Nolin v. Ramirez

2020 BCCA 274 Nolin v. Ramirez

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Nolin v. Ramirez, 2020 BCCA 274 Date: 20201007 Docket: CA46216 Between: Vincent Lloyd Nolin Appellant (Petitioner) And Diana Paloma Ramirez Respondent (Respondent) Before: The Honourable Madam Justice Saunders The Honourable Madam Justice Bennett The Honourable Mr. Justice Harris On appeal from: An order of the Supreme Court of British Columbia, dated June 11, 2019 (Nolin v. Ramirez, 2019 BCSC 934, Vancouver Docket E180833). Counsel for the Appellant: M.R. Ellis, Q.C. Counsel for the Respondent: L.A. Kahn, Q.C. Place and Date of Hearing: Vancouver, British Columbia July 20, 2020 Place and Date of Judgment: Vancouver, British Columbia October 7, 2020 Written Reasons by: The Honourable Madam Justice Bennett Concurred in by: The Honourable Madam Justice Saunders The Honourable Mr. Justice Harris Summary: This appeal arises from an order of a chambers judge dismissing an appeal from a family law arbitrator's award. The two issues on appeal are (1) whether there was an error with respect to the valuation of an investment account and (2) whether there was an error with respect to the inclusion of real property as family property. Additionally, at issue in the appeal was whether Vavilov applied to the standard of review of family law arbitration cases. Held: Appeal allowed and the equalization payment reduced by $216,822, with costs to

the appellant. The Court declined to decide the Vavilov issue, finding that, in any event, the decision resulted in palpable and overriding error and an unreasonable outcome warranting appellate intervention. The respondent conceded the error in relation to the investment account. The Court held that the arbitrator's finding that the respondent's evidence was suspicious in one context but reliable in another resulted in a palpable and overriding error. Accordingly, the chambers judge erred in concluding the arbitrator's decision was reasonable. The Court used the evidentiary foundation of the arbitrator's finding regarding the stock portfolio to decide that the half interest in the real property ought to be excluded from family property and deducted from the amount of the equalization payment. Reasons for Judgment of the Honourable Madam Justice Bennett: [1] This family law proceeding was commenced in the Supreme Court of British Columbia on May 24, 2016. The parties used the services of an arbitrator to address several issues arising out of the breakdown of their relationship. By agreement, the arbitrator issued brief or "summary reasons" for his conclusions. The idea was to save money. Unfortunately, the brevity of those reasons led to an appeal in the Supreme Court, and now to an appeal in this Court. The phrase "penny-wise and pound-foolish" comes to mind. [2] In the court

below, the chambers judge deferred to the arbitrator's use of the date of separation, as opposed to the date of the hearing, to value an investment account held by the appellant's numbered company. He considered it reasonable for the arbitrator to have not accounted for certain capital losses sustained by the investment account in discerning its value. The judge further upheld the arbitrator's conclusion that the appellant had failed to discharge his onus of establishing an exclusion in relation to real property in Qualicum Beach, B.C. [3] On appeal, Mr. Nolin raises issues regarding the valuation of the investment account and the characterization of his interest in the Qualicum Beach property as family property. An additional question hovering over the appeal is whether the recent decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 applies to the standard of review of family law arbitration cases. [4] As I explain below, it is not necessary to resolve the Vavilov question. That should be left for another day and the proper case. Rather, I am of the view that in light of any standard, the conclusions of the arbitrator with respect to the investment account and Qualicum Beach property warrant appellate intervention. I would therefore allow the appeal. Background [5] The appellant, Vincent Nolin, and the respondent, Diana Ramirez, met in Mexico in

1996. Ms. Ramirez moved to Canada shortly thereafter to live with Mr. Nolin. They married on January 24, 1997. [6] The parties have three children together. The eldest was born in 1997, and the youngest in 2009, after separation. [7] On June 8, 2005, the parties entered into a separation agreement. They were divorced by an order of the court on January 6, 2006. The parties nonetheless cohabitated in the same residence after 2005 and spent a great deal of time together. Mr. Nolin continued to plan celebrations for Ms. Ramirez, to buy her intimate apparel, and to go on family vacations with her and the children. Mr. Nolin also included Ms. Ramirez as the residual beneficiary in his will and named her as his Power of Attorney. [8] The parties had various real properties, vehicles, pieces of equipment, and bank accounts, most of which were in Mr. Nolin's name. Mr. Nolin was also the principal of three corporations: AKA Contracting Ltd., Alberg Nolin Roofing Ltd., and 1026348 B.C. Ltd. (the "Numbered Company"). The value of the Numbered Company was the value of its investment account. [9] According to the affidavits of Mr. Nolin and his brother, Lon Nolin, in 2005 their mother Irene Nolin purchased a property on Sunningdale Road in Qualicum Beach, B.C. (the "Sunningdale Property"). The property was mortgaged and rented, with Mr. Nolin managing the rental. In 2013, Mrs. Nolin sold

50% of the Sunningdale Property to a family friend, the proceeds of which were used to pay off the remaining mortgage. She purportedly gifted the other half to Mr. Nolin as an advance on his inheritance. Ms. Ramirez deposed that the Sunningdale Property was purchased by Mr. Nolin but put into his mother's name. [10] Mr. Nolin also said that his mother gifted him a stock portfolio worth $798,289, which he later transferred to the Numbered Company's investment account. He and his brother deposed that their mother had been very frugal throughout her life and had built up assets that she passed on to her sons. [11] Ms. Ramirez deposed that Mr. Nolin supported Mrs. Nolin as she had little money. She claimed that Mr. Nolin purchased the assets in his mother's name. Arbitral Award [12] There were two separate hearings in the arbitration process. The first concerned financial issues and took place from December 13 to December 15, 2017. The second related to parenting issues and spanned four days in February 2018. Both hearings led to a two-piece arbitral award, the "property award" and the "parenting award". [13] Only discrete aspects of the property award form the subject matter of this appeal. I will focus my review accordingly. [14] In relation to the financial issues between the parties, the arbitrator had to determine: child support; whether the parties were spouses; the division

of family property; and the amount of spousal support. The consideration of the latter two issues was predicated on a finding that the parties were, in fact, spouses. [15] The parties and witnesses testified, and a "meter" of documents was filed. The accounts provided by Mr. Nolin and Ms. Ramirez were diametrically at odds with one another. The arbitrator described the case as "incredible". [16] In assessing the credibility of the parties, the arbitrator found that Ms. Ramirez was direct and responsive. Her testimony was also corroborated by photographs and videos. In contrast, the arbitrator considered Mr. Nolin to be vague and evasive, and found his witnesses to be "entirely unreliable", unhelpful, and "frankly, unbelievable". He stated that where the evidence of Ms. Ramirez contradicted the evidence of Mr. Nolin as it related to financial matters, he preferred the evidence of Ms. Ramirez. [17] Despite his assessments of credibility, the arbitrator found in favour of Mr. Nolin with respect to the payment of $400,000 to his brother for "family debt", contrary to Ms. Ramirez's position. In addition, he found that Mr. Nolin was entitled to $798,289 of the value of his Numbered Company's investment account as excluded property, representing the value of the stock portfolio he said was gifted to him by his mother. He reached that conclusion, despite his credibility finding and Ms.

Ramirez's assertion that the portfolio was beneficially owned by Mr. Nolin. [18] With respect to whether the parties were spouses, Mr. Nolin led evidence that he and Ms. Ramirez had a traditional marriage early on, but that they actually separated following the agreement and divorce in 2005 and 2006, respectively. Ms. Ramirez contended that the separation agreement and divorce were part of a scheme devised by Mr. Nolin to take advantage of tax and mortgage rules, and to protect her and the children in the event that he was arrested for illicit activity. The arbitrator was ultimately persuaded by Ms. Ramirez and her witnesses' testimonies, finding that the parties were spouses as defined in the Family Law Act, S.B.C. 2011, c. 25 [FLA]. [19] On the issue of the division of property and debt, the arbitrator considered real property, the vehicles, financial assets, corporate interests, Registered Retirement Savings, pensions, and family debt. Only his conclusions regarding the parties' real property and Mr. Nolin's corporate interests bear mentioning. [20] The arbitrator held that all real property, with the exception of the value of one property at the outset of the relationship, was family property, including the Sunningdale Property. He did not accept the evidence relating to other exclusions, noting that Mr. Nolin "did not discharge his onus" of establishing any further

exclusion or adjustment. [21] With respect to the corporate interests, as noted above, the arbitrator accepted that Mr. Nolin was entitled to $798,289 of the value of the investment account held by the Numbered Company as excluded property. He then considered whether capital losses sustained by the investments should be accounted for in valuing the account: Vince led evidence that the investments sustained capital losses during the time that he held those accounts. He argues that the loss should be adjusted against the values. However, he was not able to show when that loss was sustained within the life of the portfolio: was it included in the balance as at the date of separation or was it sustained afterwards? If sustained afterwards, should it be used to reduce the value of the excluded amount [$798,289] or to reduce the value of the family property? As such, I am not prepared to take that loss into account. [22] The arbitrator ultimately did not factor in any capital losses in valuing the investment account, and instead relied on its balance on the date of separation, being $1,393,933. Chambers Judgment [23] Mr. Nolin appealed both the property award and the parenting award on many fronts. In the result, the chambers judge: a) set aside the arbitrator's conclusion estimating the value of Mr. Nolin's vehicles and equipment; b) dismissed the appeal from the arbitrator's

imputation of income to Mr. Nolin in the amount of $75,000; c) allowed the appeal from the arbitrator's award of lump-sum spousal support; d) dismissed the appeal from the arbitrator's valuation of property; e) dismissed the appeal from the arbitrator's award with respect to the Sunningdale Property; and f) dismissed the appeal from the parenting award. [24] As just (d) and (e) are challenged in this Court, I will review the chambers judge's reasons only in respect of those conclusions. Valuation date [25] Mr. Nolin argued that the arbitrator used the date of separation, March 2016, as the valuation date of the property without explanation or analysis as to why it was appropriate to depart from s. 87 of the FLA. Section 87(b) provides that the value of family property and family debt must be determined as of the date of the hearing before the court (here, December 2017), unless an agreement or order provides otherwise. [26] The chambers judge held that the arbitrator had in fact used the date of the hearing as the valuation date, except in relation to the investment portfolio of the Numbered Company. The judge further held that the arbitrator's conclusion in refusing to account for post-separation capital losses was one that was open to him and within the range of acceptable outcomes. He accordingly deferred to it. Excluded property [27] The chambers judge considered Mr.

Nolin's submission that the Sunningdale Property ought to have been characterized as excluded property on the basis that, according to his testimony and that of his brother, Mrs. Nolin purchased it as an investment and transferred a one-half interest to him as a pre-inheritance gift. [28] The judge concluded that while it would have been helpful for the arbitrator to explain his reasons for rejecting the evidence of Mr. Nolin and his brother on this issue, the arbitrator was clear in his findings of credibility and fact. Those findings were unassailable. The judge recalled that a spouse claiming an exclusion bears the responsibility under s. 85(2) of demonstrating that the property is excluded property, observing: [50] As the arbitrator rejected the evidence of Mr. Nolin and his brother about the Sunningdale property (see para 41 of the reasons), there was no basis to conclude that the property was anything other than family property. [29] The judge considered that in the context of an arbitration where the parties agreed to only summary written reasons, this was within the range of possible and acceptable outcomes. Preliminary issue: does Vavilov apply? [30] After the decision of the chambers judge was released, the Supreme Court of Canada rendered its decision in Vavilov, which altered the landscape of judicial review of administrative decision-making. Reasonableness is now

the presumptive standard. [31] In Vavilov, the majority held (at para. 17) that the presumption of reasonableness can be rebutted in two types of situations: first, where the legislature has indicated that it intends a different standard or set of standards to apply; and second, where the rule of law requires that the standard of correctness be applied. In other words, the legislature's intent with respect to the role of the reviewing court must be reflected in the standard of review, except where giving effect to that intent is precluded by the rule of law: Vavilov at para. 23. [32] The majority goes on to describe the two ways in which a legislature can indicate its intent for a standard other than reasonableness to apply. It may explicitly prescribe the applicable standard through statute, or it may provide for a "statutory appeal mechanism from an administrative decision maker to a court, thereby signalling the application of appellate standards": Vavilov at para.

33. As regards to statutory appeal mechanisms, the majority observed: [36] Where a legislature has provided that parties may appeal from an administrative decision to a court, either as of right or with leave, it has subjected the administrative regime to appellate oversight and indicated that it expects the court to scrutinize such administrative decisions on an appellate basis. This expressed intention necessarily rebuts the blanket presumption of reasonableness review, which is premised on giving effect to a legislature's decision to leave certain issues with a body other than a court [37] It should therefore be recognized that, where the legislature has provided for an appeal from an administrative decision to a court, a court hearing such an appeal is to apply appellate standards of review to the decision. This means that the applicable standard is to be determined with reference to the nature of the question and to this Court's jurisprudence on appellate standards of review. Where, for example, a court is hearing an appeal from an administrative decision, it would, in considering questions of law, including questions of statutory interpretation and those concerning the scope of a decision maker's authority, apply the standard of correctness in accordance with Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para.

8. Where the scope of the statutory appeal includes questions of fact, the appellate standard of review for those questions is palpable and overriding error (as it is for questions of mixed fact and law where the legal principle is not readily extricable): see Housen, at paras. 10, 19 and 26-37. [Emphasis added.] [33] The question borne by Vavilov is whether the dictates of the Court extend beyond judicial review of administrative decisions, and to arbitration appeals. Section 31 of the Arbitration Act, R.S.B.C. 1996, c. 55 provides: Appeal to the court 31 (1) A party to an arbitration, other than an arbitration in respect of a family law dispute, may appeal to the court on any question of law arising out of the award if (a) all of the parties to the arbitration consent, or (b) the court grants leave to appeal. (3.1) A party to an arbitration in respect of a family law dispute may appeal to the court on any question of law, or on any question of mixed law and fact, arising out of the award. [34] The Court in Vavilov makes no mention of two prior key decisions concerning arbitration appeals: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32. In those relatively recent cases, the Court tailored the judicial review framework developed in Dunsmuir v. New Brunswick, 2008 SCC 9 to the context of commercial arbitration appeals, which engage distinct policy objectives: Sattva at para.

104. The pair of decisions established that the standard of review from an arbitral award is "almost always" reasonableness--the mere presence of a legal question does not, on its own, preclude the application of that standard: see Teal Cedar Products at paras. 74-76. [35] The Court in Vavilov received intervenor submissions from the British Columbia International Commercial Arbitration Centre Foundation advocating for the preservation of this line of jurisprudence. Neither the majority nor the dissent refer to Sattva or Teal Cedar Products, let alone the word "arbitration". [36] All that said, there is an issue percolating in courts across the country as to whether Vavilov applies to commercial arbitration, or arbitration generally. To date, and to my knowledge, no appellate court has considered the issue. [37] In this case, if the statutory appeal mechanism contemplated in Vavilov captures s. 31(3.1) of the Arbitration Act, the standard of review is palpable and overriding error for questions of mixed fact and law where the legal principle is not readily extricable: Housen v. Nikolaisen, 2002 SCC 33 at paras. 26-37. If Vavilov does not apply, the standard of review is reasonableness: see McMillan v. McMillan, 2015 BCSC 2177, aff'd 2016 BCCA 441, where Punnett J. relies on Sattva. [38] In supplemental factums, both parties agreed that Vavilov establishes the proper route of

review. However, counsel for Ms. Ramirez stepped back from that position during oral argument, and submitted that Vavilov may not apply. The issue was not extensively argued as the Court raised its concern during argument. [39] In my opinion, it makes no difference in this case whether the standard of review is reasonableness or palpable and overriding error, as the result would be the same. Since it is unnecessary to decide the obviously complex question, I will leave it to another day. Issues on appeal [40] The issues before this Court are twofold: first, whether there was an error with respect to the valuation of the investment account; and second, whether the Sunningdale Property was properly characterized as family property. Position of the parties [41] In oral argument before this Court, the parties agreed that there was an error with respect to the valuation of the investment account. The arbitrator and chambers judge overlooked a concession by Ms. Ramirez that a capital loss of $213,000 should have been factored into the valuation of the account. On appeal, Ms. Ramirez agreed with Mr. Nolin that the loss was approximately $219,000, bringing the value of the investment account below the amount found to be his excluded property. Mr. Nolin does not seek to supplement this loss from other family property. He only seeks to recover the sum awarded to Ms. Ramirez on the

mistaken basis that there were proceeds left to divide in the account. [42] In terms of the Sunningdale Property, Mr. Nolin asserts that the evidence of beneficial ownership rejected by the arbitrator in finding the stock portfolio of $798,289 to be excluded property, appears to have been relied upon in concluding that Mrs. Nolin did not gift her half interest in the Sunningdale Property to Mr. Nolin. The evidence was the same, says Mr. Nolin, yet it led the arbitrator to two inconsistent conclusions. In addition, he says that the arbitrator failed to consider the statutory presumption of ownership in s. 23 of the Land Title Act, R.S.B.C. 1996, c. 250 [LTA], which placed the onus on Ms. Ramirez to show that the property was family property. Finally, he argues that the arbitrator referred to all of the witnesses except his brother, Lon Nolin, who confirmed the gift of the half interest in the Sunningdale Property. That evidence, Mr. Nolin says, was overlooked. [43] Ms. Ramirez submits that the presumption under the Land Title Act should not be permitted to be raised on appeal, as the issue was not before the arbitrator. Furthermore, she submits that it was not incongruous for the arbitrator to conclude that the value of the stock portfolio was excluded, but the interest in the Sunningdale Property was not. Acknowledging that there is no record of the evidence, and that the

reasons of the arbitrator are brief, Ms. Ramirez surmises that the conclusion was not necessarily reached in error. Discussion Investment account [44] As of the date of separation, the value of the Numbered Company's investment account was $1,393,933. After deducting $400,000 for the payment of family debt to Lon Nolin, and another $798,289 representing Mr. Nolin's excluded property, the arbitrator found that $195,644 was family property. The parties now agree that a capital loss of $219,000 sustained after the date of separation ought to have been taken into account by the arbitrator, leaving no family property to divide. That concession is justified by the documentary evidence. Accordingly, $97,822 will be deducted from the equalization order. Sunningdale Property [45] The relevant provisions of the Family Law Act are: Family property 84 (1) Subject to section 85 [excluded property], family property is all real property and personal property as follows: (a) on the date the spouses separate, (i) property that is owned by at least one spouse, or (ii) a beneficial interest of at least one spouse in property; Excluded property 85 (1) The following is excluded from family property: (a) property acquired by a spouse before the relationship between the spouses began; (b) inheritances to a spouse; (b.1) gifts to a spouse from a third party; (2) A spouse claiming that property is

excluded property is responsible for demonstrating that the property is excluded property. [46] As discussed above, Lon Nolin deposed that his mother purchased the Sunningdale Property in 2005 and subsequently converted it into an investment property, which Mr. Nolin managed. In 2013, Mrs. Nolin sold 50% of her share to a family friend, and gifted the other 50% to Mr. Nolin as an advance on his inheritance. [47] Ms. Ramirez countered that narrative in her evidence. She deposed that Mr. Nolin supported Mrs. Nolin as she had little money. The Sunningdale Property was actually purchased by Mr. Nolin, she says, and put into his mother's name. [48] Mr. Nolin submits that Ms. Ramirez's evidence did not convince the arbitrator that the stock portfolio valued at $798,289 was beneficially owned by Mr. Nolin: Suspicion is not enough to discharge Paloma's onus of refuting Vince's documented claim. No compelling evidence was adduced by Paloma to demonstrate that the portfolio in question was beneficially owned by Vince and not his mother at the time that it was transferred to him. [49] Yet, the arbitrator found that same evidence to be compelling when considering the half interest in the Sunningdale Property. Mr. Nolin submits this was a palpable and overriding error. [50] There is no dispute that the Sunningdale Property was held in the name of Mrs. Nolin until she transferred it to Mr.

Nolin in 2013. Mrs. Nolin passed away March 15, 2015. Thus, at the time of separation, found by the arbitrator to be March 1, 2016, the property was registered in the name of Mr. Nolin. [51] Ms. Ramirez's argument is that the property always belonged to Mr. Nolin, and that it was never his mother's property. [52] Mr. Nolin argues that s. 23 of the LTA provided a statutory presumption in favour of the legal owner also being the beneficial owner, and in the face of Mr. Nolin's mother holding legal title, the onus shifted to Ms. Ramirez to rebut that presumption. See Aujla v. Kaila, 2010 BCSC 1739 at paras. 31-32, affirmed 2013 BCCA 158. [53] The difficulty with this argument, (other than the fact that it was raised for the first time on appeal), is that at the time of separation, Mr. Nolin was on title and ss. 84 and 85 of the Family Law Act apply. [54] Thus, in my view, s. 23 of the LTA had no application in this matter. The onus lay with Mr. Nolin to demonstrate that the Sunningdale Property was excluded property under s.

85. The arbitrator needed to decide whether it was a gift from Mrs. Nolin or whether Mr. Nolin owned the property all along. [55] It is, in my view, impossible to understand how the arbitrator came to his conclusion regarding the half interest in the Sunningdale Property, after concluding that the stock portfolio was not beneficially held by Mr. Nolin. In addition, no mention is made of a key witness, Lon Nolin, and no justification was provided in the summary reasons for this conclusion. Sunningdale was not specifically mentioned in the reasons, other than in the context of "all real property". The issue of who held the beneficial interest was not mentioned, except at para. 41, where the arbitrator found, "I do not accept the evidence relating to any other exclusion relating to the real property". [56] It is true that the arbitrator clearly stated that when it came to financial matters he accepted the evidence of Ms. Ramirez, and not that of Mr. Nolin--yet, he relied on Mr. Nolin's evidence rather than Ms. Ramirez with respect to the ownership of the stock portfolio and the $400,000 family debt to Lon Nolin. Those findings and conclusions are difficult to reconcile with the finding that Sunningdale was family property. [57] In my view, the arbitrator committed a palpable and overriding error when he dismissed the evidence of Ms. Ramirez as suspicious in one context, and then

relied on it to find Sunningdale was family property. I consider his conclusion to have also been unreasonable. [58] Accordingly, the chambers judge erred in finding that the arbitrator's decision on the Sunningdale Property was reasonable. [59] The parties do not wish the matter to be referred back to the arbitrator. Given that the arbitrator's finding regarding the stock portfolio was not appealed, there is a logical evidentiary foundation for this Court to decide the issue based on the arbitrator's conclusion on the stock portfolio. [60] As a result, I would reduce the equalization order by an additional $119,000, which represents half of the interest in the Sunningdale Property determined to have been family property. Disposition [61] In summary, I would allow the appeal and reduce the equalization order by a total of $216,822. [62] Although Mr. Nolin was successful in the appeal, the first point was ultimately conceded by Ms. Ramirez. However, it could have been conceded before the chambers judge if counsel had turned their minds to it (counsel changed between the arbitration and the Supreme Court appeal, and again between the Supreme Court appeal and the appeal in this Court). In these circumstances, Mr. Nolin was compelled to appeal, and made full submissions before the concession. [63] Mr. Nolin is the successful party, and should have his costs of the appeal. "The Honourable Madam Justice Bennett" I AGREE: "The Honourable Madam Justice Saunders" I AGREE: "The Honourable Mr. Justice Harris"