COURT FILE NO.: FS-20-16264
DATE: 20210326
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Brian Alex Schofield, Applicant
AND:
Lisa Marie Schofield, Respondent
BEFORE: M. Kraft, J.
COUNSEL: Kenneth Younie, for the Applicant
Geoffrey Wells, for the Respondent
HEARD: March 2, 2021
ENDORSEMENT
The Motion
[1] The respondent moves for summary judgment, seeking to dismiss the applicant’s claim to set aside three domestic agreements executed by the parties over a four-year period, as follows:
i) A Marriage Contract, dated September 30 2014 (the “Marriage Contract”);
ii) A Separation Agreement, dated August 5, 2016 (the “Separation Agreement”); and
iii) An Amending Agreement, dated September 15, 2018 (the “Amending Agreement”).
[2] For the reasons that follow, the respondent’s motion is dismissed.
Orders Being Sought
[3] In particular, the respondent (“wife”) seeks the following orders:
i) An order for summary judgment, dismissing the applicant (“husband’s”) Application, dated March 6, 2020, pursuant to Rule 16 of the Family Law Rules (“FLRs”);
ii) An order that the husband’s one-half share of the net proceeds from the sale of the property located at 59A Burgess Road, Rosseau, Ontario, being $718,568.27, be released to her from the real estate solicitor’s trust account;
iii) An order that the husband’s one-half share of the net proceeds of sale be used to partially satisfy the following:
(1) $150,000 in lump sum spousal support owed to the wife pursuant to paragraph 7(a) of the Amending Agreement, dated September 15, 2018;
(2) $557,168.02, being the balance of the equalization payment owing to her pursuant to paragraph 11.3(c) of the Separation Agreement; and
(3) $120,073.19, being interest on the equalization payment pursuant to paragraph 14.4 of the Separation Agreement; and
iv) An order that the balance of the monies owing in paragraph (iii) above by the husband in the amount of $108,672.92 be paid to the wife within 30 days.
[4] The husband takes the position that this is not an appropriate case for summary judgment. He submits that that he was under duress and undue influence from the wife when he negotiated and executed all three domestic contracts. According to the husband, the contracts contain unconscionable terms. The wife denies that she abused and/or threatened the husband, as he alleges. The wife’s position is that the husband was represented by counsel throughout the process of the negotiation and execution of all three domestic agreements; the parties exchanged sworn financial statements prior to signing the Marriage Contract and the Separation Agreement; and there are certificates of independent legal advice (“ILA”) attached to the domestic agreements.
[5] In support of her motion for summary judgment, the wife filed the following material:
i) Her notice of motion, dated January 4, 2021;
ii) Her affidavit, sworn on January 4, 2021;
iii) Her reply affidavit, sworn on February 2, 2021;
iv) Her Factum, dated February 23, 2021; and
v) Her Compendium.
[6] In response to the summary judgment motion, the husband filed the following material:
i) His affidavit, sworn January 14, 2021;
ii) A supplementary affidavit, sworn January 18, 2021; and
iii) The affidavit of Julie Stanchieri, dated January 14, 2021.
The Evidence
[7] The parties began dating in 2007 while the wife was attending Brock University. According to the wife, the parties began cohabiting in November 2007. According to the husband, the parties did not begin to live together until April 2009, when they moved into a home in Burlington.
[8] The wife entered into the relationship with three children from a prior relationship, namely, Elise Schofield (“Elise”), born January 24, 1997 (then aged 10) ; Brandon Schofield (”Brandon”), born August 10, 1998 (then aged 9); and Alexander Schofield (“AJ”), born May 17, 2000 (then aged 7). The biological father of the children is Angelo Amore. Pursuant to an Order of Genessee, J., Mr. Amore was obligated to pay child support to the wife in the sum of $666 a month.
[9] The parties married on June 27, 2009. At some point after the parties married, the wife’s three children’s last names were changed to Schofield.
[10] The parties separated on January 26, 2016. They are not divorced.
[11] The wife deposes that she has struggled with mental health issues throughout her life, along with other physical ailments, including an autoimmune disease, asthma and heart issues. The husband deposes that the wife has serious mental health issues.
[12] Both parties describe their relationship as unhealthy, toxic and co-dependent. The wife claims that the husband was older, wealthier and the more powerful individual in the relationship. By contrast, the husband deposes that he fell prey to the wife’s ongoing abuse, threats and humiliation, making him the vulnerable spouse. Specifically, the husband deposes that the wife abused and controlled him throughout their relationship through a combination of confrontation, guilt and threats - manipulating him by using her health, threats and attempts at suicide to get him to acquiesce to her wishes. Both parties made allegations of physical and emotional violence by the other. The evidentiary record confirms that the wife sent angry, vitriolic text messages to the husband using profane language, and that she threatened to kill herself in 2017 and 2018.[^1]
[13] The wife deposes in her affidavit, sworn on January 4, 2021, that the husband gave her a “life-long, sexually transmitted disease”. The husband denies having a sexually transmitted disease (|STD”). The wife has attached as an Exhibit “B” to her affidavit, sworn on February 2, 2021, in which she was diagnosed with genital herpes HSV in September 2013 and in which letter the doctor states that there was no prior record of the wife having an STD prior to this time.
[14] Elisa has now graduated from University and no longer resides with her. Brandon and AJ are full-time students at the University of Guelph and Brock University respectively. They reside with the wife full-time when they are not at school.
[15] In the Fall of 2020, the parties sold their jointly owned cottage, the property located at 19A Burgess Road, Rosseau. The net proceeds of sale, being $1,437,136, have been held in trust by the real estate lawyer as a result of the husband having commenced this proceeding.
The Parties’ Educational and Employment Backgrounds
[16] The husband is highly educated. He has an undergraduate degree in Engineering and a Masters in Business Administration. He is also a certified Chartered Financial Analyst. He has worked in the wealth management industry for the past 30 years.
[17] According to the wife, when the parties began living together in 2007, the husband was employed by Blackmont Capital. At the date of marriage, the husband was employed by Macquarie Capital. When the parties signed the Marriage Contract on September 30, 2014, the husband was employed by CIBC Wood Gundy, as he was when the parties’ separated in January 2016.
[18] The husband is currently employed by Wellington-Altus Private Wealth as a Vice-President, Senior Investment Advisor & Senior Portfolio Manager
[19] For the past four years, the husband’s Line 150 income was as follows:
i) $510,364 in 2016;
ii) $454,713, in 2017;
iii) $546,741 in 2018; and
iv) $573,912 in 2019.
[20] The wife has an undergraduate degree from Brock University, which she obtained in 2013, and a Masters in Arts Degree in Child and Youth Studies, which she obtained in 2016. The wife is not employed outside of the home. Her only source of income is the support she receives from the husband.
[21] When the parties met in 2007, the wife was pursuing Bachelors of Arts and Bachelor of Education degrees at Brock University in the Concurrent Education Program. She was scheduled to begin her teaching placement to finish her Bachelor of Education degree in September 2009, but according to the wife, the husband encouraged her to stay at home and promised to take care of her financially. The husband submits that he did not encourage the wife to abandon her teaching job or her pursuit of education, but he did let her know that he had sufficient income to support their family.
[22] Whatever the reason, the wife did not complete the final year of her program. From that point onward, the husband was the breadwinner for the family and the wife looked after the household and children. During the marriage, the wife had unfettered access to the parties’ joint bank accounts, into which the husband deposited his income.
[23] In 2013, the wife tried to resume her Bachelors of Education program, but she was not permitted to re-enroll because so much time had passed. The wife was, however, permitted to re-enroll in a Bachelors of Arts program and she subsequently completed a Masters of Arts degree in Child and Youth Studies.
Circumstances of the Three Domestic Agreements
[24] The parties first separated on November 8, 2013. The children and wife continued to reside in the matrimonial home. The husband voluntarily vacated the matrimonial home but frequently returned there to spend time with the children and wife.
[25] At the time of separation, both parties retained counsel to negotiate and draft a separation agreement. The wife was represented by Anita Kain and her associate, Lisa Katz, and the husband was represented by Kevin Caspersz.
[26] According to the wife, by December 2013, the husband was coming to the matrimonial home daily and the parties were directly negotiating the terms of their Separation Agreement. These negotiations continued until April 3, 2014, when the parties had put the terms of their settlement into writing.
[27] The husband’s financial statement, which was sworn on February 28 2013, and the wife’s financial statement, which was sworn on March 24, 2014 were exchanged.
[28] The parties reconciled in the Spring of 2014, and the terms of the Separation Agreement that they had negotiated became a Marriage Contract.
[29] On September 30, 2014, the parties executed the Marriage Contract, five years after they had been married, in the presence of their lawyers. The parties’ sworn financial statements were attached to the Marriage Contract, along with certificates of ILA. According to the husband, the parties’ sworn financial statements were not complete and both parties knew that they had not made full financial disclosure to the other.
[30] The husband deposes that the wife demanded that a Marriage Contract be drafted at his expense and dictated the terms to be included. The husband submits that the wife threatened to disclose personal information to the husband’s employer, CRA and the police, to force the husband to agree to certain conditions before he could be able to return to the matrimonial home. It is the husband’s position that he was under duress when he signed the Marriage Contract.
Marriage Contract, dated September 30, 2014
[31] The significant terms of the Marriage Contract include the following:
i) The husband acknowledged that he had stood in loco parentis to the wife’s three children since November 2007 and that if the parties were to separate, child support would be governed by the applicable legislation at the time;
ii) The parties agreed that the husband would transfer ownership of 420 Belvenia, Burlington Ontario (the “Belvenia Property”), a jointly-owned investment property, from their joint names into the wife’s sole name and deem it to be excluded property. They agreed upon the value of the property, without having had an appraisal of it, at $550,000. The property was subject to a mortgage in the sum of $417,000. The transfer of this property into the wife’s sole name was to be done “in order to compensate [the wife] for both the drastic changes to her life that she suffered and for the damages she suffered” and to ensure that the children had a permanent home. This is clearly stated in paragraph 8.7(b) of the Marriage Contract;
iii) The parties agreed that the husband would reduce the Belvenia mortgage by making a payment of $250,000 on it, on or before November 15, 2014, and that he would not be able to deduct this amount from his net family property, if there was a subsequent separation within 5 years of the Marriage Contract being signed. If there was a marriage breakdown after five years, the husband was to be permitted to deduct up to $100,000 from his net family property as per paragraph 8.3 of the Marriage Contract.
iv) The parties agreed that the husband would not receive a “date of marriage” deduction for 291 Glen Afton Drive, Burlington Ontario, as it was the parties’ matrimonial home at the time of the marriage and owned by the parties jointly;
v) The parties agreed that if there was a subsequent separation, the value of their date of marriage assets and liabilities were to be as set out in their respective Form 13.1 Financial Statements, attached to the Marriage Contract, for purposes of calculating their respective net family properties.
vi) If a future separation took place, the husband was to pay spousal support to the wife for a minimum duration of six years. They also agreed that the duration of spousal support would be the maximum duration period permitted under the Spousal Support Advisory Guidelines (“SSAGs”).
vii) The quantum of spousal support was to be based on the high-range of support in accordance with the SSAGs and on the average of the husband’s previous and present years incomes; and
viii) If either party subsequently discovered that the other party had intentionally withheld or knowingly distorted information relevant to the calculation of any of their assets, debts or income, the deceptive party had to reimburse the other party for all investigative and remedial costs (including court costs) incurred in relation to same.
[32] The husband submits that several terms in the Marriage Contract are unconscionable and totally in favour of the wife, to his detriment, including the following:
i) According to the husband, at the time the Marriage Contract was negotiated, the wife was owed approximately $50,000 in child support arrears from the children’s biological father as he had not paid child support for over 6 years. These arrears are not mentioned in the Marriage Contract. The husband’s position is that the provision in the Marriage Contract requiring him to pay child support for the three children, did not consider the biological father’s obligation or the child support arrears owing to the wife;
ii) The spousal support provision in the Marriage Contract, which provides that the husband will pay spousal support “for the maximum duration provided for by the SSAGs” if the parties separated was entered into even though the parties had been together for only 5 years at the time the Marriage Contract was executed.
iii) The husband’s agreement to transfer his half of the Belvenia Property into the wife’s sole name was to “compensate” the wife for her suffering. There was no consideration to the husband for his giving up his 50% share of this property. This property, according to the husband, was purchased with funds he inherited from his parents and would have been excluded from his net family property if there were no contract. Further, the husband agreed to transfer the property to the wife, but he would remain responsible for the debt.
iv) The value of the husband’s book of business as at the date of marriage was not included in his financial statement. This omission has a serious impact on the calculation of the husband’s net family property and results in a significant windfall to the wife.
[33] After the marriage contract was executed, the husband transferred the Belvania property into the wife’s sole name and reduced the mortgage by $250,000 as provided for in the Marriage Contract.
[34] According to the husband, in 2014 after the Marriage Contract was signed, turmoil in the parties’ relationship continued. The husband deposes that on one occasion the wife threatened to kill herself unless the husband apologized and behaved according to her directions. The husband called 911, at which time the wife threatened to hurt herself and blame him if he did not hang up the phone. The wife then proceeded to bang her head against the wall; tell the children that he was hurting her, which they believed; and the police arrested the husband, and later released him with no charges being made.
[35] According to the husband, the wife regularly threatened and abused him, requiring him to sign documents or make video confessions admitting to various things that were not true. The wife would then manipulate and humiliate him with these documents and videos. An example of one of these forced confessions was the husband confirming in a notarized statement on May 25, 2015 that he pressured the wife to stop working with Ms. Bombardieri; that he wished to negotiate an agreement directly; and the parties had agreed on the principal terms of settlement. The husband deposes this was not true, but he felt he had no choice but to sign this statement to placate and appease the wife given her volatility.
[36] In March of 2015, the parties bought a $2 million cottage in Muskoka. Title to the cottage was placed in both parties’ names. The husband maintained the cottage, boat and water sports for the enjoyment of the wife and children. According to the husband, the wife’s behaviour continued to be problematic throughout 2015. According to the wife, the husband’s behaviour was the reason for her mental and physical conditions. The husband deposes that the wife would force him, by humiliation, to admit to a number of transgressions, which were false, which led to the separation.
Separation Agreement, dated August 5, 2016
[37] On January 29, 2016, the parties separated for the second time and the husband left the matrimonial home voluntarily. The parties began to negotiate the terms of a Separation Agreement.
[38] In early 2016, during the negotiation of the terms of the Separation Agreement, the wife deposes that, the husband committed forgery by doctoring his 2015 T4 from $475,587.16 to $407,587.16. The husband admits to doctoring a T4 while the parties were negotiating the Separation Agreement and claims that he did so out of fear of the wife. Specifically, he deposes that his two previous years’ T4 statements showed he had earned income of $400,000 and the parties were negotiating his child and spousal support obligations based on him earning an income of $400,000. When his T4 came in for 2015 and the husband discovered it contained a bonus of $75,000, he doctored his T4 because he was truly fearful that the wife would be enraged, vindictive and create larger emotional and financial penalties for him.
[39] Upon discovering the forgery, the wife brought an emergency motion in Milton on May 19, 2016, seeking a non-depletion and preservation order in connection with the proceeds from the sale of the husband’s condominium located at 8 York Street. The husband deposes that the wife was very angry with him and pressured him to fire Mr. Caspersz. The husband did not respond to the motion, as it was returnable the day the husband was moving. The husband deposes that the wife specifically scheduled the motion to be heard on his moving day, knowing he would not be able to be present. He also deposes that he did not understand the gravity of the order the wife was seeking at the time. Justice Mossip granted the relief requested by the wife in his absence.
[40] After the motion was dealt with, the wife discharged her lawyer. She deposes that the husband forced her to fire her lawyer. The husband deposes that the wife told him she filed Ms. Bombardieri (her then lawyer) because she did not get along with her and the lawyers were being “mean” to her.
[41] The parties began to meet, without lawyers, at the public library in Burlington in May, June and July 2016, to negotiate the terms of the Separation Agreement. The wife ended up retaining Mr. Earl Taylor to represent her and the husband initially retained Ronald Castalani, who ultimately advised him not to sign the agreement.
[42] According to the husband, the wife drafted the language in the Separation Agreement because she insisted that the language in the agreement be humiliating to him. When the husband objected to the language the wife insisted be in the agreement, the wife threatened him. The husband further deposes that the wife gave him one or two days to sign the Separation Agreement or he would be banned from the cottage or seeing the children. Accordingly, the husband had no option but to fire his then-counsel, Mr. Castalani, who would not be part of the Separation Agreement. He obtained independent legal advice from a lawyer who was not part of the negotiation of the agreement, Paul Cooper.
[43] It is the husband’s position that the following terms of the Separation Agreement are unconscionable:
i) Paragraph 1.10 in the Background Section states that the wife “has suffered mental, psychological and physical injury as a result of Brian’s conduct”. The husband deposes that the opposite is true.
ii) Paragraph 1.11 in the Background Section states that the wife has substantial concerns about the accuracy of the financial disclosure made by the husband in 2014 prior to and at the time of the Marriage Contract and the financial disclosure made since the separation. It states that the husband has admitted to incomplete and inaccurate financial disclosure and that the provisions in the agreement are to protect the wife from possible dishonesty and omissions from the husband.
iii) The wife was able to exclude the entire value of the Belvenia Road rental property from equalization, as set out in the Marriage Contract, even though this property was not gifted to the wife or inherited by her from a third party during the marriage;
iv) The wife refused to allow the husband to include a debt of $592,000 he owed to his company on the date of separation, despite the fact that he proved this was a legitimate debt;
v) The wife insisted on a highly inflated value of the husband’s business that he owned on the date of separation, namely 2226151 Ontario Inc. After the separation agreement was executed, the husband received an offer of $40,000 to purchase this company, but the wife insisted that the company be valued at $180,000 for equalization purposes;
vi) The wife demanded a payment of $197,000 for her alleged “pain and suffering”. There was no basis for this payment. The wife alleged that the husband gave her a sexually transmitted disease, which was the reason for this payment. The husband vehemently denies that he gave the wife an STD.
vii) The wife was adamant that the husband lost his right to a “date of marriage” deduction for the value of his book of business because this was not specifically addressed in the parties’ Marriage Contract. This one issue alone, increases the equalization payment by approximately $500,000. Due to the ongoing pressure, abuse and duress placed on the husband by the wife, the husband failed to grasp the magnitude of this issue and its impact on his obligations to the wife at the time the Marriage Contract was signed.
viii) The husband agreed to pay child support for the three children in the sum of $6,127 a month and 90% of the children’s s.7 expenses, based on him earning an annual income of $511,000. At this point in time, the children were in post-secondary educational programs (or very close to starting) and the special and extra-ordinary expenses were very significant. There is no mention of the children’s biological father’s responsibility to pay child support in the Separation Agreement; and
ix) The husband agreed to pay spousal support from February 1, 2016 to January 1, 2025, in the sum of $12,515 a month, however, the wife agreed to accept only $500 a month if the husband agreed to pay 100% of the cottage expenses.
[44] The wife deposes that the language referred to in the Background Section of the Separation Agreement referred to in paragraphs 43(i) and (ii) above were included in the Separation Agreement “as a result of the husband’s conduct with particular emphasis on scarring her with a lifelong STD, the physical and mental traumas of the relationship including effect of spyware and obvious forgery of his T4”. In other words, the wife admits that the inclusion of this language in the Separation Agreement was intended to be punishing to the husband.
[45] At the time of the Separation Agreement (August 5, 2010), the wife had agreed to reduce the spousal support payments provided the husband agreed to pay for 100% of the cottage costs, including the mortgage, utilities, insurance and maintenance. In the Fall of 2017, the wife demanded spousal support in the quantum of $9,000 a month, despite never having contributed to the costs of the cottage, which she jointly owned with the husband.
[46] The equalization payment (“EP”) payable by the husband to the wife under the Separation Agreement totalled $749,047.01. A portion of the EP was to be paid from the sale proceeds of 291 Glen Afton Drive and the balance was to come from the net proceeds from the sale of the parties’ cottage.
[47] Despite the significant financial payments the husband was required to make to the wife under the Separation Agreement, the wife insisted that, in addition, the husband pay for a new roof to the Belvenia Property, now in the wife’s name only; floor restoration, a new furnace and air conditioner, and house painting in relation to the Belvenia Property, exercise equipment, dog surgery costs, porch enclosure and backyard furniture. According to the husband, the wife also demanded that he do maintenance work around the house, pick up groceries for the wife and take her to various appointments. The husband complied with the wife’s demands, according to him, as a result of their abusive and toxic relationship.
[48] In May 2017 (about8 months) after the parties signed the Separation Agreement, the wife purchased four rental properties in Guelph, Ontario. Both parties depose that the husband assisted the wife in the process of purchasing of these properties, in viewing them, sourcing mortgage financing and in contributing to maintaining the properties, for no consideration.
Amending Agreement, dated September 15, 2018
[49] In the Fall of 2017, the wife believed that the husband had lied to her about the amount of insurance payments he had received in connection with flood damage at the parties’ cottage from the pervious winter. Paragraph 11.5 of the Separation Agreement required the husband to disclose to the wife all particulars of the insurance proceeds received to repair the cottage, which had been damaged in 2016. The wife deposes that the husband sent her a falsified document saying that the cottage contents insurance payoff was $5,034.04, when the wife later discovered that the payout was really $18,029.26. The husband admits that he underrepresented the amount he received from the insurer. He deposes that he was fearful that if the wife knew the amount of the insurance payment, she would demand that he pay her one-half of the amount received, even though the funds had been needed to repair the cottage and replace the damaged contents resulting from the flood.
[50] As a result of this non-disclosure, the wife insisted that this triggered additional payments to her under the Separation Agreement, as a form of penalty. The husband complied with this demand, despite there not being such a penalty clause in the agreement, as he was under the control of the wife, feared her and was an abused spouse.
[51] During the Winter of 2018, the husband deposes that the wife made additional demands that she was entitled to “special payments” from him. She threatened the husband: so much so, that he retained Julie Stancheiri to prepare an Amending Agreement to meet the wife’s demands.
[52] According to the wife, the parties negotiated the terms of the Amending Agreement themselves and signed it in the presence of a man named Bernhur Nissan on May 1, 2018. According to the husband, however, he presented the Amending Agreement to the wife in June 2018 and she did not respond. Ms. Stanchieri requested a signed copy on several occasions. The husband deposes that Ms. Stanchieri warned him not to sign the Amending Agreement and stated that she had very serious concerns about the wife’s state of mind and the pressure she believed the husband was under at the time the agreement was drafted. The husband deposes that he instructed Ms. Stanchieri to sign the ILA certificate, which she did, after sending him a detailed reporting letter stating her concerns.
[53] Ms. Stanchieri swore an affidavit, dated January 14, 2021, filed on this motion, to which she attached a copy of a letter she had sent the husband on May 25, 2018, setting out her opinion regarding the draft Amending Agreement. Ms. Stanchieri’s letter refers to a number of concerns she identified with the negotiation of the draft Amending Agreement, as follows:
i) The extremely prejudicial reference to “gross dishonest” conduct;
ii) His acknowledging the falsification of documents in the agreement and other behaviour, which could be criminal;
iii) Her concern that the wife was seeking increased spousal support, without a waiver or release in the agreement;
iv) Her concern that the husband was entering into the contract because he was under duress.
v) Her opinion that the Separation Agreement was grossly unfair to the husband;
vi) The fact that the husband had advised her that the wife had threatened that she would report the husband to CRA and/or police or disseminate harmful information about him to other people or online, which could threaten the husband’s employment;
vii) Her concern that the husband was in an abusive relationship and was being controlled by the wife.
viii) Her concern that the husband was fearful of the wife and what she may do to him as a result of her many threats; and
ix) Her concern that the husband was signing the Amending Agreement under duress and that the wife was extorting money from him.
[54] According to the husband, the wife continued to threaten suicide and, in fact, attempted suicide in October 2018. The wife does not dispute that she attempted suicide at that time.
[55] According to the wife, on November 26, 2018, after her suicide attempt, the husband re-retained Julie Stanchieri as his lawyer and tried to revoke the Amending Agreement. The wife deposes that she had executed the Amending Agreement two months earlier, on September 15, 2018. The husband deposes that he is not certain if the signed Amending Agreement, as put forward by the wife, is an actual signed agreement.
[56] The issues the husband raises with respect to the Amending Agreement include the following:
i) The wife insisted on including humiliating and unnecessary language in the Amending Agreement, using terms such as “gross dishonesty” to describe his conduct;
ii) The spousal support payments increased from $500 a month to $9,000 a month, retroactive to January 1, 2018, stating that this was the Guaranteed Minimum sum, which would continue to be paid until January 1, 2025;
iii) The husband was to pay lump sum spousal support of $150,000 from the proceeds from the sale of the cottage property, with no consideration, such as a waiver or release of spousal support in the future; and
iv) In the Amending Agreement, he acknowledged that he was managing the wife’s rental properties in Guelph and provided her with investment advice for no compensation.
[57] According to the husband, it was about a month after the Amending Agreement, on October 30, 2018 - that the wife called the husband and threatened to kill him. He deposes that he was so disturbed by the wife’s level of anger, that he left his office out of fear for his safety. On his way home, the wife called him and told him she was in the process of a suicide attempt. Ultimately, the wife called 911 and was picked up by an ambulance. The wife was then admitted to a psychiatric ward and assessed. According to the husband, the wife was despondent while in the hospital and demanded that the husband take her home. She attempted suicide again weeks later, but she was not hospitalized as a result of that attempt.
[58] In November 2018, the husband sought help for himself. He deposes that he was identified as a victim of abuse and diagnosed with co-dependency. It was through the help the husband received that, he deposes, he was able to understand the duress and undue influence the wife had had over him and which led to him commencing this proceeding.
SUMMARY JUDGMENT ANALYSIS
[59] As stated above, the husband started this case, in which he seeks orders setting aside three domestic contracts. The wife is seeking an order for summary judgment, dismissing these claims.
[60] Rule 16(6) of the Family Law Rules (“FLRs”) permits a court to make a final order, on a summary judgment motion, if there is no genuine issue requiring a trial of a claim or defence.
[61] The onus borne by the moving party is to show that there is no genuine issue requiring a trial. The responding party may not rest on mere allegations or denials, but shall “set out, in an affidavit or other evidence, specific facts showing that there is a genuine issue for trial”: Rule 16(4.1) of the FLRs.
[62] The Supreme Court of Canada has held that “summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims”: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 5. An issue should be resolved on a motion for summary judgment if: (i) the motion affords a process that allows the judge to make the necessary findings of fact and apply the law to those facts, and (ii) is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial: Hryniak, at para. 49.
[63] In Chao v. Chao, 2017 ONCA 701, at para. 27, van Rensburg J.A. held that the principles laid out in Hryniak apply to summary judgment motions under the Family Law Rules. Specifically, parties are required to put their “best foot forward” and the motions judge is entitled to assume that the evidence before the Court is the best evidence available.
[64] The party responding to a motion for summary judgment must adduce coherent evidence, based on an organized set of facts, to show that there is a real issue to be tried on admissible evidence. The responding party must "lead trump or risk losing": Saltson v. Rolnick, 2010 ONSC 914, at para. 45.
[65] A party is not entitled to sit back and rely on the possibility that more favourable facts may develop at trial. The court is entitled to assume that all of the evidence the parties intend to rely on at trial is before the court. Saltson v. Rolnick, supra, para. 45; Milne v. Milne, 2019 ONSC 459, at para. 40.
[66] On the pleadings, affidavit evidence and transcripts of the parties’ cross-examinations, I find that there is a genuine issue requiring a trial in connection with the circumstances surrounding the negotiation and execution of the three domestic contracts signed by the parties. Specifically, the issues are whether the Marriage Contract, the Separation Agreement and/or the Amending Agreement should be set aside under s.56(4) of the Family Law Act on account of lack of financial disclosure or otherwise in accordance with the law of contract because the husband was under duress and/or undue influence when he signed the domestic contract, and/or that the terms of the domestic contract(s) are unconscionable.
Setting Aside a Domestic Contract
[67] A brief review of the law respecting the setting aside of domestic contracts is necessary in order to determine whether the wife is entitled to summary judgment in this case.
[68] It is recognized that courts should respect the private contractual arrangements that spouses make for the division of their property on the breakdown of their relationship, particularly where the agreement in question was negotiated with independent legal advice: Hartshorne v. Hartshorne, 2004 SCC 22, [2004] 1 S.C.R. 550, [2004] S.C.J. No. 20, at para. 9.
[69] The statutory framework for a court to set aside a domestic contract is found in section 56(4) of the Family Law Act, R.S.O. 1990, c. F.3., , which provides that a court may, on application, set aside a domestic contract or a provision in it,
i) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
ii) if a party did not understand the nature or consequences of the domestic contract; or
iii) otherwise in accordance with the law of contract.
[70] Section 56(4)(c) of the Family Law Act permits a court to set aside a domestic contract in accordance with the law of contract, which includes grounds such as unconscionability, duress, uncertainty, undue influence, mistake, and misrepresentation: Ward v. Ward, 2011 ONCA 178, para. 21.
[71] Section 56(4) is permissive. To determine whether a provision(s) of or a domestic contract itself should be set aside, a two-step process is required: Does one of the s. 56(4) circumstances apply and, if so, is it appropriate for the court to exercise its discretion to set aside the provision(s) in issue or the entire contract, where such relief is sought?
[72] As set out in Virc v. Blair, 2014 ONCA 392, 119 O.R. (3d) 721, at paras. 31 and 52, a case in which a wife sought to set aside a separation agreement on the basis of lack of financial disclosure, the factors to consider in determining whether to set aside an agreement or a provision(s) in it are as follows:
i) Whether there has been concealment of assets or material misrepresentation?;
ii) Whether there has been duress, or unconscionable circumstances?;
iii) Whether the moving party neglected to pursue full legal disclosure?;
iv) Whether the moving party received substantial benefits under the contact?;
v) Whether the respondent fulfilled his or her obligations under the contact; and
vi) Whether the non-disclosure was a material inducement to entering into the Agreement and its importance to the negotiations.
Failure to Disclose
[73] In Quinn v. Epstein Cole LLP, 2007 CarswellOnt 6933 (S.C.J.), at para. 47, the court described a two-stage analysis when considering a claim to set aside a domestic contract for non-disclosure:
(1) First, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge their duty to disclose significant assets. The failure to disclose significant assets includes the making of a material misrepresentation about the true value of assets, and the failure to disclose changes in income. The significance of an asset is assessed by measuring the value of the asset against a party's disclosed net assets. To conclude that a party has failed to disclose a significant asset, there must be some evidence to verify the value or extent of the party's assets either at the date of marriage or the date of the agreement.
(2) If a court finds that a party has failed to disclose a significant asset, the court must determine, in light of the facts of each case, whether it should exercise its discretion to rescind the domestic contract.
[74] The burden of proof lies on the party seeking to set aside the contract to persuade the court to exercise its discretion in its favour. The court will take into account a variety of factors in exercising its discretion. In addition to the six factors described above in paragraph [72], in Turk v. Turk, 2015 ONSC 5845, the court held that when determining whether to exercise discretion and set aside an agreement, the factor of whether he/she moved expeditiously to have the agreement set aside, shall also be considered [at para. 55].
[75] In the instant case, the husband submits that there was duress, undue influence and unconscionable circumstances at the time of the negotiation and execution of the domestic agreements. The husband submits that he moved expeditiously to have the agreements set aside. He received very little benefit from the agreements, as all three agreements are one-sided, in favour of the wife’s benefit.
[76] One of the issues raised by the husband is that there was a failure to disclose by both parties in the financial statements, which they filed and attached to their Marriage Contract.
[77] In Loy v. Loy, 2007 CarswellOnt 7123, (S.C.J.), paras. 87, 183, 184, the Court held that an applicant seeking to set aside a marriage contract cannot rely on his or her own failure to provide accurate disclosure to set aside the contract. In the Loy case, the wife applied for an order setting aside a marriage contract. The financial disclosure in the marriage contract was not detailed and contained only estimates as to the “global net worth” of each party. The wife did not seek further disclosure, which would have indicated that the husband overestimated his net worth in the agreement and the wife had underestimated her net worth in the agreement. Neither party asked for any further financial disclosure than what had been provided and the wife did not suggest that she would not have signed the marriage contract if she had had more complete financial disclosure. The Court stated,
“I accept the Respondent’s submission that such a position would not make sense given the fact that more complete disclosure would have revealed that the Applicant had significantly underestimated her net worth while the Respondent had significantly overestimated his. The Applicant cannot rely on her own failure to provide accurate disclosure to set aside the contract. The Respondent disclosed his income.”
[78] While in this case the wife submits that the husband did not disclose his book of business as a “date of marriage” asset and, therefore, he cannot now rely on his own failure to provide accurate financial disclosure to set aside the Marriage Contract, his failure to show his book of business as a “date of marriage” asset or raise issues such as the arrears of child support owed to the wife are certainly two of many other facts that must be considered in determining the issues referred to below.
Duress
[79] To set aside a domestic contract due to duress, the onus is on the party claiming that the contract is unenforceable and the burden does not shift simply because the other party moves for summary judgment: Miura v. Miura, 1992 CarswellBC (C.A.), para. III.
[80] Duress means coercion of the will or giving no realistic alternative but to submit to the pressure. To prove duress, the applicant must show that he or she was compelled to enter into the final agreement out of fear of actual or threatened harm of some kind. There is no evidence to support a claim of duress where there is no attempt by one spouse to dominate the will of the other at the time of execution of the contract: Poirier v. Poirier, 2005 CarswellBC (S.C.), paras. 17-18; Segal v. Qu, 2001 CarswellOnt 2304 (S.C.J.), para. 58; Ludmer v. Ludmer, 2013 ONSC 784, para. 53; affirmed 2014 ONCA 827.
[81] In Turk, supra, Kiteley, J. similarly presided over a summary judgment. Among other thins, she relied on the following description of duress in a case where a wife sought to set aside a separation agreement on the basis of duress:
“Duress is said to occur where there is such pressure placed on one of the parties that any consent by that party is not sufficient to uphold the agreement. There exists an absence of choice which in effect vitiates any ability to lawfully consent. However, duress sufficient to void an agreement does not arise based only upon a lack of will to proceed but rather it must be based upon a resolution on the part of the submitting party that there is no other practical choice but to perform the act in question. Duress can be established based upon actual or threatened violence or upon economic considerations.”
[at para. 93]
[82] In Turk, Kiteley, J. held that “[d]uress is a state of mind.” She held that she could not “fairly and justly determine the issue of duress on the motion as it was a genuine issue for which a trial was required. The question of duress is fundamentally a question of credibility as between the Applicant and Respondent” [at para. 98]. Even though the FLRs permitted the court to assess credibility on a summary judgment motion, Kiteley, J. stated:
I am not confident that I can make findings of the necessary facts and apply the relevant legal principles so as to resolve that aspect of the dispute. In this case, it is in the interest of justice for that power to be exercised only at the trial.
[83] When a party is in a difficult emotional state at the time of the execution of a domestic contract, this does not constitute being in a state of duress: Francis v. Baker, 1997 CarswellOnt 1774 (O.C.J.), paras. 18-19; affirmed 1998 CarswellOnt 931 (C.A.); affirmed 1999 659 (SCC), 1999 CarswellOnt 2734 (S.C.C.). More recent case law confirms that concern and anxiousness are not sufficient bases upon which to prove duress.; Turk v. Turk, 2017 ONSC 6889, para. 315; affirmed Turk v. Turk, 2018 ONCA 993.
[84] The statements by the individuals involved in the negotiation of the agreement are crucial to evidence of duress at that time: Milne v. Milne, 2019 ONSC 459, para. 37.
[85] If affidavit evidence is in conflict, it is incumbent upon a motions judge to resolve those conflicts and explain why one version of the facts is accepted as opposed to another. If that cannot be done, that should be a sign that oral evidence at a trial is required: O.G. v. R.G., 2017 ONSC 6490, para. 109.
[86] In the case at bar, although the parties were cross-examined on their affidavits, the examinations took place out of a court and have limited value. The parties’ evidence is in direct dispute about the facts of the case. The husband alleges he was under duress and undue influence, which is denied by the wife. Each party accuses the other of being abusive. The wife claims that, of the two parties, she was the more vulnerable party, not the husband. Further, she claims that the husband had legal representation throughout. However, to determine whether or not the husband was truly under duress, as he claims, oral evidence is needed by both parties as well as Ms. Stancheiri and any other individuals involved in the negotiation of the Marriage Contract, the Separation Agreement and the Amending Agreement whom the parties call as witnesses at trial. Viva voce testimony is crucial to determine whether there was duress at the time that each contract was entered into. Accordingly, a trial is needed to address the duress claim.
Unconscionability
[87] An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power relationship between the parties or an “inequality in bargaining power”. Consent to the contract/transaction will be considered legally ineffective if it can be shown that there was such a disparity in the relative positions of the parties that the weaker party was not in a position to choose freely. This circumstance may arise when the person:
“may be intellectually weaker by reason of disease of the mind, economically weaker or simply situationally weaker because of temporary circumstances […] The comparative weakness or special relationship is, in every case, a fact to be proven.”: Norberg v. Wynrib, 1992 CarswellBC 155 (S.C.C.), paras. 30, 33 & 34.
[88] In Rosen v. Rosen, the Ontario Court of Appeal held that the question to be answered in determining unconscionability is whether there was inequality between the parties, or a preying of one upon the other, that placed an onus on the stronger party to act with scrupulous care for the welfare and interests of the vulnerable: 1994 CarswellOnt 390 (C.A.), para. 12; Leave to appeal refused 1995 WL 1737659 (S.C.C.).
[89] As set out in Kinsella v. Mills, 2020 ONSC 4785, para. 408, and in Rick v. Brandsema, 2009 SCC 10, para. 44, the test for setting aside a domestic contract on the ground of unconscionability involves:
i) A finding that the circumstances surrounding the negotiation or execution of the domestic contract were flawed in such a manner as to justify the court discounting or disregarding the agreement; and
ii) The court must find that, as of the date of formation of the contract, the terms of the agreement departed significantly from the objectives of the law governing the issues addressed in the contract.
[90] A power imbalance that impacts a party’s ability to understand and freely assent to a legally binding agreement should not be confused with signing an agreement in stressful circumstances where there has been financial misrepresentation: Virc v. Blair, 2016 ONSC 49, para. 102.
[91] Unconscionability in the matrimonial context is not equivalent to unconscionability in a commercial context. The question to be asked is whether there were any circumstances of oppression, pressure, or other vulnerabilities, and if one party’s exploitation of such vulnerability during the negotiation process resulted in an agreement that deviated substantially from the legislation: Singul v. Singul, 2018 ONSC 2044, at para.21; Pipitone v. D’Amelio, 2016 ONSC 2566, paras. 44-53.
[92] Evidence of threats or abuse at the critical period when the agreement is being negotiated and finalized may be the basis of a successful duress claim. While the presence of legal advice might compensate for some vulnerabilities, the emotional or mental condition of a party may leave the party unable to make use of this professional advice: Pipitone, supra, paras. 51-52.
[93] In this case, the husband deposes that the terms of the three agreements resulted in the wife receiving an overpayment of the equalization payment by hundreds of thousands of dollars. Based on the financial information before the Court, the overpayment appears to be significant. The terms of the agreement contain humiliating and punishing language against the husband. His submissions it that these agreements are one-sided and benefit the wife only. The husband submits that he would never have agreed to such terms without being under duress and undue influence from the wife.
[94] The husband has made claims that the circumstances surrounding the negotiation or execution of the three domestic contracts were flawed and that, when viewed as a whole, the terms of the Marriage Contract and Separation Agreement are marked departures from the objectives set out in the Divorce Act and the Family Law Act respectively. Based on the written record before me, I am not in a position to make the factual findings and findings of credibility, which would provide a fair and just result.
Is the Wife entitled to a Summary Judgment?
[95] Given that there are a multitude of credibility issues requiring resolution, and there are significant conflicts in the evidence, the next step is to determine whether the need for a trial can be avoided. At para., 66 of Hryniak, the Supreme Court of Canada describes the inquiries to be made by a judge concerning the use of the enhanced powers under Rules 20.04 (2.1), (2.2), and 20.05:
“If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interests of justice. Their use will not be against the interests of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.”
[96] In Oxygen Working Capital Corp. v. Mouzakitis, 2021 ONSC 1970, Myers, J. sets out the following questions, which are among those that the court ought to consider once there appears to be a genuine issue requiring a trial:
(1) Will making findings of fact on the evidence before the court provide a fair and just result as compared to a mini-trial or a trial?
(2) Does the material before the court illuminate the factual issue sufficiently to allow the judge to make findings of fact and credibility?
(3) Is there something missing that is needed for basic fairness despite the fact that the parties chose not to put that evidence forward?
(4) Do considerations of the litigation as a whole mandate some further process before making factual or credibility findings?
[at para. 42]
[97] The wife submits that there is no genuine issue for trial on any of the grounds set out in s.56(4)(a)-(c) of the Family Law Act.
[98] I do not agree with the wife’s submission that there are no material facts in dispute. The failure of the husband to disclose his alleged book of business is a fact, but it is not determinative of his claim, and is one of many facts that are relevant to his claims. It is clear from the material filed that, if the husband was under duress at the time that he negotiated and/or entered into an agreement, given the terms of the agreements, it is entirely possible, in all of the circumstances, that they did not meet the objectives of the Divorce Act and/or the Family Law Act.
[99] The husband claims that numerous terms in the Marriage Contract are unconscionable including but not limited to the lack of consideration given to the obligation of the biological father of the three children to contribute to the children’s needs, and the lack of the husband’s reference to a “date of marriage” asset that according to him would have altered his obligations to the wife in a material way. Whether the book of business was omitted knowingly by the husband or as a result of duress has to be fleshed out and cannot be determined on the basis of a written record only.
[100] While the Separation Agreement contains a penalty clause that is likely unenforceable, in any event, again, the claims by the husband that the Separation Agreement contains numerous clauses that are unconscionable and went well-beyond meeting the objectives of the Divorce Act, cannot be determined in the absence of viva voce testimony.
[101] The circumstances surrounding the negotiation and execution of the Amending Agreement are very concerning. The texts between the parties confirm that this was an extremely high-conflict relationship, with a high level of hostility between the parties that could certainly be construed as abusive in terms of the wife’s treatment of the husband. Further, the letter Ms. Stancheiri sent to the husband in 2018 mirrors the husband’s claim that he had been subjected to psychological abuse by the wife and that the dynamic between the parties was so toxic that the husband’s claims of duress and undue influence are factors that must be fully explored at a trial.
[102] I cannot make findings of fact on the evidence before me, which would ensure that t parties’ positions are decided fairly, and a just result is determined. A trial will provide a trier of fact with viva voce evidence of not only the parties, but collateral witnesses who were involved in the negotiation of and execution of f three domestic contracts. The husband has submitted that he intends to call at least one witness at trial to support his position regarding the duress issue.
[103] The evidence before the court on this motion is highly conflictual. There are significant credibility issues. There are serious issues of duress and undue influence, which simply cannot be reconciled on the written material before me. Accordingly, I find that the factual issues are in sufficient dispute and not sufficiently clear to allow me to grant the wife summary judgment.
[104] The evidence before the Court shows a whole factual matrix and history that is relevant to and evolved further as agreements were entered into.
[105] It is the husband’s position that there was a pattern of abuse and duress between the wife and him from the moment of the separation that prevented him from being able to fairly address his interests and any entitlement he had to relief. Essentially, it is this history of abuse which the husband submits prevented him from being able to effectively negotiate his rights. The parties’ relationship and the husband’s position regarding each domestic contract are not restricted only to what happened during the negotiation of a particular contract. His position overall is that he was continually under duress over the whole period of time that domestic contracts were negotiated and entered into. Whether or not his failure to disclose the value of his date of marriage book of business amounts to conduct that would disentitle him from obtaining an order under s.56(4) of the FLA will have to be considered in the overall review of the evidence.
[106] To grant the wife’s summary judgment motion would mean that factual and credibility findings would be made on what, in my opinion, is an incomplete record. To deal with the issues raised in this specific case justly, in accordance with Rules 2(2) and 2(3) of the FLRs, a trial is necessary
[107] The credibility issues in this matter are profound and serious. The evidence filed on this motion and elicited on cross-examination do not reasonably, fairly and justly enable me to resolve them. Whether any of the three agreements or provisions of them should be set aside requires a trial which focuses on whether the husband has met any of the tests referred to in s.54(6) of the Family Law Act justifying an order that the relief he claims be granted and, if so, the appropriately substantive orders for relief to be made.
[108] The trial of this matter should be expedited. Each party is to provide his/her evidence by way of affidavit, subject to any directions ordered by the judge who presides over the Trial Management Conference (“TMC”) and, of course, the trial judge. Any collateral witnesses called shall give evidence viva voce.
Conclusion and Order
[109] This Court makes the following order:
a) The wife’s motion for summary judgment is hereby dismissed;
b) The net proceeds of sale from the sale of the parties’ jointly-owned cottage, located at 59A Burgess Road, Roseau, Ontario, in the sum of $1,437,136.54 shall continue to be held in trust by the real estate lawyer who acted on the sale until further court order;
c) There shall be an expedited trial of this matter. The parties shall present their own evidence by way of affidavit. Any collateral witnesses shall give their evidence by viva voce testimony. The specifics of the filing of evidence and any other procedural issues referred to in the Trial Scheduling Endorsement Form shall be addressed at a Trial Management Conference.
d) There shall be a combined Settlement Conference/Trial Management Conference of this matter on a date to be obtained by the parties immediately. The combined conference should be half-a-day. The parties shall exchange comprehensive Offers to Settle prior to the SC/TMC, each comply with Family Law Rule 13(12), and jointly prepare a Trial Scheduling Endorsement Form for the SC/TMC.
e) A party seeing costs of this motion shall file costs submissions of no more than three pages, not inclusive of Bill of Costs and Offers to Settle by April 16, 2021. Responding submissions to a costs claim, if any, shall be no more than one page and shall be filed on of before April 23, 2021.
M. Kraft, J.
Date Released: March 26, 2021
[^1]: Exhibits from the wife’s Questioning conducted on February 10th and 12th, 2021, along with Exhibits attached to the husband’s affidavit, sworn on January 18th, 2021.