DATE:            20050715

ONTARIO

SUPERIOR COURT OF JUSTICE

BELCH J.

General Background

[1]          Pavel Kincl (applicant) and Andrea Malkova (respondent) commenced living together in August 1991, but never married each other.  The applicant was then a 37-year old truck driver from the Czech Republic.  He was previously married and divorced.  His former wife remained in the Czech Republic with their children.

[2]          The respondent, also from the Czech Republic came to Canada in August 1989 with her husband.  Her husband soon returned to the Czech Republic, leaving her in Halifax with their daughter, Denisa.  The respondent had received training as an esthetician in the Czech Republic but the disappointing demand for her skills in Halifax forced her to move to Ottawa in 1990.  She was 24 years old in 1991 and renting space at Tracey’s when she met the applicant.  Later that same year they began living together.

[3]          The parties separated in March 2001 and there is no hope of reconciliation.  In fact, the respondent has since remarried.  The respondent, Denisa and Veronica, the respondent’s second child who was born September 6, 1994 in the relationship with the applicant, all live with the respondent’s new husband, Mr. Badaan.

Issues

[4]          The applicant treated Denisa as a child of this relationship and since separation has been paying child support for her pursuant to a temporary order.  The court was advised when the trial commenced that the applicant’s claim for joint custody of and/or access with Denisa had been abandoned.

[5]          The court was requested to determine the remaining issues:

1.                  custody and access of Veronica;

2.                  the value and ownership of:

a.                  644 Montreal Road, Ottawa;

b.                  Brittany Esthetics; and

c.                  Chattels including a Land Rover vehicle.

Because the parties were never married to each other, this issue involves a trust claim.

3.                  An order of restraint against the applicant;

4.                  Child support for both Denisa and Veronica including such security as might be afforded by life insurance;

5.                  Spousal support for the applicant; and finally

6.                  Costs.

[6]          For the reasons herein, the court decides the issues as follows:

1.                  It is in the best interests of the child Veronica that custody be granted to the respondent and access to the applicant as specified herein;

2.                  a) The parties are partners in Brittany Esthetics which business is valued at $22,500 and the respective partnership interests are 80% for the respondent and 20% for the applicant;

b) In addition the applicant has a share in Brittany Esthetics based on a resulting trust, however, his share in Brittany Esthetics as a result of the resulting trust is established at the same 20%;

c) the applicant has a 50% interest in 644 Montreal Road on the basis of a resulting trust;

d) the value of 644 Montreal Road is to be established as at the date of trial in accordance with the formula set out in paragraph 134 hereof;

e) the conveyances of 644 Montreal Road and Brittany Esthetics by the applicant to the respondent were part of a protective scheme and do not extinguish the applicant’s interests;

f) the applicant’s claim for an interest in the Land Rover, paintings, bank accounts and RRSP’s is dismissed.

3.                  The request for a restraining order is dismissed.

4.                  The incomes of the parties are as follows:

On the basis of the incomes as found, the applicant is ordered to pay child support for two children in the amount of $685 monthly, commencing January 1, 2004 based on an annual income of $48,836

5.                  Finally, based on the incomes of the parties, there is no order for spousal support.

6.                  Costs to be fixed by the court if counsel cannot agree.

Veronica

[7]          Both parties agree Veronica’s custody and access is the most important issue in this litigation.

[8]          The present temporary order dated August 8, 2002 permits access to the applicant on Saturday’s from 10:00 a.m. to 3:00 p.m.

Applicant

[9]          The applicant seeks joint custody of Veronica to include substantially more access than he now enjoys.  He asks that any expanded access include the right to travel with Veronica, especially to the Czech Republic.

[10]      The applicant submits this court should restore the joint parenting that existed prior to separation through a progressive increase in access, with the assistance of a counselor and/or a psychologist to monitor the progress and to report back to the court, with the aim of eventually reaching a 50-50 time-share.  Suggested access arrangements to include every second weekend for the first three months; then adding a mid-week overnight; two weeks in the summer including one trip to the Czech Republic for seven to 10 days; after six months, Thursday to Monday access every week and half the holidays.  In the alternative, a joint custodial arrangement should be imposed.

[11]      The rationale for the applicant’s submissions is he was an active father who drove both children to and from school, did the grocery shopping and the cooking.  He argues the respondent admits he was an integral part of Veronica’s life, teaching her to swim and attending parent-teacher interviews.

[12]      The applicant accuses the respondent of having a conscious plan to destroy his relationship with Veronica and submits there is no evidence to substantiate the allegation he is a bad father, or to indicate he ever physically abused the child.

[13]      The applicant further submits Veronica, by sending a Valentine’s Day card and postcards to him from Prague shows she loves her father tremendously.

Respondent

[14]      The respondent seeks sole custody of Veronica without any increase in the applicant’s access with his daughter, and submits this arrangement is in Veronica’s best interests.

[15]      The respondent’s rationale for this position is the parties cannot communicate in any meaningful and productive manner, to wit the need for a restraining order.  The applicant’s unreasonable opposition to the respondent taking Veronica on trips shows he does not have Veronica’s best interests at heart.  She also submits theirs had been a cohabitation of imbalance with the applicant often ignoring the respondent’s views.  As for increased access, she submits Veronica through the social worker assist has told us she does not want increased access because of past difficulties with her father, a situation which is not improving.  She argues the applicant’s unwillingness to engage in counseling, his limited understanding of Veronica’s needs and his non-existent plan for Veronica’s care, shelter, and education should convince this court not to impose joint custody.

Veronica’s Position

[16]      The submissions of the Office of the Children’s Lawyer on behalf of Veronica are that Veronica wishes to remain in the custody of the respondent mother and have access to the applicant father on Saturday’s from 10:00 a.m. to 3:00 p.m., subject to change at Veronica’s discretion and subject to the respondent having Veronica one Saturday monthly.

Evidence

[17]      After he retired from trucking, the applicant’s plans included staying home to care for the children while the respondent worked as an esthetician.  Answers read in from the respondent’s discovery transcript also suggested the applicant was to retire and look after the baby.  The applicant testified that he cared for Veronica until she was two years old.  Also, that he stayed home and cared for both children from 1994 through 2001, and part of his duties was to drive the children to and from school, a distance of 15 kilometres each way.  He purchased groceries and cooked some of the meals.  This was confirmed by Radek Roflik, the respondent’s former brother-in-law who lived with the family for a period of time.

[18]      That the applicant cooked and appeared to have an interest in caring for his children was also confirmed by Mr. Ales Mach, the person who drew the plans for the addition to the Montreal Road property and continues to be a friend of the applicant.

[19]      The applicant conceded the respondent initially cared for Veronica largely due to the necessity for breast-feeding.  The respondent testified that before separation, she would awaken the children at 7:00 a.m., see they brushed their teeth, washed and ate breakfast.  The applicant would then drive them to and from school.  Upon their return from school, the respondent would make sure she was not booked with clients.  She would prepare dinner for the family and ensure the children showered before bed. She would read to them, cuddle and hug them before they settled down for the night.

[20]      Veronique Le Febvre, an employee of the esthetician’s business and more sympathetic to the respondent, testified the applicant did not do much with the children who were fearful of him.  Veronica was so fearful, Veronique Le Febvre recalls the child, Veronica, hiding under a table to avoid her father.  She observed the applicant “force-feed” Veronica with a spoon.

[21]      The respondent faxed a letter to the applicant in 2001 while he was visiting the Czech Republic advising him she wished to separate.  Upon his return, the applicant testified, he was warned by the respondent that if he ever took legal action against her it would be a long time before he saw the children.  As it was, access was delayed for about two weeks after his return.

[22]      The applicant testified that somehow he had become an “evil man” and was even denied telephone access as well as special and summer access too.

[23]      The respondent testified she felt it was not in Veronica’s best interests to see more of her father because he did not present as a good father figure.  He was racist, arrogant, controlling, abusive and very pushy.  Also, the children were nervous and fearful of being with him.

[24]      Meanwhile the applicant described his activities with Veronica.  After separation and on his access visits, they went horseback riding, skiing, swimming, played soccer, and went fishing and diving.  He described his daughter as a bright, sporty, and healthy child – a very intelligent child who enjoyed crafts.  He admitted that “he slapped her bum” once, for disciplinary reasons because she was yelling and screaming at a public swimming pool.

[25]      When it was suggested by the social assist to the Children’s Lawyer that Veronica should be allowed to choose some of their activities together, he answered she already did.  But he admitted making most of the decisions, pointing out he was the adult and she was the child and, as a child, she did not always understand what was good for her, but he did not believe this made him a bad parent.  He agreed he took Veronica to work with him a few times for short periods in his job as a driving instructor but denied he had ever left Veronica unsupervised.

[26]      Although he had been on the “Board of Parents” at the Montessori School, he was not even allowed to see Veronica’s report card now.  The respondent acknowledged she was afraid to show the report card to him because she feared the applicant would call Veronica an idiot if Veronica had received low marks.

[27]      The applicant testified he has never been able to extend the Saturday visits beyond the hours of 10:00 a.m. to 3:00 p.m., even though, he alleges, Veronica had wanted to.  Unsuccessful attempts to extend this access were also witnessed by Radek Roflik.  The applicant refused to buy into a “six coupon system” as suggested by the social worker assist, Victoria Norgaard who testified these coupons would lengthen or shorten a visit at Veronica’s choice.  His refusal was understandable, given his expressed perception that the Children’s Lawyer may have “sided with” the respondent, because Veronica had alerted the applicant on a particular day that their visit would be observed by the social worker assist, when he himself did not know.   He testified Veronica had related to him that “Mummy had told her what to tell the Children’s Lawyer.”

[28]      The respondent testified of her concern that Veronica often returned home after access visits hungry, scared, upset and on occasions, crying.  As for the greeting cards Veronica had sent her father, this was explained away as Veronica only trying to be nice to her father.

[29]      According to the social worker assist, Veronica’s preferences included not

                        doing overnights in her father’s home;… is not interested in an increase in time and is interested in having access to some flexibility.  She likes having a specified amount of time with her father.  She’d like the ability to be able to negotiate more or less on a very limited and occasional basis…  she has indicated that every second Saturday has been of interest to her, although I have noted some fluctuation in that.

[30]      Victoria Norgaard also described the “six coupon system” as follows:

                        Sometimes the children are in charge of the coupon system.  I call them a variation coupon and that’s where the person who presents it is entitled to vary the pattern of contact in a no-questions-asked kind of way.  And there being distinct limits on that.  Whatever is going to work in the family context. Six in a year, ten in a year.  I talked with Veronica about that and she was interested in the ability to use the coupons both to be able to choose to increase time with her dad should there be an event or an activity that she wished to commit more time to, as well as to have the ability to occasionally opt out of a contact with her father based on things that were happening elsewhere in her life.

Conclusion about Veronica

[31]      I am satisfied and order it is in Veronica’s best interests, to remain in the sole custody of the respondent mother. I reject both shared parenting and joint custody, fearing the current poisoned relationship between the parties will not support the atmosphere required to permit the communications necessary for successful joint parenting.

[32]      At age 10, Veronica knows who her father is and wants a relationship with him, and it is in her best interests to do so.

[33]      I find Mr. Kincl was an active parent but the usual “posturing” of parties in disputes such as these has negatively impacted the father-daughter relationship. I reject the present limited access arrangement and in its place order the following access:

1.                  every second weekend from Friday evening to Sunday evening;

2.                  half of the statutory holidays;

3.                  access at (the school breaks) for Christmas, Easter, and March break;

4.                  Father’s Day;

5.                  summer vacation time – eventually a minimum of two weeks;

6.                  some access on Veronica’s birthday;

7.                  access by telephone and e-mail provided such access is not used to harass the respondent; and

8.                  access to school records including report cards and dates of parent-teacher interviews.

[34]      However, before the new access arrangement begins, the existing access to continue.  I accept the recommendation of, and encourage the parties to arrange and equally pay for, a counseling “confidant” for Veronica as proposed by the social work assist.  Further I suggest the applicant, respondent and Veronica try family counseling to help re-establish the father-daughter relationship.

[35]      As for the date of commencement of the new access, the applicant needs time to obtain more suitable accommodation where Veronica can have her own room – she will soon be a teenager and requires her own space.  Assuming time to move and put counseling in place, likely rules out access of any significant duration this summer.  However, the new access to commence in September, first visit, Friday, September 16, 2005 at 7:00 p.m. to Sunday, September 18, 2005 at 6:00 p.m., provided the applicant has secured appropriate accommodation.  This allows a measure of time to obtain counseling assistance and make plans for the new access which includes overnights.

[36]      This decision may not accord with Veronica’s wishes, however, the wish of a child is but one of many factors considered in a custody/access decision, and is not to be confused with a child’s best interests, and here I cannot accept her wishes as the deciding factor.

[37]      The court suspects Veronica has been influenced by her sister Denisa’s choices and I find the applicant’s allegation that Veronica was told by her mother what to say to the Children’s Lawyer both believable and worrisome, and suggests having been coached.  It brings to mind what Rinfret J. expressed at page 544 of Stevenson & Florant, [1925] 4 D.L.R. 530 (S.C.C.) when addressing a child’s wishes; “…The odds in favour of a preference for those with whom they have been accustomed to live, are overwhelming.”

Restraining Order

[38]      There was no evidence the applicant had struck the respondent or the two children. Now the respondent has remarried and Denisa refuses to visit.  I am satisfied there is no need to grant a restraining order and dismiss that prayer for relief.

Property Issues

[39]      The applicant seeks a 50% interest in Brittany Esthetics by way of resulting and/or constructive trust.  If successful, he argues such a finding would entitle him to share in the profits of Brittany Esthetics declared since their separation in 2001.  Whatever the court’s findings on his trust claim, the applicant argues he is already an equal partner in Brittany Esthetics.

[40]      The applicant also relies upon trust concepts for compensation or an ownership interest in 644 Montreal Road.

[41]      The applicant takes issue with the valuations of both Brittany Esthetics and 644 Montreal Road, claiming the estimated values are both too low.

[42]      The applicant seeks a half interest in the Land Rover motor vehicle, based upon the joint registration of that vehicle.  Finally, the applicant claims to be the owner of certain artwork gifted from his mother and claims an ownership interest in any Registered Retirement Savings Plan and bank account in the respondent’s name.

[43]      The respondent denies all property claims advanced by the applicant.

Background Evidence to the Property Claims

[44]      The applicant moved into the respondent’s apartment in the fall of 1991.  He brought nothing but his clothes; no furnishings.  He was there on weekends only because weekdays he was engaged in “long-haul” trucking throughout North America.  On weekends, he would dine out with the respondent and her daughter at various restaurants and pick up the tab.  She would do his laundry and he would then return to truck driving on the weekdays.  He did not directly contribute financially to her rent or any other expenses of the apartment.

[45]      When they met, the respondent conducted her esthetics business on York Street in Ottawa where she rented space from Tracey Mahalos.  The applicant testified the parties decided to open a business at another location and because the respondent had no money, he paid the first and last months’ rent and signed the lease for 119 York Street, Ottawa, although it was agreed she paid the rent thereafter.  The respondent stated in paying the first and last months rent, the applicant was merely repaying money she had earlier advanced to fix his truck.  The applicant and a friend did some renovations at York Street, establishing a basic set-up for the esthetic business. 

[46]      Lack of parking and space in general influenced their next move to an apartment at 215 Brittany Drive.  Although the business was conducted from the apartment, they continued to look for a house.

[47]      The business known as Brittany Esthetics was registered in the applicant’s name alone in 1991, he says because he paid the rent and “she did not want her name on the ownership.”  The respondent claims the registration occurred because she was naïve about business and the applicant didn’t want to take a risk with his name on the lease that the bills would not be paid.

[48]      From 1991 through July 1994, the applicant continued to drive trucks.  He conceded he was not a trained esthetician and the money earned in the business was because of the respondent’s expertise.

[49]      The applicant located a property at 644 Montreal Road, Ottawa.  They decided to purchase it and a deed to the property was registered July 5, 1994, also in the applicant’s name alone.

[50]      I find the purchase price, fees and disbursements for 644 Montreal Road totaled $161,659 as shown on a trust ledger found at Tab 1, Exhibit A.  These purchase funds came from a first mortgage of $103,685, a second mortgage of $24,500, and $33,474.25 in cash from the parties.  The first mortgagees were Donna Klaiman, in Trust and B. & M. Cantor Holdings Ltd.  The second mortgagee was Ottawa-Carleton Mortgage Inc. in Trust.  Unfortunately there is no ledger statement showing the source of the $33,474.25.

[51]      Initially, the applicant claimed the cash came from them and included $20,000 realized from the sale of his interest in the trucking business, and the balance came from his credit cards.  He stated the respondent may have contributed $2,000.  The respondent declared the applicant advanced no monies towards this purchase.

[52]      Upon cross-examination, the applicant admitted he could not tell what, if any monies, came from the sale of his trucking business.  He acknowledged that as he had overdrawn the trucking account, he was required to repay drawings and other debts.  He further acknowledged that of the $33,474.25, $6,000 came from a lawyer, $5,000 from the real estate agent, $4,500 from TransCanada Credit, and $5,000 from credit cards.  The above still leaves a shortfall of $12,974.25 unaccounted for, although respondent’s counsel attempted without success to get the applicant to agree that $10,000 came from the respondent.  The failure of either party to prove exactly where the cash funds came from results in my finding that both parties contributed to the down-payment on 644 Montreal Road in equal amounts.

[53]      1994 was a busy year for the parties.  Montreal Road was purchased in July.  Also in July, the applicant sold his interest in the trucking business and in September Veronica was born.

[54]      It was the evidence from both parties that on September 6, 1994 the respondent worked until 6:00 p.m., gave birth to Veronica at 10:00 p.m. then took only two days off before returning to the business.  It was suggested she was forced to return to work because hers was the only income.

[55]      The applicant testified that in July, 1994 he and a friend did some renovations at Montreal Road, consisting of building a front desk area, correcting a water problem and odour in the basement, installing a new furnace and air conditioning, doing some insulation, installing drywall and painting it, together with some new lighting fixtures.

[56]      It was the applicant’s evidence that these renovations were ongoing from July 1994 until the couple’s separation in 2001.  He was assisted for the first couple of months by his son who arrived from Europe for this purpose.  The respondent advised she had purchased the son’s airline ticket.  The applicant acknowledged the renovations were paid for from income generated by the esthetics business.

[57]      The applicant insisted he could not seek alternative employment because he had to fix the house.  “Otherwise the business wouldn’t go further.  And, we would have to close the business down and we would go bankrupt.”

[58]      The applicant testified he worked everyday from 1994 through 2001 on renovations, except 45 days spent trucking in 1996, or unless he was cooking.  It was his evidence he also did general maintenance around the house, for example changing faucets, blinds, bulbs, fixing the floor and a table.

[59]      Meanwhile the respondent, as well as working as an esthetician and caring for Veronica, continued to draw social assistance, she alleges at the insistence of the applicant.  Her hours of work in the business were from 10:00 a.m., until 6:00 p.m., 7:00 p.m., even as late as 8:00 p.m., as acknowledged by the applicant.

[60]      The parties decided to increase the size of the building at 644 Montreal Road, and engaged the services of Mr. Ales Mach, a professional engineer who prepared the drawings used to obtain the minor variance and construct the additional space.  The applicant appeared before the Committee of Adjustments on April 17, 1997 to get approval from the municipality.

[61]      By May 30, 1997 the parties had already deposited $8,000 toward a final contract price of $35,943, with A.A.A. Hardwood Flooring Depot for demolition, excavation, footings, concrete walls, backfilling, framing and roofing.  The completion date for this work was June 27, 1997.  The court also received invoices for plumbing and electrical fixtures, as well as for ceramic floor and wall tile and other materials used in the project.  Mr. Mach testified he estimated the total project cost at $70,000.

[62]      The parties obtained another mortgage for $52,000 from Donna Klaiman, in Trust, in order to fund the cost of the addition.  This mortgage was registered September 25, 1997 and was guaranteed by the respondent.

[63]      Paraphrasing the testimony of the applicant,

                        Altogether it would be an area 1200 feet – square feet.  And a double garage, detached with solid foundation, professionally built…What I did inside was I finished the insulation work, I finished the vapour barrier work, I helped the  electrician, I helped the plumber, because these two trades must be licensed by the Province of Ontario.  And then I did tiling on the floor, tiling on the walls.  I set the Jacuzzi in the second floor – first floor, another Jacuzzi in main floor – in basement.  A steam sauna which was connected to sump pump… and I basically established the ventilation system.  I painted the place, I did the floor and put on doors…  There was a patio in front of the addition that was 17’ by 17’, built with pressure treated lumber…  I did it (patio) with help of my friend…  So inside we had – on the floor plan number 3 we’ll see layout of top floor, which shows bathroom with whirlpool and five pieces, bidet, toilet, shower corner, cabinets.  And there was a walk-in closet, 10’ long and probably five feet wide.  Master bedroom and spiral stairs which lead you down to the main floor directly to the living room.  There were two staircases in the structure… basement, I made the whole basement, which is roughly 1,500 square foot basement which was completely finished and used for businesses.  There was a tanning room; there was a laundry room, change room, furnace and toilets.  I installed boilers.  I made a hallway to connect the new addition basement.  I did the walls because we had to have access from the old part…  So I laid tiles for the whole floor in two rooms, in the massage room and in the therapy room, which was equipped with a sauna and a Jacuzzi which were brand new.  There was also a steam generator, electrical steam generator, and sewer pipe connected to the whole process…  So I also fixed drywall, cut ceiling, put in lights with help of my friend, new lights, and new fixtures.  We changed windows, which were done by a professional company also, and I rebuilt or redesigned the main hallway, main entrance.  There is now a waiting area for clients.  I did substantial landscaping.

[64]      It was the applicant’s estimate the whole project cost $135,000.

[65]      During and before the completion of the 1997 renovations, a client of the business threatened to go to the police with allegations of a sexual assault committed by the applicant during his giving of a massage to her.  Almost immediately, on October 14, 1997, the applicant conveyed his interest in 644 Montreal Street to the respondent.  The deed was registered the same day.  He also “signed off” on Brittany Esthetics and the respondent registered the business in her name on November 6, 1997 as Brittany Esthetics & Spa.  When the client elected not to pursue the charges, the applicant returned from the Czech Republic where he had been staying at his mother’s residence.

[66]      On December 11, 1998 the parties borrowed $50,000 from the respondent’s mother.  Both parties signed a handwritten contract with the lender.

[67]      Regarding other financial dealings, the court was advised:

1.                  A mortgage was registered April, 1999 in favour of the Bank of Nova Scotia for $76,000, and $52,617.95 of the new funds was used to discharge the September, 1997 $52,000 mortgage to Donna Klaiman.  The Bank of Nova Scotia mortgage was described by the lawyer representing the respondent as being “in support of an operating loan to Brittany Esthetics”.  This mortgage was guaranteed by the applicant.  All payments have been made by the respondent and are interest only, therefore the original $76,000 remains outstanding.

2.                  Although no document was filed as an exhibit, the respondent testified that 644 Montreal Road is subject to a first mortgage in favour of London Life and as of the trial, it is said that $65,000 is the principal amount that remains outstanding.

3.                  On August 18, 1999 the parties jointly purchased a 1999 Land Rover (Discovery model) for $41,699 and traded in the respondent’s 1996 Jetta, receiving a trade-in allowance of $12,299.  This left a balance including tax of $33,879.35: $13,379.35 was due on delivery and $20,500 was financed.  All payments, both before and after separation came from Brittany Esthetics.

It was the respondent’s evidence that she offered the Land Rover to the applicant at separation and he rejected it.  During the trial, the applicant made much of the fact that he was a half-owner and did not get to use the vehicle.  The respondent testified that she took a vacation only to return and to discover the vehicle had been taken.  There was discussion of whether the vehicle had been hot-wired as the respondent had the keys in her possession.  Upon her return, the respondent answered a call from the Land Rover dealer who had recovered the vehicle and estimated it needed approximately $4,200 in repairs before it could be driven again.  The applicant admitted taking the vehicle but denied causing any damage to it.  It was the respondent’s evidence she alone paid the repair bill.

4.                  In August, 2000 the respondent purchased a 2000 Chevrolet Cavalier automobile and the amount financed was $21,796.75.  The respondent makes the monthly payment of $371.65, however she testified the car is her mother’s and the $21,796.75 should be credited against the $50,000 the parties borrowed from her mother in December 1998.  The applicant has not paid any of the payments on the car, nor has he made any payments to the respondent’s mother.

[68]      The respondent testified she was encouraged by the applicant to apply for a number of credit cards, all of which appeared to have been borrowed against to her authorized limit.

[69]      The respondent testified the debts as of separation including both mortgages, totalled $307,408.  It was her evidence she has been the only person making payments on account of this debt, however the applicant claimed to also have credit card debts related to the renovations that he was paying.

[70]      The court received evidence at trial from the respondent and confirmed by employees of the business who testified that from 1998 until separation the applicant engaged in day trading on the stock market from his residence, using a computer.  The applicant agreed that in March 2001 $70,000 of the couple’s money was lost trading stocks from home.  The applicant used his Scotia Discount brokerage account and only he, and not the respondent, participated in day trading.  In addition, the respondent alleges he lost a further $10,000, a gift from her mother and earmarked for the children’s education costs.

Brittany Esthetics

[71]      The applicant argues regardless of the outcome of his trust claim, he is already an equal partner in Brittany Esthetics for the following reasons:

(i)                  Between 1991 and 1997, Brittany Esthetics was registered in his name alone.

(ii)               Both parties had signing authority for Brittany Esthetics.

(iii)               Their income tax filings for 1996, 1998, 1999 and 2000 show they declared the profits of Brittany Esthetics as partners in the following percentages:

(iv)              The applicant paid the initial first and last months rent in 1991 and signed the lease for the business premises.

(v)               The applicant helped manage the business, did the payrolls and banking and on occasion, prepared lunches for the customers.

Was it really a Partnership?

[72]      The essentials of a partnership are described in Halsbury’s Laws of England, 3^rd Edition, volume 28 at page 483: “Partnership involves a contract between the partners to engage in a business with a view to profit.  As a rule, each partner contributes either property, skill, or labour but this is not essential.”  Black’s Law Dictionary adds to the above… “There shall be a proportional sharing of the profits and losses between them.”  Under Canada’s Income Tax Act, Interpretation Bulletin identified as IT90 entitled What is a Partnership, found at the Canada Revenue Agency’s website, the following information is offered:

1.      The Income Tax Act does not define a partnership

2.      …for guidance on whether a particular arrangement at a particular time constitutes a partnership, reference should be made to the relevant provincial law on the subject, and such law will be viewed as persuasive by the Department of National Revenue.

…

6.      Since a partnership is a relationship between persons carrying on business for profit, the type and extent of a person’s involvement in the business is relevant in determining whether he is in reality a partner.

7.      Formal registration of a partnership is not, in itself decisive…

Ontario’s Partnership Act RSO 1990, c.P.5 in section two defines partnership as … “the relation that subsists between persons carrying on a business in common, with a view to profit…” and at section 3, No. 3 “the receipt by a person of a share of the profits of a business is proof, in the absence of evidence to the contrary, that the person is a partner in the business…”

Analysis and Conclusions Respecting Brittany Esthetics

[73]      With respect to the applicant’s partnership claim, the court notes:

(a)               There was no written partnership agreement;

(b)               At various times the business had been registered in the name of one then the other party alone, cancelling out registration as a decisive factor.

[74]      I find the applicant’s payment of the first and last month’s rent is repayment for the respondent’s earlier providing funds to fix the applicant’s truck and does not make him a partner.  The applicant’s providing a few massages over a brief period does not make him a partner either.

[75]      Overall, I am satisfied the parties were partners in Brittany Esthetics. The applicant’s testimony that they carried on the business together with a view to sharing the fruits of their labours, while shaken, was not completely refuted.  Filing annual income tax returns in which the profits were declared almost equally between them adds support to the notion of a partnership, even though such filings could be seen as a tax saving manoeuver only.  Also, while another employee could have prepared the payrolls and done the banking, served lunches and coffee occasionally, and maintained the premises, no witness said the applicant did not perform these tasks and I find these were the applicant’s contributions to the business.  Further, the applicant permitted the esthetician business to operate from 644 Montreal Road, thereby contributing the use of property to the partnership.

[76]      I have no doubt and find the respondent was the individual who made the business successful.  Her efforts and expertise far out weigh the applicant’s participation.  The definition of partnership in Black’s Dictionary foresees a proportional sharing of profits and such I find is the relationship here.  The respondent’s skills and reputation attracted and retained the clientele.  She devoted far more “hands on” time to both the clients and her staff, while the applicant’s contributions were collateral in nature and his participation did not involve nearly the same time commitment.  Accordingly, I fix their respective shares in Brittany Esthetics at 80% for the respondent and 20% for the applicant.

[77]      However, left for consideration is a determination of what, if any, interest the applicant had in Brittany Esthetics and 644 Montreal Street as of March 2001, the date of separation.  Both assets which had been registered in the applicant’s name alone were, as of March 2001, now registered in the respondent’s name only.  The applicant advances resulting trust and/or constructive trust to support his claim for an interest in both assets.

Resulting Trust – The Law

[78]      My understanding of the case law is resulting trusts were a means of recognizing the contribution of a non-titled spouse to the acquisition of property and were originally based on a direct contribution to the purchase price.  Later the presumption of resulting trust was extended to situations involving indirect financial or non-financial contributions and the courts became more concerned with the actual intentions of the parties.  Increasingly, finding that a resulting trust existed depended on whether there was a common intention of the spouses to share the beneficial interest, thus the ritual in searching for a phantom intent began.

[79]      However, finding a resulting trust exists is not the end of the problem.  This was discussed by Professor Hovius in his text, Family Law, Carswell as early as the 1982 edition at page 252.

                        If there is a contribution in money or moneys worth but absence of evidence of an agreement or common intention as to the quantum of the interest, doubts may arise as to the extent of each share of each spouse in the property.  Lord Reid, in Pettitt’s case supra at page 794 said that the respective shares might be determined in this manner:… ‘you ask what reasonable people in the shoes of the spouses would have agreed if they had directed their minds to the question of what claim the contributing spouse ought to have.’  This is a sensible solution and I would adopt it. The difficulty experienced in the cases is the situation where no agreement or common intention is evidenced and the contribution of the spouse without title can be characterized as performance of the usual duties growing out of matrimony.

Constructive Trust

[80]      Failure to find common intention leaves only constructive trust, which is built upon the principle of unjust enrichment.  For constructive trust, three requirements must be satisfied:  An enrichment, a corresponding deprivation, and no juristic reason for the enrichment.

[81]      Constructive trust is an equitable doctrine, however, respective proportions may be unequal.  As Dickson J. stated in Pettkus v. Becker, 19 RFL (2^nd) 165,

                        Although equity is said to favor equality, as stated in Rathwell, it is not every contribution which will entitle a spouse to a one half interest in the property.  The extent of the interest must be proportionate to the contribution, direct or indirect of the claimant.  Where the contributions are unequal, the share will be unequal.

Brittany Esthetics

[82]      The applicant claims Brittany Esthetics was a partnership and he has a 50% ownership interest.  The court has already made a ruling setting their respective shares at 80% respondent, 20% applicant.  Does the applicant have a share greater than 20% in Brittany Esthetics based upon a trust claim?

[83]      This is  one instance where the search for the phantom or common intention of resulting trust is successful.  The applicant has convinced the court that he is a partner in Brittany Esthetics, and given a partnership is defined as the relationship that subsists between partners carrying on business in common, that leaves only the question of proportionate sharing to address.

[84]      In addition to the applicant’s contributions to the partnership, his caring for the children furnishes a non-financial contribution which assists the applicant in establishing his interest in Brittany Esthetics based on resulting trust.

[85]      What is the extent of the applicant’s share?  The respondent also contributed her share of 644 Montreal Road; she also cared for the children, shared profits and cooking, however, her hours as an esthetician, co-manager and trainer of staff again satisfied the court that her proportional share in the partnership is greater than the applicant’s and in determining the sharing based on resulting trust, I am not satisfied that the proportions already found to be 80/20, should be deviated from.

[86]      Having found that Brittany Esthetics is a business to which resulting trust applies, there is no need to go further and discuss the applicant’s interest in the business based on constructive trust.

644 Montreal Road

[87]      644 Montreal Road is the location of the business and was as well the private residence of the parties.  It is now registered in the respondent’s name alone.  Given the parties were not married, the concept of equalization of property does not apply, and to find an ownership interest for the applicant, he must establish a trust.

[88]      This property was first registered in the applicant’s name only, however, after the alleged harassment incident, the applicant released his interest in the property in favor of the respondent.  During the periods of time when the property was registered in their respective names, the registered owner signed the mortgage (charge) documents and the other party guaranteed the mortgage (charge).

[89]      In addition, when 644 Montreal Road was first acquired, the applicant and a friend did partial renovations sufficient to allow the business to operate.  In 1994 substantial renovations occurred which included services provided by outside contractors as well as renovations performed by the applicant together with family help.

[90]      At the same time the renovations were paid for by the monies earned in the esthetician’s business to which both parties contributed, although in different amounts.

[91]      There is the problem of assigning a proportional share to each of the spouses in 644 Montreal Road.  The issue is complicated because the evidence of the cost of the major renovation in 1994 is conflicting.  The witness Mach thought the total project was worth $70,000 whereas the applicant valued it at $135,000.  Of this, $35,000 consisted of the general contractor’s work and the balance of the project cost included labour and material cost such as Jacuzzis, saunas etc.

[92]      In identifying the source of funds for payment of the renovations, there is the evidence that in 1996 the applicant earned $5,000 during 45 days of driving trucks.  He testified that the balance of the funds for renovations came from Brittany Esthetics.

[93]      I find for agreeing to purchase 644 Montreal Road, assuming the risks, doing the work, and as the renovation project itself was agreed to by the parties, that Mr. Kincl has an equal (50%) interest in 644 Montreal Road together with Ms. Malkova, based upon a resulting trust.  These were not “the usual duties arising out of matrimony”.  His contributions to the property were clearly greater than his contributions to Brittany Esthetics, accounting for the finding of different percentage interests.

Valuation of Brittany Esthetics

[94]      The parties co-retained Ms. Jane Phipps to value Brittany Esthetics.  The personal profile (Exhibit 63) of Ms. Phipps reveals she holds a Bachelor of Commerce degree (1987) and from 1987 to 1990 practiced in the area of accounting, auditing and taxation for small and medium-sized owner-managed businesses with the firm of B.D.O. Dunwoody LLP Chartered Accountants.  She obtained her Chartered Accountants (C.A.) accreditation in 1990 and worked with S.R.G.G. Valuation Inc. from March 2000 to May 2002.  S.R.G.G. advertises as providing valuation and litigation support services.  In June 2002 and continuing until the time of trial, Ms. Phipps was employed as a senior valuations consultant with Canada Revenue Agency.

[95]      Ms. Phipps received the designation as a chartered business valuator in December of 1997 and belongs to the Canadian Institute of Chartered Business Evaluators, a Canada-wide institute.  She had been practicing in the area of valuation since 1994.

[96]       After hearing her qualifications, the court accepted Ms. Phipps as an expert in business valuation.

[97]      Ms. Phipps testified she has prepared numerous owner-managed business valuations where the owner works within the business and is considered a key component of that business in that they are the person who has generated the client work.  Such an “owner is heavily involved and would be described as the key person to bring the clients in the door, generate the work and get the work done and please the clients.”

[98]      She described her assignment here as being one that required her to determine the fair market value of the equity in Brittany Esthetics.  Her retainer required her to meet with both Ms. Malkova and Mr. Kincl which she did on separate occasions in order to discuss the business with each of them.

[99]      She described her approach to this assignment as follows:  first, she would gather all of the information and then focus on the earnings of this business.  In particular, she would determine the maintainable earnings which she described as the level of earnings that a purchaser can expect to generate in the foreseeable future beyond valuation date.  It would require that she look at the revenue streams of the business as well as the expense streams, and to adjust both streams or as she described it to “normalize”.  All of this was to determine what a notional purchaser would invest to earn the desired rate of return on a similar type of investment.

[100]                          Her conclusion was that

                        When you subtract from the earnings the rent, the salary for a bookkeeper, receptionist, office manager, officer person and a salary for an esthetician, what that in effect does is it causes the  normalized earnings to be negative…  In other words there is no cash flow in the business… When the earnings are low they do not generate a sufficient rate of return, or they are negative, you then look to the value of the business based on the assets.  Fair market value can be determined from an earnings based approach or an asset based approach…  I concluded that a purchaser going in to this business would pay something for the tables, the chairs, all the fixed assets that would be used in the business… they would just buy the assets.  That’s how I came out with my liquidation value of $20,500 to $22,500, is based on the fair market value of the assets in the business on or around the valuation date.

[101]                          Ms. Phipps described Brittany Esthetics as a business where Ms. Malkova has a very high level of personal goodwill.  She testified that personal goodwill is not transferable to a purchaser.  This led her to the conclusion that the asset based approach was the appropriate approach to use.  She also concluded that “the notional purchaser coming in to this business would buy just the assets.  They are not going to take on the debt and that’s why the liquidation value simply reflects the acquisition of those assets, not the debt.”

[102]                          Ms. Phipps was asked to comment on valuing businesses using a “multiplier”.  She replied,

                        With this particular business you would have to have an income to apply the multiplier to.  As a valuator what we do, I mean you often hear people say that businesses are bought and sold by applying multiples to revenues and gross margins and what have you.  And you have to be careful there because multiples have to be first of all related to your business and not obsolete.  But in this particular business, when you’re valuing it and using appropriate valuation methods, the multiple that you referred to is a capitalization rate.  And a capitalization rate is applied to this maintainable normalized level of earnings that I attempted to determine. My result was that the earnings were not there because I had to normalize for the salaries, I had to normalize for the rent.  There were other expenses I didn’t normalize which I could have put in there.

[103]                          In cross-examination Ms. Phipps agreed there were different methods of valuing businesses.  For example, certain businesses are valued on a going-concern basis whereas others are valued on an asset basis or a liquidation basis.  Ms. Phipps was pressed on the fact that the basis of her appraisal was that one would have to sell this business to a person who was not necessarily an owner-operator.  She replied that “when we as valuators value a business we value on a hands-off basis.”

[104]                          It was suggested if this was an owner-occupier purchaser they wouldn’t have to pay rent.  She responded that the purchaser of this business was not purchasing the house.  “When you’re valuing a business, you’re valuing the business, not the premises it happens to be operating out of.”  In her opinion it was not a reasonable assumption to suggest the purchaser move into a home and occupy all of the bedrooms and fill the space.

[105]                          Ms. Phipps was asked that if she assumed there were normalized on-going earnings of $40,000 annually, and the business was not owner-occupied, what the cap rate would be that she might apply to the normalized earnings.  “What’s the industry standard here?”  To which she replied, there is no industry standard.  She finally agreed that in dealing with the hypothetical she would be comfortable with a multiplier of five times.  She agreed the location was good, there was an earning stream, and there were assets.  The applicant’s counsel presented a hypothetical situation of a business with earnings of $40,000 annually and a multiplier of five, would produce a business worth $200,000.  In reply, she testified that the hypothetical had nothing to do with the reality of Brittany Esthetics.  As she stated,

                        The definition of fair market value is that anyone can buy this business.  When you start saying someone has to come in, someone has to occupy the house, someone has got to do the work, now you’re narrowing down the scope. You’re limiting the number of purchasers there are actually going to be there…  From a notional standpoint, from a fair market value definition, that’s not the way you look at it.  A purchaser is coming in first and foremost to make an investment in an asset.  In this case it’s the equity in the business, to generate some sort of return.

Submissions of the Parties

The Applicant

[106]                          The applicant submits there are two problems with Ms. Phipps’ valuation of this business.  First, the company was valued as at a valuation date or the separation date of the parties.  However, they were not married and as such the notion of a valuation date does not apply.  Secondly, the company was valued on a liquidation basis rather than on a “going concern” basis.

[107]                          The applicant argues the respondent draws a net amount of $3,000 monthly from the business in addition to having the business pay for other expenses.  He submits the business is making a substantial profit with which the respondent can service her debt, withdraw money for herself, save for her RRSPs and pay salary for up to five employees at a time.  In addition, it was submitted that while important to the business, the absences of the respondent from the business while on vacation or trips to the Czech Republic demonstrated the business was strong enough on its own to carry on.

[108]                          Even if the business should have been valued on a liquidation basis, this valuation contained certain errors.  Firstly, there was $44,500 in the bank, not $2,300 as cited by Ms. Phipps.  Further, Ms. Phipps did not include the house as an asset of the business. Had she done so, the business would have been worth $300,000 to $400,000.  Even if not included it should be valued at between $54,000 and $200,000.  Also, the $76,000 second mortgage is not a business debt and really there are only debts owing to the Toronto Dominion Bank of $25,000.  In addition, a purchaser might well want the house in addition to the business and to operate a similar set up as the respondent currently does.  Finally, a multiplier of five should have been applied and if the earnings were $40,000 annually, then this business is worth $200,000 and not $22,500.

The Respondent

[109]                          With respect to the valuation date, the respondent submits that the parties retained Ms. Phipps to value the property as of March, 2001.  In fact, if one reads Exhibit 87, her valuation report which is addressed to both counsel, it points out the property was valued as of that date.  Surely if the date was wrong, it should have been brought to the attention of the co-retained valuator by one or both counsel long before this date.

[110]                          Ms. Phipps considered the usual earnings approach but then rejected it because of the negative cash flow after normalizing earnings.  Counsel points out the $44,500 was not in the bank account of the business but in the personal account of the respondent.  Finally, Ms. Phipps had deducted the interest paid on the $76,000 second mortgage which in turn had the effect of increasing the earnings and therefore the value of Brittany Esthetics.

[111]                          Taking into consideration the evidence of the parties and the opinion of Ms. Phipps, I am not persuaded she in any way backed away from her appraisal of the business at somewhere between $20,500 and $22,500.  Further, no other expert testified offering a contrary opinion, accordingly it is the court’s finding that Brittany Esthetics be valued at $22,500 as of March, 2001.

[112]                          What is also a concern for the court is that because these parties were not married this is not equalization and we are not dealing with a valuation date.  Ms. Phipps was asked that if another date was chosen, for example the date of trial or the date that a judgment was delivered by the court, would she use a different formula or approach to decide the value of Brittany Esthetics.  She testified that she would not, but would simply use the financial statements that were more current to the date in question.  The court was not presented with that data and cannot speculate as to value on any other date.  Furthermore, after March 2001 Mr. Kincl no longer contributed to the partnership except to the extent that Brittany Esthetics was still using the property at 644 Montreal Road.  Given the applicant did not contribute, and all significant efforts to make Brittany Esthetics successful after separation were the respondent’s, I dismiss the applicant’s claim that he is entitled to a share in the profits from March 2001 onwards.

Valuation of 644 Montreal Road

[113]                          Although the trust statement for 644 Montreal Road included all fees and disbursements and totalled $161,659, it was purchased for $157,000 and the deed registered July 5, 1994.  The parties testified that at the time of purchase it required work.  In particular, there was a smell emanating from the basement area that had to be corrected.

[114]                          In 1994 the parties did some minor renovations, however in 1997 when they did further work on the property they completed major renovations and built an addition, the cost of which has already been estimated by Mr. Mach at $70,000.

[115]                          The assessed value for taxes in 1999 was $122,000 and in February of 2001, $136,000.  Details taken from the insurance policy, made an exhibit at trial, revealed the main structure was insured for $225,000 as of March 22, 2001, and the additional building which in this case was a garage was insured for a further $25,000.

[116]                          The respondent presented Christopher Browne as her expert witness to value 644 Montreal Road.  Mr. Browne’s appraisal dated May 23, 2002 provided a value as of March 12, 2001 of $235,000 for the property.

[117]                          Mr. Browne’s curriculum vitae reveals that between 1995 and 1997 he took a two-year appraisal assessment technology diploma at a college of applied arts and technology.  In 1998 he successfully passed the AACI Comprehensive Exam offered by the Appraisal Institute of Canada.  He completed his articling program with that Institute in May of 2002 and he has been a candidate appraiser with the Institute since July of 1997 and was, at the time of trial, working toward obtaining the Accredited Appraiser Canadian Institute (AACI) designation.

[118]                          From July 1997 until February of 1999 he was engaged in real estate appraising of residential properties.  From February 1999 to June 2000 he was engaged in commercial and residential appraisal assignments, and from June 2000 until trial he was a real estate appraiser with Affiliate Appraisers, engaged in commercial and residential appraisal assignments.  He has a membership in the Appraisal Institute of Canada.  As he testified at trial, “I am basically one step away from getting that [accreditation].  I’ve completed all of the educational requirements.  I have to appear before a review board.”  He estimated that he has completed several hundred commercial appraisals between June of 2000 and the date of trial.  In his firm, there are approximately 22 appraisers, five of whom are designated members and two of whom are AACI’s.  The majority of the work is done by candidates and reviewed by a senior appraiser.  That was the case with respect to Mr. Browne’s report on 644 Montreal Road.

[119]                          The court accepted Mr. Browne as a person qualified to give an opinion of value on commercial/residential real estate.

[120]                          Christopher Browne’s appraisal of the property was entered as an exhibit.  The following information is taken from his report.

                        The property is rectangular in configuration and has a frontage of 54.02 feet along Montreal Road with a depth of 73.42 feet, and its total lot area is estimated at 3,966 square feet.  The structure on the lot is comprised of a two-story mixed use building with a rear addition.  The front section of the main floor and the majority of the basement are utilized as commercial space and the rear section of the main floor and all of the second floor consist of a three bedroom residential use.  The main floor contains an entry, partial bathroom and several commercial rooms in the front section, and there is a living/dining room and kitchen at the rear.  The second floor has three bedrooms, a standard three-piece bathroom and a large good-quality six piece bathroom.  The basement consists of utility/storage rooms, a three piece bathroom and several commercial/spa rooms.  One of the spa rooms has a whirlpool tub, shower enclosure and sink, and another spa room has a sink and shower enclosure.  Laundry facilities are also located in the basement.  The exterior of the structure is wood frame with vinyl siding.  The appraiser considered the overall quality to be average to good, considering the age of the building.  The subject site is zoned CD F (2.0) – a district linear commercial zone.  This zone permits a variety of commercial uses and the current improvement was considered legal non-conforming for the purpose of Mr. Browne’s appraisal report.

                        As for the neighbourhood, the subject property is approximately five kilometres east of downtown Ottawa.  The immediate area consists of a mix of commercial and residential uses.  The neighbourhood is characterized as mature and properties along Montreal Road consist primarily of commercial uses with some single family and multi-family properties.  The overall condition of the neighbourhood is considered to range from average to good, and most properties are generally well maintained.

                        In summary, the subject property is located on a major commercial corridor in an established mixed-use area.  The neighbourhood benefits from a central location with good access to major transportation routes such as the Queensway, Montreal Road and St. Laurent Boulevard.

[121]                          Mr. Browne described his approach to his valuation of 644 Montreal Road.  He inspected the neighbourhood, then gathered sales data with the goal being to find comparable sales.  Once the market data was gathered, he went through a process of examining and choosing the most similar comparables, which he then analyzed basically on a sale price per square foot basis.  None of his comparables were on Montreal Road and none of them were close to Montreal Road, because at the time the appraisal was completed there were no comparables in that area.  Therefore, he went looking and he obtained what he felt were the most similar comparables he could locate.

[122]                          He explained his task was to come up with market value which he defined as what a property would achieve if it was exposed to the market with a willing vendor and willing purchaser.

[123]                          In determining the highest and best use of the subject property, he noted the following criteria must be satisfied.  The use must be legally permissible, physically possible, economically viable and the most probable and most profitable use.  He concluded the highest and best use of the subject site is the continuation of the current commercial/residential use.

[124]                          In cross-examination he was pressed by the applicant’s counsel and asked to agree that there is more of an intrinsic value in this particular property than just a house with an esthetics facility in it.  Mr. Browne did not agree.  He was asked whether it was possible that some sort of commercial establishment like a bank or a box store might be constructed.  While agreeing it was possible, Mr. Browne qualified that by saying there are other things that have to be considered as well as the lot size., and one of the important factors is the surrounding property.  Mr. Browne concluded there was a demand for mixed-use properties in this area, and this site was not a run down building but was well maintained and had been recently renovated.  He testified these properties typically sell for mixed uses and potential purchasers may want to use it as office space or something else permitted under the zoning.  He also admitted that sometimes purchasers take down an old house and put up a new building, and that it was within the realm of possibility that that could happen with 644 Montreal Road.  However, he pointed out the same could be said with respect to the comparables he had put forward.

[125]                          In addressing the fact that none of the comparables were on Montreal Road, it was suggested this somehow diminished the value of his appraisal because Montreal Road was unique in character.  Mr. Browne testified that Montreal Road is not in his opinion unique in that it is not the only street in Ottawa that has a mixed use.  In fact he suggested both Bank Street and Preston Street were similar to Montreal Road as they too had mixed use properties.

[126]                          Mr. Browne would not provide evidence with respect to any general trend in Ottawa since March of 2001 on the basis he had not done a survey of what has happened generally to Ottawa’s real estate market.

[127]                          As well, he suggested such features as a Jacuzzi may not add value to the subject property as the next purchaser may not have any use for that feature.

[128]                          He agreed the current zoning allows for 200% use of the site area and while there was obviously potential for additional expansion, he refused to budge on his price of $235,000.

The Applicant’s Position

[129]                          The applicant suggested the square footage in the basement area, because it was presently used as commercial space should also be valued at $100 a square foot.  This, he submitted, would increase the value of the property to $345,000.  If an owner were to take advantage of the 200% site expansion, he suggested the value was closer to $500,000, $600,000, maybe even $700,000.  Basically, the applicant argued the property was under valued and rather than use a valuation as of March of 2001, the property should have been valued as of the date of the trial.

The Respondent’s Position

[130]                          The respondent contends that Mr. Browne measured the property and, using the comparables, determined it was worth $100 a square foot and thereby applied the proper method in arriving at a value of $235,000 for the site.  Further, the questions asked by opposing counsel of the appraiser were but” musings” and did not constitute evidence of value.

Findings

[131]                          I find the March 2001 value of $235,000 low, given the property was purchased seven years earlier for $157,000 and renovated both in 1994 and 1997, and on the latter occasion we have an estimate of between $70,000 and $135,000 being spent to renovate, add an addition and construct a stand-alone garage.  It is possible the parties could have paid too much initially, and what they paid represented location and any renovations since that time were perhaps too specific to the needs of Brittany Esthetics to be considered of any value to prospective purchasers.  However, all of this is speculation as there was no evidence other than Mr. Browne’s observations called on these points.

[132]                          The only evidence presented on the value of this property was that of Mr. Browne, a person who has conducted hundreds of commercial valuations.  Further, notwithstanding pressing cross-examination, Mr. Browne did not retreat from the $235,000 value which he placed upon the property in March, 2001, and I accept his opinion as to the value as of that date.

The Date for Valuing the Property