Waller v. Waller, (1998) 164 Sask.R. 161 (QB)

• Judge: Wilkinson, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: February 24, 1998
• Jurisdiction: Saskatchewan
• Citations: (1998), 164 Sask.R. 161 (QB)

Waller v. Waller (1998), 164 Sask.R. 161 (QB)

MLB headnote and full text

Temp. Cite: [1998] Sask.R. TBEd. MR.021

William Robert Waller (petitioner) v. Alexandra Kirsten Waller (respondent)

(1993 Q.B. No. 015113)

Indexed As: Waller v. Waller

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Wilkinson, J.

February 24, 1998.

Summary:

A husband and wife separated. The parties divided the matrimonial home and the fur­nishings equally between them. At issue was the valuation and division of the remaining matrimonial property, including the hus­band's interest in a law practice, a manage­ment company and corporation whose prin­cipal asset was the building which housed the husband's law practice. Also at issue was whether work in progress and goodwill in the law practice were divisible matrimonial property and if so, the method of valuation.

The Saskatchewan Court of Queen's Bench, inter alia, determined, what property or value was exempt from distribution, valued the matrimonial property and ordered an equal division.

Family Law - Topic 875

Husband and wife - Marital property - Distribution orders - Statutes requiring equal division - Exceptions - A husband sought unequal division of matrimonial assets, asserting that his business interests were all acquired prior to marriage and because the wife and he were both law­yers, it was unfair and inequitable to value his interest in a law partnership unless the wife's salaried position was also factored in - The Saskatchewan Court of Queen's Bench rejected the assertion and ordered an equal division of property - See para­graphs 85 to 87.

Family Law - Topic 876

Husband and wife - Marital property - Distribution orders - Family or matrimo­nial assets - During a marriage, spouses built a home which the husband's parents resided in - It was intended that the home might be a retirement home for the spouses - They separated - In an applica­tion for the division of matrimonial prop­erty, the issue arose as to the proper method of calculat­ing the home's value - The wife asserted that the equity in the home should be determined by the original cost of con­structing the home less the mortgage - The Saskatchewan Court of Queen's Bench rejected the wife's asser­tion, holding that the purchase price of land was not an appropriate basis for the establishment of fair market value - The court took into consideration that the hus­band had been responsible for the upkeep, renovation and sale of the property and determined the equity with reference to the sale price - See paragraphs 65 to 70.

Family Law - Topic 877

Husband and wife - Marital property - Distribution orders - Business, commercial or non-family assets - At issue in matri­monial proceed­ings was the valuation of the husband's interest in a law partnership - The hus­band asserted that the partner­ship had an understanding that there would be no entitlement to work in progress or good­will on termination of a partner's interest and the partnership should be valued using a liquidation approach, i.e. as though the husband had withdrawn from the partner­ship on the date of valuation - The Saskatchewan Court of Queen's Bench held that the partnership was a going con­cern and should be valued accordingly - The partnership agreement was relevant only to determining the value of the hus­band's interest if and when he departed or with­drew - A liquidation approach would be utilized only if there was a probability of the husband with­drawing from the partner­ship - See para­graphs 16 to 21.

Family Law - Topic 877

Husband and wife - Marital property - Distribution orders - Business, commercial or non-family assets - In determining the value of a husband's interest in a law partnership for the pur­pose of dividing matrimonial assets, the Saskatchewan Court of Queen's Bench held that work in progress was divisible matri­monial prop­erty - See paragraphs 22 to 34.

Family Law - Topic 877

Husband and wife - Marital property - Distribution orders - Business, commercial or non-family assets - The Saskatchewan Court of Queen's Bench adopted the fol­lowing approach to valuing a law partner­ship interest for the purpose of dividing matrimonial property: "(a) determine the capital cost account balance; (b) add work in progress; (c) subtract a discount from the work in prog­ress for: (i) work not billable; (ii) work to be billed below the going rate; (iii) work referable to adminis­tration; (iv) work to be billed in the future and therefore dis­counted for inflation and the costs of financing; (v) collection costs on billable work; and (d) subtract the income tax liability." - See paragraph 35.

Family Law - Topic 877

Husband and wife - Marital property - Distribution orders - Business, commercial or non-family assets - Parties to a matri­monial proceedings, disputed the proper tax rate to utilize in calculating the value of the husband's interest in a law partner­ship - The Saskatchewan Court of Queen's Bench stated that the effective tax rate could be determined either by the ratio of taxes paid to taxable income, or by the ratio of taxes paid to total income for any given year - The court stated that it was a safe assump­tion that any further income attributable to the husband would have been taxed at the highest marginal tax rate - However, the court used an effective income tax rate of 47.6% (calculated as the ratio of taxes paid to taxable income), where there was no strenuous objection - See paragraph 38 - The court refused to discount the tax liability for deferred income tax and work in progress by one-half - See paragraph 44.

Family Law - Topic 877

Husband and wife - Marital property - Distribution orders - Business, commercial or non-family assets - In determining the value of goodwill in a law partnership for the purpose of divid­ing matrimonial assets, the Saskatchewan Court of Queen's Bench referred to the three types of goodwill: (1) personal good­will; (2) individual goodwill; and (3) goodwill of service - The court stated that it was only goodwill of service that had a transferrable commercial value - The court refused to determine that transferrable commercial goodwill existed in the part­nership by assigning a value to an intan­gible asset when it had not been proven to exist - See paragraphs 46 to 50.

Family Law - Topic 877

Husband and wife - Marital property - Distribution orders - Business, commercial or non-family assets - In an application for a division of matri­monial property, the Saskatchewan Court of Queen's Bench determined the value of the husband's shares in a corporation as of the date of adjudication, where market forces had caused a significant depreci­ation in the value of shares between the interval of the application and adjudication - See para­graphs 62, 63.

Family Law - Topic 880.1

Husband and wife - Marital property - Distribution orders - Exempt acquisitions - General - Pre-marriage acquisitions - In an application for the division of matri­mo­nial property, the husband sought ex­emp­tions for the value of property owned by him at the date of marriage, including RRSP's, his interest in a law practice, his interest in a company, his bank accounts, life insurance and an auto­mobile - The Saskatchewan Court of Queen's Bench granted the ex­emptions, where the assets were owned prior to marriage, were in existence at the time proceedings were commenced, or directly traceable to prop­erty acquired in exchange, and it had not been established by the wife that it would be unfair and inequitable to allow them having regard to the consider­ations in s. 23(5) of the Matri­monial Prop­erty Act - See paragraphs 11 to 15.

Family Law - Topic 880.1

Husband and wife - Marital property - Distribution orders - Exempt acquisitions - General - Pre-marriage acquisitions - In an application for the division of matri­mo­nial property, the husband sought an ex­emption for a vehicle owned by him at the date of the marriage - The husband asserted that he claimed the vehicle as a business expense and it was therefore exempt under the Matrimonial Property Act pursuant to ss. 23(1)(c) and 2(e) - Section 23(1)(c) exempted from distribu­tion the fair market value of property owned by a spouse before marriage other than a matrimonial home or household goods - Section 2(e) excluded personal property "... acquired or used in connection with", inter alia, a business from the defi­nition of household goods - The Saskatchewan Court of Queen's Bench allowed the exemption - See paragraphs 77 to 81.

Family Law - Topic 880.30

Husband and wife - Marital property - Distribution orders - Particular property - Professional practice - [See first, second, third, fourth and fifth Family Law - Topic 877 ].

Family Law - Topic 882

Husband and wife - Marital property - Considerations in making distribution orders - Relevant considerations - Income tax - [See fourth Family Law - Topic 877 ].

Family Law - Topic 888

Husband and wife - Marital property - Considerations in making distribution orders - Valuation (incl. time for) - In deter­mining the value of matri­monial property, the Saskatchewan Court of Queen's Bench stated that "[t]he courts are empowered to value property at the time of application or adjudication. Gen­erally, the courts have tended to choose the date of application since it is the property then owned which constitutes the basis for the distribution contemplated by s. 21(1) of The Matrimo­nial Property Act ... But a rise or fall in value in the interval between application and adjudication attributable purely to market forces, or due to the exclusive personal efforts or neglect of one of the spouses, can justify a decision to value some, or all, of the property at either date the court thinks fit, so long as it is in keeping with the purposes of the Act and the justice of the case." - See paragraph 9.

Family Law - Topic 888

Husband and wife - Marital property - Considerations in making distribution orders - Valuation (incl. time for) - [See Family Law - Topic 876 and all Family Law - Topic 877 ].

Cases Noticed:

Benson v. Benson (1994), 120 Sask.R. 17; 68 W.A.C. 17 (C.A.), refd to. [para. 9].

Medernach v. Medernach (1987), 56 Sask.R. 240 (C.A.), refd to. [para. 10].

Mehling v. Mehling (1989), 75 Sask.R. 195; 20 R.F.L.(3d) 42 (C.A.), refd to. [para. 10].

Deyell v. Deyell (1991), 90 Sask.R. 81 (C.A.), refd to. [para. 13].

Ehlers v. Ehlers (1990), 87 Sask.R. 103 (Q.B.), refd to. [para. 14].

Chinneck v. Chinneck, [1995] O.J. No. 2786 (Gen. Div.), refd to. [para. 20].

Singleton v. Minister of National Revenue (1996), 96 D.T.C. 1850 (Tax C.C.), refd to. [para. 29].

Lynch v. Lynch, [1995] O.J. No. 758 (Gen. Div.), refd to. [para. 30].

Morscher v. Minister of National Revenue (1992), 92 D.T.C. 2214 (Tax C.C.), refd to. [para. 33].

Leckie v. Leckie, [1995] B.C.J. No. 671 (S.C.), refd to. [para. 34].

Reilly v. Reilly, [1994] B.C.J. No. 2482 (S.C.), refd to. [para. 34].

Sauer v. Sisett (1990), 48 B.C.L.R.(2d) 385 (S.C.), refd to. [para. 34].

Fox v. Fox, [1989] B.C.J. No. 1102 (S.C.), appld. [para. 34].

Corless v. Corless (1987), 5 R.F.L. 256 (Ont. U.F.C.), refd to. [para. 34].

Barnabe v. Touhey, [1994] O.J. No. 96 (Gen. Div.), refd to. [para. 34].

Perry v. Heywood et al. (1997), 154 Nfld. & P.E.I.R. 91; 479 A.P.R. 91 (Nfld. T.D.), refd to. [para. 34].

Seaberly v. Seaberly (1985), 37 Sask.R. 219 (C.A.), dist. [para. 44].

Carlson v. Carlson (1984), 34 Sask.R. 287 (C.A.), refd to. [para. 44].

Criton v. Criton (1985), 44 Sask.R. 238 (C.A.), refd to. [para. 46].

Prothoe v. Adams et al. (1997), 203 A.R. 231 (Q.B.), appld. [para. 48].

Indian Head Credit Union Ltd. v. Hosie (A.) & Co. et al., [1994] 4 W.W.R. 674; 120 Sask.R. 73; 68 W.A.C. 73 (C.A.), refd to. [para. 58].

Jacques v. Jacques (1996), 143 Sask.R. 260 (Q.B.), refd to. [para. 70].

Gaetz v. Gaetz (1996), 144 Sask.R. 268; 124 W.A.C. 268; 24 R.F.L.(4th) 72 (C.A.), refd to. [para. 78].

Canada v. Smith and Stevens (1983), 29 Sask.R. 30 (Q.B.), refd to. [para. 79].

Farr v. Farr, [1984] 1 S.C.R. 252; 52 N.R. 326; 34 Sask.R. 81; [1984] 4 W.W.R. 1, refd to. [para. 85].

Statutes Noticed:

Matrimonial Property Act, S.S. 1979, c. M-6.1, sect. 2(e), sect. 23(1)(c) [para. 77].

Authors and Works Noticed:

Jowitt, The Dictionary of English Law (2nd Ed. 1977), p. 1447 [para. 26].

McLeod, James, Annotation to Flett v. Flett (1992), 43 R.F.L.(3d) 24, generally [para. 25].

Counsel:

B.J. Scherman, for the petitioner;

B.M. Singer, Q.C., for the respondent.

This matter was heard on February 24, 1998, before Wilkinson, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following judgment on February 24, 1998.