Collins (Keith G.) Ltd. v. Coutu, 2011 MBCA 52

• Judge: Monnin, Chartier and Beard, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: May 12, 2011
• Jurisdiction: Manitoba
• Citations: 2011 MBCA 52;(2011), 268 Man.R.(2d) 130 (CA)

Collins Ltd. v. Coutu (2011), 268 Man.R.(2d) 130 (CA);

      520 W.A.C. 130

MLB headnote and full text

Temp. Cite: [2011] Man.R.(2d) TBEd. JL.014

Keith G. Collins Ltd., as Trustee of the Estate of Robert Joseph Coutu, also known as Joseph Robert Coutu, a Bankrupt (applicant/appellant) v. Debra Darlene Coutu (respondent/respondent)

(AI 10-30-07485; 2011 MBCA 52)

Indexed As: Collins (Keith G.) Ltd. v. Coutu

Manitoba Court of Appeal

Monnin, Chartier and Beard, JJ.A.

June 30, 2011.

Summary:

Coutu and her husband jointly owned their marital home. They separated in 2003. Coutu commenced family law proceedings. The following month, the husband made an assignment into bankruptcy. Subsequently, as part of a marital property consent order, the husband agreed to transfer to Coutu his share in the marital home on the understanding that she would not seek spousal support. In 2010, the trustee applied for partition and sale of the marital home. Coutu and her husband divorced. After a contested hearing, the trustee was granted an order for the sale of the home. The sale was completed. On the trustee's motion to disburse the sale proceeds, the trustee proposed to pay out the mortgage, retain for himself solicitor-client costs of $12,000, and divide the remaining proceeds with Coutu. Coutu objected, and requested mortgage and tax payment credits. The trustee objected, on the basis that Coutu had not paid any occupation rent.

The Manitoba Court of Appeal found that Coutu had a former homestead interest which was to be factored into the determination, and gave credit to Coutu for the mortgage and tax payments she made. The court also ordered that each party bear their own costs. The trustee appealed.

The Manitoba Court of Appeal allowed the appeal in part. Upon divorcing, the homestead rights ceased to exist and, as a result, the judge erred when he factored in homestead value in considering "the adjustments". The court directed that the respondent receive a credit for one half of the principal portion of the mortgage payments made by her following the separation, and that the trustee be awarded costs on a party and party basis.

Bankruptcy - Topic 402

Property of bankrupt - General - What constitutes - A trustee in bankruptcy appealed from an order directing the payment out of the proceeds of sale of a one-time marital home - The respondent was the now-divorced wife of the bankrupt - As part of the marital property settlement that was arrived at following the bankruptcy, the bankrupt agreed to transfer his interest in the marital home to the respondent - The Manitoba Court of Appeal stated that, because of the assignment in bankruptcy, the bankrupt had no further right to dispose of his interest in the marital home (Bankruptcy and Insolvency Act, s. 71) - Therefore, notwithstanding that the agreement was included in a consent judgment, the agreement to transfer the property was void and unenforceable - See paragraphs 22 and 23.

Bankruptcy - Topic 425

Property of bankrupt - Particular property - Joint interests (incl. marital home) - A trustee in bankruptcy appealed from an order directing the payment out of the proceeds of sale of a one-time marital home - The respondent was the now-divorced wife of the bankrupt - The Manitoba Court of Appeal stated that "Although the matters concerned in this appeal have overtones of a marital dispute encompassing property settlement, it would be an error to consider them from that vantage point. This is, in fact, a dispute between a Trustee in Bankruptcy and the now ex-wife of a bankrupt, and the disposition of this appeal must be informed by the provisions of bankruptcy law and proceedings" - See paragraphs 1 and 2.

Bankruptcy - Topic 485

Property of bankrupt - Exemptions or exclusions - Residence (incl. homestead property) - A trustee in bankruptcy appealed from an order directing the payment out of the proceeds of sale of a one-time marital home - The respondent was the now-divorced wife of the bankrupt - The application judge had raised the issue of whether the respondent had any homestead rights in the property and, after finding that they had been extinguished upon the granting of the divorce, went on to consider the value of those extinguished rights in determining what adjustments should be made - The Manitoba Court of Appeal held that the judge erred when he factored in homestead value - Upon divorcing, the homestead rights ceased to exist - See paragraphs 24 to 30.

Bankruptcy - Topic 485

Property of bankrupt - Exemptions or exclusions - Residence (incl. homestead property) - A trustee in bankruptcy appealed from an order directing the payment out of the proceeds of sale of a one-time marital home - The respondent was the now-divorced wife of the bankrupt - The application judge made adjustments for the mortgage principal and interest payments and the property tax payments paid by the respondent following the separation because of what he considered to be the delay by the trustee in realizing on the asset - The Manitoba Court of Appeal stated that the application judge misapprehended "the facts and the reality of the situation which the Trustee was facing" - The judge's decision to ignore the non-payment of occupation rent by the respondent and still give her a credit for the mortgage interest and tax payments made was a palpable and overriding error - Regarding the mortgage principal payments, the respondent was entitled to be reimbursed for one-half of those payments on the basis that they increased the equity in the property in which the trustee would share - The respondent was, therefore, to receive a credit equal to one-half of the principal portion of the mortgage payments - See paragraphs 31 to 36.

Bankruptcy - Topic 6977

Practice - Legal costs - Trustees - A trustee in bankruptcy appealed from an order directing the payment out of the proceeds of sale of a one-time marital home - The respondent was the now-divorced wife of the bankrupt - The trustee had proposed to retain for himself solicitor-client costs of $12,000 - The application judge had ruled that neither party was to receive costs - On the appeal, the trustee justified his seeking solicitor-client costs on the basis that he always sought such costs in such matters and that he requested them in his pleadings - The Manitoba Court of Appeal stated that such was not a basis on which to obtain solicitor-client costs and that the judge was not in error when he declined to make such an award - However, the court saw no valid reason not to award the trustee his costs on a party and party basis - The trustee did not fail to pursue his remedy in a timely fashion, nor did he act in any manner that would draw criticism - See paragraphs 37 and 38.

Family Law - Topic 773

Husband and wife - Actions between husband and wife - Property - Where spouse declares bankruptcy - [See Bankruptcy - Topic 402 ].

Real Property - Topic 2286

Dower rights - Termination - By divorce - The Manitoba Court of Appeal stated that "[w]ith the exception of the addition of rights for common law partners, the homestead provisions in the [Homesteads] Act are essentially identical to the corresponding provisions in the Dower Act [which was repealed and replaced with the homestead rights that are included in the Homesteads Act], particularly as they relate to those persons who are protected by the legislation. Thus, the law is clear that, upon spouses divorcing, the homestead rights cease to exist" - See paragraphs 28 to 30.

Cases Noticed:

Collins (Keith G.) Ltd. v. McKenzie (2005), 192 Man.R.(2d) 191; 340 W.A.C. 191; 2005 MBCA 35, refd to. [para. 15].

Boom v. Shore (1979), 31 C.B.R.(N.S.) 26 (Ont. Co. Ct.), refd to. [para. 15].

Duthie v. Duthie (Trustee of) (2001), 28 C.B.R.(4th) 34; 2001 MBQB 235, refd to. [para. 15].

Mellway v. Mellway (2004), 187 Man.R.(2d) 247; 330 W.A.C. 247; 2004 MBCA 119, refd to. [para. 15].

Osachuk v. Osachuk (1971), 18 D.L.R.(3d) 413 (Man. C.A.), refd to. [para. 15].

Zelezniak v. Senkiw, [1978] 5 W.W.R. 187 (Man. Q.B.), refd to. [para. 15].

Mastron v. Cotton, [1926] 1 D.L.R. 767 (Ont. C.A.), refd to. [para. 15].

Daly v. Daly (1980), 4 Man.R.(2d) 63 (C.A.), refd to. [para. 28].

Balzar v. Balzar (1990), 67 Man.R.(2d) 196 (Q.B. Fam. Div.), refd to. [para. 36].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 71 [para. 22].

Dower Act, R.S.M. 1988, c. D-100; C.C.S.M., c. D-100, generally [para. 28].

Homesteads Act, S.M. 1992, c. 46; C.C.S.M., c. H-80, generally [para. 25].

Counsel:

R.W. Schwartz, for the appellant;

D.D. Coutu, on her own behalf.

This appeal was heard on May 12, 2011, before Monnin, Chartier and Beard, JJ.A., of the Manitoba Court of Appeal. In reasons written by Monnin, J.A., the Court of Appeal delivered the following judgment on June 30, 2011.