r v. Loader, 2022 MBKB 195

Date: 20221019 Docket: FD 20-02-09069 (Brandon Centre) Indexed as: Loader v. Loader Cited as: 2022 MBKB 195 COURT OF KING'S BENCH OF MANITOBA B E T W E E N: Appearances/Counsel ) KENNETH ROBERT LOADER, ) RHEA MAJEWSKI Petitioner, ) for the Petitioner ) - and - ) ) ) LESLIE JANE LOADER, ) JODI WYMAN Respondent. ) for the Respondent ) ) JUDGMENT DELIVERED: ) October 19, 2022 LEVEN J.

SUMMARY [ 1 ] This is a dispute about a Master’s jurisdiction to determine the nature of a bank account (the “Bank Account”), in the context of a family law dispute. Among the other issues in dispute are some property issues, some of which will be referred to a Master in any event. [ 2 ] The Bank Account is in the Petitioner’s name. The Respondent alleges that the account is joint property. The Petitioner alleges that the money in the account belongs to his elderly mother, who has dementia.

The Petitioner and his sister have Powers of Attorney and are allegedly holding the money in trust. [ 3 ] The Respondent says this issue should be referred to the Master, along with the other issues that will be referred to the Master in any event. The Petitioner says the Master has no jurisdiction, and the issue must be adjudicated by a judge.

[ 4 ] This is apparently a case of first impression. [ 5 ] For the reasons explained below, I conclude that referring the issue to the Master is allowed by the King’s Bench Rules , and is the option most consistent with the proportionality Rules. BACKGROUND [ 6 ] In her December 13, 2021 Triage Brief, Petitioner’s counsel explained her position about the Bank Account: “With respect to the savings account, this account is comprised completely of funds that belong to [the Petitioner’s] elderly mother. [The Petitioner’s] mother has dementia and [the Petitioner] and his sister are her joint Powers of Attorney.

It became known to [the Petitioner] and his sister that his mother was being exploited and that an individual was utilizing her funds. It was agreed by both [the Petitioner] and his sister that half of the funds would be preserved by [the Petitioner] and the remaining half by [the Petitioner’s] sister. These funds are to beutilized for the benefit of [the Petitioner’s] mother until her death, at which time they would be an inheritance.

We say these funds are not shareable.” [ 7 ] The Respondent’s position is that the issue of the legal status of the Bank Account under The Family Property Act, CCSM cF25 ( the “FPA”) is an issue that should be referred to the Master [the Master would have jurisdiction under the Court of King’s Bench Rules , Man. Reg. 553/88 (the “ Rules ”) including Rule 70.25(3) ]. [ 8 ] The Petitioner’s position is that the Master has no jurisdiction, because the FPA does not apply to the Bank Account, and there is no need for a “valuation” of the account (because the parties agree on the value).

Rule 70.25(4) uses the words “valued” and “valuation”. Again, only a judge would have jurisdiction. [ 9 ] The issue was raised at a case conference. I ruled that that the dispute would be adjudicated as a “paper hearing”. Both parties made written submissions. Neither party submitted case law. SUBMISSIONS [ 10 ] As summarized above, the Petitioner argued that, if the “value” of the Bank Account were in dispute, a Master would have potential jurisdiction (under a reference) under Rule 70.25(4) to do a “valuation” of the Bank Account.

However, as the value of the account is not in dispute, that Rule does not assist the Respondent. [ 11 ] The Petitioner argued that there is no other statute or regulation that would give a Master potential jurisdiction to decide whether the Bank Account belongs to the Petitioner, or whether it really belongs to his elderly mother. Only a judge would have jurisdiction. [ 12 ] In her brief, the Respondent relied on Rule 70.25(3) (quoted in full below).

That Rule begins: If issues of shareability of assets or liabilities or ownership of assets are to be determined on a reference… [ 13 ] The Respondent argued that Rule 70.25(3) treats “shareability” and “ownership” as two separate concepts. The Petitioner argues that the money in the Bank Account is owned by the Petitioner’s elderly mother (and the Petitioner and his sister merely hold it in trust). The Respondent disagrees.

Therefore, the dispute is about “ownership” and, therefore, the dispute can properly be included in a reference to a Master. [ 14 ] Finally, the Respondent argued, “in the interests of proportionality, to send two of the three assets in dispute to the Master, and leave the third for trial, will only lengthen the litigation for the parties and hinder a timely settlement.” [ 15 ] Relevant sections of the FPA include:

Definitions 1(1) In this Act, "asset" means any real or personal property or legal or equitable interest therein including, without restricting the generality of the foregoing, a chose in action, money, jewelry and a family home, but not including any

article of personal apparel… "family asset" means an asset owned by two spouses or common-law partners or either of them and used for shelter or transportation, or for household, educational, recreational, social or aesthetic purposes, including, without restricting the generality of the foregoing, (

a) a family home, (

b) money in a savings account, chequing account or current account with a bank, trust company, credit union or other financial institution where the account is ordinarily used for shelter or transportation or for household, educational, recreational, social or aesthetic purposes, and saving bonds and deposit receipts intended to be used for those purposes….. (

d) an asset over which a spouse or common-law partner has, either alone or in conjunction with another person, a power of appointment exercisable in favour of the spouse or common-law partner, if the asset would be a family asset if it were owned by the spouse or common-law partner, and (

e) an asset disposed of by a spouse or common-law partner but over which the spouse or common-law partner has, either alone or in conjunction with another person, a power to revoke the disposition or a power to use or dispose of the asset, if the asset would be a family asset if it were owned by the spouse or common-law partner…

Asset transferred etc. 6(4) Subject to subsections (7), (7.1), (8), (9), (9.1) and (10) and to any order of a court made under

Part III or IV, this Act does not apply to an asset that a spouse or common-law partner no longer owns as at the closing date established for any accounting under this Act in which the asset would otherwise have been included under the Act. Gift, trust benefit 7(1) This Act does not apply to any asset acquired by a spouse or common-law partner by way of gift or trust benefit from a third person, unless it can be shown that the gift or benefit was conferred with the intention of benefiting both spouses or common-law partners.

Gift of insurance premiums 7(2) This Act does not apply to the proceeds of the surrender or the cash surrender value of any insurance policy where the premiums of the policy were paid by a third person by way of gift in favour of a spouse or common-law partner, unless it can be shown that the premiums were paid with the intention of benefiting both spouses or common-law partners.

Inheritance 7(3) This Act does not apply to any asset acquired by a spouse or common-law partner by way of inheritance, unless it can be shown that the inheritance was devised or bequeathed with the intention of benefiting both spouses or common-law partners…. Asset already shared 10 This Act does not apply to any asset that has already been shared equally between spouses or common-law partners, or that is acquired by one spouse or common-law partner from the other by virtue of a sharing of assets under this Act….

Right to accounting and equalization of assets 13 Each spouse and common-law partner has the right upon application to an accounting and, subject to

section 14, an equalization of assets in accordance with this Part…. Accounting and division 15(1) In an accounting of assets between spouses or common-law partners under this Act, there shall be ascertained (

a) the value of the total inventory of assets of each spouse or common-law partner, after adding to or deducting from the inventory such amounts as are required under this Act to be added or deducted; (

b) the value of the share to which each spouse or common-law partner is entitled upon the division, to be determined by combining the values ascertained under clause (

a) and dividing the total into two equal shares or, where the application for an accounting is not under

Part IV, such other shares as the court may under

section 14 order; and (

c) the amount payable by one spouse or common-law partner to the other in order to satisfy the share of each spouse or common-law partner as determined under clause (b)….

Applications to court 18(1) In any question or dispute arising under this Act or where there is a breach of a provision of this Act, the spouses or common-law partners affected or either of them may apply to the Court of King's Bench and the court may make such order or give such judgment with respect to the application and the costs thereof as it thinks fit, or may direct the application to stand over from time to time and an inquiry or issue touching the matters raised in the application to be made or tried in such manner as it thinks fit….

Applicant’s statement of assets and liabilities 18(3) A spouse or common-law partner shall at the time of making an application under this Part file with the court a sworn statement disclosing all assets and liabilities of that spouse or common-law partner whether or not they are shareable under this Act….

[ 16 ] Relevant portions of the Rules include: General principle 1.04(1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. Proportionality 1.04(1.1) In applying these rules in a proceeding, the court is to make orders and give directions that are proportionate to the following: (

a) the nature of the proceeding; (

b) the amount that is probably at issue in the proceeding; (

c) the complexity of the issues involved in the proceeding; (

d) the likely expense of the proceeding to the parties…. Orders on Terms 1.05 When making an order under these rules the court may impose such terms and give such directions as are just…. Reference of whole proceeding or issue 54.02(1) Subject to any right to have an issue tried by a jury, a judge may at any time in a proceeding direct a reference of the whole proceeding or a reference to determine an issue where…. (

b) a prolonged examination of documents or an investigation is required that, in the opinion of the judge, cannot conveniently be made at trial… Reference Directed to a Master 54.03 A reference shall be directed to a master. Order 54.04(1) An order directing a reference (

a) shall (

i) specify the nature and subject matter of the reference, (ii) designate which party is to have carriage of the reference, and… (

b) may (

i) direct in general terms that all necessary inquires be made, accounts taken and costs assessed, and (ii) contain directions for the conduct of the reference…

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… (

b) secure the just, most expeditious and least expensive determination of every family proceeding on its merits. Proportionality 70.02.1(2) Securing the just, most expeditious and least expensive determination of a family proceeding on its merits includes, so far as is practicable, conducting the proceeding and allocating appropriate court resources to the proceeding in ways that are proportionate to (

a) the interests of any child affected; (

b) the importance of the issues in dispute; (

c) the amount of support and the value of the property likely at issue in the proceeding; (

d) the complexity of the proceeding; and (

e) the likely expense of the proceeding to the parties.... Family Property Act references 70.25(1) This rule applies to a reference before a master for an accounting of assets and liabilities between spouses or common-law partners under

section 15 of The Family Property Act or for any other matter under The Family Property Act directed by a judge for a reference before a master…. Separate reference on other issues 70.25(1.4) If there are any family property issues which remain unresolved, either by written agreement or court order, other than the dates set out in subrule (1.1), a party must bring a motion for an order of reference on those issues. The motion must be brought (

a) prior to the triage conference, with the consent of both parties; or (

b) at the triage conference, for determination by the triage judge….. Order of reference 70.25(2) An order directing a reference to a master for an accounting of assets and liabilities pursuant to

section 15 of The Family Property Act shall set out the valuation date determined in accordance with

section 16 of that Act unless the issue of determining the valuation date is specifically referred to the master in the order. Directions from judge re shareability issues 70.25(3) If issues of shareability of assets or liabilities or ownership of assets are to be determined on the reference, directions shall be set out in the order of reference to delegate the determination of these issues to the master as part of the scope of the reference. [underlining added] Directions from judge re non-shareable assets of debts

70.25(4) If jointly held assets or liabilities, or other assets or liabilities, alleged to be excluded from the application of The Family Property Act are to be valued on a reference, a specific direction for the valuation of such assets or liabilities shall be set out in the order of reference. [underlining added] DECISION [ 17 ] Rule 70.25(4) deals with two types of assets. The first is “jointly held assets”. The second is assets “alleged to be excluded from the application of The Family Property Act” . Assets might be excluded from the FPA under various provisions, including section 5(1) (assets disposed of by spousal agreement),

section 10 (assets already shared equally by the spouses), section 7(1) (gifts), section 7(3) (inheritances), section 8(1) (damage awards for personal injury), and other provisions. There are some specific exceptions within the provisions mentioned. [ 18 ] The FPA never actually uses the term “jointly held assets”. However,

section 10 of the FPA (quoted above) does deal with assets already shared equally (the FPA does not apply to them). Counsel sometimes use the term “joint property” as verbal shorthand for “assets already shared equally”. [ 19 ] The FPA never actually uses the word “shareability”. However, sections 18(3) and 18(4) use the word “shareable”. Those sections essentially imply that some assets are “shareable” under the FPA and some are not. [ 20 ] The FPA never actually uses the word “ownership”.

However, several sections use the words “owns” or “owned” (e.g. section 6(4), which deals with assets no longer owned by a spouse or common-law partner). [ 21 ] Rule 70.25(4) contemplates that the parties to the dispute might disagree about the nature of certain assets (one party might argue that the PFA applies to the assets and the other party might argue that the FPA does not apply to the assets). The Rule contemplates that Masters might adjudicate the “valuation” of such disputed assets. [ 22 ] The parties agree that the dispute is not about the “valuation” of the Bank Account.

Therefore, on its face, Rule 70.25(4) would not be relevant to this dispute, because that Rule deals with “valuation” of certain assets by a Master on a reference. [ 23 ] The Respondent relies on Rule 70.25(3), which treats “shareability” and “ownership” of assets as two distinct concepts, and says that Masters can determine both. [ 24 ] The Respondent’s argument is compelling. The Petitioner argues that the money in the Bank Account is owned by the elderly mother. The Respondent disagrees.

How could this dispute not be characterized as a dispute about “ownership”? [ 25 ] Perhaps it could be argued that Rule 70.25 only applies to FPA disputes. Rule 70.25(1) explicitly references the FPA. The FPA explicitly mentions certain assets owned by certain people (e.g. in section 6(4)). Therefore, Rule 70.25(3) might give a Master potential jurisdiction to grapple with an “ownership” dispute under FPA section 6(4). However, the argument would continue, the Master has no jurisdiction to grapple with “ownership” disputes completely outside the FPA, such as a dispute about trust law. [ 26 ] To be blunt, the

interpretation outlined above is a tortured

interpretation. As noted, the FPA does not actually use the word “ownership”. Therefore, the most reasonable

interpretation of Rule 70.25(3) is that the Rule uses “ownership” in the broadest sense of the word. Therefore, the Master would have potential jurisdiction to grapple with the dispute about the Bank Account. [ 27 ] The issue remains, should the dispute about the Bank Account be referred to the Master? [ 28 ] The answer to that question lies within Rule 54.02(1): Reference of whole proceeding or issue 54.02(1) Subject to any right to have an issue tried by a jury, a judge may at any time in a proceeding direct a reference of the whole proceeding or a reference to determine an issue where, (

a) all affected parties consent; (

b) a prolonged examination of documents or an investigation is required that, in the opinion of the judge, cannot conveniently be made at trial; or (

c) a substantial issue in dispute requires the taking of accounts. [ 29 ] Rule 54.02(1) contemplates that there might be cases which a Master could properly adjudicate both the status and the value of a disputed asset in a family dispute. It might ultimately turn out that the FPA does not apply to the asset, but it is the Master who would have jurisdiction to make that determination. [ 30 ] Rule 54.02(1) must be interpreted in conjunction with Rule 70.02.1 (proportionality in family proceedings).

[ 31 ] What about the case at bar? The parties obviously do not consent to the Master dealing with the issue of the status of the Bank Account. So, Rule 54.02(1)(

a) is irrelevant. [ 32 ] At this stage of the proceedings, many questions about the Bank Account remain unanswered. It is not clear how many documents exist that relate to the Bank Account (e.g. monthly statements, cancelled cheques, deposit slips, electronic transfer slips, other banking documents). The Petitioner asserts that the Petitioner holds a Power of Attorney, so there must be at least one Power of Attorney document. There might be relevant correspondence between the Petitioner and the bank. There might be other relevant documents. [ 33 ] The trial in this matter is scheduled for March 28-29, 2023.

Spousal support and property issues are in dispute. Other specific property issues must be adjudicated by the Master in any event. [ 34 ] The proportionality Rule refers to the “just, most expeditious and least expensive determination of a family proceeding on its merits”. [ 35 ] To determine the status of the Bank Account, at least some examination of documents, and some investigation will be required. [ 36 ] In general, this court encourages parties to resolve their disputes without the need for litigation.

If the status of the Bank Account can be determined by a Master as part of the same hearing in which the Master deals with the other property issues, the parties may be a better position to resolve their entire dispute before the scheduled trial begins on March 28, 2023. [ 37 ] I conclude that an investigation into the status of the Bank Account cannot conveniently be made at trial.

Therefore, based on Rule 54.02(1)(b), interpreted in conjunction with Rule 70.02.1, I refer the matter of the Bank’s Account status (i.e. whether it is “as asset that has already been equally shared between spouses”, whether the Petitioner is holding it in trust for his mother, or whether it has some other legal status) to a Master, to be scheduled (if possible) for the same date(

s) as the other property hearing before that Master. [ 38 ] The Respondent was completely successful in respect to this “paper hearing” and shall have ordinary (tariff) costs, in any event of the cause. __________________J.