Khan v. Khan, 2015 ONSC 6780, 2015 CarswellOnt 1662

This case addresses the issue of whether a person should pay occupation rent to his or her spouse when he or she enjoys exclusive possession of a property they jointly own.

Background

The parties separated in 2014 after a 13.5-year marriage. They had a 12-year-old child.

The parties’ matrimonial home was jointly owned by the husband and wife and they remained in the home for 6 months after separating until the wife vacated the home due to tremendous conflict between she and her husband.

The wife claimed that the husband was exhibiting increasingly violent behaviour and it was in the child’s best interest for one of the parties to leave the home. The husband did not disagree regarding the necessity of one of the spouses leaving the home.

The husband refused to leave the home and, once the wife left, he moved his girlfriend in, changed the locks, and would not allow the wife to enter even to collect her belongings.

The wife had to pay to rent and furnish another dwelling and she ended up with significant debts that required urgent payment. However, she lacked the financial resources to make such payments without using her share of the equity in the home.

The husband did not want to sell the home and he agreed to buy the wife out, however, he took no steps to do so.

Additionally, after the wife vacated the home, the husband failed to pay the bills and accumulated property tax and utility bill arrears in the couple’s joint names. He also fell behind on line of credit payments for the joint line registered against the home.

The wife then brought an Application seeking Orders including the following:

• Immediate partition and sale of the home; and
• Occupation rent retroactive to the date on which the husband gained exclusive possession.

Decision

The judge allowed the Motion and Order sought by the wife for occupation rent.

The judge held that, given the circumstances, “it is fair and equitable” for the husband to pay occupation rent to the wife commencing on the date on which he gained exclusive possession. The husband could, however, reduce his occupation rent by 50% of the amounts he paid toward the joint line of credit and property tax.

The judge further held that, if the husband does not buy the wife out, occupation rent shall continue for as long as the husband resides in the home.

Analysis

Under section 24 of the Family Law Act, a court may order occupation rent to be paid by a spouse residing in the home on the basis of an order for exclusive possession.

Since there was no such order for exclusive possession in this case, the court considered the case law. The jurisprudence establishes that a court also has the power to order occupation rent where there is no order for exclusive possession.

If ordered, occupation rent is usually in the amount of half of the fair market value of rent for the same property. Both the Family Law Act and the case law require a court to assess whether occupation rent is “reasonable and equitable” in the circumstances considering the following factors:

• timing of the claim;
• duration of occupancy;
• inability of non-resident spouse to access the equity in the home;
• reasonable credits to be set off against occupation rent; and
• other competing claims.

In this case, the following factors supported the decision to order occupation rent:

• The husband’s actions resulted in him having exclusive possession of the home and the wife essentially had no choice but to leave the home due to the conflict, the best interests of the child, and the husband’s refusal to leave;
• the wife was prevented from returning to the home once she left as the husband changed the locks;
• the wife urgently needed to withdraw her share of the equity to pay her debts; and
• the husband had been delaying buying her out of the jointly owned home;

For all of these reasons, the judge found it was fair and equitable to order occupation rent in this case.