COURT FILE NO.: FS-17-67 DATE: 2018 August 13

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

LEE MARTIN JOHN PITTS Applicant Shawn Richarz, for the Applicant

• and -

HOLLY DAWN PITTS Respondent Elaine Rosewell, for the Respondent Kristen Morris, for the OCL

HEARD: June 18 and 19, 2018

THE HONOURABLE MR. JUSTICE R. J. HARPER

REASONS FOR JUDGMENT

[1] At the outset of the trial, the parties advised that they had settled all of the issues except for the following:

a) What was the extent to which the Applicant Lee Pitts (Lee) borrowed money from his father and what was the extent of Lee’s indebtedness to his father at the date of separation, if any?

b) What chattels did the parties own at the date of separation and what was the value of the chattels? What should be the disposition relative to the chattels?

c) Is the Respondent Holly Pitts (Holly) entitled to an amount of money for unjust enrichment as a result of her contributions to the matrimonial home?

d) In the alternative, is Holly entitled to an ownership interest in the matrimonial home by way of constructive trust?

e) Having regard to the findings of the court, what is the equalization owning?

This is an application brought under both the Divorce Act and the Family Law Act. I am satisfied on the evidence that a Divorce Order shall issue.

Background

[2] Holly and Lee started to cohabit in 1997. They married in 1999 and separated on October 9, 2014.

[3] They had three children: Michelle, now 17 years old; Kaitlyn, now 13; and Ashley now 10 years old.

[4] All three children have been in the care of Holly since separation. Prior to separation, Holly was the primary caregiver.

[5] Holly worked at a corner store when Holly and Lee started to reside together. At that time she was 20 years old. After cohabitation she worked for a period of time at both a corner store and a restaurant. When the children were born, she worked off and on in a part-time capacity. The children all have varying degrees of special needs. Michelle has multiple diagnoses that include ADHD, anxiety and learning disabilities. Although she is presently 18, she is only in grade 9. As a young child, her behaviour’s and emotional distress increased to the point that they were all-encompassing. Holly dedicated almost all of her time to caring for Michelle. As she got older, her needs increased and the need to engage her in counselling and other forms of adolescent psychiatric treatment also increased.

[6] Although Kaitlyn and Michelle do not have disabilities that are as severe, the two younger children also have challenges. Kaitlyn has ADD and anxiety and to a lesser degree, so does Ashley. I find that both before and after separation, Holly carried the excess burden of caring for the children.

[7] Lee has worked at the Ford Motor company throughout their relationship. Although his shifts changed from time to time, he was often at work for long periods of time. It took him approximately 40 minutes to get to work and 40 minutes to return home. He worked 8-hour shifts mostly. His mother sometimes helped out with the children when Holly would work weekends; nevertheless, I find that Holly was the one who took the children to most of their extensive appointments to caregivers. After separation, Holly has been almost exclusively responsible for the children’s care.

The Debts and Adjustments for Carrying Costs of the Cottage

The Cottage

[8] The cottage lot was purchased in or about 2013. The title was taken in both names. The purchase of the lot and the financing of the building of the cottage was all effected through monies either loaned or gifted by Lee’s father.

[9] Of the debts Lee claims that he owes his father, Holly only disputes the sum of $50,000 which Lee claims his father loaned him to pay for the costs of building the cottage.

[10] Holly also disputes that she should be responsible for the sum of $23,000, representing her share of the carrying costs of the cottage property since separation.

The Carrying Costs of the Cottage

[11] After separation of the parties, neither Holly nor the children ever used the cottage. Lee claims that although he never used the cottage, he wanted to keep the cottage in hopes that there would be a reconciliation and the cottage could be used by the family once reconciliation occurred.

[12] Neither party brought an application to have the property partitioned and sold until Lee brought his application issued on November 24, 2016. This was two years after the parties separated. Holly first claimed in her Answer filed December 6, 2016 that the cottage should be partitioned and sold.

[13] This is a jointly held property. If Holly did not want to be responsible for any of the carrying costs, she could have sought whether through an agreement with Lee or an order of the court to partition and sell the property. However, Lee could also have sought either an agreement or court order to have Holly pay a share of the expenses instead of making all of the payments and not claiming for a contribution until two years after the separation.

[14] The expenses claimed by Lee, excluding interest on a loan, consist of hydro and permit, insurance taxes and road fees. They are as follows:

a) The hydro and permit total $1,383.06;

b) The insurance totals $2,594.84;

c) The taxes total $7805.37;

d) The road fees total $304.00.

The total carrying costs set out above amount to $12,087.27.

[15] Holly’s share should be $6,043.63, which is half of the total carrying costs.

[16] I decline to include interest on a loan that is claimed by Lee for the reasons that follow.

[17] Lee testified that his father loaned him the sum of $50,000 in order to build the cottage. His father testified that he provided that amount of money to Lee in cash. He stated that he paid $8,000 in cash to one of the tradesperson. He later provided Lee with another $8,000 to pay for building expenses. He also provided the sum of $33,000 in cash at another time to pay for building and construction costs. Although both Lee and Lee’s father stated that the $50,000 was not a gift and was a loan, they did not enter into any loan documentation. The money was said to have been interest-free and had no repayment date.

[18] Holly was not told anything about the $50,000. She knew that monies were advanced from time to time between Lee and his father. However, she was only aware of the loan to the father that at the date of separation amounted to $83,000.

[19] When Lee realized at some point in 2016 that the parties were not going to reconcile, he paid off his father and took a line of credit bearing interest. He stated that he did not want his father to get stuck with this.

[20] Another significant piece of evidence is that the father withdrew the sum of $50,000 on October 23, 2012. He gave that sum of money to his other son Ian. This was to equalize the money that he had given to Lee earlier. This was not a loan to Ian. Lee’s father, John, stated that he always treated his sons equally.

[21] At the date of separation, Lee’s father John did not ask Holly for any payment with respect to the alleged loan of $50,000. He also stated that he did not ask Lee to pay back the $50,000. Instead, Lee borrowed the money to pay his father back the $50,000 that he did not have to pay back and had to pay interest on the money he borrowed. He now wants Holly to pay one half of that interest. I find that Holly is not responsible to pay any of that interest. Even if I find the $50,000 to be a loan, there is no evidence that the loan, Lee claims his father gave him, was required to be paid back.

[22] A person claiming that monies advanced by a family member is a loan has the onus of proving that it is a loan.

[23] In Turner v. Hawkins, , [2002] O.J. No. 4099 (S.C.J.). Kent J. at para. 17, stated that:

[T]he law provides where funds are advanced by family members to a daughter and son-in-law, there is a rebuttable presumption that the advance is a gift. If there is acceptable evidence which establishes on a balance of probabilities that the intent of the parties at the time of advancement was other than to give or receive a gift, then the advance may be found to be a loan. Such evidence is best if it is documentary, next best if it is independent and of the least assistance to the court if it is only the oral evidence of the involved and interested parties testifying on the basis of their recollection. This is particularly so, if anything in the evidence of the parties reflects unfavourable upon their credibility or reliability.

[24] I find that Lee’s father John gifted the $50,000 to Lee. There was no written documentation of a loan. There were no terms of repayment. Lee’s father gave the same amount of money to Ian and did not characterize it as a loan.

[25] As a result of my findings, the $50,000 claimed as a loan on Lee’s net family property shall be disallowed. No interest claimed by Lee relative to his borrowing money to pay back his father the $50,000 will be the responsibility of Holly.

The Law on Unjust Enrichment

[26] In the case of McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, the Ontario Court of Appeal stated at para. 66:

It must be stated that, in the vast majority of cases, any unjust enrichment that arises as the result of a marriage will be fully addressed through the operation of the equalization provisions under the Family Law Act; the spouse who legally owns an asset will ordinarily share half its value with the other spouse as a result of the equalization provisions under the Act. However, a fair and contextual reading of the equalization and net family property provisions of the Family Law Act ensures that married spouses are not deprived of equitable remedies they would otherwise have available to them because, as noted above, ownership issues -- equitable or otherwise -- are to be determined before the net equalization payment exercise is undertaken.

[27] The first thing that must be done is to determine the ownership of the property of the parties and then to assign the proper value. At this stage, the court must consider trust principles when there is a claim of unjust enrichment that can only be satisfied by the assignment of an ownership in that property.

[28] Once the trust issues has been determined, the court is in a position to calculate what equalization is owing if any. Only after that has been done is the court able to consider a claim for an unequal division of the net family property.

The Claim of Unjust Enrichment

[29] In G.M.C. v. A.M.F., 2018 ONSC 2704, Gordon J. made the following comments with respect to the law relating to unjust enrichment at paras. 69-70:

The elements in unjust enrichment are:

(a) an enrichment or benefit to one party;

(b) a corresponding deprivation to the other; and

(c) the absence of a juristic reason for the enrichment.

See: Kerr, at paras. 31-45.

In Kerr, Cromwell J. introduced the concept of a “joint family venture” to identify the nature of those domestic relationships involving a joint effort, or partnership, where the parties jointly contribute towards a common goal. Relevant factors to consider include mutual effort, economic integration, actual intent and priority of family. Unjust enrichment is said to reflect the reality of a joint family venture where there has been a disproportionate retention of assets.

[30] The complications in many cases result from a mixing of concepts. A court cannot do an analysis of whether a joint family venture exists until there has been a finding of unjust enrichment.

[31] In Hebo v. Putros, 2017 ONSC 7043, Graham J. stated at para. 136 the following:

The court must engage in a two-part analysis of a claim for unjust enrichment or constructive trust in relation to a matrimonial home, where the home is also subject to an equalization claim (See Cerenzia v. Cerenzia, 2015 ONSC 7305 (Ont. S.C.J.)). First, the court must determine whether the evidence supports a claim for unjust enrichment in favour of the claimant. Second, the court must determine whether a monetary award is sufficient to remedy the issue of unjust enrichment. Where unjust enrichment is established, the first remedy to consider is always a monetary award (See Martin v. Sansome, 2014 ONCA 14 (Ont. C.A.), at para. 48). A court will impress a proprietary remedy, such as a constructive trust, only if the claimant satisfies the court that a monetary award would be insufficient in the circumstance.

[32] At paras. 143-144, the court in Hebo goes on to state:

As noted above, the court is satisfied that Ms. Hebo made contributions to the acquisition of the home during the marriage. She contributed domestic labour, child care, and other services during the relationship. Further, her income helped to finance the household. The court finds that Mr. Putros was likely enriched by Ms. Hebo’s contribution.

The more difficult question is whether there is a juristic reason for Mr. Putros’ enrichment and Ms. Hebo’s corresponding deprivation.

Analysis

[33] In Hebo, the court found there was a juristic reason for the benefit and as a result the court did not do any analysis with respect to whether a monetary award would be sufficient to satisfy the unjust enrichment.

[34] In this case, Holly claims that she carried the excess burden of the child care. She also claims that the needs of the children were extreme given their behaviours’ – Michelle in particular. She referred to Michelle as her full-time job. Michelle could not be left alone. All three children together presented a significant and sustained challenge throughout the marriage and until the present time. Her primary care before separation and sole care since separation has in and of itself given a substantial benefit to Lee. He was free to continue to work on in an uninterrupted career path at the Ford Motor company. He could do that because of the fact that he was freed up to do so and not burdened by the significant child care responsibilities.

[35] In addition to child care, Holly ran the household. She did all of the cleaning and cooking. She was the one responsible to get and pay for the groceries. Lee admitted that if it was not for Holly, he would probably have starved.

[36] Holly paid for the groceries and other household items. She bought the clothing for herself and the children using the nominal income she earned while working as a part-time server at a restaurant.

[37] At the time that the matrimonial home was purchased, that home was in need of massive renovations and repairs. Although Holly did not financially contribute to the costs of the renovations, she stated that she did much of the non-specialized work. She did the labour work. She moved rocks form the broken up floors and relocated them. She helped with the tearing down of walls and ceilings. She did a lot of the cleaning up on the job sites. At the same time, Lee did participate in much of the more specialized work such as the electrical wiring and rewiring.

[38] I would characterize the process of this massive renovation as a true extended family affair. Many of Holly and Lee’s family members also helped out from time to time. Holly filed pictures of the renovations. The pictures corroborate how significant the renovations were.

[39] The same pattern of work continued with the construction of the cottage. In 2013, a lot was purchased in order for a cottage to be built in the future. This lot was placed in joint tenancy with Holly and Lee. Holly did not contribute to the financing of the purchase nor the construction costs. However, like with the matrimonial home, her contribution was child care, household management and labour-intensive work during the construction process. Holly’s brother and father made significant contributions of work on both properties. They are carpenters and used their trade skills without compensation. For the cottage, they put up the roof tresses and much of the framing.

[40] I find that the work done on both properties was significant and it was done in the spirit of a true family venture. I conclude that all of the extended family contributed to this work because of their relationship with their brother or son Lee and sister or daughter Holly. In my view, the extended family work on these properties was an indirect benefit that both Lee and Holly received.

[41] I find that Holly’s family would not have conferred that benefit had it not been for Holly, and Lee’s family would not have conferred that benefit had it not been for Lee. Having said that, all of the construction work done by Holly and her family did confer a benefit on Lee with respect to increasing the value of the home that was registered in his name. They did not get paid for their work and to that extent they acted to their detriment. I find that there was no juristic reason for the benefit to be conferred.

[42] With respect to the cottage, the benefits conferred by the work done by the parties and the extended family is compensated for by the fact that as joint owners, each party will receive one half of the net proceeds.

[43] However, that is not the case with respect to the matrimonial home. I find that there was significant contribution by Holly through her extraordinary care of the parties’ children with their special needs. This allowed Lee to work full-time and to work on the home extensively. In turn, this lowered construction costs and increased the value. All of this is a benefit to Lee for which he did not compensate Holly.

[44] I find that there is no juristic reason for Lee to have received this benefit while at the same time Holly acted to her detriment. As a result, Lee has been unjustly enriched.

Results of a Finding of Unjust Enrichment

[45] The Respondent’s counsel conceded that there was no evidence that would allow me to properly assess the dollar value of all of the benefits bestowed on the Applicant. She argued that the court must estimate the amount or percentage that would fairly reflect the value of the enrichment. I do not agree. If a party seeks a determination of and compensation for unjust enrichment, they must produce evidence as to the value of the benefit that they conferred. Courts cannot estimate, guess or assign an amount it considers fair in the abstract. That distorts the concept of fairness.

[46] If I am not able to assign a value to the contribution of the benefit conferred, how is it possible for me to make a determination whether a monetary amount would be sufficient to satisfy the unjust enrichment? If I am not able to determine that, how can I then in make an order that the only way to satisfy the unjust enrichment is to order a constructive trust interest in the property under consideration?

[47] In Granger v. Granger, 2016 ONCA 945, 133 O.R. (3d) 641, the Ontario Court of Appeal considered the issue of the evidence of calculation of services that are claimed as part of the conferring of a benefit. Commencing at para. 68, the court stated:

[68] That said, the trial judge does not seem to have placed much value on John’s services. The trial judge said that “some of the acts undertaken by John and Margaret would be those of a dutiful son and daughter-in-law.” In my view, this observation led the trial judge into error. These services had value and were a benefit to Katarina. John was under no legal obligation to act as a “dutiful son” and perform these services.

[69] In any event, to the extent that it is relevant at all, whether John’s actions were simply those of a “dutiful son” ought to have been considered at a later stage of the analysis. Specifically, that issue might have been considered in the context of a “reasonable expectations” analysis, where the defendant bears the onus of proof (a subject I discuss a few paragraphs below).

[70] Further, there was uncontradicted evidence before the trial judge regarding the value of John’s services. The parties agreed that various expert reports could be entered into evidence at trial without testimony. The agreement of the parties was that the court could accept or reject the opinion evidence depending on the court finding the foundational facts to substantiate any assumptions made in arriving at these opinions. One such report was that of valuation consultant Gordon Krofchick. Mr. Krofchick’s report was the only evidence that expressed an opinion of the value of John’s services. He concluded, using average rates for unskilled labour and based on the hourly estimates John gave on a per annum basis, adjusting for inflation, that John contributed $438,113 in domestic services from 1982 to 2013. Mr. Krofchick was not cross-examined. Katarina did not obtain a contradictory report.

[71] The trial judge did not accept Helena’s and Katarina’s blanket denial that John made any contributions. Thus, we are left with John’s evidence regarding his estimated hourly work, which the trial judge did not reject in his reasons. Those estimates provide the necessary foundational facts to validate the assumptions underlying the Krofchick report.

[72] Applying the trial judge’s meagre findings to the evidence, I conclude that John contributed $438,113 in domestic services to Katarina and enriched her in that amount.

[48] In Granger, the court had evidence that allowed it to assign a monetary value to the benefit of the services that amounted to the benefit conferred. I find that in this case, due to the lack of evidence, I am not able to assign a value to the unjust enrichment and therefore I cannot make a determination as to whether such unjust enrichment can be satisfied by a monetary order. It follows that without that determination, an order for a constructive trust interest in the home is not appropriate. However, the significant contribution I have found that Holly made, can and will be considered when making a determination as to the classification of the basis of spousal support. I will elaborate later in these reasons.

Unequal Division - Section 5(6) Family Law Act

[49] As a result of my finding, I must determine what the equalization payment should be based on the evidence before me prior to considering the alternate claim of unequal division of the net family property pursuant to the Family Law Act section 5(6).

[50] The parties dealt with two variables in each of their calculations of their client’s respective net family properties:

a) The contents of the home including tools;

b) The Applicant’s Pension.

[51] Respondent is consenting to a division of the Applicant pension at source. That will be taken out of the net family property calculation.

[52] Neither party put forward any evidence of value of the contents of the home and cottage including tools. Courts will not and cannot order divisions of chattels. As a result I make the following order:

All of the contents of the cottage and the matrimonial home shall be sold and the proceeds divided equally if the parties are not able to come to an agreement with respect to a division of or payment to the other for these chattels within 60 days.

[53] As a result of my findings with respect to the $50,000, that sum of money is a gift. It would have no impact on any equalization as it would come in as an asset and then be excluded.

[54] As a result of the above adjustments the equalization calculations is as follows as indicated in the charts.

[55] The figures shown below are as of the date of separation. They do not reflect that matrimonial home value at present.

Net Family Property Statement at Date of Separation

Table 1: Value Of Assets Owned on Valuation Date (List in the order of the categories in the financial statement)

PART 4(a): LAND

Nature & Type of Ownership (State percentage interest)

Address of Property

APPLICANT

RESPONDENT

Matrimonial Home

4383 Woodburn Road, Binbrook 50% each – 1280 Blue Heron Ridge Rd.: sold payment at 50% each

345,000.00

185,319.86

185,319.86

15. Totals: Value of Land

$530,319.86

$185,319.86

PART 4(b): GENERAL HOUSEHOLD ITEMS AND VEHICLES

Item

Description

APPLICANT

RESPONDENT

Household goods

& furniture

Cars, boats,

vehicles

10 vehicles and three boats, tools, equipment, inventory, household contents

10,650.00

Jewellery, art,

electronics, tools,

sports & hobby,

equipment

Other special

items

16. Totals: Value of General Household Items and Vehicles

$10,650.00

$0.00

PART 4(c): BANK ACCOUNTS AND SAVINGS, SECURITIES AND PENSIONS

Category (Savings, Checking, GIC, RRSP, Pensions, etc.)

Institution

Account Number

APPLICANT

RESPONDENT

RSP, investments, accounts

First Ontario C.U./Assante

82,520.03

61,890.00

17. Totals: Value of Accounts And Savings

$82,520.03

$61,890.00

PART 4(d): LIFE AND DISABILITY INSURANCE

Company, Type & Policy No.

Owner

Beneficiary

Face Amount ($)

APPLICANT

RESPONDENT

18. Totals: Cash Surrender Value Of Insurance Policies

$0.00

$0.00

PART 4(e): BUSINESS INTERESTS

Name of Firm or Company

Interests

APPLICANT

RESPONDENT

19. Totals: Value Of Business Interests

$0.00

$0.00

PART 4(f): MONEY OWED TO YOU

Details

APPLICANT

RESPONDENT

20. Totals: Money Owed To You

$0.00

$0.00

PART 4(g): OTHER PROPERTY

Category

Details

APPLICANT

RESPONDENT

21. Totals: Value Of Other Property

$0.00

$0.00

22. VALUE OF PROPERTY OWNED ON THE VALUATION DATE, (TOTAL 1) (Add: items [15] to [21])

$0.00

$0.00

Table 2: Value Of Debts and Liabilities on Valuation Date

PART 5: DEBTS AND OTHER LIABILITIES

Category

Details

APPLICANT

RESPONDENT

Personal Loan

John Pitts

83,057.19

Line of Credit

First Ontario Merit Line

13,000.00

23. Totals: Debts And Other Liabilities, (TOTAL 2)

$96,057.19

$0.00

Table 3: Net value on date of marriage of property (other than a matrimonial home) after deducting debts or other liabilities on date of marriage (other than those relating directly to the purchase or significant improvement of a matrimonial home)

PART 6: PROPERTY, DEBTS AND OTHER LIABILITIES ON DATE OF MARRIAGE

Category and Details

APPLICANT

RESPONDENT

Land (exclude matrimonial home owned on the date of marriage, unless sold before date of separation).

General household items and vehicles

Bank accounts and savings

4,000.00

Life and disability insurance

Business interests

Money owed to you

Other property

3(a) TOTAL OF PROPERTY ITEMS

$4,000.00

$0.00

Debts and other liabilities (Specify)

3(b) TOTAL OF DEBTS ITEMS

$0.00

$0.00

24. NET VALUE OF PROPERTY OWNED ON DATE OF MARRIAGE, (NET TOTAL 3)

$4,000.00

$0.00

Table 4: PART 7: VALUE OF PROPERTY EXCLUDED UNDER SUBS. 4(2) OF “FAMILY LAW ACT”

Item

APPLICANT

RESPONDENT

Gift or inheritance from third person

Income from property expressly excluded by donor/testator

Damages and settlements for personal injuries, etc.

Life insurance proceeds

Traced property

Excluded property by spousal agreement

Other Excluded Property

26. TOTALS: VALUE OF EXCLUDED PROPERTY, (TOTAL 4)

$0.00

$0.00

TOTAL 2: Debts and Other Liabilities (item 23)

$96057.19

$0.00

TOTAL 3: Value of Property Owned on the Date of Marriage (item 24)

$4,000.00

$0.00

TOTAL 4: Value of Excluded Property (item 26)

$0.00

$0.00

TOTAL 5: (TOTAL 2 + TOTAL 3 + TOTAL 4)

$100,057.19

$0.00

APPLICANT

RESPONDENT

TOTAL 1: Value of Property Owned on Valuation Date (item 22)

$623,489.89

$247,209.86

TOTAL 5: (from above)

$100,057.19

$0.00

TOTAL 6: NET FAMILY PROPERTY (Subtract: TOTAL 1 minus TOTAL 5)

$523,432.70

$247,209.86

EQUALIZATION PAYMENTS

Applicant Pays Respondent

Respondent Pays Applicant

$138,111.42

$0.00

[56] The parties have agreed that the value of the current value of the Matrimonial Home as of December 31, 2017 was $538,974.00. This represents an increase of $193,974.00 from the value at the date of separation of October 4, 2014.

[57] This application was not started until Lee issued his Application on November 30, 2016. He explained the delay by stating that he wanted the parties to reconcile. When he felt that there was no possibility, he brought the Application. Holly responded by issuing her Answer on December 16, 2016. She did not give any explanation for not coming to court earlier.

[58] The parties agree that had this matter come to court closer to the time of separation, there would be no significant increase in the value of the home and the claims for unjust enrichment, constructive trust and unequal division would not be before the court.

[59] However, that does not end the analysis. Once the equalization has been determined, I am asked to consider whether or not there should be an unequal division of the net family property due to the substantial contributions by Holly that were not compensated for in any way. Any such order must be made pursuant to s. 5(6) of the Family Law Act. That section reads:

Variation of share

S.5(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,

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

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

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

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

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

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

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

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

Purpose

(7) The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only to the equitable considerations set out in subsection (6). R.S.O. 1990, c. F.3, s. 5 (7).

[60] Normally spouses participate in the equalization of the increase in the value of the property on an equal basis. That concept already has the built-in consideration that household management and financial provisions are the joint responsibilities of the spouses. Further, inherent in the marital relationship there is equal contribution, whether financial of otherwise, by spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties, subject only the equitable considerations set out in subsection (6).

[61] The Respondent must demonstrate to the court that she falls within one of the itemized headings in ss. 5(6) (a) through (h). In addition, she must demonstrate that as a result of those circumstances, it would be unconscionable to order an equal division.

[62] In the circumstances of this case, Holly is relying on s. 5(6) (h):

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

[63] She claims that it would shock the conscience of the court to order an equal division given the extent of the role she played in the preservation, maintenance and improvement of the property. I find that she did play a significant role in the preservation, maintenance and improvement of the property as set out in my analysis earlier in these reasons. This approach was adopted by Czutrin J. in Morrison v. Barclay-Morrison, , [2008] O.J. No. 4663, Czutrin J. states in paras. 68, 69 and 70, as follows:

[68] The Court of Appeal in Levan v. Levan (2008), 2008 ONCA 388, 90 O.R. (3d) 1 (Ont. C.A.), affirmed that the proper approach to the application of s. 5(6), following its decision in Stone v. Stone (2001), , 55 O.R. (3d) 491, is as follows:

(1) Establish each spouse’s net family property pursuant to s. 4 of the FLA by determining and valuing the property owned by each spouse on the valuation date;

(2) Apply s. 5(1) of the FLA and determine the equalization payment; and

(3) Decide whether, in view of circumstances in s. 5(6), it would be unconscionable to equalize net family properties.

[69] The circumstances claimed to be unconscionable must come within one of the subsections of s. 5(6); Berdette v. Berdette (1991), , 3 O.R. (3d) 513 (Ont. C.A.). Section 5(6) (h) provides for an unequal division of property due to unconscionability resulting from circumstance relating to the acquisition, disposition, preservation, maintenance or improvement of property.

Sufficiency of Monetary Award

[64] In Cerenzia v. Cerenzia, 2015 ONSC 7305, McDermot J. stated commencing at para. 81:

[81] In Straub, McKelvey J. presided over competing constructive trust claims between married parties. The husband claimed an interest in the increased value of the matrimonial home and the wife claimed an interest in the increased value of the husband’s investment portfolio. In addressing these claims, McKelvey J. distinguished the case from Kerr on the grounds that the parties were entitled to a statutory equalization, which applies only to married couples. He concluded:

In my view, the statutory framework for equalization should be applied routinely, and it will be a rare case where a court will apply the constructive trust doctrines in situations which are governed by the statutory framework. There should be a high threshold before departing from the statutory guidelines. I also feel it is significant that the provisions of the Family Law Act have provisions which allow for an unequal distribution in cases where an equal distribution would be unreasonable. This reinforces my view that the law relating to constructive trusts has little relevance in cases which are governed by the statutory framework (para. 109).

[83] In the normal course, therefore, the increase in value after separation is not a basis for a finding that a monetary award is insufficient to address the claimant’s request based upon unjust enrichment. That is addressed by quantifying a monetary award, including any claim for an unequal division of net family property under s. 5(6) of the FLA.

[84] Furthermore, as I noted at the beginning of this judgment, the issue of the post-separation increase in value was caused, in this case, by delay in resolving this matter. Had the matter been resolved quickly, the increase in the value of the home would not have been an issue. If this was a concern of the husband, I would think that some evidence would be provided as to who was responsible for the delay. However, no blame was attributed to either party. The application was only commenced in January 2012, more than two years after separation, and it was the applicant wife who issued process. As such, assuming an award of pre-judgment interest, the husband cannot now complain that a monetary award is insufficient to address any issues of unjust enrichment.

[89] I do not find that the discretion of the court under s. 5(6) is engaged by this provision. The significant post-separation increases in the value of the home are troubling for Mr. Cerenzia and may in fact work an unfairness, but they are not unconscionable. There was no explanation for the delay in resolution which permitted the significant increase in the value of the home over the past six years. Mr. Cerenzia was not the person who brought these proceedings. Had he wished to resolve the property issues early on, he could have sought the court’s assistance well before 2012.

[90] The delays in this matter are properly satisfied by an award of pre-judgment interest on the equalization payment: Novakovic v. Kapusniak, 2008 ONCA 381, 52 R.F.L. (6th) 9. As well, as noted above, Ms. Colasanti will be left with at least a portion of the debt on the home. To provide Mr. Cerenzia with an interest in the home would not be fair, considering her obligation to her father’s estate. It is not “shocking” to the court that the applicant be given the benefit of the post-separation increases in value of the home under the circumstances.

[65] In the circumstances of this case, I do not feel that an order for unequal division of the net family property should be made. I find that the circumstances result in an unfair result however that is not sufficient to rise to the requirement of unconscionability.

[66] As a result of the significant delays by both parties in even attempting to bring this matter to court, I decline to make an order for prejudgment interest.

Entitlement to Compensatory Spousal Support

[67] My findings that Holly did make significant contributions to the marriage by way of extraordinary responsibility toward child care for children with special needs both during the marriage and after separation go to the type of spousal support the is entitled to. I also found that she provided substantial services to the renovations to the home and cleaning and upkeep, along with buying all the groceries, feeding the family and substantially clothing the family. Given these findings, I find that she is entitled to compensatory support. Although the parties settled the issue of spousal support by agreeing that Holly was entitled to support, they did not characterize that entitlement. She is receiving a nominal amount of spousal support of only $1.00 per month given there is insufficient money left over after the payment of child support.

[68] Given my findings as set out above, I find that Holly’s spousal support is to be designated as compensatory entitlement. Any change in the payment of child support and/or increase in the income of Lee must take into consideration the compensatory entitlement finding.

Costs

[69] If no costs agreed to within 30 days, counsel may set a time with the trial coordinator to argue costs.

Harper, J.

Released: August 13, 2018

Pitts v. Pitts, 2018 ONSC 4686

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Lee Martin John Pitts Applicant – and – Holly Dawn Pitts Respondent REASONS FOR JUDGMENT The Honourable Mr. Justice Harper

Released: August 13, 2018