Todd v. Freeman et al., 2005 BCCA 519

• Judge: Ryan, Donald and Low, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: October 27, 2005
• Jurisdiction: British Columbia
• Citations: 2005 BCCA 519;(2005), 218 B.C.A.C. 127 (CA)

Todd v. Freeman (2005), 218 B.C.A.C. 127 (CA);

    359 W.A.C. 127

MLB headnote and full text

Temp. Cite: [2005] B.C.A.C. TBEd. NO.018

Deborah Ann Todd (respondent/appellant on cross-appeal/plaintiff) v. Peter Charles Milne Freeman (appellant/respondent on cross-appeal/defendant) and Michael Todd (respondent/defendant by counterclaim)

(CA031098; 2005 BCCA 519)

Indexed As: Todd v. Freeman et al.

British Columbia Court of Appeal

Ryan, Donald and Low, JJ.A.

October 27, 2005.

Summary:

The parties divorced in 2002 after a 16 year marriage. The wife and her brother were the contingent beneficiaries of a family trust. The trust held eight parcels of land (the Pike Lake Property) and a significant amount of cash and other investments. The Pike Lake property was taken out of the trust and transferred to the wife and her brother as tenants in common. The wife's contingent interest in the family trust was a major issue in the division of the parties' property.

The British Columbia Supreme Court, in decisions reported at [2003] B.C.T.C. 1155 and [2004] B.C.T.C. 91, determined the issues regarding the division of the parties' property. The court held that the wife's contingent interest in the family trust was not a family asset. However, the court held that the Pike Lake property that was removed from the trust was a family asset and it awarded the husband one-half the value of the wife's interest in that property. The husband appealed, arguing that the court erred in concluding that the wife's interest in the family trust was not a family asset and in granting the husband one-half of the value of the wife's interest in the Pike Lake property as opposed to a one-half interest in the wife's interest in the property. Alternatively, he argued that if a compensation order was to be made, then the court erred in valuing his interest in the Pike Lake property. The wife cross-appealed, arguing that the court erred in failing to reapportion the Pike Lake lots in her favour and in failing to consider capital gains tax in its determination of the value of the lots. She also argued that the court erred in its determination of costs and in ordering pre-judgment interest.

The British Columbia Court of Appeal allowed the husband's appeal to the extent of increasing his award of compensation by $150,000. It also allowed the wife's cross-appeal to the extent of deleting the order for prejudgment interest. The appeal and cross-appeal were otherwise dismissed.

Family Law - Topic 867

Husband and wife - Marital property - Distribution orders - Interest on awards (incl. prejudgment interest) - The parties separated in 2000 and divorced in 2002 - The trial judge made a compensation order in favour of the husband and awarded prejudgment interest from the date of separation to the date of judgment - The British Columbia Court of Appeal held that the Court Order Interest Act did not apply and prejudgment interest was not available - For purposes of s. 56 of the Family Relations Act, the date of the divorce was the "triggering event" - As of that date, the husband had an undivided half interest in the family assets - He possessed that half interest until July 23, 2003 when the trial judge made his order with respect to the family assets and ordered compensation based on the value of the assets as of the trial date - It was only by order of the court that the husband's interest in the family assets was taken from him - See paragraphs 92 to 101.

Family Law - Topic 876

Husband and wife - Marital property - Distribution orders - Family or matrimonial assets - The parties divorced - The wife's mother was the beneficiary of a family trust, holding a life interest with the power to encroach - The wife and her brother were the contingent beneficiaries of the trust - The trial judge found that there had been encroachments on the capital of the trust and that income from the trust had been used for family purposes - However, he held that the consistent use of the trust had been for the benefit of the wife's mother and that the trust had not been ordinarily used for family purposes - He concluded that the wife's contingent interest in the trust was not a family asset - The British Columbia Court of Appeal affirmed the trial judge's analysis - The trial judge was not wrong to consider what the trustees did for the wife's mother as income beneficiary - Any advancement of funds to the wife while her mother was still alive required her mother's consent - Any legal impediments to the wife's access to the trust fund to obtain funds to benefit her family had to be taken into account in determining whether she ordinarily used her interest in the trust as a family asset - See paragraphs 32 to 45.

Family Law - Topic 876

Husband and wife - Marital property - Distribution orders - Family or matrimonial assets - The parties divorced - The wife's mother was the beneficiary of a family trust, holding a life interest with the power to encroach - The wife and her brother were the contingent beneficiaries of the trust - The trial judge held that the trust had not been ordinarily used for family purposes and the wife's contingent interest in the trust was not a family asset - The husband appealed from the finding - The British Columbia Court of Appeal dismissed the appeal - The husband's best argument would be that the family had arranged its financial affairs so that the anticipated inheritance would be counted on for future financial security - However, there was little or no evidence that that was so - An inference that the family trust was seen as providing both parties with financial security in their later years could not be made in this case where it was not a traditional marriage and both parties had their own sources of income - See paragraphs 46 to 52.

Family Law - Topic 880.21

Husband and wife - Marital property - Distribution orders - Compensation in lieu of property division - The parties divorced - The wife and her brother were the contingent beneficiaries of a family trust - Eight parcels of property (the Pike Lake property) were taken out of the trust and transferred to the wife and her brother as tenants in common - The trial judge held that the Pike Lake property was a family asset and awarded the husband one-half of the value of the wife's interest in the property - The husband appealed, arguing that the trial judge should have granted him one-half of the wife's interest in the property, i.e., an undivided one-quarter interest in the property - The British Columbia Court of Appeal rejected the argument - A compensation order was required - Title to the property was held by the wife and her brother and the property had been owned by the wife's family for generations - See paragraphs 54 to 61.

Family Law - Topic 880.39

Husband and wife - Marital property - Distribution orders - Particular property - Future income from trust fund or estate - [See both Family Law - Topic 876 ].

Family Law - Topic 888

Husband and wife - Marital property - Considerations in making distribution orders - Valuation - The parties divorced - The wife and her brother were contingent beneficiaries of a family trust - Eight parcels of land (the Pike Lake property) were taken out of the trust and transferred to the wife and her brother as tenants in common - A $600,000 mortgage was placed on the property, with the wife and her brother sharing the proceeds equally - The mortgage was later discharged from all parcels of the Pike Lake property except for section 9 - No payments were made on the mortgage and it remained an asset of the family trust - In determining the value of the wife's interest in the Pike Lake property, the trial judge deducted $300,000 for the wife's share of the $600,000 mortgage - The trial judge held that while repayment of the mortgage was extremely remote, it was not speculative as a sale of the property, which would trigger repayment, might be a consequence of the court's judgment - The British Columbia Court of Appeal held that the trial judge erred in deducting the wife's share of the mortgage from the value of the property - The likelihood of a sale of section 9, against which the mortgage was registered, was remote - See paragraphs 66 to 70.

Family Law - Topic 888

Husband and wife - Marital property - Considerations in making distribution orders - Valuation - The parties divorced - The trial judge awarded the husband one-half of the value of the wife's interest in certain property - On appeal, the husband argued that the trial judge erred in valuing the property - While the husband did not assert that he could force a sale under the Partition of Property Act, he argued that consideration should at least have been given by the trial judge to what such a sale could fetch, had it been possible to do so - The British Columbia Court of Appeal rejected the argument - Since the Partition of Property Act had no application under the Family Relations Act, it could not be an error to fail to take it into account in valuing property for the purpose of the Family Relations Act - See paragraphs 71 to 76.

Family Law - Topic 888

Husband and wife - Marital property - Considerations in making distribution orders - Valuation - The parties divorced - The wife and her brother held certain property as tenants in common - Two mortgages were registered against the property, the proceeds of which were paid to the wife's brother - The trial judge inferred that the wife's brother had the obligation to repay those mortgages and he concluded that it would be unfair to charge those debts against the wife's interest in the property - The wife argued that the mortgages should have been deducted from the value of the property in determining the value of her interest - She argued that on a sale of the property, all of the mortgages would be payable and there was no agreement between her and her brother that would allow her to obtain the benefit of the total value of the property without liability for one-half of the mortgage funds, which had been used to improve the property - The British Columbia Court of Appeal rejected the argument - The mortgages were meant to benefit the brother and he was responsible for their repayment - The amount owing on the mortgages would be deducted from his return on the sale, not the wife's - See paragraphs 84 to 88.

Family Law - Topic 967

Husband and wife - Actions between husband and wife - Practice - Interest on awards - [See Family Law - Topic 867 ].

Cases Noticed:

Whittall v. Whittall (1987), 19 B.C.L.R.(2d) 202 (S.C.), consd. [para. 37].

Graham v. Graham (1984), 59 B.C.L.R. 27 (C.A.), refd to. [para. 38].

Evetts v. Evetts (1996), 85 B.C.A.C. 19; 138 W.A.C. 19 (C.A.), consd. [para. 44].

Hefti v. Hefti (1998), 110 B.C.A.C. 44; 178 W.A.C. 44; 57 B.C.L.R.(3d) 171 (C.A.), refd to. [para. 49].

Lindholm v. Lindholm et al. (1999), 18 B.C.T.C. 356; 71 B.C.L.R.(3d) 118 (S.C.), refd to. [para. 50].

Blackett v. Blackett (1989), 40 B.C.L.R.(2d) 99; 22 R.F.L.(3d) 337 (C.A.), consd. [para. 57].

Kowalewich v. Kowalewich (1998), 108 B.C.A.C. 12; 176 W.A.C. 12; 50 B.C.L.R.(3d) 12 (C.A.), refd to. [para. 59].

Tratch v. Tratch (1981), 30 B.C.L.R. 98 (S.C.), refd to. [para. 60].

O'Bryan v. O'Bryan (1997), 97 B.C.A.C. 62; 157 W.A.C. 62; 43 B.C.L.R.(3d) 296 (C.A.), consd. [para. 67].

Gosselin v. Quebec (Procureur général), [2002] 4 S.C.R. 429; 298 N.R. 1; 2002 SCC 84, refd to. [para. 70, footnote 1].

Bodo v. Bodo, [1990] B.C.T.C. Uned. 148; 25 R.F.L.(3d) 295 (S.C.), refd to. [para. 74].

Grover v. Grover (1980), 22 B.C.L.R. 256 (C.A.), refd to. [para. 94].

Pearson v. Manning (1988), 14 R.F.L.(3d) 10 (B.C.C.A.), consd. [para. 94].

Sidwell v. Sidwell (1984), 42 R.F.L.(2d) 209 (B.C.C.A.), consd. [para. 95].

Billingsley v. Billingsley (1991), 4 B.C.A.C. 201; 9 W.A.C. 201; 58 B.C.L.R.(2d) 329 (C.A.), consd. [para. 95].

Counsel:

F.E. Maxwell, Q.C., and R.M. Mogerman, for the appellant;

K.F. Nordlinger, Q.C., for the respondent, Deborah Ann Todd.

This appeal and cross-appeal were heard on January 25 and 26, 2005, at Vancouver, British Columbia, before Ryan, Donald and Low, JJ.A., of the British Columbia Court of Appeal. The following judgment of the Court of Appeal was delivered by Ryan, J.A., on October 27, 2005.