COURT FILE NO.: FC-11-1267
DATE: 20121126
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MARGARET LESLIE NEWELL, Applicant
AND
PETER ALLEN, Respondent
BEFORE: J. Mackinnon J
COUNSEL: Philip W. Augustine, for the Applicant
Gary Steinberg, for the Respondent
HEARD: November 15, 2012
ENDORSEMENT
[1] The respondent seeks an order pursuant to section 101 of the Courts of Justice Act preventing the applicant from depleting or disposing of her RRSP savings and from further encumbering her home, and pursuant to Family Law Rule 16, for summary judgment requiring her to return to him a ring he gave her in contemplation of marriage.
[2] In 2000 the parties rekindled a prior relationship and made plans to live together in the applicant’s house in Manotick. They had already spoken of marriage when they commenced cohabitation there in December 2003. The respondent claims that he spent more than $200,000 in renovations and improvements to the applicant’s house over the period of their cohabitation. He also claims that he lent the applicant more than $200,000 to deposit in her RRSP and to reduce her outstanding debts.
[3] The respondent has claimed compensation for unjust enrichment or for a one half interest in the house by means of a constructive trust, and for repayment of the amounts of the loans he says he made to her. The applicant has defended these claims.
[4] The respondent gave the applicant the engagement ring in January 2004 when he asked her to marry him. She replied in writing. In her note she confirms the date of the proposal, the gift of the “rock” and accepts his proposal. They never did marry and separated, according to the respondent in November or December 2010, with him actually moving out in July 2011. He says that shortly after the renovations financed by him were completed, the applicant told him that she wanted to terminate the relationship. According to the applicant the relationship fractured in 2009 due to an outburst by the respondent during a trip to Turks and Caicos. November 20, 2010 is the date she pleads as the date of separation.
[5] The Application was commenced May 30, 2011. In his Answer, dated July 27, 2011 the respondent asks for the return of the engagement ring.
[6] A consent order was negotiated by the parties at a case conference held on August 2, 2011. That order required the applicant to deliver all items of jewelry in which the respondent claimed an interest, (this includes the engagement ring) to her lawyer to hold in a safety deposit box. The applicant was also ordered not to mortgage or sell her home without permission by court order or written agreement of the parties.
[7] At the time of the consent order the applicant’s financial statement before the court indicated that her house was worth $425,000 subject to a mortgage of $346,278. In fact and unknown to the respondent she had already negotiated a new mortgage of $420,000 which was registered on title a few days after the case conference. This came to the respondent’s attention about one year after the fact. He brought this motion in a timely fashion after he learned about the refinancing.
[8] The applicant’s position on the motions is that the respondent is not entitled to an interim injunction enjoining her from depleting her property and that the grounds for summary judgment with respect to the engagement ring have not been met.
The Interim Injunction
[9] There is a three part test for granting an interlocutory injunction. The first requirement, namely that there is a serious issue to be tried, is not in dispute. The second requirement is that the moving party will suffer irreparable harm if the injunction is not granted. The respondent points out that his claim against the applicant exceeds the dollar value of her assets. He says that she has already acted dishonestly in depriving him of the level of protection they had ostensibly agreed he would have. The consent order is registered against title to her home, so that the remaining equity in it is protected. But the respondent submits that his harm will be irreparable if she further depletes her savings because he will not be able to recover the money for which he may receive judgment against her. The essence of the respondent’s submission is that the applicant has acted once so as to deprive him of almost $74,000 of agreed upon security and this demonstrates the irreparable harm he faces.
[10] The applicant points to the rising real estate market and submits that the respondent’s security has therefore not really been depleted by much. This is quite disingenuous. The market would have risen, as it turns out, whether she had or had not refinanced the home, and the respondent’s security would have risen with it. The applicant also submits the respondent has not demonstrated the real risk that the applicant is about to dissipate or dispose of assets other than in the usual course of business or living. I disagree. The applicant herself has provide the best evidence of this in failing to disclose the refinancing she had already arranged prior to the case conference and the consent order.
[11] The third part of the test is to consider which party will suffer the greater harm from granting or refusing the remedy pending a decision on the merits. In this case the applicant is securely employed at an annual income of $162,989. She has $60,000 available to her on her line of credit. The applicant states that granting the order requested would prevent her from financing her defense of this litigation and covering her living expenses on a day to day basis. She shows a substantial monthly deficit in her financial statement. On the other hand, the harm to the respondent is irreparable if the security he reasonably expected the parties had agreed should be provided does not in fact exist.
[12] I am satisfied that the respondent has met the three part test for granting the interlocutory injunction. The house is already secured so no further order is required in that regard. The applicant has a total of $137,000 in her RRSP accounts. From the information in her financial statement I derive that her average rate of income tax is about 30 percent. Of course, her marginal rate would exceed that but I do not have that precise rate. In my view it is appropriate to replace the amount of security that the respondent reasonably thought was provided by the consent order. The refinancing reduced that by $74,000. I enjoin the applicant from depleting her RRSP accounts to less than $110,000 pending the conclusion of this action in order to provide a good approximate after tax equivalent to that amount.
[13] The respondent shall provide the applicant with the necessary undertaking with respect to damages forthwith upon issuance of this order.
Summary Judgment to Deliver up the Engagement Ring
[14] There is no genuine issue requiring trial as to whether the diamond engagement ring was in fact given on the occasion of the parties’ engagement in contemplation of marriage. This is confirmed in the handwritten note of acceptance attached as an exhibit to the respondent’s affidavit. The issues raised by the parties for the court are whether there are any genuine issues requiring trial with respect to whether it was the applicant who ended the engagement and if not, whether the law is clear that a gift given in contemplation of engagement shall be returned by he or she who calls off the engagement on timely demand being made for it by the donor.
[15] In her Application the applicant pleads that the respondent had an outburst in August 2009 that was “the tipping point leading towards the end of the relationship”. She also pleads that in November 2010 she wrote and asked him to leave her house. He did not and she commenced her court case. In his Answer the respondent disagrees with the applicant’s description of events in August 2009 but does confirm that later she asked him to leave her house. He also requests in his Answer the return of the jewellery he had given the applicant.
[16] The respondent clearly asserts in his affidavit that it was the applicant who called off the engagement by terminating the relationship and asking him to move out of the house. The applicant says in her affidavit that the relationship “fractured” in August 2009, thereafter the relationship was essentially at an end and it was clear they were no longer contemplating marriage. She deposes that it was his behaviour that caused the termination of the relationship. She further deposes that he refused of move out of her house until after she started the court proceedings. The respondent gives a very different description of events in and after August 2009. But neither party asserts that it was the respondent who wanted or initiated the separation.
[17] In my view the reasons why the applicant decided to terminate the relationship, and the disagreement about what those reasons were do not raise a genuine issue requiring trial on the issue of fact namely was she the one who wanted out of the relationship and told the respondent so. I find no need for trial in order to establish those facts. It is not alleged that she used the words, “the engagement is off”, but by ending the relationship it cannot be disputed that she also ended the engagement. Although it was a long engagement neither party asserts that a decision was made to abandon the idea of marriage in favour of long term cohabitation.
[18] I am also satisfied that by including a demand in his Answer the respondent made a timely enough request for the return of the engagement ring. The separation had occurred in November of the previous year, but his actual departure from the home coincided with the commencement of the proceedings and exchange of pleadings between the parties.
[19] The common law is set out in Iliopoulos v. Gettas 1981 CanLII 1703 (ON SC), 32 O.R. (2d) 636 (Co.Ct.) at para 15:
The origins of the engagement ring and the engagement in our law was outlined in Cohen v. Sellar, [1926] 1 K.B. 536, by McCardie J. At p. 547, he quotes with approval the conclusions of Shearman J. in Jacobs v. Davis, [1917] 2 K.B. 532 at p. 533:
“Though the origin of the engagement ring has been forgotten, it still retains its character of a pledge or something to bind the bargain or contract to marry, and it is given on the understanding that a party who breaks the contract must return it. Whether the ring is a pledge or a conditional gift, the result is the same. The engagement ring given by the plaintiff to the defendant was given upon the implied condition that it should be returned if the defendant” (i.e., the lady) “broke off the engagement. She did break the contract, and therefore must return the ring.” It seems reasonably clear that Shearman J. impliedly held that if the plaintiff himself had broken off the promise he could not get back the ring.
He concludes at pp. 547-8:
This I hold to be the correct legal view. If a woman who has received a ring refuses to fulfil the conditions of the gift she must return it. So, on the other hand, I think that if the man has, without a recognized legal justification, refused to carry out his promise of marriage, he cannot demand the return of the engagement ring. It matters not in law that the repudiation of the promise may turn out to the ultimate advantage of both parties. A judge must apply the existing law as to the limits of justification for breach.
[20] Two provisions of the Marriage Act, RSO 1990, c.M.3 were brought to my attention:
Breach of promise of marriage abolished
- (1) No action shall be brought for a breach of a promise to marry or for any damages resulting therefrom. R.S.O. 1990, c. M.3, s. 32 (1).
Application of subs. (1)
(2) Subsection (1) does not apply in respect of actions for breach of promise to marry or damages resulting therefrom commenced before the 1st day of August, 1978. R.S.O. 1990, c. M.3, s. 32 (2).
Recovery of gifts made in contemplation of marriage
- Where one person makes a gift to another in contemplation of or conditional upon their marriage to each other and the marriage fails to take place or is abandoned, the question of whether or not the failure or abandonment was caused by or was the fault of the donor shall not be considered in determining the right of the donor to recover the gift. R.S.O. 1990, c. M.3, s. 33.
[21] This is not an action for breach of promise to marry or for damages arising from it. Section 33 is applicable and in my view removes from relevance the question of which party caused the marriage to fail to take place. However the applicant relies upon Mastromatteo v. Dayball, [2011] O.J. No. 1600 a decision of the Small Claims Court in Ontario. In that case the Deputy Judge stated at para 19 and 20:
In the absence of any clear common law rule on whether a ring must be returned, I would incline to the position that a gift is a gift. Once perfected by delivery, it cannot be recovered. Since a promise to marry cannot be enforced, and long after divorce on a no-fault basis became accepted in Canada, the concept of a battle over ownership of the engagement ring appears artificial and anomalous at the very least. At a time when our law makes particular efforts to promote settlement, discourage litigation and narrow the scope of litigation when it is required in family law disputes, permitting ownership of gifted rings to be litigated based on a series of differing rules with no clear result, appears undesirable.
The promise of marriage is unenforceable and was unenforceable at the moment it was made along with the gifted ring. It appears undesirable for the law to permit enforcement in relation to only the gift part of that transaction when the larger transaction is itself unenforceable and in that sense legally faultless. If viewed as a matter of first impression I would find that the ring was a gift perfected by delivery and cannot now be reclaimed, whether as damages or as recovery of possession of the object itself.
[22] I disagree that the common law was not clear, although its application to, and the determination of the facts, in particular cases may not always have been readily predictable. The common law provided that a gift given in contemplation of marriage was recoverable on timely demand if the donor was not responsible for ending the engagement. The Marriage Act has removed consideration of fault.
[23] Both parties referred to McArthur v. Zaduk, [2001] O.J. No. 2284 (Sup Ct). In that case the trial judge was not directed to s. 33 of the Marriage Act and found that the donor broke the engagement. In addition, the court found that the donor did not ask for the ring back when he broke the engagement. As best as I can tell from the reasons it appears to have been close to two years later when the demand was made. In any event the omission of reference to s. 33 of the Marriage Act on the issue of fault leads me to approach the authority of this case on this point with caution.
Decision
[24] Summary judgement is granted requiring the applicant to deliver to the respondent the engagement ring. The registration of the order dated August 2, 2011 against title to the applicant’s house shall continue and the applicant is enjoined from depleting her RRSP accounts to an amount below $110,000.
[25] The respondent is entitled to costs of the motion. If the parties are unable to agree on the amount I will determine this by written submissions according to a timetable to be agreed between them but to conclude not later than December 14, 2012.
J. Mackinnon J
Date: November 26, 2012
COURT FILE NO.: FC-11-1267
DATE: 20121126
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: MARGARET LESLIE NEWELL, Applicant
AND
PETER ALLEN, Respondent
BEFORE: J. Mackinnon J
COUNSEL: Philip W. Augustine, for the Applicant
Gary Steinberg, for the Respondent
ENDORSEMENT
J. Mackinnon J
Released: November 26, 2012