Fritschij v. Bazan, 2006 MBQB 183

• Judge: Yard, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: August 21, 2006
• Jurisdiction: Manitoba
• Citations: 2006 MBQB 183;(2006), 206 Man.R.(2d) 225 (QBFD)

Fritschij v. Bazan (2006), 206 Man.R.(2d) 225 (QBFD)

MLB headnote and full text

Temp. Cite: [2006] Man.R.(2d) TBEd. SE.011

Maria Johanna Elizabeth Fritschij (petitioner) v. William Patrick Bazan (respondent)

(FD 95-01-41826; 2006 MBQB 183)

Indexed As: Fritschij v. Bazan

Manitoba Court of Queen's Bench

Family Division

Winnipeg Centre

Yard, J.

August 21, 2006.

Summary:

A husband and wife divorced. The husband settled a long outstanding disability insurance claim for $117,500. The wife commenced a motion, raising the following issues: (1) should the settlement be imputed to the husband for purposes of support under the Manitoba Child Support Guidelines and, if so, in what amount; (2) could and should the court order payment into court of a portion of the settlement proceeds to satisfy the wife's claim respecting unpaid costs orders, child support arrears and any additional recalculated child support; (3) did the husband's insurance litigation lawyer have a valid and enforceable solicitor's lien against the settlement proceeds to the extent of his unpaid fees and disbursements and, if so, did the lien take precedence over the wife's claims; and (4) did the lawyer who acted for the husband in a matter unrelated to the insurance lawsuit have a valid and enforceable solicitor's lien or assignment in connection with some of the settlement proceeds and, if so, was it in priority to the wife's claims.

The Manitoba Court of Queen's Bench, Family Division, imputed to the husband income of $69,795.19 (the settlement proceeds minus the legal expenses related to the insurance lawsuit) in the year of its receipt (2006) and ordered that he pay an additional lump sum of $15,552 for Guideline child support. The wife was entitled to have that amount, previously ordered costs, child support arrears and the costs of the motion (totalling $37,489.95) paid from the settlement proceeds. The court did not determine the solicitor lien issues where the settlement proceeds exceeded the husband's obligations to the wife and lawyers.

Editor's note: for related decisions involving the same parties see: [1999] Man.R.(2d) Uned. 132; 183 Man.R.(2d) 98; 203 Man.R.(2d) 291.

Creditors and Debtors - Topic 4343

Garnishment by creditor - Property liable to garnishment - Debt owed to judgment debtor - Spouses divorced - The husband sued his disability insurer and settled for $117,500 - $69,795.19 was imputed to the husband as income for support purposes under the Manitoba Child Support Guidelines - The husband owed the wife $37,489.95 for costs, child support arrears and additional lump sum child support owing based on the imputed income - The $117,500 was being held in trust by the husband's insurance litigation lawyers - The husband asserted that the funds were not a debt due or accruing due to him and were not subject to garnishment - The Manitoba Court of Queen's Bench, Family Division, rejected the assertion - The court accepted that, to the extent that a prior valid and perfected assignment of proceeds or a valid solicitor's lien has been demonstrated, judgment creditors' claims might lose priority - Here, however, there were more than sufficient funds to satisfy all claims against the funds - The debt which the sought-after garnishment sought to bind was the debt of whoever was holding the settlement proceeds that were otherwise payable to the husband - That debt was clearly garnishable under s. 4 of the Garnishment Act - As to procedure, Queen's Bench Rule 60.08 applied - The court noted that the wife sought relief by way of attachment and garnishment before judgment pursuant to the Queen's Bench Act - That Act did not apply as there was no existing "action" as defined in the legislation - See paragraphs 56 to 59.

Creditors and Debtors - Topic 4357

Garnishment by creditor - Property liable to garnishment - Insurance benefits - [See Creditors and Debtors - Topic 4343 ].

Creditors and Debtors - Topic 4415

Garnishment by creditor - Exemptions - Monies held in trust by garnishee - [See Creditors and Debtors - Topic 4343 ].

Creditors and Debtors - Topic 4500

Garnishment by creditor - When available - Debt requirement from garnishee to debtor - [See Creditors and Debtors - Topic 4343 ].

Execution - Topic 746

General rules - Exemptions - Life insurance - Spouses divorced - The husband sued his disability insurer and settled for $117,500 - $69,795.19 of that amount was imputed to the husband as income for support purposes under the Manitoba Child Support Guidelines - The husband owed the wife $37,489.95 for costs, child support arrears and additional lump sum child support owing based on the imputed income - The husband asserted that the settlement funds were "insurance money" under Part V of the Manitoba Insurance Act and were exempt from execution and seizure (s. 173(2)) - The Manitoba Court of Queen's Bench, Family Division, rejected the assertion - To be exempt from execution or seizure, the evidence had to establish a presently existing beneficiary designation in favour of a spouse or common law partner, a child, grandchild or a parent of the husband - There was no evidence of an effective beneficiary designation presently in effect, let alone evidence of a designation in favour of someone in one of the specified categories - A former spouse was not a spouse within the meaning of section - See paragraphs 54 and 55.

Family Law - Topic 4045.4

Divorce - Corollary relief - Maintenance - Support guidelines (incl. nondivorce cases) - Special or extraordinary expenses (incl. calculation of amount) - A divorced husband received an income replacement stream of $1,623.02 per month from his disability insurer - In June 1996, the insurer terminated the benefits because the husband had ceased providing updated medical information - In 1999, the court declined to impute income to the husband, but ordered that funds from the insurer, if ultimately received, were to be considered for child support recalculation purposes - The husband sued the insurer and settled for $117,500 - The Manitoba Court of Queen's Bench, Family Division, held that the settlement could fairly be seen as a diversion of an income stream into a lump sum settlement which affected the level of support - This was so notwithstanding that the husband had also claimed damages and costs - The husband had presented no evidence breaking down the settlement details - The court imputed $69,795.19 ($117,500 minus the legal expenses incurred in obtaining the settlement) as income for 2006 (the year of receipt) and ordered that the husband pay an additional $15,552 lump sum support under the Manitoba Child Support Guidelines - The court declined to recalculate s. 7 expenses given the parties' and children's financial circumstances - See paragraphs 12 to 25.

Insurance - Topic 7150

Life insurance - Beneficiaries - Designation of - General - Spouses divorced - The husband sued his disability insurer and settled for $117,500 - $69,795.19 of that amount was imputed to the husband as income for support purposes under the Manitoba Child Support Guidelines - The husband owed the wife $37,489.95 for costs, child support arrears and additional lump sum child support owing based on the imputed income - The husband asserted that the settlement funds were "insurance money" under Part V of the Manitoba Insurance Act and were payable pursuant to the terms of a life insurance policy as defined in the Act and were accordingly not subject to the control of the insurer or his creditors and did not form part of his estate (s. 168(1)) - The Manitoba Court of Queen's Bench, Family Division, rejected the assertion - Despite the alleged lack of control, the husband had assigned portions of the settlement proceeds to his lawyers without the concurrence of the irrevocable beneficiary (the wife) - The husband failed to meet the onus of fitting his case with the four corners of the section - See paragraphs 43 to 51.

Insurance - Topic 7150

Life insurance - Beneficiaries - Designation of - General - Spouses divorced - The husband sued his disability insurer and settled for $117,500 - $69,795.19 of that amount was imputed to the husband as income for support purposes under the Manitoba Child Support Guidelines - The husband owed the wife $37,489.95 for costs, child support arrears and additional lump sum child support owing based on the imputed income - The husband asserted that the settlement funds were "insurance money" under Part V of the Manitoba Insurance Act and were not part of his estate and not subject to the claims of his creditors (s. 173(1)) - The Manitoba Court of Queen's Bench, Family Division, rejected the assertion where there was no evidence of a beneficiary designation with the meaning of s. 173(1) - See paragraphs 52 and 53.

Practice - Topic 3372.1

Interim proceedings - Preservation of property - Attachment order - Procedure - [See Creditors and Debtors - Topic 4343 ].

Practice - Topic 5838

Judgments and orders - Renewal of judgments - Limitation period - In 1995 three separate orders for costs totalling $3,275 were made against a husband in favour of the wife - $2,933.82 remained outstanding - The wife did not renew the orders within 10 years because she did not perceive a possibility of recovery - The husband settled a claim against his disability insurer for $117,500 - The wife sought to recover the unpaid costs - The Manitoba Court of Queen's Bench, Family Division, held that orders for costs were time barred and not recoverable - The wife made a litigation choice not to renew the orders - She now had to live with the consequences of that choice - Although a prior court order obligated the husband to keep the wife informed of the progress of his disability claim and he failed to do so, the wife had been in a position to inform herself independently by reviewing the public court record - See paragraphs 28 and 29.

Cases Noticed:

Hryhoriw v. D'Lugos (1997), 161 Sask.R. 161 (Fam. Div.), refd to. [para. 15].

B.D.W. v. H.G.W. (1999), 251 A.R. 343 (Q.B.), refd to. [para. 15].

Dyck v. Highton (2003), 239 Sask.R. 38 (Fam. Div.), refd to. [para. 15].

Tennant v. Tennant (2002), 166 O.A.C. 99; 62 O.R.(3d) 185 (C.A.), refd to. [para. 55].

Wolch v. Wolch, [1981] 4 W.W.R. 628; 10 Man.R.(2d) 232 (Q.B.), refd to. [para. 56].

Stevenson v. Lebrun (1996), 112 Man.R.(2d) 158 (Q.B. Master), refd to. [para. 59].

Willick v. Willick, [1994] 3 S.C.R. 670; 173 N.R. 321; 125 Sask.R. 81; 81 W.A.C. 81; 6 R.F.L.(4th) 161, refd to. [para. 60].

Statutes Noticed:

Insurance Act, R.S.M. 1987, c. I-40; C.C.S.M., c. I-40, sect. 173(2) [para. 38].

Counsel:

Janice M. Dewar, for the petitioner;

Phillip F. Cramer, for the respondent;

Jason D. Kendall, for Tapper Cuddy LLP.

This motion was heard by Yard, J., of the Manitoba Court of Queen's Bench, Family Division, Winnipeg Centre, who delivered the following judgment on August 21, 2006.