Court File and Parties
COURT FILE NO.: FS 70/11 DATE: 20160603
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Kenneth Holtby, Applicant v. Cheryl Draper and Knapton Farms Ltd., Respondents
BEFORE: Justice C.J. Conlan
COUNSEL: William Clayton, for the Applicant Glen Carey, for the Respondent
E N D O R S E M E N T
Conlan J.
Introduction
[1] In Reasons for Judgment reported at 2015 ONSC 7160, after a lengthy trial that spanned nearly one full year, in bits and pieces, I ruled in favour of the husband, Mr. Holtby, on the main issue of ownership of the farm assets.
[2] I invited the parties, through counsel, to calculate the quantum of the equalization payment owing by the husband to the wife, Ms. Draper. They have been unable to agree on that.
[3] I invited the parties, through counsel, to calculate the amount of money owing by the husband to the wife regarding Lot 8, the fifty acres. They have been unable to agree on that.
[4] I invited further submissions by counsel on whether the wife ought to be paid back by the husband the money that she advanced for transfers of Class B shares in the farm corporation to her, and if so, how much. The parties disagree on that, at least in terms of quantum.
[5] Finally, I invited the parties, through counsel, to resolve the issues of costs and interest. They have been unable to do so.
[6] Thus, we met again in Walkerton on June 2, 2016. I heard further submissions from counsel on the above issues, and others, and we agreed to postpone the costs submissions, to be in writing, until after the release of the within Endorsement.
[7] As it is high time for these parties to resume living rather than sitting on Courtroom benches, I have decided to make this Endorsement relatively brief and release it forthwith.
Other Issues Besides Those Addressed Above
[8] Ms. Draper has raised other matters that I did not specifically invite further submissions on or leave uncalculated in my Reasons for Judgment: six cattle purchased by the wife, payments made by the wife on a loan advanced by Ms. Draper’s sister to the farm corporation, an accounting bill, and security against farm assets for whatever is owed by Mr. Holtby to the wife.
[9] On all of these matters except the issue of security, I am not entertaining any further submissions and not making any further order. Not only were these items not left open in my Reasons for Judgment, they were not the subject of any submissions by counsel at the end of the trial.
[10] On the issue of security, although I could, I would not dismiss that more important request simply on the bases noted above. On the merits of the request, not vigorously opposed by Mr. Clayton at Court on June 2, it is allowed.
[11] The powers of the Court under subsection 9(1)(b) of the Family Law Act, R.S.O. 1990, c. F.3, as amended, are enhanced remedies that are not to be resorted to indiscriminately. Thibodeau v. Thibodeau, 2011 ONCA 110, [2011] O.J. No. 573 (C.A.).
[12] Here, there is evidence to suggest that security is necessary to ensure that the Judgment will not be a hollow one, vis à vis the equalization payment in the wife’s favour. Mr. Holtby has a history of reorganizing his assets to shield himself from creditors, including his former spouse.
[13] Thus, there shall be a Charge on property owned by Mr. Holtby sufficient to secure the amount of the equalization payment (and only that payment). The other monetary amounts ordered by the Court and payable by the husband do not fall within the ambit of section 9.
Quantum of the Equalization Payment
[14] I repeat here paragraphs 100 and 101 of my Reasons for Judgment.
[100] In my view, where the net family property statements of the parties differ, but for the ownership of the assets dealt with above, I prefer the calculations submitted by Ms. Draper. They are more in accordance with the evidence at trial.
[101] Except for the ownership of the assets dealt with above, I adopt the comments made by Mr. Carey in his document submitted during final submissions – the checklist of differences between the statement filed by the Applicant and that filed by the Respondent and the reasons why the latter ought to be preferred.
[15] There is a continuing dispute between the parties regarding the value to be attributed to farm equipment and vehicles. That item falls within the two paragraphs set out above, thus, the wife’s figure of $79,425.00 shall prevail.
[16] As for cattle (the husband says $55,000.00 and the wife $67,000.00) and crops (the husband says $27,745.05 and the wife $45,000.00), unlike farm equipment and vehicles, the wife does not argue now that my Reasons for Judgment already decided those values.
[17] In the absence of any cogent reason to prefer one side’s figure over the other, which I find to be the case, averages shall be used for each of those two items: $61,000.00 for cattle and $36,372.53 for crops.
[18] Now, on to the big-ticket item – the value of the land as of August 19, 1999 (the date of separation/valuation).
[19] Ms. Draper is absolutely correct that the onus is on Mr. Holtby, as the owner of those assets, to establish their values on a balance of probabilities, failing which the figure proposed by the other side may well be accepted by the Court. Menage v. Hedges, [1987] O.J. No. 1512 (District Court), Katz v. Katz (1989), 21 R.F.L. (3d) 167 (Unified Family Court), Labrecque v. Labrecque, [1992] O.J. No. 2446 (Unified Family Court), and Clement v. Clement, [2012] O.J. No. 6156 (S.C.J.).
[20] What the wife fails to recognize, however, is that the figure proposed by the other side must be a reasonable one.
[21] The wife’s suggestion of attaching $477,000.00 to the land (except Lot 8) is unreasonable. It is based on an appraisal conducted many years after the valuation date and after, according to the appraiser himself (Mr. Zinn), years of unprecedented growth in market values for farms in this area.
[22] For example, in cross-examination at trial, Mr. Zinn acknowledged that at least some of the land in question had skyrocketed five-fold in value since 1999.
[23] So what is a reasonable figure to use? Not the book value as shown on the farm corporation’s financials, as choosing that number would ignore the evidence of Mr. Bolton that it bears little relevance to market value (my words).
[24] I have reviewed again the evidence of Mr. Zinn. I agree with Mr. Clayton that his evidence supports the reasonableness of using something in the range of $252,000.00 as the value of the land (except Lot 8) as of August 1999. If the other land increased in value by approximately 16 per cent between the marriage date (October 1995) and the date of separation, then it is reasonable to assume that Lots 6, 7, 9 and 10 had their value, in totality, accrue at roughly the same rate over those same years.
[25] Mr. Zinn did not say that expressly, but that is a reasonable inference to draw. It is certainly much more reasonable than using the book value or relying upon an appraisal done many years later.
[26] I have to decide the issue on the best evidence possible. Here, it is far from ideal, but the number that shall be used for the land in question (except Lot 8) must be in the range of $252,000.00 (about 16 per cent higher than it was worth four years earlier). That is not an unsubstantial increase. That is consistent with the tenor of Mr. Zinn’s evidence at trial, someone respected and relied upon by the wife herself.
[27] But there is one more piece of relevant evidence, Mr. Holtby’s testimony itself, that must jive with the figure that the Court ascribes to the value of the land (except Lot 8) as of August 1999. In cross-examination at trial, the husband admitted that $285,000.00 was too low for the value as of August 1999.
[28] I have reviewed the evidence again to ensure that the questioning by Mr. Carey was clear such that Mr. Holtby would have understood what his answer meant. It was clear. In fact, Mr. Carey referred specifically to page 4 of Exhibit 23, the husband’s Net Family Property Statement.
[29] Thus, I have decided to increase the value from $252,000.00 to an even $300,000.00. That remains consistent with the evidence of Mr. Zinn but also pays respect to Mr. Holtby’s own admission during cross-examination at trial.
[30] Counsel can now do the equalization payment calculation, using $300,000.00 as the value of the land (except Lot 8) as of August 1999.
Lot 8, the Fifty Acres
[31] I accept the wife’s position. The only thing disputed by Mr. Holtby, half-heartedly, is her entitlement to prejudgment interest on what Ms. Draper paid against the mortgage and taxes.
[32] Mr. Clayton also submits that some of the payments now being claimed by the wife were not specifically alluded to in the evidence at trial. That is likely correct, however, the payments are not disputed, and my view is that fairness deserves to prevail over technicalities.
[33] Mr. Holtby benefitted from her payments from the time that they were made, and but for the payments Ms. Draper would have had that money to invest elsewhere.
[34] The husband shall pay to Ms. Draper the sum of $61,577.02, including interest, as calculated by Mr. Carey.
The Class B Shares
[35] I accept the wife’s position. The only thing disputed by Mr. Holtby, again half-heartedly, is her entitlement to prejudgment interest on the $40,000.00 that she paid to acquire the class B shares in the farm corporation.
[36] She is so entitled, even though this is a closer call than with the prejudgment interest claimed with respect to Lot 8. Mr. Clayton makes a decent argument: perhaps prejudgment interest ought to start only from my Reasons for Judgment or the date of the within Endorsement as the $40,000.00 only became a live issue then.
[37] Technically, that is true, however, I have never been a slave to technicalities. Basic fairness must prevail. She paid the money. She got nothing for it (we know that now). She could have done something else with the money instead. She should have the benefit of the interest claimed.
[38] The husband shall pay to Ms. Draper the sum of $49,847.00, including interest, as calculated by Mr. Carey.
Costs
[39] If the parties cannot agree on costs, counsel may file written submissions. Each submission shall be limited to three pages, excluding attachments such as a Costs Outline, offers to settle and authorities. The husband shall file within thirty days of today, and the wife within fifteen days thereafter. No reply is permitted.
Justice C.J. Conlan