IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Weinhaupl v. Paracy, |
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2017 BCSC 1662 |
Date: 20170920
Docket: E140135
Registry: Vancouver
Between:
Mark George Weinhaupl
Claimant
And
Krystal Paracy and Jacqueline Weinhaupl
Respondents
Before: The Honourable Mr. Justice Milman
Reasons for Judgment
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Claimant, appearing on his own behalf: |
M. Weinhaupl |
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Respondent, appearing on her own behalf: |
K. Paracy |
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Counsel for the Respondent, Jacqueline Weinhaupl: |
J.H. Bryant |
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Place and Dates of Trial/Hearing: |
Vancouver, B.C. August 28-30, 2017 |
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Place and Date of Judgment: |
Vancouver, B.C. September 20, 2017 |
Table of Contents
II. Background and Procedural History
b. The advance to replace the vehicle
c. Other property and debt division issues
[1] The primary issue in these proceedings concerns the fate of $77,414.27, which is the sum that remains in court following a foreclosure and court ordered sale of a townhouse located at 3337 Mountain Highway, North Vancouver (the “Townhouse”), formerly owned by the claimant, Mark Weinhaupl.
[2] The first respondent, Ms. Paracy, lived with Mr. Weinhaupl in the Townhouse between 2006 and August, 2013, when Mr. Weinhaupl moved out. Ms. Paracy continued to live there with her two children until she was forced to leave due to the foreclosure. She asserts that the funds in court are family property and seeks an unequal division pursuant to s. 95 of the Family Law Act, S.B.C. 2011, c. 25 (the Act) so that they can be paid out entirely to her.
[3] The other respondent, Jaqueline Weinhaupl, is Mr. Weinhaupl’s mother. She asserts that most of the funds in court should be paid out to her, in repayment of two loans that she says she advanced to one or both of Mr. Weinhaupl and Ms. Paracy. The first loan of $60,000 was advanced to Mr. Weinhaupl and Ms. Paracy, she says, for the original down-payment on the Townhouse. That loan had been secured by a mortgage that was foreclosed off title to the Townhouse in the foreclosure proceeding. A second loan of $9,500 was said to have been advanced to Mr. Weinhaupl so he could replace his vehicle after it was stolen.
[4] She seeks repayment of those two loans out of the funds in court in the total amount of $69,500 and takes no position on how the remaining sum of $7,914.27 should be distributed as between the other two parties.
[5] Mr. Weinhaupl supports his mother’s position.
[6] Shortly before the couple separated in the summer of 2013, they entered into two written agreements to deal with parenting responsibilities, child support, spousal support and division of property.
[7] The first was an agreement dated June 28, 2013, which was filed in the North Vancouver Registry of the Provincial Court under court file no. F8697 (the “Parenting and Support Agreement”). It dealt primarily with parenting and support issues.
[8] The second agreement, which I will refer to as the “Property Agreement”, is undated, but appears to have been executed before witnesses by Ms. Paracy on July 4, 2013 and by Mr. Weinhaupl on August 4, 2013. Among its pertinent provisions are the following:
2. THAT if the parties separate permanently after the date of this Agreement (“final separation”) the terms of this Agreement shall govern the division of their property.
3. THAT the following items owned by the parties or either of them during their cohabitation or at any time prior to their final separation consist of family property under section 84 of the Family Law Act:
a. The residence located at 3337 Mountain Highway, North Vancouver, BC …
b. All automobiles registered in either party’s name;
c. Any RRSPS, NRSPS, Mutual funds, any savings, or money of any kind held in either party’s name;
…
4. THAT Mark agrees that none of the existing debts in either party’s name at the date of this Agreement are family debts. Mark shall accept full responsibility for all such debts and any future debts incurred by him unless Krystal has consented in writing to the debt’s being or having been incurred for family purposes. Mark shall also accept full responsibility for any future debts incurred by Krystal, for the purpose of supporting herself and/or her children or for any other family purpose; prior to final separation, or after separation in any month in which Mark has not paid child or spousal support in a timely fashion.
5. THAT any assets acquired by either party after the date of this Agreement and before final separation, or acquired after final separation with moneys derived from family property before its division, will be deemed to be family assets for the purposes of property division.
6. THAT if the parties separate, the family assets as agreed upon in this Agreement shall be divided equally, AND THAT Mark shall pay or transfer to Krystal her net share of all family assets BEFORE satisfying any non-family debts, including without limitation any debt owed to any member of Mark’s family.
[9] Ms. Paracy has two children, one with Mr. Weinhaupl, a son born in 2008, and the other from a different relationship.
[10] Mr. Weinhaupl commenced this action on January 17, 2014 seeking to have the Parenting and Support Agreement set aside or varied so that he could have shared parenting time with their common child. Schedule 4 to the Notice of Family Claim, dealing with property matters, sought an equal division of family property and family debt pursuant to the Act. It also sought compensation from Ms. Paracy for having sold his 2004 Ford 3500 crew cab truck and other of his personal possessions and having kept the proceeds for herself.
[11] Ms. Paracy filed a response and a counterclaim, both on April 23, 2014. In Schedules 4 and 5 to that counterclaim, Ms. Paracy sought, among other things, an unequal division of family property and family debt. She also claimed, on various grounds, a beneficial interest in Mr. Weinhaupl’s assets, including the Townhouse.
[12] Mr. Weinhaupl filed a response to the counterclaim on May 16, 2014.
[13] The parties attended a Judicial Case Conference on July 9, 2014.
[14] On November 27, 2015, Mr. Weinhaupl brought an application seeking to vary the Parenting and Support Agreement in various ways.
[15] On December 17, 2015, Mr. Weinhaupl obtained an order (the “December 17, 2015 Order”) allowing his application in part. Among other things, it reduced the monthly child support payments that Mr. Weinhaupl was required to make under the Parenting and Support Agreement, it eliminated his obligation to pay spousal support altogether and it cancelled his arrears of child support and spousal support. In addition, Ms. Paracy was ordered to “file a form F8 Financial Statement in compliance with the Order made at the Judicial Case Conference of July 9, 2015 [sic] in which the Respondent was required to disclose any information regarding her disability and her attempts to work.” Ms. Paracy did not comply with this last provision until August 28, 2017, i.e., the first day that was scheduled for the hearing of this trial.
[16] The December 17, 2015 Order states on its face that it was made without anyone appearing for Ms. Paracy, although she was duly served.
[17] Meanwhile, Mr. Weinhaupl stopped making mortgage payments on the Townhouse. This led eventually to a foreclosure proceeding, which was commenced as Vancouver Registry Action No. VLC-S-H-141276 (the “Foreclosure Action”). The petitioning bank obtained an order nisi of foreclosure on March 12, 2015, setting a six-month redemption period. On February 18, 2016, it obtained an order approving a sale in the amount of $451,650.00 and requiring vacant possession by March 4, 2016.
[18] Faced with her looming eviction from the Townhouse, Ms. Paracy initially moved to Victoria. On January 18, 2016, Mr. Weinhaupl applied for, among other things, an order to have his child returned to North Vancouver. An order to that effect was made on February 9, 2016.
[19] When the dust finally settled from the foreclosure, approximately $80,000 remained in court after paying out all of the other claims against the Townhouse, including the mortgage, unpaid strata fees and amounts owing to the Director of Enforcement under the Family Maintenance Enforcement Programme for the credit of Ms. Paracy.
[20] On May 27, 2016, Ms. Weinhaupl applied in the Foreclosure Action for an order to be repaid from the funds in court the amounts she claimed as outstanding on her loans. On July 12, 2016, Ms. Paracy filed a response, which was later supported by an affidavit, opposing that application. Ms. Paracy opposed any payment being made to Ms. Weinhaupl out of the funds in court other than the repayment of $3,011 that Ms. Weinhaupl had paid towards the property tax arrears owing on the Townhouse.
[21] On July 22, 2016, an order was made in the Foreclosure Action directing the Registrar to pay the sum of $3,011 to Ms. Weinhaupl. Both Mr. Weinhaupl and Ms. Paracy consented to that payment from court. The remainder of Ms. Weinhaupl’s claim to the funds in court (reflecting the other two loans alleged) was remitted to the trial list, to be dealt with in this action.
[22] Ms. Weinhaupl was formally made a party to this action by a consent order made on February 10, 2017. She filed a counterclaim on April 26, 2017 seeking the same relief she had sought in the Foreclosure Action. No response to that counterclaim was filed. She then took the steps required to bring the matter to trial.
[23] I heard testimony from all three of the parties. For the most part, their viva voce evidence repeated what had been set out in their respective affidavits filed in connection with Ms. Weinhaupl’s application in the Foreclosure Action. In the case of Ms. Paracy, I allowed the “Factual Basis” section in her Application Response filed July 12, 2016 and her supporting affidavit sworn and filed July 14, 2016 to be considered as part of her evidence in chief at trial, with the agreement of the other parties.
[24] Ms. Weinhaupl testified that she granted her son three loans in total, and was promised by him that she would be repaid on all of them.
[25] With respect to the $60,000 down-payment, she recalled that she wanted to assist her son so that he was not paying someone else’s mortgage but his own. At the time, she was not aware that Ms. Paracy was in his life. Once she became aware of her involvement, she insisted on formalising the loan in writing.
[26] She relies upon a handwritten promissory note dated December 16, 2006 that appears to be signed by both Mr. Weinhaupl and Ms. Paracy. It states as follows:
To whom it may concern,
I Mark Weinhaupl [received] from my mother Jacqueline Weinhaupl $60,000.00 (sixty thousand) dollars as down payment on my condo 3337 Mountain Hwy, N.V.
Upon the sale of this condo, $60,000.00 is due and payable to my mother.
with thanks
Mark [signature]
Kristal [signature]
[27] Ms. Weinhaupl was not present when that document was signed. She recognised Mr. Weinhaupl’s signature as his but could not verify whether Ms. Paracy’s purported signature was hers or not.
[28] Ms. Weinhaupl testified that she never had any communications with Ms. Paracy and certainly never suggested to her that any of her loans to Mr. Weinhaupl were gifts.
[29] She maintained that she never agreed with Mr. Weinhaupl to make a gift of any of the loans. The only exception was a letter that she signed at the request of the bank at the time of the purchase. That letter (the “Gift Letter”) was reproduced by Ms. Paracy in her affidavit sworn and filed July 14, 2016 in response to Ms. Weinhaupl’s application in the Foreclosure Action. It is a typed form with a number of fields filled in with handwriting. It states as follows, with the handwritten portions italicized and underlined:
GIFT LETTER
TO WHOM IT MAY CONCERN:
Please be advised that I/We the undersigned are making a gift in the amount of: $75,000.00 to:
Mark Weinhaupl son
Name Relationship
to borrower(s)
…
to be used as all or part of the down payment on the purchase of the property located at:
3337 Mountain Hwy
Street Address
North Vancouver BC
City Province
This is a gift with no terms of repayment required.
No part of this financial gift is being provided by anyone having an interest in the sale of the property, such as the vendor, builder or the real estate agent.
Dated this 12 day of Sep, 2006
Signature: J Weinhaupl
[30] The only handwriting that was hers was the signature and her handwritten name and address below it and perhaps the date. The top part of the document was not yet completed when she signed it. She stated that she signed the letter despite its being untrue in order to allow her son to borrow the funds necessary to purchase the Townhouse.
[31] Later, in June 2011, she retained a lawyer to place a mortgage on title to the Townhouse to secure repayment of the $60,000 down-payment.
[32] The mortgage states that the loan was to be without interest and Ms. Weinhaupl makes no claim for interest.
[33] Finally, Ms. Weinhaupl described the car loan. In cross-examination, she admitted that the car loan was advanced while the couple was separated, when Mr. Weinhaupl was living with her.
[34] Mr. Weinhaupl supported his mother’s version of events. He denied ever telling Ms. Paracy that his mother’s advance of the down-payment was a gift.
[35] He testified that he witnessed Ms. Paracy signing the promissory note in their kitchen. He claimed that he is able to identify Ms. Paracy’s signature on the note as hers, having seen it many times. He denied forging her signature.
[36] He granted the mortgage in favour of his mother because he was the only registered owner of the Townhouse. He was unable to recall if he discussed it with Ms. Paracy before doing so. He considered the mortgage to be necessary because he had been through a previous relationship in which a similar issue had come up and he wanted to protect his mother’s interest.
[37] He described the background to the Gift Letter. When he first applied to the bank for the mortgage, he was told that he could qualify for a loan of $320,000, assuming he made a down-payment of $75,000. The bank was not prepared to fund unless his mother signed the Gift Letter indicating that he would have no other debts to service except the mortgage. He confirmed that the handwriting in the top half of the document is his. The date and signature block are his mother’s.
[38] When he purchased the Townhouse, he was able to contribute $15,000 of his own money to the down-payment, which reduced the amount he needed to borrow from his mother to $60,000 from the $75,000 originally contemplated. Ms. Paracy contributed no funds to the purchase.
[39] When he and Ms. Paracy separated they were heavily indebted. Their only assets were the Townhouse and two vehicles. He owed three years in back taxes and approximately $23,000 on a line of credit. He had to cash in most of the value of his RRSP’s (approximately $40,000) to pay his debts. Following the separation, Mr. Weinhaupl lived with his mother, rent free. He was working full time until at least 2015.
[40] In cross-examination, Mr. Weinhaupl admitted that Ms. Paracy had contacted him prior to the December 17, 2015 hearing to advise him that she was unable to attend court that day due to her own illness and the illness of their child. She had asked him to advise the court that she was ill and unable to attend court but wanted to respond to his application. To this, Mr. Weinhaupl responded, “I will let them know.” Mr. Weinhaupl testified that he conveyed Ms. Paracy’s message to his lawyer, but his lawyer did not convey it to the court when the December 17, 2015 Order was made.
[41] In both her affidavit sworn in opposition to Ms. Weinhaupl’s application in the Foreclosure Action and her oral testimony at trial, Ms. Paracy denied signing the promissory note or even having seen it before Ms. Weinhaupl brought her application in the Foreclosure Action.
[42] She asserted that Mr. Weinhaupl had told her that his mother’s advance of the down-payment was a gift, not a loan. She does not claim to have had any direct communication from Ms. Weinhaupl suggesting the money was a gift and indeed, she agreed that they did not communicate directly at all.
[43] Her affidavit contains the following account: “To my knowledge Jackie gave Mark a gift of $75 thousand dollars in September of 2006, and provided a gift letter with the funds at that time. The gift letter [was] located from our family filing cabinet at our family home ... .”
[44] She asserted that Mr. Weinhaupl refused to sell the Townhouse after he left, with a view to harming her, so that when it later came to be sold in the foreclosure the price received was less than its market value.
[45] Ms. Paracy also resisted Ms. Weinhaupl’s application on the basis that Mr. Weinhaupl continues to owe her support payments despite the December 17, 2015 Order, which she says was improperly obtained. In her view, Mr. Weinhaupl obtained the December 17, 2015 Order in her absence relying on untruthful, inaccurate and incomplete evidence. This has left her deeply in debt.
[46] Her original response to the application stated as follows:
3. According to the documents [filed] by Mark and his mother in this application, no funds are owing currently with FMEP [Family Maintenance Enforcement Program], while that may be technically true at this moment, that is not in any way accurate. In December 2015 Mark canceled our legal separation agreement, along with $98,000.00 in years of owed arrears to me and my two children with FMEP, and ongoing spousal and child support, without notice to me, in my absence due to illness and poverty at that time.
4. Mark took all of our family assets when leaving myself and my two children in 2013, and refused to sell our family home, despite many buyers, instead allowing it to foreclose. Mark left me over sixty thousand dollars in debt. Mark owes myself and my two children well over the amount of equity funds the court is currently holding from our family home.
5. An order canceling arrears and our legal separation agreement was made Dec 2015 at Vancouver Supreme Court by Mark and his lawyer, without notice to me, in my absence due to illness at the time. I am currently in the process of applying to set aside that order.
[47] Attached to Ms. Paracy’s affidavit is a statement showing that the value of Mr. Weinhaupl’s RRSP as of December 31, 2012 was $40,676.92.
[48] Despite asserting at the time she filed her application response (i.e., July 12, 2016) that she was then in the process of applying to set aside the December 17, 2015 Order, she has not brought any such application.
[49] The first question to be determined is whether Ms. Weinhaupl advanced the down-payment as a gift or a loan.
[50] There is conflicting evidence on that question. In addition to the conflicting oral testimony given by the parties, each side points to contemporaneous documents (or at least what purport to be contemporaneous documents) suggesting that the advance had the character they now attribute to it.
[51] In particular, Ms. Weinhaupl’s contention that the provision of the down-payment was a loan rests on her testimony and that of her son. They point to the promissory note dated December 16, 2006, i.e., just under three months after the provision of the $60,000 bank draft dated September 8, 2006. They also point to the mortgage executed June 24, 2011 and submitted for filing on June 27, 2011.
[52] In arguing that the down-payment was a gift, Ms. Paracy relies primarily on the Gift Letter but also on an understanding she claims to have acquired from one or more conversations with Mr. Weinhaupl at the material time.
[53] Although there is no dispute about the authenticity of the Gift Letter, Ms. Weinhaupl submits that it should not be treated as determinative evidence of the parties’ intentions. She relies in that regard on a number of decisions of this Court holding that the provision by a parent of such a letter at the request of a bank in order to allow the recipient to qualify for a mortgage does not necessarily negate the intention to treat the advance of the down-payment as a loan.
[54] In T.J.M. v. C.R.M., 2009 BCSC 1122, at para. 81, for example, Joyce J. found that an advance from a spouse’s mother that was used as a down-payment to purchase a family home was in fact a loan, despite the provision of a similar gift letter in that case. Joyce J. relied on the presence of a written promissory note (as apparently exists in this case) as well as the fact that several payments had been made in repayment of the alleged loan (a fact not present in this case) to reach that conclusion.
[55] A similar issue arose in Savost’Yanova v. Chui, 2015 BCSC 516. In that case, Weatherill J. described the issue as follows (at paras. 38-39):
[38] In order for the parties to qualify for mortgage financing for the purchase of the matrimonial home, Mr. and Mrs. Chui signed a letter, drafted by the respondent, indicating that the $60,000 they provided towards the purchase price was not a loan but rather a gift by them to the parties (“Gift Letter”). Mr. Chui testified that, without the Gift Letter, the parties would have had to purchase mortgage insurance, which was expensive. He and the respondent testified that, despite what had been represented in the Gift Letter, the $60,000 advance was always intended and understood to be a loan.
[39] The claimant testified that she knew nothing of any of this. Rather, she testified that the respondent told her that his parents had gifted an additional $25,000 to them for the purchase of the house. As had been the case with the apartment purchase, the claimant had no knowledge of how the balance of the purchase price was financed other than she knew there was mortgage financing. She testified that she had no knowledge of the Gift Letter until it was produced during this litigation.
[56] In concluding, like Joyce J., that the gift letter before him did not negate the intention to grant a loan, Weatherill J. elaborated on the elements of the legal test to be applied in making that determination (at paras. 75-77):
[75] The law regarding whether a transfer made by a parent to an adult child is a loan or a gift was summed up by Madam Justice Brown in Hawley v. Paradis, 2008 BCSC 1255 at para. 30, after a review of the applicable authorities:
[30] Based on the case law presented to me, I conclude:
1. that the presumption of advancement no longer applies between adult children and their parents;
2. that as between adult children and their parents, the presumption is a resulting trust when the parents make gratuitous transfers to children;
3. that the court must consider all of the evidence in determining whether the parent intended the transfer as a gift or a loan;
4. that the factors considered in Wiens and Locke will assist the court in determining whether the advance was a loan or a gift.
[76] A determination of whether funds were advanced as a loan or a gift turns on the unique facts of each case. However, the following factors referred to above have been identified in the case authorities as those that should be considered when the advance occurs in a family context:
a) whether there were any contemporaneous documents evidencing a loan;
b) whether the manner for repayment is specified;
c) whether there is security held for the loan;
d) whether there are advances to one child and not to others, or advances of unequal amounts to various children;
e) whether there has been any demand for payment before the separation of the parties;
f) whether there has been any partial repayment; and
g) whether there was any expectation, or likelihood, of repayment.
See Wiens v. Wiens (1991), 31 R.F.L. (3d) 265; Locke v. Locke, 2000 BCSC 1300 at para. 20; Gill v. Jaspal, 2010 BCSC 698 at para. 9.
[77] In determining the intent of the person who advances money in a family context, the court must weigh all of the evidence to determine whether the presumption of resulting trust has been rebutted; it will depend on the facts of each case: Pecore v. Pecore, 2007 SCC 17 at para. 55.
[57] Before applying this test to the facts of this case, I must determine what those facts are by resolving the conflicts in the evidence.
[58] I begin with the observation that I found Ms. Weinhaupl in particular to be a credible witness. For example, when she was asked if she was able to identify Ms. Paracy’s signature on the promissory note as hers, she did not profess to be able to do so, even though she could easily have claimed to have that ability and thereby assisted her own case without significant risk of being impeached.
[59] I also find Mr. and Ms. Weinhaupl’s account of events to be more consistent with how the parties were likely to have behaved in the situation. Mr. and Ms. Weinhaupl may well have been concerned about ensuring Ms. Weinhaupl was repaid and papering the transaction accordingly, in light of Mr. Weinhaupl’s experience from his previous relationship. Ms. Paracy might well have been sufficiently content to be moving into a new home, without having to come up with a down-payment herself, that she would readily have signed a note promising to pay it back when the home was sold and then forgot about having done so as the years went by.
[60] On the other hand, I am unable to accept Ms. Paracy’s contention that she never signed or even saw the promissory note before Ms. Weinhaupl brought her application to court. I have compared Ms. Paracy’s signature as it appears on the promissory note with her signatures as they appear on other documents she signed in this proceeding, including the two agreements she signed before a witness in the summer of 2013. While there are subtle differences among each of her signatures, the version appearing on the promissory note is not so distinct as to give rise to a suspicion of forgery on that basis alone, particularly having regard to the multi-year gap separating the documents. While it is possible that a forgery was done skilfully enough to be convincing, there is other evidence weighing against that allegation.
[61] In order to accept Ms. Paracy’s account, I would have to find that Mr. and Ms. Weinhaupl were both lying in their affidavits and their testimony at trial and that Mr. Weinhaupl forged Ms. Paracy’s signature on the promissory note, all with a view to defrauding Ms. Paracy. I am not prepared to make those findings.
[62] Although Ms. Paracy swore in her affidavit and maintained in her testimony at trial that she came to learn from one or more conversations with Mr. Weinhaupl while they were living together that the down-payment was a gift from his mother, it is more likely that Ms. Paracy reconstructed events in that manner, consciously or not, after finding the Gift Letter in a cabinet in the family home after Mr. Weinhaupl had moved out. That would explain why Ms. Paracy refers in her affidavit to having learned of a “gift” of $75,000 (i.e., the incorrect amount stated in the Gift Letter), rather than the actual amount of the advance, i.e., only $60,000.
[63] I therefore find that both Ms. Paracy and Mr. Weinhaupl signed the promissory note on December 16, 2006 intending the debt to be a joint obligation. I am unable to find that Mr. Weinhaupl told Ms. Paracy that the down-payment was a gift from his mother. The only evidence suggesting that the down-payment was a gift is the Gift Letter and I accept Mr. and Ms. Weinhaupl’s explanation for it.
[64] Applying the test set out in Savost’Yanova in light of the facts as I have found them, I note the following:
a. there is contemporaneous documentary evidence of a loan, i.e., the promissory note and the mortgage;
b. the manner of repayment is specified, inasmuch as the promissory note states on its face that “Upon the sale of this condo, $60,000.00 is due and payable to my mother”;
c. there is security held for the loan (i.e., the mortgage);
d. there has been no partial payment because none has been called for until now; and
e. there was a reasonable expectation, or likelihood of repayment once the property was sold.
[65] In light of those considerations, along with all of the other evidence before me, I find that Ms. Weinhaupl’s advance of the down-payment was a loan, not a gift.
[66] Having made that finding, I must now decide whether the down-payment should be repaid to Ms. Weinhaupl out of the funds in court. Ms. Paracy submits that if it is a debt (as I have now found it to be), then it should be paid by Mr. Weinhaupl alone and should not come out of the funds in court, which should go instead entirely to her. She argues that the mortgage charging the townhouse to secure repayment of this debt was not validly granted and ought not to charge her beneficial interest in the proceeds.
[67] I have found that Ms. Paracy signed the promissory note along with Mr. Weinhaupl, suggesting that the loan was assumed as a joint obligation. Whether I divide the family property and family debt pursuant to the Act or the Property Agreement, I find that the mortgage was validly granted and that Ms. Weinhaupl is entitled to be repaid out of the proceeds of sale.
[68] Ms. Weinhaupl’s claim to the funds would not be affected by any division of the family debt under the Act, by virtue of s. 97(3) of the Act, which states that, “An order in relation to family debt applies only as between the spouses and does not affect an agreement between a spouse and any other person.” Nor would Ms. Weinhaupl’s claim be affected by the terms of the Property Agreement, to which she was not privy.
[69] What remains to be determined is whether, as between the two former spouses, Mr. Weinhaupl must indemnify Ms. Paracy for her having been made to repay that debt.
[70] Assuming it remains in force (and no party argued before me that it does not), the Property Agreement states in the first sentence of s. 4 that none of the debts existing at that time (i.e., the summer of 2013) in either party’s name are to be treated as family debts. This debt clearly existed at that time. But the second sentence goes on to state that, “Mark shall accept full responsibility for all such debts … unless Krystal has consented in writing to the debt’s being or having been incurred for family purposes.” To overcome the awkwardness of the drafting and reconcile the two sentences, I interpret the second sentence as qualifying the first, so that if Ms. Paracy agreed in writing to treat an existing debt (whether it was incurred by either one or both of them) as a family debt, it will be so treated, despite the first sentence.
[71] This raises the question of whether Ms. Paracy’s signature on the promissory note constitutes the requisite “consent in writing” by her that the debt was “incurred for family purposes.” There can be no doubt that the debt was, in fact, incurred for family purposes – the couple would not otherwise have been able to acquire the property they came to live in. In all the circumstances, I find that by signing the promissory note, Ms. Paracy had effectively agreed in writing that the debt was being incurred for family purposes, and therefore that the debt must be repaid by both of them jointly.
[72] I therefore order that Ms. Weinhaupl be repaid $60,000 from the funds held in court.
[73] There is less controversy with respect to the facts pertaining to the $9,500 advance to replace Mr. Weinhaupl’s stolen vehicle. Ms. Paracy claimed to have no knowledge of that loan, and it was not suggested by Mr. and Ms. Weinhaupl that she did. Indeed, they both acknowledged that the loan was made to him at a time when the couple had separated.
[74] There is no basis under the Property Agreement or otherwise to render Ms. Paracy liable for that debt. Mr. Weinhaupl must therefore repay this loan himself.
[75] In light of my findings thus far, there remains approximately $17,414.27 in court, plus interest, for distribution to Mr. Weinhaupl and Ms. Paracy in some combination. Because they are the proceeds of sale of the family home, those funds are family property to which both Ms. Paracy and Mr. Weinhaupl are equally entitled.
[76] The only other family asset about which there was evidence was the RRSP. The only evidence before me about that asset was that Mr. Weinhaupl cashed in his RRSP’s after their separation and received approximately $40,000, which he used to pay off certain debts. Attached to Ms. Paracy’s affidavit is a statement showing the value of Mr. Weinhaupl’s RRSP account as of December 31, 2012 to have been $40,676.92. Using that statement as the best evidence of the value of the account when it was cashed in, I award Ms. Paracy one half of that amount, or $20,338.46.
[77] Under the Property Agreement, Mr. Weinhaupl is required to assume all debts that are not acknowledged by Ms. Paracy in writing as family debts. Apart from the loan pertaining to the down-payment, dealt with earlier in these reasons, I have no evidence before me of any debts that were assumed by Ms. Paracy for which she should be reimbursed by Mr. Weinhaupl under the Property Agreement.
[78] Ms. Paracy seeks an unequal division of the family property under s. 95 of the Act, but s. 94(2) of the Act precludes me from making such an order unless the Property Agreement is set aside in whole or in part under s. 93. No application was made before me to vary or set aside the Property Agreement, nor do I have before me evidence that would justify doing so. Nor am I able to find, on the evidence before me, that the Property Agreement should be set aside as significantly unfair having regard to the considerations set out in s. 93(5) of the Act.
[79] Finally, Ms. Paracy never applied to vary or set aside the December 17, 2015 Order, as she said in 2016 that she would, and so I am unable to grant her any relief that would be inconsistent with it. Ms. Paracy can also no longer complain about the price that was received for the Townhouse in the Foreclosure Action, which was approved by order of this Court in that action.
[80] Ms. Weinhaupl seeks special costs against Ms. Paracy. She refers to her aborted effort to obtain repayment summarily in the Foreclosure Action and the cost of having to take the matter to trial in this proceeding, where essentially the same evidence was presented. In the result, she was mostly, but not entirely, successful.
[81] I am not satisfied that an award of special costs is appropriate, but I will award Ms. Weinhaupl costs in a lump sum of $3,000, to be paid out of the funds in court.
[82] I make no award of costs as between Ms. Paracy and Mr. Weinhaupl.
[83] I grant judgment to Ms. Weinhaupl on her counterclaim against both Mr. Weinhaupl and Ms. Paracy in the amount of $63,000, including costs, to be paid out of the funds in court.
[84] I grant judgment to Ms. Weinhaupl on her counterclaim against Mr. Weinhaupl alone in the amount of $9,500.
[85] Finally, I grant judgment to Ms. Paracy on her counterclaim against Mr. Weinhaupl in the amount of $20,338.46.
[86] The remaining funds in Court, after paying $63,000 to Ms. Weinhaupl, are to be paid to Ms. Paracy, with Mr. Weinhaupl’s half of those funds being credited as a reduction of her judgment against him.
“Milman J.”
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The Honourable Mr. Justice Milman