Horne (Re) and Evans 60 O.R. (2d) 1 [1987] O.J. No. 495

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  • Date: 2018

Re Horne and Evans

60 O.R. (2d) 1

[1987] O.J. No. 495

ONTARIO COURT OF APPEAL

BROOKE, ROBINS AND TARNOPOLSKY JJ.A.

28TH MAY 1987.

 

 

Family law — Property — Matrimonial home — Joint tenancy

— Severance — Spouse can sever joint tenancy by conveyance to self — Family Law Reform Act, R.S.O. 1980, c. 152, s. 42(1) (a).

The deceased and his wife, the appellant, owned their matrimonial home as joint tenants. Shortly before his death, the deceased conveyed his interest in it to himself in order to sever the joint tenancy, intending to leave his half-interest to his daughter by a previous marriage. He did do so by his will. After his death, the respondent executrix conveyed the deceased’s half-interest to the daughter. The appellant’s application for an order setting aside the two deeds was dismissed at first instance.

 

On appeal, held, the appeal should be dismissed.

 

Section 42(1)(a) of the Family Law Reform Act, R.S.O. 1980,

c. 152 (now Family Law Act, 1986 (Ont.), c. 4, s. 21), prohibits a spouse from disposing of or encumbering any interest in the matrimonial home unless the other spouse consents. However, the legislation does not cover a conveyance by a spouse of a joint interest to himself. The conveyance merely destroys the unity of title and, hence, the joint tenancy and converts the tenancy into a tenancy in common. The result is that the surviving spouse loses his or her right of survivorship. But each spouse remains entitled to hold his or her proprietary right in an undivided one-half interest in the property and remains entitled to possession and occupation of the matrimonial home while the marriage continues and both spouses are living and, therefore, subject to a court order or provision in a separation agreement to the contrary, the equal right of possession ends when a spouse ceases to be a spouse. Hence, such conveyance does not interfere with the Act.

Re Van Dorp and Van Dorp (1981), 30 O.R. (2d) 623, 16 R.P.R. 161, overd

Re Lamanna and Lamanna et al. (1983), 145 D.L.R. (3d) 117, 32 R.F.L. (2d) 386, 27 R.P.R. 142; Re Gignac and Schroeder (1984), 23 A.C.W.S. (2d) 482; Re Bank of Montreal and Norton (1983), 44 O.R. (2d) 39, 36 R.F.L. (2d) 268, 29 R.P.R. 248, folld Re Kozub and Timko (1984), 45 O.R. (2d) 558, 7 D.L.R. (4th) 509, 16 E.T.R. 129, 39 R.F.L. (2d) 146, 31 R.P.R. 254, distd

 

Re Wierzbicki and Wierzbicki (1986), 55 O.R. (2d) 77, 29

D.L.R. (4th) 78, 3 R.F.L. (3d) 82, 41 R.P.R. 29, consd Statutes referred to

Family Law Act, 1986 (Ont.), c. 4, ss. 19, 20(6), 21, 26

Family Law Reform Act, R.S.O. 1980, c. 152, ss. 40, 41, 42, 44 (repealed by s. 71(1) of, and replaced by 1986 (Ont.), c. 4)

Succession Law Reform Act, R.S.O. 1980, c. 488

 

APPEAL from a judgment of Galligan J., 54 O.R. (2d) 510, 1

R.F.L. (3d) 335, holding that a joint tenancy in a matrimonial home was severed when one spouse conveyed to himself.

Michael W. Shain, for appellant.

F. Scott Sievert, for respondent.

The judgment of the court was delivered by

ROBINS J.A.:– This appeal raises squarely for decision the question left unanswered by this court in Re Kozub and Timko (1984), 45 O.R. (2d) 558, 7 D.L.R. (4th) 509, 16 E.T.R. 129:

Does the statutory prohibition imposed by s. 42 of the Family Law Reform Act, R.S.O. 1980, c. 152 (now s. 21 of the Family Law Act, 1986 (Ont.), c. 4), against the disposal or encumbrance by a spouse of an interest in a matrimonial home without the joinder or consent of the other spouse apply where one spouse without the consent of the other transfers his or her interest by deed to himself or herself to sever a joint tenancy?

The facts are brief and undisputed. The matrimonial home in question was owned by the late Hillis Archibald Horne (“the husband”) and Loretta Rita Horne (“the wife”) as joint tenants. Shortly before his death and without his wife’s knowledge or consent, the husband executed a deed transferring his interest in the property to himself for the express purpose of severing the joint tenancy. He thereafter bequeathed his interest by will to his daughter of a previous marriage. Following his death on December 11, 1984, the wife applied pursuant to ss. 42 and 44 of the Family Law Reform Act (“the FLRA”) to set aside that deed and a subsequent deed from the husband’s executrix to his daughter. The application came on before the Honourable Mr. Justice Galligan and, for reasons reported at 54 O.R. (2d) 510, 1 R.F.L. 335, was dismissed. The wife now appeals from that order.

The relevant provisions of ss. 42 and 44 of the FLRA read as follows:

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.

 

(2) Where a spouse disposes of or encumbers an interest in a matrimonial home in contravention of subsection (1), the transaction may be set aside on an application under section 44 unless the person holding the interest or encumbrance at the time of the application acquired it for value, in good faith and without notice that the property was at the time of the disposition, agreement or encumbrance a matrimonial home.

. . . . .

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.

The restrictions imposed on the alienation of the matrimonial home by s. 21 of the Family Law Act, 1986 (“the FLA”) are essentially the same as those imposed by s. 42; and s. 23 of the new Act gives the court all of the powers respecting alienation found in s. 44 of the old Act. While the appeal was, of course, presented on the basis of the FLRA, I shall in deciding the issue make reference also to the provisions of the FLA.

The case-law

The specific issue raised by this appeal has arisen in a number of conflicting authorities. The earliest of these is Re Van Dorp and Van Dorp (1981), 30 O.R. (2d) 623, 16 R.P.R. 161 (Co. Ct.). There, the husband executed a deed to himself of his one-half interest in a farm owned by himself and his wife as joint tenants solely to sever the joint tenancy and permit him to will his interest in the property to their three sons. On an application by the wife after his death, the late Judge Carley held that the husband’s conveyance “disposed of” the wife’s right of survivorship in the property contrary to s. 42 of the FLRA and set aside the deed. At pp. 631-2, the learned judge stated:

A search of the Family Law Reform Act, 1978, the Registry Act, R.S.O. 1970, c. 409, and the Conveyancing and Law of Property Act has failed to reveal any statutory definition of what is meant by “dispose of any interest in”.

The compact edition of the Oxford English Dictionary contains many definitions for the word “dispose”, among them: “to dispose of, deal with in any way”; “the action of bestowing, making over or dealing out”; “bestowal, distribution”.

In the present case it would appear that the husband by executing the conveyance destroyed the unity of title and by doing so disposed of the wife’s right of survivorship in the property. It is true that the same person is grantor and grantee but in different capacities. As grantor the husband was the owner of an undivided one-half interest as a joint tenant, whereas by virtue of the conveyance as grantee, he became the owner of a differing interest — an interest of an undivided one-half interest in the lands without any right of survivorship.

In Re Lamanna and Lamanna et al. (1983), 145 D.L.R. (3d) 117, 32 R.F.L. (2d) 386, 27 R.P.R. 142 (Ont. H.C.J.), a husband similarly sought to set aside a conveyance by his wife to herself of her interest as a joint tenant of the matrimonial home made so that she might will the interest to their five children. In this case, Mr. Justice Walsh, disagreeing with the conclusion reached by Judge Carley, held that the conveyance by a joint tenant to herself did not constitute a “disposition” within the meaning of s. 42 requiring the consent of the other spouse and was therefore effective to sever the joint tenancy. After referring to the passages from Re Van Dorp reproduced above, Walsh J. said at pp. 119-20:

With respect, I find it difficult to accept the conclusion that “by doing so disposed of the wife’s right of survivorship in the property” (emphasis added). It is clear that a deed from an individual to himself severs the joint tenancy because the unity of title is destroyed. A tenancy in common is thereby created as the alienee and the remaining tenant hold their interest in land by virtue of different titles and not under that one common title which is essential to the existence of joint tenancy. Thus, the nature of the interest of the alienee in the property must be determined with reference to the latter deed from himself to himself and his title deemed to flow from that deed and not the earlier joint deed. While it is also true that after the execution and registration of a deed from himself to himself the joint tenant has lost his right of survivorship in the property this, however, is not as a result of a disposition of his interest as Van Dorp holds, but rather, because the nature of the title by which he holds such an interest has changed — the undivided one-half interest in the property remains the same.

The approach taken in Re Lamanna and Lamanna was adopted in Re Gignac and Schroeder (1984), 23 A.C.W.S. (2d) 482 (per Fortier Co. Ct. J.), in Re Bank of Montreal and Norton (1983), 44 O.R. (2d) 39, 36 R.F.L. (2d) 268, 29 R.P.R. 248 (per Boland J.), and by Galligan J. in the instant case.

In Re Kozub and Timko, supra, a deceased wife had conveyed her half-interest in a jointly-owned matrimonial home, not to herself, but to a third person, namely, her son. In those circumstances, this court upheld an order setting aside the deed. Mr. Justice Arnup, speaking on behalf of the court, agreed with Walsh J., contrary to Re Van Dorp, that a conveyance by one joint tenant of his interest in the matrimonial home did not constitute a “disposition” of the right of survivorship of the other joint tenant. However, he did not agree that Part III of the FLRA (now Part II of the FLA) and particularly s. 42 (s. 21 of the FLA) is “concerned only with possessory and not proprietory rights”. The court made it clear that a conveyance by a spouse to a third party is a violation of the plain terms of s. 42 and, if set aside, cannot operate to sever the joint tenancy notwithstanding the grantor’s obvious intention to do so. However, the court specifically did not deal with the case of a conveyance by a spouse to himself or herself and left open the question of whether such a conveyance is covered by s. 42 and requires the consent of the other spouse. At p. 562 O.R., p. 513 D.L.R., Arnup J.A. stated:

In the present case we are concerned with a conveyance by one joint tenant of a matrimonial home to a third person. Walsh J. in Re Lamanna and Lamanna was concerned with a conveyance by one joint tenant of a matrimonial home to herself. Apart from the views I have already expressed, we choose to leave the correctness of the result in Re Lamanna and Lamanna to a case in which the same factual situation arises.

The same factual situation has now arisen in this case and the correctness of the result in Re Lamanna and Lamanna must be determined.

Re Wierzbicki and Wierzbicki (1986), 55 O.R. (2d) 77, 29 D.L.R. (4th) 78, 3 R.F.L. (3d) 82 (H.C.J.), was decided subsequent to Re Kozub and Timko. It involved a situation in which a wife, after conveying her interest in a jointly-owned matrimonial home to herself without her husband’s knowledge or consent, mortgaged her interest in the property to her lawyers. The husband successfully moved to have the mortgages set aside as encumbrances against the matrimonial home made in contravention of s. 42 of the FLRA. Although no application had been made to set aside the wife’s conveyance to herself, Callon J. interpreted Re Kozub and Timko as overruling Re Lamanna and Lamanna and holding that “s. 42 applies to conveyances which affect a spouse’s right of survivorship in the matrimonial home, since that is a proprietary interest” (p. 86 O.R., p. 86 D.L.R.). While he was of the view that the conveyance by the wife to herself was a “disposition” that must comply with s. 42, he went on to hold that even if s. 42 did not apply, she was prohibited by the section from subsequently encumbering her interest and, on that ground, set aside the mortgages.

With those decisions in the background, I turn to the basic question in this case.

Does the conveyance by one joint tenant to himself or herself for the purpose of severing a joint tenancy “dispose of” an “interest” in a matrimonial home within the meaning of s. 42 of the FLRA (or s. 21 of the FLA)?

In my opinion, such a conveyance is not covered by the legislation and the question must therefore be answered in the negative. Clearly, a deed from a joint tenant to himself or herself destroys the unity of title essential to the continuance of a joint tenancy and operates to create a tenancy in common. This, unlike the encumbrance of a spouse’s interest or the conveyance of that interest to a third party, cannot affect the other spouse’s right to possession or occupation under Part III of the FLRA or Part II of the FLA. The significance of a conveyance of this nature is that it eliminates the incident of joint tenancy by which the death of one joint tenant extinguishes his or her interest in the property so that the survivor becomes seized and possessed of the whole. However, although the right of survivorship is thereby eliminated, each spouse none the less continues to hold his or her proprietary right to an undivided one-half interest in the property. For the purposes of s. 42 (s. 21 FLA), a deed from a joint tenant to himself or herself conveying his or her interest in the matrimonial home, as the court agreed in Re Kozub and Timko (p. 561 O.R., p. 512 D.L.R.), does not “dispose of” the right of survivorship of the other joint tenant nor, I would add, of the grantor. Its effect, in my respectful view, is correctly stated by Walsh J. in Re Lamanna and Lamanna in the passage at pp. 119-20 to which reference was made earlier in these reasons:

It is clear that a deed from an individual to himself severs the joint tenancy because the unity of title is destroyed. A tenancy in common is thereby created as the alienee and the remaining tenant hold their interest in land by virtue of different titles and not under that one common title which is essential to the existence of joint tenancy. Thus, the nature of the interest of the alienee in the property must be determined with reference to the latter deed from himself to himself and his title deemed to flow from that deed and not the earlier joint deed. While it is also true that after the execution and registration of a deed from himself to himself the joint tenant has lost his right of survivorship in the property this, however, is not as a result of a disposition of his interest as Van Dorp holds, but rather, because the nature of the title by which he holds such an interest has changed — the undivided one-half interest in the property remains the same.

Both the FLRA and the FLA have limited application to the matrimonial home after the death of a spouse. They provide for equal spousal rights to possession of the matrimonial home (s. 40(1) FLRA, s. 19(1) FLA). But, subject to a court order or separation agreement, under s. 40(2) of the FLRA, that equal right of possession ceases upon the spouse ceasing to be a spouse, and under s. 19(2) of the FLA, when only one of the spouses has an interest in the matrimonial home, the other spouse’s right of possession is personal as against the first spouse and ends when they cease to be spouses. The parties cease to be spouses when a spouse dies. The Acts accordingly provide for the cancellation of the designation of property as a matrimonial home upon registration of proof of death (s. 41(3) FLRA, s. 20(6) FLA). The FLA (s. 26) introduced an entirely new provision with respect to the matrimonial homewhereby: (1) if a spouse dies owning an interest in a matrimonial home as a joint tenant with a third person and not with the other spouse, the joint tenancy is deemed to have been severed before the death (and, it follows, the interest then forms part of the deceased spouse’s estate); and (2) despite s. 19(2)(a) and (b) (termination of spouse’s right of possession), a spouse who has no interest in the matrimonial home but is occupying it at the time of the other spouse’s death, whether under an order for exclusive possession or otherwise, is entitled to retain possession against the deceased spouse’s estate, rent free, for 60 days after the spouse’s death.

In light of the scheme of these Acts and their very restricted and carefully defined effect on spousal rights to the matrimonial home after death, I cannot accept that the Legislature intended to include a joint tenant’s “right of survivorship” in the class of “interests” in the matrimonial home to which the restrictions against alienation imposed by s. 42 of the FLRA and s. 21 of the FLA are applicable. These Acts do not purport to dictate the manner in which spouses may hold title to their matrimonial home. A severance of a joint tenancy neither interferes with nor affects the existing balance between spouses with respect to the ownership or occupation of their matrimonial home during their marriage. In practical terms, its only consequence is that the spouses’ undivided one- half interests thereafter form part of their individual estates thereby permitting them to devise their respective interests as they wish. This result gives a spouse no rights beyond those of a spouse in the case of a matrimonial home owned by him or her alone or with a third person or in the case of a spouse who holds his or her interest by way of a tenancy in common; nor does it place the surviving spouse in any different position than that of a surviving spouse when title is held in some form other than joint tenancy and the deceased spouse’s interest in the matrimonial home does not by reason of title pass on death to the survivor. The rights of a surviving spouse are governed primarily by the Succession Law Reform Act, R.S.O. 1980, c. 488, which, it may be recalled, came into force at the same time as the FLRA. Under the provisions of that statute, where the deceased spouse has not provided adequate support, the court is empowered to make various orders with respect to the property of the deceased for the benefit of a dependent surviving spouse including orders with respect to the occupation and ownership of the matrimonial home.

The right of a joint tenant to sever a joint tenancy unilaterally is a long-recognized common law right. In my opinion, the family law legislation in question ought not to be construed as restricting that right in the absence of express language to that effect. As the Acts are now framed, a severance is not inconsistent with the general scheme of the legislation or incompatible with the provisions respecting matrimonial homes. No policy considerations have been advanced which compel the conclusion that a party to a marriage, without the consent of the other party or a court order, should be barred so long as the marriage subsists (and regardless of the state of the marriage) from taking the steps necessary to ensure that this property interest form part of his or her estate and that the survivor, whichever party that might be, does not acquire sole ownership by operation of law. In my view, no matter how the “right of survivorship” may be characterized in law, a deed from a joint tenant to himself or herself designed to remove that right does not constitute the “disposition” of an “interest” covered by s. 42 of the FLRA or s. 21 of the FLA. In sum, I agree with the result reached by Walsh J. in Re Lamanna and Lamanna in this factual situation.

 

Conclusion

For these reasons, I conclude that the statutory prohibition imposed by s. 42 of the Family Law Reform Act (now s. 21 of the Family Law Act) does not apply where one spouse, without the consent of the other, transfers his or her interest by deed to himself or herself to sever a joint tenancy. I would accordingly dismiss the appeal with costs.

 

Appeal dismissed.

RPLT FAM ESTT