EMILY MAE SCHOLTEN Applicant, – v. –, 2023 NBKB 116

FDF-530-2017 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK FAMILY DIVISION JUDICIAL DISTRICT OF FREDERICTON Emily Mae Scholten v. Jason John Scholten, 2023 NBKB 116 BETWEEN: EMILY MAE SCHOLTEN Applicant, – and – JASON JOHN SCHOLTEN Respondent. DECISION BEFORE: Madam Chief Justice Tracey K. DeWare AT: Fredericton, New Brunswick DATE OF HEARING: April 4 and 11, 2023 DATE OF DECISION: June 26, 2023 APPEARANCES: Grant M. Ogilvie, K.C., Solicitor for the Applicant

Michael Young, Solicitor for the Respondent DEWARE, C.J. INTRODUCTION [ 1 ] This is an unusual situation. The parties were before the Court for a ten day divorce trial in October and December 2019. The trial judge set out the issues before the Court in his decision dated May 20, 2020 as follows: [7] The hearing for the Petition was completed on December the 6 th . [8] In context, E.M.S. seeks a divorce from J.J.S. She filed her Petition for Divorce on November 30 th 2017.

At first instance, she was looking for joint custody of the two children, V.A.S., who’s date of birth is […], 2004 and G.R.S., who’s date of birth is […], 2007, she also asked to have primary care of the two children. She proposed Mr. S. would have access on alternate weekends, shared holidays and such other reasonable times on reasonable notice. The Petitioner was not to unreasonably withhold her consent to such reasonable access. [9] Ms. S. also asked for child support and special expenses under s.(s) 3, 7 of the Federal Child Support Guidelines .

She asked for annual financial disclosure under s. 25, she asked for health, medical and dental insurance for she and the children under s. 6 of the Guidelines and she asked for costs. The balance of the claim is for an accounting of marital and non-marital property and debts together with an in-unequal division of the assets . [Emphasis mine] [ 2 ] Regrettably, the trial judge did not address the issues of marital assets and debts in his 35 page decision. The trial judge’s decision dealt solely with issues surrounding parenting time and child support.

These were certainly the pressing issues between the parties in 2019, and the vast majority of time at trial was spent exploring evidence pertinent to these questions. [ 3 ] The Respondent appealed the trial judge’s decision respecting the parenting arrangements for the children of the marriage. That appeal was heard on April 22, 2021 and dismissed. Written reasons for the dismissal of the appeal were rendered on July 15, 2021. The Respondent was ordered to pay costs following the appeal of $2500.00 plus disbursements.

The Registrar of the Court of Appeal issued a Certificate of Assessment in the amount of $4,335. 75. These costs remain unpaid. [ 4 ] In the summer of 2022, counsel approached the Court for assistance as the issues of marital debts and assets remained outstanding. As the trial judge had retired, I assigned the matter to myself pursuant to section 20(2) of the Judicature Act , RSNB 1973, c J-2 . In April of 2023, we heard evidence from the Trustee in Bankruptcy and then counsel argued the issues of marital debts and assets again before me.

The present decision is prepared with the assistance of submissions of counsel and the evidence tendered during the original trial. FACTS [ 5 ] The parties were married on June 13, 2009 and separated on September 9, 2017. There are two children of the marriage. The facts surrounding the children of the marriage as well as issues of support are not germane to the issues currently before the Court. [ 6 ] The marital home was purchased by the Petitioner in 2002 and has remained solely in her name.

The Petitioner purchased the home for a purchase price of $118,000.00 and initially had a mortgage on the property of $116,300.00. The parties began to cohabitate in 2008. The home was remortgaged at that time with a new mortgage of $160,000.00 secured. An appraisal of the property dated September 23, 2019 provided a value of $145,000.00. The outstanding mortgage on the home, as of October 1, 2019, was $76, 809.00 and at the date of separation, in 2017, was $96,456.00. [ 7 ] Both parties have pensions as a result of their employment. The Petitioner has been employed with NB Power for many years.

The Respondent has been employed with the City of Fredericton since 2014. The parties acknowledge each are entitled to a sharing of the others pension during their period of cohabitation and marriage. [ 8 ] The Petitioner set out the marital debts in her financial statement of November 2017 as follows: Type of Debt Amount Owing Amount of My Share of Debts Loan – Royal Bank (re: camper) $ 29,155.00 $ 14,577.50 Sears Credit Card $ 9,585.00 $ 4,792.50 RBC Credit Card $ 16,156.00 $ 8,078.00 HSBC Consolidation Loan $ 12,777.00 $ 6,388.50

RBC Financial Mortgage $ 96,456.00 $ 96,456.00 Accumulated Electricity Bill $ 716.00 $ 358.00 [ 9 ] The Respondent did not provide amounts but acknowledged the following debts in addition to the mortgage in his financial statement dated February 15, 2018: Sears credit card RBC credit card HSBC credit card PC Financial [ 10 ] The parties purchased a camper trailer during the marriage which they used to vacation as a family. Following the separation, the camper was repossessed, and there is an amount owing, according to the Petitioner, of $23, 419.66.

At trial, an exhibit was marked, Exhibit P-4, which was a letter dated June 6, 2018 from the Royal Bank confirming the amount outstanding on the camper loan of $19,249.99. While there appears to be a lack of clarity on the exact owing under this debt, there is no dispute that it is a marital debt.

Further, my understanding of the situation based on the submissions of counsel is that neither party has made any payments towards this debt since separation. [ 11 ] The Petitioner maintains there was significant improvements made to the marital home since she purchased the property and that this work was all done by her father.

The Respondent points out that the most significant repair to the marital home was a metal roof which was done during the course of the marriage and the costs were charged to his credit card. [ 12 ] The Petitioner suggests that the value of the property diminished after the Respondent moved into the home because he kept moving junk and pieces of equipment onto the property. The Respondent left all of this behind when the parties separated.

The Petitioner suggests that the property had a value of $190,000 at one point when it was remortgaged, but its value had diminished to $145,000 at the time of separation because of the state of the yard and the junk the Respondent had accumulated on the property. The Respondent counters this argument with the suggestion that the Petitioner could have sold the various items or had a dumpster come and remove all of the items.

The Respondent believes that the Petitioner left all of these items on the property for a couple of years following separation as she wanted to diminish the value of the property in the event the Respondent was granted an interest in the equity. [ 13 ] The Respondent requests $5,000.00 from the Petitioner as compensation for his interest in the furnishings at the marital home. The Petitioner maintains that the Respondent took his belongings with him in 2017, and they divided all of the furnishings equally. [ 14 ] The Respondent filed an assignment in bankruptcy in December 2020.

At the same time of his assignment in bankruptcy, the Respondent included the following unsecured debts in his filing: Canadian Tire $ 1,500.00 Capital One Bank $ 1,500.00 HSBC $ 1.00 LendCare Capital Inc. $ 0.00 LendCare Capital Inc. $ 5,000.00 McCordic Law & Mediation $30,000.00 Tax Services $ 800.00 Royal Bank of Canada $ 11,000.00 [ 15 ] The Respondent has not yet been discharged from the bankruptcy.

The Trustee in Bankruptcy, Robert Johnson, testified the Respondent has not yet been discharged, even though the requisite period of time has passed, because the Trustee was waiting to see if the Respondent had an interest in the marital home. The Trustee does not take a position on whether or not the Respondent has an interest in the marital home, but he cannot discharge the Respondent until the issue has been determined. The Trustee explained that he is simply an observer to the proceedings unfolding in the family division.

The Trustee described his role as a neutral party to the family division proceedings with a fiduciary duty to the Respondent’s creditors. The Trustee confirmed the Respondent had not included an interest in the marital home in his Statement of Affairs filed at the time of the assignment bankruptcy. ISSUES [ 16 ] What are the issues to be determined by the Court:

(1) Is the Petitioner entitled to an unequal division of marital property?

(2) What are the marital debts and assets, and what is the appropriate division of marital debts and assets?

(3) What is the impact on the division of marital property of the Respondent’s bankruptcy?

(4) Costs. POSITION OF THE PARTIES [ 17 ] The Petitioner submits that following the Respondent’s assignment in bankruptcy, he is no longer able to advance a claim against the marital home. The Petitioner suggests that any claim the Respondent had in the marital home vested in the Trustee in Bankruptcy at the time of the assignment and since the Trustee chose not to intervene, the Respondent is not in a position at this time to advance a claim.

Alternatively, the Petitioner maintains that if the Respondent does retain an interest in the marital home, in the circumstances of this case, the Court should award an unequal division of marital property and accord the Petitioner a 100% interest in the marital home. The Petitioner further asks that the marital debts be divided equally between the parties. [ 18 ] The Respondent disputes the Petitioner’s

interpretation of the impact of the bankruptcy on his entitlement to a share of the marital home. The Respondent asserts that there is no reason in this case the Court would deviate from an equal division of marital debts and assets as is mandated by the Marital Property Act , RSNB 2012, c 107 . The Respondent denies his assignment in bankruptcy has any impact whatsoever on his entitlement to the equity in the marital home.

The Respondent points out that he has been incapable of securing a discharge from the bankruptcy despite the fact that sufficient time has elapsed as the Trustee in bankruptcy will not release him until his entitlement to an interest in the marital home is resolved. LAW AND ANALYSIS [ 19 ] This decision requires the Court to divide marital debts and assets following the dissolution of a marriage. The division of marital debts and assets in the Province of New Brunswick is governed by the Marital Property Act .

While the Respondent’s bankruptcy muddies the waters in this case, it does not displace the requirement to apply the legislative framework set and in the Marital Property Act to the division of debts and assets. Once the Court has determined the appropriate division of marital property, then the impact of the Respondent’s bankruptcy can be determined. [ 20 ] Section 3(1) of the Marital Property Act provides as follows: Application for division of marital property 3

(1) Each spouse, on application to the Court, is entitled to have the marital property divided in equal shares if (

a) a judgment granting a divorce is rendered, (

b) a marriage is declared a nullity, (

c) the spouses are living separate and apart and there is no reasonable prospect of the resumption of cohabitation , or (

d) a marriage has broken down and there is no reasonable prospect of reconciliation, whether or not the spouses are living separate and apart. [Emphasis mine] Unequal division of marital property [ 21 ]

Section 7 of the Marital Property Act provides as follows: Unequal division of marital property 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 of the 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, (

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

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

d) the date when the property was acquired,

(

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

f) 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. [22] In the present matter, in order for the Petitioner to succeed in her request for an unequal division of the marital property, she mustsatisfy one of the criteria set out in

section 7 of the Act. In support of her position, the Petitioner advances the following arguments:

(1) The Petitioner purchased the home in 2002 and resided in it for six years prior to when the Respondent moved in in 2008;

(2) The Petitioner has always been the sole registered owner of the home;

(3) The indebtedness against the property increased as the parties remortgaged the property following the marriage;

(4) The Respondent diminished the value of the property by accumulating items on the property which he left at the time of separation;

(5) The significant improvements made to the home were all done by the Petitioner’s father; and

(6) The Petitioner has paid all costs related to the marital home since separation. [23] In MacPhee v. Spence, 2018 NBQB 240 , I had the opportunity to consider a request for an unequal division of maritalproperty. In that particular case, concluding it was appropriate to grant an unequal division of marital property, I explained the pertinentjurisprudence at paragraphs 65, 67, 68, 70, and 71 as follows: [65.] The petitioner appropriately points out that in requesting an unequal division of marital property, it is the party seeking such reliefthat bears the onus of proving an unequal division is appropriate.

The respondent points to the fact that he had owned the Baie Verteproperty for many years prior to the petitioner’s arrival in 2007. The respondent suggests that this property has been in his family forgenerations. The respondent further points out that between the mid-1980s and 2007, he had constructed the home, the barns, the mill,the driveways, the fields and many of the trails.

According to the respondent, the petitioner made no contribution to any of the variousstages of the construction of the farm property. [67.] In the present matter, we have a marriage of eight years duration where the petitioner contributed both financially to the maritalhome as well as providing many services to the management of the household and the farm. Clearly, the petitioner’s financialcontributions to the marital home do not near those made by the respondent in the twenty plus years he lived on and developed the farmprior to the petitioner’s arrival.

However, equal financial contributions are not a pre-requisite to an equal division of marital property.During the course of the marriage, I accept that both parties were investing their earned revenues into the marital home and farm as wellas significant manpower towards its management and maintenance. [68.] In this case, the respondent had constructed the marital home and surrounding farm by himself over the course of two decades.This property had been inherited by the respondent through his family.

While the petitioner clearly contributed to the maintenance andimprovement of the property during the marriage and cohabitation, this is a case where it is reasonable to order an unequal division ofmarital property. [70.] In determining that the respondent has met the burden to establish his entitlement to an unequal division of marital property, Icome to this conclusion, mindful of the following factors: 1) The respondent had inherited the property comprising the area surrounding the marital home, the farm and the surrounding woodlotsfrom his family; 2) The property in question has been in the respondent’s family for generations; 3) Between the mid-1980s and 2007, the respondent had constructed the home, barn, mill and other outbuildings using lumber he milledhimself from the property as well as developing fields, roads and laneways; 4) The marriage of September 2008 until December 2015, while not to be categorized as short, is not a long-term marriage; and

5) The contributions of the respondent are grossly disproportionate to the contributions of the petitioner in regards to the property inquestion. [71.] In Dow v. Dow, 2013 NBQB 106 , Mr. Justice Walsh granted a party’s request for an unequal division of maritalproperty pursuant to

section 7 of the Marital Property Act. This determination was made largely as a result of one spouse’s gamblingproblem which Justice Walsh concluded resulted in the dissipation of the family assets. Justice Walsh’s comments on the analysisrequired of a Court in according a request for unequal division of marital property is instructive to the Court’s analysis in the presentmatter. Justice Walsh comments at paragraphs 53 and 54 as follows: 53 Put together, the analysis under

Section 7 weighs heavily against an equal division of the marital home. In other words, I concludethat the "strong presumption" of equality has been rebutted. In my judgment it would be "inequitable" for the wife to have an equal share.However, the difficult question remaining is what if anything should be her share? It is the question I posed but did not answer earlier. Iwill do so now. 54 I believe the formula to solve the problem is found in the basic rules of evidence. The onus to rebut the "strong presumption of equaldivision" in the Marital Property Act was necessarily put on the person asserting (Yorke v.

Yorke, supra), in this case the husband. Hehas met that onus of proof on a balance of probabilities (See: H. (F.) v. McDougall 2008 SCC 53 , [2008] 3 S.C.R. 41). But,once met where does the onus lay to prove the extent of departure from a 50% share? In many cases it may very well continue to restwith the party seeking to depart from the basic rule of equal division. Indeed, it may be inherently required.

But, in my opinion, not in acase as here where there has been dissipation of assets through an activity such as gambling. (Emphasis mine) [24] Justice Cyr accorded an unequal division of marital property in LeBlanc (Choukri) v. Choukri, 2017 NBQB 126 explaining his reasoning at paragraphs 33 to 38 as follows: [33] The caselaw clearly authorizes the court to grant an unequal division of marital property where it would be “inequitable”,“grossly unfair”, or “grossly unjust” to share marital property equally. See also Leblanc v. Leblanc, [1988] 1 S.C.R. 2017, at paras.9-10, and 13; and Dow v.

Dow, 2013 NBQB 106, paras. 50-51. [34] I agree with the Petitioner that an equal sharing of the marital property in the present circumstances would be inequitable andgrossly unjust. [35] The circumstances surrounding the disposition of property is a factor when determining if an equal sharing of marital propertywould be inequitable. Walsh J. in Dow v.

Dow, considers this factor in his discussion of the meaning of “dissipation”, at paras. 47 to 49.Justice Walsh concludes that dissipation should be akin to “wasting” of marital resources in support of a claim for an inequitable divisionof marital property. [36] The facts in the present case lead me to conclude that the Petitioner is entitled to an unequal division of property as theRespondent deliberately and surreptitiously wasted marital resources in order to support his apparent gambling addiction.

Theevidence is clear that the Respondent spent the money gambling and numerous credit card charges reference Casino New Brunswick. The evidence discloses that he cashed out RRSPs of approximately $133,845 (before tax) from February 2016 to September 27, 2016,within eight months prior to the separation. [37] Moreover, he incurred personal debt in an approximate amount of $183,000 from January 2016 up to September 2016, nine monthsprior to the separation.

He further requested financial assistance from the Petitioner by getting her to provide him with two cheques fromthe RBC line of credit, totaling 113,756.34 in September of 2016, less than one month prior to the separation. [38] The facts in this case support that I exercise my discretion to apply paragraph 7(

f) of the Marital Property Act due to thefact that the Respondent deliberately depleted marital assets to support his serious gambling addiction. The Petitioner wasunaware of the extent of the Respondent’s gambling activities since she did not have access to his bank accounts, personalbusiness credit cards, statements, nor client funds or accounts at his law practice. The Respondent misled her to believe he was“breaking even” with the gambling and even showed her pictures of his winnings. [Emphasis mine]

[25] In Beaudoin v. Beaudoin, 2021 NBQB 103 , Justice Bélanger-Richard refused a request for an unequal division ofmarital property pursuant to

section 7 of the Marital Property Act. Justice Bélanger-Richard explained her decision in the circumstancesof the case at paragraphs 31, 33, 35, 36, 37, and 38 as follows: [31] Overall, I am satisfied that the wife was in control of the family’s finances during the marriage. Although the wife might not havebeen happy with the husband’s spending, I do not believe that it was a major issue prior to separation. During the marriage, thehusband’s earnings were used to pay day-to-day expenses and debts as well as to purchase personal property. The wife’s earnings wereset aside as savings. This is how the parties managed their finances for the benefit of the family. [33] The wife relies on

section 7(

f) in support of her position. Her counsel submitted three cases in support of the wife’s position andexplained that these cases confirm the court’s discretionary power to make an unequal division of marital property (see LeBlanc v.LeBlanc, (SCC), [1988], 1 S.C.R. 217, Yorke v. Yorke, 2011 NBCA 79 and MacPhee v. Spence, 2018 NBQB 240). [35] The decision in Yorke v. Yorke, 2011 NBCA 79 (N.B.C.A.) reiterates the presumptive statutory right of spouses to an equaldivision of all marital property upon marriage breakdown.

While there may be exceptions to an equal division as recognized inYorke, they result from peculiar circumstances such as dissipation of assets, unequal contributions, short, second or latemarriage and inherited property (para. 19). [36] In Yorke, at para.17, Justice Larlee states that there is a heavy onus on a party seeking an unequal division of marital property. She also mentions that “the length of the marriage is seemingly one of the most influential criteria to be considered in the analysis”(para. 20). [37] In the present matter, the parties were in a relationship for over 25 years.

Both parties always receied an income during therelationship. Neither party argued that their respective settlement funds or severance payments were not marital property. Both partiesfinancially contributed to household and personal expenses, acquisition of property and payment of debts. While the wife claims that thehusband dissipated his money, I am not convinced that it is the case. I am of the view that the husband’s earnings and lump sumpayments were used to pay expenses, debts and purchases of property while the wife’s earnings and lump sum payment were set aside assavings.

Also, I did not receive any evidence on the parties’ respective roles regarding child care and household responsibilities, so Iassume that they both acted responsibly in that regard. Overall, I cannot conclude that any party failed to fulfill the “jointresponsibilities” under

section 2 of the Act. [38] After considering the submissions and the evidence, I must conclude that there is no merit to the wife’s argument that she isentitled to an unequal division. The marital property was acquired by the parties during their marriage through their joint efforts andfinancial contributions. [Emphasis mine] [26] In the circumstances of this case, the Petitioner has not satisfied me that she is entitled to an unequal division of marital propertypursuant to

section 7 of the Act. Both parties contributed to the expenses of the family and the home during the course of therelationship. There is evidence that the Respondent contributed to the renovations to the home, significantly the payment of the metalroof which the Petitioner agrees was paid for on the Respondent’s credit card. While the Petitioner is critical of the Respondent’sfinancial management skills and blames the Respondent for the parties’ expenditures, this is not a situation similar to MacPhee norChoukri.

These parties were in a relationship where both made contributions to the household and both incurred debt. Neither thePetitioner’s superior financial contributions nor the hoarding of items on the property rise to the level which would justify thedisplacement of the presumption of an equal division of marital property under the Act. The facts in this case are far more similar tothose in Beaudoin, and I agree with Justice Bélanger-Richard that such facts do not support an unequal division of marital property. ThePetitioner’s request for an unequal division of marital assets pursuant to

section 7 of the Act is denied. Division of assets and liabilities [27] The next problematic question for the Court to resolve is the identification of the marital debts and assets. The assets are easilyenumerated as the parties’ respective pensions and the marital home. The pensions are to be divided during the course of cohabitationwhich is to be calculated from May 2008 to September 2017.

My understanding is that the Respondent’s pension only began toaccumulate when he began working at the City of Fredericton in April 2014. [28] I accept the value of the marital home based upon the only appraisal in evidence at $145,000.00. At the date of separation, theoutstanding amount owing on the mortgage was $96,456.00. Using these figures, I assess the value of the equity in the marital home at$48,544.00 and the Respondent’s share at $24,272.00. [29] The camper trailer owned by the parties was repossessed leaving an outstanding balance of $19,249.99. My understanding is that

the Petitioner made the initial payments on this loan until December 2017 when the camper was repossessed as she could no longer afford it. I am unable to identify from the list of creditors in the assignment of bankruptcy of the Respondent if this debt has been included or not. However, this will be an issue for the Trustee to resolve. The letter in evidence which confirms the amount outstanding under the deficiency of $19,249.99 is addressed solely to the Petitioner. [ 30 ] The preparation of this decision is challenging as I was not the trial judge.

In reviewing the evidence that is available to me, as well as the submissions of counsel, my understanding is that neither party made any payment on the marital debts, other than the mortgage, following the separation. This is not a situation where the Petitioner has paid all of the debts following the separation and is looking for compensation for the debts from the Respondent for his share. Further, I can point to no documentary evidence in the exhibits nor find any reference in the transcripts to the actual amounts of marital debts other than Mr.

Ogilvy’s explanation of the amount owing under the camper loan following its repossession. There is documentation concerning the Respondent’s purchase of a Dodge Journey post separation, but this is not a marital debt. It is very difficult to identify and divide marital debts in this evidentiary vacuum. Understandably, the trial concentrated on evidence pertinent to issues of parenting; however, the Court requires some concrete evidence of the amount of any marital debt. [ 31 ] The Court requires some level of identification and quantification of marital debts in order to consider their division.

In this case, I can only point to the camper loan as a clear marital debt. While both parties acknowledged other marital debts in their financial statements, I can find no evidence to support the amount of these debts nor the necessary evidence to confirm their existence as true marital debts. Considerable time at trial was spent discussing the marital home including various repairs made to the home as well as the accumulation of materials around the home. The parties also testified as to the situation with the camper as well as the various items taken from the home by the Respondent following separation.

However, I was unable to pinpoint testimony nor exhibits pertinent to other potential marital debts. Similarly, I could identify no evidence which would substantiate the Respondent’s request of $5,000.00 for payment of his interest in the contents of the marital home. In all of the circumstances, I am left with only the equity in the marital home, the parties’ respective pensions and the debt following the repossession of the trailer that I can divide.

Impact of Respondent’s bankruptcy [ 32 ] Much of the case law which discusses the impact of a bankruptcy following marital breakdown focuses on the issue of support and the priority which exists for support orders. There are no issues of support before the Court at this time. This decision deals uniquely with the division of marital assets and debts as well as the impact of the Respondent’s bankruptcy following both the separation and the trial on these issues. [ 33 ] In his paper Bankruptcy for the Matrimonial Court Judge , dated February 9, 2006, Robert A.

Klotz discussed when an equalization claim is provable in the various regime of matrimonial property law across Canada. Mr. Klotz explains the issue as follows: Issue (a): If a spouse declares bankruptcy before a separation agreement has been signed or an equalization judgment has been granted, is the equalization claim provable? Case law suggests that so long as a triggering event — in Ontario, normally separation without reasonable prospect of reconciliation — has occurred before the date of bankruptcy, the equalization claim is provable.

This means that the claim is stayed by the bankruptcy and will be released by the discharge. This result applies in the “equalization” provinces: Ontario, P.E.I., Manitoba and probably Québec’s partition de patrimoine familiale (division of family property). This conclusion does not apply to all the provinces. In those provinces having division of property remedies – B.C., Alberta, Saskatchewan, New Brunswick, Nova Scotia and Newfoundland – the matrimonial property remedy is not, in structure, a debt- type remedy.

As a result, while a debt claim for property division may be provable (and hence stayed and extinguished by discharge), a division claim, in specie, against an exempt asset is neither stayed nor extinguished by discharge. [Emphasis mine] [ 34 ] The Petitioner relies upon Justice Athey’s reasoning in Bulua v. Bulua , 2007 NBQB No. 324 in support of her position that the Respondent’s bankruptcy precludes an ability to seek an interest in the marital home.

In Bulua , Justice Athey ruled that the husband who had made an assignment in bankruptcy prior to the hearing did not have capacity to advance a claim against the marital home under the Marital Property Act . Justice Athey accorded a 100% interest in the marital home to the wife stating at paragraph 22 of her decision as follows: [22.] The Respondent’s property vested in the trustee in bankruptcy when he made his assignment in bankruptcy. See s.71 of the Bankruptcy and Insolvency Act . The Respondent has no capacity, in his own right, to advance a claim under the Marital Property Act .

The trustee in this case chose not to pursue a claim to the parties’ marital home. [Emphasis mine]

[35] The facts in this matter are different than those in Bulua. In Bulua, the husband had made the assignment in bankruptcy prior tothe hearing. In the present matter, the Respondent made his assignment in bankruptcy a year following the hearing. This issue wouldhave never even arisen had the May 2020 decision resolved the issues of marital debts and assets.

Further, in this case, the Trustee hasremained neutral, therefore it cannot be said that the Trustee has chosen not to pursue a claim in the marital home. [36] The Petitioner asserts that despite the Respondent’s bankruptcy, he remains responsible for 50% of the marital debts. ThePetitioner relies upon the decision of the late Justice Walsh in support of this position in Gaunce v. Gaunce, 2018 NBQB 40.

Inparticular the Petitioner refers the Court to paragraphs 20, 33 and 53 as follows: [20] Rather, as identified before, the only issue at this point of these proceedings is whether the impugned joint marital debts aredivisible under the Marital Property Act despite the bankruptcy of one of the spouses?

To reiterate, divisible in the sense meant heredoes not mean that the wife would not remain fully liable for the balances on the marital debt to the third party creditors (See: Bradley v.Bradley, supra at paras 45-46); but that her husband would be required to indemnify her for a portion of those remaining liabilities byoperation of the Marital Property Act. [33] The Supreme Court in Schreyer v.

Schreyer concluded that the “triggering event” for the Manitoba marital property equalizationregime was the date of the parties’ separation and that since the separation came before the bankruptcy (and the quantification of theclaim was “not so uncertain”) the wife’s claim under that legislation was provable in bankruptcy. However, the Supreme Court pointedout that the Manitoba legislation is an equalization regime not a division of property regime.

I pause to note that Ontario, PEI, NWT andNunavut follow the equalization model; while New Brunswick, as well as Saskatchewan, Alberta, Nova Scotia, Newfoundland andLabrador, and British Columbia are division of property schemes (See: Sarra and Boyd, Competing Notions of Fairness, supra at pp. 13-16). [53] In

summary, the Court’s

interpretation rests on the effect of the nature of the division of property regime in NewBrunswick. In my opinion, at the time of her husband’s bankruptcy the wife was not a creditor of her husband on the joint debtsbecause there had been no “triggering event”, i.e. there was no court order in existence under the Marital Property Act thatvested the marital property and fixed, as between the spouses, their legal responsibility for repayment of those debts. [Emphasis mine] [37] The facts in this case more closely resemble the facts Justice Walsh was considering in Gaunce.

In Gaunce, the husband filedfor bankruptcy after both parties had filed applications under the Marital Property Act but before any court order had been issues. InGaunce, the husband had been discharged from bankruptcy at the time of trial, unlike the Respondent currently before the Court. JusticeWalsh set out the issues and his ultimate conclusions succinctly in Gaunce at paragraphs 9 to 11 as follows: [9] Whether

Section 2 of the Marital Property Act and

Section 121 of the BIA are viewed as competing or complimentary statutoryprovisions, as I understand the legal reality - if the wife did have “provable claims” for those debts (even though she did not take steps toprove them in her husband’s bankruptcy) she ceases to be able to seek contribution from her husband through the provincial maritalproperty regime for what remains owing on them, because the Bankruptcy and Insolvency Act is paramount. (See: Schreyer v. Schreyer,supra (SCC); see also: Alberta (Attorney General) v.

Moloney 2015 SCC 51 at para. 40). [10] On the other hand, if the wife did not have “provable claims” for those joint debts then her claims survived her husband’sbankruptcy (See: Walton v. Walton (1993) (SK CA), 1 R.F.L. (4th) 93 (Sask. C.A.)).

And, if they have survivedbankruptcy she would be entitled to make her case before this Court for her husband to share the burden for what remains owing on thosedebts, for which she remains liable to the third party creditors. [11] Ultimately, I conclude that the Bankruptcy and Insolvency Act (“BIA”) has no jurisdiction to entertain anycontingent/unliquidated claim arising out of the Marital Property Act. Alternatively, I find that in the circumstances of this casethe wife’s debt claims would have been “too uncertain” to value by the trustee in bankruptcy in any event.

On either ground thewife did not have ‘provable claims’, and therefore her claim for indemnification for those joint debts has survived her husband’sbankruptcy. The Court’s reasons follow. [Emphasis mine] [38] Justice d’Entremont had the opportunity to consider the impact of a bankruptcy following marital breakdown in L.K.B. v. J.G.,2023 NBQB 90 where she provided the following comprehensive review of the facts and the state of the law at paragraphs 243to 246 as follows: [243] The parties commenced cohabitating in 1997. They were married in December of 2016.

They separated in August of 2018;however, the last physical separation was in July of 2019. In July and August of 2019, the pleadings were filed relating to the within

matter, where both parties requested a division of the marital property pursuant to the Marital Property Act . [244] Under the Bankruptcy and Insolvency Act , once the assignment in bankruptcy is filed, all the property of the bankrupt wherever situate, subject to the rights of the secured creditors, passed and vested in the trustee named in the bankruptcy order (see

section 71 of the Bankruptcy and Insolvency Act ). However, the property divisible to the creditors of a bankrupt does not include the property that is exempt from execution or seizure under the provincial laws of the province where the property is found (see paragraph 67(1) (

b) of the BIA ). In New Brunswick, these include sections 84 and 85 of the Enforcement of Money Judgments Act , S.N.B., 2013, c.23 . [245] As for the secured creditors, once the bankrupt has made an assignment, the policy of the BIA is not to interfere with secured creditors except to protect the estate of the bankrupt as to any surplus in the assets covered by the security.

Generally, secured creditors may ignore the bankruptcy and deal with their security in the usual manner. (See 2021-2022, Annotated Bankruptcy and Insolvency Act , Holden, Morawetz & Sarra, Thomson Reuters at page 774.) [246] Consequently, on January 16, 2020, when the mother filed an assignment, all her property passed and vested to the trustee, subject to the rights of the secured creditors. The property vested in the trustee did not include the exempt property.

The pension and the Venza were exempt property and did not pass to the trustee in bankruptcy. [ 39 ] The factual situation in this case is similar to Justice d’Entremont’s case in L.K.B. where the assignment in bankruptcy occurred after the filing of the pleadings and prior to the Court’s determination of the marital property issues. However, like the husband in Gaunce , the wife in L.K.B. had also been discharged from the bankruptcy at the time of trial.

The Respondent in this case has yet to be discharged as the Trustee maintains he is waiting to see this Court’s determination of the marital property division, debts and assets. [ 40 ] I am not convinced that the Respondent’s bankruptcy, at this juncture, can be said to stay or preclude any division of marital debts or assets. The Respondent has yet to be discharged unlike the bankrupt parties which were before the Court in Bulua , Gaunce and L.K.B . This fact is, in my view, significant.

Further, similar to the situation outlined by Justice Walsh in Gaunce , the Petitioner’s debt claims would have been ” too uncertain to value by the trustee ”. In this case, the Court is struggling to identify the liabilities or debts of the parties, so it is difficult to imagine how the Trustee could be certain of the value of any claims by the Petitioner. [ 41 ] Given all of the circumstances, it is appropriate to divide the marital property debts and assets as between the parties which have been sufficiently established in the evidentiary record before the Court.

The Petitioner’s pension will be divided for the period May 2008 until September 2017. The Respondent’s pension will be divided for the period between April 2014 until September 2017. Once the lawyers are able to confirm the respective values of these divisions, the Petitioner can then effect a rollover for the net amount owing to the Respondent from her pension fund. [ 42 ] The Petitioner has at all times been the sole registered owner of the marital home. The Respondent is entitled to an equal share of the equity in the home at the time of separation in the amount of $24,272.00.

The Respondent’s share of the camper loan in the amount of $9,625.00 as well as the costs outstanding from the Court of Appeal in the amount of $4,335.75 shall be deducted from this amount leaving an outstanding balance of $10,311.25 . The Petitioner’s equalization payment to the Respondent in the amount of $10,311.25 shall resolve all outstanding issues between the parties pertaining to the marital property with the exception of the division of the pensions. COSTS [ 43 ] This is a very unfortunate situation and these parties have been put to considerable expense and delay.

In all of the circumstances, the parties have enjoyed mixed success on the issues of marital debts and assets. Therefore, there shall be no order as to costs. CONCLUSION AND DISPOSITION [ 44 ] For all the aforementioned reasons, the Court orders as follows: (

i) The Petitioner’s request for an unequal division of marital property pursuant to

section 7 of the Marital Property Act is denied; (ii) The Petitioner shall pay to the Respondent $10,311.25 as an equalization payment in full satisfaction of all claims between the parties respecting marital debts and assets with the exception of the division of the parties’ pensions; (iii) Upon payment of $10,311.25 by the Petitioner to the Respondent within 60 days of the date of the decision, the Respondent’s claims for any interest in the Petitioner’s property, including the marital home of the Petitioner located at 97 Bradshaw Drive in New Maryland, shall be extinguished; (iv) The Petitioner’s counsel shall seek direction from the Respondent’s counsel and the Respondent’s Trustee in bankruptcy on the payment of $10,311.25 to identify to whom the payment should be made; (

v) The parties shall confirm the amounts of their respective pensions subject to division (Petitioner May 2008 – September 2017, Respondent April 2014 – September 2017) following which the Petitioner shall effect the necessary rollover of the net

amount owing from the Petitioner to the Respondent within 60 days of the date of this decision; and (vi) Each party shall bare its own costs. DATED at Moncton, New Brunswick, this 26 th day of June 2023. Tracey K. DeWare Chief Justice of the Court of King’s Bench of New Brunswick