COURT OF APPEAL FOR ONTARIO

CITATION: Ruffolo v. David, 2012 ONCA 698

DATE: 20121017

DOCKET: C54834

Sharpe, Gillese and Watt JJ.A.

BETWEEN

Franco Ruffolo

Applicant (Appellant)

and

Michelle Anne David

Respondent (Respondent)

Stephen Codas and Lily Ng, for the appellant

Michelle David, appearing in person

Heard: October 4, 2012

On appeal from the order of Justice Susan E. Healey of the Superior Court of Justice, dated December 6, 2011, with reasons reported at 2011 ONSC 7234.

ENDORSEMENT

[1] Franco Ruffolo (the appellant) brings an appeal in relation to the equalization and retroactive spousal support provisions in the order of Healey J. dated December 6, 2011 (the Order).

[2] In our view, the appeal must be allowed in part.

EQUALIZATION

[3] In 2009, the parties agreed to the terms of the appellant’s buy-out of the respondent’s interest in their matrimonial home. The buy-out took place in accordance with the order of Gilmore J. dated August 5, 2009 (the Buy-out Order).

[4] Some two years later, a five-day trial was held to determine, among other things, equalization and child and spousal support. Neither party raised an issue as to the validity or fairness of the Buy-out Order in their pleadings or during the trial.

[5] Nonetheless, the trial judge found that the Buy-out Order worked such an injustice that, pursuant to s. 5(6) of the Family Law Act, R.S.O. 1990, c. F.3, she was entitled to effectively alter the Buy-out Order by substituting a new value for the home and using the new value for the purposes of calculating equalization.

[6] In our view, this was a clear error.

[7] The Buy-out Order was neither appealed nor set aside. The trial judge could not simply “override” the Buy-out Order, as to do so amounts to an impermissible collateral attack. This point is particularly significant as the parties themselves raised no issue at trial as to the validity or propriety of the Buy-out Order.

[8] Further and in any event, s. 5(6) is designed to redress unconscionable conduct: von Czieslik v. Ayuso, 2007 ONCA 305, at paras. 29 – 30. The buy-out of the matrimonial home cannot be considered unconscionable when it was calculated in accordance with the procedures established by the consent orders of Quigley J., dated April 9 and 16, 2009, was the result of two independent appraisals obtained by the parties, and was ratified after multiple court attendances that followed. Indeed, at para. 6 of the reasons for decision given by Gilmore J. in making the Buy-out Order, she states that the respondent “advised the court that she did not dispute the buy-out price”.

[9] We would add, however, that we understand the trial judge’s concern that the Buy-out Order was relevant to a fair determination of equalization. The matrimonial home had been solely in the respondent’s name. The buy-out price was $685,000. When the respondent’s interest in it was bought out pursuant to the Buy-out Order, title went into the appellant’s parents’ names. Within two months of the buy-out, the house was sold for $788,000. There were listings for the house of $789,900 one year after separation. Furthermore, at the time of the buy-out, the appellant had obvious experience and expertise in the real estate field. After graduating from university in 1989, he obtained a real estate license and he has worked in real estate since that time. In addition, the trial judge made credibility findings against the appellant, particularly in the realm of financial matters.

[10] These circumstances perhaps explain why the trial judge decided to revisit the value of the matrimonial home when she determined equalization. Nonetheless, for the reasons given, it was not open to the trial judge to effectively re-write the buy-out arrangements enshrined in prior court orders.

[11] With the assistance of counsel for the appellant, we have resolved that equalization should be calculated as follows. As the parties’ interests in the matrimonial home were dealt with by means of the Buy-out Order, its value and the associated mortgage are to be removed from the trial judge’s equalization calculation at para. 73 of her reasons. This leaves the respondent with Net Family Property of $232,039. Subtracting from that the appellant’s Net Family Property of $49,437 leaves $182,602. That figure divided by 2 leaves an equalization payment owing by the respondent to the appellant of $91,301. However, $27,479.50 must be deducted from that amount due to the trial judge’s finding at para. 78 of her reasons, that the respondent was not given her full entitlement under the buy-out agreement. In the result, the respondent owes the appellant an equalization payment of $63,821.50.

[12] The appellant raises two other issues in respect of equalization.

[13] First, he says that at trial the respondent disclosed a previously undisclosed bank account at the valuation date but the trial judge did not take this into account in the equalization. It is apparent that the trial judge accepted that the account was empty. The respondent says that during the marriage the appellant would deposit small fixed sums for household expenses and those sums were routinely exhausted shortly after the deposits were made. We would not give effect to this ground.

[14] Second, the appellant contends that the trial judge erred by failing to deduct income taxes that he owed when she calculated the equalization payment. Again, we would not give effect to this ground of appeal. According to para. 59 of the reasons, the appellant produced “a sheath of documents on the first day of trial purporting to prove valuation date debts”. They were marked as exhibits 7 to 22. After careful review, the trial judge gave weight to only two of the alleged debts. She gave reasons for this. In particular, she accepted those for which there was reliable evidence to corroborate the appellant’s evidence. As for the income tax debt, she found that the appellant produced no documentation from Canada Revenue Agency, that his unsigned income tax returns had been prepared but, as at the date of trial, had not been filed. She found the appellant’s evidence to be “entirely unsatisfactory” and that he failed to meet the onus of proving the debts.

[15] There is no basis for interfering with the trial judge’s findings on this matter.

RETROACTIVE SPOUSAL SUPPORT

[16] The appellant’s primary objections to the order for retroactive spousal support are twofold: (1) it commences at a date before the respondent first claimed spousal support, and (2) the trial judge failed to provide an explanation for the amount ordered.

[17] While the trial judge’s reasons are not perfectly clear on either point, we are satisfied on a full reading of her reasons that the order should stand.

[18] Before explaining why, we wish to make a brief comment about the reasons of the trial judge. The trial judge in these proceedings was faced with a daunting task. The parties could agree on nothing – not even the date of separation. They were not responsive to court directions. Closing submissions were of little help with the result that the trial judge was forced to create accurate NFP calculations, ones supported on the evidence. The difficulty and complexity of this task was contributed to by the failure of the appellant to file income tax returns for the years in question. Despite all of these challenges, the trial judge’s reasons demonstrate that she carefully and fairly considered both parties’ positions, the issues and the evidence.

[19] We return to the issue at hand.

[20] Retroactive spousal support can be ordered prior to the date first claimed in legal proceedings where there is good reason for the delay: see Philip v. Philip, 2006 CarswellOnt 1591, [2006] W.D.F.L. 2242 (S.C.J.), at para. 50. In this case, on a reading of the reasons as a whole, it is apparent that the trial judge found good reason for the delay.

[21] After the parties separated, the respondent had primary care of the two children of the marriage, one of whom is severely autistic and requires the respondent’s care “24/7”. Although the children’s primary residence was with the respondent, it was the appellant who remained in the matrimonial home. The respondent and her children lived with the respondent’s mother on what was believed – based on the appellant’s assertions - to be a temporary basis. Suffice to say that a somewhat chaotic situation ensued after the marriage breakdown. Further, the trial judge accepted that the respondent’s mother had to provide for the needs of the respondent and the children during the period in question. In light of these findings of the trial judge, we accept that she made the implicit finding that the respondent had met the burden of demonstrating entitlement to spousal support from the date of separation and was satisfied that there was a good reason for the delay in advancing a claim for spousal support.

[22] As for the amounts ordered, there can be no doubt about the respondent’s need. For example, her income in 2007 was $1,121. Based on the appellant’s historical income and in light of his failure to file income tax returns during the relevant time period, the trial judge imputed income in entirely reasonable amounts. His ability to pay is apparent from a reading of the factual findings of the trial judge. His obligation to pay spousal support is fully evident on the record. He had been the sole income earner when the family was intact, while the respondent bore primary responsibility for child care, a responsibility enhanced by Nicole’s special needs.

[23] We do not accept the submission that the retroactive spousal support should be reduced to reflect the fact that the appellant will not be able to claim the income tax deduction to which he would otherwise be entitled. As we have noted, the appellant failed to produce income tax returns for this period and as there is no evidence that the appellant was paying incomes taxes during the period covered by the retroactive spousal support award, we see no reason to credit him for a supposed deduction.

[24] Accordingly, we would not give effect to this ground of appeal.

DISPOSITION

[25] Accordingly, the appeal is allowed in part.

[26] Paragraphs 1 and 2 of the Order are set aside. In their place, an order shall go stating that the respondent owes the appellant an equalization payment of $63,821.50. Just as the trial judge declined to award prejudgment interest against the appellant when she found that he owed an equalization payment, we decline to award prejudgment interest against the respondent in respect of the equalization payment she is found to owe the appellant. Further, we see no reason why the equalization payment cannot be set off against the retroactive spousal support that the appellant owes to the respondent. Accordingly, post-judgment interest shall not accrue on the equalization payment either.

[27] The appellant enjoyed limited success in relation to one matter only, namely, the buy-out transaction. The respondent successfully defended on all other issues raised on appeal. In the circumstances of this case, including the findings of the trial judge relating to the buy-out, we do not see this as an appropriate case in which to order costs. No costs of the appeal are ordered.

“Robert J. Sharpe J.A.”

“E.E. Gillese J.A.”

“David Watt J.A.”