Brown v. Silvera

• Jurisdiction: Alberta
• Court: Court of Queen's Bench of Alberta (Canada)
• Judge: Moen, J.
• Citation: (2009), 471 A.R. 241 (QB),2009 ABQB 523
• Date: 12 June 2008
• Subject Matter: RESTITUTION,TRUSTS,FAMILY LAW,EQUITY,EVIDENCE

Brown v. Silvera (2009), 471 A.R. 241 (QB)

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. SE.097

Thomas Edward Brown (plaintiff) v. Angela Elizabeth Silvera (defendant)

(4803-123800; 2009 ABQB 523)

Indexed As: Brown v. Silvera

Alberta Court of Queen's Bench

Judicial District of Edmonton

Moen, J.

September 15, 2009.

Summary:

Spouses separated in October 2000 after 11 years' marriage and two children. During the marriage, the husband's dollar biotech business prospered. It had no value prior to the marriage. Within 16 days of separating, the spouses negotiated and executed a settlement agreement entitling each to 50% of all marital property, including the value of corporate property (based solely on the husband's calculation of value). The wife later applied to vacate the settlement agreement provisions respecting corporate property on the ground that the husband failed to disclose the true value of corporate property. The wife sought a valuation of corporate property as of the settlement agreement date, claiming her share of the undisclosed value, which she claimed was held in trust for her by the husband. She also sought an accounting for the profits earned by the husband's use of corporate property which rightly belonged to her. She claimed the wrongfully withheld property was impressed with a resulting or constructing trust in her favour. At issue was: (1) whether the wife was entitled to full and complete disclosure of corporate property when the settlement was made; (2) whether the husband misrepresented the value of corporate property; (3) if he did misrepresent the value of corporate property, whether that misrepresentation triggered the separation agreement clause requiring complete disclosure or breached an implied term of all marital property settlement agreements; (4) whether any of the husband's corporate property was exempt from division; and (5) the nature of the wife's claim to non-disclosed corporate property.

The Alberta Court of Queen's Bench allowed the application. The husband intentionally undervalued corporate property and psychologically exploited the wife. The husband instilled panic in the wife, causing her to hastily agree to the settlement based on his misleading and incorrect information that a lawsuit jeopardized all of the corporate property and they needed to settle the matter quickly. This allowed the husband to conceal the true value of the corporate property that would otherwise have been discovered had there been a proper valuation. Based on the court's valuation of corporate property at the time of the agreement, the wife's 50% share should have been $3,283,593.76, rather than the $924,560 she received. That amount was held on a constructive trust by the husband in favour of the wife from the settlement date to the date of trial. Further, the wife was entitled not only to the 50% of corporate property she should have received on the settlement date, but also the benefits that would have flowed from those monies from the settlement date to the date of trial. In the result, the husband was ordered to pay $15,095,778.76 in restitution, plus post-judgment interest.

Equity - Topic 1109

Equitable relief - Contracts - Settlements - [See Family Law - Topic 3382 ].

Evidence - Topic 7009

Opinion evidence - Expert evidence - General - Proof of assumptions - [See Family Law - Topic 888 ].

Family Law - Topic 888

Husband and wife - Marital property - Considerations in making distribution orders -Valuation (incl. time for) - Spouses executed a settlement agreement in 2000 which equally divided all marital property, including the husband's corporate property (biotech business) - Years later, when the wife sought to vacate the settlement provisions respecting the corporate property for material nondisclosure, both spouses retained business valuation experts to determine the true value of the corporate property as of the date of the settlement agreement - The values determined by the two experts were disparate - The Alberta Court of Queen's Bench discussed the admissibility and weight to be attached to post-valuation date transactions - Although the experts could not consider these transactions in valuing corporate property, "it is, however, legitimate for a court to look at subsequent transactions to determine if the values assigned to the companies are with the range ... the court may use subsequently acquired information to measure the accuracy of projections and test the assumptions made by valuators in arriving at their conclusions. ... Hindsight can assist in determining which of the views of appraisers is correct, when those views are disparate. ... the transactions after the valuation date can provide a 'smell test' as to which [experts'] opinion comes closest to those actual transactions." - See paragraphs 557 to 560.

Family Law - Topic 3207

Separation agreements, domestic contracts and marriage contracts - General - Financial disclosure - The Alberta Court of Queen's Bench stated that under the common law, spouses negotiating separation agreements had "a duty to make full and honest disclosure of all relevant financial information" and that "special care must be taken to ensure that, to the extent possible, the assets ... are distributed through negotiations that are free from informational and psychological exploitation" - The court stated that "non-disclosure is a fundamental breach of a property settlement contract ... Proper disclosure means presenting financial information in a clear, non-cryptic form that does not require additional information." - If a husband was unaware of the value of property, he was obliged to ensure that the wife had an opportunity to determine the value - If the value of the property was uncertain, that fact had to be disclosed - See paragraphs 29 to 30, 36, 43.

Family Law - Topic 3382

Separation agreements, domestic contracts and marriage contracts - Grounds for setting aside - Material nondisclosure and misrepresentation - Spouses separated in October 2000 after 11 years of marriage - Within 16 days, a settlement agreement was negotiated and executed, equally dividing all marital property (including corporate property) - The husband's biotech business, valueless prior to the marriage, had financially prospered during the marriage - The wife hastily executed the settlement agreement because the husband misrepresented that haste was required because a lawsuit jeopardized the corporate property - The Alberta Court of Queen's Bench allowed the wife's application to vacate the agreement provisions respecting corporate property on the ground that the husband failed to disclose its true value - The settlement respecting corporate property was not binding on her both under the common law and for breach of the disclosure provisions of the minutes of settlement - The husband deliberately failed to make full and proper disclosure of his corporate property and their values, as he was required to do - He also psychologically exploited the wife to quickly obtain her agreement to the settlement on his terms, based on her fear, cultivated by him, of losing everything if she delayed - This allowed the husband to conceal the true value of the corporate property that would otherwise have been discovered had there been a proper valuation - The nondisclosure was not negligent or accidental, but "one aspect of a matrix of deception and misdirection" - The husband intended to conceal the full extent and value of his corporate holdings - Based on the court's valuation of corporate property at the time of the agreement, the wife's 50% share should have been $3,283,593.76, rather than the $924,560 she received - That amount was held on a constructive trust by the husband in favour of the wife from the settlement date to the date of trial, as he was unjustly enriched - The wife was entitled not only to the 50% of corporate property she should have received on the settlement date, but also the benefits that the husband obtained, as trustee, from the use of those monies from the settlement date to the date of trial - In the result, the husband was ordered to pay $15,095,778.76 in restitution, plus post-judgment interest.

Restitution - Topic 123

Unjust enrichment - Remedies - Constructive trust - [See Family Law - Topic 3382 ].

Trusts - Topic 1901

Resulting trusts - General principles - General (incl. when available) - Spouses agreed in a settlement agreement to equally divide the value of the husband's corporate property as of the settlement date - The husband intentionally deceived the wife by significantly undervaluing the corporate property - The Alberta Court of Queen's Bench held that the husband held the wife's share of the true value of the property she should have received on a resulting trust - The court stated that a resulting trust may be found when there is evidence of common intention regarding a non-titled spouse's ownership in property. ... Common intention may be express or implied, but where there is such evidence with regards to certain property, the party with the legal title to property may be found to be holding that property in trust for the party with a beneficial interest. ... The evidence in this case establishes that the parties had a common intention that [the husband] held the corporate assets in trust for the benefit of both of them. ... In this case, both a resulting trust and a constructive trust can be found." - See paragraphs 620, 621, 624.

Trusts - Topic 2346

Constructive trusts - Basis for imposition - Unjust enrichment - [See Family Law - Topic 3382 ].

Cases Noticed:

N.R. v. B.B. et al., [2009] 1 S.C.R. 295; 385 N.R. 85; 266 B.C.A.C. 1; 449 W.A.C. 1; 2009 SCC 10, refd to. [para. 28].

Rick v. Brandsema et al. - see N.R. v. B.B. et al.

Miglin v. Miglin, [2003] 1 S.C.R. 303; 302 N.R. 201; 171 O.A.C. 201; 2003 SCC 24, refd to. [para. 33].

Fercho v. Dos Santos, [2006] A.R. Uned. 770; 153 A.C.W.S.(3d) 1171; 2006 ABQB 879, refd to. [para. 35].

Schultz v. Schultz (2000), 282 A.R. 59; 2000 ABQB 866, refd to. [para. 35].

Moore v. Moore (2000), 255 A.R. 342; 220 W.A.C. 342; 185 D.L.R.(4th) 93; 2000 ABCA 102, refd to. [para. 36].

Leopold v. Leopold, [2000] O.T.C. 868; 51 O.R.(3d) 275; 195 D.L.R.(4th) 717 (Sup. Ct.), refd to. [para. 37].

Wolbeck v. Wolbeck, [1985] A.J. No. 437 (Q.B.), refd to. [para. 38].

Xerex Exploration Ltd. v. Petro-Canada et al. (2005), 367 A.R. 201; 346 W.A.C. 201; 256 D.L.R.(4th) 218; 2005 ABCA 224, refd to. [para. 39].

Opron Construction Co. v. Alberta (1994), 151 A.R. 241; 14 C.L.R.(2d) 97 (Q.B.), refd to. [para. 39].

Panara v. Di Ascenzo (2005), 361 A.R. 382; 339 W.A.C. 382; 250 D.L.R.(4th) 620; 2005 ABCA 47, refd to. [para. 198].

Wright-Watts v. Watts (2005), 387 A.R. 293; 2005 ABQB 708, refd to. [para. 198].

Hughes v. Hughes (2006), 410 A.R. 16; 2006 ABQB 468, refd to. [para. 198].

Domglas Inc. v. Jarislowsky Fraser & Co. (1980), 13 B.L.R. 135 (Que. C.S.), refd to. [para. 557].

Pocklington Foods Inc. v. Alberta (Provincial Treasurer) (1998), 218 A.R. 59; 159 D.L.R.(4th) 81; 1998 ABQB 279, affd. (1999), 250 A.R. 188; 213 W.A.C. 188; 184 D.L.R.(4th) 152; 2000 ABCA 8, refd to. [para. 558].

Freyberg v. Fletcher Challenge Oil and Gas Inc. et al. (2005), 363 A.R. 35; 343 W.A.C. 35; 252 D.L.R.(4th) 365; 2005 ABCA 46, leave to appeal denied (2005), 348 N.R. 198; 401 A.R. 398; 391 W.A.C. 398 (S.C.C.), refd to. [para. 559].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241; 146 D.L.R.(4th) 214, refd to. [para. 610].

Ambrozic v. Burcevski et al. (2006), 394 A.R. 15; 2006 ABQB 4, varied (2008), 433 A.R. 25; 429 W.A.C. 25; 2008 ABCA 194, leave to appeal denied (2008), 392 N.R. 382; 469 A.R. 394; 470 W.A.C. 394 (S.C.C.), refd to. [para. 610].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 611].

Peter v. Beblow, [1993] 1 S.C.R. 980; 150 N.R. 1; 23 B.C.A.C. 81; 39 W.A.C. 81; 101 D.L.R.(4th) 621, refd to. [para. 613].

Mustard v. Brache (2006), 397 A.R. 361; 384 W.A.C. 361; 275 D.L.R.(4th) 545; 2006 ABCA 265, refd to. [para. 613].

Tu v. Huang, [2006] A.R. Uned. 446; 153 A.C.W.S.(3d) 78; 2006 ABCA 263, refd to. [para. 614].

R.A.P. v. B.K. (2008), 438 A.R. 174; 2008 ABQB 4, refd to. [para. 617].

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91; 83 D.L.R.(3d) 289, refd to. [para. 620].

Gregoric v. Gregoric (1990), 4 O.R.(3d) 588; 39 E.T.R. 63 (Gen. Div.), refd to. [para. 620].

Angeletakis v. Thymaras (1989), 95 A.R. 81; 65 Alta. L.R.(2d) 345 (Q.B.), refd to. [para. 623].

Aberdeen Railway Co. v. Blaikie Bros. (1854), 1 Macq. 461; 2 Eq. Rep. 1281 (H.L.), refd to. [para. 625].

Staub v. Staub Estate (2003), 327 A.R. 46; 296 W.A.C. 46; 226 D.L.R.(4th) 327; 2003 ABCA 122, refd to. [para. 625].

Act Oils Ltd. v. Pacifac Petroleums Ltd. (1975), 60 D.L.R.(3d) 658 (Alta. C.A.), refd to. [para. 625].

M.E.B. Estate v. O.B. et al. (2007), 419 A.R. 145; 2007 ABQB 259, refd to. [para. 625].

Canson Enterprises Ltd. et al. v. Boughton & Co. et al., [1991] 3 S.C.R. 534; 131 N.R. 321; 6 B.C.A.C. 1; 13 W.A.C. 1; 85 D.L.R.(4th) 129, refd to. [para. 626].

Robinson v. Beaudette Estate - see Beaudette Estate, Re.

Beaudette Estate, Re (1998), 229 A.R. 259; 1998 ABQB 689, refd to. [para. 627].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1; 92 D.L.R.(4th) 449, refd to. [para. 629].

Jamieson v. Jamieson (1921), 63 S.C.R. 188; 65 D.L.R. 68, refd to. [para. 629].

Howe v. Howe et al., [1936] O.R. 57; [1936] 1 D.L.R. 193 (C.A.), refd to. [para. 630].

Laxton v. Coglon, [2006] B.C.T.C. Uned. A51; 152 A.C.W.S.(3d) 869; 2006 BCSC 1688, varied (2008), 261 B.C.A.C. 142; 440 W.A.C. 142; 2008 BCCA 414, refd to. [para. 639].

Hodgson v. Hodgson (2005), 361 A.R. 190; 339 W.A.C. 190; 248 D.L.R.(4th) 95; 2005 ABCA 13, refd to. [para. 639].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161; 13 D.L.R.(4th) 321, refd to. [para. 644].

Dawson, Re; Union Fidelity Trustee Co. v. Perpetual Trustee Co. (1966), 84 W.N.(Pt. 1) 404 (N.S.W.), refd to. [para. 644].

Authors and Works Noticed:

O'Byrne, Shannon, Culpable Silence: Liability for Non-Disclosure in the Contractual Arena (1988), 30 Can. Bus. L.J. 239, generally [para. 39].

Counsel:

Louise Ares, Q.C., and Karen Brown (Ares Law), for the plaintiff;

Stephen English, Q.C., and Amy Bassili (Prowse Chowne LLP), for the defendant.

This application was heard between January 14 and June 12, 2008, before Moen, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on September 15, 2009.