





CITATION: Ward v. Ward, 2011 ONCA 178

DATE: 20110307


DOCKET: C51861


COURT OF APPEAL FOR ONTARIO


Laskin, Lang and LaForme JJ.A.


BETWEEN


Wilma Ward


Applicant (Respondent)


and


Kenneth Ward


Respondent (Appellant)


Gerald P. Sadvari, for the appellant


Julie Hannaford and Golnaz Simaei, for the respondent


Heard: January 20, 2011


On appeal from the order of Justice
          Barry H. Matheson of the Superior Court of Justice, dated February 26, 2010.


Lang J.A.:

I          INTRODUCTION
[1]

The appellant appeals from the decision of the trial judge, which
    declared invalid the parties Memorandum of Agreement (MOA) dealing with their
    matrimonial dispute.
[2]

For the reasons that follow, I would allow the appeal, set aside the
    order below, and declare the MOA to be a valid and binding domestic contract
    between the respondent husband, Kenneth Ward, and the appellant wife, Wilma
    Ward.
II         BACKGROUND
[3]

The parties married in 1988, when the wife was 32 and the husband 39
    years of age. The wife had been previously married and the husband had not. The
    husband practised medicine in Ontario and owned significant assets.  The wife
    was an x-ray technologist at the local hospital.
[4]

Immediately before the marriage, the parties signed a marriage contract,
    which excluded the husbands pre-marriage property from equalization in the
    event of a future separation.  The contract stipulated the value of the
    excluded property at $1.6 million, including the husbands interests in the
    Turks and Caicos Islands.
[5]

The parties had two children, both boys. With the birth of their first
    child in 1989, the wife left her employment with the hospital. She began to work
    part-time in the husbands practice, first by conducting hearing tests on patients,
    and later by assisting with the practices bookkeeping.  According to her
    affidavit, at the time of separation the wife was receiving income of
    approximately $3,500 monthly from the practice.
[6]

The parties separated in March-August, 2005. When they executed the MOA
    on November 30, 2005, the wife was 49 and the husband was 57 years of age. 
    Their two sons were 16 and 14. Through to December 2005, the wife continued to
    receive income from the husbands practice.  As well, by at least January 2005,
    it seems the wife also had employment income from her return to work as an
    x-ray technologist.  Under the terms of the MOA, the wife would start receiving
    $3,000 monthly spousal support in December 2005.
[7]

After consultation with their experienced family law counsel, the
    parties decided to pursue resolution of their matrimonial differences through
    the collaborative family law process. For the purposes of the collaborative
    meetings, which took place between May 6 and November 30, 2005, counsel and the
    parties used a figure of $273,000 for the husbands income, which was rounded
    down from his 2004 taxable income of $273,858.  They used a range of $47,000 to
    $55,000 for the wifes income as an x-ray technologist.  Although the parties
    marriage contract showed a figure of $1,672,000 as the value of the husbands
    assets at the date of marriage, it appears, for separation negotiations, that
    the parties used $1,050,659, after backing out certain excluded assets, such as
    the value of the medical practice.
[8]

Neither the wife nor the husband provided sworn financial statements
    during their negotiations.  While the wife requested a sworn financial
    statement from the husband at one point in one of their eight collaborative
    meetings, she did not subsequently pursue that request. The parties generally
    negotiated on the basis of net family property statements provided by the
    husband, as well as financial information provided by Sandy Wetstein. Mr.
    Wetstein, a chartered accountant with experience in family law matters, was
    also a business partner of the husband and the accountant for the husbands
    medical practice.  He was familiar with the parties financial situation and
    prepared their income tax returns. Mr. Wetstein was also a close friend of both
    spouses, as was Mr. Wetsteins wife.
[9]

At their seventh collaborative meeting on October 17, 2005, the parties
    addressed potential terms of settlement.  At their eighth meeting on November
    30, the parties reached an agreement on essentially the same terms as discussed
    at the end of the October meeting. Counsel wrote out items of resolution in the
    MOA.  The parties executed the MOA and their signatures were witnessed by their
    respective counsel.
[1]

[10]

During the November meeting, Mr. Wetstein shuttled back and forth
    between the parties to assist in building a consensus on the issues that were
    being discussed. Mr. Wetstein filed an affidavit in this proceeding, which was
    also filed as an exhibit at trial.
[11]

In his affidavit, Mr. Wetstein attested to the wifes familiarity with
    the husbands practice financial statements, his discussions with the wife
    about financial issues, the absence of any concerns raised by the wife
    concerning financial disclosure, and his belief that the MOA was executed
    voluntarily and freely and in full understanding of all of the facts necessary
    to address the issues before them. In his view, the parties reached a final
    agreement, the terms of which would be transferred to a formal, typed
    separation agreement.
[12]

The MOA was handwritten by counsel.  Its preamble specified that it was
    subject to counsel working out a separation agreement [with] satisfactory
    language. It then provided that the Deal is and enumerated the resolution of
    nine issues. Those issues dealt with equalization of net family property,
    including a $250,000 payment by the husband to the wife, the conveyance and
    possession of the matrimonial home and cottage to the husband, child and
    spousal support, verification of the husbands income for the purpose of child
    support, section 7 expenses, the formation of an education trust for the
    children, and life insurance to secure the husbands obligations.
[13]

A week after the MOA was signed, the husband provided the wife with
    $250,000 by depositing that amount with the wifes real estate lawyer. The wife
    used those funds to purchase a new home. In the meantime, the parties family
    law counsel began trying to reach an agreement on the language of the
    separation agreement, with the wifes counsel providing the first draft. After
    correspondence back and forth, in mid-2006, the wife had her counsel advise the
    husbands counsel that she was taking time to consider her options. In April 2007,
    she began a family law proceeding.  In response, the husband sought a
    declaration that the MOA was a settlement and domestic contract in accordance
    with sections 54 and 55 of the
Family Law Act
, R.S.O. 1990, c. F.3.
[14]

When the husband brought a motion seeking summary judgment, the parties
    agreed to an order for a trial to determine the issue of the validity of the [MOA]
     as set out in the Respondents Notice of Motion. The resulting consent order
    did not include the validity of the parties earlier marriage contract as an
    issue to be tried, even though the husband had raised the matter in his
    material.  For the purposes of trial, the parties agreed that their filed
    affidavits would be treated as evidence-in-chief and that cross-examination on
    those affidavits would be restricted to two hours each.
[15]

In addition, the husband filed the affidavit of his collaborative family
    law lawyer.  In that affidavit, the lawyer stated that full financial
    disclosure was made by both parties; that agreement was reached on all
    substantive terms apart from those necessary to give effect to the agreement;
    and that the wife had not resiled from the agreement  As well, as I mentioned,
    Mr. Wetsteins affidavit was entered as an exhibit at trial. At trial, the
    wifes counsel acknowledged that she did not cross-examine Mr. Wetstein on the
    contents of his affidavit.  While she told the trial judge that she would deal
    with that in closing, neither opening nor closing submissions were provided to
    this court.
III       THE DECISION
[16]

The trial judges reasons began by setting out the background and
    position of the parties.  He observed at para. 45 that, in his view, there is
    an argument that the [marriage contract] is open to be examined. He also
    commented on the significant difference between the husbands 2004 income of
    $273,000, which was used for the purposes of the negotiations, subject to
    updating, and his significantly higher taxable income of $469,968 in 2005.
[2]
The trial judge also remarked on the fact that the MOA was handwritten.  He
    noted that the husband did not deliver a sworn financial statement, as well as
    his understanding that one was repeatedly asked for.
[17]

At para. 58, the trial judge provided the following reason for declaring
    the MOA invalid:


I find that the Memorandum of Agreement signed
        November 30, 2005, is at best an outline to arrive at a binding separation
        agreement. There is, in my opinion, much more information needed to create a
        binding document. Also, financial information may be included that might have
        been excluded by the [marriage contract].


[18]

At paras. 59  60, immediately before addressing costs, the trial judge
    said that he also took into account the wifes depression.  As well, he found
    it disturbing that Mr. Wetstein was a business partner of the husbands and expressed
    the view that there should have been an independent accountant.
IV       ISSUES
[19]

The husband argues that the trial judge erred by:


1.

taking into account matters that were not within the scope of the trial;

2.

applying the wrong test; and

3.

concluding that the MOA was merely an outline.


He seeks a declaration that the MOA is final and binding.
V         ANALYSIS
(1)       Scope of the Trial
[20]

The husband argues that the trial judge took into account irrelevant
    considerations, including ss. 56(4)(a) and (b) of the
Family Law Act
, as
    well as the parties earlier marriage contract.
(i)
Section 56(4) of the
Family Law Act
[21]

Section 56(4)(c) of the
FLA
permits a court to set aside a
    domestic contract in accordance with the law of contract, which counsel agree
    would include grounds such as unconscionability, duress, uncertainty, undue
    influence, mistake and misrepresentation.  In addition to the common law
    grounds, ss. 56(4)(a) and (b) permit a court to set aside a domestic contract
    in the face of significant non-disclosure or where a party did not understand
    the nature or consequences of the domestic contract.
[22]

In the husbands view, the wife could not rely on s. 56(4), particularly
    s. 56(4)(a) or (b), because neither provision was specifically pleaded. As a
    result, the husband argues, the issues before the trial judge were limited to
    whether the MOA met the requirements of formal validity and whether it
    contained all the essential terms necessary to evidence an agreed-upon
    contract.
[23]

The difficulty with the husbands argument is the parties general lack
    of specificity at the time they agreed to a trial of the issue and, apparently,
    in the issues placed before the trial judge in their submissions.
[24]

The consent order provided for a trial of the issue as set out in the
    husbands notice of motion, which was broadly worded.  Under grounds, the
    motion described the MOA as an agreement entered into voluntarily between the
    parties after lengthy negotiation over time through experienced counsel with
    full disclosure. This description in itself appears to raise a number of issues
    relevant to the binding nature of the MOA.  Indeed, those issues are reflected
    in the parties affidavits, which advanced a significant amount of evidence
    about the circumstances surrounding the negotiation and execution of the MOA,
    including the wifes evidence about her state of mind, her allegation that she
    did not understand the nature or consequences of the contract and the husbands
    secretiveness surrounding his assets.  Indeed, the three volumes of exhibits,
    including the minutes of the collaborative law meetings, demonstrated the
    breadth of the issues before the trial judge.  It is clear that the purpose of
    the affidavits and other evidence led at trial, as well as the arguments
    presumably made by trial counsel, engaged the application of s. 56(4) in its
    entirety, even if not by section number.
[25]

Moreover, it is not argued that reliance on s. 56 (4)(a) or (b) caused
    any relevant prejudice to the husband in the sense that different evidence
    would have been adduced, argument made or position taken.
[26]

I conclude that the trial judge was entitled to consider the issues
    pertinent to s. 56(4)(a) and (b). Accordingly, I will now turn to consider
    whether the evidence supported a finding on either basis that the MOA should be
    set aside, dealing first with whether the evidence supported a finding that the
    wife did not understand the nature
or
consequences of the MOA. After
    considering that issue, as well as the question of disclosure, I will move to
    the issue of the marriage contract.
(ii)
Section 56(4)(b): Nature or consequences
[27]

Although the trial judge did not specifically address
    s. 56(4)(b) by section number, his reasons could be read to do so to the extent
    that, in coming to his decision, he took into account the wifes depression at
    the time she signed the MOA in 2005.
[28]

However, the wifes evidence at trial was that she
    suffered from depression in the fall of 2001 into the winter of 2002. Her
    counsel was unable to point to
evidence that her depression was ongoing
    in 2005 or that she suffered from any other mental health issue that would have
    affected her ability to understand the nature or character of the MOA. 
    Accordingly, I conclude that there was no evidence to support the trial judges
    finding of depression in 2005.
[29]

While there was evidence that the wife felt pressured to sign the MOA
    for other reasons - such as the need for funds to buy her house; the problems
    in her relationship with her husband; and the time at which she was to pick up
    her son - they did not rise to the level required to establish that the wife
    did not understand either the nature of the MOA or its consequences.
[30]

Indeed, to the contrary, the evidence supported a finding that the wife,
    who was represented by experienced family law counsel, fully understood both
    the nature and the consequences of the MOA.  As I will discuss, this finding
    was supported by the parties conduct at the time of the MOA.
(iii)
Section 56(4)(a): Non-disclosure
[31]

Section 56(4)(a) allows a court to set aside a domestic contract, or a
    provision in a domestic contract, for significant non-disclosure. In this case,
    while the trial judge did not find significant non-disclosure in those words,
    he concluded that the agreement was invalid in part because more information
    was required.
[32]

The trial judge made a finding that the husband was repeatedly asked
    for his financial statement. As I mentioned earlier, neither party filed a
    financial statement, nor was one required under the terms of the process to
    which they agreed.  While this did not diminish the obligation to disclose, in
    this case, the parties relied on the collaborative law process and other
    avenues of disclosure, including net family property statements and information
    from Mr. Wetstein. The wife never pursued the one request she made of the
    husband for a sworn financial statement.  In these circumstances, the trial
    judges finding of a repeated failure to provide a financial statement was
    not available on the evidence.
[33]

Apart from the issue of a formal financial statement, the trial judge
    also concluded that more information was needed. It would have been helpful
    if the trial judge had expanded on this to describe the information that he
    found critical to the parties entry into a binding settlement.
[34]

The wife argues that the information referred to by the trial judge
    encompassed disclosure of both the husbands assets and his income.  On this
    issue, the wifes position relates mainly to the husbands Turks and Caicos
    assets.  However, that position was not supported by the evidence.   Indeed, the
    evidence was clear that the wife knew about the existence of the Turks and
    Caicos assets. At the June 8, 2005 meeting, there was discussion about the husbands
    property in the Turks and Caicos. The husband held a 50% interest in that property,
    which was worth about $1 million. They also discussed his investments in the
    Turks and Caicos. At the July 11 meeting, the husband acknowledged that the
    Turks and Caicos property and other assets had been sold in mid-June. At both the
    September meetings, the Turks and Caicos assets were further discussed,
    including the sale of the property. It was left that the wifes lawyer would
    speak directly to Sandy Wetstein to get the information.
[35]

Indeed, the wife and her counsel did so. As a result, during the
    negotiations, the wife knew that the Turks and Caicos assets had been sold and
    that the husband held the proceeds in a London bank account.  Mr. Wetstein told
    the wife that the proceeds exceeded $1 million, although in fact, the eventual net
    proceeds after tax were approximately $867,000.  As well, the wife was clearly
    aware that, in any event, the Turks and Caicos assets were excluded under the
    terms of the marriage contract.
[36]

The wifes knowledge of the husbands assets was also supported by the unchallenged
    affidavits of the husbands counsel and Mr. Wetstein. While the husband deflected
    disclosure to Sandy Wetstein, this method of disclosure was apparently accepted
    by the parties as reliable.  It is evident that even if the disclosure came
    from Mr. Wetstein, rather than the husband, the necessary information was
    within the wifes knowledge. Accordingly, a conclusion that the husband failed
    to disclose or misrepresented the Turks and Caicos assets during the
    negotiations was not available on the evidence.
[37]

The trial judge also raised an issue about information provided by the
    husband concerning his 2005 income. During the negotiations, the parties knew
    the husbands income for each of the years from 2000 to 2004 inclusive. The
    husbands 2002 taxable income was $450,000, which included a $120,000 capital
    gain and $340,000 of income from his practice. In 2003, his income, which was
    primarily from practice, fell to $316,000.  It fell further in 2004, the year
    before the parties separation, to $273,858. This was the figure that the
    parties rounded down to use in their negotiations from May to November of
    2005.  During the initial months of the negotiations it was clear the husband
    could not predict his income for that calendar year.
[38]

His tax return for 2005, which was prepared in April 2006, apparently
    showed significantly increased income in the amount of $469,968.  However, that
    figure included income from the Turks and Caicos assets, and capital gains on
    their sale, in addition to practice income. While the trial judge made a
    factual finding that the husband would have known about the increase in his
    2005 income at the time of the MOA, on her own evidence, the wife, who did
    bookkeeping work in the practice, conceded that this would not have been the
    case.  It was for this reason, in addition to the fact that their negotiations
    began in May 2005, that the parties based their negotiations on the 2004
    year-end practice financial statement. Finally, it would have been evident to the
    wife and her counsel that the husbands income fluctuated from year-to-year,
    sometimes significantly.
[39]

The parties awareness of the potential fluctuation in the husbands
    income is apparent from the child support provisions of the MOA. The MOA
    specifically provided that Sandy [Wetstein] to verify [the husbands] income
    and that child support would be premised on that income in accordance with the
Child
    Support Guidelines
,
O.
    Reg. 391/97
commencing in December 2005.
[40]

Child support would have been subject to variation on the basis of the
    husbands 2005 increased income in any event. Similarly, the MOAs provision
    for a 75%/25% sharing of section 7 expenses, which included significant costs
    for private school and summer camp for both children, would be subject to
    variation based on material changes in the parties relative incomes.
[41]

As far as spousal support was concerned, the minutes of their meetings
    demonstrate that the parties had consulted the
Spousal Support Advisory
    Guidelines
(Ottawa,
    Department of Justice, 2008)

during
    their negotiations. From that, they determined the applicable range of spousal
    support based on their 2004 incomes. However, the MOA provisions for spousal
    support ultimately were not premised solely on the parties respective incomes,
    but also, significantly, on the issues surrounding equalization.
[42]

During the parties negotiations, the wife proposed that she obtain
    ownership of the matrimonial home.  Assuming the validity of the marriage
    contract, this would have required her to make equalization payments to the
    husband of approximately $200,000. At the time, the proposal was that the wife
    would fund such a payment by way of deductions from her monthly spousal
    support. The parties came to realize this was an unrealistic proposition.
[43]

The husband made a counteroffer.  He would take title to both the
    matrimonial home and the cottage, and provide the wife with $250,000, which she
    could use to buy her own home. The husband made this offer even though the net
    family property calculations showed that, accepting the husband took the
    matrimonial home and cottage, the wife would have been entitled to an
    equalization payment of approximately $14,000.
[44]

Further offers were exchanged that resulted in the terms contained in
    the MOA, including the offer of $3,000 monthly spousal support. It is evident that
    this amount of spousal support bore no relationship to the
Spousal Support
    Advisory Guidelines
discussed during negotiations.  Rather, it was
    intertwined with settlement of the equalization issue. This is why the parties
    did not frame spousal support as a minimum amount to be adjusted on the basis
    of the husbands 2005 income, even though they had made that stipulation with
    respect to child support.  In any event, the spousal support of $3,000 monthly,
    which I observe was for an indefinite duration, would also be subject to
    variation in the event of materially changed circumstances, such as the
    husbands increased 2005 income.
[45]

Finally, the trial judge was troubled by Mr. Wetsteins role in the
    negotiation of the MOA.  Mr. Wetsteins position, acting as a
    friend/go-between/accountant between the parties, may have been inadvisable,
    particularly with the benefit of hindsight.  However, it was not established on
    the whole of the evidence to have had an adverse impact on the parties
    knowledge of each others financial positions and the validity of the MOA.
[46]

Accordingly, in my view, the evidence did not support the trial judges
    conclusion that more information was needed to render the MOA binding.
(iv)      The Marriage
    Contract
[47]

In addition to concerns about more information, the trial judge observed
    that the marriage contract is also being attacked because of the pressure to
    sign just before the marriage and concluded, apparently, that further
    information was also needed in that regard.
[48]

However, even though the husband had initially sought a declaration of
    the marriage contracts validity, that issue was specifically omitted from the
    order setting out the issues for trial. As well, while the wifes appellate
    counsel stated in argument that the marriage contract was in play before the
    trial judge, she did not pursue the issue in her oral argument or in her
    factum.
[49]

The decision not to pursue this issue is understandable since the evidence
    of pressure arising from the parties wedding date did not rise to the level
    necessary to set aside the marriage contract. Indeed, the evidence disclosed
    that the parties lawyers, who were experienced family law counsel, negotiated
    changes to the husbands proposed marriage contract.
[50]

Moreover, the wife did not challenge the validity of the marriage
    contract when negotiating the terms of the MOA. While her counsel expressed
    concern about the likely grossly exaggerated value ascribed to the medical
    practice (which the parties backed out of the equation), he also observed that
    the marriage contract appears to be valid.
(2)       The Proper Test
[51]

The husband argued that the trial judge incorrectly applied the test for
    summary judgment and did not appreciate that he was hearing a trial of the
    issue. The husband is correct that, in error, the trial judge described the
    proceedings before him as a summary judgment motion at points in his reasons.
    This error likely arose because the trial of the issue followed from the order
    made on a motion for summary judgment. Despite that error of nomenclature, the
    trial judge knew and stated that the matter was the trial of an issue.  A
    fair reading of his reasons as a whole leaves no doubt that the trial judge
    appreciated that he was reaching a decision after a trial based on the evidence
    called.   I would not give effect to this ground of appeal.
(3)       Common Law Grounds:
    Was the MOA Only an Outline?
[52]

I turn now to the trial judges finding that the MOA was at best
    an outline or an agreement in principle. This finding underpins the trial
    judges view that the MOA was not a binding contract, but simply an agreement
    to agree. Since the trial judge did not give reasons for his determination that
    the MOA was an outline, beyond commenting on its handwritten nature, it is
    necessary to examine the evidence to see if it supports his conclusion.
[53]

At common law, an agreement is binding if the parties consider
    that it contains all essential terms, even if the parties also agree that those
    terms will subsequently be recorded in a more formal document together with the
    usual terms ancillary to that type of agreement. However, an agreement is not
    final or binding if it is merely an agreement to later agree on essential
    provisions, or to defer the binding nature of the agreement until the execution
    of the proposed subsequent formal contract. The proper approach was discussed
    in
Bogue v. Bogue
(1990),
46 O.R. (3d) 1
(C.A.) where, at para. 12, Rosenberg J.A. cites Robins J.A. in
Bawitko
    Investments Ltd. v. Kernels Popcorn Ltd.
(1991),
79 D.L.R. (4th) 97 (Ont. C.A.) at
pp. 103 - 104 as explaining the true
    legal position:
As a matter of normal business practice, parties
    planning to make a formal written document the expression of their agreement,
    necessarily discuss and negotiate the proposed terms of the agreement before
    they enter into it. They frequently agree upon all of the terms to be
    incorporated into the intended written document before it is prepared. Their
    agreement may be expressed orally or by way of memorandum, by exchange of
    correspondence, or other informal writings.
The parties may contract to
    make a contract, that is to say, they may bind themselves to execute at a
    future date a formal written agreement containing specific terms and
    conditions. When they agree on all of the essential provisions to be
    incorporated in a formal document with the intention that their agreement shall
    thereupon become binding, they will have fulfilled all the requisites for the
    formation of a contract. The fact that a formal written document to the same
    effect is to be thereafter prepared and signed does not alter the binding
    validity of the original contract.
However, when the original contract is
    incomplete because essential provisions intended to govern the contractual
    relationship have not been settled or agreed upon; or the contract is too
    general or uncertain to be valid in itself and is dependent on the making of a
    formal contract; or the understanding or intention of the parties, even if
    there is no uncertainty as to the terms of their agreement, is that their legal
    obligations are to be deferred until a formal contract has been approved and
    executed, the original or preliminary agreement cannot constitute an
    enforceable contract.
In other words, in such circumstances the contract
    to make a contract is not a contract at all. The execution of the contemplated
    formal document is not intended only as a solemn record or memorial of an
    already complete and binding contract but is essential to the formation of the
    contract itself. [Emphasis added, citations omitted.]
[54]

As well, to be binding, it is not necessary that the original contract
    include all the ancillary terms that are already implicit in its content. As
    Rosenberg J.A. observed in
Bogue
at para. 13:


While there was no express discussion about a
        release, the settlement of the action implied an obligation to furnish
        releases:
Fieguth v. Acklands Ltd
.
(1989), 59
          D.L.R. (4th) 114
(B.C.C.A.). At the end of those negotiations, the
        parties had bound themselves to the settlement. It only remained for the
        lawyers to reduce the terms to a formal document. This was not simply an
        agreement to agree.


[55]

In my view, there are three reasons to conclude that the MOA was binding
    and the proposed separation agreement that was to follow was not a condition
    precedent to its binding nature.  First, the plain language of the preamble
    says so. Second, the parties reached agreement on all essential terms and the
    subsequent points of contention were merely incidental to or were implicit in
    the final agreement already reached. Third, the parties conduct at the time
    supports the conclusion that the parties had reached a final and binding
    settlement with the execution of the MOA.
(i)        The
    Preamble
[56]

If the parties had intended the MOA to be merely an agreement to agree
    they could easily have said so. The preamble to the MOA could have provided
    that the settlement was subject to the
parties
reaching a consensus on
    the
terms
of a separation agreement. Instead, it provided that the
    parties
lawyers
would work out satisfactory
language
for the
    separation agreement.  The parties were not left to negotiate further essential
    terms.  The terms had already been agreed.  It was simply left to the lawyers
    to work out any language necessary to give effect to that agreement. On its
    plain language, the MOA was a deal.
(ii)       The
    Terms of the MOA
[57]

Counsel for the wife takes the position, despite the wording of the
    preamble, that certain essential terms were missing or, alternatively, even if
    the parties once had a deal, they resiled from or repudiated the MOA through
    the subsequent correspondence between their counsel.
[58]

Specifically, in her appeal factum in support of this position, the wife
    points to ongoing discussions and counsels correspondence regarding what she
    characterizes as essential terms. She says that it was essential that the
    parties agree to particulars allowing for the future variation of child and
    spousal support. However, counsel for the parties clearly recognized that
    support would be subject to variation in the normal course. Indeed, terms
    providing for present and future income disclosure and support variation were
    specifically set out in the wifes proposed separation agreement, which was drafted
    within days of the execution of the MOA. There was no uncertainty about those
    terms, including the wifes right to apply to vary spousal support in the event
    of a material change, including a material change in the husbands 2005 income.
[59]

The wife also argues that the MOA lacked other essential provisions,
    particularly a mobility clause, the conditions of the agreed-upon education
    trust and the precise terms for her three-week use of the cottage. In my view,
    none of these were essential terms.
[60]

A mobility clause was not included in the MOA, nor referenced in the
    minutes of the parties collaborative meetings.  It seems the parties had earlier
    agreed to joint custody with the children maintaining their primary residence
    with the wife, subject to liberal access to the husband.  This apparent
    agreement was reflected in the wifes draft separation agreement, and was not
    the subject of comment between counsel in their discussions of the proposed
    separation agreement.
[61]

Apart from the usual terms concerning custody and access, the wifes
    counsel inserted an unusual mobility clause into the draft separation agreement,
    which purported to prohibit either parent from moving more than 50 kilometres
    without the consent of the other while a child remains a minor.  This
    proposed provision, particularly to the extent that it prohibited the husband
    from moving, could not be an essential term of the parties agreement in the
    circumstances of this case, particularly given the childrens ages of 14 and 16
    years at the time of the agreement.
[62]

As far as the education trust, its essential conditions were set out in
    the MOA, including the provision for a third party trustee. It may be, had
    matters proceeded in the normal course, that the trustee would have been Sandy
    Wetstein, as proposed in the wifes draft separation agreement. However, the
    identity of the third party trustee was merely incidental to the MOA and could
    (and still can be) readily resolved by the parties or a court.
[63]

Finally, the wife describes uncertainty regarding the agreed-upon term
    in the MOA that she would have use of the cottage for three weeks each year
    with specific times to be finalized. However, any problem in reaching an
    agreement in a year regarding specific times could be resolved through the
    usual family law processes. The need to particularize timing could not be said
    to have rendered the MOA uncertain in any essential way. The wifes subsequent
    proposal, incorporated into her draft separation agreement, that she would
    notify the husband by May 1 of each year when she would use the cottage and on
    which days, does not diminish the finality of the term to which the parties had
    already agreed.
[3]
Any breach of the provisions of the agreed-upon term would be the subject of
    separate negotiations or proceedings.
[64]

In this case, the trial judges conclusion about the MOA was apparently
    also influenced by another consideration. He found the fact that the MOA was
    handwritten was worthy of comment in light of the fact that it was meant to
    deal with a great deal of money. However, many family law settlements are
    initially handwritten during a settlement meeting in contemplation of later
    incorporation into a final separation agreement, together with other usual,
    agreed-upon, implied or boilerplate terms. The fact that the MOA was
    handwritten in this case does not support the inference that the parties
    considered it to be merely a starting point for their negotiations,
    particularly when viewed with the other circumstances, including its
    preparation by counsel and witnessed execution by the parties.
(iii)     The Parties Conduct
[65]

In determining whether a contract was binding, the court can look to the
    parties conduct at the time. The use of conduct evidence for this purpose was
    discussed in
Bawitko
, which involved a purported franchise agreement. In
    that case at p. 107, this court concluded that the parties oral contract was
    not binding, based in part on the fact that their conduct demonstrated that
    they were not ad idem on all of the terms.
[66]

In
Andrews v. Lundrigan
(2009),
247 O.A.C. 15
,
    this court upheld the decision of the motion judge and concluded that the
    parties, not having agreed on the essential terms of a formal document, had not
    entered into a binding contract. In doing so, this court confirmed the
    importance of discerning intention, including by looking at the parties
    conduct, to determine whether the proposed formal document was merely a solemn
    record of an agreement already reached or a means by which an agreement was to
    be reached in the future. The court explained at para. 8:
As the passage quoted above from
Bawitko
indicates, the intention of the parties is important in determining whether or
    not there was a final settlement that was merely to be recorded in a formal
    document. The term intention is not used in a subjective sense but rather to
    refer to whether in the eyes of a hypothetical onlooker [the parties] appeared
    to have reached an agreement: G.H.L. Fridman,
The Law of Contract in Canada
,
    5th ed. (Toronto: Thomson Carswell, 2006), at p. 6. In making this
    determination, the court will look at the conduct of the parties at the time.
    As was said in
Bawitko
at p. 104, if in examining what transpired it is
    apparent that execution of the contemplated formal document is not intended
    only as a solemn record or memorial of an already complete and binding contract
    but is essential to the formation of the contract itself, there is no
    contract, or in this case, no settlement.
[67]

Finally, the motion judge in
Bogue
, Belch J., granted judgment on
    the basis of the parties oral settlement, which was reached with the help of
    counsel following lengthy discussions. After the oral settlement, the husbands
    counsel prepared a draft separation agreement that included an unusual form of
    release. Correspondence between counsel ensued. The husband took the position
    that the wifes refusal to accept the unusual term was a deal breaker. The
    motion judge concluded that the husbands proposed clause did not fit within
    the category of a standard release clause. His decision was upheld by this
    court.
[68]

In this case, despite the able argument of the wifes counsel to the
    contrary, the binding nature of the MOA is supported by the parties conduct at
    the time.  The MOA was executed on November 30, a Wednesday.  By the following
    Wednesday, the wifes then counsel had prepared and forwarded a proposed
    separation agreement to the husbands then counsel.  The husbands counsel
    responded immediately with suggestions about the wording saying, I have the
    following comments for your consideration.  From this, it is apparent that
    counsel were acting in accordance with the wording of the agreement: they were
    trying to reach an agreement about the formal documents language.  There was
    no suggestion that the parties were not bound by the MOA.
[69]

Most significantly, the husband and wife acted as though they had a
    binding agreement.  The husband delivered his $250,000 cheque to the wifes
    real estate lawyer on December 7, 2005.  The wife accepted those funds and used
    them to close the purchase of her new home. She expressed no second thoughts or
    concerns about the terms of the executed MOA. This was not the conduct of
    parties who thought they had yet to negotiate other terms. Rather, it was the
    conduct of parties who acted and performed as though they had a deal, knowing
    as they did that the language of the separation agreement was being worked out
    by their counsel.
[70]

After the husbands counsel sent his comments on December 7, matters
    were apparently held in abeyance over Christmas while the wife closed her real
    estate transaction and moved into her new home with the children. At no time
    did the wife indicate there was not a binding contract or try to return the
    $250,000. On January 4, 2006, the husbands counsel wrote the wifes counsel
    seeking his thoughts in response to the December 7, 2005 letter.  On January
    30, 2006 after obtaining his clients request for several changes to the
    proposed draft agreement, the husbands counsel suggested that the parties and
    counsel meet to deal expeditiously with the issues in dispute.  No one
    suggested those issues were essential.
[71]

Apparently counsel continued to be in contact. On February 13, a further
    letter followed outlining the husbands instructions in relation to the draft
    Separation Agreement.  While the letter contained a number of comments about
    the detail and legal wording of the wifes proposed separation agreement, many
    of the paragraphs were expressed in terms of the husbands wishes, suggestions,
    proposals and indications. There was no indication or suggestion that the
    husband took the position that the parties had not already reached an agreement
    or that he repudiated the terms of the MOA.  The letter concluded, I look
    forward to speaking with you once you have had an opportunity of speaking to
    [the wife] concerning the above.
[72]

Again, the wifes counsel did not respond by denying that the MOA was a
    binding agreement.  Indeed, the parties continued to take steps to implement
    the terms incidental to those set out in the MOA.  For example, on February 28,
    the husbands counsel sent a bank letter confirming that the wife was not
    responsible on the line of credit.
[73]

On March 3, the wifes counsel wrote: further amendments to the
    agreement will be predicated on your client bringing support into good
    standing, if it is not already so, and maintaining his payments on time. This
    was an affirmation of the parties earlier agreement. On March 6, counsel
    confirmed that the husband followed through and had paid child and spousal
    support. He enquired whether the wife had received the March cheque. This also
    evidenced the husbands belief in the binding nature of the parties earlier agreement.
[74]

It was not until March 7, more than three months after the MOA and its
    partial implementation, that the wifes counsel wrote that his client was not
    content with the proposed wording changes and was taking time to consider
    her options.  Even at this point, the wife did not take the position that
    there was no contract or that it been repudiated.
[75]

On April 26, the husbands counsel wrote [p]ursuant to the written
    agreement reached between the parties it was necessary to execute property
    transfers to implement the MOA.  The husbands counsel followed up on this with
    letters dated June 14 and June 29. For the most part, with the exception of the
    summer use of the cottage, the parties continued to abide by the agreement
    until the wifes launch of this litigation in April 2007 and her subsequent
    denial of the MOA.
[76]

In short, the parties conduct at the time of the agreement was in
    keeping with the conclusion that the MOA was a binding contract and their
    conduct thereafter is also consistent with that conclusion.  Accordingly, I
    would not give effect to the wifes grounds of attack on the validity of the
    MOA.
[77]

In that light, it is unnecessary to deal with the husbands appeal of
    the costs disposition at trial.
VI       RESULT
[78]

For these reasons, I would allow the appeal, set aside the order below,
    and declare valid the parties domestic contract of November 30, 2005.  Any
    issues surrounding the usual ancillary terms to implement the MOA and any issue
    surrounding its enforcement are matters to be determined by a judge of the
    Superior Court of Justice.
VII      COSTS
[79]

In light of the disposition of this appeal, the costs order below
    is also set aside.  If the parties are unable to agree regarding trial costs, they
    may make brief written submissions.  The appellant may do so within 30 days from
    the release of these reasons, through the office of the senior legal officer,
    John Kromkamp. The respondent may make submissions within 15 days thereafter.
[80]

Costs of the appeal are awarded to the successful appellant fixed
    in the agreed-upon amount of $15,000 (inclusive of disbursements), plus
    applicable taxes.
RELEASED:  Mar. 7, 2011
JL                                                                                     Susan
    E. Lang J.A.
I
    agree John Laskin J.A.
I
    agree H.S. LaForme J.A.

[1]
In accordance with the collaborative process agreed upon by the parties, the
    lawyers who represented them during the negotiations leading to the MOA could
    not represent them in the litigation that ensued, including this appeal.
    Accordingly, the parties were represented by different counsel at trial and the
    husband by a third counsel on this appeal.


[2]
The husbands income for 2005 of $469,968 included income from the Turks and
    Caicos assets, capital gains from their sale and income from his medical
    practice.  The breakdown of the various sources of income was unclear on appeal
    since the husbands 2005 income tax return did not form part of the record put
    before this court.


[3]

I observe that the wife also proposed that, at her option, she take her three
    weeks use of the cottage by taking all 21 days during the summer weekends.
    Such a proposal would indeed fall outside the norm of a usual provision in a
    separation agreement.
