Court File and Parties

Court File No.: FS-21-00027082-0000 Date: 20230622 Superior Court of Justice - Ontario

Re: Sharmeen Arafat, Applicant And: Nader Arafat, Respondent

Before: L. Brownstone J.

Counsel: Diane Klukach, for the Plaintiff Nader Arafat, Self-represented

Heard: June 22, 2023

Endorsement

[1] The applicant wife brought this motion to dispense with the husband’s consent to sell the matrimonial home municipally known as 328 Glen Road, Toronto, Ontario, M4W 2X3 (also referred to in these reasons as the home, or the property). The parties hold title to the home as joint tenants. Her factum also sought partition and sale. She initially sought this relief under s. 23 of the Family Law Act, R.S.O. 1990, c. F.3, but added s. 2 of the Partition Act, R.S.O. 1990, c. P.4 as a ground for relief during argument. The husband opposes the sale. He wishes to sell the property for a higher value or purchase it himself.

[2] The motion was originally returnable June 13, 2023. Justice Shore granted an adjournment to today’s date at the husband’s request, but ordered that the date be peremptory on the husband. The husband advised on June 13, 2023 that his new counsel could be available today. However he appeared today on his own behalf and filed no materials.

[3] There were no materials before the court explaining why the husband was unable to file materials or proceed today. In argument he stated that family lawyers are busy at this time of year and that he had not had time to file materials. As indicated by Shore J.’s brief adjournment and peremptory order, and as explained below, there is urgency to this motion. The respondent did not expressly seek an adjournment and in my view, an adjournment would not be appropriate when considering the history of the matter, the lack of reason given for the need for another adjournment, and the prejudice to the applicant of delay which could not be compensated by a costs order. Ariston Realty Corp. v. Elcarim Inc., 2007 ONSC 13360, at para. 34.

[4] The parties separated in December of 2021. Parenting, child and spousal support have been resolved on a final basis. The only remaining issue is equalization. The wife moved out of the matrimonial home in February 2022 so that it could be readied for sale. The husband moved in to the home in March of 2022 and continues to reside there. The children split their time between the home and a rental property in which the mother currently resides.

[5] The evidence before the court, which was uncontradicted by the husband who did not file any materials, is that he has been paying the carrying costs for the home, which are thousands of dollars per month, from the parties’ joint line of credit which is connected to the mortgage. Realty and waste management taxes have not been paid. Whatever equity there is in the home is being quickly eroded. The wife has been unable to secure her own personal line of credit given the amounts owing on the joint line of credit being used to pay the expenses on the matrimonial home.

[6] The attempts to sell the matrimonial home have a lengthy history. It was first listed for sale at $3,200,000 in March of 2022. No offers were received. After 120 days, the wife attempted to re-list the property at $2,900,000, which the husband would only agree to if he was given a right of first refusal. Ultimately it was listed on June 21, 2022 for $2,995,000. Once again, no offers were received.

[7] In October 2022 the wife obtained two market analyses that recommended selling the property in the spring of 2023. The property was relisted in April 2023 at a lower price ($2,395,000). On May 1, 2023, on the recommendation of the real estate agent, the price was dropped to $2,200,000. The home was viewed 100 times. There were three offers to purchase in the period following the price drop. The best offer was for $2,180,000, which the real estate agent recommended the parties sign back at $2,195,000. The wife signed it back but the husband refused, stating that he would not sign back an offer that was not over the list price. The wife offered to make up the $5,000 between the sign-back price and the list price. Still the husband refused to sign the offer back. The real estate agent was advised by the potential purchasers’ agent that they would accept the figure of $2,195,000.

[8] Over this period of time, the husband made several overtures to purchase the wife’s share of the home. These continued in early June of 2023. The wife was open to these overtures. However, the husband has been unable to secure financing.

[9] Since the original return date of the motion on June 13, 2023, the husband has refused two additional showing requests, threatened action against the real estate agent, and removed the For Sale sign.

[10] The real estate agent, who swore an affidavit for use on this motion, strongly recommended selling the property at $2,195,000. If sold at that price, the wife estimates that after debts are paid, each party will realise about $29,000 in net proceeds. Given that the expenses of the home are being financed by a line of credit secured against the property, the longer it takes to sell, the higher the debt will be, and the more the equity will be eroded.

[11] The wife wishes to sign back the counter-offer without the husband’s consent, and to have authority to sell the property without the husband’s consent for a price within 5% of the list price, should the purchase to the currently identified potential buyers not go through.

Issues and analysis

[12] The wife set out the issues on the motion as follows:

1. Is the Respondent unreasonably obstructing the sale of the Matrimonial Home by not following the advice and recommendations of the Listing Agent?
2. Should an Order be made permitting the Applicant to proceed with the sale of the Matrimonial Home, without the need for the Respondent's consent to the sale?
3. Should an Order for the partition and sale of the Matrimonial Home be made?

[13] Sections 21(1) and 23 of the Family Law Act provide as follows:

21(1) No spouse shall dispose of or encumber an interest in a matrimonial home unless, (a) the other spouse joins in the instrument or consents to the transaction; (b) the other spouse has released all rights under this Part by a separation agreement; (c) a court order has authorized the transaction or has released the property from the application of this Part; or (d) the property is not designated by both spouses as a matrimonial home and a designation of another property as a matrimonial home, made by both spouses, is registered and not cancelled.

23 The court may, on the application of a spouse or person having an interest in property, by order, (a) determine whether or not the property is a matrimonial home and, if so, its extent; (b) authorize the disposition or encumbrance of the matrimonial home if the court finds that the spouse whose consent is required, (i) cannot be found or is not available, (ii) is not capable of giving or withholding consent, or (iii) is unreasonably withholding consent, subject to any conditions, including provision of other comparable accommodation or payment in place of it, that the court considers appropriate; (c) dispense with a notice required to be given under section 22; (d) direct the setting aside of a transaction disposing of or encumbering an interest in the matrimonial home contrary to subsection 21(1) and the revesting of the interest or any part of it on the conditions that the court considers appropriate; and (e) cancel a designation made under section 20 if the property is not a matrimonial home.

[14] There is case law supporting the proposition that these provisions are used when one spouse is the title owner, and the non-titled spouse refuses to consent to a disposition. Section 23 (b)(iii) has been held not to be broad enough to dispense with the consent of a spouse who is a joint owner of the matrimonial home: Sullivan v. Sullivan, 1986 ONSC 6333, [1986] O.J. No. 1896, 2 R.F.L. (3d) 251 (Ont. Dist. Ct.)).; Flores v. Flores, 2020 ONSC 5809, at para. 49; Nani v. Nani, 2021 ONSC 1368, at paras. 97, 98. Rather, “[w]hen it comes to spouses who jointly own the matrimonial home, the Partition Act … gives the court jurisdiction to deal with a proposed sale by one spouse where the other objects”: Nani at para. 98. Other case law relies upon both the Partition Act and s. 23 of the Family Law Act to effect a sale in appropriate circumstances: Bailey-Lewis v. Lewis, 2020 ONSC 7525.

[15] Section 2 of the Partition Act provides as follows:

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.

[16] The court in a family law proceeding may grant a joint tenant an order for partition and sale under s. 2 of the Partition Act unless:

a. an interim sale will prejudice a substantial right of one of the parties under the Family Law Act (Silva v. Silva, 1990 ONCA 6718, at para. 23) or b. the responding party demonstrates that the applicant’s conduct in seeking the order is malicious, vexatious or oppressive (Latcham v. Latcham, 2002 ONCA 44960, at para. 2)

[17] The husband has agreed to list the property. He simply is not co-operating with the sale. He did not argue that the sale will prejudice a substantive right in the family law proceedings. His arguments are twofold: first, he wishes to purchase the wife’s share of the home himself and second, he believes this is not an opportune time to sell the home in order to achieve its maximum value.

[18] The husband has no right of first refusal to purchase the home: Martin v. Martin, 1992 ONCA 7402 (1992), 8 O.R. (3d) 41, [1992] O.J. No. 656. Further, the husband has been unable to secure the financing required to effect such a purchase. His desire to purchase the home himself is not a ground on which relief should be refused.

[19] Second, the uncontradicted evidence before the court is that the husband is using the line of credit, secured against the home, to fund the property’s carrying expenses. The amount of equity in the home is not large. It is being quickly eroded by the delay in the sale and the mounting line of credit debt. The husband’s belief that the market will improve and the home will become more valuable is speculative, not supported by the evidence of the real estate agent, and does not amount to a legitimate reason to oppose the sale.

[20] Equalization remains to be completed, but the net proceeds from the sale will be held in trust pending equalization. There is thus no prejudice to the parties. Indeed, a timely sale will protect the parties by ensuring the remaining equity in the home does not disappear.

[21] To the degree the husband can be seen to be arguing that the applicant’s conduct in seeking the order is malicious, vexatious or oppressive, the basis of the argument is the same as that set out above: he wishes to buy the home, and believes they can obtain a higher price for it. For the reasons set out above, I do not accept these arguments. The husband is unreasonably withholding his consent to the sale. The wife’s position that the husband is intentionally delaying the sale is supported by the evidence.

[22] The reasoning of Faieta J. in Bailey-Lewis v. Lewis, at para. 20 is apposite:

Given that the Respondent seeks to prevent or delay the sale of the matrimonial home on the open market so that he may continue to try to cobble together financing in order to purchase it, I agree with the Applicant that she should have control over the sale process on certain terms. If the Respondent is able to arrange such financing, then he will be at liberty, like anyone else, to make an offer to purchase the matrimonial home on the open market.

Disposition

[23] Therefore, order to go as follows:

a. the applicant is permitted to proceed forthwith with the sale of the matrimonial home; b. the applicant shall have the sole authority to engage and instruct the listing agent as required; c. the applicant shall have the sole authority to negotiate, accept or counter-offer any offer to purchase the matrimonial home, so long as the final sale price is within 5 per cent of the listing price; d. the applicant shall have the sole authority to close the sale of the matrimonial home, including signing all documentation, without consultation with and without the consent of the respondent; e. The respondent’s consent or authority to list, enter into an agreement of purchase and sale, and complete the closing of the sale of the matrimonial home is dispensed with; f. The applicant will provide to the respondent copies of all documents executed by her in relation to the sale of the home; g. The respondent shall comply with requests made by the agent, directly or indirectly, with respect to the staging, cleanliness and showing of the home; h. The respondent shall re-place the “For Sale” sign on the property, and shall keep it there until the property is sold; i. The net sale proceeds shall be held in trust by the real estate solicitor pending court order or written agreement of the parties; j. Should any dispute arise related to the sale of the matrimonial home, the parties may return to have that matter adjudicated by me, in a summary manner, on two day’s notice, if I am available.

[24] If the parties cannot agree on costs of this motion, the applicant may deliver three pages of costs submissions, plus any offers to settle and a bill of costs, by June 30, 2023. Respondent may respond with the same page limits by July 7, 2023.

L. Brownstone J. Date: June 22, 2023