Cliff’s Notes: A Right of First Refusal

A Right of First Refusal

A right of first refusal is an issue that arises in many separations between spouses. It involves a request by one party to purchase the other’s interest in the matrimonial home. It is a common request, mostly in cases where the property is held in joint tenancy. Some of the reasons for wanting to exercise a right of first refusal are obvious – a desire to maintain stability, a tactical manoeuvre to gain advantage in a custody dispute, and, of course, the desire to achieve sole ownership of a valuable asset. 

Clients are often surprised when told by their lawyers that the law, even in cases of joint tenancy, does not give one joint tenant the legal right to purchase the other joint tenant’s interest. If a purchase is desired, it has to be negotiated; otherwise, the property will be sold (save in cases where a court may order the interest transferred to satisfy all or part of an equalization payment).

The Ontario Court of Appeal, in the recent case of Barry v. Barry, 2020, ONCA 321, said it again in the appeal of a judge’s decision that allowed a party the right to purchase an interest in the matrimonial home.

As this court explained in Martin v. Martin 1992 CanANLII 7402 (ON CA [1992] 8 O.R. (3 d) 41 (C.A.) , a right of first refusal is a substantive right that has economic value. It falls outside the boundaries of what is ancillary or what is reasonably necessary to implement the order for sale of the matrimonial home. It distorts the market for the sale of the matrimonial home by eliminating the need to compete against any other prospective purchaser, thus potentially reducing the amount the joint owning spouse realizes on the sale. In the absence of consent, the right of first refusal should not have been granted in this case. If the respondent seeks to purchase the matrimonial home, he must compete with any other interested purchaser.

The takeaway here is that  once in litigation, there is no right of first refusal. If one party wants it, that party must negotiate.

Appointment of an Amicus Curiae and Family Law

What are suffering trial judges to do when faced with the prospect of self-represented parties conducting a lengthy and complex trial involving tax treatment of support in different countries and some Hague Convention issues around access? In addition, one party was particularly anxious. The correct answer is not “slit their wrists”. 

In Morwald-Benevides v. Benevides, 2019, ONCA 1023, an the Ontario Court judge hearing this matter appointed an “amicus curiae” to act on behalf of the wife and, midway through the trial, when the husband could no longer pay his lawyer, appointed the same lawyer to act as “amicus curiae” to assist the husband. All would have been fine with this approach for this particular trial; however, the trial judge ordered the Crown to pay for the lawyers’ services.  The Crown was not amused , which led to anso  appealed. The Superior Court of Justice appeal judge upheld the process; the Crown, even more unamused by this time, appealed to the Court of Appeal. ( Actually, the process was a bit more complicated procedurally, but, for the purpose of this Note, I have chosen to simplify it.)

An “amicus curiae” is a friend of the court. The concept has been with us since time immemorial. Its purpose is to give assistance to the Court on legal issues when the Court needs it, but cannot otherwise get it. It is used in criminal matters, but rarely, if ever, in family matters.

In overturning the Superior Court judge’s order,  Lauwers, J.A. made the following points on behalf of the unanimous panel:

1) The trial judge erred in principle in appointing an “amicus” to carry on effectively in their roles as counsel for each of the parties.

2) By appointing an “amicus” for the wife, an adversarial element was introduced into the proceeding which was inconsistent with the impartial role of an “amicus”. 

3) A second “amicus”, appointed to represent the husband, was contrary to principle. A single “amicus” could have addressed questions about the application of Hague Convention principles as well as the tax issues.

4) The appointment of a second “amicus”, part way through the trial, took away any hope that a single “amicus” could be neutral.

5) It would be rare in a family case to appoint one “amicus”. Circumstances would “virtually never justify the appointment of two”. 

6) The appointment of a single “amicus” might make sense in the context of a constitutional challenge where the Attorney-General is present to represent one side of the case. A single “amicus” should “almost always be able to satisfy the basic requirements of the Court. In the family context, it is hard to imagine a situation in which appointing two counsel as “amicus” to represent adversarial interests would be appropriate, rather than a state-funded friend of the court.  

7) The fact that one party is represented does not justify the appointment of an “amicus” for the other party. It is not through the appointment of two “amicus” that a judge should seek to level the playing field. This is not a legitimate consideration in most family cases.

8) Any judge considering the appointment of “amicus” should give notice to the Attorney-General to enable the Crown to make submissions.

9) In the case at bar the trial judge should have given consideration to preparing a litigation plan to govern the scope of activities of the “amicus”. The scope should be set out as precisely as possible.

The Crown was mollified. After this case it is unlikely that two “amicus” will ever be appointed again in a family case.

I don’t expect that mediators or arbitrators need concern themselves about this issue; however, we all have had clients who do not qualify for Legal Aid. It appears that they cannot look to this process for assistance.

The Valuation of Federally Regulated Pensions for

Equalization Purposes

An important case on the valuation of a federally regulated pension was released by the Court of Appeal on May 29, 2020:  Van Delst v. Hrnowsky, 2020 ONCA 329. 

Unfortunately, space does not permit me to discuss it in detail, but, with the summer break coming up, I thought I should draw it to your attention. It deals with the determination of the parties’ normal retirement dates; the decision not to include in the wife’s net family property the  contingent interest she held in the husband’s pension; and the inclusion of a contingent survivor benefit in valuing the parties’ pensions.

The case sets out proper steps a provincial court should take in valuing a federal pension. It also clarifies the process  an Ontario Court should follow to determine a retirement date. At the risk of oversimplifying a very detailed analysis of the issue, the trial judge was found to have erred because she applied case-specific evidence to determine the retirement date for one of the parties. The Court of Appeal states that the retirement date under Ontario law is the date on which the pension-holder becomes eligible to receive an unreduced pension. This leads to far more certainty than hearing evidence on what the parties had discussed or had in mind about their retirement dates.

The Court of Appeal also points out that, when necessary, a joint litigator or expert should be appointed, as the Family Law Rules (20. 2 (8)) now require a joint litigation expert when the Court so orders. The appointment of competing valuators should be avoided because it encourages costly litigation.

The Court of Appeal also analyses and explains the route to follow in considering whether to include a survivor pension and contingent survivor pension in the respective parties’ net family property. Mediators and arbitrators should familiarize themselves with this case if they have an issue involving the valuation of a federal pension.

Until next time…..