Skip to content

Posts from the ‘Matrimonial Home’ Category

Even Judges Get it Wrong Sometimes

Even Judges Get it Wrong Sometimes

A few weeks ago, I wrote about a case called Butty v. Butty. This was a decision by Justice Pazaratz in which he considered how the parties’ separation agreement, which was intended to exempt the husband’s farm property from the normal property-equalization regime, should be interpreted after it came to light that the husband owned two separate parcels of land, rather than one as originally thought.

At trial, Justice Pazaratz had declared the separation agreement invalid, and set it aside for what he concluded was the husband’s failure – and the failure of his lawyer – to disclose the existence of the two properties. The husband’s property was then divided in keeping with the usual Family Law Act rules, notwithstanding what the parties’ separation agreement may have intended.

The husband appealed, successfully. The Court of Appeal disagreed with Justice Pazaratz’s assessment of the facts as to the alleged lack of disclosure, and reversed his ruling. For one thing, it found that the judge had been highly critical of the husband’s trial lawyer, Mr. Jaskot, accusing him of suppressing facts and deliberately misleading the court and opposing counsel. The Appeal Court found these accusations unwarranted, writing:

As we have mentioned, the trial judge believed that Mr. Jaskot tried to hide the fact that there were two separate properties. In his reasons for decision, he describes Mr. Jaskot as having purposely suppressed information in an attempt to mislead opposing counsel and the court into believing that the farm property was a single parcel of land.

In light of the foregoing evidence, this characterization of Mr. Jaskot is completely unfounded. Opposing counsel and the court had documents clearly showing that the farm property consisted of two separate properties.

As a result of the reasons for judgment, Mr. Jaskot has suffered unwarranted personal and professional embarrassment.

And rather than lay blame on the husband’s lawyer for hiding the information, the Appeal Court found that the parties actually shared in the mistaken initial belief that the there was only one piece of property at stake.   After noting that Justice Pazaratz could have easily remedied the procedural fallout from the parties’ mutual misapprehension at the trial itself, the Appeal Court said:

This court cannot truly repair the damage that Mr. Jaskot has suffered. Having said that, its comments are intended to serve as an unequivocal statement that there was nothing improper in his conduct in this matter. We regret what appears, on this record, to be unwarranted judicial criticism levied against him.

Next, the Appeal Court found that the parties’ mutual misapprehension did not detract from a key fact: The wife was aware that the separation agreement was designed to circumvent the normal property-division scheme under the Family Law Act, and that she was giving up all her claims to the entire tract of property, whether consisting of one lot or two. The Appeal Court also observed that the wife had not been under duress when she signed the agreement, and had received independent legal advice (which she did not heed) before doing so.

Based on this and other errors by Justice Pazaratz, the Appeal Court restored the parties’ separation agreement, and proceeded to divide their property in accord with its express terms.

For the full text of the decision, see:

Butty v. Butty, 2009 ONCA 852 (CanLII)

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 at RussellAlexander.com

 

Two Properties, or One? Justice Pazaratz Sorts It Out – For Now

Two Properties, or One? Justice Pazaratz Sorts It Out – For Now

Here’s another noteworthy ruling by Justice Pazaratz – and one that was ultimately reversed on later appeal. Written in his inimitable style, the judgment begins this way:

You wouldn’t think the singular or plural should be so complicated.

Property.

Properties.

The same word. Add an “s”.

You really wouldn’t think that in a nine day trial, involving four presenting counsel — and three more lawyers as witnesses — they couldn’t keep it straight.

Or, that the court wouldn’t find out until the end of the seventh day of evidence – from the very last witness — that all the time we were talking about “property”, we really should have been talking about “properties”.

The Applicant’s lawyer — apparently the only one who knew all along about the mistake — says whether it’s “one property or two” really doesn’t matter.

I’m not so sure he’s right. Or that what he did was right.

This is a story about two houses; 151 acres; a benevolent matriarch; a pregnant bride; and a marriage contract apparently suffering from too many “cut and pastes”. More importantly, it’s a story about two children, still trapped under the same roof with a mother and father who can’t agree on either the past or the future.

With that prologue delivered, Justice Pazaratz went on to examine the merits of the former couple’s dispute, which (at least on the property side of things) related to a 151-acre piece of land that the husband owned at the date of the marriage. The matrimonial home was one of two houses on the property, the other being the husband’s mother’s home.

In 1996, the spouses had signed a marriage contract providing that in the event that they separated, the husband was entitled to exclude the assets that he owned at the time of the marriage. Neither spouse (nor their lawyers) knew at the time that the 151 acres were actually two separate properties, rather than one, and that the husband owned them both.

When the true state of affairs came to after the parties’ separation light years later, the wife claimed that the husband’s non-disclosure about owning both properties invalidated the marriage contract that they had purportedly reached.

Justice Pazaratz agreed with the wife, and held that the marriage contract should be set aside due to the material misrepresentation. At the time the contract was drafted and signed, the wife and her lawyer were misled that there was only one property. This omission rendered the contract inadequate to satisfy the disclosure requirements of the Family Law Act since it undermined the factual basis of the parties’ ostensible deal, and left the wife unable to accurately assess her rights and options.

After setting the marriage contract aside, Justice Pazaratz proceeded to divide the parties’ assets through the normal equalization process. (That ruling was later reversed by the Court of Appeal, which included comment on a “serious matter arising from the reasons for judgment given by the trial judge.” The later appeal ruling will be the subject of an upcoming Blog].

For the full text of the decisions, see:

Butty v. Butty, 2008 CanLII 23946 (ON SC)

Appeal level:

Butty v. Butty, 2009 ONCA 852 (CanLII)

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 at RussellAlexander.com

Wednesday’s Video Clip: Transfer of Property in Ontario – Separation or Divorce


Wednesday’s Video Clip: Transfer of Property in Ontario – Separation or Divorce

In Ontario, whenever there’s a marriage breakdown, and spouses separate or divorce, if they jointly own property, then usually one spouse will release his or her interest in that property, either in return for an equalization payment or other predetermined benefit.

In this video, we explain how transfers of property in Ontario work, focusing on mortgage issues, equalization payments, and land transfer tax; and what documents and information you will be asked to bring to an appointment.

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 at RussellAlexander.com.

Ten Years Later, Court Overturns Agreement Due to Husband’s Non-Disclosure

Hiding Money

Ten Years Later, Court Overturns Agreement Due to Husband’s Non-Disclosure

Although the recent Ontario Court of Appeal decision in Tadayon v. Mohtashami is not all that exceptional, it serves as an excellent illustration about how even many years later, one spouse’s past misdeeds can still come back to haunt him or her, in the context of the obligation to provide full disclosure in family law litigation.

The parents of three children had separated in 1999. They entered into a separation agreement as part of their divorce in 2005.

At that time, the husband had reported that he anticipated earning $80,000 that year, and the agreement was reached with that figure in mind. Its terms required the husband to pay relatively modest amount for combined spousal and child support, and allocated him certain levels of financial responsibility for the purchase of a home for the wife and children. All of these commitments and obligations were made on the strength of the husband’s reported income of $80,000 for 2005.

In reality, his income for the prior year was already much higher than that (at $147,000), and it turned out that for 2005 he actually earned an income of $344,000, comprised of income from his own general contracting company, together with undisclosed amounts he also earned from a home building venture. All of this information was kept from the wife at the time, and none of it was taken into account when the 2005 agreement was reached between them.

Fast-forward 10 years, when the wife discovered that the husband had concealed these income amounts from her. She applied to the court to have the 2005 agreement set aside, and to have both child and spousal supports for several sequential years recalculated with the correct figures in mind.

That application was allowed by the lower court, and the husband’s subsequent appeal was dismissed. Even viewed a full decade later, both courts confirmed that the husband’s then-failure to disclose these significant income amounts undermined the validity of the 2005 agreement. Had the wife known the correct financial information, she would never have signed it.

(Moreover, the court pointed out that the husband could not claim that he would be prejudiced by the wife’s late-breaking objection to the non-disclosure; they had jointly retained an expert income valuator, so it could have come as no surprise to him that the accuracy of his figures would soon become an issue).

The bottom line was that the husband had an obligation to make full and proper financial disclosure in 2005 when the agreement with the wife was made in the first place; the agreement was accordingly unconscionable and even despite the passage of time the court was justified in overturning it now.

For the full text of the decision, see:

Tadayon v. Mohtashami, 2015 ONCA 777

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 at RussellAlexander.com

Seven Adult Kids Pool Their Money So Mom Can Buy Family Home – So Whose House is it?

brady

Seven Adult Kids Pool Their Money So Mom Can Buy Family Home – So Whose House is it?

The dispute in Andrade v. Andrade was factually-complicated in the way that only family arrangements can be: At its heart was the legal ownership of a home that had been in the family for 40 years. It involved a mother of seven children in a very tight-knit family, together with commingled family funds and undocumented intentions. And it was triggered by a daughter-in law’s desire to have her deceased husband’s contribution toward the home’s purchase-price recognized in law.

The mother of those seven children was named Luisa; she lived in the home from the time it was purchased in 1974, right up to her death in 2014. The initial problem was that both the $58,500 purchase price for the home, as well as virtually all the money needed for mortgage payments and upkeep, had historically come from her unmarried (and now-adult) children, not from Luisa herself. As the trial judge explained:

Everyone who testified at trial … described a tight-knit family that greatly respected and continuously supported their mother, and that tended to pool resources to an unusual extent. As each child left school and began their working lives, they contributed their paycheques (or a substantial portion thereof) to their mother for her support and for support of the children still too young to work.

For each of Luisa’s seven children, this pooled-earnings arrangement ended only when they married and moved out of the home. This meant that the source of the money used to purchase and maintain the home had always been commingled and indistinct.

But an added legal problem arose from the manner in which title to the home was taken: Soon after it was purchased in 1974 the home was put in the names of two of Luisa’s sons, one of whom was named Joseph. Along with his other unmarried siblings, Joseph had been contributing his earnings to the pooled family funds, until he married a woman named Manuela.

After Joseph died, it was this Manuela (i.e. Luisa’s daughter-in-law) who brought an action to have the court make a declaration as to the rightful ownership of the family home that Luisa still lived in. In the role of widow and executor of her deceased husband Joseph’s estate, Manuela asked the court to declare her to be a beneficial owner of a half-interest in the home, in recognition of Joseph’s financial contribution towards its purchase and maintenance, as well as his status on title.

Luisa, in contrast, asked the court to declare that she owned the entire home herself, even technically though she did not hold legal title. (And Luisa died before the trial, but the action was carried on by her estate. She was unsuccessful, and her estate appealed).

Central to the trial court’s earlier ruling was the conclusion that – light of the family’s pooled-fund arrangement – Luisa “had no money of her own”. This meant she could not have made any financial or other legally-recognized contribution to the house that she technically did not even hold title to.

This conclusion, the Appeal Court found, was a mistake. Simply because the source of Luisa’s money was through gifts from her unmarried adult children (rather than employment income that Luisa may have earned herself), this did not mean it was not her money. This conclusion remained true even if those adult children gave with the intention that Luisa would use the money to support other family members.

Moreover, at various times over the years Luisa had single-handedly rented out parts of the home and was also in receipt of both old age security and a legal settlement, all of which funds were deposited into her own bank account and used for mortgage payments, home maintenance, and expenses. These funds also counted as Luisa’s money for the purposes of crediting her with a contribution to the home. In contrast, none of the adult children ever made such payments or contributions, and the court found that none were expected to.

The key time for assessing the legal situation, and Luisa’s intentions especially, was at the time the property was purchased in 1974. Using that reference-point, there was nothing to indicate that Luisa intended to buy the home for her children’s legal benefit, or to gift it to two of her sons, even though she may have put title into their names.
The Appeal Court found that the situation gave rise to a “purchase money resulting trust” in Luisa’s favour for the full value of the home; this recognized Luisa’s legal interest notwithstanding that title was registered to her two sons.

For the full text of the decision, see:

Andrade v. Andrade, 2016 ONCA 368 (CanLII)

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 at RussellAlexander.com

Can One Spouse Foist Debt on the Other?

Businessman Touching Domino Pieces Arranged in a Line

Can One Spouse Foist Debt on the Other?

As we have written before , Ontario law has special rules about how a matrimonial home can be dealt with by spouses during marriage. But what about other assets? And who is ultimately responsible for any debts incurred while married?

Let’s tackle the easiest one first: Assets. From a technical legal perspective, each spouse is generally free to deal with his or her own assets during marriage. (This of course leaves aside the practical reality that in a successful marriage both spouses may have informal input on how assets are dealt with, regardless of true ownership).

The responsibility for debts, on the other hand, is a little more complex. Here are some points to know:

• Getting married does not automatically make you responsible for the existing, pre-marriage debts of your new spouse.

• During marriage, each spouse is only responsible for those (non-joint) debts that are incurred in his or her own name; the other spouse is not responsible unless they have guaranteed or co-signed the loan in writing. (And the Family Law Act provides for the deduction of these debts when the parties separate, for the purposes of calculating the Net Family Property, although exceptions are made if the debts are incurred recklessly or in bad faith.)

• Death does not change this: If one spouse dies leaving personal debts, the other is not personally responsible to repay them. However, creditors are entitled to be paid out of the deceased spouse’s estate prior to having those assets distributed to beneficiaries, including the surviving spouse.

• On the other hand, debts that are incurred jointly during marriage (e.g. a joint loan agreement, or where one spouse co-signs for the other), become an obligation that is shared by both spouses.

• Note that for such jointly-incurred debt, a separation agreement is ineffective to change or eliminate the respective obligations of the spouses to lender. Rather, any change as to who is responsible for the joint debt has to be re-negotiated with the original lender and reduced to writing in a new agreement.
With that said, credit card debts are in their own category: To determine which spouse is responsible for credit card debts, it is necessary to review what the written agreement with the credit-providing bank or organization says. Specifically:

• The agreement may provide that one spouse is the primary cardholder, but that the other spouse is also given access/authority to incur charges (usually through a second card). These kinds of agreements usually stipulate that the spouse who is the primary cardholder remains liable for all charges.

• On the other hand, if both spouses sign the cardholder agreement and commit to being jointly responsible, then they both remain liable for any charges.

• Note that in either case, this liability arises not through the fact of marriage, but because the written agreement with the credit-providing facility says so.

Do you have further questions on how debts during marriage are treated?

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 our main site.

Transfer of Property in Ontario During a Separation or Divorce – video

 

 

Wednesday’s Video Clip: Transfer of Property in Ontario During a Separation or Divorce

In Ontario, whenever there’s a marriage breakdown, and spouses separate or divorce, if they jointly own property, then usually one spouse will release his or her interest in that property, either in return for an equalization payment or other predetermined benefit.

In this video we examine how transfers of property in Ontario work, focusing on mortgage issues, equalization payments, and land transfer tax; and what documents and information you will be asked to bring to an appointment.

Do 20-Something Kids Need to Stay in the Matrimonial Home for “Stability”?

20 olds

Do 20-Something Kids Need to Stay in the Matrimonial Home for “Stability”?

Common among parents these days is the complaint that their “kids” – meaning adult children over the age of 18 – are staying longer at home before moving out on their own, or worse, are returning home after finding that independent living or navigating the job market is tougher than they anticipated.

It begs the question of how much emotional and financial support young adults need (and expect) in the modern family context.

In a recent case the court had to consider whether kids in their 20s needed to remain in the luxurious former matrimonial home for “stability”, after their parents split and until a divorce trial could be held. (The question of whether for family law purposes they were considered “children of the marriage”, and therefore eligible for child support longer-term, would have to be determined at a later trial.)

The facts were these: After a 17-year marriage, the couple separated and brought a court motion to determine the question of how their $1.5 million matrimonial former home should be dealt with. Their three children – currently aged 19, 22 and 25 – were all still living in the home with the father. As the court described the situation: “there is unanimity of opinion that the children are accomplished, high functioning young men with goals and aspirations that their parents encourage and have to date supported financially and otherwise.”

During the marriage, the couple split their income, and the wife went on title as owner of the home. However the husband originally owned the land on which the home was built, had paid all the home maintenance and carrying costs throughout the marriage, and had invested $200,000 into renovations. It was still subject to a debt of about $600,000, and the husband would be seeking an equitable interest in the home at the pending divorce trial.   After a 2013 flood, the couple received insurance funds for repair, but the amount remained unspent because they were unable to agree on how those insurance funds should be spent, and when.

Against this background the wife, who had moved to the Cayman Islands to pursue studies at a veterinary college, applied to the court for an order to have the matrimonial home repaired, listed and sold.   Although the husband was not opposed to the sale at some future date, he resisted selling it now since he was adamant that the home provided security and stability for the children.

The court began by observing:

“The youngest child will become an adult in November of this year; the older two are in their twenties now. Upon the evidence currently available, whether or for how long these young men will continue to live in the matrimonial home is speculative at best.”

The court then pointed out that although the husband earned $320,000 per year, his expenses for housing himself and his sons in the existing home would likely not be satisfied by his remaining (though still substantial) income after he had paid interim spousal support to the wife pending trial.

More to the point, there was no realistic need to maintain that particular house for the stability of his adult or near-adult children, nor was there any reason to delay the repair and sale of the home until trial.   To do so would be to merely add time to the already-lengthy process of translating the asset into funds that could be allocated by the parties in the proportion yet-to-be adjudicated at trial.

The court ordered that within 30 days the parties should agree on how to spend the insurance proceeds to repair the home, failing which the wife would have the authority to deal with the insurance and repairs, and choose an agent with which to list. The court added:

“If an acceptable offer to purchase the property is received, the [wife] shall offer the respondent the opportunity to sign as a spouse on the acceptance of the offer. If the [husband] refuses to sign the offer before it expires, the [wife] is authorized hereby to proceed with the sale without the [husband’s] consent.”

For the full text of the decision, see:

Goodman v. Goodman, 2014 ONSC 3466

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 our main site.

 

Husband Threatens to Burn Down Matrimonial Home; Can Wife Get Him Excluded While He is Away on Holiday?

match

Husband Threatens to Burn Down Matrimonial Home; Can Wife Get Him Excluded While He is Away on Holiday?

When the husband and wife married, they moved into a heavily-mortgaged home that had been purchased with funds provided entirely by the wife. They signed a pre-nuptial agreement providing that if they separated, the wife would be repaid those funds from the sale of the home prior to any equalization.

When the parties did split three years later, the wife stayed in the matrimonial home while the husband, who was a self-employed contractor, moved into a 20-foot trailer home equipped with kitchen, bathroom and sleeping quarters. However, the split was very acrimonious.

The wife brought an urgent ex parte motion – i.e. without notice to the husband, who was on holiday out of the country – asking that she be given exclusive possession of the home. She also asked for a restraining order. As the court explained:

The [wife] brings this motion in this way because she is fearful about the [husband’s] reaction to her decision to end their relationship. While I am careful not to make definitive findings of fact given the ex parte nature of this proceeding, I note the [wife’s] affidavit evidence to the effect that the [husband] is a volatile and violent alcoholic. As she tells it, he has been intimidating and verbally abusive toward her for years. In the past year, he has been physically assaultive by pushing her and has even gone so far as to place his hands around her neck as if to threaten to choke her, removing them only when the children pulled him away. As recently as February or March 2014, the [wife] indicates that as the relationship deteriorated, the [husband] threatened to burn the matrimonial home down if he could not live in it. She says he even brought a can of gasoline inside to show that he means business. In sum, the [wife] describes a pattern of behaviour on the part of the [husband] that has been escalating in its abusiveness in the form of real and threatened violence.

The court added:

Indeed, it is partly because of the [husband’s] complete lack of financial stake in the property that the [wife] fears he will come through on his promise to burn the house down.

Since the husband was unaware of the motion and was not in attendance, the court pointed out that “as a simple matter of fundamental justice” it could not draw definitive conclusions after hearing only the wife’s side of the story. But that did not mean it should ignore her evidence altogether. As the court put it:
My objective is to put in place a structure to keep the peace while at the same time respecting the [husband’s] right to meaningfully participate in any proceeding infringing upon his interests. In my view, reducing the risk of violence or allegations of violence in this household is in the best interests of all involved and is a goal that is called for given the evidence and which outweighs the [husband’s] property rights in the short-term.

Even though the husband was not present, the court granted the order for exclusive possession until trial, as well as the restraining order, but ordered the matter be returned to court in 10 days to give the husband a chance to be heard. Although under Ontario family law both spouses had an equal right to possession of the matrimonial home, there are acknowledged exceptions; given the potential for violence and the fact the husband had other accommodation, this case was one of them.

For the full text of the decision, see:

Clark v. Westendorp, 2014 ONSC 3490 (CanLII)

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 our main site.

Can Second Wife Foil Court Order Securing First Wife’s Support?

 second-wife

Can Second Wife Foil Court Order Securing First Wife’s Support?

In Watkins v. Watkins – which essentially pitted the rights of a man’s first wife against those of his second one – the court considered whether it could encumber a matrimonial home, even if spouses were prevented from doing so.

In that case, in connection with his home the husband was ordered by the court to sign a collateral mortgage in favour of his first wife, from whom he was now divorced. This was intended as security for what he owed her for existing and future spousal support, child support, and legal costs.

However, because he was now married to a second wife – and even though the home was owned solely by him – it was considered a “matrimonial home” under the Ontario Family Law Act, and was therefore subject to the special rules governing its sale, disposition or encumbrance. In particular as I’ve written before, the second wife was legally required to give her consent to the collateral mortgage.

However, the second wife refused to do so, fearing that in the future the home might be sold under the collateral mortgage, thus jeopardizing the security that she and their child have. (Apparently, even though she did not own the home herself, she had put a lot of work into it). Without the second wife’s consent, the Land Registrar refused to register the collateral mortgage.

The husband brought a motion to the court, asking for it to dispense with the second wife’s consent and authorize the collateral mortgage registration in the first wife’s favour.

In granting the husband’s request, the court looked at the purpose of the Family Law Act: It was designed to limit what a spouse was allowed to do in terms of encumbering the home; it was never intended to foil a court’s ability to secure one spouse’s financial obligation to the other.

In this case, the court had itself created the husband’s liability in the form of the collateral mortgage, regardless of what the husband wanted. The order stemmed from the court’s own initiative and by virtue of a prior court order, and – in legal jargon – arose “by operation of law”. The husband had no intentions of his own in this regard.

With this in mind, the court was fully entitled to impose a charge on the home in the form of the collateral mortgage, as a means of enforcing the husband’s legal support obligations to the first wife. The second wife’s consent was accordingly dispensed with and the collateral mortgage was duly registered by court order.

For the full text of the decision, see:

Watkins v. Watkins, 2014 CarswellOnt 5287, 2014 ONSC 2506

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 our main site.