Written on behalf of Shariff & Associates
A vesting order enables a court to transfer property ownership from one party to another. In family law cases, a person may seek a vesting order when the recovery of equalization or support payments are an issue. If the payor has been uncooperative or has not met their obligations to make the required financial payments, an order transferring property can provide the recipient with protection. However, this remedy is granted at the court’s discretion.
Courts have broad jurisdiction to make vesting orders to satisfy the payment of an equalization obligation under section 9(1)(d)(i) of the Family Law Act and to satisfy a support obligation under section 34(1)(c). Courts have discretion over granting vesting orders, but the party seeking the order bears the onus of establishing that it is appropriate. Courts have recognized the flexible jurisdiction over such orders and have resisted categorizing the family law circumstances in which a vesting order may be appropriate since much depends on the circumstances of a particular case. However, as the Superior Court of Justice has explained, the rationale for the vesting power “is to permit the court to direct the parties to deal with property in accordance with the judgment of the court.”
In Lynch v. Segal, the Court provided some context relating to vesting orders in the family law context, such as:
- a vesting order is in the nature of an enforcement order;
- the party seeking the order has the onus of establishing the existence of a payment liability by the spouse who will be the subject of the vesting order;
- the order must be necessary to ensure compliance by the spouse with the obligation;
- there must be a reasonable relationship between the value of the asset to be transferred and the amount of the other spouse’s liability; and
- the interests of any competing creditors or encumbrancers with claims against the specific property in question must not be an impediment to the granting of a vesting order.
Before granting a vesting order, the court should have an indication that payment will not be forthcoming from the spouse with the obligation upon consideration of the payor’s prior conduct and anticipated future conduct. In Levy v. Williams, the Court also explained that vesting “intertwines the satisfaction of legal obligations with a transfer of property.”
In Horrocks v. McConville, the applicant asked that the matrimonial home be transferred and vested in her. She argued that the only asset remaining in the respondent’s control was the matrimonial home that was valued at $800,000 with a mortgage of $452,000. She also argued that she had a separate claim to ownership of the matrimonial home and pointed out that she had calculated an equalization payment that the respondent owed to her in the amount of $550,000. The respondent had various debts, including a significant debt that was owed to the Canada Revenue Agency (“CRA”), which caused the applicant concern that she could lose the home that she resided in with her children. The respondent suggested that any transfer of the matrimonial home should only take place as part of a settlement and that a vesting order was not warranted. However, if one was granted, the CRA should be compensated for the amount they were owed.
The judge noted that no liens in favour of the CRA had been registered on the property as of the motion date. Therefore, the CRA did not hold status as a creditor. The mere existence of debt to CRA did “not alter the court’s authority to grant a vesting order.” It was clear that the applicant was entitled to a significant payment from the respondent either for equalization or child and spousal support. The judge found that because of the respondent’s past conduct, he would not willingly pay amounts owed to the applicant, and a vesting order would ensure compliance with future court orders, and it would protect the applicant’s interest in the matrimonial home. This resulted in title to the home transferring from the respondent and vesting with the applicant.
In some cases, a vesting order may be the only way to secure judgments against the payor. In Patel v. Patel, the applicant brought a motion for a vesting order to transfer the matrimonial home into her name, allowing her to sell it. She argued this was the only way for her to secure the payment of child support, along with other court-ordered obligations and over $16,000 in costs awards that were outstanding and owed by the respondent.
The respondent had previously ignored six court orders requiring him to provide disclosure, provide an accounting of the transfer of assets to third parties and possible depletion of funds, and to satisfy his child support obligations. At the time of the motion, the respondent owed the applicant $9,000 in child support, $5,882 in section 7 expenses, and $16,500 in cost awards. The respondent solely owned the matrimonial home, and it was his only significant asset remaining, with equity limited to $70,000. The applicant also learned that the mortgage for the property was in arrears, and the mortgagee had commenced power of sale proceedings.
After looking at the prerequisites for the court to grant a vesting order according to Lynch v. Segal, the judge determined that the applicant’s claim for the purpose of enabling her to secure enforcement of the court orders met the required conditions. The respondent had failed to comply with multiple court orders to meet his obligations that collectively amounted to over $31,000. When looking at this amount against the available equity of $70,000 in the home, there was a “reasonable relationship between the value of the matrimonial home” and the respondent’s debt to the applicant. The judge also found that without the vesting order, there was no reasonable prospect that the applicant would be able to enforce the existing court orders or any future judgment.
The respondent’s financial difficulties and a previous disappearance to India without any notice were indications of a clear risk to the applicant. Apart from being able to collect against the value of the matrimonial home, if the respondent did not return to Canada, the applicant had a very faint chance of collecting payment from any of the respondent’s other financial sources. Additionally, there was no indication the respondent would resume mortgage payments to halt the mortgagee’s impending sale of the home. The opportunity available to the applicant to obtain a vesting order and immediately list and sell the property was the better option that would minimize the costs incurred and ensure greater proceeds from the sale would be available to the parties. For these reasons, a vesting order and grant of exclusive possession of the home to the applicant for the purpose of initiating the sale process was appropriate.
When a party is trying to recover their financial entitlements, vesting orders can be an important tool. However, this remedy is discretionary and is not automatic. A court may decide to grant an order where it is clear that the payor has not complied and met their obligations.
Contact the Divorce Lawyers at Shariff & Associates in Markham-Stouffville for Advice on Support Payment Concerns
The experienced family lawyers at Shariff & Associates help clients resolve various family disputes, including child support obligations, property division and parenting disputes. We provide clients with an assessment of their unique circumstances and honest advice with respect to their options and potential outcomes of outstanding disputes. If issues arise pertaining to an existing court order, we help clients navigate post-divorce modifications. Our firm represents clients throughout Markham-Stouffville and the Greater Toronto Area. Contact us online or call us at 905-591-4545 to schedule a confidential consultation and learn how we can assist you.