COURT FILE NO.: FS-08-344363 & CV-08-366516

DATE: 20150714

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

A.A.

Applicant

– and –

z.g.

Respondent

Stephen Codas, Roslyn Tsao and Daniella Wald, for the Applicant

Harold Niman and Deborah MacKenzie, for the Respondent

AND BETWEEN:

S.A.

Plaintiff

– and –

a.a. & z.g.

Defendants

Andrea Robertson, for the Plaintiff

Stephen Codas, Roslyn Tsao and Daniella Wald, for the Defendant A.A.

Harold Niman and Deborah MacKenzie, for the Defendant Z.G.

HEARD at Toronto: November 13-23, 2012, December 6, 2012, February 25-28, 2013, October 7, 2013, December 9-19, 2013, January 6-30, 2014, April 7-14, 2014, June 23, 2014 and July 28-30, 2014.

Reasons for judgment

For publication purposes, to preserve identity of the child initials are used in this judgment whenever names of the family members are referred to.

NATURE OF THE ACTIONS. 4

BACKGROUND.. 5

Facts. 5

Trial Background. 6

1..... THE MORTGAGE ACTION.. 6

The Issues. 6

Position of the Father 7

Position of the Wife. 7

Position of the Husband. 7

Analysis. 8

Financing Issues. 8

Assessment of the Evidence. 8

The mortgage and construction. 8

The Husband’s Business Interests: 808 and D[…] Inc. 11

Credibility. 13

Finding of Fact 13

Tracing of funds. 15

Intermingling of Funds. 15

Findings of Fact and Law.. 16

Validity and enforceability of the mortgage. 16

Conclusions. 20

Alternative claim: indemnification. 20

Costs. 20

2. THE DIVORCE/FAMILY LAW ACTION.. 21

Issues. 21

Position of the Husband. 22

Position of the Wife. 23

Custody, Access and Parenting. 25

Property. 27

The Matrimonial Home Mortgage. 28

Date of Separation. 29

Equalization Payment 30

Legal Framework. 30

Property Issues. 31

Ownership of D[…] Inc. 31

Value of D[…] Inc. 34

Ownership of 808277 Ontario Ltd. (“808”) 35

Value of 808 for Equalization. 40

Real Estate Commissions on Matrimonial Home, and the Wife’s Profit on the Sale. 41

Bank Accounts and Savings. 42

Valuation Date Debts and Liabilities. 44

Income Tax Liability to CRA.. 45

Quantum of Equalization Payment 46

General Household Items and Furniture. 47

Support 48

The issues. 48

Child Support 48

Spousal Support 48

Incomes of the parties for support purposes. 50

The Husband’s Income. 51

Imputing Income. 57

Husband’s Lifestyle. 59

The Wife’s Income. 62

Wife’s Lifestyle. 64

Findings of Income. 64

Quantum of Support 65

Child Support 65

Spousal Support 65

Lump Sum Spousal Support 66

Security for Support 66

Life insurance. 67

Retroactive Child and Spousal Support 67

Conclusions and Disposition. 68

Costs. 69

Kruzick J.

NATURE OF THE ACTIONS

[1] There are two actions tried together: (1) a divorce/family law action (Court File No. FS-08-344363) brought by the Applicant, A.A. (husband), and (2) a mortgage action (Court File No. CV-08-366516) by S.A. (“father”) against the Defendants, the husband and Z.G. (“wife”). The actions were heard one after another and the evidence as heard in one applied to the other.

1. Mortgage Action

[2] The Plaintiff father, S.A., makes a civil claim against the husband and wife pursuant to a mortgage which he held on the former matrimonial home of the Defendant spouses and which was entered into by them. The husband did not defend the father’s action. The wife claims the mortgage was a sham and was never intended to be repaid by the parties to the father.

2. Divorce/Family Law Action

[3] The husband and the wife make corollary relief claims, under the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.) and the Family Law Act, R.S.O. 1990, c F.3. Their claims are more particularly set out below.

[4] The divorce was granted by me, on April 14, 2014.

BACKGROUND

Facts

[5] The husband was born on […], 1966. The wife was born […], 1964. At the conclusion of the trials, the husband was 48 and the wife 50.

[6] The husband and wife were married on March 30, 1991.

[7] Their son J.A. was born […], 1998.

[8] This was a long marriage and relationship of over seventeen years. The (turbulent) relationship was characterized by numerous disagreements, at least two previous separations and many incidents culminating in the final separation. As with almost all the issues in this trial, the parties do not agree on the date of separation. The husband takes the position that the date of separation is October 31, 2007. The wife maintains the date of separation is June 12, 2008. They do agree that they lived in the home, but separately, until December 2008 when the husband moved out.

[9] The husband was employed by D[…] Inc.. (“D[…] Inc.”). The company manufactures decorative mouldings for the construction industry. D[…] Inc. was owned by the husband at the date of separation. At trial the husband took the position the company is now owned by his business associate and former partner, V.C.. The wife is a residential real estate agent and broker employed by the S[…].

[10] At the date of separation, the husband and wife lived at 10 S[…] Road, Toronto. In April 2005, they purchased the home for a price of $1,030,000. They paid a deposit of $30,000, made a down payment of $300,000 and obtained financing by a first mortgage of $700,000.

[11] The original house was then demolished and a new one was constructed by the husband and wife.

[12] On January 6, 2006, a further mortgage in the amount of $800,000 was registered against the former matrimonial home of the husband and wife, with the father as mortgagee. The mortgage contained no payment provisions during its term. It was without interest to the last payment. On July 1, 2006, the principal balance was due and payable.

[13] When the parties separated, the mortgage to the father remained unpaid. The father’s first demand for repayment occurred in August 2008. In November 2008, the father sued the husband and the wife.

[14] On March 23, 2009, the father obtained default judgment against the husband, who did not defend the action. The wife defends the claim. The father obtained judgment in the amount of $871,243.83 plus costs of $1,525. Once the father obtained judgment against the husband, the father brought a summary judgment motion against the wife. The wife successfully defended the summary judgment motion and was awarded costs.

[15] The father’s mortgage action against the wife was consolidated with the divorce/family law proceeding pursuant to an order of Czutrin J., dated April 17, 2009. The father’s right to enforce the judgment against the wife was stayed pursuant to Minutes of Settlement converted into a court order dated April 7, 2009.

[16] The house was sold in 2010. The firm of Epstein Cole LLP held the amount of $800,000 in trust on account of the father’s claim. Pursuant to a letter of credit securing the amount of $800,000, the funds were paid to the father.

Trial Background

[17] The trial of these two actions commenced the same day. The matters were tried one following the other with the evidence in one also serving in the other. The trials took over seven weeks of court time. Unfortunately, the time originally set aside for the trials was grossly underestimated. Given the issues raised, the availability of the counsel, the availability of witnesses and the court’s schedule, the trial was protracted. Countless volumes of documents and many bankers’ boxes account for some 420 exhibits in the trials.

[18] Needless to say, while there was an agreed statement of facts prepared and filed as one of the exhibits, the parties agree on very little. The agreed statement of facts is attached to these reasons as “Appendix A.” In essence, this is a case that turns on credibility, where the parties paint diametrically different pictures of their affairs.

[19] To their credit, notwithstanding these obstacles, counsel worked well together. They were at all times courteous, cooperative and professional in their conduct with one another and to the court. Unfortunately, this is one of those cases that should have settled, but where the parties are driven by their sustained animosity, polarized views and determination to discredit the other. In my fact-finding role I am faced with the contradictory evidence of the parties, the witnesses and the respective expert witnesses. While almost every witness was referred to numerous documents and exhibits, I am nevertheless left with the task of assessing the evidence and whether it is sufficient to prove the facts in issue to the appropriate standard. My role is to assess credibility based on the evidence as put before me, mindful of the themes in the evidence and the perceived cultural imperatives, family interactions and the unique relationships of the parties.

[20] In these reasons, I deal with the two actions separately however my findings of fact in one apply to the other.

1. THE MORTGAGE ACTION

The Issues

[21] The issues in the mortgage action of the father are:

(a) whether the mortgage registered on title of the former matrimonial home of the husband and wife, municipally known as 10 S[…] Road, Toronto, Ontario, in favour of the father is valid and enforceable against the wife; and

(b) whether the husband should be required to indemnify the wife if the mortgage is valid and enforceable against the wife.

Position of the Father

[22] It is the position of the father that the mortgage in the amount of $800,000 was valid.

[23] The father maintains he advanced well in excess of the $800,000 to the husband and wife once the old house on their property was demolished for the construction of the new matrimonial home.

[24] The father maintains the wife knew the mortgage was valid, payable and enforceable. He argues that the wife is a sophisticated real estate agent with knowledge of property related matters. The father submits that the wife was also employed in his construction business and in the construction business of her brother so that she is well versed in construction, real estate and the legal obligations that flow from a mortgage. The father’s position is that the wife was well aware of construction costs which related to the former matrimonial home and the arrangements that the father made with the husband and wife to assist them financially in the construction of their new home.

Position of the Wife

[25] It is the position of the wife that she signed the mortgage with the father because she was forced to do so by the husband.

[26] The wife maintains that she did so having been coerced by the husband and without independent legal advice. She maintains that the lawyer with whom she consulted acted for all the parties to the mortgage.

[27] The wife maintains that she entered the mortgage in haste and without any choice in the matter. She takes the position that given traditional Iranian culture of the family, she obeyed her husband and found herself obliged to do as her husband and his father requested.

[28] The wife acknowledges that the father was a source of some of the construction funds. The position of the wife is that most of the funding was advanced by a company owned by the husband, being 808276 Ontario Inc. (“808”). It is her position any funds advanced by the father were either earned by the husband and paid to 808 or gifted to the husband and the wife.

Position of the Husband

[29] The husband supports the father and takes the position that the funds were paid to the husband and the wife and secured by the mortgage so that they are indebted to the father.

[30] The husband states that during the marriage and since separation his father has been generous to him. To support the father’s position that he is indebted to his father, in the husband’s sworn financial statements, the husband lists a debt owing to his father including the mortgage debt as $400,000 owed by each party. He also lists additional loans from his father and 808. The husband assumes responsibility for half of the mortgage judgment taking the position that the wife should bear half.

Analysis

History of the Mortgage

[31] The husband and wife admit that the mortgage relates to their matrimonial home at the time of separation. When they purchased the house in April 2005, they obtained a first mortgage of $700,000. Shortly after the purchase of the S[…] property, the husband testified that his father suggested to him that the wife sign a marriage contract. The husband then made the request and the wife refused. Both the husband and wife admit that the marriage contract was requested, but refused by the wife.

[32] In July 2005, the husband and wife decided to demolish the original home on the S[…] property and build a new home.

Financing Issues

[33] The husband’s evidence was that in order to fund the construction, money was advanced by the father.

[34] The wife’s evidence was that they decided to undertake the project because they had access to substantial funds to undertake the construction of the new home.

[35] The wife evidence supports that around this time the husband asked her to enter a marriage contract. When she refused, the husband insisted that the wife sign a mortgage in favour of the father. The wife’s evidence was that she was not in favour of entering into the mortgage as she did not believe it was necessary. The husband told her that the mortgage was meant to protect them against potential lien claimants.

[36] The husband and wife wanted to proceed with the construction. She testified she found herself with no options given the circumstances. With a conventional first mortgage in place, the second mortgage was then signed and registered on title against the matrimonial home in favour of the father.

Assessment of the Evidence

The mortgage and construction

[37] The position of the husband was that the mortgage from the father was necessary because the couple would not qualify for financing to undertake the construction. There was no evidence of any effort by the parties to get an arm’s length conventional mortgage to finance the construction project from an outside lender. In fact, Steven Ranot (“Ranot”), the evaluator called by the husband, testified to the husband’s 2005 income as being between $368,000 and $415,000, which may have allowed them to qualify for a second mortgage with a commercial lender.

[38] The wife’s evidence was that there was no expectation that the father was advancing funds because they were entering the mortgage. The wife testified that there was no expectation, at least on her behalf, that this mortgage would dilute the couple’s equity in the property. I accept her evidence that she relied on the husband’s representations that this mortgage was a formality to protect them against third-party creditors. The explanation is plausible given the various trades involved in the construction.

[39] Her evidence, which I accept, is that she reluctantly agreed to sign the mortgage. The wife testified that she was afraid and concerned for what would happen to her and the couple’s plan if she did not accommodate the husband and father by entering the mortgage. She also testified that she did not want to show any disrespect for the father, whom she liked and esteemed.

[40] The evidence supports that it was the father who arranged for the mortgage documents to be prepared and he retained the solicitor, Mr. Donald Grant.

[41] When the mortgage to the father was executed, the same lawyer, Mr. Grant, acted for the husband, the wife and the father. Mr. Grant was well known to the family and had been engaged by them in other transactions. Mr. Grant testified that he advised each of the parties to obtain independent legal advice. Neither of them did. The wife’s evidence was that she does not recall being so advised by Mr. Grant.

[42] The wife testified that the mortgage was prepared and signed in haste and that she did not have a chance to meet with Mr. Grant without her husband being present.

[43] At the time that the mortgage was signed, the $800,000 was not advanced pursuant to the mortgage. Mr. Grant prepared a memorandum to the husband and wife, dated July 5, 2005 which reads:

As you are aware, the Mortgage is in the amount of $800,000.00 bears no interest and is to be advanced on an "as need" basis during the construction of your new home. It matures on July 1^st, 2006. As explained, the Mortgage incorporates by reference the Standard Charge Terms No. 200033. We reviewed these terms and you appeared to understand same. I also provided you with a copy thereof for your records. I understand that the sum of $40,000.00 has already been advanced.

I further explained that it would be in order for you and for Mr. S.A. to seek independent legal advice but you indicated you did not wish to and would not do so.

Finally, I explained that if there arises any difficulty or difference with respect to any advance under the Mortgage or its repayment I would not be in a position to act for any of the parties hereto.

[44] The mortgage was executed in July 2005 and registered against title to the matrimonial home in January 2006. It was due one year after it was executed, on July 1, 2006. There is no evidence to support that repayment was ever discussed with Mr. Grant or by the parties and the father. Mr. Grant’s memorandum refers to the construction, but not to the obligation. In the memorandum he states: “As you are aware, on the instructions of S.A. I have drafted and I am asking you to sign a new Second Charge / Mortgage of Land with respect to the above property”.

[45] The mortgage was put in place before the construction began. It was the father’s evidence that even though the mortgage was for $800,000, during the construction he then advanced funds in excess of $900,000. He testified these advancements were paid either directly to the husband or the wife, or to the contractors or the sub-trades involved in the construction.

[46] When the mortgage became due in July 2006, the father made no demand for any payment from the parties while they were living together. The demand under the mortgage came in August 2008. The husband and wife agree that by that time they were separated. The father’s claim was commenced well after the dates of separation relied upon by the husband and the wife. The husband commenced his divorce and family law claims at the same time. It is argued, and I would agree, that it is not a coincidence that the husband’s divorce application and father’s Statement of Claim to enforce the mortgage were issued on the same day, November 18, 2008.

[47] The delay in enforcement of the mortgage and the coincidence of the date the father brought his claim only confirms that the father would not have pursued this claim if the husband had not started the divorce/family law proceedings.

[48] The wife’s position that there was never any expectation of repayment to the father is believable. She relies on the fact that repayment was never discussed and, more particularly, there were no monthly or other payments made to retire the principal, nor were such payments ever requested.

[49] The only reason the father made the demand for payment on the mortgage, according to the wife, was to protect his son and to pressure her to resolve the family law issues. The wife testified that she wanted to resolve the two actions, but could not accept the terms of her husband.

[50] The father confirmed he took no earlier steps to collect on the mortgage when the husband and wife lived together at the property in issue. The father’s evidence at trial was that he always intended the mortgage to be repaid and that he was aware he had 10 years to collect on the debt, given the provisions of the Real Property Limitations Act, R.S.O. 1990, c. L.15.

[51] In support of his position, the father referred to the fact that during the marriage he lent money to the couple to fund their housing needs. He relies on the fact that a previous home, at 1 Hycrest Avenue, North York, was purchased with mortgage financing from him. It was sold and that mortgage was repaid. That property was purchased in 1999 and sold in 2003. The evidence supports that the mortgage of $160,000 was repaid by the husband and wife and that the mortgage was discharged. The wife did not deny this financing, but then added that all the proceeds of sale of this house were given to the husband by the father and then reused by them for their needs including housing. In fact, the three parties to the mortgage testified that whenever the husband and wife had financial needs, their needs were met and provided for by the father.

[52] It is the father’s position that had he not provided the funds for the construction, the new house would not have been constructed. He relies on the fact that the mortgage was put in place before the construction commenced. While I accept this evidence, I was not convinced that the parties could not have arranged conventional third party financing.

[53] The testimony of the father was that he was prepared to give the couple the money for the construction because the house was an investment and because he believed it would be “a flip”. In other words, the new house would be constructed, and then sold for a profit. The husband supports his father and says it was a house the couple could not afford.

[54] The wife does not agree. She testified this was the family’s dream home and built because they could afford it. The wife said it was a property carefully chosen and a house she and her husband specifically designed to suit them. The neighbourhood met their specific needs and the location was chosen so that their son could attend B[…]. The wife’s evidence is that it was not intended as a property to be “flipped”, but as a home they would live in and to which their son could invite his friends.

The Husband’s Business Interests: 808 and D[…] Inc.

[55] One of the issues that relates to both the mortgage and the divorce/family law matter is the ownership of 808. The father maintains he provided funds to 808 which in turn was the main sources of funds for the construction. The ownership of 808 is questioned by the wife. When 808 was originally incorporated it was owned by the husband. He held a 98% interest in 808 while his father held the remaining 2%. No one else owned this company.

[56] In 1993 and then again in 2003, the shareholdings of 808 were restructured; the father divested himself of his shares and the husband transferred some of his shares to his siblings, ultimately reducing his 98% ownership to 24%. The specific transactions with respect to 808’s shareholdings are analyzed in more detail in the second part of these reasons, in the family law trial. For the purposes of the mortgage action, the question of 808’s ownership is relevant because 808 that funded the construction and paid the sums which the father now claims represent his advances under the mortgage.

[57] The dramatic change in 808’s ownership was never satisfactorily explained, other than that the father wanted it to happen. It was never explained why 808 was not the mortgagee.

[58] Mr. Lloyd Raskina, the father’s accountant, testified with respect to 808. His evidence is that 808 is used by the father as an income splitting tool. Mr. Raskina testified that he advised the father to reduce the husband’s shares in 808 to distance 808 from the husband company, D[…] Inc.. It was never clarified why the father did not simply incorporate a new company for income splitting.

[59] The father and husband take the firm position that 808 is the father’s company and that the father is its controlling mind, although he owns no shares in the company. While the husband and father submitted that the 2003 changes to 808’s shareholdings were done merely to formalize and give effect to a trust arrangement that the family members agreed upon in 1993, no formal trust agreement was ever presented as evidence.

[60] The wife was not involved in the restructure of 808 and, while she does not dispute that the father makes the decisions with respect to the company’s organization, highlights that, given that the father has no ownership interest in 808, he cannot claim that the money he then divested himself of in 808 is his own, or claim that money which came to the husband and wife from 808 results in a debt to him.

[61] The wife’s evidence is that during the period in which the 808 shareholdings were changed, the husband and wife were having marital difficulties. Mr. B.S., who testified at the trial, stated that he was made aware of the difficulties in the marriage around this time. Mr. B.S. is a family friend. He was also the principal of Pegah Construction, the contracting firm that built the new home. He remains close with the husband and the father.

[62] I accept the wife’s evidence that she did not know the details or particulars of 808, believing the company and its income stream always to be the husband’s. The wife believes the restructuring of 808 was part of a scheme to protect the husband and to distance her from his assets.

[63] The husband testified that that there was no consideration for the transfer of his majority shares of 808. This evidence was contradicted, or at least clarified, by Mr. Raskina who recounted that the restricting of 808 was part of the father’s estate planning. The transfer of shares triggered capital gains which were paid for by the company not the husband or the father. I accept that the wife knew nothing of the 808 share transfers and its implications and was not kept in the loop by her husband.

[64] During the marriage, the evidence supports that 808 was paying expenses for the husband and the family including for their son’s private school expenses at B[…]. This supports the wife’s belief that 808 was the husband’s company or treated as such. The payment arrangement with respect to the son’s tuition ended just before separation. The husband argues this change occurred because 808 was not his company, but interestingly enough, 808 has paid for the husband’s personal expenses post-separation.

[65] The father in his evidence confirmed that post-separation over $275,000 was given to the husband through 808. The father very candidly admitted in cross-examination that he does not have much hope of being repaid by the husband for these post-separation payments through 808.

[66] Apart from 808, the husband also had a 100% interest in D[…] Inc.. It too provided the family with an income stream. It would appear from the Minute Book that the husband still owns the shares of D[…] Inc.; however, the evidence of the husband, his business partner and the partner’s wife is that the partner now owns D[…] Inc.. At the date of separation, the husband owned D[…] Inc.. What is important on this issue is that according to the evidence of Mr. Raskina, through D[…] Inc., some $232,000 was paid toward the construction costs of the home, clouding whose funds were used in the construction to which the mortgage is alleged to relate.

Credibility

[67] The father staunchly testified to the validity of his claim against the wife. He presents as a quiet and self-controlled gentleman. While he conveyed an air of being sincere and honest, I have difficulty accepting his version of the evidence. I found his evidence biased and tailored, obviously favouring his son, the husband.

[68] The husband was evasive and reluctant to answer questions in a forthright manner. Even when questioned by his own counsel, his responses were elusive and at times arrogant. The husband conveyed an air of overconfidence and superiority. In contrast to his father who was polite and respectful, the husband maintained an air of disdain for being in a process which he commenced.

[69] While it was argued that that wife was evasive. I found her to be nervous, somewhat timid and hesitant. Although at times emotional, particularly when she testified about J.A., she was, I find, straight forward and forthright.

[70] Where the evidence of the father, husband and wife were contradictory, I preferred the version of the wife. In the end, I had difficulty with the evidence of the husband and his witnesses.

Finding of Fact

[71] At this stage, the father clearly does not like his former daughter-in-law. He acknowledged that, before the mortgage was put in place, he wanted his son to protect himself financially with a marriage contract. When the wife refused to enter a marriage contract, I find the father insisted on this self-serving mortgage in an effort to protect his son. Not only was this request made in anticipation of the construction, but also at a time when the couple were having marital difficulties.

[72] It was the wife’s evidence at trial that culturally the husband’s family is a patriarchal one, where women are kept out of the loop and expected to obey their husbands. In support of her position, on a personal level, she testified to the husband’s infidelities during the marriage, to which she turned a blind eye. In his evidence, the husband boastfully admitted to his infidelities, giving the impression this was acceptable. The wife also testified that the relationship with her husband was physically and emotionally abusive and dominated by him. She testified that the husband tried to choke her when he made persistent demands and she refused to enter a marriage contract. Nevertheless, she testified she remained in the marriage as it was “her place” to do so.

[73] Her relationship with her husband’s father was one in which she was respectful of him. Her evidence was not challenged that she always addressed him formally and referred to him respectfully as “Mr. A.” She was not asked to do otherwise.

[74] Financially, while the wife did the bookkeeping in the family, paid the household bills, wrote cheques and had access to the funds and spending, I find that she found herself in a world where the finances and the financial resources of their family were controlled by her husband and his father.

[75] While the father and the husband attack the wife’s credibility, it is their evidence that gives me difficulty. While the documentation is there to support the father’s claim with respect to the mortgage, I find that it is like wallpaper covering another surface.

[76] I believe the wife’s evidence that when they were discussing building a new home, the father offered to assist the couple with the construction by giving them access to his tradespeople and contractors and to assist them financially. While the wife paid bills related to the construction as it was ongoing, I accept her evidence that she did not pay attention to the source of the funds. I also believe her that she had no idea as to what specific financial arrangements were made, or what money was used to pay the contractors who were engaged.

[77] I accept Mr. Grant’s evidence that given the implication and nature of this mortgage, he informed all three parties to the mortgage that they should have independent legal advice. I also accept this evidence that he was not aware of the difficulties in the marriage or the relationship issues that were then going on. One could not expect Mr. Grant to know of the dynamics of the husband’s and wife’s relationship or the intricate and intertwined way the father and the husband operated their finances and respective businesses.

[78] The husband testified that prior to the mortgage arrangement, he asked Mr. Grant to prepare a marriage contract. Mr. Grant did not recall being approached by the husband about a marriage contract.

[79] I accept the evidence of B.S., the builder/contractor, that both the husband and the wife were involved in the design and construction of the house being built for them. The parties’ engagement included details of design, construction and cost. Mr. B.S. testified that the total amount invoiced to the parties was $1,147,033.44 for the construction and that the records show that some $889,750 of the construction costs came from sources of the father. Mr. B.S.’s evidence, however, does not help with respect to the parties’ mortgage obligation.

[80] Mr. B.S. also testified that he reviewed invoices with the wife. While I accept his evidence that the wife was aware of the invoices rendered and was engaged in making payments, his evidence does not support the contention that the cost of construction was ever expected to be repaid, as argued by the father.

[81] Once the construction began, the wife did not deny that she was involved in paying construction bills. I accept her evidence that she did not know or question the source of the funds. I also believed her when she testified that she believed the funds coming from 808 were her husband’s.

[82] Even if 808 was not the husband’s company, I accept the wife’s evidence that during the marriage the father paid the husband through his companies either directly or indirectly. The evidence is clear and not denied that the father provided funds to the husband throughout the marriage so that the father and the son were intrinsically related financially. I believe the wife that she did not clearly understand the business relationship or understand her husband’s flow of income or the funds that were available to the family.

[83] Mr. Raskina went through the ledgers of 808. Through the evidence of Mr. Raskina, the father took the position that the funds as advanced related to and substantiate the mortgage debt. What is interesting is that the money that was expended on the construction is recorded on the Books of 808 as relating to an asset of 808 and as “work in progress”. Yet, as argued by the wife, and admitted by Mr. Raskina in his cross-examination, 808 did not own the asset related to the construction. It was the husband’s and wife’s matrimonial home. As a result of Mr. Raskina’s consultation with the father, Mr. Raskina created a category on the books of 808 called “Construction Project”. He admitted the construction was not an asset of 808 and had nothing to do with 808.

[84] The evidence of the father and his accountant, Mr. Raskina, was that the father put money into 808. The source of these funds was the father’s business activities, namely management and consulting fees that the father earned. It was, then, the father’s evidence that he put these funds into 808 so that he could share his income with his three children, one being the husband. His evidence was that he did so for income tax purposes. His position is that in doing so, he did not intend to benefit his daughter-in-law.

[85] I find that most of the funds for the construction came from 808. What is troubling is that the father relies on the fact that the funding for the construction came from “his” company, 808 and now related to the mortgage. As already expressed, this company was owned by the husband until sometime in 2003. The husband, then, coincidentally transferred his majority interest in 808. Even with the transfer, the husband remains a shareholder of 808.

[86] The father argued that it would be unfair for the wife to benefit to his determinant because of this arrangement. He argues that when the wife sold the house to third party purchasers, she herself made a further profit of $350,000 in that transaction that excluded his son. I can appreciate his dissatisfaction with the benefit to the wife after his son sold his interest to her. That may well be so; however, those arrangements were made between the husband and the wife and do not concern the father, or relate to his claim against the wife.

Tracing of funds

[87] To support his version as to the flow and purpose of funds, the father relied on the tracing reports (July 27, 2012) of his accountant, Mr. David Yabrow, to show that the funding of the construction of the matrimonial home came from the father and his related companies. As stated, I accept that the funding is traced to 808 and the funds came from the father’s related companies.

[88] At trial, the wife’s valuator, Melanie Russell, provided her comments on the tracing report. Her review and analysis of the tracing report was significantly restricted by the failure of Mr. Yabrov to produce the documents referenced in his scope of review. Her report identified several incorrect facts relied upon by Mr. Yabrov; however, those comments do not alter my conclusions on this issue.

Intermingling of Funds

[89] There is rational evidence to support the wife’s position that there has been a history of intermingling of funds between the husband and his father. The interests of the husband and the father are, as argued, identical. I agree with the submission that it is impossible to say with any degree of certainty where the husband’s interests end and the father’s begin. This intermingling of funds is apparent through the following few examples:

(a) 808 earned consulting income from companies in which the father had an interest. The father paid these consulting fees to 808 in the regular course.

(b) 808 shows advances to the husband’s company D[…] Inc. in each year of its financial statements. 808 also shows loan receivables in 2010 to a “related company”. In its corporate financial statements, D[…] Inc. is listed as a “related company” of 808.

(c) As indicated, according to the husband’s financial statement sworn in the divorce/family proceeding, the father and 808 continued to advance money to the husband following the date of separation. To the date of trial, the father loaned the husband money some $275,020.82 notwithstanding the mortgage debt and the fact that the father has judgment against the husband.

(d) The husband testified there were no promissory notes to evidence his post-separation indebtedness to his father. The husband’s evidence of this point is that they have their own [i.e. private] arrangement.

(e) There has always been a flow of money from the father, his corporate interests, to the husband and D[…] Inc..

(f) When the husband and wife sold the earlier matrimonial home, namely, Hycrest, the evidence was that the husband and wife gave the proceeds of sale, approximately $240,000, to the father to hold for them as an investment for future use.

(g) The husband’s evidence was also that the proceeds of sale of yet another property, a property previously owned by the husband and located at 19 Munro Boulevard, were split with the father.

Findings of Fact and Law

Validity and enforceability of the mortgage

[90] It is alleged the mortgage was a sham. What is the meaning of “sham”? The definition according to the online Merriam-Webster Dictionary is “something that is not what it appears to be and that is meant to trick or deceive people who look at it.”

[91] One of the most commonly cited definitions of “sham” is found in Snook v. London & West Riding Investments Ltd., [1967] 2 Q.B. 786. In that case, Lord Diplock stated as follows:

… I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties the legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. One thing, I think, however, is clear in legal principle, morality and the authorities….that for acts or documents to be a “sham”, with whatever legal consequences follow from this, all parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.

[92] The Federal Court of Appeal in Antle v. Canada, 2010 FCA 280, endorsed the following essentially equivalent explanation of a “sham,” as set out in Waters' Law of Trusts in Canada, 3^rd ed. (Toronto :Thomson Carswell, 2005) at 145:

The term “sham” in English and offshore parlance, adopted in Canada, is not a precise term. It is more a turn of speech; its meaning has been given as “some-thing that is not what it seems; a counterfeit” (Black’s Law Dictionary, 7th ed. (St-Paul. Minn.: West Group 2000)). It originated in England with regard to transactions, to which of course there are always at least two parties, and it means the parties’ true intent is that others shall be misled by the terms appearing in the transactional instrument. The real terms are something other, and the instrument is therefore declared void.

[93] In Antle, the Court held that the transaction in question constituted a sham because the parties intended to give “a false impression of the rights and obligations created between them,” and presented the transaction in question as “being different from what they [knew] it to be” (at paras. 20-21).

[94] While Antle concerned a sham trust, the case of Bank of Nova Scotia v. Simonot (1992), 105 Sask.R. 154 (C.A.), considered a mortgage alleged to be a sham. In that case, the Court of Appeal held the proper approach to determining whether the mortgagee was entitled to the benefits of the mortgage was to consider, first, if the advances had actually been made; and second, even if not all the monies had been advanced, whether the intention of the parties was nevertheless to benefit the mortgagee for the amount of the mortgage. If so, effect should be given to that intention.

[95] The father argues there was a common intention and that this was a standard mortgage. At trial, the evidence was highly contradictory. On the balance of probabilities, the mortgage does not satisfy me as to common intention. There were too many loose ends and unanswered questions. Similarly, I cannot find this is a typical mortgage case as the father would want.

[96] The father puts great stock in the tracing of the funds back to him. However, he has not substantiated or corroborated his claim that he advanced $800,000 (or any money) under the mortgage. An analysis of the invoices and cheques produced by the father, and purporting to be advances under the mortgage, shows that the monies received by the general contractor, Pegah Construction, were received from multiple sources. The majority of the funds – approximately $625,838.96 according to the cheques and invoices produced by the father – came from 808. A portion of the alleged advances by the father were paid to D[…] Inc., a company which was owned by the husband. The evidence supports that D[…] Inc. expended a total of $232,000 on the construction of the home.

[97] Even if I accept the tracing report of Mr. Yabrov, it does not prove that advances of funds made by the father to 808 were made under the mortgage. From the evidence, I am satisfied that the husband always had a financial dependency upon the father, from which the husband and wife both benefitted. The money which the father provided to 808 benefited the husband and the wife. The father now has obviously regrets any benefit to his former daughter-in-law.

[98] Mr. Grant, the lawyer who prepared the mortgage, found himself in a difficult position. He knew the husband, the wife and the father. From this testimony, I conclude he was uncomfortable when he agreed to act for the three parties. Because he knew them and acted for them on other transactions, he was not at ease in dealing with this mortgage; but did so notwithstanding better judgment in hindsight.

[99] Mr. Grant was perhaps one of the most forthright of the witnesses on this issue. His memorandum dated July 5, 2005, foreshadows the “difficulties and differences” arising from this mortgage and its repayment.

[100] In the end, there are compelling reasons to find the mortgage to be a sham. The evidence does not satisfy me as to common intention. The mortgage was, I find, put in place to trick third party claims, or to recover only from the wife if the marriage failed. When looked at from the evidence that I accept, I find the mortgage was not meant to have an impact on the equity of the parties.

[101] I therefore accept the wife’s position that the mortgage against the former matrimonial home is unenforceable against her for the following reasons:

(a) The principal amount was not advanced to the husband and wife when the mortgage was entered into.

(b) The mortgage was not related to any tangible or substantiated debt to the father. If anything, it was entered into on the assumption that it would be the father who would be a source of money for the demolition and construction of a new house.

(c) Based on past history and representations, believed by the wife, the mortgage was never intended to be repaid or to reflect as a debt to be paid by the husband and wife to the father.

(d) Throughout the marriage there was an intermingling of funds by the father, the husband and various companies owned by them. When it came to funding the construction, this continued to be the case.

(e) The wife relied on the husband’s representation that when the mortgage was entered into, it was for the purpose of protecting them against potential lien claimants in the construction.

(f) It was only after the separation of the wife and the husband that the father demanded payment and sought to enforce his interest.

(g) The father has failed to satisfy me that any monies which he has advanced under the mortgage were not the husband’s or not intended to benefit him and his family.

(h) A large portion of the money later alleged to be advanced under the mortgage came from 808, a company in which the father had no interest and in which the husband originally held 98% and latterly at least a 24% interest.

(i) The evidence supports that historically funds were paid to the husband through 808 and that the company existed largely for the husband’s benefit.

(j) The wife was told to enter into the mortgage and did not have the benefit of independent legal advice.

(k) The wife entered into the mortgage pressured by her husband.

(l) The mortgage was imposed on the wife by the father and her husband because she refused to enter into a marriage contract with the husband.

[102] What also favours the wife is my finding that money was transferred by the father at a time when the marriage was shaky with two previous separations in 2000 and 2003. The father’s fears that the marriage was not stable compelled him to insist on a marriage contract and then the mortgage. With these concerns, the father nevertheless provided funding for the construction. Clearly, the father and the husband wanted to protect the husband’s interest in the property given that it would be an investment in excess of $2 million. At the same time, they were aware of the risk that the wife would benefit from the investment and the venture.

[103] With respect to the parties’ intentions, while the mortgage was properly documented and registered, I find it was not intended to create a debt by the husband and wife to the father. On the evidence which I accept, the parties did not intend to create a mortgage, with all the legal consequences that flow from it.

[104] As suggested in Hitch v. Stone, [2001] E.W.C.A. Civ. 1224, at para. 66 (citing Snook, supra) in considering the intentions of the parties I looked at all the external evidence, including the parties’ explanations and the circumstantial evidence, such as the conduct of the parties both before and after executing the mortgage. I find that the purpose of the mortgage was to protect the husband’s interest and entitlement in the event of a breakdown of the marriage of the husband and wife. I agree with the submission that it was a means to achieve indirectly what the husband could not accomplish through a marriage contract.

[105] While the facts in this case are distinguishable from the case of von Czieslik v. Ayuso, 2007 ONCA 305, because the wife here entered into the mortgage, the intent of the father and the husband in this case was the same. The mortgage was an attempt to protect the husband’s equity in the matrimonial home. In von Czieslik, the husband entered into a mortgage in favour of his friend’s corporation. The corporation did not advance any funds under the mortgage and the husband made no payments of either principal or interest (see para. 9). In that case, the wife did not attempt to set aside the mortgage, but sought unequal division of net family property (“NFP”). The trial judge found the husband’s conduct met the threshold of unconscionability for the purposes of s. 5(6) the Family Law Act.

[106] I accept the wife’s evidence that she was told the mortgage was put in place to protect the property from third party creditors and sequel claims that could arise once the construction was commenced. I also accept the wife evidence that when she signed the mortgage she did so reluctantly, without independent legal advice and feeling pressured by the husband and the father, pressure that she felt she could not resist.

Conclusions

[107] After assessing all the evidence and applying the law, I find the mortgage is not valid and the action by the father against the wife should be dismissed.

Alternative claim: indemnification

[108] In her statement of defence, the wife made a claim against the husband for contribution, indemnity, and relief over from any amounts that may be found owing by her to the father. Therefore, even if the mortgage is valid so that money is owing by the wife to the father, the wife seeks an order that the husband indemnify her for the full amount of the debt. For NFP purposes, she asks the “debt” be given a value of zero. It appears that this claim of the wife has not been defended by the husband.

[109] If I am wrong in my findings, and the wife is indebted to the father, given my findings, I order that the husband make full contribution, indemnity, and relief over from any amounts that may be found owing by the wife to the father.

[110] In the end, what is clear from the evidence is that, given the nature of the relationship between the father and the husband, the father will not enforce his debt against the husband. To my mind, it would therefore be inequitable for the father to now enforce this mortgage against the wife.

[111] Finally, even if I had found that the mortgage is valid so that money is owing by the husband and wife to the father, which I did not find, I am of the view that for NFP purposes the debt should be given a value of zero. My reasons on this issue are set out in more detail below, under the equalization analysis.

Costs

[112] Counsel did not have an opportunity to argue costs. If they are unable to resolve the issue of costs they shall make submissions (limited to seven double spaces pages) in writing with the following time lines:

(a) The Plaintiff’s submissions shall be served and filed on or before September 11, 2015.

(b) The Defendants’ submissions shall be served and filed on or before September 30, 2015.

There will be no reply.

2. THE DIVORCE/FAMILY LAW ACTION

Issues

[113] In the divorce/family law action, the issues to be determined are:

(a) Custody, access and parenting issues regarding the child.

(b) Property issues, including:

(i) whether the date of separation is October 1, 2007 as claimed by the husband, or whether it is June 12, 2008 as claimed by the wife;

(ii) whether the amount owing to the father should be considered zero for equalization purposes if the mortgage is deemed to be valid;

(iii) whether the husband’s contingent tax liabilities should be shared by the wife if payable or factored into equalization;

(iv) the value of various disputes assets and liabilities owned by the parties on the valuation date, and what equalization payment is owed the husband or the wife; and

(v) whether this is an appropriate case for an unequal division of net family property.

(c) Child and spousal support, including;

(i) incomes of the parties for support purposes;

(ii) whether income should be imputed to the husband and/or the wife, having regard to lifestyle, access to funds, business interests, or intentional underemployment;

(iii) the appropriate amount of child support including special expenses;

(iv) the appropriate quantum of child support, including special expenses, owing in accordance with the Federal Child Support Guidelines, retroactive to June 12, 2008;

(v) the appropriate quantum of spousal support and whether this should be satisfied by periodic payments, lump sum, or a combination of both; and

(vi) security and life insurance related to the support obligation.

(d) Costs.

Position of the Husband

[114] The husband argues that the wife’s understanding of the parties’ financial issues is exaggerated and unrealistic and not founded on or supported by the evidence.

[115] The husband asks that the court rely on his documentation, expert evidence and evidence from third party witnesses that support his evidence and claims.

[116] The husband reasons that during the course of the trial, the wife did not call witnesses on her witness list with the exception of Ms. Russell. He argues that the court has been precluded from testing evidence that would assist the court in deciding the issues before it. The husband therefore states that an evidentiary void has been left on many important issues.

[117] The husband seeks the following relief:

1. joint or shared custody of J.A.;

2. primarily residence of J.A. with the husband and time with the wife pursuant to his wishes;

3. a release of J.A.’s Canadian passport and United Stated passport currently being held in trust pursuant to paragraph 2 of the my order dated January 31, 2014;

4. that the claim for counselling be dismissed;

5. a determination that the date of separation is October 31, 2007;

6. an equalization payment to the husband calculated as follows:

(a) based on the date of separation, October 31, 2007 and on his estimated contingent tax liabilities factored into equalization, the wife to pay to the husband an equalization amount of $65,982; or

(b) in the alternative, based on the date of separation of October 31, 2007 and that the estimated contingent tax liabilities are not included in equalization (but to be shared equally on an if and when basis), the husband pays the wife an equalization amount of $39,913; or

(c) if the date of separation is June 12, 2008 and the husband’s estimated contingent tax liabilities are included in equalization, the wife pays to the husband an equalization amount of $34,752; or

(d) if the date of separation is June 12, 2008 and the husband’s estimated contingent tax liabilities are not included in equalization (but to be shared equally on an if and when basis), the husband pays to the wife an equalization amount of $71,142;

2. that the contents of the former matrimonial home be divided equally between the parties; or, in the alternative, that the contents be sold at auction with the parties to share the proceeds of sale equally after auction fees;

3. that two Persian rugs be returned by the wife to the husband’s father;

4. an order for contribution to J.A.’s s. 7 expenses including B[…], tutoring and agreed upon activities; the sharing sought is 53.5% (husband) and 46.5% (wife);

5. dismissal of the wife’s spousal support claim;

6. that the husband’s retroactive child and spousal support obligations to the wife for the period of time from January 1, 2009 to April 30, 2014 be fixed at $98,222, and that the husband be paid and credited as set out in paragraph 13 below;

7. that the claim for reimbursement for storage fees relating to the contents of the former matrimonial home be dismissed;

8. a lump sum of $544,583, payable by the wife to the husband from the funds held in trust by the wife’s solicitors, in satisfaction of all claims for retroactive child support, retroactive spousal support, equalization and all other property issues with adjustments and calculated as follows:

Retroactive child support and net spousal $98,222

support owed by the husband to the wife from

January 1, 2009 to July 31, 2014

Less equalization payment owed by ($65,982)

the wife to the husband (subject to an adjustment, if

appropriate, based on the equalization payment

determined in accordance with paragraph 9 above)

Less payments made by the husband from ($576,823)

January 1, 2009 to and including August 1, 2014

Overpayment claim ($544,583)

9. repayment of the payment of $25,000 that was advanced by the husband to counsel for the wife in trust pursuant my Order dated April 8, 2014;

10. a dismissal of the remaining claims of the wife; and

11. costs.

Position of the Wife

[118] It is the position of the wife that her evidence and that of her expert be preferred.

[119] The wife submits her position is founded on the evidence at the trial. The wife argues that the husband’s evidence and position with respect to the parties’ finances is unreliable and fabricated for his own purpose. The wife also argues that the husband’s witnesses are not credible or reliable given their relationship and association with the husband.

[120] The wife asks that the court rely on the documentation, expert evidence and evidence from own testimony that support her claims.

[121] The wife seeks the following orders:

1. sole custody of J.A.;

2. primarily residence with the wife and time with the husband as agreed by the parties;

3. that a therapist be retained as recommended by J.A.’s physician with costs, if any, to be considered as a s. 7 expenses payable by the husband at 65% and the wife at 35%;

4. that the husband take J.A. for counselling and that the court remain seized of the issue with a review;

5. if J.A. resides with the husband, that the mother have as much times as possible including a sharing of all holidays, special occasions, alternate weekend and mid-week access;

6. that the date of separation for equalization purposes is June 12, 2008;

7. if the mortgage to the father is deemed valid, that for equalization purposes in the calculation of net family property, the debt to the father be deemed as “zero”;

8. an equalization payment in the amount of $1,201,969.48 together with interest from the date of separation;

9. that one-half of the household contents be hers and that the costs of storage be shared equally by the parties;

10. that 50% of the letter of credit posted by the father be paid to the wife on account of the equalization payment;

11. child support;

12. spousal support in the monthly sum of $19,975 commencing January 1, 2014 based on an imputed annual income to the husband of $735,000;

13. alternatively, lump sum spousal support in the range of $1,504,715 to $1,814,236;

14. retroactive child and spousal support in the range of $591,035 to $722,097;

15. that J.A. continue at B[…] to the completion of High School and that the husband pay all expenses related to the attendances;

16. that post-secondary education expenses (limited to Ontario) be shared by the parties proportionate to their incomes at that time;

17. that of the $25,000 (or remaining amount after deductions of fees and disbursement to the wife’s counsel) ordered July 8, 2014, be paid to the wife with a credit to the husband in the equalization amount payable;

18. that the wife shall be entitled to the funds held in trust by her counsel free from any claim by the husband;

19. security for any amounts payable to include:

(i) a transfer to the wife of the husband’s shares of 808, or, directing that in the event of any default the shares shall vest in her together with all shareholder rights and entitlements without prejudice to any other remedies she may have;

(ii) a letter of credit equal to the amount owing; or

(iii) the husband to deposit his Canadian and Iranian passports with the court; and

20. costs.

Custody, Access and Parenting

[122] This trial revolved around financial issues; however, to my mind the most agonizing and important question before the court was the child J.A. Both parents sought custody.

[123] Immediately prior to the commencement of the trial in November 2012, the parties reached a custody agreement. The Minutes of Settlement were incorporated into a court order where they agreed to joint custody with J.A. having his primary residence with the wife and residential time with the husband.

[124] When the parties separated, J.A. was 10 years old. He remained in the day-to-day care of the wife. It is clear from the evidence that for all of J.A.’s life she was his primary care giver.

[125] J.A. spent the summer of 2013 with the husband. They travelled to Europe together with the husband’s girlfriend. Upon their return, J.A. was to return to reside with his mother. Instead, J.A. remained with the father. Since the fall of 2013, J.A. has continually resided with the husband and refuses to have contact with the mother. While the husband in his testimony expressed that he would encourage J.A. to spend time with the wife, at the conclusion of the trial in August 2014, J.A. had had no contact with the wife.

[126] Counsel agreed to file separately a binder of documents produced by the wife. The contents were not tested in the trial. Pursuant to my order, and on consent of the parties, this binder was sealed to protect the child. It is sufficient to say that the mother was alarmed by J.A.’s online activities, which she discovered. I accept her evidence that, from a parent’s perspective, she was gravely concerned for J.A. The binder contains what is, or should be, disturbing online conduct for a child. The mother testified that she had concerns regarding J.A.’s exploration of the internet and his online liaisons, which led J.A. to a worrying face-to-face rendezvous. The wife was distressed and worried for the child who was then only 15 years old. The husband, in his response, has a lesser concern and considered these explorations as a fact of life and part of growing up.

[127] The wife is of the view that given J.A.’s activities and preoccupations and the breakdown of his relationship with her, an order for counselling for J.A. and the parties should be made. The husband resists any such order and will not consent to counselling for himself, or J.A.

[128] The wife testified that J.A. is being brain-washed against her and being influenced by her husband, who leaves J.A. without supervision or adult guidance. She is also of the view that J.A. is being swayed by the husband’s laissez faire style of parenting, and by his lavish and materialistic lifestyle. She alleges the husband caters to J.A.’s wants and does not provide him with parental guidance. The father denies these allegations and takes the position the parenting styles of the parties are very different. He maintains J.A. wants to be with him.

[129] The evidence of the wife was concerning; however, given J.A.’s age there is little this court can do. As recognized by the Court of Appeal in Kapalanis v. Kapalanis, 2005 1625 (ON CA), [2005] O.J. No. 275, 10 R.F.L. (6th) 373 (S.C.), the older the child, the more an order as to custody requires the cooperation of the child and recognition of the child’s wishes. According to the husband, J.A. wants to be with him. It is clear from the child’s refusal to return to the wife or have any contact with her that there are some serious problems.

[130] The parents agreed to joint custody. Prior to J.A.’s unilateral decision to live with the husband, the wife in her cross-examination admitted that it would be in J.A.’s best interest if she and the husband could make a decision together. The wife is of the view that it would now be best if she had sole custody of J.A. She acknowledged that J.A. obviously prefers to be with the husband, even though that is not in his best interest. She admitted, however, that there is no basis for changing the joint custody arrangement agreed to in November 2012. As in Cote v. Dixon, [2007] O.J. No. 1237, the 2007 agreements of joint custody are set aside reluctantly. Moreover, given J.A.’s age, and what I accept as his wishes to live with the husband, I am not prepared to order him to reside with the wife, even if that it would be in his best interest.

[131] Since J.A.’s change of residence, the wife testified that counselling and therapy for J.A. and the parents would be of assistance to the J.A. The wife’s justifiable concerns and anxiety for her child was clearly heard by the husband and his counsel. Yet the husband refuses to enter into counselling or encourage J.A. to do so.

[132] In considering the wife’s claim for custody of J.A., as with her request that this court order counselling and/or therapy, the claims must be looked at practically. While counselling would assist the child, and this ongoing family unit, the counselling must be useful and meaningful. If neither the child nor the husband will participate in counselling, making such an order is a futile exercise.

[133] Apart from the wife’s own evidence and expressed desire, no other evidence on the issue of counselling was called. No persuasive evidence or authorities convinced me that such an order would benefit the sad state of this family. At the conclusion of the trial, I orally addressed the issue of J.A. and his needs. I expressed the positive and long term benefits of counselling, or mediation, for the child and the parties.

[134] I was referred to Bruni v. Bruni, 2010 ONSC 6568, 100 R.F.L. (6th) 213. In dealing with such a request concerning a 13 year old boy, the trial judge stated that it is not the function of the family court to make counselling orders. While I do not entirely agree with my learned colleague, given the age of J.A. and the intransigence of the husband, this case is not one where I think ordering counselling is appropriate.

[135] During this trial, I permitted each party to testify as to statements made by J.A. without either party admitting as to the truth of the statement in issue. J.A. was spared being called as a witness in this ongoing battle between his parents. I am satisfied that J.A. wishes to remain with his father.

[136] J.A. is now 16 years old. While I am of the opinion that it may not be in J.A.’s best interest to live with the husband, J.A. clearly wishes to remain with his father. I am of the view that this court cannot order otherwise.

[137] The parties entered into a joint custody agreement. The husband does not ask that that be changed. As J.A. has chosen, he shall have his primary residence with the father; however, I am of the view that the joint custody arrangement should remain in place. J.A. should spend time with the wife, his mother, and for that reason, if J.A. wishes, he should also reside with her. While I make no order for counselling, I encourage it as it may be beneficial to J.A. and the parties.

Property

[138] My task is to “equalize” the net family property under s. 5 of the Family Law Act. As a general rule, the Act directs that the spouse with the larger net family property pay half the difference to the other spouse, so that at the end, they are equal.

[139] The first step, pursuant to s. 4 of the Family Law Act, is to calculate the “net family property” of each spouse as of the date of separation. In this case, the issue of the date of separation needs to therefore be resolved. The other major hurdle in the equalization is the father’s mortgage on the former matrimonial home.

[140] For the purposes of division of “net family property”, property under s. 4 comprises all the property a spouse owns valued at the valuation/separation date after deducting the debts and the value of any property the spouse brought into the marriage.

[141] There are many contentious property disputes in this case that need resolution in order to arrive at how much is owed to whom. These include:

(a) the debts and amounts owing to the father.

(b) whether the date of separation is October 1, 2007 as claimed by the husband, or whether it is June 12, 2008 as claimed by the wife;

(c) the ownership and value of 808;

(d) the ownership and value of D[…] Inc.;

(e) whether the profit made by the wife in the resale of the former matrimonial home should be shared with the husband, and what if any adjustment should be made to the notional commission from the sale;

(f) the validity of debts and liabilities as claimed by the husband; and

(g) the wife’s ownership and interest in investments the wife claims are owned by her mother.

The Matrimonial Home Mortgage

[142] For reasons set out above, the father’s claim against the wife is dismissed. Therefore for my purposes, at the date of separation, the wife has no debt owing to the father. In the event I am wrong, should the husband indemnify the wife for any liability? I am of the view that, given the conduct of the husband and the nature of the relationship he has with the father, should the alleged debt be called by the father, the husband should indemnify the wife and save her harmless from it.

[143] From the evidence, to date, the husband has made no payment to the father on the debt or judgment the father has against him. If the debt is not shared by the husband and the wife, the husband takes the position that $800,000 should then be considered his liability for equalization purposes. As I indicated earlier, I am of the view that even had I found that the mortgage is valid; for NFP purposes, I would assign that debt a value of zero.

[144] Given the history of father’s and son’s relationship during the marriage and since separation, I find it is highly unlikely that the father’s judgment will be enforced against the husband. There is compelling evidence that the money the father advanced will not be repaid by the husband. I also find it interesting that the husband does not show this liability as debt to the father in his earlier financial statements other than now, in his net family property calculation.

[145] As held in Poole v. Poole (2002), 2001 28196 (ON SC), 16 R.F.L. (5th) 397, fairness dictates that the husband should not receive a credit for a debt that he never intended to repay and that will never be repaid. As a result, in the divorce/family law proceeding, for NFP purposes, the “debt” shall be given a value of zero so that neither the husband nor the wife has debt to the father arising from the mortgage.

Date of Separation

[146] The next question to be resolved is the date of separation, or the valuation date for equalization. Each party relies on a different date of separation. In my preliminary examination, the choice of date between the two options argued does not make a significant difference to the equalization claims. Having said that, the first task in addressing property values is to make a finding on the date of separation.

[147] The issue to be decided is whether the date of separation is October 1, 2007 as claimed by the husband, or June 12, 2008 as claimed by the wife. The date obviously impacts to some extent on the value of property and the quantum of equalization of their net family property.

[148] The valuation date is, as described by s. 4(1) of the Family Law Act, “the date the spouses separate and there is no reasonable prospect they will resume cohabitation”. I also refer to s. 8(3) of the Divorce Act. In determining the date of separation, each case must be examined on its own facts. The jurisprudence establishes factors to be considering in the exercise. While the list is comprehensive, it is not exhaustive and which I bear in mind in the totality of the evidence in this trial. See Oswell v. Oswell (1990), 1990 6747 (ON SC), 28 R.F.L. (3d) 10, (C.A.), Cramer v. Cramer, 2013 ONSC 4182 and Andrade v. Andrade, 2012 ONSC 2777.

[149] As set out in Cramer and Andrade, supra, in determining the date of separation, the court must be satisfied that from that day forward there was no reasonable prospect of reconciliation and that all the indicia, considered together, so indicate.

[150] The husband takes the position that from his date forward the parties resided under the same roof but lived separate lives. To his mind, they were separated.

[151] It is the wife’s evidence that following the husband’s date, the parties continued to be economically interdependent, attended social functions together, and conducted themselves as husband and wife in the home, sharing domestic and parenting duties. The parties may have slept in separate rooms, but that alone does not define the relationship.

[152] In his evidence, the husband acknowledges earlier separations and the ongoing marital difficulties in the marriage. However, his position is that things started to deteriorate after the S[…] home was built and when the wife began furnishing it. He stated it was in 2007 that the parties began arguing over finances. The husband’s evidence is that he felt nothing was good enough for his wife, and that is when he told her he was “done” with the marriage. He relies on the fact that, in 2007, the parties were at the peak of their financial difficulties and had continuing disagreements and arguments.

[153] While that may well be so, the husband acknowledged that when he prepared his 2007 income tax returns (in 2008) he declared his status as “married’ for the 2007 calendar year. Furthermore, he also acknowledged that he and his wife stayed together in a hotel room following his separation date. He explained that this was for the purpose of a family wedding attended by the couple and his parents. From this evidence, I conclude that, to the outside world, the couple still presented themselves as a married couple.

[154] I accept the wife’s evidence that they argued prior to her date separation and divorce were raised in those arguments. I also accept her evidence that she did not want the separation.

[155] After considering the tumultuous history of this relationship and all the facts as put before me, I prefer the wife’s evidence and find that the parties separated on June 12, 2008. This is when, following an argument, the husband sent her an email asking for a divorce. It was, I find, a declaratory statement that brought the marriage to an end. Until then, I find, the couple continued in their stormy on/off again relationship with no conclusive intent of calling the marriage relationship at an end.

[156] It is not contradicted that after June 12, 2008 the couple lived together at the former matrimonial home, but separately with no prospect of reconciliation until the husband left. They agree that, while they lived under the same roof, they continued a shared financial and parenting arrangement.

[157] Commencing January 2009, the husband and wife lived separate and apart in all respects.

Equalization Payment

Legal Framework

[158] The equalization of property is the determination of what payment, if any, is owed to which party. s. 5 of the Family Law Act, governs. It establishes the basic principle that the spouse with the lesser net family property, as calculated in s. 4, is entitled to “one half the difference” pursuant to the stated principles of the provision. Equalization recognizes the contribution to the marriage financial and non-financial, and presumes an equal contribution by the spouses.

[159] In this case, based on his date of separation, October 31, 2007, the husband claims an equalization amount of $65,982.85 owing to him. On the wife’s date, he claims $34,752 is owed to him.

[160] Based on the wife’s date of separation, she claims an equalization amount of $1,201,969.48. Using the husband’s date of separation, her claim if for $1,181,018.83. The wife also submits that given the conduct of the husband this is an appropriate case for an unequal division of net family property in her favour.

[161] As set out in s. 5(6) of the Family Law Act, an exception to the general rule of equalization can occur where, in the discretion of the court, equalization be “unconscionable”. The section sets out a list of circumstances, however, the list is broadened by s. 5(6)(h) which allows the court to consider “any other circumstance” relating to the acquisition of or disposition of property.

[162] Generally, the policy of the Family Law Act encourages finality, predictability and certainty so that litigation is discouraged and enables parties to settle their own affairs. See Ward v. Ward, [2012] ONCA 462. The court can consider the conduct alleged to be “unconscionable”, within the framework pronounced by the Court of Appeal. The test for unconscionability is high. See Woods v. Robertson, [1998] O.J. No.4730.

[163] The wife’s claim for an unequal division is based on allegations of the husband’s unscrupulous conduct and management of their finances and his businesses. She specifically refers to the husband’s dealings with the companies 808 and D[…] Inc.. It is alleged that his interests in these companies were manipulated in order to dilute her property entitlement. The wife maintains it would be just, fair and equitable to compensate her given this conduct.

[164] The husband denies any misconduct and argues that the restructuring of his corporate affairs was legitimate and properly done with good and valid reason of which the wife was, or should have been, aware.

Property Issues

[165] Given my finding on the date of separation, the property issues that impact on the equalization amount are the following:

(a) the ownership of D[…] Inc.;

(b) the value of D[…] Inc.;

(c) the ownership and interest in 808;

(d) the value of 808;

(e) the adjustment to profit and the commission on the sale of the matrimonial home;

(f) validity of debts and liabilities as claimed by the husband; and

(g) the wife’s ownership and interest in investments the wife claims are owned by her mother.

Ownership of D[…] Inc.

[166] D[…] Inc. was the husband’s company. It was incorporated in December 1997 with the husband as sole owner and shareholder. In the latter years of the relationship, it was one of the main sources of income for the husband. Within the construction industry, D[…] Inc. manufactures exterior and interior mouldings for commercial and residential units. The husband incorporated a second company, D[…] Inc.., in Texas, manufacturing the same products for the construction industry in the United States.

[167] During the marriage, the husband owned 100% of the shares of this company. The wife maintains that the husband still owns 100% of the company, and for equalization purposes, the wife argues his interest in D[…] Inc. should be valued at 100%.

[168] The husband’s position at trial is that at the date of separation he only owned 75% of D[…] Inc.. He argues that a 25% interest was transferred to V.C., his business partner, prior to the separation of the parties.

[169] The evidence of both Mr. V.C. and the husband was that Mr. V.C. was hired in April or May 1998 on a contract basis to assist the husband with the manufacturing side of the business. Mr. V.C.’s role was then setting up the equipment and working in the fabrication of the mouldings. The husband testified to an informal employment contract between himself and Mr. V.C. until Mr. V.C. became a permanent employee of D[…] Inc..

[170] Mr. V.C. confirmed he had an informal employment contract from 1998 to 2001 where he worked six days a week. Mr. V.C. testified that in 2001 he proposed to the husband that he be given a 10% interest in the business when his role and responsibilities changed from manufacturing to also assuming some of the administrative functions, such as dealing with suppliers, customers and pricing. Mr. V.C. described his new role as “the general manager” of D[…] Inc.. He said that, pursuant to a verbal agreement with the husband, he received a 10% ownership interest in D[…] Inc. in 2001. No formal contract was signed. No transfer of shares occurred. The husband testified to this as an oral agreement.

[171] In 2004, D[…] Inc. moved to larger premises. Both Mr. V.C. and the husband testified that Mr. V.C.’s ownership interest in D[…] Inc. was increased to 25% at that time and pursuant to a one page agreement confirming this arrangement. For equalization purposes, the husband argues that as a result of this agreement he only owned 75% of D[…] Inc. as of the valuation date. Mr. V.C. supports the husband’s position that when the parties separated Mr. V.C. owned 25% of D[…] Inc..

[172] When examined, the corporate tax returns for D[…] Inc. indicate that as of December 31, 2007, the husband owned 100% of D[…] Inc. and not 75% as alleged.

[173] It is interesting to note that apart from the one page agreement upon which the husband relies, this changed ownership was never reported or updated in the Minute Book of D[…] Inc.. There was no physical transfer or public record of transfer of shares to Mr. V.C.. There was no other evidence at trial that Mr. V.C. held himself out as a 25% owner of D[…] Inc..

[174] Counsel for the husband argued that simply because an individual does not appear on any corporate records as shareholder is not determinative of ownership.

[175] I was referred to Colafranceschi v. Colafranceschi, 2001 28188 (ON SC), [2001] O.J. No. 771, 15 R.F.L. (5th) 294, a decision of this court, for the proposition that the lack of corporate records is not fatal to a determination of ownership. In Colafranceschi, a husband was found to be a beneficial owner even though he was not a shareholder because he controlled the operation of the corporation and managed its financial affairs. I was also referred to the Court of Appeal decision in Fedel v. Tan, 2010 ONCA 473, 101 O.R. (3d) 481, where the court held that it is open to a trial judge to rely on an oral agreement and the actions of the parties in implementing that agreement.

[176] While the husband and Mr. V.C. testified that they both operated and made personal decisions in the affairs of D[…] Inc., there were aspects of this arrangement and agreement that give me great difficulty. Apart from the lack of corporate records of ownership, another of my concerns which relates to control was the fact that the business has a “cash sales” component which benefited the husband. There were additional unreported profits, but no evidence that Mr. V.C. benefited.

[177] The husband maintains that, in November 2011, a new D[…] Inc. was formed and that he no longer owned the company. The evidence of the husband, supported by Mr. V.C. and his spouse, is that the new business was set up by Mr. V.C. under the D[…] Inc. name; but without the husband’s involvement or ownership in it.

[178] The husband in his testimony attempted to convey the impression that he is rarely around the “new” D[…] Inc. and that he is not involved in its operation. He testified it was run by Mr. V.C.. I simply cannot accept that evidence because it does not seem logical or plausible based on the more concrete evidence of the husband’s involvement, or the lack of evidence to support this significant change in operation and ownership.

[179] It is submitted by the wife that when looked at more closely, the conduct of the husband and Mr. V.C. supports a finding of an ownership by the husband in the “new” D[…] Inc.. I agree with the wife’s argument that it simply does not make any sense that the husband has no interest in the new D[…] Inc.. The evidence supports that the husband operates a joint D[…] Inc. chequing account with Mr. V.C. and that he still has and uses a D[…] Inc. credit card. While the address of the company has changed, the evidence supports that the company’s website remains the same and the company continues in the same name and with the same phone number. The husband is on the premises from time to time, likely more than he and Mr. V.C. admit to.

[180] In contrast to D[…] Inc., while the ownership of 808 has been challenged, there were share transfers made and properly recorded and those were with family members. In the husband’s dealing with D[…] Inc., his dealings are with a third party. When I look at the whole of what the husband is trying to get me to accept with respect to the disposition of D[…] Inc., it is indicative of the extent to which the husband will go to defeat the claims or entitlements of his former spouse.

[181] I find that much of the evidence relating to D[…] Inc. is self-serving and not supported by sound documentation or record keeping. I am asked to accept and rely on the oral agreements of the parties (the husband, his business partner and the partner’s spouse) who clearly have an interest in the outcome. With respect to D[…] Inc., the alleged arrangements of the parties, in the context of this case are, I find, implausible. It is simply not logical that the husband would divest himself of ownership of a company which he created and which is related to the construction industry that he knows well and in which he is well-connected. If the company was not profitable, I ask myself why Mr. V.C. would then want to carry on this operation. It just does not make sense.

[182] I agree with the argument as put forward by the wife that the handwritten agreement regarding D[…] Inc., upon which the husband relies, is a remuneration agreement rather than an ownership agreement, even though it purports to deal with ownership. As a result, I do not accept the evidence that the husband’s ownership of D[…] Inc. at the date of separation was only 75%.???

[183] It is also difficult to accept the husband’s position and testimony that he closed D[…] Inc. and ceased its operation. His explanation for doing so was that there was a downturn in the economy and an increase in value of the Canadian dollar so he decided to vacate the space where D[…] Inc. carried on its business. He testified he donated inventory to Habitat for Humanity and sold a foam cutting machine for $16,000. The rest of the equipment was either scrapped or put in storage. The husband testified employees were laid off.

[184] For equalization purposes, it is not necessary for me to decide whether or not the husband has an interest in the new company. What is relevant is ownership and value at the date of separation. On that point, given the evidence, I find the husband owned 100% of D[…] Inc. at the date of separation.

[185] For the purposes of equalization, I find D[…] Inc. is 100% owned by the husband. To summarize, I come to that conclusion for the following reasons:

(1) The Articles of Incorporation show the husband as owning 100% of the shares of the corporation.

(2) Mr. V.C. was never reflected as a shareholder of D[…] Inc. until after the separation of the parties in 2008.

(3) There was no reporting of disposition of shares of D[…] Inc. in the personal income tax returns of the husband.

(4) The documentation that the husband relies on is a profit sharing agreement and does not support ownership. It is an agreement in writing that “his partner” is to receive 25% of the “profits” not 25% ownership.

(5) The oral evidence, as a whole, is simply not convincing that the husband had less than a 100% ownership in D[…] Inc. as of June 2008.

[186] With respect to D[…] Inc., I find the testimony of the husband and that of Mr. and Ms. V.C. self-serving. In the end, I cannot accept the husband’s position and I conclude that at the date of separation, the husband’s interest in D[…] Inc. was 100%.

Value of D[…] Inc.

[187] I turn then to the value of D[…] Inc. for equalization purposes. On behalf of the husband, Ranot valued D[…] Inc. as of October 31, 2007. He concluded that D[…] Inc. had a value of $560,000. Ranot valued the husband’s 75% interest at $420,000. Factoring in a shareholder loan of the husband for $41,866 Ranot concluded the value of 75% at the October 2007 date was $461,866.

[188] Ranot was cross-examined on the value of D[…] Inc. based on using a 75% interest. His approach was uncontroverted. We do not have a valuation date value, so I rely on that valuation (as at October 31, 2007) for equalization purposes. There is no evidence that the value of D[…] Inc. would have changed significantly between October 2007 and June 2008.

[189] Using the Ranot approach, for equalization purposes, I find the husband’s interest in D[…] Inc. at 100% to have a value of $560,000. Given the shareholder loan owed to the husband, I would, and did add that value in, so that the value for equalization purposes is $601,866.

Ownership of 808277 Ontario Ltd. (“808”)

[190] The husband incorporated 808 in December 1998. The husband and wife testified that it was his company and that the husband was the original owner of 808. The husband does not deny that he was the major shareholder and it was his company. Historically, when the company was originally incorporated, the corporate records confirm that the husband owned 98 of 100 shares. His father owned the remaining two shares.

[191] The husband’s evidence, confirmed by the wife, was that the husband used 808 to operate a landscaping business related to the construction industry. The husband operated the landscaping operation for approximately five years. The wife testified that the 808 company was used for this purposes. She also testified that their family used 808 as source of income. The wife confirmed the husband’s evidence that, in or about 1992, he stopped working in landscaping and pursued numerous other ventures until D[…] Inc. was established.

[192] The father testified that he wanted to take over 808 when the husband no longer used or needed the company for his business operations. As a result, the company was restructured. For equalization purposes, the husband’s position is that he had a 24% interest in 808 at the date of separation.

[193] The wife challenges the husband with respect to the ownership of 808 at the date of separation. The wife argues that the husband and his family members, who are now the shareholders of 808, have re-structured this company so as to defeat her property and support claims.

[194] Mr. Raskina, who has been the accountant for 808 since 1992, testified 808 became dormant in 1994. The company had been less than diligent in filing income tax returns. It was Mr. Raskina’s evidence that the company was dissolved in 1994 when it did not file annual tax returns.

[195] The documentary evidence supports that 808 was revived in 1996 by Articles of Revival signed by the husband’s mother. The husband’s evidence is that from 1996 he had no involvement in 808 or in its revival in 1996. He stated that when asked by his father to sign documents to effect the revival of 808, he did so without question.

[196] What is curious is the husband’s testimony that several years later, he delivered the Minute Book of 808 to his father. It was in 1992 that the ownership of 808 is alleged to have changed.

[197] The husband, the father, the husband’s sister, S.A., the father’s business partner, H.G., and Mr. Raskina all testified that the father, and not the husband, owns and controls 808. Their testimony confirmed that that at the date of separation the father controlled 808.

[198] The husband’s case relied on the evidence of one of the father’s partners in the T[…], Mr. H.G.. Mr. H.G. testified that the father has income from the T[…]. The T[…] involves itself in many projects and ventures related to real estate and construction. His testimony was that each joint venture or project of the T[…] is independent and has its own shareholder structure, with the T[…] shareholders each owning an interest in a project or venture through various companies. Mr. H.G.’s evidence was that one of the companies which the father used in these joint ventures was 808. His testimony was that when 808 was involved, the dealings were with the father and not the husband or the husband’s siblings. What was compelling in Mr. H.G.’s evidence, which I accept, was that he did not know who the shareholders of 808 were. As far as he was aware, the father owned the company 808.

[199] The documentary evidence supports that, at the valuation date, the company was structured so that the assets of 808 comprised of the father’s 26% interest in the T[…]. Mr. H.G. testified that decisions regarding the distribution of profits from the T[…] joint ventures, which includes those that find their way into 808, are made by the three T[…] shareholders, jointly. I am satisfied that the husband has no ownership and plays no role in the T[…].

[200] Tracing the ownership of 808 reveals that, in September 1993, the husband transferred 46 of his 98 shares (in 808) to his brother E.A. Simultaneously, the father transferred his 2 shares of 808 to E.A. so that E.A. owed 48 shares. The husband was then left with the remaining 52 shares. The father holds no shares in 808.

[201] In 1993, the husband signed a declaration of trust for 28 of his 52 shares to be held in favour of his sister, S.A. Then E.A. entered into a similar declaration of trust for 24 of his 48. At the time of these declarations, the sister, S.A. was only 20 years old.

[202] In 2003, E.A. and the husband transferred shares to their sister, S.A., so that she then owned 52 shares and became the majority shareholder. In May 2007, E.A. resigned as a director and secretary of 808. The husband assumed the role of secretary. In 2009, the husband resigned as director, president and secretary of 808, distancing himself further from the company’s operations.

[203] The husband testified that the transfers to his sister were made at the request of the father because his father wanted S.A., as the majority shareholder of 808. The evidence of the husband and father was that the father wanted the share transfers to S.A. to occur because she was moving from Ottawa to Toronto and to work with the father.

[204] While that explanation and the need for the transfers is not totally plausible, the Minute Book of 808 records these changes of ownership. It is argued by the husband that there was nothing illegitimate or irregular in these transfers, the first of which took place some two years after the marriage of the parties and some 14 years prior to their separation.

[205] An explanation of the more recent transfers of 808 shares also came from Mr. Raskina. He testified that he advised the father to restructure the shareholding of 808 solely for tax purposes. On Mr. Raskina’s advice to the father, the husband’s shares in 808 were reduced. According to Mr. Raskina, the rationale for this advice was to distance D[…] Inc. and 808 so that they would not be associated for tax purposes. On Mr. Raskina’s advice, the father then caused the transfer of the husband’s shares to the husband’s sister, reducing the husband’s interest in 808 to 24%. This transfer was reflected in the husband’s 2002 personal tax return which confirms his sale of 28 of his shares in 808. The husband testified this transfer gave effect to, and formalized, the 1993 trust arrangements and his father’s wishes.

[206] S.A., the husband’s sister’s testimony aligned with and supported the evidence of her father and the husband. Her evidence was that she did not initiate any transactions in 808 or meet with Mr. Raskina in that regard. Her evidence was that all the restructuring that occurred was done by her father and Mr. Raskina. She too complied with the wishes of her father in the restructuring of 808.

[207] The husband’s evidence, supported by his father, was that he has had no involvement in 808 since 1992. Notwithstanding the distance that has been put in place with respect to the husband’s ownership of 808, the evidence supports that 808 benefited the husband, the wife and the husband’s company, D[…] Inc., during the marriage. Since separation, the husband continues to benefit from 808.

[208] The evidence supports that 808 enabled the following expenses to be paid for the family and the husband:

(1) advances of approximately $625,838.96 for the construction of the parties’ matrimonial home;

(2) payments of private school tuition fees for the parties’ son;

(3) payments on the husband’s car lease;

(4) payments on the parties’ HSBC mortgage obligations of approximately $155,000;

(5) advances of funds to the husband in the amount of $499,812 during the marriage;

(6) advances of funds to the husband in the amount of $390,818 since separation;

(7) payment of legal and accounting fees for the husband in the amount of $102,583 in 2012 and $77,228 in 2013; and

(8) payments for appraisals related to this litigation.

[209] While I accept that the transfer of the husband’s shares in 808 were done at the request and direction of his father, I find it difficult to accept that these manoeuvers were not related to or connected to the husband and effected because of the ongoing marriage issues of the parties. The wife’s evidence was that at the time the first 808 restructuring occurred, she and the husband were having marital difficulty that resulted in a temporary separation. When looked at objectively, I agree with the wife that the share transfers have the appearances of the husband (or his father) distancing the husband from the income and assets of 808.

[210] What remains unsettling for me in the structure and scenario as put forward by the father, supported by the husband, is that 808 is the father’s company, when the father owns no shares in the company. The father’s evidence was that he was the directing mind of 808 and that the shareholders, his children, including the husband, did not have any involvement in the decision making or operation of this company.

[211] In her testimony during both trials, the wife’s position was clear that her husband is the 100% owner of 808 and that the restructuring measures were to benefit and protect the husband and, in turn, deprive her financially. I agree with the argument of the husband that during the course of both trials, the wife appeared to contradict herself. While she may acknowledge the fact that at the date of the separation the husband had 24% of the shares in 808, she firmly believes he is the beneficial owner of 100% of the company. The wife confirmed that in the early part of the marriage her husband collected the 808 Minute Book, the Corporate Seal and the 808 corporate documents and gave them to his father. In cross-examination, and in an affidavit of March 20, 2009, she expressed that the father owned the company. To my mind, what the wife is saying is that 808 was the husband’s company and the husband’s family, and more particularly, the father caused the restructuring to protect the income splitting scheme the father put in place to protect the husband. He did not want the wife to benefit.

[212] To support his position, the husband raised the argument that the wife brought a motion for an expert examination of the 808 Minute Book to verify the dates when the shares of 808 were transferred. The husband argues that even though the wife was successful on the motion at trial, she did not tender any evidence of findings. While the findings may have supported the wife’s suspicions, it would be one further piece of evidence. There is no such evidence, one way or the other.

[213] Aligning himself with the evidence of his father, the husband maintains he has only a 24% minority interest in 808 and that his father is the operating mind while he and the other shareholders have no control of 808. This position is supported by the members of the husband’s family. Specific to this case, for property and support purposes, the husband maintains that he has no more than a 24% interest in 808.

[214] The husband’s position, supported by his sister and the father, is that the father is the de facto owner of 808 and its directing mind. Given the history of the 808 and the way it was restructured, it now appears to be the father’s and not the husband’s company. The husband’s finances, however, seem intrinsically tied to 808.

[215] I was referred to Colafranceschi. While I have significant difficulty in concluding that the husband is only a 24% shareholder with no control over the corporate structure, I find that 808 is not solely the husband’s company. It also appears that its income is now derived from the father.

[216] When the wife was asked about the affairs of the family, she stated that in the family unit, all major decisions were deferred to the father. They referred to the father as “the head” of the family. As such, I accept that much the affairs of the family are driven by the father who also provided significantly for his family.

[217] While Mr. Raskina testified that the restructuring of 808 was directed by the father in order to minimize his tax base, it was never clear from the evidence why the father did not incorporate his own company. Why the father chose to use 808 and then dilute the husband’s interest in it was never clearly explained. I find the restructuring of 808 and apportionment of the shares difficult to accept, especially when the father acknowledged that the money as paid to the husband from 808 was greater than that paid to the husband’s siblings.

[218] With respect to the siblings, the husband’s sister, who owns the major portion of the shares, testified that, as a director, she had no say and has no authority. The husband’s sister also testified that she had no meetings with Mr. Raskina regarding 808’s transactions and played no role in the restructuring of 808 from the husband to the father.

[219] I accept the evidence of Mr. Raskina that the husband had been a signing officer for 808, but that role was assumed by the father when 808 was restructured. Mr. Raskina also testified that since the restructuring the tax returns for 808 reflect the address of the father’s company’s head office and not the husband’s. While Mr. Raskina was not shaken in this testimony that the father, and not the husband, now controls 808, Mr. Raskina did say that the husband signs cheques for 808. He qualified the statement to say that any such dispersal of funds from 808 is done with the approval of the father.

[220] What is uncontroverted is that 808 is a passive company that simply receives revenue from the joint ventures and projects of the father in the T[…]. It also receives some consulting fees and other incomes of the father. The retained earnings for 808, as of March 31, 2013 were $1,859,600, which represents an increase over the retained earnings of previous years. In cross-examination, Mr. Raskina testified that these retained earnings represent the assets owned by the company less it liabilities. Furthermore, he testified that the retained earnings would be the cost value rather than current value.

[221] The wife takes the position that the husband owns 100% of 808 and that the restructuring of 808, like the father’s mortgage on the matrimonial home, is a sham. As such she argues that the husband’s net family property statement should reflect $1,859,057 or $1,810,000 for his interest in 808.

[222] On the evidence as it unfolded at trial, I fully understand the wife suspicions, concerns and distrust of the operations of the husband. It was argued that the husband’s business dealings are tantamount to fraud and that as such his position with respect to 808 and its value is untenable. She argues the husband and his father restructured 808 to protect the husband financially.

[223] When 808 was initially incorporated for the enterprise of the husband with the father’s limited involvement in it as a 2% shareholder. While I accept the wife’s difficulties with accepting the restructuring of 808, I find that the documentation and the evidence at the trial do not support her position. Obviously, she questions the motive for the changes. The changes made to the 808 were clearly out of the wife’s hands as she herself was never a shareholder.

[224] For whatever reason, the husband divested himself of control of the company and allowed his father to use it as a vehicle for the father’s income stream. While I am satisfied that the income of 808 comes from the father, the father shares his income with the husband and his siblings as minority shareholders.

[225] Following the restructuring, I find that 808 now consists of the assets of the father and not the husband. In the restructured 808, the husband’s interest was reduced to 24%. Stopped here

[226] Historically, the husband has benefited more than his siblings from 808. More importantly, given the history of the company and the interpersonal relationships of the shareholders in 808, it may well be that the husband’s ownership is greater than expressed. In the end, when I look at the restructured 808, and how it was done, it appears it was done legitimately and correctly. On the evidence which I accept, I conclude that the husband’s interest for equalization purposes is 24%. For support purposes, I will examine the income stream the husband has and has had from 808.

Value of 808 for Equalization

[227] I turn to the value of the husband’s interest in 808. Mr. Yabrov valued 808. In his valuation, Mr. Yabrov applied a 30% reduction for the minority interest 808 had in several joint real estate ventures. He applied a further 10% discount to the husband’s minority shareholdings in 808.

[228] Mr. Yabrov in his testimony also relied on information from the father and the father’s accountant, Mr. Raskina. The assets of 808 are real estate holdings of the T[…]. Mr. Yabrov acknowledged that, in the valuation of 808, he relied on the real property valuations of Mr. Dik.

[229] Mr. Dik testified that the valuations of the real estate holdings of the T[…] were based on earlier valuations he prepared for mortgage purposes at the request of the father. Mr. Dik did not conduct more recent fair market valuations for the purposes of this litigation.

[230] Pursuant to the Yabrov report, dated September 3, 2013, the 100% value of 808 was $1,859,057 as of October 31, 2007 and $1,810,000 as of June 12, 2008.

[231] Factoring in a 10% discount for the minority interest, Mr. Yabrov first valuation of the husband’s 24% interest in 808 as of October 2007 was $410,556. He then took into account contingent tax on the disposition of this interest, estimated at 23%, calculated to be $92,357. As a result, the position of the husband is that the net value of his interest in 808 for equalization purposes is $309,199 using the husband’s valuation date.

[232] The second Yabrov valuation at June 12, 2008, being the wife’s date, valued the husband’s interest in 808 at $390,968. Taking into account the 23% deduction ($93,832) for contingent tax liability, the husband’s position is that the value of his interest in 808 for equalization is $297,136.

[233] Russell did not opine or take issue with the Mr. Yabrov’s valuations of 808, but questioned the minority discount that he applied to the value of 808’s interest in joint real estate ventures and then the 10% discount he applied to the husband’s interest. She also took issue with the contingent disposition discount that Mr. Yabrov applied. Her view was that the minority discounts in this case should be zero. Russell did not have insight into the father’s interest in the T[…] joint venture. In the end, she did not challenge the value of 808’s interest in the joint venture.

[234] Russell accepted that it is a generally customary practice to discount minority interests in the public market. Russell opined that 808 was closely held and there was no evidence of any disagreement within the family members, who together owned 100% of 808, to warrant a minority discount. While the percentage interests of the shareholders are different, there was no evidence that the shares of the various family members were treated differently. I therefore accept the Russell report that a minority discount is not appropriate in this privately held “family” corporation.

[235] Our courts have accepted as an economic reality that a minority interest in a company may not have the more secure value of a majority interest, even in family-owned corporations. I was referred to the decisions in Balcerzak v. Balcersak, [1998] O.J. No. 3860, 41 R.F.L. (4th) 13 (S.C.) (where a minority discount of 15% was applied); Huck v. Huck, 2004 22079 (ON SC), [2004] O.J. No. 3652, 9 R.F.L. (6th) 362 (S.C.) (minority discount of 10% applied), and McKinney v. McKinney, 2008 BCSC 709 (minority discount of 50%).

[236] Discounting for a minority shareholder interest is a subjective exercise. In Balcerzak v. Balcersak, the court held that where the shareholders are a close family unit, as I find here, and where the family members have worked together for many years, and are likely to continue to do so in the future, the discount should not be very high.

[237] The significant difference in this case is that the shareholders do not work together in 808, but rather 808 is a passive company, where the father has relinquished ownership and distributes, or diverts, his income to each of his children by shares in 808. There was no evidence that the husband’s shares are at risk. Since separation to the date of trial nothing has changed.

[238] There was no evidence of disposition of these shares in the near future and given the nature and structure of 808, it is not likely that the husband will dispose of his interest in 808. On that basis, I prefer the Russell approach and the find that no discount should me made here to the shares of this closely held family company.

[239] Applying the Russell opinion, I would use the wife separation date of June 12, 2008 for equalization purposes. By adding back the 10% discount applied by Yabrov results in a value of the husband’s share of 808, in the amount of $434,809.

Real Estate Commissions on Matrimonial Home, and the Wife’s Profit on the Sale

[240] Pursuant to the order of Czutrin J., the wife purchased the husband’s interest in the S[…] home for $2,800,000 (being half of the separation date value of the property). The parties consented to a notional real estate commission of $150,000. That was factored into the price. The husband maintains that only $18,375 of real estate commissions was paid and therefore seeks a credit of $131,625 for overpayment of notional commissions.

[241] A few months after purchasing the husband’s interest for $2,800,000, the wife sold the home for $3,100,000, therefore making a profit,. She was obliged to pay real estate commissions on that sale that totaled $114,000. The fact that she made a profit on the resale is, I find, to her benefit. In the circumstances, it was fair and she did not withhold the fact that she benefited from her purchase and the subsequent sale.

[242] Where the parties consented to the terms of the wife’s purchase, I agree with the position of the wife, that the court should now not be asked to look behind the order made, particularly where it was pursuant to the consent of the parties. Accordingly, I make no adjustment, as sought, for the notional sales commission as agreed to when the husband transferred his interest to the wife or for the profit made by the wife on her sale.

Bank Accounts and Savings

[243] The major point of contention between the parties with respect to bank accounts relates to bank accounts and savings which the wife maintains are held by her for her mother. The wife argues that the CIBC, Bank of America Savings accounts and CIBC Guaranteed Investment Certificate (GIC) funds, which are in her name, belong to her mother and that she holds these in trust for her mother, who resides in the United States.

[244] The GIC in issue were expressed in the wife’s financial statement as “joint”. However, at trial, the wife acknowledged they were originally purchased in her name alone. The wife’s evidence on this point, which I accept, is that at the time of purchase, the bank would not register these in her mother’s name because her mother did not have a Canadian Social Insurance number. The intention was to purchase the GIC for her mother, but jointly own with her mother to facilitate and enable the wife to deal with the investment and to transfer funds to her mother when requested to do so.

[245] The husband argued that the wife depleted funds in the GIC prior to separation. I am not able to so find. My only concern is with the accounts at the valuation date.

[246] The wife in her evidence traced the source of GIC funds as at the date of separation. I accept the evidence of the wife that the GIC funds in issue came from proceeds of sale of two condominium units at L[…] Drive and D[…] Drive, Toronto, owned by her mother. The condominiums were in a project developed by the wife’s brother. When these were sold, the wife’s testimony, which I accept, is that the wife opened a joint account with her mother. Then, and on behalf of her mother, she invested the funds in GIC’s here in Canada.

[247] It was put to the wife that she was in fact the beneficial owners of these condominiums and that they were earned or obtained by her in the course of her employment for her brother. When the Agreement of Purchase and Sale for the L[…] Drive condominium was put to the wife, she identified the document as being signed by her mother. She could not remember whether her mother was in Ontario to execute the documents, but satisfied me that the proceeds of sale were her mother’s.

[248] The husband’s position is that the entirety of the original amount of GIC funds should be included in the wife’s Net Family Property. The original amount was reduced by the wife and the husband argues that the NFP amount should include the money the wife testified she transferred to her parents before the separation. The husband argues this was a depletion of funds during the marriage which he seeks to recapture for valuation purposes.

[249] The husband takes the position that these were funds that the wife earned or saved during the marriage.

[250] It is argued there is a presumption that ownership of a bank account is as described on the face of the documents. See: Sheikh v. Sheikh, 2005 14151 (ON SC), [2005] O.J. No. 1712, 17 R.F.L. (6th) 303 (S.C.) at para. 91. The burden is on the wife, who is asserting the position, to rebut this presumption of ownership.

[251] The history of the amounts of the GIC’s can be summed up as follows:

(a) As of June 2007, the GIC’s had a balance of $328,080.

(b) As of October 2007, the GIC’s had a balance of $284,875.

(c) As of June 2008, the GIC’s has a balance of $247,081.

[252] The evidence which I accept is that, in August and September 2007, the wife withdrew the sums of $32,606.29 and $10,599.09 from the GIC’s.

[253] I rely on the evidence that, in August and September 2007, the wife wired that money to her parents. $32,606.29 was wired in August 2007 and $10,599.09 in September 2007, and with a further $10,000 sent in March 2008. I accept the wife’s evidence that the funds were wired to her parents for them and at their request.

[254] The wife was forthright in the production of documents that related to these savings. There is no trust agreement in writing between her and her mother with respect to the GIC.

[255] It is argued that the wife did not call any witnesses to support her position; she was not required to do so. It was contended that an adverse inference be drawn against the wife because she did not call witnesses on this issue. I was referred to Dupuis v. Desrosiers, 2013 ONCJ 720, where the court drew an adverse inference in a fact situation where there was co-mingling of funds. While I agree that a negative inference can be drawn from a failure to call a witness, I rely on the wife’s evidence and on the documents she produced which I accept. It is not necessary for witnesses to be called simply to bolster a case.

[256] I find that the wife had and held money with and for members of her family who lived in the United States. I find that the GIC shown as being jointly owned is held by the wife for her mother, I accept the wife’s explanation that it was purchased in the her name to enable her to deal with the investment on her mother’s behalf. I also rely on the fact that this arrangement was not uncommon with the wife’s family. A Bank of American bank account, which the wife maintains, is a joint account with her sister who lives in the United States. The amount of the Bank of America account was $28,333.57 and the wife acknowledges that in that case the ownership is shared with her sister so that the wife’s amount for NFP purposes is $14,666.78.

[257] I accept the wife evidence that prior to separation, she added $50,000 of money from a joint account with the husband and pooled it with the mother’s investments so that the larger sum would yield a higher rate of interest. Therefore a $50,000 amount should be shown in the wife’s net family property statement for the CIBC GIC.

[258] The RRSP’s with HSBC for the husband, TD Waterhouse for the wife, CIBC for the wife, an investment of the wife with Katy Totonchian and cash that the wife had on hand in a bank safety deposit box are not disputed.

[259] The parties also had two joint chequing accounts, one with CIBC and one with HSBC, used to pay the mortgage. There are slight discrepancies in the valuation date balances claimed by each party. I prefer the evidence of the wife, who claims that the CIBC account had a balance of $3,351.89 and the HSBC account a balance of $522.90. Each party will be shown as having half of these amounts ($1,675.95 and $276.45) on the valuation date.

Valuation Date Debts and Liabilities

[260] The major debt in issue is the mortgage loan to the father.

[261] The husband in his Net Family Property claims interest as owing to the father under the mortgage loan which the husband and wife never paid. I have already made my finding on the mortgage. For NFP purposes, the “debt” shall be given a value of zero.

[262] There is also a claim for interest owing that relates to the father’s mortgage. Given my findings on this debt, I ascribe no debt payable by either party for interest on the mortgage.

[263] The other major debt is the HSBC debt on the matrimonial home. While there is a small discrepancy in the amount each party says is owing under the mortgage on the valuation date, the Order of Czutrin J., made March 10, 2009, reflects the mortgage as being for $685,000. I will use that amount. Shared jointly between the parties, this gives each a debt of $342,500.

[264] The husband also claims he owes 808 for funds extended to him; this includes personal expenses for money used as a down payment on a leased vehicle and for personal expenses. The husband also lists a loan from the father for money used in the construction of the matrimonial home over and above the $800,000 mortgage. Given my conclusion with respect to 808, I find that I cannot consider these as additional debts of the husband. If owing, which I do not find, I have serious doubt these will be called by the father or repaid by the husband.

[265] It does not appear to be disputed that at the valuation date the wife was liable for $22,993.61 on a line of credit with CIBC (Account 69234) and that she owed $9,964.79 to CIBC VISA on her credit card.

[266] Both the husband and wife ask that I consider the income tax liability costs on the disposition of their respective RRSP’s, which liability they valued at 25%. I agree that these should be factored as valid contingent liability and therefore accept the husband’s cost at $5,500 on $22,000 and the wife’s at $9,590 on $38,522.41.

Income Tax Liability to CRA

[267] In his Financial Statement of December 3, 2013, the husband sets out a contingent debt which he says he will owe to Canada Revenue Agency for unpaid income tax in the amount of $211,793. He estimates this liability based on the following:

(a) The sum of $203,000 which the husband withdrew from D[…] Inc. during the marriage for construction costs on the former matrimonial home. Excluding penalties and interest, the husband lists the tax rate on this amount at 46%, creating a tax liability of $93,380.

(b) The sum of $257,420 which the husband withdrew from D[…] Inc. for living expenses during the marriage. Again, excluding penalties the tax rate on this amount would be at approximately 46%, creating a liability of $118,413.

[268] In this case, both the husband and the wife testified that D[…] Inc. was the source of income for the family during the marriage. It is clear that both benefited from the money that was withdrawn and that they therefore may have used money free of income tax.

[269] The husband argues that the result of his sole responsibility for this debt would be an unequal division of net family property: his position is that there is no basis for an order for an unequal division relying on the fact that if the debt materializes it was incurred during the marriage and should be shared.

[270] In the normal course of events, contingent liabilities that are reasonably foreseeable are and attributed to the marriage should be liabilities for both parties to bear. See Greenglass v. Greenglass, 2010 ONCA 675 at para. 26. The funds in issue here were diverted by the husband. There is no evidence that the wife was a party to the scheme put in play by the husband. I find that during the marriage the wife was neither aware nor a party to this arrangement. The husband managed his affairs and had accountants who prepared his corporate financial statements.

[271] The husband acknowledges that there may be no such liability because it has not yet crystalized. He therefore claims that any tax liability that happens in the future should be shared by the parties if and when it materializes. This approach was taken by this court in Prevost v. Prevost, (2006) O.J.2313 at para. 43:

The evidence revealed that there were many irregularities and questionable practices that went on during the years that Ms. Taylor did the books for her husband's business. Mr. Prevost may indeed have a serious contingent tax liability in the future related to his business if this is ever pursued. I think it would be fair for this Court to order, and it is so ordered, that in the event that such a contingent tax liability ever materializes both parties are to be jointly contingently liable for the potential income tax liability that may arise based on any irregularities relating to the Prevost Collision Centre for the years that Ms. Taylor did the books.

[272] While the husband claims he will be reassessed for income tax on the amount listed and claims that it would be reasonable to assume a tax rate of 46%, he has provided no evidence that he will be so assessed. More importantly, in this case it would not be fair as the wife had no role in any irregularities of the husband.

[273] Given no tangible evidence on this liability, I am unable to so find. Where courts have found no or a very low risk at the valuation date that a liability would materialize, the value of the contingent liability has been determined to be nil: See Greenglass, supra at para 26.

[274] In exercising my discretion, I am not prepared to reward the husband for his indiscreet actions by bringing this debt into the equalization formula. If in the end, I find the wife should not be responsible for this debt, I would make an unequal division of the net family property so that the husband pays any debt attributed to the wife. As the Court of Appeal held in Serra v. Serra, 2009 ONCA 105, [2009] O.J. No. 432 (C.A.) to now burden the wife with this debt, long after it was incurred and without her knowledge or approval, would more than be unfair and unjust. To do so would shock the conscience of the court.

[275] For these reasons, I not prepared to make an “if and when” order as sought in the alternative. In the exercise of my discretion, I find that it would simply not be fair to the wife.

Quantum of Equalization Payment

[276] The husband submits with a June 2008 date of separation, the wife owes him an equalization payment of $34,742. In this calculation, he has included the contingent debt which is not proven. On the assumption that the husband’s contingent liabilities to CRA are not factored, but including his debts to 808, the husband acknowledges an equalization amount of $71,143.93 payable by him to the wife.

[277] Based on the wife’s net family property calculation she claims $1,201,969 as payable to her by the husband. She claims $1,440,945 inclusive of interest to July 2014 as the equalization amount owing to her by the husband.

[278] Based on my findings as outlined above, I include my Net Family Property Calculation as Appendix B to these reasons. According to my calculations, an equalization payment in the amount of $489,354.27 is owed by the husband to the wife.

[279] The wife claims that, given the husband’s conduct during the marriage and post-separation, this is a case for an unequal division of their family property in her favour. Pursuant to s. 5(6) of the Family Law Act an exception to the general rule of equalization may, in the court’s discretion, be ordered where equalization would be “unconscionable”. The section lists specific examples of circumstances that may result in unconscionability and allows the court to consider “any other circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property”.

[280] It is argued by the wife that the husband has conducted his business and their personal financial affairs with the sole purpose of defeating her property claim, so that the court should be outraged by his conduct. If there is liability on this debt, the wife argues it should be assumed by the husband by way of an unequal division of their family property in her favour. In addition, the wife relies on the following:

(a) The conduct of the husband in his business affairs was deliberate and calculated.

(b) The husband and his father arranged for the transferring of the shares in 808 from the husband to members of his family solely to defeat her property entitlement.

(c) She was forced to put in place a false debt for $800,000 on the matrimonial home.

(d) Just prior to separation, the husband purported to transfer 25% of his interest in his company, D[…] Inc., to his business associate. The husband stonewalled disclosure making it impossible to distinguish the husband’s money from the father’s.

[281] To support her position, the wife cites Harry v. Harry, 1987 8288 (ON SC), [1987] O.J. No. 2028, 9 R.F.L. (3d) 121 (Distr. Ct.), where the court found that giving away assets weeks before a separation was reckless and unconscionable. I was also referred to the Helmy v. Helmy, 2000 22452 (ON SC), [2000] O.J. No 4456, 12 R.F.L. (5^th) 68 (S.C.) and von Czieslik v. Ayuso, for the proposition that the husband altered the value of his net family property so as to avoid equalization.

[282] The Court of Appeal in Serra v. Serra, held that the threshold of “unconscionability” under s. 5(6) is exceptionally high. To cross the threshold, the result of the equal division must “shock the conscience of the court”. If the husband bears the income tax burden for unreported income, as set out above, the wife with this debt would cross the threshold of unconscionability. By relieving her of this potential responsibility, I have in effect given her a benefit akin to an unequal division because of what I find was reckless conduct of the husband.

[283] I agree with the wife that when one looks at the history of this marriage and the way the finances were maintained and manipulated by the husband, his conduct was deceitful. I have already addressed my findings on the changed ownership of 808 after the reconciliation of the parties.

[284] While the conduct of the husband may have been deliberate and deceitful in the conduct of his affairs, I find that a further unequal division of net family property is neither warranted nor necessary to address any inequity within the purpose of s. 5(7) of the Act. Except as provided in these reasons, given my findings in the mortgage action and with respect to the potential income tax liability, I find that I cannot make any further unequal division of property.

General Household Items and Furniture

[285] In the equalization amount, I have not addressed the household items and furnishings.

[286] General household items and furnishings are in storage and in the possession of the wife and to some smaller degree, in the possession of the husband. The husband includes as an issue two Persian rugs which he maintains are his parents’ and were on loan to the couple. The wife’s position is that the rugs were gifted to them by the parents. The husband’s father supported the husband that these were loaned to the couple. There was no reliable evidence on this point. Because the Persian rugs did not appear to be an issue until the litigation, I find that the rugs were given to the parties and as such are now owned by the parties.

[287] The general household items and furniture, including the rugs, shall be divided in specie by the parties with the assistance of their counsel. If the husband and wife are unable to agree they should be sold and the proceeds divided equally after deduction of reasonable expenses.

[288] The storage costs incurred to date shall be shared equally.

Support

The issues

[289] The wife claims support for herself and for the child, if living with her. J.A. is living with the husband and the husband only makes a claim for s. 7 expenses. Therefore the only claims to be decided is spousal support as claimed by the wife, and retroactive child and spousal support that may be owed by the husband to the wife.

[290] The husband claims s. 7 expenses for the child since J.A. began living with him in 2013.

[291] The husband takes the position that there should be no order for spousal support.

Child Support

[292] The wife has an obligation for child support. The husband makes no claim for periodic child support. Where there is no claim for child support, I must be satisfied that the husband is able to financially support the child. Given my analysis of his income and ability to look after J.A., financially, I make no order for periodic child support.

[293] The wife shall pay to the husband s. 7 extraordinary expenses for J.A. as set out under quantum of support. It shall be paid retroactively to September 2013. With respect to the arrears of s. 7 child support claim by the husband, I cannot calculate the s. 7 expenses owing by the wife to the husband since J.A. began living with the husband as the amounts did not form part of the evidence.

Spousal Support

[294] Lang J.A. in Fisher v. Fisher, 2008 ONCA 11 provides a careful road map for determining entitlement and quantum of spousal support. Section 15.2 of the Divorce Act, and 33 of the Family Law Act govern support of a spouse. Fisher carefully sets out each of the factors and objectives of ss. 15.2(4) and (6). Pursuant to the Divorce Act (s. 15.2 (6)), there are four economic or financial objectives that a support order should strive to address: balancing the economic advantages and disadvantages of the marriage or its breakdown, adjusting for the financial impact on the custodial spouse of raising the parties’ child, compensating for hardship resulting from marriage breakdown and promoting economic self-sufficiency “with a reasonable length of time”.

[295] The case law, as it has evolved, apportions equal weight to each of the four objectives set out in s. 15.2(6). In [Bracklow v. Bracklow, 1999 715 (SCC)](https://www.