



COURT OF APPEAL FOR ONTARIO

CITATION: Moses Estate v. Metzer, 2017 ONCA 767

DATE: 20171004

DOCKET: C61974

Hoy A.C.J.O., Huscroft and Paciocco JJ.A.

BETWEEN

Tsur Moses as Estate
    Trustee

For the Estate of Ora
    Moses, deceased

Plaintiff (Respondent)

and

Oded Metzer

Defendant (Appellant)

Simon Morris and John Adair, for the appellant

Igor Ellyn and Ryan Kniznik, for the respondent

Heard: September 15, 2017

On appeal from the judgment of Justice Wendy Matheson of
    the Superior Court of Justice at Toronto, Ontario, dated March 14, 2016, with
    reasons reported at 2016 ONSC 1765.

By the Court:

[1]

This appeal arises from a dispute between the appellant, Oded
    Metzer, and the respondent, the Estate of Ora Moses.  Ora Moses was the
    appellants former spouse.  The couple never married and separated before her
    death.  The main issue at trial was whether broadly-worded waivers of property
    rights in the couples Cohabitation Agreement applied to three development
    properties.

[2]

Under the Cohabitation Agreement, dated July 23, 2007, the
    rights of ownership were stated to govern property division, the parties waived
    any claims to beneficial ownership, they agreed to deal with their property as
    though they were unmarried, and they specifically waived rights to the property
    of the other.

[3]

At trial, the respondent claimed, amongst other relief, either a
    constructive or resulting trust interest in the property municipally known as
    21 Parkwood Avenue, Toronto Ontario, to which the appellant alone held title,
    or an order setting aside clauses 9, 10, 11 and 12 of the Cohabitation
    Agreement.

[4]

The trial judge found that though never formalized, a property
    development agreement (the PDA) existed between the appellant and Ora Moses. 
    She further found that despite the express wording of the Cohabitation
    Agreement, there was convincing evidence that the PDA and not the Cohabitation
    Agreement governed 21 Parkwood and two other development properties in which
    the parties invested.    The evidence of the PDA included, amongst other
    things, the appellants own testimony of the understanding between him and Ora
    Moses, and two letters, both dated after the execution of the Cohabitation
    Agreement, which confirmed that the parties had a clear agreement about their
    respective interests in the development properties.  The letters also set out the
    specific nature of this agreement.  Namely, that after the settlement of all
    related debts, each party would be refunded his or her share of the initial
    investment in the property, with the remaining profit shared equally between
    them.

[5]

The trial judge found that the PDA was not an enforceable
    agreement to amend the Cohabitation Agreement because it was not in writing,
    signed by the parties, and witnessed, as required by s. 55(1) of the
Family
    Law Act
, R.S.O. 1990, c. F.3, as am. (
FLA
).
However, relying on s. 56(4)(b)
of the
FLA
, the trial judge set aside the Cohabitation Agreement as it applied
    to the three development properties
.  She granted judgment in favour of
    the respondent in the amount of $3,325,000 for amounts owing under the PDA as
    well as pre- and post-judgment interest and costs in the amount of $315,000.

[6]

At the hearing, the appellant narrowed his
    arguments to the following. The trial judge erred:

(1) in
    setting aside the Cohabitation Agreement, only as it applied to the development
    properties;

(2)
    in not setting aside the whole Cohabitation Agreement, including the waiver of
    support clause; and

(3)  in
    calculating the amount owing under the terms of the PDA.

[7]

We address each alleged error in turn.

[8]

The Cohabitation Agreement is a domestic
    contract as defined by the
FLA
.  Section 56(4)
    permits a court, on application, to set aside a domestic contract or a provision
    in it under certain circumstances.  In this case, the trial judge held that s. 56(4)(b)
     if a party did not understand the nature or consequences of the domestic
    contract  was engaged.

[9]

As the trial judge herself explained, in
LeVan
    v. LeVan
, 2008 ONCA 388, 90 OR (3d), this court approved
    of the two-part approach to applying s. 56(4) articulated in
Dochuk
    v. Dochuk
(1999), 44 RFL (4
th
) 97 and
Demchuk
    v. Demchuk
, [1986] O.J. No. 1500 before that.  First, the
    party seeking to set aside must demonstrate that one of the listed
    circumstances within s. 56(4) has been engaged.  This is a necessary but
    insufficient condition for invoking the power to set aside.  The court must
    then consider whether it is appropriate to exercise discretion in favour of
    setting aside the agreement or a provision within it.

[10]

This is precisely the approach the trial judge
    took in this case.  She first found that there was overwhelming evidence that
    neither party to the Cohabitation Agreement understood its consequences in
    regard to their property development venture (para. 139).  This conclusion was
    amply supported by the record and, in his oral submissions, counsel for the
    appellant ultimately conceded that there is no basis for this court to
    interfere with that factual finding.

[11]

The trial judge then went on to consider whether
    it was appropriate to exercise her discretion to set aside all or part of the
    Cohabitation Agreement. In
LeVan
, this court
    held, at para. 60, that fairness was an appropriate consideration in the
    exercise of the courts discretion in the second stage of the s. 56(4)(a)
    analysis.  Here, the trial judge set aside the Cohabitation Agreement as it
    applied to the development properties because in her view, it would be a
    failure of justice to broadly enforce the property clauses in the Cohabitation
    Agreement in the circumstances of this case (para. 148).

[12]

The trial judges conclusion that enforcing the
    property clauses in the Cohabitation Agreement would be a failure of justice
    was based on detailed factual findings which were in our view amply supported
    by the record.

[13]

Having so found, we do however agree with the appellant
    that the trial judge erred in setting aside the property waiver clause of the Cohabitation
    Agreement only as it related to the development properties.

[14]

Section 56(4) of the
FLA
permits a court to set aside a domestic contract or a provision in
    it. This contemplates setting aside a contract or provision in its entirety. It
    does not permit the court to, in effect, amend a domestic contract by providing
    that it does not apply to certain assets.  Moreover, the respondent did not
    seek that relief at trial. Rather, the respondent sought an order setting aside
    in their entirety clauses 9, 10, 11 and 12 of the Cohabitation Agreement.

[15]

Counsel for the Appellant argues that given the
    inadequate financial disclosure provided by both parties prior to signing the
    Cohabitation Agreement, the effect of setting aside clauses 9, 10, 11 and 12
    cannot be known such that setting aside the clauses is inappropriate.

[16]

We disagree.  Neither party argued inadequate
    disclosure as a basis for setting aside the Cohabitation Agreement.  And the
    only property put in issue by the pleadings was 21 Parkwood.  There is no
    evidence that setting aside clauses 9, 10, 11 and 12 would have any effect on
    any other property.

[17]

To give effect to the trial judges factual
    findings and conclusions, we would modify the application of s. 56(4) to set
    aside in their entirety clauses 9, 10, 11 and 12 of the Cohabitation Agreement.

[18]

The appellant argues in the alternative that the
    trial judge should have set aside the whole Cohabitation Agreement, including
    the waiver of spousal support, and that this court should do so.   He submits that
    to do otherwise is to upset the balance of the bargain.

[19]

We do not agree.

[20]

The appellant made this same argument before the
    trial judge. The trial judge declined to set aside the spousal support waiver saying,
    at para. 147, that she did not find a particular unfairness arising from the
    waiver of spousal support in the Cohabitation Agreement.  Her conclusion was
    based on the entirety of the record including the significant cash gifts that
    Ora Moses had given to the appellant. And contrary to the appellants
    submissions, the appellant receives a not-inconsiderable sum in the form of 50%
    of the profits earned on all three development properties.

[21]

The decision to leave the spousal support waiver
    intact was open to the trial judge.  Further, we agree with it.

[22]

Unlike with the reach of the property clauses,
    there was no finding that the parties did not understand or did not intend any
    aspect of the spousal support waiver.  And if the property clauses were never
    understood or intended to apply to the development properties, then there is no
    merit to the appellants argument that declining to set aside the support
    waiver disturbs the balance of the bargain.

[23]

It was clear that the trial judge sought to
    fashion a remedy directed at the parties property rights only. Informed by the
    trial judges extensive factual findings, we would give effect to her intent by
    setting aside clauses 9, 10, 11 and 12 of the Cohabitation Agreement.

[24]

Finally, we reject the appellants argument that
    the trial judges conclusion as to the amount that Ora Moses contributed to one
    of the development properties, and therefore the amount owing under the PDA,
    was the result of a palpable and overriding error. The trial judge relied on an
    updated expert report in finding the amount that Ora Moses contributed.  And,
    contrary to the appellants assertion, the experts opinion is supported by
    bank statements produced by the appellant.

[25]

For these reasons, we replace the trial judges decision
    to set aside the Cohabitation Agreement as inapplicable to the development
    properties with a decision to set aside clauses 9, 10, 11 and 12 of the
    Cohabitation Agreement. The appeal is otherwise dismissed.

[26]

Since the Cohabitation Agreement does not govern
    property ownership or division without clauses 9, 10, 11 and 12, the PDA, which
    on the facts of this case is also consistent with common law trust principles,
    determines the division of the proceeds of sale of 21 Parkwood Avenue. The
    trial judges order for the return to the respondent of Ora Moses investment
    in the 21 Parkwood Avenue and half of the profits from the sale of that
    property therefore stands.

[27]

The judgment amount of $3,145,682.88 plus
    accumulated interest and costs shall be paid out to the respondent.  The
    remainder of the amount previously paid into court shall be paid out to the
    appellant.

[28]

The respondent shall be entitled to costs in the
    sum of $25,000, inclusive of HST and disbursements.

Released: AH OCT 04 2017

Alexandra Hoy
    A.C.J.O.

Grant Huscroft J.A.

D.M. Paciocco J.A.


