In a recent, and at times strongly-worded, court decision, two parents were ordered to sell their jointly-owned matrimonial home and investment property to alleviate economic difficulties created by the COVID-19 pandemic.
Court’s Opening Remarks
Before getting to the facts of the case, the court began its endorsement by making the following remarks:
“COVID-19 has instantly made most of our “He Said/She Said” disputes sound pretty petty.
We’re still in the midst of an existential crisis. Medically. Economically. Socially.
But rather than brace together against the common enemy, parents are pounding on the family court door, begging us to open up so they can get a few more kicks in – as if a judge has the power to wake anyone from this pandemic nightmare.
Business as Usual? Gone.
Nonsense as Usual? Here to stay.”
What Happened?
The father brought a motion to force the immediate sale of two jointly-owned properties, including the matrimonial home where the mother resided with their two children ages seven and four. The mother did not want either property sold.
The equity in the matrimonial home was about $1 million and the value of their Toronto investment property had a fair market value of approximately $700,000.
Parties’ Positions
The father advanced that COVID-19 had drastically and unexpectedly decreased his income. As a result, he claimed he could not longer afford to pay the mortgage and carrying costs in relation to the matrimonial home. Additionally, he could no longer afford to pay child and spousal support. Between 2016 and 2019 his annual personal income averaged $132,000; he estimated that his total 2020 earnings would be about $66,000. The father argued that neither he nor the mother couldafford the carrying costs in relation to either of the two properties.
The mother argued that while the father claimed COVID-19 had resulted in a reduction in his income, he had made no reference to his personal savings, investments or other sources of income from which he could meet his financial obligations. Additionally, the mother argued that the COVID-19 restrictions were being reduced, so any reduction in the father’s business income would soon be resolved. The mother also claimed that the father could have applied for government financial assistance to help small businesses and employees during COVID-19, but he had elected not to pursue these options. Finally, the mother argued that the father was taking a scorched earth litigation strategy, seeking to sell properties when the real estate market was depressed.
Decision
The court accepted that both parents were experiencing financial hardship and that COVID-19 had unexpectedly and unavoidably created a profound and indefinite financial crisis for the family. The court found no reason to doubt the father’s estimate that his income for 2020 would be about half of what it had been in previous years. The court stated:
“[T]his pandemic has created such immediate financial crisis for so many individuals and businesses, that it would be unrealistic and inhumane not to understand that people are really hurting – and they need help now. […]
COVID-19 has at least temporarily ruined the financial prospects of both of these parties. And neither of them is to blame.”
While the court wondered why, in the face of economic uncertainty, the parents were spending money to pay lawyers to debate the sale of their homes, it acknowledged that the parents simply did not have enough money and that the sale of the two properties would free up at least $1.3 million dollars of joint funds, after clearing the parents’ debts.
The court then stated:
“I find that both of these parties are frightened, angry and stubborn. That’s not enough to either force a sale or block a sale.
They are both acting so strategically and aggressively that they have lost sight of the harm they are doing to their children and to their bank accounts.
And they definitely don’t seem to understand that in this COVID-19 economy, financially wasteful litigation is an indulgence they can no longer afford.”
However, the court concluded that the mother had not established any reason why either of the properties should not be sold. To the contrary, the court found that the father had clearly established that economic necessity required that both properties be sold, to alleviate a crippling debt load, and to free up significant available equity so that the parents can both get on with their lives.
As a result, the court ordered the immediate listing for sale of both properties.
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