D.A.D. , Petitioner, – v. –, 2023 NBKB 049

FDN-59-2019 IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK FAMILY DIVISION JUDICIAL DISTRICT OF MIRAMICHI Date: March 28, 2023 Neutral Citation: 2023 NBKB 049 BETWEEN: D.A.D. , Petitioner, – and – E.M.D. , Respondent. DECISION BEFORE: Madam Justice Marie-Claude Bélanger-Richard AT: Miramichi, N.B. DATES OF HEARING: May 16, 17 and 18, September 12 and 13, and October 20 and 21, 2022 LAST POST-HEARING BRIEF FILED: December 8, 2022 DATE OF DECISION: March 28, 2023 APPEARANCES: Stephen J. Doucet, for the Petitioner Timothy F. Murphy, for the Respondent

Summary: Divorce Act – Division of marital property – Business assets -Spousal support – Imputation of unreported cash income

a. 2001 Honda ATV: $1,000 b. 2013 Ram 1500: $24,600 c. 2006 Dodge Ram: $5,500 d. 2014 Allen Cargo Trailer (14’): $3,000 e. 2013 Forus Enclosed Cargo Trailer: $3,000 f. 2013 Hyundai Santa Fe: $11,500 g. 12’ Aluminium Boat and motor: $3,000 h. 2009 Artic Cat snowmobile: $3,600 i. 2009 Harley Davidson: $10,000 BÉLANGER-RICHARD, J.: OVERVIEW AND BACKGROUND [ 1 ] The parties began living together in 1983 and were married in September 1988. They have two adult children, namely M., who is 30 years old, and K., who is 24 years old.

The parties separated on October 26, 2018. [ 2 ] The Petitioner (the “wife”) filed a Petition for Divorce (Form 72A) on May 3, 2019. The Respondent (the “husband”) filed an Answer and Counter-Petition on March 23, 2020. [ 3 ] At the hearing, I have heard the evidence necessary to grant a divorce pursuant to section 8(2) (

a) of the Divorce Act . I therefore grant a divorce to the Petitioner. [ 4 ] The issues arising from this divorce proceeding are the following: 1. What property and debts are included in the division of marital property and should the division be in equal shares for all marital property? 2. Should the incorporated business known as Donovan’s Mobile Wash be subject to a division pursuant to

section 8 of the Marital Property Act ? 3. Is the wife entitled to spousal support, retroactive and prospective, and in the affirmative, what is the quantum and duration? 4. Should prejudgment interest be granted? 5. What costs, if any, should the Court award? FIRST ISSUE: DIVISION OF MARITAL PROPERTY [ 5 ] During the hearing, the parties agreed on values for some assets and debts. They also agreed that some assets were not marital property subject to division. In their respective post-hearing briefs, the parties agreed to split the costs of obtaining appraisals equally.

Here are the facts that the parties agreed to and that I will rely on in making my decision: 1. The marital home is appraised at $365,500 for division. 2. The South Esk property is appraised at $220,500 for division. 3. The Lower Derby property is appraised at $95,000 for division. 4. The following vehicles have the following appraised values for division: 5. At separation, the wife had the following taxable assets having the following values: − NB Public Service Pension: $70,424.29 − RRSPs #567: $44,144.08 − RRSPs #601: $10,551.97 6. At separation, the husband had RRSPs having a taxable value of $2,686 .

7. At separation, the husband had a balance of $54,867.15 in a bank account. 8. At separation, the Visa credit card in the name of the wife had a balance of $2,872.16. 9. At separation, the debt regarding the 2013 Hyundai Santa Fe vehicle had a balance of $15,429.53. 10. At separation, the debt regarding the 2013 Dodge Ram had a balance of $14,292.04. 11. Each party keeps the furniture and household items in their respective possession. 12.

Following the separation, the wife paid interest of $7,142.50 on the Home Equity Line of Credit, which interest payment should have been made by both parties in equal shares. 13. Following the separation, the husband made the mortgage payments for the South Esk property and because the wife should have contributed 50% to these payments, the mortgage balance subject to division is $95,108.34. 14. The 2017 Volkswagen Jetta is not marital property subject to division. 15. The 2002 Harley Davidson Sportster is not marital property subject to division. 16.

The travel trailer is not marital property subject to division. [ 6 ] The wife claims an equal division of all marital property. The marital property subject to equal division includes the following disputed assets: the Lower Derby property, the 2006 Dodge Ram vehicle, two enclosed trailers, and the Chevelle vehicle. [ 7 ] The husband agrees with an equal division of marital property, but takes the position that the Lower Derby Property, the 2006 Dodge Ram vehicle and the two enclosed trailers are business assets.

With respect to the Chevelle vehicle, the husband claims that the wife is only entitled to a compensation equal to 50% of the cost of acquiring and improving the vehicle. The husband also argues that he received a $10,000 gift from his mother to pay for a garage he installed on the South Esk property after the separation; he asks that the value of the South Esk property be reduced for division by that amount. [ 8 ] Also, at issue is the amount of cash the husband retained from the safe, what portion of the 2018 tax return refund each party received and the treatment of the $79,603.09 shareholder account.

A) The Lower Derby property, the 2006 Dodge Ram vehicle and the two enclosed trailers [ 9 ] In his pre-hearing and post-hearing briefs, the husband claims that the Lower Derby Property, the 2006 Dodge Ram vehicle and the two enclosed trailers are the property of the business “Donovan’s Mobile Wash” because business assets “are being associated with [him] personally, seemingly due to the fact they are in his possession.” The husband further claims that these assets have “no personal use application”. [ 10 ] The Lower Derby property was purchased by the parties for the sum of $6,000, and they used their joint line of credit to make the purchase.

The title to the property was registered in the husband’s name, not in the name of the corporation known as Donovan’s Mobile Wash (the “company”). Shortly after purchasing the property, they built a workshop on the property. [ 11 ] The Lower Derby was originally appraised at $52,000. Because the parties had decided to obtain updated appraisals for all of their properties, an updated appraisal was requested. Without consulting the wife, the husband cancelled the updated appraisal for this property.

The wife and her counsel did not learn of this until the first day of the hearing. [ 12 ] On the second day of the hearing, counsel for the husband informed the Court that his client wished to sell the Lower Derby property and, therefore, no updated appraisal was required. Counsel for the wife informed the Court that his client did not agree to a sale. I informed the parties and their counsel that, in light of the husband’s very late request, I did not believe that a sale was an appropriate resolution to this matter. In Beaudoin v.

Beaudoin , 2021 NBQB 103 , I had to deal with a similar situation, and I commented as follows: [13] The parties have been separated for almost five (5) years. Their divorce trial was set to begin in January 2020 but was delayed until April 2021. Knowing the condition of the marital home and despite an adjournment of more than a year, the wife did not request an appraisal to better assess her position regarding the marital home.

Similarly, the husband did not take any steps to obtain an appraisal of the marital home or to request its sale since the separation. [14] I am of the view that the wife had ample time and opportunity to request and obtain an appraisal of the marital home if she was

considering the possibility of retaining the marital home as part of the division of marital property. Both parties had ample time and opportunity to discuss a possible sale of the marital home and to negotiate the various aspects of a sale such as the selling price, the choice of a realtor, what reasonable offer would be acceptable, what repairs or improvements should be made before the sale, who will maintain the property until the sale and who will pay the property expenses until the sale, etc. Both parties failed to act on this possible solution for over four (4) years.

They want me to believe that they will be able to agree on everything that a property sale entails. The fact is they have not yet even started discussing and negotiating the various aspects of a sale more than four (4) years after their separation. For unknown reasons, the wife has decided to change her mind about a possible sale of the home at the last hour.

Having heard the parties at trial, I am convinced that the sale of the marital home will simply create more conflicts between the parties and will open the door to more proceedings. [15] It is time to put an end to their litigious saga by providing a solution that will not require ongoing negotiations regarding the marital home. The parties came to trial for a final determination of their issues. The marital home being mortgage-free, either party may retain this asset as part of the division of marital property. I am of the opinion that this is the only solution offering a simple and final outcome to this issue.

As the husband has had possession of the marital home for more than four (4) years, he shall keep the marital home and its value shall be taken into consideration in the division of marital property. [ 13 ] In the present matter, there is no charge or lien against the Lower Derby property. The wife is not willing to negotiate the terms of a possible sale with the husband. If the husband’s intentions of selling the Lower Derby property had been serious, the husband should have taken steps months ago and should not have surprised the wife at the final hearing with this new position.

The property is in the name of the husband and he shall retain that asset as part of the division of marital property. When the hearing resumed in May 2022, the property had been appraised at $95,000 and this is the value on which the parties agree for the purpose of division. [ 14 ] In all of his sworn Financial Statements (including the most recent one sworn on May 12, 2022 – Exhibit 50), the husband has always acknowledged that the wife has a 50% interest in the Lower Derby property.

In his testimony, the husband never mentioned that the Lower Derby property should be treated as a business asset and/or should be excluded from the division of marital property. The husband presented no evidence to support his position that the Lower Derby property is not marital property.

His Answer and Counter- Petition does not contain a claim to exclude the Lower Derby property from the division of marital property or that this property is a business asset. [ 15 ] When the appraiser hired by the wife, David Barnett, came to appraise the business equipment and machinery, the husband never identified the 2006 Dodge Ram vehicle and the two enclosed trailers as part of the business property. In fact, Mr. Barnett testified that he was specifically told that the two enclosed cargo trailers were not business assets and he did not include them in his report.

The husband provided no evidence that the 2006 Dodge Ram vehicle and the two enclosed trailers were registered in the name of the company. [ 16 ] While these assets may have been used by the company, this does not necessarily mean that they are business assets.

Section 1 of the Marital Property Act , SNB 2012, c. 107 (the “ Marital Property Act ”) defines “business assets” as being “property owned by one spouse and used principally in the course of a business carried on by that spouse” (underlines added). There is no evidence that the 2006 Dodge Ram vehicle and the two enclosed trailers are used principally in the course of the business.

Moreover, the mere fact that the husband has possession of these items is certainly not sufficient to characterize them as business assets. [ 17 ] Overall, the husband has failed to provide any factual or legal foundation for his position. Therefore, I conclude that the Lower Derby property, the 2006 Dodge Ram vehicle and the two enclosed trailers are marital property.

B) The Chevelle vehicle [ 18 ] Upon separation, the wife kept the 2013 Santa Fe vehicle. The husband kept all other vehicles. All of the vehicles were appraised. The parties are in agreement with the appraised values except for the 1970 Chevelle vehicle (the “Chevelle vehicle”). [ 19 ] The Chevelle vehicle was purchased in 2008 for the sum of $5,000. The husband explained that he won a cash prize in a charity lottery and he used some of the money to purchase the vehicle.

The wife points out that the winning ticket was purchased with marital funds. [ 20 ] At the time of purchase, the Chevelle vehicle was not driveable. The husband had to “build” it with the assistance of other people. He testified he did approximately 65% of the work. At times, the wife looked on the internet for parts or items at the husband’s

request. According to the wife, the sum of $40,000 was spent in acquiring parts and items to build this vehicle. The husband says it was more in the range of $15,000. The husband acknowledges that some expenses for the Chevelle vehicle were paid through the business. [ 21 ] The Chevelle vehicle was mostly used by the husband, but both parties liked to take a ride in this vehicle. Both children used the vehicle for their respective prom ceremony. The husband admitted the Chevelle vehicle was used by the family for leisure. [ 22 ] In his Answer and Counter-Petition, the husband claims that the Chevelle vehicle should be excluded from the division of marital property pursuant to

section 6 of the Marital Property Act . In his post-hearing brief, the husband claims he “poured years of blood, sweat and tears to restore a vehicle from the shell … to the beautiful, appraisal worthy vehicle which it is today.” In these circumstances and pursuant to

section 7(

f) of the Marital Property Act , he submits that it would be inequitable to make an equal division of this asset (para. 108 of the post-hearing brief) and an appraised value of $27,000 (appraisal made in April 2020 – Exhibit 57) should be used for the division. [ 23 ] Then, in paras. 123 and 124 of his post-hearing brief, the husband argues that the wife is only entitled to 50% of the cost of acquiring and improving the Chevelle vehicle, which cost he estimates to be $20,000 ($5,000 for the acquisition and $15,000 for improvement).

In other words, the wife’s share of the Chevelle vehicle would be worth $10,000 according to the husband. [ 24 ] The husband’s position is quite confusing. Most importantly, the husband did not plead

section 7(

f) of the Marital Property Act in his pleading and he never made a motion to amend his pleading.

Section 7(

f) of the Marital Property Act reads as follows: 6. 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 rendering it inequitable for the division of marital property to be in equal shares. [ 25 ] Even if I were to consider

section 7(

f) of the Marital Property Act , I do not agree with the husband’s position to exclude the Chevelle vehicle from the division of marital property for the following reasons: the parties were married for over 30 years; the Chevelle vehicle was purchased in 2008 (10 years prior to separation); marital funds were used to purchase parts and items to build the vehicle; the Chevelle vehicle was used by the family for leisure and special events; and even though the husband put a lot of efforts into building the vehicle, I consider it to be like a hobby for him. [ 26 ] As to

section 6 of the Marital Property Act , it appears that the husband has abandoned his claim under that section. In any event, the Chevelle vehicle was not acquired prior to the marriage and was not a gift, devise, or bequest of another person. [ 27 ] The Chevelle vehicle raises another issue as to which there is no agreement: its value for the purposes of a division. [ 28 ] The Chevelle vehicle was first appraised in July 2015 for insurance purposes. The appraisal report was prepared by Maurice Guimond (Exhibit 37).

The 2015 appraisal report indicates that the Chevelle vehicle is a Chevelle SS in excellent condition, that the vehicle has leather seats and that it had been driven for 4,041 miles. Mr. Guimond gave an appraised value of $73,200 plus taxes to the Chevelle vehicle in 2015. The wife testified that at the time of separation (three years later), the Chevelle vehicle was still in mint condition because the vehicle was always stored with a cover.

[ 29 ] The husband testified that the Chevelle vehicle was not a genuine Chevelle SS and the seats were not in leather. The husband implied that these two factors (if known to the appraiser) would have resulted in a lower value for the Chevelle vehicle. However, at the hearing, Mr. Guimond was called as a witness and was recognized as an expert in appraising antique cars and classic cars. Mr. Guimond testified that these two factors (the Chevelle vehicle not being a true SS and having vinyl seats) would not have changed the value he appraised in 2015. [ 30 ] In April 2020, Mr.

Guimond re-appraised the Chevelle vehicle and gave it a value of $27,000 plus taxes (Report dated April 13, 2020 - Exhibit 57). Mr. Guimond testified that the diminished value for the Chevelle vehicle was due to its general condition.

He added that if the Chevelle vehicle had been in the same mint condition in 2020 as it was in 2015, its appraised value might have been higher than the value given in 2015. [ 31 ] As noted above , the husband states in his post-hearing brief that the wife should be entitled to only 50% of the cost of acquiring and improving the Chevelle vehicle, which cost he estimates to be $20,000 ($5,000 for the acquisition and $15,000 for improvements). No documentary evidence was presented on the cost incurred to build the Chevelle vehicle and there is conflicting viva voce evidence on the amount spent.

Again, given the date of acquisition of this asset, the use of marital funds to acquire and build this asset, the family use of this asset, and the length of the marriage, I do not agree to limit the value of the Chevelle vehicle to the cost of acquisition and improvements as submitted by the husband. [ 32 ] Even if both of Mr. Guimond’s appraisals were not performed as of the date of separation, I find that the 2015 appraisal gives the Chevelle vehicle a value that is closest to what it would have been at the date of separation in light of Mr. Guimond’s testimony.

Therefore, the Chevelle vehicle has a value of $73,200 for purposes of division.

C) The $10,000 gift [ 33 ] Since the separation, the husband has had possession of the South Esk property. Without consulting the wife, the husband made some renovations and improvements to the property. While the husband submits that these renovations and improvements may have increased the value of the property, he admits that the structure is essentially the same as it was before separation. No evidence was presented as to how these renovations and improvements may have increased the value of the property.

The husband does not make any claim in regard to these renovations and improvements. [ 34 ] However, the husband claims that his mother gave him the sum of $10,000 to install a garage. Because it is a post-separation gift from a third party and the “garage gift has undoubtably increased the value of the property” (as claimed by the husband in his post- hearing brief), the husband asks to be credited the sum of $10,000 pursuant to

section 7(

e) of the Marital Property Act . [ 35 ] There are two problems with the husband’s claim. First, the husband never amended his pleading to plead this relief under

section 7(

e) of the Marital Property Act . Second and more importantly, there is no evidence to support a gift from his mother other than his own testimony. No documentary evidence such as a cheque or a deposit slip was provided. [ 36 ] Therefore, I do not accept to credit the husband with the sum of $10,000 for the reason he advanced.

D) Cash retained by the husband [ 37 ] Both parties testified that they had a safe containing cash at the time of separation and that the husband obtained possession of the safe after the separation. The amount of cash in the safe is in dispute. [ 38 ] The husband claims that there was $15,000 in cash in the safe, but he did not count it. He testified that he never counted the cash money, that the wife handled it, and that she would know how much there was. I will explain later in this decision how the parties came to have substantial amounts of cash in the home.

[ 39 ] The wife testified that the last time she had access to the safe prior to the separation was in the summer of 2018, and she went on to say that “there was easily $20,000 in the safe upon separation”. [ 40 ] Having heard both parties on this issue, I am satisfied that there was approximately $20,000 in cash when the husband took possession of the safe. The person who has the best knowledge of this is the wife and the husband does not dispute this.

E) The 2018 Income Tax Returns [ 41 ] When the husband filed his 2018 tax return, he received a refund of $5,160. The wife used the sum of $3,692 to pay the 2019 property taxes on the marital home and she gave $1,500 to the husband.

The husband acknowledged receiving the sum of $1,500 from the wife. [ 42 ] With respect to the wife’s 2018 tax return, she was required to pay an additional amount of $1,263.37 in income taxes to the Canada Revenue Agency. [ 43 ] Given that the parties separated at the end of October 2018, I find that only the following portions of the refund and payment are subject to division: Husband’s refund: 2 months/12 X $5,160 = $860 Wife’s payment: 2 months/12 X $1,263 = $210 [ 44 ] However, the wife used $3,692 to pay for the 2019 property taxes on the marital home.

Because the wife was living in the marital home, she was responsible for paying the 2019 property taxes. Therefore, I will order a reimbursement of $3,692 from the wife to the husband.

F) The Shareholder Account [ 45 ] The parties are shareholders in a company. The husband owns 90% of the shares and the wife owns 10%. Over the years, the parties have accumulated a due to shareholders (“shareholder account”) that has been used to provide tax-free income to the husband. [ 46 ] The wife produced a list of shareholder contributions (Exhibit 31) and a list of shareholder withdrawals (Exhibit 32). The last entry from the list of shareholder contributions is on October 8, 2018 and the balance is $236,481.79.

The wife is not aware of any contributions made to the company by any shareholder from October 8, 2018 through May 2019. With respect to the list of shareholder withdrawals (Exhibit 32), the sum of $156,877.91 represents the total amount withdrawn from the company as of October 20, 2018. By subtracting the amount of the withdrawals from the contributions, the wife arrived at the sum of $79,603 as the amount owed to the shareholders as of October 2018. She claims that the $79,603 is marital property and should be allocated to the husband in the division of marital property.

Even if the shareholder account is a business asset, the wife submits that she is still entitled to 50% of those funds. [ 47 ] The husband does not dispute that the amount of the shareholder account at the time of separation was $79,603. He argues, however, that it is not marital property because the shareholder contributions are derived from “unreported business revenues”. The husband’s counsel calls the whole thing a “well conceived tax scam” for which the wife is responsible.

The husband submits that these “unreported business revenues” were used to purchase equipment and machinery, and by transferring these assets to the company, it generated the shareholder contributions. The husband further asserts that he did not know or even understand what was going on. [ 48 ] The wife testified that not only the unreported cash revenues were used to purchase equipment and machinery for the company, but the parties also took out personal loans or used RRSP funds to do so. Thus, the origin of the shareholder account is a mix of various sources of funds.

Also, the unreported revenues were not solely for the benefit of the company; the parties paid family and personal expenses and set aside some cash for themselves with these unreported revenues. In other words, I find that although the husband refers to them as “unreported business revenues”, they were actually “unreported cash income ” earned by the husband. [ 49 ] Based on the evidence I heard, I am satisfied that the husband knew the difference between receiving tax-free income and taxable income, and how to use the shareholder account.

As the wife testified, the husband insisted on paying as little income taxes as possible.

The wife explained that the shareholder account was therefore used to provide the husband with tax-free income. In addition, after the separation, the husband used the shareholder account to pay off the marital loan related to the Santa Fe vehicle. Further, there is no evidence that the husband disavowed the “well conceived tax scam” from which he (as well as the family) benefited and continued to benefit after the separation. [ 50 ] In Brown v. Brown , [1990] NBJ No. 842 (N.B.Q.B.) , a shareholder’s loan of $25,868 had accrued to the benefit of Mr.

Brown (the sole shareholder of a company) at the time of separation because he had lent money or had paid the company’s expenses. Justice Larlee found that the shareholder’s loan was marital property for the following reasons: 19. From the categorization " shareholder's loan ", one might assume that it is a business asset. However where the parties have chosen to invest their money is not determinative of the nature of the money. One has to determine the origin of the money that was invested in a company by a shareholder.

The answer to that question determines how it should be categorized and if it is marital property subject to division. 20. In the absence of specific evidence as to the origin of the money, I conclude that it was money that would have been at the family's disposal. The debt owed by the company to Mr. Brown, which the company is able to pay, is an asset that is marital property subject to division. [ 51 ] In this matter, I am satisfied that the source of the money for the shareholder account is money that would have been available to the family.

As a result, the shareholder account is marital property subject to division. I will allocate this asset to the husband because he has continued to manage and control the company after the separation.

CONCLUSION ON DIVISION OF MARITAL PROPERTY [ 52 ] In their respective post-hearing briefs, each party provided a table for the division of taxable marital property and another table for the division of non-taxable marital property. [ 53 ] With regard the taxable marital property, the parties agree on the list of taxable assets, their values, an equal division, and the amount of the equalization payment owed to the husband.

I therefore order the wife to transfer, either through a division of her pension or a rollover of RRSPs, the sum of $61,217 to the husband within 90 days of the date of this decision , which sum is based on the following table: TAXABLE ASSETS WIFE HUSBAND NB Public Service Pension $70,424.29 RRSPs #567 $44,144.08 RRSPs #601 $10,551.97 RRSPs $2,686.00 TOTAL $125,120.34 $2,686.00 50% $63,903 $63,903 Equalization payment -$61,217 +$61,217 [ 54 ] With regard to non-taxable marital property, I have reached the necessary conclusions regarding the parties’ respective claims.

Based on my conclusions and the parties’ respective positions and tables as contained in their post-hearing briefs, the wife is entitled to an equalization payment from the husband in the amount of $69,351, which equalization payment is based on the following table: WIFE HUSBAND ASSETS Marital home $365,500 South Esk property $220,500 Lower Derby property $95,000 2013 Hyundai Santa Fe $11,500 2013 Ram 1500 $24,600 2006 Dodge Ram $5,500 2014 Allen Cargo Trailer (14’) $3,000 2013 Forus Cargo Trailer $3,000 12’ Aluminium Boat + Motor $3,000 2009 Arctic Cat Snowmobile $3,600 2001 Honda ATV $1,000 2009 Harley Davidson $10,000 Bank account $54,867 1970 Chevelle $73,200 2018 Tax Refund $860

Cash in the safe $20,000 Due to shareholder $79,603 SUB-TOTAL(ASSETS) $377,000 $597,730 WIFE HUSBAND DEBTS TD Home Equity $36,563 Mortgage South Esk $95,108.34 Loan – Hyundai Sante Fe $15,429.53 Loan – 2013 Ram 1500 $14,292 Visa Credit Card $2,872 Line of credit interest $7,142.50 2018 Tax Payment $210 Appraisal costs $2,117.50 $1,092.50 Appraisal costs $632.50 SUB-TOTAL(DEBTS) $49,537.50 $125,922.37 TOTAL $327,463 $471,808 50% $399,635.50 $399,635.50 Equalization payment +$72,173 -$72,173 [ 55 ] However, the wife must reimburse the sum of $3,692 to the husband for the 2019 property taxes on the marital home.

Consequently, the final equalization payment owed to the wife is $68,481. The husband shall pay the amount of $68,481 to the wife within 90 days of the date of this decision. As part of the Order, I will include that each party shall retain any and all personal property currently in their possession. SECOND ISSUE: THE COMPANY [ 56 ] The parties own shares in a company (507535 N.B. Ltd.) doing business as Donovan’s Mobile Wash; the husband owns 90% of the shares and the wife owns 10% of the shares. [ 57 ] The wife claims a 50% interest in the company pursuant to

section 8 of the Marital Property Act . The husband’s position is that he does 90% of the work for the company and a 10% interest for the wife reflects her contribution to the company. [ 58 ] Both parties agree that the company is a business asset. I n order for the wife to have an interest in the company in excess of 10%, she must show that the circumstances fall within one of the triggering provisions of

section 8 of the Marital Property Act . Those requirements are: 8. In determining any application for a division of marital property, the Court may make a division of any property of either spouse that is not marital property if (

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

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

i) the considerations set out in paragraphs 7(

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

section 2 on the ability of the other spouse to acquire, manage, maintain, operate or improve property that is not marital property.

[59] The wife specifically relies on

section 8(b). Therefore,

section 2 and 7 are relevant and read as follows: 2.

Child care, household management and financial provision are joint responsibilities of spouses and are recognized to be of equalimportance in assessing the contributions of the respective spouses to the acquisition, management, maintenance, operation orimprovement of marital property; and subject to the equitable considerations recognized elsewhere in this Act the contribution of eachspouse to the fulfillment of these responsibilities entitles each spouse to an equal share of the marital property and imposes on eachspouse, in relation to the other, the burden of an equal share of the marital debts. 7.

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

a) any agreement other than a domestic contract, (

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. [60] Both parties submitted numerous cases in support of their respective positions: Fraser v. Fraser, (NB CA),[1983] NBJ No. 14 (NBCA), Gillespie v. Gillespie, [2018] NBCA 22, Steeves v. Steeves, [2016] NBJ No 136 (NBQB), McLellan v.McLellan, [1999] NBJ No. 348 (NBQB), Walls v. Walls, [1998] NBJ No. 246 (NBQB), Fox v. Fox, (NB CA),[1994] NBJ No. 415 (NBCA), Khoury v.

Khoury, (NB KB), [1994] NBJ No 188 (NBQB), Simms v. Simms, (NB CA), [1996] NBJ No. 570 (NBCA). When appropriate, I shall refer to the cases I find the most relevant in thismatter. [61] I will first provide some background about the company and review the relevant facts regarding the wife’s claim. [62] In 1992, the husband had a seasonal construction job. He convinced the wife to start a small business. As the wife explained,they both knew that she would accumulate pension benefits through her employment, but for the husband, it was unlikely that he wouldobtain employment with pension benefits.

Therefore, the business was an opportunity for the husband to build some sort of pension inanticipation of the parties’ retirement. [63] From 1992 to 1998, the business known as Donovan’s Mobile Wash was a sole proprietorship in the husband’s name. At thebeginning, the husband had only one wash truck. He parked on the side of a highway and offered his services to wash trucks. Then, thehusband was hired by the Department of Transportation to repair frozen water pipes. The business gradually grew. [64] In 1998, a numbered company (507535 NB Ltd.) (the “company”) was incorporated to continue the business.

The husbandreceived 90% of the shares and the wife received 10%. Neither party knows why the shares in the company were divided in this way. According to both parties, the lawyer who handled the incorporation decided the shareholding without any input from them. [65] Around 2000, the husband quit his part-time construction job and decided to focus all his efforts on the company. Over theyears, the husband purchased all sorts of equipment and began doing excavation, grading and scraping, painting lines, washing trucks,cleaning of parking lots and properties, and repairing frozen water pipes or clogged sewer lines.

About ten (10) years ago, he alsostarted doing snow removal. With all of his different lines of work, the husband was busy year-round. [66] Prior to the incorporation, the husband was the only full-time employee. However, there was always at least one part-timeemployee working for the business and depending on the weather, the part-time employee might have worked 3 to 6 days a week. After

the incorporation, there were always part-time and seasonal employees from May through September/October. At times, additional employees were hired for a specific contract. [ 67 ] Prior to the incorporation, the wife did all the bookkeeping and administrative work for the business without being paid for her services. She testified that during these years (1992 to 1998), her duties were more demanding because the business was “paper based”, and she worked approximately 15 hours per week.

Because she had a full-time job at RePap during the day, she performed her duties for the business in the evenings or on weekends. [ 68 ] After the incorporation in 1998, the wife computerized the company’s bookkeeping system and continued to do the bookkeeping without compensation.

The wife explained that the bookkeeping included preparing invoices, paying the vendors, reviewing contracts, reviewing insurance coverage and reviewing insurance contracts, credit card payments, reconciling in and out at the end of the month, posting expenses, filing HST reports, processing payroll and cheques, collecting payments, and providing documents to the accountants for them to prepare the financial statements and the corporate tax return. The wife also handled the banking and deposits. She set up the security system in the shop. She would accompany the husband to pick up equipment or to collect money.

Despite the separation, the wife continued her duties for the company until May 2019. [ 69 ] The wife indicated that for a period of about five years, other people were hired to do all or part of the bookkeeping while she was busy with the children. However, she was still involved in the company, supervising the work of these bookkeepers and occasionally assisting them with their tasks. [ 70 ] In addition to her administrative duties, the wife also performed physical labor for the company. She mowed lawns for customers and cleaned parking lots in the spring and fall. She also painted commercial spaces.

The only financial compensation the wife received from the company was $5,000 in 2015 and some payment for the painting she did. [ 71 ] The husband admitted that it took “a fair amount of time” to set up the company’s books. However, he called his current bookkeeper, Judy Tracy, to testify about the time she currently spends doing the company’s books. Ms. Tracy has been doing bookkeeping for over 30 years and she currently has 12 or 13 clients. She started doing bookkeeping for the company in the spring or June of 2019, and she has worked for the company consistently since then.

However, the husband admitted that sometime around September 2020, no one was doing the books and he wanted the wife to come back to do the books. The husband testified that the wife was a “great bookkeeper” and that he trusted her with the money. Ms. Tracy did not appear to be aware that there was a period of time when she did not do the books. [ 72 ] Ms. Tracy testified that the husband calls her once a month to do the bills and the receipts and disbursements. Ms.

Tracy’s duties include invoicing, filing HST reports, processing payroll, reviewing contracts, and preparing the necessary information to submit to the accountant for the year-end closing. Ms. Tracy estimates that she spends 6 to 8 hours per month performing these duties for the company. [ 73 ] During his testimony, the husband minimized the physical work the wife did for the company. He said that the wife only mowed the lawn one summer and it was only for a period of three months. He estimated that she might have worked 8 hours per week for the company during that 3-month period.

He also stated that the wife only painted one room in a commercial space for which she was paid. [ 74 ] The husband is a hard-working person. During the marriage, he worked very long hours for the company and his work was physically demanding. Because of the quality of his work and his work ethics, the husband built up a good reputation in the area. There is no question that the husband is the person with the technical skills and knowledge to perform the various services that the company offers to clients.

The husband alleges that the customers did not come to him because of the bookkeeping and administrative tasks done by the wife. Consequently, he submits that the wife’s overall contribution to the company was minimal when comparing with what he has brought to and has done for the company. [ 75 ] During his testimony, the husband however recognized that he did not take any important decisions regarding the company without first talking with his wife and getting her approval. If the wife did not approve, the husband was not doing it. He commented that he valued the wife’s opinion.

At some point in his testimony while talking about line painting, the husband expressed that his wife “helped me of course”. Listening to the husband at the hearing, I became convinced that he and his wife were a real team regarding the

operations of the company with each of them having different responsibilities, relying on each other, and playing an important and equal role in the success of this enterprise. It was also evident that the wife’s opinion carried significant weight in any important decisions regarding the company. [ 76 ] The overall impression of teamwork is also confirmed by the parties’ intentions to invest in another business approximately ten years before the separation. Both testified that they had a plan to sell the company and invest the money in Subway franchises.

The wife would have done all the administrative work and the husband would have done the maintenance. The parties had received a verbal offer from someone willing to buy their company for approximately $200,000 and they had made financing arrangements with the bank to invest in Subway franchises. The parties intended to invest the entire purchase price they would receive for the company in these franchises and to become equal partners in this new business.

Unfortunately, the deal did not go through. [ 77 ] It is evident from the parties’ testimony that they always viewed their company as a joint asset and were willing to invest the entire value of the company in another joint venture in which they would have been equal partners and shareholders. I do not know when the parties learned of the 90/10 split in the company (it could have been during the course of these proceedings!), but the evidence is overwhelming that it was not what the parties wanted or intended for the company.

The husband now attempts to justify this unequal shareholding by claiming that he worked harder and longer hours and that he was the face of the company, but I find that the success of the company was due to the combined efforts of him and his wife. [ 78 ] This brings me to the responsibilities set out in

section 2 of the Marital Property Act (c hild care, household management and financial provision) and the effect of the wife assuming these responsibilities on the husband’s ability to manage, maintain, operate or improve the company. [ 79 ] Throughout the marriage, the wife worked full time. When their first child, M., was born in 1992, the wife worked for RePap Pulp and Paper in a clerical position. The second child, K., was born in 1997 and the wife continued to work for the same employer. The wife took 6 months of maternity leave for each child.

After her second maternity leave, the wife left RePap and became an executive assistant to the CEO of a manufacturing company. She remained in this position for about ten years. When the manufacturing company closed, the wife decided to pursue a degree in nursing. However, she heard about an opportunity at the Miramichi Regional Hospital, applied and got the job. She still works there. [ 80 ] In addition to her full-time employment, in 2012, the wife took a part-time bookkeeping job at a travel agency. She maintained this part-time employment until 2018, when the husband asked her to leave the job.

She did so. [ 81 ] From late 2012 to 2014, the parties experienced a difficult period in their relationship. Their daughter K. faced serious challenges at school, and later on at a personal and physical level due to unfortunate events in her life. At times, the husband was supportive of the wife’s efforts and assistance to their daughter, but not always. [ 82 ] During the marriage, the wife took care of all the household chores such as cleaning, laundry, cooking, and she took care of the pool and the grounds around the marital home. She was responsible for the children’s homework and school projects.

She attended medical appointments with the children and parent-teacher meetings. The wife testified that the husband was the breadwinner in the home. However, she admitted that when M. was born, the husband’s work was seasonal and during the winter months (approximately 3 or 4 months), he took care of M. while she was at work. When K. was born, the husband worked 6 or 7 days a week for the company, and therefore was not involved in her care. The wife stated that the husband still drove K. to school every day and took M. to Tae-Kwon- Do.

For the wife, the husband was a workaholic and she let him do his work. [ 83 ] The husband agrees that the wife was the primary caregiver for the children and that she took care of all the household responsibilities. However, he mentioned that help was hired to clean the house when the children were young. Overall, however, the husband agrees with the wife’s account of his involvement with the children and the unfortunate events that marked K.’s life. His current relationship with the children seems strained. [ 84 ] In Gillespie v.

Gillespie , 2018 NBCA 22 , the New Brunswick Court of Appeal referred to the discretion that a judge has when making a division of non-marital property to address an inequity pursuant to

section 8 of the Marital Property Act , and highlighted the variation in the outcomes in cases and the particular facts of each individual case. The Court of Appeal also noted the importance of reviewing the factors enumerated in

section 7 of the Marital Property Act .

[ 85 ] In reviewing the factors enumerated in

section 7, I make the following conclusions: 1. The parties did not have a domestic agreement. 2. The parties lived together for over 35 years (1983 to 2018) and were married for 30 years during that time. 3. The business started in 1992 and the company was incorporated in 1998. For the next 20 years, the parties ran the business together. 4. There is no inheritance or gift in relation to the company. 5. The business began as a sole proprietorship in the husband’s name. The wife kept the books and did all the accounting for the business. When the company was incorporated, both parties became shareholders.

The parties intended the company to be part of their retirement plan. Over the years, the husband expanded the services offered by the company. He was the face of the business and he built up a very good reputation. However, no major decision was made without the wife’s approval and the husband valued the wife’s opinion. The wife performed all the administrative and bookkeeping duties without remuneration.

The wife’s involvement in the company was so valuable that the husband asked her to continue doing her duties after the separation until May 2019 and again in 2020. [ 86 ] Regarding the responsibilities of child care, household management and financial provision, I am convinced that the mother did the lion’s share of child care and household management during the marriage. She was the primary caregiver for the children and she took care of the household as described earlier.

By assuming this daily role and responsibility, the wife allowed the husband to be free to work, build his reputation, and focus on expanding and diversifying the business. The wife also contributed financially to the household with her income from a full-time job.

I am satisfied that without the wife’s assumption of all responsibility for child care and household management, the husband would not have been as successful and as respected in relation to the company as he became. [ 87 ] In these circumstances, I conclude that the result of the division of marital property would be inequitable to the wife without doing a division of the non-marital property, in this case the company. Therefore, pursuant to

section 8 of the Marital Property Act , the wife is entitled to an interest in the company. [ 88 ] The husband argues that the wife’s 10% share in the company is sufficient compensation for any possible inequity and that the Court should respect the share in the company assigned to the wife. The husband cites cases where a court refused to interfere with the division of issued shares in a corporation and awarded to a spouse the only interest she already had in her shares: see Walls v. Walls [1998] N.B.J. No. 246 and McLellan v. McLellan , [1999] N.B.J.

No. 348 . [ 89 ] In Walls, the parties had been married for 22 years. The wife owned 25% of the outstanding shares of a printing company while the husband owned 75%. The printing company had been in operation for only about a year when the parties separated. The wife had worked for the printing company and had been compensated for her services at fair market value. Justice Riordon concluded that the husband was the “dominant force in the business”.

He recognized that the wife had assumed the primary responsibility for child care and household management, but concluded that “the agreement for the division of issued shares of this business at the time that it was set up and organized should be respected.” In other words, there was no inequity in the circumstances of this case to justify a different division of this non-marital property.

It should be noted that the wife was compensated at fair market value for her services, the printing business had only been in operation for one year, and the parties had agreed that the wife would have 25% interest in the company. Walls is therefore distinguishable from the present case. [ 90 ] In McLellan , the parties had been married for 11 years and had two children. They formed an insurance company in which they initially held 51 shares and a guarantor had 49 shares. However, no share certificates were issued at that time.

When they realized this problem two years later, the parties arranged to have share certificates issued. Since they no longer needed the guarantor, the parties agreed that the husband would have 51 shares and the wife would have 49 shares. Justice Clendening found that the wife handled all office business while the husband sold the insurance policies. She noted that the husband hired two employees after the wife left because of the workload.

In addition to the wife’s equal participation in the day-to-day operations of the business, the Court found that the wife was responsible for all household management and child care. While Justice Clendening concluded that “the intention set out in the company books and shareholders register should not be disturbed”, she stated that the facts in this case supported such an intent.

In other words, the fact that the wife participated equally in the day-to-day operations of the business and was responsible for all household management and child care justified her having a virtually equal interest in the business, and therefore there was no reason to diminish or

reduce her interest. [91] McLellan bears similarities to the present matter. In both cases, the wife was involved in the day-to-day operations of thebusiness while the husband provided the services of the business. In both cases, the wife was responsible for all household managementand child care.

In McLellan, the wife’s involvement at home and in the business supported her equal interest in the business.Consequently, if the wife was entitled to an equal interest in the business in McLellan, I fail to see why it would not be the same for thewife in this matter. [92] I understand that in McLellan, the parties had agreed to a virtually equal interest at the time the shares were issued. In the presentmatter, the wife received a 10% interest in the company. However, neither party knows or understands why the shareholder register wasset up as it was. There was no agreement regarding this division of shares.

The only thing the parties knew and agreed was that theywere both shareholders in the company. [93] In the present matter, the following additional facts support the intention that the parties should have an equal interest in thecompany: 1. As the wife was to accumulate pension benefits through employment, the husband was to build up some equity in the company to beused for the parties’ retirement; and 2.

If the parties had obtained Subway franchises, the proceeds from the sale of the company would have been fully invested in this newventure and the parties would have been equal shareholders with a division of duties similar to that which they had in the company. [94] I have reviewed the other cases cited by counsel. However, I note that in Khoury, Simms and Fox, the wives stayed at home andtook care of their children and household. The wives were not involved in their husbands’ businesses.

Therefore, I do not find thesecases as relevant as McLellan. [95] In these circumstances, I therefore conclude that the wife is entitled to 50% interest in the company. [96] I will now determine the value of the company to determine the amount to which the wife is entitled. [97] In H.(P.). v. H.(P.), 2008 NBCA 17, Justice Bell enunciated a general rule regarding the valuation date for business assets: 7. In Miller v. Miller (N.B. C.A.) the Court considered the valuation of stock options following dissolution of the marriage andconcluded the date of separation is typically used for valuation purposes.

See also Fraser v. Fraser (1983), (NB CA),47 N.B.R. (2d) 364, [1983] N.B.J. No. 14 (N.B. C.A.) in which the Court dealt with the valuation date for both marital and non-maritalproperty. The appellant requests this Court follow Miller and the decisions in MacElwain v. MacElwain (2006), 294 N.B.R. (2d) 111,[2006] N.B.J. No. 13, 2006 NBQB 19 (N.B. Q.B.); and Khoury v. Khoury (1994), (NB KB), 149 N.B.R. (2d) 1,[1994] N.B.J. No. 188 (N.B. Q.B.), where the trial judges accepted the date of separation as the most appropriate valuation date for non-marital assets. 8.

In my view, the general rule is that non-marital assets are to be valued as at the date of separation. This prevents the intentionalwasting of assets and permits the spouse in control of those assets to reap the benefits of his or her business acumen post separation. [Emphasis added.] [98] In this matter, the date of separation is October 26, 2018. Neither party has suggested that a different date be used to value thecompany. [99] The wife is categorical that the business was profitable at the time of separation. She testified that “on paper”, it did not look

profitable, but with the cash coming in, the company was actually profitable. The wife explained that they kept revenues low and expenses high in order to reduce the corporate taxes. Similarly, they kept the husband’s income low for tax purposes. The wife added that there was always “a lot of cash” that was not passed through the company. The company was never audited by the Canada Revenue Agency. The husband admitted that the company reported losses in some years because it did not report of the cash income he earned. [ 100 ] At the time of separation, the company had no long term debt.

There were two leases for which the company was responsible. One lease was for a 2018 Bobcat and the balance at separation was $59,731.00. The other lease was for a McCormick tractor and the outstanding balance at separation was $24,939.43. [ 101 ] According to the wife, the company had $43,047.11 in receivables as of October 26, 2018 (Exhibit 35). In her experience, all of the receivables had been collected. She stated that the customers were repeat customers and there was no reason why they would not pay their fees.

The wife also provided a statement of accounts receivable as of October 31, 2018 which showed a total of $37,722.61. She testified that the difference was due to payments made by clients over a five-day period. As of October 26, 2018, there were funds of $36,534.02 in the company’s bank account (Exhibit 36). [ 102 ] The husband called his current bookkeeper to testify about the company’s financial condition. Ms. Tracy however was not involved with the company at the time of separation. She therefore testified about the company’s income and expenses after the separation.

She commented there was less income and more repairs and expenses to pay. The company was therefore in a deficit position. She had no knowledge of any cash income and she relied on the husband to provide all the information she needed for the bookkeeping. As to the shareholder account, she left it to the husband and the accountant “to talk it out”. [ 103 ] The husband testified that the company was doing “alright” at the time of separation. In 2020, the Covid-19 pandemic reduced the company’s activities. However, he agrees that there is still money to be made, but not as much as before.

He testified that he has a back problem and can no longer work 70 hours a week. [ 104 ] In the wife’s opinion, the husband can grow the business as he wants. The husband always did the jobs he needed to do for the company, but he liked to do the “cash business”. She supported him in that regard. [ 105 ] The wife hired David Barnett to do an appraisal of the equipment owned by the company. Mr. Barnett is a consultant for small businesses and for acquisition and sale of businesses. He is also a certified machinery/equipment appraiser since 2008.

He testified that he may be called to do 12 to 25 of this type of appraisals per year. I accepted Mr. Barnett’s expertise in the field of appraising machinery and equipment used in a business to generate an income. [ 106 ] Mr. Barnett was retained by the wife in the spring of 2021 to appraise some equipment at a valuation date of October 26, 2018 (the date of separation). He was provided a list of equipment he should find on site and appraise. He testified that he found all the pieces on site. [ 107 ] Mr.

Barnett recorded all pieces of equipment and took note of various information about them such as serial numbers, mileage, number of hours of use, capacity, etc. He also took several pictures of each piece of equipment. After doing an appropriate analysis, Mr. Barnett produced a Restricted Appraisal Report of Machinery and Equipment in Continued Use with an effective date of appraisal being October 2018. [ 108 ] Mr. Barnett divided the equipment into two categories, Capital Equipment and Support Equipment.

He explained that he chose to put the items with a value over $1,500 or a large item in the Capital Equipment. For some Capital Equipment, he used a market value approach, and for other items in that category, he used a cost less depreciation approach. For the smaller (in size and value) items, he used a bulk approach. [ 109 ] For the market value approach, Mr. Barnett looked at prices at which similar equipment had been sold or was for sale. Where there was insufficient market data, Mr. Barnett used the cost less depreciation approach to arrive at a value for the Capital Equipment.

He explained that the cost less depreciation approach requires him to look at the cost of similar new equipment and then, consider the effective age of the equipment and apply the appropriate depreciation table. Regarding the bulk approach, he said that the end result is usually a percentage of the total value of the Capital Equipment. In the present case, he was satisfied that the ratio he arrived at with the values of the Support Equipment and the Capital Equipment was within the norm.

[ 110 ] On page 23 of his report (Exhibit 3), Mr. Barnett concluded that the Capital Equipment had a total value of $208,000 as of October 26, 2018. At page 24 of his report, he gave the Support Equipment a total value of $17,000 as of October 26, 2018. Therefore, it is Mr. Barnett’s opinion that the total fair market value in continued use of the equipment owned by the company as of October 26, 2018 is $225,000. Mr. Barnett mentioned that the “fair market value in continued use” represents what the equipment is worth to the company and not necessarily what the equipment would sell for.

He also noted that the fair market value in continued use assumes a profitable ongoing business. In this matter, he could not determine whether the company was profitable because he was not provided with any financial statements from the company. [ 111 ] The husband’s position is that all of the equipment is very old and that the values assigned by Mr. Barnett are too high. While the husband testified as to the condition of the equipment and what he paid for it, he is not a recognized expert who can provide an opinion on the value of the equipment as of the date of separation. Mr.

Barnett may not have thoroughly inspected each and every piece of equipment or turned the engine on at times, but there is no evidence presented by the husband as to how this would have affected the values provided by this expert. Even when a piece of equipment was not working, the husband testified that he preferred to keep it in case he could use some parts. He described himself as a hoarder. Consequently, I am satisfied that the best and only evidence of the value of the company is the appraisal report prepared by Mr. Barnett. [ 112 ] The wife testified that there was some equipment that was missing from Mr.

Barnett’s report. Using a list prepared by the accountants entitled “Capital Asset Leadsheet” (Exhibit 28), the wife identified the following items that were still in existence at the time of separation, but were not included in Mr. Barnett’s report: − Used Dust Pan – Bobcat − Honda Motor − Utility trailer − Lorex 8 Camera [ 113 ] The husband admitted that there were two pressure washers that were not included in the list of equipment valued by Mr. Barnett.

In any event, there was no expert opinion as to the value of these items and I will therefore disregard these items. [ 114 ] The wife also called Alexandre Vigneault to provide an opinion on the valuation process and the tax consequences resulting from a division of the company. Mr. Vigneault is a tax specialist who provides tax planning services and opinions on the valuation process and the division of business assets in the most efficient manner. He has already been recognized by the Court of King’s Bench of New Brunswick as an expert in this field. [ 115 ] Mr.

Vigneault was provided with the appraisal report prepared by David Barnett. He confirmed that the determination of the value of the equipment in continued use was reasonable under the circumstances. However, Mr. Vigneault testified that the total fair market value determined by Mr. Barnett ($225,000) needed to be adjusted to reflect the value of the company at a particular point in time. As part of the necessary adjustments, Mr.

Vigneault indicated that the shareholder account and accounts payable should be deducted from the fair market value. [ 116 ] The wife provided a corporate balance sheet as of October 31, 2018 (Exhibit 29). The wife stated that the company had no long term debt as of October 31, 2018, and that the only liabilities were the accounts payable ($20,983.07), the GST/HST payable ($6,283.26), and the payroll liabilities ($1,253.84). [ 117 ] The accounts payable included two credits cards (Mastercard and TD Visa), the petty cash ($5,253.28 + $4,830.00) and their son’s business, Matthew Donovan Trucking ($4,958.81).

However, the wife stated that the petty cash was actually a payable to a shareholder. As a result, the “true” accounts payable totaled $10,899.79. The husband did not dispute the wife’s evidence regarding the accounts payable. [ 118 ] Using the methodology proposed by Mr. Vigneault and based on the evidence, the value of the company subject to division is $134,497.21 ($225,000 minus $79,603 (due to shareholder) minus $10,899.79 (accounts payable)). Therefore, the wife is entitled to 50%

of $134,497 or $67,248.61. I will round up the number to $67,249. [ 119 ] Mr. Vigneault testified as to possible options for selling the wife’s shares and compensating her in the event that she was entitled to a 50% interest in the company, taking into account the tax consequences for both parties. [ 120 ]

Section 9 of the Marital Property Act mandates a Court to take into consideration tax consequences when dividing marital property. However, it does not go so far as to require one of the options proposed by Mr. Vigneault. The type of options suggested by Mr. Vigneault require a concerted tax planning effort by both parties, which should be guided by professionals. If the parties had negotiated a settlement of their issues, they could have made arrangements to minimize their respective tax consequences as much as possible.

They could have decided that even if one option was more advantageous to one party, they would share the tax burden that the other party might have to bear. Negotiation and compromise by both parties on the issue of the division of the company could have led to a creative result that would have benefited both parties. However, under the circumstances, I cannot decide which tax scenario is feasible or better for the parties.

Each scenario requires advice from accountants, tax specialists and lawyers for each party. [ 121 ] I will order that the husband pay the wife the sum of $67,249 in consideration of her 50% interest in the company (507535 NB Ltd.) within 90 days of the date of this decision and upon receipt of this payment, the wife shall sign over her shares in the company to the husband or the company as directed by the husband. THIRD ISSUE: SPOUSAL SUPPORT 1) Income determination [ 122 ] Before deciding whether the wife is entitled to spousal support, I must address the issue of income determination.

In the present matter, the wife asks this Court to attribute a substantial amount of net income ($100,000) to the husband because of the undeclared cash income he has been earning for years. Similarly, the husband seeks an attribution of income to the wife based on the monthly rent ($800) paid by the wife’s mother who lives in the marital home. [ 123 ] Courts have applied the provisions of the Federal Child Support Guidelines to determine income for spousal support purposes.

The following provisions are relevant to the determination of income: 16 Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. 17(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. 19(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: […] (

d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; […] (

f) the spouse has failed to provide income information when under a legal obligation to do so; (g)the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax;

[ 124 ] I will now review the evidence on the parties’ incomes and determine their incomes for spousal support purposes.

a) Husband’s income [ 125 ] From 2016 through 2018, the husband reported the following income on his tax returns: 2016 Total income $37,496 (no breakdown provided) 2017 Employment income $18,720 RRSP $24,568 TOTAL $43,288 2018 Employment income $19,440 RRSP $21,371.93 TOTAL $40,811.93 [ 126 ] In order to avoid increasing the husband’s income taxes, the parties decided that the husband would receive additional money from the shareholder account (tax-free income) instead of paying himself a higher salary.

The husband received net income from the shareholder account during these years as follows: 2016 Shareholder account $17,160 2017 Shareholder account $20,700 2018 Shareholder account $9,500 (Exhibit 1, pp. 56-58) [ 127 ] After the separation in October 2018, the wife continued to do the company’s bookkeeping with the husband’s consent. As she was accustomed to preparing the husband’s income tax returns, she even offered to prepare his income tax return for the year 2018, which he agreed to do.

I am satisfied that the wife had all the necessary information about the husband’s income prior to the separation and until May 2019 as she continued to do the company’s bookkeeping. In any event, the husband admits that he took money from the shareholder account in addition to his income. [ 128 ] The wife testified that, in addition to his salary and money from the shareholder account, the husband “always had cash clients”. She explained that the husband was being paid in cash for various services including snow removal and lawn mowing.

I was impressed by the wife’s detailed knowledge of the cash income the husband had earned over the years and by the evidence she provided to support her allegations. [ 129 ] First, the wife testified that customers would come to the marital home to pay for the husband’s services. They would give her cash money or leave it in the mailbox. Some clients would put their payment in an envelope, and the wife took pictures of several envelopes she received after the separation (see Exhibit 1, pp. 62-104).

According to the wife, cash payments were made every year for the ten years prior to the separation. [ 130 ] Second, the wife prepared a list of customers for whom the husband performed snow removal (Exhibit 1, page 59). While the wife prepared this document after the separation, she sometimes accompanied the husband as he plowed for these clients. She was also present when cash was picked up from these customers or when these customers brought cash at their home. As she said, she knew full well that the people on the list were customers and were paying cash for the husband’s services.

The wife also produced another list of clients for whom the husband also did snow removal (Exhibit 1, page 60). She testified that the husband used this document to remember what locations he needed to plow. [ 131 ] Third, the wife testified that she went with her husband to collect cash money from customers. If a customer did not pay immediately, the customer would be given a receipt showing the amount owed. The wife produced five (5) receipt books (Exhibit 24). Either the wife or the husband wrote the slips contained in these receipt books.

The original slip was given to the customer and a copy was left in the receipt book. The wife testified that she checked each slip to confirm whether or not an invoice had been posted to the business books. The wife mentioned that if HST was not charged on a slip, it was a good indicator that the invoice did not go through the company. After the separation, the wife prepared a

summary of the slips contained in these receipt books to indicate which invoices were not billed through the company (Exhibit 23). According to this document, there were slips totaling $28,033 that were not billed through the company. In other words, this amount is part of the cash money received by the husband during the years 2015 through 2018. The wife also testified that the five receipt books she produced were at the marital home but that there were other receipt books at

the office and in the husband’s truck. She also testified that the receipts accounted for only 30% of the cash income because the receipts were made for those customers who had not yet paid for the service; in other words, the receipts were a friendly reminder to pay. [ 132 ] The wife mentioned that they did not really keep track of the cash. She usually put the money and the envelopes (full of money) in bags that were kept in drawers. Then, every 2 or 3 weeks (always on a Sunday), she and the husband put all the money on their bed, organize the money into bundles and put the cash in their safe.

The last time the wife had access to the safe was in the summer of 2018. Upon separation, the wife gave the safe to the husband. She testified “there was easily $20,000 in the safe upon separation”. [ 133 ] The wife estimated that there was a minimum of $100,000 in cash income each year that was received for the husband’s services. She asserted that snow removal brought in about $50,000 in cash and said that the husband was paid about $2,500 per storm and that there was an average of 20 storms per season. During the summer, there were more lucrative jobs that brought in at least an additional $50,000 in cash.

According to the wife, “there was no shortage of cash in our house” and major expenses were covered by cash income. She testified that all heating expenses for the marital home were paid through the company, as were all repairs. [ 134 ] The wife also specified that while the husband received cash payment for some services, the expenses incurred to perform those services (such as the fuel) went through the company. As she explained, the goal was to have as many expenses as possible in order to reduce the corporate taxable income and the HST payment. In support of her statement, she provided a

summary of the gas and oil costs reported by the company (Exhibit 1, pp. 225-228) for the years 2015-2018. If the husband had personally paid all of the expenses for snow removal (which was his primary activity during the winter), the fuel costs would have been very low during the winter months, which is not the case according to the documents provided. The wife added that any expenses that could be considered business expenses were funneled through the company. [ 135 ] The husband admits that there was unreported cash income and that they kept cash in the house.

He said that he and his wife managed this unreported income. However, on cross-examination, he admitted that he never counted the cash, that the wife managed the cash, and that she knew how much there was. He saw the receipt books regularly. He admitted that people who had not yet paid for his services were given a receipt as a reminder to pay, or receipts for the upcoming season. Contrary to his counsel’s submission that these receipts could have been fabricated by the wife, the husband did not dispute the legitimacy of the receipts contained in Exhibit 24 during his testimony.

The husband also admitted that individuals regularly stopped by the house to pay for his services and that cash was received in an envelope from some clients. [ 136 ] In his Financial Statement sworn on May 12, 2022, the husband reported undeclared income in the amount of $6,500. During his examination, he was asked the source of this unreported income. His response was: “Probably, snow removal.” He added that there was another source of unreported income, which was his services of “flushing lines”, but that this service had a minimal income.

However, the husband testified that he did not know how much unreported income he earned between 2000 and 2010. A few questions later in his examination, he then said that he probably earned $8,000 per year in unreported income between 2000 and 2010. According to him, the best years for unreported income were from 2010 to 2015. He explained that the unreported income decreased after 2015 because he could no longer work 23 hours a day and there was competition. However, he acknowledged that he also worked for some of his competitors.

The husband claimed that at the time of separation, he was earning $8,000 per year in unreported income. [ 137 ] However, on cross-examination, the husband was shown his Affidavit sworn on September 8, 2019 (Book of Pleadings, p. 153) in which, at para. 15, he stated that he earned $18,000 per year in “net cash income”. The husband first stated that this net cash income was for the years 2015, 2016, 2017 and 2018, but then, he had no idea why he had previously stated that he earned $6,500 in cash income.

He eventually admitted that these amounts of $6,500 and $18,000 were “guesses” on his part. [ 138 ] In J.D.F. v. J.L.F.-F. , 2020 NBCA 70 , Justice Quigg confirms a judge’s discretion to look beyond the income tax return and adjust a payor’s income for unreported income. She stated: 25. Where a person has income from a business, corporation or self-employment, such as in this case, the court may look beyond the income tax return to adjust for such things as undeclared income.

The court may impute income when it determines a payor, for example, is deliberately under-employed, is under-reporting income for tax purposes, or is not using available corporate pre-tax income. Money earned “under the table,” often not claimed, and difficult to prove, can lead to an imputed income finding. […] 27. As observed earlier, s. 19 of the Guidelines allows a court to impute income in certain circumstances such as when the parent fails to provide accurate income information. The decision to impute income is discretionary in nature, as evidenced by Parliament’s use of the

words “may impute such amount of income” in this section. 28. Sometimes the financial documents are incomplete or inaccurate because parties: • work for cash; • are not actively looking for a job; • are underemployed by working only part-time or in a low-paying job; • are not reporting all their income; • are giving false information; • are self-employed and claiming deductions that are not true business expenses or keeping money in their company that could be used for support. 29.

Judges are empowered by s. 19 to impute income based on what the payor parent is capable of earning or what the judge thinks the payor parent actually earns following a review of work history, past income, education, lifestyle, and job opportunities. [ 139 ] In the present matter, it is undisputed that the husband has been earning undeclared income for years. Both parties testified that there was always plenty of cash in the home due to this undeclared income.

While the husband suggested that he could have earned $6,500 or even $18,000 in any given year, he admitted that these amounts were mere guesses on his part. The wife insisted that the unreported income was as much as $100,000 in any given year. Although the wife testified that this was an estimate, the wife was very knowledgeable about the unreported income and provided documentary evidence of this cash income. The receipt books show that services were performed for cash during the winter and summer months. I accept that there were more receipt books in existence an

[…]