Turner v. DiDonato et al. [Indexed as: Turner v. DiDonato]

95 O.R. (3d) 147

Court of Appeal for Ontario,

Cronk, Gillese and G.J. Epstein JJ.A.

March 18, 2009

Family law -- Domestic contracts -- Separation agreement -- Separation agreement providing that husband would pay spousal support to wife until she reached age of 65 and that he would maintain life insurance policy for her benefit in amount of $100,000 until he was no longer obligated to pay spousal support -- Obligation to maintain life insurance policy constituting [page148] independent obligation and not mere security for obligation to pay spousal support -- Husband maintaining life insurance policy but amount designated for wife's benefit less than $100,000 at time of his death -- Husband's estate obligated to pay amount of shortfall to wife.

A separation agreement between the husband and the first wife provided that the husband was to pay the first wife spousal support until she reached 65 years of age. The agreement also required the husband to maintain a life insurance policy benefitting the first wife in the amount of $100,000 until he was no longer obligated to contribute to her support. When the husband died, he had life insurance in place, but the amount designated for the first wife's benefit was only $43,507.15. The first wife was 56 years old at the time. She brought an application against the husband's estate and against the second wife in her personal capacity claiming entitlement to the shortfall. The application was granted. The second wife appealed.

Held, the appeal should be dismissed.

The standard of review of the trial judge's decision was correctness.

The obligation to maintain life insurance for the first wife's benefit was an independent obligation and not mere security for the obligation to pay spousal support. The fact that the commitment to maintain the insurance coverage came to an end at the same time as the support obligations did not, in itself, connect that commitment to the support obligations. The agreement could have expressly provided that the insurance was intended solely as security for outstanding support obligations should the husband die before the first wife reached 65 years of age. It did not do so. The agreement specifically precluded the husband from adjusting the amount of insurance designated in favour of the first wife to account for diminishing future support obligations or for any other reason. If the parties intended the insurance policy merely as security for the support payments, it would be unreasonable to preclude the husband from adjusting the face value of the policy as the total value of his outstanding support obligations declined.

The trial judge did not err by failing to give effect to the first wife's admissions regarding her understanding that the obligation to maintain life insurance was for the purpose of providing security for the spousal support payments. The trial judge found that the agreement reflected the parties' expectations in a clear and unambiguous manner, and neither party challenged that conclusion on appeal. Moreover, the agreement contained an "entire agreement" clause. There was no need to consider the extrinsic evidence of the first wife's admissions.

APPEAL from the judgment of Sanderson J., [2008] O.J. No. 1983, 40 E.T.R. (3d) 128 (S.C.J.) granting an application claiming entitlement to a shortfall in insurance proceeds.

Cases referred to

MacLean v. MacLean Estate, 1998 CanLII 28764 (NB QB), [1998] N.B.J. No. 26, 195 N.B.R. (2d) 303, 20 E.T.R. (2d) 266, 35 R.F.L. (4th) 214, 76 A.C.W.S. (3d) 1236 (Q.B.), distd Other cases referred to Adams (Next friend of) v. Adams Estate, [2001] A.J. No. 285, 2001 ABQB 173, 289 A.R. 345, 27 C.C.L.I. (3d) 235, 15 R.F.L. (5th) 237, 104 A.C.W.S. (3d) 132; BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, [1993] S.C.J. No. 1, 99 D.L.R. (4th) 577, 147 N.R. 81, [1993] 2 W.W.R. 321, J.E. 93-271, 20 B.C.A.C. 241, 75 B.C.L.R. (2d) 145, 14 C.C.L.T. (2d) 233, 5 C.L.R. (2d) 173, 37 A.C.W.S. (3d) 1202; Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, [1998] S.C.J. No. 59, 161 D.L.R. (4th) 1, 227 N.R. 201, J.E. 98-1562, 80 C.P.R. (3d) 321, 80 A.C.W.S. (3d) 871; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; [page149] MacDougall v. MacDougall, 2005 CanLII 44676 (ON CA), [2005] O.J. No. 5171, 262 D.L.R. (4th) 120, 205 O.A.C. 216, 144 A.C.W.S. (3d) 103 (C.A.); Phillips v. Spooner, 1980 CanLII 2109 (SK CA), [1980] S.J. No. 398, [1981] 1 W.W.R. 79, 4 Sask. R. 103, 7 E.T.R. 157, 4 A.C.W.S. (2d) 483 (C.A.); Shannon v. Shannon (1985), 1985 CanLII 2026 (ON SC), 50 O.R. (2d) 456, [1985] O.J. No. 2501, 12 C.C.L.I. 46, 19 E.T.R. 1, [1985] I.L.R. Â1-1910 at 7362 (H.C.J.)

Statutes referred to

Evidence Act, R.S.O. 1990, c. E.23, s. 13

Authorities referred to

Swan, John, Canadian Contract Law, 1st ed. (Markham, Ont.: LexisNexis Butterworths, 2006)

Benjamin D. Eisner, for appellant. Michael G. Cochrane and Sandra Smith, for respondent.

The judgment of the court was delivered by

G.J. EPSTEIN J.A.:

I. Introduction

[1] This case concerns the interpretation of a Separation Agreement (the "Agreement"), signed by Albert DiDonato and his first wife, Dilia DiDonato, in 1995. Under the Agreement, Mr. DiDonato was obligated to maintain a life insurance policy benefiting Ms. DiDonato in the amount of $100,000. The question is whether this obligation was mere security for Mr. DiDonato's companion obligation to pay spousal and child support, or whether it constituted an independent obligation.

[2] The Agreement specified that Mr. DiDonato was required to pay Ms. DiDonato spousal support until she reached 65 years of age. The Agreement also required Mr. DiDonato to maintain a life insurance policy benefiting Ms. DiDonato in the amount of $100,000 until he was no longer obligated to contribute to her support. When Mr. DiDonato died at the age of 58 in November 2004, he did have life insurance in place; however, the amount designated for Ms. DiDonato's benefit was only $43,507.15. As Ms. DiDonato was 56 years old at the time of Mr. DiDonato's death, he was in breach of the terms of his insurance obligation under the Agreement.

[3] Ms. DiDonato brought an application against Mr. DiDonato's estate and against Mr. DiDonato's second wife in her personal capacity, claiming entitlement to the shortfall in insurance proceeds. [page150] Justice Sanderson held that under the Agreement, Ms. DiDonato was entitled to the full $100,000, and awarded the amount outstanding to be paid out of Mr. DiDonato's estate.

[4] Mr. DiDonato's second wife and trustee of his estate, Carol Turner, appeals. She argues that the insurance policy was intended not as an independent benefit for Ms. DiDonato but as security for any outstanding support obligations at the time of Mr. DiDonato's death. Since it was agreed that the $43,507.15 that Ms. DiDonato received under the policy was equal to or greater than the value of Mr. DiDonato's outstanding obligation to pay spousal support at the date of his death, Ms. Turner contends that Ms. DiDonato should not be entitled to anything further from the estate. Ms. Turner argues that the trial judge's interpretation of the Agreement is incorrect and that Ms. DiDonato has consequently received a windfall beyond the bargain between the parties.

[5] For the reasons that follow, I would dismiss the appeal. In my view, the trial judge correctly interpreted the Agreement.

II. Facts and Procedural History

[6] Following a 26-year marriage, the DiDonatos separated. In July 1995, they signed the Agreement, which was expressly intended to constitute a full and final financial settlement. Subsequently, they divorced and Mr. DiDonato married Ms. Turner. He continued to maintain his contractual support obligations to Ms. DiDonato and to the children of the marriage. However, he failed to maintain the insurance policy on the terms set out in the Agreement.

[7] Mr. DiDonato's spousal support obligation, as set out in para. 10 of the Agreement, was as follows:

10. SUPPORT . . . . .

B. Spousal Support (1) The parties acknowledge that on July 7, 1994, the husband was ordered to pay to the wife, commencing June 2, 1994, for her support the sum of $900.00 per month. (2) The parties agree that the husband shall pay spousal support in accordance with the July 7, 1994 support order to and including July 31, 1995. The parties also agree that the husband shall pay all outstanding arrears in connection with this support order. (3) Commencing on the 1st day of August, 1995, and on the first day of each month thereafter, the husband shall pay to the wife for her support the sum of $500.00 per month. The said support shall be paid in two (2) equal instalments, specifically the sum of $250.00 on or [page151] before the 15th day of the month and the sum of $250.00 on or before the last day of the month. The parties agree that for as long as provided for in the Income Tax Act, for Income Tax purposes, the husband shall be entitled to deduct and the wife shall claim as income the foregoing payments pursuant to the Income Tax Act. (4) The husband shall pay to the wife the aforementioned spousal support until the wife becomes 65 years old. (5) The wife and the husband acknowledge that the support will be an automatic support deduction from the husband's pay in accordance with the Family Support Plan Act. (Emphasis added)

[8] Mr. DiDonato's insurance obligation, the interpretation of which is at the heart of this appeal, is contained in para. 12 of the Agreement:

12. husband's life insurance (1) The husband owns or has an interest in a London Life policy of life insurance through his employment at Ontario Hydro in the amount of approximately $220,000.00. (2) The husband warrants that he has not borrowed against the policy and that the full face value of the policy is available. (3) The husband shall irrevocably designate under this policy: the wife as the sole beneficiary of $100,000.00, Mark DiDonato as the sole beneficiary of $50,000.00 and the wife in trust for Riccardo DiDonato as the sole beneficiary of $50,000.00. The husband shall file these designations with the insurer as provided by the Insurance Act. The husband will give the wife a true copy of these designations within fourteen (14) days from the execution of this Agreement. (4) The husband shall maintain the policy and shall maintain each of the aforementioned as beneficiary as set out in paragraph 12(3) hereof as long as the husband is obligated to support such beneficiary as provided in this Agreement following which the husband may then deal with the applicable portion or portions of the policy as he wishes and the wife will then sign any document necessary to change or revoke the applicable designation or designations of beneficiary. (5) At the wife's request, the husband shall annually provide proof that the policy remains in effect and that he has not transferred it, borrowed against it, or pledged it as security. (6) If the policy of insurance is no longer available to the husband through his employment, he shall immediately obtain replacement insurance (ensuring that there is no gap in coverage beyond his control) for the amount referred to in paragraph 12(4) hereof, and shall maintain the replacement policy for the period referred to in paragraph 12(4) hereof, and shall designate the beneficiary in accordance with the terms of paragraph 12(3) hereof. (7) If the husband defaults in payment of the premiums, the wife may pay any premiums and may recover them from the husband, together with all her costs and expenses, including her solicitor and client costs with respect to collection of the above. [page152] (8) If the husband dies without his insurance in effect contrary to the Agreement, his obligation to contribute to the support of the wife and children shall be a first charge on his estate.

[9] After Mr. DiDonato's death in November 2004, Ms. DiDonato received $43,507.15 in insurance proceeds. In April 2005, she commenced an application against Mr. DiDonato's estate and against Ms. Turner in her personal capacity, claiming a lump- sum payment of $56,492.85, representing the difference between $100,000 and the amount she received from the insurance company under the existing policy. She also sought an order for interim spousal support retroactive to December 2004, pending resolution of this matter. The interim support order was granted by Greer J. in October 2005 and specifically provided that the payments were to be made without prejudice to any claim by the estate trustee for reimbursement.

[10] Ms. Turner commenced an application for an order requiring Ms. DiDonato to return to the estate the support payments she had received subsequent to Mr. DiDonato's death. By order dated March 20, 2007, Low J. refused to grant the relief requested and ordered the trial of the issue on the basis that the insurance obligation in the Agreement was ambiguous.

[11] In April 2008, Sanderson J. presided over the trial ordered by Low J. -- Ms. Turner and Ms. DiDonato's applications were treated as one for the purpose of the issue to be tried.

[12] Before the trial judge, the parties agreed that the $43,507.15 in life insurance proceeds that Ms. DiDonato received was equal to or greater than the present value of Mr. DiDonato's obligation to pay spousal support as at the date of his death. The parties further agreed that the following two options were open to the trial judge: (1) If Ms. DiDonato were to be successful, she would receive $56,492.85 plus interest to December 2004, less interim support payments received, being $25,071.91, for a balance of $32,420.94 (sic) (Ms. DiDonato would end up receiving a total of $100,000); (2) If the estate were to be successful, Ms. DiDonato would repay the $25,071.91, being all interim payments received, plus interest, from the dates upon which she received the payments. (Essentially, the insurance payout would discharge the debt owed for spousal support.)

[13] The trial judge heard argument relating to the interpretation of the Agreement and extrinsic evidence about Ms. DiDonato's understanding of the meaning of the insurance obligation before [page153] deciding whether it was ambiguous such that the parole evidence would be admissible. [See Note 1 below]

[14] Evidence was also led by Ms. Turner regarding admissions made by Ms. DiDonato, in a response to a request to admit, as to her understanding of the insurance obligation in the Agreement. In her response, Ms. DiDonato had indicated that the contractual obligation in issue, under which Mr. DiDonato was required to maintain life insurance in her favour, was for the purpose of providing security for the spousal support payments due to her under the Agreement. Further, Ms. DiDonato said that this understanding was based on information conveyed to her by her lawyer, who had been involved in negotiating the Agreement on her behalf.

[15] Ms. DiDonato also testified at trial as to her understanding of the reasoning behind Mr. DiDonato's obligation to maintain the insurance policy and the circumstances in which she believed she would be entitled to the full $100,000. She said that she had signed the Agreement based on her lawyer's explanation that if her former husband died before she reached the age of 65, there would be $100,000 paid to her up front. Ms. DiDonato added that she was advised that she would receive the $100,000 even if Mr. DiDonato died the day before she turned 65.

[16] During cross-examination, Ms. DiDonato explained further that, if Mr. DiDonato were to die before she reached 65, she understood that her spousal support payments would stop, and she would get the lump-sum payment of $100,000. When asked about her understanding of the meaning of para. 12(8), Ms. DiDonato said that if Mr. DiDonato died without the insurance in place as agreed, "the support for the wife and the children shall be the first that comes out of the estate, if there is any".

III. Reasons of the Trial Judge

[17] In her reasons, the trial judge examined the provisions of para. 12 of the Agreement to determine whether Ms. DiDonato was entitled to judgment against Mr. DiDonato's estate for his breach of para. 12(4). She started her analysis with the observation that by failing to maintain a life insurance policy designating Ms. DiDonato as the beneficiary of $100,000, Mr. DiDonato was in breach of the Agreement. She went on to observe, at para. 15, that "[h]ad he done so, [Ms. DiDonato] would have received $100,000 of life insurance upon his death". Ms. Turner does not contest the accuracy of these statements. [page154]

[18] The trial judge then identified the principle that where a contract has been breached, the aggrieved party is generally entitled to be put in the position in which he or she would have been had the contract been performed. She further noted that an estate may be liable in damages for a deceased's failure to maintain an insurance policy, citing Adams (Next friend of) v. Adams Estate, 2001 ABQB 173, [2001] A.J. No. 285, 289 A.R. 345 (Q.B.), at para. 14; MacLean v. MacLean Estate, 1998 CanLII 28764 (NB QB), [1998] N.B.J. No. 26, 195 N.B.R. (2d) 303 (Q.B.), at para. 31; Phillips v. Spooner, 1980 CanLII 2109 (SK CA), [1980] S.J. No. 398, 4 Sask. R. 103 (C.A.); and Shannon v. Shannon (1985), 1985 CanLII 2026 (ON SC), 50 O.R. (2d) 456, [1985] O.J. No. 2501 (H.C.J.).

[19] The trial judge's conclusion that Ms. DiDonato was entitled to judgment against the estate for the shortfall between what she received and the $100,000 Mr. DiDonato was obligated to maintain for her benefit rested on her interpretation of para. 12(4). However, since Ms. Turner relies heavily on the wording of para. 12(8) in support of her argument before this court, I will first discuss the trial judge's reasoning in relation to that paragraph.

[20] The trial judge interpreted para. 12(8) as providing Ms. DiDonato with security in the sense that any support obligations Mr. DiDonato had at the time of his death would constitute a first charge against the estate assets.

[21] Significantly, the trial judge found that para. 12(8) did not derogate from Ms. DiDonato's right to sue the estate for breach of contract based on her failure to receive $100,000 in life insurance.

[22] Pivotal to the trial judge's conclusion that Ms. DiDonato was entitled to receive a total of $100,000 from the estate was her interpretation of para. 12(4) as a stand-alone provision whereby Mr. DiDonato agreed to maintain $100,000 of life insurance for the benefit of Ms. DiDonato until she turned 65.

[23] On the basis of this reasoning, the trial judge awarded Ms. DiDonato $31,420.15: the difference between the $100,000 to which she was entitled under the Agreement and $43,507.15 that she had received from the insurance company, plus $25,071.91 that she had received pursuant to the order of Greer J.

IV. Issues

[24] The main issue on appeal is as follows: (1) Did the trial judge err in her interpretation of para. 12 of the Agreement in the context of the Agreement as a whole?

[25] I will also briefly address the other issues raised by Ms. Turner regarding the trial judge's interpretation of the Agreement: [page155] (2) Did the trial judge err in failing to give effect to or by misapprehending admissions made by Ms. DiDonato regarding her understanding of the life insurance obligation in the Agreement? (3) Did the trial judge err in granting judgment to Ms. DiDonato on her own evidence in respect of a matter occurring before the death of Mr. DiDonato in the absence of corroboration, contrary to s. 13 of the Evidence Act, R.S.O. 1990, c. E.23? (4) Did the trial judge err in providing Ms. DiDonato with a windfall that was not part of the bargain between the parties?

V. Analysis

(1) Did the trial judge err in her interpretation of para. 12 of the Agreement?

(a) Standard of review

[26] The parties disagree as to the applicable standard of review. Ms. Turner argues that the trial judge's interpretation of the Agreement should be reviewed on a standard of correctness on the basis that the appeal relates to whether there was a failure to apply a fundamental principle of contract interpretation. In so arguing, Ms. Turner relies on this court's recent decision in MacDougall v. MacDougall, 2005 CanLII 44676 (ON CA), [2005] O.J. No. 5171, 262 D.L.R. (4th) 120 (C.A.). Ms. DiDonato, on the other hand, argues that the applicable standard is one of deference and that this court should not interfere absent palpable and overriding error.

[27] In MacDougall, this court considered the standard of review on an appeal from a decision involving contract interpretation. At para. 33, Lang J.A. explained that in order to determine the proper standard of review, an appellate court must first determine whether the nature of the issue on appeal is a question of fact, law, or mixed fact and law.

[28] It is clear from her reasons that the trial judge's ultimate interpretation of the Agreement was based on the language of the Agreement and not on any factual findings about the surrounding circumstances. If there was an error in her decision, therefore, the error was one of law. Consequently, the applicable standard of review is one of correctness: see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, at para. 8.

(b) The interpretation of para. 12 of the Agreement

[29] It is a fundamental principle of the construction of contracts that each provision must be interpreted in the context of [page156] the intentions of the parties as evident from the contract as a whole: see, e.g., BG Checo International Ltd. v. British Columbia Hydro and Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12, [1993] S.C.J. No. 1.

[30] Ms. Turner argues that the trial judge erred in her interpretation of the Agreement by failing to consider the Agreement as a whole. Specifically, it is alleged that she failed to interpret para. 12(4) in the light of para. 12(8). Had the trial judge done so, she would have concluded that the "likely intention" of the DiDonatos when they entered into the Agreement was that the obligation to maintain a $100,000 life insurance benefit for Ms. DiDonato did not extend beyond the obligation to make support payments in the amounts specified under the Agreement. In Ms. Turner's submission, this intention is apparent in para. 12(8) of the Agreement, which sets out the remedy in the event that Mr. DiDonato died "without his insurance in effect contrary to the Agreement". This remedy is restricted to any claim for support being a first charge on the estate.

[31] In my view, para. 12(8) has little relevance to the central issue. It is clear on its face that 12(8) is applicable only in the event that Mr. DiDonato did not maintain any insurance at all for Ms. DiDonato's benefit. This was not the case. Mr. DiDonato did maintain insurance for the benefit of Ms. DiDonato; the insurance simply fell short of the agreed- upon amount.

[32] In my view, the wording of the Agreement does not support Ms. Turner's position that para. 12(4) is linked to para. 12(8). The fact that the commitment to maintain the insurance coverage came to an end at the same time as the support obligations does not, in itself, connect that commitment to the support obligations in the manner Ms. Turner advances. There is a conspicuous absence of express language to this effect. Nowhere in para. 12 is it stated that the insurance was intended solely as security for outstanding support obligations should Mr. DiDonato die before Ms. DiDonato reached 65 years of age.

[33] Ms. Turner relies on the decision in MacLean, supra, for the proposition that where the obligation to maintain insurance is linked to the obligation to pay spousal or child support, damages are defined by the amount of support owing. In my view, MacLean does not assist Ms. Turner. MacLean stands for the proposition that the failure of the deceased to maintain an insurance policy in breach of a domestic contract gives rise to a right of action against the estate "for an amount directly related to the loss resulting from the breach" (para. 27). This is a proposition that supports Ms. DiDonato as opposed to Ms. Turner. That the remedy selected in MacLean was the payment of outstanding support is not in itself sufficient to give rise to a principle of law; [page157] since no reasons for that aspect of the decision are provided, no principle is established.

[34] Moreover, MacLean is distinguishable on the facts. Unlike this case, the agreement in MacLean was expressly tethered to the obligation to maintain life insurance to the obligation to pay support.

[35] I further note that the language of para. 12 is inconsistent with Ms. Turner's contention that the life insurance policy was merely intended to be security for Mr. DiDonato's diminishing spousal support obligations at the time of his death. As is apparent from the various components of para. 12, the Agreement specifically precludes Mr. DiDonato from adjusting the amount of insurance designated in favour of Ms. DiDonato to account for diminishing future support obligations or for any other reason. If the parties intended the insurance policy merely as security for the support payments, and nothing more, it would be unreasonable to preclude Mr. DiDonato from adjusting the face value of the policy as the total value of his outstanding support obligations declined.

[36] Moreover, the interpretation advanced by Ms. Turner would lead to a result in conflict with the overall intention of the Agreement. Before this court, counsel for Ms. Turner agreed that, had Mr. DiDonato been in compliance with his insurance obligation under the Agreement at the time of his death, Ms. DiDonato would have been entitled to receive the full $100,000 from the insurance company.

[37] This significant concession undercuts Ms. Turner's suggested interpretation of the Agreement. I say this for two reasons. First, it is counterintuitive that the parties intended for Ms. DiDonato to receive less under the Agreement as a result of Mr. DiDonato's breach than she would have received but for the breach. Second, counsel for Ms. Turner suggested that, had Mr. DiDonato died in compliance with his insurance obligation, the estate may have considered an action against Ms. DiDonato claiming that she had been unjustly enriched by any life insurance proceeds advanced in excess of the outstanding spousal support obligations. I cannot accept that the parties intended that litigation would be necessary in order to finally resolve their affairs if Mr. DiDonato happened to die at a time when he had maintained his insurance obligation in compliance with the Agreement and at a time when the value of the insurance proceeds designated for Ms. DiDonato's benefit exceeded the amount of outstanding spousal support. This result would be at odds with the parties' express intention that the Agreement finally settle their respective rights and obligations. [page158]

[38] It is possible, indeed commonplace, for separation agreements to link the obligation to maintain life insurance to the obligation to pay support. This Agreement did not do so.

[39] I therefore agree with the trial judge's conclusion that Ms. DiDonato was entitled to receive the full $100,000 if Mr. DiDonato died before she reached the age of 65 years, even if that amount exceeded the present value of the outstanding support obligations.

[40] It follows that Ms. DiDonato is entitled to $31,420.94: the difference between what she would have received had Mr. DiDonato met his obligation under the Agreement and what she has received to date. [See Note 2 below]

(2) Did the trial judge err in failing to give effect to certain admissions made by Ms. DiDonato regarding her understanding of the life insurance obligation?

[41] Ms. Turner argues that the trial judge erred by failing to give effect to, or by misapprehending, two admissions made by Ms. DiDonato through her counsel in response to a request to admit. The relevant admissions are as follows: -- Steven Skrow conveyed the understanding to the first wife that the portion of the Separation Agreement under which the deceased was obliged to maintain life insurance in favour of the first wife was for the purpose of providing security to the first wife for the spousal support payments due to her under the Separation Agreement. -- At all material times, the first wife was of the understanding that the portion of the Separation Agreement under which the deceased was obliged to maintain life insurance in favour of the first wife was for the purpose of providing security to the first wife for the spousal support payments due to her under the Separation Agreement.

[42] Ms. Turner argues that a formal admission in civil proceedings is conclusive as to the matters admitted. Ms. Turner contends that if the trial judge had considered Ms. DiDonato's admissions, she would have concluded that the life insurance was nothing more than security for Ms. DiDonato's support. Upon payment of the debt for which the security was given, the security for the debt is discharged. As Ms. DiDonato's admissions were drafted by lawyers, [page159] the use of the word "security" should be interpreted in its technical legal sense.

[43] In response, Ms. DiDonato argues that the trial judge did not err in failing to give effect to her admissions of understanding. She submits that such extrinsic evidence is only admissible as an aid to contract interpretation where there is ambiguity in the written agreement at issue, such that it is not possible to determine the likely intention of the parties without considering the parole evidence. In this case, the trial judge found no such ambiguity in the provisions of para. 12.

[44] In my view, the trial judge did not err by failing to consider Ms. DiDonato's admissions regarding her understanding of the insurance obligation in the Agreement. In resolving disputes arising from the interpretation of contracts, the objective is to protect the reasonable expectations of the parties, as set out in the language of their agreement. In the absence of ambiguity in the words of the contract, parole evidence of the subjective intention of the parties has no place in the interpretive exercise: see Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, [1998] S.C.J. No. 59, at paras. 54-56. The trial judge found that the Agreement reflected the DiDonatos' expectations in a clear and unambiguous manner -- neither party has challenged that conclusion before this court. On the contrary, in advancing her own interpretation of the Agreement, Ms. Turner maintains that it is not ambiguous. She thereby implicitly acknowledges the irrelevance of extrinsic evidence in this case.

[45] Further, para. 28 of the Agreement sets out what is commonly referred to as an "entire agreement" clause. It provides as follows:

28. GENERAL (1) There are no representations, collateral agreements, warranties or conditions affecting this Agreement.

[46] As Professor Swan states in Canadian Contract Law, 1st ed. (Markham, Ont.: LexisNexis Butterworths, 2006), at p. 515:

The likelihood that a document will be held to be the final, integrated expression of the parties' agreement will be increased if the document contains an "integration clause" or an "entire agreement" clause . . . . Where the parties have been advised by their solicitors and the agreement has been carefully negotiated, such a clause should be conclusive evidence that the document is the final and sole expression of the parties' agreement. (Footnotes omitted) In the circumstances of this case, there was no need to consider the extrinsic evidence of Ms. DiDonato's admissions. [page160]

(3) Did the trial judge err in granting judgment to Ms. DiDonato on her own evidence in respect of a matter occurring before the death of Mr. DiDonato in the absence of corroboration?

[47] Ms. Turner submits that the trial judge erred in granting judgment to Ms. DiDonato on Ms. DiDonato's own evidence regarding a matter occurring before the death of Mr. DiDonato in the absence of corroboration, contrary to s. 13 of the Evidence Act, which provides as follows:

Actions by or against heirs, etc.

13. In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.

[48] In my view, this section of the Evidence Act has no application. The trial judge's decision was based not on Ms. DiDonato's evidence or admissions, but on the wording of the Agreement.

(4) Did the trial judge err in providing Ms. DiDonato with a windfall that was not part of the bargain between the parties?

[49] Ms. Turner also argues that the trial judge erred in deciding that Ms. DiDonato was entitled to a windfall extending beyond the bargain between the parties.

[50] I disagree. In my view, the trial judge's decision did not result in a windfall benefit to Ms. DiDonato; the trial judge merely enforced the agreement into which Mr. and Ms. DiDonato had entered.

(5) Additional issue as to costs

[51] Ms. Turner also challenges the trial judge's order as to costs primarily on the basis that the trial judge allegedly failed to properly take into account the relatively small amount of money involved. The costs award was entirely within the trial judge's discretion and I see no reason to interfere with it.

VI. Disposition

[52] For these reasons, I would dismiss the appeal.

[53] Ms. DiDonato is entitled to her costs of this appeal in the amount of $10,000, including disbursements and Goods and Services Tax, pursuant to the agreement of counsel.

Appeal dismissed.

Notes

Note 1: The parties have not challenged the trial judge's jurisdiction to consider the ambiguity issue de novo.

Note 2: I note that Ms. DiDonato advanced no claim for both the insurance proceeds and the support arrears.