Guertin v. Guertin, 2015 ONSC 1239

COURT FILE NO.: FC-13-1202

DATE: 20150225

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Mary-Ellen Guertin, Kenneth Cook, Wilhelmina Cook

Applicants

– and –

Michael Guertin

Respondent

Mary-Ellen Guertin, self-represented

Sean Jones, Counsel for the Applicants K. and W. Cook

Cheryl Payette, Counsel for the Respondent

HEARD: January 26, 27, 28, 2015

REASONS FOR JUDGMENT

BLISHEN J.

INTRODUCTION

[1] The focus of this three day trial was on the claim by Kenneth and Wilhelmina Cook, parents of the Applicant wife, for payment of $181,000 from the net proceeds of the sale of the matrimonial home, based on breach of contract and/or constructive trust.

[2] Other issues were:

(1) the payment of ongoing spousal support to Mrs. Guertin;

(2) Mr. Guertin’s claim for payment by Mrs. Guertin of taxes paid to Canada Revenue Agency (CRA) due to Mrs. Guertin’s failure to provide a written confirmation that he was paying spousal support; and

(3) equalization of net family property (NFP).

BACKGROUND FACTS

[3] Mary Ellen and Michael Guertin, who are now 55 and 61 years old respectively, were married on April 5, 1980 and separated on August 29, 2011, after 31 years. They have two children, Melissa, born November 26, 1980 and Kevin, born December 12, 1985. Both are independent.

[4] During the marriage, Mr. Guertin worked long hours as a police officer with the Ottawa Police Service (OPS). Mrs. Guertin remained in the home and was the primary caregiver for the two children. She returned to part-time employment in 2001, when Kevin was 15 years old.

[5] In the Spring of 2002, Mr. and Mrs. Guertin decided they wanted a larger home for their family and began looking at model homes.

[6] On July 29, 2002 the Guertins signed an agreement of purchase and sale for a home to be constructed by Minto Developments on Blue Willow Drive in Ottawa for $347,400. They made a down payment of $10,000.

[7] At this time, Mrs. Guertin’s parents Kenneth and Wilhelmina Cook were residing in their mortgage-free home on Northlands Drive. Mr. Cook was 82 (date of birth February 1, 1920) and Mrs. Cook was 78 (date of birth September 24, 1924) and, although they were in good health, they were considering whether they might at some point need to move to a seniors’ residence. It was agreed by all parties that the Cooks would reside with the Guertins and an in-law suite would be constructed in the basement of the new home.

[8] On August 6, 2002, the Guertin’s signed an amendment to the agreement of purchase and sale adding $45,385 worth of options to the purchase price, the majority of which were to accommodate the construction of the in-law suite. The Cooks provided a post-dated cheque dated August 29, 2002 for $24,740.

[9] The Blue Willow home was constructed and the Guertins and their two children, along with the Cooks, took possession in February, 2003. Title was registered in the names of Mary Ellen and Michael Guertin.

[10] In order to complete the purchase the Guertins took out two mortgages with the Toronto Dominion Bank totaling $188,533 and the Cooks provided $5,651 for additional fees and disbursements.

[11] In October, 2003, the Cooks sold their home on Northlands Drive for $229,000 and invested those funds.

[12] After moving into the Blue Willow property, changes were made at the Cooks’ request including the addition of stairs and a lower deck off the in-law suite. A kitchen was also added. The Cooks paid for most of the supplies and Mr. Guertin provided most of the labour, with some assistance from his brother-in-law and Mr. Cook. In addition, the Cooks paid one half of the property taxes and their share of utility costs.

[13] In 2008, the Guertins decided to buy a smaller home and downsize as their children were no longer living with them. They purchased a newly constructed home on Keith Crescent in March, 2008 for $531,420 and all parties moved into the home. The Blue Willow property was sold for $552,000.

[14] The Guertins financed the purchase of the Keith Crescent property with the net proceeds from the sale of Blue Willow, an $88,000 severance payment received by Mr. Guertin upon his retirement from the OPS and two substantial mortgages with the Toronto Dominion Bank.

[15] On this occasion, the in-law suite was constructed with the home. Again, the Cooks paid for certain upgrades to their suite including the supplies to install a kitchen. Mr. Guertin provided most of the labour. They continued to pay one half of the property taxes and half of the utility costs. Mrs. Guertin paid the monthly bills and the Cooks reimbursed her by cheque as requested.

[16] The parties separated in August, 2011 and Mr. Guertin left the matrimonial home. Mrs. Guertin and the Cooks remained in the home and the Cooks continued to contribute to utilities. Mr. Guertin alone made the payments on the two mortgages until the property was ultimately sold in July, 2013 for $636,000.

[17] After paying off the mortgages and other expenses, the net proceeds of sale were $185,384.19 of which $15,000 was paid out to Mrs. Guertin. The remaining $170,384.19 continues to be held in trust.

[18] After the sale, Mrs. Guertin and her parents moved to Peterborough and in November, 2013, the Cooks purchased a home on Ireland Drive for $416,890. No financing was necessary. Mrs. Guertin is the sole registered owner on title.

[19] After his retirement from the OPS in 2008, Mr. Guertin obtained a job with Capital Security as the Senior Office Manager. In 2013 his position was eliminated and he began working the night shift on patrol. Mr. Guertin also received pension income which he shared with Mrs. Guertin.

[20] Mrs. Guertin has not worked since separation and maintains herself on her share of the pension income, spousal support and assistance from her parents.

[21] The parties have agreed to an order for spousal support in 2013 and 2014. They further agree that commencing January 1, 2015, Mr. Guertin will pay spousal support to Mrs. Guertin in the amount of $350 per month (mid-range of the Spousal Support Advisory Guidelines) based on his pension and employment income totaling $49,017 annually and Mrs. Guertin’s pension income of $26,404 plus imputed income of $13,000.

BREACH OF CONTRACT

Positions of the Parties

[22] Mr. and Mrs. Cook testified they were approached by the Guertins, prior to the signing of the contract for the construction of the Blue Willow home with the suggestion that the Cooks move in with them. An agreement was reached that the Cooks would contribute to the purchase price of a new home in the name of Mr. and Mrs. Guertin, as well as the costs of property taxes, utilities and monthly expenses. In consideration for their monetary contributions, the Cooks testified they were to receive a lifetime of care from their daughter and her husband. In their Application, the Cooks argued they were in fact to receive a life interest in the land in return for their monetary contributions.

[23] At trial, the Cooks and Mrs. Guertin testified it was Mr. Guertin who stated he would not let the Cooks move into a seniors’ home and would care for them for the rest of their lives. Mrs. Cook and Mrs. Guertin further testified these conversations occurred prior to the applicant and respondent’s signing the agreement for the construction of the new home on Blue Willow.

[24] The Cooks and Mrs. Guertin argue an offer was made by the Guertins for a life interest in the property, which the Cooks accepted. The consideration was the money they invested in Blue Willow and later in the Keith Crescent property.

[25] Mr. Guertin testified he and Mrs. Guertin viewed model homes and on July 29, 2002 signed an agreement of purchase and sale for a home to be constructed on Blue Willow Drive. After signing the initial agreement the Guertins and the Cooks discussed the Cooks moving in to Blue Willow in order to avoid moving to a seniors’ residence. Therefore amendments were made to the purchase/design agreement for the Blue Willow property in order to provide an in-law suite for the Cooks. Mr. Guertin’s testimony is supported by the documentary evidence. The initial agreement of purchase and sale was signed on July 29, 2002 and the Guertins made a $10,000 down payment. On August 6 the Guertins signed an amendment adding $45,385 worth of options, most to accommodate the in-law suite. The Cooks then provided a post-dated cheque dated August 29, 2002 for $24,740.

[26] I find as a fact that the plan for the Cooks to move in to the Blue Willow property was formulated after the initial agreement to purchase.

[27] Mr. Guertin argues there was no certainty of terms in the alleged verbal contract. He further argues a lack of clarity as to what the co-applicants in fact claim to have contracted for: a lifetime of care, or a life interest in the real estate. The requirements for a valid contract have not been proven by the Cooks or Mrs. Guertin.

Law and Analysis

[28] As noted in USB Securities Canada Inc. v. Sands Brothers Canada Ltd., 2009 ONCA 328, 248 O.A.C. 146 at paras. 47, 88-89, for a contract to exist, there must be a meeting of the minds, commonly known as consensus ad idem. The Court states the “test as to whether there has been a meeting of the minds is an objective one – would an objective, reasonable bystander conclude that, in all the circumstances, the parties intended to contract?” The investigation into whether a reasonable observer would conclude the parties intended to contract extends to all the circumstances of the agreement including: words and conduct, future actions, representations by both parties, and reliance.

[29] In Kiyon v. Lanegraff, 2007 BCSC 1299, 34 E.T.R. (3d) 46 [Kiyon], the trial judge accepted that the plaintiffs believed by paying “rent” they were acquiring an interest in the home. However, the trial judge also accepted the position of the defendants that they did not understand the arrangement in this fashion. The court noted “such a misunderstanding was not surprising given the rather casual unlimited nature of the discussions held between the parties about the relationship” (ibid, at para. 45). Ultimately, the Court held there was no meeting of the minds, and thus the claim of a contract did not succeed.

[30] An intention to contract does not end the inquiry. Intention alone is insufficient to create an enforceable agreement (USB Securities 2009, at paras. 47, 88-89). The existence of a contract also requires the essential terms of the agreement to be sufficiently certain. If the essential terms lack certainty, either because they are vague or obviously incomplete, the result will not be a binding contract (USB Securities 2008, at para. 42). To establish a contract for an interest in land the essential terms are parties, property and price.

[31] In Erie Sand and Gravel Limited v. Tri-B Acres Inc., 2009 ONCA 709, the Ontario Court of Appeal upheld the trial judge’s finding of an oral contract for land as the parties had agreed on all the essential provisions for the purchase and sale of real property to be incorporated into a formal document which they intended to be binding. The trial judge found the parties had agreed on price, acreage, and terms including the closing date for the purchase and sale of the property.

[32] In the case at bar, I do not find on a balance of probabilities an intention to enter into a contract. Considering all the circumstances, on the basis of the evidence an objective bystander could not conclude an intention existed. It is not even clear whether the co-applicants are arguing there was a contract for a life interest in land or for a lifetime of care.

[33] I cannot find on a balance of probabilities that either a lifetime of care or a life interest in land was considered by all parties. As submitted by Mr. Guertin, it is difficult if not impossible to contract for life regarding living arrangements, given the significant unknowns, especially regarding ongoing future needs and health. As was noted by the Court in Simpson v. Simpson, 1997 CarswellBC 2169, 74 A.C.W.S. (3d) 701 [Simpson] at para. 215: “Common sense dictates that the time may well come in anyone’s life when institutional life is a practical necessity”. It was foreseeable that the living arrangement would have to end at some point. As the Cooks claim the agreement was for life, the onus is on them to prove this and they have not.

[34] In addition to the absence of an intention to enter into a contract, the essential terms of the contract were not sufficiently certain. No evidence was provided as to the parameters of the Cooks’ contributions nor as to the specific terms of the Guertins’ agreement to care for the Cooks during their lifetime. It is impossible to determine the consideration for the alleged contract. The funds expended by the Cooks over close to a 10 years were on an ad hoc basis. It is not possible to go back in time and establish a contract, complete with certainty of terms, for all future expenses and projects.

[35] Therefore, I find the Cooks and Mrs. Guertin have not met the burden upon them of proving on a balance of probabilities an intention to contract, a meeting of minds nor certainty of terms I find no valid contract between the Cooks and the Guertins for either a lifetime of care or a life interest in the property.

UNJUST ENRICHMENT

Positions of the Parties

[36] The Cooks advanced an alternative claim for the recovery of monies invested in the two homes on the basis of unjust enrichment. They argue Mr. and Mrs. Guertin received a substantial benefit from the money invested in the purchase, upgrades and maintenance of the homes owned by them. It is further argued the Guertins benefited from the Cooks’ contributions to property taxes and utility payments. The Cooks submit they have suffered a corresponding deprivation as they lost the funds invested in the properties and their investment opportunity in their former home on Northlands Drive. Finally it is argued there is no juristic reason for this loss.

[37] Mr. Guertin argues he and Mrs. Guertin did not benefit by an increase in the property value dollar for dollar for the contributions made by the Cooks. He argues the real benefit was to the Cooks as they received personal enjoyment and benefited from their projects while paying no rent. There is no deprivation when the funds are spent for one’s own personal enjoyment and benefit. Furthermore, it is argued that even if the Guertins benefited directly or indirectly from the Cooks’ contributions over a 9 year 5 month period, there was never any expectation they would have to reimburse the Cooks at a later date. Finally, Mr. Guertin submits some of the same contributions were gifts by the Cooks to the Guertins.

Law and Analysis

General Principles

[38] The Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 outlined the following elements to be considered in an unjust enrichment claim:

1. whether the respondent has been enriched;

2. whether the applicant has suffered a corresponding deprivation; and

3. absence of a juristic reason.

[39] In this case, the onus is on the Cooks to prove all the elements required for a successful claim of unjust enrichment on a balance of probabilities.

[40] To satisfy the first requirement, the Supreme Court of Canada indicates the applicant must show he or she gave something to the respondent that the respondent received or retained. The benefit must be tangible.

[41] In considering the second requirement, the Court notes that the applicant’s loss is material only if the respondent has been enriched. That is why the applicant must establish the enrichment corresponds to a deprivation.

[42] The third requirement involves a two part analysis. The court must begin by applying established categories of juristic reasons (e.g., contract, gift or donative intent, disposition of law, or other valid common law equitable or statutory obligations). If no juristic reason exists from one of the established categories, the applicant has made out a prima facie case. However, the prima facie case is rebuttable. The second part of the analysis permits the respondent to show a reason why the enrichment should be retained. At this stage, the courts have regard to the reasonable expectations of the parties and public policy considerations.

[43] In the case at bar, Mr. Guertin argues a number of the payments made by the Cooks were in fact gifts. If so, there would be a juristic reason to deny recovery.

[44] A gift is defined as “a voluntary transfer of property to another without consideration” (Resiman v. Resiman, 2014 ONCA 109, 315 O.A.C. 333, at para. 53 [Resiman]). In Resiman and also McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401 at para. 23 [McNamee], the Court of Appeal outlined the elements of an inter vivos gift as follows:

1. an intention to donate on the part of the donor, without consideration or expectation of remuneration,

2. an acceptance of the gift by the donee; and

3. a sufficient act of delivery or transfer of the property to complete the transaction.

[45] In this case, I find there were a number of purchases made for items with the intention of donating those items to Mr. and Mrs. Guertin and without the expectation of remuneration. These will be considered below.

Jurisprudence Regarding In-law or Granny Suites

[46] In Ellis v. Jones, 2008 NBQB 326, 336 N.B.R. (2d) 395, the plaintiff (mother-in-law) argued she had a constructive trust interest in the defendant children’s home after building a granny suite apartment. The investment made by the plaintiff amounted to $35,000. The defendants argued their understanding was they would not have to pay for the improvements to the basement in order to make the granny suite. The trial judge noted at para. 9, the defendant indicating he could not afford to repay the plaintiff and her partner is not the same as a written agreement stating nothing would ever be payable regarding the investment by the plaintiff and her husband in the defendants’ property. Ultimately the trial judge found a constructive trust.

[47] In Clark v. Clark, 1997 CarswellNB 410 [Clark], the petitioner and respondent brought an application for divorce and division of matrimonial property and assets. The respondent’s mother had lived in a granny suite attached to the former matrimonial home which was appraised in January, 1997 for $133,000. The granny suite was assigned a value of $28,000 = 21%.

[48] The evidence of the respondent was his mother had put $45,000 into the matrimonial home. She also contributed to utility costs.

[49] The trial judge found a substantial financial contribution had been made by the respondent’s mother which increased the value of the home by $28,000 according to the evidence of the real estate appraiser. The Court noted: “to deny any part of the claim by the third party would be to allow an unjust enrichment to take place in favour of both the petitioner and the respondent” (para. 35). The Court further indicated that to deny the relief sought by the respondent’s mother would be to find the benefits were conferred gratuitously. Considering the contribution made by the respondent’s mother and the benefit she received of living at a reduced cost, the Court determined the granny suite amounted to 21% of the sale price of the home and the respondent’s mother was awarded 21% of the net proceeds of sale.

[50] In Campbell v. McLelland, [1995] B.C.J. No. 1893, the plaintiff claimed she advanced funds to the defendants to assist with mortgage payments and to renovate a basement suite for her on the understanding she would have a permanent home with the defendants. Difficulties arose and the living arrangement ended.

[51] The trial judge found: the defendants were enriched by the plaintiff’s contributions; the ability of the plaintiff to live comfortably had been reduced by the loss of funds; and there was no juristic reason for the enrichment and the corresponding deprivation. The Court held objectively it could not be stated that there was a legitimate expectation that the defendants would benefit to the plaintiff’s detriment. Further, the trial judge did not accept the parties’ expectations were the plaintiff would relinquish a major portion of her limited funds forever with no expectation they would be repaid or she would receive something of equal value, namely a secure and permanent home.

[52] In Campbell v. Campbell (1999), 1999 2294 (ON CA), 43 O.R. (3d) 783, 173 D.L.R. (4th) 270, two sons operated a dairy farm on their mother’s property and spent money on improvements. Years later when the property was sold they claimed an interest in the land based on unjust enrichment. The Court of Appeal indicated there was no evidence when the sons incurred expenses, they expected to be reimbursed by their mother for the cost of improvements. The Court noted “to order recovery would effect the result of enabling the plaintiffs to unilaterally constitute their mother’s obligations. In my view, liabilities are not to be forced upon people without their consent, and without their knowledge” (p. 130).

Analysis

[53] In considering the first element for unjust enrichment, I find Mr. and Mrs. Guertin were enriched by the co-applicants, the Cooks. While the Cooks did not submit a real estate appraisal as in Clark, it is reasonable to conclude, with reference to the jurisprudence, that the addition of the in-law suite to the Blue Willow property increased the value of the Blue Willow property and the funds expended on the Keith Crescent property likewise increased its value. Mr. and Mrs. Guertin benefited from the contribution by the Cooks to the down payment and their payments for the options necessary for the construction of the in-law suite on Blue Willow. As the Cooks did not have a titled interest in the homes, the increased value realized upon sale benefited or enriched the Guertins. In addition, the Guertins also benefited from a reduction to their property taxes and utility costs given the contributions by the Cooks.

[54] Although the Cooks benefited from and enjoyed the renovations and lived in the home at a significantly reduced cost, they did ultimately experience a deprivation corresponding to the enrichment or benefit received by the Guertins. The co-applicants invested significant sums of money in the creation of two in-law suites. Given the separation of the parties, the Cooks were ultimately unable to continue living in either of the properties nor did they receive a return on their investments.

[55] The evidence at trial demonstrated the Cooks invested significant sums of money in both properties. They carefully selected tile, carpeting, and kitchen cabinetry as well as contributed to the overall landscaping of the properties. Such investments indicate the Cooks’ intention to live with the Guertins and remain in these homes. The inability to continue to reside in the Blue Willow property and finally in the Keith Crescent property was not their decision but was due to the Guertins’ separation. Although the sale of the Blue Willow property and the investments the Cooks made in that property “rolled over” into the Keith Crescent property, the sale of the Keith Crescent property with no payment to the Cooks, ultimately deprived them of their investment.

[56] As to whether there is a juristic reason justifying the unjust enrichment, I find certain expenses claimed by the Cooks were in fact gifts which will be discussed below. However, for most of the expenditures, there was no clear donative intent as the Cooks expected to continue living in the property to which they had made improvements. As noted above, there was no contract as to the terms of the investment in the property. Therefore, with respect to most of the expenditures, the Cooks have made out a prima facie case.

[57] Considering the reasonable expectations of the parties and public policy, I find no expectation the Cooks would receive a dollar for dollar reimbursement on their contributions to the property. However, I find that both Mr. and Mrs. Guertin understood the reasonable expectation of the Cooks that they were investing in property where they would continue to live and from which they would continue to benefit.

[58] As the Cooks can no longer live in the property and have not received reimbursement for their investments, the Cooks have been deprived. The Guertins have been enriched by the increased value on the sale of the property and there is no juristic reason why the Guertins should retain the entire benefit.

[59] As the house has already been sold and the net proceeds are held in trust, a monetary award is a good and sufficient remedy.

Quantum

Contributions by the Cooks

[60] In determining quantum it is important to be equitable to all parties. Unfortunately, the evidence in order to make a precise calculation of the appropriate monetary award to the Cooks was lacking which makes the court’s task a difficult one.

[61] To substantiate their claims, the Cooks provided photocopies of cheque ledgers upon which they recorded cheques made for payments relevant to both properties.

[62] There are a number of evidentiary difficulties with respect to this evidence including:

1. it was Mrs. Guertin who selected and submitted the Cooks’ cheque ledgers;

2. many of the cheques were deposited into Mrs. Guertin’s personal account and reimbursed her for funds she had spent on the Cooks’ behalf;

3. there are no cancelled cheques, invoices or receipts to verify the amounts Mrs. Guertin claimed were paid and the nature of those payments;

4. Mr. Cook’s testimony regarding the purpose of a number of the cheques was vague and unreliable; and

5. Mrs. Guertin and difficulty in remembering the purpose of all of the cheques recorded.

In considering the Cooks’ claim to be reimbursed dollar for dollar for the payment towards municipal taxes, utilities and monthly expenses, I note that for the nine years and five months the Cooks resided in the two properties, they paid no rent. It is simply not credible that the Cooks expected to have no living costs over the course of almost 10 years, regardless of where they resided. The funds they contributed to the taxes, utilities and monthly expenses amounted to approximately $59,000 which would be just over $500 per month during the time they resided with the Guertins. This would be an extremely low monthly rent.

[63] Given the frailties in the testimony of Mr. Cook and some of Mrs. Guertin’s understandable difficulties remembering the purpose of some of the cheques, I will not consider claims for amounts where the cheque ledger has no indication as to the purpose. In addition, cheques for the appliances and Direct Buy membership fee that the Cooks retained or could have retained will not be considered.

[64] In addition, there are certain items I find meet the test for a gift as outlined in McNamee. The $4,000 for draperies for the main part of the Guertin home and the $113.85 for a satellite receiver were gifts. The Cooks provided funds for these items to the Guertins without consideration or expectation of remuneration. This can be inferred from the testimony at trial. Mr. Cook clearly stated: “it was for the kids.” There was an acceptance of the gift by the applicant and respondent and there was a sufficient act of delivery of the property.

[65] Finally, the claim for reimbursement of funds expended following the separation will be denied, e.g., $1,045.25 for lawn care.

[66] The following table sets out the expenses I find to be capital contributions to the two relevant properties.

Cheque #

Amount

Date

Reason

Property

411

$24,740

14-Aug-02

Pearson House

Blue Willow

418

$482.12

24-Oct-02

Minto Design Centre

Blue Willow

435

$34,000

4-Feb-03

Pearson House

Blue Willow

438

$5,651.45

18-Feb-03

Forbes and Singer

Blue Willow

002

$5,000.00

17-Mar-03

Kitchen Craft

Blue Willow

003

$3,573.00

27-May-03

Kitchen Craft

Blue Willow

452

$800.00

21-May-03

Millennium Carpet

Blue Willow

004

$2,000.00

10-Jun-03

Westboro

Blue Willow

005

$953.11

25-Jun-03

Kitchen Craft

Blue Willow

517

$1,600.00

2-Nov-04

Deck

Blue Willow

548

$200.00

16-May-05

Maple Tree

Blue Willow

558

$2,900.00

27-Jul-05

Landscaping

Blue Willow

638

$545.00

8-Sep-06

Deck Expense

Blue Willow

Subtotal:

$82,444.68

N/A

$200.00

13-Jun-08

Dry walling

Keith Crescent

038

$165.00

30-Mar-10

Paint

Keith Crescent

47

$30,000.00

21-Jul-10

Landscaping

Keith Crescent

Sub-total:

$30,365.00

Total:

$112,809.68

[67] Given the lack of evidence to enable the court to precisely calculate the appropriate monetary award to the Cooks, I have considered three different approaches.

1. Capital Contributions in Relation to the Increased Value of the Property

[68] The Blue Willow property was purchased for $392,785 and sold by the Guertins for $552,000. Therefore, the overall increase in the value of the Blue Willow property over five years was $159,215. The Cooks made capital contributions of $82,444.68 which amount to just over 50% in relation to the increased value of the property.

[69] The purchase price of the Keith Crescent property was $531,419.98 plus GST. That property was sold by the Guertins for $636,000. Therefore, the overall increase in the value of that property was $104,580.02. The Cooks’ capital contributions were $30,365 which amount to 29% of the increased value of the property.

[70] There are a number of weaknesses in calculating a monetary award to the Cooks based on their capital contributions in relation to the increased value of the properties.

[71] The Cooks submitted no evidence indicating that their capital contributions and the changes such as: moving the stairs, adding a kitchenette and landscaping, in fact contributed dollar for dollar to the increased value of the property. This case, as noted above, is distinguishable from Clark where a real estate appraisal was provided to the court indicating the in-law suite accounted for 21% of the sale price.

[72] There is no direct evidence as to the value of the Cooks’ capital contributions. Other variables affecting the value of the Cooks’ contributions were not addressed such as: 1) the real estate market; 2) the fact that while land may increase in value buildings and materials depreciate; and 3) the fact that Mr. Guertin provided most of the labour to install the improvements to the in-law suites. Further, the Cooks derived benefit by living in the suites. Adjustments downward must necessarily be made to the percentage contributions above to reflect the lack of evidence on the other variables.

2. Contributions to the Purchase Price of the Property

[73] The Blue Willow property was purchased for $392,785. To that purchase price the Cooks contributed $45,385 for options; $24,740 towards the down payment and $5,651 towards the fees and disbursements for a total of $75,776 or 19.3% of the purchase price. That investment was rolled over into the purchase of the Keith Crescent property.

3. Contributions in Lieu of Rent

[74] The Cooks contributed $58,988.87 towards taxes and utilities over 9 years and 5 months. If this amount is added to their capital contributions of $112,809.68 the total is $171,798.55. The Cooks resided in the two homes for 113 months and therefore contributed $1,520.34 per month.

[75] Mr. Guertin argues $1,500 per month could be considered in lieu of rent and therefore there should be no monetary award. I find that amount high given the nature of the accommodation in a basement in-law suite and the fact that although the Cooks had dinner from time to time with the Guertins upstairs, they spent the majority of time in their suite.

[76] There was no evidence provided as to the monthly rent at the time for a comparable in-law suite nor as to the monthly cost for a suite in a seniors’ residence. Nevertheless, given the factors noted above, I find the $1,520.34 amount per month high. If a more appropriate amount for such an in-law suite was closer to $1,200 per month, the Cooks overpaid by $320.34 for 113 months or an amount of $36,198.42. This amount is 19.5% of the net proceeds of sale of Keith Crescent. If a more appropriate monthly rent was $1,000 the Cooks paid $520.34 x 113 months = $58,798.42 too much. This is 31.7% of the net proceeds of sale of the Keith Crescent property.

Conclusion

[77] Although I have found unjust enrichment, it is difficult to quantify the monetary award. Having considered the three approaches noted above, I find an appropriate monetary award to the Cooks to be 25% of the net proceeds of sale of the Keith Crescent property, an amount of $46,346.05.

[78] Therefore $46,346.05 is to be paid to the Cooks from the remaining net proceeds of sale of the matrimonial home held in trust. After the payment, the remaining funds held in trust are to be equally divided between Mrs. Guertin and Mr. Guertin.

SPOUSAL SUPPORT

[79] As noted above, at trial, the applicant and respondent agreed that Mr. Guertin would pay ongoing spousal support to Mrs. Guertin in the amount of $350 per month commencing January 1, 2015 based on his pension and employment income of $49,017 and Mrs. Guertin’s pension income of $26,404 plus imputed income of $13,000. This is the mid-range as outlined in the Spousal Support Advisory Guidelines.

[80] Mr. Guertin seeks compensation from Mrs. Guertin for the income tax loss he argues he incurred as a result of Mrs. Guertin’s refusal to provide a written acknowledgment of the spousal support she received in 2012. Mr. Guertin seeks an order that Mrs. Guertin pay him $11,283.70, which he states was the amount he lost to income tax.

The parties acknowledge that $28,319.59 was paid in support to the Applicant in 2012. However, the respondent’s deduction was disallowed by the CRA as the support was not made pursuant to a written agreement or court order. Mr. Guertin attempted to get Mrs. Guertin to sign an agreement, but she refused. Mrs. Guertin states she acknowledged the spousal support payments on her 2012 Income Tax Return and was taxed on those payments.

Law and Analysis

Income Tax Act

[81] For income tax purposes a “support payment”, as defined in s. 56.1(4) of the Income Tax Act, R.S.C., 1985 c. 1 (5th Supp.) [ITA], is one made by order of a competent tribunal or under a written agreement. Without a court order or written agreement there are no tax consequences to spousal support. In other words, a payor spouse cannot deduct payments made.

[82] Sections 56(1)(b) and 60(b) of the ITA use the term “commencement date” in relation to court orders or written agreements. The commencement date determines the extent to which support amounts are included in the recipient’s income and are deductible by the payor (Canada Revenue Agency, Income Tax Folio, S1-F3-C3, “Support Payments” (18 August 2014)).

[83] Certain payments can be deemed to be made prior to the commencement date. Section 60.1(3) provides that support payments made in the year of an order or agreement or in the preceding year are deemed to be paid under the order or agreement if the order or agreement provides that the support payments are to be so considered (ibid). Section 60.1(3) only allows for prior payments to the extent that the payments were made in the year of separation or the previous calendar year.

Jurisprudence

[84] In Splett v. Pearo, 2011 ONSC 5329, 2011 CarswellOnt 10349, the parties separated in October, 2006. In July, 2011 the parties came to an agreement about spousal support. The Court considered the issue of whether it should make some order with respect to the tax deductibility for the spousal support payments made by the husband from 2006-2009. The Court noted that “no statutory provision had been provided to support the court’s jurisdiction to make such an order. No authorities have been provided to support such a court order which has either been binding or followed by Canada Revenue Agency” (ibid, at para. 79). The Court held that without statutory or judicial precedent, it was not prepared to make an order directing the deduction treatment.

[85] In Holland v. Novotony, 2009 BCSC 1754, [2010] B.C.W.L.D. 4397, a payor of spousal support sought a retroactive order so that voluntary payments made prior to an interim support order could be deductible for tax purposes. The trial judge declined to make such an order “[g]iven the income tax repercussions of making such an order and in the absence of any clear authority on the issue” (ibid, at para. 180).

[86] As noted in the cases cited above, I can find no legislation or jurisprudential authority to make an order directing a certain tax deduction treatment by CRA, nor can I find an authority to support an order that Mrs. Guertin pay Mr. Guertin for the taxes he was required to pay given the lack of an agreement or court for spousal support. In addition, I am not clear how Mr. Guertin arrived at the $11,283.70 figure which would necessarily be the result of a calculation by CRA. Although it does appear CRA treated Mrs. Guertin and Mr. Guertin differently as Mrs. Guertin did pay tax on her declared spousal support, I do not find it equitable that she should also pay Mr. Guertin for taxes that he paid as a result of inconsistent treatment by CRA. Therefore Mr. Guertin’s claim is dismissed.

EQUALIZATION OF NET FAMILY PROPERTY

[87] The only property issue remaining at trial was Mrs. Guertin’s claim for an exclusion of the total settlement she received for her claim against Walmart in the the amount of $34,834. Under cross-examination Mrs. Guertin acknowledged that her claim was for more than personal injury and included physiotherapy and loss of income. She received a global settlement of all issues with no breakdown. Therefore I find an exclusion of 50% - $17,417, as proposed by Mrs. Guertin, fair and reasonable. Mrs. Guertin acknowledged under cross examination this amount was fair.

[88] All other figures as outlined on Mr. Guertin’s NFP Statement are agreed to. Therefore Mrs. Guertin is to pay Mr. Guertin an equalization payment of $10,443.53.

OTHER FINAL ORDERS

[89] I make further final orders as follows:

(1) Spousal support for 2013 is ordered as per the terms contained in the Interim Order dated July 2, 2014.

(2) The Temporary Order, dated July 2, 2014 regarding 2014 spousal support shall be replaced with the following: The Respondent shall pay the Applicant $3,165.00 per month from January 1, 2014 until December 1, 2014 for spousal support. Each party shall claim $37,980.00 for total spousal support in their respective income tax returns for 2014. This amount was based on the Applicant’s pension income of $2,530.24, received in December, 2014. The Respondent’s income is based on his employment income of $30,564.85 and his pension income of $58,787.60 for 2014.

(3) The division of the OMERS pension, as per the Agreement dated September 8, 2014 shall remain with the exception that there shall be no arrears adjustments applied to the division commencing March, 2015. The arrears adjustment on the December, 2014, January, 2015, and February, 2015 pay shall not be changed. There are no arrears owing.

(4) The Respondent shall be credited with paying the Applicant spousal support in the amount of $1,106.34 (three arrears adjustments of $368.78 each by OMERS). FRO shall apply $1,106.34 as spousal support paid to the Applicant.

(5) The Applicant shall assume sole responsibility for the Home Depot debt, account No. 6035 2944 3050 8601. The Applicant shall pay out the balance within 60 days and shall close the account.

COSTS

[90] If there is no agreement on costs, written submissions are to be provided on behalf of the applicants within 2 weeks of the release of my Judgment, by the respondent within a further two weeks with a right of reply by the applicants within a further week. The submissions are to be no more than three pages in length plus Offers to Settle, Bills of Costs and any other relevant attachments.

Blishen J.

Released: February 25, 2015

CITATION: Guertin v. Guertin, 2015 ONSC 1239

COURT FILE NO.: FC-13-1202

DATE: 20150225

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Mary-Ellen Guertin, Kenneth Cook, Wilhelmina Cook

Applicants

AND

Michael Guertin

Respondent

REASONS FOR JUDGMENT

Blishen J.

Released: February 25, 2015