Top court criticizes ‘unfair’ laws

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This article was published 15/07/2011 (5198 days ago), so information in it may no longer be current.

OTTAWA — Bankruptcy and divorce laws in Manitoba are not flexible enough to award a Manitoba woman money she was granted as part of her divorce settlement, the Supreme Court ruled Thursday.

Justice Louis LeBel acknowledged in his decision the law is unfair and urged Parliament to amend bankruptcy laws to rectify the situation. But he still had to dismiss Susan Wilma Schreyer’s appeal, though he did so without awarding costs to her former husband, Anthony Leonard Schreyer.

The case surrounds Susan’s quest to get a share of the value of the family farm she and Anthony acquired before they divorced. The property was in his name only. They married in 1980 and separated in 1999.

In the divorce settlement, Susan was to receive $41,063.48 as an equalization payment based on the value of the family farm her husband bought from his parents in 1997. Manitoba law doesn’t require the division of assets but does require the total value of assets held by two partners to be calculated. If one of the two has assets worth more than the other, an equalization payment is ordered.

The trouble began when Anthony Schreyer filed for bankruptcy.

Federal law says payments such as alimony and child support are not cancelled out by a bankruptcy filing, however no such exemption exists for equalization payments.

Ultimately, that meant the equalization payment was wiped out when the bankruptcy claim was accepted.

However, Anthony got to keep the farm despite the bankruptcy because family farms are exempt as assets that are lost in a bankruptcy.

Susan Schreyer’s lawyers argued the equalization payment should be upheld because the farm was not lost in the bankruptcy. She also argued that she was never informed of the bankruptcy and therefore could not file a claim to the property as part of that process.

LeBel found the bankruptcy act did not give him any room to award her the equalization payment without substantially changing the law.

“I do not doubt that an outcome like the one in this appeal looks unfair, given that the appellant’s equalization claim was based primarily on the value of an asset — the farm property — which was exempt from bankruptcy and therefore not accessible to other creditors,” wrote LeBel.

LeBel further noted it will require an act of Parliament to change the bankruptcy laws to include an equalization payment in a similar way as alimony or child support so someone can’t get out of paying equalization to a former spouse by filing for bankruptcy.

Alain Hogue, the Winnipeg lawyer representing Susan Schreyer, said his client was disappointed but “putting on a brave face.”

“It had been hoped the Supreme Court would remedy this unjust legislation,” said Hogue.

He said a Senate committee recommended in 2003 the bankruptcy law be changed to exempt equalization payments but no government has since done anything about it.

Hogue however said the fight will continue based on advice in the Supreme Court decision to pursue the matter by asking a court to set aside the bankruptcy act as it applies to her.

“There is a glimmer of hope for Mrs. Schreyer,” he said.

With interest, the amount she is owed would likely be close to $75,000 he said.

“That’s huge for someone who earns minimum wage in Somerset waiting on tables,” he said.

mia.rabson@freepress.mb.ca