ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Cheryl Ann Wadsworth
Applicant
– and –
Peter Garth Wadsworth
Respondent
M. Kenneth Douglas, for the Applicant
Bruce A. MacDonald, for the Respondent
HEARD: January 15, 16, 17, & 18, 2013
THE HONOURABLE JUSTICE J. R. HENDERSON
R E A S O N S F O R J U D G M E N T
Introduction
1The parties separated in August 2007, but they both continued to reside in the matrimonial home known as 15 Wychwood Road, St. Catharines, Ontario, until Cheryl Wadsworth (“the wife”) moved out of the home in January 2008. Peter Wadsworth (“the husband”) remained in the home and continues to reside there.
2The matrimonial issues came before the courts in November 2009 at which time the parties entered into lengthy settlement negotiations, resolved many of the issues, and had a short trial with respect to some of the furniture. The order of Justice Carpenter-Gunn dated November 6, 2009 (“the 2009 Order”) incorporated all of the terms of the settlement and the trial.
3In the current Application the parties have raised several matters that flow from the 2009 Order. At the commencement of this trial, the parties were able to settle the division of the wife’s pension, and the child support payable by the husband. Consent orders were made with respect to both of those matters.
4Therefore, the following issues proceeded to trial:
The husband’s purchase of the wife’s interest in the matrimonial home.
The wife’s claim for section 7 expenses for the parties’ daughter, Grayson, born July 17, 1997.
The husband’s obligation to provide life insurance on his life for the benefit of the child Grayson.
THE MATRIMONIAL HOME
The Matrimonial Home
5Paragraphs 24, 25, and 26 of the 2009 Order deal with the matrimonial home. In essence, the home was to be listed for sale at an initial list price of $434,000, reducing after two weeks, and the parties were to split the proceeds of the sale up to a sale price of $350,000. The interest of the wife (the Applicant in the 2009 proceeding) in the matrimonial home was to be capped in accordance with paragraph 25 which reads as follows:
“Each party shall share 50% of the net proceeds, up to a value for the home of $350,000.00. If the property is sold at a price exceeding $350,000.00, the additional proceeds generated by the sale shall be payable to the Respondent.”
6Despite attempts to sell the matrimonial home, the home has not been sold. Each of the parties blames the other for the fact that the home has not sold. In my view, it is not necessary for this court to assign fault to either party.
7The parties now agree that the 2009 Order should be varied to require the husband to purchase the wife’s interest in the matrimonial home for an amount to be determined by this court. It is also agreed that the wife’s interest in the home will be calculated using $350,000 as the value of the home, which was the value that was used to cap the wife’s interest in the 2009 Order.
8Accordingly, if I start with the value of the home at $350,000, deduct the current balance owing on the mortgage of $234,605, and then divide that amount equally between the parties, I find that the wife’s interest in the matrimonial home, as capped and before adjustments, is $57,698. (In this decision I will round off all figures to the nearest dollar.) The parties disagree as to what adjustments should be made to this figure for the purpose of the buyout, as discussed below.
9First, the husband requests that notional real estate commission of five percent plus HST be deducted from the wife’s interest in the matrimonial home. In the case of Sengmueller v. Sengmueller 1994 8711 (ON CA), 17 O.R. (3d) 208 at para. 33 the Ontario Court of Appeal set out three rules to apply in all cases in which a court is asked to consider the question of notional disposition costs. These rules include consideration of the probable timing of the actual disposition, and the overriding principle of fairness.
10In my view there is a strong probability that the husband will actually sell the matrimonial home to a third party in the foreseeable future as the husband has already made extensive efforts to market and sell the home, albeit at a price that may be high. Moreover, the present case is further along the spectrum toward an actual disposition than the circumstances in the Sengmueller case, as there is already an order in the present case that the matrimonial home be sold.
11Also, in terms of fairness, I note that if the matrimonial home had been sold pursuant to the 2009 Order, the wife would have actually paid a percentage of the disposition costs. If the wife is to have her money out of the matrimonial home before an actual sale, in my view it is only fair that the wife absorb some of the foreseeable disposition costs.
12As to the quantum of the notional real estate commission, the parties had previously agreed to share the disposition costs pro rata, as set out in paragraph 26 of the 2009 Order which reads, in part:
“Sale expenses, including real estate commission and legal fees, shall be pro-rated on the basis of the total percentage proceeds received by each party.”
13The parties agree that the present value of the home is more than $350,000, and therefore it is expected that the husband’s interest in the home, when it is realized, will be greater than the wife’s interest. Consequently, this court should determine the current value of the home and divide the notional disposition costs between the parties on a pro rata basis, in accordance with the net proceeds that each party is expected to receive.
14The evidence as to the current value of the home is fairly consistent. Derek Abrahams listed the home for sale at $399,000 in 2010, but it did not sell. Subsequently, two other real estate agents wanted to re-list it at $399,000. There is also a written appraisal, although it was not formally proved at trial, that valued the home at between $390,000 and $395,000. On this evidence I find that the current value of the matrimonial home for the purposes of these calculations is $390,000.
15Using $390,000 as the value of the home and following the formula in paragraph 26 of the 2009 Order, I find that the notional real estate commission, including HST, that should be deducted from the wife’s interest in the matrimonial home is $8,234.
16Second, for the same reasons as set out above, I find that notional legal fees for the disposition of the matrimonial home in the amount of $374 should be deducted from the wife’s interest in the matrimonial home.
17Third, the 2009 Order provides at paragraph 27 that “Each party shall be responsible for 50% of the property tax balance outstanding as at January 30, 2008.” Both parties agree that 50% of the outstanding property taxes as at January 30, 2008, was $5,783, and this amount should be deducted from the wife’s interest.
18After the parties separated in January 2008, the wife did not pay anything to the municipality toward the outstanding property taxes. Therefore, the husband paid, in full, all of the outstanding property taxes, but because of the way in which the municipality applies property tax payments, the husband paid significant penalty and interest charges. He now asks that the wife give him credit for one half of these penalty and interest charges.
19The husband has gone through an elaborate calculation to show that he has been required to pay over $8,000 in penalties and interest over the past few years because of the arrears of property taxes, and the way in which his tax payments were applied. In my view, the wife should reimburse the husband for some of these penalty and interest charges, but she should not be responsible for the continuing fall-out from the fact that the property taxes fell into arrears prior to separation.
20If the wife did not pay her share to the municipality, the husband, being in possession of the matrimonial home and the recipient of the property tax invoices, had a duty to mitigate the amount of the penalty and interest charges. In fact, it appears that all of the 2006, 2007 and 2008 property taxes had been paid in full by the husband by November 2009. By that time there had been three separate penalty and interest charges assessed in the amounts of 367.20, 375.36, and $441.98, for a total of $1,184.54. Thus, I find that the wife should reimburse the husband for one half of this amount or $592.27, rounded to $592.
21Therefore, there will be a deduction from the wife’s interest in the matrimonial home for her share of the outstanding property taxes as at January 30, 2008, in the amount of $5,783, plus her share of the penalty and interest charges in the amount of $592, for a total deduction of $6,375.
22Fourth, the husband has assumed the joint line of credit, which includes $7,900 that the wife had used for her benefit. The wife agrees that there should be a deduction against her interest in the home of $7,900 plus interest. I accept the husband’s calculation that the principle and interest on the line of credit that should be deducted from the wife’s interest in the home is $8,674.
23Fifth, the husband has made all of the mortgage payments since the separation. Those mortgage payments consisted of single monthly payments that covered principal, interest, and the premiums for life insurance on the lives of both the husband and the wife. The husband requests a credit for the life insurance premiums paid on the life of the wife. In my view, this is not an appropriate request by the husband.
24Paragraph 26 of the 2009 Order reads, in part, “All ongoing property related expenses after January 30, 2008 shall be the responsibility of the Respondent.” Because the mortgage on the matrimonial home had been set up to be secured by life insurance on the lives of both the husband and the wife, this part of the 2009 Order should be interpreted to mean that the husband is responsible for the monthly mortgage payments, including the life insurance component.
25Furthermore, by paying the life insurance premiums, the husband was in a position to receive a windfall if the wife died. That is, if the wife were to die, then the entire amount of the mortgage would be paid in full. Therefore, the husband should not receive any credit for the life insurance premiums that he paid as part of the monthly mortgage payments.
26Sixth, the parties agree that 50 percent of the assessment report prepared with respect to the child should be deducted from the wife’s interest in the amount of $3,750.
27Seventh, when the wife vacated the matrimonial home she removed some of the husband’s furniture from the home. On a subsequent date, she returned this furniture to the husband by arranging for a mover to drop it off in the driveway at the matrimonial home. I accept the evidence that it was raining for most of the day on which the furniture was delivered, and I accept that the furniture was damaged as a result.
28I find that the wife did not give the husband any advance notice of her intention to deliver the furniture; that the wife had a mover call the husband at his place of employment after the furniture had been dropped off in the rain; and that the wife failed to take any steps to protect the furniture from the elements.
29Therefore, I will allow a deduction from the wife’s interest in the matrimonial home for the cost of repairing the damaged furniture in the amount of $788.
30Eighth, it is agreed that the husband owes to the wife for section 7 expenses the sum of $1,900, and this amount will be added to the amount otherwise payable by the husband to the wife.
31In summary, the following schedule sets out my findings as to the amount payable by the husband to purchase the wife’s interest in the matrimonial home:
Wife’s Interest in Home
$57,698.00
Notional Real Estate Commission
$ 8,234.00
Notional Legal Fees
$ 374.00
Property Tax Arrears
$ 6,375.00
Joint Line of Credit
$ 8,674.00
Life Insurance Premiums
NIL
Assessment Report
$ 3,750.00
Furniture Repair
$ 788.00
Credit Section 7 Expenses
$ 1,900.00
TOTALS
$59,598.00
$28,195.00
NET amount payable by the husband to the wife
$31,403.00
SECTION 7 EXPENSES
Section 7 Expenses
32The wife makes three requests regarding section 7 expenses.
33First, the child, Grayson, attends dance lessons, and dances at a relatively high level. The total cost of the dance lessons for 2013 has been invoiced by Ballet Etc… at $6,541. The wife asks that the husband pay 50 percent of this expense.
34I note that paragraph 13 of the 2009 Order states that the parties will share the dance expenses and the husband will pay his share directly to the dance studio, but that the husband’s share will be capped at $2,500 per year. Therefore, in order for the wife to succeed on this point, the wife must convince this court that the 2009 Order should be varied.
35The husband resists the wife’s claim for these dance expenses because she has not formally brought a motion to change the 2009 Order; she has not delivered a financial statement in this Application; and there is no material change in circumstances.
36I accept that the wife has not complied with the formal requirements for a variation to the 2009 Order. However, this issue was discussed fully during the trial and both parties testified as to their present financial circumstances. Therefore, in accordance with the objectives of the Family Law Rules, I am prepared to deal with this request on its merits.
37In that respect, I find that the incomes of both parties have increased since the original order was made, and I find that the cost of dance lessons has increased. Accordingly, I find that the necessary material change in circumstances has occurred. On that basis, I will vary the 2009 Order. However, given the husband’s concern in 2009 about the possibility of the dance expenses being greater than he thought was reasonable, I am prepared to simply change the cap on the husband’s share of these expenses from $2,500 per year to $3,500 per year.
38Therefore, I order that the husband pay the sum of $3,271, (one half of the current invoice) to Ballet Etc… as the husband’s share of the 2013 dance expenses, and that the cap on the husband’s annual obligation to pay for dance expenses as set out in paragraph 13 of the 2009 Order be increased to $3,500.
39Next, the wife asks for reimbursement of 50 percent of the expense for Grayson’s laptop computer that cost a total of $1,660.76. I accept that a computer is not required by the school, but I agree that a computer is a useful tool for any high school student, particularly for a good student such as Grayson.
40The husband resists this claim, in part, because the wife did not give him advance notice of her intention to buy this computer for Grayson as required by the 2009 Order. While I agree that the wife did not follow the prescribed procedure, I note that the wife has not made many section 7 claims on Grayson’s behalf, and thus is not in the habit of circumventing the section 7 procedure. Moreover, in my view, this is a fair request, and the husband should have readily agreed to pay 50 percent of this expense.
41Therefore, the husband will be ordered to pay the sum of $830 to the wife for his share of the cost of the laptop computer.
42Lastly, there are orthodontic expenses billed by Dr. Riva. The difficulty with this claim arises from the fact that all of Dr. Riva’s bills to date have been paid by the combined health insurance plans of the wife and the husband. The wife has been making the quarterly payments to Dr. Riva up front and receiving reimbursement through the insurance plans. There is one quarterly payment left in March of 2013.
43Neither party is out of pocket at this point. Therefore, I will not make any order today regarding Dr. Riva’s account.
HUSBAND’S LIFE INSURANCE
Husband’s Life Insurance
44Pursuant to paragraph 21 of the 2009 Order, the husband was required to designate John Hayes as the beneficiary of his life insurance policy in the amount of $250,000 in trust for the benefit of Grayson, and he was to annually provide proof of coverage to the wife.
45In fact, the husband has a $500,000 life insurance policy with RBC Life Insurance, and has drafted his will so that John Hayes will be a trustee in the amount of $250,000 for Grayson. He has also provided a direction to RBC Life Insurance that would allow the wife to contact the insurance company from time to time to obtain information regarding the policy.
46In light of these circumstances, I will not make any order regarding paragraph 21 of the 2009 Order.
CONCLUSION
Conclusion
47For these reasons it is ordered:
The husband shall purchase the wife’s interest in the matrimonial home by paying to the wife the sum of $31,403.
The husband shall pay the sum of $3,271 to Ballet Etc… as the husband’s share of the 2013 dance expenses.
Paragraph 13 of the 2009 Order is hereby changed so that the cap on the husband’s annual obligation to pay for dance expenses is increased to $3,500.
The husband shall pay the sum of $830 to the wife for his share of the cost of the laptop computer for Grayson.
48If either party wishes to make submissions regarding interest, costs, or any other matter that flows from this decision, they may do so in writing directed to the Trial Coordinator at Welland within 20 days of this decision.
Henderson, J.
Released: February 6, 2013
**COURT FILE NO.:**25/08
DATE: 2013-02-06
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Cheryl Ann Wadsworth
Applicant
– and –
Peter Garth Wadsworth
Respondent
r e a s o n s f o r j u d g m e n t
Henderson, J.
Released: February 6, 2013