COURT FILE NO.: FS-20-077
DATE: 2021/07/20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
David Robert Schmidt
Applicant
– and –
Jennifer Lea Schmidt
Respondent
Joyce Faria, for the Applicant
Andrew Perrin, for the Respondent
HEARD: June 21, 2021
REASONS FOR DECISION
Ellies R.S.J.
OVERVIEW
[1] The applicant in these divorce proceedings moves for summary judgment based on an offer to settle which the parties agree was accepted by the respondent. The central issues in the motion are whether the accepted offer should be interpreted to permit the respondent to buy out the applicant’s interest in the jointly-owned matrimonial home as of August 1, 2021, and, if so, whether the accepted offer requires the respondent to pay the value of the applicant’s interest as of the date of separation or as of the date of the buyout.
[2] I reserved my decision at the conclusion of the hearing. During my deliberations, I requested further evidence. On June 29, after considering the additional evidence, I released an endorsement in which I advised that, for reasons to follow, the motion was allowed in part. I held that the term permitting the respondent to buy out the applicant’s interest in the home expired on May 1, 2021. I ordered that the matrimonial home be listed for sale immediately and that the applicant was entitled to be paid the value of his interest in the home as of the date of the sale, following the discharge of encumbrances on title and the costs of disposition.
[3] These are my reasons for making that order.
BACKGROUND
[4] The parties were married in February 2010 and separated in October 2019. They have two children from their marriage. Those children are now 3 and 10 years old. The respondent has two children from an earlier relationship or relationships.[^1] The applicant has no relationship with those children, but he and the respondent share parenting with respect to the children of their marriage.
[5] At the time they separated, the parties were living in a home they both owned in North Bay. At or about the time of the separation, the applicant was charged criminally based on allegations made by the respondent. As a result, the applicant was required to leave the home. The respondent has continued to reside there. She has paid all the expenses associated with the home since the date of separation, but has not paid any occupation rent to the applicant.
[6] The charges against the applicant were eventually withdrawn after he agreed to enter into a “peace bond” that limited his contact with the respondent. The parties have continued to live separate and apart. According to the applicant’s sworn testimony, he has had to rent alternate accommodations at a monthly cost to him of more than the monthly costs associated with the former matrimonial home.
[7] Following the separation, the applicant retained counsel in an effort to resolve the family law issues without resorting to litigation. That effort failed and the applicant commenced the divorce application in July 2020. However, even before the proceedings were commenced, his lawyer served the respondent’s lawyer with an offer to settle dated April 3, 2020. The relevant terms of the offer to settle provide:
Matrimonial Home:
The matrimonial home will be appraised by a certified appraiser as agreed upon by the parties.
Following the appraisal:
a) Jennifer will have the first option to buy out David's interest in the matrimonial home. Jennifer will pay to David half of the equity in the matrimonial home, CIBC line of credit, and an additional $5,161.69 to equalize the debt. David will transfer his interest in the home to Jennifer concurrent with payment by her of one half of the equity in the home, the discharge of the CIBC line of credit and the $5,161.69 payment. Jennifer will use her best efforts to immediately obtain a release of David's mortgage obligations on the existing mortgage. If Jennifer cannot obtain David's release from the existing mortgage, she will refinance the home and discharge the existing mortgage. David will be solely responsible for the CRA debt and the TD line of Credit.
b) In the event that Jennifer is unwilling or unable to exercise the option in paragraph a) above, the home will be listed for sale no later than May 1, 2020. Jennifer and David will accept the first reasonable offer to purchase the property, provided that the offer is not less than 10% of the listing price and/or the appraised value. Both parties agree to sign all documents necessary to effect a sale and to join in any necessary conveyance.
The parties will direct the lawyer on the sale to pay the real estate commission; adjustments for taxes, utilities, municipal fees or levies; amounts required to discharge registered encumbrances; legal fees and disbursements relating to the sale; and all other sale adjustments from the proceeds of the matrimonial home sale.
From the net proceeds, before distribution between the parties, they will pay the CIBC line of credit in the approximate amount of $13,263.55, the TD Line of Credit in the approximate amount of $11,994.50 and the CRA debt in the approximate amount of $11,994.50.
After paying these amounts, the remaining proceeds will be divided equally between the parties.
- There shall be no equalization payment made by either party.
[8] The offer also provided that, if it was accepted within two weeks, each party would bear his or her own costs. However, the offer was not accepted within two weeks. Instead, the lawyers corresponded back and forth, with Mr. Perrin accusing Ms. Faria and her predecessor on the file of failing to provide proper financial disclosure and Ms. Faria asking him repeatedly to be more specific.
[9] The matter eventually became the subject of a case conference held on December 1, 2020. At that conference, the parties consented to an order requiring the matrimonial home to be listed for sale using a particular realtor “forthwith, the intention [being] to have the property on the market … within two weeks.”
[10] More letters were exchanged between counsel about financial disclosure following the case conference. For reasons I will explain, the most important was a letter sent by Mr. Perrin to Ms. Faria on December 14, 2020. In that letter, Mr. Perrin advised that his client could not get financing to buy a new house without a separation agreement being in place, which created “an unforeseen delay with respect to the sale of the matrimonial home.”
[11] Ms. Faria responded on January 6, 2021. In her letter, Ms. Faria told Mr. Perrin that her client would not agree to delay the sale of the home and pointed out that the agreement to sell the home was not contingent on either party qualifying for the financing needed to buy another one.
[12] Mr. Perrin wrote the following day, on January 7, 2021. After setting out his client’s position with respect to other issues raised in Ms. Faria’s letter, he closed with:
As my client is eager to resolve the issues and focus on moving forward with her children, she has agreed to your client’s offer to settle. My office will prepare the terms into a Draft Order for your client’s approval in the coming days.
[13] On January 25, 2021, Mr. Perrin sent a draft order in exactly the terms of the April 3 offer to settle, with one exception: the deadline for buying out the applicant’s interest in the matrimonial home was changed from May 1, 2020, to May 1, 2021. The applicant does not dispute that he agreed to this new date, as is demonstrated by the fact that Ms. Faria also prepared a draft order about a month later, which included the new deadline.
[14] However, after receiving Ms. Faria’s new draft, Mr. Perrin began to assert that the applicant was not entitled to the value of his interest in the jointly-owned home as of the date of the sale or buyout, but only as of the date of the separation.
[15] The applicant then brought this motion.
ISSUES
[16] Counsel for the respondent submits that this is not an appropriate case for summary judgment. In the alternative, he submits that the respondent was prevented from buying out the applicant’s interest in the matrimonial home because the applicant included inappropriate clauses in draft orders based on the April offer and because he improperly insisted on being paid the value of his equity as of the date of the sale. Mr. Perrin further submits that, because the parties did not ultimately succeed at incorporating the accepted offer into an order or agreement, there is no binding agreement between them.
[17] Thus, the motion raises four issues, which I would approach in this order:
(1) Is this an appropriate case for summary judgment?
(2) If so, is there a binding agreement between the parties?
(3) If so:
(a) What is the valuation date for the applicant’s interest in the matrimonial home?
(b) Should the respondent still be permitted to buy out the applicant’s interest?
ANALYSIS
Is this an appropriate case for summary judgment?
[18] The applicant moves under r. 16.1 of the Family Law Rules, O. Reg. 114/99, for summary judgment in the terms of the April offer to settle.
[19] In the factum filed on behalf of the respondent, counsel submitted that “this matter is a genuine issue that will require a trial … [d]ue to the immeasurable prejudice suffered by the respondent”. However, this submission was not pressed in argument. That is probably a wise thing, given that the point is practically conceded on behalf of the respondent later in the factum, where counsel wrote (para. 20):
The continuum of absent, delayed or insufficient responses coupled with the continuous production of frivolous allegations are clearly evidenced in correspondence between counsel.
[20] As this concession makes clear, this is an ideal case for summary judgment. The evidence is entirely paper-based, consisting of correspondence between counsel, the April offer, and the draft orders. It is not necessary to make any findings of credibility to determine whether there is a genuine issue requiring a trial.
[21] This motion is in essence a motion to enforce an accepted offer under r. 18(13) of the Family Law Rules, which the applicant relies upon as an alternative basis for proceeding. Such a motion would ordinarily focus only on the document(s) containing the offer and the document(s) conveying the acceptance. In this case, however, the correspondence between counsel is relevant because of the respondent’s position that the applicant is responsible for the fact that the buyout deadline passed before she was able to take advantage of it.
[22] Unfortunately, as I will elaborate upon when I address the issue of costs, neither party provided enough of the correspondence or organized the correspondence provided in a way that was very helpful.
Is there a binding agreement between the parties?
[23] While the parties agree that the applicant’s April offer was accepted by the respondent, the respondent’s factum once again seems to take contradictory positions on the binding nature of their agreement. At para. 4 of the respondent’s factum, counsel writes that “[n]either party has disputed the existence of a binding agreement”. However, elsewhere in the factum, counsel submits because the applicant “thwarted” the respondent’s right to exercise the buyout clause and because there are no minutes of settlement or draft order in the terms of the offer (see paras. 13 and 53) “the parties should not be considered to have a binding agreement and the matter should proceed in its usual fashion”.
[24] I disagree. The evidence is clear both that the parties reached a binding agreement and that they believed they did.
[25] The draft order that Mr. Perrin prepared and provided to Ms. Faria on January 25, 2021, was in the exact terms of the April offer, except for the revised deadline for the buyout. The draft order that Ms. Faria prepared and provided to Mr. Perrin on February 25, 2021, incorporated that revised deadline, but added certain other clauses. These clauses included the following, numbered as they were in the February draft:
If any encumbrance has been registered on title after the separation but before the transfer, the responsible party will immediately remove it and fully indemnify the other from all liability relating to it.
David and Jennifer will each designate the matrimonial home as their principal residence from the year of the purchase until the year of David’s transfer to Jennifer or until the sale of the matrimonial home.
Jennifer will continue to have exclusive possession of the matrimonial home until the matrimonial home is transferred pursuant to paragraph 21(a) above or the sale closes pursuant to paragraph 21(b) above. Jennifer will keep the matrimonial home in good repair until the transfer or sale and will pay utilities, mortgage, insurance, realty taxes and maintenance.
David and Jennifer will equally share any major repair expenses over $1,000 which are deemed necessary to effect the sale of the matrimonial home. Neither party will arrange for major expenses without the other’s prior consent, in writing.
[26] On behalf of his client, Mr. Perrin took exception to the inclusion of these clauses. In his letter of March 1, 2021, he accused Ms. Faria of including “inaccuracies” in the draft order. After Ms. Faria wrote on March 5 to inquire as to what he meant by that, Mr. Perrin wrote on March 12, saying that para. 23 (the principal residence clause) had “no place in the final order”. That was the only clause he mentioned. It has not been made clear to me, either in the evidence or in argument, why that clause was so objectionable.
[27] In my view, the inclusion of these clauses in the draft order of February 25, 2021, did not have the effect of nullifying the agreement reached by the parties or demonstrating that an agreement had never been reached. The offer itself contemplated that additional clauses might be added into any separation agreement that might result from it. Paragraph 22 of the offer provided:
- In the event of acceptance of this offer, the terms of the accepted offer shall be incorporated into a separation agreement with such expansion of these terms as counsel may deem necessary to give full force and effect to their meaning. The final form of such separation agreement shall be subject to approval by counsel for both parties.
[28] It is clear that both sides understood that terms could be added without affecting the binding nature of the agreement, providing the parties agreed on the additional terms. In the letter he sent accompanying his January 25, 2021, draft order, Mr. Perrin referred to the “binding agreement between the parties” and yet suggested including additional provisions relating to shared parenting. In her response of February 2, 2021, Ms. Faria agreed to expand the terms of the agreement in accordance with para. 22 of the offer. Indeed, in what I believe was a final draft order prepared by Mr. Perrin on or about May 28, 2021, he included clause 22 from Ms. Faria’s February draft (regarding encumbrances), set out above.
[29] In my view, the clauses that Ms. Faria included in her February draft all fit squarely within the category of clauses designed not to change the agreement, but to give full force and effect to it. The fact that the parties were unable to agree on which additional clauses should be included did not affect the binding nature of those clauses of the April offer which were accepted on behalf of the respondent by Mr. Perrin on January 7, 2021.
[30] I turn now to the meaning of those clauses.
What is the valuation date for the applicant’s interest in the matrimonial home?
[31] As I stated earlier, it was not until after Ms. Faria sent a draft order in February that Mr. Perrin began to assert on behalf of the respondent that the applicant was not entitled to be paid his equity in the matrimonial home beyond the date of separation. In a letter dated March 1, 2021, Mr. Perrin wrote that the applicant was “only entitled to any equity up to the date of the separation as he has made no contributions to the matrimonial home since October of 2019.”
[32] This interpretation is not supported by any term in the offer to settle. In fact, all of the relevant terms of the offer support the opposite conclusion.
[33] Clause 20(a), the clause giving the respondent the option to buy out the respondent’s interest, provides specifically that “Jennifer will pay to David half of the equity in the matrimonial home” and that “David will transfer his interest in the home to Jennifer concurrent with payment by her of one[-]half of the equity in the home”. There is nothing in those words or in the rest of the paragraph that could be interpreted to mean one-half of the equity in the home at the time of separation.
[34] The respondent’s position is also unsupported by the terms of clause 20(b), requiring that the home be sold if the applicant’s interest in it is not purchased by the respondent. That clause provides that, after paying out the costs of the sale and discharging the parties’ debts, “the remaining proceeds will be divided equally between the parties.”
[35] There is no ambiguity and therefore no possibility of being mistaken about the valuation date for the applicant’s interest in the matrimonial home based on the wording of the offer to settle. Nor, I would point out, has the respondent deposed that she was. The offer clearly required the respondent to pay the applicant the value of his interest in the home at the time of the buyout.
Should the respondent still be permitted to buy out the applicant’s interest?
[36] The respondent submits that I should find a way to extend the deadline for allowing the respondent to buy out the applicant’s interest in the home. When asked what legal basis I have for doing that, Mr. Perrin conceded that he is not aware of any. The respondent’s factum refers briefly to the doctrines of “exceptional circumstances”, unconscionability, “gross unfairness”, and the duty of good faith. In my view, none of these provide a legal basis for the relief sought.
[37] The respondent’s factum defines “exceptional circumstances” to mean “events or issues not foreseen that inherently prevent specific performance”. By this, I take the respondent to be referring to the doctrine otherwise known in contract law as “frustration”. However, this doctrine is of no assistance to the respondent in this case. Where a court finds that unforeseen events have occurred, the parties are relieved of their obligations under the agreement: Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at paras. 53 and 55. The doctrine of frustration operates to put the agreement to an end, not to re-write it. If operable in this case, the doctrine would relieve the respondent of her obligation to purchase the applicant’s equity in the home (had there been such an obligation), not require the applicant to sell it to her. Further, the doctrine operates only where the frustrating event arises without the fault of either party. As I will explain, that is not what happened here.
[38] Just as obviously, the doctrine of unconscionability has no application to this case. To be unconscionable, an agreement must be the result of inequality of bargaining power: Uber Technologies Inc. v. Heller, 2020 SCC 16, at para. 54. There is no evidence of such inequality here. Both parties are reasonably sophisticated individuals, the applicant being a financial or mortgage advisor and the respondent being a paralegal. Both were represented by counsel.
[39] By “gross unfairness”, I understand the respondent to be referring to the second element that must be present before a court will find an agreement to be unconscionable: Uber, at paras. 64-65. I see nothing unfair, let alone grossly unfair, in the agreement reached by the parties in this case. The May 1, 2021, deadline was included by Mr. Perrin on behalf of the respondent in his January 25, 2021, draft order. Further, it was a deadline set with full knowledge of the difficulties the respondent might have if the parties were unable to reach an agreement, as Mr. Perrin set out in his letter to Ms. Faria of December 14, 2020.
[40] I turn now to a discussion of the reasons why the parties were unable to reach an agreement before the May 1, 2021, deadline as I consider the last of the legal bases set out in the respondent’s factum: the duty of good faith in the performance of a contract.
[41] In Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, the Supreme Court of Canada recognized that there is a “general organizing principle” of good faith underlying contract law and, in particular, “a duty of honest performance, which requires the parties to be honest with one another in relation to the performance of the contractual duties”: para. 93. The respondent contends that the reason she was unable to meet the May 1 deadline is because of the applicant’s “oppressive conduct”, including (1) making “false, frivolous, and vexatious allegations” and (2) including improper terms in the draft order drawn up to turn the accepted offer into final form. I have already dealt with and dismissed the argument that improper clauses were including in the draft orders.
[42] With respect to the respondent’s other argument, I have been provided with little, if any, evidence of false allegations having been made by the applicant that resulted in delay. There are references to such allegations in letters from Mr. Perrin to Ms. Faria dated May 11 and May 25, 2021. However, these refer to allegations having been made in letters from Ms. Faria dated May 7 and May 18, 2021, all of which were sent after the May 1, 2021, deadline. They could not, therefore, have resulted in any delay prior to that date.
[43] There is also a reference to frivolous and vexatious behaviour on the applicant’s part in the respondent’s affidavit (para. 50). However, this is a conclusory statement for which no evidence is provided. Rather, the respondent deposes that details “will be provided in advance of trial”. That is not sufficient. It is well-accepted that a party responding to a motion for summary judgment must put her best foot forward and cannot succeed by deposing that there is “more evidence to come”: 061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.), at p. 557.
[44] The respondent has failed to demonstrate that the applicant breached his duty of good faith performance by causing delay. Instead, I am satisfied that the delay was the result of the respondent’s own conduct, in two ways.
[45] The first was the respondent’s act in retaining an appraiser of her own choosing, without consulting the applicant. The April offer required that the matrimonial home be appraised by a certified appraiser as agreed upon by the parties. In compliance with this term, Ms. Faria wrote to Mr. Perrin on February 2, 2021, providing the names of three appraisers. However, eight days later, Mr. Perrin responded by advising that his client had unilaterally retained an appraiser who was not even on the list. Further, Mr. Perrin went on to insist that the applicant pay one-half of the cost of that appraiser’s work.
[46] On February 25, 2021, Ms. Faria wrote to say that, notwithstanding this clear breach of the terms of the accepted offer to settle, her client would pay his share of the appraisal, once received. The reason the applicant insisted on seeing the appraisal, she explained, is that the appraiser refused to speak to the applicant concerning the same. I would have thought this was a reasonable position to take. I would also have thought that the appropriate response would be that the respondent would make sure that the appraiser knew the appraisal was being paid for by both parties and that he should feel free to speak with both of them about it.
[47] However, that was not the response. Instead, Mr. Perrin wrote back on March 1, 2021, stating that there was no need for the applicant to communicate with the appraiser and advising that the appraisal would not be shared until the applicant paid for half of it. This unreasonable behaviour on the part of the respondent was responsible for a significant amount of the delay between January 7, 2021, when the respondent accepted the April offer, and the deadline of May 1, 2021.
[48] But the most significant cause of delay was the position communicated for the first time in Mr. Perrin’s letter of March 1, 2021, that the applicant was only entitled to his equity in the jointly-owned home as of the date of separation. I have already explained how unsupported this position is by the terms of the accepted April offer. It was also unsupported by the facts of this case. The respondent had lived in the matrimonial home without paying any occupation rent to the applicant. There was nothing unreasonable in the applicant insisting that he be paid the value of his equity in the home as of the date of the buyout. As he put it in his affidavit, he would not have offered to allow the respondent to buy him out at a reduced price if he stood to gain the full value of his equity by listing the property for sale.
[49] Ultimately, it was the respondent’s position on the value of the applicant’s equity in the home that took the parties past the May 1 deadline. It was the respondent, therefore, and not the applicant, who was responsible for that delay.
CONCLUSION
[50] For these reasons, on June 29, 2021, I ordered that a final order be submitted to the court in the form of Mr. Perrin’s January 25, 2021, draft, together with any additional terms on which the parties might agree in writing.
[51] I also ordered that the balance of the motion in which the applicant requests certain ancillary orders (see para. 4 of the notice of motion) and damages resulting from delay (see para. 5 of the notice) be adjourned without a fixed date.
COSTS
[52] The applicant has been successful on this part of the motion. However, I am inclined to award him only a fraction of his costs.
[53] The motion materials filed by both parties left a great deal to be desired. Both sides filed long PDF files, with no bookmarks whatsoever. The applicant’s counsel was not even able to refer me to a specific page in the PDF file when making her submissions. While counsel for the respondent was able to do a little better during his submissions, his material failed to include some of the exhibits to which his client referred in her affidavit.
[54] In addition to these shortcomings, the parties did not even organize the letters chronologically in their PDFs in a way that I could at least hope to find them by scrolling through a hundred or more pages. To top it all off, I was required to request further evidence in the form of letters which had been referred to in, but not included with, those that had been filed in evidence.
[55] This is unacceptable. The pandemic has been upon us for far too long to excuse this kind of unhelpful advocacy. Paper is a thing of the past. Digital records are here to stay. Throughout the pandemic, I have communicated regularly via telephone with the presidents of all the law associations in Northeastern Ontario in my capacity as the Regional Senior Judge. I have consistently asked them to urge their members to help us and to help their clients by making our jobs as judges easier in these difficult times. I have preached the virtues of bookmarking PDF files and pointed out how the use of a digital record can actually be more effective than that of a paper record when done properly. My pleas have been ignored in this case.
[56] A message must be sent to counsel in our region that this will no longer be tolerated. Requiring a judge to spend an inordinate amount of time finding the evidence in one case takes valuable judicial time away from other cases. It impacts our ability to deliver timely, effective, and affordable justice. It must stop. Therefore, in my view, where it will not unduly prejudice the rights of the parties, judges should refuse to hear matters where our court’s practice directions, including the use of bookmarks, are not followed. Where delaying a matter will unduly harm a litigant, the message must be delivered in the form of a costs order, as I believe should be done in this case.
[57] If the parties are unable to agree on the issue of costs in light of my comments, they may make written submissions, limited to five typewritten pages, exclusive of attachments, as follows:
(1) On behalf of the applicant, within 30 days of the release of these reasons.
(2) On behalf of the respondent, within 20 days of the receipt of the applicant’s submissions.
M.G. Ellies R.S.J.
Released: July 20, 2021
COURT FILE NO.: FS-20-077
DATE: 2021/07/20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
David Robert Schmidt
Applicant
– and –
Jennifer Lea Schmidt
Respondent
REASONS FOR DECISION
M.G. Ellies R.S.J.
Released: July 20, 2021
[^1]: It is not clear from the record whether the children have different fathers. The applicant deposes that the children are from two relationships. The respondent deposes that they are from one. Nothing turns on it. However, I mention the other children only because the respondent argued that the consequences of requiring that the home be listed for sale impacted four children, not just two.