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Cottages as Matrimonial Homes – It Can Get Complicated

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Cottages as Matrimonial Homes – It Can Get Complicated

With the recent improvement in the weather, it seems my mind is on cottages lately. I have written before  that matrimonial homes enjoy special legislated protection under Ontario family law. I have also written about how second homes and often-used cottages – and sometimes even sailboats can sometimes satisfy the legal requirements for what constitutes a “matrimonial home” in some cases.

Sometimes the status of a particular property falls into the “grey zone”, or separated/divorcing spouses may disagree as to whether it should be included as part of their matrimonial home. In such cases it may be necessary to go to court to get a declaration one way or the other.

The recent case of Logotech v. McConnell included this kind of application – but it was actually a lender who dragged the married couple to court to get the declaration. This is because there were several other elements in the mix, namely: the lender, a failed investment, a mortgage in default, a looming power of sale, the husband’s bankruptcy, and an injunction application. All of this “thickened the plot”, legally speaking.

The husband had mortgaged certain Muskoka cottage property he owned as part of a family compound of several cottages. To do so he swore a declaration – which the court later concluded was likely false – to the effect that the properties were not occupied by him and his wife as family residences, and that a different property had been designated as a matrimonial home. This technically eliminated the need to get his wife’s written spousal consent to the cottage mortgage, so it was all arranged without her knowledge.

When the husband allowed the mortgage to go into default, the lender asked the court to declare the cottage excluded from the “matrimonial home” designation, so that it could take unimpeded steps to enforce it security by way of power of sale. It also asked for an order forcing the couple to give up possession.

The wife resisted, and in fact asked the court for an injunction to stop the lender’s mortgage enforcement process until the entire matter could be brought to a full trial.

The court looked at the facts, and found many of them in dispute. Contrary to the husband’s sworn declaration, there was actually strong evidence that the family regularly used the cottage during both the summer and the winter each year since 2002. There was also strong evidence that the lender knew the property was a cottage and was used as such. Finally, the validity of the lender’s mortgage was up for debate, they had been arranged by the husband without the wife’s knowledge and without the spousal consent as required by law.

As part of applying the test for an injunction, the court remarked that the wife would naturally suffer irreparable harm if she had to give up possession, pre-trial, of a property in which she likely had a legal interest. When viewed in the balance against the risk of harm to the lender if the injunction is not granted, it was evidence that the wife faced a much more severe risk of harm.

The court granted the wife’s request for injunction, which prevented the lender from taking mortgage enforcement steps, and ordered that the question of whether the cottage was a matrimonial home should be fully explored at trial. The validity of the mortgages would also be given scrutiny by the court at that time.

For the full text of the decision, see:

Logotech Inc. v. McConnell, 2012 ONSC 4386

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us our main site.