ONTARIO

SUPERIOR COURT OF JUSTICE

OTTAWA COURT FILE NO.: FC-09-1655
DATE: August 21, 2014

B E T W E E N:

JOHN HASLIP

Gary Blaney, for the Applicant

Applicant

• and -

TERESA HASLIP

Sean Jones, for the Respondent

Respondent

HEARD: April 17, 2014

REASONS FOR DECISION

James J.

Introduction

[1] The applicant John Haslip has brought a motion for the following relief:

(a) for judgment in accordance with the settlement reached by the parties;

(b) an order granting the applicant exclusive possession of the matrimonial home;

(c) an order for the immediate sale of the matrimonial home and;

(d) an order dispensing with the respondent’s consent to the sale.

[2] The settlement that Mr. Haslip seeks to enforce was the culmination of last minute negotiations that took place between May 15 and 17th, 2013 in circumstances where the case had been called for trial to commence on Tuesday, May 23rd, 2013.

[3] Multiple drafts of proposed minutes of settlement were exchanged during this period. At about 5:30 p.m. on the Friday afternoon before the May Victoria Day long weekend prior to trial, the respondent, Teresa Haslip (now Teresa Mycyk) signed the settlement documentation in the presence of her lawyer at his office. The signed documentation was forwarded to the solicitor for Mr. Haslip who arranged for Mr. Haslip to sign as well and a fully executed set of documents was returned to Ms. Mycyk’s solicitor, David Sinclair, shortly before 6 p.m. that day.

[4] Within a few days, Ms. Mycyk resiled from the purported settlement. She says that Mr. Haslip failed to make full financial disclosure and that she was pressured into signing the settlement documentation by her lawyer. She wishes to proceed to trial. There is no evidence before me that she has made an application under section 56(4) of the Family Law Act to set aside the minutes of settlement.

[5] Extensive documentation has been filed by both sides on the motion. Both Ms. Mycyk and her counsel, Mr. Sinclair, were questioned by Mr. Blaney, the lawyer for Mr. Haslip. Ms. Mycyk also examined her former counsel. She did not have legal representation at the time of the examinations.

[6] Mr. Haslip says that he has honoured his end of the settlement notwithstanding Ms. Mycyk’s contention that the settlement is not binding. He seeks to have it enforced.

Background Facts

[7] The parties are in their early 50’s. They were married in 1987 and separated in 2008. They have two children, Laurel who is 21 and Dylan who is 19. At the time of the settlement negotiations, Laurel was enrolled in university and Dylan had graduated from secondary school and was unsure whether he was going to continue his education or take a year off.

[8] Mr. Haslip is the principal of Object Network Inc. This corporation provides information technology services to the federal government. Ms. Mycyk is a 50 per cent shareholder in the corporation. In the years prior to their separation, Ms. Mycyk received a salary from the company but did not play an active role in it.

[9] Ms. Mycyk says that when the parties were married in 1987, she gave up her job in Toronto in order to relocate to Alberta for Mr. Haslip’s career.

[10] She studied visual arts at the University in Alberta and worked as an independent artist until 1992. She says that her work as an artist was very successful.

[11] The parties returned to Ottawa in 1992 in order to enhance Mr. Haslip’s career opportunities. In late 1992 Laurel was born and Dylan was born about 2 ½ years later. Ms. Mycyk was a stay at home mother following the birth of her children and dedicated herself to parenting and running the household. She says that she has not worked outside the home since 1987. Both children have achieved performance level qualifications as musicians. Ms. Mycyk says she has experienced an array of health problems since the children were young.

[12] After separation, Mr. Haslip initially reported that his income in 2008 was $98,000 and $145,000 in 2009. Subsequent investigations disclosed that his true income for support purposes in 2008 amounted to $196,000 and in 2009 amounted to $206,000. It also became apparent that there was an unusual entry in the financial records of the company relating to a $92,000 “reverse bonus” in 2008.

[13] Ms. Mycyk contends that there are numerous unresolved questions with respect to financial transactions inside the company and in relation to the party’s bank accounts and investments. She says that the issue of retained earnings in the company remains an outstanding issue.

[14] Ms. Mycyk retained the services of Jean-Claude Desnoyers, a chartered accountant and certified business valuator, to investigate and provide a report respecting the income available to Mr. Haslip for support purposes for the years 2008, 2009, 2010 and projected for 2011. This report was provided to Ms. Mycyk on February 16, 2012. Subsequently, Mr. Desnoyers provided a second report on May 13, 2011, just a few days before the application was to proceed to trial, updating the information respecting Mr. Haslip’s actual income for 2011 and 2012. Mr. Desnoyers indicated in his second report that Mr. Haslip’s actual income in 2011 was $175,000 rather than the amount he had previously projected at $205,000 and his actual income for 2012 was $197,000. He indicated that the average amount available to Mr. Haslip for support purposes for the years 2008 to 2012 was $195,000.

Issues

[15] The following matters need to be determined:

(a) Is the operation of Rule 13 of the Family Law Rules (“FLR”) affected by recent changes to Rule 20, the equivalent rule in the Rules of Civil Procedure?

(b) Is there a genuine issue requiring a trial whether Mr. Haslip failed to make adequate disclosure?

(c) Is there a genuine issue requiring a trial as to whether Ms. Mycyk’s capacity to enter into a contract was vitiated by the presence of duress, psychological or emotional infirmity or were there other factors present that prevented the formation of a binding contract of settlement?

Rule 16 FLR

[16] Counsel for Mr. Haslip submits that on a motion under Rule 16 of the FLR the motion judge may weigh evidence, evaluate credibility and draw reasonable inferences from the evidence. He argues that the recent amendment to the summary judgment provisions of the Rules of Civil Procedure and the developing case-law has expanded the power of a motion judge in a family law proceeding to determine whether there is a genuine issue requiring a trial. (See Steine v. Steine, 2010 ONSC 4289 and Children’s Aid Society of Ottawa v. B(C.), 2010 ONSC 6961).

[17] Counsel for Ms. Mycyk, Mr. Jones, submits that the expanded scope of Rule 20 under the Rules of Civil Procedure does not apply to summary judgment motions in family law proceedings. (See Starr v. Gordon, 2010 ONSC 4167, 2010 CarswellOnt 5508 (S.C.J.). He says the facts alleged in response to the motion ought to be accepted as proven unless blatantly ridiculous or incapable of proof; it must be plain, obvious and beyond doubt that the defence cannot succeed and the defence must be read generously with allowances for the inadequacies due to drafting deficiencies. (See Children’s Aid Society of Niagara Region v. D(W.), 2003 CarswellOnt 3140 (S.C.J.). Where evidence is unclear, conflicting or gives rise to issues of credibility then summary judgment motions are not the appropriate way to resolve the dispute. (See Bruxer v. Bruxer, 2013 CarswellOnt 12623 (S.C.J.).)

[18] I recognize that the law surrounding the scope and operation of Rule 16 FLR is subject to uncertainty in light of recent developments in relation to the equivalent rule under the Rules of Civil Procedure. Pending clarification from the Court of Appeal or an amendment of the rule, I hold to the view that Rule 16 FLR is unaffected by recent changes to the equivalent provision in the Rules of Civil Procedure. This interpretation is consistent with the trend that has developed in the recent cases on this issue: Bruxer, para. 38. This means that I am not empowered on this motion to make findings of fact where there is contradictory evidence from Mr. Sinclair and Ms. Mycyk respecting the events surrounding the negotiation and signing of the minutes of settlement.

Disclosure

[19] Ms. Mycyk says that Mr. Haslip’s financial disclosure, both with respect to his personal dealings and the financial records of Object Network Inc., is inadequate. Incomplete or inadequate financial disclosure is grounds for setting aside a domestic contract or, as here, minutes of settlement.

[20] I do not agree that Mr. Haslip’s financial disclosure was incomplete or inadequate. His disclosure included his personal tax returns, bank records, corporate financial statements, corporate journal entries and answers to undertakings given during the course of his questioning. Ms. Mycyk had the benefit of Mr. Desnoyers’s investigation including his input respecting the preparation of questions to be asked of Mr. Haslip when he was questioned.

[21] At Tab 1A of Volume 4 of the Continuing Record is a disclosure summary setting out the details of the extensive financial disclosure provided by Mr. Haslip. It appears that this disclosure was provided during the period October 2009 to September 2012, well in advance of the scheduled trial date. Counsel for Ms. Mycyk did not contend that the disclosure summary was inaccurate or misleading. I accept that Ms. Mycyk and her then counsel may have had questions arising from the disclosure but I regard this as a different issue. There is no suggestion in the reports of Mr. Desnoyers that Mr. Haslip hid financial information or that Mr. Desnoyers did not have access to sufficient documentation in order to prepare his analysis of Mr. Haslip’s available income for support purposes. In my view Ms. Mycyk conflates questions arising from the financial disclosure to a suggestion that financial disclosure is incomplete.

[22] I am not persuaded that Ms. Mycyk has raised a genuine issue for trial as to whether the settlement contract is voidable or never came into existence because of inadequate financial disclosure by Mr. Haslip. This issue ought to be determined in favour of Mr. Haslip.

Other Factors

[23] Ms. Mycyk has numerous complaints about her former counsel, Mr. Sinclair, especially in relation to the day the settlement documents were signed. She says that she rejected paragraphs 5.4 and 7.1 in the draft documents prepared by Mr. Blaney and they were crossed out in the version returned to Mr. Blaney’s office. More drafts were exchanged but she was never allowed to review the entire revised document. She didn’t know that the rejected paragraphs were included in the subsequent revisions. When asked how her initials came to be on the pages that included these provisions, Ms. Mycyk said her lawyer “just went through the corners. He didn’t let me read the document… he did it quickly… I wasn’t trying to read. I was shut down. He turned me down. I just had to get out of there.” (Questioning of Teresa Mycyk, questions 914, 915, page 156).

[24] There is no medical evidence to assist in understanding Ms. Mycyk’s physical or psychological condition at the material time.

[25] Ms. Mycyk says she spent most of the day on May 17th at her lawyer’s office and was mocked by Mr. Sinclair and pressured to finalize the agreement. One of her complaints is that her counsel said she would be left to fend for herself at trial if she did not agree to a settlement.

[26] Ms. Mycyk’s allegations are denied by Mr. Sinclair who says that over the course of about eight hours on May 17th there were three versions of the minutes of settlement exchanged. He said the first version was reviewed thoroughly with Ms. Mycyk and then subsequently they reviewed changes as they came in. He said the last version arrived at about 5:10 p.m. They reviewed the changes in the final version of the document. He disputes Ms. Mycyk’s allegation that she asked him for an opportunity to review the entire agreement before she signed it. He denied that he threatened that she would be left to fend for herself at trial although he did acknowledge that on an earlier occasion, on May 10th, he expressed frustration at the length of time that Ms. Mycyk was taking to review a settlement conference brief and said something to the effect that “I’m done, you can represent yourself again”. He said he apologized later that day and they carried on. (Questioning of David Sinclair, question 238, page 56, 57).

[27] The minutes of settlement include a certificate of independent legal advice signed by David Sinclair in the following terms:

I, David Sinclair, of the City of Ottawa, in the Province of Ontario, barrister and solicitor, certify that I was consulted by Teresa Haslip, one of the parties to the attached separation agreement with respect to her rights and obligations under disagreement.

I acted only for Teresa Haslip and fully explained to her the nature and effect of the agreement. Teresa Haslip acknowledged that she completely understood the nature and effect of the agreement. Teresa Haslip executed the agreement in front of me and confirmed that she was entering into the agreement of her own volition without any fear, threats, compulsion or influence by John Haslip or any other person.

Dated at Ottawa, this 17th day of May, 2013. Signed David Sinclair

[28] The law of contracts provides that many factors may render an agreement unenforceable including: a) unconscionability; b) undue influence; c) duress or d) misrepresentation. Lack of consensus ad idem, that there was never a meeting of the minds on the precise terms of settlement, could also be added to this list.

[29] Mr. Jones says that Ms. Mycyk deserves an opportunity to test Mr. Sinclair’s evidence of what transpired on May 17th by means of in-court oral testimony. He emphasizes that she was not represented by legal counsel during the questioning that followed the filing of this motion.

[30] It appears to me that the options are either to allow the motion, which would have the effect of determining that the minutes of settlement are valid and binding or alternatively, direct the trial of an issue as to whether the minutes of settlement are binding and enforceable or ought to be set aside.

[31] I note that section 56(4) of the Family Law Act provides that in appropriate circumstances a domestic contract may be set aside. This subsection says:

56(4) A court may, on application, set aside a domestic contract or a provision in it,

(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;

(b) if a party did not understand the nature or consequences of the domestic contract; or

(c) otherwise in accordance with the law of contract. R.S.O. 1990, c. F.3, s. 56 (4).

[32] Although the subsection refers to a “domestic contract”, the minutes of settlement in this case are contractual in nature and fall within the ambit of this provision.

[33] I appreciate that a motion to enforce a settlement is qualitatively different from an application under subsection 56(4) of the Family Law Act. Neither party referred to this provision in their factums although a copy of this subsection was included in the respondent’s brief of authorities. It seems to me that by referring to the alleged inadequacy of Mr. Haslip’s disclosure, Mr. Jones seeks to draw this remedy into the legal matrix because it is difficult to see how the disclosure issue is relevant to the question of whether a binding contract was formed or not without resorting to this provision. The law of contracts does not incorporate disclosure obligations as they have developed in family law realm except perhaps as an aspect of misrepresentation. In any event I have determined that Mr. Haslip’s disclosure was adequate.

[34] Rule 16(9) FLR provides that where the motion does not result in a final order, the court may specify the issues, impose conditions and give directions on how and when the case will go to trial. Recently the Supreme Court endorsed the practice of judges who preside on unsuccessful motions for summary judgment remaining seized of the proceeding and giving directions on the most efficient, expeditious and cost-effective means of bring the dispute to a conclusion (See Hryniak v. Maudlin, 2014 SCC 7, [2014] S.C.J. No. 7, paras. 76-77). While Hryniak was decided under the revised Rule 20, the principles applicable to the post-motion phase are also relevant to family law proceedings under Rule 16. The parties have invested substantial resources in preparing materials and work product to date and its use going forward should be maximized. The hybrid trial format with the same judge carrying on from the motion will likely result in costs savings and an earlier disposition than would otherwise be possible.

Disposition

[35] The motion is dismissed subject to the determination of the disclosure issue in favour of the applicant.

[36] A hearing for directions shall be set on a date to be fixed by the trial co-ordinator at Pembroke in consultation with counsel. The hearing may be conducted by teleconference. Counsel shall consult and consider whether they wish to propose a trial plan for approval.

[37] On a preliminary basis and subject to hearing from counsel, the directions may include the following:

1. The issue to be determined is whether the parties entered into a binding contract of settlement.

2. If so, should the issues to be determined include whether there is a basis for setting it aside under subjection 56(4) FLA.

3. the questioning/cross-examinations shall serve as examinations for discovery;

4. identify proposed witnesses;

5. where affidavits have been filed, the affidavits shall serve as examination in chief;

6. The applicant shall present first and have the onus of proof;

7. Time lines and limits ought to be established.

[38] Costs will be dealt with by way of a separate endorsement.

Mr. Justice Martin James

DATE RELEASED: August 21, 2014

OTTAWA COURT FILE NO.: FC-09-1655
DATE: August 21, 2014

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

JOHN HASLIP

Applicant

--and—

TERESA HASLIP

Respondent

REASONS FOR DECISION

Mr. Justice Martin James

DATE RELEASED: August 21, 2014