Court of Appeal for Ontario

CITATION: Hughes v. Haycock, 2010 ONCA 227

DATE: 20100326

DOCKET: C50621

BEFORE: Laskin, Moldaver and Armstrong JJ.A.

BETWEEN

Jan-Lee McKenzie Hughes (formerly Jan-Lee McKenzie Hughes-Haycock)

Appellant (Creditor)

and

Terry Dwight Haycock aka Francis Eldon Allen

Respondent (Debtor)

COUNSEL:

Jason MacLean and Robert Carson, for the appellant

David Swift, for the respondent

Heard and released orally: March 23, 2010

On appeal from the Order of Justice W. Tausendfreund of the Superior Court of Justice dated March 19, 2009.

ENDORSEMENT

[1] The appellant and respondent entered into a co-habitation agreement on February 20, 1992. The agreement contained the following provisions:

And whereas, for the purpose of obtaining mortgage financing, the parties have agreed to transfer the home into both … names as tenants-in-common…

(1) In the event that the parties’ relationship breaks down, either through separation or death, they hereby acknowledge that the sum of sixty-one thousand dollars ($61,000) representing Emily’s net equity in the home, after purchasing the home from her husband pursuant to their Minutes of Settlement, shall be first payable to Emily or her estate.

(2) In the event that the parties marry, this agreement shall be deemed to be a marriage contract.

The parties married on July 18, 1992 and separated on July 18, 2004. The appellant commenced an action against the respondent on September 15, 2005 for $61,000, said to be owing to her under the terms of the co-habitation agreement. The respondent consented to judgment against him on January 10, 2006 in the amount of $61,430.97.

[2] The respondent made an assignment in bankruptcy on August 6, 2006. The appellant filed a proof of claim as an unsecured creditor. The appellant opposed the respondent’s discharge on three grounds:

(i) he made the assignment to avoid judgment in her favour;

(ii) he did not disclose all his debts; and

(iii) he did not disclose investments.

[3] The Registrar in Bankruptcy rejected the submissions of the appellant and discharged the respondent.

[4] On appeal to the Superior Court, the appellant submitted for the first time, that the provision in the co-habitation agreement requiring the respondent to pay her $61,000 was a contingent obligation for future spousal support. The Superior Court judge dismissed her appeal and her motion for an order that the debt of the respondent survived bankruptcy pursuant to s. 178 of the Bankruptcy and Insolvency Act. The Superior Court judge said at paragraph 12 of his reasons:

I find that the creditor’s self-serving attempt to categorize these funds, not as a recognition of her net equity in the Staffa house, but as the debtor’s contingent obligation for future spousal support, is nothing more than a transparent attempt to shelter this claim from the debtor’s assignment in bankruptcy. These facts do not support such a characterization.

[5] The appellant in this court submits that the Superior Court judge erred in his conclusion. We disagree. The language of the co-habitation agreement is clear. The $61,000 related to the appellant’s net equity in the matrimonial home.

[6] The appeal is therefore dismissed. The respondent is entitled to his costs fixed in the amount of $2,500, inclusive of disbursements and GST.

“John Laskin J.A.”

“M.J. Moldaver J.A.”

“Robert P. Armstrong J.A.”