Mar 17, 2014

Summary of Bellamy v. Hill

Bellamy v. Hill, 2005 SKQB 333 (CanLII)
After 5 years of marriage, the parties went their separate ways. The task of valuing property was greatly complicated by the husband's commingling of corporate and personal income, assets and liabilities throughout the marital relationship, by fundamental changes in the parties' financial status after separation and the husband's subsequent assignment into bankruptcy. Both parties represented themselves and both parties asked for an unequal distribution of family property.HELD: 1) Regarding the contributions by parents after separation, the Court was of the view that the contributions of the wife's father to the acquisition of the condo were made after separation and with no intention to benefit the husband. The wife's interest is roughly the initial investment, or alternatively one half of the equity based on a value of $122,000 less the mortgage of $112,000. 2) Of the premarital exemptions claimed, the only ones allowed as satisfying the requirements of the Act, together with the required standards of proof are the RRSP exemptions. The others relate to household goods that cannot be the subject of exemptions. 3) As to the $40,000 exemption claimed for premarital business interests, most of the realizable value in that interest was liquidated in 2001. No 'tracing' exercise was attempted and that exemption must fail. Even if it had been established, the effect of bankruptcy is that the husband's premarital exemptions under The Family Property Act become part of the bankrupt's estate for distribution to the unsecured creditors, at least to the extent that it does not otherwise constitute exempt property by provincial law and thus is protected by virtue of s. 67(1)(b) of the Bankruptcy and Insolvency Act. 4) The husband declared unsecured debts of $172,930 on assignment in bankruptcy. The trustee holds no property or assets of the bankrupt available for distribution to the creditors. There are not apparent claims that will survive the bankruptcy and he will be entitled to an automatic discharge in January 2006. The only family debt left will be the CIBC joint line of credit. The full amount was declared in bankruptcy but because of the joint and several nature of the liability, the bank presumably is entitled to proceed against the wife to the extent of the balance remaining after any distribution in the bankruptcy proceedings. 5) The gross value of the distributable family property is $57,061. The net value for distribution is roughly $30,377, if the $26,684 remains owing on the line of credit. An equal distribution would leave each spouse with $15,188.50. 6) On the rough figures available to the Court, an equal distribution would result in the proceeds of sale in trust being paid out in the amount of $15,188.50 to the trustee for distribution to the husband's creditors and the balance of $10,811.50 being paid to the wife. The wife would then have family assets of $31,061 plus $10,811.50 cash, less the liability for the CIBC joint line of credit equaling $15,188.50. That is the distribution ordered.