Boelman v Boelman, 2023 ABKB 159

Court of King’s Bench of Alberta Citation: Boelman v Boelman, 2023 ABKB 159 Date: 20230327 Docket: 4803 169501 Registry: Edmonton Between: Kelly Lynn Boelman Plaintiff - and - Luke Aeisso Boelman and Carmen Mittelstadt Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice Leonard _______________________________________________________ Corrected judgment: A corrigendum was issued on March 27, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. ISSUES [ 1 ] Ms.

Boelman, who now goes by her maiden name Ms. Nickerson, filed a Statement of Claim for Divorce and Division of Matrimonial Property on September 25, 2014, seeking a divorce, division of matrimonial property, and spousal support from Mr. Boelman. An Amended Statement of Claim was filed on October 22, 2014. Mr. Boelman’s Statement of Defence was filed on November 17, 2014. He did not file a Counterclaim. He filed an Amended Statement of Defence on September 19, 2018. [ 2 ] On August 1, 2017, Ms. Nickerson filed a Notice of Application against Ms. Mittelstadt pursuant to s 10 of the Matrimonial

Property Act , RSA 2000, c M-8 . Ms. Mittelstadt defended the claim, filing a Statement of Defence on February 23, 2018. She is a party to this litigation. [ 3 ] There are two distinct overarching issues before the Court that touch on the issues of division of matrimonial property and spousal support that must be addressed at the outset. [ 4 ] The first issue relates to the characterization of funds received by Ms. Nickerson pursuant to two court orders. Ms. Nickerson asks the Court to characterize these funds as spousal support while Mr. Boelman urges the Court to characterize them as advances on property.

A subsidiary issue arising from the funds received by Ms. Nickerson is whether Mr. Boelman should share responsibility for the tax liabilities Ms. Nickerson has incurred and paid in relation to these funds. [ 5 ] The second issue involves Ms. Mittelstadt and the s 10 claim. The issue is whether a business arrangement between by Mr. Boelman and Ms. Mittelstadt deprived Ms. Nickerson of her share of the Matrimonial Property such that property now owned by Ms. Mittelstadt should be treated as matrimonial property owned by Mr. Boelman pursuant to s 10 of the Matrimonial Property Act .

BACKGROUND FACTS [ 6 ] The parties began living together in November 1996 and were married on November 1, 1997. They separated on September 28, 2013 and have lived separate and apart since that time. There is no possibility of reconciliation. The parties have two children, born in September 1999 and December 2003 respectively. Following the separation, the children initially lived with Mr. Boelman. In 2014, they began living with Ms. Nickerson and have had little contact with their father since that time. [ 7 ] Mr. Boelman is presently 55 years old and Ms. Nickerson is 52 years old. Mr.

Boelman is an intergenerational cattle farmer. He grew up on a farm that his father bought in 1961. Mr. Boelman joined the local 4-H Club when he was 9 years old. His father gave him a steer and Mr. Boelman kept the proceeds from its sale. Prior to meeting Ms. Nickerson, he farmed on three parcels of land. He bought two parcels of land in 1994 and co-owned a parcel with his father, Eppo Boelman. Mr. Eppo Boelman died in 1996 and left Mr. Boelman his interest in the parcel they co-owned together, along with two additional parcels of land.

The farm currently consists of 5 parcels of land that will be discussed in greater detail below. The parties are in agreement regarding the exemptions Mr. Boelman has in these farmlands. [ 8 ] Prior to meeting Mr. Boelman, Ms. Nickerson had completed a diploma in Tourism Guiding and Development from the Atlantic Canada Opportunities Agency and a secretarial program at Burridge Community College. In the fall of 1995, when Ms. Nickerson was approximately 25 years old, she moved from Nova Scotia to Alberta and met Mr. Boelman shortly thereafter.

She was initially unemployed but then began working as a personal service attendant and a teller at a bank. [ 9 ] Ms. Nickerson started staying with Mr. Boelman in September 1996 and was fully moved in by November 1996. Ms. Nickerson testified that when she started dating Mr. Boelman, she began working on the farm. She drove a tractor, fed cattle, did needling, shovelled grain, cleaned barns, and birthed baby animals. The parties were married a year later, in November 1997, and continued to live on the farm. [ 10 ] Throughout their marriage, the parties made use of a joint account with the Bank of Nova Scotia.

All household, family, and farming expenses went through the same account with the Bank of Nova Scotia (the Farm Account). Ms. Nickerson also had a bank account where, according to Mr. Boelman, she kept the money she earned from her jobs. CREDIBILITY AND RELIABILITY OF WITNESSES Ms. Nickerson [ 11 ] Mr. Boelman argues Ms. Nickerson is not a credible witness and that her evidence should be considered carefully given her post-separation conduct. [ 12 ] I understand that Ms. Nickerson pled guilty to theft under $5,000 arising from her entry into the matrimonial home post- separation.

The details of this conviction are limited. [ 13 ] In addition, post-separation, Ms. Nickerson changed the mailing address of one of the parties’ statements for a joint MBNA Oilers credit card account, to the address of her new home. Previously, the statements for this credit card went to the matrimonial home. Mr. Boelman’s position is that Ms. Nickerson did this so that he would not see her expenditures. Ms. Nickerson’s position is that this was a joint account and Mr. Boelman could have seen the account details online. [ 14 ] Mr. Boelman also contends that Ms.

Nickerson’s credibility is suspect because she allegedly failed to disclose an account with the Bank of Montreal (BMO). He relies on cheques from 2005 to support his position that this account exists. [ 15 ] Ms. Nickerson, in cross-examination, denied currently or ever having an account with BMO. She also denied receiving disclosure establishing that she has an account with BMO. She was then shown a bundle of cheques for account XXX8616 from 2005 and 2006. She explained these were companion cheques for the BMO Mastercard that the parties shared. She testified both she and Mr.

Boelman received these companion cheques so that they could be used if the card was not accepted. Her evidence was that they both received cheques with their own names on them. [ 16 ] I acknowledge that some of Ms. Nickerson’s conduct post-separation was questionable. She moved money between accounts, she changed the mailing address for a joint credit card and pled guilty to an offence in the post-separation period. I also accept that when

she left the matrimonial home, she had virtually nothing and minimal means of earning an income. [ 17 ] Although some of this conduct was not appropriate and her evidence regarding the movement of money was not entirely forthcoming, I found Ms. Nickerson’s evidence regarding her knowledge of farming to be compelling and detailed. She struck me as an individual with significant knowledge of farming life, from the perspective of a farming wife. Mr. Boelman [ 18 ] Mr. Boelman is an extremely knowledgeable and experienced cattle farmer.

When he testified about farming and cattle, his evidence flowed easily and clearly. He has some memory issues, but these did not impact his evidence on key issues, nor did they detract from his ability to present clear and cogent evidence. Ms. Mittelstadt [ 19 ] Ms. Mittelstadt testified clearly and honestly. On numerous occasions during the proceedings, Ms. Mittelstadt interjected to voice concerns or viewpoints that were timely and of assistance to the Court. I acknowledge her candour and forthrightness. Brenda Pisko [ 20 ] Ms.

Brenda Pisko was tendered by the Plaintiff as an expert in the area of chartered accounting with an expertise in the distribution of matrimonial property and the preparation of matrimonial property statements. She prepared Matrimonial Property Statements for 2014 and 2021. The evidence she relied on to prepare the Matrimonial Property Statements consisted of the sworn statements of the parties, their personal Income Tax Returns, the Farmbooks, the property appraisals, as well as bank statements. She did not perform any property valuations. [ 21 ] Ms.

Pisko testified that she did not consider whether any assets were dissipated. She explained that if the Court finds there was dissipation of assets, the value of these assets would be added to the asset column of the person who dissipated the asset. [ 22 ] Mr. Boelman argues Ms. Pisko did not fulfill her duties as an expert witness and was biased in favour of Ms. Nickerson. Counsel argues Ms. Pisko relied solely on information provided to her by Ms. Nickerson and did not conduct any independent evaluations of the information. [ 23 ] I find that Ms. Pisko was not biased.

She testified in a dispassionate and professional manner, providing evidence and information regarding the preparation of matrimonial property statements. Ms. Pisko was not confronted on the issue of partiality and was not given an opportunity to respond to this allegation. Further, in her evidence, she clearly indicated what information she relied upon to create the Matrimonial Property Statements. In some instances, she relied on values provided by Ms.

Nickerson; however, most of the information she relied upon came from the Farmbooks, sworn statements of income, assets and liabilities, Income Tax Returns, bank statements, credit card statements, and appraisals. [ 24 ] Farmbooks are books kept by farmers where they record their annual income and expenses. Entries are made by hand and include cattle sold and purchased, and expenses paid for tools, equipment, interest, insurance, machinery, rent, feed, veterinary charges, etc. In this case, the entries in the Farmbooks were primarily made by Mr. Boelman. [ 25 ] While Mr. Boelman questions the partiality of Ms.

Pisko, many of the values on the Matrimonial Property Statements have been agreed to by the parties. Only items in dispute will be dealt with in these Reasons. Where there is a dispute, I will canvass the position of each party and render a decision. DIVORCE [ 26 ] Based upon the Agreed Statement of Facts filed by the parties and the evidence I heard, I am satisfied that there has been a breakdown in Mr. Boelman and Ms. Nickerson’s marriage. They have been living separate and apart for well over one year.

Although they have two children, it is agreed the children are adults and no longer children of the marriage. [ 27 ] I am satisfied the other requirements of the Divorce Act , RSC 1985, c 3 (2nd Supp ) have been met including that there has been no collusion and there is no possibility of reconciliation. [ 28 ] I grant the Divorce Judgment sought in the pleadings and direct it be included in the formal order that flows from this Decision. FUNDS RECEIVED BY MS. NICKERSON PURSUANT TO COURT ORDERS [ 29 ] The first issue for determination is how the Court should treat funds Ms.

Nickerson received pursuant to two court orders: as spousal support or as an advance against a division of the parties’ matrimonial property. The funds were the net cattle proceeds from sales that occurred at auction marts. [ 30 ] Following the separation, Ms. Nickerson testified that Mr. Boelman kept almost all the farm income. As a result, she sought

an order for, inter alia , interim costs in the amount of $60,000, the sale of land (15-61-27 W4, E1/2 of 16-61-27 W4), the sale of the entire herd of cattle, and the sale of all the farm machinery. [ 31 ] On February 12, 2015, Justice Michalyshyn granted an order directing that “The funds held to the parties’ credit by Livestock Identification Services shall be paid in equal shares to the parties through their solicitors ...” (2015 Order).

The 2015 Order also contained the following clause: The net sale proceeds of any further cattle sales shall be held by Livestock Identification Services until further agreement between the parties or Court Order. [ 32 ] On March 16, 2017, Justice Macklin granted an order varying the 2015 Order such that Mr. Boelman would receive 67.5% of the net cattle sale proceeds from Livestock Identification Services (LIS) and Ms.

Nickerson would receive 32.5% of the net cattle sale proceeds (the 2017 Order). [ 33 ] These Orders were provided to LIS so that the proceeds from the sale of cattle at auction marts were held rather than being given to Mr. Boelman. Cattle sold at auction were inspected by brand inspectors. When the brand inspectors saw cattle bearing Mr. Boelman and Ms. Nickerson’s brand, they would document it and indicate that LIS was to hold the funds. The money on the sale was then sent to LIS. [ 34 ] Ms. Nickerson received $468,032.86 in total in cattle revenue payments (cattle proceeds).

She included the cattle proceeds she received in her Income Tax Returns as farming income and incurred a substantial tax liability ($118,708.51) as a result. [ 35 ] Ms. Nickerson’s position is that the cattle proceeds should be considered primarily an advance on spousal support, while Mr. Boelman asserts the proceeds should be characterized as an advance on property division . [ 36 ] The funds received by Ms. Nickerson are a mixture of both capital and income. Had Mr.

Boelman received the funds, he would have presumably used them to pay off debts incurred in the cattle operation (care, feed, and maintenance) and to replenish his stock of cattle. The profit on the sales would have been a small percentage of the total amount. [ 37 ] Support is generally paid from income, not capital. In Colivas v Colivas , 2013 ONSC 168 , an interim support order was made that combined income and capital. The Court explained at para 37: This is an extraordinary situation where the support payable is based on a mixture of income and capital.

As such, I want to ensure that the trial judge has as much flexibility as possible to re-adjust and/or re-characterize any amounts paid, in order to justly allocate the economic consequences of the marriage between the parties. According [sic], the support orders made today are without prejudice to: (1) the trial judge’s discretion to retroactively vary the allocation of child and spousal support once Mr. Colivas’ income is more accurately determined; and, (2) the trial judge's discretion to re-characterize some portion of the spousal support payments made by Mr.

Colivas pursuant to this order as transfers of capital, or an advance on an equalization payment, as the case may be, so as to fairly equalize the parties’ net family property and to address any issues of double dipping that the trial judge considers appropriate. [ 38 ] The amounts received by Ms. Nickerson varied each year, depending on the number of cattle Mr. Boelman sold at auction. As will be discussed later in these Reasons, starting in 2016, Mr. Boelman took steps to reduce the amount of money that would be paid to Ms. Nickerson. As a result, the amount of money Ms.

Nickerson received each year from the cattle sales was not predictable. The table below shows amounts received by Ms. Nickerson between 2015 and 2021: YEAR TOTAL PAYMENT 2015 $229,060.12 2016 $94,531.38 2017 $73,518.04 2018 $19,543.11 2019 $24.662.36 2020 $19,673.58 2021 $5,711.69 2022 $2,323.58 TOTAL CATTLE PROCEEDS $468,023.86 [ 39 ] The cattle proceeds are not the only funds Ms. Nickerson was receiving during this period. Pursuant to a court order dated November 12, 2014 (the Support Order), Ms.

Nickerson began receiving child support in the amount of $700 per month and spousal support in the amount of $1,000 per month, commencing December 1, 2014. On July 20, 2021, the Support Order was varied to reduce the amount of child support paid to $412 for one child. The spousal support amount of $1,000 per month, remained in effect and continues to this day. [ 40 ] In Meydaner v Meydaner , 2020 ONSC 3857 , additional reasons 2020 ONSC 5574 , the Court dealt with a similar situation where Mrs. Meydaner received a lump sum payment, as well as regular support payments.

The lump sum payment was the result of interim orders related to the advance disbursement of funds from the net proceeds from the sale of the matrimonial home. These payments created confusion regarding the treatment of a $60,000 advance payment made to Mrs. Meydaner.

The Court ultimately concluded that the $60,000 advance payment was an advance against an equalization award. [ 41 ] Justice Tzimas concluded at paras 4 and 5: 4 Beginning with the payment of $60,000, when considered in its full context, although the court did not expressly characterize it as a sum to be applied against a future equalization payment, the implication in the judge’s reasoning is that the advance payment would serve such a purpose. I arrive at that conclusion because the said order made separate support orders for the payment of child and

spousal support as well as

section 7 payments. Even if Mrs. Meydaner said she used the $60,000 to support herself and her children, that sum was ordered in addition to the other support payments. [emphasis added] 5 Moreover, the judge’s explanation for his rejection of an analogous advance to Mr. Meydaner suggested his anticipation of future financial obligations by Mr. Meydaner to Mrs. Meydaner, that would have included equalization.

I draw specific attention to the following explanation: “Several areas of dispute remain outstanding with respect to the value of the Respondent’s property in Turkey; the Respondent’s primary sources of income are from Turkey, he has no local income. The net proceeds remain the only source for any security the Applicant may seek for any support or other order.

For all these reasons, the Respondent’s application for a $60,000 pay-out from the proceeds is deferred until disclosure issues between the parties are completed.” I conclude that in all the circumstances it is appropriate that the sum of $60,000 be treated as an advance payment against an equalization award in Mrs. Meydaner’s favour. [ 42 ] Given the unpredictable nature of the payments, the fact that they were paid from both income and capital, and the fact that Ms.

Nickerson was in receipt of spousal support from a separate court order granted in 2014 that was and remains in effect, I conclude that the payments received by Ms. Nickerson on account of cattle sales should be characterized as an advance against a division of the parties’ matrimonial property. [ 43 ] Ms. Nickerson reported the funds she received from the cattle sales as farming income on her Income Tax Returns. Having concluded that the funds shall be treated as an advance on property division, I must determine whether Ms.

Nickerson should be solely responsible for the tax liability associated with the funds, or whether Mr. Boelman should be required to share responsibility for a portion of this liability. The total tax liability on the funds is $118,708.51 . Ms. Nickerson has paid $31,300.91 of this amount leaving a balance owing of $87,407.60. [ 44 ] Ms. Nickerson received the cattle proceeds without having to pay for any of the farm’s liabilities. Mr. Boelman’s evidence was that the profit margin on the sale of a cow is between 2-5%. Because he only received 50% of the sale proceeds, he was unable to pay the farm’s debts.

As will be discussed in greater detail in the next section, this created a significant financial problem for Mr. Boelman. [ 45 ] Mr. Boelman’s position is that Ms. Nickerson knew what the effect would be of taking half of the cattle proceeds and that she intentionally created this problem to cause him harm. Ms. Nickerson’s position is that she was in need of support and sought relief from the Court. Mr. Boelman could have appealed the 2015 Order but did not. [ 46 ] Because Ms. Nickerson did not have any farming debts or liabilities, her receipt of the cattle proceeds created a significant tax consequence.

Had all the funds remained with Mr. Boelman, he would have reduced the tax liability by deducting the farming liabilities from the cattle revenues. [ 47 ] Mr. Boelman is critical of Ms. Nickerson for having claimed the cattle proceeds as farming income without deducting the farm’s liabilities. His position is that he should not be responsible for any portion of the tax liability. In short, this is a problem of Ms. Nickerson’s own making, which she should be solely responsible for. [ 48 ] Mr. Boelman argues Ms. Nickerson had several options to reduce her tax liability.

She could have sought to have the 2015 and 2017 Orders characterized as support payments, she could have obtained advice from her lawyer or her accountant about ways to reduce the tax liability, or she could have had the Orders characterized as a property order. [ 49 ] The parties were very focussed on what should have been done to prevent this tax situation. Mr. Boelman’s assertion that Ms.

Nickerson should have sought a further court order to have the Orders characterized as either spousal support or a property order can be countered by an argument that he should have done the same or should have appealed or sought clarification of the nature of the 2015 Order. Neither party did anything. A tax liability would have arisen in any event had Ms. Nickerson persuaded the Court to characterize the payments as spousal support. [ 50 ] Although Ms.

Nickerson has been criticized for claiming the cattle proceeds as farm revenue on her Income Tax Returns without deducting the farm’s liabilities, I fail to see what option she had. The evidence before the Court is that she received funds that were derived from the farming operation, which she was not involved with post-separation. She did not have the ability to claim expenses because she did not incur any. Only Mr. Boelman could claim farm expenses because he was the only one that incurred them. [ 51 ] At trial, I asked the parties whether there is an ability in this case to re-file Ms.

Nickerson’s Income Tax Returns following receipt of this Decision. I was advised that there is no ability to re-file or change the way the proceeds were taxed. The tax debt associated with the funds received by Ms. Nickerson is static and will not change. Therefore, the taxes associated with the cattle proceeds is a factor that I must consider in dealing with the 2015 and 2017 Orders. [ 52 ] Parties do not generally pay taxes on funds received as part of the equalization of matrimonial property. Holding Ms.

Nickerson responsible for the entirety of the tax bill associated with this property is inequitable and would result in an uneven distribution of property. In the absence of the 2015 and 2017 Orders, the parties would have undoubtedly paid less tax on the cattle proceeds. Assigning blame to one party over the other in respect of the consequences of these Orders is not possible. These Orders are the result of contentious family litigation where Ms. Nickerson was left without access to her share of the Matrimonial Property. As such, I conclude that Ms. Nickerson and Mr.

Boelman shall share equally in the remaining tax burden associated with the cattle proceeds received by Ms. Nickerson, i.e., $87,407.60. [ 53 ] I acknowledge that Ms. Nickerson has already paid $31,300.91 of the total tax liability. Mr. Boelman is not required to contribute to this portion of the debt because there was some evidence at trial that he paid the CRA money as a result of a writ letter that was sent to LIS. In addition, had the Court found that the cattle proceeds were spousal support, spousal support is taxable to the recipient and, as will be discussed further, Mr.

Boelman has overpaid spousal support.

THE DISSIPATION CLAIM [ 54 ] Ms. Nickerson claims pursuant to s 10 of the Matrimonial Property Act that Mr. Boelman and Ms. Mittelstadt dissipated matrimonial property. The allegation is that Mr. Boelman sold Ms. Mittelstadt his cattle so that he could avoid paying Ms. Nickerson any of the cattle sale proceeds. [ 55 ]

Section 10 of the Matrimonial Property Act provides as follows: 10(1) When an application has been made for a matrimonial property order and the Court is satisfied that (

a) a spouse has (

i) transferred property to a person who is not a bona fide purchaser for value, or (ii) made a substantial gift of property, (

b) the spouse making the transfer or gift did so with the intention of defeating a claim that the other spouse may have under this Part, (

c) the transferee or donee accepted the transfer or gift when the transferee or donee knew or ought to have known that the transfer or gift was made with the intention of defeating a claim a spouse may have under this Part, and (

d) the transfer or gift was made not more than one year before the date on which either spouse commenced the application for the matrimonial property order, the Court may do any one or more of the things referred to in subsection (2).

(2) If subsection (1) applies, the Court may do any one or more of the following: (

a) order the transferee or donee to pay or transfer all or part of the property to a spouse; (

b) give judgment in favour of a spouse against the transferee or donee for a sum not exceeding the amount by which the share of that spouse under the matrimonial property order is reduced as a result of the transfer or gift; (

c) consider the property transferred or the gift made to be part of the share of the spouse who transferred the property or made the gifts, when the Court makes a matrimonial property order. [ 56 ] Prior to the 2015 Order, Mr. Boelman ran a cow/calf operation. He also fattened cattle. He testified that he bred and bought cattle and would sell them for a profit. The amount he bought or sold would depend on the markets each year. [ 57 ] Mr. Boelman testified that the period immediately after the 2015 Order came into effect was a confusing and devastating time for him. He had half as much money to run the farm.

He was unable to pay his debts and had to draw $150,000 from his FCC operating loan to pay the bills. Most importantly, he was no longer able to buy and sell cattle through LIS because half of the proceeds of sale were to be paid to Ms. Nickerson pursuant to the 2015 Order. [ 58 ] Mr. Boelman’s position is that in the face of the 2015 Order, he had three options: 1) become insolvent and sell the farm, 2) find ways to cut expenses, or 3) find a new revenue source. Mr. Boelman’s wish was to continue farming. He had a herd that required ongoing care and feed. Therefore, options 1 and 2 were not viable.

According to Mr. Boelman, the only viable option he had was to find a new revenue source. [ 59 ] Mr. Boelman’s position is that he did not intend to deprive Ms. Nickerson of a fair distribution of matrimonial property. His goal was to save the farm. He complains Ms. Nickerson sought the 2015 Order, knowing it would have a devastating impact on the cattle operation. [ 60 ] Mr. Boelman explained that he could not survive with Ms. Nickerson taking 50% of the cattle sale proceeds, without her paying any of the associated farming expenses. The profit margin on cattle is only 2-5%.

The rest of the funds go back into the farming operation. He tried to talk to Ms. Nickerson’s lawyer, explaining that the 2015 Order was not fair, but he was unable to convince counsel to make any changes. Ultimately, he got back into court in March 2017 and had a judge change the amount of the net proceeds he could keep from 50% to 67.5% (the 2017 Order). However, this still resulted in a loss. [ 61 ] Before Mr. Boelman realized the full impact of the 2015 Order, he sold half of his calves in the winter of 2015, so he had some room with some cash to purchase heifers.

He thought he could make some money on them, but he did not realize what the impact would be of 50% of his cash leaving the farm. By the time the summer rolled around, he regretted purchasing the heifers. He had to find someone to buy them and that’s when Ms. Mittelstadt came along. [ 62 ] Ms. Mittelstadt’s position is that the business arrangement she entered with Mr. Boelman was not nefarious, done on the fly, or done with collusion. It was well thought out. [ 63 ] Ms. Mittelstadt met Mr. Bolman in January 2016. Prior to meeting Mr. Boelman, Ms. Mittelstadt did not work in the farming industry.

She had worked for a government organization and was a forklift operator for the University of Alberta. When she met Mr. Boelman, she was working on a casual contract as an assistant to a realtor. Though she had been on farms owned by her relatives, she did not have any experience buying or selling cattle. [ 64 ] Ms. Mittelstadt’s evidence was that in March 2016, she learned of some of the problems Mr. Boelman was having with the

cattle portion of the farming operation. Specifically, Ms. Mittelstadt saw the 2015 Order. In questioning, she explained that the Order “specified that there would be a one-time equal division of a cattle sale that was being held, and that the parties were supposed to establish what the percentage would be after that. But the expenses on the cattle had not been accounted for in the original order so it was purely dividing profit, but the expenses had never been factored in.” [ 65 ] Ms. Mittelstadt explained that in November and December, Mr. Boelman was in settlement negotiations with Ms. Nickerson.

He believed a settlement was imminent, so he bought 22 bred heifers for approximately $50,000 to refresh the herd. In early 2016, the settlement negotiations fell apart. This meant the 2015 Order would continue and Mr. Boelman would be left with little funds to pay for farming expenses. Mr. Boelman explained his situation to Ms. Mittelstadt. He testified that they had to come up with a way to “reduce the plaintiff’s share because I can’t keep surviving without her paying the expenses.” [ 66 ] Ms. Mittelstadt told Mr. Boelman that she had some extra money, and she was interested in the cattle operation.

She offered to buy the 22 bred heifers that Mr. Boelman had purchased. [ 67 ] Mr. Boelman testified that the plan was for Ms. Mittelstadt to buy the bred heifers for what they cost him. The bred heifers would remain on Mr. Boelman’s farm, and he would care for and feed them. [ 68 ] Mr. Boelman had purchased the 22 bred heifers for $49,517.40 on December 19, 2015. Ms. Mittelstadt’s evidence is that she paid for the 22 bred heifers by paying for Mr. Boelman’s legal fees and other expenses, with the first payment being made in September 2016. Ms. Mittelstadt paid a total of $49,000 as follows: (

i) September 19, 2016: $5,000 paid to a lawyer. (ii) October 14, 2016: $2,500 paid to a lawyer. (iii) October 31, 2016: $2,000 paid to a lawyer. (iv) December 12, 2016: $2,000 paid to a lawyer. (

v) January 26, 2017: $5,000 paid to a lawyer. (vi) January 31, 2017: $2,500 paid to a lawyer. (vii) January 31, 2017: balance of $30,000 paid by cheque to Mr. Boelman. [ 69 ] The 22 bred heifers Ms. Mittelstadt purchased from Mr. Boelman remained on Mr. Boelman’s farm. Ms. Mittelstadt’s intention was to sell the bred heifers so that she could obtain a return on her investment. However, Mr. Boelman did not want to sell the cattle. He had selected these bred heifers to maintain his herd. Mr.

Boelman explained that he had to maintain his herd at between 200 to 210 cattle to keep the cashflow going for bills and expenses. He had too many old cows and he was concerned about in-breeding. The two argued about this after Ms. Mittelstadt had provided him the last cheque for $30,000. Ms. Mittelstadt asked him what he was going to give to her. Mr. Boelman had her money, and he would not let her sell the 22 bred heifers. She needed something in return. [ 70 ] They went back and forth all weekend. Mr. Boelman could not give her back the money. Ms.

Mittelstadt testified that the 2015 Order kept coming up as being problematic. The 2015 Order prevented Mr. Boelman from being a livestock merchant. Someone had to step in and do this for him. The 2015 Order did not say anything about finished cattle (i.e., cattle that were ready for sale); it just talked about LIS. That’s when the pair came up with the idea of Ms. Mittelstadt purchasing the calves born to the herd. [ 71 ] Mr. Boelman did not mind selling the calves. He would sell Ms. Mittelstadt the baby cows bred by the mother cows. Mr.

Boelman explained that he categorized his cattle based on whether they were “marital cows” or not. He explained that a “marital cow” was anything that existed on the farm before Ms. Nickerson left in November 2013. Any cow that came to his farm after Ms. Nickerson left was referred to as “Hold Back Exempt.” [ 72 ] According to Ms. Mittelstadt, she was determined to find a way that she would have something to sell so that she would not be stuck. She understood that she could not buy anything that was “marital”. In Mr. Boelman’s and Ms. Mittelstadt’s mind, the calves were not marital cows. [ 73 ] Ms.

Mittelstadt took out her calculator and did the math based on the fair market value of a calf, which was $300 per calf, according to Mr. Boelman, to determine how many calves she could buy with roughly the same amount of money. They came up with 170. The pair also agreed that Ms. Mittelstadt would pay Mr. Boelman a calving fee of roughly $100 because she would not be there when the calves were born.

They did the substitution, ripped up the old bill of sale for the 22 heifers and created a new bill of sale, backdated to September 2016, for 170 calves. [ 74 ] The actual bill of sale is included in Exhibit 42 in these proceedings. It shows a handwritten bill of sale from “Luke and Kelly Boelman” to “Double D Livestock c/o Carmen Mittelstadt” dated February 1, 2017. The notes show 170 mixed steer and heifer with two payments having been made. The first payment was listed as being $21,000 made on September 19, 2016 and the second payment was $30,000, made on January 31, 2017 for a total of $51,000. [ 75 ] Mr.

Boelman testified that Ms. Mittelstadt was investing in the calves. The following year when they sold the calves, it saved the farm. He explained that Ms. Mittelstadt paid for care and feed at an industry rate and the cattle gained weight well. When they sold them that winter, they got all the money back out of them. Instead of giving the money to Ms. Nickerson, Mr. Boelman was able to survive and keep the farm. [ 76 ] Ms. Mittelstadt had her first sale of calves on February 28, 2017, 28 days after she bought the 170 calves for $300 per head. She sold the calves for $1,279 per head.

[ 77 ] At this point, her calves were not branded. She purchased her brand on January 27, 2017, under the name Double D. During the summer, Ms. Mittelstadt sold “fats” that bared both Mr. Boelman’s brand as well as her own brand. These are animals that had been pasturing at a public pasture. Ms. Nickerson was alerted to the arrangement between Mr. Boelman and Ms. Mittelstadt in the summer of 2017 when news of cows baring both brands reached her. Prior to this, she was not aware of the arrangement. [ 78 ] Ms. Mittelstadt was adamant that her decision to invest in cattle farming was a business decision.

She saw the purchase of the first set of calves as an opportunity to invest and start a business, which operates as Double D. Ms. Mittelstadt was adamant that Double D is separate from Mr. Boelman’s business, but admitted they work together. Despite this, on a number of occasions throughout her testimony, she referred to the cows as being Mr. Boelman’s cows. Further, Ms. Mittelstadt maintains Mr. Boelman’s Farmbooks and prepares Mr. Boelman’s invoices. It is apparent that in practice, there is no division between these two businesses. [ 79 ] Ms.

Mittelstadt’s evidence focused in large part on the way she structured her business, how she made business decisions, and whether she paid fair market value for the cattle she purchased from Mr. Boelman. Having heard the evidence, I take no issue with the way in which Ms. Mittelstadt conducted her business. She acted as a good steward of the assets in her care. However, this is not the issue. The issue is whether the assets she acquired as part of her business were the Matrimonial Property of Mr. Boelman and Ms.

Nickerson. [ 80 ] In Cox v Cox , 1998 ABQB 987 , the Court reviewed a series of decisions involving dissipation and distilled the following principles at para 46: 1. Section 7 (4) creates a presumption of an equal distribution of non-exempt matrimonial property, unless it would not be just or equitable to do so.

Section 8(

l) provides one of the factors that can lead to an unequal distribution where one spouse dissipates assets to the detriment of the other. 3. Dissipation does not necessarily result where an asset is worth less at trial than it was at separation. Dissipation requires a degree of intent although that intent does not necessarily have to extend to intentionally depriving the other spouse of a fair distribution of matrimonial property. It is sufficient if one spouse intends to dissipate the assets (usually for their own enjoyment), and that dissipation arises in detriment to the other spouse. 4.

There must be actual detriment to the other spouse. 5. The law generally does not find dissipation if the reduction in assets was due to reasonable expenditures made on behalf of the family or to maintain existing matrimonial assets. However, the court will look to see if the spouse could have paid those expenses out of income rather than by depleting assets. Purely personal expenses which do not benefit the other party that are paid out of matrimonial property may also be considered dissipation (even though prior to separation they might have been matrimonial expenses). 6.

If an asset is sold or otherwise reduced, the courts will not consider this dissipation if the proceeds can be traced to another asset. The replacement assets form part of the assets available for distribution. 7. If assets are sold for less than fair market value, the courts may determine whether the sale was done improvidently, hastily or fraudulently in deciding whether it was dissipation. If the sale is effected in accordance with pre-separation negotiations it may not be considered dissipation. 8.

The total amount actually dissipated “to the detriment” of the spouse is one-half of the amount by which the asset was reduced. 9. Ultimately, it is in the discretion of the trial judge, based on the consideration of all the facts, to determine whether or not dissipation exists. [ 81 ] In his written submissions, Mr. Boelman compared his situation to the commercial fishing industry where fishermen are sometimes limited by fishing bans or quotas. Fishermen are forced to find other revenue streams such as tourism, to survive as fisherman. In the tourism industry, fishermen provide a service in exchange for a fee.

According to Mr. Boelman, this is what he did. He provided a service to Ms. Mittelstadt in exchange for a fee. [ 82 ] I reject Mr. Boelman’s analogy. His situation is not akin to commercial fishing where a government agency imposes bans or quotas on fishing, affecting the industry as a whole. Mr. Boelman was involved in matrimonial litigation. A court order was pronounced that required him to give funds to Ms. Nickerson. He evaded the Court Order by divesting himself of assets that were the subject of the Order. [ 83 ] I find that Mr. Boelman’s arrangement with Ms.

Mittelstadt was contrived to defeat the 2015 Order and the 2017 Order. His evidence is clear that he needed to find a way to prevent 50% (and later 32.5%) of the cattle sale proceeds from being given to Ms. Nickerson. The evidence also establishes that Ms. Mittelstadt was aware of the divorce proceedings and the 2015 Order. She reviewed Mr. Boelman’s divorce file in August 2016 and testified that she saw the 2015 Order. She explained that she could not make sense of what she saw or heard. She took him to his appointments with his lawyer and questioned why the 2015 Order was not appealed. [ 84 ] I find Ms.

Mittelstadt was a full partner in the arrangement to defeat the 2015 Order. [ 85 ] It is clear that the 2015 Order and the 2017 Order would have prevented Mr. Boelman from continuing the farming operation. I accept his evidence that the profit margin on a cow is between 2-5%. The Orders did not take the farm’s operating expenses into account. By transferring 50% of the net proceeds of cattle sales to Ms. Nickerson, Mr. Boelman was unable to pay both his own and the farm’s bills and was unable to continue operating the farm as he had been.

[ 86 ] Mr. Boelman purports to have divided his herd into “marital cows” and “exempt” cows. His position is the progeny of the marital cows are not divisible with Ms. Nickerson. However, the assets of the farming operation, including the herd, are matrimonial property. The cattle owned at the time of separation are matrimonial property, as are their progeny. The 22 bred heifers purchased by Mr. Boelman in December 2015, post-separation, were purchased to maintain the farming operation. Both the 22 bred heifers and their progeny are thus matrimonial property. Therefore, matrimonial property was transferred to Ms.

Mittelstadt post-separation. [ 87 ] While the arrangement between Mr. Boelman and Ms. Mittelstadt was intended to save the farm, it is also clear that the arrangement intentionally deprived Ms. Nickerson of a fair distribution of matrimonial property. I find that Ms. Mittelstadt was aware of the 2015 Order, was aware of its consequences, was aware of divorce proceedings between Mr. Boelman and Ms. Nickerson, and entered the business arrangement with Mr. Boelman with the intention of defeating Ms. Nickerson’s entitlements under the 2015 Order. She was not a bona fide purchaser for value.

Based upon what the calves were sold for, she also clearly did not purchase them for their fair market value. [ 88 ] Finally, the transfer post-dates the commencement of divorce proceedings. As such, the limitation period provided for in s 10(1)(

d) of the Matrimonial Property Act is not engaged. [ 89 ] In conclusion, for the purpose of division of matrimonial property, I treat the property transferred to Ms. Mittelstadt as part of the share of property owned by Mr. Boelman at the date of trial. DIVISION OF MATRIMONIAL PROPERTY [ 90 ] Sections 7 and 8 of the Matrimonial Property Act set out how matrimonial property is to be distributed between spouses upon marriage breakdown.

In Hodgson v Hodgson , 2005 ABCA 13 [ Hodgson ], the Alberta Court of Appeal interpreted ss 7 and 8 of the Matrimonial Property Act and established the following four-step process to be followed to achieve a just and equitable division of the matrimonial property owned by the parties at the date of trial: 1. Determine all property owned at the date of trial 2. Determine the property that is exempt from distribution under s 7(2), or that can be traced to s 7(2) property. The value of this property, as at the date of acquisition, or date of marriage, is excluded from distribution. 3.

Determine what property falls under s 7(3). This includes the increase in value of exempt property, from the date of acquisition or marriage to the date of trial. This property is distributed between the parties in a manner that is just and equitable taking into consideration the s 8 factors. 4.

Divide the balance of the property equally unless it would be unjust and inequitable to do so considering the factors in s 8. [ 91 ] While s 7 of the Matrimonial Property Act refers to property, the law is clear that matrimonial debts and liabilities are to be considered by the Court as the intention of the regime in Alberta is to divide “net matrimonial property”: Carmichael v Carmichael , 2007 ABCA 3 at para 21 [ Carmichael ] ; Kretschmer v Terrigno , 2012 ABCA 345 at para 20 ; Martin v Martin , 2019 ABQB 590 at para 10 . [ 92 ] The Alberta Court of Appeal explained in Carmichael at para 21 that: While the Matrimonial Property Act does not expressly say so, the obvious intention of s. 7(4) is that it is “net matrimonial property” that is to be divided.

The trial judge must determine the matrimonial assets, subtract the matrimonial debts , and identify the net amount that is available for distribution . [ 93 ] I will now undertake the four-step process set out in Hodgson . Real property [ 94 ] There are five parcels of land that are at issue in this litigation (Boelman Lands). The parties tendered experts that conducted valuations of each of the five parcels. [ 95 ] Mr. Brian Gettel was tendered as an expert for Ms. Nickerson in the area of land valuations including real estate, farmland, farm buildings, and farm residences. Mr.

Glen Doll was tendered as an expert for Mr. Boelman in the area of rural appraisals. [ 96 ] There is no dispute as to the size of each of the five parcels of land or that they are currently being used for agricultural purposes with a rural residence on one of the parcels, along with various farm buildings. Both experts agree that the highest and best use of all five parcels of land is agricultural purposes. [ 97 ] There are three areas of significant disagreement between the experts.

These are: 1. the percentage of organic soil on SW23-61-26-W4 and Pt NE-13-61-27-W4; 2. the selection and use of appropriate comparators; and 3. the value of the improvements on the home quarter.

Parcel Legal Description Size (Acre) Gettel Doll 1 NE-23-61-26-W4 160 Organic $280,000.00 $1750/acre Organic $248,000 $1,550/acre 2 Pt SW-23-61-26- W4 156.63 Organic in NE corner of parcel 2/3 Class 3W $515,000.00 $3288/acre 50% (80% Class 3W, 20% organic), 50% organic $345,000 $2,203/acre 3 Pt Sec 15-61-27- W4 232.50 Dominant Class 3S Subdominant Class 4T $1,305,000.00 Land: $1,140,000 Buildings: $163,488 $4903/acre 80% Class 3S, 20% Class 4T $1,135,000 Land: 1,046,250 Buildings: $89,000 $4,500/acre 4 Pt SE 16-61-27-W4 152.20 Dominant Class 3S Subdominant Class 4 $745,000.00 $4895/acre 80% Class 3S, 20% Class 4T $651,000 $4,277/acre 5 Pt NE-13-61-27- W4 155.01 133 of 155.01 acres cultivated so it is better than 70/30.

Dominant Class 3W Subdominant Class 4W and 4D $745,000.00 $4806/acre 70% (80% Class 3W, 20% organic), 30% organic $558,000 $3,600/acre [ 98 ] The following table summarizes the soil classifications and values assigned to the Boelman Lands by both experts: Percentage of organic soil on SW-23-61-26-W4 and Pt NE-13-61-27-W4 [ 99 ] The most significant area of disagreement between the experts is how they classified the soil on Pt SW-23-61-26-W4 and Pt NE 13-61-27-W4.

This difference affects the amount of usable farmland that each expert concluded was available on these two parcels and affects the value of the property. [ 100 ] Whereas Mr. Doll estimated the first property was 50% organic and 50% Class 3W, Mr. Gettel testified that it was 2/3 3W and 1/3 organic. Similarly, Mr. Doll was of the view that Pt NE-13-61-27-W4 was 70% organic, while Mr. Gettel was of the view that because there are 133 acres of cultivated land, it is more than 70% organic.

Soil Analysis [ 101 ] Both experts relied on information from the Canada Land Inventory, Soil Capability for Agriculture Map (CLI map). This map was entered as an exhibit. It shows an area of over 14,000 square kilometers north of Edmonton. [ 102 ] Eight different colours are used on the CLI map to denote different soil classes. Soils are grouped into seven classes on the basis of soil survey information. Classes 1, 2, 3 and 4 can be used for cultivated field crops. Categories 5 and 6 are used for perennial forage crops, and Category 7 is not suitable for either. [ 103 ] Class “0” soils are organic.

They are not placed into one of the seven capability classes. Mr. Gettel testified that organic soils are poorly drained, are generally muskeg, and are not suitable for farming. He testified that the CLI sometimes underrates land. An example of land that is underrated is where it’s rated as organic, but it is being used for pasture. [ 104 ] According to both experts, Class 3 soils have moderately severe limitations that restrict the range of crops or require special conservation practices.

Class 4 soils have severe limitations that restrict the range of crops or require special conservations practices or both. [ 105 ] Subclass “S” involves a combination of limitations and could include undesirable soil structure, low natural fertility, low moisture holding capacity, and/or the adverse effect of soluble salts. Subclass “T” refers to adverse topography where either steepness or the pattern of slopes limits agricultural use.

Mr. Gettel’s opinion regarding percentage of organics [ 106 ] Mr. Gettel relied on aerial maps to look at how the land was actually being used by the farmer. Although the CLI map provided some information about the quality of the soil, his evidence was that it was more accurate to look at how the farmer was using the land. [ 107 ] Thus, although according to the CLI map SW-23-61-26-W4 is approximately 50% organic, 105 of 156.63 acres is cleared, with a treed area in the NW corner. Rather than relying on the CLI map, the aerial map shows that 2/3 of the land is cultivated. Mr.

Gettel therefore concluded that 2/3 of the land has Class 3 soils. Although he agreed that there are organic soils on this portion of the land, he explained there is a greater percentage of usable land than is depicted on the CLI map. His evidence was that the farmer’s use of the land was likely more accurate in terms of what the land is capable of. [ 108 ] Similarly with respect to Pt NE-13-61-27-W4, the CLI map illustrates that this parcel is 20% organic; however, it is mainly open and cultivated with some tree cover. Mr.

Gettel testified that this parcel has some organic soils, as evidenced by the treed area in the NW corner of the property. Mr. Gettel was of the view that the split between organics and Class 3 soils was better than 70/30. Mr. Doll’s opinion regarding percentage of organics [ 109 ] Mr. Doll relied on the CLI map to determine the classification of the soils. The actual use of the land did not impact his analysis of the land classification. [ 110 ] Mr. Doll testified that organic can mean different things in different areas. Sometimes it’s peaty and boggy and sometimes it is poor quality soil.

Although organics can be used for pasture in some instances, that is not always the case. He explained that even though the land is being used for agricultural purposes, it does not change the classification of the soil, and it is the classification that prospective purchasers will consider, rather than the actual land use. [ 111 ] I accept Mr. Doll’s reliance on the CLI map. Regardless of how the land is used, the soil quality remains the same. Establishing the soil quality enables the valuators to choose comparators that are similar to the properties being valued.

The actual land use can be taken into consideration at that stage of the analysis. Comparables [ 112 ] With the exception of three common comparables, the experts chose different comparables to value the Boelman Lands. The comparables are reproduced in the table below. [ 113 ] Mr. Doll chose comparables by obtaining market value information from land title transfers, MLS data, and area realtors. He selected properties for comparison where there were normal, arm’s length transactions. Mr. Doll testified that it is rare to find comparable property. Land will differ based on quality and use.

Because of this, adjustments are made to determine the comparable value of the land. [ 114 ] Mr. Doll made adjustments for location, physical features, and size. He did not adjust for time because he concluded that although the market value of agricultural property increased over the past 10 years, the year over year increases have stalled due to recent weather conditions and sales over the past few years have shown stagnant values. [ 115 ] Mr. Doll attributed a percentage difference to each adjustment factor to assign a value to each of the comparables he used.

For example, with respect SE 1-61-2-W5, he concluded that no adjustment was necessary because it was similar to the Boelman Lands he was comparing it to. In contrast, with respect to SE 21-62-1-W5, which sold for $5,031.00 per acre in April 2021, he concluded that this land was superior to the Boelman Lands because it was Class 2, level and cultivated. He adjusted the value for the physical features of the land and determined it had an indicated value of $4,528.00 per acre. [ 116 ] Mr.

Gettel compared the lands he selected to the Boelman Lands and then adjusted the price per acre based on whether the comparables were of higher quality of lower quality. He looked at location and development potential, ratio of cultivation and soil quality, and size. [ 117 ] In contrast to Mr. Doll, Mr. Gettel made adjustments for time. He noted that in 2015, there was a significant jump in property values in Westlock County as compared to the rest of the province.

He pointed out that while property values have continued to increase, the rate of increase has moderated and the rate of increase in Westlock County was more recently below trends observed in other areas. [ 118 ] Mr. Gettel did not provide any calculations to demonstrate how the Boelman Lands compared to the comparables he used. For example, with respect to comparable number 1, Mr. Gettel testified that this land is modestly superior to the subject lands.

He testified that he would have adjusted the value downward because it was Class 2 and fully cultivated and adjusted it upward for the time adjustment related to market fluctuations. Unlike Mr. Doll, he did not attribute a percentage to the amount of adjustment he applied. [ 119 ] Similarly, with respect to comparable number 2, Mr. Gettel testified that it is similar to comparable number 1. He adjusted the price of comparable 2 down modestly because it is fully cultivated and up for time.

Again, although he explained how this land compared to the Boelman Lands, he did not quantify the difference by attributing a percentage to the amount of adjustment he applied. Table of Comparables Description Size Sale Date Price per acre Comment Used for

1 NE-23-60-26-W4 Gettel 160 acres Nov 2019 $4,844/acre Fully cultivated, primarily Class 2 with some Class 4 Compared to properties 3,4,5. Higher end of the range 2 NW-18-62-26-W4 Gettel and Doll 142.93 acres Jan 2020 $4,723 Gettel estimated that it was almost fully cultivated. Class 3 Doll estimated that 70 acres were cultivated. Compared to 3,4,5. Higher end of range Doll was of the view that the

section 15 lands were superior to this parcel. 3 NW-27-62-27-W4 Gettel and Doll 159 acres Sept 2020 $4,376 Fully cultivated. 70% Class 3 and 30% organic Compared to 3,4,5. Inferior to subject lands because of patchiness. Doll agreed this was inferior to the Boelman Lands on

section 15. 4 NW-28-60-25-W4 Gettel 79.59 acres Nov 2020 $3,895 50 acres cultivated, balance treed and low. Class 3 Less value because of approximately 30 acres of bush. 5 NE-8-60-26-W4 Gettel 123 acres May 2021 $6,250 Fully cultivated. Class 2. 0.8 km North of Westlock Absolute high end of the range. 6 SE-21-62-1-W5 Gettel and Doll 159 acres May 2021 $5,031 Fully cultivated. Class 2C. Level Doll concluded this is superior to the Boelman Lands on

section 15. 7 Pt NE-5-61-24-W4 Gettel 136.15 acres Nov 2021 $2,423 80 acres cultivated. Creek runs through property. Class 4 with some organic soils Compared to properties 1 and 2. This land is poorer quality with Class 4 8 SW -10-61-24-W4 Gettel 160 acres Pending sale $1,500 60 acres cultivated; the balance is bush. Class 4. Compared to properties 1 and 2 9 NW-33-62-27-W4 Gettel 157 acres Pending sale $2,707 128 acres cultivated; the balance is bush. Class 3 with some Class 0. Compared to properties 1 and 2 10 NW-2-61-24-W4 Gettel 160 acres Pending sale $1,445 105 acres cultivated; balance is treed. Class 5.

Low end of the market, near the bottom of agricultural ability. Compared to properties 1 and 2

11 SE-1-61-2-W5 Doll 158.97 acres Oct 2021 $4,749 145 acres cultivated. Class 4D. Abandoned yard site. Comparable to western properties. 12 NE-21 & SE-28- 60-1-W5 Doll 320 acres Nov 2019 $5,500 Fully cultivated. 80% Class 3W This is a corner-to- corner Class 3 parcel. It is superior to

section 15. 13 SW-25-62-27-W4 Doll 146.67 acres Mar 2021 $4,600 140 acres cultivated. Class 2C. Gently undulating More productive than Boelman Lands. 14 NW-33-62-27-W4 Doll 157 acres Sept 2021 $2,707 115 acres cultivated hay. 80% Class 3, 20% organic This is superior to the lands at SW of 23. 15 NW-15-62-26-W4 Doll 159 acres Mar 2020 $2,516 70 acres cultivated. 90% Class 4S, 10% organic. Undulating Compared to SW of 23. Slightly superior soils. 16 SE-15-62-25-W4 Doll 158.03 acres Jul 2021 $2,911 80 acres cultivated. 90% Class 3S, 10% organic.

Undulating Slightly superior to SW of 23 because of land use and soils. 17 SE-3-62-26-W4 Doll 160 acres Mar 2020 $1,550 40 acres cultivated. 80% organic, 20% 3W. Gently undulating. Mobile home and outbuildings. Lands are inferior to SW of 23 18 NW-10-63-25-W4 Doll 161 acres Oct 2020 $1,050 20 acres cultivated. Remainder treed. Class 5S. Undulating Quite inferior to SW of 23. Valuation of the home and other improvements [ 120 ] The building site is located on Pt

Section 15-61-27-W4. Mr. Gettel’s opinion is that the depreciated value of the improvements, which are outlined below, is $163,488. Mr. Doll’s opinion is that the depreciated value of the improvements is $89,000. [ 121 ] The home is a 1,126 square foot wood frame bungalow with a developed basement that was built in 1967. Mr. Gettel’s evidence was that the house is in average condition. It is maintained but there are no upgrades. Mr. Gettel attributed a higher value to the house because the basement is developed. Mr. Doll inspected the property in March 2022.

He testified that he included the basement of the residence in his analysis but noted that it was only partially finished. [ 122 ] Mr. Gettel testified that the older buildings are in fair condition but there could be maintenance issues. Mr. Doll’s evidence was that the older buildings are either fully depreciated or provide little value. There has been deferred maintenance and no upgrading. With respect to the garage, he noted that there is no siding on one portion of the garage and there are no eves troughs. These factors cause structural deterioration. [ 123 ] Mr.

Gettel’s opinion is that the chattels have value to a purchaser. He attributed a depreciated value of $50,000 to the site improvements, including the approach road, the gas, telephone, and septic. Mr. Doll testified that a prospective purchaser would put a dollar value on having certain site services but that a purchaser of farmland would purchase the parcel for the land, not the home and site services. The buildings and services would not be the primary purpose of buying the property.

This explains the significant difference between the values assigned to the home and the site services. [ 124 ] The improvements along with the estimated depreciated values attributed by the experts are as follows: Doll Gettel Bungalow $43,000 $75,355 Detached garage $7,000 $8,133 Three-sided machine shed $4,000 $10,000

Older service buildings including hay shed, cattle sheds, grain bins and corrals. $10,000 $12,500 (hay shed/livestock shelters $7,500 (fencing/corrals) $10,000 (road/landscaping) Site services: water well, power, natural gas, septic and telephone. $25,000 $40,000 Total depreciated value $89,000 $163,488 [ 125 ] I note there is not a significant difference in the values assigned to the detached garage and the older services-buildings and a moderate difference in the value assigned to the three-sided machine shed. [ 126 ] Mr.

Gettel did not visit the residence and confirmed during his testimony that he based his appraisal on an inspection that was conducted by another appraiser in 2015. He described the home as being in average condition for its age. His valuation is primarily driven by the value of the home and the site services. [ 127 ] Mr. Doll did not specifically mention the home in his testimony other than to say that he included a partially finished basement in his analysis. He described the buildings on the property as being aged and in need of maintenance. [ 128 ] Both Mr. Boelman and Ms.

Mittelstadt testified as to the state of the farm. Both agreed that the farm required maintenance and that this had been deferred due to a lack of funds. I accept this evidence. [ 129 ] There is no principled way to decide which value is correct or more accurate. Determining the value of the home and site services requires me to either accept or reject the notion that a farmer would not assign the home and the site services a value. Similarly, descriptions of the home given by each of the experts does not enable me to meaningfully determine which value is more appropriate.

In the circumstances, I assign the improvements an estimated depreciated value in between the two values assigned by the experts, being $126,244. Review of land valuations [ 130 ] Counsel for Mr. Boelman takes issue with the fact that Mr. Gettel did not include any formulas or calculations to show how he adjusted the various factors to determine the price per acre of each parcel of land. When confronted with this on cross-examination, Mr.

Gettel explained that he would have adjusted up or down based upon the soil classification, the amount of cultivated land, and the market changes over time. [ 131 ] In contrast, Mr. Doll’s report contains detailed information to show why he either increased or decreased the price per acre of each comparable so that it could be used to determine the value of the Boelman Lands. He assigned a percentage adjustment for time, location, physical features, size, and motive. [ 132 ] There is no requirement for Mr. Gettel to have included detailed calculations to show how he adjusted each comparable.

It is understood that if a comparable was fully cultivated with Class 2 soil, it would have higher value than all of the Boelman Lands, none of which are fully cultivated or Class 2. I accept that land valuation is not an exact science, and it is difficult to quantify the adjustments, given the number of variables at play. [ 133 ] However, Mr. Doll’s approach allows the Court to understand how he viewed each comparable in the context of the individual Boelman Lands. It also makes Mr. Doll’s adjustments repeatable in terms of understanding how each characteristic figured into Mr. Doll’s final value.

That being said, I acknowledge that assigning an adjustment such as 10% to the physical features of the land is a highly subjective exercise. While Mr. Doll might conclude that a flat landscape is 10% better than a rolling landscape, assigning a 10% value to this type of characteristic does not make the subjective exercise of land valuation any more concrete. [ 134 ] A significant point of disagreement between the two experts is whether the market value of farm property increased between 2018 and 2022.

This is important when considering the use of comparables, all of which either sold between 2019 and 2021 or were pending sale at the time of the reports. [ 135 ] Mr. Gettel’s opinion is that the market values of farm properties increased between 2018 and 2022. As a result, Mr. Gettel testified that he increased the price per acre of each of the comparables in his analysis. In contrast, Mr. Doll’s report concludes that the market did not change during the period in which the comparables were sold. [ 136 ] This lack of increase in market value is evident when comparing an earlier report prepared by Serecon to Mr.

Doll’s current report. The table below shows that over 4 years there was virtually no increase in value as between the two reports: Legal Description Size (Acre) Serecon Jan 31, 2018 Doll March 3, 2022 NE-23-61-26-W4 160 $252,000 $248,000 Pt SW-23-61-26-W4 156.63 $328,900 $345,000 Pt Sec 15-61-27-W4 232.50 $1,046,300 $95,800.00 $1,046,250 $89,000 Pt SE 16-61-27-W4 152.20 $650,700 $651,000 Pt NE-13-61-27-W4 155.01 $558,000 $558,000 [ 137 ] Both experts agreed that there was a significant jump in land values in 2015. Mr. Doll’s view, however, was that land values in Westlock County have been flat since that time.

As such, the time adjustment for the comparables sold between 2019 and 2022 is zero.

[138] Mr. Gettel’s opinion is that land values have continued to increase since 2015/2016. A chart included in his report, however,shows that the average value of real estate in Alberta was constant between 2018 and 2020, while the value in Westlock Countyincreased moderately. [139] Both reports contain the same graph showing the annual percent change in Alberta farmland values produced by Farm CreditCanada. This shows a change of 7.4% in 2018, 3.3 % in 2019 and 6.0% in 2020. While Mr. Doll concluded that the year over yearincreases had stalled due to recent weather conditions, Mr.

Gettel concluded the rate of increase has moderated. [140] Having considered the evidence of both experts as well as the tables and graphs in their reports, I conclude that there has been amoderate increase in land values between 2018 and 2020. As such, I find that Mr. Doll’s land values must be moderately increased toreflect the market conditions. [141] The parties agree that Parcels 3, 4 and 5 are at the upper end of the range in terms of value per acre. Parcels 1 and 2 are inferiorand coincide with the lower end of the market. [142] The comparables shed some light on the valuations assigned by the experts.

Both experts agree that property number 3 (Pt Sec15-61-27-W4) has the highest value per acre of all the Boelman Lands. Mr. Doll assigns it a value of $4,500 per acre while Mr. Gettelassigns it a value of $4,903 per acre. [143] I have reviewed each of the comparators and the evidence of each expert. I conclude that Mr. Gettel’s values are generallyhigher than the comparators, particularly when compared to the quality of the Boelman Lands. Conversely, I conclude that Mr. Doll’svalues are generally lower than the comparators.

Conclusions regarding land valuations [144] There is no precise way to determine the values of the Boelman Lands. The parties have tendered two experts that areexperienced and qualified in their fields. Land valuation is an art rather than a science and I recognize that there is a great degree ofvariability in the process. [145] In this case, I have determined that Mr. Gettel’s values are too high, given the comparators that both experts used. I have alsodetermined that Mr.

Doll has failed to factor in moderate market increases in the value of farmland and has concluded that the BoelmanLands have lower value than many of the comparators. Despite his conclusions, in many cases, they are quite similar to the BoelmanLands.

Having reviewed the materials in detail, I conclude that the most equitable way to resolve the differences in values is to value theproperty at the midpoint between the value ascribed by the two experts. [146] The result is as follows: Legal Description Size (Acre)Gettel Doll Value assigned by CourtNE-23-61-26-W4 160 $280,000 $248,000 $264,000Pt SW-23-61-26-W4 156.63 $515,000 $345,000 $430,000Pt Sec 15-61-27-W4 232.50 $1,140,000 (vacant) $1,046,250 (vacant) $1,093,125 Pt SE 16-61-27-W4 152.20 $755,000 $651,000 $703,000Pt NE-13-61-27-W4 155.01 $745,000 $558,000 $651,500 Cattle inventory [147] Neither party has performed a business valuation of the farming operation.

As such, I am unable to determine the value of thefarming operation as a business prior to the marriage, at separation or at the date of trial. The best that can be done is to attempt toreconstruct what assets and liabilities existed at these three points in time. [148] Similar situations exist in the jurisprudence. For example, in Medley v Medley, 1999 CarswellMan 601, [2000] WDFL 349(Man Ct QB) [Medley], which follows the equalization regime, an expert appraisal of the husband’s cattle farming business was notsubmitted into the evidence.

As a result, the Court determined the value of each aspect of the farming business separately: the value ofthe cattle, land, and farming equipment, less the farming debt. [149] I adopt the approach taken by the Court in Medley. I will therefore consider the value of the cattle inventory. While there isevidence regarding the status of the farm at separation and at the date of trial, little evidence is before the Court regarding the farmingoperation prior to the marriage. Pre-marriage cattle inventory [150]

Section 7 of the Matrimonial Property Act provides for an exemption to the extent of the market value of property held on thedate of the parties’ marriage and for the distribution of any increase in its value as at the time of trial. However, property that a partyowns at the time of marriage will only be considered exempt from matrimonial property under s 7(2)(

c) of the Matrimonial Property Actif the exempt property is “still owned or traceable into other still owned property” at the time of trial: Jackson v Jackson (1989), 1989ABCA 197 , 97 AR 153 at para 11, 68 Alta LR (2d) 118 (Alta CA). In some cases, the Court can infer, imply, or presume thatproperty is traceable: DGM v KMM, 2004 ABCA 257 at para 13 [DGM]. [151] The onus of proof rests with the party asserting the continued existence of the exempt property, or its substitute: DGM at para13; Beaudry v Beaudry, 2010 ABQB 119 at para 96 [Beaudry]. The onus is twofold: to prove both the entitlement to an exemption and

to prove the quantum of the exemption: Beaudry at para 96 ; O’Neil v Yaskowich , 2018 ABQB 599 at para 60 . [ 152 ] The parties married on November 1, 1997. Ms. Nickerson argues Mr. Boelman has failed to sufficiently prove any exemption for pre-marital cattle related inventory. She argues disclosure is incomplete and that the 1998 Farmbook is missing. Although there is some information regarding interest, loan payments, and bank charges, there is no information regarding the balance of any liabilities. [ 153 ] Mr.

Boelman urges the Court to calculate the value of the cattle inventory he owned on the date of marriage based upon the limited information that is before the Court. [ 154 ] In this case, Mr. Boelman has met the onus with respect to proving an entitlement to an exemption. I acknowledge that it is typically difficult to produce date of marriage values. This case is no different. However, there is sufficient information contained in the 1997 Farmbook to estimate the value of his exemption. [ 155 ] The cattle inventory is recorded in the 1997 Farmbook.

The entry indicates that the total value of the year-end inventory, including livestock, grain, and hay, was $231,250 (“cattle inventory”). Mr. Boelman estimates that of this grand total, his cattle herd had a market value of $83,850 at the date of marriage. Unfortunately, there is little information regarding the liabilities associated with the cattle inventory at the date of marriage. [ 156 ] Mr.

Boelman argues that the Farmbooks for 1996, 1997, and 1999 (the 1998 Farmbook is missing) show a loan related to the cattle inventory, payable in mid-November, recorded as “cattle loan” or “loan payment.” The principal payment amount is recorded at $1,445. The loan does not appear in the 2000 Farmbook, so it can be concluded that it was paid off in 1999. I am satisfied the total cattle loan at the time of the marriage was approximately $4,335, being the total of three payments made of $1,445 in each of 1997, 1998 and 1999. According to Mr.

Boelman, the value of the cattle inventory should be reduced by this amount. [ 157 ] There are a number of other entries in the Farmbooks during this period on pages called “Interest, Loan Payments & Bank Charges.” For 1997, there is a notation showing total interest paid by Mr. Boelman of $8,801.23. Of this amount, the interest associated with the “cattle loan” was $251.82. [ 158 ] There is no description of what liability or liabilities accumulated $8,801.23 in interest. There are hand-written notes next to each line entry.

These include, among others, loan interest, bank charge, interest operating, service charge, loan fee, interest charge, application fee, and loan handling charge. However, the amount of interest payable suggests there were additional sizeable liabilities owing in respect of the cattle operation, above and beyond the cattle loan, including an operating loan or line of credit. Not including this liability/these liabilities would inflate the date-of-marriage value of the exemption that Mr.

Boelman is claiming in respect of the cattle inventory. [ 159 ] Based upon my calculations, the total amount of interest charged included in the 1997 Farmbook, not including bank charges, service charges, or application fees, is $7,881.12. Interest of $251.82 on the cattle loan of $4,335 equates to an interest rate of approximately 5.81%. Using the same interest rate results in estimated liabilities totalling approximately $135,649 inclusive of the cattle loan. Subtracting the total estimated value of the liabilities from the value of the livestock inventory leaves an exemption of $95,601.

Cattle inventory at the date of separation and date of trial [ 160 ] Having found that the Ms. Mittelstadt’s herd is part of Mr. Boelman’s herd for the purpose of dividing matrimonial property, it is necessary to quantify the total number of cattle that comprise of the herd. This is a difficult task requiring a review of the Farmbooks as well as Ms. Mittelstadt’s inventory. [ 161 ] Both Ms. Mittelstadt and Mr. Boelman argue that the inventory should not include calves because these are the “widgets” produced from the “factory”, i.e., the calves and the bulls.

They argue that the calves are sold to produce income and should not be included in the calculation. [ 162 ] I acknowledge the difficulty in assessing the total value of the inventory because of the accounting methods used by farmers. However, inventory is determined at a point in time. While there is a risk that a calf used in the inventory calculation will have been sold by the time it is used in the income calculation, thereby resulting in a double count, this risk is minimal for two reasons. First, it appears the cattle inventory is done at year end.

Therefore, the cattle sold during the year are not included in the final count. Second, the profit margin on the sale of a cow is between 2% and 5%. The value of a calf as an asset is much higher and is set off by the associated liabilities. If the calves are not included in the inventory, there is a risk of significantly over-inflating the liabilities of the farming operation by including the liabilities associated with raising the calves. As such, it is appropriate to assess the total value of the inventory, including the calves at a point in time. I do this based on the inventory information provided by Mr.

Boelman and Ms. Mittelstadt. [ 163 ] The 2013 Farmbook contains the following year-end inventory: Bred Cows 215 $1,300 Big Feeders 110 $1,200 Little Feeders 100 $1,000 Bred Heifers 23 $1,600 Bulls 6 $2,000 [ 164 ] Ms. Pisko obtained the herd inventory numbers from the December 21, 2014 Farmbook. The information she provided in the Statement of Matrimonial Property was not challenged. It discloses the following: Cows 170 $1,500

Big feeders 62 $1,700 Small feeders 100 $1,500 Bulls 6 $2,000 [ 165 ] Mr. Boelman’s 2020 Farmbook indicates that the year-end inventory of cows is “58 mat cows” and “64 other”. He assigns a unit value of $850. However, the entries related to the number of cows, the unit value, and the realizable value have all been crossed out. The value of $850 is written over a crossed-out number. [ 166 ] Mr. Boelman produced a document during the trial where he has attempted to capture his inventory from 2015 to 2021.

This document lists cows that were on the farm at separation and cows that were acquired after the date of separation. The records are sparse for the years 2015, 2017 and 2018. There are no entries for 2016. Starting in 2019, the entries appear more complete. [ 167 ] Removing cows that were sold or died, the record shows that in 2021, there were 57 “marital” cows and 33 “exempt” cows. [ 168 ] Mr. Boelman testified that he did not include the bulls in the inventory. He estimated that he currently has 5 or 6 bulls. I accept that he has 6 bulls currently.

This is consistent with his inventory of bulls in the Farmbooks for the years 2013 and 2014. [ 169 ] Mr. Boelman’s evidence was that he did not include any calves born from his inventory because he sold them all to Double D for $325 each. [ 170 ] In her Affidavit sworn February 19, 2021, Ms. Mittelstadt deposed to the following: I have about 110 cows x 1200 = $132,000. 7 bulls, but only 2-3 that are higher quality, the rest are home raised so maybe $15,000 for all bulls, 30 left from last year x 1900 = $57,000, calves are about 150 average $1400 at sale finished, so if they all get sold around $200,000.

Total value of animals I [own] right now before payment for Care and Feed is about $400,000 (gross). Any cattle sold are subject to care and feed rates. [ 171 ] From this, I conclude that in February 2021, Ms. Mittelstadt owned 297 animals with a total gross value of $400,000. [ 172 ] At trial, Ms. Mittelstadt’s evidence was that she has an inventory of 114 breeding cows and that that she bought the calf crop from Mr. Boelman. She initially said she bought 118 calves from Mr. Boelman but then explained that it could be 130 calves.

She did not testify as to the number of bulls she has. [ 173 ] From this evidence, I conclude that Ms. Mittelstadt had a herd of between 232 and 297 animals at the time of trial. [ 174 ] The total number of cattle owned by Mr. Boelman and Ms. Mittelstadt is therefore anywhere between 322 and 387. This is consistent with the number of cattle on the farm in 2014 and is consistent with Mr. Boelman’s evidence that the farm can only sustain a certain number of cattle. [ 175 ] The value of Ms. Mittelstadt’s animals in February 2021 was $400,000. To this I add the value of Mr. Boelman’s 90 head of cattle. Although Mr.

Boelman indicates in his Farmbook that the cows have a value of $850, this is a replacement figure, the original figure having been crossed out. I note that Ms. Mittelstadt’s evidence was that a cow had a sale value of approximately $1,200 or $1,400 at sale when finished. These figures are consistent with the figures contained in Mr. Boelman’s earlier Farmbooks. [ 176 ] Conservatively, I attribute a value of $1,200 to Mr. Boelman’s 90 head of cattle. As such, the total value of Mr. Boelman and Ms. Mittelstadt’s combined herd is approximately $508,000. This is consistent with the value of Mr.

Boelman’s cattle inventory in 2014 which was $522,000. It is significantly less than the value of the herd at the date of separation, which was $891,500 or the values in preceding years. However, the 2014 figure pre-dates the 2015 Order. [ 177 ] While

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