Maroukis v. Maroukis, [1984] 2 SCR 137

Supreme Court of Canada

Maroukis v. Maroukis, [1984] 2 S.C.R. 137

Date: 1984-09-17

Despina Maroukis (Plaintiff) Appellant;

and

Apostolos Maroukis, also known as Paul Maroukis, and carrying on business as Maroukis Construction Ltd. and Moe Siding Limited, and G.H. Ward & Partners and Bank of Nova Scotia and Lockhart Electric Limited and Moore Paint & Wallpaper and Superior Sanitation and Power T.V. (Defendants) Respondents.

File No.: 16867.

1984; May 5; 1984: September 17.

Present: Dickson C.J. and Ritchie, Beetz, Estey, McIntyre, Chouinard and Lamer JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Matrimonial law—Distribution of matrimonial assets—Executions filed against joint tenant prior to vesting order—Subsequent order vesting property at separation—Time specific property vests on division of family assets—Family Law Reform Act, R.S.O. 1980, c. 152, s. 4.

Creditor and debtor—Executions—Family assets—Distribution—Whether or not executions effective if filed after separation but before distribution order.

The Maroukis separated in October 1978. An order providing for disposition of family assets under s. 4 of the Family Law Reform Act was made in October 1979 vesting the matrimonial home, formerly held in joint tenancy by husband and wife, in the wife. Executions were filed with the sheriff after the separation and before the order was made. On an application by the wife to “clarify his judgment” the trial judge made an order on October 10, 1980 purporting to vest the matrimonial home in the wife from October 1978. The Court of Appeal confirmed the vesting in the wife but denied the order any retrospective effect, holding that the vesting occurred upon the making of the order of October 1979.

Held: The appeal should be dismissed.

When matrimonial property is being divided between spouses under s. 4 of the Family Law Reform Act,

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specific matrimonial property does not vest until the court order is made. Since the new property régime created by the Act only comes into effect on the conclusion of the application and the order for distribution, there is no authority for an order retroactively vesting property in a spouse. Each spouse has the right to invoke the new régime by application on the occurrence of a “triggering event”. Until the order is made, however, this right is only a personal right to require the court to determine the ownership of family assets.

The interest of a joint tenant is exigible and a creditor’s execution against that interest continues to be binding after an inter vivos transfer of the interest. The interest in the family home was not encumbered contrary to s. 42(1) of the Act for that section, on the plain meaning of its words, cannot be extended to include an execution taken by a creditor against one of the parties to the marriage.

Re Craig, [1929] 1 D.L.R. 142; Toronto Hospital for Consumptives v. Toronto (1930), 38 O.W.N. 196; Re Young (1968), 70 D.L.R. (2d) 594; Re Tully and Tully and Klotz, [1953] O.W.N. 661; Sirois v. Breton (1967), 62 D.L.R. (2d) 366; Re McDonald (1969), 71 W.W.R. 444; Worms v. Worms (1981), 18 R.P.R. 35, referred to; Power v. Grace, [1932] 2 D.L.R. 793, distinguished.

APPEAL from a judgment of the Ontario Court of Appeal (1981), 125 D.L.R. (3d) 718, 33 O.R. (2d) 661, 24 R.F.L. (2d) 113, allowing an appeal from a judgment of Luchak Co. Ct. J. and substituting an order in place of one made on an application for clarification of judgment following a judgment and order made on an application for division of matrimonial assets. Appeal dismissed.

M. Fleck, Q.C., and Ian Bruce, for the appellant.

Brian Donovan, for the respondent the Bank of Nova Scotia.

The judgment of the Court was delivered by

MCINTYRE J.—The principal question arising in this appeal may be simply stated: where proceedings are taken by a spouse under s. 4 of the Family Law Reform Act, R.S.O. 1980, c. 152, at what time does specific property vest in the spouse to whom it has been allocated?

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The appellant Despina Maroukis (the wife) and the respondent Apostolos Maroukis (the husband) were married in 1965. The matrimonial home in Sarnia was acquired in 1975 in joint tenancy. The parties separated in October, 1978, and in November, 1978 the wife applied for a division of family assets under the Act. In July, 1979, the respondent Bank of Nova Scotia started actions against the husband to collect unpaid loans. Default judgments were signed by the Bank on July 24 and 25 and executions were filed with the sheriff. On October 10, 1979 Luchak Co. Ct. J. ordered that the matrimonial home vest in the appellant wife. This order had the effect of excluding the husband, formerly a joint tenant with the wife, from any interest in the matrimonial home. All the remaining assets were allotted to the husband. Of particular importance to this case is the fact that the actions of the Bank of Nova Scotia were commenced and their executions filed after the separation and commencement of proceedings under s. 4 of the Act but before the making of the order of Judge Luchak.

By notice of motion dated January 28, 1980, the wife brought an application before Judge Luchak to “clarify his judgment” of October 10, 1979 in relation to the rights of execution creditors. She sought an order vesting her with the matrimonial home as of November 6, 1978, the date upon which she had commenced her original application. Such an order would have had the effect of clearing the property of the claims of the Bank of Nova Scotia and other execution creditors who had filed executions with the sheriff before Judge Luchak’s order of October 10, 1979. All concerned execution claimants were served with notice of the application “to clarify”. On October 10, 1980, Judge Luchak made an order purporting to vest the matrimonial home in the wife as of October, 1978, the date of separation.

The execution claimants appealed to the Court of Appeal against the order of October 10, 1980.

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In the proceedings the husband did not appear, no claim having been made against him. The contest in the Court of Appeal was between the wife and the execution creditors. The appeal was allowed. The Court of Appeal confirmed the order vesting the matrimonial property in the wife but denied it any retrospective effect. Her interest was therefore held to be “subject to the interests of the Bank of Nova Scotia and other execution creditors under their respective executions filed prior to the tenth day of October, 1979.”

The most important issue, and the one upon which this case turns, is the determination of the time at which the matrimonial home became vested in the appellant to the exclusion of her former husband. The appellant contended that the trial judge made no error in choosing the date of the separation of the parties as the effective time at which the vesting occurred. It was argued that upon a true construction of the words of s. 4 of the Act the rights of an applicant spouse crystallized on the separation or on the bringing of the application for division of the property. This proposition was accepted by the trial judge and he said:

In these proceedings, the parties separated in October 1978 and in my opinion the right of the wife, as set out in the judgment, crystallized as of that date. The court order of October 10, 1979, is merely a declaration as to the property rights as between husband and wife as of the date of the crystallization of their rights in October 1978 and is an implementation of that finding by vesting their rights.

The judgment of the Court of Appeal is now reported at 24 R.F.L. (2d) 113. Wilson J.A. (as she then was), with whom Brooke and Thorson JJ.A. concurred on this issue, disagreed with the trial judge and said, at p. 117:

I must respectfully disagree with the effect Luchak J. has given to s. 4(1) of the Family Law Reform Act. I do not think the subsection confers rights in property in the absence of an order of the court. I think the subsection simply sets out the circumstances in which the court may make an order for equal division of the family assets. I appreciate that the subsection uses the words “is entitled to”, which seem to suggest a statutory right, but the opening words of the subsection ”Subject to

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subsection 4”, which empowers the court to make an unequal division, make it clear that subs. (1) does not confer the right to an equal division, but merely state that, prima facie, the court should order an equal division, but not if equality would be inequitable having regard to the items listed in paras, (a) to (f) of subs. (4). I believe, therefore, that until Luchak J. made his order of 10th October 1979 the matrimonial home continued to be held in joint tenancy and that the executions against the husband filed prior to that date attached to his interest in it. The learned judge accordingly had no jurisdiction to vest the property in the wife free and clear of those executions.

I am in complete agreement with this statement and adopt it in concluding that the full estate in the matrimonial home vested in the appellant wife only on the making of the order by Judge Luchak on October 10, 1979.

The Act does not automatically confer any property interest in family assets. Subsections 4(1) and (2) of the Act provide:

4.—(1) Subject to subsection (4), where a decree nisi of divorce is pronounced or a marriage is declared a nullity or where the spouses are separated and there is no reasonable prospect of the resumption of cohabitation, each spouse is entitled to have the family assets divided in equal shares notwithstanding the ownership of the assets by the spouses as determinable for other purposes and notwithstanding any order under section 7.

(2) The court may, upon the application of a person who is the spouse of another, determine any matter respecting the division of family assets between them.

The mechanism for the division of property provided for by s. 4 of the Act may, subject to the conditions precedent in s. 4(1), only be set in motion by an application for distribution under s. 4(2), which gives the court the power to determine the division of matrimonial property between the spouses. Prior to the conclusion of the application and the order for distribution, the new property régime created by the Family Law Reform Act (i.e. the prima facie entitlement of each spouse to one half the family assets regardless of ownership) is not in effect. Each spouse has the right under the Act to invoke the new régime by application under s. 4(2) upon the occurrence of one of the

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three “triggering events” set out in s. 4(1), but until the court order is made the right is only a personal right to require the court to determine the ownership of family assets. The vesting in a spouse of the specific property making up his or her respective share takes place upon the date the court order is made. There is no authority in the Act for an order retroactively vesting property in a spouse as the appellant contends and as Judge Luchak ordered.

In argument in this Court the appellant submitted that, even if the husband’s interest vested in the wife only upon the making of a court order, the wife took the interest free and clear of the claims of execution creditors. The appellant argued that due to the special nature of an interest held in joint tenancy the writs of execution did not attach to the husband’s interest. I find no merit in this argument.

This submission is based on the proposition that the creditor of one joint tenant cannot execute against the interest of his debtor until the joint tenancy is severed and a tenancy in common created. To the contrary, the courts have consistently ruled that the interest of a joint tenant is exigible: see Re Craig, [1929] 1 D.L.R. 142 (Ont. C.A.); Toronto Hospital for Consumptives v. Toronto (1930), 38 O.W.N. 196 (C.A.); Power v. Grace, [1932] 2 D.L.R. 793 (Ont. C.A.); Re Young (1968), 70 D.L.R. (2d) 594 (B.C. C.A.) If any doubt was cast upon earlier authorities by Re Tully and Tully and Klotz, [1953] O.W.N. 661, as contended by the appellant, it was set at rest by the enactment in the year 1957 of the present s. 9 of the Execution Act, R.S.O. 1980, c. 146, in these terms, which now specifically include an interest in property held in joint tenancy:

9. The sheriff to whom a writ of execution against lands is delivered for execution may seize and sell thereunder the lands of the execution debtor, including any lands whereof any other person is seized or pos-

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sessed in trust for the execution debtor and including any interest of the execution debtor in lands held in joint tenancy. [Emphasis added]

The appellant also referred to Power v. Grace, supra, in support of the argument that even if the interest of a joint tenant is subject to execution it does not continue to be bound in the hands of a transferee. Power v. Grace stands for the proposition that, where a writ of fieri facias is delivered to the sheriff covering the interest of one joint tenant in real property and no further steps are taken in the execution process, the death of that joint tenant will pass the whole estate to the survivor free of execution. This case has no application to the case at bar where the interest of the joint tenant debtor has passed to the other joint tenant, not by survivorship but by an order of the court. Any transfer inter vivos is subject to executions attaching to the land. Authority for this proposition may be found in Sirois v. Breton (1967), 62 D.L.R. (2d) 366 (Ont. Cty. Ct.); Re McDonald (1969), 71 W.W.R. 444 (B.C. S.C.), and Worms v. Worms (1981), 18 R.P.R. 35 (Ont. Dist. Ct.)

One further point was raised concerning ss. 42 and 44(d) of the Family Law Reform Act. The argument rests upon the proposition that the filing of writs of execution against the interest of the debtor constitutes an encumbrance within the meaning of s. 42(1). That section provides that:

42.—(1) No spouse shall dispose of or encumber any interest in a matrimonial home unless,

(a) the other spouse joins in the instrument or consents to the transaction;

(b) the other spouse has released all rights under this Part by a separation agreement;

(c) the transaction is authorized by court order or an order has been made releasing the property as a matrimonial home; or

(d) the property is not designated as a matrimonial home under section 41 and an instrument designating another property as a matrimonial home of the spouses is registered under section 41 and not cancelled.

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The appellant submits that because the husband encumbered the interest in the family home contrary to s. 42(1) the court has jurisdiction to set aside the writs of execution, pursuant to s. 44(d), which provides:

44. The court may, on the application of a spouse or person having an interest in property, by order,

...

(d) direct the setting aside of any transaction disposing of or encumbering an interest in the matrimonial home contrary to subsection 42(1) and the revesting of the interest or any part of the interest upon such terms and subject to such conditions as the court considers appropriate.

In my opinion, this argument fails. To begin with, s. 44 provides that the court may “on the application of a spouse” set aside an encumbrance. No such application has been made in the case at bar. The matter was raised for the first time in this Court and, in my view, it ought not to be dealt with. Furthermore, the prohibition in s. 42 is against a disposition or an encumbrance of an interest in a matrimonial home by a spouse. Giving those words their plain meaning in the context in which they are used in s. 42, it is my opinion that they cannot be extended to include an execution taken by creditors of one of the parties to the marriage.

For the above reasons, I would dismiss the appeal with costs and confirm the order of the Court of Appeal.

Appeal dismissed with costs.

Solicitors for the appellant: Fleck, Sartor, Gray & Bruce, Sarnia.

Solicitors for the respondent the Bank of Nova Scotia: Merchant, Dawson & Donovan, Sarnia.