Mildren v. Mildren, 2013 ONSC 1435

COURT FILE NO.: D-767/09

DATE: 2013-05-28

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Thomas R. Mildren

Applicant

– and –

Dawn L. Mildren

Respondent

Mr. J. Higginson, counsel for the Applicant,

Mr. M. Clarke, counsel for the Respondent

HEARD: September 5th, 6th, 7th, 10th, 11th, 12th, 13th, 14th, 18th and 21st, 2012

the honourable madam justice M. J. Mclaren

[1] A ten day trial was held in this matter in September 2012. The issues were equalization of property, spousal support, child support and divorce. Included in the claim for spousal support was a request to impute income to the applicant and order a lump sum payment. Included in the claim for equalization was a request to declare the parties’ rental business a joint venture and to find that the respondent holds certain properties by way of a constructive trust.

Background

[2] The parties were married on December 30th, 1982 and separated on March 31st, 2007. They cohabited a few years before marriage. They have two children namely Kellie Leanne Mildren, born June 30th, 1989; and Robyn Lynne Mildren, born July 24th, 1990. At the time of the trial Kellie was taking an undergraduate program at Queen’s University and Robin was taking an undergraduate program at the University of Guelph. When she is not in Kingston, Kellie resides with the applicant father. Robyn primarily resides with the respondent mother.

[3] The applicant is currently 54 years of age and the respondent is 55 years of age. For convenience I will refer to the applicant as the husband and the respondent as the wife.

[4] During the early years of the marriage, the husband had various jobs. He worked in a truck assembly factory early in the marriage. Eventually he started his own business called “Thomas Mildren Contracting” (T.M.C.). Through this business he does construction jobs, but has began to specialize in repairing leaky basements. The wife worked as a registered nurse, but gave this up several years before separation, and after the parties began investing in real estate.

[5] They began to invest in real estate several years ago at the suggestion of the husband’s brother. Over the years they have purchased and sold several properties. As of separation they owned the following:

(a) 6 Watchgate Court, Dundas, Ontario. This property was the matrimonial home and registered in the wife’s name. Part of the house was rented out.

(b) 26 Bowman Street, Hamilton, Ontario. This property is a seven unit apartment building and the units are mostly rented to McMaster University students. It is registered in the wife’s name.

(c) 1263 Main Street West, Hamilton, Ontario. This property has a rental component and was also used by the husband for his business. It is registered in the wife’s name.

(d) 1022 Rat Bay Lane, Lake of Bays (referred to as the large cottage). This property was rented out on occasion and used by the parties as well. It is registered in the name of the husband’s mother pursuant to a trust agreement.

(e) 1028 Rat Bay Lane, Lake of Bays (referred to as the small cottage by the parties). This property was sold during the litigation. It had been held in the name of the wife’s mother pursuant to a trust agreement.

[6] The parties agree that the properties were registered as they were based on advice from a friend who was a lawyer.

[7] The husband did the day to day work at Thomas Mildren Contracting (TMC) and the wife primarily managed the rental units. There is a disagreement as to the significance of how they arranged their business affairs.

[8] The husband claims that the property management was a joint venture and that he should be deemed to hold a constructive trust interest in the properties registered in the name of the wife alone.

[9] The wife claims that it was her job to look after the properties and she has done so without contribution from the husband since separation and there should be no constructive trust found and no joint venture found.

[10] The wife declares lump sum spousal support based on the fact that the husband has had significant income, which has not been declared.

[11] This would make a monthly amount of spousal support difficult to obtain and enforce. The husband believes there should be no spousal support because the wife can support herself from the rental income properties.

[12] The parties also disagree on how much income should be imputed to the husband. They also disagree on whether or not the wife shall be able to show funds received from her mother as a loan on her Net Family Property (N.F.P.) Statement.

Witnesses

[13] The following people testified:

• The applicant Thomas Mildren.

• Thomas John Beasley.

• Becky Cooper.

• The respondent Dawn Mildren.

• Michael Robert Carnegie.

• Jennifer Winterfield.

• Shirley Morehouse.

• Serguei Avdeyev.

• Mary McFarlane.

[14] I will review the evidence of each of the witnesses.

[15] The applicant husband was the first witness and a summary of his evidence is as follows:

• He began this action in April 2009 which was two years after separation. The wife blocked the entrance to his business so he could not use it. She also disposed of his work van, some large equipment, tools and some cottage chattels.

• The Main Street West property was a triplex, but part of it was used as his workshop.

• The wife answered the telephone for T.M.C. while he did the day to day work in the business. Her duties in the real estate business included collecting the rent, showing new tenants around, paying bills, keeping the records, some painting and arranging for repairs. The husband said he did minor repairs on the rental properties.

• He described relations between the two as having deteriorated quickly following separation. The parties agree that the separation occurred at the end of March 2007. The husband did not move out of the matrimonial home until January 2008. Shortly after that, entry to his business was blocked. After it was clear he would not be able to use these premises he began to store all equipment at the home of his subcontractor and he purchased new equipment and a new van.

• The wife accused the husband of assault on two occasions following separation. He described an incident in February 2008 where the wife came to his home at night to obtain documents. The meeting was pre-arranged. He would not release the papers without the wife signing a receipt for them and she refused. There was some grabbing of the documents and the wife claimed the husband assaulted her at the side of the house.

The police investigated but did not lay charges and they cancelled a meeting with the husband.

He was subsequently served with a Statement of Claim for damages due to the alleged assault and he noticed that the parties’ two daughters were added as parties. He said the daughters were surprised to learn that they were parties to the action. The husband brought a motion to have them removed as parties and they were removed on consent.

• The wife removed numerous things from the cottages and had her cousin sell some of them, along with the work related equipment. The husband described the following as having been taken:

o Four work trailers.

o Gas tamper (which cost $3,400.00 two years before).

o Concrete jack hammer

o Concrete saws

o Many small tools

o A GMC Chevy van he used for work

o A boat

o An ATV

o Sea doo

o Cottage furniture and appliances

o Stereo

o Canoes and Kayaks

o Camper and camping gear.

• The small cottage was sold in October 2011 and the husband did not know that the wife and her mother arranged for a sale until it was all over. It was a private sale. A motion was argued and the husband received half of the proceeds.

• The small cottage was registered in the name of the wife’s mother, Shirley Morehouse, in trust for the parties. A trust agreement was signed in 1997 and the parties herein agreed to indemnify Ms. Morehouse and save her harmless from any personal liability in relation to the said lands.

• The husband testified that the parties completed their income tax return themselves. He provided the figures for T.M.C. and she provided the figures for the Property Management Business (P.M). The 2004 income tax return was looked at. It shows the husband claiming half of the expenses and income for P.M. He pointed out that this is how they did their returns every year. They each used one half of the expenses and income for each business. It was a form of income splitting. His 2005 income tax return shows the same method. He also showed business income and rental income of his 2006 income tax return. By the time the 2007 return was completed the parties were separated and the returns were done differently. No rental income or expenses were shown on the husband’s 2007 return.

The husband believes that the fact that the parties engaged in a form of income splitting and that he helped in the purchase of the rental properties, along with doing some minor maintenance and repairs on the rental properties, shows that the rental business was a joint venture. As such a finding of a constructive trust should be made in his view. This would mean that the current values of the properties could be used in the N.F.P. statements, rather than the values of March 31st, 2007. The March 31st, 2007 values would all be on the wife’s side of the N.F.P. statements if a trust is not found and the husband would not benefit in any increase in value.

• Despite the fact that the parties shared income from the two businesses on their tax returns during the marriage, the husband did not contribute to the taxes and other expenses for the properties in the wife’s name after separation. He acknowledged being asked to pay spousal support, but he did not. He said that the wife earned sufficient money from the rental income to pay all the expenses and support herself.

• The husband estimated his annual income is $60,303.48 on his financial statement sworn on September 4th, 2012. During his testimony he said that he typically receives about $10,000.00 to $15,000.00 in undeclared income for small jobs every year. As such his total income could be deemed to be, at least, $70,000.00. However he said that a similar amount could be added to the wife’s income, because some rent (for example for the cottage and previously both cottages) is paid in cash. He also commented that the 2004 income tax return showed no income for parking and the coin laundry, and there would have been some. He believes the seven unit building on Bowman Street provides $70,000.00 to $80,000.00 in profits every year. There is no mortgage on that property and he believes there must be $120,000.00 in gross rental income every year.

• The husband said that most jobs he receives are in the range of $5,000.00. The largest would be about $40,000.00 and he would get a job at that price about once every three years. When he is busier, it does not always translates into an equal increase in profits, because he has to hire workers to do the work since he cannot personally do two jobs at the same time.

• He refinanced his house at 65 Newcombe Road in Dundas a second time in order to purchase new equipment, pay debts, pay legal fees, etc. He testified that he told the mortgage broker that he earned about $70,000.00 per year and was informed that this was not enough for the $500,000.00 mortgage he was seeking. He said he then suggested his income was $350,000.00 in order to secure the mortgage. This mortgage was on the house he purchased about ten months after separation. The husband said that the original mortgage was in the amount of $360,000.00 to $380,000.00 and it was refinanced in the amount of $500,000.00. On the mortgage application he also listed his assets as including the property at 26 Bowman Street and 1263 Main Street East even though they were in the name of the wife. He said that the amount inserted for income was suggested by the mortgage broker in order to qualify for the loan and not at all an accurate reflection of his income.

• Evidence was given about the money that was earned through his business, but paid to the parties’ daughter Kellie. Some customers were asked to make payment to K. Mildren. The husband said he started to do this when the parties were separated but living in the same house and he wanted to move out and get a home of his own. He felt that the wife was not cooperating and this was the only way he would be able to put some money aside. When asked during cross-examination how much money was deposited into an account held by Kellie, he said “hundreds of thousands – I don’t remember”. The husband undertook to provide an accounting of all the money that was deposited into Kellie’s name during questioning in 2010. He ultimately provided an accounting that was prepared by Kellie. Kellie showed deposits of $139,530.85 into her T.D. bank account from between June 2008 and July 2009. She also showed deposits into her CIBC account of over $300,000.00. She went on to show how much of the money was spent. Large amounts were used for Kellie’s own expenses including a car and tuition. Other money was used for expenses relating to the husband’s new home, his legal fees, a new work shop, a new bobcat. A sum of $70,531.43 was shown as being used for T.M.C. operating expenses for example. Not all of this money was from customers who wrote cheques to K. Mildren, but it is clear that Kellie’s account was used to transfer money for the husband.

• Evidence was also given about money that was transferred from the business to the husband’s new girlfriend (Jennifer Winterfield). He said this amounted to over $130,000.00. The cheques payable to Mr. Mildren or T.M.C. were endorsed over to Ms. Winterfield. This appeared to be information revealed at trial. The wife’s lawyer asked the husband if he only acknowledged the $130,000.00 during the trial, because he learned that his girlfriend had been served with a subpoena to appear. He responded by saying that he was just trying to come clean.

He also testified about the arrangement between him and Ms. Winterfield regarding the new home she was having built. She purchased a lot with a house on it at 34 Tally-Ho Drive in Dundas. That house was torn down and she is building a new house on the property. The property is in her name alone. The husband says that they both plan to live there when the home is completed which was estimated to be about February 2013. He says they have not talked about him being put on title to the new home, even though he has contributed $130,000.00 to the home, plus other expenses which he has contributed towards by providing some of the work that was done. He hopes to be put on title once the home is completed. In addition to the $130,000.00 transferred to Ms. Winterfield, the husband contributed by having the demolition and digging done, and other miscellaneous jobs. The new home is on a 75’ x 50’ lot and the construction was estimated to be about $375,000.00. The husband said he met Ms. Winterfield about one year after separation and they decided to build a house together in 2011.

• Another issue addressed by the husband was that of money he allegedly took from an account held for his mother-in-law Shirley Morehouse. This was in the amount of $21,790.00 and Ms. Morehouse is suing him for it. The husband acknowledged that he did take money from the joint line of credit to use for the purchase of his house. He went on line to review the accounts and he thought the $21,790.00 was in the wife’s name. He said he had no knowledge of it being money for Ms. Morehouse as her name was not shown on the list of accounts. The accounts were shown as sole, joint, or primary spouse. The customer name is shown as Dawn Mildren. He said the money was used by him for Kellie’s schooling because there had been money in a Registered Education Savings Plan and the wife put it in her own name. This was how he justified taking the money, which was shown on the print out as part of Dawn Mildren’s accounts.

[16] Thomas Beasley testified. He was called to testify for the husband and received a subpoena to do so, but he is the wife’s cousin. He was asked about the chattels he helped to sell for the wife. He found someone to buy the van registered in her name and he acknowledged that it looked like it was used in a business. He bought it for $6,000.00 and sold it for $8,000.00. He also bought the parties’ camper and sea doo. He sold the sea doo and made a profit. He sold the Honda 4 wheel ATV for the wife, and made a small profit. He acknowledged that he assisted in removing some furniture from one of the cottages.

[17] During cross-examination he said he saw the husband drill holes in the bottom of a 19 foot boat about 17 or 18 years ago and when the husband realized he was there, he indicated he should be quiet about it. The witness said he subsequently learned that the boat sank and a new one purchased. He also said he heard the husband say to his daughters “Rules are for other people – not for us”.

[18] Becky Cooper testified. She is a records disclosure clerk for the Hamilton Police Services and she was called to verify police occurrence reports regarding a complaint of an assault and other occurrences plus a report of a stolen vehicle.

[19] The Respondent wife testified and I will summarize her evidence:

• By training the wife has a diploma from Niagara College in nursing. In 2010 she went back to school and obtained a teaching certificate which would allow her to teach health care to students in High School or in grades 7 and 8. When the parties began cohabiting she was a registered nurse working in a doctor’s office. She was off work for a while when the children were born, but she went back to work when the youngest was 3 and worked at two part-time jobs. This was from 1993 to 1996 and she worked in a doctor’s office for 3 days per week and with a visiting nursing agency. In total it was like a full time job she said. From 1996 to 1999 she just worked with the visiting nursing agency about 2 days per week. She did not work as an employee anywhere after 1999.

The wife indicated that when she gave up nursing it was something that the husband wanted her to do, so that they would have more time to go to the cottage.

The parties began buying properties in the nineties and ultimately the wife had a role in managing some rental properties and she never went back to nursing.

She had her nursing license reinstated upon completion of a certification course in the spring of 2010. She also obtained a certificate to teach health care. She has applied to two school boards. She has not applied to work in a doctor’s office. She says that these types of jobs do not pay enough and she has found the litigation process and the loss of a relationship with her oldest daughter difficult to deal with. She has been in counselling for a while.

She described her duties of managing the rental units as being very bust at times. The fall months and the spring months are particularly busy. She said she has to be upbeat to meet the potential renters for the Bowman property, who are mostly students. This involves meeting their parents often and finding new tenants when the students leave. She collects rent, pays the bills and arranges for maintenance and repairs.

• The wife also testified about her role in the home while the children were growing up. She outlined how she had primary responsibility for the children.

• There was evidence about assaults by the husband. The wife described the evening of February 27th, 2008 when she went to the husband’s home to obtain some documents. She said he wanted her to sign a type of receipt for the documents but she would not sign it because it did not seem like all the documents were there. He then allegedly jumped her from behind as she was walking away and he started to drag her to the side of the house, wherein he slammed his fist into her abdomen and spoke abusively to her. The police were called and they investigated. They looked around the outside of the home and spoke to each party and ultimately did not lay charges. The wife said she suffered injuries to her shoulder and abdomen and as a result of this assault she filed an application with the Criminal Injuries Compensation Board. A hearing was held and the wife was awarded $7,242.90. The husband did not attend the hearing. She commenced a law suit regarding this assault in Kitchener, although all parties resided in Hamilton. It was commenced about 2 years after the assault. She sought damages for her shoulder injuries. Initially, she included the parties’ two daughters as parties to the action. The husband brought an action to have the daughter’s removed as parties, and this was done. The action remains outstanding however.

Another incident was described wherein the police were called. The wife said the husband assaulted her at the family cottage. The police spoke to witnesses in the cottage and declined to lay charges. It became clear in cross-examination that the wife went to the cottage the next day and refused to leave while the husband was there with friends. She sat at the kitchen table and did a jigsaw puzzle and ate her lunch.

• Evidence was given regarding the history of the real estate purchase. Several properties have been brought and sold over the years. The husband’s brother was involved in the purchase of some. The wife said the parties decided to get involved in buying real estate as a form of security for her as she was not working as a nurse anymore. She said the husband spent a lot of time rebuilding the large cottage, but he spent less time doing repairs or renovations on the properties in the Hamilton area.

The wife reviewed the history of how title was held on the relevant properties. The property at 1263 Main Street West was transferred from joint tenants to her name alone. The matrimonial home and the rental building at Bowman Street were always in her name. She said they did this to avoid any liability he might face as a result of his business and it was always meant to be her means of employment.

When asked about how 1263 Main Street West was purchased, the wife said that she saw a private “For Sale” sign on the lawn and made enquiries. When asked about a prior interest she had in a property on Emerson Avenue, she said it was not her signature on the transfer and that her signature was forged. That transfer was prepared in the offices of a local law firm.

The cottage properties were handled differently. There was a cottage which was always referred to as the large cottage, at 1022 Rat Bay Lane on Lake of Bays. It was registered in the husband’s mother’s name (Nicole Mildren) in trust for the two parties herein.

There was a second cottage which was always referred to by the parties as the small cottage at 1028 Rat Bay Lane on Lake of Bays. It was registered in the wife’s mother’s name (Shirley Morehouse) in trust for the two parties. The small cottage was sold in the spring of 2012. The net proceeds of sale were divided by an order of this court dated May 3rd, 2012 following the argument of a motion.

• Although the parties each received close to $173,000.00 from the sale of the small cottage, the wife ended up paying considerable capital gains. She showed the sum of $65,146.21 for capital gains on her 2011 income tax return. Her net rental income for that year was shown as $15,594.20 and she cashed in an RRSP worth $9,971.75. She said she expected the husband to share in the capital gains expense, but his income tax return showed nothing for it.

The trust agreement signed by the parties with Ms. Morehouse when the small cottage was purchased in 1997 contained a clause that the parties herein would indemnify Shirley Morehouse for any personal liability in relation to the lands. The wife said this meant that the parties were to share in any capital gains tax that resulted from a sale.

• Considerable time was spent on the topic of the wife’s loan or gift of income from her mother Shirley Morehouse. Ms. Morehouse provided various sums of money over the years to her daughter, the respondent herein.

The wife prepared a chart, based on notes she kept to show what sums of money were received, and what amounts were reimburse to Ms. Morehouse. The wife shows a total of about $132,559.09 that was advanced from Ms. Morehouse from April 1988 to December 2006. About $6,000.00 was repaid. The sums of money that were advanced were shown as 33 different payments. Some were for Registered Education Savings Plans for the children. About $34,000.00 was shown for this purpose. Some payments were for household renovations. The wife did not reveal what all of the payments were used for. No interest was owing on this money and no formal agreement was drawn up, but the wife says the parties were obliged to pay her mother back and that this is why records kept.

Another chart was provided which shows money received by the wife from Ms. Morehouse after separation. This one showed $87,200.00 in transfers from December 18th, 2007 to November 2011. Seventeen entries were shown. The wife testified that many of these sums of money were used for expenses in general. On July 18th, 2012 the wife wrote a cheque for $50,000.00 to Ms. Morehouse in order to reduce the loan. She was able to pay this from her share of the cottage sale proceeds. She also paid a man named John Fraser the sum of $13,750.00 on the same day as she had borrowed this amount of money from him to pay expenses. She also reimbursed her mother a further sum of $8,000.00 and believes she now owes her about $155,759.00.

The wife’s mother sued Thomas Mildren in the amount of $115,000.00 for breach of loan agreement which was in reference to the sums of money referred to above. The wife was not named as a defendant. That claim was eventually withdrawn.

• In addition to money loaned by Ms. Morehouse, the wife believes that the husband took money from a bank account that belonged to Ms. Morehouse. She stated that the husband took $21,790.00 from her mother’s account, without authorization, and that he was able to do it with the wife’s bank card on line. She said that she herself never used this account at Scotia Bank without her mother’s permission. Shirley Morehouse commenced an action in Kitchener in February 2010 seeking damages for this amount and other relief. While she has withdrawn the claim for loans of $115,000.00, the claim regarding the $21,790.00 remains ongoing.

• The wife testified about the equipment she took from the husband’s business and the cottage. She claimed that she was the owner of these objects and therefore had a right to sell them. She said she sold them because she needed the money. She said she also sold his work van, because it was on her insurance policy and he was driving it. She was borrowing money from her mother at the time and felt that she was entitled to sell certain items. For example she sold a boat, Sea doo and ATV that were at one of the cottages.

She acknowledged that she took three trailers that the husband used for work in March 2009 and the work van in March 2010. All three trailers were sold by her along with the van. She sold a tamper that he used in the business and said that it was broken. Basically her reasons for selling equipment were that (a) she needed the money, (b) nearly everything that needed insurance was on a policy in her name and (c) some of the equipment was used to dump debris on the 1263 Main Street West property in violation of the Property Standards by Laws.

• Testimony was given by the wife about the condition of the property at 1263 Main Street West. The husband said that the wife blocked entry to his place of business at 1263 Main Street West. The wife said that the husband or his subcontractors were dumping things in the rear of the property that were excavated from job sites such as concrete, asphalt, rubble. Photographs were produced that were taken by her in 2009 that showed large piles of debris. She said she was concerned because there were tenants in part of the home and they complained. There was a large pail of foundation coating (tar) by the side door where the tenants entered and exited their unit. Some of this substance spilled on the property. She said she told the husband about the spill and he said he would see about getting it cleaned up, but nothing happened. Ultimately she paid someone $200.00 to clean up the tar and she said she paid about $9,700.00 for all jobs to clean up the property. It was her evidence that debris was not dumped on the property during the marriage. After she spoke to him about it the husband allegedly said he would clean it all up in the spring when the tenants were away for spring break. The wife said however that the mound of debris kept getting higher. She then threatened to have him charged with trespass. Since Mr. Mildren was not correcting the situation, the wife called the Property Standard Officer, who said a fine would be given if the rubble was not removed. The wife said that someone on behalf of the husband removed approximately two thirds of the rubble, but left a big mound of it in the back. She then had two steel posts set in concrete with a chain (that cost $570.00) but she said the tenants called her to inform her that someone was there with large equipment and they were then removing the steel posts. The wife called the Property Standards Officer and as a result of that conversation she contacted the police.

The wife also said that she had two locks installed on the garages and that the husband or someone on his behalf was there removing them with a grinder. They also removed the steel posts that were encased in concrete. When the wife arrived she said they were filling in the holes where the steel posts were. She produced a photograph she had taken of a sign she posted on the property in December 2008 that said:

“Order of Owner

No Dumping

Bylaw 03-118

Will be Fined”.

That sign was painted over in January 2009.

• Eventually the husband was able to get his personal things from the property pursuant to a court order and he was ordered to clean up the property. In this temporary order dated May 15th, 2009 (based on a consent) the wife was also ordered to return to the husband all tools and equipment she had removed. According to the wife, the husband still brought piles of coiled pipe to the garage on this property after this order was made, along with an old concrete mixer and some broken hand tools.

The wife commenced an action in Small Claims Court for her expenses (over $10,000.00) in having debris removed and having the concrete posts built, etc.

It was the wife’s evidence that the practice of dumping debris in the yard only began in 2008. She said the property on 1263 Main Street West was tenant occupied and that the husband used a shed at his brother’s residence. She said the husband made very little use of the Main Street property and used it mainly to pick one worker up who took the bus to that location in the morning. In 2008 however, she said he began storing things in the garage and dumping large amounts of debris there. She had several photographs to show the debris.

• Evidence was given by the wife as to how income tax returns were done. She said the husband took control of the income tax returns. She said she wanted to hire a professional to do them, but the husband insisted that he do them because he had taken a course in tax preparation from the H. & R. Block. He provided the figures for the basement business and she provided the figures for the rental properties. She said it was always a rush to get everything done at the last minute before the deadline. As soon as the parties separated the wife hired someone to complete her income tax returns every year.

• The wife stated that the husband took nearly all the records and documents she needed when he left, which included the contents of a four drawer filing cabinet. She said this made it difficult for her because it included documents for properties registered in her name. It was especially difficult when she had to complete her 2007 taxes and did not have the necessary documentation.

• It was the position of the wife that there was no joint venture in their businesses. She let the husband direct how their income tax returns were done because of his knowledge on income tax return preparation. She said he told her that by income splitting he could reduce his taxes and this is how it was done. This made her nervous she said, but she went along with it. It was her evidence that she helped a little in his business by answering the telephone and speaking to some customers and that he did some minor repairs in her business, being the rental income business. It was her position however that the businesses were separate and that the rental income business was intended to be security for her since she was not working as a nurse anymore. She said that the husband always made good money from the basement business and that the property management business was hers.

• Of particular frustration to the wife was the fact that she had no help from the husband in paying municipal taxes on any of the properties after separation. She outlined how tax arrears built up on all the properties. There were no tax arrears as of separation, but there are now on the Watchgate property, the Main Street West property and the Bowman Street property. Taxes on the remaining cottage property also went into arrears. The wife said she has not been able to pay for all the taxes owing on the properties, plus the maintenance, plus the payments on the lines of credit.

She borrowed money from her mother and a friend. She provided calculations for the amount of interest she paid on the line of credit for the remaining cottages since separation ($44,850.00) and on the property at 1263 Main Street (a total of $26,887.00 from 2008 to 2011). The husband did not contribute to any of these expenses since the separation on March 31st, 2007.

• The wife was of the view that the husband should be deemed to earn a gross income of approximately $547,393.40 per year. She based this in part on the mortgage application the husband signed in 2008 where he estimated his gross income to be $385,000.00 in March and $350,000.00 in October. He also showed his investments were worth $500,000.00 in his October mortgage application. In addition there is the unreported income that was paid to the parties’ daughter Kellie and Ms. Winterfield. In submissions, counsel for the wife suggested that the husband’s income be multiplied by 1.85 in order to account for the fact that taxes were not paid on large parts of his income and this was a factor at arriving at the figure of $547,393.40.

[20] Michael Carnegie testified. His Curriculum Vitae was introduced. The court has found him in the past to be an expert in the area of business valuation, income determination for Family Court cases, income tax matters, and other areas. No one objected to his qualifications.

[21] Mr. Carnegie prepared an income analysis on the husband’s income. A professional opinion as to Mr. Mildren’s income would likely have been helpful to me, but I did not allow the report into evidence. Mr. Higginson only received the report on the morning that the trial commenced and he had no time to seek a second opinion. I appreciate the argument that the husband had an obligation to provide proof of his own income, and that the wife’s lawyer wrote and asked for an analysis several months before the trial. However, I took the position that a major report like a professional report on income analysis cannot just be delivered at the commencement of trial. A motion could have been brought during the three years that this court action was in progress to compel the husband to obtain one. Likewise, a professional analysis on the wife’s income would likely have been helpful, but I did not receive a report for her.

[22] Mr. Carnegie was allowed however to provide his calculations on the impact of capital gains on the properties. This was not in dispute. He concluded that if the three properties that were not the matrimonial home (namely: the large cottage, 26 Bowman Street and 1263 Main Street West) were sold on the date of separation that $209,000.00 would have been owing in capital gains taxes. He suggested a 50% discount to reflect the uncertainty as to the timing of any sales, leaving a sum of $105,000.00. If a 5% cost of disposition were applied, then the $209,000 becomes approximately $191,000.00 and half is $95,000.00.

[23] When asked if he knew of any major renovations that would affect the undepreciated capital cost, Mr. Carnegie said he did not know of major renovations. He said that the Canada Revenue Agency (C.R.A.) has discretion on this and they can deem the renovations to be something that actually adds to the value or is just a repair. He was unable to assess the undepreciated capital costs for the Bowman Street property or the 1263 Main Street West property, which may have effected the total calculations. He did not realize the cottage property was used at times as a rental property which would mean that an undepreciated capital costs allowance could possibly be considered there.

[24] While Mr. Carnegie was on the stand, he was asked by the wife’s lawyer for assistance in grossing up the husband’s income due to the fact that large amounts of income have been unreported. He stated that a helpful way is to take an amount and multiply by 1.85. For example, $260,000.00 of unreported income would be $481,000.00.

[25] Jennifer Winterfield testified. She is in a relationship with Mr. Mildren. She currently lives with him at 65 Newcombe Road and she has her own interior design and drapery business. They have known each other for over 4 years. When they met she lived on Market Street South in Dundas. She sold the Market Street property in order to purchase a property at 34 Tally-Ho Road. She had the house at Tally-Ho torn down in order to build a new home. The property is in her name alone and she anticipates that she and Mr. Mildren will reside there together when the home is built and he will sell his home on Newcombe Road. She had about $345,000.00 left over from her Market Street property and borrowed $292,000.00 from the bank for this house. In addition she received over $132,000.00 from the husband herein. The house was described as being over 5,000 square feet of living space once the basement is finished. She did not have a total value for the home as she has not calculated all the expenditures and she said that she loaned her son $130,000.00.

[26] Plans for the home were introduced and they showed a very large and grand home being built.

[27] Ms. Winterfield said that the husband has helped in the project of the new home by getting quotes, dealing with trades people, getting permits, and sometimes hiring the trades people.

[28] A list was provided by Ms. Winterfield of the money she received from the husband. She received cheques from between April 2011 to July 2012 that came to a total of $132,325.16. These cheques were described by the witness as having been made out to Thomas Mildren Contracting by various customers for work done and they were endorsed over to her to be used for the new home.

[29] Evidence was also given by this witness about an incident at the large cottage in the summer of 2010. It was her understanding that it was agreed between the parties that the husband was to have the cottage for a few weeks. The wife showed up and came over from the other cottage to get firewood. The wife was allegedly angry and began to tell Ms. Winterfield about everything she had been through. She took the firewood and left, but later called the police and said the husband hurt her arm. The police came and interviewed the husband, Ms. Winterfield and some of the guests who were in the home at the time of the alleged assault (two other couples were there).

[30] No charges were laid by the police after they completed their interviews. The next day the wife came over and went inside and ate her lunch. This time the husband called the police. On the third day the wife called the police who arranged for the wife to come over and get some of her things. Ms. Winterfield said that the wife was supposed to stay five minutes, but she stayed longer. The box with her things was ready and according to this witness, the police had to coax the wife into the police car in order to leave.

[31] The only other encounter Ms. Winterfield had with the wife was when she saw Ms. Mildren came to serve papers on one of the husband’s employees in a black wig, which she found a little disturbing.

[32] Shirley Morehouse, the wife’s mother, testified. She is 89 years old and lives independently in her own home in Hamilton. She has two surviving children being the respondent and another daughter named Ruth. Her source of income is her old age pension, Canada Pension Plan benefits and a pension from U.S. Steel Canada.

[33] She said she also has some R.I.F.’s which will be used up soon. In all, she averaged her annual income to be about $24,000.00 to $25,000.00 per year.

[34] She testified about the money the husband took from her account and is currently subject to a court action. She said he did not have permission to take this money. A sum of $21,790.00 was taken from a joint account she held with the wife at the Bank of Nova Scotia. She said she was shocked to find only $1.64 remaining in that account in January 2008. It was soon learned that the husband took this money and she said she felt that he robbed her. She also said during cross-examination that she was not sure how the amount got as low as $253.18 as of the end of 2006. Other than some R.I.F. funds from her, she acknowledged that much of the additional money deposited into that joint account was deposited by the wife.

[35] Ms. Morehouse also testified about the money she advanced to the parties over the years. She described it as a “rolling loan”. She advanced money from time to time when it was needed and occasionally was paid back. She said she also expected to be paid back because she will need that money and she has another daughter. She acknowledged providing the other daughter with money from time to time.

[36] She reviewed the chart provided by the wife which sets out all money given by Ms. Morehouse from April 14th, 1988 to December 2006. It began with $18,000.00 which was provided on April 14th, 1988. She said this was to help the parties buy a house on Duff Street which they fixed up and sold. She could not remember what all the amounts were for but she remembered some of them. Some of the money was used for Registered Education Savings Plan (R.E.S.P.) funds. She said she wanted to provide these for her grand-daughters, but she could not, so the wife said she should loan them the money and they would purchase these funds, and pay her back. R.E.S.P. purchases were shown in 2001 ($4,000.00) on February 16th, 2004 ($8,000.00); on January 4th, 2005 ($8,000.00); on April 20th, 2006 ($8,000.00) and on December 28th, 2006 ($6,000.00).

[37] While Ms. Morehouse had difficulty remembering the purpose for every entry on this chart, she felt it reflected the amount of money given by her to the parties.

[38] When asked about the total amount owing, she said she depended on her daughter to keep the records. As such she felt she had no reason to doubt her daughter’s calculations, which showed $126,559.00 owing to her as of separation.

[39] The witness also reviewed the chart provided by the wife which showed money provided to her from Ms. Morehouse after separation. She said her daughter was very much in need of money and she needed to help her by way of further loans. She did not dispute the totals provided by the wife, which showed a total of $87,200.00 owing from Dawn Mildren to Shirley Morehouse from the period December 18th, 2007 to November 2nd, 2011.

[40] Ms. Morehouse acknowledged that she did not personally keep a list of the money provided and that there was no written agreement and no payment terms. She did not recall anything being paid back until the small cottage sold and the wife gave her $50,000.00 from her share.

[41] When asked about the cottage sale, she said the cheque was given to her from the sale of the cottage and she gave it to the wife herein. The small cottage was held in trust by her for the parties.

[42] Serguei Avdeyev testified. He has his own business but works for the husband as a subcontractor. He said that he and the husband used the 1263 Main St. West property for business purposes. When shown the photographs of the large piles of debris he said that this was an example of a pile getting out of hand.

[43] Usually, he said, they did not let the debris build up that much, but there was often a pile stored in the back of the property. Once the pile was big enough they got a dumpster and took it away. He said they stored tools and equipment at the Main St. West property. They would go there at least twice a day to get things etc. He said they stopped using the property when Ms. Mildren said they could not use the property anymore and had to clean it up.

[44] He acknowledged being the one who took the posts and chain down that the wife had installed because he had to get equipment. Some of his own tools were stored there. He added that he was never aware of a complaint from a tenant at this property, and they used it a lot. He also said that he met the wife at this property from time to time and that she has definitely seen a pile of debris there while the parties were together. He said that it had been like this for about 23 years.

[45] Mary McFarlane testified. She is a mortgage agent and she arranges for financing and re-financing of properties. Ms. McFarlane dealt with the husband in his mortgage application for his home on Newcombe Road. She said that Mr. Mildren needed to go to an equity lender as his credit was not good. She said that she had no reason to believe that he had $500,000.00 in stocks or investments. She believed that he had an interest in properties other than Newcombe Road, being properties at Main St. West, Bowman Street and Lake of Bays and that the $500,000.00 figure was for these properties. She said she did not need proof of the values for these properties for this lender.

[46] With hindsight though, she felt that the value of the properties should have been shown as “other” rather than in the column “investments”. She was aware that the values of these properties were likely higher than $500,000.00 but that the total was not important. She knew that there were liabilities on the properties, and that his parents owned the cottage. The actual value meant nothing to the lender she said.

[47] Ms. McFarlane reviewed the mortgage application signed in 2008 and noted that the husband said his projected 2008 income was $350,000.00. She assumed that $350,000.00 meant a gross income, and without expenses considered. The witness explained that an equity lender is concerned about the value of the property involved. As such, she did not seek particulars of the husband’s business expenses and she took no steps to verify his income. The equity lender is not interested in his business she said. The mortgage was being used for a good property and there was a good down payment so the equity in this property would satisfy the lender, without a lot of information on the husband’s income, according to Ms. McFarlane. The husband paid 20% of the purchase price and this would satisfy the lender she said. They care about the value of the property and the down payment, and since they will be a first mortgagee, they are not very concerned about the applicant’s credit rating. Ms. McFarlane said she would have simply asked the husband what he thought his income was and put a number down. It would have taken a minute or two she said.

[48] In October 2008, the husband refinanced his mortgage. He was borrowing $393,750.00. This was nearly all being used to pay debts and the existing mortgage. He paid a down payment of 20% when he first purchased the home.

[49] The husband gave some brief reply evidence. This included the usual testimony regarding a divorce, since he had claimed one, and the introduction of the marriage certificate which was not available at the beginning of the trial.

[50] He said the evidence of the wife regarding 1263 Main St. West was absurd because it had been extensively developed as his shop over a 20 year period. He said they always had debris there and took it away in a dumpster when they had enough.

[51] He spoke of how they purchased 1263 Main St. West. He initially had a shop at 1261 Main St. West, and he got to know the owners next door who said they would let him know when they were willing to sell, which they did.

[52] Likewise he said it was he who located the Bowman St. property through a neighbour on Main St. West, and not the wife.

[53] He denied sabotaging his boat in order to make an insurance claim.

Case Law

[54] Among the cases I reviewed, were the following provided by counsel:

Rawluk v. Rawluk, [1990] 1. S.C.R. 70, 23 R.F.L. (3d) (S.C.C.)

Klimm v. Klimm, 2010 ONSC 1479 (S.C.J.)

Joy v. Mullins, 2010 ONSC 1742, [2011] W.D.F.L. 1070 (S.C.J.)

Ramlochan v. Ramlochan, 2010 ONSC 4323, [2011] W.D.F.L. 466 (S.C.J.)

McLeod v. McLeod, 1998 CarswellOnt 3058 (C.J.)

Wilson v. Wilson, 2011 ONCJ 103, 2 R.F.L. (7th) 233 (C.J.)

Davis v. Crawford, 2011 ONCA 294, 95 R.F.L. (6th) 257 (C.A.)

[55] Rawluk v. Rawluk was provided by the husband in support of his claim for a finding of unjust enrichment and a constructive trust. The Rawluk’s, who were married, lived and worked together for 29 years. They had a farm and a farm equipment sales and service business. The wife was found to have assumed a large role in the operation of the farm and the farm equipment business. On the date of separation the couple had a number of properties which were mostly registered in the name of the husband. In the time between separation and trial the value of the properties was said to have risen dramatically.

[56] The Supreme Court upheld the lower courts in finding that the property in question was subject to a constructive trust which gave the wife a beneficial half interest in the property as of separation which therefore allowed her to share as an owner in the value of the property after separation and as of the trial.

[57] The case is relevant because it showed that the concept of a constructive trust can work with a claim under the Family Law Act for married parties.

[58] Counsel for the husband specifically drew my attention to paragraph 54 wherein Justice Cory said as follows:

54. The review of the cases decided by this Court from Murdoch v. Murdoch, supra, to Sorochan v. Sorochan, supra, demonstrates the importance that has been attached to the use of the remedy of constructive trust to achieve a division of property that is as just and equitable as possible. A marital relationship is founded on love and trust. It brings together two people who strive and sacrifice to attain common goals for the benefit of both partners. When it is terminated and acquired assets are to be divided, then in this of all relationships the concept of fairness should predominate in making decisions as to ownership. This was the fundamental equitable principle underlying the application of the constructive trust remedy to matrimonial cases. Where the application of the principle would achieve the goal of fairness it should not be discarded unless the pertinent legislation makes it clear that the principle is to be disregarded.

[59] Klimm v. Klimm was provided by the husband as an example of a case from the Superior Court of Justice of how money from parents can be treated. In this case Mr. Klimm claimed that $158,000.00 given from his parents during the marriage were in fact loans. Ms. Klimm said they were gifts. The money was given in five instalments between 1989 to 2001. The court declined to hold that any of this money was a loan. Justice Mulligan noted the following:

The loans and repayments were not well documented and there was poor record keeping on the part of both Mr. Klimm and his parents.

$40,000.00 of the said loans was forgiven.

Money was given to Mr. Klimm’s siblings and $40,000.00 was forgiven to them.

The Statement of Claim was issued by the parents six years after the last payment and after Mr. Klimm filed an answer to the Family Law proceedings.

No demand for payment was issued from the time of the last loan in 2003 until after the litigation started in 2007.

[60] There was a good review of the law in this case. The judge referred to the leading case of Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. The Pecore case was in regards to an estate issue. However, speaking for the court, Justice Rothestein stated at paragraph 36:

[G]iven that a principle justification for the presumption of advancement is parental obligation to support their dependent children, it seems to me that the presumption should not apply in respect of independent adult children.

[61] As noted by Justice Mulligan in the Klimm case, a presumption can be rebutted and one must consider a number of factors. He went on to quote from the case of Locke v. Locke [2000] B.C.J. No. 1850, 2000 BCSC 1300, where the court listed the criteria that should be reviewed when examining such presumptions. Justice Mulligan wrote at paragraph 28:

28. There was no issue of dependency between Michael Klimm and his parents and I am satisfied that based on the Pecore decision the concept of a presumption of a resulting trust must be analyzed. However the presumption is just that; a presumption which can be rebutted based on all of the evidence. In Locke v. Locke, [2000] B.C.J. No. 1850, 2000 BCSC 1300 (B.C.S.C.) at para. 20 the court listed some of the criteria that ought to be reviewed when such presumptions are examined:

29. whether there were any contemporaneous documents evidencing a loan;

30. whether the manner for repayment is specified;

31. whether there is security held for the loan;

32. whether there are advances to one child and not others or advances on equal amounts to various children;

33. where there has been any demand for payment before the separation of the parties;

34. whether there has been any partial repayment; and

35. whether there was any expectation or likelihood of repayment.

[62] Joy v. Mullins was provided by the husband as it had a good analysis of the law on imputed income for purposes of child support, when business deductions, business losses and capital cost allowances are considered.

[63] Ramlochan v. Ramlochan was provided by the husband in regards to the issue of his undeclared income and whether or not this declared income should be grossed up for support purposes. In this 2010 Superior Court of Justice case, Justice Corbett declined to gross up the father’s income because he had not paid tax on large portions. In this case the father undertook to make disclosure to Canada Revenue Agency (C.R.A.) and pay any outstanding taxes. This was an interim motion, but the judge remarked that if the voluntary disclosure was not made to C.R.A. that the trial judge would be at liberty to gross up past income and adjust support arrears.

[64] MacLeod v. MacLeod was provided by the wife as an example of the concerns that arise when disclosure is not adequate. In the MacLeod case a wife brought a motion to strike pleadings due to the husband’s failure to comply with the interim order and to answer undertakings. He did not, for example, provide a breakdown of business expenses. While his pleadings were not struck, Justice Kiteley commented on the disclosure obligation of self employed payors at paragraph 12 as follows:

12 In Nardea v. Nardea, heard March 5, 1998, I commented on the disclosure obligations of a self-employed payor under the Child Support Guidelines. The same considerations apply here. It is inherent in the circumstances of those who are self-employed, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses. That does not mean audited statements. But it does mean a package from which the recipient spouse can draw conclusions and the amount of child support can be established. Where disclosure is inadequate and inferences are to be drawn, they should be favourable to the spouse who is confronted with the challenge of making sense out of financial disclosure, and against the spouse whose records are so inadequate that cumbersome calculations and intensive and costly investigations or examinations are necessary.

[65] Wilson v. Wilson was also provided as an example of the costs concerns about disclosure and with business deductions. In the Wilson case the father was bringing a motion to change child support. He was a commissioned salesperson. Justice Masse commented at paragraph 22:

22 A self-employed person, or a commissioned salesperson such as Boyd Wilson, has the onus of clearly demonstrating the basis of his net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes: See Whelan v. O’Connor, 2006 CanLII 13554, 28 R.F.L. (6th) 433, [2006] O.J. No. 1660, 2006 CarswellOnt 2581 (Ont.Fam.Ct.). Such payors have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See Meade v. Meade, 2002 CanLII 2806, 31 R.F.L. (5th) 88, [2002] O.J. No. 3155, 2002 CarswellOnt 2670 (Ont.S.C.). The onus rests upon the parent seeking to deduct expenses from income to provide meaningful supporting documentation in respect to those deductions, failing which an adverse inference may be drawn. See Orser v. Grant (2000), 96 A.C.W.S. (3d) 644, [2000] O.J. No. 1429, 2000 CarswellOnt 1354 (Ont. S.C.J.).

[66] Davis v. Crawford was provided by the wife as an example of a case where lump sum spousal support was ordered. In this case the trial judge ordered $135,000.00 in lump sum spousal support. The parties were not married and the husband had more assets. The trial judge felt that the husband gave evidence about his business affairs that was not credible. The court acknowledged that the Ontario Court of Appeal case Mannarino v. Mannarino, (1992) 1992 CanLII 14022 (ON CA), 43 R.F.L. (3d) 309 (Ont.C.A.) stood for the principal that lump sum maintenance cannot be a redistribution of assets in the guise of support, but they disagreed with the husband that such payments could only be ordered in very unusual circumstances. Speaking for the Court of Appeal, Justice Simmons and Lang wrote from paragraphs 67 and 68:

67 The advantages of making such an award will be highly variable and case-specific. They can include but are not limited to: terminating ongoing contact or ties between the spouses for any number of reasons (for example: short-term marriage; domestic violence; second marriage with no children, etc); providing capital to meet an immediate need on the part of a dependant spouse; ensuring adequate support will be paid in circumstances where there is a real risk of non-payment of periodic support, a lack of proper financial disclosure or where the payor has the ability to pay lump sum but not periodic support, and satisfying immediately an award of retroactive spousal support.

68. Similarly, the disadvantages of such an award can include: the real possibility that the means and needs of the parties will change over time, leading to the need for a variation; the fact that the parties will be effectively deprived of the right to apply for a variation of the lump sum award; and the difficulties inherent in calculating an appropriate award of lump sum spousal support where lump sum support is awarded in place on ongoing indefinite periodic support.

[67] In Davis v. Crawford the Court of Appeal felt that it was apparent that the trial judge concluded that there was a real risk that the husband would not pay periodic support and that this factor justified a lump sum award. In addition, the fact that the husband did not make proper disclosure was a consideration in ordering a lump sum, thereby providing a clean break. Otherwise the wife would face unending litigation in order to maintain her entitlement to spousal support. The court upheld the decision of the trial judge.

[68] Kerr v. Baranow and Vanasse v. Seguin, 2011 SCC 10, [2011] 1 S.C.R. 269 was referred to by the husband. In this 2011 Supreme Court of Canada, case law was made in the area of constructive trusts. Ms. Kerr and Mr. Baranow were a common-law couple, as were Ms. Vanasse and Mr. Seguin. The court ruled that the previous law on common intention with a resulting trust was no longer valid. These cases hold that:

A constructive trust can be established by finding an unjust enrichment. To demonstrate the existence of an unjust enrichment the party making the claim must show that there has been,

(a) An enrichment;

(b) A corresponding deprivation;

and

(c) The absence of a juristic reason for the deprivation (such as a contract).

[69] Writing for the court, Justice Cromwell reviewed the law on both resulting and constructive trusts before coming to the conclusion that the old law on resulting trusts should no longer be accepted.

[70] The elements of an unjust enrichment case were described. In the first element of enrichment the plaintiff needed to show that he or she gave something to the defendant which had enriched the defendant and which could be restored to the plaintiff in specie or by money. With the second element of corresponding deprivation the plaintiff needed to establish that not only had the defendant been enriched, but that the enrichment corresponded to a deprivation which the plaintiff has suffered. The third element of the claim is that the benefit and corresponding detriment must have occurred without a juristic reason. This means that there is no legal reason for the defendant’s retention of the benefit given by the plaintiff making its retention unjust. The juristic reason could be the existence of a contract between the parties or the presence of a gift.

[71] In reviewing the law, the court noted that with a proprietary award, the plaintiff must demonstrate a link or causal connection to the partner’s contributions and an acquisition, preservation, maintenance or improvement of the disputed property. For monetary awards it becomes a matter of quantification.

[72] In providing a monetary award the court can consider a “value received” claim which is like a payment for services provided. In the alternative they can provide a “value survived claim” which involves determining an appropriate amount to be awarded based on the value of property. The court said that this second approach could be provided when an unjust enrichment arises from a situation where a “joint family venture” has been found. In order to find a joint family venture, the court needs to consider:

(a) Whether there has been a mutual effort between the parties to work towards common goals. They could be by way of money or household responsibilities.

(b) Whether or not the parties had an economic integration of their financial and economic interests.

(c) Whether or not the parties actually intended to equally share in any wealth created.

(d) Whether or not the family unit has been given priority in their decision making. This could be an employment or re-location decision for the benefit of the family unit.

[73] In the Vanasse v. Seguin case the Supreme Court held that there was an unjust enrichment and a corresponding joint family venture and they took a value survived approach which meant that the plaintiff was given a proportionate share of the accumulated wealth.

[74] In Kerr v. Baranow a new trial was ordered.

[75] The case of Straub v. Straub (2013) O.J. No. 138, 2012 ONSC 3819, is a Superior Court case that dealt with constructive trust claims between married parties. The husband made this claim over the increase in the value of the matrimonial home and the wife made the claim over the increase in the husband’s investment portfolio. The judge noted that neither party were able to point to any specific contribution either party made to the property in question after separation. He also noted that both parties would have assets upon separation and that there is a difference between the Kerr v. Baranow case. That case dealt with two common law relationships where the statutory equalization of matrimonial assets would not apply.

[76] Justice McKelvey concluded the following in paragraphs 109 and 110:

109 In my view, the statutory framework for equalization should be applied routinely, and it will be a rare case where a court will apply the constructive trust doctrines in situations which are governed by the statutory framework. There should be a high threshold before departing from the statutory guidelines. I also feel it is significant that the provisions of the Family Law Act have provisions which allow for an unequal distribution in cases where an equal distribution would be unreasonable. This reinforces my view that the law relating to constructive trusts has little relevance in cases which are governed by the statutory framework.

110 I do not view this case as holding any extraordinary circumstances which would suggest that there is any inherent unfairness in the equalization payment based on the valuation date. I therefore dismiss both of the constructive trust claims.

Equalization

[77] There are several areas that need to be ruled on.

Constructive Trust

[78] I am of the view that a constructive trust has not been established by the husband. I understand his argument about the joint venture. The parties bought and sold several properties together and only began to put them in the wife’s name alone upon advice from a friend who was a lawyer.

[79] Each party performed some minor duties in the other’s businesses. Incomes from both businesses were split for many years in the parties income tax returns. The three properties in the wife’s name alone appear to have gone up in value since separation. For example, both parties show the Bowman Street property on their N.F.P. statements being worth $760,000.00 as of the date of separation, being March 31st, 2007. A letter of opinion dated August 29th, 2012 shows it having a market value for resale purposes of between $800,000.00 to $820,000.00.

[80] Both showed the Main Street West property on their N.F.P. statements as being worth $295,000.00 as of March 31st, 2007. A letter of opinion dated August 29th, 2012 shows it as having a market value for resale purposes of between $310,000.00 and $325,000.00.

[81] The wife shows an increase in value for the matrimonial home on her financial statement of about $24,000.00.

[82] However, I do not believe that a constructive trust has been established. While the 1990 Supreme Court case of Rawluck v. Rawluck did lead the way for constructive trusts being found between married persons, it is the 2011 Supreme Court case of Kerr v. Baranow and Vanasse v. Seguin that set out the steps that must be followed in finding a constructive trust. I referred to those steps earlier herein and I cannot say that there has been an unjust enrichment, which would need to be found.

[83] The only enrichment on the part of the wife might be that the properties went up in value since separation somewhat, but her evidence was that she struggled financially to pay the bills on these properties and had no help from the husband in maintaining the properties after separation. She received help from her mother in paying expenses.

[84] The wife was not unjustly enriched in my view and it cannot be said that the husband had a corresponding deprivation. Both the enrichment and deprivation must be found before I need to consider whether or not there was a joint venture.

[85] As of May 2012 the wife owed $21,896.98 for tax arrears on the Main Street West property. She owed $11,479.24 for tax arrears on the Watchgate Court property as of May 2012. She owed $102,609.33 in tax arrears on the Bowman Street property as of May 2012. There were no tax arrears as of separation on these properties.

[86] If the husband likely felt that he had a trust interest following separation, he might have shown some interest in how these properties were being maintained, and there was no evidence that he did. The wife stated that she asked him for help in paying taxes numerous times.

[87] The tax arrears that accumulated are greater than the estimated increase in values of the properties. The husband has failed to show that he has suffered a deprivation in my view.

[88] In addition, I see no reason why the provisions of the Family Law Act (R.S.O.. 1990, c.F.3, as am.) cannot apply. This legislation provides the parties with a fair method of equalizing their property as of separation. They made a decision to place the real property in the name of the wife alone and this has created consequences for both parties.

Money from Shirley Morehouse

[89] There is a dispute over whether or not the money provided by the wife’s mother is a gift or a loan. Although different figures were used by the parties at different times, the positions taken at trial were that Ms. Morehouse was owed $126,559.09 by the parties as of separation (wife’s position) and she was owed nothing (husband’s position).

[90] The wife took the position that the husband acknowledged a debt to Ms. Morehouse of $55,000.00 as of separation because he showed this on his net family property statement that was filed in the trial record as a debt in his column. However, I notice that he said it was subject to verification and that he showed no amount owing to Ms. Morehouse in the net family statement provided on his behalf, during submissions.

[91] The sum of $55,000.00 initially shown on the wife’s financial statement is what was owing.

[92] The parties’ positions at trial were clear and I accept them as being as described above.

[93] The main difference between the parties’ positions is not in regard to the dollar amount in any event. It is in regard to the issue of whether the money was a gift or a loan that was intended to be paid back.

[94] The wife provided a chart that she prepared which showed a total of $126,559.09 being provided by Ms. Morehouse from between April 1988 and December 2006. This was a period of close to 19 years. A total of $6,000.00 was paid back to Ms. Morehouse during this time and this was in one instalment in November 20000. She provided a further chart which showed that she received a total of $87,000.00 from Ms. Morehouse from December 2007 to November 2011. Of this amount she reimbursed Ms. Morehouse the sum of $50,000.00 on July 30th, 2012 after the small cottage sold.

[95] The wife’s position is that all of these amounts were loans.

[96] Ms. Morehouse commenced an action against Mr. Mildren alone in Kitchener on February 10th, 2010 wherein she sought $115,000.00 for “breach of loan agreements”. She subsequently withdrew this claim.

[97] I reviewed some law in this area earlier. There is no presumption of a gift with adult children and the seven questions set out in Locke v. Locke is still an appropriate test to apply in order to determine whether or not a loan was intended. In answering the seven questions in this case, I came to the conclusion that the wife has not been able to establish that there has been a loan that was intended to be paid back.

[98] I am mindful that Ms. Morehouse does not appear to be someone with much money. However, in coming to my conclusion I have addressed the test set out in Locke v. Locke as follows:

1. Whether there were any contemporaneous documents evidencing a loan.

• The only documents that were available were photo-copies of brief hand written notes made by the wife. She used these and cancelled cheques to make her chart for trial. In many cases the notes were no-more than a photo-copy of the wife writing “owe Mom” on a copy of a money order or a photo-copy of a cheque.

2. Whether the manner for repayment is specified.

• There was never any manner for repayment specified anywhere.

3. Where there is security held for the loan.

• There was no security for any of these alleged loans and there easily could have been due to the number of properties in the wife’s name alone.

4. Whether there are advances to one child and not others or advances on equal amounts to various children.

• Ms. Morehouse said that she has one other child, being another adult daughter who works in real estate. She says she has loaned that daughter money over the years too. When asked if that daughter has ever paid her back she said “no, but she just got her divorce”.

5. Whether there has been any demand for payment before the separation of the parties?

• There was no evidence of any demand for repayment prior to separation.

6. Whether there has been any partial repayment?

• The only partial repayment prior to separation was one payment of $6,000.00 during a period of nearly 19 years where money was shown as having been provided on approximately twenty seven occasions.

7. Whether there was any expectation or likelihood of repayment?

• I cannot say that there was an expectation of repayment for the nearly 19 years that money was provided prior to separation. The actions of the parties and the lack of documentation do not indicate that there was an expectation for repayment. At the time that the wife gave Ms. Morehouse a payment of $6,000.00 (November 2000) she had received money from Ms. Morehouse on thirteen occasions going back to April 1988 according to the wife’s chart. If repayment was expected some steps could have been taken during this time for a repayment plan.

[99] For the above reasons I will not include the money shown on the wife’s N.F.P. statement as owing to Ms. Morehouse as a debt.

[100] I do not need to rule on the money that is currently the subject of a lawsuit between Ms. Morehouse and Mr. Mildren, as this involved post separation funds.

Notional Costs of Disposition

[101] The wife has included the following future expenses as debts in Table 2 of her N.F.P. statements:

$24,747.00 for 6 Watchgate Court.

$42,940.00 for 23 Bowman Street.

$16,667.00 for 1263 Main Street West.

[102] This comes to a total of $84,354.00. It is her position that she will one day need to sell the above three properties and she should be able to deduct the cost of the real estate commission. The husband believes there should be no deduction.

[103] I am of the view that there should be no deduction. The wife testified that she plans on remaining at Watchgate Court for the foreseeable future. She has lived there since separation in early 2007 without taking any steps to sell. The husband bought a home following separation which he plans to sell and he will have his own real estate expenses. Without a clear plan by the wife, I see no reason to treat a possible real estate commission expense for several years in the future, as a debt as of separation date.

[104] Likewise, I do not believe that the two rental properties should be subject to a nominal cost of disposition. There is no evidence that the wife plans to sell these properties as she makes her living out of renting them. Although she has taken some courses and looked into teaching, she has had no proposals for other jobs.

[105] I have no reason to believe that the wife will be selling these buildings soon. I also note that she has benefited from the increase in the value of the buildings since separation, because they were both put in her name alone. She has taken no steps to sell either of them in the nearly six years that have passed since separation.

[106] I am unaware of her having a plan to sell soon. For these reasons it would be inappropriate in my view to include an amount for possible future real estate commissions of the rental properties as a debt as of valuation date, being March 31st, 2007.

Capital Gains Consequences

[107] Mr. Carnegie provided calculations regarding the future capital gains consequences of selling 1263 Main Street West, 26 Bowman Street and the remaining cottage. He indicated that there would be a potential tax for these three properties in the amount of $209,000.00. This is based on $77,000.00 for the large cottage, $93,000.00 for 26 Bowman Street and $39,000.00 for 1263 Main Street West.

[108] He suggested taking 50% off the $209,000.00 to reflect the uncertainty of the timing, leaving an amount of $105,000.00.

[109] The wife has included the amount of $105,000.00 in Part 5 of her N.F.P. statement, being the section on debts and liabilities. The husband believes these amounts should not be included.

[110] The husband is of the view that he will face capital gains consequences for the small cottage when he completes his 2012 income tax return, because the proceeds of sale were divided in 2012. The wife has already faced such consequences and they need to share this liability, because the property was held in trust for both of them. I will make an order that the parties share in this expense for the small cottage and invite counsel back to request any further ruling they may need as the 2012 Income Tax returns will need to be completed.

[111] They may also be in the same position when the large cottage is sold one day because the husband’s mother owns it in trust for both of them. She has no other residence however, and it is therefore hoped that there will be no capital gains liability on this property. If there is then they would each pay their own portion on their half of the sale proceeds.

[112] In regard to the two rental properties, I am also declining to accept this expense as a deduction. My position might be different if I were accepting the husband’s argument about a constructive trust. The wife could then argue that it would not be fair for the husband to share in present day values of these properties with only her burdened with capital gains tax liabilities.

[113] However, the wife alone has benefited from the increase in value of these properties since separation and she has taken no steps to sell either of them in the nearly six years that has passed. By the time she does sell them she will perhaps realize a further increase in their value which would along with the current increase in value offset the capital gains tax. On the other hand there could be a decrease in value and a reduction in capital gains.

[114] I see no reason to allow a deduction for future tax consequences on the eventual sale of the two rental properties, as we have no idea as to the timing of such a sale, or of any other circumstances that may exist. Too much speculation is involved. When the parties decided to put the properties in the wife’s name alone, it led to advantages to her, but the future tax liabilities are a disadvantage.

[115] For the above reasons, I am not allowing the future capital gains calculations to be included as a debt. However, I will include a clause that any capital gains liabilities must be shared for the sale of the two cottages because these properties were purchased in trust for both parties.

Employment Insurance Debt

[116] The husband included a debt to Employment Insurance Benefits in his N.F.P. statement, in the amount of $7,578.00 as of valuation date. He provided documentation regarding this in his financial brief that was filed as exhibit 5; and I will accept this item as a debt. This was not a contentious issue, but I notice that the wife did not include it in her N.F.P. statement.

MasterCard Debt

[117] The husband included two MasterCard debts as of separation in his N.F.P. statement. Since these were identified in his financial brief, I will allow them. They were in the amounts of $10.651.00 and $1,462.00. This was not a contentious issue at trial, but I notice that the wife did not include them in her N.F.P. statement.

Wife’s Bank Accounts and Savings

[118] The wife shows $31,207.50 as of separation in her column for bank accounts and savings, securities and pensions. The husband shows $25,273.50 for her. The difference appears to be how the parties handled two accounts the wife had with the children. The husband reduced the amount by one half because this would be the wife’s share. This was not an issue during trial or in submissions.

[119] I will accept the husband’s number because it works to the wife’s advantage and his method makes sense.

Mortgage on Watchgate Court

[120] The parties were only $600.00 apart on this issue. The husband said the mortgage was $127,000.00 as of separation and the wife said it was $127,600.00. This was not a contentious issue. Since the wife was the one paying the mortgage, I will accept the sum of $127,600.00.

Line of Credit – Main Street West

[121] The husband showed this as $141,500.00 and the wife showed this as $139,997.00, as of valuation date. This is only a difference of $1,503.00. Neither counsel addressed this discrepancy when they re-attended to addressed a few issued on March 6th, 2013. I will accept the wife’s sum of $139,997.00 since she is the one who paid the mortgage and this lower amount benefits the husband.

Car Loan 2005 Acura MDX

[122] The wife shows a debt for a car loan as of separation in the amount of $36,000.00. The husband did not show this in his N.F.P. statement. No supporting information on this debt was provided. However, the wife does show a value for this car as of separation in the amount of $35,000.00. In her initial financial statement filed in 2009 she shows a value of $35,000.00 for this car and a debt of $36,000.00, plus a monthly car loan payment, so she has been consistent.

[123] Given that the husband did not raise this issue and the wife has been consistent, I will allow this amount.

Contractor Debt

[124] The wife showed a debt for renovations to two properties as a separation in the amount of $6,000.00 and the husband did not include it on her side of the statement.

[125] This issue was not brought up by either counsel when they re-attended. Given that the wife was in charge of paying the bills on these properties, she recalled owing this amount, and it is a small amount.

[126] I will allow this sum in her column. I also note that she included this sum in her initial financial statement filed in 2009, so she has been consistent.

Husband’s Bank Accounts and Savings

[127] In part 4(c) of their N.F.P. statements, the parties have very different numbers for the husband’s savings.

[128] The wife gives a figure of $500,000.00 which she took directly from the husband’s mortgage application as referred to earlier herein. The application had $500,000.00 listed for investments. He indicated that he meant this to be his interest in the real estate property as well as any investments. The mortgage agent, Mary McFarlane confirmed this. She said she had no reason to believe that Mr. Mildren had $500,00.00 in stocks and investments and that the $500,000.00 was mostly for the husband’s interest in the other properties that were not in his name and not the subject of the mortgage application. Ms. McFarlane was satisfied with the figure of $500,000.00 for his interest in the properties at Bowman Street, Main Street West and Lake of Bays.

[129] The mortgage was an equity loan and very little attention would have been paid to this number Ms. McFarlane said.

[130] I accept the husband’s version of where the $500,000.00 number came from as it was verified by Ms. McFarlane. It does not have enough validity to form the basis of a significant portion of the Net Family Property Statement.

[131] The husband shows $162,791.55 on his statement. There are some concerns with this amount. For example, the $40,000.00 shown for the C.I.B.C. is based on an estimate as the husband could not get the records. The wife is also concerned that money went in and out of Kellie’s accounts and therefore the husband’s accounting is unreliable.

[132] The husband’s amounts however are more reliable then the wife’s number from a mortgage application. His was itemized and explanations were given. A great deal of time was spent reviewing the money that went into accounts through Kellie and Kellie attended examinations. I will therefore accept the amount of $162,791.55 as the amount for the husband’s savings as of separation as the best evidence available.

Equalization Owing

[133] Once I make the adjustments to the net family property statements, I conclude that the wife owes the husband an equalization payment of $488,287.92. They shall also share in any capital gains liabilities for both cottages.

[134] I will allow counsel to re-attend to address the issue of how the large cottage is to be dealt with. I cannot make an order that the large cottage is to be sold because it is in the name of the husband’s mother, in trust for both of them. Once the parties have my decision, they may have some ideas on how to deal with the large cottage, in consultation with Nicole Mildren.

Wife’s Income

[135] The wife suggested that I deem her income to be $33,740.00 which is an average of her net income from 2006 to 2011. This is after all the deductions she is allowed for running the rental properties.

[136] The husband suggested that I deem her income to be $88,125.75. This is based on an average of the wife’s net rental income for each property for four years with the following added back in:

• Property taxes for four properties (Main Street West, Bowman Street and two cottage properties). He has added the taxes back in because they were not paid and are in arrears.

• Mortgage interest on the Bowman Street property because the mortgage was paid off.

• Motor vehicle expenses because two of the properties (Main Street West and Bowman Street) were only a few miles from her home. Also, the two cottage properties were next door to one another and there was only limited rental of these properties. For example, in 2008 the wife deducted the sum of $3,412.00 for each of the four properties, as a motor vehicle expenses. In 2009 she deducted $4,271.00 and $4,272.00 for the Bowman Street and Main Street West properties.

[137] The figures the husband provided begin with the net rental income. For example, in 2011 the gross rental income for Bowman Street was $100,810.00. It was $30,220.70 by the time the business expenses were deducted. He then took $30,220.00 and added back in property taxes, motor vehicle expenses and mortgage interest.

[138] I do not agree that the property taxes should be added back in simply because they have not been paid. The wife will have to pay them eventually. This is not a debt she can avoid. She said she asked the husband several times for help in paying the taxes, but he would not.

[139] However, it is appropriate in my view, to add back in the interest expense for Bowman Street since the mortgage was paid, and some of the motor vehicle expenses. I will reduce the total motor vehicle expense by one half since the properties were close together.

[140] Counsel for the husband also added back in a capital cost allowance for three of the properties. I will also add it back in pursuant to Schedule III section 11 of the guidelines.

[141] I have added back in the legal bill for the sale of the small cottage as this does not seem to be an appropriate deduction for purposes of determining income. The parties must have shared this expense before the proceeds of sale were divided.

[142] I will allow the 2011 utility bill for the small cottage however as the parties did attempt to rent from time to time.

[143] The respondent based his calculations on the years 2007, 2008, 2008 and 2011 because the wife’s documentation for 2010 was missing some pages. I will accept these four years as a base from which to calculate an average income as the 2010 documentation was lacking. By making the adjustments that I have allowed, I arrive at income of $65,654.00 (2007), $51,405.00 (2008), $60,063.00 (2009) and $52,438.00 (2011). This comes to an average of $57,390.00. I will round this off to $57,000.00 and deem this to be the wife’s income.

[144] There was testimony about the wife’s efforts to get back in the health care field. It has been many years since she worked as a nurse and she is only interested in teaching health care in a school now, where she does not find the work easy to get. I am not inclined to in impute any income to her for other types of employment.

[145] I have no way of knowing if she could earn more in the health care field now than she can in the rental business. Her decision to leave nursing was made years ago while the parties were still together and she has earned her living solely in the rental business for many years now.

Husband’s Income

[146] The wife proposed that I use a sum of $547,393.00 as the husband’s taxable income. This is an average of the income she suggests for 2008 ($810,726.21), 2009 ($524,416.86), 2010 ($524,591.74), and 2011 ($329,838.00). The wife has arrived at this figure by taking the husband’s figures in exhibit 31, which shows all deposits including money put into Kellie’s account and the business account. She then multiples the unreported portion by 1.85 as suggested by Mr. Carnegie. In 2011 there was unreported income that was given to Ms. Winterfield and this was included. She also adds in money that was used for personal expenses and for miscellaneous cash jobs.

[147] The husband suggested I accept his income as $165,503.00. He has obtained this number by taking all money deposited into his and Kellie’s accounts for three years with three deductions. These deductions were for pre separation money or other funds that were not connected to the business. He then subtracted from this what he showed on his income tax returns. The difference is the unreported portion. There was $177,698.00 shown as unreported income for each of these three years.

[148] Mr. Higginson suggested that I deduct 35% from $177,698.00 because the evidence was that the subcontractors received about 35% of the income. This comes to $115,000.00 and the husband’s lawyer added on $50,000.00 as his average yearly income as shown on his income tax returns.

[149] His Notice of Assessment for 2010 showed a taxable income of $51,080.00. His Notice of Assessment for 2011 showed a taxable income of $49,131.00.

[150] In 2010 he showed gross revenue of $315,468.79 in the name of Thomas Mildren Contracting. From this he showed deductions of $170,209.15 in work expenses and $94,179.00 for the subcontractor. The expenses include business related expenses such as advertising, insurance, telephones, etc. It also includes supplies for projects, such as a $34,145.00 payment to Hamilton Builders Supply and $10,966.92 for Turkstra Lumber. There are also expenses for equipment rental such as $16,449.30 for a bobcat or bobcats.

[151] The statement for 2011 is similar. It shows a gross income of $279,149.55. The portion for the subcontractors is $105,357.05 and the portion for business expenses is $124,660.71. There are some large expenditures such as $19,630.91 to Hamilton Builders Supply. The subcontractors in 2011 are shown as Serge ($42,397.05 plus H.S.T. of $4,877.54); Dave ($22,480.00 plus H.S.T. of $2,586.19) and Mel and Derek ($40,480.00 plus H.S.T. of $4,657.00). Advertising was high for both years, but he said he had an advertisement for a few years in the yellow pages which was about 1/6th of the page and this was in the book for the Hamilton and Burlington area.

[152] Both counsel have commenced their calculations in a similar fashion. The difference is that the wife did not deduct anything for any of the non-business funds put into Kellie’s account and the wife did not deduct anything from the unreported income for subcontractors. It was the husband’s estimate that the subcontractors were paid about 35% of the gross revenue. In addition, the husband did not add a 1.85 increase because of the fact that taxes were not paid on the unreported income.

[153] The husband also testified that the money put into Kellie’s accounts included money from the Dundee account ($105,000.00) at separation and that some was from his mortgage on his new home.

[154] The figure provided by the husband’s lawyer does not include the money endorsed over to Ms. Winterfield. She said she received $132,325.16 in a sixteen month period being April 2011 to July 2012.

[155] It is extremely difficult to ascertain an exact number for the husband’s income.

[156] I accept the argument that some of the money that was given to Kellie included money that was not from business clients, as set out in Kellie’s chart.

[157] I also accept that some of the money was used for expenses such as equipment and equipment rentals as shown in Kellie’s chart. The husband would have had to replace the equipment the wife sold.

[158] Kellie did not testify but she did attend examinations and the husband went through her calculations in his testimony.

[159] However, I do not know that there should be 35% reduction for subcontractors. It seems more likely that the wages paid to the subcontractors would be included in the respondent’s income tax returns.

[160] Up until I have to deal with the 35% deductions the husband’s basic calculations made sense. They show an average income for 2008, 2009 and 2010 of $343,705.28. Some further reduction is needed for the work expenses that were paid by Kellie, but the proposal of 35% is not supported by any helpful evidence. Half of that amount is appropriate as an estimate.

[161] The money given to Ms. Winterfield works out to $99,243.84 per year. ($132, 325.16 divided by 16 = $8,270.32 x 12).

[162] I have no evidence of any of that money being used to pay subcontractors or work expenses, other than the husband’s statement that an average of 35% of revenue is used for the workers.

[163] At present then, it looks as though the husband can earn $50,000.00 per year in declared income and $99,243.84 in undeclared income. The husband says that as he gets older he is less able to do the physical work and needs to hire people more often.

[164] Regarding the issue of the 1.85 gross up for income taxes, I note the following:

• This was not actually dealt with in the case of Ramlochan v. Ramlochan as the payor pledged to re-file his income tax returns prior to trial.

• The husband in this case says he wants to come clean. The information regarding his unreported income is set out in writing now and known to several people, including the wife. It may well be that he will soon be facing serious consequences and will have to pay thousands of dollars worth of back taxes. This calls for speculation however and I note that the husband did not say he was going to re-file his tax returns. Since he has been under reporting his income on his tax returns for years and has made no effort to re-file a gross up is appropriate in my view.

[165] In addition to the income described above the husband acknowledged receiving about $10,000.00 to $15,000.00 in cash payments from customers every year that is also unreported.

[166] An argument was made by the wife that I also accept the husband’s income being at least $385,000.00 because that is the amount he put in a mortgage application. I am not inclined to accept this argument. Ms. McFarlane testified that even she believed it was a gross business income because she went on to ask him how many employees he had. She also remarked that it was a mortgage with an equity lender and there was not much thought put into specific income calculations or the accuracy thereof.

[167] For the purposes of any child support ordered, I will need to provide an amount of income in order to utilize the Child Support Guidelines. However, for purposes of any spousal support ordered a range may be more helpful given that the wife has suggested a lump sum.

Child Support

[168] The husband did not claim child support in his application. He took the position that he was helping both girls with their University expenses and that each party had one child residing with them, so there was no need for a claim for child support. At the time he felt that the parties’ incomes were similar.

[169] The wife is seeking retroactive child support in the amount of $167,000.00. She provided calculations going back to March 31st, 2007 as to how she arrived at this figure. She is requesting child support for both children as of March 31st, 2007 and for just Robyn as of September 1st, 2007. Her claim was made in her Answer.

[170] The calculations provided on behalf of the wife were based on the husband earning $547,393.00 per year.

[171] Kellie was born on June 30th, 1989 and will be 24 years of age in a few months. Robyn was born July 24th, 1990 and will be 23 years of age in a few months.

[172] I do not disagree with the request to examine child support as of the date of separation since the litigation was commenced in 2009 and the parties resided in the same home until January 2008. Also the respondent requested retroactive support in her Answer, which was issued in June 2009.

[173] I have several difficulties with the wife’s proposal, however:

1. Her proposal ignores the fact that Kellie has resided with the husband since approximately September 2007 and has been attending University since then. While no claim for support was made for Kellie, she should be a factor since the situation of both daughters is identical.

2. Her proposal ignores the fact that the husband has paid rent for both girls since they started University. This is for accommodations at Queen’s University for Kellie and the University of Guelph for Robyn. The husband said that he pays Robyn’s rent for twelve months of the year. When the girls come home for school breaks, they go to different homes. Kellie goes to her Dad’s and Robyn goes to her Mom’s home.

3. Her proposal ignores the fact that once each girl turned 18 and finished High School, I needed more disclosure regarding the children’s budgets etc.

[174] I am prepared to order child support for the period of April 1st, 2007 (the day after the date of separation) to August 2007 for both girls, and from September 2007 to July 2008 for Robyn. This covers both children while they were living with the respondent mother and attending High School. It also covers Robyn while she was the only one living with the mother and attending High School.

[175] I am not ordering retroactive support however for the period after they each turned 18 and were living in separate houses.

[176] The wife is asking me to be too selective regarding the issues of child support. I cannot grant her a large retroactive sum that is solely based on when Robyn lived with her and that does not take into account the expenses the husband paid for Robyn and Kellie, the support needs of Kellie, and the children’s own means and budgets.

[177] For the sixteen months that child support is being ordered for I will deem the husband’s income to $343,225.00 for these months. I have arrived at this sum as follows:

(i) $177,000.00 is the starting point as suggested by the husband. It takes into account the average amount of money given to Kellie during the relevant time with the “non business” money deducted.

(ii) Instead of deducting 35% for expenses and subcontractors, I am deducting half of that because I do not have sufficient evidence to say it is 35%. Some deduction is appropriate however as business deductions were shown by Kellie and this business does have large deductions. This leaves $146,000.00.

(iii) I am adding $12,500.00 onto the $146,000.00 for cash income. This is the mid range between $10,000.00 to $15,000.00.

(iv) I am multiplying the sum of $158,000.00 (being $146,000.00 plus $12,500.00) by 1.85 in order to gross it up for income tax purposes. This is appropriate because the evidence is that during these years there was significant unreported income and despite the husband’s claim of wanting to “come clean” there was no evidence that he has taken steps to re-file any income tax returns. With the gross up of 1.85 I now have $293,225.00.

(v) I have added $50,000.00 on for the reported income.

(vi) If I am wrong to have included a gross up for income tax, I am still of the view that the income arrived at ($343,225.00) is appropriate for child support purposes given the difficulty in ascertaining the husband’s actual income as a result of his practice of not declaring all of it.

[178] Based on an income of $343,225.00, and the Federal Child Support Guidelines that were in effect at the time, child support is as follows:

(a) For the two daughters for five months it is $21,167.05.

(b) For the youngest daughter for a further eleven months it is $29,522.46.

[179] As a result a total of $50,689.51 is owing in child support.

Spousal Support Entitlement

[180] The issue of the wife’s entitlement to spousal support needs to be addressed. The husband took the position that there should be no spousal support ordered because she is capable of supporting herself and she could be doing more to earn a higher income.

[181] In the event that I do order support he suggests that it be based on the spousal support advisory guideline (S.S.A.G.) calculations he provided. They were based on incomes of $165,503.00 and $70,148.00.

[182] The wife included a claim for spousal support in her Answer. She provided S.S.A.G. calculations to show the mid-range amount of support for twelve years under three different scenarios. She believes that there is an entitlement to support.

[183] Since the mother has proceeded under the Divorce Act (R.S.C. 1985, c.3(2nd Supp.) as am.) (ss.1 to 35.1), I will review the provisions of that Act that is relevant. Section 15(2) reads as follows:

15.2 SPOUSAL SUPPORT ORDER – (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

(2) INTERIM ORDER – Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to secure or pay, or to secure and pay, such lump or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse, pending the determination of the application under subsection (1).

(3) TERMS AND CONDITIONS – The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just.

(4) FACTORS – In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

(c) any order, agreement or arrangement relating to support of either spouse.

(5) SPOUSAL MISCONDUCT – In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration any misconduct of a spouse in relation to the marriage.

(6) OBJECTIVES OF SPOUSAL SUPORT ORDER – An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[184] I am of the view that the wife has demonstrated entitlement to spousal support for the following reasons:

(i) The parties were married for over 24 years and lived together a few years before that. They had two children together.

(ii) The wife was trained as a registered nurse and worked in doctor’s offices during the early years of the marriage. She left that type of work during the marriage to devote more time to the family. She said this decision was fully supported by the husband and there did not appear to be any dispute about this.

(iii) After the wife left nursing the parties made a decision to invest in real estate by buying property with rental units. The management of these properties became the wife’s responsibility. The husband prepared income tax returns for both of them during the marriage wherein they engaged in a form of income splitting. While together they shared in the support of one another and assisted somewhat in each other’s businesses. The wife always contributed to the support of the family. In addition, she stated that she had primary responsibility for the children, which was not disputed.

(iv) The husband is deemed to have earned significantly more income than the wife and as such she has suffered an economic disadvantage from the breakdown of the marriage, since they are no longer pooling their resources. She has received funds from her mother to help pay expenses. An order for support will help to relieve the economic hardship she has suffered since separation.

[185] For all of the above reasons, I believe the wife is entitled to spousal support.

Spousal Support

[186] Having found that the wife is entitled to spousal support, I need to determine the amount and method of payment.

[187] The wife requested a lump sum payment and she provided three sets of calculations based on her income of $33,740.00 and the husband earning $547,393.40, $350,000.00, and $250,000.0. The assumption in all three scenarios is that the support lasts for twelve years. Her position is that support be based on an income of $547,393.40. The other calculations were provided in the alternative.

[188] The calculations showed that the lump sum would be as follows for the mid-range:

• $1,305.766.00 for an income of $547,393.00

• $818,948.00 for an income of $350,000.00

• $569,799.00 for an income of $250,000.00

[189] The husband provided calculations, in the event that spousal support is ordered, based on his income of $165,503.00 and the wife’s income of $70,148.00. These calculations were based on monthly spousal support payments on an indefinite basis. The mid-range suggested is $3,476.00 per month.

[190] The law is such that lump sum spousal support should be awarded only in unusual circumstances. I am of the view that it is appropriate to order a lump sum in this case for the following reasons:

(i) The husband does not have a history of filing accurate income tax returns. He has had a substantial amount of unreported income over the last few years and this will make it extremely difficult on a “go forward” basis to know what his income is when the inevitable variations are brought.

(ii) Because the husband has his own business and his income has included unreported income, it will be very difficult to enforce any monthly support order.

(iii) The husband’s finances may be jeopardized soon if he is involved in an audit by the C.R.A. This might make it more difficult to obtain a monthly amount.

(iv) Given that the wife currently manages the rental units and supports herself from that income, it makes sense for her to have the money up front because it will allow her to continue with this source of income.

[191] I appreciate the argument that a lump sum deprives the husband of the right to seek a variation if his income goes down through no fault of his own. This is something I can consider when dealing with quantum.

[192] Overall, the reasons to order a lump sum outweigh the reasons to not order it, and it is important to note that the husband has created the reasons to order a lump sum, as set out above, by his own actions.

[193] Having decided that a lump sum is appropriate, I will now deal with the amount.

[194] The wife’s S.S.A.G. calculations for a lump sum were based on an assumption of a 12 year duration. This is appropriate given the current ages of the parties and the nature of their work. The husband is currently 54 years of age and he may not be able to do the physical work required in his job for many years more. He has said that he will need to increasingly hire people to do this type of work. A 12 year period would cover approximately 6 years of retroactive support and 6 years ongoing. This is fair for the wife because she will have the money in her hands despite any downturn in the husband’s income, or any downturn in his financial situation.

[195] She will also not have to pay any income tax on the lump sum.

[196] The proposal by the wife, which results in a lump sum payment of $1,305,766.00 is too high however, in my view for three reasons:

i) It does not take into account that some child support has been ordered. I ordered a retroactive amount of over $50,000.00;

ii) It is based on the wife earning $36,000.00 per year. I have given reasons why I deem her income to be approximately $57,000.00;

iii) I am also not inclined to deem the husband’s income to be $547,393.00. I gave some reasons for this earlier. The figure of $547,393.00 was based on all money given to Kellie without any deduction for business purchases and expenses, or money from other sources. While I was prepared to deem the husband’s income to be $343,225.00 for the 16 month period of child support being April 2007 to July 2008, I am not convinced that this is the appropriate amount on an ongoing basis, and for a 12 year period;

[197] The most recent evidence is that the husband earned about $100,000.00 per year in undeclared income payable by cheques, $12,500.00 undeclared income payable in cash, and $50,000.00 in net declared business income. This was between 2011 and 2012 and this comes to $162,500.00. A gross up for income tax purposes is appropriate however, as is some consideration for any further business expenses. If for example, I take 17% (being just under half of the 35% proposed by the husband) for expenses and I subtract it from the $112,500.00 in undeclared gross income, I get $93,357.00. When I gross this up by 1.85 for income tax, I get $172,743.75. With the approximate $50,000.00 in reported income added on, I get approximately $235,000.00 The mid range in lump sum spousal support for incomes of $235,000.00 and $57,000.00 based on an assumption of 12 years is $491,838.00. (This calculation was done without regard to the retroactive child support ordered.)

[198] There is a great deal of uncertainty over the husband’s income. It is clearly not the $50,000.00 he claims on his income tax return. Even the husband agrees with that. If I accept the $165,000.00, the husband proposes then that is based on no gross up for income taxes and a constant 35% deduction for business overhead, and it is based on the years that Kellie was receiving funds through the business that were not declared. While I am not inclined to accept the husband’s income as $547,393.00, I believe it is within a large range and somewhere between $162,500.00 and $343,225.00. If I am wrong to have considered a gross up for unpaid income taxes, then I still deem the income to be within this range as the husband clearly had significant additional money coming in that was difficult to ascertain, and his business expenses over and above what was shown on his income tax return were also difficult to ascertain.

[199] For all of the above reasons, I believe a lump sum of $500,000.00 is appropriate. This amount is higher than the mid range for an income of $235,000.00, and it would also be higher when the child support ordered is factored in. The husband’s actual income in any given year may be less or more depending on his degree of reported income versus unreported income, his overhead expenses for that year, the amount of business he takes in, and his situation with C.R.A.

[200] The amount of 500,000.00 will enable the wife to continue in her rental business. I am also mindful that she will end up with nearly all of the property acquired during the marriage, and this is a consideration when ordering spousal support. She will have about 1.5 million dollars in assets. This amount, in my view, will enable the wife to be economically self sufficient and it will alleviate any economic hardship arising from the breakdown of the marriage. In time, she will be able to sell one or both rental properties and that will also provide her with an income.

[201] The husband will be left with very little in the way of assets once the payments ordered herein are paid. At present, he has his house on Newcombe Street. It has a large mortgage but there appears to be over $100,000.00 in equity. He also has his share in the large cottage. However he likely has several years of earning capacity left and a business that has been the source of a good income for many years now.

[202] If he handled his business accounting in a more straightforward and accurate manner, the results likely would have been different in that a monthly amount of support likely would have been ordered and he would have been able to receive his entire equalization payment as a result.

[203] When counsel re-attend to address a few final issues, they can address this issue of when and how the balance of support owing to the wife will be paid.

Miscellaneous Issues

[204] There have been few issues that were of significance to the parties but that I have not dealt with on terms of an order or in terms of credibility.

[205] The money that is still subject to a lawsuit between Ms. Morehouse and the husband concerns post separation money and a determination is not needed by me in terms of the equalization. That issue is best left to be determined in the separate action that is pending.

[206] The issue of the alleged assaults is also not something I need to make a finding on. The police investigation on both occasions and deciding to not lay charges. The decision of the wife to bring an action against the husband for damages from an assault in Kitchener (where they had no connections) and to include both daughters as parties was of concern, and it is understandable that the husband brought a motion to have the daughters removed as parties. However, the daughters were removed as parties on consent once the motion was brought and that entire issue plus the alleged assaults do not appear to be relevant to the issues that I have had to deal with. I make no finding in regard to the alleged assaults testified about.

[207] I did not find the wife to be credible when she said that the husband only used the Main Street West property for purposes of picking up a worker everyday and that he only started to use it to leave debris and store equipment after separation.

[208] Serguei Avdeyev supported the husband’s evidence that they had been using the property in the same manner for over 20 years. Given that there was no other place of business and the clear evidence of Mr. Avdeyev as to how they carried out the business over the years, I am prepared to make a finding that the Main Street West property was used for storing equipment, dealing with debris, and picking up workers. However, there is not much that hinges on this issue as the property and equipment were all in the wife’s name and have been dealt with as part of the equalization process. The fact that bylaws were being violated also does not appear to be relevant to the issues in dispute.

[209] The wife’s decision to sell the husband’s vehicle and equipment that he needed for work without his knowledge clearly was not well handled and it added to the acrimony between the parties and it led to the initiation of this action.

[210] Likewise, the wife’s decision to sell the small cottage without the husband’s knowledge when litigation was underway and lawyers were in place was not appropriate and it also added to the acrimony and difficulty in this file.

[211] On the other hand, the husband’s decision to hide income and for such a lengthy period of time was a tremendous source of frustration and difficulty for the wife and it led to a major portion of the time at trial.

[212] I have had to deal with the issue of the husband’s undeclared income but the other issues described above, by their nature, do not affect the outcome of my decision. I mention them however because they were of importance to the parties.

Divorce

[213] Both parties claimed a divorce and the usual evidence was given regarding the divorce. I will grant the divorce on consent. The style of cause however needs to be amended to reflect the full names shown in the Certificate of Marriage, being Thomas Robert Mildren and Dawn Louise Mildren.

Costs and Further Attendance

[214] Rather than impose deadlines for filing written submissions as to costs, I will invite counsel to re-attend and address the issue of when and how costs will be addressed. At the same time they can seek any clarification that may be needed and provide any suggestions that are needed regarding the large cottage and any ruling needed regarding capital gains on the small cottage.

[215] In addition counsel may want to address the timing of the payments set out herein.

Final Order to Issue

On Consent:

1. A divorce is granted.

2. The pleadings are amended to show the parties as Thomas Robert Mildren and Dawn Louise Mildren.

Not on Consent:

3. The applicant shall pay to the respondent retroactive support for the two children of the marriage namely: Kellie Leanne Mildren born June 30th, 1989 and Robyn Lynne Mildren born July 24th, 1990, fixed in the amount of $50,689.51.

4. The respondent shall pay the applicant an equalization payment of $488,287.92.

5. The applicant shall pay the respondent lump sum spousal support in the amount of $500,000.00.

6. The parties shall share in any capital gains liabilities for both cottage properties.

7. Counsel for the parties are requested to contact the trial co-ordinator to address the following:

(a) Any clarification needed.

(b) Any request to include a clause regarding the cottage property at 1022 Rat Bay Lane, Lake of Bays.

(c) Any further clause needed regarding payment of capital gains on the cottage at 1028 Rat Bay Lane, Lake of Bays that was sold.

(d) Set a time table for making the payments set out herein.

(e) Set a time table for addressing the issue of costs.

McLaren, J.

Released: March 28, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Thomas R. Mildren

Applicant

– and –

Dawn L. Mildren

Respondent

REASONS FOR JUDGMENT

THE HONOURABLE MADAM JUSTICE MCLAREN

Released: March 28, 2013