Partition and Sale of a Matrimonial Home
Delongte v. Delongte, 2019 ONSC 6954 provides us solid guidance on the issue of partitioning and sale of a matrimonial home – when one party wants such a sale and the other party resists such a sale (especially when there are children around). How should a Court decide?
Introduction  The applicant/wife and respondent/husband separated in March 2018 after twenty years of marriage. They have two children who are 16 and 14 years old. The applicant and the children have been living in the matrimonial home since the parties separated. While there is no interim order for support, the respondent currently pays $9,500 per month towards the carrying costs of the matrimonial home and other expenses for the applicant and children. In May 2018, after the parties separated, the respondent purchased a new home, which is near the current matrimonial home and the children’s school.  The application was commenced in June 2018. Regrettably, there are now two boxes of affidavits filed in connection with various motions, which have been before the court in the past year. A number of interim orders have been made regarding various financial issues. There is also an interim order regarding the respondent’s access to the children.  The respondent seeks an order under the Partition Act, RSO 1990, c. P.4 for the partition and sale of the jointly owned matrimonial home. The applicant resists the sale, as she believes it is in the children’s best interests to remain in the home they know. The applicant hopes to be in a position to eventually purchase the respondent’s half interest. While the applicant sought exclusive possession in a notice of motion dated March 6, 2019, (about nine months after the litigation was commenced) she did not pursue that relief on this motion.  In the event the relief is granted and I order the home to be sold, the applicant seeks an order for monthly child and spousal support, in accordance with the applicable guidelines. In that regard, there is a dispute regarding each parties’ income. Both are seeking to impute income to the other, beyond the amounts they declared to Revenue Canada.  The respondent’s position is that – because he has not yet received a report from the expert he has retained to determine the applicant’s income and the value of her businesses – the applicant’s motion for spousal support should be adjourned, pending receipt of that report.  The applicant resists this, and takes the position that there is sufficient evidence before the court to make findings regarding their respective incomes and sufficient evidence to impute additional income to the respondent. She further takes the position that there is sufficient evidence to make an order that he pay child and spousal support, in the event I order the sale of the home.  The applicant also seeks an interim order for the sale of other jointly owned property. The respondent agrees that cottage property municipally known as 8 Tranquility Ave, Tiny, Ontario, shall be sold. If not yet done, I order that property shall be forthwith listed for sale.  There is a second cottage property that is owned jointly with another couple. This cottage is located at 12 Beachview Road, Tiny, Ontario. If one of those parties oppose the sale, either the applicant or respondent will have to seek an order for its sale under the Partition Act.  While constraints on judicial resources make securing access to long motion dates very difficult, it is not in the best interests of family law litigants to compress an otherwise full-day motion into a shorter time period. This is particularly so in a matter such as this where there are significant assets, the values of which are in dispute, and both parties operate and own business interests, resulting in disputes in regarding their respective incomes. There are also various allegations of each party failing to disclose income or assets, as well as other alleged acts of misconduct.  At the heart of this matter, there are two young children deserving of parents who are less focused on their animosity towards each other. The emotional costs of this type of litigation are, too often, borne by the children and the negative results of this can be long-term.  For the reasons that follow, I order that the matrimonial home be listed for sale by July 2, 2020, when the children have completed their school year.  The parties are to schedule a further one-day motion before me to make submissions on income and child/spousal support. That motion must be heard by no later than the end of May 2020. Pending the result of that motion and my finding regarding incomes and support, the respondent shall maintain the current status quo payment of $9,500 per month for the carrying costs of the matrimonial home and other expenses for the applicant and children.  Prior to the sale of the home, the applicant may make an offer to purchase the respondent’s half interest in the matrimonial home. To be clear, the respondent is not obligated to sell his half interest in the matrimonial home to the applicant, even if she is financially able to make an offer to do so. It is, however, an option the parties may wish to consider as part of a global resolution of all issues which may avoid the costs of proceeding to trial.  I expect that, prior to the motion to argue income and support, both parties will serve and file all expert reports they intend to rely upon regarding the other’s income. Both parties shall also serve and file all income information for the 2019 tax year filed with Revenue Canada. I fully expect that all disclosure issues will be resolved before I hear the motion. Applicable Legal Principles  The jurisprudence is clear that a requesting party has the prima facie right to sell a jointly owned property under s. 2 of the Partition Act. The onus is on the resisting party to show sufficient reasons why the order for sale should not be made.  In Silva v. Silva (1990), 1990 CanLII 6718 (ON CA), 75 D.L.R. (4th) 415 (Ont. C.A.), the court dealt with the interplay between the Partition Act and proceedings commenced under the Family Law Act, R.S.O. 1990 c. F- 3, as amended, when dealing with the matrimonial home. The Court found at para. 23 that the two Acts are not incompatible but: Where substantial rights in relation to jointly owned property are likely to be jeopardized by an order for partition and sale, an application under the Partition Act should be deferred until the matter is decided under the Family Law Act. Putting it more broadly, an application under section 2 should not proceed where it can be shown that it would prejudice the rights of either spouse under the Family Law Act.  In Afolabi v. Fala, 2014 ONSC 1713 (CanLII), the Court found that, should an application be made for sale under the Partition Act, the opposing party must provide evidence of malicious, vexatious or oppressive conduct on behalf of the spouse who is resisting the sale. If the spouse opposing the sale can establish such conduct, the Court has narrow discretion to refuse to order the sale of the home: Latcham v. Latcham, (2002) 2002 CanLII 44960 (ON CA), 27 R.F.L. (5th) 358 (Ont. C.A.).  When considering oppressive conduct, the Court may consider whether the sale of the home would cause hardship to the opposing party or the children. For example, if the opposing party did not have the ability to find somewhere to live or the children would be deprived of a place to live: King v. Shaw, 2017 ONSC 3050 (CanLII), 94 R.F.L. (7th).  In Goldman v. Kudeyla, 2011 ONSC 2718 (CanLII), 5 R.F.L. (7th) 149, McGee J. summarized the interplay between the Family Law Act and the Partition Act as follows: A property owner, whether the holder of an exclusive interest or a joint interest has a prima facie right to sale. When the property consists of an interest in a matrimonial home, that prima facie right is subject to any competing interest under the Family Law Actthat would otherwise be defeated. To make a pre trial order for the sale of a matrimonial home the Court must first determine whether the resisting party has established a prima facie case that he or she is entitled to a competing interest under the Family Law Act. If not, then the right to sale prevails. If so, then the motion is sale is denied unless the selling party can demonstrate that the sale would not prejudice the rights of the resisting party. …issues arising from relationship breakdown by their very nature inextricably intertwined. I agree with Justice Wright’s reasoning in Walters confirmed in Kereluk, supra that orders for the sale of the home should not be made as a matter of course. One must always be mindful of the whole of the proceeding and the need to move forward as fairly and expeditiously as possible. At the same time, determinations must have a starting point. The sale of the matrimonial home is often the most appropriate catalyst to affect the equal division of family assets and establish post separation parenting patterns.  As McGee J. noted, there have been cases in which the Court has denied interim motions for sale. In each, there were compelling circumstances favouring the resisting party such as the availability of trial within a short period, prejudice to the resisting party’s right to an equalization payment or the need to preserve the residence for a vulnerable spouse or child who might retain the home at trial. Position of the Parties  The respondent’s position is that the jointly owned matrimonial home should be sold, given the significant equity it holds. He proposes that each party should receive $500,000 from the net proceeds of sale, with the balance being held in trust. He proposes that, when the home is sold, he will commence paying child support based on his 2017 income of $250,000. He proposes that the determination of s. 7 expenses and the quantum of spousal support should be adjourned, pending receipt of an expert report regarding the applicant’s income.  The applicant’s position is that the matrimonial home should not be sold. She proposes that two other jointly owned properties should be sold so that each party can access the equity in those properties. Pending trial, the respondent should continue to pay the current carrying costs for the matrimonial home and other related expenses which total $9,500 per month. Background  Since the parties separated on March 19, 2018, the children and the applicant have lived in the matrimonial home. The home is close to the children’s school and it is the only home they have lived in.  The respondent relies on a letter from a real estate agent dated May 16, 2019, which states that the current market value of the matrimonial home is $2.59 million. Given the mortgage and line of credit registered on title, there is equity of approximately $1.7 in the matrimonial home. The respondent proposes that the home be sold and that $500,000 be released to each party, with the balance held in trust pending a final resolution of the property issues. He proposes that such a payment would assist the applicant to purchase a new home and the respondent could pay his debt.  The respondent had proposed that, pending the applicant securing alternative living accommodations, if the matrimonial home was sold, the children could stay in his home and he and the applicant could set up a nesting arrangement so that they would spend alternate time living in the home with the children. Quite frankly, that proposal is illogical given the high degree of conflict between the parties. That sort of parenting arrangement would require a level of cooperation that is clearly beyond the parties’ abilities, at this time.
Analysis a) Sale of the home  The applicant’s position is that the home should not be sold as it is the only home the children have known. The children have significant attachment to that house, it is close to their school and it provides them with a sense of stability. If that was a sufficient basis to resist the sale of a matrimonial home following separation, no matrimonial home would be sold in situations where a spouse wished to remain in the home with the children. In most cases, the children are attached to the home, it is close to their school and it provides a sense of stability. That is not, in and of itself, a sufficient basis to defeat a presumptive right to sell a jointly owned property, pursuant to thePartition and Sale Act.  The applicant submits that selling the matrimonial home is extreme relief. I do not agree. An order for the sale of the matrimonial home is relief that is routinely sought in matrimonial litigation. It is not uncommon that parties wish to access the equity in the matrimonial home for a variety of reasons such as purchasing other property or paying debt.  Based on a review of the jurisprudence as set out above, there is no basis for the applicant to successfully resist the sale of the matrimonial home. Although she alleges that the children have been having difficulty with the separation and have attended counselling, that is an all-too-common occurrence in high conflict situations. The children are young teenagers and there was no independent evidence led as to how the sale of the home might have a detrimental impact on their well-being, other than what can be typically expected when parties separate and then reformulate a new family unit after separation. Separation is a very dramatic and life-changing event for all involved. It means moving on from the familiar – often including the matrimonial home – to the new and unfamiliar.  In most situations where parties separate, there is a transitional period of time when financial necessity dictates that the home is sold and the parties must move into their own respective homes. It is to be expected that the children will be dislocated from their home, which will be difficult – as it always is in these situations.  Based on a review of the evidence, there is no child-focused reason not to sell the home.  The plaintiff has failed to lead any evidence to support her claim for exclusive possession on a final basis. She wisely did not pursue such an order on an interim basis as she would not have been successful. The respondent has moved out of the home. There is no evidence of any ongoing threat or danger that might require some degree of protection that can be found in an exclusive possession order.  The parties own a number of assets. The applicant suggests that, if the respondent is suffering from financial hardship (which she disputes), he can remedy his financial challenges through selling other jointly owned assets or assets he owns in his name or through his corporations, such as the commercial property on Matheson Blvd East. The fact that a party owns other assets does not displace a joint owner’s prima facie right to have a property sold pursuant to the Partition Act.  The applicant alleges that she will be advancing a claim for an unequal division of property at trial, and that a sale of the home at this juncture could prejudice her claim in that regard. The applicant has led insufficient, if any evidence, to support her claim in that regard. A bald assertion on a motion that a claim for an unequal division of property will be pursued at trial is insufficient to defeat the prima facie right of a joint tenant to seek the sale of a jointly owned property.  At this time, both parties are claiming that the other will owe an equalization payment. The applicant’s concern is that, if the matrimonial home is sold and funds disbursed prior to trial, that may prejudice her ability to collect on any equalization payment owing to her. The same argument is made regarding the possible prejudice to her claim for an unequal division of property. As is often the case when a home is sold prior to trial, if the parties cannot agree on how funds are to be disbursed, the net proceeds are held in trust pending further court order or agreement. Accordingly, if the parties cannot agree on how the funds are to be disbursed, they will be held in trust pending trial or further court order. In that way, the applicant’s potential claims will not be prejudiced. The parties should be mindful that there are some instances where only one party receives a portion of the proceeds of sale of the matrimonial home prior to trial and the balance are held in trust pending trial if there are disputes regarding the quantum of equalization payment that will be owing by one to the other.  The applicant has failed to identify a competing interest under the Family Law Actthat would defeat a joint owner’s prima facie right to sale under the Partition Act. There are no compelling circumstances to deny sale of the home. The applicant has not advanced evidence that she will be entitled to exclusive possession of the home on a final basis and there is no child-focused reason to oppose the sale. There is no evidence on this motion that there would be any prejudice to the applicant’s right to an equalization payment, if the home was sold. The proceeds, or a portion thereof, can be held in trust, if necessary.  Furthermore, this matter will likely not be ready for trial until January 2021, which makes an early trial date impossible.  While the applicant would like to purchase the respondent’s half interest in the property, that is not a competing interest or a compelling reason to resist the sale. The applicant can only do so if the respondent agrees to sell his interest to her. There is no right of first refusal, meaning that the respondent can insist that the home be listed for sale. The applicant can make an offer for the property, like any other third party, once it is listed for sale to the public if the respondent does not agree to sell his interest to her prior to the listing.  As the children are part way through their school year and, as homes are often listed for sale during the summer months to maximize the selling price, the sale of the home shall be delayed until the end of the school year and the house shall be listed by July 2, 202. The Court ordered that the matrimonial home be listed for sale by July 2, 2020. Blog Analysis: Often, we assume that just because there are children involved and living in a matrimonial home, it would be in their best interest if the property is not sold. But clearly this case proves otherwise. In other words when going before the court which is essentially a third-party neutral and unknown to both parties, one never knows what the conclusion can be. It’s like a toss of a coin. As a result it may well be advisable for parties to settle amongst themselves rather than go to court because then there are cost consequences to the losing party - And of course one never knows who’s going to lose. It takes a great deal of skill and analysis and hard work to put forward these legal principles before the court in order to convince the court either to sell a house or for one of the parties to have exclusive possession. This is where the skill advice of Shankar law office comes into play.
At Shankar Law, we are happy to assist and guide you through whatever challenges you have in your spousal and matrimonial life. We work primarily in three counties and all over Ontario: Huron, Bruce, and Grey and span several cities (Southampton, Kincardine, Goderich, Wiarton, Hanover, Dundalk, Walkerton, Meaford, Markdale, Chatsworth), through our two locations in Port Elgin and in Owen Sound. We look forward to serving you.