COURT OF APPEAL FOR ONTARIO
Rosenberg, MacPherson and LaForme JJ.A.
BETWEEN
Katherine Anne Fratric
Applicant (Appellant by Appeal)
(Respondent by Cross Appeal)
and
Joseph Robert Fratric
Respondent (Respondent by Appeal)
(Appellant by Cross-Appeal)
Stanley P. Jaskot and Darryl A. Willer, for the appellant
Anita K. Kania, for the respondent
Heard: November 4, 2010
On appeal from the judgment of Justice Christopher Corkery of the Superior Court of Justice dated November 12, 2009.
1The appellant wife appeals from the judgment of Corkery J. concerning the Kerr Street property and the failure to order child support for the period from July 1, 2002 through December 31, 2003. By cross-appeal, the husband seeks leave to appeal the costs order made by the trial judge. For the following reasons the wife’s appeal is dismissed and the husband’s cross-appeal is also dismissed.
THE APPEAL
The Kerr Street Property
The Appeal
2The trial judge held that the respondent had a fifty percent beneficial interest by way of resulting trust in the Kerr Street property. The appellant attacks the finding of a resulting trust on two bases: first, that the issue of resulting trust was never pleaded; second, that the trial judge failed to consider the respondent’s motive for putting the company that held title to the property into the appellant’s name. Finally, the appellant submits that even if there was a resulting trust, the trial judge erred in finding that the respondent had a fifty percent beneficial interest. We would not give effect to any of these submissions.
3It is true that the resulting trust was never pleaded. However, it is apparent from the transcript of the trial that the parties were well aware that the respondent’s interest in the Kerr Street property was a live issue. Counsel for the appellant at trial specifically referred to the issue in his questioning of the respondent. Further, the record is filled with questions about the respondent’s contribution to the purchase of the property and his subsequent work on the property. These questions would only be relevant to the issue of either resulting or constructive trust, or possibly quantum meruit. There was no objection to any of this evidence. Additionally, there is nothing in the record to suggest that the appellant claimed that she was prejudiced by the deficiency in the pleadings. The trial judge noted in his reasons that the appellant was not disadvantaged by the fact that the respondent raised this issue at trial. While the trial judge dealt differently with the appellant’s claim for a reverse constructive trust, he provided reasons for the different treatment. In particular, he found it would be “manifestly unfair” to consider that issue.
4We are satisfied that the appellant was not prejudiced by the respondent’s failure to amend the pleadings. In the circumstances it was open to the trial judge to consider the respondent’s claim for a beneficial interest in the property. As this court said in Cassidy v. McNeil, (2010), 2010 ONCA 218, 99 O.R. (3d) 81 at para. 42:
Finally, the husband apparently did not advance any argument of prejudice at trial, an argument that could have been accommodated by an adjournment, if one was necessary. The decision not to raise the argument at trial supports the conclusion that the husband suffered no prejudice. In any event, there is no evidence that the husband suffered either surprise or prejudice from any technical deficiency in the wife's Answer.
5We would also not give effect to the submission concerning the respondent’s motive for putting the property in the name of a corporation wholly owned by the appellant. The respondent’s evidence was that on the advice of an accountant he and the appellant agreed that the Kerr Street property should be held in the corporation. While the respondent had some concerns about tax liability, there was nothing to show that there was any claim by Revenue Canada or any other real creditors at the time of the purchase or later. The evidence demonstrated that the parties hoped that the increase in value of the property would someday be available for the children. There was a legitimate reason in the minds of the parties for favouring a corporate structure for holding title to the property. In our view, this case falls within this court’s decision in Launchbury v. Launchbury (2005), 2005 10640 (ON CA), 12 R.F.L. (6th) 393 (C.A.), where the court said the following at para. 3:
We note there was no suggestion that any creditor or potential creditor was prejudiced by the property being registered in the appellant’s name. There was also evidence that the decision to put the property in the appellant’s name was for a legitimate purpose, namely, because of the dangerous work that the respondent had done as a police officer in the anti-gang squad.
6Finally, the appellant submits that the trial judge erred in finding that the respondent had a fifty percent beneficial interest in the Kerr Street property. This argument is based on the theory that the respondent’s only contribution to the purchase of the property was the $90,000 inheritance that was used to pay down the mortgage on the matrimonial home so that a second mortgage could be taken out to finance the purchase of the Kerr Street property. However, there was a great deal more evidence in the record concerning the respondent’s contribution to the payment of the mortgages as well as evidence concerning the maintenance and repair work performed by the respondent. There was a foundation in the evidence for the trial judge’s conclusion and we have not been persuaded that he made any palpable or overriding error in his appreciation of the evidence.
Child Support
Child Support
7The appellant submits that the trial judge erred in failing to order the respondent to pay child support for the period from July 1, 2002 (the date of separation) until December 31, 2003 (the effective date of the order of Herold J. dated March 2, 2005). The appellant points out that in his reasons, Herold J. left this issue open on the basis that the trial judge would “be in a better position to fix a more accurate date for the notional commencement of child support”. The trial judge did not deal with this issue except to say that he had “considered and chosen not to revisit the temporary child support order of Herold J.”
8While it would have been preferable had the trial judge provided reasons for that decision, the basis for the decision is apparent from the record. The appellant and the respondent operated appliance stores. The stores were held in the name of a corporation wholly owned by the appellant. The appellant kept the company books while the respondent ran the stores. After the separation, on September 10, 2002, the appellant locked the respondent out of the stores and summoned the police. The respondent no longer had any source of income. Despite the fact that orders were made to assist the respondent in resuming operation of the Etobicoke store, the respondent claimed he was unable to do so because of intimidation from the appellant’s boyfriend. Admittedly, the respondent could have taken steps to enforce the orders of Kruzick J. and his evidence for failing to do so is far from compelling.
9In any event, the appellant brought two applications, prior to the 2005 application heard by Herold J., to obtain child support. These applications were heard on January 30, 2003 (Kruzick J.) and March 31, 2003 (Herold J.). In both cases, the application judges refused to order child support because the respondent had no income. In the meantime, the evidence shows that the appellant had more than sufficient income to care for the children and her own needs. In fact, the evidence shows that her income increased following the separation. Thus, there were circumstances from which the trial judge could conclude that he should not interfere with the original order made by Herold J. in 2005. As the Supreme Court of Canada said in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231 at para. 95:
It will not always be appropriate for a retroactive award to be ordered. Retroactive awards will not always resonate with the purposes behind the child support regime; this will be so where the child would get no discernible benefit from the award. Retroactive awards may also cause hardship to a payor parent in ways that a prospective award would not. In short, while a free-standing obligation to support one's children must be recognized, it will not always be appropriate for a court to enforce this obligation once the relevant time period has passed.
10Accordingly, the appeal is dismissed.
THE CROSS-APPEAL
The Cross-Appeal
11The trial of this matter was heard in October and December of 2008. The trial judge provided lengthy reasons in September 2009. His task in dealing with this case was a daunting one. The parties had failed to make proper disclosure and the evidence at the trial was deficient in many respects. At the conclusion of his reasons, the trial judge said the following concerning costs:
Rule 24 of the Family Law Rules creates a presumption that a successful party is entitled to the costs of the case. I have considered the factors identified in subsection 24(11).
In this case, success has been mixed. Deficiencies in disclosure and, ultimately, deficiencies in the evidence in this case made the trial and adjudication of this matter needlessly complex and tedious. Both parties bear responsibility for this. The remedy for deficient disclosure, where such disclosure is necessary to a party’s case, is a motion for production. It is never appropriate to proceed to trial, to pursue such a claim, and expect the court to reason around the deficiencies. Such practice must be discouraged.
No costs shall be awarded in this case.
12In his cross-appeal, the respondent submits that the trial judge erred in principle by failing to inquire as to whether there had been offers to settle that would have influenced the costs decision. Counsel has produced the offers to settle from the parties. The respondent made several offers to settle including an offer in June 2003 and September 2008. The appellant made only one offer to settle in the course of the trial. The respondent’s recovery at trial arguably exceeds the 2003 offer to settle. Therefore, counsel submits that the respondent should at least be given costs on a partial indemnity basis.
13No doubt it would have been preferable that the trial judge inquired about offers to settle. However, we have now had the opportunity to review those offers and, in our view, they would not have affected the result. The husband’s 2008 offer does not comply with Rule 18. The 2003 offer was made before there had been financial disclosure and at a time when it would have been impossible for the appellant to determine whether the offer should be accepted. Thereafter, as observed by the trial judge, there were continuing problems with disclosure of financial information. We have not been persuaded that there is a basis for interfering with the order made by the trial judge.
DISPOSITION
Disposition
14Accordingly, the appeal and cross-appeal are dismissed. The appeal was by far the most significant aspect of the case and the respondent is therefore entitled to some costs, notwithstanding dismissal of his cross-appeal. Accordingly, the appellant shall pay costs to the respondent fixed in the amount of $10,000.00 inclusive of disbursements and applicable taxes.
Signed: “M. Rosenberg J.A.”
“J. C. MacPherson J.A.”
“H. S. LaForme J.A.”
RELEASED: “MR” NOVEMBER 12, 2010
