Court File and Parties
COURT FILE NO.: FS-19-075 (Owen Sound) DATE: 20220317 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Stephanie Erica Henderson Applicant
-and-
David George Henderson Respondent
Counsel: Jason J. Murphy, for the Applicant James S. Marks, for the Respondent
Heard: January 25, 2022 by video conference Before: Justice R. Chown
Reasons for Decision
[1] The parties reached a partial settlement in April of 2021. They settled the issue of spousal support and sale of the matrimonial home. They agreed to execute a Miglin release.
[2] The respondent now moves to amend his answer to claim occupation rent. He also asks for an order that the applicant sign the Miglin release. The applicant opposes, arguing that the amendments are an attempt at an end-run around the partial settlement.
[3] The parties separated on December 3, 2018 after a 12-year relationship. They have two children, age 11 and 9. At separation, the respondent moved out of the matrimonial home. The parties paid carrying costs for the matrimonial home from the joint account which contained proceeds from the sale of their cottage.
[4] The respondent did not initially pay child or spousal support. It was his position that he should not have to pay support while paying half of the carrying costs for the matrimonial home from the joint account.
[5] The parties engaged in extensive negotiation including more than one round of mediation but were unable to resolve their issues.
[6] The respondent brought a motion for the sale of the matrimonial home and the applicant brought a motion for child and spousal support. The motions were returnable on April 21, 2021.
[7] The parties exchanged offers to settle the motions. On April 16, 2021, the respondent made an offer which provided:
All terms herein are severable by their headings and may be accepted individually without prejudice to the other terms not accepted.
PART A (i)- Sale of the matrimonial home
The jointly owned matrimonial home shall be sold on terms as set out in the draft Order attached hereto as Schedule "A".
For greater certainty, the terms for the sale of the matrimonial home shall include the following: a. The closing date shall not be earlier than June 30, 2021. b. Upon the sale of the property: i. 50% of the net proceeds of sale shall be distributed to the Applicant. ii. At the Applicant's option, up to a further 50% of the net proceeds of shall be distributed to the Applicant as a without prejudice, uncharacterized advance by the Respondent, with the balance held in trust.
Upon acceptance of this Part A, the Respondent shall take out an Order in the form attached hereto as Schedule "A", on consent.
PART E – Spousal support
- Dave shall pay Stephanie a lump sum of $110,000 in lump sum spousal support as a final settlement of Stephanie's claims for spousal support and retroactive spousal support, and the parties shall execute Miglin releases.
[8] On April 19, 2021, the applicant accepted the above parts of the respondent’s severable offer. The accepted offer was turned into two separate consent orders dated April 23, 2021, which I signed on April 27, 2021.
[9] The matrimonial home was sold on August 22, 2021 and the sale closed on October 15, 2021. The day after the home sale went firm (September 1, 2021), the respondent presented a claim to the applicant for reimbursement of the carrying costs for the matrimonial home.
[10] What’s at stake is roughly $80,000, which is about half of the carrying costs for the matrimonial home during the time that it was solely occupied by the applicant.
The Parties’ Positions
The Respondent’s Position
[11] The respondent submits that, under rule 11(3), it is mandatory that the amendment be permitted. He submits that the only “disadvantage” or prejudice that would flow to the applicant from the amendment “is that which would be inevitable as a result of any successful plea.” If this type of prejudice could prevent an amendment, “only unmeritorious amendments would be allowed – an obviously ludicrous proposition”: Hanlan v. Sernesky.
[12] The respondent says:
spousal support and occupation rent are two separate issues. An award for spousal support can be set off against an award for occupation rent, but a court decides each issue on its own merits, tests, and factors. The existence of a claim for occupation rent does not affect a court’s analysis of spousal support and vice versa.
[13] The respondent further submits that the applicant had full opportunity to analyze the benefits of the settlement offer, and the risks of not accepting it. He valued the claims. He made an offer. The applicant accepted it, and she was paid in accordance with its terms. The offer was made with the motions pending so she faced risk if she did not accept it.
[14] The respondent further submits that his offer to settle was a series of independent, stand-alone offers. He says it was not connected to prior negotiations. Although there were negotiations including mediation, there were no negotiations that led to the applicant accepting his offer. It was accepted by way of a notice of acceptance of offer. He says there was offer and acceptance, and a binding agreement with adequately certain terms was created. Those terms do not, in his submission, address any potential claim for occupation rent.
[15] The respondent says he only advanced the claim for occupation rent after the settlement because until then he did not have a claim for occupation rent: “The reason I did not have a claim for occupation rent was because at that point I had not paid any spousal support. It was my position that I should not have to pay spousal support plus ½ the carrying costs while Stephanie occupied the matrimonial home.”
[16] The respondent distinguishes the cases relied on by the applicant on the basis that they all involve amendment requests made very late in the litigation process, typically with the goal of advancing suspect or unmeritorious claims. Here, the litigation has not even advanced to questioning.
The Applicant’s Position
[17] The applicant says the amendments should not be allowed as they would cause prejudice. She would not have settled on the terms she did, and she would not have used the settlement proceeds as she did, if she knew that the respondent might advance a claim for occupation rent. In her submission, the claims for occupation rent or post-separation household expenses were interconnected with her claim for spousal support and with the sale of the matrimonial home. She claims the amendment would cause non-compensable prejudice to her. She will now have to fight a battle over occupation rent which she says was subsumed in the settlement of the issues of spousal support and the sale of the matrimonial home. She says she compromised on her positions on these issues to move things closer to a complete resolution. She says she used the settlement funds to buy a new home, mortgage free, and that because she recently became self-employed, she could not qualify for a mortgage. “I would not have taken these steps, or would have taken different steps, if I thought that Dave could simply turn around and amend his claim to seek new relief effectively clawing back the spousal support settlement.”
[18] The applicant says the settlement included resolution of the occupation rent and post-separation carrying costs for the matrimonial home. She says the respondent is attempting to renege on the settlement through his proposed amendments. She argues that several cases have held that leave to amend a pleading may be denied where leave is sought after concessions or settlements of issues in the litigation are made: Moghimi v. Dashti, 2016 ONSC 2116; Singal v. Singal, 2019 ONSC 2758; Lerus v. Vilgrain, 2020 ONCJ 77, at para. 332 to 333. She acknowledges that in these cases the amendments were requested later in the litigation process than here, but that was only one of the factors in these decisions.
[19] The applicant also points to several things that she says demonstrates bad faith on the part of the respondent: his initial refusal to agree to closing the sale of the matrimonial home unless the applicant paid him half of the carrying costs; several intemperate, gloating text messages from the respondent sent after the partial settlement; and the fact that the issue of occupation rent was not raised until the day after the house sale went firm while, at the same time, the respondent withdrew all outstanding offers to settle. She argues that “The existence of bad faith is an exception to everything”: Stefureak v. Chambers, at para. 19, and is a basis to refuse the amendment.
[20] The applicant argues that occupation rent, the sale of the matrimonial home, and spousal support are issues that are inextricably linked. She points to the factors courts consider in assessing a claim for occupation rent, which include:
a. “the conduct of the non-occupying spouse, including the failure to pay support”; b. “the extent to which the non-occupying spouse has been prevented from having access to his or her equity in the home”; c. “whether the non-occupying spouse moved for the sale of the home”; d. “whether the occupying spouse paid the mortgage and other carrying charges of the home”: Higgins v. Higgins (2001), 19 R.F.L. (5th) 300 (Ont. S.C.J.), at p. 320; Ganie v. Ganie, 2019 ONSC 1128, at para. 288.
She argues that this list of considerations shows how closely intertwined the issues are.
[21] The proposed Miglin release contains language which the applicant says she cannot truthfully sign. She says:
a. I cannot agree that we have “negotiated the release in an unimpeachable fashion”. I believe Dave’s actions demonstrate that he has negotiated in bad faith. b. I cannot agree that the terms of the Agreement “fully represent our intentions and expectations”. The release does not represent my expectations if Dave can simply turn around and make a new claim that would claw back nearly all of my spousal support settlement. c. I cannot agree that “the terms of this Agreement substantially comply with the overall objectives of the Divorce Act”. If my compromise amount of spousal support is to be effectively repaid to Dave than I do not believe that such an agreement meets the objectives as set out in paras. 15.2(6)(a), (c) or (d) of the Divorce Act. d. I cannot agree that “the terms of the Agreement are a final and certain settling of all spousal support issues” [emphasis added]. If Dave had made his housing costs claim prior to or at the same time as we settled spousal support via a lump sum, I would not have agreed to the lump sum or would have negotiated a higher amount. [Emphasis in original.]
Issues
[22] The respondent frames the issues as follows:
a. Would the requested amendments cause non-compensable prejudice to the applicant? b. Should the amendments be denied on the basis that the respondent has acted in bad faith? c. Should the court order the applicant to sign the Miglin release?
Discussion
A. Would the Amendments Cause Prejudice?
[23] I agree with the applicant that the issues of occupation rent, sale of the matrimonial home, and spousal support are interconnected. I specifically disagree with the respondent’s submissions that “The existence of a claim for occupation rent does not affect a court’s analysis of spousal support and vice versa.” The list of factors considered in a claim for occupation rent, as set out in Higgins, shows just how intimately connected the issues are.
[24] The respondent’s own evidence shows this as well. He said, “The reason I did not have a claim for occupation rent was because at that point I had not paid any spousal support.”
[25] Allowing the respondent to amend his answer to claim occupation rent would give him an advantage from not disclosing his position in his pleading. The respondent received the benefit of letting the applicant assess his offer and letting her do her risk assessment in the motions without knowing that he would advance a claim which involved related factors. She says she compromised when she accepted the offer. No doubt, in her mind, she did compromise. Requiring her to now face a closely intertwined claim after making such a compromise would be unjust. This is exactly the kind of non-compensable “disadvantage” which rule 11(3) is designed to prevent (or non-compensable prejudice which rule 26.01 of the Rules of Civil Procedure is designed to prevent). Allowing this would encourage lying in the weeds with an amendment until after a partial settlement.
[26] I also agree with the applicant that the effort to claim occupation rent amounts to an attempt to do and end-run around the settlement. The settlement effectively subsumed the issue of occupation rent. Holding otherwise would (to borrow from the language of Shen v. Shen, [2007] O.J. No. 4361, 231 O.A.C. 53 (Div. Ct.), at para 12) “seriously undermine the benefits provided to litigants by the rules pertaining to settlements.” It would discourage partial settlements. Before entering into a partial settlement, lawyers and litigants would have to predict the changes that opposing parties might seek to their pleadings. This would add to the complexity of evaluating partial settlement proposals. It could even create a dynamic whereby family lawyers would be leery about recommending partial settlements.
[27] For these reasons, I dismiss the respondent’s motion amend his answer to include proposed paragraphs 29 to 41.
B. Should the amendments be denied on the basis that the respondent has acted in bad faith?
[28] Given the foregoing, it is not necessary to address this issue.
C. The Miglin release
[29] Counsel both agreed that the language of the Miglin release is largely generated by DivorceMate and it is well-known. The applicant did not take the position that the text of the Miglin release was unexpected or somehow inconsistent with what she agreed to. Rather, her position was that if the applicant was allowed to amend his pleading, the attestations in the Miglin release would not be accurate.
[30] The applicant agreed that the parties “shall execute a mutual ‘Miglin release’.” Given my ruling regarding the amendments, I suspect that the applicant will no longer have difficulty signing the Miglin release, but I will address this by setting consequences if she does not.
Disposition
[31] The respondent’s motion to amend his answer is allowed in part and dismissed in part. He shall not be permitted to make the amendments to claim occupation rent contained in paragraphs 29 through 41 (inclusive) of his proposed amended answer but shall be permitted to make the other amendments.
[32] Provided there is no appeal from this decision, if the applicant has not signed the release within 60 days, the respondent may bring a 14B motion on 14 days notice for a dismissal of the claim for spousal support. This motion shall be directed to my attention.
[33] I will receive written submissions on costs. The applicant’s submissions within 14 days. The respondent’s submissions within 14 days after that. Submissions are to be not more than three double-spaced pages plus bills of costs, costs outlines, dockets, offers to settle, or other relevant attachments.
Chown J. Released: 2022-March-17