COURT FILE NO.: FC-03-2932-1

DATE: 20140610

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Elio Pietro Malandra

Applicant

– and –

Victoria Mary Malandra

Respondent

Gil D. Rumstein, for the Applicant

J. Alison Campbell, for the Respondent

HEARD: May 26 - 29, 2014

REASONS FOR JUDGMENT

J. MACKINNON J.

[1] The parties were married on October 5, 1971 and separated on June 15, 2012. They have three adult children. The applicant is 64 years of age, and will turn 65 on June 29. The respondent is also 64, turning 65 on December 24.

[2] At the opening of trial the claims for spousal support and occupation rent were dismissed without costs on consent of the parties. I have dismissed the applicant’s claim for an order to dispense with the respondent’s consent to the sale of the matrimonial home. The applicant sought an order for ongoing financial disclosure between the parties. I declined to make that order in view of the agreed upon dismissal of the claim for spousal support.

[3] Both parties claimed a divorce. The grounds for divorce are proven and the divorce is granted.

[4] Several other terms were agreed to. An order will go in accordance with those terms which are set out in Appendix A to these reasons.

[5] The issues remaining for determination by the court are the following:

• Is the applicant entitled to the equalization payment, agreed to be $34,301.09, together with pre-judgment interest, or is the respondent entitled to an unequal division of net family property (“NFP”). If so, the remedy she seeks is that the net proceeds of sale of the real property shall be divided equally between the parties, without requiring her to make the equalization payment to the applicant.

• Is the applicant entitled to reimbursement of $2,746.76 on account of payments for the mortgage and line of credit automatically withdrawn from his account in July and August 2012?

• What terms of sale shall the court order for the Dovercourt property?

Factual background

[6] The parties are joint owners of 215 – 217 Dovercourt Avenue in Ottawa. This property consists of a side by side double on an undivided lot. Title was originally in the applicant’s name, and was subsequently transferred to the parties in joint tenancy.

[7] The parties resided in 215 Dovercourt from the date of marriage until November 1983. In 1983 the applicant was issued a building permit allowing him to convert the single family residence into a double residence. At that time they moved into 217 Dovercourt and rented out the other unit. The rental income was used to help defray the carrying costs of the property. The property is currently listed for sale at an asking price of $789,500. The registered encumbrances totaled $243,385 as of March 2014.

[8] The NFP of each party and the resulting equalization payment were agreed to. Primarily as a result of the respondent’s employment pension and the fact that the applicant had somewhat higher debts than did the respondent, the equalization payment was calculated at $34,301.09 in the applicant’s favour.

[9] The applicant was employed throughout the cohabitation. He worked for Swiss Pastries for 22 years. He was released on two weeks’ notice due to a change in ownership. His salary had been about $40,000 per annum. He obtained new employment at Bell Pastry and remained there for some six to seven years, earning about $35,000 per annum. He left in 2003 because he felt he was not making enough money. In that year his total income was $46,193 from various sources, including employment, RRSP, rental and some income from the business he opened in 2003.

[10] The respondent was working as a waitress when she met and married the applicant. She remained at home after the birth of their first child until their youngest was in grade one, about eight years in total. She returned to work. Her main employment was driving a school bus. I do not have a complete record of her earnings. I do have her net income figures for 1998 and 2001 which were $7,999 and $9,297. I also have an application she issued in this court in November 2003 wherein she states she earned approximately $10,000 per year commencing in 1994, driving bus. I find that the applicant was the primary wage earner in the family before their first separation in 2002. He was also the more involved spouse in the property upkeep and the rental of 215 Dovercourt Ave. I find that the respondent was the parent / spouse primarily responsible for the children and homemaking, and contributed her part time earnings towards the family expenses.

[11] The parties separated for the first time in June 2002. The respondent and the one remaining dependent child moved into 215 Dovercourt in December 2002. The applicant paid the carrying costs of the undivided property but did not contribute other amounts to their support. Both parties incurred debt during this period of time. The applicant borrowed as needed to carry the Dovercourt property without rental income. The respondent borrowed as needed to cover expenses for herself and their child. It was also during this separation that the respondent obtained casual employment with Canada Post, at the same time continuing to drive a school bus.

[12] In the summer of 2003 the respondent learned of the applicant’s affair with a co-worker, Linda Morazuk. The applicant admitted the affair in his testimony. The respondent called Ms. Morazuk as a witness, and she also admitted the affair. I concluded from their testimony that the affair took place during the Malandra’s separation and did not last very long.

[13] The respondent made other allegations about this affair including that the applicant had spent money on Ms. Morazuk that should have gone to the family. These allegations were not proven. Ms. Morazuk confirmed the applicant’s testimony about the financial arrangements at Antonio’s Café and Catering (“Antonio’s”), and the work she performed there. I found Ms. Morazuk to be very candid and forthright. The respondent’s case was not advanced by calling her as a witness.

[14] In 2003 the applicant and Ms. Morazuk had left their employed positions at Bell Pastry. The applicant purchased Antonio’s located in the lower level of a downtown office building. He invested $30,000, $10,000 of which he borrowed from his sister. An unspecified amount was borrowed from his mother. Ms. Morazuk invested $5,000. Despite her investment, initially she was paid as a salaried employee.

[15] After several months an oral agreement was made to the effect that the applicant owned 67% and Ms. Morazuk owned 33%. They reached this arrangement to acknowledge her investment and because it was less costly and time consuming for the applicant than treating her as an employee. Mr. Winter prepared their income tax returns and divided the net income of Antonio’s between them in these proportions. However, there was a cash component to the business and the fact is both were paid in cash. The applicant would pay Ms. Morazuk first, in priority to himself if cash was short, as if she were an employee. There are no records of what they actually received from the business. It appears as if they each expected to receive something in the range of $200 to $300 per week, although there were many weeks the amounts were lower and some weeks neither was paid.

[16] Ms. Morazuk was essential to the operation of Antonio’s. One person could not run it alone. She worked five days each week, from about ten in the morning until three in the afternoon. She was able to stay on even though pay was low and inconsistent because she had the financial support of her husband.

[17] Despite the so-called partnership, the applicant was the only signatory on the lease and the only obligor to the two suppliers willing to advance credit to Antonio’s. The first lease ran from mid-2003, for five years. Under this lease the rent increased annually and the applicant paid the hydro.

[18] I find that the applicant and Ms. Morazuk did not enter into a legal partnership. The business was registered as a sole proprietorship in the applicant’s sole name. There was no intention that she would be liable for any debt of the business. She never actually did share in any profits. Rather she was paid a modest cash salary for work she actually did. Overall I find the facts of the business relationship are more consistent with her being an employee than being a partner in the business.

[19] In July 2004 the Malandra’s reconciled. The respondent moved back into 217 Dovercourt. Once again, 215 Dovercourt was rented out. Both parties continued to work. Their understanding was the applicant was to pay the mortgage and other carrying costs and the respondent was to pay the utilities and groceries.

[20] I have the respondent’s net income figures for the years 2004 to 2011, which ranged from $19,644 to $30,229. From 2004 forward the applicant’s reported income was very low. The applicant testified the business generated some cash, perhaps as much as $5,000 to $6,000, never more than $10,000, to be shared between him and Ms. Morazuk. I understood this testimony to refer to cash on top of recorded income. Even accepting this, I find the respondent earned at least double what the applicant did from their reconciliation in 2004 to their separation in 2012.

[21] In 2008 the building where Antonio’s was located was sold. The new owner offered the applicant a fixed rate for five years and the owner would pay the hydro which would save the applicant about $8,000 each year. Due to these inducements the applicant signed a second five year lease even though Antonio’s was not meeting his expectations.

[22] In 2008 the Malandra’s refinanced Dovercourt Avenue. They obtained a “Homeowner Readiline” loan with the Bank of Montreal. This loan had two components; a fixed “Instalment Arrangement” loan which at the time of refinancing was in the amount of $167,031 (used to discharge the prior conventional mortgage on title) and a revolving line of credit which allowed the parties to borrow up to $82,500 (almost $74,000 was borrowed at the time to pay off existing debts). As the fixed instalment loan was paid down, the ability to borrow against the revolving line of credit increased correspondingly.

[23] The debts paid off initially were:

• a line of credit incurred by the applicant in the sum of $22,823.65,

• credit card debt incurred by the respondent in the sum of $19,651.47,

• $5,317.56 credit card debt of the applicant.

In addition, a car was purchased for the applicant for $9,000 and a trailer was purchased for the respondent for $16,653.37.

[24] In all $37,141.21 was applied to or for the applicant, as compared to $36,304.84 to or for the respondent.

[25] The applicant explained the need to refinance by noting that both parties had maxed out their credit cards during the prior separation. For his part he had borrowed to continue to pay the carrying costs on Dovercourt when there had been no rental income coming in. He says the parties agreed to borrow the additional $75,000 to consolidate the debts noted above and to purchase the car and trailer. The parties attended at the bank together and they both signed all of the necessary loan documentation in the presence of the bank loan officer. The applicant acknowledges that the overall debt went up after the 2008 refinancing, but only because he was using the line of credit to pay expenses for Dovercourt that he could not pay in any other way. The loan was maxed out at $250,000 at the date of their final separation.

[26] The respondent tells a different story. She testified that she was aware of her own credit card debts and the intended purchases of the car and trailer, but not of the other debts of the applicant’s that were consolidated in the 2008 refinancing. She also testified she was not aware the conventional mortgage was being paid off and replaced by the Readiline that would allow the revolving loan to be increased as the installment portion was decreased. She acknowledges she signed the papers at the bank, but says she did not read them, they were not explained to her by the Branch Manager, and her focus was her excitement over the purchase of the trailer she had always wanted.

[27] I am not persuaded that the respondent was unaware of the other debt the applicant incurred during their first separation. She obviously knew the rental income that had always been used to carry Dovercourt was not coming in as of December 2002 and that the applicant was nonetheless continuing to make these payments. Whether she did or did not know, there was no evidence to contradict his testimony that this was when and why he incurred this debt.

[28] The loan documents are signed by both parties and witnessed by the Branch Manager. The documents clearly state that the maximum amount available was $250,000. I find the respondent did know they were increasing their borrowing line. She described a discussion at the bank where she says her husband agreed not to borrow up to the available limit. Nor did she call the Branch Manager to testify at trial, rather offered what amounted to hearsay evidence as to her recollection of what they had said to each other in a telephone call after the separation. There was no evidence that the Branch Manager was unavailable to attend trial and I find no necessity that would warrant the admission of hearsay on this important issue.

[29] As noted, 2008 was also the year the applicant signed the second five year lease for Antonio’s. Until then, the gross revenues of Antonio’s had increased every year, from $36,965 for the partial year of 2003, up to $97,574 in 2008. The next year was the best year: gross revenue of $110,315 in 2009. In 2010 the gross slipped back to $82,424 but in 2011 the applicant said, the bottom fell out.

[30] The reason for the downturn was that after the federal election in 2011 the government tenants in the office building were moved out. There were government offices on all floors and two entire floors emptied out. Antonio’s was dependent upon the business of tenants of the office building. Its location was not conducive to “outside” business. As the building occupancy dropped so did Antonio’s gross revenue. Revenue in 2011 fell to $69,815, the lowest year since opening in 2003. For the first four months of 2012 the estimated gross was only $17,500. Ms. Morazuk left in February 2012 because she could no longer afford to stay. By the end of April the applicant had arranged with the landlord to abandon the lease and the premises.

[31] The applicant was left with outstanding debt when he walked away from Antonio’s. He owed his sister $10,669, HST of $3,125, and $9,362 on his MasterCard business line of credit. The HST has since been paid off by the government retaining income tax refunds. The applicant has been paying $200 per month towards the business line, which is now down to about $6,000. No payments have been made to his sister.

[32] During the winter or spring of 2012 the applicant fell into a depression. He was on medication. He had suicidal ideation. The respondent took him to emergency on two occasions. Their final separation took place on June 15, 2012. On that day they had an argument about how much the applicant’s 1966 Pontiac was worth. The respondent threatened to take the rent cheques, to report her husband and Ms. Morazuk to CRA, to “take them both down.” The applicant threatened to burn down the house, and said someone would die. She called 911; he was removed by the police, charged, and prohibited from returning to the house. The applicant was released on his undertaking and subsequently pled guilty to the charge.

[33] Since then the applicant has been staying in his mother’s basement. He went back to work at a bakery. He worked 14 hour days, 6 days per week. He earned $29,300 over the balance of 2012 and $47,900 in 2013. The work was difficult for him because of his asthma, the heat and a sensitivity he developed to grains. His doctor advised him to cease working there, which he did in February 2014. At present the applicant is in receipt of employment insurance. The respondent called the owner of the bakery to testify that since leaving his employment, the applicant had gone back in to the bakery on three occasions for a few hours each time, to help out, in return for which he received some bread.

[34] It is unclear why this witness was called. The applicant will reach age 65 at the end of June 2014. The respondent had agreed to the dismissal of her claim for spousal support at the opening of trial.

[35] The respondent has continued her employment with Canada Post and is earning $28,000 annual income. She has occupied 217 Dovercourt since the separation, and has received the rent cheques for 215 Dovercourt. She called both of her daughters to testify. They are both employed. The youngest lives with her mother and helps out financially to the extent of about $600 per month. The older daughter testified she is helping her mother financially by paying $310 per month on what she thought was her father’s personal MasterCard and line of credit payment, in order to protect the equity in the home. She was not aware that this was in fact the monthly payment on the revolving portion of her parents’ joint line of credit.

[36] Neither daughter was a necessary witness. The extent of their financial assistance to their mother was not an issue and could have been attested to by the respondent.

[37] The respondent received the rent cheques for July and August 2012. She testified the bank would not allow her to deposit the rent cheques into the applicant’s personal account from which the installment portion of the Readiline was paid each month by automatic withdrawal. She was able to deposit the payments for the revolving portion, and did so, even though those were also deducted from the applicant’s account by automatic withdrawal. In this way, double payments to the revolving line were made in July and August, to the equal benefit of both parties. Two payments of $1,073.62 came out of the applicant’s account for the instalment portion. He says he should be reimbursed $2,147.24 from the respondent because she had the use of the rent cheques that should have gone into his account for those two months to cover these payments. I agree.

[38] The respondent provided proof of an expense she incurred to maintain the rental unit, in the amount of $107.35, which shall be set off against the amount due to the applicant.

Unequal division of NFP

[39] Section 5(6) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) provides:

(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,

(a) a spouse’s failure to disclose to the other spouse debts or other liabilities existing at the date of the marriage;

(b) the fact that debts or other liabilities claimed in reduction of a spouse’s net family property were incurred recklessly or in bad faith;

(c) the part of a spouse’s net family property that consists of gifts made by the other spouse;

(d) a spouse’s intentional or reckless depletion of his or her net family property;

(e) the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years;

(f) the fact that one spouse has incurred a disproportionately larger amount of debts or other liabilities than the other spouse for the support of the family;

(g) a written agreement between the spouses that is not a domestic contract; or

(h) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property. R.S.O. 1990, c. F.3, s. 5 (6).

[40] The Court of Appeal for Ontario addressed this provision in Serra v. Serra, 2009 ONCA 105, 93 O.R. (3d) 161 (“Serra”). The Court stressed the exceptionally high threshold required:

47 In this regard, the threshold of “unconscionability” under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are “unfair”, “harsh” or “unjust” alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must “shock the conscience of the court”…

48 I note, for example, the following comments of Backhouse J. in LeVan, and of Jennings J. in Merklinger:

LeVan, at para. 258:

“Unconscionability” is a much more difficult test to meet than “fairness” and as a result, the courts have only minimal discretion to order anything other than an equal division of family property. Unconscionable conduct has been defined as, among other things, conduct that is harsh and shocking to the conscience, repugnant to anyone’s sense of justice, or shocking to the conscience of the court. [Citations omitted].

Merklinger, at para. 54:

Section 5(6) of the Family Law Act, 1986 permits me to order an unequal allocation of value if to do otherwise would be unconscionable. The legislature deliberately chose to strictly define the severity of the result of the application of s. 5(6) which must pertain before there can be any judicial intervention. The result must be more than hardship, more than unfair, more than inequitable. There are not too many words left in common parlance that can be used to describe a result more severe than unconscionable. [Emphasis added].

[41] The rationale behind the decision to create a “rare exception” is discussed at para. 52 of Serra:

52. The rationale behind the statutory direction in s. 5 of the Family Law Act that net family property is to be shared equally – with the rare exception provided in s. 5(6) – is set out in s.5(7) of the Act:

The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).

[42] The respondent relies upon subsections (b) and (d). Her main submission relates to his decision to open and to continue to operate Antonio’s. She asks the court to remedy this by disallowing the reduction of his NFP by the amount of debt associated with Antonio’s left at the date of separation. ($23,157.32). She says an adjusted equalization payment should be calculated in this way, and would reduce the equalization payment to $22,722.43.

[43] The respondent points to facts which I find she has established, namely that the applicant relied on the word of the previous owner of Antonio’s who said he made a living from it, and did not ask to see his books or cash receipts. She also submits that after the first five year lease was up, the applicant should have cut his losses rather than renewing the lease for another five years.

[44] In addition she submits he acted in bad faith or intending to deplete his NFP in paying off the two debts in the 2008 financing of which she says she was unaware. (Line of credit $22,823.65 and credit card debt $5,317.56). Next, she submits he was also reckless or acted in bad faith, and intentionally depleted his NFP, when he paid off their fixed mortgage and replaced it with the Readiline Loan which enabled him to borrow additional funds on the revolving portion as the installment portion was reduced. In this way the balance owing increased after the 2008 refinancing by $17,000.

[45] To remedy these actions she submits the court should deduct one half of the combined totals from the adjusted equalization payment, with the result that there would be no equalization payment owing from her to him.

[46] In support of her position the respondent relies upon Lamantia v. Solarino, 2010 ONSC 2927, 2010 CarswellOnt 3412. In that case the parties lived together for about 12 years during which time the husband forged the wife’s signature and borrowed from credit cards for which she became liable, without her knowledge and for the purpose of making reckless investments in the stock market. He ignored her request not to play the market. The court found he engaged in a pattern of deceit, took active steps to prevent her from learning the true state of their financial affairs, such as by diverting statements to another address, and was reckless in the investments he made leading to substantial capital losses.

[47] In Dillon v. Dillon, 2010 ONSC 5848, 2010 ONSC 5858, 96 R.F.L. (6th) 193 (“Dillon”) the court allowed an unequal division of NFP in an unopposed case. The court found the respondent to have been a severe alcoholic who lost many jobs and kept the family financial circumstances from the applicant. He incurred debts to feed his alcohol addiction. The wife was unaware and ultimately paid over $50,000 towards his debts. The court pointed out she had no opportunity to protect herself from his reckless behaviour, her precarious financial situation was in no way of her own making, and the husband had spent his money and borrowed to pay for an addiction. The court also found that the wife had contributed significantly more than her share to the acquisition of the NFP. She had generated income from her employment that resulted in the acquisition of a cottage worth $260,000 and RRSP funds of $150,000. The court concluded at para. 47:

In conclusion, I find that an equal distribution of the net family property in this case would shock the court’s sensibilities. The respondent has depleted family property and incurred debts in a reckless fashion without regard to the harm he has caused the applicant. In addition, he seeks to share property in most respects acquired and maintained by the applicant in the face of his recklessness. He has also taken advantage of the applicant’s selfless act of placing herself in a position of economic vulnerability in the best interests of her children. He deliberately concealed the extent and timing of his financial perdition thereby removing any opportunity that the applicant might have had to prevent his destructive behaviour or to prepare herself for retirement. The precarious financial position of the respondent does not affect my conclusion on unconscionability.

[48] The respondent also relied on Hutchings v. Hutchings (2001), 2001 28130 (ON SC), 20 R.F.L. (5th) 83 (Ont. S.C.J.). That court allowed an unequal division to make up for the funds the husband had spent on travel with a third party with whom he engaged in an extra-marital affair. As I have found earlier in these reasons, although the respondent was suspicious and made allegations about the applicant’s expenditures for Ms. Morazuk and possible other affairs, these allegations remained unproven. Understandably difficult as it would be for her to know her husband was continuing a business relationship with Ms. Morazuk after their reconciliation in 2004; the law does not provide a remedy.

[49] The applicant submits the respondent has fallen far short of what is required to meet this test. He refers to “Unequal Sharing of Net Family Properties under Ontario’s Family Law Act”, Berend Hovius, Canadian Family Law Quarterly, Volume 27 2008. In his article Professor Hovius addresses unsuccessful investments or business ventures in the context of a claim for an unequal division of NFP. He writes at pages 14 to 15 :

(ii) Unsuccessful Investments or Business Ventures

Unsuccessful investments or business ventures do not usually amount to intentional or reckless depletion of NFP. [FN1 13] In particular, it is not enough for the spouse who seeks an unequal sharing of the NFPs to show that poor judgment or poor management resulted in a loss. Rather, the claimant must establish that the other spouse knowingly made bad investments in order to waste assets or was totally indifferent to the consequences of a foolish decision. This approach is in keeping with the wording of the paragraph since it refers to “intentional” or “reckless” depletion. The courts also appear influenced by the fact that the claimant spouse would have been entitled to share in any gain if the speculative investment had worked out. Since gains are shared, losses should be shared in the absence of male fides. Finally, the active or passive concurrence of the claimant spouse in the investment decision will militate against a finding that the other spouse intentionally or recklessly wasted assets so as to justify an adjustment to the equalization sum.

[50] The applicant distinguishes the respondent’s cases by pointing out that the debt he incurred was to pay family expenses and to try to earn a living, not for his own personal use, nor for irresponsible activities such as gambling, drugs, alcohol or to pursue an extra marital affair. He also relies on the facts that I find he has established, namely that the line of credit statements were delivered to their home and were available to be seen by the respondent, that his income figures were recorded on the first page of her income tax returns, and that she attended at the bank with him to sign all of the loan documents.

[51] The applicant cites Fraser v. Fraser (2004), 2004 7038 (ON SC), 8 R.F.L. (6th) 125 (Ont. S.C.J.) (“Fraser”) in support of the proposition that the fact that Antonio’s ultimately did fail does not render the investment of funds in it improvident. The court there held at para. 61: “I cannot find that a business investment made reasonably and in good faith, that does not achieve expectations, necessarily constitutes a reckless depletion of assets. This is not in the same category as accruing large gambling debts.”

[52] In Fraser the court also noted at para. 64:

…It is evident that the respondent felt that her husband should be bringing more income into the home. However, the evidence is that, over the course of the marriage, he was generally employed on a full-time basis. In the early years of marriage, Mr. Fraser earned significantly more income than the respondent. He has not made an issue of this at trial.

[53] In Coscarella v. Coscarella, 1999 CarswellOnt 4606 (S.C.J.) in denying the wife’s claim for an unequal division to account for the business loan registered against the matrimonial home, the court found the husband’s pizza business failed because of competition from a Pizza Pizza outlet which opened nearby after he had started up his business.

[54] Unlike in Dillon the property acquired during the Malandra’s marriage was not acquired in the most part only by the respondent. The applicant worked throughout the 41 years of marriage. In all but the final eight years he was the primary earner in the family. He did contribute significantly to the acquisition and maintenance of the main asset, the Dovercourt property. Whether the respondent knew about his two debts included in the 2008 refinancing totalling $28,141.21, I have found he incurred those debts during their first separation, primarily, to carry the Dovercourt property while the rental unit was occupied by the respondent and their child. The respondent also incurred significant credit card debts in that same time period. Moreover, the total borrowed in the refinancing was almost equal as between the parties’ debt and new purchases. True, the applicant was not verbally forthcoming with the respondent, but she admits she left financial affairs to him, did not read her income tax returns, or ask any questions of their accountant. She was at the bank to sign the refinancing documents, and I find she was aware the debt limit was being increased to $250,000 as stated in the documents. If, as she says, she did not review the documents before signing them, it was by her decision, and not because the applicant prevented, induced or deceived her from so doing.

[55] I am not persuaded that the decision to start-up Antonio’s was reckless, even though it was not a good business decision. Normally one would expect a purchaser to look at the books and speak to the accountant. Had he done so, he would have learned that the prior owner ran the café for ten years and on the books, basically broke even. This type of business was known to have a significant cash component. For the first seven years the gross revenue did increase from year to year. The event that triggered the failure was the sudden departure of the government tenants, something not within the applicant’s control.

[56] At the date of separation the applicant owed $9,371 more debt than the respondent. That disparity at the conclusion of 41 years is not one which cries out for remedy. The Readiline was maxed out at $250,000, up about $10,000 since the 2008 refinancing, and up about $17,000 from where it would have stood had the conventional mortgage remained in place and not been replaced by the instalment portion of the Readiline. The position of the respondent is that the applicant should credit her with one half of that $17,000, yet she also takes the position that her own credit card debt, up by $13,942.32 since the 2008 refinancing, is a legitimate deduction from her NFP. I noted the respondent’s acknowledgement that she had incurred this amount without the applicant’s knowledge.

[57] It is clear that had the applicant closed down Antonio’s in 2008 and gone to work then at a pastry shop or bakery he could have earned $35,000 to $45,000 annually. This might or might not have permitted him to reduce the Readiline but would have obviated the necessity for increased borrowings. The fact that he did not take this course of action is regrettable. The applicant agrees it was a stupid decision, but I cannot find he made the decision indifferent to the financial consequences or intentionally to deplete his property. In my view, the facts in this case taken in the context of the entirety of the marital relationship, do not establish that an equal division of NFP is unconscionable.

[58] The respondent’s claim for an unequal division of NFP is dismissed. She shall pay to the applicant the equalization payment of $34,301.09 plus reimburse him the net amount after set off of $2,039.89 by way of accounting for the rental income which she retained in July and August of 2012.

Terms of Sale of 215 - 217 Dovercourt

[59] The listing agent testified that in his view the property would sell for between $725,000 to $750,000. He recommended an asking price of $769,500 at this point in time. The initial listing in place for the first three months of 2014 was at $799,500. No offers were received and only three showings were requested. The agent explained that the property is unique in that it consists of a side by side double on an undivided lot. This reduces the pool of interested buyers and probably also impacts on the length of time it may take to achieve a sale. It also means that this property is more challenging to price than a more conventional real property.

[60] When the initial listing expired the parties were unable to agree on renewal terms. The property was off the market as of March 31, 2014. At the conclusion of the trial the parties did agree to sign a listing agreement whereby the property would be listed immediately at an asking price of $789,500, to be reduced to $779,500 on June 20, and to $769,500 on July 11. The term of the listing is six months and the asking price as of July 31 is to be determined by the court.

[61] The applicant favours a lower price and an aggressive marketing strategy. He has been residing in his mother`s basement since the date of separation and is unemployed. He strongly states that he needs his share of the equity sooner rather than later. The respondent favours an approach that will achieve the highest price possible. She makes the point that this is their main retirement asset and given the parties’ limited means, every dollar counts.

[62] In December 2012 the property was appraised. The appraised value as an undivided property was $730,000. On the basis the parcel was severed, the rental side was appraised at $350,000 and the matrimonial side at $450,000, for a combined total of $800,000. However, although an order was made in October, 2012 allowing the respondent to obtain a severance and to apply for a minor variance, she has not done so.

[63] The recommended asking price of $769,500 is consistent with the appraisal of the undivided property and the intervening rise in the market as described by the real estate agent. In my view, the agreement to list at the higher asking prices until July 11 gives adequate weight to the views of the respondent that efforts should be made to obtain the highest price possible. Having regarded to the appraisal, to the prior listing and to the recommendation of the real estate agent, any longer prolongation of an asking price above his recommendation would be unreasonable. If the property has not sold by July 31 the asking price shall drop to $759,500. In my view, that is an asking price that should attract offers to purchase in the selling range estimated by the agent, namely $725,000 to $750,000. No further reductions to the asking price shall be made without an updated report from the real estate agent describing the intervening events in relation to the listing and his recommendations on a go forward basis.

[64] The other terms of sale shall be as follows:

• If an offer is under negotiation at the time of a scheduled price reduction, the reduction shall be postponed until the negotiation is completed.

• The fridge, stove and other appliances shall be included in the sale.

• Any offer of $725,000 or more shall be countered and or accepted as the parties agree. Disagreements between the parties in relation to responding to or accepting any offer shall be referred to a Master for determination on an expedited basis, on short notice. Disagreements between the parties as to any further reductions to the asking price shall also be reserved to me or another judge in my absence.

Costs

[65] If the parties are unable to agree with respect to costs of the action, they may make written submissions to me. The applicant shall deliver his submissions on or before June 27, limited to three pages and attachments which shall include a bill of costs and any offers to settle. The respondent may deliver her submissions on or before July 15, subject to the same requirements. If necessary the applicant may deliver a brief reply by July 22, 2014.

J. MACKINNON J.

Released: June 10, 2014

Appendix A

1. The municipal taxes on the Dovercourt property at the date of separation are the equal responsibility of the parties. The respondent shall be responsible for payment of the mortgage, line of credit and municipal taxes related to the property accrued from the date of separation to the date of sale. If there is an adjustment in favour of the vendors for municipal taxes on closing of the sale of 215 – 217 Dovercourt, it shall be payable solely to the respondent.

2. The respondent shall have possession of the list of items on exhibit 12 save and except that she shall provide the applicant with one half of the pictures of their children, to be selected by the respondent; the applicant may remove any of the other items from the house that are not included on the list on a date to be agreed by counsel; any remaining items shall be sold and the proceeds shared equally between the parties. The reference to “other items as advised” in exhibit 12 is deleted. By order of the court, the fridge and stove are to remain in the matrimonial home and shall be included in the sale.

3. The applicant and respondent shall share equally any liability, interest and penalties arising from any re-assessment of either parties income taxes relating to the rental deductions claimed by the applicant during the parties’ marriage up to and including the date of sale of 215 - 217 Dovercourt.

4. The respondent shall within 30 days provide the applicant all rental income information and all rental expense information requested by him or his accountant covering the period from January 1, 2012, to date, to enable him to complete his income tax return. The respondent shall provide the subsequent rental information to the applicant within 30 days of the closing of the sale of 215 – 217 Dovercourt. 5. The respondent shall within 30 days return to the applicant all business records in her possession regarding Antonio`s.

COURT FILE NO.: FC-03-2932-1

DATE: 20140610

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Elio Pietro Malandra

Applicant

– and –

Victoria Mary Malandra

Respondent

TRIAL DECISION

J. MACKINNON J.

Released: June 10, 2014