COURT FILE NO.: FC-16-2421
DATE: 2021/06/11
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Francine Trombetta, Applicant
AND
Josef Trombetta, Respondent
BEFORE: Justice Engelking
COUNSEL: Judith E. Wilcox, for the Applicant
Katherine A. Cooligan, for the Respondent
HEARD: February 23, 2021
Endorsement
[1] This is a motion for directions brought essentially by both parties, specifically with respect to whether property identified in section 7.1 (b) and (c) of the parties’ Cohabitation Agreement dated November 16, 2010, are to be treated as exclusions in the equalization of net family properties, and if so, whether they can be traced.
Background Facts
[2] The parties began cohabiting in September of 2008 and married on November 27, 2010. Ms. Trombetta was 60 years old at the time of the marriage and Mr. Trombetta was 67. They were both previously married and brought assets into the marriage.
[3] They began discussing a domestic contract in the summer of 2010. An agreement was drafted by Mr. Trombetta’s then counsel to which Ms. Trombetta did not agree, finding it overly long and complex. Ms. Trombetta’s counsel then prepared a fresh draft in September of 2010. The parties negotiated certain provisions and Mr. Trombetta’s counsel prepared a final draft of the Cohabitation Agreement, which was executed by Mr. Trombetta on November 4, 2010 and Ms. Trombetta on November 16, 2010.
[4] Both parties were represented throughout the preparation and execution of the agreement, and both acknowledged having received independent legal advice in the agreement. Both counsel signed Certificates of Independent Legal Advice, which are affixed to the agreement.
[5] The paragraphs of the Cohabitation Agreement (which became a Marriage Contract as a result of the marriage) which are at issue in this motion are 7.1 (a), (b) and (c). They provide as follows:
7.1 Should Josef and Francine marry and except as specifically modified in this paragraph or as otherwise provided in this Contract, Josef and Francine agree as follows:
(a) Their property will at all times be treated, divided and equalized in accordance with Part 1 of the Family Law Act, as this property section of the legislation reads on the date of the execution of this Contact [sic] (the “current Part 1 of the Family Law Act”), and will not include any amendments thereto or successor legislation.
(b) For the purposes of equalization under the current Part 1 of the Family Law Act, the definition of excluded property under the legislation is modified by adding thereto an additional category of excluded property, that is Josef’s assets on the date of marriage. All such assets on the date of marriage are to be considered Josef’s excluded property and accordingly all such assets do not form part of Josef’s net family property.
(c) For the purposes of equalization under the current Part 1 of the Family Law Act, the definition of excluded property under the legislation is modified by adding thereto an additional category of excluded property, that is Francine’s assets on the date of marriage. All such assets on the date of marriage are to be considered Francine’s excluded property and accordingly all such assets do not form part of Francine’s net family property.
[6] The Cohabitation Agreement included a Schedule “A” which listed Mr. Trombetta’s assets and a Schedule “B” which listed Ms. Trombetta’s assets. Included in Mr. Trombetta’s assets in Schedule “A” to the contract is: “3399206 Canada Inc. -Mr. Trombetta personally and through a solely-owned holding company (4474015 Canada Inc.) is the majority shareholder of 3399206 Canada Inc. which company in turn is the sole shareholder of Vars Concrete Company Inc.”, which had a value of $4,900,000. Mr. Trombetta sold this company in 2011 (for more than it was valued in 2010) and it was, therefore, converted into cash.
[7] The contract also provided for a mutual waiver of spousal support and for the family residence at 3618 Delson Drive, Navan, Ontario, which would become the matrimonial home upon marriage, to be transferred to Ms. Trombetta as the sole owner, as part of the consideration for the release of spousal support, in the event of a breakdown of the relationship.
Position of the Parties
[8] The parties ask essentially for partial summary judgment on the issue of the proper interpretation of section 7.1 of the Cohabitation Agreement.
[9] Ms. Trombetta’s position is that the parties did not provide in the agreement for the exclusion of property traced into property excluded by subparagraphs 7.1 (b) and (c). Her view is that although property may be excluded pursuant to a domestic contract, such property is not among the categories of property subject to tracing as defined in section 4(2) of the Family Law Act (“FLA”).
[10] Mr. Trombetta’s position is that property into which the property identified in 7.1 (b) and (c) can be traced, and more particularly the proceeds of the sale of Vars Concrete, is excluded from the spouse’s net family property for purposes of equalization under sections 4 and 5 of the FLA. His view is that, because in their domestic contract a new category of property was created for the purposes of section 4(2) of the FLA, such property is subject to tracing.
[11] Ms. Trombetta’s submits that this interpretation is contrary to the plain wording of the agreement and that once converted, the property became divisible between them. Ms. Trombetta also takes issue with certain evidence proffered by Mr. Trombetta.
Analysis
[12] I begin by addressing Ms. Trombetta’s objection to the admissibility of certain evidence proffered by Mr. Trombetta. Due to health issues that Mr. Trombetta is facing, including having suffered a stroke in August of 2015 which has impeded his ability to communicate and heart issues which may be exacerbated by stress, he has not provided his own sworn affidavit for this motion. Rather, the following three affidavits were filed in support of Mr. Trombetta:
a. Affidavit of Mr. Trombetta’s adult daughter, Nicolina Trombetta, sworn on February 16, 2021;
b. Affidavit of an associate of Mr. Trombetta’s counsel, Elena Mamay, sworn on February 8, 202; and,
c. Affidavit of Mr. Trombetta’s former counsel, Stephen Appotive, sworn on February 9, 2021.
[13] Although Ms. Trombetta notes that no medical evidence was provided as to Mr. Trombetta’s incapacity, she does not object particularly to the affidavit of Ms. Nicolina Trombetta, at least not in so far as it explains why Mr. Trombetta has not sworn his own affidavit. However, Ms. Trombetta submits that the affidavit of Elena Mamay is inappropriate on the basis that it does not comply with Rules 14(18) and 14(19) of the Family Law Rules, and is not in keeping with decided law on the issue of an information and belief affidavit from an employee of a party’s law firm. Additionally, she asserts that much of the evidence provided by Mr. Appotive by way of his sworn affidavit is either irrelevant or inadmissible.
[14] I will deal with each of these objections in turn.
Affidavit of Ms. Mamay sworn on February 8, 2021
[15] Rule 14(18) of the Family Law Rules provides that an “affidavit for use on a motion shall, as much as possible, contain only information within the personal knowledge of the person signing the affidavit.” Rule 14(19) provides:
The affidavit may also contain information that the person learned from someone else, but only if,
(a) the source of the information is identified by name and the affidavit states that the person signing it believes the information is true; and,
(b) in addition, if the motion is a contempt motion under rule 31, the information is not likely to be disputed.
[16] Ms. Trombetta submits that although Ms. Mamay indicates that she “reviewed all pertinent documents in the file”, she does not set out what the documents are, does not attach copies of the documents she reviewed, does not identify who authored what she reviewed and does not make any statement as to the nature of her belief in the veracity of the documents. Additionally, Ms. Trombetta submits that Ms. Mamay set out a number of chronological facts regarding the parties relationship without identifying where they came from, made inflammatory statements without identifying how she came to learn them, provided evidence about Mr. Trombetta’s expectations during the marriage and of Ms. Trombetta’s professional skills and history without identifying a source for them, described what Ms. Trombetta apparently knew about certain transactions without stating the source of that information and described Mr. Trombetta’s position on certain things without identifying how she came to know them.
[17] Ms. Trombetta relies on a recent decision of the Justice Pazaratz, Farooq v. Hawkins, 2018 ONSC 4841, wherein he summarized the state of the law in relation to affidavits like that of Ms. Mamay as follows:
[14] There have been a number of recent decisions expressing the court’s very strong disapproval of the apparent growing practice of affidavits being filed by lawyers or by legal staff. Among the instructive cases: Pavao v. Ferreira 2018 ONSC 1573 (SCJ); CAS v. N.A.-M. 2018 ONSC 978 (SCJ); Ceho v Ceho, 2015 ONSC 5285 (SCJ). Some basic principles emerge:
a. Rule 14(17) sets out how evidence may be presented on a motion. This includes affidavits.
b. Rule 14(18) requires that “an affidavit for use on a motion shall, as much as possible, contain only information within the personal knowledge of the person signing the affidavit.”
c. Rule 14(19) specifies the limited circumstances in which an affidavit can contain information obtained from another person (and the source must be named).
d. Rule 14(19) is permissive, not mandatory. Its primary function is to provide a controlled exception to the hearsay rule. A judge retains the discretion to refuse to admit the hearsay evidence based on information and belief when the information is being led for the truth of its contents.
e. The caselaw recognizes that a failure to attribute hearsay evidence is not in itself fatal in circumstances where it is possible to glean the source of the information from attached exhibits, or circumstances where the matters referred to are not contentious.
f. There are very few circumstances in which lawyers – or staff members of law firms – should be filing affidavits on behalf of parties, in contentious proceedings. This should be limited to summarizing non-contentious facts or documents, or providing an agreed upon chronology. On some procedural motions a lawyer’s affidavit might assist in focussing on the legal issue. (Emphasis added).
g. But as a general rule – particularly in family court (and especially in family proceedings relating to children) -- parties should always file their own affidavits setting out their first-hand knowledge, observations and experiences. If there are unique circumstances in which a party cannot file their own affidavit, those circumstances should be specifically set out.
h. There is no Rule that allows lawyers – or lawyers assisting lawyers – to file affidavits on behalf of parties, setting out contentious factual information, or advancing evidence dealing with the substance of a claim. If there’s any doubt about what’s contentious and what’s not, the safer course is to simply have the party file an affidavit setting out all of the evidence. (Emphasis added).
i. Motions are very important in family proceedings. Even when proper affidavit materials are filed, the court must still struggle with dealing with untested materials. It is inappropriate to needlessly add a further layer of uncertainty, by allowing lawyers to tell the story and advance the narrative, in circumstances in which the party could and should be telling their own story.
j. Affidavits by lawyers or legal staff are problematic because they are not so easily subject to scrutiny. Parties can be cross-examined on their affidavits. But it is much more cumbersome and impractical to raise the issue of cross-examining lawyers or legal staff.
k. Speaking plainly, having a lawyer or legal staff member swear an affidavit on behalf of a client is lazy, and breaches counsel’s responsibility to advance a client’s evidence in a proper and admissible manner.
[18] Mr. Trombetta’s position is that Ms. Mamay’s affidavit is admissible because much of the information contained in it has already been put before the court by one or the other party. Mr. Trombetta states that Ms. Trombetta well knows Mr. Trombetta’s challenges with communication, and it is therefore reasonable that his evidence be provided via Ms. Mamay. He indicates further that Ms. Trombetta’s expectation that Ms. Mamay methodically identify the source of the information and her belief therein is “simply” an example of Ms. Trombetta’s “proclivity to prioritize form over substance”. In actual fact, it is required by the Rules, and as set out by Justice Pazaratz above, the law.
[19] I agree with Ms. Trombetta with respect to Ms. Mamay’s affidavit. It is rife with “contentious factual information” and/or information clearly not within the personal knowledge of Ms. Mamay with no source identified. In fact, it is difficult to determine the efficacy of Ms. Mamay’s affidavit at it pertains to the question to be determined by the court. Although admissible with respect to certain cited uncontentious facts, it adds little of value to the motion. I find that paragraphs 8 through 11, 19, 22, 23, and its attached Exhibit “B” are inadmissible based on containing contentious facts about which Ms. Mamay would have no personal knowledge. I find paragraphs 6, 15 through 17 and 20 inadmissible based on Ms. Mamay having no personal knowledge of the information contained therein, having identified no source and having stated no particular belief in their veracity. Paragraphs 3 to 5, 7, 12 to 14 and 18 are admissible as being non-contentious facts.
Affidavit of Stephen Appotive sworn on February 9, 2021
[20] Ms. Trombetta’s objection to Mr. Appotive’s affidavit is for different reasons. She submits that this affidavit is inadmissible to the extent that it purports to demonstrate one party’s subjective intentions at the time that the Cohabitation Agreement was entered into. Her position is that this is contrary to the principles of contractual interpretation as set out by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633, and the Ontario Court of Appeal in Weyerhaeuser Company Limited v. Ontario (Attorney General), 2017 ONCA 1007. In the former, it is stated at paragraph 47 that to determine “the intent of the parties and the scope of their understanding”, the court “must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”. In the latter, it is stated at paragraph 65:
When interpreting a contract, an adjudicator should:
(i) determine the intention of the parties in accordance with the language they have used in the written document, based upon the "cardinal presumption" that they have intended what they have said;
(ii) read the text of the written agreement as a whole, giving the words used their ordinary and grammatical meaning, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;
(iii) read the contract in the context of the surrounding circumstances known to the parties at the time of the formation of the contract. The surrounding circumstances, or factual matrix, include facts that were known or reasonably capable of being known by the parties when they entered into the written agreement, such as facts concerning the genesis of the agreement, its purpose, and the commercial context in which the agreement was made. However, the factual matrix cannot include evidence about the subjective intention of the parties; and
(iv) read the text in a fashion that accords with sound commercial principles and good business sense, avoiding a commercially absurd result, objectively assessed.
[21] Ms. Trombetta argues that the whole purpose of the Appotive affidavit is to provide either his and/or Mr. Trombetta’s subjective intent during the parties’ negotiations as part of the factual matrix and it should not be admitted. In the alternative, her position is that if the court finds that the affidavit may be relevant to its examination of the factual matrix, those portions purporting to provide Mr. Appotive or Mr. Trombetta’s subjective intent should be given no weight.
[22] Mr. Trombetta argues that Mr. Appotive’s evidence is relevant and admissible in respect of the context surrounding the execution of the agreement and the parties’ reasonable expectations (as opposed to only his subjective intentions) in relation thereto.
[23] I find that Mr. Appotive’s affidavit is admissible to the degree that it may assist the court to “read the contract in the context of the surrounding circumstances known to the parties at the time of the formation of the contract”.
Factual Matrix
[24] The factual matrix in this case is set out, in part, in the “Background” in section 1 of the Agreement. It provides:
- Background
1.1 Josef and Francine have been cohabiting since in or about September, 2008, and intend to marry.
1.2 Josef was previously married and is now divorced. He has two adult children from his earlier marriage both of whom are financially independent.
1.3 Francine was previously married and is now divorced. She has two adult children from an earlier marriage both of whom are financially independent.
1.4 Each party agrees with the other to be bound by the terms of this contract.
1.5 This Agreement replaces all oral or written agreements made between the parties.
[25] To the extent that the parties’ “intentions” are specifically expressed, they are so in section 3 of the contract, which sets out its purpose:
3.1 With respect to spousal support, Josef and Francine intend by this Agreement to restrict or modify their spousal support rights and obligations, as specifically provided herein, that have arisen or that may arise under the Family Law Act, the Divorce Act, the Succession Law Reform Act, and any other applicable legislation or law, now or in the future, at law or inequity, from their marriage and/or in the event of a breakdown of the relationship;
3.2 With respect to property, should Josef and Francine marry they intend by this Agreement to restrict or modify their rights and obligations relating to property, as specifically provided herein, that have arisen or that may arise under the Family Law Act, the Divorce Act, the Succession Law Reform Act, and any other applicable legislation or law, now or in the future, at law or inequity, from their marriage and/or in the event of a breakdown of the relationship.
[26] As I have indicated above, the contract also dealt with the issue of ownership of the family home at section 8, providing that ownership of it be transferred to Francine solely upon breakdown of the relationship in consideration for spousal support. Interestingly, there is a handwritten amendment to the last sentence of paragraph 8.1, initialed by both parties. The typewritten sentence reads: “Josef and Francine agree this home is to be transferred to Francine as the sole owner if there is a breakdown of the relationship”, but the handwritten amendment is inserted between “this home” and “is to be transferred” which reads: “or any family residence acquired during the marriage that is designated as a matrimonial home”. Ms. Trombetta argues that this amendment is significant in that it demonstrates that where the parties contemplated that property that was traceable to property that was existent at the time of the agreement needed to be dealt with, it was specifically written into the agreement.
[27] Mr. Appotive’s affidavit provides additional information of the circumstances surrounding the formulation of the contract. He was retained to represent Mr. Trombetta from 1994 to 1996 in relation to the breakdown of his first marriage, and he was retained again in 2008 to negotiate a Cohabitation Agreement with Ms. Trombetta (then Francine Dube). Mr. Appotive attests that he knew from his interactions with Mr. Trombetta that his client was anxious to avoid a repeat of the litigation which stemmed from the breakdown of his first marriage. Indeed, Mr. Appotive was retained a third time to deal with obtaining a divorce for Mr. Trombetta from his first wife and to dispute her claim for increased spousal support.
[28] In December of 2008, Mr. Appotive prepared a first draft of a Cohabitation Agreement and had it delivered to Ms. Trombetta via Mr. Trombetta. This draft contained a full and final release by the spouses against each other’s property, and no equalization pursuant to the FLA. He did not hear further from either of them in regard to this draft and did not take any further steps.
[29] In September of 2010, Mr. Trombetta advised Mr. Appotive that he would be bringing in a draft Cohabitation Agreement prepared by Ms. Trombetta’s then counsel, Julie Bergeron. This draft agreement proposed that the FLA would apply respecting property but for the assets owned by each party at the date of marriage. Mr. Appotive discussed this draft with Mr. Trombetta, and although he did not attach a copy of it to his affidavit, he indicated in paragraph 22. a. of his affidavit that he described the change to include that: “Marriage date assets would be off the table for division should there be a subsequent separation, and this included traceable assets.” (Emphasis added).
[30] This draft of the agreement also did not contain a waiver of spousal support, which Mr. Appotive understood the parties were agreeing to, and he brought this to the attention of Ms. Bergeron by letter dated September 29, 2010.
[31] Mr. Appotive received a second draft of the agreement, referred to as the “amended Marriage Contract” from Ms. Bergeron on October 14, 2010, a copy of which is attached as Exhibit “E” to his affidavit. Mr. Appotive discussed this second draft from Ms. Bergeron with Mr. Trombetta, and indicated the following at paragraph 26. a. of his affidavit:
- On October 25 and 27, 2010, I spoke with Mr. Trombetta and reviewed the second draft of the Marriage Contract with him. I recall discussing the following:
a. that there had been no change from the first draft Marriage Contract relating to property (except for the proposed matrimonial home) such that only new assets acquired with new money during the course of the marriage would be subject to a division. More particularly, marriage date assets (including traceable assets) were still excluded from division. Mr. Trombetta was agreeable with this provision; (Emphasis added).
[32] The draft amended Marriage Contract provided in section 2, entitled “Purpose of the Contract”: “The parties wish for this contract to clarify that all assets owned at the date of marriage is [sic] to be excluded from the equalization of their net family property accumulated during their marriage unless otherwise expressed in a [sic] legal documents.” Under section 6, entitled “Assets at the date of marriage”, the following was provided:
(1) No property owned by either spouse, or in which either spouse has an interest of any kind on the date of marriage shall form part of the spouse’s net family property in the event of a separation.
(2) The spouses waive all rights to share in any way in the property owned by the other party prior to the date of marriage upon termination of their marriage.
[33] Section 7 of the draft, entitled “Calculating Net Family Property”, indicated:
The assets of significance owned by each party at the date of the marriage are described in Schedule “A”. On termination of the marriage, if any interest in any of these assets (or other assets acquired with the proceeds of these assets) is still owned by the souse who now owns them, that interest will be excluded from his or her net family property. (Emphasis added).
[34] Included in Schedule “A” was a note indicating that “Josef Trombetta is the sole owner of undernoted corporations, any values accumulated prior to and after, the signature of this document, will continue to remain the property of Josef Trombetta”, and it listed Vars Concrete Corporation Inc, 3399206 Canada Inc. and 4474015 Canada Inc.
[35] This draft also included a term relating to the release of spousal support so long as sole ownership of the matrimonial home at 3618 Delson Drive was transferred to Ms. Trombetta upon breakdown of the relationship.
[36] At the end of October 2010, on instructions from Mr. Trombetta, Mr. Appotive drafted the final version of the parties’ agreement, which he titled “Cohabitation Agreement” as they were not yet married. On November 4, 2010, four copies of it were executed with Mr. Trombetta and sent to Ms. Bergeron, along with a covering letter from Mr. Appotive. In his letter, Mr. Appotive stated: “In respect to property, we have made no changes to your concept that each party’s assets on the date of marriage are to be considered excluded property for the purposes of any NFP calculation. Given that property rights only arise once there has been a marriage the introductory provision of subparagraph 7.1 makes it clear that the part of the Agreement becomes effective once the parties marry.”
[37] Mr. Appotive indicates at paragraph 30 of his affidavit that in drafting section 7.1 of the agreement, he “did not change the agreement between Mr. Trombetta and Ms. Dube that property owned by them on the date of marriage and other assets acquired by either of them from proceeds of marriage date assets would be excluded from the calculation of his or her net family property.” Rather, he refined the wording “so it more closely aligned with the structure and wording of section 4 of the Family Law Act.” Mr. Appotive attests to first drafting subparagraphs 7.1(b) and (c) to include additional categories of excluded property and second, having subparagraph 7.1(a) provide that the additional categories of excluded property would be “treated, divided and equalized in accordance with Part 1 of the Family Law Act.”
[38] Ms. Trombetta executed the agreement on November 16, 2010 and Mr. Appotive was provided with a copy. He wrote a reporting letter to Mr. Trombetta dated December 10, 2010, in which he stated:
As you know from our discussions it is extremely important that you maintain good paperwork so that you can trace the increase in value in those assets over the course of the marriage years. This includes the sale of any particular assets especially where the proceeds of sale of that asset are then used in a new investment. In order for these assets to remain excluded they must be capable of being traced from the date of marriage onwards. As well, you must remember that should you decide to transfer any such asset into Francine’s name or into the two or [sic] your names jointly then the asset will no longer be excluded from division should there be a breakdown of the relationship.
Interpretation of the Contract
[39] The parties agree that the Supreme Court of Canada case of Sattva, supra, involving the interpretation of a commercial contract, and the Ontario Court of Appeal case of Weyerhaeuser, supra, dealing with the interpretation of an indemnification agreement between Ontario and certain companies, are the leading cases on the basic principles of the contractual interpretation.
[40] At paragraph 50 of Sattva, the SCC found: “Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.” The court found further at paragraphs 57 and 58:
[57] While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence is to deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 1997 CanLII 4085 (BC CA), 101 B.C.A.C. 62).
[58] The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case to case. It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution of the contract (King, at para. 66 and 70), that is knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, in the words of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” (Investors Compensation Scheme, at p.114). Whether something was or reasonably ought to have been within the common knowledge of the parties at the time of execution of the contract is a question of fact.
[41] After explaining the “parol evidence rule” at paragraph 59 of the decision, the Supreme Court finds at paragraph 60 that it does not apply to preclude evidence of the surrounding circumstances, indicating that:
Such evidence is consistent with the objectives of finality and certainty because it is used as an interpretive aid for determining the meaning of the written words chosen by the parties, not to change or overrule the meaning of those words. The surrounding circumstances are facts known or facts that reasonably ought to have been known to both parties at or before the date of contracting; therefore, the concern of unreliability does not arise.
[42] In Weyerhauser, Justice Brown of the Ontario Court of Appeal noted at paragraph 112 that:
Canadian common law generally treats evidence of the parties’ specific negotiations as inadmissible for purposes of interpreting a contract: Primo Poloniato Grandchildren’s Trust (Trustee of) v. Browne, 2012 ONCA 862, 115 O.R. (3d) 287, at para. 71. In light of that principle (and until that principle of contract interpretation is changed as a matter of policy), evidence of the factual matrix cannot operate as a kind of alternate means by which an adjudicator constructs a narrative about what the parties must have discussed or intended in their negotiations. In other words, evidence of the factual matrix cannot be used to do indirectly that which the principles of contract interpretation do not permit doing directly. (Emphasis is original).
[43] Ms. Trombetta submits that the actual words of her and Mr. Trombetta’s agreement can only lead to the conclusion that while property owned by each of them at the time of marriage is excluded from their respective NFP’s for the purposes of equalization, property that can be traced from it is not.
[44] In support of her position, Ms. Trombetta relies on the actual wording of the contract and the actual wording of the definition of excluded property in section 4(2) of the FLA, which provides as follows:
4.(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:
Property, other than a matrimonial home, that was acquired by gift of inheritance from a third person after the date of the marriage.
Income from property referred to in paragraph 1, if the donor or testator expressly stated that it is to be excluded from the spouse’s net family property.
Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.
Proceeds or a right to proceeds of a policy of life insurance as defined under the Insurance Act, that are payable on the death of the life insured.
Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.
Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.
Unadjusted pensionable earnings under the Canada Pension Plan.
[45] Both parties agree that they were capable of excluding the spouses’ property owed at the date of marriage by virtue of paragraph 6 of section 4(2) of the Act. Ms. Trombetta argues that because the property in paragraph 6 is not included in paragraph 5, it cannot be traced.
[46] Mr. Trombetta’s position, on the other hand, is that because a new category of property was created by the wording of their contract, about which both parties had or ought to have had knowledge, that category is as subject to paragraph 5 as are paragraphs 1 to 4. He argues, moreover, that this is the only interpretation that makes sense upon an examination of the factual matrix at the time the contract was made. Mr. Trombetta submits that if Ms. Trombetta’s position is accepted, then it leaves him in a worse state than if he had not entered into a contract at all. In other words, if he was subject to a straight equalization pursuant to section 5 of the FLA, without the property being excluded in one form and then included in another, he would have at least had the benefit of pre-marriage deductions. This, he submits, cannot reasonably be the intended outcome.
[47] On this point, I agree with Mr. Trombetta. Without changing or overruling the meaning of the words used by the parties, or deviating from the text such that a new agreement is created between them, I find that the proper interpretation of section 7.1 of the Cohabitation Agreement dated November 16, 2010 is that the property which can be traced to property in subparagraphs (b) and (c) is to be excluded from the parties respective net family properties.
[48] Although the language of section 7.1 of the agreement does not include the words “and section 4(2), paragraph 5 of the Family Law Act shall apply to the additional categories of exclusions created by subparagraphs (b) and (c)”, the contract did more than not include certain property pursuant to section 4(2), paragraph 6 of the Act. It created new categories of excluded property, which were to be encompassed by section 4(2) of the FLA. This is clear from the wording of section 7.1, subparagraph (a) of the contract.
[49] The factual matrix, as I have laid it out above, moreover, demonstrates that the “mutual and objective intentions” of the parties was that their pre-marriage property, and the property which could be traced from it, so long as it was still solely owned by the individual spouse, would be excluded from any equalization claim if the relationship broke down. The most objective evidence of this is contained in paragraph 7 of the draft amended Marriage Contract provided by Ms. Bergeron to Mr. Appotive on October 14, 2010, along with Mr. Appotive’s letter to Ms. Bergeron dated November 4, 2010, in which he stated that no change had been made to “your concept that each party’s assets on the date of marriage are to be considered excluded property for the purposes of any NFP calculation”.
[50] If, however, such property did not continue to be solely owned by the spouse, in whatever form it was, then it, of course, is subject to the presumptions contained in section 14 of the FLA.
[51] For all of the reasons given above, there shall be an order as follows:
(1) The property identified in section 7.1 (b) and (c) of the Cohabitation Agreement dated November 16, 2010, as well as property which can be traced from it, is to be treated as an exclusion in the equalization of net family properties under sections 4 and 5 of the Family Law Act.
Costs
[52] If the parties are unable to reach an agreement as to the liability or quantum of costs payable on the motion, they may make written submissions of no more than three pages, along with copies of their Bills of Costs and Offers to Settle, to me at intervals of 10 days from June 25, 2021, and I will make an order.
Justice Engelking
Date: June 11, 2021
COURT FILE NO.: FC-16-2421
DATE: 2021/06/11
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Francine Trombetta, Applicant
AND
Josef Trombetta, Respondent
BEFORE: Justice Engelking
COUNSEL: Judith E. Wilcox, for the Applicant
Katherine A. Cooligan, for the Respondent
Endorsement
Engelking J.
Released: June 11, 2021