



COURT OF APPEAL FOR ONTARIO

CITATION: Berta v. Berta, 2017 ONCA 874

DATE: 20171116

DOCKET: C62797

MacPherson, Juriansz and Roberts JJ.A.

BETWEEN

Delia Joan Berta

Applicant (Appellant)

and

Raymond Louis Berta

Respondent (Respondent)

Aaron Franks and Michael Zalev, for the appellant

Peter Callahan, for the respondent

Heard: October 16, 2017

On appeal from the judgment of Justice R. John Harper of
    the Superior Court of Justice, dated September 13, 2016, with reasons reported
    at 2016 ONSC 5723, 133 O.R. (3d) 704.

MacPherson J.A.:

A.

INTRODUCTION

[1]

The appellant, Delia Joan Berta (Joan), and the respondent, Raymond
    Louis Berta (Ray), were married for 27 years. They owned equal shares of a
    business created by Ray during the marriage and developed a lavish lifestyle
    when the business prospered.

[2]

The marriage ended and the parties could not resolve several financial
    issues. After a nine day trial in 2013, Harper J. ordered Joan to make an equalization
    payment to Ray, and ordered Ray to pay Joan indefinite spousal support on the
    low end of the
Spousal Support Advisory Guidelines
(
SSAGs
)
    in the amount of $5,380 per month. Joan was also ordered to pay Rays costs of
    $460,179.57 on a full indemnity basis due to,
inter alia
, Joans
    unreasonable behaviour throughout the litigation, including her repeated
    unproven allegations of fraud against Ray.

[3]

Joan appealed from the trial judges decision on three grounds: the
    quantum of spousal support, the equalization payment, and the costs award.

[4]

This court allowed the appeal:
Berta v. Berta
, 2015 ONCA 918.
    The court returned the case to the trial judge to reconsider the spousal
    support and costs issues in accordance with the reasons of this Court.

[5]

The parties agreed to file the same material at the rehearing and made
    only written submissions. No new financial information about the parties was
    prepared or filed.

[6]

At the rehearing, the trial judge awarded Joan indefinite spousal
    support of $8,000 per month and awarded Ray costs of $322,125.70.

[7]

Joan appeals both the new spousal support and costs awards.

B.

FACTS

(1)

The parties and events

[8]

The parties married in 1982. Joan was 44 and Ray was 37. They did not
    have children together.

[9]

Ray worked in several jobs in the early years of the marriage. Joan had
    a senior management position in Stelco in Hamilton.

[10]

In
    1986, Ray decided to start a clinical research business. He called it Applied
    Consumer Clinical Evaluations Inc. (ACCE). Joan and Ray were equal
    shareholders in ACCE, and both were directors of the company. Both contributed
    labour and funds to the growth of ACCE, but Ray operated the company on a daily
    basis.

[11]

In
    1993, Joan took early retirement from Stelco and set up a consulting business.

[12]

Both
    businesses flourished, especially ACCE, which became very successful and
    profitable.

[13]

Joan
    and Ray enjoyed a lavish lifestyle together, especially in the later years of
    their marriage. They had expensive homes and vacation properties, travelled
    extensively, hosted extravagant social events, and gave each other very
    expensive gifts  a real fire truck for Ray and an antique T-Bird car for Joan.

[14]

The
    marriage ended in March 2010. Joan and Ray sold their matrimonial home, divided
    the net proceeds of sale equally, and purchased separate homes in Ontario. Joan
    also bought a small condominium in Florida. Ray purchased Joans ACCE shares
    for $2.2 million, payable in part on closing with the balance of $1.85 million
    to be paid over time.

[15]

The
    parties were unable to resolve many of the relevant financial issues. They went
    through a nine day trial in November 2013.

(2)

The trial

[16]

The
    trial judge dealt with three issues at the trial  equalization, spousal
    support and costs.

(a)

Equalization

[17]

The
    trial judge ordered Joan to pay an equalization payment of $101,223.13 to Ray.

(b)

Spousal support

[18]

Both
    Joan and Ray called accountants as expert witnesses to provide evidence on determining
    income for support purposes. The trial judge preferred the evidence of Rays
    expert. He found that Joans expert had improperly acted as an advocate for
    her, acting as her [g]eneral to lead her into battle, rather than a neutral
    expert seeking information to assist the court. He said that, both before and
    during the trial, Joan and her expert engaged in a relentless quest to
    demonstrate that Ray had engaged in fraud or some other nefarious activity.
    Joans expert also failed to meet with Rays expert to narrow the issues.

[19]

The
    trial judge found that Rays average annual income was $644,172, comprising
    employment income, CPP, OAS, other pensions, investment income, and actual
    capital gains.

[20]

The
    trial judge found that Joan had substantial assets, including a pension, a
    RRIF account, the money received from her ACCE shares, proceeds from the sale
    of the matrimonial home, and other savings. However, she failed to maximize the
    income that she could earn from these assets. She did not meet with a financial
    advisor and kept the funds in a traditional bank account with a low interest
    rate (between 1.35 and 1.9 per cent). She acknowledged that she had done
    nothing to ensure that she received the best return on her assets. The trial
    judge was also critical of Joans behaviour in two important respects 
    non-disclosure of two sources of income and surreptitious removal of money from
    ACCE when she knew it was in financial distress. Taking account of all these
    factors, the trial judge fixed Joans annual income at $484,356, which
    includes pension income and investment income.

[21]

In
    light of the parties incomes, the trial judge observed that the
SSAGs
indicated that spousal support could be $5,380 in the low range, $6,227 in the
    mid-range, and $7,174 in the high range. He concluded that because Joan was
    not maximizing her resources after separation, the fairest approach was to
    order support at the low end of the
SSAGs
 $5,380 per month.

(c)

Costs

[22]

The
    trial judge was highly critical of Joans conduct and positions throughout the
    litigation, including her allegations of fraud that were not supported by any
    evidence. He also referred to Rays reasonable offers to settle and Rays
    success on all material issues. The trial judge ordered full indemnity costs
    fixed at $460,179.57.

(3)

The first appeal

[23]

Joan
    appealed on the issues of equalization, spousal support and costs.

[24]

On
    the equalization issue, this court upheld the trial judges analysis and
    calculation.

[25]

On
    the spousal support issue, this court concluded that the trial judges
    determination of Joans income was unsustainable and preclude[d] meaningful appellate
    review. It returned the issue to the trial judge to be determined in accordance
    with the reasons of this Court.

[26]

On
    the costs issue, this court concluded that the trial judge fell into error in
    two ways  first, by stating that Rays offer to settle was as good as if not
    better than the outcome at trial; and second, by stating that Ray had been
    successful at trial [on] all material issues.

[27]

In
    light of these errors, and against the backdrop of the return of the spousal
    support issue to the trial judge, this court determined that the costs issue
    should also be returned to the trial judge to fix an appropriate award of
    costs, in light of the relative success of the parties, their conduct at trial,
    and other relevant considerations under the
Rules
.

(4)

The rehearing

[28]

The
    trial judge dealt with two issues at the rehearing  spousal support and costs.
    Both parties made written submissions on these issues. They agreed that the
    trial judge should consider only the original evidence in making his decision;
    they would not provide an update on their financial positions. The parties
    agreed that they would decide how to proceed once the trial judge rendered his
    second decision.

(a)

Spousal support

[29]

On
    the crucial issue of Joans sale of her shares in ACCE to Ray, the trial judge
    concluded that the capital receipts they generated should only be considered
    for what they can reasonably yield as income if invested in a reasonable
    manner. He then considered that income  using a generous six per cent
    return  and her various pension incomes, and arrived at an average annual
    income for Joan of $282,119, down from $484,356 at the original trial.

[30]

The
    trial judge stated that Rays average annual income was $644,172, the same
    number as determined at trial.

[31]

Then,
    in the crucial passage in his reasons in the rehearing, the trial judge reached
    his conclusion on the spousal support issue:

Based on the income ranges set out above, Raymond should pay
    the low end of the SSAG calculations. This amounts to $8,000 per month in
    spousal support. That level of support results in Joan retaining 40% of the Net
    Disposable Income and Raymond retaining 60%.

(b)

Costs

[32]

The
    trial judges reasons on the costs issue were brief, so I set them out in full:

With its reasons, the Court of Appeal has also requested a
    reconsideration of the cost award. Ray Berta submits that this reconsideration
    by me should make a specific finding that Joan Berta acted in bad faith given
    my other findings in the original reasons. I agree with these submissions.
    Although I did not use the term bad faith, my findings describe conduct that
    amounts to bad faith.

Joan Berta served and filed an offer to settle that the Court
    of Appeal felt was better than the judgment granted in favour of Ray Berta.
    They observed that Ray Berta took the position that Joan was not entitled to
    spousal support, and I found that she was. Taking both of these factors into
    consideration, it is my view that bad faith amounts to fueling the fire of
    litigation. Such conduct cannot be condoned, even if an offer was better than
    the judgment. I view this as similar to a successful party being disentitled to
    costs when the court finds that they acted unreasonably.

In weighting the considerations of Joans offer with her
    conduct amounting to bad faith that drove the litigation, I am of the view that
    Ray Berta should recover a substantial portion of his costs. Under the
    circumstance I find that reducing his full indemnity costs by 30 percent would
    be a fair allotment.

As a result of the above factors, Joan shall pay costs to Ray
    in the total amount of $322,125.70.

[33]

Joan
    appeals on both the spousal support and costs issues.

C.

ISSUES

[34]

Joan
    raises two issues on the appeal:

1.      Did
    the trial judge err by awarding Joan spousal support of $8,000 per month; and

2.      Was
    the trial judges costs award of $322,125.70 in favour of Ray unfair,
    unreasonable or clearly wrong?

D.

ANALYSIS

(1)

Spousal support

[35]

Joan
    contends that the trial judge erred by fixing indefinite spousal support at
    $8,000 per month. She says that this amount is too low. She submits that the
    trial judge made three errors in arriving at this number  he erred in calculating
    Joans income for support purposes; he erred in applying the low range of the
SSAGs
;
    and he made a mathematical error when he applied the
SSAGs
. I will consider
    these submissions in turn.

(a)

Joans income

[36]

The
    trial judge fixed Joans annual income at $282,119. He adopted the Court of
    Appeals approach, which meant that the income flowed from two sources 
    imputed (not actual) income on her investment portfolio ($179,400) and income
    from other sources, including OAS, CPP, Stelco pension, RRIF income, U.S.
    benefits, loan income, and rental income ($102,719).

[37]

While
    she submits support should be calculated based on an annual income of $85,000, Joan
    does not specifically challenge the figure for actual income. She challenges
    the imputed income figure on two bases.

[38]

First,
    Joan asserts that the trial judge failed to take account of the tax
    implications of her receipt of $2.2 million for the sale of her ACCE shares to Ray.

[39]

I
    agree with this submission. Joan acknowledged in one of her financial documents
    prepared for the trial that she would have to pay taxes, over a period of
    years, on the income she received from the sale of her ACCE shares. Ray does
    not challenge this assertion. The calculation prepared by McGillivray and
    Associates (a firm retained by Ray to advise both parties about the income tax
    implications of Joans sale of her ACCE shares to Ray) established that the
    cumulative cash Joan would retain after 2016 from the sale of the shares was $1,685,923.
    I accept this figure.

[40]

Second,
    Joan submits that the trial judge erred by in effect double counting certain
    items in both the imputed income and other sources categories of income.

[41]

I
    agree. The trial judge improperly added to Joans asset portfolio the value of
    the RIFF, the income from which is already accounted for in her line 150 income.
    He also incorrectly included the proceeds from the sale of her matrimonial home
    which she used to buy a new home and which were not available to invest, as
    well as amounts for personal property like a car and jewellery, which could not
    generate income.

[42]

Subtracting
    the amounts related to these items leaves a final number in the imputed income
    category of $1,685,923  the cumulative cash retained from the share sale.

[43]

Third,
    Joan contends that the trial judge erred by determining that she should be earning
    six per cent a year on her capital. She says that this is too high a figure for
    an elderly, conservative investor.

[44]

I
    do not accept this submission. In its appeal decision, this court used a six
    per cent figure, which it described as generous, in calculating Joans
    potential annual income. In addition, the record established that Joans RIFF
    return from 2010 to 2013 was around six per cent. Accordingly, while I would
    not endorse six per cent as the usual rate of return to be imputed, I do not
    fault the trial judge for choosing this number. I do not think that this
    figure, in the circumstances of this case, with two wealthy and financially
    savvy spouses, is predicated upon insensitive standards on how the payee
    spouse should have managed her finances from the point of separation: see
Boston
    v. Boston
, 2001 SCC 43, at para. 58.

[45]

Combining
    my conclusions on the three issues raised relating to Joans income, my
    ultimate conclusion is that it was appropriate to impute an asset portfolio of
    $1,685,923. If invested so as to generate an annual return of six per cent, the
    annual income in this category would be $101,155. If this is added to the other
    income sources totalling $102,719, Joans total annual income would be
    $203,874.

(b)

The low range of the
SSAGs

[46]

After
    determining that Rays annual income was $644,172 and Joans annual income was
    $282,119, the trial judge stated: Based on the income ranges set out above,
    Raymond should pay the low end of the SSAG calculations. Joan contends that
    the trial judge offered no reasons in support of this conclusion and that he
    erred in choosing to apply the low end of the
SSAGs
.

[47]

I
    am not persuaded by these submissions.

[48]

The
    trial judge concluded that there was no compensatory entitlement to support
    here. The only entitlement was non-compensatory or needs-based. He also carefully
    reviewed the financial situations of both parties. It is obvious from a review
    of his reasons that he concluded that both parties have substantial resources.
    His treatment of this issue is far removed from a no reasons analysis.

[49]

Absent
    an error in principle, a significant misapprehension of the evidence, or an
    award that is clearly wrong, the trial judges conclusion on spousal support
    awards should be affirmed: see
Hickey v. Hickey
, [1999] 2 S.C.R. 518,
    at paras. 11-12, and
Halliwell v. Halliwell
, 2017 ONCA 349, at para.
    88. This deference is augmented for payor incomes over $350,000 where the
SSAGs
themselves suggest pure discretion as one of two possible approaches: see
    Department of Justice Canada, Spousal Support Advisory Guidelines (July 2008), (Ottawa:
    Department of Justice, 2008) at p. 112 and
Hathaway v. Hathaway
, 2014
    BCCA 310, at para. 46. This approach remains unchanged in the April 2016
    Revised Users Guide. I cannot say that the trial judges decision to make a
    spousal support order at the low end of the
SSAGs
calculation amounts
    to any of the errors set out in
Hickey
and
Halliwell
.

[50]

Finally,
    I note that in oral argument Joan conceded that the midrange of the
SSAGs
would be a bit high.

[51]

For
    these reasons, I conclude that the trial judge did not err by purporting to
    apply the low end of the
SSAGs
when calculating Rays support
    obligation.

(c)

The mathematical error

[52]

The
    trial judges ultimate conclusion on the spousal support issue was:

Based on the income ranges set out above, Raymond should pay
    the low end of the SSAG calculations. This amounts to $8,000 per month in
    spousal support. That level of support results in Joan retaining 40% of the Net
    Disposable Income and Raymond retaining 60%.

[53]

Joan contends that the trial judges intent here
    was to order support at the low end of the
SSAGs
range. The order of $8,000 per month was simply a mathematical
    error in applying this intent. To support this, she refers to the trial judges
    original decision:

The spousal support calculations given my
    findings are as follows: $5,380 for low, $6,227 for mid and $7,174 for high.

Given my findings relating to Joan not
    maximizing her resources after separation, I am of the view that the fairest
    approach is to order support that is at the low end of the SSAG calculations.

For the foregoing reasons, I am ordering
    spousal support in the amount of $5,380 per month.

[54]

Ray concedes that based on an income for him of
    $644,172 and an income for Joan of $282,119, the support payable at the low end
    of the range is $11,314. He argues, however, that it is the trial judges last
    sentence about the net disposable income split of 40/60 that reflects his true
    intent. In this way, on the trial judges income findings, Joan would be
    entitled to $6,173 per month.

[55]

I agree with Joan on this point.

[56]

The decision under appeal was a rehearing
    further to direction from this court on appeal. On that first appeal, this
    court found no error in the initial decisions application of the low end of
    the
SSAGs
. Furthermore, there was no stated
    intent in the trial judges rehearing decision to depart from this original
    choice.  All this given, I would agree with Joan that the trial judge intended
    to apply the low end of the
SSAGs
range to the
    revised calculation of Joans income and simply made a mathematical error in
    calculating this amount (as well as in calculating the net disposable income
    split).

[57]

I would accordingly apply the low end of the
SSAGs
to the corrected income figure of $203,874 to generate the
    appropriate spousal support amount. This amounts to $13,759 per month in
    spousal support.

(2)

Costs

[58]

At
    the first trial, the trial judge awarded Ray full indemnity costs fixed at
    $460,179.57.

[59]

On
    appeal, this court identified two errors in the trial judges costs analysis 
    his treatment of Rays offer to settle and his conclusion that Ray had been
    successful at trial [o]n all material issues. The court returned the costs
    issue to the trial judge to fix an appropriate award of costs, in light of the
    relative success of the parties, their conduct at trial, and other relevant
    considerations under the
Rules
.

[60]

At
    the rehearing, the trial judge made a specific finding that Joan acted in bad
    faith at the original trial. However, he heeded the comments of this court and
    concluded that Ray should recover a substantial portion of his costs, not
    full indemnity. He reduced the full indemnity costs by 30 per cent and awarded
    Ray costs of $322,125.70.

[61]

Joan
    submits that this costs award is unreasonable, especially since she was
    successful on the spousal support issue.

[62]

I
    do not accept this submission. The trial judge was in the best position to
    assess the parties conduct before and during a nine day trial. In both his
    trial and rehearing reasons he made explicit negative findings about Joans
    conduct. In his rehearing reasons, the trial judge specifically stated that his
    findings at the trial describe conduct that amounts to bad faith.

[63]

In
    its appeal reasons, this court referred to the trial judges findings that the
    Wife and her expert both acted unreasonably throughout the litigation and the
    Wife also made baseless allegations of fraud against the Husband, and
    continued: These findings are amply supported by the evidentiary record. They
    strongly support an award of costs to the Husband on a full recovery basis.

[64]

Importantly,
    at the rehearing, the trial judge, taking account of this courts comments in
    its appeal reasons, reduced the costs award in favour of Ray by about $138,000.

[65]

In
    the end, I cannot say that the new costs award made by the trial judge at the
    rehearing  $322,125.70, not full indemnity costs of $460,179.57  even
    approaches being unreasonable.

E.

DISPOSITION

[66]

I
    would allow the appeal in part on the spousal support issue and order that the
    respondent pay spousal support to the appellant in the amount of
$13,759
per month.

[67]

I
    would dismiss the appeal on the costs issue.

[68]

Success
    on the appeal is divided. I would order that each party bear its own costs of
    the appeal.

Released: JCM  NOV 16 2017

J.C. MacPherson
    J.A.

I agree. R.G.
    Juriansz J.A.

I agree. L.B.
    Roberts J.A.


