r v. Forster, 2023 MBKB 138

Date: 20230925 Docket: FD 18-02-08341 (Brandon Centre) Indexed as: Forster v.

Forster Cited as: 2023 MBKB 138 COURT OF KING'S BENCH OF MANITOBA B E T W E E N: ) ) JAMES WILLIAM FORSTER ) Glen Harasymchuk petitioner (respondent), ) for the petitioner (respondent) and ) ) TERRIE LYNN FORSTER ) respondent (applicant). ) Rhea Majewski ) for the respondent (applicant) ) ) ) ) Reasons for Decision: ) September 25, 2023 ) MASTER PATTERSON Introduction [ 1 ] The primary issue to determine in this case is whether an agreement with respect to the amount of a family property equalization payment precludes a claim for interest that is now being advanced in relation to the equalization payment previously negotiated by the parties. [ 2 ] A hearing was held before me on August 29, 2023, which has necessitated prompt release of this decision as the parties are proceeding to trial, commencing on October 17, 2023.

Background [ 3 ] The Petitioner, James William Forster (the “Husband”), and the Respondent, Terrie Lynn Forster (the “Wife”), commenced cohabitation in a conjugal relationship on January 1, 1989. They were married on July 4, 1992. [ 4 ] The agreed date of separation (the “valuation” or “closing date”) is March 14, 2018. [ 5 ] An order was pronounced by the Honourable Justice Abel on November 24, 2022 (the “Reference Order”), which stipulated that there was to be a reference to the Master (the “Reference”) with respect to the following contested issues:

a) determining the value of ten specific assets and liabilities, owned by the Wife or by the Husband, as well as the extent to which such assets and liabilities are shareable or non-shareable (paragraph 4.5);

b) valuing five jointly held assets of the parties (paragraph 4.6);

c) sale of a fifth wheel trailer, and three properties, all of which are located at Melita, Manitoba, and are referred to as “113 Maple Street”, “58 Bruce Street” and “117 Ash Street” respectively (paragraph 4.7); and

d) accounting for all payments made by the Wife and the Husband post-separation concerning joint liabilities (paragraph 4.12). [ 6 ] The upcoming three-day trial has been scheduled to determine other issues which remain in dispute between the parties, such as but not limited to the Wife’s claim for spousal support from the Husband. Hearing for Directions Before the Master [ 7 ] The initial Hearing for Directions was held with counsel and both parties on January 10, 2023.

Within the one hour allotted, a number of facts, issues and positions were canvassed, which resulted in a detailed memorandum of fourteen pages being issued shortly thereafter by the Court (“Memo #1”). [ 8 ] A subsequent Hearing for Directions with counsel and both parties was convened on March 9, 2023. At the request of counsel, this follow up Hearing for Directions was held in-person in order that there would be an opportunity for counsel and the parties to participate in settlement negotiations. [ 9 ] Consensus was reached by the parties at this further Hearing for Directions (the "March 9th Agreement").

The terms of the March 9th Agreement were confirmed within another detailed memorandum issued by the Court (“Memo #2”). [ 10 ] As set forth at paragraph 7 within Memo #2, a material term of the March 9th Agreement is that the Husband is to provide a family property equalization payment to the Wife in an amount of $550,000.00.

In addition, the issues that had not been referred to the Master, and items not contained within the Reference Order, were identified (which, if unresolved, will be determined at the upcoming trial). [ 11 ] Within paragraph 9 of Memo #2, it is confirmed that “the one issue” which had not been resolved in accordance with the Reference Order was accounting for the parties’ respective payments upon joint debt post-separation.

A hearing date to determine this disputed issue was scheduled for May 9, 2023. [ 12 ] On May 9, 2023, counsel and the parties appeared before me, at which time the Court learned a further agreement had been reached (the "May 9th Agreement"). In particular, it was agreed that the Husband shall pay or give credit to the Wife in an amount of $37,000.00 with respect to payments made by the Wife upon joint liabilities following the parties’ separation.

Costs were agreed to be in the cause. [ 13 ] Based upon the foregoing, I directed that a Report on Reference (Final) was to be provided to the Court for approval and signing within two weeks (on or before May 23, 2023). It was eventually filed on June 15, 2023.

Case Conference on June 21, 2023 [ 14 ] As a result of the discussions involving counsel and both parties at the Case Conference held on June 21, 2023, Justice Abel confirmed the following within Case Conference Memorandum No. 3 (at paragraph 1): Although the parties had agreed on the equalization payment to be made, reflected in the Memorandum of the Master and the Report on Reference, the wife now seeks interest on the payment, to which the husband is opposed.

Accordingly, a ½ day hearing before the Master was set for August 29, 2023 at 10:00 am. [ 15 ] Within the balance of Case Conference Memorandum No. 3, Justice Abel confirmed that the following issues were to be determined before the Master (at paragraph 2):

i) Did the agreement reached preclude the payment of interest? (i.e.) Did the agreement address all outstanding property issues, including interest? ii) If not, ought interest be paid by the husband? iii) If so, in what amount? iv) Did the agreements address the outstanding taxes owing on Maple, Main and Ash? and

v) Did the agreement address the Atomic Trailer and Cargo Container? Evidence Relied Upon for this Hearing

[ 16 ] Both counsel filed extensive Hearing Briefs with case law (which was appreciated by the Court). [ 17 ] Neither party testified to provide direct evidence or be cross-examined. Cross-examinations upon affidavit material was not conducted by either counsel in advance of this hearing. [ 18 ] Counsel for the Wife advised that the evidence being relied upon in support of the Wife’s position is primarily the affidavit of the Wife sworn July 5, 2023 (the “Wife’s Affidavit”).

In addition, counsel for the Wife noted that the Wife is relying upon her affidavits sworn October 21, 2022, November 24, 2022, and May 1, 2023 respectively. [ 19 ] On behalf of the Husband, it was confirmed by his counsel that the evidence which supports the Husband’s position is primarily the affidavit of the Husband sworn July 17, 2023 (the “Husband’s Affidavit”). Similar to the Wife, the Husband also relies upon his prior affidavits filed with the Court. [ 20 ] No other witnesses provided evidence for this hearing.

Consensus Reached for Two Corporate Assets [ 21 ] Consistent with what had been outlined within the Hearing Briefs, counsel confirmed that the parties are principals of 6191364 Manitoba Ltd. (the “Manitoba Corporation”) as well as 540408 Alberta Ltd. (the “Alberta Corporation”). The “Atomic Trailer” and the “Cargo Container” are corporately owned assets, which the Wife and the Husband have agreed shall be sold.

The net proceeds from sale are to be shared equally by the parties (they will presumably obtain accounting advice, as these items are not personally owned). [ 22 ] It was anticipated by counsel that there should be no difficulties insofar as the parties carrying out the sale of these two assets in due course. Interest Upon Agreed Equalization Payment

Summary of Wife’s Position [ 23 ] The position advanced on behalf of the Wife can be summarized as follows:

a) Counsel for the Wife submits that the issue of interest upon the agreed equalization payment was not referred to the Master, and is not an item that is mentioned or contained within the Reference Order.

b) Paragraph 7(

d) of Memo #2 was highlighted by counsel for the Wife, wherein I stated the following: The method of payment or manner of satisfying the agreed family property equalization in an amount of $550,000.00 is not specifically noted as an issue for the Master determine in accordance with the Reference Order (consistent with there being a “statutory pause” pursuant to The Family Property Act ). Similarly, any income tax consequences associated with the agreed equalization payment has not been specifically stated as an item to be determined by the Master (appreciating that certain of the assets for which value had been in dispute are corporately and not personally owned).

c) From the perspective of the Wife, the issue of interest upon the equalization payment to be forthcoming from the Husband was left to be decided by the presiding justice at trial (with Justice Abel now referring this contested issue to the Master for determination at this hearing).

d) Counsel for the Wife acknowledges that the March 9th Agreement was comprehensive insofar as confirming the terms of consensus reached, identifying the unresolved issue of accounting for payments made by the parties upon joint debt following separation, and setting forth the specific issues that I was not tasked to determine pursuant to the Reference Order (such as the method or mode of providing the agreed equalization payment and any associated income tax consequences). At no time, however, was a claim for interest upon the agreed equalization payment waived by the Wife.

e) It was also acknowledged by the Wife that counsel for the Husband is not incorrect when he states that the first time it was confirmed that the Wife was proceeding with a request for interest upon the agreed equalization payment was within the Supplemental Case Conference Brief filed on behalf of the Wife (shortly prior to the Case Conference before Justice Abel on June 21, 2023). Counsel for the Wife explained that the issue of interest was raised at that particular Case Conference because, by that juncture, the Wife was now aware of the amount of the equalization payment that was to be forthcoming from the Husband.

f) T he Family Property Act , C.C.S.M. c. F25 (the “ FPA ”), at section 20(3) , provides as follows with respect to interest: Interest where equitable 20(3) On making an order for one spouse or common-law partner to pay an amount under

section 17 or on application the court, if satisfied that it is equitable under the circumstances, may order that spouse or common-law partner to pay interest on all or a portion of the amount at a rate fixed by the court and calculated from a date which is not earlier than the valuation date established under

section 16.

g) It is submitted that the Wife is entitled to make an application for interest, with section 20(3) of the FPA not specifying when notice of a claim for interest must be made by a spouse.

h) According to counsel for the Wife, a reasonable

interpretation of section 20(3) of the FPA results in a determination that the Wifehas a “prima facie” right to seek interest, with the onus shifting to the Husband to establish that it would be inequitable to award interestupon the equalization payment due in favour of the Wife.

i) The decision of the Honourable Justice Yard in G.M. v. W.M., 2001 MBQB 219 (“W.M.”) was cited by both counsel (a copy isattached at Tab "A" to the Hearing Brief filed on behalf of the Wife).

j) At paragraphs 100 to 102 in W.M., Justice Yard made the following findings: [100] The general rule under this

section is that interest should be awarded to place the payee of a judgment in the same positionthat party would have been had the required payment been made at the time of separation: Lev v. Lev (1992), (MB KB), 74 Man.R. (2d) 123; 34 R.F.L. (3d) 412 (Q.B.). Generally prejudgment interest should be awarded as such a practice will encourage timely settlement: Burgess v. Burgess (1996), (ON CA), 16 R.F.L. (4th) 388 (Ont. C.A.). [101] The husband argues here that no mention of interest being made in the wife’s pleading none can be awarded. While the generalrule is that relief not plead for cannot and should not be granted the

section here appears to provide otherwise. [102] The husband has had control over and use of the assets since the separation. By their nature almost all of these assets are incomegenerating or capable of being so. It is equitable in these circumstances that the husband pay interest on the equalization payment fromFebruary 10, 1996 until paid. The rate will be the average rate as published by the Registrar of this Court pursuant to s. 79 of TheQueen’s Bench Act from February 10, 1996 to the present. (emphasis added)

k) Counsel for the Wife argues that based upon the

interpretation applied to section 20(3) of the FPA in W.M., a claim for interest uponany equalization payment which may ultimately be awarded in favour of the Wife was not relief that had to be pleaded within thePetition for Divorce.

l) It is also submitted by counsel for the Wife that in consideration of W.M., it is of importance to note that the Husband had thebenefit of control over and use of the majority of the highest valued assets since the parties’ separation.

m) At page 5 of the Hearing Brief filed on behalf of the Wife, counsel for the Wife argues as follows: … In this case Mr. Forster used the farmland to obtain farm rent in each year of separation, earning gross farm rent of $41,491.83 in2018, $41,526.33 in 2019, $44,715.35 in 2020 and $35,074.51 in 2021 (because he’d sold one parcel of land), and presumably he wouldhave obtained at least $35,000 in rent ongoing. If we accept that a reasonable deduction from the gross rent for property taxes is $8,000annually, this means that Mr.

Forster earned over $32,000 annually for farm rent that he did not share with his wife. If we just considerthe fact that he earned at least $32,000 annually until he sold one parcel in 2020, from 2018 to 2022 from farm rent alone Mr. Forsterbenefitted to the tune of $160,000.00 half of which should have been shared with Ms. Forster for a sum of $80,000. When you alsoconsider that Mr. Forster netted over $400,000 when he sold a parcel in 2020 and again shared none of that sum with Ms. Forster, he hadconsiderable access to capital that was withheld from Ms. Forster. …

n) The Order pronounced by Justice Abel on November 24, 2022 (apart from directing that there be a Reference) prohibited any furthersale of farm property on the part of the Husband until further order of the Court.

o) Counsel for the Wife advised that neither the Wife or the Husband are presently employed. At page 6 of the Hearing Brief filed onbehalf of the Wife, the following depiction of the Wife's financial status was provided: Ms. Forster owned no income generating or other assets in her sole name other than her RRSP’s. Those RRSP’s were used to pay downfamily debt.

p) It was also highlighted by counsel for the Wife that spousal support was not voluntarily provided by the Husband, and a contestedhearing before Justice Abel on November 24, 2022 was required (resulting in the Husband being ordered to pay an amount of $1,300.00monthly in spousal support to the Wife, commencing December 1, 2022, and continuing on the first day of each month thereafter untilfurther order of the Court).

q) The Wife disputes the notion that she has "blindsided" the Husband with her request for interest. There had been no adjudicationupon the issue, and no motion for

summary judgment has been advanced on behalf of the Husband (if the Husband is convinced that theMarch 9th Agreement represents a full and final agreement which acts to preclude the Wife from seeking interest at this time). Even ifsummary judgment was sought, it is the position of the counsel for the Wife that there is a genuine issue, and

summary judgment shouldnot be granted.

r) As to the Husband’s submission that he would "never have settled for such a large equalization payment had he been aware thatinterest was also being requested", counsel for the Wife submits that even though the topic of interest was never a subject of negotiationsprior to June 21, 2023, advance notice of a claim for interest is not compulsory in reliance upon W.M.

s) It was acknowledged by counsel for the W ife (and by counsel for the H usband as well) that the parties had attempted to arbitrate resolution of their disputed property claims and other outstanding issues such as spousal support. Arbitration proceeded for approximately two years, from sometime in 2020 until sometime in 2022. Unfortunately , the arbitrator whom had been selected was unable to continue, prompting th e parties to return before the Court.

t) The W ife is of the position that the approximately two year s in which the parties were involved in arbitration should not be carved out or exempted from the period of t ime during which interest ought to be calculated. The W ife says this is because there was a mutual decision to commit to arbitration, during which there was no interim advance upon an anticipated family property equalization received by the Wife (nor was there prior to or following arbitration).

u) Attached at Tab "B" to the Hearing Brief filed on behalf of the Wife is a copy of the decision of my predecessor, the Honourable Master Harrison, in Medley v. Medley , [1999] M.J. No. 576 (“ Medley ”) .

v) Counsel for the Wife submits that unlike what was the case in Medley , the evidence does not support the Husband’s contention that the Wife unduly delayed these proceedings. The Wife disputes the allegation that she was uncooperative and was unwilling to participat e in settlement meetings suggested by the Husband.

The Wife also denies that she neglected to organize corporate records and ensure that corporate tax returns for the Manitoba Corporation and the Alberta Corporation were prepared and filed in compliance with applicable statutory deadlines (noting that following separation, she had limited resources to pay for accounting services). To the contrary, it is the position of the Wife that it was the Husband who contributed to delay in resolution of the parties’ property claims. According to counsel for the Wife, motions were required to compel financial disclosure and completion of other obligations by the Husband.

w) As to the amount of interest sought by the Wife, calculations are set forth at pages 7 and 8 of the H earing B rief filed on behalf of th e Wife. Counsel for the W ife utilized a principal amount of $587,000.00 in her calculations ($550,000.00 for the agreed equalization payment, as well as $37,000.00 representing the additional sum that the parties agreed upon concerning payment by the W ife upon joint liabilities following separation).

x) Counsel for the W ife confirmed that if the prescribed statutory rate of interest was applied to the agreed sum payable by the Husband, from March 14, 2018 to August 9, 2023 (the date of the Hearing B rief being signed by counsel for the Wife), the r es ult would be an amount for interest totalling $57,497.78 ( interest would of course continue to accrue until payment in full had been made).

y) It is submitted by c ounsel for the Wife, however, that it would be equitable in these circumstances to order that the H usband pay a higher rate of interest than Court prescribed rates. The W ife is suggesting that an interest rate of 4.5% be utilized, effective March 14, 2018 and until such time as the equalization payment and agreed amount for recovery regarding payment of joint liabilities post- separation is satisfied completely. For illustration, the result would be an amount of $144,305.38 for interest upon the sums to be paid by the Husband pursuant to the March 9 th Agreement as well as the May 9 th Agreement, for the period of March 14, 2018 until August 9, 2023.

Summary of the Husband’s Position [ 24 ] The position of the H usband in relation to the Wife's claim for interest can be summarized as follows:

a) On page 3 of the H earing B rief filed on behalf of the H usband, it is submitted that it was only recently when the Husband became aware of the Wife's claim for interest : The issue of interest which is now being raised by Mrs. Forster has not been referred to in any documentation that she has filed with the Court, whether by way Petition for Divorce, Affidavit, Notice of Motion, Responding Reply Affidavit, Triage Brief, Supplemental Triage Briefs or Motions Briefs. The Supplemental Triage Brief that was filed on June 19, 2023, prior to the last Case Conference which was held before Mr.

Justice Abel on June 21, 2023, was the first time this issue was raised by Ms. Forster in her documentation .

b) T he following comments concerning Memo #2 are contained at the bottom of page 3, and at the top of page 4 of the H earing B rief filed on behalf of the H usband: Attached as T ab A to this B rief, for sake of convenience is the H earing for D irections M emorandum dated March 9, 2023, prepared by Master Pat[t]erson. At that hearing both parties made efforts to come to consensus with respect to the total amount of family property equalization to be payable by Mr. Forster to Mrs. Forster.

The memorandum is quite detailed respect to the precise nature of the settlement, [ and ] specifically at paragraph 9 reads “ T he one issue which has not been resolved concerns the parties [respective] payments upon joint debt post - separation, which is an item to be determined pursuant to paragraph 4.12 of the Reference Order”. (emphasis added)

c) I t is the position of the Husband that the R eport on R eference ( F inal) was precise with respect to the following: i. The amount agreed upon for the equalization payment to be provided by the Husband to the Wife ( p aragraph 4.1.1) ; ii. The assets that the H usband is to keep, without claim by the W ife ( paragraph 4.1.2) ; iii. The assets which the W ife is to retain, without claim from the H usband, which includes a property in Melita, Manitoba commonly known as “129 Main Street” (paragraph 4.1.3) ;

iv. The debts for which the H usband and W ife are to be responsible respectively (paragraphs 4.1.4 and 4.1.5) ; v. The method of payment and manner of satisfying the agreed equalization payment is not part of the R eference, and is adjourned to trial, along with the issue of any income tax consequences as a result of the agreed equalization payment (paragraph 4.1.7) ; vi. Transfer to the Wife of 58 Bruce Street, 117 Ash Street, and 113 Maple Street (paragraphs 4.1. 4); vii.

The winding up and any accounting fees related to the Alberta Corporation is not a part of the R eference and adjourn ed to the trial (paragraph 4.1.8); and viii. The H usband is to pay the sum of $37,000.00 to the W ife in order to "equalize the paydown of joint debt post- separation" (paragraph 4.2).

d) Unlike the foregoing issues, there was absolutely no mention of a claim for interest being advanced on behalf of the Wife within the Report on Reference (Final). Even if it was not a subject to be addressed within the R eference, counsel for the Husband submits that there ought to have been notice provided by the Wife (far earlier than in June of this year) of the Wife’s intention to seek interest upon the agreed equalization payment, as the Husband reasonably believed that a comprehensive settlement concerning property related items had been consummated with the March 9 th Agreement (as well as with the May 9 th Agreement).

e) From the perspective of the H usband, he has not misunderstood what was discussed and agreed upon with the Wife on March 9, 2023. Rather, it is submitted on behalf of the H usband, that from an objective standpoint, it is reasonable to conclude that a full and final settlement with respect to all property matters had been achieved with the March 9th Agreement (which included interest), save and except the items expressly noted within M emo #2 that are to be determined by the presiding justice at trial.

f) It was acknowledged by counsel for the Husband that no motion for

summary judgment has been pursued (which would have i nvolved both counsel being witnesses, and the parties needing to retain new lawyers).

g) The Husband categorizes the "late in the day" efforts by the W ife to claim interest upon the agreed equalization payment as being an attempt to "blindside" him, subsequent to the parties negotiating and finalizing terms of a comprehensive property settlement on March 9, 2023, as well as on May 9, 2023.

h) Counsel for the H usband does not dispute the position advanced on behalf of the Wife that it was not necessary for the Wife to have plead interest within the Petition for Divorce. That being stated, the first time in the claim for interest was mentioned on behalf of the W ife was in June of this year, over five years following the parties' separation.

i) It is not accepted by the Husband that section 20(3) of the FPA establishes a prima facie entitlement to interest on the part of the Wife, or that there is a shift in onus with the Husband having the burden to demonstrate that it would be ine quitable for interest t o be awarded in favour of the Wife in these circumstances.

j) Counsel for the Husband noted that in W.M. , the actions of the husband in that case were such that Justice Yard determin ed it was equitable to essentially punish the spouse for his conduct (at paragraph 33). In the case at bar, however, the amount of equalization payment to be provided by th e Husband was reached through negotiations between the parties, with it being the contention of the Husband that there was no undue delay on his part when it came t o addressing outstanding property related issues.

k) As to Medley , counsel for the H usband pointed out that the question of interest was put squarely before Master Harrison fo r determination by virtue of the wording of the applicable reference order, which is unlike this scenario ( there being a R eport on R eference (Final ) approved and signed by the Court , with the trial upcoming, and the claim for interest was then raised on behalf of the Wife ) .

l) In the alternative, and should this Court be inclined to award the Wife a sum for interest upon the agreed equalization payment, counsel for the H usband submits that there was delay experienced with t hese proceedings due t o the conduct of the W ife , which should operate to mitigate against the rate and extent of interest to be imposed against the Husband.

m) As an illustration, the Husband says that the Wife's business ("Nifty Nook"), which she operated during their relationship, was "under the umbrella" of the Alberta Corporation. While he was working on a full time basis as a consultant for various energy firms, the Husband contends it was understood and agreed by the Wife that i t was her obligation to ensure that corporate records were organized so that their accountant could receive required documentation and prepare the necessary corporate tax returns for f ilin g on a timely basis (for the Manitoba Corporation as well as the Alberta Corporation).

n) Despite the denial of the Wife in this regard, the Husband alleges that incomplete corporate records and unfiled tax returns created complications and delay with respect to finalizing his own personal income tax returns (a reality that explains why there was certain delay encountered with the Husband supplying financial disclosure sought on behalf of the Wife).

o) It has also been argued on behalf of the Husband that the Wife was uncooperative by being unwilling to participat e in settlement meetings suggested by the Husband (concerning property related issues and other items in dispute between the parties).

p) Copies of the H usband’s personal income tax returns for 2018, 2019, 2020 and 2021 a re attached as E xhibits "A", " B", "C" and "D" respectively to the H usband’s A ffidavit.

q) At paragraph 13 of the H usband’s affidavit, it is confirmed that the Husband's annual income as reported within the foregoing personal income tax returns was as follows: $11,739.49 in 2018 ; $76,313.94 in 2019;

$369,342.03 in 2020; and $50,976.15 in 2021.

r) Counsel for the Husband stated that in 2019, the Husband had cashed in some RRSP funds, resulting in an additional $61,000.00 being included as income for that year. Without the re ceipt of these RRSP proceeds, counse l for the Husband submits that the total income of the Husband in 2019 would have been much lower (only $15,313.94).

s) With respect to 2020, the Husband acknowledges that he sold one parcel of farm property, and also had to convert certain funds invested within an RRSP to a RRIF. When deducting the net sale proceeds and investment funds, however, counsel for the Husband argues that a more accurate picture of the Husband's finances is revealed (an annual income for 2020 of only $29,420.25).

t) The H usband is retired. He no longer farms either. The Husband has described that he is presently suffering from serious health complications (and is 10 years older than the Wife). The Husband is in receipt of monthly CPP and OAS benefits, as well as net income from renting the remaining farm property (rental revenue less associated expenses, such as but not limited to property taxes).

u) While the W ife has confirmed that she is also not employed (and is currently is in receipt of disability benefits), counsel for the Husband states that in addition to retaining ownership of and residing at 58 Bruce Street, the parties have agreed that the Wife is to receive sole title to 117 Ash Street, 113 Maple Street, as well as 129 Main Street . As a result, the Husband contends that the Wife can rent one or more of these properties (which has been done in the past) to generate a regular income stream.

v) Even though the H usband has retained three parcels of farm property, counsel for the Husba n d confirmed that the Husband is intent upon proceeding to sell two of these parcels in order to be in a position to satisfy the agreed equalization payment in favour of the Wife.

w) Once further farm property of the Husband is sold to provide the agreed equalization payment for the Wife, the Husband takes the view that he will essentially be left with minimal land holdings, along with numerous items of farm machinery and equipment (the farm machinery and equipment depreciating rather than appreciating in value) .

x) It is submitted by counsel for the H usband that section 20(3) of the FPA establishes a threshold, namely, that the W ife must demonstrate it is equitable in the circumstances for interest to be awarded. Given the evidence relied upon and factors cited, counsel for the Husband asserts that it would be inequitable for interest to be applied to the agreed equalization payment, especially given the timing and manner by which the claim for interest has been raised on behalf of the W ife.

y) By way of response to the question of the C ourt for both counsel, it was articulated by cou n sel for the Husband that if interest is awarded, the two year window of time in which the parties participated in arbitration should be carved out or excluded.

z) It is also the position of the H usband that the evidence does not justify deviating from the prescribed s t atutory rates of interest, in the event that interest is to be applied to the outstanding equalization payment in favour of the Wife. Can an Interest Claim be Made by the Wife at this Time?

Agreements should be encouraged and enforced [ 25 ] At the outset, I will be clear in that I find this latest impasse between the parties to be both concerning and frustrating. [ 26 ] The Husband believes that the March 9th Agreement represented comprehensive consensus with respect to family property issues, other than in relation to the items specifically mentioned and exempted from the terms of settlement.

The Wife fully agrees that there was a comprehensive agreement achieved, but it insistent that a claim for interest was not mentioned nor was it included within the March 9 th Agreement. [ 27 ] Negotiating a settlement agreement should give rise to certainty and closure, not uncertainty and further litigation. [ 28 ] The Court of King's Bench Rules , Man. Reg. 553/88 (the " Rules "), at Rule 70.02.1(1) , confirms the objectives of the "family proceeding rules" (under Rule 70): Purpose of family proceedings rules 70.02.1(1) The purpose of this Rule is to (

a) help parties resolve the legal issues in a family proceeding fairly and in a way that will (

i) take into account the impact that the conduct of the proceeding may have on a child, and (ii) minimize conflict and promote cooperation between the parties ; and (

b) secure the just, most expeditious and least expensive determination of every family proceeding on its merits.

(emphasis added) [ 29 ] Consistent with Rule 70.02.1(1), the benefits to settlement are numerous, including but not limited to the following:

a) minimizing conflict;

b) encouraging cooperation;

c) facilitating control for the parties over the proceedings;

d) reducing the time commitment associated with contested hearings;

e) lessening emotional strain from conflict;

f) curbing legal expenses; and

g) as mentioned above, allowing for certainty of outcome and closure. [ 30 ] “Freedom of contract” is respected by the Court, with the theme of “contractual autonomy” being raised within such seminal family law cases as the decision of the Supreme Court of Canada in Miglin v. Miglin , 2003 SCC 2 4 (“ Miglin ”) . [ 31 ] Anderson v. Anderson , 2023 SCC 13 (" Anderson ") is a more recent decision concerning family law agreements that was released in May of this year by the Supreme Court of Canada. [ 32 ] Within the headnote portion of Anderson , the

summary provided of this decision (authored by the Honourable Madam Justice Karakatsanis) includes a description of the perceived advantages and difficulties inherent with settlement agreements: Domestic contracts present unique advantages and concerns. On the one hand, parties are generally better positioned than courts to understand the distinctive needs and circumstances of their private relationship. On the other, parties to domestic contracts are particularly vulnerable to unfairness and exploitation, given the unique environment in which domestic contracts are negotiated and concluded.

The Court’s jurisprudence on domestic contracts, including Miglin , signals to courts to approach domestic contracts with caution and to have regard to important procedural protections that help ensure the deal struck is fair . Moreover, while the Court has long supported the freedom of parties to settle their domestic affairs privately, respect for private ordering cannot be permitted to thwart the public policy objectives enshrined in family law legislation. Courts must approach family law settlements with a view to balancing the values of contractual autonomy and certainty with concerns of fairness.

In essence, courts must review domestic contracts with particular sensitivity to the vulnerabilities that can arise in the family law context, without presuming that spouses lack the agency to contract simply because the agreement was negotiated in an emotionally stressful context. (emphasis added) [ 33 ] Madam Justice Karakatsanis continued by making the following further observations within paragraph 33 of Anderson : [33] So while the proper interpretive framework for assessing a domestic contract is statute-specific, useful principles emerge from Miglin and this Court’s subsequent jurisprudence that aid in this judicial assessment.

As a starting point, domestic contracts should generally be encouraged and supported by courts, within the bounds permitted by the legislature, absent a compelling reason to discount the agreement ( Miglin , at para. 46 ; D.B.S. , at para. 76; Rick , at para. 45). This deference flows from the recognition that self-sufficiency, autonomy and finality are important objectives in the family law context ( Miglin , at para. 28 ).

Not only are parties better placed than courts to understand what is fair within the context of their relationship, but the private resolution of family affairs outside the adversarial process avoids the cost and tumult of protracted litigation (paras. 45-46; see also Association de médiation familiale du Québec v.

Bouvier , 2021 SCC 54 , at paras. 44 and 134 ). (emphasis added) [ 34 ] One of many take aways from Anderson is that where parties make their respective best efforts at reaching consensus, such agreements should be respected (absent any material issues or concerns which detract from enforceability). [ 35 ] In Johnson v. Miazga , 2022 MBQB 90 (" Miazga ") , the issue before the Honourable Justice Petersen was whether the petitioner should be granted

summary judgment in accordance with a settlement reached at a case conference. [ 36 ] At paragraph 70 of Miazga , Justice Petersen included the following excerpt in relation to settlements reached in domestic proceedings: [70] “… [I]f the agreements at case conferences are to mean anything, they have to be respected and honoured by the court and enforced by the court and a motion for

summary judgment is one of the tools to do that …” ( Dhalla v Dhalla , 2020 MBCA 69

at para. 21, quoting the motion judge in that case; also Hohl v. Hohl, 2018 MBQB 53, at paras. 19-20). (emphasis added) Full disclosure is expected concerning contested issues [37] While acknowledging the case was focused upon whether pleadings ought to be struck, 7602678 Manitoba Ltd. v. Jhanji, 2023MBKB 79 ("760") is a decision that I issued earlier this year. At paragraph 94 of 760, I noted as follows: [94] Maquinay v.

Greatway Financial Inc. et al., 2021 MBQB 35 (“Maquinay”) is a decision of the Honourable JusticeHarris, in which the function of pleadings is reviewed (at paragraph 4): [4] In Holmested and Watson, Ontario Civil Procedure, looseleaf (Toronto: Carswell, 1993), the authors make the following statementrespecting the function of pleadings (see vol. 4, 25§6): The information exchange provided by pleadings is essential to procedural fairness.

The right to participate in the proceedingand to be heard are of limited value unless the party knows the case alleged against him so that he can marshal the relevantevidence and argument to meet it. Further, pleadings assist in defining and recording the res judicata effect of judgment in an action. As stated in Williston and Rolls, The Law of Civil Procedure (1970), at p. 637: The function of pleadings is fourfold: 1. To define with clarity and precision the question in controversy between litigants. 2.

To give fair notice of the case which has to be met so that the opposing party may direct his evidence to the issuesdisclosed by them. A defendant is entitled to know the nature of the defence raised in answer to his claim. 3. To assist the court in its investigation of the truth of the allegations made by the litigants. 4. To constitute a record of the issues involved in the action so as to prevent future litigation upon the matter adjudicatedbetween the parties. (as cited by Dewar J. in Peguis First Nation et al. v.

Canada (Attorney General), 2014 MBQB 98 at para. 5 (“Peguis”)) (emphasis added) [38] Quite frankly, one of the aforementioned functions of properly drafted pleadings ("to give fair notice of the case which has to bemet…") is a concept that is consistent with and can be applied to settlement negotiations between spouses. [39] Full disclosure is expected of each party pursuant to the Family Division Case Flow Model (the "FD Case Flow"). "Trial byambush" is a relic of the past.

Good faith negotiations [40] There is also a duty of good faith in performing contractual obligations which cannot be ignored, an issue I addressed in 760(commencing at paragraph 169): [169] As to the duty of good faith in contractual performance, Chief Justice Joyal noted the following at paragraph 155 in Christie:

[155] Shelter responds by saying that the arbitrator’s finding of bad faith do not give rise to a question of law of arguable merit in thatthe arbitrator’s decision was guided by the correct legal test as it relates to the duty of honest contractual performance as set out by theSupreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71.

In Bhasin, the Court noted that “parties must not lie or otherwiseknowingly mislead each other about matters directly linked to the performance of the contract” (at para. 73). (emphasis added) Possible remedies of the Husband [41] With the foregoing considerations in mind, and when assessing the evidence presented to determine if the Husband’s position is sustainable (that the March 9th Agreement), the potential recourse for the Husband should be examined. [42] At the outset, section 5(1) of the FPA recognizes that "spousal agreements" (as defined therein) may be negotiated betweenspouses concerning property related issues. [43] The Husband has elected not to pursue

summary judgment to enforce what he believes was agreed upon with the Wife (thatinterest is not payable by him upon the equalization payment until satisfied in full). [44] Apart from

summary judgment, another possible remedy to enforce commitments reached by litigants is Rule 49 (offers tosettle), which was reviewed thoroughly by the Manitoba Court of Appeal in Cement Accents Manitoba Inc. et al. v.

WagnerConstruction et al., 2023 MBCA 59 ("Cement Accents"). [45] Within paragraphs 16 and 18 of Cement Accents, the goal or purpose of Rule 49 and its application to the facts of that particularcase were outlined: [16] As noted by this Court in Pearson v Plester (1989), (MB CA), 65 DLR (4th) 463, r 49 adds a convenientprocedure for enforcement of a settlement agreement made under the rule whereby the judge may grant judgment if satisfiedthat settlement was reached (see para 9). … [18] However, r 49 contemplates that the offer to settle and its acceptance be in writing to be enforceable under the rule.

Both rr49.02(1) and 49.07(1) refer to service of an offer to settle and service of an acceptance of an offer with suggested forms (thoughadherence to the precise format of the forms is not required) (see Dreger v Dreger, 1994 CarswellMan 412 at paras 4-5 (QB)). Here,while the offer to settle was contained in the initial email and, thus, in writing, the acceptance, which occurred at a meetingbefore the scheduled examinations, was not.

Accordingly, enforcing this settlement within the rubric of r 49 was not available. (emphasis added) [46] As there were only discussions of the parties before me at the Hearing for Directions on March 9, 2023, and all that wascommitted to writing was Memo #2 (which was issued by the Court), resort to Rule 49 is not available in the case at bar either. [47] The Husband has also not advanced an alternate position, to the effect that if a claim for interest may be made by the Wife at thistime upon the agreed equalization payment, it must then be a case where there was actually "no meeting of the minds" (and as a result,no obligation for the Husband to provide an equalization payment of $550,000.00 to the Wife as had been negotiated).

In essence, theparties would be "back to square one". Principles to apply for

interpretation of agreements [48] With respect to the proper

interpretation approach to be adopted in the case at bar (in furtherance of what has been suggested bycounsel for the Husband), the Manitoba Court of Appeal detailed the principles to apply when determining if a binding agreement wasreached in Matic et al. v. Waldner et al., 2016 MBCA 60 (“Matic”). [49] At paragraphs 55 and 57 in Matic, the Manitoba Court of Appeal confirmed as follows: [55] The standard for determining whether an agreement, written or oral, has been reached, is whether an “objective reasonable bystander”, looking at all the material facts, would say so. GHL Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell,2011) describes the test as follows (at p. 15):

Constantly reiterated in the judgments is the idea that the test of agreement for legal purposes is whether parties have indicated to theoutside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. Thelaw is concerned not with the parties’ intentions but with their manifested intentions.

It is not what an individual party believedor understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether a reasonableman in the situation of that party would have believed and understood that the other party was consenting to the identical terms.As Fraser C.J.A. said in Ron Ghitter Property Consultants Ltd. v.

Beaver Lumber Co, [2003 ABCA 221 at para. 9, 330 AR 353]: …the parties will be found to have reached a meeting of the minds, in other words be ad idem, where it is clear to the objectivereasonable bystander, in light of all the material facts, that the parties intended to contract and the essential terms of thatcontract can be determined with a reasonable degree of certainty. … [57] The principle that can be distilled from Bawitko and Ghitter (Ron) Property Consultants Ltd. v.

Beaver Lumber Co., 2003 ABCA221, 330 AR 353 (quoted by Fridman), is that there are three requirements for a binding contract – the intention to contract; theessential terms of the contract have been settled; and the terms are sufficiently certain. Whether the three requirements are metin any case is to be determined from the perspective of the objective reasonable bystander. (emphasis added) [50] The contractual

interpretation method outlined in Matic was followed lastyear by the Honourable Justice Grammond in Capital Commercial Real EstateServices Inc. v. Bibeau, 2022 MBQB 105 (“Bibeau”). [51] Subsequent to release of Justice Grammond’s decision in Bibeau, the Honourable Chief Justice issued his decision in ChristieBuilding Holding Company, Limited v. Shelter Canadian Properties Limited, 2022 MBKB 239 (“Christie”), whereincontractual

interpretation and the Supreme Court of Canada decision in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53,[2014] 2 SCR 633 (“Sattva”) was examined. [52] At paragraph 165 of my decision from earlier this year in 760, I included paragraphs 41 through 44 from Christie: [41] The general approach to contractual

interpretation is well known, and was summarized by Rothstein J. in Sattva asfollows (at para. 47): [47] ... [T]he

interpretation of contracts has evolved towards a practical, commonsense approach not dominated by technicalrules of construction. The overriding concern is to determine "the intent of the parties and the scope of their understanding"[citation omitted]. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary andgrammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of thecontract. [42] The role of surrounding circumstances in contractual

interpretation is to deepen a decision maker's understanding of themutual and objective intentions of the parties. As Rothstein J. wrote (Sattva, at para. 57): [57] While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowedto overwhelm the words of that agreement [citation omitted]. The goal of examining such evidence is to deepen a decision-maker'sunderstanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The

interpretation of awritten contractual provision must always be grounded in the text and read in light of the entire contract [citation omitted].

While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the textsuch that the court effectively creates a new agreement [citation omitted]. [43] Examples of relevant surrounding circumstances or the "factual matrix" include the genesis, aim or purpose of the contract, thenature of the relationship created by the contract and the nature or custom of the market or industry in which the contract was executed(see IFP Technologies (Canada) Inc. v. EnCana Midstream and Marketing, 2017 ABCA 157).

[44] As Rothstein J. remarked ( Sattva , at para. 58 ): [58] The nature of the evidence that can be relied upon under the rubric of ‘surrounding circumstances’ will necessarily vary from case to case. ... [T]his includes ... ‘ absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man’. The limits of what can be relied upon were expressed as follows: [58] ...

It should consist only of objective evidence of the background facts at the time of the execution of the contract [citation omitted] that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting....

Whether something was or reasonably ought to have been within the common knowledge of the parties at the time of execution of the contract is a question of fact. (emphasis added) Review of the March 9 th Agreement [53] With use of the foregoing interpretive tools from Christie (reinforcing application of Sattva ) as well as from Matic , my initial reaction is that the Husband’s position concerning the March 9 th Agreement should not be dismissed outright or be deemed untenable. [54] Objectively considered, I find that there is evidence which can reasonably support the Husband’s contention that the March 9 th Agreement (supplemented by the subsequent May 9 th Agreement) represents a full and final agreement with the Wife to resolve all property related matters between them, save and except any items specifically exempted, with a claim for interest being precluded.

In particular, I highlight the following:

a) There was absolutely no mention of a claim for interest made by the Wife (within her pleadings or otherwise) until this issue was raised within the Supplemental Case Conference Brief filed on her behalf in preparation for the June 21, 2023 Case Conference;

b) The quantum of equalization payment negotiated in favour of the Wife is not insignificant, such that a sum for interest could be substantial, depending upon the rate utilized and date from which interest is to accrue;

c) With Memo #1 and Memo #2 both being detailed, and when considered along with the memoranda issued from each Case Conference, there was a roadmap as to the status of property related issues (items resolved before the Master, the one unresolved issue to be determined by the Master, and the items that would be determined at trial), such that the late in the day notice of an intention on the part of the Wife to seek interest is an exception or anomaly;

d) Notice of a claim for interest earlier in these proceedings would have been in keeping with principles of full disclosure and transparency, so that the parties can make informed decisions during the course of their negotiations; and

e) The reality here is that this hearing, as scheduled, with a decision to be issued promptly in view of the trial scheduled to proceed next month, speaks to delay on the part of the Wife to make her intentions clearly known to the Husband (and the Court) with respect to requesting interest upon the agreed equalization payment. [55] It has been submitted by counsel for the Wife (in response to the concerns raised on behalf of the Husband) that the request for interest was made once there was more certainty as to the amount of the equalization payment that would be due in favour of the Wife. This is one way to describe was has unfolded.

[56] From the Court’s perspective, the words deliberate, calculated and tactical more aptly describe the decision made on behalf of the Wife to make a claim for interest after the parties had negotiated the amount to be payable by the Husband for family property equalization purposes. [57] It has been submitted that the Husband feels “blindsided” by the Wife’s last minute request for interest upon the agreed equalization payment.

As alluded to earlier, the Husband has expressed that he would "never have settled for such a large equalization payment had he been aware that interest was also being requested". [58] I do not find the Husband’s reaction to be unreasonable when considering the evidence before me.

In fact, the Wife does not dispute that the Husband held the above noted perception, asserting instead that the Husband has experienced counsel, who could have explained that a claim for interest did not have to be set forth within the originating pleadings, and could be raised at any time during the proceedings. [59] Unfortunately, what has unfolded in relation to the issue of interest has been counter-productive to the objective of proportionate resolution of disputes before the Court.

This outcome is concerning, especially in consideration of themes reviewed earlier within this decision, such as but not limited to the following:

a) certainty and closure (not uncertainty and further litigation with associated time and expense);

b) encouraging reliance upon and enforcement of domestic contracts;

c) full disclosure and transparency so that informed decisions can be formulated; and

d) negotiating in a good faith manner to minimize conflict and facilitate cooperation. [60] The FD Case Flow, which was implemented effective January 1, 2019, has a number of intended objectives, one of which is continually moving an action forward, through triage (where contested issues are identified) to a timely resolution at trial (with trial dates scheduled at the initial case conference).

In the case at bar, however, having to convene a hearing with the Master, a mere seven weeks before trial, following extended negotiations (which resulted in the March 9 th Agreement and the May 9 th Agreement), is not an approach to be encouraged or condoned. [61] All counsel are to passionately advocate for the rights and remedies of their client.

There can be so called collateral damage or adverse consequences though with aggressive advocacy, such as the other party and counsel becoming more confrontational and less cooperative. [62] For purposes of any future discussions or negotiations between the parties and counsel in this case, it would not at all be surprising if the Husband was wary of participating.

The adage of "fool me once, shame on you, fool me twice, shame on me" comes to mind in these circumstances. [63] It should be clarified, however, that despite the concerns I have expressed about the Wife's late in the day notice of her request for interest, I have not found that the conduct of counsel on behalf of the Wife rises to the extent or level of “sharp practice”. [64] In the case at bar, it has not been asserted on behalf of the Husband that there was an error, oversight or mistake on the part of the Husband (or more particularly by counsel for the Husband), which counsel for the Wife has pounced or seized upon insofar as negotiating the terms and conditions to be included within the March 9th, 2018 Agreement and the May 9th Agreement.

Rather, the Wife and the Husband acknowledge there was consensus reached, with the issue at this time being to determine if interest upon the negotiated equalization payment can still be pursued by the Wife. [65] At the end of the day, the Husband has maintained his belief that the March 9 th Agreement was comprehensive in relation to settlement of family property issues, including interest (especially when read together with the May 9 th Agreement as well as Memos #1 and 2). [66] Despite the concerns raised by the Court, and what I have reviewed thus far, application of the aforementioned contractual

interpretation principles to the facts and circumstances of this case does give rise to the following conclusions, which support or favour the Wife’s position:

a) The issue of interest was not listed within the Reference Order as an item to be determined by the Master during the Reference;

b) There is no mention of interest within the Report on Reference (Final);

c) Interest is not discussed at all within Memo #2;

d) Memo #1 did not mention interest either;

e) Paragraph 7(

d) of Memo #2 sets forth that the two issues specified (mode or manner of satisfying the equalization payment, and any associated income tax consequences) are adjourned to trial;

f) The final portion of paragraph 7(

g) in Memo #2 reads that "Any other items not mentioned within the foregoing listing, but contained within the Reference Order that is now filed, have also been settled, subject to what is set forth within the balance of this memorandum";

g) Paragraph 8 of Memo #2 confirms that the parties' respective shares and interests in the Manitoba Corporation and the Alberta Corporation are not items to be determined in the Reference; and

h) Within paragraph 9 of Memo #2, it describes that there has been "resolution of all but one of the outstanding issues that were noted within Memo #1" (accounting for payments made by the parties upon joint liabilities, which was subsequently settled in accordance with the May 9th Agreement). [67] Neither party raised any objection to the content of the Memo #2, or Memo #1 for that matter (each memorandum containing standard language confirming that the Court shall be notified within fourteen days in the event there is any opposition to what is contained therein). [68] As reviewed earlier, section 20(3) of the FPA does not specify when notice is to be provided regarding a claim for interest.

In addition, Justice Yard found in W.M. that it is not necessary for an interest claim to be included when filing an originating action, such as a petition or petition for divorce. [69] In recognition of the parties’ diverging positions (the Husband insisting that the foregoing agreements represented full and final settlement of property related matters, save and except any items that were specifically adjourned to trial, compared to the Wife’s persistent argument that her right and intention to seek interest was never waived), the result is a situation where despite the Husband's submissions, it can be reasonably concluded that there was no “meeting of the minds” as it relates to the issue of interest. [70] Ultimately, when assessing the evidence and applicable legal principles (as well as the

summary contained at paragraph 66 herein), I find that upon a balance of probabilities, the Wife has sufficiently established that her claim for interest is not precluded by the March 9th Agreement, or by the May 9th Agreement.

If a claim for interest is not precluded by the March 9 th Agreement, should interest be awarded upon the equalization payment? [71] As confirmed previously herein, section 20(3) of the FPA provides that interest may be granted where it is "equitable" to do so. [72] With respect to the argument advanced on behalf of the Wife (that a “ prima facie ” basis for awarding interest has been established in this case, which must be rebutted by the Husband), I respectfully disagree.

To the contrary, I read section 20(3) of the FPA as prescribing that the onus is upon the Wife in this case to demonstrate beyond a balance of probabilities that it is equitable to award interest upon the equalization payment negotiated by the parties. [73] The Husband is retired. He no longer farms. The Husband has described that he is suffering from health complications, and is ten years older than the Wife. His income currently consists of CPP and OAS benefits, as well as rent from leasing his remaining parcels of farm property. The Husband previously cashed in some of his RRSP's.

He also converted certain RRSP's to a RRIF. [74] The Wife is also not employed currently. She is in receipt of disability benefits, as well as spousal support payable by the Husband. The Wife also had RRSP’s which were cashed in by her, with proceeds utilized to attend to debt. [75] As noted by counsel for the Husband, the Wife is to receive sole title to 117 Ash and 129 Main Street, both of which can be rented to generate income for the Wife.

She will also soon have sole title to 113 Maple, another property that has a history of being rented. [76] In comparison to the Wife, however, the Husband has had access to and enjoyed ownership of various assets since separation, an example being the one parcel of farm property he sold in 2020 (for proceeds of approximately $400,000.00 according to counsel for the Wife). [77] Prior to negotiating the equalization payment (the March 9th Agreement), the Husband did not make any interim advance or voluntary payment to the Wife in relation to family property. [78] At the same time, no motion for an interim equalization was filed on behalf of the Wife.

Even though the "motions culture" has become a thing of the past with implementation of the FD Case Flow in January of 2019, a motion seeking interim property related relief can still be pursued. [79] Nonetheless, after considering the foregoing evidence, and the reality that a significant equalization payment has been negotiated, I find that it would be equitable for interest to be granted in favour of the Wife concerning the forthcoming equalization payment (subject to my further findings to follow).

From when should interest be payable, and at what rate? [80] Pursuant to section 20(3) of the FPA , the Court can impose interest upon all or a portion of the equalization payment as negotiated in this case, commencing no earlier than the date of separation (March 14, 2018). [81] A review of Registry reveals the following details of relevance:

a) Even though the parties separated on March 14, 2018, the Petition for Divorce was not filed until October 16, 2018 (Document #8), with the Answer being filed on November 16, 2018 (Document #18 );

b) On March 3, 2020, the Triage Brief of the Husband was filed (Document #50); and

c) There were no further proceedings before this Court until February 7, 2022, when a Request was filed on behalf of the Husband to move the matter to triage (after almost two years in which the parties were unable to conclude their dispute through arbitration). [82] When faced with determination of when interest should commence, a starting place is W.M. , where Justice Yard found that, generally speaking, interest should be awarded so as to put the payee spouse “… in the same position that party would have been had the required payment been made at the time of separation” (at paragraph 100) .

[83] I searched to determine if W.M. (or even Medley) had been recently considered by this Court, and came across the thoroughdecision issued by the Honourable Justice Horst only three months ago in Duncan v.

Magnusson, 2023 MBKB 87 (“Duncan”). [84] In Duncan, Justice Horst reviewed section 20(3) of the FPA as well as W.M., but determined that interest would not be awardedbecause the request was made in connection with a joint line of credit (an excluded intem which was not to be included with calculationof the applicable equalization payment). [85] Even where interest has been awarded, there are cases where the interest clock so to speak did not commence as of the date ofseparation. [86] In L.A.H. v.

G.W.H, 2005 MBQB 290 ("L.A.H."), the Honourable Justice Menzies expressed concern about the “… the lengthof time it has taken to bring this matter to court” (it being described within paragraph 32 of the decision that the Petition was filed inJanuary of 1996). [87] Upon considering the evidence presented and determining what rate of interest would be acceptable, Justice Menzies proceededwithin paragraphs 34 through paragraph 36 of L.A.H. to work through the “factors” which he believed ought to have an impact upon theultimate award for interest: [34] … While I find that rate acceptable, there are two factors which I believe must have an affect on the interest awarded. [35] Firstly, the Petitioner has had spousal support in the amount of $1,500.00 a month payable since the date of separation.

There issome likelihood that if the full $407,500.00 had been paid in a timely fashion, the award of spousal support would have been reduced. Iam satisfied that some allowance for that should be made in making an award of interest. [36] Secondly, although the Respondent has dragged his feet in bringing this matter to court, he cannot be held solelyresponsible for the nine years this has taken to finally come before the courts for a final order.

To permit interest at the full ratefor such a long period would not be equitable and may encourage the recipient of any payment to delay in bringing proceedings. (emphasis added) [88] The result in L.A.H. was that Justice Menzies awarded interest from the date of separation at a rate which was one half (50%) ofthe rate that had been determined to be acceptable upon the evidence (paragraphs 37 and 38). [89] Gates v.

Hrynkiw, 2005 MBQB 123 ("Gates") is a decision of my predecessor, the Honourable Master Harrison, where hedescribed the issue in relation to interest as follows (at paragraph 40): The basic question which must be considered by this court, some 11 years after separation, is why didn’t the parties make a timelysettlement, or move the matter onto hearing, and is that failure attributable to either or both parties? … [90] As summarized by Master Harrison within paragraphs 38 and 39 in Gates, counsel for the payee urged the Court to adopt theprinciples enunciated in W.M., whereas counsel for the payor referred to the Manitoba Court of Appeal decision in Watts v.

Watts, (MB CA) (“Watts”), where interest was not awarded because “… demonstration of unreasonable delay on the part of thepayor was not proved to the court”. [91] Master Harrison concluded at paragraph 40 in Gates that “A careful analysis of the facts reveals the sad reality that neither partyto this litigation pushed the marital property issues forward”. Accordingly, Master Harrison determined that interest would be payableupon the following basis (set forth within the balance of paragraph 40): [40] ... Given the extreme delay in this matter, the court finds that each party must bear responsibility.

In other words, one-half of thefault for the delay must rest with the respondent, and one-half rests with the petitioner/wife. It is equitable that the wife should receiveinterest for a period of five years after separation only… [92] In the case at bar, there was no cross-examination of the parties conducted during the course of this hearing, or prior to it.

As aresult, the Court is left with assessing credibility and weighing the evidence of each party based upon affidavit evidence solely. [93] As an illustration of the Court’s concern in this regard, the Wife contends that the Husband’s actions resulted in delay with theseproceedings, and by extension, a further period of time in which she was without her family property equalization payment. In response,the Husband claims it was the Wife’s conduct which gave rise to protracted proceedings.

Being unable to hear the Wife and theHusband testify, and be challenged in relation to their respective positions, places the Court in a difficult situation when determiningwhich evidence is to be preferred. [94] In view of the foregoing, I am unable to determine whether one party was more responsible than the other for any delay in these

proceedings. [95] It was reviewed earlier herein that the parties attempted to resolve the issues in dispute between through arbitration.

After approximately two years without resolution, and resignation of the selected arbitrator, the parties returned before the Court (there being no pleadings or other documentation filed in Registry from March of 2020 until February of 2022). [96] In the circumstances, when there was a mutual decision to utilize an alternate means of dispute resolution, I am not inclined to do anything other than carve out or exempt the period of time in which the Wife and the Husband were participating in arbitration when it comes to calculation of interest.

There was no mention by the Wife of her intention to request interest upon the agreed equalization payment until earlier this year (well after completion of arbitration last year), and I have no evidence as to what, if anything, was consented to or discussed by the parties during the arbitration process, and the potential impact upon these proceedings before the Court (including pending claims such as interest). [97] There is also the reality that section 20(3) of the FPA speaks to awarding interest where it is “equitable”. [98] Quite frankly, the Court has to consider whether the Wife is “coming to court with clean hands”, by raising a claim for interest at such a late date in these proceedings. [99] In Keown v.

Mainer , 2016 MBQB 73 (" Keown ") , the Honourable Justice Johnston made the following determination: [13] Whatever may have been the underlying reasons for the respective parties, the ultimate determination by this court was that there was sufficient “fault” attributable to both parties. The law set out in the D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry v. Henry; Hiemstra v. Hiemstra , 2006 SCC 37 , [2006] 2 S.C.R. 231 (“ D.B.S. ”) decisions, particularly respecting the explanation for delay, is akin to classic equitable principles. Where “clean hands” do not exist, equity must be refused.

When relief is refused, the result falls where it may. (emphasis added) [100] The Honourable Justice McKelvey included similar guidance at paragraph 48 of Vend-All Marketing Inc. v. Hunter et al ., 2014 MBQB 11 (" Vend-All ") : [48] … In 921250 Alberta Ltd. v. 762910 Alberta Inc. , 2003 ABQB 81 , 7 R.P.R. (4th) 209 at para. 29 , Rawlins J. quoted from J.

McGhee, ed., Snell’s Equity , 13th ed. (London: Sweet & Maxwell, 2000) at 676-77: … [T]he court may still refuse the equitable remedy of specific performance if the conduct of the claimant has been tricky or unfair, for “ he who comes into equity must come with clean hands, ” and the court is not bound to decree specific performance in every case … (emphasis added) [101] To my mind, the approach adopted by the Wife insofar as putting the issue of interest upon the agreed equalization payment before the Court (of which I have been critical) works against or diminishes the Wife's request for equitable relief.

In addition, the Husband is adamant that he would not have settled upon an equalization payment in an amount of $550,000.00 had he known that the Wife was seeking interest upon that sum, commencing as of the date of separation. [102] In recognition of the concerns I have expressed in relation to the Wife raising her claim for interest rather "late in the day" considering the March 9th Agreement (as well as the May 9th Agreement), and the approximate two year period in which the parties mutually committed to arbitration, I am not prepared to go back to the date of separation for commencement of interest upon the sum to be payable by the Husband to the Wife. [103] From the evidence before the Court, I also do not find that the conduct of the Husband or these circumstances warrants imposing a rate of interest that exceeds the rates prescribed pursuant to the The Court of King’s Bench Act, CCSM c C280 (the “ KB Act ” ).

Conclusion [104] It is my finding that it would be equitable to award the Wife with interest upon the agreed equalization payment of $550,000.00 in accordance with the pre-judgment and post judgment interest table pursuant to the KB Act , at

Part XIV, section 79(1) thereof, which shall be effective as of March 9, 2023 (the date of negotiating the March 9 th Agreement). [105] The aforementioned sum payable by the Husband to the Wife shall be increased by an amount of $37,000.00, effective May 9, 2023 (the date of negotiating the May 9th Agreement), with the above noted statutory rate of interest to continue until payment in full has been made by the Husband.

Outstanding Property Taxes

Summary of Wife’s Position [106] Counsel for the Wife submits that the agreed sum of $37,000.00 to be provided by the Husband to the Wife (pursuant to the May 9th Agreement) is intended to address payments that had already been made by the Wife upon joint liabilities following separation. Responsibility for joint debts, that have not yet been paid (such as property taxes), is a separate issue according to counsel for the Wife (and distinct from what was specifically set forth within the Reference Order). [107] With respect to the March 9th Agreement, paragraph 7(

b) from Memo #2 confirms that the Husband is to transfer his interest and title to 113 Maple in favour of the Wife, for one dollar, including all appliances (other than the dishwasher, which the Husband was to arrange to remove promptly). [108] At paragraph 7(

c) of Memo #2, it further provides that the Wife is to be responsible for any arrears in property taxes for 113 Maple (while it was believed by the parties at the time that the 2022 property taxes for 113 Maple Street had been paid in full, the Wife has inquired and learned there are arrears owing, as set forth at paragraph 13 of the Wife’s Affidavit). [109] In view of the foregoing, the Wife takes the position that any arrears in property taxes for the jointly owned properties, up to December 31, 2022, is a shared obligation of the Husband. [110] With the Wife to receive sole title for 117 Ash and 129 Main Street, as well as 113 Maple, together with 58 Bruce Street (the residence which she has occupied following separation), property taxes for 2023 and onwards for all of these properties is acknowledged by the Wife to be her responsibility, without contribution from the Husband. [111] The amount sought by the Wife for arrears in property taxes concerning 113 Maple Street, 117 Ash and 129 Main Street totals $8,342.06, and it is one half of this amount, or $4,171.03, which the Wife is requesting that the Husband be ordered to pay in her favour.

Summary of Husband’s Position [112] On page 6 of the Hearing Brief filed on behalf of the Husband, the perspective of the Husband is been succinctly stated as follows: It is the position of the petitioner that the issue surrounding the outstanding taxes were dealt completely with respect to the allocation of the additional $37,000 to Mrs.

Forster in this matter. [113] By taking title to the aforementioned jointly held properties, it is argued by counsel for the Husband that it is implicit the Wife should be responsible for any arrears in property taxes, unless expressly stipulated in writing to the contrary (which was not the case in these circumstances).

Analysis [114] Once again, the Court is experiencing a degree of concern and frustration insofar as why there is any uncertainty or dispute in this regard, when there have been two settlements reached (the March 9th Agreement and the May 9th Agreement). [115] The themes I have addressed in relation to interest (such as closure and certainty, encouraging parties to cooperate and reach settlements, full disclosure for negotiation purposes, respect for and enforcement of agreements, as well minimizing time and legal expenses) can be applied to this particular contested issue as well. [116] All of this being stated, I accept the

interpretation advanced on behalf of the Wife insofar as the May 9 th Agreement representing recovery for the Wife in relation to expenses already incurred, as opposed to arrears in property taxes which remain outstanding. [117] Counsel for the Wife is also correct in that the Reference Order does not specifically speak to joint liabilities of the parties, save and except what is contained within paragraph 4.6 thereof (such as the “debt under mortgage and operating loan” as well as the “RBC line of credit”). [118] In addition, Memo #2 (which outlines the terms and conditions reached pursuant to the March 9th Agreement) does not mention there being any consensus achieved or otherwise as to arrears in property taxes for 117 Ash and 129 Main Street (or even 58 Bruce Street). [119] Accordingly, I find that the property tax arrears for 117 Ash Street and 129 Main Street, up to and inclusive of December 31, 2022, remains a joint obligation of the parties, which was not impacted by virtue of the May 9 th Agreement.

The sum owing for 117 Ash Street is $2,302.95 while the outstanding amount for 129 Main Street is $2,192.53, for a total of $4,495.48. Upon this basis, the Husband is responsible for one-half of this total for property tax arrears ($2,247.74). [120] I am not, however, ordering the Husband to share the property tax arrears for 113 Maple Street. Even though the Wife has subsequently ascertained that arrears do exist, paragraph 7, at subparagraph (

c) within Memo #2, confirms clearly that the parties agreed as follows: c. The Wife is responsible for any arrears in property taxes for 113 Maple (it was believed, however, that 2022 property taxes were paid in full, with the Wife to be responsible for 2023 property taxes when due).

Conclusion [121] The Husband shall be responsible to pay the Wife an amount of $2,247.74 with respect to his equal share of the arrears in property taxes for 117 Ash Street and 129 Main Street up to and inclusive of December 31, 2022. [122] I order that the Husband shall pay his required share of the above noted property tax arrears to the Wife, or directly to the applicable municipality, on or before October 31, 2023.

Summary [123] Based upon the foregoing, I have determined as follows:

a) Despite my concerns insofar as what has transpired in relation to the March 9th Agreement, a claim by the Wife for interest upon the agreed equalization payment is not precluded;

b) It is equitable for the Husband to pay some interest upon the agreed equalization payment;

c) The Husband shall pay interest upon the agreed equalization payment at the rate prescribed pursuant to the KB Act , effective March 9, 2023 and until the date of the Wife being in receipt of the agreed equalization payment (with the principal sum outstanding to be increased in an amount of $37,000.00, as of May 9, 2023, in recognition of the terms set forth within the May 9 th Agreement); and

d) An amount of $2,247.74 shall be paid by the Husband to the Wife with respect to the Husband's share of outstanding property taxes (up to December 31, 2022). Costs [124] Given the outcome and mixed results achieved, the Court is hopeful that the parties will be able to reach a resolution in relation to the issue of costs for this Reference. In the event, however, that there is impasse concerning costs, a further brief hearing may be scheduled before me.

Confirmation of Report on Reference [125] Pursuant to Rule 54.09(1), this report shall be deemed to be confirmed upon the date which is 35 days after the date this report was signed (the "Deemed Confirmation Date"), unless a motion to oppose confirmation is filed and served in accordance with Rule 54.10(1). [126] With the date of release of this decision, however, and the trial to commence on October 17, 2023, the confir

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