Apr 8, 2019

A spouse not on title may share the increase in value of the family home through a resulting trust

Gionet v. Pingue, 2018 ONCA 1040 (CanLII)

This decision of the Court of Appeal provides a clear and concise reiteration of two of the central principles in the division of family property after a divorce.

First, the equalization of family property must not take into account the fact that one spouse earned more income than the other. Second, the fact that the matrimonial home is registered in the name of only one spouse does not necessarily make that spouse the sole owner.

Facts of the Case

Mr. Gionet and Ms. Pingue were married for ten years. They separated in 2013. The trial to determine the division of property took place in 2016. That three-year gap is significant, as it was a period when there was a large increase in house prices in Toronto.

Ms. Pingue worked during the marriage as a teacher. Mr. Gionet was in the business of buying, renovating, and selling houses, in which Ms. Pingue also participated. It is reported that her income was considerably higher than his.

Sharing the proceeds from the sale of the family home

Under Ontario’s Family Law Act, the matrimonial home has a special status. Its value on the “valuation date” (the date of separation) is divided equally regardless of whose name the house is registered in. This is the case even if one of the spouses owned it free and clear prior to the marriage.

The wrinkle in this case is that the house was not actually sold until a few years after separation. Its value increased substantially over that period. The wife argued that she was entitled to all of this post-separation increase in its value, since it was only in her name.

The lower court judge rejected the wife’s argument, and the Court of Appeal affirmed this.

There is a principle known as “resulting trust.” It means that a person can be the effective owner of something (having a beneficial interest, in the language of trust law) without having legal title.

If the husband paid for part of the house, even if it was not in his name, the legal presumption is that he had an ownership interest. This presumption can be defeated by evidence, e.g., that the husband’s contribution was intended to be a gift to the wife. No such evidence was presented here.

The practice of putting the house in the name of only one spouse is not uncommon. The goal is frequently to defeat creditors. It does not always succeed in that goal, and it often leads to complications when the marriage breaks down, as it did in this case. Numerous other examples of such cases are discussed in a longer article I wrote about this for the Canadian Family Law Quarterly.

The wife is not entitled to more on account of her higher income

The wife argued that she was entitled to a larger share of the home than her husband. She had earned a higher income during the marriage. She had contributed more of the cost of buying and maintaining the house.

Prior to the law reform that took place in Ontario in 1968, such an argument might have carried weight. Historically, it was often beneficial to men, who commonly earned more than their wives. The law was reformed, and a new statute was enacted to reflect a philosophy that marriage is an equal partnership. All the wealth built up during the marriage becomes family property to be shared equally if separation occurs.


[17] The trial judge’s conclusion on this point is entirely consistent with the purpose of equalization under the Act, as expressed in s. 5(7):

The purpose of this section is to recognize that child care, household management and financial provision are the joint responsibilities of the spouses and that inherent in the marital relationship there is equal contribution, whether financial or otherwise, by the spouses to the assumption of these responsibilities, entitling each spouse to the equalization of the net family properties. [Emphasis added by Court of Appeal.]

[18] The Act thus requires that the net family property of each spouse be shared equally upon marriage breakdown, based on a presumption that the spouses contributed equally during the marriage. This approach to the division of property reflects a clear policy choice on the part of the Ontario legislature….

The wife was a self-represented litigant

Ms. Pingue was represented by a lawyer at the Court of Appeal. However, she had been self-represented at the original six-day trial at the Superior Court. In losing that case, she was required to pay legal costs of $50,000 to her ex-husband.

One of her arguments to justify an appeal was that the trial judge had not sufficiently considered the handicap she faced as a self-represented litigant. Near the end of the trial, she discovered that she wanted to call an additional witness. The judge did not allow her the two-week adjournment that she requested so that the witness could attend.

It has become an accepted principle that a trial judge should provide some additional assistance to a self-represented litigant. The Court of Appeal emphasized that this does not extend to the point of bending the rules of court:

[30] ...it is well-accepted that trial judges have special duties to self-represented litigants, in terms of acquainting them with courtroom procedure and the rules of evidence: Davids v. Davids (1999), 1999 CanLII 9289 (ON CA), 125 O.A.C. 375, at para. 36. However, a trial judge's duty to assist has limits. It does not entail bending the rules of evidence in an attempt to compensate for the lack of representation….

[31] In ensuring that a self-represented litigant has a fair trial, the trial judge must treat the litigant fairly and attempt to accommodate their unfamiliarity with the trial process, in order to permit them to present their case…

[32] A review of the transcript of proceedings belies Ms. Pingue’s submissions on this ground. The trial judge made significant and sustained efforts throughout the course of trial to assist her. The trial judge provided detailed answers to Ms. Pingue’s questions, explained various aspects of trial procedure and the rules of evidence, and allowed for brief adjournments to facilitate settlement discussions and document review.

Therefore, this argument did not help her appeal.

Conclusion

The two main principles of law that were at issue in this case are both well established. The wife’s attempt to argue for an unequal division of property based on her higher income was contrary to the clear rule in the Family Law Act. An incorrect understanding of this key legal principle led the self-represented litigant into error. If she had sought expert legal advice in advance, she might have decided to settle rather than pursue a futile court case.


This case review is provided for general information, and is not intended to be legal advice for your particular case. The author is the principal of Spiro Law Professional Corporation, www.peterspiro.com