Hatton v Richards, 2021 ABQB 25

Court of Queen’s Bench of Alberta Citation: Hatton v Richards, 2021 ABQB 25 Date: 20210108 Docket: FL03 59254 Registry: Edmonton Between: Karyn Hatton Applicant - and - Ryan Richards Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice N.J. Whitling _______________________________________________________ I. Introduction [ 1 ] This is an application for

summary judgment by the Plaintiff, Ms. Karyn Hatton, against her former common law partner, the Defendant, Ryan Richards. The basis for the Plaintiff’s application is an agreement entered into between the parties to settle the Plaintiff’s claim against the Defendant for a share of the property acquired during the currency of their relationship. The Defendant acknowledges that he agreed to pay the Plaintiff $100,000 in settlement of her claim, but argues that the agreement is void for uncertainty.

In the alternative, he argues that the agreement was entered into under duress. [ 2 ] The Plaintiff’s application is granted in part. The parties substantially agree as to the existence of their settlement agreement and its essential terms. The evidence establishes that the parties agreed that the $100,000 would be payable in satisfaction of the Plaintiff’s claim to a share of the property acquired during the relationship, and not in satisfaction of any other claim.

Although the parties did not specifically agree upon a payment schedule, the timing of payment is not an essential term, and the Court may impose a payment

schedule that is reasonable. Since the parties have not specifically addressed the issue of what would be a reasonable time for payment, that issue will have to be determined in the context of a future application. There is no merit to the Defendant’s defence of

duress. II. Facts and Evidence [ 3 ] The parties cohabited in a relationship from May, 2001, to May, 2017. During the currency of that relationship, they were involved in business arrangements together. By the time of their separation, both of their names were on the title and the mortgage to their home. It is unnecessary to review the additional details of their inter-personal finances.

It suffices to say that on May 22, 2019, the Plaintiff sued the Defendant in unjust enrichment for a division of the property they acquired during their relationship. [ 4 ] In October, 2017, the parties entered into a written separation agreement, a nearly illegible copy of which is now in evidence. The written agreement deals with various matters that are not presently in dispute. Among other things, it was agreed that the Defendant would have exclusive possession of the family home.

The written agreement did not address any entitlement on the part of the Plaintiff to compensation for her contributions to the property acquired during the relationship. Instead, a clause of the written agreement left that issue open for future negotiation: The Parties are aware that although this document is not legally binding, the intent and purpose is agreed upon and both parties shall act in accordance with it to the best of their ability, until either changes to this Agreement are mutually decided upon, or until the Separation is finalized.

This Agreement, while listing specific assets, does not exclude the decisions to be made in regards to the value of other assets or the ownership of those assets. The value of each party’s interest in assets is an ongoing discussion.

The value of each Party’s assets acquired by the other party after May 1, 2001 and prior to May 24, 2017 shall be considered going forward in an amicable and fair manner with the intention of equitable distribution. [ 5 ] Shortly after the parties entered into the written agreement, they entered into a verbal agreement respecting the outstanding issue referred to in the final sentence of the clause quoted above.

In his Affidavit, the Defendant acknowledges the nature and existence of that verbal agreement in the following terms: “Karyn and I further agreed that I would transfer to her $100,000 in full satisfaction of any claim I had to property of the relationship and of any joint family venture”.

Although this language refers to any claim “I” had, referring to the Defendant himself, the parties agree that the verbal agreement was intended to settle the Plaintiff’s claim against the Defendant. [ 6 ] Aside from the Defendant’s admission, the documentation which supports the nature and existence of the verbal agreement is scant. Both parties refer to a brief text message exchange, which reads in relevant part as follows: Plaintiff: Have you agreed to $100,000? […] Defendant: I thought that we had agreed to that already. Plaintiff: No, I told you the number, and you shut down.

Like every other conversation we’ve ever had.

Defendant: I agreed to the 100k. Or at least I thought we agreed on that. [ 7 ] The evidence also establishes that the parties agreed that their home would be sold, and that half of the proceeds of sale would be paid by the Defendant to the Plaintiff. The home was subsequently sold and yielded proceeds of $80,000.

In recognition of the Plaintiff’s entitlement to half of those proceeds, the Defendant paid the Plaintiff $28,500 in April, 2018, and provided her with a promissory note for the remaining $11,500 dated April 4, 2018. [ 8 ] Following their verbal separation agreement, the Defendant paid the Plaintiff $2,000 each month from November, 2017, to January, 2018. He then paid $1,000 in each of February and March, 2018, $800 in May and June, 2018, and $500 on July 16, 2018. There were also a number of irregular payments by the Defendant to the Plaintiff.

The parties kept track of these payments on a jointly accessible Google spreadsheet, and they agree that of the agreed-upon $100,000, there remains $55,532.73 outstanding. The last payment made by the Defendant to the Plaintiff was $500 in July, 2018, although there was also a transfer on August 24, 2018, of $109.60 which is described as “shaw refund”.

It is unclear whether the payments made after April 4, 2018, were made in satisfaction of the amount then due under the promissory note, or in satisfaction of the other moneys owing under the verbal agreement. [ 9 ] The Defendant states in his Affidavit that he stopped making payments because of his inability to pay, and not because of any belief on his part that he lacked any obligation to pay. III. The Test for

Summary Judgment [ 10 ] In Weir-Jones Technical Services Inc. v. Purolator Courier Ltd ., 2019 ABCA 49 at para. 47 , the Alberta Court of Appeal established the following “key considerations” on an application for

summary judgment:

a) Having regard to the state of the record and the issues, is it possible to fairly resolve the dispute on a

summary basis, or do uncertainties in the facts, the record or the law reveal a genuine issue requiring a trial?

b) Has the moving party met the burden on it to show that there is either “no merit” or “no defence” and that there is no genuine issue requiring a trial? At a threshold level the facts of the case must be proven on a balance of probabilities or the application will fail, but mere establishment of the facts to that standard is not a proxy for

summary adjudication.

c) If the moving party has met its burden, the resisting party must put its best foot forward and demonstrate from the record that there is a genuine issue requiring a trial. This can occur by challenging the moving party's case, by identifying a positive defence, by showing that a fair and just

summary disposition is not realistic, or by otherwise demonstrating that there is a genuine issue requiring a trial. If there is a genuine issue requiring a trial,

summary disposition is not available.

d) In any event, the presiding judge must be left with sufficient confidence in the state of the record such that he or she is prepared to exercise the judicial discretion to summarily resolve the dispute. [ 11 ] I conclude that it is appropriate to resolve part of the dispute between the parties on a

summary basis. The parties substantially agree upon the relevant facts. Importantly, they do not disagree that they entered into the verbal agreement in October, 2017, and they do not disagree that the amount to be paid was $100,000. Further, the evidence respecting the nature of the verbal agreement consists only of the parties’ recollections, which, as just stated, are consistent, as well as their brief text message exchange.

There is no reason to believe that a full trial of this matter would yield any additional evidence of significance. [ 12 ] I also conclude that the current state of the record is sufficiently certain to enable me to determine the issues raised by the Plaintiff’s application. Although, as mentioned above, the evidence respecting the parties’ verbal agreement is scant, there are no material credibility concerns. Further, the issues do not require the assistance of any expert evidence.

IV. Is the Separation Agreement Void for Uncertainty? A. Legal Principles Respecting Certainty of Contractual Terms [13] The formation of a legally enforceable contract requires an offer and an acceptance of all the essential terms of the agreement.Those essential terms must be sufficiently certain. Where the terms agreed upon are too vague, the purported agreement will beunenforceable.

In Ron Ghitter Property Consultant Ltd v Beaver Lumber Co, 2003 ABCA 221, Fraser C.J.A summarized the applicableprinciples as follows: 8 Regardless of the theories underlying the enforcement of contracts, mutuality of agreement lies at the root of any legally enforceablecontract. The required degree of mutuality of agreement mandates that the parties reach a consensus ad idem on essential terms. Indetermining whether the parties have reached agreement for legal purposes, the starting point must be the alleged contract itself:Associated Japanese Bank (International) Ltd. v.

Credit du Nord S.A., [1989] 1 W.L.R. 255 at 268 (Q.B.). If the wording of thecontract is plain and unambiguous, that will ordinarily be an end of the matter. The accepted test is whether a reasonable observer wouldinfer from the words or conduct of the parties that a contract had been concluded: Smith v. Hughes (1871), L.R. 6 Q.B. 597 at 607.

Thatis, on an objective basis, have the parties reached consensus ad idem? 9 The common thread running through the cases is that the parties will be found to have reached a meeting of the minds, in other wordsbe ad idem, where it is clear to the objective reasonable bystander, in light of all the material facts, that the parties intended to contractand the essential terms of that contract can be determined with a reasonable degree of certainty: Scammell (G.) and Nephew, Ltd. v.Ouston (H.C. and J.G.), [1941] A.C. 251 at 255 (H.L.); British Columbia (Minister of Transportation and Highways) v.

ReonManagement Services Inc. (2001), 2001 BCCA 679 , 208 D.L.R. (4th) 175 (B.C.C.A.); Langley Lo-Cost Builders Ltd. v.474835 B.C. Ltd., 2000 BCCA 365 , [2000] 7 W.W.R. 46 (B.C.C.A.); Anchorage Management Services Ltd. v. 465404 B.C.Inc. (1999), 1999 BCCA 771 , 72 B.C.L.R. (3d) 389 (C.A.); see also, G.H.L. Fridman, The Law of Contract in Canada, 4th ed.(Toronto: Carswell, 1999) at 15-17.

This requires the court to decide whether “a sensible third party would take the agreement to meanwhat A understood it to mean or what B understood it to mean, or whether indeed any meaning can be attributed to it at all”: Cheshire,Fifoot and Furmstom, Law of Contract, 14th ed. (London: Butterworths, 2001) at 272. Otherwise, then, as stated by Lord Maugham inScammell, supra at 255, “the consensus ad idem would be a matter of mere conjecture.” [14] In Ko v Hillview Homes Ltd, 2012 ABCA 245 at paras. 91-92, Côté J.A. noted that “What terms are essential depends on thetype of contract”.

In specific reference to contracts of sale, he states further that: “Price is vital in a sale contract”. He also notes that afailure to achieve certainty as to the timing of payment may render a contract of sale void for uncertainty. In his words: “Where not allthe price is to be paid at once and the rest, the balance, is “to be arranged”, that makes the contract void for uncertainty.” One of thecases cited by Côté J.A. on this point is Murphy v.

McSorley, (SCC), [1929] S.C.R. 542, where Mignault J. found anoption to purchase to be invalid due to the uncertain nature of the payment terms: With the learned trial judge, I am of opinion, as I have already stated, that the understanding of the parties, so far as it had progressed atthe time of the lease, was not that if Murphy exercised the option, he should pay the whole price in cash.

There was to be a downpayment of $15,000, and the balance was to be “arranged,” that is to say, its mode of payment, no doubt very imprudently, was left to bedetermined by a further understanding between the parties, for to “arrange” something is to come to an agreement in respect of it, tosettle or adjust it. Unfortunately for the appellant, this further understanding or meeting of the minds did not take place.

It is no answer tosay that McSorley's attitude was not “fair” or “reasonable.” As it takes two to make a bargain, the only way this bargain could have beenmade would have been by acceptance of McSorley's terms at the interview of October 29. It was too late to accept them on November 3.The court cannot make for the parties a bargain which they themselves did not make in proper time… [15] In contrast to the approach taken to commercial contracts of sale, as examined by Côté J.A. in Ko, a somewhat more relaxedapproach to certainty of terms has been taken in the context of separation agreements.

In Obradovic Estate v. Obradovic, 2013 ABQB470, a husband and wife entered into a separation agreement pursuant to which it was agreed that the husband would transfer his interestin the matrimonial property to the wife in exchange for a payment of $10,000. At paragraphs 25-32, Macklin J. held the agreement to besufficiently certain and enforceable despite the fact that the parties had only agreed that the funds were to be provided at the wife's “firstopportunity”. B. The Subject Matter of the Agreement

[ 16 ] Although the Defendant admits that he agreed to pay the Plaintiff the amount of $100,000 in satisfaction of a legal claim, he argues that the Plaintiff has not established that the parties agreed that the $100,000 was to be applied in satisfaction of her unjust enrichment claim, as opposed to a claim for partner support. In support of this argument, the Defendant points to the words “partner support payments” in paragraph 14 of the Plaintiff’s Affidavit, which reads as follows: 14.

According to the Additional Agreement, the $100,000.00 was to be derived from splitting the proceeds of assets of the relationship, including the transfer of the House into Ryan’s name and eventual sale.

The remaining amount owing towards the payment of the $100,000.00 that was not covered by the splitting of our assets was to be covered by monthly $2,000.00 partner support payments , to be made until the $100,000.00 was fully paid to me. [Underlining added] [ 17 ] The Defendant emphasizes the distinction between claims for partner support pursuant to the Family Law Act , SA 2003, c F- 4.5 , and claims for unjust enrichment pursuant to the common law.

Given the language of paragraph 14, he argues that the parties were not ad idem since the agreement may have pertained to a claim for partner support as opposed to unjust enrichment. [ 18 ] The first difficulty with this aspect of the Defendant’s argument is that it is contradicted by his own evidence. At paragraph 14 of his Affidavit, he acknowledges that the purpose of the verbal agreement was to settle the Plaintiff’s claim “to property of the relationship and of any joint family venture”.

He does not suggest in his Affidavit that the $100,000 or any portion of it might actually have been intended to be payable as partner support. [ 19 ] Further, the verbal agreement must be interpreted and understood in light of the context in which it was negotiated, including the written agreement that shortly preceded it. As noted above, the language of the written agreement expressly refers to the Plaintiff’s claim to a share of the assets of the relationship, and the parties’ intention to settle that claim amicably. The written agreement does not refer to any outstanding claim to partner support.

Nor is any claim to partner support contained in the Plaintiff’s subsequent Statement of Claim. I find that it cannot reasonably be concluded on the evidence that the parties might have intended the $100,000 to be payable in satisfaction of a claim that did not exist, and which was not in contemplation. [ 20 ] Regarding the language adopted in paragraph 14 of the Plaintiff’s Affidavit, I find that it creates no real uncertainty as to the characterization of the $100,000.

That paragraph, read in its entirety, indicates that the payments were to be paid in satisfaction of the $100,000, and that the $100,000 was to be paid in satisfaction of the Plaintiff’s claim to the assets of the relationship. [ 21 ] In conclusion, the evidence confirms that the parties were ad idem with respect to the fact that the $100,000 was payable in satisfaction of the Plaintiff’s claim to the property acquired during the relationship, and not to any distinct claim for partner support. The Defendant has no defence respecting the certainty of this aspect of the separation agreement. C.

The Time of Payment [ 22 ] The Defendant’s second argument on certainty of terms pertains to the time of payment. He states at paragraph 14 of his Affidavit that the parties did not agree to any set monthly payment amount given the unpredictable nature of his business income. He also points out that there was no agreement as to any penalties for non-payment, and no acceleration clause.

Nothing in the parties’ brief email exchange reflects any mention of a payment schedule. [ 23 ] The evidence does at least establish that the parties were ad idem with respect to the timing of the payment of $40,000 of the $100,000. Both of the parties acknowledge in their Affidavits that the Defendant agreed to pay the Plaintiff half of the proceeds of the sale of the home when it sold, which proceeds amounted to $80,000.

Their agreement to this extent is further evidenced by the Defendant’s payment of $28,500, and the promissory note for the remaining $11,500, which is stated to be immediately due and payable without demand. [ 24 ] With respect to the other $60,000, I find that the Plaintiff has not proven on a balance of probabilities that the parties agreed that the Defendant would pay off this amount in monthly instalments of $2,000 per month. The Defendant denies the occurrence of any such agreement.

He states at paragraph 14 of his Affidavit that: “It was understood by both parties around fall 2017 that a set monthly payment amount could not be achieved due to the nature of my business finances.” The subsequent irregular pattern of payments does not reflect the existence of a fixed payment schedule. [ 25 ] Does the absence of an agreement respecting the timing of payment of the $60,000 render the separation agreement unenforceable?

As noted above, Murphy and Ko reflect the proposition that time of payment is generally an essential term of a contract for sale, such that a failure to agree upon time of payment may render the contract void for uncertainty. However, Côté J.A. in Ko also noted that the issue of what terms are essential depends on the type of contact.

In Obradovic , Macklin J. held that the time that the wife was to make an equalization payment in a separation agreement was not an essential term, at least in the particular circumstances of that case. [ 26 ] In my view, the different results in Murphy and Obradovic reflect the distinction between separation agreements and commercial contracts. This distinction was emphasized by Abella J. in Rick v Brandsema , 2009 SCC 10 at para. 40 :

There is no doubt that separation agreements are negotiated between spouses on the fault line of one of the most emotionally charged junctures of their relationship -- when it unravels.

The majority in Miglin [ v Miglin , 2003 SCC 24 ] concluded that because of the uniqueness of this negotiating environment, bargains entered into between spouses on marriage breakdown are not, and should not be seen to be, subject to the same rules as those applicable to commercial contracts negotiated between two parties of equal strength… [ 27 ] Given the unique nature of separation agreements and the circumstances under which they are negotiated as examined by Abella J., such agreements cannot be subjected to the same standards of certainty as commercial contracts.

Where former spouses or cohabitants have agreed to settle an outstanding dispute on the basis of a payment of money, a lack of certainty with respect to time of payment does not invalidate the entire agreement and the court may impose payment terms that are reasonable.

I would therefore recognize this situation as an exception to the general principle that the court cannot make a bargain for the parties that they have not made for themselves. [ 28 ] Given the Defendant’s acknowledgment that the parties agreed that he would pay $100,000 to the Plaintiff in satisfaction of her claim to a share of the property acquired during the course of the relationship, I find that the absence of a clear agreement respecting the time of payment of $60,000 does not raise a defence to the Plaintiff’s application to enforce the agreement.

The Defendant was required to pay the $60,000 to the Respondent within a reasonable time. [ 29 ] What then is a reasonable time for payment of the $100,000? The parties have not specifically addressed the issue of a reasonable repayment

schedule for the outstanding amounts owed by the Defendant to the Plaintiff. This determination would at least require a consideration of the parties’ financial circumstances which have not been provided to the Court. Consequently, this issue will have to be determined by agreement, or on further application. VI. Duress [ 30 ] The Defendant also argues that the verbal separation agreement is unenforceable since it was entered into under duress.

Duress is the coercion of a person’s will through illegitimate pressure, with one party dominating the will of the another at the time that a contract is executed: Ramidal v Davis , 2015 ONCA 726 at para. 42 . [ 31 ] As noted above, scant evidence exists respecting the circumstances surrounding the negotiation of the separation agreement. The Defendant does state that he did not have independent legal advice, and argues that the written component of the separation agreement may have been prepared by the Plaintiff with legal assistance.

However, nothing in the evidence is significant enough to establish the commission of coercion on the part of the Plaintiff, or that the Defendant’s will was subject to her domination. There is also nothing in the evidence to suggest that the amount of $100,000 was an unreasonable or unconscionable settlement amount. [ 32 ] In the absence of any such evidence, the Defendant’s claim of duress is dismissed. VII. Conclusion [ 33 ] The Plaintiff’s application is granted in part. The Plaintiff is granted judgment against the Defendant in the amount of $55,532.73.

However, the Defendant is granted leave to bring an application for an Order permitting him to pay that money over time with or without interest. Any such application shall be brought within 30 days of the date of this Order, failing which the Plaintiff may apply for final judgment in the full amount. Costs may also be addressed in the context of any future application. Heard on the 09 th day of November, 2020. Dated at the City of Edmonton, Alberta this 8 th day of January, 2021.

N.J. Whitling J.C.Q.B.A. Appearances: Richard D. Smith for the Plaintiff Anthony Morrish for the Defendant