Obradovic Estate v Obradovic, 2013 ABQB 470

Court of Queen ’ s Bench of Alberta Citation: Obradovic Estate v Obradovic, 2013 ABQB 470 Date: 20130815 Docket: 4803 139611 Registry: Edmonton Between Suzana Kostadinovic as the Administrator Ad Litem of the Estate of Janko Obradovic Plaintiff (Respondent) - and - Dara Obradovic Defendant (Applicant) Corrected judgment: A corrigendum was issued on August 19, 2013; the correction has been made and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Eric F.

Macklin _______________________________________________________ I. Introduction [ 1 ] The Plaintiff is the Estate of Janko Obradovic who was the husband of the Defendant, Dara Obradovic.

The Estate says that a matrimonial property settlement agreement was reached in February 2009 between the husband and the wife in which the wife agreed to pay to the husband the sum of $10,000 in exchange for a transfer of his interest in the matrimonial home to the wife alone. [ 2 ] The Estate of the husband says that the wife is in breach of the agreement and should pay the sum of $10,000 to the Estate even though the Estate no longer possesses any interest in the matrimonial home by operation of the law of survivorship which resulted in the transfer of the husband ’ s entire interest to the wife on his death. [ 3 ] The wife says that no agreement was ever concluded but, if so, it is frustrated by the inability of the Estate to now perform the husband ’ s obligations.

The wife asks that the Estate be compelled to remove the Lis Pendens still registered against the matrimonial

home. II. Facts [ 4 ] The parties were married on May 13, 2005 in Serbia. After the marriage, the husband sponsored the wife so that she could move to Canada and obtain Canadian citizenship. She arrived in Canada in November 2005. [ 5 ] On July 4, 2006, the parties purchased the matrimonial home located at 55, 8745 - 165 Street in Edmonton. [ 6 ] The husband and wife were registered as joint tenants of the matrimonial home. [ 7 ] The parties separated on July 27, 2006. [ 8 ] The husband issued a Statement of Claim for Divorce and Division of Matrimonial Property on September 13, 2006.

The wife filed a Statement of Defence and Counterclaim for Divorce and Division of Matrimonial Property on October 25, 2006. [ 9 ] The wife continued to reside in the matrimonial home. [ 10 ] A Certificate of Lis Pendens was registered by the husband on the Certificate of Title on April 20, 2007 under the Matrimonial Property Act , RSA 2000, c M-8. [ 11 ] The parties, through their respective counsel, commenced negotiations regarding the division of matrimonial property, being the matrimonial home. [ 12 ] In February 2009, the wife offered to pay $10,000 in return for the husband transferring his rights in the matrimonial home to her.

By letter dated February 26, 2009, counsel for the husband wrote to counsel for the wife and stated that he “ will accept $10,000 and release his interest in the property ” . The acceptance was “ contingent on the $10,000 being releaseable ” to the husband by March 15, 2009. [ 13 ] On March 4, 2009, counsel for the husband wrote to counsel for the wife asking that he “ direct the Transfer of Land, Dower Release, Request for Divorce and Divorce Judgment ” to her offices and that the executed documents would be returned to counsel for the wife.

The date for receipt of the settlement proceeds of $10,000 was extended to March 27, 2009. [ 14 ] By letter dated May 7, 2009, counsel for the husband wrote to counsel for the wife asking that he “ provide the settlement documents and funds at your first opportunity ” . [ 15 ] By letter dated May 12, 2009, counsel for the wife advised a representative of RBC Royal Bank ( “ RBC ” ) that once the funds were received (presumably from RBC), they would be sent to the husband ’ s lawyer on the condition that the various transfer and discharge documents be signed and returned.

It further indicated that if the husband ’ s lawyer could not comply with the trust conditions, the $10,000 would be returned to counsel and would be refunded to RBC. [ 16 ] In an affidavit, counsel for the husband states that on June 16, 2009, she advised counsel for the wife that the husband had accepted the $10,000 settlement and suggested a mechanism for giving effect to the settlement by transferring the property under trust conditions.

[ 17 ] By letter dated June 26, 2009, counsel for the wife advised counsel for the husband that a mortgage for $10,000 could be obtained from the Royal Bank only if title was placed in the name of the wife alone. He indicated that a transfer of the property could be done under appropriate trust conditions. He forwarded another letter, dated July 17, 2009, asking for her response to the letter of June 26, 2009.

A further request for response was sent by the wife ’ s lawyer on August 28, 2009. [ 18 ] In her affidavit, counsel for the husband explains that her subsequent communications with him were not received by him. She was advised by his family following his death in October 2009 that the reasons she had been unable to reach the husband were due to his becoming “ very ill ” , being incarcerated for some time “ and then hospitalized for both health and psychiatric reasons ” . [ 19 ] The husband died on October 1, 2009 before the divorce had been finalized.

Under the terms of a Holograph Will dated August 28, 2008, the husband left his entire estate to his daughter, Biljana Obradovic. However, by operation of the law of survivorship, the matrimonial home passed to the wife as surviving joint tenant on his death. [ 20 ] The matrimonial home now stands in the sole name of the wife but the Certificate of Lis Pendens remains registered against it. [ 21 ] The only matrimonial property owned by the parties was the matrimonial home held in joint tenancy. It had an appraised value on September 11, 2008 of $160,000.

A mortgage of $117,000 was registered against it and, with approximately $110,000 remaining to be paid on the mortgage, the total equity was approximately $50,000. Equal division of the matrimonial property would have resulted in the payment of approximately $25,000 to each party. [ 22 ] Additional facts will be considered in the context of the issues raised. III. Positions of the Parties [ 23 ] The Estate of the husband says that a settlement agreement was reached in February 2009 and the wife owes the sum of $10,000 to the Estate.

In exchange, the husband was obliged to provide the necessary transfer documents to have the matrimonial home placed in the sole name of the wife and, though this cannot now be done and is not necessary in any event, the agreement was complete. [ 24 ] The wife argues that no settlement agreement was ever reached as there was never any consensus between the parties as to its precise terms.

Alternatively, the wife says that if an agreement was reached, then it was a condition precedent that she would be able to obtain financing in order to pay the agreed upon sum and she was unable to do so due to a lack of adequate security. In the further alternative, the wife submits that both parties were still joint tenants of the matrimonial home and upon the death of the husband, he no longer possessed an interest in the matrimonial home. His interest was vested in the wife by operation of the law of survivorship and, as he can no longer perform, the contract has been frustrated. IV. Analysis 1.

Was there an agreement? [ 25 ] The husband and wife were joint tenants of the matrimonial home when they separated on July 27, 2006. The matrimonial home was the only matrimonial property owned by the parties at that time. [ 26 ] A Statement of Claim for Divorce and Division of Matrimonial Property was issued by the husband and the wife filed a Statement of Defence and Counterclaim for Divorce and Division of Matrimonial Property. The wife continued to reside in the matrimonial home and the husband registered a Certificate of Lis Pendens against the title.

The parties began negotiating a resolution of the matrimonial property action.

[ 27 ] The issue is whether terms were agreed upon that were certain. If there was no certainty of terms, then there could have been no meeting of the minds and there could not be an agreement. Both parties must understand the terms of the agreement and their respective understanding of those terms must be the same. [ 28 ] The wife offered to pay $10,000 in return for the husband transferring his rights in the matrimonial home to her. The husband agreed to accept $10,000 and release his interests in the property.

The correspondence suggests that initially time was of the essence regarding payment of the settlement funds. It is clear, however, that time ceased to be of the essence as extensions were granted and, indeed, counsel for the husband ultimately asked that the funds simply be provided at the wife ’ s “ first opportunity ” .

By letters sent in June, July and August of 2009, counsel for the husband sought responses with respect to the transfer of the property on trust conditions but never suggested again that time was of the essence with respect to payment of the settlement funds, or any of the other terms of the agreement. [ 29 ] The wife agreed to pay $10,000. The husband agreed to accept $10,000. The husband agreed to transfer his interest in the matrimonial home to the wife. The wife agreed to accept the transfer.

As set out in the letter of March 4, 2009, it was expected that there would be a transfer of land, dower release, request for divorce, and divorce judgment provided by the wife to the husband. The provision of those documents was a mere formality, as the parties had agreed to settle for $10,000 in exchange for the transfer of the husband ’ s interest to the wife. [ 30 ] In my view, the parties were in agreement on all essential terms.

The only issues extant once agreement had been reached on substance was the manner or form by which the settlement would be effected. [ 31 ] In order to complete the settlement, the wife was required to pay the sum of $10,000 to the husband. She did not have that sum available. However, it is clear from the correspondence that the funds would be made available by the RBC for her to provide to the husband once the husband provided the transfer of land. The exchange would be accomplished by the imposition of appropriate trust conditions.

There was nothing to stand in the way of the completion of the agreement and the imposition of appropriate trust conditions. There was nothing further to agree upon in order to complete the settlement. [ 32 ] Accordingly, I am satisfied that an agreement was negotiated and concluded. It called for a payment by the wife of $10,000 to the husband and it called for a transfer by the husband of his interest in the matrimonial home. Though time may initially have been of the essence, it clearly ceased to be, as evidenced by the ongoing correspondence between counsel.

An agreement as to the precise trust conditions was unnecessary as it is clear that the parties intended the agreement to be implemented by doing whatever was necessary. That is, the parties were not concerned regarding trust conditions which might be imposed, as long as they facilitated the completion of the agreement. The deal was done. 2. Has the agreement been frustrated? [ 33 ] The matrimonial home was registered in joint names. On the husband ’ s death, the wife was entitled to have his interest transferred to her.

The wife says that once that transfer occurred by operation of law, there was nothing for the husband, or his Estate, to perform in order to complete the settlement agreement. That is, the Estate is unable to perform the husband ’ s contractual obligations. The question is whether the inability of the Estate to now provide the transfer documents in compliance with the terms of the agreement effectively frustrates the contract such that the wife is no longer obliged to pay the sum of $10,000 to the Estate.

In other words, does the impossibility of performance by the husband or his Estate frustrate the agreement and relieve the wife of her contractual obligations. [ 34 ] The terms of the agreement required the husband to provide a transfer to the wife. Obviously, he cannot now do so. However, and importantly, the settlement reached between the parties related to the matrimonial property action commenced by the husband and the counterclaim filed by the wife.

In the Prayer for Relief, the husband ’ s action claimed a “ distribution of all of the property acquired by [the parties], either jointly or separately, in such a manner as the Court deems just and equitable ” . It also sought a declaration “ that each party has an interest in each other ’ s property by reason of each other ’ s contribution to the acquisition ... of the property ” . [ 35 ] Upon resolution of the matrimonial property action, the only thing left for the parties to obtain was a divorce judgment, which was one of the documents to be exchanged as part of the negotiated settlement.

Clearly the settlement was intended to put an end

to the litigation between the parties. While it was not referred to in any of the correspondence, I find it to be an implied term of theagreement that two other documents would be exchanged in order to give effect to the matrimonial property settlement and conclude thelitigation. The husband would provide a discontinuance of the action and the wife would provide a discontinuance of the Counterclaim.The settlement was negotiated so as to conclude the litigation between the parties.

The litigation would only have been satisfactorilyconcluded with the mutual exchange of discontinuances. [36] The wife has argued that the husband’s interest in the matrimonial property ceased upon his death and as a result of thetransfer of his interest in the matrimonial home to the wife pursuant to the laws of joint tenant survivorship. Performance of hiscontractual obligation is now both impossible for the husband and unnecessary for the wife.

But a question remains as to the effect of thison the matrimonial property actions. [37] The wife’s counsel refers to Coyle v Coyle (Estate), 2005 ABQB 436, 383 AR 135 which in turn references Dunn Estate vDunn (1994), (AB KB), 148 A.R. 131, [1994] AJ No 42. In Dunn Estate, although the matter was complicated bylife insurance which paid out the mortgage, Trussler J. appears to have taken the position that the right of survivorship takes precedenceover ss. 11 and 16 of the Matrimonial Property Act.

In other words, on the husband’s death, the former matrimonial home no longerformed part of the matrimonial property subject to division under the Act. [38] As noted in Coyle, the decision in Dunn was criticized by the Alberta Law Reform Institute in the May 2000 Final Report No83, Division of Matrimonial Property on Death. [39]

Section 16 of the Matrimonial Property Act provides: 16 Where a person dies after commencing an action under this Part, (

a) the action may be continued by the estate of the deceased person, and (

b) the rights conferred on that person under this Part prior to that person’s death survive that person’s death for the benefit of thatperson’s estate. [40] Accordingly, an action for matrimonial property survives the death of a party.

The Estate of a deceased spouse can thereforecarry on with a matrimonial property action existing at the time of death. (See also Kozyra v Kozyra, 1998 ABQB 641 at para 20.) Theclear intent of the legislature is to crystallize the parties’ interests in the context of the matrimonial property action as at the date of death.To hold that the right of survivorship of a joint tenant supercedes the deceased’s rights under the matrimonial property action, effectivelyremoving the asset in question from the matrimonial property regime, would undermine the intention behind the provision.

Therefore,while title transfers by operation of the law, the wife in this case holds title subject to the Estate’s right to claim an interest in thatproperty under the Act. [41] Further, despite the fact that neither the husband nor the Estate can now provide some of the documents that were anticipatedto be exchanged as part of the settlement (the transfer of land and the dower release), the Estate can still provide a discontinuance of thematrimonial property action and that discontinuance has significant value.

The facts suggest that an equal division of the matrimonialproperty may well have resulted in the husband receiving an amount greater than $10,000 and perhaps as high as $25,000 if the estimateof the equity in the property as at September 11, 2008 is still reasonably accurate. In other words, the contract is not totally frustrated andthe Estate of the husband can still provide to the wife part of the valuable consideration anticipated in the settlement agreement. [42] Had I found that there was no agreement or that the agreement had been frustrated, the matrimonial property actions wouldhave remained alive.

The result would then be a continuation of the litigation over the division of matrimonial property with the Estatestanding in the shoes of the husband as it is entitled to do under s. 16 of the Matrimonial Property Act. As provided in s. 11(3) of thatAct, the Court would take into consideration any benefit received by the wife spouse as a result of the death of the husband in makingany matrimonial property order in favour of the wife. [43] Another consequence may have arisen had no agreement been reached prior to the husband’s death. Once negotiations began

for the division of the matrimonial property and, particularly, once an agreement was reached, the joint tenancy was effectively terminated and the husband and wife then held their interests in common. It has been held that even failed negotiations over jointly held property can sever a joint tenancy though it may be uncertain as to the precise moment during negotiations when the joint tenancy is severed.

However, once an agreement has been reached, as I have found it was here, the joint tenancy can be considered severed and the interests of the parties in jointly held property become interests in common rather than joint interests. (See Bruce Ziff, Principles of Property Law , 5 th ed (Toronto: Carswell, 2010) at 346 and 347; McNaughton v McNaughton 1999 ABQB 77 at para 19 ; Jurevicius v Jurevicius 2011 ONSC 696 at paras 22-23 .) [ 44 ] I have no hesitation in concluding that the separation of the parties, the commencement of litigation and the negotiation of a settlement evidence clear intentions by the parties to terminate their joint tenancy in the matrimonial home.

I have no doubt that, if asked, both parties would have said throughout the course of their dealings and even before they reached agreement that they did not want the law of survivorship to continue to apply. They each would have intended their interest in the matrimonial home to go to someone other than the estranged spouse. [ 45 ] Had I found that the agreement was frustrated, then it would also have been open for either party to proceed on the basis that the agreement had severed the joint tenancy and resulted in the matrimonial home then being held by the parties as tenants in common.

In that event, the parties could either have simply gone their separate ways on a sale of the home or either could have proceeded with the matrimonial property action for an ultimate determination by the Court on an appropriate division of the matrimonial property, then being each party ’ s interest as a tenant in common in the matrimonial home. [ 46 ] Accordingly, had there been an agreement which was frustrated, then it would have been possible for the parties to simply walk away with their respective interests as tenants in common or to proceed with the matrimonial property actions for a different property distribution.

V. Conclusion [ 47 ] An agreement was reached between the husband and wife for the husband ’ s sale of his rights in the matrimonial home to the wife for the sum of $10,000. Notwithstanding the death of the husband and the transfer of his interest in the matrimonial home to the wife under survivorship law, the husband ’ s rights survived his death for the benefit of the estate. The agreement remains in force, and was not frustrated by the death of the husband. The wife remains obliged to pay the sum of $10,000 to the husband ’ s estate to complete her obligations under the terms of the agreement.

Once she has done so and provided a discontinuance of the Counterclaim, the Estate shall file a discontinuance of the action and will remove the lis pendens registered against the former matrimonial home. Heard on the 16 th day of July 2013. Additional submissions on July 31, 2013 and August 6, 2013. Dated at the City of Edmonton, Alberta this 15 th day of August 2013. Eric F. Macklin J.C.Q.B.A. Appearances:

Iain M. Cameron for the Plaintiff (Respondent) Kenneth J. Alyluia for the Defendant (Applicant) _______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice Eric F. Macklin _______________________________________________________ The citation line on page 1 should read as follows: Obradovic Estate v Obradovic .