The parties had been married 17 years - the husband now 64 and retired, the wife 56. They had one 15 year old child in the wife's custody. The husband had been a government scientist; his income at trial consisted of a pension worth $3,565 per month, a CPP payment of $434 per month and interest and dividends from savings and investments. Wife had worked before but not during the marriage; she contended husband had wanted her free to travel with him on business trips. When she reached 60 she would be eligible for pension payments of $211 per month plus indexing. Prior to the trial, the parties had agreed that the wife would share one-half of husband's work pension income earned during the marriage, payable from the trial date. By consent until trial, the husband had been paying $1,300 per month in support. The trial judge valued the matrimonial assets at $458,793 and divided them 53:47 percent in the husband's favour under s. 13 of the Matrimonial Property Act. He assessed the husband's non-matrimonial assets at $34,200, the wife's at $14,200 and awarded the wife $1,200 support without time limit. He also ordered a $2,500 "arrears payment" to reimburse the wife for living expenses prior to the interim maintenance order. He valued a cottage property inherited by the husband at ten per cent matrimonial ($3,800), as it was used by parties infrequently. The parties raised a total of 25 issues on appeal to the Nova Scotia Court of Appeal.
- How should the assets be divided?
Appeal and cross-appeal allowed in part.
Justice Hallett, writing for the court, reviewed extensively the division of assets as done by the trial judge. He concluded that the following were not matrimonial assets:
- The Supreme Court held that business assets must be those held for the "purpose [of] the generation of income in an entrepreneurial sense". Business assets are exempt from the definition of matrimonial property under s. 4(1)(e) of the Matrimonial Property Act. Section 2(a) defines business assets as:
real or personal property primarily used or held for or in connection with a commercial, business, investment or other income-producing or profit-producing purpose, but does not include money in an account with a chartered bank, savings office, loan company, credit union, trust company or similar institution where the account is ordinarily used for shelter or transportation or for household, educational, recreational, social or aesthetic purposes
Investments liquidated before division
- In the facts at bar, the investments were liquidated to pay for living expenses and the amounts were roughly equal, thus Hallett saw no reason to interfere with the exclusion of these by the trial judge.
- The bonds excluded were purchased by the wife with inherited money. The husband argued that because the money was inherited and not the bonds, the bonds should be included in the matrimonial assets. Hallett disagrees with this conclusion from the caselaw and finds they are prima facie excluded. As there was no evidence to show the income was used for the benefit of the husband or child, they remain excluded.
The following assets Hallett concluded were matrimonial property:
- The primary purpose of pensions is savings or the diversion of income for future use; they are not business assets. 50% of pension income earned during the marriage are included in matrimonial property.
Investment portfolio and RRSPs
- Absent an unusual fact situation, these should be divided equally. Hallett recognizes that the value of an RRSP today is not the same as the value it will have in the future. There is a tax deferral element to RRSPs and a tax liability which will arise in the future. If the RRSPs are awarded in their entirety to one party without discounting, this would result in an uneven distribution of assets (which occurred at trial). The court orders the RRSPs to be split 50:50.
- All financial assets should be valued as of the commencement of the proceedings (expert appraisal), with adjustments to be made on date of trial if there is evidence of variation in value which warrants adjustment. In the case at bar, no satisfactory evidence was brought to demonstrate that the value of the mutual funds had changed since the commencement of the proceedings.
- The cottage had been inherited by the husband and thus was prima facie not a matrimonial asset, other than to the degree to which it was used for the benefit of the family, which resulted in the 10% contribution awarded by the trial judge. However, in the case at bar significant (~$20 to $30 thousand) matrimonial funds were used to do renovations, increasing the amount of the value which should be included in the matrimonial assets. Hallett adjusts the percentage to 65%.
- Where the home is not sold, it may be necessary to use the value from an official appraisal. In this case, however, the judgment required the sale of the home to affect an even distribution of assets, so the appraisal is irrelevant - the parties will each share equally in the actual proceeds from a sale.
- As the points were earned during the marriage and the tickets were paid for with matrimonial funds, they are matrimonial assets and an equal division was correctly ordered.
With significant changes made to the trial judge's order, the court affected a new division of assets and gave an order to give effect to its judgment.
When calculating an equalization payment, total the value of all matrimonial property and divide in half. The party who is in possession of the lesser amount is compensated by the other to the level necessary to make them even.