



COURT OF APPEAL FOR ONTARIO

CITATION: Berta v. Berta, 2015 ONCA 918

DATE: 20151223

DOCKET: C59380

[
Corrigendum released on January 18, 2016
]

Cronk, Lauwers and van Rensburg JJ.A.

BETWEEN

Delia Joan Berta

Appellant

and

Raymond Louis Berta

Respondent

Douglas A. Quirt, for the appellant

Peter M. Callahan, for the respondent

Heard: September 1, 2015

On appeal from the order of Justice R. John Harper of the
    Superior Court of Justice, dated August 20, 2014, with reasons reported at 2014
    ONSC 3919, and the costs order, dated June 11, 2015, with reasons reported at
    2015 ONSC 1493.

Cronk J.A.:

[1]

This matrimonial litigation arose from the collapse of a long-term marriage
    (27 years) between Delia Joan Berta (the Wife) and Raymond Louis Berta (the
    Husband).   Following separation, the Wife applied in the Superior Court for
    a divorce, spousal support, equalization of property, and various other forms
    of relief under the
Divorce Act
, R.S.C. 1985, c. 3 (2nd Supp.) and the
Family Law Act
, R.S.O. 1990, c. F.3 (the 
FLA
).  At trial,
    the main issues in contention concerned the parties annual incomes for spousal
    support purposes and the equalization of their net family properties (NFPs).

[2]

The trial judge ordered that the Wife pay an equalization payment of
    $101,223.13 to the Husband.  He further ordered that the Husband pay indefinite
    periodic spousal support of $5,380 per month to the Wife, commencing February
    1, 2014.  The trial judge also awarded full indemnity costs of $460,179.57 to
    the Husband.

[3]

The Wife appeals the trial judges rulings on the appropriate quantum of
    spousal support and the equalization payment.  She further appeals from his costs
    award against her.
[1]


I.        Background in Brief

(1)

The Marriage

[4]

The parties married on December 31, 1982 and separated on March 26, 2010. 
    At the time of trial, the Wife was 75 years old and the Husband was 68 years
    old.  Each party has adult children from his or her previous marriage and several
    grandchildren.

[5]

When the parties married in 1982, the Wife was employed as an executive
    with the Steel Company of Canada (Stelco), now known as U.S. Steel, in
    Hamilton, Ontario.  She held senior management positions with Stelco until she
    retired, after lengthy service with the company.  On retirement, she formed her
    own consulting company.

[6]

The Husband worked throughout his career in clinical research.  When the
    parties married, he was employed in that field by a company in Atlanta,
    Georgia.  After their marriage, the Wife supported the Husband until he
    obtained landed immigrant status in Canada.

[7]

In 1985, the Husband obtained a clinical research position in Ontario.  The
    following year, when his employers business was sold, the Husband decided to
    commence his own clinical research-based business.  He incorporated Applied
    Consumer Clinical Evaluations Incorporated (ACCE), together with 911184
    Ontario Ltd. (911 Ltd.), for this purpose.  The trial judge found, at para.
    10 of his reasons, that 911 Ltd. was a vehicle whereby monies could flow to
    [the parties] without the employees of ACCE knowing what remuneration the
    owners took.

[8]

The parties were equal shareholders in ACCE and served as directors of
    the company.  ACCE is the sole shareholder of 911 Ltd.

[9]

On the evidence before the trial judge, both parties dedicated labour
    and funds to the establishment and growth of ACCE, although the Husband operated
    the company on a day-to-day basis save for a brief period in the early 1990s.

[10]

Over
    time, ACCE prospered, attracting several large food companies as clients.  The
    Wifes consulting business also flourished.  As a result, the parties enjoyed a
    high standard of living throughout their marriage.  The trial judge described
    their lifestyle, at para. 15, as quite lavish.  It included expensive travel,
    generous gifts to each other, the costly purchase and renovation of their
    matrimonial home, the use of a cottage owned by 911 Ltd., and entertaining, on
    some occasions, more than 100 guests.

(2)

The Separation

[11]

In
    March 2010, the parties agreed to separate.  At that time, their principal
    assets consisted of their matrimonial home and their shares in ACCE.

[12]

Following
    separation, the matrimonial home was sold, the proceeds were divided equally
    between the Husband and the Wife, and each of the parties purchased separate
    residences.  The Wife also acquired a condominium in Florida.

[13]

On
    April 3, 2012, the Husband purchased the Wifes shares in ACCE for $2.2
    million.  Under the terms of the share purchase agreement, the purchase price
    was payable in part on closing of the share transaction and the balance of
    $1.85 million over time.

(3)

The Trial Judgment

[14]

In
    late July 2010, the Wife commenced proceedings under the
Divorce Act
and the
FLA
for spousal support from the Husband, equalization of the
    parties NFPs, and a divorce.

[15]

On
    August 20, 2014, following a nine-day trial, the trial judge ordered that the
    Wife pay a $61,530.12 equalization payment to the Husband and that the Husband pay
    indefinite periodic spousal support to the Wife of $5,380 per month, based on
    imputed annual incomes of $644,172 for the Husband and $484,356 for the Wife. 
    He also granted the Wifes request for a divorce and awarded full indemnity
    costs of $460,179.57, inclusive of disbursements and HST, to the Husband.

[16]

After
    his August 2014 ruling, the parties jointly requested that the trial judge
    correct various errors in his calculations of the parties NFPs.  By
    corrigendum dated July 21, 2015, the trial judge did so.  As a result of
    adjustments to the parties NFPs, the trial judge directed that the Wife pay an
    adjusted equalization payment to the Husband in the amount of $101,223.13.

(4)

Additional Facts

[17]

Where
    additional facts are relevant, I will address those facts in the context of the
    issues to which they relate.

III.      Issues

[18]

There
    are three issues on appeal:

[2]

(1)

Did the
    trial judge err in determining the parties annual incomes for the purpose of
    spousal support?

(2)

Did the
    trial judge err in equalizing the parties NFPs by valuing the notional costs
    of the Wifes disposition of her ACCE shares at $0.00?

(3)

Did the
    trial judge err in awarding costs to the Husband on a full indemnity basis: i) by
    holding that the result achieved by the Husband at trial was as favourable as
    or more favourable than his pre-trial settlement offers; ii) by relying on allegations
    of fraud; and iii) by imposing a costs award that was disproportionate in the
    circumstances and unsupported by the evidence?
[3]


IV.     Analysis

(1)

The Parties Annual Incomes

[19]

The
    Wife appeals the amount of her periodic spousal support award, arguing that it rests
    on flawed calculations of the parties respective annual incomes.  She submits that
    the trial judge overstated her annual income by about $461,000 and understated
    the Husbands annual income by approximately $204,107.

(a)

Wifes Annual Income

[20]

The
    Wife attacks the trial judges calculation of her annual income on three
    grounds.  First, she argues that the trial judges reasons fail to reveal the
    basis and justification for his imputation of annual income to her in the
    amount of $484,356.  Second, she submits that his income calculation involved
    impermissible double dipping because it included earnings from sources that had
    already been addressed in the Wifes NFP, and equalized, namely: i) her Stelco
    pension; ii) her registered retirement income fund (RRIF); and iii) capital
    gains.  Third, the Wife maintains that the annual income imputed to her
    impermissibly included spousal support.

[21]

The
    Wife contends that, properly calculated, her annual income for the purpose of
    spousal support should include only income received by her under the Canada
    Pension Plan (CPP Benefits) ($11,567.04), investment income ($2,561.68) and
    U.S. Social Security benefits (US Benefits) ($9,216), as set out in her 2012
    income tax return, for a total of $23,344.72.

[22]

A
    trial judges award of spousal support will not be interfered with lightly by a
    reviewing court.  Deference to such awards promotes finality in family law
    litigation and recognizes the importance of the appreciation of the facts by
    the trial judge.  However, appellate intervention is appropriate where there is
    an error in principle, a significant misapprehension of the evidence, or the
    award is clearly wrong:
Hickey v. Hickey
, [1999] 2 S.C.R. 518, at
    para. 11.  For the reasons that follow, I agree that the trial judges
    determination of the Wifes annual income for support purposes is
    unsustainable.

[23]

The
    trial judge commenced his spousal support analysis by reviewing the evidence of
    two experts regarding the parties incomes for support purposes.  For reasons
    that he explained, he placed little weight on the opinion evidence of the
    Wifes expert, Bruce Horsley, concluding that he had engaged in multiple,
    unnecessary disclosure requests and acted in an adversarial and partial
    manner.  In contrast, he accepted the evidence of Steve Ranot, the Husbands expert,
    describing him, at para. 62, as very thorough, fair and objective.

[24]

The
    Husband also called Brian Braun of MacGillivray and Associates, a chartered
    accountancy firm, as an expert witness at trial.  MacGillivray and Associates
    performed audits of ACCE and 911 Ltd.s books and records for 2010 and 2011,
    and conducted a review of the companies books for 2012.  The trial judge found,
    at para. 77, that Mr. Braun also testified in a fair, objective and neutral
    manner.

[25]

The
    trial judge next addressed the factors governing an award of spousal support set
    out in s. 15.2(4) and (6) of the
Divorce Act
and some of the Supreme
    Court of Canadas related jurisprudence.  He noted, at para. 92, that the court
    must examine the payee spouses need, the payor spouses ability to pay and,
    to some extent, the issue of double recovery.

[26]

The
    trial judge then turned to the application of the governing principles
    regarding spousal support to the Wifes circumstances.  He found, at para. 104,
    that the Wife had been fully compensated for her contributions to the marriage
    and to ACCE prior to the date of separation.  Accordingly, he held that she was
    not entitled to compensatory support.  This ruling is not challenged on appeal.

[27]

With
    respect to the Wifes need for support, the trial judge made the following key
    findings regarding the Wifes post-separation circumstances and conduct:

(1)

the Wife
    had significant assets with which to contribute to her own support, including
    her Stelco pension and her CPP and U.S. Benefits.  In combination, these assets
    yielded approximately $4,974 per month or $59,688 per annum in income (at para.
    106(a));

(2)

the Wife
    also had significant funds invested in a RRIF account ($380,673.71), together
    with $59,326.29 in further savings (at paras. 106(c) and (f));

(3)

by the
    time of trial, the Wife had received $1,050,000 from the Husband on account of
    the purchase price for her ACCE shares, plus about $350,000 as her share of the
    proceeds of sale from the parties 2011 disposition of the matrimonial home (at
    paras. 106(d) and (e));

(4)

the Wife had
    chosen not to use her post-separation assets in order to maximize her income
    and, by her own admission, had done nothing to achieve the best return on her
    capital (at paras. 98, 107 and 12223);

(5)

the Wife
    had also failed to make full disclosure of her income and assets in the
    matrimonial litigation, including with respect to her acquisition of a rental
    property in London, Ontario, her receipt of rental income from this property
    and, as well, interest income on a $200,000 loan made by her to her daughter
    (at paras. 98, 108 and 11112); and

(6)

the Wife
    did not feel any responsibility to contribute to her own support.  Instead, she
    had exhibited an attitude of entitlement (at paras. 110 and 11718).

[28]

Against
    this factual backdrop, the trial judge determined the parties respective
    annual incomes for support purposes and the appropriate quantum of periodic
    support to be awarded to the Wife.  As I have said, he awarded the Wife indefinite
    periodic spousal support of $5,380 per month.  He based this award on his calculations
    of the parties annual incomes and his finding that, post-separation, the Wife
    had failed to utilize her available assets to maximize her income and return on
    capital.

[29]

In
    imputing annual income to the Wife, the trial judge said merely, at para. 120,
    I find [the Wifes] income to be as follows: $484,356, which includes pension
    income and investment income.

[30]

However,
    the trial judge did not indicate the amounts of the Wifes pension and
    investment income that he included in his income imputation analysis.  Nor do
    his reasons furnish any other explanation as to the basis for the quantum of income
    imputed to the Wife or as to why it was appropriate in the circumstances.

[31]

At
    the appeal hearing, the Husbands counsel candidly acknowledged that nothing in
    the trial judges reasons reveals his methodology or any formula used by him to
    impute annual income to the Wife.  Nonetheless, counsel argued that the annual
    income fixed by the trial judge for the Wife is explained by three factors: i)
    the Wifes pension and investment income as disclosed in her 2012 income tax
    return; ii) interest earned on the Wifes RRIF post-separation; and iii)
    capital gains realized by the Wife in 2012.

[32]

I
    disagree.  Based on the trial judges reasons, I am unable to accept that these
    factors adequately account for the annual income that the trial judge imputed
    to the Wife.

[33]

There
    is no dispute that the Wifes gross income from all sources for 2012 was
    $593,709.68 (including spousal support received).  This amount was comprised of
    the following:



Other Employment Income

$522.00



Old Age Security Pension

$6,510.60



CPP or QPP Benefits

$11,567.04









Other Pension Income

$63,716.36



i)

US Benefits - $9,216





ii)

Stelco Pension - $39,729.60





iii)

RRIF - $14,774.45











Interest and Other Investment
          Income

$2,561.68









Taxable Capital Gains

$350,432.00









Support Payments Received

$158,400.00





__________



TOTAL:

$593,709.68



[34]

Thus,
    based on her 2012 income tax return, the Wifes pension and investment income totalled
    $84,355.68 (comprised of: i) Old Age Security Pension; ii) CPP Benefits and Other
    Pension Income; and iii) Interest and Other Investment Income).

[35]

The
    Husband contends that the remaining $400,000 of annual income imputed to the
    Wife is based on her post-separation earnings on her RRIF and capital gains. 
    The Wifes 2012 tax return suggests that $14,774.45 (included in the Wifes
    Other Pension Income) could be attributed to annual RRIF income.  The trial
    judge also mentioned approximately $6,000 per year in interest income on the
    Wifes loan to her daughter and approximately $14,400 in rental income on the
    London property acquired by the Wife.  This leaves approximately $380,000 to be
    accounted for by capital gains or other investment income.

[36]

It
    is true that the Wifes 2012 income included $350,432 in taxable capital
    gains.  It is also the case that, under the ACCE share purchase agreement, she
    receives capital payment instalments for several years on account of the
    purchase price for her ACCE shares.  Under the terms of that agreement, the
    $2.2 million purchase price was to be paid to the Wife as follows: i) $350,000 at
    or around closing; and ii) in instalments: $50,000 on May 1, 2012, $150,000 on
    July 1, 2012, and 16 equal quarterly instalments of $100,000 each (for an
    annual total of $400,000) from October 1, 2012.  The last instalment of $50,000
    is payable on October 1, 2016.

[37]

While
    consideration of all sources of the Wifes income, together with her capital receipts
    under the ACCE share purchase agreement, to some extent might explain the trial
    judges imputation of $484,356 in income per year for the years 2013 to 2016,
    it does not adequately explain the attribution of this income for the purpose
    of calculating
indefinite
spousal support.  Further, I note that it is
    also unclear from the trial judges reasons whether he distinguished the Wifes
    capital receipts from her capital gains.

[38]

In
Boston v. Boston
, [2001] 2 S.C.R. 413, the Supreme Court held that if
    a payee spouse receives significant assets as part of equalization and does not
    invest those assets in an attempt to produce an income, the court should impute
    an income to the payee spouse based on what income those assets could
    reasonably produce if invested.  This assessment, however, cannot be based on
    artificial assumptions.

[39]

In
    this case, looking forward from October 1, 2016, the Wife could at the most be
    expected to have an asset portfolio of $2.2 million from the sale of her ACCE
    shares, plus: i) approximately $380,000 in her RRIF; ii) $350,000 from the sale
    of the matrimonial home; and iii) about $60,000 in additional savings.  This
    would yield a total asset portfolio of approximately $2.99 million.

[40]

The
    trial judge, at para. 107, criticized the Wife for investing in investment
    vehicles that earned only marginal annual interest (between 1.35 to 1.9 per
    cent).  Even at a generous annual interest rate of 6%, and taking account of the
    Wifes other pension and benefits income of $67,545 (other employment income, Old
    Age Security Pension, CPP and US Benefits and her Stelco pension), income from
    her RRIF, and her loan and rental income, this might be expected to yield
    approximately $282,119 in annual income ($179,400 (interest) + $67,545 + $14,774
    + $20,400 (loan and rental income)).

[41]

This
    calculation, while not intended to be precise, illustrates that an indefinite
    attribution of $484,356 in annual income to the Wife remains both entirely
    unexplained and without any apparent justification on both the trial judges
    reasons and the evidentiary record.  In my opinion, to award $5,380 in monthly
    periodic support,
indefinitely
, on the basis of an imputed income of
    $484,356, in the absence of any explanation for this imputation, constitutes
    reversible error.

[42]

In
    the result, I am compelled to conclude that the trial judges reasons on the
    important issue of the amount of annual income to be imputed to the Wife for
    spousal support purposes preclude meaningful appellate review.  Neither his
    imputation methodology nor his justification for the income imputed to the Wife
    can be discerned from his reasons.  The parties and this court should not be
    left to guess at the basis and justification for the trial judges calculation
    of the Wifes annual income.

[43]

Accordingly,
    I would set aside the trial judges spousal support award.  In light of this
    conclusion, it is unnecessary to address the Wifes remaining complaints concerning
    the trial judges calculation of her annual income.

(b)

Husbands Annual Income

[44]

The
    trial judge accepted Mr. Ranots evidence concerning the Husbands annual
    income in 2010 to 2012.  He averaged the Husbands annual earnings during that
    three-year period and concluded that the Husbands annual income for spousal
    support purposes was $644,172.

[45]

The
    Wife does not dispute that the Husbands annual income should be based on his
    average annual earnings for 2010 to 2012.  However, she argues that the trial
    judge erred by understating the Husbands average annual income by
    $204,107.30.  In particular, the Wife says, the trial judge failed to account
    for the following earnings that the Husband realized, or ought to have realized:
    i) $83,500 in income advances by ACCE to the Husband in 2011; and ii)
    $120,607.30 in advances accrued at ACCEs 2011 year end.

[46]

The
    Wife maintains that Mr. Brauns and Mr. Ranots evidence established that the
    amount at issue  $204,107.30  should have been taxed personally to the
    Husband.  Because Mr. Ranot failed to take this income adjustment into account
    in calculating the Husbands income, the trial judge erred by relying on his
    calculations.

[47]

The
    Wife submits that, properly calculated, the Husbands income in 2011 was
    $921,896.30, rather than $717,789 as posited by Mr. Ranot.  Adjusting for the
    2011 understatement yields $712,141.10 average annual income for the three-year
    period ending 2012.  This amount, the Wife says, should have been used to
    determine the amount of spousal support to be paid by the Husband.

[48]

I
    would reject the Wifes challenge to the trial judges ruling on the Husbands
    annual income for support purposes.  In my opinion, based on the evidentiary
    record before him, it was open to the trial judge to accept and rely on Mr.
    Ranots calculations of the Husbands annual income during 2010 to 2012.

[49]

Mr.
    Ranot testified that the Husband realized the following income: 2010 -
    $620,472; 2011 - $717,789; and 2012 - $594,055.  The trial judge accepted this
    evidence.  He held, at para. 75:

I accept Mr. Ranots opinion as to the available income of [the
    Husband] for support purposes.  It represents in my view the fairest and most
    realistic approach to the determination of income available for support.

[50]

The
    dispute regarding the Husbands 2011 earnings arises primarily from the
    evidence of Mr. Braun.  Based on his firms 20102011 audits of ACCE and 911
    Ltd. and review of the companies 2012 financial records, Mr. Braun testified
    that an accounting error had been made in 2011 relating to: i) a shareholders
    loan of $355,944 that was debited to the Husband and then credited to ACCEs
    retained earnings (the Shareholders Loan); and ii) a debit of $200,625
    regarding retained earnings that was credited in 2012 as an accrued commission
    to the Husband (the Accrued Commission).

[51]

Mr.
    Braun indicated that the necessary accounting adjustments for the Shareholders
    Loan were made and the Husbands loan account with ACCE was charged with this
    amount.  Further, ACCEs management informed him that the amount of the Accrued
    Commission was going to be included in the Husbands income.

[52]

Mr.
    Braun also testified that ACCE and 911 Ltd.s 2010 and 2011 financial
    statements fairly represented the income, expenses, assets and liabilities of
    the companies and that he found no evidence of any inaccuracy in the companies
    2012 financial statements.

[53]

As
    summarized by the trial judge in his reasons, at paras. 69 and 79, Mr. Ranot testified
    that all the parties expenses paid for by the companies had been accounted
    for; that he did not see anything that would represent anything other than
    errors that could be and were corrected by accounting adjustments; and that he
    had no doubt that he saw all the money in the companies.

[54]

The
    trial judge addressed the issue of the 2011 accounting error and made the
    following findings, at para. 77:

This [error] was picked up in the following year and resulted
    in [the Husband] paying more taxes as an adjustment had to be made to his loan
    account in the following year to correct the error.  This was in fact done and
    [the Husband] was taxed on the higher amount in 2012.

[55]

The
    Wife contends that these findings are tainted by palpable and overriding error
    because there was no evidence at trial that the amount of the Accrued
    Commission error was actually included as income in the Husbands income tax
    returns.  In other words, although the Husbands expert witnesses acknowledged
    that the Husband should be taxed on this amount and the requisite adjustment to
    the Husbands income should be made, in fact there was no evidence that this had
    actually occurred.

[56]

The
    record supports this assertion.

[57]

The
    trial judges impugned statements that an adjustment had to be made to [the
    Husbands] loan account in the following year to correct the error.  This was
    in fact done and [the Husband] was taxed on the higher amount in 2012, must be
    viewed in the context of the evidence at trial regarding the accounting error
    at issue.  That evidence does not establish that the amount of the Accrued
    Commission error was included in the Husbands income for tax purposes in 2011
    or 2012.  Nor, however, does the record confirm that it was not.

[58]

Mr.
    Braun testified that the necessary accounting entries to adjust for the
    Shareholders Loan error were made, and the Husbands loan account was charged
    with this amount.  However, he was unable to confirm that the Husband had
    included the amount of the Accrued Commission error in his income because he
    had neither prepared nor reviewed the Husbands tax returns.

[59]

Mr.
    Ranots evidence was to similar effect.  He said that the best approach to correcting
    the 2011 accounting error was to make the appropriate adjustments to ACCEs and
    911 Ltd.s 2011 financial records, rather than adjusting their 2012 records.  But,
    as with Mr. Braun, he could not confirm whether the Husband included the income
    attributable to the Accrued Commission error in his personal income tax
    returns.

[60]

Nor
    did the Husbands evidence at trial clarify the issue.  During his testimony,
    the Husband was not asked if he included the amount of the Accrued Commission
    error in his 2011 or 2012 income for tax purposes.  On cross-examination, he
    said only that he did not recall if his accountant brought the discrepancy to
    his attention.  I note that the Husbands 2012 income tax return does not form
    part of the record before this court.

[61]

Thus,
    there was evidence at trial that the necessary accounting adjustments were made
    to correct the Shareholder Loan error.  But the evidentiary record does not
    establish that the necessary adjustments to correct the Accrued Commission
    error were also made, at least in respect of the requisite adjustment to the
    Husbands income.  This gap in the evidence militates in favour of the
    conclusion that the trial judges description of the evidence relating to the
    accounting adjustments, quoted above, in fact pertained to the Shareholder Loan
    error, but not to the Accrued Commission error.

[62]

Clearly,
    the evidentiary record on this issue is less than satisfactory.  I would
    summarize the pertinent, available evidence in this fashion:

1)

the
    expert accounting evidence established the 2011 Accrued Commission error and
    the need for accounting adjustments to correct it, including adjustments to the
    Husbands income;

2)

ACCE
    and 911 Ltd.s auditors were informed that the necessary accounting adjustments
    for the Accrued Commission error would be made by ACCE management;

3)

the

auditors

were

satisfied

that ACCE and 911 Ltd.s 20102011
    consolidated financial statements fairly represented the companies income,
    expenses, assets and liabilities and that the 2012 financial statements reflected
    no inaccuracies;

4)

Mr.
    Ranot concluded that any accounting errors could be and were corrected by
    accounting adjustments.  He proceeded on this basis in calculating the
    Husbands annual income.  However, neither he nor Mr. Braun were in a position
    to confirm that the Husbands income, as opposed to the companies books, was adjusted
    to account for the Accrued Commission error; and

5)

by
    the same token, there was no evidence at trial, accepted by the trial judge,
    establishing that the Husband had failed to personally account for his income
    relating to the Accrued Commission error.

[63]

The
    Wife bore the onus at trial to establish an evidentiary foundation for the
    imputation of income that she requested for the Husband:
Homsi v. Zaya
,
    2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 28;
Nielson v. Nielson
,
    2007 BCCA 604, 47 R.F.L. (6th) 26, at para. 22;
C.L.E. v. B.M.R.
, 2010
    ABCA 187, 86 R.F.L. (6th) 26, at para. 27.  For the reasons outlined above, she
    failed to do so.

[64]

It
    follows that the Wife has not demonstrated a palpable and overriding error in
    the trial judges calculation of the Husbands annual income.  On the
    evidentiary record at trial, it was open to the trial judge to accept Mr.
    Ranots income calculations as the best available evidence of the Husbands
    income for support purposes.

[65]

I
    would reject this ground of appeal.

(2)

Notional Disposition Costs of ACCE Shares

[66]

The
    trial judge ordered the Wife to pay an equalization payment to the Husband in
    the amount of $101,223.13, based on NFPs of $2.89 million for the Wife and $2.68
    million for the Husband.  In calculating the parties NFPs, the trial judge
    assigned a nil value ($0.00) to the notional costs of disposition of each of
    the Wifes and the Husbands ACCE shares (the Share Disposition Costs).

[67]

The
    Wife argues that the trial judge erred in his equalization analysis by failing
    to value her Share Disposition Costs at $364,884.  She submits that, as of March
    26, 2010, the date of separation (V-Day), the sale of her ACCE shares was
    imminent and sufficient evidence was adduced at trial to support a $364,884
    valuation of her Share Disposition Costs.  I disagree.

[68]

The
    significance of this issue flows from the equalization of property scheme
    contemplated by s. 5 of the
FLA
.  Under that scheme, on marriage breakdown,
    the spouse with the lesser NFP is entitled to an equalization payment from the
    other spouse in an amount equal to one-half the difference between the spouses
    respective NFPs.  Section 4(1) of the
FLA
defines the term net family
    property (NFP) as the value of all the property, except property exempted
    under s. 4(2), that a spouse owns on the valuation date (V-Day), after
    deducting specified debts and other liabilities.  Section 4(1.1) of the
FLA
stipulates that the specified liabilities to be deducted from a spouses NFP
    include any applicable contingent tax liabilities in respect of the property.

[69]

In
    this case, the parties accept that, for property equalization purposes, V-Day
    is the date of separation.  The deduction from the Wifes NFP of any Share Disposition
    Costs in excess of $0.00 would narrow the difference between her NFP and that
    of the Husband.  This, in turn, would reduce and potentially eliminate any
    equalization payment owed to the Husband.

[70]

In
    support of her argument that the trial judge erred by failing to value her
    Share Disposition Costs at $364,884, the Wife relies on the undisputed evidence
    of the Husbands April 2012 purchase of her ACCE shares for $2.2 million, together
    with the evidence of the taxes paid by her in 2012 on the capital gains arising
    from this share purchase transaction, as reflected in her 2012 income tax
    return.

[71]

The
    Wife also relies on the evidence of David Straughan of MacGillivray and
    Associates, who was initially retained by the Husband to assist in structuring
    the Husbands purchase of the Wifes ACCE shares following separation.

[72]

Mr.
    Straughan testified that his firm advised both parties on the income tax
    implications of the proposed share purchase transaction and various options to
    minimize potential detrimental tax consequences for the Wife arising from the
    transaction.  He explained that, based on an assumed purchase price of $2
    million for her ACCE shares, the Wife would realize after-tax proceeds of $1,635,116. 
    The difference between this amount and the assumed purchase price of $2 million
    ($364,884) represented the Wifes Share Disposition Costs.

[73]

Based
    on Mr. Straughans calculations, the Wife says that, in calculating her NFP,
    $364,884 Share Disposition Costs should have been deducted from the value of
    her property in accordance with ss. 4(1) and 4(1.1) of the
FLA
.

[74]

The
    trial judges reasons confirm that he appreciated the applicable legal
    principles governing the valuation of the parties Share Disposition Costs.  He
    stated, at para. 24, the court must make a meaningful determination of the
    value to be attributed [to the costs of disposition] at the date of separation. 
    Citing this courts decision in
Zavarella v. Zavarella
, 2013 ONCA 720,
    117 O.R. (3d) 641, he framed the applicable test in this fashion, at para. 24:
    What is the reasonable likelihood that the debt will be incurred and what is
    the reasonable estimate of value?

[75]

Applying
    this test to the facts of this case, the trial judge concluded that a nil value
    should be assigned to the Wifes Share Disposition Costs, as well as to those
    of the Husband.  In reaching this conclusion, he made no reference to Mr.
    Straughans testimony, or to the tax calculations performed by MacGillivray and
    Associates.  That evidence, contrary to the trial judges suggestion, did
    provide some basis for the calculation of the tax consequences to the Wife associated
    with the disposition of her ACCE shares.

[76]

That
    said, the fact that the trial judge did not specifically address this evidence is
    of no moment.  I say this for the following reasons.

[77]

First,
    the calculations performed by Mr. Straughan, as set out in a summary report
    dated November 22, 2011, were undertaken in connection with the proposed post-V-Day
    sale by the Wife of her ACCE shares to the Husband.  The sale occurred in April
    2012, two years after V-Day.

[78]

The
    relevant inquiry was not what reasonable or notional Share Disposition Costs should
    be assigned to the Wifes ACCE shares at the time of the 2012 share transaction
    but, rather, whether there was a reasonable likelihood, as of V-Day, that the Wife
    would sell her shares and, if so, at what reasonably estimated value.  Mr.
    Straughan provided no evidence about the Share Disposition Costs, for either
    party, as of V-Day.  Indeed, there was no direct evidence at trial from any
    source concerning such costs, as of V-Day.

[79]

Second,
    the trial judge found that, as of V-Day, the Wifes sale of her ACCE shares was
    contemplated only as part of the parties proposed joint sale of  ACCE to a
    third party.  This sale ultimately collapsed.  The trial judge held, at para.
    24, that he was not given sufficient evidence in order to meaningfully assess
    the value of any notional disposition costs.  He concluded, at para. 26, that
    the only thing that was certain was that the parties owned equal shares and
    would have incurred similar costs of disposition for their ACCE shares on the
    sale of the company, which would have resulted in no imbalance in the net family
    property.

[80]

These
    findings were open to the trial judge.  As I have said, Mr. Straughans expert
    evidence did not pertain to the Share Disposition Costs, as of V-Day, of a sale
    by the Wife of her ACCE shares.  Further, the Husband led no evidence of his anticipated
    Share Disposition Costs as of V-Day, or at any other date.

[81]

Nor
    was the Wifes trial testimony inconsistent with the trial judges findings. 
    The transcript does not support the conclusion that she had a clear intention
    to sell her ACCE shares as of V-Day.  Both parties testified that the Wife had
    wanted to sell her ACCE shares prior to separation, and the Wife said that she
    had offered or was at least willing to sell her shares.  But there was also
    evidence, described above, that as of V-Day, the parties were attempting to
    sell their entire joint interest in the company to a third party.

[82]

The
    trial judges appreciation of the evidence concerning the Wifes Share Disposition
    Costs and his assignment of weight to that evidence attract considerable
    deference from this court.  See for example,
Ottawa Community Housing
    Corporation v. Foustanellas (Argos Carpets)
, 2015 ONCA 276, 332 O.A.C.
    354, at para. 64.  In the circumstances described above, the trial judge was
    entitled to conclude that the only reliable evidence before him was that, if
    the parties ACCE shares were sold, they would both incur similar Share Disposition
    Costs, thus creating no imbalance in their respective NFPs.  I see no basis on
    which to interfere with this aspect of the trial judges NFP calculation for
    the Wife.

(3)

Remedy

[83]

On
    the disposition of this appeal that I propose, the trial judges spousal
    support award must be set aside because the basis for his determination of the
    Wifes annual income for support purposes is unclear, as is any justification
    for the amount of annual income imputed to the Wife.

[84]

At
    the appeal hearing, the parties took the position that if this court set aside
    the trial judges spousal support award based on an error by the trial judge in
    imputing annual income to the Wife, this court should substitute its own
    opinion regarding the appropriate quantum of the Wifes annual income for
    support purposes.  In the alternative, the Husband argued that the issue should
    be returned to the trial judge for clarification.

[85]

This
    court does not have the benefit of meaningful reasons from the trial judge
    concerning his income imputation to the Wife, a key component of his spousal
    support analysis.  Nor has this court been provided with any information
    regarding the Husbands and the Wifes post-2012 annual incomes.  In these
    circumstances, in my view, it is inappropriate for this court to attempt to
    ascertain the appropriate quantum of the Wifes periodic spousal support.

[86]

Accordingly,
    I would order that the issue of the proper quantum of the Wifes annual income
    for support purposes, and the consequences, if any, of that determination on
    the amount of periodic spousal support to be paid to her by the Husband, be
    remitted to the trial judge for reconsideration.  In the interim, unless
    otherwise agreed by the parties and without prejudice to the trial judges
    reconsideration of the issue, the Husband shall pay monthly spousal support to
    the Wife commencing January 1, 2016 in the same monthly amount as applied in 2011
    and 2012.  Depending on the outcome of the trial judges reconsideration of
    spousal support, the Husband may be credited for any overpayment by him of
    periodic spousal support from and after January 1, 2016, as the trial judge may
    direct.

(4)

Trial Judges Costs Award

[87]

The
    Wife argues that the trial judge erred in awarding costs on a full indemnity
    basis: i) by holding that the Husband achieved a result at trial that was as
    favourable as or more favourable than his pre-trial settlement offers, thus
    triggering the costs consequences of r. 18(14) of the
Family Law Rules
,
    O. Reg. 114/99 (the 
Rules
); ii) by relying on allegations of fraud;
    and iii) by imposing a costs award that was disproportionate in the
    circumstances and unsupported by the evidence.

[88]

A
    trial judges costs award attracts considerable deference from a reviewing
    court.  Absent an error in principle, or unless a costs award is plainly wrong,
    appellate intervention with a trial judges discretionary costs ruling is
    precluded:
Hamilton v. Open Window Bakery Ltd.
, 2004 SCC 9, [2004] 1
    S.C.R. 303, at para. 27.  In this case, I agree with the Wife that the trial
    judge erred in principle in fashioning his costs award.

[89]

In
    family law cases, a trial judges discretion to award costs is subject to the
    provisions of the
Rules
.  Rule 24(1) creates a presumption that a
    successful party is entitled to the costs ofa case.  But it does not require
    that a successful party is always entitled to costs:
M.(A.C.) v. M.(D.)
(2003), 67 O.R. (3d) 181 (C.A.), at para. 40.  Rule 24(4) states that a
    successful party who has behaved unreasonably may be deprived of all or part
    of his or her costs or ordered to pay all or part of the unsuccessful partys
    costs.  Further, in cases where a party has acted in bad faith, r. 24(8)
    directs that the court shall decide costs on a full recovery basis and shall
    order the party to pay them immediately.

[90]

Rule
    24(11) outlines the factors to be considered in awarding costs.  These include
    the importance, complexity or difficulty of the issues (r. 24(11)(a)), the
    reasonableness or unreasonableness of each partys behaviour in the case (r.
    24(11)(b)), the lawyers rates (r. 24(11)(c)), and the time properly spent on
    the case (r. 24(11)(d)).

[91]

Moreover,
    as in other civil cases, offers to settle in family law cases carry costs
    consequences.  Rule 18(14) stipulates that if a party makes an offer and
    obtains an order that is as favourable as or more favourable than the offer,
    that party is entitled to full recovery of costs from that date.  However,
    the court retains a discretion not to make an award of full recovery of costs
    even where a party has met the conditions in r. 18(14):
M.(A.C.)
, at
    para. 43.

[92]

In
Biant v. Sagoo
(2001), 20 R.F.L. (5th) 284 (Ont. S.C.), the court
    considered the costs award scheme under the
Rules
and commented, at
    para. 20:

[T]he preferable approach in family law cases is to have costs
    recovery generally approach full recovery, so long as the successful party has
    behaved reasonably and the costs claimed are proportional to the issues and the
    result.  There remains, I believe, a discretion under r. 24(1) to award the
    amount of costs that appears just in all the circumstances, while giving effect
    to the rules preeminent presumption, and subject always to the rules that
    require full recovery or that require or suggest a reduction or an
    apportionment.

[93]

This
    court has repeatedly endorsed the
Biant
courts approach to the
    determination of costs in family law disputes: see for example,
Ruffudeen-Coutts
    v. Coutts
, 2012 ONCA 263, 15 R.F.L. (7th) 35, at para. 4;
Sordi v.
    Sordi
, 2011 ONCA 665, 13 R.F.L. (7th) 197, at para. 21;
M.(A.C.)
,
    at para. 40.

[94]

Thus,
    a successful party in a family law case is presumptively entitled to costs.  An award of costs, however, is subject to the factors listed in r. 24(11), the directions set out under r. 24(4) (unreasonable conduct), r. 24(8) (bad faith) and r. 18(14) (offers to settle), and the reasonableness of the costs sought by the successful party:
M.(A.C.)
, at paras. 40–43.

[95]

The
    trial judge explicitly addressed the principles governing costs under the
Rules
,
    including the costs considerations set out in r. 24(11).  With respect to these
    considerations, he found, at paras. 1823 of his costs reasons:

(1)

the issues
    in contention at trial were important and complex;

(2)

the Wife
    and her expert both acted unreasonably throughout the litigation.  For
    instance, the Wife refused to acknowledge the parties date of separation until
    the opening of trial.  She also took untenable positions regarding the parties
    NFPs and created the climate that fed her experts unreasonable litigious
    conduct, which, in turn, throated efforts to settle and led to
    disproportionate and unending requests for disclosure;

(3)

the Wife
    also made baseless allegations of fraud against the Husband; and

(4)

in
    contrast, the Husband and his experts acted in a reasonable manner throughout
    the proceedings.

[96]

These
    findings are amply supported by the evidentiary record.  They strongly support
    an award of costs to the Husband on a full recovery basis.  In particular, I
    note that, although the Wife did not expressly plead fraud, the record confirms
    that, supported by her expert, the Wife repeatedly alleged or insinuated fraudulent
    conduct by the Husband throughout the trial.  On the trial judges findings,
    the Wife failed to establish fraud and, generally, acted unreasonably in the
    conduct of the litigation.

[97]

The
    trial judge also considered the costs consequences of the Husbands pre-trial
    offers to settle.  After reviewing the Husbands first offer to settle and
    concluding that it did not attract costs consequences, the trial judge turned
    to the Husbands second offer to settle, dated November 5, 2013.  In respect of
    this offer, he stated, at para. 24:

I agree with counsel for the [Husband] that the [Husbands]
    second offer provided that the [Husband] pay a lump sum of $200,000 for
    support.  That amount would not have been taxable in the [Wifes] hands and
    would be equivalent to approximately $300,000.  At the rate of spousal support
    that I did order ($5,380.00 per month) the $300,000.00 equivalent would be
    equal to approximately 56 months of support that was ordered.  Given the
    respective ages and health of the parties that lump sum offer was most reasonable.

[98]

The
    trial judge concluded, at paras. 2526:

As a result of the above findings that include:

a)

the
    unreasonable conduct on the part of the [Wife] in the conduct of the case;

b)

the
    allegations of fraud that were not supported by any evidence;

c)

the
    [Husbands] offers to settle that were as good as if not better than the
    outcome at trial; and

d)

the
    success of the [Husband on] all material issues,

I order that the [Wife] shall pay to the [Husband] full
    indemnity costs.

[99]

And
    it is here, with respect, that I conclude that the trial judge fell into error
    in two ways.

[100]

First, the
    Husbands November 2013 offer to settle was not as good as if not better than
    the outcome at trial achieved by the Husband.  As the trial judge noted, the
    lump sum support amount contained in that offer, on an after tax basis, was the
    equivalent of approximately 56 months (4.8 years) of spousal support at the
    monthly rate awarded by the trial judge.  But, the trial judge awarded the Wife
indefinite
periodic spousal support.  In her costs submissions before
    the trial judge, the Wife provided life expectancy data that indicated her
    anticipated life expectancy was close to 13 years.  The Husband led no evidence
    to the contrary.

[101]

Thus, it was an
    error in principle to hold, as the trial judge did, that the Husbands November
    2013 offer was as good as if not better than the results at trial.  Consequently,
    the November 2013 offer could not trigger the costs consequences of r. 18(14).

[102]

Second, the
    trial judge held that the Husband had been successful at trial [on] all
    material issues.  This, too, was incorrect.  Spousal support was a hotly
    contested issue at trial.  The Husband maintained that the Wife was not
    entitled to spousal support.  The Wife prevailed on this issue as the trial
    judge ordered indefinite periodic spousal support.  He also ordered the Wife to
    pay an equalization payment to the Husband.  Accordingly, the Husband was not
    successful at trial on all material issues.  Rather, success at trial was
    divided on the main issues in dispute.

[103]

The trial judge
    made no explicit finding of bad faith against the Wife, so as to trigger r.
    24(8).  Yet, he found that the Wife and her expert acted unreasonably in the
    conduct of the litigation; that the Wife made serious, unsupported allegations
    of fraud; and that, in contrast to the Wife, the Husband acted reasonably
    throughout.  Under r. 24(4), these findings permitted the trial judge to
    deprive the Wife of any or all of her costs despite her partial success at
    trial, and to grant the Husband any or all of his costs.

[104]

That said, I
    have already concluded that two of the factual findings relied on by the trial
    judge to anchor his award of full indemnity costs (the November 2013 offer and
    success at trial) are based on a significant misapprehension of the evidence. 
    It is unclear how much weight the trial judge attached to these findings in
    crafting his costs order.

[105]

Given the errors
    that I conclude the trial judge made in fixing the quantum of spousal support,
    the appropriate remedy is to remit the matter for the trial judges
    reconsideration, in light of these reasons.  The trial judge is in the best
    position on that reconsideration 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
.

V.      Disposition

[106]

For the reasons
    given, I would allow the appeal in part by setting aside para. 3 of the divorce
    order (spousal support) and remit the question of the proper quantum of the
    Wifes annual income for spousal support purposes and the consequences, if any,
    of that determination on the amount of periodic spousal support to be paid to
    the Wife by the Husband to the trial judge for reconsideration in light of
    these reasons.  Pending the trial judges reconsideration ruling, the Husband
    shall continue to pay monthly spousal support to the Wife in accordance with
    para. 86 of these reasons.  I would also grant leave to appeal costs and remit
    the question of costs to the trial judge.  In all other respects, I would
    dismiss the appeal.

[107]

As success on
    this appeal has been divided, I would make no order as to the costs of the
    appeal.

Released:

KMvR                                    E.A. Cronk
    J.A.

DEC 23 2015                          I agree P. Lauwers
    J.A.

I agree
    K. van Rensburg J.A.





[1]
The Husband initially filed a cross-appeal.  He abandoned his cross-appeal in
    August 2015.



[2]
In her factum, the Wife also argued that the trial judge made several
    calculation errors concerning the value of various of the parties assets.  The
    trial judge corrected these errors in his corrigendum dated July 21, 2015.



[3]
In her factum, the Wife challenged the trial judges award of costs on a
    substantial indemnity basis.  In fact, the trial judge awarded costs on a full
    indemnity basis.


