Focus On

MARITAL PROPERTY - Equalization or division - Exempt acquisitions and deductions

Monday, November 11, 2019 @ 9:18 AM  

Lexis Advance® Quicklaw®
Appeal by the husband from trial judgment respecting division of family property. The parties were in a relationship from 1997 to 2013. At the time, both owned a home. The wife sold her home to purchase the family home. The husband kept his home. The husband was the owner and operator of a business. The trial judge determined the time of trial was the appropriate date to value the properties as they were the only precise valuations before him. The trial judge did not allow the husband any exemption for his house because he failed to establish the net value of the property at the relevant time and because it would be unfair and inequitable to the wife, who had sold her home to purchase the family home. The trial judge then dealt with certain business debts in the process of calculating the value of family property. He did not include a promissory note and a mortgage in the determination of family property. The $150,000 mortgage in favour of EM, the husband’s business associate, was registered against the husband’s property. He had also executed a $135,982 promissory note payable to EM. The husband argued the $150,000 was advanced to him personally by EM for business purposes. He testified he granted the mortgage to EM as security for repayment of this loan. The trial judge found that EM gave the money to him due to his friendship with him. The husband testified the funds were paid by EM to the corporation, but, as reflected in the promissory note, the loan was advanced to the husband personally. The trial judge did not accept the husband’s evidence over the corporate documentation and found his interest in the corporation to be 65 per cent.

HELD: Appeal allowed in part. The court adjusted the value of the husband’s property from $250,000 to $100,000 to account for the mortgage registered against the title. The trial judge did not err in not granting the husband an exemption for the property as the husband did not provide evidence of the value of the property in 1999 when the spousal relationship crystallized. The trial judge made no error in principle when he determined that, apart from the husband’s failure to prove the value of an exemption for the property, it would be unfair and inequitable to allow for that exemption. There was no evidence to support the trial judge’s finding that the $150,000 was advanced due to the husband’s friendship with EM. There was evidence that the funds were advanced, the mortgage was taken as security, and the loan was to be repaid. While the trial judge erred in finding there was no evidence of an intention to repay the note, this error was without consequence as there was no evidence whether the husband or the corporation repaid the debt. The evidence was conflicting at best as to whether the loan was a personal loan or a loan to the corporation. Under these circumstances, the trial judge made no error in disallowing this debt to be factored into the calculation of family property. As it was unclear whether the husband or the corporation repaid the debt, and it was unclear whether he or the corporation would make any future payments on the debt, the trial judge did not err in declining to allow the amount of the promissory note to be deducted from the husband’s family property. There was evidence to support the trial judge’s conclusion that the husband held a 65 per cent interest in the corporation as of the petition date. There was no error by the trial judge accepting the evidence he did.

Reardon v. Rodway, [2019] S.J. No. 385, Saskatchewan Court of Appeal, P.A. Whitmore, L.M. Schwann and R. Leurer JJ.A., October 3, 2019. Digest No. TLD-November112019002