Competing Parties In Line For Proceeds From Home Sale

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When a couple gets divorced or separated, the matrimonial home can sometimes be the largest asset shared by the couple. Oftentimes one of the parties buys out the interest of the other, or the home is sold and the proceeds are divided between the parties. Usually, the money from the sale would be distributed to the parties, but as we see in a recent decision from the Ontario Superior Court of Justice, that’s not always the case.

Ex-husband owes money to multiple parties

The matter arrived before the court when the applicant, who had obtained a judgment against the ex-husband arising out of a motor vehicle accident in which the ex-husband (“the husband”) was uninsured, asked the court to direct the proceeds from the sale of the matrimonial home following the husband’s divorce. The judgment was for the amount of $380,071.

At the time of the accident, the husband was married to the respondent. They owned a home together at the time of their separation. Since then, the husband has not made whole on his spousal or child support obligations, with arrears for both amounting to close to $40,000 over two years (they have since grown to over $100,000). A previous court order had stipulated that the husband’s share from the proceeds of the home sale were to be held in trust after paying the money he owed to the respondent, his ex-wife. The money held in trust would be a security for future support payments. The judge in this decision was not aware of the husband’s other debts.

To whom should the proceeds of the house sale go?

The applicant stated that he is entitled to the full amount available from the husband’s portion of the home sale ($180,670.15), arguing the Divorce Order should be set aside. The respondent, who was married to the husband, took the position that the court had no jurisdiction to vary the Divorce Order.

The applicant relied on some case law, in which one decision stated that the execution of an ex-husband’s debt “has priority over any claim that the wife has to the husband’s net proceeds of the sale of the matrimonial home.”

However, in this case, the court noted that the judge who made the Divorce Order had been created to protect the respondent’s right to spousal and child support. This was all done during the matrimonial proceeding, which had already occurred. By this point, those proceedings have concluded and the trust has been established. The applicant would have to vary that order if he were to obtain any entitlement to the funds, and that must be done in the matrimonial proceeding, rather than the sale of the home. The application was therefore dismissed.

To speak with Jason P. Howie or one of our experienced family law lawyers about child custody and support modifications, call 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants, and other professionals.

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