Thibodeau v. Thibodeau

• Jurisdiction: Ontario
• Court: Court of Appeal (Ontario)
• Judge: Sharpe, Blair and Rouleau, JJ.A.
• Neutral Citation: 2011 ONCA 110
• Citation: (2011), 277 O.A.C. 359 (CA),2011 ONCA 110,104 OR (3d) 161,[2011] CarswellOnt 686,[2011] OJ No 573 (QL),277 OAC 359,104 O.R. (3d) 161,(2011), 277 OAC 359 (CA),[2011] O.J. No 573 (QL),277 O.A.C. 359
• Date: 10 February 2011

Thibodeau v. Thibodeau (2011), 277 O.A.C. 359 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. FE.018

In The Matter Of the Bankruptcy of Rodney Blair Thibodeau, of the Town of Stouffville, in the Province of Ontario;

And In The Matter Of an Appeal Made by Rodney Blair Thibodeau Under the Family Law Rules, O. Reg. 114/99, s. 38(1).

Darlene Joyce Thibodeau (applicant/respondent in appeal) v. Rodney Blair Thibodeau (respondent/appellant)

(C50496)

Darlene Joyce Thibodeau (applicant/respondent in appeal) v. The Bank of Nova Scotia, as assignee of Cyril Sapiro & Co. Ltd., Trustee of the Estate of Rodney Blair Thibodeau, a bankrupt (respondent/appellant)

(C50520; 2011 ONCA 110)

Indexed As: Thibodeau v. Thibodeau

Ontario Court of Appeal

Sharpe, Blair and Rouleau, JJ.A.

February 10, 2011.

Summary:

An arbitration award incorporated into a court order entitled a wife to a $264,468.69 equalization payment, payable out of the husband's share of the sales proceeds of the marital home. The husband subsequently became bankrupt. An unsecured creditor sought an order that the husband's share of the marital home sale proceeds be distributed under s. 136 of the Bankruptcy and Insolvency Act.

The Ontario Superior Court, in a judgment reported [2009] O.T.C. Uned. B15, held that the wife's equalization claim had priority over the claims of unsecured creditors. The court ordered that the husband's bankruptcy-exempt RRSPs be transferred to the wife to defray her claim to costs related to the equalization payment. The Bankruptcy trustee and the creditor appealed.

The Ontario Court of Appeal allowed the appeal. The wife's equalization claim did not have priority over that of unsecured creditors under the Bankruptcy and Insolvency Act. The motions judge erred in ordering the transfer of the husband's bankruptcy-exempt RRSPs to defray her costs related to the equalization payment.

Bankruptcy - Topic 3651

Creditors - General - Priorities - Marital property distribution orders - [See both Family Law - Topic 868.3 ].

Bankruptcy - Topic 3658

Creditors - General - Priorities - Equitable claims - [See both Family Law - Topic 868.3 ].

Courts - Topic 560

Judges - Powers - Authority to act ex mero motu (on own motion) - [See Family Law - Topic 880.19 ].

Equity - Topic 70

General - Maxims - Equity regards as done that which ought to have been done - [See first Family Law - Topic 868.3 ].

Family Law - Topic 868.3

Husband and wife - Marital property - Distribution orders - Equalization payments - An arbitration award incorporated into a court order entitled the wife to an equalization payment, payable out of the husband's share of the sales proceeds of the marital home - The husband became bankrupt - An unsecured creditor sought an order that the husband's share of the proceeds be distributed under s. 136 of the Bankruptcy and Insolvency Act - A motions judge held that the wife's claim had priority over unsecured creditors, because the order created an equitable trust in her favour respecting the husband's share of the sales proceeds - On appeal, the wife also claimed that the husband no longer had a property interest in the proceeds at the time of bankruptcy, that his obligation imposed an equitable lien or assignment, and that the trustee and unsecured creditor, stepping into the husband's shoes, were bound by his obligation to pay the proceeds to the wife - The Ontario Court of Appeal rejected the submissions and allowed the appeal - No equitable trust was imposed by the arbitrator's award - Equity required payment to the wife only if she had priority over other unsecured creditors - It was circular to use the equitable maxim "equity regards as done that which ought to have been done" to resolve the priority issue - There was no equitable lien or equitable assignment - The husband retained his property interest in the proceeds at the time of bankruptcy - The order provided a mechanism for enforcing the equalization payment; it did not transfer the husband's interest to the wife - See paragraphs 1 to 60.

Family Law - Topic 868.3

Husband and wife - Marital property - Distribution orders - Equalization payments - An arbitration award incorporated into a court order entitled the wife to an equalization payment, payable out of the husband's share of the sales proceeds of the marital home - The husband became bankrupt - An unsecured creditor sought an order that the husband's share of the proceeds be distributed under s. 136 of the Bankruptcy and Insolvency Act - A motions judge held that the wife's claim had priority over unsecured creditors, because the order created an equitable trust in her favour respecting the husband's share of the sales proceeds - The Ontario Court of Appeal, in allowing an appeal from the judge's decision, stated that "an order providing that an equalization payment to one spouse is to be made out of the payor spouse's share of the proceeds of the sale of the matrimonial home, without more, does not create 'property rights' in the payee spouse - equitable, securitized, or otherwise. Absent clear language pointing to the trier of fact's intention to order the transfer or vesting of a payor spouse's assets, or the creation of security, or the imposition of a trust-like obligation, in satisfaction of the equalization payment, courts should be wary of giving effect to a proprietary right form of disposition, lest (a) what the legislature has clearly decided is to be an equalization regime is inadvertently transformed into a division of property regime under the guise of protecting a payee spouse's right to receive the equalization payment awarded, and (b) otherwise legitimate claims of third parties be subverted and bankruptcy priorities reversed." - See paragraph 43.

Family Law - Topic 880.17

Husband and wife - Marital property - Distribution orders - Priorities - [See both Family Law - Topic 868.3 ].

Family Law - Topic 880.19

Husband and wife - Marital property - Distribution orders - Arbitration awards - Enforcement - An arbitration award incorporated into a court order entitled a wife to a $264,468.69 equalization payment, payable out of the husband's share of the sales proceeds of the marital home - The husband subsequently became bankrupt - An unsecured creditor sought an order that the husband's share of the marital home sale proceeds be distributed under s. 136 of the Bankruptcy and Insolvency Act - The motions judge, in finding that the wife's entitlement to her husband's share of the proceeds took priority over other unsecured creditors, also ordered that the husband's bankruptcy-exempt RRSPs be transferred to the wife to defray her costs related to the equalization payment - The Ontario Court of Appeal set aside the order - In the arbitration proceedings, no relief specific to the RRSP funds was asserted - The motions judge granted relief that was not claimed on the s. 59.8 Family Law Act motion to enforce the arbitrator's award - The court stated that "section 59.8 is essentially an enforcement proceeding designed to turn a family arbitration award into a court order with the enforceability that goes with such an order. Respectfully, it is not an opportunity for the Superior Court judge hearing the application to tweak or alter the arbitration award to conform to what the judge may think the arbitrator should have done. Nor is it an opportunity to 'correct' the award retroactively, the better to protect a payee spouse in the event of a subsequently occurring bankruptcy at the expense of the other creditors." - See paragraphs 61 to 75.

Cases Noticed:

Klymas v. Burkholder (1976), 22 C.B.R.(N.S.) 216 (Ont. Co. Ct.), refd to. [para. 26].

Pulzoni v. Pulzoni (1982), 25 R.P.R. 72 (Ont. H.C.), refd to. [para. 26].

Lee, Re (1995), 58 A.C.W.S.(3d) 547 (Ont. Gen. Div.), refd to. [para. 26].

Godfrey v. Godfrey (1996), 19 R.F.L.(4th) 58 (Ont. Gen. Div.), refd to. [para. 26].

Wells, Re (1993), 160 B.R. 726 (Bktcy. N.D.N.Y.), refd to. [para. 26].

Peterson, Re (1991), 133 B.R. 508 (Bktcy. W.D. Mo.), refd to. [para. 26].

Michiels, Re (1991), 14 Fam. L.R. 587 (Aust. Fam. Ct.), refd to. [para. 26].

Mountney v. Treharne, [2002] 2 F.L.R. 930 (Eng. C.A.), refd to. [para. 26].

Marsham v. Marsham (1987), 59 O.R.(2d) 609 (H.C.), refd to. [para. 31].

Gilmour (Bankrupt), Re (1997), 46 O.T.C. 81; 6 C.B.R.(4th) 191 (Bktcy. Reg.), dist. [para. 35].

Coulthard (Bankrupt), Re (2003), 349 A.R. 397 (Bktcy. Reg.), dist. [para. 35].

Dhala v. Dhala (2006), 410 A.R. 74 (Q.B.), dist. [para. 35].

Berdette v. Berdette (1991), 47 O.A.C. 345; 3 O.R.(3d) 513 (C.A.), refd to. [para. 38].

Shea v. Fraser (2007), 223 O.A.C. 253; 85 O.R.(3d) 28 (C.A.), refd to. [para. 38].

Schreyer v. Schreyer (2009), 245 Man.R.(2d) 86; 466 W.A.C. 86; 70 R.F.L.(6th) 237 (C.A.), refd to. [para. 38].

Burson v. Burson (1990), 29 R.F.L.(3d) 454 (Ont. Gen. Div.), refd to. [para. 38].

Gaudet v. Young Estate (1995), 11 R.F.L.(4th) 282 (Ont. Gen. Div.), refd to. [para. 38].

Colquhoun v. Colquhoun, [2007] O.T.C. Uned. 8; 2007 CarswellOnt 18 (Sup. Ct.), refd to. [para. 41].

Kennedy v. Sinclair, [2001] O.T.C. Uned. 465; 18 R.F.L.(5th) 91 (Sup. Ct.), refd to. [para. 42].

Lynch v. Segal et al. (2006), 219 O.A.C. 1; 82 O.R.(3d) 641 (C.A.), refd to. [para. 42].

Raymond v. Raymond, [2008] O.T.C. Uned. S17; 64 R.F.L.(6th) 160 (Sup. Ct.), refd to. [para. 42].

Alldred v. Alldred, [1998] O.J. No. 3606 (Gen. Div.), refd to. [para. 42].

McDonald v. McDonald (1994), 5 R.F.L.(4th) 215 (Ont. Gen. Div.), affd. (1997), 33 R.F.L.(4th) 425 (Ont. C.A.), refd to. [para. 42].

Bright, Re (1981), 33 O.R.(2d) 219 (H.C.), refd to. [para. 46].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241, refd to. [para. 50].

McCoy v. Hucker (1998), 75 O.T.C. 12 (Gen. Div.), refd to. [para. 51].

Coathup v. Coathup, [2000] O.T.C. Uned. 679 (Sup. Ct.), affd. [2001] O.A.C. Uned. 116 (C.A.), refd to. [para. 54].

Swiss Bank Corp. v. Lloyds Bank, [1981] 2 All E.R. 449 (H.L.), refd to. [para. 57].

Graystone Properties Ltd. v. Smith (1982), 39 O.R.(2d) 709 (C.A.), refd to. [para. 65].

LeBlanc v. Board of Education of York Catholic District School et al., [2002] O.T.C. 933; 61 O.R.(3d) 686 (Sup. Ct.), refd to. [para. 65].

Statutes Noticed:

Family Law Act, R.S.O. 1990, c. F-3, sect. 9(1) [para. 32, footnote 1].

Counsel:

Douglas Christie, for the appellant, Rodney Blair Thibodeau;

S.N. Zeitz, for the appellant, Bank of Nova Scotia;

Robert A. Klotz and N. Barmania, for the respondent.

This appeal was heard on October 18, 2010, before Sharpe, Blair and Rouleau, JJ.A., of the Ontario Court of Appeal.

On February 10, 2011, Blair, J.A., delivered the following judgment for the Court of Appeal.