Calculating fairness: determining entitlement to occupation rent

• by Ainsley Doell

Originally published in the OFLM 2024-04 edition

Overview

Must parties demonstrate that there are ‘exceptional circumstances’ in order to succeed with a claim for occupation rent? This article considers this question by looking at recent decisions in K v. H (2023 ONSC 1612), Mansfield v. Kolinski (2024 ONSC 553), and Chhom v. Green (2023 ONCA 692), and comes to the conclusion that occupation rent remains a highly discretionary remedy to be considered in the broader context of a matter.

Introduction

It is widely accepted that after separation, both parties are typically economically worse off than they were during marriage or cohabitation. This new economic reality is felt acutely by parties who vacated the matrimonial home, and who now have a whole host of other living expenses, sometimes in addition to the expenses that they continue to pay for the matrimonial home as a joint asset.

When the other party remains in the matrimonial home, this can lead to a sense of unfairness and resentment. One way in which parties may seek to alleviate this sense of injustice and economic disadvantage is through a claim for occupation rent, wherein the occupying spouse would pay the non-occupying spouse for their continued use of the matrimonial home. There may be a sense among non-occupying spouses that this is “only fair” in circumstances, however, the law does not always agree.

There is no automatic or statutorily-derived entitlement to occupation rent between spouses in Ontario.  An order for occupation rent is a discretionary remedy, but the case law is inconsistent as to whether it should be reserved for exceptional circumstances, or simply available wherever it is deemed equitable on a holistic consideration of the circumstances.

This should have been clarified in Ontario after the 2023 Ontario Court of Appeal decision in Chhom v. Green (2023 ONCA 692), but this does not appear to be the case.

This article looks at the recent decision in K. v. H (2023 ONSC 1612), where Justice McGee discusses the current state of the law on occupation rent, applying the Chhom decision. However, the article will also look at Mansfield v. Kolinski (2024 ONSC 553), released in January, wherein Justice Nieckarz finds, contrary to Chhom, that such orders are only to be made in exceptional circumstances.

The aim of this discussion is to help clarify the current state of the law around occupation rent, and to assist family law lawyers in understanding how to advance these claims on behalf of their clients and assess the strength of these claims.

Analyzing a claim for occupation rent

  1. K v. H: a recent claim

The parties in K. v. H were in the midst of a litigious separation. This decision marked the end of the second trial between the parties, and Justice McGee noted that her reasons do not mark the end of the litigation (at para. 6).

This discussion will focus on only one of the issues that was outstanding between the parties at the time of this second trial, namely, the wife’s “claim for occupation rent in the face of an agreement for post separation adjustments” (at para. 17).

The wife had continued to reside in the matrimonial home with the parties’ two daughters following separation. Title was solely in the husband’s name, and the husband left the country before the resolution of any of the legal or financial issues arising from the separation. At trial, he asked for $114,400 in occupation rent for the period from separation in December 2019 to trial in October 2023.

As part of these proceedings, the wife’s claim of resulting trust over a 50% interest in the matrimonial home was successful. The evidence demonstrated that title was taken in the husband’s name only to preserve the wife’s access to a first-time homeowner’s benefit, on the advice of a broker (at para. 92).

The parties had also already agreed that the wife would pay the husband a post-separation adjustment of $70,997.59, to compensate him for expenses he had paid, many — but not all — of which were for the maintenance of the matrimonial home. This included payments for condo fees, gas, electricity, home insurance, etc. (at para. 116).

  1. Discretionary factors

K v. H is a 47-page decision, but the husband’s claim for occupation rent is dealt with rather swiftly.

Justice McGee asserted that “occupation rent is a discretionary determination available to a trial judge when it is “reasonable and equitable” to do so”, citing Griffiths v. Zambosco (2001 CanLII 24097 (ONCA)) to support this proposition.

The factors to be considered in determining whether it would be “reasonable and equitable” also come from Griffiths v. Zambosco, and are as follows:

  1. The timing of the claim for occupation rent;
  2. The duration of the occupancy;
  3. The inability of the non-resident spouse to realize on their equity in the property;
  4. Any reasonable credits to be set off against occupation rent;
  5. And any other competing claims in the litigation.

How these factors are to be weighed against each other, and whether there are other relevant factors to be considered, is up to the discretion of the trial judge (K v. H at para. 117).

These are the same factors that were cited by the Court of Appeal in Chhom, and other recent case law.

Higgins v. Higgins (2001 CanLII 28223 (ON SC)) added some more factors to this list. Higgins was not cited by Justice McGee, but did make a recent appearance in Mansfield v. Kolinski. These additional factors include:

  1. The conduct of the spouses (including the failure to make support payments);
  2. Whether the non-occupying spouse moved for the sale of the home (or, why they did not);
  3. Whether the occupying spouse paid the mortgage and other carrying costs of the home;
  4. Whether there are children in the home; and
  5. Whether the occupying spouse has increased the value of the home.

(Higgins at para. 53).

The central question to ask when applying these factors appears to be, is there an injustice that would be remedied by an award of occupation rent?

In the case of K v. H, the answer was no. This was in large part due to the post-separation adjustment that the parties had agreed to, and the finding that the wife had a beneficial interest in half of the matrimonial home.

An order for occupation rent is a “tool for balancing the equities”, and must be “assessed in relation to the affairs of the whole family” (at para. 114).

While seems that it is possible that the husband could have been successful in his claim for occupation rent in similar circumstances (absent the post-separation adjustment), Justice McGee makes it clear that this payment that the parties had agreed to was enough to “offset any benefit” that the wife would have enjoyed from her exclusive possession of the property (at para. 119).

The specific enumerated factors are considered in more detail in Mansfield v. Kolinski, where Justice Nieckarz considers the following:

  • There was insufficient evidence that the occupying spouse’s conduct forced the non-occupying spouse to leave;
  • The non-occupying spouse did bring an application seeking the home’s sale, and it is the occupying spouse that delayed the sale;
  • The non-occupying spouse was paying carrying costs;
  • The occupying spouse had renovated the home and would not be receiving an additional credit to his equity for this contribution; and
  • All of the above factors had been factored into a separate unjust enrichment analysis (at para. 93).

Justice Nieckarz ultimately finds that an award of occupation rent is not appropriate. This decision is consistent with K v. H: In the face of factors weighing against and in favour of the non-occupying spouse’s claim, the most important piece of the puzzle is that these factors in favour of the non-occupying spouse have already been considered elsewhere, and they have therefore already been compensated or otherwise accounted for.

  1. Requirement of “exceptional circumstances”

Justice McGee begins her analysis in K v. H by citing Chhom v. Green for the proposition that claims to occupation rent are “no longer restricted to exceptional cases”. While this does appear to be a new development, she makes it clear that this does not mean that there is an automatic entitlement on behalf of the non-occupying spouse (at para. 114).

This is interesting, because in Chhom, the Court states that “while it is settled law in Ontario that an order for occupation rent be reasonable, it need not be exceptional”, and cites Griffiths v. Zambosco to support this idea (at para. 8). The Court of Appeal appears to disagree with the existence of this requirement for ‘exceptional circumstances’ altogether, but Justice McGee suggests that the Chhom decision has changed the state of the law in this area.

Looking back to Mansfield v. Kolinski, decided just two months before K v. H and months after Chhom, Justice Neickarz asserted that claims for occupation rent made by one spouse against another “will be granted in exceptional circumstances” (at para. 90). She cites Ombac v. George (2015 ONSC 1983) in support.

In Ombac, Justice Chiappetta elaborated that where one spouse is a joint owner of the matrimonial home but enjoys exclusive possession of the property, the other spouse is entitled to compensation. However, “compensation” does not necessarily mean “occupation rent”. The non-occupying spouse must be able to make out that the other remedies that may be available, such as gaining possession of the property or receiving support from the occupying spouse, are not in fact available to them (at para. 33).

Justice Chiapetta states that this is the “exceptional case”, but if this is what is meant by “exceptional”, this does not actually sound all that different than the factors that are enumerated in Griffiths v. Zambosco. It may be that the loosening of this ‘exceptionality’ requirement does not make that big of a difference at all.

  1. Is title relevant?

A spouse advancing a claim for occupation rent certainly needs to be a titled owner. However, the occupying spouse can be titled or non-titled. Likely, they just need to have exclusive possession, such that they are a rightful occupant of the home and the non-occupant spouse cannot otherwise remove them.

In K v. H, the husband was the sole titled owner and advanced his claim for occupation rent against the non-titled occupying wife. Ultimately, the wife was found to have a beneficial interest in the property.  In Mansfield v. Kolinski, the parties held title as joint tenants.

Title does become relevant when determining the amount of occupation rent that one may be entitled to. According to Ombac v. George, where the occupying spouse is a joint owner, the non-occupying spouse may be entitled to “one-half of the rent that the premised would attract, less one-half of the taxes and insurances for the period of possession” (Ombac at para. 33).

Evidence to support a claim for occupation rent

In Mansfield v. Kolinski, Justice Neickarz stated that “a list of homes and their rents with little more than that, does not assist” in determining the appropriate amount of occupation rent (at para. 93(h)). So, what does assist, then?

In K v. H, the husband brought expert evidence regarding the fair market rent for the matrimonial home, off which he based the amount of his claim. Justice McGee does not appear to take issue with the adequacy of this evidence, but it is difficult to know for certain, since she decided in these particular circumstances there was no entitlement to occupation rent. It was not necessary for her to assess the adequacy of his evidence or the reasonableness of his calculation.

In another recent case, Skrak v. Skrak (2024 ONSC 1574), Justice Agarwal ruled that the party making the claim for occupation rent has the obligation to adduce the evidence to support the amount claimed. Justice Agarwal declined to take judicial notice of rental rates and specified that the husband should have provided opinion evidence on the rental rates in question (at para. 96).

Conclusion

The non-occupying spouses in Mansfield and K v. H were both unsuccessful in their claims for occupation rent. And so, while the case law appears to have dropped the “exceptionality” requirement for successful claims of occupation rent (if it ever existed), it appears that this may not make a practical difference for those making a claim. It is still the same set of factors being applied either way, with broad judicial discretion.

Occupation rent remains a discretionary equitable remedy, to be assessed in the larger context of the parties’ circumstances, with regard to what is fair and equitable as between the parties. 

A party has no guarantee of success on the basis of title and non-occupancy. Parties and their lawyers should be advised to come prepared with a holistic assessment of all of the payments being made in the context of the parties’ separation, and with expert evidence to support the amount of rent that they are claiming.