Court File and Parties

Court File No.: FS-18-0120 Date: 2021-01-19 Superior Court of Justice - Ontario

Re: Jo-Anne Rainville, Applicant And: Brian James Walsh, Respondent

Before: M.G. Ellies R.S.J.

Counsel: William H. Abbott, for the Applicant Paul Slan and Annie Yektaeian, for the Respondent

Heard: December 18, 2020 (via Zoom)

Endorsement

[1] Ms. Rainville brings this motion in the context of an application under the Family Law Act, R.S.O. 1990, c. F.3 in which the main issue is equalization of net family property.

[2] The parties were married in 1996 and separated in 2018. Each had children from a previous relationship. There are no children from their marriage.

[3] During their cohabitation, Mr. Walsh sold his interest in a construction company and began to buy and renovate rental properties on his own. As of the date of separation, he had an interest in six such properties. Four of them are owned by a company of which Mr. Walsh is the only shareholder. These are all rental properties, some of which are being occupied by the children of either Mr. Walsh or Ms. Rainville, rent-free in the case of at least one of the children.

[4] In addition to these properties, both Mr. Walsh and Ms. Rainville own a property on Jane Street in North Bay, in which Mr. Walsh now resides. Although Ms. Rainville deposes that the Jane Street property was the parties’ matrimonial home, Mr. Walsh denies that it was. Ms. Rainville is the sole owner of a sixth property on Marine Drive in Callander, in which she now resides. Although Ms. Rainville is the only person on title, Mr. Walsh alleges he was the one who purchased the property and Ms. Rainville admits that they “accumulated” it while they lived together.

[5] Ms. Rainville asserts, and Mr. Walsh admits, that since they separated, Mr. Walsh’s assets have gone down in value and his liabilities have gone up. According to Ms. Rainville, the value of Mr. Walsh’s RRSP has gone from approximately $197,000 to $90,000 and, according to both parties, lines of credit secured against the Marine Drive property are at or near their max. Mr. Walsh deposes that he has had to use funds from his RRSP to pay for his basic needs and that the lines of credit were used to pay off mortgages on two of the rental buildings owned by his company.

[6] Notwithstanding the age of the application within which this motion is brought, Mr. Walsh has still not provided all of the financial disclosure required by the Family Law Rules, O. Reg 114/99. As Ms. Rainville submits, this has prevented the matter from moving forward.

[7] In this motion, Ms. Rainville makes two requests that she says are necessary to preserve her entitlement to an equalization payment once the application is decided.

[8] In her first request, Ms. Rainville asks for an order under the Partition Act, R.S.O. 1990 c. P.4, for the partition and sale of the Jane Street property. She asks that she be given her share of the sale proceeds, but that Mr. Walsh’s share be held in trust pending the resolution of her claim. In my view, that request should be denied for two main reasons.

[9] The first relates to Mr. Walsh’s personal circumstances. Mr. Walsh is an alcoholic. Based on the evidence, his disease is severe. He has been to rehab three times. He has lost his driver’s licence on more than one occasion for impaired driving and been hospitalized for alcoholism or alcohol-related illnesses several times. While he says he is sober at the moment, that does not appear to be a very stable state for him.

[10] Mr. Walsh deposes that granting Ms. Rainville the order she seeks would be tantamount to putting him out on the street. So it would seem. Although Mr. Walsh’s company owns a number of rental units, with one exception, they are all occupied. The unoccupied unit requires repairs, according to Mr. Walsh, who deposes that the previous tenant “trashed it”. Even if Mr. Walsh gave the tenants of a habitable unit notice that he wanted to occupy it, I am not certain he could evict them in light of the recent passage of O. Reg. 13/21 passed under the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9, which currently prohibits residential evictions.

[11] The owner of real property has a prima facie right to have the property sold and to recover the value of their interest in the property: Partition Act, s. 2; Davis v. Davis (1953), 1953 148 (ON CA), [1954] O.R. 23 (C.A.), at p. 29. However, that right is subject to a narrow exception, namely where the party seeking the sale is guilty of malicious, vexatious, or oppressive conduct: Latcham v. Latcham, 2002 44960 (ON CA), at para. 2. In Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2004), 2004 48652 (ON CA), 75 O.R. (3d) 478, at para. 2, the Ontario Court of Appeal held oppression includes hardship on a co-owner resulting from the order. In the circumstances of this case, I have concluded that there would be hardship to Mr. Walsh if the Jane Street property were to be sold at this time.

[12] The second reason for denying Ms. Rainville’s request relates to the basis upon which she advances it. Most of the cases to which I have reviewed in which a request for partition and sale is made ahead of trial have been cases in which the requesting party has moved for summary judgment. In this case, however, Ms. Rainville makes the request not of the basis that there is no genuine issue requiring a trial of her claim under the Partition Act, but on the basis that the Jane Street property should be sold to preserve her entitlement to an equalization payment. I am not satisfied that this is necessary.

[13] To begin, I am not satisfied that Ms. Rainville is entitled to much of an equalization payment, if any. On November 27, 2018, Mr. Walsh consented to an order requiring him to file his answer and a proper financial statement by December 14, 2018. He failed to do that. He deposes it is because his health was at its worst and points to the fact that he was hospitalized between December 17 and December 23, 2018. However, by May 2, 2019 he still had not complied. That was the date upon which Ms. Rainville moved for a final judgment on an unopposed basis. As part of that judgment, she received approximately $38,000 as a partial equalization payment. The judgment was eventually set aside on consent, but Ms. Rainville kept the equalization payment. In addition, Mr. Walsh deposes that Ms. Rainville took $35,000 from a joint line of credit.

[14] While I accept that Ms. Rainville is disadvantaged because Mr. Walsh has not yet provided full financial disclosure, Ms. Rainville still bears the burden in this motion of demonstrating that selling the Jane Street property is necessary to preserve her entitlement to an equalization payment. She is aware of Mr. Walsh’s assets. Indeed, she has attached documents that show that Mr. Walsh has failed to disclose some of them. However, she has not provided me with a net family property statement showing that she will be entitled to an equalization payment beyond what she has already received, even using values that she can only estimate. I am asked, instead, to speculate, which I am not prepared to do.

[15] In her second request, Ms. Rainville asks for an order under s. 100 of the Courts of Justice Act, R.S.O. 1990, c. C.43, vesting Mr. Walsh’s shares in his company in her name. For the reasons I have expressed, I am not satisfied that such an order is necessary to secure an equalization payment. Nor am I satisfied that it would be effective at preserving Mr. Walsh’s ability to make one, even if he is eventually ordered to do so.

[16] Ms. Rainville deposes that she wants the shares vested in her so that she can manage and deal with the properties and the tenants renting them. She highlights some outstanding utility bills. She says that she is concerned that her home on Marina Drive will be seized if Mr. Walsh fails to make the loan payments. However, there is no evidence that he has failed to make any loan payments, even though, as Mr. Walsh deposes, he has been in and out of the hospital.

[17] I also fail to see how vesting the shares in Ms. Rainville would prevent Mr. Walsh from borrowing more money, if there is any more money to borrow. The loans are secured against the Marine Drive property. If Ms. Rainville cannot prevent them from being increased as the sole owner of the property, I do not understand how owning the shares will put her in a better position.

[18] For these reasons, both requests are denied. The motion is dismissed. However, it is dismissed without prejudice to Ms. Rainville bringing them again, in the event that Mr. Walsh stalls or stops altogether making the financial disclosure his counsel is now making on his behalf.

[19] While Mr. Walsh was successful at defending against the relief sought in this motion, I am not inclined to award him costs. After all, he has admitted depleting his assets and failing to make full financial disclosure. If the parties cannot agree on costs, they may make written submissions, limited to five typewritten pages, excluding attachments, as follows:

(1) By Ms. Rainville, within 20 days of the date of this endorsement;

(2) By Mr. Walsh, within 10 days thereafter.

[20] The parties are directed to arrange a further case conference before me through the office of the trial coordinator, to be held within the next 60 days.

[21] The procedural order of November 2018 to which Mr. Walsh failed to adhere included a clause precluding Mr. Walsh from depleting his assets without Ms. Rainville’s consent or further order of the court. If for some reason it could be said that the November order was replaced by the uncontested order of May 2019, I would make another order to the same effect. Mr. Walsh is not to deplete or dispose of any assets without Ms. Rainville’s written consent or further order of the court.

M.G. Ellies R.S.J.

Date: January 19, 2020