COURT FILE NO.: FC-16-FS-51999
DATE: 2021/09/24
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jowan Abdulla, Applicant
AND:
Bayad Sulaiman, Respondent
BEFORE: Madam Justice J. Breithaupt Smith
COUNSEL: B. Paquette, for the Applicant
K. Hughes, for the Respondent
HEARD: September 8, 2021
DECISION RELEASED: September 24, 2021
ENDORSEMENT
[1] This is my substantive Endorsement regarding the issues raised by the Applicant’s Motion seeking to enforce terms of settlement allegedly reached between the parties. The Motion had an original placeholder return date of June 30, 2021 and was argued before me on September 8, 2021.
[2] The following documents were made available to the Court for this matter:
a. Notice of Motion;
b. Applicant’s Affidavit dated June 10, 2021;
c. Respondent’s Affidavit dated June 23, 2021;
d. Applicant’s Factum dated August 30, 2021 and supporting Book of Authorities;
e. Respondent’s Factum dated August 27, 2021 and supporting Book of Authorities;
f. Confirmations and Affidavits of Service.
Background Chronology
[3] In brief, the chronology of events is as follows:
a. The parties were married on September 24, 1988 and separated on January 1, 2016. They have an adult daughter who is not part of this litigation, which has been ongoing since December 1, 2016. Two settlement conferences have been held, roughly ten months apart, but no formal settlement document has been filed with the Court.
b. At the conclusion of the second settlement conference on March 5, 2021, the Respondent made an oral settlement proposal, the exact language of which is unknown. It is undisputed that the Applicant did not accept the Respondent’s proposal at the settlement conference.
c. Later that day the Applicant’s lawyer wrote to the Respondent’s lawyer in an attempt to accept the oral settlement proposal. The details of the letter and its description of the Respondent’s oral settlement proposal are set out below.
d. On March 8, 2021, the Respondent’s lawyer wrote back, seeking to change one term. The Respondent now wished to transfer value in an amount roughly equivalent to the balance owing on the secured line of credit from his RRSP via a tax-free spousal rollover. The stated reason for the requested change was that “he does not have $44,000.00 in cash to pay [off] the line of credit.” In her letter, Respondent’s counsel added: “Also my client requires his divorce at the same time as the transfer and complete release of spousal support.”
e. On March 9, 2021, the Applicant’s lawyer declined the proposed change in the single payment term, writing “my client will not be agreeing to your client’s further proposal” and commenting that the completing of the title transfer before the uncontested divorce “will not result in any meaningful delay.”
f. On March 11, 2021, the Respondent’s lawyer sent draft Final Minutes of Settlement to the Applicant’s lawyer along with a Mutual Release of Spousal Support and a draft Divorce Order for approval by counsel. The draft Divorce Order included the transfer of the matrimonial home, to be paid for by the Applicant and completed concurrently with the payout and closure of the line of credit by the Respondent. There is no mention of the RRSP rollover. Neither of the draft Final Minutes of Settlement or the Mutual Release were signed by the Respondent or his lawyer.
g. On March 29, 2021, Applicant’s counsel sent fresh Minutes of Settlement, signed by the Applicant, to Respondent’s counsel “revised in accordance with my client’s instructions” but said to be “entirely consistent with the settlement that the parties have reached, in accordance with my letter to you of March 5, 2021.”
h. On April 6, 2021, Respondent’s counsel wrote back to Applicant’s counsel rejecting the Applicant’s Minutes of Settlement and giving a deadline of April 16, 2021 for the Applicant to sign the Respondent’s draft Minutes of Settlement (originally sent March 11, 2021), “failing which [his] offer is withdrawn and [he] will be proceeding to trial.”
i. Later that same day, Respondent’s counsel wrote again to Applicant’s counsel as follows:
Further to my earlier letter of today’s date my client has now instructed me to withdraw his offer all together and that he is withdrawing his offer in accordance with his Minutes of Settlement effective immediately and will be proceeding to trial. Do not bother to have your client sign them because my client will not be signing them.
j. On April 12, 2021, Applicant’s counsel sent the Respondent’s draft Minutes of Settlement, now signed by the Applicant and by him, to Respondent’s counsel. The Spousal Support Release was also signed, with a copy to be deliverable “upon receipt of a fully executed copy of the Minutes of Settlement.” The covering letter concludes: “If the signed Minutes of Settlement are not returned to me by April 16th, my instructions are to bring a motion to the court to enforce the settlement.”
k. On April 14, 2021, Applicant’s counsel received a letter from Respondent’s counsel enclosing a Notice of Change in Representation signed by the Respondent on April 12, 2021, which document does not provide the required service details for the Respondent, but indicates instead: “I have chosen to be represented by a lawyer. To be determined. Awaiting for confirmation from other law firm.”
l. On or about June 1, 2021, Respondent’s new counsel served and filed the fully-completed Notice of Change in Representation.
Law in Brief
[4] The principles applicable to this matter can be summarized as follows:
At common law, an agreement is binding if it contains all essential terms, even if the parties agree that a more formal document will be drawn up at a later date. However, an “agreement to agree” on essential provisions is unenforceable.[^1]
These primary principles apply equally to family law matters,[^2] and, where essential terms are agreed upon, the inclusion of a statement confirming the parties’ intention to generate a more detailed and formal separation agreement does not defeat the settlement.[^3]
The test is whether a reasonable observer would have understood that the parties were making a final agreement resolving all essential issues.[^4]
The parties’ behaviour after the date upon which the settlement theoretically crystallized can be instructive to the Court in assessing whether an agreement was reached. If, in the eyes of an objective observer, the parties took steps consistent with the terms reached, it is reasonable to infer that the parties believed themselves to be bound by those terms.[^5] If, however, the parties’ subsequent course of conduct emphasized the importance of a formal document, then the opposite can be inferred.[^6]
Discussion
Madsen, J’s Endorsement of March 5, 2021
[5] The Respondent, via his counsel, makes much of the litigation-management details set out in Justice Madsen’s settlement conference endorsement of March 5, 2021. Her Honour’s Endorsement is appended hereto as Appendix “A” for ease of reference. At paragraph 2, she notes that a settlement may be possible within a week. At paragraph 3, Her Honour authorizes pleading amendments by both parties. At paragraph 4 she confirms that “the Respondent may obtain a critique expert report if required.” At paragraph 5 she confirms that the next step in the litigation would be a Trial Management Conference. Respondent’s counsel argues that by including the pleadings amendment; the expert critique; and the Trial Management Conference, Her Honour was confirming the ongoing nature of the litigation.
[6] The content of Justice Madsen’s Endorsement is exactly what one would expect from a Settlement Conference where a final resolution has not been filed with the Court. Two of the enumerated purposes of a settlement conference are: (1) to address issues relating to expert evidence or reports (Rule 17(5)(c.1); and (2) to organize a Trial Management Conference (Rule 17(5)(h)).
[7] In any event, the Applicant says that her acceptance of the Respondent’s oral settlement proposal did not take place until her counsel’s letter was sent later that day.
[8] I find that nothing turns on the contents of the Endorsement of Justice Madsen.
Respondent’s Oral Settlement Proposal (March 5 – 9, 2021)
[9] As noted, at the end of the settlement conference the Respondent made an oral proposal to the Applicant to settle all issues. That same day, March 5, 2021, Applicant’s counsel wrote to the Respondent’s counsel in an effort to accept the Respondent’s oral settlement proposal and confirmed it as having the following terms:
The matrimonial home would be transferred into the Applicant’s name free and clear.
The Respondent would pay off and close the line of credit secured against the matrimonial home.
The Applicant would pay the legal fees and other costs for the transfer of ownership of the matrimonial home.
No other equalization or division of property would be made, with all property claims to be dismissed.
Neither party would pay spousal support to the other for any period of time (i.e. including retroactive spousal support).
Each party would bear his or her own costs of the proceeding.
A Divorce Order would be obtained on consent “once the matrimonial home has been transferred to [the Applicant] free of any encumbrance, and the line of credit discharged.”
[10] Regarding the seventh point noted above, the Applicant argues that it was not a term of the settlement, per se, but that she wanted the Divorce Order to issue after the registration of the title transfer to the matrimonial home so as to ensure that the transaction would be completed efficiently and in a tax-effective manner.
[11] The Respondent argues that the seventh point was a condition essential to the completion of the terms of the agreement, and that the Respondent never offered to wait for the Divorce Order until after title was transferred. He says that getting a Divorce Order as quickly as possible was one of his main goals in settling the matter. In his Affidavit prepared in response to this Motion, he attests: “... a divorce order, [was] extremely important to me and would have been one of my priorities immediately after reaching a deal.” No clear reason explaining the importance of obtaining a Divorce Order as quickly as possible is described in the Affidavit, but the point was raised by his previous counsel on March 8, 2021.
[12] Having regard especially to the high conflict nature of this matter and the complete lack of trust between the parties, I understand and sympathize with the Applicant’s need to ensure that the substance of the settlement had been completed before the Respondent got what he wanted, namely the Divorce Order. The correspondence between counsel shows that this was a live issue. This in and of itself demonstrates that the timing of the Divorce Order was materially significant to both parties and that they were not ad idem on that point as of March 9, 2021.
[13] I therefore find that the oral offer proposed by the Respondent at the end of the settlement conference on March 5, 2021 was not accepted by the Applicant. No settlement was reached.
Respondent’s Draft Minutes of Settlement (March 11, 2021)
[14] The Respondent’s draft Minutes of Settlement dated March 11, 2021 represented his position on final settlement as of that date. As noted above, the Respondent attempted (by letter of March 8, 2021) to change the payment provision from the payout and closure of the line of credit secured against the home to a spousal RRSP rollover. Although this change of an essential term would normally have resulted in the demise of the settlement proposal, it did not appear in the Respondent’s draft Minutes of Settlement.
[15] Using the paragraph numbering of the document, the essential terms of the Respondent’s draft Minutes of Settlement dated March 11, 2021 were:
A Divorce Order would be obtained at the Respondent’s expense incorporating the terms of the Final Minutes of Settlement.
Within thirty days, the matrimonial home would be transferred to the Applicant’s name at her expense in full and final satisfaction of all property claims, with the Respondent paying off the secured line of credit “in the approximate amount of $44,000.00” and with the Applicant covering “all outstanding property taxes and water charges pertaining to the said property.”
The Applicant’s spousal support claims were to be dismissed with prejudice to any future claims regardless of the Applicant’s circumstances and with a mutual release to be signed by both parties.
Each party would pay his or her own costs of the proceedings.
All other claims by the parties would be dismissed.
[16] No mention is made of the RRSP rollover proposal, nor is a timeline specified for obtaining the Divorce Order.
[17] The Applicant did not accept the Respondent’s Final Minutes of Settlement at that time, choosing instead to instruct her lawyer to send out fresh and revised Final Minutes of Settlement, which he did on March 29, 2021. I therefore find that the Applicant did not accept the Respondent’s settlement proposal as set out in his Final Minutes of Settlement on March 11, 2021. No settlement was reached.
Applicant’s Minutes of Settlement (March 29, 2021)
[18] On March 29, 2021, the Applicant’s Minutes of Settlement, signed on that date both by her and by her counsel, were sent to the Respondent’s counsel. This document contained eight paragraphs which set out the following:
A divorce would be granted on the basis of at least one year’s separation.
Upon completion of the transfer of title of the matrimonial home into the Applicant’s name and the discharge “of any encumbrances registered against the matrimonial home,” the Respondent would undertake the divorce filings with the Divorce Order to include the terms of the Minutes of Settlement.
The Respondent would transfer title of the matrimonial home to the Applicant “free of all encumbrances” in settlement of equalization. The Applicant would select and pay the real estate lawyer. The Respondent would discharge “all [registered] encumbrances” and, in particular, the line of credit “in the approximate amount of $45,000.00.” The Respondent was not to further encumber the home. The Applicant would pay all outstanding property taxes and water charges.
The title transfer was to take place within thirty days.
Neither party would have any further property claims against the other.
The Applicant’s spousal support claims were to be dismissed with prejudice to any future claims regardless of the Applicant’s circumstances and with a mutual release to be signed by both parties. (Note that the language of this paragraph copies the language of the Respondent’s draft Minutes of Settlement verbatim here.)
Each party would bear his or her own costs.
All other claims by the parties would be dismissed.
[19] The Respondent makes much of three “significant” differences between his draft Minutes of Settlement of March 11, 2021 and these Minutes, namely: (1) the use of the term “encumbrances” repeatedly in the Applicant’s document; (2) the difference in the approximations of the balance owing on the secured line of credit (the Respondent used the figure of $44,000 whilst the Applicant used the figure of $45,000); and (3) the Applicant’s recitation that she would select the real estate lawyer to close the spousal transfer transaction. I will deal with each in turn.
The term “encumbrances” simply refers to any debts registered against the property. The parties were ad idem regarding property tax arrears or water charges levied by the municipal authorities, which were to be paid by the Applicant. There is no evidence of any encumbrances other than the secured line of credit, and it is undisputed that the Respondent was the sole beneficiary of the funds accessed through that credit vehicle and thus was to pay it off. I find that nothing turns on the inclusion of the word “encumbrances” in the Applicant’s Minutes of Settlement.
Had the approximation of the balance owing on the line of credit differed substantially between the parties in their respective documents, it might well be an issue of such magnitude as to rise to the level of an essential term. Here, both parties use the term “approximate” and the amount involved – $1,000 – is slightly more than 2% of the total balance owing on the line of credit and about 0.15% of the appraised value of the matrimonial home. It cannot be described as “significant.”
Throughout the settlement discussions, there is no doubt that the Applicant would be paying the cost of the real estate lawyer retained to conduct the spousal transfer transaction. That point is made by Applicant’s counsel as early as March 5, 2021 and can be considered standard practice in such matters. In a high-conflict matter such as this one, to suggest that the Applicant would pay the legal fee of a real estate lawyer retained by the Respondent strains credulity. Had the Respondent insisted upon being involved in the selection of the real estate lawyer, presumably he would have raised this point prior to the argument of this motion.
[20] Having said this, the language around the timing of the Divorce Order is relevant and had obviously become material to both parties. The Applicant wanted the spousal transfer of the matrimonial home completed, inclusive of the payout and closure of the secured line of credit, before the Divorce Order was granted. The Respondent did not sign the Applicant’s Minutes of Settlement and instructed his lawyer to advise Applicant’s counsel that “he will not sign the Minutes of Settlement drafted by your office.” Having regard to the previous correspondence between counsel, it is reasonable to infer that he continued to be concerned about the timing of the Divorce Order. No settlement was reached.
Respondent’s Revival and Withdrawal of Draft Minutes of Settlement and Applicant’s Signing of Respondent’s Draft Minutes of Settlement (April 6 - 12, 2021)
[21] As described above, Respondent’s counsel replied to the Applicant’s Minutes of Settlement by letter dated April 6, 2021 which both rejected the Applicant’s Minutes of Settlement and revived the Respondent’s draft Minutes of Settlement as a time-sensitive offer. That same business day, Respondent’s counsel clearly withdrew the time-sensitive offer and indicated that all settlement proposals made by the Respondent were withdrawn. Had the Applicant signed the Respondent’s draft Minutes of Settlement and returned them to the Respondent’s counsel during the window of time between the two letters, the outcome of this motion might very well have been different. As it is, the Respondent’s offer (as contained in his draft Minutes of Settlement) was no longer open for acceptance when the Applicant signed it on April 12, 2021.
Parties’ Behaviour in Following the Terms of Settlement (March 5 – April 12, 2021)
[22] The Respondent alleges the absence of steps being taken by either party to move forward with the terms of settlement shows that neither believed the matter to be settled. For clarity, the relevant period of time is between March 5, 2021 (the date of the settlement conference) and April 12, 2021 (when the copy of the Respondent’s draft Minutes of Settlement signed by the Applicant was delivered to Respondent’s counsel).
[23] The court is often tasked with evaluating individuals’ motivations by assessing their conduct. However where, as here, the proposed final resolution is entirely based upon the completion of a single transaction that cannot occur until signed documentation is in place, preparatory conduct is only minimally relevant. The resolution of the issues in this matter – property division and spousal support – was entirely predicated upon the single transaction of the transfer of the matrimonial home to the Applicant. Such a transfer cannot be completed until the secured line of credit is removed from title, and it would be nonsensical to undertake the transfer in the absence of a signed agreement which would allow the transaction to proceed without paying Land Transfer Tax.[^7]
[24] The Respondent’s responsibility under the proposed resolution was to pay out and close the line of credit – the fact that he did not take steps to come up with the cash to do so has no bearing upon the Applicant’s view of the resolution. As the post-settlement legal work to be completed by a real estate solicitor at the Applicant’s instruction is quite modest in scope and complexity, it is my view that nothing can be inferred from her decision not to engage a real estate lawyer during the period between March 5, 2021 and April 12, 2021.
Conclusion
Applicant’s Motion
[25] Based on all of the foregoing, I conclude that no settlement was ever crystallized in this matter. As a result, it must proceed to the next step, namely a Trial Management Conference.
[26] Certainly, it is hoped that settlement is still a possibility, and to encourage and facilitate same, I deem the draft Minutes of Settlement signed by the Applicant on April 16, 2021 to be an Offer to Settle made by her and effective as of that date.[^8] The document meets all the requirements of Rule 18 and had not been withdrawn as of September 8, 2021. It is, of course, open to the Applicant to withdraw this Offer to Settle in accordance with Rule 18(5) should she choose to do so. Should she choose to keep the Offer to Settle alive and available for acceptance until the day of trial, she will have the benefit of Rule 18(14) if she is able to demonstrate to the trial judge that any result following a trial is as or more favourable to her per Rules 18(14)(5) and 18(15).
Costs
[27] Although the Respondent successfully defended the Applicant’s motion, I decline to award any amount to him on account of costs. In addition to a broad review of the guidance provided by Rule 24 of the Family Law Rules and the prevailing case law, this conclusion is based upon two observations.
[28] Firstly, it is important to note that nowhere in the Respondent’s Affidavit does he assert that he believed the settlement proposal (i.e. exchanging his equity in the matrimonial home for a waiver of the Applicant’s property and support claims) was unfair to him or predicated upon a miscalculation. It is not lost on me that the Respondent continued to insist that the Divorce Order be granted before the spousal transfer of the matrimonial home was to be completed. In light of the assertion that he did not have sufficient cash on hand to payout and close the line of credit registered against the matrimonial home, one can appreciate the Applicant’s skepticism about the completion of the terms of settlement once the Respondent had his Divorce Order in hand. Looking at the admittedly limited evidence before the Court on this point, one wonders why the Respondent would not have simply arranged to complete the spousal transfer so as to obtain his much-coveted Divorce Order before now. As a result of the strains on the Court’s schedule, six months passed between the initial settlement proposal on March 5, 2021 and the argument of this motion on September 8, 2021 – plenty of time in which to bring this matter to a conclusion.
[29] Secondly, there was a suggestion that the Respondent did not have capacity to agree to a fulsome resolution because he wasn’t receiving adequate legal advice, and the Respondent argued that the breakdown in the solicitor-client relationship with his former counsel proves this point. This is speculation at best. There is no evidence – and nor should there be – before the Court to substantiate any reason for the breakdown of the relationship between the Respondent and Ms. Andrade. The exhibits speak for themselves: Ms. Andrade withdrew the Respondent’s draft Minutes of Settlement on April 6, 2021 when she was instructed to do so and soon thereafter the Respondent was looking for new counsel. To ask the Court to infer that Ms. Andrade was giving the Respondent bad advice such that he was disadvantaged to the point of having reduced capacity is inappropriate and smacks of an unnecessary attempt by him to blame and shame.
[30] As a result of these observations and my review of the applicable Rule and caselaw, I decline to award any amount of costs to the Respondent on account of this motion.
Order
[31] Temporary Order to go:
The Applicant’s Motion heard September 8, 2021 is dismissed.
The Minutes of Settlement signed by the Applicant on April 12, 2021 are deemed to be an Offer to Settle all issues raised in this litigation on a final basis, made by her effective as of April 12, 2021. All aspects of Rule 18 apply to this document accordingly.
Matter is adjourned to a Trial Management Conference on a date to be arranged by counsel through the Trial Co-Ordinator’s Office. Once a date has been secured, the Respondent shall serve and file a Notice of Trial Management Conference (Form 17C amended as necessary).
Each party shall bear his or her own costs of this Motion.
J. Breithaupt Smith, J
Date: September 24, 2021
APPENDIX “A” TO THE ENDORSEMENT OF BREITHAUPT SMITH, J. DATED SEPTEMBER 24, 2021
ONTARIO Court File Number Superior Court of Justice – Family Court FC-16-51999 (Name of Court) at 85 Frederick Street, Kitchener, ON N2H 0A7 Endorsement (Court office address) Date March 5, 2021 Settlement Conference
Applicant(s): Jowan Abdulla x Present Counsel: Barry T. Paquette x Present Duty counsel
Applicant(s): Present Counsel: Present Duty Counsel
Respondent(s): Bayad Sulaiman – present - Counsel: Filomena M. Andrade - present Present Present Duty Counsel
Respondent(s): Counsel: Present Present Duty Counsel
Order to go in accordance with minutes of settlement or consent filed.
- A fulsome settlement conference was held today. I expressed opinions.
- The parties are close to settlement. The Applicant requires time to consider the settlement proposal. The Court is advised that the Applicant expects to communicate her position to the Respondent’s counsel within about a week.
- The parties may both amend pleadings if required. The Applicant shall have 30 days to file an Amended Application. The regular timelines for Amended Answer and Reply shall apply thereafter.
- The Respondent may obtain a critique expert report if required.
- In the event that a Trial Management Conference is required, it may be organized through the trial coordinator once disclosure is complete and expert reports have been exchanged.
Madsen J.
[^1]: Bawitko Investments Ltd. v Kernels Popcorn, 1991 CanLII 2734 (ON CA). [^2]: Bogue v Bogue, 1999 CanLII 3284 (ON CA) at paragraph 12. [^3]: Ward v Ward, 2011 ONCA 178 at paragraphs 53 – 55. [^4]: Iofcea v. Dinoiu, 2018 ONSC 6882 at paragraph 28. [^5]: Ward v Ward, supra Note 3 at paragraphs 68 – 70. [^6]: Andrews v. Lundrigan, 2009 ONCA 160 at paragraphs 8 – 9. [^7]: Land Transfer Tax Act Regulation “Exemption(s) – For Certain Transfers Between Spouses,” R.R.O. 1990, Regulation 696. [^8]: I rely upon the Court’s primary objective of dealing with cases justly, in a manner consistent with the duty to manage high-conflict litigation, as set out at Rule 2 of the Family Law Rules.