Bank of Montreal v. Bray, (1997) 104 O.A.C. 351 (CA)

• Judge: Robins, Abella and Rosenberg, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: October 23, 1997
• Jurisdiction: Ontario
• Citations: (1997), 104 O.A.C. 351 (CA)

Bk. of Mtrl. v. Bray (1997), 104 O.A.C. 351 (CA)

MLB headnote and full text

Temp. Cite: [1997] O.A.C. TBEd. OC.048

Bank of Montreal (appellant) v. Dixie Lee Bray and Dixie Lee Bray as Executrix of the Estate of Walter D. Bray (respondent)

(Docket No. C15302)

Indexed As: Bank of Montreal v. Bray

Ontario Court of Appeal

Robins, Abella and Rosenberg, JJ.A.

October 23, 1997.

Summary:

Mr. and Mrs. Bray owned a matrimonial home in joint tenancy. In 1978, Mr. Bray gave a personal guarantee of $750,000 to the Bank of Montreal for the debts of his com­pany, Bray Rivet. In 1986, Mr. Bray ac­knowledged that the guarantee was still valid. On February 21, 1990, Mr. Bray conveyed his interest in the matrimonial home to Mrs. Bray for $1. In July, 1990, the Bank called its loan to the company. In September 1990, the Bank's solicitors demanded payment from Mr. Bray on his personal guarantee. In February 1991, the Bank commenced an action claiming a declaration that the February 21, 1990 trans­action was void as against the Bank and all other creditors of Mr. Bray. The Bank also sought an order that the deed be set aside and ruled off the abstract index. The Bank had a certificate of pending litigation issued against the subject property. The Bank also commenced another action demanding pay­ment on the basis of Mr. Bray's personal guarantee. Mr. Bray died in March 1991. The Bank obtained default judgment in the action on Mr. Bray's personal guarantee. In July, 1991, a writ of seizure was issued. A special case was presented pursuant to rule 22 seeking an answer to the following ques­tions: (1) "Whether the transfer of an interest in jointly held property by one spouse to another has the effect of severing the joint tenancy when the subject transfer is subsequently set aside as contravening s. 2 of the Fraudulent Conveyances Act?"; (2) "Whether Mr. Bray's giving of the Guaran­tee or subsequent acknowledgement contra­vened s. 21(1)(a) of the Family Law Act because Mrs. Bray did not consent to either of them?"; (3) "Whether the Challenged Trans­fer contravened s. 21(1)(a) of the Family Law Act because the consent which Mrs. Bray did give was not sufficiently informed?", and (4) "If the answer to ques­tion 1 is yes, and the answer to one of ques­tion 2 or question 3 is yes, should the right of survivorship in the Defendant [Mrs. Bray] be restored pursuant to s. 23 of the Family Law Act?"

The Ontario Court (General Division), in a judgment reported (1993), 12 O.R.(3d) 545, answered as follows: Question (1): no; Ques­tion (2): yes; Question (3): yes, and Question (4): yes. The court held that Mrs. Bray owned the entire property free from any claim by the Bank. The Bank appealed.

The Ontario Court of Appeal, Abella, J.A., dissenting, allowed the appeal. The court answered the questions as follows: Question (1): yes; Question (2) no; Question (3): no. The court found it unnecessary to answer Question 4. The court declared that the Bank had a 50% interest in the property.

Family Law - Topic 635

Husband and wife - Marital property - Matrimonial home - Disposition of - Con­sent of spouse - The Ontario Court of Appeal held that a personal guarantee for company debts given by one spouse and a subse­quent acknowledgement by that spouse of the guarantee did not "encum­ber" a matri­monial home within the mean­ing of s. 21 of the Family Law Act (Ont.) and thus the wife's consent was not required - See paragraphs 29 to 38.

Family Law - Topic 635

Husband and wife - Marital property - Matrimonial home - Disposition of - Con­sent of spouse - A businessman and his wife owned their matrimonial home in joint tenancy - The businessman, whose com­pany owed money to a bank and who had given the bank a personal guarantee, con­veyed his interest in the home to his wife - Unaware of her husband's true motives, the wife consented to the convey­ance - The bank successfully challenged the transaction as violating the Fraudulent Conveyances Act and obtained personal judgment against the husband - The hus­band died - The bank sought to seize and sell the matrimonial home - The wife defended by invoking s. 21(1)(a) of the Family Law Act (Ont.) and arguing that her consent to the transaction was not informed hence the conveyance being invalid and the joint tenancy being rein­stated with her as full owner of the prop­erty - The Ontario Court of Appeal rejected the argument - See paragraphs 39 to 43.

Real Property - Topic 3886

Joint estates - Severance of joint tenancies - Mutual acts which result in severance - The following question was stated to the court in a special case brought pursuant to rule 22: "Whether the transfer of an inter­est in jointly held property by one spouse to another has the effect of severing the joint tenancy when the subject transfer is subsequently set aside as contravening s. 2 of the Fraudulent Conveyances Act?" - The Ontario Court of Appeal answered yes - See paragraphs 14 to 28.

Words and Phrases

Encumber - The Ontario Court of Appeal discussed the meaning of the word "en­cumber" found in s. 21 of the Family Law Act, R.S.O. 1990, c. F-3 - See paragraphs 29 to 38.

Cases Noticed:

Donohoe v. Hull Bros & Co. and others (1895), 24 S.C.R. 683, consd. [para. 17].

Murdoch and Barry, Re (1975), 10 O.R.(2d) 626 (H.C.J.), consd. [para. 19].

Horne v. Horne Estate (1987), 21 O.A.C. 313; 60 O.R.(2d) 1 (C.A.), consd. [para. 20].

Pringle v. Olshinetsky (1908), 17 O.L.R. 38 (Div. Ct.), refd to. [para. 22].

McGuire v. Ottawa Wine Vaults Co. (1913), 48 S.C.R. 44, refd to. [para. 22].

Westinghouse Canada Ltd. v. Buchar et al. (1975), 20 C.B.R.(N.S.) 246 (Ont. C.A.), consd. [para. 24].

Caisse Populaire de Saint-Boniface Ltée v. Bohemier et al. (1994), 93 Man.R.(2d) 192; 24 C.B.R.(3d) 286 (Q.B.), consd. [para. 25].

Murphy v. Lindzon, [1969] 2 O.R. 704 (C.A.), refd to. [para. 33].

Wright and another v. New Zealand Farm­ers' Co-operative Association of Canterbury Ltd., [1939] 2 All E.R. 701 (P.C.), refd to. [para. 34].

Ennis v. Royal Bank of Canada, [1994] O.J. No. 1899 (Gen. Div.), refd to. [para. 34].

Sun Life Trust Co. v. Dewshi, [1993] O.J. No. 57 (Gen. Div.), refd to. [para. 34].

Bank of British Columbia v. Houston (1984), 57 B.C.L.R. 91 (S.C.), refd to. [para. 34].

Maroukis v. Maroukis, [1984] 2 S.C.R. 137; 54 N.R. 268; 5 O.A.C. 182; 41 R.F.L.(2d) 113, refd to. [para. 35].

First City Trust Co. v. McDonough (1993), 15 O.R.(3d) 586 (Gen. Div.), consd. [para. 37].

Ferguson v. Ferguson (1994), 7 R.F.L.(4th) 384 (Ont. U.F.C.), refd to. [para. 37, footnote 2].

Statutes Noticed:

Family Law Act, R.S.O. 1990, c. F-3, sect. 21(1)(a), sect. 21(2), sect. 21(5) [para. 29]; sect. 23(d) [para. 30].

Fraudulent Conveyances Act, R.S.O. 1990, c. F-29, sect. 2 [para. 16].

Authors and Works Noticed:

Halsbury's Laws of England (3rd Ed.), vol. 2, p. 560 [para. 26].

Springman, M.A., Stewart, G.R. and Mac­Naughton, M.J., Fraudulent Conveyances and Preferences (1997), c. 7 [para. 26].

Counsel:

Mark Hartman and Thomas M. Slahta, for the appellant;

Colin E. Wright, for the respondent.

This appeal was heard on June 9 and 10, 1997, by Robins, Abella and Rosenberg, JJ.A., of the Ontario Court of Appeal.

The decision of the Court of Appeal was delivered on October 23, 1997, and the following opinions were filed:

Rosenberg, J.A. (Robins, J.A., concur­ring) - see paragraphs 1 to 46;

Abella, J.A., dissenting - see paragraphs 47 to 54.