Bolliger v. White, 2016 ONSC 5024

Bolliger v. White, 2016 ONSC 5024

CITATION: Bolliger v. White, 2016 ONSC 5024

COURT FILE NO.: CV-12-00447290

DATE: 2016-09-16

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MANON BOLLIGER

Plaintiff

– and –

DEBORAH ANN WHITE

Defendant

COUNSEL:

Robert Di Vencenzo, for the Plaintiff

Robert Klotz, for the Defendant

HEARD: July 28, 2016

BEFORE: G. DOW, J

REASONS FOR JUDGMENT

1The parties were directed by Justice Diamond at the pre-trial conference to bring this motion as a means to narrow or determine the issues for trial. The issue, as I characterize it, is whether the defendant’s former spouse, Franklin White made a transfer of property under provincial family law that can be set aside under the applicable federal bankruptcy legislation.

2The chronology of events is as follows:

a) on June 4, 1988, the defendant and Franklin White marry, while the defendant is the registered owner of a house in Newmarket in which they begin to reside;

b) in 1999, the Newmarket house is sold and another house is purchased in Pontypool in which they reside, also registered only in the defendant’s name;

c) in October, 2007, the plaintiff obtained a judgment against Franklin White for $356,219.18 plus interest at six percent per annum for breach of trust and fraud;

d) on November 24, 2008, the defendant and Franklin White separate;

e) on March 9, 2009, the defendant and Franklin White enter into a separation agreement in which Franklin White gave up any interest he may have had in the “matrimonial home” as the defined in the Family Law Act, R.S.O. 1990 c. F.3 (“FLA”) in exchange for a release from payment of support or an equalization payment as may be required, also pursuant to the FLA.

f) on March 19, 2009, Franklin White made an assignment into bankruptcy with a trustee appointed under the (then) version of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3 (“BIA”);

g) on May 27, 2010, the Defendant sold the Pontypool house and purchased a house in Bowmanville;

h) on December 12, 2011, the plaintiff, as a creditor in the bankruptcy of Franklin White, obtained an order to commence and prosecute in her own name, and at her own expense, a proceeding to set aside the transfer of Franklin White’s interest in the defendant’s home as a matrimonial home;

i) on February 27, 2012, this action was commenced.

The Plaintiff’s Position

3The plaintiff maintains the release of Franklin White’s interest in the matrimonial home is a reviewable transaction under the BIA. To arrive at this conclusion the plaintiff starts with the broad definition under section 2 of the BIA which includes “things in action”, property whether “legal or equitable” or “vested or contingent”. Further, the BIA provides for any settlement and is defined to include “contract, covenant, transfer, gift” made within one year of bankruptcy to be void as against the trustee. Similarly, under the FLA, the definition of property under section 4 is defined to include interest in real property, whether vested or contingent. The province of Ontario uses an equalization scheme to distribute family assets after a marriage break down which involves valuation and accounting.

4The plaintiff relies on the Court of Appeal decision in Maroukis v. Maroukis (1981), 1981 CanLII 77 (ON CA), 33 O.R. (2d) 661 where it reversed the trial judge’s decision to vest the interest in the matrimonial home solely in the wife after a creditor of the husband obtained judgment against him. The house was acquired post marriage in joint tenancy and the wife filed an application for a division of family assets before the action against the husband by the creditor regarding the debt was commenced. However, while the Court of Appeal concluded the husband’s interest as a joint tenant owner of the house existed at the time the creditor obtained judgment and filed execution could not be ignored, it seems the facts are distinguishable by the very nature of the husband’s direct partial legal ownership of the asset.

5Similarly, in Bosveld v. Bosveld, a Supreme Court of Ontario oral decision of Justice Sutherland dated January 10, 1986, the Court dealt with a situation where the marriage break up occurs after the husband’s bankruptcy and how to deal with the wife’s application for division of the family assets which included a residential property and a cottage property, both registered in the wife’s name. This issue was whether the wife and trustee could make a settlement without involving the husband and the Court concluded the trustee was in a position to negotiate the division of the family assets with the wife. This conclusion was repeated in Blowes v. Blowes, 1993 CanLII 8521 (ON CA), [1993] O.J. No. 2022 where the wife sought to reactivate her equalization claim after going bankrupt, not disclosing this potential claim to the trustee, and then being discharged. The Court rejected the argument the claim was personal in nature and did not pass to the trustee when she became bankrupt.

Defendant’s Position

6The defendant acknowledged, for the purposes of this motion, that Franklin White’s beneficial interest in the matrimonial home prior to bankruptcy was a transfer or transaction as contemplated by the BIA (as well as the Fraudulent Conveyances Act R.S.O. 1990, C-F.29) and the trustee has the right to seek a declaration it was void. The defendant argued the right to claim against her as actually a right to claim an equalization which is a debt owed by one spouse to the other (Schreyer v. Schreyer 2011 SCC 35, 2011 S.C.C. 35 at paragraph 18) which can be forgiven or exchanged and falls outside the provisions of the BIA.

7Further, the nature of the equalization claim is personal between the spouses and must be articulated in a court proceeding to be available as an asset of the bankrupt which can be distributed amongst the creditors.

Analysis

8In this case, Franklin White’s right to claim possession of the matrimonial home was personal in nature, and like other personal assets of a bankrupt, such as personal injury or libel damages, is not included in the bankrupt’s assets for distribution to creditors. The claim for possession of a matrimonial home is not assignable and cannot be transferred to another. Further, there was no evidence that the circumstances of Franklin White and the defendant were such that he would have been granted an order for possession. The personal asset appears to have been used to reduce a likely debt to the defendant, that is, his spouse’s right to claim support and an equalization payment.

9As a result, I conclude the defendants former spouse’s transfer of his right to claim possession of the matrimonial home should not be set aside and question 1(a) of the Notice of Motion is answered in the negative.

Costs

10The parties have agreed that costs should be reserved to the trial judge and I agree.