CITATION: I.S. v. M.S., 2017 ONSC 7160
COURT FILE NO.: FS-14-19641
DATE: 20171129
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
I.S.
Applicant (Moving Party)
– and –
M.S.
Respondent
Sarah Young and Deborah Perkins-Leitman, for the Applicant
Martine Ordon, for the Respondent
-and-
Tough-Oakes Explorations Inc.
Michael Brzezinksi
HEARD: November 21, 2017
RULING ON MOTION
C. Gilmore, J.
Overview
[1] The applicant moves to enforce a term of the Minutes of Settlement (“the Agreement”) that the parties signed on October 2, 2015. The parties met on an online dating site called seekingarrangements.com. The site advertises itself as a place for “sugar daddies” and “sugar babes” to meet. The respondent entered into a relationship/arrangement with the applicant. The applicant’s position is that the parties were well aware of what they were getting into. The applicant knew from the beginning that the respondent had a wife and children and that he wanted their relationship to be kept secret. When she announced her pregnancy to the respondent, the parties separated as the respondent felt he had been “set up.” The child was born on August 23, 2014.
[2] In order to settle the legal issues arising after the birth of their child, the parties signed the Agreement which dealt with custody, access, child support, s.7 expenses and property. In 2013, the respondent purchased a home for the applicant in Toronto (“the home”) for $1,187,000. The home is in the applicant’s name alone and the Agreement specifies that she has exclusive possession of it. Tough Oakes Exploration Inc., a company controlled by the respondent, owns an interest free first charge on the property in the amount of $1,187,000 which matures on June 30, 2018.
[3] The Agreement provides for certain options available to the applicant in relation to the home. The relevant provisions are reproduced below:
62(c) The parties agree that on or before June 30, 2018, I. shall have the right to deal with the property on one of the two following manners, at her sole discretion:
i. Should I. not wish to retain the property beyond June 30, 2018, then the property shall be listed for sale at a price mutually agreed to by the parties. In the event that there is any disagreement between the parties in connection with any of the terms relating to the sale, then the parties agree to accept the recommendations of the real estate agent chosen by I. to list the property. Upon the sale of the property, I. shall be entitled to retain one third of the net sale proceeds and M. 2/3 of the net sale proceeds, less all proper and reasonable costs of disposition, including, real estate commissions, legal fees incurred to close the transaction and all other necessary disbursements to close the transaction. The mortgagee will arrange for the discharge of the aforementioned mortgage at the time of the sale. For the sake of clarity, there will be no reduction for the mortgage amount when calculating I.’s one-third share of the net sale proceeds. For example, if the home sells for $1,500,000 gross, the amounts deducted from the gross will be agent’s commission, outstanding taxes, utilities, etc., if any. Assuming those costs, for illustrative purposes only, equal $100,000, the remainder amount of $1,400,000 would be apportioned 2/3rds ($933,333 in this example) to M. and 1/3 ($466,667 in this example) to I. I. would have no obligation or liability in respect of the redemption of the existing mortgage. Any reasonable and agreed upon costs for marketing and staging of the property, as recommended by the real estate agent, shall be paid off the top of the sale proceeds and shall be reimbursed to the payor of such expenses; or
ii. In the alternative, and if I. wishes to retain the property, then, on or before June 30, 2018, I. shall pay to the mortgagee two-thirds of the principal amount then owing on the mortgage and M. shall cause the mortgagee to discharge the mortgage upon receipt of the said funds. M. and the mortgagee will, thereafter, have no further claim against the property whatsoever.
[4] The Agreement goes on to say that in the event that the applicant does not redeem the mortgage or sell the property by June 30, 2018 then the respondent has the right to do so and the applicant must give him vacant possession.
[5] This motion relates to the applicant seeking to enforce the provisions of the Agreement such that she may discharge the mortgage pursuant to paragraph 62(c)(ii) reproduced above. She gave notice of her intention to do so on September 20, 2017 by email to the respondent’s counsel. Counsel for TOE responded that the applicant was in breach of the Standard Charge Terms of the mortgage because she had refused to allow an inspection of the security and that an inspection/appraisal had been requested since July 27, 2017. Counsel for the respondent replied on October 4, 2017 that she had instructions to bring a motion to set aside the Agreement and that other than the payment of child support and s.7 expenses, the respondent would not be performing any other terms of the Agreement.
[6] The applicant obtained financing for $800,000 with a co-mortgagor. Her financing commitment expired on October 20, 2017 and was extended to November 28, 2017. She is concerned about her ability to re-qualify and blames the delays on the respondent.
[7] The applicant submits that the Agreement is a valid and enforceable domestic contract. She is entitled to enforce the terms of it. Disallowing her to do so would result in significant prejudice to her.
[8] The respondent resists the motion. He served an application to set aside the Minutes on October 22, 2017.
[9] The respondent’s position is that it is clear from the applicant’s actions that she never had any intention of honouring the Agreement. Every term bargained for by the respondent has been breached by the applicant. The parties were not ad idem when they entered into the agreement and the respondent has ample grounds on which to set it aside. In the event he is unsuccessful, there is no prejudice to the applicant as the respondent is well able to compensate her in damages.
[10] The respondent further argues that if the court grants the applicant’s motion, his application to set aside the Agreement becomes moot, as he has no further security in relation to the home.
[11] The respondent continues to pay child support of $5150 per month. He was previously paying $2500 per month for a nanny. The nanny expense is in dispute as the respondent’s position is that there was no nanny for a significant period and he was not advised of this. The applicant submitted that the nanny has now quit. The nanny issue remains in dispute but that part of the applicant’s motion was not argued on the hearing date.
[12] The Agreement provides that the respondent will pay 2/3 of the property taxes and any necessary improvements to the home. He has refused to make these payments since issuing his application based on his claim that the applicant has been and continues to be in fundamental breach of the Agreement.
[13] Counsel for Tough Oakes Explorations Inc. (“TOE”) was present at the motion but filed no material and made few submissions. TOE is requesting an inspection of the home pursuant to the provisions of the Standard Charge Terms. TOE is also taking the position that it will not provide a discharge for anything less than the full amount of the mortgage.
The Test and Analysis
[14] The applicant submits that there can be no question of the validity, fairness and enforceability of the Agreement which both parties entered into with independent legal advice and full financial disclosure. She is entitled to enforce the Agreement.
[15] The applicant relies on several principles to support her position:
a. The fact that the respondent is now raising issues related to alleged breaches and non-compliance with the Agreement should not affect the applicant’s ability to enforce it. In Jhuman v. Moakhan, 2007 CarswellOnt 6996 (SCJ) at paras 12-17, the court granted summary judgment enforcing the equalization provisions of the parties’ separation agreement notwithstanding the father’s position that the amount of equalization should be varied because of a loan he was aware of prior to the execution of the agreement.
b. The terms of the Agreement are clear and were negotiated with legal advice. There is no allegation of duress or non-disclosure. In Nisbett v. Nisbett, 2010 ONSC 4381, the court enforced specific performance of a separation agreement even where it contained internal inconsistences and was negotiated with inadequate legal advice.
c. There is significant prejudice to the applicant if the agreement is not enforced. She may not qualify for future financing and her co-mortgagor is not willing to sign a further mortgage application with her.
d. Discharging the mortgage at 2/3 of its face value is considerably more advantageous to the applicant than receiving 1/3 of the sale proceeds, given the increase in value of Toronto homes since it was purchased in 2013.
e. The respondent’s application has little merit and does not meet the requirements under s.56(4) of the Family Law Act (“FLA”.) There is insufficient evidence to prove a lack of consensus, material misrepresentation, fundamental breach or repudiation as alleged by the respondent.
f. The respondent is pursuing his application because he has the resources to exhaust, intimidate and bully the applicant into settling for less than what she is entitled to receive under the Agreement.
[16] Not surprisingly, the respondent has a very different view. He relies on the following in support of his position:
a. The test on a motion to enforce the terms of a settlement is the same as the test on a motion for summary judgment. That is, a settlement cannot be enforced so long as there are factual disputes, which require a trial. See Mittal v. Jindal, 2012 ONSC 3568. It would be substantively and procedurally unfair to the respondent if he could not determine the validity of the Agreement through the trial process.
b. There is significant evidence that the parties were not ad idem when they entered into the Agreement and evidence that the applicant has fundamentally breached the agreement.
c. The applicant has made it clear by her actions that she has never had any intention of complying with the Agreement. She cannot now ask to have it enforced in the face of her non-compliance. See Jedfro Investments (U.S.A.) v. Jacyk Estate. 2006 CanLII 16347 (ONCA), leave to appeal aff’d. 2007 SCC 55 at para 139.
d. The respondent’s affidavit material is replete with examples of the applicant’s many breaches of the Agreement and clear intention from the beginning to avoid compliance. The respondent is entitled to damages, as a domestic contract is no different than any contract in non-family law related circumstances.
e. The cases cited by the applicant are distinguishable. In the case at bar, the respondent has never stopped paying child support and was never obligated to pay spousal support. The respondent recognizes his obligation to pay child support notwithstanding any dispute about the validity of the Agreement. Further, other cases cited by the applicant relate to requests to vary an agreement. The respondent does not seek to vary the agreement. He seeks to set it aside in its entirety.
[17] I agree with the respondent in this case. It would be unfair to the respondent to allow the applicant to enforce a term of an Agreement with which there are so many disputed factual and legal issues as well as allegations of substantial non-compliance.
[18] In the circumstances, s.56(4)(c) of the FLA applies. This is not a case where there has been a failure to disclose significant assets or debts nor where a party is alleging he or she did not understand the nature or consequences of the contract. Therefore, it is open to a court to set aside the Agreement in accordance with the law of contract and its exercise of discretion.
[19] In Bayerische Landesbank Girozentrale v. R.S.W.H. Vegetable Farmers Inc. (2001), 2001 CanLII 28050 (ON SC), 53 O.R. (3d) 374 (S.C.J.) the court held that a motion to enforce a settlement may be granted only if there are no factual disputes which require a trial for their resolution. There is some merit in briefly reciting the factual and legal disputes in this case in the context of confirming their number and significance.
[20] The disputes may be listed as follows and are pared down to a minimum as they are all factually complex:
a. The respondent alleges he has not received what he bargained for in that:
i. He was to have reasonable access to the child and such access has been withheld and minimized. The applicant disputes this and maintains that the respondent is having agreed upon and court ordered access as per a consent order dated May 19, 2017 which permits a total of five hours per week of access. The respondent’s position is that this is not reasonable access and was agreed to without prejudice, pending parenting mediation with Dr. Butkowsky. Both parties say the other terminated the mediation in early October 2017.
ii. The Agreement does not permit the applicant to change the child’s last name to that of the respondent but she has threatened to do so in the course of open mediation. The applicant does not specifically deny that she threatened to do this, but points out that she has never taken any steps in that regard.
iii. The Agreement does not permit the applicant to enforce the payment of child support through FRO except where the respondent is late with payment. The respondent submits that the applicant deliberately did not cash his child support cheques and then enforced the Agreement with FRO. The applicant denies this and says she was enforcing the nanny expenses, which the respondent refused to pay, alleging that no nanny was employed. She also sent back his post-dated child support cheques on the advise of her FRO contact. The respondent submits it is clear that no FRO enforcement is permitted when he is not in arrears, however, he was forced to send his child support payments to FRO notwithstanding the terms of the Agreement and despite not being in arrears of child support.
iv. There is a court order that this file and its contents be initialized to avoid identification for privacy purposes. When the applicant filed the Agreement in the Ontario Court of Justice, she breached this order by using the parties’ full names. The respondent was obliged to bring a motion in this regard. The applicant’s position is that she agreed to initialize the Ontario Court file after the motion was brought. The respondent replies that the consent was forthcoming only at the last minute.
v. The consent order of February 9, 2015 required the parties to bring any dispute related to the Agreement back to court via the applicant’s original court application issued in August 2014. The applicant acted unilaterally regarding the alleged arrears of support according to the respondent and started a new court action in the Ontario Court of Justice when she filed the Agreement.
vi. The Agreement was made in part to ensure the applicant did not contact the respondent’s wife or family. Instead, the applicant contacted the respondent’s wife directly and posted disparaging remarks about the respondent on Instagram. The applicant points out that this was done before the signing of the Agreement, however, the respondent’s position is that this was done in January 2016.
vii. The applicant has failed to provide information about the child including details of a recent surgery, ongoing medical information and information about a recent fall in which the child suffered a concussion and required stitches.
viii. The applicant was to provide receipts in a timely fashion for certain expenses that the respondent was obliged to pay for pursuant to the Agreement. The respondent alleges that the applicant deliberately delayed providing the receipts and then claimed the respondent was in breach of the Agreement. The applicant denies these allegations.
ix. The applicant failed to employ a nanny while being reimbursed expenses for a nanny. Alternatively, the applicant employed a nanny who was not legally permitted to remain in Canada. When the respondent became suspicious in the summer of 2016 that he was paying for a nanny that did not exist, he asked for particulars of the nanny’s full name and phone number. When no particulars were forthcoming, the respondent offered to put the nanny on his payroll and deal with her directly. No response to these enquiries was received. The applicant maintains there was always a nanny until very recently when she quit. She submits that the respondent is well aware of the existence of the nanny as she facilitated access exchanges on many occasions. The respondent replies that someone called “Jenny” facilitated some access exchanges but she was not working for the applicant full time from the child’s birth until at least the end of 2016.
x. The parties agreed to attend both a financial mediation (with Stephen Grant) and a parenting mediation with Dr. Butkowsky. Both mediations failed. Each party blames the other for the failure of the mediations. The respondent’s position is that the mediations failed because the applicant continues to be in breach of the Agreement both in terms of parenting and financial provisions. Further, the applicant refused to accept Dr. Butkowsky’s recommendations concerning access. As soon as it became clear to the respondent that the applicant had no intention of following Dr. Butkowsky’s recommendations made on October 3, 2017, he issued his application on October 4, 2017. By way of consent order dated May 19, 2017, the parties were precluded from litigating during the course of the mediations. The mediations occurred between May and October 2017.
xi. On November 2, 2017, Dr. Butkowsky provided a Memorandum of Understanding on the issue of access. The applicant has failed to respond to the Memorandum. The respondent’s position is that the applicant never envisioned the respondent actually wanting to be part of the child’s life so when it became clear that he very much wanted to be in the child’s life, the applicant embarked on a campaign of alienation and resistance to contact with the child by the respondent. The applicant’s position is that she has and continues to abide by all court ordered access.
xii. The applicant failed to notify the respondent that she was employed, thereby taking benefits under the Agreement to which she was not entitled.
xiii. The parties dispute whether or not the payments the respondent is obliged to make in relation to the home are in lieu of spousal support. The applicant says they are. The respondent submits the parties never lived together and were not spouses and the Agreement releases him from the payment of spousal support.
xiv. The applicant refused to consent to an inspection of the home and is breach of the Standard Charge Terms of the mortgage. As a result, counsel for TOE sent a Notice of Default Under Charge to the applicant’s lawyer on October 3, 2017. The applicant insists she is in compliance. She complains that originally TOE requested an appraisal and not an inspection. She has since provided available dates for the inspection.
xv. The respondent has spent over $150,000 in legal fees since the Agreement was signed due to the applicant’s untenable positions, refusals to comply, attendance at mediations in which she clearly has no intention of meaningfully participating, and constant changing of counsel (five so far). The applicant submits she has spent significant legal fees as well because of the respondent’s continuous bullying and threats.
[21] In his application the respondent seeks the return of $750,000 in benefits already received by the applicant, interest of $3620 per month on the mortgage payable to TOE, and damages for unjust enrichment, intentional infliction of emotional distress as well as punitive and exemplary damages. No Answer has yet been filed and the respondent’s litigation is still in its infancy.
[22] It should be noted that by dismissing the applicant’s motion she is not exposed to any significant prejudice. If the respondent is unsuccessful, he has the means to compensate the applicant in damages. If he is successful and the Agreement is set aside, the parties must start anew with an arrangement that better reflects the reality of their situation.
[23] It is clear from paragraph 20 above, that the factual disputes are significant and ongoing. So long as the respondent continues to pay his child support obligations, the respondent will be far from destitute. She earns $60,000 a year from her employment and receives over $60,000 per year in tax-free child support. She pays no mortgage and lives in a detached home in an upscale and quiet neighbourhood. She has a fully paid for car purchased for her by the respondent and significant savings.
[24] Based on all of the above I make the following orders:
a. The applicant’s motion is dismissed.
b. The balance of the relief in the applicant’s motion is adjourned sine die.
c. The respondent shall continue to pay the required child support. He shall also pay s.7 expenses for before and after school care or nursery school as required. The payments are to be made directly to the daycare/nursery school and not to the applicant. The applicant to provide the required consent/permission to allow the respondent to deal directly with the daycare/nursery school regarding payment.
d. The respondent to pursue his set aside application expeditiously and a Case Conference is to be scheduled forthwith.
Costs
[25] The respondent was entirely successful. He seeks all-inclusive partial indemnity costs for Ms. Ordon of $18,417.60. He also seeks costs for TOE’s counsel in the amount of $3446.50. The applicant’s Bill of Costs was $31,046.75, however, this was reduced down to $15,000 because enforcement of the nanny’s fees was not argued at this motion.
[26] The parties each served Offers to Settle. They were provided to me in a sealed envelope which I opened following the writing of this ruling.
[27] The respondent served an offer on November 17, 2017. He offered to consent to a dismissal of the motion to enforce with each party bearing their own costs. Alternatively, he offered to consent to the withdrawal of the motion with costs reserved to the motions or trial judge.
[28] The applicant served three offers. The second offer was revoked and replaced by the third offer. The first offer permitted the applicant to discharge the mortgage for $791,254.20 with the difference of $395,745.80 to be held in trust in the event the home sold and pending the outcome of the respondent’s application. The third offer permitted the applicant to withdraw those portions of her motion relating to the enforcement of paragraph 62 of the Agreement without costs and without prejudice to her right to pursue the relief at a later date. If the offer was accepted after November 16, 2017 at 2:00 p.m. but before November 20, 2017 at 4:00 the respondent would pay the applicant $5000 in costs. If accepted after, the respondent would pay the applicant’s full recovery costs.
[29] Both parties’ offers were reasonable but the issue of who would pay costs remained the sticking point. It is somewhat surprising that none of the offers were accepted.
[30] The costs sought by the respondent are at a partial indemnity rate and not unreasonable. However, the motion material covers many other outstanding issues that will ultimately form part of the respondent’s application. Some degree of proportionality is required in the circumstances. Costs are therefore payable to the respondent as the successful party in the amount of $10,000. Those costs are payable forthwith.
[31] As for TOE, their Bill of Costs is at a full indemnity rate. No grounds for requesting costs at this rate were given nor was the presence of TOE at the motion essential. Costs in relation to TOE are fixed at $1,000 but reserved, pending the outcome of the respondent’s application.
C. Gilmore, J.
Released: November 29, 2017
CITATION: I.S. v. M.S., 2017 ONSC 7160
COURT FILE NO.: FS-14-19641
DATE: 20171129
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
I.S.
Applicant (Moving Party)
– and –
M.S.
Respondent
-and-
Tough-Oakes Explorations Inc.
REASONS FOR JUDGMENT
C. Gilmore, J.
Released: November 29, 2017