Introduction
The Applicant, in her evidence, contends that the Respondent has been depleting a line of credit secured against their matrimonial home since their separation. She alleges that he has withdrawn a substantial amount, ultimately threatening her financial interests. To safeguard her claims and preserve the matrimonial property's value, she seeks an order to freeze this line of credit.
Additionally, the Applicant lays claim to a Toronto condo acquired during their marriage. She asserts that the property was bought with joint funds and seeks a Certificate of Pending Litigation (CPL) against the condo's title to secure her financial stake in it.
Legal Issues
Freezing the Line of Credit: The first issue here is whether the court should issue an order to freeze the line of credit secured against the matrimonial home. This request is made under Section 12 of the Family Law Act. The Applicant's concern is that the Respondent's unfettered access to this credit may erode her trust interest in the matrimonial home.
Certificate of Pending Litigation (CPL): The second issue involves the Applicant's request for a CPL against the Toronto condo. This order is made under Section 103 of the Courts of Justice Act. The primary question is whether the Applicant has a reasonable claim to an interest in the Toronto condo, thereby justifying the issuance of a CPL. The onus then shifts to the defendant to show there is no triable issue.
Analysis
Freezing the Line of Credit
The court emphasizes the importance of preventing one party from depleting assets that may be subject to equalization, especially when it's apparent that the claimant will receive an equalization payment. In the current case, the Applicant demonstrated the relative strength of her case, the balance of convenience favouring her, and the irreparable harm she would suffer if the Respondent continues to draw down the line of credit.
[8] I agree with the conclusion reached by Kurz J. in Thomas v. Wohleber, 2020 ONSC 1965 that freezing a line of credit and restraining the depletion of property comes within the rubric of s. 12 of the Family Law Act. I find this conclusion is applicable to the facts in this case as the interests of each party are threatened by the respondent’s unimpeded access to the line of credit.
[9] Sachs J. held in Bronfman v. Bronfman, 2000 CanLII 22710 (ON SC), [2000] O.J. No. 4591 at paragraph 31 that the court will give considerable weight when deciding whether to make a non-depletion order where it is clear that the claimant will receive an equalization payment. The applicant has filed evidence that meets the three factors set out in paragraph 28 of Bronfman. She has demonstrated the relative strength of her case, that the balance of convenience favours her, and that she will suffer irreparable harm if the respondent is permitted to draw down on the line of credit much further.
Therefore, the court ordered the freezing of the line of credit to protect the Applicant’s pending a final resolution.
Certificate of Pending Litigation (CPL)
The Applicant is only required to show a reasonable claim to an interest in the property in order to get a CPL. This threshold is relatively low, and the evidence provided, such as the use of joint funds to purchase and maintain the condo in this particular case, met the requirement. The court noted:
[18] I have considered those matters that are relevant to the applicant’s motion for a CPL. I find the applicant has made out a reasonable claim to an interest in the Toronto condo by virtue of the trust claims she is pleaded in her application. There is evidence that the Toronto condo was purchased with joint funds, and expenses for the Toronto condo have been paid out of joint funds. This evidence lays the foundation for the applicant’s claim that she has an equitable interest in the Toronto condo by way of a resulting or constructive trust.
[19] The applicant has attached marketing material for the listing the Toronto condo to her primary affidavit showing it has been listed for sale at $669,000. After subtracting the mortgage balance of approximately $270,000, this leaves $399,000 in equity to cover her trust claim.
In turn, the Respondent must show there is no triable issue. The Respondent failed to demonstrate the absence of a triable issue.
Consequently, the court granted the CPL to secure the applicant's financial interest in the Toronto condo.
Conclusion
This case highlights the court's role in preserving and protecting the financial interests of parties involved in family law disputes. It emphasizes the importance of freezing lines of credit when substantial equalization payments are anticipated and granting CPLs to secure equitable interests in jointly acquired properties. These legal measures aim to ensure that parties are not unjustly deprived of their due shares in the event of property division.