Re Kozub and Timko*
45 O.R. (2d) 558
7 D.L.R. (4th) 509
ONTARIO COURT OF APPEAL
ARNUP, MORDEN AND TARNOPOLSKY JJ.A.
2ND MARCH 1984.
* Leave to appeal to the Supreme Court of Canada refused, June 19, 1984. S.C.C. File No. 18795.
Family law — Property — Matrimonial home — Disposition of interest — Estranged wife conveying half-interest in matrimonial home owned in joint tenancy with husband to son — Whether husband entitled to have deed set aside — Considerations — Family Law Reform Act, R.S.O. 1980, c. 152, ss. 42, 44(d).
Section 42 of the Family Law Reform Act, R.S.O. 1980, c. 152, which provides that no spouse shall dispose of or convey any interest in the matrimonial home unless the other spouse joins in or consents to the transaction, and entitles a non- consenting spouse to have the transaction set aside under s. 44(d) except as against a bona fide purchaser for value without notice, concerns proprietary rights and not merely possessory rights. The language of s. 42 is clear. Accordingly, where one joint tenant executes a deed of the matrimonial home in favour of her son in order to prevent her husband, the other joint tenant, from obtaining the property on her death and the husband did not consent thereto, the deed may be set aside on the husband’s application. Semble, such a deed may be voidable rather than void.
Re Van Dorp and Van Dorp et al. (1980), 30 O.R. (2d) 623, 16 R.P.R. 161; Bendix v. Jonas (1982), 27 R.P.R. 163; Re Lamanna and Lamanna et al. (1983), 145 D.L.R. (3d) 117, 32 R.F.L. (2d) 386, 27 R.P.R. 142, consd
Other cases referred to
Re Sammon (1979), 22 O.R. (2d) 721, 94 D.L.R. (3d) 594; leave to appeal to S.C.C. refused May 7, 1979; Re Bank of Montreal and Norton (1983), 44 O.R. (2d) 39, 36 R.F.L. (2d) 268, 29 R.P.R. 248
Statutes referred to
Family Law Reform Act, R.S.O. 1980, c. 152, ss. 40(1), 42(1) (a), (2), 44(d) Short Forms of Conveyances Act, R.S.O. 1970, c. 435 — now R.S.O. 1980, c. 472
APPEAL from a judgment of Hollingworth J. setting aside a deed.
J. D. Weir, for appellant, executor of estate of Stella Timko, deceased, and in his personal capacity.
S. Schnurr, for respondent.
The judgment of the court was delivered orally by
ARNUP J.A.:– This appeal involves the interpretation and application of ss. 42 and 44 of the Family Law Reform Act, R.S.O. 1980, c. 152 (“the Act”). It raises questions which have not previously arisen for decision in this Court, although the enactment of s. 42 was noted in another context in the decision of this Court in Re Sammon (1979), 22 O.R. (2d) 721, 94 D.L.R. (3d) 594.
The facts of the matter are not in dispute. In July, 1958, the respondent William Timko and his wife, the late Stella Timko, purchased as joint tenants a residential property known as 1 High Park Gardens in Toronto.
The parties separated in 1977, but continued to live in the premises, although in separate apartments. It is common ground that the property was the matrimonial home for the purposes of the Act.
In 1979 Stella Timko became seriously ill with cancer and directed her son, the appellant George Nicholas Kozub, to arrange for a transfer to him of her interest in the property and also to prepare or have prepared a will naming him as executor and sole beneficiary of her estate. It is said that she did so to ensure that at her death none of her property would pass to her estranged husband, the respondent.
In accordance with these instructions, there was prepared and executed by Stella Timko a conveyance to her son of her half- interest in the property. The conveyance was in the usual form under the Short Forms of Conveyances Act, R.S.O. 1970, c. 435. It was executed on April 2, 1979, and registered on July 26, 1979.
Stella Timko died on February 27, 1982. Subsequently a motion was brought before The Honourable Mr. Justice Hollingworth pursuant to s. 44 of the Act. The relevant sections are 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;
. . . . .
(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.
Mr. Justice Hollingworth made an order setting aside the deed to which I have previously referred. The grantee under the deed, the son of the deceased, now appeals to this Court.
There have been three previous reported cases decided by single judges with respect to the application of ss. 42 and 44. (Subsequent to the argument and our decision, the judgment of Boland J. in Re Bank of Montreal and Norton has been reported: see 44 O.R. (2d) 39, 36 R.F.L. (2d) 268, 29 R.P.R. 248. It had previously been noted in 22 A.C.W.S. (2d) 443, but was not referred to by counsel before us.) In the first of these, Re Van Dorp and Van Dorp et al. (1980), 30 O.R. (2d) 623, 16 R.P.R. 161, The Honourable Judge Carley made an order setting aside a deed in a case where the husband and wife were joint tenants and the husband executed and registered a deed to himself of his interest in the property. The deed itself contained a recital that its purpose was to sever the joint tenancy, and the land transfer tax affidavit confirmed that that was the purpose. After the death of the husband, the wife brought an application to have the transaction set aside in so far as it related to the matrimonial home (the deed covered an entire farm property). The application was granted. In the course of his reasons, Judge Carley said 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” (p. 631, emphasis added).
In December, 1982, the question came before The Honourable Mr. Justice Eberle in Bendix v. Jonas (1982), 27 R.P.R. 163. In that case the husband and wife had acquired a farm as joint tenants and the wife subsequently registered deeds from herself to her son of her joint interest in the farm and in other properties jointly owned by the husband and the wife. The husband did not join in the deed or consent to the conveyance. Mr. Justice Eberle referred to the judgment of Judge Carley in Van Dorp and reached the same conclusion, namely, that the deed was ineffective to sever the joint tenancy with respect to the matrimonial home because of the provisions of s. 42 of the Act. He held that the deed was effective in so far as it conveyed the wife’s interest in other properties which were not the matrimonial home. At p. 166 he agreed with the conclusion of Judge Carley expressed in the words I have already quoted.
The third case in the series is the decision of The Honourable Mr. Justice Walsh 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. The facts in that case were that the wife executed and registered a deed to herself of her half-interest in the matrimonial home held in joint tenancy with her husband. The husband, who had not joined in or consented to the conveyance, brought an application after his wife’s death for a declaration that he was the owner of the home by right of survivorship, on the ground that his wife’s conveyance was ineffective because of s. 42 of the Act. Walsh J. dismissed the application. He declined to follow Re Van Dorp and Van Dorp, and particularly the passage already quoted, and expressed the view that while the effect of a deed from one joint tenant to himself is to sever the joint tenancy, such a deed does not “dispose of ” the right of survivorship of the other joint tenant, as those words “dispose of ” are used in s. 42 of the Act. Walsh J. went on to hold that Part III of the Act, in which ss. 42 and 44 are found, dealt only with possessory rights of spouses, not proprietary rights. Since the wife’s deed did not interfere with her husband’s possessory rights in the matrimonial home, s. 42 did not have the effect contended for by the husband.
The decision was given on February 4, 1983, less than two months after the judgment of Eberle J. in Bendix v. Jonas, and it is clear from perusal of the reasons of Walsh J. that he was not aware of the decision in Bendix. It would appear to us that there is a clear conflict in the reasoning of the two cases.
We agree with Walsh J. in declining to follow the statement in Re Van Dorp. and Van Dorp, agreed with in Bendix v. Jonas, that a conveyance by one joint tenant of his interest in the matrimonial home “disposes of ” the right of survivorship of the other joint tenant. However, we have great difficulty in following his conclusion that Part III of the Act, and particularly s. 42, is concerned only with possessory rights and not proprietary rights. Protecting proprietary rights is a way of protecting the possessory rights clearly conferred by s. 40(1). The protection afforded by s. 42(2) to purchasers for value in good faith and without notice that the property was the matrimonial home, and the provisions of s. 44(d) empowering the court to revest the interest disposed of or encumbered contrary to s. 42(1), are both consistent only with the view that proprietary rights are intended to be affected. We recognize, of course, that s. 42(1) is applicable even if there is no joint ownership, but that does not change our view that proprietary rights are affected.
Walsh J. also applied a “rule of construction” of statutes that they are not to be held to affect common law rights unless an intention to do so is expressed in clear language or must follow by necessary implication (p. 121 D.L.R., p. 392 R.F.L., p. 145 R.P.R.). We do not find it necessary to decide whether that rule of construction should be applied to a remedial statute such as the Family Law Reform Act. It is our view that the language of the statute in s. 42(1) is clear and unambiguous. It contains a statutory prohibition against the disposal or encumbrance by a spouse of any interest in a matrimonial home without the joinder or consent of the other spouse. It would appear that such a conveyance or disposition might be considered voidable rather than void in view of the fact that s. 44(d) empowers the Court to “set aside” the transaction (rather than simply declare it to be void) and to revest the interest purporting to pass under the conveyance, but it is unnecessary to decide the question here, since Hollingworth J. set aside the transaction, and we think he was right in doing so.
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 argument of the appellant in this case has been confined to much narrower grounds than those set out in his filed factum. In essence, that argument is that while the conveyance of the late Mrs. Timko may be voidable as a conveyance of her half-interest, it is nevertheless valid to sever the joint tenancy. We are unable to accept this proposition. The “transaction” represented by the execution and registration of the conveyance has been set aside on the ground it was executed and registered in violation of the plain terms of s. 42. If both of the original joint tenants were still alive it would be appropriate to declare the conveyance void and to revest the interest of the wife in her as a joint tenant with her spouse. It would be incongruous if the fact that she died before her husband found out about the conveyance and hence before the Court could set it aside made it impossible to restore the position existing immediately before the prohibited conveyance. In our view a declaration that the conveyance was void accomplishes the desired result. The joint tenancy was not severed by the deed which the Court has set aside as invalid.
The appeal is dismissed with costs.