2013 QCCA 2092, 2013 QCCA 2092

Droit de la famille — 133444 2013 QCCA 2092 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-018447-086 (500-12-278797-059) DATE: DECEMBER 6, 2013 CORAM: THE HONOURABLE MARIE-FRANCE BICH, J.A. JACQUES DUFRESNE, J.A. NICHOLAS KASIRER, J.A. B. S. APPELLANT – defendant v. M. C. RESPONDENT – plaintiff JUDGMENT [ 1 ] B.

S. has appealed a judgment of the Superior Court, District of Montreal (the Honourable Kevin Downs), rendered on January 23, 2008 and corrected on January 25, 2008, which granted a divorce between the parties and, inter alia , awarded custody of the children of the marriage to M. C., ordered the appellant to pay support, and condemned him to pay $199,281.50 as a result of the partition of the family patrimony and the partnership of acquests, with interest from the date of service. The judge did not award a provision for costs in the amount of $15,000 requested by Ms. C..

Finally, no costs were awarded. [ 2 ] The present appeal concerns only the amount Mr. S. was ordered to pay Ms. C. in respect of the partition of the family patrimony and the partnership of acquests. [ 3 ] Mr. S. advances five grounds of appeal. First, he says the judge erred in including in the family patrimony an amount representing the increase in value of a secondary residence during the marriage. Second, he argues that the judge erred in failing to divide the net value of the furniture as part of the family patrimony. Third, he says that the judge failed to consider three letters sent to Ms.

C.’s lawyer that establish that he paid her an advance on property claims prior to the judgment. Fourth, he said the judge failed to address the amount of $15,557.14 paid in advance in his determination of the amount owed to Ms. C.. Fifthly, he asks that calculation of interest on any amount he might be ordered to pay Ms.

C. be stopped on November 16, 2009 because, he says, she has been responsible for unnecessary delays on appeal since that time. [ 4 ] It bears noting that the divorce between the parties has been particularly hard fought and that this is not the first time that this Court has been confronted with proceedings brought by one or another of the parties. I Facts [ 5 ] The facts relevant to this appeal may be briefly stated. [ 6 ] The parties, who lived in Town A, were married in Las Vegas, Nevada, on August 31, 1999, without a marriage contract. Ms. C. was 34 years old at the time. Mr. S. was 37.

Two children were born of the marriage: X, in 2000, and Y, in 2003. [ 7 ] At the time of the marriage, Mr. S. had savings of about $240,000 and a similar amount held in Registered Retirement Savings Plan. He owned several condominiums and had already established himself as a successful real estate investor. At the time of the marriage, he also owned a secondary residence in Town B, having a market value of $180,000, which was free and clear of hypothecs. [ 8 ] At the time of the marriage, Ms. C. had about $10,000 in personal savings. [ 9 ] During the marriage, Mr.

S. earned approximately $100,000 annually as salary from a family business. He also continued to buy and sell residential properties as investments as a sideline. The pattern for those investments generally proceeded as follows: the family would move into the newly purchased home for a period of several months or more, renovate it and then sell, if possible, at a profit. Ms. C. assisted her husband in finding these investment properties and preparing them for resale, although the amount of time she devoted to this work was disputed at trial. She did not receive remuneration for this work.

She did not work otherwise outside the home during the marriage. [ 10 ] Separation took place on or about April 1, 2005, very soon after which Ms. C. instituted proceedings to obtain a divorce.

II Judgment of the Superior Court [ 11 ] The judge granted the divorce on the ground of a breakdown of the marriage established by separation for a period of more than one year. [ 12 ] He acknowledged that the parties filed an agreement on corollary relief which proposed that Ms. C. have custody of the two children of the marriage and that Mr. S. pay support to Ms. C. for herself and for the children, as well as an amount for rent for the apartment in which they lived. Access rights, which had been the object of disagreement between the parties, were established by the judge.

None of these matters is in dispute on appeal. [ 13 ] The judge then set forth the basis for partition of the family patrimony and the division of the partnership of acquests. What follows is his account of the matters that remain in dispute on appeal. [ 14 ] He explained the parties’ opposing positions on the division of the net value of the furniture. Mr. S. evaluated its value at $25,300 and said that he had received only a few pieces of furniture at separation worth $1,600. He claimed the balance owed to him was $11,050. On the other hand, Ms. C. evaluated the furniture at $15,000 and said that Mr.

S. had received his proper share when the furniture was divided amicably at separation. On this point, the judge wrote: [22] Il n’y a aucune preuve documentaire déposée au dossier de la Cour quant à la valeur de ce mobilier et, vu les témoignages contradictoires des parties, il n’y a pas lieu pour le Tribunal d’intervenir à cet égard. [ 15 ] As to the secondary residence in Town B, the judge observed that Mr. S. owned the property prior to marriage and that it was not encumbered by hypothec at that time or thereafter.

The judge fixed the relevant market value at $180,000 at the time of the marriage and $252,000 at the time of the institution of proceedings, thereby resulting in an increase in market value during the marriage of $72,000. [ 16 ] He then set out the basis of their disagreement. Mr. S. had argued that the residence, which he acquired before the marriage and was not used by the family, should be excluded from the family patrimony and that none of its value should be subject to partition. Ms.

C. contended that the family did use the secondary residence, and claimed that the increase in value should be included for division between the parties. [ 17 ] The judge found that the family did use the residence, albeit less frequently in the later years of marriage (paras [26] to [28]). He decided to include the increase in value of the residence of $72,000 in the family patrimony (para [29]). [ 18 ] The judge established that the gross value of the acquests was $491,053, which he characterized as "le fruit de la contribution conjointe des parties à la société [d’acquêts]" (para [35]).

He deducted amounts for losses sustained by Mr. S. and concluded that the net value of acquests was $326,563, of which $163,281.50 was to be remitted by Mr. S. to Ms. C.. To that figure he added her share of the increase in the net value of the secondary residence.

He concluded as follows in respect of the division of property between the spouses: [40] Monsieur doit donc verser à madame la somme de 36 000 $ provenant du patrimoine familial, soit la plus-value de la résidence secondaire à Ville B, plus la somme de 163 281,50 $ résultant de la dissolution et du partage de la société d’acquêts, pour un total de 199 281,50 $ . [ 19 ] The judge dismissed Ms.

C.’s claim for a compensatory allowance – initially of $96,512 and reduced to $25,000 at the hearing – given the amount she received upon dissolution of the family patrimony and the partnership of acquests, and taking into account, as well, the duration of the marriage and the alimentary pension paid to her by Mr. S. (para [39]). [ 20 ] Finally, the judge made no explicit mention of the amounts Mr. S. claimed he had paid as advances on partition of the family patrimony and the partnership of acquests. He made no mention either, in his reasons, of Ms. C.’s demand for a provision for costs. III Analysis [ 21 ] Mr.

S.’s five grounds of appeal shall be treated here in turn. III.1 Secondary Residence [ 22 ] Mr. S. submits the judge erred in including the increase in value of the secondary residence in the family patrimony. He notes that the judge accepted that he owned it outright, free and clear of hypothecs, prior to the marriage and that, pursuant to

article 418 CCQ, the increase in value should have been excluded from partition. [ 23 ] In her factum, Ms. C. conceded that the second paragraph of

article 418 CCQ provides that the increased value of a family residence owned by a spouse prior to the marriage and which has no hypothec is not subject to partition. [ 24 ] She argues, however, that this point was never raised before the judge and that the whole of the debate at trial was devoted to the question as to whether or not the property in Town B was used by the family. She submits that it therefore would be both inappropriate and unfair to raise this issue on appeal.

At the hearing, her lawyer also pointed to a reference in her own testimony that, she says, indicates that the residence was hypothecated at one stage during the marriage. Finally, Ms.

C. contends that even if the judge did err, the error should be ignored because the judge considered the inclusion of this increase in value in the family patrimony in his decision to dismiss her claim for a compensatory allowance at paragraph [39] of his reasons. [ 25 ] With due respect for the judge’s view, his decision to include the increase in value of the secondary residence of $72,000 was based on a mistake in law and should be corrected on appeal. [ 26 ] Mr. S. owned the residence prior to the marriage.

Article 415 CCQ clearly provides that unless such property is acquired by gift

or succession, it is to be included in the family patrimony as long as the family uses it. The judge found, as a matter of fact, that the family had indeed used the property sufficiently during the marriage so that it was proper to consider it a residence of the family for the purposes of

article 415 CCQ. [ 27 ] The judge correctly deducted the market value of the property at the time of the marriage from the net value of the family property subject to partition pursuant to the first paragraph of

article 418 CCQ. The judge failed, however, to deduct the increase in value of the property that accrued during the marriage according to the formula set forth in paragraph 2 of

article 418 CCQ. [ 28 ] The relevant portion of

article 418 CCQ provides as follows (emphasis added): 418. Une fois établie la valeur nette du patrimoine familial, on en déduit la valeur nette, au moment du mariage, du bien que l'un des époux possédait alors et qui fait

partie de ce patrimoine; on en déduit de même celle de l'apport, fait par l'un des époux pendant le mariage, pour l'acquisition ou l'amélioration d'un bien de ce patrimoine, lorsque cet apport a été fait à même les biens échus par succession ou donation, ou leur remploi.

On déduit également de cette valeur, dans le premier cas, la plus-value acquise, pendant le mariage, par le bien, dans la même proportion que celle qui existait, au moment du mariage, entre la valeur nette et la valeur brute du bien et, dans le second cas, la plus-value acquise, depuis l'apport, dans la même proportion que celle qui existait, au moment de l'apport, entre la valeur de l'apport et la valeur brute du bien. Le remploi, pendant le mariage, d'un bien du patrimoine familial possédé lors du mariage donne lieu aux mêmes déductions, compte tenu des adaptations nécessaires. 418.

Once the net value of the family patrimony has been established, a deduction is made from it of the net value, at the time of the marriage, of the property then owned by one of the spouses that is included in the family patrimony; similarly, a deduction is made from it of the net value of a contribution made by one of the spouses during the marriage for the acquisition or improvement of property included in the family patrimony, where the contribution was made out of property devolved by succession or gift, or its reinvestment.

A further deduction from the net value is made, in the first case, of the increase in value acquired by the property during the marriage, proportionately to the ratio existing at the time of the marriage between the net value and the gross value of the property, and, in the second case, of the increase in value acquired since the contribution, proportionately to the ratio existing at the time of the contribution between the value of the contribution and the gross value of the property.

Reinvestment during the marriage of property included in the family patrimony that was owned at the time of the marriage gives rise to the same deductions, adapted as required. [ 29 ] The judge found, as a matter of fact, that there was no security on the residence. [ 30 ] Proof was not made at trial that the residence was hypothecated. The passing reference made by Ms. C. to a "mortgage on the country house" cannot amount to such proof. No mistake has been shown by the judge on this point. [ 31 ] Applying the formula in

article 418, paragraph 2, however, the judge should have deducted an amount of $72,000 from the net value representing the increase in value ($72,000) proportionate to the ratio existing at the time of marriage between the net value of the Town B residence ($180,000) and its gross value ($180,000), i.e. ($72,000) x ($180,000/$180,000) = $72,000. [ 32 ] With due respect, he wrongly credited Ms. C. by deducting one-half of this sum – $36,000 – from the amount Mr. S. was required to pay Ms. C. at partition of the family patrimony (paras [40] and [46]). [ 33 ] Does the fact that Mr.

S. did not directly raise this argument at trial preclude him from claiming this amount on appeal? [ 34 ] It does not. [ 35 ] Mr. S.’s arguments at trial are plainly not a bar to disposing of the matter correctly on appeal. The judge committed an error of law in failing to apply

article 418, paragraph 2 CCQ. The matter was plainly before him. [1] [ 36 ] The debates at trial did turn largely on whether the residence was used by the family. But the judge had to address the question of use, as a preliminary matter, to determine whether the property was included under

article 415 CCQ. Once he decided that it was, the judge was bound to calculate the net value of the family patrimony as provided by law, including the rule on increase in value at

article 418, paragraph 2 CCQ. [ 37 ] As a final point, Ms. C. argues that had the judge excluded the increase in value on the chalet, he might have come to a different

conclusion in respect of her claim to a compensatory allowance, which he dismissed. [ 38 ] Paragraph [39] of the judge’s reasons does indeed suggest that he decided to dismiss the claim for a compensatory allowance in part because of the amounts he awarded for the family patrimony, the matrimonial regime and as support. [ 39 ] Whether this assertion is correct, and, if not, whether the judge would have decided on the claim for a compensatory allowance differently had he correctly determined the amount of the family patrimony, are matters upon which one might speculate.

This would have been properly disposed of in a cross-appeal. [ 40 ] Ms. C. did bring a motion for leave to bring a cross-appeal outside the time limit prescribed by law. The Court granted her motion to permit a cross-appeal on November 11, 2009. [2] The cross-appeal was later declared abandoned. Ms. C. subsequently brought a motion to have the abandonment cancelled, and to have the cross-appeal restored, pursuant to

section 16 of the Rules of the Court of Appeal in Civil Matters . [3] The Court dismissed that motion on July 11, 2013, with costs. [4] She cannot now revive that cross-appeal by claiming its substance in argument here. [ 41 ] To conclude on this point, an amount of $36,000 should be deducted from the total amount awarded to Ms. C. as a result of the mistaken inclusion of the increased value of the Town B residence in the family patrimony. III.2 Furniture [ 42 ] Mr.

S. submits that the judge erred by omitting to decide the value of the furniture and whether it should form part of the amount to be partitioned of the family patrimony in paragraph [22] of his reasons. [ 43 ] He has provided excerpts from transcripts of the hearing that, he says, demonstrates that Ms. C. admitted, on cross-examination, retaining a number of pieces of furniture having between $14,200 and $16,300 in value, contradicting her position that the total value of the furniture was $15,000. [ 44 ] Ms. C. answers by pointing to excerpts of her own testimony in which she states that Mr.

S. took a "big part" of the furniture and that the parties divided the property equally and amicably at the time of separation. [ 45 ] The matter is made difficult to unravel on appeal because the evidence that the appellant has filed in support of his appeal is incomplete. While the respondent has provided supplementary excerpts from the transcript of the hearing before the Superior Court, there are portions not in the record on appeal. By way of example relevant to the furniture, Mr. S. referred repeatedly to an examination before plea in his cross-examination of Ms.

C., seeking to confront her with contradictory statements. The transcript of this out-of-court examination is missing from the record. [ 46 ] A review of the partial transcript of the three days of hearing suggests, as the judge wrote at paragraph [22], that the testimony was contradictory on this point. [ 47 ] The judge’s observation in paragraph [22] suggests that his disinclination to "intervene" reflects his sense that Mr. S. had failed to meet his burden to show that the value of the furniture was what he alleged.

He failed, as well, to show that the division of furniture at separation was anything but amicable. [ 48 ] The evidence Mr. S. points to in support of his claim that $11,050 remains owed to him is inconclusive. Moreover, he has failed, on appeal, to present the full picture of the documents and extracts from the evidence necessary to determine whether the judge was in fact wrong to paraphrase

article 507, paragraph 1 CCP. The cases on point are clear: it was his obligation to furnish the materials necessary to decide whether the judge erred in considering the furniture to have been fairly divided and, having failed to produce the necessary evidence to dispose of the matter, his ground of appeal must fail. [5] III.3 Letters establishing Mr. S.’s advance payments [ 49 ] Mr. S. submits that the judge erred in failing to take account of three letters sent to a lawyer who previously represented Ms. C..

He claims that the letters he sought to introduce into evidence show he made payments on account of any claim that Ms. C. might have against him pursuant to an agreement reached between the parties. [ 50 ] With his factum, he has filed copies of the letters that accompanied these payments dated April 15, 2005, April 19, 2005 and February 7, 2006, and the cancelled cheques of $5,000 and $10,557.41 respectively. The letters were prepared by his lawyer at the time and marked "without prejudice".

The first and third letters mention expressly that the payments are considered to be a payment on account. [ 51 ] At trial, Mr. S. sought to question Ms. C. with regard to these letters. Her lawyer objected on the grounds that they were written "without prejudice". The judge sustained the objection and did not allow the letters to be included in the record. [ 52 ] Mr.

S. submits the judge erred in excluding them from evidence; that the letters were not privileged and that the heading "without prejudice" did not preclude them from being admitted into the record. [ 53 ] The argument relating to the admissibility of the letters must fail. The decision by the judge to maintain the objection to the evidence was susceptible of appeal, pursuant to

article 29, para 2 CCP, and Mr. S. did not seek to appeal the ruling. [ 54 ] In any event, taken on their own the letters, which emanate from Mr. S.’s lawyer, prove little or nothing in respect of the agreement he alleges. III.4 Payment of $15,557.14 to Ms. C. [ 55 ] It should be recalled, by way of introduction to this point, that Ms. C. asked the Superior Court for a provision for costs in the

amount of $15,000. While the judge did not expressly discuss this point in the judgment, the transcript indicates that he was not willing to award the amount, being of the view that Ms. C. had already received $15,000 as a provision for costs. [ 56 ] Mr. S. submits that the $15,557.14 alluded to in the letters should have been considered an advance and that the judge erred in not deducting it from the amount of the condemnation. He points to an exchange between Ms.

C. and her lawyer in the examination in chief in which she purportedly acknowledged that amounts of $5,000 and $10,000 were paid, saying that "there was an agreement that I would pay that [ i.e. $5,000] back at the end and then, there was ten thousand dollars ($10,000) paid but that, there was no agreement". [ 57 ] Ms.

C. answers that the judge did take the amount into account and that he specifically cited it as justification for refusing a further provision for costs. [ 58 ] Was the amount paid and, if so, was there an agreement that it was an advance? [ 59 ] Here again, the incomplete character of the record makes disposing of the argument on appeal difficult. [ 60 ] The appellant did not prove the "agreement" whereby Ms. C. desisted from a motion for provision for costs in exchange for an advance on an eventual claim to property held by Mr. S..

The letter of April 15, 2005 alludes to it but, as noted above, it was not properly admitted into evidence and the agreement was not otherwise established. [ 61 ] It would seem, from the record as constituted and in particular from the remarks of the judge at the hearing, that he considered the $15,557.14 already paid to be a provision for costs and that, given this payment, Ms. C. had no basis for claiming a further provision. [ 62 ] The fuller transcript submitted by Ms.

C. does confirm that she acknowledged an agreement whereby $5,000 paid as a provision for costs would be considered as an advance. [ 63 ] Respectfully stated, by omitting this amount in his conclusions, the judge committed a palpable and overriding error. [ 64 ] No such admission has been established for the remaining amount. [ 65 ] The Court shall accordingly deduct a further $5,000, in addition to $36,000 relating to the secondary residence, from the amount owed by Mr. S.. The new amount to be paid is $158,281.50: $199,281.50 less $41,000.

III.5 Relevant date for the calculation of interest [ 66 ] As noted above, the judge decided that interest on the balance owed by Mr. S. resulting from the partition of the family patrimony and the dissolution of the partnership of acquests should be calculated from the date of service of the Motion to Institute Proceedings, i.e . April 4, 2005. [ 67 ] At the hearing, Mr. S. asked that the calculation of interest on any amount owing by him following judgment on appeal be stopped at November 16, 2009, the date at which Ms. C.'s Motion to File a Cross-appeal was granted.

He reasons that the cross-appeal – which was declared abandoned in 2013 by reason of Ms. C.’s negligence – resulted in an unfair delay in the prosecution of his appeal that has caused him prejudice. Interest should stop accruing, he says, at the date originally scheduled to hear the appeal in 2009. [ 68 ] Mr. S.'s request is refused. While it may well be true that some of the delay here is attributable to Ms. C., the better view is that both parties are responsible for the long period of time that litigation arising out of this divorce has been before the courts.

The judge's decision in respect of the relevant date for the calculation of interest should not be disturbed. [ 69 ] The Court sees fit to record here a comment addressed to the parties at the end of the hearing by a member of the panel hearing the appeal. It is most regrettable that the parties have chosen to litigate so aggressively virtually every aspect of the breakdown of the marriage. This has resulted in time, expense and no doubt unhappiness to the parties, not to mention substantial costs for the court system.

Without calling into question their right to seize courts of their disputes, it seems plain that it would be in their interest, and no doubt in the interest of their young children, that they seek out other means to settle their differences. [ 70 ] They shall be no order as to costs given the nature of the dispute and its divided outcome.

FOR THE FOREGOING REASONS, THE COURT : [ 71 ] ALLOWS the appeal in part; [ 72 ] STRIKES paragraph [46] from the corrected judgment of January 25, 2008 and REPLACES it with the following: [46] CONDAMNE monsieur à verser à madame la somme de 158 281,50 $, résultant du partage du patrimoine familial et de la dissolution de la société d’acquêts, plus les intérêts à compter de l’assignation. [ 73 ] CONFIRMS the judgment in other respects; [ 74 ] Without costs. MARIE-FRANCE BICH, J.A. JACQUES DUFRESNE, J.A.

NICHOLAS KASIRER, J.A. Mr. B. S. In person Mtre Élaine Bissonnette For the respondent Date of hearing: December 5, 2013