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EQUALIZATION OR DIVISION - Valuation of assets - Exempt acquisitions and deductions

Friday, January 24, 2020 @ 6:21 AM  


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Appeal by the wife from trial judgment dividing matrimonial property and denying her claim for spousal support. The wife lived in Russia when the parties met. In 2005 she came to Canada, and the parties married. There were no children of the marriage. The wife had Russian degrees in radio physics and commerce but was not able to establish herself firmly in the Canadian economy. The parties separated in 2013. In the 47 months between the separation and the trial in 2017, the wife was in Russia for about 30 months. Because of a series of orders prior to trial, she received $26,400 in spousal support between the separation and the trial. She also had exclusive possession of the matrimonial home until it was sold in 2017. The trial judge found that there was no basis to award compensatory or non-compensatory support. At the time of the marriage in 2005 the husband owned a house in Leduc which was sold in 2007. The proceeds were used to purchase the matrimonial residence in joint names. The trial judge found that the husband was entitled to an exemption equal to the equity in the Leduc home when it was sold in 2007. The overall increase in the equity of the Leduc house between 2002 and 2007 was $130,000. Early in the marriage the husband changed employment and began to accrue pension rights. The pension was valued at $133,065 as of the date of separation, but its value as of the date of trial was not in evidence. The trial judge declared that the joint accrual period for purposes of division should be from the date of the marriage until the date of separation.

HELD: Appeal allowed in part. The wife failed to prove key facts necessary to support her compensatory spousal support claim. There was no evidence on what she was doing in Russia prior to the marriage, how she was utilizing her Russian education, or what her income was. By returning to Russia for extended periods of time, she undermined her ability to become self-sufficient. Given the nature of the marriage, the age of the parties, the length of the marriage, the relative income earning capacity of the parties, and the other relevant factors, spousal support for about four or five years post-separation would have given the wife a reasonable amount of time to upgrade her qualifications and re-enter the workforce. The wife spent much of that time in Russia and could not use that to increase the husband’s obligations. The trial judge erred however, in finding that the wife was not entitled to non-compensatory support. Taking into consideration her decisions and circumstances after the date of separation, and to allow the wife to finish her educational upgrading and to better establish herself in the employment market, an appropriate award was further spousal support of $800 a month, for 12 months commencing January 2020. This amount, combined with the previous support that she received would fall within the range suggested by the Spousal Support Advisory Guidelines. The trial judge correctly concluded that the husband was entitled to an exemption for the equity in the Leduc house as of the date of marriage, but the husband produced no evidence of its value on that date. It was not reasonable to simply take the equity at the time of sale and assume that it was all exempt. The appropriate inference was that the equity increased on a linear basis from the date of purchase to the date of sale. The husband should have been entitled to an exemption of $78,000. One half of the exemption was lost when the matrimonial home was placed in joint names, leaving a net exemption of $39,000. The trial judge did not err in directing an equal division of the husband’s pension. The period of accrual, however, should have been from the date that the husband commenced pensionable employment up until the date of trial.

Lux v. Lux, [2019] A.J. No. 1571, Alberta Court of Appeal, F.F. Slatter, B.K. O'Ferrall and R. Khullar JJ.A., November 25, 2019. Digest No. TLD-January202020012