Roseneck v. Gowling [Indexed as: Roseneck v. Gowling]
62 O.R. (3d) 789
[2002] O.J. No. 4939
Docket No. C36550
Court of Appeal for Ontario,
Catzman, Weiler and Armstrong J.
December 24, 2002
Family law -- Property -- Equalization of net family property -- Ownership of property -- Husband purchasing matrimonial home before marriage and wife making pre-marital monetary contributions to renovation of home -- Parties holding matrimonial home in joint tenancy at end of marriage -- Trial judge finding that husband was unjustly enriched as of date of marriage by wife's pre-marital contributions -- Trial judge ordering that monetary compensation in amount of wife's monetary contributions to renovations be paid to wife and included in her pre-marriage holdings, enabling wife to deduct this sum in calculating her [page790] net family property -- Husband's appeal allowed -- Calculation of spouse's net family property must begin by ascertaining property owned by spouse as of date of separation, not date of marriage -- Wife having joint interest in matrimonial home as at date of separation -- Wife not suffering deprivation -- Elements of unjust enrichment not made out even if date of marriage chosen as relevant date.
Before the parties' marriage in 1996, the husband purchased a property that became the matrimonial home, and the wife contributed almost $89,000 of her own money towards renovations to the home. After the marriage, title to the property was transferred into the names of both parties as joint tenants. The property was held in joint tenancy when the parties separated in 2000. The husband paid the mortgage, taxes and utilities on the matrimonial home before and after the marriage. The trial judge found that, as of the date of the marriage, the husband was unjustly enriched by the wife's pre- marital contribution towards the renovations. As a remedy for the unjust enrichment, she ordered that monetary compensation in the amount of almost $89,000 be paid to the wife and included in her pre-marriage holdings, thus enabling the wife to deduct this sum in calculating her net family property. The trial judge declined to grant the remedy of a constructive trust, which would have resulted in the wife having an interest in the matrimonial home before marriage, the value of which would not have been deducted from her property owned at the end of the marriage. Given the amount of the unjust enrichment claim, the trial judge rejected the wife's claim for an unequal division of property under s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3, but stated that she would have made an unequal division and ordered an additional payment of $25,000 if there had not been unjust enrichment. The wife's claim for spousal support was dismissed. The husband appealed and the wife cross-appealed.
Held, the appeal should be allowed; the cross-appeal should be dismissed.
The calculation of a spouse's net family property does not begin by ascertaining what the spouse owned as at the date of the marriage. Rather, the calculation begins by ascertaining the property that a spouse owns as at the date of separation. In this case, title to the matrimonial home was held in joint tenancy as at the date of separation. Section 14 of the Act creates a presumption of joint ownership of property held in joint names. The trial judge made no affirmative finding that this presumption was rebutted. Each party was therefore entitled to a beneficial joint interest in the property as at the date of separation. In ascertaining whether unjust enrichment exists, the court considers whether a benefit should be retained. It is not until the end of the relationship or an application is made to the court for relief that the court ascertains whether justice does not permit the benefit to be retained. Having regard to the joint interest of the parties in the property at the time of separation, the wife no longer suffered a corresponding deprivation.
Even if the date of marriage was chosen as the relevant date, the elements of unjust enrichment were not established. In relation to the third element, the absence of any juristic reason for the enrichment, it is the legitimate expectation of the parties that is of fundamental concern. There was no suggestion that the wife expected to be reimbursed for the money she put into the home. At the date of marriage, she expected that she was contributing to a joint venture. There was no absence of a juristic reason for deprivation at the date of the marriage. Further, even if all of the elements of unjust enrichment existed, the appropriate remedy in the circumstances of this case was a constructive trust, not monetary compensation. The wife's contribution to the matrimonial home was substantial and direct. She expected that the house would be the husband's and hers, and no [page791] doubt she expected that the improvements made to the house would be reflected in its value. A constructive trust for one-half the property best accorded with the expectations of the parties.
The trial judge erred in alternatively ordering an equalization in unequal shares pursuant to s. 5(6) of the Family Law Act. In considering s. 5(6)(e) of the Act, whether the amount received by way of equalization is disproportionately large in relation to the period of cohabitation, and s. 5(6)(h), any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property, the trial judge concluded that with the amount awarded for unjust enrichment, the result of equalizing the net family properties was not unconscionable, but that if that amount were excluded, it would create an unconscionable situation that should be remedied. Her reasons reflected the fact that the wife "lost" the better part of an inheritance by contributing it to the matrimonial home while the husband still had most of his inheritance. This fact could not be considered in isolation, particularly when the husband's contribution to the acquisition and improvement of the matrimonial home from funds accumulated prior to marriage was substantial. The matrimonial home was the main asset in the calculation of net family property. It did not increase in value but instead was worth less. It was not unconscionable that both parties bear this result, nor was it unconscionable that the husband emerge from the marriage with more assets, given that his inheritance was $76,000 more than the amount that the wife contributed from her inheritance to the matrimonial home.
In dismissing the wife's claim for spousal support, the trial judge found that she and the husband had approximately the same earning capacity, that the wife was financially self-sufficient and that this was a relatively brief marriage. The court should not interfere with an award of or refusal to award spousal support unless the trial judge's reasons disclose material error or are clearly wrong. This standard was not met in this case. Assuming for the purposes of this appeal that an appellate court should consider afresh the question of support where, as here, the court has significantly altered the equalization payment by one spouse to another, there was no reason to award either compensatory or non-compensatory support in this case. The wife chose not to work for several years during the marriage. Having regard to the relatively equal earning power of the spouses both before and after the marriage, the wife's loss of opportunity to provide for herself by making contributions to her R.R.S.P. during marriage was not a cost that should be borne in the form of compensatory support by the husband. Non-compensatory support may be awarded where there is an economic dependency that may be due to a variety of factors such as age, illness or disability that need not necessarily be connected to the marriage. The evidence in this case did not support a conclusion that a non-compensatory order for support was required to address and cushion the effect of the marriage breakup.
APPEAL and CROSS-APPEAL from orders in family law proceedings.
Cases referred to Berdette v. Berdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513, 47 O.A.C. 345, 81 D.L.R. (4th) 194, 41 E.T.R. 126, 33 R.F.L. (3d) 113 (C.A.) [Leave to appeal to S.C.C. dismissed (1991), 85 D.L.R. (4th) viiin, 137 N.R. 388n, 55 O.A.C. 397n], affg (1988), 1988 4605 (ON SC), 66 O.R. (2d) 410, 29 E.T.R. 303, 14 R.F.L. (3d) 398 (H.C.J.), supp. reasons (1988), 1988 8617 (ON SC), 66 O.R. (2d) 428, 16 R.F.L. (3d) 360 (H.C.J.); Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, 63 B.C.L.R. (3d) 77, 169 D.L.R. (4th) 577, 236 N.R. 79, [1999] 8 W.W.R. 740, 44 R.F.L. (4th) 1; Hamilton v. Hamilton (1996), 1996 599 (ON CA), 92 O.A.C. 103 (C.A.); Harrington v. Harrington (1981), 1981 1762 (ON CA), 33 O.R. (2d) 150, 123 D.L.R. (3d) 689, 22 R.F.L. (2d) 40 (C.A.); Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518, 138 Man. R. (2d) 40, 172 D.L.R. (4th) 577, 240 N.R. 312, 202 W.A.C. 40, [1999] 8 W.W.R. 485, 46 R.F.L. (4th) 1; [page792] Linton v. Linton (1990), 1990 2597 (ON CA), 1 O.R. (3d) 1, 42 O.A.C. 328, 75 D.L.R. (4th) 637, 41 E.T.R. 85n, 30 R.F.L. (3d) 1 (C.A.), affg (1988), 1988 4680 (ON SC), 64 O.R. (2d) 18, 49 D.L.R. (4th) 278, 29 E.T.R. 14, 11 R.F.L. (3d) 444 (S.C.); Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813, 81 Man. R. (2d) 161, 99 D.L.R. (4th) 456, 145 N.R. 1, [1993] 1 W.W.R. 481, 43 R.F.L. (3d) 345; Peel (Regional Municipality) v. Canada, 1992 21 (SCC), [1992] 3 S.C.R. 762, 98 D.L.R. (4th) 140, 144 N.R. 1, 12 M.P.L.R. (2d) 229; Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, 77 B.C.L.R. (2d) 1, 101 D.L.R. (4th) 621, 150 N.R. 1, [1993] 3 W.W.R. 337, 48 E.T.R. 1, 44 R.F.L. (3d) 329 Statutes referred to Family Law Act, R.S.O. 1990, c. F.3, ss. 4, 5, 30, 33(8), (9) Authorities referred to Rogerson, C., "Spousal Support Post-Bracklow: The Pendulum Swings Again" (2001) 19 C.F.L.Q. 185
James G. McLeod, for respondent. Hendrick Keesmaat, for appellant.
The judgment of the court was delivered by
1WEILER J.A.: -- The primary issue on this appeal is the interrelation between the equitable doctrine of unjust enrichment and the Family Law Act, R.S.O. 1990, c. F.3 (the "Act" or "FLA"), arising from an order of Wallace J. establishing an equalization payment owed by the appellant, Gowling, to the respondent, Roseneck. The further issues of unequal division of matrimonial property and spousal support are also under appeal.
2Section 5 of the Act provides that when spouses divorce or permanently separate, the spouse whose net family property is the lesser of the two net family properties is entitled to an equalization payment of one-half the difference in value between them. Under s. 4, the calculation begins by ascertaining the title to property owned by each spouse as at the date of separation. Beneficial ownership of that property is then ascertained taking into account trust principles where applicable. Following this, the court determines the relevant deductions and exclusions under the Act: see Hamilton v. Hamilton (1996), 1996 599 (ON CA), 92 O.A.C. 103 (C.A.) at paras. 26 and 27 and, generally, Berdette v. Berdette (1991), 1991 7061 (ON CA), 3 O.R. (3d) 513, 33 R.F.L. (3d) 113 (C.A.). The value of property that a spouse owned on the date of the marriage, for example, does not form part of the spouse's net family property as defined in s. 4(1), and is excluded. The value of the matrimonial home is protected by the Act for policy reasons in order to ensure that both spouses are entitled to half its value. Subject to this and [page793] other provisions set out in s. 4, the value of property that a spouse owned on the date of marriage is subtracted from the figure for the value of property owned at the end of the marriage. This figure forms the basis for calculating the net difference in value of the spouse's properties which is then subject to equalization.
3The trial judge found that, as of the date of marriage, Gowling was unjustly enriched by Roseneck's pre-marital contribution in money towards the renovation of the matrimonial home totalling $88,779.44. As a remedy for the unjust enrichment, she ordered that monetary compensation in this amount be paid to Roseneck and included in her pre-marriage holdings, thus enabling Roseneck to deduct this sum in calculating her net family property. Justice Wallace declined to grant the remedy of a constructive trust which would have resulted in Roseneck having an interest in the matrimonial home prior to marriage, the value of which would not have been deducted from her property owned at the end of the marriage under s. 4. The reason she gave was that ". . . the parties had not lived together for any significant length of time." Although the property was held in joint tenancy at the end of the marriage, the trial judge also attributed the entire amount of the value of the matrimonial home to Gowling on his net family property statement. The trial judge's calculation of the parties' respective net family property is set out in the Net Family Property Statement attached as Schedule "A" to these reasons [Schedule "A" omitted]. [See Note 1 at end of document]
4Roseneck also made a claim for an unequal division of the matrimonial property. Where the equalization of net family property would be unconscionable having regard to the factors set out in s. 5(6), the court may vary the amount of the equalization payment to "an amount that is more or less than half the difference between the net family properties". Given the payment of the unjust enrichment claim, the trial judge rejected Roseneck's claim for an unequal division of property under s. 5(6) of the FLA, but stated she would have made an unequal division and ordered an additional payment of $25,000 if there had not been unjust enrichment.
5Finally, the trial judge considered Roseneck's claim for support. She noted the brevity of the marriage and considered the income of the parties. She found that Roseneck's earning capacity was equal to that of Gowling's, and dismissed her claim for spousal support. [page794]
6As a result, the court ordered Gowling to make an equalization payment under s. 5(1) to Roseneck in the amount of $31,130.68. In view of this order, the court dismissed Roseneck's request for an unequal division of the net family property and support. Roseneck cross-appeals from the dismissal of her claim for spousal support. Gowling asks:
(1) that Roseneck's claim for unjust enrichment be dismissed;
(2) that the dismissal of Roseneck's claim for an unequal share of net family property be upheld;
(3) that Roseneck's cross-appeal from the dismissal of her claim for spousal support be dismissed; and
(4) seeks costs.
7For the reasons that follow, I would allow the appeal and dismiss the cross-appeal.
The Facts
The matrimonial home
8Gowling and Roseneck cohabited in a common-law relationship in Burlington from 1994 to 1995. They lived in a home that Roseneck had inherited from her mother.
9During 1995, the parties separated for a brief period and during this time Gowling purchased a property at 398 Cedar Avenue, Turkey Point (the "Cedar Avenue property"), for $214,000. Gowling made a down payment of $24,000 on the purchase price from savings and funds withdrawn from his Registered Retirement Savings Plan. He financed the balance of the purchase price by way of a mortgage for $190,000. In the months prior to their marriage, renovations to the home were undertaken, and when the cost of the renovations exceeded the initial estimates, Gowling contributed an additional $59,865 of his own funds for a total of $83,865.
10In the spring of 1996, Roseneck sold her property in Burlington, realizing approximately $106,000 from the sale, and moved into the Cedar Avenue property with Gowling. While the Cedar Avenue property was being renovated prior to their marriage, Roseneck contributed almost $89,000 from the proceeds of sale of her Burlington home toward the renovations.
11After their marriage in June 1996, the parties completed the renovations to the matrimonial home, landscaped the property and installed a deck. Roseneck, who was not working outside [page795] the home for the better part of the marriage, did the painting and decorating, and some of the landscaping and gardening. The cost of installation of the deck was paid for with funds withdrawn from Roseneck's R.R.S.P.
12Title to the Cedar Avenue property was transferred into the names of both spouses as joint tenants on June 7, 1997. The first mortgage continued to be in Gowling's name alone and, except for one month, he alone paid the mortgage, taxes and utilities on the matrimonial home both before and after the marriage. The only carrying costs for the home paid by Roseneck were one instalment on the mortgage and some hydro bills.
13In 1997, Gowling also changed his chequing account at the C.I.B.C. to a joint account. This account was used for payment of the household expenses. The only money contributed by Roseneck to the C.I.B.C. joint account during their relationship was $2,177.83 from the proceeds of her Registered Retirement Savings Plan. The GST rebate for the renovations was also deposited to the joint account.
14The parties separated in June 2000, but continued to share the use of the matrimonial home. Gowling alone paid the mortgage between June and September 2000. In September 2000, Sills J. granted Roseneck exclusive possession of the matrimonial home and ordered Gowling to make one-half of the mortgage payments.
15In March 2001, Gowling purchased the matrimonial home for $282,000. This was the listing price for the property pursuant to an order made by Festeryga J. earlier that month after the parties were unable to agree on the listing price themselves.
16The matrimonial home was the main family asset. Roseneck received one-half of the net equity in the amount of $53,557, while Gowling's share remains in trust pending the resolution of the parties' respective claims.
Financial circumstances of the parties
17At the time of the trial, Gowling was 40 years old and Roseneck was 46. There were no children of the marriage. Both parties had previously been married. Gowling had a 24-year-old daughter by his prior marriage.
18The parties both worked in sales for Laidlaw Transport prior to their marriage. Roseneck became unhappy in her work because of conflict with her supervisor, and she left her employment in May 1996, approximately one month prior to their marriage. Roseneck received Employment Insurance benefits for one year after leaving Laidlaw. In 1997 and 1998 she did some painting and decorating, and earned approximately $10,000 over two [page796] years from this work. In May 1999, she obtained a sales position similar to the one held at Laidlaw with a competitor company. She worked three days per week at a rate of $250 per day. At all times during the marriage, Roseneck maintained a separate account in her name at the Bank of Montreal, where she deposited both her Employment Insurance payments in the first year after the marriage and her employment income when she resumed employment in May 1999.
19Wallace J. found that the parties made a joint decision that Roseneck would withdraw from the workforce and a joint decision based on Roseneck's wishes that resulted in her re- entering the workforce.
20In 2000, Roseneck's employment income (including commissions) was $62,168. Roseneck testified at trial that in 2001 her commissions decreased from the previous year, that her current job was not secure and that she did not have the benefits she had in her former position. Although she was initially hired on a six-month contract, at the time of trial she was no longer on contract but was earning in excess of $45,000 per year working three days a week. The trial judge found that Roseneck's income would be similar to Gowling's if she was working full-time.
21Prior to their marriage, Gowling was earning $80,000 to $90,000 per year at Laidlaw. Gowling's employment at Laidlaw was terminated in January 1997. He received a severance package, and transferred a portion of the severance to his Registered Retirement Savings Plan. He was unemployed for approximately four months. He then accepted a position with a company called Johnson Controls (at a lower salary of approximately $60,000), but was let go less than a year later. After one month of unemployment, he obtained another sales position with DeCloet Greenhouses. He was still employed at DeCloet at the time of trial, earning $60,000 to $65,000 per year.
22Over the four years of the marriage, Gowling cashed in approximately $80,000 from his Registered Retirement Savings Plans. Roseneck withdrew $28,600 from her Registered Retirement Savings Plans during the same period.
23In February 2000, Gowling received an inheritance of approximately $165,000 from his late mother. Gowling provided his daughter with funds out of his inheritance, but did not disclose this to Roseneck because she objected when he gave money to his daughter. At the time of trial he had approximately $133,000 remaining from that inheritance. [page797]
Analysis
1. Should the claim for unjust enrichment and the remedy of a monetary award be upheld?
24I propose to deal first with the claim for unjust enrichment. In order for a court to find that there has been unjust enrichment, three requirements must be met. The court must make a finding that (1) the person holding title to property has been enriched, (2) the non-titled claimant has suffered a resulting corresponding deprivation, and (3) there must be an absence of any juristic reason for the enrichment: Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, 101 D.L.R. (4th) 621.
25Roseneck's position is that the Act envisages two valuation dates: the date of marriage and the date of separation. Roseneck submits that inasmuch as a spouse is entitled to deduct the net value of his or her property on the date of marriage, a determination of whether there has been an unjust enrichment should also be made as of the date of marriage. Under this approach, Roseneck states that she had a right to make a claim for unjust enrichment when she married Gowling as he was enriched by her monetary contribution to the renovation of his property, she was correspondingly deprived, and he had no juristic right to retain the enrichment without further accounting. The right to make a claim, it is submitted, is a receivable and should be included as an asset in calculating the total amount of the property excluded from sharing as of the date of marriage.
26I would reject this argument for several reasons.
27First, Roseneck's position does not accord with the statutory scheme for calculating a spouse's net family property. The calculation does not begin by ascertaining what a spouse owned as at the date of the marriage. The calculation begins by ascertaining the property that a spouse owns as at the date of separation. Here, title to the matrimonial home was held in joint tenancy as at the date of separation. Section 14 of the Act creates a presumption of joint ownership with respect to property held in joint names. The trial judge made no affirmative finding at trial that this presumption was rebutted. Each spouse was therefore entitled to a beneficial joint interest in the property as at the date of separation.
28In ascertaining whether unjust enrichment exists, the court considers whether a benefit should be retained. As noted by McLachlin J. in Peel (Regional Municipality) v. Canada, 1992 21 (SCC), [1992] 3 S.C.R. 762, 98 D.L.R. (4th) 140 at para. 41: [page798]
At the heart of the doctrine of unjust enrichment, whether expressed in terms of the traditional categories of recovery or general principle, lies the notion of restoration of a benefit which justice does not permit one to retain.
(Emphasis added)
29It is not until the end of the relationship or an application is made to the court for relief that the court ascertains whether justice does not permit the benefit to be retained.
30Having regard to the joint interest of the parties in the property at the time of separation, she no longer suffered a corresponding deprivation. She had received an interest in the property that was equal to Gowling's interest.
31Second, even if the date of marriage is chosen as the relevant date, the elements of unjust enrichment are not made out. In relation to the third element, the absence of any juristic reason for enrichment, it is the legitimate expectation of the parties that is of fundamental concern: Peter v. Beblow, supra, at paras. 9 and 10 of the reasons of McLachlin J. There is no suggestion in the evidence that Roseneck expected to be reimbursed for the money she put into the home. The legitimate expectation of the parties was, on Roseneck's evidence, that she was contributing to what would become "our home for the future". Thus, at the date of marriage, Roseneck expected that she was contributing to a joint venture. The fact that her expectation was fulfilled after the marriage does not mean that there was an absence of any juristic reason for her deprivation at the date of the marriage.
32Third, even if I were to accept that all of the elements of unjust enrichment exist, I would not agree that the appropriate remedy was monetary compensation. In Peter v. Beblow, supra, at paras. 29-34, McLachlin J. for herself, La Forest, Sopinka and Iacobucci JJ. discussed the two alternative remedies for unjust enrichment: monetary compensation or a constructive trust.
33When monetary compensation is ordered, the claimant is given the "value received" by the other party. The value conferred on the property is irrelevant. When a constructive trust is imposed, the claimant receives an interest in the property and receives the "value survived" of the contribution. In the latter instance, regard is had to the extent to which the property has been improved in deciding the property interest. A minor or indirect contribution will not give rise to the imposition of a constructive trust.
34McLachlin J. held that in determining the proper remedy in unjust enrichment cases, the same general principles apply in both commercial and family situations. In order for a constructive trust to be imposed, monetary compensation must be inadequate and there must be a link between the services rendered [page799] and the property in which the trust is claimed. Having said this, McLachlin J. added at para. 26:
I echo the comments of Cory J. [who wrote concurring reasons for himself, L'Heureux-Dubé and Gonthier JJ.] at 1023 that the courts should exercise flexibility and common sense when applying equitable principles to family law issues with due sensitivity to the special circumstances that can arise in such cases.
And at para. 30 she observed:
Moreover, a "value survived" approach arguably accords best with the expectations of most parties; it is more likely that a couple expects to share in the wealth generated from their partnership, rather than to receive compensation for the services performed during the relationship.
35Roseneck's contribution to the matrimonial home was substantial and direct. She expected that the house would be "our home". No doubt she expected that the improvements made to the matrimonial home would be reflected in its value. A constructive trust with respect to one-half the property best accorded with the expectations of the parties.
36One of the reasons why the trial judge was moved to adopt the approach she did was undoubtedly the fact that Roseneck had in effect contributed her inheritance to the matrimonial home and would not be excluded, whereas Gowling's inheritance, which had not been so contributed, was. No doubt the trial judge felt it was unfair for Roseneck to be substantially worse off at the end of the short relationship when, at the beginning of the relationship, she was in a slightly stronger financial position compared to Gowling. The fact that the trial judge was of the opinion that the result was unfair cannot ground recovery on the basis of unjust enrichment when the legal test for recovery is not met. As the Supreme Court of Canada held in Peel, supra, at pp. 802-03 S.C.R.:
The courts' concern to strike an appropriate balance between predictability in the law and justice in the individual case has led them in this area, as in others, to choose a middle course between the extremes of inflexible rules and case by case "palm tree" justice. The middle course consists in adhering to legal principles, but recognizing that those principles must be sufficiently flexible to permit recovery where justice so requires having regard to the reasonable expectations of the parties in all the circumstances of the case as well as to public policy. Such flexibility is found in the three-part test for recovery enunciated by this Court in cases such as Pettkus v. Becker, supra. Thus recovery cannot be predicated on the bare assertion that fairness so requires. A general congruence with accepted principle must be demonstrated as well.
37I would set aside the trial judge's conclusion that Roseneck was entitled to a claim for unjust enrichment and monetary compensation. [page800]
2. Did the trial judge err in alternatively ordering an equalization in unequal shares pursuant to s. 5(6) of the Family Law Act on the facts of this case?
38Section 5(6) provides:
5(6) Variation of share -- The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,
(a) a spouse's failure to disclose to the other spouse debts or other liabilities existing at the date of the marriage;
(b) the fact that debts or other liabilities claimed in reduction of a spouse's net family property were incurred recklessly or in bad faith;
(c) the part of a spouse's net family property that consists of gifts made by the other spouse;
(d) a spouse's intentional or reckless depletion of his or her net family property;
(e) the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years;
(f) the fact that one spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse for the support of the family;
(g) a written agreement between the spouses that is not a domestic contract; or
(h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property.
39The parties agree that the "unconscionable" threshold is higher than "unfairness", "harshness" or "injustice".
40The trial judge reviewed the factors in s. 5(6) in detail. In relation to s. 5(6)(a), she considered the alleged failure of Gowling to disclose his debts at the time of marriage. The trial judge found that his only debts were a $13,000 bank loan flowing from the loss he incurred on the sale of his home in Hamilton and the mortgage registered on the matrimonial home. She stated "There is no persuasive evidence before me that the applicant requested or demanded information and was denied access to this financial information." Roseneck testified that she trusted Gowling and that is the reason she did not ask for such information. I am of the opinion, however, that the Act places an affirmative duty on a spouse to disclose any debts existing as at the date of the marriage, and that the other spouse does not have a duty to ask what debts are outstanding. [page801]
41The fact that Gowling did not disclose his $13,000 debt in existence as at the date of the marriage does not, however, appear to be the real basis of the claim for an unequal division of property. I note that in para. 18 of her affidavit sworn in support of her application on August 17, 2000, Roseneck asks for an unequal division of property, but the reasons she gives for an equal division being unconscionable do not include non-disclosure of a debt as at the date of marriage.
42In relation to s. 5(6)(b), the trial judge considered whether Gowling's debts and liabilities claimed in reduction of his net family property were incurred recklessly or in bad faith. In this respect, Roseneck's affidavit alleged that in the less than four years the marriage lasted, Gowling depleted his R.R.S.P. holdings by $75,000 and incurred gambling debts. The trial judge found that Roseneck was aware that debts incurred or moneys deregistered were, for the most part, made available to pay the family bills and to maintain the family's lifestyle. She further found that Roseneck benefited from the purchases, as did Gowling, and that they both enjoyed a very comfortable lifestyle with vehicles, watercraft and vacations.
43The trial judge acknowledged that some of this money went to sums made payable to Gowling's mother and daughter, and that shortly before separation Gowling incurred a gambling debt of between $4,000 and $8,000. She found, however, that this gambling debt appeared to be an isolated event and not enough to constitute a reckless incurring of debt in bad faith.
44The trial judge then stated:
The applicant's counsel asked the Court in submissions to make a finding of bad faith by the respondent's deregistration of almost $80,000 of R.R.S.P.s, because of the surreptitious nature in which he handled his financial affairs during the course of the marriage and because he has failed to make full and complete financial disclosure before trial.
I decline to do so at this time, having made a finding of unjust enrichment, which in my view compensates the applicant in some way for the losses that she suffered as a result of the benefit she conferred upon the respondent before the marriage. I would say however, that if I am found by some higher court to have erred in making a finding of unjust enrichment, I would be persuaded to review in greater depth the applicant's submissions about bad faith on the respondent's part by incurring those debts, and failing to disclose his bank accounts that would show specifically and clearly whether or not the monies that he did deregister flowed completely or almost completely to the benefit of the family unit.
45In considering s. 5(6)(c), the trial judge found the only apparent gift from one spouse to the other was a sea-doo from Gowling to Roseneck having a value of less than $6,000. She concluded: [page802]
There is no evidence of gifts, apart from the pre-marriage gift that has been addressed within the term of unjust enrichment, from the applicant to the respondent. Again, I would say that if I am found to have erred with respect to my finding that there was unjust enrichment, this subsection of s. 5(6) should be revisited by any reviewing court.
46With respect to other factors listed in s. 5(6), the trial judge found:
I find there is no intentional reckless depletion of net family property as contemplated by s-s. (d), and I further find that s-s. (f) and (g) are not applicable to the case before me.
47The trial judge made a finding that the money withdrawn from Gowling's R.R.S.P.s went mainly to maintain the parties' lifestyle. This finding was largely unchallenged on this appeal, as were her other findings, including the conclusion that the gambling debt of between $4,000 and $8,000 was an isolated event. The non-disclosure of the $13,000 debt prior to marriage would not, of itself, lead to the conclusion that an unequal division was "unconscionable".
48There remains for consideration the inter-relationship of s. 5(6)(e), whether the amount received by way of equalization is disproportionately large in relation to the period of cohabitation, and (h), any other circumstance relating to the acquisition, disposition, preservation maintenance or improvement of property.
49In relation to these two factors, the trial judge concluded that with the amount awarded for unjust enrichment, the result of equalizing the net family properties was not unconscionable. If, however, the amount awarded for unjust enrichment was excluded, the trial judge was of the opinion that, ". . . it would create an unconscionable situation that should be remedied." Her reasons reflect the fact that both parties received an inheritance but the wife "lost" hers because she contributed it to the matrimonial home. The trial judge also noted that the wife contributed work during the marriage that substantially improved the property. She observed that without an unequal division Roseneck would be leaving the marriage with far less assets than Gowling. Roseneck would have holdings of approximately $115,000 and Gowling $250,000.
50As I have indicated, inheritances are gifts that do not arise from the common effort of the parties and are therefore excluded from sharing unless contributed to the matrimonial home. The fact that Roseneck contributed the better part of her inheritance to the matrimonial home and that Gowling still had most of his cannot be considered in isolation, particularly when Gowling's contribution to the acquisition and improvement of the matrimonial home from [page803] funds accumulated prior to marriage was substantial. Had this money not been expended on the matrimonial home, Gowling, too, would have been entitled to deduct the amount he contributed, less his debt of $13,000, from the calculation of his net family property. Also, Gowling's mortgage payments made prior to the marriage would also have been deductible. Finally, the fact that Gowling made all the mortgage payments after the marriage, save for one, must be considered when weighing Roseneck's contribution in labour to the property during the marriage.
51The matrimonial home was the main asset in the calculation of net family property. Unfortunately, it did not increase in value taking into account the money expended on it but instead was worth less. It is not unconscionable that both parties bear this result. Nor is it unconscionable that Gowling emerge from the marriage with more assets given that his inheritance was $76,000 more than the amount that Roseneck contributed from her inheritance to the matrimonial home.
52Having reviewed the factors having a bearing on the unequal division of net family property with the trial judge's comments in mind, I have come to the conclusion that an equal division of net family property is not, in all the circumstances, unconscionable.
53In view of my conclusion that the result of equalizing the net family properties is not unconscionable, it is not necessary for me to resolve the question of whether the court may make an order under s. 5(6) which exceeds the difference between the spouses' net family property.
54I would not allow the alternative claim for unequal division of family property.
3. Should the cross-appeal respecting spousal support be allowed?
55Roseneck claimed spousal support pursuant to s. 30 of the Act which provides:
- Every spouse . . . has an obligation to provide support for himself or herself and for the other spouse . . . , in accordance with need, to the extent that he or she is capable of doing so.
56Section 33(8) of the Act sets out the purposes of an order for support, the relevant portions of which are:
33(8) An order for the support of a spouse . . . should,
(a) recognize the spouse's . . . contribution to the relationship and the economic consequences of the relationship for the spouse . . . ;
. . . . . [page804]
(c) make fair provision to assist the spouse or same- sex partner to become able to contribute to his or her own support; and
(d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (the Matrimonial Home).
57The factors listed in s. 33(9) relevant to this appeal include the current assets and means of the parties, their future assets and means, the capacity of the dependant spouse to contribute to his or her own support, the capacity of the other spouse to provide support, their ages and health, the dependant's needs having regard to their standard of living, the length of cohabitation and housekeeping services provided for the family. The legislation does not emphasize any one particular objective or factor but gives judges a broad discretion to determine the issue of support having regard to the particular facts of the case.
58The trial judge found that Roseneck and Gowling had approximately the same earning capacity, that Roseneck was financially self-sufficient, and that this was a relatively brief marriage. She dismissed Roseneck's claim for support. Counsel for Roseneck submits that the trial judge's reasons disclose material error in that she only considered the current ability of Roseneck to support herself and did not consider whether Roseneck suffered economic disadvantage as a result of the marriage. The factors the trial judge mentioned, however, are relevant to an assessment of both economic dependence and economic disadvantage. I am not prepared to find that the trial judge erred in dismissing Roseneck's claim for support simply because she did not specifically mention economic disadvantage in her reasons. The applicable standard on appellate review of an award or refusal to award spousal support is that a court should not interfere unless the reasons of the trial judge disclose material error or are clearly wrong: Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813, 99 D.L.R. (4th) 456, adopting the statement of Morden J.A. in Harrington v. Harrington (1981), 1981 1762 (ON CA), 33 O.R. (2d) 150, 123 D.L.R. (3d) 689 (C.A.) at p. 154 O.R.; Hickey v. Hickey, 1999 691 (SCC), [1999] 2 S.C.R. 518, 172 D.L.R. (4th) 577. This standard has not been met.
59Counsel for Roseneck also submits that an appellate court should consider afresh the question of support where, as here, the court has significantly altered the equalization payment by one spouse to another. This is relevant because the amount of property, or means, a spouse has bears on that spouse's claim for support. For the purposes of this appeal, I am prepared to accept this submission.
60I propose to discuss Roseneck's claim within the context of the conceptual bases of compensatory and non-compensatory [page805] support, as outlined in Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, 169 D.L.R. (4th) 577. The third conceptual basis for support mentioned in Bracklow, supra, contract, is not relevant to this appeal.
61Compensatory support is intended to compensate a spouse upon the breakdown of a marriage for contributions made to the marriage, such as sacrifices made for a spouse's career and loss of economic opportunity sustained as a consequence of raising children. This is particularly applicable where a property division is insufficient to achieve this result: see Moge, supra, at pp. 843-49 S.C.R. Where a spouse has the capacity to be self-sufficient but the spouse's ability to enjoy the same standard of living as during the marriage has been negatively impacted as a result of the marriage breakdown, compensatory support helps to ensure that the economic impact of this breakdown is equitably shared: Linton v. Linton (1990), 1990 2597 (ON CA), 1 O.R. (3d) 1, 75 D.L.R. (4th) 637 (C.A.). As pointed out by Carol Rogerson in "Spousal Support Post-Bracklow: The Pendulum Swings Again" (2001) 19 C.F.L.Q. 185 at p. 191, the compensatory principle fits most comfortably the situation where, as a result of having children, the parties have developed an interdependency and merger of their economic lives.
62Here, there does not appear to be any issue that had Roseneck not married Gowling she would have remained employed in the workforce. In her affidavit sworn in support of her application, Roseneck states that, in addition to not earning income during the marriage for three years, she lost the opportunity to make R.R.S.P. and pension contributions as well as the accruals from the R.R.S.P.s she deregistered during the marriage. Roseneck submits that consequently she is economically disadvantaged. In effect, Roseneck's submission is that because she did not work outside the home for most of the marriage, she was unable to accumulate greater property during this time from which to generate income, and that, as a result, there is a continuing impact on her financial position. The evidence placed before the court does not go so far as to prove, however, that any such economic disadvantage has impacted her standard of living as compared to Gowling's. Having regard to the relatively equal earning power of the spouses both before and after the marriage, I cannot conclude that Roseneck's loss of opportunity to provide for herself by making contributions to her R.R.S.P. during marriage is a cost that should be born in the form of compensatory support by Gowling.
63As stated by L'Heureux-Dubé J. in Moge, supra, at p. 849 S.C.R.:
Fair distribution [of the economic consequences of marriage breakdown] does not, however, mandate a minute, detailed accounting of time, energy [page806] and dollars spent in the day to day life of the spouses, nor may it effect full compensation for the economic losses in every case. Rather, it involves the development of parameters with which to assess the respective advantages and disadvantages of the spouses as a result of their roles in the marriage, as the starting point in determining the degree of support to be awarded. This, in my view, is what the Act requires.
64Bearing in mind these comments, I would conclude that, given the parameters of this marriage, this is not a situation in which to award compensatory support.
65Non-compensatory support focuses on the mutual obligation that arises from the marriage itself, the expectations of the parties when they married, and the need to grant relief from hardship flowing from the break-up of the marriage: Bracklow, supra, at paras. 48-49. Thus, non- compensatory support arises where there is an economic dependency that may be due to a variety of factors such as age, illness or disability. It is apparent that these factors need not necessarily be connected to the marriage. Where the marriage is of relatively short duration and there are no children of the relationship, however, economic self- sufficiency carries greater weight when considering the expectations of the parties: Rogerson, supra, at p. 281. The evidence before the court does not lead me to conclude that a non-compensatory order for support is required to address and cushion the effect of the marriage breakup.
66I would therefore dismiss the cross-appeal respecting support.
Disposition
67For the reasons I have given, I would allow the appeal and set aside the order granting Roseneck an equalization payment in the amount of $31,130.68. I would order that the equalization payment be recalculated in accordance with these reasons. Based on the property statement appended to Schedule B [Schedule omitted], this would appear to result in an equalization payment payable by Gowling to Roseneck of $2,356.43. I would dismiss the cross-appeal.
68In order to comply with the rule that now requires this court to fix costs, the respondent is requested to file a bill of costs with the court in the appropriate form. The appellant may make submissions in writing thereon within ten days after filing and the respondent may reply within ten days thereafter.
Appeal allowed; cross-appeal dismissed.
[Schedule A omitted.] [page807]
Notes
Note 1: Counsel agreed that Roseneck's R.R.S.P. is $55,086 as shown on her property statement rather than the $50,086 indicated by the trial judge in her reasons.
