Court File and Parties

COURT FILE NO: FS-21-00022472-0000 DATE: 2024-05-13

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

J.T. Applicant – and – R.F. Respondent

Counsel: Jaret Moldaver / Lindsay Konkol, for the Applicant Kristen Normandin / Hannah Lank, for the Respondent

HEARD: April 18, 23, and May 9, 2024

RHINELANDER, J.

Reasons for Decision

[1] The Applicant brought a motion for the sale of the jointly owned matrimonial home, located in Toronto, Ontario, in accordance with sections 2 and 3(1) of the Partition Act, and in accordance with the Family Law Act.

[2] As part of the motion, the Applicant requested an Order for terms regarding the sale of the home including but not limited to the listing agent, timelines for the signing of the agreement, showings, and distribution of the net sale proceeds.

[3] The Respondent is opposed to the sale of the home at this time, and requests the motion be dismissed with costs payable to her.

[4] It was agreed by the parties that the issue relating to the distribution of the net sale of the proceeds was not urgent and could be determined later.

[5] On May 2, 2024, I ordered the sale of the matrimonial home with reasons to follow. I also invited the parties to appear before me to address issues regarding the listing and sale of the property. These submissions were heard on May 9, 2024, the following are my reasons for ordering the sale of the matrimonial home and terms regarding the sale of the home.

Procedural History of this Motion

[6] This motion was deemed urgent at a case conference heard on April 5, 2024. There is a history to this motion that needs to be addressed that adds to the urgency.

[7] The Royal Bank of Canada holds the mortgage for the property. The mortgage and property taxes are currently in arrears. The RBC sent notices regarding the mortgage arrears on or about November 9, 2023. The Applicant acknowledged receiving the notices, the Respondent does not.

[8] The RBC commenced an action against both parties regarding the mortgage arrears, interest on lines of credit, and credit cards. The parties were served with a Statement of Claim on January 31, 2024. Per the Statement of Claim, the parties owe the following: 1) $1,843,443.62 (principle on the mortgage) plus interest; 2) $51,143.43 plus interest (line of credit held jointly); 3) $41,079.87 plus interest (line of credit held jointly). Further, the claim seeks $9,865.11 plus interest for a credit card held solely by the Respondent, and a further $10,269.97 plus interest for a line of credit held solely by the Applicant.

[9] The Applicant was served with a Notice of Sale dated February 13, 2024.

[10] Through counsel, the Applicant requested consent to list the home for sale on January 5, 2024. Counsel for the Respondent (not current counsel) did not respond. On January 25, 2024, and February 1, 2024, the Applicant sought availability from the Respondent’s counsel to schedule a motion for partition and sale of the home. Counsel advised they had no availability. Shortly after this response, the Respondent’s counsel advised new counsel would be coming on board and it was their position the motion to sell the home was not urgent. The Applicant was advised the Respondent had taken steps to address the mortgage arrears. Unfortunately, contrary to the Respondent’s belief, the RBC had not accepted her recent payment effort or agreed to pause the civil proceedings.

[11] The matter was addressed at a “to be spoken to” appearance on March 4, 2024, and the motion was scheduled for March 26, 2024. Due to unforeseen circumstances, the Court was unavailable to hear the motion and it was rescheduled for April 2, 2024. Unfortunately, with the Easter long weekend and court closures, confirmation of the motion was not filed as required, and the matter was removed from the motion list.

[12] A case conference had previously been scheduled for April 5, 2024. This issue was further conferenced on that date and the motion rescheduled for April 18, 2024. Responding materials were required to be filed by April 11, 2024. The Respondent discharged her counsel after the case conference. She retained new counsel on April 15, 2024. As a result, the filing deadline was not met. Present counsel for the Respondent did not obtain the file until April 17, 2024, and best efforts were made to file a response and a factum that same day in advance of this motion.

[13] On April 18, 2024, counsel for the Respondent requested a brief adjournment to permit her time to review the file and prepare any additional materials that may assist on this motion. A short adjournment was granted. The motion was rescheduled for Tuesday, April 23, 2024, and was marked peremptory to the Respondent. This is the third counsel for the Respondent this year.

Background

[14] The parties were married for over 28 years and separated March 29, 2022. The Applicant has not resided in the matrimonial home since that date. The Respondent continued to reside in the matrimonial home with the parties’ two youngest children, ages 12 and 16. The two eldest children are independent and self-sufficient.

[15] Between March 29, 2022, and June 2023, the Applicant continued to cover the costs related to the matrimonial home on a without prejudice basis which included the mortgage, hydro, Enbridge, alarm, insurance, and a portion of the property taxes. The mortgage was $8,833.38 per month. The mortgage has been in default since July 7, 2023.

[16] The Applicant ceased covering these expenses in June 2023, and commenced paying child support in the amount of $6493 per month and various section 7 expenses including tuition fees of $30,000 for one of the children on a without prejudice basis. The Respondent disagrees with this assertion and states the child support payments did not start until August 2023.

[17] The Respondent’s position is the Applicant’s contributions to the household expenses were in lieu of spousal support. As a result of his unilateral decision to stop these payments, it became the Applicant’s responsibility to carry the costs of the matrimonial home. It is clear this was not done as the mortgage fell into arrears.

[18] The Respondent argued she has made every effort to bring the mortgage into good standing after the Applicant stopped paying. This included communicating with RBC about her plan to pay the arrears and maintain the mortgage moving forward. Unfortunately, this is a case of “too little, too late”. The Respondent took no steps to inquire about the mortgage or its payments for eight months. She stated the first she became aware of the arrears was when her credit card was inoperable, having been frozen by the bank.

[19] She was advised in writing, on two separate occasions, of the Applicant’s decision to no longer contribute or over the household expenses. Despite being aware that the Applicant was no longer covering the household expenses effective June 6, 2023, the Respondent took no steps and made no inquiries of the RBC regarding the mortgage until 2024.

[20] On January 26, 2024, the Respondent authorized a payment of $20,000 towards the mortgage arrears and offered a further four payments of $8,250 per month. By this time, the RBC had initiated Power of Sale proceedings and insisted on the arrears being paid in full in addition to the outstanding property tax arrears. The total of both arrears at the time of this hearing, was approximately $110,000.00.

[21] The RBC has issued a Statement of Claim against the parties as joint defendants regarding the mortgage arrears, interest on lines of credit, and credit cards. The parties have both served Statements of Defence. The Respondent has also filed a counterclaim seeking damages and an order directing the mortgage to be vacated from title to the matrimonial home, among other claims, and a counterclaim against the Applicant for damages and other relief.

[22] The Respondent maintains it is not in the best interests of the children to sell the matrimonial home. She argues the children have been subjected to a great deal of stress because of the family court proceedings. The children have friends in the neighbourhood and want to stay in the home. Further, the Respondent expressed concern regarding her ability to secure new accommodations because of damage to her credit score.

[23] The Respondent maintains the sale of the matrimonial home is premature and the parties have not resolved their financial issues. Further, the sale will prejudice her claim under the Family Law Act. The Respondent’s motion for spousal support is scheduled for August 8, 2024. If successful on her motion, it is her position she will be able to remain in the home with the children. Further, the Applicant will likely owe her an equalization payment and approximately $200,000 for retroactive child and spousal support and other post-separation expenses. It is her belief that once the financial issues are addressed between the parties, she will be able to buy out the Applicant and maintain the residence.

[24] If the Court is to order the sale of the matrimonial home, the Applicant seeks to use a real estate agent that was appointed via an arbitral hearing during an earlier separation; the Respondent is opposed and seeks to utilize the services of a realtor of her choice.

Analysis

[25] In Dhaliwal v Dhaliwal 2020 ONSC 3971 at paragraph 16, Justice Pazaratz, summarized the applicable legal principles as follows:

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 (SCJ). 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 (SCJ); Marchese v. Marchese 2017 ONSC 6815 (SCJ); Jama v. Basdeo 2020 ONSC 2922 (SCJ); Davis v. Davis; Brienza v. Brienza 2014 ONSC 6942 (SCJ). 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 Doucett 2020 ONSC 3386 (SCJ). d. The other joint tenant has a corresponding obligation to permit the sale. These are fundamental rights flowing from joint tenancy. Steele v Doucett. 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 (SCJ). 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), 1 O.R. (3D) 436 (ON CA); Jama v. Basdeo; Steele v Doucett. g. Each case must be considered on its own facts. The court must consider all relevant factors in exercising its discretion. Davis v. Davis, [1954] O.R. 23 (C.A.); Steele v Doucett. 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), 2 O.R. (2d) 713 (ON CA). 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 (SCJ); Latcham v. Latcham (2002), 27 R.F.L. (5th) 358 (ON CA); Dulku v. Dulku 2016 CarswellOnt 16066 (SCJ). 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 (SCJ); Giglio v Giglio 2015 ONSC 8039 (SCJ); Keyes v. Keyes 2015 ONSC 1660 (SCJ). 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 (SCJ); Kaing v. Shaw 2017 ONSC 3050 (SCJ). 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 (SCJ). 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. 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 (SCJ). 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. Nor can it give either joint tenant a right of first refusal. Dibattista v. Menecola. 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 (SCJ). 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?

[26] I have considered the above principles in my analysis and am cognizant that courts must examine the individual facts in each case when considering the sale of the matrimonial home. Courts should carefully examine all the circumstances before deciding on the sale of the matrimonial home where there is no final determination, specifically those regarding financial issues and equalization payments. The Respondent relied on R.L. v. M.F., 2022 ONSC 1677 in addition to other cases for why this Court should not order the sale of the matrimonial home, however, the facts in each case are different and distinguishable.

[27] The Respondent asserted she has sufficient assets to bring the mortgage into good standing and could continue to make the payments with proper spousal support from the Applicant. However, there was no evidence before me the bank will agree to allow the arrears to be paid and the mortgage to remain in place. The bank has called in payment on the entire mortgage, and no evidence was presented to establish the Respondent would qualify for a new mortgage required for the home and that retaining it is financially feasible.

[28] The Respondent estimated the Applicant owes her approximately $200,000. Based on the Spousal Support Advisory Guidelines, she estimated her entitlement up to $4560 per month. On a without prejudice basis, the Applicant has been paying monthly child support of $6493. The Respondent’s income is approximately $285,000, and she has RRSPs of approximately $350,000.

[29] The estimated value of the matrimonial home ranged from $4.1 to 4.6 million. The outstanding mortgage is $1.8 million plus legal fees and administrative costs. In a best-case scenario situation for the Respondent, if i) the house sold for 4 million (lower than priced); ii) the Applicant owed $1M in equalization, providing the Respondent with $2,000,000 in equity to be used as a deposit; she would still need to qualify for a $2,000,000 mortgage. The current mortgage was negotiated in 2016, when interest rates were lower, and the current monthly payment is over $8000.00 for a lesser total mortgage. I appreciate other factors need to be considered but nothing was proffered.

[30] Inquiries were made by the Court what evidence there was that even in a best-case scenario whether the Respondent would be in a financial position to afford and continue to maintain the home. It was submitted this was not an issue for today. But it is. On a best-case scenario, the home is beyond the financial means of the Respondent.

[31] In determining whether to order the sale of the matrimonial home, I must take a realistic view of all potential impacts of a sale. Where the financial circumstances are such that a sale is inevitable, there is little justification for delaying the sale. In this case, the bank has commenced proceedings to take possession of the home and it is only a matter of time before the bank seeks a summary judgment [^1].

[32] Requiring the sale of the matrimonial home, provides the parties an opportunity to control the process and protect their most valuable asset by obtaining the best price. It is trite to say that the interests of the bank are not the same as the parties.

[33] An Order for the sale of the matrimonial home does not preclude the Respondent from seeking financing elsewhere and/or making an offer to purchase the home. The onus is on the party resisting the sale to demonstrate a legitimate claim would be prejudiced. In so doing, the party must also demonstrate that maintaining the home is financially feasible.

[34] In this case, I found the sale of the home to be inevitable and there was no basis to delay it any further.

[35] Given my order for the sale of the matrimonial home, further submissions were heard relating to the sale of the property.

[36] The Applicant maintained the parties should use the real estate agent who was appointed during their first separation. The Respondent is opposed.

[37] The parties had separated on one prior occasion and had entered into a Temporary Separation Agreement. Subsequently, the parties reconciled and agreed to terminate all previous court Orders on consent effective December 3, 2021. Therefore, any prior agreements or orders are no longer in effect and neither party is bound by those earlier agreements or orders.

[38] I advised the parties if they were unable to agree on a listing agent, to provide me with a list of not more than three names by May 13, 2024, and I would decide. Fortunately, the parties were able to agree on the listing agent.

[39] During submissions on May 9, 2024, the parties agreed to follow the advice of the listing agent regarding: a listing price; acceptance of all reasonable offers; to listen and follow the recommendations of the listing agent regarding repairs and staging of the house; the Applicant will cover costs that are not covered by the listing agent up to $10,000 and will recover the amount spent from the sale of the home; cleanliness, upkeep, and tidiness of the home; notice for showings and open houses; and the use of a “For Sale” sign.

[40] A party who wishes to prepare a formal order for approval and issuance may do so and submit materials to the Family Trial Office or my judicial assistant to my attention. The Draft Order shall include the full address of the matrimonial home and any other information that has not been included in my reasons to protect information that may otherwise compromise the sale of the property.

[41] The following endorsement is effective from today and is enforceable as an order of the court. Therefore, the following is Ordered:

a. The matrimonial home shall be listed for sale as soon as possible. b. The parties shall enter and sign a listing agreement with the mutually agreed upon real estate agent no later than Thursday, May 16, 2024. c. The parties shall do all things necessary to facilitate the marketing and sale of the property as directed and/or advised by the listing agent, including whether to use a “For Sale” sign. d. The Applicant shall be responsible to cover any costs not covered by the agent regarding repairs/staging up to $10,000.00 and shall be reimbursed for such expenses from the net proceeds of the sale of the property. e. The net proceeds of sale after payment of registered encumbrances, outstanding taxes, and legal fees, shall be held in trust pending further court order or written agreement between the parties. f. The parties shall follow the advice of the listing agent regarding the listing date and any closing date included in an offer to purchase. The parties shall not be unreasonable regarding any closing date that could jeopardize the sale of the property. g. The parties shall accept any reasonable offer in relation to the property. h. The parties may bring a motion on short notice regarding the listing or sale of the matrimonial home if required. i. If the parties are unable to resolve the issue of costs, the Applicant shall serve and file his written costs submissions by June 3, 2024; the Respondent’s response shall be served and filed by June 17, 2024; and any reply shall be served and filed by June 24, 2024. Costs submissions shall not exceed two pages, typed, and double spaced exclusive of the bills of costs.

[^1]: As submissions were being completed on May 9, 2024, the parties received notification the RBC has requested the matter be set down for summary judgement.

Rhinelander J. Date: May 13, 2024