CITATION: Ross v. Krupa, 2017 ONSC 4609
COURT FILE NO.: FD551/16
DATE: 2017/07/31
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Laurie Lyn Ross
Self-represented
- and -
Michael Andrew Krupa
Iain Sneddon and Erin Burns, for the Respondent
HEARD: July 27, 2017
GEORGE J.
[1] The parties married on June 9, 2001; and separated on February 4, 2015. There is one child of the marriage. The parties jointly own the matrimonial home at 10 Birchcrest Drive, RR#5 Komoka, Ontario. The respondent has had de facto exclusive possession of the matrimonial home since the date of separation, when the applicant moved out.
[2] The applicant commenced this action in May 2016. She seeks a divorce, spousal support, custody, child support, sale of the matrimonial home, and an equalization of net family property.
[3] The respondent did not initially respond, and on August 12, 2016, after an uncontested trial, Vogelsang J. made the following order:
The respondent was noted in default.
The applicant was awarded sole custody of the children.
The respondent was afforded reasonable access on reasonable notice.
Child support was ordered in the amount of $967/month commencing February 1, 2015, based on an imputed income of $108,600.00.
Arrears were fixed at $16,241.00.
Spousal support ordered at a rate of $750/month.
The applicant was permitted to immediately list the matrimonial home for sale for the market value of $475,000.00, dispensing with the necessity of the respondent’s execution of a listing agreement, and dispensing with the need for his spousal consent.
The applicant was authorized to arrange for showings of the home, through a broker, via email or text to the respondent.
The proceeds of a sale, were one to occur, to be held in trust by the applicant’s real estate lawyer, pending a payout to the parties.
The respondent was permitted to remain in the matrimonial home, provided he cooperated with this order, with a direction to preserve the home and its contents, and to make it presentable for viewings.
[4] This was styled a temporary order as the issues of divorce and equalization were not addressed, and remained outstanding. The order was served on the respondent on August 22, 2016.
[5] At the time this application was issued, the applicant was facing criminal charges of mischief and harassment, with a release term prohibiting her from communicating or associating with the respondent. These terms were varied at some point before Vogelsang J.’s order, allowing for some contact.
[6] By motion first returnable August 31, 2016, the respondent sought to set aside Vogelsang J.’s order. He also requested permission to file responding material, and for leave to issue and register a certificate of pending litigation against the title to the matrimonial home.
[7] Four court orders were subsequently made. First on August 31, 2016, Heeney J. varied Vogelsang’s order directing that:
The listing price of the matrimonial home be $599,000.00;
The applicant would not, in any case, accept an offer less than $535,000.00; and
The closing date will not be less than thirty days from the date the offer is accepted.
[8] Next, on September 14, 2016, Carey J. ordered the parties to retain an appraiser to determine a listing price and value of the matrimonial home.
[9] On October 5, 2016, Mitrow J. set aside the noting of default and granting of custody to the applicant. He preserved the prior directions to engage an appraiser and proceed with a listing.
[10] Finally, on March 22, 2017, at the case conference, Henderson J. ordered that:
Within 20 days, the applicant was to obtain an up to date appraisal of the home; and
The respondent to cooperate fully and leave the home in presentable state for the appraisal.
[11] Also, on this same date, the parties executed partial minutes of settlement that provided the applicant sole custody, and the respondent access.
[12] There is some evidence, from both the applicant and a real estate agent (Edward Hamden), that the respondent was not compliant with the direction that he make the home ready and available for showings, thereby frustrating the process contemplated by these orders. This is not particularly relevant to my task, which I will now describe.
[13] I am being asked to determine the validity of minutes of settlement that were executed by the parties in November 2016. The applicant executed it on November 8th; the respondent November 10th. The relevant provisions are found at paras. 1 – 3:
Laurie Lyn Ross shall transfer her interest in the matrimonial home to Michael Andrew Krupa based on the parties’ agreement that the matrimonial home (municipally designated as 10 Birchcrest Drive, Komoka, Ontario) is valued at $475,000.00 and the mortgage outstanding (C.I.B.C. Mortgage number 7796906), at the date of separation (February 4, 2015) was $259,639.82.
In consideration for the transfer of title of the matrimonial home, Michael Andrew Krupa, shall pay Laurie Lyn Ross, half of the difference between the agreed upon value of the matrimonial home ($475,000.00), and the amount of the mortgage outstanding on the date of separation ($259,639.82), which payment shall be $107,680.49, and this payment shall be made to Laurie Lyn Ross no later than November 15, 2016.
This transfer of Laurie Lyn Ross’ interest in the matrimonial home is conditional upon Michael Andrew Krupa providing written confirmation from the mortgagee (C.I.B.C.) of Laurie Lyn Ross’ absolute discharge from the mortgage as at the date of transfer.
[14] Both parties were represented by counsel at the time. The applicant subsequently discharged her counsel, I believe at some point in January 2017. She is currently self-represented.
[15] This is the applicant’s motion. She seeks exclusive possession of the matrimonial home, an order for the sale of the home (with an equal division of the proceeds), that the respondent vacate the home, and for the minutes be set aside. This raises two issues. First, do the minutes of settlement constitute a valid agreement? Second, if so, did the respondent breach its terms?
[16] If the answer to either of these questions is yes, I must then consider the second aspect of the motion, which is, whether to order vacant possession and direct an immediate listing and sale.
[17] The applicant’s primary position is, it is an invalid agreement. While not entirely clear, the basis for this seems to be twofold. There is an allegation her counsel acted contrary to her instructions, and she contends she signed it under duress. In the event it is found to be valid, she alleges a breach of its terms as she was not paid on or before November 15th, 2016.
[18] I can quickly dispose of the first part of her argument. There is no basis upon which to conclude her counsel acted contrary to her instructions. Furthermore, there is a complete dearth of evidence to substantiate any claim of duress. That leaves me to determine whether there was a breach of the minutes, and whether the appropriate remedy would be to grant her motion and have the respondent vacate the home and direct a sale. This breach, she argues, should trigger the sale of the matrimonial home.
[19] The respondent argues the alleged breach is immaterial and that the admitted failure to comply with the strict timeline set out in the consent was not connected to any wrongdoing. He argues the delay is largely attributable to the need to discharge the applicant’s previously undisclosed CRA lien against the home.
[20] Below is a chronology of the events following the execution of the minutes.
[21] On November 8th, prior to either signing, respondent counsel sent correspondence to applicant counsel indicating that there might be an issue with respect to timing as they could not control the actions of the bank and therefore could not guarantee payment by November 15th. By email reply, applicant counsel confirmed that “best efforts” were being undertaken respecting the timeline for payment.
[22] After execution, it was learned there were two CRA liens on the home. One was in the respondent’s name; one in the applicant’s. Neither party disclosed the liens in advance of the agreement. In any case, I am to understand the respondents would not be a barrier to the transfer. For obvious reasons, as the applicant would be coming off title, her lien was an impediment.
[23] In her evidence, the applicant kept pointing out that had the lawyers done their due diligence, and conducted a title search, they would have learned of this. She blamed others. I am not prepared to lay blame at the feet of anyone other than the applicant herself and perhaps her counsel. It was her responsibility.
[24] I find it was the existence of the CRA lien that delayed the closing of the transfer.
[25] On November 18th, 2016 the respondent’s real estate lawyer emailed applicant counsel, confirming the delay on account of the liens, indicating also that, as a show of good faith, the respondent would deposit $107,680.49 into his counsel’s trust account. These funds were deposited on November 29th where it continues to sit, awaiting either the resolution of this case, or payment to the applicant as contemplated by the agreement.
[26] The respondent’s real estate lawyer requested information about the liens, and a discharge statement, on November 21st. That same day he provided an update to applicant counsel. On the 25th, CRA advised that a payout letter would not be provided until the balance was paid in full.
[27] On December 2nd, applicant counsel confirmed there indeed was a lien in the applicant’s name and asked that it be removed. On the 5th respondent’s real estate lawyer advised applicant counsel that the respondent would satisfy both liens. A certified cheque was ultimately sent to CRA requesting the discharge of both liens. This is important and bears repeating. The applicant’s representative acknowledges the lien, asking that the respondent discharge it. This would have made no sense if she didn’t continue to want a fulfillment of their agreement.
[28] There was some confusion over what liens were in fact being discharged. Respondent counsel had clearly noted both liens in his correspondence to CRA, but each were processed separately. In any event, the cheque to discharge the applicant’s lien, in the amount of $6,401.39, was sent on December 21st. Despite the fact this was the applicant’s lien, it was paid by the respondent from the trust funds.
[29] The discharge was not received until January 5, 2017. On January 10th, the discharge was confirmed with an advisement the deal could close within the week. On the 17th, respondent counsel forwarded to the applicant’s real estate lawyer an acknowledgement and direction for the applicant to sign, who wrote back indicating the applicant now wants the home valued at $575,000.00 and a contribution to her legal fees. According to her, the deal was off.
[30] It is worth noting that throughout this entire period, from the early stages of the litigation, through the negotiation and execution of the minutes of settlement, up to the correspondence exchange of January 17th, the applicant is represented by experienced counsel, whose practice focused on family law.
[31] On January 24, 2017 respondent counsel received a notice of change in representation indicating the applicant had decided to act in person. She did, however, still have counsel assisting her with the real estate issues and he, on February 3rd, sets out the applicant’s position that the minutes of settlement were “null and void”.
[32] Based on the evidence, I make these findings. First, that while respondent counsel anticipated a problem early on related to binding another party (i.e. bank), the true cause of the delay is wholly attributable to the time required to discharge the CRA liens. Contrary to the applicant’s view, it was not in any way because of inaction on the respondent’s part.
[33] I accept that the respondent’s real estate lawyer acted diligently, and did his best to complete the transaction as quickly as possible. I find the delay, reasons for delay, and actions taken by the respondent and his counsel, from November 15th through to January 20th, were done with the applicant’s knowledge and agreed to by her legal representative.
[34] It is abundantly clear to me that had the home decreased in value in the intervening period, the applicant would not have sought to frustrate the completion of this transaction or argue the agreement was invalid. She is being opportunistic. In fact, she insincerely advanced a duress argument, in order to substantiate her claim.
[35] The minutes of settlement must be upheld. It is an enforceable contract. It was negotiated in good faith, and everyone moved with haste to rectify a problem that became apparent. The applicant only had second thoughts as she approached the closing, and spoke to real estate counsel, realizing then that the home may fetch more than she bargained for, on the open market.
[36] It would be unfair to the respondent and, quite frankly, bad public policy, to interfere with a contract for this reason.
[37] The respondent did not frustrate the contract. He did not attempt to frustrate it. The difficulties that arose here could not have been foreseen and, even if they were, the applicant is at least as culpable as the respondent in not advising of the liens. To the extent there was a disruption - and there clearly was as the applicant did expect to be paid on or before November 15th - it was not permanent as the respondent has had the funds available to pay her since they were placed in his counsel’s trust account. Nor was it, in the circumstances, protracted. The initial delay (from November to January) was necessary in order to sort things out with CRA, and the delay since then is solely because of the applicant’s refusal to complete the transaction.
[38] The performance of the contract at this point would not be radically different from that which was anticipated in the minutes. Enforcing it, and completing the contract now, would not affect the nature, meaning, purpose, effect or consequences of the contract.
[39] Had she had a real beef with the agreement, either she, or her counsel, would have said so long before mid-January 2017. The communications involving her counsel, after the agreement was signed, did nothing to suggest the deal had gone bad, or that she had a grievance with the process that led to it.
[40] The applicant is attempting to renege because she no longer likes the deal. Plain and simple. She, through her counsel, agreed to the delay, which was a reasonable position to take in the circumstances. In hindsight she criticizes her then counsel, which is unfair. She was also misleading in advancing a duress claim. She no doubt felt a financial crunch at the time, but there is no reason to believe she wasn’t fully apprised of her rights and given sound advice.
[41] The only remedy available to the applicant is to award post-judgment interest for the period beginning November 15, 2016 (when the payment should have been made) until January 20, 2017 (after the lien had been discharged and the deal could be closed).
[42] After calculating and including post-judgment interest at 2%, and after deducting the amount paid to satisfy the applicant’s debt to CRA, the respondent is to pay the applicant $101,668.52.
[43] In the result, I make the following order:
The minutes of settlement dated November 8, 2016, are a valid and enforceable contract.
In consideration for the transfer of the applicant’s interest in the matrimonial home, the respondent is to pay the applicant $101,668.52.
The applicant’s motion at tab 25 of the continuing record is dismissed.
The applicant is to pay the respondent his costs of this motion, fixed at $7500.00 inclusive of HST and disbursements. This will be deducted from the amount payable to her, reducing the amount owing to $94,168.52.
__Justice J. C. George
Justice J. C. George
Released: July 31, 2017
CITATION: Ross v. Krupa, 2017 ONSC 4609
COURT FILE NO.: FD551/16
DATE: 2017/07/31
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
Laurie Lyn Ross
Applicant
- and -
Michael Andrew Krupa
Respondent
REASONS FOR JUDGMENT
GEORGE J.
Released: July 31, 2017