ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 15-49795
DATE: 2015-11-17
BETWEEN:
Adam Thomas Hollohan
Applicant
– and –
Amanda Rae Hollohan
Respondent
Edmund Wellhauser, Q.C., for the Applcant
Lorrie Stojni, for the Respondent
HEARD: October 22, 2015
G. E. Taylor
REASONS FOR JUDGMENT
Introduction
[1] The parties were married on September 19, 2009. At the time of the marriage, the respondent had an ownership interest in residential property known municipally as 5 David Bauer Drive, Unit 412, Waterloo, Ontario. Prior to their marriage, the parties signed a cohabitation agreement which, among other things, identified the property at 5 David Bauer Drive as the matrimonial home. The cohabitation agreement provided that the matrimonial home was the excluded property of the respondent and that the matrimonial home or its value would not be included in the respondent’s net family property for purposes of equalization in the event of a breakdown of the marriage.
[2] The parties separated on December 29, 2014. By that date, the Father David Bauer Drive property had been sold and the parties had purchased a home located at 198 Mitchell Street, Ayr, Ontario, title to which was taken in the parties’ names as joint tenants. The Ayr property was sold on June 22, 2015. The sale of the Ayr property generated net proceeds of approximately $425,370. Half of the net proceeds have been paid to the respondent. The remaining net proceeds are being held in trust with both parties claiming entitlement.
[3] The resolution of the dispute regarding entitlement to the balance of the net proceeds from the sale of the Ayr property requires an analysis and determination of the meaning of the terms of the cohabitation agreement.
Facts
[4] The parties began cohabiting in February 2006 at the Father David Bauer Drive property. Title to this property was held in the name of the applicant and her mother.
[5] The parties entered into a cohabitation agreement dated September 10, 2009. Both parties were independently represented and acknowledged that they had each received independent legal advice, had read the agreement in its entirety, understood their respective rights and obligations under the agreement, understood the nature and the consequences of the agreement and acknowledged that the terms were fair and reasonable.
[6] The parties were married on September 19, 2009 and hence the cohabitation agreement became a marriage contract.
[7] The preamble to the marriage contract reads as follows:
AND WHEREAS the parties wish, by this Agreement to establish all of their future rights and obligations in relation to each other and agree as follows: …
[8] A number of terms were defined in the marriage contract including:
“property” means all real and personal property of any kind whether owned directly or indirectly and includes:
(i) land, …;
(ii) future rights or interests in real … property; …
“ownership” means a legal ownership and does not include any rights arising by operation of the principles of constructive or resulting trust or other trust doctrine or equity. Without limiting the generality of this clause, the following shall constitute ownership for the purposes of this Agreement:
(i) property held or registered in the name of one of the parties shall be deemed to be owned by that party;
(ii) property transferred to one of the parties shall be deemed to be owned by that party; …
“matrimonial home” means the property identified by municipal address as 5 Father David Bauer Drive, Unit 412, Waterloo, Ontario.
[9] Clause 2 of the marriage contract entitled Intention for Marriage states:
Amanda and Adam intend to be married on September 19, 2009 at Niagara Falls and intend to enter this Contract so that it takes priority with respect to division of property or equalization of net family property or other rights pertaining to property as provided for in the Family Law Act, R.S.O. 1990, c. F.3, as amended.
[10] Clause 3 of the marriage contract deals with the matrimonial home and provides as follows:
The value of the matrimonial home as defined by this Agreement or its successor home replacing it will not be included in the owner’s net family property. Amanda and Adam further acknowledge and agree that the matrimonial home as defined by this Agreement is the excluded property of Amanda as defined and provided for in the Family Law Act and Amanda shall not be required to include the matrimonial home or its value at any time as part of her net family property for the purposes of equalization of net family properties upon the breakdown of the marriage of the parties.
[11] Clause 5 of the marriage contract which is entitled Release of All Property or Equalization Claims contains the following:
(a) No property owned by either party, or in which either party has an interest of any kind, shall be subject to a claim by the other party.
(b) The parties waive all rights to share in any way in the property of the other and waive any claims for legal or equitable interest in the property owned by the other. The parties further waive and release the other party from any and all claims by way of resulting or constructive trust. There shall be no division of property except by legal ownership as defined herein.
(c) There will be no equalization of their net family properties if they subsequently marry;
(d) Neither party will be able to share in the property of the other;
(e) Neither party will be able to assert a claim against the other for an interest in property or for a claim arising out of the value of property owned by the other, including any claims for compensation as a result of a monetary or non-monetary contribution to assist the other party to acquire, maintain or improve any property owned by the other party. All contributions made by one to the other or to the property of the other will be conclusively deemed to be a gift.
(f) There is no equalization of property and should either party seek same, it is understood and agreed that by virtue of this Agreement each party’s net family property would be considered nil and no property owned by either Amanda or Adam shall be required to be included in any party’s net family property as any and all such property would be considered “excluded property” as defined by the Family Law Act, R.S.O. 1990, c. F3, as amended;
(g) The parties acknowledge and agree that neither party holds any property in trust for the other, and they further agree that no property will ever be held in trust for the other. [punctuation as per original]
[12] There is no suggestion that the marriage contract was and is anything other than a valid and enforceable agreement.
[13] By way of an Agreement of Purchase and Sale dated April 5, 2013, the parties agreed to purchase the Ayr property. The purchase price was $565,000. Both parties signed the Agreement of Purchase and Sale. The closing of the purchase of the Ayr property was on May 30, 2013. Title to the Ayr property was taken in the name of the parties as joint tenants. The sale of the Father David Bauer Drive property was completed in August 2013. The respondent’s equity in the Father David Bauer Drive property was used to acquire the Ayr property. There was also a mortgage on the Ayr property which was signed by both the applicant and the respondent.
[14] The parties separated on December 29, 2014. The Ayr property was listed for sale and was sold for $616,000. The sale closed on June 22, 2015. The net sale proceeds were approximately $425,370. One half of that amount has been paid to the respondent. The other half is being held in trust pending the outcome of this proceeding.
Positions of the Parties
[15] The applicant takes the position that the wording of the marriage contract makes it clear that he is entitled to 50 percent of the equity in the Ayr property by reason of the fact that title to the property was held by the parties as joint tenants.
[16] The respondent asserts that the intent of the marriage contract was to protect her real estate asset, in whatever form that asset might take, from any claim by the applicant. The respondent takes the position that she did not intend to make a gift to the applicant of half of her equity in the Father David Bauer Drive property when they purchased the Ayr property. The respondent says the presumption of joint tenancy has been rebutted.
Analysis
[17] In Eli Lilly & Co. v. Novopharm Ltd.; Eli Lilly & Co. v. Apotex Inc., 1998 791 (SCC), [1998] 2 S.C.R. 129 the Supreme Court of Canada stated at paragraph 54:
The contractual intent of the parties is to be determined by reference to the words they used in drafting the document, possibly read in light of the surrounding circumstances which were prevalent at the time. Evidence of one party's subjective intention has no independent place in this determination.
[18] For the purpose of this case, the relevant portion of section of the Family Law Act dealing with excluded property is as follows:
The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:
- Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.
[19] Section 14 of the Family Law Act provides as follows:
The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not married, except that,
(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and
(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).
[20] With this background, I turn to an analysis of the marriage contract.
[21] By way of general observation, it appears that the intent of the parties was to opt out of the property regime upon breakdown of the marriage as established by the Family Law Act. That intention is made clear in several different provisions of the marriage contract. The preamble recites that the parties wish to establish their future rights and obligations by way of the agreement they are entering into. Property is defined as land and future rights or interests in real property. Ownership is restricted to legal ownership. Upon breakdown of the marriage, property is to be divided in accordance with ownership. It is clear that property transferred by one party to another is owned by the recipient. The parties release all claims against each other’s property. The parties agree that there will be no equalization of their net family properties. The agreement specifies that each party’s net family property will be nil and that all property will be considered excluded property. Finally, the agreement provides that neither party will hold property in trust for the other.
[22] The marriage contract specifically addresses the respondent’s ownership in the Father David Bauer Drive property. The term “matrimonial home” is defined to be the Father David Bauer Drive property. Significantly, the definition does not make any reference to any home or property that replaces the Father David Bauer Drive property or any property purchased using some or all of the equity from that property.
[23] Clause 3 of the marriage contract specifically addresses the issue of the respondent’s entitlement to the entire equity in the matrimonial home. In this clause there is reference to a “successor home replacing” the matrimonial home. In my view, it is clear when clause 3 is read in its entirety, that the respondent’s interest in the Father David Bauer Drive property is protected. However, in my view, it is equally clear that the same protection is not afforded to the respondent in relation to any successor home. Immediately following the reference to a successor home are the words “will not be included in the owner’s net family property”. As I have indicated previously, the marriage contract makes it clear that ownership governs. Therefore, the interests of the parties in any successor matrimonial home will be determined by their respective ownership interests.
[24] The respondent relies on several cases in which the conveyance of property into joint names was set aside because there was a lack of intention to create a joint and equal ownership interest in the property in question. However, none of the cases relied upon by the respondent involved written domestic contracts.
[25] In Gaunt v. Woudenberg, 2005 63804 (ON SC), [2005] O.J. No. 2413, the parties to a three-year common-law relationship purchased a home and took title as joint tenants. The down payment of $64,000 was provided by the defendant and the parties both signed mortgages in the total amount of $165,000. The trial judge concluded, based on the evidence, that the defendant did not intend that the plaintiff would be a joint beneficial owner of the property. At paragraph 96, the trial judge stated:
In my view the parties did not expressly or by implication, form a mutual intention at the material time that one-half of the equity of Sheppard would be a gift. The plaintiff did not meet the evidentiary threshold required to rebut the presumption of resulting trust. I conclude, therefore, that the presumption of resulting trust applied and that she held her share of the equity of Sheppard in trust for the defendant.
[26] The case of Witzel v. Witzel, [2004] O.J. No. 498 dealt with an investment account in the joint names of the parties into which damages received by the husband arising out of a motor vehicle accident had been deposited. It was held that the presumption in section 14 (a) of the Family Law Act that money held in a joint account was the joint and equal property of both spouses had been rebutted by the husband based on his testimony that he never intended to make a gift to his wife of one half of the damages from the motor vehicle accident settlement.
[27] In Lehner v. Grundl, [1995] O.J. No. 181, one common-law spouse transferred title to real property from his name alone into the joint names of he and his common-law spouse. The trial judge found as a fact that the transferring spouse did not understand what he was doing when he transferred the property and accordingly the presumption of resulting trust had not been rebutted.
[28] As I have stated previously, none of these cases involved a domestic contract. If I were to accept the position asserted by the respondent, it would have the effect of rendering meaningless the terms of any domestic contract. In the present situation, the parties directed their attention to the property regime that would govern in the event of a breakdown of their relationship. They chose a regime which resulted in ownership being the determining factor. To accept the respondent’s position would mean that a party to a domestic contract could avoid the effect of that contract by simply asserting that they did not intend the terms of the contract to apply with respect to a particular transaction.
[29] The respondent does not suggest that the marriage contract is anything other than a valid and subsisting contract. I therefore have no hesitation in concluding that there is no genuine issue requiring a trial in this proceeding.
Conclusion
[30] For the foregoing reasons, there will be judgment in favour of the applicant declaring his entitlement to one half of the net proceeds remaining from the sale of the property located at 198 Mitchell Street, Ayr, Ontario, and directing that such proceeds be paid to the applicant by any person currently holding such proceeds in trust.
[31] If counsel are unable to agree on the appropriate disposition as to costs they may make written submissions. The written submissions on behalf of the applicant are to be delivered to my office within 14 days of the release of these Reasons, not to exceed three pages in length, exclusive of a Bill of Costs and Costs Outline. Responding submissions are to be delivered to my office within 28 days of the release of this these Reasons, not to exceed three pages in length. Counsel are directed to file electronic copies of their cost submissions at Kitchener.Superior.Court@ontario.ca to my attention.
G.E. Taylor J.
Released: November 17, 2015
COURT FILE NO.: 15-49795
DATE: 2015-11-17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Adam Thomas Hollohan
Applicant
- and -
Amanda Rae Hollohan
Respondent
REASONS FOR JUDGMENT
G.E. Taylor J.
Released: November 17, 2015