Wylie v. Leclair
64 O.R. (3d) 782
[2003] O.J. No. 1938
Docket No. C38184
Court of Appeal for Ontario,
Laskin, MacPherson and Simmons JJ.A.
May 21, 2003
Family law -- Practice -- Costs -- Trial judge making no award of costs after three-day trial of issues of support and unjust enrichment -- Trial judge erring in failing to award costs to successful party in absence of any indication that successful party had behaved unreasonably.
Family law -- Property -- No presumption existing that net family property of common law spouses should be equalized upon breakdown of relationship -- Trial judge erring in effectively providing equalization of net family property of common law spouses in guise of monetary award for unjust enrichment. [page783]
Family law -- Support -- Child support -- Parties having joint custody of children -- Trial judge ordering father to pay child support in amount of $400 per month rather than the set- off amount of $272 which was produced by applicable Guidelines table -- Trial judge failing to properly apply s. 9 of Guidelines -- Child support reduced to $272 per month -- Child Support Guidelines, O. Reg. 391/97, s. 9.
Restitution -- Unjust enrichment -- Trial judge finding that common law husband was unjustly enriched by common law wife's domestic services during their 15-year relationship and that monetary award rather than constructive trust was appropriate remedy -- Trial judge erring in not applying "value received" approach to quantification and in effectively providing equalization of net family property in context of common law relationship -- No presumption existing that net family property of common law spouses should be equalized upon breakdown of relationship -- Award of $150,000 reduced to $70,000.
The parties lived together from 1985 to 2000 and had two children. After they separated, they agreed to a shared custody arrangement, with the children living with each parent on alternate weeks. A trial was held on issues of support and division of property. Based on the income of both parties, the trial judge found that the set-off produced by the applicable Child Support Guidelines table was $272. However, she ordered W to pay child support in the amount of $400 per month rather than $272, holding that she had reservations as to how the parties could have afforded their lifestyle and as to how the husband could have afforded the assets which he had on his income. The trial judge also found that W was unjustly enriched by L's domestic services during their relationship and that a monetary award, rather than a constructive trust, was the appropriate remedy. She awarded L $150,000. She awarded no costs to either party. W appealed. L cross-appealed the failure to award costs.
Held, the appeal and cross-appeal should be allowed.
The trial judge did not properly apply s. 9 of the Child Support Guidelines. Her comments about the couple's lifestyle and W's assets were entirely speculative. There was no evidence of increased costs of shared custody arrangements. There was no basis for departing from the set-off amount of $272 per month.
The trial judge correctly held that a monetary award, rather than a constructive trust, was the appropriate remedy. She was also correct in holding that the "value received" approach should be employed to calculate the monetary award. However, there was virtually nothing in her reasons to indicate that she applied the "value received" approach to quantification. Rather, both her reasons and her conclusion established that she was intent on attempting to provide an equalization of net family property in the context of a common law relationship to which it did not apply. She commenced her analysis of the property issue by setting out the assets and liabilities of the parties at the commencement of cohabitation and at separation. This was an exercise relevant to equalization of net family property not to a "value received" calculation in the context of unjust enrichment. The trial judge made obiter comments which indicated that she thought that Parliament's failure to provide for equalization of net family property for common law spouses was a "lacuna" in legislation that needed to be addressed. There is no presumption that the net family property of common law spouses should be equalized upon breakdown of the relationship. The trial judge's reasons were silent on any quantum meruit calculation. The value of the benefits that L and W received from each other were not assessed or set-off. A set-off analysis would have been particularly relevant in light of findings of the trial judge that L lived rent-free for the [page784] duration of her 15-year relationship with W and had made no contribution during the first three years of the relationship. The award for unjust enrichment should be varied to $70,000.
Rule 24 of the Family Law Rules, O. Reg. 114/99 creates a presumption that a successful party is entitled to its costs in a family law proceeding. The presumption can be rebutted if the successful party has behaved unreasonably during the case or if success is divided. The trial judge did not rely on either of these factors to support her rejection of the presumption. L was clearly the successful party. The trial judge erred by not awarding costs to L.
APPEAL from quantum of child support and from quantum of award for unjust enrichment; CROSS-APPEAL with respect to costs.
Cases referred to Bell v. Bailey (2001), 2001 11608 (ON CA), 203 D.L.R. (4th) 589, 20 R.F.L. (5th) 272, 148 O.A.C. 333 (C.A.); Nova Scotia (Attorney General) v. Walsh, 2002 SCC 83, 210 N.S.R. (2d) 273, 221 D.L.R. (4th) 1, 297 N.R. 203, 659 A.P.R. 273, 102 C.R.R. (2d) 1, 32 R.F.L. (5th) 81, [2002] S.C.J. No. 84 (QL); 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 Rules and regulations referred to Child Support Guidelines, O. Reg. 391/97 ("Family Law Act"), s. 9 Family Law Rules, O. Reg. 114/99 ("Courts of Justice Act"), rule 24
David E. Waterhouse, for appellant, respondent by way of cross-appeal. Nicole Tellier, for respondent, appellant by way of cross-appeal.
The judgment of the court was delivered by
[1] MACPHERSON J.A.: -- Earl Wylie and Sandra Leclair lived together from 1985 to 2000. Although they never married, their relationship was a long-term, committed one. They had two children, Kyle, who was born in 1990, and Kelly, who was born in 1994.
[2] The parties separated in November 2000 and, in May 2001, Leclair moved in with her new common-law partner, Brian Boyd.
[3] The parties agreed to a shared custody arrangement. However, on many other issues, including spousal and child support and division of property, the parties were unable to reach an agreement. Accordingly, a three-day trial took place in March 2002 before Justice Johanne Lafrance-Cardinal. In comprehensive reasons released on April 8, 2002, the trial judge dealt with all outstanding issues. In a supplementary endorsement released on September 3, 2002, she disposed of the issue of costs.
[4] Wylie appeals from the trial judge's judgment on two matters: (1) the quantum of child support; and (2) the quantum [page785] awarded to Leclair under the rubric of unjust enrichment. Leclair cross-appeals against the trial judge's costs order.
A. Wylie's Appeal
(1) Child support
[5] The parties agreed to a joint custody regime. In fact, their arrangement is a true joint custody regime -- both children reside with their parents on alternate weeks.
[6] Section 9 of the Child Support Guidelines, O. Reg. 391/97 ("Guidelines"), provides that, in a shared custody situation, the amount of child support must be determined by taking into account three factors: (1) the applicable table amounts for each parent or spouse; (2) the increased costs of shared custody arrangements; and (3) the conditions, means, needs and other circumstances of each parent or spouse and of the children for whom support is sought.
[7] The trial judge held that, based on the respective incomes of the parents (both worked), the set-off amount produced by the applicable Guidelines table was $272; that is, Wylie had to pay Leclair $272 per month for the support of Kyle and Kelly. On the appeal, the parties agree that this is the correct set-off amount under s. 9(a) of the Guidelines.
[8] The trial judge decided not to apply the set-off amount of $272, which relates to the first factor in s. 9 of the Guidelines. She was cognizant of all three factors in s. 9 and, after identifying the set-off amount of $272, continued [at para. 30]:
[Section] 9 of the guidelines requires the Court to look at the facts of each specific case and to exercise its discretion accordingly. Having regards to the circumstances of this case, including the fact that the Court has reservations as to how the parties could have afforded such a lifestyle, and the Court has reservations as to how the husband could have accumulated the assets that he has on his income, the Court will order child support in the amount of $400 per month for the support of both children taking into consideration the shared parenting regime.
[9] With respect, I do not think this analysis and application of the second and third factors of s. 9 of the Guidelines is supportable. The comments about the couple's lifestyle and Wylie's assets are entirely speculative. Indeed, the latter comment belies the careful analysis and conclusions reached by the trial judge in resolving property issues elsewhere in her reasons. Counsel acknowledged that there was no evidence of "increased costs of shared custody arrangements" (the second factor in the Guidelines) for either parent.
[10] Since the trial judge's analysis and application of the second and third factors in the Guidelines are not supportable, it [page786] follows that there was no basis for departing from the set-off amount which the parties acknowledged was the sum of $272 per month.
(2) Unjust enrichment
[11] The trial judge held that Wylie was unjustly enriched by Leclair's domestic services during their 15-year relationship. Although Wylie initially appealed this holding, during oral argument he conceded that some award under this rubric was appropriate.
[12] The trial judge awarded Leclair $150,000 under this heading. Wylie contends that this award was far too high and that a proper award would have been something in the $35,000- $70,000 range. I agree.
[13] The trial judge correctly held that a monetary award, rather than a constructive trust, was an appropriate remedy: see Peter v. Beblow, 1993 126 (SCC), [1993] 1 S.C.R. 980, 101 D.L.R. (4th) 621. She also held, again correctly, that the "value received" approach should be employed to calculate the monetary award: see Peter v. Beblow at p. 999 S.C.R. and Bell v. Bailey (2001), 2001 11608 (ON CA), 203 D.L.R. (4th) 589, 148 O.A.C. 333 (C.A.) at p. 341 O.A.C.
[14] Unfortunately, there is virtually nothing in the trial judge's reasons to indicate that she applied the "value received" approach to quantification. On the contrary, both her reasons and her conclusion establish that the trial judge was intent on attempting to provide an equalization of net family property in the context of a relationship -- common law -- to which it did not apply. I reach this conclusion for several reasons.
[15] First, the trial judge commenced her analysis of the division of property issue by setting out the assets and liabilities of the parties at the commencement of cohabitation and at separation. This is an exercise relevant to the equalization of net family property, not to a "value received" calculation in the context of unjust enrichment.
[16] Second, at the outset of her legal analysis, the trial judge stated [at paras. 21-24]:
In the Province of Ontario, the Family Law Act does not give equal standing to common law spouses when it comes to property accumulated during the years of cohabitation. The Act does not talk of an equalization of net family properties, common law relationships are not viewed as partnerships as stated in the preamble of the Act.
It is worth noting that our society has evolved drastically in the last decade. We now talk of same sex benefits, of same sex spouses being able to bring a claim for spousal support, of same sex spouses being able to adopt children. The Income Tax Act, a federal statute, treats common law spouses in the [page787] same manner as married spouses. They are deemed common law if they have been living together for at least twelve continuous months. Common law spouses are subject to the same income tax rules as married spouses ie: -- designation of principal residence, attribution rules, equivalent-to-spouse tax credit.
With respect to spousal support, the law does not treat a common law relationship any differently than a marital relationship except that you must have cohabitated continuously for a period of not less than 3 years before you can bring such a claim. (S. 29 of the Family Law Act)
However, with regards to property issues and long term common law relationships Parliament has not kept up with the times. Common law spouses have been accepted in our society as spouses. Politicians may have a political future even though they may be divorced and now live in a common law relationship. In most cases common law relationships, to the outsider looking in, have the same attributes as those relationships commenced with marital vows. There are two income families, two car garages, PTA meetings, car pooling, mortgages, pooling of incomes. However, at separation, common law spouses do not have the protection of the Family Law Act. The preamble of the Family Law Act does not protect them as it speaks of recognizing marriage as a form of partnership. If the assets are in one spouse's name, the other spouse must prove their claim, their contribution, their entitlement. Parliament will have to address this lacuna, in the interim however, the trial judges will have to continue interpreting the common law spouses intentions and will have to inspect their investments, their accumulated wealth, their enrichment, their corresponding deprivation with a fine tooth comb.
(Emphasis added)
[17] Based on this passage, it appears that the trial judge thought that Parliament's failure to provide for equalization of net family property for common law spouses was a "lacuna" in legislation that needed to be addressed. In my view, these comments are significant in the context of this case. The trial judge essentially awarded an equalization of net family property. These obiter comments of the trial judge can be seen as informing her approach to the calculation of her unjust enrichment award.
[18] In Nova Scotia (Attorney General) v. Walsh, 2002 SCC 83, 221 D.L.R. (4th) 1, the Supreme Court of Canada upheld Nova Scotia's legislation that provides equalization to married spouses but not to common law spouses. The court stated, at para. 54:
[The Nova Scotia legislation] is primarily directed at regulating the relationship between the parties to the marriage itself; parties who, by marrying, must be presumed to have a mutual intention to enter into an economic partnership. Unmarried cohabitants, however, have not undertaken a similar unequivocal act. I cannot accept that the decision to live together, without more, is sufficient to indicate a positive intention to contribute to and share in each other's assets and liabilities. It may very well be true that some, if not many, unmarried cohabitants have agreed as between themselves to live as economic partners for the duration of their relationship . . . . It does not necessarily follow, however, that these same persons would [page788] agree to restrict their ability to deal with their own property during the relationship or to share in all of the other's assets and liabilities following the end of the relationship.
Accordingly, there is no presumption that the net family property of common law spouses should be equalized upon breakdown of the relationship.
[19] Third, after stating at the outset that the "value received" approach was the applicable calculation method, the trial judge's reasons are silent on any quantum meruit calculation. The value of the benefits that Leclair and Wylie received from each other were not assessed or set-off. A set- off analysis would have been particularly relevant in light of findings of the trial judge that Leclair lived rent-free for the duration of her 15-year relationship with Wylie and had made no contribution during the first three years of their relationship.
[20] Accordingly, I conclude that the trial judge erred in assessing Leclair's damages based on principles relating to the equalization of net family property rather than on a "value received" basis.
[21] There remains the question of whether a new trial should be ordered on this issue or whether this court should determine an appropriate amount for unjust enrichment. In Bell v. Bailey, Osborne A.C.J.O. said, at p. 343 O.A.C.:
Since I think that the evidence supports a narrower finding of unjust enrichment than that made by the trial judge, and since it is accepted that a monetary award is adequate in this case, there remains to be considered what adjusted monetary reward is reasonable in the circumstances. One option is to order a new trial to determine the appropriate monetary award. In my opinion, it would not be in the interest of either party to order a new trial. Too much time and money has already been invested in this dispute. I will therefore do my best to determine what monetary award will reasonably remedy the unjust enrichment I have found to exist.
[22] I agree with these observations and believe that a similar approach is preferable in this appeal. I have reviewed the entire record of the trial proceeding. In my view, the $150,000 awarded by the trial judge is far too high. In argument, Wylie's counsel suggested a range of $35,000 to $70,000. On the basis of my review of the record, I am inclined to think that the higher number in this range reflects a fair assessment of quantum on the unjust enrichment issue. Accordingly, I would award Leclair $70,000.
B. Leclair's Cross-Appeal
[23] The parties were unable to agree on the costs of the trial. The trial judge received submissions and released an endorsement on September 3, 2002 in which she awarded no costs to either party. [page789]
[24] Although a decision of a trial judge on the issue of costs is entitled to substantial deference, it is difficult to see any basis for not awarding costs to Leclair. Rule 24 of the Family Law Rules, O. Reg. 114/99, creates a presumption that a successful party is entitled to its costs in a family law proceeding. The presumption can be rebutted if the successful party has behaved unreasonably during the case or if success is divided. The trial judge did not rely on either of these factors to support her rejection of the presumption. Moreover, there is no doubt that Leclair was the successful party at the trial, and that this characterization holds after the disposition of this appeal. She obtained child support and a substantial payment for unjust enrichment, and in amounts that exceeded Wylie's offer to settle. Accordingly, I am of the view that the trial judge erred by not awarding costs to Leclair.
[25] I have reviewed Leclair's submissions on costs of the trial. Bearing in mind that the custody issue was resolved before the trial, I would award Leclair trial costs fixed at $10,000, inclusive of disbursements and GST, and in addition to the costs award of $1,000 by Justice Blishen.
Disposition
[26] I would allow the appeal, set the child support amount Wylie must pay to Leclair at $272 per month, and order Wylie to pay Leclair $70,000 as compensation for the domestic services she provided during their relationship.
[27] I would allow the cross-appeal and order Wylie to pay Leclair trial costs fixed at $10,000, inclusive of disbursements and GST, and in addition to the costs award of $1,000 by Justice Blishen.
[28] Although both parties have been successful on the appeal and the cross-appeal, there is no doubt that Wylie has achieved the greater success. I would award Wylie costs of the appeal fixed at $3,000, inclusive of disbursements and GST.
Appeal and cross-appeal allowed.