2019 NLCA 40, 2019 NLCA 40

Boyd Shears and W. Bryant Shears Limited (appellants/respondents by cross-appeal) v. Sharon Shears and Sharmat Services Inc. (respondents/appellants by cross-appeal) (14/70 and 14/84) Indexed As: Shears v. Shears 2019 NLCA 40 4 C.A.N.L.R. 548 Court of Appeal of Newfoundland and Labrador Welsh, Hoegg and O’Brien JJ.A. July 4, 2019

Summary: Mr. Shears, and a company he controls, W. Bryant Shears Limited, appealed a decision that primarily involved the division of matrimonial property. Ms. Shears, and a company she controls, Sharmat Services Inc., cross-appealed. Mr. Shears’ appeal alleged two overarching errors: (1) that the trial judge failed to find abuse of process by Ms. Shears, and (2) that the judge erred in her treatment of the evidence, which caused her to make errors in valuing the assets of both WBSL and Sharmat under

section 29 of the Family Law Act . In her cross-appeal, Ms. Shears argued that the judge erred in finding that her claim to the business assets of WBSL was fairly compensated by allowing her to retain the full value of Sharmat while Mr. Shears retained the full value of WBSL. Ms. Shears alleged other errors respecting the judge’s valuation and division of matrimonial property, the valuation of Mr. Shears’ income for the purposes of child and spousal support, and the judge’s decision not to award costs. Held: Appeal and cross-appeal allowed, in part. Hoegg J.A. (Welsh and O’Brien JJ.A. concurring): Mr.

Shears’ claim of abuse of process by Ms. Shears was dismissed. Both parties had a history of not adhering to the rules, procedures and practices of the Court. Ms. Shears’ conduct in the litigation was not manifestly unfair to Mr. Shears (paragraphs 7-16). The judge did not err in finding no role for the application of the rule in Browne v. Dunn (1983), 1893 CanLII 65 (FOREP) , 6 R. 67 (U.K.H.L.). There was no unfairness or surprise occasioned by the way in which the evidence of Mr. Shears or his accountants was received or treated by the trial judge.

Further, the judge was not obligated to accept evidence that Mr. Shears alleged was not cross- examined or contradicted (paragraphs 17-31). There was no merit to Mr. Shears’ claim that the judge had erred in her credibility assessments. She explained why she accepted the evidence of certain witnesses over others. Mr. Shears did not demonstrate any palpable or overriding errors in the judge’s general credibility assessments (paragraphs 32-40). The judge erred in ordering Mr. Shears to pay Ms. Shears $7,286.66 from a trust created for the benefit of the parties’ son.

Only the parties’ son, the sole beneficiary of the trust, had the authority to arrange such payment (paragraphs 41-45). Mr. Shears did not identify any palpable or overriding error in the judge’s decision not to include two significant debts owed by WBSL as matrimonial debts (paragraphs 46-52). There was no error in the judge’s approach to the equalization of the RRSPs of both parties. While the strategy adopted by the trial judge

was novel, it did not result in an inequity to Mr. Shears (paragraphs 53-61). The trial judge did not err in ordering that pre-judgment interest be paid on Ms. Shears’ interest in Investments Holdings Inc. Regardless of the valuation being out of date, it was a determination based on the evidence at trial and was not shown to be in error (paragraphs 62- 64). No error was shown in the judge’s consideration of the evidence respecting taxes and insurance costs for the matrimonial home, or in ordering Ms. Shears to pay one half of these sums (paragraphs 65-67). Similarly, the judge did not err in ordering Ms.

Shears to pay half the cost of an environmental study of several parcels of matrimonial property (paragraphs 68-72). Ms. Shears’ argument that the judge erred in including only the accounts receivable of a company as a matrimonial asset, as opposed to the full value of the company, was rejected. The judge’s findings in this regard were part of a larger property division scheme and were therefore not disturbed (paragraphs 73-82). The judge’s finding that a vehicle used by Mr. Shears was not a matrimonial asset was not an error. Mr.

Shears’ use of the vehicle was business related, but he claimed his personal use of the vehicle as a benefit of his taxable income. His personal benefit was already included in his income for the purpose of spousal support. The value of the vehicle was also included in the valuation of WBSL and Ms. Shears received her share of WBSL through her business asset claim (paragraphs 83-86). The trial judge erred in her calculation of the amounts withdrawn from Mr. Shears’ director’s account with WBSL as a matrimonial asset subject to equal division. She divided the amount in half twice.

The amount was varied from $424,488 to $848,977 (paragraphs 87-91). The grounds of appeal and cross-appeal pertaining to the assessment of business assets was dismissed. The trial judge erred in her assessment of the business assets by excluding shares of WBSL that Mr. Shears brought into the marriage. However, this error had no impact on the judge’s conclusion. The judge primarily based her findings on Mr. Shears’ contribution to the business assets on the fact that matrimonial funds were used to acquire shares and not on Ms. Shears’ primary role as a homemaker (paragraphs 92-109).

The judge did not err in ordering that Ms. Shears and Mr. Shears would retain the value of their respective companies. Although the judge determined that Ms. Shears was entitled to 51% of the value of the shares in WBSL, she did not order division of this amount in her overall property division assessment. Failure to do so was not an error. The Family Law Act provides for judicial discretion in determining business asset claims (paragraphs 110-124). The judge did not err in ordering Mr. Shears to pay retroactive child support.

The judge did not order pre-judgment interest on the retroactive child support, which was challenged on the cross-appeal. The judge did not err in declining to award pre-judgment interest (paragraphs 125-133). The only error in the judge’s analysis on retroactive spousal support was the consideration of a particular payment to Sharmat as an after- tax amount. Ms. Shears was therefore entitled to an additional $13,692.35 in retroactive spousal support. The judge’s order respecting retroactive spousal support was not adjusted beyond this amount (paragraphs 134-148). The judge did not err in calculating Mr.

Shears’ income. She applied the discretion afforded to her under the Federal Child Support Guidelines , SOR/97-175 and applied a practical approach in assessing Mr. Shears’ complex financial affairs (paragraphs 149-163). The judge’s decision to order “lifetime support” was substituted with an order for indefinite support (paragraphs 164-169). Mr. Shears’ argument that the future support award should be adjusted to account for payments on the division of property that Mr. Shears has already made, while not unreasonable, was rejected (paragraphs 164-175).

While the judge exercised her discretion judicially in declining to order costs at trial, she erred in not awarding Ms. Shears the costs

associated with retaining an accountant as her expert witness. Mr. Shears was ordered to pay these costs. The judge’s costs order wasotherwise undisturbed (paragraphs 176-186). Cases cited: Behn v. Moulton Contracting Ltd., 2013 SCC 26, [2013] 2 S.C.R. 227 Canam Enterprises Inc. v. Coles (2000), (ON CA), 51 O.R. (3d) 481 (Ont. C.A.) Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77 Browne v. Dunn (1893), 1893 CanLII 65 (FOREP), 6 R. 67 (U.K.H.L.) R. v. Lyttle, 2004 SCC 5, [2004] 1 S.C.R. 193 Apotex Inc. v. Takeda Canada Inc., 2013 FC 1237 R. v.

Mete (1971), (BC CA), [1973] 3 W.W.R. 709, 22 C.R.N.S. 387 M. Hodge & Sons Ltd. v. Monaghan (1985), 51 Nfld. & P.E.I.R. 173 (Nfld. S.C.T.D.) Nalcor Energy v. NunatuKavut Community Council Inc., 2012 NLTD(G) 175, 330 Nfld. & P.E.I.R. 233 Jampolsky v. Insurance Corp. of British Columbia, 2015 BCCA 87 Stassis v. Amicus Bank, 2014 NLCA 38, 356 Nfld. & P.E.I.R. 80 Faryna v. Chorny (1951), (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.) H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401 F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41 Martin v. Martin (1998), (NL CA), 168 Nfld. & P.E.I.R. 181 McPherson v.

McPherson (1988), (ON CA), 63 O.R. (2d) 641, 48 D.L.R. (4th) 577 (Ont. C.A.) Clarke v. Clarke, (SCC), [1990] 2 S.C.R. 795 Snook v. Snook, 2010 NLCA 57, 301 Nfld. & P.E.I.R. 113 Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 Rawluk v. Rawluk, (SCC), [1990] 1 S.C.R. 70 Marsden v. Marsden, 2008 NLUFC 18, 280 Nfld. & P.E.I.R. 43 Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 MacLennan v. MacLennan, 2003 NSCA 9, 212 N.S.R. (2d) 116 Gosse v. Sorensen-Gosse, 2011 NLCA 58, 311 Nfld. & P.E.I.R. 76 Courtney v. Cleary, 2010 NLCA 46, 299 Nfld. & P.E.I.R. 85 Collins v.

Collins, 2008 NLUFC 31, 281 Nfld. & P.E.I.R. 1 Cadigan v. Cadigan, 2007 MBCA 28, 212 Man. R. (2d) 291 Dobbin v. Dobbin, 2009 NLUFC 11, 284 Nfld. & P.E.I.R. 6 Barry v. Barry (1995), (SK KB), 136 Sask. R. 277 (Sask. Q.B.) Tadayon v. Mohtashami, 2015 ONCA 777 Chandra v. Chandra (2002), (NL SC), 212 Nfld. & P.E.I.R. 138 (Nfld. U.F.C.) Statutes considered: Family Law Act, R.S.N.L. 1990, c. F-2,

section 29

Counsel: Nick Avis Q.C., for the appellants/respondents by cross-appeal; Jean Dawe Q.C., for the respondents/appellants by cross-appeal. The appeal was heard on April 16, 17 and 18, 2018 before Welsh, Hoegg and O’Brien JJ.A. The following judgment was filed on July 4, 2019 by Hoegg J.A. for the Court. ______________________________________________________________ Hoegg J.A.: INTRODUCTION [ 1 ] Boyd Shears and the company he controls, W.

Bryant Shears Limited (WBSL), appeal a trial decision involving the division of matrimonial property, claims respecting the assets and debts of several businesses and a trust, spousal support and retroactive child support. Mr. Shears listed 44 grounds of appeal in his notice of appeal, but this number was reduced to 20 in his factum. The respondents, Mr. Shears’ former wife Sharon Shears now known as Sharon Chaulk, and the company she controls, Sharmat Services Inc. (Sharmat), have cross-appealed, stating an additional 35 grounds. [ 2 ] Mr. Shears and Ms.

Chaulk were married in 1973 when they were in their early 20s. They have three children who were aged 11, 17 and 18 when the couple separated in 1995. Mr. Shears and Ms. Chaulk divorced in 1998. When the trial commenced in early 2012, all of their children were employed and living independently of their parents. [ 3 ] Four actions respecting the parties’ rights and obligations pertaining to the matters referenced in paragraph one were consolidated for trial. The trial began in February 2012 and lasted 41 days intermittently over a period of nearly two and one-half years. ISSUES [ 4 ] Mr.

Shears’ appeal alleges two overarching errors: (1) that the Judge failed to find that Ms. Chaulk abused the process of the Court, and (2) that the Judge erred in her treatment of the evidence. Mr. Shears argues that Ms. Chaulk’s abuse of the Court’s process resulted in costly and undue trial delays. His argument respecting the Judge’s treatment of the evidence rests on two alleged errors: (

a) that the Judge failed to adhere to the rule in Browne v. Dunn in assessing the evidence and (

b) that the Judge failed to properly assess the credibility of several trial witnesses. [ 5 ] Mr. Shears argues that the Judge’s treatment of the evidence caused her to make specific errors in valuing and treating the business assets of both WBSL and Sharmat under

section 29 of the Family Law Act, R.S.N.L. 1990, c. F-2 (the FLA ), in finding that a $902,030 debt allegedly owed by WBSL to Provincial Video Wholesalers Limited (PVWL) and a debt of $123,872 owed to Anchois Ltd. were not matrimonial debts, and in finding that there was an enforceable contract between WBSL and Sharmat. Several other errors respecting more discrete questions of mixed fact and law are also alleged. [ 6 ] Ms. Chaulk’s cross-appeal involves issues respecting the

interpretation and application of the provisions of

section 29 of the FLA to her claim against WBSL, the valuation of Mr. Shears’ interest in WBSL, and the valuation of Ms. Chaulk’s interest in other companies. She alleges that the Judge erred in concluding that her claim to the business assets of WBSL was fairly compensated by the Judge’s ultimate decision to allow Mr. Shears to retain the full value of WBSL and Ms. Chaulk to retain the full value of Sharmat. Ms. Chaulk alleges several other errors respecting the Judge’s valuation and division of matrimonial property, the valuation of Mr.

Shears’ income for the purposes of child and spousal support, and the Judge’s decision not to award costs. ANALYSIS Abuse of Process [ 7 ] Mr. Shears asks this Court to determine whether Ms. Chaulk’s conduct of the litigation amounts to an abuse of process. He alleges that Ms. Chaulk took unreasonable positions in her conduct of the litigation, used trial time to conduct discoveries, and certified readiness for trial when disclosure was incomplete and discoveries had not concluded. There was no specific finding by the Judge respecting abuse of process, which makes Mr.

Shears’ argument in this regard an unusual ground of appeal. Nevertheless, I will address it as follows. [ 8 ] Mr. Shears’ fundamental position is that Ms. Chaulk took 14 years to prosecute her claims against him, during which time she had ample opportunity to pursue disclosure of documentation, the late production of which caused trial delays and resulted in the trial being “akin to a discovery process”. He argues that this situation “impacted all of the major issues at trial” and had “a major impact on the length of the proceedings and hence the costs involved”. Mr. Shears also points out that counsel for Ms.

Chaulk certified trial readiness when the case was, in his submission, clearly not ready for trial.

Background [ 9 ] In her decision, the Judge commented on several matters concerning the conduct of the trial. At paragraphs 178-181, she noted that one of Mr. Shears’ accountants had not taken his witness responsibilities seriously. The accountant had failed to look for files respecting relevant issues which Ms. Chaulk’s counsel had requested. He ultimately located the files and produced a copy to Ms. Chaulk’s counsel the day before the trial resumed, with the result that counsel’s examination of the accountant was, according to the Judge, “more akin to a discovery”.

At paragraphs 300-302, the Judge identified another delay due to the accountant having had no access to some of the documentation respecting one of the companies involved in the litigation, and stated that “both counsel were to blame”. [ 10 ] The Judge addressed some of Ms. Chaulk’s conduct which could be supportive of Mr. Shears’ abuse of process allegation in the costs

section of her judgment, saying: [429] Both parties seek costs. [430] After the three actions were started in 1998, there were many applications made for disclosure of relevant records. This court made two Orders for disclosure by Ms. Chaulk in February 2002 and January 22, 2003, but Ms. Chaulk has never fully complied with the terms of either Order, which is unacceptable given the vigor with which her counsel pursued Mr. Shears for full disclosure. … [432] Ms. Chaulk maintains that she has been pursuing disclosure from Mr. Shears since 1998 and has been continuously frustrated.

She specifically alleges that she requested her complete personal files and those of Sharmat Services Inc. from Mr. Blagdon in 1998 and has never received the records. She maintains this has prevented her from being able to quantify the matrimonial and business assets as of the date of separation. [433] Mr. Shears claims that the records for Sharmat for the period of 1991 to 1993 are “missing” and he blames Ms. Chaulk. He suggests that it is convenient to her case that they have not been produced because he was very involved in the records in that period. [434] On cross-examination, it was established that Ms.

Chaulk was not always reasonable in the positions she maintained prior to trial. For example, she requested that Mr. Blagdon release to her the original of her personal and corporate records. He wanted $600.00 for copying charges and she refused to pay it. As a result, the records were not delivered and no further requests were made. [435] In addition, Ms.

Chaulk would not agree that she was responsible for either half of the cost of the environmental assessment on the property at 197 Nicholsville Road, Deer Lake ($24,701.80) or the appraisals on the matrimonial home ($678.00). [ 11 ] The Judge also commented on Mr. Shears’ conduct of the litigation and the conduct of his accountants. At paragraphs 309-310, the Judge commented on the failure of Claude Blagdon, Mr. Shears’ cousin and chief accountant, to provide relevant documentation and prepare for his testimony, describing it as conduct which “borders on contempt”. Mr. Shears did not tender Mr.

Blagdon as a witness, so Mr. Blagdon had to be subpoenaed by Ms. Chaulk to provide evidence respecting the financial affairs of the companies involved in the litigation and information respecting Mr. Shears’ income. I note that Mr. Blagdon’s failure to co-operate as an important witness in the litigation was the subject of an earlier appeal to this Court ( 2012 NLCA 17 ). I note as well that the two accountants working under Mr. Blagdon also had to be subpoenaed by Ms. Chaulk. [ 12 ] Mr. Shears and his expert witness, David Howe C.A., were the only two persons who testified for Mr. Shears. It is clear that Mr.

Shears’ accountants – Mr. Blagdon and two others working under him – had much relevant and necessary evidence to give, and equally clear that requests for production of documents and attendance at discoveries were not met prior to trial. While Ms. Chaulk may have had the legal means to obtain the requested information before trial, to do so would have required much persistence, effort, and cost given Mr. Blagdon’s stone-walling of her requests. Moreover, one must not loose sight of the fact that the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sched.

D place an obligation on each party to make disclosure without forcing opposite parties to request it. [ 13 ] The Judge also commented on Mr. Shears’ conduct of the litigation at paragraph 436: Lack of cooperation was also evident from Mr. Shears. As early as 1999, he suggested in an affidavit that the only asset he was prepared to concede [as] matrimonial was the home. and at paragraph 437, concluded: In earlier decisions on this file, I have made conclusions on delay which I will not repeat here.

Suffice to say, my disappointment that actions commenced in 1998 would not come to trial until 2012 have already been expressed and I have found that both parties are to blame. [ 14 ] The Judge then summarized the damages awards, noting that Ms. Chaulk was largely successful. The Judge stated: [440] In light of the foregoing, I would make no Order as to costs, subject however to: - counsel’s submissions on the effect of any offers to settle; and - counsel’s submissions on the effect of the Company having paid a disproportionate amount of the legal and accounting fees associated with this litigation.

The Law [ 15 ] Abuse of process in the context of a civil proceeding was addressed by the Supreme Court of Canada in Behn v. Moulton Contracting Ltd. , 2013 SCC 26 , [2013] 2 S.C.R. 227 . At paragraphs 39-40, the Court stated that the doctrine “is not limited to criminal

law” and “is characterized by its flexibility”. The Court quoted with approval Goudge J.A.’s comments about abuse of process atparagraphs 55-56 of Canam Enterprises Inc. v. Coles (2000), (ON CA), 51 O.R. (3d) 481 (Ont. C.A.) (whosedissenting reasons were endorsed by the Supreme Court of Canada, 2002 SCC 63, [2002] 3 S.C.R. 307), saying that it: ... engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party tothe litigation before it would in some other way bring the administration of justice into disrepute. … See also Toronto (City) v.

C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at paras. 36-37. Analysis [16] It is clear from the record and the Judge’s decision that both parties’ conduct of this litigation left much to be desired and thatboth parties did not always adhere to the rules, procedures, and practices of the Court. In these circumstances, it cannot be seriouslyargued that Ms. Chaulk was solely responsible for trial delays or that her conduct of the litigation was “manifestly unfair” to Mr. Shears. Neither can it be said that Ms. Chaulk’s conduct of the litigation brought the administration of justice into disrepute.

Accordingly, Mr.Shears has not demonstrated that Ms. Chaulk abused the process of the Court. The Judge’s Treatment of the Evidence The Rule in Browne v. Dunn [17] The “rule in Browne v. Dunn” was first stated by Lord Herschell in Browne v.

Dunn (1893), 1893 CanLII 65 (FOREP), 6 R. 67(U.K.H.L.): Now, my Lords, I cannot help saying that it seems to me to be absolutely essential to the proper conduct of a cause, where it is intendedto suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross-examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogetherunchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been putto him, the circumstances which it is suggested indicate that the story he tells ought not to be believed … [18] In R. v.

Lyttle, 2004 SCC 5, [2004] 1 S.C.R. 193 the Supreme Court of Canada confirmed the rule in Browne v. Dunn as a “soundprinciple of general application” but stated that it is a flexible concept whose application is within the discretion of a trial judge: 65 The rule, although designed to provide fairness to witnesses and the parties, is not fixed. The extent of its application is within thediscretion of the trial judge after taking into account all the circumstances of the case. … See also Apotex Inc. v. Takeda Canada Inc., 2013 FC 1237 at paras. 159-160. [19] In

summary, the rule in Browne v. Dunn is a rule of fairness. The principle is if a party intends to impeach a witness’s evidenceby subsequently calling contradictory evidence, the party ought to give the witness notice of the potentially impeaching evidence. Thisprovides the witness with an opportunity to address it while the witness is still testifying and able to do so. [20] Another well-established rule of evidence is that a trial judge can accept all, some, or none of a witness’ testimony, and a judge isnot bound to accept evidence just because it has not been challenged by cross-examination.

The British Columbia Court of Appealaddressed this issue in R. v. Mete (1971), (BC CA), [1973] 3 W.W.R. 709, 22 C.R.N.S. 387, saying: …I can see no reason or logic in any view that a judge may not reject evidence which he disbelieves merely because it has not beencross-examined upon. This same reasoning was employed by the Newfoundland and Labrador Supreme Court Trial Division in M. Hodge & Sons Ltd. v.Monaghan (1985), 51 Nfld. & P.E.I.R. 173 (Nfld. S.C.(T.D.)) and also in Nalcor Energy v.

NunatuKavut Community Council Inc., 2012NLTD(G) 175, 330 Nfld. & P.E.I.R. 233, at paras. 74 to 78, reversed on other grounds in 2014 NLCA 46. [21] On appeal, Mr. Shears asserts that the Judge erred in failing to accept evidence from him or his accountants when their evidencewas not subjected to cross-examination, saying that this violated the rule in Browne v. Dunn. Mr. Shears argued application of the rulein Browne v. Dunn at trial, and the Judge rejected his argument, explaining why at paragraphs 11 to 16: [11] Mr.

Shears was the first witness to testify in a 38-day trial that has taken more than two years to conclude. He deferred the majorityof questions on his income and business interests to his accountant, a position that I have determined was only partially appropriate. Inthese circumstances, any shortcomings in counsel’s cross-examination of Mr. Shears should not be held to violate the fair play rule withthe result that subsequent evidence would be inadmissible or afforded less weight.

Counsel could not predict the detailed evidence thatwould subsequently be provided in documentary form and through testimony of multiple witnesses which, it is argued, should have beenput to Mr. Shears in cross examination. [12] As to Messrs. Blagdon, Tilley and Dwyer, Certified General Accountants, subpoenaed by counsel for Ms. Chaulk, the analysis issomewhat different. [13] Mr. Blagdon was not only a reluctant, but a hostile witness. Having taken an oath to tell the truth, the whole truth and nothing butthe truth, he was evasive, rude to counsel for Ms.

Chaulk, often unprepared and answered questions with riddles. Against this backdrop,were I to ascribe reduced weight to subsequent evidence that provided clarity to questions for which Mr. Blagdon provided no assistanceor that contradicted Mr. Blagdon’s testimony, the result would be a complete injustice to Ms. Chaulk. [14] As to Messrs. Tilley and Dwyer, each of whom attempted to be as helpful as possible, both accountants deferred many issues to Mr.Blagdon and, in my view, properly so. They acted on Mr. Blagdon’s direction without questioning his motives, the propriety of his

accounting practices or the effects they would have on the client. In these circumstances, any failure to cross-examine these witnesses on issues for which Ms. Chaulk’s subsequent witnesses provided assistance or gave contrary evidence, should not warrant reduced weight to be applied to such evidence. [15] I agree that the testimony of John Morgan, C.A. gives rise to a conspiracy theory in which Mr. Tilley would be implicated and that this conspiracy theory was not put directly to Mr. Tilley. However, Ms. Dawe, Q.C.’s cross-examination of Mr. Tilley was rigorous and lengthy. Throughout his cross-examination, Mr.

Tilley would have been aware that the appropriateness of his accounting practices was challenged. It would not have been necessary for Ms. Dawe, Q.C. to actually suggest to Mr. Tilley that he had conspired to prepare records that would be to the benefit of Mr. Shears and the detriment of Ms. Chaulk. That suggestion was obvious to the court and, I conclude, also obvious to Mr. Tilley. In any event, as will be subsequently apparent, I have concluded that Mr. Tilley did not conspire to prepare records to impair Ms. Chaulk’s financial position. Mr. Tilley, like Mr. Shears and Ms. Chaulk, simply followed Mr.

Blagdon’s directions. [16] Relative to these concerns of Mr. Avis, Q.C., I see no role for the application of the rule in Browne v. Dunn . [ 22 ] In this case, Mr. Shears’ principal accountant, Mr. Blagdon, had relevant evidence to give which was important to many of the issues raised in the case. Despite being the chief accountant for the Shears entities involved in this litigation, he had been evading discovery before trial and was not tendered as a trial witness by Mr. Shears. Instead, Ms. Chaulk had to subpoena Mr. Blagdon, who was declared hostile at trial. The two other accountants who worked with Mr.

Blagdon on Mr. Shears’ affairs also had to be subpoenaed by Ms. Chaulk. They also had relevant and important evidence to give which incidentally showed that they had been carrying out Mr. Blagdon’s instructions in structuring the Shears entities and providing financial and accounting services to them. As well, all three accountants provided personal financial and accounting services to Mr. Shears and Ms. Chaulk during the marriage. [ 23 ] Where the evidence of Mr. Shears and his accountants was rejected, despite not being subjected to cross-examination, the evidence of Ms.

Chaulk or her expert, John Morgan C.A., was generally accepted. The differences were on matters pertaining to the financial affairs of the entities implicated in the litigation and the financial affairs of Ms. Chaulk and Mr. Shears, and Mr. Shears’ income. These matters were in play throughout the lengthy conduct of the litigation and during the trial. [ 24 ] As the Judge noted in paragraph 15 of her decision, there was no realistic possibility that Mr. Shears, Mr.

Blagdon and the two other accountants did not have general notice of the issues respecting the financial matters of the entities involved in the litigation or that they were otherwise caught by surprise by the evidence of Ms. Chaulk and Mr. Morgan. In fact, Mr. Shears and his accountants knew the financial affairs of Mr. Shears and the Shears entities intimately ​​– better than Ms. Chaulk and Mr. Morgan. [ 25 ] Likewise, there was no realistic possibility that Mr. Shears was caught by surprise respecting matters pertaining to the nature and particulars of his and Ms.

Chaulk’s marriage, their matrimonial property, and their relationships with their children. These matters were in play from when the couple separated in 1995 and each knew the general position of the other respecting them. Mr. Shears did not cite any instance that could support a finding of him being unfairly treated by virtue of his not having had the opportunity to respond to potentially impeaching evidence through cross-examination. [ 26 ] Further, as Ms. Chaulk points out in her factum, the Judge granted Mr. Shears leave to call reply evidence to address any matters to which he argued the rule in Browne v.

Dunn applied. Mr. Shears declined the opportunity. [ 27 ] Mr. Shears also argues that the Judge erred in rejecting his evidence that was not contradicted by other evidence. He identifies uncontradicted evidence that was favourable to his overall position respecting his involvement in the relationship between PVWL and the Matthew Shears Trust, work that was done by his father’s widow, Ethel Shears, for WBSL, whether the accrued value in WBSL would go to the children, whether Ms. Chaulk owed one-half of the WBSL debt, and Ms. Chaulk’s mental health issues.

He argues that the Judge’s rejection of his uncontradicted evidence was also in violation of the rule in Browne v. Dunn . [ 28 ] I am dubious about Mr. Shears’ contention that all of the evidence he references was uncontradicted. However, even if I were to accept his argument that some of the rejected evidence was uncontradicted, I do not accept his argument that the Judge was obligated to accept it. [ 29 ] As noted above, a trial judge can accept all, some, or none of a witness’ testimony, and a judge is not bound to accept evidence just because it has not been contradicted.

A similar argument to the one advanced by Mr. Shears was recently considered and rejected by the British Columbia Court of Appeal in Jampolsky v. Insurance Corp. of British Columbia , 2015 BCCA 87 : 38 Throughout his written argument, counsel for Mr. Jampolsky seemed to take the position that the judge was required to accept any evidence that was not specifically contradicted in cross-examination or on which there was no contradictory evidence tendered by the defence. He cited no authority for this proposition. This is not the law. [ 30 ] The Judge’s rejection of Mr.

Shears’ evidence in the above-noted respects engages her assessment of his credibility. At paragraphs 54-104 of her decision, the Judge provided reasons for her assessment of the credibility of Mr. Shears and Mr. Blagdon. This

section of her judgment, together with the reasons she gave for her rulings respecting discrete issues, amply supports her decision to reject aspects of the evidence favorable to Mr. Shears despite the evidence being uncontradicted. [ 31 ] In the result, the Judge did not err in finding no role for application of the rule in Browne v. Dunn to the conduct of this litigation. There was no unfairness or surprise occasioned by the way in which the evidence of Mr.

Shears and his accountants was received or treated by the Judge and no obligation on the Judge to accept evidence which was not cross-examined or contradicted. The Judge’s General Credibility Assessments [ 32 ] Mr. Shears argues that the Judge erred generally in accepting Ms. Chaulk’s evidence over his, in rejecting much of Mr. Blagdon’s evidence, and in failing to recognize that Mr. Shears put “blind trust” in Mr. Blagdon and therefore did not understand “the

details of transactions for which Mr. Bladgon was the mastermind”. [33] The Judge concluded that Mr. Shears was not forthright with the Court respecting his involvement in and knowledge of theoperations and financial health of many of the Shears entities (paragraph 55). She gave several examples of how his evidence did notring true or hang together with the other evidence. She found that Mr. Blagdon’s evidence respecting certain issues lacked credibility,and gave reasons why she so concluded. As for Ms.

Chaulk’s credibility, the Judge noted some minor inconsistencies which she foundwere explained by the passage of time. [34] It is well established that credibility assessments are the province of trial judges and are not to be lightly disturbed on appeal. Trial judges see and hear witnesses and directly receive documentary evidence. Consequently, they are in a better position than appellatejudges to evaluate how a witness’ evidence meshes with other trial evidence in the context of the issues being tried. [35] This Court addressed the role of a trial judge in evaluating credibility in Stassis v.

Amicus Bank, 2014 NLCA 38, 356 Nfld. &P.E.I.R. 80. In Stassis, White J.A. endorsed the well-known and time-tested approach to credibility assessment set out by the BritishColumbia Court of Appeal in Faryna v. Chorny (1951), (BC CA), [1952] 2 D.L.R. 354, (B.C.C.A.), saying: 33 The issue of credibility is discussed by O'Halloran J.A. in Faryna v. Chorny (1951), (BC CA), [1952] 2 D.L.R. 354(B.C.

C.A.) at page 357: The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether thepersonal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examinationof its consistency with the probabilities that surround the currently existing conditions. ...

Continuing on the same page, Justice O’Halloran wrote: … The trial judge ought to go further and say that evidence of the witness he believes is in accordance with the preponderance ofprobabilities in the case and, if his view is to command confidence, also state his reasons for that conclusion. The law does not clothe thetrial judge with a divining insight into the hearts and minds of the witnesses.

And a Court of Appeal must be satisfied that the trialjudge's finding of credibility is based not on one element only to the exclusion of others, but is based on all the elements by which it canbe tested in the particular case." [36] Trial judges themselves are uniquely situated to evaluate credibility. Under the palpable and overriding error standard of review,an appeal court can only interfere with the credibility findings of a trial judge when those findings are “clearly wrong.” This requires theidentification of a discrete error that has had an impact on the result. As stated by Fish J. in H.L. v.

Canada (Attorney General), 2005SCC 25, [2005] 1 S.C.R. 401: 56 In my respectful view, the [palpable and overriding error] test is met as well where the trial judge's findings of fact can properly becharacterized as "unreasonable" or "unsupported by the evidence". In R. v.

W. (R.), (SCC), [1992] 2 S.C.R. 122,McLachlin J. (as she then was) explained why courts of appeal must show particular deference to trial courts on issues of credibility. … [37] The Supreme Court of Canada emphasized the importance of deference to trial judges’ findings of credibility in F.H. v.McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 72: 72 With respect, I cannot interpret the reasons of the majority of the Court of Appeal other than that it disagreed with the trial judge'scredibility assessment of F.H. in light of the inconsistencies in his evidence and the lack of support from the surrounding circumstances.Assessing credibility is clearly in the bailiwick of the trial judge and thus heightened deference must be accorded to the trial judge onmatters of credibility. … [38] Mr.

Shears’ complaint is based on the notion that he was dependent on Mr. Blagdon and only repeating what he learned andunderstood from Mr. Blagdon, because Mr. Blagdon had “masterminded” the network of companies and his financial affairs. In otherwords, Mr. Shears wants to be excused for depending on Mr. Blagdon’s advice. However, at the same time Mr. Shears argues that theevidence of Mr. Blagdon and that of the two other accountants was not fairly considered by the Court. [39] The standard of review respecting a trial judge’s credibility assessments is palpable and overriding error. This is a high standardto meet.

Mr. Shears identifies issues which he argues the Judge ought to have decided differently. While it was open to the Judge tocome to different conclusions respecting the issues he raises, Mr. Shears has not demonstrated any palpable, let alone overriding, factualerrors in the Judge’s reasoning respecting those issues. The Judge gave reasons why she accepted the evidence of certain witnesses overthat of Mr. Shears, Mr. Blagdon and the other accountants, on all of the controverted issues.

Her general credibility assessmentsrespecting all of the witnesses and her acceptance and rejection of certain evidence from certain witnesses are ably explained in herdecision and well supported by the evidence. Accordingly, there is no merit to Mr. Shears’ credibility assessment argument. [40] Having found that the Judge committed no error with respect to the two overarching issues raised by Mr. Shears, there is no needto consider several specific grounds of appeal which flow from those overarching issues. However, several discrete grounds of appealwhich warrant further consideration remain.

The Matthew Shears Trust [41] In 1994, the year before Mr. Shears and Ms. Chaulk separated, a trust for the benefit of their son Matthew (the MST) wascreated. Ms. Chaulk was named the settlor of the trust and the trustee was Kevin Dwyer, one of the two accountants working with Mr.Blagdon. Neither the MST nor Matthew Shears was a party to this litigation. [42] The Judge found that Ms. Chaulk owned matrimonial property in the form of PVWL shares which had been placed in the MST,and that she was due her share of their value which calculated to $7,286.66.

The Judge correctly stated at paragraph 228 of her decisionthat “beneficiaries alone have the rights to pursue the trustees” of a trust, and at paragraph 251, that Matthew Shears is the sole

beneficiary of the MST. However, the Judge ruled at paragraph 223 of her decision that Mr. Shears effectively controlled the MST, and she ordered him to arrange for Ms. Chaulk to be paid her due from the trust in return for which her shares would be endorsed over to the MST. [ 43 ] Mr. Shears maintains that the Judge erred in so ordering, arguing he has no legal or beneficial interest in the trust, and therefore no ability to “arrange to pay” monies to Ms. Chaulk from the trust. [ 44 ] It is easy to see why the Judge concluded that Mr. Shears effectively controlled the MST.

However, in the absence of specific provision, trust law does not give authority to Mr. Shears to pay or to direct payment of monies from the MST. It is only Matthew Shears, the sole beneficiary of the MST and not a party to this litigation, who could arrange to pay Ms. Chaulk monies from the MST. While there may be situations where a court can order a trust to be pierced or monies from a trust to be disgorged, a ruling respecting such a situation would be arrived at after consideration of evidence and legal argument respecting the purpose for doing so and how this could be accomplished.

It does not appear that such submissions were made and considered at trial. [ 45 ] In the result, I accept Mr. Shears’ argument and declare that the Judge erred in ordering him to arrange to pay Ms. Chaulk $7,286.66 from the MST. The Judge’s order should therefore be vacated. While the Judge erred in directing Mr. Shears to make arrangements to have Ms. Chaulk paid, there was no argument on appeal that the Judge erred in finding that the $14,575.33 due to Ms. Chaulk from the MST is a matrimonial asset subject to equal division. As such, it is only the order compelling Mr.

Shears to make the payment that I would disturb. Matrimonial Debt The PVWL Debt [ 46 ] Mr. Shears argues that the Judge erred in deciding not to include two significant debts as matrimonial debts. Mr. Shears testified that at the time of separation he owed – through his proprietorship of Pro-Video – an amount of $902,030 to PVWL. A further $123,872 was allegedly owed by Mr. Shears and his companies to Anchois Ltd. (Anchois). The Judge did not accept either of these debts as matrimonial debts, and did not factor them in to her property division analysis. [ 47 ] Mr.

Shears argues that the Judge erred in holding that the PVWL debt was not proven to be matrimonial. He maintains that the PVWL debt was matrimonial and that Ms. Chaulk was as liable for it as he. Mr. Shears argues that his expert, David Howe C.A., accepted the legitimacy of the PVWL debt and says that the Judge did not explain why she rejected Mr. Howe’s evidence. [ 48 ] Ms. Chaulk’s position is that the PVWL debt of $922,030 was a paper debt which was not legitimate. She relies on the evidence of John Morgan C.A. who said that the debt “had never really existed”. In any event, Ms.

Chaulk argues that if there is a debt, it is not matrimonial. [ 49 ] The Judge agreed with Ms. Chaulk’s position, saying at paragraph 217 of her decision: [T]here is not a shred of evidence to suggest that this debt was incurred for the benefit of the family. She continued at paragraph 218, saying that Ms. Chaulk “received no benefit from the losses incurred”. At paragraph 220 the Judge concluded: The contradictory accounting records, the charging of interest without a contractual requirement, the questionable management fees without proof of supporting services and Mr.

Blagdon’s deferral to others of questions he should have been able to answer, support the conclusion that the alleged matrimonial debt of $922,030.00 has not been established. [ 50 ] I do not accept Mr. Shears’ argument. Both Mr. Howe and Mr. Morgan testified and were cross-examined on the PVWL debt issue. The Judge considered their evidence and also the evidence from Mr. Blagdon and Mr. Shears on the issue, and determined that the alleged matrimonial debt was not established. The reasons why she rejected Mr. Shears’ position are noted in the paragraph above. Mr.

Shears has not identified any palpable and overriding error in the Judge’s consideration of the issue. The Anchois Debt [ 51 ] Similarly, Mr. Shears argues that the Judge erred in finding that the Anchois debt was not matrimonial. The Judge found there was no evidence supporting that the $123,872 alleged to be payable to Anchois by Mr. Shears and his companies was money borrowed for matrimonial purposes. She concluded that Mr. Shears had the onus of proving that the debt represented money he personally borrowed for matrimonial purposes and that he did not meet this onus. Mr.

Shears has not demonstrated any palpable and overriding error in the Judge’s fact finding, reasoning or conclusion on this issue. [ 52 ] Accordingly, Mr. Shears grounds of appeal with respect to the division of debts fails. Division of Matrimonial Property [ 53 ] The Judge’s findings on the division of matrimonial assets have been subject to several grounds of appeal and cross-appeal. These challenges relate to which assets the Judge determined to be matrimonial as well as the way in which she valued and divided the assets she found to be matrimonial.

Equalization of the RRSPs [ 54 ] At the time of separation, both parties had RRSPs in their own names. In determining how to order equalization of the RRSPs, the Judge was faced with the task of parsing out what changes in value to the RRSPs were the result of investment interest (which would

ordinarily be subject to division), and which changes were the result of contribution and withdrawal. [55] There was evidence of the value of Mr. Shears’ and Ms. Chaulk’s RRSPs at the date of separation, and at the time of trial. However, there was no evidence on how to account for contribution and withdrawals respecting Mr. Shears’ RRSPs, whereas there wassuch evidence respecting Ms. Chaulk’s. [56] In determining equalization, the Judge adopted the novel strategy advanced by Ms. Chaulk. The strategy involved consideringthe difference in value between Mr. Shears’ RRSP and Ms.

Chaulk’s RRSP at the date of separation, and then ordering Ms. Chaulk tomake a tax-free rollover to Mr. Shears in an amount representing half the difference in their RRSPs in 1995 plus a rate of returnequivalent to that which Ms. Chaulk’s RRSPs obtained between 1995 and the date of trial. [57] Mr. Shears takes issue with this approach and argues that the Judge erred in assessing his evidence. It is his position that therecords show that he continued to make contributions to his RRSPs, as the Judge found, but that she erred in saying that he also madewithdrawals.

He argues that the Judge’s approach results in him not receiving the benefit of the increase in value of Ms. Chaulk’s onesignificant divisible asset. In his factum, Mr. Shears provides another “rough and ready approach” to determine RRSP equalization. [58] It was held by this Court in Martin v. Martin (1998), (NL CA), 168 Nfld. & P.E.I.R. 181 that “as a generalrule, the content of the RRSPs should be determined at the date of separation but valued at the date of rollover or transfer” (paragraph40).

That said, general rules are flexible, and they must adapt to unique circumstances. [59] The Judge’s approach does result in a potential inequity to Mr. Shears. While she found him entitled to the benefit of the increasein value of Ms. Chaulk’s RRSPs up to the end of 2013, this benefit only attaches to the difference in value between her RRSPs and Mr.Shears’ RRSPs at the date of separation. If Ms. Chaulk’s RRSPs as a whole achieved a greater rate of return than those of Mr.

Shearsbetween the date of separation and the date of trial, then he is at a disadvantage under this method. [60] The Judge was not unaware of this potential inequity. However, she found that it was made necessary due to the passage of timeand insufficient documentation provided by Mr. Shears. [61] The fact that there are different approaches to resolving a unique problem does not make one approach necessarily wrong. Thereis no error in principle in the Judge’s approach. It was taken for a reason and it was not demonstrated that an injustice resulted. Accordingly, I would dismiss this ground of appeal.

Judgment Interest on Shares [62] Mr. Shears argues that the Judge erred in ordering that pre-judgment interest be paid on Ms. Chaulk’s interest in InvestmentsHoldings Inc. (IHI). He argues that pre-judgment interest should not attach as the whole value of Ms. Chaulk’s interest will becalculated in the present when it is divided and paid. [63] For her part, Ms. Chaulk says that the value of her interest, determined by the Judge at trial to be $115,593.00 on the basis of Mr.Morgan’s calculation, is out of date.

I agree it is out of date, given that it was determined in 2012. [64] Regardless of the valuation being out of date, it was a determination at trial based on the evidence and has not been shown to bein error. Accordingly, judgment interest is payable on this amount from the date of valuation relied on by the Judge. Taxes and Insurance Costs for the Matrimonial Home [65] Mr. Shears also argues that the Judge erred in failing to order Ms. Chaulk to pay one-half of the taxes, insurance, and utilitycharges for the matrimonial home after she left. [66] Ms. Chaulk objects, arguing that it was Mr.

Shears who benefitted from use of the home after she moved out. In particular, Ms.Chaulk says that after the couple separated, each of their children had lived from time to time in the home with Mr. Shears’ consent, thatMr. Shears had an office in the home which he continued to use, and that he stored excess WBSL inventory there. Ms. Chaulk also saysthat Mr.

Shears filled in the swimming pool at the home without her knowledge or consent, and that when she sought his agreement tosell the home or buy out her one-half interest in 1999, he refused to do either. [67] The Judge considered the evidence on this point, and decided that Mr. Shears should cover the taxes and costs of insurance andutilities for the matrimonial home. No error on her part has been shown. Accordingly, this ground of appeal fails. Deductions for Environmental Study [68] The matrimonial assets included several parcels of real property.

A garage had been situated on one of these properties for over30 years. To assist in determining its value, Mr. Shears obtained an environmental study of the property to determine whether it wascontaminated, for if it were contaminated its original appraised value would doubtless be less. The Judge found that Ms. Chaulk wasresponsible for half the value of the assessment. Ms. Chaulk has cross-appealed this liability. [69] Ms. Chaulk argues that notional costs related to the disposition of matrimonial property are not permissible deductions from itsvalue, and she relies on the Ontario case of McPherson v.

McPherson (1988), (ON CA), 63 O.R. (2d) 641, 48 D.L.R.(4th) 577 (Ont. C.A.) for the proposition. I would reject this argument as it applies to the present case, for two reasons. [70] In McPherson, Justice Finlayson does not claim to be making an absolute statement that notional costs are not permissibledeductions from the value of real property. Rather, he concludes that the question of deductibility is a factual inquiry into the likelihood

of the liability being incurred, for if incurring the liability is speculative, it “can safely be ignored.” [71] In this case, the cost for the environmental study is not a hypothetical cost, rather it is an actual cost that Mr. Shears hasincurred. As such, McPherson is of no application. [72] Similar to the cost of appraisal, the cost of the environmental study was incurred for the sake of properly valuing the property. Inother words, it was necessary to assist the Court in answering the question before it. Absent an argument that Mr.

Shears obtained thestudy in a bad faith effort to expend matrimonial assets, there is no reason why the cost should not be borne by both parties. Accordingly, the Judge did not err in ordering Ms. Chaulk to pay half the share of the environmental study. Deer Lake Development Inc. [73] On cross-appeal, Ms. Chaulk argues that the Judge erred in failing to classify Deer Lake Development Inc. (DLD) as either abusiness asset or a matrimonial asset.

She argues that the Judge erred because only $100,000 of DLD, representing its accountsreceivable and not its full value, informed the Judge’s reasoning. [74] The Judge found no reliable evidence upon which to award Ms. Chaulk anything but her interest in the $100,000 accountsreceivable. However, Ms. Chaulk maintains that the Judge ought to have ordered that the DND shares were matrimonial, and eitherordered a transfer of half of them to Ms. Chaulk or ordered an appraisal of DLD’s realty and determined its value, as she did with IHI. [75] DLD was incorporated by Mr. Shears in 1993, and he is the sole shareholder.

The company was incorporated for the purpose ofpurchasing a parcel of land. The money to purchase the land was “loaned” interest-free by WBSL, and Mr. Shears testified that the loanremained outstanding. The loan was approximately $100,000. [76] The Judge declined to treat DLD as either a business asset, or a matrimonial asset. Rather, she found that, because the onlyinvestment in the company during the marriage was the $100,000 loan, and because the loan remained outstanding as an accountreceivable on the books of WBSL and was therefore included in the valuation of WBSL, Ms.

Chaulk’s interest in DLD would already becompensated through her entitlement to an interest in WBSL. [77] The Judge characterized the asset for division as Mr. Shears’ “investment” in DLD. In fact, the asset is the shares, which were“acquired by either or both spouses [in this case Mr. Shears] during the marriage” (section 18(1)(

c) of the FLA). As the shares wereacquired during the marriage, they must be a matrimonial asset unless they fall within one of the enumerated exceptions. Section18(1)(

a) of the FLA defines “business assets” as “property primarily used or held for or in connection with a commercial, business,investment or other income or profit producing purpose”. Business assets are one of the enumerated exceptions to property classified asmatrimonial assets. [78] The Judge found that DLD was established for the purpose of purchasing land “for future development”. She further found that,following the parties’ separation, the activities of the company were “confined to purchasing and renting properties”. A comparableprovision to section 18(1)(

a) of the FLA in the Nova Scotia legislation was considered by the Supreme Court of Canada in Clarke v.Clarke, (SCC), [1990] 2 S.C.R. 795, at 814. In Clarke the Court remarked that “business assets are assets which have astheir purpose the generation of income in an entrepreneurial sense”. [79] In the circumstances, I am satisfied that the findings of the Judge ground a conclusion that the shares in DLD were a businessasset, incorporated on Mr. Blagdon’s advice as a cog in Mr. Shears’ complex corporate dealings. [80] As a business asset, any claim by Ms. Chaulk to division must be grounded on

section 29 of the FLA. While the operation ofsection 29 in this case is discussed in more detail later in this decision, it is sufficient to resolve this aspect of the appeal by noting thatthere was no finding by the Judge that Ms. Chaulk made any direct contribution to, or had any direct dealings with DLD. [81] The record before this Court is not sufficient to determine whether the $100,000 loaned by WBSL to DLD were funds that wouldotherwise have been available to Mr. Shears, and therefore the family, so as to constitute a contribution by Ms. Chaulk to theimprovement of DLD.

Therefore, I am satisfied, like the Judge, that Ms. Chaulk’s interest in the shares of DLD, if any, is sufficientlycompensated by her proportionate entitlement (through her interest in WBSL) to the $100,000 loan outstanding from DLD to WBSL. [82] In the result, the Judge’s reasoning was not inconsistent with the law respecting the division of a business asset. Given that herconclusion respecting DLD was a component of a larger property division scheme, I would defer to her decision, and leave herconclusion undisturbed. Buick Roadster [83] When the parties separated, Ms.

Chaulk was driving a 1993 Ford Probe she purchased with money drawn from Sharmat. Mr.Shears was driving a Buick Roadster which was owned by WBSL. The Judge found the depreciated value of the Probe at the date ofseparation to be matrimonial property subject to division, but found that the Buick Roadster was not matrimonial property so she did notdivide its depreciated value. Ms. Chaulk argues that this was an error, and relies on section 18(3) of the FLA in support of her position.

She requests an equalization payment of half of 70% of the purchase price of $35,000, which calculates to $12,250. [84] Section 18(3) of the FLA provides a spouse with a claim to shares of a corporation held by the other spouse when thatcorporation owns property which would be considered a matrimonial asset, but for the fact that it is owned by the corporation. In suchcircumstances, shares of the corporation with a market value equal to the benefit the other spouse has in respect of the property aretreated as a matrimonial asset.

This entitles a spouse to claim division of property which is “effectively owned” by the other spouse butlegally owned by a corporation in which the other spouse owns shares. [85] Accordingly, because the Buick roadster was owned by WBSL, shares in WBSL owned by Mr. Shears equal to the benefit hereceived from the Buick Roadster could be treated as a matrimonial asset. This requires consideration of Mr. Shears’ use of the vehicle.

[ 86 ] Mr. Shears had exclusive use of the Buick Roadster. However, Mr. Shears’ use of it was also business related, and he claimed his personal use of it as a benefit in his taxable income. The benefit to Mr. Shears was therefore already included in his income for purposes of spousal support. As well, the value of the vehicle was included in the valuation of WBSL, and Ms. Chaulk has received her share of WBSL through her

section 29 claim. To grant this ground of appeal would effectively be giving Ms. Chaulk the value of her share of the Buick Roadster twice. Accordingly, the Judge’s treatment of this issue was not in error. Amount in Director’s Account [ 87 ] The Judge found that amounts withdrawn from Mr. Shears’ director’s account with WBSL were matrimonial assets subject to equal division. She accepted the evidence of Mr. Morgan, stated at paragraph 222 of her decision, that the amount currently outstanding was $848,977, and found that Ms. Chaulk was owed half of this amount. [ 88 ] Ms.

Chaulk has cross-appealed the Judge’s finding on this point, claiming that the Judge misapprehended Mr. Morgan’s evidence. Ms. Chaulk submits, and Mr. Shears concedes, that the evidence showed that the amount outstanding was $1,697,954. Thus the Judge erred by dividing in half a number which had already been divided in half. [ 89 ] Mr. Shears concedes this mathematical error. However, he argues that this error is only relevant if this Court dismisses his ground of appeal related to the PVWL debt.

For reasons explained in this decision, this Court has dismissed his ground of appeal related to the PVWL debt. [ 90 ] Mr. Shears’ concession on the mathematical error is also “subject to deducting the tax benefit that [he] received and from which the family obviously benefitted.” In the Judge’s initial order that Ms. Chaulk was owed $424,488, the Judge did not deduct any amount for the tax benefit received which benefited the family. Mr. Shears has not put forward on appeal any basis to find that there was an error in the Judge’s failure to do so. Accordingly, I see no reason why the amount owing to Ms.

Chaulk should be adjusted on appeal beyond doubling it in accordance with the positions of the parties. [ 91 ] Therefore, the amount due to Ms. Chaulk is varied from $424,488 to $848,977. Claims Respecting the Business Assets of WBSL and Sharmat [ 92 ] WBSL is a company that was established by Mr. Shears’ father before the couple married. The parties agreed that the value of WBSL in 2010 was $5,922,000. [ 93 ] The Judge found that Mr. Shears brought 48 shares in WBSL into the marriage and that he was gifted one other share in 1987. She found these 49 shares were not matrimonial assets and not assets that Ms.

Chaulk was entitled to an interest in under

section 29 of the FLA . She found the remaining 51 shares were business assets subject to division on the basis that Mr. Shears acquired them with funds that would have otherwise been available for the family’s use and enjoyment (paragraphs 44-47 of the decision). In so doing, the Judge reasoned that

section 29 of the FLA limited Ms. Chaulk’s claim to “business assets built up during the marriage” and that what was built up during the marriage could not exceed the 51 shares. [ 94 ] Mr. Shears argues that the Judge significantly overstated Ms. Chaulk’s entitlement to the WBSL shares. While he argued at trial that WBSL was his business and his alone, he acknowledges on appeal that Ms. Chaulk has a

section 29 claim based on certain shares being purchased with matrimonial funds. However, he maintains that this entitlement only applies to 27 of the 51 shares acquired during the marriage, and further that Ms. Chaulk is only entitled to the original purchase price (plus interest) of the 27 shares, not their current value. Further, he argues that Ms. Chaulk is not entitled to a

section 29 claim by virtue of her homemaking contribution to the family, and he relies on Snook v. Snook , 2010 NLCA 57 , 301 Nfld. & P.E.I.R. 113 , at paras. 18-24 to support his position. [ 95 ] Ms. Chaulk maintains that all of the shares held by Mr. Shears in WBSL are business assets subject to division, arguing that the whole value of the company, and not just the value of the 51 shares which were purchased with matrimonial money, was “built up during the marriage and maintained as a joint family venture”. She argues that the Judge’s

interpretation of sections 5 and 29 of the FLA is narrow and limiting and in conflict with the meaning of “built up by a spouse during a marriage” in

section 5 (

d) of the FLA . Alternatively, Ms. Chaulk argues entitlement to the pre-matrimonial shares in WBSL by virtue of the constructive trust and joint family venture principles set out in Kerr v. Baranow , 2011 SCC 10 , [2011] 1 S.C.R. 269 . [ 96 ] Sharmat was a company incorporated in 1991 to provide management and payroll services to WBSL. Ms. Chaulk was the sole shareholder and employee. [ 97 ] The Judge found that Sharmat was a duly incorporated company, that Ms. Chaulk was the sole shareholder, and that there was an enforceable contract between Sharmat and WBSL.

She found that Sharmat was matrimonial property subject to division, as it had been established for the purpose of obtaining “a second small business deduction” and benefits from income splitting for the benefit of the family and that it had been purchased with matrimonial money. [ 98 ] Mr. Shears argues that he was the true owner of Sharmat despite its incorporation and the contract between Sharmat and WBSL. He says he was its directing mind and the beneficiary of the anticipated tax benefits and income splitting resulting from its establishment, and further maintains that Ms.

Chaulk was fully compensated for the payroll services she performed through Sharmat. [ 99 ] Ms. Chaulk argues that Sharmat was incorporated as her company, and that she was its sole employee and operating mind, as the Judge found. Entitlement to Division of Business Assets [ 100 ] Sections 5 (

d) and 29 of the FLA set out the basis for entitlement to business assets claims: 5. The purpose of Parts I and II is to reform the law with respect to matrimonial property in order to

(

a) recognize the contribution made by each spouse to a marriage; (

b) give a 1/2 interest in the matrimonial home to each spouse; (

c) provide for the deferred sharing of most other property acquired during marriage; and (

d) provide for judicial discretion in sharing business assets built up by a spouse during a marriage. . . . 29. Where one spouse has contributed work, money or money's worth in respect of the acquisition, management, maintenance,operation or improvement of a business asset of the other spouse, the contributing spouse may apply to the court and the court shall byorder (

a) direct the other spouse to pay an amount that the court orders to compensate the contributing spouse; or (

b) award a share of the interest of the other spouse in the business asset to the contributing spouse in accordance with thecontribution, and the court shall determine and assess the contribution without regard to their spousal relationship or the fact that the acts constitutingthe contribution are those of a reasonable spouse in the circumstances. [101] Two relevant considerations emerge from

section 5(

d) of the legislation. First, the language provides for judicial discretion insharing business assets. Second, the business assets subject to sharing are those determined to have been “built up by a spouse during amarriage”. [102] What are the business assets that could be said to be “built up during a marriage”? Are they only the assets that were acquiredduring a marriage, or are they any business assets that stand in the name of either party in a marriage which have been “built up” or“increased in value”, during a marriage. The language of

section 5(

d) does not limit claims for business assets that were acquired duringthe marriage. The only limiting language in the FLA is that the business assets must have been built up by the claiming spouse duringthe marriage, provided that spouse meets the entitlement criteria set out in

section 29 of the FLA. [103] I agree with Ms. Chaulk’s argument that the Judge erred in interpreting

section 5(

d) of the FLA so narrowly. I see no reason inprinciple to exclude from sharing the business assets which were brought into a marriage if a judge concludes, on a proper exercise of heror his discretion, that those business assets were built up, enhanced, or improved by a spouse during a marriage and the claiming spousemeets the criteria set out in

section 29 of the FLA. [104] In this regard I refer to the Supreme Court of Canada decision Rawluk v. Rawluk, (SCC), [1990] 1 S.C.R. 70,which held that, absent clear legislative language, matrimonial property legislation should not be held to abrogate the common lawconstructive trust remedy (page 97). The overlap between the common law of constructive trusts and

section 29 of the FLA has beenrecognized in this jurisdiction in Marsden v. Marsden, 2008 NLUFC 18, 280 Nfld. & P.E.I.R. 43, at para. 18. Given that the language insections 5(

d) and 29 of the FLA does not clearly limit claims to business assets to those business assets that were actually acquired duringthe marriage, claims based on

section 29 could succeed on the basis of contribution to the acquisition, management, maintenance,operation or improvement of property brought into a marriage. [105] In this case, the Judge calculated monies due by WBSL to Sharmat under the contract between those two entities, adjusting thevalue of WBSL down to $4,268,903 to account for WBSL’s liability to Sharmat. She then determined the adjusted value of Mr. Shears’matrimonial interest in WBSL to be $2,177,140. [106] While the Judge did err in law by restricting her sections 5(

d) and 29 analysis to the 51 shares acquired during the marriage, I amsatisfied that the law properly applied to the circumstances leads to the same result. [107] The Judge found that Ms. Chaulk contributed to her husband’s interest in WBSL by performing duties including “chequeauthorization and signing, management assistance in the store and advice on purchasing” and holding various director and executivepositions in the company. However, the Judge found Ms. Chaulk’s most significant contribution to WBSL involved the usage of familyfunds for the purchase of 51% of the shares during the marriage. Ms.

Chaulk played no role in the acquisition of the other 49 shares.While her work on payroll can be considered “management, maintenance, operation or improvement” of the assets, I am satisfied thatthis contribution is adequately compensated through the division of the 51 shares acquired during the marriage. [108] Mr. Shears is correct to state that this Court held in Snook v. Snook, 2010 NLCA 57, 301 Nfld. & P.E.I.R. 113 that one spousetaking a primary role as a homemaker does not create entitlement to business assets under

section 29. However, the Judge did not rely onMs. Chaulk’s homemaking as providing entitlement. While the Judge recognized that Ms. Chaulk’s domestic role played an importantpart in enabling Mr. Shears to contribute to the company in the way he did, the Judge further stated that this fact was not “strictlyrelevant” to the

section 29 analysis. Rather, she primarily relied on the fact that matrimonial funds were used to acquire the shares, whichshe found to be a clear contribution to the business assets by Ms. Chaulk. [109] In the result, I would dismiss the grounds of both the appeal and the cross-appeal relating to the entitlement of Ms. Chaulk to thebusiness assets of WBSL. Relationship Between WBSL and Sharmat [110] Despite finding that Ms. Chaulk was entitled to half of 51% of the value of the WBSL shares, division of this amount was not

ordered as part of the Judge’s holistic property division assessment. The appropriateness of this approach to division has been challenged on cross-appeal, and requires consideration of the relationship between WBSL and Ms. Chaulk’s company, Sharmat. [ 111 ] Sharmat was a company incorporated in 1991 to provide management and payroll services to WBSL. Ms. Chaulk was the sole shareholder and employee. [ 112 ] The Judge found that there was an enforceable contract between Sharmat and WBSL for payment of $5,000 per month and 15% profit on payroll for WBSL administered by Sharmat.

Pursuant to this contract, the Judge found that WBSL owed Sharmat $1,653,097. The Judge further found that Mr. Shears would be entitled to half of this amount, either on the basis of the Sharmat shares being a matrimonial asset, or on the basis that Mr. Shears has a

section 29 claim to half the value of Sharmat. [ 113 ] After valuing Ms. Chaulk’s interest in WBSL at $2,177,140 (this was based on half of a 51% interest, with the value of WBSL adjusted to account for the liability of $1,653,097 to Sharmat), the Judge declined to order division of the values of WBSL and Sharmat respectively. Rather, she accepted that the parties carrying the companies in their own names was a financial arrangement made by them, and that Ms. Chaulk keeping the full value of Sharmat and Mr. Shears keeping the full value of WBSL achieved a “fair result”. [ 114 ] Mr.

Shears has appealed the finding that there was an enforceable contract between WBSL and Sharmat entitling Sharmat to payment. Ms. Chaulk has cross-appealed the Judge’s decision to not order division of the respective properties. She challenges the appropriateness of the Judge’s decision generally, and further asserts that the Judge erred in determining the value of WBSL that Ms. Chaulk would otherwise have been entitled to. [ 115 ] Mr.

Shears’ argument that there was not an enforceable contract is based on his position that he was the directing mind of both WBSL and Sharmat and, as such, he alone had the right to determine what was or was not paid from WBSL to Sharmat. Ms. Chaulk argues that the purpose of creating Sharmat as a corporation is irrelevant, and that as an entity with the capacity, rights, powers and privileges of a natural person under the Corporations Act , R.S.N.L. 1990, c.

C-36 , Sharmat is entitled to enforcement of the legal contract. [ 116 ] The Judge considered the specific factual circumstances surrounding the incorporation of Sharmat, and the relationship between Sharmat and WBSL, and gave reasons for why she decided this property issue as she did. In arguing that the contract between the WBSL and Sharmat should not be enforceable, Mr. Shears has not identified any palpable and overriding error of fact on the Judge’s part. Accordingly, this ground of appeal fails. [ 117 ] On cross-appeal, Ms.

Chaulk argues that the Judge’s ultimate conclusion on the division of property was based on incorrect considerations, and produced an unfair result. [ 118 ] As noted above, the Judge adjusted the agreed value of WBSL to account for WBSL’s liability to Sharmat in the amount of $1,653,097. Ms. Chaulk argues that the Judge’s deduction of the entire liability was in error as a portion of this liability was already reflected in the valuation of WBSL. This had the effect of improperly lowering the value of WBSL when valuing Ms. Chaulk’s entitlement. Ms. Chaulk refers specifically to Mr.

Morgan’s expert report as indicating that $600,417.36 was already accounted for as payable in the unadjusted valuation of WBSL. [ 119 ] Mr. Morgan’s report was filed in this Court. On review of it, it is not clear to me or “so obvious that it can easily be seen or known” or “readily or plainly seen” (as per Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 , at para. 5 ) that Mr. Morgan had already partially accounted for WBSL’s liability to Sharmat in his valuation of WBSL. I am therefore unable to say that this error, if committed, is palpable.

More importantly, though, if the error did occur as is suggested by Ms. Chaulk, I am unable to say that it was overriding. [ 120 ] As discussed above, the Judge calculated the value of Mr. Shears’ interest in WBSL that was subject to division, but she did not actually order one-half of that amount to Ms. Chaulk. In the same vein, she valued Sharmat but did not actually order one-half of that amount to Mr. Shears. Rather, she found that the established structure already fairly divided the family wealth, and ordered that WBSL pay Sharmat $1,653,097 in satisfaction of the breach of contract claim, Ms.

Chaulk’s claim to WBSL, and Mr. Shears’ claim to Sharmat. [ 121 ] The Judge’s approach resulted in 56% of the combined value of the divisible WBSL and Sharmat shares going to Mr. Shears, and 44 % going to Ms. Chaulk. The Judge saw this as a “fair result” based on all the evidence, and exercised her discretion to order accordingly. If the error Ms. Chaulk alleges actually did occur, the percentages would be adjusted to 60% in favour of Mr. Shears, and 40% in favour of Ms. Chaulk. [ 122 ] The business assets claim under the FLA was only one piece of this complicated and multi-faceted family litigation.

Other claims and awards also flowed from the litigation. On a holistic view of the evidence respecting the division of matrimonial and business assets, the awards respecting spousal and retroactive child support, and other issues, I am satisfied that a 4% difference in the award respecting Ms. Chaulk’s claim to the business assets of WBSL would not have altered the result ordered by the Judge. [ 123 ] With respect to Ms. Chaulk’s challenge to the appropriateness of the division order generally, I am satisfied that the Judge’s decision on this point survives appellate scrutiny.

As noted above, the FLA specifically provides for judicial discretion in determining claims to business assets. Moreover, the division of all property in family law proceedings, with the exception of the matrimonial home, involves the exercise of judicial discretion. As stated by Cromwell J.A. of the Nova Scotia Court of Appeal (as he then was) in MacLennan v.

MacLennan , 2003 NSCA 9 , 212 N.S.R. (2d) 116 , at para. 9 : “Provided that the judge of first instance applies correct principles and does not make a palpable and overriding error of fact, the exercise of such discretion will not be interfered with on appeal unless its result is so clearly wrong as to amount to an injustice”. [ 124 ] In exercising her discretion, the Judge was satisfied that she had achieved a “fair result”. I would note that Mr. Shears and Ms. Chaulk have been separated since 1995. Valuations of the business assets were done for trial approximately 15 years later. In the intervening period, Ms.

Chaulk did not contribute to building up the business assets. Rather, it was only Mr. Shears who did so. In these circumstances, I do not see the result amounting to an injustice to Ms. Chaulk. Accordingly, I would not interfere with the Judge’s

decision on the division of WBSL and Sharmat on the grounds raised in either the appeal or the cross-appeal. Retroactive Child Support [ 125 ] The Judge ordered that retroactive child support respecting Matthew should be paid to Ms. Chaulk. Matthew was a child of the marriage when he lived with his mother for three years after she and Mr. Shears separated. Mr. Shears argued at trial that he owed no retroactive child support for Matthew because he “supported and helped support the children after separation, and still supports Lesley” and also that the Court had no authority to order it because Ms.

Chaulk did not apply for child support until trial, when Matthew was 29 years old and no longer dependent. [ 126 ] The record shows that Ms. Chaulk applied for child support for Matthew, then approximately 14 years old, when she filed her answer to Mr. Shears’ Petition for Divorce in 1998. Accordingly, Mr. Shears’ argument that Ms. Chaulk’s claim for child support is time barred by virtue of late application is not supported by the record. [ 127 ] The Judge ordered that Mr. Shears pay Ms.

Chaulk retroactive child support respecting Matthew after hearing all of the evidence respecting the family dynamics in play at the time. In the result, she exercised her discretion to order retroactive child support for Matthew, without interest, and gave reasons at paragraphs 364 and 368-369 of her decision. I see no basis on which to interfere with her decision. The Judge correctly noted that the Child Support Guidelines were not legislated at the time of this entitlement.

However, I do not see any error in her referring to them as a resource in determining the amount of support. [ 128 ] Accordingly, the Judge’s order that Mr. Shears pay $83,200 to Ms. Chaulk as retroactive child support for Matthew stands. The Judge’s decision not to award interest on the retroactive award is also a ground of cross-appeal, and is considered below. [ 129 ] Section 3(3) of the Judgment Interest Act , R.S.N.L. 1990, c. J-2 confers discretion on a judge to decline to order pre-judgment interest. However, as recognized by this Court in Gosse v.

Sorensen-Gosse , 2011 NLCA 58 , 311 Nfld. & P.E.I.R. 76 , at paras. 141 – 144 , this discretion must be exercised judicially, and is limited to circumstances “where it is proven to the satisfaction of the Court that it is just to do so having regard to the circumstances.” [ 130 ] The Judge was not silent on why she declined to award pre-judgment interest. She explained (at paragraphs 369 and 415) that pre- judgment interest was not added because the award was based on current support tables. [ 131 ] The usage of current tables in calculating retroactive support was not raised as an issue on appeal.

As there was no argument on this point, I offer no opinion on the appropriateness of such a practice, and whether it accomplishes the same goals as pre-judgment interest, namely recognition of the impact of inflation and the impact of the recipient being denied the opportunity to utilize the funds at the time they were due ( Courtney v. Cleary , 2010 NLCA 46 , 299 Nfld. & P.E.I.R. 85 , at para. 88 ). [ 132 ] Rather than challenge the Judge’s reasons for not awarding pre-judgment interest, Ms. Chaulk has simply attacked her decision not to do so.

She has referred this Court to other cases where pre-judgment interest was awarded on support. However, the fact that interest has been awarded in other cases does not establish the principle that interest must be awarded in every case. [ 133 ] The Judge articulated her reason for not awarding pre-judgment interest. Ms. Chaulk has not argued that this reason was conceptually flawed. Accordingly, the Judge’s exercise of discretion is entitled to deference, and I would uphol

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