Kassian v Kassian, 2019 SKCA 101

Court of Appeal for Saskatchewan Docket: CACV3280 Citation: Kassian v Kassian , 2019 SKCA 101 Date: 2019-10-15 Between: Kenneth Victor Kassian Appellant/Respondent on Cross-Appeal (Respondent) And Lana Joy Kassian Respondent/Appellant on Cross-Appeal (Petitioner) Before: Richards C.J.S., Barrington-Foote and Tholl JJ.A. Disposition: Appeal allowed in part; cross-appeal allowed Written reasons by: The Honourable Mr. Justice Tholl In concurrence: The Honourable Chief Justice Richards The Honourable Mr.

Justice Barrington-Foote On Appeal From: Div 360 of 2013, Saskatoon Appeal Heard: April 30, 2019 Counsel: Raymond Wiebe and Rachel Blocka for the Appellant/Cross-Respondent Andre Memauri for the Respondent/Cross-Appellant Tholl J.A. I. Introduction [ 1 ] This is an appeal and cross-appeal from a trial decision granting judgment for the division of family property and spousal support. [ 2 ] The main issues in dispute at trial were the valuation of business interests and the amount and duration of spousal support. The valuation of the business interests was complicated by events that occurred post-petition.

Several years after the petition was issued, Kenneth Kassian encountered difficulties with his business partners, which resulted in him being frozen out of the business. Protracted litigation ensued between Mr. Kassian and his business partners, with the litigation being settled prior to the completion of the family law trial. The settlement amount Mr. Kassian received for his shares in one of the businesses was significantly less than the value of the shares at the petition date [application date]. At trial, Mr.

Kassian asserted the adjudication date should be used for valuation purposes for the shares, with the settlement amount representing the adjudication date value. The trial judge rejected Mr. Kassian’s position and determined the shares should be valued as of the application date. [ 3 ] Mr.

Kassian appeals the property division judgment on several grounds that can be broadly summarized as an assertion that the trial judge misconstrued or ignored evidence, engaged in speculation, applied improper considerations and, overall, erred in choosing the application date instead of the adjudication date for determining the value of the shares. In the alternative, if the application date is upheld as the valuation date, Mr.

Kassian submits the trial judge erred by failing to apply a minority shareholder discount to the share valuation and by failing to consider the tax implications when he determined the value of all of the business interests. [ 4 ] Lana Kassian cross-appeals the property division judgment, asserting the trial judge erred by attributing a portion of the business interests as property in her possession when all of the business interests should have been found to have been in Mr. Kassian’s possession. [ 5 ] The trial judge also ordered Mr. Kassian to pay Ms.

Kassian time-limited spousal support, with a review provision. Mr. Kassian appeals against the duration of spousal support and the review provision. [ 6 ] For the reasons that follow, I would dismiss Mr. Kassian’s appeal with regard to family property division, partially allow his appeal with regard to spousal support and allow Ms. Kassian’s cross-appeal. The trial judge made no error in determining the application date was the appropriate date for valuation of the assets or in determining there should not be an adjustment for the minority shareholding or potential tax consequences.

The trial judge did not err in determining the duration of spousal support but erred in imposing a review provision. The trial judge erred in finding a portion of the business assets were in Ms. Kassian’s possession and, as a result, understated the amount owed by Mr. Kassian to Ms. Kassian. II. Background [ 7 ] Mr. Kassian was born in 1959. Ms. Kassian was born in 1966. They began living together in the spring of 1998 and were married in December of 2001. Mr. Kassian’s two teenage children from a previous relationship were living with him when the parties started cohabiting.

The parties have no children together. [ 8 ] Ms. Kassian had worked full-time as a dental assistant at the start of the relationship but began cutting her work back substantially in 2003 because of her ongoing health issues and to provide flexibility so she could travel with Mr. Kassian on short notice. She was completely financially dependent on Mr. Kassian for the last eight years of the marriage.

[ 9 ] Mr. Kassian has had a long career in the glass industry, beginning shortly after he graduated from high school. In 2001, he and two business partners, Rick and Laurie Hopkinson, founded Dynamic Glass & Door Ltd. [Dynamic], with Mr. Kassian as the general manager. As of the application date, Mr. Kassian owned 46% of the shares of Dynamic and the Hopkinsons owned the other 54% of the shares, directly and through a holding company, 620949 Saskatchewan Ltd. [620949]. Dynamic owns all of the shares of another glass company, Clear-View Glass Ltd. [Clear-View].

Up until 2014, the Hopkinsons provided some limited accounting services but were otherwise content to allow Mr. Kassian to run the operations as he saw fit. [ 10 ] Mr. Kassian and Ms. Kassian owned KLK Holdings Ltd. [KLK], with Mr. Kassian owning 51% of the shares and Ms. Kassian owning 49% of the shares. Income generated by Dynamic’s business operations flowed to the Kassians through the payment of management fees from Dynamic to KLK. From 2009 to 2012, these management fees were around $700,000 per year. [ 11 ] Mr. Hopkinson owned 100% of the shares of 623385 Saskatchewan Ltd. [623385].

Together, KLK and 6223385 created R.K. Partners, with KLK owning 40% of the partnership and 623385 owning 60% of the partnership. R.K. Partners owns the building out of which Clear-View operates and Clear-View pays rent to R.K. Partners. [ 12 ] The businesses were very successful during the marriage, generating significant income and allowing the parties to live a lavish lifestyle. They owned a substantial home, a condominium in Palm Springs and several personal and recreational vehicles. They spent freely and travelled frequently. [ 13 ] The Kassians separated in March of 2011. Ms.

Kassian filed a petition on May 10, 2011. On November 24, 2011, Mr. Kassian was ordered to pay Ms. Kassian interim spousal support of $10,000 per month, commencing September 1, 2011. There were numerous other interim applications before the trial commenced in April of 2017. [ 14 ] After the petition was filed in 2011, but before the trial commenced in April of 2017, difficulties arose in the business relationship between the Hopkinsons and Mr. Kassian.

The Hopkinsons had been passive participants in the business for many years but had become more involved in the day-to-day operations of Dynamic beginning in March of 2014. Mr. Kassian did not approve of many of the business decisions being made by Mr. Hopkinson and Dynamic’s profitability declined. This created a great deal of friction between Mr. Kassian and the Hopkinsons, culminating in Mr. Kassian being relieved of his duties and frozen out of the business on October 27, 2015. Mr. Kassian’s son, Nicholas, was an employee of Dynamic and was terminated on the same date.

Nicholas then set up a competing business with Mr. Kassian’s assistance. The extent of that assistance is disputed and will be detailed later in this judgment. [ 15 ] Dynamic commenced an action for breach of fiduciary obligations against Mr. Kassian in relation to the competing business. Mr. Kassian filed an originating application seeking an oppression remedy against Dynamic, the Hopkinsons and 620949. On Mr. Kassian’s direction, KLK commenced an action against Dynamic for breach of contract for failure to pay management fees. Nicholas sued Dynamic and Mr. Hopkinson for wrongful dismissal.

I will refer to this group of four court actions as “the litigation”. The litigation remained outstanding when the family law trial began in April 2017. III. Court of Queen’s Bench Decision [ 16 ] In advance of the family law trial, Ms. Kassian and Mr. Kassian resolved the division of the family home, the condominium in Palm Springs, a van and a joint bank account, with payments made by agreement to account for this property. At trial, the parties further agreed with regard to the possession and value of many other items such as vehicles, household goods, some bank accounts and other assorted personal property.

The agreement at trial resulted in Mr. Kassian having $33,915 of undisputed property in his possession, and Ms. Kassian having $62,817 of undisputed property in her possession, all still subject to division of its value. [ 17 ] The trial judge made determinations with regard to the remaining disputed property. Excluding the business interests, this resulted in the trial judge finding the following property was in Mr.

Kassian’s possession as of the application date: Affinity account 1, $17,888; Affinity account 2, US$54,851; RRSPs differential (net of notional tax), $72,272; and personal accounts receivable, $75,900. All of these assets were valued as of the application date. The trial judge also set out a method to divide the Aeroplan points in Mr. Kassian’s possession. [ 18 ] After determining these values, the trial judge then turned to the valuation of the parties’ interests in Dynamic (including Clear-View), KLK and R.K. Partners.

At trial, each party presented expert evidence regarding the value of Dynamic as of the application date. Ms. Kassian’s expert, Keith Thomson, provided a value range for Mr. Kassian’s shares in Dynamic as $3,105,000 to $3,427,000. Mr. Kassian’s expert, Marc Hoffort, provided a value range as $1,180,000 to $1,220,000. The main differences between the two opinions of value consisted of Mr. Thomson using a much larger amount for the value of goodwill and not applying a discount to reflect the fact Mr. Kassian was a minority shareholder in Dynamic.

Neither party provided an expert opinion of value for the adjudication date. [ 19 ] Mr. Kassian had presented the bulk of his evidence at trial before requesting an adjournment. He was still embroiled in the litigation with the Hopkinsons and wanted the adjournment to attempt to resolve that matter. The adjournment was granted. When the family law trial recommenced eight months later, Mr. Kassian provided additional evidence establishing he had settled with the Hopkinsons, resulting in Mr. Kassian selling his shares in Dynamic to the Hopkinsons, a cash payment being made to Mr.

Kassian, KLK and Nicholas, and all of the litigation, including Nicholas’s claim, being discontinued [Hopkinson settlement]. Mr. Kassian asserted that the money received from that litigation, minus the legal fees, accounting fees, a payment to KLK and a wrongful dismissal payment to Nicholas, represented the value of his shares in Dynamic. This net amount was $600,800. Mr. Kassian argued at the continuation of the trial that this was the value that should be divided for the Dynamic shares. Ms.

Kassian disagreed and held to her position that the value of the business interests as of the application date was the value that should be divided between the parties. [ 20 ] The trial judge rejected Mr. Kassian’s position and determined the appropriate valuation date for the Dynamic shares was the application date.

While the trial judge recognized there was a decrease in the value of Dynamic between the application date and the adjudication date, he observed that he could not identify the extent of that decrease or how much of the decrease was caused by market forces and the Hopkinsons and how much was caused by Mr. Kassian’s affiliation with Nicholas’s business and the allegations of breach

of fiduciary duty. Accordingly, he found he could not conclude there was a noteworthy decrease in value or make a likely attribution of any such decrease. In considering the fairness of the use of one valuation date over the other, the trial judge noted the amount received from the Hopkinson settlement was less than the application date value, but recognized the circumstances creating that decrease in value did not occur for several years after the application date. The trial judge also found Mr. Kassian was mainly responsible for the long delay in having the family law matters resolved.

He further observed all other assets were being valued as of the application date so using that same date for the valuation date of the Dynamic shares was consistent with taking a snapshot of the parties’ assets and distributing those assets. [ 21 ] The trial judge moved on to determine the value of the Dynamic shares as of the application date. He preferred the opinion evidence provided by Mr. Kassian’s expert regarding the much lower value of goodwill and accepted that evidence. The trial judge preferred the evidence of Ms. Kassian’s expert regarding the inappropriateness of a minority discount.

In the end, the trial judge accepted the range of value opined to by Mr. Kassian’s expert, added the minority discount back in, and chose the midpoint in the range arriving at a value of $1,713,500 for Mr. Kassian’s shares in Dynamic. The trial judge rejected any further discount to the value of the shares in Dynamic to account for potential tax consequences of divestment of the Dynamic shares, relying on James v Belosowsky , 2012 SKQB 316 , [2013] 5 WWR 415 [ Belosowsky ].

He found there was insufficient evidence to quantify any tax consequences and found it was not likely any such consequences would have arisen. [ 22 ] After determining Dynamic’s value, the trial judge turned to the value of KLK and R.K. Partners. The parties had agreed KLK owned liquid assets of $533,451 (not including the value of R.K. Partners) as of the application date and agreed this was its value for the purposes of property division. The trial judge accepted this as the value to be divided, after refusing to make any adjustments for potential tax consequences as argued for by Mr. Kassian. Noting that Ms.

Kassian owned 49% of the shares of KLK and Mr. Kassian owned the other 51% of the shares of KLK, he assigned Ms. Kassian $261,391 and Mr. Kassian $272,061 for their respective shares of KLK. [ 23 ] At trial, the parties had agreed KLK’s share of R.K. Partners’s value was $145,000, but Mr. Kassian asserted there should be a reduction for potential tax consequences. The trial judge again rejected any reduction in value for tax consequences. Given that the partnership interest in R.K. Partners was owned by KLK, the trial judge assigned 49% of the value to Ms. Kassian ($71,050) and 51% to Mr.

Kassian ($73,950). [ 24 ] The trial judge summed up all of the property he found to be in each party’s possession and arrived at values of $395,258 in Ms. Kassian’s possession and $2,314,337 in Mr. Kassian’s possession. [ 25 ] From those valuations, the trial judge ordered Mr. Kassian to make an equalization payment to Ms. Kassian of $959,540, minus $100,000 that had already been paid to her as an interim distribution from the settlement funds that were being held in trust. [ 26 ] Turning to spousal support, the trial judge found Ms.

Kassian was entitled to spousal support on a compensatory and non- compensatory basis. I will return to the details of the trial judge’s findings and analysis on that front when I analyze the issues related to spousal support. At the end of his analysis, the trial judge found Ms. Kassian was entitled to spousal support of $2,000 per month until January 1, 2024. The trial judge ordered a review of the spousal support to take place in 2023, upon application of either party.

With regard to retroactive spousal support and arrears of spousal support, the trial judge retroactively adjusted the spousal support down to $2,000 per month effective January 1, 2016, and determined the arrears of spousal support to be $80,000. IV. Issues [ 27 ] The issues in this matter can be stated as follows: (

a) Did the trial judge err in choosing the application date as the valuation date for the business interests? (

b) Did the trial judge err in not applying a minority discount to the valuation of Mr. Kassian’s shares in Dynamic? (

c) Did the trial judge err in not taking the potential tax consequences of the disposition of the business interests into account? (

d) Did the trial judge err in attributing a portion of the value of the business interests to Ms. Kassian? (

e) Did the trial judge err in determining the duration of the spousal support? (

f) Did the trial judge err in ordering a review of the spousal support? V. Analysis of Family Property A. Application date versus adjudication date [ 28 ] Mr. Kassian alleges the following errors were committed by the trial judge when he determined the application date was the appropriate date for the valuation of the shares in Dynamic and rejected the settlement funds as representing the shares’ value: 36. With great respect, the Learned Trial Judge made various errors of fact and law: … i.

The Learned Trial Judge committed an error of law in failing to apply the principle that a reduction in the valuation of the company Dynamic between the date of Application and the date of Trial through circumstances beyond the control of the Appellant

should dictate that the appropriate valuation date was the date of Trial; ii. The Learned Trial Judge committed a palpable and overriding error by misconstruing and failing to consider the evidence of theAppellant’s witnesses and the cross-examination evidence of the expert witness called on behalf of the Respondent, with respect to thereasons for the decrease in value of Dynamic between the date of Application and the date of Trial; iii.

The Learned Trial Judge committed a palpable and overriding error by ignoring or dismissing the direct evidence of the Appellantwith respect to the decrease in value of his shares in Dynamic and the effect of the oppression action involving Dynamic between thedate of Application and the date of Trial; iv. The Learned Trial Judge made a palpable and overriding error in failing to consider the effect of the Appellant’s removal fromDynamic (a matter beyond his control) on the value of his shares in Dynamic; v.

The Learned Trial Judge made a palpable and overriding error in failing to consider the evidence pertaining to the settlement ofthe oppression action as representative of the value of the Appellant’s shares in Dynamic as of the date of Trial; vi. The Learned Trial Judge made an error of law by introducing a new criterion for choosing a valuation date, namely hisspeculation as to the reason for the delay in proceeding to Trial, and attributing the blame for such delay to the Appellant; vii.

The Learned Trial Judge made an error of law in developing and considering and giving weight to a hypothetical scenario ofproperty distribution at a date in time between the date of Application and the date of Trial; and viii.

The Learned Trial Judge committed a palpable and overriding error and significantly misapprehended the evidence whichresulted in his finding that the valuation date for the shares of Dynamic should be the Date of Application, not the date of Trial. [29] These grounds of appeal overlap and must be analyzed somewhat concurrently. [30] The fundamental principle governing the division of family property is the presumption of joint contribution to the acquisitionof property during the spousal relationship and an equal division of the value of that property upon dissolution of the spousalrelationship, subject only to applicable exceptions, exemptions and equitable considerations: s. 20 and s. 21 of The Family Property Act,SS 1997, c F-6.3 [FPA].

In determining value, the court applies s. 2 of the FPA:

Interpretation 2(1) In this Act: … “value” means: (

a) the fair market value at the time an application is made pursuant to this Act, or at the time of adjudication, whichever the court thinksfit; or (

b) if a fair market value cannot be determined, any value at the time an application is made pursuant to this Act, or at the time ofadjudication, that the court considers reasonable. [31] Under s. 2 of the FPA, the trial judge had the option of choosing the application date (petition date) or the adjudication datefor valuing the shares in Dynamic. He chose the application date.

This portion of the appeal turns on whether the trial judge committedan error in doing so. [32] When this Court reviews a trial judge’s choice of valuation date, considerable deference is owed to the trial judge: Rimmer vAdshead, 2002 SKCA 12 at para 58, [2002] 4 WWR 119; Muranetz-Dubelt v Dubelt, 2010 SKCA 5 at para 12, 343 Sask R 215;Williams v Williams, 2011 SKCA 84 at paras 3 and 29, 343 DLR (4th) 720 [Williams]; and Ackerman v Ackerman, 2014 SKCA 137 atpara 23, [2015] 6 WWR 626 [Ackerman]. This Court is not permitted to merely substitute its own view of the appropriate date.

Thisdeferential standard was emphasized by Jackson J.A. in Riley v Riley, 2011 SKCA 5, 366 Sask R 110 [Riley], where she described thestandard of review: [5] When an appellate court reviews a decision of a trial court, three standards of review are usually engaged: (

i) the standard of reviewconcerning questions of law, i.e., did the trial judge decide all questions of law correctly (see: Housen v Nikolaisen, 2002 SCC 33 atpara. 8, [2002] 2 S.C.R. 235); (ii) the standard of review as to factual findings, i.e., did the trial judge make any palpable and overridingerror with respect to a material finding of fact (see: Lensen v Lensen, (SCC), [1987] 2 S.C.R. 672 at p. 683 and Housen atpara. 10); and (iii) the standard of review with respect to discretionary matters, i.e., did the trial judge consider all relevant matters (see:Friends of the Oldman River Society v Canada (Minister of Transport), (SCC), [1992] 1 S.C.R. 3 at 76–77 and thecases referred to therein).

When the decision under review divides family property, all three types of review are engaged to a greater orlesser extent (see: Russell v Russell (1999), (SK CA), 179 D.L.R. (4th) 723 (Sask. C.A.) at para. 18), but there is anoverarching consideration.

Given the provisions of The Family Property Act, with its emphasis on a “fair and equitable” distribution ofproperty, considerable deference is owed to the trial judge’s overall decision as to entitlement and valuation (see: The Family PropertyAct, ss. 21(2), 22(1) and 23(4); Russell at paras. 19 and 71; and Muranetz-Dubelt v Dubelt, 2010 SKCA 5 at para. 12, 343 Sask.

R. 215).While the standard of appellate review permits a court of appeal to intervene in the face of an error of law, a palpable and overridingerror of fact, or an abuse of discretion, the court must be aware that disturbing one of a trial judge’s many decisions as to entitlement tofamily property, or its valuation, may disturb the overall equities that have been achieved in arriving at what constitutes a fair andequitable distribution. The standard of appellate review in family law matters reflects this deference to the trial judge’s overalldistribution of family property.

[33] While the choice of valuation date is a discretionary decision by the trial judge, if the date selected defeats the fundamentalprinciples of the FPA then the choice is beyond the proper bounds of the trial judge’s discretion and can be interfered with upon appeal:Williams at para 29. [34] Generally, the application date, as opposed to the adjudication date, is used for valuation in the division of family property inSaskatchewan: Benson v Benson (1994), (SK CA), 120 Sask R 17 (CA) at para 34, Ackerman at para 37, and D.B.B. vD.M.B., 2017 SKCA 59 at para 206 [D.B.B.].

While property would typically be valued consistently at one date or the other, a trial judgeis entitled to value the property on either of the two dates that he or she sees fit.

A trial judge can also value some of the property on onedate and some of the property on the other date; as long as he or she exercises that discretion rationally, the choice is based on theevidence and the decision is in keeping with the purposes of the FPA and the justice of the case: Benson at para 33; Russell v Russell(1999), (SK CA), 180 Sask R 196 (CA) at paras 25 to 28 [Russell]; Ackerman at para 37. [35] One of the major factors that influences the choice of the valuation date for specific items of property is the reason for anyincrease or decrease in value of that item between the application date and the adjudication date.

This factor was summarized by Ryan-Froslie J.A. in Ackerman: [37] … The ambit of that discretion has been considered by this Court and a review of that jurisprudence reveals the following principles: … (

v) If property has increased or decreased in value between the application date and the date of adjudication, the reason for that increaseor decrease is an important factor to be considered in choosing the appropriate valuation date. If the increase or decrease is due solely tomarket forces the property should generally be valued as of the date of adjudication … . On the other hand, when the rise or fall in valueis attributable solely to the actions of one spouse, it is appropriate to value the property as of the date of application … .

I would add thatany contribution by a third party to the increase or decrease in value of family property, would militate in favour of valuing that propertyas of the application date. [36] The use of the adjudication date is generally more appropriate when the increase or decrease in value of a specific item ofproperty is caused solely by market forces because market forces are beyond the control of the parties and neither party should benefit orsuffer as a result of circumstances that they have no influence over.

Similarly, when other circumstances over which the parties havelittle or no control cause the change in value, the adjudication date is typically more appropriate. However, there is often a variety offactors that cause changes in value of an item of property, some of which may be outside of the control of the parties and others subjectto a level of control by one or both spouses. For example, the value of an active business may be affected by a downturn in the economybut may also be affected by the myriad of operational decisions made over time by the spouse in possession of the business.

A trial judgeshould carefully consider all of the factors that have caused an increase or decrease in value when determining which valuation date touse. [37] The choice of a valuation date will also be informed and influenced by the sufficiency of the evidence related to the value ateach date: Ackerman at para 37 and Russell at para 28. [38] In this matter, after setting out the facts and reviewing the applicable case law – including Ackerman, Cey v Teske, 2006SKQB 315, 286 Sask R 221, and Phipps v Phipps (1993), (SK KB), 117 Sask R 55 (QB) [Phipps] – the trial judgeconsidered the factors that influenced the use of one valuation date over the other.

The trial judge chose the application date as theappropriate valuation date for the Dynamic shares and provided reasons for doing so. With the deferential standard of review in mind, Iwill examine that determination. 1. Evidence of value at application date and adjudication date [39] The trial judge commenced his analysis by observing there was expert evidence from both parties regarding the valuation ofthe Dynamic shares as of the application date but there was no expert evidence setting out the valuation of the shares as of theadjudication date.

The only evidence regarding the adjudication date value was the amount Mr. Kassian obtained in the Hopkinsonsettlement. Mr. Kassian submits the trial judge erred by not accepting the Hopkinson settlement as representative of the value of theDynamic shares as of the adjudication date. I find I am unable to agree with Mr. Kassian’s submission for the reasons that follow. [40] Mr. Kassian’s counsel had urged the trial judge to simply accept the amount Mr. Kassian unilaterally allocated from theHopkinson settlement funds to the Dynamic shares as representing the value at the adjudication date.

The trial judge was willing toaccept there had been a decrease in value from the application date to the adjudication date but noted the quality of the relevant evidencewould only permit him to speculate as to the magnitude of that decrease; speculation that he refused to engage in. The fundamentalproblem identified by the trial judge was that, under the Hopkinson settlement, all of the litigation was discontinued. Ms. Kassian had noparticipation or input of any kind into the conduct of the litigation, the acceptance of the settlement, or the allocation of the settlementfunds.

The trial judge found the Hopkinson settlement had limited value because “tied up inextricably in that settlement are theallegations of breach of fiduciary duty on Ken’s part. There is no way of knowing to what extent that factor influenced the parties inreaching a settlement amount” (Kassian v Kassian, Saskatoon, Div 360 of 2013 (Sask QB) at para 45 [Trial Decision]). This finding waswell supported by the evidence. I will explain. [41] The Hopkinsons were suing Mr. Kassian and seeking damages of over $2,000,000, arising out of his involvement in his son’snewly-formed glass business.

They commenced the action well before Mr. Kassian filed his application seeking an oppression remedy.There was substantial evidence that Mr. Kassian faced significant risk in the breach of fiduciary obligation action. Mr. Kassian’s son,Nicholas, had been employed at Dynamic. His employment had been terminated on the same date Mr. Kassian and KLK’s activeinvolvement with Dynamic had terminated. Nicholas had promptly established a competing business, DSM Glass & Aluminum Ltd.[DSM] with his sister, Jennifer. At the time of trial, Nicholas and Jennifer were the sole shareholders, directors and officers of DSM.Mr.

Kassian testified he did not take an active role in DSM prior to the Hopkinson settlement, however, there was substantial evidencethat contradicted this bare assertion.

[ 42 ] Mr. Kassian gifted $100,000 to Nicholas and Jennifer to help fund the start-up of DSM. An application to the Business Development Corporation listed Mr. Kassian as a guarantor for his children’s application for financing for DSM, although Nicholas and Jennifer eventually qualified for financing without the guarantee. Mr. Kassian testified he fulfilled a mentoring role and provided advice to Nicholas in relation to setting up the competing business. Mr. Kassian would “stop by” the business to talk to his son. He described himself as “behind the scenes guiding [Nicholas] at the kitchen table or by emails”.

DSM printed business cards with Mr. Kassian’s name and contact information and Mr. Kassian was carrying at least one of those cards on his person during his testimony at trial. Mr. Kassian had an email address of “ken@dsmglass.com”. Several of Dynamic’s employees left Dynamic to work for DSM. Several of Dynamic’s customers became DSM customers. After Mr. Kassian settled the litigation, he immediately began receiving a consulting fee of $1,500 per month from DSM. [ 43 ] The family law trial was not a trial to determine the collateral issue of whether Mr. Kassian had breached his fiduciary obligations to Dynamic.

However, the trial judge was entitled to consider all of the evidence regarding Mr. Kassian’s participation in the competing business as representing risk to Mr. Kassian that would have put significant downward pressure on the settlement amount he received. This factor represented sufficient justification for the trial judge to disregard the assertion that the settlement funds represented the fair market value of the shares as of the adjudication date. [ 44 ] During argument in this Court, Mr.

Kassian conceded any adjustment to the amount received in the settlement to account for the value of the discontinuation of the breach of fiduciary obligation action would be arbitrary. However, Mr. Kassian submits the evidence of Ms. Kassian’s expert, Mr. Thomson, supports the contention that the amount received in the Hopkinson settlement represents the fair market value of the Dynamic shares. Mr. Thomson testified before the litigation was settled. Mr. Kassian relies on the following testimony from Mr. Thomson: Q Right.

Now, you’re also aware that this business is now the subject of an oppression application, are you not? A Yes, I am made aware of that. Q So if one were to attempt to put a value on what the shareholder, Mr. Kassian, is going to realize out of this business, would it be fair to say that probably the only conclusion one could come to is it’ll be whatever he gets out of that oppression application? A Yes, I guess so. Yes. [ 45 ] This evidence does not support the conclusion sought to be ascribed to it by Mr. Kassian. Mr.

Thomson was agreeing that any money received in the oppression application in the future was what Mr. Kassian would “realize out of this business”. This simply means the amount Mr. Kassian would receive is the amount he would receive.

It does not address whether the cash received as a global settlement of the entirety of the litigation has any relationship to the fair market value of the Dynamic shares. [ 46 ] In addition to the concern about the interwoven issues regarding the litigation, the allocations and adjustments to the settlement funds cast further doubt on the usefulness of the settlement as a measure of the fair market value of the Dynamic shares. The terms of the Hopkinson settlement consisted of a cash payment being made from the Hopkinsons of $1,100,000. Mr.

Kassian solely determined how the funds would be allocated: Allocation Recipient $75,000 Nicholas, wrongful dismissal claim $223,750 KLK –$78,750 in management fees to KLK plus $145,000 for KLK’s partnership interest in R.K. Partners $801,250 Mr. Kassian, Dynamic shares [ 47 ] While not commented on in detail by the trial judge, the $75,000 allocated to Nicholas for his wrongful dismissal claim is an additional factor that indicates the settlement did not represent the fair market value for the Dynamic shares.

This payment would represent approximately one full year’s salary for Nicholas, who had been employed at Dynamic for approximately 4.5 years. The uncontroverted evidence established that Nicholas commenced a competing business and was earning a larger salary less than six months after being terminated from Dynamic. It is hard to understand why Nicholas would be entitled to settle for a payment that, on its face, seems to exceed a reasonable quantification of his claim.

Perhaps there was justification for this allocation, but such justification is not found in the evidence. [ 48 ] The allocation of management fees to KLK from the settlement funds was also unilaterally determined by Mr. Kassian. He had already agreed to value KLK as of the application date, and had agreed to the value, so any amount he unilaterally allocated to KLK further reduced the value of his Dynamic shares for his sole benefit. [ 49 ] With regard to the $801,250 allocated by Mr. Kassian to his Dynamic shares, he submitted at trial that this amount must be further reduced. Mr.

Kassian provided invoices for legal fees and accounting fees that he testified were solely related to the litigation. Mr. Kassian asked the trial judge to deduct the entirety of the legal fees of $182,819 and accounting fees of $17,630 from the value of the Dynamic shares, leaving $600,800 as the value of those shares. At the argument of this appeal, Mr. Kassian correctly noted one of the invoices for legal expenses had been erroneously counted twice, so the legal fees were actually $164,834.

As a result, he amended his position for the value realized for the shares to $618,785. [ 50 ] It is obvious the legal fees paid to MLT Aikins should not be attributed solely to the oppression remedy. An examination of the MLT Aikins invoices confirms a portion of the legal fees related to the breach of fiduciary obligation action.

For example, several time entries appear in the February 2016 MLT Aikins billings regarding drafting a statement of defence to the breach of fiduciary obligation claim and numerous time entries appear in the November 2015 and January 2017 billings for research related to fiduciary obligations. Based on the evidence provided, the billing for the litigation and the oppression application appears to be inextricably tied up together, with the possible exception of Nicholas’s claim. However, as can be seen from the minutes of settlement that resolved the litigation, the same lawyer from MLT Aikins that represented Mr.

Kassian and KLK also signed the minutes of settlement on Nicholas’s behalf so it is unknown if a portion of the MLT Aikins’s billings also related to Nicholas’s claim. All of this overlap added to the problems with Mr. Kassian’s position that the net amount of the Hopkinson settlement, after the deduction of all legal and accounting fees, should be used as the value of the Dynamic shares as of the adjudication date.

[ 51 ] Lastly, the evidence indicated Mr. Kassian himself did not believe the amount he received from the Hopkinson settlement represented the amount he was entitled to for the value of his shares in Dynamic. In examination-in-chief, Mr. Kassian testified as follows: Q And just before we get to the contents of the addendum, was that settlement you reached as -- as good a settlement as you were hoping to achieve or were able to achieve? A That was the best settlement we were able to achieve. On the advice of counsel at the time they felt that that was the best that I was going to achieve.

But, in cross-examination, Mr. Kassian testified as follows: Q Now, this action involved not only you on an oppressive shareholder’s remedy, but Mr. Hopkinson also sued you saying that you had breached the fiduciary duty by assisting your children to set up a competing company, enticing employees away, enticing customers away; is that correct? A Correct. Q And the -- when the settlement was eventually reached, both sides were, I assume, espousing their view, as to what should happen? A Sorry, I didn’t understand that.

Q Yeah, both sides were -- were -- each of you wanted different things when you started out negotiating? A Well, when we started negotiating I would assume everybody wants something different, yes. Q Yeah. Because, you know, you had filed a huge affidavit that is an exhibit in this court that indicated in that affidavit you thought you were entitled to significantly more than what you ended up with on this settlement; is that correct? A Correct. Q And so what we ended up with, I guess, was a -- a finally a compromised settlement, if I can call it that; is that fair?

A A negotiated settlement, yes. [ 52 ] There were ample grounds for the trial judge to reject the assertion that the amount received in the Hopkinson settlement represented the fair market value of the Dynamic shares as of the adjudication date. Based on the deferential standard of review, I cannot conclude the trial judge erred in this determination. As a result, there was no reliable evidence of the value of Dynamic’s shares as of the adjudication date. 2. Decrease in value from factors beyond Mr. Kassian’s control [ 53 ] Mr.

Kassian, as he did at trial, submits the interference by the Hopkinsons in the business, his expulsion from the business and the general decline in economic conditions all constituted factors that were beyond his control and contributed to a decrease in Dynamic’s value. He asserts these factors should have compelled the trial judge to use the adjudication date as the valuation date. The trial judge considered these arguments and rejected them.

He found that the decrease in the value of Dynamic from the application date to the adjudication date was not solely attributable to forces beyond the control of the parties. The trial judge found it would be speculative to conclude any decrease in value resulted solely from forces beyond Mr. Kassian’s control or solely from his own conduct. He found he could not conclude there had been a noteworthy decrease in value or make a likely attribution of the cause of any such decrease. The trial judge found this factor did not support the use of the adjudication date for valuation.

I can find no error in that determination. [ 54 ] There was evidence that general economic conditions had worsened and that the Hopkinsons had caused a decline in the value of Dynamic. However, there was also evidence Mr. Kassian was fully involved with Dynamic for long after the application date. Mr. Kassian remained the general manager and the controlling influence in Dynamic for three years after the application date of May 10, 2011. The business continued to succeed, and Mr. Kassian continued to draw a large income during that time. In March of 2014 (three years after the application date), Mr.

Hopkinson began to take an active role in the operation of the business and Mr. Kassian’s control of Dynamic diminished substantially. Concurrent with this change, Dynamic’s profitability declined dramatically. Mr. Kassian and the Hopkinsons explored the prospect of one party or the other voluntarily buying the other party out or selling the entire business to a third party, but these options did not materialize. The relationship between Mr. Kassian and the Hopkinsons deteriorated over the next year and a half to the point they could no longer work together.

The dispute came to a head when the Hopkinsons terminated Mr. Kassian’s and KLK’s relationships with Dynamic on October 27, 2015. It was at this point that Mr. Kassian was completely removed from the operations of Dynamic and all payments to Mr. Kassian and KLK ceased. [ 55 ] While there was evidence that some factors beyond Mr. Kassian’s control caused a decrease in the value of Dynamic, there was also evidence that he remained firmly in charge of the business for three years after the application date and, even after March of 2014, he maintained a level of control until October of 2015.

The profitability of the corporation diminished at the same time that the Hopkinsons started to take over the operations of Dynamic, but the trial judge found the evidence insufficient for him to determine this outside influence alone, or in combination with general economic conditions, was the sole cause of any decrease in value. Mr. Kassian’s involvement with his son’s competing business for several years before the adjudication date was a significant factor in creating this uncertainty. [ 56 ] Mr.

Kassian’s argument that the decrease in value was solely caused by external forces was not borne out by the evidence. Based on the evidence before him, it was open to the trial judge to conclude he could not determine there had been a decrease in value that was caused solely by influences beyond Mr. Kassian’s control. As a result, it was appropriate for the trial judge to find this factor weighed in favour of using the application date for the valuation of the Dynamic shares. 3.

Fairness of using application date versus adjudication date [ 57 ] In the Trial Decision , the trial judge considered the fairness of using the application date versus the adjudication date. He recognized there was no dispute that the amount Mr. Kassian received for his shares was significantly less than the application date value. This was a factor that suggested to the trial judge that the parties should share the loss in value:

[50] As to the fairness of one date over the other, there is no dispute that the amount that Ken accepted in exchange for his Dynamic shares in the Hopkinson settlement is less than the value of those shares in May 2011. With that circumstance in mind, one might conclude that fairness suggests that the parties should share that loss of value. [ 58 ] In rejecting this notion, the trial judge considered what would have occurred if the parties had distributed the property within two or three years of the application date. He noted the factors causing the decrease in value had not yet occurred and that Mr.

Kassian had operated Dynamic in the same manner for three years after the application date, taking the same significant income as he had taken as of the application date. The trial judge then noted that, if the parties had divided their property during those years, all of the later negative affects would have been experienced by Mr. Kassian alone. He found this further supported the conclusion that the application date was more appropriate: “doing so effectively puts the parties in the situation they would have been in if they had distributed family property within a reasonable period” (at para 54).

In coming to these conclusions, the trial judge laid the blame for most of the delay in getting to trial at Mr. Kassian’s feet. [ 59 ] Mr. Kassian submits the trial judge committed two errors: (

a) introducing a new criterion for choosing a valuation date by speculating as to the reason for the delay in proceeding to trial and attributing the blame for such delay to him; and (

b) developing, considering and giving weight to a hypothetical scenario of property distribution at a date between the two allowable dates for valuation. [ 60 ] Turning first to the assertion that the trial judge introduced a new criterion by looking at delay between the application date and the adjudication date, I find no error in the trial judge taking the length of time between the application to adjudication into account as one factor in determining whether it was more appropriate to use one date over the other. [ 61 ] The cause of delay is a finding of fact.

I can find no palpable and overriding error in the trial judge’s findings that Mr. Kassian caused delay. There was evidence upon which he could conclude a large portion of the delay was caused by Mr. Kassian. In saying this, I am cognizant that a trial judge must be cautious in attributing delay to one party or another.

It is often very difficult to lead evidence regarding the causes of delay because such causes are frequently intertwined with settlement discussions or issues within the knowledge of counsel who cannot give evidence. [ 62 ] While the presence of delay is generally of little importance, and more relevant to the issue of costs, it is not inappropriate for trial judges to consider the broad effect of delay and the causes of that delay when considering all of the factors that lead to a determination of which valuation date to choose: Smith v Smith , 2016 ABCA 376 at para 21 , 84 RFL (7th) 1; Phipps at para 19 ; Russell at para 52 .

Relying on the delay caused by Mr. Kassian as one factor, within the entirety of the circumstances, was an appropriate approach for the trial judge to take in choosing between the two valuation dates. [ 63 ] Turning to the submission that the trial judge relied on a hypothetical distribution at a point in time between the two allowable valuation dates, I find this was simply another manner in which the trial judge considered the effect of the delay.

The entirety of the circumstances properly led the trial judge to a determination that the application date was the appropriate date to value Dynamic’s shares. [ 64 ] The last argument raised by Mr. Kassian, regarding the overall fairness of using the application date for valuing the Dynamic shares, can be distilled to the proposition that it is not fair that Ms. Kassian is entitled to the entirety of the funds received through the Hopkinson settlement plus a judgment against him for an additional amount while Mr. Kassian receives nothing from the Hopkinson settlement.

This is merely a cash flow argument and is without merit. The means by which Mr. Kassian will pay an equalization payment that was properly arrived at by the trial judge is not relevant in this matter. Mr.

Kassian’s argument on this point ignores the property divided prior to trial, ignores other property that remains in his possession, ignores his now extinguished potential liability for breach of fiduciary obligations that arose post-application, ignores the generous allocation of settlement funds to his son, ignores the $80,000 paid out of the settlement funds for his arrears of spousal support and ignores the entirety of the analysis by the trial judge in which he considered and arrived at a fair and equitable distribution of property between the parties.

Crucially, this argument fails to consider the significant benefits Mr. Kassian derived from the family property from the application date until October of 2015. [ 65 ] A stark example of Mr. Kassian ignoring the assets in his possession, when making his fairness argument, can be seen in the value of KLK. Mr. Kassian testified that he removed Ms. Kassian as a director of KLK and changed its share structure after the application date so he could “operate [KLK] without her consent” and pay himself dividends without paying her dividends.

KLK had $533,451 in liquid assets as of the application date but had less than $1,000 as of the adjudication date. All of KLK’s liquid assets were used by Mr. Kassian. [ 66 ] Further examination of Mr. Kassian’s income post-petition also illustrates his myopic view of the unfairness of the distribution of the settlement funds. Mr. Kassian’s income, as set out in line 150 of his income tax returns, that was derived solely from family assets, was $1,463,394 in 2013, $423,855 in 2014 and $607,486 in 2015. In an attempt to explain this income, Mr.

Kassian testified he had taken loans from KLK for several years, including for the family home, which then had to be brought into income, resulting in the large incomes attributed to him. However, cross-examination revealed these repayments appear to be related to loans from KLK that were mainly post-petition. Ms. Kassian’s income in that same period consisted solely of the $10,000 monthly payments for spousal support. [ 67 ] Mr. Kassian obtained his value from the family property up front. Ms. Kassian has had to wait to obtain her value from the family property.

The argument regarding the fairness of the distribution of the settlement funds has no merit. 4. Consistency in valuation date [ 68 ] As his final point, the trial judge considered that all other property was being valued at the application date, including the other business interests, so valuing the Dynamic shares in the same manner would complete the snapshot. As noted above, a trial judge is entitled to use different valuation dates, if the circumstances support such an approach. The trial judge recognized this fact and his reasons do not reflect a misunderstanding of this concept.

5. Conclusion on valuation date [ 69 ] The trial judge’s determination of the valuation date was a finding that was open to him. Applying the deferential standard of review, I cannot find he committed an error in determining Mr. Kassian’s shares in Dynamic should be valued as of the application date. B. Minority discount [ 70 ] In the event this Court determines there was no error in the trial judge selecting the application date as the valuation date for the Dynamic shares, Mr. Kassian submits it should find that the trial judge erred in failing to reduce the value of those shares to account for the fact Mr.

Kassian was a minority shareholder. [ 71 ] In providing his opinion as to value for the shares as of the application date, Mr. Hoffort (the expert witness for Mr. Kassian) opined a minority shareholder discount of 30% should be applied to the value of the Dynamic shares. His rationale for this discount was the fact that Mr. Kassian owned less than a controlling interest in Dynamic so the shares had less marketability. Mr. Hoffort explained that a non-controlling interest is less desirable to hypothetical buyers so a third party buying only Mr.

Kassian’s 46% share would not pay 46% of the value of Dynamic. [ 72 ] Under cross-examination, Mr. Hoffort agreed the 30% discount was a “fairly subjective calculation”. Mr. Hoffort also agreed that, in addition to selling his minority shareholding to a third party, Mr. Kassian might dispose of his shares

a) by selling his shares to the other shareholders,

b) by selling his shares to a third party who purchases the entire company or

c) by a court ordering Mr. Kassian’s shares to be purchased at fair market value in an oppression application. Mr. Hoffort agreed a minority discount would not be applied in any of those three scenarios. [ 73 ] In his testimony, Mr. Thomson (the expert witness for Ms. Kassian) disagreed with the application of a minority shareholder discount to the valuation of Mr. Kassian’s Dynamic shares. Mr. Thomson said the following: Q … You have not dealt with whether or not it would be applicable to have a minority shareholder’s discount. Can you advise the Court what your position is with -- A Okay.

Q -- respect to that particular issue? A I don’t usually put -- I don’t do that at all, honestly, in valuations. For one thing, I don’t believe that a minority shareholder discount is necessarily a given. If somebody’s looking to buy all the shares of the company I don’t think they would want to have a minority shareholder hanging around, so I think they would want to buy everybody out. If you do go with a minority shareholder discount, deciding on what the magnitude of that discount should be is very, very subjective.

And in my 40 years of practicing, I’ve only seen a minority interest discount taken into consideration one -- at one time. And it was only applied to the -- the goodwill value. It was not applied to the entire share value. And if I can -- I can be more specific if you’d like, I mean, we had a -- it was agreed that the total goodwill factor in the company would be $1,500,000. There was a 50.1 shareholder who controlled the company. There was a 39 percent shareholder and there was a 10.9 percent shareholder.

It was agreed that the 50.1 shareholder would get 1.1 million of that 1.5 million as goodwill on his share value. The 39 percent shareholder would get $400,000 and the ten point -- ten percent shareholder would get nothing. And that’s the only time I’ve ever seen it used. And as I point out, it was only to the goodwill factor, not to the total share value.

Q So typically, if a -- if a company is being sold as a whole or perhaps the -- the majority shareholder is buying out voluntarily or forcibly, the minority shareholder can typically, in those cases, would you -- would you see a -- a minority shareholder discount? A I -- the case I gave you was not that situation, but I -- no, I have not seen a minority shareholder discount in real life in my practice. I don’t know that they don’t exist, I just haven’t seen it. In cross-examination, Mr.

Thomson held to his opinion that a minority discount was not appropriate in this matter. [ 74 ] The determination of fair market value of any particular piece of family property is a question of fact: Ackerman at para 25 . A trial judge’s determination that he prefers the opinion of one properly qualified expert over the opinion of another properly qualified expert with regard to that value is accorded great deference on appeal.

The standard of review is palpable and overriding error: Stelter v Stelter , 2012 SKCA 117 at para 31 , 405 Sask R 63. [ 75 ] In this matter, the trial judge was faced with conflicting opinion evidence from two properly qualified experts. After considering those opinions, he determined he preferred Ms. Kassian’s expert opinion that there should be no minority discount. In my view, the trial judge did not commit a palpable and overriding error in making this determination. This Court cannot interfere with the trial judge’s refusal to apply a minority discount. C.

Adjustment for potential tax consequences [ 76 ] Mr. Kassian submits the trial judge erred by not discounting the value of all of his business interests (Dynamic, KLK and R.K. Partners) to account for the potential income tax consequences upon a sale of those business interests. Mr.

Kassian did not pursue this ground of appeal with vigour on appeal, but he did not abandon it. [ 77 ] A trial judge may deviate from an equal division of family property if it would be unfair and inequitable to make an equal distribution because of a tax liability or a potential tax liability: FPA , s. 21(3) (j); Linn v Frank , 2014 SKCA 87 at para 50 , [2014] 10 WWR 215 [ Linn ]. [ 78 ] A tax liability, actual or potential, is an equitable consideration that a trial judge may consider in determining the appropriate division of the value of family property. In this matter, after considering the

summary of applicable principles found in Belosowsky at

paragraph 70 , the trial judge refused to make any adjustment for potential income tax consequences for any of the three business interests. The principles set out in Belosowsky (at para 70 ) have been referred to with approval by this Court in Linn (at para 52 ). [ 79 ] With regard to the Dynamic shares, the trial judge observed much of the income tax evidence focused on the tax consequences of the Hopkinson settlement and stated it might be more appropriate to factor in those tax consequences if he were using the adjudication date for the valuation date. In any event, the evidence revealed Mr.

Kassian had a significant portion of his capital gains exemption remaining after using some of the exemption to eliminate all of the income tax from the capital gain on the sale of the Dynamic shares. There was no actual tax payable on the sale of the Dynamic shares under the Hopkinson settlement. [ 80 ] Turning to whether the trial judge should have factored in a notional tax consequence, he noted there was no application date evidence with regard to the total capital gains exemption available to Mr.

Kassian, no evidence of the adjusted cost base of the shares in order to determine the capital gain and no evidence of the tax rate that would be applicable. The trial judge concluded the evidence did not support an adjustment for the eventuality that Mr. Kassian would have had to sell the shares: “In short the evidence does not put me in a position to determine any such tax consequences.

I am not in a position to conclude that it would be unfair or inequitable to make an equal distribution of the value of Ken’s Dynamic shares without having regard to tax consequences” ( Trial Decision at para 75). [ 81 ] The trial judge similarly found he did not have sufficient evidence to apply a discount for any potential tax consequences with regard to KLK and R.K. Partners.

The evidence he did have supported a finding that there would not be any tax consequences and he refused to make an adjustment for potential tax consequences. [ 82 ] A determination to apply, or not apply, an equitable consideration under s. 21(3) of the FPA is a discretionary decision by a trial judge that is subject to deference upon appeal. A party asserting property should be discounted for a potential tax liability bears the burden of leading the necessary evidence to support that assertion: P.M. v S.M. , 2012 SKCA 55 at para 38 , 393 Sask R 229 [ P.M. ].

Based on the evidence filed in this matter, the trial judge made no error in refusing to make an adjustment for potential tax consequences. There was precious little evidence supporting the assertion that tax consequences might materialize, and the remaining evidence pointed to the absence of tax consequences. I find no basis to interfere with the trial judge’s finding that there should be no tax discount. There is no merit in this ground of appeal. D. The cross-appeal – business interests in Ms. Kassian’s possession [ 83 ] Ms. Kassian owned 49% of the shares of KLK. Mr. Kassian owned the other 51%.

KLK owned 40% of R.K. Partners. At trial, the parties agreed to value these two business interests as of the application date and agreed KLK would be valued at $533,451 and the 40% interest in R.K. Partners would be valued at $145,000. As a result, the trial judge concluded Ms. Kassian had $261,391 worth of KLK shares in her possession (49% of $533,451.61) and $71,050 of the partnership interest in R.K. Partners in her possession (49% of $145,000). The trial judge counted these two amounts on Ms. Kassian’s side of the ledger when determining the equalization payment owed by Mr. Kassian.

This resulted in the trial judge setting out the property in each party’s possession as follows: Assents Ms. Kassian Mr. Kassian Agreed personal assets $62,817 $33,915 Affinity CAD account $17,888 Affinity USD account $54,851 RRSP difference $72,272 Accounts receivable $75,900 Dynamic $1,713,500 KLK $261,391 $272,061 R.K. Partnership $71,050 $73,950 Total: $395,258 $2,314,337 [ 84 ] Ms. Kassian asserts the trial judge erred in accounting for KLK and R.K. Partners in this manner. Ms. Kassian submits that, although she had bare ownership of her shares in KLK, she did not have possession or any control of KLK.

As a result, she also did not have possession or any control in the partnership interest in R.K. Partners. She submits these assets were solely in the possession and control of Mr. Kassian, who retained the entirety of their value post-petition. Ms. Kassian asserts it was a palpable and overriding error for the trial judge to place the value of those two entities in her column. She submits the entirety of the value of KLK and the partnership interest in R.K. Partners should have been fully put in Mr.

Kassian’s column, with the equalization payment changed to reflect the total assets in each party’s possession. [ 85 ] After the release of the judgment, Ms. Kassian promptly applied to the trial judge and asked him to correct this mistake, categorizing it as a mathematical error. In a fiat, the trial judge refused to amend the judgment ( Kassian v Kassian (5 September 2018), Saskatoon, Div 360 of 2013 (Sask QB)): [3] As I advised at the hearing of this application, I cannot amend my judgment on the basis of a mathematical error. When I was preparing my judgment I turned my mind to this point.

Accordingly, if my treatment of [Ms. Kassian’s] interests in KLK Holdings or R.K. Partnership was in error, it was an error in concept rather than a simple mathematical error. As such, I may not now address it. If it is to be addressed it must be addressed by the Court of Appeal. [ 86 ] The trial judge was correct that this was not a simple mathematical error that could be corrected under Rule 10-10(b)(ii) of The Queen’s Bench Rules . The trial judge intentionally placed the two values in Ms. Kassian’s asset column when he was determining the value of the family property in each party’s possession.

As such, the trial judge could not correct the calculation upon application to him post-trial. If the trial judge’s determination of the family property in Ms. Kassian’s possession is to be corrected, it can only be corrected on appeal.

[ 87 ] Mr. Kassian resists any changes to the allocation of the value of these two business interests. Despite this position, Mr. Kassian makes the following admission in his factum on the cross-appeal: “[Mr. Kassian] acknowledges [Ms. Kassian] did not have in her possession her share of the funds from KLK Holdings or R.K. Partnership at the time of trial”. At the argument of the appeal, Mr. Kassian properly acknowledged the amounts for KLK and R.K. Partners should have been in his column. This admission fits squarely with the uncontroverted evidence that Mr.

Kassian took control of KLK and used all of its resources for his own purposes. However, despite this concession, Mr. Kassian asserts the trial judge’s overall consideration of fairness and equity led him to render a judgment of only $14,540 over and above a payment of the entirety of the funds held in trust. He submits this is a far cry from Ms. Kassian receiving all of the funds in trust, plus a judgment for $346,981 and that the trial judge allocated the value of KLK and R.K. Partners as he did to assist in achieving fairness and equity in the division of the family property. Mr.

Kassian also repeats his arguments regarding his perceived unfairness of Ms. Kassian receiving more as a property judgment than the total amount of the Hopkinson settlement. [ 88 ] I find there is merit in Ms. Kassian’s assertion that the trial judge committed a palpable and overriding error when he split the values for KLK and R.K. Partners into 49% and 51% shares and placed the resulting values in each party’s property column when completing his calculation.

Mere ownership or title to an item of property is not determinative of which party should be assigned the value of the item of property when a trial judge determines the appropriate division of family property under the FPA . The party with ownership must also have possession of the value of that property or the necessary control to access the value. [ 89 ] Mr. Kassian admits Ms. Kassian never had possession or control of her share of the value in KLK or R.K. Partners. The evidence was uncontroverted that Ms. Kassian never obtained any of the value of KLK or R.K. Partners. Mr.

Kassian drained the value out of KLK after changing the share structure to permit him to pay himself dividends without paying Ms. Kassian. Mr. Kassian did not propose sharing the $145,000 he allocated to the value of R.K. Partners from the Hopkinson settlement. There was no basis in the evidence for placing any value for KLK or R.K. Partners on Ms. Kassian’s side of the equation. The evidence was completely to the contrary. The business interests were jointly owned, but they were in Mr. Kassian’s sole possession and control and he used that control to appropriate their entire value to himself.

The entirety of the value should have been attributed to family property in Mr. Kassian’s possession. Placing the two values in Ms. Kassian’s column in the property division calculation, in the face of uncontroverted evidence that Mr. Kassian retained all of its value, represents palpable and overriding error that can be corrected on appeal. [ 90 ] From a conceptual standpoint, this scenario is no different than if one party, post-petition, completely emptied a joint bank account, sold a jointly-owned vehicle or disposed of any other jointly-held asset and retained the proceeds.

The value would be attributed to the party who obtained and retained the value of the property. It would not be split equally between the parties. While each KLK share was owned individually by the parties, Mr. Kassian’s control of KLK allowed him to convert all of the value of this joint asset to his own purposes. In this matter, the formal ownership was irrelevant. All of KLK and the 40% partnership interest in R.K. Partners were in Mr. Kassian’s possession. [ 91 ] In arriving at my conclusion that the trial judge committed a palpable and overriding error, I reject Mr.

Kassian’s assertion that the trial judge had the overall fairness and equity of the total equalization payment in mind when he placed the values for KLK and R.K. Partners in Ms. Kassian’s column. The trial judge’s reasons do not reveal any such analysis or conclusion. His analysis consisted of the conclusion that Ms. Kassian had 49% of the KLK shares as of the application date so she had 49% of the value in her possession. As set out in the Trial Decision (at paras 92 and 94), the trial judge was endeavouring to equalize the property division.

He was not deviating from an equal division of property on any equitable basis. In my view, the fairness and equity of the situation required the trial judge to divide the value of the property each party had in their possession as of the application date. [ 92 ] This requires a correction to the amount of the equalization payment. I must recalculate that value and the resulting division of property. The correct calculation of the value of family property in each party’s possession as of the application date is as follows: Assets Ms. Kassian Mr.

Kassian Agreed personal assets $62,817 $33,915 Affinity CAD account $17,888 Affinity USD account $54,851 RRSP difference $72,272 Accounts receivable $75,900 Dynamic $1,713,500 KLK $533,452 R.K. Partners $145,000 Total: $62,817 $2,646,778 [ 93 ] The total value of family property was $2,709,595. Each party is entitled to half of that value, calculated as $1,354,798. Ms. Kassian had $62,817 of family property in her possession, so she is entitled to an equalization payment from Mr. Kassian of $1,291,981. E. Conclusion on property division [ 94 ] Ms. Kassian is entitled to an equalization payment from Mr.

Kassian of $1,291,981. The $1,025,000 from the Hopkinson settlement was ordered to be held in trust. Ms. Kassian received interim payments from the funds in trust of $100,000 in December of 2017 and $280,000 in January of 2019. An amount of $80,000 was paid out of the funds in trust for arrears of spousal support. This leaves $565,000 remaining in trust. I confirm the trial judge’s judgment that the entirety of the remaining funds held in trust shall be paid out to Ms. Kassian. After this payment, this leaves a deficiency in the amount owed by Mr. Kassian to Ms. Kassian of $346,981 . Ms.

Kassian shall have judgment for this amount. [ 95 ] Mr. Kassian’s appeal regarding the division of property is dismissed. Ms. Kassian’s cross-appeal is allowed and the amount of the property judgment is varied to $346,981.

VI. Analysis of Spousal Support [96] Following an application in 2011, Mr. Kassian was ordered to pay Ms. Kassian interim spousal support of $10,000 per month,commencing September 1, 2011. Mr. Kassian made the interim support payments until October of 2015, although the payments wereirregular and sometimes difficult to extract from him. After October of 2015, when he was frozen out of Dynamic, Mr. Kassian ceasedmaking support payments. [97] The trial judge determined Ms. Kassian was entitled to spousal support on a compensatory and a non-compensatory basis.

Heretroactively adjusted the amount of the support effective January 1, 2016, decreasing it to $2,000 per month to reflect Mr. Kassian’ssignificantly reduced ability to earn income, and fixed arrears of support at $80,000. The trial judge ordered ongoing support of $2,000per month, with the last payment to made on January 1, 2024. As part of his spousal support order, the trial judge ordered a review ofspousal support to take place in 2023, if either party applied for such a review. [98] Mr. Kassian’s notice of appeal sets out the following grounds of appeal with regard to spousal support: (

i) That the Learned Trial Judge made an error of law in failing to provide for an end date in the Appellant’s obligation to paysupport to the Respondent. (ii) That the Learned Trial Judge committed a palpable and overriding error and significantly misapprehended the evidence inordering over twelve (12) years of spousal support, and a review provision, where the parties cohabited as spouses for less than that[.] [99] The first ground is easily disposed of. The spousal support is time-limited because the trial judge did provide an end date forthe payment of spousal support; according to the Trial Decision, Mr.

Kassian’s “last payment will be made January 1, 2024” (atpara 148). The judgment is clear – barring further order, spousal support terminates on January 1, 2024, with the final payment to bemade on that date. At the argument of the appeal, Ms. Kassian agreed the judgment states spousal support concludes on that date. Thereis no requirement to analyze this issue further. [100] The second ground breaks down into the following two issues that this Court must determine: (

a) Did the trial judge err by awarding spousal support for a duration of 12 years and 5 months? (

b) Did the trial judge err by awarding a review of the spousal support? A. Award of spousal support [101] The trial judge ordered spousal support for a duration of over 12 years. Mr. Kassian concedes entitlement, and does not questionthe amount, but submits support should be limited to a total of 10 years. [102] The standard of review to be applied to issues of spousal support is highly deferential.

An appellate court should not overturn aspousal support order unless there is “an error in principle, a significant misapprehension of the evidence, or unless the award is clearlywrong” (Hickey v Hickey, (SCC), [1999] 2 SCR 518 at para 11). This standard has been consistently applied by ourCourt: A.L. v M.L., 2019 SKCA 61 at para 142; Savoy v Savoy, 2019 SKCA 1 at para 11; D.B.B. at para 48; Jones v Jones, 2017 SKCA46 at para 82, 95 RFL (7th) 43; Linn at paras 82–83 and 89; Bergquist v Bergquist, 2014 SKCA 20 at para 16, 433 Sask R 173.

Thus, thisCourt is not permitted to overturn a support order simply because it would have made a different decision or balanced the factorsdifferently: Riley at para 6. [103] In Linn, Jackson J.A. addressed the standard of review for spousal support orders in relation to the application of CarolRogerson and Rollie Thompson, Spousal Support Advisory Guidelines (Ottawa: Ministry of Justice, 2008) [Spousal Guidelines]: [89] … a court of appeal will intervene only if it finds a material error, a serious misapprehension of the evidence, or an error in law.

Acourt of appeal will show considerable deference to the decision under appeal, but if the Guidelines have been fully argued by counsel,an appeal court may intervene if reasons are not or cannot be given to support the trial judge’s disposition in relation to them. [104] Turning to the matter at hand, it is important to begin the analysis by noting the issues that are not in dispute. Mr. Kassian doesnot challenge the trial judge’s finding that Ms. Kassian is entitled to spousal support on both a compensatory and non-compensatorybasis, although Mr. Kassian submits the compensatory basis is weak.

There is no challenge to the trial judge’s findings thatMs. Kassian’s mental and physical health conditions have deteriorated to the extent that she is unable to work and “there is no reasonableexpectation she will ever be able to work” (Trial Decision at paras 108 and 115). Lastly, there is no dispute regarding the imputation ofannual income to Mr. Kassian of $120,000 and the setting of the amount of the spousal support at $2,000 per month. The dispute issolely about the duration of spousal support. Ms.

Kassian has not cross-appealed the trial judge’s determination that the spousal supportshould be time-limited as opposed to indefinite. [105] The trial judge fully canvassed the facts regarding Ms. Kassian’s entitlement to support from both a compensatory and non-compensatory basis. He found the parties began living together in 1998, were married on December 31, 2001, and separated on March27, 2011, concluding they were together for about 13 years. Ms.

Kassian was working as a part-time dental assistant during the first threeyears of the relationship, but she cut back on her work because of her increasing health concerns and to be available to accompanyMr. Kassian to entertain Dynamic clients. From 2004 to 2011, she was completely financially dependent on Mr. Kassian. From acompensatory standpoint, the trial judge found Ms. Kassian contributed to the marriage and sustained loss. From a non-compensatoryentitlement standpoint, it was uncontroverted Ms. Kassian has a number of physical and mental health concerns and has not beenemployed in over a decade.

The trial judge found there is no reasonable expectation she will be able to work in the future. The trial judgedetermined Ms. Kassian continues to have substantial unmet needs, even once the property division is taken into account. The trial judgefound Mr. Kassian has the ability to meet some of those needs.

[ 106 ] One of the factors the trial judge took into account in determining spousal support was the ranges generated by the Spousal Guidelines . Based on a 13-year relationship, the Spousal Guidelines suggested a monthly payment of $1,950 to $2,600 and a duration of 6.5 to 13 years. After considering the factors specific to the matter, the trial judge found the range to be appropriate both on compensatory and non-compensatory grounds. He ordered spousal support in an amount close to the low end of the quantum range and close to the high end of the duration range. 1.

Length of cohabitation [ 107 ] For all purposes related to spousal support, including the Spousal Guidelines , the trial judge found the relationship had lasted 13 years, commencing when the parties started living together in the spring of 1998. In his submissions to this Court, Mr. Kassian repeatedly refers to the spousal relationship as having lasted 11 years. It appears Mr. Kassian relies on the duration of the married relationship and does not include the first 2 years of cohabitation in his calculation of the length of the cohabitation for spousal support purposes. Mr.

Kassian is correct that the entitlement to spousal support did not arise until a spousal relationship commenced. In this case, the spousal relationship commenced in 2000 after the parties had cohabitated for 2 years: s. 2 and s. 5 of The Family Maintenance Act , 1997 , SS 1997, c F-6.2 .

However, the commencement of a spousal relationship under The Family Maintenance Act, 1997 is not determinative of the length of cohabitation for the purposes of the Spousal Guidelines . [ 108 ] While the Spousal Guidelines primarily uses the term length of marriage to refer to the length of the relationship, the authors clarify that the actual measure of the length of the relationship is the period of cohabitation (at 56): 7.3 Determining the Length of the Relationship The without child support formula relies upon length of marriage for determining both amount and duration of support.

While we use the convenient term “length of marriage”, the actual measure under the Advisory Guidelines is the period of cohabitation . This includes pre-marital cohabitation and ends with separation. Inclusion of pre-marital cohabitation in determining length of marriage is consistent with what most judges do now in determining spousal support.

This way of defining length of marriage also makes the Advisory Guidelines more easily used under provincial spousal support laws, which apply to non-marital relationships. (All emphasis in original) [ 109 ] In Carol Rogerson and Rollie Thompson, Spousal Support Advisory Guidelines: The Revised User’s Guide (Ottawa: Minister of Justice and Attorney General of Canada, 2016) [ Spousal User’s Guide ], the authors again caution that the appropriate way to determine the length of a relationship for the duration formula includes periods of pre-marital cohabitation (at 3 and 24): 2 Common Errors to Avoid … (

g) It is the length of cohabitation that must be used in determining amount or duration, not the length of marriage alone , under the without child support formula … . … 7 The Without Child Support Formula ([ Spousal Guidelines ]

Chapter 7) … This formula relies heavily upon length of the relationship to determine both the amount and duration of support. Both amount and duration increase with the length of the relationship. … … • In calculating the length of the relationship , be sure to include periods of pre-marital cohabitation . Also, the period ends with the date of separation (not divorce). Thus

[…]