Court File and Parties

COURT FILE NO.: FS-20-43623 DATE: 2022-03-16 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: R.L., Applicant AND: M.F., Respondent

BEFORE: Kurz J.

COUNSEL: Martha McCarthy and J. Robinson, for the Applicant, R.L. Judith Nicoll, for the Respondent, M.F.

HEARD: February 16, 2022

Endorsement

[1] This is an interim motion by the Applicant father for partition and sale of the jointly owned matrimonial home (the “home”) The motion is opposed by the Respondent mother.

[2] The father argues that this is a simple motion. He has a prima facie right to partition and sale of the home and the mother has a concomitant obligation to permit that sale at his behest, unless she can show a reason recognized by law to refuse the sale. He argues that this principle means that she must show malicious, vexatious, or oppressive conduct, which the mother has not demonstrated.

[3] He argues that now is the time to sell in light of a likely hot spring market. He would be willing to delay a closing until the summer school break, so as to inconvenience the children as little as possible. He plans to buy his own place to accommodate himself and the children.

[4] The mother asks that the issue be left for trial, which is scheduled to take place during the Milton fall 2022 trial blitz. At that time, she intends to request a time limited order of exclusive possession of the home, to last until the parties’ eldest child completes high school. She points out that the father has already indicated to the court in his materials that he is open to a buy-out by the mother. The children have, in her telling, a close association with their neighbourhood and a strong wish to remain. Further the parties sat the children down on October 4, 2021, to inform them that they would do everything in their power to allow them to remain in the home. This occurred while the parties were still living separate and apart in the home. Yet just days after he moved out, and without prior notice that he had changed his mind, the father brought this motion.

[5] The mother adds that she has substantial claims against the father, which may be satisfied by his interest in the home, including $1 million in retroactive support and over $400,000 in equalization payments.

[6] The mother also argues that there is no advantage to the father in selling now. His proceeds would likely be held in trust. In any event, he has rented his present apartment until October 2022. Further, the issue of his contact with the children is the subject of an assessment and trial. At present, the father’s contact is day contact only; in large measure due to the children’s concerns about the father.

[7] For the reasons that follow, I dismiss this motion.

Background

[8] The parties were married on February 18, 2006. They have two children together, aged 15 ½ and 13 ½. They separated on February 24, 2020. However, they continued to reside together, separate and apart in the matrimonial home, for a further 10 – 10 ¼ months, until the father moved out on January 2 or 3, 2022. He moved into an apartment that he had first rented in October 2021. The father says that his apartment is about 15 minutes from the home.

[9] Both parties are high income earners. The mother is a radiologist who earns approximately $350,000 per year, while the father is an investment banker who earned $1.552 million in 2019. That figure is the basis of his temporary support obligations. However, the mother points to information showing that his present income is closer to $2 million than $1.5 million.

[10] The father pays the mother interim, without prejudice child support of $18,541, 72% of the children’s s.7 expenses, and $14,000 per month in interim spousal support. The s. 7 expenses are extensive since the children are both enrolled in private school.

[11] The children have resided in the home for the past 13 years. Their activities are in their neighbourhood, although they attend private school rather than their local public school.

[12] All family members are presently engaged in family therapy with psychologist, Dr. Irwin Butkowski.

[13] One realtor whom the father relies upon has estimated that the current market value of the home is between $2,250,000 and $2,350,000. There is a line of credit registered against the home, in the amount of approximately $692,000. The father is of the view that the net equity in the home is about $770,000 for each party. The mother is of the view that the value of the both the home and each party’s equity in it is far lower than the father claims. She says that when the line of credit and a 5% commission is deducted, the parties’ net equity in the home is $715,000 each.

[14] The father’s rental property has many amenities, including an indoor skating rink, a place to practice tennis and a fitness room. The home also has a pool.

[15] Whether or not this case can be described as “high conflict”, I am advised that the parties have had seven court appearances in the brief period of time this year before this motion was argued. The parties are scheduled to attend a settlement conference in June 2020. Their present parenting arrangements will be re-assessed by psychologist, Dr. Helen Radovanovic, this spring. Judging from the submissions of counsel, the parties’ disclosure is far from complete. However, as set out above, the parties are scheduled to go to trial this fall.

Previous Orders

[16] In accord with the consent Order of Chozik J of September 23, 2021, the parties parent the children “in accordance with the recommendations of the assessor, Dr. Helen Radovanovic, released May 23, 2021 … subject to the adjustments in paragraphs 2-7 herein”. Effectively, that means that the children primarily reside with the mother, while the father presently has contact with the children every Wednesday from after school to 9:30 p.m. and alternate weekends from after school to Sunday at 7. This arrangement will be reviewed following the completion of Dr. Radovanovic’s assessment update this spring.

[17] The father brought a motion for Christmas parenting time before me on December 20, 2021. I found that the motion was unnecessary because the parties were basically in agreement as to dates anyways. Nonetheless, I set out dates for contact in line with what the parties had already agreed upon. I ordered the father to pay costs of $6,000 to the mother.

Applicable Law

[18] The jurisdiction to order partition and sale of a jointly owned property is found in s. 2 and 3 of the Partition Act, which reads as follows:

Who may be compelled to make partition or sale

2 All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.

Who may bring action or make application for partition

3 (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.

[19] In Davis v. Davis, [1953] O.J. No.733, the Ontario Court of Appeal set out the principles that still apply to partition and sale of jointly owned properties. Commenting on 1913 legislative changes (that continue in place today in the Partition Act), Laidlaw J.A. wrote for the court at para. 9:

There continues to be a prima facie right of a joint tenant to partition or sale of lands. There is a corresponding obligation on a joint tenant to permit partition or sale, and finally the Court should compel such partition or sale if no sufficient reason appears why such an order should not be made. I do not attempt to enumerate or describe what reasons would be sufficient to justify refusal of an order for partition or sale. I am content to say that each case must be considered in the light of the particular facts and circumstances and the Court must then exercise the discretion vested in it in a judicial manner having due regard to those particular facts and circumstances as well as to the matters which I have said are, in my opinion, fundamental.

[20] As the Ontario Court of Appeal re affirmed in Latcham v. Latcham, [2002] O.J. No. 2126 (O.C.A.) the standard for the exercise of the court's discretion under s. 2 of the Partition Act to refuse partition and sale is a narrow one. The partition application should only be denied if it is the result of malicious, vexatious or oppressive conduct. That court added that "[t]his narrow standard for the exercise of discretion flows from a joint owner's prima facae right to partition."

[21] In Thompson v. Fitzjames, [2004] O.J. No. 5218 (S.C.J.) Tulloch J., as he then was, adopted at para. 11 this definition of the term "vexatious", which shows the narrowness of the exception:

It means the bringing of an action:

i. To determine an issue that has already been determined;

ii. Where it is obvious that the action cannot succeed; or

iii. Brought for an improper purpose, including the harassment of the respondent.

[22] In order to avoid partition and sale, the responding party must show that they would be prejudiced by the order, either because they have an order for (or entitled to) exclusive possession, or because their claims at trial will be prejudiced by an immediate sale (see: Copeland v. Copeland, 2017 ONSC 4475 at paras. 12 and 13, citing Batler v. Batler (1988)).

[23] Partition and sale will not be refused when it is opposed on the basis of:

• Mean-spiritedness (Shemish v. Bernarzi, 2006 CarswellOnt 5450 (S.C.J.) at para. 11-13);
• Behaviour unrelated to the partition and sale itself (Akman v. Burshtein, [2009] O.J. No. 1499 (S.C.J.) at para. 38);
• The fact that the sale could cause anxiety and even depression in the spouse opposing partition and sale (Gainer v. Gainer, [2006] O.J. No. 1631 (S.C.J.) at para. 17-19);
• The issue of whether one party may be in a position, after equalization, to buy out the interest of the other (Allard v. Sylvain-Allard, 2015 ONSC 2052 (S.C.J.) at para. 13);
• Personal attachment to the property, as there is always hardship when a party is compelled to sell against their will (Allard v. Sylvain-Allard, above);
• Matrimonial proceedings, unless prejudice to the rights of a party under the Family Law Act can be established (Silva v. Silva, [1990] O.J. No. 2183 (O.C.A.) at para. 23);
• The possibility that success in the matrimonial litigation would enable a spouse to buy out the interest of the other. That is not a form of prejudice that will prevent partition and sale (Paganelli v. Paganelli, [2002] O.J. No. 2705 (S.C.J.) at para. 6 and 14);
• One party's wish to buy out the other's interest in the matrimonial home (Manteaw v. Nyarko, 2011 ONSC 5401 at para. 13);
• A joint owner's request for a right of first refusal or an order requiring the other joint owner to sell their interest in the property to him or her (Martin v. Martin, [1992] O.J. No. 656 (O.C.A.)). Such orders distort the competitive market for a matrimonial home. They discourage other interested buyers. They eliminate the need for the party seeking to exercise the right to compete with the best price for the property. The Ontario Court of Appeal concisely explained the rationale for this rule in Buttar v. Buttar, [2013] O.J. No. 372 (O.C.A.), stating at para. 64: "[t]his court has jealously guarded the rights of joint owners to the best price for jointly-owned property."

[24] The general principles that apply to the partition and sale of a jointly owned property at trial are somewhat attenuated when the request is for sale of the matrimonial home prior to trial of the remaining financial issues. In Goldman v. Kudeyla, 2011 ONSC 2718, McGee J. summarized the applicable principles and test for partition and sale of a matrimonial home on an interim motion as follows:

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), 33 R.F.L. (3rd) 44 (OCA,) Walters v. Walters, [1992] O.J. No. 1564, 1992 CarswellOnt 811 and more recently, Kereluk v. Kereluk, 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.

[25] This test was adopted by MacKinnon J. in Chaudry v. Chaudry, 2012 ONSC 2149, at para. 21, She added at para. 22:

There is judicial authority for the proposition that an order for sale of jointly owned property ought not to be made before trial where there is a substantial right in relation to property to be tried, and that determination of the equalization payment may be such an issue: Walters v. Walters, [1992] O.J. No. 1564, 1992 CarswellOnt 811 (Gen. Div.); Kereluk v. Kereluk (2004), 9 R.F.L. (6th) 385, 2004 CarswellOnt 4332 (SCJ).

[26] In Carmichael v. Carmichael, 2019 ONSC 6313, Desormeau J. adopted the comments of MacKinnon J. above and stated at para. 47 that at an interim motion, prior to trial, the court’s determination does not end with the joint owner’s prima facie right to sale. She pointed to the need to consider any child’s best interest in allowing the sale, pointing to Punit v. Punit, 2014 ONCA 252. There, the Court of Appeal for Ontario considered the effect of the sale on a teen-aged child, although it made little reference to them.

[27] Perhaps more to the point, Desormeau J. referred to Fernandes v. Darrigo, 2018 ONSC 1039, where the Divisional Court overturned the motion judge’s order of partition and sale on the basis of the best interests of a child. Matheson J. writing for the Divisional Court referred to the principle that orders directing the sale of a matrimonial home prior to trial should not be made as a matter of course. Based on evidence before the court, including fresh evidence, Matheson J. found that the primary caregiver’s claim to exclusive possession at trial, as well as a vesting order, would be prejudiced by the order of partition and sale and set it aside.

[28] I also point out that in overturning the motion judge’s order of partition and sale in Punit, the Court of Appeal considered both the prejudice of the order upon the wife’s equalization claim at trial and the practical effect of the order on the husband seeking the sale. The proceeds of sale would have been held in trust pending trial in any event, offering him little practical advantage.

[29] For his part, the father points to the decision of Pazaratz J in Dhaliwal v. Dhaliwal, 2020 ONSC 3971, at para. 16 to emphasize the rigor of the test that applies to a party opposing a request for partition and sale. The principles to which Pazaratz J. refers are generally set out above. However, the father wishes to emphasize the following factors found at para. 16 (e), (f), (o) and (q) of Pazaratz J.’s reasons:

e. The onus is on the party who opposes a sale to establish that there is a sufficient reason, recognized in law, why the court should exercise its discretion to refuse a sale. Afolabi v. Fala, 2014 ONSC 1713 (SCJ).

f. Generally, the party opposing the sale must show malicious, vexatious or oppressive conduct relating to the partition and sale issue in order to avoid the sale. Silva v. Silva (1990), 1 O.R. (3D) 436 (ON CA); Jama v. Basdeo; Steele v. Doucett.

o. On the other hand, a request for sale during summer months may entail some timeliness if seasonal market opportunities are favourable; or to reduce the likelihood of a child having to change residence (and possibly catchment area) while a school year is in session.

q. But the mere existence of children in a household is not in itself a sufficient basis to oppose a sale. A generic statement that children enjoy living in their current house or that they will be unhappy if they have to move, is not sufficient. The party opposing a sale must establish a likely negative impact more serious than the inevitable adjustments and disruptions which all families face when parents decide to separate.

[30] However, the father neglects to cite these following sub-paragraphs from Dhaliwal, at para. 16:

g. Each case must be considered on its own facts. The court must consider all relevant factors in exercising its discretion. Davis v. Davis, [1954] O.R. 23 (C.A.); Steele v. Doucett.

h. In family law cases, an order under the Partition Act should generally not be made until any dispute related to the property has first been determined. Maskewycz v. Maskewycz (1973), 2 O.R. (2d) 713 (ON CA).

i. The Family Law Act does not displace the Partition Act. But in family cases a partition application should generally not be granted where it can be shown that a legitimate family law claim would be unfairly prejudiced. Silva v. Silva; Parent v. Laroche 2020 ONSC 703 (SCJ); Latcham v. Latcham (2002), 27 R.F.L. (5th) 358 (ON CA); Dulku v. Dulku 2016 CarswellOnt 16066 (SCJ).

j. In assessing and guarding against potential prejudice, the court must take a realistic view of the potential impacts of a sale -- both positive and negative -- in relation to the interests of both joint tenants, and the family as a whole. Where the financial or other circumstances of the parties are such that a sale would be the inevitable result at trial, there is little justification for delaying the sale. Zargar v. Zarrabian 2016 ONSC 2900 (SCJ); Giglio v. Giglio 2015 ONSC 8039 (SCJ); Keyes v. Keyes 2015 ONSC 1660 (SCJ).

l. The court must consider the impact of a proposed sale on children or a vulnerable spouse -- including the emotional impact, and the fundamental need to ensure that they have appropriate housing. Delongte v. Delongte 2019 ONSC 6954 (SCJ); Kaing v. Shaw 2017 ONSC 3050 (SCJ). The availability and affordability of alternate housing must be considered. As part of the analysis, support obligations may need to be co-ordinated -- even on a temporary basis -- to ensure that any party displaced by a sale will have the resources to arrange reasonable replacement accommodation.

m. Orders for sale of a matrimonial home at the interim stage should not be made as a matter of course. Fernandes v. Darrigo 2018 ONSC 1039 (SCJ). The court must be mindful of the whole of the proceeding, and the need to achieve a final resolution for the family as fairly and expeditiously as possible. Kereluk v. Kereluk.

n. Timing can be a relevant consideration in dealing with a motion for sale at a temporary stage. The availability of a trial within a short period might reduce the pressure for an immediate sale. Goldman v. Kudeyla, 2011 ONSC 2718 (SCJ).

r. A pending equalization claim may also be relevant. The court cannot compel one joint tenant to sell to the other. Martin v. Martin. Nor can it give either joint tenant a right of first refusal. Dibattista v. Menecola. But a recipient of an equalization payment may propose to set that entitlement off against their former spouse's share of the equity in the home. If a sufficiently particularized proposal seems viable -- and especially if it would benefit a child -- sale should be delayed to allow proper consideration of that option. Chaudry v. Chaudry 2012 ONSC 2149 (SCJ).

s. The court must consider and attempt to guard against potential prejudice. Are there realistic issues or claims yet to be determined on a final basis, which would be prejudiced or precluded if a property is ordered to be sold at the temporary stage?

Applicable Principles in a Nutshell

[31] In a nutshell, while partition and sale is presumptively available at the behest of a joint owner, that principle is subject to greater discretion when the court is dealing with a matrimonial home and when the request is made at an interim rather than trial stage of the proceedings. In an interim motion, the court is called upon to engage in a holistic review of the merits of the sale, while considering the interests of each party and the children. Further the court must balance the prejudice to the claims of each party regarding the home against prejudice to the other and the advantages of sale.

[32] A key point in the interim family law context is how the best interests of the children before the court, rather than an abstract notion of children in general, would be affected by sale before trial. The best interests of the children before the court may, in themselves, may be sufficient to overturn the presumption regarding partition and sale, unless other facts mandate that sale.

Application of the Law to the Facts of this Case

[33] The father’s main arguments are legal and financial. Legally, he refers to the presumption that applies under the Partition Act. Financially, he refers to the perceived benefits of the spring market and the present low interest rates for mortgages. He states that he wishes to use his equity to purchase his own home in proximity to that of the mother.

[34] The father also argues that it is in the best interests of the children that the sale take place now. He proposed a summer closing, which would allow the children time to acclimate to what he sees as the inevitable sale.

[35] However, he implicitly admitted that it is in the best interests of the children to remain in the home when he and the mother told their children that they would do everything possible to allow them to stay in the home. He further told the court that he is open to a buy-out of his interest in the home, which would, of course be a solution that he would accept because of the children’s best interests.

[36] Further, a sale of the home would prejudice the mother’s claim to exclusive possession of the home until the eldest child graduates from high school.

[37] With regard to the mother’s desire to buy out the father’s interest in the home, it is unlikely that the court will make a vesting order for her interest in the home in light of the dicta in Martin v. Martin. But the mother cannot either bid on the home when it is placed on the market or know how much she will have available to purchase alternate accommodations until trial. Here, that is not an abstract issue. Her claims against the father are so substantial that, if successful, they are about double his interest in the home. In other words, she would easily be able to purchase the home when it is placed on the market. That result would be in accord with the parties’ promise to their children.

[38] While the trial is not imminent, it is scheduled for the next trial sittings, this fall. That makes the trial imminent, if not immediate.

[39] When speaking of timing, I note that the father has not suffered the delay of his claim to his half equity in the home for long. He brings this motion just days after moving from the home and less than three months after promising the children that he would do everything in his power to allow them to stay there.

[40] I understand that the father can argue prejudice in having to await the fall blitz to actualize on his interest in the home. But, as set out above, he likely would not have received any of the proceeds of sale of the home prior to trial, in any event. Yes, he will miss the spring market, but in these volatile times, it cannot be said that there is a clear prejudice or advantage to selling now.

[41] In light of all of these factors, I find that the immediate sale of the home is premature. It shall await trial. However, my order is without prejudice to the right to renew this motion if this matter is not reached by the fall sittings and the father is not responsible for that delay.

Costs

[42] The parties should attempt to resolve the issue of costs on their own. If they are unable to do so, the Respondent may submit her costs submissions of up to three pages, double spaced, one-inch margins, plus and bill of costs/costs outline and offers to settle. She shall do so within 14 days of release of this endorsement. She need not include the authorities upon which she relies so long as they are found in the commonly referenced reporting services (i.e., LexisNexis Quicklaw, or WestlawNext) and the relevant paragraph references are included. The Applicant may respond in kind within a further 14 days. No reply submission will be accepted unless I request it. If I have not received any submissions within the time frames set out above, I will assume that the parties have resolved the issue and will make no costs order.

“Marvin Kurz J.” Electronic signature of Justice Marvin Kurz, Date: March 16, 2022