Court of Appeal for Ontario

Date: 2017-05-01 Docket: C62677

Judges: Doherty, Benotto and Trotter JJ.A.

Between

Katherine Joanne Ernikos Applicant (Appellant)

and

Anastasios Ernikos and Antonia Ernikos Respondents (Respondents)

Counsel

Frances Wood and Areesha Zubair, for the appellant

Jose Bento Rodrigues, for the respondent, Anastasios Ernikos

Howard W Reininger, for the respondent, Antonia Ernikos

Heard: April 26, 2017

On appeal from: The judgment of Justice Meridith Donohue of the Superior Court of Justice, dated August 17, 2016.

Endorsement

Overview

[1] The parties were married in 1997. They separated in 2006. In March 2007, they settled all matters arising out of their marriage and incorporated the terms into Minutes of Settlement. Pursuant to the terms of the Minutes of Settlement, the appellant (wife) transferred her ownership in the matrimonial home to the respondent (husband).

[2] The parties reconciled at the end of May 2007. In August 2007, the wife received a $135,000 disability payment from her insurance company and deposited it into the husband's bank account. He, in turn, paid the household bills. In 2010, the husband transferred ownership of the former matrimonial home to his mother (also a respondent).

[3] The parties separated in 2013. The wife sought an equalization of net family property and an interest in the former matrimonial home on the basis of a resulting, implied or constructive trust.

[4] The trial judge held that the Minutes of Settlement precluded any future equalization payment and that the wife had failed to establish any trust interest in the former matrimonial home.

[5] On appeal, the wife argues that: (i) the trial judge erred in not considering the validity of the Minutes of Settlement because it was not pleaded; (ii) the trial judge erred in finding that the division of property under the agreement survived reconciliation; and (iii) the trial judge improperly dismissed her trust claim.

Amendment to Pleadings

[6] The wife alleges that the trial judge should have allowed her to amend her application to include a request to set aside the Minutes of Settlement. We reject this submission for two reasons.

[7] First, the trial judge confirmed – on several occasions – that the wife was not challenging the validity of the agreement; rather, she was challenging whether it was complied with. Second, the wife presented no facts that would support a claim under s. 56(4) of the Family Law Act, R.S.O. 1990, c. F.3. That section sets out when a court can set aside a separation agreement and provides a two-step process:

Step 1: The court considers if there was non-disclosure; if a party did not understand the agreement; or if the agreement should be set aside otherwise in accordance with the law of contract.

Step 2: If any of the circumstances in Step 1 exist, then the court determines if it is appropriate to exercise its discretion to set aside the agreement.

[8] These criteria were not addressed in evidence. The wife was given the opportunity to amend her pleadings and present the evidence and chose not to. The validity of the separation agreement was therefore not in issue at trial and we see no error in the trial judge's determination of this issue.

The Equalization Claim

[9] The appellant submits that the trial judge erred in dismissing her equalization claim on the basis that – having upheld the validity of the Minutes of Settlement – there could be no further equalization.

[10] The Minutes of Settlement provide that, upon reconciliation, the transfers or payments made would remain valid and that no party would be entitled to an equalization of net family property under the Family Law Act. In particular, the Minutes of Settlement state:

14.2: If [the parties] agree to try and reconcile their relationship but they cohabit for no longer than 90 days, the Agreement will not be affected. If they cohabit for more than 90 days, the Agreement will become void, except that any transfers or payments made to that time will not be affected or invalidated.

14.3: In the event that the parties try to reconcile their relationship and cohabit for more than 90 days, the parties agree that none of the property or debts in the name of [either party] will be included in the net family property of the parties as defined by the Family Law Act. If there should be a breakdown of the relationship or marriage of the parties, or if one of the parties dies, neither party shall be entitled to an equalization of net family property as calculated pursuant to the Family Law Act.

[11] The common law rule is that a separation agreement becomes void upon reconciliation of the parties. In Sydor v. Sydor, 178 O.A.C. 155, this court determined that parties could contract out of the common law. If they specifically state their intentions to have a separation agreement survive reconciliation, the agreement is not rendered void. The wife submits that Sydor does not apply because paras. 14.2 and 14.3 of the agreement are not clear. She submits that the phrase in para. 14.2 that the agreement will be void upon reconciliation is inconsistent with the provision in para. 14.3 that there will be no future equalization. We do not agree. The two clauses, read together, indicate a clear intention to exclude all future property from equalization.

The Trust Claim

[12] The appellant submits that the trial judge erred in not awarding her a 50 percent interest in the former matrimonial home, which is currently in the name of her mother-in-law. She bases her submission on her evidence that the disability payment she gave to her husband upon reconciliation was used to pay off the mortgage of $28,000 on the home and that, by operation of the presumption of resulting trust, she is an owner of the home.

[13] We do not accept this submission. There is no evidence that the wife transferred money to the husband's mother. A claim for a resulting trust – if it exists at all – would be against the property in the husband's name. However, at trial the wife did not put forth a claim for a beneficial interest in the bank account or other property owned by the husband, nor did she present evidence to support it. There was no evidence of an intention on her part to retain a beneficial interest in the funds.

Disposition

[14] The appeal is dismissed with costs payable to the husband in the amount of $6,000 and to the husband's mother in the amount of $5,000. Both amounts are inclusive of disbursements and HST.

"Doherty J.A."

"M.L. Benotto J.A."

"G.T. Trotter J.A."