Court File and Parties

COURT FILE NO.: FC-19-59234 DATE: 20200225 CORRIGENDA: 20200226

ONTARIO SUPERIOR COURT OF JUSTICE FAMILY COURT

BETWEEN:

Timothy Ronald McNeil Applicant – and – Christine Leanne McNeil Respondent

Counsel: Monica Farrell, for the Applicant Colin Still, for the Respondent

HEARD: February 12, 2020

Reasons for Decision

(Text of Original Decision Has Been Amended – Change Appended)

CHARNEY j.:

[1] The applicant, Timothy McNeil, brings this motion for an order for the partition and sale of the matrimonial home in Stouffville, Ontario.

[2] The respondent has brought a cross motion for various orders, including:

(a) Imputing the applicant with an income of $160,000; (b) Exclusive possession of the matrimonial home; (c) Retroactive child support from the date of separation in the amount of $62,084; (d) Retroactive spousal support from the date of separation in the amount of $63,052; (e) An order that the applicant pay the mortgage and property taxes until the matrimonial home is sold; (f) An order that the valuation of the applicant’s pension shall include the pre-marriage co-habitation period from 1992 – 2000; (g) An order that if the partition and sale of the matrimonial home is granted, the applicant will pay one half of the value of his pension to the respondent to enable the respondent to purchase a replacement home.

Background Facts

[3] The parties were married on April 8, 2000. The applicant takes the position that they began living together in 1994, the respondent takes the position that they began living together in 1992. Their first child was born in 1997. The applicant is currently 53 years of age, the respondent is currently 50 years of age.

[4] The date of separation is May 15, 2018, although both parties remained in the matrimonial home until the applicant moved out of the matrimonial home in December 2018.

[5] The parties have four children, aged 23, 21, 19 and 16. The children all live with the respondent in the matrimonial home. The home has five bedrooms.

[6] The applicant is a firefighter, and his pension and the matrimonial home are his two major assets. His pension, valued from the date of marriage, was valued at $808,379 as of April 2019.

[7] The matrimonial home is jointly owned by the parties. It was purchased in 1999 for about $200,000.

[8] The matrimonial home was appraised for $945,000 in April 2019. It has two mortgages totalling approximately $533,000, leaving approximately $400,000 in equity to be divided by the parties if the home is sold. The total monthly mortgage and property tax payments are $3,881.93. Additional charges have been added to the tax bill to pay for delinquent water/sewer bills. Until recently, the monthly mortgage and property tax bill have been paid by the applicant, although these payments have recently fallen into arrears as a result of the continued dispute between the parties.

[9] The applicant’s annual income is approximately $130,000 per year, although the respondent alleges that he earns at least an additional $30,000 in cash each year from contracting work and refereeing hockey.

[10] The respondent’s annual income is approximately $10,000 per year.

[11] The applicant commenced his Application on August 16, 2019. Since early 2019 the parties have attempted to negotiate a resolution of all issues. The respondent has made it clear throughout that keeping the matrimonial home is a priority for her.

[12] The parties have exchanged offers with respect to the home, but have not been able to reach an agreement. The respondent’s various offers are based on the applicant paying her lump sum spousal support of $550,000.

[13] The respondent advises that she has arranged for financing to assume the mortgage on the property. This financing is based on the respondent earning $15,000 per year and receiving monthly child support of $2,347 and monthly spousal support of $2,008. This proposal does not, however, include paying the applicant one half the equity in the home. In other words, it is not a buy-out, but an offer to assume the existing mortgage and to delay any equalization payment to the applicant for some unspecified time.

[14] The respondent takes the position that the parties had a “joint family venture” prior to marriage and she is therefore entitled to one half of the applicant’s pension since they began cohabiting in 1992, and not just since they were married in 2000: Cloutier v. Francis, 2011 ONSC 5550, at para. 244. It is on this basis that she requests an order that the valuation of the applicant’s pension include the pre-marriage co-habitation period from 1992 – 2000.

The Respondent’s Cross Motion

[15] The respondent’s cross motion was served just four days before the applicant’s motion was to be heard, which is less than the minimum 6 day notice period under the Family Law Rules. The applicant objected to the respondent bringing this motion on such short notice, and argues that he did not have time to respond to the multiple issues raised in the cross motion, and that the cross motion cannot be addressed in the one hour scheduled for the motion for partition and sale.

[16] The applicant is correct that it was not possible to deal with the applicant’s motion and the respondent’s cross motion in one hour. Nor did the respondent seriously expect the court to deal with all of these issues in the one hour allotted for the motion. The purpose of the cross motion was really to demonstrate the respondent’s position that there were multiple issues in dispute between the parties, and that the sale of the matrimonial home should not be dealt with until all of these issues can be dealt with at trial. The respondent’s position is that the sale of the matrimonial home at this stage in the proceedings will defeat or prejudice the respondent’s other rights under the Family Law Act, R.S.O. 1990, c. F.3 (FLA).

Legislative Framework

[17] Section 2 of the Partition Act, R.S.O. 1990, c. P.4 empowers the court to order the sale of a jointly owned home, including a matrimonial home:

2. All joint tenants… may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.

[18] In addition, sections 23 and 24 of the FLA deal specifically with the court’s powers regarding the sale, possession and exclusive possession of a matrimonial home:

23. The court may, on the application of a spouse or person having an interest in property, by order,

(b) authorize the disposition or encumbrance of the matrimonial home if the court finds that the spouse whose consent is required,

(i) cannot be found or is not available,

(ii) is not capable of giving or withholding consent, or

(iii) is unreasonably withholding consent,

subject to any conditions, including provision of other comparable accommodation or payment in place of it, that the court considers appropriate;

Order for possession of matrimonial home

24. (1) Regardless of the ownership of a matrimonial home and its contents, and despite section 19 (spouse’s right of possession), the court may on application, by order,

(a) provide for the delivering up, safekeeping and preservation of the matrimonial home and its contents;

(b) direct that one spouse be given exclusive possession of the matrimonial home or part of it for the period that the court directs and release other property that is a matrimonial home from the application of this Part;

(c) direct a spouse to whom exclusive possession of the matrimonial home is given to make periodic payments to the other spouse;

(e) order a spouse to pay for all or part of the repair and maintenance of the matrimonial home and of other liabilities arising in respect of it, or to make periodic payments to the other spouse for those purposes;

(f) authorize the disposition or encumbrance of a spouse’s interest in the matrimonial home, subject to the other spouse’s right of exclusive possession as ordered;

Order for exclusive possession: criteria

(3) In determining whether to make an order for exclusive possession, the court shall consider,

(a) the best interests of the children affected;

(b) any existing orders under Part I (Family Property) and any existing support orders or other enforceable support obligations;

(c) the financial position of both spouses;

(d) any written agreement between the parties;

(e) the availability of other suitable and affordable accommodation; and

(f) any violence committed by a spouse against the other spouse or the children.

Best interests of child

(4) In determining the best interests of a child, the court shall consider,

(a) the possible disruptive effects on the child of a move to other accommodation; and

(b) the child’s views and preferences, if they can reasonably be ascertained.

Analysis

[19] The relevant provisions of the Partition Act and the FLA must be read together. Where substantial rights in relation to jointly owned property are likely to be jeopardized by an order for sale, the matter should be deferred until the issues are decided under the FLA. However, if the sale will not prejudice either spouse’s claim with respect to the home under the FLA, there is no reason to delay a sale: Silva v. Silva; 1 O.R. (3d) 436: 75 D.L.R. (4th) 415.

[20] An owner of a home has a prima facie right to sale: Davis v. Davis, [1954] O.R. 23 (C.A.); Goldman v. Kudeyla, 2011 ONSC 2718, at paras. 17 and 18; Brienza v. Brienza, 2014 ONSC 6942, at para. 22. A matrimonial home may be sold without spousal consent when the evidence does not support a realistic need to maintain the house as a home for the benefit or stability of the children pending trial: Jiang v. Zeng, 2019 ONSC 1457, at paras. 50 and 51.

[21] In Jiang McGee J. stated, at paras. 36 - 38:

Exclusive possession is an Order only available pending the sale of a matrimonial home. An Order for exclusive possession cannot be used to frustrate an owner’s prima facie right to the sale of the home. The sale of the matrimonial home can be ordered prior to Trial on a motion, or at Trial.

The sale of a matrimonial home will generally be ordered on a motion unless there are children residing in the home, per section 24(3)(a) of the Family Law Act, or, an entitlement under the Act that would be otherwise defeated.

The purpose of section 24(3) is to preserve stability and continuity in the lives of children while their parents’ legal issues are determined.

[22] In the present case, the applicant has not resided in the matrimonial home since December 18, 2018. There is no indication that he intends to return. The respondent already has de facto exclusive possession. In these circumstances there is no utility to granting an order for exclusive possession pending the sale of the matrimonial home. The respondent’s motion for exclusive possession is really a motion that the home not be sold at all: Khan v. Khan, 2019 ONSC 4687, at para. 13. The respondent’s motion for exclusive possession is, accordingly, dismissed.

[23] The respondent has no right to own the house after separation and divorce. As a joint tenant, she has a right to half of its value. She may have a right to an equalization payment depending on the parties’ net family property calculations.

[24] Much of the argument on the motion before me focused on whether the respondent’s offers to purchase the applicant’s interest in the matrimonial home were reasonable. The reasonableness or unreasonableness of the respondent’s offers does not affect the applicant’s prima facie right to sell the home. At the end of the day, if the parties cannot reach an agreement, the matrimonial home will have to be sold.

[25] The court does not have the authority to grant a spouse the right to purchase the other’s interest in the matrimonial home or the right of first refusal: Martin v. Martin, [1992] 8 O.R. (3d) 41.

[26] In Brienza, Perell J. summarized the law at paras. 37 and 38:

The court does not have the jurisdiction to compel one co-owner to sell to the other, although the co-owners may participate in the court-ordered sale of the property in the open market; Osborne v. Myette, [2004] O.J. No. 3383 (S.C.J.); Legg v. Draper-Legg, [2004] O.J. No. 606 (S.C.J.); Greenbanktree Power Corp. v. Coinamatic Canada Inc., supra.

The court does not have the jurisdiction under the Partition Act to grant a right of first refusal to either co-owner: Dibattista v. Menecola (1990), 75 O.R. (2d) 443 (C.A.). In Silva, supra, the court noted that where a sale is ordered, the respondent may bid in the sale. See also: Glick v. Carr, [1991] O.J. No. 1588 (Gen. Div.).

[27] See also: Buttar v. Buttar, 2013 ONCA 517, at para. 64: “This court has jealously guarded the rights of joint owners to the best price for jointly-owned property”; Laurignano v. Laurignano, 2009 ONCA 241, at para. 3; Watson v. Watson, 2015 ONSC 2091, at paras. 34-37; McColl v. McColl, at para. 29; Kokaliaris v. Palantzas, 2016 ONSC 198, at para. 44; and Delongte v. Delongte, 2019 ONSC 6954, at para. 14:

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.

[28] Rule 66.03 of the Rules of Civil Procedure requires that subject to court order, the proceeds resulting from a sale under the Partition Act be paid into court unless the parties agree otherwise.

[29] The law relating to the sale of the matrimonial home was recently canvassed by Shaw J. in Delongte, at paras. 16 – 21. Referencing the decision of McGee J. in Goldman, he states, at para. 21:

[T]here 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.

[30] The trial in this case is not likely to be heard within a short period of time. A Settlement Conference has not yet been scheduled, and a trial is unlikely to be held until the November 2020 trial sittings.

[31] The respondent argues that the home should not be sold until her “joint family venture” argument for a share of the applicant’s pension from prior to the marriage is dealt with. She also argues that the children should not be uprooted; the children are attached to the matrimonial home, and it is close to the high school attended by the youngest child. In addition, she argues that each child requires his own bedroom, and it is difficult to find a five-bedroom home for rent in the area.

[32] With respect to the equalization of property, the parties have only two major assets, the matrimonial home and the applicant’s OMERS pension. The applicant wants an equalization that leaves each party with more or less equal retirement assets for the future, and liquid cash for the current expenses. The respondent cannot insist that the applicant retain a greater share of his OMERS pension and forego any cash payment from the sale of the matrimonial home. Whatever the valuation date, the pension will be divided between the parties in accordance with sections 9 and 10.1 of the FLA.

[33] Sections 10.1(3) and (4) of the FLA provide:

Order for immediate transfer of a lump sum

(3) An order made under section 9 or 10 may provide for the immediate transfer of a lump sum out of a pension plan but, except as permitted under subsection (5), not for any other division of a spouse’s interest in the plan.

Same

(4) In determining whether to order the immediate transfer of a lump sum out of a pension plan and in determining the amount to be transferred, the court may consider the following matters and such other matters as the court considers appropriate:

1. The nature of the assets available to each spouse at the time of the hearing.

2. The proportion of a spouse’s net family property that consists of the imputed value, for family law purposes, of his or her interest in the pension plan.

3. The liquidity of the lump sum in the hands of the spouse to whom it would be transferred.

4. Any contingent tax liabilities in respect of the lump sum that would be transferred.

5. The resources available to each spouse to meet his or her needs in retirement and the desirability of maintaining those resources.

[34] In Nadendla v. Nadendla, 2014 ONSC 3796, Sproat J., in considering the relief available in section 10.1, made the following findings, at paras. 18 to 22:

With respect to factors 1 and 2, the pension constitutes greater than 50% of the Applicant’s assets. If the pension is not divided at source, the Applicant will have to deplete virtually all his liquid assets. In the result, his assets will be tied up in the pension while all of the Respondent’s assets will be liquid. In contrast if the pension is divided at source both the parties will have a reasonable balance between liquid assets and savings for retirement.

With respect to factor 3 the funds would be transferred to a Locked In Retirement Account (“LIRA”) in the name of the Respondent.

With respect to factor 4, I was not advised of any contingent tax liabilities. In any event, any such liabilities would equally affect the Applicant.

With respect to factor 5, the Respondent has only modest savings. In this case, and in virtually all cases, it is desirable that the Respondent have resources to provide for her in retirement.

These factors strongly favour division of the pension at source and I so order. As such 50% of the Family Law Value of the pension shall be transferred to the Respondent plus applicable interest, if any. The Applicant shall forthwith complete all required forms to effect this transfer.

[35] The present case presents an even stronger case for the division of the pension at source and the transfer of the funds to a LIRA. The pension represents more than 60% of the applicant’s assets. The parties are both over 50 years of age, and the respondent has no savings. Given her current employment situation, the respondent will not realistically be able to save for her retirement in the next decade. If the pension is not divided at source, all of the applicant’s assets will be tied up in his pension, while all of the respondent’s assets will be tied up in the home. If the home is sold and the pension is divided at source, both parties will have a reasonable balance between liquid assets and savings for retirement.

[36] I agree with the applicant that the almost certain outcome of this dispute is the division of the pension at source, and that the respondent’s rights under the FLA are not prejudiced by the sale of the matrimonial home before trial.

[37] With regard to the respondent’s argument that the children should not be uprooted, I adopt the analysis of Shaw J. in Delongte, who noted that simply arguing that the children are attached to the matrimonial home is not a sufficient basis to delay the sale. In Delongte the children were 14 and 16 years of age. Shaw J. stated, at paras. 38 – 41:

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 the Partition 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.

[38] In the present case, I am not satisfied that the housing needs of the respondent and her children must prevent the house from being sold until after the trial. The applicant has provided evidence that there are suitable homes for rent in the area of the youngest child’s school. The remaining children are all adults, and should be able to adjust to a new home without difficulty. If the respondent cannot find or afford a five-bedroom home, they will have to make do with a smaller home. It is not unusual that, following separation, the parties are not able to continue to live the same lifestyle as they did prior to separation. The applicant is the only income earner. Unless the respondent finds employment, the applicant’s income will now have to support two households instead of just one. It is not realistic for the respondent to expect to live the same lifestyle as she did when there was only one household to support.

[39] If a portion of the proceeds of sale are held in trust, the proposed sale will not prejudice the rights of either spouse under the FLA. Indeed, the sale of the matrimonial home may encourage settlement because the parties will know the actual value of this asset and will want to access the funds held in trust.

[40] The respondent has not established a reasonable need to delay the sale of the home. As Moore J. stated in Goodman v. Goodman, 2014 ONSC 3466, at para. 35:

Delaying the sale until the time of trial simply adds time to the process of translating the asset into a fund to be allocated between the parties according to their interests on proper evidence at trial. I am satisfied that the house should be sold and the proceeds of the sale should be maintained in trust pending agreement between the parties as to allocation between the parties or further order of the court.

[41] I am mindful that the youngest child is still in high school, and given the timing of this decision, there is no reason why the closing of any sale of the matrimonial home cannot wait until the end of June to ensure that it does not interfere with his school year.

[42] Delaying the closing of the home will also give the parties an opportunity to negotiate child and spousal support. As I understand the applicant’s position, there is no dispute that, once the house is sold and the applicant is no longer paying to maintain the home, the applicant will be paying child support for at least three children on the basis of his reported income of $130,000. If the parties are unable to reach an agreement on child and spousal support, the end of June closing will give the respondent an opportunity to bring her cross motion for increased child and spousal support.

Conclusion

[43] This Court Orders:

[44] The applicant, Timothy Ronald McNeil and the respondent, Christine Leanne McNeil, shall list their matrimonial home at 97 Flint Crescent, Stouffville, Ontario, for sale by April 3, 2020 with a mutually agreeable real estate agent.

[45] The parties shall choose the real estate agent by March 16, 2020.

[46] In the event that the parties cannot agree on a real estate agent, the respondent shall provide the applicant with a list of three agents by March 10, 2020, and the applicant shall select an agent from this list by March 13, 2020.

[47] If the parties cannot agree on a list price for the home, the applicant shall decide, in consultation with the real estate agent.

[48] The respondent shall prepare and stage the home for sale, as directed by the real estate agent, and she shall promptly sign the listing agreement and any other documents reasonably required by the listing agent and real estate solicitor acting for the parties on the sale.

[49] The listing agent shall have access to the matrimonial home on 24 hours’ notice to the respondent, or such other shorter length of notice as agreed to by the respondent, for the purpose of inspecting the home to determine the listing price, to conduct an open house, and to allow prospective purchasers to view the home.

[50] The closing date for the sale of the home will not be before June 26, 2020 unless agreed to by the respondent.

[51] The parties shall accept the first reasonable offer to purchase the home. If they cannot agree on whether an offer is reasonable, any offer that is within two percent (2%) of the list price shall be deemed reasonable.

[52] Provided that the respondent complies with the terms of this order, the applicant shall continue to make the payments on the mortgage and secured line of credit, which includes the property taxes, until the sale is completed.

[53] The real estate lawyer acting on the sale of the matrimonial home shall pay the following from the sale proceeds:

a. real estate commission, b. adjustments for taxes, utilities, municipal fees or levies, c. amounts required to discharge registered encumbrances, d. the two Scotiabank Visa credit cards, e. legal fees and disbursements relating to the sale, and f. all other sale adjustments.

[54] The two Visa credit cards shall be closed simultaneous with the payments in paragraph 53(d).

[55] From the net proceeds, before distribution between the parties, the real estate lawyer shall hold back the sum of $150,000 pending a further court order or written agreement of the parties.

[56] After paying the items in paragraph 53 and deducting $150,000 for the holdback, the remaining proceeds shall be divided into two equal shares and distributed equally to the applicant and the respondent.

[57] In the event that there are any unsatisfied writs of execution against either party, the amount required to be paid out to any judgment debtor shall be paid out exclusively from that portion of the net sale proceeds that would have otherwise been paid to the party against whom the writ of execution is registered, without prejudice to that party’s claim to recover such portion of the debt that may have existed on the date of separation by way of equalization of net family property or, if the debt was jointly incurred post-separation regardless of whose name the debt was in.

[58] If the parties disagree on a term of the listing, the execution of any documents or the showing of the property, or in the event that the respondent fails to comply with the terms on this order, either party may bring a motion on four days’ notice before this court to obtain directions.

[59] This ruling is without prejudice to the relief requested in the respondent’s cross motion, except for her request for an order for exclusive possession of the matrimonial home, which is dismissed. The balance of the respondent’s cross motion may be brought back on notice.

[60] The applicant was successful on this motion and is presumptively entitled to costs. If the parties are not able to agree on costs within 20 days of the date of this decision, the applicant may serve and file written submissions of not more than 3 pages plus costs outline and any offers to settle, and the respondent may serve and file responding submissions on the same terms within 15 days thereafter.

Justice R.E. Charney

Released: February 25, 2020

Amendment

1. The first sentence of paragraph [15] has been amended from its original text: The respondent’s cross motion was brought on February 6, 2020, just six days before the applicant’s motion was to be heard, the minimum period of notice permitted by the Family Law Rules.

To now read as follows: The respondent’s cross motion was served just four days before the applicant’s motion was to be heard, which is less than the minimum 6 day notice period under the Family Law Rules.