Court File and Parties
Court File No.: FC-69-2019 Date: 2021-01-04 Ontario Superior Court of Justice
Between:
Nathalie Guertin, Applicant – and – Patrick Thibodeau, Respondent
Counsel: Alison Campbell, counsel for the Applicant Gary Blaney, counsel for the Respondent
Heard: October 28, 29, 30 2019 and October 19, 2020
Before: Charbonneau, J.
Reasons for Judgment
[1] The applicant brings this application for an equalization of property and spousal support. The respondent alleges that the parties had signed a cohabitation agreement prior to their marriage, which agreement constitutes a bar to the applicant’s claims
[2] This is a trial to determine the validity, enforceability and content of the alleged cohabitation agreement entered into by the parties on or about September 1992. The answers to these questions are necessary to decide the applicant’s claims. At that time, the parties had been cohabiting since December 1, 1990. They had one child, Melika, born March 27, 1991. They were expecting a second child, Nicholas, who was born on January 12, 1993. The applicant was expecting a second child and she wanted larger accommodations. They had very little financial means. The respondent’s father, Bernard Thibodeau (“Bernard”), was a wealthy businessman. He offered advice and recommended that they should buy a house instead of renting an apartment. He offered to finance the purchase of a house. However, he insisted that his help was conditional upon the parties signing a cohabitation agreement to protect his son’s interest to the property he would give or bequeath to him should the parties eventually separate.
[3] The parties later had two other children, Cassandra born January 3, 1996 and Joshua born January 10, 1999. They separated on January 1, 1997.
[4] Bernard gave his instructions for the agreement to his solicitor, Marc Smith. Mr. Smith prepared a cohabitation agreement in accordance with these instructions. Mr. Smith would have explained the agreement to the respondent before the respondent signed it at his office. Mr. Smith sent the applicant to another solicitor for independent legal advice. The applicant attended at that solicitor’s office who advised her not to sign the agreement. He explained to her that she would not own anything other than what was in her name or joint name with the respondent. The applicant signed the agreement. Nobody remembers who that solicitor was.
[5] Mr. Smith could not find any documents pertaining to the work he did on this agreement. His practice is to destroy his files after 10 years. The only document he found was his bill which combined the preparation of the agreement and for acting in the purchase of the house on Arthur Street that Bernard Thibodeau was financing for the parties.
[6] There is no copy of the agreement nor of the instructions received from Bernard. The parties and Mr. Smith testified and provided, to the best of their abilities their recollection of the terms of the agreement. It is noteworthy that none of them recalls that the agreement contained a waiver of spousal support.
[7] As indicated, the parties separated on January 1, 2017. After separation, the respondent paid the applicant spousal support in the amount of $1 000.00 per month. When the applicant initiated her claim for equalization in June 2019, the respondent stopped paying support and delivered an answer alleging that the applicant’s claims for equalization and spousal support were both barred by the cohabitation agreement.
[8] At trial, the applicant admitted signing the agreement but testified that the respondent tore it up shortly after they entered their new home.
The Issues
Was the agreement still in existence at the time of separation?
If yes, is the agreement unenforceable on the ground of duress and/or non-disclosure?
If yes, what were the terms of the agreement?
The Position of the Parties
[9] The applicant submits that the agreement was no longer in existence at the time of separation because the respondent decided to cancel the agreement by destroying it shortly after it was signed saying: “my father wanted the agreement, not me”.
[10] Moreover, the applicant submits the agreement is unenforceable because she signed under duress and/or without adequate financial disclosure before signing the agreement.
[11] She also submits that it is impossible to know what were the terms of the agreement and therefore the court must disregard it.
[12] More particularly, it is impossible to know what type of property was to be out of her reach. Was it all the property owned by the respondent at separation or only business property the respondent received from his father? The applicant submits it was only the business properties he transferred to his son that Bernard Thibodeau wanted protected and she is still bound by that promise.
[13] On the other hand, the respondent denies that he destroyed the agreement. He insists this is a pure fabrication by the applicant. The respondent submits that there is sufficient evidence for the court to conclude that the parties agreed that they were to be totally separate as to property before and after marriage. As such, the agreement is a complete bar to a claim by the applicant in any property owned only by him at the date of separation.
[14] The applicant testified that spousal support was not addressed in the agreement. Both Mr. Smith and the respondent could not recall whether the agreement contained a spousal support waiver.
Analysis
[15] Was the agreement enforceable at the time of trial
If the respondent tore up the agreement indicating his repudiation of the agreement, he may not rely on the agreement as a defence to the applicant’s claim for equalization. Similarly, if the applicant can show that she signed the agreement under duress or without proper financial disclosure, the court could set aside the agreement.
[16] I have no hesitation in finding that there is no evidence to justify setting aside the agreement for lack of adequate disclosure. The only relevant disclosure here would be the disclosure of Bernard’s assets. The applicant knew Bernard was a very wealthy man and that it was more likely than not that Bernard would eventually transfer by will or gift substantial property. She was not entitled to get the particulars of that wealth. She had all the disclosure she needed. In any event, disclosure of Bernard’s assets was not the disclosure required by law. The required disclosure was the disclosure of the financial situation of the respondent. The applicant had that disclosure because she agrees the respondent had nothing of value at the time the agreement was signed.
[17] In relation to duress, I accept that duress need not be physical. It can consist of coercion, intimidation or the application of illegitimate pressure that creates a situation where one party has no realistic alternative but to submit to the pressure. Here, there is no evidence whatever Bernard applied any pressure. He suggested they would be better off buying a home and was prepared to help them do that. In return, he wanted an agreement to protect the property he would give or bequeath to his son. This is not duress. The applicant wanted to move to a bigger apartment and had identified some apartments. The opportunity to have a house immediately was very appealing to the applicant but she was not coerced, intimidated or pressured into signing. She had a realistic alternative but she chose to accept Bernard’s offer. The applicant has failed to prove duress that would allow the court to set aside the contract.
[18] What was the content of the agreement?
The agreement created a regime of separation of property which had the effect of depriving the parties to an equalization of property on separation. Any asset was the property of its owner. Ownership would first and foremost depend on which party could prove title to the asset. There was nothing in the evidence which allows the court to find that the agreement also excluded claims by way of resulting or constructive trust. I find the agreement was silent on these issues. Finally, I find the agreement did not contain a waiver of spousal support and income derived from the assets owned by the respondent would be available to satisfy the spousal support obligation.
[19] Did the respondent destroy the agreement in front of the applicant saying his father wanted this agreement not him?
[20] The only direct evidence that this actually occurred is the testimony of the applicant. The evidence of the respondent is that it never happened.
[21] The analysis of this question requires a careful weighing of the parties’ credibility in the context of all the surrounding circumstances existing at the relevant time as revealed by the totality of the evidence.
[22] I have come to the conclusion that the respondent did in fact destroy the agreement as described by the applicant for the following reasons.
[23] The respondent tearing up the agreement at that time and these circumstances makes a lot of sense in view of the overall circumstances revealed by the evidence including the respondent’s own views about his father’s demand.
[24] First of all, at that time the respondent was not asking his wife to sign an agreement. It was purely his father’s idea which he did not necessarily share. On the one hand, he did not feel a need to move into a house as he felt the apartment, they were renting was just fine. In examination-in-chief, he testified as follows
“A. Well, originally the moving somewhere else, like, we had a two-bedroom apartment. It was a big apartment. It’s still a bungalow. The lady upstairs like raised all her kids in her upstairs apartment, so the apartment was, you know, and people were always saying it’s a small apartment. It was a big apartment. It was nice apartment. The considering of moving, we had talked about it. That maybe we’d have to go into a bigger two, three bedrooms, you know, but it was big enough, and we weren’t making thousands of dollars a paycheck there. We were at minimum wage jobs. She was in college at that time and I think she was working part-time at Texan Burger, which is like a burger, burger joint, burger truck, like, like thing there. So we couldn’t really afford all that much. We had cheaper rent because I was doing a bit of maintenance for the lady, you know, cutting her grass and stuff. [Transcript October 30, p.5 and 6]
[25] And later at p. 14:
Q. Did your father seek any input from you with regards to the cohabitation agreement?
A. Well, he said, I remember his saying that he wanted to have a cohabitation agreement, and he made it pretty clear that it was to protect his assets and to protect mine and didn’t really ask for input. We probably talked about it a bit at the table. What was said, I don’t know.
Q. Did you provide any disagreement with regard to the content? Did you say, ““No, dad, I don’t think that’s fair. I don’t want to sign that.””
A. Well, I remember raising the question, you know, “” Why do we need this?”” You know, and that’s where he came up with, “” Well it’s to protect, protect, protect.”” And it’s all I really remember about the actual talk at home there.
[26] And later, at p. 6:
A. Well, my mom and dad were there and Nathalie of course, and we were in the dining room. My dad’s a business guy, he always did business in dining rooms. I don’t know why. Not in restaurants, but in dining rooms. And he sat down and said basically he wanted a cohabitation agreement that would protect his assets, that would protect if he bought a house that he wouldn’t lose the house, or we wouldn’t lose the house, it would be his house, and we – he left on that. He never stayed very, very long. He left on that and me and Nathalie talked about it. And like we didn’t need to move, we didn’t have to move, but we talked about it, and said, “” Well, you know, it’s our chance to have a house because we don’t have money to buy a house anyways.”” … But my father called us and set up a meeting at Mark’s, Mark Smith’s office to go over a cohab agreement …
[27] The respondent viewed his father as a tough business man. During the examination-in-chief, at p.7 he testified:
A. … my father worked 33 years for Bell Canada. He was a business guy, you know, he was business, business, business, business. Did my father ever tell me he loved me? Think I could count on it one, one hand. You know, he was a business guy. He was a nurturing guy, he like to take care of his family, but he was a business guy. When you walked in, you could tell that’s a business guy. Some people walk in you say, “” Okay that’s a [indiscernible] that guy is no good.”” You know. But him you knew that when he walked in, he was a businessman.
[28] The applicant testified about the following discussion the parties had before she signed the agreement.
“Q. Okay. So, during the period leading up to the execution of the cohab agreement, did you have discussions with Patrick Thibodeau about the agreement itself?
A. You mean executing, you mean signing it?
Q. Signing, sorry, my apologies, yes.
A. Okay. Leading up to it, yes, we did talk about it that night after his dad left. He told me I didn’t have to sign it.”
[29] The respondent accompanied the applicant to the lawyer’s office where she signed the agreement after getting independent legal advice. The parties had a conversation afterwards and the applicant made it clear she was not happy because she would be left with nothing.
[30] The applicant testified that the respondent tore the agreement as they were moving into the house on Arthur Street; the house that Bernard had financed and on which title he had registered a mortgage that the parties had to repay $500.00 per month. According to the applicant, she asked the respondent where they would keep this agreement and the respondent tore it up saying basically that it was signed for his father not him. I find in all the circumstances, the fact the respondent did not want such an agreement and the timing of the incident, that it is more probable than not that the respondent tore up the agreement with the intention of terminating it. I find this as a fact. I reject the evidence of the respondent that he did not tear up the agreement. I accept the evidence of the applicant and I find none of the point raised by the respondent in an attempt to discredit the applicant convinces me otherwise. In fact, most of those submissions are the result of the confusion created by questions going to the content of the agreement and or legal issues about exclusion and tracing than actual contradictions of fact in the applicant’s testimony. For an example, the applicant’s answer “its murky” is an answer to unfair questions about the legal effect of exclusions and possible trust issues on the applicant’s claim to income from the capital assets left to the respondent by his father as compared to the income derived therefore. This arises in cases where the existence, validity and enforceability of an agreement are subject to a bifurcated trial process. I find the applicant a credible witness and accept her evidence on this issue.
[31] I find the agreement was no longer in effect and did not bind the parties on the date of separation.
[32] If so advised, counsel may provide me with written submissions on costs. The applicant; within 20 days and the respondent; 15 days thereafter.
RELEASED: January 4, 2021 The Honourable Justice M.Z. Charbonneau