What happens when only one spouse owns the matrimonial home? Do both of the spouses still enjoy the increase in the value following the date of separation? This is a particularly important issue in light of the rapid increase in the value of real estate over the last several years. In the recent decision of the Ontario Court of Appeal in Korman v. Korman this very point was considered.
In this case the parties were married in 1988 and separated in 2009. At the time of the separation they lived in a house purchased in 2002 with the proceeds from the sale of their first home, with money gifted from both of their parents, and some savings. Title to the home was registered in the name of the wife alone at the time of purchase and she remained the sole owner at the time of trial. There was no mortgage.
At the trial, which was in Newmarket, the wife argued that they had jointly agreed to register title to the home solely in her name to protect the home from the husband’s potential creditors, although there were never any actual creditors. The wife argued at trial that because she was the sole owner of the home she was entitled to the whole of the post-separation increase in its value. There was no issue that the husband was entitled to an equal share of the value of the home as at the date of separation. The trial judge agreed with the wife and rejected the husband’s claim for one-half of the post-separation increase.
The husband appealed and fortunately for him the Court of Appeal disagreed with the trial judge and awarded him one-half of the increase following the date of separation. The particular issue before the Court of Appeal was whether the husband had intended to “gift” his interest in the home to the wife when they purchased it in 2002. The Court of Appeal found that the wife had failed to meet that evidentiary burden at trial. In fact, the wife had never said that the husband had gifted his interest in the home to her. On the other hand, she did say that although the home was registered solely in her name to protect it from claims by his potential creditors he still had a full interest in it. Later courts have gone further by deciding that even if there were creditors at the time the home was purchased, such cannot be used to defeat the claim of the non-titled party to the increase in value.
It appears that clear and convincing evidence will be required of an intention to gift to defeat the claim of a non-titled spouse to the increase in the value of the home following the date of separation.
By Charles Baker