Court File and Parties
Court File No.: FS-19-00010851 Date: 2023-03-23 Superior Court of Justice - Ontario
Re: Angela Amendola, Applicant And: Renaldo (Ron) Amendola, Respondent
Before: W.D. Black J.
Counsel: A. Macri, for the Respondent/moving party W. Abbott, for the Applicant/responding party
Heard: March 16, 2023
Endorsement
Overview
[1] The respondent brought this motion seeking a sale of the matrimonial home at 25 Burncrest Drive in Toronto (the “MH”) pursuant to ss. 2 and 3 of the Partition Act, R.S.O. 1990, c. P4 (the “Act”).
[2] The applicant is currently living in the MH, and has been since the respondent moved out in December of 2018. One of the adult children of the marriage also lives at the MH, as does her fiancé and two young children.
[3] It appears to be common ground between the parties that, since he left the MH in late 2018, the respondent has been living in his office (in commercial premises at 1804 Avenue Road, Toronto, jointly owned by the parties through a holding company), as well as spending weekends at a cottage property owned by another of the adult children.
[4] There is a dispute between the parties as to the date of separation. The applicant says it was November of 2014 whereas the respondent says it was June of 2018.
[5] The applicant is the sole registered owner of the MH. It is agreed that the respondent held a 50% beneficial interest in the MH, at least as of June of 2018. The applicant stresses that for valuation purposes that does not translate into a 50% interest in the current value of the MH.
[6] The question of value of the MH, and that point at which it should be valued, looms large in this motion. In particular, it features prominently in the applicant’s response to the motion.
General Right to Partition and Sale and Narrow Exceptions
[7] As a general proposition, there is no question that a party who has a substantial ownership interest in a jointly owned property has the ability to compel a sale of that property under the Act.
[8] The parties agree on this proposition, and on the related notion, articulated by the Court of Appeal for Ontario in Latcham v. Latcham (2002), 27 R.F.L. (5th) 358 (Ont. C.A,), that the court has a narrow discretion to refuse partition, and only on the basis that a proposed sale is the result of malicious, vexatious or oppressive conduct.
[9] In the domain of family law, the clarity of that proposition can be clouded to some extent by considerations of competing rights and interests under the Family Law Act, R.S.O. 1990, c. F.3. In Goldman v. Kudeyla, 2011 ONSC 2718, 5 R.F.L. (7th) 149, at para. 18, McGee J. noted that:
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.
[10] In this regard, cases that have discussed these issues confirm that in the analysis of prejudice to the resisting party, the court may take into account such factors as the timing for trial, potential prejudice with respect to an equalization payment, or the need to preserve the residence for a vulnerable spouse or child who might well retain the home in the cause.
[11] The applicant maintains that these and other factors, including hardship, are to be more flexibly construed in the family law context than their narrow construction in the commercial context.
[12] Even in the commercial context, hardship is a relevant consideration. The Court of Appeal for Ontario said, in Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2004), 75 O.R. (3d) 478 (C.A.) that “In our view “oppression” properly includes hardship, and a judge can refuse partition and sale because hardship to the co-tenant resisting the application would be of such a nature as to amount to oppression.”
[13] In the family law context, the applicant asserts, the court may consider any evidence concerning the effect of a proposed sale and determine if the cause-and-effect of the sale amounts to oppression (Kaphalakos v. Dayal, 2016 ONSC 3559 (Div. Ct.), citing Morris v. Donnegan, 2015 ONSC 3360, 11 E.T.R. (4th) 88).
[14] The Court of Appeal for Ontario confirmed in Martin v. Martin (1992), 8 O.R. (3d) 41 (C.A.), at para.26, that:
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, 1986 issues (particularly the determination of the equalization payment), should not be made as a matter of course.
[15] To similar effect, in Freeman v. Freeman, 2013 ONSC 4934, at para. 42, Stevenson J. said that:
The case law is clear that while there is a prima facie entitlement to a sale of the matrimonial home by a joint owner, a sale should only be ordered where, in all of the circumstances, the order would be appropriate. Additionally, there must be no prejudice to the other spouse’s claim and where there is a risk of prejudice to the other spouse’s claims, the matters are best determined at trial.
[16] These and other authorities make it clear that the right to a sale under the Act is not absolute, and that the court has broad discretion to consider a wide array of factors to determine questions of hardship, oppression and prejudice.
[17] This latitude is consistent with the seminal guidance of the Court of Appeal for Ontario in Davis v. Davis, 1953 ONCA 148, [1954] O.R.23 (C.A.) in which the Court said: “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.”
Applicant’s Position that Sale is Premature and Prejudicial
[18] The applicant’s position is that the respondent’s motion features a number of reasons to except the case from the prima facie right to sell under the Act.
[19] She says:
a. The respondent has been dilatory in his disclosure obligations, to the point where the case has been significantly delayed, and that the respondent’s foot-dragging ought to factor in the assessment of his conduct and motives; b. In a related point, the applicant notes that the respondent’s business generates gross income in excess of $2 million per year, and yet the respondent discloses personal income of about $20,000.00 – $40,000.00 per year, which at the low end of the range is less than minimum wage; c. The applicant also says that if the respondent needs money, about which the applicant is skeptical, the respondent can sell (and the applicant would agree with the sale of) the commercial property on Avenue Road, jointly owned by the parties and having a value in the range of $2 million. This sale would generate substantial funds without causing the disruption and dislocation that a sale of the MH would cause; d. Given the likely dispute about equalization, it is predictable that the proceeds of sale of the MH would have to be held in trust. Inasmuch as the respondent is paying no spousal support, and given the applicant’s limited income (in the range of $47,000 per year), the sale would thus cause significant financial strain on the applicant, and on the parties’ daughter and grandchild currently living at the MH, and there would be no prospect of the applicant being able to purchase a replacement home, let alone a home comparable to the MH; e. The trial in this matter has not yet been scheduled and is likely some months away; f. There is an upcoming settlement conference (on June 9, 2023), and that upcoming conference will be the first opportunity for the parties to conference substantive issues, including the potential sale of the MH (there was a case conference in September of 2019 which dealt exclusively with procedural issues); g. In that regard, as a further consequence of the respondent’s delay in providing proper financial disclosure, the applicant’s expert has not yet been able to complete reports on the respondent’s income and valuation of the respondent’s business interests, but expects to deliver those reports in time for the upcoming settlement conference, such that by that time the parties and the court should have a clearer picture of the relevant numbers; h. The timing of the respondent’s motion – three and a half years after the last conference and three months before a settlement conference – can be seen as tactical and oppressive. i. The applicant points out that she is the sole registered owner of the MH. That said, albeit with provisos about the proper timing for valuation of the MH, the applicant appears to concede that the respondent has a beneficial interest in the MH, and in my view, section 2 of the Act makes clear that an equitable interest in the property at issue will suffice as the basis for a partition and sale.
Respondent’s Position: No Oppression and Imperative to Sell Now
[20] The respondent contends that there is no evidence of oppression whatsoever.
[21] He reminds the court that he has been living in his office on weekdays for the last four years, and that his office does not have laundry facilities or a kitchen.
[22] He also expresses a concern that, given what he characterizes as the falling residential real estate market in Toronto, delaying a sale of the MH will risk shrinking the equity in the property.
[23] The respondent notes that the MH was valued at $1.2 million by the applicant (using the applicant’s suggested date of separation) and at $1.4 million by the respondent (using his date of separation), and that there remains an outstanding amount on the mortgage of just shy of $330,000.00. As such, the respondent argues, there is ample equity in the MH to provide considerable funds for the parties.
[24] Recognizing the potential disagreement pending concerning equalization, the respondent’s proposal is that after paying the balance of the mortgage and other fees, an additional $300,000.00 from the net proceeds of sale of the MH should be held in trust. He asserts that this amount should be more than enough to cover the delta between the parties’ positions (or potential positions) on equalization, and that even after payment of the remaining balance on the mortgage and holding the $300,000.00 in trust, there will be substantial funds going to the parties.
[25] He also notes that the parties have the comfort of knowing that they each hold 50% of the Avenue Road property which, although subject to taxes on disposition, is mortgage-free. Interestingly, although his initial submission was that the Avenue Road property should not be sold, (no such relief was sought before me, but both parties referred to the possibility) because it would require payment of substantial capital gains tax, and because it would disrupt the respondent’s business by requiring him to relocate his business operations, in his reply submissions he said that if the court permitted the sale of the MH he would agree that the Avenue Road property could also be sold.
[26] In response to my question as to why he was not prepared to sell the Avenue Road property in lieu of selling the MH, but was prepared to sell the Avenue Road property if the MH is also sold, his counsel submitted that this was because if both properties were sold these sales would yield sufficient funds that the respondent could readily re-establish his business operations at a new location and could afford to rent or buy a separate residence at which to live.
[27] On the topic of rental or buying, one of the applicant’s stated concerns continues to be that, if the MH is sold, and assuming some portion of the proceeds of sale are held in trust – be it $300,000.00 as the respondent suggests, or some other amount – the proceeds coming to the applicant, combined with her modest salary, would not allow her to buy a replacement home.
[28] The respondent’s answer was that there is no absolute right to purchase comparable accommodation, that the applicant could certainly rent a home or apartment, or, assuming she would have up to $400,000.00 available and could finance another $100,000.00, she could “purchase a condominium”. I expressed uncertainty about the condominium scenario, albeit in the absence of evidence about what kind of condominium can be purchased in the greater Toronto area for $500,000.00, or the likelihood that a condominium, which could house the applicant, as well as the applicant’s daughter and her fiancé and two children could be found in that price range.
[29] The respondent fairly noted case law confirming that children as young as the parties’ grandchildren (a toddler and a newborn) are not expected to be cognizant of the community in which they live, let alone to have developed particular ties there. On the other hand, while in my view this is at most a nominal factor in the absence of evidence of significant hardship, I believe that one of the consequences of a sale of the MH will be that not only the applicant, but also the other people currently living in the MH, will have to find alternative housing, and on a somewhat constrained budget.
Analysis of Arguments
[30] Stepping back now to analyze the competing arguments, I do not find that the conduct of the respondent, having regard to the timing of his motion, is demonstrably and intentionally “tactical” or “oppressive”. While it is ostensibly somewhat troubling that the respondent has not brought this motion until now, I note that a sale of the MH was part of the unrealized relief of an earlier motion that was settled between the parties, and that a potential sale of the MH has also been raised by the respondent for the applicant’s consideration on at least one other occasion.
[31] It is also fair to observe that the respondent’s living arrangements for the last four years, staying in his office on weeknights without laundry or kitchen facilities, have clearly been less than optimal. His wish to improve on those accommodations can be seen as reasonable and not tactical.
[32] On the other hand, it seems at least somewhat surprising that, as the principal of a business that generates $2 million per year – albeit the business is as a franchisee – the respondent only earns $20,000.00 - $40,000.00 per year.
[33] As noted above, the applicant complains that the respondent’s disclosure concerning his earnings and the value of his business had been protracted and piecemeal, and it is only now that her expert is able to work on the necessary reports, which, it is expected, will be available for purposes of the settlement conference on June 9, 2023. It is only at that stage, the applicant maintains, that she (and the court) will have a true sense of the relevant numbers, and in turn a fully informed view of the respective equalization entitlements.
[34] In my view, it is this consideration that is at the crux of the determination of this motion.
[35] As noted, I am not persuaded that the respondent’s conduct is deliberately malicious, tactical or oppressive. The question for me is whether, nonetheless, given uncertainty about the equalization issues, and having regard to the guidance in Martin, and in Freeman (discussed above), a sale of the MH will risk leaving insufficient assets to fund an equalization payment down the road. Alternatively, if an amount of $300,000.00 or more is set aside to guard against that risk, the question becomes whether that would inflict undue hardship on the applicant by removing her from the MH with no realistic prospect of finding appropriate alternative accommodations (and the question would remain as to whether holding back $300,000.00 is sufficient to fund an equalization when agreed or ordered).
[36] That issue in turn, I believe, depends on whether I can be satisfied, even allowing for the applicant’s largest potential entitlement on equalization, that the proposed sale of the MH will not risk creating irretrievable shortfalls and the related risk that the applicant will be left out of pocket.
[37] While in my view, the disruption and dislocation to the applicant’s household, including to the other current members of that household, is a lesser consideration, inasmuch as such disruption will always be a consequence of a court-ordered sale under the Act, I also do not ignore those consequences entirely.
[38] The applicant maintains that, in order to make the appropriate determinations, the court requires certain additional information.
[39] In particular, in addition to the fact that her expert’s assessment of the respondent’s income and valuation of the respondent’s business remain pending, the applicant notes the absence of a formal valuation or valuations of the MH, including in particular as of June of 2018.
[40] In my view, there is some force to these submissions.
[41] While it remains very possible that a sale pursuant to the Act will be a reasonable and appropriate step when fulsome valuations are available, to order that sale before such information is at hand is in the nature of shadow-boxing.
Applicant’s Suggestion to Dismiss Motion Without Prejudice
[42] One of the applicant’s suggestions in her argument is that the respondent’s motion be dismissed at this juncture, without prejudice to the respondent’s ability to revive it once additional information, including the applicant’s pending expert opinions, is on the table.
[43] The applicant advises that these opinions should be in place by the time of the settlement conference on June 9, 2023, and that waiting until (at least) then will yield the additional benefit of allowing the issue to be substantively addressed with the judge presiding over that conference.
[44] I am drawn to this suggestion.
Absence of Evidence re Near Term Trends in Real Estate Market
[45] Part of what inclines me in that direction, in addition to the benefit of fulsome financial and valuation information then being available such that the consequences of a sale need not be considered in a vacuum, is that there is no adequate evidence before me to substantiate the respondent’s stated concern that the residential real estate market will continue to fall and the value of the MH will thus deteriorate.
[46] While that may prove to be the case, and notwithstanding that the respondent works in that domain, in order to rely on that prediction the court would need to receive independent expert evidence. While it is apparent that at least some quadrants of the greater Toronto residential real estate market have trended downwards in recent times, it is not clear to me and more importantly I have no expert evidence that the market, and/or the pocket of the market including the MH will continue to slide.
[47] In all of the circumstances, I dismiss the respondent’s motion at this time, without prejudice to the respondent’s ability to bring the motion back on following the settlement conference on June 9, 2023, by which time I expect the applicant’s expert income and valuation reports will also be available.
[48] I continue to recognize that as a general proposition ss. 2 and 3 of the Act compel a sale absent evidence of malice, vexation or oppression, but in my view, guided by some of the case law cited above, in the family law context the analysis can be somewhat more nuanced. In particular, unless and until the equalization picture is clear, there is merit in taking a measured approach.
[49] For these reasons I dismiss the motion (for now).
Costs
[50] While this means that the respondent has not succeeded on the motion, and that I am giving effect to a position offered and articulated by the applicant, and that the applicant is therefore entitled to costs, I have also expressly allowed for the possibility that the respondent’s motion may yet succeed, and perhaps in the not too distant future.
[51] As such, I am prepared to make only a relatively nominal costs award, and order the respondent to pay the applicant costs of this motion in the amount of $2000.00, payable within 30 days.
W.D. Black J. Date: March 23, 2023