In a recent Ontario Superior Court of Justice case, the court examined whether a motion to sell the matrimonial home prior to trial could be allowed.

What Happened?

The couple in question began living together in 1999. They bought a house together and both their names were on the land title (which means they legally had equal ownership). They got married in 2005 and ultimately separated in 2012. The couple had no children, and throughout their marriage they lived in this home (their matrimonial home).

After they separated, the wife moved out of the matrimonial home and the husband continued to live there. He paid all the carrying costs, which included the mortgage, taxes, and insurance and came to approximately $2,000.00 per month. He also paid for some renovations and repairs.

On the date of separation, the matrimonial home was worth $310,000. An appraisal done in May 2016 valued the home at $525,000. The home was the most significant asset for both parties. They had discussed the possibility of the husband buying out the wife’s share, however, they could not reach a final  agreement on the appropriate amount.

The wife brought a motion for an order that the matrimonial home be sold prior to trial. The husband brought a cross-motion for an order that the home not be sold prior to trial and that the date of separation value be used for the purposes of calculating equalization payments.

The issues were as follows:

  1. Did the husband show that he was entitled to a competing interest under the Family Law Act (“FLA”) such that that the sale should not proceed?
  2. Did the wife demonstrate that a sale would not prejudice the husband’s rights?
  3. Was the wife’s conduct in bringing this motion malicious or oppressive?

 

The Decision

1. Did the husband show that he was entitled to a competing interest under the FLA such that that the sale should not proceed?

The husband argued that the equalization payment the wife owed him was equal to or more than the value of her interest in the home. Relying on s. 9(1)(c) of the Family Law Act, he claimed that he would be entitled to an order transferring the matrimonial home to him.

The husband outlined several figures in support of his position:

  1. The mortgage owing in September 2016 was $159,236.
  2. The equity, if the 2016 appraised value is used, would be $365,764. The value of each party’s share would be approximately $167,382.
  3. The husband had been paying the wife’s share of carrying costs, for a total of $65,770.
  4. He also spent money on repairing the home; the total for carrying costs and repairs was $78,431.
  5. The parties made unequal contributions to the down payment, and he should get credit for the difference.
  6. The wife and her son from a previous marriage were living on the property and using the hydro. The husband received rent for that, but it was not agreed as to how much was received in total.
  7. Although the husband had lived in the matrimonial home for 5 years, he did not owe the wife any occupation rent because he was the one paying the carrying costs.

Overall, the husband stated that he had spent $140,941.86 in carrying costs, plus the difference he believes he was entitled to. The equalization payment he wanted was at least $170,537.86, which is more than half of the wife’s share of the matrimonial home. According to him, he had shown that he had a competing interest under the FLA and the sale of the home should not be allowed.

The court had a different opinion stating that there ere was no authority for the husband’s argument that he should be entitled to credit for the difference in down payment that he made prior to the marriage. Instead, the court believed that when the couple bought the home, they owned it jointly.

The court noted that the issue of carrying costs and whether the husband could claim credit for them was not within the scope of this motion and was ultimately for a trial judge to decide.

The court held that the husband had not shown that the wife would owe him an equalization payment equal to or greater than her interest in the matrimonial home.

 

2. Did the wife demonstrate that a sale would not prejudice the husband’s rights?

Even though the husband had not shown that he has a competing interest under the FLA, the court went on to consider whether the sale of the home would prejudice his rights.

The husband had stated that he had financing set up to pay the wife for her share of the matrimonial home. However, there was no evidence of this, other than the husband’s word. He argued that refinancing the existing mortgage would be easier than getting a new one on a new property. If the home were to be sold, he would not, according to him, be able to qualify for another mortgage, and would have to rent. He could potentially buy another house with the help of his children, but they would then want to be on the title.

The court held that the husband had no right to own the home after separation and divorce. He was a joint tenant, which meant he was entitled to half of the home’s value. There was no evidence that the husband would qualify to take over the existing mortgage, and there was no evidence that it would be easier to refinance rather than apply for a new mortgage on a new house. The parties had some discussions regarding the husband purchasing the wife’s interest, but they never came to an agreement on the amount. According to the Rules of Civil Procedure, when a home is sold, both parties’ interests are preserved.

The court found that the sale would not prejudice the husband’s rights. The husband had not shown that there was a need to preserve the home for a vulnerable child or spouse who might keep the home in that case, as per past case law.

3. Was the wife’s conduct in bringing this motion malicious or oppressive?

The husband argued that the wife’s conduct in bring the motion for sale was malicious and oppressive. He claimed that if the home is sold, he would have nowhere to live and he would not qualify for another mortgage. He also claimed that the wife’s financial statement showed she had no living expenses. If the home is sold, the proceeds would be held in trust until after the trial (meaning she would not have access to the funds), and therefore it would not benefit her. His position was that the wife wanted to prevent him from having his own home.

The court evaluated a few past cases in making its decision. These cases established that:

  1. The court must consider any evidence of how the sale will affect the resisting party to determine whether the moving party’s conduct in bringing the motion is oppressive;
  2. An order for sale should not be made before trial, unless it is appropriate in all circumstances; and
  3. Hardship amounts to oppression.

The court considered the estimated trial start date. Both parties believed it would not start until mid or late 2018, which was a considerable time away. As long as the wife continued to be liable on the mortgage, she would not be able to get a mortgage on another home. The major issue in this case was the value of the matrimonial home. A sale would “crystallize” the value.

The court ultimately found that husband had failed to prove his case on all three issues. An order for sale was made and costs in favour of the wife were ordered.

What We Learned

There are a lot of factors to consider when bringing an application to sell the matrimonial home prior to trial. Just because one spouse carries the costs of the home, it does not mean that they are entitled to a competing interest. The court will always look at what kind of impact proceeding with the sale will have on both parties, and vice versa. One of the reasons the husband failed on his motion was because he did not have adequate authorities or evidentiary support for his arguments.

It is important to have a well-thought out argument with support and legal authority when making a motion, particularly one which will have a significant financial impact on you or your former spouse. The experienced and compassionate team of family lawyers at Borden Family Law is ready to help clients deal with the stressful matter of division of property between spouses. Our focused area of practice means our clients benefit from our in-depth knowledge of the ins and outs of the family law system, the technical legal rules governing family law matters, and trial strategy. We serve clients in Oshawa, Brooklin, and the surrounding areas. To see how we can help you resolve your issue, call us at 905.576.6090 or contact us below. Ask us about flat fees.