SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Laura Ariadna Aguilar Leon, Applicant
AND:
Juan Manuel Gonzalez Dorantes, Respondent
BEFORE: Harvison Young J.
COUNSEL: Philip Viater, for the Applicant
Mr Gonzalez Dorantes on his own behalf,
ENDORSEMENT
Overview
1The applicant mother Laura Aguilar Leon “Ms. Aguilar”) brought this motion for summary judgment asking the court to declare the Separation Agreement between her and the respondent father Juan Gonzalez Dorantes (“Mr. Gonzalez”) dated February 23, 2015 valid and enforceable. The driving issue has been ongoing disputes over the payment of s. 7 expenses. Until recently, and as was evident from the endorsement of Myers J. dated August 19, 2016, Mr. Gonzalez was not prepared to agree that the Agreement was valid and enforceable, at least to the extent that he was seeking to vary its terms before the review date of July 1, 2017.
2Mr. Gonzalez now agrees that the Agreement is valid and enforceable. Accordingly, the issue for this motion is no longer the validity or enforceablility of the agreement and thus there is no need for the summary judgement motion to proceed. The parties agree that an order may issue to that effect.
3The only issue remaining issue on this motion is whether Mr. Gonzalez is obligated to pay the disputed expenses which, the parties agree, amount to approximately $68,342.42 of which Ms. Aguilar claims Mr. Gonzalez owes half. The answer to this question depends on the interpretation of the Agreement.
4Mr. Viater submits that the disputed expenses are all expressly contemplated by the Agreement which was carefully and specifically drafted in an attempt to minimize or eliminate such disputes. Moreover, he states that the Agreement set out budgetary amounts for contemplated expenses and the amounts incurred have consistently been below those amounts. The disputed amounts include, for the most part, expenses for March break and summer day camp, skating lessons and counselling. Mr. Gonzalez claims that he should not be required to pay because he did not consent to the disputed amounts which include certain camp, skating, and.counselling which, he submits, is required by Article 5.15 of the Agreement. In addition, the parties disagree over some credits claimed by Mr. Gonzalez.
Background
5Ms. Aguilar and Mr. Gonzalez were married on December 8, 1995 in Mexico City. They immigrated to Canada in 1997. They separated on October 15, 2013 and were divorced on April 29, 2015. There are two children of the marriage. Eric Jordan Gonzalez was born May 12, 2005, and is currently 11, and Diego Gonzalez was born June 6, 2007, and is currently 9.
6By way of background, it is clear that income determination of Mr. Gonzalez was a significant issue before the execution of the Agreement. He had started his own business which appears to have been successful in that it is now (according to his own evidence) worth significantly more than it was at that time. He has remarried and had another child, and he takes the position that his financial circumstances have deteriorated.
7The Agreement sets out an agreed upon imputed annual income of Mr. Gonzalez in the amount of $111,750.00 and provided for the payment of table child support in the amount of $1559.00 per month for both children. It also provides that the parties intend the child support arrangements including special and extraordinary expenses to be in force “at least” until July 1, 2017 (Agreement, Article 5.21). It provides that Ms. Aguilar, whose annual income at the time was $86,392.91, would share the special and extraordinary expenses with the respondent father on an equal basis.
8Article 5.21 also specifies that the amounts are to remain constant with no exchange of financial information before June, 2017 and that if the amounts do change as of July 2017, there are to be no retroactive adjustments. It stipulates:
The parties specifically acknowledge that there may be changes in their financial circumstances or in the children’s financial needs or in their residency. No factor, including the ones mentioned above, will cause the child support arrangements made in this Agreement to be affected until July 1, 2017 (Article 5.21). [emphasis added]
9The Agreement also sets out the current special and extraordinary expenses in which the children were involved at the time as well as the costs estimated of those expenses at para. 5.8:
(a) Their private school tuition and associated school expenses as provided in paragraph 5.9 below;
(b) Their extracurricular activities as provided in paragraph 5.11 below; and
© Their medical expenses not covered by OHIP or private health benefits as provided in paragraph 5.12 below.
5.10 Laura and Juan are committed to Eric and Diego attending private school for at least the primary to grade six levels. To ensure the funds are available for private school education, the each will deposit $25,000 to a non-RRSP account by January 1st of each year for as long as one child is enrolled in private school. The funds will be used to pay their respective portions of the following school year’s tuition fees in accordance with the school’s payment policy. Laura and Juan agree to provide each other with a bank statement quarterly to verify the funds have been deposited and are available.
5.11 Eric and Diego are currently enrolled in swimming, gymnastics and other activities totaling approximately $6000.00 per year, and counselling, if needed, of up to $3,800.00 per year. Summer and March Break Camps currently total approximately $9,000.00 per year. Birthday parties currently totals [sic] $1,000.00 per year. Sports/Winter/Safety equipment currently totals approximately $1,000.00 per year (helmets, bicycles, skates, etc). The above amounts are an average for both children’s costs as set out in Schedule D to the Agreement.
5.12 Laura and Juan agree to also share equally the children’s medical expenses not covered by health insurance or OHIP, and the possible cost of orthodontics for Eric in the next two years or so. Out-of-pocket medical costs include, but are not limited to, non-covered alternative health care, medication, eye care, dental, counseling, therapeutic, deductibles, and co-payments that exceed $100 per year.
5.13 Laura will maintain her current health/dental insurance policy for the benefit of Eric and Diego as long as such policy is available through her employer and pay the premiums as they become due. In return, Juan agrees to pay for the cost of Eric’s ADD medication of about $480 per year.
5.15 Aside from the special and extraordinary expenses noted above, there are no other expenses at this time. The parties will only contribute to Eric and Diego’s special or extraordinary expenses if the parties consent to the expenses in advance. Neither party will unreasonably withhold consent. […]
Law and Analysis
10The history of this matter indicates that disputes over payment of s. 7 expenses began to arise shortly after the Agreement was signed. Ms. Aguilar states that it has been very difficult to get cooperation on many items, and says that the Agreement was so specific to try to eliminate these disputes. Mr. Gonzalez says that he has not given his consent to some of these expenses and is therefore not required to pay. Hence, the issues to be addressed in considering the present claims are
a. Are the expenses in issue contemplated in the Agreement and do they require the consent of the other parent Mr. Gonzalez submits?
b. If the expenses do require the consent of the other parent, was it withheld unreasonably in these circumstances?
Was Mr. Gonzalez’s consent required before any special or extraordinary expenses were incurred?
11Mr. Gonzalez stated during the oral hearing that the context of the Agreement was that he and Ms. Aguilar would take their respective financial circumstances into account in deciding whether to consent to s. 7 expenses. In his submission, the requirement of consent was intended to apply to all s. 7 expenses, not just those set out at Articles 5.7 to5.14 of the Agreement.
12Mr. Viater submitted that the requirement of consent only applies to those special or extraordinary expenses not set out at Articles 5.9 to 5.13 of the Agreement, and to and of those that do exceed the estimated totals for those expenses set out at Article 5.11.
13As Mr. Gonzalez mentioned in the course of the hearing, the amounts in issue amount to a total of about $31,002 in expenses for which the AM has paid, and for which she seeks reimbursement of 50% or $15,501.00. These expenses include counselling, march break and summer camps, orthodontics and skating as well as credit with respect to drugs and travel expenses paid for by Mr. Gonzalez. I will address them individually below.
14At the outset, and as Mr. Gonzalez pointed out during the hearing, the majority of issues have been worked out. These children are both in private school and the total of their s. 7 expenses are over $100,000 per year. The amounts in issue before the court today cover roughly one and a half years, so according to Mr. Gonzalez the amounts in issue approximate about 20% of the annual s. 7 expenses. That amount, however, as Mr. Viater submitted, is not insignificant to Ms. Aguilar, particularly when she has had to retain counsel to resolve the dispute, and particularly when, in Mr. Viater’s submission, these ongoing issues are symptomatic of a lack of cooperation on Mr. Gonzalez’s part with respect to the s. 7 expenses.
15Mr. Gonzalez submitted that the context of the Agreement was that consent would be required in advance out of the parties’ mutual respect for the fact that they would be leading independent lives and that their individual circumstances would influence their abilities to pay for certain expenses
16Having carefully reviewed the Agreement and the submissions of the parties, I conclude that the requirement of consent only applies to those special or extraordinary expenses not set out at Articles 5.9 to 5.13 of the Agreement, and to those that do exceed the estimated totals for those expenses set out at Article 5.11.
17The argument that consent is required in advance of any s. 7 expenses is not consistent with the literal wording of the contract, read as a whole. As a matter of law, the court must interpret contracts according to the wording and terms that they use. External evidence or context is not to be relied upon unless the words themselves are unclear or ambiguous. As the Supreme Court of Canada stated recently, the court must “read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”: Sattva Capital Corp . v. Creston Moly Corp 2014 SCC 53, [2014] S.C.J. No. 53 at para. 47. The Supreme Court emphasized in Sattva that the language of the contract remains preeminent. The surrounding circumstances “must never be allowed to overwhelm the words of the agreement”.
18In Eli Lily & Co. v. Novopharm Ltd. 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129 at paras 54-56, the Supreme Court of Canada emphasized that a court should presume that the parties to a contract intended the legal consequences of the words they used as follows:
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. … Indeed, it is unnecessary to consider any extrinsic evidence at all when the document is clear and unambiguous on face. … However, to interpret a plainly worded document in accordance with the true contractual intent of the parties is not difficult, if it is presumed that the parties intended the legal consequences of their words.
19The Agreement is clear. Section 5.11 is very detailed in terms of the estimates and or upper limits of the expenses which it sets out. Moreover, a reading of the contract as a whole indicates that the parties made very significant efforts to make the amounts owing as clear as possible. Child support was fixed for the period ending July 1, 2017 without any disclosure requirements in the meantime. Changes in the parties’ financial or other circumstances were, in the meantime, not to affect the child support or s. 7 obligations of the parties.
20Most significantly for the consent argument, the activities in which the children were involved and which the parties clearly contemplated that they would continue to be involved were set out, with budgetary envelopes set out as well. Paragraphs 5.8 to 5.15 of the Separation Agreement specifically set out the parties’ agreement to contribute to enumerated section 7 expenses. The parties clearly intended for these expenses to be ongoing, at least until the July, 2017 review period. The expenses claimed fall within those budgetary envelopes.
21In addition, the provision requiring consent at Article 5.15 is contained in a separate paragraph which specifies that the enumerated expenses set out in Article 5.11 are those in which the children are involved “at this time”, and then goes on to say that consent is required which shall not be unreasonably withheld.
22In my view, the consent provision in Article 5.15 applies to expenses that arise that do not fall within those set out in Article 5.11 or which exceed the budgetary envelopes set out there. The wording and the fact that the provision on consent is in a separate paragraph which deals with expenses that are outside the ambit of Article 5.11 makes this interpretation clear and unambiguous. It also makes sense given the circumstances at the time. Reading the Agreement as a whole, it is clear that the parties were attempting to make their obligations as clear as possible. This arose from difficulties determining Mr. Gonzalez income for support purposes at a time when he was establishing a new business.
Was consent unreasonably withheld?
23I also conclude that, if I am wrong and consent is required pursuant to the Agreement even for expenses falling within the ambit of Article 5.11, Mr. Gonzalez has unreasonably withheld his consent for the disputed expenses. I will review the categories of expenses claimed below, but all of the expenses claimed fall within the ambit of contemplated expenses, both in their nature and with respect to the overall amounts claimed. Put another way, it is clear from the Agreement that these are all reasonable and necessary expenses for this family, particularly given the Agreement. The parties set out considerable detail both with respect to the sorts of s. 7 expenses they anticipated but also the approximate quantum of these expenses.
24The underlying theme of the respondent father’s submissions is that his financial circumstances have deteriorated and that he can no longer afford to pay for the expenses contemplated at the time of the Agreement. In light of the Agreement, this amounts to an attempt to review the Agreement which provided in certain terms that its provisions relating to child support and s. 7 expenses could not be changed until 2017. In the course of the hearing he acknowledged that the Agreement is valid and enforceable, but asked the Court to take his financial circumstances into account in interpreting it.
25Ms. Aguilar does not accept Mr. Gonzalez’ claim that his real income has dropped based on what she asserts to be an incongruity between his lifestyle\expenses and the income that he claims to have at this point. She also points out that income determination was a highly contested matter between the parties before they came to this Agreement. In addition, she submits that the Agreement was as detailed and specific as it was in relation to expenses and estimates precisely because Mr. Gonzalez was not cooperative in addressing these matters in a timely way.
26In sum, neither the assertion that his income has dropped, nor the submission that Ms. Aguilar justifies the failure to give consent to the expenses in issue in light of the Agreement.
27I will consider each category of expense in turn.
The Costs of Counselling
28The total amount claimed with respect to counselling is approximately $2000 over the year and a half period for which reimbursement is claimed. This amount is well under the $3800 annual amount contemplated in the Agreement. There was, as I have indicated, no basis given the Agreement and the specific contemplation of these expenses, for Ms. Aguilar to have sought the consent of Mr. Gonzalez. ( I do note that there is a dispute as to whether she generally did so by email out of courtesy.) In any event, even if consent were required, it would not be reasonable for the him to withhold it given the fact that the parties understood such expenses in these amounts to be reasonable and necessary as evidenced by Article 5.11 of the Agreement.
Skating
29The amount in issue is $1250 for the skating lessons for the boys at Leaside Skating Club. Mr. Gonzalez says that he was not consulted, stating that he could have arranged community skating for less.
30While there was no precise amount allocated for skating, it is the sort of activity that is covered within the “other activities” set out at Article 5.11. Moreover, even though there is no amount specified for this activity, the total amount claimed for the expenses set out in Article 5.11 is well under the envelope of $6,000 annually that is set out. Once again, it would not have been reasonable for Mr. Gonzalez to refuse consent for this expense in these circumstances.
Summer Camps
31Mr. Gonzalez does not agree with the amounts of $2071 and $500 incurred for summer camp and March Break camp. He did not object to a Science Centre camp expense. According to the charts submitted to the court, which are not in dispute, it is clear that the total amounts expended on all camps have fallen well below the annual budgetary envelope of $9,000. Again, consent was not required for these expenses, but given Article 5.11, I see no reasonable basis for Mr. Gonzalez to have withheld consent.
Orthodontics
32The amount claimed for orthodontic expenses is $4,000. Article 5.12 contemplated the “possible cost of orthodontics for Eric in the next two years or so” as expenses that would be shared equally. Mr. Gonzalez submitted that he takes some issue with whether these expenses needed to be incurred now, and whether this amount should have been payable at this point rather than spread over time. He acknowledges that he and Ms. Aguilar recognized that this is an expense that was coming up. He states that he simply cannot afford it.
33As there was no budgetary amount specified, the argument that consent was required is easier to make than it is with respect to the expenses set out in Article 5.11. However, Mr. Gonzalez unreasonably withheld his consent. That is because, given the expenses contemplated in the Agreement as a whole, and its recurring theme that these obligations could not be revisited for any reason until July 1, 2017, it was not open to him to argue that he cannot afford it.
34While the $4,000 amount is higher than he may have contemplated having to pay at one time, many of the expenses as I have indicated have in fact been less than the budgetary envelopes that the Agreement had contemplated. As Mr. Viater noted, this Agreement was concluded after extensive negotiation and both parties had legal representation throughout. By arguing now that he cannot pay an expense that falls within the framework of the Agreement, Mr. Gonzalez is effectively seeking to rewrite the Agreement, which he cannot do. This is an expense which must be shared by the parents.
35Having said that, I have some sympathy for the argument that, practically speaking, Mr. Gonzalez might have expected this expense to be spread out over time, and for that reason, communication as to why the expense had to be incurred in this manner would have been useful. I make no finding as to whether Ms. Aguilar did attempt such communication. Her materials express frustration with what she sees as a repeated failure of Mr. Gonzalez to respond in a timely way to her emails concerning expenses. Evidently, there have been ongoing disputes and if the parties are unable to communicate effectively enough to avoid such disputes, then it may be necessary, as part of any review in 2017, to revise the s. 7 provisions so that the amounts are predetermined for certain periods of time.
Ticket to Mexico and drug costs
36The parties had also disagreed as to certain expenses paid by Mr. Gonzalez for which he was claiming credit from Ms. Aguilar. Mr. Gonzalez was seeking credit for ADD medications not covered by drug plans. This is an expense contemplated in Article 5.13, but it is also clear that the parties contemplated that while Ms. Aguilar was paying premiums through her employment for health benefits for the children, he would pay for the ADD medication that was not covered. Ms. Aguilar’s plan ended when she was laid off from her previous employer in June 2015 and obtained new employment in January, 2016. Mr. Gonzalez submits that he the ADD expenses over this period should be shared because the “quid pro quo” of Ms. Aguilar paying the premiums was no longer in operation. This position is not unreasonable and, in fact, credit for this was included in Mr. Viater’s calculations presented to the court.
37The issue with the travel to Mexico was slightly different. While it seems to be agreed that at least part of the purpose underlying the roughly $2000 amount claimed by Mr. Gonzalez, Ms. Aguilar’s objection was that she had never seen a receipt. Mr. Gonzalez did not press this in the course of the hearing. Accordingly, I would allow credit for the drug expenses for Eric but not the travel claim.
Conclusion
38The result of the foregoing is that, after crediting Mr. Gonzalez for the amount paid for the ADD medication, the result is that Ms. Aguilar has paid a total of $68,342.42 in eligible expenses while Mr. Gonzalez has paid a total of $37,340.00. An order will issue that he pay half of the difference between these amounts, which is $15, 501.00.
39On consent, orders will issue incorporating the Agreement into a court order, and providing that Mr. Gonzalez will furnish proof of life insurance to Ms. Aguilar through her counsel within 7 days.
40There is no need for any other orders at this time in relation to the Agreement, which, as I have indicated, is valid and enforceable. If necessary, the parties may bring motions to enforce other obligations set out in the Agreement.
41The parties may make brief submissions to the court on costs within 30 days on a timetable to be agreed upon between themselves. Approval as to form and content of this order by Mr. Gonzalez is dispensed with.
Harvison Young J.
Date: October 28, 2016