2021 QCCA 1030, 2021 QCCA 1030

Droit de la famille — 211142 2021 QCCA 1030 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-028877-207 (500-12-332141-161) DATE: June 18, 2021 CORAM: THE HONOURABLE FRANÇOIS DOYON, J.A. SUZANNE GAGNÉ, J.A. GENEVIÈVE COTNAM, J.A. S. S. APPELLANT – Applicant v. B. H. RESPONDENT – Defendant JUDGMENT [ 1 ] This is an appeal from a judgment rendered on January 27, 2020, by the Superior Court, district of Montreal (the honourable Madam Justice Micheline Perrault), granting a divorce petition and adjudicating corollary relief. [1] - I - [ 2 ] For the most part, the facts are not contested.

The parties were married on August 14, 1994, without a marriage contract, and two children were born from the marriage. [ 3 ] Prior to the marriage, on October 15, 1980, the appellant purchased a property located at [...], for the price of $11,150 (the “ Chalet ”). [2] It is not contested by the respondent that the Chalet was worth $20,100 at the time of the marriage, and $94,900 at the time of the proceedings. [3] [ 4 ] On April 19, 1995, the parties jointly purchased the family home (“ Grenier ”) [4] for the sum of $112,000, with a deposit of $5,000 from the appellant and a mortgage of $107,000. [ 5 ] On June 19, 2009, the couple remortgaged the Chalet, both of them signing the deed of hypothecary loan for a mortgage of $87,552. [5] On June 23, 2009, they jointly purchased a duplex (“ Kildare ”) which they moved into while renting out the other unit.

The appellant contends that the unit in which they lived forms part of the family patrimony while the other unit is an acquest. This element is also not contested by the respondent. [6] Furthermore, the appellant alleges that some of the funds from the Chalet mortgage, totalling $37,928, were used as a down payment for the purchase of the Kildare property, the balance of the $425,000 purchase price having been financed by a mortgage in the amount of $387,072. [7] [ 6 ] In 2010, the respondent and her daughters moved to Florida, USA, while the appellant continued to live in the Kildare property in Town A.

While in Florida, the respondent opened a hairdresser and barber school, the [Company A] (“ [Company A] ”). While the respondent was the sole shareholder of [Company A], the appellant was an investor, having provided a loan of $150,000 in 2012 which was obtained by mortgaging a property owned solely by the appellant.

The loan was made through a transfer from [Company B], the appellant’s Company, to [Company A], at a 12% interest rate and with the condition that it be repaid in full by December 15, 2015. [8] [ 7 ] Throughout the marriage, the appellant contributed to the Government and Public Employees Retirement Plan (“RREGOP”), which was valued at $457,991 at the time of the proceedings. [9] He also benefited from a registered retirement income fund (“RRIF”) valued at $21,280.60 at that same moment. [10] [ 8 ] On September 2, 2016, the appellant initiated divorce proceedings and served them on the respondent. [11] - II - [ 9 ] After introducing the parties and setting out the context, the trial judge divided her analysis by ruling on the divorce, the child

support and special expenses, the spousal support, the partition of the family patrimony, the dissolution of the partnership of acquests, the compensatory allowance, various claims, and, finally, the provision for costs. As the other elements are not contested on appeal, only the relevant conclusions with regards to the family patrimony and the partnership of acquests will be outlined. [ 10 ] Regarding the partition of the family patrimony, the trial judge first ruled on the Chalet.

She concluded that it is part of the family patrimony and that the appellant is entitled to a deduction therefrom, having purchased the property prior to the marriage. [12] However, as he did not provide evidence of the net value of the property at the date of the marriage, and as there were subsequent renovations made to the property with funds from the family patrimony, she decided that the total deduction he is entitled to is his initial investment of $11,150. [ 11 ] Second, she reviewed the appellant’s pension plans and registered retirement savings plan (“ RRSP ”) and established their worth at the time of the institution of the divorce proceedings. [13] She indicated that the cashing in of the RRSP by the appellant does not affect the inclusion of the RRSP within the family patrimony, but that its tax consequences should be shared between the parties.

As such, she established the tax rate at 35%, making the shareable value of the RRSP $34,186.10.

She concluded that the respondent is entitled to the following: (1) $17,093.05 as her share of the RRSP; (2) $10,640.30 as her share of the RRIF; and (3) $228,995.50 as her share of the RREGOP. [ 12 ] As for the partnership of acquests, she ruled on three properties: (1) the Grenier property; (2) the Kildare property; and (3) the [Company A]. [14] Regarding [Company A], the judge concluded that its value must be established as of the date of liquidation, at which point it had ceased its operations; there was therefore no value attributed to it.

The judge nevertheless commented on the expert reports tendered by the parties. She considered their use in the course of the divorce proceedings to be questionable as they were prepared for other purposes with other objectives in mind. [ 13 ] Finally, barring an agreement between the parties, she ordered the sale of the Grenier and Kildare properties. [15] - III - [ 14 ] The appeal raises the following issues: 1. The date of valuation of the respondent’s shares in [Company A]; 2. The deductions to the benefit of the appellant in the Chalet; 3.

The deductions to the benefit of the appellant in the Kildare property; 4.

The partition of the appellant’s RREGOP and RRIF. - IV - Value of [Company A] [ 15 ] The appellant contends that the trial judge erred in using the date of the judgment for the valuation of [Company A]. [ 16 ] Generally, in the context of a divorce, property of the partnership of acquests is valued in conjunction with the effects of the dissolution, [16] which may be at the time of the institution of the proceedings [17] or, exceptionally, at the date the parties ceased sharing a community of life. [18] Otherwise, property which is susceptible of compensation is valued at the time of liquidation, [19] which often coincides with the date of the judgment granting the divorce. [ 17 ] In this instance,

article 476 C.C.Q. is not applicable as the respondent has no private property to operate compensation with her shares in [Company A]. The judge should therefore have retained the date of the institution of the proceedings, namely, September 2, 2016, for valuing the property of the partnership of acquests. [20] [ 18 ] However, there is no justification for revising the judgment in this regard.

Indeed, the judge expressed reservations about the expert reports and relied instead on the respondent's testimony about the unprofitability of [Company A] since 2016 and the efforts she made to sell it. [21] We share these reservations. The expert evidence itself is tenuous and cannot guide the Court in establishing a clear value for this property at the relevant time, i.e. at the time of the institution of the proceedings in 2016. [ 19 ] The reports prepared by Mr. David A. Levy were done on a “value in use” or “going-concern” premise, which proved to be mistaken.

Furthermore, the revised report provides an evaluation as at December 31, 2018, which is not compelling given the valuation date that should have been used. [ 20 ] As for the reports prepared by Mr. Salvatore Urso, they do not adequately reflect the situation in 2016, at which time [Company A] owed at least $365,000 in loans to the appellant’s holding Company. [ 21 ] Barring an overriding and palpable error made by the trial judge in her factual determinations, we are bound by this conclusion. As such, the Court dismisses this ground.

Deduction to the benefit of the appellant in the Chalet [ 22 ] The appellant argues that the trial judge erred in asserting that there was no evidence as to the value of the property at the time of

the marriage and at the time of the proceedings, given that municipal evaluations for the years 1994 (date of marriage) and 2016 (date of proceedings) were filed. [ 23 ] He is correct in this contention. [ 24 ] The net value of the Chalet at the time of marriage is indeed known, by referring to the 1994 municipal evaluation. [22] The appellant correctly points out that such evaluations may be used as the “best evidence available”. [23] Indeed, “[e]vidence of any fact relevant to a dispute is admissible and may be produced by any means”. [24] It is therefore erroneous to state, as the trial judge did, that “the net and gross values of the Chalet at the time of marriage are unknown”. [25] The Court will therefore grant a deduction of $20,100 to the benefit of the appellant in the Chalet. [ 25 ] In other respects, the judge concluded that the change in value of the Chalet between the date of the marriage and the date of the dissolution of the family patrimony was due to the significant renovations during the marriage.

There is no reason to intervene on this conclusion. As such, the appellant is not entitled to a further deduction.

Deduction to the benefit of the appellant in the Kildare property [ 26 ] The appellant submits that the judge erred in qualifying the Kildare property solely as part of the partnership of acquests rather than part of the family patrimony, and in not granting a further deduction for the reinvestment of the appellant’s private property for the purchase of the Kildare property. [ 27 ] The Court disagrees. [ 28 ] Whether the Kildare property is considered part of the family patrimony or part of the partnership of acquests (or both), the trial judge did not err in not deducting the amounts that the appellant alleges he contributed to the property from his private property. [ 29 ] On the one hand, if the Kildare property is deemed to be a family residence and as such forms part of the family patrimony, in order to calculate the net partitionable value, the debts incurred for its acquisition must be deducted from its gross value. [26] The total debts may be deducted as a single aggregate amount from the entirety of the family patrimony. [27] As both properties would be part of the family patrimony, the value of the mortgage deducted to obtain the net shareable value of the Chalet is already accounted for in the global calculations related to the family patrimony.

Moreover, since both parties are liable for the repayment of the mortgage on the Chalet, the amounts alleged to have been used in the purchase of Kildare cannot be deemed a reinvestment for the purposes of art. 418 C .C.Q. , since they consist of a liability rather than an asset. [ 30 ] On the other hand, the conclusion would be the same if the Kildare property were deemed to be an acquest. The real property in question is the value of the mortgage for the loan made to both parties.

The fact that the Chalet was presented as collateral for the mortgage does not change the qualification of the loan as a debt by both parties rather than as the appellant’s private property. [ 31 ] This submission must consequently be dismissed.

Partition of the pension plans [ 32 ] As for the pension plans, it is clear that the trial judge was aware of the potential fiscal impact of the division of the various retirement plans, having established a tax rate of 35% for 2016 regarding the appellant’s RRSP (which had been withdrawn in the year prior to the proceedings). [28] She ordered the division of the RRIF and the RREGOP in the same paragraph of her judgment.

Furthermore, she unequivocally rejected the possibility of unequal partition. [29] In the Court’s view, the intention was to order that the assets in the RRIF and in the RREGOP be transferred to the respondent, having regard to the potential fiscal impact. The Court will therefore order the partition of the RRIF by rollover. [ 33 ] Regarding the RREGOP, it is well established that the court ordering the partition of a pension plan has no discretion in establishing the modalities of the partition where such pension plan is governed or established by

an act. [30] [ 34 ] Thus, while this element could have been stated in the conclusions, the trial judge did not err in not qualifying the fiscal impact of the partition with regards to the RREGOP, since such partition must be done in accordance with the applicable laws and regulations. FOR THESE REASONS, THE COURT: [ 35 ] grantS the appeal in part; [ 36 ] REPLACES paragraphs [160] and [161] of the conclusions with the following: [160] ORDERS Applicant to pay to Defendant the sum of $38,913.50 as her share of the residence situated at [...], in Town B, together with interest and the additional indemnity provided at

Article 1619 of the Civil Code of Québec since the institution of the proceedings; [161] ORDERS Applicant to pay to Defendant $17,093.05 as her share of his RRSP and $10,640.30 by way of rollover as her share of the RRIF, together with interest and the additional indemnity provided at

Article 1619 of the Civil Code of Québec since the institution of the proceedings, and ORDERS that the benefits accumulated in the Applicant’s RREGOP from the date of the marriage (August 14, 1994) until the date of the proceedings (September 2, 2016) be partitioned equally in accordance with the applicable laws and regulations governing the pension plan; [ 37 ] THE WHOLE , without legal costs.

FRANÇOIS DOYON, J.A. SUZANNE GAGNÉ, J.A. GENEVIÈVE COTNAM, J.A. Mtre Andrew H. Heft HEFT FAMILY LAW For Appellant Mtre Gérald Stotland Mtre Eva Mckenzie Fog LAVERY, DE BILLY For Respondent Date of hearing: June 15, 2021