Court File and Parties
COURT FILE NO.: FC-15-924 DATE: 2017/06/02 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Joane Bouchard, Applicant AND: Jean Poulin, Respondent
BEFORE: Shelston J.
COUNSEL: Christian Pilon, counsel for the Applicant Frederic Huard, counsel for the Respondent
HEARD: March 23, 2017
Endorsement
[1] The main issue in this motion is whether or not the parties entered into a partial agreement on December 22nd, 2016. The applicant and the respondent are equal co-owners of a maple grove company (“Company”) located in the province of Québec.
[2] The respondent’s position is that the parties entered into an agreement on December 22, 2016 that required the applicant to transfer her interest in the Company including immovables and equipment for the sum of $270,000 to be paid by $190,000 upon the signing of the transfer and a credit of $80,000 which would be paid by the respondent to the Canada Revenue Agency towards his arrears of income tax registered on the parties matrimonial home to allow its sale to proceed. The sum of $80,000 would be considered a without prejudice payment subject to further adjustments by the court or further agreement of the parties in the matrimonial proceedings.
[3] The applicant’s position is that there was no agreement entered into by the parties and that the meeting of December 22, 2016 did not include all of the essential requirements to have an agreement. Further, she submits that the agreement was complex and important and many of the essential terms were not discussed in the meeting of December 22, 2016. The applicant concedes that the parties agreed to the cost of the sale, the date of sale and the modalities of the sale and that her counsel was to prepare a draft agreement incorporating the general principles discussed during the negotiation.
Background
[4] The applicant and the respondent lived together in August 1992, married on July 4, 1999 and separated in October 1, 2012. The parties resided together in the jointly owned matrimonial home until March 1, 2014. The wife had exclusive possession after that date until sale.
[5] There are three children of the marriage namely Matthew, born in 1993, Kimberly born in 1996 and Megan born in 1998.
[6] The applicant commenced proceedings on April 29, 2015, where she sought various claims for relief including but not limited to retroactive and ongoing spousal support and child support, exclusive possession of the matrimonial home, the sale of the Company, equalization of the net family property and costs.
[7] The respondent filed an Answer and Claim dated September 3, 2015, where he claims child support, custody of the children, equalization of the net family property, sale of family property, occupation rent, child support and costs.
[8] On September 9, 2015, Justice Sheffield issued a temporary order, on consent of the parties, including disclosure and questioning. On November 7, 2016, the parties appeared before Justice Linhares De Sousa for a settlement conference. The matter did not settle. At that time, the Court granted the parties the right to bring a motion regarding the sale of the company and with respect to the sale of the family residence, and finally that disclosure to be completed by December 15, 2016.
[9] On February 2, 2017, the parties attended a procedural motion before Master Champagne who set the date for this motion regarding the sale of the matrimonial home and the Company to March 23, 2017 and set a timetable for the exchange of documentation for the motion.
[10] On March 23, 2017, the motions proceeded.
Issues for the motion
[11] Both parties filed notice of motions seeking various claims for relief. The gist of the motions were to strike the respondent’s pleadings, to determine whether or not the parties entered into a partial agreement regarding the Company on December 22, 2016, disclosure, determination of the sharing of the costs of the matrimonial home, the return of the equipment belonging to the Company, registration of security on the Company property and costs.
[12] At the motion, I indicated that I would not grant an order striking the pleadings and that I would order more disclosure. I requested that the parties provide a letter setting out the request for disclosure by April 3, 2017, which was done. I have received the specific requests for disclosure from the parties which I have included as part of my order.
[13] All other relief including the applicant’s request to have security placed in the Company property was adjourned.
The Law
[14] In Bogue v. Bogue, 1999 ONCA 3284, Justice Rosenberg dealt with an appeal to determine whether the motions judge erred in concluding that there was a settlement of the issues. The principle point of this agreement concerned an extraordinary payment clause which the husband indicated was a fundamental aspect of the agreement. The motions judge found that there was an agreement and that a standard release form was intended and not the extraordinary clause as alleged by the husband. Justice Rosenberg canvassed three possibilities to be considered by the Court in determining whether or not there was an agreement being an agreement to agree, mistake or discretion to relieve against inadvertence.
[15] On the issue of whether or not there was an agreement to agree, Justice Rosenberg sets out the legal position as to whether or not there can be an agreement to agree. He relies on the decision in Bawitko Investments Ltd v. Kernels Popcorn Ltd, 1991 ONCA 2734, where Robins, J.A. of the Court of Appeal stated at pp. 103-104 the following:
As a matter of normal business practice, parties planning to make a formal written document the expression of their agreement, necessarily discuss and negotiate the proposed terms of the agreement before they enter into it. They frequently agree upon all the terms to be incorporated into the intended written document before it is prepared. Their agreement may be expressed orally or by way of memorandum, by exchange of correspondence, or other informal writings. The parties may “contract to make a contract”, this is to say, they may bind themselves to execute at a future date a formal written document containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated into a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.
However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. In other words, in such circumstances “the contract to make a contract” is not a contract at all. The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself…
And at p. 105:
If no agreement in respect to the essential terms has been reached or the terms have not been agreed to with reasonable certainty, it can only be concluded that such terms were to be agreed upon at a later date and until that time there would be no completed agreement.
[16] In the Bogue decision, Justice Rosenberg finds that there was evidence to determine that there was a final settlement, there was no expressed discussion about the extraordinary release sought by the husband and that the parties had agreed to bind themselves to a settlement and what remained was for the lawyers to reduce that settlement to a formal document. He did not find that that was an agreement to agree. At paragraph 15 of the decision, Justice Rosenberg states:
Generally speaking, litigation is settled on the basis that a final agreement has been reached which the parties intent to record informal documentation and “parties reach a settlement should usually be held to their bargains”
[17] If the court finds that at the end of negotiations where the litigants had agreed to bind themselves to a settlement and it only remained for the lawyers to draft a formal document, the parties have entered into a contract and not “an agreement to agree”. For there to be a binding contract, all the basic and essential components of the creation of the contract must be present. (Volmer v. Jones, 2007 ONSC 7999)
Analysis
[18] I wish to address a preliminary issue regarding the jurisdiction of the Superior Court to determine whether or not there was an agreement reached by the parties with respect to real property and equipment located outside of the province of Ontario, in this case and the province of Québec. I find that I do have jurisdiction to determine whether or not the parties entered into a partial agreement regarding real property equipment located in the province of Québec. I do so because the parties are residents of Ontario, the negotiations took place in the province of Ontario and the parties are currently in family law litigation in the Superior Court of Ontario. The fact that certain property is outside of the province of Ontario does not prevent the Court from determining if there was an agreement regarding such property under Ontario law. While the Superior Court of Ontario does not have jurisdiction with respect to real property outside of the province of Ontario for purposes of in rem orders, it does have jurisdiction to issue in persona orders.
[19] A second issue arose as to whether or not Québec or Ontario law would apply in determining whether or not the parties had reached an agreement. I find that Ontario law will apply in determining whether or not there was a contract because the negotiation was conducted while an ongoing family law litigation was proceeding in the province of Ontario where both parties resided.
[20] Based on my review of the evidence, I make the following findings of fact:
(a) the applicant and the respondent were co-owners of the matrimonial home; (b) the applicant and the respondent are equal co-owners of the Company located in the province of Québec; (c) since April 29, 2015, the parties have been in family law litigation in Ottawa, Ontario; (d) the parties had attended a case conference and a settlement conference without resolution; (e) in March 2016, the applicant proposed selling her interest in the company to a third party, Mr. Gizzi who provided a $20,000 nonrefundable deposit. The transaction did not close and Mr. Gizzi sued for the return of his deposit. On December 22, 2016, this claim was still outstanding; (f) on December 22, 2016, the parties with their counsel met at the offices of counsel for the respondent for the purposes of exploring settlement; (g) as of December 22, 2016, the matrimonial home was sold on the closing date of January 27, 2017; (h) as of December 22, 2016, there were three liens registered against the respondent’s interest in the matrimonial home by the Canada Revenue Agency with an estimated value of $90,000; (i) as of December 22, 2016, the parties were not in a position to settle all outstanding issues between them including but not limited to the equalization claim because there was financial disclosure lacking, claims her contribution to the carrying costs of the matrimonial home, an accounting of a special expenses as well as retroactive and ongoing child and spousal support; (j) at the meeting on December 22, 2016, the respondent’s counsel verbally proposed an agreement to deal with the Company being that the applicant would transfer her interest in the Company which included two immovable properties and equipment used for the Company to the respondent for the sum of $270,000 of which $190,000 would be payable on the date of transfer to occur no later than January 20, 2017 and that the sum of $80,000 would be paid to the Canada Revenue Agency on account of arrears owed by the respondent without prejudice to further adjustment of this amount towards an equalization payment owed in the matrimonial proceeding; (k) the payment of the $80,000 to the Canada Revenue Agency would allow the sale of the matrimonial home to close; (l) the applicant and her counsel left the conference room for approximately 20 to 25 minutes at which time the applicant and her counsel returned to the conference room. At that time, the applicant agreed to transfer her interest in the Company to the respondent based on the terms proposed. In addition, as the matrimonial home was sold with a closing date of January 27, 2017, the parties discussed five or six items that the respondent wanted to receive from the matrimonial home before the sale; (m) at the conclusion of the meeting, the parties did not reduce the agreement to writing but that counsel for the applicant agreed to draft an agreement to be provided the next day; (n) there was no congratulations or handshakes exchange between counsel and or the parties at the end of the meeting; (o) the date of January 20, 2017 was selected as the closing date for this transaction because the applicant wanted to make sure that the liens registered on the matrimonial home paid off before the closing of the matrimonial home one week later; (p) counsel for the applicant was to draft a proposed agreement and submit on December 23, 2016. No agreement was forwarded on December 23, 2016; (q) on December 30, 2016, counsel for the respondent wrote an email to counsel for the applicant asking for a copy of the draft agreement based on the verbal agreement concluded on December 22, 2016. Approximately 40 minutes later, counsel for the applicant wrote an email to counsel for the respondent indicating that he was awaiting instructions from his client. Approximately 20 minutes later, counsel for the respondent replied indicating there was no need to wait for instructions as the agreement was very clear. (r) Later that day, by email, counsel for the applicant provided the draft agreement which included a clause that required the respondent to secure the repayment of the $80,000 to be used by the respondent to pay to the Canada Revenue Agency to lift the liens registered against the matrimonial home; (s) on December 30, 2016, counsel for the respondent wrote to counsel for the applicant that the Québec notary would not start working until the written agreement duly executed by the parties was completed; (t) on January 5, 2017, counsel for the respondent emailed to counsel for the applicant a redrafted interim agreement which addressed some of the issues raised by the applicant including that the respondent would be responsible to pay and assume the annual dues to UPA, the Federation, provincial and federal income taxes for the years 2013 to 2016; that the parties agreed to retain a notary to dissolve the Company; to and address the shortfall in the proceeds of sale of the matrimonial home to pay for the real estate commission, municipal taxes and legal fees related to the sale; (u) on January 12, 2017, counsel for the respondent forwarded a preliminary draft of the notarial contract to be reviewed by the parties. That contract included the equipment that was to be included in any sale of the applicant’s interest in the Company and made no mention of a security interest for the $80,000.
[21] I have had the opportunity to review the affidavit of the applicant, respondent and counsel for the respondent. Counsel for the applicant, who was present and involved in all parts of the negotiation and communication between the parties, chose not to file an affidavit which would have been helpful.
[22] This is not a case about mistake or discretion to relieve against inadvertence. The question here is whether or not there was an agreement or an agreement to agree.
[23] Upon a review of the interim draft agreement which appears at Tab 17 F of Volume 1 of the Continuing Record, the agreement deals with three assets being the matrimonial home, the Company and the chalet.
[24] Regarding the matrimonial home, the agreement proposed that the respondent, by January 20, 2017 at 4:00 p.m. would have the liens registered by the Canada Revenue Agency against the matrimonial home lifted to allow the sale of the matrimonial home to proceed. Further, if the sale proceeds of the matrimonial home were insufficient to pay the real estate commission, the legal fees related to the sale, municipal tax arrears and usual adjustments regarding the sale, the applicant proposed that the parties will be equally responsible for all expenses and costs associated with the sale and to be equally responsible for any shortfall to cover the above-noted expenses. Finally, the respondent was granted permission to receive certain chapels located in the matrimonial home.
[25] With respect to the Company, the applicant agreed on the sale price of $270,000, agreed on the closing day of January 20, 2017, agreed that she would receive $190,000 on the day of transfer, agreed that the respondent would pay $80,000 to the Canada Revenue Agency to allow them to leave the liens registered against the matrimonial home. Further, the applicant requested that the respondent be prevented from transferring, mortgaging or having a security interest placed on his half interest in the Company until final settlement in the matrimonial proceedings regarding the financial questions. Finally, the applicant proposed that she would retain the sum of $20,000 paid by Mr. Gizzi as part of the settlement and that the respondent would be responsible for all costs associated for the company for the years 2012 to 2016 and was to indemnify the applicant with respect to any such costs.
[26] With respect to the chalet, the applicant proposed that the respondent transfer his interest to her by January 20, 2017.
[27] While this is a matrimonial proceeding, the transfer of the applicant’s interest in the Company was a commercial and real estate transaction that would require the assistance of a notary to effect the real estate transfers in the province of Québec as well as to deal with the corporate issues related to the sale. Any such agreement would require more than one simple paragraph.
[28] On January 5, 2017, counsel for the respondent sent a redrafted agreement which addressed three issues. Firstly, the respondent would be responsible for and indemnify the applicant for all associated costs incurred in running the Company for the years 2013 to 2016 including membership fees and Provincial\Federal income tax and expenses related to l’union des producteurs agricoles (UPA) and la Federation des producteurs acericole du Québec (FPAQ).
[29] Secondly, the January 5, 2017 revised agreement addressed winding up the corporation.
[30] Thirdly, the January 5, 2017 revised agreement addressed the shortfall in the sale proceeds of the matrimonial home and who would be responsible to pay for those expenses at least on a without prejudice basis.
[31] None of these issues were addressed in the discussion of December 22, 2016 but were part of the December 30, 2017 proposed agreement. All three issues were addressed in the January 5, 2017 draft proposal prepared by the respondent.
[32] While the terms of price and payment were discussed and agreed to, there were other issues that were not addressed but that I find were essential terms of any agreement. Firstly, the applicant believed that counsel for the respondent would contact Mr. Gizzi to have him renounce his $20,000 claim against the applicant related to the aborted sale. Secondly, I find that the applicant wanted to consider an issue of having a security registered on the Company property to guarantee the respondent paying her back the $80,000, if required, being indemnified by the respondent for the expenses and liabilities incurred for the Company in the years 2013 to 2016 and the $20,000 claim outstanding by Mr. Gizzi.
[33] I find that at the meeting of December 22, 2016, the parties agreed in principle to the applicant transferring her share of the Company to the respondent. I accept the evidence of Mr. Ranger and his client that they had an agreement on specific terms. However, I do not accept their evidence that the December 22, 2016 agreement contained all the essential terms of a binding contract. I accept the evidence of the applicant that she had to consider other essential terms that required a complete and all-encompassing agreement that covered not only the Company but the matrimonial home.
[34] I find when one considers the multitude of issues that had to be addressed in the transfer of the applicant’s interest in the Company as well as dealing with the sale of the matrimonial home, it is not realistic to believe that such a contract would be restricted to the terms contained in one short as alleged by the respondent.
[35] Further, if the parties had reached a contract on the single paragraph as alleged by the respondent, then why wasn’t the contract prepared by hand or typed at the meeting before anyone left the meeting. I conclude that the reason it was not so prepared was because only general terms had been agreed to and a complete contract had to be drafted. To accept the respondent’s position would ignore the other issues that he himself has raised in his redrafted agreement of January 5, 2017.
[36] The jurisprudence clearly indicates that for me to find that there was a binding contract, I must be convinced that all essential terms of the contract were agreed upon. If all of the essential terms of the agreement were agreed upon and that the only remaining step was to put pen to paper, I would have found that there was a binding contract. That is not what happened in this case.
[37] I have considered the jurisprudence submitted by the parties. This case differs from Volmer v. Jones, 2007 ONSC 7999 on its facts. In the Volmer case, the parties were working with a draft minutes of settlement as a working document. There was evidence that the parties discussed the various paragraphs, amendments and there were handwritten notes made. At the end of the 3½ hour meeting, the parties shook hands as did counsel and congratulated themselves on reaching a final settlement and handing out copies of the minutes of settlement. When the husband attempted to withdraw his consent to the minutes of settlement, the Court granted a motion for summary judgment in accordance with the minutes of settlement.
[38] In the Bogue (supra) decision, Mr. Justice Belch found that a contract existed based on reviewing all of the circumstances concerning the contract including words of congratulations and handshaking that took place at the end of the meeting. Justice Belch found that there was a basic agreement and that it was not a preliminary agreement, that it was not predicated on the execution of a formal contract, that there is no fundamental mistake and that the lawyers were simply waiting to reduce the settlement to writing. The Court of Appeal in Bogue confirmed Justice Belch’s decision.
[39] Consequently, I dismiss the respondent’s motion for judgment that there was an agreement reached on December 22, 2016. I find that there was no agreement reached.
Disclosure
[40] I have received from both parties correspondence setting out the disclosure requested. Based on the correspondence, I order the applicant to provide to the respondent by June 23, 2017 the following:
(a) Toutes les demandes de financement et de crédit faites depuis la date de séparation; (b) Les détails de son REER au jour de la séparation et au 31 mars 2014; (c) Rapport d’évaluation par un évaluateur agrée relativement à la valeur du chalet de la requérante en date du mariage et de la séparation; (d) Rapport d’évaluation relativement au terrain de Beauceille appartenu par la requérante en date du mariage et de la séparation (tel que reflété à son état financier du 28 février 2017); (e) Rapports d’évaluation relativement aux biens meubles et véhicules reflétés à l’état financier de la requérante (28/2/2017) en date du mariage et de la séparation; (f) Rapports d’évaluation relativement à tous les autres biens de la requérante reflétés à la page 6 de son état financier du 28 février 2017 en date du mariage et de la séparation; (g) Contrat d’emprunt relativement à la dette de $9,674.94 de la requérante auprès de la banque TD en date de la séparation; (h) Documentation relativement aux emprunts privés ($23,000.00 + $45,000.00 + $7,000.00) de la requérante figurant à la page 8 de son état financier (28/2/2017) et relevés bancaires démontrant les dépôts afférents auxdits emprunts; (i) Déclarations d’impôt de l’enfant « Kimberly » pour les années 2012 à 2016 (inclusivement) et les avis de cotisation pour ces mêmes années; (j) Documentation afférente à tous les paiements de frais de scolarité payés par la requérante pour « Kimberly »; (k) Documentation à l’appui de toutes autres demandes de contributions financières de la requérante auprès de l’intimé depuis la date de séparation; (l) Déclaration d’impôt 2016 et avis de cotisation de la requérante.
[41] Further, I order the respondent to provide to the applicant by June 23, 2017 the following:
(a) Les relevés de compte bancaires personnels (Banque TD) depuis la date de la séparation; (b) Les documents et/ou les factures à l’appui de la ventilation des dépenses réclamées aux déclarations d’impôts depuis la date de séparation (2012, 2013, 2014, 2015 et 2016); (c) Le relevé détaillé (par année) des arrérages dus à l’Agence de revenu du Canada jusqu’à présent; (d) Les demandes de financement et/ou de crédit faites depuis la date de séparation incluant, mais ne se limitant pas à toute information fournie à M. Guzzi dans l’optique de sécuriser une hypothèque sur l’érablière; (e) Les relevés détaillés de son RÉER en date de séparation et en date du 1er août 2015; (f) Une ventilation détaillée de toutes les ventes de sirop d’érable provenant de l’érablière Bouchard-Poulin incluant, mais ne se limitant pas aux quantités vendues, à la liste de commerçants et à une ventilation faisant état de tout profit généré directement ou indirectement; (g) Toute correspondance dans le but d’obtenir l’hypothèque au profit d’Alain Guzzi, incluant, mais ne se limitant pas aux échanges entre Pierre Ranger, Alain Guzzi, Pierre Poulin, Paul Germain et toute autre tierce partie concernée; (h) Une ventilation détaillée de la façon dont les argents obtenus en contrepartie de l’hypothèque grevée sur l’érablière ont été dépensés; (i) Une ventilation détaillée des paiements faits en intérêt et/ou envers le capital de l’hypothèque grevée sur l’érablière au profit de M. Guzzi; (j) À la lumière de l’hypothèque obtenue par l’intimé au montant de 270 000,00$, un Affidavit de Jean Poulin affirmant la raison pour laquelle il n’a pas obtenue la mainlevée des sûretés au profit de l’Agence du revenu du Canada grevant le foyer conjugal.
COSTS
[42] In the event the parties are unable to resolve the issue of costs by June 16, 2017, the applicant shall provide her cost submissions of no more than three pages (not including any offers to settle and Bill of costs) by June 23, 2017. The respondent shall file his cost submissions of the same length by June 30, 2017.