ORILLIA COURT FILE NO.: FC-17-126 DATE: 20231031
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Scott Dolson, Applicant AND: Helle-Mai Dolson, Respondent
BEFORE: The Honourable Madam Justice M.E. Vallee
COUNSEL: David Winnitoy, Counsel for the Applicant Michael Sirdevan, Counsel for the Respondent
HEARD: October 5, 2023
RULING ON MOTION
1The applicant (A) brings a motion to vary Justice Wood’s final order, made on consent, dated December 14, 2018. Justice Wood handwrote the terms in an endorsement. The paragraph at issue states:
On consent final order to go as follows
- From the Hoop Pension the R will transfer to the applicant a) 293,945.98 in full satisfaction of NFP equalization b) 9840 - 250 costs (9590) in full satisfaction al all claims for spousal support c) For greater certainty the total sum to be transferred is 303,535.98
2The A states that the endorsement should be varied to require that the respondent (R) pay him $66,723.93 in addition to the $293,945.98 that was ordered. He was unrepresented at that time. He states that when the parties calculated the equalization payment, R’s counsel made an error which resulted in an underpayment. Because the R decided to pay this by a transfer from her pension into a LIRA that the A would open, the amount ought to have been grossed up by 18.5% because he will have to pay tax on it when he withdraws the money. Without the gross up, the transfer does not result in $293,945.98 in his hands. The gross up amount should have been $66,723.93.
Applicable Law
3Rule 25(19)(b) of the Family Law Rules states that, “The court may, on motion, change an order that contains a mistake.”
Issues to be Determined
4Should the order be varied?
Jurisprudence
5Both the A and the R provided a number of cases to the court. The decisions in which r. 25(19)(b) has been applied are very fact specific. The A relies on the cases below which I will set out in chronological order:
6Wilde v. Wilde, 2000 Carswell Ont. 2224 (Ont.S.C.J.). The two major assets were the matrimonial home and the husband’s pension. An actuary valued the pension and the maximum transferrable amount. In an offer to settle. The wife’s lawyer forgot to include the pension amount. The husband accepted the offer. The subsequent minutes of settlement were signed on October 12, 1999. The separation agreement did not mention the pension amount. The court found that there was no common intention between the parties, and therefore no binding agreement. The agreement was rescinded in 2000.
7West v. West. This concerned a temporary order for spousal and child support. The father wanted to have the order varied to lower the amount retroactively and currently. The father was not successful, partly because the issue had not been conferenced and because there was an upcoming settlement conference. In para. 23, a five part test is set out for the court to consider when called upon to exercise its discretion to change an order. It stated:
a) The evidence presented on the motion must be clear and credible; b) it must be of such a nature that the original order would have been different if the evidence had been available; c) it must not have been in existence at the time the order was made or not discoverable by diligent effort by the party asking the Court to change the order; d) the party must have acted with diligence once the information came to light; and, e) the evidence must establish that action is needed to prevent a miscarriage of justice.
8DeCraemer v. DeCraemer, 2012 CarswellOnt. The parties both owned shares in a construction company. The wife stated that her shares were put in her name for tax reasons. Any taxes owing on them were paid by the husband during the marriage. The parties attended arbitration and signed minutes of settlement dated February 28, 2011 that did not address the tax issue, which was significant. There was no reference to the issue of the wife’s owing taxes of $485,000 with interest and possible penalties based on shares that were converted to an income fund post separation. The wife alleged that the husband owed the taxes whereas he asserted that the minutes included the tax issue and there was an implied term that she should indemnify him if he had to pay them. The parties stated that they would not have agreed to the deal if they knew they would be responsible for the debt. The court set aside the agreement in 2012.
9Cramer v. Cramer, 2013 CarswellOnt. 8197. Neither party understood that the husband’s pension had a value under the Family Law Act for equalization purposes. The wife accepted the husband’s position that she was not entitled to any of it. The pension was valued at $160,253. The court found that the parties made a mutual mistake and that as a result, the wife had received $113,000 less than what she ought to have received. The husband had received a windfall. He was ordered to pay the appropriate amount to the wife.
10Henderson v. Henderson, 2015 ONSC 2914. Due to inadvertence, the lawyers mistakenly forgot to include a support arrears amount of $100,000 in an order, to which they had both agreed. The court stated that in addition to correcting typographical or mathematical errors, “Rule 25(19)(b) may be used to rectify a court order where, through mistake, that order does not reflect the common intentions of the parties…only where it is in the interests of justice to do so.” The court also referred to rules 2(2) and (3) which state that the primary objective of the rules is to enable the court to deal with cases justly, having regard to the factors set out in rule(3).
11McCabe v. Tissot, 2015 CarswellOnt. 7860. The sharing of costs of private school was inadvertently omitted from minutes of settlement. This was immediately communicated between counsel. The court found that the father may not have actually known of the error but should have known about it. The remedy was recission of the minutes.
12Stephens v. Stephens, 2016 ONSC 367. A pension administrator provided an incorrect value. The parties were unaware of the error. They entered into minutes of settlement which became part of a final order dated October 23, 2013. In April 2015, the administrator sent a letter stating that the value was incorrect. The respondent brought a motion to change the order, which was granted on November 23, 2015, seven months later.
The R relies on the additional cases set out below:
13Abitbol v. Abitbol, 2017 ONSC 571. The court commented on Henderson and Stephens, acknowledging the test regarding reflection of the common intention of the parties. It went on to state in para. 39 that in agreements reached at conferences,
“many items are discussed, many factors are considered, and many concessions are made before the parties agree, where they do, to enter into a consent order or settlement…the definition of an agreement involves some quid pro quo between the parties…A court subsequently reviewing the parties’ positions and conduct leading up to a settlement cannot be certain as to exactly what factors incited the parties to enter into the settlement…the court should…be very reluctant to tinker with isolated items within the context of the parties’ entire settlement”
14Lecompte v. Paroyan, 2021 ONSC 6333. A pension administrator made a mistake and overestimated the value of the wife’s pension. The amount in issue was $51,000. The parties came to an agreement based on an incorrect assumption regarding the value. The court noted that there was no evidence that the husband was aware of the error. He transferred his interest in the matrimonial home to the wife for $140,000 less $40,000 to take into account the equalization payment of $33,709 and arrears of support. The wife paid the husband $100,000 for his interest in the matrimonial home. This was the common intention of the parties. If the husband had been aware that his equalization payment was $51,000 more, he may not have agreed to the final terms. The wife’s motion was dismissed.
The Test
15The cases above indicate that the court ought to consider the following questions:
a) Is the evidence clear and cogent? b) If the mistake was known at the time, would it likely have resulted in a different order? c) Was the mistake not discoverable by parties with reasonable diligence at the time? d) Without the correction, will a party gain an unintended and unexpected windfall at the expense of and to the prejudice of the other party such that a substantial miscarriage of justice would result? e) Should the court adjust isolated items within the context of the parties’ entire settlement, considering that in hindsight, it cannot know the concessions made by the parties to reach an agreement? f) Would the party have agreed to the final terms if a correction results in an increase of the equalization payment? and g) Did the moving party act promptly.
The A’s Position
16The A states that he is seeking to correct an inadvertent math error made by the R’s counsel when the equalization payment was calculated. The parties’ main asset was a property which was sold on August 23, 2018 for $1,350,000. The parties had a line of credit. He states that he received an advance of $277,529.32 which was subject to the apportionment of a line of credit that he had used post-separation. The line of credit was paid jointly from the sale proceeds.
17The A states that the issues for the settlement conference were his claim for spousal support, equalization of net family property and post-separation adjustments. He was the only party who sought post-separation adjustments. In her settlement conference brief at para. 16, the R states, “it is clear from the banking records that the Respondent has already paid approximately $10,000 more than her share of expenses – which she is not claiming recovery of [sic].”
18The A was self-represented at the settlement conference. The R had counsel. The parties agreed to an equalization payment based on an exchange of net family property statements. In Part 4(c), the value of the R’s pension is shown as $839,691.01. Part 5 shows the calculation for the contingent tax at 18.5% ($155,342.83). The calculation for the contingent tax on the A’s LIRA (to be created by rolling over his RRSP of $112,598.92) is shown at 18.5% ($20,830.80). The combined NFP statement shows that the R owes the A an equalization payment of $293,945.98 because of her large pension.
19Paragraph 1(a) of Justice Wood’s endorsement states, “From the Hoop Pension the R will transfer to the applicant $293,945.98 in full satisfaction of NFP Equalization.” The A states that because he will have to pay tax when he withdraws this amount from the LIRA, the equalization payment ought to have been $360,669.91. Because only $293,945.98 was paid, the A was short changed $66,723.93. This was an oversight on the part of counsel.
20The settlement was not a global amount. It was calculated with precision based on exchanges of net family property statements. Counsel for the R made an inadvertent mathematical error.
21The A is not requesting a second payment from the R’s pension because the plan administrator would add interest from the date of separation. That would be too punitive. She ought to pay the $66,723.93 from her own resources because she obtained a windfall.
22The A concedes that he learned of the tax issue in 2021 when he consulted with counsel. He states that there is no prejudice regarding delay because he is not claiming interest on the amount. The court must balance any concerns about delay against the windfall that the R received.
The R’s Position
23The cases relied upon by the A address fixing a mistake in order to reflect the common intentions of the parties. The court does not have an ad hoc ability to correct a deemed error. The A must show that the error does not reflect the parties’ common intentions – the court must determine what they were. Here, the parties did not sign minutes of settlement. Justice Wood stated the amount of the equalization payment in his order and further stated that “This payment constitutes a full settlement of all issues between the parties aside from a divorce.” The endorsement includes an amount for support and an amount for equalization. The common intentions of the parties were to resolve the matter based on these numbers.
24The R states that she decided to forego her claim for reimbursement of $60,000 that the A withdrew from their joint line of credit immediately before and after separation. It was paid from the proceeds of sale. She decided not to pursue reimbursement of over $10,000 for her contribution to household expenses which she states was in excess of her agreed upon share. She states that she decided not to pursue an unequal division of net family property based on the A’s improvident depletion of his CN Rail pension buyout funds without her knowledge at some point in the marriage.
25Neither of current counsel represented the parties at the settlement conference. The brief shows that the line of credit issue and spousal support were live issues before the court at the conference.
26The A represented himself. He is expected to know the law. He is not requesting that a math order be fixed; rather, he is requesting that the equalization payment be changed. Abitol applies. Settlements are reached though compromise. A subsequent court is not equipped to review the parties’ conduct and positions up to the settlement. The A is requesting that this be done.
27If the R had known that she would have to pay an additional $66,723.93 for equalization, she might not have agreed to settle the matter.
28Although the A states that delay should not concern the court because he is not requesting interest on the amount, delay is a significant concern. Within three days of the settlement, the A sent an email to the R and her lawyer stating that he was struggling with the settlement. He referred to a $30,000 issue relating to his “perception of the holdback which really was not there”. In 2021, three years later, he consulted counsel and learned about the tax issue. Counsel sent him a letter dated July 29, 2021. There is no evidence as to why he consulted counsel in 2021, two and a half years after the order was made, nor is there an explanation for why he waited until May 2023 to bring his motion. The court should be skeptical of this. The R states that she thought there was finality as per Justice Wood’s endorsement in 2018. She has retired and is living on her pension. Requiring her to pay $66,723.93 now relating to a 2018 settlement would cause an injustice.
Analysis
29This case can be distinguished from Wilde, Cramer, DeCraemer, Henderson and McCabe because in those cases, significant assets and expenses were omitted (pensions, a tax issue in the amount of $485,000, support arrears of $100,000, private school expenses). This case can be distinguished from Stephens and LeCompte because in both of them, the pension valuators made mistakes. In most of these cases, the motions were brought quite promptly.
30West does provide some assistance regarding exercise of due diligence. Expecting the self-represented A to discover the gross up issue though due diligence is unrealistic, given that R’s counsel did not consider it. Nevertheless, the A did learn of it in July 2021 when he consulted counsel. According to West, a party seeking to set aside or change an order must act promptly. The A did not bring this motion promptly. It was served in May 2023. There is no explanation for the almost two year delay.
31I do not accept the A’s argument that delay is not an issue because interest is not requested. Accordingly there is no prejudice. Prejudice is not mentioned in the test set out in West. A party must act promptly because the other party, here the R, will arrange her financial affairs going forward in reliance on the order, believing that she had completely settled matters with the A in 2018.
Conclusion
32The A did not bring his motion promptly, as required. The delay was almost two years. The interests of justice would not be served by requiring the R to pay an additional $66,723.93, almost five years after the order was made.
33The A’s motion is dismissed.
34Counsel made submissions at the conclusion of the motion. Counsel for the A stated that a fair amount for the losing party to pay would be $3,640. Counsel for the R agreed. Therefore, the A shall pay costs of $3,640 to the R within 30 days.
Justice M.E. Vallee Released: October 31, 2023