In some marriages, the spouses may decide to buy a matrimonial home and put themselves both on title. In others – for reasons of their own – only one of them may have legal title to the home they share. In either situation, the Ontario Family Law Act (FLA) gives the matrimonial home special status, and accounts for it as part of the equalization calculation if the couple decides to split. This means that even the non-titled spouse can attain certain rights to share in the home’s value up until separation.
But as one divorcing couple found out recently, things can be a little unclear when only one of them is on title, but the value of the matrimonial home has skyrocketed while they’ve been untangling their relationship. In a noteworthy recent decision, the Ontario Court of Appeal addresses this precise scenario, and clarifies the rights of the non-titled spouse in connection with:
- His or her right to share in the value of a matrimonial home prior to separation, as distinct from:
- Any potential right to share in the post-separation increase in a matrimonial home’s value.
The couple had married in 2014. They bought a house at that time, and put title in the husband’s name only. They separated in November 2019 at a point where the home was worth $672,500.
However, they continued to live together under the same roof until May of 2020. A few months later, in September 2020, the home was sold for $860,000.
The former couple disagreed on whether the wife had the right to share in the increase in the value of the matrimonial home that occurred after their separation date – which was about $187,500. At trial, the judge held this amount was to be divided equally, based on the notion that the husband was holding the home in trust for both of them. The wife had given evidence of her belief that “she was always promised and always told that they were buying a house together and that she would be an equal owner”, which she considered “to be a form of security in the event the marriage broke down.”
The Ontario Court of Appeal overturned the trial judge’s ruling. The husband, as the sole title-holder, was entitled to the full post-separation increase in the home’s value, being the entire $187,5000.
The Appeal Court reasoned that the wife had made no payment toward the purchase price of the home at all, and while she wanted to be “on title”, she did not want to contribute to, or be responsible for, the mortgage. The husband had bought the property in his sole name after a lawyer advised them that the bank would not allow the wife on title if she was not contributing to the mortgage. All the money came from the husband and his family.
The Court pointed out that upon separation, any marriage-related rights the wife might have to the value of the matrimonial prior to the separation date were addressed under the Ontario FLA. That legislation has built-in devices and protections for addressing any financial unfairness she might experience due to the marriage breakdown. (And in this case the wife admitted she could not make any claims for unequal division based on unfairness. The court also found she had no claims based on a constructive trust).
So under the FLA the wife had certain rights to the home pre-separation; but after that date, it was a different story.
The trial judge had wrongly relied on the wife’s so-called “reasonable expectations” to give her a share of the $187,500, the Appeal Court ruled. The judge had also misapplied the test for what is known as “proprietary estoppel”, which required the wife to show that: 1) a representation or assurance was made to her, leading her to expect some right or benefit in the home; 2) she reasonably relied on the expectation by doing or refraining to do something; and 3) she suffered a detriment as a result, and it would unfair or unjust for the husband to go back on his word.
None of these elements of the test were met, on the facts. In particular, the husband had made no representation to the wife about sharing any part of the $187,5000 increase in the home’s value after separation.
The Court of Appeal dismissed the wife’s claim, reiterating that her “equalization entitlements under the FLA already account for the value of the matrimonial home, to which she made no monetary contribution, up to the date of the parties’ separation.”
For the full text of the decision, see:
Madi v. King, 2023 ONCA 443 (CanLII), <https://canlii.ca/t/jxs40>