Court File and Parties

Court File No.: FS-20-16004 Date: 2023-07-25 Superior Court of Justice - Ontario

Re: MARISSA JOSEPH, Applicant And: LASZLO MOLNAR, Respondent

Before: M. D. Faieta J.

Counsel: Nancy Iadeluca, for the Applicant Jaret Moldaver & Stephanie Yuen, for the Respondent

Heard: July 20, 2023

Endorsement

Faieta J.

[1] There are two motions before the court.

[2] The Applicant mother brings a motion to bifurcate the trial in this case such that the parenting issues will be determined on an expedited basis at a trial to be held in September 2023 or as soon as possible thereafter.

[3] At the outset of this hearing, the parties advised that they had settled the Applicant’s motion and provided a consent draft Order that states:

1. The Continued Settlement Conference and Trial Management Conference shall proceed on October 31, 2023, at 2pm. This combined Conference shall be peremptory to both parties.
2. The parties have now exchanged their respective TSEFs and no further relief is sought on the motion in regards thereto.
3. There shall be an expedited trial of all issues scheduled for 21 days to proceed at the earliest mutually available date on such terms as the court may direct having regard to the urgency of resolving the parenting issues as soon as may be possible. If the court permits, trial dates to be canvassed on July 20, 2023. The Trial shall be peremptory to both parties.
4. This Consent Order reserves the issue of the Costs of the Applicant’s Motion returnable on July 20, 2023, to the Judge hearing the Respondent’s Cross-Motion on July 20, 2023, and concurrent with the determination of the costs of the Respondent’s Cross-Motion.
5. The Respondent’s Cross-Motion returnable on July 20, 2023, shall proceed to argument on July 20, 2023.

[4] The Respondent father brings a cross-motion, served July 11, 2023, for “an Order granting the Respondent leave to bring a Motion to request an Order for the immediate partition and sale of the jointly owned matrimonial home … and/or an Order requiring the Applicant to cooperate with the Respondent to obtain a line of credit/encumbrance in the amount of $200,000, to be secured against the Respondent’s prima facie 50% share in the matrimonial home, with the funds to be paid to the Respondent. The Respondent shall be responsible for making the interest payments and repaying the principal amount for the line of credit/encumbrance”.

Background

[5] The parties were married in September 2012 and are the parents of a child that was born in 2015.

[6] The Respondent states that he was diagnosed with “Bipolar Type 1” in December 2001.

[7] The Applicant states that the parties separated on September 29, 2017, following an argument at which time the Respondent threatened the Applicant, smashed an iPad and left the matrimonial home.

[8] In October 2017, the Respondent was brought by the police to a hospital, where he was involuntarily admitted for a period of days.

[9] On October 26, 2017, a temporary order granted the Applicant sole custody of their two-year-old child, directed that the child reside with the Applicant on a temporary basis and a restraining order against the Respondent.

[10] On April 23, 2018, the parties signed a Separation Agreement and a Marriage Contract. The Marriage Contract addressed property and spousal support in the event of a reconciliation following the Respondent’s return home.

[11] Amongst other things, the Separation Agreement provides that the matrimonial home shall be listed for sale by April 1, 2019. It also provides the Applicant with the option to buy the Respondent’s interest in the matrimonial home prior to the home being listed. It provides a process for the determination of the value of the home in the event the parties cannot agree on a price as well a formula for determining the value of the Respondent’s interest in the home.

[12] In the summer of 2018, the Respondent moved into the basement of the matrimonial home. The Applicant states that this move was made to facilitate parenting time with their child and not for the purpose of reconciliation.

[13] On April 1, 2019, the parties signed an Amending Agreement that changed the timeline for the sale of the matrimonial home and changed the calculation of the Respondent’s interest in the matrimonial home. It provides that the matrimonial home will be listed for sale by a mutually agreed upon real estate agent within 30 days of either party providing a written notice requires that the home be sold. It also states that the Applicant will continue to have the opportunity to purchase the Respondent’s interest in the matrimonial home as described in the Separation Agreement.

[14] The Respondent states that the date of separation is November 1, 2019. He states that the parties finally decided to separate permanently on or about October 30, 2020.

[15] This Application was commenced in March 2020. Her Amended Application filed later in 2020, states that the Applicant wants to remain in the matrimonial home and intends to exercise her right to purchase the Respondent’s interest pursuant to the amended Separation Agreement.

[16] In his Answer dated January 28, 2021, the Respondent asks that the amended Separation Agreement and Marriage Contract be set aside as he was unable to understand the terms and effect of the agreements, that the Applicant failed to make full and frank disclosure, that he signed the agreements under extreme duress and that the agreements are unconscionable.

[17] By Order dated March 15, 2021, the child spends six out of 14 overnights with the Applicant mother.

Position of the Parties

[18] The Respondent states that without access to $200,000 of equity in the matrimonial home, he will not have funds to pay for his legal expenses and to take this case to trial.

[19] The Respondent submits that the Applicant will not be prejudiced by the sale of the matrimonial home, given that he believes that his share of the equity in the matrimonial home is about $658,000 and because he is proposing that the net sale proceeds be held in trust by the real estate lawyer.

[20] The Respondent further submits that a court has very limited discretion to refuse an application for partition and sale under the Partition Act, R.S.O. 1990, c. P.4 (“Partition Act”) and that the party opposing the Application must show the other party is guilty of malicious, vexatious or oppressive conduct relating to the request and that it would prejudice the rights of either party.

[21] Although not raised in his Factum, at the hearing of this motion the Respondent submitted that he has a right to have the matrimonial home sold under the amended Separation Agreement.

[22] The Respondent also submits that notwithstanding the Applicant’s objection to a further line of credit against the matrimonial home, he submits that it is a practical solution to their objectives and that she has failed to identify any prejudice that would flow from the Respondent’s proposal.

[23] The Applicant submits that an order should not be granted compelling the sale of the house under the Partition Act because it will prejudice the claims that she has advanced. She further states that the Respondent cannot rely on the amended Separation Agreement when he has resiled from it and seeks to have it set aside. The Applicant further states that she opposes encumbering the matrimonial home. The Respondent, who has been unemployed for years and who states, in his latest Financial Statement dated July 5, 2023, that he has no income and monthly expenses of $6,613.37. The Applicant states that there is nothing to suggest that the Respondent has the ability to service the proposed third mortgage and, given her opposition to a further mortgage, there is no authority under the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) to compel her to encumber the matrimonial home.

[24] The Applicant further states that the Respondent brought these alternate motions because he cannot satisfy the criteria for a motion for interim disbursements: Parente v. Parente, 2023 ONSC 907, para. 31.

Issue #1: Should the Respondent be Granted Leave to Bring this Cross-Motion?

[25] On June 21, 2021, Kiteley J. ordered that “… neither party may bring any motion for any relief without first obtaining leave from a judge”. [Emphasis added]

[26] The Respondent brought his cross-motion without first seeking or obtaining of this court. It is too late for the Respondent to now seek leave after he has brought his motion. The Respondent’s only submission on this point is that the Applicant, in settling her motion, agreed that the Respondent’s cross-motion shall “proceed to argument on July 20, 2023”. This is a specious argument. The Respondent is not “a judge” nor was leave sought prior to the cross-motion being brought.

[27] On March 6, 2023, both parties sought and obtained the leave of Diamond J. to bring motions. The Applicant was granted leave to bring a motion to bifurcate the trial and the Respondent was granted leave to bring a motion for child support. That motion will be heard on July 27, 2023. The Respondent could have asked for leave by way of Form 14B motion. In fact, both parties brought a Form 14B motion dated June 22, 2023, to have a Settlement Conference/TMC postponed but no request for leave in respect of his cross-motion was sought by the Respondent.

[28] The Respondent brought his cross-motion without first obtaining leave from a judge. Although on this cross-motion he belatedly asked for leave to bring the cross-motion, he offered no explanation regarding why he did not first seek leave prior to bringing this cross-motion. The failure to comply with a court order requiring leave to be obtained prior to bringing a motion without establishing, or even offering, a good reason for failing to do so, must have consequences in order to avoid undermining the administration of justice. The Respondent’s cross-motion is dismissed.

[29] In any event, I will briefly address the merits of the Respondent’s cross-motion given that it was fully argued.

Issue #2: Should the matrimonial home be sold?

[30] A person with an interest in land has a prima facie right to an order for the partition and sale of a matrimonial home under the Partition Act. A court is required to compel the partition and sale of a matrimonial home unless the opposing party has shown that there is malicious, vexatious, or oppressive conduct on the part of the moving party in relation to the sale itself: Marchese v. Marchese, 2019 ONCA 116, at para. 5.

[31] Additional considerations apply when a motion brought for the sale of a matrimonial home prior to trial. In such circumstances, a sale will not be permitted when:

(a) The sale would prejudice the rights of the other spouse under the FLA or a court order (see Silva v. Silva (1990), 1 O.R. (3d) 436 (C.A.), at p. 445; Martin v. Martin (1992), 8 O.R. (3d) 41 (C.A.), at para. 26.

(b) The sale would prejudice the opposing spouse’s arguable claims under the FLA (see Binkley v. Binkley, [1988] O.J. No. 414 (C.A.), at para. 3; Gibson v. Duncan, 2013 ONSC 5377, at paras. 20-23).

(c) The sale is not in the child’s best interests: Fernandes v. Darrigo, 2018 ONSC 1039 (Div. Ct.) paras. 19-21.

[32] It is arguable that the sale of the matrimonial home is not in the child’s best interests given the turmoil in his life up to his point, as noted by Sossin J., as he then was, and Kiteley J., in earlier decisions, and given that he has lived in that home since his birth. Further, the sale of the matrimonial home would prejudice the Applicant’s ability to claim the relief that she has sought in her Application—namely, an Order that she purchase the Respondent’s interest pursuant to the terms of the Separation Agreement, as amended. The Applicant has an arguable claim to that relief as the Separation Agreement, as amended, has not been set aside and it is far from clear that the grounds raised by the Respondent to have those agreements set aside will succeed. Finally, the Applicant has an arguable claim for exclusive possession of the matrimonial home which is governed by s. 24 of the FLA particularly given the best interests of the child noted above and the fact that joint possession is not an option having regard to the conflict between the parties while they resided together.

[33] For these reasons, I dismiss the Respondent’s motion for the sale of the matrimonial home.

Issue #3: Should the Respondent be permitted to encumber the Matrimonial Home?

[34] Section 23 (b) of the FLA states that

The court may, on the application of a spouse or person having an interest in property, by order,

(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.

[35] It is the Respondent's position is that s. 23 (b)(iii) of the FLA gives this court jurisdiction to dispense with a joint owner's consent to sell or encumber a matrimonial home where a joint owner is "unreasonably withholding their consent." The Respondent relies on Rothschild v. Rothschild, 2019 ONSC 568 as support for his position that the requested relief is available under s. 23 of the FLA. There is no mention of section 23 of the FLA in Rothschild nor was the issue of jurisdiction raised. In that case the moving party brought a motion for interim disbursements. The responding party stated that he did not have the funds to pay interim disbursements and suggested during oral argument that a line of credit be secured against the matrimonial home and that each party be permitted to draw down on this line of credit in order to fund their expenses. The responding party objected to a further encumbrance on the matrimonial home however, in ordering that the parties cooperate in establishing a line of credit secured against the matrimonial home, the court noted that no reason was advanced to explain why it would be inappropriate to grant this relief.

[36] Section 23 (b) of the FLA does not permit a mortgage to be registered on title to the matrimonial home against a joint owner's objection. I agree with the view expressed by Kimmel J. in Nani v. Nani, 2021 ONSC 1368, at paras. 98-100:

When it comes to spouses who jointly own the matrimonial home, the Partition Act, R.S.O. 1990, c. P.4, gives the court jurisdiction to deal with a proposed sale by one spouse where the other objects. I was not directed to any statutory provision that deals directly with the court's jurisdiction to authorize an encumbrance on a matrimonial home over the objection of a joint owner, unless s. 23 of the Family Law Act can be read as such.

The applicant points out that the cases that the respondent relies upon under s. 23 (such as Norris v. Norris, 2016 ONSC 7077, at para. 37, and El Feky v. Tohamy, 2012 ONSC 2749, at paras. 14, 16, and 19) are not dealing with the court's jurisdiction to order the sale or encumbrance over the objection of a titled spouse, but with the implementation or mechanic for implementing an existing order or agreement for the sale or encumbrance. I agree that the cases that the respondent relies on do not address directly the jurisdictional issue that the applicant has raised and that the cases she cites squarely do address.

There appears to be a void in the legislation, in that no one has been able to direct me to any statutory provision that grants the court jurisdiction to permit a mortgage to be registered on title to the matrimonial home (or any property) over one of the joint owner's objection. …

[37] I find that the Respondent has failed to establish that this court has the authority to encumber the property with a further mortgage given that the Applicant opposes this request.

Next Steps

[38] The parties ask that 21 days be set aside for this trial. The earliest available trial date for a trial of this length is May 27, 2024. The Applicant states that she will call seven witnesses over 6 days. The Respondent states that he cannot afford a trial yet seeks to call 17 witnesses. The proposed length of trial appears to have little regard for the considerations described in Rule 2(3) of the Family Law Rules, particularly clauses (b) and (d). As a consequence, I make the orders described below.

Order

[39] Order to go as follows:

1. The parties shall serve and file a jointly prepared Trial Scheduling Endorsement Form by October 17, 2023. This date is peremptory to both parties.
2. A Settlement Conference and Trial Management Conference (“Conference”) shall be held on October 31, 2023 at 2:00 pm. The Conference date is peremptory to both parties.
3. The trial shall commence on May 27, 2024. Any requests to change the date for the commencement of trial shall be addressed at the Conference. Once the parties confirm their availability for the commencement of trial on May 27, 2024 or any other date, then such trial dates are peremptory to both parties.
4. By September 22, 2023, counsel for the parties shall confer to determine what substantive issues to be addressed at trial present the best potential for mediation or, if it is available in the Toronto Region by that time, judicial dispute resolution (See https://www.ontariocourts.ca/scj/practice/binding-judicial-dispute-resolution-pilot/). Each party’s Confirmation form in respect of the Conference shall describe their views on what steps can be taken to settle any part of this case, reduce the number of witnesses, and reduce trial time.
5. By October 6, 2023, each party shall serve and file a draft witness statement, no more than three pages for each of their anticipated witnesses described in the TSEF, other than the Applicant and the Respondent, which provides a meaningful summary of their anticipated evidence at trial.
6. The Respondent’s cross-motion is dismissed.
7. Any party claiming their costs of these motions, shall file their costs submissions with the court by July 31, 2023. Responding costs submissions shall be filed with the court by August 7, 2023. The maximum length of each costs submission shall be no more than three pages exclusive of a bill of costs and any offers to settle.

Mr. Justice M. D. Faieta Released: July 25, 2023