Hamilton v. Hamilton
Ontario Reports
Ontario Superior Court of Justice
Summers J.
January 12, 2021
154 O.R. (3d) 465 | 2021 ONSC 274
Case Summary
Family law — Property — Partition — Parties obtaining interim without prejudice order on consent granting spousal support to wife and exclusive possession of matrimonial home to husband — Wife moving for sale of matrimonial home — Motion granted — Failure to plead Partition Act did not defeat the motion — Husband had no competing interests under Family Law Act to defeat wife's prima facie right to sale — Family Law Act, R.S.O. 1990, c. F.3, s. 25(1) — Partition Act, R.S.O. 1990, c. P.4, s. 2.
The parties separated in March 2018 after five years of marriage, and continued living separate and apart in the matrimonial home until December 2019, at which time the wife moved out. In November 2019, the wife moved for temporary spousal support and the sale of the home. That motion settled, with an interim without prejudice order on consent granting spousal support of $1,500 per month to the wife and exclusive possession of the matrimonial home to the husband. The wife sought to vary the order for exclusive possession, and moved for an order under the Partition Act for an order for sale of the matrimonial home and other relief.
Held, the motion should be allowed.
The fact that the wife did not specifically plead the Partition Act was not fatal to her motion. The husband was aware that the wife was relying on the jurisdiction in the Partition Act as the case did not involve a question of ownership that pointed to claims under the Family Law Act. Nor was it a case where the wife failed to plead a claim for sale. The wife's factum referred to s. 2 of the Partition Act and the arguments made by the husband in opposition to the motion all indicated that he was aware of the case he had to meet.
The husband did not have competing interests under the Family Law Act that defeated the wife's prima facie right to a sale. First, no proof of material change in circumstances was required to vary the temporary exclusive possession order. Each party had their reasons for consenting to the order, all of which were temporary and said to be without prejudice. Proof of material change at the current stage would dampen the usefulness of temporary without prejudice orders as important interim settlement tools allowing parties to move forward with their case and their lives. Second, the husband's wish to remain in the home was not a right under the Family Law Act. He had his office in the home and used the property to store business equipment and vehicles. He claimed that he wanted to buy the wife's interest once he was in a financial position to do so and argued that an immediate sale would deny him that opportunity. However, that concern was more in the nature of an inconvenience than a genuine risk to the well-being of his business. The wife could not be ordered to sell her interest to the husband, nor did he have a right of first refusal. Further, he had no equalization payment coming to him. It was not a case for exclusive possession on the merits.
It was ordered that the matrimonial home be listed for sale forthwith, and the husband was ordered to provide the wife with a copy of a valuation report of his business and to disclose the details of income earned or received from it.
D. (E.) v. D. (D.), [2012] O.J. No. 5586, 2012 ONSC 6689 (S.C.J.); Kahsai v. Hagos, [2015] O.J. No. 3337, 2015 ONSC 3900 (S.C.J.), supp. reasons [2015] O.J. No. 4764, 2015 ONSC 5756 (S.C.J.); Ceho v. Ceho, [2015] O.J. No. 4505, 2015 ONSC 5285 (S.C.J.), apld [page466]
Kereluk v. Kereluk, [2004] O.J. No. 4337, [2004] O.T.C. 918, 9 R.F.L. (6th) 385, 2004 CanLII 34595 (S.C.J.), consd
Other cases referred to
Chaudry v. Chaudry, [2012] O.J. No. 1511, 2012 ONSC 2149, 19 R.F.L. (7th) 478 (S.C.J.); Goldman v. Kudeyla, [2011] O.J. No. 2020, 2011 ONSC 2718, 5 R.F.L. (7th) 149 (S.C.J.); Martin v. Martin (1992), 1992 CanLII 7402 (ON CA), 8 O.R. (3d) 41, [1992] O.J. No. 656, 89 D.L.R. (4th) 115, 55 O.A.C. 9, 38 R.F.L. (3d) 217 (C.A.); Silva v. Silva (1990), 1990 CanLII 6718 (ON CA), 1 O.R. (3d) 436, [1990] O.J. No. 2183, 75 D.L.R. (4th) 415, 42 O.A.C. 5, 30 R.F.L. (3d) 117 (C.A.); Union Carbide Canada Inc. v. Bombardier Inc., [2014] 1 S.C.R. 800, [2014] S.C.J. No. 35, 2014 SCC 35, 457 N.R. 279, 55 C.P.C. (7th) 1, 373 D.L.R. (4th) 626, 2014EXP-1508, J.E. 2014-849, EYB 2014-236800; Walters v. Walters, 1992 CanLII 8599 (ON SCDC), [1992] O.J. No. 1324, 92 D.L.R. (4th) 398 (C.J.)
Statutes referred to
Family Law Act, R.S.O. 1990, c. F.3 [as am.], ss. 9(1) (d), 10, 24(3) [as am.], 25(1)
Partition Act, R.S.O. 1990, c. P.4, s. 2
Rules and regulations referred to
Family Law Rules, O. Reg. 114/99, rule 18(8)
MOTION for sale of matrimonial home.
Marina Tronin, for applicant.
Graeme Fraser, for respondent.
SUMMERS J.: —
The Relief Sought
[1] The applicant brings this motion seeking an order for the sale of the jointly owned matrimonial home at [address omitted], under s. 2 of the Partition Act.[^1] In this regard, she also seeks an order to vary the temporary without prejudice consent order giving the respondent exclusive possession. If the home is to be sold, the applicant asks for an order that she and the respondent each receive a payment of $40,000 from the net proceeds with the balance to be held in trust by their solicitor. Finally, she seeks an order that the respondent provide a business valuation of his interest in 1924288 Ontario Ltd. and the particulars of the income he receives from the company.
[2] Subject to the consent noted below, the respondent opposed the motion.
[3] For the following reasons, I allow the applicant's motion. [page467]
Preliminary Issues
[4] At the outset of the motion, the applicant's counsel properly raised a concern about the respondent's affidavit and disclosure of his settlement offer. The respondent's explanation confirmed the disclosure was intentional. I ruled that the settlement communication was improperly before the court, that I would ignore it, and no further reference should be made to it during submissions. Rule 18(8) of the Family Law Rules[^2] is clear. Offers are confidential and the terms of an offer shall not be mentioned in any document filed in the Continuing Record and shall not be mentioned to the judge hearing the claim dealt with in the offer, until the judge has dealt with all the issues in dispute except costs. I also note the common law and following statement by the Supreme Court of Canada in Union Carbide Canada Inc. v. Bombardier Inc.:[^3]
Settlement privilege is a common law rule of evidence that protects communications exchanged by parties as they try to settle a dispute. Sometimes called the "without prejudice" rule, it enables parties to participate in settlement negotiations without fear that information they disclose will be used against them in the litigation. This promotes honest and frank discussions between the parties, which can make it easier to reach a settlement.
[5] During submissions, the parties acknowledged consent on two issues. Although the respondent did not have a motion before the court, the applicant agreed to his request for leave to amend his pleadings to claim an unequal division of net family property. With respect to the disclosure order sought, the respondent advised that the business valuation was already underway and consented to the applicant's request. I make both orders.
Factual Context
[6] The parties began cohabiting in 2010, married on September 8, 2012, and separated March 1, 2018. They continued to live separate and apart under the same roof until December 15, 2019. They do not have children together.
[7] In November 2019, the applicant brought a motion for temporary spousal support and the sale of the home. Two days before the scheduled hearing date, the motion settled. On consent, R. Smith J. made an interim without prejudice order dated November 26, 2019 granting spousal support of $1,500 per month to the applicant, exclusive possession of the matrimonial home to the [page468] respondent, and the court dismissed the applicant's motion for the sale of the home. All relief was granted on the same without prejudice terms.
[8] In December 2019, the applicant moved from the matrimonial home with her 16-year-old daughter from a prior relationship. Early in 2020, her 19-year-old son returned home from college because of health issues. The applicant provides for the financial needs of both children.
[9] During her relationship with the respondent, the applicant worked in retail and clerical positions. In 2017, she purchased a retail pet supply store. She now has two locations and significant business-related debt. She reports self-employment income of $24,000 annually.
[10] The respondent is also self-employed. His company, Delta Global Logistics Inc., ships and distributes organic waste bins in Canada and the United States. Due to the COVID-19 pandemic and the interruption in regular court activities, I did not have access to the respondent's financial statement in the Continuing Record.
[11] Both parties say the pandemic has impacted their businesses.
[12] The respondent also has an interest in 1924288 Ontario Ltd. carrying on business as DHW Property Rentals.
[13] The most recent appraisal of the matrimonial home was completed more than a year and a half ago indicating a value of $815,000. The parties do not agree on the current value. There is debt of approximately $500,000 secured against the property some of which relates to the applicant's business.
[14] The parties agree that the total equity in the home is approximately $231,000 after consideration of disposition costs and potential issues with the septic system.
Sale of the Matrimonial Home
The parties' positions
[15] It is the applicant's position that as a joint owner of the home, she is entitled to realize her interest and that the sale will not result in any prejudice to the respondent. She argues that she needs to access her equity to meet her day-to-day needs and those of her children. Since leaving the matrimonial home, she has already had to move a second time. If possible, she wants to buy a house. The applicant believes that the respondent is delaying disclosure in order to remain in their joint property as long as possible.
[16] The respondent's primary argument is that the sale of the property prior to trial will prejudice his substantive rights under [page469] the Family Law Act.[^4] He denies delay and raises a concern with respect to the applicant's failure to specifically plead the Partition Act[^5] in this motion. He did not say that the applicant had behaved maliciously, oppressively, or with a vexatious intent[^6] to ask the court to exercise its discretion under the Partition Act to refuse the order for sale.
The legal framework
[17] Section 2 of the Partition Act[^7] provides that a joint owner has a prima facie right to the sale of property.
[18] Both counsel referred to the Ontario Court of Appeal decision in Silva v. Silva.[^8] There, the court said that if an order for sale under the Partition Act was likely to jeopardize substantial rights in relation to jointly owned property, such a request should be deferred until the Family Law Act claims are decided. "Putting it more broadly, an application under s. 2 should not proceed where it can be shown that it would prejudice the rights of either spouse under the F.L.A."[^9]
[19] The respondent also referred me to the Ontario Court of Appeal decision in Martin v. Martin[^10] and emphasized the court's direction to take account of interim exclusive possession orders. The crux of the dispute in Martin was the lower court's decision to award the respondent husband a right of first refusal under s. 10 of the Family Law Act.[^11] The Court of Appeal found that s. 10 did not provide jurisdiction to order a sale in the absence of a question regarding ownership and further held that neither the Partition Act[^12] or the Family Law Act[^13] allow the court to grant a right of first refusal. On the issue of sale, Osborne J. described the tension between the two statutes in this way: [page470]
Although there is clear jurisdiction under the Partition Act to order the sale of the parties' matrimonial home, I do not wish to be taken to have endorsed the wholesale issuance of these orders. In my view, an order directing the sale of a matrimonial home before trial should only be made in cases where, in all of the circumstances, such an order is appropriate. Orders for the sale of a matrimonial home made before the resolution of Family Law Act issues (particularly the determination of the equalization payment), should not be made as a matter of course. See Binkley v. Binkley (1988), 1988 CanLII 8717 (ON CA), 14 R.F.L. (3d) 336 (Ont. C.A.). In addition, spousal rights of possession (s. 19) and any order for interim exclusive possession should be taken into account.
(Emphasis added)[^14]
[20] I also add McGee J.'s summary of the law in Goldman v. Kudeyla[^15] regarding pre-trial orders for the sale of jointly owned property:
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.
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.
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 CanLII 12940 (ON CA), 33 R.F.L. (3rd) 44 (OCA), Walters v. Walters, 1992 CanLII 8599 (ON SCDC), [1992] O.J. No. 1564, 1992 CarswellOnt 811 and more recently, Kereluk v. Kereluk, 2004 CanLII 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.
Analysis
[21] I deal first with the respondent's submission regarding the deficiency in the applicant's pleading and the decision in Kereluk v. Kereluk[^16] that he referred to. In that case, Polowin J. noted the applicant's failure to plead or bring her motion under the Partition Act[^17] and indicated that shortcoming could technically be the end of the matter [emphasis added]. However, that was not the [page471] basis for her decision. Justice Polowin went on to say that she would not have made the order for sale anyway and paraphrased Wright J. in Walters v. Walters, 1992 CanLII 8599 (ON SCDC), [1992] O.J. No. 1324, 92 D.L.R. (4th) 398 (C.J.), this way: "I cannot say there is no genuine issue for trial."[^18]
[22] In the circumstances before me, I do not regard the technical pleading deficiency as determinative of the motion. I am satisfied that the respondent was aware the applicant was relying on the jurisdiction in the Partition Act[^19] as this case does not involve a question of ownership that would point to reliance on s. 10 of the Family Law Act.[^20] Nor is it a case where the applicant failed to plead a claim for sale in her application. I also observe that the applicant's factum referred to s. 2 of the Partition Act[^21] and the arguments made by the respondent in opposition to the motion all indicate that he was aware of the case he had to meet.
[23] I now turn to the respondent's submission that he has competing interests under the Family Law Act[^22] that defeat the applicant's prima facie right to the sale. He makes two arguments. I will deal with them in order.
[24] The respondent points first to the without prejudice consent order of Smith J. that provides him with temporary exclusive possession. He contends that order should prevail until trial and submits the applicant cannot prove a material change in circumstance under s. 25(1) of the Family Law Act[^23] that allows the court to discharge, vary or suspend an order for exclusive possession if satisfied that there has been a material change in circumstances.
[25] For her part, the applicant makes two arguments. The first is that if a material change in circumstances is needed, the respondent's decision to advertise the matrimonial home as a short-term rental on Airbnb without her knowledge or consent, constitutes such a change. The house, she says, is her only asset of any significance. She worries that renting it out to strangers risks potential damage. She also argues that the respondent's ability to rent the home for short periods indicates he has alternate accommodation. The respondent says his decision to use the [page472] property as an Airbnb was necessary. He says the applicant's refusal to sign the mortgage renewal caused a dramatic increase in the carrying costs for the home and he needed money. He also relies on this lack of cooperation to justify his decision not to seek her consent to Airbnb. He alleges her refusal to renew the mortgage indicates she would never consent to use the house as a short-term rental.
[26] The applicant's second argument is that a material change in circumstance is not required to vary a temporary without prejudice order. I was not directed to any authority that spoke to variation under s. 25(1) of the Family Law Act[^24] in these circumstances, however, I take guidance from those spousal support cases where the court looked at the question of whether a material change is needed to vary temporary without prejudice orders. See D. (E.) v. D. (D.)[^25] and Kahsai v. Hagos[^26] where the court held that the moving party was not required to meet the substantial change in circumstances test. I adopt that approach here. I also agree with and adopt the words of Price J. in Ceho v. Ceho[^27] where he said, "The very expression 'without prejudice' is intended to preserve the position of each party. It would be rendered meaningless if the temporary temporary order, in fact, prejudiced the party who consented to it, by imposing on that party a higher threshold of proof in the future, and requiring him or her to prove a material change of circumstances." Although Ceho was a custody case and the order in question was a temporary without prejudice consent order that the court regarded as a temporary temporary order, I find the words of Price J. equally applicable to the situation here. Each party had their reasons for consenting to the terms of Smith J.'s order, all of which were temporary and said to be without prejudice. If proof of material change is required at this stage of a proceeding, I fear it would dampen the usefulness of temporary without prejudice orders as important interim settlement tools that allow the parties to move forward with their case and their lives.
[27] The respondent's second argument with respect to a competing interest is this. He submits he should not be denied the opportunity to buy the applicant's interest in the matrimonial [page473] home by ordering the sale now. He says he hopes to remain in the home but cannot assess his financial ability to do so until his business valuations are completed, and the equalization payment is known. He also contends that it will be difficult to find another suitable property and that a forced move would harm the company. His office is in the home and he asserts that he needs the space the property provides to store his distribution equipment including two trucks, and two trailers.
[28] I am not persuaded by the respondent's alleged housing concern and regard it more in the nature of inconvenience rather than posing a genuine risk to the well-being of his business. It has been two and one-half years since separation and more than a year and one-half since the applicant served her application and gave notice of her claim for partition and sale. The respondent has had ample time to investigate and make alternate arrangements. Most important, however, is that neither his wish to purchase the home nor the potential disruption he alleges relate to substantive rights under the Family Law Act.[^28] Neither argument links to relief that the court can grant at trial. The applicant cannot be ordered to sell her interest in the house to the respondent.[^29] Nor does the respondent say that the applicant will owe him an equalization payment such that a court could transfer her interest in the matrimonial home to satisfy that obligation under s. 9(1)(d) of the Family Law Act.[^30] On the contrary, the respondent's counsel agreed during submissions that there is no scenario where the applicant will owe him. He also acknowledged that his best possible outcome, if he succeeds on his claim for an unequal division, is that his equalization payment will be $0. Nor can the respondent, as a joint owner, seek a right of first refusal to purchase the property when placed on the market for sale. It is not an order that the court can make.[^31] The owner seeking sale has the right to test the market for the best possible terms of sale and the other owner has the right to make an offer and compete with other prospective purchasers.[^32] In short, the respondent's wish to remain in the home is not a right that he has under the Family Law Act[^33] [page474] and therefore it does not defeat the applicant's prima facie right to a sale.
[29] The respondent has not satisfied me that he has competing claims under the Family Law Act that would be prejudiced by the sale of the matrimonial home prior to trial. He is not owed an equalization payment therefore this is not a situation where the home could be transferred to him to satisfy the entitlement. Nor do I find that this is a case for exclusive possession on the merits, either now or at trial, such as those situations mentioned by McGee J. in Goldman v. Kudelaya.[^34] The parties do not have children together and the respondent is not a vulnerable spouse as contemplated under s. 24(3) of the Family Law Act.[^35] Nor is a trial imminent in this case. It will be many months before this matter proceeds to trial. For these reasons, I find it appropriate in the circumstances of this case, to vary the temporary without prejudice order of R. Smith J. dated November 26, 2019, and order the sale of the jointly owned matrimonial home on the conditions set out at the end of these reasons.
[30] Neither the applicant nor respondent provided the court with a draft net family property statement, however, based on the evidentiary record provided, I am satisfied that the release of $40,000 to each party will not jeopardize either party's position with respect to the potential post-separation adjustments alleged including the responsibility for certain debts to be paid from the joint proceeds provided the remaining funds are held in trust. I make that order.
[31] The respondent denied that he has delayed financial disclosure. I did not find his explanation convincing. The respondent offered an explanation for the period following the applicant's move from the home that includes delay visited on the world by COVID-19 but said nothing of the 20-month period that passed between separation and the end of 2019. I find that delay favours the respondent, and more than sufficient time has passed to complete disclosure.
My Order
[32] For the reasons given, I make the following order:
(1) The interim without prejudice order of R. Smith J. dated November 26, 2019 is varied to allow for the sale of the matrimonial home. [page475]
(2) The jointly owned home at [address omitted], shall be listed for sale forthwith. If the parties cannot agree on the listing agent within ten days, either party may contact the trial coordinator and return the matter to me with a notice of motion and concise affidavits not to exceed three pages in length, double spaced, using 12-point font.
(3) The respondent shall allow the agent all reasonable access to the property to inspect the home and determine a list price on 24 hours' notice. Thereafter, if the parties cannot agree on a list price with the advice of their agent, the matter may be returned to me on the same terms as set out in para. 1 above.
(4) The respondent shall prepare and stage the home as directed by the real estate agent. The temporary without prejudice order dated November 26, 2019 is further amended to allow the applicant to attend the home to inspect the premises if she wishes but not more than once every 15 days, for no longer than 20 minutes, on no less than four hours' notice. The applicant may be accompanied by a person of her choosing.
(5) The respondent shall accommodate all reasonable requests for showings or inspections provided he has minimum notice of three hours.
(6) The parties shall accept the first reasonable offer to purchase the home. If they cannot agree on the reasonableness of any offer, either party may bring a motion before me on the terms set out in para. 1 above.
(7) The parties shall instruct their real estate lawyer to pay from the proceeds of the sale all sale adjustments including encumbrances, real estate commission, property taxes, utilities or municipal fees that are outstanding, legal fees and disbursements associated with the sale, and $40,000 to each party. The balance of the sale proceeds shall remain in trust pending further court order or written agreement of the parties.
(8) The respondent's temporary without prejudice right to exclusive possession of the home shall terminate simultaneously with the sale closing.
(9) On consent, the respondent has leave to amend his pleadings to claim an unequal division of net family property.
(10) On consent, the respondent shall provide the applicant with a copy of the business valuation report valuing his interest in 1924288 Ontario Ltd. carrying on business as DHW Property [page476] Rentals and further disclose the details of any income earned or received from that company.
(11) The parties are encouraged to resolve costs between them. If unable to do so, the applicant shall have 14 days to deliver her costs submissions and the respondent shall have the next 14 days to deliver his submissions, not to exceed three pages using 12-point font and double spaced, exclusive of detailed Bills of Costs and offers to settle, if any. The applicant shall have a further five day right of reply not to exceed one page. Case law, if necessary, shall be provided by hyperlink only.
Motion allowed.
Notes
[^1]: R.S.O. 1990, c. P.4. [^2]: O. Reg. 114/99. [^3]: 2014 SCC 35, [2014] 1 S.C.R. 800, [2014] S.C.J. No. 35, at para. 31. [^4]: R.S.O. 1990, c. F.3. [^5]: Supra, note 1. [^6]: (1990), 1990 CanLII 6718 (ON CA), 1 O.R. (3d) 436, [1990] O.J. No. 2183 (C.A.), at para. 15. [^7]: Supra, note 1. [^8]: Supra, note 6. [^9]: Ibid., at para. 23. [^10]: (1992), 1992 CanLII 7402 (ON CA), 8 O.R. (3d) 41, [1992] O.J. No. 656 (C.A.). [^11]: Supra, note 4. [^12]: Supra, note 1. [^13]: Supra, note 4. [^14]: Ibid., at para. 26. [^15]: [2011] O.J. No. 2020, 2011 ONSC 2718 (S.C.J.), at paras. 17-19. [^16]: [2004] O.J. No. 4337, 2004 CanLII 34595 (S.C.J.). [^17]: Supra, note 1. [^18]: Supra, note 16, at para. 21. [^19]: Supra, note 1. [^20]: Supra, note 4. [^21]: Supra, note 1. [^22]: Supra, note 4. [^23]: Ibid. [^24]: Ibid. [^25]: [2012] O.J. No. 5586, 2012 ONSC 6689, 2012 CarswellOnt 14841 (S.C.J.). [^26]: [2015] O.J. No. 3337, 2015 ONSC 3900, supp. reasons [2015] O.J. No. 4764, 2015 ONSC 5756 (S.C.J.). [^27]: [2015] O.J. No. 4505, 2015 ONSC 5285 (S.C.J.), at para. 86. [^28]: Supra, note 4. [^29]: Chaudry v. Chaudry, [2012] O.J. No. 1511, 2012 ONSC 2149 (S.C.J.). [^30]: Ibid. [^31]: Martin v. Martin, supra, note 10, at para. 55. [^32]: Ibid., at paras. 31-32. [^33]: Supra, note 4. [^34]: At para. 15. [^35]: Supra, note 4.
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