Mar 17, 2014

Summary of Johnson v Johnson

Johnson v Johnson, 2012 SKCA 87 (CanLII)
The parties divorced and their matrimonial property was divided by a trial of the matter in Queen's Bench. The appellant appealed the decision arguing that the trial judge erred on the following grounds: 1) in holding the loan payable to his parents was statute-barred when The Limitations Act had not been pled. The Court reviewed the evidence presented at trial and noted that it was a demand loan made in 1995. The respondent had stated in her written and oral submissions that the debt owed was barred by The Limitations Act (without identifying the relevant period) and therefore should not be taken into account in the division of property. Both parties acknowledged that the loan had not been paid. The appellant stated that it was unfair for the trial judge to hold that the loan was statute-barred without it being properly pled in accordance with Queen's Bench Rule 142, although he did not provide any evidence whether the failure had caused him any prejudice or the steps he would have taken if the Act had been pled or the basis on which he challenged the loan being affected by the Act. The Court noted that in the context of family law, a debt defined as statute-barred was taken to mean that a trial judge had been satisfied that a spouse had a viable limitation defence to any proceeding a creditor might bring to collect a debt and therefore the debt should not be taken into account in the division of the family property. It is well established though that loans similar to the one in question can be taken into account under s. 20 and 21 of The Family Property Act. As the appellant argued that distribution of the property should be unequal based on the loan being an enforceable obligation of the respondent and him, the burden rested on him to demonstrate that the loan was legally enforceable against the respondent at the date of her petition. 2) in finding the New Holland combine was encumbered by a large loan, in the absence of any evidence of any loan obligation. The Court reviewed the trial judge's comments and concluded that he had mistaken which combine was involved. 3) by not taking into account his farming losses when calculating his child support as provided by the Federal Child Support Guidelines. This ground entailed the Court examining the appellant's IT return and confirmed that his employment income as a firefighter was $69,000 and his claimed farming losses from 2002-2006. There was no evidence provided regarding the long-term viability of the farming operation. The trial judge had determined the appellant's net income without considering the farming losses relying on his interpretation of the ratio in Nichol v. Johnson and on the fiat issued with respect to the petition for interim child support in this case which based the support on the appellant's net income as a firefighter. 4) by not applying the common law presumption of advancement and the 'clean hands' doctrine as they applied to the lands conveyed by respondent's father to her. The Court reviewed the evidence of the transactions that had occurred where the respondent's father had transferred land to the respondent and his acknowledgement that he had conveyed the lands for the purpose of avoiding writs of execution attaching to them. The appellant argued that the trial judge erred in holding that the respondent held the lands in trust for her father and were therefore not family property because the presumption of advancement applied. Thus the lands were transferred as unconditional gifts. The respondent had not claimed any interests in the lands she held in trust for her father. 5) that costs should not have been awarded against him.HELD: 1) The Court held that the appellant had not met the burden of proving that the respondent would not have a viable limitation defence to any proceeding brought by his parents. The trial judge had not erred in considering the potential defence raised by the respondent when she had not plead the provisions of The Limitations Act as required by Rule 142 because the appellant's parents had not demanded repayment and therefore there was no existing proceeding and the Rule did not apply. 2) The Court set aside the trial judge's decision and declared that the equipment was the appellant's exempt property. 3) The Court held that the trial judge erred in his interpretation of Nichol and held that the fiat regarding interim child support did not apply. A Court cannot ignore farming losses and determine a party's net income based solely on a party's largest source of income for the purposes of child support. The Court held though that the evidence established that the appellant's farming operation was not economically viable and therefore it would be inappropriate to take the farming losses into account in calculating the appellant's child support obligations. Where such losses are claimed, evidence should be submitted to the Court confirming the current or long-term viability of the farming operation. 4) The Court held that the trial judge did not err because the presumption of advancement did not apply in this case as the respondent was at all times an adult child able to provide for herself. Further, the appellant could not rely on the Statute of Elizabeth or The Fraudulent Preferences Act because the respondent's father was never indebted to him and there was no evidence that the impugned conveyances to the respondent were adverse to his interest. 5) The Court held that an appellate court should not interfere with an order for costs unless it was demonstrated that the lower court had erred in the exercise of its discretion. The trial judge had not so erred in awarding the respondent her costs. The appeal was dismissed but for the awarding to the appellant the exemption for the combine.