Court File and Parties

NEWMARKET COURT FILE NO.: FC-15-49755-00 DATE: 20190114 ONTARIO SUPERIOR COURT OF JUSTICE FAMILY COURT

BETWEEN:

Antonella Testani Applicant – and – Jason Haughton Respondent

Counsel: Michelle Sample, Counsel for the Applicant Vilma Radfar, Counsel for the Respondent

HEARD: November 26, 27 and 28, 2018

Reasons for Decision

JARVIS J.:

[1] In 2013, title to a residence (“Wildfire”) was transferred to the applicant (“the wife”, sometimes referenced as “the daughter”) and the respondent (“the husband”) by the wife’s mother. The pivotal issue in this trial is whether the wife is entitled to deduct from the calculation of her net family property the sum of $125,000, representing the value of a promissory note that she signed in favour of her mother shortly before title was transferred. The husband claims that the first time he became aware of this document was when these proceedings started. If the debt is included in the wife’s net family property, the husband owes her an equalization payment of $75,825.62. If the debt is not included, the husband will only owe her $1,332.54. These amounts are subject to some further, mostly post-separation, adjustments as identified below.

[2] The husband claims that the transfer was a gift.

[3] All other issues arising from the breakdown of the parties’ marriage, those involving custody of the parties’ daughter, and child and spousal support, were resolved before trial.

Background

[4] The parties married on May 3, 2003 and separated on October 11, 2015. There is one child of the marriage. She was born on December 12, 2003 and resides with her mother. The wife has always worked as a property manager. She was 57 years old at the time of trial and is fluent in English and Italian. The husband immigrated to Canada from Jamaica in approximately July 2001 and afterwards worked as a labourer. He was 45 years old at the time of trial and is functionally illiterate.

[5] The wife is one of two children. Her mother is Filomena Testani (“Filomena”) and her brother is Massimo Testani (“Massimo”). Filomena is elderly, and retired; Massimo lives with her, has power of attorney over his mother’s financial affairs, and shares a joint account with her. He works in the heating and air conditioning industry as a mechanic and also is a professor at a local community college in its heating and refrigeration program. They live in a home (Vera Road) owned by Filomena.

The Issues

[6] The issues to be determined are the following:

(a) whether Filomena’s transfer of Wildfire’s title to the parties was a gift;

(b) the wife’s entitlement to a $125,000 valuation date deduction represented by a promissory note to her mother, the authenticity of which is challenged by the husband (the “Promissory Note”);

(d) the husband’s entitlement to an equalization payment adjustment for income replacement benefits paid to him which were appropriated by the wife after the parties separated (the “Income Replacement Benefit”);

(e) the wife’s entitlement to a contribution from the husband for expenses paid by her after the valuation date for their matrimonial home before its sale (“House Expenses”);

(f) miscellaneous post-valuation adjustments upon which the parties could not agree in terms of how they should be recorded in the parties’ net family property statements or which the parties left to the court to determine (“Other NFP Adjustments”).

[7] The parties filed an Agreed Statement of Fact (“SAF”) when trial began. [^1] Both of the parties testified. The wife called her mother and her brother as witnesses. The husband called the solicitor (Anthony Maniaci) who acted for the wife’s mother and the parties when Wildfire’s title was transferred to the spousal parties.

[8] Each of the issues will be separately addressed.

Transfer of Wildfire

[9] Those facts and evidence relevant to determining whether the Wildfire transfer was a gift include the following:

(a) after the parties married in 2003 they lived in a rented apartment;

(b) the wife managed the parties’ financial affairs;

(d) in 2005, Filomena bought two investment properties; Wildfire and another property at 34 Teahouse Rd, in Vaughan (“Teahouse”);

(e) the purchase of both properties was financed by cash and a mortgage;

(f) the parties rented Wildfire from Filomena after she bought it. Teahouse was rented;

(g) Filomena and the wife testified that, for many years, they and the husband often discussed at family gatherings the eventual transfer of Wildfire to the wife and the husband. The husband testified that there were never any such discussions. He did admit (with the wife) that during the marriage both of them expressed a desire to build their financial equity;

(h) the parties renovated, at their expense, the unfinished basement of Wildfire, and later, around the time that title to Wildfire was transferred to them, they renovated its kitchen. There was some evidence that Filomena financially assisted in paying for these renovations;

(i) in August 2012, Filomena transferred title of Teahouse to Massimo. They testified that while no cash was exchanged, Massimo had made, and paid for, renovations to the Vera and, to a lesser extent, the Teahouse properties;

(j) Filomena and Massimo retained the services of a local real estate solicitor, Mr. Maniaci (“the solicitor”), to transfer title. The transfer recorded “$0.00” for Consideration and the attached Land Transfer Tax affidavit indicated that Massimo was assuming the outstanding mortgage registered on title;

(k) Massimo testified that he paid his mother’s capital gains tax on the transfer amounting to about $19,000;

(l) on or about February 2, 2013, Filomena made a decision early one morning to transfer Wildfire to her daughter and son-in-law. She wrote a note to her daughter that said that she would transfer the title of Wildfire to her and her husband. She showed this to her daughter a day or two after it was written and both of them signed it. This is what the note said (translated from Italian),

Dear Antonella: We spoke many times of putting the house in your names; I’ve decided to do so, but we agree that you shall return to me the money I spent

I’ve done the calculations with your brother: I spent 125,000 dollars

I am lending you this sum; you’ll have to give it all back to me upon my request

Antonella paper speaks

Filomena Testani

Antonella Testani

(m) the wife and her mother claim that title was also transferred in exchange for a promise that the spousal parties would pay Filomena’s taxable capital gains triggered by the transfer and that Filomena would be repaid the amount of $125,000 representing her out-of-pocket contributions to the property on demand;

(n) the parties attended at a local bank to apply for mortgage financing. They did not disclose on their mortgage loan application any debt owed to Filomena. The wife says that she told the bank officer with whom the parties were dealing that her mother was leaving her equity in the property. No mention was apparently made about the promissory note. The husband disputes that any mention was made to the banking officer about any note or debt owing to Filomena;

(o) the parties and Filomena retained Mr. Maniaci to act for them on the transfer of title to Wildfire and a refinancing of the existing mortgage on title. When title was transferred and registered on June 18, 2013, the Consideration portion of the transfer showed “$0.00”. The Land Transfer Tax Affidavit accompanying the Transfer showed that the spouses were assuming the value of a $175,000 mortgage [^2] then registered on title. Transfer tax was calculated and paid on that amount;

(p) Filomena testified that she had asked the solicitor to prepare a document that if her daughter and son-in-law separated, she’d get her money back. She said that Mr. Maniaci challenged her about how could she expect to be repaid if there was no reference in the transfer documentation to the debt. She felt bad; nothing more was apparently said or done about that subject;

(q) Mr. Maniaci testified. He said that he had some recollection of meeting the parties in 2013. There was no mention about any promissory note or $125,000 being owed to Filomena (she testified that she did not bring the promissory note to the solicitor’s office). Filomena wanted his advice about probate issues associated with transferring Wildfire while she was alive. They conversed mostly in Italian and a little bit in English. Mr. Maniaci said that he could not recall whether the word “gift” was ever used but did agree that there was to be no consideration (except for paying land transfer tax on the value of the mortgage being assumed). Filomena said that the solicitor cautioned her that if a property is given then the gift “cannot be undone”;

(r) Filomena incurred a $20,019.84 capital gains tax arising from the Wildfire transfer. This was paid from the spousal parties’ joint line of credit.

[10] The husband claims that Wildfire was gifted to the parties. I disagree.

Analysis

[11] It is well established that equity presumes a bargain, not gift, and that the onus rests with the claimant to prove the requisite elements of a gift; intention of the donor at the time of transfer, acceptance of the gift and delivery of the gift. [^3] Only the donor’s intention is relevant in the circumstances of this case.

[12] The husband acknowledged that he never had any discussions with Filomena dealing with Wildfire’s transfer of title - those were between the wife and her mother. His case for gift rests on circumstantial evidence involving the transfer, such as; the absence of consideration recorded in the transfer document, the non-disclosure of the promissory note or debt to the bank representative by the wife, and by the wife and her mother of that note, or even a debt, to Mr. Maniaci (the non-disclosure confirmed by the solicitor), and eventually its disclosure to him only after the parties separated and Filomena started her civil collection action.

[13] The preponderance of evidence must leave no doubt about the donor’s intention. [^4] External indicia are assistive in this determination. [^5] In this case, I find that the husband has not only failed to discharge the onus of proof but also that the evidence does not support a finding of a gift, for these reasons:

(a) the parties paid Filomena’s capital gains taxes;

(b) the parties’ assumed Filomena’s mortgage on title to Wildfire;

(d) in August 2012, less than a year before Wildfire’s title was transferred to the parties, Filomena had transferred Teahouse to Massimo, he paid his mother’s capital gains taxes triggered by that transfer, and assumed the mortgage on that property;

(e) the evidence of the wife, Filomena, and Massimo, was consistent with there not being a gift intended. By contrast the husband was less credible; he could not recall basic details about dates and events critical to his case, acknowledged that he “forgets from one minute to the next”, and that he had ‘a tough time remembering details”.

[14] Mr. Maniaci’s evidence was equivocal on the issue of gift. While there was some discussion between him and Filomena involving estate or probate matters, he was tasked with doing for Filomena and the parties with respect to Wildfire, what he had done for Massimo less than a year before. The only difference was that Massimo had provided financial and physical (i.e. labour) benefits to his mother; the wife signed a promissory note.

[15] The husband’s claim that Wildfire was gifted to the parties is dismissed.

The Promissory Note

[16] In addition to the foregoing evidence dealing with the transfer of Wildfire, the following evidence is relevant to the value to be attributed to the promissory note because it impacts the determination of the equalization payment:

(a) on or about March 10, 2016, about five months after the parties separated, Filomena started a civil action against the parties and Mr. Maniaci claiming, among other things, payment of the promissory note. Her Statement of Claim alleged that she had requested “on numerous occasions… that they sign a Promissory Note to her for the $125,000 advanced on the purchase of…Wildfire…” Filomena also claimed that Mr. Maniaci had acted in a conflict of interest and “had failed to ensure…[that her]…interests were protected”. Filomena pleaded that she “was not given the opportunity to obtain independent legal advice prior to transferring the property…or to obtain security”;

(b) the wife filed a Statement of Defence admitting her mother’s claim against the spousal parties: the husband denied Filomena’s claim. No Statement of Defence was apparently demanded of Mr. Maniaci;

(c) Filomena withdrew her claim against Mr. Maniaci. In November 2016, she agreed to dismiss all claims against the husband without costs;

(d) the parties signed an agreement to sell the matrimonial home on June 2, 2017, having a September 15, 2017 completion date;

(e) on June 28, 2017, McGee J. ordered that the net proceeds of sale of Wildfire be equally divided and paid to the parties but for $160,000 which was to be held in trust pending written agreement of the parties or trial disposition;

(f) after Wildfire was sold on September 15, 2017, the net proceeds of sale were equally divided between the parties except for $160,000 which remains held in trust. [^6] Each party’s share of the proceeds was paid to their solicitors;

(g) on September 26, 2017 the wife’s counsel paid to the wife $159,647.81. The wife endorsed this cheque in favour of her brother. On September 29, 2017, Massimo deposited $160,447.63 into his personal bank account. This deposit comprised the endorsed cheque from his sister, a client refund owed to him and a small deposit for his mother;

(h) the wife and Massimo testified that the cheque endorsed to him represented the wife’s payment of $125,000 to Filomena and included money that she had either borrowed from her brother after the parties separated, or his payment of Wildfire realty taxes and her income taxes and telephone bills;

(i) Massimo purchased a $100,000 Guaranteed Investment Certificate (“GIC”) in his name and retained the other $25,000 for unspecified future medical needs for Filomena. Massimo had no explanation why the GIC was not purchased in his mother’s name or why the $25,000 was not deposited into the joint bank account that he and his mother shared.

[17] The wife claimed that the promissory note was a valid deduction in calculating her net family property whereas the husband challenged the authenticity of the note and argued that no debt was owed to Filomena or that, if there was any such debt, its face value should be discounted as it was unlikely that its payment would ever be demanded.

Analysis

[18] Part 1 of the Family Law Reform Act [^7] (“the Act”) deals with Family Property. Net Family Property is defined in s. 4(1) of the Act as follows,

4(1) net family property” means the value of all the property…that a spouse owns on the valuation date, after deducting,

(a) the spouse’s debts and other liabilities, and

(b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse’s debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage;

[19] In determining the value of a spouse’s net family property, a spouse is entitled to deduct their debts and other liabilities. The burden of proving entitlement to a deduction rests squarely with the claimant pursuant to s. 4(3) of the Act,

4(3) The onus of proof proving a deduction under the definition of “net family property…is on the person claiming it.

[20] The wife must satisfy the court on a balance of probabilities that she owed her mother the value of the $125,000 promissory note on the valuation date. While the note may be evidence of that debt, it is not determinative of the issue, particularly where the husband challenges the note’s authenticity and the likelihood of the wife ever being called upon to pay it.

[21] The husband’s challenge to the authenticity of the note was really a challenge as to when it was signed; the implication of this being that if the note was prepared after the parties separated, it was concocted in an effort to financially assist the wife, and, possibly, her mother. As serious and troubling an allegation as this is, it should have been investigated more thoroughly by the husband than he did. While the explanation of Filomena and the wife about the decision to transfer Wildfire and the making of the note might reasonably invite suspicion in circumstances of the parties’ separation, I am not prepared to conclude that the note was made after the parties separated. That does not mean though, that the wife is entitled to a deduction equal to the note’s face value.

[22] In Cade v. Rotstein [^8], the Ontario Court of Appeal upheld a trial decision that reduced to 5% of their face value, five advances made by a husband’s elderly parents which the husband sought to deduct from the calculation of his net family property. The court observed that:

(a) the debts were old;

(b) no demand to repay any of the advances had been made except one after, and motivated by, the separation of the parties;

(d) there was limited expectation of repayment. The parents were elderly, financially well off and did not need the money;

(e) there was little likelihood that the husband would have been called upon to pay. His father testified that he did not intend to ask for payment.

[23] In Da Silva v. Da Silva [^9], Ingram J. commented on the competing interests at play when parents advance funds to their married children,

This issue of the characterization of money advanced from parents to their children arises frequently in family law disputes at the time of the separation. The parents and their own child characterize the advances as loans to be repaid, while the son-in-law or daughter-in-law characterize the advances as gifts. As pointed out by Professor McLeod in his annotation to the case of Amaral v. Amaral (1993), 50 R.F.L. (3d) 364 (Ont. Gen. Div.) at 366: Courts are suspicious of transactions between family members that are raised to reduce the value of shareable property. They have insisted that claimants present proof of the nature of the dealings before granting credit.

[24] Several factors were listed in Da Silva which led to the conclusion that approximately $166,000 advanced by the husband’s mother to help her son and his wife purchase a matrimonial home was a gift. These included the non-disclosure of any loan to the lending institution when obtaining mortgage financing for the purchase of the home and non-disclosure to the solicitor handling the real estate transaction. [^10]

[25] In Traversy v. Glover [^11], MacKinnon J. discounted the value of a debt in favour of the wife’s sister and brother-in-law by 25%, observing that the probable repayment date of the debt was, at most, five years away.

[26] How then to deal with the promissory note signed by the wife and her mother in this case? In Poole v. Poole [^12], Heeney J. adopted an approach with which the Court of Appeal in Cade expressly approved. Mr. Poole’s parents had advanced to him and his wife more than $80,000, evidenced by promissory notes. All of the notes had been signed by both of the spousal parties. Heeney J. found that the parties’ actions, in particular those of the wife who contended that the advances were gifts, were consistent with a loan but he discounted the value of the debt to 10% of its face value. The age of the debts, the absence of payment demands before (and after) separation, the age of the parents and the evidence that the parents did not at the time of trial need the money, were all factors which persuaded the trial judge that the probability of Mr. Poole ever being called upon to pay was extremely low, although that could not be wholly ruled out.

[27] In Vaccaro v. Vaccaro [^13], Milanetti J. rejected a husband’s claim that the value of several promissory notes totalling almost $150,000 in favour of his father were legitimate debts owing on the valuation date. The wife had known nothing about any of the notes or loans that they purported to represent until many months after she and her husband had separated. While the court disbelieved the evidence of the husband and his witnesses, preferring instead the evidence of the wife, it was noted that the husband’s father had given each of his children significant funds “… not looking for payment until they could afford to do so.” The Court accepted that it was quite likely “… that the funds will never be repaid; rather that the generosity will be returned in other ways…” [^14] The court was also skeptical about the provenance of the notes, observing that they were not made “… contemporaneously with the advancement of funds, but sometime significantly later in an effort to protect [the father’s] on-going investment”. [^15]

[28] In Arora v. Arora [^16], a case upon which the wife relies, D. L. Edwards J. accepted as legitimate debts owing by a wife on the valuation date, the value of twenty-five promissory notes that she had signed as borrower in favour of family and friends, over a five-year period. The notes were signed only by the wife and the lenders; the husband testified that he knew nothing about the loans until after the parties separated. The court was satisfied that the lenders expected to be repaid once the wife was in a position to do so, which was, in fact, done after the matrimonial home was sold.

[29] Each case must be decided on its own facts. There was no discussion in Arora of the statutory burden of proof on the wife, or of the authorities dealing with the likelihood of the notes being repaid, although it is clear that the trial judge was alert to those issues. There was no evidence in that case, unlike this, of a pattern of generosity when funds were advanced, or of third party evidence (such as that of Mr. Maniaci), that suggested the transfer was being made for no consideration. Arora must be confined to its own facts.

[30] In my view, the face value of the promissory note in favour of Filomena in this case must be discounted for the following reasons:

(a) the parties were of modest means. They had a combined income of between $65,000 and $70,000 a year and lived paycheque to paycheque;

(b) the mother owned three properties in 2005, two of which were income producing (Wildfire and Teahouse). She wanted to help the wife in 2013, as she had helped Massimo in 2012, build their financial security. It is not unreasonable to conclude that Filomena had no need for the equity in Wildfire when its’ title was transferred to the parties in 2013, or had any need when the parties separated in 2015 (or even at trial);

(c) the note was not made contemporaneous with any actual advance of funds or with the transfer of title to Wildfire; that happened over four months later;

(d) the wife never told the lender about the note. Her evidence was that she told the lender that her mother was leaving her equity in the property;

(e) neither the wife nor Filomena told Mr. Maniaci about the note. Mr. Maniaci testified that there was no mention of any note or money owed to Filomena relating to the transfer; she asked him for some probate advice. I prefer his evidence to that of Filomena on what was said, and by whom, when the parties, Filomena, and he met at his office. He was uninterested in the outcome of this case and his evidence was unshaken in cross-examination. He did for the parties and Filomena the same work that he had done for Filomena and Massimo with respect to the Teahouse property;

(f) the husband was never told about the note until after the parties separated. I believe him. He must have been aware that Filomena was being generous to the parties when title was transferred but that does not mean that he was aware of the note or of any legal (as distinct from moral) obligation to pay anything to Filomena except for her taxes arising from the transaction;

(g) no demand for any payment pursuant to the note was made before the parties separated;

(h) although Filomena was retired when the parties separated, there was no evidence that before then, she had any financial, health-related, or other care needs;

(i) Filomena was more elderly and, she testified, in poor health at the time of trial but there was no evidence of her having any present financial or other care needs. She owned Vera Rd, where Massimo lived too;

(j) Massimo deposited into his bank account, not into the bank account owned by his mother and for which he held a Power of Attorney, the money paid to him by his sister, represented by the note. He had no reasonable explanation at trial why this wasn’t done. He also used these funds to purchase a GIC in his name alone.

[31] There is little likelihood, in my view, that immediately before she became aware that her daughter and her husband had separated, Filomena would have expected payment of the note. Not unlike Vaccaro, Filomena’s generosity would have been returned to her in a way or ways which would not have required payment of the note, or debt. In Traversy, Mackinnon J. referred to a number of cases, including Cade and Poole, as providing “some guidance [in the choice of an appropriate discount factor], although this is clearly not an exact science…” [^17] In all of the circumstances of this case, I discount the value of the note to 10% of its face value, or $12,500, for equalization purposes.

Household Contents

[32] The parties continued to reside in the matrimonial home after they separated until October 23, 2015, when the husband was charged with assaulting the wife. A term of his release from custody included that he abstain from going to the matrimonial home. The wife and the parties’ daughter occupied the home until it was sold.

[33] The husband claimed at trial that there should be attributed to the wife a $15,000 value for the household contents retained by her after they separated.

[34] The following facts (as admitted) and evidence are relevant to this issue:

(a) after the husband was released from police custody, he attended at the matrimonial home with a police officer to collect some of his personal belongings;

(b) in November 2015, the husband re-attended the matrimonial home, this time with a moving company, to obtain more personal belongings. These were located in the garage;

(c) in each of the three financial statements sworn by the wife in these proceedings (November 25, 2015; June 28, 2016; and October 1, 2018) she attributed no value to the household contents. For the first two statements, the wife said that the furniture could be divided in specie between the parties. In the last statement, she stated that she had disposed of many of the contents;

(d) the husband also swore three financial statements (December 30, 2015; February 2, 2018; and September 29, 2018). In his first statement he said that the contents were to be divided. In the second and third statements he attributed values of $30,000 and $15,000, respectively, for the furniture to the wife;

(e) on July 27, 2017, counsel for the wife wrote to counsel for the husband to propose that the husband obtain certain household contents which were then listed;

(f) on August 2, 2017, counsel for the husband advised that the husband declined the wife’s proposal because the items that she had listed were “old and worthless”. He accused the wife of “cherry-picking the expensive furniture purchased shortly before separation and all other household items purchased throughout the marriage”;

(g) on August 4, 2017, counsel for the wife advised husband’s counsel that in light of the husband’s position, the wife would make arrangements to have the contents that the husband didn’t want to retain, removed from the property before its sale;

(h) the wife testified that she kept some of the household contents and donated or threw out the rest.

[35] The wife contended that no value should be attributed to the value of the household contents, pointing to the unchallenged evidence of her unsuccessful efforts to engage the husband in negotiating their division. He refused her proposal for a specified division but never delivered a counter-proposal.

[36] The husband’s position was that the wife selected for herself the best items from the home and that the parties should equally share in the contents’ value. He believed that they were worth an estimated $30,000 but reduced that figure to $15,000 to encourage a resolution. To support this claim, the husband told the court about a purchase of furniture before the parties’ separation that he estimated as costing $6,000.

Analysis

[37] Apart from the household contents listed in the July 27, 2017 letter from the wife’s counsel, there was no inventory or other schedule, listing or describing the contents of the Wildfire residence, their values, condition, or even date of purchase. There was no evidence about what was bought, when, or for how much. There was no evidence of any effort by either party to value or divide the household contents before the parties agreed to sell Wildfire. The husband objected to the wife’s August 2, 2017 proposal and then ignored her counsel’s letter of August 4th that the wife would make whatever arrangements she felt were appropriate; he did nothing. In essence, what the husband is asking the court to do is pick a number for the value of the contents retained by the wife, or of which she disposed, and to then attribute that value to her in calculating her net family property.

[38] As observed by Minnema J. in Rebiere v. Rebiere [^18], “[i]t is not always necessary to call expert evidence to prove values for minor assets”; a court can even “ballpark” the value of household contents in the absence of evidence of value. [^19] But to arbitrarily pick a value in circumstances where there is no evidence even minimally identifying the contents, their cost, their date of purchase, or their condition on the valuation date, or at some later point in time, is to simply engage in guesswork. I am not prepared to guess. No value shall be attributed to the wife for the household contents which she retained or of which she disposed.

Income Replacement Benefit

[39] In or about December 2014, the husband was injured. He was entitled to income replacement benefits. The parties also had insurance coverage for the mortgage payments on the Wildfire property and their line of credit. This coverage was for 24 months, reviewable at six month intervals during the coverage period. The sum of $1,333.25 was automatically deposited monthly into the parties’ joint bank account by the insurer and then debited to pay the mortgage.

[40] Shortly after the parties separated, an income replacement benefits payment belonging to the husband was deposited into the joint bank account. The wife withdrew the funds representing that payment and deposited them into a bank account in her name alone. The husband claims that the wife misappropriated this money and that there should be a credit made in his favour after the equalization payment is determined. The wife claims that there is no need to make any adjustment to the equalization payment because she applied those funds to joint family expenses and, pursuant to a court Order made in September 2016, she divided equally the funds remaining in the parties’ bank accounts.

[41] The following are the relevant facts and evidence:

(a) prior to the valuation date, the husband had been injured and was in receipt of disability benefits;

(b) there was being deposited monthly to the parties’ joint bank account (*7389), the monthly amount of $1,333.25 to pay the Wildfire mortgage;

(c) on October 26, 2015, a deposit of $11,292 was made to the parties’ joint bank account by the husband’s disability insurer. This was a lump sum payment representing the husband’s income replacement benefits;

(d) on October 26, 2015, the wife opened a bank account (*7328) owned solely by her and she transferred into this new account the $11,292 deposited into the joint bank account;

(e) there continued to be deposited into the joint bank account, the amount of $1,333.25 for the November 2015 to February 2016 mortgage payments. From this account there were paid a variety of expenses such as realty taxes, credit card, mobile phone charges, and groceries, but no mortgage payments;

(f) from her *7328 account, the wife paid mortgage and utility payments relating to the Wildfire residence for four months from November 2015 to and including the mortgage payment due on February 1, 2016. The wife also made a payment to the parties’ joint line of credit. The mortgage payments totalled $5,333 (i.e. 4 x $1,333.25) and the other payments $1,652.77;

(g) pursuant to an Order made on September 19, 2016, the balances then outstanding in the *7328 account owned by the wife and the *7389 joint account were ordered to be equally divided between, and paid to, the parties. This was done.

Analysis

[42] The wife managed the parties’ finances. The monthly statements for the *7389 and *7328 accounts for October 2015 to April 2016, were tendered in evidence. The wife testified about, and the statements confirmed, the uses to which the funds were put. The husband was unable to point to any transaction that did not benefit the family. While he objects, not without some cause, to the wife’s unilateral action, the evidence does not support that she alone benefitted.

[43] There was no evidence whether the income replacement benefits were gross or net of tax for 2015 tax reporting purposes. No evidence was led by the husband about this: if he wanted to claim a deduction for the tax relating to this payment, he had the statutory onus pursuant to s. 4(3) of the Act to prove his entitlement to any such deduction. He did not discharge that onus.

[44] The income replacement benefit of $11,292 shall be included in the husband’s net family property without deduction: there shall be no adjustment to the equalization payment relating to the wife’s use of these funds.

House Expenses

[45] The husband’s insurance for the mortgage payments on Wildfire ended February 2017. The wife testified that she paid the $1,333.25 March 1st mortgage payment; the parties’ SAF acknowledged that she also made those monthly payments afterwards until Wildfire sold in mid-September. The total paid was $9,332.75 (i.e. seven months x $1,333.25).

[46] The wife and her brother said that he assisted her in paying Wildfire’s realty taxes from March 2017 to August 2017. These totalled $2,867.72.

[47] Shortly after the parties signed a binding sale agreement for Wildfire (June 2, 2017), the parties negotiated payments for the house until the sale was completed. In a letter dated June 16, 2017, from the wife’s counsel (Sample) to the husband’s former counsel (Kazman), the wife agreed to continue paying the house expenses on a without prejudice basis,

Ms. Testani is agreeable to continue making the payments for the mortgage and the line of credit associated with the matrimonial home pending the closing, on a without prejudice basis and subject to a final accounting of all the outstanding property issues in this matter. To be clear, Ms. Testani has been making these payments since March, 2017, so we are uncertain as to why Mr. Haughton believes that such confirmation is necessary, as Ms. Testani has no interest in delaying or obstructing the closing of the sale transaction. Regardless, you have Ms. Testani’s confirmation on this matter. [^20]

[48] This position was reconfirmed in a further “With Prejudice” letter from Ms. Sample dated June 23, 2017,

As we have made plain previously, the majority of the relief set out in Mr. Haughton’s Notice of Motion [^21] is now moot, as the parties’ matrimonial home has been sold, Ms. Testani has agreed that she will continue to make all payments for the house (i.e. mortgage, property insurance, property taxes, utilities) pending the closing on a without prejudice basis, that the parties will pay out their jointly held debts from the proceeds of sale. [^22]

Analysis

[49] The husband benefitted from the mortgage, property and realty taxes payments made by the wife for the seven months before Wildfire was sold. There was no agreement that she was making any of these payments without expecting contribution from the husband especially since he was obligated in any event, pursuant to his mortgage covenant and joint ownership of the property, to contribute.

[50] The combined mortgage payments and realty taxes paid by the wife is $12,200.47 (i.e. [$9,332.75 plus $ $2,867.72]/2). The husband shall pay to the wife one-half of that sum or $6,100.25, rounded to $6,100 from his share of the funds held in trust.

Other NFP Adjustments

[51] There were three further adjustments upon which the parties could not agree in terms of their NFP treatment or which were left to the court to determine. These involved the value to be used for the matrimonial home, whether its sale commission should be considered in determining the equalization payment owed and the value to be attributed to a bank account. Since the assets and liability were joint, there is no practical impact on the determination of that payment.

[52] The parties disputed whether the value of their jointly-owned matrimonial home to be used to determine their respective net family properties should be its $580,000 value on the valuation date in October 2015 (the wife’s position) or its $808,000 sale price in 2017 (the husband’s position). The wife contends that the former approach is appropriate (which would then not include any realtor’s sale commission); the husband, the latter (which would include realtor’s commission of $36,380). While the wife’s approach is technically correct, the husband’s is more practical because where, as in this case, there is no claim for unjust enrichment the impact on each parties’ net family property is the same regardless which date is chosen and the husband’s approach will better result in providing a current net worth value for each party. This approach too captures the realtor’s commission.

[53] The husband took no position on the value to be attributed to each party for their jointly owned CIBC chequing account, so $208.65 shall recorded in each party’s valuation date column.

NFP/Equalization Payment

[54] Appendix “A” to this Judgment is a summary of the values agreed by the parties in their SAF and as determined by the court. The husband owes to the wife an equalization payment of $26,309.29, rounded to $26,309. Together with the $6,100 adjustment in favour of the wife for the household expenses she paid for the seven months before Wildfire was sold, the husband owes her $32,409. This shall be paid from his half share of the funds remaining in trust from the sale of Wildfire.

Disposition

[55] The following is ordered:

(a) a Divorce Order shall issue;

(b) the husband owes the wife an equalization payment of $26,309;

(d) the amounts owed by the husband in (b) and (c) shall be paid from the husband’s share of the funds held in trust pursuant to the Order of McGee J. dated June 28, 2017;

(e) none of the funds held in trust shall be disbursed until the costs of this proceeding and pre-judgment interest have either been agreed by the parties or determined by the court.

[56] If the parties are unable to agree on costs and pre-judgment interest, the following is directed:

(a) the party seeking costs shall deliver their submissions by January 31, 2019;

(b) the responding party shall deliver their submissions by February 11, 2019;

[57] All submissions shall be double-spaced and in the case of paragraphs 56 and (b) limited to five single-face pages: reply shall be limited to two pages. These shall be filed in the Continuing Record. Offers to Settle, Bills of Costs, and any authorities upon which a party may wish to rely, shall be filed by the above deadlines but not form part of the Continuing Record. Counsel are directed to notify the judicial assistant ( Meghan.Billings@ontario.ca ) when they have filed their material.

Justice David A. Jarvis

Released: January 14, 2019

Appendix A

Item	Antonella	Jason
1. (a) Land [^23]	$404,000	$404,000
1. (b) Vehicles	$35,400	$15,850
1. (c) Savings [^24]	$4,757.85	$847.02
1. (d) Money owed [^25]		$11,292
Total Assets	$444,157.85	$431,989.02
2. Value of debts [^26]	$246,646.93	$190,933.46
3. Marriage date net worth	$10,657.68	$1,483.27
Total	$257,304.61	$192,416.73
Net Family Property	$186,853.24	$239,572.29
Equalization Payment to Antonella	$26,359.25	$26,359.25

Footnotes

[^1]: The parties filed two Statements of Agreed Fact. The first was dated October 3, 2018. It was amended on November 22, 2018. For convenience, it is the latter SAF which is referenced here. [^2]: This was the face value of the mortgage. Its outstanding principal was less on the transfer date, about $159,417. [^3]: Crepeau v. Crepeau, 2012 ONSC 418 at paras. 39-44. [^4]: Ibid at para. 41. [^5]: Barber v. Magee, 2017 ONCA 558, 139 O.R. (3d) 78, 282 at para. 4. [^6]: The wife received $172,160.07 and the husband received $163,560.07. The difference in payouts relates to a costs Order against the husband for $8,600 made by McGee J. on June 28, 2017. This award was paid to the wife from the husband’s share of the net proceeds of sale. [^7]: R.S.O. 1990, c. F.3 as am. [^8]: 2004 ONCA 24269, 181 O.A.C. 226 at para. 8. [^9]: [2004] W.D.F.L. 232 (Ont. S.C.) at para. 46. [^10]: Ibid at paras. 42 and 51(h) and (i). [^11]: [2006] W.D.F.L. 3740 (Ont. S.C.) at para 57. [^12]: 2001 ONSC 28196, 16 R.F.L. (5th) 397 (Ont. S.C.). [^13]: [2005] W.D.F.L. 1741 (Ont. S.C.). [^14]: Ibid at paras. 15 and 22. [^15]: Ibid at para. 25. [^16]: 2014 ONSC 780, [2014] W.D.F.L. 1801. [^17]: Traversy, supra note11 at para. 57. [^18]: 2015 ONSC 1324, 59 R.F.L. (7th) 414 at para. 14. [^19]: Alaouf v. Sumar, 2017 ONSC 3043, [2017] W.D.F.L. 3566 at para. 73. [^20]: Exhibit 36. [^21]: This is the motion heard by McGee J. on June 28, 2017 where costs of $8,600 were awarded to the wife. See fn #2 above. [^22]: Exhibit 37. [^23]: Sale value of Wildfire ($808,000/2). [^24]: Includes CIBC chequing account. [^25]: Income replacement benefit. [^26]: Includes $18,190 for agent’s commission for Wildfire sale.

Testani v. Haughton, 2019 ONSC 174

Case Summary

Court File and Parties

Reasons for Decision

Background

The Issues

Transfer of Wildfire

Analysis

The Promissory Note

Analysis

Household Contents

Analysis

Income Replacement Benefit

Analysis

House Expenses

Analysis

Other NFP Adjustments

NFP/Equalization Payment

Disposition

Appendix A

Footnotes

Judge

Counsel

Parties

Areas of Law