Court File and Parties

COURT FILE NO.: FS-16-20653 DATE: 20170221

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Philip Freire, Applicant - and - Adalaura Testani Freire, Respondent

BEFORE: Justice S. Stevenson

COUNSEL: Murray E. Lightman, for the Applicant Philip Viater, for the Respondent

ENDORSEMENT

Introduction

[1] The applicant commenced an Application on January 29, 2016 seeking inter alia an order setting aside the parties’ Separation Agreement (the “Agreement”) dated October 15, 2007 and equalization of net family property. He also requests an extension of time to bring a claim for equalization. The respondent pleads in her Answer that the applicant is out of time to bring a claim for equalization and that the parties settled all matters in their Agreement. She asks that the Application be dismissed.

[2] There are two motions before the court. The applicant has brought a motion seeking an order extending the time for the bringing of an application for equalization of net family property pursuant to section 2(8) of the Family Law Act, R.S.O. 1990, c. F.3, as am. (the “Act”). The respondent has brought a cross-motion seeking summary judgment pursuant to Rule 16 of the Family Law Rules, O. Reg. 114/99, as am., (the “FLRs”), or, in the alternative, an order for security for costs. Both parties also seek costs.

Background

[3] The parties were married on May 6, 1989 and separated on February 11, 2005. They were subsequently divorced pursuant to the order of Paisley J. dated September 8, 2008. During the course of their marriage, the parties had two children with their first child born in 1990 and the second in 1991. Neither child remains a child of the marriage.

[4] Both parties acknowledge that they entered into a Marriage Contract (the “Contract”) on May 2, 1989, four days before the parties were married. The applicant contends that he had completely forgotten about the Contract until he received a copy that was e-mailed to his lawyer on September 22, 2016. The applicant asserts that the respondent has not relied upon the Contract in her pleadings.

[5] The applicant submits that it was never his intention, nor did the parties discuss, that they were to have separate property for the remainder of their married life. He further contends that the parties did not conduct themselves in accordance with the terms of the Contract and that subsequent to the execution of the Contract both parties ignored it.

[6] In contrast, the respondent asserts that the Contract is an enforceable domestic contract and it confirms the parties’ intention to remain separate as to property in the event of a separation. She further contends that both parties waived any right to equalization of net family property in the Contract. It is the respondent's position that during the marriage the parties only had one joint account and the rest of their assets were separate. The respondent submits that the applicant has not taken any steps to seek to set aside the terms of the Contract and has not challenged the validity of the Contract.

[7] It is not disputed that on the date of marriage the respondent owned a home registered solely in her own name. There was no mortgage on the home. Approximately two years after the date of marriage, the respondent sold that home and used the proceeds of sale towards the purchase of the matrimonial home located at 16 Wendell Avenue in Toronto, Ontario which was registered jointly in the names of the applicant and respondent. It is also undisputed that the respondent's parents provided her with the remainder of the funds required to purchase the matrimonial home so there would be no mortgage on the property. The applicant does not dispute that he did not contribute any funds to the purchase of the matrimonial home but he deposes that he contributed significantly through both finances and labour to the matrimonial home and its renovations throughout the marriage. This is disputed by the respondent.

[8] On June 9, 2001, title to the matrimonial home was transferred into the respondent's name only. The parties do not agree as to the reason for the home being transferred into the name of the respondent alone. The applicant claims that the transfer was made for liability reasons with respect to a company owned by him. The respondent disputes that the respondent owned a company at that time and contends that he did not own any business until after separation.

[9] The respondent deposes that the reason the home was placed in her name alone was that the applicant admitted to an extramarital affair in 2001 which put a significant strain on the parties’ relationship. The applicant does not dispute the affair. The respondent contends that in 2001 there was ongoing construction/renovations to the matrimonial home and the parties did not have enough funds to complete the construction/renovations. The respondent further deposes that her father, who is an architect, agreed to assist with the completion of the construction/renovations of the matrimonial home through his labour and financially. It is the respondent's position that her father would not assist if the matrimonial home remained in joint names as it was the respondent's father's view that the applicant had never assisted financially with the matrimonial home and he was upset with the applicant for having an affair. The respondent also deposes that she sold another property registered in her name, but held in trust by her for her parents, in July 2001 and used those proceeds towards the matrimonial home. A mortgage was also placed on the matrimonial home to assist with the cost of renovations.

[10] Attempts were made to reconcile the relationship but the parties separated on February 11, 2005. After separation, the applicant resided in the basement of the matrimonial home. The parties subsequently entered into a Separation Agreement (the “Agreement”) on October 15, 2007. It is the applicant's position that the Agreement was prepared by the respondent's lawyer. The applicant deposes that he was concerned at the time that the children remain in the matrimonial home such that their stability and well-being would not be affected and their lives not disrupted in any way. The applicant contends that he did not seek independent legal advice and that he signed the Agreement in the presence of his mother. He deposes that there were no negotiations or discussions concerning the terms of the Agreement and there was no financial disclosure provided.

[11] The applicant takes the position that the Agreement was completely one-sided and unfair. He contends that despite the respondent being employed as a teacher, her pension was never valued and he had no idea as to the value of the pension. He also asserts that he was given no right to possession of the matrimonial home in the Agreement and he was obligated to pay rent while residing in the basement. The rent could be changed at any time by the respondent alone. Further, the applicant contends that the Agreement provided that if the matrimonial home were to be sold, the respondent would receive an amount that she deemed suitable and he had no defined right to any amount under the terms of the Agreement. It is the applicant's position that he agreed to the terms of the Agreement primarily out of his concern for his children and his assurances by the respondent that he would be treated fairly. The applicant asserts that the respondent inappropriately involved the children in the marital discord when learning of the applicant’s affair in 2001, and continuation of that affair in 2004, by waking up the children in the middle of the night and telling them about the applicant’s affair. The applicant contends that he was always concerned for the children and that they not be further affected by uprooting them from their home.

[12] The respondent deposes that the Agreement is a valid domestic contract and enforceable as such. It is her position that the terms of the Agreement were negotiated and that the parties jointly paid to have the Agreement drafted in accordance with the terms that they had both agreed to. She further contends that the parties exchanged financial disclosure and that the applicant had access to all of her bank accounts and pension statements such that he was fully aware of all of her assets. She further contends that there were several interim drafts of the agreement and that the applicant considered the Agreement for a month prior to signing it. She deposes that this is evidenced by the handwritten change of date on the Agreement from September to October. The respondent submits that the applicant made changes to the final Agreement in writing and his changes were accepted and included in the final draft. The respondent further asserts that the applicant acknowledges in his sworn affidavit that he did not seek independent legal advice by his own choice as he did not deem it necessary. She further contends that the applicant agreed and understood the terms of the Agreement.

[13] It is the respondent's submission that the parties abided by the terms of the Agreement after it was executed by them. She deposes that the applicant received 50% of the funds in the parties’ joint bank account and that the parties divided debts and household contents. She further contends that the applicant continued to reside in the basement and he paid rent according to the terms of the Agreement. The respondent asserts that the support provisions of the Agreement were also followed in that the applicant paid the respondent $800 per month for child support as set out in the Agreement. She also contends that she paid over $50,000 for the children’s post-secondary education without contribution from the applicant and she had to re-finance the home in order to do so.

The Applicant’s Motion for an Extension of the Limitation Period

[14] Section 7(3) of the Act states that an application for equalization of net family property based on subsections 5(1) or 5(2) of the Act shall not be brought after the earliest of:

(a) two years after the day the marriage is terminated by divorce or judgment of nullity;

(b) six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation;

(c) six months after the first spouse’s death.

[15] Section 2(8) of the Act states that the court may, on motion, extend a time prescribed by the Act if it is satisfied that,

(a) there are apparent grounds for relief;

(b) relief is unavailable because of delay that has been incurred in good faith; and

(c) no person will suffer substantial prejudice by reason of the delay.

[16] There is no dispute between the parties that pursuant to s. 7(3) of the Act, the applicant is out of time to bring a claim for equalization. Given the parties’ date of divorce is September 8, 2008 and, accounting for the 31 day appeal period, a claim for equalization would have to have been made by October 9, 2010. The parties’ date of separation is February 11, 2005, therefore a claim would have had to have been made by February 11, 2011. As per s. 7(3), the earliest of these dates is October 9, 2010 and the Application was not commenced until January 29, 2016. The applicant must therefore seek an extension of the limitation period under s. 2(8) of the Act.

(a) apparent grounds for relief

[17] With respect to the first part of the test, the applicant sets out in his factum that he has “obvious and apparent grounds for relief, in that all assets of any significance at the time of separation, and in particular the matrimonial home, were in the name of the Respondent.” He further states that there is “clearly a substantial equalization payment owing to him.”

[18] It is the respondent's position that the applicant now seeks to set aside the Agreement and seek equalization of net family property 11 years after separation, 9 years after the Agreement was signed, 8 years after the parties’ divorce was granted and over 5 years after the expiration of the limitation period. She contends that the applicant is out of time to make a claim. The respondent also contends that the applicant cannot do so because the parties’ Agreement and Contract preclude both parties for making property and equalization claims against the other. Counsel for the respondent submits that the applicant has not made any claims to set aside the Contract or to amend his pleadings to address the issue of the Contract. The respondent contends that even if the Agreement were to be set aside, the Contract remains valid and enforceable.

[19] Counsel for the applicant submits that the applicant is not seeking an order on this motion to set aside the Contract and the Agreement but he contends that there is a genuine issue requiring a trial given the conflicting evidence regarding the execution of the Contract and the Agreement. Counsel for the applicant asserts that pursuant to s.56(4) of the Act, the respondent failed to disclose significant debts or assets or other liabilities as there was no financial disclosure provided with respect to either the Contract or the Agreement at the time of signing. The applicant further asserts that he did not understand the nature or consequences of the Contract. He contends that the respondent acknowledges in her affidavit that the parties had to sign the Contract because of the influence of her parents at the time. He further asserts that neither party understood that there would never be equalization of net family property as the parties continued to have a joint account and own joint property during the marriage.

[20] Additionally, counsel for the applicant contends that the applicant was under duress when he signed the Contract given the pressure of the respondent’s parents. Further, counsel for the applicant argues that the Agreement provides nothing to the applicant after 16 years of marriage and all discretion is left with the respondent. The respondent has the sole discretion to decide if and when the matrimonial home will be sold and what amount, if any, the applicant will receive from any proceeds of sale of the matrimonial home. The applicant submits that the Agreement is unconscionable and that that paragraph 10.2 of the Agreement is “replete with inconsistencies and contradictory statements” rendering it void for uncertainty.

[21] Counsel for the applicant also submits that the respondent has not pleaded the Contract in her Answer and only presented the Contract to the applicant for the first time in September 2016. Counsel for the applicant does not suggest that there was any intention or “ambush” by the respondent but rather both parties had forgotten about the Contract as they did not rely upon it during their marriage. He also states that the terms of the Contract were extinguished by the terms of the Agreement.

Analysis

[22] As set out by the Ontario Court of Appeal in Scherer v. Scherer, 2002 ONCA 44920 at para. 16: “…the “relief” under s. 2(8)(a) (and under s. 2(8)(b)) is not referable to the extension of time sought by the moving party on the motion but to the relief sought on the prescribed claim.”

[23] On the record before me, neither party pleaded the validity of the Contract as a legal issue in their Application or Answer. Neither party sought an order in their Notices of Motion to amend their pleadings to address the validity and enforceability of the Contract. Although both parties referred to the Contract in their affidavit material and facta on these motions, looking at the legal issues pleaded and the fact that the Contract was not pleaded as a legal issue by either party, with neither the applicant seeking to set the Contract aside nor the respondent seeking to rely on the validity of the Contract, the issue of the validity of the Contract is not properly before the court. As such, I will not address the issue of the Contract on this motion as it cannot be relied upon by either party when it has not been pleaded as a legal issue.

[24] In order to be able to claim equalization of net family property, the applicant would need to set aside the Agreement pursuant to s.56(4) of the Act. Pursuant to s. 56(4), the court may set aside a domestic contract or a provision in it, if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made; if a party did not understand the nature or consequences of the domestic contract; or otherwise in accordance with the law of contract.

[25] As set out in LeVan v. LeVan, 2008 ONCA 388 at para. 51, in a claim under s. 56(4), the burden of proof is on the party seeking to set aside the Agreement to persuade the court to exercise its discretion. Further, as stated in LeVan, the analysis of the court is comprised of a two-part process: first, the court must consider whether the party seeking to set aside the agreement can demonstrate that one or more circumstances set out within the provision have been engaged and, if so, the court must then consider whether it is appropriate to exercise discretion in favour of setting aside the agreement.

[26] The applicant relies upon the Supreme Court of Canada decision of Rick v. Brandsema, 2009 SCC 10 in support of his position that separation agreements are not and should not, be seen as subject to the same rules as commercial contracts between two parties of equal strength. The applicant also relies upon the decision of Butler v. Butler, 2015 ONSC 6796, 2015 CarswellOnt 19859 wherein Volgelsang J. held that fairness of the agreement is an “appropriate consideration in the exercise of the court’s discretion in the second stage of the s. 56(4)(a) analysis.”

i) Failure to disclose

[27] In the decision of Quinn v. Epstein Cole LLP, 2007 ONSC 45714 Brown J. set out the factors that the court will consider when deciding whether to set aside an agreement for non-disclosure at paras. 46-48:

[46] Section 56(4)(a) of the Family Law Act provides that a court may set aside a domestic contract, or a provision in it, "if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made".

[47] The case law indicates that a court should employ a two-stage analysis when considering a claim to set aside a domestic contract for non-disclosure:

(i) First, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge its duty to disclose significant assets. The failure to disclose significant assets includes the making of a material misrepresentation about the true value of assets, and the failure to disclose changes in income. The significance of an asset is assessed by measuring the value of the asset against a party's disclosed net assets. To conclude that a party has failed to disclose a significant asset, there must be some evidence to verify the value or extent of the party's assets either at the date of marriage or the date of the agreement;

[48] Finally, formal disclosure by way of sworn financial statements prior to executing an agreement is not necessary to meet the obligation to disclose. A general awareness of the assets of the other party may be sufficient to avoid setting aside an agreement. Parties are expected to use due diligence in ascertaining the facts underlying their agreements; a party cannot fail to ask the correct questions and then rely on a lack of disclosure. One must inquire whether the responding party withheld information or whether the information was available to the party seeking to set aside the agreement.

Analysis

[28] There are no Financial Statements attached to the Agreement, which as set out in Quinn, are not necessary to meet the obligation to disclose. However, I note that in paragraph 24 of the Agreement, it is stated that each party “has fully and completely disclosed to the other the nature, extent and probabic [sic] value of all his or her significant assets and all his or her significant debts or other liabilities (existing at the date of this contract), as evidenced by the Financial Statements previously exchanged.” It further states that each has “given all information and particulars about his or her assets and liabilities that have been requested by the other and is satisfied with the information and particulars received from the other”. Additionally, there is an acknowledgment that there are no requests for further information or particulars that have not been met to his or her complete satisfaction.

[29] There is also reference to the value of the matrimonial home of $800,000 and reference to monies that would be paid first to the respondent from the proceeds of sale of the matrimonial home if a sale is to take place in the future, which sale is solely in the discretion of the respondent. This includes the sum of $450,000 being paid to the respondent plus any further mortgage payments made by her from October 1, 2007 onward. The Agreement also references the amount of mortgage outstanding at the time which was approximately $190,000.

[30] There is no documentary evidence before the court as to what financial disclosure was exchanged between the parties. The parties disagree as to whether there was disclosure. The respondent deposes that the applicant was aware of all of her assets and that he viewed her bank accounts and other statements including that of her pension. There is no evidence that a pension valuation was completed which would have been a comprehensive valuation not simply a pension statement. However, the Agreement addresses the issue of waiver of the right to a division of the pension of the other and the parties specifically signed a Spousal Waiver of Joint and Survivor Pension form that is attached to the Agreement.

[31] Based on the record before me, the applicant has not provided any evidence to suggest that the respondent failed to disclose significant assets or debts at the time the Agreement was entered into by the parties. The parties addressed the issue of the matrimonial home in the Agreement even agreeing to its value. Additionally, in his affidavit sworn August 11, 2016, the applicant deposes that the respondent had a valuable teacher’s pension “but there was never any discussion or consideration of having the pension valued. I had no idea as to the value of the pension. I truly trusted that the Respondent would deal fairly with me in the future.” This suggests that the applicant was aware that the respondent had a valuable pension and that he had an opportunity to request a proper valuation if he was not satisfied with the information provided to him. The language of the Agreement at paragraph 24 as referred to above, suggests that the applicant was satisfied with the disclosure that had been provided to him. It appears that the applicant was aware of the respondent’s assets and chose not to seek a formal appraisal of the matrimonial home or a pension valuation. There is no evidence that the respondent withheld information. Taking all of these factors into consideration, I am not satisfied that there was a failure to disclose by the respondent.

ii) Failure to understand the nature or consequences of the Agreement

[32] In the applicant's factum and in oral argument, counsel for the applicant relies on the decision of Mesbur J. in Dhanna v. Dhanna, 2004 CarswellOnt 6131 as being similar to the facts of this case. Counsel contends that the wife in Dhanna testified that she did not recall reviewing the marriage contract in any detail and did not understand that property accumulated during the marriage would be exempt from division. Despite the fact that the contract contained a certificate of independent legal advice, the wife did not recall what the lawyer providing the advice to her had told her. Mesbur J. accepted the evidence of the wife that she had an entirely different understanding of the purpose of the agreement than what the agreement actually provided. She also found that the wife had no real independent legal advice. Counsel for the applicant submits that the wife in Dhanna was in similar circumstances as the applicant which led to the marriage contract being set aside in that case.

[33] The applicant also relies upon the decision of Dada v. Jivraj, 2012 ONSC 3665 in support of his position that as the wife in Dada, the applicant was also not clear in understanding the significance of there being no property division. The applicant contends that the solicitor’s certificate did not contain a specific clause indicating that the lawyer had explained the nature and consequences of the agreement to the wife.

Analysis

[34] The applicant makes these assertions and relies upon these decisions in support of his position that he did not fully understand the implications of signing the Contract. No such argument is made by the applicant with respect to the Agreement. I have previously articulated in paragraph 23 above my conclusions with respect to the Contract. Based on the record before me, I am not persuaded that there is any evidence that the applicant did not understand the nature or consequences of the Agreement. On the contrary, the applicant's own evidence supports that he understood the nature and consequences of the Agreement. The applicant deposes in his affidavit sworn August 11, 2016 that he “agreed to the agreement, despite the obvious unfairness of the provisions, due primarily to concern for my children, and also as a result of the fact that the Respondent assured me that I would be treated fairly. I asked nothing for myself.”

[35] It is acknowledged that there is no certificate of independent legal advice attached to the Agreement with respect to any advice given to the applicant. There is, however, at paragraph 23 of the Agreement an acknowledgment by both parties that he or she has had independent legal advice; has read the agreement in full prior to signing and acknowledges that he or she fully understands the nature and effect of the Agreement. There is also a provision that both parties understand his or her respective rights and obligations under the agreement, the nature and consequences of the agreement and acknowledges that the terms are fair and reasonable. Additionally, it is stated that each party acknowledges that he or she is entering into the Agreement without any undue influence, fraud or coercion whatsoever and is signing the Agreement voluntarily.

[36] The applicant deposes that at the time of the signing of the Agreement he was “concerned only with the stability and well being of my children, and did not wish to further disrupt their lives in any way. When presented with the separation agreement, I did not feel it necessary to seek independent legal advice, and I simply signed the agreement in the presence of my mother.” By the applicant's own admission, he chose not to seek independent legal advice. The applicant knew he could do so, he had the opportunity to do so, and he chose not to. For all of these reasons, I am not satisfied that the applicant failed to understand the nature or consequences of the Agreement.

iii) Otherwise in accordance with the law of contract

[37] The Ontario Court of Appeal decision of Ward v. Ward, 2011 ONCA 178 at para. 21 sets out the grounds applicable to setting aside a domestic contract pursuant to s. 56(4)(c). These grounds include unconscionability, duress, uncertainty, undue influence, mistake and misrepresentation. On this motion, the applicant submits that the Agreement should be set aside on the basis of unconscionability, duress and uncertainty.

a) Unconscionability

[38] The applicant submits that the Agreement itself is unconscionable. He contends that the agreement is completely one-sided and provides absolutely nothing to the applicant after 16 years of marriage.

[39] In the recent decision of Toscano v. Toscano, 2015 ONSC 487, 57 R.F.L. (7th) 234, Blishen J. provides a comprehensive summary of the issue of unconscionability at paras. 63-66 and 68 of her decision:

[63] Although in her Application Ms. Toscano argued that the consequences of the marriage contract were unconscionable, in general the doctrine of unconscionability with respect to domestic contracts focuses on whether or not there were unconscionable circumstances surrounding the formation of the contract. It is the circumstances at the time of the drafting and signing of the contract which must be examined, not the results, under this criterion. There is an exception for a spousal support waiver which can be set aside if it results in unconscionable circumstances, pursuant to s. 33(4) of the FLA.

[64] Matrimonial negotiations occur in a unique environment and therefore unconscionability in the matrimonial context is not equivalent to unconscionability in a commercial context (Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295, at para. 43 [Brandsema]). The question to be asked is whether there were “any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation” (ibid, at para. 44).

[65] Examples of inequality in bargaining may include one party being intellectually weaker by reason of a disease of the mind, economically weaker or situationally weaker. Vulnerability may also arise due to a special relationship of trust and confidence (see Norberg v. Wynrib, 1992 SCC 65, [1992] 2 S.C.R. 226, at para. 33). However, the “mere presence of vulnerabilities will not, in and of itself, justify the court’s intervention. The degree of professional assistance received by the parties will often overcome any systemic imbalances between the parties” (Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303, at para. 82, [Miglin]).

[66] In Rosen v. Rosen, 1994 ONCA 2769, 3 R.F.L. (4th) 267 at para. 12 (Ont. C.A.), the Ontario Court of Appeal states the question to be answered in determining unconscionability is whether there was inequality between the parties, or a preying of one upon the other, that placed an onus on the stronger party to act with scrupulous care for the welfare and interests of the vulnerable. At para. 13 the Court notes it is: “not the ability of one party to make a better bargain that counts. Seldom are contracting parties equal. It is the taking advantage of that ability to prey upon the other party that produces the unconscionability”.

[68] In Miglin at para. 83 the Supreme Court of Canada notes that the emotional stress from separation or divorce does not give rise to the presumption that a party is incapable of assenting to a binding agreement...

[40] The applicant focuses on his assertion that the Agreement is unfair to him and “one-sided”. He submits that after a lengthy marriage, the terms of the Agreement leave all discretion with respect to the division of the proceeds from any sale of the matrimonial home with the respondent alone. As indicated, he also contends that the respondent has a valuable pension which is not subject to division as per the terms of the Agreement.

Analysis

[41] As set out in Toscano, it is the circumstances at the time of the drafting and signing of the contract which must be examined, not the results. The applicant focuses mainly on the results of the Agreement as being unfair with the exception that he does depose at the time of the signing of the Agreement he did not wish to further disrupt the children and remove them from the home. The applicant alleges that the respondent had inappropriately involved the children and he did not want to affect them further. As set out in the applicant's factum, he asserts that he was vulnerable at the time as the respondent was aware that the applicant was feeling guilty about his affair and he was distraught about upsetting the lives of the children. The applicant submits that as a result he signed the Agreement which provided little or no benefit to him.

[42] The evidence of both parties is that the applicant had an affair in 2001 which resumed again, after a period of reconciliation between the applicant and respondent, in 2004. Despite their best efforts, the parties could not reconcile their marriage and they separated on February 11, 2005. The Agreement was not signed until October 15, 2007. At the time of the drafting and execution of the Agreement, there is no evidence of oppression or pressure by the respondent upon the applicant. The applicant's affair commenced in 2001. The applicant and the respondent then reconciled and the respondent resumed the affair in 2004. In his affidavit the applicant deposes that this is the time frame in which the respondent told the children about the affair and forced him to admit the affair to the children. The Agreement was not executed by the parties until three years later when the children were approximately 16 and 17 years old.

[43] While the applicant may have been feeling guilty at the time of the execution of the Agreement and that he did not want to disrupt the children, his evidence is that he trusted the respondent. There is no evidence that the respondent took advantage of any guilt or vulnerability the applicant may have had at the time. As indicated, the applicant deposes that he chose not to seek independent legal advice. He further deposes that he was aware of a valuable pension owned by the respondent. Based on the evidence before me, there was not an inequality between the parties or a preying upon the applicant by the respondent. The applicant chose to sign the Agreement without independent legal advice and in his own evidence acknowledges that he knew of what he deems was the “unfairness” of the Agreement. As such, I do not find that there were unconscionable circumstances at the time of the drafting and signing of the Agreement.

b) Duress

[44] As set out above, the applicant claims that he was under duress when he signed the Contract. There does not appear to be any allegation of duress made with respect to the signing of the Agreement. In the event that I am unclear in the submissions being made by the applicant regarding duress and the Agreement, I will address the issue.

Analysis

[45] Kiteley J. in the recent decision of Turk v. Turk, 2015 ONSC 5845 at para. 93 set out the meaning of duress:

[93] I accept and rely on this description of duress:

Duress is said to occur where there is such pressure placed on one of the parties that any consent by that party is not sufficient to uphold the agreement. There exists an absence of choice which in effect vitiates any ability to lawfully consent. However, duress sufficient to void an agreement does not arise based only upon a lack of will to proceed but rather it must be based upon a resolution on the part of the submitting party that there is no other practical choice but to perform the act in question. Duress can be established based upon actual or threatened violence or upon economic considerations.

[46] Based on the evidence before me, I cannot conclude that the applicant was under such pressure that he felt compelled and had no choice but to sign the Agreement. As already indicated, in his own words the applicant chose not to seek independent legal advice and he was aware of what he perceived was the unfairness of the Agreement. There is no evidence that the applicant was under any duress when he signed the Agreement which took place approximately two years after the date of separation. He made the choice to sign the Agreement of his own volition. The applicant’s evidence that he did not want to disrupt the children further and that he trusted the respondent in my view does not give rise to duress.

c) Uncertainty

[47] Counsel for the applicant submits that paragraph 10.2 of the Agreement which deals with the matrimonial home is “replete with inconsistencies and contradictory statements”. Counsel states in the applicant’s factum that “… either the agreement provides for a formula relating to the distribution of sale proceeds, or, it is at the discretion of the wife, but the agreement cannot provide for both.”

[48] In contrast, counsel for the respondent submits that there is no ambiguity or uncertainty in the terms of the Agreement and in particular paragraph 10.2. He contends that the respondent has the sole discretion as to whether or not to sell the matrimonial home and the timing of that sale. He submits that she also has discretion with respect to the calculation of the applicant’s share of the proceeds if the sale is to take place.

[49] Counsel for the respondent further submits that even if paragraph 10 is found to be void for uncertainty, the parties’ Agreement in paragraphs 22.4 and 22.5 provides that the terms of the Agreement are severable from one another and if any term is found to be void, the other terms are to be construed as a separate contract and enforceable as such. He contends that, as set out in paragraph 15 of the Agreement, both parties agree to release any claims to equalization.

Analysis

[50] I agree with the submissions of counsel for the respondent that although the language and wording in paragraph 10.2 of the Agreement is not written in the simplest form, it is clear that the decision of whether or not to sell the matrimonial home is that alone of the respondent as is the distribution of the proceeds of sale taking into consideration the funds that the respondent had already put into the home as well as mortgage payments that would be made by the respondent from October 1, 2007 onward. It is clear that the discretion lies solely with the respondent and I find that there is no uncertainty.

Conclusion With Respect to Apparent Grounds for Relief

[51] As stated above, in order to be able to claim equalization of net family property, the applicant would need to set aside the Agreement pursuant to s.56(4) of the Act. Taking into consideration all of the factors above, I find that there are no apparent grounds for relief as the applicant will be unable to set aside the Agreement in accordance with the provisions set out in s. 56(4).

(b) relief is unavailable because of delay that has been incurred in good faith

[52] As indicated, the applicant contends that he was acting honestly and in good faith at all times and that any delay was only because the applicant was concerned about the children remaining in the home as he wanted to provide them with stability. He was also concerned about the children as he submits the respondent had involved them in the separation. The applicant contends that there was no ulterior motive on his part in delaying and that any delay has only served to deny him his equity in the matrimonial home. He submits that he was reliant upon the good faith of the respondent whom he trusted to negotiate with him fairly. The applicant further asserts that he was unaware of any limitation period. He contends that it is the respondent who has failed to deal with the applicant in good faith and who now seeks to rely upon the limitation period compelling him to bring this motion.

[53] The respondent submits that the applicant claims ignorance of the limitation period. As set out in her factum, she states that if the court accepts the applicant’s claims, then the applicant’s ignorance of the law “rises to the level of willful blindness, and his delay in making inquiries for 11 years after the separation falls well below community standards.” The respondent further contends that the applicant had dealings with lawyers in the past including the negotiation and execution of the Contract. The respondent relies upon Scherer to support her submission that the applicant’s claim that he delayed for the benefit of the children is insufficient to warrant an extension and qualify as good faith. The respondent also asserts that the applicant provides no evidence of being impecunious thus preventing him from seeking legal advice between 2005, when the parties separated, to 2015 when he retained a lawyer.

Analysis

[54] In the Ontario Court of Appeal decision of El Feky v. Tohamy, 2010 ONCA 647, Rosenberg J.A. sets out the meaning of good faith at para. 34 as follows:

[34] A more appropriate explanation for the meaning of good faith in this context is found in the decision of Mendes da Costa U.F.C.J. in Hart v. Hart, 1990 ONSC 12268, 27 R.F.L. (3d) 419 at p. 432:

Section 2(8)(b) enshrines in legislative form the concept of “good faith”. As is not infrequently the case, these words are not defined in the Act, and I do not believe that it would be either possible or useful to attempt to catalogue the possibilities that they embrace. However, I must attribute to these words their “plain meaning according to the understanding and practices of the times.”: Cash v. George Dundas Realty Ltd., 1973 ONCA 40, 1 O.R. (2d) 241, 248 (C.A.). I believe, to establish “good faith”, it must be shown that the moving party acted honestly and with no ulterior motive. It does not seem to me that the Legislature, anticipating the general newsworthy nature of the family property provisions of the Act, intended that a mere failure to make enquiries should necessarily negate “good faith”, provided that the absence of enquiry does not constitute wilful blindness or does not otherwise, in all the circumstances, fall below community expectations. As I have stated, my assessment of the evidence is that the wife was ignorant of her rights under the Act, and I believe that her state of mind was one of blameless ignorance. I am satisfied that the delay in issue was delay incurred in good faith within the meaning of section 2(8)(b).

[55] The applicant delayed in bringing his Application for a lengthy period of time. The Application was commenced in January 2016, approximately 8 years after the divorce was granted and 11 years after separation. This is significant delay. The parties conducted themselves in accordance with the terms of the Agreement and the applicant took no steps to move to set aside the Agreement. The applicant paid rent to the respondent to reside in the home for a period of time as per the Agreement and he left when the respondent asked him to leave. The applicant paid child support in accordance with the Agreement (he did not pay section 7 expenses as none were in the Agreement) and the respondent continued to pay all mortgage payments. It may be that the applicant acted honestly in his desire not to upset the children and with no ulterior motive, but I agree with the submissions of the respondent that the applicant’s failure to take steps to set aside the Agreement in order to make a claim for equalization of net family property and to inquire as to a limitation period in a timely fashion does constitute wilful blindness and falls below community expectations.

[56] Again, the applicant knew that he could seek independent legal advice previously prior to signing the Agreement and he chose not to do so. There is insufficient evidence provided by the applicant to prove that he was impecunious and could not afford to consult a lawyer. Evidence provided by the respondent regarding the applicant’s business leads the court to conclude that the applicant could have afforded to consult with a lawyer at an earlier point during which such consultation undoubtedly the applicant would have been advised about a limitation period. There is also no evidence that the applicant sought a free initial consultation with a lawyer, as is often offered, where the issues would have been discussed including that of a limitation period. The applicant was aware of the terms of the Agreement and he deposes that he was aware at the time of signing that the terms in his view were unfair. Nothing prevented him from moving quickly to set aside the Agreement and he did not do so. The children were approximately 17 and 16 years old at the time of the execution of the Agreement yet the applicant waited approximately 9 more years to commence an Application. He initiated contact with the applicant in 2014 and waited until 2016 before commencing an Application. For all of these reasons, I do not accept that the applicant’s delay was incurred in good faith.

c) no person will suffer substantial prejudice by reason of the delay

[57] The applicant submits that there is no prejudice to the respondent by reason of the delay. He contends that the respondent has had the benefit of residing in the home without having to pay any occupation rent to the applicant or other financial compensation. The applicant asserts that he has been prejudiced as his equity has been tied up and the respondent alone benefits from the significant appreciation in the value of the home as it is registered in her name alone.

[58] Counsel for the applicant submits that the respondent will not suffer any prejudice as her significant asset, which is a teacher's pension, is easily valued as is the matrimonial home at the date of separation. Further, counsel contends that as is evidenced by the amount of documentation produced by the respondent for this motion, the respondent is a “packrat” and it is likely that she has the necessary documentation in her possession in order to prove any date of marriage deductions. Further, counsel contends that the respondent had every opportunity to pursue section 7 expenses since the date of separation but she chose not to and did not seek contribution from the applicant. He further contends that there is nothing precluding the respondent from seeking an unequal division of net family property if the applicant is allowed to seek an equalization of net family property.

[59] In contrast, the respondent submits that she will suffer substantial prejudice as a result of the delay. It is the respondent's position that given the significant period of time that has elapsed since separation many of the documents that she requires to prove her date of marriage deductions, which she claims are significant, along with documentation evidencing her monies spent on renovations and those family monies spent by the applicant on his affair, are no longer available. Given the fact that this documentation is no longer available, the respondent deposes that she will be greatly prejudiced if she has to proceed to trial without this documentation.

[60] Further, the respondent asserts that she governed herself according to the terms of the Contract and the Agreement. By doing so, it is her position that she did not pursue spousal support against the applicant, nor did she pursue claims for increased child support and contribution from the applicant to the children's significant section 7 expenses. As indicated, the respondent deposes that she spent over $50,000 on the children's section 7 expenses without contribution from the applicant. The respondent argues that if the applicant is allowed to proceed with his claims and seeks to set aside both the Contract and the Agreement, she will not be able to claim retroactive child support as the children are now over the age of majority. She asserts that this is significantly prejudicial to her.

[61] The respondent also denies the applicant's claims that the parties negotiated after the expiration of the limitation period. Counsel for the respondent submits that the applicant has not provided any evidence of negotiation between the parties or evidence of correspondence from the respondent or her counsel wherein it is suggested that the applicant is entitled to an equalization payment.

Analysis

[62] The applicant acknowledges that he is prepared to recognize that the respondent had a home on the date of marriage and to allow her a date of marriage deduction. He does not address other assets that the respondent may have owned on the date of marriage. The respondent deposes that these assets are significant. The court does not have any evidence of attempts made by the respondent to retrieve these documents from financial institutions or otherwise, however, there is no doubt this will result in increased expenses for the respondent as she may incur costs to retrieve these documents. However, this will not result in substantial prejudice unless the documents are no longer available.

[63] As for the respondent’s claim of section 7 expenses, she asserts that the children are no longer children of the marriage. The respondent deposes that she spent over $50,000 on the children’s post-secondary expenses and provides a detailed chart. There does not appear to be a dispute that the respondent covered these expenses and had to re-finance the home to pay for some of the expenses. If the claim of the applicant for equalization is allowed, the respondent will be able to make a claim for unequal division of net family property under s. 5(6) of the Act and provide evidence of how she supported the family. As such, this will not result in substantial prejudice to the respondent. Based on all of these factors, I conclude that no person will suffer substantial prejudice by reason of the delay.

Conclusion

[64] For all of the above reasons, the applicant has failed to meet the conjunctive test for an extension of time under s. 2(8) of the Act. The applicant’s motion is dismissed. Given the dismissal of the applicant’s motion and the fact that he is left with no remedy, it is unnecessary to address the respondent’s motion.

[65] This court orders as follows:

i) the applicant’s motion is dismissed;

ii) I urge the parties to agree on costs but if they are unable to do so, the respondent shall serve and file written costs submissions, no longer than two double-spaced pages, along with a Bill of Costs and any Offers to Settle, within 14 days. The applicant shall serve and file responding written costs submissions, no longer than two double-spaced pages, along with a Bill of Costs and any Offers to Settle, 14 days thereafter. Any reply by the respondent shall be served and filed 7 days thereafter.

Stevenson J.

DATE: February 21, 2017