COURT FILE NO.: FS-15-400450-00
DATE: 20180307
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
NGA TU TRUONG, Applicant
– and –
ALI REZA MALEKI, Respondent
COUNSEL:
Julius Omware, for the Applicant
Sasha Faraone & Preet Pannu, for the Respondent
HEARD: February 20, 2018
BEFORE: Hood J.
REASONS FOR DECISION
Nature of Application
[1] The trial before me is to determine the enforceability of a domestic contract signed on November 25, 2016. The applicant takes the position that the domestic contract is unenforceable. The respondent takes the position that it is. The parties agree that the onus to convince the court to set it aside it is on the applicant.
Background
[2] The parties married in June 1998. They have two children: Tiffany, born in 2000, and Lexine, born in 2002. They separated in May 2011.
[3] On December 29, 2014 the applicant signed an application that was then issued January 29, 2015. In the application, she sought a divorce, a restraining order against her respondent husband, sole custody of Tiffany and Lexine, child support, equalization of their net family property, exclusive possession of the matrimonial home and an order freezing assets pending the hearing of her application. The parties owned 7 different real estate properties including a number of residential and commercial rental properties. Two of the properties had been bought post separation.
[4] She obtained a restraining order against her husband. On March 20, 2015 she obtained a further order which effectively gave her full control over the rental properties allowing her to collect all the rent and to make any necessary payments such as for the mortgages, taxes and other bills.
[5] On November 25, 2016 the parties along with their counsel attended in court for a combined case conference/settlement conference.
[6] That day, after lengthy negotiations, the parties signed a handwritten Consent. Within moments of it being signed, however, the applicant’s counsel, Mr. Omware, advised the respondent’s counsel, Mr. Martin, that the applicant had changed her mind and was not agreeing to the Consent.
Issues & Law
[7] Both parties acknowledge that the executed Consent is a domestic contract within the meaning of s. 55(1) of the Family Law Act, R.S.O. 1990, c.F.3. The sole issue, then, is whether the contract can be set aside. The test for setting aside a domestic contract is set out in LeVan v. LeVan, (2008), 2008 ONCA 388, 90 O.R. (3d) 1 (C.A.), at para. 51. The court must consider whether the party seeking to set aside the agreement can show that one or more of the circumstances set out within the provision has been engaged. If they can, the court must then consider whether it is appropriate to exercise their discretion in favour of setting aside the agreement.
[8] The applicant’s argument and submissions focused on s. 56(4)(b) of the Act - that she did not understand the nature or consequences of the domestic contract.
[9] The applicant, in her notice of motion to set aside the domestic contract, also sought to void the Consent pursuant to s. 56(1.1) of the Family Law Act on the basis that it relates to support of the children of the marriage. The applicant however, acknowledged in argument, that she had led no evidence on this which would allow the court to come to a determination that the child support provisions in the domestic contract were unreasonable having regard to the child support guidelines. She dropped this as a basis for relief.
[10] She did not argue s. 56(4)(c) of the Act. She did not argue matters such as duress, unconscionability, undue influence, mistake, repudiation or misrepresentation. Nor did she argue ineffective assistance of counsel. This would have been difficult considering that her counsel at trial, Mr. Omware, was her same counsel on the day the domestic contract was signed.
Evidence & Analysis
[11] The respondent and his counsel Mr. Martin testified that after the Consent had been negotiated and signed, Mr. Omware walked up to them and told them that the applicant had changed her mind and was backing out of the Consent because it had no provision for her being paid any management fees for managing the various rental properties owned by the parties. This evidence was uncontradicted and unchallenged. Neither the respondent nor Mr. Martin were cross-examined.
[12] On November 29, 2016 Mr. Omware sent Mr. Martin an email which set out the applicant’s position, which was now slightly different from what had been suggested on November 25, 2016. The email, among other things, stated as follows:
She explains that she did not fully understand the process and was under the impression that unequal division of the property was on the table as she had raised this issue before you came on record for Mr. Maleki.
She thinks that it is not fair that she managed the 7 assets single-handedly from May 2011 to date, and has had to spend her time and effort, which equal division will not reward. This was in an effort to save the estate from paying management fees that would have depleted the assets further.
Here her counsel was stating that she did not understand the process and thought that unequal division was “on the table”. Mr. Omware concluded by saying the applicant would be proceeding with a motion for unequal division.
[13] On June 30, 2017 her counsel Mr. Omware served an affidavit from the applicant as commissioned by him, on Mr. Martin. Paragraphs 3 to 5 are as follows:
I agree that we attended court on November 25, 2016 at which the Consent herein was negotiated buy the parties. [sic]
In response to paragraph 4 of the Respondent’s Affidavit, I wish to state that at the time of the discussions leading to the consent, I was in extreme distress and tension related to this family matter. I was suffering from headaches and dizziness at the time and did not fully understand what I was signing.
As a result of this state of mind, even though I participated in the discussions, I realized that I did not fully apply mind and did not clearly know and understand what I was signing, even though I had legal representation. [sic]
Although the affidavit references an affidavit of the respondent, neither party saw fit to make the respondent’s affidavit an exhibit at trial. The applicant’s affidavit was marked as Exhibit 3. Her affidavit raised a new argument – that she did not understand what she was signing due to headaches and dizziness. Paragraph 5 of the affidavit is unclear, due to its wording, about whether she realized this at the time or only later.
[14] In her evidence in chief at trial the applicant set out a different position as to why the Consent should be set aside. The applicant stated that she did not feel well on November 25, 2016, when the Consent was signed by her. She claimed that she was not aware of most of the things that happened that day. She stated that she did not understand the concept of equalization at all. She did acknowledge however that she had signed the Consent.
[15] When asked by her trial counsel why she changed her mind after just signing it, she said it was “not the intention I wanted”. She stated that she had looked after the rental properties as well as the children without any help from the respondent since separation, that she had had to personally deal with all the problems associated with the properties, many of which were caused by the respondent and as a result she was entitled to an unequal division of the property, and not the equal division of the property as contemplated by the Consent. She wanted an unequal division as a form of management fee for looking after the properties since separation.
[16] This very answer to her own counsel as to why she changed her mind defeats her argument that she did not understand the nature or consequences of the Consent. If she had testified that the Consent as she understood it allowed for an unequal division of property to reflect her entitlement to a management fee, then arguably she could say she did not understand the consequences of the Consent (similar to what her counsel wrote in the email of November 29, 2016). But to have her counsel approach the respondent and his counsel, and to say that she would not comply with the agreement because she realized that it did not provide for an unequal division shows that she understood exactly the nature of and the consequences of the Consent signed by her. Her own actions contradict her position.
[17] As mentioned previously, she did not argue possible grounds under s. 56(4)(c) such as duress, unconscionability or mistake. Nor did she argue ineffective assistance of counsel.
[18] Paragraph 3 of the Consent clearly states that she waived any claim for unequal division of the net family property, and for compensation for any contribution to any of the properties. In the same paragraph the respondent waived his claim for unequal division of the net family property and for compensation for any rent received. The applicant had had full control of the rental properties since at least March 20, 2015 when the court order was made, and from the respondent’s perspective, since separation in 2011.
[19] Mr. Martin, who was counsel for the respondent since the commencement of the application and at the time the Consent was signed, testified that this paragraph was part of the Consent for the purposes of finality. The respondent had not received any information from the applicant as to how much rental money she had received since 2011 and rather than going back and trying to sort this out along with any claimed expenses, which would have taken time and money to do, the respondent was prepared to forego any claim that he might have against the rent. However, in return, she had to forego any claim for compensation for any contribution by her to the rental properties. He also waived any claim for compensation for any contribution by him. Mr. Martin was the one who inserted this paragraph in the Consent.
[20] Mr. Martin testified that the settlement discussions took approximately two hours. The applicant testified that it took about one hour. Due to the issues involved and the amendments made to the Consent, two hours would be more likely as a time frame. This is also consistent with the respondent’s evidence. He too said the negotiations took around two hours.
[21] The applicant testified that the respondent, Mr. Martin and her counsel Mr. Omware negotiated together and that she was separate and apart from the three of them. Mr. Martin testified to the contrary. He testified that he and the respondent were in a conference room in the courthouse on the ninth floor at 393 University Avenue while the applicant and Mr. Omware sat in the waiting area outside the courtroom on the ninth floor. He further testified that he shuttled back and forth between the two parties with the draft Consent. Again, this is consistent with the respondent’s evidence. The respondent said that he went to a room close to the courtroom with Mr. Martin and Mr Martin went back and forth. The respondent said that he did not know where the applicant and her lawyer went and he did not speak to her or see her while they negotiated. Mr. Martin’s evidence is also consistent with the physical state of the handwritten Consent and the additions and deletions that clearly were made to it in different handwriting over time.
[22] I find it unbelievable for the applicant to suggest that she sat apart from her own lawyer while the respondent, Mr. Martin and her own lawyer Mr. Omware sat together and negotiated the Consent without her. Mr. Martin and the respondent were not cross-examined on this or at all. Mr. Omware did not give evidence.
[23] The applicant was not credible as a witness on this matter as well as on other matters. She acknowledged that paragraph 7 of the Consent, giving her final and sole custody of the children was in Mr. Omware’s handwriting but insisted that she did not instruct him to insert this paragraph in the Consent. I do not accept this evidence from her. This was something that she had been seeking since her application was issued and it is unbelievable to suggest that she did not ask for this to be part of the Consent, especially when it is in her own counsel’s handwriting.
[24] There are other examples of her testimony which lead me to find that she was not credible.
[25] For example, she claimed that the signature on the Form 8 initial application was not hers.
[26] She claimed that she had always wanted an unequal division of the family property. However, her application itself made no mention of an unequal division and she never sought to amend her application to put this claim forward. She had no evidence that she had raised this issue at any time.
[27] She denied being aware that she had agreed to provide disclosure about the mortgages, taxes and rent for the various properties, as set out in paragraph 1 of the Consent. She claimed that she didn’t have the chance to read this paragraph on the day it was signed. This was despite the fact that she was with counsel. When pressed on her alleged lack of awareness of this paragraph in cross-examination she refused to answer the questions put to her and instead testified about what the respondent had allegedly failed to do in 2014, and then said that this paragraph in the Consent was unnecessary as the respondent had all the records and he did not need anything.
[28] She claimed that her affidavit of June 28, 2017, sworn in support of her motion to set aside the domestic contract, was true when she deposed in it that she was in a state of distress on the day the Consent was signed, was suffering from headaches and dizziness and did not fully understand what she was signing. In cross-examination she admitted that she did not tell Mr. Omware that she had headaches or dizziness. She did not ask Mr. Omware to seek an adjournment. She did not seek medical treatment. She did not tell Mr. Omware that she did not understand what she was signing as she signed it.
[29] Mr. Martin testified that she interjected when he talked to Mr. Omware, that she was actively involved in the settlement discussions that took place and that she was engaged in the process. At no time did she or Mr. Omware mention her health or state of mind. At no time did she ask for a break for any reason.
[30] I accept Mr. Martin’s evidence. Mr. Martin was not cross-examined. There was no reply evidence from the applicant. Without there being any cross-examination of Mr. Martin it may have been difficult to lead any evidence that contradicted his - however, it was not even attempted. His evidence was consistent with the documentation including the Consent and the follow-up email communications. Where it conflicts with the applicant’s evidence, I prefer his evidence over hers.
[31] Following the applicant’s repudiation of the Consent and the email of November 29, 2016 the respondent made constant requests for the applicant to provide not only the quantum of the management fee, which she said she was entitled to and which had been left out of the Consent, but also the documentation in support. The respondent wanted to know what she was claiming. Perhaps the amount was not worth fighting over. The requests were made both through correspondence and through a Form 20: Request for Information. The requests were made for close to a year. The applicant never provided the disclosure sought. The respondent argued before me that this failure to provide the information went to the applicant’s credibility.
[32] I do not think that her failure to provide this goes to her overall credibility but it certainly undercuts the believability of her argument as to why she changed her mind – that she was entitled to an unequal division due to her efforts. Despite all the requests she was unable or unwilling to provide anything in support of an unequal division.
[33] If unable to do so, then this would suggest that an unequal division was unnecessary and the Consent was correct. If unwilling, then this is a consideration for me as to whether it is appropriate to exercise my discretion in favour of setting aside the domestic contract if I was to find that the applicant had demonstrated that one of the circumstances in s. 56(4)(b) had been engaged: LeVan at para. 51.
[34] The applicant has not shown that she did not understand the nature or consequences of the Consent executed by her on November 25, 2016. If she had, however, I would not have exercised my discretion in favour of setting it aside not only because of her failure to advise as to the quantum of the unequal division sought through her management fee, but also her failure to provide any documentation in support of her claim.
[35] Although s. 56(4)(c) was not argued by the applicant, and her counsel clearly indicated that the only ground being put forward was the nature or consequences of the domestic contract under s. 56(4)(b), her evidence lent itself more to s. 56(4)(c) than s. 56(4)(b).
[36] However if she had put s. 56(4)(c) forward and the normal arguments made under this section, she would also have failed.
[37] Her alleged headaches and dizziness and inability to understand were a bald assertion. She had a lawyer who chose not to testify. Further, the respondent and Mr. Martin were unaware and had no reason to be aware of her alleged issues and alleged inability to understand and lack of capacity. This is fatal to any such claim: Lougheed v. Ponomareva, 2013 ONSC 4347, [2013] O.J. No 2952, at paras. 42-45.
[38] Equally, if there was a mistake it was a unilateral one by the applicant. The respondent was unaware of it and had no reason to be aware of it. Accordingly, the Consent would still be valid: Bogue v. Bogue, 1999 ONCA 3284, 46 O.R. (3d) 1, (C.A.), at para. 18.
[39] Finally, for the reasons already given I would not have exercised my discretion even if she had been successful in engaging any of the circumstances in s. 56(4)(c).
Order
[40] The relief sought is set out in the respondent’s notice of motion dated November 29, 2017. Other than the removal of the deadline of December 16, 2016, which was part of paragraph 1 of the Consent, the order being sought is identical to the Consent as executed.
[41] While not in evidence, the parties were in agreement that a long motion for the partition and sale of the seven properties, in accordance with paragraph 10 of the Consent, has been set for April 10, 2018. The applicant argues that I should not make the order sought, in accordance with the Consent, as that would create a “judicial absurdity”, due to dissonance between paragraph 1 of the order and Consent and the April 10, 2018 motion. I fail to see any absurdity. The parties can always settle the property division issue. However, to do so, disclosure from the applicant is required. If she fails to make any disclosure I imagine the motion will proceed. The faster she makes disclosure the faster a resolution might be possible.
[42] While the parties may have issues going forward with respect to child support owing from December 1, 2016 and how the rent paid and received from December 1, 2016 is to be dealt with, these are not this court’s issues to sort out. The parties will have to do that, preferably by agreement, or if not agreement, further court proceedings.
[43] Order to go in accordance with paragraphs 1 through 11 inclusive of the respondent’s notice of motion dated November 29, 2017. The applicant’s notice of motion dated December 13, 2017 is dismissed.
Costs
[44] Both parties in their notices of motion asked for costs. Despite this, neither of them were prepared to make costs submissions at the conclusion of the evidence and submissions at trial. Neither of the parties had a Bill of Costs or Costs Outline as required under Rule 57.01(5) & (6).
[45] I was tempted to deny the respondent his costs for his failure to comply with the rules and for not being prepared to argue costs at the conclusion of the trial. However, under Rule 24(1) of the Family Law Rules there is the presumption that being successful, he is entitled to costs and I am prepared to entertain submissions on this matter.
[46] If the parties are unable to reach an agreement as to costs, the respondent is to serve and provide me with his costs submissions on or before March 28, 2018, consisting of no more than three pages, typed, and double spaced along with any necessary material such as a Bill of Costs, dockets, case law and offers to settle. All of this is to be in hard copy. All of this is to be sent to my attention at 361 University Avenue, Judges’ Administration, Room 170, Toronto, as well as being filed with the Family Law Office at 393 University Avenue, Toronto. The applicant’s submissions, subject to the same directions, are to be provided on or before April 18, 2018.
HOOD J.
Released: March 7, 2018
COURT FILE NO.: FS-15-400450-00
DATE: 20180307
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NGA TU TRUONG, Applicant
– and –
ALI REZA MALEKI, Respondent
REASONS FOR DECISION
HOOD J.
Released: March 7, 2018