



COURT OF APPEAL FOR ONTARIO

CITATION: Virc v. Blair, 2017 ONCA 394

DATE: 20170517

DOCKET: C62309

Laskin, Benotto and Trotter JJ.A.

BETWEEN

Patricia Anne Virc

Applicant (Respondent)

and

Michael Finley Lawrence Blair

Respondent (Appellant)

Michael Finley Lawrence Blair, in person

Bryan R.G. Smith and Sarah Conlin, for the respondent

Heard: February 23, 2017

On appeal from the judgment of Justice David Jarvis of
    the Superior Court of Justice, dated May 31, 2016, with reasons reported at
    2016 ONSC 49, 80 R.F.L. (7th) 124.

Benotto J.A.:

A.

Introduction

[1]

The appellant (husband) is a businessman. He and the respondent (wife),
    a lawyer, were married for 14 years when they separated. They signed a
    separation agreement prepared by the husband. The wife did not seek independent
    legal advice, believing that the husbands financial disclosure was accurate.
    She later determined that he had misstated the value of his assets at the date
    of marriage. She brought an application to set aside the agreement.

[2]

The trial judge set aside the separation agreement. He found that the
    husband had misled the wife with respect to the value of his company at the
    date of marriage. The trial judge revised the calculations to determine the
    appropriate amount of equalization and support payments.

[3]

The husband appeals the trial judges decision to set aside the
    separation agreement, as well as the amount he awarded for the equalization
    payment and retroactive child support. He does not contest the spousal support
    award.

B.

Background

[4]

The parties met in 1991 when the wife was 26-years-old and the husband
    was 46. The wife worked as a lawyer at a small Toronto litigation firm. The
    husband and his businesses were clients of the firm. The wife acted as junior
    counsel on the husbands files.

[5]

When he met the respondent, the husband was separated from his former
    wife of 27 years. They had not, however, resolved their financial issues.

[6]

A personal relationship between the husband and wife started in 1992.
    They began living together in 1993 and the husband commenced divorce
    proceedings with his former spouse. That same year, the wife left the law firm
    where she had been employed and began working almost exclusively for the husband
    on his litigation and related corporate affairs.

[7]

The parties married on September 14, 1994 and had three children:
    Michael in 1994, Jeffrey in 1997, and Grace in 1999.

[8]

In 1999, the outstanding family law proceedings between the husband and
    his first spouse were settled.

[9]

The wife continued to practice law until 2001. With the exception of
    some part-time work between April 2004 and March 2006, she did not otherwise
    work outside of the home.

[10]

The parties marriage fell into difficulties and they eventually
    separated in May 2008.

(1)

The
Separation
Agreement

[11]

In January 2008, the husband emailed the wife a template of a separation
    agreement. She did not initially respond. Meanwhile, the husband commissioned
    valuations and appraisals of the matrimonial home and the couples art
    collection. He consulted with accountants, retained a chartered business
    valuator and prepared, with input from his previous divorce lawyer, various net
    family property scenarios. For the most part, the wife was unaware of these
    activities and did not retain a lawyer. In late May 2008, the husband sent the
    wife a net family property statement showing that she owed him almost $954,000.

[12]

The wife did not retain a lawyer to review this information for several
    reasons: (i) the husband had considerable experience in valuing businesses;
    (ii) the financial statements had been audited; (iii) the husband was confident
    about the values given; and (iv) the wife knew that she would need to find a
    large error  of nearly $2 million  to negate any payment the husband claimed
    she owed.

[13]

The parties signed the separation agreement on May 31, 2008 in their home
    (the Separation Agreement). The Separation Agreement provided, among other
    things: the wife was released from her obligation to make a $954,150
    equalization payment, and no child support would be payable as the children
    would spend equal time with both parties. The issue of child support would be
    reviewed yearly after 2010.

(2)

The basis for the wifes
equalization
payment

[14]

On separation, spouses are entitled to share equally in the increase in
    value of their respective property from the date of marriage to the date of
    separation. For that reason, each spouse has an obligation to value his or her
    property as of the date of marriage and the date of separation. The difference
    between the two values is the partys net family property. The spouse with the
    higher net family property pays the spouse with the lower net family property an
    equalization payment representing one-half of the difference between their net
    family property values. A main issue in this appeal is the value of the
    husbands property at the date of his marriage to the respondent-wife, for the
    purposes of calculating his net family property and, consequently, the value of
    any equalization payment.

[15]

The husband owned a 60 percent interest in a holding company, Renegade
    Capital Corporation. His former wife owned the other 40 percent. Renegades
    principal holding was Algonquin Mercantile Corporation, a publicly traded
    company in which Renegade held a 68 percent interest. In turn, Algonquin held
    investments in two businesses  a 50.1 percent interest in Pharma Rexall Drug
    Store Ltd. and a 100 percent interest in Dominion Citrus & Drugs Ltd.

[16]

The husband listed the date of marriage value for Renegade at
    $7,603,685.03. This reflected a cost or book value approach calculated by
    multiplying Renegades shareholders equity of $12,672,085 by the husbands 60
    percent interest in the company.

[17]

This value did not reflect any trading value in the market for
    Renegades $32,363,466 in long-term investments in its operating companies. The
    notes to the financial statements recorded this trading value as $16,243,860.
    The difference between the book value of Renegade and its market value was
    over $16 million. By using Renegades book value instead of its market value in
    disclosing his assets to the wife, the husband significantly overvalued the
    company.

[18]

The valuation of Renegade formed the majority of the husbands
    $11,012,390.36 date of marriage deduction from his net family property. This
    deduction served to reduce his net worth, resulting in the wife owing the
    husband an equalization payment.

(3)

The wifes concern about
    the value of Renegade

[19]

After signing the Separation Agreement, the wife became concerned about
    the value the husband had attributed to Renegade at the date of marriage.

[20]

On February 1, 1994, seven-and-a-half months before the parties
    marriage, the husband swore a financial statement in legal proceedings with his
    former spouse. In those proceedings, he swore that he was being sued in various
    proceedings where the damages sought exceeded $200,000,000. He said that
    Renegade was virtually worthless. He prepared a Renegade Equity Value schedule
    showing a negative equity value of $3,446,801, adjusted for a market-to-market
    value of the companys long-term investment for the year ending December 31,
    1994. In those proceedings, he also provided an accountants memorandum saying
    that the wind-up value of the company as of October 15, 1993 would have
    resulted in no monies being available for distribution to the shareholders.

[21]

All of this would suggest that the husbands assets at the date of marriage
    to the respondent-wife were zero. The husbands net family property value therefore
    should have been greater than what was reflected in the documents preceding the
    signing of the Separation Agreement, and the corresponding equalization payment
    that the wife owed should have been lower.

(4)

The wifes action to set
aside
the Agreement

[22]

On June 7, 2009, the wife sent an email to the husband asking why it was
    appropriate to value Renegade at its book value for the purpose of valuing it
    at the date of marriage, but at its liquidation value at the end of the
    marriage. She testified that this was when the penny dropped, and she
    realized that she had been misled.

[23]

The wife brought an application to set aside the Separation Agreement, to
    recalculate the equalization payment, and to review the child support
    arrangements. In response, the husband brought a motion for summary judgment to
    dismiss the wifes claim to set aside the Separation Agreement, together with
    her other claims.

[24]

The motion judge granted the husbands motion for summary judgment. She
    concluded that even if the numbers the husband had provided were deliberately
    false and the wife received substantially less than her entitlement, there was
    no genuine issue for trial relating to setting aside the Separation Agreement.
    She held that the party who seeks to set aside a separation agreement cannot
    rely on the fact that she failed to undertake her own investigation into values
    when she had the opportunity to do so. The motion judge noted that the wife was
    a shareholder and eventually an officer of Renegade. She had full access to its
    books and records and chose not to review them. She also did not ask the
    husband for further information or consult with anyone regarding the value of
    the shares.

[25]

The wife successfully appealed the motion judges decision to this court,
    which concluded that the motion judge erred in shifting the onus to the wife to
    inquire as to the veracity of the husbands financial disclosure. This court said,
    In the face of a deliberate material misrepresentation, the onus is not
    appropriately placed on the recipient spouse. Rather, the burden is on the
    party disclosing to establish actual knowledge of the falsehood by the
    recipient:
Virc v. Blair
, 2014 ONCA 392, 119 O.R. (3d) 721, at para.
    58. This court went on to say, at para. 68, The law does not entitle a liar to
    succeed just because the recipient of the falsehoods has not ferreted them
    out.

[26]

In addition, this court concluded that the motion judge erred in
    granting summary judgment when relevant factors that required a determination
    were left unresolved. Specifically, the motion judge did not make rulings on
    key factors required by
Rick v. Brandsema
, 2009 SCC 10, [2009] 1
    S.C.R. 295, including the extent of the defective disclosure and the degree to
    which it was deliberate. This court ordered a trial and the decision from that
    trial is currently under appeal.

C.

The Trial
    Judges Reasons

[27]

The trial lasted 19 days. The trial judge provided extensive, detailed
    and thorough reasons. He set aside the Separation Agreement, recalculated the
    equalization payment, and ordered spousal support and retroactive child support.
[1]

(1)

Setting aside
the
Separation Agreement

[28]

The primary basis underlying the trial judges decision to set aside the
    Separation Agreement involved the value of Renegade at the date of the marriage.
    The trial judge applied s. 56(4) of the
Family Law Act
, R.S.O. 1990,
    c. F.3., which provides:

A court may, on application, set aside a domestic contract or a
    provision in it,

(a) if a party failed to disclose to
    the other significant assets, or significant debts or other liabilities,
    existing when the domestic contract was made;

(b) if a party did not understand the
    nature or consequences of the domestic contract; or

(c) otherwise in accordance with the
    law of contract.

[29]

He then followed the two-step procedure set out by this court in
LeVan
    v. LeVan
,

2008
    ONCA 388, 90 O.R. (3d) 1, at para. 51:

The analysis undertaken under s. 56(4) is essentially comprised
    of a two-part process:
Demchuk v. Demchuk
. First, the court must
    consider whether the party seeking to set aside the agreement can demonstrate
    that one or more of the circumstances set out within the provision have been
    engaged. Once that hurdle has been overcome, the court must then consider
    whether it is appropriate to exercise discretion in favour of setting aside the
    agreement. [Citations omitted.]

[30]

On the first step, the trial judge concluded that there were two bases
    to set aside the Separation Agreement under s. 56(4) of the
Family Law Act
:
    (i) pursuant to s. 56(4)(a)  the failure of the husband to accurately disclose
    the value of a significant asset, namely Renegade; and (ii) pursuant to s. 56(4)(c)
     the husbands material misrepresentation about the value of Renegade, which
    was contrary to the law of contract.

[31]

The trial judge held that the husband had not discharged his duty to
    disclose the value of Renegade. The trial judge relied, in part, on the husbands
    valuation expertise and the wifes deference to that expertise. In particular,
    he found that the husband never alerted the wife to the fact that the book
    value of Renegades investments significantly exceeded their market value.

[32]

The trial judge ultimately concluded that the husband had deliberately misrepresented
    the marriage date value of his interest in Renegade. He based this conclusion
    on several factors, including:

·

The
    husband was an experienced and sophisticated businessman.

·

The
    husband had substantial experience in valuing businesses.

·

In
    the proceedings with his first spouse, the husband had prepared financial
    statements that were materially different from the representations he made to
    the wife.

·

The
    representations the husband made about the value of Renegade in the proceedings
    with his first spouse were nearly $6 million different from those made in this
    case, despite the fact that both were estimates of the business value at
    approximately the same point in time.

·

The
    husband admitted that a market-to-market analysis of the value of long-term
    investments is easy to do, and he did them regularly, although he said he did
    none in this case.

[33]

The trial judge found that the wife did not have actual knowledge that
    the husband had overvalued his marriage date interest in Renegade.

[34]

The trial judge also held that the husbands representations about the
    value of his marriage date interest in Renegade were material, as they had a
    significant impact on the equalization payment calculations.

[35]

Moving to the second step of the
LeVan
analysis, the trial
    judge assessed whether he should exercise his discretion to set aside the Separation
    Agreement. He concluded that he should, noting that the wife had deferred to
    the husbands financial expertise, and the agreement was unfair to her because
    it substantially misstated the parties net family properties.

(2)

Calculating the equalization
    payment

[36]

Having set aside the Separation Agreement, the trial judge determined
    the value of Renegade at the date of marriage and recalculated the husbands
    net family property on that basis. The husband submitted that he was entitled
    to deduct the value of his litigation receivables at the date of marriage, in
    addition to Renegades value. Apart from these two issues, there was no real
    disagreement about the husbands net family property. The trial judge dealt
    extensively with Renegade and the litigation receivables. I will address each
    in turn.

(a)

Renegade

[37]

Peter Weinstein is a business valuator who testified about the value of
    the husbands business interests at the marriage and valuation dates. Using an
    adjusted book value assets approach at both the marriage and valuation dates,
    he concluded that the husbands interest in Renegade on the date of marriage was
    $0. This was because the companys significant bank debt and total liabilities
    of $20,300,000 exceeded its value of $17,761,399.

[38]

The husband maintained that the value of his interest was $7,889,904
    (which was slightly more than $7,603,685.03  the amount he listed in the net
    family property statement attached to the Separation Agreement). He used a book
    (or cost) value for Renegades investments, not their market value.

[39]

The husband sought to have Professor Douglas Cumming qualified as an
    expert to provide a valuation of Dominion Citrus (a wholly-owned subsidiary of
    Algonquin, which was 68 percent owned by Renegade). Cumming was tendered to
    provide an opinion about the enterprise value of Dominion Citrus, which is a
    discounted net-present-value cash flow methodology that relies on hindsight
    information.

[40]

Cumming was not engaged to express any marriage date opinion about the
    value of the husbands interest in Renegade, the value of Renegade, or the
    value of Algonquin. The husband submitted this was not necessary. Since
    Dominion Citrus was wholly owned by Algonquin, it was simply a mathematical
    exercise to follow its value through to the husbands share of Renegade.

[41]

The trial judge did not accept this submission. Nor did he allow Cumming
    to testify as an expert witness. The trial judge concluded, at the
    qualification stage, that the relevance of the proposed evidence was
    compromised by the selective and circumscribed nature of Cummings engagement
    by the husband. The husband had provided Cumming with only the information that
    the husband decided was required, including some of the husbands own
    valuations that Cumming had relied on. The trial judge expressed concern that
    Cummings work product was more of a collaborative effort with the husband, not
    expert testimony.

[42]

The trial judge accepted Weinsteins evidence that the value of Renegade
    on the date of marriage was nil.

(b)

Litigation receivables

[43]

The husband claimed $1,500,000 as part of his date of marriage deduction
    for a number of inter-related legal proceedings in which he was involved. The
    lawsuits were based on pre-marriage events, but were not resolved until after
    the marriage date.

[44]

By December 19, 1995 (over a year after the date of marriage), six of
    the proceedings had been settled, and the husband had received $1,500,000, less
    $135,000 withholding tax deductions, for a total of $1,365,000. The husband did
    not offer an explanation for why he sought to have $1,500,000 included as his
    date of marriage deduction, rather than the $1,365,000 he actually received.
    The husbands financial statement sworn in his family law proceedings with his
    first spouse on February 1, 1994 did not disclose any litigation receivables,
    but said the husbands exposure to damages was in excess of $200,000,000.

[45]

After reviewing these facts, the trial judge concluded that the husband
    had not met his onus of proving that the various legal proceedings in which he
    was personally involved would be either adjudicated or settled in his favour in
    the amounts claimed. As the trial judge could not reasonably assess the value
    of any litigation receivables, he declined to allow any date of marriage
    deduction.

(3)

Retroactive child support

[46]

The wife sought retroactive child support.

[47]

The trial judge discussed the principles from
D.B.S. v. S.R.G.
,
    2006 SCC 37, [2006] 2 S.C.R. 231, with respect to the choice of date from which
    a court should make a retroactive award for child support.

[48]

Although the trial judge found that the effective date of notice was
    June 7, 2009 (the date the wife emailed the husband requesting a review of the
    child support arrangements), he concluded that the retroactive date should be
    July 1, 2008 (when the wife and children left the matrimonial home). He made
    this conclusion on the basis that the husbands income was higher than
    anticipated in the Separation Agreement, the wifes income was lower than
    anticipated, and the husband had engaged in blameworthy conduct by misleading
    the wife about the value of his interest in Renegade.

[49]

The trial judge then conducted a lengthy analysis to determine the
    wifes income, the husbands income, and the childrens residence.

[50]

He calculated the adjusted amount under the
Federal Child Support
    Guidelines
, S.O.R./97-175 (the Guidelines)

(taking into account
    what the husband paid and what the wife should have paid) as $506,865. He
    ultimately decided that the Guideline amount was inappropriate and reduced it
    to $450,000, in light of approximately $350,000 the husband had spent on the
    children that did not qualify as special or extraordinary expenses under s. 7
    of the Guidelines, but still benefited the children.

D.

Fresh Evidence

[51]

On appeal, the husband seeks to introduce fresh evidence showing his
    correspondence with his lawyers and accountants in connection with his previous
    divorce and with the respondent. The correspondence, he submits, demonstrates
    that he did not disclose a lower value for Renegade to his former spouse. Rather,
    the correspondence confirms a value in excess of $13 million. He also seeks to
    rely on several financial reports relating to the valuation of Renegade  particularly
    the Cumming report  which the trial judge ruled inadmissible.

E.

Issues

1.     Is the fresh evidence
    admissible?

2.     Did the
    trial judge err in setting aside the Separation Agreement?

3.     Did the
    trial judge err in calculating the equalization payment?

4.     Did the
    trial judge err in awarding retroactive child support for Michael and Jeffrey?

F.

Analysis

(1)

Fresh
evidence

[52]

The principles governing the admissibility of fresh evidence on appeal
    are outlined in
R. v. Palmer
, [1980] 1 S.C.R. 759, at p. 775.
    The
Palmer
test requires the applicant to satisfy four
    criteria: (i) the evidence could not have been adduced at trial; (ii) the
    evidence must be relevant in that it bears on a decisive or potentially
    decisive issue; (iii) the evidence must be reasonably capable of belief; and
    (iv) the evidence must be such that, if believed, it could reasonably, when
    taken with the other evidence adduced at trial, be expected to have affected
    the result.

[53]

The proposed evidence does not meet the test. The correspondence could
    have been adduced at trial. It also could not reasonably have affected the
    result at trial, since the trial judge had the benefit of the same information
    in the husbands sworn financial statements (also referred to later in these
    reasons.) With respect to the Cumming report, the husband attempted to
    introduce it at trial, but the trial judge declined to qualify Cumming as an
    expert. The Cumming report is therefore not properly the subject of a fresh
    evidence motion. Rather, what the husband is challenging is the trial judges
    exercise of discretion to exclude Cummings testimony (and accompanying
    report). The Cumming report is discussed in more detail below.

(2)

Did the trial
judge
err in setting
aside
the
    Separation Agreement?

[54]

The husband submits the trial judge misapprehended the evidence and
    consequently erred in setting aside the Separation Agreement. I disagree.

[55]

The trial judge correctly followed the two-step process directed by this
    court in
LeVan
. As discussed, step one requires the party seeking to
    set aside the agreement to demonstrate that one or more of the circumstances in
    s. 56(4) is engaged. The trial judge concluded that the husband had breached
    his disclosure obligations (s. 56(4)(a)) and, in accordance with the law of
    contract (s. 56(4)(c)), had materially misrepresented his assets. The trial
    judge then moved to step two and exercised his discretion to set aside the Separation
    Agreement.

(a)

The husbands breach of his disclosure obligations (s. 56(4)(a))

[56]

The husband submits the trial judge misapprehended the evidence and
    misunderstood the disclosure he made to the wife. He submits he did disclose
    the existence of his assets as required by the
Family Law Act
. His
    wife, he argues, had the ability to value the assets, but did not do so.

[57]

The trial judge found, at para. 94 of his reasons:

[T]he husband never alerted the wife to the fact that the book
    value of Renegades investments significantly exceeded their market value. At best,
    the husbands evidence is that he did nothing to prevent the wife from testing
    the veracity of his representation of the companys value.

The trial judge concluded this was not a sufficient
    discharge of the duty to make full disclosure, especially given the husbands
    valuation expertise and the wifes deference to that expertise.

[58]

In my view, the husbands submission is improperly characterized
    as an alleged misapprehension of fact on the part of the trial judge. In
    reality, the husband asserts an error of law, in that the husband submits he
    fulfilled his disclosure obligations because the wife could have sought to
    independently verify his valuations.

[59]

The trial judge did not err. Inherent in the duty to
    disclose is the duty of the titled spouse to fairly value the asset. This is a
    basic principle of disclosure.
The onus is on the party
    asserting the value of an asset that he or she controls to provide credible
    evidence as to its value:
Menage v. Hedges
(1987), 8 R.F.L. (3d) 225, at para. 44;
Homsi v.
    Zaya
, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para.
    38.
The husbands submission to the contrary is wrong in law.

(b)

The
husbands
misrepresentation (s.
    56(4)(c))

[60]

The husbands overall submission is that the trial judge erred in
    finding he misrepresented the value of Renegade at the date of marriage. The
    husband represented that it was worth $7.6 million. The trial judge found it
    was worth nothing.

[61]

In arriving at this conclusion, the trial judge relied on the expert evidence
    of Weinstein. The husband alleges the trial judge should not have relied on this
    evidence for two reasons: first, Weinstein relied on hindsight in valuing the
    company; and second, the trial judge did not allow the husbands valuator,
    Cumming, to testify. I do not agree with either proposition.

[62]

The Weinstein report was not based on hindsight. Early in the
    proceedings, the husband obtained a report from another valuator, Glenn Bowman,
    of Capital Canada. This report was not produced at trial, but was given to
    Weinstein. Weinstein compared his independent results to those in the Bowman
    valuation.

[63]

As to Cumming, the trial judge concluded, after conducting a
voir
    dire
,

that his
    report was a collaborative effort with the husband and did not meet the
    requirements for expert testimony as set out in
White Burgess Langille
    Inman v. Abbott and Haliburton Co
., 2015 SCC 23, [2015] 2 S.C.R.
    182. In particular, the trial judge found that Cummings evidence lacked
    relevance, as he was not engaged to express any marriage date opinion about the
    value of the husbands interest in Renegade; the value of Renegade; or the
    value of Algonquin.

[64]

The husbands position at trial, which the trial judge summarized at
    para. 261 of his reasons, was that it was not necessary to value Renegade and
    its holdings because, as Dominion Citrus was wholly owned by Algonquin, it was
    simply a mathematical exercise. Expert evidence, the husband submitted, was
    not required to follow Dominion Citrus value up through Algonquin to Renegade,
    and ultimately to the husband. The husband maintained that this was
    neither complex nor challenging and in argument we would all have the ability
    to assist the court with that exercise. For the reasons outlined above, the
    trial judge rejected the husbands position.

[65]

I agree with the trial judges analysis of the admissibility of Cummings
    evidence. The trial judge correctly considered independence and impartiality as
    a threshold admissibility issue.
White Burgess,
at para 54, states: [T]he
    [trial] judge must still take concerns about the experts independence and
    impartiality into account in weighing the evidence at the gatekeeping stage. Cummings
    lack of independence and close association with the husband, together with his
    inability to opine on the date of marriage value of the asset, justified the exclusion
    of his testimony. I would not interfere with the trial judges exercise of
    discretion in this regard.

[66]

Having excluded Cummings evidence, it was open to the trial judge to
    accept Weinsteins evidence as the only evidence of value. Hence, it was open
    to the trial judge to value Renegade at the date of marriage as zero.

[67]

I now turn to the more specific errors the husband focused on during his
    oral submissions.

[68]

The husband alleges that the trial judge erred, in para. 94 of his
    reasons, when he found that: [T]he husband never alerted the wife to the fact
    that the book value of Renegade exceeded its market value. This error, the
    husband submits, was exacerbated in para. 114(e) of the reasons, when the trial
    judge said that the representations the husband made in the divorce proceedings
    with his former spouse could not be reconciled with the representations he made
    to the wife in this proceeding. The husband contends these are errors of fact that
    informed the trial judges conclusion that the husband had misrepresented his
    financial circumstances.

[69]

I do not agree with the husbands characterization of these statements. The
    statements did not form the basis for the trial judges determination of the
    value of Renegade at the date of marriage. In any event, the evidence supported
    both of the impugned statements.

[70]

I begin with para. 94, the entirety of which reads:

The evidence in this case is that the
husband
    never alerted the wife
to the fact that the book value of Renegades
    investments significantly exceeded their market value. At best, the husbands
    evidence is that he did nothing to prevent the wife from testing the veracity
    of his representation of the companys value. That, in my view, is not a
    sufficient discharge of his duty. In the circumstances of this case, especially
    given the husbands valuation expertise and the wifes deference to that
    expertise, it was incumbent on him to do more than stand by silently and leave
    it for the wife to verify the accuracy of his representation. [Emphasis added.]

[71]

During cross-examination, the husband stated that he did not tell the
    wife what book value meant, nor did he tell her that Renegades financial
    statements valued its Algonquin shares at cost. This evidence supported the
    trial judges conclusion that the husband did not alert the wife to the fact
    that the book value of Renegade exceeded its market value.

[72]

The trial judge was correct to conclude the onus was on the husband to establish
    that the wife had actual knowledge. As this court stated when it allowed the
    appeal from the summary judgment motion:

In the face of a deliberate material misrepresentation, the
    onus is not appropriately placed on the recipient spouse. Rather, the burden is
    on the party disclosing to establish actual knowledge of the falsehood by the
    recipient. The respondent could point to no authority for the proposition that
    the suggested duty of a spouse receiving financial disclosure in a matrimonial
    case, to investigate or test the veracity of the information provided,
    overtakes deliberate material non-disclosure by the other spouse
:
Virc v. Blair
, 2014
    ONCA 392, 119 O.R. (3d) 721, at para. 58.

[73]

I now turn to the trial judges statement that he could not reconcile
    the representations the husband made to his former spouse with those made to the
    respondent-wife. The trial judge said, at para. 114(e):

[T]he representations about the depressed value of their
    interests in Renegade made to his former spouse in their litigation, reduced
    the husbands [equalization payment] exposure in that case. Conversely, the
    representations made to the wife in this case about Renegades value when they
    married suggested a different value, more than $6,000,000 higher, at almost the
    same point in time. This latter representation increased his marriage date net
    worth, dramatically reducing the value of his net family property and, it
    follows, his equalization payment exposure. These representations were made in
    different legal proceedings, but it terms of content, proximate in time to each
    other. They cannot be reconciled. Each was financially advantageous to the
    husband.

[74]

In further support of his submission, the husband also relied on various
    documents including: a five year summary of operations with respect to a
    company called The Enfield Corporation Limited; excerpts from a pre-trial
    memorandum and financial statements provided in his previous matrimonial
    matter; and a 1989 valuation of Renegade by his then accountants.

[75]

The Enfield Corporation was founded by the husband in 1984. In 1985, he
    incorporated Renegade to hold 25 percent of its shares. The husband was
    President and CEO until 1989 when a hostile take over took place. There was no
    evidence before the trial judge that The Enfield Corporation affected the value
    of Renegade at the date of marriage. The trial judge treated the corporation as
    a separate asset with no value at the date of marriage. I see no error in this
    regard.

[76]

The documents from the husbands divorce proceedings with his former
    spouse  including the pre-trial conference memo and financial statements, and
    his then accountants valuation  disclose a value of $13,888,000 for Renegade
    at the date of separation from his former spouse. The husband submits that this
    shows that the values in his two divorce proceedings can be reconciled and the
    trial judge misinterpreted the evidence.

[77]

The documents the husband relied on must be read in their entirety and
    in the context of all of the representations the husband made to his former
    spouse. The trial judge did just that. The trial judge had, and relied on, extensive
    disclosure, testimony, and representations that the husband made in the prior
    proceedings with his former spouse. The evidence disclosed that some seven months
    before his marriage to the respondent-wife, the husband had told his former
    spouse that Renegade was essentially insolvent. His net family property
    statement to the respondent-wife, however, set Renegades date of marriage value
    at $7.6 million.

[78]

In summary, there was evidence upon which the trial judge could conclude
    that the husband misrepresented the value of his date of marriage assets. The
    trial judge also found that the misrepresentation materially impacted the
    calculation of the husbands net family property and the wifes decision to
    sign the Separation Agreement. I would therefore not interfere with the trial
    judges exercise of discretion to set aside the Separation Agreement.

(3)

Did the trial judge err in calculating the equalization payment?

[79]

The parties were largely in agreement as to the net family property of
    the husband, except for the value of Renegade and any litigation receivables at
    the date of marriage. I have discussed Renegade and now turn to the litigation
    receivables.

[80]

The husband claimed $1,500,000 as part of his date of marriage deduction
    from his net family property for a number of inter-related legal proceedings in
    which he was involved. The amount claimed was the proceeds of the legal
    proceedings that were not resolved until after the marriage date, but were
    based on pre-marriage events.

[81]

The husband submits that these litigation receivables were contingent
    assets at the date of marriage and the trial judge erred in finding their value
    at the date of marriage to be nil.

[82]

After reviewing the facts in some detail, the trial judge concluded that
    the husband had not met his onus of proving that the various legal proceedings
    in which he was personally involved would be either adjudicated or settled in
    his favour in the amounts claimed. The trial judge concluded, at para. 298, given
    the swamp of litigation in which the husband was involved and the lack of any
    credible evidence with which to determine the imminence or likelihood of
    settlement about any of the litigation receivables claimed, he was unable to
    reasonably assess their value and awarded none.

[83]

This issue is a factual one. I see no palpable or overriding error in the
    trial judges reasons.

(4)

Did the trial judge err in awarding retroactive child support for
    Michael and Jeffrey?

[84]

The husband submits that the trial judge erred in awarding retroactive
    support for Jeffrey and Michael for three reasons: (i) the trial judge relied
    on an understated 2008 income figure for the wife; (ii) the wife acknowledged
    in her application that the children generally spent equal time with each
    parent, so the presumptive Guideline amount does not apply; and (iii) Jeffrey
    (age 19) and Michael (age 21) were not children of the marriage at the time of
    the award.

[85]

I do not agree with the husbands submissions.

[86]

First, the trial judge carefully outlined the wifes income sources and
    determined her income for each of the relevant years. The husband has failed to
    identify a palpable and overriding error in the trial judges findings of fact.

[87]

Second, the trial judge conducted a detailed analysis of the childrens
    primary residence for the years 2008-2015. He made findings of fact that
    although the children went back and forth between the parents homes, for the
    period from July 2000 to March 2009, the children resided primarily with the
    wife.

[88]

Third, at the time of the trial, both Michael and Jeffrey were in
    university and thus qualified as children of the marriage.

[89]

The trial judge outlined the directives in
D.B.S.
,

where the Supreme Court
    held that a court may order retroactive child support if the child was eligible
    for support at the date of the application. The trial judge determined as
    follows, at para. 334:

In this case, the wife unequivocally requested a review of the
    child support arrangements in her June 7, 2009 email, and the husband, just as
    clearly, refused the same day. That date should be the date of effective
    notice. And, in my view, the retroactive date from which the parties support
    obligations should be determined is July 1, 2008, for these reasons:

(a)     as
    will be noted below, the husbands line 150 income for 2008 was $773,487, not
    approximately $590,000 a year. This is a material difference. In fact, it was
    not until 2014 that his income was lower than $590,000. It was substantially
    greater for most of the intervening years;

(b)     the
    husband did engage in blameworthy conduct by misleading the wife about the
    value of his interest in Renegade. This impacts the choice of commencement date
    because, absent such conduct, it is not an unreasonable inference that
    different child support arrangements would have been made; and

(c)     the
    wifes income was not approximately $390,000 a year. Excepting 2010, when the
    balance of the Renegade retainer was paid, the wifes income never exceeded the
    $260,470.15 that she earned in 2008, and for most of the years up to and
    including 2014, it was substantially less.

[90]

In
D.B.S.
, at paras. 94-116, the Supreme Court outlined four
    factors to consider when determining whether a court should make a retroactive child
    support award:

·

Whether
    there is any reasonable excuse for why support was not sought earlier;

·

The
    conduct of the payor parent;

·

The
    circumstances of the child; and

·

Any
    hardship occasioned by a retroactive award.

[91]

It is only after discussing these factors that the Supreme Court in
D.B.S.
went on to consider the date of retroactivity: paras. 118-125. Thus, a
    court must first determine whether to make a retroactive award before it
    considers the date of that award.

[92]

The period from July 2008 to March 2009 attracts
D.B.S.
considerations.
    The husband submits that the trial judge only focused on the conduct of payor
    and did not address the other issues. I do not agree.

[93]

The trial judges reasons, read as a whole, make it clear that the
    husbands conduct was blameworthy. The trial judge also addressed the
    circumstances of the children. Although the children lived a privileged
    lifestyle, the husbands assets, according to the trial judge,

enabled
    him to fund a lifestyle for himself and the children that was materially
    different from what the wife could offer: at para. 352. The Supreme Court confirmed
    the appropriateness of balancing the discrepancies in the parents households

in
Francis v. Baker
,
    [1999] 3 S.C.R 250.

[94]

Ultimately, the trial judge determined that the wife had made an early
    request for child support; he turned his mind to the fact that the children
    lived at a high standard and the award would amount to a transfer of wealth;
    and he found the husband had engaged in blameworthy conduct. In considering the
    appropriateness of the award determined by the Guidelines, he exercised his
    discretion to reduce it from $506,865 to $450,000.

[95]

I see no error in the trial judges analysis, and I would therefore not
    interfere with the award of retroactive child support.

G.

Disposition

[96]

I would dismiss the appeal with costs payable to the wife. Her counsel
    requested partial indemnity costs of $67,000. I would award costs in the amount
    of $25,000 inclusive of disbursements and HST. Of that amount, I would direct
    that $10,000 is related to support and therefore enforceable by the Family
    Responsibility Office.

Released: MLB MAY 17 2017

M.L. Benotto J.A.

I agree. John Laskin
    J.A.

I agree. G.T.
    Trotter J.A.





[1]
On appeal, the husband does not contest the child support ordered for Grace, or
    the spousal support award.


