Ierullo v. Ierullo et al, 2025 ONSC 3224

minicounsel

Footnotes

Ierullo v. Ierullo, COA 23-CV-0904, September 23, 2023, per Zarnett J.A.
Ierullo v. Ierullo et al, 2023 ONSC 74.
Ierullo v. Ierullo et al, 2023 ONSC 3327.
Ierullo v. Ierullo et al, 2023 ONSC 5390, 96 R.F.L. (8^th^) 468 (disqualification of proposed expert) and Ierullo v. Ierullo et al, 2024 (sic) ONSC 1828 (disqualification of witness).
According to the husband’s expert (Rudson), the income before taxes in 1990 was $700,000 due to a one-time $3,400,000 bonus paid to the husband and his brother.
In his Statement of Claim in the civil action (at para. 11) the husband pleaded that the parties incorporated the company but the incorporation documents only name, and were signed by, the wife.
This action involved a claim about an improper $300,000 disbursement from the trust, subsequently revised to $311, 638. See Family Trust Distribution #3 (issue and analysis below). An Order discontinuing this proceeding was made by Chiappetta J. on January 14, 2019, on consent.
R.S.O., c. T. 23.
The OCL was also named as a respondent on behalf of the unborn and unascertained beneficiaries of the trust.
Supra, note 2.
Ierullo v. Ierullo et al, 2023 ONSC 4633.
Supra, note 1. Zarnett J. A. observed that the family law action was six-years old and on its fifth trial list.
R.S.O. 1990, c.F.3.
The value at trial was $970,000.
The parties dispute what this descriptor involves; the wife’s definition is broader than the husband’s whose expert (Mr. Rudson) defined this category as including the husband’s ownership interest in and loans from 2002029 Ontario Limited, Vito Ierullo Investments Incorporated (“VII”) and VII subsidiaries, 2034933 Ontario Limited and 297241 Ontario Limited. VII was a holding company solely owned by the husband and had been incorporated before the date of marriage.
Ouellette v. Uddin, 2018 ONSC 4520.
2024 ONSC 6285, 10 R.F.L. (9^th^) 310.
R. v. A.(A.), 2015 ONCA 558, at paras. 131-132.
R. v. C. (M.), 2019 ONCA 502, 146 O.R. (3d) 493, at para. 56.
R. v. D.W., 2023 ONCA 767, at para. 24.
Pursuant to s. 14(b) of the Act, money on deposit in the name of both spouses is deemed to be in their names as joint tenants.
Trial transcript (September 21, 2023) at p. 101.
While there was likely some debt arising from the November 2016 mortgage the wife had the statutory onus pursuant to s. 4(3) of the Family Law Act to prove the deduction. That wasn’t done. More problematic, but not explored in any detail (and so no finding will be made), was the issue whether the chalet was a matrimonial home and whether the wife properly disclosed her marital status when the charge was registered.
Given this disposition, the amendments sought by the husband to his pleadings dealing with this property which this court dismissed before trial, and which were the subject matter of the husband’s motion to stay heard by Zarnett J.A., are moot.
There was no evidence about the nature of a transfer from Olive to herself registered on May 21, 2013, despite the issue being raised by the court.
McNamee v McNamee, 2011 ONCA 533, at paras. 23 and 24.
See para. 174 below for the subsection.
Viewed in isolation from the other valuation issues in this case, the difference in the parties’ positions is $8,240,000.
Supra, note 4.
Exhibit #138, CBV Practice Standard 110 dated June 17, 2009.
2015 ONSC 3588 (Div. Ct.).
(2006), 2006 CanLII 41401 (ON CA), 83 O.R. (3d) 1, (Ont. C.A.), at paras. 52-54.
2021 ONSC 7358, at para. 174.
As noted by Mr. Rudson, EBITDA means earnings before interest, taxes, depreciation and amortization and is commonly used as a proxy for cash flow.
2019 ONCA 940, 151 O.R. (3d), at para. 70, leave to appeal refused, [2021] S.C.C.A. No. 263, [2021] S.C.C.A. No. 274.
Arash Nayerahmadi, “Far Beyond Baker: Heuristics and the Inadequacy of the Reasonable Apprehension of Bias Analysis”, (2022) 59 Osgoode Hall L. J., at p. 10.
2023 ONSC 2738, 167 O.R. (3d) 117.
2017 ONCA 640, 140 O.R. (3d) 40.
Ibid, at para. 115.
2018 ONCA 486.
The estimated “en bloc” FMV (rounded) was $2,908,000 less $517,000 notional disposition costs.
Without drawing too fine a point, the property was between 75 to 77 acres in size. This was noted in the evidence but given the size of the dispute about value, nothing material turns on this.
O. Reg. 114/99.
Mr. Rober used a 1.2% adjustment factor.
Exhibit 136c being Mr. Rudson’s valuation date report, p. 11 and C1 schedule.
S.O. 2002, c. 24.
In their pleadings in the civil action the parties refer to the Mulberry Hills Realty Trust (MHRE) which was settled by the husband’s father on the same June 4, 1997, date that the company was incorporated. The wife and Simpson were the trustees. The purpose of the trust was to hold shares owned by the husband’s father, but the trust Indenture was silent about the settlement object. In any event, the parties agree that MHRE was wound up in 2015 and the husband and wife each received 50 shares in Mulberry, the company. In a September 7, 2018, affidavit in litigation involving the family trust, the husband attached a copy of a corporate profile report (Exhibit 107, Exhibit 6) and stated that the company had been dissolved in 2005 but revived in 2009. Despite some uncertainty about the relationship between MHRE and the company, the parties have approached these proceedings on the basis that at the material times they were equal owners of the company.
Supra, note 4.
This evidence of value is no more than the wife’s belief. The appraisal was not tendered as an expert report, nor was any effort made to qualify it as such. The same can be said about the CIBC appraisal (see (n) and the appraisal that informed the adjusted purchase (see (o))). In Case Management Ruling #4 dated August 11, 2023, this court ruled (at para. 24 (c)) that an estimate of value “is not proof of value absent consent or admissible evidence (mostly expert) of value.”
BMO v. Iskenderov, 2023 ONCA 528, 168 O.R.(3d) 1, at para. 3.
Later adjusted to 14% by the wife. Her evidence was that the 5% rate was “in error.” No interest was being paid; it was accruing.
2019 ONCA 1005, 441 D.L.R. (4^th^) 393.
Colin v. Tan, 2016 ONSC 1187, at para. 67.
2014 ONCA 526, at para. 41.
2019 ONCA 369, 146 O.R. (3d) 135.
Ibid, at para. 32.
R.S.O. 1990, c. B.16.
Hare v. Hare (2006), 2006 CanLII 41650 (ON CA), 83 O.R. (3d) 766 (Ont. C.A.), at para. 11.
2008 SCC 69, [2008] 3 S.C.R. 560.
Ibid, at para. 68.
Ibid, at paras.70 and 71.
Ibid, at paras. 74, 75, 78, 79 and 80.
Ibid, at para. 84.
2022 ONSC 2305.
Ibid, at para. 20.
2022 ONSC 4238, 32 B.L.R. (6^th^) 51.
Ibid, at para. 35.
(1995), 1995 CanLII 959 (ON CA), 23 O.R. (3d) 481 (Ont. C.A.).
Ibid, at para. 21.
2017 ONSC 2602, 47 C.B.R. (6^th^) 307, aff’d 2018 ONCA 70, 140 O.R. (3d) 799.
This is a summary of a more complicated fact situation.
(2009), 2009 CanLII 29902 (ON SC), 98 O.R. (3d) 103 (Ont. S.C.).
Stevens et al. v. Hutchens et al, 2022 ONSC 1508, 98 C.B.R. (6^th^) 246, at para. 37, aff’d 2022 ONCA 771.
In 2019 the IFT “cleaned out” the loan from the husband as, likely (according to Mr. Rudson), a non-taxable capital distribution.
There was some suggestion that two charities were involved but, if so, they were not identified. This was not an issue at trial.
2018 ONSC 7424.
The claim was for damages resulting from solicitor’s negligence, negligent misstatement, breach of trust and breach of fiduciary duty.
2010 ONCA 675, 99 R.F.L. (6^th^) 271, at para. 28.
According to Fournie, the Lindsay case was more complex from a tax planning standpoint but was an easier court challenge (hence the summary judgment motion) because CRA had deregistered the charity involved shortly before the impugned donation was made. The Ierullo Group case was simpler from a tax standpoint but likely more complex and would have involved expert evidence; the facts which led to the motion in Lindsay were absent. Also, the dismissal of the motion in Lindsay would not have constituted a dismissal of the case.
In the NFP statement appended to the wife’s closing submissions she double counted $59,918.12 payable to the husband’s numbered company, 2002029 Ontario Limited. This amount was included in the $1,053,532.10 allocated to ROW and the brothers’ numbered companies.
2013 ONCA 720, 117 O.R. (3d) 641.
Greenglass, at para. 30.
The wife submitted that this totaled about $3,202,100 CAD. The husband did not dispute this figure.
See Saunders v. Saunders, 2015 ONSC 926, at para. 13.
The parties had settled $2,000,000 trusts for each of their children several years earlier. There was some evidence that Austin was not able to access the corpus of his trust until he was thirty years old. He was twenty-seven years old in 2017.
Trial transcript (September 26, 2023), at p. 37.
Trial transcript (September 27, 2023) at pp. 85-86.
Bennett v. Bennett (1997), 1997 CanLII 12388 (ON CTGD), 34 R.F.L. (4^th^) 290 (Ont. Gen. Div.), aff’d 1999 CanLII 2583 (ON CA), [1999] O.J. No. 2631 (Ont. C.A.), deals with tracing and the proximate timing between receipt of an inheritance and the purchase of property. It follows an annotation by Prof. McLeod in Berdette v. Berdette (1991), 1991 CanLII 7061 (ON CA), 3 O.R. (3d) 513 (Ont. C.A.). See also Najm v. Najm, 2024 ONSC 2053, at para. 57, for a description of the three generally accepted approaches (or methodologies) to tracing.
2009 ONCA 105, 93 O.R. (3d) 161.
Ibid.

CITATION: Ierullo v. Ierullo et al, 2025 ONSC 3224

NEWMARKET COURT FILE NO.: FC-17-54359 and CV-22-3267-00

DATE: 20250530

DATE OF AMENDMENT: 20250722*

BETWEEN:

Rae Marie Ierullo

Applicant

– AND –

Vito Ierullo

Respondent

– AND –

Mulberry Hills Realty Inc.

Added Respondent

Vito Ierullo

Plaintiff

Rae Marie Ierullo and Forever Thyme Sanctuary

Defendants

Aeden Erica MacLean

Defendant

Martha McCarthy and Joy Casey, Counsel for the Applicant

Jaret Moldaver, Counsel for the Respondent

Christopher Gibson, Counsel for the Added Respondent in FC-17-54359 and CV-22-3267-00

Sean Zeitz, and Trung Nguyen, Counsel for the Plaintiff Vito Ierullo in CV-22-3267-00

Joy Casey, Counsel for the Defendants Rae Marie Ierullo and Forever Thyme Sanctuary in CV-22-3267-00

Gwendolyn Adrian, Counsel for the Defendant Aeden Erica MacLean in CV-22-3267-00

HEARD: September 18-22, 26-28, October 26-27, 2023, January 30, and April 2-4, 2024

reasons for JUDGMENT

d.a. jarvis, J.

Table of Contents

A. Introduction

D. Credibility

E. Analysis of Issues

F. Conclusion

1This trial involves money. There are two interlinked actions. The primary action brought by the applicant, Rae Marie Ierullo (the wife), involves equalization of the spousal parties’ net family properties and oppression; the secondary, or civil, action brought by the respondent, Vito Ierullo (the husband), involves fraudulent conveyance claims against the wife, one of the parties’ daughters, Aeden MacLean (Aeden), and a company in which the spousal parties have or held interests. The companies own realty that is alleged to form part of the spouses’ net family properties. Each proceeding presents with several complicated sub-issues. The actions were heard together pursuant to a litigation plan approved by the court.

2Leading up to the trial were numerous amendments to the pleadings (one on the eve of trial), at least four case management hearings (and one appeal for a stay of a pleadings- amendment ruling that was dismissed by the Court of Appeal¹). The trial had to be adjourned twice, once on the eve of trial due to a potential issue involving the husband’s continued representation² and, again, before the next scheduled trial sittings because of a health issue involving one of the wife’s counsel.³ During the trial, voir dire rulings were held involving the disqualification of witnesses.⁴

3In addition to the spousal parties, Aeden testified. Their evidence comprised affidavits, supplemented by time-limited direct testimony and time-limited cross-examination. A lawyer also testified with respect to the value of a solicitor’s negligence action involving a disallowed tax scheme that was settled after the valuation date. Realty appraisers and business valuators who were accepted by the parties and qualified as experts also gave evidence. Some of that evidence was not challenged and so only expert reports were filed and relied upon. Other experts whose opinions differed testified.

A. INTRODUCTION

4The wife claims that the husband owes her an equalization payment of $3,020,906 (rounded). According to her, the husband is an experienced litigant who procedurally weaponized this case, adopted inconsistent positions during its seven-year path through the court, threatened (and brought for tactical reasons) actions (including the civil action) against those with whom he disagreed, and then tailored his evidence to suit his pre-conceived notion that the wife owed him a substantial equalization payment.

5The husband claims that the wife owes him an equalization payment of $7,562,000 (rounded). It is his position that during the course of the marriage, particularly in its later years and just before the parties separated, the wife engaged in what he describes was deceitful and oppressive conduct, the purpose or at least the outcome of which not only transferred significant assets owned by him to her (and Aeden MacLean) without his knowledge but also reduced the wife’s net family property by serially divesting herself of assets over time which would have formed part of her net family property. By all accounts, the husband was wealthy when the parties married; that wealth was considerably diminished by the valuation date.

B. OVERVIEW OF FACTS

6The parties were married on February 17, 1990. Each had been previously married. From those relationships, the wife had one child (Aeden); the husband had two children (Torri and Paul). Two children were born to the parties, a son (Austin, born August 8, 1990) and a daughter (Avery, born December 31, 1993). The parties agree that the valuation date is April 1, 2017.

7The wife worked as a freelance scriptwriter for television when the parties met in mid‑1988. She was divorced (1987) and had custody of Aeden. The husband was married but separated from his former spouse (Goodis). They divorced in 1988. Goodis had custody of Torri and Paul. The husband and his brother (Don) owned and operated Records on Wheels Limited (ROW), a distributor of records, compact discs (CD), videos and video games.

8When the husband and wife met, the husband was involved in acrimonious matrimonial litigation with Goodis. That litigation settled in September 1990 on the eve of trial, about seven months after the parties in this case married. The husband and Goodis were represented by senior family law counsel. The circumstances relating to that settlement are relevant to this case. Despite competing expert valuations of the husband’s business interests in the Goodis litigation, principally ROW, the settled value attributed to those interests was approximately $2,356,895 (net of notional disposition costs and discounts) as of the December 1986 valuation date. In these proceedings, the husband claims that the value of his business interests on the date of the parties’ marriage, earlier in 1990 than the Goodis settlement, was $9,130,000 (also net of notional disposition costs). The wife submits that the value of those interests when the parties married was $3,500,000 reflecting their increase in value between 1986 and 1990. The difference is about $5,630,000; it significantly impacts the determination of the equalization payment and is one of the principal trial issues.

9Shortly after the husband and wife met, she and Aeden began living with the husband in a home he owned. Torri and Paul spent regular time with them when not living with their mother. The wife continued working as a scriptwriter after Austin was born, but stopped work in mid-June 1993, about six months before Avery was born. Not long afterwards, Torri and Paul came to live fulltime with the parties and their stepsiblings because (according to the wife) they had issues with their stepfather (Goodis had remarried). The wife managed household and primary caregiving responsibilities while the husband worked long hours with his brother for ROW.

10Notwithstanding the settlement with Goodis, the husband described himself as very “comfortable financially” when he and the wife began cohabiting. Their financial circumstances and lifestyle improved. By all accounts ROW, already successful when the parties met, became significantly more successful, and profitable, in the following years. Starting from an old school bus selling records and related merchandise at concerts in 1974 (hence “Records on Wheels”), ROW grew to operate, either directly or through franchising, about 100 locations and to have a distribution network of about 350 accounts nationwide. Between 1990 and 1998, ROW’s annual sales increased from about $27,000,000 to $50,100,000 with net income fluctuating (according to the husband) between $3,300,000⁵ to $5,000,000 annually. ROW’s success was reflected in what the husband described were “lavish” family trips, the purchase of expensive jewellery for the wife and extensive land and sea vacations around the world, often involving one or more of the children. This success was also reflected in their estate planning and the purchase and development of realty.

11On December 16, 1992, the husband settled The Ierullo Family Trust (“IFT”). His ROW shares were rolled into the trust. The husband and the wife were the capital beneficiaries, and three of their five children (Aeden, Austin and Avery) were discretionary income and capital beneficiaries. The trustees were the husband, the wife and their financial advisor, Mervyn S. Simpson (Simpson). While the evidence in this case, and the parties’ claims, involve certain IFT transactions, there is a dispute between the parties whether they agreed before trial that the transactions would be determined in separate, currently on-going litigation between them or in these proceedings. These reasons will not deal with the IFT.

12In late October 1993, the husband purchased a 100-acre lot (14571 Warden Avenue, Whitchurch-Stouffville) on which the parties built a 10,000 square foot matrimonial home (the wife described it as the “home property”). Title was initially registered in the husband’s name, but it was later transferred into the names of the parties as joint tenants in June 1995. As of the valuation date the property had a four-car external garage, a bunkie, an in-ground swimming pool, a tennis court, a horse barn, horse stables, an indoor arena, paddocks and a storage barn. The property was worth more than $4,530,000. Title was unencumbered. At the time of trial, the wife occupied the property, although there were frequent conflicts involving the husband attending there. No order for exclusive possession was in effect.

13The next year an adjoining 46-acre farm property (14787 Warden Avenue) was purchased for $365,000 (“the farm”). Title was jointly registered in the names of the husband and the wife. A small house was located on the property and periodically rented. The parties initially thought that they would develop a subdivision of estate homes but that never happened due to municipal restrictions on land development in the Oak Ridges Moraine area where the farm was situated. In June 1997, the parties incorporated Mulberry Hills Realty Inc. (Mulberry).⁶ The wife was the sole director. Fifty common shares were issued to each of the husband and the wife. In August 1997, ownership of the farm property was transferred to Mulberry. The husband disclaims the signature on the transfer as his; he has claimed in the civil action that the conveyance was fraudulent and that he only became aware of the transfer in February 2023. Over time, the Mulberry property became part of horse operations run from the home property and beginning in 2012, became a sanctuary for aging, displaced or abandoned horses. The sanctuary, a not-for-profit corporation, was registered as a charity in 2012 (Forever Thyme Sanctuary). In June 2022, Aeden purchased the property for $2,650,000.

14Between 2003 to 2007, there were dramatic changes to the parties’ circumstances, principally the following:

(a) On May 15, 2003, a condominium chalet was purchased for $245,000 at Blue Mountain, Collingwood, Ontario (the chalet). The unencumbered title was registered in the name of the wife. She and the children were active skiers and used the chalet frequently; the husband does not dispute that he was rarely there. The parties agree that the fair market value of the property on the valuation date was $376,500, before capital gains and disposition costs. The husband claims a trust interest in the chalet.

(b) On June 16, 2003, a condominium (Silken Lauman Drive, Unit 1, Newmarket) was purchased for $245,000. Unencumbered title was registered in the wife’s name. The parties agree that property was worth $376,500 on the valuation date before capital gains and disposition costs.

(c) On July 25, 2003, a $140,000 loan was made to the wife’s sister (Gabrielle St. George) and her former husband in exchange for a 15% share in the value of a property owned by Ms. St. George and her spouse (the estimated value of the property was $1,000,000). The loan document was rudimentary. The wife, her sister and her spouse signed the document. Although there was a place for the husband’s signature, he did not sign it. The wife subsequently handwrote that an additional $360,000 had been advanced on the understanding that each advance of $100,000 would purchase an additional 10% of the property’s market value.

(d) In late October 2003, ROW transitioned to a public income trust known as the ROW Entertainment Income Fund. The aggregate proceeds were about $121,114,195. The husband stopped working.

(e) Using the same law firm that had acted for ROW in going public, the husband, his brother, their holding companies and associated family trusts (the “Ierullo Group”) were recommended to, and did, create an off-shore insurance trust (the “Latitude Foundation”) in 2003 to which the group collectively contributed $19,945,000 between 2003 to 2007, the intended purpose of which was that the donations would be tax-deductible. Canada Revenue Agency (CRA) disallowed the deductions and reassessed the donors. The law firm was put on notice that the Ierullo Group would be pursuing a solicitor’s negligence action against it and the solicitor involved, but no formal claim had been issued by the valuation date (the claim was settled afterwards).

(f) In February 2004, the parties purchased a waterfront property located in Keswick, Ontario (the cottage) for $1,100,000. Unencumbered title to the property was registered in the names of the parties as joint tenants. The existing cottage was demolished, and the parties built a 6,000 sq. foot year-round recreational residence with an attached 3-car garage. At the time of trial, the husband occupied the property; it was worth more than $4,225,000.

15While the parties’ perceptions and their explanations about who was most at fault for the breakdown of their relationship differ, they were experiencing marital challenges late in the first decade of the 2000s which culminated in an incident involving Avery and her father. The police and the local Children’s Aid Society became involved. No criminal charges were laid. Avery received some counselling. The wife says that the incident happened in 2008 whereas the husband claimed that it occurred in 2010. Nothing substantive turns on this. More likely it was the later date. The wife testified that she and the husband worked out an arrangement after this whereby she would live at the home property, and he would live at the cottage, but the parties would otherwise continue as husband and wife (which they did). Shortly afterward, the parties signed a note prepared by Simpson on May 5, 2011 (the Simpson note). It set out a very rudimentary financial arrangement between the parties which provided that $125,000 monthly could be disbursed from their joint savings account, $25,000 to each of them and $75,000 to be used for joint family expenses. Several years later the family expense allotment was reduced to $65,000 by the husband.

16While the parties’ 2011 arrangements appeared to improve the parties’ relationship for a time, by 2016 it was unravelling. Disputes arose about money. The wife’s evidence was that the husband directed the IFT trustees to no longer distribute money for the children’s expenses and that he threatened her that he would discontinue their financial arrangement, effectively cutting her off from any monthly income, leaving her with nothing. Around this time, the wife began to take steps to arrange her financial affairs to protect herself. The husband’s evidence is that he discovered efforts by the wife to transfer some of their joint assets, such as the home property and the cottage, into her name. He was able to prevent this.

17In 2016 and later in early 2017, the wife and Simpson authorized two distributions from the IFT to the parties in equal share from the IFT. The distributions totalled $14,000,000 leaving, according to the wife, about $6,000,000 in the IFT. The wife also severed the joint tenancies for the home property and the cottage in November 2016 and began the process of winding up the IFT.

18In December 2016, the parties discussed a separation of their financial affairs (a “financial divorce” according to the husband in a December 16, 2016, email to the wife). The wife retained a lawyer (Ms. McCarthy) who contacted the husband about the parties negotiating a marriage contract to deal with a separation of their financial affairs within the context of an intact marriage. Mediation was suggested. The husband was encouraged to retain a lawyer. The husband relied on an accountant friend (Rick Gargarella) to help him but by March 2017 there had been little progress in the parties’ discussions.

19Simpson resigned as an IFT trustee on April 4, 2017 (the parties dispute whether he was removed or resigned). The wife was removed as a trustee in July 2017.

20In May 2017, the husband closed the parties’ joint account from which they were then collectively drawing up to $115,000 monthly.

21On July 24, 2017, the husband started an action against the wife and Simpson alleging breach of trust involving the IFT.⁷

22On August 31, 2017, the wife started the family law proceeding.

23In 2018, the wife, Avery, Austin, and Aeden started an action under the Trustee Act⁸ to remove the husband, Ted Siomos and Rick Gargarella as the IFT’s trustees.⁹

24While there were many interlocutory events, the following procedural facts are the most relevant:

(a) On February 11, 2020, Douglas J. made an Order (the Douglas Order) dealing principally with disclosure, scheduling a Long Motion and targeting a Fall 2020 trial date. Additionally, paragraph 4 (a) of the Order prohibited both parties (who were the only parties involved at that time) from selling, encumbering, transferring or assigning real property without providing at least 14 days’ notice to the other party. While the motion was never heard, the Order was never rescinded or varied.

(b) A Trial Scheduling Conference proceeded on March 21, 2022. Himel J. directed that the trial proceed during the November 2022 sittings.

(c) On August 3, 2022, Daurio J. granted leave to the husband to add Mulberry Hills Realty Inc. as a party to the family law proceeding and ordered that the matter remain on the November 2022 trial list.

(d) On October 17, 2022, the husband started a fraudulent conveyance action (the “civil action”) naming the wife, Aeden, Mulberry Hills Realty Inc. and Forever Thyme as defendants. The wife, Aeden and Avery are Forever Thyme’s directors.

(e) On October 28, 2022, Edwards, R.S.J. made an Order in the civil action enjoining the wife, Aeden, and Mulberry from selling, dissipating, alienating, assigning, encumbering, or similarly dealing with the Mulberry property pending the hearing of the family law trial then scheduled to start in the November 2022 trial sittings or until June 30, 2023, whichever was first.

(f) On October 31, 2022, Himel J. refused a request by the husband to adjourn the family law trial.

(g) The trial was scheduled to proceed in the week of November 21, 2022. During the preceding weekend, counsel for the husband became aware of a potential limitation issue that obliged him to report to LawPro and sought an adjournment of the trial, which was opposed. On November 22, 2022, the adjournment was granted with costs payable to the wife.¹⁰ A new trial date for May 2023 was eventually scheduled.

(h) On December 9, 2022, this court approved a Litigation Plan combining the family law and civil proceedings.

(i) The trial was scheduled to proceed during the week of May 29, 2023. It had to be adjourned because the week before one of the wife’s principal lawyers had a medical emergency involving surgery that precluded her presence at court. The trial was rescheduled to proceed in September 2023 on a peremptory basis.

(j) After the trial was rescheduled, the husband brought motions to amend pleadings in his family law and civil actions. Although the husband had already amended his pleadings in the family law case on at least one or two earlier occasions, he sought to add (or withdraw) allegations of fact and/or to expand the scope of the relief he intended to seek. There were five groups of amendments. In the civil action, the husband proposed delivering a Fresh as Amended Statement of Claim involving the wife and Mulberry. He sought to unwind (among other things) over twenty years of financial transactions and duplicated (in part) his claims in the family law action of oppressive conduct by the wife. The motions were dismissed.¹¹

(k) On September 12, 2023, Zarnett, J.A. dismissed a motion by the husband to stay the August 11, 2023 order pending disposition of an appeal by the husband from that order, the effect of which appeal, if successful, would have been to delay the trial starting the next week.¹² Zarnett, J.A. observed that the husband’s complaints about the order should be viewed as a ruling made at the outset of trial. The husband did not proceed with his appeal. The trial started on September 18, 2023.

C. ISSUES TO BE DECIDED

25The principal issues for trial are equalization of the spousal parties’ net family properties, unequal division of the value of those properties pursuant to s. 5(6) of the Family Law Act (the Act)¹³ dealing with depletion of assets before and after the valuation date, post-valuation date adjustments, the tolling of a limitation period and the husband’s claims of fraud and oppression relating to the farm property sold to Aeden in 2022.

26Broadly described, the sub-issues are these:

(a) Blue Mountain property (the chalet). Whether a chalet owned by the wife is subject to a trust claim by the husband. There are three issues here. The first is whether the husband has a beneficial interest in the property equal to one-half of its agreed $565,000 value on the valuation date. If not, the second issue is whether the husband is entitled to share in any increase in the property’s value after the valuation date.¹⁴ The third issue involves whether the husband should be held accountable for encumbrances registered on the property by the wife after the valuation date.

(b) Taylor Mills property (Taylor Mills). This is a property that was the principal residence of the wife’s late mother, title to which was transferred to the parties’ son (Austin) before the valuation date and ultimately sold in 2021. The husband claims that there should be an appraised value of $1,625,000 added to the wife’s net family property because the way in which Austin acquired title was fraudulent or, if not fraudulent, then part of the wife’s efforts to deplete her net family property.

(c) The husband’s business interests on the date of marriage and on the valuation date.¹⁵ The husband values his business interests on the date of marriage at $9,130,000; the wife values those interests at $3,500,000. The husband claims that the value of his business interests on the valuation date was $2,391,000 whereas the wife contends that the value was $4,141,000.

(d) Mulberry Hills Realty Inc. (Mulberry). This is a private company in which the husband and wife are equal shareholders. Ownership of the farm was transferred to the company in 1997. The farm was sold in June 2022 to Aeden. The wife says that the company was worth $694,049 on the valuation date and nothing when the trial started. The husband claims that the way by which the Mulberry property was ultimately transferred to Aeden was fraudulent and oppressive. Among other relief sought, the husband claims punitive, exemplary and aggravated damages of $250,000 from the wife. If his claims in the civil action are unsuccessful, then the husband asserts that $1,121,773 (plus accrued interest of $21,943.72) should be added to the wife’s net family property representing a shareholder loan formerly owed to her by Mulberry but now owed by Aeden.

(e) Shareholder loans payable to the husband on the valuation date. The wife claims that the husband was owed $5,382,874 by VII whereas the husband claims he was owed $3,287,874.

(f) Loan assignment. In 2011, the husband allegedly assigned to the wife his interest in a $500,000 loan that the parties had made in 2003 to the wife’s sister and the sister’s former husband. The loan was repaid in 2015. The husband claims that his assignment was obtained duplicitously, under false pretences, and that $600,000 should be added to the wife’s net family property because she failed to account for her receipt of the funds as of the valuation date although he also says that the funds were used by the wife to repay a Mulberry line of credit. The wife disputes the husband’s efforts to add the loan to her net family property.

(g) Latitude Foundation claim. The husband settled a failed tax shelter claim involving his former law firm for $899,694 (rounded) after the valuation date. The parties dispute whether this amount should be added to the husband’s net family property.

(h) Family Trust Distributions #1. In late March 2017, shortly before the valuation date, the IFT distributed $2,250,000 USD (i.e., about $3,200,000 CDN) to each of the husband and wife. She claims that these payments were capital distributions. The husband claims, and the wife disputes, that she has failed to disclose her receipt of those funds in calculating her net family property whereas he has included receipt of these funds in his net family property statement.

(i) Family Trust Distributions #2. The husband claims that there should be added to the wife’s net family property $311,638 that the wife withdrew from the family trust on April 4, 2017, three days after the valuation date.

(j) Family Trust Distributions #3. The IFT distributed $796,080 to the husband after the valuation date, but nothing to the wife. She claims that this amount should be added to the husband’s net family property even though (according to the husband) the parties agreed that issues in the ongoing trust litigation would not include the value of the IFT in calculating their net family properties.

(k) IFT Debt. This relates to Family Trust Distribution #1. The husband claims, and the wife disputes, that he owed $3,202,100 to the IFT on the valuation date. The wife’s position is that no loan was made, and that the ledger entry representing the late March 2017 IFT capital distribution, initially recorded as a “loan”, was adjusted at year end to reflect its true distributive character, a not uncommon accounting practice.

(l) Joint Loan (debt). The husband claims that he and the wife jointly owe the IFT $35,108, or $17,554 each, which debt the wife disputes.

(m) Husband’s $1,586,000 exclusion/unconscionability claim. The husband claims, and wife disputes, that their May 5, 2011, arrangement reflected in the Simpson note represented an agreement between them that excluded the monthly $25,000 they received between May 2011 and May 2017, and that the unspent balance of those distributions paid to the husband which he didn’t spend should be excluded from his net family property.

(n) Adjustment to equalization payment. This involves a Seadoo transferred by the wife to the husband after the valuation date.

27The parties have been unable to resolve issues relating to intra-spousal transfers of title or sale of the home property and the cottage such that directions will be required from the court, including enforcement remedies if the directions are not followed.

D. CREDIBILITY

28While the parties were able to agree on most of their assets and related values, those they disputed involved issues about the structure, timing and ultimate beneficiary or beneficiaries of the sub-issues noted above. Each party vigorously challenged the reliability of the other party’s evidence and their credibility on these issues.

29The wife claimed that the husband was an unreliable witness, a poor historian, whose evidence was tailored to conform to serial, weaponized amendments to his pleadings. He was accusatory of everyone with whom he disagreed and evasively deflected accountability for events and inconsistencies in his evidence to others such as the wife, Aeden, Simpson, his accountants and even his lawyers. Overall, his evidence made no sense and was disconnected from reality. Aeden claimed that her father’s avowed purpose in the civil litigation was to ensure that Mulberry was ultimately sold to anyone but her and that it revealed a “colder”, impliedly punitive, “truth” to penalize her mother and her.

30The husband submitted that he was more credible and forthright in his evidence than the wife even though his recollection of events and ability to directly answer questions was “far from perfect.” The wife’s evidence had to be approached with caution unless corroborated by independent documentation. According to him, she was highly sophisticated and possessed “…a deep contextual knowledge of business, law, accounting, trusts, estate planning, etc. that rivalled the knowledge of the many advisors she surrounded herself with.” She acted with malice in pursuing a strategy first conceived in 1997 to syphon the husband’s wealth to the benefit of her and her children with him (to the exclusion of the children from his first marriage). She repeatedly breached a preservation order of the court and self-interestedly forged the husband’s signature to important documents relating to property transfers and trust instruments.

31Given the complexity and number of the disputed issues (many involving allegations of fraud and forgery), their timeframe (over two decades, as pleaded by the husband), the absence (in several cases) of independently corroborative evidence and (in most cases) the parties’ materially different recollections about central events and the reasons for their actions, determining the parties’ credibility is critical.

32As often observed, credibility assessment is an inexact science, a holistic undertaking incapable of precise formulation.¹⁶ There is no one-size-fits-all template. In Lang-Newlands v. Newlands,¹⁷ Sharma J. described the essential considerations as follows:

100Assessing credibility requires the court to consider many factors. Trial judges face the challenge of precisely articulating the complex intermingling impressions after watching and listening to witnesses when reconciling various versions of events. [Citations omitted].

101Chappel J., in McBennett v. Danis, 2021 ONSC 3610, at para. 41 lists various factors to consider when assessing credibility. They include inconsistencies between a witness’ evidence and other credible witnesses or documentary evidence; whether the witness’ evidence is inherently improbable or implausible; the existence of other independent evidence that confirms or contradicts a witness’ testimony; whether a witness was straightforward or “evasive, strategic, hesitant, or biased” and whether a witness is able to make concessions or gives self-serving evidence.

33Demeanour is also a relevant consideration but cannot be the sole determinant of witness reliability or credibility.¹⁸

34Mindful of these considerations, some of the following observations are relevant to the reliability and credibility of the parties and Aeden (that of the experts will be addressed when dealing with their evidence):

(a) Order non-compliance. The weight to be assigned to a breach of a court order in assessing the trustworthiness of a party is a variable, not a constant.¹⁹ Where the terms of an order are unambiguous, non-compliance relates directly to the integrity of a party, respect for the courts and can take on added significance when assessing credibility.²⁰ Paragraph 4 of the Douglas Order provided as follows:

There shall be a long Motion on the issues of preservation of property, exclusive possession of property, disclosure, undertakings, under advisements and/or refusals, on a date to be set in June or July 2020 before an Arbitrator, subject to instructions from the Applicant, Rae Marie Ierullo, and the Respondent, Vito Ierullo. In the interim, both the Applicant, Rae Marie Ierullo, and the Respondent, Vito Ierullo, shall preserve their property as follows:

a. Neither the Applicant, Rae Marie Ierullo, nor the Respondent, Vito Ierullo, will sell or encumber or transfer or assign real property without providing at least 14 days' notice; and

b. If either the Applicant, Rae Marie Ierullo, or the Respondent, Vito Ierullo, intends to draw on savings and/or capital in an amount of more than $500,000 in aggregate and prior to the long Motion date, he or she will provide at least 14 days’ notice.

The wife testified that she thought that the order had expired when no motion was heard. These are the facts:

(i) The order was never rescinded or varied.

(ii) In October 2020, the wife sold a townhouse without notice to the husband.

(iii) In January 2021, when the husband sought the wife’s consent to transfer one-half of the parties’ joint accounts from one wealth manager to another, she refused: her counsel pointed out that the husband was “bound by the February 11, 2020, Consent Order for preservation and non-dissipation.” Shortly afterward, the wife disclosed the townhouse sale.

(iv) The wife refinanced a $438,000 mortgage on the chalet in January 2022 by securing a $810,000 mortgage on title, although only $650,000 was advanced. She rationalized ignoring the Douglas Order by saying that the original mortgage had been in place before the order. The fact is that new funds were advanced, discharge and charge instruments were registered on title and the husband’s consent was never sought.

(v) The wife declared in the new chalet charge that she was “not a spouse.” This was false.

(vi) During the pendency of a motion by the husband to join Mulberry Hills as a party, and even when the motion was argued on August 3, 2022, the wife never disclosed to Daurio J. that Mulberry’s principal asset, the farm, had been sold to Aeden six weeks earlier. Only the wife benefitted from the sale. Admittedly, the wife was not the owner of the property (Mulberry owned it), but she and the husband were equal shareholders in the company, and he only found out about the sale afterward.

While it is often easier to ask for forgiveness than to ask for permission, it is clear that the wife knew at all material times what the Douglas Order meant and even if she may have forgotten about it when she sold her townhouse in October 2020 or thought that the order had expired, she was certainly well aware of it in late January/early February 2021. She equivocated that her mortgage actions involving the chalet merely converted equity, preserving it in different form, but that was (to adopt a phrase used by one of the husband’s lawyers) “a slippery way” of looking at things. The fact is that the wife chose to ignore a court order when it suited her purpose, falsely declared she was “not a spouse” when the new charge was registered in early 2022 and was less than forthright with the court when the joinder motion was later heard by Daurio J. on August 3, 2022.

(b) Retooling his case(s). In a case management endorsement made on June 19, 2023, this court expressed its concern about the weaponization of pleadings amendment requests by the husband (in both actions). In a further case management endorsement made on August 11, 2023, this court dismissed most of the husband’s requests to make extensive amendments to his pleadings in the combined actions (describing the husband’s proposed new amendments in the family action as “retooling his narrative” and “procedural sandbagging” in the civil action on the eve of trial). The husband appealed and brought a motion for a stay pending disposition of his appeal. Zarnett J.A. dismissed the motion on the basis that the order was effectively the same as a ruling made at the outset of trial and that if the husband was dissatisfied with the result of the trial, he could combine that appeal with his appeal from the refusal to grant the amendments. The panel hearing the appeal would “be in a position to grant effective relief if it concludes that the amendments should have been granted and the trial result must be varied or altered as a result.”

The proposed amendments in the combined actions principally involved claims about oppression, asset dissipation and, in essence, unwinding over twenty years of transactions involving Mulberry. The husband claimed that his proposed amendments arose from “new facts” discovered after the wife’s questioning on February 21, 2023, in the civil matter. Both parties testified about Mulberry and what each did or knew at the relevant times. The documentary evidence was extensive. While the court has serious concerns about the propriety of the wife’s management of Mulberry’s affairs (and Aeden’s involvement in acquiring the farm, which will be addressed later) she was generally more credible about the early years involving Mulberry than the husband. He grossly overreached in his allegations of a two-decade (as he described it) “scam” involving his wife and Simpson by disingenuously equating, and conflating, his historical non-involvement in the management of his and the family’s financial affairs as incentivizing their allegedly fraudulent conduct. For example:

(i) In support of his fraud allegations made in his civil action, the husband testified that he did not know that the farm had been transferred by the wife and him to Mulberry until February 2023 (i.e., after the wife’s discovery). He later corrected the date to 2015. Neither answer was true. In his affidavit sworn on September 7, 2018, in a separate proceeding involving the family trust, he swore that “In or about 1997… we transferred ownership of the Farm to Mulberry Hills Realty Inc…” (para. 29). This allegation was repeated in his 2022 Statement of Claim in the civil action (para. 13). At trial, he acknowledged when asked in cross-examination to confirm his earlier evidence that verbally he “knew [about the transfer] from 1997 on?” A(nswer). “Probably, but it doesn’t disregard that my name was forged to do this…”

(ii) In his proposed amended pleadings and his trial evidence, the husband projected back his dispute about the wife’s management of the parties’ financial affairs to 1997 claiming that his signature on the deed transferring the farm to Mulberry and, by implication, the unsuccessful estate subdivision application, were forgeries. The wife acknowledged that depending on the circumstances, she often signed the husband’s signature to documents with his knowledge because he was often too busy to deal with paperwork. Neither of these actions benefitted her over the husband. Given, too, that there was no evidence (or, at least, no persuasive evidence) that the parties’ relationship was troubled in 1997, I find the wife’s actions and her explanations for signing the husband’s name credible and that she acted with his actual, if not implied, authority in signing the 1997 Mulberry transfer.

(iii) Too much trial time was spent comparing the husband’s signatures on documents. Despite his claims of fraud, no forensic evidence was called, and the husband often had trouble identifying his signatures over two decades. Tellingly, the husband could not even identify a signature as his on an invoice of expenses to be reimbursed to him by the family trust (Exhibit 114) in circumstances where only he and the two other trustees he had appointed could have signed it (he identified their signatures though). While there is a possibility that the husband was confused (although the signature was legible), this evidence called into question the reliability of his evidence about the way he signed documents. It is equally likely, in fact plausible, that, as the wife testified, the husband was untroubled by having others often sign his name to documents.

(c) Evasive testimony. When confronted at trial with conflicting civil discovery evidence about the funding sources for the Mulberry mortgage the wife secured for herself, she accepted counsel’s “interpretation” that she had not been “entirely truthful” about that issue and, ultimately, her “answers were woefully inadequate…” When pressed on certain issues (such as disclosure or failing to advise the husband of certain actions) she deflected by saying she deferred to her lawyer’s advice, as did the husband about inconsistencies between his affidavit and trial testimony. Not infrequently he avoided direct answers to questions with statements such as “Might be true”, “If you’d like to say that”, “I could have said that” or, when challenged whether an exchange of emails with Aeden could be interpreted as threatening: “I WANT BOTH OF YOU OFF ANY OF MY PROPERTIES AND I WANT EVERYTHING THAT YOU HAVE FROM ME DIRECTLY OR INDIRECTLY BACK,, THAT WOULD BE APPROX, $4 million dollars back…” (Exhibit 88, higher case in original), the husband disclaimed that a threat was intended. He also disclaimed (on several occasions) familiarity with important contents of his trial affidavit, deflecting responsibility to his lawyers.

These are but a couple of examples where the parties shaded their answers to inconvenient questions.

(d) Inconsistent financial statements. There were material financial statement discrepancies and omissions in the husband’s declarations of his net worth in 1990, the year in which the parties married (February) and when he settled with Goodis (September). He had delivered a financial statement sworn on September 4, 1990, shortly before trial in that proceeding that, among other disclosures, identified and valued the assets and debts comprising his net worth when the statement was sworn. In these proceedings he delivered at least five financial statements which identified his net worth when the parties married seven months before the Goodis settlement. There were significant inconsistencies. These included the value of a house under construction in 1990 (321 Willow Avenue, Toronto) and the ownership of automobiles (number owned and their cumulative value), the effect of which increased his marriage date net worth in this case and decreased his net worth on the valuation date (which is what the wife alleged the husband tried to do in his case with his former spouse). Although later corrected before trial, the husband also misidentified his ownership and related value for the parties’ first matrimonial home (which the husband then owned with Goodis) and over $4,300,000 of music collectibles (Master Pressing album rights to Jimi Hendrix, the Yardbirds and Judas Priest among others as well as a record collection and related items) which rights he said he had since lost or were too difficult to value.

It is not uncommon in family law proceedings that, as a case evolves and disclosure is provided, the contents of a party’s financial statement(s) will be revised. That is to be expected. It would be unreasonable to demand of a party a standard of perfection. Even so, the financial statements dealing with 1990 in the two actions cannot be reconciled. Moreover, the husband demonstrated a puzzling unfamiliarity with some of his own financial disclosure and, overall, the broader brushstrokes of his net worth despite that he had much of this information, or could have obtained it himself, several years before trial. This observation is relevant to the reliability of his evidence.

(e) Aeden MacLean (Aeden). As the purchaser of Mulberry, Aeden was defensive when cross-examined about the circumstances involving the purchase, her knowledge that her parents owned the property (through Mulberry) and that the acquisition was concealed from her stepfather. Viewed in context with the other evidence in this case involving Mulberry, Aeden was a proxy for ensuring that the horse sanctuary would remain under her mother’s control. This will be addressed more fully later but her evidence supports the husband’s concerns about the propriety of the transfer and confirms that the wife was the driving force and mind behind the transfer of the farm. Aeden was a willing participant in the events which led to her acquisition of the farm property.

35It is clear that the wife is more financially astute than the husband. Her narrative of important family events and general management of the parties’ financial affairs was more coherent and logical, often corroborated by independent documents. Even so, great caution must be taken when assessing her evidence impacting the family’s financial affairs. Her lack of candour and pattern of self-dealing are concerning. The husband claimed that he trusted the wife in the management of their financial affairs and, in my view, that trust was not displaced even when the parties signed the Simpson note (that trust changed later). But he was an unreliable historian, prone to exaggeration, quick with accusations and often only casually familiar with his own evidence. He often deflected responsibility for errors or omissions to others.

36Each of the party’s descriptions challenging the other’s reliability and credibility are well supported by the evidence. Greater weight will be given to independently corroborative evidence about important events (particularly financial). The court will not prefer all of one party’s evidence to the other. Different weight will be attached to different parts of a party’s evidence and, where probable, the court will apply common sense to link narrative gaps.

E. ANALYSIS OF ISSUES

37Each of the sub-issues will be considered.

Blue Mountain Property (the chalet)

38Two principal issues arise with respect to the chalet. These are whether the husband has a resulting trust interest in the property and, if so, the value of the parties’ respective shares. This is the evidence:

(a) The chalet was purchased by the wife for $245,000 on May 15, 2003.

(b) The transaction was a cash deal; there was no mortgage financing.

(d) The husband was the source of all the funds in the joint account.²¹

(e) In November 2016, a charge in favour of the Canadian Imperial Bank of Commerce (CIBC) was registered on title. There is no evidence that the husband’s consent was sought or that he was aware of the transaction. There is no evidence about the mortgage principal.

(f) The parties agree that the gross fair market value of the chalet on the April 1, 2017, valuation date was $376,500 (a compromise value).

(g) Despite there being a mortgage, there was no evidence about the balance owing on the valuation date.

(h) In December 2018, the wife sold a property (Jim Mortson Road, Queensville). She owned that property on the April 1, 2017, valuation date. There was a mortgage. After the sale, a portion of the mortgage was transferred to the chalet.

(i) In January 2019, the wife refinanced and discharged the 2016 mortgage in favour of the CIBC. Again, there was no evidence that the husband’s consent was sought or that he was aware of the transaction, nor was there any evidence about the refinanced mortgage principal. In her trial financial statement, the wife disclosed a post-separation mortgage of $240,055.31 owing on May 9, 2023.

(j) In January 2022, the wife refinanced the property by having a $810,000 mortgage registered in favour of the CIBC and discharged the 2019 mortgage (see para. 34(iv) above). In her trial financial statement, the wife identified a $409,414.61 line of credit in favour of the CIBC in addition to the mortgage.

(k) The parties agreed that the fair market value of the chalet was $970,000 as of mid-2024.

39The wife was cross-examined about ownership of the chalet:

Q. Will you agree with me that Mr. Ierullo thought or do you have any reason to believe that Mr. Ierullo thought that Blue Mountain was owned jointly?

A. Yup.

Q. Did he ever talk to you about that? Did he ever share his understanding with you that the property was a joint property?

A. I can’t say we have specific (sic), but the assumption was always that all assets were joint.

Q. Okay. So when you say the assumption was always that assets were joint, that would apply to the Blue Mountain property?

A. Yes.

Q. And did he know at the time that Blue Mountain was being taken in your name only?

A. Yes, he did.

Q. So, I just want to make sure I understand this clearly. Are you taking the position in this case that Mr. Ierullo gifted to you the Collingwood property, or the Blue Mountains property?

A. I would really like to think so but I really can’t take that position because on my financial statement I’ve attributed half the value of Blue Mountain on the date of separation to him. Now, I’ve been carrying it ever since, but certainly its (sic) attributed to him as well, as a shared asset.

40While the wife submitted that the evidentiary onus was on the husband to establish unjust enrichment, her evidence is sufficient in my view to find that she holds title to the chalet in trust for herself and him in equal shares. The wife conceded in her closing submissions that if the husband was successful on the trust claim she would be responsible for any post-separation charges.²² As there was no evidence about the value of the 2016 CIBC mortgage on the valuation date, the husband holds his one-half share interest in the chalet free and clear of any encumbrances.²³ He shall not be required to account for any expenses relating to the property from and after the valuation date, and even though there was reference to an occupation rent claim by the husband payable by the wife he never pursued that at trial (there was no rental value evidence) and so it will not be ordered.²⁴

Taylor Mills Property (Taylor Mills)

41The husband seeks to add $1,625,000 to the wife’s net family property relating to a residence (Taylor Mills) that the wife transferred to the parties’ son, Austin, on December 15, 2016. The husband asserts that Austin held the property in trust for his mother on the valuation date and that the timing of the transfer, together with other actions by the wife around that time, represented an intentional depletion of her property. The wife disputes this assertion and claims that she had acquired the property as a gift from her mother several years before.

42These are the relevant facts:

(a) Taylor Mills was the matrimonial home of the wife’s parents. They held title as joint tenants.

(b) The wife’s father died in 1983. His widow, Olive George (Olive), became sole owner by right of survivorship.

(d) In 2006, a $150,000 mortgage by Olive and the wife was registered in favour of the Canadian Imperial Bank of Commerce (CIBC). The evidence is that the funds were loaned to the wife’s sister, Gabrielle St. George (St. George). Olive later assigned the mortgage to the wife.

(e) On May 31, 2013, Olive and the wife refinanced the mortgage to $305,000 adding to the 2006 mortgage and recognizing line of credit funds of $149,551 which had been loaned by the wife to St. George who was no longer willing, or was unable, to make payments. The wife assumed responsibility for the payments.²⁵

(f) On August 22, 2013, sole title was transferred to the wife with Olive retaining a life interest in the property, which she continued to occupy. The wife testified that her mother obtained independent legal advice.

(g) On December 15, 2016, the wife transferred Taylor Mills to Austin. Olive retained her life interest and continued to occupy the property. Austin assumed the mortgage.

(h) On January 22, 2020, Olive released her life interest. The unchallenged evidence is that in the course of a mortgage refinancing of the property it became known that the CIBC would not advance funds if its mortgage was subject to a life interest. Olive continued to live at Taylor Mills until she had to move to a nursing home in 2021 due to her advanced age. She died in 2023.

(i) On November 5, 2021, Austin sold Taylor Mills for $1,328,888.

43The term “gift” is not defined in the Act. Its essential elements involve: (1) an intention to make a gift by the donor without consideration or expectation of remuneration; (2) an acceptance of the gift by the donee, and; (3) a sufficient act of delivery or transfer of the property to complete the transaction.²⁶ All three elements are present with respect to the 1998 transfer whereby the wife obtained the whole of an undivided interest in the property. The consideration is noted as being “natural love and affection”, the transfer is signed by Olive (there was no evidence at trial challenging her signature or the wife’s evidence that her mother signed the document), the wife accepted the transfer, and it was registered with the local Registry Office. There is no practical difference, in my view, with respect to the 2013 transfer. The property was already subject to a mortgage for which the wife was an obligor, she was already an owner of the property and the conversion of Olive’s interest to a life interest did not constitute “consideration” or “exception of remuneration.” The last two elements of “gift’ were met too.

44The husband conflates the 1998 and 2013 transfers by ignoring the former and then viewing the latter through the lens of the parties’ late 2016 “financial divorce” and surrounding valuation date actions, in particular those of the wife involving Mulberry. As will be addressed below, she did take steps to financially advantage herself (and Aeden), improperly in my view, to the husband’s prejudice (with respect to Mulberry) but her transfer to Austin, however suggestive of depleting her net family property, involved the value of property whose source was her mother. In determining a party’s net family property or considering “unconscionability” pursuant to s. 5(6)(d) of the Act²⁷, a party’s gifted property forms no part of the equalization calculus. The husband’s claim to include a value for Taylor Mills in the wife’s net family property is dismissed. The issue with respect to a $311,000 IFT distribution to the wife relating to this property after the valuation date and her claim for a deduction will be addressed later (Family Trust Distribution # 2).

45Different considerations will apply with respect to the wife’s post-valuation date actions involving Mulberry.

Value of the husband’s business interests on the marriage and valuation dates.

46The parties dispute the value of the husband’s business interests on the marriage and valuation and dates. The wife claims that the value of the husband’s interests was $3,500,000 on the date of marriage whereas the husband contends they were $9,130,000 net of disposition costs. On the valuation date, the wife submits that the value of the husband’s business interests was higher at $4,141,000 than the husband’s $2,391,000 value.²⁸ Each tendered a witness to be qualified as an expert on business valuations but in a mid-trial ruling this court found that the wife’s witness (Martin) was not qualified to give expert evidence.²⁹ The parties agreed about the qualifications of the husband’s expert, Wayne Rudson. He prepared Calculation Valuation Reports for both dates. This form of report contains “a conclusion as to the value of shares, assets or an interest in business that is based on minimal analysis and little or no corroboration of relevant information.”³⁰ This type of report provides the least amount of assurance with respect to value conclusions.

47Mr. Rudson is an accredited business valuator with over thirty-five years’ experience in business valuations. He was engaged by the husband to prepare calculation valuation reports on the value of the husband’s business interests on the marriage and valuation dates (reports dated October 1, 2018, and April 4, 2023). At the time of trial, Mr. Rudson had been qualified as an expert witness in over fifty cases. Based on the parties’ agreement, Mr. Rudson’s qualifications and previous appearances before this court as an expert in business valuations, he was qualified to give expert business valuation evidence in this case.

48While the wife accepted Mr. Rudson’s expertise she vigorously disputed his opinions, thus complicating the court’s analysis. Two principles frame the court’s consideration of Mr. Rudson’s evidence in this cae.. The first is that even though expert evidence is commonly put forward to establish fair value, and invariably it is necessary, the court is not obliged to accept it. The second is that the court should not disregard the only expert evidence received and rely on its own independent analysis. In Paul v. 1433295 Ontario Limited³¹, the Divisional Court dealt with an appeal involving the valuation of shares in a private company whose only asset was an operating hotel. Many witnesses testified about what they thought was the value of the hotel and the company but only the appellant led evidence from a qualified expert. The trial judge put aside the expert’s evidence and undertook her own analysis. The appeal was allowed.

35In coming to this conclusion in this way, the trial judge went beyond what the law allows. It is trite to observe that, to be useful, expert evidence must be necessary to assist the court on issues that are beyond its purview; in short when the court needs help understanding the issue. In this case, the issue at hand was the valuation of the shares. As a general proposition, it is not difficult to see that this is a question the court would need assistance to resolve. [Footnote omitted.]

49In Ross v. Ross³², the Court of Appeal held that the trial judge erred in rejecting the evidence of the only expert about a broadly accepted valuation method. The judge should have determined what adjustments, if any, were appropriate based on the evidence that was accepted. Even where there are competing expert reports, the court must exercise caution about undertaking its own valuation by mixing and matching portions of the reports.

50I will make one last observation about the parties’ conflicting approaches to their valuation obligations.

51Whatever the merits of the wife’s dispute with Mr. Rudson’s evidence, the husband submits that an adverse interest should be drawn from her decision to terminate the retainer of a business valuator (Paula White) who possessed similar qualifications to those of Mr. Rudson, who had worked with the wife for about a year, who had copies of Mr. Rudson’s 2018 reports and who had requested and been given disclosure but who was then discharged in favour of a proposed expert (Martin) with whom the wife had socialized for several years. In D.A.S. v P.S.³³, Horkins J. drew an adverse inference against a mother who had chosen not to call a proposed expert witness and instead unsuccessfully cross-examined the father’s expert to accept her position about the father’s income. If the mother had an opinion that challenged the father’s expert she should have called that witness. Horkins J. found it a reasonable inference that the mother’s expert did not disagree with the husband’s expert. In this case, the wife’s evidence is that no report was ever prepared by Ms. White and that it was she (the wife) who decided to end the retainer for “personality” reasons. She could not recall at trial when the decision to discharge Ms. White was made but the trial evidence was that there had been at least two Information Requests from Ms. White by the end of November 2018. Despite some misgivings about the reason or reasons why the wife parted ways with Ms. White, I am not prepared to draw the inference requested. No report was ever delivered by Ms. White, there was no evidence that even a preliminary opinion in writing was provided and there was insufficient evidence about the extent to which Mr. Rudson and Ms. White, apart from disclosure requests, may have communicated in a way that suggested some preliminary agreement (or not) about values.

Business interest value on marriage date

52On the marriage date, the husband solely owned Vito Ierullo Investments Incorporated (VII) which, in turn, owned 50% of ROW. Mr. Rudson estimated that the net value of the husband’s business interests was $9,130,000. In arriving at this figure, two methods were applied to account for the different nature of the companies. An adjusted net book value approach was utilized with respect to VII because it was essentially a holding company whose principal assets comprised real estate, loans and the 50% interest in ROW. A capitalized cash flow approach (i.e., EBITDA³⁴) was used with respect to ROW as it was an operating company. Mr. Rudson valued ROW’s maintainable EBITDA as of the marriage date ($4,237,000), applied the median of a capitalization multiple ranging between 4x and 4.5x to arrive at an en-bloc fair market value (FMV) for ROW of $18,010,000 of which one-half, or $9,005,000 was the value of VII’s interest. A VII loan to the husband of $862,625 brought the total to $9,992,625, which Mr. Rudson rounded down to $9,990,000.

53The wife submitted that there were multiple problems with Mr. Rudson’s evidence. These included:

(a) Absence of proper background information, in part because the husband withheld information and/or was provided with false or inaccurate information.

(b) Poor and/or not impartial assumptions and errors made because of or to compensate for the information deficiencies in (a).

(c) A deliberate refusal to correct his evidence and/or assumptions after proper background information became available, even when he was correcting other reports before trial.

(d) Misleading and not impartial elements/assumptions in his written report(s).

(e) Inaccurate and misleading scope of review, and deliberate refusal to correct his scope of review and limitations to his report after better information became available.

(f) Using wrong business comparables.

(g) Making erroneous adjustments impacting value.

(h) Appearing as an advocate rather than as an independent expert, both in his written reports and trial demeanour.

54Ignoring the overlapping nature of these descriptions, the wife’s submissions really involve four main complaints: confirmation bias; choice of valuation methodology; uninformed/misleading assumptions; and partiality/demeanour.

Confirmation bias

55Midway through Mr. Rudson’s cross-examination, his notes from meetings with the husband, his counsel and various third parties were disclosed. The following information was revealed:

(a) In an email dated October 27, 2016, to the parties’ financial adviser (Paul Mascard) the wife forwarded the 1990 Hill & Company and KPMG Peat Marwick reports “to be sent to whoever is assessing Vito’s assets.”

(b) In an email exchange dated March 8, 2017, between the wife and the husband’s close accountant friend and KPMG partner (Rick Gargarella) who was helping him gather information relating to dividing the parties’ assets, Mr. Gargarella wrote that the initial documentation in his possession suggested that the value of ROW in the late 1980s and early 1990s was $20,000,000 (implying that the value of the husband’s interest was $10,000,000). But more information was needed.

(c) On June 5, 2018, a meeting was held at the offices of the parties’ accountants. This followed a May 30, 2018, conference call in which the husband’s lawyers were involved. Among the meeting attendees were Mr. Rudson, the husband, his accountants and Mr. Gargarella. Minutes of that meeting were taken by an associate assisting Mr. Rudson. Accompanying the minutes were schedules listing additional information needed from the husband “With Answers by Rudson Valuation Group Inc.” Item 28 recorded “We understand from our conference call on May 30, 2018, that Mr. Ierullo has a signed agreement with his first wife that indicate that his share of ROW was worth approximately $10M. Please provide a copy of this agreement.” Mr. Moldaver was to provide the agreement (none was ever provided). The conference call apparently involved the husband’s legal team.

(d) Mr. Rudson testified that when he prepared his October 1, 2018, marriage date report he was unaware of the 1990 valuations.

(e) By covering letter dated November 5, 2018, Ms. McCarthy sent, among other things, copies of the 1990 expert reports to Mr. Moldaver in a USB.

(f) Mr. Rudson agreed that in undertaking a valuation engagement a valuator would like to know whether there had ever been other valuations prepared for a client.

(g) In answers to the court, Mr. Rudson said that he or his offices had repeatedly inquired about the existence of other valuations throughout his mandate. He confirmed that he had asked and was not told about any.

(h) Mr. Rudson testified that he did not become aware of the Hill & Company reports (there were two) until October 27, 2021 (only through interaction with Mr. Martin, the wife’s proposed expert), and the KPMG Peat Marwick report only on September 28, 2023, during the trial.

(i) There was no evidence explaining why the 1990 reports were never provided to Mr. Rudson by Mr. Mascard (2016), Mr. Gargarella (2017), or the husband’s counsel (2018) before he issued his report. There was no explanation why Mr. Rudson was not made aware of the existence of the reports until anywhere from one to three years later.

(j) No effort was made to value the husband’s business interests using the same methodology used by the experts in the 1990 settlement or to update those values to February 1990, also using the same methodology, particularly after Mr. Rudson had been provided with more accurate financial information for the relevant years than he has relied upon in his reports.

(k) When he was asked at trial whether the 1990 reports impacted his opinion Mr. Rudson answered that they had not. It was his view that the reports were, among other things, irrelevant. They were stale dated.

56As observed by the Court of Appeal in R. v. Mills³⁵, confirmation bias is defined as an “unconscious tendency of those who desire a particular outcome to search for things that support that outcome and to ignore or reinterpret contradictory information” (citation omitted).” It is also described as a tendency “to discriminate in the collection and weighing of information and evidence to confirm an initial hypothesis or preference.”³⁶ How that may apply to this case are the facts that almost from the outset of the parties’ financial divorce in late 2016, the husband and his advisers held the view that the value of his business interests on the marriage date was $10,000,000. The husband and his advisers told Mr. Rudson what they thought was the marriage date value and they, in my view, chose not to inform him about what other information they had (i.e., the 1990 reports). Someone made that decision (it was not Mr. Rudson) such after his report was delivered on October 1, 2018, confirming a $9,990,000 value he became aware that there was, in my view, relevant information which could challenge his assumptions. Or which should have been considered before he completed his report and even after the information had come to his attention.

57Confirmation bias is difficult to identify. In Mills, the Court of Appeal distinguished between a police officer developing an expert opinion and the process of a criminal investigation. They are different. The court found that the officer had considered third party reports and carefully catalogued when and from whom he received information. The exploratory process was transparent. Admittedly, a calculation valuation report is minimally reliable, but where, as in this case, Mr. Rudson was not informed about what I view was information relevant to his engagement and where his Scope of Review did not disclose all his sources of information, the court is left uncomfortably skeptical about the reliability of his evidence and his defence of his opinion when challenged about information the husband’s advisers never told him, or which came to his attention after the fact.

Choice of methodology

58When the husband and Goodis settled their matrimonial litigation in September 1990 each was represented by senior family law counsel, and each had obtained expert opinions about the value of the husband’s business interests as of December 20, 1986. The wife’s expert, Hill & Company, valued those interests at $3,300,000; the husband’s expert (KPMG Peat Marwick) valued his interests at $2,250,000. The parties settled on a gross value of $2,900,000, a figure with which the husband agreed. After netting out costs of disposition, applying a discount and making other adjustments which resulted in a business value of $2,356.895, that figure was factored into the equalization payment paid to Goodis of $1,300,000.

59In December 1992 the husband settled the IFT and transferred his shares in VII (which owned ROW) into the trust. A value of $3,500,000 was recorded. This is the value that the wife submits should be used as representing the value of the husband’s business interests in February 1990.

60The February 1990 marriage of the parties falls almost equally between the December 1986 valuation date and the 1992 trust settlement.

61In arriving at his opinion that the value of husband’s business interests was $9,990,000 in February 1990, Mr. Rudson used a different valuation methodology than either of the experts used in the Goodis/husband litigation. He was cross-examined about this.

Q. Okay, so KPMG and Hill & Company used an after-tax income, maintainable earnings figure times a multiplier, right?

A. I believe so. Yes.

Q. And you used a before tax earnings times a multiple.

A. Before tax is correct. It’s EBITDA which by definition is before tax, but that’s correct.

Q. And you’ll agree with me that the common approach for a maintainable earnings method of valuation is to use after tax income times a multiplier.

A. It is common to use that technique, but I’m reluctant to suggest it’s the most common. Many valuations use different methods. That might be one. There might be a pre-tax, what we call EBIT, EBITDA, price earnings, price sales. In the KPMG report, for example, they used normalized earnings. They didn’t even use actual earnings. They came up with what they think the income should be based on the sales revenue and the gross margins on a go-forward basis. That’s a technique that’s available sometimes, and that’s what they’ve done. So, there’s different techniques that can be used depending on the circumstances and the judgment of the particular business valuator. [Emphasis added.]

62Mr. Rudson adopted a different ROW valuation methodology than the husband had used in his 1990 settlement.

63The husband submits that the values reflected in the Hill & Company and KPMG Peat Marwick reports should be disregarded because they are hearsay in the absence of their authors testifying and that the values do not reflect significant changes in the music business between December 1986 and February 1990. In Gojkovich v. Buhbi Organics Inc.³⁷, an oppression case, the applicant appended to her application a copy of a valuation report prepared by two experts which contained a fair market value opinion of the applicant’s business interest. There was no affidavit from those experts. Perell J. accepted the report as part of the factual narrative but ruled the opinion inadmissible. In my view, Gojkovich is distinguishable from this case. The husband swore to the truth of the value that he was representing to the court in 1990, he acknowledged (and initialled) his acceptance of that value, and his counsel used that value to settle. As for the 1992 declaration to Canada Revenue Agency that, again, involved the husband’s representation to a third party. It is clear that, with respect to both event dates, the husband was relying upon qualified professional advisers, and he accepted those values. As for changes in ROW’s operating results, there was a marginal difference in operating results between 1989 to 1991.

Uninformed/misleading assumptions

64The wife alleged that Mr. Rudson was not provided with, was misinformed or misled about information which should have been relevant to his engagement such as:

(a) Non-disclosure of ROW valuations around the marriage date. As already noted, Mr. Rudson was not informed about any ROW valuations in existence around the marriage date. He confirmed that in his testimony. The fact is that the husband (through Mr. Mascard, Mr. Gargarella and his lawyers) had the Hill & Company and KPMG Peat Marwick reports. Item #27 in the memorandum prepared by Mr. Rudson’s associate having this subject as a title is blank.

(b) Shareholder Agreements. The issue was raised at the June 5, 2018, meeting at the accountant’s office. It was noted in either Mr. Rudson’s handwriting or that of his associate “Prob not…assume not.” This was incorrect. The husband and his brother had signed an agreement on October 29, 1986, permitting the brother to acquire the husband’s interests in ROW for $2,000,000 subject to an upward adjustment between the date of the agreement and December 31, 1987.

(c) Value of ROW. There is no reference to, or at least no evidence, that Mr. Rudson was aware that when the husband was questioned in the Goodis litigation in April 2017, he remarked as “a ridiculous figure” the suggestion ROW could be worth even $10,000,000.

(d) Husband’s marriage date net worth statements. The minutes of the June 2018 meeting have as crossed out copies of all net worth statements prepared by the husband for each of the three years preceding each of the two valuation dates, being the marriage date and April 1, 2017. There were in fact at least two financial statements sworn by the husband around the time of the Goodis settlement in 1990.

(e) Relationship with brother. The minutes also indicate that the husband was “on good terms with brother.” This note is inconsistent with the 1986 agreement which the husband prepared, and which began with “Due to the mundane friction and every work day rivalry between myself, Vito Ierullo and my brother Don Ierullo, and especially the friction between my brother and my wife, Lyn Ierullo…” It is also inconsistent with the husband’s trial evidence, and that of the wife.

(f) CRA representation. Mr. Rudson was unaware of the 1992 representation. While this hindsight should not be used to confirm a valuation, it can be used to assist in verifying whether the assumptions leading to the opinion are reliable.

65The Scope or Review (SOR) accompanying Mr. Rudson’s report is silent with respect to any of this information, all of which in my view would be relevant to the nature of the engagement he accepted. Moreover, it is surprising that relevant information touching upon ROW’s value three years before the marriage date was never shared with Mr. Rudson. There was no satisfactory explanation (in fact there was none at all) why he was only made aware of that information years after his report and, even then, not from his advisers but by the wife’s advisers.

Partiality/Demeanour

66The wife submitted that Mr. Rudson did not provide independent, impartial or professionally sound evidence and that once information came to his attention about the 1990 valuations and 1992 CRA representation he should have reconsidered his opinion incorporating that information and adopted a similar methodology to test his opinion. I agree. The wife maintained that Mr. Rudson appeared more as an advocate for his client than an independent witness, a submission with which the husband disagreed and pointed to Mr. Rudson’s reasons why none of the wife’s criticisms mattered. The wife also submitted that the SOR was deficient in that it did not disclose the May 2018 conference with counsel or the better attended June 2018 meeting as sources of management information. The only SOR documents and information disclosed involved the accountant’s statements for 1988 to 1990, ROW financial statements for 1987 and 1988 and partial statements for the year ending March 31, 1990, a ROW Entertainment prospectus for 2003 and public company comparables.

Conclusion on marriage date business value

67Reliability is a key component of an expert’s testimony. As observed by the Ontario Court of Appeal in R. v. Abbey³⁸, “expert evidence of questionable reliability risks distorting and prejudicing the fact-finding process.”³⁹ Reliability can be compromised by the absence of what may be described as a properly instructed report. In Ritchie v. Ritchie⁴⁰ the Court of Appeal declined to interfere with the trial judge’s assessment of a parent’s income where the parent’s own expert was not provided with information relevant to his engagement. Why, in this case, was Mr. Rudson, despite requests made throughout his retainer, not told about the 1990 reports in 2016, 2017 and 2018 until several years after his October 1, 2018 report was concluded? On what basis did the husband’s close friend and KPMG partner (Mr. Gargarella) tell Mr. Rudson that the value of the husband’s business interests was $10,000,000 and Mr. Rudson erroneously led to believe by the husband’s legal team that there was a signed agreement indicating that the value of the husband’s shares for the 1990 Goodis settlement were worth $10,000,000? Why was an entirely different valuation methodology chosen in this case than what the husband had endorsed, and his advisers and experts had adopted, in 1990? I accept that the September Goodis’ settlement dealt with a December 1986 valuation date but even a cursory review of the financial information in this case from those reports and Mr. Rudson’s evidence indicates that gross revenue from the husband’s businesses in 1986 ranged between $26,100,000 to $29,000,000; in 1990 it was $27,334,000, and slightly less in 1991. On January 22, 1990, the husband noted to an associate in the offices of his business valuator that overall 1989 third quarter ROW sales (October to December 1989) were “down extremely from 1988” and that ROW’s margins had “dropped considerably” too (Exhibit 13). The wife testified that the husband wrote this because he wanted to ensure that ROW did not appear too financially robust.

68The difference in the methodologies is almost $7,000,000.

69Mr. Rudson’s valuation evidence was compromised by the circumstances surrounding his choice of methodology, the information he was given (and not given), his inadequate SOR disclosure and his failure (in my view inexplicable and not convincingly answered) why he rejected any serious effort to value the husband’s business interests using the same methodology used by the experts in 1990, and of which he had been aware since 1991. In my view, it was incumbent on Mr. Rudson in the discharge of his duty to the court to do more than the husband’s bidding, especially after the wife’s proposed expert was not qualified. The court is not obliged to accept Mr. Rudson’s evidence uncritically because he was the last expert standing, and I will not.

70Mindful of the caution expressed in Ross about the court undertaking its own valuation, this court is left with the challenge of determining the value of the husband’s marriage date business interests. Accepting that valuation is more an art than a science there is a simpler approach that accords with the evidence in this case, although not as reassuring perhaps as one where there is acceptable expert evidence. The wife proposes averaging the values from the $2,356,895 Goodis’ settlement (using a December 20, 1986, valuation date) and $3,500,000 from the 1992 CRA Declaration (for December 22, 1992) to arrive at a gross value of $2,928,848. The February 1990 marriage date is practically equidistant from those dates.

71It is worth observing the gross value of the husband’s interests for December 20, 1986, was $2,900,000 but that included $488,000 owing by Goodis to VII; there was no cost of disposition discount agreed (e.g., taxes on notional disposition). I prefer to adopt $2,900,000 and use the average of that and $3,500,000 declared to CRA, or $3,200,000 as representing the gross value of the husband’s business interests on the marriage date. I am not willing to speculate on discounts.

Business interest value on valuation date.

72Mr. Rudson prepared two Calculation Valuation Reports for the value of the husband’s business interests. The first was dated October 1, 2018 (as was the marriage date report) and was updated on April 4, 2023, after additional information had been brought to his attention. Mr. Rudson valued the interests at $2,391,000⁴¹; the wife’s value is $4,141,000.

73Figure #1 provides a visual summary of the husband’s business interests.

74VII owned 100% of the special shares and IFT owned all the common shares in 2034933 Ontario Limited (“933”) which, in turn, owned 40% of the common shares in 297241 Ontario Limited (“241”); the other shareholders in 241 were the husband’s brother, Don (40%) and a third party, Throop (20%). Mr. Rudson estimated an “en bloc” fair market value for VII of $2,908,000 which, less notional disposition costs of $517,000, resulted in a net value of $2,391,000 (rounded).

75The wife challenged Mr. Rudson’s opinion, submitting that it should be adjusted to include items which he either ignored or failed to properly address.

(a) Risca Partners, L.P. (“Risca”). Risca developed and sold residential properties. The book value of VII’s interest in Risca was $1,067,323. Mr. Rudson’s second report corrected earlier erroneous information that all the properties in the Risca portfolio, except one, had been sold and the net proceeds distributed in March 2017. On or about May 19, 2017 (about seven weeks after the valuation date) VII received $729,443 from Risca. Mr. Rudson adjusted the book value of the husband’s equity in VII by recording the receipt but deducting the book value. The wife contends that deducting the book value was improper because the full amount of the book value was thought to be collectible on the valuation date as reflected in VII’s balance sheet and should be treated as such. I disagree. The best evidence about the value of VII’s interest was that no further funds would be available for distribution.

(b) Vacant lot (17317 Warden Avenue, Whitchurch-Stoufville). VII and a holding company owned by the husband’s brother each owned a 50% interest in a 76-acre lot.⁴² The husband valued the property at $1,300,000 on the valuation date. Mr. Rudson included one-half of this amount less book value (i.e., $650,000 less $225,965) to arrive at a $424,035 positive adjustment to book value of the husband’s equity in VII. The wife valued the property at $2,390,000. As the husband’s one-half share amounted to $1,195,000, she submitted that the difference between that figure and $650,000, or $545,177, should be a further positive adjustment to the husband’s equity in VII.

Each party called an appraiser. The wife challenged the qualifications of George Carruthers, the husband’s expert. A voir dire was held. He had co-authored an appraisal dated November 15, 2022, with a since-retired colleague (Mr. Katchen). He testified that he had been an accredited appraiser for over forty years and had appeared in court as an expert appraiser about a dozen times. While he delivered an Acknowledgement of Expert’s Duty, only a statement of Mr. Katchen’s qualifications accompanied the appraisal; Mr. Carruthers was listed as an alternative expert in the Trial Scheduling Order. The wife raised her objection to Mr. Carruthers testifying as an expert after court closed the day before he was scheduled to testify. Despite non-compliance with rule 20.2 of the Family Law Rules ⁴³ permitting expert evidence, I exercised my discretion under rule 20.2 (6) to allow his testimony. Mr. Carruthers’ evidence was that the per-acre value of the property was $17,000 which resulted in a value of $1,300,000 (i.e. $17,000 x 76.958 = $1,306,286, rounded). He maintained this opinion after reading Mr. Rober’s opinion and doing a further drive-by inspection shortly before trial.

The wife called David Rober as her expert. He fully complied with the rules governing the admissibility of expert evidence. Mr. Rober had been a real estate agent for thirty years, was an accredited residential appraiser since 2005, later a commercial appraiser, and had appeared in court as an expert a handful of times. He had inspected the property in December 2016 for the wife and had provided an initial opinion but no report. He did a drive-by inspection of the property in September 2021. His evidence was that the per acre value of the property was $32,000 which resulted in a gross market value of $2,390,000 (i.e. $32,000 x 75 = $2,389,120, rounded). As will be noted below dealing with Mulberry, the husband’s expert (Polisuk) who valued the parties’ interest in that company adopted Mr. Rober’s opinion of the farm’s value.

With one exception, the experts used different comparables. Each was challenged that their choice of comparables was flawed. The husband criticized Mr. Rober (whose opinion of value, as just noted, was acceptable with respect to Mulberry) for his use of a form report, in particular his choice of differently sized, and cleared, lots; the absence of reasons for his price-per-acre adjustments, and the market exposure times for each of the comparables. The wife criticized Mr Carruther’s evidence. He (and Mr. Katchen) overlooked using the same property as a comparable twice (it had different municipal addresses; Mr. Carruthers testified that he and Mr. Katchen had done a drive-by of the property). They applied different adjustments to the same property, the same location and on the same date. Unlike Mr. Rober’s choices, Mr. Carruthers chose several properties more than thirty to forty-five minutes driving distance from the Highway 404 corridor (the subject property was about a five-minute driving distance). Two comparables were sold after the valuation date. The experts disagreed whether it was appropriate to use post-valuation date property sales as comparable properties.

The comparable property used by both experts (Queensville Sideroad) was closest to the subject property (about a three-minute driving distance from the 404 corridor), about thirteen acres larger (at 89.32 acres) and had sold six months before the valuation date for $2,600,000 representing a $29,100 price-per-acre.

Both experts agreed that the highest and best use of the property was its development as a single-family residence.

Both experts agreed that a Direct Sales/Comparison approach was appropriate.

Both experts considered allowable use under the zoning by-laws as of the valuation date.

Mr. Carruthers used a 1.21 positive time adjustment to the $29,100 per acre value of the Queensville property, resulting in an adjusted per acre value of $35,222 then downward adjusted that figure by .5% to arrive at a per acre value of $17,611.⁴⁴ Mr. Rober used a 1.2 positive time adjustment factor resulting in a per acre value of $34,920.

The experts disagreed whether the Queensville property was in the Queensville Settlement area boundary (which would result in a 25% negative adjustment to the subject property according to Mr. Carruthers). After a modest (unspecified) positive adjustment was applied because the subject property’s location was superior to the Queensville property, Mr. Carruthers downward adjusted (the degree also unspecified) the per acre value of the subject property due to Queensville’s larger size (thirteen acres) and its proximity to existing development.

Mr. Rober testified that the larger size of the Queensville property would not translate into a rateable per acre value, that there would be a sliding per acre value scale based on acreage additional to, for example, the value of the first acre compared to later acres, and so on, and that the subject property was only a few minutes more distant from the 404 corridor, which factors, when viewed together, he testified did not warrant the .5 adjustment made by Mr. Carruthers.

In my view, the per acre value for the property is $26,970 resulting in a $2,049,720, value for the vacant lot for these reasons:

(i) Excepting the Queensville property, there were too many different properties used as comparables; Mr Carruthers used ten properties whereas Mr. Rober used six, both lists inclusive of the Queensville property. There was no overlap.

(ii) Mr. Carruthers identified major differences with Mr. Rober in terms of data sources, choice of comparables and absence of adjustment analysis reasons. But his adjustment factors were largely speculative, and subjective. As were those of Mr. Rober.

(iii) Apart from their experts’ disagreement, neither party led evidence whether the Queensville property was located in the Queensville Settlement area. Such evidence would have been helpful because it represents a 25% per acre value adjustment.

(iv) I did not find the slightly larger size of the Queensville property warranting more than a slight downward adjustment nor the additional driving distance from the 404 corridor as a significant downward adjustment factor either.

(v) Applying Mr. Rober’s 1.2 times adjustment factor to the Queensville per acre cost, rounded to $29,000, results in an adjusted per acre value of $34,800. Using a median 12.5 % downward adjustment representing the uncertainty in the evidence about whether the subject property was in the Queensville Settlement area and a, admittedly arbitrary, 10%, downward adjustment representing the several other positive and negative adjustments identified (and mostly unspecified) by the experts leads to a total 22.5% per acre adjustment, or $26,970 per acre value (i.e., $34,800 x .775%). As the lot size is 76 acres, its value on the valuation date was $2,049,970. The husband’s share is $1,024,860.

Accordingly, there should be an upward adjustment of $374,860 (unadjusted) to Mr. Rudson’s value of VII (i.e., $1,024,860 less the $650,000 estimated value used by Mr. Rudson, relying on the Carruthers/Katchen appraisal).⁴⁵

(c) Value of VII advances to ‘933. The wife contends that $866,635 should be added to Mr. Rudson’s value of VII. Her submissions are that he relied on erroneous information and that he misinterpreted and ignored (or overlooked) other relevant information. The husband did not directly address in his closing submissions the several examples from Mr. Rudson’s evidence highlighted by the wife in his cross-examination, essentially responding that, as Mr. Rudson was the only expert left standing, the court should rely on his expertise. Mindful of Paul, I reject the wife’s submissions with one exception.

The exception relates to the value of the husband’s interest in ‘241 held through ‘933 and, ultimately, VII. Mr. Rudson estimated that ‘241’s “en bloc” FMV was “nil”; the total shareholders’ deficit was slightly over $2,00,000. The wife targeted several of the asset figures recorded in the company’s March 31, 2017, balance sheet, one of which was $765,720 cash. Mr. Rudson did not identify “cash” as a significant asset and testified that the creditors would be paid before VII and, inferentially, nothing would be left for distribution to VII. That is what Mr. Rudson assumed and concluded. That was incorrect. Mr. Rudson’s associate (Lam) had obtained from VII’s accountant (Potter) confirmation that the cash was paid to “933, and then to VII, and, further, that there was no evidence that any creditors had been repaid. In my view that cash receipt must be factored into VII’s value: it amounts to $306,288 (i.e., 40% of $765,720).

76Adjusting for the vacant lot ($374,860) and VII advances to “933 ($306,288) and applying the same notional disposition cost factor as used by Mr. Rudson (18%), results in a positive adjustment to the value of the husband’s business interests on the valuation date of $558,840, rounded. Accordingly, the value of those interests is $2,949,840.

Mulberry Hills Realty Inc. (Mulberry)

77Mulberry is an Ontario private company in which the parties were equal shareholders on the valuation date. They dispute its value then and currently. The situation is complicated by the husband’s May 2022 amended pleading in which he claims (among other relief) that the wife conducted the business and affairs of Mulberry in a manner that was oppressive to, or that unfairly disregarded, his interests in the company. In the accompanying civil action, the husband claims that beginning in 2015 the wife took steps to encumber the farm property to his financial prejudice. It was the only asset of the company. When the farm was sold to Aeden in June 2022, Mulberry was left a corporate shell, without any equity. The wife held a mortgage secured against title to the farm: the husband received, or was entitled to, nothing. Among other relief, he asks that the court declare as fraudulent the 2022 transfer by which Aeden acquired title and also two allegedly fraudulent mortgages registered in 2017 (assumed by Aeden on her purchase). The wife acted oppressively. He also seeks $250,000 in punitive, exemplary and aggravated damages from her in the civil action.

78The wife and Aeden deny the claims. The wife pleaded that she acted in Mulberry’s best interests, sold the property for an advantageous price and that, in any event, the husband’s claims in oppression and fraud are statute-barred. Aeden generally agrees with her mother, also pleading the provisions of the Limitations Act, 2002.⁴⁶

79These are the relevant evidence, facts and findings:

(a) The farm was purchased in May 1996 for $365,000. Title was registered in the parties’ names as joint tenants and was unencumbered.

(b) Mulberry was incorporated a little over a year later on June 4, 1997, to hold title to the farm. The wife was the sole director and officer. The parties were equal shareholders.⁴⁷

(c) On August 12, 1997, the farm was purchased by Mulberry for consideration of $400,000 secured by a non-interest-bearing promissory note in favour of the wife and the husband, payable on demand. The transaction was structured to minimize future tax consequences on disposition. The parties were represented by their lawyer (the same lawyer who later acted for the Ierullo Group with respect to the Latitude Foundation scheme – see Latitude Foundation claim below).

(d) The wife signed the transfer to Mulberry for herself and the husband. I find that she signed the husband’s name to the transfer with his ostensible, if not actual, authority. There was no evidence that the parties’ relationship was troubled. There was no evidence that his interests were prejudiced by the transfer. There was plenty of evidence that the husband relied on others to assist in the management of his and the family’s affairs. It would not have been out of character in 1997 for him to have approved the wife signing his name (as I expect he did) particularly since, as he said multiple times during this trial, he loved her and never wanted their marriage to end, at least until December 2016.

(e) After the parties learned that their plan to develop a residential subdivision would not be permitted, they rented out the small house on the property intermittently and parked equipment there. The property was not favourable for farming operations due to the quality of the soil.

(f) In 2012, the wife decided to improve the property by building a horse farm with the intention of using the property as a sanctuary for old, retired and abandoned horses. To that end, she arranged to have Forever Thyme Sanctuary (FTS) incorporated as an Ontario non-share capital corporation in August 2012. About a week later, it was registered as a charity. The wife, Aeden and Avery were the directors. FTS leased the property from Mulberry.

(g) The wife assured the husband that he would not be required to financially contribute. He was fine with that plan.

(h) About a year after FTS was registered as a charity, the wife learned that FTS, as a charity, could not finance land improvements. Even so, construction had started in 2012. The wife paid for the construction by using a personal line of credit (later secured by a Mulberry mortgage), donations and other funds from FTS (mostly from the wife), money from the Simpson note and her other resources. The husband was unaware of these arrangements but did help with some of the early construction. (The parties dispute how much he contributed.)

(i) In mid-December 2016, the parties began discussing a “financial divorce” by way of a marriage contract within the context of an intact marriage (see para. 18 above).

(j) On February 8, 2017, Mulberry granted a $1,121,773 mortgage to the wife which the wife later contended had a 14% annual compound interest rate. The wife chose this rate. She authorized Mulberry to enter into this mortgage to secure her investment in the property. After the April 1, 2017, valuation date, another mortgage was granted on September 25, 2017, this time in favour of FTS for $185,000. The wife intentionally chose not to tell the husband about either of the mortgages.

(k) Each party tendered a witness to give expert evidence about the value of the company as of April 1, 2017. I declined to qualify the wife’s witness as an expert.⁴⁸ The husband’s witness (Steven Polisuk) was qualified as an expert and testified.

(l) The wife’s evidence is that she obtained a $3,000,000 appraisal of the farm in December 2021 for the family law case.⁴⁹

(m) On May 2, 2022, the husband brought a motion to join Mulberry as a party. The wife was provided with a copy of the proposed amended pleading. She knew (as did Aeden) that the husband wanted the farm sold.

(n) In short order, the wife obtained an appraisal of the property in late May 2022 for $2,000,000 from the CIBC and undertook all the legwork necessary to ensure that Aeden could purchase the farm. Aeden went to the CIBC to obtain mortgage approval, which was given. She and her mother agreed that if Aeden proceeded with the purchase that she would not have to pay either of the 2017 mortgages until the CIBC mortgage was paid off. Aeden testified in September 2023 that she had made no payments on either mortgage to her mother or to FTS.

(o) Aeden offered to purchase the farm on May 27, 2022, for $2,000,000. This was later adjusted to $2,650,000 based on the median of values contained in a further appraisal obtained by the wife. The transaction was completed on June 24, 2022, before the husband’s motion was heard.

(p) The purchase was funded by a $1,300,000 mortgage in favour of the CIBC, the assumption of a $198,000 mortgage to FTS (also secured by a promissory note) and the assumption of the $1,121,733 mortgage in favour of the wife for which two promissory notes were given. The aggregate amount of the consideration was insufficient to pay all the interest (calculated at 14% annually) that the wife says was owed to her pursuant to the February 2017 mortgage. She received about $728,624.65 on completion of the sale. The husband received no benefit as a shareholder from the sale. The company was left a shell.

(q) On August 8, 2022, Daurio J. heard the husband’s joinder motion and granted it. The court was not informed that the property had been sold to Aeden six weeks earlier or that there was no equity in Mulberry.

(r) The husband started his civil action on October 17, 2022.

(s) The husband became aware of the sale of the Mulberry property on September 2, 2022, when he received the Answer of the wife and Mulberry in the matrimonial proceeding.

(t) An expert called by the husband (Kim Passmore) testified that the fair market value of the farm on June 24, 2022, was $3,680,000.

80Three issues arise with respect to the foregoing. The first is the value of the company on the valuation date and on the date when the farm was sold to Aeden. The second is whether all or any part of the claims made involving oppression and fraud are statute-barred pursuant to the Limitations Act, 2002. Depending on the determination of the second issue it may be necessary to deal with the oppression and fraudulent conveyance claims and determine the appropriate remedy.

Value of Mulberry on the valuation date and in May/June 2022

81The evidence of two witnesses, whose expertise the parties accepted and who were qualified as experts by the court, testified about the value of Mulberry on the valuation date. Mr. Rober gave evidence that the fair market value (FMV) of the farmland and building was $2,200,000 on the valuation date. This value was accepted by Steven Polisuk, an accredited business valuator whom the husband called as a witness. Mr. Polisuk prepared an Estimate Valuation Report and concluded that the FMV of the company was $914,000 (net) on the valuation date. In arriving at that value, he identified as liabilities a bank debt of $289,422 and $873,232 due to directors. The wife was the only director.

82The wife submitted that the value of Mulberry was $694,940 on the valuation date, suggesting that the value of each party’s interest was $347,024.50. Based on Mr. Polisuk’s valuation, that value would be $457,000 per shareholder. But both parties agreed that, regardless of the company’s value, there would be no impact on the determination of the equalization payment because they were equal shareholders. The husband’s qualification/position is that whatever value should be attributed to either party’s interest depends on the outcome of his oppression and fraudulent conveyance claims.

83Mr. Polisuk also gave evidence with respect to the value of the company as of May 31, 2022, three weeks before the farm was sold to Aeden. He prepared a Calculation Valuation Report. He prepared two scenarios. The first calculated that the FMV of the company was $2,215,000; this included an amount due to shareholders of $729,934. Scenario II excluded the amount due to shareholders and calculated $2,945,000 as the FMV of Mulberry. The parties’ evidence is that the husband never advanced any funds to the company.

84In valuing the company, Mr. Polisuk relied on an appraisal prepared by Kim Passmore. She is an accredited appraiser, much of whose practice involves valuing rural properties, including horse farms. The parties accepted her qualifications, as did the court. Ms. Passmore testified that of the three accepted valuation methodologies (cost approach, income approach and direct comparison approach), she applied the last approach because it “is based on the principle of substitution. The premise is that the property price tends to be set by the price that would be paid for a property with desirability and utility” and that “the subject property had a good set of comparable properties.” She valued the farm at $3,680,000 on June 24, 2022. Ms. Passmore’s choice of valuation methodology was not challenged in cross-examination. She was questioned about her use of comparable properties and testified that she adjusted her opinion according to the differences noted between those properties and the farm. She adopted a best practice of using sales which predated June 24, 2022. She also testified that the value of the property had declined by November 2022 to $3,335,000 due to an increase in interest rates and inflation since February 2022.

85In my view, Ms. Passmore was a credible witness. She answered questions clearly and without equivocation. Her evidence was unshaken in cross-examination. I accept that the FMV of the farm on June 24, 2022, was $3,680,000.

86In his valuation, Mr. Polisuk identified as Mulberry’s largest liabilities a bank debt of $496,425 and $729,034 due to shareholders. As already noted, the wife testified that she received about $700,000 on completion of the sale to Aeden. She testified that she used these funds to pay “accounting, legals, taxes, particularly capital gains.” It is not an unreasonable inference that she used the sale proceeds to repay herself.

87Excluding the amount due to shareholders, the value of the company as of June 24, 2022, was $2,215,000. Each party’s presumptive interest in the company was worth $1,107,500.

Limitations Act, 2002

88The husband’s position with respect to Mulberry is, in essence, that the value of the company’s debt and the amounts due to the director/shareholders as reflected by mortgage in favour of the wife should be disregarded as being the product of fraud or oppressive conduct or, if not, included as an asset in calculating the wife’s net family property. More broadly he asserts that since the farm was purchased in 1997, the wife embarked on a course of fraud over the next two decades, assisted by Simpson, with the object of enriching herself at his expense. The wife denies these allegations and contends that any claim relating to fraud or oppression impacting any value to be attributed to Mulberry is statute barred and, in any event, the principal amount of her impugned mortgage of $1,121773 (principal and accrued interest) is already included in her net family property.

89Sections 4 and 5 of the Limitations Act, 2002 (the Limitation Act) provide as follows:

Basic limitation period

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. 2002, c. 24, Sched. B, s. 4.

Discovery

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a). 2002, c. 24, Sched. B, s. 5 (1).

90A two-year limitation period applies to fraudulent conveyance claims.⁵⁰

91The wife submits that the husband knew about the 1997 transfer of the farm to Mulberry when that occurred and, later, that mortgages had been registered on title to the farm in September 2017 soon after her August 31, 2017, financial statement in the family case was served. She disclosed that she was owed $1,121,000 by Mulberry pursuant to a mortgage (at 5% interest).⁵¹ She also disclosed that FTS had loaned $185,000 for improvements on the farm. This disclosure was repeated in her later financial statements.

92In a second trust litigation action, the husband delivered an affidavit sworn on September 7, 2018. The affidavit had several introductory titles to the paragraphs which followed. Under the title “Rae Misappropriates My Property” paragraph 29 said this:

In or about 1997, we purchased the adjacent 46 acre farm (the "Farm"). Thereafter we transferred ownership of the Farm to Mulberry Hills Realty Inc. ("Mulberry Hills"). It is my understanding that Rae and I are equal shareholders of Mulberry Hills, however Rae is the sole officer and director.

93Paragraph 32 stated:

I just recently learned, however, that:

(a) On July 24, 2015, Rae borrowed $500,000 from CIBC secured by a mortgage on the Farm bearing interest at prime plus five percent;

(b) On February 8, 2017, Rae registered a mortgage against the Farm on her behalf for $1,121,773 as a demand loan; and

(c) On September 25, 2017, Rae registered a mortgage against the Farm on behalf of Forever Thyme Sanctuary for $185,000 as a demand loan bearing interest at 5 percent.

94Exhibit 6 to the affidavit was the 1997 transfer of the farm to Mulberry. Exhibit 7 confirmed the registration of that transfer and the mortgages (and discharged mortgages) registered on title to that date.

95The wife was questioned in the family action on January 22, 2019. She was specifically asked about the three mortgages registered on the farm (CIBC, the wife, and FTS).

96In asserting that his claims in the civil action are not statute-barred, the husband submits that: (1) relying on s. 5 (1)(a)(iv) of the Limitation Act, he did not discover that an action (“a proceeding”) would be an appropriate remedy until either his family lawyers brought that to his attention in March 2022 (the impugned mortgages) or February 21, 2023, after the wife’s discovery in the civil action (the wife signing his name to the 1997 transfer of the farm to Mulberry, for example) or May 15, 2023 (an explanation embedded in the wife’s trial NFP statement) and; (2) relying on s. 5(1)(b) of the Limitation Act, it would be unreasonable, given his abilities and circumstances, that he should have known about his claims.

97The wife and Aeden submit that the husband cannot rebut the presumption in s. 5(2) of the Limitation Act that he knew about the 1997 transfer around the time it took place (“verbally”) and about the mortgages, if not when he swore his September 7, 2018, affidavit then, at the very latest, when he attended the wife’s January 2019 questioning.

98In Sosnowski v. MacEwen Petroleum Inc.⁵², a case upon which the husband relies with respect to s. 5(1)(a)(iv), the Court of Appeal interpreted that provision in a case where the appellant had brought an action for wrongful dismissal six years after he had been dismissed from his employment for cause. He had been charged with theft and fraud involving his former employer in July 2010 about seven months after he had been dismissed. He was found guilty in 2011 but he was acquitted on appeal in late 2014, five years after his dismissal. The issue for the court was whether the appellant knew before the completion of the criminal proceedings that bringing a proceeding was an appropriate means of seeking redress.

99The court distilled the relevant principles to be applied:

16First, the determination of whether a proceeding is an appropriate means to seek to remedy an injury, loss, or damage depends upon the specific factual and/or statutory setting of each case. [Citation omitted].

17Second, this court has observed that two circumstances most often delay the date on which a claim is discovered under this subsection. The first is when the plaintiff relied on the defendant’s superior knowledge and expertise, especially where the defendant took steps to ameliorate the loss. The other situation is where an alternative dispute resolution process offers an adequate remedy, and it has not been completed [Citation omitted].

18Third, Sharpe J.A. in Markel Insurance Company of Canada v. ING Insurance Company of Canada, 2012 ONCA 218, 109 O.R. (3d) 652, at para. 34, provided the following guidance concerning the meaning of the term “appropriate”:

This brings me to the question of when it would be “appropriate” to bring a proceeding within the meaning of s. 5(1)(a)(iv) of the Limitations Act. Here as well, I fully accept that parties should be discouraged from rushing to litigation or arbitration and encouraged to discuss and negotiate claims. In my view, when s. 5(1)(a)(iv) states that a claim is “discovered” only when “having a regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it,” the word “appropriate” must mean legally appropriate. To give “appropriate” an evaluative gloss allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess the tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions. [Emphasis in original.]

19In other words, appropriate means whether it is legally appropriate to bring an action. Appropriate does not include an evaluation of whether a civil proceeding will succeed.

100The husband submitted that he did not discover that the wife had “forged” his signature to the 1997 Mulberry transfer until her discovery on February 21, 2023, at which he attended. This is not credible. A copy of the impugned transfer was attached as an exhibit to his September 2018 trust litigation affidavit. He also acknowledged at trial the wife and Simpson had told him “verbally” about the transfer “probably” in 1997. There was no evidence that the parties’ relationship in 1997 was troubled.

101With respect to the claims with the mortgages involving the CIBC, the wife and FTS, about which the wife was questioned in January 2019, the husband alleged in the same September 2018 affidavit (as noted above) that the wife had misappropriated his property, but it was not until 2022, “…my lawyers discovered that they [i.e., the mortgages] were fraudulent.”

102The fact is that the husband had sufficient information no later than January 2019 to determine whether he had claims involving injury, loss, or damage before he sought amendments to his pleadings in May 2022 (oppression) and later that year when he started his civil action (fraud and oppression). Whatever his lawyers knew then to have had him advance allegations of misappropriation is deemed to be his knowledge.⁵³ As observed in Longo v. MacLaren Art Centre⁵⁴, a litigant is required to act with due diligence in determining if they have a claim. In my view the husband’s claims involving oppression and fraud arising from circumstances before May 2, 2022, are statute-barred unless he can satisfy the “reasonable person” test in s. 5(1)(b).

103In Service Mold + Aerospace Inc. v. Khalaf⁵⁵, the Court of Appeal applied what it described was a “modified objective test” for interpreting s. 5(1)(b) which involves inquiring what a reasonable person ought to have known but imbuing that hypothetical reasonable person with the subjective abilities and circumstances of the person with the claim. Considering the person’s life circumstances and the nature of the “injury, loss or damage” did the person act with reasonable levels of prudence and attention? Applying that test to the facts of this case, would a reasonable person have examined the 1997 Mulberry transfer to “discover” that a signature purporting to be theirs was not in fact signed by them, claim misappropriation and then do nothing for four years? Or would a reasonable person alleging misappropriation of their property in 2018 referable to the three mortgages not diligently pursue a recovery claim of some kind?

104The husband submitted that given his age (78 years old by the time of trial), “frailties, memory, attention issues and cognitive decline” he was prone to being manipulated, scattered and easily confused. That was not my impression at trial. Often, he provided inconsistent evidence when his narrative of recently discovered evidence about oppression and fraud did not fit the documentary record. Or deflected responsibility about inconsistencies between his affidavit evidence and trial testimony to others. There was no medical evidence of cognitive decline. Considering too the explanation that delay was the result of inadequate or refused disclosure there was no evidence of a disclosure motion before May 2022 and no evidence that a tolling agreement had been signed or even discussed at any time after the September 2018 affidavit or the wife’s January 2019 questioning. In my view, the husband did not act reasonably. As noted in Service Mold “[i]f the hypothetical person is imbued with unreasonable imprudence or inattention the objective component of the test is defeated, and only one result can obtain.”⁵⁶

105The husband has not rebutted the presumption in s. 5(2). His claims involving oppression and fraud before May 2022 are dismissed. But this does not mean that those claims involving events after that date cannot proceed or that a remedy cannot be ordered.

Oppression

106In the family action (but also referenced in his submissions in the civil action) the husband claimed that the wife (through Mulberry) acted in a manner oppressive or unfairly prejudicial to or that unfairly disregarded his interests as a shareholder. He relies on the provisions of Part IX (Directors and Officers) and Part XVII (Penalties, Offences and Remedies) of the Ontario Business Corporations Act⁵⁷ (OBCA). The wife and Mulberry reject the claim. There is no issue that the wife was the sole director and officer of Mulberry at all material times and that she and the husband each owned 50 shares in the company.

107Section 245 of the OBCA provides as follow:

In this Part,

“complainant” means,

(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates,

108As the holder of 50 shares in Mulberry, the husband fits the definition of a complainant.

109Sections 248(1) and (2) of the OBCA set out the parameters of the oppression offence:

(1) A complainant and, in the case of an offering corporation, the Commission may apply to the court for an order under this section.

(2) Where, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates,

(a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result;

(b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or

(c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner,

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of.

110Where a court is satisfied that the conduct of the affairs of a corporation falls within any of the s. 248(2) offences, it is empowered to order a remedy pursuant to s. 248(3).

(3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing,

(a) an order restraining the conduct complained of;

(b) an order appointing a receiver or receiver-manager;

(c) an order to regulate a corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholder agreement;

(d) an order directing an issue or exchange of securities;

(e) an order appointing directors in place of or in addition to all or any of the directors then in office;

(f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder;

(g) an order directing a corporation, subject to subsection (6), or any other person, to pay to a security holder any part of the money paid by the security holder for securities;

(h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract;

(i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financial statements in the form required by section 154 or an accounting in such other form as the court may determine;

(j) an order compensating an aggrieved person;

(k) an order directing rectification of the registers or other records of a corporation under section 250;

(l) an order winding up the corporation under section 207;

(m) an order directing an investigation under Part XIII be made; and

(n) an order requiring the trial of any issue.

111In his pleading the husband particularized the impugned conduct of the wife and Mulberry (which he identifies as MHRI), among other allegations, as follows:

Rae has carried on the affairs of MHRI in a manner that unfairly disregards to the interests of Vito as a shareholder, in that:

a. Rae has orchestrated a situation to diminish Vito’s interest in MHRI by removing equity through mortgaging 14787 in favour of herself and Forever Thyme Sanctuary, which is solely controlled by Rae.

b. Rae has demonstrated no regard or respect for the financial interests of Vito and operates MHRI to her advantage and to the disadvantage of Vito;

c. Rae has usurped value for herself that properly belongs to MHRI in complete disregard of Vito’s interest as a shareholder;

d. Rae has charged personal expenses to MHRI to the detriment of the corporation and Vito;

e. Rae has unlawfully failed to hold annual shareholder meetings without seeking the required corporate resolutions from Vito to waive such meetings;

f. Rae has unlawfully failed to produce audited financial statements to Vito, despite him not consenting to any exemption of this requirement;

g. Rae has rented the property owned by MHRI to a non-arms’ length party (her horse sanctuary) at below market value;

h. Despite their separation, Rae has failed to institute any procedural protocols or agreements that would institute a modicum of fairness to Vito;

i. Rae has unfairly disregarded her duties as a director to act in the best interests of MHRI and its shareholders; and

j. Rae has disregarded her fiduciary duties to MHRI and Vito.

These acts, individually and cumulatively, have breached Vito’s reasonable expectations as a shareholder. There was no reasonable expectation for Vito to remain a shareholder in MHRI, wholly controlled and operated by Rae for Rae’s exclusive benefit following the breakdown of their relationship.

112While many of the husband’s complaints about the wife’s conduct of Mulberry’s affairs precede May 2022, the singular facts of this case after that date warrant a finding of oppression pursuant to all the subsections of s. 248(2) of the OBCA. The evidence underpinning this finding cannot be understood without some background context (a repetition of some of the evidence noted already is unavoidable):

(a) The farm was purchased in the joint names of the parties for $365,000 cash, presumably using funds from a joint bank account. Whether all the funds were provided by the husband is not relevant. Section 14 of the Act applies to realty acquired jointly and monies on deposit in a joint bank account: the husband never made any effort to displace the presumption that he (and the wife) intended to own the farm as joint tenants.

(b) A $400,000 promissory note in favour of the parties was given by Mulberry as consideration for the farm transfer. The undisputed evidence is that the parties hoped to develop the property and that, after that was not possible, they used it for their personal enjoyment and other uses as it was adjacent to their home property. The husband trusted the wife in the management of their financial affairs. There was no evidence that the parties’ relationship was other than happy.

(c) In 2003, the wife loaned her sister and her sister’s husband $140,000. The loan document indicates that the loan was being made by the wife and the husband and would be repayable to them. The wife, her sister and the sister’s husband signed the document. Although there was a line for the husband’s signature, he did not sign it. The loan was subsequently increased by another $360,000 to $500,000. I will accept that the money for the loan came from the parties’ joint funds.

(d) The wife submits that whatever claim either party “might have had” against the company relating to the note expired on August 12, 2003, because of a limitation period under a former Limitations Act.⁵⁸

(e) On January 15, 2011, the loans made to the wife’s sister and the sister’s husband were assigned to the wife. The assignment was allegedly signed by the husband; it was witnessed. The husband disputes that the signature on the assignment was his.

(f) After the wife decided to build a horse sanctuary in 2012, she assured the husband that he would not be required to financially contribute. In my view, he had a reasonable expectation that whatever the wife chose to do with the property that would not financially disadvantage him.

(g) There is no dispute that the husband contributed sweat equity to the farm construction for which he was never financially compensated, although he did present an invoice that the wife refused to pay. She disputed the extent and value of his contributions.

(h) Between 2013 and 2015 the wife advanced funds totalling $592,025.33 to Mulberry. It is entirely likely that she could have advanced more but her evidence was unreliable in that regard. She used a line of credit and paid for expenses and serviced the line from several sources including her monthly Simpson note distributions. She also obtained mortgage funds from a bank (2013). The husband was never informed about the mortgage.

(i) On March 31, 2015, the wife deposited $600,000 into a personal account. The funds came from the repayment of the loan made to her sister and repaid the wife’s line of credit. A new mortgage from Mulberry in favour of the CIBC for $500,000 was registered. The husband was intentionally not informed about this. The wife testified that she didn’t consult him because “I was not required to.”

(j) On February 8, 2017, a $1,121,773 mortgage was given by Mulberry to the wife. She registered this when she realized that “I needed to protect my charity and my investments because Vito’s threatening, because of Vito’s threats.”

(k) The mortgage principal represented funds advanced by the wife with interest accruing from 2013 at 14%. The wife testified that the rate “was not retaliatory. It was more a humorous gesture…” and that she never expected “any real interest to be paid back over the next 20 years.”

(l) A copy of the mortgage was not filed in evidence, but the wife’s first two financial statements sworn August 30, 2017, and August 15, 2018, refer not to a mortgage but to a Shareholder Loan from Mulberry and “Interest @5% compound interest since 2013”. Her financial statements sworn on June 20, 2020, and October 8, 2021, disclosed no interest rate but stated that the mortgage value did “not include any further interest post separation”. Her financial statements sworn on October 21, 2022, and May 9, 2023, referenced the Shareholder Loan and noted that the loan had been assumed by Aeden when she purchased the farm.

(m) On September 25, 2017, a $185,000 mortgage was granted to FTS. According to the wife, this secured funds that would have been advanced to FTS between 2012 and 2013. Aeden assumed this loan too in 2022.

(n) After the farm was sold to Aeden, the wife received about $78,624.65 from the proceeds of sale.

113The wife admitted that she was familiar with the duties expected of a director pursuant to the OBCA, that she had a fiduciary duty to act in the best interests of the company, she had an obligation to discharge her duties in good faith and she understood her obligation to avoid conflicts of interest. She acknowledged that she intentionally did not disclose to the husband how the farm construction was being funded, she never told him about any of the mortgages given by Mulberry, she never told him, or disclosed to the court when the issue of the farm and the parties’ interests in it were before Daurio J., that she had arranged for the sale of, and actually had already sold the, farm, a transaction which involved the assumption of her mortgage by Aeden and her receipt of $728,624.65

114Put another way, the wife was repaid $728,624.65 from the sale of the farm and has a $1,121,773 mortgage with interest secured on title. Mulberry was left a shell. The wife’s position is that there is no current value to the parties’ interests in Mulberry. There is nothing to distribute to the husband.

115In BCE Inc, v. 1976 Debentures⁵⁹, the Supreme Court of Canada identified two related inquiries in a claim for oppression: (1) Does the evidence support the reasonable expectation asserted by the claimant? and (2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest.”⁶⁰ The issue before the court related to a leveraged buyout by BCE the effect of which would diminish the trading value of debentures held by financial institutions who opposed the buyout.

116The court observed that the first inquiry was fact-specific, that exhaustively cataloguing every situation in which a reasonable expectation might arise would be impossible⁶¹ and that useful factors for determining whether a reasonable expectation existed included:

(a) The size, nature and structure of the corporation. Greater latitude might be given to the directors of small, closely held companies to deviate from the stricter formalities expected of larger, public companies.

(b) Personal relationships between the shareholders. Different standards, not simply legal rights, might apply based on ties of family than relationships between arm’s length shareholders.

(c) Preventive steps. Could the claimant have taken steps to protect themselves against the prejudice they claimed to have suffered?

(d) Representations and agreements. What representations were made?⁶²

117The court observed that:

84There is no principle that one set of interests – for example the interests of shareholders – should prevail over another set of interests. Everything depends on the particular situation faced by the directors and whether, having regard to that situation, they exercised business judgment in a responsible way.⁶³

118The husband principally relies on two cases, both of which the wife submits are distinguishable.

119In Alexander v. DHA Holdings Inc. et al.⁶⁴, a daughter applied to set aside a debt conversion and share implementation plan by her mother involving a family-owned company of which there were only two shareholders. Until the plan was implemented, dividends were annually distributed by DHA to the shareholders; after the plan was implemented all the distributions were redirected to the mother. Penny J. observed that “The oppression remedy is intended to provide a broad and flexible form of relief, and courts consequently take a broad and flexible approach to its application.”⁶⁵ The two-stage inquiry in BCE Inc. was applied. Penny J. found that the daughter had a reasonable expectation that her mother breached:

41I also find, as discussed above, that Denise had a reasonable expectation that the director and officer of DHA (including Sheila after Keith died) would conduct the affairs of DHA in accordance with the statutory and common law duties required of them. In this case, the relevant duty is the requirement to act in the best interests of DHA. DHA is a small, closely held family company, with no employees or active business, whose role is essentially a holding company. This is all the more so now that the Bowes property has been sold. Now, it is simply a question of DHA’s management of the resulting wealth. In the circumstances of this case, it was not only legitimate for Sheila to consider the interests of all shareholders (i.e., including Denise), it was an absolute necessity. Whatever theoretical distinctions may be made between the interests of a corporation and its shareholders, in this case, with only two shareholders, no employees and only one asset (originally the shares in Bowes Limited, now the Alexander share of the proceeds of sale) involving no active business, Sheila was clearly required to consider the best interests of all shareholders; that is, of Denise as well as herself. However, Sheila gave no consideration to Denise’s interests in bringing about the Debt Conversion and terminating all monthly payments to Denise.

42I find that Sheila’s conduct breached Denise’s reasonable expectation that Sheila would act in the best interests of DHA. The Debt Conversion was explicitly done for Sheila’s exclusive benefit with the intention of diverting all of DHA’s revenue entitlements to her alone. The result – cutting Denise off from the income stream that she had been receiving for almost 20 years – was a breach of Sheila’s duty to act with a view to the best interests, not only of Sheila, but of Denise as well. That breach was a violation of Denise’s reasonable expectation.

120In my view, the husband reasonably expected when the parties’ joint funds were used to purchase the farm that the wife would act in their best interests. That was the history of the parties’ financial relationship as evidenced by their building the home and cottage together (among other things) and the husband’s leaving to the wife management of their financial affairs. The parties hoped to develop a residential subdivision. The wife signed the husband’s signature to the transfer of the property to Mulberry and did so after obtaining legal advice involving the $400,000 promissory note in the parties’ favour as consideration for the transfer and to minimize their potential capital gains exposure upon any disposition. She acted in the parties’ best interests; he trusted her, a fact she acknowledged. Given this family history and the wife’s handling of its affairs with the assistance of professional advisers (i.e., accountants, lawyers, and wealth advisers), the husband cannot be faulted in my view with failing to take preventive steps; it was reasonable for him to accept the wife’s assurance that her constructing a horse sanctuary wouldn’t cost him anything. It was reasonable for the husband to expect that having been the primary contributor to the purchase of the property that he would retain equity in it, rather than being a shareholder in a company that was left a shell, virtually insolvent, by the wife’s management of its affairs to his financial, but not her, prejudice.

121But was the wife’s conduct oppressive, unfairly prejudicial or did it unfairly disregard the husband’s interests? In words echoing an outcome in DHA not unlike this case, Penny J. concluded that the mother’s conduct was oppressive:

51Not every breach of an expectation, however reasonable, necessarily qualifies as oppression. Nevertheless, on the evidence, I have no hesitation in concluding that Sheila’s conduct, in purporting to arrogate to herself alone the entire benefit of the Alexander half-ownership in Bowes Limited and purporting to cut Denise off from all benefits derived from this ownership, was burdensome, harsh and wrongful and a visible departure from standards of fair dealing, given Sheila’s role as both a Class B shareholder with voting control and as the sole officer and director of DHA. Further, Sheila’s conduct unquestionably had unfair consequences for Denise, as set out above. And, Sheila’s actions ignored Denise’s legitimate interest and treated Denise’s interest as being of no importance.

52Thus, I find Denise has established that the impugned corporate actions of DHA (that is, the Debt Conversion and terminating all payments to Denise), brought about by Sheila as sole office [sic] and director of DHA and by virtue of her voting control, fell within the definition of oppression under s. 248(2) of the OBCA.

122The wife agreed that while Penny J.’s analysis of the applicable law was relevant, the outcome in that case turned on the disruption in the daughter’s reasonable expectation that she would continue to receive corporate distributions, a factor not present in this case. That is, in my view, a distinction without a difference. The fact is that the husband had a reasonable expectation that the wife would not (to use an excerpt from DHA) “arrogate to herself alone the entire benefit” of Mulberry’s only asset, the farm.

123The husband also relies on Mastromattei v. Mastromattei et al.⁶⁶another oppression case involving two brothers (Enzo and Jack) who were equal shareholders in a privately owned company (MJL) engaged in the restaurant business. One of the brothers (Jack) arranged to have MJL’s most valuable asset, a lease, purchased for $847,500 and deposited into the company’s account then transferred without Enzo’s knowledge into his (Jack’s) account from which a number of debts were paid, including a fabricated $300,000 payment to Jack’s wife. While there was a Unanimous Shareholder’s Agreement (USA) and both brothers were directors and officers of MJL (which the wife submits distinguishes that case from the facts in this case), James J. held that directors had a legal obligation “to ensure that they did not put their personal interests ahead of the corporation.”⁶⁷ While the existence of a USA may impact the issue of reasonable expectation leading to a finding of oppression, Enzo was found entitled as a shareholder to be treated fairly and equally. The wife’s submission in this case that the proceeds of the farm’s sale have been fully accounted for disingenuously avoids the inconvenient fact that only she received anything from the sale. Prejudice to Enzo is what led James J. to find “oppression.”

38I find that Enzo’s reasonable expectations were breached but does the breach amount to oppression? In my view, the answer is unequivocally yes. They were the only two shareholders and directors, so they were in a close relationship. They owed duties to each other and the corporation. The diversion of funds by Jack was detrimental not only to the corporation, but to Enzo as well. The RioCan transaction created a significant tax liability which, if unpaid, would affect the directors. Enzo was entitled to share in the net profits, if any, of the transaction by way of dividends. Enzo was not only entitled but also obligated as a director to participate in the corporate decision-making. Jack’s action had a direct and significant detrimental effect on Enzo’s interests that amounted to “oppression” within the meaning of the Act.

39While it may be that the RioCan transaction was in the best interests of MJL, the manner in which it was implemented negatively affected the interests of both the corporation and Enzo as the only other director and shareholder.

124In light of all the circumstances, I find that the husband has established that the wife’s actions after May 2022 involving the sale of the farm amounted to oppressive conduct within the meaning of s. 248(2) of the OBCA, they were unfairly prejudicial to him and entitle him to an appropriate remedy.

Remedy

125Section 248(3) of the OBCA lists a non-exhaustive range of orders available to the court where oppression has been found, the only one relevant to the circumstances of this case being subsection (j) “an order compensating an aggrieved person.” The caselaw is clear that the compensation order must be fit, in other words appropriate to the case. The husband is an aggrieved person. He has asked for orders which, among other relief sought, include a tracing of all funds received by the wife and $250,000 for punitive, exemplary and aggravated damages.

126A review of the caselaw on oppression compensation provides some assistance in framing the guardrails to the exercise of the court’s discretion. In Naneff v. Con-Crete Holdings Limited.⁶⁸, a case involving a falling out between the founder of a family company and one of his two sons, a shareholder, the Court of Appeal observed that any remedy under s.248(3) had to be “fashioned so that it was just, having regard to the considerations of a personal character”⁶⁹ existing between the father and his sons:

22The provisions of s. 248(3) give the court a very broad discretion in the manner in which it can fashion a remedy. Broad as that discretion is, however, it can only be exercised for a very specific purpose; that is, to rectify the oppression. This qualification is found in the wording of s. 248(2) which gives the court the power, if it finds oppression or certain other unfair conduct, to "make an order to rectify the matters complained of". Therefore, the result of the exercise of the discretion contained in s. 248(3) must be the rectification of the oppressive conduct. If it has some other result the remedy would be one which is not authorized by law. I agree with the opinion expressed by Professor J.G. MacIntosh in his paper "The Retrospectivity of the Oppression Remedy" (1987-88), 13 Can. Bus. L.J. 219 at p. 225:

The private law character of the enactment strengthens the argument, for in seeking to redress equity between private parties the provision does not seek to punish but to apply a measure of corrective justice.

127The Court of Appeal adverted to the financial contributions made by the father to the business and compared, or balanced, that with the significantly more limited financial contributions made by the son. The court ordered that the son be paid the fair market value of his shares and that since the son’s dismissal from the family business was part of an overall pattern of oppression, the trial judge’s $200,000 award for compensation was upheld.

128In El-Hawary v. Tam⁷⁰ the applicant had obtained a judgment against a pharmacy in which she was a shareholder and separately against its principal owner (Tam) awarding her compensation for wrongful dismissal. The termination of the applicant’s employment and the sale of the pharmacy coincided on the same day. When the applicant sought to enforce her judgment, she discovered that the pharmacy’s net proceeds of sale had been paid out to Tam.⁷¹ She brought a motion for summary judgment and succeeded. The court ordered that the respondents (Tam and other companies he owned) pay the applicant the outstanding amounts owing under her earlier lawsuit.

129In Fiorillo v. Krispy Kreme Doughnuts, Inc. et al⁷², a punitive damage award was one of several heads of relief sought against a shareholder (Alofs) who the court found had lied to the other two shareholders about a share placement and had acted deceitfully and oppressively. The plaintiff was awarded $439,243.20 for deceit and a judgment in that amount under s. 248 of the OBCA. Punitive damages were not awarded. Newbould J. explained why:

171In Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, [2002] S.C.J. No. 19, at para. 36, Binnie J. stated the test for punitive damages as follows:

Punitive damages are awarded against a defendant in exceptional cases for "malicious, oppressive and high-handed" misconduct that "offends the court's sense of decency": Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, at para. 196. The test thus limits the award to misconduct that represents a marked departure from ordinary standards of decent behaviour. Because their objective is to punish the defendant rather than compensate a plaintiff (whose just compensation will already have been assessed), punitive damages straddle the frontier between civil law (compensation) and criminal law (punishment).

172Binnie J. also stated the primary vehicle of punishment is through the criminal law (and regulatory offences) and that punitive damages should be resorted to only in exceptional cases and with restraint.

173Although Mr. Alofs was deceitful, I do not think this is a case for punitive damages. He should never have started his lie, and had he not, this case undoubtedly would not have been brought. However, once he signed his letter accepting the terms offered by Kremeko, which included a requirement that he keep the sale confidential, he was bound by it not to disclose the sale of his shares. He still should not have lied, but I am prepared to accept that he felt bound by the non-disclosure agreement. His actions were not so malicious, oppressive or high-handed to justify a punitive damage award in this case.

130In considering the compensation to be awarded the husband in this case, the following facts are relevant:

(a) The $365,000 paid for the farm in 1997 came from a joint bank account of the parties and the money on deposit for the most part, if not all, came from the husband. The amount of the $400,000 promissory note given as consideration for the transfer included an amount for possible capital gains on disposition.

(b) The wife used the parties’ money to loan her sister and her husband and, regardless of the parties’ positions about the 2011 loan assignment, the $600,000 received by the wife in April 2015 was used to repay her for what she had spent on the farm’s development and its operations.

(d) The wife was paid $728,624.65 when Mulberry sold the farm to Aeden. Her earlier mortgage of $1,121,773 with Mulberry was assumed by Aeden, although no interest on it had been paid for years (regardless of whether it was accruing at 5% or 14% a year).

(e) The wife was determined to ensure that the farm was not sold, which is what the husband wanted. She engineered the sale to Aeden in circumstances redolent of at least six of the ten commonly recognized badges of fraud (i.e., continuing to use the farm as her own; secretive transfer; hasty transfer; transfer made in the face of threatened legal proceedings; retention of some benefit; the conveyance defeated the husband’s ability or right to realize on what he had contributed to the farm when it was purchased and later financed with repayment of the sister’s loan.)⁷³

131In Fiorillo, Newbould J. declined to award punitive damages because he found that while Alofs had lied, he accepted that Alofs felt bound by a nondisclosure agreement. This case is different though; it involves the court. The wife’s failure to disclose the sale of Mulberry’s only asset between the time that the husband started his joinder motion and when it was heard and, most importantly, her failure to bring this information to the court’s attention when the matter was being heard, was unacceptable and is deserving of sanction. The wife was not candid with the court.

132In my view, the husband is entitled to $1,000,000 of which $950,000 represents an award for oppression and $50,000 represents punitive damages. This award considers the $700,000 (at least) that the wife received from the sale of the farm and discounts the value of her mortgage. This shall be a post-equalization payment adjustment.

133In light of my finding on the husband’s oppression claim, it is not necessary to deal with his fraudulent conveyance claims involving the wife and the other respondents in the civil action. Even so, it is my view that the 1997 transfer of the farm to Mulberry was not fraudulent. The mortgages in favour of the wife and FTS were not fraudulent; the wife had the authority to enter into them. The wife concealing from Daurio J. in August 2022 that Mulberry had already completed the sale of the farm to Aeden is deserving of sanction as reflected in the punitive damages award but (however reprehensible) I am not prepared to determine whether there was fraud.

Shareholder loan payable to the husband on the valuation date

134The husband claims that VII owed him $3,287,874 on the valuation date; the wife claims that $5,382,874 was owed. She points out that the loan should not be confused with the roughly equal IFT debt of $3,202,210 that the husband also claims as a deduction on the valuation date (see IFT Debt below).

135VII’s 2014 to 2018 financial statements recorded $5,382,874 as “Advances from shareholder”; the company’s General Ledger (GL) divided this figure into $3,287,874 as reflecting advances from the husband and $2,095,000 owing from the IFT, which was not a shareholder of VII.⁷⁴ Mr. Rudson relied on the accountant Potter’s advice that the two amounts were grouped together “for presentation purposes.”

136The wife maintains that her figure should be preferred because she contends that is the more reliable document upon which third parties such as banks, other lending institutions and Canada Revenue Agency would typically rely. Lost, though, in this aspect of the parties’ dispute are two considerations. The first is that Mr. Rudson was retained to value the husband’s “business interests” which definition (his) included the husband’s ownership interest in and loans owing to/from several entities (imprecisely described as “companies” even though the IFT was not a company) as outlined in Figure 1 (see para. 73 above). He expressed an opinion on the value of the husband’s business interests (not including the IFT) and another about the IFT. No effort was made to value the parties’ beneficial interests in the IFT (or those of the other beneficiaries). The second consideration flows from the first; neither party included a value for the IFT as part of their case. The parties agreed as some point after Mr. Rudson delivered his reports to leave the valuation of the IFT to the parallel legal proceedings involving the IFT, which the court understands involves a passing of accounts and should include the parties’ dealings with respect to their several disputes about distributions from, and the management of, the IFT (see Family Distributions #1 to #3 below). Whatever the accountant meant by combining the advances from the husband with the amount due from the IFT was never made clear but can only be reconciled if the husband had a 100% beneficial interest in the trust capital, which is not the case.

137Without determining whether the husband was owed more than the $3,287,874 as recorded in VII’s GL, I accept that amount as owing to him on the valuation date and leave the balance disputed by the wife ($2,095,000) to be determined as part of the trust litigation.

Loan Assignment

138It is unnecessary to deal with the issues whether the husband signed the note, or the wife signed it with, or without (and hence allegedly forged), his signature because the husband’s share in the value of the loan is captured in the court’s disposition of the husband’s oppression claim.

Latitude Foundation claim

139The Latitude Foundation was a charity that was recommended as a tax planning/tax deduction strategy to the husband and his brother and to which they and others (the Ierullo Group) donated $19,945,000 between 2003 and 2010.⁷⁵ A law firm (Aird & Berlis LLP) provided legal and tax planning advice to the group and one or more of its members. In or about 2012, Canada Revenue Agency (CRA) disallowed the strategy, reassessed all the members of the group who, in turn, retained counsel to pursue potential claims against the law firm. LawPro became involved. A Tolling Agreement effective December 13, 2012, was signed. It was extended several times afterward and was in effect on the valuation date, but no statement of claim had been issued (none ever was). A settlement was eventually concluded in late 2018 and funds were paid.

140The parties dispute whether a contingent value should be attributed to the husband on the valuation date for his claim and whether, if value is found, it should be $899,693.92 (the wife’s position) or $312,508.75 (the husband’s position).

141The husband declared a CRA liability of $1,481,345.55 relating to the reassessment on the valuation date. There is no controversy about this debt.

142The husband called Eric Fournie as a witness. Retired at the time of trial, he had been retained as litigation counsel for the group and acted for its members in dealing with CRA and the law firm. He was also plaintiff’s counsel in Lindsay v. Aird & Berlis LLP⁷⁶, a case in which the same law firm was successfully sued for, among other things, professional negligence involving the same tax planning advice/strategy as the Ierullo Group followed (although involving a different charity).⁷⁷

143Mr. Fournie was forthright, even-handed, and credible. It was his opinion that the group’s claim was “a good claim” worth taking to trial. He was not prepared to opine on the probabilities of success but was “fairly certain” that on the valuation date the group would recover about $2,814,208.72. No statement of claim had been filed because Mr. Fournie needed more information from the law firm and didn’t want to jeopardize its cooperation. The February 8, 2018, release of the Lindsay decision hastened resolution of the Ierullo matter after it was front page news on one of Toronto’s major newspapers. A settlement of the group’s claims was reached later in the year.

144In considering whether a potential litigation receivable should be attributed a value, the court must look at what was reasonably foreseeable, in this case on the valuation date. As observed in Greenglass v. Greenglass⁷⁸, foreseeability can be a particularly difficult issue, and where legal proceedings are involved (anticipated or issued) consideration must be given to such things as “the likelihood of victory…, the likelihood of appeal, the length of trial and any appeal, any cost awards, the possibility of settlement, and the amount of the lawyers’ time spent on various aspects of the case.” These considerations must be balanced with the evidence from Mr. Fournie which was clear, consistent and convincing about the relative strength of the Ierullo Group case, there was no evidence that members of the group were not committed to proceeding with a claim or claims against the law firm and there was no suggestion that, had Lindsay been decided differently (it was a summary judgment motion), the group would have abandoned its’ claim.⁷⁹ In my view it would be unrealistic to attribute no value to the husband’s potential litigation receivable.

145The Ierullo Group settled for $2,500,000 (Exhibit 164). Of this amount the husband was initially allocated (and paid) $312,073.52. He was further paid $527,702.29 representing his share of $1,053,532 allocated to ROW and numbered companies which his brother and he owned, and which had participated in the tax scheme but weren’t operating when the settlement was paid. Additional settlement proceeds of $24,905.86 and $274,624.70 were paid, respectively, to Vito Ierullo Investments Inc. and the Ierullo Family Trust. Only $839,775.81 (i.e., $312,073.52 and $527,702.29) representing the payments to the husband are relevant.⁸⁰

146In Zavarella v. Zavarella⁸¹ the Court of Appeal expressly endorsed the approach that in assessing the actual value of a contingent asset or liability, a discount is permissible. The court should not simply insert face value (in this case $839,775.81) into the NFP calculation; rather, the court must make a realistic determination of value. The husband in this case submits that, among other reasons, the failure of the wife to adduce any expert evidence relating to potential recovery should lead to no value being attributed to the husband’s settlement. But in Greenglass, as in this case, the litigation lawyer acting for the husband in a civil action unrelated to the family proceedings testified about a contingent liability of $564,840 for part of the civil action’s legal fees (the trial judge had only allowed a $6,033 deduction representing the balance of legal fees owing on the valuation date). The court specifically referenced the lawyer’s evidence that the case would be “a long, expensive and difficult fight…[the lawyer] was certain that, no matter what was decided at trial, it would be appealed. The trial judge noted that there was evidence to the effect that the projected litigation costs would be several thousands of dollars.”⁸² The husband was allowed to deduct $300,000. In this case, who else but Mr. Fournie was as qualified to give evidence about the Latitude Foundation claim?

147The husband asserted that his claim was “speculative”, no claim had been formally issued and that the Lindsay decision was released after the valuation date. None of these arguments, when viewed with the evidence of Mr. Fournie, is sufficient in my view to warrant no value being attributed to the husband’s claim.

148The amount of a discount will vary according to the nature of the asset or liability involved and the sufficiency of the evidence. There is no discount template. In this case Mr. Fournie’s evidence viewed in combination with the litigation considerations noted in Zavarella when applied to this case, the determination of the Ierullo Group to pursue recovery over a five to six year period (which, admittedly, involved CRA negotiations), the ability of the group to fund any potential litigation cost, the absence of any evidence that one or more members of the group would have declined to participate in any legal action (a draft statement of claim had been prepared), and what the wife described about the husband’s tenacity (which is apparent from the passion with which he has pursued complaints where he feels wronged), supports an assessment of $400,000 for the husband’s Latitude Foundation claim on the valuation date.

Family Trust Distributions # 1

149On March 24, 2017, the wife and Simpson in their capacity as IFT trustees authorized the payment of, and the IFT distributed, $2,250,000 USD to each of the parties.⁸³ The IFT trust statement clearly shows the deposits to each of the parties’ accounts held with their investment advisor, Northland Wealth Management (NWM). A same date record was produced of a deposit into the husband’s account and is reflected in a month end statement to him along with activity details for the month. The wife produced no comparable statement reflecting the deposit and activities for her NWM investment account for March 2017 but did provide an April 1, 2017, NWM portfolio statement for $3,057,974.39 combining CAD and USD investments. “Consolidated” was written on the statement.

150The husband complained that the wife refused to disclose the activities in her NWM account for the months of March and April 2017 which would have confirmed the IFT deposit and the account’s activity. He suspected (and submitted to this court in closing) that an adverse inference should be drawn by the court and that the entirety of the distribution should be added to the wife’s net family property because she refused to provide the same disclosure as he had, and he wasn’t able to confirm that the IFT distribution was reflected in the “Consolidated” statement she produced. On the eve of the May 2023 trial, he brought a disclosure motion. It was dismissed by Himel J. who left it to this court to determine whether there were “material gaps in any party’s evidence” and, if so, to “draw adverse inferences in the determination of the financial issues and address the non-disclosure in costs.”

151In the affidavits exchanged by the parties for the motion heard by Himel J., their trial affidavits, the wife’s trial financial statement and the parties’ testimony, the following evidence is relevant to the issue whether an adverse inference should result in over $3,000,000 being added to the wife’s NFP:

(a) The wife disclosed more than $7,000,000 held in NWM accounts on the valuation date. These included Canadian and US holdings. She acknowledged receipt of the same distribution as the husband.

(b) The wife testified that she received the IFT distribution and relied on the parties’ then investment advisor to make investment decisions for her pursuant to an authorization on file although her evidence was unclear (and somewhat inconsistent) whether these decisions were made before, after or straddling the valuation date.

(c) The wife was questioned in the family proceedings on January 22, 2019. She testified then, and maintained at trial, that she had disclosed all that she could and all that she felt she was obliged to disclose. There is no evidence that in over four years after the questioning the husband brought a disclosure motion for the same relief until the motion heard by Himel J. on the eve of trial. Although he did complain.

(d) On April 29, 2022, NWM advised the husband’s lawyer that it could not produce account statements before fourth quarter 2020 “due to the malicious illegal coordinated actions in January 2021 by a group of former…employees to destroy company records.” NWM’s computer files, equipment and data sources were destroyed beyond recovery or repair. The Ontario Securities Commission became involved. The former employees migrated to a different wealth advisory firm used by the husband.

(e) By March 10, 2023, the wife’s unchallenged evidence is that she had provided at least five sworn financial statements, a Disclosure Brief with supporting documents and three Certificates of Financial Disclosure.

(f) The husband’s March 2017 NWM statement was located shortly before trial at the offices of the parties’ accountant. The wife’s evidence is that her NWM statements were sent to her and that she never kept them because she could always access them online. But by the time that the husband brought his 2023 disclosure motion, the records had been destroyed. It was the husband’s practice to have his statements forwarded to the accountant. This evidence was not challenged.

152The issue whether the wife’s April 1, 2017, NWM portfolio statement included the NWM distribution made a week earlier, and her position that she had disclosed all that was required of her to prove its valuation date balance and her portfolio values was known to the husband by January 22, 2019: he didn’t like her answers and viewed her disclosure as inadequate. But if this information was so important to his case, why wait for over four years to bring a disclosure motion and then only on the eve of trial? There must be a balance between relevant and proportional disclosure and weaponizing disclosure and overreaching for tactical purposes.⁸⁴ The wife’s financial conduct is troubling, as this court has observed with respect to Mulberry, but in the husband asking the court to infer that she hid over $3,000,000 for more than seven years that he either hadn’t bothered to pursue more diligently (except to complain), and to which there is no obvious “smoking gun” to which he can point is overreaching in my view.

153I am not prepared to draw the inference sought by the husband; there will be no addition to the wife’s NFP comprising the IFT distribution.

Family Trust Distributions #2

154The wife claimed a $311,638 deduction representing funds withdrawn from the IFT and paid on April 4, 2017, three days after the valuation date. She testified that the funds were withdrawn to give to Austin, hoping that he would discharge the Taylor Hills mortgage or invest the funds (the mortgage was not discharged until 2020). The transaction was represented and recorded as payment of IFT taxes. The wife and Simpson authorized the distribution; the husband was not consulted. This event formed part of the husband’s complaint that led to his late July 2017 action against the wife and Simpson.

155The wife’s evidence is that when she and Simpson determined that there were no IFT taxes owing, the funds were paid to her to give to Austin instead of returning them to the trust. She explained that she felt that Austin was owed the money because until he had acquired Taylor Mills he had been the only child who didn’t own a home; hence a distribution more or less equivalent to the mortgage on title. The wife acknowledged that Austin was a capital and income beneficiary of the IFT and that the funds could have been paid directly to him but the IFT distributions “usually…came from me.” There was no explanation why the distribution could not have been made from the Austin Ierullo Investment Trust, instead of from the IFT.⁸⁵

156The wife also suggested that she held the funds in trust for Austin on the valuation date in a personal account pending a passing of the IFT accounts and that she distributed them afterwards. There was no evidence that funds had been advanced to her for Austin before the valuation date and no evidence when the accounts were passed. In fact, the wife acknowledged in cross-examination that the trustees “actually took those funds out of the trust on April the 4^th^.”

157Whether or not the decision to make a distribution was made shortly before the valuation date (of which there was some suggestion by the wife) and the cheque for the funds issued afterwards (which the wife acknowledged), her evidence on this issue is convoluted and unpersuasive. While she may have felt some kind of moral obligation to have Austin treated like his siblings (there was evidence that the husband and Austin had been estranged for years) she owed nothing to Austin or to the IFT on the valuation date.

158The wife’s claim for a $311,638 deduction is denied.

Family Trust Distributions #3

159The wife claims, and the husband denies, that there should be added to his net family property $796,080 in respect to IFT distributions made to him after the valuation date.

160There is no question that in July 2017 the IFT trustees (the husband, Mr. Gargarella and Mr. Silomos) began to authorize distributions from the trust to the husband. These involved, among other things, personal expenses and legal fees. There is no issue about the total advanced to the husband when the trial began or that all the distributions were made after the valuation date. The parties dispute whether post-valuation date IFT distributions should be included in their equalization claims considering their on-going IFT litigation. The wife submits that such “big ticket items… are obviously part of the NFP… along with other distributions that both parties received”, although it is unclear why such post-valuation date items should be included in a party’s NFP (which was never explained by the wife, and which the husband submits is unsupported in law). The husband submits too that the parties had agreed that neither would include the IFT’s value in their net family property statements and that entitlement and distribution issues were reserved to the trust litigation.

161Neither party led evidence about the status of the trust litigation. There was no evidence about the terms of alleged agreement involving IFT distributions and the other issues in this trial and no reference to the trust litigation or valuing the parties’ interests in the IFT in the Trial Scheduling form.

162In my view, there is no basis for including the IFT’s post-valuation date distributions to the husband in his net family property and there is no evidentiary or legal foundation to adjust the equalization payment based on post-valuation date adjustment or unconscionability principles.

163The issue of IFT distributions made after the valuation date should be addressed in the trust litigation.

IFT Debt

164The husband claims, and the wife disputes, that he owed $3,202,210 to IFT on the valuation date. In my view, his evidence is insufficient to prove this deduction. The fact is that he knew nothing about any such loan until Mr. Rudson brought an accounting entry to his attention in the process of valuing the husband’s business interests. There is no explanation about, or any reference to, this debt in the husband’s trial affidavit (apart from saying that he accepted Mr. Rudson’s opinion). The following exchange between the husband and his counsel at trial (the only other time that the husband referenced this debt in his direct evidence) is hardly illuminating:

MR. MOLDAVER:…In your financial statement you’re taking the position that you owe the trust money?

THE COURT: Which one of the six?

MR. MOLDAVER: Q: I think all of them. In your financial statements, Mr. Ierullo, you’re taking the position that you owed the trust money on the date of the separation. What do you understand your obligation to be today?

A. It is a loan and I must pay it back.⁸⁶

165More revealing is the following exchange in cross-examination:

Q. Mr. Ierullo, you heard Ms. Adragone’s evidence. Her evidence was that the accountants, when money was taken out of the trust, would originally allocate it as a loan, and loans, if they were not loans or if they were capital distributions, they would be eventually reallocated. Did you hear her evidence?

A. I don’t believe that’s the way things were set up. I mean, are we in Trump land? You know? I’m ‘indiscernible’ promotions(ph)?

Q. Well, Mr. Ierullo, you say it’s a loan that you owe to the trust?

A. That’s what it says here.

Q. Do you have a loan agreement that you’ve produced?

A. No, I’ve hired Mr. Rudson to look after this sort of thing. You need to ask Mr. Rudson.

Q. Mr. Rudson is your business valuator, isn’t he, Mr. Ierullo?

A. He’s the evaluator of everything.

Q. So, you say you owe the trust $3.2 million dollars approximately. When was that money advanced to you?

A. I don’t know.

Q. What were the terms of the loan?

A. I don’t know.

Q. What was the interest rate on the loan?

A. I don’t believe there was an interest rate.

Q. When were you supposed to repay the loan?

A. I don’t know.

Q. Have you at any time repaid any part of this loan?

A. Again, I don’t know.⁸⁷

166The evidence is that the “loan” was recorded around the same time that each of the parties received a capital distribution from the IFT in roughly the same amount as the debt claimed less than a week before the valuation date. Despite complaining about the adequacy of the wife’s disclosure efforts, the husband tendered no evidence about any other details respecting this alleged debt, the onus of proving which lay with him. He could have, for example, called the parties’ accountant to testify in support of his position and to challenge the wife’s, admittedly layperson, evidence, but he didn’t. It is noteworthy too that in undertaking his valuation of the husband’s business interests on the valuation date, Mr. Rudson defined those interests to mean “ownership interests in and loans owing to/from Mr. Ierullo from the companies listed in Figure #1…” (see para. 73 above). IFT was a trust, not a company. The “loan” was personal to the husband and related to the IFT, not VII. Mr. Rudson was not tendered to express an opinion about the husband’s obligations with respect to IFT. Expanding the definition of “business interests” in this way to include personal obligations relating to the IFT was, in my view, a backdoor effort to a prove a deduction.

167The husband’s claim to a $3,202,210 deduction is denied.

Joint Loan (debt)

168In valuing the husband’s business interests, Mr. Rudson concluded that the parties jointly owed $35,108 to the IFT (or $17,554 each), which the wife disputes. As already noted with respect to the IFT Debt, the husband had no personal knowledge of any IFT debt obligation until it was brought to his attention by Mr. Rudson. There was no information about what this debt involved. There was no explanation why an accountant for the IFT was not called as a witness by the husband and, in any event, the parties agreed that issues involving the IFT would be addressed in that litigation.

169In my view, the husband’s evidence (such as it is) is insufficient in these proceedings to prove this debt. His claim to deduct $17,554 from his net family property is denied.

Husband’s $1,586,000 exclusion/unconscionability claim

170The husband requests to either exclude from his net family property $1,586,000 or, alternatively, to have that amount considered by varying the equalization payment on the ground of unconscionability. He contends this amount is the saved, or at least the unspent, portion of his $25,000 monthly Simpson note distributions. In my view his position is premised on a misconceived reliance on s. 4 of the Family Law Act and, alternatively, the unconscionability provisions of s 5(6) of the Act (no listed subsection is identified).

171This is the note:

172The relevant subsections of sections 4(2) and section 4(3) of the Act provide as follows:

The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

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.
Not relevant.
Not relevant.
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.
Not relevant.

(3) The onus of proving a deduction under the definition of “net family property” or an exclusion under subsection (2) is on the person claiming it.

173It would be absurd to describe the Simpson note as a domestic contract or even remotely falling under any of the other s. 4(2) subsections. Neither of the authorities upon which the husband relies is of any assistance either.⁸⁸ The evidence which this court accepts is that the wife used her portion of the monthly distributions and drew upon the $75,000 allowed for the children, their private schooling, university “and everything else, horses, charity, holidays, all the rest of that I was funding at that point in time….” and (very likely) for Mulberry expenses. While the husband challenged the wife about her spending and corroboration of her claimed expenses, someone had to pay them. And it wasn’t him. The wife conceded that the husband was “frugal.” Perhaps most fatal to the husband is the fact that the account upon which he relied as being the source of his claim over time was funded by a family trust deposit made three days before the valuation date, not periodic distributions which he banked.

174The husband’s alternative unconscionability claim made pursuant s. 5(6) of the Act also lacks merit. That section provides as follows:

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

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

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

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

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

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

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

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

175The test for unconscionability is a high one. The court in Serra v. Serra⁸⁹ described it as follows:

47In this regard, the threshold of "unconscionability" under s. 5(6) is exceptionally high. The jurisprudence is clear that circumstances which are "unfair", "harsh" or "unjust" alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must "shock the conscience of the court." ⁹⁰ [Citations omitted.]

176In a very real sense, the husband’s reliance upon s. 5(6) duplicates his claim in the civil action that alleges fraudulent conduct and, in that proceeding as well as the family action, he seeks compensation for oppressive conduct relating to, principally, the management of Mulberry’s affairs. Given the court’s oppression findings with respect to Mulberry, it is not necessary to deal with the husband’s fraudulent conveyance and related claims in the civil proceeding.

177The husband’s claim for an exclusion is denied as is his claim to vary the equalization payment based on unconscionability.

Adjustment to equalization payment

178The parties agree that the wife owned a Seadoo watercraft on the valuation date. It was located at the cottage, which the husband occupied. She sold the boat to him on August 9, 2017, for $14,000 as set out in a Bill of Sale she signed (Exhibit 41). Her unchallenged evidence is that he never paid her. The husband made no reference to this transaction in his evidence or in his closing submissions.

179The wife will be allowed this adjustment. The ownership and $14,000 value of the Seadoo will be reflected in the husband’s net family property.

Determination of the equalization payment

180Accompanying, and forming part of, these reasons as Schedule A is a Net Family Property Statement incorporating the values of those assets, debts and other liabilities upon which the parties agreed and those as determined in these Reasons. The husband owes the wife an equalization payment in the amount of $1,054,267.66, say $1,054,267.

F. CONCLUSION

181Accordingly:

(a) A Divorce Order shall issue.

(b) The husband shall pay to the wife an equalization payment in the amount of $1,054,267.

(d) Subject to (e) and (f) below, the parties shall have until July 31, 2025, to resolve whether either or both the matrimonial home and cottage shall be sold, failing which both properties shall be listed for sale and sold, and the net sale proceeds equally divided between the parties.

(e) Failing any agreement on an intra-spousal transfer of title with respect to the property municipally located at 14571 Warden Avenue, Whitchurch-Stouffville (the matrimonial home), as set out in (d) above, the wife shall propose three realtors to list the property for sale and the husband shall have seven days to choose the agent. The wife shall be responsible for any repairs or staging as recommended by the agent.

(f) Failing any agreement on an intra-spousal transfer of title with respect to the property municipally located at 136 Lake Drive East, Georgina, Ontario (the cottage), as set out in (d) above, the husband shall propose three realtors to list the property for sale and the wife shall have seven days to choose the agent. The husband shall be responsible for any repairs or staging as may be recommended by the agent.

(g) By July 31, 2025, the parties shall agree on an in specie division of the contents of the matrimonial home and cottage properties, failing which directions with respect to retaining a third party to auction, or otherwise expose the contents of both properties for sale may be sought by either party.

(h) The wife holds 50% of her interest in the lands and premises located at 796404 Grey Road 19, Unit 121, The Blue Mountains, Ontario (“Blue Mountain Property”) in trust for the husband.

(i) The parties shall cooperate with notifying the Land Registry Office for the Blue Mountains Ontario to rectify the Land Register that each party owns 50% of the property.

(j) The Blue Mountain Property shall be listed for sale by July 5, 2025. The net proceeds of sale shall be presumptively paid to the parties in equal shares with the exception that the value of any mortgage encumbrance on the property as of the completion date shall be paid from the wife’s presumptive share; the husband shall be entitled to a 50% share of the net sale proceeds without any deduction encumbrances. Until completion of the sale the wife shall be responsible for all costs associated with the property.

(k) The parties shall cooperate with the listing, sale and showing of the matrimonial home, the cottage and the Blue Mountain Property, including following the realtor’s recommendations for preparing and staging the properties, and accepting any reasonable offer to purchase made. Without limiting the generality of potential sanctions, a party found to have acted unreasonably may lose the right to participate in the sale process.

(l) Any joint accounts still held with Northland Wealth Management shall be equally divided between the parties by June 15, 2025. In the event that any party should fail to comply with this direction by the deadline ordered, that party shall be responsible for any market losses that may occur after the deadline as a result of his/her failure to cooperate.

(m) The parties’ claims with respect to their IFT issues, including the debt owed to VII and Family Trust Distributions #1 to # 3, shall be determined in the parties’ IFT litigation.

(n) All other claims in the combined proceedings are dismissed.

182Given the significant differences in the parties’ claims when the trial started and the divided success reflected in their outcome as reflected in these reasons for decision, I am disinclined to award costs but if the parties disagree and are unable to resolve costs and pre-judgment interest by June 20, 2025, the following directions shall apply;

(a) The wife, Mulberry Hills, Aeden Erica MacLean, Mulberry Hills Realty Inc. and Forever Thyme Sanctuary shall deliver their collective submissions by June 27, 2025.

(b) The husband shall deliver his submissions by July 18, 2025.

(d) The submissions in (a) shall be not more that fifteen pages (in total for all parties in (a)) and ten pages in total for the husband’s family law and civil proceedings, double-spaced, excluding Bills of Costs and Offers to Settle. Reply by the wife shall be restricted to four pages (only one reply will be considered for the parties in (a)).

(e) All submissions, Bills of Costs, Offers to Settle and any case authorities upon which a party relies shall be uploaded to Case Center and the filing party shall forthwith advise the judicial assistant when that has been done.

183An approved copy of the final Order may be forward to the judicial assistant to ensure timely issuance.

The Honourable Justice D.A. Jarvis

Date: May 30, 2025

SCHEDULE A – to be read with corrected Reasons for Decision dated May 30, 2025

ONTARIO

Court File Number

Superior Court of Justice, Family Court

FC-17-54359

(Name of Court)

50 Eagle St. West, Newmarket ON L3Y 6B1

Form 13B: Net Family

Property Statement

(Court office address)

Applicant(s)

Full legal name & address for service — street & number, municipality, postal code, telephone & fax numbers and e‑mail address (if any).

Lawyer’s name & address — street & number, municipality, postal code, telephone & fax numbers and e‑mail address (if any).

Rae Ierullo

14571 Warden Avenue

Stouffville, ON L4A 3V7

Martha McCarthy

McCarthy Hansen & Company LLP

601-1133 Yonge Street

Toronto, ON M4T 2Y7

Tel: (416) 862-6226

Fax: (416) 862-9001

martha@mccarthyco.ca

Joy Casey

200 Adelaide Street West

Suite 400

Toronto, Ontario M5H 1W7

Tel: 416-368-3847

jcasey@idirect.com

Respondent(s)

Full legal name & address for service — street & number, municipality, postal code, telephone & fax numbers and e‑mail address (if any).

Lawyer’s name & address — street & number, municipality, postal code, telephone & fax numbers and e‑mail address (if any).

Vito Ierullo

136 Lake Drive East

Keswick, ON L4P 3E9

Mulberry Hills Realty Inc.

14571 Warden Ave.

ON, L4A 7X5

Jaret N. Moldaver

Teplitsky LLP

70 Bond Street

Suite 200

Toronto, ON M5B 1X3

Tel: (416) 865-5346

Fax: (416) 365-7702

martine@ordonlaw.ca

The parties names are

Rae (Adragone) Ierullo and Vito Ierullo

The valuation date for the following material is (date)

April 1, 2017

The date of marriage is (date)

February 17, 1990

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

PART 4(a): LAND (Values are estimates and not indicative of current value)

Nature & Type of Ownership

(State percentage interest)

Address of Property

APPLICANT

RESPONDENT

Matrimonial Home (50/50)

14571 Warden Ave., Stouffville, Ontario.

$2,265,000.00

Cottage Property (50/50)

6 Lake Drive. Keswick, Ontario.

$2,112,500.00

Blue Mountain chalet (wife holds 50% beneficial interest in trust for husband)

796404 Grey Road 19, Unit 121, Blue

Mountain – Wife is responsible for all post-valuation date encumbrances.

$485,000.00

100% Investment Property

58 Walter English Drive, Queensville,

Ontario

$40,000.00

Condominium

520 Silken Lauman

$565,000.00

Investment Property

69 Jim Mortson Road

$459,032.00

Totals: Value of Land

$5,886,532.00

$4,902,500.00

PART 4(b): GENERAL HOUSEHOLD ITEMS AND VEHICLES

Item

Description

APPLICANT

RESPONDENT

Household goods & furniture

and cars

Various automobiles (parties to divide other chattels as may be agreed)

$68,750.00

$25,050.00

Seadoo Boat (Value agreed; owned by wife but transferred to husband after valuation date but included in husband’s column as per Reasons for Decision – corrected)

$14,000.00

Jewellery, art

Jewellery

$1,940.00

Totals: Value of General Household Items and Vehicles

$70,690.00

$39,050.00

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

Footnotes

Ierullo v. Ierullo, COA 23-CV-0904, September 23, 2023, per Zarnett J.A.
Ierullo v. Ierullo et al, 2023 ONSC 74.
Ierullo v. Ierullo et al, 2023 ONSC 3327.
Ierullo v. Ierullo et al, 2023 ONSC 5390, 96 R.F.L. (8^th^) 468 (disqualification of proposed expert) and Ierullo v. Ierullo et al, 2024 (sic) ONSC 1828 (disqualification of witness).
According to the husband’s expert (Rudson), the income before taxes in 1990 was $700,000 due to a one-time $3,400,000 bonus paid to the husband and his brother.
In his Statement of Claim in the civil action (at para. 11) the husband pleaded that the parties incorporated the company but the incorporation documents only name, and were signed by, the wife.
This action involved a claim about an improper $300,000 disbursement from the trust, subsequently revised to $311, 638. See Family Trust Distribution #3 (issue and analysis below). An Order discontinuing this proceeding was made by Chiappetta J. on January 14, 2019, on consent.
R.S.O., c. T. 23.
The OCL was also named as a respondent on behalf of the unborn and unascertained beneficiaries of the trust.
Supra, note 2.
Ierullo v. Ierullo et al, 2023 ONSC 4633.
Supra, note 1. Zarnett J. A. observed that the family law action was six-years old and on its fifth trial list.
R.S.O. 1990, c.F.3.
The value at trial was $970,000.
The parties dispute what this descriptor involves; the wife’s definition is broader than the husband’s whose expert (Mr. Rudson) defined this category as including the husband’s ownership interest in and loans from 2002029 Ontario Limited, Vito Ierullo Investments Incorporated (“VII”) and VII subsidiaries, 2034933 Ontario Limited and 297241 Ontario Limited. VII was a holding company solely owned by the husband and had been incorporated before the date of marriage.
Ouellette v. Uddin, 2018 ONSC 4520.
2024 ONSC 6285, 10 R.F.L. (9^th^) 310.
R. v. A.(A.), 2015 ONCA 558, at paras. 131-132.
R. v. C. (M.), 2019 ONCA 502, 146 O.R. (3d) 493, at para. 56.
R. v. D.W., 2023 ONCA 767, at para. 24.
Pursuant to s. 14(b) of the Act, money on deposit in the name of both spouses is deemed to be in their names as joint tenants.
Trial transcript (September 21, 2023) at p. 101.
While there was likely some debt arising from the November 2016 mortgage the wife had the statutory onus pursuant to s. 4(3) of the Family Law Act to prove the deduction. That wasn’t done. More problematic, but not explored in any detail (and so no finding will be made), was the issue whether the chalet was a matrimonial home and whether the wife properly disclosed her marital status when the charge was registered.
Given this disposition, the amendments sought by the husband to his pleadings dealing with this property which this court dismissed before trial, and which were the subject matter of the husband’s motion to stay heard by Zarnett J.A., are moot.
There was no evidence about the nature of a transfer from Olive to herself registered on May 21, 2013, despite the issue being raised by the court.
McNamee v McNamee, 2011 ONCA 533, at paras. 23 and 24.
See para. 174 below for the subsection.
Viewed in isolation from the other valuation issues in this case, the difference in the parties’ positions is $8,240,000.
Supra, note 4.
Exhibit #138, CBV Practice Standard 110 dated June 17, 2009.
2015 ONSC 3588 (Div. Ct.).
(2006), 2006 CanLII 41401 (ON CA), 83 O.R. (3d) 1, (Ont. C.A.), at paras. 52-54.
2021 ONSC 7358, at para. 174.
As noted by Mr. Rudson, EBITDA means earnings before interest, taxes, depreciation and amortization and is commonly used as a proxy for cash flow.
2019 ONCA 940, 151 O.R. (3d), at para. 70, leave to appeal refused, [2021] S.C.C.A. No. 263, [2021] S.C.C.A. No. 274.
Arash Nayerahmadi, “Far Beyond Baker: Heuristics and the Inadequacy of the Reasonable Apprehension of Bias Analysis”, (2022) 59 Osgoode Hall L. J., at p. 10.
2023 ONSC 2738, 167 O.R. (3d) 117.
2017 ONCA 640, 140 O.R. (3d) 40.
Ibid, at para. 115.
2018 ONCA 486.
The estimated “en bloc” FMV (rounded) was $2,908,000 less $517,000 notional disposition costs.
Without drawing too fine a point, the property was between 75 to 77 acres in size. This was noted in the evidence but given the size of the dispute about value, nothing material turns on this.
O. Reg. 114/99.
Mr. Rober used a 1.2% adjustment factor.
Exhibit 136c being Mr. Rudson’s valuation date report, p. 11 and C1 schedule.
S.O. 2002, c. 24.
In their pleadings in the civil action the parties refer to the Mulberry Hills Realty Trust (MHRE) which was settled by the husband’s father on the same June 4, 1997, date that the company was incorporated. The wife and Simpson were the trustees. The purpose of the trust was to hold shares owned by the husband’s father, but the trust Indenture was silent about the settlement object. In any event, the parties agree that MHRE was wound up in 2015 and the husband and wife each received 50 shares in Mulberry, the company. In a September 7, 2018, affidavit in litigation involving the family trust, the husband attached a copy of a corporate profile report (Exhibit 107, Exhibit 6) and stated that the company had been dissolved in 2005 but revived in 2009. Despite some uncertainty about the relationship between MHRE and the company, the parties have approached these proceedings on the basis that at the material times they were equal owners of the company.
Supra, note 4.
This evidence of value is no more than the wife’s belief. The appraisal was not tendered as an expert report, nor was any effort made to qualify it as such. The same can be said about the CIBC appraisal (see (n) and the appraisal that informed the adjusted purchase (see (o))). In Case Management Ruling #4 dated August 11, 2023, this court ruled (at para. 24 (c)) that an estimate of value “is not proof of value absent consent or admissible evidence (mostly expert) of value.”
BMO v. Iskenderov, 2023 ONCA 528, 168 O.R.(3d) 1, at para. 3.
Later adjusted to 14% by the wife. Her evidence was that the 5% rate was “in error.” No interest was being paid; it was accruing.
2019 ONCA 1005, 441 D.L.R. (4^th^) 393.
Colin v. Tan, 2016 ONSC 1187, at para. 67.
2014 ONCA 526, at para. 41.
2019 ONCA 369, 146 O.R. (3d) 135.
Ibid, at para. 32.
R.S.O. 1990, c. B.16.
Hare v. Hare (2006), 2006 CanLII 41650 (ON CA), 83 O.R. (3d) 766 (Ont. C.A.), at para. 11.
2008 SCC 69, [2008] 3 S.C.R. 560.
Ibid, at para. 68.
Ibid, at paras.70 and 71.
Ibid, at paras. 74, 75, 78, 79 and 80.
Ibid, at para. 84.
2022 ONSC 2305.
Ibid, at para. 20.
2022 ONSC 4238, 32 B.L.R. (6^th^) 51.
Ibid, at para. 35.
(1995), 1995 CanLII 959 (ON CA), 23 O.R. (3d) 481 (Ont. C.A.).
Ibid, at para. 21.
2017 ONSC 2602, 47 C.B.R. (6^th^) 307, aff’d 2018 ONCA 70, 140 O.R. (3d) 799.
This is a summary of a more complicated fact situation.
(2009), 2009 CanLII 29902 (ON SC), 98 O.R. (3d) 103 (Ont. S.C.).
Stevens et al. v. Hutchens et al, 2022 ONSC 1508, 98 C.B.R. (6^th^) 246, at para. 37, aff’d 2022 ONCA 771.
In 2019 the IFT “cleaned out” the loan from the husband as, likely (according to Mr. Rudson), a non-taxable capital distribution.
There was some suggestion that two charities were involved but, if so, they were not identified. This was not an issue at trial.
2018 ONSC 7424.
The claim was for damages resulting from solicitor’s negligence, negligent misstatement, breach of trust and breach of fiduciary duty.
2010 ONCA 675, 99 R.F.L. (6^th^) 271, at para. 28.
According to Fournie, the Lindsay case was more complex from a tax planning standpoint but was an easier court challenge (hence the summary judgment motion) because CRA had deregistered the charity involved shortly before the impugned donation was made. The Ierullo Group case was simpler from a tax standpoint but likely more complex and would have involved expert evidence; the facts which led to the motion in Lindsay were absent. Also, the dismissal of the motion in Lindsay would not have constituted a dismissal of the case.
In the NFP statement appended to the wife’s closing submissions she double counted $59,918.12 payable to the husband’s numbered company, 2002029 Ontario Limited. This amount was included in the $1,053,532.10 allocated to ROW and the brothers’ numbered companies.
2013 ONCA 720, 117 O.R. (3d) 641.
Greenglass, at para. 30.
The wife submitted that this totaled about $3,202,100 CAD. The husband did not dispute this figure.
See Saunders v. Saunders, 2015 ONSC 926, at para. 13.
The parties had settled $2,000,000 trusts for each of their children several years earlier. There was some evidence that Austin was not able to access the corpus of his trust until he was thirty years old. He was twenty-seven years old in 2017.
Trial transcript (September 26, 2023), at p. 37.
Trial transcript (September 27, 2023) at pp. 85-86.
Bennett v. Bennett (1997), 1997 CanLII 12388 (ON CTGD), 34 R.F.L. (4^th^) 290 (Ont. Gen. Div.), aff’d 1999 CanLII 2583 (ON CA), [1999] O.J. No. 2631 (Ont. C.A.), deals with tracing and the proximate timing between receipt of an inheritance and the purchase of property. It follows an annotation by Prof. McLeod in Berdette v. Berdette (1991), 1991 CanLII 7061 (ON CA), 3 O.R. (3d) 513 (Ont. C.A.). See also Najm v. Najm, 2024 ONSC 2053, at para. 57, for a description of the three generally accepted approaches (or methodologies) to tracing.
2009 ONCA 105, 93 O.R. (3d) 161.
Ibid.

A. INTRODUCTION

B. OVERVIEW OF FACTS

C. ISSUES TO BE DECIDED

D. CREDIBILITY

E. ANALYSIS OF ISSUES

Blue Mountain Property (the chalet)

Taylor Mills Property (Taylor Mills)

Value of the husband’s business interests on the marriage and valuation dates.

Business interest value on marriage date

Confirmation bias

Choice of methodology

Uninformed/misleading assumptions

Partiality/Demeanour

Conclusion on marriage date business value

Business interest value on valuation date.

Mulberry Hills Realty Inc. (Mulberry)

Value of Mulberry on the valuation date and in May/June 2022

Limitations Act, 2002

Oppression

Remedy

Shareholder loan payable to the husband on the valuation date

Loan Assignment

Latitude Foundation claim

Family Trust Distributions # 1

Family Trust Distributions #2

Family Trust Distributions #3

IFT Debt

Joint Loan (debt)

Husband’s $1,586,000 exclusion/unconscionability claim

Adjustment to equalization payment

Determination of the equalization payment

F. CONCLUSION

Footnotes

A. INTRODUCTION

B. OVERVIEW OF FACTS

C. ISSUES TO BE DECIDED

D. CREDIBILITY

E. ANALYSIS OF ISSUES

Blue Mountain Property (the chalet)

Taylor Mills Property (Taylor Mills)

Value of the husband’s business interests on the marriage and valuation dates.

Business interest value on marriage date

Confirmation bias

Choice of methodology

Uninformed/misleading assumptions

Partiality/Demeanour

Conclusion on marriage date business value

Business interest value on valuation date.

Mulberry Hills Realty Inc. (Mulberry)

Value of Mulberry on the valuation date and in May/June 2022

Limitations Act, 2002

Oppression

Remedy

Shareholder loan payable to the husband on the valuation date

Loan Assignment

Latitude Foundation claim

Family Trust Distributions # 1

Family Trust Distributions #2

Family Trust Distributions #3

IFT Debt

Joint Loan (debt)

Husband’s $1,586,000 exclusion/unconscionability claim

Adjustment to equalization payment

Determination of the equalization payment

F. CONCLUSION

Footnotes

Ierullo v. Ierullo et al, 2025 ONSC 3224

Case Summary