CITATION: Culloden v. Card, 2022 ONSC 5573

COURT FILE NO.: FC43/22

DATE: 20220930

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Carrie Bernadette Culloden, Applicant

AND:

Otto Hector Joseph Card, Respondent

BEFORE: Heeney J.

COUNSEL: The Applicant, self-represented

Zachary Wilson, for the Respondent

HEARD: September 27, 2022 by videoconference

ENDORSEMENT

[1] The respondent brings this motion for the immediate partition and sale of the matrimonial home, known as 10 Orkney Crescent, London, pursuant to the Partition Act, R.S.O. 1990, c. P.4.

[2] By way of background, the parties were married on September 4, 1993, and separated on November 1, 2017, when the respondent moved out of the matrimonial home. It is owned jointly by the parties. The applicant has been residing in the matrimonial home since the separation.

[3] At present, their four adult children reside with the applicant, who range in age from 22 to 28, as well as the applicant’s 94-year-old mother.

[4] The applicant is 62 years of age, and the respondent turns 65 on September 30, 2022. It is his intention to retire from his job as a truck driver on his 65th birthday.

[5] The respondent wishes to have the house sold so that he can realize his 50% interest in the equity. The applicant wishes to buy him out, but only after deducting what she calculates is owing to her by way of equalization, post-separation adjustments and retroactive child and spousal support. The parties do not agree on their calculations, and therefore have not been able to agree on a buy-out.

[6] The confusion largely arises from the fact that, from the time of the separation until December 2021, the respondent directly contributed toward the carrying costs relating to the matrimonial home in lieu of paying support. As of December, 2021, he began paying child and spousal support and stopped contributing to the matrimonial home expenses.

[7] The equalization payment due to the applicant is between about $40,000 and $62,000 depending upon whose values are accepted, according to the evidence of the respondent, which is not challenged. However, the respondent alleges that he overpaid support, and claims a credit. He calculates that he will owe the applicant between $13,636 and $35,655, after deducting his alleged overpayment from the equalization payment.

[8] The applicant claims, in her affidavit sworn September 9, 2022, that the respondent owes her $56,298 in retroactive child support and $61,353 in retroactive spousal support, but she owes the respondent a post-equalization adjustment of $38,375. She never brought all of her claims together to arrive at a final figure, but by my calculations she appears to be claiming a net figure of about $141,276, taking her numbers at face value and assuming an equalization payment due to her of $62,000.

[9] There are, however, obvious problems with the applicant’s numbers. With respect to spousal support, she has failed to add in the rent she has been receiving for years from her mother, apparently on the advice of a lawyer. However, in my view that rent clearly constitutes income which is available to assist in paying her living expenses. Furthermore, she is now receiving rent from her children that she does not account for. Both of these sources of income would have a significant impact on the quantum of any retroactive spousal support due to her.

[10] She also wants to hold the respondent liable to pay 50% of the mortgage, even though she is the one in possession of the house and is receiving spousal support from the respondent. The general rule is that the party living in the home is responsible for all expenses for it, including the mortgage, taxes, insurance, and utilities: see Colquhoun-Kelly v. Kelly, 2014 ONSC 1509 at para. 24. Furthermore, if her calculations regarding retroactive spousal support failed to take this into account, so as to give the respondent a 100% credit towards spousal support for the money he contributed to the mortgage and other expenses, the result will be an inflated figure.

[11] The house was valued by a realtor on May 25, 2022 to be worth between $825,000 and $840,000. However, that same relator was of the opinion, as of August, 2022, that the value had likely decreased by between $75,000 and $100,000 since his first opinion was given.

[12] There are two encumbrances registered on title totalling $360,155. Thus, the total equity, based on the two opinions of value, is between $404,845 and $364,845. The respondent’s ½ share of the equity is therefore estimated to be between $202,422 and $182,422.

[13] In Dhaliwal v. Dhaliwal, 2020 ONSC 3971 at para. 16, Pazaratz J. reviewed the applicable legal principles to be considered in a motion of this kind:

The applicable legal principles include the following:

a. Section 2 of the Partition Act empowers the court to order the sale of a jointly owned property, including a matrimonial home. McNeil v. McNeil, 2020 ONSC 1225 (Ont. S.C.J.).

b. A joint tenant has a prima facie right to an order for the partition or sale of property held with another joint tenant. Kaphalakos v. Dayal, 2016 ONSC 3559 (Ont. Div. Ct.); Marchese v. Marchese, 2017 ONSC 6815 (Ont. S.C.J.); Jama v. Basdeo, 2020 ONSC 2922 (Ont. S.C.J.); Davis v. Davis, 1953 148; Brienza v. Brienza, 2014 ONSC 6942 (Ont. S.C.J.).

c. A court is required to compel partition and sale unless the opposing party has demonstrated that such an order should not be made. Jama v. Basdeo; Steele v. Doucet, 2020 ONSC 3386 (Ont. S.C.J.).

d. The other joint tenant has a corresponding obligation to permit the sale. These are fundamental rights flowing from joint tenancy. Steele v. Doucet.

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 (Ont. S.C.J.).

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), 1990 6718 (ON CA), 1 O.R. (3d) 436 (Ont. C.A.); Jama v. Basdeo; Steele v. Doucet.

g. Each case must be considered on its own facts. The court must consider all relevant factors in exercising its discretion. Davis v. Davis (1953), 1953 148 (ON CA), [1954] O.R. 23 (Ont. C.A.); Steele v. Doucet.

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), 1973 603 (ON CA), 2 O.R. (2d) 713 (Ont. C.A.).

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 (Ont. S.C.J.); Latcham v. Latcham (2002), 2002 44960 (ON CA), 27 R.F.L. (5th) 358 (Ont. C.A.); Dulku v. Dulku, 2016 CarswellOnt 16066 (Ont. S.C.J.).

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 (Ont. S.C.J.); Giglio v. Giglio, 2015 ONSC 8039 (Ont. S.C.J.); Keyes v. Keyes, 2015 ONSC 1660 (Ont. S.C.J.).

k. More to the point, where it is evident at the temporary motion stage that monthly carrying costs are currently unsustainable, it is inappropriate to indefinitely perpetuate financial hardship for the entire family. Quite commonly, house expenses which were barely affordable when the family unit was intact immediately become unaffordable once the same income has to fund two separate households. Sometimes harsh new realities need to be faced sooner as opposed to later — in order to avoid even more painful consequences such as power of sale proceedings or even bankruptcy.

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 (Ont. S.C.J.); Kaing v. Shaw, 2017 ONSC 3050 (Ont. S.C.J.). 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 (Ont. Div. Ct.). 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 2004 34595 (ON SC), [2004 CarswellOnt 4332 (Ont. S.C.J.)], 2004 34595.

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 (Ont. S.C.J.).

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.

p. The stage of a child’s academic progress might also be relevant. Sale might be delayed if it would allow a child to complete a certain grade level before an inevitable switch to another school. On the other hand, immediate sale might be more appropriate if the child happens to be transitioning to a new school in any event.

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.

r. A pending equalization claim may also be relevant. The court cannot compel one joint tenant to sell to the other. Martin v. Martin 1992 7402 (ON CA), [1992 CarswellOnt 226 (Ont. C.A.)], 1992 7402. Nor can it give either joint tenant a right of first refusal. Dibattista v. Menecola [1990 CarswellOnt 574 (Ont. C.A.)], 1990 6888. 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 (Ont. S.C.J.).

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?

[14] As noted above, the respondent has a prima facie right to sell the jointly owned property and realize his share of the equity. The applicant has the onus of demonstrating that such an order should not be made.

[15] Here, the applicant argues that selling the house would displace her children and her mother from their residence. That argument would be more compelling if the separation was more recent, and the children were not now adults. However, the separation occurred five years ago. That is a long time for the respondent to have to wait to get what he is clearly, at law, entitled to receive, and it is more than enough time for the applicant to find other suitable accommodation.

[16] The caselaw suggests that a sale should generally not be made until any dispute relating to property has been resolved. On the other hand, though, the respondent’s right to realize his equity in the matrimonial home should not become a hostage to the applicant’s demands, particularly where they appear, on their face, to be unreasonable in several respects. In other words, it should not be open to the applicant to maintain that she opposes a sale, but is willing to buy the respondent out, provided that it is on her terms.

[17] In my view, the dispute as to what final amount the applicant is entitled to receive can be accommodated by withholding, in trust, an appropriate sum from the amount due to the respondent from the sale, as security for the payment that will inevitably be due to the applicant. This will ensure that her legitimate family law claim will not be unfairly prejudiced.

[18] The respondent has proposed, in the draft order included in his Factum, that all of the proceeds be held in trust pending a further court order or the agreement of the parties. I am not disposed to do this. It is the respondent’s wish to sell the house, while the applicant wishes to remain there. If the applicant is to be forced to relocate, she will need the full amount of her equity in the house in order to acquire other accommodation. It is the respondent who will owe the applicant an amount of some kind once the issues in dispute are resolved or adjudicated, so it is the respondent who should have a portion of his equity withheld. The applicant will be entitled to her full half share of the equity plus whatever additional amount is found to be due to her, so a deduction from her share is not necessary.

[19] In my view, the appropriate amount to withhold from the respondent’s half share of the equity is $75,000, which is roughly half-way between the best-case scenario for each party, as calculated above.

[20] Before pronouncing my order, though, I want to return to the applicant’s wish to buy out the respondent’s interest in the house. I cannot order one joint tenant to sell their interest to the other. I can, however, delay the implementation of my order for the sale of the property, in order to give the parties time to negotiate a buy-out on their own.

[21] While the parties have been unable to agree on a buy-out to date, there is a way that they might be able to do so, while still preserving their right to dispute the amount of the final payment. They could do so by using the same deduction of $75,000 in the amount payable to the respondent that I have utilized above. They would, as a first step, have to agree on the value of the house. Once they do so, however, the amount of the encumbrances is a known figure, so the calculation of the respondent’s half interest in the equity is simple. He could be paid $75,000 by way of a non-interest-bearing promissory note, which would be due and payable when the other disputes are resolved or adjudicated and taken into account in the final calculation as to who owes what to whom. The balance of his half interest in the equity would be paid in cash, which could be raised by the applicant through remortgaging the house.

[22] If the estimates are accurate, the respondent’s half share in the equity is worth about $192,000, plus or minus $10,000. Paying $75,000 by way of a promissory note would require the applicant to raise only about $117,000 through a new mortgage. When added to the existing encumbrances, this would result in total indebtedness of only $477,155. Given that the Royal Bank has apparently committed to provide mortgage financing up to $500,000, this would be a realistic option to pursue.

[23] To be clear, I am not ordering this to take place. I am simply suggesting a methodology whereby a buy-out could occur, which would avoid displacing the applicant, the four children and the applicant’s mother from their home, without pre-determining the disputed issues.

[24] I will give the parties 30 days to see if a resolution of some kind can be achieved.

[25] An order will, therefore, go as follows:

a) Pursuant to the Partition Act, the jointly owned matrimonial home known as 10 Orkney Crescent, London, ON, shall be listed for sale 30 days from this date;

b) Both parties shall do all things necessary to facilitate marketing of the home;

c) The parties shall jointly select a listing agent for the matrimonial home within 25 days. If there is a disagreement regarding the agent or the listing price or other terms of sale, the matter may be returned to this court for directions. I am not seized with this matter.

d) The parties shall accept any reasonable offer.

e) The net proceeds of sale shall be divided into equal shares. The applicant’s half -share shall be paid out to her forthwith. The sum of $75,000 shall be withheld from the respondent’s half-share and held in an interest-bearing trust account pending final resolution or adjudication of this action and shall be applied towards any payment due from the respondent to the applicant. The balance of the respondent’s half-share shall be paid to him forthwith.

[26] With respect to costs, it is clear that the reason this motion had to be brought is because the parties cannot agree on the property and retroactive support issues. Accordingly, it is appropriate to order that the costs of this motion be in the cause, in an amount to be fixed by the trial judge.

Mr. Justice T. A. Heeney

Date: September 30, 2022