Court File and Parties
COURT FILE NO.: FC-18-2371 DATE: 2022/01/31 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: RENEE ANNE MARIE HAMILTON, Applicant -and- GEORGE SCOTT HAMILTON, Respondent
BEFORE: Justice D. Summers
COUNSEL: Sarah Hart, for the Applicant Graeme B. Fraser, for the Respondent
HEARD: June 30, 2021
ENDORSEMENT
[1] The respondent brings this motion under rule 18(13) of the Family Law Rules, O. Reg. 114/99, seeking an order in accordance with draft Final Partial Minutes of Settlement that he says reflect the terms of an accepted offer. He relies on an email exchange between counsel as setting out agreed terms for the transfer of the jointly owned matrimonial home from the applicant to himself. The applicant opposes the motion. She says they had not resolved all essential terms and that at best, the email exchange reveals an unenforceable agreement to agree.
[2] The respondent’s motion is dismissed. The reasons that follow explain my conclusion.
The Email Exchange
[3] On an earlier contested motion, I ordered the sale of the parties’ jointly owned matrimonial home. My reasons can be found at 2021 ONSC 274. The email exchange between counsel began shortly thereafter and on January 15, the applicant’s former lawyer proposed a realtor and a list price of $900,000, subject to the realtor’s advice. The respondent replied with a global offer to settle that the applicant rejected. A copy of the offer was not provided to the court.
[4] On January 20, the applicant’s lawyer followed up with the respondent to ask whether her client’s proposed agent and list price were acceptable. On January 26, counsel wrote again to inquire if the respondent was still prepared to purchase the home at $900,000. The respondent’s counsel replied in the affirmative. Then, on January 29, he made an offer to purchase at $900,000 and said he would assume the mortgage. The respondent also set out how he proposed to allocate the line of credit balance between them.
[5] The applicant’s counsel countered the proposal and allocated a reduced portion of the line of credit to her client. The respondent held firm but clarified that the amount allocated to the applicant would be fully deductible to her as a debt in the equalization process.
[6] On February 5, the respondent’s counsel sent another email. He essentially reiterated his offer and set out the line of credit amounts that each would pay.
[7] The applicant’s counsel responded with her calculation of the net amount to be received by her client under the respondent’s offer, namely, $165,870.15. She asked for confirmation of this amount and whether the transfer could be completed within 45 days. The reply was yes to the amount, but the respondent sought 90 days to get his financing in place.
[8] Later that same day, the applicant’s counsel sent an email to her counterpart saying, “Looks like we finally have a deal, my client has agreed on the value and on the 90-day timeline. Would you be able to get us something in writing that they can both sign since you’ve had access to all the calculations?” The respondent’s counsel replied, “That’s good news. I will prepare something by early next week. Thanks very much”.
[9] On February 12, the respondent’s lawyer forwarded draft Final Partial Minutes of Settlement to the applicant’s lawyer for review. The covering email said, “Please confirm if acceptable, otherwise let me know if there are any changes required.” On February 18, the applicant’s counsel replied that she had reviewed the terms in their entirety with her client, and they were not acceptable to her. No other explanation was given, and she communicated her client’s instructions to proceed to list the home for sale in accordance with the court order.
Case Law
[10] The decision of the Ontario Court of Appeal in Bogue v. Bogue, 1999 CanLII 3284 (ON CA), [1999] O.J. No. 4310, is instructive on the legal issues raised in this motion. The court stated at para. 12:
It is an over-simplification to say that there cannot be an agreement to agree. The true legal position was explained by Robins J.A., in Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 79 D.L.R. (4th) 97 (Ont. C.A.) at pp. 103-04:
As a matter of normal business practice, parties planning to make a formal written document the expression of their agreement, necessarily discuss and negotiate the proposed terms of the agreement before they enter into it. They frequently agree upon all of the terms to be incorporated into the intended written document before it is prepared. Their agreement may be expressed orally or by way of memorandum, by exchange of correspondence, or other informal writings. The parties may "contract to make a contract", that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.
However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. In other words, in such circumstances the "contract to make a contract" is not a contract at all. The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself . . . [Emphasis added]
And at p. 105:
If no agreement in respect to essential terms has been reached or the terms have not been agreed to with reasonable certainty, it can only be concluded that such terms were to be agreed upon at a later date and until that time there would be no completed agreement.
[11] More recently in Bouchard v. Poulin, 2017 ONSC 3328, Justice Shelston applied Bogue, and held at paras. 16, 17 and 33-35:
[16] In the Bogue decision, Justice Rosenberg finds that there was evidence to determine that there was a final settlement, there was no expressed discussion about the extraordinary release sought by the husband and that the parties had agreed to bind themselves to a settlement and what remained was for the lawyers to reduce that settlement to a formal document. He did not find that that was an agreement to agree. At paragraph 15 of the decision, Justice Rosenberg states:
Generally speaking, litigation is settled on the basis that a final agreement has been reached which the parties intent to record informal documentation and “parties reach a settlement should usually be held to their bargains”.
[17] If the court finds that at the end of negotiations where the litigants had agreed to bind themselves to a settlement and it only remained for the lawyers to draft a formal document, the parties have entered into a contract and not “an agreement to agree”. For there to be a binding contract, all the basic and essential components of the creation of the contract must be present. (Volmer v. Jones, 2007 CanLII 7999 ONSC).
[33] I find that at the meeting of December 22, 2016, the parties agreed in principle to the applicant transferring her share of the Company to the respondent. I accept the evidence of Mr. Ranger and his client that they had an agreement on specific terms. However, I do not accept their evidence that the December 22, 2016 agreement contained all the essential terms of a binding contract. I accept the evidence of the applicant that she had to consider other essential terms that required a complete and all-encompassing agreement that covered not only the Company but the matrimonial home.
[34] I find when one considers the multitude of issues that had to be addressed in the transfer of the applicant’s interest in the Company as well as dealing with the sale of the matrimonial home, it is not realistic to believe that such a contract would be restricted to the terms contained in one short as alleged by the respondent.
[35] Further, if the parties had reached a contract on the single paragraph as alleged by the respondent, then why wasn’t the contract prepared by hand or typed at the meeting before anyone left the meeting. I conclude that the reason it was not so prepared was because only general terms had been agreed to and a complete contract had to be drafted. To accept the respondent’s position would ignore the other issues that he himself has raised in his redrafted agreement of January 5, 2017.
[12] Similar to Bouchard, the email exchange between counsel in this case shows that general terms had been agreed to, but essential terms intended to govern the contractual relationship had not been settled. In my view, the statement, “Looks like we finally have a deal” when combined with the request to receive a draft agreement that both parties can sign, indicates that legal obligations were not to arise until a formal contract had been approved and executed. Seen in that context, counsel’s statement does not mean “we have a deal”. The conclusion that the essential terms of a final deal had yet to be reached is also consistent with the language used by the respondent’s counsel upon tendering his draft Minutes when he asked the applicant to “confirm if acceptable, otherwise let me know if there are any changes requested.”
[13] I turn now to my analysis of the draft Final Partial Minutes of Settlement to further explain my conclusion that, while there was an agreement on certain terms reached in the emails between counsel, the exchange did not contain all the essential terms of a binding contract.
Draft Final Partial Minutes of Settlement
[14] Some provisions in the draft settlement document, and some omissions from it, support my conclusion that the email exchange between counsel did not include all the terms essential to the alleged agreement.
[15] I start with paragraphs 3.2, 3.4 and 3.5 of the draft Minutes prepared by the respondent’s counsel that sets out the starting price of $900,000 and the various calculations resulting in the net payment to the applicant of $165,870.15. They read as follows:
3.2 The parties have agreed that the Respondent will purchase the Applicant’s interest in the matrimonial home, within 90 days of signing this Agreement, based on a jointly shared value of $900,000.00.
3.4 The Respondent will obtain re-financing and assume full liability for the existing mortgage. $900,000.00 - $399,864.27 = $500,135.73, to be divided between the parties ($250,067.86) and to be used to pay off the LOC as follows:
(i) From her share, the Applicant will pay $84,197.71 towards the LOC, calculated as follows: $75,000.00 was borrowed on the LOC by the Applicant for her business;
(ii) At valuation date, the total amount owing on the LOC was $93,395.42; subtracting $75,000.00 from this amount leaves a difference of $18,395.42; the parties agree to split this amount equally = $9,197.71;
$75,000 + $9,197.71 +$84,197.71 = Applicant’s payment;
(iii) From his share, the Respondent will pay $43,713.55 towards the LOC, calculated as follows: $9,197.71 = $34,515.84 (amount borrowed the LOC since valuation date) = $43,713.55 = the Respondent’s payment;
(iv) After the payment of $84,197.71 from her share of $250,067.86, the Applicant will receive $165,870.15 for her interest in the matrimonial home, to be transferred to the Respondent;
(v) The parties agree that while the above calculations are exact, the numbers must be considered approximate, or as close as possible, as there may be some adjustments required, based on e.g., shifting mortgage amounts, interest, etc.
3.5 The Respondent will continue to be solely responsible for any and all liabilities related to the matrimonial home, including but not limited to property insurance, property taxes, municipal fees and all utilities, until the transfer is registered, and will indemnify the Applicant from any such liability.
[16] Several questions arise out of and remain unanswered by these paragraphs. First, what is the meaning of the preamble to paragraph 3.4: “The respondent will obtain refinancing and assume full liability for the existing mortgage?” Does it mean he will re-finance in an amount sufficient to pay off the existing mortgage plus the additional funds needed to discharge the line of credit and pay $165,870.15 to the applicant? In context, do the words “assume full liability for the existing mortgage” mean, as the applicant appears to have contemplated in paragraph 8 of her affidavit, or that the respondent will simply take responsibility for paying the existing mortgage? If it is the latter, nowhere does the draft Minutes require the respondent to indemnify the applicant for the existing mortgage, should she be called upon to make any payments. Paragraph 3.5 provides an indemnity that could extend the ongoing mortgage payments however, it ends when the house transfer is registered.
[17] It is clear in subparagraphs 3.4(i) and (iv) that the applicant will receive the funds to pay off her agreed portion of the line of credit and retain the agreed upon amount of $165,870.15. When read together with paragraph 3.2, subparagraph (iv) also indicates the applicant’s obligation to transfer her interest in the home to the respondent within 90 days, however, the draft document provides no such clear deadline or obligation on the respondent to pay off his share of the line of credit before title is transferred to him. Paragraph 3.4(iii) requires him to pay his portion of the line of credit “from his share”. This phrase refers back to the preamble that sets out how the equity in the home is to be divided between the parties, namely, $250,067.86 each.
[18] The difference in the parties’ circumstances is this. The respondent will not receive his share of the equity in cash, rather, he will retain title to the house in his sole name. Moreover, since the amount that he is required to re-finance is not specified, would the alleged agreement contemplate the line of credit remaining open and secured against title, such that the respondent could pay off his share by making payments over time? If the alleged agreement is such that the respondent would assume, but not discharge the existing mortgage, the applicant would have an interest in ensuring that both parties make the described lump sum payments on the joint line of credit before she transfers title, and that it is closed and discharged from title, at that time.
[19] To paraphrase Justice Shelston in Bouchard, it would not be realistic to expect that the parties had reached a binding agreement when they had not specifically addressed and agreed upon terms such as these.
[20] There are also other clauses in the draft settlement document that were clearly not discussed between the parties. They include: the designation of the matrimonial home as their principal residence from the date of purchase until the year of transfer; the related requirement to indemnify the other for any income tax liability arising from a breach of the principal residence clause; and the provision requiring each party to pay their own costs for the negotiation and preparation of the Final Partial Minutes of Settlement.
[21] These issues may have proven contentious and further negotiations, had they happened, may or may not have culminated in an agreement. It is perhaps unusual that the applicant did not counter with suggested revisions, however, she did not. Nor was it argued that she was obligated to continue negotiations in an effort to reach agreement on the essential terms that would have allowed them both to sign off rather than take the position that she did and revert to the sale of the property as ordered by the court.
Conclusion
[22] The respondent’s motion is dismissed. If counsel do not agree on whether costs should be paid, and if so, by whom and in what amount, they may make written submissions on the issue, not exceeding three pages excluding Bills of Costs and any offers to settle. Submissions shall be double spaced using twelve-point font. The deadline for costs submissions is February 28, 2022.
Justice D. Summers
Date: January 31, 2022
COURT FILE NO.: FC-18-2371 DATE: 2022/01/31
ONTARIO SUPERIOR COURT OF JUSTICE
RE: RENEE ANNE MARIE HAMILTON, Applicant -and- GEORGE SCOTT HAMILTON, Respondent
BEFORE: Justice D. Summers
COUNSEL: Sarah Hart, for the Applicant Graeme B. Fraser, for the Respondent
ENDORSEMENT
D. SUMMERS J.
Released: January 31, 2022