NEWMARKET COURT FILE NO.: FC-12-42147-00 DATE: 20181116 SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT
RE: Florentina Iofcea, Applicant -and- Valentin Nicolae Dinoiu, Respondent
BEFORE: The Honourable Mr. Justice J.P.L. McDermot
COUNSEL: John P. Schuman, for the Applicant Giovanna Cacciola, for the Respondent
HEARD: May 28, 29, 30, 31, June 1, 2018
Endorsement
Background
[1] When is an informal settlement document made and signed by the parties enforceable? That is the question raised in this single-issue trial by the Applicant, Ms. Iofcea.
[2] This trial arose from a motion for summary judgment brought before Bennett J. on February 14, 2018. The sole issue was whether a document signed by the parties on September 13, 2016, was a binding settlement of the property and support issues in this litigation. Bennett J. ordered the summary judgment motion to trial.
[3] The trial in this matter was heard on May 28, 29, 30, 31 and June 1, 2018. Further written submission were requested to be served and filed. The Applicant’s submissions were received on June 11, 2018, the Respondent’s responding submissions were received on June 22, 2018, and the Applicant’s reply submissions were received on June 27, 2018. After hearing the evidence at trial and on reading the submissions filed, these are my reasons.
[4] These parties began cohabitation somewhere between 1994 and 1996; the parties disagree on the exact date. They separated in 2012. They had one child, a son, Adrian, who is now 16. He continues to live with Ms. Iofcea.
[5] Ms. Iofcea brought proceedings for property division, spousal and child support as well as custody of Adrian. The situation was complicated by the fact that the parties were unmarried and that, along with the mutual hostility between the parties, made for the perfect storm. Ms. Iofcea worked in a hospital as a nurse, and made a good income; however, the Respondent, Mr. Dinoiu, is a partner in a tool and die company providing for automotive parts suppliers and makes much more. Ms. Iofcea’s expert assessed the business as being worth between $3 million and $3.5 million and she also assessed Mr. Dinoiu’s income as being more than $400,000, and substantially more than he declared on his income tax returns. Because the parties were not married, equalization of property was not a remedy and Ms. Iofcea was forced to claim unjust enrichment. Mr. Dinoiu took the position that Ms. Iofcea should not share in his business or his other assets, and the race was on.
[6] Child and spousal support were also an issue. Mr. Dinoiu initially paid $4,000 per month in child support; this was increased on motion to combined child and spousal support of $8,000 per month pursuant to a temporary order of Charney J. made on October 7, 2015. Mr. Dinoiu claims the support to be unaffordable although he continues to pay that support.
[7] There were also custody and access issues. The parties’ son, Adrian, who is now 16 years old, was living with the Applicant, but Mr. Dinoiu wanted shared custody. There were problems with access and the parties retained Susan Lieberman, a parenting coach, to assist them. As will be seen, her part in this process became crucial.
[8] The parties were unable to settle their issues and they began litigation soon after separation. According to their evidence, they have spent “hundreds of thousands of dollars” on legal fees. In the first part of 2016, they attempted settlement through a private mediator at a cost of $10,000; that was unsuccessful. By August of 2016, litigation was heating up again and motions had been scheduled.
[9] With this in the background, the parties met with Susan Lieberman on September 13, 2016. They differ as to who wanted this meeting and for what purpose. It is, however, common ground that they did not talk about Adrian; instead, they talked about their property and support issues. Ms. Lieberman testified that the parties came to an agreement, and that she wrote out what the parties had agreed upon. The parties each signed that handwritten document in the presence of Ms. Lieberman. Because of its brevity, I will reproduce it in full below: [1]
Sept. 13, 2016 -Florentina will keep the house – will be put in her name -Settlement of $650,000 -Valentin will not claim any of the pension of Florentina’s. -No Reassessment in 2 yrs. Will settle through communication -Split cost of any future therapy for Adrian. -Will try for 1 payment – Valentin needs to have an appt. with his accountant. – have $650,000 of the mortgage on the house be put in Valentin’s name. It’s currently in both names. -monthly child support $3,000.00 – will come into discuss, if it regularly seems to not cover costs. _______________________ “Valentin Dinoiu”_________ Florentina Iofcea “F. Iofcea” Valentin Dinoiu
[10] Ms. Lieberman testified that the parties were extremely relieved at coming to an agreement, and they hugged each other at the end of the meeting. Mr. Dinoiu went off to raise the money. Ms. Iofcea acknowledges that she had agreed to reduce support but she refused to do so until she was satisfied that Mr. Dinoiu would make the payment owing under the agreement.
[11] Unfortunately, the agreement was stillborn. By November 7, 2016, Mr. Dinoiu was complaining that he could not raise the money and offered to pay the amount owing in 8 annual payments of $81,000. [2] Ms. Iofcea says that she refused this offer because she could not have qualified for the mortgage remaining on the common residence to be transferred to her. There were several other meetings with Ms. Lieberman without result, and Ms. Iofcea discharged her lawyer. Mr. Dinoiu continued to pay the support that he had been paying all along. By January 2017, it was apparent that for Mr. Dinoiu, the deal, if there was one, was off.
[12] Ms. Iofcea re-retained her lawyer in March 2017. She has brought a motion for summary judgment under the document signed by the parties on September 13, 2018. Both parties have participated in questioning, and settlement remains as elusive as it was prior to the meeting with Ms. Lieberman. By order of Bennett J. dated February 4, 2018, the motion for summary judgment was set down for trial of the issue of the validity of the agreement. Although the parties estimated that the trial would take place over two to three days, this trial, in fact, took five.
[13] For the reasons set out below, I have determined that the document in question does not constitute a final settlement, and that the motion for summary judgement is therefore dismissed.
A Note on Evidence at Trial
[14] The parties filed affidavits in support of their motion for summary judgment, which were included in the parties’ exhibit books. At the commencement of trial, I heard a motion for the redaction of certain parts of Mr. Dinoiu’s affidavit sworn on January 29, 2018 and made rulings. This argument appears to have been in contradiction with Kaufman J.’s endorsement dated March 21, 2018, which was made in response to a 14B motion brought in this matter. He ruled that “the evidence of the respondent may be tendered in-chief by the affidavits.” That ruling would appear to indicate that redactions were not necessarily permitted; however, this ruling was not brought to my attention during the redaction argument. As well, Kaufman J. did not address the Applicant’s affidavit evidence; however, on May 11, 2018, he stated that he had completed Part 3 of the Trial Scheduling Endorsement Form which may have addressed the use of the affidavit evidence of the parties during trial. That Trial Scheduling Endorsement Form was not, however, on the endorsement record and I have been unable to find it in the file.
[15] The Respondent’s unredacted affidavit was removed from the record because of my ruling on the redactions [3] and it was replaced by a redacted affidavit. [4] That redacted affidavit was never filed as a trial exhibit, but that was unnecessary based upon Kaufman J.’s March 21 endorsement. I have used the Respondent’s redacted affidavit as his evidence in chief.
[16] The Applicant’s affidavits were left on the record and no redactions were requested; both of her affidavits were made exhibits at the trial. [5] Her examination in chief was limited in scope, presumably because her evidence in chief was also through her affidavits. Because this was trial of an issue of a motion for summary judgment, I assume that the pleadings for the purposes of this trial were the affidavits filed in support of that motion. The evidence in chief of both parties was to be entered through the filed affidavits of the parties to be used in the argument of that motion. I cannot confirm this through the Trial Scheduling Endorsement Form, which appears to have gone astray, but this is the only interpretation that makes sense under the circumstances.
Positions of the Parties
[17] Ms. Iofcea takes the position that the document signed by the parties on September 13, 2016, is a binding settlement on the parties. She says that this is a simple issue of Mr. Dinoiu resiling on a deal that he has now had second thoughts about. According to Mr. Schuman’s submissions, all of the essential terms for a settlement were contained in the document that the parties signed. He says that the surrounding circumstances show that an agreement was intended, and that this was confirmed by the Respondent’s conduct after the agreement was filed. Mr. Schuman suggests that the Respondent acted in bad faith, and when he discovered that there might be some difficulty in raising the funds, he decided to take the position that no agreement was ever arrived at.
[18] Mr. Dinoiu denies there to be any agreement; in his words, this was only a “framework” for a potential settlement, and that he agreed to explore whether he could raise $650,000 to address that potential settlement. He says that certain essential issues were left out of the document: these essential elements included s. 7 expenses for Adrian, RRSP money that Mr. Dinoiu says that Ms. Iofcea kept and did not pay back, and the proceeds of the sale of a jointly owned condominium which Mr. Dinoiu says that Ms. Iofcea wrongfully received to her own use.
[19] Mr. Dinoiu also says that Ms. Iofcea’s post-separation conduct did not support the contention that there was an agreement. He says that her lawyer’s decision to ask for examinations and disclosure after January emails were inconsistent with her position that there was a settlement; why did she not just set the matter down for summary judgment as soon as she re-retained Mr. Schuman in this matter?
[20] Finally, he says that he did all that he could to explore whether he could raise the $650,000. He says that his accountant told him that he could not raise it from his equity in the business and that he had gone to lenders who refused to lend him money for the settlement. He says that the Applicant and he met with the financial advisor who also advised them that Mr. Dinoiu could not raise the funds. He said that he complied with his obligations under the document, which was to explore whether he could finance the potential settlement. The position of the Respondent is that this document was exploratory only, and not intended to be a binding settlement of this litigation. He wants a trial of all of the financial issues between the parties.
The Issues
[21] The issues in this case are defined by the case law which examines basic contract law principles to determine whether an agreement is in place. Those cases state that an agreement is in place when all of the “essential terms” of the agreement are present in the transaction in question: see Ward v. Ward, 2011 ONCA 178 at para 53. However, if there is nothing other than an “agreement to make an agreement” or where the parties contemplate a formal agreement as being necessary to complete the transaction, there is no enforceable agreement: see Bawitko Investments Limited v. Kernels Popcorn Limited, [1991] O.J. No. 495 (C.A.) at para 21. As set out in Ward, in determining these issues, the conduct of the parties may be examined to determine whether an objective person would find that there was an agreement present.
[22] As well, the Respondent has raised the issue of compliance with s. 55 of the Family Law Act: [6] Must this agreement comply with the formal requirements of a domestic contract under the FLA, and if so, does it?
[23] Therefore, the issues define themselves as follows: (a) Does the document signed on September 13, 2016, contain all of the essential terms for the formation of an agreement as to the property and support issues between these parties? (b) Does the conduct of the parties support the contention that there was an agreement in place between the parties as of September 13, 2016? (c) If there is an agreement, does s. 55 of the FLA apply to make the agreement unenforceable?
Discussion
Does the document signed on September 13, 2016 contain all of the essential terms for the formation of an agreement as to the property and support issues between these parties?
[24] In this matter, the parties entered into a fairly simple handwritten document. That document provided for a payment by Mr. Dinoiu of $650,000 and ongoing child support of $3,000 per month. It also confirmed that the common residence would be transferred to Ms. Iofcea. Mr. Dinoiu agreed not to pursue Ms. Iofcea’s HOOP pension plan. The agreement “discussed” how the payment would be made and said that there would be no “reassessment” in two years (presumably of child support), but that the parties would meet to change it.
[25] The question is whether the agreement contains all of the essential terms necessary to settle the financial issues between the parties.
[26] As noted above, the leading case is Ward v. Ward, supra, a decision of Lang J.A. of the Ontario Court of Appeal. In that case, as part of a collaborative process agreed to by the parties, they executed a Memorandum of Understanding which provided that it was subject to the parties’ counsel “working out” a formal separation agreement with “satisfactory language”. They agreed on the incomes of the parties, equalization of property including a $250,000 payment by the husband to the wife, conveyance of certain real estate assets to the husband, child and spousal support, section 7 expenses, support insurance, and an educational trust for the children.
[27] Lang J.A. determined that the MOU was a valid and binding domestic contract. She stated at para 53, that the test for the finding of an agreement is as follows:
At common law, an agreement is binding if the parties consider that it contains all essential terms, even if the parties also agree that those terms will subsequently be recorded in a more formal document together with the usual terms ancillary to that type of agreement. However, an agreement is not final or binding if it is merely an agreement to later agree on essential provisions, or to defer the binding nature of the agreement until the execution of the proposed subsequent formal contract.
[28] The test is not subjective. The issue is whether a reasonable person standing in the position of either of the parties or observing the circumstances surrounding the making of the agreement, would have believed or understood that the parties were making a final agreement on all essential issues sought to be settled: see Swift v. Swift, 2010 ONSC 6049 at para 35, Lundrigan v. Andrews, 2009 ONCA 100 at para 8 and Halpern v. Halpern, 2014 ONSC 4246 at para 21.
[29] In making her decision in Ward, Lang J.A. followed Bawitko Investments, cited above. At paras 20-21 of Bawitko, Robins J.A. stated:
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 of 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”, that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in 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.
[30] In that case, Robins J.A. reviewed a situation where the parties had orally agreed on some outstanding matters in the negotiation of a franchise agreement. However, because the “precise terms under which a business relationship of this nature is to be governed are manifestly essential to the formation of a binding contract”, as well as based upon the parties’ conduct after the meeting, Robins J.A. found that the oral agreement, even though it addressed the then outstanding issues between the parties, was subject to the drafting and execution of a formal franchise agreement (Bawitko Investments, para 22.).
[31] In the present case, it appears as if the parties thought that they had entered into an agreement that settled all of their affairs. Essentially, the agreement was that the Respondent would pay the Applicant $650,000 and transfer the matrimonial home to her to end the litigation. He would no longer pay spousal support but would only pay $3,000 per month in child support. The parties would split the costs of Adrian’s therapy. There would be no claims as to each other’s property, including Ms. Iofcea’s pension and Mr. Dinoiu’s business, and the litigation would come to an end.
[32] This was supported by the background to the matter. Ms. Lieberman testified that the parties had intended to meet to settle their financial issues, and said that she suggested the meeting because the parties were finding both the litigation and the expense of the litigation intolerable. Although Mr. Dinoiu claimed that the meeting was supposed to be about Adrian, [7] this assertion is without credibility. The parenting coordinator, Susan Lieberman, confirmed that no one was “surprised” or in doubt about the purpose of the meeting, as they wished to put an end to the litigation and discuss settlement. They had already been through a lengthy and expensive negotiation with a well-known private mediator which had come to nothing. Mr. Dinoiu acknowledged that he “initiated” the settlement in an email to Ms. Lieberman dated December 16, 2016 [8] and all that he could be speaking about was the settlement that he subsequently discussed in that email that he said that he could not afford. He also admitted in cross examination that he knew that the September 13 meeting was going to be about “financial issues” which is inconsistent with his affidavit. I find that when the September meeting was scheduled, Mr. Dinoiu knew that financial issues were to be discussed with Susan Lieberman, and that his statements made in his affidavit to the contrary were inaccurate at best.
[33] Ms. Lieberman, who observed the parties negotiating on September 13, 2016, certainly thought that there had been an agreement struck between the parties. She drafted the document signed by the parties to reflect their “agreement”. She said the parties hugged at the end of the session, something inconsistent with the suggestion by Mr. Dinoiu that all that had been agreed to was a “framework” to examine whether the suggested terms were possible to fulfill and that the document was signed only to outline “our discussions to date”. [9]
[34] Mr. Dinoiu says that certain essential terms were left out of the agreement. He says that the agreement was missing essential terms including: the termination of spousal support; certain claims that he had made regarding the proceeds of the sale of a condominium located at 60 Absolute Avenue, in Mississauga, owned by the parties jointly; and the proceeds of an RRSP which were kept by the Applicant. He says the agreement also did not address $190,000 in joint debts, or a property located at 579 Candlestick Circle, in Mississauga, which he said was purchased in Ms. Iofcea’s name with his funds.
[35] This is contrary to Ms. Lieberman’s evidence on what she thought that the parties had done. She said in her email sent out to counsel after the September 13 meeting that the parties “had agreed to a settlement of $650,000”. [10] She said during her examination in chief that the $650,000 was to cover “everything other than Adrian’s education”. In cross-examination, in a question as to why the agreement did not mention spousal support, Ms. Lieberman said that “everything was covered by the $650,000”. Although Ms. Iofcea’s pension was mentioned, Ms. Lieberman said that this was because Ms. Iofcea was more vocal about her pension than was Mr. Dinoiu, who was “quieter”. But it was clear to Ms. Lieberman that she thought that all of the financial claims of each party, other than the child support mentioned in the agreement, were covered by the payment of $650,000.
[36] Mr. Dinoiu’s position as to the missing clauses was also put paid to by his cross-examination. Mr. Schuman examined Mr. Dinoiu extensively about his assertion that the document did not mention his business or spousal support. He asked Mr. Dinoiu if he was saying that he was agreeing to pay the $650,000, and yet Ms. Iofcea would still have a right to share in his business or continue to collect the $8,000 per month on top of the $3,000 per month that was contained in the agreement. Mr. Dinoiu had no answer to this. He could not, in any reasonable fashion, explain what he thought he was paying $650,000 for. If I take him at his word, he was agreeing to explore raising $650,000 for an unknown purpose. I found his responses to Mr. Schuman’s questions evasive and, frankly, unbelievable. His position that the items left out of the agreement were not covered, and would remain in issue after payment of the money, was a position that made no sense.
[37] The Respondent also complains that there were no releases by the parties of future claims contained in the agreement. There was nothing to indicate that neither party could begin another application or continue with the present one regarding the issues intended to be settled within the agreement.
[38] Case law has made it clear that a formal release is not an “essential term” necessary to find there to be an agreement; it may be implied by the settlement’s terms: see Bogue v. Bogue, [1999] O.J. No. 4310 (C.A.), where Rosenburg J.A. said, at para 13:
In my view, there was evidence upon which the motions judge was entitled to find that a final settlement of all the issues had been reached on December 10th and that there was an agreement in respect to the essential terms. While there was no express discussion about a release, the settlement of the action implied an obligation to furnish releases: Fieguth v. Acklands Ltd. (1989), 59 D.L.R. (4th) 114 (B.C. C.A.).
[39] In my view, the wording of the agreement, “-Settlement of $650,000” makes it implicit that releases were eventually to be provided. It must be recalled that the agreement was drafted by laypersons, unversed in legal affairs, and who probably would not have known about the necessity of formal mutual releases to prevent further litigation on the same points being settled between themselves. The plain meaning of the word, “settlement” is therefore important in this regard. I believe that the parties intended that the payment of $650,000 was to end the litigation, including all claims by both parties, and that neither party could come back on the other once those funds were paid.
[40] For example, Collins Dictionary [11] defines “settlement” as “an agreement to end a disagreement or dispute without going to court, for example by offering someone money .” The example in the dictionary entry was, “ She accepted an out-of-court settlement of £4,000.” In my view, the plain meaning of the line in the agreement was that the parties intended to end the property and spousal support disputes in the litigation by way of payment by Mr. Dinoiu to Ms. Iofcea of $650,000. A reasonable lay person (and the agreement was drafted by a lay person) would have understood no less. Implicit was that the claims of each of the parties would have been ended by the payment of that sum of money.
[41] I was more troubled, however, with the provision regarding the raising of the $650,000. The clause reads as follows:
-Will try for 1 payment – Valentin needs to have an appt. with his accountant. – have $650,000 of the mortgage on the house be put in Valentin’s name. It’s currently in both names.
[42] The agreement provided that Mr. Dinoiu would “try for 1 payment” and that an option would be to “have $650,000 of the mortgage on the house be put in Valentin’s name”. Mr. Dinoiu said he would speak with his accountant. He says that he could not raise the money to make the payment from either his personal assets or his company. Is the payment of the funds, and how and when they are to be paid, an “essential term” which was left outstanding within the meaning of Bawitko Investments?
[43] This is not an issue of the agreement being “subject to financing” or conditional on financing. Ms. Lieberman was clear that there was an agreement that the funds would be paid, but that how they were to be paid was left outstanding. She says that there was never an issue between the parties whether Mr. Dinoiu could raise the money; in her words, the only issue was “how”. She testified that when the agreement was arrived at, “nothing was up in the air” and the only issue was the means of raising the funds. The wording, “try for 1 payment” came from Ms. Iofcea but Mr. Dinoiu had agreed to go to his accountant and the bank to discuss how, not whether, the funds would be obtained. In light of Mr. Dinoiu’s evasive responses to Mr. Schuman’s questions, I find Ms. Lieberman’s version of events much more credible than that of Mr. Dinoiu.
[44] But the question as to “how” the funds would be paid remains an issue between the parties. If Mr. Dinoiu could not make one payment, the agreement does leave it “up in the air” as to how he would make the payment. There was an option of him assuming part of the mortgage on the home; again, he says that he could not do that and this was confirmed by the testimony of Mr. Wood. He ended up by offering to pay the sum over eight years, which Ms. Iofcea rejected.
[45] Mr. Dinoiu says that the only thing he was obligated to do was to see if he could raise the funds and if not, the parties would have to go back to the drawing board. However, the agreement was that Mr. Dinoiu would “try for 1 payment” and I do note that the evidence led by Mr. Dinoiu, as to his efforts to raise the funds to make that one payment, was lacking.
[46] Firstly, he was dishonest with both Ms. Iofcea and Ms. Lieberman about his attempts to obtain funds. He claimed in his emails to Ms. Iofcea that, “There seems to be no financial institution ready to credit me” [12] implying that he had attempted to obtain financing from more than one lender. He said to Ms. Lieberman on October 25, 2016, that he had been “trying to find a lender to finance the settlement but with no success. None of them would lend that kind of money with little or no collateral.” [13] These were both lies; in fact, he admitted during cross-examination that he had never applied at any other lender other than speaking with Mr. Wood, the parties’ financial advisor at CIBC.
[47] He was also extremely evasive about the support figure that he gave to Mr. Wood when he applied for the loan; he refused to answer whether he used the $8,000 support figure or the reduced figure of $3,000 per month set out in the document that the parties signed. No loan application was produced by Mr. Dinoiu as an exhibit at trial; in fact, as his cross-examination progressed, he acknowledged that there was “nothing in writing” showing that he had applied for the loan and the only time that Mr. Dinoiu met with Mr. Wood was when he and Ms. Iofcea got together with Mr. Wood in November 2016.
[48] And when he and Ms. Iofcea met with Mr. Wood on November 27, 2016, he did not explore a business loan; Mr. Wood was clear that Mr. Dinoiu did not have real estate or personal assets from which he could raise the funds. When a loan against his business was raised as a possibility, Mr. Dinoiu never asked to meet with another bank advisor as to the raising of funds through a business loan. He said his business partner “would not allow me” to raise the funds through the business [14] but he did not testify or lead evidence that he had even asked him about borrowing this sum against his interest in the business. He did not call either his accountant or his business partner as trial witnesses to testify as to his discussion with the accountant, whether the business partner would allow Mr. Dinoiu to raise the funds from his business, or to allow the court to explore through these witnesses as to whether it was even possible to do so. Mr. Dinoiu called no evidence whatsoever to corroborate that he had attempted to raise the money through any means, other than through his meeting with Mr. Wood, or followed through on his obligation under the document to meet with his accountant to discuss those issues.
[49] However, Mr. Dinoiu did give his own evidence that he met with his accountant, as he had agreed to do under the agreement. [15] He says in his affidavit (and I presume this is based on information and belief arising from his meeting with his accountant) that there was insufficient capital in the company to pay the funds outlined in the agreement. Mr. Dinoiu did not call his accountant, but it appears that he received advice from the accountant that confirms that he thought that he was unable to pay the funds that the parties had agreed that he would pay. Although Mr. Dinoiu did not call the accountant, that provision in Mr. Dinoiu’s affidavit was not objected to or sought to be redacted.
[50] Mr. Dinoiu ended up offering to pay the funds at $81,000 per year over 8 years. Susan Lieberman testified that this was not anything new other than just another way of coming up with the funds: her only issue with Mr. Dinoiu was whether this was a final offer, the rejection of which would result in further arbitration. [16] However, it is clear from that email exchange that the issue of payment of the funds was yet to be agreed upon.
[51] This exchange also confirms the agreement on the amount to be paid, but the rejection of that offer out of hand by Ms. Iofcea, also confirms that there was a vital issue which remained unsettled at the time of the September negotiation. She said that it was impossible to accept Mr. Dinoiu’s proposal because she could not pay the mortgage on the home if she agreed to it. In late November 2016, the parties explored other options with Mr. Wood; however, Ms. Iofcea previously confirmed with Mr. Wood that the mortgage “must not be against the 15 Woodland Hills Blvd because the house is going to be transferred in my name, it would have to be against his own assets”. [17] Both parties were concerned as to how the payment would be made, and without that being sorted out, there was no clear path to resolution of the issues between the parties.
[52] The fact that Mr. Dinoiu made the eight-year offer, however, is reflective of his interpretation of the plain language of the agreement which leaves the payment of the settlement amount up in the air. The statement “will try for 1 payment” implies that there was no agreement as to how and when the payment would be made. The agreement allows Mr. Dinoiu the option of making more than one payment if he could not make the “1 payment”. As suggested by Ms. Lieberman, how he was going to make the payment, including whether it would be over a period of time, or how the money would be raised, was something left outstanding by the written agreement. All the agreement contained were options, rather than obligations, as to how the payment would be made.
[53] Was the means of payment of the funds, and how they were to be paid, essential terms of the agreement? That can only be shown by the rejection by Ms. Iofcea of the offer made by Mr. Dinoiu to pay the amount owing over eight years. She testified that she was not willing to accept the payment that way because she could not pay the mortgage on the home if she did. It was essential for her to have a sufficient amount paid which would permit her to pay the mortgage and keep the home. And for Mr. Dinoiu, payment of the amount was even more crucial: he had insufficient personal assets which would enable him to borrow to pay the funds, as discussed with Mr. Wood together with Ms. Iofcea. He also faced headwinds in raising the funds from his business assets: he gave evidence that his business partner would not agree to encumber the business assets to pay the funds, and his accountant appears to have told him that he did not have sufficient capital in the company to take the funds out to make the payment.
[54] The fact that this was an “agreement to agree” is confirmed by the fact that both parties went to meet with Mr. Wood about raising the funds. This meant that both continued to be involved in the decision as to how the funds were to be raised, which is to say that both were involved in the further step necessary to agree as to how the funds were to be paid. Although no one seems to have a good recollection of the meeting, Ms. Iofcea acknowledged that three options were presented to the parties at the meeting and Mr. Wood recalls that the parties were looking into raising the funds from Mr. Dinoiu’s assets and income. Mr. Wood recalls that the meeting was over how much Mr. Dinoiu could get, but he also recalls a discussion as to payments in instalments, although he could not recall specifics. The parties explored a personal unsecured loan, but that was limited to $50,000. The key is that both parties remained involved at this stage of the negotiation. This indicates that both were involved in determining when and how the payment was to be made, which implies that there remained a crucial issue yet to be determined; the means of paying the settlement funds, as well as how many “instalments” would be made toward that payment. The issue of the means of payment of the $650,000, and/or the period it was to be paid over, was yet to be resolved.
[55] How the payment is to be made is also essential to the other terms of the agreement. If the parties could not agree on the method of payment, this might very well change the amounts payable under the agreement. For example, if the parties could not agree on how many instalments that Mr. Dinoiu could make under the agreement, then they parties may have discussed more support and a smaller lump sum payment. The method of payment was essential to the other terms of the agreement.
[56] This is emphasized by the fact that I was unclear from the terms of the putative agreement as to what type of order that I can make at this trial. It seems unfair to issue a judgment against Mr. Dinoiu for $650,000, when all that he had agreed to do was to “try for 1 payment”, which implies that it was possible under the agreement for him to make more than one payment. How can I decide that Mr. Dinoiu has to make one payment through a judgment when he did not necessarily agree to do so? What assets would any judgment be enforced against? If the shares of the business are seized in satisfaction of the debt, that leaves Mr. Dinoiu with no income from which to pay support and the business without the resource of Mr. Dinoiu who actively operates this tool and die business. There is also no basis for me to impose a scheme for payment of the amounts over a period of time, because that issue was again left outstanding. The fact that I am uncertain as to what type of order I can make, confirms that the agreement was uncertain as to an essential term; how and when the payment was to be made.
[57] It is apparent from the evidence that the parties had not agreed on how the payment was to be made, including how many payments and over what period. There was an outstanding essential issue that remained unsettled after the meeting of September 13, 2016, and the signing of the document arising from that meeting. If there is an essential issue which remains outstanding at the end of the negotiation, there is no agreement; there remains only an agreement to make an agreement on that essential term of the settlement.
[58] As stated above, I am convinced that the parties thought that they had a final agreement after the September 13 meeting with Ms. Lieberman. However, what the parties thought is not necessarily conclusive (although that is one piece of evidence as to whether a final agreement was arrived at). The test, rather, is what a reasonable person would have considered that the parties had come to a final agreement on all essential terms considering all of the circumstances. I find that the only conclusion that can be made is that the written document prepared by Ms. Lieberman was essentially an agreement to agree on the terms of the payment of the $650,000 that Mr. Dinoiu said that he would pay.
[59] That means, unfortunately, that there is no enforceable agreement between the parties.
[60] This brings us to the post-agreement conduct of the parties.
Does the conduct of the parties support the contention that there was an agreement in place between the parties as of September 13, 2016?
[61] In Ward at para 65, the Court of Appeal confirmed that the court can review, in determining whether there was an agreement, the “parties’ conduct at the time”. In that case, the court reviewed the parties’ behavior after the Memorandum of Understanding was signed.
[62] I note that the trial in this issue was an exercise of extreme caution in the language used by counsel when referring to the document signed in this matter. Although Ms. Iofcea had no problem with calling it an “agreement” or “settlement”, the same was not the case for Mr. Dinoiu or his counsel. They referred to the document as a “document” or as a “piece of paper.” They refused to call it an agreement.
[63] As pointed out in Cole v. Cole, 2011 ONSC 4794 at para. 41 (cited in Halpern, supra at para. 20), at a certain point, when enforcement of an agreement becomes an issue, “parties generally govern themselves in a self-serving fashion” and it is therefore important to limit the inquiry into the parties’ conduct to the time before this self-serving behavior begins to occur. At a certain point, the parties’ conduct indicates nothing other than the result that they wish to achieve.
[64] There were a number of things that both parties did that were consistent with the existence of an agreement. For example, after the first meeting with Ms. Lieberman, the parties hugged each other, consistent with entering into a final agreement rather than a memorandum to record the point at which negotiations were at. They acted as if the very expensive and draining litigation was over and considering the hostility that the parties had towards each other at that point in time, it would have been unlikely that the parties would show affection if they were going to continue negotiations as suggested by Mr. Dinoiu.
[65] After the second meeting with Ms. Lieberman, Ms. Iofcea arranged for her lawyer to get off the record. [18] The parties together instructed Mr. Moubarak to adjourn the Trial Scheduling Conference, and he did so. Ms. Iofcea was told that she did not have to be there and was upset when the judge’s endorsements suggested that she should have been present.
[66] Moreover, Mr. Dinoiu also confirmed that he thought there was an agreement in several emails. Firstly, in October 2016, he offered $81,000 per year, for 8 years, to be paid out of income [19]; this amount totals $648,000 and confirms the settlement amount that he had agreed upon in September.
[67] There were, however, several actions that suggest that there was no agreement as to when and how the money would be paid. Ms. Iofcea continued to collect the $8,000 per month that she had been awarded the year before by order of Charney J., rather than the $3,000 per month set out in the agreement. She said that she did this because she could not afford to live without it until she received the funds under the settlement; however, she also said that she was unsure when the funds would be paid to her.
[68] As noted above, when the parties met with Mr. Wood in December, it was to explore how Mr. Dinoiu could raise the funds to pay the settlement amount to Ms. Iofcea. However, it is significant that Ms. Iofcea had sought to set up a three-way meeting with Mr. Dinoiu and Mr. Wood immediately after the meeting with Ms. Lieberman. She testified that Mr. Dinoiu just refused to make himself available. However, Ms. Iofcea’s attempts to set up an immediate meeting in September 2016, suggest that the negotiation was going to continue regarding financing the payment of the settlement funds.
[69] The October 2016 offer by Mr. Dinoiu of $81,000 per month over 8 years also says two things. Firstly, it confirms the amount that he thought was the settlement figure as this payment scheme would have put $648,000 into Ms. Iofcea’s hands, albeit over 8 years. However, it also confirms that there was no agreement on how the funds were to be paid; as noted above, Ms. Lieberman confirmed in testimony that this was just another offer on how the funds were to be paid. That issue remained outstanding and had to be agreed upon prior to there being a final agreement.
[70] The meeting with Mr. Wood confirms also that the parties were exploring how to make the payment together on November 27, 2016. Ms. Iofcea confirmed in her questioning that three options for raising the funds were presented during this agreement. [20] Mr. Wood confirmed that the parties discussed Mr. Dinoiu making instalment payments, although he could not recall specifics of those proposals. In late November 2016, the parties continued to discuss the major issue left outstanding by the agreement, which was when and how the payment would be made.
[71] Mr. Schuman suggested that there were unequivocal statements by Respondent’s counsel to indicate that there was a final agreement. Certainly, Mr. Moubarak confirmed in an email to Ms. Iofcea that “my instructions are not to proceed to Trial given that you and my client have reached a deal and you are simply awaiting some final steps to be concluded.” He said in the email that he told the court that “the parties have finally come to their senses” and that he “hoped that the matter will be concluded between the parties shortly with the help of the parenting coordinator”. Mr. Moubarak said that he believed that Ms. Iofcea and Mr. Dinoiu “have made great progress” and suggested that Ms. Iofcea and Mr. Dinoiu “continue doing with Ms. Lieberman the great work that you have accomplished to date.” [21]
[72] However, the statements by Mr. Moubarak after September 2016 are more equivocal that Mr. Schuman suggests. Mr. Moubarak advised Kaufman J. on October 14, 2016, that settlement was “imminent” but Kaufman J. was of the impression that it remained touch and go at that point, addressing in his endorsement options in the event that settlement was not achieved. In the October 12, 2016 confirmation sent to the court by Mr. Moubarak, he said that the “parties are attempting resolution of this matter and are close to doing so” and his office echoed this in the email sent to Ms. Iofcea on the same date. [22] On October 17, 2016, Mr. Moubarak confirmed the adjournment with Ms. Iofcea, saying in his letter that the “parties settled this matter subject to our client putting in place the necessary financing” and that the parties should “continue and finalize settlement discussions amongst yourselves.” [23] Although Ms. Iofcea was infuriated by the Kaufman J. endorsement which was enclosed with that letter, she was not upset by the suggestion that the agreement was “subject to financing”; she was upset about the fact that there was some suggestion that she or Mr. Schuman should have been present, and the court was not advised that she was told by Mr. Moubarak that she need not attend.
[73] This, as well, answers the question as to whether counsel bound the Respondent to the terms of the agreement, such as it was. The equivocal responses of Respondent’s counsel did not bind the Respondent to anything more than the agreement made on September 13, 2016, which lacked a significant term.
[74] All of this leads me to find that the conduct of the parties in and around the settlement agreement confirmed that there was an essential matter that was left to be agreed upon, which was the financing and payment of the amount that Mr. Dinoiu agreed to pay. This is therefore an agreement to agree on that major term, and I therefore cannot find there to be an enforceable settlement agreement between the parties.
If there is an agreement, does s. 55 of the FLA apply to make the agreement unenforceable?
[75] I have determined that this agreement is lacking an essential term to be agreed upon, and is therefore a “contract to make a contract” and unenforceable.
[76] However, I have heard a trial on the circumstances of the execution of the agreement, and I am therefore in the best position to determine compliance with s. 55(1) of the FLA, which Respondent’s counsel suggests also makes the agreement unenforceable.
[77] Section 55(1) of the FLA reads as follows:
- (1) A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.
[78] Respondent’s counsel suggests that the formal requirements of s. 55 should not be relaxed. However, I believe those formal requirements have already been met.
[79] The section requires the agreement to be in writing, signed by the parties and witnessed. The first two requirements are clearly met. It was in writing, and was signed by the parties.
[80] Ms. Lieberman testified during the trial under oath that she witnessed both parties signing the agreement. She “witnessed” the signatures of the Applicant and the Respondent. She just did not sign the agreement as a witness, but I do not believe this to be a formal requirement under s. 55. All that had to be done is that the signature be witnessed, which it was. The witnessing and execution of the agreement was proven through sworn testimony by the witness rather than by an affidavit of execution.
[81] The formal requirements of s. 55 of the FLA have been satisfied.
Conclusion
[82] Because an essential term in the agreement was not agreed to, this is an agreement to make an agreement, and unenforceable. Because of this, the Applicant’s motion for summary judgment is dismissed. The matter will have to proceed to trial.
[83] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, there is a suggestion that if I have heard a motion for summary judgment, I should remain seized of the matter: see para 6. I have heard a trial as to one aspect of the matter, which mostly involved the agreement signed in the presence of Ms. Lieberman. I do not believe that there is any necessity for me to remain seized, as the evidence that I heard was not about the substantive issues between the parties, and there would not be a need to repeat the evidence all over again for the purposes of a comprehensive trial. As well, I heard a lot about settlement negotiations between the parties. In light of these facts, and considering the fact that I do not sit in Newmarket, I do not believe that I should remain seized of the matter if and when it proceeds to trial.
Costs
[84] The parties may make written submissions as to costs on a 10-day turnaround. As I have dismissed the Applicant’s motion, the Respondent shall firstly make submissions, and then the Applicant. Costs submissions shall be no more than 7 pages in length not including Offers to Settle or Bills of Costs.
McDermot J. Date: November 16, 2018
[1] Trial Ex. 3 [2] See Trial Ex. 27. [3] Trial Ex. E. [4] Tab 1 of the Respondent’s Supplementary Trial Record. [5] Trial Ex. 1 and 2: Initially Ex. 1 was noted as being Ex. A to the Applicant’s affidavit sworn January 11, 2018 (the business valuation of Cedonia Inc. and Carpathia Investment Corp.) but a review of the record shows that Ex. A was to be the January 11, 2018, affidavit and exhibits in whole. [6] R.S.O. 1990, c. F.11. [7] Affidavit of Mr. Dinoiu sworn January 29, 2018, para. 33. [8] Trial Ex. 5. [9] Affidavit of Mr. Dinoiu sworn January 29, 2018, para. 36. [10] Ibid., Ex. I [11] https://www.collinsdictionary.com/dictionary/english/settlement [12] Email from Mr. Dinoiu to Ms. Iofcea dated January 6, 2017, found at Ex K to the affidavit of Ms. Iofcea sworn January 11, 2018 (Trial Ex. A). [13] Email from Mr. Dinoiu to Ms. Lieberman dated October 25, 2016, Trial Ex. 12. [14] Affidavit of Mr. Dinoiu sworn January 29, 2018, para 52. [15] Affidavit of Mr. Dinoiu sworn January 29, 2018, paras 54 and 55. [16] See Trial Ex. 27. [17] Email from Ms. Iofcea to Mr. Wood dated September 14, 2016, Trial Ex. 13. [18] See Ex. H to the affidavit of Ms. Iofcea sworn January 11, 2018 (Trial Ex. 1). [19] Trial Ex. 27. [20] See the transcript of the questioning of Ms. Iofcea dated November 7, 2017, pp. 196 – 198 (Trial Ex. 14). [21] Ex. J to the affidavit of the Applicant sworn January 11, 2018 (Trial Ex. A). [22] See Trail Ex. 15. [23] Ex. I to the affidavit of Ms. Iofcea sworn January 11, 2018.