The parties in this case were married on June 8, 1996 and separated after approximately 11 years of marriage on March 30, 2007. At the end of June 2007, the Respondent moved out of the jointly owned matrimonial home, granting the Applicant de facto exclusive possession of the matrimonial home which she was living in with the two children of the marriage.

During the marriage, in 2001, the Respondent and Applicant agreed that she would forego any viable career opportunities in order to stay home and take care of the family.  The Respondent held a prestigious executive position from which he was deriving a substantial income, thus facilitating the decision for the Applicant to become a stay-at-home mom. 

Once the parties separated, the Applicant attempted to gain some independence by starting her own business; however, she was not able to derive a significant income from her business.

In September 2009, the parties consented to a final order which determined, among other things, the Respondent’s child and spousal support obligations.  In April 2010, the Respondent brought a motion for the partition and sale of the matrimonial home, which was dismissed by Justice Van Rensburg, based on the best interests of the children who were residing in the home with the Applicant.

Following the April 2010 motion, there were two issues which remained to be resolved:

• Whether the Applicant is entitled to unequal adjustment of net family property in the amount of $90,000.00?; and
• Whether the Applicant should be charged occupation rent in the amount of $64,784.50?

Occupation Rent

The Respondent believed that occupation rent was owed to him for the period beginning on July 1, 2007, after his departure from the matrimonial home to September 2, 2009, which is when the parties consented to the final Order and the Applicant consented to the assumption of all carrying costs and expenses related to the matrimonial home.

He believed the rent amounted to $64,784.50 which represented 50% of the rent which could have been charged for the matrimonial home if it had been leased to a third party.  Additionally, the Respondent’s claim stemmed from his being upset as a result of the Applicant’s claim for retroactive spousal and child support for the period from separation until September 2, 2009.

He explained how he held an expectation that he would not be required to pay retroactive support based on the fact that he had paid for all expenses until the date of the final Consent Order.

When calculating his retroactive support obligations, the Applicant and Respondent applied numerous credits which served to lower these payment amounts.  For example, retroactive support was adjusted by deducting 50% of the amounts paid by the Respondent for things such as gas, Hydro, phone, Internet, and so on.

The court explained in this decision how a claim for occupation rent by one spousal co-tenant against the other will be granted only in exceptional cases.  It was further explained that this was not an exceptional case, as the Respondent’s claim was unmeritorious and opportunistic.

Essentially, the Respondent was not entitled to occupation rent from the Applicant since in the calculations for retroactive support obligations, the Respondent was credited for 50% of any and all contributions he made to the matrimonial home and additionally, once he moved out of the home the Applicant assumed all contributions towards retroactive support.

Therefore, each party had assumed about half of the carrying charges of the home since separation.

Unequal Division of Property

The second claim, made by the Applicant, is whether she is entitled to an unequal division of the net family property pursuant to s. 5(6) of the Family Law Act since the Respondent benefitted from a $180,000.00 inheritance she received from her father and which he used to pay down the joint line of credit secured against the home on January 4, 2007.

The Applicant claimed that she had wanted to use this money for retirement, but was persuaded by the Respondent to use it against the joint line of credit.  In addition, she claimed that she had an expectation of compensation from the Respondent.

In order for a claim for the unequal division of property to be successful, it must be shown that equalizing the net family properties would be unconscionable, having taken into account a number of factors. The Ontario courts have set a high standard for a finding of unconscionability and have stated that it means “shocking to the conscience of the court,” “shockingly unfair” and “patently unfair” or “inordinately inequitable.”

After this, the court explained that the $180,000.00 contribution served to increase the net family property of the Respondent by $90,000.00 which represented the value of his joint interest in the matrimonial home resulting from the use of the Applicant’s gift from her father.  Additionally, it was explained how under normal circumstances, the inheritance would be excluded from the calculation of the Applicant’s net family property pursuant to s. 4(2) of the Family Law Act, but for the payment towards the mortgage.

Therefore, having regard to the aforementioned and numerous other circumstances, such as the fact that the Applicant could have benefitted from the inheritance due to her lack of employment, and her role as primarily caregiver to the children, the court ordered that she was, in fact, so entitled to an unequal division of the parties’ net families properties.

More specifically, her entitlement was pursuant to s. 5(6)(c) which contemplates unequal division where part of a spouse’s net family property consists of a gift made by one spouse to the other and s. 5(6)(h) which states that an unequal division is warranted under circumstances relating to the acquisition, disposition, preservation, maintenance or improvement to property.

Conclusion

Therefore, pursuant to the court the Respondent was required to pay $238,965.39 to the Applicant which accounts for the equalization payment owing in the amount of $84,180.89, and the additional amounts of $90,000.00 and $64,784.50.

Andrew Feldstein’s comment:

In my opinion, the court rendered the correct ruling regarding occupation rent; however, the result regarding the equalization of net family property was simply wrong.

The legislation is clear regarding the fact that you cannot exclude a gift or inheritance that has been spent or used towards a matrimonial home.  In this case, the monies were used to pay down a mortgage.  In this case, the court took issue with the fact that the husband used the gift to pay down the mortgage on the matrimonial home rather than the wife.

However, when a parent provides a large gift to a child it is usually intended for a specific purpose such as paying down a mortgage.  Thus, in my opinion, despite the result being unfair under the circumstances, this was not an appropriate case for an unequal division of net family property.

In addition, this may open the flood gates to other people litigating that gifts that have been spent on a mortgage should be excluded which is contrary to the clear language contained in the Family Law Act.