CITATION: McNamara v. Houston, 2017 ONSC 6443
COURT FILE NO.: FC-16-424-00
DATE: 20171026
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DONALD FRANKLIN MCNAMARA
Applicant
– and –
LISA DAWNE HOUSTON
Respondent
Mr. O. Khan, for the Applicant
Ms. S. Downey, for the Respondent
HEARD: October 12, 2017
REASONS FOR DECISION
VALLEE J.
Introduction
[1] The respondent wife brings this motion for an order that the matrimonial home be sold prior to trial. The husband brings a cross-motion for an order that the matrimonial home not be sold prior to trial and that the date of separation value be used in the equalization payment calculation. The husband’s Notice of Motion requests an order for exclusive possession; however, this issue was not argued, nor was it included in the husband’s factum.
[2] The parties began living together in 1999. They purchased a home and held title as joint tenants. They married six years later, in 2005, and separated in 2012. There are no children of the marriage. Throughout their relationship, the parties lived in this matrimonial home and continued to own it jointly.
[3] Upon separation, the wife moved out of the matrimonial home. The husband continues to live there. He has paid all of the carrying costs including mortgage, taxes and insurance which total approximately $2,000 per month. He also paid for certain renovations and repairs.
[4] The matrimonial home was valued at $310,000 on the date of separation. The most recent appraisal carried out in May, 2016, values of the home at $525,000. This property is each party’s most significant asset. The parties had some discussions about the husband’s buying out the wife’s share; however, they could not agree on an amount.
Applicable Legal Principles
[5] Pursuant to s. 2 of the Partition Act, R.S.O. 1990, C. P. 4, a person who owns a property in joint tenancy with another has a prima facie right to partition and sale of the property.
[6] The court may make an order for sale of a matrimonial home unless the resisting party has established a prima facie case that he is entitled to a competing interest under the Family Law Act, R.S.O. 1990, c. F.3.
[7] If the resisting party has not demonstrated this competing interest, the right to sale prevails. If he has, the motion will be dismissed unless the moving party can demonstrate that the sale will not prejudice his rights. (See Goldman v. Kudeyla, 2011 ONSC 2718 at paras. 17 and 18)
[8] The court must also consider whether the moving party’s conduct in bringing the motion was malicious, oppressive or vexatious. (See Silva v. Silva (1990), 1 O.R. (3d) 463 (Ont. S.C.) The husband concedes that the wife’s conduct was not vexatious.
Issues
(1) Has the husband shown that he is entitled to a competing interest under the Family Law Act such that the sale should not proceed?
(2) Has the wife demonstrated that a sale will not prejudice the husband’s rights?
(3) Was the wife’s conduct in bringing this motion malicious or oppressive?
Has the husband shown that he is entitled to a competing interest under the Family Law Act such that the sale should not proceed?
The Husband’s Position
[9] The husband states that s. 9(1)(c) of the Family Law Act empowers the court to make an order, “if appropriate to satisfy an obligation imposed by the order, that property be transferred to or in trust or vested in a spouse…” He argues that the wife’s equalization payment owing to him will be as much or more than the value of her interest in the matrimonial home. Accordingly, he would be entitled to an order transferring the matrimonial home to him to satisfy this obligation.
[10] The husband states that the amount owing on the mortgage on the date of the September 2016 appraisal was $159,236. If the 2016 appraised value of $525,000 is used, the equity in the property is $365,764. Given disposition costs of approximately $31,000, the value of each party’s share on a sale would be approximately $167,382. The husband states that he has paid the wife’s share of the carrying costs, including the mortgage, taxes and insurance which total $65,770. In addition, he has spent $11,309 repairing the laundry room and replacing the basement bathroom. He spent a further $1,352 on other repairs to the basement. When these numbers are added together, they total $78,431.
[11] The husband states that when the parties bought the home before marriage, they made unequal contributions to the down payment. He paid $46,196.54 in contrast to the wife’s payment of $16,600. The husband states that he should receive a credit for the difference, being $29,596.54.
[12] After wife moved out, the wife’s son from a previous relationship remained in the matrimonial home in a basement apartment. In addition, the wife’s mother remained in a trailer on the property and used hydro. The husband received combined rent of $1,200 per month tax free. The parties disagree regarding the total amount of rent received by the husband. It could range from $30,000 to $50,000. The husband states that the rent was of no benefit to him because when the wife’s son and mother left, his hydro bill decreased by approximately $1,200, the same as the amount of the rent.
[13] Although he has been living in the matrimonial home for the past five years, the husband states that he should not be required to pay occupation rent to the wife because he has been paying all of the carrying expenses with respect to the property.
[14] The husband states that since the date of separation, he has spent $140,941.86 in carrying costs. He is entitled to the further $29,596 regarding the down payment. Accordingly, the wife will owe him an equalization payment of at least $170,537.86, more than half of her share of the matrimonial home. Therefore, he has demonstrated that he has a competing interest under the Family Law Act. Accordingly, an order for sale prior to trial should not be made.
Analysis
[15] There is no authority for the husband’s position that he should be entitled to a notional credit for the difference in down payment that he made on the home prior to the parties’ marriage. From the date of purchase, the parties have always held the home in joint tenancy. Joint ownership results in each party’s entitlement to an equal share of the asset.
[16] The husband has paid the carrying costs of the home for the last five years and now claims a credit for them. According to para. 31 of Higgins v. Higgins (2001), 2001 28223 (ON SC), 19 R.F.L. (5th) 300 (Ont. S.C.), “if a claim is made by the occupying spouse for carrying costs, he or she must submit to an allowance for occupation rent.” As noted above, the wife’s share of the carrying costs for five years total $65,000 ($13,000 per year, $1,083 per month). The husband has resided in the matrimonial home for five years post separation. He states that he currently pays approximately $2,000 per month for carrying costs. According to the 2016 appraisal, the house is 1,465 square feet on the main level and has three bedrooms. The property is 1.4 acres. When compared to the carrying costs, a reasonable occupation rent could be equal to or greater than the amount of the wife’s carrying costs that have been paid by the husband.
[17] The issue of whether the husband’s receipt of rental income benefited him, as alleged by the wife, or simply covered the cost of the increased utilities is not within the scope of this motion. It will be a matter for the trial judge to decide. The husband alleges that certain repairs were required to the basement after the wife’s son moved out because he left the area in a state of disrepair and caused extensive damage to the bathroom. If this occurred, the wife’s view is that the husband should pursue her son for this amount. It should not be deducted from her share of the matrimonial home. The wife disputes the amount spent by the husband on the basement bathroom renovation. She states that some of this work was for in upgrades to the bathroom. Again, these issues will be for the trial judge to decide.
[18] Based on the evidence before me, I am not satisfied that the husband has shown that the wife will owe him an equalization payment equal to or greater than her interest in the matrimonial home.
Has the wife demonstrated that a sale will not prejudice the husband’s rights?
[19] Even though the husband has not demonstrated that he has a competing interest under the Family Law Act, I will go on to consider whether a sale will prejudice his rights.
The Husband’s Position
[20] The husband states that he has financing in order to pay the wife her share of the equity in the matrimonial home. Beyond the husband’s assertion, there was no evidence of this. The husband states that refinancing the existing mortgage would be easier for him than obtaining a new mortgage on another property. He would not qualify for the amount of the mortgage that he would need if he were to a buy another property using his share of the equity in matrimonial home. If the matrimonial home is sold, he will not have another home of his own. He would have to rent one. He might be able to purchase another home with the help of two of his children; however, this house would not be in his name alone. His children would expect to be on title if they assisted him.
Analysis
[21] The husband has no right to own the house after separation and divorce. As a joint tenant, he has a right to half of its value. He may have a right to an equalization payment depending on the parties’ net family property calculations.
[22] There is no evidence that the husband would qualify to assume the existing mortgage on the matrimonial home nor was there any evidence that it would be easier for the husband to do this in contrast to applying for a new mortgage for another house. The evidence shows that the parties did have some discussions regarding his purchasing the wife’s interest; however, they could not agree on an amount. They disagreed regarding whether the property should be valued on the date of separation or the date of disposition. They disagreed with respect to the expenses incurred by the husband and whether he ought to pay occupation rent.
[23] Rule 66.03 of the Rules of Civil Procedure requires that proceeds resulting from a sale under the Partition Act be paid into court unless the parties agree otherwise. On a sale, both parties’ interest will be preserved. The husband has not shown that there is any, “need to preserve the residence for a vulnerable child or spouse who might retain the house in the cause” as stated in Goldman, para 19. I find that a sale will not prejudice the husband’s rights.
Was the wife’s conduct in bringing this motion malicious or oppressive?
The Husband’s Position
[24] The husband states that the wife’s conduct in bringing the motion for sale was malicious and oppressive. He states that he will have nowhere to go if the matrimonial home is sold. He will not qualify for another mortgage. He has money to buy out the wife’s equity. If the home is sold, he will not have an asset to pass along to his children. The home is located in Essa Township. The husband states that his family is nearby. He has ties to the community. If the matrimonial home is sold there will be disposition costs of approximately $31,000. This will result in a reduction of each party’s equity.
[25] The husband further states that the wife’s financial statement shows that she has no living costs. The sale proceeds would be held in trust. She would have no access to them so a sale prior to trial would not benefit her. The wife’s conduct in bringing motion for sale is oppressive because he wants to keep the house. A sale would prevent him from having his own home.
Analysis
[26] According to Morris v. Donegan, 2015 ONSC 3360, at para. 138, the court must consider any evidence of the effect of a sale on the resisting party to determine whether the moving party’s conduct in bringing the motion is oppressive. According to para. 6 of Martin v. Martin 1992 7402 (ON CA), 8 O.R. (3d) 41 at p. 10 (C.A.), an order for sale should not be made as a matter of course before trial but only where in all circumstances it is appropriate. According to Kaphalakos v. Dayal, 2016 ONSC 3359, at para. 29 (Div. Ct.), hardship can amount to oppression. In Kaphalakos, the husband had violently assaulted the wife leaving her with significant cognitive impairments and disabilities. The court found that there would be a significant hardship on the wife to find other accommodation prior to trial. Therefore, the court refused to make in order for sale.
[27] The husband relies on Punit v. Punit, 2014 ONCA 252, at para 22, in which the court refused to order a sale prior to trial. The motion judge stated the trial would occur in the near future. The house would not likely be sold prior to trial. The motion judge also commented that the moving party would not receive any of the sale proceeds prior to trial.
[28] Counsel for the husband estimated that the trial of this application might be reached in the spring of 2018. Counsel for the wife stated that a more realistic time frame would be the fall of 2018. Either way, the trial will not be held soon. As long as the wife continues to be liable on the mortgage for the matrimonial home, she will not be able to obtain a mortgage for another property.
[29] I note McGee J’s comments in para. 20 of Goldman that “the sale of the matrimonial home can often the most appropriate a catalyst to effect the equal division of the family assets…” One of the main issues between these parties is the value of the matrimonial home. A sale of the home on the open market would crystallize its value. If the parties cannot not resolve the issues regarding credits and occupation rent, among other things, the trial will be shorter and more focused.
Conclusion
[30] Having found that the husband does not have a competing interest under the Family Law Act, a sale will not prejudice the husband’s rights and the wife’s conduct in bringing the motion was not malicious nor oppressive, I order, pursuant to the provisions of the Partition Act, that the matrimonial home located at 6675 8th Line, R.R. #1 Essa Township, Ontario, being Part 2, 51R-19046, be sold.
[31] The matrimonial home shall forthwith be listed for sale with Craig Butcher of Re/Max Chay Realty Inc., if he will accept the listing, at a price recommended by the realtor. If he will not accept the listing, the home shall be co-listed for sale with two real estate agents, one of each party’s choosing at a price recommended by these realtors.
[32] The parties shall co-operate fully with the listing and sign all necessary documents as recommended by the realtor(s).
[33] The husband shall keep the property tidy and the home clean and in a saleable condition. He shall permit showings as required by the realtor(s).
[34] If the parties disagree on a term of the listing, the execution of any documents or the showing of the property, either party may bring a motion on three days’ notice before this court to obtain directions.
[35] Upon the sale, all of the funds shall be held in trust by the wife’s counsel in an interest bearing account pending further order of this court or agreement between the parties.
Costs
[36] The wife has been entirely successful on this motion. She is presumptively entitled to costs. She served an offer to settle dated August 17, 2017, the first term of which is “the matrimonial home shall be immediately listed for sale.” The result of the motion is equal to the wife’s offer. She is entitled to full recovery costs from August 18, 2017, the date when the offer was served.
[37] Incidentally, the husband’s offer to settle dated September 11, 2017 states, among other things, that “the wife shall transfer her interest in the matrimonial home to the husband on payment of $108,355.14” and “there shall be no further equalization payment.”
[38] This was a very important matter for the parties. The hourly rate of counsel for the mother was $325, which is reasonable. The Bill of Costs shows that counsel for the wife spent 13.45 hours on the matter with assistance from her staff of 5.2 hours. Counsel delegated work appropriately to her assistant whose hourly rate is $125. I find that the time was properly spent on the case.
[39] The wife requests $6,976.86 for fees and $55.24 for disbursements. The disbursements are in order and are allowed. The fees include travel to attend the motion and two hours for the motion as well as preparation of the Bill of Costs. I note that the motion was longer than two hours.
[40] The wife served and filed two affidavits totalling 14 pages with a number of appropriate exhibits. She also served and filed a well written, nine page factum and a book of authorities containing eight cases, all of which were referred to in argument. I note that the wife’s Bill of Costs does not show the dates when the various aspects of the work was done. This should have been included. The wife’s first affidavit was sworn on August 17, 2017 and was served along with the offer to settle. Accordingly, some of the work for this motion was carried out prior to service of the offer.
[41] Nevertheless, the husband’s positions on two important issues in the motion (that the home should be valued on the date of separation, rather than the date of disposition, and that he was entitled to a credit because he made a larger contribution to the down payment on a jointly owned asset) were not supportable in law.
[42] In considering the factors set out in Rule 24 and that the overriding principles in fixing costs are fairness and reasonableness (see Boucher v. Public Accountants (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), in my view, a fair, reasonable and proportionate costs award for this motion is $7,032 all inclusive, which the applicant husband shall pay to the respondent wife.
M.E.Vallee, J.
Released: October 26, 2017