Ontario Court Of Appeal Summaries (May 1-5, 2017)

Good afternoon.

There were quite a few substantive civil decisions this week, particularly in family law.

In Halliwell, the Court discussed in detail the difficult issue of applying the Spousal Support Advisory Guidelines to high income cases (over $350,000). It also canvassed the "double dipping" issue discussed in Boston v Boston, in this case, in the context of the equalization of a business rather than a pension. The support order was reduced and no double-dipping was found.

In Dagg, the Court decided a moot appeal that had been settled. It held that where a spouse is designated an irrevocable beneficiary of a life insurance policy as security for support payments owing, the irrevocable beneficiary is entitled to the insurance proceeds to cover all present and future support obligations owing as of the date of death, and any clawback under s. 72 of the Succession Law Reform Act in favour of a competing dependant of the deceased will only apply to any surplus insurance proceeds after the irrevocable beneficiary's entitlement is satisfied in full.

In addition to other family law decisions, other topics covered included wrongful dismissal, wills and estates, breach of contract, contractual interpretation, occupier's liability and mortgages. We also summarized a decision involving state mutual assistance in criminal matters where the documents seized for use in a foreign criminal proceeding were of a sensitive commercial nature. The court detailed the process for obtaining such orders, but ordered no special terms to protect the confidentiality of the information, citing the Treaty obligations of the foreign state as providing sufficient protection for the accused's commercial secrets.

Have a nice weekend.

Civil Decisions:

Concentra Financial Services Association v. Rawling, 2017 ONCA 348

[Juriansz, Pepall and Miller JJ.A.]

Counsel:

13. S. Deverett, for the appellant

2. Frydenberg, for the respondent

   Keywords: Contracts, Debtor-Creditor, Mortgages, Fraud, Summary Judgment

   Facts:

   The appellant appeals from the October 4, 2016 judgment granting summary judgment to the respondent and ordering the appellant to pay approximately $311,000 on account of a mortgage debt. In addition, the motions judge dismissed the appellant's counter-claim seeking a refund of the payments he had made to the respondent on the mortgage.

   The motions judge found that the appellant was a direct participant in the shady transaction in issue. The true owner of the property was Edwards but he could not qualify for a mortgage. The appellant therefore put himself forward as the face of the purchase. He obtained a letter verifying his income from his place of employment, he supplied Canada Revenue Agency ("CRA") notices of assessment to the respondent and signed all documents knowing that he would be taking title and signing the mortgage in favour of the respondent.

   Significantly, the appellant was paid $5,000 for his participation knowing that he was assuming the risk of payment if Edwards failed to make payments on the mortgage. In September 2015, the mortgage went into default and the respondent sued and subsequently moved for summary judgment. The appellant brought a cross-motion for summary judgment on his counter-claim. The motions judge granted the summary judgment motion requested by the respondent and dismissed that of the appellant.

   The appellant appeals from the October 4, 2016 judgment granting summary judgment to the respondent and ordering the appellant to pay approximately $311,000 on account of a mortgage debt.

   Issues:

   (1) Did the motions judge fail to apply rule 20.02 because the respondent did not provide evidence of a witness with personal knowledge of the contested facts?

   a. Did the motion judge err in not drawing an adverse inference against the respondent as a result?

   b. Did the motion judge err in failing to sanction the respondent for its failure to produce relevant documents?

   (2) Is a mortgage based on a fraudulent agreement of purchase and sale unenforceable?

   Holding:

   Appeal dismissed with costs on a substantial indemnity scale fixed in the amount of $11,911.31.

   Reasoning:

   (1) No. Rule 20.02 is discretionary and not mandatory. The motions judge considered the appellant's argument and dismissed it, noting that there was no real dispute on the facts and no dispute that the appellant had signed the mortgage. Approximately three weeks prior to the hearing of the summary judgment motions, the respondent produced its entire file to the appellant. There was no evidence that the respondent had actual knowledge of a mortgage fraud prior to advancing funds. Moreover, even if the respondent could and should have uncovered the fraud prior to advancing funds, given the appellant's active participation, the respondent's role would not provide a defence to the appellant.

   (2) No. There is no suggestion here that the vendor was not paid for the purchase of the property in the appellant's name or that the mortgage proceeds given by the respondent were not used to fund the purchase of the property. The appellant was not an innocent party and the transfer and the mortgage are valid instruments. Moreover, no declaration that the mortgage was unenforceable was sought by the appellant in its counterclaim.

   Halliwell v Halliwell, 2017 ONCA 349

   [Gillese, Pepall and Roberts JJ.A.]

   Counsel:

16. Amey, for the appellant

18. Bickle, for the respondent

    Keywords: Family Law, Spousal Support, Spousal Support Advisory Guidelines (SSAGs), Incomes Over $350,000, Entitlement, Net Family Property, Equalization, Double Recovery, Boston v Boston, 2001 SCC 43, Joint Family Venture, Kerr v Baranow, 2010 SCC 10

    Facts:

    By order dated January 8, 2016 and September 26, 2016 (the "Order"), pursuant to the Family Law Act, Martin Halliwell, the appellant, was ordered to pay Toni Halliwell, the respondent: $3,047,061.47 for the equalization of net family property (net of credits for the advances already made) in equal annual instalments, over five years, with interest at 3% per annum; $28,978 per month for spousal support commencing January 1, 2016, based on imputed annual income of $1,000,000 for the appellant; and arrears of retroactive spousal support in the amount of $1,106,887.85, reduced by 40% for income tax, payable by January 8, 2017. The appellant challenged all three parts of the order.

    Prior to their separation, after a major setback when the appellant lost his job in 1994, the parties' standard of living improved as companies they owned and operated prospered. They enjoyed an affluent lifestyle. When the parties separated in June 2009, their daughter had left home and their son continued to live with the respondent in the matrimonial home. The appellant moved to the parties' recreational home. After separation, the appellant started various new corporations and purchased a number of commercial and residential properties. From the time the parties separated until October 2010, the respondent continued to receive about $11,500 per month along with benefits as an administrator of the companies. In October 2010, the appellant abruptly relieved her of most of her responsibilities for the businesses, changed the locks on the premises, and informed her that he no longer would allow her to work on the premises. Her income from the companies dropped first to $7,000, then to $5,000 per month.

    After these events, the respondent commenced the proceedings at issue (the "Application"). Pursuant to a 2011 consent order, the appellant has since paid interim spousal support of $10,000 per month. Pursuant to a court order, he also paid $135,000 as an advance equalization payment. The trial judge found the appellant's lifestyle did not change much after separation; on the other hand, the respondent had to significantly adjust her lifestyle after separation. The trial judge also found the respondent had acted responsibly in pursuing employment opportunities after separation.

    The parties went to trial to determine issues of spousal support, retroactive spousal support, and equalization. The appellant owned 100% of the shares in HA. HA owns shares in HC Matcon Inc. ("Matcon"), an Ontario corporation, and in HCM Contractors Inc ("HCM"), an Alberta corporation. At all material times, the appellant was the president of the corporations. A man named Ron Amos, or his holding companies, had a shareholder interest in Matcon and HCM equal to that of HA. In addition, HA held a minority shareholder interest in RWH Engineering ("RWH"). The appellant's income was generally earned from the operations of Matcon and HCM, which paid consulting fees and dividends to HA. Dividends to HA were converted to shareholder loans. In turn, HA paid management fees and dividends to the appellant. At the time of trial, HA held the following minority shareholder interests: Matcon - 44%; HCM - 39.9%; and RWH - 30%.

    With respect to the value of the companies and equalization, the trial judge identified four main differences in the expert valuators' approaches to valuation: (1) their approach (capitalized cash flow vs EBITDA); (2) their choice of multiple; (3) their treatment of the White Mud project; and (4) the appellant's expert's deduction of $1.6M in the 2008 income. The trial judge gave extensive reasons for preferring Mr. Sciannella's approach to the valuation of Matcon and HCM over that of Mr. Ross. The trial judge found that HCM had a low value of $2.35M and a high value of $2.5M. The resulting adjustment to HA led to a low value of $5.7M and a high value of $5.9M. Considering the contingencies the trial judge alluded to, relative to capitalization and changes in the market, for net family property purposes, he used the low value for each value and for the notional tax. The trial judge accepted the tax calculations provided by the respondent. The trial judge found that the appellant's NFP was $6,491,129.11 and the respondent's NFP was $555,375.50.

    With respect to spousal support, the trial...