Can A Misbehaving Spouse Get Occupation Rent? Maybe.
As we wrote in an article back a few years ago in Ontario the concept of “occupation rent” arises in family law in situations where spouses who co-own a matrimonial home have decided to separate, and one of them physically moves out.
When it comes time to untangle their financial affairs leading up to or part of a divorce, the remaining (i.e. still-occupying) spouse may at the court’s discretion be obliged by law to pay and amount for “rent” to the other spouse starting on the separation date, and based on fair market value rent. This is by no means an automatic right in every case (and indeed, it is considered by courts to be an “exceptional remedy”). However, once established this rent obligation can theoretically continue as long as the occupying spouse remains living on the premises, pending sale of the property and splitting of proceeds as part of the equalization.
In deciding whether to pay occupation rent, the court must take numerous established factors into account. One of them (from among more than a half-dozen) is the conduct of the non-occupying spouse.
This has been the focal point of several recent cases:
• In the recent decision of Malik v. Malik, the husband claimed occupation rent from the wife even though he had acted very badly: He had taken the equity out of the family home, had absconded the jurisdiction, and had made no voluntary child support payments at all, even though he could financially afford to. In disallowing his claim, the court said: “A non-occupying spouse ought never to receive occupational rent for a period in which he or she has deliberately avoided the payment of child support.”
• Likewise, in Wimalaratnam v. Wimalaratnam, the husband’s claim for occupational rent was even more tenuous: not only did he fail to meet his support obligations to his wife and children, and stopped paying his share of the mortgage and other home expenses, but he was actually excluded from the home as a result of his own criminal conduct. He had been forcibly removed from the home after being charged with several criminal offences, and was later found guilty of one of them. This being the case, the husband was the author of his own misfortune in terms of being excluded from the home; in the circumstances, it was not appropriate to award him occupation rent.
• On the other hand, in a case called Stetco v. Stetco, the judge found it was fair to grant occupation rent of $1,000 per month to the husband, even though he had been abusive in the 32-year marriage to the wife. For example, he had used violence and threats of violence to force her to sign a joint line of credit a year before the marriage ending, which he then ran up with debt. He had no clear or credible explanation for where he spent the money.
After separation, the wife continued to live modestly, while the husband bought a car, a new home, regularly entertained, and contributed to his RRSPs. Still – and even though the husband’s conduct “shocked the conscience of the court” – it saw fit to award him 21 months’ occupation rent after taking into account various factors, including the equalization payment and the manner in which the parties’ assets would be split. A later appeal court affirmed that ruling.
Trying to predict whether occupation rent will be awarded can be a slippery exercise; as with so many legal determinations, the outcome will always depend on the specific facts.
For the full text of the decisions, see:
Malik v. Malik, 2015 ONSC 2218
Wimalaratnam v. Wimalaratnam, 2010 ONSC 4491
Stetco v. Stetco, 2014 ONCA 370, 2014 CarswellOnt 5919 (Ont. C.A.)
Affirming Stetco v. Stetco, 2013 CarswellOnt 7087, 2013 ONSC 3103 (Ont. S.C.J.)
