Manfred Wolf and Ursula Wolf v. Her Majesty the Queen, [1991] 2 CTC 133, 91 DTC 5437

Denault, J.:—The opposant, the defendant's wife [1] , is opposing a seizure of immovables by the Minister of National Revenue against the defendant pur- suant to the filing of a certificate on September 28, 1983 ordering him to pay a total of $305,022.39 for the 1976 to 1982 taxation years. The defendant and the opposant engaged in a flurry of oppositions to seizures of immovables, movables and a registered retirement savings plan by the Minister of National Revenue and proceedings taken by the latter to cause a safety deposit box to be opened, and so on. The opposition at bar deals in particular with the seizure of an immovable located at Ste-Thérèse.

The facts need to be briefly summarized. The defendant and the opposant were married under the regime of community of property and agreed to amend their matrimonial regime and adopt the regime of separation of property. On August 3, 1978, before the notary Louis Lagacé in Sherbrooke, they signed a declaration to this effect and then agreed on a division of the community. Under the terms of that division a house located in the town of Ste-Thérèse became the opposants property. This document was not immediately registered with the registry office where the immovable was located. On the following October 3 a Superior Court judgment homologated the deed of division of the community property between the parties; this judgment was registered in the central registry of matrimonial regime on November 3, 1978. On October 7, 1983 a writ of seizure of immovables was served on the defendant in respect of his Ste-Thérèse immovable. The defendant's wife immediately filed an opposition, saying she was owner of the immovable as she had acquired it on August 3, 1978. The deed of division was registered in the Terrebonne registry office on October 25, 1983.

The plaintiff challenged this opposition on the ground that the seizure took place before the deed of division was registered and so this essential formality could be set up against the transfer of ownership. He accordingly asked that the opposition be dismissed.

It should be noted that on September 14, 1988 the Court granted an extension of the period of validity of the writ of fieri facias, in accordance with Rule 2006(2) of the Rules of this Court. The opposant accordingly renewed her opposition on November 27, 1989, and this was again challenged by the plaintiff.

At the hearing of this case the opposant testified and alleged essentially that the house had belonged to her since 1978. She said she gave instructions to the notary to register it but he failed to do so. It was not until October 25, 1983, over five years after the division of the community and over two weeks after the seizure by the plaintiff, that the transfer of ownership of this immovable was duly registered in the Terrebonne registry office. The opposant pointed out that in 1985 the family situation became so bad that she brought divorce proceedings on September 16, 1985. In January 1986 she moved into "her" Ste-Thérèse house, where she made certain improvements before moving to Ottawa in June 1987. The opposant submitted that she has always made the mortgage payments on this house, from which she received rental income, and has paid the real estate and school taxes. She said she received nothing from her husband after the divorce proceedings, though she admitted dropping them. She is now working in a store in Ottawa and is relying on this Ste-Thérèse house for her old age.

The plaintiff's representative in charge of the case explained the steps taken to proceed with this seizure, and in particular that a check with the Terrebonne registry office had indicated that the immovable was registered in the defendant's name. The proceedings were stayed when a notice of opposition was filed. It appears from the record that the defendant made an assignment of his property on January 26, 1989 but on October 16, 1989 the trustee in bankruptcy discontinued the bankrupt's appeal to the Tax Court of Canada.

Though the answer to the solution in this case lies in the interpretation of article 2091 of the Civil Code, which the plaintiff is setting up against the opposant, several concepts of civil law must be considered in arriving at it. Thus, there is no doubt that a debtor's movable and immovable property are the common pledge of his creditors (articles 1980 and 1981 C.C.). Under article 569 of the Code of Civil Procedure, a creditor may seize the immovable property of which the debtor is or is reputed to be in possession as owner. Additionally, under the rules of registration contained in the Civil Code, any inter vivos deed conveying the ownership of an immovable must be registered (article 2098 C.C.) or the deed cannot be set up against third parties (articles 2082 and 2083 C.C.). Article 2091 of the Civil Code, which must be read in conjunction with article 2090 [2] , states that the registration of title conferring real rights in or upon immovable property is without effect if it takes place "after the seizure of an immovable, when such seizure is followed by judicial expropriation".

In the case at bar counsel for the opposant acknowledged that at first sight, unless the document conveying ownership of this immovable to the opposant was registered before the seizure, the defendant is deemed to be its owner. He admitted that he had the burden of proving that his client was owner of the immovable at the time of the seizure. He argued that article 2091, set up against him by the plaintiff, does not apply to the case at bar and challenged the seizure itself, which he described as irregular and unlawful because, according to an old judgment of the Supreme Court (Dufresne v. Dixon (1887-1889), 16 S.C.R. 596), the seizure was not made against the person reputed to be in possession as owner. He objected that the plaintiffs representative had not investigated before proceeding with the seizure, as if he had he would have found that the immovable belonged to the opposant. In similar cases subsequent to this Supreme Court judgment the judges have taken care, as suggested in Dufresne v. Dixon, supra, to check in case of seizure before a deed conveying ownership is registered whether the defendant actually was the owner of the immovable or was reputed to be. In Boiseries Raymond Inc. v. Construction Leo Lalonde Inc., [1986] R.D.I. 785 the Provincial Court refused to allow an application to dismiss an opposition to a seizure of an immovable made the day after the sale of the immovable and some five days before it was registered. In that case reference was made to various judgments in which Dufresne v. Dixon, supra, was followed. In the same case of Boiseries Raymond Inc. v. Construction Leo Lalonde Inc., [1989] R.D.I. 132, now on appeal, the Superior Court later dismissed the opposition by third-party purchasers of the immovable sold the day before the seizure but without the contract being registered until later. After reviewing the applicable case law, Benoit, J. said the following about article 2091 C.C.:

The rule is that an unregistered deed has no effect on the seizing party. In exceptional cases such a deed may have effect and the seizure will accordingly be quashed, but evidence must be presented that the buyer had such open and public possession that it amounted to notice to the seizing party comparable to registration.

I share this view and that of Desjardins, J. in Cohen v. 98669 Canada Inc., [1984] C.S. 709 in which the facts were very similar to those of the case at bar.

Counsel for the opposant also referred the Court to Dorion v. Lagarde, [1987] R.D.J. 87 and Constructions Rivard & Lavallée Inc. v. Centre canadien d'étude pratique des technologies avancées, [1986] R.D.1. 92. I do not feel that these cases can be used to support the opposants argument as in both cases giving in payment judgments were involved, and were given priority rather than those of the seizing parties.

In the case at bar, even assuming that the Dufresne v. Dixon rule must be applied, the opposant must then, as her counsel admitted, prove that she was reputed to be the owner of this property before the seizure. She was not able to do so. She did show that in 1978 she and her husband changed their matrimonial regime [3] and agreed, in the division of the community, that the Ste- Thérèse immovable should henceforth be part of the opposant's property. However, this document was not registered and up to the time of the seizure in September 1983 there was nothing to indicate to a third party that the immovable had changed hands. The evidence that the opposant made mortgage payments is not sufficient in this regard. She did not live in the house until 1986, a long time after the seizure, and the evidence that she made improvements on it and paid the municipal and school taxes relates only to a period which is considerably later than the seizure.

I therefore consider that the opposant has not proven that she was reputed to be in possession as owner at the time this immovable was seized. On the contrary, everything tends to show that the defendant was owner at this time and, to use the very language of article 569 C.C.P., that he was or was reputed to be in possession as owner.

The opposition is dismissed with costs.

Opposition dismissed.