COURT OF APPEAL FOR ONTARIO
CITATION: Farnsworth v. Chang, 2016 ONCA 442
DATE: 20160607
DOCKET: C59103
Rouleau, Pardu and Benotto JJ.A.
BETWEEN
Juanita May Farnsworth
Applicant (Respondent/Appellant by way of cross-appeal)
and
John Wingka Chang
Respondent (Appellant/Respondent by way of cross-appeal)
Gary Joseph and Ryan Kniznik, for the appellant/respondent by way of cross-appeal
Richard Bowles and Sarah Kennedy, for the respondent/appellant by way of cross-appeal
Heard: May 6, 2016
On appeal from the order of Justice Alan P. Ingram of the Superior Court of Justice, dated June 13, 2014, with reasons reported at 2014 ONSC 1871, and his costs order, dated September 8, 2014.
ENDORSEMENT
[1] The parties had been married for 32 years when they separated in February 2009. By then, they were both 68 years old and each had net family property of over two million dollars. Their divorce action was heard in 2014. Following a twelve-day trial, the trial judge awarded the wife an equalization payment of $388,643 and periodic spousal support of $4,000 per month, reviewable on the happening of certain events.
[2] The trial judge referred to the evidence as “a tangled web of financial affairs.” Their several real estate properties had been acquired through a combination of savings and inheritances. Although they had the financial capacity to retain an expert to collect, organize and analyze their financial material, they relied on their own testimony as a basis for their claims. According to the trial judge, this involved their “best recollections and scattered documentation.” A complicating factor was the prolonged and bitter estate litigation between the husband and his siblings taking place in Hong Kong. The wife asserted that the husband will receive substantial wealth from this estate, generating an income of $1,500,000.
[3] The husband (Chang) appeals the equalization payment amount and the spousal support. The wife (Farnsworth) cross-appeals the trial judge’s failure to award her pre-judgment interest, indexing of support, security for support, and compensatory support. She also appeals the trial judge’s treatment of mortgage payments made by the husband on his excluded property. For ease of reference, the parties will be referred to as husband and wife.
The Equalization Payment
[4] The husband raises two issues with respect to the equalization calculation. He submits that the trial judge erred in concluding that one of the wife’s properties, 7 Resort Lane, was not a matrimonial home, and in denying him a deduction for a contingent tax liability.
(a) 7 Resort Lane
[5] In 1992, the parties purchased a small resort property on Pigeon Lake. The wife managed the resort during the summer months, from May until October, and ultimately moved there full time when a winter clientele was established. The husband went back and forth from his job in Ottawa.
[6] In 2002, the wife purchased 7 Resort Lane, a property next door to the resort. The parties each contributed approximately $55,000 to the purchase price, but the wife paid for substantial renovations with funds from an inheritance.
[7] In 2005, the wife moved into 7 Resort Lane and the husband moved from Ottawa to live at the resort property next door.
[8] The wife testified that she moved into this property in 2005 after an argument with the husband and they never cohabited after that date. Her evidence was that, although the husband stayed overnight occasionally, he was there as a guest. He slept in another bedroom and only did so because his house was too cold. The husband says that, up until February 2009, he thought their marital relationship was continuing and 7 Resort Lane was their family home.
[9] The husband alleges that the trial judge erred by not accepting his evidence that the property was a matrimonial home as defined in s. 18 of the Family Law Act, R.S.O. 1990, c. F. 3; namely that it was, “at the time of separation ordinarily occupied by the person and his or spouse as their family residence”. We disagree. It was open to the trial judge to accept the wife’s evidence and find that 7 Resort Lane was not ordinarily occupied as the family residence at the time of the parties’ separation. The trial judge excluded the property from the wife’s net family property after she returned the husband’s $55,000 contribution to the purchase price. We see no error in this finding of fact.
(b) The Husband’s Tax Liability
[10] The husband’s financial statement filed before trial disclosed no debts. At trial, he claimed a debt of nearly $800,000 for unpaid taxes. He produced a “Non-Resident Tax Notice of Assessment” showing him as the taxpayer. He testified that this related to condominiums on Spadina Avenue which are tied to the estate dispute with his brothers. He and his counsel submitted that “this is a debt he is liable to pay as of the date of separation.” However, in closing submissions, his counsel proposed that the debt be reflected by a reduction in his net family property of approximately $190,000. This amount was a combination of the amount of the reduction in mortgage principal the husband said was attributable to his share of the Spadina properties ($171,000) and of the rent collected ($19,000). The trial judge found the evidence confusing, queried why it was listed as non-resident tax owing and found that there was no evidence of the amount owing by the husband on valuation date.
[11] On appeal, the husband sought to file fresh evidence which included further notices of assessment. It appears that the taxes are related to property owned by the estate of the husband’s father. The fresh evidence does not substantiate a debt owing by the husband in his own right. It appears to confirm that the assessment relates to income from properties tied up in the proceedings involving the estate lands. These lands – together with the tax obligation – will likely be shared with his siblings when the dispute is resolved. In our view, the proposed fresh evidence adds little and ought not to be admitted. As a result, we see no basis to interfere with the trial judge’s disposition of this issue.
Support Payments
[12] Although the parties each had substantial assets, the trial judge determined that the wife – who was undergoing cancer treatments – had an immediate need for support. He ordered that the husband pay $4,000 per month, reviewable on the happening of certain events. The order states:
- The Respondent shall pay spousal support of $4,000.00 on the first day of each month commencing July 1, 2014. Either party may seek a review following:
a) Sale of the Daly and Melfa properties;
b) Payment of the equalization payment; and
c) Completion of the Hong Kong estate litigation. Within one year of completion of the Hong Kong estate litigation, the Respondent if requested by the Applicant, shall provide the Applicant a professionally prepared accounting of the settlement of the estate and an income analysis for all his financial holdings.
[13] The husband submits that the trial judge erred in awarding the wife support and then, having awarded support, in failing to exclude the equalized portion of his pension from his income and in ordering a review. Lastly, the husband submits that the trial judge failed to account for $30,000 paid in voluntary support.
[14] The trial judge considered the objectives of spousal support under the legislation and jurisprudence and made no error of fact or law in his decision to award of support. The wife’s assets were not liquid and she had an immediate need for support. The fact that the trial judge allowed either party to seek a review addresses the husband’s allegations of unfairness with respect to the inclusion of his pension income.
[15] The $30,000 of voluntary support paid by the husband to the wife was subject to a written agreement specifically stating that it would be deducted from any amount of retroactive support ultimately ordered. The trial judge considered an award of retroactive support. He reviewed the guiding principles with respect to retroactive support and concluded as follows, at para. 170:
As a result of the voluntary non-taxable payments made from the date of separation, the similar lifestyles, the failure on the part of the [wife] to seek a larger quantum by motion and the lack of blameworthy conduct on the part of the [husband], there will be no retroactive support.
[16] On this basis, the husband should not now receive a credit for the payment.
[17] Finally, the parties are in agreement that the wording of paragraph 5 of the order set out above should be amended. The review is said to be triggered on the happening of three events. The parties agree that any one of the three events would trigger the review. We agree, and on consent of the parties the “and” in paragraph 5(b) is replaced with “or”.
The Wife’s Cross-Appeal
[18] The trial judge did not award the wife pre-judgment interest, security for support, or indexing of the support. She cross-appeals on the basis that, having rendered insufficient reasons with respect to these claims, the judge erred in failing to make the awards.
[19] Although the trial judge did not separately detail his reasons for rejecting each of these claims, his thorough reasons support his conclusions on these discretionary issues.
[20] The equalization payment arose primarily from the husband’s pension. The wife was receiving support based on the total income from the pension. We agree with the trial judge that this was not an appropriate case for pre-judgment interest. There was also no basis to require the husband – at the age of 68 – to obtain life insurance to secure the support payments, particularly when the wife had significant assets of her own. In light of the review clause, we agree with the trial judge that it would not be appropriate to order an indexing of the support payments.
[21] The wife submits that the trial judge erred in how he dealt with income from an excluded property used to make mortgage payments on that same property. The husband received rental income from excluded properties. The rental income was used to pay the mortgage on the property. The trial judge determined that a portion of the rental income had increased the value of the property. He calculated that $133,000 was the amount by which the mortgage principal had been reduced and added this amount to the husband’s net family property, as contemplated by Oliva v. Oliva, 1988 8689 (ON CA), 12 R.F.L. (3d) 334, [1988] O.J. No. 165 (C.A.).
[22] The wife submits that the trial judge should also have added back the interest portion of the mortgage payments. We disagree. First, the trial judge’s calculations were grounded in the evidence and disclose no error. Second, at trial, the wife’s counsel submitted that the trial judge treat the payments in the way he did – for both her and her husband. It is not open to her now to object to this exercise of the judge’s discretion.
[23] Lastly, the wife submits that the trial judge erred in rejecting her claim for compensatory support. The trial judge reviewed the relevant provisions of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), the leading jurisprudence and the factual basis for the wife’s support claims. He concluded – in our view correctly – that the non-compensatory support awarded to the wife satisfied all her claims for support.
Disposition
[24] The appeal and the cross-appeal are dismissed. Paragraph 5(b) of the Final Order of June 13, 2014 is amended to replace the word “and” with the word “or”.
[25] Each party will bear his or her own costs of this appeal.
“Paul Rouleau J.A.”
“G. Pardu J.A.”
“M.L. Benotto J.A.”