Andrews v. Lundrigan, 2009 ONCA 160
COURT OF APPEAL FOR ONTARIO
Winkler C.J.O., Rosenberg and Moldaver JJ.A.
BETWEEN:
Danny Andrews
Respondent (Appellant on Appeal)
And
Laura Lundrigan
Applicant (Respondent on Appeal)
Dawn Bourque for the appellant
John J. Winter for the respondent
Heard: January 16, 2009
On appeal from the judgment of Justice Thomas Wood of the Superior Court of Justice dated June 11, 2008.
By The Court:
1The issue in this appeal is whether the motion judge, Wood J., erred in setting aside a final order based on Minutes of Settlement. The appellant submits that the motion judge made palpable and overriding errors in his assessment of the facts and failed to apply the proper test as to whether the parties had reached a settlement. For the following reasons, the appeal is dismissed.
2The appellant and the respondent lived in a common-law relationship for four and one-half years between 1999 and 2004 and separated in July 2004 after an allegation by the respondent that the appellant had assaulted her. The respondent has three children from a previous relationship. In August 2004, the respondent commenced proceedings seeking spousal and child support and claiming certain property by way of a constructive trust. Although the parties were represented by counsel, it is apparent that they continued to negotiate between themselves without lawyers in an attempt to resolve these issues. In view of the submissions by the appellant, a somewhat detailed chronology is required.
October 26, 2004 DiTomaso J. grants order that appellant provide interim spousal support in the amount of $1,400 commencing November 1, 2004
February 16, 2005 At request of respondent, criminal assault charges against appellant are withdrawn and appellant enters into peace bond with condition not to communicate directly or indirectly with respondent except with her written consent
February 25, 2005 Appellant’s solicitor writes to respondent’s solicitor advising that she understood the parties had reached a final settlement; she enclosed proposed terms of the final settlement and asked respondent’s solicitor to review the terms with the respondent and respond as soon as possible. In summary, the proposed terms were:
An “equalization payment” of $37,440 to be made by way of spousal support payments of $700.00 per month commencing March 1, 2005 and terminating February 1, 2009. Payments are tax deductible to appellant and taxable in hands of respondent.
No child support.
Respondent to retain RRSP registered in her name and a vehicle; appellant has transferred motor vehicle to respondent.
Respondent is to vacate 31 Forest Wood Drive by February 28, 2005.
Respondent to release claims against 31 Forest Wood and any claim to any other property.
[sic] Parties agree to withdraw from Family Responsibility Office.
Parties agree separation date is July 24, 2004.
No costs payable for the action.
April 1, 2005 Respondent’s solicitor writes in response to the February 25 letter saying she has met with the respondent and indicates that the terms reflect the discussions between the parties except that there should be a reference to the $1400 per month from November 1, 2004 until the day the respondent moved. She says she will meet with the respondent after the appellant’s solicitor has prepared the Minutes of Settlement to finalize the matter.
April 28, 2005 Respondent’s solicitor asks for the Minutes of Settlement “to reflect the agreement between Mr. Andrews and Ms. Lundrigan”.
May 16, 2005 Appellant’s solicitor sends to respondent’s solicitor the Minutes of Settlement. She asks that the respondent execute them and return them for the appellant to execute. She will then file them with the court. The terms are essentially the same as in the February 25 letter except the equalization payment is now referred to as compensatory spousal support, and payments made under the order of DiTomaso J. are reflected. There is also reference to the respondent having vacated 31 Forest Wood Drive on March 1, 2005. Finally, a term is included stating that no child support is payable by the appellant “now or in the future”
June 22, 2005 Letter from respondent’s solicitor to appellant’s solicitor enclosing signed copies of Minutes of Settlement, but these minutes have several changes from the May 16 version. One change is to the amount of the support payment to reflect the amount already paid by the appellant to the respondent in accordance with the order of DeTomaso J. It also clarifies that the respondent has indeed vacated 31 Forest Wood. In addition, the Minutes now include a new para. 4:
Any Order of the Court for custody, access or support is not necessarily final and may be varied by the Court if a change in circumstances occurs, in accordance with the Act under which the Order is made and the Rules of the Court
July 5, 2005 Letter from appellant’s solicitor indicating that “we are in agreement with the Minutes of Settlement save and except for paragraph 4, which we request be deleted”.
July to September Respondent’s solicitor met with respondent and the respondent signed three different versions of the Minutes of Settlement; the first and third delete paragraph 4 and the second does not. They are dated August 18; none were ever sent to the appellant.
September 6, 2005 Letter from respondent’s solicitor to appellant’s solicitor [letter is not included in materials and its contents are unknown]
September 8, 2005 Letter from appellant’s solicitor in response to the September 6 letter stating:
My client has instructed me to bring this matter [sic] initiate a court proceeding if we are not in receipt of completed Minutes of Settlement by September 16, 2005
October 5, 2005 Letter from respondent’s solicitor to appellant’s solicitor advising her that respondent was under doctor’s care and was unable to sign Minutes of Settlement.
October 11, 2005 Letter from appellant’s solicitor indicating that appellant is content that paragraph #4 remain and enclosing the signed Minutes of Settlement that had been sent by respondent’s solicitor in June.
October 19, 2005 Respondent enters residential treatment programme for alcoholism.
October 24, 2005 Order of DiTomaso J. made under Rule 14B granting judgment in accordance with Minutes of Settlement.
January 13, 2006 Letter from appellant’s solicitor dated December 22, 2005 faxed to respondent’s solicitor enclosing a draft final order and seeking the respondent’s approval.
January 31, 2006 Order of DiTomaso J. issued and entered.
February 3, 2006 Letter from respondent’s solicitor asking appellant’s solicitor not to have the draft order issued and entered.
3The respondent states that when she entered the residential treatment programme she was not aware that the appellant had signed the Minutes of Settlement, that she did not intend that those Minutes still be open for completion, and that she had instructed her solicitor that she would not agree to them.
4It appears that before the motion judge, counsel for the appellant argued that the Minutes of Settlement of June 22, 2005 were never withdrawn and were always open for acceptance, as they were when the appellant signed them on October 11, 2005. The motion judge held that when the appellant signed the Minutes of Settlement in October 11, 2005, they were no longer open for acceptance. Rather, it was apparent from the September and October correspondence that the parties were contemplating that new Minutes of Settlement be prepared. In the result, he was not satisfied “that the parties were ad idem at any point throughout the long negotiations”. It followed that the appellant was not entitled to simply sign the June Minutes of Settlement.
5Before this court, counsel for the appellant, who was not counsel before the motion judge, made a different argument. She submits that by May 16, 2005, the parties had reached a settlement because they had agreed on all of the essential terms. Counsel relies upon the decision of this court in Bogue v. Bogue (1999), 1999 CanLII 3284 (ON CA), 46 O.R. (3d) 1, which in turn relied upon this court’s decision in Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 79 D.L.R. (4th) 97. The critical passage from Bawitko is found at pp. 103-104:
As a matter of normal business practice, parties planning to make a formal written document the expression of their agreement, necessarily discuss and negotiate the proposed terms of the agreement before they enter into it. They frequently agree upon all of the terms to be incorporated into the intended written document before it is prepared. Their agreement may be expressed orally or by way of memorandum, by exchange of correspondence, or other informal writings. The parties may "contract to make a contract", that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.
However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. In other words, in such circumstances the "contract to make a contract" is not a contract at all. The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself.
6The appellant says that from May 16 the parties had agreed on all of the essential terms of the settlement, and the fact that there was some uncertainty about whether the written memorandum of those terms was open for signature is beside the point; the parties had made a contract. As in Bawitko, the fact that the parties contemplated that there was to be a formal written document to the same effect as the terms upon which the parties had agreed does not alter the binding validity of the original agreement or settlement.
7In our view, the motion judge did not err in finding that the June 22 Minutes were no longer open for acceptance. We would also not give effect to the slightly different argument made before us. We address that latter argument first.
8As the passage quoted above from Bawitko indicates, the intention of the parties is important in determining whether or not there was a final settlement that was merely to be recorded in a formal document. The term “intention” is not used in a subjective sense but rather to refer to whether “in the eyes of a hypothetical onlooker [the parties] appeared to have reached an agreement”: G.H.L. Fridman, The Law of Contract in Canada, 5th ed. (Toronto: Thomson Carswell, 2006), at p. 6. In making this determination, the court will look at the conduct of the parties at the time. As was said in Bawitko at p. 104, if in examining what transpired it is apparent that “execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself”, there is no contract, or in this case, no settlement.
9The course of conduct by both parties indicates that they viewed a formal document as essential and moreover, as held by the motion judge, that they had not agreed on the terms of that document. The appellant made this explicit in his solicitor’s letter of July 5, 2005 refusing to accept the Minutes of Settlement as drafted because of the inclusion of a term that had not been agreed upon, namely paragraph 4, concerning variation of custody, access and support. It may be said that paragraph 4 was extraneous and unnecessary because courts always retain the right to vary terms where there has been a change of circumstances in accordance with the governing legislation. However, the inclusion of the term was apparently important to the respondent and its exclusion was important to the appellant, who for many months was not prepared to finalize the settlement while that term remained part of the formal document. A reasonable observer could conclude that preparation of a mutually acceptable formal document was essential to the settlement. The course of conduct by the parties, especially the appellant in refusing to sign the June Terms of Settlement for over three months, simply reinforces this conclusion.
10The appellant submits that the motion judge found that there was no agreement and that the parties were not ad idem because he misapprehended the evidence. The appellant particularly relies upon para. 25 of the reasons:
On September 8, 2005 [the appellant’s solicitor] on behalf of the [appellant], demanded that new minutes be executed failing which court action would be taken. [The respondent’s solicitor’s] reply on October 5, 2005 also contemplates new minutes as she advises that her client is in no condition to sign minutes. This assertion is backed up by the [respondent’s] admission to Georgianwood soon after.
11The appellant submits that the motion judge misapprehended the meaning of the September 8 letter. He argues that the appellant’s solicitor was not asking for new Minutes of Settlement and denies that this letter was an indication that the parties had not agreed on the terms of the settlement. In our view, the motion judge did not misapprehend the evidence and in particular did not misapprehend the meaning of the September 8, 2005 letter. That letter demonstrates that the appellant was aware that the June Terms of Settlement were not intended as a final settlement of the dispute. There is no other way to interpret the request for completed Minutes of Settlement. If the June terms, which had been signed by the respondent, reflected the agreement reached by the parties, there would be no reason for the appellant to request a new document; all the appellant had to do at that point was sign the copy already signed by the respondent and return it to the respondent’s solicitor. We would therefore not give effect to the appellant’s principal submission.
12We are also satisfied that the motion judge was correct in finding that the June Minutes of Settlement were not open for acceptance in October. That the June terms were no longer open for acceptance as the formal record of the agreement is put beyond dispute by the letter from the respondent’s solicitor advising that her client was under the care of a physician and “unable to sign Minutes of Settlement”. It is apparent that both parties were no longer operating on the basis of the June Minutes of Settlement and that they did not intend for that document to be the formal record of their purported agreement. At all relevant times the parties considered that the terms of the intended formal agreement were not yet settled. See Bawitko at p. 104.
13We have not been persuaded that the motion judge erred in his findings of fact or that he misapplied the law.
14Accordingly, the appeal is dismissed with costs fixed at $6,000 inclusive of G.S.T. and disbursements.
Signed: “W. Winkler C.J.O.”
“M. Rosenberg J.A.”
“M. J. Moldaver J.A.”
