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Did Landlord Have Duty to Warn Woman of Fraudster Boyfriend?

Fraudster Boyfriend

Did Landlord Have Duty to Warn Woman of Fraudster Boyfriend?

In a decision called Larizza v. The Royal Bank of Canada, the court introduced the facts this way:

The [female] plaintiff … was the unfortunate victim of a [male] fraudster.  She met [the man] in February 2012, and married him in March 2013.  During the course of their relationship, [the man] persuaded [the woman] to sell her house, move in with him, and give him over two hundred thousand dollars. In the summer of 2013, she became aware that [the man] was not who he purported to be, and that she had lost the money she gave him.

When they had met online, the man told the woman he was a 56-year old wealthy Swiss-Canadian businessman, and heir to a fortune made from the Ovaltine beverage.   In fact, he was 69 years old, born in Egypt, and had been convicted of fraud on a number of past occasions.   When the woman finally confronted him about her money, he physically assaulted her, and was arrested. He was convicted of assault and fraud, and sentenced to 60 months in jail.

Their rental living arrangements while married became the focus of the woman’s subsequent legal claim against the landlord, Minto.

At the man’s urging, the woman had sold her house, quit her job, and moved in to the Penthouse of the Minto-owned building in which the man had previously rented a 9th floor unit.   That move came after the man single-handedly negotiated with Minto about the Penthouse rent and terms.  What the woman didn’t know, was that Minto had performed a credit check on the man, and finding there was “insufficient” credit information, had asked him to provide another name.  Without her knowledge, the man offered up the woman’s name and a credit check was done without her consent.  Based on her strong credit rating, Minto agreed to lease the Penthouse suite.

What the woman also wasn’t clear on at the time, was that she was listed as the tenant on the one-year lease calling for $10,225 in monthly rent.  She said she signed after being rushed into it by the man, and thought she was signing merely as an occupant.  In fact, the reverse was true.

She therefore sued the landlord Minto for damages, claiming it had a responsibility to take steps to: 1) protect her from the man’s fraud; and 2) alert her to the fact that she was actually the tenant on the hook for the hefty rent.  She argued that, based on Minto’s interactions with the man, and given his long history of fraudulent activities for which he had been previously convicted and imprisoned, Minto had a duty to protect her from the man’s fraud.

The court rejected the woman’s claim.  Even after seeing the man’s sketchy credit report, Minto did not have a duty to alert her about it in the time leading up to signing the lease.  Although Minto did have a duty of good faith and honesty in performing its end of the lease – by providing a habitable rental unit in exchange for rent – it also had no duty toward her in the time leading up to signing it.  Nor did it have any obligation to make it clear she was signing as the tenant, not the occupant.

Simply put:  Canadian law did not recognize a duty of care owed by landlords to tenants or potential tenants to protect them from third-party fraudulent schemes.  The court said:

There is no basis for a potential tenant entering into a lease to expect the landlord to protect him or her from the potential fraud of other people who will be occupants of the dwelling.  The reality is that it would be exceptionally intrusive for landlords to have an obligation to inquire into the legitimacy and wisdom of the decision of two people to live together.  This type of intervention bears no relation to the nature of the contractual relationship between the parties, and cannot give rise to an expectation that landlords would have such a duty.

The court added that even if landlords like Minto had such a duty, in this case any financial harm suffered by the woman was too remote. The court granted Minto’s motion for summary judgment, obviating the need to have the matter go forward to trial.

For the full text of the decision, see:

Larizza v. The Royal Bank of Canada, 2017

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

 

On Income Tax, Support Arrears, and Retroactive Support

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On Income Tax, Support Arrears, and Retroactive Support

Income tax time will be upon us soon enough.  If you are receiving spousal support from your former spouse, you may wonder how those support payments should be treated when it comes time to file your income tax return with the Canada Revenue Agency.

The answer is straightforward:  If you are receiving spousal support from your former spouse or common-law partner, under a court order or written agreement that specifies the amount, frequency and duration of the payments, then those amounts are fully taxable in your hands.  In other words, all those amounts must be reported as “income” on your tax return, and will be taxed accordingly. (This is unlike the situation with child support, which from the recipient’s vantage point is generally considered non-taxable).

Normally, that obligation to declare your spousal support as income on your tax return triggers a corresponding entitlement by your former spouse or partner to claim an equivalent deduction on his or her tax return for those same payments, with some exceptions.

So the short answer, is that spousal support is considered “income.”  But what if the payments you receive now cover support payments that your former spouse should have made in the past?

A pair of recent decisions tackled a narrow – but important – issue relating to how: 1) retroactive support, and 2) support arrears, are to be handled for personal income tax purposes.

In a case from last year called Gonsalves v. Scrymgeour, the court reviewed the law on the tax treatment of retroactive spousal support awards (being those where the support paying spouse is newly-ordered to pay an amount that covers a past period of time during which the other spouse was eligible to receive it). The court confirmed that an award of retroactive spousal support should be reduced, to take into account the benefit of the income tax deduction that the paying spouse would have been able to claim, using the mid-point of the spouse’s respective marginal tax rates.

The more recent decision in Negin v. Fryers addresses support arrears (which are unlike retroactive support because they consist of unpaid amounts that were due under an order made previously).  There, the separated parents had agreed in 2004 that the father would pay child support to the mother in line with Guidelines amounts, together with a set amount of spousal support.   Apparently for some of the years since then, the father overpaid child support by over $52,000, and underpaid spousal support by more than $155,000.  After offsetting these amounts, the mother claimed the father owed just under $103,000 in arrears.

The father claimed – unsuccessfully – that the lump-sum gross amount he now owed the mother in arrears should be “netted down” to account for the different tax treatment of lump sum spousal support, as compared to an order for periodic support.  The wife pointed out – and the court agreed – that it was the policy of the Canada Revenue Agency to allow non-retroactive lump-sum spousal support payments to be deducted by father in the role of the support payor.  The court directed the parents to calculate the amount of child and spousal support owed or overpaid accordingly (as the case may be), in keeping with its specific directions and ruling.

Nobody loves tax time (except perhaps the Income Tax Preparers and Accountants!)  If you have questions about the spousal support you receive, feel free to give our office a call.

For the full text of the decisions, see:

Negin v. Fryers, 2018

Gonsalves v. Scrymgeour, 2017

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.  For more information, visit us at RussellAlexander.com

 

 

Can You Get Damages for “Emotional Distress” in Family Law?

Can You Get Damages for “Emotional Distress” in Family Law?

In Ontario at least, the answer to this question is “yes”, according to the 2009 court decision in McLean v. Danicic, in which a wife was awarded significant damages after her husband engaged in what the court called “a relentless campaign of harassment” against her after they separated. This included him sending her numerous harassing letters and intimidating photographs, and sending her a written threat that he would “personally put a bullet in her head”. His conduct had caused the wife to suffer considerable distress, acute anxiety, and fearfulness which required her to seek medical attention and take medication regularly.

Accordingly, as part of the separation and divorce process the wife asked the court to award her damages for pain and suffering or for harassment, claiming that the Ontario Family Law Act (the “FLA”) allowed for such an award in the right circumstances.

In considering the wife’s request, the Ontario Superior Court of Justice noted that historically there were only two specific situations in which such damages could be awarded under the FLA:

1) where a plaintiff loses a loved one because of the negligence or misconduct of the defendant, thereby losing the loved one’s services and/or companionship; and

2) where there is “assaultive behaviour” after a relationship breakdown.

The court further observed that in the second category of cases there is usually a criminal conviction for some sort of physical assault (and by definition a clear factual finding by a judge that the assault occurred).

Nonetheless – and even though it was not specifically requested by the wife – the court in McLean v. Danicic was willing to entertain a damages claim for harassment, more specifically in the form of the tort of “intentional infliction of mental suffering and emotional distress.” In order to prove such a tort, the following three elements must be present (as has been established in an earlier decision called Prinzo v. Baycrest Centre for Geriatric Care):

1) flagrant or outrageous conduct;

2) calculated to produce harm; and

3) resulting in a visible and provable illness.

Applying this test the wife was awarded $15,000 in damages, as a means of expressing “society’s outrage” at the husband’s conduct, and to compensate her for the losses she suffered. (The husband later appealed on an unrelated point, but was unsuccessful).

Despite the outcome in McLean v. Danicic, emotional distress damages will be awarded in every case, however. Two subsequent Ontario decisions from 2010 illustrate that the facts and circumstances will remain an important consideration in determining whether such damages are appropriate in any given situation.

In Druhan v. Druhan the court – after initially expressing doubt about its jurisdiction to award damages for mental distress at all – found no reason to award them in the case before it. According to that judgment, the mere fact that one of the parties to a family proceeding brings a motion, launches an appeal, responds to a motion with a cross-motion, or simply aggravates or distresses the other party, will not amount to “flagrant” or “outrageous” conduct under the relevant test.

Similarly in A.A. v. G.G., the court conceded that the mother’s conduct no doubt had a severe emotional impact on the father in the circumstances. However, it was unable to conclude that her conduct had resulted in the father suffering the required “provable illness”, since there was no medical evidence; indeed the court doubted whether the father had any illness at all.

Clearly, damages for emotional distress and mental suffering remain a distinct possibility in Ontario family law. But given the inherently volatile and distressing context of almost every family law proceeding, it will be interesting to see where the court will draw the line on culpable behaviour by separating and divorcing spouses.

The full text of these decisions can be found at:

McLean v. Danicic http://bit.ly/foSg1W appeal on other grounds dismissed

Prinzo v. Baycrest Centre for Geriatric Care http://bit.ly/gGuy60

Druhan v. Druhan http://bit.ly/gWM9hF

A.A. v. G.G http://bit.ly/hq9NYv

Further information about family law and family law court decisions can also be found on our website at www.russellalexander.com