Case reference: White v. White, 2021 ONSC 6018 (CanLII)
This historical case summary discusses the decision identified above. Later decisions and legislative changes may affect how it applies today. Obtain legal advice about your circumstances.
This motion concerns the sale of four rural properties owned by the parties during their marriage of 25 years. …..“the farm” is indeed a farm within the meaning of section 11(1) of the Family Law Act. I find the woodlot to be a business within the meaning of section 11(1). Both of these properties shall be listed for sale forthwith.
Section 3(1) of the Partition Act reads as follows:
3 (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested. R.S.O. 1990, c. P.4, s. 3 (1).
The relevant sections of the Family Law Act are:
Equalization of net family properties Divorce, etc.
5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).
9 (1) In an application under section 7, the court may order,
(a) that one spouse pay to the other spouse the amount to which the court finds that spouse to be entitled under this Part;
(b) that security, including a charge on property, be given for the performance of an obligation imposed by the order;
(c) that, if necessary to avoid hardship, an amount referred to in clause (a) be paid in instalments during a period not exceeding ten years or that payment of all or part of the amount be delayed for a period not exceeding ten years; and
(d) that, if appropriate to satisfy an obligation imposed by the order,
(i) property be transferred to or in trust for or vested in a spouse, whether absolutely, for life or for a term of years, or
(ii) any property be partitioned or sold. R.S.O. 1990, c. F.3, s. 9 (1); 2009, c. 11, s. 25.
Financial information, inspections
(2) The court may, at the time of making an order for instalment or delayed payments or on motion at a later time, order that the spouse who has the obligation to make payments shall,
(a) furnish the other spouse with specified financial information, which may include periodic financial statements; and
(b) permit inspections of specified property of the spouse by or on behalf of the other spouse, as the court directs. R.S.O. 1990, c. F.3, s. 9 (2).
Variation
(3) If the court is satisfied that there has been a material change in the circumstances of the spouse who has the obligation to make instalment or delayed payments, the court may, on motion, vary the order, but shall not vary the amount to which the court found the spouse to be entitled under this Part. R.S.O. 1990, c. F.3, s. 9 (3).
Ten-year period
(4) Subsections (3) and 2 (8) (extension of times) do not permit the postponement of payment beyond the ten-year period mentioned in clause (1) (c). R.S.O. 1990, c. F.3, s. 9 (4).
Determinations of questions of title between spouses
10.1 (1) The imputed value, for family law purposes, of a spouse’s interest in a pension plan to which the Pension Benefits Act applies is determined in accordance with section 67.2 or, in the case of a spouse’s interest in a variable benefit account, section 67.7 of that Act. 2009, c. 11, s. 26; 2017, c. 8, Sched. 27, s. 21 (1).
Operating business or farm
11 (1) An order made under section 9 or 10 shall not be made so as to require or result in the sale of an operating business or farm or so as to seriously impair its operation, unless there is no reasonable alternative method of satisfying the award. R.S.O. 1990, c. F.3, s. 11 (1).
Idem
(2) To comply with subsection (1), the court may,
(a) order that one spouse pay to the other a share of the profits from the business or farm; and
(b) if the business or farm is incorporated, order that one spouse transfer or have the corporation issue to the other shares in the corporation. R.S.O. 1990, c. F.3, s. 11 (2).
Residence on farmland, etc.
18 (3) If property that includes a matrimonial home is normally used for a purpose other than residential, the matrimonial home is only the part of the property that may reasonably be regarded as necessary to the use and enjoyment of the residence. R.S.O. 1990, c. F.3, s. 18 (3).
What Constitutes a Farm under Part 1 of the Family Law Act?
The terms farm or farmlands are not defined in the FLA.
The ordinary meaning of the word “farm” as defined by the Collins English Dictionary is “ an area of land, together with the buildings on it, that is used for growing crops or raising animals, usually in order to sell them.” The definition of farm in the Cambridge English Dictionary reads: “an area of land together with a house and buildings used for growing crops and/ or keeping animals as a business.” Lastly, the Oxford English Dictionary definition is “an area of land, and the buildings on it, used for growing crops and/ or keeping animals.”
Notably, the Oxford Dictionary definition makes no reference to any commercial aspect whereas the Collins Dictionary definition includes that “usually” there is a commercial purpose. And in the Cambridge Dictionary, a farm is by its very definition a business enterprise. These definitional differences raise the question whether a farm, as referred to in Part 1 section 11(1) of the FLA, must have a business or commercial purpose. That section must be read together with sections 5(1), and 9 and the property scheme as whole.
Section 5(1) directs the court to make a payment by one spouse to the other that amounts to one half of the difference between their respective net family properties. The calculation is driven by ownership and value. In Thibodeau v. Thibodeau, 2011 CanLII 110 (ONCA), and Buttar v. Buttar, 2013 CanLII 517 (ONCA), the Ontario Court of Appeal confirms that the court’s power under this section is to order an equalization payment and does not include the power to redistribute or divide properties in specie. Any powers under the FLA to delay the equalization payment, to provide a party entitled to such a payment with security pending that delay, or to vest title to a property owned by one spouse to the other spouse, as set out in section 9 of the Act, are limited to specific circumstances, after the equalization issue has been determined.
The purpose of these powers is evident from a plain reading. Under section 9, the court is granted the power to delay partial or complete satisfaction of the equalization payment for up to maximum of ten years, to avoid causing hardship to the payor spouse. A variety of companion remedies are available to the court to protect the rights of the spouse to whom the delayed payment is owed. Section 9 also confers enforcement powers in relation to the owed equalization, including the partition and sale of property, or the transfer of property in trust to or vested in the other spouse. In sum, the purpose of this provision is to relieve against financial hardship arising from the equalization obligation, on terms, or to enforce the obligation, on terms. It provides extra remedies to both the entitled spouse and the obliged spouse in specified circumstances.
Section 11(1) of the FLA serves to limit the scope of these powers in circumstances where there is an operating business or farm. This is the only section in the Part 1 of the FLA that refers to a farm. The court is directed to avoid making an order for sale or any other order, that would seriously impair operation, unless there is no alternative method of satisfying the obligation. Since the purpose or aim is to alleviate financial hardship arsing from the property related obligations, then the busines or farm in question must be engaged in commercial activity to be afforded these extra remedies. A hobby farm, for example, would be excluded from the ambit of these provisions. This interpretation comports with two of the three definitions provided in the ordinary meaning part of the analysis.
The modern principle requires the court to find a meaning that is harmonious with the Act as a whole. Therefore, I considered the use of the term farmland found elsewhere in the Act. Part II of the FLA deals exclusively with the matrimonial home, which is defined in section 18. Section 18(3) parses the residence and any property surrounding it necessary for its use and enjoyment from any remaining property which is normally used for other than residential purposes. This impacts rights of possession as well as valuation.
This provision falls under the heading “Residence on Farmland etc.” According to Sullivan the use of headings as an aid to statutory interpretation is to “cast light on the purpose or scope of the provisions to which they relate.” In section 18 (3), the header helps resolve any ambiguity in the section that follows by giving an example, namely farmland, where a matrimonial home might be parsed in this way.
The effect of this provision is compatible with the functional, commercial, definition of farm in section 11 adopted above. The separation of one piece of property based on use and purpose in section 18(3) supports the continuing functionality of a farm or other activity, without derogating from either spouse’s separate rights in relation to the matrimonial home. Sections 11 and 18(3) both preserve the farm or other enterprise on an operational level, albeit in different ways.
Farm income can be variable from year to year, especially having regard to matters beyond the owner’s control such as the effect of weather conditions on livestock wellness or crop yield and the bottom line. In my view, so long as the intention or purpose of the farm enterprise is profit, the consideration of a farm’s profitability or viability takes place at the second stage of the inquiry, namely whether the specific farm at issue ought to attract the protections afforded under section 11.
Is the Woodlot a Farm or a Business?
The ordinary meaning of the word “woodlot” is defined by the Collins English Dictionary, according to the British version as “an area restricted to the growing of trees” and, according to the US version, as “a piece of land on which trees are cultivated specifically as a source of firewood, lumber etc.” The Merriam-Webster Dictionary defines a woodlot as “a restricted area of woodland usually privately maintained as a source of fuel, posts and lumber. The Oxford English Dictionary definition is “an area restricted to the growing of trees.” None of these definitions make specific reference to the cultivation or harvesting of wood for a commercial purpose, and accordingly, the ordinary meaning rule is inadequate for resolving this definitional issue.
It is common in rural areas for woodlots to be part of or adjacent to farmland. They may be used to support the farm operation by providing timber as fuel, fencing and building materials or as a separate commercial enterprise. Adopting a purposive approach to the definition of farm, arguably that term could be interpreted to encompass a broader range of activities than those described under the ordinary meaning rule, including, for example, fish farming or harvesting wood.
The purpose of section 11 of the FLA is to avert or minimize hardship for spouses engaged in the operation of a business or farm….. the woodlot ought to be classified as a farm, it does not impact the outcome on the question of whether the property should be sold, at this time, because section 11 operates to provide equal protection to both farms and operating businesses.
Does Section 11 of the FLA Create a Complete Defence to Partition and Sale under the Partition Act?
It is well established law that separated spouses may bring an application under the Partition Act to exercise their prima facie right to sell jointly held property, contemporaneously with claims brought under the Family Law Act. See Silva v Silva 1990, Can LII 6718 (ONCA). As the Court of Appeal states in Silva at pp.11-12, the FLA does not oust the jurisdiction of the Partition Act when dealing with jointly owned spousal property; the two statutes are not incompatible. It is only where “substantial rights in relation to the jointly owned property are likely to be jeopardized by an order for partition and sale, that an application under the Partition Act should be deferred until the matter is decided under the FLA.” Notably, the court’s discretion to decline partition is narrow and requires malicious, vexatious or oppressive conduct on the part of the applicant. See Latcham v. Latcham 2002 CanLII 44960 (ONCA).
This means, for example, where a spouse has a strong claim for exclusive possession of a jointly owned matrimonial home, or there are serious questions of ownership, the application for partition and sale will likely fail. The party resisting the partition application bears the onus of establishing what circumstances or claims justify the court’s refusal to grant an order for partition and sale. See Afolabi v. Fala 2014 CanLII 1713 (ONSC) at para. 29.
I do not read section 11 as a provision which ousts the court’s jurisdiction to give effect to a joint owner’s prima facie right to partition. Section 11 must be read together with sections 9 and 10. Section 9 provides the court with enhanced payment and enforcement remedies for businesses and farms. When faced with a partition claim in these circumstances, the court’s task is to weigh the applicant’s right to partition and sale as against the likelihood that once the equalization is determined, the resisting spouse will succeed in achieving a section 9 remedy. This is the approach adopted in Silva where the court was called upon to balance the right of partition and sale of parties’ matrimonial home by one spouse, with the competing claim that its sale would jeopardize the other spouse’s request for an award that exceeded half the difference between the net family properties under section 5(6) of the FLA.
The denial of any consideration of a partition application prior to trial in all cases of jointly owned businesses or farms also runs contrary to Rule 2 of the Family Law Rules, which provides that:
(2) The primary objective of these rules is to enable the court to deal with cases justly. O. Reg. 114/99, r. 2 (2).
(5) The court shall promote the primary objective by active management of cases, which includes,
(a) at an early stage, identifying the issues, and separating and disposing of those that do not need full investigation and trial;
(b) encouraging and facilitating use of alternatives to the court process;
(c) helping the parties to settle all or part of the case;
(d) setting timetables or otherwise controlling the progress of the case;
(e) considering whether the likely benefits of taking a step justify the cost;
(f) dealing with as many aspects of the case as possible on the same occasion; and
(g) if appropriate, dealing with all or any part of the case without requiring parties, witnesses or lawyers to attend in person on the basis of written documents or by using telephone or video technology, by way of an order under clause 1 (7.2) (i) or (i.1). O. Reg. 114/99, r. 2 (5); O. Reg. 152/21, s. 2.
Rule 2(3) elaborates that the primary objective of dealing with cases justly is achieved by saving expense and time and by dealing with cases in ways that are appropriate to the importance and complexity of the issues.
*source: Canlii
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