Court File and Parties

Court File No.: FS-09-346560 Date: 2024-08-28 Superior Court of Justice - Ontario

Re: Jong Hyun Kim, Applicant And: Soon Nam Lee, Respondent

Before: Mathen J.

Counsel: J. Lee, for the Applicant K. MacDonald, for the Respondent

Heard: August 28, 2024

Endorsement

[1] The parties attended an Urgent Motion regarding the sale of a home located at 63 Madawaska Avenue, Toronto.

[2] At the conclusion of the hearing, I issued the following order with reasons to follow:

a. The Respondent is authorized to close the sale of the property located at 63 Madawaska Avenue Toronto Ontario (legal desc LT 288 PL 2385 TWP of York, Toronto (N York) City of Toronto) (“63 Madawaska”) in accordance with the agreement of purchase and sale dated July 9, 2024.

b. Pending resolution of the parties’ divorce proceedings, all net proceeds of the sale (total proceeds minus the funds to discharge bank mortgage plus the funds to pay sales commission and other usual costs of sale) are to be held in the vendors’ lawyer trust account.

c. The party who is subsequently awarded costs of this proceeding is at liberty to request from the escrow agent payment of those costs.

d. The Respondent’s request to remove the designation of 63 Madawaska as a matrimonial home is dismissed without prejudice.

e. There shall be an Urgent Case Conference Thursday September 12, at 2 pm.

These are my reasons. Because this was a motion, there are a number of disputed facts about which I am unable to make a finding. Below, I note where the facts remain disputed and where they are either uncontroversial or did not impede me from making a finding.

Background

[3] The parties married in 1985 in South Korea. There are two adult children of the marriage.

[4] The parties disagree about the date of separation. The wife says they separated in 2002 when she emigrated with the children to Canada. The husband says they did not separate until September 2007.

[5] The Applicant husband emigrated to Canada in 2005.

[6] The Applicant is a construction contractor. At one time, he had a successful business in South Korea. He says that the business suffered setbacks during the 2005 global financial crisis.

[7] In 2007 the husband was arrested after a violent altercation at 63 Madawaska. He was charged and, it appears, jailed for some time. The parties do not dispute that he was thereafter subject to a restraining order preventing him from entering the property.

[8] Earlier that same year, the Respondent wife purchased 63 Madawaska and was registered on title as its sole owner. She agrees that the husband lived there for some period in the Spring and Summer but says that it was strictly to perform contract work. It is on the basis of this cohabitation – which the Respondent wife denies constituted a reconciliation – that the Applicant husband argues that 63 Madawaska was the matrimonial home as of his asserted date of separation in September, 2007.

[9] I am not in a position to rule on the date of separation, or whether 63 Madawaska was the parties’ matrimonial home.

[10] On February 24, 2009, the Applicant husband commenced divorce proceedings.

[11] On March 5, 2009, the husband registered on title to 63 Madawaska a designation of the property as the matrimonial home. At the hearing before me the wife acknowledged that she first learned of this many years ago, but she did not give an exact date.

[12] In the meantime, case conferences were held and orders made for the exchange of Affidavits and leave for questioning. The last endorsement of this Court appears to be in 2011 wherein the conference judge noted the lack of progress.

[13] After 2011, nothing much happened with respect to the Divorce Proceedings or corollary relief.

[14] Currently, there is a $325,000 CIBC Mortgage on 63 Madawaska. Her counsel drew my attention to the fact that the Respondent assumed this mortgage in her name when she bought the property and she remains the sole mortgagor.

[15] Sometime in the Spring of 2024, the wife resolved to sell 63 Madawaska due in large part to her fear of rising mortgage payments. I am persuaded that the rise in interest rates meant that the Respondent’s mortgage payments were set to increase considerably.

[16] I am persuaded that the Respondent through her counsel informed the husband or his counsel of the possibility of a sale around this time. I cannot determine whether the husband actually “agreed” to it.

[17] I am persuaded that the house was listed for sale at a price determined with the assistance of a realtor through professional assessment of the overall real estate market and the house’s condition. The wife deposed that the house requires extensive repairs which made it very attractive to consider any offers to purchase without conditions. Her evidence of the house’s poor condition was not contradicted by the husband.

[18] I am persuaded that the wife sold 63 Madawaska on the open market after it was listed on MLS, following a number of showings and at least one open house.

[19] The house was sold, as is, for $1,103,880. An Agreement of Purchase and Sale (“APS”) was entered into on July 10, 2024.

[20] Prior to the sale, the wife did not discuss with the husband details of the listing, who would be the broker or the negotiations between her and the buyer.

[21] On July 12, 2024, the wife notified the husband that an APS had been reached.

[22] On July 22, 2024, husband’s counsel’s office emailed the wife asking for particulars. I am satisfied that Respondent’s counsel sent what particulars were available at that time.

[23] On July 28, the wife and the buyer agreed to amend the APS to move up the closing date from September 9 to August 8.

[24] On August 2, wife’s counsel emailed husband’s counsel several times about lifting the matrimonial home designation. I am persuaded that no response was received.

[25] On August 8, the parties to the sale agreed to move the closing date to August 29.

[26] According to the husband, he contributed significantly to 63 Madawasksa. Indeed, notwithstanding that the wife took out a mortgage, he argues that he provided almost all of the financing.

[27] The husband states that he and the wife were in negotiations to resolve their divorce and corollary issues. These negotiations were carried out between the Respondent and a mutual friend, H.S.R. According to the husband, he and the Respondent wife agreed that he would receive $1 million. He then made efforts to secure a signed Separation Agreement.

[28] Essentially, the husband claims to have been blindsided by the subsequent sale of 63 Madawaska. He says he has additional claims to properties not registered in the Respondent’s name but held for her benefit by third parties, such that he is due an unequal division of family property. He further claims that his consent was required before the wife entered into the APS.

[29] The husband has not produced sworn evidence that he will be prejudiced should the house be sold at the agreed-upon price with the net proceeds to be held in trust. At the hearing, his counsel argued that he believes that the house is being sold for approximately $200,000 less than fair market value. But he provided no supporting evidence for this claim.

[30] The Respondent wife seeks an order authorizing the sale, and an order lifting, removing or cancelling the designation of 63 Madawaska as a matrimonial home.

The Law

[31] Section 20 of the Family Law Act, R.S.O. 1990, c.F.3 permits either or both spouses to designate property as a matrimonial home in the form prescribed by the Regulations: R.S.O. 1990, c.F.3 (“Family Law Act”).

[32] A designation of a matrimonial home as that home is defined under the Family Law Act does not create an interest in the land for a non-titled spouse: Manufacturers Life Insurance Co. v. Riviera Farm Holdings Ltd., 1998 ONCA 1481.

[33] Section 21 of the Family Law Act states that no spouse shall dispose of or encumber an interest in a matrimonial home unless, inter alia, by court order.

[34] Section 23 of the Family Law Act grants the Court the following powers respecting alienation:

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. R.S.O. 1990, c. F.3, s. 23.

(emphasis added)

[35] The Court may permit the sale of a matrimonial home if a sale balances the prima facie right of a titled party to that sale with the correspondent obligation to consider whether a sale would prejudice the rights of a party resisting sale: Scanga v. Scanga, 2023 ONSC 3592.

[36] The provisions of section 23 most pertinent to this motion are subparagraph (b)(iii) and subparagraph (e). Given that, the relevant questions are:

a. Can 63 Madawaska’s designation as a matrimonial home be cancelled under section 23(e) of the FLA?

b. If the answer to (a) is “no”, may I nevertheless authorize 63 Madawaska to be sold under section 23(b)(iii) of the FLA on the basis that

i. the Applicant is withholding his consent unreasonably; and

ii. The Applicant will not suffer prejudice that outweighs the wife’s right, as the sole titled owner, to the sale?

Analysis

Designation

[37] The parties disagree on whether 63 Madawaska is the matrimonial home. They have presented some sworn testimony and other documents to support their respective arguments.

[38] Section 23 (e) of the FLA is clear. I can only cancel a designation if the property is not a matrimonial home.

[39] On the record presented, I am unable to make such a finding. Absent negotiation, this issue will require a separate motion or a trial to resolve.

[40] Accordingly, the Respondent’s request that I cancel the matrimonial home designation registered on title is dismissed.

[41] Given that the designation remains a live issue, the parties shall attend an urgent case conference on September 12 at 2 pm.

[42] My conclusion about designation does not prevent me from dealing with the sale itself, however.

Authorizing the sale

[43] I take as my starting point the fact that the husband objects to the sale of 63 Madawaska precisely on the basis that it is the parties’ matrimonial home.

[44] There is no dispute that the Respondent wife is the sole registered owner on title. As such, the husband’s interest in 63 Madawaska relies on the provisions respecting a matrimonial home set out in the FLA.

[45] A non-titled spouse has a special interest in the matrimonial home. The Court is required to consider those interests in matters affecting the property’s disposition.

[46] However, a non-titled spouse does not have a veto on all future dispositions of that home. Section 23 clearly contemplates situations in which a matrimonial home may be sold even if the non-titled spouse does not consent.

[47] Two questions must be answered before permitting a sale under section 23(b)(iii). First, is the non-titled spouse (the Applicant) withholding such consent unreasonably? Second, and very much linked to the first question, would a sale cause him any prejudice?

[48] The husband’s position at the hearing was that he has been or will be prejudiced for two reasons:

a. He was not involved in the negotiations leading up to the sale.

b. He has outstanding property claims against the Respondent which would be negatively affected by a sale of 63 Madawaska. In effect, he would lose his leverage.

[49] I do not accept the Applicant’s reasoning.

[50] First, as a non-titled owner, the husband had no standing to participate in the sale of the home. The parties did not negotiate terms for such participation. I note that since 2011 the husband made little effort to move his Application forward.

[51] Second, I am not persuaded that the parties were engaged in broader negotiations in the Spring such that the wife was enjoined from disposing of 63 Madawaska, particularly if that sale protected the husband’s asserted interest.

[52] I accept Respondent counsel’s argument that the husband told the wife that he would sign a settlement only if she would give him the entire monetary value of the home. At that point, I am persuaded, the Respondent wife stopped negotiating.

[53] Even if I accept that such negotiations had been ongoing, the husband’s position appears to be that he was entitled to withhold consent to 63 Madawaska’s sale as a bargaining chip. The Applicant provided me with no statutory or judicial support for this proposition.

[54] I am bolstered in this conclusion by the fact that the record at present does not substantiate the husband’s expansive claims of what else the wife owes him. His allegations largely rest on bare assertions that require greater testing than is possible on this motion.

[55] I accept the Respondent wife’s argument that the surrounding circumstances and proposed conditions for the sale eliminate any possible prejudice. In particular:

a. There are no dependent children whose benefit or future support must be considered.

b. The net proceeds of sale will be held in trust pending the resolution of the divorce and corollary issues.

c. There is no evidence that the purchase price failed to reflect fair market value.

[56] Aside from the husband’s claim regarding what he might be owed from the sale of 63 Madawaska, he offered no other objection to the sale, and no argument at all against the safeguard of putting the net proceeds of that sale into trust. Even if the husband’s equalization or other claims are entirely vindicated, they are not imperiled by the sale of 63 Madawaska. The monies (subject to any costs for this motion) will be held in trust pending resolution of the parties’ divorce.

[57] I therefore find that (a) the husband is withholding his consent unreasonably because, among other things, (b) the sale of 63 Madawaska will not prejudice his interest in the property.

Costs

[58] At the conclusion of the hearing, I asked both counsel to submit bills of costs.

[59] The Respondent wife has prevailed in her request for an order authorizing the sale to proceed. She did not prevail in lifting the designation registered on title of 63 Madawaska as the matrimonial home. The Respondent claimed that this issue was not really canvassed due to time constraints. I disagree – it was requested in the notice of motion and received some attention at the hearing.

[60] Nevertheless, the Respondent achieved in large part what she was seeking.

[61] I have reviewed both bills of costs. The Applicant’s bill is $10,616.35. The Respondent requests $29,135.01 which represents 80% recovery (full bill $36,418.77). Both parties catalogued work almost exclusively between August 9 and August 27.

[62] The Rules do not require the court to allow the successful party to demand a blank cheque for their costs (Slongo v. Slongo, 2015 ONSC 3327). The court retains a residual discretion to make costs awards which are proportional, fair and reasonable in all the circumstances (M. (C.A.) v. M. (D.), supra; Scipione v. Scipione, 2015 ONSC 5982).

[63] In this case, I find the amount billed by the Respondent to be very high for a one-hour motion that was not especially complex. Having said that, I acknowledge that counsel is very senior, and incurred interpretation expenses for his client who speaks little English.

[64] Due to the amount of costs being claimed by the Respondent, and the somewhat divided success, I find it appropriate to award costs of $15,000. This is higher than what I have observed for other regular motions, but is appropriate given counsel’s seniority and other disbursements.

Order

[65] As a companion to my order reproduced at paragraph [2] of these reasons, the Applicant shall pay to the Respondent $15,000 inclusive of HST and disbursements. I repeat for clarity that the Respondent is at liberty to request from the escrow agent payment of those costs from the net proceeds of sale.

Mathen J. Date: August 28, 2024