Arnold Bros. Transport Ltd. v. Murphy, 2013 MBQB 137

• Judge: McKelvey, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: July 08, 2013
• Jurisdiction: Manitoba
• Citations: 2013 MBQB 137;(2013), 295 Man.R.(2d) 66 (QB)

Arnold Bros. Transport v. Murphy (2013), 295 Man.R.(2d) 66 (QB)

MLB headnote and full text

Temp. Cite: [2013] Man.R.(2d) TBEd. JL.056

Arnold Bros. Transport Ltd. (applicant) v. Debra Ann Murphy (respondent)

(CI 12-01-76244; 2013 MBQB 137)

Indexed As: Arnold Bros. Transport Ltd. v. Murphy

Manitoba Court of Queen's Bench

Winnipeg Centre

McKelvey, J.

July 8, 2013.

Summary:

The notice of application sought the direction of the court for the disbursement of the surplus mortgage auction sale proceeds held in trust by counsel for the applicant. The issues were: (1) the operation of s. 136(3) of the Real Property Act as regards a mortgage sale; (2) whether the conduct of the joint tenants (the Murphys) severed the joint tenancy prior to the mortgage sale of the property; and (3) whether the acts of the creditors severed the joint tenancy prior to the mortgage sale of the property.

The Manitoba Court of Queen's Bench held that: (1) the joint tenancy was not severed; (2) in accordance with s. 136(3), the remaining balance of the mortgage sale proceeds was to be applied in payment of the judgment granted to the applicant; (3) any remaining funds were payable jointly to the Murphys. As this was a novel point of law, the court declined to make any order as to costs.

Family Law - Topic 632

Husband and wife - Marital property - Matrimonial home - Joint ownership - [See second Mortgages - Topic 5706 ].

Family Law - Topic 654

Husband and wife - Marital property - Dispositions and encumbrances - [See second Mortgages - Topic 5706 ].

Mortgages - Topic 5706

Mortgage actions - Proceeds of sale - Surplus - Distribution of - A judgment granted in the applicant's favour against Mr. Murphy was registered against property jointly held with the respondent (Mrs. Murphy) - The judgment was second in priority to a mortgage - The Murphys separated - A mortgage auction sale was held - The Murphy's divorced - The applicant sought the direction of the court for the disbursement of the surplus mortgage sale proceeds - The question was whether all the surplus sale proceeds were available for satisfaction of the judgment, or only Mr. Murphy's one-half entitlement (as argued by the respondent) - The Manitoba Court of Queen's Bench stated that s. 136(3) of the Real Property Act was "imperative in nature and follows a progression as to how a mortgagee must distribute the proceeds of sale. In this case, the judgment granted in the applicant's favour must be paid out of the pool of funds available prior to the distribution of any surplus to the joint tenants. Further, the act of a mortgagee selling a property by virtue of a Power of Sale does not sever the joint tenancy. ... There is entitlement for payment from the whole of the proceeds of sale prior to a distribution between joint tenants." - See paragraphs 22 to 25.

Mortgages - Topic 5706

Mortgage actions - Proceeds of sale - Surplus - Distribution of - A judgment granted in the applicant's favour against Mr. Murphy was registered against the marital home jointly held with the respondent (Mrs. Murphy) - The Murphys separated- Mr. Murphy retained sole possession of the property - A mortgage auction sale was held - The Murphy's divorced - The applicant sought the disbursement of the entire surplus sale proceeds toward the judgment - The respondent submitted that the joint tenancy was severed before the sale of the property, and that the applicant should only be permitted to satisfy the judgment against Mr. Murphy's one-half share - The Manitoba Court of Queen's Bench held that the "course of dealing" between the Murphys was insufficient to establish a mutual or unilateral intention to sever the joint tenancy - Nor was the conduct sufficient to establish a severance - "The Manitoba case law has required something more than one party leaving the marital home and engaging in some negotiations towards the disposal of jointly-held assets. Importantly, no 'formal' steps were undertaken to sever the tenancy despite the respondent's knowledge of that issue prior to the commencement of the divorce proceedings. ... Something more is necessary in these types of cases. To hold otherwise would cause immeasurable difficulties as regards divorce and survivorship situations, as well as compromising the indefeasibility of the Certificate of Title when dealing with the ownership or transfer of property, particularly in those situations involving joint tenants." - See paragraphs 52 and 53.

Mortgages - Topic 5706

Mortgage actions - Proceeds of sale - Surplus - Distribution of - The certificate of title to the Murphy's marital home (the property) showed the Murphys as joint tenants - A mortgage to TD Bank was registered against the property - Judgment was granted in favour of the applicant against Mr. Murphy; a certificate of judgment was registered against the property - The Murphys separated - Mr. Murphy retained sole possession of the property - Counsel proceeded to negotiate the terms of a separation - TD Bank registered an application for order for sale against the property - A mortgage auction sale was held - The divorce judgment was registered - The applicant advised TD Bank of its position that the joint tenancy had not been severed and that pursuant to s. 136(3) of the Real Property Act, distribution of the entire surplus sale proceeds should firstly be made towards a discharge of the judgment - Neither Mr. Murphy nor the respondent herein (Mrs. Murphy) had filed a Notice of Intent to Sever the joint tenancy, or had sought a partition and sale - The Manitoba Court of Queen's Bench held that: (1) the joint tenancy was not severed; (2) in accordance with s. 136(3), the remaining balance of the mortgage sale proceeds was to be applied in payment of the judgment granted to the applicant; (3) any remaining funds were payable jointly to the Murphys - Registration of neither the judgment nor the mortgage enforcement proceedings served to affect a severance - There was no evidence of an intention to sever the joint tenancy - The registration of the judgment attached to the interest of the joint tenants and, hence, attached to the entire property - The entire sale proceeds were subject to the payment of any prior claims and were liable to satisfy the judgment - As this was a novel point of law, the court declined to make any order as to costs - See paragraphs 58 to 63.

Mortgages - Topic 7982

Statutory and contractual rights - Sale under power of sale - Sale proceeds and expenses - Disposition of excess proceeds held by mortgagee - [See third Mortgages - Topic 5706 ].

Mortgages - Topic 7990

Statutory and contractual rights - Sale under power of sale - Sale proceeds and expenses - Priorities - [See third Mortgages - Topic 5706 ].

Real Property - Topic 3881

Joint estates - Severance of joint tenancies - General - [See second Mortgages - Topic 5706 ].

Cases Noticed:

Canada Trustco Mortgage Co. v. Nikkel et al., [1995] 4 W.W.R. 373; 101 Man.R.(2d) 277 (Q.B.), refd to. [para. 12].

Brooklands Lumber & Hardware Ltd. v. Simcoe (1956), 18 W.W.R.(N.S.) 328 (Man. Q.B.), refd to. [para. 15].

Young Estate, Re (1968), 66 W.W.R.(N.S.) 193 (B.C.C.A.), refd to. [para. 15].

Commonwealth Bank of Australia, Re, 2009 NSWSC 81, refd to. [para. 19].

Caisse Populaire de Saint-Boniface ltée v. Hongkong Bank of Canada et al. (1997), 120 Man.R.(2d) 268 (Q.B.), refd to. [para. 19].

Hansen Estate v. Hansen (2012), 288 O.A.C. 116; 109 O.R.(3d) 241; 2012 ONCA 112, refd to. [para. 22].

Canadian Imperial Bank of Commerce v. 3L Trucking Ltd. et al., [1996] 2 W.W.R. 637; 176 A.R. 245 (Q.B.), refd to. [para. 22].

Williams v. Hensman (1861), 70 E.R. 862, refd to. [para. 29].

Davison v. Davison Estate (2009), 251 Man.R.(2d) 1; 478 W.A.C. 1; 2009 MBCA 100, consd. [para. 30].

Gorski v. Gorski (2011), 265 Man.R.(2d) 152; 2011 MBQB 125, consd. [para. 30].

Lam v. Le Estate, [2002] Man.R.(2d) Uned. 10; 2002 MBQB 31, consd. [para. 30].

Simcoff v. Simcoff (2009), 245 Man.R.(2d) 7; 466 W.A.C. 7; 2009 MBCA 80, refd to. [para. 34].

Confab Laboratories Inc. v. Wilding (2006), 234 Man.R.(2d) 15; 2006 MBQB 197, refd to. [para. 55].

Statutes Noticed:

Law of Property Act, R.S.M. 1987, c. L-90; C.C.S.M., c. L-90, sect. 19(1) [para. 6].

Real Property Act, R.S.M. 1988, c. R-30; C.C.S.M., c. R-30, sect. 79(1), sect. 136(3) [para. 5].

Authors and Works Noticed:

Anger and Honsberger, Law of Real Property (3rd Ed.) (2012 Looseleaf Supp.), vol. 1, §14:20.120 [paras. 28, 33].

Ziff, Bruce H., Principles of Property Law (2nd Ed. 1996), pp. 301 to 302 [para. 44].

Counsel:

John B. Martens, for the applicant;

Grant M. Driedger, for the respondent.

This application was heard before McKelvey, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment, dated July 8, 2013.