McNamee v. McNamee, (2011) 280 O.A.C. 372 (CA)

• Judge: Sharpe, Blair and Rouleau, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: February 01, 2011
• Jurisdiction: Ontario
• Citations: (2011), 280 O.A.C. 372 (CA);2011 ONCA 533

McNamee v. McNamee (2011), 280 O.A.C. 372 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. AU.002

Connie McNamee (applicant/respondent in appeal) v. Clayton McNamee (respondent/appellant)

(C52000; 2011 ONCA 533)

Indexed As: McNamee v. McNamee

Ontario Court of Appeal

Sharpe, Blair and Rouleau, JJ.A.

July 26, 2011.

Summary:

The parties separated after 18.5 years of marriage. The husband's father had transferred common shares in the father's company to the husband in 2003 as a result of a corporate estate freeze undertaken by the father. The shares were valued at $418,200 as of the date of separation. At issue was whether the shares had been received by way of gift and were therefore exempt from inclusion in his net family property (Family Law Act, s. 4(2)).

The Ontario Superior Court held that the shares were not a gift and were therefore subject to equalization. The trial judge did not deal with the wife's argument that she was entitled to a beneficial ownership interest in the shares by way of unjust enrichment and constructive trust. The husband appealed.

The Ontario Court of Appeal allowed the appeal. The shares were a gift and therefore not subject to equalization on that basis. The court held that a new trial was warranted to deal with the unjust enrichment and constructive trust issue.

Family Law - Topic 629.3

Husband and wife - Marital property - Marital property legislation - Availability of constructive trust - A trial judge found that shares that a husband received from his father were not a gift and therefore were not exempt from inclusion in his net family property (Family Law Act, s. 4(2)) - The trial judge found that it was not necessary to assess the wife's claim for a constructive trust - The Ontario Court of Appeal held that the shares were a gift - However, the court stated that the trial judge should have determined claims of ownership, including beneficial ownership, of all assets prior to dealing with the net equalization payment exclusions under s. 4(2) - A claim of ownership was distinct from a claim for a share in property value - The constructive trust claim addressed the former and the equalization regime of the Family Law Act covered only the latter - Therefore, a court must first apply trust principles to determine ownership before turning to the exclusions listed in s. 4(2) - This was supported by the language of s. 4(2) - A spouse could not exclude property that was beneficially owned by someone else - See paragraphs 54 to 65.

Family Law - Topic 637

Husband and wife - Marital property - Constructive trusts - [See Family Law - Topic 629.3 ].

Family Law - Topic 880.3

Husband and wife - Marital property - Distribution orders - Exempt acquisitions - Gift - The parties separated after 18.5 years of marriage - The husband's father had transferred common shares in the father's company to the husband in 2003 as a result of a corporate estate freeze undertaken by the father - The estate freeze was unusual from the norm in that the father retained full control by ensuring that his preference shares be voting shares which entitled him to take unlimited dividends from the company at any time, thus enabling him to denude the company of any equity or retained earnings in the future - At issue was whether the shares had been received by way of gift, and were therefore exempt from inclusion in his net family property (Family Law Act, s. 4(2)) - The trial judge held that the shares were not a gift - The Ontario Court of Appeal allowed the husband's appeal - The shares were a gift - The transfer was gratuitous - The intention to transfer the shares had a perfectly legitimate legal objective (to underpin the corporate restructuring in the form of an estate freeze) - The court disagreed that for a gift to be valid the donor's intention could only be motivated by altruism - A transfer of property by way of gift could equally be motivated by commercial purposes provided the transfer was gratuitous - The husband accepted the gift - The fact that the father could affect the shares' value at any given time and there were "strings attached" to the gift did not invalidate the gift - See paragraphs 21 to 53.

Cases Noticed:

Birce v. Birce (2001), 150 O.A.C. 319; 56 O.R.(3d) 226 (C.A.), refd to. [para. 23].

Peter v. Beblow, [1993] 1 S.C.R. 980; 150 N.R. 1; 23 B.C.A.C. 81; 39 W.A.C. 81, refd to. [para. 23].

Cochrane v. Moore (1890), 25 Q.B.D. 57 (C.A.), refd to. [para. 24].

Traversy v. Glover, [2006] O.T.C. Uned. 754; 30 R.F.L.(6th) 372 (Sup. Ct.), refd to. [para. 36].

Wilson v. Hicks (1911), 23 O.L.R. 496 (C.A.), refd to. [para. 47, footnote 1].

Rawluk v. Rawluk, [1990] 1 S.C.R. 70; 103 N.R. 321; 38 O.A.C. 81, refd to. [para. 57].

Hamilton v. Hamilton (1996), 92 O.A.C. 103 (C.A.), refd to. [para. 63].

Roseneck v. Gowling (2002), 167 O.A.C. 203; 62 O.R.(3d) 789 (C.A.), refd to. [para. 63].

Yates v. University College, London (1875), L.R. 7 H.L. 438, refd to. [para. 69].

Macklem and Niagara Falls Park Commissioners, Re (1887), 14 O.A.R. 20 (C.A.), refd to. [para. 69].

Statutes Noticed:

Family Law Act, R.S.O. 1990, c. F-3, sect. 4(2) [para. 21].

Authors and Works Noticed:

Mossman, Mary Jane, and Flanagan, William F., Property Law: Cases and Commentary (2nd Ed. 2004), pp. 439 [para. 23]; 441 [para. 24].

Ziff, Bruce H., Principles of Property Law (5th Ed. 2010), p. 157 [para. 24].

Counsel:

H. Hunter Phillips and James N. Eastwood, for the appellant;

Philip W. Augustine, for the respondent.

This appeal was heard on February 1, 2011, before Sharpe, Blair and Rouleau, JJ.A., of the Ontario Court of Appeal. Blair and Rouleau, JJ.A., delivered the following decision for the Court of Appeal on July 26, 2011.