Court of Appeal for Ontario

Date: 20210427 Docket: C68659

Before: Feldman, Harvison Young and Thorburn JJ.A.

Between: Samantha Anne Dowdall, Respondent And: Paul David Dowdall, Appellant

Counsel: Aaron Franks and Gabrielle Pop-Lazic, for the appellant Michael J. Ruhl and Ashley Timm, for the respondent

Heard: April 14, 2021 by videoconference

On appeal from the order of Justice Marvin Kurz of the Superior Court of Justice, dated November 12, 2020, with reasons reported at 2020 ONSC 4944.

Reasons for Decision

Overview

[1] The appellant, Paul Dowdall (“Mr. Dowdall”), appeals the order denying his motion for judgment and declining to enforce the minutes of settlement for child and spousal support signed by the parties.

[2] The motion judge held that he would not enforce the settlement agreement because, prior to accepting the offer in question, Mr. Dowdall engaged in intentional and material non-disclosure. In the motion judge’s view, Mr. Dowdall did not act in good faith and, moreover, enforcement of the settlement would lead to an unfair result. The respondent, Samantha Dowdall (“Ms. Dowdall”), was denied the opportunity to make an informed decision, including the opportunity to withdraw the open offer.

[3] The parties separated in April 2017. They had cohabited for 12 to 14 years, had been married for 7½ years, and they had two children together.

[4] The short history of the settlement offer is as follows:

[5] On January 31, 2018, the parties entered a consent order for property division, and interim child and spousal support. The issue of spousal support was not finally resolved, and the matter was scheduled for trial in October 2019.

[6] On October 6, 2019, Ms. Dowdall sent Mr. Dowdall an offer to settle the litigation. The offer was to provide her $3,800 per month, fixed and non-variable spousal support, from November 2019 to September 2027. The offer would not be subject to future variation by either party regardless of their change in circumstances.

[7] Through no fault of either party, the October trial did not take place and a mistrial was declared. The matter was rescheduled for some time around March 2020. In the meantime, Mr. Dowdall changed jobs. His salary increased from $199,530 to $200,000 (excluding a car allowance of $12,000), and he disclosed this change to Ms. Dowdall.

[8] As the March 2020 trial date approached, the COVID-19 pandemic intervened. The courts were suspended, and the matter was not called as scheduled. Around this time, Mr. Dowdall’s salary was cut by 25%, to $150,000, due to COVID-19 reductions at his workplace, initially for eight weeks.

[9] On May 12, 2020, Mr. Dowdall emailed a settlement offer to Ms. Dowdall. He informed her that his employer intended to extend his salary reduction and advised her that it “does not leave [him] with much of a future.” In his email, Mr. Dowdall did not disclose to Ms. Dowdall that he was in the process of negotiating a new, better paying, position. In fact, Mr. Dowdall had already been offered a position with a new employer at a salary of $225,000.

[10] The next day, on May 13, that company improved its offer to $280,000, along with a discretionary bonus of 30%. Mr. Dowdall resigned from work on May 15 and, on May 18, accepted the job offer.

[11] On May 15, just after Mr. Dowdall had been offered a new job with a salary of $280,000, he accepted Ms. Dowdall’s October 2019 offer to finally settle his support obligations.

[12] At no point in these discussions did Mr. Dowdall inform Ms. Dowdall of the employment offer extended on May 13, 2020, his acceptance of that offer, or his resignation from his previous employer. In fact, Ms. Dowdall did not learn of Mr. Dowdall’s new position until June 1, 2020, when her father spotted an online press release.

[13] By May 2020, Ms. Dowdall had completed her early childhood educator qualification and was seeking employment. Mr. Dowdall says he did not know whether she had obtained employment. She had not.

[14] In August 2020, Mr. Dowdall moved to enforce his acceptance of Ms. Dowdall’s October 2019 offer.

The Motion Judge’s Decision

[15] After a comprehensive review of the evidence, including an extensive review of the details of the offer to settle, the circumstances of the offer, the course of negotiations and the differences between Ms. Dowdall’s October 2019 settlement offer and Mr. Dowdall’s May 2020 offer, the motion judge held that Mr. Dowdall engaged in intentional and material non-disclosure and declined to enforce the settlement.

[16] The motion judge found that “[t]he only credible implication” of Mr. Dowdall’s conduct is that, at the time he accepted the October 2019 offer, “he knew he would be accepting a job that would pay him $280,000 per year.”

[17] He noted that Mr. Dowdall had an obligation to provide Ms. Dowdall with updated financial information under r. 13(15) of the Family Law Rules, O. Reg. 114/99, “[a]s soon as [he] discover[ed]” his last sworn financial statement setting out his income was inaccurate, since the difference in support obligations was material.

[18] He found that his non-disclosure deprived Ms. Dowdall of the opportunity to withdraw her offer. Furthermore, he held that enforcing the resulting settlement would be unfair because Ms. Dowdall would likely be entitled to a substantially greater amount of support at trial. Under Ms. Dowdall’s October 2019 offer, Mr. Dowdall’s support obligations would be 54% less than suggested by the support guidelines for a person with an income of $280,000.

The Law

[19] Conversion of an offer to settle into a court order is a discretionary remedy: see Milos v. Zagas (1998), 38 O.R. (3d) 218 (C.A.), at para. 15; Magnotta v. Yu, 2021 ONCA 185, at paras. 26-27.

[20] This court has jurisdiction to hear an appeal of a discretionary order refusing to enforce a final settlement pursuant to r. 18(13)(a) motion under the Rules: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b). This is because a decision refusing to enforce a settlement agreement is final: Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., 2007 ONCA 497, 87 O.R. (3d) 443, at para. 17.

[21] Exercise of this discretion attracts deference. Where the relevant factors disclosed by the evidence are considered, “an appellate court will not generally interfere with the motion judge’s decision to grant, or not grant, judgment in accordance with an accepted offer,” Milos, at para. 19. In the family law context, this court has recognized that significant deference is owed, particularly in matters relating to support orders: Ballanger v. Ballanger, 2020 ONCA 626, at para. 22.

[22] In Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, at paras. 46-48, Abella J., writing for the court, outlined some of the important principles to be considered in reviewing discretionary orders in the family law context:

[C]ontractual autonomy … depends on the integrity of the bargaining process. Decisions about what constitutes an acceptable bargain can only authoritatively be made if both parties come to the negotiating table with the information needed to consider what concessions to accept or offer. Informational asymmetry compromises a spouse’s ability to do so[.]

[A] duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the result of negotiations undertaken in these uniquely vulnerable circumstances….

Such a duty in matrimonial negotiations anchors the ability of separating spouses to genuinely decide for themselves what constitutes an acceptable bargain. It also helps protect the possibility of finality in agreements. An agreement based on full and honest disclosure is an agreement that, prima facie, is based on the informed consent of both parties…. [Internal citations omitted.]

[23] Rule 13 of the Family Law Rules provides for extensive financial disclosure, and an ongoing duty to correct or update documents. Rule 13(15) provides that “ [a]s soon as a party discovers that a document that he or she has served under this rule is incorrect, incomplete or out of date, the party shall serve on the other party and, if applicable, file, a corrected, updated or new document, as the circumstances require.”

Analysis and Conclusion

[24] In this case, the reasons of the motion judge clearly articulate why he exercised his discretion and refused to enforce the settlement. In his view, there was material non-disclosure on the part of Mr. Dowdall.

[25] There is no reason to interfere with that decision.

[26] Mr. Dowdall failed to disclose to Ms. Dowdall that he had received a job offer at a significantly higher salary just three days before signing the settlement offer. Instead, he advised Ms. Dowdall on the very day he received his new job offer, that his employer had decided to continue the salary reduction. This resulted in Ms. Dowdall operating on a misapprehension that Mr. Dowdall would earn $150,000 going forward. In fact, he already had been offered a new position at a salary of $225,000 (i.e., an increase of 50%) and would go on accept an offer of $280,000 (i.e., an increase of 86%).

[27] The motion judge found that Mr. Dowdall knew, at the time he accepted the October 2019 offer, that he would soon earn a much greater salary. This finding is unchallenged and undisturbed on appeal. Given this finding, we agree with the motion judge’s conclusion that Mr. Dowdall did not act in good faith and breached the Family Law Rules, in particular r. 13(15), by failing to disclose the fact that he intended to accept a new job at a significantly higher salary before accepting the October 2019 offer.

[28] On appeal, Mr. Dowdall argues that the fixed and non-variable character of Ms. Dowdall’s October 2019 offer rendered any change to either party’s financial affairs at the time of the offer’s acceptance immaterial. We disagree.

[29] In making her October 2019 offer, Ms. Dowdall took the risk that either party’s financial situation might improve or worsen following its acceptance. However, the terms of the offer would have reasonably been informed by Mr. Dowdall’s disclosures. Moreover, in the event of a change in Mr. Dowdall’s financial situation, Ms. Dowdall had the right to withdraw her offer at any time prior to its acceptance: Family Law Rules, r. 18(5). She was entitled to rely on Mr. Dowdall’s ongoing disclosure obligations in determining whether or not to exercise that right. Mr. Dowdall’s intentional and material non-disclosure deprived her of that option. In the circumstances, the motion judge properly exercised his discretion to decline to enforce Mr. Dowdall’s acceptance of the October 2019.

[30] In doing so, the motion judge found that enforcing the settlement would be “unfair and unreasonable” in the circumstances. Mr. Dowdall challenges this finding and seeks to adduce “new” evidence on appeal relating to Ms. Dowdall’s current employment. Mr. Dowdall argues that this evidence shows that the financial consequences of enforcing the October 2019 settlement are less significant than the motion judge assumed.

[31] We do not believe this is a proper case for the admission of new evidence. Ms. Dowdall had disclosed her employment in May, as well as the fact that she had graduated and was looking for a teaching job. The parties knew the range of salary she would be able to command as a teacher, which was in the range revealed by the new evidence. In short, this evidence, if admitted, would not change the picture already known.

[32] Nor do we accept Mr. Dowdall’s argument that acceptance of the October 2019 offer was necessary to avoid costs-related risks at trial. Had Mr. Dowdall disclosed his salary negotiations to Ms. Dowdall before accepting her offer, he would have faced no costs-related risks.

[33] Finally, we disagree with Mr. Dowdall’s suggestion that setting aside the settlement agreement will “promote litigation and encourage litigants to question, contest, and refuse to be bound by accepted offers without first asking more questions and demanding further disclosure.”

[34] On the contrary, as stated by Abella J. in Rick, disclosure is fundamental to the just resolution of familial disputes. Setting aside a settlement brought about through intentional and material non-disclosure protects confidence in r. 13 disclosure obligations, which in turn encourages settlement. Where both parties have access to the relevant and material information and full disclosure is provided, as required by the Rules, litigation will be minimized. Courts are not inclined to interfere with settlements reached between parties, so long as there has been full and frank disclosure and the opportunity to obtain independent legal advice.

[35] We see no merit to the other grounds of appeal raised by Mr. Dowdall in his factum.

[36] For these reasons the appeal is dismissed.

[37] Costs to the respondent Ms. Dowdall, in the amount of $17,500 as agreed by the parties.

“K. Feldman J.A.”

“A. Harvison Young J.A.”

“J.A. Thorburn J.A.”