SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 12915/04
DATE: 2015-08-04

RE: WILLIAM GARY MOUNTAIN, Plaintiff

AND:

TD CANADA TRUST COMPANY, AS ESTATE TRUSTEE DURING LITIGATION FOR THE ESTATE OF JOHN NIXON MOUNTAIN, deceased, TD CANADA TRUST COMPANY, AS ESTATE TRUSTEE DURING LITIGATION FOR HELEN ELIZABETH MOUNTAIN and LOUANNE MOUNTAIN, Defendants

BEFORE: Gray J.

COUNSEL:
Kenneth Prehogan, Counsel for the Plaintiff

Peter Griffin, Counsel for Louanne Mountain

C. Melville and Jay Krotz, Counsel for TD Canada Trust Company

HEARD: June 19, 2015

ENDORSEMENT

[1] On March 19, 2014, the parties signed Minutes of Settlement that settled this litigation. As a practical matter, while not a party to those minutes, TD Canada Trust Company had a significant interest in the contents of the Minutes, and indeed TD Canada Trust’s counsel approved the Minutes.

[2] The parties are now in dispute as to the proper interpretation of certain aspects of the Minutes, and have requested that I issue orders consistent with each party’s interpretation.

[3] In an endorsement dated June 22, 2015, I ordered that certain terms of the Minutes of Settlement be implemented, as in my view they were relatively non-controversial and it was important that the parties have the security of knowing that the essential elements of their Agreement were in place.

[4] In my endorsement, I ordered that a vesting order be issued, by which Gary Mountain (“Gary”) would acquire title to the disputed farm property, and required that Gary Mountain furnish to Louanne Mountain (“Louanne”) the sum of $1,325,000. Further, I ordered that a collateral mortgage in favour of TD Canada Trust Company and Louanne Mountain be registered as collateral security for the obligations of Gary Mountain pursuant to paragraph 7 of the Minutes of Settlement. In my endorsement, I noted that some amendment to the collateral mortgage would likely be required, and the form of the indemnity to be given by Gary Mountain would need to be finalized. However, I thought that as a practical matter what I ordered would be sufficient at that point.

[5] I am now in a position to issue a final order, dealing with what remains.

[6] What remains to be implemented under the Minutes are the following:

a) Pursuant to paragraph 2 of the Minutes, Gary must irrevocably direct TD Canada Trust to pay to Louanne the amount of $500,000 from his half-interest in the assets of Helen Mountain Estate;

b) Gary must direct TD Canada Trust to pay to Louanne her half-interest in the assets of the Helen Mountain Estate;

c) TD Canada Trust must provide a Bill of Sale for machinery, fixtures, chattels and bank accounts located on and with respect to the farm property, including the milk quota of the farm business, and a vesting order must be issued in that respect;

d) Gary must complete his tax restructuring, if any, and any transactions related thereto that may affect the Estate of Jack Mountain or the Helen Mountain Estate, and must do so on or before May 15, 2019;

e) Gary must pay any tax, interest, penalty, charges, and legal, professional and trustee fees resulting from the settlement and the transactions contained therein and any restructuring of the farm property and farm business, and will indemnify and save harmless Louanne and TD Canada Trust, and the Estate of Jack Mountain and the Estate of Helen Mountain from any liabilities resulting therefrom;

f) TD Canada Trust must hold a discharge of the collateral mortgage in escrow pending the earlier payment of any taxes, penalties, charges, legal, professional and trustee fees on May 20, 2014 at Gary’s expense;

g) Gary must direct TD Canada Trust to release the jewellery of Helen Mountain to Louanne;

h) The parties must execute any further documents to give effect to the Minutes of Settlement as may be reasonably necessary; if required, Gary must execute a specific indemnity undertaking.

[7] The main dispute between the parties relates to the liability for any tax consequences arising from the Settlement and its implementation. In particular, it appears that Gary does not intend to file a final T3 for the Estate of Jack Mountain or a request for a clearance certificate for the Estate of Jack Mountain, but rather will wait and see whether CRA assesses him on the Jack Mountain Estate.

[8] It is Louanne’s position that any professional fees and estate trustee fees, taxes and liabilities relating to the Estate of Jack Mountain are to be borne by Gary. Further, tax liabilities relating to the disposition of the farm property and the farm assets are to be borne by Gary. Louanne requests orders that would require clarity as to what Gary is to indemnify her for, and, as I understand it, an order requiring Gary to not proceed with what she submits is a “high risk” tax plan, as it could result in increased liability for her.

[9] Counsel for Gary submits that the Minutes of Settlement are clear and unambiguous, and need no clarification. Specifically, he submits that if there is a risk arising from the way in which he deals with CRA, it is his risk, and he has agreed that he will indemnify Louanne if there is any tax consequence to her. He submits that his obligation is to pay any tax, interest, penalty, charges, and legal, professional and trustee fees “resulting from this settlement and the transactions contained herein”, and he must “complete his tax restructuring, if any, and any transactions related thereto that may affect the Estate of Jack Mountain or the Helen Mountain Estate on before May 15, 2019.” Gary, through his counsel, confirms that Gary will live up to his obligations under the Minutes of Settlement, and no further clarification is required or appropriate.

[10] The Minutes of Settlement, being a contract, are to be interpreted in the same way as any other contract.

[11] The surrounding circumstances in which a contract is negotiated are relevant considerations in interpreting the contract: see Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254 (C.A.), at para. 45. The contract is to be interpreted as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective. An interpretation should be preferred that is in accordance with the language the parties have used in the written document, and based upon the cardinal presumption that they have intended what they have said: see Ventas, supra at para. 24; and 3869130 Canada Inc. (c.o.b. I.C.B. Distribution 2001) v. I.C.B. Distribution Inc., 2008 ONCA 396, [2008] O.J. No. 1947 (C.A.), at para. 31. Evidence of the subjective intention of the parties is neither relevant nor helpful. It is often the case that both parties will enter the negotiations with different expectations or intentions, and intentions may change during the negotiations: see Dumbrell v. The Regional Group of Companies Inc. (2007), 2007 ONCA 59, 85 O.R. (3d) 616 (C.A.), at para. 50.

[12] In my view, the words of the Minutes of Settlement do not admit of much doubt as to their meaning. No further clarification is required. Gary is to assume full responsibility for any tax restructuring and any transactions that may affect the Estate of Jack Mountain or the Helen Mountain Estate, and he is given until May 15, 2019 to do so. He must assume any liability for, among other things, any tax, interest, penalties and charges resulting from the settlement and the transactions contained in the settlement. If he chooses to adopt a tax plan that is high risk, it is his risk. If it results in liability to Louanne, he must indemnify her and TD Canada Trust for it. The collateral mortgage or mortgages on title are to act as security in that respect.

[13] Louanne’s request for further clarification of Gary’s obligations under the Minutes of Settlement is therefore dismissed.

[14] In my view, the remaining elements of the settlement should now be implemented as quickly as possible. I am not at all convinced that any further amendment to the collateral mortgage is required, but I am prepared to entertain submissions in writing if any party thinks otherwise. If there is any dispute as to the contents of any further documents that may be required to give effect to the Minutes, the parties may make written submissions.

[15] Once the remaining elements of the Minutes of Settlement have been implemented, I will then invite submissions on the issue of costs.

Gray J.

Date: August 4, 2015