A section of a geode containing minerals.

S.B. v T.B., SKCA 65

Case Reporter

Written by Ty Schmidt, Supervised by Rebecca Jaremko-Bromwich

S.B. v T.B., 2022 SKCA 65, is a recent decision where the Saskatchewan Court of Appeal offered guidance as to how assets of a trust partnership in mining and mineral rights should be valued in the context of dividing family property following a marital breakdown. In short, the correct approach to this valuation is “to determine the value of [the spouse’s] interests in the trust and whether and how much of it constitutes family property for the purposes of division.”[1]

S.B. and T.B. married in 1994 and became separated in 2016. Prior to separation, S.B.’s father, L.B., created a partnership between himself and a discretionary family trust (of which, both S.B. and T.B. were beneficiaries). He subsequently executed a Mineral Transfer Agreement that transferred the entirety of his personally-held mineral rights to the partnership. As a result, “the mineral rights were the only asset of the partnership, and the partnership the only asset of the trust”.[2] When L.B. passed away, S.B. and his sister became the registered owners of the mineral titles.

In the decision being appealed, the trial judge attributed to S.B. a 50 per cent interest in the mineral rights themselves. The Court of Appeal held this attribution to be an error which “fails to account for the complex arrangement by which the beneficial ownership of the mineral rights was divided…The proper step would have been to value the trust and, more specifically, the respective interests in the trust held by S.B. and T.B. as beneficiaries.”[3]

The Court of Appeal further found that the trial judge neglected to pierce the veil of the trust to find out what amount of control and interest each of the former spouses enjoyed in it. While it seemed that S.B. enjoyed sufficient powers in the trust to deem his interest to be family property, it is entirely possible that a different conclusion could be arrived at considering that “S.B. is not the sole trustee and does not maintain exclusive decision-making authority with respect to the trust.”[4]

The Court of Appeal remitted the matter back to the Court of Queen’s Bench to properly determine the values of S.B. and T.B.’s respective interests in the trust and the partnership.

[1] 2022 SKCA 65 at para 97.

[2] Ibid at para 73.

[3] Ibid at para 74.

[4] Ibid at para 76.

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