SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Rose Marie Soulliere, Applicant
AND:
Kenneth Allen Soulliere, Respondent
BEFORE: Verbeem J.
COUNSEL:
Samuel A. Mossman, for the Applicant
David W. Ziriada, for the Respondent
HEARD: June 13, 2014
ENDORSEMENT
Nature of the Motion
1The applicant seeks an order compelling the respondent do all things necessary to cooperate in the renewal of a mortgage on the matrimonial home located at 4670 Alpenrose, Windsor, Ontario, for a five-year open term at a rate of 4 per cent.
Background
2The parties were married on September 5, 1992, and cohabitated since July 1991. They separated, on or about, May 21, 2011. Since that time, the applicant has continued to reside in the matrimonial home.
3There are two children of the marriage: Ryan Soulliere – born May 8, 1999; and Sara Soulliere born October 12, 2003. At the time of separation, the parties agreed to a shared custody/shared residency arrangement for both children. That has recently changed. Ryan now resides with the respondent, on a full-time basis. Sara continues to reside equally with each parent.
4The applicant earns approximately $33,000 a year. The respondent earns in excess of $100,000 a year and earned $130,000 in 2013. The respondent paid spousal support, on an informal basis, post separation. Voluntary support payments ceased in December 2013. No further spousal support payments were made prior to the hearing of this motion.
5A case conference was held on May 20, 2014. Apparently, that resulted in an interim agreement whereby the respondent is to pay the applicant $517 per month for child support and $1,698 per month for spousal support.
6Title to the matrimonial home is registered in the applicant’s name. It is encumbered by an institutional mortgage in favour of the Bank of Montreal.
7The complete terms of the mortgage are not in evidence. The parties agree that the annual interest rate under the mortgage is currently 2.85 per cent. The specific principal amount currently owing is not set out in the evidence. Counsel were not certain of the specific amount, but agree that it is between $ 90,000 - $100,000. The respondent is a guarantor of the mortgage.
8The mortgage term will end on June 27, 2014. At that time, the mortgage will be renewed. The evidence disclosed two options with respect to the renewal of the mortgage:
(a) renewal at an annual interest rate of 4 per cent, for a five-year open term, provided the respondent acts as a guarantor; or
(b) renewal at an annual interest rate of 6.3 per cent for a six-month open term, if the respondent does not act as a guarantor.
9Apart from the foregoing, the specific terms of the mortgages contemplated in options (a) and (b), are not before the court.
10On May 29, 2014, the respondent advised the applicant that he would not agree to act as a guarantor on the mortgage, as renewed.
Position of the Parties
11The applicant seeks the relief set out above, in order to secure a lower interest rate under option (a), on renewal. Her financial situation is strained. She has not received any support from the respondent for nearly half a year. If the respondent does not act as a guarantor on the mortgage, the increase in her monthly mortgage payment will further strain her finances.
12She concedes that she owes the respondent a significant equalization payment under the Family Law Act, R.S.O. 1990, c. F. 3, (FLA), and the matrimonial home will most likely be sold, to fund that payment. She cannot precisely calculate her obligations in that regard, as the respondent has claimed certain liabilities at the time of separation, which have not been properly evidenced.
13Until she has an opportunity to vet the evidence with respect to the respondent’s debt claim, she will not be in a position to determine the quantum of her equalization payment, and her corresponding financial means, post equalization. Once that is determined, she can move forward with securing a new residence, as she will know what she can realistically afford. Until the respondent provides evidence with respect to his debts, she will have to remain in the matrimonial home. Financial prudence dictates that the parties co-operate to ensure that the expenses in that regard are minimized.
14While the mortgage under option (a) has a five-year term, it is an open mortgage. Therefore, it is capable of being discharged, once the proper equalization payment is calculated, and the home sold, if necessary.
15She suggests the court has jurisdiction to make the order requested, under the following provisions of the FLA:
(I) s. 23 (b) – as part of an order authorizing the encumbrance of the matrimonial home, where the court finds that a spouse is unreasonably withholding consent;
(II) s. 24 (a) – as part of an order preserving the matrimonial home;
(III) s. 24(e) – as an order that a spouse pay all or part of the repairs or maintenance of a matrimonial home and other liabilities in respect of it (regardless of ownership).
16The respondent resists the motion for three reasons:
(a) the court does not have jurisdiction to make the order requested – none of the provisions of the FLA cited by the applicant authorize the court to order a non-titled spouse to guarantee the mortgage obligations of the titled spouse;
(b) if he is ordered to act as a guarantor of the mortgage as renewed, his ability to obtain an unrelated mortgage as a mortgagor, will be impaired. This may prevent him from financing the purchase of his own residence; and
(c) based on the equalization payment the applicant owes, the matrimonial home will have to be sold. There is no reason to delay listing the home for sale. A five year mortgage term is inappropriate. If the applicant moves forward with the inevitable sale of the matrimonial home, forthwith, the “bottom line” financial impact on her, resulting from the higher interest rate in option (b) will be minimal.
Analysis
17While counsel referred me to various provisions of the FLA, I was not provided with any judicial authority concerning the court’s jurisdiction to make the order requested.
18Based on my review of the decided cases, there are two decisions of this court that have given passing consideration to an order compelling a spouse to act as a mortgage guarantor with respect to a matrimonial home occupied by the other (see: Misner v. Misner, 2010 ONSC 2284 at para. 182, and Jacobs v. Jacobs, 2011 ONSC 2699 at para. 68 – 69).
19In each of those cases it appears that the occupying spouse would not have qualified for a mortgage, at all, but for the other acting as a guarantor. Neither case expressly determined whether the court has jurisdiction to make such an order, as the “guarantee” issue was a collateral consideration, and not an issue that was required to be determined, in disposing of the issues before the court, respectively.
20Based on the evidence before me, it is unnecessary to determine whether the FLA affords jurisdiction to make the order requested by the applicant. If there is such jurisdiction, I would decline to exercise it, in the circumstances of this case.
21The evidence discloses that the mortgage can be renewed without the respondent acting as a guarantor. Although, if he does so, the terms of the renewal will be more favourable for the applicant. This is not a “preservation” situation. There is no evidence that the matrimonial home will be “wasted”, if the respondent does not act as guarantor. Instead, the applicant will be forced to incur a greater monthly expense, servicing the debt attached to the matrimonial home.
22The parties agree that the matrimonial home will most likely be sold, in order to fund the anticipated equalization payment. The respondent suggests that the home should be listed for sale, immediately. The applicant resists listing the home for sale, until all disclosure necessary to accurately calculate the respondent’s NFP is made. Until that is done, she cannot determine what funds she will ultimately have available, post equalization, to secure a new residence for herself and her daughter.
23While the evidentiary record is not complete on the point, I have difficulty understanding why the home cannot be listed for sale at the same time production and proof issues with respect to the respondent’s alleged liabilities are dealt with.
24None of this detracts from the reality that the mortgage will be renewing at a higher interest rate than the current rate of 2.85 per cent, in a matter of days. The applicant’s mortgage expenses will increase, the question is, by how much.
25There is no evidence before me concerning what the differential in monthly mortgage payments will be as between options (a) and (b). I was not advised of that amount during the course of submissions. Without knowing the current principal amount of the mortgage, I cannot calculate those figures. I was not provided with amortization schedules relative to the mortgages contemplated in options (a) and (b).
26Therefore, it is difficult to accurately determine the impact of the interest rate differential on the applicant’s monthly expenses. Obviously, a higher mortgage rate will adversely affect the applicant’s financial position, on an ongoing basis, until the matrimonial home is sold and the mortgage is discharged.
27The differential between the mortgage rates in options (a) and (b) is 2.3 per cent. Assuming a principal amount of $100,000 (which is higher than the parties’ estimate), the additional annual interest, on a simple basis, would be $2,300 as between the renewal rate with the guarantee and the renewal rate without it.
28Based on the limited evidence, if the respondent does not act as a guarantor on the mortgage renewal, it appears there will be an additional increase in the applicant’s mortgage expense in the range of $175 to $190 per month, compared to the increase that would follow the mortgage renewal, with the guarantee.
29The matrimonial home will, probably, be listed for sale in the near future. Given that, there is little to be gained by entangling the respondent in a contingent liability related to the secured financing of the matrimonial home, pending its sale, particularly, if to do so will negatively impair his own borrowing capacity.
30However, the additional monthly expenses that will be visited on the applicant, as a result of the respondent’s unwillingness to act as a guarantor, cannot be ignored. As her expenses increase, so does her need. The respondent earns substantially more than the applicant. The parties acknowledge the applicant has an entitlement to spousal support, and recently agreed to a monthly payment of $ 1,698.00, in that regard.
Disposition
31In my view, the “interest rate differential issue” is appropriately dealt with by adjusting the monthly spousal support quantum in an amount equal to the difference between what the applicant’s monthly mortgage payment would be with the guarantee in place and the amount that it will be without the guarantee in place. The amount will have to be grossed up, on account of the income tax the applicant will be compelled to pay as a result of the increase in spousal support quantum.
32Counsel should calculate the difference between the actual monthly mortgage payments required under options (a) and (b). An order will go, increasing the monthly spousal support quantum payable by the respondent to the applicant, by that amount, as grossed up for income tax payable by the applicant on that sum. The specific amount of the variation should be included in the formal order. If there is a dispute with respect to that amount, counsel may make an appointment with me, through the trial coordinator’s office, to settle the terms of the order. The increased amount of spousal support will be payable commencing with the July 2014 spousal support payment. The additional support will be payable until the renewed mortgage is discharged or further order of the court.
33This situation is not intended to be open-ended. As the home will be listed for sale in the near future, the support ordered herein will be the subject of a review after 90 days. I will remain seized of this issue. Counsel should coordinate with the trial coordinator and obtain a mutually agreeable date sometime between 90 days and 130 days after the date of this order for this matter to come back before me at 9:30 a.m., for the purpose of reviewing the increased support awarded under this order.
34There was mixed success on the motion. The order requiring the respondent to act as a guarantor was not granted, however, the applicant obtained alternative relief. As a result, there shall be no order as to costs.
Original signed “Gregory J. Verbeem”
Gregory J. Verbeem
Justice
Date: June 20, 2014