



COURT OF APPEAL FOR ONTARIO

CITATION: Miaskowski v. MacIntyre, 2020 ONCA 178

DATE: 20200309

DOCKET: C66946

Feldman, Brown and Zarnett JJ.A.

BETWEEN

Richard
    Miaskowski

Applicant (Respondent)

and

Jacqueline MacIntyre

Respondent (Appellant)

Michael Stangarone and Stephen Kirby, for the appellant

Anita Kania, for the respondent

Heard: January 21, 2020

On appeal from the order of Justice Gordon D. Lemon of
    the Superior Court of Justice, dated April 9, 2019, with reasons reported at
    2019 ONSC 1872, 24 R.F.L. (8th) 112.

Feldman J.A.:


I.

Introduction

[1]

During their marriage, the parties separated twice.

[2]

Two and a half years after the first separation, they entered into a
    separation agreement that contained a reconciliation clause that preserved the separation
    agreement if the reconciliation lasted fewer than 90 days, but voided the separation
    agreement if they reconciled for more than 90 days. As an exception to the voiding
    provision, any payment, conveyance or act done under the agreement would not
    be invalidated.

[3]

The parties remained married and eventually reconciled four years after
    they signed the separation agreement. They then remained together for almost
    nine more years.

[4]

The issue on the second separation is the extent of the wifes
    entitlement to share the value of the husbands Canada Post pension, based on
    the effect of the reconciliation provision of the separation agreement and the interpretation
    of two clauses in that agreement: the waiver by the wife of her rights to share
    in the husbands pension, and the payment exception to the clause that makes
    the separation agreement void on reconciliation for more than 90 days.


II.

Facts

[5]

The parties married on October 16, 1997 and separated for the first time
    on July 22, 1999. They entered into a separation agreement dated January 18,
    2002.

[6]

The separation agreement contains a number of releases including a
    release by the wife of her rights in the husbands Canada Post pension:

19.3   The wife specifically releases any rights or claims she
    may have to a share of the husbands Canada Post pension.

[7]

The separation agreement also has a provision that preserves the
    agreement in the event of reconciliation and cohabitation for less than 90 days
    and voids it if the parties reconcile for a longer period. This reconciliation clause
    provides:

25.1   If at any future time the parties, with their mutual
    consent, cohabit as husband and wife for a period of or periods totalling not
    more than ninety days with reconciliation as the primary purpose of the
    cohabitation, the provisions contained in this agreement will not be affected
    except as provided in this paragraph. If the parties, with their mutual
    consent, cohabit as husband and wife for a period or periods totalling more
    than ninety days with reconciliation as the primary purpose of the
    cohabitation, the provisions contained in this agreement will become void,
    except that nothing in this paragraph will affect or invalidate any payment,
    conveyance or act made or done pursuant to the provisions in this agreement.

[8]

Following the first separation, both parties had relationships with new partners,
    but they never divorced each other. After the new relationships ended, the
    parties reconciled as of March 1, 2006 and remained together until they
    separated for the second time on December 7, 2014.

[9]

The main issue at trial and the only issue on this appeal is the extent
    of the appellant wifes entitlement to share in the value of the respondent
    husbands Canada Post pension. The respondent does not take the position that
    the appellant has no claim to any share in that pension. Rather, the parties
    placed two options before the court at trial for the commencement date from
    which to value the pension: either the appellant is entitled to an equalization
    payment based on the value of the respondents pension from the date of their marriage
    in 1997 to the date of the second separation ($272,161.55), or her entitlement
    is based on the value of the pension from the date of reconciliation in 2006
    until the second separation ($139,356.14).

[10]

The issue turns on the proper interpretation of the separation agreement
    and whether the release of the pension rights was voided when the parties
    reconciled. If the appellants release of any claim to the respondents pension
    was voided when the parties reconciled and cohabited for more than 90 days,
    then the value of the respondents pension should be calculated using the date
    of marriage as the starting date. If, on the other hand, the appellants release
    of any claim to the respondents pension survived the parties reconciliation
    and cohabitation for more than 90 days, then in light of the two options put
    forward, the value of his pension would be calculated using the date of
    reconciliation as the starting date.
[1]

[11]

The trial judge held that the specific pension release clause was not
    voided by the parties reconciliation. He referred to this courts decision in
Sydor
    v. Sydor
(2003), 178 O.A.C. 155 (C.A.), in which the court explained, at
    para. 22, the common law rule that a separation agreement is void upon
    reconciliation subject to a specific clause in the agreement that would
    override the common law or a clause that would be implied from the agreement
    that the intent of the parties was that transactions carried out under the
    agreement will remain in place. Relying on para. 24 of
Sydor
,
which states that a specific release
    of all rights to a particular property can be viewed as evidence that the
    parties considered the disposition of that property final and binding,
    regardless of what may occur in the future, the trial judge found that the appellants
    release of any claim or right to the respondents pension was the kind of
    specific release referred to in
Sydor
and survived her
    reconciliation with the respondent: at para. 24. He also found there was no
    evidence of the parties conduct that would set aside the clear terms of the
    agreement, and those terms were therefore a bar to the appellants claim to
    share in the respondents pension prior to their reconciliation: at para. 43.

[12]

On appeal, the appellant argues that the trial judge erred in three
    ways.

1)

The trial judge
    failed to consider the
Pension Benefits Act
, R.S.O. 1990, c. P.8, and
    the applicable regulations, which indicate that the starting date for a
    pension valuation in the family law context is the date of marriage.

2)

The trial judge
    failed to consider the principles of contractual interpretation, which indicate
    that the objective intention of the parties was to void the releases upon
    reconciliation. Specifically, the trial judge erred in relying on
Sydor
because the agreement at issue in that case contained no clause dealing
    expressly with reconciliation, and the agreement at issue in this case does.

3)

The trial judge erred in relying on inadmissible parol evidence and
    evidence of the subsequent conduct of the parties to determine the subjective
    intention of the parties.

[13]

The respondents position is that the decision below should stand, and
    that the general voiding provision following 90 days of cohabitation and
    reconciliation cannot be interpreted as applying to the specific pension
    release.


III.

Analysis

[14]

While the appellant sought to rely on the
Pension Benefits Act
on the appeal, the court was advised that no such argument was made at trial.
    As noted above, the parties put two alternative positions to the trial judge
    based on the proper interpretation of the provisions of the separation
    agreement. The issue on appeal is whether he made a palpable and overriding
    error in interpreting and applying those provisions.

(1)

Reasons of the Trial Judge

[15]

The trial judge made his determinative finding at para. 24, as follows:

In my view, the releases in the agreement executed by the
    parties in the 2002 agreement are in the nature of a specific release
    considered in
Sydor
. The parties had made specific transfers and acted
    on the basis of those releases. Pursuant to the terms of their agreement, Ms.
    MacIntyre had already received her share of the pension, or, at least, was
    satisfied with that amount. The equalization payment to her was the sort of
    payment, conveyance or act envisioned by the agreement. By the terms of the
    agreement, Ms. MacIntyre had released her interest in Mr. Miaskowskis pension
    and that release survived the reconciliation.

[16]

Without so stating explicitly, the trial judge clearly recognized that
    the parties had reconciled for more than 90 days, and that the provisions of
    the separation agreement were therefore voided unless the exception applied. I
    repeat the exception here:

except that nothing in this paragraph will affect or invalidate
    any payment, conveyance or act made or done pursuant to the provisions in this
    agreement.

[17]

The trial judge found that the exception applied to the equalization
    payment to the wife because the payment either included her share of the value
    of the respondents Canada Post pension or an amount that she was satisfied
    with. He also found that the release of the pension entitlement in the
    separation agreement survived the reconciliation as it is the type of specific
    release referred to in
Sydor
.

(2)

The Effect of the Reconciliation Clause

[18]

With respect, the trial judge erred in his interpretation and
    application of the separation agreement by failing to give effect to the
    reconciliation clause that voids the agreement upon reconciliation for more
    than 90 days.

[19]

As this court stated in
Sydor
, at common law, the effect of
    reconciliation of separated spouses is to void the separation agreement subject
    to (a) a clause in the agreement that provides to the contrary or (b) a clause
    that indicates the intent of the parties that transactions carried out under
    the agreement will remain in place: at para. 22.

[20]

In this case, unlike in
Sydor
, the separation agreement
    provides for what will occur if the parties reconcile. By preserving the
    agreement if the reconciliation is very short-lived, it encourages the parties
    to attempt to reconcile without fear of the effect of the common law undoing
    the separation agreement. However, where the reconciliation is successful and
    lasts for more than 90 days, it essentially confirms the common law result. That
    is, in the event of a successful reconciliation, the separation agreement is void,
    except that payments, conveyances or acts that have been completed to carry out
    the agreement will not be invalidated.

[21]

Here, the reconciliation lasted for almost nine years. Therefore, the separation
    agreement is void, except that any payment, conveyance or act completed under
    the agreement will not be invalidated.

(3)

Two Errors

[22]

In my view, the trial judge made two errors in his reasons. The first
    was that he misapprehended the evidence regarding whether there was any
    payment for the value of the pension to carry out the terms of the separation
    agreement. In fact, there was no such payment and therefore the exception to
    the voiding provision did not apply.

[23]

The second error was that by finding that the pension release was not
    voided by the parties reconciliation, the trial judge failed to give effect to
    the express term of the reconciliation clause that provides that the separation
    agreement becomes void if the parties reconcile for more than 90 days.

(i)

Misapprehension of the evidence

[24]

The trial judges conclusion was based on his finding that the
    equalization payment made to the wife under the separation agreement included
    the value of her share of the pension up to the date of separation. However, the
    evidence was clear that no portion of the equalization payment that the
    appellant received related to the value of the husbands Canada Post pension.

[25]

The appellant testified that the respondent had only recently begun to
    contribute to his pension at Canada Post shortly before the original
    separation, and because there was so little in the plan, the amount of the
    potential division of that asset did not justify the cost of having it valued.
    The agreement recites in paras. 8.1 and 10.1 that the equalization payments
    were the amounts held in trust from the sale of the matrimonial home.

[26]

It is clear from the terms of the agreement, substantiated by the
    undisputed evidence of the appellant, that no amount was paid to the appellant in
    respect of any pension entitlement as part of the equalization payment.
    Therefore, the trial judges statement, at para. 24, that [t]he equalization
    payment to her was the sort of payment, conveyance or act envisioned by the
    agreement constitutes a palpable and overriding error in the apprehension of
    the evidence and the application of the terms of the agreement.

[27]

While the appellant was satisfied to receive no share in the
    respondents pension and, as part of the overall bargain made on separation, to
    release all future  rights to share the value of the respondents pension,
    voiding the release of the appellants future pension rights on reconciliation
    does not invalidate any conveyance, payment, or act that was made or done under
    the agreement. No money could be returned because no money was paid. Accordingly,
    on the facts, the voiding provision in the reconciliation clause, and not its
    exception, applied to the pension release.

(ii)

Mistaken Interpretation of the Reconciliation Clause of the Agreement

[28]

The trial judges second error involves the intent and effect of the provision
    that voids the separation agreement when the parties reconcile for more than 90
    days.

[29]

In interpreting the agreement, the court strives to discern the
    intention of the parties from the language of the separation agreement:
Bebenek
    v. Bebenek
(1979), 24 O.R. (2d) 385 (C.A.). The language of the voiding
    clause in the separation agreement in this appeal clearly demonstrates the intent
    on reconciliation to return the parties to the position they were in prior to
    separation. The bargain they made on separation, whereby they released each
    other from future rights and obligations, is set aside and becomes void. The
    parties are meant to regain all the rights they had as spouses that were
    bargained away in the separation agreement.

[30]

But the clause also provides that it is not necessary, in order to give
    effect to that intent, to undo conveyances or transfers that have been
    completed. For example, it may not be in the spouses control to obtain a
    reconveyance of a property that has been sold or transferred to a third party. Nevertheless,
    the fact that such a conveyance cannot be set aside will not derogate from the
    parties intention that the separation agreement become void on reconciliation
    for more than 90 days.

[31]

In this case, the parties focused on transfers between the spouses and
    the potential for unfairness under the terms of the agreement. In particular, is
    there potential unfairness if intra-spousal transfers and payments remain in
    place where the consideration for the transfer was not a payment but just a
    release of future rights, without also maintaining the release? The concern is
    that the spouse who receives the payment may ultimately be overcompensated if
    he or she does not release the other spouse from some corresponding obligation.

[32]

This concern will arise only exceptionally. Under the equalization of
    net family property regime established by the
Family Law Act
, R.S.O.
    1990, c. F.3, there will normally be no unfairness because the value of
    spouses net family property is equalized upon separation, subject to
    specifically identified exceptions. In this way, it will not ordinarily matter
    in whose name a particular asset is held. Subject to exclusions, all assets are
    valued on valuation day, and that value is equalized between the spouses so
    that each party will end up with half the value of the net family property: s.
    4. If a one-sided transfer or payment remains in place under the agreement, its
    effect is neutralized so long as it is included in net family property for the
    purpose of equalization.

[33]

Therefore, extrapolating from this case as an example, had the husband
    paid the wife an amount to represent her share of the value of his Canada Post
    pension as of the date of the first separation, for example, $10,000, then his
    funds would have been depleted by $10,000 and hers would have been increased by
    $10,000. After reconciling and separating again, leaving the transfer of
    $10,000 in place, the effect of equalization would be to put the parties in the
    same position as they would have been had the transfer never occurred. That is,
    absent the transfer, the husband would have had to pay the wife $5,000 by way
    of equalization. Leaving the transfer in place, the wife now owes the husband
    $5,000. Either way, the couples $10,000 is shared equally between them. The
    fact that the $10,000 was paid under the separation agreement to represent the
    value of the respondents pension on valuation day becomes irrelevant. On a
    subsequent separation of the parties, the value of the husbands pension from
    the date of the marriage forms part of his net family property.

[34]

Admittedly, unfairness could potentially arise in certain circumstances
    where completed transfers remain intact under the terms of the reconciliation
    clause. For example, by operation of either the defined exclusions from net
    family property, which are listed at s. 4(2) of the
FLA
, or the
    deeming of any otherwise negative net family property to be zero under s. 4(5),
    the equalization of net family property could fail to neutralize the effect of
    a completed transfer under the separation agreement.

[35]

In my view, the solution to any potential unfairness that might arise
    under these exceptional circumstances will be determined on a case-by-case
    basis.

[36]

For example, where it is clear that certain transfers completed under
    the terms of the agreement correspond to specific releases or payments, it may
    be appropriate to exclude these items from the net family property under s. 4(2)6.

[37]

In
Sydor
, this court had to contend with the completed sale of
    a property and division of its proceeds under a separation agreement prior to
    reconciliation. The court held, at para. 27, that:

based on the terms of the separation agreement and corroborated
    by the subsequent conduct of the parties, the trial judge was entitled to find
    that they intended the disposition of the Edgemore home under the separation
    agreement, which divided the value between them as of the separation date, to
    be final and to survive reconciliation. However, there was no basis in the
    agreement or the evidence to go further and find that the entire agreement was
    intended to survive a reconciliation and continuation of the marriage.

[38]

Similarly, in
Emery v. Emery
(2008), 51 R.F.L. (6th) 294 (Ont.
    S.C.), a case relied upon by the respondent, the court concluded that the
    general release in the separation agreement did not survive. However, the
    release of the husbands pension that was given specifically as consideration
    for the wifes receipt of the net proceeds of the sale of the matrimonial home,
    was held to remain intact so that on the parties subsequent separation, the
    pension was excluded from the calculation of net family property pursuant to s.
    4(2)6 of the
FLA
. As the court held in that case, [i]t would not be
    appropriate to equalize this asset [the pension] a second time: at para. 64.

[39]

The respondent submitted that the same result should apply in this case.
    However, while the pension release in the parties separation agreement is
    described and labelled as a specific release, as discussed above, it was not
    given in exchange for a payment of the wifes share of the pension. It was
    instead in the nature of and part of the general release of rights given as
    part of the overall bargain between the parties.

[40]

Conversely, where it is clear that a legal transfer of value was
    completed under the agreement with no corresponding consideration, the
    presumption of resulting trust may be invoked to allow the transferor to retain
    his beneficial interest.

[41]

In other cases, unfairness may be addressed by invoking the unequal
    division of net family property provision under s. 5(6)(h) of the
FLA
,
    which provides:

5 (6)
The
    court may award a spouse an amount that is more or less than half the
    difference between the net family properties if the court is of the opinion
    that equalizing the net family properties would be unconscionable, having
    regard to,



(h)
any
    other circumstance relating to the acquisition, disposition, preservation,
    maintenance or improvement of property.

[42]

There is no shortage of tools at the courts disposal
    to give effect to the spouses intentions and address consequences that were
    clearly unintended. In most cases, the equalization of net family property will
    neutralize the effect of a voiding clause that nonetheless maintains completed
    payments and transfers. Where, however, it does not, the specifics of the
    parties bargain will have to be examined and appropriate exclusions defined.

[43]

Importantly,
    there is no unfairness in this case.
The husbands position is that
    the wife should not be entitled to share in the value of his Canada Post pension
    for the roughly seven-year period during which they were living separate and
    apart and with other spouses. However, the alleged unfairness does not arise
    from any transfer completed under the agreement. Instead, it arises from the
    operation of the
FLA
,
which entitles married spouses to share
    in net family property so long as they remain legally married.

[44]

I note that the reconciliation clause used in the separation agreement
    in this case has been a precedent for over 30 years: see e.g., James C.
    MacDonald
et al.
, Precedents and Principles: A Comprehensive Review
    of Domestic Contracts, Canadian Bar Association  Ontario, Continuing Legal
    Education Program, Family Law for the Specialist, February 7, 1986. In order to
    clarify the intent of the parties, it may be helpful in future for such
    reconciliation clauses to address what the parties intend will occur upon
    reconciliation with respect to specifically contemplated transfers. For
    example, if the parties intend any transferred property to be treated as
    property that is to be excluded from the net family property under s. 4(2)6 of
    the
FLA
, that should be explicitly provided.

(4)

Parol Evidence

[45]

As I have concluded that the trial judge erred in his interpretation and
    application of the provisions of the separation agreement, it is not necessary
    to address the parol evidence issue. However, I note that the trial judge
    concluded his analysis of that evidence by finding that nothing in the parties
    conduct after their reconciliation set aside the terms of the separation
    agreement: at para. 43. Therefore, any reference to that conduct did not affect
    the result.


IV.

DISPOSITION

[46]

I would allow the appeal and find that no transfer or conveyance was
    made respecting any entitlement by the appellant to the value of the respondents
    Canada Post pension, the exception to the voiding clause in the separation
    agreement does not apply, and the release of the appellants right to share in
    the pension is void. As a result, of the two choices proposed by the parties,
    the appellant is entitled to receive a share of the respondents pension from
    the date of marriage to the date of the second separation.

[47]

I would order the costs of the appeal to the appellant in the agreed
    amount of $18,000, inclusive of disbursements and HST, and the costs ordered on
    the application of $10,000 be paid to the appellant.

Released: K.F. March 9, 2020

K.
    Feldman J.A.

I
    agree. David Brown J.A.

I
    agree. B. Zarnett J.A.





[1]

In oral argument, counsel for the respondent explained that he
    chose not to take the position that the specific release completely disentitled
    the appellant to the value of the pension, even though, in her view, that
    position was open to the respondent.


