2019 QCCA 1098, 2019 QCCA 1098

Droit de la famille — 191160 2019 QCCA 1098 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-027999-184 (500-12-330873-161) DATE: June 20, 2019 CORAM: THE HONOURABLE YVES-MARIE MORISSETTE, J.A. CLAUDINE ROY, J.A. STEPHEN W. HAMILTON, J.A. J. W. APPELLANT – Plaintiff v. A. S.

RESPONDENT - Defendant JUDGMENT [ 1 ] The Appellant appeals from a judgment rendered on November 22, 2018 by the Honourable Micheline Perrault of the Superior Court, district of Montreal, and rectified on November 23, 2018. [1] He also filed a motion to adduce new evidence. [ 2 ] The Appellant and the Respondent were married on April 8, 1995 in City C, [Province A]. They had two children, X in 2003 and Y in 2005. They separated on November 11, 2015. [ 3 ] The trial judgment granted a divorce between the parties and included various corollary relief orders. [ 4 ] The Appellant raises five grounds of appeal: 1.

Did the trial judge err in ordering payment of spousal support in the amount of $7,741.58 per month, and in refusing to establish a term or a revisionary term? 2. Did the trial judge err in ordering that the payment of special expenses for the children be supported exclusively by the Appellant? 3. Did the trial judge err in refusing to grant the Appellant relief for the debts of the marriage he paid with his inheritance income? 4.

Did the trial judge err in refusing to order the Respondent to reimburse The Appellant for the income tax credit in the amount of $8,657 she received which was paid for by the Appellant? 5. Did the trial judge err in granting the Respondent an additional provision for costs? * * * [ 5 ] Before addressing these grounds, the Court must rule on the Appellant's motion to present new evidence. The new evidence consists of the transcript of a hearing that took place on April 24, 2019 before the Honourable Justice Pepita G. Capriolo.

The Appellant had presented an Application for Safeguard Measures in this matter before Justice Capriolo. At the beginning of the hearing, the Respondent’s attorney (who said she did not have a mandate from her client and was acting as amicus curiae ) mentioned that her client was earning about $25,000 a year.

The Appellant argues that this is a judicial admission binding on the Respondent as to her income at the time of the trial judgment, and that it is new evidence that is indispensable in determining the correct amount of spousal and child support owed to the Respondent. [ 6 ] The Appellant’s motion does not meet the requirements for new evidence under

article 380 C.C.P . The evidence is new since the hearing before Justice Capriolo took place after the trial judgement and before the hearing on this appeal. However, the evidence is not indispensable, because it is not likely to change the outcome of the dispute: it is unclear whether the Respondent’s lawyer was referring to the Respondent’s income from work or whether she was also including child support paid by the Appellant or child benefits received from the government. [2] In the present circumstances, we cannot see a judicial admission of the Respondent’s annual income from work. [ 7 ] The motion for new evidence will be dismissed.

* * * [ 8 ] We will now review each of the grounds of appeal. We are of the view that the Court should only intervene with respect to spousal support and the income tax paid by the Appellant. The Court will also add a conclusion with respect to the provision for costs. 1. Spousal support and imposition of a term

a) Spousal support [ 9 ] Pursuant to the safeguard order rendered by the Honourable André Roy on May 10, 2016 and renewed up until the trial, the Appellant was paying spousal support of $1,500 per month as well as the housing expenses. The trial judge ordered the Appellant to pay spousal support to the Respondent in the amount of $7,741.58 per month, retroactively to December 1 st , 2018.

This amount included spousal support of $2,500 net per month and the housing expenses of $2,500 net per month, bringing the total spousal support to $5,000 net, or $7,741.58 gross, per month. [ 10 ] The trial judge did not impose a term to the spousal support, considering it would be unreasonable in the circumstances.

She did however remind the Respondent that “future lack of efforts at finding gainful employment may eventually lead to a cancellation or a reduction of her spousal support.” [3] The trial judge also ordered that the family residence be put up for sale no later than April 1st, 2019. [ 11 ] The Appellant submits that the trial judge erred in the evaluation of the Respondent’s needs. [ 12 ] This argument is unfounded.

The Appellant failed to demonstrate either an error in principle, a significant misapprehension of the evidence, or a clear error in the evaluation of the Respondent’s needs. [4] The trial judge evaluated the evidence before her and did not need to refer to every detail, as long as the reasons underlying her decision can be understood. [5] In the evaluation of the Respondent’s needs, the trial judge took into consideration all the circumstances before her and we cannot see any error justifying the intervention of the Court on that ground. [ 13 ] The Appellant also submits that the trial judge erred in her analysis of his ability to pay. [ 14 ] The trial judge reviewed the two versions of Form III filed by the Appellant: his 2016 Form III shows a surplus of $4,344 per month while his 2018 Form III shows a monthly deficit of $6,579.64, a difference of almost $11,000 per month.

Based on this discrepancy, the trial judge concluded that the Appellant’s 2018 Form III was not credible: [31] The Father filed a Form III dated October 1, 2018 showing a yearly income of $220,040.38 and a monthly deficit of $6,579.64 , or $78,955.68 per year.

In comparison, his Form III dated May 6, 2016, showed a yearly income of $195,214.00 but a monthly surplus of $4,354 , while including child support payments of $19,059 per year. [32] How did his expenses increased by almost $11,000 per month in such a short period of time? […] [34] When comparing the Father’s 2016 Form III with his 2018 Form III, the increase in expenses that can be attributed to the two children is $23,872 per year. The remaining deficit of $55,083.68 ($78,955.68 - $23,872) cannot be explained by the spousal support payments of $1,500 per month, for which he also receives a tax saving.

As is the case with the Mother, this undermines the credibility of his budget . [E mphasis added ] [ 15 ] She therefore concluded that he had the capacity to pay spousal support of $7,741.58 gross per month. [ 16 ] The discrepancy between the Form III’s was not specifically addressed during the trial. The Appellant argues that if the discrepancy had been raised during the trial, he would have reviewed more carefully the 2016 Form III and noticed the clerical error made by his previous attorney, whereby the income tax was not deducted.

We agree that there seems to be an error in the 2016 Form III: the Appellant must have paid much more than $22.83 in taxes on an income of $16,267.83 per month in 2016. Due to this error, the Appellant’s 2016 Form III shows a surplus of $4,354 per month when it should have shown a deficit. [ 17 ] Without this error in the Appellant’s 2016 Form III, his 2018 budget would have appeared credible. It shows a deficit of $6,579.64 per month while he was paying spousal support of $1,500 and the housing expenses.

This suggests that he could not afford to pay spousal support of $7,741.58 gross per month. [ 18 ] This is confirmed by the Appellant’s testimony on his indebtedness: he borrowed money from his father to pay for sports costs for his children and for a portion of the down payment of his new house. [ 19 ] Moreover, the effect, as established by the trial judge on the “Sommaire Alitax” annexed to her judgment, is that the Appellant is left with $62,919.81 annually while the Respondent receives $109,307.39.

This is not reasonable. [ 20 ] These elements are sufficient to justify the intervention of the Court in order to reduce the spousal support payable to the Respondent. [ 21 ] Moreover, at the hearing on this appeal, the parties informed the Court that the family residence will be sold on July 15, 2019. [ 22 ] In our view, the spousal support should be reduced by $1,000 net from December 1, 2018 up until July 15, 2019 : $1,500 net for the Respondent and $2,500 net for the housing expenses, for a total amount of $4,000 net per month or $5,977.75 gross per month .

[ 23 ] Once the family residence is sold and the Respondent has found a new place to stay , her housing expenses will be reduced. As a result, spousal support should be further reduced after July 15, 2019. In our view, spousal support of $3,000 net per month, or $4,387.50 gross per month, is reasonable for the expenses of the Respondent, including her future housing expenses.

b) Imposition of a term [ 24 ] At trial, the Appellant asked that any spousal support carry a maximum term of one year from the date of the judgment. On appeal, the Appellant submits that the trial judge erred in fact and in law by failing to provide a maximum term or at least a review term for the spousal support payable to the Respondent. [ 25 ] The imposition of a term for spousal support is exceptional.

There are cases where the imposition of a term is justified, as stated by the Court in Droit de la famille — 103038 , especially to sanction the blatant idleness of a spousal support creditor who makes no effort to achieve economic self-sufficiency. [6] However, the present case is not a case of “blatant idleness” justifying the imposition of such a term.

The trial judgment specifically addressed the Respondent's difficulties in integrating the labour market bas ed on her age (47 years old) and the fact that she does not speak French, and noted that she “ has done little to improve her skills and her ability to become economically self-sufficient.” [7] The trial judge specified that the Respondent must take active measures to become self-sufficient as soon as reasonably possible.

In our view, it was appropriate, in these circumstances, which are not disputed by the Appellant, to award spousal support without a termination date for the payment. [ 26 ] However, where the imposition of a term is inappropriate, it is nevertheless possible to provide for a review term at the end of which it will be the responsibility of the creditor to demonstrate to the Court that he or she has made efforts to put an end to economic dependence arising from the marriage, failing which there will be grounds to reduce or terminate the maintenance obligation or to impose a term (

Section 15.2(3) of the Divorce Act ). As the Court stated in Droit de la famille — 12103 : [L]a fixation d'un terme de révision ou de réévaluation est envisageable dans les situations qui présentent un caractère transitoire ou comportent des éléments indéterminés ou incertains ou encore lorsqu'on veut encourager une personne à faire certaines démarches. [8] [ 27 ] A review order is justified in the present circumstances and it would be consistent with the reasoning of the trial judge that the Respondent must take active measures to become self-sufficient as soon as reasonably possible.

In view of the multiple difficulties encountered by the Respondent in finding employment or improving her skills, it appears that a term of review of two years would be appropriate in order to allow for a reassessment of the situation. 2. Special expenses [ 28 ] The trial judge ordered the Appellant to pay 100% of the children’s special expenses.

The Appellant submits that the judge dealt with this issue on her own initiative, therefore adjudicating ultra petita and that her decision is erroneous in law, as special expenses are in principle shared in proportion of the parents’ respective incomes. [ 29 ] First, it must be said that the ultra petita argument must be interpreted flexibly in family matters. [9] Also, the Appellant was heard on the issue of the special expenses, since he testified on it. [ 30 ] Additionally, while the principle is indeed that the payment of special expenses is proportional to the income of the parties, the Court has discretion to do otherwise.

The Court of Appeal stated the following with respect to the allocation of special expenses between the parties: [25] Le tribunal n'est pas sans pouvoir discrétionnaire dans l'attribution de la responsabilité du paiement des frais particuliers, mais la règle générale est celle d'un partage au prorata des moyens des parents.

Une autre forme de partage peut être ordonnée lorsqu'il existe une disproportion entre les moyens d'un parent et ceux de l'autre; on peut même ordonner à un parent, en raison de ses moyens nettement supérieurs, d'assumer la totalité desdits frais. [10] [References omitted, emphasis added ] [ 31 ] In the present circumstances, the trial judge did not commit an error in principle, nor did her reasons disclose a significant misapprehension of the evidence. Her decision is not clearly wrong. [11] The disproportion between the incomes of the parties is well established.

The trial judge had the discretion to order the payment by the Appellant of all special expenses. [ 32 ] This ground of appeal is dismissed. 3. Inheritance

a) Family patrimony/Partnership of acquests [ 33 ] The Appellant argued at trial that he was entitled to $203,209.36, reduced at trial by 50%, as compensation for an inheritance that he used to pay family debts and expenses. He submits that the trial judge committed an error of mixed fact and law when she denied his claim. [ 34 ] The trial judge justified her decision not to grant the Appellant’s claim as follows: [62] The evidence offered by the Father does not allow the Court to individualize the money that came from his inheritance.

It is not sufficient to show that a specific withdrawal was used to pay the joint lines of credit or the expenses of [Company D]. There are too many deposits from various sources into the joint bank account, as well as withdrawals for numerous purposes from the joint bank account to be able to state that any individual payment was made with money from the inheritance. For example, was the money used to pay the joint lines of credit or the expenses of [Company D] come from the Father’s inheritance or from his employment income or from the Mother’s income as a fitness instructor? As stated by Justice Stephen W.

Hamilton, the Court cannot presume that all payments made

from the joint account were made with funds from the inheritance. [Reference omitted] [ 35 ] We agree with the Appellant that the bank statements establish that, without the deposits of his inheritance, the parties did not possess sufficient sums to pay certain family debts. [ 36 ] However, this ground of appeal should nevertheless be dismissed. The Appellant must demonstrate a legal basis for the recovery, such as the partition of the family patrimony or the liquidation of the matrimonial regime. [ 37 ] The rules on the family patrimony require the Appellant to prove that his inheritance contributed to the family patrimony (Art. 418 C.C.Q .).

Article 415 C.C.Q . indicates what constitutes the family patrimony; family residences and motor vehicles used for family travel being examples of things that are included in the family patrimony. Neither the payment of credits cards, nor the payment of the debt of the family’s business can be considered as having contributed to the family patrimony. [ 38 ] Furthermore, even if the use of his inheritance to pay family debts gave rise to a debt in the partnership of acquests – an issue on which the Court does not take position – there are no assets in the partnership of acquests to liquidate . [12] [ 39 ] This submission is thus rejected.

b) Compensatory allowance [ 40 ] The Appellant submits in the alternative that he was entitled to a compensatory allowance with respect to his inheritance and that the trial judge erred in dismissing his claim on the basis that there was no enrichment to the patrimony of the Respondent. He contends that his argument did not pertain to the enrichment of the Respondent, but rather to his impoverishment. [ 41 ] Referring to the decision of the Supreme Court in Lacroix v. Valois [13] and M. (M.E.) v.

L. (P.) [14] , the trial judge justified her decision as follows : [70] The Court finds that the criteria for the attribution of a compensatory allowance are not present here. As appears from her Form III, the net value of the Mother’s assets as at October 1, 2018, is $28,543, whereas the Father’s net value is $632,012. Suffice it to say that there is no enrichment to the patrimony of the Mother. [ 42 ] The Appellant's argument is unfounded.

Article 427(1) C.C.Q. requires that there must be an enrichment of the patrimony of the other spouse. [15] As stated by the trial judge, the Respondent did not get richer, unlike the Appellant. [ 43 ] This ground of appeal is dismissed. 4. Tax payments [ 44 ] The Appellant claimed the reimbursement of two tax payments he made on the Respondent’s behalf. The trial judge dismissed his claim: [74] The evidence revealed that the Mother received a refund of $4,875.37 for the year 2016.

However, it is unclear from the evidence adduced at trial why the Mother received this refund and whether there is a link between this refund and the amount of $8,657 paid by the Father to the tax authorities for the year 2016. In addition, there is a dispute between the Father and the tax authorities with respect to the year 2016 which may eventually be resolved in his favor.

For these reasons, the Court will dismiss the Father’s claim for the reimbursement of the sum of $8,657. [16] [Reference omitted] [ 45 ] In our view, the trial judge made a palpable and overriding error in her evaluation of the evidence. [ 46 ] The Appellant was paying housing expenses in addition to spousal support by virtue of the safeguard order rendered in May 2016. The parties agreed to include the housing expenses in the Respondent’s spousal support, in order for the Appellant to be able to deduct them from his income and reduce his income taxes.

The Appellant agreed to compensate the Respondent for the increase in her taxes. We do not comment on whether the taxation authorities are bound by such an agreement. [ 47 ] Pursuant to this agreement, the Appellant sent revised tax returns on behalf of the Respondent along with two cheques of the amount of $2,896 and $5,761 in payment of the additional taxes that were due as a result of her including the housing expenses in her income. Notwithstanding their agreement, the Respondent changed her mind after a dispute with the Appellant regarding an insurance claim.

She then filed revised tax returns, subtracting the housing expenses added by the Appellant to her tax return. As a result, she received a tax reimbursement. She received $4,875.37 as a tax reimbursement on August 2, 2018. There is a deposit in her bank account of $5,357.44 on November 21, 2017 that may be a further tax reimbursement. [ 48 ] On the other hand, the Appellant’s deduction for spousal support for the year 2016 was denied.

We are informed that he is contesting his reassessment. [ 49 ] In any event, it is clear that the Respondent was unjustly enriched by an amount of $8,657 at the expense of the Appellant. She received this amount as compensation for doing something that she did not ultimately do. If ever she is reassessed and the housing expenses are included in her income, she will have a claim against the Appellant for the additional taxes she will pay. 5. Provision for costs [ 50 ] The Appellant submits that the trial judge erred by ordering the payment of a provision for costs in favor of the Respondent.

The Appellant also contends that the trial judge failed to take into account the legal hypothec registered by Deveau Avocats on the family residence for legal fees which the Respondent has not paid.

The Appellant asks that the unpaid legal fees to Deveau Avocat be paid out of the Respondent’s share in the proceeds of the sale of the family residence. [ 51 ] The awarding of a provision for costs is a discretionary decision to which the Court of Appeal owes substantial deference. [17] The trial judge considered the relevant factors and gave significant importance to the disparity between the resources of the parties.

The Appellant failed to demonstrate an unreasonable exercise of the trial judge’s discretion. [ 52 ] Nonetheless, we agree with the Appellant that the legal fees owed to Deveau Avocats should be paid by the Respondent. She had claimed, in first instance, a provision for costs to cover the outstanding legal fees due to Deveau Avocats ($13,000), the fees owed to her lawyer ($16,500) plus her fees for 3 days of trial.

The trial judge took all of those fees into account, as well as the fact that the Appellant already paid a provision for costs of $5,000, in awarding the Respondent a further $20,000 as a provision for costs. We are advised that the fees owed to Deveau Avocats have been paid in full or at least in large part but that the legal hypothec has not been radiated.

To avoid any uncertainly, we will order the Respondent to pay any remaining balance owed to Deveau Avocats, to discharge the legal hypothec registered on the family residence by Deveau Avocats and to pay all related costs out of her share of the proceeds of the sale of the family residence. This burden should not be split between the parties.

FOR THE FOREGOING REASONS, THE COURT: [ 53 ] DISMISSES the Appellant’s application for permission to present indispensable new evidence; [ 54 ] GRANTS the appeal in part; [ 55 ] REPLACES paragraph [87] of the conclusions with the following paragraphs: [87] ORDERS the Appellant to pay spousal support to the Respondent in the amount of $5,977.75 per month starting December 1, 2018 until July 15, 2019; [87.1] ORDERS the Appellant to pay spousal support to the Respondent starting July 15, 2019, in the amount of $4,387.50 per month; [87.2] ORDERS that the spousal support be reviewed within two years; [ 56 ] ADDS the following paragraph [94.1] to the conclusions of the trial judgment: [94.1] ORDERS that any remaining balance owed by the Respondent to Deveau Avocats and all related costs to discharge the legal hypothec published by Deveau Avocats against the family residence be paid from the Respondent’s share of the net proceeds of the sale of the family residence; [ 57 ] REPLACES paragraph [102] of the conclusions with the following paragraph: [102] ORDERS the Respondent to pay to the Appellant the sum of $8,657, to be set off against any arrears of spousal support owed by the Appellant to the Respondent; [ 58 ] THE WHOLE, without legal costs.

YVES-MARIE MORISSETTE, J.A. CLAUDINE ROY, J.A. STEPHEN W. HAMILTON, J.A. Mtre Sylvia Beatrix Schirm Mtre Lori Boyadjian SCHIRM & TREMBLAY AVOCATS For the Appellant Mtre Lynda Renaud For the Respondent Date of hearing: June 13, 2019