Legal Blog

Maintenance #2

Sometimes two equally deserving litigants square off, both have worthy claims, but only one can win. This was the case in De Coito v. De Coito, a 2009 decision of the Ontario Superior Court of Justice. 

Wife 

Husband and wife were divorced and, it seems, husband simply abandoned all of his assets to his wife. He ignored wife’s divorce action and allowed wife to obtain judgment against him for a 50% share in the matrimonial home and child support arrears of $55,000, which were to be paid from husband’s share in the matrimonial home.

Ultimately, the parties sold the home and, after accounting for encumbrances and sale costs, the surplus was $95,000.

Creditor 

One month after the divorce judgment, husband sweet-talked a woman – we do not know if there was a romantic aspect to the relationship – into lending him $25,000 to put the mortgage on the home into good standing. Husband gave her a promissory note for her largesse. Subsequently, she took out credit cards in her name with husband as a supplementary cardholder. He rang up $31,000 in debt and, instead of paying the debt, gave her a new promissory note for $56,000. The woman finally saw the writing on the wall, sued husband, and obtained a $59,000 judgment.

Motion

Wife brought a motion to obtain the surplus funds from the sale of the home. Husband, true to form, did not appear, but creditor did. She wanted her money.

There was insufficient money to pay both wife and creditor. Wife received $47,500 for her half of the home and the other $47,500 was to be applied either to the maintenance arrears or to creditor’s judgment.

Family Law 

We dealt with this issue in our newsletter of August 2007. Section 4 of the Creditors’ Relief Act gives priority to a support or maintenance order to the extent of the arrears in periodic payments or a lump sum order for arrears. Accordingly, wife had priority over creditor.

Creditor, however, also argued that wife was unjustly enriched and therefore creditor should still be paid. To demonstrate unjust enrichment, creditor had to establish that wife was enriched, creditor had a corresponding deprivation, and there was no juridical reason for the enrichment.

The judge looked in turn at each of the payments creditor made to husband. For the money loaned to pay arrears of the mortgage on the home, there was indeed enrichment and deprivation. After all, had creditor not advanced money to pay the arrears, the net proceeds would have been $25,000 less than they were. However, the judge held that there was a juridical reason for the enrichment. Husband and debtor had agreed that creditor would lend the funds and creditor knew the purpose of the loan.

For the money loaned under the credit cards, there was no enrichment of wife. She did not receive the money; husband did. Accordingly, that argument also failed.

The Court of Appeal dismissed creditor’s appeal in a terse endorsement.

The upshot was that wife got everything and creditor received nothing. We can see how creditor might have been a little upset. If she had a romantic relationship with husband, we doubt that it lasted.