Court of Appeal for Ontario
CITATION: Denomme v. McArthur, 2015 ONCA 15
DATE: 20150116
DOCKET: C57936 and C57937
Sharpe, van Rensburg and Pardu JJ.A.
BETWEEN
C57936
Kelly Jane Denomme
Applicant (Respondent)
and
Corey Wilson McArthur
Respondent (Appellant)
AND BETWEEN
C57937
Paul Denomme
Plaintiff (Respondent)
and
Kelly Jane Denomme
Defendant (Respondent)
and
Corey Wilson McArthur
Defendant (Appellant)
Counsel:
Anna Towlson, for the appellant
Clarke L. Melville and Jacqueline E.N. Day, for the respondent Paul Denomme
Pamela L. Hebner and Robert K. Bickle, for the respondent Kelly Jane Denomme
Heard: December 18, 2014
On appeal from the judgments of Justice Dale Parayeski of the Superior Court of Justice, dated May 21, 2013, with reasons reported at 2013 ONSC 2834 and 2013 ONSC 2895.
ENDORSEMENT
[1] Corey Wilson McArthur appeals from a judgment granted in favour of Paul Denomme, his former wife’s father, for debts owing. He also appeals from the judgment in the matrimonial proceeding in favour of Kelly Jane Denomme, granting spousal support and s. 7 extraordinary expenses for the children’s activities, and determining amounts due for equalization.
THE DEBT ACTION
[2] The trial judge granted judgment to the wife’s father for three loans. The first was a promissory note for $70,000 signed by both Ms. Denomme and Mr. McArthur on October 25, 2002, before marriage. $20,000 had been advanced in cash, and was intended to be used to pay for home improvements. The balance of $50,000 was advanced by cheque referenced in the promissory note, and intended to be applied to the purchase of their matrimonial home.
[3] Second, the trial judge found that the wife’s father also advanced $19,413 so that the husband could buy a new car when his vehicle became inoperable. The wife’s father produced banking records showing he withdrew $19,413 from his bank account on May 6, 2003, the day the new car was acquired. That was the amount shown as the purchase price of the vehicle on the agreement of purchase and sale signed by the appellant. The appellant testified that he thought the money came from a joint line of credit he had with his wife, but there was no evidence of any such advance. Payments were made on the loan, but payments stopped in 2004 because of financial difficulties, according to the wife and her father.
[4] Third, in mid-2005, the husband and wife installed a home theatre system in their home. The husband again testified that the theatre system was paid for by the line of credit he had with his wife. The wife’s father and the wife testified that the wife’s father advanced the funds for the theatre system as a loan. The record contained no documentation of this loan. Nonetheless, the trial judge accepted the evidence of the wife and her father, and granted judgment to the father for this third loan.
[5] The wife’s father also claimed repayment of a loan for $6,808.63, used to wire the matrimonial home for sound. However, the trial judge found that this amount was a gift.
[6] The appellant’s position at trial and on appeal was that these transactions were all a sham manufactured by his wife and her father before marriage and after separation. He submitted that the wife’s father was, at least in part, not advancing his own money to create the alleged loans. Rather, the wife had secret savings of her own, and she disguised her own funds as loans from her father to artificially make the appellant indebted to her father, and to reduce her own net family property to zero.
[7] The husband’s suspicions sprang from the discovery of a bank account held by the father, said to be in trust for his daughter. The trust account statement was dated April 30, 2002. The wife’s father testified that he lent money to a trust account for his daughter and made investments in it, so that income and gains in the account could be taxed at his daughter’s tax rate, which was much lower than his own. He would pay any income tax owing. He said his daughter did not know of the trust arrangement. He testified that, because the value of the assets in the account fell substantially, the arrangement no longer resulted in a tax benefit for him. As a result, he collapsed the trust and called in the loan. The father testified that he would have been entitled to income from the trust account. The husband submits that this evidence was not credible, as the wife had faxed a copy of the trust account statement to a lender, in May 2002, when the parties were negotiating a mortgage for their home. However, the trial judge accepted the father’s evidence that the wife was not involved in running the trust, and that the trust was set up to secure tax benefits for the father. Ultimately, he accepted that the monies advanced by the father were his own funds, and not the wife’s own savings.
[8] Regarding the $70,000 promissory note, the husband admitted he had signed the promissory note referring to both the $20,000 in cash and the $50,000 for the house purchase. At trial, the husband ultimately accepted that the funds had been provided, but disputed the uses to which the funds had been put. The trial judge found that $50,000 was used to pay part of the balance due for the house at closing, and put little weight on the fact that no documentation had been provided to prove that the $20,000 in cash was used to pay a kitchen contractor. Title to the house was taken jointly by the husband and wife. The trial judge found no evidence that the appellant was not jointly and severally liable, together with the wife, for the debt created by the promissory note.
[9] Similarly, the advance for the car purchase was supported by documentary evidence. There was no evidence that the husband and wife used their own line of credit to purchase the husband’s vehicle. The wife’s father had some evidence that payments were made for a time on the loan.
[10] Finally, the husband could produce no evidence to suggest that the home theatre system was purchased using the couple’s line of credit. The husband did not dispute that $8,089.15 was paid for the system, and that it was purchased with borrowed money. The trial judge accepted the wife’s father’s evidence and the wife’s evidence that this was a loan by the wife’s father.
[11] This appeal is entirely fact-driven. The trial judge gave adequate reasons to explain the basis for his findings. There was evidence, both documentary and oral, to support those findings. The appellant has not established that the trial judge made any palpable and overriding error in coming to the factual conclusions he did, based on his assessment of the credibility of the parties, and the evidence led at trial. There is no basis for this court to intervene.
THE MATRIMONIAL ACTION
[12] The husband and wife were married on November 16, 2002. There are three children of the marriage, the eldest now aged nine years, and twins who are seven years old. The parties separated on March 9, 2009, when the children were, respectively, approximately four years old and one and a half years old.
Spousal support
[13] The husband earned about $82,000 as a police officer in 2011. He argued that the trial judge should impute $120,000 in income to the wife for 2009, and an annual income of $80,000 going forward. To support these arguments, the husband points to the amount of deposits made to a “business account” used by the wife. The wife testified that the account was not used exclusively for business purposes and that deposits from other sources were made to the account. She testified that her inexperience with bookkeeping led her to deposit non-business funds into the business account.
[14] According to her evidence at trial, the wife juggled money between four accounts so that the couple could meet their financial obligations. The wife was a part time self-employed CPR instructor when the parties married and continued that occupation after marriage. Her 2010 income tax records show a gross income of $19,519 and a net income of $8,685.78. In 2011 her gross income was $9,626 with a net income of $4,149.91.
[15] The trial judge accepted that the wife’s income was largely as reported for tax purposes after separation and did not impute any income to her. While he also accepted that, in the past, the wife had received some cash payments that she did not report as income, the wife’s evidence was that she no longer received any cash payments. The trial judge rejected the husband’s submissions that the wife had significant unreported income, that she exaggerated her business expenses to reduce her net income, or that she was deliberately under-employed. Despite the disparity in the parties’ incomes, and the relative security of the husband’s employment as compared to the wife’s position, the trial judge ordered spousal support for 25 months only in the sum of $500 per month, indexed, ending on September 1, 2014. At that time, the issue of spousal support could be reviewed.
[16] Again, the husband has not demonstrated that the trial judge made any palpable and overriding error in coming to the factual conclusions he did, and there is no basis to intervene.
Child support
[17] The trial judge ordered the husband to pay the guideline amount of child support and a further $150 per month to the wife on account of extraordinary expenses. On November 1 of each year, the wife is required to present the husband with receipts for expenses paid and there has to be an adjustment between the parties, proportionate to their incomes. The wife was ordered to consult with the husband and seek his consent to s. 7 expenses, such consent not to be withheld unreasonably.
[18] The appellant has not demonstrated any error on the part of the trial judge in dealing with s. 7 expenses in this manner.
Debts to wife’s father
[19] Finally, the appellant husband submits that, for the purposes of calculating the wife’s net family property, the trial judge ought to have discounted the wife’s debts to her father to about 5-10% of their face value, on the basis that the father was unlikely to pursue his daughter for these debts, and in fact was lending her additional funds. The wife’s father had sued her on the debts and obtained judgment against her, which she did not contest. The trial judge accepted the wife’s evidence that she intended to pay her father and did not discount the valuation day amount of the wife’s indebtedness to her father. The trial judge expressly referred to the relevant legal authorities. The trial judge could have applied some discount to reflect the delay likely before any payment would be made on the debts, but again, the appellant has not demonstrated any palpable and overriding error in his failure to apply any discount. We note that, pursuant to the trial judge’s order, the husband and wife are jointly and severally liable to pay the debts to the wife’s father so that the husband will have a claim over against the wife if he is called upon to pay more than his share of the debt. In any event, we are unable on the record before us to assess what, if any, difference application of a discount to the face value of the debts or deduction from the wife’s net family property of a contingent liability for the husband’s right of contribution and indemnity would have had on the wife’s net family property.
CONCLUSIONS
[20] The appellant has not demonstrated that the trial judge erred in law or in coming to any of the factual conclusions he drew from the evidence. Accordingly, the appeal is dismissed, in both the debt action and in the matrimonial proceedings.
[21] We grant costs to the wife in the matrimonial appeal, in the sum of $15,000 inclusive of disbursements and taxes.
[22] There was an offer to settle made by the wife’s father in the debt action that may have some impact on the costs award in that appeal. The parties may make written submissions as to the costs of that appeal, due from the successful respondent on the appeal, Paul Denomme, within 30 days of the release of this decision, and due from the appellant within 20 days thereafter.
“Robert J. Sharpe J.A.”
“K. van Rensburg J.A.”
“G. Pardu J.A.”