



COURT OF APPEAL FOR ONTARIO

CITATION: Denomme v. McArthur, 2015 ONCA 15

DATE: 20150116

DOCKET: C57936 and C57937

Sharpe, van Rensburg and Pardu JJ.A.

BETWEEN

C57936

Kelly Jane Denomme

Applicant (Respondent)

and

Corey Wilson McArthur

Respondent (Appellant)

AND BETWEEN

C57937

Paul Denomme

Plaintiff (Respondent)

and

Kelly Jane Denomme

Defendant (Respondent)

and

Corey Wilson McArthur

Defendant (Appellant)

Anna Towlson, for the appellant

Clarke L. Melville and Jacqueline E.N. Day, for the
    respondent Paul Denomme

Pamela L. Hebner and Robert K. Bickle, for the
    respondent Kelly Jane Denomme

Heard: December 18, 2014

On appeal from the judgments of Justice Dale Parayeski of
    the Superior Court of Justice, dated May 21, 2013, with reasons reported at
    2013 ONSC 2834 and 2013 ONSC 2895.

ENDORSEMENT

[1]

Corey Wilson McArthur appeals from a judgment granted in favour of Paul
    Denomme, his former wifes father, for debts owing. He also appeals from the
    judgment in the matrimonial proceeding in favour of Kelly Jane Denomme, granting
    spousal support and s. 7 extraordinary expenses for the childrens activities,
    and determining amounts due for equalization.

THE DEBT ACTION

[2]

The trial judge granted judgment to the wifes father for three loans. The
    first was a promissory note for $70,000 signed by both Ms. Denomme and Mr.
    McArthur on October 25, 2002, before marriage. $20,000 had been advanced in
    cash, and was intended to be used to pay for home improvements. The balance of
    $50,000 was advanced by cheque referenced in the promissory note, and intended
    to be applied to the purchase of their matrimonial home.

[3]

Second, the trial judge found that the wifes father also advanced
    $19,413 so that the husband could buy a new car when his vehicle became
    inoperable. The wifes father produced banking records showing he withdrew
    $19,413 from his bank account on May 6, 2003, the day the new car was acquired.
    That was the amount shown as the purchase price of the vehicle on the agreement
    of purchase and sale signed by the appellant. The appellant testified that he
    thought the money came from a joint line of credit he had with his wife, but
    there was no evidence of any such advance. Payments were made on the loan, but
    payments stopped in 2004 because of financial difficulties, according to the
    wife and her father.

[4]

Third, in mid-2005, the husband and wife installed a home theatre system
    in their home. The husband again testified that the theatre system was paid for
    by the line of credit he had with his wife. The wifes father and the wife
    testified that the wifes father advanced the funds for the theatre system as a
    loan. The record contained no documentation of this loan. Nonetheless, the
    trial judge accepted the evidence of the wife and her father, and granted
    judgment to the father for this third loan.

[5]

The wifes father also claimed repayment of a loan for $6,808.63, used
    to wire the matrimonial home for sound. However, the trial judge found that
    this amount was a gift.

[6]

The appellants position at trial and on appeal was that these
    transactions were all a sham manufactured by his wife and her father before
    marriage and after separation. He submitted that the wifes father was, at
    least in part, not advancing his own money to create the alleged loans. Rather,
    the wife had secret savings of her own, and she disguised her own funds as
    loans from her father to artificially make the appellant indebted to her father,
    and to reduce her own net family property to zero.

[7]

The husbands suspicions sprang from the discovery of a bank account
    held by the father, said to be in trust for his daughter. The trust account
    statement was dated April 30, 2002. The wifes father testified that he lent
    money to a trust account for his daughter and made investments in it, so that
    income and gains in the account could be taxed at his daughters tax rate,
    which was much lower than his own. He would pay any income tax owing. He said
    his daughter did not know of the trust arrangement. He testified that, because the
    value of the assets in the account fell substantially, the arrangement no
    longer resulted in a tax benefit for him. As a result, he collapsed the trust
    and called in the loan. The father testified that he would have been entitled to
    income from the trust account. The husband submits that this evidence was not
    credible, as the wife had faxed a copy of the trust account statement to a
    lender, in May 2002, when the parties were negotiating a mortgage for their
    home. However, the trial judge accepted the fathers evidence that the wife was
    not involved in running the trust, and that the trust was set up to secure tax
    benefits for the father. Ultimately, he accepted that the monies advanced by
    the father were his own funds, and not the wifes own savings.

[8]

Regarding the $70,000 promissory note, the husband admitted he had
    signed the promissory note referring to both the $20,000 in cash and the
    $50,000 for the house purchase. At trial, the husband ultimately accepted that
    the funds had been provided, but disputed the uses to which the funds had been
    put. The trial judge found that $50,000 was used to pay part of the balance due
    for the house at closing, and put little weight on the fact that no
    documentation had been provided to prove that the $20,000 in cash was used to
    pay a kitchen contractor. Title to the house was taken jointly by the husband
    and wife. The trial judge found no evidence that the appellant was not jointly
    and severally liable, together with the wife, for the debt created by the
    promissory note.

[9]

Similarly, the advance for the car purchase was supported by documentary
    evidence. There was no evidence that the husband and wife used their own line
    of credit to purchase the husbands vehicle. The wifes father had some
    evidence that payments were made for a time on the loan.

[10]

Finally,
    the husband could produce no evidence to suggest that the home theatre system
    was purchased using the couples line of credit. The husband did not dispute
    that $8,089.15 was paid for the system, and that it was purchased with borrowed
    money. The trial judge accepted the wifes fathers evidence and the wifes
    evidence that this was a loan by the wifes father.

[11]

This
    appeal is entirely fact-driven. The trial judge gave adequate reasons to
    explain the basis for his findings. There was evidence, both documentary and
    oral, to support those findings. The appellant has not established that the
    trial judge made any palpable and overriding error in coming to the factual
    conclusions he did, based on his assessment of the credibility of the parties,
    and the evidence led at trial. There is no basis for this court to intervene.

THE MATRIMONIAL ACTION

[12]

The
    husband and wife were married on November 16, 2002. There are three children of
    the marriage, the eldest now aged nine years, and twins who are seven years
    old. The parties separated on March 9, 2009, when the children were,
    respectively, approximately four years old and one and a half years old.

Spousal support

[13]

The
    husband earned about $82,000 as a police officer in 2011. He argued that the
    trial judge should impute $120,000 in income to the wife for 2009, and an
    annual income of $80,000 going forward. To support these arguments, the husband
    points to the amount of deposits made to a business account used by the wife.
    The wife testified that the account was not used exclusively for business
    purposes and that deposits from other sources were made to the account. She
    testified that her inexperience with bookkeeping led her to deposit
    non-business funds into the business account.

[14]

According
    to her evidence at trial, the wife juggled money between four accounts so that
    the couple could meet their financial obligations. The wife was a part time
    self-employed CPR instructor when the parties married and continued that
    occupation after marriage. Her 2010 income tax records show a gross income of
    $19,519 and a net income of $8,685.78. In 2011 her gross income was $9,626 with
    a net income of $4,149.91.

[15]

The
    trial judge accepted that the wifes income was largely as reported for tax
    purposes after separation and did not impute any income to her. While he also
    accepted that, in the past, the wife had received some cash payments that she
    did not report as income, the wifes evidence was that she no longer received
    any cash payments. The trial judge rejected the husbands submissions that the
    wife had significant unreported income, that she exaggerated her business
    expenses to reduce her net income, or that she was deliberately under-employed.
    Despite the disparity in the parties incomes, and the relative security of the
    husbands employment as compared to the wifes position, the trial judge
    ordered spousal support for 25 months only in the sum of $500 per month,
    indexed, ending on September 1, 2014. At that time, the issue of spousal
    support could be reviewed.

[16]

Again,
    the husband has not demonstrated that the trial judge made any palpable and
    overriding error in coming to the factual conclusions he did, and there is no
    basis to intervene.

Child support

[17]

The
    trial judge ordered the husband to pay the guideline amount of child support
    and a further $150 per month to the wife on account of extraordinary expenses. On
    November 1 of each year, the wife is required to present the husband with
    receipts for expenses paid and there has to be an adjustment between the
    parties, proportionate to their incomes. The wife was ordered to consult with
    the husband and seek his consent to s. 7 expenses, such consent not to be
    withheld unreasonably.

[18]

The
    appellant has not demonstrated any error on the part of the trial judge in
    dealing with s. 7 expenses in this manner.

Debts to wifes father

[19]

Finally,
    the appellant husband submits that, for the purposes of calculating the wifes
    net family property, the trial judge ought to have discounted the wifes debts
    to her father to about 5-10% of their face value, on the basis that the father
    was unlikely to pursue his daughter for these debts, and in fact was lending
    her additional funds. The wifes father had sued her on the debts and obtained
    judgment against her, which she did not contest. The trial judge accepted the
    wifes evidence that she intended to pay her father and did not discount the
    valuation day amount of the wifes indebtedness to her father. The trial judge
    expressly referred to the relevant legal authorities. The trial judge could
    have applied some discount to reflect the delay likely before any payment would
    be made on the debts, but again, the appellant has not demonstrated any
    palpable and overriding error in his failure to apply any discount. We note
    that, pursuant to the trial judges order, the husband and wife are jointly and
    severally liable to pay the debts to the wifes father so that the husband will
    have a claim over against the wife if he is called upon to pay more than his
    share of the debt. In any event, we are unable on the record before us to
    assess what, if any, difference application of a discount to the face value of
    the debts or deduction from the wifes net family property of a contingent
    liability for the husbands right of contribution and indemnity would have had
    on the wifes net family property.

CONCLUSIONS

[20]

The
    appellant has not demonstrated that the trial judge erred in law or in coming
    to any of the factual conclusions he drew from the evidence. Accordingly, the
    appeal is dismissed, in both the debt action and in the matrimonial
    proceedings.

[21]

We
    grant costs to the wife in the matrimonial appeal, in the sum of $15,000 inclusive
    of disbursements and taxes.

[22]

There
    was an offer to settle made by the wifes father in the debt action that may
    have some impact on the costs award in that appeal. The parties may make
    written submissions as to the costs of that appeal, due from the successful
    respondent on the appeal, Paul Denomme, within 30 days of the release of this
    decision, and due from the appellant within 20 days thereafter.

Robert
    J. Sharpe J.A.

K.
    van Rensburg J.A.

G.
    Pardu J.A.


