2011 ONSC 942, 2011 ONSC 942

CITATION : Kane v. Sevigny, 2011 ONSC 942 COURT FILE NO.: Kingston 03/09 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: )) ) CATHERINE ANNE KANE ) ) ) Mark S. LaFrance, for the Applicant ) Applicant ) ) - and - ) ) ) CLAUDE PATRICK SEVIGNY ) ) ) Sharon Hodkinson, for the Respondent ) Respondent ) ) ) ) HEARD: December 1, 2, 3, 2010 Mr. Justice A.D. Sheffield [ 1 ] By way of an application dated January 2, 2009, the Applicant, Ms. Catherine Kane, sought an order granting a divorce from the Respondent, Mr.

Claude Sevigny, directing the sale of the matrimonial home, occupational rent, an equalization of net family property, directing that the Respondent maintain all expenses associated with the matrimonial home, and pre and post judgment interest. [ 2 ] At the time of trial, the parties had resolved all outstanding differences except the equalization of net family property.

They further agree that the net proceeds of the sale of the matrimonial home in the amount of $333,577 presently being held in trust is the only asset left to be apportioned between them. [ 3 ] What they cannot agree upon is how these monies should be apportioned. The Applicant seeks an order directing an equalization payment in the amount of $192,500 be made to the Respondent, with the balance payable to her, while the Respondent seeks a payment in his favour approximating $306,000. [ 4 ] Although a divorce was requested in the notice of application, the file is not divorce ready.

I am not seized of this matter and a divorce may proceed once the appropriate certificates have been filed. Background [ 5 ] The parties were married on July 21, 2001 and separated on May 31, 2008. Although there were initially a few attempts to reconcile, none such were successful. There is no present prospect of reconciliation. [ 6 ] The evidence discloses that on the eve of their marriage the parties had a brief discussion concerning their individual assets and liabilities. At that time, the Respondent avowed that he had very few assets and no liabilities or debts.

He did not disclose that he had debts totalling close to $30,000; that his mother was holding approximately $130,000 of his money in bank accounts and investments in her name; or that he was going to declare bankruptcy. During this same brief discussion, the Applicant disclosed that she owned her home subject to a manageable mortgage; that she had some 22 years tenure and experience as a registered nurse at Kingston General Hospital which included a salary, benefits, and a pension; and she had some modest savings.

[ 7 ] Four weeks after their marriage, on August 23, 2001, the Respondent, without notice or consultation to his new wife or to his mother who was apparently holding $130,000 of his money, made an assignment into personal bankruptcy claiming assets of only $2,000 and liabilities of over $28,000.

Based on the Respondent’s admissions in cross-examination, he deliberately misled both his creditors and the trustee by providing incorrect information including but not limited to declaring his marital status as “divorced” and swearing that “this statement is, to the best of my knowledge a full, true and complete statement of my affairs on the 23 rd day of August, 2001 and fully discloses all property and transactions of every description that is or was in my possession or that may devolve on me in accordance with

section 67 of the Bankruptcy and Insolvency Act .” [ 8 ] An absolute order of discharge of bankrupt was issued by the Superior Court of Justice on October 18, 2002 with the only difference between his assignment and the discharge being a boat which was overlooked by the Respondent as an asset but discovered by the trustee prior to discharge. The end result was a disclosure of assets in the amount of $6,000 and debts totalling over $28,000.

The Respondent’s creditors received 15 cents on the dollar and no mention was made of the Respondent’s apparent $130,000 held by his mother. [ 9 ] Shortly after the Respondent’s discharge from bankruptcy, the parties bought a piece of land where they eventually built their matrimonial home. Title to the subject property was taken in the Applicant’s name alone, however, the evidence discloses that each of the parties contributed financially to the cost of building and maintaining the matrimonial home. At the date of separation, the property was valued at approximately $540,000.

The property ultimately sold some 17 months after separation for $670,000. [ 10 ] Following separation, as noted above, the parties made several futile attempts at reconciliation. Although the evidence is conflicting, I am satisfied that their relationship had deteriorated to a point that continued co-habitation was neither practical nor feasible and that the Applicant left the matrimonial home to avoid threats of physical and emotional harm.

This left the Respondent in exclusive possession of the matrimonial home from the date of separation to the date of sale, a period of 17 months. [ 11 ] Also following separation, the Applicant purchased her own residence by accessing a pre-existing line of credit for the sum of $205,000 which was secured against the parties’ matrimonial home. The parties agree that the Applicant is solely responsible for this debt and it will not form part of this Judgment.

Credibility [ 12 ] Part of the difficulty in resolving the net equalization of family property is grounded in the fact that each party has filed financial statements in which they both admit to making errors. A considerable portion of the court’s time at trial was taken in relation to receiving explanations as to why these errors were initially made then repeated over the protracted course of this litigation. However, having now had an opportunity to review these materials, I find the evidence of Ms.

Kane to be more reliable and trustworthy and accordingly, where there were inconsistencies in the evidence offered and no third party evidence was forthcoming, I have preferred the evidence of Ms. Kane. Net Family Property [ 13 ] As noted above the net proceeds of sale of the matrimonial home after all fees, commissions and registered encumbrances were paid amounts to $333,577. [ 14 ] In reviewing the materials filed in support of each party’s net family property calculation, I am mindful of the words of Robertson J. in Flatters v. Brown , [1999] O.J. No. 2608 (Sup.

Ct.) wherein she stated: 2 The court has no discretion to divide marital property according to its own sense of fairness and cannot simply award support without an application. … … 4 Each entry on the Net Family Property Statement (NFP) is determined on the evidence regarding that specific property item. … … 13 The court can only consider the presented evidence.

The court cannot consider documents, facts or corroborative witnesses, which might exist but are neither disclosed nor tendered at trial. … [ 15 ] In the case at bar, very little third party evidence was tendered on the contentious values for net family property. In several instances, it was strictly a “he said/she said” claim. In those circumstances, unless the result was unconscionable which I did not find in this case, for the reasons of credibility stated above, I have found in favour of the Applicant.

The Respondent’s Date of Marriage Deduction [ 16 ] One of the major hurdles precluding settlement in this matter is grounded in the fact that the Respondent has admitted to deliberately misleading the Superior Court of Justice as well as his family in all matters concerning his bankruptcy. He has acknowledged that between the time of marriage and the day he filed for bankruptcy four weeks later, he did not experience any financial crisis or windfall. He has admitted to not disclosing assets to the trustee in bankruptcy when to not do so was to his financial advantage.

However, since this position is no longer to his advantage, he now wishes the Superior Court to ignore his previous sworn statements and acknowledge his true assets at date of marriage as being over $190,000 which he believes to be “rightfully” his in a division of net family property. In

summary, although the Respondent eventually declared to the bankruptcy court that at the time of marriage he had assets of only $6,000, he has since filed four different financial statements each claiming a different amount for his assets at date of

marriage, culminating in a final claim of assets worth $192,251.33 on his December 1, 2010 statement. [ 17 ] The Respondent has asked this court to ignore his previous sworn statements to the trustee and believe that he had assets far in excess of his bankruptcy debts, yet declared bankruptcy anyway. However, to do this would be to condone his deliberate behaviour in misleading the trustee and this court will not do that. I am mindful of the sentiments expressed in Ho v. Ho, [1993] O.J. No. 2919 (Sup. Ct.) : 19 …I accept the evidence of the husband that the funds were transferred to Mrs. Ho for tax purposes.

That does not end the matter however. Mr. Ho cannot have it both ways. The funds are either his wife's or his. If they are his, then there would be no basis upon which Mrs. Ho would have to pay tax on the interest derived from the funds. Clearly, if Mr. Ho had been asked by the Department of National Revenue, in 1989, whose funds they were, he most certainly would have answered "my wife's".

That answer would have been true and he cannot now, in the face of the separation and the Family Law Act, reverse the facts. [Emphasis added.] [ 18 ] This statement is equally true in this case. [ 19 ] The Respondent shall be held to his date of marriage assets and liabilities as previously declared and sworn to in his bankruptcy proceedings; namely $6,000 in assets and approximately $28,000 in liabilities. These assets and liabilities were discharged in 2002 with no credit or debit necessary to the family finances.

Consequently, I am not including these in the net equalization of family property and will credit the Respondent with assets and liabilities of $0 at date of marriage. Disputed Net Family Property [ 20 ] Where the parties have agreed on net family property values, I have accepted them. Where the parties did not agree, I have found the following: (

a) Household goods The Respondent asked for a value of $2,200 to be attributed to himself but did not provide any breakdown, nor pictures of exactly what contents a house valued at over $650,000 contained. There was no dispute that the major appliances and a leather couch were retained by him as well as a plethora of miscellaneous goods that were never categorized. I have accepted the Applicant’s numbers concerning the value of the contents retained by the Respondent as being $10,000. The household goods retained by the Applicant were summarized but no value was acknowledged by her.

The Respondent has advocated for a value of $1,450. I accept Ms. Kane’s value. (b) 2005 Toyota or 2005 Honda This vehicle was listed as two different vehicles by the parties but the evidence led was for one vehicle only. The Respondent provided a Kijiji advertisement showing a value for a 2005 Honda of $3,100. No comparisons were made between this vehicle and his own to allow me to ascertain that what would be a valid price. Therefore, I have accepted Ms. Kane’s value of $4,100. (

c) Sailboat and trailer Neither party tendered any current evidence as to the value of the boat and trailer. I accepted Ms. Kane’s value of $7,500. (

d) Tools The Respondent’s original two estimates of the value of his tools were $100,000. He later reduced his claim to $11,500 without any explanation except he had made an error. His cross examination confirmed that he was using “fair market value.” in his first two estimates. The Applicant claims the Respondent’s tools at $100,000. The Respondent failed to file any materials showing a breakdown of what the value of his tools was or how he arrived at his determination; nor did he file a list of what tools were included in his valuation.

Absent any credible explanation as to how he decreased the value of his tools by almost $90,000, or even a simple list of what he is claiming as tools, I accept his original value of $100,000. (

e) Engagement Ring I was given no credible evidence as to the disposition of this ring and have no means of deciding its whereabouts. Consequently, I have accepted Ms. Kane’s value and assigned $3,500 to Mr. Sevigny. (

f) TD VISA The Applicant has undertaken to pay the pre-separation debt charged against the TD VISA in her name. $6,218 was incurred post separation and she has asked that the Respondent assume responsibility for one-half. She has also asked that this be paid directly from the monies held in trust for the Respondent and paid to her for credit to her VISA as she is ultimately responsible for the debt. Both requests are fair and reasonable. An order will issue accordingly. (

g) Scotiabank VISA The Respondent has assigned a value of $1,195; the Applicant $987. Based on the statement at Exhibit 2, tab 20, I have accepted the Applicant’s number as correct. (h) $57,000 inheritance to the Respondent

This money was from the sale of property held by the Respondent’s parents. Although there is no doubt this property was sold, there is no direct evidence showing that this money was received by the parties in its entirety or where it went. The best evidence is the Respondent’s testimony that it was absorbed into the building of the matrimonial home which makes these monies, no matter exactly how much received, family funds. This amount is disallowed. (

i) Monies from the law suit, vehicles owned at date of marriage, monies held in mother’s account, etc. As noted above, any and all assets should have been declared in the Respondent’s bankruptcy proceedings. This court is accepting the Respondent’s sworn statement in his earlier court proceedings. (j) $25,000 loan from the Respondent’s mother The evidence on this point was inconsistent and contradictory. The debt was said to be $25,000 but the only evidence tendered showed a debit from the mother’s account of $26,100 with a corresponding credit to the parties’ joint account.

The Respondent and his mother disagree on how much had been repaid and how much was left owing. The Respondent and his mother testified that the Applicant was party to the loan discussions but the Applicant has denied any knowledge of this debt. Even if this debt could be considered valid, I have no evidence by which to assign a value as both the Respondent and his mother do not agree. Absent any cogent evidence on this point, this amount is disallowed. (k) $1,800 GST owing by Respondent to CRA No evidence was tendered.

This amount is disallowed. [ 21 ] Using the above values and those agreed upon by the parties, I find the Net Family Property distribution to be as follows: NET FAMILY PROPERTY STATEMENT ITEM HUSBAND WIFE 1.

Assets Matrimonial home $633,231.00 Household goods $10,000.00 2005 Toyota/Honda $4,100.00 Sailboat and trailer $7,500.00 Tools $100,000.00 Stained Glass Materials $7,500.00 Engagement ring $3,500.00 Joint Bank Account (TD) $1,038.00 $1,038.00 RRSP (TD pretax value) $10,499.00 RRSP (TD pretax value) $2,575.00 RRSP (KCCU) $13,156.00 Bank Account (KCCU) $217.00 RRSP (Concentra) $14,227.00 Bank Account (TD) $1,091.00 Bank Account (TD) $3,354.00 Bank Account (KCCU) $280.00 RRSP (Investors) $31,128.00 Pension $81,829.00 TOTAL 1. $169,491.00 $756,772.00 2.

Debts and Liabilities Mortgage $93,460.00 VISA (TD Emerald) -- preseparation debt $3,116.00 VISA (TD Emerald) $6,218 post separation debt . Mr. Sevigny’s portion to be paid to Ms. Kane from the monies held in trust for him $3,109.00 $3,109.00 VISA (Scotiabank) $987.00 Line of Credit (TD) $7,325.00 Notional tax (RRSP TD) $2,204.00 Notional tax (RRSP TD) $540.00 Notional tax (RRSP KCCU) $2,763.00 Notional tax (RRSP Concentra) $2,987.00 Notional tax (RRSP Investors) $6,536.00 TOTAL 2. $9,645.00 $116,491.00 3. Property Owned at Marriage Household Items and Vehicles $7,500.00

Land $54,284.00 Bank Accounts, savings, securities, pensions, insurance, etc. $17,786.00 Notional tax on pre-marriage RRSP -$3,734.00 TOTAL 3 . $0.00 $75,836.00 4. Excluded Property TOTAL 4. $0.00 $0.00 5. Net Family Property (Total 1 minus Totals 2, 3 and 4) $159,846.00 $564,445.00 6. Equalization Payment Wife pays to Husband $202,299.50 owered by DIVORCEmate Software Inc. (c) 2002 Deductions/Credits Post Separation [ 22 ] The Applicant has claimed occupational rent for the 17 months in which she could no longer reside in the matrimonial home.

During this time period, she incurred debt to find other living accommodations as well as paid the mortgage, taxes and utilities on the matrimonial home while the Respondent resided there. The Respondent agreed that rent for a home such as theirs would be approximately $2,000 per month but he vehemently disagrees that any occupational rent should be owing on his part as he spent this time finishing and upgrading the matrimonial home for sale. I disagree and will deal with the home improvements later. [ 23 ] I agree that the Applicant was unable to continue to reside in the matrimonial home.

I further find that the Applicant assumed responsibility for the mortgage, taxes and utilities of the matrimonial home while also financially maintaining her own residence. She is entitled to occupational rent. Therefore, I find the Applicant is owed 17 months x $2,000/month for a total of $34,000. [ 24 ] The Respondent has claimed a constructive trust in the matrimonial home seeking reimbursement for the materials and labour expended to ready the home for sale.

He has only been able to produce receipts for a fraction of the $16,000 claimed and not shown himself to be credible during proceedings before the Superior Court of Justice. However, there is no doubt that the home increased in value from $540,000 at date of separation to $670,000 at time of sale and neither party indicated this was due to market factors. In my view, denying the Respondent credit for his time and materials may lead to an unconscionable result given the home’s subsequent increase in value. Consequently, I will accept his testimony in this regard and assign him a post separation credit of $16,000.

Final Accounting Applicant owes Respondent $202,299.50 Credit to Respondent for work done post separation $ 16,000.00 Credit to Applicant for occupational rent $-34,000.00 Therefore, Applicant owes Respondent $184,299.50 Respondent’s payment for the TD VISA $- 3,109.00 Therefore, Applicant owes Respondent $181,190.50 [ 25 ] Inasmuch as no submissions were received from either party, there shall be no order for pre or post judgment interest. Monies Held in Trust [ 26 ] Any interest accrued over and above $333,577 shall be divided equally between the parties.

Any additional fees for the distribution of these funds shall also be divided equally between the parties. [ 27 ] Of the monies held in trust from the sale of the matrimonial home, Messrs.

Black and Black are to release the following funds on or after February 28, 2011, upon direction of either party: (a) $100,000 shall be released to the Respondent with the balance of $81,190.50, subject to paragraph 26 above, to continue to be held in trust for the Respondent; and, (b) $100,000 shall be released to the Applicant with the remainder of the monies, subject to paragraph 26 above, to continue to be held in trust for the Applicant.

Costs [ 28 ] I shall entertain brief submissions on the issue of costs from the Applicant by February 18, from the Respondent by February 25 and with a three day right of reply. Any costs awarded shall be paid from the monies which continue to be held in trust for each of the parties with the remaining monies to be paid out upon satisfaction of any costs award.

___________________________ Sheffield J. Released : February 10, 2011 CITATION : Kane v. Sevigny, 2011 ONSC 942 COURT FILE NO.: Kingston 03/09 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: CATHERINE ANNE KANE Mark S. LaFrance, for the Applicant - and – CLAUDE PATRICK SEVIGNY Sharon Hodkinson, for the Respondent REASONS FOR JUDGMENT Sheffield J.

Released : February 10, 2011