Nahatchewitz v. Nahatchewitz

Nahatchewitz v. Nahatchewitz Collection Decisions of the Court of Appeal Date 1999-08-24 Docket numbers C30130 Judges Labrosse, Jean-Marc; Goudge, Stephen Thomas; Borins, Stephen Subject Civil Decision Content DATE: 19990824 DOCKET: C30130 COURT OF APPEAL FOR ONTARIO LABROSSE, GOUDGE and BORINS JJ.A. BETWEEN: ) ) Robert Anagnostopoulos, JOHN NAHATCHEWITZ ) for the appellant ) Appellant ) ) - and - ) Stephen C. Woodworth, ) for the respondent OLGA NAHATCHEWITZ ) ) Respondent ) ) Heard: May 27, 1999 ) On appeal from the judgment of Mr. Justice N. Borkovich dated June 8, 1998 GOUDGE J.A.: [1] John and Olga Nahatchewitz were married on June 15, 1992. They then lived together in the house which the husband owned at 12 Maurice Street, in Kitchener, Ontario. On October 1, 1993, while the wife was on a trip back to her native Ukraine, he sold the Maurice Street house and used the proceeds to buy a house at 128 Dekay Street, in Kitchener, where they lived together from her return until they separated in December 1995. [2] The central issue in this appeal is whether the trial judge erred in denying the husband a deduction for the value of the Maurice Street property in the calculation of his net family property. [3] For the reasons that follow I have concluded that the trial judge erred, that a deduction must be given, and that the appeal on this issue must be allowed. THE FACTS [4] At the time of the marriage, the appellant husband was seventy years old and was living in the Maurice Street property which he had owned since 1988. He had been married twice before. [5] The respondent wife was fifty years old at the date of the marriage. She had not been married before. She had lived and worked her entire life in the Ukraine before coming to Canada in June 1991 to visit her brother in Edmonton. [6] Shortly before the wife was to return to the Ukraine, she met and married the appellant. She then applied to stay permanently in Canada, supported by the husband, who executed an Undertaking of Assistance for her to Immigration Canada. [7] In August of 1992, the Canadian immigration authorities required that the wife leave Canada temporarily. As a result, she travelled to the Ukraine and did not return to Canada until October 27, 1993. [8] While the wife was away, the husband sold the Maurice Street property for $101,000 and purchased the Dekay Street property with the proceeds. With what the trial judge properly found to be the unprofessional complicity of his lawyer on the transaction, the husband signed the deed for the Maurice Street property declaring that he was not a spouse. [9] When the wife returned to Canada, the husband and his lawyer had her sign her consent on a second deed for the property which the lawyer held in case of future difficulties. While the trial judge rejected the evidence of the wife that if she had been aware of the consequences of signing she would have requested that the Dekay Street property be put in their joint names, he did find that her consent was obtained in circumstances tantamount to fraud so as to vitiate the transfer. [10] The parties continued to live together in the Dekay Street property until late 1995 when they separated. [11] At trial, there were two outstanding issues, namely the equalization of net family property under the Family Law Act, R.S.O. 1990, c. F-3 ("the Act") and spousal support. [12] In deciding the first of these the trial judge accepted the evidence of the wife as contained in her Net Family Property Statement. He then said: For calculating the amount of the net family property, I have found that the value of Maurice Street matrimonial home is not deductible. [13] The resulting calculation yielded an equalization payment from the husband to the wife of $61,800. [14] The trial judge disposed of the spousal support issue by determining that in all the circumstances, including the husband's Undertaking of Assistance given to Immigration Canada, the wife should receive a lump sum payment of $15,000. [15] Finally, the trial judge ordered that because the wife had remained throughout in the Dekay Street property there would be no order of pre-judgment interest. He ordered costs to the wife on a party-and-party basis to trial and thereafter on a solicitor- client basis, apparently because of offers that had been made. [16] The husband's main ground of appeal is the failure of the trial judge to permit a deduction for the value at the date of the marriage of the Maurice Street property in the net family property calculation of the husband. He also appeals the support order and the costs order. The wife cross-appeals from the denial of pre-judgment interest. ANALYSIS [17] The central question raised in this appeal is the treatment of the Maurice Street property and the net family property determination. In my view, the answer is clearly indicated by the governing legislation, and the interpretation given to it in the case law. [18] The relevant sections of the Act are as follows: 4. (1) In this Part, . . . "matrimonial home" means a matrimonial home under section 18 and includes property that is a matrimonial home under that section at the valuation date; "net family property" means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting, (a) the spouse's debts and other liabilities, and (b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage …. . . . 18. (1) Every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home. [19] Pursuant to s. 4 the husband is entitled to deduct from his net family property the value of the Maurice Street property as property he owned on the date of the marriage, unless the matrimonial home exception applies. [20] Section 18 requires that where spouses have separated, to qualify as a matrimonial home, the property must have been the family residence of the spouses at the time of separation. [21] In this case, at the time of separation the Maurice Street property was not ordinarily occupied by the parties as their family residence. The fact that it had at one time prior to separation been so occupied is not enough to bring it within the legislative definition of matrimonial home. [22] I can find no policy basis to support the opposite conclusion for the Maurice Street property. The policy imperative of the legislation is clear: in calculating net family property a matrimonial home is to be treated differently from other property owned at the date of the marriage. [23] To exclude from this exception a property which was a matrimonial home at the date of marriage but ceased to be at the time of separation is no less defensible than to include such a property as a matrimonial home but exclude from net family property the funds brought into the marriage by one spouse which were thereafter used to buy it. Either could be attacked for creating anomalous and unfair results inconsistent with the fundamental objective of the legislation. Or each could be defended as in some measure achieving the objective of treating a matrimonial home differently in the net family property calculation. Hence there is no policy victory achieved by including the Maurice Street property within the definition of matrimonial home in calculating net family property. [24] Given that there is no overriding policy consideration that would dictate otherwise, the ordinary meaning of the legislation must prevail. [25] This reading of the legislation is supported by the relevant jurisprudence. With one exception, it uniformly employs the interpretation I have set out. The leading case remains Folga v. Folga (1986), 2 R.F.L. (3d) 358 (Ont. H.C.J.). For the most part, it has been consistently followed. See, for example, West v. West (1997), 33 R.F.L. (4th) 56 (Ont.Gen. Div.). [26] Only Miller v. Miller (1987), 8 R.F.L. (3d) 113 (Ont. Dist. Ct.) concludes that a matrimonial home owned by one spouse on the date of the marriage but no longer serving as such at the time of separation cannot form a deduction from that spouse's net family property. For the reasons I have given I find this conclusion unsustainable in the face of the governing legislation. I am fortified in this conclusion by the fact that Miller has been explicitly rejected (see Smith v. Smith (1995), 13 R.F.L. (4th) 379 (Ont. Gen. Div.). It has also been the subject of adverse commentary. See Susanne Goodman, Family Law: Reference Materials, 37th Bar Admission Course: Phase 3 (Toronto: Law Society of Upper Canada, 1995) c. 21 at p. 21-20, fn. 136, and James G. McLeod, Annotation to Miller v. Miller (1987), 8 R.F.L. (3d) 114 at 115. I would agree with these criticisms of Miller. [27] While there has been no appellate decision on this issue, as I have outlined, the state of the trial jurisprudence has been relatively well settled. I venture to say that there has been significant reliance on it by practitioners in the area. This adds support to the conclusion I have reached, namely that the Family Law Act permits the husband to deduct the value of the Maurice Street property in calculating his net family property. [28] The wife argues in the alternative that the definition of "matrimonial home" in s. 4(1) of the Act includes the proceeds of an existing matrimonial home which are then used to purchase a substitute matrimonial home. The wife says that this would include the proceeds of the sale of the Maurice Street property which were used to purchase the Dekay Street property. She relies for this on Kukolj v. Kukolj (1986), 3 R.F.L. (3d) 359 (Ont. U.F.C.). [29] I cannot agree. I am very doubtful about the correctness of Kukolj. But more importantly, that case involved funds brought into the marriage by one spouse which were shortly thereafter used to purchase a matrimonial home and for which a deduction was not permitted. In this case, it was not funds but the Maurice Street property which was brought into the marriage by the husband. It is that property which must meet the statutory definition of matrimonial home if a deduction for it is to be denied. As I have set out, it cannot do so. [30] Finally, the wife argues that because of the husband's false statement that he was not a spouse made on the sale of the Maurice Street property the court should order, pursuant to s. 24(1) of the Act, that he substitute other real property or money for it. [31] I disagree. Section 24(1) permits the substitution of property for "the matrimonial home". In this case, for the reasons I have given the Maurice Street property does not meet that definition. [32] In summary, therefore, I conclude that the trial judge erred in declining to permit the husband to deduct the value of the Maurice Street property in calculating his net family property. [33] The wife argues that if this deduction is permitted, it should be in the amount of the sale price in 1993, namely $101,000, but less the fees paid on that sale. Again, I disagree. The Act requires that the deduction must be of the value as at the date of the marriage. It is not to be reduced by the fees incurred later to dispose of that property. [34] The recalculation thus entailed produces a net asset value at separation for the husband of $128,532.03 and for the wife of $556.88 and at marriage, for the husband of $105,940.00 and for the wife of negative $2,200.00. Since there is no basis for anything other than the usual equal division, the resulting equalization required is a payment by the husband to the wife of $9,917.58. [35] The second major issue raised by the husband is his challenge of the support order made below. In my view this challenge must fail. In Hickey v. Hickey, [1999] S.C.J. No. 9 (Q.L.), the Supreme Court of Canada firmly underlined the proposition that significant deference must be given to trial judges in relation to support orders. Absent an error in principle, the significant misapprehension of the evidence, or unless the award is clearly wrong, it should stand. [36] There is no such error here. The trial judge considered all the circumstances, including the husband's Undertaking of Assistance given to Immigration Canada, and ordered that a lump sum payment of $15,000 was appropriate. I would not interfere with his determination. [37] I would also dismiss the cross-appeal from the denial of pre- judgment interest. The trial judge concluded that because the wife had resided in the Dekay Street property throughout the proceedings and therefore had the benefit of the use of this property, she ought not to receive pre-judgment interest on her equalization payment. I see no basis for interfering with this conclusion. [38] Finally, the husband has been partially successful on this appeal. I would therefore award him one-half of his costs of this appeal. As this result might have affected the costs order at trial, the parties shall have thirty days to make written submissions as to whether there should be any change made in the trial costs order. [39] In the result, the appeal is allowed in part. The husband is entitled to one-half his costs of the appeal. Any further order as to trial costs will await written submissions. RELEASED: August 24, 1999