COURT FILE NO.: CV-15-0541-00, FS-17-0195-00
DATE: 2021-04-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N: CV-15-0541-00
ORIENTAL GARDEN CHINESE &VIETNAMESE RESTAURANT INC. and HUONG CAO QUE TANG also known as QUE TANG
Mr. John G. Illingworth, for the Plaintiffs
Plaintiffs
- and -
PHUC VAN NGUYEN
Mr. Michael Cupello, for the Defendant
Defendant
BETWEEN: FS-17-0195-00
CUC THI CAO
Applicant
-and-
PHUC VAN NGUYEN
Respondent
Ms. Samantha Filipovic, for the Applicant
Mr. Michael Cupello, for the Respondent
HEARD: January 18th, 2021
at Thunder Bay, Ontario
Madam Justice T. J. Nieckarz
Reasons On Motion
OVERVIEW:
[1] There are three motions before the Court involving related parties. They are:
a. The Plaintiffs’ motion in the civil action for an order:
i. For payment of $100,000 to the Defendant from the moneys presently held by the Accountant of the Superior Court of Justice (the “Accountant”) to the credit of this action, with the remainder to the Plaintiff, Oriental Garden Chinese & Vietnamese Restaurant Inc., pursuant to the terms of an accepted offer to settle reached at a pre-trial conference;
ii. Directions to give effect to the Minutes of Settlement dated June 4, 2019 made in the family action, and to give effect to the Direction dated August 19, 2019 and signed by the Defendant regarding moneys held by the Accountant in the civil action;
iii. An order dismissing this action without costs on the terms of the accepted offer to settle of December 6, 2019; and
iv. Costs of the motion against the Defendant’s lawyer personally, arising out of delay in the implementation of the December 6th settlement, or alternatively, as against the Defendant on a substantial indemnity basis.
b. The Applicant’s motion in the family law action for:
i. A final order to issue in accordance with the terms of the Minutes of Settlement dated June 4, 2019;
ii. An order directing the Respondent to sign the releases required by the Minutes of Settlement;
iii. An order directing that the Applicant shall receive the sum of $63,191.36 out of the net sale proceeds being held by the Accountant in the civil action, in accordance with the terms of the Minutes of Settlement;
iv. In the alternative to the foregoing, directions from the Court; and
v. Costs of the motion payable from the remaining funds due to the Respondent from the net sale proceeds on a substantial indemnity basis.
c. The Respondent’s motion in the family law action for an order:
i. Determining that only $64,218.66 remains available for equal division between the Applicant and the Respondent, with the Applicant receiving payment equal to one-half that amount, being $32,109.33;
ii. That the balance of the $100,000 shall be payable to the Respondent; and
iii. Costs in the discretion of the Court.
[2] On consent, an order was made at the hearing of the motions that all funds held by the Accountant, other than the $100,000 in dispute shall be paid to the Plaintiff, Oriental Garden.
[3] The issue remaining in dispute, and to be determined, is how much of the $100,000 are each of the Applicant and the Respondent in the family law matter entitled to pursuant to the terms of the final Minutes of Settlement signed in that action.
THE FACTS:
[4] This case is driven primarily by a dispute as to the proper interpretation of the family law Minutes of Settlement. A detailed discussion of the facts is required.
The Civil Action:
[5] The Defendant, Phuc Van Nguyen (“Nguyen”) and the Plaintiff, Huong Cao Que Tang (“Tang”) are father and daughter.
[6] Nguyen owned the Plaintiff, Oriental Garden, until he sold the restaurant to Tang. Nguyen continued to work in the business after the sale. Nguyen also continued to own the property on which the restaurant operated.
[7] Tang claims that when she purchased the business, the Plaintiffs also entered into a binding verbal agreement (the “Agreement”) with Nguyen for the purchase of the property. In furtherance of this Agreement, the Plaintiffs allege they paid all costs associated with the property, including but not limited to the mortgage, taxes and insurance. It is alleged that more than $420,000 was paid on account of the property. Once the mortgage for the property was paid off, the agreement was that Nguyen would transfer title to the Plaintiffs.
[8] By July 2015, Nguyen had separated from his wife (the Applicant, Cao in the family matter), who is also Tang’s mother. The separation was acrimonious. This affected the relationship between father and daughter whose, personal and business relationship suffered. Nguyen stopped working at Oriental Garden. Nguyen also denied there was an agreement for the purchase and sale of the property and claimed that the Plaintiffs were merely tenants, paying rent. He attempted to sell the property. The civil action ensued.
[9] Once Nguyen advised Tang there was no agreement for the sale of the property, they stopped paying the expenses for the property and simply began paying rent.
[10] An unfortunate series of events followed. Nguyen also stopped paying the mortgage on property. He alleges he had no alternative due to his finances and the Plaintiffs’ alleged frustration of his efforts to sell the property. In January 2016, the relatively small mortgage remaining on the property went into default and Nguyen was placed into receivership initiated by the mortgagee. The property was sold by the receiver and the sum of $236,543.53, representing the net sale proceeds payable to Nguyen were paid into court pursuant to my Order dated December 14, 2018.
[11] While the Plaintiffs were subsequently able to negotiate the purchase of the property from the purchaser, they maintained their claims against Nguyen, claiming entitlement to the net sale proceeds by virtue of the Agreement and the payments made.
The Family Action:
[12] Cao and Nguyen are married spouses. They are immigrants to Canada who worked in a family business together to support themselves and their family. Their daughter then took over the family business.
[13] They separated either August of 2014 or 2015 (the date was in dispute). The family law proceedings were commenced on in July 2017, and the Respondent filed his Answer in September 2017. Relief claimed in the family law matter included (but was not limited to) a divorce, support, equalization of net family property, the sale of family property, exclusive possession of the matrimonial home and occupation rent. The proceeding was hard fought and bitter, characterized by multiple appearances including a motion for contempt and appeals of various decisions. While the assets of the parties were not complex, the receivership and the emotional turmoil surrounding the separation seemed to complicate the family law proceedings.
The Settlements:
[14] The family action between Nguyen and Cao was resolved by way of Minutes of Settlement dated June 4, 2019 (the “Family Minutes”).
[15] Not all the terms of the Family Minutes are relevant to this motion. The relevant provisions are:
a. Paragraph 2, which in reference to the net sale proceeds of the property, requires payment to Cao of “50% of any of these monies ultimately due to the Respondent husband after the civil matter is resolved…”.
b. Paragraph 4, which requires for the purpose of calculating Cao’s 50% share, that the following amounts to be notionally added to the monies due to Nguyen from the net sale proceeds of the property to account for personal expenses paid by the receiver, on account of Nguyen, from the sale of the building:
i. all monies paid for Nguyen’s family law matter to Nguyen’s former counsel, Mr. Melchiorre; and
ii. all monies paid for Nguyen’s personal income taxes.
[16] Following the resolution of the family action, Mr. Illingworth received the following two directions:
a. On July 19, 2019, Mr. Cupello forwarded an irrevocable direction dated March 27, 2019 directing Mr. Illingworth to pay to Mr. Cupello whatever money was to be paid to Nguyen in the civil action; and
b. On September 12, 2019, Ms. Filipovic forwarded to Mr. Illingworth correspondence, together with a direction to Mr. Illingworth, the Accountant and Mr. Cupello, signed by Nguyen and dated August 19, 2019, directing 50% of any monies paid to Nguyen to be paid to Cao.
[17] Mr. Illingworth was not holding any funds that would be payable to Nguyen in the civil action. I assume that the purpose of the direction and attached Family Minutes was to put Mr. Illingworth on notice as to the terms of the Family Minutes to ensure that no resolution of the civil action prejudiced Cao’s entitlement pursuant to paragraphs 2 and 4 of those minutes.
[18] The civil action was subsequently settled at a pre-trial conference held on December 6, 2019. RSJ Warkentin endorsed the record that the matter had been resolved and that Minutes of Settlement and a final order were to be prepared.
[19] The terms of the settlement provided that:
a. Nguyen was to receive $100,000 from the funds paid into court;
b. the Plaintiffs were to retain the balance of the funds;
c. the Plaintiffs agreed to forgive a prior costs order for $12,500; and
d. the civil action was to be dismissed without costs.
Counsel for Nguyen was tasked with drafting the Minutes of Settlement, while counsel for the Plaintiffs was to prepare the releases.
[20] On December 20, 2019, Mr. Cupello provided Mr. Illingworth with draft Minutes of Settlement (the “Civil Minutes”). Mr. Illingworth made his changes to the document and forwarded them to Mr. Cupello. He also forwarded the Civil Minutes to Ms. Filipovic for her review and comment. Ms. Filipovic, whose client is not a party to the civil action, sought additional amendments to the Civil Minutes, which included specifying the amounts payable to each of Cao and Nguyen from the $100,000.
[21] It has never been disputed between the parties what the terms of the settlement of the civil action required. What gave rise to concern, was the preamble to the draft Civil Minutes and the amendment sought by Ms. Filipovic specifying the amounts payable to Cao and Nguyen.
[22] With respect to the preamble, the initial draft Civil Minutes acknowledged the requirement in paragraph 2 of the Family Minutes to pay Cao fifty per cent of the monies due to Nguyen. It did not reference the add-on amounts provided for in paragraph 4 of the Family Minutes. When this amendment was sought by Mr. Illingworth, Mr. Cupello agreed, provided that the words “if any” were added in reference to the add-ons.
[23] With respect to the amounts to be paid to Cao and Nguyen, Mr. Cupello did not indicate what the disagreement was, but merely stated that it would be sorted out with family counsel.
[24] The amendment to the preamble, combined with the suggestion that division of the $100,000 between the spouses would be sorted out later, raised concern for counsel for Tang and for Cao that, Nguyen was seeking to relitigate the meaning of paragraph 4 of the Family Minutes. The lack of any clear position from Nguyen in the correspondence on this issue, combined with the bitter history of both the civil and family files, no doubt fueled these fears. Tang and Cao decided to present a united front, with Tang refusing to finalize the Civil Minutes until the wording of those minutes properly reflected Cao’s understanding of the Family Minutes.
[25] To avoid an ongoing dispute in the Civil Action, on March 9th, 2020, Mr. Cupello suggested that the civil matter be finalized by way of a joint direction to the Accountant of the Superior Court of Justice, requiring that $100,000 be paid to Cupello & Company in trust, while the balance is payable to the Plaintiffs’ counsel. Mr. Cupello undertook to hold the funds in trust until counsel in the Family Action had resolved the issue of the proper distribution of the $100,000 as between Cao and Nguyen pursuant to the Family Minutes. Revised draft Minutes of Settlement were provided that were not entirely clear on this latter point, and still contained the offending words “if any” in relation to paragraph 4 of the Family Minutes.
[26] On March 11th, 2020, Mr. Cupello advised counsel for Cao (with a copy to Mr. Illingworth) that he would be agreeable to the disputed funds being held in trust by the Filipovic law firm on condition that they are not to be released without the consent of both parties.
[27] Despite requests, Nguyen’s dispute as to the distribution of the $100,000 was not explained. His position was not known until he swore his affidavit dated January 4, 2021.
[28] On April 3, 2020, Mr. Illingworth advised Mr. Cupello that there was no resolution of the terms of the Civil Minutes, and that a motion would be brought. Mr. Cupello made it clear that this was not an issue for civil counsel, but one to be sorted between family counsel. Ultimately all three motions ensued.
THE POSITIONS OF THE PARTIES:
Tang’s Position:
[29] Mr. Illingworth states that he is bound by the direction dated August 19, 2019, signed by Nguyen and directed to Mr. Cupello, Mr. Illingworth and the Accountant of the Superior Court of Ontario. Mr. Illingworth argues that this compels him, and indeed his client to ensure that nothing done in the civil action prejudices Cao’s entitlement pursuant to the terms of the Family Minutes.
[30] While the Plaintiffs support Cao’s position with respect to the distribution of the $100,000 as between Nguyen and Cao, it is primarily their wish for this issue to be resolved so that the civil action may be concluded as agreed upon.
Nguyen’s Position:
[31] Nguyen’s position is that the $100,000 should be dealt with as follows:
Total funds to be paid to Nguyen: $100,000.00
Plus add-back pursuant to paragraph 4:
$2,303.53 legal fees +
$11,383.72 personal income taxes
Total add-back $ 13,687.53
Total funds to be distributed prior to adjustments: $113,687.25
Less legal fees for the civil action $ 49,468.57
Total available for division: $ 64,218.96
Cao’s one-half share = $32,109.48
[32] With respect to Mr. Melchiorre’s fees referenced in paragraph 4 of the Family Minutes, Nguyen argues that the Minutes are clear that the add-back is to be for fees paid on account of family law matters. While Mr. Melchiorre may have been paid $15,000 in total, he has confirmed that the only portion that relates to the family matter is $2,303.53. This should be the amount of the add-back.
[33] The biggest issue from Nguyen’s position is the legal fees he owes to Mr. Cupello on account of the civil action. Nguyen argues that these fees were incurred to recover the $100,000 that is subject to division between the parties. Paragraph 2 of the Family Minutes only entitles Cao to 50% of the monies “ultimately due” to Nguyen. Mr. Cupello argues that a deduction for legal fees was specifically contemplated by use of the words “ultimately due” as opposed to merely saying “due”; that the intention was to share with Cao one-half of the amount received from the receivership funds, net of his legal fees in the civil action. He argues that to interpret the Family Minutes otherwise would be inequitable, as it would require him alone to bear all the costs of recovering the $100,000 that is being used for the joint benefit of the parties.
Cao’s Position:
[34] Cao’s position is that paragraphs 2 and 4 of the Family Minutes require the following amounts to be paid to her:
Total Funds to be paid to Nguyen $100,000.00
Plus Add-backs pursuant to paragraph 4
$15,000 legal fees +
$11,383.72 personal income taxes $ 26,383.72
Total benefit received by Nguyen from property sale $126,383.72
Cao receives 50% of the total amount or $63,191.86 out of the $100,000 payable to Nguyen
Nguyen receives the balance of the $100,000, being $36,808.14.
[35] Cao takes the position that the amount to be added back with respect to Mr. Melchiorre’s fees is $15,000. There is correspondence from Mr. Melchiorre dated August 8, 2017, to the receiver enclosing an irrevocable direction signed by Nguyen to pay to Mr. Melchiorre’s firm the sum of $15,000 from the net sale proceeds of the property. Shortly after the Family Minutes were signed, Mr. Cupello confirmed that $15,000 had been paid. The receiver also confirmed that this was the amount paid to Mr. Melchiorre. The intention of the Family Minutes was to capture in the add-back provisions the total amount paid to Mr. Melchiorre. The evidence is clear as to what that amount was.
[36] With respect to any claim for Mr. Cupello’s fees in furtherance of the civil action, this was not contemplated by the Family Minutes and should not be paid. A deduction for Mr. Cupello’s fees was never discussed. If Nguyen wanted a deduction for his legal fees, then this should have been reflected in the Family Minutes. Cao disagrees that by disallowing this deduction Nguyen suffers an injustice. She argues that she made some considerable compromises in her legal positions to reach this agreement and had she known that this was Nguyen’s position, she would not have agreed to the Minutes.
ANALYSIS:
[37] In determining how much of the $100,000 each of Nguyen and Cao should receive pursuant to the terms of the Family Minutes, the positions of the parties require a determination of the following issues:
a. Whether the full $15,000 paid to Mr. Melchiorre should be added back pursuant to paragraph 4 of the Minutes, or the $2,303.53 attributed by him to the family file? And
b. Whether Nguyen is entitled to reduce the amount subject to division by the total of his legal fees paid in the civil action?
What amount is to be added back for the Melchiorre fees:
[38] Paragraph 4 of the Family Minutes states that the add-back is to include “all monies paid for the Respondent’s family law matters from the receivership funds…”. The wording of the provision is clear. The Offer to Settle and correspondence leading up to the Family Minutes all reference solely monies paid for family law matters from the receivership funds.
[39] The Family Minutes further provide that Mr. Melchiorre is to confirm the appropriate amount. On June 21, 2019, Mr. Melchiorre confirmed to Mr. Cupello that the $15,000 paid by the receiver was on account of the family law file, lease file and civil litigation file. Unfortunately, it does not appear that this was something that had been communicated to Ms. Filipovic prior to her client signing the Family Minutes.
[40] It was not until December 31, 2020, that Mr. Cupello responded to Mr. Melchiorre’s June 21, 2019, letter asking for the exact amount attributable to the family law file. By way of email dated January 4, 2021, Mr. Melchiorre’s office confirmed that the amount was $2,303.53.
[41] Based on the evidence before me and the clear wording of the Family Minutes, I find that $2,303.53 is the appropriate add-back. Having said this, I do note Ms. Filipovic’s point that the email references a commencement date for the family account of July 2015, but Mr. Melchiorre was sending correspondence in the file as early as June of 2015. This difference needs to be reconciled and my findings with respect to the appropriate add-back is subject to adjustment once this has been done.
Should there be an adjustment for fees paid in the civil action?
[42] With respect to the issue of Mr. Cupello’s fees, I agree with the position of Cao. I do not agree that the words “ultimately due”, or anything else in the Family Minutes permit a deduction by Nguyen from the $100,000 for his legal fees incurred in the civil action. If Mr. Nguyen wanted to be able to share the burden of the legal fees incurred in the civil action with his spouse, then he should have specifically stated that in the Family Minutes. There is simply nothing in the wording of the Family Minutes or anything that I have seen produced by the parties that would have alerted Cao to the fact that this formed part of their agreement.
[43] With respect to the argument of equity and injustice, again I must respectfully disagree with Nguyen’s position. As Ms. Filipovic pointed out in argument, her client made certain compromises of her positions on financial issues based on what she believed to be the clear agreement between the parties as reflected in the Minutes of Settlement. To allow Mr. Nguyen to now inject into the Family Minutes his intention with respect to those fees, based on concepts of “fairness” would in fact do an injustice to Cao.
[44] In the resolution of any action, parties need to have a clear understanding as to what the terms of the settlement are. There is no room to be coy or vague and then after the fact plead fairness or equity. Fairness is often a subjective concept. Generally, compromises are made to the positions of both parties to reach a settlement of a matter. They need a clear understanding of what they are receiving in exchange for those compromises in order to make an informed decision as to whether they wish to settle on the terms proposed. In circumstances such as this, and particularly when a settlement was reached after extensive negotiations with representation from legal counsel throughout, and the words of that settlement are clear and unambiguous, there is no need to start examining the subjective intention of one party and injecting that meaning into the settlement, particularly when to do so will create an outcome contrary to the intention of the other. A $49,000 adjustment in this case has a significant impact on the overall resolution. If Nguyen had intended for this adjustment to form part of the settlement, it should have been expressly stated in the Family Minutes.
ORDER:
[45] In light of the foregoing, it is ordered that:
a. With respect to the civil action:
i. Subject to any adjustment required once Mr. Melchiorre’s fees on the family file are confirmed, the Accountant of the Superior Court of Justice shall pay the $100,000 remaining to the credit of the civil action as follows:
A. $56,843.63 payable to Cuc Thi Cao (subject to any authorizations and directions received to direct the payment to her solicitors); and
B. $43,156.37 payable to Phuc Van Nguyen (subject to any authorizations and directions received to direct the payment to his solicitors).
ii. Subject to a determination of costs on these motions, the civil action (CV-15-0541) is dismissed without costs on the terms of the accepted offer to settle of December 6, 2020.
b. With respect to the family action:
i. A final order shall issue in accordance with the terms of the Minutes of Settlement dated June 4, 2019.
ii. The parties shall forthwith confirm the total amount paid to Mr. Melchiorre on account of the family file from the commencement of his representation of Nguyen to the conclusion and notify Mr. Illingworth if any amendment to the amounts ordered in paragraph 45(a) is required.
iii. If the parties are unable to agree as to the form and content of the final order, or any adjustments required to paragraph 45(a)(i) herein as a result of the confirmation of the Melchiorre fees, they shall each file their proposed draft orders for review, and to be settled by me.
iv. Each party shall comply with any outstanding obligations they may have pursuant to the Minutes of Settlement within 60 days.
[46] Costs outlines were provided to me in the civil action. However, given the nature of the costs claimed made, and particularly the request for costs payable by counsel personally I will require written submissions as to costs. No such claim was made in the family action, but no costs outlines were provided either. For both actions:
a. A party claiming costs shall deliver their written submissions, limited to 10 pages, double-spaced (excluding bills of costs, costs outlines, offers to settle and caselaw) within 30 days of release of this decision, failing which costs will be deemed to be settled.
b. A responding party shall deliver their written submissions, subject to the same limitations provided in (a) within 15 days of receipt of the claiming party’s submissions.
c. Any reply submissions shall be limited to 5 pages, double-spaced and shall be delivered within 10 days of receipt of the responding party submissions.
d. Absent exceptional circumstances, the filing of any materials that do not comply with these time limits shall not be permitted.
“original signed by”
The Hon. Madam Justice T. J. Nieckarz
Released: April 16, 2021
COURT FILE NO.: CV-15-0541-00, FS-17-0195-00
DATE: 2021-04-16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N: CV-15-0541-00
ORIENTAL GARDEN CHINESE &VIETNAMESE RESTAURANT INC. and HUONG CAO QUE TANG also known as QUE TANG
Plaintiffs
- and –
PHUC VAN NGUYEN
Defendant
BETWEEN: FS-17-0195-00
CUC THI CAO
Applicant
-and-
PHUC VAN NGUYEN
Respondent
REASONS ON MOTION
Nieckarz J
Released: April 16, 2021
/cjj