Court of Appeal for Ontario

Date: August 2, 2017 Docket: C63005

Judges: Sharpe, Lauwers and Roberts JJ.A.

Parties

Between

Prudence Gonsalves Applicant (Respondent in Appeal)

and

Steven Scrymgeour Respondent (Appellant)

Counsel

For the appellant: Alex Finlayson

For the respondent: Elliott Birnboim and Faye Yao

Hearing and Appeal

Heard: July 19, 2017

On appeal from the judgments of Justice B. T. Glustein of the Superior Court of Justice, dated October 27, 2016, with reasons reported at 2016 ONSC 6659, and dated February 22, 2017, with reasons reported at 2017 ONSC 1034, and on motion for leave to appeal the costs order of Justice B. T. Glustein, dated May 1, 2017, with reasons reported at 2017 ONSC 2651.

Reasons for Decision

Roberts J.A.:

Introduction

[1] The parties were never married but lived together in a conjugal relationship for over 16 years. They have three children, one of whom requires ongoing financial child support. The appeal and cross-appeal challenge the trial judge's determinations in relation to the issues of spousal and child support, and the division of the value of the family home as an asset of a joint family venture.

[2] After 14 days of trial and further written submissions, the trial judge granted judgment in favour of the respondent, determining as follows:

(i) that there was a joint family venture and that the respondent was entitled to $595,530 as her share of the value of the family home;

(ii) that $150,000 should be imputed to the appellant as annual income for the purposes of calculating spousal and child support and that the respondent is entitled to retroactive and future spousal and child support;

(iii) that the appellant pay costs fixed in the amount of $280,000.

A. Appeal

(1) Property Issues

[3] The appellant does not challenge the trial judge's finding that there was a joint family venture. However, he submits that the trial judge misapplied the test for unjust enrichment under a joint family venture and therefore erred in awarding anything on account of the respondent's property claims because she did not contribute to the generation of wealth in the joint family venture; rather, she should be ordered to repay the appellant $130,000.

[4] In the alternative, the appellant contends that the trial judge erred in granting the respondent about 50 per cent of the value of the family home because the respondent's share should have been limited to her contributions, which the appellant calculated to be approximately 12 per cent of the value of the family home. Moreover, he submits, the value of the family home should have been assessed as of the date of the separation, rather than the date of trial.

[5] Finally, the appellant maintains that the trial judge erred in failing to deduct the deposit paid by the appellant and the outstanding balance of the mortgage on the family home.

[6] With the exception of the deduction of the outstanding mortgage on the family home, to which I return later in these reasons, I would reject the appellant's submissions. All of those submissions depend on this court setting aside the trial judge's findings of fact. Absent overriding and palpable error or error of law, this court cannot interfere. I see no such error here.

[7] In considering the respondent's property claim, the trial judge correctly framed his analysis, following the leading decision of Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269. As the trial judge noted, Cromwell J., writing for the unanimous court in Kerr, at para. 81, stated that a claim for unjust enrichment arises "when the parties have been engaged in a joint family venture and there is a clear link between the claimant's contributions to the joint venture and the accumulation of wealth".

[8] The trial judge concluded that, on the facts of this case, there was both a disproportionate accumulation of assets by the appellant, linked to the respondent's contributions to the parties' joint family venture, and a corresponding deprivation and absence of juristic reason for the appellant's disproportionate accumulation of assets.

[9] The trial judge's conclusions are grounded in his detailed factual findings about the parties' respective monetary and non-pecuniary contributions to their joint family venture. In his very thorough examination of the evidence, the trial judge carefully examined the respective benefits received and efforts maintained by each party. It was open to him to weigh the factual circumstances of this case as he did. The trial judge's findings of the parties' respective contributions and their expectations that the family home would be shared as an asset of their joint family venture flow from his factual analysis. I see no error in either the trial judge's findings or treatment of these issues.

[10] The thrust of the appellant's argument is that the trial judge erred in not giving more weight to the financial support provided by the appellant over the course of the parties' relationship. The appellant's position runs directly contrary to the approach mandated in Kerr and other cases: namely, that the court's consideration of the parties' respective contributions and entitlement to a share in their joint family venture should not amount to a bookkeeping exercise but instead must take account of all contributions, both pecuniary and non-pecuniary: Kerr, at paras. 57-58.

[11] I turn finally to the issue of whether the trial judge erred in failing to deduct the outstanding mortgage on the family home from its assessed value in his calculation of the respondent's monetary remedy. In my view, he did.

[12] The trial judge accepted the evidence of the appellant and his brother that the balance of the mortgage "is outstanding and is required to be paid upon sale" of the family home. Given these findings, it was not then open to the trial judge to ignore the ongoing liability for which the appellant would be solely responsible following the sharing of the value of the family home. That the mortgage was not satisfied during the course of the parties' relationship meant that they both benefitted from the availability of the funds from the family's disposable income which otherwise would have been depleted to pay off the mortgage debt.

[13] As a result, I would deduct the amount of $137,060 from the net value of the family home of $1,191,060, resulting in the amount of $1,054,000, of which the respondent's share is $527,000 (rather than the $595,530 awarded by the trial judge).

(2) Imputation of Income and Support Issues

[14] The appellant does not take issue with the retroactive support ordered by the trial judge. However, he submits that the trial judge erred in imputing a total of $150,000 of annual income to him for the purposes of calculating future spousal and child support. Specifically, while he does not challenge the trial judge's imputation of employment income, the appellant maintains that the trial judge erroneously included three anomalies in the respondent's income which would not be repeated in following years: a one-time dividend of $50,000 paid in 2013; a capital gain of $34,975.76 paid in 2014; and a dividend of $17,434 paid from retained earnings in 2015. The appellant submits that a reasonable rate of return of 3 per cent on his investments of $442,805.68 ought to be imputed to him and that the imputed investment amount should be $13,284.17, which, added to the $98,000 calculation of employment income, amounts to $111,284.17.

[15] I would not give effect to these submissions.

[16] For the appellant's investment income, the trial judge calculated the average of the appellant's investment income from all sources for the three-year period from 2013 to 2015 and arrived at a figure of $52,000. He then added this $52,000 to the appellant's employment income of $98,000, to arrive at a total of $150,000 as the appellant's annual imputed income. It is clear from his reasons that the trial judge did not accept that the appellant's investment income was anomalous or non-recurring. Instead, the trial judge found that after 2012, the appellant received "regular" income from dividends and capital gains: $81,000 in 2013; $43,000 in 2014; and $34,000 in 2015; and that the appellant's brother has paid dividends "from time to time" to the appellant and his siblings from GHL, the holding company established by their father to hold investments. In my view, these findings were open to the trial judge and there is no basis to interfere with them.

B. Cross-Appeal

[17] The respondent submits that the trial judge erred by not imputing additional income to the appellant in relation to the following:

(i) his inheritance from his father's estate that he donated to the University of Toronto to create a scholarship;

(ii) the value of the appellant's shares in GHL.

[18] The appellant inherited approximately $1.3 million from his father. The trial judge found that in accordance with their father's wishes, which were not enshrined in his will, the appellant and his brother had pledged their inheritances totalling about $2.6 million to establish a scholarship at the University of Toronto.

[19] To create a legally valid gift, there must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee and (3) a sufficient act of delivery or transfer of the property to complete the transaction: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 24. Here, the appellant had given his full share of the inheritance to his brother for the purpose of donating the entire inheritance in accordance with their father's wishes. The appellant's brother was to receive the entire tax benefit of the donation. At the date of the trial, the appellant's brother had donated approximately $1.6 million. A further $500,000 was to be donated in 2016; and the final $500,000 was to be donated by December 31, 2017.

[20] The respondent effectively asserts that the appellant was required to retain his inheritance from his father in order to pay additional spousal and child support based on the income generated from investing this inheritance. There is no evidence that the appellant had access to any income or other benefits produced from that inheritance. The trial judge accepted that the appellant had gifted his share of his inheritance to his brother in good faith for the purpose of making a donation to honour their father's wishes and memory. He did not see these circumstances as justifying imputing any additional income to the appellant. This finding is entitled to deference, absent error of law or palpable or overriding error. I see no such error here.

[21] As for the appellant's interest in GHL, the trial judge found that the appellant does not have access to GHL's assets nor the ability to require the sale of his share or the declaration of dividends. Again, these were findings that were available to the trial judge on the evidentiary record before him. I see no error in his findings that would permit appellate intervention.

[22] The trial judge correctly recognized that the appellant had received, and would continue to receive, dividends and other income benefits from GHL. For that reason, he included the supposedly one-time dividends and other benefits that the appellant received from GHL in order to calculate the average income that should be imputed to the appellant. To impute further income from the same assets would amount to double-counting.

[23] Accordingly, I would dismiss the cross-appeal.

C. Leave to Appeal Costs

[24] While not pressed in oral argument, the appellant seeks leave to appeal the costs order dated May 1, 2017. I see no basis on which to grant leave.

[25] The trial judge found that the respondent had obtained a more favourable result at trial than her offer to settle and was entitled to full recovery costs from the date of her offer in accordance with the provisions of r. 18(14) of the Family Law Rules.

[26] The trial judge reviewed the factors enumerated under r. 24(11) of the Family Law Rules. In particular, the trial judge found that the appellant's pre-trial conduct in failing to pay spousal support and opposing an order that their youngest son move back in with the respondent notwithstanding the recommendation of the Office of the Children's Lawyer, was unreasonable. He also found that the parties' respective costs were comparable.

[27] Based on all of the circumstances, the trial judge awarded the respondent costs in the amount of $280,000, which represented a significant reduction of the $376,540.32 in costs claimed by the respondent.

[28] I see no error in the trial judge's cost award and would not interfere.

D. Disposition

[29] For these reasons, I would allow the appeal with respect to the recalculation of the respondent's share of the family home, and dismiss the cross-appeal and motion for leave to appeal the costs order.

[30] I would amend the first paragraph of the trial judge's October 27, 2016 order to read as follows: "The Respondent shall pay to the Applicant the amount of $527,000."

[31] As for costs of the appeal, the parties agreed that $50,000 on a substantial indemnity basis and $35,000 on a partial indemnity basis would be appropriate.

[32] In my proposed disposition, the appellant would achieve modest success on a narrow issue that took up little time at trial and on appeal: namely, the $68,530 reduction in the amount payable to the respondent as her share of the value of the family home. I agree with the respondent's submissions that this outcome ought not to affect the costs disposition at trial nor justify an award of costs to the appellant on appeal.

[33] The appellant submitted an offer to settle with respect to the appeal. While it is open to this court to consider offers to settle, having reviewed the appellant's offer, in my view it represents little compromise and has no relevance given the outcome of the appeal or the cross-appeal.

[34] While in my proposed disposition, the respondent would prevail on many issues on the appeal, her cross-appeal would be dismissed.

[35] Given the mixed success, I would make no order as to the costs of the appeal.

Released: August 2, 2017

"L.B. Roberts J.A."

"I agree Robert J. Sharpe J.A."

"I agree P. Lauwers J.A."