Court File and Parties
Court File No.: FS-23-0003839-0000 Date: 2024-10-10 Ontario Superior Court of Justice
Between: Elizabeth Gomes, Plaintiff – and – Michael Gomes, Defendant
Counsel: Alan Honner & Nicholas Smith, for the Plaintiff Eva Janta, for the Defendant
Heard: August 8, 2024
Before: Rhinelander J.
Reasons for Decision
[1] A motion was heard August 8, 2024, for the sale of the Matrimonial Home (“Home”), located in Toronto, Ontario. The Respondent seeks to have the home listed for sale within 30 days, and for the net proceeds of sale to be held in trust by a lawyer of his choosing until released by a signed agreement or court order. The motion is opposed by the Applicant.
Background
[2] The parties commenced living together in 2005 and were married September 6, 2008. There are two children of the marriage, Cruz (15 years) and Jax (12 years). The parties separated March 19, 2022. Both children reside with the Applicant in the Home.
[3] The Respondent remained responsible for the entire mortgage payment from separation until February 26, 2024, the date of the DRO conference. Since then, the Respondent has contributed 50% of the mortgage $1,112 and child support of $1,178 monthly.
[4] The Respondent has incurred significant debt during the marriage and since separation and is unable to afford the expenses and the mortgage on the Home. The Respondent estimates the value of the Home as $998,000. There is an outstanding mortgage of approximately $225,000.
[5] The Respondent offered the Applicant the option to buy out his share of the Home so she can remain in the house with the children. The Applicant has not made an offer to date. It is her position that prior to a buyout, equalization and spousal support need to be determined. The Respondent owns a trailer and has a pension. It is his belief that equalization will not cover the cost of a buyout.
[6] The Applicant has not worked since the birth of Cruz. She argues her skillset is outdated as she received her training in 1997 and would require significant updating. The Applicant has applied to the Toronto District School Board for a position as a custodian. In the interim, she has assisted a friend in her housecleaning business.
[7] The Applicant would like to buyout the Respondent’s share of the Home; however, she believes the value of the Home is significantly less due to recent damage, and electrical issues.
[8] The Applicant argued she had been further hindered in making any offers due to protracted and delayed financial disclosure of the Respondent. The Respondent failed to disclose he had a pension on his initial financial statement and the Applicant only received its valuation two weeks before this motion was heard.
[9] It is her position the Respondent booked this motion in advance of providing important financial disclosure and has not given her adequate time to receive a response from her mortgage broker.
[10] The Applicant confirmed her parents would assist in co-signing a mortgage and she was awaiting approval from the mortgage broker at the time of this motion.
[11] A monthly mortgage would be far less than current rental prices for a three-bedroom apartment in the area. It would be in the children’s best interests to remain in the Home.
[12] Lastly, the Applicant argued the Respondent failed to plead a claim for the sale of the Home under the Partition Act in his Answer or in his Notice of Motion, and therefore, the motion should be dismissed on that ground alone.
Issues
[13] This motion raised the following issues:
- Can the Respondent rely on the Partition Act to compel the sale of the Matrimonial Home given he did not plead this in his original claim?
- If so, should this Court order the sale of the Matrimonial Home?
Relevant Principles
[14] In Mignella v. Federico, 2012 ONSC 5696, Price, J. dismissed the Applicant father’s motion for the sale of the matrimonial home pending trial as he did not apply pursuant to the Partition Act and had not raised an issue as to the ownership of the home.
[15] In Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., 2019 ONCA 6 the Ontario Court of Appeal ruled that motion judges must read pleadings generously to allow for drafting deficiencies, particularly where a party pleaded facts sufficient to support a cause of action or a defence but did not specifically mention the cause of action of the defence in question.
[16] 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 (ONCA); 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 (ONCA). 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 (ONCA); 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 Gigli, 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?
Analysis
1. Can the Respondent rely on the Partition Act to compel the sale of the Matrimonial Home given he did not plead this in his original claim?
[17] The Respondent did not specifically set out the words “the Partition Act” or section 2 of said Act in his notice of motion or in his Form 10 Answer. Nor did the Respondent check off box 26 “sale of family property” in paragraph 8 under “Claims relating to property” in his Answer. The Respondent did, however, clearly state in that same paragraph where the Respondent is asked to “give details of the order that you want the court to make”, under the sub-heading property, at sub-paragraph 10, request “An order that the Applicant either buy out the Respondent’s interest in the matrimonial home or that the matrimonial home be sold”. That is the substance of this motion and the arguments put forward.
[18] Following the Ontario Court of Appeal to read the Respondent’s pleadings generously, I find that he did set out his intention for the Applicant to either buy out his interests or for its sale, which would be pursuant to s.2 of the Partition Act.
2. If so, should this Court order the sale of the Matrimonial Home?
[19] The Respondent argued he has a prima facie right to the sale of the Home and it is the Applicant who bears the onus to establish that there is a sufficient reason, recognized in law, why the court should exercise its discretion to refuse a sale. He argued it is the parties’ most valuable asset and he is unable to continue making the mortgage payments, child support, debts accumulated during the marriage, and a second household.
[20] Offers to have the Applicant buyout his portion have gone unanswered and the likelihood of the Applicant being able to afford or be approved for a mortgage have little, if any chance of success.
[21] The Applicant argued the children have lived in the Home for most of their lives and it is the only home they remember. It is located minutes from each of their schools and is within proximity of friends and family members.
[22] Her position is a sale of the Home will prejudice her rights in this application. She argued she has a claim for spousal support, prospectively and retroactive to the date of separation. Further, there are child support arrears as the Respondent deliberately reduced his income in 2023 to not pay child support.
[23] A Court’s discretion to refuse partition and sale is a narrow one and should only be denied if it is the result of malicious, vexatious, or oppressive conduct. The Applicant must establish she would be prejudiced by the order, either because she has an order for exclusive possession or because her claims at trial will be prejudiced by an immediate sale. Copeland v. Copeland, 2017 ONSC 4475.
[24] As set out in Allard v. Sylvain-Allard, 2015 ONSC 2052, at para. 13, partition and sale will not be refused when it is opposed based on whether one party may be in a position, after equalization, to buy out the interest of the other. See also [Paganelli v. Paganelli, [2002] O.J. No.2705](Paganelli v. Paganelli, [2002] O.J. No.2705) at paras. 6 and 14.
[25] The Applicant seeks to rely upon an equalization payment to set that entitlement off against the Respondent’s share of the equity in the home. She is now in possession of the valuation of his pension and was awaiting approval from a mortgage broker. If this proposal is viable, that is the best course in the circumstances.
Conclusion
[26] Having considered the above principles in my analysis, I 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.
[27] I am not satisfied the Applicant has discharged her onus in establishing why the Court should exercise its discretion to refuse an Order for the sale of the Home. However, because the potential viability of the Applicant to purchase the home may be available, the sale should be delayed as set out below to allow proper consideration of that option.
[28] Order to go as follows:
i. If the parties have not already done so, the parties shall immediately arrange to renew/remortgage the matrimonial home under an Open Mortgage, as the mortgage came due September 2024. ii. The parties shall cooperate and execute all necessary documents to affect the renewal/remortgage, until such time as a buy-out of the Home occurs pursuant to the terms set out below, or the house is sold. iii. The parties shall obtain an up-to-date comparative market analysis of the Home within two (2) weeks of this Order. iv. The parties shall agree to the value of the home (for the purpose of the buy-out) upon the recommendation of the real estate agent who prepared the comparative market analysis. v. If the parties are unable to agree on a real estate agent to prepare the comparative market analysis, the parties shall each submit three names to my attention via the Family Trial Office no later than Friday, October 18, 2024, by 12:00 p.m. and I shall randomly choose a name from the three names. vi. The Applicant shall secure financing to affect the buy-out of the Home and shall provide a copy of the Mortgage Loan Commitment (not a pre-approval), fully executed by the Applicant and the lender, no later than November 15, 2024. vii. If the Applicant is unable to secure financing to affect the buy-out of the Home, the parties shall enter and sign a listing agreement with the mutually agreed upon real estate agent no later than Friday, November 15, 2024. viii. 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. ix. The parties shall be responsible to cover any costs for repairs/staging as agreed upon and shall be reimbursed for such expenses from the net proceeds of the sale of the property. x. 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. xi. 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. xii. The parties shall accept any reasonable offer in relation to the property. xiii. The parties may bring a motion on short notice regarding the listing or sale of the matrimonial home before me if required. xiv. If the parties are unable to resolve the issue of costs, which they are encouraged to do as both achieved some level of success on this motion, they may serve and file written costs submissions by October 25, 2024, by 5:00 p.m. Costs submissions shall not exceed two pages, typed, and double spaced exclusive of the bills of costs.
Rhinelander J. Released: October 10, 2024