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Family Law Act considerations in Partition Act applications

Ontario courts have long recognized a joint property owner’s presumptive right for an order under the Partition Act to partition and sever the property. That being said, the granting of such an order is within the court’s discretion and each request has to be reviewed on a case-by-case basis. When the parties to the dispute are spouses, the court also take into consideration the making of such an order on their rights under the Family Law Act, as the recent motion decision in Mitchell v. Leach et al, 2015 ONSC 6041, demonstrates.

The facts

The background facts are interesting. It is worth noting that by the time the motion came before the court, the parties, whose evidence on many of the key facts was markedly different, had not been examined for discovery nor cross-examined on the affidavits in support of the motion.

The plaintiff, Mr. Mitchell, and the main defendant, Ms. Leach, were separated spouses. The plaintiff was 84 years old and Ms. Leach 78. The property in question was their matrimonial home. At the time of marriage, the property was in the plaintiff’s name alone.

The spouses were married on August 31, 2007 and separated on April 22, 2013 with Mr. Mitchell moving out of the home. Some time before the separation, Ms. Leach’s permanently disabled daughter moved into the lower level of the home. Ms. Leach and her daughter continued to reside in the property after the separation.

Two marriage contracts were before the court. The first was dated August 23, 2007. This document was prepared by Ms. Leach’s lawyer, Mr. Maich, and stated that the plaintiff was to have his full interest in the matrimonial home even after marriage. Both spouses were represented by lawyers and had independent legal advice.

The second marriage contract was dated January 8, 2008. The plaintiff stated that he had no recollection of signing this document. The document appeared to have been signed by both parties and witnessed by Mr. Maich. There is a certificate of independent legal advice in respect of the plaintiff that was signed by the plaintiff’s lawyer. The plaintiff stated that he had no recollection of meeting his lawyer about the second marriage contract.

Sometime in January 2008, the plaintiff signed a transfer conveying the matrimonial home from himself alone to himself and the defendant as joint tenants. The transfer was completed by Mr. Maich was registered in February 2008.

In this action, the plaintiff claimed that he did not appreciate or understand the effect of executing the transfer nor was same explained to him by Mr. Maich. The plaintiff stated that at no time did he intend to gift or transfer the matrimonial home to Ms. Leach and asserted that Ms. Leach exerted undue influence over him in respect of the execution of the transfer.

Approximately one year after their separation, the plaintiff severed the joint tenancy.

Ms. Leach’s evidence was that she had very limited means and that both she and her daughter would like to continue living in the matrimonial home. If the trial judge found that she had a 50% interest in the property, she would be able to borrow funds against her interest to purchase it. Until then, she had no way of raising funds for its purchase.

Relief sought

In the main action, the plaintiff sought, among other relief, a declaration that the conveyance of property registered in February 2008 to be invalid and an order requiring Ms. Leach to re-convey and restore title to the property back into the sole name of the plaintiff.

On the motion, the plaintiff sought an order pursuant to the Partition Act that the matrimonial home be listed for sale and with 50% of the proceeds being paid into court and the balance to him. The plaintiff argued that he had a prima facie right to such an order under the Partition Act and the case law provided that the court has limited discretion to refuse the application.

The decision of the motions judge

The motions judge found that the Partition Act applied to this motion as the parties were currently joint owners of the property and that both spouses had an interest in a matrimonial home.

The judge agreed with the plaintiff that a joint owner had a presumptive right to partition and sale, in accordance with the Court of Appeal decision in Silva v. Silva (1990), 1990 CanLII 5400 (BC CA). In Silva, however, an extra layer of consideration applied as the disputing joint owners were spouses. The motions judge quoted from paragraph 23 of Silva as follows:

… where substantial rights in relation to jointly owned property are likely to be jeopardized by an order for partition and sale, an application under the Partition Act should be deferred until the matter is decided under the F.L.A.  Putting it more broadly, an application under s. 2 should not proceed where it can be shown that it would prejudice the rights of either spouse under the F.L.A.

The motions judge also referred to Ontario cases including Davis v. Davis, 1953 CarswellOnt 106 and Garfella Apartments Inc. v. Chouduri, 2010 ONSC 3413, as to the onus of the party resisting partition to show circumstances of malice, oppression, and vexatious intent warranting a denial of a partition order.

Ms. Leach succeeded in persuading the court that its discretion ought to be exercised to refuse the motion for partition and sale. The court found that Ms. Leach had established that a partition and sale order may result in jeopardy to her substantial rights, including her right as a true joint owner of a matrimonial property pursuant to a valid marriage contract and transfer. The court also found that in Ms. Leach’s circumstances, being forced to move would amount to a hardship beyond mere inconvenience and financial difficulty.

Discussion

Disputes among joint owners of properties are frequent occurrences. Sometimes the owners feel that they have no choice but to go their separate ways. The presumptive nature of a joint owner’s right to an order for partition and sale is generally accepted in Ontario law. Where the owners are spouses, however, the parties should consider the impact, if any, of a partition order on their Family Law Act rights. In Mitchell v. Leach, for instance, the prejudice to Ms. Leach’s rights under a potentially valid marriage contract was an important factor persuading the court to exercise its discretion against partition and sale.

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