Walshe v Walshe, 2022 MBCA 93

Citation: Walshe v Walshe, 2022 MBCA 93 Date: 20221118 Docket: AF22-30-09781 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Christopher J. Mainella Madam Justice Janice L. leMaistre Madam Justice Lori T. Spivak BETWEEN : ) R. P. Majewski and ) S. S. Peplinskie clare diane walshe ) for the Appellant ) (Petitioner) Appellant ) J. L.

Wyman ) for the Respondent - and - ) ) Appeal heard and niall thomas walshe ) Decision pronounced: ) November 8, 2022 (Respondent) Respondent ) ) Written reasons: ) November 18, 2022 On appeal from 2021 MBQB 259 mainella JA (for the Court) : Introduction [ 1 ] This appeal arises from a judgment delivered after a divorce trial on issues relating to a parenting plan, child and spousal support, and property and corporate matters. After hearing argument, the appeal was dismissed with reasons to follow. These are those reasons. Background [ 2 ] The relevant facts in brief are as follows.

The parties married in 2008 and separated in 2017. They have three daughters: one age 8 and twins age 5 (the children). The petitioner (the wife) is a full-time provincial civil servant. The respondent (the husband) is self-employed in the construction trade carrying on business through Walshe Construction. The parties jointly own several properties; those joint properties are not a subject of this appeal. [ 3 ] The parties are 50/50 shareholders in 6228764 Manitoba Ltd. (the numbered company), which was incorporated during the marriage and used for real estate development.

The numbered company purchased real estate and held those assets. Walshe Construction provided the relevant services to develop the numbered company’s real estate. The personal and corporate finances of the parties, Walshe Construction and the numbered company were interrelated and the subject of family law proceedings and an application by the wife for an oppression remedy under The Corporations Act , CCSM c C225 . Standard of Review [ 4 ] Numerous errors are raised by the wife as to the decision of the trial judge; the reoccurring theme is that this Court

should embark on a review of the evidence and substitute its view for that of the trial judge. That would be inappropriate; the primary function of this Court is restricted to that of error correction (see Barendregt v Grebliunas , 2022 SCC 22 at paras 1 , 102). [ 5 ] Codification of legal standards plays an important

part in the architecture of family law. Accordingly, family law decisions are highly dependent on factual determinations and the exercise of judicial discretion. Additionally, many family law decisions can be the subject of a variation proceeding, within defined parameters, to reflect the reality that the circumstances of a family evolve naturally in time—so too must rights and obligations where appropriate. As a result, the standard of review of a family law decision is highly deferential save for pure questions of law (see Barendregt at paras 100-104 ).

As was explained in that case, “an appellate court may only intervene where there is a material error, a serious misapprehension of the evidence, or an error in law” (at para 103; see also Horch v Horch , 2017 MBCA 97 at para 50 ). Parenting Plan [ 6 ] The parties’ separation has been acrimonious and, unfortunately, the children have witnessed the mutual hostility of their parents towards each other, including the police being involved to keep the peace.

That said, prior to trial, they agreed to a detailed parenting plan save for a few issues, only one of which is germane to this appeal: the trial judge refused the wife’s request that the parenting plan include her having the right of final decision-making authority for the extracurricular activities of the children or major decisions relating to the children. [ 7 ] The trial judge correctly understood that family violence is a significant factor impacting the assessment of the best interests of the child (see sections 2(1) , 16(3) (j), 16(4) of the Divorce Act , RSC 1985, c 3 (2nd Supp ); and Barendregt at paras 141-47 ). [ 8 ] The trial judge was best equipped to pass judgment on matters of fact and discretion in relation to the parenting arrangement ( ibid at paras 1, 100-103).

The trial judge did not accept the wife’s argument that the family violence was “one way” (at para 22) as she had claimed. He found that both parents had engaged in family violence against each other. He also determined that, because of “the nature of their relationship” (at para 24), it was not in the children’s best interests for either parent to have final decision- making authority because each of them would be likely to abuse such a right.

He concluded that, when the parties are civil to each other, they can parent the children reasonably together. [ 9 ] We see no basis for interfering with the trial judge’s findings of fact or what he decided the parameters of the parenting plan should be to ensure the best interests of the children. In our view, the conclusions reached by the trial judge were reasonably open to him in light of the totality of the record; we decline the wife’s invitation to retry the question of family violence and come to a more favourable decision for her.

Child Support [ 10 ] Unlike the situation with wage earners, the calculation of income under the Manitoba, Child Support Guidelines Regulation , Man Reg 58/98 (the Guidelines ), for self-employed individuals is a complex matter. Key to this appeal is the trial judge’s decision to average the husband’s income over the period 2017 to 2020 to be $53,424.95 per year. [ 11 ] In contrast to the wife’s steady T4 income (which was $68,469.56 in 2018; $76,399.72 in 2019; and $78,882 in 2020), the husband’s income varied significantly from year to year, particularly as a result of the COVID-19 pandemic.

The wife argued for the imputation of income to the husband under the Guidelines because of intentional under-employment, deduction of unreasonable business expenses and deriving a significant portion of income from sources that are taxed at a lower rate than employment or business income or that are exempt from tax. The wife submitted that the husband’s income for the period 2017 to 2020 should be set at in excess of $140,000 per year. [ 12 ] There is a “narrow scope” of appellate review as to determinations of income under the Guidelines ( Horbas v Horbas , 2020 MBCA 34 at para 15 ).

The trial judge conducted a detailed analysis of the husband’s income. He rejected all of the wife’s arguments and refused to impute income to the husband under the Guidelines . We are satisfied that the trial judge was alive to the reality that the net reported income for tax purposes is not necessarily a true reflection of a self-employed parent’s income for their child support obligations. [ 13 ] The entire thrust of the wife’s argument on the question of child support is simply to re-argue the merits of her case, which was unsuccessful in the trial court; again, it must be said that that is not our role.

In our view, the trial judge’s decision as to the calculation of the husband’s income was reasonably supportable, as was, overall, the child support award. We have not been persuaded that the trial judge made a material error that would warrant us reversing the original decision (see Smederovac v Eichkorn , 2020 MBCA 57 at para 16 ). [ 14 ] One final comment on child support. The issue of special or extraordinary expenses of the children (see

section 7 of the Guidelines ) will have to be resolved cooperatively by the parties. Counsel for the husband confirmed at the hearing of the appeal that he is prepared to pay reasonable special or extraordinary expenses for the children. The short-term estimate of the wife as to the husband’s expected contribution, $750 per child per year, strikes us as eminently reasonable. Spousal Support [ 15 ] In his reasons, the trial judge referenced the relevant principles to consider in awarding a spousal support order under

section 15.2 of the Divorce Act . He decided that this was not an “appropriate situation” (at para 70) to award the wife spousal support. [ 16 ] Noteworthy is the fact that both parties have suffered from the separation, but the wife is economically self-sufficient and earns more than the husband. During the marriage, the arrangement was for the wife to raise the children and the husband to work to build up the assets of the numbered company. The trial judge noted that “it [was] evident that the [wife] [would] receive a sizable equalization payment upon the resolution of the parties’ property issues.

Any economic hardship from the role adopted by the [wife] in the marriage [would] be compensated for in the property settlement” (at para 69).

[ 17 ] We see no basis for interfering with the legal conclusion that no spousal support be paid here. As was stated in Aquila v Aquila , 2016 MBCA 33 , “the overarching question at the heart of entitlement to spousal support on a compensatory basis is equitable sharing of the economic consequences of marriage and its breakdown” (at para 38). The wife’s compensatory claim is not a strong one; she has no non-compensatory claim.

The substantial equalization payment she will receive will cushion the economic blow of the breakdown of the marriage given she has steady employment with generous benefits as a civil servant. [ 18 ] We are not persuaded there is a reversible error here that meets the significant threshold required to interfere with a spousal support order ( ibid at para 26). Property and Corporate Matters Confirmation of the Master’s Report [ 19 ] Prior to the family law trial, there was a reference to a master for the purposes of an accounting under The Family Property Act , CCSM c F25 (the FPA ) (see 2021 MBQB 197 ).

The master determined that, on the parties’ separation date, the value of Walshe Construction was $267,596.13 and the value of the shareholder loan owed by the numbered company to the husband was $583,295.08. In reaching his decision, given the vagaries of some of the evidence, the master used a 75% discount factor to value most of the assets of Walshe Construction.

He also rejected the wife’s arguments about the amount of the husband’s shareholder loan and that two business debts, totalling over $86,000, were not owed as of the date of separation but were incurred after the separation. [ 20 ] The trial judge dismissed the wife’s objection to the master’s report.

He either agreed with the master’s findings on the reference or, where the master erred, the trial judge was of the view that the master reached the right result given the admissible evidence. [ 21 ] The standard of review with respect to confirmation of a report of a master under the FPA is determined in accordance with the principles set out in Housen v Nikolaisen , 2002 SCC 33 —the degree of deference owed to the original decision depends on the nature of the question (see Schreyer v Schreyer , 2009 MBCA 84 at paras 37-40 , 61-62, 75, 105-6, aff’d 2011 SCC 35 ). [ 22 ] All of the arguments raised by the wife challenging the trial judge confirming the master’s report raise either questions of fact or mixed fact and law.

We are not persuaded that the trial judge made a palpable and overriding error. The wife has not demonstrated “an obvious error that can be plainly identified in [the trial] judge’s reasons that is determinative of the outcome of the case” ( Albo v The Winnipeg Free Press et al , 2020 MBCA 50 at para 19 ). Oppression Remedy [ 23 ] The trial judge decided that, since the date of separation, the husband had operated the numbered company in an oppressive manner.

The oppression remedy he granted under The Corporations Act was for the husband to purchase the wife’s shares in the numbered company based on their value on the date of separation. He stated that the value of the shares was to be determined by “agreement” or a “further hearing” with appropriate expert evidence (at para 92). [ 24 ]

Section 234 of The Corporations Act vests the Court with a broad discretion and powers to “rectify the matters complained of” (at section 234(2)). The trial judge’s choice of remedy was a discretionary decision that is owed deference on appeal absent an error in principle or an unjust result (see Wilson v Alharayeri , 2017 SCC 39 at para 59 ; 63833 Manitoba Corporation v Cosman’s Furniture

(1972) Ltd et al , 2018 MBCA 72 at para 47 ; and Caughlin v Canadian Payroll Systems Inc , 2020 MBCA 25 at para 11 ). [ 25 ] There is no merit to the wife’s submission that the trial judge erred by not imposing a form of “rough justice” where he would value the shares of the numbered company based on the total of its assets on the date of separation ($1,014,785.63), less certain adjustments, such as the husband’s shareholder loan. [ 26 ] As Burnett JA noted in Caughlin , “Quantification of the amount due as a consequence of oppressive conduct is often extremely difficult” (at para 12).

It does not surprise us that the trial judge required expert evidence as to the value of the shares of the numbered company if the parties could not agree. That is the usual and prudent course in matters where a corporation used in a family business is embroiled in a family law dispute and a question of an oppression remedy arises (see Sonley v Koolridge Holsteins Inc et al , 2017 MBQB 20 ). [ 27 ] Unfortunately, the wife’s position overlooks the trial judge’s preference that the parties resolve this corporate dispute themselves without resort to the courts.

This was sage advice in this case and is a good idea generally in family law disputes. Disposition [ 28 ] In the result, the wife’s appeal was dismissed with costs. JA JA

JA