Court of Appeal Finds No Obligation to Generate Income from Divided Family Property

In Bergquist v Bergquist, the Court of Appeal for Saskatchewan rejected the argument that a recipient of family property through a property division must use that property to generate an income.

The facts of the case are straightforward:  The parties separated after 26 years of marriage and had been involved in various businesses during the marriage.  The wife did the book-keeping and stayed home with the parties’ children.  The trial judge found that the wife had experienced economic disadvantage due to the breakdown of the marriage and that the husband had been correspondingly advantaged.  The wife was 58 years old at the time of the separation and 63 years old at the date of judgement.  She had not sought employment outside of the family business and was hesitant about entering the job market.  The trial judge found that the wife was not required to work for a third-party and declined to impute income to her for spousal support purposes.

The husband appealed, arguing that income should be imputed to the wife based upon her estimated earning ability of $11.00 to $14.00 per hour.  In addition, as the wife had received $1.8-million in the property settlement, which included the family home, the family cottage and her share in the capital invested in the family business, the husband argued that the wife should use and rely on those assets to generate income for herself.

The Court of Appeal upheld the trial judge’s decision not to impute income to the wife because of her age and education, agreeing that it unreasonable to expect a 63-year-old woman, who had only ever worked in the family business and with only self-taught skills, to seek employment in the open market.

Moreover, the Court of Appeal also upheld the trial judge’s decision that the wife should not be obligated to sell or use the assets that she received from the property settlement in order to generate an income.  Because the house and cottage were part of her previous standard of living, as long as the resources existed to maintain that standard of living, the Court held that there is no reason that she should be required to sell these assets.

In the leading Supreme Court of Canada decision in Boston v Boston, the Supreme Court found that where spousal support plays a compensatory role in marriage breakdown, it may be unreasonable to expect the payee spouse to generate investment income from the matrimonial home.  Boston shows that, as far as it is practicable, the support payments should provide a level of income sufficient to maintain a lifestyle that is comparable to that enjoyed during the marriage.

In Bergquist, the Court of Appeal followed Boston and rejected the husband’s appeal that the wife should be required to live on capital and/or generate income from the assets that she received during the property settlement.

Bergquist v Bergquist, 2014 SKCA 20