Cortina v. Cortina

Ontario Reports

Court of Appeal for Ontario,

Blair, Hourigan and D.M. Brown JJ.A.

November 6, 2015

128 O.R. (3d) 452 | 2015 ONCA 750

Case Summary

Family law — Practice — Costs — Trial judge erring in awarding respondent full recovery costs for period following delivery by respondent of offer to settle — Offer not open for acceptance until commencement of trial and therefore not meeting criteria of rule 18(14) of Family Law Rules — Family Law Rules, O. Reg. 114/99, rule 18(14).

Family law — Property — Net family property — Inter vivos monetary gifts to husband from his mother and bequest to husband from mother's estate deposited into couple's joint account and then transferred to husband's investment account — Trial judge not erring in finding that moneys were excluded from husband's net family property under s. 4(2)1 of Family Law Act — Mother intending moneys to go to husband alone — Moneys not losing their character as gifts and inheritance by virtue of being deposited in joint account — Family Law Act, R.S.O. 1990, c. F.3, s. 4(2)1.

The applicant appealed from a judgment providing for custody, child support and the equalization of property. She also appealed the trial judge's decision to award costs of the trial to the respondent in the amount of $95,498.39.

Held, the appeal should be allowed in part.

The trial judge made no error in his decision to grant full legal custody of the children to the respondent or in his child support order. Nor did the trial judge err in finding that inter vivos monetary gifts to the respondent from his mother and a bequest to the respondent from his mother's estate were excluded from the respondent's net family property under s. 4(2)1 of the Family Law Act. The respondent's mother intended the moneys to go to the respondent alone, and [page453] the moneys did not lose their character as gifts and an inheritance by virtue of the fact that they were deposited in the couple's joint account before being transferred to the respondent's investment account.

About $20,000 of the total costs award represented full recovery costs allowed for the period following the delivery by the respondent of an offer to settle. However, the trial judge was mistaken in her belief that the offer was open for acceptance until the commencement of the trial, and therefore met the criteria of rule 18(14) of the Family Law Rules. In fact, the offer expired three days before the commencement of the trial. The costs award was varied to $76,000.

Statutes referred to

Family Law Act, R.S.O. 1990, c. F.3, ss. 4(2)1, (2)5, 14(a)

Rules and regulations referred to

Family Law Rules, O. Reg. 114/99, rules 18(14), (16)

APPEAL from the judgment of Lafrenière J. of the Superior Court of Justice dated September 15, 2014 and from a costs order.

Tony Sferruzzi, for appellant.

Deborah Ditchfield, for respondent.

[1] Endorsement BY THE COURT: -- Ms. Cortina appeals from the judgment of Lafrenière J. dated September 15, 2014 providing, amongst other things, for the custody of the couple's teenage children, the payment of child support and the equalization of property. She submits that the trial judge erred in three respects:

(a) by awarding sole custody of the children to the respondent;

(b) by assessing child support based on the respondent's 2012 income rather than his 2013 income; and

(c) by finding that certain inter vivos payments and testamentary bequests received by the respondent from his mother and his mother's estate were to be excluded from his net family property calculation.

[2] The appellant also seeks to appeal from the trial judge's decision awarding costs of the trial to the respondent in the amount of $95,498.39.

[3] With the exception of the variation to the costs order discussed below, we do not accept the appellant's submissions. They are almost entirely based on arguments of fact or at least of mixed fact and law and we see no palpable and overriding error (or, indeed, any error) in the trial judge's careful and thorough review of the evidence (including her clear findings of credibility [page454] in favour of the respondent's testimony and against the appellant's), in the findings she made and inferences she drew, or in her application of the law to those findings.

Custody

[4] The custody decision is supported on the evidence and properly reflects the trial judge's finding on the conduct of the appellant as it pertained to the children and as it would impact the likelihood of a successful shared custody situation. The trial judge was justified in granting full legal custody to the respondent in the circumstances. That said, her order carefully provides for shared custody time (alternate weeks living with the appellant and the respondent), and seeks to ensure that both parties have a meaningful input into the decision-making process regarding the children's activities and best interests.

[5] The trial judge made no error in this respect.

Child Support

[6] The child support order was based on the shared custody arrangement and reflected the fact that the respondent has the children for more than 40 per cent of the time. There is no fixed formula for such a determination and it is a matter of judicial discretion to which deference is owed.

[7] The trial occurred in October 2013. In the circumstances, there was no error in our view in relying on the respondent's established 2012 income of $109,000 for purposes of this calculation. In any event, even if the 2013 figure of $118,000 is taken, the difference is de minimus in the overall context of the support issues the trial judge had to determine.

[8] The parties are required under the order to exchange financial information annually, and the award may be varied if there is a substantial change in circumstances.

[9] We would not give effect to this ground of appeal.

Net Family Property/Exclusion of Gifts

[10] The trial judge ordered that funds in the amount of $122,762.00 held in the respondent's investment account were to be excluded from the calculation of his net family property on the basis that those funds represented the compilation of certain inter vivos payments received by the respondent from his mother and a bequest received by him from his mother's estate, together with the income earned on those amounts.

[11] The trial judge found that these moneys were excluded from the respondent's net family property under s. 4(2)1 of the Family Law Act, R.S.O. 1990, c. F.3 because they constituted [page455] property acquired by the respondent by gift or inheritance from a third person after the date of the marriage.

[12] There is no dispute that the moneys were deposited first into a joint account in the names of the appellant and the respondent, and then transferred to the respondent's investment account, where they continued to grow for a period of about five years before the separation and valuation date. There is also no dispute that the moneys in the respondent's investment account (with the exception of an inconsequential amount) can be traced back to the inter vivos payments and the respondent's inheritance and the income earned thereon.

[13] The appellant submits, however,

(a) that the trial judge erred in finding that the respondent's mother intended the gifts and the inheritance to be to the respondent alone and not to the respondent and the appellant together; and

(b) that the moneys, once deposited into the joint account, lost their character as gifts and an inheritance, and therefore that the investment funds into which they were placed were not subject to exclusion from net family property. She did not argue that by depositing the moneys into the joint account the respondent had gifted her one-half of the moneys.

[14] There are at least three responses to these submissions.

[15] First, there was ample evidence to support the finding that the respondent's mother intended the moneys to go to him alone (as well as other amounts to his siblings) and not to his spouse (or the siblings' spouses). The will was clear that the bequest of $30,000, and the income derived from it, were not to fall into community property in the event of a breakdown of the marriage. The respondent and each of his siblings received inter vivos amounts from their mother by way of cheques that were in their names alone. There was clear evidence from the respondent and his brother -- accepted by the trial judge where it differed from the testimony of the appellant -- that the cheques received by the respondent were intended by the mother to be a gift to him only. While the appellant argues it makes no sense that certain smaller inter vivos gifts made to the respondent were made to him alone -- since they were apparently made in consideration of the mother living in their home with the appellant and the respondent -- it was open to the trial judge to conclude on the evidence that these payments fell into the same category as the others. [page456]

[16] It was for the trial judge to weigh and assess the evidence. We see no basis for interfering with her findings or the inferences she drew on this issue.

[17] Second, the trial judge did not err, in fact or in law, in finding that the moneys did not lose their character as gifts or an inheritance by virtue of their having been deposited first into the parties' joint account.

[18] Section 14(a) of the Family Law Act provides that "the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants" (emphasis added). The trial judge reviewed all of the relevant evidence and concluded that the respondent had succeeded in establishing that there was evidence to the contrary. To put it another way, she accepted the evidence favouring the finding that the respondent had rebutted the presumption that the inter vivos gift moneys and the inheritance moneys were intended to be owned jointly by the parties simply because the respondent had "parked" them in the joint account prior to transferring them to his wholly owned investment account more than five years before the breakdown of the marriage.

[19] This finding was open to her on the evidence.

[20] Finally -- although this point was not pressed by the respondent -- it seems to us that s. 4(2)5 of the Family Law Act is an answer to the appellant's argument as well. It provides for the exclusion from net family property of property, other than a matrimonial home, into which property referred to in s. 4(2)1 (i.e., property acquired by gift or inheritance) can be traced. As pointed out earlier, the appellant concedes that the moneys in the respondent's investment account can be traced to the inter vivos gifts and the inheritance, albeit that she argued they were made to her and the respondent jointly. However, since the trial judge did not accept this argument and we would not disturb her finding on this point, the moneys in the respondent's investment account are traceable to the inter vivos gifts and the inheritance made to him alone.

Costs

[21] The appellant seeks to overturn the costs award made by the trial judge as well. We grant leave to appeal and would vary the costs order as set out below, for the reasons that follow.

[22] The trial judge awarded costs against the appellant in the total amount of $95,498.39, inclusive of disbursements and HST. Roughly $20,000 of that amount represented full recovery costs allowed for the period following the delivery by the respondent of [page457] an offer to settle on August 9, 2013, approximately two months before the trial.

[23] Central to the trial judge's conclusions in this regard appears to have been her view that the August 2013 offer was open for acceptance until the commencement of the trial and therefore that it was an offer that met the criteria of rule 18(14) of the Family Law Rules, O. Reg. 114/99 and that gave rise to the costs consequences flowing from that rule.

[24] Respectfully, however, the trial judge was mistaken in this view. The offer was not open for acceptance until the commencement of trial. It expired three days before the commencement of trial. Accordingly, it did not meet the rule 18(14) criteria.

[25] While it is true that a trial judge is entitled to give consideration to an offer to settle that does not comply with the Family Law Rules -- see rule 18(16) -- the trial judge did not approach her disposition as to costs from that perspective, and we do not know what her determination would have been had she done so.

[26] The respondent sought costs at trial on a partial indemnity basis in the amount of approximately $76,000. In our view, that is a reasonable amount, having regard to the length of the trial (8[cents] days), the conduct of the appellant at trial, the findings of the trial judge that the hours spent by respondent's counsel and the rates charged were reasonable, and all of the other factors taken into account by the trial judge in reaching her decision (save for the offer to settle).

[27] We vary the costs order accordingly.

Disposition

[28] For all of the foregoing reasons, the appeal on the merits is dismissed. Leave to appeal costs is granted and the costs award at trial is varied to the sum of $76,000, inclusive of disbursements and HST.

[29] Since the respondent was substantially successful, he is entitled to the costs of the appeal, which we fix in the amount of $17,500, all inclusive.

Appeal allowed in part.

[page458]

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