Issues on Appeal

This case addresses the following issue:

• Whether a spouse may right to have sole discretion over jointly owned property;
• Whether a spousal support payor’s ability to pay should impact the quantum of spousal support awarded; and
• What constitutes “bad faith” when assigning costs.

Background

64-year-old Giuseppe Scalia (”Joe”) and 54-year-old Giuseppina Scalia (”Pina”) were married in 1993.  Both Joe and Pina were retired and their monthly retirement incomes were approximately $2,100 and $1,300 respectively.

During the marriage, Joe and Pina deposited both of their incomes into their joint bank account.

Joe owned a duplex prior to the marriage, half of which the couple moved into once they were married and the other half of which was rented out for approximately $1000 per month.

Before marrying, the couple entered into a marriage contract that specified the following:

• The parties would share equally all property acquired during the marriage;
• Pina expressly waived any rights in law or equity over Joe’s duplex and RRSPs, which he owned before the marriage, and said assets were not to be included in any net family property calculation;
• Pina would receive a life interest in half of Joe’s duplex on his death; and
• The parties were equally responsible for living expenses.

Joe was diagnosed with Alzheimer’s disease in 2006 and his son, Giovanni Scalia (”John”), was appointed as Joe’s power of lawyer for property and personal care in 2007.  He was moved to a long-term care facility in 2012.

The dispute arose between John, the Appellant in this case, and Pina, the Respondent, when John began to suspect that Pina was inappropriately diverting Joe’s funds after he was allegedly warned of same by Pina’s children.  John then transferred $36,000 from Joe and Pina’s joint account to a trust account in Joe’s name only and he sought financial information from Pina regarding the whereabouts of the rental income from the other half of the duplex.

Pina claimed that the rental income was never deposited in the bank as it was paid in cash and used to pay the monthly expenses of approximately $1000 to maintain the duplex.

John was not satisfied with the information Pina provided and he felt he had a duty as Joe’s Power of Attorney to intervene.  As such, John stopped depositing Joe’s pension income into the joint account in August of 2012 and when the tenant moved out of the other half of the duplex, John allegedly refused to secure another tenant, thus leaving Pina with little or no income from Joe.

Joe’s assets at the time of the Application consisted of his duplex, his joint interest in the Florida property, and a small amount of money, which included his portion of the frozen funds.

Joe died in March of 2014, before the Application judge released his Endorsement.

His will provide John was to be executor of his estate, Pina was to have life interest in the duplex, and the remainder of his estate was to be divided equally among his children.

The Two Applications

As Joe’s Power of Attorney, John commenced an Application against Pina in January of 2013, seeking the following:

1. Certain banks to deliver information about Pina;
2. Pina to account for rental property income and funds allegedly missing from the joint account;
3. Frozen funds to be released to John to use to repair rental property, pay Pina’s interim support, pay for Joe’s living expenses, and retain the balance in trust for Joe; and
4. The Florida property to be sold and proceeds divided equally.

Pina commenced an Application against Joe and John in March of 2013, seeking the following:

1. Office of the Public Guardian and Trustee to be appointed as Joe’s Power of Attorney;
2. The marriage contract to be set aside;
3. Interim support retroactive to October 1, 2012 to the date of Joe’s death;
4. Release of the frozen funds into the joint account;
5. A declaration that Pina was Joe’s dependent and that her needs were not properly provided for;
6. Support and/or compensation for care Pina provided to Joe on a quantum meruit basis; and
7. John to be prohibited from dealing with the Florida property.

The Applications were heard together in June and December of 2013 and the Application judge granted Pina’s Application in part and released an Endorsement in June of 2014 determining both Applications as follows:

• Pina was awarded $900 in monthly support from date when income stopped (October 1, 2012) to the date of Joe’s death (March of 2014);
• The balance of the frozen funds were to be released to Pina
• Pina was given an unrestricted right to deal with the Florida property; and
• John was to pay coasts on a substantial indemnity basis in the amount of $13,500 due to the “reprehensible conduct of John Scalia and the finding of bad faith.”   Joe’s estate was also to pay costs on a partial indemnity basis in the amount of $9,450. 

John appealed the decision of the Application judge.

Appeal Decision and Analysis

The Court granted the appeal in part.

Exclusive Rights to Deal with Matrimonial Property

The Court set aside the Order granting Pina the sole authority and discretion to deal with the Florida property and the Court ordered partition and sale nunc pro tunc as of December 16, 2013 (the date the hearing of the application concluded).  The court found that there was contradicted evidence that Joe had contributed from his own funds approximately half of the purchase price of the Florida property.

Spousal Support

The Court set aside the award of $900 in monthly support and substituted an award of $300 in monthly support for the period of October 1, 2012, to Joe’s death in 2014 because the Application judge failed to consider the payor’s ability to pay the support.  Based on Joe’s income, medical expenses, and the cost of maintaining his duplex, he would have approximately $360 of disposable income each month.  Further, the Spousal Support Advisory Guidelines suggested support should be approximately $250 per month and, although spousal support orders are usually afforded deference, the Application judge deviated significantly from the Guidelines and failed to provide reasons for doing so.  As such, the Court found that the $300 monthly support amount proposed by John was appropriate in this case.

Costs and Finding of Bad Faith

The Court found that the Application judge erred in finding that John’s conduct constituted bad faith.  The Application judge failed to apply the test for bad faith, which is set out in S. (C.) v. S. (M.) and requires that the behaviour was carried out with “intent to inflict financial or emotional harm on the other party or persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court.”

Further, the Court held that the record did not support a finding of bad faith and the Court disagreed with several of the Application judge’s findings as follows:

• The Application judge found that John withheld support from Pina.  However, John only withheld Joe’s pension income, and only after 15 months of Pina refusing to explain why finds were disappearing.  Pina was allowed to continue collecting rental income from the duplex.
• The Application judge found that John “unilaterally” withdrew funds from the joint account, however, John simply transferred funds to a trust account for Joe in order to fulfil his duty as Joe’s Power of Attorney to protect Joe’s estate, which was particularly important given Joe’s growing and uncertain healthcare costs.  Further, John informed Pina of the transfer and he also used the transferred funds to pay expenses of the duplex in which Pina resided.
• The Application judge found that John forced Joe into the long term care facility against his will despite clear evidence that the decision was significantly influenced by the Community Care Access Centre.
• The Application judge found that John allowed Joe to foster hostility toward Pina for his move to the long-term care facility, yet there is no evidence of this.
• The Application judge found that John cut off Pina’s and her family’s visitation to Joe, however, the evidence shows that Joe expressed that he did not want to see Pina and John sought advice on this from a gerontology consultant when deciding whether to allow the visits.
• The Application judge found that John commenced his Application in response to Pina’s request for support, however, John had already commenced his Application before Pina brought her Application requesting support.

Nonetheless, the Court did agree with the costs award of the Application judge based on John’s conduct during litigation because he failed to accept a reasonable offer and he unnecessarily escalate the conflict.