CITATION: Pilon v. Lavigne, 2016 ONSC 1965
DIVISIONAL COURT FILE NO.: DC-14-2055
DATE: 2016/03/22
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
FRANCOIS XAVIER PILON
Appellant (Defendant)
– and –
LINDA LAVIGNE
Respondent (Plaintiff)
Ashish Duvadie and Katherine O’Hagan, for the Appellant (Defendant)
Brian Wilson, for the Respondent (Plaintiff)
HEARD: March 16, 2016 (at Ottawa)
REASONS ON APPEAL DECISION
M. LINHARES DE SOUSA
INTRODUCTION
[1] The matter before the Court is an appeal from a decision of the Small Claims Court ordering the Appellant, Francois Xavier Pilon, to pay $12,000 to the Respondent, Linda Lavigne. On August 19, 2014, Deputy Judge Whitehall ruled, after hearing the evidence of both parties and interpreting all of the facts before him, that the loan agreement entered into between the parties in 2010 was not discharged by their subsequent separation agreement. He determined that Mr. Pilon continued to owe Ms. Lavigne $12,000 and gave judgment for that amount plus some pre-judgment and post-judgment interest. Deputy Justice Whitehall also granted Ms. Lavigne approximately $200 for her disbursements.
[2] Mr. Pilon seeks to have the judgment of Deputy Judge Whitehall overturned. Ms. Lavigne contests this appeal and seeks to have the appeal dismissed, the judgment of Deputy Judge Whitehall upheld and the garnishment that has been suspended against Mr. Pilon be resumed. In the alternative, Ms. Lavigne seeks an order transferring the matter to Family Court for a new trial. Ms. Lavigne also seeks her costs in this appeal on a substantial indemnity basis.
FACTUAL BACKGROUND
[3] The relevant facts from which this appeal arises are the following. The parties commenced cohabiting in February of 2010. In August of 2010 Ms. Lavigne lent Mr. Pilon the sum of $24,000. A loan agreement was entered into by the parties for that amount which included a schedule (spread sheet) and monthly payments to be paid by Mr. Pilon to Ms. Lavigne on the loan on an ongoing basis with a view to paying the money back. Payments on the loan by Mr. Pilon to Ms. Lavigne were made during the period of cohabitation, although it was found that payments on the loan by Mr. Pilon to Ms. Lavigne were not always made. The parties terminated their cohabitation in October of 2012. It was not disputed that at the time of separation Mr. Pilon still owed the amount of $12,000 on the loan agreement.
[4] During their cohabitation the parties jointly purchased the home in which they lived during their cohabitation. It was agreed between the parties that Mr. Pilon would sign over his interest in the home to Ms. Lavigne which was in fact done.
[5] On October 26, 2012, the parties signed a Separation Agreement effecting the buyout of their joint home. In addition to dealing with the buyout of the joint home, under the title of “Matrimonial Home” (paras. 34 to 41), the Separation Agreement also dealt with topics of spousal support (para. 26 – no spousal support to be paid), debts and obligations (paras. 27 to 29 - each party to be responsible for all debts incurred in his or her name etc.), assets and liabilities (paras. 30 to 31- each party to keep their personal belongings) and liabilities (paras. 32-33 each party to accept sole and exclusive liability for their own personal debts and not to pledge credit for the other).
[6] It is not disputed that both parties consulted a lawyer or had an opportunity to consult a lawyer with respect to the Separation Agreement prior to their signing it. It is also not disputed that the last paragraph under the section entitled “Matrimonial Home”, paragraph 41 was added at the last moment, at the insistence of Mr. Pilon. Ms. Lavigne did not seek out her lawyer’s advice with respect to this paragraph and signed the Separation Agreement with this last minute inclusion.
[7] Paragraphs 40 and 41 of the Separation Agreement read as follows:
Upon signing this agreement or by October 31, 2012 [Francois X Pilon] shall pay to Linda Lavigne an equalization payment of $4827.80 being an adjustment to the full and final satisfaction of entitlement to any and all claims against the Party previously covered in this agreement. This amount takes into account all property and net family property including but not limited to pension credits, and excludes the amount described for the sale or transfer of the matrimonial home.
Upon the transfer of funds and the deposit of the $4827.80 owed to Linda Lavigne, Francois X Pilon will be cleared of all moneys owing to Linda Lavigne.
[8] In August of 2013, Ms. Lavigne commenced an action in Small Claims Court claiming certain payments from Mr. Pilon were owed to her relating to some medical insurance claims. This issue has now been resolved and is not before the Court. Mr. Pilon acknowledged his debt for the medical insurance claim. In addition, Ms. Lavigne claimed the balance of the money due on the loan agreement entered into by the parties in August of 2010 and which had not yet been paid at the time of their separation, in the amount of $12,000.
[9] The matter came before Deputy Judge Whitehall who heard the evidence of the parties. Ms. Lavigne argued that the unpaid balance of $12,000 on the loan agreement was still due and owing. She further argued that it had not been her intention to waive that debt due and owing by signing the Separation Agreement.
[10] Mr. Pilon argued that paragraph 41 was intended and should be read as a waiver of the balance due on the loan agreement because it resulted in the payment of $4,827.80 and upon the payment of such sum paragraph 41 indicated that he, Mr. Pilon, “will be cleared of all moneys owing to Linda Lavigne”, including the $12,000 on the loan agreement.
[11] Neither party raised the issue of the jurisdiction of the Small Claims Court to hear the matter in the context of their cohabitation.
DECISION OF DEPUTY JUDGE WHITEHALL
[12] Deputy Judge Whitehall after receiving the evidence from both parties and examining the various clauses of the Separation Agreement concluded that the loan agreement was not discharged by the separation agreement. In coming to his conclusion, he relied on the Supreme Court of Canada decision Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 dealing with questions of mixed facts and law as well as parties’ intentions in the creation of a contract. The reasoning for his conclusion, found on pages 63 to 67 of the Proceedings at Trial, indicates that he looked at the parties’ Separation Agreement and would determine whether the intention of the parties was to discharge the loan agreement by the signing of the Separation Agreement. He indicated at page 66 of his decision, “What I have to do this afternoon is to interpret what is meant by the parties based on the words of the contract.”
[13] Deputy Judge Whitehall found that on the evidence before him, the amount and payment of $4,827.80 was specifically related to “... an adjustment to the full and final satisfaction of entitlement to any and all claims against the Party previously covered in this agreement.” And it took into account “all property and net family property including but not limited to pension credits, and excludes the amount described for the sale or transfer of the matrimonial home.” Deputy Judge Whitehall noted that the loan agreement was not specifically mentioned in that payment clause, nor was it mentioned anywhere else in the Separation Agreement. He concluded that, given the evidence of how the parties tracked the monthly payment of the loan agreement made by Mr. Pilon to Ms. Lavigne during the cohabitation, both parties were not of the same mind that the payment of $4,827.80, was intended to discharge the prior loan agreement entered into between the parties. He found that such a mutual intention would have been specifically mentioned and it was not. Rather, he concluded that the payment of $4,827.80 specifically and solely related to the transfer of the joint home.
[14] Deputy Judge Whitehall found that Mr. Pilon continued to owe Ms. Lavigne $12,000 and entered judgment against him for that amount.
POSITION OF THE PARTIES
[15] Counsel for Mr. Pilon argues on his behalf that the Small Claims Court lacked the jurisdiction to hear the matter and hence the Deputy Judge erred in proceeding with the hearing and exceeded his jurisdiction in doing so.
[16] Counsel for Mr. Pilon argues that because the money paid by Mr. Pilon, in the amount of $4,827.80, was pursuant to a separation agreement signed by the parties on October 26, 2012, the Superior Court of Justice, Family Division, has sole jurisdiction in matters dealing with domestic contracts.
[17] Counsel for Mr. Pilon relies on Section 21.8 of the Courts of Justice Act, R.S.O. 1990 c. C.43, which enumerates the legislation and the types of proceedings which would come within the jurisdiction of the Family Court of the Superior Court of Justice and which includes those,
- Proceedings for the interpretation, enforcement or variation of a marriage contract, cohabitation agreement, separation agreement, paternity agreement, family arbitration agreement or family arbitration award.
[18] In support of his position counsel for Mr. Pilon also relies on the jurisprudence presented in his Book of Authorities filed on this Appeal, whereby certain matters were found to be properly before Family Court and not the Small Claims Court.
[19] Counsel for Ms. Lavigne takes the position that Deputy Judge Whitehall did not exceed his jurisdiction and that this matter was properly before the Small Claims Court.
[20] Counsel for Ms. Lavigne submitted that the pith and substance of Ms. Lavigne’s claim for the $12,000 owed to her under the loan agreement was a claim in simple debt based on the contract of the loan agreement entered into by the parties in 2010. The claim was not created nor did it arise out of the Separation Agreement per se. Hence, counsel for Ms. Lavigne submitted, the Deputy Judge was not dealing with or interpreting the couples’ rights and obligations under a Separation Agreement.
[21] The reason that the Deputy Judge looked at the Separation Agreement at all was to determine whether the Separation Agreement made reference to the loan agreement in any way to suggest that the mutual intention of the parties under the Separation Agreement was to discharge Mr. Pilon’s obligation under the loan agreement. In fact, the Separation Agreement did not deal with the amount owed under the loan agreement at all. It was submitted by counsel for Ms. Lavigne that in view of the fact that the loan agreement was not dealt with, at all, in the Separation Agreement it could not be discharged by that agreement as the Deputy Judge so found. Furthermore, the question of whether the Separation Agreement discharged the loan agreement debt was raised by Mr. Pilon in his Defence. It did not in any way frame the presentation Ms. Lavigne’s claim to repayment on the loan agreement by Mr. Pilon.
[22] In support of his position counsel for Ms. Lavigne relies on the jurisprudence presented in his Book of Authorities filed on this Appeal, whereby certain matters were found to be properly before the Small Claims Court even in a matrimonial or common law cohabitation context.
JURISPRUDENCE
[23] Upon an initial reading of the jurisprudence presented by both counsel it might appear that there was identifiable conflict in the reported case law on this issue. However, upon a closer examination of those cases and the facts found in those cases, there is no conflict.
[24] Counsel for Mr. Pilon relies on the case of Saker v. Brown, [2007] O.J. No. 2023 (S.C.J.). In that decision Deputy Judge Searle found that he lacked jurisdiction to hear the matter pursuant to Section 21.8 of the Courts of Justice Act.
[25] The facts of that case revealed that the plaintiff sought compensation and reimbursement for numerous payments made by her during the course of a cohabitation and subsequent to the cohabitation. The Court found that, in essence, although not specifically pleaded in those terms, the claim was one for quantum meruit, with reference to “on going intentions and failed attempts to seek judicial relief for unstated claims arising out of their common law relationship and home ownership.”
[26] Deputy Judge Searle concluded at para. 10 with these words:
10 Jurisdiction is not a mere technicality. It is fundamental. Without jurisdiction a court cannot adjudicate. Jurisdiction is not something that can be conferred on a court by the consent or silence of the parties. In the opinion of this court the parties have cohabited and the main claim is one for a monetary award for unjust enrichment and jurisdiction over the proceeding is therefore solely in the Family Court.
[27] A stay of the action in Small Claims Court was therefore ordered.
[28] Counsel for Mr. Pilon further relies on the case of McCrone v. McCrone (2008), 58 R.F.L. (6th) 102, 2008 CarswellOnt 4869 (S.C.J.). The facts of that case revealed that a Plaintiff who had been legally married to the Defendant, sought relief in Small Claims Court for the payment of damages for certain debts and expenses arising out of a sale of a house which they had occupied together.
[29] Deputy Judge Winny determined in that case that the matter properly belonged in Family Court and not Small Claims Court based on Sections 21.1, 21.2, and 21.8. At para. 8 the Deputy Judge states:
8 In this case, it appears to me that the substance of the plaintiff’s claim is for a family law remedy to a family law dispute. Her claim could be characterized as one for support, for division of family property, or as incidental to the sale of the matrimonial home. In my view it is clear that no common law cause of action is pleaded and any applicable remedies lie under the Family Law Act (outside of Part V).
[30] In the last case relied on by counsel for Mr. Pilon, Kurtz v. Hueckroth (2014), 49 R.F.L. (7th) 210, 2014 CarswellOnt 10132, Deputy Judge Winny was again asked to consider whether Small Claims Court had the jurisdiction to consider a claim, in the context of a long cohabitation of a couple who were unmarried. The claim was for occupation rent for the matrimonial home from the date of the separation until the home was sold, during which both parties contributed equally to the cost of the home while one of them lived in the home and the other lived elsewhere. When the home was sold the net proceeds were divided equally as was provided for in a cohabitation agreement which the parties had signed. The cohabitation agreement also provided that both parties would release all present and future rights, claims and entitlements other than those provided in the contract.
[31] The plaintiff, who had been the party living out of the home for the period since the separation to the final sale of the home, subsequently brought a claim in Small Claims Court requesting relief in the payment of occupation rent for that period.
[32] In that case both parties plead the cohabitation agreement.
[33] Deputy Judge Winny raised the issue of jurisdiction before proceeding with the case. He proceeded with an examination of the nature of the claim before him. In concluding that he did not have jurisdiction to hear the matter he stated at para. 21 as follows:
21 In my opinion, the determinative factor in this case is the Cohabitation Agreement, which is a ‘domestic contract’ within the meaning of Part IV of the Family Law Act. The real substance of Mr. Kurtz’s claim is to set aside or vary that domestic contract, which may be pursued by application under s. 56(4). The plaintiff’s claim seeks a remedy that on its face is barred by clause 14 and amounts to an unequal division of proceeds contrary to the plain language of clause 17. I conclude that his claim triggers rule 1(2)(b) of the Family Law Rules and must therefore proceed in family court. The jurisdiction of the Small Claims Court is ousted.
[34] In another matter, Hipwell v. Agnew, [2010] O.J. No. 984, Deputy Judge Winny came to a different conclusion. On the facts of that case, the parties had lived together in a common law relationship and had children. The parties separated and entered into a Separation Agreement. The facts further revealed that during the course of the cohabitation one party advanced some monies to the other for the purchase of a vehicle.
[35] The repayment for those monies was now sought by the party who had advanced the funds and a claim was launched in Small Claims Court. Deputy Judge Winny after examining the nature of the claim found that the issue between the parties was whether the advancement of those monies was done by way of a loan or as merely financial assistance given with no expectation of repayment. There was no written agreement. Justice Winny concluded, at para. 7, that the claim as advanced “involves a severable common-law cause of action within this court’s monetary jurisdiction” and later at para. 13, “[T]his is a simple debt claim …”
[36] At an appellate level, the Ontario Superior Court of Justice was faced with the same jurisdictional issue in the case of Armellini v. Crook, 2013 ONSC 4735. On the facts of that case Deputy Judge Shaw had transferred a motion to set aside a default judgment to Family Court, ruling that the Small Claims Court did not have jurisdiction in a co-habitation family law matter. On appeal of that decision Justice McCarthy determined that Deputy Judge Shaw erred when he “characterized the claim as a “cohabitation family law matter” for the purposes of section 21.8(3) of the Act [Courts of Justice Act].
[37] At para. 8 of the decision, Justice McCarthy, after a close reading of the claim, determined that the relationship of the parties and the reasons for the claims served as part of the narrative of the salient facts in support of the claim. It was not a claim for an equitable remedy. It did not advance a claim for resulting trust, constructive trust or unjust enrichment. It was a claim, “in pith and substance” for a monetary amount of debt; it was a claim in debt. It was in effect within the jurisdiction of Small Claims Court.
[38] In Matteau v. Johnson, 2012 ONSC 1179, a decision of Deputy Judge Munn was appealed to the Ontario Superior Court of Justice. Deputy Judge Munn determined that she had jurisdiction to hear a matter involving a claim for the payment of moneys. The parties had lived together and separated and the claim allegedly was owed by one party against another under an oral agreement between them as well as some living expense debts.
[39] After examining the facts and the nature of the claim, Justice Wilcox upheld the decision of Deputy Judge Munn concluding among other reasons, the claim in question was not one of seeking relief by way of constructive or resulting trust or one based on unjust enrichment. Justice Wilcox states at para. 25:
25 Finally, I agree with Deputy Judge Munn that the claim discloses a common law cause of action. The claim could be characterized as one based in contract for the repayment of moneys lent. The Respondent appears to have waived the excess in order to bring the claim within the monetary jurisdiction of the Small Claims Court.
[40] Justice Wilcox dismissed the appeal.
ANALYSIS
[41] After examining the jurisprudence, I must conclude that there is no conflict in the case law for the determination of the issue before this Court. The approach applied by all the courts in the jurisprudence described above is similar and principled. It is first necessary to determine the true character or nature of the claim in question, or as one court put it, one must determine the “pith and substance” of the claim.
[42] If the pith and substance of the claim is one that arises out of or is created by the “family law relationship” (by way of marriage or by way of cohabitation), then such claims would be caught by the operation of s. 21.8 of the Courts of Justice Act. Some examples of such claims are recognized in the jurisprudence mentioned earlier and include the following types of claims, unjust enrichment for a joint venture, constructive trust and resulting trust claims, support, monies relating to dealing with a matrimonial home qua matrimonial home within the meaning of the Family Law Act, monies and debts claimed by operation of s. 5 of the Family Law Act in the calculation of an equalization payment. These claims would not be within the jurisdiction of the Small Claims Court and properly brought before Family Court.
[43] If on the other hand, the “family law relationship” is merely the context and part of the narrative of the claim in issue, then, assuming that the claim is a recognized one in law, a common law cause of action, that is within the monetary limit of Small Claims Court then the Small Claims Court will have jurisdiction to hear the matter. Examples of these claims are those that frequently featured in the case law mentioned earlier, a simple debt, a common law claim for money’s lent based on a contract or expectation of repayment.
[44] Deputy Judge Whitehall examined the claim before him based on the evidence presented by both parties. His conclusion was that the essence of the claim before him was one of simple debt. I cannot find that he erred in arriving at that conclusion. It was a conclusion solidly supported by the evidence. The parties had clearly entered into a loan agreement for the moneys advanced to Mr. Pilon by Ms. Lavigne. That the intention of the parties, upon entering into that loan agreement, included an expectation of repayment was not disputed. During their cohabitation a flow chart was kept of the regular monthly payments made by Mr. Pilon to Ms. Lavigne during the cohabitation right up to the date of separation of the couple when the payments stopped. It was also not disputed that $12,000 was still owing on the loan by Mr. Pilon to Ms. Lavigne at the time of the separation.
[45] The parties subsequently entered into a Separation Agreement. The Separation Agreement substantially and almost wholly deals with the resolution of the buyout of the parties’ jointly owned matrimonial home during the course of their separation, which they were free to do and which clearly dealt with a separate distinct issue between the parties arising out of the joint purchase of that property and their cohabitation in that property. On the facts, this is the context of the signing of the Separation Agreement which was supported by the evidence. The parties are able to enter into other contracts, such as a Separation Agreement besides or in addition to the loan agreement. The signing of subsequent agreements does not negate or override earlier agreements unless it is clear that that is the joint intention of the parties.
[46] The Separation Agreement makes no mention of the original loan agreement. In fact, on the plain reading of paragraph 32 each party was to accept “sole and exclusive liability for their own personal debts”. Mr. Pilon acknowledged the expectation of the repayment of the loan agreement of 2010 and his monthly periodic repayment of the loan agreement up to the date of separation show that. There is no question that when the Separation Agreement was signed to resolve the issue of their joint property, the loan agreement was the sole and exclusive personal debt of Mr. Pilon to Ms. Lavigne.
[47] It is clear from Deputy Judge Whitehall’s reasons that the sole purpose of examining and considering the Separation Agreement at all was for the purpose of determining whether the Separation Agreement discharged, forgave or somehow merged the $12,000 owed by Mr. Pilon to Ms. Lavigne into the payment of $4,827.80 he was required to pay her for the buyout of their joint matrimonial home shared by them during their cohabitation. I can take no issue with the Deputy Judge’s reasons for concluding that it did not.
[48] In this case, I conclude that the pith and substance of Ms. Lavigne’s claim against Mr. Pilon relating to the repayment of the balance of the loan agreement which they entered into in 2010, is a common law claim in contract, “a simple debt” as a number of the cases put it. The claim does not arise from nor was it created by the parties’ cohabitation. It arose rather from a discrete common law contract that occurred during their cohabitation. The cohabitation is the context and part of the narrative of this case vis-à-vis the claim.
[49] The claim does not arise from nor was it created by the Separation Agreement. In fact, it predated the Separation Agreement. Any reference to or use of the Separation Agreement made by the Deputy Judge in making his decision was merely to determine whether the parties intended to deal with the loan agreement as part of the Separation Agreement which they clearly did not because of the total absence of any mention of it in the Separation Agreement.
DISPOSITION
[50] For these reasons, I cannot find that Deputy Judge Whitehall erred in hearing this matter. The claim in issue did not arise out of a Separation Agreement between the parties but rather was a common law action in debt arising out of a loan agreement entered into by the parties in 2010. The matter was properly before Small Claims Court and the Deputy Judge had the jurisdiction to make the order which he did. I can find no error in his conclusion. The appeal is dismissed. The judgment of Deputy Judge Whitehall is upheld and the garnishment that has been suspended against Mr. Pilon is to be resumed.
COSTS
[51] The last issue to be dealt with is costs. Mr. Pilon shall have two weeks from the release of this decision to serve and file his written submissions on costs, including any offers to settle. Ms. Lavigne shall have two weeks from that date to serve and file her written submission on costs, including any offers to settle. Mr. Pilon shall then have one week from that date to make any reply, if he so chooses.
M. Linhares de Sousa J.
Released: March 22, 2016
CITATION: Pilon v. Lavigne, 2016 ONSC 1965
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
FRANCOIS XAVIER PILON
Appellant (Defendant)
– and –
LINDA LAVIGNE
Respondent (Plaintiff)
REASONS ON APPEAL DECISION
M. Linhares de Sousa J.
Released: March 22, 2016