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Nuri Law

ONCA Permits Deduction Even Though Property Owned by Employer

Greetings friends.

 

After a brief hiatus, we are back with a fresh summary for all you avid readers from the Ontario Court of Appeal (“ONCA”) with the case of Siddiqui v Riahi (2021 ONCA 63). Released in February 2021, the decision dealt with an appeal of a trial decision by the Hon. Justice Karen Leef of the Superior Court. The appeal dealt with issues of property ownership, debts, and child and spousal support. The appeal was dismissed in its entirety.

 

The Facts

 

The facts of this case are somewhat limited because the trial decision has not been reported. From the ONCA decision, it appears that the Husband and Wife met in 2007 when the Wife immigrated to Canada with a son that was 10 years old at the time. The Wife rented a basement apartment from the Husband who lived on the property’s main floor. The Husband had been living in Canada since 1978. Starting in 1998, he managed a pharmacy. In 2016, the Husband was terminated from his employment. It is unclear when the parties married, but it is clear that their marriage lasted 5 years.

 

The Wife appealed the trial judge’s decision on the following grounds:

 

  1. that the trial judge erred in her findings regarding the ownership of two properties referred to as Centre Street and Royal Road;
  2. that the trial judge erred in the application of resulting trust principles – namely she should have permitted the Wife a deduction for loans from family members;
  3. that the trial judge erred for not awarding child and spousal support;
  4. that the trial judge was far more rigorous with her than with the Husband in her determinations on credibility.

 

Before even getting into the analysis, the ONCA explained that the appeal was dismissed because it failed to meet the test for standard of review. Specifically, the ONCA concluded that all of the Wife’s grounds of appeal addressed findings of fact. Those are grounds that are more difficult to appeal because of the higher threshold of “palpable and overriding error of fact” and the deference Appeal courts give to trial judges on findings of fact.

 

The ONCA then explained its decision.

 

Centre Street

 

As it related to the first issue regarding the properties, the Wife was essentially appealing the trial judge because in her decision, the Hon. Justice Leef had permitted the Husband a date of marriage deduction for the value of the Centre Street property – even though the property was not owned by him at the time but was owned by his employer.

 

The problem for the Wife was that the Husband’s employer testified at trial in favour of the Husband – and also stated that the Husband was the beneficial owner. Evidence from the trial demonstrated that the Employer wanted to help the Husband and had placed the home in the company name because the Husband was unable to secure a mortgage. The Husband and Employer were apparently good friends. (But really, this is a pretty big favour). In any event, the Employer testified that she advanced money for the purchase but this had all been repaid when the property was sold.

 

The ONCA saw no problems here (even though this narrative is extremely strange) finding that the definition of property under section 4 of the Family Law Act, R.S.O. 1990, c. F.3 covered such equitable ownership. Although the Wife did cite section 4 of the Statute of Frauds, R.S.O. 1990, c. S.19, which requires that an agreement for the sale of lands be in writing and signed by the party to be charged, it looks like for the ONCA, this was too little too late. The ONCA dismissed this ground of appeal because it was the first time the issue was brought up.

 

Royal Road

 

The Wife’s second issue was that the trial judge saw the Husband as a joint owner of the Royal Road property (matrimonial home) even though the Wife was the only person on title. The Wife was doubly incensed because the trial judge had also rejected her position that her sisters, who had advanced significant funds to her in the course of the marriage, be considered lenders or equitable owners in the home.

 

Once again, the problem for the Wife was that the Husband provided evidence that he contributed $60,000.00 towards the purchase price of the matrimonial home and had also paid for renovations. The Wife claimed that his loan had been repaid, but the trial judge rejected this assertion. The ONCA stated that the trial judge had given “cogent reasons” for rejecting the Wife’s evidence and had correctly applied the resulting trust principles from the cases of Kerr v Baranow (2011 SCC 10) and Korman v Korman (2015 ONCA 578). It is less than clear why $60,000.00 plus renovations justified 50% ownership in the entire property. Perhaps, this was clarified in the trial decision.

 

As for the Wife’s sisters, the ONCA supported the trial judge’s “serious doubts” about whether the Wife’s sisters had actually advanced any funds and whether such funds were loans.

 

Spousal and Child Support

 

Where the Wife argued that the trial judge erred by not awarding her with child support or spousal support – the ONCA once again stood behind the trial judge.

 

At trial, the Hon. Justice Leef saw no entitlement to compensatory support because the Wife had failed to provide evidence as to her income during the marriage. (It is unclear to the writer that such evidence is necessary to determine compensatory entitlement). In any event, the Wife had also failed to provide evidence that she suffered an economic disadvantage due to the role she assumed in the marriage. It also appears that the Wife did not help herself at trial during discussions about the matrimonial home when she testified that she earned a good income as a hairstylist and did not need or want the Husband’s support. That was probably a portion of the testimony she wished she could take back.

 

The ONCA also saw no need for child support because the child was over 18 years old, was not enrolled in post-secondary education, and was not even a child to the Husband because he did not stand in loco parentis.

 

Credibility

 

For her last ground of appeal, the Wife had argued that the trial judge’s approach to her evidence differed from the trial judge’s approach to the Husband’s evidence. The Wife obviously thought the trial judge had given her rough treatment in her determinations, especially since the trial judge seemed to accept the unusual arrangement between the Husband and his employer and friend.

 

The ONCA once again sided with the trial judge. In her decision, the trial judge commented that both parties had not been truthful on some occasions during the proceedings, but overall found the Husband’s evidence to be more credible. The ONCA found that the trial judge gave clear and extensive reasons for her credibility findings, which were well-grounded.

 

The ONCA commented that overall, the trial judge made “clear findings of fact”, applied the correct legal principles to the facts, and clearly explained her reasoning. As such, the Court of Appeal dismissed the appeal and ordered the Wife to pay $8,475 in costs to the Husband.

 

Comment

 

Overall, this case demonstrates that litigants like the Wife should always consider settlement as their first and best option. Even if the other side takes unreasonable positions, going to court can be like Russian roulette. One never knows how a court will react to the other side’s assertions no matter how false, absurd, baseless, meritless, scandalous, unusual, nonsensical and [insert adjective of choice] these assertions seem to you. There is always a risk. Regrettably, for the Wife in this case, she felt the risk would pay off. To her demise, it did not.

 

If you need the assistance of family counsel to deal with strange and unusual forms of beneficial ownership, or to settle cases with tough unrelenting opposition, please contact one of the lawyers at our firm. We would be happy to help (416) 323-5092.