Anderson v. McWatt, 2015 ONSC 3784

COURT FILE NO.: 00-FP-255355FIS DATE: 2015-06-24

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HELEN ANDERSON Applicant

– and –

ROGER McWATT Respondent

COUNSEL: Patrick Schmidt, for the Applicant Roger McWatt, self-represented

HEARD: May 11 to 14; 19 to 22; 25 to 28; May 29 for ½ day; June 1; June 2 For 1 hour; and June 4, 2015

CHIAPPETTA J.

REASONS FOR JUDGMENT

Overview

[1] The parties committed themselves to accumulating wealth through their mutual and equal effort in a jointly established business. The Respondent always felt that he had more to contribute than the Applicant, however, and that he was therefore deserving of a greater portion of the resulting profit. The Applicant eventually withdrew from the personal and professional partnership after years of diminishment. She struggled to support herself and their two children as the Respondent repeatedly fell into arrears of the interim support order. It has now been 18 years since separation and 15 years since the commencement of the application. The truth has been captive for far too long; it is finally time to set it free.

Factual Background

[2] The Applicant, Helen Anderson (“the Applicant”) and the Respondent, Roger McWatt (“the Respondent’”) began living together in June 1980. They were married on February 11, 1989. There are two children of the marriage: Claire McWatt, born July 24, 1989 (“Claire”) and Robin McWatt, born December 1992 (“Robin”). The parties separated on September 1, 1997 but continued to live separate and apart in the matrimonial home until 1999 when the Respondent was removed from the home with police intervention. As a result of a Court Order dated November 2, 2011, the agreed valuation date for equalization of net family property is September 1, 1997.

[3] Soon after the parties started dating, they began blending their personal and professional lives, combining their respective interior design talents to establish and operate a jointly owned business. The business evolved from a small start-up during their student days into an award winning incorporated company, McWatt Anderson Design Consultants Inc. (“McWatt Anderson”). From the outset, the Applicant held a 45% interest in McWatt Anderson and the Respondent held a 55% interest. The business experienced great success and produced opportunity for the parties to invest in real estate generating properties.

[4] As the business revenues declined, however, so did the state of the parties’ marriage. In September 1997, the Applicant moved out of the bedroom she shared with the Respondent in their matrimonial home.

The Properties

[5] For reasons more particularly set out below, I find as a fact that the joint profits of McWatt Anderson were used to fund the following properties:

(a) 47 Mountview, Toronto. Registered in July 1984. Used by the parties as an investment property. Title was taken in the names of the Applicant and the Respondent as joint tenants, with equal interest. On June 3, 2000, Justice Greer ordered on consent the sale of 47 Mountview. The net proceeds of sale in the amount of $129,966.90 were split equally between the parties on April 18, 2001 and some of the proceeds were used to pay joint debts of the parties. There is no issue before the Court concerning 47 Mountview. 47 Mountview is the first of the three properties reflected on the financial statements of McWatt Anderson as being transferred to McWatt Anderson in 1992 or rolled over to it under section 85.1 of the Income Tax Act, R.S.C. , 1985, c. 1 (5th Supp.). No such transfer or rollover ever took place.

(b) 40 Ellis Park Road, Toronto. Registered in July 1986. Used by the parties as the matrimonial home. Title was taken in the names of the Applicant and the Respondent as joint tenants, with the Applicant holding a 40% undivided interest and the Respondent holding a 60% undivided interest. The property was mortgaged six times from 1986-1997. The Applicant was always equally responsible for the mortgages, despite her lesser ownership interest. The Respondent has not lived in the matrimonial home since December 1999. On October 3, 2000, Justice Greer ordered, on consent, that the Applicant was entitled to interim exclusive possession of the matrimonial home and its contents. She continues to reside there today. The issue before the Court concerning 40 Ellis Park is ownership, disposition, credit for payment of the debts (mortgages and line of credit interest) registered against title, and occupation rent

(c) 330 Eagle Street, Newmarket. Registered in December 1998. Purchased by the Respondent’s mother, Lorraine McWatt (“Lorraine”), for $315,000, with a mortgage charge at purchase of $55,000. Lorraine was the sole title holder until the property was sold in September 2001. Lorraine confirmed in writing on September 20, 2001 that she held title as a mere trustee since 1992, when she transferred her beneficial interest to McWatt Anderson, and that since 1993 McWatt Anderson was responsible for all mortgage payments and other expenses related to the property. During his cross-examination, the Respondent abandoned his position that he was the sole beneficial owner of 330 Eagle Street as of the date of marriage (February 11, 1989). As such, there is no issue before the Court concerning 330 Eagle Street. The property was sold September 24, 2001. Although McWatt Anderson funded the property from 1992, only the Respondent received the net proceeds of sale and used it to satisfy the arrears of support then owing to the Applicant. 330 Eagle Street is the second of the three investment properties reflected on the financial statements of McWatt Anderson as being transferred to McWatt Anderson in 1992 or rolled over to it under section 85.1 of the Income Tax Act. No such transfer or rollover ever took place.

(d) 234 Hillsview Avenue, Richmond Hill. Registered in January 1989. Purchased by the Respondent from his mother Lorraine for $330,000 with a mortgage charge at purchase of $224,000. The Respondent was the sole title holder. A mortgage of $300,000 was registered on February 7, 1990 and guaranteed by the Applicant. The property was sold on January 21, 2001. On April 2, 2001, Justice Kiteley ordered the Respondent to use the net proceeds of sale in part to satisfy support arrears, unpaid costs awards in favour of the Applicant and outstanding debt. The net proceeds were applied toward a debt incurred by McWatt Anderson with CIBC concerning equipment financing. There is no issue before the Court concerning 234 Hillsview. 234 Hillsview is the third of the three properties reflected on the financial statements of McWatt Anderson as being transferred to McWatt Anderson in 1992 or rolled over to it under section 85.1 of the Income Tax Act. No such transfer or rollover ever took place.

(e) 50 Big Sound Road, Parry Sound. Registered in July 1991. Purchased by the parties as joint tenants with equal interest for $228,000, with a mortgage charge registered at purchase of $170,000. This was vacant land. The parties designed and built a cottage on the property. A mortgage was registered on April 8, 1994 for $330, 865. On June 3, 2000, Justice Greer ordered the immediate sale of 50 Big Sound. The net proceeds of sale of $36,728.90 plus interest were split equally between the parties in June 2004 and some of the proceeds were used to pay joint debts of the parties. There is no issue before the Court concerning 50 Big Sound.

(f) 28 Atlantic Avenue, Toronto. This is a commercial investment property used by the parties from April 1987 until June 2000 in part to house the operations of McWatt Anderson. The offer to purchase was accepted on April 29, 1987 but the transaction was not registered until July 19, 1988 due to severance requirements. The deed is registered solely to the Respondent. A vendor take back mortgage of $385,000 was also registered to the property and the Respondent on that date. The Respondent operated McWatt & Associates out of 28 Atlantic after June 2000. The building has been fully tenanted since 2013. The issue before the Court is whether the Applicant is an owner of Atlantic under the doctrines of constructive trust and unjust enrichment and whether she is statute barred from bringing such a claim. The financial statements of Stratus Development Corporation (“Stratus”) reflect that ownership of 28 Atlantic was transferred or rolled over to it under section 85.1 of the Income Tax Act. No such transfer or rollover ever took place.

Procedural Background

[6] The Applicant caused this proceeding to be commenced by way of Petition for Divorce in 2000. The motion activity commenced soon thereafter. This case has been high conflict for over 15 years. The procedural history is relevant to the issues before the Court and is therefore set out in chronology below:

(a) October 3, 2000 – Justice Greer, on consent, ordered that the Applicant have interim custody of the children, the Respondent have access, the Applicant have interim exclusive possession of the jointly owned matrimonial home, and the parties list for sale the jointly owned property at 47 Mountview. Justice Greer ordered the Respondent to pay interim child support to the Applicant in the amount of $1,000 per month, retroactive to February 2000. This amount was based on the Respondent’s 1999 reported income of $80,000. No section 7 expense was ordered or paid by the Respondent. Justice Greer further issued a support deduction order. The Applicant’s motion for spousal support was adjourned to a date to be fixed to allow the parties time to produce further financial information and to show what efforts they each had made to find other employment. Justice Greer also made a restraining order and an order that the parties immediately list 50 Big Sound Road for sale.

(b) April 2, 2001 – the Applicant brought a motion for spousal support and other relief, including an order striking out the Respondent’s Answer and Counter-Petition for failure to comply with the child support provisions of Greer J.’s order. The Respondent moved to amend the pleadings to add McWatt Anderson as a respondent. Justice Kiteley made an Order that the Respondent pay interim spousal support in the amount of $750 per month, commencing October 3, 2000, without prejudice to the Applicant seeking interim spousal support commencing in February 2000. Justice Kiteley further directed the solicitor holding the proceeds of sale of 234 Hillsview Drive property to pay to the Applicant the arrears of spousal support in the amount of $5,250, the arrears of child support in the amount of $2,000, costs ordered by Greer J., and costs of the motion in the amount of $7,000.

(c) February 10, 2004 – the Family Responsibility Office (“FRO”) had begun proceedings in the Ontario Court of Justice as a result of the Respondent’s failure to abide by the Orders of Greer J. and Kiteley J. After several adjournments, the matter was heard on January 21, 2004. The Respondent was ordered to pay his arrears of support, in the amount of $31,600, by May 15, 2004, failing which he would be committed to jail.

(d) May 28, 2004 – By order of Justice Nevins, the Respondent was sent to jail for failure to pay his arrears by May 15, 2004.

(e) November 19, 2009 – Justice Macdonald heard motions by the Applicant and the Respondent on October 5, 2009. The Applicant moved for various reliefs and the Respondent moved for an order terminating the spousal support order dated April 2, 2001, a stay of enforcement of arrears, disclosure, partition and sale of the matrimonial home and a variation of the order of Greer J. for child support in the amount of $1000. Justice Macdonald granted the Applicant leave to encumber the jointly owned matrimonial home to the extent of $200,000. Justice Macdonald also ordered that, pending trial, the Respondent continue to pay child support in the amount $1,000 per month as well as spousal support until the disposition of both issues at trial. Justice Macdonald further ordered the Respondent to refinance 28 Atlantic in order to discharge the arrears of child and spousal support. Further, the Respondent was ordered to provide an appraisal of 28 Atlantic as of the date of marriage and separation. The restraining order as it related to the Respondent in relation to 28 Atlantic was lifted. FRO was restrained from collecting arrears of child and spousal support for 60 days in light of the expectation that the Respondent would proceed to refinance 28 Atlantic immediately and discharge the order for the refinancing. Justice Macdonald further ordered that any enforcement by FRO of arrears not include incarceration or suspension of the Respondent’s driver’s license. The Respondent was required to provide an accounting, as well as disclosure of GST/PST filings for his business activities in 2008 and 2009. He was further required to provide specified disclosure within 14 days and to attend for questioning for no more than two hours following the disclosure.

(f) February 9, 2010 – Following the failure of the Respondent to make payments of the arrears, the Applicant, the Respondent, and the FRO brought motions. Justice Kelly ordered that the Respondent comply with various terms by March 16, 2010, failing which Kelly J. gave leave to the Applicant to bring an ex parte motion to strike out the Respondent’s Answer.

(g) March 20, 2010 – On notice to the Respondent, the Applicant brought a motion to strike pleadings. Justice Kelly struck the Respondent’s pleadings for failure to comply with the February 9, 2010 Order.

(h) November 2, 2011 – Justice Goodman made an order on consent fixing the valuation date as September 1, 1997. The trial date was fixed for the week of April 16, 2012 for 10 days. Justice Goodman established a procedure to get ready for trial, including a direction that the Respondent would immediately take steps to value the corporate interests; the parties would conduct questioning to a maximum of six hours each; the Applicant would cooperate if the Respondent wished to have the matrimonial home appraised and/or inspected, but that the Respondent was not to be present during the appraisal. The parties were required to comply with their ongoing disclosure obligations under the Family Law Rules pending trial

(i) May 4, 2011 – The Respondent brought a motion to reinstate his pleadings. He had refinanced 28 Atlantic and had paid up all arrears of spousal support, child support and costs. Justice Aston made an order reinstating the Respondent’s pleadings. He further set out a number of conditions and terms for the reinstatement of the Respondent’s pleadings, including the removal of the corporate respondent, McWatt Anderson design Consultants Inc. and an Order that the Respondent continue to pay the ongoing child and spousal support in full and in a timely manner. Justice Aston further ordered that the Respondent not bring any further motions in this proceeding without leave of the judge conducting the trial management conference.

(j) May 23, 2012 – Justice Goodman made an order vacating the June 11 date, granting leave to the Applicant to make a request at the opening of the trial for an order securing an amount up to a maximum of $250,000 against 28 Atlantic on account of interim costs and directing disclosure by the Respondent. She also ordered the parties to answer unanswered questions and provide any further questions to each other with answers to be supplied as soon as possible.

(k) March 21, 2014 – Justice Czutrin directed that the parties attend before Mesbur J. on May 21, 2014 to establish a schedule that would address the request by the Applicant to amend pleadings, the request by the Respondent for leave to bring a motion to vary support orders, as well as a timeline for expert reports. Justice Czutrin established a timetable for each party to produce a proposed timeline and a list of outstanding issues and a timetable to trial.

(l) May 21, 2014 – Justice Mesbur made an order that the Applicant’s motion to amend the Petition for Divorce be scheduled before her on June 5, 2014, with motion materials to be delivered by May 27, 2014. Justice Mesbur noted that the Respondent wanted to move for further financial disclosure and Mr. Schmidt would advise him by May 28, 2014 if any of the requested disclosure had already been produced or would be produced. Justice Mesbur directed the Respondent to amend his materials by June 3 to reflect the relief he sought which Mr. Schmidt refused.

(m) June 5, 2014 – Justice Mesbur made an order that the disclosure motions be heard on September 9, 2014 and set a timetable for delivery of materials. She made an order on consent amending the Petition for Divorce by deleting certain paragraphs.

(n) June 9, 2014 – Justice Mesbur, by endorsement, allowed the balance of the amendments which permitted the Applicant to assert a s. 5(6) claim under the Family Law Act and a claim for constructive trust, subject to the Respondent asserting a limitation period defence.

(o) October 14, 2014 – the Applicant and the Respondent brought a motion for disclosure. The Respondent brought a motion seeking an order staying the enforcement of the alleged support arrears by the FRO of the support orders made by Greer J. on October 3, 2000 and Kiteley J. on April 2, 2011, until the resolution of these matters at trial. He further sought an order requiring the FRO to immediately remove any notification sent to any credit reporting agency with respect to the alleged arrears as a collection amount. The Respondent also moved for an order compelling the Applicant to produce disclosure and undertakings; an order for immediate production of information within 14 days on an emergency basis, which included a detailed accounting of funds secured by the mortgage registered against title to the matrimonial home in furtherance of Macdonald J.’s order dated November 19, 2009; particulars with regard to a lien in the amount of $248,000 registered by CRA; particulars with regard to the Applicant’s current income; cheques registers and ledgers for her business from 2000 to date; all records in her possession pertaining to the children’s living expenses, employment records and leases from the date that each child left the matrimonial home, which according to the Respondent was September 11 for Claire and August 2010 for Robin. He further sought an order compelling the Applicant to allow him to attend at the matrimonial home in the presence of an appraiser and an associate or, alternatively, one of the children, absent the Applicant, for four hours to determine the value of the home and to inventory the personal property items of the parties. Finally, he sought an order for the immediate sale of the matrimonial home at 40 Ellis Park Road. Justice Kiteley ordered that the Respondent’s support obligations be suspended effective January 1, 2014 and that no arrears accumulate thereafter, subject to an order of the trial Judge reinstating payment effective that date. Justice Kiteley dismissed the Respondent’s motion for an order against the FRO, staying the enforcement of support arrears. She dismissed the Respondent’s motion for disclosure, as well as his motion for attendance at the matrimonial home. Justice Kiteley allowed the Applicant’s motion for disclosure, ordering the Respondent to provide disclosure by December 1, 2014. She further ordered the Respondent to pay costs to the FRO in the fixed amount of $1000. Finally, she ordered the Respondent to pay costs to the Applicant on a partial indemnity basis with respect to the parties’ motions for disclosure, with the amount to be fixed by the trial judge.

(p) January 23, 2015 – After receiving the Court ordered disclosure from the Respondent, which revealed his income in 2013, the Applicant brought a motion before Kiteley J. to reconsider the order of suspension of support and to permit the Applicant to proceed with a motion for support from the Respondent. Justice Kiteley dismissed the Applicant’s motion and prohibited any further motions from being brought prior to the conclusion of the Trial Management Conference scheduled on November 24, 2014 by Order dated October 22, 2014.

(q) April 15, 2015 – the Divisional Court denied the Applicant leave to appeal the January 13, 2015 Order.

The Applicant

[7] The Applicant’s narrative is that there was economic interdependency and integration of the parties through their work efforts. The Respondent took active steps in both their personal and professional lives to diminish their equality and dismiss her thoughts and ideas. Throughout the relationship, the Respondent emotionally abused her, which had a profound impact on her self-confidence, mental health and ongoing professional abilities.

[8] Unless otherwise stated, the following represents the testimony of the Applicant.

[9] The Applicant is 60 years old. She grew up on a farm in Clinton, Ontario. She first met the Respondent at Ryerson University in 1976 where they were both studying interior design. By 1977, they were dating and by 1978, they were carrying on an interior design business together called Adobe Design (“Adobe”). They began living together in 1980 and continued to merge their personal and professional lives until June 2000.

[10] At the commencement of their professional partnership in or around November 1978, a sample partnership agreement and a checklist of items were provided to the Applicant by her friend who was in law school at the time. The partnership agreement was signed by the parties on November 1, 1978. The parties agreed therein that the profits of the joint business would be divided to apportion 55% to the principal partner and 45% to the partner. The respective proportions were never discussed between the parties; it was a unilateral decision made by the Respondent that he would be the principal partner and receive the greater share of profit. The Applicant did not fuss about it as at the time there were no profits to apportion; the parties were simply embarking on their joint business venture.

[11] The parties graduated from Ryerson in 1980 and began living together in the Applicant’s rented apartment. Both the Applicant and the Respondent secured outside employment while pursuing the business interests of Adobe. By 1982, the jointly owned business was becoming more sophisticated, with a focus on commercial design. They changed its name to Artec Design Consultants (“Artec”). Their roles in the joint business were becoming more defined, with the Respondent focusing on accounting and finance and the Applicant focusing on design, drawings, booking keeping and time sheets.

[12] McWatt Anderson Design was incorporated in November 1983. The parties continued as before with the Respondent having 55% of the common shares and the Applicant having 45%.The percentage interest was dictated by the Respondent without consultation with the Applicant, despite her joint efforts in the business. He named himself as president and named the Applicant as secretary/treasurer of the corporation. Corporate by-law 11.01 directed that obligations of the corporation are to be signed by the president together with the secretary/treasurer.

[13] Throughout the late 1980s, McWatt Anderson was very successful. It developed a large base of clients many of which were corporations listed on the Fortune 500. The Applicant was responsible for bringing in such business. Her high school friend introduced her to prime developers Olympia & York and other influential leasing agents. The parties’ success gave rise to a need for a new location. The parties searched together and found 28 Atlantic. They purchased, renovated and maintained the building from their joint pool of revenues from McWatt Anderson. They worked together to re-design the building while maintaining the business of McWatt Anderson throughout the renovations. After the purchase and renovation of 28 Atlantic, the Respondent increasingly became immersed in managing the tenancy of the building, leaving the Applicant to share a greater load of the operations of McWatt Anderson.

[14] In the mid-90s, McWatt Anderson began experiencing declining revenues. The parties had accumulated a large amount of debt, borrowing against their various properties. The debt was a significant concern to the Applicant and the declining revenues contributed to the stress on their marriage. The gross revenues of McWatt Anderson were as follows:

Period ended October 31, 1984 – $487,655.25 Period ended October 31, 1985 – $387,713 Period ended October 31, 1986 – $841,661 Period ended October 31, 1987 – $495, 813 Period ended October 31, 1988 – $758,095 Period ended October 31, 1989 – $1,305,551 Period ended October 31, 1990 – $1,542,711 Period ended October 31, 1991 – $1,335,071.51 Period ended October 31, 1992 – $701,427 Period ended October 31, 1993 – $549,171.53 Period ended October 31, 1994 – $444,044 Period ended October 31, 1995 – $453,430 Period ended October 31, 1996 – $457,979 Period ended October 31, 1997 – $332,914 Period ended October 31, 1998 – $505,197 Period ended October 31, 1999 – $647,701

[15] The parties’ daughter Claire was born in July 1989. The Applicant stayed home with her for three months, took her to work for three months thereafter and then hired a nanny to assist her with the child care. But for the first 3 months after Claire’s birth, the Applicant worked full time hours at McWatt Anderson. The Respondent did not assist with the child care responsibilities.

[16] The parties’ son Robin was born in 1992. The Applicant balanced her work and home life in a similar fashion as she did after Claire was born. The Respondent continued not to assist with the child care responsibilities. The Applicant’s second pregnancy was much more difficult, however. By 1992, the parties’ relationship had deteriorated. The Applicant was extremely distraught. The Respondent was treating her terribly. He called her names and blamed her for the decline in the revenue of their business. By this time, the years of emotional abuse and belittling by the Respondent had taken their toll on the Applicant. She lacked self-confidence, fell into depression and cried daily. Everything was unravelling.

[17] In September 1997, the Applicant moved out of the bedroom she shared with the Respondent in the matrimonial home.

[18] In December 1999, the Respondent assaulted her when she told him she had invited houseguests without first consulting him. The Applicant reported the incident to the police, who removed the Respondent from the matrimonial home. The Respondent was charged with assault and entered into a peace bond.

[19] Following separation, the Applicant continued to work at McWatt Anderson until June 2000 when she stopped going into work as she could no longer tolerate the Respondent’s abusive behaviour, which by now had serious adverse effects on her mental and emotional state. She formally resigned on December 18, 2001.

[20] After leaving McWatt Anderson, the Applicant made efforts towards self-sufficiency. She attempted to form a partnership with a friend in the design business and took a course in AutoCAD, a commercial software application for 2D and 3D computer aided design and drafting. Both efforts were unsuccessful.

[21] The Applicant incorporated her own business, Helen Anderson Design Associates Inc., in February 2002 and attempted to maintain some of the accounts she was servicing under McWatt Anderson. However, the Respondent impeded her efforts. But for a few exceptions, he refused to provide her with the work product she had prepared prior to leaving McWatt Anderson. The business nonetheless generated revenue as follows:

Period ended December 2001 – $59,202 Period ended December 2002 – $74,791 Period ended July 31, 2003 – $120,894 Period ended July 31, 2004 – $60,456 Period ended July 31, 2005 – $110,977 Period ended July 31, 2006 – $69,606 Period ended July 31, 2007 – $133,276 Period ended 2008 – $45,632 Period ended April 30, 2009 – no revenues

[22] Helen Anderson Design Associates Inc. has not operated since 2009. The Applicant did some minor design work in 2013 but she has no prospects for design work in the future, considering her age, rich experience in design and lack of experience with AutoCAD. She has attempted to market herself, to no avail.

[23] The Applicant has struggled financially since separation. She has depleted approximately $670,000 in RRSPs due to the Respondent’s continuous failure to pay child support and spousal support as ordered in 2000 and 2001 and her efforts to continue this proceeding. She suffered from clinical depression during the course of the marriage and its residual effects after June 2000.

[24] In 2014, during a telephone conversation, the Respondent told the Applicant that his greatest satisfaction to date is watching her bleed to death.

[25] The Applicant presents at trial as a shell of a person. She is visibly diminished. As the Respondent is self-represented, he conducted the cross-examination of the Applicant. His conduct demonstrated the Applicant’s testimony of her gradual diminishment at the hands of a controlling spouse who consistently undermined their mutual efforts and dismissed her thoughts and feelings. Instead of asking a question and receiving an answer, the Respondent attempted to control the Applicant’s answers, telling her what she meant to say or suggesting that her words were in some way unworthy. The Respondent felt it appropriate to judge the Applicant’s answers using the words “yes,” “no” or “close” despite clear direction by the Court not to do so. The Applicant on one occasion pleaded that she needed a break as “he is in my head.” Throughout the cross-examination it became abundantly clear to me that this woman was conditioned to be submissive to the thoughts and opinions of the person asking her the questions.

The Applicant’s Credibility

[26] During her cross-examination conducted by her husband, the Applicant did her best to answer questions fully and directly to the best of her recollection. She was candid with her inability to recall particular details of events occurring more than 15 or 20 years ago and genuine with her raw emotion and, at times, uncomfortable honesty. I found no inconsistencies in the evidence presented by the Applicant during the course of this proceeding. I find the Applicant to be a credible witness.

The Applicant’s Witnesses

[27] No witnesses testified in this proceeding on behalf of the Applicant.

The Respondent

[28] The Respondent’s narrative is that he built the business of McWatt Anderson from the ground up. He worked harder and smarter than the Applicant, had more talent and expertise than the Applicant and he brought in more business than the Applicant. It was his tremendous work ethic and business acumen that resulted in business profits and the accumulation of the parties’ wealth. The Applicant was fortunate to reap the financial benefits of his hard work and expertise. She repaid his efforts by abandoning the business at its first signs of distress, leaving him with an enormous amount of debt to pay and numerous law suits to defend. He takes no ownership of the Applicant’s allegations of emotional abuse or diminishment.

[29] Unless otherwise stated, the following represents the testimony of the Respondent.

[30] The Respondent is 60 years old. He met the Applicant while they were studying interior design at Ryerson University in 1976. The Applicant pursued him; she wanted to be in his study group; she liked his brain. They began their own business, called Adobe, during their second year of study. He retained greater ownership of the business as he had more to offer to the business than the Applicant, given his superior work ethic and keen interest in finance.

[31] During school, the Respondent commuted from 234 Hillsview, his childhood home, and worked for various newspapers in pre-press publication. He also delivered papers in the evening.

[32] Upon graduation in 1980, the Respondent was sought out for employment by many design firms. In contrast, the Applicant was only offered employment for $5/hour. He worked for various high end design firms until 1982 when, because of the economy, he was laid off. He and the Applicant then ran Artec out of her leased apartment. He would stay overnight on occasion, but slept in his own bedroom. It was not until 1983 when his relationship with the Applicant became serious and they began living together.

[33] McWatt Anderson was incorporated in 1983. He insisted on having final decision making authority as he had better judgment than the Applicant and a superior ability to understand and manage large amounts of money. He also trusted his family to make decisions on behalf of McWatt Anderson in his absence and gave power of attorney to do so to both his mother Lorraine and his brother Bryan McWatt (“Bryan”).

[34] The Respondent believed that the business required a proper name, brand and place of operation so he found them a building in a location he discovered and believed to be trending: 28 Atlantic in what is now known as Liberty Village. The building provided benefits to the Applicant as a shareholder of McWatt Anderson as it attracted others to the corporation and projected a successful professional image. He decided to acquire 28 Atlantic as both a commercial investment and to house the office of McWatt Anderson. The Applicant did not support his purchase. She did not want a third mortgage and she was concerned about environmental contamination on the property. He did not require her support. He did all of the renovations and improvements to the property himself. He thereafter marketed and managed the property.

[35] It was the Respondent’s intention that 28 Atlantic would be administered by a company. He incorporated Stratus Development Corporation (“Stratus”) in 1988 with the intention that it would manage 28 Atlantic and ultimately own it. He failed, however, to ever transfer title of 28 Atlantic to Stratus. The Respondent pursued and brought in all of the high end corporate clients to McWatt Anderson. He was introduced to them by a leasing agent for whom he acted as best man three times. He thereafter marketed, secured and serviced the clients.

[36] The Respondent had a different vision for their company than the Applicant. She was conservative. He was progressive and embraced risk. His learning curve was much steeper than hers. He quickly understood what it took to make the business successful and cutting edge. He developed innovative and progressive methods of information technology to work with clients and manage staff. He was instrumental in establishing the AutoCAD standards for the industry and the Canadian Standards Association adopted his manual. The Respondent was able to progress with the advancement of technology in the industry, but the Applicant did not have the skill set to understand such advancements.

[37] By 1994, the revenues of the business dropped and the atmosphere was dysfunctional. The parties were attending marriage counselling. The Respondent decided to leave McWatt Anderson. He looked for work in Asia. He was successful in his efforts but was forced to remain with the partnership by legal opinion obtained by the Applicant. He nonetheless was able to secure a lot of work for the firm from his efforts in Asia.

[38] By 1997, the Applicant would stay home for long periods of time and not come into the office of McWatt Anderson. The debt of the business was accumulating. By June 2000, when the Applicant left, the business had accumulated enormous debt and numerous collection efforts had been commenced. The Respondent was left without any assistance from the Applicant to wind up the company and address the legal and debt issues. McWatt Anderson ceased operating as a business as of June 30, 2000.

[39] The Respondent wanted to assist the Applicant with her efforts to continue servicing clients after leaving McWatt Anderson. He encouraged her to maintain client work, sent her three computers, drawings and templates, and provided access to the library of McWatt Anderson and AutoCAD support from McWatt Anderson. He wanted the clients to be serviced properly. He also wanted the Applicant to be self-supporting so he would not have obligations of spousal support.

[40] The Respondent was unable to keep up with his debts and expenses and as a result fell into arrears with his court ordered obligations to both interim child support and interim spousal support. This was directly related to the freezing order obtained against him on October 3, 2000 by the Applicant. In 2010, he obtained a court Order lifting the freeze on 28 Atlantic. This allowed him to refinance 28 Atlantic and assess his equity therein to pay the arrears owing.

[41] On June 29, 2010, the Respondent obtained financing from a foreign Chinese bank, now named I.C.B.C., in the amount of $500,000 secured against the building. He embarked on a renovation and rebranding of the building. The line of credit was secured against 28 Atlantic until February 24, 2014, at which time it was discharged as, on December 20, 2013, the Respondent had secured financing in the amount of $1,000,000 from TD Canada Trust against 28 Atlantic. The Respondent assigned the leases of the tenants in 28 Atlantic to TD Canada Trust as security for the $1 Million advanced.

[42] The renovation project was substantially completed in 2013 and included both structural changes, re-roofing, electrical and plumbing upgrades. He also changed the front façade of the building and upgraded the windows. He did most of the work himself. The result of his efforts received immediate attention in the market place, such that by 2013 the building was completely rented out and occupied. He negotiated and drafted all of the leases himself and he completed all of the agreed work to suit the tenants. The lease agreements were between the tenants and Roger McWatt operating as Stratus.

The Respondent’s Credibility

[43] The Respondent was argumentative and non-responsive during his cross-examination. He did not answer questions directly. Rather, he attempted to answer perceived inferences, despite repeated direction from the Court to listen and respond to the question asked. I have serious concerns with the Respondent’s credibility. The Applicant’s evidence shall be preferred and accepted wherever it conflicts with the evidence of the Respondent. I make this conclusion in part for the following reasons, taken together:

(a) At paragraph 7b of his affidavit sworn August 16, 2000, the Respondent deposed that he purchased 28 Atlantic through Stratus and that he is still listed on the registered title as the owner, although he transferred his interest to Stratus before he married the Applicant on February 11, 1989. At paragraph 5 of his affidavit sworn 14 years later, on June 2, 2014, he deposed that although his sworn financial statements show Stratus as owning 28 Atlantic, he failed to ever transfer title of 28 Atlantic from himself to Stratus.

(b) At paragraph 13 of his Amended Amended Amended Answer signed on February 19, 2015, the Respondent pled that he and the Applicant did not cohabitate until 1984. At paragraph 4 of his affidavit sworn August 16, 2000, he deposed that the parties commenced living together in the Applicant’s apartment shortly after they graduated from Ryerson in 1980. At trial he testified that the parties did not start living together as a couple until 1983. When presented with these inconsistencies in cross-examination, the Respondent blamed his previous counsel Mr. Davies, saying he rushed him to sign his affidavit of August 16, 2000. Mr. Davies was not called as a witness and the Respondent swore to the truth of his affidavit and admitted that prior to swearing to the truth of its contents, the Respondent was asked by Mr. Davies if the contents therein were true.

(c) At paragraph 3 of his affidavit sworn August 16, 2000, the Respondent deposed that he had a larger initial investment of capital in Artec and that is why his percentage of shares was greater than the Applicant’s. He testified that the Applicant was unable to make her capital contribution to Artec, but that he was able to make a large capital investment contribution because of his employment during school and because he operated his own design business prior to Adobe. He stated that his proportion of shares was greater than the Applicant’s as his capital investment was greater. There are no documents to support that the Respondent operated his own design business prior to Adobe and he did not testify to this when describing his employment history in detail during his examination in chief. The balance sheet from Artec for the period ending on December 31, 1979 records the Respondent’s contribution at $31.06 and the Applicant’s contribution at $3,200. The Applicant’s evidence is that she borrowed her portion from her father. When presented with this inconsistency during cross-examination, the Respondent insisted that his contribution was greater but admitted there was no document to demonstrate this. He could not explain why he said the Applicant could not make her contribution but he was able to make all of his.

(d) At paragraph 15 of his Amended Amended Amended Answer, the Respondent pled that he held properties with his mother and his brothers. The Respondent stated that he relied on this statement for the purposes of the trial. When asked to explain what he meant by the word “held,” the Respondent was unable to do so. After a number of evasive and argumentative responses, the Respondent stated he held 234 Hillsview with his mother, despite the legal transfer of the property from her to him on January 16, 1989, and that he held 28 Atlantic with his brothers, despite his evidence that his brothers made no financial contribution to the acquisition or to the renovations and contributed nothing to acquire shares in Stratus. The Respondent also stated that the pleading was prepared by his lawyer and did not mean what it said, after stating that he relied on the statement therein. The pleading, however, was prepared at a time when the Respondent was self-represented and he signed the pleading attesting that the statements therein were true.

(e) During the course of this proceeding, the Respondent attested to the truth of 16 separate financial statements. At trial, he purported to disavow the truth of all but the most recent financial statement, alleging that they were prepared by lawyers and that he signed them without discussion or explanation. He was provided with time to review his 16 sworn financial statements and restate his position as to whether, at the time he swore to their truth, the information therein was in fact true. Upon review, he testified that the information in each of the 16 sworn financial statements was true at the time he swore it to be so.

(f) In his affidavit of documents sworn April 20, 2011 and January 15, 2015, the Respondent listed a document entitled “loan from McWatt Anderson to Roger to purchase 28 Atlantic.” Despite giving an undertaking to produce the document as listed during questioning on February 8, 2012 and May 6, 2015, the Respondent did not produce it and it is not before the Court. During cross-examination, the Respondent agreed that there is no such document, namely no resolution that authorizes a loan to him from McWatt Anderson to purchase 28 Atlantic.

(g) A 1994 Crown Bowrider is listed as an asset of the parties as of the valuation date on the parties’ respective financial statements. The value is agreed at $13,000. The Respondent wishes to deduct the value for the purpose of calculating net family property. The Applicant submits that it should not be deducted. The Respondent has never denied ownership of the family boat. However, in his financial statement sworn October 15, 2014, he attested that it was stolen. In all financial statements thereafter he attests that the boat has been in storage as of 2000. At trial, the Respondent stated that the reference to “stolen” in his October 2014 financial statement was a typo, a carryover in error from a different stolen boat listed in a previous financial statement. The Respondent was given time to find the reference to a different boat being stolen in a previous financial statement. He was unable to do so. He advised the Court that perhaps a second boat was referenced in a previous draft financial statement or perhaps he misspoke.

(h) The Respondent has been in arrears of child and spousal support repeatedly throughout this proceeding. He testified that at some point he gratuitously provided the Applicant with a cheque of $5,000 “off the record” and not through the FRO. The Respondent relied on 12 volumes of documents for the purposes of trial. He was unable to produce the cheque to evidence his assertion.

(i) The Respondent testified that a tenant of 28 Atlantic, Epoca Interiors, occupied more space in the building than McWatt Anderson and paid more in rent. The financial statements of Stratus, however, for year end June 30 1989, reflect that McWatt Anderson paid more in rent to lease space at 28 Atlantic than Epoca Interiors. When confronted with this contradiction in cross-examination, the Respondent stated that his original answer was meant to refer to the year 1988 only. He did not qualify the original evidence and but rather represented that it was the case for the entirety of the lease with Epoca Interiors.

(j) At paragraph 18 of his Amended Amended Amended Answer, the Respondent pled that the funds to purchase 40 Ellis Park came from cash flow generated by the parties and the income property at 47 Mountview. The Respondent stated that he relied on this statement for the purposes of the trial. The Respondent was asked in cross-examination if the cash flow he was referring to was monies generated from McWatt Anderson. He said that it was only in part as he had other business activities at the time, including a moving company, and that he performed contract graphic design work. He further stated that he had significant savings. 40 Ellis Park was purchased in July 1986. The Respondent’s tax returns from 1985 and 1986 do not reflect significant employment income as he testified to, nor do they reflect significant savings or investment income. Further, the tax returns indicate that the rental income from 47 Mountview in 1985 and 1986 totaled only approximately $550.

(k) At paragraph 23 of his Amended Amended Amended Answer, the Respondent pled that the money from the down payment on 28 Atlantic came from a dividend paid out to the Respondent from McWatt Anderson. The Respondent stated that he relied on this statement for the purposes of trial. In his affidavit sworn on June 2, 2014, the Respondent deposed that the dividend in question was in the amount of $144,000 and that the Applicant received a similar dividend although none of her monies were used for the purposes of the purchase or improvement of 28 Atlantic. Bryan McWatt testified that he prepared the financial statements for McWatt Anderson for fiscal years ending 1988 and 1989 and any dividend paid during the year would be recorded on the year-end financial statement. The only dividend paid during the relevant time, however, as reflected by the financial statements of McWatt Anderson, was a dividend of $169,628 paid to the parties as to their respective interests in McWatt Anderson in accordance with a director resolution of McWatt Anderson dated October 27, 1988. The entire dividend was paid back to McWatt Anderson from the personal accounts of the parties by respective cheques dated October 1988.

(l) At paragraph 28 of his Amended Amended Amended Answer, the Respondent pled that McWatt Anderson entered into a lease with Stratus upon the insistence of Canada Tax Revenue (CRA). The Respondent stated that he relied on this statement for the purposes of the trial. The Respondent filed 12 large document briefs with the Court, containing the documents that he wished to rely upon in furtherance of the issues in the proceeding. The Respondent was unable to produce a document to evidence this assertion.

(m) During his cross-examination, the Respondent was asked when he asked the Applicant to pay money into Stratus so she could contribute to the purchase of 28 Atlantic as he pled at paragraph 29 of his Amended Amended Amended Answer. He advised that it was sometime between the date Stratus was incorporated, July 21, 1988 and the date of marriage, February 11, 1989. He was then asked to point to a document evidencing his request. The Respondent stated that it was a resolution of Stratus. He was unable to locate such a resolution in his 12 volumes of documents. It is inconceivable that there would be a resolution of Stratus wherein the Respondent asks the Applicant to fund cash into Stratus. When this was put to the Respondent he stated that his request was not in writing and there was no document.

(n) Similarly, during his cross-examination, the Respondent was asked when he asked his mother and his brothers to pay money into Stratus so they could contribute to the purchase of 28 Atlantic as he pled at paragraph 29 of his Amended Amended Amended Answer. He stated that he asked his mother more than a year before Stratus was even incorporated and that he could not remember when he asked his brother Paul McWatt (“Paul”). He further stated he asked his brother Bryan “when he told all the shareholders of Stratus,” even though his mother and his brother Paul are also shareholders of Stratus, along with the Applicant. Bryan testified that he did not recall being so asked.

(o) In his affidavit sworn October 2, 2000, the Respondent deposed that his mother, two brothers and sister were going to guarantee the original mortgage on 28 Atlantic “which Helen was not willing to do.” The Respondent stated that he relied on this statement for the purposes of this trial. The Respondent confirmed that by original mortgage he was referring to the vendor take back mortgage. He was asked to advise as to the date or time period he asked the Applicant to guarantee the vendor take back mortgage on 28 Atlantic. After attempting to answer the perceived inference of the question, he admitted that he did not recall asking the Applicant to guarantee the vendor take back mortgage.

(p) In his evidence in chief, the Respondent testified that he had to increase his offer to purchase 28 Atlantic by $40,000 to secure a 6 month rent free period for McWatt Anderson. The Respondent produced 3 offers to purchase 28 Atlantic, 2 by him in trust and 1 by the vendor numbered company. He did not produce an offer to purchase 28 Atlantic for $420,000, $40,000 less than the accepted purchase price of $460,000.

(q) By correspondence dated September 20, 2001 from the Respondent’s previous counsel, the Respondent’s mother Lorraine acknowledged and agreed that she held title to 330 Eagle Street as a mere trustee since on or about 1992, when she transferred her beneficial interest to McWatt Anderson. In an answer to an undertaking given on his questioning held September 25, 2000 the Respondent advised through his counsel at the time that Lorraine owed McWatt Anderson $166,033.98 for money advanced to her, including the paying of a mortgage of $55,000 on 330 Eagle Street. It was stated therein that 330 Eagle Street was transferred in return for assuming the mortgage and forgiving Lorraine’s loan from the company. There is no loan to Lorraine documented in the financial statements of McWatt Anderson for the year ended October 31, 1990 or for the year ended October 31, 1991. Nor is there a record of a note payable in the financials of the company year ended October 31, 1992. Although the 1990 and 1991 financials were put to the Respondent in this context, he refused to acknowledge that there was no money advanced to Lorraine by McWatt Anderson in 1990 or 1991.

(r) The Respondent testified that his brothers Paul and Bryan were paid by McWatt Anderson for labour in furtherance of the renovations of 28 Atlantic. He subsequently testified that they were partially paid for this work. He could not locate a document to evidence this assertion. Bryan testified that he was not paid.

(s) The draft financial statement of Stratus for fiscal 2014 reflects that Stratus owes McWatt Anderson $28,280.17. During cross-examination, the Respondent was asked why Stratus would owe McWatt Anderson money 14 years after it ceased business. The Respondent replied that it is a remaining residual from a loan many years ago because no rent was paid to Stratus from McWatt Anderson. When it was put to him that his response would mean that McWatt Anderson would owe Stratus for unpaid rent and not the other way around, the Respondent was non responsive and replied that from time to time each company loaned the other money.

(t) Bank statements produced by the Respondent reflect that McWatt Anderson banked with Canada Trust from November 30, 1995 to August 31, 1999 and with the Royal Bank of Canada from July 21, 2000 to April 18, 2001. During cross-examination, the Respondent was asked where McWatt Anderson did its banking between September 1, 1999 and July 20, 2000 and where the bank statements were for that period. The Respondent replied that it banked with Royal Bank. He was presented with the July 21, 2000 statement from the Royal Bank account wherein it is noted “balance forward $0,” thereby indicating the account was first opened as of July 21, 2000. He first asserted that it was nonetheless the Royal Bank and then stated McWatt Anderson banked with CIBC during this period and he did not have the statements.

(u) The Respondent testified that the Applicant left the business in June 2000, the business of McWatt Anderson ceased operations as of June 30, 2000 and that he was left to deal with enormous debt and lawsuits from creditors. The bank statements reflect, however, that the Respondent signed cheques against the McWatt Anderson account from July 1, 2000 through to March 15, 2001, paying each of himself, Stratus, his visa bill and his new business McWatt & Associates from the McWatt Anderson account. There are no cheques written from McWatt Anderson to its “creditors” as described by the Respondent to be “circling” during this time frame. There are also no documents to evidence his statement of lawsuits against McWatt Anderson during this time.

(v) The Respondent testified that it was fortunate for McWatt Anderson that it did not have to pay rent between 1995 and 2000. The financial statements of McWatt Anderson for fiscal years 1995, 1996, 1997, 1998, and 1999 respectively reflect the payment of rent. There is no financial statement for fiscal 2000. When presented with this inconsistency during cross-examination, the Respondent refused to agree that the financial statement contained false information and refused to agree that he misled the Court when he testified that McWatt Anderson did not pay rent during from 1995 to 2000.

(w) The Respondent was asked during cross-examination where in his sworn financial statement of April 22, 2015 he disclosed his newly formed sole proprietorship, Roger McWatt. He responded that it was reflected in a line item wherein he set out an amount of self-employment income. He was then taken to the statement and shown that under sources of self-employment income he did not list this new entity. He responded that it should not be listed therein.

(x) The Respondent wrote a cheque to the parties’ son Robin on June 1, 2011 for $1,200. The Respondent testified that the money was used by Robin to purchase furniture for his apartment in Montreal where he was attending school. The cheque reflects in the reference line, however, that the money was for “pay period June 1-15.” When this was put to the Respondent during cross-examination and suggested to him that he carried Robin as an employee on the books of McWatt & Associates, he disagreed and stated that the words “pay period June 1-15” were written on the cheque as that cheque was to be used to pay a labourer of McWatt & Associates but he used it instead for Robin.

(y) Keith Doxee has been the Respondent’s personal and business accountant for the last 16 years. He was called as a witness by the Respondent. On May 16, 2014 Mr. Doxee authored a letter to whom it may concern advising that the Respondent owns a commercial building with an appraised value of 7 figures and a gross monthly income in the 5 digit range. At his questioning on May 6, 2015, the Respondent stated that he did not give any information contained in the letter to Mr. Doxee (Q 105). Mr. Doxee testified that this was not true. Rather, the information therein was based on representations made by the Respondent.

The Respondent’s Witnesses

[44] Four witnesses were called on behalf of the Respondent to give evidence in this trial; his brothers Paul and Bryan, Keith Doxee, as referred to above, and Brian Marino, business valuator. As more particularly set out below, I have relied in relevant part on the evidence of the Respondent’s witnesses but for one exception. It was readily evident to me that Paul McWatt was coached by his brother to answer questions in examination-in-chief consistent with a well-rehearsed script of dialogue. The pace of question and answer was rapid, with Paul repeating almost word for word evidence testified to by his brother days prior. Each of his demeanor, tone and recollection of events entirely changed upon cross-examination. On cross-examination, Paul was unable to recall relevant recent events but had clear recall of specific words relayed in a conversation suggested to have occurred over 15 years ago. For these reasons, I find that Paul McWatt is not a credible witness and I have not relied upon his evidence in resolving the issues for trial.

Issues

[45] The issues for this trial were agreed to by the parties and set out in the Order of Madam Justice Kiteley, dated February 18, 2015 as follows:

(a) Ownership and disposition of 28 Atlantic Avenue, Toronto;

(b) Ownership and disposition of the parties’ matrimonial home located at 40 Ellis Park, Toronto and credit to the Applicant for payment of the debt (mortgages and line of credit interest) registered against title to the matrimonial home;

(c) Occupation rent owing to the Respondent from the Applicant in relation to the matrimonial home;

(d) Determination of the Respondent’s income from 2000 to trial, for purposes of determining his support obligations to the Applicant;

(e) Determination of the Applicant’s income from 2000 to trial, for Purposes of determining the Respondent’s support obligations to the Applicant;

(f) Determination of the amount of retroactive and prospective spousal support payable by the Respondent to the Applicant, including payment of arrears of spousal support owing by the Respondent to the Applicant for the period between January 1, 2000 to date of judgment;

(g) Determination of the arrears of child support (section 3 and section 7) owing by the Respondent to the Applicant for the children of the marriage, Claire McWatt, born July 24, 1989, and Robin McWatt, born December 20, 1992, from January 1, 2000 to the date of judgment;

(h) Determination of the amount of prejudgment interest owing by the Respondent to the Applicant on arrears of spousal support and child support;

(i) Equalization of the parties’ net family property as at September 1, 1997;

(j) Determination of the amount of prejudgment interest owing by the Respondent to the Applicant on the equalization payment from September 1, 1997 to date of judgment; and

(k) Return of the respective property of the parties.

Divorce

[46] The parties ask the Court to grant them a divorce. I am satisfied that the details of the marriage were proven by the Certificate of Marriage dated February 11, 1989. There was a breakdown of the marriage. The parties have lived separate and apart for at least one year and there is no chance of reconciliation: Sections 3 (1), 8(1), 8(2), 8(3) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.). The Court orders therefore that the parties be divorced and that the divorce take effect 31 days after the date of these reasons.

A) Ownership and disposition of 28 Atlantic Avenue Toronto

[47] The Applicant submits that under the doctrine of unjust enrichment she is entitled to an Order declaring her a beneficial owner of 28 Atlantic to the extent of a 50% undivided interest from and after the closing of its purchase on July 19, 1988.

[48] The Respondent submits that he has been the sole owner of 28 Atlantic on title since the purchase closed on July 19, 1988. At all times the Applicant knew that she was not entitled to an interest in the building and is only seeking entitlement now, at this late stage, as the building is finally financially sound directly as a result of his efforts.

i) Background

[49] The Respondent’s offer to purchase 28 Atlantic for $460,000 was accepted by the vendor, 605343 Ontario Limited, on April 29, 1987. The transaction closed on July 19, 1988 in the Respondent’s name only, with a vendor take back mortgage of $345,000, also in his name only. Prior to closing, the vendor was obliged to complete the severance architecturally and to provide separate storm and sewer drains, sever the sprinklers, gas and hydro. The costs of the severance were to be borne by the vendor in accordance with the purchase agreement. Renovations to the building took place between July 19, 1988 and June 30, 1989.

[50] At the time of purchase, 28 Atlantic had 2 tenants: Epoca Interiors on the first floor (approximately 6,000 square feet) and Valerie Foss and Debra Young on the second floor. In accordance with the purchase agreement, the lease of the main floor tenant was to be assigned to the Respondent upon closing and the second floor would be vacated for use by McWatt Anderson.

[51] The parties agree that the value of 28 Atlantic as of the date of marriage is $914,000 and as of the valuation date is $549,000. The parties further agree that as of the date of marriage, the Respondent’s mortgage on 28 Atlantic was $342,826, and as of the valuation date, the Respondent’s mortgage on 28 Atlantic was $287,100.35. As reflected in the Respondent’s financial statement sworn on April 11, 2011, there were no mortgages on 28 Atlantic prior to June 29, 2010.

[52] McWatt Anderson ceased business operation in June 2000. Thereafter, the Respondent operated his business McWatt & Associates from a smaller space on the second floor of 28 Atlantic.

[53] The Respondent obtained a line of credit of $500,000 secured against the building on June 29, 2010 from what is now I.C.B.C. The line of credit was secured against 28 Atlantic until February 24, 2014, at which time it was discharged as, on December 20, 2013, the Respondent secured a mortgage in the amount of $1,000,000 from TD Canada Trust against 28 Atlantic.

[54] The Respondent submits that the 2010 and 2013 financing was used to renovate the building. The Applicant submits that the credit obtained by the Respondent was used for personal purposes, including payment of child and spousal support to the Applicant.

ii) Stratus Development Corporation

[55] Following the purchase of 28 Atlantic, the parties and their accountant discussed the possibility of establishing a development company which would take ownership of 28 Atlantic. On July 21, 1988, Stratus was incorporated.

[56] The shareholder register for Stratus produced by the Respondent shows that on the date of the parties’ marriage, the Respondent owned a 50% interest and his mother, sister and two brothers and the Applicant each owned a 10% interest in Stratus. It further shows that in 1995, the Respondent’s mother and sister transferred their shares in Stratus to the Respondent. The Respondent confirmed that his family members contributed no money to acquire shares in the Stratus. As of valuation date, therefore, according to the shareholder register for Stratus produced by the Respondent, the Respondent held a 70% interest and the Applicant held a 10% interest along with the Respondent’s brothers, Bryan and Paul, who each owned a 10% interest.

[57] I accept the Applicant’s evidence that by the time Stratus was incorporated her relationship with the Respondent had become submissive. She was not consulted as to the share structure of Stratus or the Respondent’s gift of a shareholding interest in Stratus to his family members. The Respondent was in full control of the parties’ finances, she was not asked for her opinion but rather she was told by the Respondent to sign certain documents to affect his intentions. For example, in October 1988 at the Respondent’s request she signed a shareholder resolution to affect a dividend payout to her and the Respondent. The amount of the dividend was blank when she executed the resolution. The Respondent determined the amount thereafter. For 10 years her opinions were dismissed by the Respondent who consistently reminded her of his superior financial abilities. The Applicant no longer had the will to stand up to the Respondent or argue; she removed herself from the parties’ financial issues and focused her energy on her design work.

[58] At the request of the Respondent, the Applicant signed a director resolution of McWatt Anderson dated October 31, 1988 authorizing a loan to Stratus in the amount of $100,025 with the intended use to purchase 28 Atlantic. There is no evidence, however, that this loan was ever made to Stratus from McWatt Anderson. Ownership of 28 Atlantic was never transferred from the Respondent to Stratus. Despite this fact, the financial statements of Stratus reflected its ownership, showing the building as a fixed asset, the vendor take back mortgage as a liability, and the rents as income. In reality, the Respondent owned the building, the Respondent had the mortgage and the Respondent received the rents from Epoca Interiors and McWatt Anderson.

[59] Similarly, ownership of 47 Mountview, 330 Eagle Street and 234 Hillsview was reflected and accounted for in the financial statements of McWatt Anderson from 1992 to 1999. At no time, however, did McWatt Anderson ever have an ownership interest in any of the three properties.

iii) Limitation Period

[60] The Applicant claims ownership of 28 Atlantic by application of the doctrine of unjust enrichment.

[61] The Respondent submits that claim is statute barred under the Real Property Limitations Act, R.S.O 1990, c L.15, s. 4, as it was made more than 10 years after the Applicant knew or ought to have known of the need to assert the claim. Section 4 of the Real Property Limitations Act, which is included as Schedule to the Limitations Act, 2002, establishes a 10 year limitation period for claims for recovery of land or rent. It states:

4. No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[62] The Applicant argues that a limitation period defence is not available to the Respondent by reason of the doctrine of fraudulent concealment.

[63] The Respondent argues that at all time the Applicant always knew that he was the sole owner of 28 Atlantic on title, she had access to the agreement of purchase and sale which represented as much and nothing was concealed from her in this regard.

[64] The Respondent’s evidence as to the ownership of 28 Atlantic has been entirely inconsistent throughout the course of this proceeding. Examples of these inconsistencies include:

(a) August 16, 2000 – In his sworn Affidavit, the Respondent stated that while he was listed on title as the registered owner of 28 Atlantic, he transferred his interest to Stratus before the parties’ marriage.

(b) October 2, 2000 – In his sworn Affidavit, the Respondent stated that his mother, sister and two brothers helped him out with 28 Atlantic and, as a result, he gave each of them a 10% ownership in the building, He stated that the Applicant never complained about being only a 10% owner of 28 Atlantic.

(c) February 5, 2001 – In his sworn Affidavit, the Respondent referred to 28 Atlantic as “our” investment property referring to himself and the Applicant. He stated that, at the time, he held a 70% ownership in 28 Atlantic while the Applicant had a 10% interest. He further stated that at the time the purchase of 28 Atlantic was completed, he had incorporated Stratus to own 28 Atlantic. The Respondent relied on the Financial Statement for Stratus at fiscal year-end 1989 to corroborate his evidence that 28 Atlantic was owned by Stratus.

(d) September 25, 2000 – During his questioning, the Respondent confirmed that Stratus was the owner of 28 Atlantic. When asked about his assertion that ownership of 28 Atlantic was transferred from him to Stratus by a “rollover,” he stated that 28 Atlantic was “rolled over or rolled into or transferred” to Stratus “the next day.” The Respondent was unable to give a firm date for the said transfer/roll over.

(e) April 12, 2000, May 30, 2000, August 16, 2000 and September 30, 2002 – In his sworn Financial Statements, the Respondent did not include 28 Atlantic as an asset owned by him personally at the date of marriage, valuation date and the date on which the Financial Statements were sworn,

(f) April 21, 2008, September 28, 2009, April 11, 2011 and July 21, 2011 – In his sworn Financial Statements, the Respondent stated that he owned 100% of Stratus on the date of marriage, separation date and date of the statements.

(g) April 11, 2011, July 21, 2011 and February 8, 2012 – the Respondent’s sworn Financial Statements showed 28 Atlantic as the Respondent’s personal asset. However, the valuations of Stratus proffered by the Respondent and the Financial Statements of Stratus continued to show 28 Atlantic as an asset of Stratus.

(h) August 10, 2011 – By letter to Mr. Schmidt, which was introduced in evidence at trial, the Respondent’s then lawyer, Mr. Ford stated that while 28 Atlantic was in fact a pre-marital asset owned by the Respondent, the equity in this asset as of the date of marriage was substantial. Shortly after the date of marriage, Stratus was incorporated and in the first Financial Statement from that company, and in each Financial Statement thereafter, 28 Atlantic was shown as an asset of Stratus. Mr. Ford stated that the Respondent appeared to be the beneficial owner of the shares throughout this time.

(i) February 8, 2012 – during further questioning of the Respondent, his then lawyer, Mr. Ford, confirmed that the Respondent had recorded 28 Atlantic as an asset on Stratus’ statements. He further stated that there was no rollover or transfer.

(j) May 11, 2012 – Mr. Ford by letter advised Mr. Schmidt that the Respondent’s position had changed. He now maintained that 28 Atlantic was owned by the Respondent alone on the parties’ date of marriage and valuation date. Despite the content of his letter, however, Mr. Ford had attached schedules prepared by the Respondent’s expert calculating the value of Stratus at the parties’ date of marriage, which included the value and the notional costs of disposition of 28 Atlantic as an asset of Stratus.

(k) May 16, 2012 – Mr. Ford delivered the Respondent’s Financial Statement sworn May 14, 2012 and the Respondent’s Net Family Property Statement, dated May 14, 2012, both of which asserted that 28 Atlantic was an asset of Stratus on the relevant dates.

(l) May 23, 2012 – following a special appearance in court, the Respondent delivered a Financial Statement sworn May 30, 2012 and a Net Family Property Statement dated May 30, 2012, which listed 28 Atlantic as a personal asset of the Respondent.

(m) June 2, 2014 – in his sworn Affidavit, the Respondent stated that it was his intention that 28 Atlantic would be administered by a company. He incorporated Stratus with the intention that it would manage 28 Atlantic and ultimately own it. However, he failed to transfer title to 28 Atlantic to Stratus. The Respondent acknowledged that the Financial Statements for Stratus showed it as owning 28 Atlantic but, in fact, the title was held by him, and he never did anything to change this. The Respondent contemplated that he, along with his mother and two brothers, would be the original owners of Stratus. However, even though they were initially shown as shareholders they contributed nothing to acquire shares in the company and the Respondent effectively ended up owning 90% of the company while the Applicant retained a 10% interest as was evidenced in the original incorporation documentation. The Respondent stated that Mr. Ford advised him that the best position he could take was that which the Applicant’s counsel had taken, namely that title was equivalent to ownership. He therefore advised counsel for the Applicant to this affect.

[65] In summary, until February 8, 2012/ May 11, 2012, the Respondent’s pleaded position and sworn evidence in affidavits and on questioning was that despite being registered on title as the owner of 28 Atlantic, 28 Atlantic was the property of Stratus as a result of a transfer or a rollover under the Income Tax Act. By letter dated May 11, 2012, the Respondent’s former counsel advised the Applicant’s counsel that the Respondent’s position had changed. His position now was that 28 Atlantic was owned by the Respondent alone on the parties’ date of marriage and valuation date. The Respondent’s sworn evidence after May 11, 2012 has been consistent with his “changed position,” although the financial statements of Stratus continue to reflect its ownership of 28 Atlantic through to fiscal 2014.

[66] Calling what happened a “changed position” does reflect the reality of what occurred. For the first time since the proceeding was commenced in 2000, the Respondent was telling the truth about the ownership of 28 Atlantic. At no time was Stratus the beneficial owner of 28 Atlantic. The Respondent knew there was no transfer when he executed his affidavit in August 2000. Instead of telling the truth, however, he attempted to deceive his reader by stating that there was a transfer from him to Stratus and he continued the deception for almost 12 years in part by evidencing it with the financial statements of Stratus, which themselves were contrived to perpetuate this fiction.

[67] He “changed his position” or told the truth in 2012 because, as he deposed at paragraph 9 of his affidavit sworn June 2, 2014, “….when I finally retained counsel, J. Kelvin Ford, he advised me that based on his analysis of matters that the best option I could take was simply the position that counsel for the Applicant had taken an issue and that is that title was equivalent to ownership and, therefore, my counsel instructed to advise counsel for the Applicant to this affect.” The first report he received on the value of 28 Atlantic reflected a value higher at date of marriage than at valuation date. In other words, the Respondent told the truth as he was advised it suited his needs in this lawsuit.

[68] On May 13, 2013, the Applicant sought leave to amend her pleading to make a trust claim against 28 Atlantic and an accounting of rental income. Leave was granted by Justice Mesbur on May 21, 2014. At the motion held June 5, 2014, Justice Mesbur granted the Applicant leave to amend her petition for divorce, as sought.

[69] In Guerin v. R, [1984] 2 S.C.R. 335, at paras 98-99, in terms of the doctrine of fraudulent concealment, the Supreme Court of Canada stated that it is well-established that when such concealment is used to shield a cause of action, “the limitation period will not start to run until the plaintiff discovers the fraud, or until the time when, with reasonable diligence, he ought to have discovered it.” This concealment does not need to “amount to deceit or common law fraud,” but will suffice when “having regard to some special relationship between the two parties concerned, [the concealment] is an unconscionable thing for the one to do towards the other:” at para. 111.

[70] In M. (K.) v. M. (H.), [1992] 3 S.C.R. 6, at para 60, the Supreme Court of Canada acknowledged that the equitable doctrine of fraudulent concealment had merged in substance with that of the common law long ago. The doctrine has an underlying principle premised on the fact that “the courts will not allow a limitation period to operate as an instrument of injustice:” at para. 66.

[71] In Giroux Estate v. Trillium Health Centre, [2004] O.J. No. 557, at para. 19, Lederman J., in applying the doctrine of fraudulent concealment, drew from a description given by Cameron J. in Buell v. C.I.B.C. Wood Gundy Securities Inc., [1988] O.J. No. 2861 (Gen. Div) at para 43, stating as follows:

The “fraud” to which the principle applies is to be given a broad interpretation and covers conduct which having regard to some special relationship between the two parties concerned, is an unconscionable thing for the one to do towards the other. The fraudulent concealment may arise from the manner in which the act which gives rise to the right of action is performed. There has to be some abuse of a confidential relationship, some intentional imposition or some deliberate concealment of facts.

[72] In Giroux Estate the court went on to describe at para. 20 that the doctrine of fraudulent concealment applies when:

(1) the defendant and plaintiff are engaged in a special relationship with each other, (2) given the special or confidential nature of their relationship, the defendant’s conduct amounts to an unconscionable thing for the one to do towards the other, and (3) the defendant conceals the plaintiff’s right of action (either actively, or as a result of the manner in which the act that gave rise to the right of action is performed).

[73] The Court of Appeal for Ontario upheld the decision of Lederman J., noting that the doctrine of fraudulent concealment is a powerful tool of equity used to toll the limitation period and has an underlying rationale that equity will not permit a statute to be used as an instrument of fraud: Giroux Estate v. Trillium Health Centre, [2005] O.J. No. 226, 74 O.R. (3d) 341. Writing for the court, Moldaver J.A. reasoned at para. 29:

Stated succinctly, [the doctrine fraudulent concealment] it is aimed at preventing unscrupulous defendants who stand in a special relationship with the injured party from using a limitation provision as an instrument of fraud.

[74] By 1988 the parties’ relationship had evolved to a point where the Respondent fully controlled the financial decisions of their personal and business partnerships. The Respondent denies this. He states that the Applicant had full access to all “financial records” which were kept on site at the offices of McWatt Anderson. For years, however, the Respondent dismissed the opinions of the Applicant on all financial matters. He felt entitled to assume greater ownership interests in the jointly held design businesses and the matrimonial home, without her discussion or input. His evidence at trial demonstrates his opinion even today that he had more to offer to the joint business than the Applicant given what he describes as his superior financial expertise. He feels that the Applicant has nothing to complain about as she benefited from his talents and abilities.

[75] The Applicant’s evidence that the Respondent dismissed her opinions on all financial matters is demonstrated by the Respondent’s self-described mind-set and is easily accepted. I accept that after years of voicing her opinion only to have it ignored or dismissed, the Applicant gave up and simply submitted to the will of the Respondent, without discussion or question. She purposefully removed herself from further diminishment to preserve her damaged confidence and emotional wellbeing. The Applicant became vulnerable to the joint personal and financial decisions made without her input by the Respondent, at his discretion. I find therefore that the parties were engaged in a special relationship.

[76] The Respondent advised the Applicant that a development company would take ownership of 28 Atlantic in 1988. He unilaterally designated the share structure of Stratus and advised her that 28 Atlantic was rolled over or transferred to it prior to their marriage. The Respondent instructed his accountant to reflect such ownership on the financial statements of Stratus. The Respondent continued to maintain this falsehood for almost 12 years in the context of a legal proceeding wherein ownership of family property is in issue. In my view, such deceit is unconscionable considering the special relationship of the parties and the matters at issue in this proceeding.

[77] By attesting to the untruth that Stratus was the beneficial owner of 28 Atlantic, the Respondent concealed the Applicant’s right to claim equitable ownership in the building as her claim in equity is triggered by the very ownership he was purposively concealing. It is appropriate considering the totality of the circumstances, therefore, to invoke the Court’s equitable jurisdiction to stay the operation of the limitation period. The Respondent’s conduct in representing that his interest was transferred and concealing that his interest was never transferred constitutes an abuse of the parties’ special relationship. The Applicant discovered that abuse for the first time by the Respondent’s admission of previous deceit in February/May 2012. The limitation period under the Real Property Limitations Act is therefore stayed until that time.

iv) Unjust enrichment

a) The position of the parties

[78] The Respondent states that 28 Atlantic was acquired by him as a long term investment. It was only one of a number of properties he was looking to acquire and develop. He states that the Applicant did not support the purchase as she did not want to take on more debt and she was concerned that there would be environmental issues with the property. He controlled all aspects of the purchase, renovation and management of 28 Atlantic. He notes that title is registered to him, the vendor take back mortgage is registered to him and the rent from the existing tenant at the time of purchase was paid to him personally. The Respondent’s position is that the Applicant benefited from the Respondent’s investment and skills in building out a long term, highly inspiring and productive work space for McWatt Anderson, without any risk or detriment to her personally.

[79] The Respondent’s testimony is that in 2010 he embarked on a major renovation and rebranding of 28 Atlantic for the direct purpose of attracting tenants for the entire building. The renovations were substantially completed in 2013 and three tenants were secured by August 2013. He states that, for the first time since his purchase, the building became a viable financial operation. The respective leases are between the respective lessees and him personally, operating as Stratus. The leases are assigned to the TD Bank.

[80] The Respondent submits that the Applicant contributed nothing to the purchase, renovation or work done to 28 Atlantic and makes this claim 14 years after the commencement of this proceeding because 28 Atlantic only recently, as a result of his efforts, began to generate profit. He states that he did all of the work on the property, including the construction, management and marketing. The Applicant’s efforts, he submits, were limited to choosing paint colours soon after he purchased the building.

[81] The Applicant’s position is that she worked shoulder to shoulder with the Respondent on locating, purchasing, renovating and maintaining 28 Atlantic prior to June 2000. McWatt Anderson funded each of the purchase, renovation and maintenance of the building. Her evidence is that she and the Respondent both searched for commercial properties to house their business, found 28 Atlantic together and decided to purchase and renovate the building with the joint pool of funds generated from their business. She denies that she did not support the purchase. She states that she wanted to own the building and believed that, as was done in the past, the joint revenues of McWatt Anderson would be used to secure the building for the parties’ mutual benefit.

[82] The Applicant states that some of the renovations to 28 Atlantic, including design, painting and finishes were completed by the parties prior to their marriage in February 1989, but the balance of the more extensive renovations were completed following marriage by the parties working together with the assistance of third party contractors, McWatt Anderson employees and clients. The employees of McWatt Anderson who participated in the renovations were paid by McWatt Anderson for their efforts. The Applicant participated in the space planning and selection of colours and finishes for the interior of the building and contributed to physical labour such as dry walling as well.

[83] The Applicant admits that she did not contribute to the management of 28 Atlantic to the same extent as the Respondent as her efforts were focused on continuing the operations of McWatt Anderson to fund the maintenance and renovation of the building while the Respondent stepped away from the design work of McWatt Anderson and became focused on managing 28 Atlantic.

b) Source of funds for purchase

[84] Mr. Terrance Kelly acted for the Respondent on his purchase of 28 Atlantic. His reporting letter of August 11, 1988 to the Respondent indicates that the total purchase price of $460,000 was payable by way of a $20,000 deposit, $345,000 vendor take back mortgage and a $95,000 balance due on closing. Mr. Kelly’s ledger statement of trust account transactions records total money received by him from Roger McWatt of $144,325.00.

[85] $144,325.00 was received by Mr. Kelly in furtherance of the purchase of 28 Atlantic. Where did the money come from?

[86] The Respondent pleaded that he made the payment towards the purchase price of 28 Atlantic with a dividend paid to him by McWatt Anderson. I do not accept that the Respondent made the down payment towards the purchase price with a dividend. I make this conclusion for the following reasons:

(a) Bryan testified on behalf of his brother. He stated that he prepared the McWatt Anderson financial statements of 1988 and 1989. Bryan confirmed that any dividend paid during the fiscal year for McWatt Anderson would be recorded in the financial statement for the end of that fiscal year.

(b) The only dividend paid to the Respondent by McWatt Anderson in 1988 was paid in October 1988 and repaid by him from his personal account in October 1988. The dividend was for $169,628.43 but it was paid to both parties in accordance with their respective interest in the company. It was paid to the Applicant by a cheque dated October 30, 1988 in the amount of $76,332.69 and a cheque of the same date to the Respondent in the amount of $93,295.64. This amount was thereafter paid back to the company by cheques from the parties dated October 2008 in the respective amounts of $25,582.28 and $144,046.50.

[87] The Respondent’s evidence on questioning held on May 10, 2001, at question 653, is that he believed the source of the payment was a shareholder loan from McWatt Anderson to Stratus in the amount of $100,025. I do not accept that a shareholder loan was made to Stratus in the amount of $100,025 or that these monies funded the down payment. I make this conclusion for the following reasons taken together:

(a) On October 31, 1988, McWatt Anderson directors approved a loan to Stratus in the amount of $100,025, which was intended to be used in regards to the closing of 28 Atlantic. There is no director resolution from Stratus approving the borrowing of this amount despite by-law 1 of Stratus, which mandates such a document.

(b) The resolution of October 31, 1998 states that the loan would bear interest at 10%. No corresponding interest is accounted for in the fiscal 1988 or 1989 financials for Stratus or McWatt Anderson.

(c) The financial statement of McWatt Anderson for fiscal year end 1989 records a loan to Stratus in the amount of $142,059, not $100,025. There is no director resolution from McWatt Anderson approving the lending of $142,059.

[88] The Respondent’s third and most recent evidence is that the proceeds to purchase 28 Atlantic came from a shareholder loan made to him by McWatt Anderson for $100,025. I do not accept that a shareholder loan was made to the Respondent in the amount of $100,025 or that these monies funded the purchase. I make this conclusion for the following reasons taken together:

(a) No such loan was listed as a debt of the Respondent’s on the date of marriage on the Respondent’s 15 financial statements sworn throughout the course of this proceeding.

(b) One page from a four page February 1989 ledger of McWatt Anderson was produced to the Applicant for the first time in this proceeding on April 14, 2015. The one page records a shareholder loan to the Respondent in the amount of $100,025. The reference is marked with a box around it. Bryan testified that although he prepared the financial statements for McWatt Anderson during this time, he did not mark the ledger with a box nor had he seen this page of the ledger before.

(c) On the Respondent’s 16th and final financial statement sworn April 22, 2015, he lists for the first time a shareholder loan from McWatt Anderson to him in the amount of $100,025, consistent with the one page from the ledger he faxed to the Applicant’s counsel on April 14, 2015.

(d) The one page from the ledger is a computer generated document. The Respondent represented to the Court that the McWatt Anderson ledgers were handwritten and contained in ledger books.

(e) There is no resolution from McWatt Anderson cancelling the loan to Stratus for this amount.

(f) The financial statements of McWatt Anderson for year ended October 31, 1988 and October 31, 1989 do not reflect a shareholder loan to the Respondent in this amount or an increase to his shareholder loan account to reflect the loan as alleged.

(g) The Respondent testified that he could not recall if he paid the loan back to McWatt Anderson between February 1989 and October 31, 1989.

(h) The Respondent also testified that, in accordance with his financial statement sworn April 22, 2015, the loan remains outstanding.

(i) Mr. Marino valued McWatt Anderson at the request of the Respondent as of the date of marriage. No such shareholder loan was taken into account by Mr. Marino in his valuation.

[89] McWatt Anderson was the joint business venture of the parties from 1983 to June 2000. It was generating great wealth during the late 80s and early 90s. McWatt Anderson was the source of all monies used by the parties to acquire 47 Mountview, 40 Ellis Park and 50 Big Sound. The Respondent took title to 40 Ellis Park at 60% and assigned a 40% undivided interest to the Applicant despite their equal contributions to the purchase price. The same joint business revenues were used by the Respondent to acquire 234 Hillsview and 330 Eagle Street. The Respondent took title to these properties in his name alone despite the Applicant’s 45% contribution to both through the revenues of McWatt Anderson.

[90] There are no objective documents to evidence the Respondent’s statements that he used his personal funds to purchase 28 Atlantic. Rather, the documentary evidence leads to the conclusion that the Respondent’s evidence on this issue is not credible. I accept that the funds used to purchase 28 Atlantic came from the same source used to finance all of the parties’ properties: their joint fund created by the revenues of McWatt Anderson.

c) Source of funds for the post purchase renovations

[91] The Respondent’s testimony is that the renovations to 28 Atlantic took place between July 19, 1988 and June 30, 1989. He states that major structural work on the building was paid for by himself personally or Stratus, while much of the work in the form of physical labour was done by himself or his friends and family. The Respondent provided the Court with some photographs evidencing that structural work was completed at this time. He states that the value of the work was $150,000. He provided the Court with no documents to evidence this assertion.

[92] The Applicant submits that the renovations were funded by McWatt Anderson and that the Respondent did not contribute any personal funds towards those renovations as he alleges. I find as a fact that the renovations to 28 Atlantic, completed between July 19, 1988 and June 30, 1989, were funded by the revenues generated within McWatt Anderson. I make this conclusion for the following reasons taken together:

(a) The Respondent asserts that he spent $150,000 of his own money to renovate 28 Atlantic. On questioning held on May 10, 2001, his previous counsel suggested on his behalf that Stratus borrowed $137,421 to complete some renovations to the property.

(b) There is no document to evidence that the Respondent paid for any of the renovations to 28 Atlantic from his own personal funds.

(c) There is no document to evidence that Stratus paid for any of the renovations to 28 Atlantic, although the financial statements for fiscal years 1989, 1990 and 1991 respectively reflect the same number of $8,028 for “capital additions.”

(d) The financial statement for McWatt Anderson for fiscal years 1988 and 1989 account for leasehold improvements of $26,056 and $63,704, respectively. The payment for the leasehold improvements as recorded is documented by cheques payable from McWatt Anderson to third parties between July 19, 1988 and June 30, 1989.

(e) The Respondent’s evidence is that the only other tenant at the time of renovations, Epoca Interiors, paid personally for the leasehold improvement to their space.

(f) The Applicant’s evidence is that all expenses incurred in relation to any structural work to the building were paid for by McWatt Anderson.

d) Source of funds for the vendor take back mortgage

[93] The Respondent admits that the expenses related to the vendor take back mortgage, taxes and insurance in relation to 28 Atlantic were covered by the rents from tenants of 28 Atlantic, including McWatt Anderson, from July 1988 to date. The mortgage was assigned to Sun Life Assurance Co. of Canada and paid off no later than May 2010.

e) Post separation financing

[94] The Respondent obtained $500,000 in financing in 2012 from I.C.B.C. secured against 28 Atlantic. He refinanced in December 2013 with a $1 Million line of credit from TD Canada Trust, also secured against 28 Atlantic by way of an assignment of rents. The Respondent testified that the financing permitted him to significantly renovate 28 Atlantic and that the renovations enabled him to lease the entire building.

[95] The Respondent provided the Court with a few comparison photos of 28 Atlantic he testified he took before and after the three year renovation project and stated that they reflect the extent of the renovation project he described. The few photos do not evidence a three year renovation project. They reflect a replacement of the front façade of the building, for which the Respondent testified he received a $10,000 grant from the City of Toronto to complete the work. The Respondent provided no photos to evidence the nature of the structural renovations done to building as he describes, nor any documents to evidence the payment of the monies he said he spent on 28 Atlantic for any such work. There were no invoices from contractors, no invoices for supplies purchased, no drawings, no permits, nothing to evidence a substantial renovation to the building after 2010. Similarly, the Respondent provided no personal bank statements or visa statements to evidence that he paid for the renovations. None of his 16 financial statements sworn throughout the course of this proceeding reflect a personal expense to the Respondent for any renovations done to 28 Atlantic.

[96] When presented with this reality in closing submissions, the Respondent submitted that the existing tenant leases reflect the renovations done under the subheading therein “landlord’s work.” The Respondent led no evidence, however, that would reasonably permit such an inference.

[97] The Respondent valued 28 Atlantic on his financial statement sworn July 29, 2013 at $2.5 Million. TD Canada Trust advanced the Respondent $1 Million in December 2013, secured against the building. The balance owing to TD on this line of credit, based on the Respondent’s financial statement sworn October 15, 2014, was $990,000. The Respondent stated that from this $1Million line he paid off the I.C.B.C. loan, which had accumulated to $620,000. A review of his financial statements of July 2, 2013, September 8, 2014, and October 15, 2014 reflect the following debts were extinguished after July 2, 2013 and before the fall of 2014:

1. Personal loan from Bryan McWatt of $185,000
2. Legal fees of $4,500
3. CRA personal debt of $45,000
4. RBC personal visa of $11,000
5. RBC corporate visa of $10,000
6. Personal line of credit of $15,000
7. Storage fees of $36,000.

[98] This totals 926,500. It is a reasonable inference therefore that none of the $1 Million advanced by TD Canada Trust was used to increase the value of 28 Atlantic. This inference is as well consistent with the evidence that the building was fully tenanted at the time of the TD advance, rendering unlikely the idea of major structural work taking place during this time period.

[99] This leaves the $620,000 advanced to the Respondent by I.C.B.C. in 2010. The Respondent testified that he used this money to complete renovations to 28 Atlantic between 2010 and 2013. He provided no objective documents to evidence that structural work was done to the building and no evidence to demonstrate that these funds were used to finance the renovations. He admitted on questioning held on May 6, 2015 that by December 2012, only $25,000 had been drawn on the I.C.B.C. financing. While he was able to provide photographs from 1989 to evidence renovations to the building at that time, he provided no such photographs to evidence the renovations he said he did to 28 Atlantic between 2010 and 2013. The Respondent’s bald statements are not credible. I do not know how the Respondent spent $595,000 ($620,000 - $25,000) between December 2012 and December 2013. The evidence fails to demonstrate, however, that he used these funds to increase the value of 28 Atlantic as he provided the Court with no objective evidence to demonstrate that renovations were done to 28 Atlantic between 2010 and 2013 or that they were financed by the monies advanced by I.C.B.C.

f) The law of unjust enrichment

[100] In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, the Supreme Court reviewed the jurisprudence on unjust enrichment and canvassed the applicable test and appropriate remedies. Justice Cromwell, writing for a unanimous court, identified the three elements of unjust enrichment: a benefit conferred upon one party, a corresponding deprivation and the absence of a juristic reason for the enrichment. This last element is established where there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention ‘unjust’ in the circumstances of the case: at paras. 36-42. Juristic reasons include the intention to make a gift, a contract, or a disposition of law: at para. 41.

[101] Additionally, in Kerr v. Baranow, the Court clarified that, in most cases, a monetary award will be sufficient to remedy an unjust enrichment and may be calculated on either a quantum meruit basis or by the value survived measure. However, where a monetary award is inappropriate, a proprietary remedy in the form of a constructive trust may be ordered. To justify a remedial constructive trust, the plaintiff must establish that a monetary award would be insufficient in the circumstances. The court may take into account the probability of recovery, as well as whether there is a reason to grant the plaintiff the additional rights that flow from recognition of property rights: para. 52. Further, the plaintiff must establish “a direct or causal connection between his or her contributions and the acquisition, preservation, maintenance or improvement of the disputed property:” para. 50. The extent of the constructive trust interest is determined by assessing the plaintiff’s contributions. Consequently, where the contributions of the parties are unequal, their respective shares will also be unequal: at para. 53.

g) Analysis – unjust enrichment

[102] I accept the Applicant’s evidence that she believed that 28 Atlantic would be jointly owned by her and the Respondent based on how the parties had previously carried on business and given that their jointly owned business was the source of monies used to purchase the property. I also accept the Applicant’s evidence that she discussed with the Respondent that 28 Atlantic was a joint investment for their future. In a functional relationship, these discussions would have been reflected in legal title to the property.

[103] This was not a functional relationship, however. This was a marital relationship wherein the Respondent consistently insisted on a greater proportion of ownership of an asset despite the joint pool of funds used to finance the purchase. More significantly, this was a relationship of diminishment wherein the Respondent made financial decisions in his best interest without informing the Applicant and without regard for her opinion. The Respondent enjoyed complete and unfettered access to the parties’ joint wealth.

[104] In my view, therefore, this is a case where unjust enrichment properly applies to restore a benefit to the Applicant deprived from her by the actions of the Respondent.

[105] The Respondent used the parties’ joint revenues as generated from McWatt Anderson to finance the purchase, renovations and maintenance of 28 Atlantic. He maintained title in his own name and falsely asserted under oath that Stratus was the beneficial owner. The building has increased in value from the time of purchase. Without an equitable remedy, the Respondent will retain a disproportionate share of an asset purchased during cohabitation and accumulated during the marriage as a result of the joint efforts of both parties and the Applicant will continue to suffer a corresponding economic deprivation without just reason.

[106] In terms of an appropriate remedy, I agree with the submission of the Applicant that a monetary award is not appropriate. It is not possible to measure the respective value of services rendered by the parties in furtherance of the joint business used to acquire and maintain the asset. I also agree that recovery of a monetary award from the Respondent would be difficult. As will be discussed below, the Respondent’s income is layered with deliberate deception, making a straightforward collection highly unlikely

[107] The Applicant contributed her labour to McWatt Anderson and the revenues from her work efforts facilitated the purchase, renovation and maintenance of the building. The plaintiff has established a direct nexus between her contributions to McWatt Anderson and the acquisition, renovations and maintenance of 28 Atlantic, such that she is properly entitled to a proprietary interest in 28 Atlantic. I disagree with the Applicant, however, that the extent of the constructive trust should be 50%.

[108] The extent of the constructive trust interest should be proportionate to the unjust enrichment; in this case, to the extent of the Applicant’s contributions to the building. As noted above, it is not possible to quantify the proportionate share of the parties’ labour that led to the revenues generated to purchase the asset. I accept that the business was a joint effort. I accept that the Respondent contributed more to the management of the building while the Applicant filled his void in the operations of McWatt Anderson. The Applicant enjoyed a 45% interest in McWatt Anderson. The Applicant was entitled to 45% of the revenues used to purchase, renovate and maintain the building. In my view, therefore, a 45% constructive interest in 28 Atlantic in favour of the Applicant is a fair and equitable distribution having regard to the respective ownership interests in the revenues.

[109] I have considered whether there is reason to grant the Applicant the additional rights that flow from the recognition of property rights, including the right to the building’s increased value. The Applicant has not contributed to the building since her resignation from McWatt Anderson in December 2001. I see no reason on the facts of this case, however, to deny the Applicant the benefit of the present value of the building. The Respondent provided no evidence of any of his own monies he put into the asset that would impact the present value of the building. He testified that he marketed the building and secured tenants for it but he paid himself a management fee for this work. The property rose in value through no input, alterations or renovations to it by either party. Rather, the evidence demonstrates that the asset increased in value due to the operation of organic market conditions. Both parties should therefore benefit from the increase in equity.

[110] For almost 12 years, the Respondent provided sworn evidence to the Applicant and to this Court that he transferred his interest in 28 Atlantic to Stratus. In Feb/May 2012, he admitted that there was no such transfer. The building, he now asserts, belongs to him alone. Without the Applicant’s consent by way of a shareholder resolution, the Respondent unilaterally accessed the profits of McWatt Anderson to invest in a real estate income property that he registered in his name alone. The Applicant contributed her time, talent and work product to affect those profits; she was entitled to a 45% share of those profits. The Respondent took her share of the profits to purchase, renovate and maintain a valuable asset for his own benefit. The result of his efforts is that the Applicant does not have a legal remedy to 28 Atlantic. In my view, considering all of the circumstances, this is an injustice and equity must properly play a role to rectify it.

h) Conclusion – 28 Atlantic

[111] For the reasons set out above, I have concluded as follows:

(a) The Applicant is hereby declared to be an owner of 28 Atlantic Avenue, Toronto (28 Atlantic) to the extent of a 45% undivided interest effective as of the date of the purchase of the said property.

(b) Title to 28 Atlantic shall be vested in the names of the Applicant and the Respondent as tenants in common with the Applicant having a 45% undivided interest and the Respondent having a 55% undivided interest.

(c) 28 Atlantic shall be listed for sale by August 27, 2015 with a real estate broker mutually agreed to by the parties at a price and terms recommended by the real estate broker.

(d) If the parties are unable to agree to a real estate broker, either party may bring a motion before me on 7 days’ notice to resolve the issue.

(e) The gross proceeds of sale of 28 Atlantic, after deduction of real estate commission, legal fees in relation to the sale and all normal adjustments between the vendor and purchaser (hereinafter referred to as “net proceeds of sale”) shall be divided and paid to the parties as follows:

1. To the Respondent – 55% of the net proceeds of sale less the full amount required to pay to TD Canada Trust to discharge its charge identified as registered instrument no. AT34847748, securing the line of credit granted to the Applicant by TD Canada Trust in an amount up to $ 1 Million dollars, and a notice of assignment of rents-general identified as registered instrument no. AT3484749 both on title to 28 Atlantic.

2. To the Applicant – 45% of the net proceeds of sale.

3. Given the Respondent’s history of defaulting on Court ordered support and the evidence demonstrating that his income is directly related to the rental income of 28 Atlantic, it is appropriate to ensure compliance with the within Order that any amount of the net proceeds of sale payable to the Respondent pursuant to subparagraph (a), above, shall be paid into Court to the credit of this action as security for all amounts found by this Court to be due and owing by the Respondent to the Applicant.

4. The Respondent shall indemnify the Applicant and save her harmless from any claim for income taxes, interest and penalties by the Canada Revenue Agency with respect to the Respondent’s failure to declare the net rental income from 28 Atlantic in his personal income returns for the taxation years 1988 through to and including the year in which 28 Atlantic is sold.

B) Ownership and disposition of the parties’ matrimonial home located at 40 Ellis Park, Toronto and credit to the Applicant for payment of the debts (mortgages and line of credit interest) registered against title to the matrimonial home.

[112] The parties purchased 40 Ellis Park (“Ellis Park”) effective July 2, 1984 for $225,000. The Applicant is registered as a 40% owner and the Respondent is registered as a 60% owner. The property was mortgaged many times. The Applicant was always jointly and severally accountable for the joint mortgages despite her lesser ownership interest. The parties agree that the value of the matrimonial home as of the valuation date is $600,000.

[113] The Respondent’s evidence is that the ownership reflects the parties’ respective contribution to the purchase price. He also states that the ownership reflects that the parties were not married at the time of purchase. The Respondent further states that he personally funded the renovations to Ellis Park.

[114] The Applicant disagrees. She states that she made an equal contribution to all aspects of Ellis Park and that the money used to purchase and renovate the property came from McWatt Anderson. The proportion of ownership was never discussed. No explanation was offered to her as to why the Respondent took 60%. She believes it was a further example of the Respondent’s efforts to make her feel inferior to him.

[115] There is no document to evidence that the Respondent personally paid his own monies to fund either the purchase of Ellis Park or its renovations. I do not accept the Respondent’s bald statement in this regard. Rather, all of the parties’ real estate purchases were funded by their mutual efforts and joint profits created through their equal work at McWatt Anderson. 40 Ellis Park was no different.

[116] Similarly, there is no evidence to support the Respondent’s assertion that the difference in the parties’ percentage of ownership was reflective of the parties’ respective contributions to the purchase of the matrimonial home. Rather, the Respondent engaged in a pattern of behavior designed to ensure that he always owned a little bit more than the Applicant upon joint ownership. I accept the Applicant’s statement that this is an example of the Respondent’s efforts to make her feel inferior to him.

[117] The Applicant resides at the matrimonial home. On October 3, 2000, Greer J. ordered, on consent, that she was entitled to interim exclusive possession of the matrimonial home and its contents. The Respondent has not lived in the matrimonial home since December 1999. The Applicant’s evidence is that she had to deplete her savings to maintain the home given the minimal amount of support paid to her by the Respondent, when it was paid.

[118] The Applicant requests that she be granted continued exclusive possession of the matrimonial home until such time that all amounts found to be due and owing to her by the Respondent, including costs of this proceeding are paid, in full.

[119] Section 19(1) of the Family Law Act, R.S.O. 1990, c. F.3 provides that both spouses have an equal right to possession of a matrimonial home. Section 24 of the Family Law Act gives the court discretion to order a married spouse exclusive possession of the matrimonial home regardless of the ownership of the home. Pursuant to subsection (1) (b), the court may

direct that one spouse be given exclusive possession of the matrimonial home or part of it for the period that the court directs and release other property that is a matrimonial home from the application of this Part;

[120] Subsection 24(3) sets out the criteria that the court shall consider in deciding whether to make an order for exclusive possession:

(a) the best interests of the children affected; (b) any existing orders under Part I (Family Property) and any existing support orders; (c) the financial position of the spouses; (d) any written agreement between the parties; (e) the availability of other suitable and affordable accommodation; and (f) any violence committed by a spouse against the other spouse or children

[121] Considering the criteria noted above, the Applicant’s request for exclusive possession pending payment of all monies ordered in this proceeding is not supported by the statutory provisions for exclusive possession. The matrimonial home should be sold. It is appropriate, however, considering the totality of the circumstances, that the Respondent’s share of the net proceeds of sale of the property be paid into Court to the credit of this action as security for all amounts found to be due and owing to the Applicant by the Respondent, including the costs of this proceeding.

[122] There are two current debts registered to the property:

(a) Joint TD Canada Trust Line of Credit Account No. 03754503819 in the amount of $100,000 is secured by a mortgage registered against title to the matrimonial home. Both parties admit that the funds were used by McWatt Anderson for business purposes. I do not agree with the submission of the Applicant that the Respondent is properly responsible for 100% of this debt because he converted the goodwill and revenues of McWatt Anderson to his own benefit by creating and operating McWatt & Associates. The corporations are not parties to this proceeding. The Respondent was a 55% owner of McWatt Anderson. The funds were used by McWatt Anderson for business purposes. The Respondent is properly responsible for 55% of the debt.

(b) TD Canada Trust Line of Credit Account No. 03753282610. The Applicant was permitted to obtain the amount of $200,000 secured against title to the matrimonial home over and above any existing line of credit by Order of Madam Justice Macdonald dated November 19, 2009. This Order was made in response to the Applicant’s evidence that she was in dire financial circumstances as a result of the Respondent’s inadequate support to her and the children. The Applicant shall assume 100% of this debt.

[123] For reasons set out above, I have concluded as follows:

(a) 40 Ellis Park shall be listed for sale by August 27, 2015 with a real estate broker mutually agreed to by the parties at a price and terms recommended by the real estate broker.

(b) If the parties are unable to agree to a real estate broker, either party may bring a motion before me on 7 days’ notice to resolve the issue.

(c) The gross proceeds of sale of 40 Ellis Park, after deduction of real estate commission, legal fees in relation to the sale and all normal adjustments between the vendor and purchaser (hereinafter referred to as “net proceeds of sale”) shall be divided and paid to the parties as follows:

1. To the Respondent – 60% of the net proceeds of sale less 55% of the balance owing on TD Canada Trust joint line of credit account No. 03754503819 secured against title to 40 Ellis Park, identified as registered instrument No. E113018;

2. To the Applicant – 40% of the net proceeds of sale less 45% of the balance owing on TD Canada Trust joint line of credit account No. 03754503819 secured against title to 40 Ellis Park, identified as registered instrument No. E113018 and less 100% of the balance owing on TD Canada Trust line of credit account No. 03753282610 secured against title to the 40 Ellis Park, identified as instrument no, AT2582026;

3. Given the Respondent’s history of defaulting on Court ordered support and the evidence demonstrating that his income is directly related to the rental income of 28 Atlantic and my order that 28 Atlantic is to be sold, it is appropriate to ensure compliance with the within Order that any amount of the net proceeds of sale payable to the Respondent pursuant to subparagraph (a) above shall be paid into Court to the credit of this action as security for all amounts found by this Court to be due and owing by the Respondent to the Applicant.

C) Occupation rent owing to the Respondent from the Applicant in relation to the matrimonial home

[124] The Respondent led no evidence with respect to his claim, as pleaded, for occupation rent owing to him from the Applicant in relation to the matrimonial home. For this reason, the Respondent’s claim for occupation rent is dismissed.

D) Determination of the Respondent’s income from 2000 to trial for purposes of determining his support obligations to the Applicant

[125] The Applicant submits that the Respondent artificially suppressed his income for support purposes in this action and that he did so successfully by diverting the rents from 28 Atlantic to Stratus, claiming personal expenses as business expenses of Stratus and by using his corporations to pay his credit card bills for his other personal expenses.

[126] The Respondent denies that he artificially suppressed his income for support purposes. He submits that his income is properly reflected as accurate at line 150 of his income tax returns. He makes this assertion despite attesting to a lifestyle in his financial statements of $159,603 pre-tax expenses in 2014 and $118,097.75 pre-tax expenses in 2015. Assuming a gross up for tax purposes of 1.8, the Respondent spent more than three times his line 150 income in 2014 and 2015. Where did this money come from? The documentary evidence is helpful in this regard. It demonstrates that the Respondent’s line 150 income is merely a number he assigns to it in any given year, and is in no way reflective of his true available income for support purposes.

[127] Determining the Respondent’s true available income for support purposes is no easy feat. To do so, one must immerse in a complicated world where money is generated, spent and accounted for in ways other than how it is recorded and reported. The Respondent is the self-appointed leader of this world, feeding information to his accountant who, like a good soldier, does as he is told, all the while surely knowing that his instructions are neither sound nor virtuous.

[128] The evidence is such that the financial statements of Stratus are used by the Respondent to suppress his true available income for support purposes. I make this conclusion based on the following evidence taken together:

(a) The Applicant’s evidence is that the Respondent made it clear to her that he did not value her input and that he had no respect for her in the area of administration and finances. She therefore focused her efforts on design and became immune to having opinions on finance. The Respondent testified at length to his talents in the area of finance and the Applicant’s inability to understand the area as he did. I find as a fact that the Respondent had full control and management over all financial matters at McWatt Anderson and Stratus. The Applicant signed what she was asked to sign but ultimately it was the Respondent who controlled the financial aspects of the jointly held companies without input or opinion from the Applicant.

(b) The Respondent’s brother Bryan testified that he prepared the financial statements for McWatt Anderson for fiscal years ending 1988 to 1993 and the financial statements for Stratus for fiscal years ending 1989 to 1990. He confirmed that he conducted no independent investigation to conclude whether what he was including therein was correct or incorrect. Rather, all of the information contained therein came from management. His role was simply to compile the information given to him in a form akin to a notice to reader, which he explained as the lowest level of reliability in terms of financial statements.

(c) Bryan testified that he was comfortable with the work he did for McWatt Anderson and Stratus in preparing the financial statements noted above. In cross-examination, he agreed that his comfort level would be significantly diminished if he learned that there was no resolution from McWatt Anderson to loan the Respondent $100,025, no money was advanced to Stratus from McWatt Anderson, title and the mortgage to 28 Atlantic were registered to the Respondent and Epoca Interiors’ lease for 28 Atlantic was with the Respondent, not Stratus.

(d) Mr. Keith Doxee also gave evidence on behalf of the Respondent. He testified that he prepared the financial statements for each of McWatt & Associates, Stratus and McWatt Anderson from 1999 forward. He also confirmed that he conducted no independent investigation to conclude whether what he was including therein was correct or incorrect. His primary source for all of the information contained therein came from the Respondent. Mr. Doxee’s role was simply to compile the information given to him in a form akin to a notice to reader, which he too explained as the lowest level of reliability in terms of financial statements.

(e) During cross-examination, Mr. Doxee confirmed that the Respondent was expensing his personal legal and accounting fees for the purposes of this proceeding through both McWatt & Associates and Stratus. He questioned the Respondent about this. The Respondent told him that the expenses were more related to his business than to his personal issues such that, in the Respondent’s view, it was appropriate to treat them as a business expense. Mr. Doxee took the Respondent’s instruction on this issue.

(f) Mr. Doxee was referred to the fiscal 1999 financial statement for McWatt Anderson wherein it is reflected that McWatt Anderson owns land and buildings valued at $983,338. Mr. Doxee confirmed that his information would have come from the Respondent and that his role did not include conducting title searches to confirm the information given to him by the Respondent. He further testified that he learned in the early 2000s that McWatt Anderson never owned any real estate, despite what he was told by the Respondent to reflect in its fiscal 1999 financial statement. He stated it was not likely he would not have included such assets in the said financial statement if he knew prior to March 2000 that McWatt Anderson did not own any land or buildings.

(g) Similarly, Mr. Doxee testified that he learned that Stratus did not own 28 Atlantic in the early 2000s, despite reflecting such ownership in the financial statements of the company. Mr. Doxee’s evidence is that upon learning of this, he would have counselled the Respondent to remove 28 Atlantic from the Stratus financials as the building represents the entire asset of the company. He testified that he advised the Respondent to obtain legal advice. The Respondent told him that he obtained legal advice and that it was appropriate to continue to account for ownership and rental income of 28 Atlantic on the financial statements of Stratus despite the fact that the Respondent, and not Stratus, owned the building. Mr. Doxee took this instruction from the Respondent.

(h) Despite the Respondent’s assertions, Stratus had no business activity. There was no rollover or transfer of 28 Atlantic and no assignment of rents from 28 Atlantic by him to Stratus and no management agreement between him and Stratus. The Respondent used his accountants to prepare misleading financial statements and reflect a rollover, an assignment of rents and a management agreement.

(i) The Respondent’s evidence during cross-examination demonstrated that he had been paying his personal expenses through McWatt Anderson including his lease on his Lexus from 1999 to 2002 and his legal and expert fees in the proceeding, expenses for the cottage, support payments to the Family Responsibility Office, section 7 expenses, and payments on his personal lines of credit with ICBC.

(j) The Respondent’s use of the corporations for his personal expenses is further reflected through a summary of Stratus cheques in the years 2011 to 2014. The summary is based on a sampling of Stratus cheques found in trial exhibit 144C as filed by the Applicant and attached as Schedule A to these reasons. The Respondent led no evidence in response to the summary, which clearly demonstrates a regular and consistent use of monies from Stratus to finance his lifestyle, personal expenses, support obligations, and financing payments.

(k) The Respondent admits that he claimed personal expenses through the respective corporations but asserts that the personal expenses were charged against the shareholder loans owed to him by Stratus from 2000 to date. This assertion is not credible and I do not accept it. Mr. Doxee confirmed that the Respondent’s personal legal and expert fees for this proceeding were expensed through Stratus. The Respondent led no evidence as to how or why a shareholder loan would be owed to him by Stratus. 28 Atlantic was never rolled over or transferred to Stratus and therefore no shareholder loan was created in favour of the Respondent from which to draw against. A reasonable inference from the evidence is that the respective financial statements may reflect a shareholder loan but, in reality, there is no loan, only a self-created vehicle used by the Respondent to insulate his income and access tax free funds for his own personal use, separate and apart from the payment to himself of a modest management fee.

(l) The Respondent admitted that since 2000 he co-mingled the funds between Stratus, McWatt & Associates and McWatt Anderson, whether it was for rent, expenses paid by one entity to another or to cover something else. He did so at his discretion.

(m) The Respondent was unable to explain gaping holes and apparent manipulations of the financial statements for McWatt Anderson, Stratus and McWatt & Associates, particularly as they relate to his personal expenses. He consistently deferred to information he said would be contained “in the ledgers.” On the 5th day of trial, after the Applicant completed her case, the Respondent requested to file with the Court two large legal size books, with hundreds of pages of handwritten notes therein. He advised the Court that the two books were the ledger books for McWatt Anderson and that he could have them copied at a cost of $9,000. Upon hearing submissions, I refused the Respondent’s request to file the two ledger books. Included in my reasons was the fact that prior to the trial, Justice Kiteley held six lengthy trial management conferences with the parties from October 22, 2014 to May 6, 2015. The issues for trial were agreed to therein by the parties. Justice Kiteley made specific orders in terms of production of documents, including that both parties shall serve and file their document briefs for trial by May 1, 2015. The Respondent clearly understood the order and served and filed 12 large volumes of documents by May 1, 2015. Despite the amount of judicial resources devoted to trial management issues and despite the clear direction from Justice Kiteley with respect to timelines for delivery of documents, the Respondent waited until after the Applicant finished her case to request that further voluminous and detailed documents be filed with the Court. The parties agreed to the issues for trial before Justice Kiteley. Nothing new was raised during the Applicant’s evidence. The Respondent offered no reasonable explanation as to why such documents were not included in the 12 briefs of documents served and filed in accordance with the order of Justice Kiteley. Such conduct cannot be excused because the Respondent is self-represented, particularly given the time Justice Kiteley spent with the parties to prepare them for trial and the clear guidance on this specific issue given to the Respondent prior to the commencement of trial.

(n) Included in his 12 volumes of documents was the one page of a four page ledger from McWatt Anderson from February 1, 1989 to February 29, 1989, as referred to above. The ledger was in computerized form and not in handwritten form as the two books he put to the Court for proposed filing. The veracity of this incomplete document is discussed above. If the Respondent believed that all of the handwritten ledgers were relevant to the issues for trial as agreed to by him long before the commencement of trial, he ought to have produced them along with his 12 volumes of documents and the partial ledger produced therein or in any event at the commencement of trial.

[129] In order to determine the Respondent’s true available income for the purposes of support, the Court is left to assess the evidence of a witness who is not credible, the evidence of his accountants who do as he says, inaccurate financial statements and inaccurate income tax returns. It is within this context that best efforts will be made to calculate the Respondent’s true available income for support purposes.

[130] Section 15.1 (1) of the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.) provides that “[a] court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage.” Subsection (3) stipulates that “[a] court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with the applicable guidelines.”

[131] Section 19 of the Federal Child Support Guidelines gives the court discretion to impute income to a spouse in an amount that it considers appropriate in the circumstances, including when:

(a) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; (b) the spouse has failed to provide income information when under a legal obligation to do so; and (c) the spouse unreasonably deducts expenses from income;

[132] In order to determine the Respondent’s true available income for support purposes, it is necessary to impute income to the Respondent and extinguish once and for all any notion that 28 Atlantic was rolled over or transferred to Stratus. The Respondent’s income should properly reflect that he owned the building, he collected the rental income, he paid the mortgage and the property taxes and insurance. I accept the methodology put forward by the Applicant to achieve this end, described as follows:

(a) Start with the Respondent’s line 150 income; (b) Deduct the management fee paid to the Respondent by Stratus; (c) Attribute the net rental income received by Stratus to the Respondent. Calculate this amount by subtracting the gross rental income received by Stratus by the amount it paid in property taxes, interest on the vendor take back mortgage and insurance; (d) Gross up the net rental income by a 45% marginal rate or a factor of 1.8 to reflect the fact that the Respondent benefited from the income diverted to Stratus and received by him on a tax free basis to fund his lifestyle and personal expenses. The gross up does not apply to retained earnings declared by Status on its corporate financial statements; see s. 19(1)(b) of the Federal Child Support Guidelines, which permits the court to impute income to a spouse in such amount as it considers appropriate, when the spouse is exempt from paying federal or provincial income tax. (e) Add in the retained earnings of McWatt & Associates in accordance with Section 18 of the Federal Child Support Guidelines as the Respondent led no evidence that the retained earnings were needed to be retained for a valid corporate purpose: Brophy v. Brophy, [2004] O.J. No. 17 (C.A.).

[133] Accepting the above noted methodology and applying component elements based on the evidence before me, including the financial statements of Stratus and McWatt & Associates and the personal income tax returns of the Respondent, the following represents the calculation of the Respondent’s true available income in the years 2000 to 2015 for purposes of calculating his child support and spousal support as put forward by the Applicant and accepted by the Court:

Year	Line 150 Income based on calendar year	Minus Management Fee received by Respondent from Stratus Development Corporation	Net Rental Income [Including Gross Up] based on year-end June 30	Retained Earnings of McWatt & Associates based on year-end June 30	TOTAL INCOME FOR CHILD SUPPORT	Minus RRSP Income For Spousal Support purposes only	TOTAL INCOME FOR SPOUSAL SUPPORT
2000	$92,819.91	$4,000	$39,490.20		$128,310.11	$21,843.09	$106,467.02
2001	$60,094.39	$2,800	$55,544.60		$112,838.99	$19,833	$93,005.99
2002	$68,246.66	$6,725	$78,269.40		$139,791.06	$65,284.32	$74,506.74
2003	$31,915.21	$5,000	$56,505.00	$43,616	$127,036.21	$833.00	$126,203.21
2004	$51,562.09		$45,886.40		$97,448.49	$1,333.00	$96,115.49
2005	$75,000.00	$3,750	$59,467.20	$44,734	$175,451.20		$175,451.20
2006	$47,065.00	$19,315	$79,124.20	$56,205	$163,079.20		$163,079.20
2007	$57,034.71	$20,000.00	$50,502.80	$94,784	$182,321.51		$182,321.51
2008	$98,568.13		$89,665.40		$188,233.53	$52,835.32	$135,398.21
2009	$50,551.90	$15,000.00	$49,348.00		$84,899.90		$84,899.90
2010	$65,000.00		$23,864.40		$88,864.40		$88,864.40
2011	$30,000.00		$30,000.00		$62,703.00		$62,703.00
2012	$28,000.00		$28,000.00		$158,661.80		$158,661.80
2013	$30,000.00		$30,000.00		$44,935.20		$44,935.20
2014	$62,907.28		$62,907.28		$452,799.00		$452,799.00
2015	$62,907.28		$62,907.28		$452,799.00		$452,799.00

[134] The last financial statement from Stratus received by the Court is for fiscal year end 2014. The Respondent confirmed in cross-examination, however, that the rental income from 28 Atlantic would be the same in 2015 as it was in 2014. Moreover, Mr. Doxee, in his letter dated May 26, 2014, stated that the Respondent’s income from 28 Atlantic is in the five digit range monthly, which he stated in cross-examination meant more than $10,000 and less than $100,000 monthly.

[135] Although not advanced by the Respondent, to avoid a “double dip” argument by the Respondent, the Respondent’s RRSP income was not included for the purposes of calculating his income for spousal support for the years 2000 to part way in 2008. The Respondent’s financial statement sworn April 22, 2015 and his evidence on cross-examination confirm that on valuation date he had a total of $161,961.73 in two RRSP accounts: Boston v. Boston, 2001 SCC 43, [2001] 2 S.C.R. 413; Hutchison v. Hutchison, [1998] O.J. No. 3027, at para. 9(Gen. Div.); and Shadbolt. v. Shadbolt, [1997] O.J. No. 3666, at paras. 14-53 (Fam. Ct.)

[136] The Respondent’s true available income for support purposes is therefore something very different than what he declares as his income on line 150 of his personal tax return. Rather, the Respondent’s income is the rental income from 28 Atlantic, with applicable deductions. It is from this rental income that the Respondent has sustained his lifestyle and supported his personal expenses. To suggest otherwise is to embrace the fiction created by the Respondent and perpetuated for him by his accountants, namely that Stratus owns 28 Atlantic and Stratus receives the rental income of 28 Atlantic.

E) Determination of the Applicant’s income for 2000 to trial, for purposes of determining the Respondent’s support obligations to the Applicant

[137] The Respondent submits that the Applicant’s income for the purposes of his support obligations is properly her line 150 income. The Applicant submits that the following items are properly deducted from her line 150 income for support purposes:

1. RRSP income;
2. Taxable spousal support (received by the Applicant); and
3. Other non-recurring income (i.e. capital gains).

[138] I agree that the spousal support received by the Applicant and capital gain income should not be included in the calculation of her income for determining the Respondent’s support obligations to her as these amounts are non–recurring: Pollitt v. Pollitt, 2010 ONSC 1617, [2010] O.J. No. 5905, at paras. 109-113; Walsh v. Walsh, [2008] W.D.F.L. 1750, at paras. 28-30 (S.C.J.); Gibson v. Gibson, [2002] O.J. No. 1784, at paras. 19-23 (S.C.J.); and Shaw v. Shaw, [2002] O.J. No. 2782, at para. 97 (S.C.J.).

[139] I also agree that the Applicant’s RRSP income should be excluded from her income for support purposes: McConnell v. McConnell, 2015 ONSC 2243, [2015] O.J. No. 1710 at paras. 93-107.

[140] The Applicant depleted approximately $670,000 in RRSPs during the 15 years of this proceeding. The Respondent was ordered to make interim support payments to the Applicant in 2000 and 2001. He fell into arrears repeatedly. By February 10, 2004, the arrears of support were $31,600. By October 5, 2009 the Respondent was again in arrears of child and spousal support in the amount of $47,985.00. By March 2013, the Respondent was in arrears of support a third time in the amount of over $14,000. The Respondent engaged in a repeated pattern of ignoring the Court Order to pay interim support, accumulating arrears and selling or financing jointly funded properties to satisfy the arrears, all the while suppressing his true available income for support purposes through Stratus.

[141] Put bluntly, the Applicant did not have enough money over the 15 years of litigation to support herself and her children. She accessed her RRSP income because the Respondent was not providing adequate support. She also used $50,000 in RRSPs to support her legal fees in this litigation. There is no evidence to suggest that the Applicant used her retirement income to advance her lifestyle. The uncontested evidence is that the Applicant depleted her retirement savings to maintain the matrimonial home and to support herself and her children as a matter of necessity, not discretion. This is supported by her evidence in 2009 before Madam Justice Macdonald that she was in dire financial circumstances as a result of the Respondent’s inadequate support for her and the children. As noted above, the Applicant was permitted at that time to obtain the amount of $200,000 secured against title to the matrimonial home and by this judgment she has assumed 100% of this debt.

[142] The Applicant’s withdrawals from her RRSPs were made necessary by the fact that she was not receiving timely and/or adequate payments of child and spousal support. To include the withdrawals as her income for support purposes would diminish her entitlement to retroactive support. Taking such an approach would result in a retroactive entitlement based not on the Applicant’s true income but rather on her income borne as a result of the Respondent’s failure to provide adequate support. This result would therefore be perverse and entirely contrary to the very reasons and purposes of spousal support as described below.

[143] In these circumstances, including the Applicant’s RRSP withdrawals in her income to determine the Respondent’s support obligations to her would unfairly distort her true income and her need for support during the relevant years in question. I have concluded therefore that is it appropriate to exercise my discretion under s.17 (1) of the Federal Child Support Guidelines and calculate the Applicant’s income for the purposes of determining the Respondent’s support obligations to her by subtracting her RRSP income from her line 150 income

[144] .Accepting this methodology and applying the component elements based on the evidence before me, including the personal income tax returns of the Applicant, the following represents the calculation of the Applicant’s income in the years 2000 to 2015 for purposes of calculating the Respondent’s obligations to her for child support and spousal support as put forward by the Applicant and accepted by the Court:

Year	Line 150 Income	Minus RRSP Income	Minus Other Income	Applicant’s Income for Spousal Support
2000	$31,113.03	$1,333		$29,780.03
2001	$104,323.54	$5,000	$9,000 [taxable support] $59,109.16 [taxable Capital Gains]	$31,214.38
2002	$57,195.41	$1,333.00	$5,250 [taxable support]	$50,612.41
2003	$99,231.07	$1,333.00		$97,898.07
2004	$67,833.00	$1,333.00	$16,500 [taxable support]	$50,000.00
2005	$119,157.00	$84,333.00		$34,824.00
2006	$164,003.00 *per Notice of Reassessment	$88,003.88		$75,999.12
2007	$88,333.00	$1,333.00		$87,000.00
2008	$137,378.47	$102,625.18	$7,500 [taxable support]	$27,253.29
2009	$64,777.89	$52,187.81	$7,000 [taxable support]	$5,590.08
2010	$82,739.57	$50,004.45	$27,685 [taxable support]	$5,050.12
2011	$17,064.21		$9,000 [taxable support]	$8,064.21
2012	$158,167.65	$150,000.00		$8,167.65
2013	$94,034.33	$82,800.00		$11,234.33
2014	$52,150.84	$43,955.46		$8,195.38

F) Determination of the amount of retroactive and prospective spousal support payable by the Respondent to the Applicant, including payment of arrears of spousal support owing by the Respondent to the Applicant for the period January, 1 2000 to date of judgment

[145] On April 2, 2001, Madam Justice Kiteley ordered the Respondent pay the Applicant $750 per month for interim spousal support. The support was suspended pending the within decision, by Court Order effective January 1, 2014.

[146] The evidence is consistent that the Applicant was a talented interior designer. She worked alongside the Respondent and together they established and operated an award winning design firm. The Applicant left McWatt Anderson in 2000. She was 46 years old.

[147] Upon her departure she asked the Respondent to provide her with her degrees and evidence of past projects. The Respondent refused to provide these items then and he refuses to provide them now. At the time, he testified that he considered the items either unnecessary or out of date and therefore useless to the Applicant. He unilaterally decided that the Applicant did not need what she stated she needed to continue her design work, without respecting her opinion. He testified that the items are presently not available as they were left on the corner, with a couple of cases of beer, for the neighbours to take during a recent clean out of 28 Atlantic.

[148] The Applicant nonetheless continued her interior design work from the matrimonial home upon incorporating her own company. She was offered some assistance on occasion from her former employees, at the time employed with McWatt & Associates. She was able to generate some income for herself and the children through her company until 2008. Eventually she lost the clients as the people that were loyal to her retired and she was unable to stay current with the demands of AutoCAD. At some point she states she gave up on herself, fell into depression and contemplated suicide. She let her membership with the Association of Interior Designers of Ontario lapse and stopped actively looking for employment, in design or otherwise. She insists however that design is her passion and she would like to get back to it.

[149] The Respondent submits that the Applicant was never entitled to spousal support. He argues that she has been self -supporting since leaving McWatt Anderson in June 2000.

[150] Section 15.2 of the Divorce Act governs final spousal support orders. Section 15.2(4) sets out the factors the Court must consider when making a final spousal support. It provides:

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

(a) the length of time the spouses cohabited;

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

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

[151] The objectives behind an order for spousal support are summarized in section 15.2 (6) of the Divorce Act. That section provides:

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

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

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

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

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

[152] The parties lived together for 17 years. They owned a business together for 22 years. They were married for 8 years.

[153] The Applicant assumed the primary responsibility for the household and the children during the marriage and after separation until the children left the matrimonial home to pursue post-secondary education. She also contributed equally to the success of the parties’ joint business, providing her design expertise and sourcing major clients.

[154] The parties formed a relationship of financial interdependence when they decided to couple their professional and personal lives. The Respondent assumed control of the finances, leaving the Applicant in the unenviable position of working to generate profits and having no control over how those profits were consumed or accounted for. Years of emotional abuse and diminishment at the hands of the Respondent left the Applicant without will or capacity. She left the matrimonial bed in 1997 and the joint business in June 2000. Thereafter the Respondent remained in the building purchased for the joint business with its profits and assumed all of the assets of the joint business for his own benefit under his new business name, McWatt & Associates. The Applicant was left without what she believed she needed to excel and thrive at her design work from the matrimonial home. She suffered economic disadvantage as a result of the marriage and its breakdown and is entitled to compensatory support.

[155] The Applicant avoided suffering undue economic hardship from the marriage breakdown by drawing from her RRSP investments and securing debt against the matrimonial home to provide for her needs and those of the children.

[156] The Respondent argues that the Applicant is intentionally unemployed. I disagree. The evidence is that the Applicant made valiant efforts at self-sufficiency. She serviced the few clients she took with her from the joint business as best as she could before loyalty expired, technology caught up with her and they moved on. She attempted to learn about AutoCAD to no avail and the Respondent continued to refuse to provide her with the tools she felt she needed to succeed as a designer. The Applicant now finds herself unable to support a standard of living that is reasonable having regard to the economic partnership she enjoyed during the marriage and believes herself to be unemployable as a result of being overqualified in design and under-qualified in technology. And the Respondent fails to take accountability for the consequences of his dismissive treatment of the Applicant. He is entirely unrepentant.

[157] The Applicant was the primary care giver for the children, suffered economic disadvantage to the advantage of the Respondent, and has been unable to achieve a degree of self-sufficiency having regard to the marital standard of living. For these reasons, she is entitled to an award of spousal support from January 1, 2000 to May 30, 2015, in accordance with the income of the parties as determined above.

[158] The Applicant submits that for the period in question, the Respondent’s payments for spousal support are properly based on the high end of the range pursuant to the Spousal Support Advisory Guidelines. The Spousal Support Guidelines were not available as a tool to assist the Court in 2000. They nonetheless present today as a useful guide for the Court in awarding an appropriate amount of retroactive spousal support. In my view, the high range of the Guidelines provides an appropriate level of monthly support to the Applicant, considering the factors outlined above and the totality of circumstances of their relationship.

[159] I accept the calculation of arrears of spousal support as submitted by the Applicant as follows:

Year	Respondent’s Guideline Income [with SSAG adjustment]	Applicant’s Guideline Income	Respondent’s monthly spousal support obligation	Monthly amount ordered to be paid by Respondent	Monthly Arrears	Arrears for the Calendar year
2000	$106,467	$29,780	$607	$750 (beginning Oct. 2000)	$607 for Jan. to Sept. ($143) for Oct. to Dec.	$5,034
2001	$93,006	$31,214	$207	$750	($543)	($6,516)
2002	$74,507	$50,612	$750		($750)	($9,000)
2003	$126,203	$97,898	$750		($750)	($9,000)
2004	$96,115	$50,000	$715	$750	($35)	($420)
2005	$175,451	$34,824	$3,448	$750	$2,698	$32,376
2006	$163,079	$75,999	$1,661	$750	$911	$10,932
2007	$182,322	$87,000	$1,901	$750	$1,151	$13,812
2008	$135,399	$27,253	$376	$750	($374)	($4,488)
2009	$84,900	$5,590	$1,467	$750	$717	$8,604
2010	$88,864	$5,050	$2,119	$750	$1,369	$16,428
2011	$62,703	$8,064	$1,453	$750	$703	$8,436
2012	$158,662	$8,168	$4,264	$750	$3,514	$42,168
2013	$44,935	$11,234	$955	$750	$205	$2,460
2014	$452,798	$8,195	$12,597		$12,597	$151,164
2015	$452,798	$8,195	$12,597		$12,597	$ 62,985
TOTAL ARREARS OF SPOUSAL SUPPORT PAYABLE BY THE RESPONDENT TO THE APPLICANT						$324,975

[160] It is the Applicant’s submission that she ought to be entitled to receive $211,233.75 as a lump sum on account of spousal support arrears owing by the Respondent to her for the period of January 1, 2000 to date, which represents 65% of the gross spousal support arrears calculated above. 65% is roughly equivalent to the after tax benefit she would enjoy from such spousal support based on her having an effective tax rate of 35%. In Willemze-Davidson v. Davidson, [1997] W.D.F.L. 345, the Court of Appeal for Ontario reviewed the law on lump sum support orders and stated at paras. 31-33:

31 Both the Divorce Act (s. 15(2)) and the Family Law Act (s. 34(1)(b)) provide authority for lump sum spousal child support orders. It follows that there is a place in the support scheme of things for lump sum child support orders. To determine what that place is I think it is helpful to identify when a lump sum support order, child or spousal, should not be made.

32 Lump sum support orders should not be made to achieve a more equitable division of capital assets, including real property. There is ample authority for that proposition: see Mannarino v. Mannarino (1992), 43 R.F.L. (3d) 309 (Ont. C.A.). The purpose of a lump sum support order must, however, be distinguished from its effect. Any lump sum support order will result in a transfer of capital from the payor to the payee equal to the lump sum order to be paid. To justify a lump sum child or spousal support order, there should be a valid reason for not making a periodic support order which usually will be paid from the payor's income.

33 In my opinion, this is a proper case for a lump sum child support order having in mind the trial judge's findings that the husband's attitude, financial circumstances, his consistent record of non-payment and his new family responsibilities make it highly unlikely that he will pay periodic child support, at least with a degree of regularity consistent with the child's best interests. Mr. Davidson's payment record since the trial, as disclosed by counsel during oral argument, supports this conclusion.

[161] In Davis v. Crawford, 2011 ONCA 294, [2011] O.J. No. 1719, the Court of Appeal for Ontario elaborated on the factors that the court must take into account in considering an award of lump sum spousal support. The Court explained at paras. 65-67:

65 These statutory provisions make it clear that ability to pay is an important consideration in making an award of spousal support, including lump sum spousal support.

66 Most importantly, a court considering an award of lump sum spousal support must weigh the perceived advantages of making a lump sum award in the particular case against any presenting disadvantages of making such an order.

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

[162] In my view, the circumstances of this case represent “very unusual circumstances” wherein is it appropriate to make a lump sum award for spousal support. I make this conclusion for the following reasons taken together:

1. The Respondent attempted to shelter his true available income for support purposes by diverting his rental income to Stratus;
2. The Respondent has a history of non-payment of periodic spousal support despite a Court Order obliging him to do so;
3. The Applicant is entitled to an immediate award to satisfy retroactive spousal support; and
4. The Respondent will have the ability to pay a lump sum award by way of the sale of both 40 Ellis and 28Atlantic as ordered.

[163] I also agree that the lump sum should not attract tax consequences as 15 years of retroactive reassessments is not in anyone’s best interest.

[164] For these reasons I have concluded that the Respondent shall pay to the Applicant a lump sum which shall not be taxable as income to the Applicant nor deductible by the Respondent for income tax purposes in the amount of $211,233.75 in full satisfaction of the Applicant’s claims for retroactive spousal to May 31, 2015, based on the Court’s finding as to the amount of income to be imputed to the Respondent for the years 2000 to 2015.

G) Determination of the arrears of child support owing by the Respondent to the Applicant for the children of the marriage, namely Claire McWatt, born July 24, 1989, and Robin McWatt, born December 20, 1992 from January 1, 2000 to the date of judgment.

[165] On October 3, 2000, Justice Greer made an order that the Respondent pay interim child support to the Applicant in the amount of $1,000 per month for both children. This amount was based on the Respondent’s earings of $80,000 per year. No section 7 support was ordered. The support was suspended pending the within decision, by Court Order effective January 1, 2014.

[166] Section 15.1 of the Divorce Act grants the court discretion to make an order for the support of any children of the marriage and to impose terms and conditions that it deems fit and just. Section 15.1 states in relevant part:

(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage.

Guidelines apply

(3) A court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with the applicable guidelines.

Court may take agreement, etc., into account

(5) Notwithstanding subsection (3), a court may award an amount that is different from the amount that would be determined in accordance with the applicable guidelines if the court is satisfied

a) that special provisions in an order, a judgment or a written agreement respecting the financial obligations of the spouses, or the division or transfer of their property, directly or indirectly benefit a child, or that special provisions have otherwise been made for the benefit of a child; and

(b) that the application of the applicable guidelines would result in an amount of child support that is inequitable given those special provisions.

Reasons

(6) Where the court awards, pursuant to subsection (5), an amount that is different from the amount that would be determined in accordance with the applicable guidelines, the court shall record its reasons for having done so.

a. Section 3 support.

[167] Section 3(1) of the Federal Child Support Guidelines provides the presumptive rule for the application of the table amounts. It states:

Unless otherwise provided under these Guidelines, the amount of a child support order for children under the age of majority is

(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the spouse against whom the order is sought; and

(b) the amount, if any, determined under section 7.

[168] Section 3(2) of the Guidelines specifically addresses child support orders in relation to children over the age of majority. It states:

Unless otherwise provided under these Guidelines, where a child to whom a child support order relates is the age of majority or over, the amount of the child support order is

(a) the amount determined by applying these Guidelines as if the child were under the age of majority; or

(b) if the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child.

[169] The parties agree that both children left the matrimonial home to commence post-secondary education in September 2010. Claire attended the University of Toronto and Robin attended McGill University in Montreal. Prior to that time, the children resided with their mother as the primary caregiver.

[170] Considering the Guidelines, therefore, the presumptive rule supports an Order that the Respondent pay table amounts to the Applicant for Claire and Robin from January 2000 through to August 30, 2010. Although Claire was over the age of majority at this time, it would not be inappropriate for the Respondent to pay the Applicant table support for Claire as she nonetheless lived full time with her mother and there is no evidence to suggest that she was not otherwise completely dependent upon the Applicant for basic needs and lifestyle.

[171] I find that it would be inappropriate for the Respondent to pay the Applicant table support for Robin and Claire beyond September 2010. Both children lived on their own in rented apartments with the responsibility of satisfying their own needs and running their own lifestyle. Robin returned to the matrimonial home only for short visits during Christmas or to visit friends in the summer but his full time residence was in Montreal.

[172] I have applied the Respondent’s income as determined above to these findings and factored in the support he paid to the Applicant for Robin and Claire in accordance with the Order of Madam Justice Greer. The following chart illustrates the calculation of arrears of s. 3 child support owing by the Respondent to the Applicant for Claire and Robin.

Year	Respondent’s Guideline Income	Respondent’s monthly Section 3 support obligation	Monthly amount ordered to be paid by the Respondent	Monthly Arrears	Arrears for the Calendar Year
2000	$128,310	$1,534	$1,000 (beginning February 2000)	$1,534 for January $534 for February to December	$7,408
2001	$112,839	$1,374	$1,000	$374	$4,488
2002	$139,791	$1,654	$1,000	$654	$7,848
2003	$127,036	$1,521	$1,000	$521	$6,252
2004	$97,448	$1,214	$1,000	$214	$2,568
2005	$175,451	$2,026	$1,000	$1,026	$12,312
2006	$163,079	$2,144	$1,000	$1,144	$13,728
2007	$182,322	$2,367	$1,000	$1,367	$16,404
2008	$188,234	$2,436	$1,000	$1,436	$17,232
2009	$84,900	$1,219	$1,000	$219	$2,628
2010	$88,864	$1,268	$1,000	$268	$2,144
2011	$62,703	$1,000		($1,000)	($12,000)
2012	$158,662	$1,000		($1,000)	($12,000)
2013	$44,935	($1,000)		($1,000)	($12,000)
2014/2015	$452,798
TOTAL ARREARS OF SECTION 3 CHILD SUPPORT PAYABLE BY THE RESPONDENT TO THE APPLICANT					$57,012

b. Section 7 support

[173] Section 7 of the Guidelines makes provision for special or extraordinary expenses. It states:

7. (1) In a child support order the court may, on either spouse’s request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation:

(a) child care expenses incurred as a result of the custodial parent’s employment, illness, disability or education or training for employment;

(b) that portion of the medical and dental insurance premiums attributable to the child;

(c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;

(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;

(e) expenses for post-secondary education; and

(f) extraordinary expenses for extracurricular activities

[174] Subsection (1.1) defines “extraordinary expenses” as follows:

(a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate; or

(b) where paragraph (a) is not applicable, expenses that the court considers are extraordinary taking into account

(c) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,

(d) the nature and number of the educational programs and extracurricular activities,

(e) any special needs and talents of the child or children,

(f) the overall cost of the programs and activities, and

(g) any other similar factor that the court considers relevant.

[175] Pursuant to subsection (2), the “guiding principle” in apportioning extraordinary expenses is that “the expense is shared by the spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.”

[176] Subsection (3) provides that “[i]n determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.”

[177] The parties agree that both parties contributed to the children’s s. 7 expenses since separation up to and including the present day. Robin graduated from McGill in December 2014 and Claire graduated from the University of Toronto in May 2012 (but returned in the summer of 2014 to complete 3 courses). There is no evidence of the children’s respective ability to contribute to their own post-secondary education costs or s. 7 expenses post-graduation. As both parties willingly continue to make these expenses in favour of the children, there is a reasonable inference of demonstrated need by the children for such support. Neither party takes the position that the children are no longer entitled to s. 7 expenses. The Court’s role therefore is limited to ensuring that that the expenses are allowable in accordance with s. 7, have been incurred as claimed and are paid in proportion to the parties’ respective income.

[178] Over and above the 12 briefs of documents relied upon by the Respondent, as referred to above, the Respondent provided the Court with 5 additional briefs which he submitted as proof of his s. 7 expenditures. He did not take the Court through the briefs. He did not demonstrate that the documents therein prove that the expenses as claimed properly fall under s. 7 and were incurred or paid by him. Rather, he left it to the Court to review the multitude of paper and satisfy itself as to his evidentiary burden.

[179] A review of the briefs indicates that the Respondent has mischaracterized many of his stated expenditures as s. 7 expenses. For example, listed therein are the children’s birthday gifts, dinners and parking charges. These expenses do not properly fall within s. 7 of the Guidelines. The paperwork submitted also reflects some properly claimable s. 7 expenses. As noted above, many such expenses were paid through Stratus and not by the Respondent personally.

[180] I accept the summary of s. 7 expenses incurred by the Respondent from 2000 to date, as submitted and accepted by the Applicant as follows:

Year	Total Expenses
2000	$255.00
2001	$589.38
2002	$900.00
2003	$1,563.09
2004	$2,073.56
2005	$2,933.53
2006	$8,228.30
2007	$4,000.00
2008	$950.00
2009
2010	$3,525.84
2011	$19,155.30
2012	$7,429.16
2013	$9,666.37
2014	$21,808.92
2015 [to date]	$2,364.85
TOTAL	$85,443.30

[181] The Applicant’s evidence with respect to the amount of s. 7 expenses she paid in the years 2000 through to 2015 stands uncontested. She satisfied her evidentiary burden of proving that the expenses properly fall under s. 7, were incurred and paid by her and she produced documents to support her oral evidence in this regard. A summary of the s. 7 expenses incurred by the Applicant from 2000 to date is as follows:

Year	Total Expenses
2000	$603.05
2001	$4,667.97
2002	$4,053.21
2003	$6,832.67
2004	$8,462.11
2005	$4,924.78
2006	$2,891.41
2007	$6,109.13
2008	$12,070.74
2009	$11,273.21
2010/2011	$56,194.20
2012	$2,369.77
2013	$12,888.08
TOTAL	$133,340.33

[182] As set out in s. 7(2), the Court must strive to ensure that the parties share the children’s expenses in proportion to their respective incomes. I accept the Applicant’s calculation of the Respondent’s and the Applicant’s respective percentage share of s. 7 expenses for the years 2000 to 2015 based on the parties’ respective incomes, and the proper level of spousal and s. 3 child support as determined above and as calculated in the Divorcemate Calculations as follows:

Year	Respondent’s Percentage Share	Applicant’s Percentage Share
2000	75.9%	24.1%
2001	75.8%	24.2%
2002	72.9%	27.1%
2003	56.1%	43.9%
2004	59.7%	40.3%
2005	63.3%	36.7%
2006	59.5%	40.5%
2007	59.1%	40.9%
2008	85%	15.0%
2009	73.8%	26.2%
2010	67.6%	32.4%
2011	64.0%	36.0%
2012	64.4%	35.6%
2013	59.6%	40.4%
2014	65.4%	34.6%
2015	65.4%	34.6%

[183] Considering the s. 7 expenses incurred and claimable by the Applicant from 2000 to date and the parties’ respective percentage shares of the said expenses as set out above, the Respondent owes $89,047.08 in arrears of s. 7 child support to the Applicant as presented by the Applicant and accepted by the Court:

Year	Total Expenses incurred by Applicant	Respondent’s Percentage Share	Arrears owing by the Respondent to the Applicant based on Percentage Share
2000	$603.05	75.9%	$457.71
2001	$4,667.97	75.8%	$3,538.32
2002	$4,053.21	72.9%	$2,954.80
2003	$6,832.67	56.1%	$3,833.13
2004	$8,462.11	59.7%	$5,051.88
2005	$4,924.78	63.3%	$3,117.39
2006	$2,891.41	59.5%	$1,720.39
2007	$6,109.13	59.1%	$3,610.50
2008	$12,070.74	85%	$10,260.13
2009	$11,273.21	73.8%	$8,319.63
2010	$28,097.10	67.6%	$18,993.64
2011	$28,097.10	64%	$17,982.14
2012	$2,369.77	64.4%	$1,526.13
2013	$12,888.08	59.6%	$7,681.30
TOTAL ARREARS OF SECTION 7 CHILD SUPPORT:			$89,047.08

[184] Considering the s. 7 expenses incurred and claimable by the Respondent from 2000 to date and the parties’ respective percentage shares of the said expenses as set out above, the Applicant owes $31,109.80 in arrears of s. 7 child support to the Respondent as presented by the Applicant and accepted by the Court:

Year	Total Expenses incurred by Respondent	Applicant’s Percentage Share	Arrears owing by the Applicant to the Respondent based on Percentage Share
2000	$255.00	24.1%	$61.46
2001	$589.38	24.2%	$142.63
2002	$900.00	27.1%	$243.90
2003	$1,563.09	43.9%	$686.20
2004	$2,073.56	40.3%	$835.64
2005	$2,933.53	36.7%	$1,076.61
2006	$8,228.30	40.5%	$3,332.46
2007	$4,000.00	40.9%	$1,636.00
2008	$950.00	15.0%	$142.50
2009		26.2%
2010	$3,525.84	32.4%	$1,142.37
2011	$19,155.30	36.0%	$6,895.91
2012	$7,429.16	35.6%	$2,644.78
2013	$9,666.37	40.4%	$3,905.21
2014	$21,808.92	34.6%	$7,545.89
2015 [to date]	$2,364.85	34.6%	$818.24
TOTAL ARREARS OF SECTION 7 CHILD SUPPORT:			$31,109.80

[185] The net result therefore is that the Respondent owes the Applicant arrears of s. 7 child support in the amount of $57,937.28.

H) Determination of prejudgment interest owing by the Respondent to the Applicant on arrears of spousal support and child support

[186] The Applicant seeks the payment of prejudgment interest from the Respondent on his arrears of both spousal and child support. Although not requested by the Respondent, the Applicant states that it is appropriate that the Respondent be credited prejudgment interest on his overpayments in any given year of spousal and child support. The Applicant has calculated the prejudgment interest payable in accordance with the average prejudgment interest rate on an annual basis for each year in question, as set out in the Courts of Justice Act., R.S.O. 1990, c. C.43.

[187] In terms of arrears in spousal support, the Applicant submits that the net prejudgment interest owing by the Respondent to the Applicant up to June 4, 2015 is $17,061.66 ($30,093.46 –13,031.80), demonstrated as follows:

a) Owed by the Respondent to the Applicant

Year	Average Interest Rates	Arrears for the Calendar Year	Prejudgment Interest owed for the Calendar Year	Prejudgment Interest owed up to June 4, 2015
2000	5.6%	$5,034	$281.90	$4,348.21
2005	2.8%	$32,376	$906.53	$9,450.26
2006	4%	$10,932	$437.28	$4,121.21
2007	4.6%	$13,812	$635.35	$5,352.61
2009	1.2%	$8,604	$103.25	$663.35
2010	0.7%	$16,428	$115.00	$623.84
2011	1.3%	$8,436	$109.67	$485.25
2012	1.3%	$42,168	$548.18	$1,877.33
2013	1.3%	$2,460	$31.98	$77.54
2014	1.3%	$151,164	$1,965.13	$2,799.64
2015 to June 4, 2015	1.1%	$62,985	$294.22 [up to June 4, 2015]	$294.22 *155 days
TOTAL PREJUDGMENT INTEREST ON ARREARS:				$30,093.46

b) Owed by the Applicant to the Respondent

Year	Average Interest Rates	Overpayment for the Calendar Year	Prejudgment Interest owed for the Calendar Year	Prejudgment Interest owed up to June 4, 2015
2001	5.2%	$6,516	$338.83	$4,887.77
2002	2.6%	$9,000	$234.00	$3,141.20
2003	3.2%	$9,000	$288.00	$3,578.45
2004	2.6%	$420	$10.92	$124.77
2008	3.9%	$4,488	$175.03	$1,299.61
TOTAL PREJUDGMENT INTEREST ON OVERPAYMENT:				$13,031.80

[188] In terms of arrears in s. 3 child support, the Applicant submits that the net prejudgment interest owing by the Respondent to the Applicant up to June 4, 2015 is $34,550.24 ($36,152.99 – $1,602.75)demonstrated as follows:

a) Owing by the Respondent to the Applicant

Year	Average Interest Rates	Arrears for the Calendar Year	Prejudgment Interest owed for the Calendar Year	Prejudgment Interest owed up to June 4, 2015
2000	5.6%	$7,408	$414.85	$6,398.92
2001	5.2%	$4,488	$233.38	$3,366.43
2002	2.6%	$7,848	$204.05	$2,739.30
2003	3.2%	$6,252	$200.06	$2,485.68
2004	2.6%	$2,568	$66.77	$762.82
2005	2.8%	$12,312	$344.74	$3,593.80
2006	4%	$13,728	$549.12	$5,175.22
2007	4.6%	$16,404	$754.58	$6,357.08
2008	3.9%	$17,232	$672.05	$4,989.74
2009	1.2%	$2,628	$31.54	$202.63
2010	0.7%	$2,144	$15.00	$81.37
TOTAL PREJUDGMENT INTEREST ON ARREARS:				$36,152.99

b) Owing by the Applicant to the Respondent

Year	Average Interest Rates	Overpayment for the Calendar Year	Prejudgment Interest owed for the Calendar Year	Prejudgment Interest owed up to June 4, 2015
2011	1.3%	$12,000	$156.00	$690.25
2012	1.3%	$12,000	$156.00	$534.25
2013	1.3%	$12,000	$156.00	$378.25
TOTAL PREJUDGMENT INTEREST ON OVERPAYMENT:				$1,602.75

[189] In terms of arrears in s. 7 child support, the Applicant submits that the net prejudgment interest owing by the Respondent to the Applicant up to June 4, 2015 is $11,904.22 ($15,740.91— $3,836.69), demonstrated as follows:

a) Owing by the Respondent to the Applicant

Year	Average Interest Rates	Arrears for the Calendar Year	Prejudgment Interest owed for the Calendar Year	Prejudgment Interest owed up to June 4, 2015
2000	5.6%	$457.71	$25.63	$395.30
2001	5.2%	$3,538.32	$183.99	$2,653.99
2002	2.6%	$2,954.80	$76.82	$1,031.28
2003	3.2%	$3,833.13	$122.66	$1,524.01
2004	2.6%	$5,051.88	$131.35	$1,500.63
2005	2.8%	$3,117.39	$87.29	$909.92
2006	4%	$1,720.39	$68.82	$648.60
2007	4.6%	$3,610.50	$166.08	$1,399.17
2008	3.9%	$10,260.13	$400.15	$2,970.98
2009	1.2%	$8,319.63	$99.84	$641.44
2010	0.7%	$18,993.64	$132.96	$721.26
2011	1.3%	$17,982.14	$233.77	$1,034.35
2012	1.3%	$1,526.13	$19.84	$67.95
2013	1.3%	$7,681.30	$99.86	$242.13
TOTAL PREJUDGMENT INTEREST ON ARREARS OF SECTION 7 CHILD SUPPORT:				$15,740.91

b) Owing by the Applicant to the Respondent

Year	Average Interest Rates	Arrears for the Calendar Year	Prejudgment Interest owed for the Calendar Year	Prejudgment Interest owed up to June 4, 2015
2000	5.6%	$61.46	$3.44	$53.06
2001	5.2%	$142.63	$7.42	$107.03
2002	2.6%	$243.90	$6.34	$85.11
2003	3.2%	$686.20	$21.96	$272.85
2004	2.6%	$835.64	$21.73	$248.26
2005	2.8%	$1,076.61	$30.15	$314.30
2006	4%	$3,332.46	$133.30	$1,256.31
2007	4.6%	$1,636.00	$75.26	$634.04
2008	3.9%	$142.50	$5.56	$41.28
2010	0.7%	$1,142.37	$8.00	$43.40
2011	1.3%	$6,895.91	$89.65	$397.35
2012	1.3%	$2,644.78	$34.38	$117.74
2013	1.3%	$3,905.21	$50.77	$123.10
2014	1.3%	$7,545.89	$98.10	$139.76
2015	1.1%	$818.24	$3.10	$3.10
TOTAL PREJUDGMENT INTEREST ON ARREARS OF SECTION 7 CHILD SUPPORT:				$3,836.69

[190] Section 128 of the Courts of Justice Act provides the Court authority to award prejudgment interest as follows:

Prejudgment interest

128. (1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.

Exception for non-pecuniary loss on personal injury

(2) Despite subsection (1), the rate of interest on damages for non-pecuniary loss in an action for personal injury shall be the rate determined by the rules of court made under clause 66 (2) (w).

Special damages

(3) If the order includes an amount for past pecuniary loss, the interest calculated under subsection (1) shall be calculated on the total past pecuniary loss at the end of each six-month period and at the date of the order.

Exclusion

(4) Interest shall not be awarded under subsection (1),

(a) on exemplary or punitive damages;

(b) on interest accruing under this section;

(c) on an award of costs in the proceeding;

(d) on that part of the order that represents pecuniary loss arising after the date of the order and that is identified by a finding of the court;

(e) with respect to the amount of any advance payment that has been made towards settlement of the claim, for the period after the advance payment has been made;

(f) where the order is made on consent, except by consent of the debtor; or

(g) where interest is payable by a right other than under this section.

[191] Section 130 of the Courts of Justice Act provides for the exercise of the Court’s discretion in determining whether to award prejudgment interest and in what amount as follows:

Discretion of Court

130. (1) The court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129,

(a) disallow interest under either section;

(b) allow interest at a rate higher or lower than that provided in either section;

(c) allow interest for a period other than that provided in either section.

Idem

(2) For the purpose of subsection (1), the court shall take into account,

(a) changes in market interest rates;

(b) the circumstances of the case;

(c) the fact that an advance payment was made;

(d) the circumstances of medical disclosure by the plaintiff;

(e) the amount claimed and the amount recovered in the proceeding;

(f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and

(g) any other relevant consideration.

[192] The law is such that awards of retroactive support in family law cases can attract an award of prejudgment interest at the discretion of the trial judge : Burgess v. Burgess, [1995] O.J. No. 2242, at para.23; Vanasse v. Sequin, [2009] W.D.F.L. 1489; Greco-Wang v. Wang, 2015 ONSC 3444, at para.86.

[193] The Respondent’s true available income for support purposes was not available to the Applicant until October 2014 when, in accordance with Court Order, the Respondent disclosed the level of rental income generated by 28 Atlantic and sheltered in Stratus. The Respondent offered no objective evidence to demonstrate he was unable to pay support from 2000 to 2015. Rather, the evidence is such that he took measures to conceal his true available income for support and repeatedly fell into arrears of the interim support Order. In these circumstances the Applicant is entitled to prejudgment interest on the award for retroactive support. I accept the calculations of the Applicant as demonstrated above.

I) Equalization of the parties’ net family property as at September 1, 1997

[194] The Applicant submits that the Respondent owes her an equalization payment of $218,732.09. The Respondent submits that Applicant owes him an equalization payment $56,489.47. The issues in dispute are reviewed and resolved below. For reasons that follow I have concluded that the Respondent owes the Applicant an equalization payment of $62,731.69. A Net Family Property Worksheet consistent with my conclusions is attached as Schedule B.

i) Notional costs of disposition of 40 Ellis Park Road

[195] The Applicant submits that notional costs of 5% for real estate commission should be accounted as debt for each of the Applicant and the Respondent as at the valuation date, in accordance with their respective ownership interest. The Respondent led no evidence at trial on this issue and made no submission in this regard. I agree with the Applicant.

ii) Notional costs of disposition of 47 Mountview

[196] The property was jointly owned at the time of marriage. The notional costs of disposition are properly attributed equally therefore to both parties.

iii) The parties’ respective interests in McWatt Anderson as at the valuation date

[197] The parties agree that pursuant to a report prepared for the Respondent by Pettinelli Matroluisi dated February 2, 2012, and accepted by the Applicant, the value of McWatt Anderson as at valuation date is $133,200. The Applicant submits that 100% should be allocated to the Respondent as when the Applicant left McWatt Anderson she did not receive consideration for her 45% interest in the company. Rather, the Respondent diverted all assets of McWatt Anderson as well as its work product and goodwill to his newly formed business McWatt & Associates. The Respondent submits that the value should be shared in accordance with the respective registered business interest; 45% to the Applicant and 55% to the Respondent. He denies that McWatt & Associates took over the assets of McWatt Anderson and states that he was left alone to handle the debts associated with McWatt Anderson.

[198] The Respondent testified that the business of McWatt Anderson ceased on June 30, 2000 and that he started McWatt & Associates effective June 30, 2000. A comparison of the financial statement of McWatt Anderson for fiscal 1999 and the financial statement for McWatt &Associates for fiscal 2000, 2001, 2002 demonstrates that, contrary to the Respondent’s assertions, McWatt & Associates did take over and completely assume the assets of McWatt Anderson. For example, for its first fiscal year-end 2001, McWatt& Associates shows inventory of $57,242 and revenue of $146,279. The Respondent also continued to access the bank account of McWatt Anderson, as referenced above, to write cheques to himself, his new business and Stratus. The Respondent admitted that McWatt & Associates “took over” some of the space of McWatt Anderson and its office equipment and furniture effective June 2000. The financial statements reflect that McWatt & Associates retained for its own use all of the computers leased by McWatt Anderson as well as McWatt Anderson’s work in progress. The Respondent provided no objective evidence of any payables of McWatt Anderson he had to pay personally and he admitted that the Applicant did not take any property of McWatt Anderson with her which she would have needed to do her work from home.

[199] The Applicant’s evidence is that she received no compensation from the Respondent for her 45% shareholding in McWatt Anderson. There is no evidence to contradict this statement. Instead, the objective evidence demonstrates that the Respondent simply changed the name of the joint business to reflect the Applicant’s departure and assumed all of the assets and goodwill of the joint business without a second thought to the Applicant’s efforts in building the business or to her right to her percentage interest in the assets. The fact that the Applicant was able to continue to work for some previous clients of McWatt Anderson in the short-term is not sufficient to justify the Respondent keeping all of the assets of the joint business for his own use.

[200] For this reason, the Applicant claims under Section 5(6) of the Family Law Act for an unequal division of the value of McWatt Anderson as at the valuation date. Section 5(6) of the Family Law Act provides:

The Court may award 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,

(g) any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property.

[201] In Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432, the Court of Appeal for Ontario considered whether and in what circumstances a market-driven post valuation date change in the value of a spouse’s assets may be taken into account in determining whether an equalization of family property is unconscionable under s. 5(6) of the Family Law Act. In that case, the husband had carried on a very profitable textile business, the success of which had enabled him and his wife to live a luxurious lifestyle. At the time of their separation after 24 years of marriage, the husband’s shareholdings in the business were valued at between $9.5 and $11.25 million. By the time of the trial, the value of the assets had dropped dramatically to somewhere between $1.87 and $2.6 million. The decrease was not due to any fault on the part of the husband and was attributed entirely to shifting market forces that had affected the Canadian textile industry generally. At trial, the husband argued that equalizing his and his wife’s net family properties on the basis of the separation-date value of his assets would be “unconscionable” under s. 5(6) of the Family Law Act, as it would require him to make an equalization payment that exceeded his total net worth. The trial judge ruled that she could not take a market-driven post-separation date decline in the value of the husband’s assets into account and ordered to him pay the large sum of $4,129,832. In finding that the trial judge erred in refusing to take into account the market-driven downward impact on the value of Mr. Serra’s asserts, Blair J.A. explained at paras. 46 and 47:

In my opinion, a court may take into account a post-separation date change in the value of a spouse’s assets, and the circumstances surrounding such a change, for purposes of determining under s. 5(6) of the Family Law Act whether equalizing net family properties would be unconscionable. An order for an unequal division of net family properties is exceptional, however, and may only be made on such a basis (i) where the circumstances giving rise to the change in value relate (directly or indirectly) to the acquisition, disposition, preservation, maintenance or improvement of property (s. 5(6)(h)), and (ii) where equalizing the net family property would be unconscionable, having regard to those circumstances (taken alone or in conjunction with other factors mentioned in s. 5(6)).

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”: see Merklinger v. Merklinger (1992), 11 O.R. (3d) 233 (Ont. Gen. Div.), aff'd (1996), 30 O.R. (3d) 575 (Ont. C.A.); Roseneck v. Gowling (2002), 62 O.R. (3d) 789 (Ont. C.A.);McDonald v. McDonald (1988), 11 R.F.L. (3d) 321 (Ont. H.C.); and LeVan.

[202] In rejecting the proposition that the enumerated circumstances in s. 5(6) of the Family Law Act embody and reflect fault-based conduct, the Court reasoned at paras. 56 and 58:

Secondly, neither the purpose or object of the s. 5 equalization payment scheme, the s. 5(6) exception, nor of the Act itself call for such an interpretation. The design of the legislation is to promote the goals of certainty, predictability and finality in the resolution of property matters following the breakdown of marriage. This, in turn, is founded on the central premise articulated in s. 5(7) that “inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of [their joint] responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6).” (emphasis added)

There is no principled reason that I can see, given the language of the Act and its purpose or objects, to confine the word “unconscionable” in s. 5(6) only to circumstances arising from fault-based conduct on the part of one of the spouses. Although unconscionable conduct is obviously an appropriate consideration in determining whether equalizing the net family properties would be unconscionable, in my opinion the true target of the limited exception to the general rule is a situation that leads to an unconscionable result, whether that result flows from fault-based conduct or not.

[203] I agree that the Respondent assumed the assets of the joint business into McWatt & Associates and that the Applicant did not receive compensation for her 45% interest in McWatt Anderson. In my view, although the Respondent’s conduct can be accurately described as fault based, considering all of the circumstances, I am not prepared to conclude that the result is of a sufficient level of unconscionability to warrant an unequal division. McWatt & Associates is not a party to this action. The Applicant made no efforts in 2000 or 2001to recoup the assets of the joint business but rather chose to motion the Court for interim support and soldier on to attempt self-sufficiency through her own business. I am unable to conclude therefore that the result as submitted by the Respondent is unconscionable. For the purposes of the division of net family property, I have concluded that the value of McWatt Anderson be shared in accordance with the respective registered business interest: 45% to the Applicant and 55% to the Respondent.

iv) Loan receivable by the Respondent from McWatt Anderson

[204] The Respondent admits that this debt was owing to him at valuation date but asserts that it is uncollectable. The objective evidence, however, asserts otherwise. The payable is shown by McWatt Anderson as a liability in its financial statement for fiscal 1997 and is not shown in its financial statement for fiscal 1998. It is a reasonable inference therefore that the debt was repaid to the Respondent by McWatt Anderson during fiscal 1998.

v) Bank and investment accounts held by the parties as at the date of marriage and valuation date

[205] The Applicant provided documentary and oral evidence to prove the ownership and value of all bank and investment accounts, Canada Savings Bonds and RRSP accounts held by her at the date of marriage. The Respondent led no evidence to the contrary. I have concluded that the Applicant met her evidentiary burden to prove her assets in dispute owned by her on the date of marriage.

[206] The Respondent led no evidence to support his claimed ownership of bank or investment accounts, RRSP accounts, USD cash or Canada Savings Bonds in dispute at the date of marriage. The Respondent’s income tax returns for the taxation years 1985 to1997 do not corroborate the Respondent’s assertion of such assets in his name alone at the date of marriage.

vi) Joint mortgage on 40 Ellis Park

[207] The parties agree that on the valuation date the value of the mortgage on the matrimonial home is $134,394.72. The Respondent submits that the debt should be allocated in accordance with title: 60% to him, 40% to the Applicant. The Applicant submits that 100% of the debt should be included in her net family property as she paid the mortgage from the valuation date until its date of discharge in April 2007, without any contribution form the Respondent. Further, the parties were jointly and severally liable under the mortgage.

[208] The Applicant again relies on the Court’s jurisdiction under section 5(6) of the Family Law Act. I have imputed income to the Respondent and made an award for retroactive spousal support between valuation date and April 2007. The Applicant had exclusive possession of the matrimonial home since valuation date and the Respondent’s request for occupation rent has been denied. Considering all of the circumstances, I am not prepared to conclude that dividing the mortgage in accordance with ownership leads to an unconscionable result. I have concluded that it is not unconscionable for the purposes of the division of net family property that the mortgage on the matrimonial home be shared in accordance with the respective ownership interest: 40% to the Applicant and 60% to the Respondent.

vii) Joint line of credit

[209] The parties had a joint line of credit with the Canada Trust Co. Mortgage Co. There is an issue between the parties as to whether the debt existed as of the valuation date. As it is agreed that it was a joint debt, it would have no effect on the net family property in any event.

viii) The 1994 Crown Bowrider at valuation date

[210] The value of the 1994 Crown Bowrider as of the valuation date is agreed at $13,000. The Respondent wishes to deduct the value. The Applicant submits that it should not be deducted. The Respondent has never denied ownership of the family boat. He did, however, state that it was stolen in his sworn financial statement of October 15, 2014, and in all financial statements thereafter, he notes that the boat has been in storage as of 2000. The Respondent testified that the reference to the boat being stolen was an error. He then stated that the boat was seized for storage fees. I do not accept this statement. The Respondent provided no evidence of this, other than his statement. I agree with the Applicant that the value of the boat should not be deducted.

ix) 1986 Mercedes at valuation date

[211] The value of the 1986 Mercedes as of the valuation date is agreed at $3,000. The Respondent declared himself as owner at valuation date in financial statements sworn on May 30, 2000 and August 16, 2000. However, he denied ownership in all financial statements thereafter. During cross-examination, the Respondent admitted ownership of the 1986 Mercedes on valuation date.

x) Applicant’s engagement ring at valuation date

[212] The Applicant submits that the value at valuation date for her engagement is properly $8,000 as this is the amount she received when she sold it in 2002. The