Johnson v. Johnson et al., 2012 SKCA 87

• Judge: Klebuc, C.J.S., Lane and Richards, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: October 27, 2011
• Jurisdiction: Saskatchewan
• Citations: 2012 SKCA 87;(2012), 399 Sask.R. 196 (CA)

Johnson v. Johnson (2012), 399 Sask.R. 196 (CA);

    552 W.A.C. 196

MLB headnote and full text

Temp. Cite: [2012] Sask.R. TBEd. OC.018

Ty Reed Johnson (appellant) v. Twila Dawn Johnson (respondent) and Allan Larsen (respondent)

(CACV1978; 2012 SKCA 87)

Indexed As: Johnson v. Johnson et al.

Saskatchewan Court of Appeal

Klebuc, C.J.S., Lane and Richards, JJ.A.

October 3, 2012.

Summary:

The parties married in 1994 and separated in 2005. The wife petitioned for a divorce, custody of the children and child support and a division of family property. The husband counter-petitioned for the same types of relief.

The Saskatchewan Court of Queen's Bench, in a decision reported at [2010] Sask.R. Uned. 152, granted a divorce and determined the corollary relief issues. The husband appealed.

The Saskatchewan Court of Appeal allowed the appeal on one issue only regarding family property.

Equity - Topic 1482

Equitable principles respecting relief - Clean hands doctrine - Application of - [See third Family Law - Topic 868 ].

Family Law - Topic 868

Husband and wife - Marital property - Distribution orders - Property subject to distribution - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that certain land and interests in the land that had been conveyed to the wife by her father were held in trust by the wife for her father and, therefore, were not divisible family property - The Saskatchewan Court of Appeal dismissed the husband's appeal - The trial judge had not erred in the manner in which he applied the common law presumption of advancement or the presumption of a resulting trust - The court rejected the husband's assertion that the presumption of advancement applied to the conveyances such that it was presumed that the wife's father intended to unconditionally gift his interest in the lands to her and not to create a resulting trust - The presumption of advancement did not apply - The wife was an adult child who was able to provide for herself - Consequently, the husband's submission that the wife's father bore the burden of rebutting the presumption was "not sustainable" - Rather, the burden of establishing that it applied rested on the wife and, indirectly, on the husband to the extent that he had claimed an interest in the lands - The wife had never relied on either the presumption of advancement or a resulting trust on the grounds that it would be inequitable to deprive her of the lands - She had claimed no interest in the lands - The trial judge accepted her evidence - See paragraphs 74 to 79.

Family Law - Topic 868

Husband and wife - Marital property - Distribution orders - Property subject to distribution - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that certain land and interests in the land that had been conveyed to the wife by her father were held in trust by the wife for her father and, therefore, were not divisible family property - The Saskatchewan Court of Appeal dismissed the husband's appeal - The court rejected the husband's argument that the trial judge had misapplied the law of fraudulent conveyances - The husband was not entitled to rely on the Fraudulent Preferences Act - The wife's father was never indebted to him and there was no evidence that the impugned conveyances were in any way adverse to the husband's interests - Rather, the husband only stood to benefit if the lands were never reconveyed to the wife's father or handed over to the wife's father's creditors - See paragraphs 80 to 83.

Family Law - Topic 868

Husband and wife - Marital property - Distribution orders - Property subject to distribution - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that certain land and interest in the land that had been conveyed to the wife by her father were held in trust by the wife for her father and, therefore, were not divisible family property - The husband appealed, asserting, inter alia, that the trial judge had erred in failing to apply the "clean hands" rule when he took into account the agreements that the wife's father and the wife had entered into for the purpose of defrauding the wife's father's creditors and when he allowed the wife's father to rely on the common law presumption of resulting trust, given the nature of the illegal scheme - The Saskatchewan Court of Appeal dismissed the appeal - The husband's submissions were not sustainable on several grounds - First, the presumption of advancement did not apply here - Second, since the wife (and her sisters) had agreed that they held the lands in trust for the father, the father did not have to rely on the common law presumption of a resulting trust - The clean hands doctrine did not apply here - See paragraphs 84 to 86.

Family Law - Topic 868.2

Husband and wife - Marital property - Distribution orders - Debts - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that a loan of $20,000 that the parties had been given by the husband's parents in 1995 was "statute-barred" and, therefore, was not taken into account in the division - In dismissing the husband's appeal, the Saskatchewan Court of Appeal stated, "Using the term 'statute barred' in family property actions, of the sort in issue here, may lead to confusion for the term appears to extinguish the right of a creditor to recover money owed by one or both spouses involved in a family property action, notwithstanding the creditor is not a party to such action. Thus, it would be appropriate for a court in such circumstances to state that a spouse has established on a balance of probabilities that he or she has a viable limitation defence to any proceeding the creditor may bring to recover the debt owed by him or her; and therefore the subject indebtedness should not be taken into account in the division of family property between the spouses, all without prejudice to any legal right the creditor may have against either spouse." - See paragraph 30.

Family Law - Topic 868.2

Husband and wife - Marital property - Distribution orders - Debts - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that a loan of $20,000 that the parties had been given by the husband's parents in 1995 was "statute-barred" and, therefore, was not taken into account in the division - In dismissing the husband's appeal, the Saskatchewan Court of Appeal stated, "an unequal division of family property in favour of spouse A based upon him or her claiming to be legally liable to repay a joint or joint and several debt, while spouse B has a plausible limitation of actions defence, may be inappropriate for the following reasons: (a) an unequal distribution in favour of spouse A leaves spouse B with the risk of the creditor successfully suing him or her to recover the entire joint debt should spouse A fail to pay it; (b) spouse A may be able to successfully rely on a limitation of action defence should the creditor sue him or her, and thereby gain an unfair division of family property; (c) if spouse B has a viable defence should the creditor bring an action against him or her, an unequal distribution of family property in favour of spouse A will have occurred. Each of these potential scenarios yields a result inconsistent with the requirements of The Family Property Act" - See paragraph 39.

Family Law - Topic 868.2

Husband and wife - Marital property - Distribution orders - Debts - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that a loan of $20,000 that the parties had been given by the husband's parents in 1995 was "statute-barred" and, therefore, was not taken into account in the division - The Saskatchewan Court of Appeal dismissed the husband's appeal - The trial judge had used the term "statute-barred" as an abbreviated way of saying that, if he was satisfied that the wife had a viable limitation defence to any proceeding that the parents might bring to collect on the debt, that debt should not be taken into account in the division of the family property - On the "very sparse evidence before him," the trial judge was entitled to conclude that the wife had such a viable limitation defence - The six year limitation period had expired no later than October 2001 - There was no evidence of a partial payment or an acknowledgement meeting the requirements of s. 11 of the Limitations Act to extend the limitation period - Consequently, the trial judge had not erred by refusing to make the unequal distribution of family property sought by the husband - Further, "moral obligations" were not to be taken into account in the division of family property - See paragraphs 14 to 43.

Family Law - Topic 868.2

Husband and wife - Marital property - Distribution orders - Debts - The parties married in 1994 and separated in 2005 - Regarding the division of family property, the trial judge held, inter alia, that a loan of $20,000 that the parties had been given by the husband's parents in 1995 was "statute-barred" and, therefore, was not taken into account in the division - The husband appealed, asserting that the trial judge had erred in finding the loan was statute-barred when the Limitations Act had not been pled as required by rule 142 of the Queen's Bench Rules - The Saskatchewan Court of Appeal dismissed the appeal - Klebuc, C.J.S., having rejected the husband's arguments regarding the merits of the distribution order, also indicated that, as the parents had not demanded repayment or sued the wife to recover the money owed, no proceeding existed wherein the wife was entitled to plead and rely on a limitations defence - Therefore, rule 142 did not apply - See paragraphs 41 to 43 - Richards, J.A. (Lane, J.A., concurring), concurred with Klebuc, C.J.S., in the result, but noted that rule 142 was in Part Ten of the rules and spoke generally to pleadings - Rule 591(3), which was in Part Forty-Eight regarding family law proceedings, indicated that a petition had "the effect of raising all issues" - The wife had not listed the loan in her property statement, while the husband had - This should have alerted the husband that the loan's status was in dispute - As the husband had not demonstrated that he had been prejudiced in any way by the way that the matter unfolded, Richards, J.A., would not have interfered with the trial judge's decision to consider the Limitation Act argument - See paragraphs 90 to 99.

Family Law - Topic 942

Husband and wife - Marital property - Distribution orders - Practice - Pleadings (incl. form) - [See fourth Family Law - Topic 868.2 ].

Family Law - Topic 4045.5

Divorce - Corollary relief - Maintenance - Support guidelines (incl. nondivorce cases) - Calculation or attribution of income - The parties married in 1994 and separated in 2005 - There were three children of the marriage - While the parties lived on their farm, they both had permanent jobs off the farm - The trial judge determined the father's child support obligation without taking into account the father's farming losses - The Saskatchewan Court of Appeal dismissed the father's appeal - The farming operation was very modest and had "generated a decade of uninterrupted losses" - There was no "bottom-line error" in deciding to exclude those losses - However, generally, farming losses were not automatically excluded from the calculation of income for support purposes - Rather, that income had to be determined in the manner set out in ss. 15 to 20 of the Federal Child Support Guidelines - Section 19 was particularly relevant as it empowered the court to impute such amount of income "as it considers appropriate in the circumstances" - As a result, s. 19 would allow a trial judge, if necessary, to impute income amounts, effectively cancelling out farming or other losses - This should not be framed as an "all or nothing" proposition - A judge was not obliged to choose only between giving full effect to farming losses or excluding them completely - Section 19's flexibility should be preserved - If appropriate, a judge could impute into a spouse's income an amount equivalent to part or all of claimed farming losses - The decision should be based on the overall equities and aimed at achieving a fair and reasonable result - The economic strength of a farming operation was a significant factor in the equation, but it was not necessarily always the only factor - See paragraphs 100 to 109.

Fraud and Misrepresentation - Topic 1272

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - What constitutes a creditor or person entitled to impeach - [See second Family Law - Topic 868 ].

Fraud and Misrepresentation - Topic 1281

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - Conveyances between relatives or near relatives - [See second Family Law - Topic 868 ].

Gifts - Topic 527

Gifts inter vivos - Presumption against gift - Resulting trust - Rebuttal of presumption - [See first Family Law - Topic 868 ].

Gifts - Topic 554

Gifts inter vivos - Presumption of gift - Advancement - Transfers from parent or grandparent to children - [See first Family Law - Topic 868 ].

Limitation of Actions - Topic 2050

Actions in contract - Actions for debt - General - [See first and second Family Law - Topic 868.2 ].

Limitation of Actions - Topic 2052

Actions in contract - Actions for debt - When time begins to run - [See third Family Law - Topic 868.2 ].

Practice - Topic 1310

Pleadings - Questions of law - Pleading a statute - [See fourth Family Law - Topic 868.2 ].

Trusts - Topic 2044

Resulting trusts - Voluntary property transfers - Presumption of resulting trust - [See first Family Law - Topic 868 ].

Cases Noticed:

Gallop v. Abdoulah et al., [2008] 5 W.W.R. 231; 311 Sask.R. 123; 428 W.A.C. 123; 2008 SKCA 29, refd to. [para. 10].

K.V.P. v. T.E., [2001] 2 S.C.R. 1014; 275 N.R. 52; 156 B.C.A.C. 161; 255 W.A.C. 161; 2001 SCC 60, refd to. [para. 11].

Van de Perre v. Edwards - see K.V.P. v. T.E.

C.R.H. v. D.G. (2010), 362 Sask.R. 261; 500 W.A.C. 261; 2010 SKCA 127, refd to. [para. 11].

Stavric v. King (2009), 320 Sask.R. 37; 444 W.A.C. 37; 2009 SKCA 6, refd to. [para. 11].

Young v. Queensland Trustees Ltd., [1956] H.C.A. 51; 99 C.L.R. 560, refd to. [para. 21].

Ravndahl v. Saskatchewan et al. (2007), 299 Sask.R. 162; 408 W.A.C. 162; 2007 SKCA 66, affd. [2009] 1 S.C.R. 181; 383 N.R. 247; 320 Sask.R. 305; 444 W.A.C. 305, refd to. [para. 25].

Fritz v. Knorr et al., [1993] 7 W.W.R. 303; 111 Sask.R. 142 (Q.B.), refd to. [para. 25].

Kammins Ballrooms Co. v. Zenith Investments (Torquay) Ltd., [1970] 3 W.L.R. 287 (H.L.), refd to. [para. 25].

Tolofson v. Jensen and Tolofson, [1994] 3 S.C.R. 1022; 175 N.R. 161; 77 O.A.C. 81; 51 B.C.A.C. 241; 84 W.A.C. 241, refd to. [para. 26].

Castillo v. Castillo, [2005] 3 S.C.R. 870; 343 N.R. 144; 376 A.R. 224; 360 W.A.C. 224; 2005 SCC 83, refd to. [para. 26].

Markevich v. Minister of National Revenue, [2003] 1 S.C.R. 94; 300 N.R. 321; 2003 SCC 9, refd to. [para. 26].

Russell v. Russell, [2000] 1 W.W.R. 619; 180 Sask.R. 196; 205 W.A.C. 196 (C.A.), refd to. [para. 27].

Burke v. Burke (1987), 47 Man.R.(2d) 216; 8 R.F.L.(3d) 393 (Q.B. Fam. Div.), refd to. [para. 28].

Deyell v. Deyell (1991), 90 Sask.R. 81 (C.A.), refd to. [para. 46].

Nichol v. Johnson (2003), 240 Sask.R. 275; 2003 SKQB 486 (Fam. Div.), refd to. [para. 50].

Dean v. Friesen (1999), 185 Sask.R. 208 (Q.B. Fam. Div.), refd to. [paras. 51, 102].

Botha v. Botha (2000), 283 A.R. 201; 2000 ABQB 870, refd to. [para. 52].

Goodfriend v. Goodfriend, [1972] S.C.R. 640, refd to. [para. 74].

Maysels v. Maysels (1974), 17 N.R. 112; 45 D.L.R.(3d) 337 (Ont. C.A.), affd., [1975] 1 S.C.R. v; 17 N.R. 111; 64 D.L.R.(3d) 765, refd to. [para. 74].

Pecore v. Pecore, [2007] 1 S.C.R. 795; 361 N.R. 1; 224 O.A.C. 330; 2007 SCC 17, refd to. [para. 74].

Walsh v. Walsh, [1948] O.R. 81 (H.C.), affd. [1948] 4 D.L.R. 876 (C.A.), refd to. [para. 74].

Moody v. Ashton (2004), 258 Sask.R. 1; 248 D.L.R.(4th) 690; 2004 SKQB 488, refd to. [para. 80].

Stewart v. Zacharuk, [1949] 1 W.W.R. 213 (Sask. Q.B.), refd to. [para. 81].

Proulx v. Proulx (2002), 316 A.R. 150; 2002 ABQB 151, refd to. [para. 82].

Tribe v. Soiseth et al., [2006] B.C.T.C. 652; 26 R.F.L.(6th) 28; 2006 BCSC 652, refd to. [para. 84].

Haaksma v. Haaksma, [2008] O.T.C. Uned. P55; 2008 CanLII 63564 (Sup. Ct.), refd to. [para. 84].

Holland v. Holland, [2007] O.T.C. Uned. N61; 49 R.F.L.(6th) 97 (Sup. Ct.), dist. [para. 86].

Rimmer v. Adshead, [2002] 4 W.W.R. 119; 217 Sask.R. 94; 265 W.A.C. 94; 2002 SKCA 12, refd to. [para. 87].

Shmyr v. Shmyr (2003), 233 Sask.R. 87; 2003 SKQB 209, refd to. [para. 102].

Myketiak v. Myketiak (2001), 203 Sask.R. 90; 240 W.A.C. 90; 2001 SKCA 17, refd to. [para. 105].

Authors and Works Noticed:

Abrams, Linda S. and McGuinness, Kevin P., Canadian Civil Procedure Law (2nd Ed. 2010), pp. 414 to 416 [para. 25].

Halsbury's Laws of Canada, Debtor and Creditor (1st Ed. 2010), para. HDC-6 [para. 22].

Waters, Donovan W.M., The Law of Trusts in Canada (3rd Ed. 2005), p. 358 [para. 84].

Counsel:

Lawrence J. Zatlyn, Q.C., for Ty Johnson;

Joleen L. McCullagh, for Twila Johnson;

Nicole A. Sawchuk, for Allan Larsen.

This appeal was heard on October 27, 2011, by Klebuc, C.J.S., Lane and Richards, JJ.A., of the Saskatchewan Court of Appeal. On October 3, 2012, the court's judgment was delivered, including the following opinions:

Klebuc, C.J.S. - see paragraphs 1 to 88;

Richards, J.A., concurring (Lane, J.A., concurring) - see paragraphs 89 to 112.