COURT FILE NO.: FS-14-81731
DATE: 2021 06 21
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
LISA SAROLI
Self-represented
- and -
LUCIANO SAROLI
J. Rosenberg, for the Respondent
HEARD: January 11, 12, 13, 14, 15, 18, 19, 20, 21, 22 and 25, 2021
REASONS FOR JUDGMENT
Petersen J.
Contents
INTRODUCTION. 3
Issues in Dispute. 7
Jointly Owned Hendershot and Jake Properties. 9
EQUALIZATION OF NET FAMILY PROPERTIES. 16
Statutory Framework for Equalization Calculation. 16
How does the Marriage Contract affect the parties’ rights under the FLA?. 18
What property is contractually excluded from equalization?. 29
Mr. Saroli’s Tara Crescent Properties. 29
Mr. Saroli’s Scotiabank Powerchequing Account (SP25) 34
Is Mr. Saroli entitled to exclude a $50,000 gift from his parents?. 35
What, if any, equalization payment is owed?. 47
Value of Assets Owned on Valuation Date. 47
Debts and Other Liabilities on Valuation Date. 52
Value of Assets Owned on Date of Marriage. 55
Debts and Liabilities on Date of Marriage. 56
Equalization Calculation. 56
Pension Equalization. 60
POST SEPARATION ADJUSTMENTS. 60
Utilities in the Matrimonial Home. 60
Mortgage Payments and Property Taxes on the Matrimonial Home. 64
Maintenance and Repairs on the Matrimonial Home. 66
Expenses Related to the Jake Property. 68
Proceeds of Sale from Jake Property. 71
Joint Secured Line of Credit 72
Shared Visa Credit Card. 74
Ms. Saroli’s Borrowing Costs. 76
Ms. Saroli’s Car and Travel Expenses. 78
Home Insurance on Tall Grass Property. 78
Ms. Saroli’s 2012 Tax Refund. 78
Ms. Saroli’s Bike. 79
Mr. Saroli’s Parking Infraction. 79
Total Post-Separation Adjustments. 79
RETROSPECTIVE AND RETROACTIVE CHILD SUPPORT. 80
What is the date upon which the child support obligation commenced?. 81
Parties’ Positions. 81
Legal Principles. 81
Analysis. 83
Conclusion. 83
Is Ms. Saroli precluded from claiming retroactive child support?. 84
What was Mr. Saroli’s income for support purposes?. 84
Method of Income Determination. 84
Line 150 Income as Adjusted. 85
Should capital gains be excluded?. 87
Should income be imputed to Mr. Saroli?. 92
Conclusion. 92
Amount of Retrospective Child Support Owed by Mr. Saroli 93
RETROSPECTIVE SPOUSAL SUPPORT. 96
Spousal Support Paid by Mr. Saroli 96
Parties’ Positions on Spousal Support 96
Statutory Framework for Spousal Support 97
What was Ms. Saroli’s income for support purposes?. 98
Line 150 Income as Adjusted. 98
Should income be imputed to Ms. Saroli?. 100
Unreasonable Deduction of Expenses. 100
Intentional Unemployment or Underemployment 102
Analysis. 106
Conclusion. 108
Is Ms. Saroli entitled to retrospective spousal support?. 109
SPECIAL AND EXTRAORDINARY CHILD-RELATED EXPENSES. 112
Statutory Framework for Section 7 Expenses. 112
Are Ms. Saroli’s expenses eligible for reimbursement?. 115
Is either party entitled to payment for section 7 expenses?. 121
Prospective Section 7 Expenses. 122
OCCUPATION RENT. 123
Jurisprudence. 123
Analysis of Relevant Factors. 125
What amount of occupation rent must be paid?. 131
SUMMARY OF AMOUNTS PAYABLE BY THE PARTIES. 133
FINAL ORDERS. 134
COSTS. 135
INTRODUCTION
[1] The parties in this divorce proceeding jointly purchased a home on Emily Carr Crescent in Bolton, Ontario and began cohabiting there on March 14, 2001. They were married on August 17, 2001. Each owned investment properties on the date of marriage, in addition to their co-owned Bolton residence. Approximately two weeks prior to their wedding, they executed a domestic contract dealing with property and support issues in the event of a breakdown of their marriage (the “Marriage Contract”).
[2] They have two children, a son who is now 17 years old and daughter who is 15 years old. The children were considerably younger when the parties separated on January 15, 2012.
[3] The parties lived in their Bolton home throughout their marriage. They continued to reside separately and apart in the matrimonial home after the marital relationship ended. In September 2013, they began a quasi-nesting arrangement, with each of them taking turns caring for the children. Mr. Saroli stayed at his parents’ house in Toronto while Ms. Saroli resided with the children in the matrimonial home. When Mr. Saroli came to the home for his parenting time on alternating weekends and Wednesday evenings, Ms. Saroli either went to visit her parents in Woodbridge or isolated within the home to minimize contact with him.
[4] Their post-separation relationship grew tense and adversarial over time. Ms. Saroli terminated the quasi-nesting arrangement and asked Mr. Saroli to remove his belongings from the matrimonial home, which he did in early April 2014. He has lived in his parents’ basement since then. Ms. Saroli continued to reside in the matrimonial home up until the trial. Both children’s principal residence was with her.
History of Proceeding
[5] Ms. Saroli commenced an Application on September 25, 2014, which began a protracted legal proceeding that did not reach trial until mid-January 2021. Mr. Saroli filed his Answer on July 21, 2015 and filed an Amended Answer on August 21, 2020. Several of the issues raised in the pleadings were resolved prior to trial.
[6] The parties had multiple court appearances over the years. Numerous temporary orders and a few final orders were made at case conferences and after motion hearings. The following summarizes key pre-trial steps and outcomes in the proceeding:
a) December 19, 2014, Temporary Order: Justice André ordered exclusive possession of the matrimonial home to Ms. Saroli and a parenting schedule for Mr. Saroli.
b) June 28, 2016, Temporary Order: Justice Donohue ordered Mr. Saroli to pay interim monthly child support in the amount of $1,071 based an income of $72,400, and interim monthly spousal support in the amount of $978, with no income imputed to Ms. Saroli. She also ordered sharing of prospective s. 7 expenses on a pro-rata basis, with Mr. Saroli paying 82.1% and Ms. Saroli paying 17.9%. Mr. Saroli’s motion for sale of the matrimonial home was adjourned sine die.
c) September 15, 2017, consent Temporary Order: Justice LeMay adjourned the parties’ respective motions (including Mr. Saroli’s motion for sale of the matrimonial home) pending the outcome of a mediation session they agreed to attend. Mr. Saroli’s spousal support obligation was varied and fixed at $1 per month and his interim child support payment was increased to $1,420 per month, with s. 7 expenses apportioned as 65% payable by Mr. Saroli and 35% payable by Ms. Saroli.
d) August 16, 2019, consent Temporary Order: Justice Trimble ordered Mr. Saroli to maintain health and dental benefits coverage for Ms. Saroli and the children, and to facilitate Ms. Saroli’s direct access to his insurer to make claims for reimbursement, including post-separation retrospective claims on her personal behalf or on behalf of the children.
e) September 11, 2019, Temporary Order: Justice Trimble dismissed Ms. Saroli’s motion for a retrospective order requiring Mr. Saroli to pay monthly spousal support to her in the amount of $901.18 effective October 1, 2017.
f) March 13, 2020, consent Final Order: Justice Trimble made final parenting orders. He also ordered that, commencing the first day of each month, Mr. Saroli shall pay Ms. Saroli the Table amount of child support in the amount of $1,482 based on his 2018 Line 150 income of $100,883, subject to review/variation provisions and the regular residency regime of the children. Justice Trimble noted the parties’ mutual acknowledgment that the Marriage Contract executed on August 2, 2001 is valid, binding and enforceable.
[7] On the first day of trial, Ms. Saroli confirmed that she is no longer seeking prospective spousal support and she agreed to sell the matrimonial home. On February 28, 2021, I issued a consent Order to list the home for sale, which included the following provisions:
- The real estate lawyer who will act on the closing of the sale of the matrimonial home, shall disburse the proceeds of sale on closing, as follows:
a. Per the parties' Marriage Contract dated March 14, 2001, and signed August 2, 2001 ("Marriage Contract"), to Lou the amount of $95,190.00 from Lisa's prima facie 50% share of the net proceeds of sale, and to Lisa the amount of $20,000.00 from Lou's prima facie 50% share of the net proceeds of sale. For clarity, these particular disbursements relate to section 7.9 of the Marriage Contract and the Schedule found at page 10 of the Marriage Contract, entitled Division of Proceeds on Eventual Sale of 52 Emily Carr Cr., BOLTON, Ontario in accordance with Paragraph 7.9 (11);
b. To Lou, any amount owing per paragraph 5 above from Lisa's prima facie 50% share of the net proceeds of sale; and
c. Subject to all of the foregoing, and after all other usual disbursements necessary to close the sale transaction are paid from the proceeds of sale (for example, real estate commissions, outstanding municipal property taxes and legal fees in connection with the closing), the remaining net proceeds of sale shall be held in trust by the real estate lawyer with carriage of the sale of the matrimonial home, pending further written agreement between the parties or Court Order.
[8] On the first day of trial, the parties also reached agreement on the proportionate allocation of prospective s. 7 expenses for the children. A consent order on that issue appears at the end of this judgment.
Issues in Dispute
[9] The remaining issues for me to determine relate to equalization, post-separation adjustments, and retroactive and retrospective child support, spousal support and s. 7 expense claims. More specifically, the issues are as follows:
a) How does the Marriage Contract affect the parties’ rights under Part I of the Family Law Act, R.S.O. 1990, c. F.3?
b) What property is excluded from equalization based on the Marriage Contract?
c) Is Mr. Saroli entitled to exclude from his net family property a $50,000 gift from his parents?
d) What, if any, equalization payment is owed?
e) Are the parties entitled to any post-separation adjustments?
f) What is the date upon which Mr. Saroli’s obligation to pay child support commenced?
g) What was Mr. Saroli’s annual income for child support purposes?
h) Does Mr. Saroli owe Ms. Saroli any retroactive or retrospective child support?
i) Should income be imputed to Ms. Saroli?
j) Is Ms. Saroli entitled to retrospective spousal support?
k) Is either party entitled to a payment relating to s. 7 expenses?
l) Is Mr. Saroli entitled to occupation rent for the matrimonial home?
Jointly Owned Hendershot and Jake Properties
[10] Before examining the issues relating to equalization, it is necessary to summarize some background information about properties jointly owned by the parties.
[11] They purchased two lots in Niagara as investment properties during their marriage. The first lot, located on Hendershot Boulevard, was acquired on June 25, 2010. Title to the land was registered in the name of Ms. Saroli’s niece, E.E., who agreed to act as their trustee pursuant to a formal written Declaration of Trust.
[12] E.E. did not contribute any money to the acquisition of the lot or to the construction costs for the house built on the lot. The mortgage to secure construction financing was given by E.E. as mortgagor, but the mortgagee required the parties to sign as guarantors on the loan. All payments toward the mortgage loan were made by the parties. The trust arrangement was designed to enable the parties to benefit from a principal residence exemption from capital gains tax when they eventually sold the investment property. E.E. was to reside at the property as her principal residence.
[13] After the construction was completed, the parties directed E.E. to sell the Hendershot property. It sold on February 25, 2011. E.E. was paid a fee from the net proceeds of sale as compensation for her role as trustee. The parties then purchased another lot on Jake Crescent on May 27, 2011. They entered a similar trust arrangement with E.E. as the registered owner, but without executing a written trust agreement. Once again, E.E. did not contribute any money to the purchase of the Jake lot or to the construction cost to build on the lot. The parties were guarantors on the construction mortgage loan obtained by E.E. in connection with the Jake lot. They jointly held the full beneficial ownership interest in the Jake property. They made all the mortgage loan payments.
[14] On the date of their separation, the house on the Jake lot was still under construction. After the house was built, it remained unoccupied, so the property was not generating any rental income. The parties were making mortgage payments on the property and were losing money on their investment, so they decided to sell it. They listed it for sale on the market, but it did not attract many offers.
[15] In a Financial Statement sworn May 22, 2014, Ms. Saroli listed the RBC mortgage ($363,000) on the Jake property among her valuation date liabilities and she included her half ownership interest in the property among her valuation date assets. She listed the value as “TBD” and wrote:
Title of this property is held by my niece [E.E.] 100%. Luciano and I both contributed $60,000 to purchase the lot, and then another $100,000 to building this property. We are both guarantors on the RBC Mortgage. The house is currently listed for sale, and once it is sold, the net proceeds will be divided.
[16] As explained below, the net proceeds were not divided when the property eventually sold.
[17] Ms. Saroli became actively involved in staging the house and advertising the listing. An offer to purchase was received while Mr. Saroli was away in Florida and Ms. Saroli made a unilateral decision to direct E.E. to accept it. The sale price was $532,000 and the transaction closed on August 8, 2014. The real estate solicitor’s Trust Ledger Statement confirms that net proceeds of sale in the amount of $103,817 were paid to E.E. as the registered owner.
[18] At trial, Ms. Saroli testified that she asked E.E. to advance some of the Jake proceeds to her because she was not working and needed money. She said she received about $14,000. She could not recall the precise amount or the date of that first payment. Later, in January 2016, she received the balance of the proceeds ($89,465) from E.E., in exchange for which she released E.E. from any responsibility associated with the funds. Ms. Saroli admitted that these payments to her were made without Mr. Saroli’s knowledge or consent.
[19] I infer from the above evidence that the first payment to Ms. Saroli from the Jake proceeds was in the amount of $14,352.[^1] Ms. Saroli could not recall how she spent that money. She testified that she put the second lump sum payment of $89,465 in a safety deposit box. She said it was her intention to use the money to pay the outstanding balance on a joint line of credit that the parties had secured against the matrimonial home (the “Joint LOC”). She explained that she did not follow through on this plan because she did not know how much of the Joint LOC debt was her responsibility. She said the balance on the Joint LOC had become “inflated” and Mr. Saroli would not tell her “where the money was going”. She testified that she asked him for an accounting of the funds withdrawn from the Joint LOC, but he would not provide any information. That was the reason she withheld his share of the net proceeds from the sale of the Jake property.
[20] Ms. Saroli gave this evidence under cross-examination at trial. She also testified that the money she received from E.E. was no longer in a safety deposit box. She admitted that she ultimately spent it all. She provided no particulars of how the money was spent.
[21] Prior to trial, Mr. Saroli repeatedly tried to obtain disclosure from Ms. Saroli of the amount of the net proceeds of sale from the Jake property and of the whereabouts of the money. He was misled by Ms. Saroli to believe that E.E. retained the funds and converted them to her own use.
[22] In a sworn Financial Statement dated September 19, 2014 (the month after the sale of the Jake property), Ms. Saroli made no mention of her ownership interest in the Jake property on the date of separation, or of her joint liability for the mortgage debt associated with the property. However, she listed among her property $50,000 of “Money owed by [E.E.] 50%”.
[23] Mr. Saroli’s counsel asked for particulars of E.E.’s $50,000 debt owed to Ms. Saroli. In a letter dated July 20, 2015, Ms. Saroli’s lawyer responded to that request as follows: “[O]ur client cannot recall why that debt was recorded, apparently by prior counsel. It may have been in error.” The $50,000 owing from E.E. did not appear again on any of Ms. Saroli’s subsequent Financial Statements. The Jake property and the mortgage associated with the Jake property was not included in any of Ms. Saroli’s subsequent Financial Statements.
[24] In the July 20, 2015 letter, counsel confirmed that Ms. Saroli was maintaining a refusal to provide a full accounting of the sale and distribution of proceeds for the Jake property “as this asset does not belong to her”. Ms. Saroli also refused to disclose a copy of the real estate lawyer’s file for the sale of the Jake property on the grounds that it was not within her control to obtain the file and the contents of the file would be solicitor-client privileged. These positions were disingenuous, given that she had unilaterally directed E.E. to complete the sale of the property.
[25] When Ms. Saroli was cross-examined about this correspondence at trial, she testified that she did not recall instructing her former lawyer to take those positions. She claimed to have been unaware that Mr. Saroli was seeking disclosure regarding the proceeds from the sale of the Jake property in July 2015. Her testimony on these points is so implausible as to strain credulity.
[26] Ms. Saroli did not disclose the payments she received from E.E. in any of her Financial Statements. At trial she testified that this was an oversight on her part, which I do not believe to be credible. The fact that she put in excess of $89,000 in cash in a safety deposit box rather than depositing it to a bank account or other investment is consistent with her deliberate concealment of the funds from Mr. Saroli. The absence of any reference in Ms. Saroli’s sworn Financial Statements to the proceeds of sale that she received from E.E. constitutes an egregious breach of her disclosure obligations.
[27] Despite his repeated requests for disclosure, Ms. Saroli did not share any information with Mr. Saroli about the proceeds from the Jake property until she attended for questioning in December 2019. By then, she had received all the net proceeds of sale from E.E., but she had not mentioned the $89,465 in her safety deposit box in any of her sworn Financial Statements.
[28] When Ms. Saroli was questioned in December 2019 about the Jake property proceeds, she said she could not recall the net amount from the sale. She undertook to provide the real estate solicitor’s closing documents. When asked how much she received from the net proceeds, she responded, “At closing, I didn’t receive any. E.E. held onto those funds.” This was technically a truthful answer because the solicitor released the funds to E.E. as the registered owner upon closing, but Ms. Saroli was not asked how much she received at closing. She qualified her answer to the question by specifying “at closing” so that she could withhold material information, namely that she had been paid all the proceeds from E.E. in two installments. This intentional prevarication reflects poorly on her credibility.
[29] Later during the questioning in December 2019, Mr. Rosenberg specifically asked Ms. Saroli how much she received from E.E. “after the closing”. Ms. Saroli responded that E.E. “kept the proceeds after closing”, which was patently false. She was pressed by Mr. Rosenberg about whether she was ever repaid by E.E. for the money she had invested in the Jake property and she finally admitted having been repaid about two years earlier. She said E.E. paid her cash and that she could not recall the amount. She undertook to provide the amount, as well as documentation supporting the payment.
[30] At no time during the questioning did Ms. Saroli disclose that E.E. had given her more than her half share of the proceeds. She did not mention that she also received — and spent — Mr. Saroli’s half share of the money.
[31] Despite her undertakings during questioning, Ms. Saroli did not produce the requisite disclosure until a year later, on December 7, 2020, approximately one month before the commencement of the trial. Her explanation for the delay was that her sister, E.E.’s mother, had a massive stroke in January 2020 and was hospitalized for a few months. In the circumstances, she did not want to ask E.E. for the real estate documentation. This explanation does not justify a twelve-month delay in producing the disclosure.
[32] When the relevant documents were finally disclosed, the package included a copy of the Release that Ms. Saroli signed on January 7, 2016 when E.E. paid her $89,465 from the net sale proceeds. The Release does not mention that E.E. had previously paid her $14,352. Ms. Saroli withheld that fact until she was under cross-examination at trial.
EQUALIZATION OF NET FAMILY PROPERTIES
Statutory Framework for Equalization Calculation
[33] Part I of the Family Law Act (“FLA”) provides that upon the breakdown of a marriage the spouses will, in most circumstances, share equally any increased wealth accrued by the couple during the marriage. Assets are not divided or redistributed between the spouses. Rather, the parties each retain their respective ownership interest in their assets and an equalization payment is made if one spouse’s net worth has grown more than the other’s net worth during the marriage.
[34] This equalization scheme requires the court to begin by calculating each spouse’s “net family property” (NFP), which is defined in the FLA as follows:
4(1) the value of all the property, except property described in subsection (2), 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.
[35] “Valuation date” is also defined in s. 4(1) of the FLA. In this case, as in most cases, it is the date upon which the parties separated with no reasonable prospect of reconciliation.
[36] Subsection 4(2) of the FLA excludes from the calculation the value of certain property that a spouse owns on the valuation date, including the following:
Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property.
Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.
Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.
[37] The onus of proving a deduction from the NFP calculation or an exclusion under s. 4(2) of the FLA is on the spouse claiming it: FLA, s. 4(3).
[38] If a spouse’s NFP is less than zero, it is deemed to be zero: FLA, s. 4(5). The spouse whose NFP is the lesser of the two NFPs is entitled to an equalization payment of one-half the difference between them: FLA, 5(1).
How does the Marriage Contract affect the parties’ rights under the FLA?
[39] I will reproduce at length the relevant terms of the parties’ Marriage Contract to provide context for my reasons and findings below. The contract includes the following clauses:
1.0 INTERPRETATION
.15 The terms “Net Family Property” and “Property” have the meaning ascribed thereto in the Family Law Act and all terms used herein shall be given the meaning prescribed in the Family Law Act unless the contract otherwise provides or the context otherwise determines.
2.0 PURPOSE OF THE CONTRACT
2.1 The parties intend to be married. Each party intends by this contract:
.11 to avoid any rights and obligations relating to Property which arise or which may in the future arise at law or in equity from their marriage, except as herein otherwise provided;
.12 to elect and affirm that none of the Property of either party will be divided between them except according to ownership, except as herein otherwise provided;
6.0 INTENTION OF THE PARTIES
6.1 The parties intend that upon the “Breakdown of the Marriage” support obligations and property divisions will be subject to the terms of this contract.
7.0 PROPERTY ACQUIRED BEFORE MARRIAGE
7.1 Except as in this agreement may be otherwise provided, all property listed in schedule “A”, owned by the Husband as at the date of marriage shall remain separate and exclusive property of the husband (herein the “husband’s exclusive property”). The income and capital appreciation of the husband’s exclusive property shall remain part of his exclusive property.
7.2 In the event the husband should sell any part or all of the husband’s exclusive property the proceeds thereof may be held or reinvested in any kind of property or investments and upon being held or reinvested, shall continue to remain the separate and exclusive property of the husband.
7.3 The wife shall not at any time or upon any circumstances make any claim to the husband’s exclusive property.
7.4 Except as herein otherwise provided, the wife shall not claim any interest or right to the exclusive property of the husband, or rights to compensation for any contribution to such property pursuant to any principal of trust including resulting trust or any other law relating to property.
7.5 Except as in this agreement may be otherwise provided, all property listed in schedule “B”, owned by the wife at the date of marriage shall remain separate and exclusive property of the wife (herein the “wife’s exclusive property”). The income and capital appreciation of the wife’s exclusive property shall remain part of her exclusive property.
7.6 In the event the wife should sell any part or all of the wife’s exclusive property the proceeds thereof may be held or reinvested in any kind of property or investments and upon being held or reinvested shall continue to remain the separate and exclusive property of the wife.
7.7 The husband shall not at any time or upon any circumstances make any claim to the wife’s exclusive property.
7.8 Except as herein otherwise provided, the husband shall not claim any interest or right to the exclusive property of the wife, or rights to compensation for any contribution to such property pursuant to any principal of trust including resulting trust or any other law relating to property.
7.9 It is agreed between the parties that the real property municipally known as 52 Emily Carr Crescent, BOLTON, Ontario and legally described as Lot 126, Plan 43M-1324, TOWN OF CALEDON, Regional Municipality of Peel shall be regarded as their place of residence. It is further agreed that upon the eventual sale of the property any encumbrances shall be repaid in full along with legal and other expenses associated with the sale. The net proceeds of sale shall then be divided amongst the parties in the following fashion:
.11 The husband and wife shall firstly be repaid their initial investment in the property;
.12 The husband and wife shall share any balance remaining on a fifty/fifty basis.
It is further agreed that any property acquired by the parties in replacement of their place of residence shall be treated in the same fashion as set out above, in that the initial investment made by the party shall always be the exclusive property of that party.
8.0 PROPERTY ACQUIRED AFTER MARRIAGE
8.1 Except as in this agreement may be otherwise provided, all property acquired by the husband or wife after marriage shall be deemed to be the joint property of the husband and the wife. Whether or not such property is registered in the name of the husband or the wife or both of them, such shall be the deemed to be the joint property of the husband and the wife. Provided that property acquired by the husband in replacement of the husband’s exclusive property, is specifically excluded from the provisions of this article.
9.0 WAIVER OF RIGHTS UNDER THE FAMILY LAW ACT
9.1 Subject to the terms of this contract, each party waives all rights under Part 1 of the Family Law Act and in lieu thereof each with the other agrees by this contract that
.11 the wife will not be entitled to a division of the exclusive property of the husband;
.12 the husband will not be entitled to a division of the exclusive property of the wife.
9.2 The parties waive equalization of Canada Pension Plan Benefits upon breakdown of marriage.
13.0 RELEASE
13.1 The husband and wife intend this agreement to be final as to all claims regarding the matters dealt with in this contract and hereby release all such claims arising out of their marriage. Except as provided in this contract, the husband and wife hereby release and discharge the other from all claims and demands of every nature and kind which one of them has or hereafter can, shall or may have against the other of them under the laws of any jurisdiction and in particular under the Family Law Act and the Divorce Act. This shall not constitute a bar to any action or proceeding to enforce and of the terms of this contract or for the dissolution of the marriage. Both parties are aware and acknowledge that each of them may suffer or enjoy drastic changes in their respective circumstances. No change whatsoever, even if it is material, profound, catastrophic or otherwise, will give either party the right to claim or obtain any interest in any property of the other or make any claim against the other for his or her own support.
[40] Schedule B to the Marriage Contract lists Ms. Saroli’s Registered Retirement Savings Plan (RRSP) and her ownership interest in a residential property on Tall Grass Trail in Woodbridge, where her parents and brother reside. Schedule A to the Marriage Contract lists a Harley Davidson motorcycle, automotive tools, stereo equipment, artwork and Berkshire investments owned by Mr. Saroli. It also lists four properties in which he had an ownership interest on the date of marriage, namely: 129 and 144 Concession Street in Tillsonburg, and 14 Calcott Court and 25 Tara Crescent in Thorold. I will adopt the terminology used by the parties in the Marriage Contract and refer to the assets listed in Schedules A and B as the parties’ “Exclusive Properties”.
[41] The parties devoted very little time to the provisions of the Marriage Contract during their submissions at trial. This is surprising because the drafting of the contract leaves much to be desired.
[42] Some of the property provisions in the contract are clear and unambiguous (e.g., paragraphs 7.9 and 9.2). Although the subtitle to Part 7.0 of the Marriage Contract is generic (“Property Acquired Before Marriage”), the provisions in Part 7.0 explicitly apply only to the specified Exclusive Property set out in Schedules A and B. Paragraphs 2.1(.11), 7.3, 7.4, 7.7, 7.8 and 13.1 unequivocally preclude any trust claims by the parties in respect of beneficial ownership interests in each other’s Exclusive Properties.
[43] The remaining property provisions in the contract are ambiguous, rendering the court’s task of ascertaining the parties’ intention difficult. Paragraphs 7.1 and 7.5 stipulate that the property listed in Schedules A and B shall remain the “separate and exclusive property” of each party, together with any capital appreciation and income generated by the property. Paragraphs 7.2 and 7.6 allow each party to sell their Exclusive Property and reinvest the proceeds in other property that shall remain exclusive to them. These provisions appear to speak to the exclusive ownership of the property in question and not to the excluded value of the property from the parties’ NFP calculations under the FLA. However, the parties agree that what they mutually intended by these provisions was to exclude the values of the Exclusive Properties listed in or traceable to Schedules A and B (together with income and capital gains) from equalization under the FLA.
[44] This intent is not clearly expressed in the Marriage Contract. Indeed, a contrary intention could reasonably be inferred from paragraphs 2.1 and 9.1. In paragraph 2.1, the parties express their intention to avoid any rights and obligations relating to property that arise at law upon marriage, except as otherwise provided in the contract. In paragraph 9.1, the parties mutually waive “all rights under Part I of the Family Law Act” and agree, “in lieu thereof” that neither of them will be “entitled to a division of the exclusive property” of the other. Waiving all rights under Part I of the FLA in lieu of a different regime suggests that the parties intended to opt out of the statutory equalization scheme. However, the stipulation in paragraph 9.1 that they shall not be entitled to “division of” each other’s Exclusive Property confuses the intended meaning of the clause because it suggests that the parties incorrectly thought the FLA is a division of property regime.
[45] On the other hand, the parties appear to have been aware of the nature of the FLA scheme because they adopted the statutory definition of “net family property” in paragraph 1.0 of the Marriage Contract (even though that phrase is not used anywhere in the contract) and they explicitly waived their right to “equalization of Canada Pension Plan benefits” in paragraph 9.2. Paragraph 9.2 of the contract would be redundant if paragraph 9.1 meant that the parties were opting out of the FLA equalization scheme.
[46] To add to the confusion, in paragraph 2.0(.12) of the Marriage Contract, the parties affirm that none of the property owned by either of them will be divided between them except according to ownership. This suggests an incorrect understanding of the statutory equalization regime, which does not divide assets between spouses other than in accordance with ownership.
[47] In any event, despite the waivers of statutory property rights in paragraphs 9.1 and 13.1, the parties expressly agreed at trial that the Marriage Contract does not oust the equalization regime under the Family Law Act, except as it applies to CPP benefits. They each completed NFP Statements prior to trial, setting out their respective equalization calculations. The NFP Statements reflect their mutual contractual intention to exclude the value of certain Exclusive Property owned on the date of marriage (together with income and capital gains) from the equalization regime. In other words, their calculations show a shared understanding that the words “division” and “divide” in the Marriage Contract serve as synonyms for “equalization” and “equalize”, and the term “exclusive property” refers to “excluded” property under the equalization regime. Neither party made this submission explicitly, but it is a necessary deduction from the way they completed their NFP Statements.
[48] But for the parties’ expressed agreement, I might not have interpreted the Marriage Contract in the manner understood by them. I will, however, follow their mutual understanding and apply the equalization regime to their circumstances, while excluding the value (plus income and capital gains) of the Exclusive Properties listed in or traceable to Schedules A and B.
[49] In their respective NFP statements, the parties exclude from their calculations any debts or liabilities related directly to Exclusive Properties on both the date of marriage and the date of separation. This is not surprising, given their agreement on how the value of the Exclusive Properties should be treated, but the Marriage Contract is silent with respect to debts and liabilities. The parties’ intention to exclude these debts is not discernible from the contract language, but it seems they mutually intended to exclude the net value of the Exclusive Properties from their equalization calculations.
[50] The parties do not agree on the meaning of the “deemed joint property” provision in paragraph 8.1 of the Marriage Contract. Mr. Saroli gives it a literal interpretation. In his NFP Statement, he treats virtually all non-Exclusive Property acquired by either party during the marriage as jointly owned property on the date of separation. He therefore attributes half the value of the assets to each party in the calculation of their respective NFP.
[51] Notably, Mr. Saroli does not apply this interpretation of paragraph 8.1 to a $50,000 gift that he claims to have received from his parents. He does not treat the $50,000 as “deemed joint property” even though it was acquired during the marriage. Instead, he treats it as his sole property and seeks to exclude it from the calculation of his NFP pursuant to s. 4(2) of the FLA. This gift is discussed in more detail below. I raise it now only to point out that Mr. Saroli interprets paragraph 8.1 inconsistently, depending on what serves his interests.
[52] Ms. Saroli, on the other hand, treats property acquired by either party after marriage as individually owned on the date of separation, consistent with the parties’ affirmation in paragraph 2.0(.12) of the Marriage Contract. She interprets the “deemed joint property” provision in paragraph 8.1 to be an expression of the parties’ agreement that non-Exclusive Property acquired by either of them after marriage would be family property subject to the equalization regime upon separation.
[53] Mr. Saroli’s interpretation is superficially appealing because it is consistent with the plain meaning of the words used in paragraph 8.1, but a reading of the paragraph in the context of the entire Marriage Contract supports Ms. Saroli’s position as the correct interpretation.
[54] Given the parties’ shared understanding of the meaning of the other provisions in the contract, Mr. Saroli’s interpretation of paragraph 8.1 defeats the mutual intention of the parties to apply the equalization regime. In his proposed calculations, the values of all non-Exclusive Property acquired during the marriage are divided in half and equal amounts are attributed to each party. With no difference between the values, equalization of the difference is a pointless exercise.
[55] Mr. Saroli’s interpretation of paragraph 8.1 also leads to an absurd result, namely that the parties’ acquired debts and liabilities are equalized but not the value of their acquired assets. Such an absurdity cannot be what the parties intended when they executed the Marriage Contract.
[56] Moreover, Mr. Saroli’s interpretation of paragraphs 8.1 and 9.1 of the Marriage Contract is not consistent with the conduct of the parties upon their separation. He treats all property acquired during the marriage as jointly owned on his NFP Statement for the purpose of calculating an equalization payment, but he has not treated the property as jointly owned in his daily life. He cannot have it both ways.
[57] For example, Mr. Saroli was the registered owner of a Mercedes on the date of separation. He attributes half the value of the vehicle to Ms. Saroli on his NFP Statement based on paragraph 8.1 of the Marriage Contract, but the parties did not sell the vehicle and split the proceeds, nor did they share the use of the vehicle. Instead, Mr. Saroli kept it and drove it, without paying Ms. Saroli for her purported half ownership interest in the car. When it was later written off after an accident, he did not share the auto insurance proceeds with her as the “deemed joint owner”. It makes no sense, in these circumstances, to treat the vehicle as jointly owned property for equalization purposes.
[58] It is also worth noting that, in seven Financial Statements sworn between March 4, 2014 and March 5, 2020, Mr. Saroli treated property acquired during the marriage as individually owned on the date of separation. It was not until he swore his last Financial Statement on December 21, 2020 (a month prior to trial), that he adopted his current interpretation of paragraph 8.1. This was a self-serving shift in his position that benefits him financially but belies the parties’ common intention when they executed the Marriage Contract.
[59] For all the above reasons, I accept and adopt Ms. Saroli’s interpretation of paragraph 8.1. Subject to property excluded by s. 4(2) of the FLA or by the Marriage Contract, all property acquired by either spouse after the marriage will be treated as individually owned by that spouse, but subject to equalization. The contents of the matrimonial home were acquired by both spouses during the marriage, are therefore jointly owned and will be treated as such.
What property is contractually excluded from equalization?
Mr. Saroli’s Tara Crescent Properties
[60] The parties agree that the values of all Exclusive Properties listed in Schedules A and B of the Marriage Contract are to be excluded from their NFP calculations (on both the date of marriage and the date of separation), along with any debts directly related to the Exclusive Properties. However, the parties disagree about whether Mr. Saroli is entitled to exclude the value of (and debts related to) his ownership interest in two residential properties located at 15 and 22 Tara Crescent in Thorold, which he purchased during the marriage.
[61] Mr. Saroli sold his ownership interest in the Exclusive Calcott property in December 2004 and acquired an interest in the disputed Tara properties in the spring and summer of 2005. He claims to have used the proceeds of sale from the Calcott property to finance the purchase of his interests in the Tara properties. He submits that the latter properties are therefore excluded from the calculation of his NFP pursuant to paragraphs 7.2 and 8.1 of the Marriage Contract.
[62] Mr. Saroli bears the burden of proving the exclusion. For the reasons that follow, I find that he has satisfied the onus of establishing, on a balance of probabilities, that the proceeds of sale from the Calcott property were reinvested in the 15 and 22 Tara properties, such that the latter two properties form part of his Exclusive Property under the terms of the Marriage Contract. The following is a summary of the evidence upon which I rely to make this finding.
[63] Mr. Saroli co-owned the Calcott property with a third party named Antonio Gatti. They sold the property on December 10, 2004. Mr. Saroli purchased 15 Tara Crescent with another person named Lito Romano on May 13, 2005. He purchased 22 Tara Crescent with Mr. Romano on July 8, 2005.
[64] The documentary record corroborates Mr. Saroli’s testimony that, when the Calcott property was sold, the net proceeds of sale were divided equally between him and Mr. Gatti. According to the real estate solicitor’s Statement of Receipts and Disbursements, they each received $68,812. The date on which Mr. Saroli received his share is not known, but the solicitor’s reporting letter is dated December 21, 2004.
[65] Mr. Saroli testified that he and Mr. Gatti had a joint line of credit related to the Calcott property, which they discharged after the sale. He recalled that the account for the line of credit was located at Mr. Gatti’s banking institution. He stated that he used more than $18,000 of his share of the proceeds of sale to pay off his half of the balance on the line of credit. He did not supply any documentary evidence to support this statement, but his testimony was not challenged on cross-examination. He did not disclose the joint line of credit with Mr. Gatti on any of his sworn Financial Statements. It existed on the date of marriage and therefore ought to have been disclosed. It is excluded from the calculation of his net family property pursuant to the Marriage Contract, so the non-disclosure does not impact his NFP calculation, but it is nevertheless not condoned by the court.
[66] Notwithstanding the lack of disclosure, I accept Mr. Saroli’s uncontested evidence on this point as credible. I would not expect him to have retained or to be able to obtain bank records from an account that was closed more than sixteen years ago, so I draw no inference from his failure to adduce that evidence. In any event, Mr. Saroli is not seeking to trace the $18,000 for the purpose of establishing a deduction in his NFP calculation, so the manner in which that money was spent is not a material issue.
[67] Mr. Saroli testified that he opened a Scotiabank investment portfolio to hold the balance of his share of the proceeds of sale from the Calcott property until the money could be reinvested in other real estate. He produced quarterly Scotiabank Portfolio Summary statements to corroborate this testimony. The first statement is from the second quarter of 2005 and shows that he purchased $50,000 in GICs on February 1, 2005.
[68] Ms. Saroli challenged Mr. Saroli on cross-examination about the source of the funds used to purchase the GICs. He was unwavering in his testimony. I accept his evidence that the GICs were acquired with his share of the net proceeds of sale of the Exclusive Calcott property. The timing of the purchase of GICs on February 1, 2005 roughly coincides with the sale of the Calcott property about seven weeks earlier. Mr. Saroli received $68,812 from the sale on or about December 21, 2004. There is no other known source for the $50,000 on the evidence before me. It is therefore probable that the net proceeds of sale from Calcott financed the purchase of the GICs as a temporary investment.
[69] The Scotiabank Portfolio Summary statement shows that only $30,800 in GICs was remaining in Mr. Saroli’s investment portfolio at the end of the second quarter of 2005, with a total value of $31,051 as of June 30, 2005, including interest accrued since February 1, 2005. This bank statement does not record specific transactions, but it is reasonable to infer that Mr. Saroli sold $19,200[^2] in GICs at some point during the second quarter of 2005.
[70] Mr. Saroli testified that he withdrew that amount of money from the GICs in the Scotiabank investment portfolio to make a down-payment on the purchase of 15 Tara Crescent, which he acquired with Mr. Romano on May 13, 2005. He adduced a Scotiabank Customer Receipt for a bank draft dated May 12, 2005, in the amount of $19,200, made out in trust to the real estate lawyer who handled the purchase transaction. Mr. Saroli recalled that he and Mr. Romano made equal deposits in that amount. The bank draft bears handwriting on the memo line that states, “Purchase – 15 Tara Cres.”
[71] Mr. Saroli and Mr. Romano jointly purchased another property at 22 Tara Crescent a couple months later, on July 8, 2005. The real estate solicitor’s Trust Statement shows that they each paid a deposit of $20,350. Mr. Saroli testified that he financed his share of the down-payment with funds withdrawn from his Scotiabank investment portfolio. His testimony is corroborated by the documentary record. In particular, the third statement from his Scotiabank Portfolio Summary shows that there were only $10,450 in GICs in the account as of September 30, 2005, with a total value of $10,589, including interest accrued since February 1, 2005. Although no specific transactions are recorded on the statement, it is reasonable to infer that Mr. Saroli sold $20,350[^3] in GICs at some point during the third quarter of 2005, which is when the property at 22 Tara was acquired.
[72] Based on the above, Mr. Saroli has demonstrated on a balance of probabilities that the proceeds of sale from his Exclusive Calcott property were reinvested by him in the properties at 15 and 22 Tara Crescent. He and Mr. Romano jointly obtained mortgage loans to finance the purchase of those investment properties. They rented the properties and used the rental income to pay the carrying costs for the properties, including the mortgage payments. There is no evidence that any other source of funds was injected by Mr. Saroli into the Tara properties.
[73] Mr. Saroli has successfully traced the funds from the Exclusive Calcott property into the disputed Tara properties. Consequently, his interest in the Tara properties and any capital appreciation in the value of those properties constitute part of his Exclusive Property pursuant to the terms of the Marriage Contract. The value of the 15 and 22 Tara properties on the date of separation will therefore be excluded from the calculation of Mr. Saroli’s net family property, as will any debt relating directly to those properties.
Mr. Saroli’s Scotiabank Powerchequing Account (SP25)
[74] Mr. Saroli relies on the Marriage Contract to seek to exclude from his NFP the funds he held in a Scotiabank Powerchequing account that he opened prior to the parties’ wedding (the “SP25 account”). He has not disclosed the value of the account on the date of marriage. A bank statement shows that there was a balance of $4,617 on the date of separation. Ms. Saroli argues that he is not entitled to exclude that amount from the calculation of his assets on the valuation date because the account was not listed among his Exclusive Property in Schedule A to the Marriage Contract.
[75] Mr. Saroli testified that the rental income generated by his Exclusive Concession Street properties and by his Exclusive 25 Tara Crescent property was deposited to the disputed bank account, which was then used by him to pay expenses related to those Exclusive Properties. His evidence on this point was uncontradicted and I accept it as credible. The monies in the disputed account are therefore excluded by virtue of s. 7.1 of the Marriage Contract, which stipulates that income earned on the properties listed in Schedule A shall form part of his Exclusive Property.
Is Mr. Saroli entitled to exclude a $50,000 gift from his parents?
[76] Mr. Saroli seeks to exclude $50,000 from the value of his ownership interest in the Jake property pursuant to s. 4(2)1 and 4(2)5 of the FLA. He testified that he received a $50,000 gift as an early “inheritance” from his parents during the marriage and invested it in the Jake property. Ms. Saroli testified that the money was gifted to both of them.
[77] In order to benefit from the exclusion, Mr. Saroli bears the onus of proving that (i) the money was given solely to him and (ii) it can be traced to the Jake property on the date of separation. Mr. Saroli has not established either of these facts on a balance of probabilities.
[78] Approximately 15 years ago, Ms. Saroli’s parents sold a property that they owned and gave some of the net proceeds of sale to each of their children. His mother wrote a personal cheque to him for $50,000 on April 16, 2016. The fact that the cheque is made out to him and not to both of the parties is not sufficient to establish on a balance of probabilities that the money was given to him exclusively. The money could have been given to both parties, even though the cheque is only in Mr. Saroli’s name, just as the money came from both his parents even though the cheque was signed by only his mother. All the circumstances surrounding the gift need to be examined to determine whether the money was given to Mr. Saroli alone or to both parties.
[79] Mr. Saroli testified that he was uncomfortable accepting the $50,000 gift because he knew his parents did not have a pension. He thought they needed the money more than he did. He said his mother insisted on giving it to him because his siblings had received their shares. He reluctantly accepted it and deposited it into a new savings account that he opened within his Scotiabank investment portfolio. He explained that he wanted to keep the money segregated from his other accounts because he thought that his parents might need it back some day. The relevant quarterly statement from Mr. Saroli’s Scotiabank Portfolio Summary shows that he deposited $50,000 into a high interest savings account at some point between April 1, 2006 and June 30, 2006.
[80] Ms. Saroli testified that she knew about the $50,000 gift but was not aware that the money was deposited by Mr. Saroli into a separate account. She said she was not even aware of the existence of the separate account or of the Scotiabank investment portfolio in which the account was held. Mr. Saroli did not dispute these facts. He acknowledged during his cross-examination that his sworn Financial Statements did not disclose the existence of the investment portfolio containing the GICs and savings account.
[81] The value of the investment portfolio on the date of separation was only $62, such that it has no significant impact on the equalization calculation. The non-disclosure of the portfolio in Mr. Saroli’s sworn Financial Statements is nevertheless significant because it likely contributed to the parties’ inability to resolve their disputes about the exclusion of the 15 and 22 Tara properties and the $50,000 gift.
[82] It is noteworthy that Mr. Saroli did not rely on the gift from his parents as a basis to exclude $50,000 from the value of his share of the Jake property until the commencement of the trial. Prior to trial, he maintained that he used $50,000 originating from the sale of the Exclusive Calcott property to purchase the Hendershot lot and later the Jake lot. He made a sworn statement to that effect in an affidavit dated June 13, 2016 and in several Financial Statements. That was the basis of his claim for the $50,000 exclusion up until trial, when he suddenly asserted that $50,000 invested in the Jake property had come from his parents.
[83] The facts pleaded in Mr. Saroli’s Amended Answer dated August 21, 2020 did not mention the parental gift. The gift was not referenced in Part 7 (Excluded Property) of his most recent sworn Financial Statement dated December 21, 2020. It does not even appear in Part 7 (excluded gift or inheritance from third person) on his NFP Statement signed on January 5, 2021, six days before trial. It is as though the gift were an afterthought that only occurred to Mr. Saroli on the eve of trial. Ironically, the only mention of the $50,000 parental gift prior to trial appears in the “Excluded Property” section of an undated and unsworn Financial Statement submitted by Ms. Saroli around the time of the commencement of the proceedings.
[84] I infer that Mr. Saroli likely realized, on the eve of trial, that the documentation from his previously-undisclosed Scotiabank investment portfolio did not support his narrative that $50,000 of the money used to purchase the Hendershot lot came from the sale proceeds of the Calcott lot. He probably also realized, at that point, that he used the $50,000 from his parents to pay for the Hendershot lot. I am not suggesting that he deliberately misled Ms. Saroli for many years about the source of the funds. I find it more likely that he misremembered where the money originated. However, once he realized that the $50,000 derived from his parents’ gift, he then fabricated a story that the gift was made to him alone in order to try to preserve his claim for a $50,000 exclusion from his NFP.
[85] Ms. Saroli recalled discussing the $50,000 gift with Mr. Saroli at the time that it was offered by his parents. She remembered talking to him about the fact that his parents should keep the money because they might need it. She said his parents were insistent on making the gift. She specifically remembered that his mother was initially stipulating, as a condition of the gift, that she (Ms. Saroli) sign papers promising to return the money in the event their marriage broke down. She believed that his mother tried to impose this condition because his sister had recently been through a separation. She testified that she refused to agree to the proposed condition and the monetary gift was then made unconditionally.
[86] Ms. Saroli was adamant that the $50,000 was given to them both “as a family” and not to Mr. Saroli alone. She recalled that she was on maternity leave at the time and that Mr. Saroli was in school, so neither of them was working. She said they discussed it and agreed to use the money to pay down some of their debts. She thought that was how Mr. Saroli used the money. At trial, she expressed disbelief and dismay to learn that the $50,000 was not used to pay down their debt but rather was concealed by Mr. Saroli in an undisclosed separate savings account. Given the non-disclosure of the account by Mr. Saroli, I accept her evidence on this point as credible. It was unshaken under cross-examination.
[87] During his cross-examination and re-examination, Mr. Saroli testified that he did not recall having a conversation with Ms. Saroli about the $50,000 gift. He did not deny that they spoke about it, but rather stated that he could not remember. He acknowledged that his mother may have tried to impose the alleged condition on the gift. He was aware of his mother’s concern and said that asking Ms. Saroli to sign something to the effect that she would return the funds if they ever separated was something his mother would likely do. He could not, however, confirm whether that occurred. He said he simply could not recall. His memory regarding the relevant facts was selective and the gaps in his memory were self-serving. I conclude, on a balance of probabilities, that he was weaving a yarn to try to preserve his entitlement to a $50,000 exclusion from NFP after realizing that his original justification for the exclusion (i.e., tracing funds from the Exclusive Calcott property) would not survive scrutiny.
[88] Given the accuracy of Ms. Saroli’s detailed recollection (including that the gift was made while she was on her second maternity leave and Mr. Saroli was pursuing studies), and the fact that Mr. Saroli does not outright deny what she says transpired, I find it probable that his mother attempted to impose a condition on the gift. I accept Ms. Saroli’s uncontested testimony that she did not agree to the condition and that Mr. Saroli’s parents then gifted the money unconditionally.
[89] The mother’s attempt to impose a repayment condition in the event of separation is probative of Ms. Saroli’s understanding that the money was being advanced to them both. Mr. Saroli’s failure to mention the gift as the basis for his claimed $50,000 exclusion prior to trial reinforces my conclusion that Ms. Saroli’s recollection of the events is to be preferred. I note that, although Mr. Saroli segregated the money from his parents at the time that the gift was made, he did not do so because he was treating the money as his exclusive funds. Rather, he did so in case his parents needed the money back in the future.
[90] Finally, Mr. Saroli could easily have corroborated his version of the events by calling either of his parents as a witness to attest to the beneficiary of the gift. His failure to do so invites an adverse inference that, had his parents testified, they would have confirmed Ms. Saroli’s testimony that the money was given to both parties.
[91] Mr. Saroli’s claim to an exclusion of the $50,000 gift is therefore denied.
[92] He argues, in the alternative, that he is entitled to exclude $25,000 from his net family property based on his half interest in the gift made by his parents, which he claims he can trace to the Jake property, an asset that was in existence on the date of separation. For the reasons set out below, I have concluded that he has not successfully traced the money to property that he owned on the valuation date, as required by s. 4(2)5 of the FLA.
[93] When he deposited the $50,000 cheque from his mother into a high interest savings account in the spring of 2006, the only other funds in his Scotiabank investment portfolio were the remaining GICs from the proceeds of sale of the Exclusive Calcott property (after purchasing the 15 and 22 Tara properties). The value of the GICs at that point was $10,589. The $50,000 was initially kept separate from the GICs in a high interest savings account. Quarterly Portfolio Summary statements show that the GICs matured and were renewed a few times. Interest accrued on the GICs and on the funds in the savings account. By September 30, 2007, the GICs were worth $11,145 and the savings account balance was $52,254.
[94] On December 3, 2007, Mr. Saroli used the money in the high interest savings account to purchase additional GICs, leaving only a nominal balance in the savings account. The investments were thereafter untouched for more than two years. The GICs grew in value to $68,117 by March 31, 2010, with only a nominal balance of $2 remaining in the savings account.
[95] Had the parties separated at that point (in March 2010), Mr. Saroli would have been able to exclude his share[^4] of his parent’s monetary gift from his valuation date assets, because the funds in the GICs consisted entirely of the sale proceeds from the Exclusive Calcott property and the $50,000 gift from his parents. After that date, however, the monies were comingled with other funds.
[96] The parties acquired their ownership interest (held in trust by E.E.) in the Hendershot lot for $87,619 on June 25, 2010. The documentary record establishes that Mr. Saroli paid $92,869 to the real estate solicitors on the closing date. That payment covered the consideration for the purchase of the property, as well as transactional costs. Mr. Saroli testified that he sold about $68,000 of his GICs and put that Exclusive money toward the purchase price. This testimony is corroborated by a Scotiabank Portfolio Summary statement that shows two transactions in the spring of 2010. He sold $18,000 of GICs on May 20, 2010 and $50,153 on June 23, 2010.
[97] Ms. Saroli was not aware that the investment portfolio existed or that funds were withdrawn from it to contribute to the purchase of the Hendershot property, but I am persuaded by the documentary record that is what occurred. The timing of the withdrawals coincides with the payment that was made by Mr. Saroli to purchase the lot. Based on the totality of the evidence at trial, I accept as credible his testimony that the parties did not have the means to make the entire $92,869 payment from other funds.
[98] Mr. Saroli admitted, however, that the money used to purchase the Hendershot property “came from a combination of excluded monies [his GICs] and other joint monies” that the parties had saved. The Exclusive funds in the investment portfolio were thereby co-mingled with non-Exclusive funds. The blended funds were then used to pay the purchase price of the Hendershot lot and sundry transactional costs. At this point, the tracing of Mr. Saroli’s $25,000 gift from his parents became obscured.
[99] The parties signed as guarantors on the construction mortgage loan in the amount of $366,000, which was used to build a house on the Hendershot lot. The construction draws were deposited into a RBC bank account opened by Mr. Saroli in August 2010 (the “RBC Construction Account”). Bank statements confirm that the first construction draw in the amount of $186,909 was deposited to the account on August 9, 2010. Mr. Saroli then made two $25,000 withdrawals on August 10, 2020 to pay installments to the builders. Further construction draws were subsequently deposited to the account and construction expenses were paid from the account.
[100] After the home construction was completed, the parties directed their trustee, E.E. to sell the Hendershot property. It sold for $435,000. E.E. instructed the real estate solicitor to release the net proceeds of sale in the amount of $67,301 to Mr. Saroli. He deposited the proceeds into the RBC Construction Account, which prior to the deposit had a balance of $81,653. At that stage, it was not possible to discern whether any portion of the net proceeds of sale from Hendershot consisted of the Exclusive funds originating from the Calcott property or his half share of the $50,000 gift. The Exclusive funds could not be distilled from the other savings used to purchase the Hendershot lot or from the mortgage financing used to build on the lot.
[101] Three days after the sale of the Hendershot property, on February 28, 2011, the parties paid E.E. $7,000 pursuant to their trust agreement with her. Then, on March 7, 2011, Mr. Saroli withdrew $131,900 from the RBC Construction Account and used $81,900 to make a payment on a joint line of credit that the parties had secured against their matrimonial home. He deposited the remaining $50,000 into a new Scotia Power Savings account and later withdrew that money, in two $25,000 installments, to pay the builder that the parties hired to construct a house on the Jake lot that they acquired in May 2011. Mr. Saroli submits that his share ($25,000) of the gift from his parents is therefore traceable to his ownership interest in the Jake property, but the gift money had long since become so co-mingled with other funds that it was no longer discernible.
[102] It is not the number of transactions nor the changes in the form of the gift (i.e., from cash, to GICs, to the Hendershot property, back to cash and then to the Jake property) that defeats Mr. Saroli’s claim. The question is whether he has shown, at each stage of the transactions, that the subsequent property or proceeds were acquired, or partially acquired, with assets traceable to the excluded gift. As Justice Penny explained in Ludmer v. Ludmer, 2013 ONSC 784, at para. 86, aff’d 2014 ONCA 827:
[I]t is not the transformation of the asset that brings tracing to an end. Rather, it is the inability of the beneficiary to prove the necessary connection or nexus between the [gifted] property and the subsequently acquired asset. For example, tracing may reach its limit when an asset is spent or dissipated or where it is used to pay down debt or otherwise becomes co-mingled with other assets such that the original [gifted] property can no longer be discerned.
[103] In this case, Mr. Saroli’s $25,000 share of the gift (and the remaining funds from the sale of the Calcott property) that had been preserved in GICs until June 2010 were intermingled with other funds such that, by the date of separation, it was not possible to discern what happened to the money. I accept Mr. Saroli’s testimony that the $25,000 formed part of the payment of $92,869 for the purchase of the Hendershot lot, but beyond that, the money is not traceable.
[104] It is notable that the parties appear to have lost money on their investment in the Hendershot property. After paying E.E. her $7,000 trustee fee, they obtained a net amount of only $60,301 from the proceeds of sale. They had purchased the lot at a cost of $92,869 and had paid interest on a construction mortgage loan for about eight months. Having lost more than $32,500,[^5] the court cannot conclude that $25,000 of the gift from Mr. Saroli’s parents was preserved as part of the $60,301 proceeds of sale from Hendershot. Moreover, the proceeds of sale from Hendershot were thereafter blended with monies in the RBC Construction Account, a substantial portion of which was used to pay down the parties’ Joint LOC.
[105] For the above reasons, Mr. Saroli has failed to establish that $25,000 of the $50,000 he took from the RBC Construction Account and paid to the builder for the Jake property is traceable to the $25,000 gift from his parents. He is therefore not entitled to the $25,000 exclusion that he claims. Moreover, if I had decided that the entire $50,000 gift was made to him alone, he would not be entitled to an exclusion of $50,000, because the money is not traceable to an asset that he owned on the date of separation.
What, if any, equalization payment is owed?
[106] To determine what, if any, equalization payment is owed, I must first calculate the parties’ respective NFPs in accordance with s. 4(1) of the FLA. This necessitates a review of the evidence regarding their non-excluded assets, debts and liabilities on the date of marriage and on the valuation date.
[107] The parties agree that the valuation date is January 15, 2012. I use the expressions “valuation date” and “date of separation” interchangeably throughout this Judgment.
Value of Assets Owned on Valuation Date
[108] The value of the jointly owned matrimonial home on January 15, 2012 is not in evidence. Ms. Saroli adduced a letter of opinion from a Real Estate agent dated April 8, 2014, estimating the value at that time to be approximately $540,000 to $550,000. Mr. Saroli did not object to the admissibility of the opinion letter.
[109] In his sworn Financial Statements, Mr. Saroli has consistently estimated the value of the matrimonial home to be $564,000 on the date of separation. He provided no documentary evidence to support that valuation. Ms. Saroli estimates the separation date value to be $600,000 in her most recent Financial Statement, but she estimated lower values ranging from $523,000 to $565,000 on earlier sworn Financial Statements. She provided no documentary evidence to support her valuations. Neither party testified about the separation date value of the home during the trial.
[110] Given that the parties do not agree on the value and no appraisal of the property was done on the date of separation, I must rely on the only evidence available to me, namely the letter of opinion from the real estate agent that was provided in April 2014. It is unlikely that the value of the property decreased between January 2012 and April 2014. If anything, it probably increased. I will therefore adopt the lower end of the range estimated by the real estate agent (i.e., $540,000) as the value on the date of separation. An amount of $270,000 in value will therefore be allocated to each party for their half share.
[111] On the date of separation, the parties also jointly owned 100 percent of the beneficial interest in the Jake investment property registered under E.E.’s name. The property was not appraised effective the date of separation. In an unsworn Financial Statement from August 2019, Mr. Saroli estimated the separation date value to be $397,460. The source of that figure is unknown. It is not supported by any documentary evidence.
[112] The record contains only circumstantial evidence of the Jake property’s value in January 2012. The lot was purchased for $129,000 in May 2011. The parties obtained a construction mortgage loan in the amount of $412,000 to build on the lot. The property was eventually sold by E.E. for $532,000 on August 8, 2014, two and a half years after the parties separated. Considering that construction of the house was unfinished on January 15, 2012, I estimate the value of the property at that time to be $150,000 less than the sale price in 2014 (i.e., $382,000). An amount of $191,000 will therefore be allocated to each party for their half share.
[113] In addition to their interests in land, the parties also owned vehicles on the date of separation. Mr. Saroli had a 2008 Mercedes and Ms. Saroli had 2010 Honda.
[114] Neither party testified about the value of the Mercedes on the date of separation. Mr. Saroli deposed in his most recent Financial Statement that the Mercedes was worth $14,200, but in his initial Financial Statement dated March 4, 2014 he said it was worth $20,000. No explanation was provided at trial for the decrease in the estimated value. Ms. Saroli submits that the court should use the higher amount. Mr. Saroli provided no documentary evidence regarding the car’s value. I have decided to rely on the $20,000 value because his estimate of the car’s worth on January 15, 2012 was likely more accurate in March 2014 than it was in December 2020, and because he gave no explanation for the self-serving reduction in the estimated value.
[115] In her Financial Statements, Ms. Saroli values her Honda at $11,000 on the date of separation, but during her testimony at trial she agreed with Mr. Saroli’s valuation of the vehicle in the amount of $3,304. I will therefore use the agreed-upon amount.
[116] The parties agree that the contents of the matrimonial home were co-owned and had a value of approximately $5,000 on the date of separation.
[117] The parties’ Financial Statements contain inconsistent evidence about jewelry owned on the date of separation. It is unnecessary for me to review the evidence because, during her cross-examination, Ms. Saroli conceded Mr. Saroli’s position that the jewelry was co-owned by the parties and worth approximately $10,000 on the valuation date.
[118] The parties each had bank accounts. Bank statements establish the balances in those accounts on the date of separation. Ms. Saroli had a TD Canada Trust account with $1,464 and Mr. Saroli had a Scotiabank Powerchequing Account (“SP21 account”) with $9,127.
[119] Mr. Saroli also had the RBC Construction account, which contained a balance of $9,524 on the date of separation. Although that account was in his name alone, the funds in the account belonged to both parties because they were joint guarantors on the construction mortgage loans that were injected into the account. An amount of $4,762 will therefore be credited to each of them for their half shares.
[120] Mr. Saroli also had a joint bank account with Lito Romano, with a balance of $5,952 on the date of separation. Mr. Saroli seeks to exclude his half interest ($2,976) in that account from his NFP. He claims the exclusion based on paragraph 7 and Schedule A of the Marriage Contract, but the account was not in existence on the date of marriage and is not mentioned in Schedule A. In his early sworn Financial Statements, Mr. Saroli listed the account as one of his assets on the valuation date and did not take the position that it was excluded, although he attributed a value of $0 to it. In later sworn Financial Statements, he claimed the account as an excluded asset and deposed that it was “used for Tara property”.
[121] Mr. Saroli did not clarify the basis for this claimed exclusion at trial. I can only guess that he is seeking to exclude his interest in this joint account on the basis that the funds in the account constitute income from the Exclusive Tara properties that he co-owned with Mr. Romano. If that were so, then his half interest in the joint bank account would be excluded pursuant to s. 7.1 and 7.2 of the Marriage Contract, which stipulate that income from Mr. Saroli’s Exclusive Properties forms part of his Exclusive Property. Mr. Saroli did not, however, adduce evidence to establish that the money in the disputed account constituted income generated by the Tara properties. Although some of his sworn Financial Statements indicate that the account was “used for Tara property” (emphasis added), there is no evidence upon which I could reasonably infer that the money in the joint account came from rent collected from tenants occupying the Tara properties. Mr. Saroli has therefore failed to establish that his half interest in the joint account with Mr. Romano is his Excusive Property. The value of his share of the account ($2,976) will therefore be included in his list of assets on the date of separation.
[122] As noted previously, Mr. Saroli had a balance of $62 in his Scotia Investment Portfolio on the date of separation.
[123] Both parties have pension plans. Actuarial values of the plans on the date of marriage and on the valuation date are not in evidence, so these assets cannot be included in the calculation of the parties’ net family properties. I will therefore deal with the pensions separately by making an order for division of pension credits at source pursuant to s. 10.1(3) of the FLA.
Debts and Other Liabilities on Valuation Date
[124] The balance outstanding on the parties’ mortgage loan for the matrimonial home was $101,470 on January 1, 2012. This was a joint debt so half the amount ($50,735) will be allocated to each party.
[125] The parties also had the Joint LOC secured against title to the matrimonial home. The relevant bank statement shows a balance of $26,774 owing on January 27, 2012. A debt of $13,387 will therefore be allocated to each party for their half shares.
[126] The original principal amount of the construction mortgage loan for the Jake property was $412,000 in June 2011. In her sworn Financial Statement dated May 22, 2014, Ms. Saroli deposed that the amount owing on January 15, 2012 was $363,000. That figure is not supported by a bank statement, but it was not challenged by Mr. Saroli and it is the only evidence in the record relating to the balance of the mortgage debt for the Jake property on the valuation date. I will therefore accept it in accordance with the best evidence rule. The parties were joint guarantors on the mortgage loan, so an equal amount of $181,500 will be allocated to each of their debts.
[127] The parties had a shared Scotiabank Visa credit card. A bank statement shows a balance of $8,914 owing in January 2012, so an equal debt of $4,457 will be allocated to each of the parties. Mr. Saroli also had a Canadian Tire credit card with a balance owing of $940 on the valuation date. Ms. Saroli had a TD Canada Trust line of credit with a balance owing of $5,573 on the valuation date.
[128] Ms. Saroli claims to have also owed a debt to her brother on the valuation date, relating to her ownership interest in the Tall Grass property where her brother and parents reside. Title to the property is registered in her name alone but she holds two thirds of the property as trustee for the benefit of her brother and parents. The mortgage loan secured on title is in her name, but her parents and brother pay a share of the monthly mortgage payments as co-owners.
[129] Ms. Saroli testified that her brother has been paying her one third share of the mortgage ($600). She said she plans to pay him back when the Tall Grass property is eventually sold. In her Financial Statement dated December 15, 2020, she deposed that he has been paying her share “since 2010”, but during her cross-examination at trial she testified that he started to pay her share “just before the date of separation” in January 2012. In her December 15, 2020 Financial Statement, she claims the amount owed to her brother on the valuation date was $14,400. However, in multiple previous Financial Statements, she deposed that the amount owing on the valuation date was only $9,800.
[130] Due to the internal inconsistencies in Ms. Saroli’s evidence, I am unable to determine what amount her brother paid toward the Tall Grass mortgage on her behalf prior to the parties’ separation. She produced no documentary evidence showing the payments supposedly made by him. Furthermore, she adduced no admissible evidence of an agreement for her to repay the money. She tendered a letter purportedly signed by her brother, but I ruled it inadmissible because it is hearsay and does not satisfy the twin criteria of reliability and necessity required to fall within the principled exception to the hearsay exclusion rule. Ms. Saroli could have called her brother as a witness to confirm the total amount of money advanced by him and the terms of repayment. Her failure to do so invites an adverse inference that her brother’s evidence would not have supported her claim.
[131] Based on the totality of the evidence, and the lack of evidence, I find that the existence of a loan from her brother has not been established on a balance of probabilities. Ms. Saroli’s claim for this deduction is therefore denied. I note that, even if I had concluded that Ms. Saroli owed her brother money in connection with the Tall Grass property on the date of separation, that debt would be excluded from the calculation of her NFP because it relates directly to one of her Exclusive Properties listed in Schedule B to the Marriage Contract.
Value of Assets Owned on Date of Marriage
[132] The value of the matrimonial home is statutorily excluded from the calculation of the parties’ assets on the date of marriage: FLA, s. 4(1)(b).
[133] There is contradictory and internally inconsistent evidence in both parties’ sworn Financial Statements about the existence and value of jewelry owned by each of them on the date of marriage. It is unnecessary for me to review the evidence because Ms. Saroli agreed, during her cross-examination, with Mr. Saroli’s suggestion that they each owned $5,000 worth of jewelry.
[134] During Ms. Saroli’s examination-in-chief at trial, Mr. Saroli stipulated that Ms. Saroli owned approximately $1,000 worth of household items on the date of marriage.
Debts and Liabilities on Date of Marriage
[135] The mortgage secured against the matrimonial home is statutorily excluded from the calculation of the parties’ debts and liabilities on the date of marriage: FLA, s. 4(1)(b).
[136] The parties agree that Ms. Saroli’s only (non-excluded) debt on the date of marriage was a balance of $4,347 on a TD line of credit. Mr. Saroli had no (non-excluded) debts or liabilities on the date of marriage.
Equalization Calculation
[137] The following charts show the calculation of the parties’ NFPs.
TABLE 1: Value of assets owned on valuation date
| Item | Ms. Saroli | Mr. Saroli |
|---|---|---|
| Matrimonial Home | $270,000 | $270,000 |
| Jake property | $191,000 | $191,000 |
| 2008 Mercedes | $ 20,000 | |
| 2010 Honda | $ 3,304 | |
| Household items | $ 2,500 | $ 2,500 |
| Jewelry | $ 5,000 | $ 5,000 |
| TD Canada Trust account | $ 1,464 | |
| RBC Construction account | $ 4,762 | $ 4,762 |
| ½ of joint account with Lito Romano | $ 2,976 | |
| Scotiabank Powerchequing account SP21 | $ 9,127 | |
| Scotiabank investment portfolio | $ 62 | |
| Total Table 1 | $478,030 | $505,427 |
TABLE 2: Debts and liabilities on valuation date
| Item | Ms. Saroli | Mr. Saroli |
|---|---|---|
| Mortgage on matrimonial home | $ 50,735 | $ 50,735 |
| Secured joint line of credit | $ 13,387 | $ 13,387 |
| Mortgage on Jake property | $181,500 | $181,500 |
| Joint Visa credit card | $ 4,457 | $ 4,457 |
| Canadian Tire credit card | $ 940 | |
| TD Canada Trust line of credit | $ 5,573 | |
| Total Table 2 | $255,652 | $251,019 |
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)
| Assets (date of marriage) | Ms. Saroli | Mr. Saroli |
|---|---|---|
| Jewelry | $ 5,000 | $ 5,000 |
| Household items | $ 1,000 | |
| Total Table 3(a) | $ 6,000 | $ 5,000 |
| Debts or Liabilities (date of marriage) | Ms. Saroli | Mr. Saroli |
|---|---|---|
| TD Line of Credit | $ 4,347 | |
| Total Table 3(b) | $ 4,347 | $ 0 |
| Total Table 3 (Total 3(a) minus Total 3(b)) | $ 1,653 | $ 5,000 |
| Net Family Property Calculation | Ms. Saroli | Mr. Saroli |
|---|---|---|
| Total Table 1 | $478,030 | $505,427 |
| Total Table 2 | $255,652 | $251,019 |
| Total Table 3 | $ 1,653 | $ 5,000 |
| Net Family Property (Table 1 minus Tables 2 and 3) | $220,725 | $249,408 |
[138] The difference between the parties’ net family is $28,683.[^6] Mr. Saroli therefore owes Ms. Saroli an equalization payment of $14,341.[^7]
Pension Equalization
[139] The parties adduced evidence of the Family Law Value (FLV) of their respective pensions (i.e., the imputed value of the pension accrued between the date of marriage and the date of separation, calculated pursuant to s. 10.1 of the FLA). The FLV of Ms. Saroli’s OP Trust pension is $73,981 and the FLV of Mr. Saroli’s Ontario Teachers’ Pension is $35,135.
[140] The FLV of Ms. Saroli’s pension exceeds the FLV of Mr. Saroli’s pension by $38,846. To equalize the value of this asset, Ms. Saroli shall forthwith apply to the Ontario Pension Board for a transfer of a lump sum in the amount of $19,423[^8] from her pension plan directly to Mr. Saroli’s pension plan: FLA, s. 10.1(3).
POST SEPARATION ADJUSTMENTS
[141] Each party is entitled to be reimbursed for post-separation payments that they made on the other’s behalf, whether toward joint liabilities or toward the other party’s liabilities.
Utilities in the Matrimonial Home
[142] I will refer to the period between January 15, 2012 and March 31, 2014 as the parties’ “Co-Occupation Period” because they were living separately in the matrimonial home or “nesting” with the children in the matrimonial home throughout that time. During that period, they ought to have been sharing the home insurance and utility bills equally. In fact, Mr. Saroli paid 100 percent of the home insurance premiums, home alarm bills, and Rogers internet, cable and phone service bills. His bank records show that he paid the following amounts:
| Expense (January 15, 2012 to March 31, 2014) | Amount Paid by Mr. Saroli |
|---|---|
| Home insurance | $ 2,159 |
| Internet/cable/phone bill | $ 7,549 |
| Home Alarm bill | $ 1,272 |
| TOTAL | $ 10,980 |
[143] Mr. Saroli is entitled to reimbursement of $5,490 for half the total cost of the utilities that he paid on Ms. Saroli’s behalf.
[144] Mr. Saroli also paid a disproportionate amount of the hydro, gas and water bills during the Co-Occupation Period. Bank records establish the following:
a) Mr. Saroli paid all the hydro bills up until March 2014, in the total amount of $4,561. Ms. Saroli paid one hydro bill for $150 in late March 2014.
b) Mr. Saroli paid the gas bills up until August 2013, in a total amount of $1,314. Ms. Saroli paid the gas bills in January, February and March 2014, for a total amount of $781. It is unclear from the record who (if anyone) paid the gas bills from September to December 2013.
c) Mr. Saroli paid the water bill up until September 2013, in a total amount of $868. Ms. Saroli paid a total of $130 toward the water bills between January and March 2014. It is unclear from the record who (if anyone) paid the water bills from September to December 2013.
[145] Mr. Saroli therefore paid a total of $6,743[^9] and Ms. Saroli paid a total of $1,061[^10] for the hydro, gas and water bills during the Co-Occupation Period. Because Mr. Saroli paid $5,682[^11] more than Ms. Saroli, he is entitled to be reimbursed half that amount ($2,841).
[146] After Mr. Saroli moved out of the matrimonial home in April 2014, he continued to pay 100 percent of the home insurance premiums until May 2015. He also contributed to some of the utility bills. His bank statements show that he paid the following amounts:
| Expense (April 1, 2014 onward) | Amount Paid By Mr. Saroli |
|---|---|
| Home insurance | $ 1,749 |
| Home Alarm[^12] | $ 194 |
| Gas bill[^13] | $ 116 |
| Internet/cable/phone bill[^14] | $ 1,310 |
| TOTAL: | $ 3,369 |
[147] Mr. Saroli is entitled to reimbursement of the above amount of $3,369 because he was not consuming the utilities during this time period. Moreover, he had removed his personal belongings from the home and no longer required contents insurance or a security system for his personal property and personal safety. Although he benefited somewhat from the homeowner’s insurance coverage, Ms. Saroli, as the exclusive occupant of the home, ought to have been paying the insurance premiums and house alarm fees effective April 1, 2014.
[148] In summary, Mr. Saroli is entitled to be reimbursed $11,700[^15] for insurance premiums and utilities in the matrimonial home that he paid on Ms. Saroli’s behalf post-separation.
Mortgage Payments and Property Taxes on the Matrimonial Home
[149] As joint owners of the matrimonial home, the property taxes and mortgage loan payments for the house should have been shared equally by the parties from the date of separation, regardless of who was occupying the home.
[150] The mortgage balance owing on the date of separation was $101,470. The documentary record establishes that payments were made by both parties toward the mortgage after they separated. Based on the parties’ testimonies and my examination of the relevant bank records, I conclude that the following payments were made:
a) Mr. Saroli made all the mortgage payments from January 16, 2012 to April 27, 2015 inclusive, for a total of $44,335.
b) It is unclear who paid the mortgage in May 2015.
c) Ms. Saroli made the mortgage payments from June 15, 2015 to December 24, 2018, for a total of $45,146. She testified that her brother loaned her in excess of $10,000 to make these payments.
d) Ms. Saroli discharged the mortgage by paying the outstanding principal balance of $20,647 in December 2018.
[151] On the evidence, I conclude that Ms. Saroli contributed a total of $65,793[^16] to the mortgage post-separation and Mr. Saroli contributed $44,335. Because Ms. Saroli paid $21,458 more than Mr. Saroli, she is entitled to reimbursement of half that amount ($10,729).
[152] The property taxes owing on the matrimonial home were not always paid promptly. Bank statements show that Mr. Saroli paid 100 percent of the property taxes from the date of separation until November 2013, plus he made one payment in the amount of $300 in October 2015, for a total of $8,962. Payment receipts and bank statements establish that Ms. Saroli made sporadic payments toward the property taxes between March 2014 and January 2019, in a total amount of $24,418. Ms. Saroli paid $15,456 more than Mr. Saroli and is therefore entitled to reimbursement of half that amount ($7,728).
[153] The property taxes have not been paid since January 2019. The record shows that by November 2020, almost $11,000 in arrears was owing to the Town of Caledon. Ms. Saroli testified that the arrears were not being enforced because of the COVID-19 pandemic. Those arrears shall be paid from the proceeds of sale of the matrimonial home pursuant to paragraph 6(c) of my Order dated February 28, 2021.
Maintenance and Repairs on the Matrimonial Home
[154] Mr. Saroli gave Ms. Saroli $500 to contribute to the cost of roof repairs on the matrimonial home in or about December 2015. He seeks reimbursement for half that amount, but he testified that Ms. Saroli also contributed $500 toward the roof repair, so he is not entitled to a post-separation adjustment for this expense.
[155] Ms. Saroli adduced evidence to show that she incurred a total of $23,792 on maintenance and repairs for the matrimonial home since the date of separation. She seeks reimbursement of half that amount.
[156] Ms. Saroli’s list of expenses includes painting supplies (e.g. rollers, brushes, paint), small plumbing supplies (e.g. washers, drain, toilet seat), landscaping products (e.g. weed killer, mulch, soil, grass seed, fertilizer), landscaping services (e.g. aerating and weed control), garden plants, outdoor lighting, pool supplies and services, window coverings, and miscellaneous trivial items such as a drill bit, screws, anchors, hooks, cabinet knobs, wall receptacle covers, epoxy, and carbon monoxide detectors. These types of expenses are not compensable as a post-separation adjustment to the equalization payment owed by Mr. Saroli. They were incurred for Ms. Saroli’s exclusive benefit as the occupant of the home. She chose to repaint some of the interior rooms. She chose to replace the knobs on cabinets. She made small repairs to sinks, tubs and toilets. She chose to have flower gardens and to devote significant resources to lawn maintenance. These aesthetic choices and expenses no doubt enhanced her personal enjoyment of the property but there is no evidence that they enhanced the value of the property. To the extent that they may have helped to maintain the value of the property, they were incurred without Mr. Saroli’s knowledge or consent. In the circumstances, her claim for reimbursement of 50 percent of these costs is unreasonable and is dismissed.
[157] Ms. Saroli incurred a few significant post-separation expenses relating to repairs or renovation of the matrimonial home. Specifically, she paid $2,825 to replace the kitchen sliding door, $5,375 to replace the two front doors on the house, and $4,397 to install hardwood flooring on the upper floor. She did not consult with Mr. Saroli about these repairs or renovations. She has not established that they were necessary to maintain the value of the property. Mr. Saroli was not given an opportunity to contest whether they were necessary, to assess whether he could perform the work himself, or to gather quotes as to cost. In the circumstances, her claim for reimbursement of half of these expenses is dismissed.
[158] There are a couple of expenses incurred by Ms. Saroli that are properly the subject of a post-separation adjustment because they were costs reasonably required to maintain the property and were therefore for the benefit of both parties, even though Mr. Saroli was no longer occupying the premises. Specifically, she paid for repair of water damage from the upper bathroom into the kitchen ceiling light fixture ($271) and replaced the broken springs on the garage door ($734), for a total cost of $1,005. She is entitled to reimbursement of half that amount ($503).
Expenses Related to the Jake Property
[159] After the parties separated, Mr. Saroli paid the mortgage on the jointly owned Jake property up until July 2014, after which the property was sold. He made these payments from his personal SP21 bank account, in the amount of $2,107 per month, for a total of $65,318. He seeks reimbursement for half this amount.
[160] During the post-separation period, the funds in the SP21 account were derived from at least four different sources. First, a total of $18,769 was transferred from the RBC Construction account in increments of $2,107 between January and October 2012. Ms. Saroli alleges that Mr. Saroli was siphoning money from the RBC Construction account into his own personal account for his personal benefit, but the documentary record corroborates Mr. Saroli’s testimony that the funds transferred from the RBC Construction account into his SP21 account were used exclusively to pay the Jake property mortgage. Her allegation that he “absconded” with $235,000 in funds from the RBC Construction account is not made out on the evidence.
[161] The second source of funds deposited to Mr. Saroli’s SP21 account was his paycheques. Third, he occasionally transferred amounts of $1,000 or $2,000 from his SP25 account, where the rental income from his Exclusive Concession street properties was deposited. Fourth, he routinely transferred funds from the parties’ Joint LOC into his SP21 account. He downplayed these transfers when he testified, but his bank records establish that he transferred a total of $43,500 from the Joint LOC to the SP21 account between August 2012 and August 2013.
[162] The funds in the RBC Construction account belonged to both parties because they were both guarantors on the construction mortgage loan for the Jake properties. The funds withdrawn from the Joint LOC also belonged to both parties because they were jointly liable for repayment of the balance owing. Mr. Saroli used a combination of these joint funds ($18,769 + $43,500) to pay a total of $62,269 toward the Jake mortgage. He is not entitled to any reimbursement for those payments because joint funds injected into his account were used to pay the parties’ joint liability. If Ms. Saroli were ordered to reimburse him for those payments, she would effectively be contributing twice to the Jake mortgage.
[163] The evidence establishes that Mr. Saroli only contributed $3,049[^17] of his own money to the Jake mortgage post-separation. He is entitled to reimbursement of half that amount ($1,524).
[164] Mr. Saroli hired a tradesperson to pave the driveway on the Jake property in the fall of 2013. He paid the worker $7,000 in cash. He testified that he borrowed money to pay for it because there were insufficient funds in the RBC Construction account. Bank records confirm that the RBC Construction account had a balance of only $1,633 on September 1, 2013. Mr. Saroli is seeking reimbursement from Ms. Saroli for half the cost of the driveway and half the borrowing cost (i.e., interest payments) that he incurred to pay for the driveway.
[165] Mr. Saroli obtained a line of credit in September 2013 with a maximum borrowing limit of $8,000 and an annual interest rate of 5%. He withdrew a cash advance of $7,100 on September 20, 2013 and used that money to pay for the driveway. He then made an initial payment of $1,000 toward the line of credit, after which he paid only the minimum monthly amount of $50 for a few years, then he defaulted on the loan. He eventually paid the outstanding balance using the proceeds of sale of one of his Exclusive Properties. Bank statements show that he paid a cumulative total of approximately $1,400 in interest on the line of credit prior to paying an undisclosed lump sum to discharge the loan and close the account.
[166] Ms. Saroli does not dispute that the driveway on the Jake property was paved, but she claims that she was not consulted beforehand. Mr. Saroli testified that they discussed the need to pave the driveway in order to sell the property and they agreed that he would hire someone to do it. I find his evidence to be credible and more probable. However, I accept Ms. Saroli’s evidence that she had no knowledge of the line of credit obtained by Mr. Saroli to borrow funds to pay for the work.
[167] Mr. Saroli is entitled to reimbursement for half the cost of the driveway, which the parties agreed to incur in order to sell the property. He is not entitled to reimbursement for half the borrowing cost that he incurred to pay for the driveway without Ms. Saroli’s knowledge or consent. He will therefore be reimbursed only $3,500 for the driveway.
[168] Ms. Saroli seeks compensation in the amount of $2,400 for “property management fees” relating to the Jake property, which she says she managed from January 2014 until the property sold in August 2014. Mr. Saroli did not agree to pay her fees for these services. Moreover, Mr. Saroli managed the property from the date of separation (January 15, 2012) until December 2013 without compensation, so this is not a reasonable claim on her behalf.
[169] Ms. Saroli also seeks compensation for advertising costs that she incurred in promoting the listing of the Jake property for sale in 2014. She undertook these expenses without Mr. Saroli’s knowledge or consent, and ultimately directed their trustee to accept an offer to purchase without his knowledge or consent. In the circumstances, she is not entitled to reimbursement of these costs.
Proceeds of Sale from Jake Property
[170] As discussed earlier in this Judgment, after the Jake property was sold in August 2014, Ms. Saroli took all the net proceeds ($103,817) and converted Mr. Saroli’s half share of that money to her own use. He is entitled to reimbursement of his half in the amount of $51,908.
Joint Secured Line of Credit
[171] The balance owing on the parties’ Joint LOC was $26,774 on the date of separation in January 2012. The balance increased to more than $100,000 by August 2013.
[172] Ms. Saroli withdrew $20,000 from the Joint LOC in late August 2013. She testified that she did so because she discovered that the outstanding balance on the account had ballooned by more than $50,000 since the date of separation due to cash withdrawals and bank transfers that Mr. Saroli had been making without her knowledge. When asked what she did with the $20,000, Ms. Saroli stated, “I kept the money in cash.”
[173] As noted above, Mr. Saroli transferred a total of $43,500 to his personal SP21 account to pay the Jake property mortgage,[^18] which is a joint liability. He also made two cash withdrawals totaling $7,000 in July 2012. He provided no explanation for those withdrawals and no evidence as to how that money was spent. I infer that the cash was used for his sole benefit.
[174] I therefore conclude that, of the total debt accrued on the Joint LOC, Ms. Saroli should be responsible for repaying the first $13,000[^19] and the remaining debt is a joint liability to be shared equally.
[175] The evidence establishes that Mr. Saroli made minimum monthly payments to service the debt, initially in amounts of $85 to $90, but later in amounts of $165 to $180, and eventually in amounts exceeding $200 and $300 dollars as the principal balance grew. He paid a total of $10,187 post-separation. Ms. Saroli made lump sum payments of $750 and $400 in May 2018 and July 2018 respectively. She eventually paid off the outstanding balance of $98,915 in late December 2018. She therefore paid a total of $100,065.[^20]
[176] Collectively, the parties paid $110,252[^21] toward the Joint LOC post separation. After subtracting Ms. Saroli’s $13,000 personal debt, the parties were jointly responsible for the remaining $97,252.[^22] Mr. Saroli ought to have paid $48,626 for his half share. He paid only $10,187, so he owes Ms. Saroli $38,439[^23] to make up the difference.
Shared Visa Credit Card
[177] The balance owing on the parties’ shared Visa credit card was $8,914 on the date of separation. Both parties continued to use the credit card post-separation until August 2013.
[178] Ms. Saroli’s post-separation charges on the credit card totalled $13,802. She claims that $4,548 was for payment of tutoring, therapy fees and other special expenses for the children. Her claim for partial reimbursement of those costs will be addressed below when I deal with s. 7 expenses. She acknowledges that the remaining charges were personal to her.
[179] Mr. Saroli’s post-separation charges on the credit card include a monthly charitable donation to Sick Kids hospital on both parties’ behalf, some pool expenses for the matrimonial home, and other items that were for the benefit of the family during the Co-Occupation Period. His charges also include $6,768 paid for a collaborative divorce service that the parties retained in June 2013. They agreed to try the service, but Ms. Saroli withdrew after the initial intake. She feels that Mr. Saroli should be solely responsible for the cost, but I will not include it in the sum of his personal expenses because they both agreed to incur the expense.
[180] Mr. Saroli’s remaining post-separation charges on the Visa credit card amount to $14,346. They appear to be personal (e.g. gas, iTunes, restaurant and retail purchases). He testified that some of the charges were for appliances that he purchased for the Jake property, but he was unable to identify the specific purchases or amounts. He did not adduce any evidence to contradict Ms. Saroli’s testimony that the remaining charges were personal expenses and I accept that as probable.
[181] In summary, charges in the amount of $13,802 were made for Ms. Saroli’s benefit and charges in the amount of $14,326 were made for Mr. Saroli’s benefit on the Visa credit card post-separation. All other charges on the card were for the parties’ joint benefit. Consequently, of the total debt accrued on the credit card, Mr. Saroli should be responsible for repaying the first $524[^24] and the remaining debt is a joint liability to be shared equally.
[182] The evidence establishes that Mr. Saroli serviced the Visa debt with minimum monthly payments from the date of separation until May 2015. Bank records show that he paid a total of $5,396. He also made a $2,500 payment in August 2013, but he used funds from the Joint LOC to make that payment, so he will be not be credited for it.
[183] Ms. Saroli made payments toward the credit card debt from her personal bank account in the following amounts: August 2012 ($1,000), June 2017 ($609 + $284), August 2017 ($176 + $684), March 2018 ($365), May 2018 ($300) and November 2018 ($1,200). She therefore paid a total of $4,618[^25] post-separation.
[184] By October 12, 2018, the balance owing on the card was $38,227. Ms. Saroli received correspondence from Chaitons, the solicitors for the Bank of Nova Scotia, regarding collection of this debt, as well as the outstanding balance on the Joint LOC, which was also in default. She negotiated a reduction in the amount owing for the Visa to $34,874 and paid that amount by way of bank draft on December 31, 2018.
[185] Ms. Saroli paid a total of $39,492[^26] and Mr. Saroli paid a total of $5,396 toward the credit card debt post separation. Collectively, they paid $44,888.
[186] After subtracting Mr. Saroli’s personal debt of $524 from the total amount paid by the parties, there remains a joint debt of $44,364.[^27] Ms. Saroli ought to have paid half that amount ($22,182). In fact, she paid $39,492, so Mr. Saroli owes her the difference ($17,310).
Ms. Saroli’s Borrowing Costs
[187] Ms. Saroli obtained private mortgage loans secured on her Tall Grass property in order to finance the December 2018 payments that she made to discharge the balance owing on the mortgage on the matrimonial home, to pay arrears of property taxes on the matrimonial home, and to retire the parties’ shared debts on their Joint LOC and Visa credit card. She did this in response to legal action that was threatened by Chaitons law firm on behalf of the Bank of Nova Scotia. She acknowledges that she borrowed more money than she required to make these payments. She calculates that about 64 percent of the amount she borrowed was used to retire joint debt, so she is seeking reimbursement from Mr. Saroli of 32 percent of the borrowing costs that she incurred, including interest paid on the mortgages, legal fees, brokerage fees, and other lending fees. She claims that he owes her in excess of $9,700 for these borrowing costs.
[188] I note that Ms. Saroli claims the mortgage interest on the Tall Grass property as a tax deduction, which reduces her income tax liability. If Mr. Saroli were to reimburse her for a third of the mortgage interest payments, his contribution would need to be reduced to account for that tax benefit. She is not, however, entitled to reimbursement of her borrowing costs because she did not consult Mr. Saroli when she decided to obtain private mortgages and incur high lending fees. He had no opportunity to try to secure loans at a lower interest rate or with lower fees. Moreover, if she had given him his half of the net proceeds of sale from the Jake property, he would have been able to substantially reduce the amounts owing without incurring any borrowing costs. She incurred these costs without his knowledge or consent and cannot reasonably expect to have any portion of them reimbursed.
Ms. Saroli’s Car and Travel Expenses
[189] After the parties separated, Mr. Saroli paid bimonthly car payments for Ms. Saroli in the amount of $320 from January 19, 2012 to May 9, 2014 inclusive, for a total amount of $19,520. He paid the monthly premiums for her auto insurance from January 23, 2012 to April 21, 2014 inclusive, for a total of $5,452. He paid her Highway 407 ETR expenses between February 2012 and April 2016, in the total amount of $2,918. She enjoyed exclusive use of the vehicle throughout this period. All these expenses were for her sole benefit. Mr. Saroli is therefore entitled to reimbursement of the full cost in the amount of $27,890.[^28]
Home Insurance on Tall Grass Property
[190] Between February 2012 and January 2013, Mr. Saroli paid the monthly home insurance premiums for Ms. Saroli’s Tall Grass property, which she co-owns with her brother and parents. He paid a total of $965 post separation. He is entitled to full reimbursement of that amount because the payments were for Ms. Saroli’s sole benefit.
Ms. Saroli’s 2012 Tax Refund
[191] During the parties’ Co-Occupation Period, Ms. Saroli received a 2012 income tax refund from the Canada Revenue Agency in the amount of $5,163. It is unclear how Mr. Saroli was able to cash the cheque, but he acknowledges that he did so without her consent. She has been demanding repayment of that amount for years and is entitled to it.
Ms. Saroli’s Bike
[192] Ms. Saroli purchased a bike for $898 in September 2012 and Mr. Saroli took it with him when he removed his belongings from the matrimonial home in April 2014. He has enjoyed the exclusive benefit of the bike since then. He testified that he is agreeable to reimbursing Ms. Saroli for the cost.
Mr. Saroli’s Parking Infraction
[193] Ms. Saroli paid $324 to settle a parking ticket that Mr. Saroli incurred post-separation. She is entitled to reimbursement of that amount.
Total Post-Separation Adjustments
[194] The following chart summarizes my findings regarding post-separation adjustments owed by the parties.
| Reason for the post-separation adjustment | Amounts owed to Mr. Saroli | Amounts owed to Ms. Saroli |
|---|---|---|
| Utilities in the matrimonial home | $ 11,700 | |
| Mortgage payments on the matrimonial home | $ 10,729 | |
| Property Taxes for the Matrimonial Home | $ 7,728 | |
| Repairs on the Matrimonial Home | $ 503 | |
| Mortgage payment on the Jake Property | $ 1,524 | |
| Driveway on the Jake Property | $ 3,500 | |
| Proceeds of Sale from the Jake property | $ 51,908 | |
| Secured Joint LOC | $ 38,439 | |
| Joint Visa credit card | $ 17,310 | |
| Ms. Saroli’s car and travel expenses | $ 27,890 | |
| Home Insurance on the Tall Grass property | $ 965 | |
| Ms. Saroli’s tax refund | $ 5,163 | |
| Ms. Saroli’s bike | $ 898 | |
| Mr. Saroli’s parking infraction | $ 324 | |
| TOTALS | $ 97,487 | $ 81,094 |
[195] In the result, Mr. Saroli is owed a set-off amount of $16,393.[^29]
RETROSPECTIVE AND RETROACTIVE CHILD SUPPORT
[196] The difference in the parties’ positions with respect to child support arises from disputes over (i) the start date of Mr. Saroli’s child support obligation, (ii) Ms. Saroli’s entitlement to retroactive support, and (iii) the proper calculation of Mr. Saroli’s annual income for the purpose determining the monthly amount of his child support payments.
What is the date upon which the child support obligation commenced?
Parties’ Positions
[197] Ms. Saroli submits that Mr. Saroli has underpaid child support and owes her $73,240 in retroactive and retrospective support. She calculates this amount from September 2013, when the parties commenced their quasi-nesting arrangement. She acknowledges that no child support was owing from the date of separation in January 2012 until August 2013 because the parties were both residing (albeit separate and apart) in the matrimonial home.
[198] Mr. Saroli argues that his child support obligation did not commence until the quasi-nesting arrangement ended. He submits that he does not owe any retrospective amount. He further submits that Ms. Saroli should not be permitted to claim retroactive child support prior to the date of her Application (in September 2014) because she did not specifically plead for such relief.
Legal Principles
[199] No child support analysis should ever lose sight of the fact that support is the right of the child: D.B.S. v. S.R.G., 2006 SCC 37, at para. 38. As Wagner, C.J. and Martin, J. stated in Michel v. Graydon, 2020 SCC 24, at para. 38: “The purpose and promise of child support is to protect the financial entitlements due to children by their parents.” Those entitlements survive the breakdown of their parents’ marriage: D.B.S., at para. 38.
[200] The Supreme Court of Canada has long recognized that “the children of the marriage should be sheltered from the economic consequences of divorce”: Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670, at p. 690. “Child support should, as much as possible, provide children with the same standard of living they enjoyed when their parents were together”: D.B.S. at para. 38. To that end, one of the primary objectives of the Federal Child Support Guidelines, SOR/97-175 (FCSG) is “to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation”: FCSG, s. 1(a).
[201] In most cases under the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.), the objective of preserving a child’s standard of living post-separation is achieved by ensuring that the parent with whom the child principally resides is not burdened with the entire cost of child-rearing. A secondary but equally important goal of child support, in these circumstances, is to ensure that the child enjoys a relatively equal standard of living in both of their parents’ homes.
[202] When a nesting arrangement is implemented, the goals of child support can be met differently. The child does not go back and forth between two households, so potential disparities in standards of living are not a concern. The child remains in the matrimonial home while the parents come and go, taking turns caring for the child. The objectives of child support, in these circumstances, are met by ensuring that the separated spouses share the financial burden of carrying the family residence and paying for the children’s living expenses.
Analysis
[203] In this case, Mr. Saroli was paying all the utility bills and carrying costs for the matrimonial home throughout the quasi-nesting period. I have ordered that he must be reimbursed for half of those costs through post-separation adjustments, which means that Ms. Saroli will be responsible for half the cost of maintaining the matrimonial home during the quasi-nesting period. In these circumstances, the children’s right to continue to benefit from the financial means of both parties is met without the need for child support payments to be made by either spouse.
[204] My ruling on this issue should not be interpreted as a pronouncement that child support payments will never be triggered where a nesting arrangement is in place. It depends on the circumstances of each case.
Conclusion
[205] I conclude that Mr. Saroli’s obligation to pay child support commenced when the quasi-nesting arrangement ended. At point, he made a permanent move to his current residence in his parents’ basement. From that point onward, the children spent time with him there while residing principally in the matrimonial home with their mother.
[206] There is a dispute about when Ms. Saroli terminated the quasi-nesting arrangement. She testified that it was in January 2014, whereas Mr. Saroli said it was in March 2014. They agree that he came to the house and removed some of his belongings on April 3, 2014. I infer that the quasi-nesting arrangement most likely ended in March 2014, in proximity to when he retrieved his personal items. Mr. Saroli’s obligation to pay monthly child support therefore began on April 1, 2014.
Is Ms. Saroli precluded from claiming retroactive child support?
[207] Mr. Saroli’s objection to the retroactive component of Ms. Saroli’s child support claim (i.e., for the period prior to the filing of her Application on September 25, 2014) is without merit. Ms. Saroli’s short delay (of 6 months) in enforcing the children’s right to support does not override Mr. Saroli’s obligation to support his children: Michel v. Graydon, and D.B.S. Her failure to specify explicitly in her pleadings that she was seeking child support for a short period prior to the date of filing cannot be used to defeat the children’s right to support from both their parents.
What was Mr. Saroli’s income for support purposes?
Method of Income Determination
[208] The amount of retrospective child support payable by Mr. Saroli depends on his annual income in each of the years in which he was obligated to pay support . The FCSG establish a method to determine a spouse’s annual income for child support purposes. The relevant passages of the FCSG provide as follows:
16 Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.
17 (1) If the court is of the opinion that the determination of a spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.
[209] The rationale for judicial discretion in sections 17-20 of the FCSG is that “[t]he payor’s income for income tax purposes may not be an accurate reflection of the money that the spouse has available for support payments”: Ludmer v. Ludmer, 2013 ONSC 784, at para. 152, aff’d in part 2014 ONCA 827.
Line 150 Income as Adjusted
[210] In his T1 General tax forms for the relevant years, Mr. Saroli’s declared sources and amounts of income included the following:
| Year | Employment Income | RRSP income | Investment income | Net Rental income | Taxable Capital gains | Line 150 Total income |
|---|---|---|---|---|---|---|
| 2014 | $78,401 | $1,667 | $ 2,977 | $ 8,266 | $ 91,312 | |
| 2015 | $67,059 | $1,223 | $536 | $ 4,793 | $ 73,612 | |
| 2016 | $92,520 | $1,223 | $120 | $ 6,445 | $100,309 | |
| 2017 | $97,641 + $413 | $1,223 | $ 3,279 | $102,557 | ||
| 2018 | $99,358 + $543 | $ 980 | $100,882 | |||
| 2019 | $98,787 + $478 | ($2,668) | $66,423 | $163,021 |
[211] The above amounts must be adjusted upward or downward in accordance with Schedule III of the FCSG. Subsection 1(g) of Schedule III requires a deduction of professional dues from employment income. Mr. Saroli paid dues to his teachers’ federation in each of the relevant years, in the following amounts:
2014 $1,262 2015 $1,188 2016 $2,041 2017 $1,812 2018 $1,832 2019 $1,842
[212] After the requisite deduction of the dues, Mr. Saroli’s income in each of the relevant years is as follows:
2014 $ 91,312 - $1,262 = $ 90,050 2015 $ 73,612 - $1,188 = $ 72,424 2016 $100,309 - $2,041 = $ 98,268 2017 $102,557 - $1,812 = $100,745 2018 $100,882 - $1,832 = $ 99,050 2019 $163,021 - $1,842 = $161,179
[213] Another adjustment mandated by s. 6 of Schedule III is the replacement of any taxable capital gains by the actual amount of capital gains realized by Mr. Saroli in excess of his capital losses in any given year. In 2014, Mr. Saroli sold his interest in the 22 Tara property and realized actual capital gains in the amount of $16,533. In 2019, he sold the 129 Concession property and realized actual capital gains in the amount of $132,847. By replacing the amount of his taxable capital gains with the amount of these actual gains, Mr. Saroli’s annual income in 2014 increases to $98,316 and his annual income in 2019 increases to $227,602.
Should capital gains be excluded?
[214] Mr. Saroli argues that the above method for determining his income is not the fairest determination for the years 2014 and 2019 because it includes capital gains from the sale of investment properties, which he submits is a non-recurring source of income. He asks the court to exercise its discretion under s. 17(1) of the FCSG and exclude the capital gains that he realized in 2014 and 2019 from the calculation of his income for child support purposes.
[215] Ms. Saroli argues that the capital gains are recurring and should therefore be included in the calculation of Mr. Saroli’s income for child support purposes. She relies on the fact that Mr. Saroli also realized capital gains in the amount of $48,786 in 2013, from the sale of his interest in the 15 and 25 Tara properties.
[216] Determining whether a s. 16 calculation of income is fair frequently involves consideration of whether to include capital gains or some portion of capital gains in a spouse’s income: Ewing v. Ewing, 2009 ABCA 227, at paras. 32-34; Fournier v. Labranche, 2019 ONSC 4651, at para. 76; Van Boekel v. Van Boekel, 2020 ONSC 5265, at paras. 129-134. The decision must be made on a case by case basis: Berta v. Berta, 2016 ONSC 5723, at para. 29; Lorimer v. Lorimer, 2017 ONSC 4467, at para. 12. Capital receipts will, however, rarely be considered income for support purposes in circumstances where there has been a one-time capital sale, even if the proceeds from the sale are paid periodically over time: Berta, at para. 29.
[217] The recurring or non-recurring nature of the capital gains is a central issue in dispute in this case. Mr. Saroli realized capital gains from the sale of investment properties in three out of seven years between 2013 and 2019, but there was a consecutive four-year period (2015-2018 inclusive) when he had no capital gains. Although this is not a case in which a sale of a capital asset resulted in a one-time substantial increase in taxable income, neither is it a case in which the payor spouse is regularly in receipt of capital gains year-after-year as part of his taxable income.
[218] Mr. Saroli testified that he sold the Calcott and 25 Tara properties only because his co-investor, Tony Gatti, wanted to access the equity in order to start a business venture. He explained that he would have preferred to hold onto those properties for longer. Similarly, he testified that he sold the 15 and 22 Tara properties only because his co-investor, Lito Romano, no longer wanted to do the work required to maintain and rent the properties.
[219] The reason why these properties were sold when they were sold is not as important to the analysis as whether the capital gains realized in 2014 were part of a recurring source of income for Mr. Saroli at that time. He was acquiring properties with co-investors and flipping them for profit. When he sold his interest in the Calcott property during the marriage, he used the proceeds to acquire an interest in two additional properties with Mr. Romano. He and Ms. Saroli also acquired two lots (i.e., Hendershot and Jake) during the marriage with the intention of building on the land and selling the properties for profit. They sold the Hendershot property before they separated.
[220] When Mr. Saroli sold his ownership interest in the 15 and 25 Tara properties in 2013 and later sold his ownership interest in the 22 Tara property in 2014, it may have been sooner than he desired, but the sales were nevertheless part of a pattern of buying and selling capital assets for profit. The capital gains realized from the sale of these assets was therefore in the nature of income. There is no evidence that the sales did not generate disposable income from which child support could be paid. The children of the marriage should therefore benefit from that source of income.
[221] Based on the above, I find that the s. 16 method of calculating Mr. Saroli’s 2014 income is fair in the circumstances. I decline to exercise my discretion under s. 17 of the FCSG to exclude the capital gains that year. The capital gains realized in 2019 are, however, different.
[222] Mr. Saroli testified that he was forced to sell his property at 129 Concession street in order to pay legal fees and disbursements related to this proceeding. He had purchased that property prior to the marriage, in 1990, and held it for 29 years. It was not co-owned. Title was registered in his name alone. He explained that it was supposed to be his retirement “nest egg”. He said he never would have sold it but for the litigation costs. He stated “there are zero dollars left” from the proceeds of sale. His evidence on this point was neither contradicted nor challenged on cross-examination and I accept it as credible.
[223] It is readily apparent that the inclusion of the $132,847 in capital gains in Mr. Saroli’s 2019 income would not be the fairest way to determine his income for child support purposes. His sale of the 129 Concession property was an exceptional one-time event necessitated by his desperate need to access funds to finance the costs associated with this protracted litigation. The sale occurred five years after he sold his interests in his other co-owned investment properties. It was not part of an ongoing pattern of buying and selling capital assets.
[224] Furthermore, the amount of the capital gains realized in 2019 was substantial. It caused a sudden and dramatic 150 percent increase in Mr. Saroli’s taxable income that was not consistent with his historical pattern of income. To include those capital gains in his 2019 income for support purposes would effectively constitute a transfer of wealth to Ms. Saroli rather than proper support for the children: Ewing at para. 35; Van Boekel at para. 132.
[225] Moreover, the sale of 129 Concession did not generate disposable funds from which child support could be paid. The proceeds were spent on legal fees and disbursements: Van Boekel, at paras. 133-134; McNeil v. McNeil, 2013 NBCA 65, at para. 14; Fielding v. Fielding, 2014 ONSC 2272, at para. 168, rev’d on other grounds 2015 ONCA 901; Leet v. Beach, 2010 NSSC 433, at paras. 29-30, 71 and 73. The capital gains did not enhance Mr. Saroli’s standard of living or fund a lifestyle for him that should be shared with the children: Marinangeli v. Marinangeli, 2003 27673 (ON CA), [2003] O.J. No. 2819, at paras. 29-30.
[226] For the above reasons, I find that the s. 16 method for determining Mr. Saroli’s 2019 income is not a fair way to fix his income for child support purposes. Having regard to his income pattern in the preceding three years and considering the exceptional nature of the non-recurring capital gains in 2019, I conclude that it is fair and reasonable to exclude his capital gains from the determination of his 2019 income for support purposes.
Should income be imputed to Mr. Saroli?
[227] Ms. Saroli asks the court to impute additional income to Mr. Saroli on the basis that he has unreasonably deducted expenses from his rental income on his tax returns: FCSG, s. 19(1)(g). However, she made no specific submissions with respect to this argument and did not cross-examine Mr. Saroli on the topic.
[228] I reviewed the expenses claimed on Mr. Saroli’s Statement of Real Estate Rentals attached to T1 General tax returns for the years 2014 to 2019 inclusive. I found no basis to conclude that any of the expenses are unreasonable. There is no evidence upon which income could be imputed to Mr. Saroli beyond the amounts that he declared in his tax returns.
Conclusion
[229] For the above reasons, I conclude that Saroli’s annual incomes for support purposes are as follows:
2014 $ 98,316 (including actual capital gains) 2015 $ 72,424 2016 $ 98,268 2017 $100,745 2018 $ 99,050 2019 $ 94,755[^30] (excluding capital gains)
[230] I do not have evidence of Mr. Saroli’s 2020 income, so I will use his 2019 income to calculate his child support obligation in the first three months of 2020. My calculation of retrospective child support ends in March 2020 because Mr. Saroli’s child support obligation effective April 1, 2020 has already been determined in Justice Trimble’s Final Order dated March 13, 2020.
Amount of Retrospective Child Support Owed by Mr. Saroli
[231] Based on his annual income as set out above, the applicable child support Table in Schedule I to the FCSG sets out the following monthly amounts of child support that Mr. Saroli was obligated to pay for the two children:
| Date | Annual Income | Monthly Amount | Total Amount |
|---|---|---|---|
| April 1, 2014 to December 31, 2014 | $98,316 | $1,395 x 9 mos. | $12,555 |
| January 1, 2015 to December 31, 2015 | $72,424 | $1,071 x 12 mos. | $12,852 |
| January 1, 2016 to December 31, 2016 | $98,268 | $1,394 x 12 mos. | $16,728 |
| January 1, 2017 to November 30, 2017[^31] December 1, 2017 to December 31, 2017 |
$100,745 | $1,425 x 11 mos. $1,480 x 1 mo. |
$15,675 $ 1,480 |
| January 1, 2018 to December 31, 2018 | $99,050 | $1,460 x 12 mos. | $17,520 |
| January 1, 2019 to December 31, 2019 | $94,755 | $1,407 x 12 mos. | $16,884 |
| January 1, 2020 to March 31, 2020 | $94,755 | $1,407 x 3 mos. | $ 4,221 |
| TOTAL: | $97,915 |
[232] The parties agree that Mr. Saroli paid the following amounts of child support between May 2015 and July 2016:
| Date | Amount Paid |
|---|---|
| May 2015 | $ 1,150 |
| August 2015 | $ 1,150 |
| October 2015 | $ 1,150 |
| November 2015 | $ 1,150 |
| December 2015 | $ 1,150 |
| January 2016 | $ 1,150 |
| March 2016 | $ 1,150 |
| April 2016 | $ 1,150 |
| May 2016 | $ 1,150 |
| June 2016 | $ 1,150 |
| July 2016 | $ 1,150 |
| TOTAL: | $12,650 |
[233] Based on Mr. Saroli’s testimony and the documentary evidence that he adduced, I am persuaded on a balance of probabilities that he also made the following child support payments in 2015:
| Date | Amount Paid |
|---|---|
| April 2015 | $ 2,500 |
| June 2015 | $ 925 $ 925 |
| July 2015 | $ 1,150 |
| TOTAL: | $ 5,500 |
[234] Mr. Saroli claimed to have made additional child support payments in 2015 and early 2016, but they are not made out on a balance of probabilities by the evidence he tendered.
[235] A Statement from the Director of the Family Responsibility Office (“FRO”) shows that, from August 1, 2016 to October 1, 2017 inclusive, Mr. Saroli paid $1,071 in child support monthly, for a total of $16,065. He paid $1,421 monthly from November 1, 2017 to March 1, 2020 inclusive, for a total of $41,209.
[236] Based on the above, I conclude that Mr. Saroli paid a total of $75,424[^32] in child support between May 1, 2015 and March 1, 2020. He ought to have paid a total of $97,915 between April 1, 2014 and March 1, 2020. He therefore owes Ms. Saroli a lump sum payment of retrospective child support in the amount of $22,491.[^33]
RETROSPECTIVE SPOUSAL SUPPORT
Spousal Support Paid by Mr. Saroli
[237] Mr. Saroli paid spousal support to Ms. Saroli, pursuant to a temporary court order, in the amount of $978 per month from June 1, 2016 to September 1, 2017 inclusive, for a total of $15,648. The temporary order was made by Justice Donohue based on an interim finding that Mr. Saroli had an income of $72,400, without imputing any income to Ms. Saroli.
[238] Ms. Saroli was unemployed when the temporary spousal support order was made. She subsequently obtained employment with a base salary of $80,000 in November 2016. She did not disclose this material change in her employment status and financial circumstances. Indeed, she withheld information about her income for about eight months, despite repeated requests from Mr. Saroli’s counsel, ultimately forcing Mr. Saroli to bring a motion for disclosure. Notwithstanding these facts, Mr. Saroli is not seeking to be reimbursed for the spousal support payments that he made.
Parties’ Positions on Spousal Support
[239] Ms. Saroli claims that Mr. Saroli owes her retrospective spousal support in the amount of $103,224, calculated from the date of commencement of the parties’ quasi-nesting arrangement in September 2013 up until December 2020.
[240] Mr. Saroli takes the position that Ms. Saroli has no entitlement (and never had entitlement) to spousal support.
Statutory Framework for Spousal Support
[241] Entitlement to spousal support is a threshold question that must be answered before considering the quantum (amount and duration) of any support to be paid: Bracklow v. Bracklow, 1999 715 (SCC), [1999] 1 S.C.R. 420, at para. 49. In determining the issue of entitlement, the court must consider the objectives of spousal support set out in s. 15.2(6) of the Divorce Act:
a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
[242] All these objectives must be considered, with no one objective being paramount: Moge v. Moge, 1992 25 (SCC), [1992] 3 S.C.R. 813, at p. 852.
[243] In making a spousal support order, s. 15.2(4) of the Divorce Act stipulates that the court shall take into consideration the means, needs and other circumstances of each spouse, including the length of time the spouses cohabited and the functions performed by each spouse during cohabitation. A trial judge must look at all the relevant factors in light of the objectives of spousal support to arrive at a determination that equitably alleviates the adverse consequences of the marriage breakdown: Bracklow, at para. 36.
[244] There are three different conceptual bases for spousal support, namely contractual, compensatory and non-compensatory: Bracklow, at paras. 37 and 49. In this case, the Marriage Contract is not the basis of Ms. Saroli’s claim. She claims entitlement to both compensatory and non-compensatory need-based spousal support. In order to determine her entitlement, I must first determine what her annual income has been for support purposes since the parties separated.
What was Ms. Saroli’s income for support purposes?
Line 150 Income as Adjusted
[245] Income determination for spousal support purposes is done in much the same way as income determination for child support purposes, namely by using the sources of income set out under the heading “Total income” in the T1 General form issued by the CRA and adjusting the amounts in accordance with Schedule III of the FCSG.
[246] Ms. Saroli declared the following total income amounts at Line 150 of her personal income tax returns:
2013 $20,986 2014 $33,172 2015 $ 0 2016 $ 9,698 2017 $61,222 2018 $ 0 2019 $ 0
[247] Her income sources during these years included employment earnings, Employment Insurance benefits, investment income, rental income and spousal support. The spousal support payments in 2016 and 2017 must be deducted from her declared income amounts pursuant to s. 3(a) of Schedule III of the FCSG. Her tax returns for 2013 and 2014 show that she paid $43 and $422 in union dues in those years, which must also be deducted from her income pursuant to s. 1(g) of Schedule III of the FCSG. She received $720 for the Universal Child Care Benefit in 2017, which must be also deducted from her income pursuant to s. 3(b) of Schedule III of the FCSG.[^34]
[248] Ms. Sarolis’ total Line 150 income amounts, as adjusted, are therefore as follows:
2013 $20,943 ($20,986 - $43 union dues) 2014 $32,750 ($33,172 - $422 union dues) 2015 $ 0 2016 $ 5,807 ($ 9,698 - $3,891 support) 2017 $48,601 ($61,222 - $720 UCCB - $11,901 support) 2018 $ 0 2019 $ 0
Should income be imputed to Ms. Saroli?
[249] Mr. Saroli argues that income in the amount of $80,000 should be imputed to Ms. Saroli for every year since the date of separation.
[250] The court may impute such amount of income to a spouse as it considers appropriate in circumstances where the spouse is intentionally under-employed or unemployed, “other than where the under-employment or unemployment is required by the needs of a child of the marriage … or by the reasonable educational or health needs of the spouse”: FCSG, s. 19(1)(a). As noted earlier in this Judgment, the court may also impute income to a spouse in circumstances where the spouse unreasonably deducts expenses from their income: FCSG, s. 19(1)(g). In my view, both these circumstances warrant an imputation of income to Ms. Saroli in this case.
Unreasonable Deduction of Expenses
[251] In each year from 2014 to 2019 inclusive, Ms. Saroli reduced her income tax liability by deducting significant expenses relating to her Tall Grass investment property. She declared rental income from the property but claimed expenses that exceeded the amount of rent declared each year, resulting in a net negative amount of rental income. The expenses included home insurance, property taxes, mortgage interest, utilities, repairs and maintenance costs, and travel expenses.
[252] Ms. Saroli co-owns the Tall Grass property with her brother and her parents. Title is registered in her name alone, but she holds 2/3 of the interest in in trust for the benefit of her family members. They pay 2/3 of the mortgage payments. Her parents and her brother reside at the property. They are not tenants, but rather are co-owners with a beneficial ownership interest in the property. Yet, she declares their mortgage payments as rental income so that she can claim expenses relating to the property. She does this to reduce her overall income tax liability.
[253] Based on the large expense amounts claimed on her tax returns, it is probable that she is claiming 100 percent of the property taxes, home insurance, mortgage interest and utilities relating to the property, even though she is incurring at most only 1/3 of those expenses. (She testified that her brother has been paying her share of the mortgage for the past nine years.) She is also deducting expenses related to travel to and from the property. Unlike Mr. Saroli, who was required to travel to his investment properties for the purpose of maintaining them and dealing with his tenants, Ms. Saroli travels to her property to visit her family (and unreasonably deducts the travel expense on her tax returns).
[254] Furthermore, there is evidence that Ms. Saroli is misrepresenting her Tall Grass expenses to Revenue Canada in order to further lower her tax liability. She produced an invoice in the amount of $4,397 for the installation of hardwood flooring in the matrimonial home as part of her evidence in support of her claim for post-separation adjustments. The invoice is addressed to her at the Tall Grass property. She was unable to provide a reasonable explanation for this. I infer that she had the billing sent to her Tall Grass property for accounting purposes, so she could claim the expense as a deduction from her rental income.
[255] Ms. Saroli’s deductions relating to the Tall Grass property are unreasonable and should not be permitted to reduce her income for support purposes. The following income amounts should therefore be imputed to her in order to compensate for the deductions of net negative rental income from her Total Income declared at line 150 of her tax returns:
2013 $6,291 2014 $9,451 2015 $5,581 2016 $5,201 2017 $5,014 2018 $4,559 2019 $2,059
Intentional Unemployment or Underemployment
[256] Mr. Saroli argues that even more income should be imputed to Ms. Saroli based on intentional unemployment since the parties separated.
[257] A finding of intentional unemployment or underemployment does not require evidence of bad faith: Drygala v. Pauli, (2002), 2002 41868 (ON CA), 61 O.R. (3d) 711 (Ont. C.A.), at paras. 24-37. The reasons for underemployment are irrelevant. If a spouse is earning less than they could be, they are intentionally underemployed, unless their underemployment is justified by the needs of a child of the marriage or by the spouse’s own reasonable health or educational needs: Lavie v. Lavie, 2018 ONCA 10, at para. 26; Riel v. Holland, 2003 3433 (ON CA), 2003 CarswellOnt 3828 (Ont. C.A.), at para. 24.
[258] When considering a spouse’s capacity to earn income, the court must consider that every spouse has a duty to actively seek out reasonable employment opportunities that will maximize their income potential: Thompson v. Thomspon, 2013 ONSC 5500, at para. 99; Verhey v. Verhey, 2017 ONSC 2216, at para. 35. This duty exists in respect of the spouse’s obligation to contribute financially to the support of their children and in respect of their obligation to attempt to achieve self-sufficiency within a reasonable time after the breakdown of the marriage.
[259] When imputing income based on intentional under-employment or unemployment, a court must consider what is reasonable in the circumstances. The relevant factors include the spouse’s age, education, experience, skills, health, and previous earning capacity, as well as other relevant factors: Drygala, at paras. 45-46; Lavie, at para. 32; Verhey, at para. 35(b).
[260] In this case, Ms. Saroli was 47 years old when the parties separated. She has a Bachelor of Arts degree from York University, with a double major in Political Science (Public Policy Administration) and French. She also completed a course on Marketing for Non-Marketing Managers at the Schulich School of Business.
[261] On the date of marriage, she was employed as an Administrative Assistant to the Regional General Manager of Holiday Inn Worldwide. She then worked for Liverton Hotels for four years, with two interruptions for maternity leaves when the children were born. She was an account director and brand manager for luxury hotels. Her income during those years is not in evidence, but Mr. Saroli’s uncontested testimony was that she was earning more than he was, in the range of about $75,000 annually. He was working as an auto mechanic at that time.
[262] In 2006, Ms. Saroli transitioned out of the hospitality sector into the public sector and started working for the Government of Ontario. She testified that she earned more money in government. She was not able to secure a permanent position, but she had uninterrupted service for about six continuous years, on a series of consecutive full-time contracts in various economic development roles for two different ministries. She held managerial positions of significant responsibility. Her tax records show that in the last two years of the parties’ marriage, her employment income was $88,621 for 2011 and $78,334 for the first 9 months of 2012 (which equates to an annual salary of $104,445).
[263] In October 2012, Ms. Saroli’s employment contract with the Ministry of Economic Development, Employment and Infrastructure ended. At that time, the parties were separated but were still living under the same roof. Rather than immediately seeking another contract, Ms. Saroli chose to focus her attention on the needs of their 9-year-old son, who was experiencing academic difficulties as a result of a learning disability. She engaged physiotherapists to assist him with his fine motor skills, retained an agency to assist him with higher executive functioning skills, arranged for a psycho-educational assessment, consulted the Learning Disability Association of Ontario, and advocated for him to have an Individual Education Plan at his school. She testified that these activities consumed her time and energy until November 2014, when she returned to the paid labour market on a six-month contract as a Senior Policy Advisor with the provincial government. When that contract ended, she was unemployed again for eighteen months.
[264] In November 2016, she was hired by an American company called Ryan ULC that was creating a new Canadian division. She was a manager assigned to oversee clients’ grants funding plans and incentive program applications. She negotiated a base salary of $80,000, plus a bridge compensation payment of $10,000 for the first year. She also had the potential to earn discretionary incentive payments and commissions. Her employment was terminated by Ryan in June 2017.
[265] At that point, she registered for a certification program in Public Relations at Ryerson University. She completed the first course in 2018 but did not complete the program. She then considered a career in the real estate sector, having been involved in the rental income business for several years. She took a mortgage agent licensing course and obtained sponsorship by a firm called Mortgage Alliance, but she was not successful in attracting clients or generating income.
[266] Ms. Saroli gave evidence about her efforts to secure employment from 2014 to 2020. Except for when she was working for Ryan and when she was pursuing the Public Relations course at Ryerson University, she used social media and other networking tools to learn about job opportunities, applied for posted positions, forwarded her resume to countless employers, and interviewed for a few jobs at the Chief Executive Officer level, but she was not successful in any of the competitions. She argues that she was diligent in her efforts to seek employment and therefore cannot be found to have been intentionally unemployed.
[267] At the time of trial, Ms. Saroli was still unemployed. She testified about the challenges of trying to find work during the COVID-19 pandemic and said, “it is hard to find positions suitable to my career and to what I would like to pursue.”
Analysis
[268] In my view, Ms. Saroli’s chronic unemployment (except for 6 months in 2014-2015 and 7 months in 2016-2017) is the result of choices that she made. When her government contract ended in October 2012, she elected not to seek immediate employment, even though the parties were separated, and she was aware that she needed to maintain self-sufficiency. She had been earning a steady income for many years, in the range of $88,000 to $104,000 in the previous two years. Despite this robust earning capacity and her newly separated status, she opted to stay at home.
[269] The children were both school age by then and did not require the constant care demanded by toddlers or infants. Although she was busy advocating for their son and making arrangements for services to meet his needs, the evidence does not support a finding that these efforts required her full-time attention for two years. Many parents of children with learning disabilities juggle their parental responsibilities and full-time work. Her unemployment for two years from November 2012 to October 2014 was not justified by the child’s needs.
[270] That two-year hiatus placed her at a disadvantage in terms of competing with other candidates for vacancies when she decided to return to the paid labour market. She was able to secure a six-month government contract late in 2014, but she struggled thereafter to find work. She testified that she applied for jobs in the $80,000 and above salary range, commensurate with her previous experience. While this was not an unreasonable approach in the initial days of her job search, when it became apparent that she was not succeeding in her efforts, she ought to have lowered her expectations and searched for other less remunerative employment opportunities or considered options outside her expertise and main areas of interest.
[271] She eventually secured the job with Ryan, where she was able to command a salary comparable to her previous public sector jobs ($80,000 base, $10,000 bridge, plus bonuses). However, when that position was terminated prematurely, she abandoned her career path and decided to try public relations instead, then she attempted to segue into mortgage brokering. She did not complete the public relations certificate that she started. Although she did obtain her mortgage licence, that venture was a false start. She attributes her lack of success in the mortgage business to the fact that she does not have strong entrepreneurial skills. She provided no explanation for her decision to attempt self-employment as a mortgage agent knowing that she lacked the requisite skills. A separated spouse cannot reasonably persist in a state of unemployment while choosing to pursue unrealistic goals and career aspirations. In the circumstances, her unemployment since 2018 was not justified by reasonable educational needs.
Conclusion
[272] Ms. Saroli is a relatively young, healthy, educated, fluently bilingual, articulate, bright, skilled and capable individual. She had a history of continuous employment during the marriage with an increasing earning capacity that exceeded $88,000 in 2011 and 2012, but she sabotaged her employability by electing not to work outside the home after her contract ended in October 2012. Thereafter, she continued to make decisions that compromised her earnings. These decisions were not justified by either the needs of a child of the marriage or her own reasonable educational or health needs. In the circumstances, I find that it is appropriate to impute to her an income of $80,000 for each of the years from 2013 to present.
Is Ms. Saroli entitled to retrospective spousal support?
[273] Ms. Saroli argues that she is entitled to spousal support on a compensatory basis. She submits that she sacrificed the pursuit of an M.B.A. during the marriage in order to support Mr. Saroli in a transition of his career from auto mechanics to teaching. She claims that she put his career goals ahead of her own and that she suffered economic disadvantages as a result.
[274] The evidence establishes that she supported Mr. Saroli (financially and otherwise) during a period of transition in his career. She helped him prepare applications to educational programs and to teaching jobs, and she assisted him in preparing for interviews. However, her submissions exaggerate the extent to which her contributions resulted in his success. She outright takes credit for his acceptance to the Ontario Institute for Studies in Education, for his completion of that program of study, for his subsequent ability to secure job interviews in the education sector and for his current gainful employment as a teacher. The evidence does not support these exaggerated claims.
[275] Furthermore, there is no evidence that Ms. Saroli abandoned her own educational goals, passed up occupational opportunities, sacrificed her career aspirations or compromised her earning potential in furtherance of supporting her husband. She was employed full time throughout the marriage. There is no evidence of her intention to pursue an M.B.A. She successfully transitioned out of the hospitality sector into the public sector. Her career as a civil servant progressed well, despite not being able to secure a permanent position in the provincial government. She consistently earned more than Mr. Saroli did, and her income increased over the years.
[276] Ms. Saroli claims that she was the primary caregiver for the children, both during the marriage and after the parties separated. She testified that she coordinated their extra-curricular activities, oversaw their homework assignments, and spearheaded their religious sacramental duties. As noted previously, she was also actively engaged in securing appropriate educational accommodations and services for their son. However, the evidence establishes that Mr. Saroli was also a very involved parent, both during the marriage and post-separation. Apart from taking two maternity leaves early in the marriage, Ms. Saroli has not demonstrated that the parties adopted parenting roles within their relationship that disadvantaged her economically. Moreover, there is no evidence that the maternity leaves had an adverse impact on her career trajectory.
[277] For the above reasons, I conclude that there is no basis on the evidence for a compensatory spousal support order.
[278] Ms. Saroli is also claiming entitlement to spousal support based on need. She argues that she has been in a “perpetual job search” since separation, while Mr. Saroli has continuously advanced his career.
[279] Although she has had a demonstrable need for spousal support during extended periods since November 2012, she did not suffer economic disadvantage as a result of the marriage breakdown. Rather, her economic disadvantage arises from choices that she made after the parties separated.
[280] My decision regarding imputation of income to Ms. Saroli reflects the fact that she has had the consistent income-earning capacity to achieve and maintain economic self-sufficiency. Furthermore, the evidence establishes that she has received substantial financial support from her brother post-separation. Although she claims that his support has been in the nature of loans, she has not established that on the evidence. In the circumstances, it is reasonable to treat the payments from her brother (toward her Tall Grass property mortgage and toward the mortgage on the matrimonial home) as part of her “means” when assessing her entitlement to spousal support.
[281] For the above reasons, I conclude that Ms. Saroli is not entitled to retrospective spousal support.
[282] Had I found that Ms. Saroli was entitled to spousal support based on need during the period of her unemployment that commenced in October 2012, I would have concluded that her entitlement was only for a brief transitional period and that the spousal support paid by Mr. Saroli in 2016 and 2017 was sufficient to meet his obligation in that regard.
SPECIAL AND EXTRAORDINARY CHILD-RELATED EXPENSES
[283] Ms. Saroli seeks an order for Mr. Saroli to reimburse her for a portion of numerous child-related expenses that she incurred post-separation. She claims to have spent in excess of $18,000 on special and extraordinary expenses for the children between 2012 and 2017.
[284] She has already received reimbursement for child-related expenses incurred in 2018-2020 through enforcement by the FRO. Mr. Saroli disputes the expenses that have been submitted through the FRO and he seeks repayment of some of the money that has been garnished from his wages.
Statutory Framework for Section 7 Expenses
[285] These issues must be determined in accordance with s. 7 of the FCSG, which provides as follows:
(1) In a child support order the court may, on either spouse’s request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation:
(a) child care expenses incurred as a result of the employment, illness, disability or education or training for employment of the spouse who has the majority of parenting time;
(b) that portion of the medical and dental insurance premiums attributable to the child;
(c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;
(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;
(e) expenses for post-secondary education; and
(f) extraordinary expenses for extracurricular activities.
(1.1) For the purposes of paragraphs (1)(d) and (f), the term extraordinary expenses means
(a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable table or, where the