Rice v. DeBaie, 2015 NSSC 246

Supreme Court of Nova Scotia (FAMILY DIVISION) Citation: Rice v. DeBaie , 2015 NSSC 246 Date: 20150902 Docket: 1201-066216 Registry: Halifax Between: Tony Gerald Rice Applicant v. Joanne Ethel DeBaie Respondent ________________________________________________________________________ LIBRARY HEADING Judge: The Honourable Justice Beryl MacDonald Heard: July17 and 27, 2015, Halifax Nova Scotia Keywords: Separation Agreement,

Interpretation of Contract,

Summary: The parties had prepared their own Separation Agreements and described one as an Amendment to the previous agreement but it was an exact replica except for insertion of the words “completed” next to some of the paragraphs and lines drawn through others. The Applicant suggested the Amended Agreement signified the Respondent’s consent to his division of their assets and debts.

The Agreements both stated “each party was to be responsible for all debts incurred in his or her name from the date of separation and neither will incur a debt or liability on the credit of the other and each was to pay his or her own debts and indemnify the other therefrom”. This was a clear statement and the obvious meaning was that neither party was required to pay, from the sale of assets, nor otherwise, any post separation debt of the other. In addition the Agreements concerning the assets were structured in such a way to indicate the value of the assets was to be shared equally.

The Applicant had not carried out the intent of the Agreements and was ordered to do so. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT’S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.

Supreme Court of Nova Scotia (FAMILY DIVISION) Citation: Rice v. DeBaie , 2015 NSSC 246 Date: 20150902 Docket: 1201-066216 Registry: Halifax Between: Tony Gerald Rice Applicant v. Joanne Ethel DeBaie Respondent Judge: The Honourable Justice Beryl A. MacDonald Heard: July 17 and 27, 2015 Counsel: Bryen E. Mooney, counsel for the Applicant; Laura Kanaan, counsel for the Respondent By the Court: [ 1 ] On July 9, 2012 a Corollary Relief Order was granted in respect to a divorce between Tony Rice and Joanne DeBaie. Attached to that Order are two Separation Agreements.

The first was made July 19, 2011; the second was made April 26, 2012 and was called an amendment to the previous Separation Agreement. Both of these agreements are difficult to understand. The April 26, 2012 Separation Agreement did not amend any of the provisions of the previous agreement. It is an exact copy of the previous agreement with the word “completed” appearing after several of the provisions and various lines drawn through other provisions. [ 2 ] Neither of the parties accessed independent legal advice before signing these Agreements and it appears the Agreements were prepared by Mr.

Rice and presented to Ms. DeBaie for her approval. Neither of the parties have chosen to contest the fundamentals in respect to the preparation and signing of these Agreements although it appears there were many flaws that may have undermined their enforceability were it not for their acceptance by the parties, a fact I do not intend to ignore. [ 3 ] Counsel each provided a different

interpretations of these contracts. Potentially the words used can support either

interpretation. There are many cases when a court has refused to enforce terms of a contract because they were not sufficiently definite to permit the court to determine the applicability of the terms of the contract to the remedy requested. These discussions often require a rather esoteric analysis about whether there are ambiguities and whether the court is restricted to the words in the document or whether parole evidence may be used in

interpretation. Neither of the parties have analyzed these contracts in respect to the interpretive principles that may be applied other than to make reference to the apparent overall intent of these agreements and whether or not that intent has been fulfilled by the subsequent actions of the parties and in particular those of Mr. Rice. [ 4 ] I do not intend to explore the subject of contractual

interpretation other than to acknowledge that my role is to determine the mutual intention of the parties by using the ordinary meaning of the words referenced in relation to the entire agreement, giving effect to all parts of the agreement to the extent that is possible within the context in which the agreements were concluded. [ 5 ] In the July 19, 2011 Separation Agreement under the heading “Background” there is a statement that the assets and liabilities of the parties are accurately and completely described in the agreement.

While the identification of the assets may have been accurate the values given for the assets were mere estimates. Under liabilities the parties speak of values but presumably they meant amounts owing and again it is unclear whether those amounts accurately reflected what was owing at the time. This became a subject of this hearing and documentary material has been provided to establish pre-separation liabilities. [ 6 ] What I consider most important in sorting out the responsibility each party had in respect to assets and debts is the statement in

the July 19, 2011 Separation Agreement, which is repeated in the April 26, 2012 agreement, that “each party was to be responsible for all debts incurred in his or her name from the date of separation and neither will incur a debt or liability on the credit of the other and each was to pay his or her own debts and indemnify the other therefrom”. This is a clear statement and the obvious meaning is that neither party was required to pay, from the sale of assets, nor otherwise, any post separation debt of the other.

In addition the Agreements concerning the assets are structured in such a way to indicate the value of the assets was to be shared equally. [ 7 ] At the time of their separation the parties were responsible for two properties - 4 Fury Drive and 416 Little Harbor Road. There were mortgages attached to each of these properties. They were to be sold and the July 19, 2011 agreement set out the responsibilities of each party in respect to those properties. 416 Little Harbour Rd Property A Both parties responsible for repairs and maintenance Mr. Rice responsible for 50 % of the mortgage Mr.

Rice responsible for house insurance Ms. DeBaie responsible for 50 % of the mortgage Ms. DeBaie responsible for property taxes, heat, water, phone, internet, cable Ms. DeBaie was to remain at this property until it was sold and both parties discharged from the mortgage. 4 Fury Drive Property B Mr. Rice responsible for repairs and maintenance Mr. Rice responsible for 100% of the mortgage Mr. Rice responsible for house insurance Mr. Rice responsible for property taxes, heat, water, phone, internet, cable Ms. Rice was to remain at this property until it was sold and both parties discharged from the mortgage.

The Separation Agreement included an estimate of the equity in each of these properties after sale. 416 Little Harbour Rd Property A Appraised Value $400,000.00 Less current mortgage $244,000.00 Less costs of sale $ 22,000.00 Total Equity $134,000.00 (to be divided 50/50) 4 Fury Drive Property B Appraised Value $245,000.00 Less current mortgage $254,000.00 Less costs of sale $14,000.00 Total Equity ($23,000.00) (to be divided 50/50) Total Property division Equity Property A: $134,000.00 Equity Property B: ($23,000.00) Net Total Property division $111,000.00 (to be divided 50/50)

[ 8 ] However later in the Separation Agreement it appeared there were to be deductions for taxes, utilities and other adjustments in addition to selling costs and legal fees. No definition of the utility and other adjustments was provided. Presumably the parties would have to agree upon these expenses at the time of sale. [ 9 ] 416 Little Harbour Road had one mortgage registered against it referred to in this proceeding as mortgage # 9001. 4 Fury Drive had one mortgage registered against it - mortgage #02603. The parties also had a Line of Credit used to purchase 4 Fury Drive referred to as #7001.

This Line of Credit, although not mentioned specifically in the agreement, was considered part of the “mortgage” on 4 Fury Drive. I have come to this conclusion because the “amount of the current mortgage - $254,000” was not the amount owing under #02603 when the July 19, 2011 Separation Agreement was drafted. Only by including the then outstanding Line of Credit debt can this debt amount be understood. The result was that Mr.

Rice was to pay the monthly debt required by the obligations under #02603 and #7001. [ 10 ] When 4 Fury Drive was sold there was enough money to pay off both #02603 and #7001 with a positive balance remaining of $162.58. The Closing Statement from the law firm confirms the amounts involved. The parties intended both of these debts to be paid from the sale of 4 Fury Drive. Unfortunately the money to pay out #7001 was not applied by the Bank to the debt obligation #7001. When this error came to light the cheque for the amount involved, $60,641.78, was sent directly to Mr. Rice. His testimony is that he and Ms.

DeBaie discussed what they should do with the funds and both decided that: • $28,000.00 would be applied to pay a car loan he negotiated after trading in the 5 th wheel trailer that the parties had expected to sell and receive a modest profit. His car loan was a post separation debt. • $25,000.00 would be applied to #7001 • $7,000.00 would be applied to the ING debt [ 11 ] Ms. DeBaie disputes this testimony and believed #7001 would be paid in full. In addition Ms. DeBaie has provided documentary evidence that indicates Mr. Rice’s recollection of what he did with the money was incorrect.

The actual amount he paid on his car loan was $28,393.00. The ING debt was incorporated into #7001. However it does appear $7,000 was applied to reduce the #7001 debt, and the $25,000.00 was applied, to the mortgage on Little Harbour Road. I accept Ms. DeBaie’s evidence about their discussions. Her testimony is that there were discussions but they primarily consisted of Mr. Rice telling her what he was intending to do without explaining where the money came from and how what he intended to do would affect her position relative to the agreement overall.

The agreement required an equal sharing of assets and pre-separation debt. It was only when Mr. Rice commenced this proceeding that Ms. DeBaie began to review the financial records and realize she had been disadvantaged by what Mr. Rice had actually done. She had trusted him to her detriment. Following the intent of the July 19, 2011 Separation Agreement she should have received one half of the $28,393.00 which is $14,196.50. There was no advantage to her to permit money that should have been applied to #7001 to be applied instead to the purchase of a vehicle for Mr. Rice. Ms.

DeBaie is not seeking any reimbursement in respect to the value of the trailer because it may not have been sold for a profit in any event. [ 12 ] The July 19, 2011 Separation Agreement, page 3, indicated that the Ram 2500 truck was expected to be sold for $35,000.00 and from the proceeds of sale the RBC Visa debt, in the amount of $6,000.00, and the Amex charge card debt, in the amount of $1,500.00, were to be paid with the expectation that the profit of $27,500.00 would be divided equally.

The agreement later provided on page 5 that each party accepted “exclusive liability” for certain debts that were to be paid off “immediately after the sale of the Truck RAM 2500”, presumably those payments were to be made from his and her share of the profit realized upon sale of the truck. Mr. Rice was to pay: Description Value Scotia Bank Visa $8,000 RBC Line of Credit $8,300 American Express Ms.

DeBaie was to pay: Description Value BMO (car loan) $21,000 RBC Visa [ 13 ] The latter provision suggests the amounts to be paid off on the RBC Visa and the Amex were as previously mentioned and were accepted as pre-separation debt to be shared. Any other debt on those accounts, post separation debt, was to be paid by the named person responsible. [ 14 ] When the truck was sold it appears Mr. Rice made payments out of the parties’ joint banking account with RBC. I am asked to trace and recreate the transactions to ensure they comply with the Separation Agreements as I have interpreted them. Mr.

Rice argues that by using the word “completed” on the Separation Agreement dated April 26, 2012 this is an acknowledgement the terms of the Agreements were complied with. I do not interpret that word in this manner. By accepting and using the word “completed” Ms. DeBaie was acknowledging the truck had been sold and the debts paid. It was not an acknowledgement that the debts were paid as required by

the July 19, 2011 Separation Agreement. It was not an acknowledgement of acceptance of what Mr. Rice actually did with the money received. He was handling all the financial matters and she trusted him at the time. She has subsequently completed an analysis to follow the money and realized it was not applied as she expected. I make the same comment about the use of the word “completed” in respect to the disposal of the proceeds from the sale of 4 Fury Drive. Mr. Rice argues that Ms.

DeBaie knew or should have known that as a result of his purchase of a new car, she would not receive any direct benefit from the sale of 4 Fury Drive. He justifies this on the basis that the parties expected a loss on the sale of that property and some money was directed to pay down the debt against 416 Little Harbour Road which was to her advantage. What this argument ignores is his attempt to shift the mortgage burden in respect to 416, Little Harbour Road and the fact that it now will likely sell at a loss. The parties were to share assets equally and that result will not be accomplished if his

interpretation of the April 26, 2012 Separation Agreement is accepted. Mr. Rice directed the sale proceeds from the truck as follows: • $7,000.00 – Amex • $9.700.00 – BNS Visa • $6,888.00 – RBC Visa • $10,550.00 – Ms. DeBaie [ 15 ] Documents confirm the RBC Visa balance at separation was $3,862.00. The Amex balance was $1,572.00. Subtracting these shared debts from the $35,000.00 leaves the amount of $29,566.00. Each party should have received $14,783.00 from the sale of the truck to pay off the other listed debts. When he paid the RBC Visa balance Mr.

Rice paid the entire balance owing in the amount of $6,888.00. However, this amount included post separation debt, $449.00 to be paid by Ms. DeBaie and $2,577.00 to be paid by Mr. Rice. Subtracting the $10,550.00 paid to Ms. DeBaie and the $449.00 paid on her behalf indicates Mr. Rice still owes Ms. DeBaie $3,784.00 from the proceeds of the truck sale. With this amount she will have received $14,783.00. [ 16 ] An additional problem created when #7001 was not paid in full from the proceeds of the sale of 4 Fury Drive relates to the fact that the monthly payments required to service this debt were to be paid by Mr.

Rice. He did make those payments until that property was sold and he continued to do so for a short time thereafter but he eventually stopped paying. By this time the Bank involved transferred that debt as an obligation owing against the equity in 416 Little Harbour Road. Mr. DeBaie was required to pay the entire monthly obligation required for #7001 in addition to her one half share of the regular mortgage payment. She wants to be reimbursed for 100% of all payments she has made in respect to that debt after deducting $5,700.00 provided by Mr. Rice in respect to a potential sale of 416 Little Harbour Road.

At the date of the hearing it appeared Ms. DeBaie made 81 payments of $183.77 each. Because this is an ongoing obligation and because there was some question about the number of payments made by Mr. Rice after the sale, I retain jurisdiction to set the exact amount owning if the parties, after review of this matter with counsel, cannot resolve that issue. My decision is that Mr. Rice is responsible for those payments; he must reimburse Ms.

DeBaie for the payments she has made and he must resume payment of continuing amounts owing for #7001 until 416 Little Harbour Road is sold. [ 17 ] On the April 26, 2012 Separation Agreement there are lines drawn through Mr. Rice’s responsibilities in respect to 416 Little Harbour Road. Mr. Rice has argued that this was acceptance by Ms. DeBaie that he would no longer be responsible to pay 100% of “mortgage for Property B”, ( i.e. the payments required by #7001). I disagree.

The most that can be said about these lines is that because there no longer was a mortgage on Property B (property B was sold) the lines only indicate the obvious - there no longer was a mortgage on Property B, (i.e. 4 Fury Drive). The April 26, 2012 Separation Agreement says nothing about who was to pay #7001 and as a result that responsibility must be determined by reference to the first agreement in which it was recognized that #7001 was part of the debt against Property B for which Mr.

Rice was to be responsible. [ 18 ] The only remaining issue, that was the subject of the Variation Application, related to the sale of 416 Little Harbour Road. The parties have resolved those issues to date although it is recognized other proceedings may be initiated if the parties do not agree about how the terms of the Separation Agreements are to apply to the disposition of the proceeds from the sale of 416 Little Harbour Road or the division of any debt that may remain after that sale. [ 19 ] As a result of my decision Mr. Rice: • is to pay Ms.

DeBaie $14,196.50 as her share from the sale of 4 Fury Drive • is to pay Ms. DeBaie $3,784.00 as her share from the proceeds of the truck sale • is to reimburse Ms. DeBaie for the payments she has made in respect to #7001 and he must resume payment of continuing amounts owing for #7001 until 416 Little Harbour Road is sold. [ 20 ] Ms. DuBaie has been the successful party in this proceeding. She is entitled to costs.

If the parties cannot agree on the amount to be paid the scheduling office is to be contacted to arrange a conference call on my docket at which time I will hear the submissions of the parties on costs. ____________________ Beryl A. MacDonald, J.