Superior Court of Justice – Ontario
COURT FILE NO.: FC-20-00000504-0000 DATE: 2022/11/16
BETWEEN:
SERGIO MAMMOLITI Applicant
– and –
JULIE ANNE PATRICIA SMUTNIAK Respondent
COUNSEL: R. Baker, for the Applicant B. Kelly and P. Moser, for the Respondent
HEARD: November 14, 2022
BEFORE: The Honourable Justice Piccoli
Endorsement
[1]. On November 2, 2022, the Applicant had two motions before the court.
[2]. The first is a motion in relation to the issue of costs which he agrees need not proceed today given that motions on a regular motions day, such as November 2, 2022, are to be limited to motions under one hour. He asks that the matter be adjourned and made peremptory on both parties. The Respondent does not agree with the motions being made peremptory.
[3]. The second motion, dated October 7, 2022, is in relation to the requested sale of the property located at 44 Voisin Court, Clements, Ontario, to which title is owned equally by the parties as tenants in common (“the home”). The Applicant claims that the Respondent holds her interest on a resulting trust in his favour because, he states, she made no contribution towards the purchase or ongoing costs of the home. It appears that he seeks the return of his down payment, which he has listed as $362,302.52 in one section of Exhibit “A” to his affidavit of October 7, 2022, and $301,679.95 in two other sections of that exhibit. For the purposes of this decision, I am using the figure of $301,679.95.
[4]. On September 1, 2022, Justice Tweedie ordered that the motion regarding the sale of the home take place on or before October 14, 2022. The Applicant served the motion and affidavit in support of the motion on October 7, 2022. The motion could not be heard as the Respondent's counsel was out of the country from October 18, 2022, to October 31, 2022.
Materials Before the Court
[5]. In addition to his notice of motion, the Applicant relies on his affidavits of October 7, 2022, and October 30, 2022, and his financial statement of October 7, 2022. He has also filed a factum and brief of authorities.
[6]. The Respondent relies on her affidavit of October 26, 2022. She has no motions before the court.
Position of the Parties
[7]. It is the Applicant’s position that the home be listed for sale immediately and that it continue to be listed for sale until sold. He asks that he be allowed to attend the home on one occasion to determine the state of the home. He is prepared to delay the closing of the sale until January 31, 2023. He also asks that the proceeds of sale be paid into court or held in trust pending further order or agreement. Although it is not being requested, he is willing to pay to the Respondent the sum of $2,439.00 per month on a without prejudice basis in uncharacterized support following the closing date of the sale of the home. He arrived at this amount by using his 2021 income, which he asserts was $180,137.00 and the table amount of support for 2 children.
[8]. The Respondent is not opposed to the sale of the home but seeks conditions. First, she asks that the closing date of the home be June 30, 2023, or later as she does not want to move the children in the middle of the school year. She asserts that the children are compromised both medically and psychologically as a result of the matters arising out of the relationship of the parties. She also states (although there is no motion before the court) that she should receive 50% of the proceeds of sale of the home. Second, she argues that she has no ability to purchase a home or secure accommodations for her and the children. All of her equity is tied up in the home. She points out that the Applicant lives with his parents rent-free. Finally, she argues that she would be completely prejudiced and left at the mercy of the Applicant should she not receive 50% of the proceeds of sale of the home. Her counsel states that the offer made by the Applicant to pay uncharacterized support should not be considered by the court as it is improper and puts his client “between a rock and a hard place.” She does not consent to such an order.
[9]. Both parties agree that, if this court orders the home sold, the Applicant will provide the names of three (3) real estate agents to the Respondent, and she can choose one (1) of the three (3) names provided.
[10]. Both parties agree that the successful party should receive $3,000.00 in costs.
Brief Background
[11]. The parties were never married. They lived together from July 2012 until October 11, 2019. The Applicant states that the Respondent assaulted him on October 11, 2019, and, as a result, he left the home.
[12]. The Applicant has two children from his previous relationship. They are 27 and 21.
[13]. The Respondent has two children from her previous marriage. They are 20 and 17. Although her older child, Ashley, has university accommodation, she resides mainly at the home with the Respondent and her brother.
[14]. The Applicant works at SEMP Canada and last year he earned $180,137.00. In prior years he has earned more.
[15]. The Respondent works at Spark and her income last year was $119,423.00.
[16]. The Applicant has been requesting the sale of the home since at least October 30, 2019. The Respondent and her two children have lived in the home since October 12, 2019, to the exclusion of the Applicant.
[17]. The Respondent states that the Applicant has entered the home on a number of occasions without notice. She asserts that there has been family violence.
[18]. On the contradictory affidavit material before me (which, in the Respondent’s case, includes videos that do not shed light on the issue), it is impossible to assess who is telling the truth about the nature of the relationship and which, if either, party committed family violence against the other. There has been no questioning. I am told that has been arranged for January 2023 and that there will be a trial management conference thereafter.
[19]. The parties agree that the only property issue between them is in reference to the home. The Applicant’s contention is that he put down the entire down payment of either $301,679.95 or $362,302.52. He attaches a schedule to his affidavit setting out the amounts he seeks be reimbursed from the Applicant. In his affidavit he states that he expects the house could sell for 1.4 million dollars.
[20]. The Respondent refutes the Applicant’s claim for a trust interest over the home, stating that she has contributed to the home financially and in other ways. The Respondent states she has a claim for ongoing retroactive child and spousal support as well as a credit for her contribution towards the home. She also asserts that she has a claim for a constructive trust. Oddly, she also, in her affidavit, asserts that the Applicant has caused significant damage to her and the children’s home.
[21]. The Respondent pays for the utilities of the home. She states she has also been primarily responsible for “maintaining the home” but provides no particulars.
[22]. There is a dispute about who has paid the property taxes.
[23]. The Applicant states that he pays most of the carrying costs in relation to the home. There is no dispute that he is paying the mortgage and line of credit payments which exceed $5,000.00 per month.
[24]. As of November 1, 2022, the mortgage in relation to the home came due and it is now an open mortgage with an interest rate of approximately 7%. This increases the mortgage payment being made by the Applicant by approximately $400.00 per month. It is noteworthy that the Respondent did not offer to take over the mortgage payment.
The Law Regarding Sale of a Jointly Owned Property
[25]. Section 2 of the Partition Act, R.S.O. 1990, c.P.4, gives this court the jurisdiction to order the partition and sale of jointly owned property.
[26]. This is not a matrimonial home as the parties are not married.
[27]. As articulated in Davis v. Davis, 1953 CanLII 148 (ON CA), [1954] O.R. 23, 1953 CarswellOnt 106, I accept that:
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.
[28]. In Afolabi v. Fala, 2014 ONSC, 1713, [2014] O.J. No. 2429, Mr. Justice Emery confirmed that the onus rests on the party opposing the request for partition and sale to establish evidence of “sufficient reasons” to require the Court to exercise its discretion to refuse the remedy offered by section 2 of the Partition Act.
[29]. The Ontario Court of Appeal, in Latcham v. Latcham, 2002 CanLII 44960 (ON CA), [2002] O.J. No. 2126, (2002) 27 R.F.L. (5th) 358, at paras. 1 and 3, stipulated that the “proper standard for the exercise of judicial discretion to refuse partition under section 2 of the Partition Act… [required] evidence of malicious, vexatious or oppressive conduct.”
[30]. In Dhaliwal v. Dhaliwal, 2020 ONSC 3971, at para. 16, Justice Pazaratz provided a restatement of the legal principles governing a motion for the sale of real property in the context of a family law case:
a. The Partition Act provides a prima facie right to an order for partition and sale.
b. A court is required to make such an order unless there is demonstrated reason not to do so.
c. The onus is on the party opposing the sale to establish that there is sufficient reason to refuse a sale.
d. The party opposing the sale must, generally, show malicious, vexatious, or oppressive conduct.
e. Meaningful disputes related to the property should be resolved before a sale order is made.
f. A sale should not be ordered if there is a legitimate family law basis or where a family law claim would be unfairly prejudiced.
g. The court should consider the prejudice to both parties and a sale should be ordered where a sale would likely be inevitable at trial. This is especially the case where a trial is not imminent.
h. A sale should be ordered where current carrying costs are unsustainable.
i. The court should consider the impact of a proposed sale on vulnerable parties, including children (with consideration given to academic progress or other evidence impacting a child’s wellbeing).
j. The potential for unhappiness or dissatisfaction experienced by a party or by children is not enough to prevent a sale.
Application of Law to the Facts
[31]. The Applicant asks that I give minimal, if any, weight to the impact of the sale on the children. There is no independent evidence before the court that the sale of the home will negatively impact the children; just the Respondent’s “bald assertions.” Although I do not agree that these are simply bald assertions, I do agree that there is no independent evidence to support the Respondent’s contentions about the impact of the sale on her children.
[32]. It is conceded by the Respondent that the Applicant’s wish to sell the home is not vexatious or oppressive. She asserts that it is his request that the home be listed forthwith, as opposed to the end of the school year, and that the entire proceeds be paid into court or held in trust, that is vexatious and oppressive. It will put her in a situation of duress. I will deal with the disbursement of sale proceeds in the next section.
[33]. There are disputes regarding the home which are triable issues. The trial will not be held until the spring or summer of 2023. There has been significant delay and the sale of the home is a foregone conclusion, even if the disposition of the proceeds of sale are not.
[34]. The current carrying costs are not sustainable by the Applicant. The Respondent did not offer to assume those carrying costs. She states that her share of the carrying costs are less than any support owed to her by the Applicant. She has no motion before the court for support. She advises that she will bring that motion.
[35]. Based on these facts, I find that the Applicant would be prejudiced by any further delay in the sale of the home, particularly where there is no reasonable prospect of the Respondent purchasing the Applicant’s joint one-half interest in the home. I note that the court in Chateauvert v. Chateauvert, 2019 ONSC 81, [2019] O.J. No. 714, at paragraph 114, found that payment of the expenses associated with the matrimonial home by one party amounts to prejudice.
[36]. Based on the evidence before me, I find that the Respondent has not met the burden to be successful in resisting an order for sale of the home at this time. As such, I exercise my discretion to order partition and sale of the property located at 44 Voisin Court, Clements, Ontario. The closing date of the home will be no sooner than January 31, 2023, unless agreed upon by both parties in writing. This allows ample time for the Respondent to secure alternate accommodation for her and Liam. It is also hoped that by that time Ashley will return to her university accommodations.
Proceeds of Sale
[37]. The Applicant estimates the value of the home to be $1.4 million. The Respondent does not provide an estimate of value. Neither party provided the court with any independent information as to the value of the home that would allow the court to assess the parties’ positions regarding distribution of the proceeds of sale.
[38]. The only evidence the court has before it is the estimate of the Applicant that the home is worth approximately $1.4 million dollars. The mortgage has a current balance of $481,560.98 and the line of credit registered against the home has a current balance of approximately $75,000.00. According to the Applicant, the Respondent withdrew $17,161.00 from the line of credit post-separation. Even if the Applicant is successful in his claim to have the deposit returned to him, there is, on the evidence presently before the court, an excess of $450,000.00 in equity in the home.
[39]. The Applicant asserts that he has a claim for contribution towards post-separation carrying costs and occupation rent, as well as potential adjustments for storage costs and court costs that have not yet been ordered.
Application of Law to the Facts
[40]. The sale is ordered under section 2 of the Partition Act. The parties are not married and, as such, section 12 of the Family Law Act does not apply. It is rule 66.03 of the Rules of Civil Procedure that applies.
[41]. Rule 66.03 of the Rules of Civil Procedure and states:
66.03 All money realized in a partition proceeding from sale of land shall forthwith be paid into court, unless the parties agree otherwise, and no money shall be distributed or paid out except by order of a judge or, on a reference, by order of the referee. O. Reg. 396/91, s. 13.
[42]. The Applicant will only reluctantly agree to release $50,000.00 to each party. The Respondent seeks that the proceeds of sale be divided equally between the parties.
[43]. The Respondent has no motion before the court seeking a disbursement of funds. Despite that, I am going to deal with the issue so as to save time and expense and give the appropriate court resources to this issue (Rule 2).
[44]. Justice Raikes in the decision of Curtis v. Curtis, 2019 ONSC 1527, at para. 41, deals with the disbursement of funds under Rule 66.03 and states: “In my view, the principles that apply to whether to order a sale apply with necessary modification to any order made regarding distribution of the proceeds of the sale; viz. there is a prima facie right to an order for distribution in accordance with the title holding which is subject to the exercise of the court’s discretion. The exercise of that discretion requires a contextual analysis on a case-by-case basis to determine whether the applicant has clean hands, whether there is oppression or hardship, whether the proceeding is vexatious and whether the moving party is using the Act to avoid contractual obligations.” Justice Raikes continued, at para. 47, stating: “Where the partition application is but a piece of a larger litigation puzzle, and the issues extant in the broader litigation are intertwined with the property in question, the court should exercise caution so as not to give one side an unfair advantage in the litigation or prejudice the other party in that litigation."
[45]. Justice Chown in Urness v. McDonald, 2022 ONSC 1697, 2002 CarswellOnt 3275, deals with disbursement of funds pursuant to Rule 66.03 of the Rules of Civil Procedure at para. 60: “Where parties cannot agree on how much should be distributed from trust, courts will order an amount that is reasonable bearing all factors in need including possible equalization payment”.
[46]. I make no findings on the merits of this case. Although the Respondent admits that she did not contribute to the purchase price of the home, she asserts that she contributed in many other ways. The trust issues before the court, if not resolved by the parties, will be determined by the trial judge.
[47]. The evidence before me is incomplete. However, on the current evidence, I find:
(1) That if none of the proceeds are distributed, the Respondent would suffer hardship as she would be unable to secure alternate accommodations. This could result in oppression.
(2) The equity of sharing proceeds equally is intertwined with the outcome of the other financial claims made.
(3) It may give an unfair advantage to Applicant if I accept the Respondent’s position and may give the Respondent an unfair advantage if I accept the Applicant’s position.
[48]. Based on the limited evidence before me, I exercise my discretion and find that it is reasonable to disburse 150,000.00 to each party following the sale of the home. The remainder of the funds will be paid into court or if agreed by the parties held in trust pending further order or agreement. For clarity, the sums disbursed are to be accounted for in the litigation.
Orders made:
(1) Pursuant to section 2 of the Partition Act, 44 Voisin Court shall be immediately listed for sale, and continuously listed for sale until sold upon the recommendations of the retained realtor, on the following terms, which are consented to:
i. The Applicant will provide the names of three realtors and the Respondent will select one realtor to act on the parties’ joint behalf as the realtor on the sale, unless said individual is unable or unwilling to act, in which case, the parties shall agree upon a third-party realtor to list the property;
ii. The parties shall follow the advice of the realtor with respect to list price and/or minor modification/repair or cleaning needed with respect to the property; and
iii. The parties shall accept the first offer within 5% of the list price.
(2) On consent, the Applicant shall attend at 44 Voisin Court on one more occasion prior to the listing of the home in order to assess the state of the home on conditions agreed to by the parties via counsel.
(3) Three hundred thousand dollars ($300,000.00) of the net proceeds of sale of 44 Voisin after the payment of encumbrances (including mortgage account number 1576006 and joint line of credit account number 0395-3284306), realtor fees, legal fees, and any other expense that the parties may agree upon, in writing, shall be forthwith paid to and divided equally between the parties. The remaining funds from the sale of the home shall be paid into court pursuant to Rule 66.03 of the Rules of Civil Procedure, pending agreement of the parties or further order of the Court. Alternatively, if the parties agree, the funds may be held in trust by the real estate solicitor handling the sale of the home.
(4) The parties shall obtain a date from the trial coordinator to argue the costs motion that is adjourned but not made peremptory.
Costs
[49]. Both parties seek their costs. The parties agree that the costs owing would be $3,000.00 to the successful party. In this case, I find that success was divided and, as such, there are no costs payable unless there were offers to settle that meet the requirements of Rule 18. If that is the case, then the party who made such an offer has 14 days to make costs submissions. The other party may then file responding written submissions within 10 days thereafter. The initial party may then provide brief reply 4 days thereafter. Submissions are not to exceed four pages, plus a detailed bill of costs and copies of any offers to settle. There shall be no extension of these timelines. If a party does not submit submissions respecting costs in accordance with these deadlines, there shall be no costs payable to that party, although costs may still be awarded against that party. Cost submissions shall be sent to Kitchener.SCJJA@ontario.ca.
Justice Piccoli
Released: November 16, 2022
COURT FILE NO.: FC-20-00000504-0000 DATE: 2022/11/14
ONTARIO SUPERIOR COURT OF JUSTICE
SERGIO MAMMOLITI
– and –
JULIE ANNE PATRICIA SMUTNIAK
ENDORSEMENT
Justice Piccoli
Released: November 16, 2022