Zimmerman v Buss, 2015 MBCA 106

Citation: Zimmerman v Buss, 2015 MBCA 106 Date: 20151124 Docket: AF15-30-08351 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Mr. Justice William J. Burnett Mr. Justice Christopher J. Mainella BETWEEN : HEATHER LEE ZIMMERMAN ) M. U. Kramer ) for the Appellant ) (Petitioner) Respondent ) ) C. B. Shefman - and - ) for the Respondent ) DOUGLAS GORDON BUSS ) ) Appeal heard and ) Decision pronounced: (Respondent) Appellant ) November 24, 2015 BEARD JA (for the Court): I.

THE ISSUE [ 1 ] This is an appeal by Douglas Gordon Buss (the husband) from a decision under Court of Queen’s Bench Rules, Man Reg 553/88 , r 49.09, granting judgment to Heather Lee Zimmerman (the wife) in relation to their separation agreement. In essence, the wife is seeking to enforce that agreement, while the husband argues that the separation agreement cannot be enforced pursuant to r 49.09.

The husband is also arguing that the motion judge erred in granting: - specific performance; - a money judgment when that relief was not requested in the wife’s motion; - judgment in an amount that was not supported by the evidence; and - costs on a solicitor-client basis. II. THE FACTS [ 2 ] The underlying facts are not in dispute. The parties separated on or about August 18, 2008. They each retained legal counsel, but, to their credit, they chose to resolve the issues arising from the separation by way of a collaborative settlement process.

Their efforts were successful and they entered into a separation agreement dated August 4, 2009. [ 3 ] On October 7, 2009, the wife commenced a divorce proceeding in which the only relief being requested was the divorce and costs. The divorce was uncontested and a divorce judgment was granted on December 21, 2009.

Some issues arose regarding the variation of the support payments, which led to the wife commencing a proceeding on January 19, 2011, that was ultimately resolved by agreement and consent court order. [ 4 ] The wife became concerned that the husband was not making the payments on a joint debt in the manner to which he had agreed in the separation agreement, so she commenced an action by way of a statement of claim, filed on October 3, 2012, to enforce the separation agreement.

The husband filed a statement of defence and counterclaim on November 21, 2012, and the wife filed a defence to the counterclaim on December 20, 2012. [ 5 ] In the exchange of information related to the litigation, the wife became aware that the husband had liquidated an investment that, in her view, was, according to the terms of the separation agreement, required to be retained as security for his share of

the family debts. One of these debts was a line of credit secured against the family home which had become her property in the familyproperty division.

This, together with her belief that he was not paying those debts as he had agreed, led her to file the present motion tosecure her position. [6] This motion was brought pursuant to r 49.09 and requests specific performance of the separation agreement and, inparticular, clause 15.6.5; an order that the separation agreement be enforced; an order that the husband pay an amount equal to theNovember 2009 value of the liquidated investment on the joint debt; and solicitor-client costs. [7] The motion judge stated that she was granting specific performance, judgment in the amount of $145,128 and costs on asolicitor-client basis, which she set at $11,000.

The husband has appealed that order. III. THE LEGISLATION [8] At issue in this appeal is r 49.09, which states: FAILURE TO COMPLY WITH ACCEPTED OFFER 49.09 Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may, (

a) make a motion to a judge for judgment or an order in the terms of the accepted offer, and the judge may grant judgment or make anorder accordingly; or (

b) continue the motion or proceeding as if there had been no accepted offer to settle. IV. ANALYSIS [9] We deal first with the applicability of r 49.09. The motion judge did no analysis of the applicability of this rule in thiscase, but, in fairness to her, this issue was not raised by the husband, probably because he appeared before her without counsel. The onlystatement by the motion judge was, “Rule 49.09(

a) talks about granting judgment when there has been an accepted offer.” [10] The husband’s first ground of appeal is that the motion judge erred in law in deciding the motion pursuant to r 49.09. Theissue is whether the motion judge properly understood and interpreted the statutory provision. This is an extricable question of law andis to be reviewed on appeal on the standard of correctness. (See Housen v Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235.) [11] Rule 49.09 must be read in the context of the entirety of r 49, which deals with offers to settle.

Karen Busby, ManitobaQueen’s Bench Rules Annotated (Toronto: Carswell, 2014) (loose-leaf updated 2015, release 65), explains this rule as follows (at p 2-175): INTRODUCTORY NOTE The purpose of R. 49 is to encourage settlements. If any party to an action or motion makes an offer to settle which is not acceptedand, if the judgment subsequently obtained is as favourable or more favourable to the party who made the offer, certain costconsequences follow. . . . Where a party to an accepted offer fails to comply, the other party may apply for

summary judgment. (See also Gary D. Watson & Derek McKay, Holmested and Watson: Ontario Civil Procedure (Toronto: Carswell, 1993) vol 5 (loose-leaf updated 2012, release 4) at 49-9.) [12] The purpose of the rule is demonstrated by looking at the wording of r 49.02(1), which refers to a party to a proceedingmaking “an offer to settle any one or more of the claims in the proceeding by serving on any other party an offer to settle”.

This isfollowed by rules that govern the making of an offer to settle, the withdrawal or expiry of an offer to settle, the acceptance of an offer tosettle and the consequences of failing to accept an offer to settle. Rule 49.05 states that “[a]n offer to settle shall be deemed to be anoffer made without admission of liability and without prejudice.” Further, r 49.06 states that the fact of an offer to settle cannot becontained in any pleading, communicated to the court if not accepted or filed with the court prior to the determination of liability or therelief granted in the motion or proceeding. [13] In

summary, it is clear that the type of agreement that comes within r 49 is an agreement that settles all or some of theissues in litigation that was commenced prior to the making and accepting of the offer of settlement that constitutes the agreement beingenforced. [14] This is confirmed by the facts of the cases that have interpreted r 49.09. We note, for example, this Court’s decision inPearson v Plester et al (1989), (MB CA), 62 ManR (2d) 142; and Yard J’s decision in Poste v Mitchell-Poste, 2009MBQB 201, 242 ManR (2d) 310.

[ 15 ] In this case, the separation agreement was concluded prior to any litigation between the parties, the litigation to enforce the separation agreement having been commenced by statement of claim filed more than three years after the date of the separation agreement. It could not and did not constitute an “accepted offer” in the litigation within r 49.09. [ 16 ] We would find that the motion judge erred in law when she found that r 49.09 was available to enforce the terms of the separation agreement. There were other

summary proceedings that the wife could have pursued, but the parties have agreed, as do we, that there was no such motion before the court in this case. [ 17 ] We will make a further brief comment regarding the relief that was ordered. In her reasons, the motion judge confirmed that she was making an order for specific performance in the amount of $145,128. This arose out of her finding that the investment at issue was intended to be held as security for the payment of the joint debt by the husband.

Even if she did not err in coming to that conclusion (about which we make no finding), an order of specific performance was not available because the investment had already been liquidated. [ 18 ] The judgment that was taken out does not refer to her order of specific performance but, rather, is worded as a money judgment requiring the husband to pay the wife the sum of $145,128. There are two problems with this order.

First, the husband did not owe that sum on the joint debt at the time of the hearing because the payments that he had made had reduced it below that amount, which was acknowledged by counsel for the wife at the hearing. Second, the money was not owing to the wife, but to the creditor.

Thus, if an order for the payment of money was appropriate, that order should have directed that the money be applied to the debt, not that it be paid to the wife. [ 19 ] For these reasons, we would find that the motion judge erred both in law and in fact in granting the relief that was ordered. [ 20 ] We would grant the appeal and set aside the order that was made. Given that the order is being set aside, it is not necessary to deal with the appeal as it relates to the order for costs, which order is also set aside. [ 21 ] Each party will bear her or his own costs both in this Court and in the Court below.

JA JA JA