2020 QCCA 478, 2020 QCCA 478

Droit de la famille — 20471 2020 QCCA 478 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-028513-190 (500-12-328245-158) DATE: MARCH 24, 2020 CORAM: THE HONOURABLE FRANÇOIS PELLETIER, J.A. SUZANNE GAGNÉ, J.A. LUCIE FOURNIER, J.A. S. S. APPELLANT – Defendant v. T. F. RESPONDENT – Plaintiff JUDGMENT [ 1 ] The appellant appeals from a judgment rendered on July 12, 2019 and corrected on August 22, 2019 by the Superior Court, District of Montreal (the Honourable Madam Justice Guylaine Duplessis), that granted the parties’ divorce and adjudicated corollary relief. [1] I.

Background [ 2 ] The parties are originally from City A, [Province A]. They moved to Quebec in 1999 so that the respondent could work in the family business. The business had operated for 75 years [...]. Until very recently, the F. family owned five [franchise A], all of which closed due to a declining market. There is currently only one store left, [store A]. The respondent works there as manager. [ 3 ] The parties married on July 22, 2000 in [Province A] under the regime of partnership of acquests, because, at the time, they were domiciled in Quebec.

Three children were born of their union: - X, born in City B on [...], 2001 (18 years old); - Y, born in City B on [...], 2003 (16 years old); - Z, born in City B on [...], 2006 (13 years old). [ 4 ] Their marriage was a traditional one in the sense that the respondent worked and handled the family’s finances while the appellant stayed home to care for the children. [ 5 ] In 2005, the parties, as undivided co-owners, purchased a house located at [...] in City B.

During the period the parties cohabited, the respondent paid all bills related to the family residence. [ 6 ] On April 13, 2008, the respondent signed a written employment contract with [store A] that included the following: 11 RETIREMENT PENSION 11.1 In recognition of the services provided by the Employee during his years of service to the Company, the Company intends to create a pension plan for its key employees from which the Employee will benefit as stipulated herein or as otherwise determined from time to time by the Company. [ 7 ] The parties ceased living together on October 9, 2014.

At that time, the appellant retained the exclusive use of the family residence and custody of the three minor children. During the same period, she began to work as a house keeper, which allowed her to earn a modest income. [2] [ 8 ] At the beginning of 2015, the parties met with their lawyers and agreed that the respondent would pay spousal support, child support and an amount of $250 per month in order to cover the children’s special expenses. [3] Concurrently with the signing of that agreement, the respondent informed the appellant that he could no longer pay the expenses related to the family residence.

The appellant

paid those expenses as of then. [ 9 ] On September 18, 2015, the respondent filed for divorce. [ 10 ] On September 14, 2016, the appellant filed a cross-application.

She claimed, inter alia , a lump sum equal to the respondent’s share in the family residence. [ 11 ] On December 7, 2016, the parties entered into an interim agreement in which they acknowledged the following in particular: • The appellant would continue to have custody of the children and the respondent would have certain access rights; • The respondent would pay the appellant monthly child support of $1,130; • The respondent would pay the appellant monthly spousal support of $970. [4] [ 12 ] On March 23, 2018, the appellant asked the Superior Court to order the respondent to renew their mortgage, which was coming due.

At the hearing, that conclusion was postponed to the judgment on the merits, but Dugré, J.S.C., noted the following in his decision: [ translation ] CONSIDERING that the parties are co-owners of a house having a value of $450,000 and equity of approximately $190,000; CONSIDERING that, in the current situation, the parties are obviously unable to make ends meet and must therefore consider selling their house given their family and financial situation; […] CONSIDERING that the parties are strongly urged to sell their home in order to solve their financial problem; [5] [ 13 ] The trial on the merits was held from February 4 to 6, 2019.

II. Judgment under appeal [ 14 ] After ruling on the divorce, custody of the children and child support, the judge proceeded with the partition of the family patrimony. [ 15 ] She was of the view that the parties did not have the means to keep the co-owned family residence. She therefore ordered them to hire a real estate agent to sell the house as quickly as possible and she further ordered them to divide the balance of the selling price equally between them.

She granted the appellant the use of the family residence until the sale and ordered her to assume all fees and costs of the family residence. [6] [ 16 ] Absent an evaluation of the movable property in the family residence, but given evidence demonstrating that said property had no substantial value, the judge granted each party ownership of the movable property then in their respective possession. [7] [ 17 ] The judge rejected the appellant’s argument that she was entitled to half the sums [store A] had undertaken to pay to the respondent as a pension plan.

She noted that “no such a Pension Plan has yet been created by the company” and consequently declared that “the Husband has no pension plan accumulated during the marriage”. [8] [ 18 ] With respect to the dissolution of the matrimonial regime, the judge observed that there were no acquests to be partitioned. There was only a $9,310 debt on the respondent’s Visa credit card for expenses incurred for the family’s needs before the separation. She decided that this debt should be shared between the parties. [9] [ 19 ] The judge then considered the request for a lump sum.

She was of the view that the existing situation indicated that the appellant was still financially dependent on the respondent, but the latter had few assets and was highly indebted. In light of all the circumstances, she ordered the respondent to pay a lump sum of $10,000. [10] [ 20 ] Lastly, the judge ordered the respondent to pay the appellant spousal support of $1,021.20 a month as well as a provision for costs of $5,000. [11] III.

The issues in dispute [ 21 ] The appeal raises the following issues: • Did the trial judge err in applying the rules of the family patrimony to the partition of the family residence? • Did the trial judge err in determining the amount of the lump sum? • Did the trial judge err in applying the rules of partnerships of acquests when she ordered the appellant to pay half of a debt incurred by the respondent? • Did the trial judge err in refusing to order the partition of the respondent’s pension fund? IV. Analysis A. The family residence

[ 22 ] The appellant claims that the trial judge erred by applying the Civil Code of Québec provisions on undivided co-ownership, given that the rules relating to the family patrimony are of public order. The respondent argues that a literal

interpretation of articles 414 and 415 C.C.Q. supports the conclusion that property held in co-ownership is not included in the family patrimony. [ 23 ] The respondent is wrong. It is well established that undivided co-ownership between the spouses does not preclude the application of the family patrimony rules. [12] Furthermore, those rules take precedence over the rules of undivided co-ownership and a judge granting a divorce must first partition the family patrimony before terminating the indivision. [13] [ 24 ] In the present case, however, the parties are not claiming any deductions under

article 418 C.C.Q. , such that applying the rules of undivided co-ownership in order to partition the residence has no impact on the claims resulting from the partition of the family patrimony. [14] It is sufficient to note that on the partition date, the house and the mortgage formed part of the family patrimony. [ 25 ] The Court also rejects the appellant’s contention that the judge ruled ultra petita by ordering the sale of the family residence.

In family matters, the trial judge has broad discretion, such that the ultra petita rule must be applied more flexibly. [15] In the present case, the departure, if any, from the rule, did not impair the appellant’s right to be heard, because respondent’s counsel, during his oral arguments, expressly requested that the house be put up for sale. [16] Furthermore, given the facts in the case, the fate of the house was a predictable issue and the appellant was not deprived in any way of her right to assert all her arguments in that regard. [ 26 ] Be that as it may, the appellant argues that the respondent is not entitled to his share in the current value of the house insofar as he ceased to act as a co-owner when he stopped paying the mortgage instalments and the other expenses related to the house.

The appellant is of the view that he should be entitled to the net value of the immovable at the time of the separation or on the date the divorce proceedings were instituted. [ 27 ] The Court cannot accept this ground of appeal. The former spouses continue to co-own the house as long as partition has not been effected.

As Jean-Pierre Senécal, J.S.C. explained, [ translation ] “each of them is entitled to or bears the change in the value of the property as long as he or she continues to own it, until partition”. [17] [ 28 ] Lastly and subsidiarily, the appellant argues that the judge erred by not ordering the respondent to reimburse her half of the expenses pertaining to the family residence from January 2015 until the sale of the house.

On this point, the appellant is correct. [ 29 ] Indeed, it is well established that [ translation ] “an undivided co-owner cannot claim his or her share of the partition before indemnifying the other co-owner for the latter’s contributions”. [18] The source of this rule is found in articles 1019 and 1020 C.C.Q. : 1019. Co-owners are liable proportionately to their shares for the costs of administration and the other common charges related to the undivided property. 1020. Each co-owner is entitled to be reimbursed for necessary disbursements he has made to preserve the undivided property.

For other authorized disbursements, he is entitled, at partition, to an indemnity equal to the increase in value given to the property. Conversely, each co-owner is liable for losses resulting from his act or omission that decrease the value of the undivided property. 1019. Les indivisaires sont tenus, à proportion de leur part, des frais d’administration et des autres charges communes qui se rapportent au bien indivis. 1020. Chaque indivisaire a droit au remboursement des impenses nécessaires qu’il a faites pour conserver le bien indivis.

Pour les autres impenses autorisées, il a droit, au moment du partage, à une indemnité égale à la plus- value donnée au bien.

Inversement, l’indivisaire répond des pertes qui diminuent, par son fait, la valeur du bien indivis. [ 30 ] For example, in Droit de la famille — 121389 , the Court concluded as follows: [ translation ] [7] When the indivision ends, the respondent is entitled to her share, in cash, of the house at the end of the indivision, that is, at the time of the judgment. [8] The judge was therefore right to use the value of the respondent’s share in the house at the time of the judgment, less half the expenses, which expenses were incurred by the appellant, to maintain the house during the proceedings . [19] [Emphasis added] [ 31 ] In other respects, the appellant is not required to pay an indemnity for the exclusive use of the house.

The jurisprudence refuses the right to an indemnity under

article 1016 C.C.Q. where the use stems from a judgment or an arrangement with the other co-owner. [20] [ 32 ] The Court must therefore establish the expenses paid by the appellant to maintain the house (mortgage, taxes and property insurance) since 2015. [ 33 ] For the years 2015 to 2018, table D-1 shows that those expenses totalled $85,810.08. [21] For 2019 and the first four months of 2020, we know that the monthly mortgage and tax payments amount to $1,725. [22] As for the property insurance, the monthly invoice is $189.93.

Thus, the monthly expenses to maintain the family residence amount to $1,914.93. [ 34 ] Therefore, as at April 30, 2020, the appellant will have paid total expenses of $116,448.96. [23] The respondent will therefore be ordered to reimburse her half that amount from his share of the proceeds of the sale of the family residence. Furthermore, as of May 1, 2020, the respondent will have to reimburse the appellant half of the monthly expenses (mortgage, taxes and property insurance), by

means of a cheque or bank transfer on the 15th day of every month, until the sale of the house. B. The lump sum [ 35 ] The appellant claims that the $10,000 lump sum the judge awarded her does not achieve the objectives of s. 15.2(6) of the Divorce Act . [24] She also argues that the judge underestimated the respondent’s financial resources. [ 36 ] It is true that the financial consequences for the appellant arising from the breakdown of the marriage are serious and that, for the time being, she is financially dependent on the respondent.

The judge took this into consideration when determining the lump sum amount and when she refused to set a term for the spousal support. [ 37 ] Incidentally, at trial, the appellant asked for a lump sum of $89,000 (half the value of the family residence) and was willing to waive the right to spousal support.

In that regard, the judge concluded that “the position of the Wife by which, she can maintain the family residence in the absence of any spousal support is, in the court’s view, unrealistic”. [25] On appeal, the appellant asks for both, namely a lump sum equal to the respondent’s share in the family residence and the continued payment of spousal support. [ 38 ] It should be noted that the trial judge has [ translation ] “broad discretion” when ruling on the amount of a lump sum.

With respect to such a decision, the Court should not intervene [ translation ] “unless it sees an egregious error in the assessment of the facts or an error of legal principle”. [26] [ 39 ] The appellant has not shown such an error in the judgment. The judge referred to the objectives for awarding a lump sum as well as its alimentary nature. She assessed the appellant’s needs and the respondent’s means after the partition of the family patrimony, as required. [27] Moreover, her assessment of the respondent’s means is supported by the evidence. [ 40 ] This ground of appeal must therefore fail. C.

The partnership of acquests [ 41 ] It is not contested that the $9,310 debt on the respondent’s Visa credit card arose for expenses incurred for the family’s needs before the separation. [28] The judge therefore erred in deciding to share that debt between the parties. [ 42 ] As the Court explained in a recent judgment, those expenses are not [ translation ] “acquest-related debts”, but rather “expenses of the marriage / charges du mariage ” within the meaning of articles 396 and 397 C.C.Q. , which are rules of public order. [29] According to

article 396, para. 1 C.C.Q. , the parties were therefore required to contribute thereto “in proportion to their respective means / à proportion de leurs facultés respectives ”. [ 43 ] The guidance of the Court in Droit de la famille – 172975 applies here: [ translation ] [16] The remarks of Pierre C. Gagnon, J.S.C., in Droit de la famille – 081969 , regarding the patrimonial rights and duties of spouses arising under articles 396 and following of the C.C.Q. can be transposed to the matter at hand: [51] This primary regime is comprehensive.

It cannot throw the door open wide so as to allow one spouse to give to the other, during divorce proceedings, an invoice for the reimbursement of half of everything he or she paid while they cohabited . [52] The fundamental principle of the primary regime, set out in

article 396 C.C.Q ., is that the spouses contribute towards the expenses of the marriage, not on a strictly equal basis, but according to their respective means. As a corollary, activities within the home (including, primarily, but not solely, looking after young children) may be a valid contribution . […] [54] The Court will intervene at the dissolution of the marriage only where there is evidence of a disproportionate contribution by one of the spouses, that is, a contribution well beyond what would reasonably have been expected based on the respective incomes of the spouses.

The debate on this point usually (but not necessarily) takes place in connection with an application for a compensatory allowance (articles 427 to 430 C.C.Q .), a recourse that also forms part of the primary regime. [55] The spouse seeking the compensatory allowance must prove not only that he or she incurred debts for the family’s needs, but also, through comparisons or otherwise, that his or her contribution was disproportionate to that of the other spouse.

The mere fact of being indebted when the cohabitation ceases is embryonic evidence that is insufficient in and of itself for the claim to succeed . [30] [Emphasis added; underlining in original omitted] [ 44 ] In the present case, the appellant satisfied her obligation to contribute to the expenses of the marriage by her activities at home and there is no evidence of a disproportionate contribution by the respondent. Given the lack of reasons warranting the sharing of the debt on the Visa credit card equally between the parties, that conclusion of the judgment should be set aside.

As a matter of fact, respondent’s counsel acknowledged in his oral arguments that the appellant was not required to pay that debt. [31] D. The pension plan [ 45 ] The appellant argues that the judge erred by finding that “[i]t is not in dispute that no such a Pension Plan has yet been created by the company” and by considering that “[a]s of today, there is no fund set aside for a pension plan”.

In her view, the amounts [store A] undertook to pay to the respondent as a pension ($100,000 after ten years of full-time employment, plus $10,000 for each additional year of service [32] ) are part of the family patrimony, even if the evidence reveals that no amount was paid, whether to the respondent or into

a pension fund. [ 46 ] This ground is unfounded. [ 47 ]

Article 415 C.C.Q. states: 415. The family patrimony is composed of the following property owned by one or the other of the spouses: […] and the benefits accrued during the marriage under a retirement plan.

The payment of contributions into a pension plan entails an accrual of benefits under the pension plan; so does the accumulation of service recognized for the purposes of a pension plan. […] For the purposes of the rules on family patrimony, a retirement plan is any of the following: — a plan governed by the Supplemental Pension Plans Act (chapter R-15.1 ) or by the Voluntary Retirement Savings Plans Act (chapter R-17.0.1 ) or that would be governed by one of those Acts if one of them applied where the spouse works; — a retirement plan governed by a similar Act of a legislative jurisdiction other than the Parliament of Québec; — a plan established by

an Act of the Parliament of Québec or of another legislative jurisdiction; — a retirement-savings plan; — any other retirement-savings instrument, including an annuity contract, into which sums from any of such plans have been transferred. 415. Le patrimoine familial est constitué des biens suivants dont l’un ou l’autre des époux est propriétaire: […] et les droits accumulés durant le mariage au

titre d’un régime de retraite. Le versement de cotisations au

titre d’un régime de retraite emporte accumulation de droits au

titre de ce régime; il en est de même de la prestation de services reconnus aux termes d’un régime de retraite. […] Pour l’application des règles sur le patrimoine familial, est un régime de retraite: — le régime régi par la

Loi sur les régimes complémentaires de retraite (chapitre R-15.1 ) ou par la

Loi sur les régimes volontaires d’épargne- retraite (chapitre R-17.0.1 ) ou celui qui serait régi par l’une de ces lois si celle-ci s’appliquait au lieu où l’époux travaille, — le régime de retraite régi par une loi semblable émanant d’une autorité législative autre que le Parlement du Québec, — le régime établi par une loi émanant du Parlement du Québec ou d’une autre autorité législative, — un régime d’épargne-retraite, — tout autre instrument d’épargne-retraite, dont un contrat constitutif de rente, dans lequel ont été transférées des sommes provenant de l’un ou l’autre de ces régimes. [ 48 ] The list of pension plans in

article 415 C.C.Q. is exhaustive. [33] The clauses in the respondent’s employment contract that deal with the creation of a pension fund are liable to be covered by the Supplemental Pension Plans Act . [34] Indeed, that statute covers [ translation ] “contractually created supplemental pension plans” [35] and applies to those implemented by private companies. [36] [ 49 ] The pension fund provided for in the respondent’s employment contract, however, is not governed by that statute, because, in the current circumstances, it does not fulfil the statute’s essential requirements.

According to author Jean de Montigny, the fundamental characteristic of a pension plan governed by the statute is the obligation of the employer [ translation ] “to contribute to the funding of its employees’ pension fund”. [37] That requirement stems from s. 6 of the Supplemental Pension Plans Act : [38] 6. A pension plan is a contract under which retirement benefits are provided to the member, under given conditions and at a given age, the funding of which is ensured by contributions payable either by the employer only, or by both the employer and the member .

Every pension plan , with the exception of insured plans, shall have a pension fund into which, in particular, contributions and the income derived therefrom are paid . The pension fund shall constitute a trust patrimony appropriated mainly to the payment of the refunds and pension benefits to which the members and beneficiaries are entitled. 6.

Un régime de retraite est un contrat en vertu duquel le participant bénéficie d’une prestation de retraite dans des conditions et à compter d’un âge donnés, dont le financement est assuré par des cotisations à la charge soit de l’employeur seul, soit de l’employeur et du participant . À moins qu’il ne soit garanti, tout régime de retraite doit avoir une caisse de retraite où sont notamment versés les cotisations ainsi que les revenus qui en résultent .

Cette caisse constitue un patrimoine fiduciaire affecté principalement au versement des remboursements et prestations auxquels ont droit les participants et bénéficiaires. [Emphasis added] [ 50 ] According to professors Jean Pineau and Marie Pratte, the benefits accrued during the marriage under a retirement plan [ translation ] “are undoubtedly assets that, in a person’s patrimony, have the most stability and are the most easily subject to partition:

indeed, most often, it is impossible to withdraw the sums contributed by the employee and the employer”. [39] In the instant case, given the absence of a pension fund funded by contributions made by the respondent’s employer, the judge was right to conclude that the respondent does not have any benefits under a retirement plan within the meaning of

article 415 C.C.Q. V. Conclusion [ 51 ] The judgment should be set aside as regards the sharing of the expenses for the maintenance of the family residence and the sharing of the household expenses.

FOR THESE REASONS, THE COURT: [ 52 ] GRANTS the appeal in part; [ 53 ] OVERTURNS the judgment under appeal in part; [ 54 ] STRIKES paragraph 145 thereof; [ 55 ] AMENDS paragraphs 147-148 thereof solely for the purpose of replacing the date of August 15, 2019 with the date of May 1, 2020; [ 56 ] STRIKES paragraph 153 thereof; [ 57 ] ORDERS the respondent to reimburse the amount of $58,224 to the appellant at the time of sale of the house, from his share of the proceeds of the sale of the house; [ 58 ] ORDERS the respondent to reimburse to the appellant, as of May 1, 2020, half of the monthly expenses (mortgage, taxes and property insurance), by means of a cheque or bank transfer on the 15th day of every month, until the sale of the house, and ORDERS that any unpaid amount be deducted from the respondent’s share in favour of the appellant’s share at the time of the sale; [ 59 ] DECLARES that all expenses for major repairs to the house and all expenses pertaining to the sale thereof shall be borne equally by the parties; [ 60 ] STRIKES paragraph 156 of the judgment under appeal; [ 61 ] AMENDS paragraph 157 thereof for the sole purpose of striking the words: “to be satisfied in part by the Husband assuming the Wife’s share of the debt of the Partnership of acquests in the amount of $ 4,655 and the balance, namely $ 5,335 payable at the time of the sale of the family residence.”; [ 62 ] CONFIRMS the other conclusions of the judgment under appeal; [ 63 ] WITHOUT LEGAL COSTS.

FRANÇOIS PELLETIER, J.A. SUZANNE GAGNÉ, J.A. LUCIE FOURNIER, J.A. Mtre Marguerite Mancini MARGUERITE MANCINI ATTORNEY Mtre Maria Rita Battaglia MARIA R. BATTAGLIA, ATTORNEYS For the appellant Mtre Howard Barza For the respondent Date of hearing: January 30, 2020