Clark, Drummie & Co. v. Ryan, (1999) 209 N.B.R.(2d) 70 (CA)

• Judge: Daigle, C.J.N.B., Rice and Ryan, JJ.A.
• Court: Court of Appeal (New Brunswick)
• Case Date: October 21, 1998
• Jurisdiction: New Brunswick
• Citations: (1999), 209 N.B.R.(2d) 70 (CA)

Clark, Drummie & Co. v. Ryan (1999), 209 N.B.R.(2d) 70 (CA);

    209 R.N.-B.(2e) 70; 535 A.P.R. 70

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [1999] N.B.R.(2d) TBEd. FE.021

Deborah Ryan (defendant/appellant) v. Clark, Drummie and Co. (plaintiff/respondent)

(87/97/CA)

Indexed As: Clark, Drummie & Co. v. Ryan

New Brunswick Court of Appeal

Daigle, C.J.N.B., Rice and Ryan, JJ.A.

February 1, 1999.

Summary:

A lawyer stole from his firm's clients. As a consequence of the thefts, the firm held two judgments against the lawyer totalling $238,000. The firm applied for a declaration that the lawyer had a resulting trust interest in the matrimonial home, that the property be sold, prior encumbrances be paid off and the balance divided equitably.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported 188 N.B.R.(2d) 91; 480 A.P.R. 91, allowed the application in part. The lawyer's wife appealed.

The New Brunswick Court of Appeal allowed the appeal.

Execution - Topic 3821

Sale of land of judgment debtor - Interests which may be sold - [See first Family Law - Topic 944 ].

Family Law - Topic 866.3

Husband and wife - Marital property - Distribution orders - Jurisdiction re third party rights - [See both Family Law - Topic 944 ].

Family Law - Topic 944

Husband and wife - Marital property - Distribution orders - Practice - Persons who may apply or continue application - A family home was purchased in the wife's name - She paid the mortgage - A creditor obtained judgment against the husband - The creditor applied for partition and sale pursuant to rule 67 of the Rules of Court on the ground that the wife held the hus­band's interest in the home under a result­ing trust - The creditor claimed that it was entitled to the husband's interest under a constructive trust - In considering the matter, the New Brunswick Court of Ap­peal observed that the provisions of the Marital Property Act were not available to a creditor until the rights of either spouse had crystallized (if at all) - Also, the provi­sions could only be invoked after there had been a breakdown of the spousal relation­ship - See paragraphs 7 and 8.

Family Law - Topic 944

Husband and wife - Marital property - Distribution orders - Practice - Persons who may apply or continue application - Spouses purchased a new home with the profit from the sale of their jointly owned home - The new home was placed in the wife's name - She paid the mortgage - The lawyer husband paid the family's general expenses - A creditor obtained judgment against the husband - The creditor applied for a declaration that the husband had a one-half interest under a resulting trust and for an order for sale pursuant to rule 67 of the Rules of Court - The creditor claimed that the wife held the husband's interest for the creditor through a constructive trust - The New Brunswick Court of Appeal held that there was no result­ing trust be­cause (1) there was no common inten­tion and (2) the Marital Property Act's pre­sumption of a resulting trust was not ap­plicable - Also, only persons with an in­terest in the property could invoke rule 67 - See paragraphs 14 to 33.

Family Law - Topic 946

Husband and wife - Marital property - Distribution orders - Practice - Declaration of spouse's interest - [See first Family Law - Topic 944 ].

Trusts - Topic 2006

Resulting trusts - Joint undertakings - By husband and wife - A lawyer and his wife purchased a home - Each contributed half of the down payment - The house was placed in the wife's name - The husband was fired when his firm discovered various thefts - Subsequently, the firm obtained judgments against the lawyer totalling $238,000 - The firm applied for a declara­tion that the husband had an interest in the matrimonial home and for an order for the sale of home - The trial court found that there was a resulting trust which gave the husband a one-half interest in the home - Neverthe­less, the court declined to order the sale of the home until the youngest of the three children reached the age of ma­jority - The New Brunswick Court of Appeal allowed the wife's appeal and dismissed the firm's application.

Trusts - Topic 2006

Resulting trusts - Joint undertakings - By husband and wife - A lawyer and his wife purchased a home - Each contributed half of the down payment - The house was placed in the wife's name - Subsequently, the husband's firm obtained judgments against him totalling $238,000 - The firm submitted that the husband retained a beneficial interest in the property through a resulting trust - The property was placed in the wife's name solely as a means of shielding the property from creditors - The firm applied for a declaration of the hus­band's interest in the matrimonial home and for an order for sale - In dismissing the application, the New Brunswick Court of Appeal observed that "[i]t would be unconscionable for any lawyer to deliber­ately mislead and deceive his or her spouse by purporting to convey or relinquish his or her interest to the spouse while at the same time being fraudulently duplicitous about the beneficial interest the lawyer surreptitiously retains" - See paragraph 19.

Cases Noticed:

Carl-Zeiss-Stiftung v. Smith (Herbert) & Co. (No. 2), [1969] 2 All E.R. 367 (C.A.), refd to. [para. 2].

Clemens v. Clemens, [1956] S.C.R. 286, refd to. [para. 6].

Levy v. Levy Estate (1981), 50 N.S.R.(2d) 14; 98 A.P.R. 14; 131 D.L.R.(3d) 15 (T.D.), refd to. [para. 6].

Bank of Montreal v. Kuchuk and Kuchuk (1982), 40 N.B.R.(2d) 203; 105 A.P.R. 203 (C.A.), folld. [para. 8].

George v. George (1987), 80 N.B.R.(2d) 357; 202 A.P.R. 357 (Fam. Div.), affd. (1987), 84 N.B.R.(2d) 355; 214 A.P.R. 355 (C.A.), refd to. [para. 9].

Schriver v. Schriver (1985), 65 N.B.R.(2d) 255; 167 A.P.R. 255 (Fam. Div.), refd to. [para. 10].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384; 19 R.F.L.(2d) 165; 117 D.L.R.(3d) 257; 8 E.T.R. 143, consd. [para. 10].

Pettitt v. Pettitt, [1970] A.C. 777 (H.L.), refd to. [para. 12].

Gissing v. Gissing, [1971] A.C. 886 (H.L.), refd to. [para. 12].

Meltzer v. Meltzer (1989), 61 Man.R.(2d) 1; 22 R.F.L.(3d) 38 (Q.B. Fam. Div.), dist. [para. 17].

Hillier v. Hillier, Williams and Williams, [1979] 2 W.W.R. 346; 17 A.R. 133 (T.D.), dist. [para. 17].

Van De Mark v. Walton (1981), 34 O.R.(2d) 654 (H.C.), dist. [para. 18].

Tinker v. Tinker, [1970] 1 All E.R. 540 (C.A.), consd. [para. 21].

Morrow et al. v. Eakin et al., [1953] 2 D.L.R. 593 (B.C.S.C.), consd. [para. 29].

Temple v. Temple (1991), 120 N.B.R.(2d) 342; 302 A.P.R. 342 (T.D.), refd to. [para. 29].

Hyman v. Hyman, [1934] 4 D.L.R. 532 (S.C.C.), consd. [para. 30].

Statutes Noticed:

Marital Property Act, S.N.B. 1980, c. M-1.1, sect. 15(1) [para. 6]; sect. 47 [para. 7].

Rules of Court (N.B.), rule 67.02 [para. 28].

Authors and Works Noticed:

Dunlop, C.R.B., Creditor-Debtor Law in Canada (2nd Ed. 1995), pp. 352 to 354 [para. 29].

Gillese, Eileen E., The Law of Trusts (1997), pp. 103, 104 [para. 24].

Oosterhoff, A.H., and Gillese, Eileen E., Text, Commentary and Cases on Trusts (5th Ed. 1998), c. 7, c. 8 [para. 6]; p. 288 [para. 31].

Waters, Donovan, Commentary (1975), Can. Bar Rev. 366, p. 368 [para. 12].

Counsel:

Donna E. Mitchell, for the appellant;

Kenneth B. McCullogh, Q.C., for the respondent.

This appeal was heard on October 21, 1998, by Daigle, C.J.N.B., Rice and Ryan, JJ.A., of the New Brunswick Court of Ap­peal. The decision of the Court was deliv­ered by Ryan, J.A., on February 1, 1999.