NEWMARKET COURT FILE NO.: FC-20-246-00 DATE: 20230803 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Joanne McIntyre Applicant – and – David McIntyre Respondent
K. Bales and H. Kindness, Counsel for the Applicant J. Rosenberg, Counsel for the Respondent HEARD: July 26, 2023
Ruling on Motion
Overview
1After engaging in negotiations, a failed mediation and litigation for almost five years, the parties negotiated terms of a global financial settlement at a settlement conference held August 30, 2022 (the “Settlement Conference”). During the conference Bennett J. assisted the parties collectively and through caucusing, ultimately dictating an agreement (the “negotiated terms”) on the record.
2Both parties are experienced lawyers although neither practices family law. While the Applicant (“wife”) was represented by counsel throughout this matter, the Respondent (“husband”) discharged his lawyer in 2021, following the failed mediation.
3The wife argues that the husband’s intentions and actions during and following the Settlement Conference support the conclusion that the negotiated terms form a binding agreement. The wife states that all aspects of the test for enforceability are met, and that the husband has the onus (which he has not met) to persuade me to exercise my discretion not to enforce the negotiated terms.
4The husband disagrees that there is a binding agreement. The husband submits that he was disadvantaged, had no access to independent legal advice (“ILA”), was under extreme financial pressure, and did not understand the “Miglin” release or the proposed settlement. He believed that the negotiated terms were subject to the receipt of ILA and the execution of a written agreement. The husband also argues that the negotiated terms are untenable and unconscionable. He states that the terms result in significant financial prejudice on the issues of child and spousal support, post-separation accounting and costs.
5The negotiated terms are as follows: (a) the parties will equally divide the net proceeds from the sale of the matrimonial home and the Cayman Islands property (“Cayman”); and, (b) the husband will pay the sum of $150,000 to the wife from his share in full satisfaction of all claims. During the Settlement Conference Bennett J. explained the fundamental aspects of a “Miglin” release to be included in the Minutes of Settlement.
6The parties acknowledged on the record that they understood and agreed to the negotiated terms.
7Bennett J. once again summarized the negotiated terms in his endorsement dated September 5, 2022, as follows: (a) the sum of $1.9 million representing the net proceeds of sale will be notionally divided equally; (b) The husband will pay the sum of $150,000 to the wife from his share. This payment will be in full satisfaction of any claims between the parties including equalization, prospective and retroactive spousal support, retroactive child support and section 7 expenses, or post-separation adjustments. The terms are intended to achieve a “clean break” with no future claims between the parties.
8The endorsement directed the parties to execute a “Miglin” mutual release with respect to any future spousal support claims.
9Bennett J. recommended that the parties set aside sufficient funds to cover any capital gains taxes or include a provision committing them to pay the taxes. He noted that the capital gains tax issue was not addressed during the Settlement Conference.
10The endorsement included a recommendation that the husband, although a lawyer himself, retain experienced family law counsel to give him advice on the agreement/release/minutes of settlement to be signed.
11The husband made two requests in September 2022 for the release of funds from trust to enable him to retain a family lawyer. He also requested that the agreement be provided in draft so that he could give comments. The wife agreed to both requests. Funds were released prior to the provision of the draft Minutes of Settlement (“draft Minutes”) on November 1, 2022.
12On November 11, 2022, the husband’s newly retained counsel advised that his client was declining to execute the draft Minutes, and that he withdrew all prior offers to settle.
13The parties have been unable to resolve this matter notwithstanding two re-attendances before Bennett J. in January and June 2023.
14With respect to the summary judgment motion the parties agree that if I find in favour of the wife, then there is no genuine issue that requires a trial. In this scenario the case is resolved in accordance with the negotiated terms derived from the Settlement Conference. However, if I decline to award summary judgment, the next step is a trial on all outstanding claims.
15The issues that I must decide are as follows:
(a) Did the parties reach a binding settlement at the Settlement Conference? i. Was there a “meeting of the minds” as observed by a reasonable observer? ii. Was there a consensus on all essential terms of the agreement, or is the Court being asked to make an agreement for the parties? iii. Was the agreement conditional upon and subject to the execution of a formal contract? (b) If there was a settlement, should I exercise my discretion not to enforce the settlement?
16I find that there is no binding settlement. The negotiated terms contemplated that the husband would have the opportunity to retain family law counsel (and, as such to obtain independent legal advice). Once the husband reviewed the draft Minutes with counsel, the lawyer advised that his client did not consent to the terms that had been negotiated.
17In light of my findings above, I do not need to address the discretion to enforce a settlement. However, in the alternative that there is a binding settlement I would direct the enforcement issue to a trial. This is a genuine issue that requires a trial.
Background Facts
18The parties married in 1992, separated in 2017, and commenced this litigation in 2021.
19The husband was previously a corporate (and M & A) lawyer in downtown Toronto. He now resides in a small town in British Columbia where he works remotely and on a part-time basis. The wife is employed as a part-time crown attorney and is also in receipt of long-term disability payments.
20The parties had a substantial net worth at the time of separation, as evidenced by the $1.9 million in net proceeds of sale from the matrimonial home and Cayman. Both parties continue to provide some financial support to the three adult children.
21During the Settlement Conference both parties expressed a desire to resolve the dispute on a full and final basis.
Law and Analysis: The Enforceability of Negotiated Terms Derived from the Settlement Conference
(a) Did the parties reach a binding settlement at the Settlement Conference?
22It is well-established that binding agreements can be enforceable even in cases such as the one before the Court where the agreement fails to comply with the formal requirements set out in section 55(1) of the Family Law Act, R.S.O. 1990, c F.3 (the “Act”).
23However, there are public policy reasons for the requirement that a higher standard must be met in the absence of compliance with section 55(1) of the Act. As stated recently by the Supreme Court of Canada in Anderson v. Anderson, 2023 SCC 13, at para. 42, “statutory formalities serve to impress upon spouses the significance of their agreement and to encourage and preserve the validity of binding family property settlements.”
24I must decide whether the negotiated terms meet the test for a finding that there was a binding settlement: Swift v. Swift, 2010 ONSC 6049, at para. 38.
(i) Was there a “meeting of the minds” as observed by a reasonable observer?
25Having reviewed the parties’ affidavits and the transcripts, I conclude that a reasonable observer would find that there was a meeting of the minds during the Settlement Conference for the following reasons:
(a) Both parties, who are sophisticated litigants, were motivated to resolve the matter in its entirety; (b) Bennett J. identified that the negotiated terms took into account various factors that supported each party’s position, and that the agreed-upon amount is the means to resolve the dispute. He stated that the number may be right, may be wrong or may be indifferent. Bennett J. explained that amount payable is the sum required to avoid a trial and enable the parties to move forward with their lives; (c) With the assistance of Bennett J., who went back and forth between the parties, the husband made the initial proposal, the wife made a counterproposal, and the parties agreed to a compromise that was between the two initial positions; and, (d) The negotiated terms were clear – there was a full and final settlement of all issues by way of a lump sum payment by the husband to the wife, and mutual releases;
(ii) Was there a consensus on all essential terms of the agreement, or is the Court being asked to make an agreement for the parties?
26The original draft Minutes contain clauses respecting capital gains arising from the Cayman’s disposition and clauses that require the husband to indemnify the wife for possible taxes on rental income. The husband argues that these terms are material and impede a finding that there was a full and final settlement of all issues.
27I disagree.
28Both parties were always jointly liable for the capital gains taxes, which they ultimately acknowledged. The inclusion of terms to that effect in the draft Minutes is not material.
29The husband correctly identifies that the requested indemnification was neither contemplated nor agreed to during the Settlement Conference. This was a minor issue, however, given that the husband represented that there was no rental income (such that there would be no tax liability).
30The wife has now filed her 2022 taxes without issue, and the potential tax problem is now resolved. The wife seeks enforcement of the revised Minutes of Settlement (“revised Minutes”), that were served with the Notice of Motion. They do not include the disputed tax provisions.
31The ancillary tax issues do not detract from the parties’ consensus on the essential negotiated terms. The Court is not being asked to make an agreement for the parties.
(iii) Was the agreement conditional upon and subject to the execution of a formal contract?
32In Andrews v. Lundrigan, 2009 ONCA 160, at para. 8, the Ontario Court of Appeal summarized the relevant factors to consider when assessing whether a final agreement has been reached, in contrast to a “contract to make a contract”. The intention of the parties is important:
The term “intention” is not used in a subjective sense but rather to refer to whether “in the eyes of a hypothetical onlooker [the parties] appeared to have reached an agreement”: G.H.L. Fridman, The Law of Contract in Canada, 5th ed. (Toronto: Thomson Carswell, 2006), at p. 6. In making this determination, the court will look at the conduct of the parties at the time. As was said in Bawitko at p. 104, if in examining what transpired it is apparent that “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”, there is no contract, or in this case, no settlement.
33The wife argues that the husband’s stated intention to resolve all issues during the Settlement Conference, and his repeated requests for a copy of the draft Minutes are evidence of the binding nature of the negotiated terms.
34I disagree.
35By emails dated September 20 and 30, 2022, the husband clearly indicated his intention to follow Bennett J.’s recommendation to retain family law counsel to review the draft Minutes. He requested that the sum of $100,000 be released to each party, as he would otherwise be unable to retain counsel. The husband identified that he had significant debts from the marriage, maxed out his credit, dissipated his RRSPs, and was solely responsible for one child’s grad school expenses including rent.
36The wife ultimately agreed to the husband’s request. On October 2, 2022, she directed the real estate lawyer to release the sum of $100,000 to each party on a “without prejudice” basis.
37A subsequent release of funds was contemplated. However, when the wife removed the “without prejudice” term from the October 23, 2022 authorization, the husband declined to consent to release the funds until the wife agreed to include that condition.
38The wife argues that the term “without prejudice” was in error, and that the funds were advances on the money that was due to each of them under the negotiated terms from the Settlement Conference.
39I decline to accept that the release of funds was conditional upon a binding final settlement. The husband intended (and did) use the funds to retain family law counsel. He had yet to receive (or review) the draft Minutes when the funds were released. Moreover, the husband refused to execute the second authorization unless it contained the “without prejudice” term.
40A reasonable observer would conclude that the negotiated terms were conditional upon the husband having the opportunity to consider family law legal advice in respect of “agreement/release/minutes of settlement to be signed.” Bennett J. correctly identified that the husband should obtain family law legal advice when he caucused with the husband, during the concluding phase of the Settlement Conference and in his endorsement.
41The opportunity to obtain, consider and act on family law advice is the cornerstone to the family law justice system and sustainable agreements. Self-represented litigants must have the opportunity to obtain ILA so that they can make informed decisions and provide informed consent: Aberback v. Bellin, 2019 ONSC 3866, at para. 23.
42In the recent Supreme Court of Canada decision, Anderson v. Anderson, the Court explained the role of ILA, as follows:
The involvement of counsel is an important safeguard to make sure parties understand the terms and effect of their agreement, as well as the rights they are giving up under the relevant statutory scheme. Just as with financial disclosure, the involvement of lawyers in the negotiation of a domestic contract helps to prevent prejudice arising from a vulnerability inherent in the parties’ relationship or the bargaining process. For instance, independent legal advice helps to compensate for imbalances or informational deficiencies that may result in an agreement that is substantially unfair to one or both of the parties.
43The parties never entered into an agreement that complied with section 55(1) of the Act, and there was no waiver of ILA. On the contrary, the husband repeatedly stated his intention to retain a family lawyer and obtain legal advice.
44The provision of ILA is not the act of rubber-stamping agreements already reached by self-represented litigants. A lawyer who accepts such a retainer is expected to meet with the client for a reasonable amount of time, and often more than once. In anticipation of the provision of legal advice the lawyer is also expected to review relevant court and related documents. Typically this includes the pleadings, financial disclosure, sworn financial statements, parenting assessments and reports, and any other issue-specific documents.
45In Harnett v. Harnett, 2014 ONSC 359, McGee J. described what is encompassed in the provision of ILA:
79Providing independent legal advice means more than being satisfied that a party understands the nature and the contents of the agreement and consents to its terms. Gurney v. Gurney, 2000 BCSC 6, 2000 CarswellBC 90 (B.C. S.C.) The lawyer should make inquiries of the party so as to be fully apprised of the circumstances surrounding the agreement. The party should be advised of her legal rights and obligations. Simply stated, a client must understand the legislative scheme out of which she is opting.
80It is the lawyer who should offer his or her opinion on whether it is appropriate for the party to sign the agreement, and not leave that question to the party.
81It is only with comprehensive advice that a party can make an informed decision about the advisability of entering into an agreement as opposed to pursuing some other course. Only with comprehensive advice can a party appreciate the future risks and obligations of the agreement, and how best to organize one’s affairs accordingly.
46The nature of the advice received by the husband is governed by solicitor client privilege and irrelevant to the disposition of the summary judgment motion. What is relevant, however, is that the husband, after receiving the draft Minutes and retaining family law counsel, declined to accept the draft Minutes and withdrew his prior offers to settle. He took this step on November 11, 2022, within 10 days of receipt of the draft Minutes.
47Interestingly, while the wife seeks a finding that there was a full and binding settlement as of the Settlement Conference (August 22) and well before the husband had the chance to review the draft Minutes (after November 1), she recognized the utility of the husband receiving independent legal advice.
48The draft Minutes, which were prepared by the wife’s counsel, contain the following acknowledgements. First, that the parties have negotiated the terms in an unimpeachable fashion and that the draft Minutes fully represent their intentions and expectations. Next, that the parties:
Have had independent legal advice or the opportunity to have independent legal advice, and all the disclosure they have requested and require to understand the nature and consequences of these Minutes of Settlement, and to come to the conclusion, as they do, that the terms of these Minutes of Settlement, including the release of all spousal support rights, reflect an equitable sharing of the economic consequences of their relationship and its breakdown.
49These clauses, which are standard to most releases, re-confirm the importance of ILA as means to support sustainable agreements that are not subsequently set aside.
50I recognize that in December 2022, and January 2023, Bennett J. recollected that the parties reached a settlement in August 2022. However, these endorsements are not determinative. Instead, it is Bennett J.’s initial recommendation, that the husband obtain family law advice, and the consequences that flowed after he retained counsel, that are determinative.
51I find that the parties made the Settlement Conference agreement conditional upon the husband having the opportunity to retain family law counsel and consider the nature and consequences of the negotiated terms, his legal rights and obligations, and the relevant legislative scheme. The negotiated terms were subject to the execution of a formal contract, and the opportunity to review, revise and rescind the terms upon receipt of independent legal advice.
52In any event the negotiated terms cannot be an effective agreement. Family Law Rule 17(19) requires that agreements reached at a conference must signed by the parties and witnessed to be effective.
(b) If there was a settlement, should I exercise my discretion not to enforce the settlement?
53In the alternative that the negotiated terms form a binding agreement, I must determine whether to enforce the agreement within the context of the motion for summary judgment.
54The parties’ affidavits contain allegations about various financial issues that arose during the marriage, and the seven years post-separation. The allegations include: intentional under-employment by both parties, child support and section 7 expenses, spousal support, post-separation expenses and debts. There are factual and credibility matters in dispute.
55The summary judgment motion came before the Court by way of a regular one-hour motion, with the usual page and time limits. On the limited record before me I am unable to conclude that there is “no genuine issue requiring a trial” on the enforcement issue. I am also in no position to make credibility findings on the contradictory evidence that is before me.
56Therefore, if the draft Minutes are binding a trial is required to determine:
(a) Whether the offer/agreement was clear and unequivocal; (b) Whether or not a mistake was made; (c) Whether the settlement was reasonable; (d) The degree of prejudice to either party if settlement is not given effect; and (e) The effect of the settlement on third parties if the settlement is not enforced: L-Jalco Holdings Inc v Lawrynowicz & Associates, 2018 ONSC 4002, at para 38.
Costs
57The parties have agreed that the sum of $30,000 is reasonable and proportionate in the context of this summary judgment motion (and including the multiple conferences and 14B motion). Costs payable within 90 days, as agreed.
Conclusion
58I recognize that the parties will now incur further legal fees and expend additional emotional energy to bring this matter to conclusion.
59The final outcome (by way of a consent order or a trial) may well be similar to the negotiated terms. I note that Bennett J. has vast experience and skill at assessing and resolving family law matters.
60A successful resolution, in my opinion, is one that falls within the range of what is reasonable, avoids the uncertainty and expense of a trial and allows the parties to move forward with their lives.
61I implore the parties to consider the emotional and financial costs of a trial (and the impact on their children), and to consider a four-way settlement meeting or a return to mediation with counsel.
62Both parties were motivated to settle this dispute in August 2022. It is not too late to do so.
63I appreciate the helpful factums and insightful arguments provided by counsel.
Order to Go:
- The Applicant wife’s motion for summary judgment is dismissed.
- Costs payable to the Respondent husband in the amount of $30,000, within 90 days.
- This matter is directed to a trial in November 2023 or May 2024.
- A Trial Scheduling Conference will be held virtually on October 24, 2023 at 9:30 a.m. (or another date in October as arranged by the parties and the trial coordinator).
Justice A. Himel Date: August 3, 2023