquire, manage, maintain, operate or improve, that spouse's non-marital property, ( s.8 (b)(ii)). [ 160 ] I do not doubt for a moment that Mr. P worked hard to build his business assets and that his skills, talents, and business acumen were the foundation of his success. That success was however also positively impacted by the efforts of Ms. P and the role she played over the course of their marriage. Ms. P clearly supported Mr. P’s investment of time and money into the businesses. While he worked long hours and chased projects for N.P.

Contracting Ltd., De Novo Construction Inc., and created G-8 Way Convenience, she was the spouse who primarily was responsible for the home and the couple’s young daughter. [ 161 ] This does

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