Court File and Parties
Newmarket Court File No.: FC-15-48746-00 Date: 20160429 Ontario Superior Court of Justice
Between: Faryab Zargar, Applicant – and – Mahsa Zarrabian, Respondent
Counsel: Alexandra Abramian, Counsel for the Applicant Ross Macdonald, Counsel for the Respondent
Heard: April 27, 2016
Ruling on Motion
JARVIS J.:
[1] This is the respondent husband’s motion for the sale of the former matrimonial home before trial. The wife opposes the motion for three principal reasons, those being her suspicions about the husband’s financial circumstances (and his non-payment of support), trauma to the children which a sale would involve, and her wish to acquire his interest in the residence. It is jointly owned.
Background
[2] The parties were married on August 18, 1998 and separated on May 25, 2015. There are two children of the marriage, ages 14 and 9, both of whom reside with their mother in the former matrimonial home. The husband lives elsewhere in a residence owned by his current partner.
[3] The matrimonial home is about 8,000 square feet in size and worth an estimated $2,000,000. Registered against title is a mortgage, the outstanding principal balance of which is about $1,130,000. The monthly mortgage expense is $5,400 and the overall monthly housing costs (which include the mortgage) are $7,367.
[4] The wife is a chiropractor and earns a minimal income. The husband did not challenge her counsel’s assertion that substantial disclosure of her financial circumstances has been made. What remains outstanding is a value for her professional practice, a valuation engagement being undertaken by the wife when this motion was argued but which, so it would appear, is likely quite modest. According to her Financial Statement, the wife earns about $8,000 a year.
[5] The husband is a qualified mechanical engineer but has worked mostly in the financial services industry in recent years. Preceding the parties’ separation, his income has been the following:
2011 - $455,082 2012 - $119,788.37 2013 - $249,104 2014 - $154,293
[6] During this period the husband worked for a number of different employers. There were a couple of employment interruptions of short duration. In 2015 the husband lost his employment as an investment banker. Since then he has either been unemployed or only periodically employed. When this motion was argued, his counsel advised that the husband had just secured employment paying about $80,000 a year. His updated Financial Statement recorded a prior year’s income of $155,447 but I suspect that figure related to his 2014 income and not 2015 in light of the evidence before the court. The husband’s Financial Statement disclosed an average 2016 monthly income (before he secured new employment) of about $2,000. Until his loss of employment in September 2015 the husband paid one-half of the monthly mortgage ($2,700) and house insurance ($200) expenses as well as quarterly property taxes. Since then he has paid nothing. Except for a modest stock trade, there has been about a $45,000 deterioration in his cash and debt situation.
[7] The wife has had to borrow at least $85,000 from her family members to maintain her and the children’s living and housing expenses. She is hopeful that her practice will earn her more income but, as matters now stand, it is patently clear that even with support from the husband, the parties cannot afford to indefinitely maintain their former residence.
Law
[8] In Goldman v. Kudelya (2011), 5 R.F.L. (7th) 149, 2011 ONSC 2718 McGee J. ordered the sale of a matrimonial home in circumstances where the best interests of a child were alleged to be involved.
[17] 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 interests under the Family Law Act that would otherwise be defeated.
[18] 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 for sale is denied unless the selling party can demonstrate that the sale would not prejudice the rights of the resisting party.
[19] There have been a number of cases in which the court has denied an interim motion for sale prior to trial such as Arlow v. Arlow (1990) 1991 12940 (ON CA), 33 R.F.L. (3rd) 44 (OCA), Walters v. Walters 1992 8599 (ON SCDC), 1992 CarswellOnt 811 and more recently, Kereluk v. Kereluk 2004 34595 Ontario S.C.J. In each case there were compelling circumstances in which one or both tests favoured the resisting party, such as the availability of trial within a short period, prejudice on the equalization payment, or the need to preserve the residence for a vulnerable spouse or child who might well retain the home in the cause.
[9] In Goldman, the husband (who unsuccessfully opposed the sale) argued that the best interests of the parties’ daughter (then four years, three months old) would be harmed. There was, however, and as McGee J. noted, no evidence that the child was bonded to the home, or that its sale would harm her.
[10] In this case the wife asserts that the children have been traumatized by their parents’ separation, and will be devastated by the home being sold. They do not wish to spend time with their father at the residence he shares with his new partner, and the OCL has accepted its appointment to represent their interests. Beyond these rather bald allegations though, the evidentiary record about the children’s best interests is lacking. The circumstances of this family are very different from those in Petit v. Petit, 2016 ONSC 849, another case upon which the wife relies, and in respect to which there was a robust record of likely emotional harm to the children if their family home had been sold.
[11] I agree with the views expressed by McGee J. in Goldman,
[20] Issues arising from relationship breakdown are by their very nature inextricably intertwined. I agree with Justice Wright’s reasoning in Walters supra, 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 effect the equal division of family assets and establish post separation parenting patterns.
[12] The facts in this case are distinguishable from those in Kereluk, (2004), 2004 34595 (ON SC), 9 R.F.L. (6th) 385, [2004] O.J. No. 4337 (Ont. S.C.) and Mignella v. Federico, 2012 ONSC 5696 in that, unlike Kereluk, the evidence is that what the wife would need to pay and acquire the husband’s interest is significant and currently, even with support being paid, beyond her means and also, unlike Mignella, the evidence does not support that there would be so large a set-off against that equity payment so as to support that the wife would overpay for the husband’s interest.
[13] Counsel for the wife has questioned the husband. While the wife is suspicious about why so proximate to the parties’ separation the husband’s employment of several years was ended and, soon after separation, his (then) lawyer wrote to her that the home needed to be sold, there was no evidence before the court nor submissions that there were outstanding undertakings from the husband’s questioning or “smoking gun” documents that suggested a much different financial picture than represented by the husband.
[14] In this case, the Net Family Property (“NFP”) Statement accompanying the husband’s affidavit indicates that, before taking into account what I view as will likely be a modest value attributable to the wife’s chiropractic practice, she will owe the husband an equalization payment of about $4,600. There is about $800,000 equity in the matrimonial home. The wife wishes the opportunity to explore purchasing her husband’s interest.
[15] In my view, there are compelling reasons for the sale of the matrimonial home. These are:
(a) the husband has a prima facie right to have the matrimonial home sold; (b) given the parties’ financial circumstances, there is a significant likelihood that a sale will be the inevitable result at trial; (c) delaying a sale in circumstances where, based on both parties’ evidence, their collective net worth has declined over $130,000 in less than a year would be financially irresponsible and unreasonable; (d) there is little probative evidence of harm to the children if the home was sold; (e) the husband has acknowledged that he has no objection to selling to his wife his interest in the matrimonial home based on a binding joint appraisal of it; and (f) giving the wife an opportunity, as I intend, to acquire her husband’s interest in the property, provided certain security provisions are imposed, balances the wife’s expressed interest to acquire sole title and with the husband’s wish to access his equity.
Disposition
[16] Accordingly, an Order shall issue as follows:
(1) Within 10 days of the date of release of these Reasons, the parties shall agree on a qualified real estate appraiser (not an agent) for the former matrimonial home, the costs for which shall be equally shared by the parties but paid by the husband, with later credit to him of an amount equal to one-half of the cost;
(2) Within 30 days of the date of the appraisal, or such further time as the parties may agree, the wife shall be entitled to purchase the husband’s interest in the matrimonial home. The amount to be paid shall be calculated as follows:
(a) one-half of the appraised value less one-half of the principal balance due on the mortgage as of the completion date; and less (b) the sum in (a) less 1.5% for notional realtor’s commission; and (c) the sum of $30,000 to be retained by the wife and applied on a without prejudice basis to be credited to the husband’s support obligations as may later be determined from and after the valuation date to April 30, 2016.
(3) If the wife is unable to acquire the husband’s interest in accordance with (2) above by the time indicated (or as otherwise agreed) then the matrimonial home shall forthwith thereafter be listed for sale and sold. In the event that the parties are unable to agree on the sale conditions then either may move on 10 days’ notice to the other side by way of form 14B motion before me for an Order dispensing with the other spouse’s consent to the listing and sale of the matrimonial home, including choice of solicitor handling the transaction;
(4) In the event of (3) there shall be paid to each party the following from the net proceeds of sale;
(i) to the husband his one-half share less the sum of $30,000 to be applied as per (2) (c) above; (ii) to the wife the balance.
(5) Based on the husband’s declared income (at motion) of $80,000 and the wife’s income of $7,900 as disclosed in her most recent Financial Statement, the husband shall pay to the wife monthly table child support in the amount of $1,172 and to the wife mid-range monthly spousal support in the amount of $732, both payments effective May 1, 2016. Such payments to be made on a without prejudice basis and for which credit will be given to the husband for any payments made from and after May 1, 2016.
(6) SDO to issue.
[17] If the parties are unable to agree on costs then the husband shall file his submissions by May 11, 2016. The wife shall file her responding submissions by May 20, 2016. Reply submissions (if any) shall be served and filed by May 27, 2016. Submissions shall be limited to three pages, exclusive of a detailed Bill of Costs and copies of any Offers to Settle. Submissions are to be filed by 14B Motion to my attention within the Continuing Record.