COURT OF APPEAL FOR ONTARIO
DATE: 20200331 DOCKET: C66482, C66483, C66075
Tulloch, van Rensburg and Zarnett JJ.A.
BETWEEN
Nicole Peerenboom Applicant (Respondent)
and
Robert Peerenboom and Harold Peerenboom Respondents (Appellants)
AND BETWEEN
Nicole Peerenboom Applicant (Respondent)
and
Robert Peerenboom and Harold Peerenboom Respondents (Appellant)
Counsel: Symon Zucker, for the appellant Harold Peerenboom Nancy J. Tourgis and Laney Paddock, for the appellant Robert Peerenboom Dani Z. Frodis, for the respondent
Heard: February 5, 2020
On appeal from the orders of Justice J. Patrick Moore of the Superior Court of Justice, dated October 1, 2018, with reasons reported at 2018 ONSC 5796, 16 R.F.L. (8th) 451, and December 20, 2018, with reasons reported at 2018 ONSC 7562, and the costs order, dated February 22, 2019.
van Rensburg J.A.:
The Appeals
[1] These reasons address three appeals arising out of proceedings following the breakdown of the marriage between the appellant, Robert Peerenboom (“Robert”) and the respondent, Nicole Peerenboom (“Nicole”). The appeals are from orders made by Moore J. following two trials heard one after the other.
[2] The first trial, in proceedings commenced by Nicole in 2016 (the “Civil Action”), was to determine the validity of a default judgment obtained by the appellant, Harold Peerenboom (“Harold”), Robert’s father, against Robert. The trial judge ruled against Nicole and refused to set aside the default judgment. There is no appeal from the dismissal of the Civil Action and the award of costs against Nicole.
[3] The second trial was in the matrimonial proceedings commenced by Nicole in 2014.
[4] Nicole added Harold as a respondent to the matrimonial proceedings. Ultimately, the trial judge granted an order in favour of Nicole, staying enforcement of the writ of execution Harold obtained under his default judgment against the home she and Robert occupied in Toronto on Old Forest Hill Road (“OFH”). Harold appeals that order in Appeal C66482.
[5] At the commencement of the matrimonial trial, the trial judge made an order, on Nicole’s motion, striking Robert’s pleadings. Robert appeals that order in Appeal C66075.
[6] Assuming that the order striking his pleadings is set aside, or he is otherwise permitted to advance his appeal before this court, Robert, in Appeal C66483, appeals two aspects of the trial judge’s final order: the award to Nicole of a one-half interest in OFH under the parties’ domestic contract, and the equalization payment of $87,734 in favour of Nicole. He also seeks to appeal the costs award.
Relevant Facts
[7] The facts relevant to the three appeals can be briefly stated.
[8] Robert and Nicole married in 2002 and separated in 2013.
[9] In October 2003, Mandrake Properties Inc. (“MPI”), a company controlled by Harold, purchased OFH for $1.3 million. Robert and Nicole and their children moved into the home in April 2004. For the first several years, they rented OFH, paying monthly rent of $2,000 to MPI. The house was transferred from MPI to Robert on October 30, 2008 at a price of $1.2 million, with title taken in Robert’s name. Harold paid the down payment of $250,000, and the balance was provided by a bank loan, secured by a $950,000 mortgage. In February 2015, Harold advanced Robert $200,000, secured by a mortgage on OFH. Nicole consented to the mortgage. In October 2017, OFH was appraised at $2.93 million.
[10] On October 15, 2007, and at a time when there were difficulties in the marriage, Robert and Nicole entered into a domestic contract (the “Domestic Contract”). The parties subsequently disagreed about whether the effect of the Domestic Contract was to provide Nicole with a one-half interest in OFH on marriage breakdown. More on this will follow later in these reasons.
[11] Before the couple’s separation, Harold subsidized an affluent lifestyle for Robert and his family. While Harold provided many gifts of money, he also made loans to Robert, documented by promissory notes, dated between 2008 and 2015. Harold did not demand repayment of the loans before the separation.
[12] On August 22, 2014, Nicole registered a matrimonial home designation on title to OFH.
[13] On March 31, 2015, Harold sent Robert a notice of demand for payment, and Robert signed an acknowledgment of the debts he owed his father. Harold commenced an action against Robert on June 3, 2015 and obtained default judgment for $948,840 on August 27, 2015. A writ of execution was issued on August 31, 2015, filed with the sheriff of the City of Toronto and entered in the sheriff’s electronic database.
[14] At the opening of trial in the Civil Action, Nicole moved to add a request for relief, seeking to set aside Harold’s writ of execution as against OFH. The trial judge denied the motion and directed that this issue be determined in the matrimonial proceedings.
[15] Nicole was unsuccessful in the Civil Action. The trial judge dismissed the Civil Action, with costs, concluding that the default judgment was not a sham, as it accurately described the legal relationship between Harold and Robert by virtue of the promissory notes. The trial judge also found that there was insufficient evidence that Harold and Robert had an agreement to deprive Nicole of her spousal rights. More on the findings in the Civil Action will follow later in these reasons.
Harold's Appeal
[16] Harold appeals the order of the trial judge staying the writ of execution dated August 31, 2015, in relation to his default judgment. He essentially makes two arguments in this appeal.
[17] First, Harold submits that a writ of execution is not an “encumbrance” within the meaning of this term in ss. 21 and 23 of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”), such that the trial judge was without authority to stay his writ of execution. Harold also contends that the circumstances did not warrant relief under s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), that s. 106 was not relied upon in the judgment, and that relief under this provision was not available in any event because it had not been sought by Nicole.
[18] Second, Harold asserts that the trial judge’s decision to stay the writ of execution reflects a palpable and overriding error because it was inconsistent with findings the trial judge made in dismissing the Civil Action. He argues that, as the trial judge had already determined that the loans underlying Harold’s judgment were bona fide, and that there was a legitimate commercial intent in respect of the loans, there was no basis to stay the execution of his judgment.
Analysis
The Stay of the Writ of Execution
[19] I will first address Harold’s argument concerning the appropriate authority for the trial judge’s order.
[20] In staying the writ of execution, the trial judge referred to provisions of the FLA, in particular ss. 21 and 23. Subsections 21(1), (2), and 23(d) of the FLA provide as follows:
21(1) No spouse shall dispose of or encumber an interest in a matrimonial home unless,
(a) the other spouse joins in the instrument or consents to the transaction;
(b) the other spouse has released all rights under this Part by a separation agreement;
(c) a court order has authorized the transaction or has released the property from the application of this Part; or
(d) the property is not designated by both spouses as a matrimonial home and a designation of another property as a matrimonial home, made by both spouses, is registered and not cancelled.
(2) If a spouse disposes of or encumbers an interest in a matrimonial home in contravention of subsection (1), the transaction may be set aside on an application under section 23, unless the person holding the interest or encumbrance at the time of the application acquired it for value, in good faith, and without notice, at the time of acquiring it or making an agreement to acquire it, that the property was a matrimonial home.
- The court may, on the application of a spouse or person having an interest in property, by order,
(d) direct the setting aside of a transaction disposing of or encumbering an interest in the matrimonial home contrary to subsection 21(1) and the revesting of the interest or any part of it on the conditions that the court considers appropriate.
[21] Subsection 21(1) of the FLA applies to dispositions and encumbrances made by a spouse without the consent of the other spouse.
[22] The term “encumbrance” may have different meanings, depending on the context. As used in the FLA, “encumbrance” has been interpreted by this court to include “a burden on property, a claim, a lien or liability attached to the property”, but to require more than simply incurring a debt or entering into a loan agreement: Bank of Montreal v. Bray (1997), 36 O.R. (3d) 99 (C.A.), at pp. 113-114.
[23] It is beyond the scope of this appeal to fully explore the extent of the rights a writ of execution affords a judgment creditor when the judgment debtor holds title to land. It is sufficient to say that the writ provides an enforcement mechanism, binding the land against which it is issued once the sheriff has complied with the statutory obligations listed at s. 136(1) of the Land Titles Act, R.S.O. 1990, c. L.5: Land Titles Act, s. 136(2); Execution Act, R.S.O. 1990, c. E.24, s. 10(1). A writ of execution permits the judgment creditor to seize and sell the property: Execution Act, s. 9(1). While some consider that, from a practical perspective, an execution, in effect, “creates a lien against title to land” (see e.g. Marguerite E. Moore, Title Searching and Conveyancing in Ontario, 7th ed. (Toronto: LexisNexis, 2017), at c.12 (QL)), the lien is not an interest in land per se but rather in the proceeds of sale of the debtor’s interest in such lands: see Ferrier v. Civiero (2001), 147 O.A.C. 196 (C.A.), at para. 8 (dealing with the sheriff’s application for partition of property jointly held); Ferrier v. Wellington (County) Sheriff (2003), 40 C.P.C. (5th) 344 (Ont. S.C.), at para. 45 (upholding an order setting aside a certificate of pending litigation against the same property).
[24] The matrimonial home occupies a special place in family relations: Bank of Montreal, at p. 113. Sections 21 and 23 of the FLA are intended to protect the interests of spouses in matrimonial property by prohibiting unilateral dealings that threaten to interfere with their interest: see Walduda v. Bell (2004), 7 R.F.L. (6th) 205 (Ont. S.C.), at para. 14.
[25] While a writ of execution may be an “encumbrance” within the meaning of that term in ss. 21 and 23(d) of the FLA, there is an issue as to whether, and in what circumstances, a writ of execution by a third-party creditor can be an “encumbrance” by a spouse. Under s. 23(d) of the FLA, the court may set aside a transaction encumbering an interest in a matrimonial home, and revest the interest if the encumbrance occurred contrary to s. 21(1) – that is, contrary to the prohibition against a spouse encumbering the interest without the consent of the other spouse. Therefore, to engage this section, the spouse must have done something to directly encumber the interest in the matrimonial home. As such, this provision does not typically apply to executions by third-party creditors: see Maroukis v. Maroukis, [1984] 2 S.C.R. 137, at p. 144.
[26] It is unnecessary in this case to determine whether there are circumstances in which ss. 21 and 23 of the FLA would apply to an execution by a third-party creditor. Assuming, without deciding, that these provisions could be available to permit the court to stay an execution by a third-party creditor, they would only be available where the court can conclude that, by virtue of the execution, the spouse effectively encumbered the interest in the matrimonial home.
[27] For example, in Walduda the spouse borrowed money from her sister to fund the litigation against her husband – knowing that she would be unable to repay the debt – and then consented to judgment in the action to recover the debt. In these circumstances, the application judge found that the spouse had entered into the transaction with the intent of tying up the interest in the matrimonial home. The spouse used the third-party transaction to encumber the matrimonial home, thereby doing indirectly what she could not do directly.
[28] In this case, and unlike the spouse in Walduda, Robert did not execute the promissory notes that led to the judgment for the purpose of tying up Nicole’s interest in the matrimonial home. As noted by the trial judge in the Civil Action, the debts behind the promissory notes were “legitimate marital debts”. Moreover, there is no evidence that Robert was using the debt he owed Harold to encumber OFH. Harold did not consult or confer with Robert before he sued or executed on the judgment and Robert chose not to defend Harold’s claim only after obtaining legal advice that led him to believe that there were no valid defences to Harold’s claim. The fact that Harold knew of Nicole’s interest in the matrimonial home is not sufficient to engage s. 21(1) of the FLA. Speaking of a comparable provision under Nova Scotia’s legislative framework, Bryson J.A. noted that it “contemplates some positive act by an owner that grants an interest to a third party”, and he concluded that third party judgments would not be caught “merely because a creditor knows that a debtor owns a matrimonial home”: Hurst v. Gill, 2011 NSCA 100, 342 D.L.R. (4th) 583, at paras. 65-66.
[29] In my view, the requirements of s. 23(d) of the FLA were not met in this case because Harold’s writ of execution was not an encumbrance of the matrimonial home by Robert. As such, the trial judge ought not to have stayed the writ of execution under that provision.
[30] Nevertheless, as I will explain, the stay of the execution of Harold’s judgment was justified under s. 106 of the CJA. Section 106 provides that “[a] court on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just”. This general authority of the court to stay a proceeding can be applied to the enforcement of a judgment. See Zanetti Estate v. Roltford Developments Ltd., [1990] O.J. No. 2584 (S.C.); Buttarazzi v. Buttarazzi (2009), 84 R.F.L. (6th) 240 (Ont. S.C.); and 1247902 Ontario Inc. v. Carlisle Power Systems Ltd., [2003] O.J. No. 6300 (Div. Ct.), at para.10, aff’d .
[31] Harold submits that the circumstances of this case did not meet the high threshold for relief under this provision, and that it would be inappropriate to uphold the stay under the CJA because it was not relied on by Nicole.
[32] I disagree. The court’s authority under s. 106 to stay the execution of a judgment was before the court at trial. Although the trial judge expressly relied on the FLA provisions when granting the stay, he adverted to the authority under s. 106 of the CJA when referring to the Buttarazzi case, stating at para. 175:
[Buttarazzi] confirmed that it is important that spouses are well and truly advised that an execution creditor who is not at arm’s length and who takes with notice of a competing spouse’s claim does so subject to the court’s discretion and the court’s discretion can be exercised by an order setting aside the offending judgment or by a stay of execution per section 106 of the Courts of Justice Act. In the result, the court stayed execution of the judgment.
[33] In any event, it is appropriate to determine whether the trial judge’s order, if not properly made under the FLA, was nevertheless a proper exercise of discretion under s. 106 of the CJA: see CJA, s. 134(1)(a); L.M. v. Peel Children’s Aid Society, 2019 ONCA 841, at para. 54; and Ontario (Attorney General) v. 855 Darby Road, Welland (In Rem), 2019 ONCA 31, 431 D.L.R. (4th) 243, at para. 30.
[34] A stay of execution of a judgment may be granted in rare circumstances where the conduct of the judgment creditor is oppressive or vexatious or an abuse of process of the Court, and where the stay would not cause an injustice to the plaintiff: 1247902 Ontario Inc., at paras. 8, 10, citing Gruner v. McCormack (2000), 45 C.P.C. (4th) 273 (Ont. S.C.), at para. 30, per Epstein J. This test for the stay of proceedings was cited with approval by this court in Yaiguaje v. Chevron Corporation, 2013 ONCA 758, 370 D.L.R. (4th) 132, at paras. 54-55, aff’d 2015 SCC 42, [2015] 3 S.C.R. 69, a case involving the stay of an action for the enforcement of a foreign judgment.
[35] Contrary to Harold’s submission, I do not agree that the trial judge “lowered the bar” for granting a stay of the execution of his judgment. The trial judge did in fact articulate and apply the appropriate test. He stated, at para. 180:
In the instant case it is clear that Harold took legal advice and then instituted his action to crystalize Robert’s debt to him as supported by the promissory notes. Nicole submits, and I accept as proven, that the enterprise Harold put in place in order to obtain the default judgment was initiated because of Nicole and more specifically what Harold considered to be her greed and Harold’s belief that she had reneged on various agreements. Harold specifically acknowledged that he was aware of Nicole’s matrimonial home designation and her court application seeking an interest in the matrimonial home and that this was the only method by which he could have obtained an encumbrance against [OFH] without Nicole’s consent. As well, Harold knew that Robert could not repay him the amount claimed (except from the equity in the home) and he was upset at Nicole for claiming an interest in the home, which he had put money into. The default judgment had nothing to do with actually securing repayment from Robert and everything to do with ensuring that the equity in the home was put beyond Nicole’s reach.
[36] The distinctive factor in this case is that, although Harold had legitimate claims against Robert that he was entitled to pursue, and had obtained a valid judgment, there was no question that his objective in enforcing the judgment by filing the writ of execution against OFH was to put the equity in the home beyond the reach of Nicole. Harold was not entitled to pursue Nicole for the debts, as his judgment was against Robert only, who had signed the promissory notes. Although Harold had advanced money for the purchase and improvement of OFH, he could not have obtained a mortgage against the property without Nicole’s consent (as he had done in 2015 in respect of a $200,000 mortgage obtained with Nicole’s agreement). Harold not only pursued the execution of his judgment against OFH with knowledge of Nicole’s claims, he did so for the purpose of defeating her claims.
[37] A stay of execution of Harold’s judgment against OFH was warranted in this case. In essence, where Harold took the steps he did admittedly to “secure” repayment of the loans, and where he could not have obtained a mortgage against the home without Nicole’s consent, filing a writ of execution against the home would permit him to do indirectly what he could not do directly.
[38] Accordingly, I would not interfere with the trial judge’s stay of execution of the default judgment against OFH.
Inconsistent Findings
[39] I now turn to Harold’s argument that a stay of the writ of execution was inconsistent with the trial judge’s findings in the Civil Action.
[40] Harold submits that the trial judge had determined in the Civil Action that the debts in respect of which the promissory notes were issued were “legitimate marital debts”, that Harold was not trying to interfere with Nicole’s rights, and that there was no collusion. Moreover, he argues that the trial judge affirmed the writ of execution as a legitimate transaction and, in his costs decision, concluded that there was no malfeasance or bad faith on the part of Harold. According to Harold, in these circumstances, it was a palpable and overriding error for the trial judge to grant the stay of execution.
[41] I do not accept this argument. There is nothing in the trial judge’s findings in the Civil Action upholding Harold’s judgment or in his costs decision that would preclude a stay of an execution that was for the sole purpose of preventing Nicole from obtaining what she was entitled to under the Domestic Contract.
[42] There is no contradiction between the trial judge’s finding in the Civil Action that the debts behind the promissory notes were “legitimate marital debts”, and his conclusions in the matrimonial proceedings that the transactions in creating the promissory notes were “not commercial transactions” and that the default judgment had “everything to do with ensuring that the equity in the home was put beyond Nicole’s reach”. The trial judge specifically reserved the question of the enforceability of the judgment against OFH in his reasons in the Civil Action. He stated, at para. 40:
The matter of whether Harold can enforce the default judgment against Robert and the writ of execution lodged against Robert’s ownership in [OFH] and/or in priority to Nicole’s spousal interests will be determined in the matrimonial litigation.
[43] Harold asserts that his intention in obtaining the judgment, which was found to be legitimate in the Civil Action, simply carried through in his enforcement of the judgment through the writ of execution. He argues that his execution against OFH was justified by the significant monies he had contributed to the acquisition and improvement of the property – in this sense, it was a legitimate commercial transaction. I disagree. Although Harold’s money went into the purchase and improvement of OFH, his loans were to Robert, not to Nicole. Robert alone signed the promissory notes. Even if Harold wanted to recover against Nicole, he had no right to do so. His pursuit of the execution in the circumstances, apart from the fact that it was between non-arm’s length parties, could not be described as a “legitimate commercial transaction” because it was motivated by his desire to recover against Nicole’s interest.
Robert's Appeal of the Order Striking His Pleadings
[44] At the hearing of Robert’s appeal of the order striking his pleadings, his counsel indicated that, if Robert were successful, he was not seeking to reopen the matrimonial application, and to have a new trial. Rather, he proposed to argue, and to have this court determine on a final basis, the limited issues raised on his appeal, based on the existing record.
[45] We decided to give Robert a right of audience on the issues in his appeal. As such, his appeal of the order striking his pleadings is of no practical effect and it is unnecessary to address this appeal in detail. It is therefore sufficient to state briefly why I conclude that there was no error, and then to explain why, in any event, we granted Robert a right of audience on the limited grounds he is appealing.
[46] Robert’s pleadings were struck at the outset of the matrimonial trial, on Nicole’s motion. There were two bases for the motion: Robert’s non-compliance with costs orders, including the order of Hood J., dated December 18, 2017, requiring Robert to pay Nicole $150,000 for her interim costs and disbursements (he paid her $30,000 on the eve of trial), and Robert’s breach of his financial disclosure obligations, including those ordered by Goodman J. on November 10, 2015. In making his decision, the trial judge considered and rejected Robert’s arguments, including arguments made to this court: that he had not in fact breached his disclosure obligations, and that he was impecunious.
Analysis
[47] A decision to strike pleadings and to deny participation at trial is entitled to deference if exercised on proper principles and in the absence of a material misapprehension of the evidence: Purcaru v. Purcaru, 2010 ONCA 92, 75 R.F.L. (6th) 33, at paras. 49-50; Chiaramonte v. Chiaramonte, 2013 ONCA 641, 370 D.L.R. (4th) 328, at para. 33. Robert has failed to demonstrate any such error here.
[48] First, the trial judge cited and applied the correct test. He did not lower the threshold, as Robert asserts. He recognized that striking pleadings is a remedy of last resort, which is justified only in exceptional circumstances and where no other remedy would suffice: Chiaramonte, at paras. 31-32.
[49] Second, the trial judge carefully considered the evidence with respect to Robert’s defaults, which were significant. His finding that the defaults were wilful was supported by the evidence and is entitled to deference.
[50] The argument that Robert had an excuse for non-compliance with outstanding orders to pay costs was properly rejected. It had already been determined that Robert had the ability to pay the costs ordered, namely when each of the four judges who made such orders rejected Robert’s argument of impecuniosity. The trial judge properly concluded that it was not open to Robert to make this argument once again, in response to the motion to strike.
[51] As for Robert’s argument that he was only in default of Hood J.’s order for nine days, the order, although stayed while Robert pursued an appeal of it, was made in December 2017, nine months earlier. Robert ought to have known that he might well not succeed in the appeal, and that the order would be operative as soon as the appeal was disposed of. It was also plain that the purpose of the order was to provide Nicole with funds so that her counsel could prepare for and attend at trial. The trial judge reasonably considered whether Robert made any efforts to comply with the order and whether his assertions that he was unable to pay were true and made in good faith.
[52] As for Robert’s failure to make full financial disclosure, the trial judge properly found that he remained in default of certain obligations under the Goodman J. order, dated November 10, 2015. Contrary to Robert’s argument, the order did not limit or constrain his financial disclosure obligations. Moreover, there was no error in the trial judge’s conclusion that Robert was not justified in refusing to value certain property on the basis that it was excluded under the Domestic Contract: see Montemarano v. Montemarano, 2018 ONSC 1481, 10 R.F.L. (8th) 212, at para. 47.
[53] Finally, the striking of pleadings was a proportionate response to Robert’s defaults. The Hood J. order contemplated that Nicole would have the funds sufficient to proceed with the matrimonial trial. Robert’s default therefore prejudiced her ability to proceed with the litigation. In addition, as noted by the trial judge, Robert had a history of non-compliance with costs orders and disclosure obligations. The trial judge considered that the alternative remedy proposed by Robert – the sale of OFH to fund the outstanding costs awards – would not be appropriate in the circumstances. The trial judge was well-positioned to understand the implications of the order striking Robert’s pleadings for the trial of the issues that were before him.
[54] Despite his pleadings being struck, Robert’s evidence and position were before the court. His updated financial statement was filed as an exhibit by Nicole. The transcript of his evidence from the trial of the Civil Action was entered as evidence in the trial of the matrimonial proceedings. Robert was called as a witness by Harold, and he provided oral evidence over several days. Moreover, Harold’s closing submissions addressed various issues relevant to Robert’s position in the matrimonial proceedings, including the interpretation of the Domestic Contract and equalization.
[55] There is simply no basis to interfere with the decision to strike Robert’s pleadings.
[56] Where an order has been made striking pleadings in the court below, and it has not been set aside, typically this court will not hear an appeal by the party from the order made in the unopposed proceedings, but may choose to do so: see Higgins v. Higgins, 2007 ONCA 663, at paras. 17-18. (In some cases, this court, without commenting on the issue, has considered an appeal on the merits, after refusing to reopen an appellant’s pleadings: see e.g. Purcaru). In this case, we have exercised our discretion to consider Robert’s appeal. The grounds of appeal are confined to issues in respect of which Robert’s position was before the court below, and he does not seek to reopen the proceedings. Rather, he accepts the record in its current state.
Robert's Appeal of the Trial Judgment and Costs
[57] Robert submits that the trial judge erred (1) in his interpretation of the Domestic Contract, with the result that Nicole is entitled to half the proceeds of sale of OFH; (2) in valuing Robert’s debts to Harold at zero for the purpose of equalization; and (3) in his costs award, including the failure to direct that costs are net of the $130,000 Robert paid under the Stevenson J. and Hood J. interim costs and disbursements orders.
Analysis
The Interpretation of the Domestic Contract
[58] The Domestic Contract contains the following provisions:
5.1 (a) Rob may soon be the beneficiary of certain gifts or other transactions by which he acquires an interest in [OFH] which may or may not become a matrimonial home of the parties, as well as an interest in various other corporations. [OFH] was acquired for approximately $1.3 million and its current value may well be in excess of that figure. These corporate interests may be worth hundreds of thousands of dollars now, and millions of dollars in the future. Nikki hereby releases all her Rights to these assets should Rob acquire them in any fashion as well as any assets or property into which they can be traced in the future.
6.1 The parties’ present residence is leased. The lease expires in approximately two years. At a reasonable period of time before the expiry of the lease Rob and Nikki will jointly purchase a Matrimonial Home. Although it may be financed, Rob will be responsible for the deposit and down payment, which will total between $150,000 and $250,000. The title will be held in joint tenancy. Notwithstanding paragraph 5 hereof, on any Marriage Breakdown the net equity (or proceeds of sale in the case of a sale of the Matrimonial Home) will be shared equally between the parties, but Nikki’s one half of the equity will be excluded from the calculation of her Net Family Property.
[59] Robert argues that the trial judge erred in concluding that Nicole was entitled to a one-half interest in the current equity of OFH under the Domestic Contract. He submits that, fairly construed, OFH was to be “excluded property”, pursuant to the Domestic Contract. Robert asserts that the errors here were in failing to look at the entirety of the contract, and in considering the subjective intentions of the parties, as well as extrinsic evidence of events that occurred after the formation of the contract.
[60] I disagree.
[61] The trial judge’s interpretation of the Domestic Contract is a question of mixed fact and law that is entitled to deference on appeal: see MacDougall v. MacDougall (2005), 262 D.L.R. (4th) 120 (Ont. C.A.), at para. 33; Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-55; and Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 36.
[62] Contrary to Robert’s assertion, the trial judge examined the relevant wording of the Domestic Contract. Based on a plain reading of the Domestic Contract, he concluded that Nicole was entitled to a one-half interest in OFH and that this is the result that Robert and Nicole would have reasonably expected at the time the contract was signed. His conclusion is reasonable and reveals no error.
[63] “Matrimonial Home” is capitalized in s. 6.1 but not in s. 5.1(a). This does not mean that OFH, in which the parties were living at the time the Domestic Contract was signed, could never become a “Matrimonial Home” and subject to the operative provisions of s. 6.1. The trial judge reasonably concluded that this was the effect of the “notwithstanding” language in s. 6.1. As noted by the trial judge, Robert agreed at trial that s. 5 does not state that OFH is an excluded property, and that s. 5 is overridden by s. 6.
[64] I see no reversible error in the trial judge’s interpretation of the Domestic Contract.
Equalization
[65] Robert submits that, if Harold’s default judgment had been properly valued at its face value, Robert would not have owed any equalization payment to Nicole. According to Robert, in valuing the judgment at “nil”, the trial judge committed a palpable and overriding error by failing to give effect to his earlier findings that Harold’s judgment was legitimate.
[66] Again, I disagree. Notwithstanding the trial judge’s findings in the Civil Action regarding the validity of the judgment and debts, it was open to him to conclude, as he did, that there was no reasonable prospect that Harold would pursue Robert for the repayment of the debt.
[67] Contingent liabilities are only to be taken into account if they are reasonably foreseeable: Greenglass v. Greenglass, 2010 ONCA 675, 99 R.F.L. (6th) 271, at para. 26. The reasonable foreseeability of the liability is determined at the valuation date, not the date of the trial: Greenglass, at para. 27. At the valuation date, Harold had not made any demand for repayment and Robert had not included the debt in his first two financial statements. Further, Harold stated in cross-examination that he had, in the past, forgiven debts owed by his children.
[68] I see no error in the trial judge’s decision to value Robert’s debt to Harold at zero for equalization purposes.
The Costs Issue
[69] I now consider Robert’s costs appeal. Since Robert was not successful in his appeal of the merits, leave is required to appeal the costs order: CJA, s. 133(b); Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.), at paras. 74-80. Robert sought leave to appeal the costs order, and in the circumstances, I would grant such leave. There are strong grounds to find that the trial judge’s costs award, in failing to consider the advances made under previous orders, was plainly wrong: see Hobbs v. Hobbs, 2008 ONCA 598, 240 O.A.C. 202, at paras. 32-33; Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.
[70] Robert contends that the trial judge overlooked his advances to Nicole of $100,000 (under the Stevenson J. order) and $30,000 (under the Hood J. order). He submits that these amounts should have been credited against the costs award of $285,000. Robert points to the trial judge’s reasons for judgment in the matrimonial proceedings where the trial judge stated that “the treatment of the interim costs and disbursements totaling $100,000, which Nicole received pursuant to the June 16, 2016 order of Stevenson J. should be addressed as part of the overall costs analysis following trial.” Nicole did not address the advances in her written costs submissions, and Robert was not given the opportunity to make submissions on costs (because his pleadings had been struck).
[71] This court was advised that the trial judge declined to provide clarification on whether the intention was to credit Robert for the $130,000 he advanced, indicating that his decision spoke for itself.
[72] Nicole asserts that the intention was to provide her with full recovery of her costs, and that this would not include any credit for the $130,000 already paid by Robert under the earlier orders.
[73] On a plain reading of the trial judge’s reasons, it is apparent that he overlooked the $130,000 advance by Robert when he awarded $285,000 in costs to Nicole. If Nicole were correct, she would have received a costs award of $415,000 ($285,000 plus $130,000), which was more than the $377,847 amount she requested from Robert in her written costs submissions.
[74] While Nicole is correct that a costs award may exceed the amount sought by a party, if and when that happens, it should be explained. I do not accept Nicole’s assertion that this is what happened in the present case. Contrary to her submission, there is no indication from the reasons that the trial judge awarded her costs in an amount greater than she requested (or deliberately did not credit the amounts already advanced) because of Robert’s bad faith. The reasons make it plain that the trial judge did not intend to award Nicole the amount she was seeking, let alone any additional “bonus” amount. Specifically, at para. 32, the trial judge stated, “[i]n the result, it is appropriate that I make adjustments to Nicole’s recovery of full recovery costs to take into account Nicole’s lack of success on many issues at trial”.
[75] I would reject Robert’s argument that the quantum of the costs award was otherwise excessive. Aside from failing to discount the sums advanced under the Stevenson J. and Hood J. orders, the trial judge properly exercised his discretion in fixing costs and considered the relevant principles. His decision with respect to the quantum of costs is entitled to deference on appeal, unless he erred in principle or his costs award is plainly wrong: Hamilton, at para. 27.
Disposition
[76] For these reasons, I would dismiss Harold’s appeal. I would dismiss Robert’s appeals, except to the extent of varying the costs award in the court below, to award Nicole costs of $155,000, after credit for the sum of $130,000 Robert has already paid under the Stevenson J. and Hood J. orders.
[77] I would award Nicole her costs of the appeals, in the amounts agreed between the parties: $15,000 to be paid by Harold in Harold’s appeal, $10,000 to be paid by Robert in his appeal of the order striking his pleadings, and $15,000 to be paid by Robert in his appeal of the December 20, 2018 order, and the costs order. All amounts are inclusive of disbursements and applicable taxes.
Released: March 31, 2020 (“M.T.”)
“K. van Rensburg J.A.”
“I agree. M. Tulloch J.A.”
“I agree. B. Zarnett J.A.”
