Zecha v. Zecha Estate, 2017 ONSC 1972

CITATION: Zecha v. Zecha Estate, 2017 ONSC 1972

COURT FILE NO.: 855/16

DATE: 2017-03-28

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

NANCY ZECHA

Plaintiff

– and –

OLIVER CHRISTIAN ZECHA, in his capacity as the ESTATE TRUSTEE OF THE ESTATE OF ERWIN ZECHA

Defendant

Esther L. Lenkinski, for the Plaintiff

Judith L. Turner, for the Defendant

HEARD: March 23, 2017

gray J.

1This case arises out of a separation agreement that was made between Nancy Zecha (“Nancy”) and Erwin Zecha (“Erwin”) while Erwin was alive. He died on November 28, 2014.

2Under the separation agreement, a property owned by Nancy was to be sold. Under some circumstances she was to receive at least $1,500,000 upon sale of the property. That was so even if the property sold for less. Under other circumstances, if the property sold for less, Nancy would receive the actual sale price and nothing more.

3The property sold at a price of $1,180,000. Nancy now claims from Erwin’s estate the difference between $1,500,000 and $1,180,000, namely, $320,000. Her claim is based on the wording of the agreement, and in the alternative on an alleged estoppel.

4Nancy has brought a motion for summary judgment. The defendant submits, in his factum, that Nancy’s claim should be dismissed. It is clear that both parties take the position that the record is such that I can make a final judgment, one way or the other.

5While the agreement provides that disputes are to be arbitrated, both parties agreed that it is appropriate that the Court determine the dispute.

6For the reasons that follow, Nancy’s action is dismissed.

Background

7Nancy and Erwin married on February 14, 1996. They had two children together.

8Two vacant lots were purchased on Kempenfelt Drive in Barrie. One property was registered in Nancy’s name, and the other in the name of a corporation. A house was built on the property that was in Nancy’s name. The defendant says Erwin paid to have the house built at a cost of $1.4 million.

9The defendant says Nancy lived in the house for a few months with the children but it was not a matrimonial home. During that time, Erwin lived at a farm property in Essa.

10The parties were separated at least since 2008. There was a dispute as to whether the separation was in 2001 or 2008, but the dispute is not material.

11The parties entered into a separation agreement dated May 31, 2012. It is the terms of the separation agreement that govern this dispute. The parties were represented in the negotiations by highly competent counsel.

12Article 9 of the separation agreement deals specifically with the relevant property and its sale, and with Nancy’s entitlement following the sale. There are some other provisions in the agreement that may have relevance in interpreting the provisions of Article 9. At the risk of unduly lengthening these reasons, I will reproduce the relevant provisions of the agreement in chronological order:

1.4 This Agreement represents a global settlement of all issues between the parties, and all of the terms of this Agreement (including, child support, spousal support, property, etc.) are interdependent and inextricably intertwined. This Agreement is the result of both parties working cooperatively with the assistance of their respective lawyers, and their mediator, Alfred Mamo, over the course of multiple mediation sessions, and provides for a global resolution of all of the issues arising out of the breakdown of their marriage.

1.5 Although the terms of this Agreement may be different from what a court might have ordered, and although the child support, spousal support, property, and equalization provisions of this Agreement may provide Nancy with a greater or lesser amount of money than she might have otherwise received in Court on account of property and/or support, and may provide that Erwin pay a greater or lesser amount of money than he might have otherwise been ordered to pay on account of property and/or support, both parties agree that this Agreement constitutes a fair and equitable and final resolution of the breakdown of their relationship, and they do not want a court to set it aside or vary it under any circumstances whatsoever.

1.6 The parties agree to be bound by this Agreement which settles all issues between them.

1.7 This Agreement replaces all oral or written agreements made between the parties.

6.7 Spousal support release:

(a) As a result of all of the terms of this Agreement (including but not limited to the child support provisions, the spousal support provisions, and the property provisions), Nancy and Erwin are financially independent of each other and, other than the spousal support payments provided for by paragraph 6.2 of this Agreement, release his or her rights to spousal support from the other, now and forever.

(c) For greater certainty, the parties acknowledge that:

(v) The terms of this Agreement and, in particular, this release of spousal support, reflect his and her own particular objectives and concerns, and are intended to be a final and certain settling of all spousal support issues between them. Among other considerations, they are also relying on this spousal release, in particular, upon which to base their future lives. Both parties have negotiated, with the benefit of independent legal advice, and made concessions in coming to the terms of this Agreement, which is a complete settlement package.

9.2 Nancy will sell the Barrie Property.

9.3 Nancy and Erwin will advise each other of all offers to purchase the Barrie Property.

9.4 Erwin will make best efforts to help Nancy with the sale of the Barrie Property, including but not limited to, if so requested by Nancy, being the primary contact person for the listing agent.

9.5 If Nancy receives an offer to purchase the Barrie Property for less than $1,500,000 gross, Erwin can require that Nancy accept the offer, but shall make up any shortfall between the amount of the offer and the $1,500,000 gross. If the property sells for more than $1,500,000 gross, Nancy shall keep the entirety of the proceeds of sale.

9.6 If Nancy receives a conditional offer to purchase the Barrie Property for greater than $1,500,000 gross, which could have been accepted by Nancy, which Nancy declines to accept, Erwin’s obligation under paragraph 9.7 ends. If there is an issue about whether Erwin’s obligation under paragraph 9.7 should end, that issue alone will arbitrated. If the arbitrator finds that the offer was unconditional and/or could have been accepted by Nancy then Erwin’s obligation under paragraph 9.7 shall end and if the arbitrator finds that the offer was not unconditional and/or could not have been accepted by Nancy then Erwin’s obligation under paragraph 9.7 shall continue.

9.7 If the Barrie Property has not been sold within 18 months, and Nancy has not declined an unconditional offer which could have been accepted by Nancy for greater than $1,500,000 gross:

(a) Erwin will assume carriage of the sale of the Barrie Property;

(b) Nancy will cooperate with the sale process, and sign any necessary documents;

(c) If the property sells for less than $1,500,000 gross, Erwin shall make up any shortfall between the amount of the offer and the $1,500,000 gross; and

(d) If the property sells for more than $1,500,000 gross, Nancy shall keep the entirety of the proceeds of sale.

9.8 Pending the sale of the Barrie Property:

(a) Nancy will not encumber or otherwise borrow against the Barrie Property in any way;

(b) Nancy will pay for the property taxes, utilities, and insurance for the Barrie Property; and

(c) Erwin will pay for the normal maintenance costs for the Barrie Property, including snow removal, gardening, and maintenance.

9.9 Erwin will co-operate and provide supporting documents for the expenses totally approximately $1,400,000 for the Barrie Property to enable Nancy to determine the capital gains if any on the Barrie Property.

12.1 Except as otherwise provided in this Agreement, Nancy and Erwin release each other from all claims either may have against the other now or in the future under the terms of any statute or the common law, including all claims under the Divorce Act, the Family Law Act, and the Succession Law Reform Act, for:

(a) possession of property,

(b) ownership of property,

(c) division of property,

(d) compensation for contributions to property, and

(e) an equalization payment.

14.1 Nancy and Erwin each acknowledges and agrees that this Agreement is a separation agreement entered into under section 54 of the Family Law Act, and is a domestic contract that prevails over all matters dealt with in the Family Law Act.

14.2 There are no representations, collateral agreements, warranties, or conditions affecting this Agreement. There are no implied agreements arising from this Agreement and this Agreement between the parties constitutes the complete agreement between them.

14.11 This Agreement survives the death of Nancy and Erwin and ensures to the benefit of and binds Nancy and Erwin’s heirs, executors, estate trustees, personal representatives, and assigns.

14.12 Nancy and Erwin will each inform the executors, estate trustees, personal representatives named in his or her will that this Agreement exists, and where a copy is located.

14.13 Any amendments to this Agreement must be in writing, signed by the parties, dated and witnessed.

14.17 Nancy or Erwin’s failure to insist on the strict performance of any terms in this Agreement will not be a waiver of any term.

14.19 Nancy and Erwin have both had independent legal advice, Nancy from Harold Niman and Erwin from Michael Zalev.

14.20 Nancy and Erwin

(a) understands his or her rights and obligations under this Agreement and its nature and consequences,

(b) acknowledge that this Agreement is fair and reasonable,

(c) acknowledge that they are not under any undue influence or duress, and

(d) acknowledge that both are signing this Agreement voluntarily.

14.21 Nancy and Erwin will each inform the executors named in his or her will that this Agreement exists, and where a copy is located.

[Emphasis added]

13As contemplated by Article 9.2 of the separation agreement, Nancy listed the property for sale, on October 29, 2012. She deposes that by the end of the summer of 2013, the property had not sold and there was very little interest from prospective buyers.

14On October 9, 2013, Nancy emailed Erwin and advised that she was considering listing the property with a different broker. By email dated October 10, 2013, Erwin agreed with her suggestion.

15On November 6, 2013, Nancy signed a new listing agreement with a new broker. She listed the property for $1,195,000. On November 10, 2013, she entered into an agreement of purchase and sale to close on March 31, 2014, at a price of $1,190,000. That sale did not close.

16On April 30, 2014, Nancy entered into another agreement of purchase and sale, to close on May 21, 2014. The purchase price was $1,180,000 and it closed on May 12, 2014.

17There is no evidence that Nancy advised Erwin that the property had been listed at less than $1,500,000. There is also no evidence that she advised him of either agreement of purchase and sale before their execution.

18Erwin had become seriously ill in November, 2013, and he died a year later on November 28, 2014.

19On May 13, 2014, Erwin sent Nancy the following email message:

I understand that you sold 35 Kempenfelt – congratulation. Can you tell me what price you got (to adjust 33 if necessary) and when closing will take place, so I can stop garden, spider and other services.

20Nancy responded the same day by email, and advised Erwin that the closing date would be May 21, 2014, and she sold it for $1,180,000. She said she had at least six prior offers all under $1,000,000. She also said the realtor had multiple showings every weekend.

21Paragraphs 20-22 of Nancy’s affidavit read as follows:

20. At no time prior to or following the sale of the Property did Zecha indicate and displeasure in my management of the sale of the Property.

21. At no time prior to or following the sale of the Property did Zecha indicate he did not intend to pay me in accordance with the terms of the Agreement.

22. Given the severity of Zecha’s health condition I did not feel it right to constantly bother him with sale of the Property. Following the sale of the Property, Zecha’s health had declined so significantly, I did not think if fair to him or our children to burden him with payment details under the Agreement.

22Nancy also deposes as follows at paragraph 28 of her affidavit:

There was no harm or prejudice in my having continued with the sales effort. Given the many listings and showings, it is unlikely a better price could have been obtained by Zecha’s efforts.

23The parties have filed conflicting affidavit material as to whether Erwin objected to the sale of the property after the agreement of purchase and sale had been executed, and whether he objected to the price Nancy had obtained. The defendant has filed evidence to the effect that Erwin took the position that Nancy had breached the agreement by selling it for less than $1.5 million without giving him the opportunity to control the sale. In view of my conclusions regarding the proper interpretation of the separation agreement, it is unnecessary to resolve this conflicting evidence.

Submissions

24Ms. Lenkinski, counsel for Nancy, submits that Nancy is entitled to be paid $320,000, being the difference between the sum of $1,500,000, the amount contemplated under the separation agreement, and the sale price of $1,180,000.

25Ms. Lenkinski submits that the parties agreed that Nancy would control the sale for a period of 18 months after the date of execution of the separation agreement. The separation agreement was executed on May 31, 2012, and the 18-month period expired on November 30, 2013. Thus, from and after December 1, 2013, Erwin was entitled to control the sale. However, he gave no indication to Nancy that he wished to do so. Indeed, on October 10, 2013, Erwin told Nancy to go ahead and re-list the property.

26It is clear, Ms. Lenkinski submits, that Erwin showed no interest in Nancy’s attempts to sell the property. He knew, however, that there had been little interest in the property as of October, 2013.

27Ms. Lenkinski submits that by his silence, Erwin represented to Nancy that she could control the sale. By its very nature, this would include a determination of the sale price.

28Ms. Lenkinski submits that Erwin’s conduct after he became aware of the actual sale price, after the agreement of purchase and sale was executed, is consistent with Erwin’s indifference. Ms. Lenkinski submits that Erwin made no complaint in writing. Had he been concerned, he undoubtedly would have complained in writing. Evidence of oral complaints must be discounted.

29Ms. Lenkinski submits that on a proper interpretation of the separation agreement, Nancy is entitled to succeed. She submits that the provisions of Article 9 must be interpreted in context. The overriding understanding was that Nancy was to receive $1,500,000 from the sale of the property. Erewin declined to control the sale after 18 months as he had a right to do. As a result, he, and his estate, cannot complain about the price Nancy obtained when she controlled the sale.

30Ms. Lenkinski submits, in the alternative, that Erwin and his estate are estopped from challenging Nancy’s entitlement. She submits that the elements of estoppel have been met, as follows:

a) Irwin’s conduct, and his silence, amounted to a representation to Nancy that she could control the sale, even after the expiry of the relevant 18-month period;

b) Nancy relied on the representation, and sold the property at the highest price she could obtain, even after the property was actively marketed;

c) Nancy has suffered detriment as a consequence.

31For these reasons, Ms. Lenkinski submits that Nancy is entitled to be paid the sum of $320,000 by the estate.

32Ms. Turner, counsel for the defendant, submits that Nancy’s claim should be dismissed.

33Ms. Turner submits that based on the plain wording of article 9 of the separation agreement, Nancy’s claim is without merit.

34Ms. Turner submits that both before and after the expiry of the 18-month period, Erwin had the right to determine whether an offer of less than $1,500.000 should be accepted.

35Pursuant to article 9.5, which applied if an offer was received within 18 months, Nancy was guaranteed the sum of $1,500,000 only if Erwin required that Nancy accept the offer. After the expiry of 18 months, article 9.7 applied. Under that provision, Erwin would assume carriage of the sale and if the property sold for less than $1,500,000, Erwin would make up any shortfall between the sale price and $1,500,000. In either case, Erwin had the right to decide whether an offer of less than $1,500,000 should be accepted.

36In this case, Nancy did not advise Erwin that she had listed the property for less than $1,500,000. Neither did she advise Erwin, prior to the execution of the agreement of purchase and sale, that she had actually sold the property for less than $1,500,000.

37In the circumstances, Nancy deprived Erwin of his right to decide whether to accept an offer of less than $1,500,000.

38Ms. Turner submits that there is no estoppel in the circumstances of this case.

39Ms. Turner submits that Erwin did not, at any time, represent to Nancy that if she sold the property for less than $1,500,000 without his consent, he would make up the shortfall so that she would be guaranteed $1,500,000. Nancy made her own decision to list the property and accept an offer for less. She cannot hold Erwin to a promise that he did not make.

40Authorities relied on by the parties include Hryniak v. Mauldin, 2014 SCC 7, 2014 S.C.C. 7, [2014] 1 S.C.R. 97; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200; Miglin v. Miglin, 2003 SCC 24, 2003 S.C.C. 24, [2003] 1 S.C.R. 303; Canadian Superior Oil Ltd. v. Hambly, 1970 CanLII 3 (SCC), [1970] S.C.R. 932; Rolston v. Rolston, 2016 ONSC 2937; Starrcoll Inc. v. 2281927 Ontario Ltd., 2016 ONCA 275; MacDougall v. MacDougall (2005), 2005 CanLII 44676 (ON CA), 262 D.L.R. (4th) 120 (Ont. C.A.); Dumbrell v. Regional Group of Cos., 2007 ONCA 59; Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, 2014 S.C.C. 53, [2014] 2 S.C.R. 633; Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912; and Anderson v. Anderson, 2010 BCSC 911.

Analysis

41The separation agreement, being a contract, is to be interpreted according to certain well-established canons of construction.

42A 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 Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254 (C.A.), at para. 24; and 3869130 Canada Inc. (c.o.b. I.C.B. Distribution 2001) v. I.C.B. Distribution Inc., 2008 ONCA 396, at para. 31.

43Contracts are not made in a vacuum. They are made in a context of surrounding circumstances, which can, and indeed must, be considered in construing the terms the parties have used. As stated by Blair J.A. in Ventas, at para. 45:

Contracts are not made in a vacuum, and there is no dispute that the surrounding circumstances in which a contract is negotiated are relevant considerations in interpreting contracts.

44This principle has been restated and reinforced many times: see, for example, Starrcoll, at para. 17; Dumbrell, at paras. 52-56; and Creston Moly, at paras. 47 and 48.

45As noted, Ms. Lenkinski submits that the context in which the separation agreement was negotiated is important. It is clear, Ms. Lenkinski submits, that the parties intended that, if at all possible, Nancy should receive at least $1,500,000 from the sale of the property. It is with that intention in mind that the terms of the agreement should be interpreted.

46Ms. Lenkinski submits that after the expiry of the relevant 18-month period, the only way in which the parties’ mutual intention would not be achieved was if Erwin took control of the sale and sold the property himself. In this case, however, Erwin did not do so, presumably because of his health, and was content to let Nancy control the sale. That being the case, Erwin (or the estate on his behalf) had no right to complain if the sale was for less than $1,500,000.

47In my view, Ms. Lenkinski construes the context of the agreement too narrowly.

48It was certainly anticipated that in some circumstances Nancy would be guaranteed the sum of $1,500,000 from the sale of the property. However, it was an overarching proviso that such a guarantee would be operative only if Erwin consented to a sale at less than that price.

49It must not be forgotten that this agreement was negotiated with the assistance of very competent counsel. It is evident that the parties intended the agreement to be a full and final settlement of all matters in dispute, no matter whether any court or tribunal might consider that the terms are improvident or unfair. The parties clearly bargained over every detail of the deal, and spelled out in no uncertain terms that a court or tribunal is not to interfere in the deal.

50That being the case, it is simply not open to the court to read words into article 9, nor is it open to the court to read words out.

51Article 9.5 is crystal clear. If an offer to purchase for less than $1,500,000 was received by Nancy within 18 months, she would only receive $1,500,000 if Erwin required her to accept the offer.

52Article 9.7 is also crystal clear. After 18 months, Erwin would assume carriage of the sale.

53Under either alternative, Erwin had the clear right to decide whether an offer of less than $1,500,000 should be accepted. Only if he decided that such an offer should be accepted would the guarantee of $1,500,000 to Nancy be in place.

54Of importance is article 9.3. Pursuant to that provision, Nancy and Erwin were to advise each other of all offers to purchase. In that way, both parties would be fully informed before any offer to purchase was accepted.

55In this case, Nancy did not advise Erwin that she listed the property for less than $1,500,000, nor did she advise him that she had accepted an offer for less than that amount before she accepted it.

56Based on the clear wording of the agreement, Nancy’s claim cannot succeed.

57I am not persuaded that there is any estoppel raised in the circumstances of this case.

58The elements of promissory estoppel were summarized by Martland J. in Canadian Superior Oil, supra:

The essential factors giving rise to an estoppel are, I think: 1) a representation or conduct amounting to a representation intended to induce a course of conduct on the part of person to whom the representation is made; 2) an act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made; and 3) detriment to such person as a consequence of the act or omission.

59I am not persuaded that Erwin’s silence amounted to any representation to Nancy that affects this case. At no time did Nancy represent to Erwin that she would list the property for less than $1,500,000. At no time did she tell him that she had done so. Erwin would have had no reason to believe that she did so. In the circumstances, Erwin’s representation that it was acceptable for Nancy to list the property cannot be taken as a representation that it was acceptable to list it for less than $1,500,000, nor could it be a representation that she could accept an offer for less than that amount without his approval.

60This case would be quite different if Nancy had told Erwin that she would list it for $1,195,000, as she did, or if she had advised him that she intended to accept an offer for $1,180,000, as she did, and Erwin had remained silent. However, that is not what happened.

Disposition

61For the foregoing reasons, Nancy’s action is dismissed.

62I will entertain brief written submissions with respect to costs, not to exceed three pages together with a costs outline or bill of costs. Ms. Turner will have five days and Ms. Lenkinski will have five days to respond. Ms. Turner will have three days to reply.

Gray J.