The Ontario Court of Appeal’s decision in Nairne v. Nairne, 2023 ONCA 478 has created precedent, supporting an innovative approach in spousal support and property division.
Nairne v. Nairne Overview
The Court of Appeal upheld an arrangement where an interest-free mortgage on the matrimonial home was considered a legitimate part of the spousal support payment.
Traditionally, property division in family law cases has followed a predictable path—either the matrimonial home is sold and the proceeds are divided, or one party buys out the other. However, the judge in Nairne v. Nairne took a different route. The trial judge accepted Mr. Nairne’s proposal that:
- the matrimonial home, appraised at $1.8 million, be transferred to Ms. Nairne;
- Mr. Nairne would receive a mortgage that represents his 50% equity in the matrimonial home (less certain support payments and certain other amounts) (the mortgage would amount to about $561,000.00);
- there would be no interest on this mortgage;
- there would be no mortgage payments of either principal or interest on this mortgage; and
- the mortgage would be due if Ms. Nairne dies, sells the matrimonial home or if she no longer resides in the home.
This arrangement allowed Ms. Nairne to remain the sole owner of the home for life, with the potential for rental income from a self-contained unit in the home.
The Interest-Free Mortgage: A Factor in Quantum and Duration
The Court of Appeal emphasized that the value of the interest-free mortgage was substantial and should be considered in conjunction with the monthly spousal support award of $2,500. The Court noted that this value would continue to accrue to Ms. Nairne even after Mr. Nairne’s retirement, at a time when the income disparity between the parties would be much smaller. In particular, the Court stated:
“There can be no question that the value to Ms. Nairne of not having to pay interest on a mortgage of approximately $561,000 is substantial. The $2,500 per month award while Mr. Nairne continues to work must be viewed in combination with the value of the interest-free mortgage. The value of the interest-free loan will continue to accrue to Ms. Nairne after Mr. Nairne retires, at a time when the disparity between the parties’ incomes will be much smaller. In the circumstances, taking into consideration, as the trial judge did, the significant value to Ms. Nairne of the interest-free mortgage, among the other factors he considered, I see no error in principle in his award of spousal support.” (emphasis added)
Not an Endorsement of the Trial Judge’s Approach
The Court of Appeal clarified that its decision was not an endorsement of the trial judge’s overall approach to assessing Ms. Nairne’s entitlement to spousal support. The trial judge arguably took a narrow approach in assessing the parties’ respective roles during the marriage and their needs following the marriage. Despite these issues, the Court of Appeal concluded that the trial judge did consider all relevant circumstances.
Nairne v. Nairne Implications for Future Cases
The Court of Appeal’s decision sets a precedent that could influence future spousal support calculations, especially in cases involving complex financial arrangements. This was a very unusual and creative approach for a trial court to take, but in the circumstances of the facts of the case, worked for the family. As practitioners, we should be prepared to argue for or against the inclusion of such arrangements or other novel approaches in spousal support calculations, depending on our clients’ best interests.
Let’s continue to elevate the practice of family law in Ontario!