COURT OF APPEAL FOR ONTARIO

CITATION: Anderson v. McWatt, 2016 ONCA 553

DATE: 20160708

DOCKET: C60768

MacPherson, Cronk and Benotto JJ.A.

BETWEEN

Helen Anderson

Applicant (Respondent)

and

Roger McWatt

Respondent (Appellant)

Gary Joseph and Ryan Kniznik, for the appellant

Patrick D. Schmidt, George Karahotzitis and Melanie A. Larock, for the respondent

Heard: July 6, 2016

On appeal from the order of Justice Victoria R. Chiappetta of the Superior Court of Justice, dated June 24, 2015.

By the Court:

[1] At the conclusion of the appellant’s submissions, we advised that the appeal would be dismissed with reasons to follow. These are those reasons.

[2] The parties began living together in 1980. They married in 1989 and had two children who are now adults. In 2000, the respondent petitioned for divorce. For the next 15 years, the parties were mired in high conflict litigation. The trial in 2015 lasted 16 days. The appellant (husband), who represented himself at trial, challenges certain aspects of the judgment and the costs award.

Brief Background

[3] The parties are interior designers who together created a successful business and acquired various properties. “McWatt Anderson” was jointly owned; the appellant had a 55% interest and the respondent 45%.

[4] In April 1987, just prior to the parties’ marriage, the appellant purchased – in his name alone – a commercial investment property on Atlantic Ave. in Toronto. The parties had previously discussed with their accountant the advisability of incorporating a company to take ownership of the Atlantic property. In 1988, the appellant incorporated Stratus Development Corporation (“Stratus”). The respondent believed that Stratus owned the Atlantic property. The financial statements of Stratus stated that ownership of the property was transferred or rolled over to it under s. 85.1 of the Income Tax Act. However, no such transfer or rollover ever took place. The trial judge found that it was not until 2012 that the respondent learned that title to the property was registered in the appellant’s name alone.

[5] Both parties contributed to the renovations and maintenance of the building after it was purchased. Between April 1987 and June 2000, the Atlantic property was used by the parties, in part to house the operations of McWatt Anderson. After June 2000, following the parties’ separation, the respondent stopped going to work at McWatt Anderson and formally resigned in December 2001. From June 2000 onward, the appellant operated his own business, McWatt & Associates, out of the Atlantic property.

[6] In May 2014, the respondent obtained leave to amend her pleadings to make an unjust enrichment claim and to seek a constructive trust against the Atlantic property. The unjust enrichment issue was a primary focus of the trial below.

Trial Judgment

[7] The trial judge’s reasons run to 87 pages and deal with all matters arising from the marriage. The appellant challenges three aspects of the judgment: (i) the award of a 45% interest in the Atlantic property to the respondent on the basis of unjust enrichment; (ii) the award of retroactive spousal support for the years 2000-2015; and (iii) the award of prejudgment interest on the equalization payment.

Discussion

Unjust Enrichment

[8] The appellant raises three issues with respect to the finding of unjust enrichment: first, he alleges that the claim is statute barred; second, he challenges the apportionment of 45% to the respondent; third, he submits that if he is unsuccessful on his limitation period argument, the respondent should receive a monetary award, not an interest in the property.

[9] The trial judge found that the doctrine of fraudulent concealment applied to toll the limitation period. In accordance with R. v. Guerin, 1984 CanLII 25 (SCC), [1984] 2 S.C.R. 335 at paras. 98-99, the limitation period did not start to run until the respondent “discovers the fraud, or until the time when, with reasonable diligence, she ought to have discovered it.” The trial judge concluded at para. 77:

By attesting to the untruth that Stratus was the beneficial owner of 28 Atlantic, the [appellant] concealed the [respondent’s] right to claim equitable ownership in the building as her claim in equity is triggered by the very ownership he was purposively concealing. It is appropriate considering the totality of the circumstances, therefore, to invoke the Court’s equitable jurisdiction to stay the operation of the limitation period. The [appellant’s] conduct in representing that his interest was transferred and concealing that his interest was never transferred constitutes an abuse of the parties’ special relationship. The [respondent] discovered that abuse for the first time by the [appellant’s] admission of previous deceit in February/May 2012. The limitation period under the Real Property Limitations Act is therefore stayed until that time.

[10] The appellant submits that the trial judge erred in her finding that the respondent did not know that the property was registered in the appellant’s name until 2012. He says that the respondent knew or should have known in 2001 that the property was in the appellant’s name. He submits that, because her counsel knew, she knew. In particular, she is bound by comments her counsel made during her questioning in 2001 when her counsel said that the appellant was the registered owner of the Atlantic property. Counsel was then asked if he was making a claim to the Atlantic property on the basis of a constructive trust. He responded: “When we finish your client’s examination, we have no claim at the present made in our petition. We may very well have a claim against the property.” And he also said: “We will make our claim as and when we feel we have sufficient facts to base it on.” This section of the questioning was read on the record at trial.

[11] The appellant argues that the trial judge did not address this evidence when she considered the limitation period. By not addressing this evidence, the appellant argues that the trial judge made a reversible error because the evidence confirms that the respondent knew of her claim in 2001.

[12] We do not agree.

[13] At the time of the questioning, and for the next 11 years, the appellant swore financial statements and affidavits confirming that the Atlantic property was held by Stratus. The respondent was entitled to rely on this disclosure. Her counsel’s indication that she “may” have a claim was not an admission that she had a claim such that the limitation period was triggered.

[14] While not pressed in oral submissions, the appellant submits generally that the respondent could have, with reasonable diligence, discovered the true ownership of the Atlantic property long before 2012. While the trial judge did not directly address the reasonable diligence argument – made for the first time on appeal – her reasons read as a whole make her findings clear that the respondent did everything she reasonably could to determine the truth that the appellant was concealing.

[15] The trial judge found that the respondent suffered from clinical depression, depleted her RRSPs as a result of the appellant’s continual child support arrears, was abused by the appellant and by the time of trial was “a shell of a person…visibly diminished”. At paragraph 25, the trial judge said this:

As the [appellant] is self-represented, he conducted the cross-examination of the [respondent]. His conduct demonstrated the [respondent’s] testimony of her gradual diminishment at the hands of a controlling spouse who consistently undermined their mutual efforts and dismissed her thoughts and feelings. Instead of asking a question and receiving an answer, the [appellant] attempted to control the answers, telling her what she meant to say or suggesting that her words were in some way unworthy. The [appellant] felt it appropriate to judge the [respondent’s] answers using the words “yes,” “no” or “close” despite clear direction by the Court not to do so. The [respondent] on one occasion pleaded that she needed a break as “he is in my head.” Throughout the cross-examination it became abundantly clear to me that this woman was conditioned to be submissive to the thoughts and opinions of the person asking her the questions.

[16] These findings make it clear that the trial judge determined that the respondent did all she could reasonably have done to find out the true ownership of the Atlantic property.

[17] Although the appellant takes no issue with the finding of unjust enrichment, he submits that the trial judge erred in finding that the respondent was entitled to a 45% interest in the property. Again, we disagree.

[18] The trial judge accepted the respondent’s evidence that she believed that the Atlantic property would be jointly owned. She found that the joint efforts of the parties contributed to the acquisition and maintenance of the building. She rejected the appellant’s evidence that he had arranged and personally paid for renovations post-separation which contributed to the present day value. She also found that the appellant had lied to the respondent by telling her the property was owned by Stratus – a corporation in which she held shares. These findings of fact were open to the trial judge and supported the finding of a constructive trust.

[19] Lastly with respect to unjust enrichment, the appellant challenges the remedy. He submits that the trial judge should have made a monetary award instead of awarding an interest in property. The trial judge considered and rejected the appropriateness of a monetary award. She considered the difficulty of recovery, the contributions made by the respondent, the market forces that increased the value of the property, and the profits that the appellant had taken for himself. We see no error in her analysis.

Retroactive Spousal Support

[20] Although addressed only briefly in oral submissions, the appellant also challenged the retroactive spousal support award.

[21] The quantum of spousal support was based on compensatory and non-compensatory principles. The trial judge found that the respondent: (i) assumed primary responsibility for the household and the children during the marriage and after separation; (ii) contributed equally to the success of the parties’ joint business; (iii) suffered undue economic hardship from the marriage breakdown by drawing from her RRSP investments and securing debt against the matrimonial home to provide for her needs and those of the children; (iv) made valiant efforts at self-sufficiency after the marriage but has been unable to achieve a degree of self-sufficiency having regard to the marital standard of living; (v) suffered economic disadvantage to the advantage of the appellant; and (vi) suffered emotional abuse by the appellant, which had an ongoing impact on her health and professional abilities. The quantum of support ordered was based on the high range of the SSAGs. We see no error in this analysis.

[22] Nor did the trial judge err in awarding retroactive spousal support in light of her findings that: (i) the respondent had to deplete $670,000 in RRSPs during the proceedings to support herself because of the appellant’s failure to provide adequate support; and (ii) the appellant engaged in a repeated pattern of ignoring the interim spousal support order and accumulating arrears, and suppressed his true available income for support purposes through the company he controlled, Stratus.

Prejudgment interest

[23] The trial judge found that the appellant owed the respondent an equalization payment of $62,731.69. She held that the equalization payment was due and payable to the respondent on September 1, 1997 and that “there is no reason to depart from the general rule that the payor spouse is required to pay prejudgment interest on the equalization payment owing to the payee spouse, at the judge’s discretion.”

[24] There was no objective evidence that the appellant did not have the ability to pay the equalization amount prior to this order. Rather, he delayed the precise calculation of the equalization amount by concealing until 2012 that the Atlantic property was not rolled over into Stratus and further concealing until 2014 that the parties’ other properties had not been rolled over into McWatt Anderson. The trial judge concluded that he should therefore pay prejudgment interest in accordance with the average rate on an annual basis for each year in question, as set out in the Courts of Justice Act R.S.O. 1990, c.43. We see reason to interfere with this exercise of discretion.

Costs

[25] We also see no error in the trial judge’s award of costs. While the amount awarded is high, it reflects 15 years of high-conflict litigation involving multiple court attendances. The trial judge set out the provisions of Rule 24 in detail and carefully applied each consideration to the facts. In our view, the costs award is neither plainly wrong, nor tainted by any palpable and overriding error.

Disposition

[26] The appeal is dismissed with costs payable to the respondent in the amount of $35,000, inclusive of disbursements and HST.

Released: July 8, 2016

“J.C. MacPherson J.A.”

“E.A. Cronk J.A.”

“M.L. Benotto J.A.”