Turner v Russell, 2013 ABQB 704

Court of Queen ’ s Bench of Alberta Citation: Turner v Russell, 2013 ABQB 704 Date: 20131205 Docket: 4801 152074 Registry: Calgary Between: Herma Urceline Turner Plaintiff - and - Moses Anthony Russell Defendant _ ________________________________________ ______________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _________________________________________ ______________

Summary [ 1 ] Ms. Turner asks the court for the right to unilaterally list the jointly-owned matrimonial home for sale and for exclusive possession of that home to allow her to prepare the home for sale. The home is in foreclosure; a redemption order issued on August 21, 2013, gave to the co-owners, Mr. Russell and Ms. Turner , until February 21, 2014 to repay the approximately $140,000.00 owing on the mortgage failing which the trust company mortgagee will be at liberty to list the property for sale at $250,000. [ 2 ] Mr. Russell is apparently currently living in the matrimonial home.

Although he had notice of this application, he did not appear in person, but made a request to the clerks to have the application adjourned until December, 2013. Because of the urgency of the situation, his application for adjournment was denied. [ 3 ] Ms. Turner’s application is opposed by Mr. Lalji, a judgment creditor of Mr. Russell, who obtained a writ of enforcement against Mr. Russell in the amount of approximately $22,000.00 and who registered that writ against the matrimonial home on January 4, 2013. On January 23, 2013, Mr.

Lalji’s agent, Allied Shortridge Civil Enforcement Agency Inc., filed a caveat on the title to the

matrimonial home indicating its intention to list Mr. Russell’s interest in the matrimonial property for $49,900.00 with a minimum saleprice of $24,000.00. Mr. Lalji has now served a notice of method of sale and advises that he has received an informal offer to purchasethe Russell interest in the property for $--,---.00 which offer he intends to accept once the offer is formalized. [4] Ms. Turner’s application is deemed to be a timely objection to the judgment creditor’s civil enforcement sale proceedings.Ms. Turner therefore has standing to object to the judgment creditor’s notice of method of sale. [5] Ms.

Turner has not established any basis for declaring that the judgment creditor does not have the power to sell Mr.Russell’s interest in the matrimonial home. On the contrary, the judgment creditor has established that he has priority over Ms. Turner’sclaim to Mr. Russell’s interest in the matrimonial home. Therefore, the judgment creditor is at liberty to sell Mr. Russell’s interest. [6] Although she cannot prevent the judgment creditor from selling Mr. Russell’s interest in the matrimonial home so as torecover the amount of his judgment, Ms.

Turner does have an interest in maximizing the sale price obtained by the judgment creditorsince any difference between the amount of the judgment creditor’s claim plus costs and the sale price will be potentially available to heras an unequal division of matrimonial property. Even using Ms. Turner’s evidence of the value of the matrimonial home, rather than thevalue used in the foreclosure proceedings, the judgment creditor’s proposed list sale price for Mr..

Russell’s half interest is reasonable:the restrictions on the effective use of a half interest in a matrimonial residence justify a discount from the market price for the entireinterest. However, given both the lack of information about the way in which the judgment creditor has marketed Mr. Russell’s halfinterest in the matrimonial home, and the evidence that he has already received an informal offer for an amount just below the list price,the judgment creditor’s minimum sale price for the Russell half interest is not approved: Mr. Lalji must bring an application, asanticipated in s. 74(3)(

b) of the Civil Enforcement Act, to have the court approve a minimum sale price for the Russell interest. [7] In the result, therefore, Ms. Turner might be allowed to list her interest in the matrimonial home for sale so long as themethod of sale she proposes does not interfere with the redemption limit ordered by the court in August, 2013. However, in order to havethe court properly consider such an application, Ms. Turner would have to limit her application to her one-half interest in the home andshe would have to give the mortgagee notice of her application. Cases and authority cited [8] By Ms.

Turner: Stockinsky v Chetnev, 2002 ABQB 296. [9] By Mr. Lalji: Nelson v Nelson, 2001 ABQB 732; Maroukis v Maroukis, (SCC), [1984] 2 SCR 137;Bjornson v Schacher 2009 ABQB 84; Millar v Millar, (AB KB), [1991] AJ No. 561; Lecerf v Lecerf, 2004 ABQB501. 1. Background

a) Factual [10] The parties were married in July 2000. Ms. Turner claims that they separated as man and wife in December, 2011, but thateach continued to live in the matrimonial home for some considerable period of time after that. [11] The matrimonial home was acquired by the parties prior to the marriage, in May, 1998; the land title certificate indicates thatthe value of the property at that time was $109,000.00. In 2006, a mortgage was placed on the property in the original principal amountof $140,000.00. The monthly mortgage payments were, apparently, $1,046.25. Ms.

Turner swears that all mortgage payments made onthe matrimonial home from the outset of the mortgage were made by herself alone and that Mr. Russell has never made any mortgagepayments. [12] In June 2009, the Director of Employment Standards filed an order against the property requiring Mr. Russell, and hisbusiness, to pay $437.58. [13] In January 2013, Majid Lalji obtained a judgment against Mr. Russell and registered a writ of enforcement on the property onJanuary 4, 2013. Ms. Turner states that the judgment obtained by Mr. Lalji was for a loan he had made to Mr. Russell alone; Ms.

Turnerswears that the proceeds of the loan were not used for acquiring matrimonial assets or used for paying family expenses. On January 23,2013, Mr. Lalji issued a notice of sale of the debtor’s – i.e. Mr. Russell’s - interest in the property. That notice states that the CivilEnforcement Agency is entitled to a fee of $3,000.00 whether or not Mr. Russell’s interest is sold. The mortgagee was given notice ofMr. Lalji’s notice of method of sale and presumably has not filed any objection to it. [14] On March 1, 2013, Ms.

Turner, and the couple’s children, moved out of the matrimonial home and into a basement rentalsuite. It is not clear why Ms. Turner moved out of the home and stopped making mortgage payments on it and instead left the home forrental accommodation where she is presumably paying monthly rent which must be more or less equivalent to the mortgage payment. [15] On August 21, 2013, the mortgagee of the matrimonial home obtained a redemption order stating that there was due andowing approximately $140,000.00 on the mortgage.

The order gave to the parties the right, until February 21, 2014, to repay thatindebtedness failing which the mortgagee was entitled to sell the matrimonial home by listing the home with the multiple listing serviceat a list price of $250,000.00 or at such higher price as may be recommended by the listing realtor after a comparative market analysis isconducted by that realtor. The redemption order was to be served on Ms. Turner at the matrimonial home. It is expected that counsel forthe mortgagee have incurred costs of approximately $5,000.00 to date in relation to the sale of this property.

It does not appear, however,that the mortgagee has been given notice by Ms. Turner of this application.

[ 16 ] On September 20, 2013, Mr. Lalji filed a Notice of Method of Sale indicating that he intended to sell Mr. Russell’s half interest in the matrimonial home by listing that interest for sale with a named real estate agent on a multiple listing basis at a price of $49,900.00 with a minimum price of $24,000.00 at a specified real estate commission. This notice was also served on Ms. Turner at the matrimonial home.

The notice indicates that any person having an interest in the property can serve a notice of objection to the proposed minimum price by serving the agency within 30 days from the date of being served with the notice of sale. The civil enforcement agency states that although Ms. Turner was properly served with its notice of sale more than 30 days ago, she has not registered an objection to its proposed sale in a timely way and that she therefore has no status to object to the civil enforcement agency’s proposed sale. [ 17 ] On September 23, 2013, Ms.

Turner obtained an order for child support in the amount of $2,736.00 per month retroactive to March 1, 2013; she claims that Mr. Russell has never paid either the retroactive portion or the ongoing portion of that award and is consequently $24,624.00 in arrears of his child support obligation. [ 18 ] On October 2, 2013, Ms. Turner served an Amended Statement of Claim for Divorce and Division of Matrimonial Property on Mr. Russell. The amendments claimed a lump sum payment of spousal support in the amount of $60,000.00 secured against Mr.

Russell’s interest in the matrimonial home and an unequal division of the matrimonial home based on, among other factors, a claim for occupancy rent against Mr. Russell. The amendment also referred to the Lalji writ of enforcement. Mr. Russell has not defended Ms. Turner’s amended statement of claim and was noted in default on October 29, 2013. [ 19 ] On October 29, 2013, Ms.

Turner obtained a comparative market analysis from a realtor to the effect that the matrimonial home has an estimated sale price of $2--,---.00 and that it should be listed for sale at $2--,---.00 [The numbers which have been truncated in the preceding sentence and in para. 3 above are known to the parties; the estimated sale price and proposed list price referred to in this para. are in excess of the amounts set out in the redemption order.] However, that realtor has not seen the inside of the house, and his opinion is subject to an actual viewing of the property. [ 20 ] Ms.

Turner anticipates that any third party purchaser of Mr. Russell’s interest in the matrimonial home would proceed with an application for partition and sale pursuant to the Law of Property Act. Indeed, the civil enforcement agency has indicated that, failing any arrangement or agreement with Ms. Turner concerning the disposition of the equity in the property, that is exactly what should be foreseen.

b) Legislative [ 21 ] The provisions of the Civil Enforcement Act which apply here include:

Part 7 Land Applies to all land 67 For the purposes of enforcing a writ, (

a) all land of the enforcement debtor that is under the Land Titles Act is liable to sale under this Part, and . . . Instruction to sell 68 To initiate enforcement proceedings to sell land an enforcement creditor must provide to an agency instructions to sell the land and any relevant documents or information that are required by the agency. Method of sale 69 An agency may sell land by any method of sale that is commercially reasonable. Notice of intention to sell 70

(1) Before selling land under this Act, an agency must give notice of intention to sell the land in accordance with the regulations.

(2) If an agency has given notice of intention to sell land, no other agency may give notice of intention to sell the same land while the original notice is still in effect. . . . Waiting period 72

(1) Once the regulations governing the giving of notice of intention to sell have been complied with, an agency shall not, unless otherwise permitted by the Court, offer the land for sale until a waiting period of 180 days has expired from the day that all the requirements of those regulations have been complied with.

(2) A Court may, subject to subsection (3), extend or shorten the 180-day waiting period.

(3) The Court may shorten the 180-day waiting period only if the Court is satisfied that the land is not exempt. . . .

Sale of land 74

(1) At least 30 days before offering land for sale the agency must serve notice of the method of sale on the enforcement debtor and any other person specified by the regulations.

(2) In addition to any information prescribed by the regulations, the notice of the method of sale may set out the minimum price for which the agency proposes to sell the land.

(3) If the notice of the method of sale sets out the minimum price for which the agency proposes to sell the land, the following applies: (

a) the notice must state that any person who objects to the land being sold for the proposed minimum price must serve a notice of objection on the agency within 30 days from the day of being served with notice of the method of sale; (

b) if any person serves a notice of objection on the agency within the time mentioned in clause (a), the agency must not sell the land except on terms that are approved of by the Court; (

c) if a notice of objection is not served on the agency within the time mentioned in clause (a), the agency may, without an order of the Court, complete the sale of the land for a price that equals or exceeds the proposed minimum price. . . . [ 22 ] The pertinent regulations passed under the Civil Enforcement Act include: Notice of intention to sell 46

(1) The notice of intention to sell land required by

section 70 of the Act (

a) must contain (

i) all of the standard information, (ii) a statement that the agency has been instructed by the instructing creditor to sell the enforcement debtor’s interest in the land described in the notice, (iii) a statement that, unless the Court otherwise orders, the agency cannot offer the land for sale until the expiration of a 180-day waiting period after the notice has been served on the persons who are required to be served with the notice, (iv) a statement that if the debtor’s principal residence is located on the land, the land may be exempt, in whole or in part, from sale under writ proceedings, and (

v) a statement that if the enforcement debtor claims that the land is exempt in whole or in part from sale under writ proceedings, the enforcement debtor must serve a written claim on the agency before the expiration of the waiting period, and (

b) must be served on (

i) the enforcement debtor, (ii) every registered owner, and (iii) every subordinate claimant whose claim is recorded on the certificate of title for the land.

(2) Before land may be sold under the Act by an agency, the agency must file a caveat against the certificate of title to the land setting out the notice of intention to sell the land. Notice of method of sale 47

(1) The notice of the method of sale required by

section 74 of the Act must contain (

a) all of the standard information, (

b) the proposed method of sale, (

c) if the proposed method of sale is by listing with a real estate agent, (

i) the name, business address and telephone number of the listing agent, (ii) the price at which the land is to be listed, (iii) whether the listing is to be exclusive or multiple, (iv) the duration of the listing, and (

v) the amount of, or method of calculating, the real estate agent’s commission,

(

d) if the proposed method of sale is by tender, . . . and (

e) if the proposed method of sale is by auction, . . .

(2) T he notice of the proposed method of sale required by

section 74 of the Act must be served on (

a) the enforcement debtor, (

b) every registered owner, and (

c) every subordinate claimant whose claim is recorded on the certificate of title for the land.

(3) Where an agency sells land, the agency must (

a) within 10 days from the day of the sale of the land register in the Registry a report in a form acceptable to the sheriff setting out the details of the sale, and (

b) within 3 days from the day of conducting a distribution of funds arising from the sale of the land, amend, in a form acceptable to the sheriff, the registration referred to in clause (

a) setting out the details of the distribution of the funds.

(4) For the purposes of determining time periods under subsection (3), Saturdays and holidays are to be excluded when making the determination. 2. Can Ms. Turner’s application to this court be deemed to be notice to the agency of an objection to the method of sale proposed by the judgment creditor and, if so, should it be deemed to be a timely objection?

a) Can Ms. Turner’s application be deemed to be a notice of objection pursuant to s. 74 of the Civil Enforcement Act? [ 23 ] From a substantive perspective, Ms. Turner’s application in this court can be deemed to be a notice of objection to the sale as filed by the judgment creditor as required under s. 74(3)(

a) of the Civil Enforcement Act : the judgment creditor has notice of her application and is able to respond to it in a meaningful way. [ 24 ] Nonetheless, in order to maintain the integrity of the civil enforcement system from an administrative perspective, I require Ms. Turner to forthwith file with the agency a copy of this decision as constituting a notice of objection.

b) Should Ms. Turner’s objection to the judgment creditor’s proposed method of sale be deemed to have been made in a timely way? [ 25 ] It is not clear on the materials which I have seen when and how Ms. Turner was served with the notice of method of sale. Nonetheless, any delay occasioned by Ms. Turner in bringing forward her objection to the judgment creditor’s plan of sale was made in a sufficiently timely way that her own application was returnable on November 14. Assuming therefore that Ms.

Turner did not, in fact, give notice to the judgment creditor of her objection within 30 days of having been served with his notice of method of sale, because the judgment creditor has not been prejudiced by the delay, I deem her objection to have been made within the required 30 days. Ms. Turner therefore has standing to object to the judgment creditor’s proposed method of sale. 3. Does Ms. Turner have a valid objection to the judgment creditor selling Mr. Russell’s interest in the matrimonial home? [ 26 ] Ms. Turner has not suggested or established any legal barrier to the sale of Mr.

Russell’s half interest in the matrimonial home. [ 27 ] Ms. Turner states that the sale of Mr. Russell’s interest will not relieve a purchaser of Mr. Russell’s obligations to deal with the clogs on the title. She is undoubtedly correct; any proposed purchaser will be presumed to be aware of the clogs on the title to the property from the state of the title. I note as well, in this context, that the mortgagee, which had been served with the judgment creditor’s notice of method of sale, has not objected to the judgment creditor’s proposed sale; therefore, the mortgagee presumably has no objection to Mr.

Lalji’s proposed course of action. Moreover, as was pointed out by Mr. Lalji, were the mortgagee not to accept a proposed purchaser as an appropriate assignee of the mortgage, the mortgagee would presumably just engage the foreclosure which it is currently pursuing. [ 28 ] The court observes that Mr. Russell might himself have had an objection to the sale of at least part of his equity in the matrimonial home since that home is apparently his residence. However, Mr.

Russell did not claim any exemption from the statutory sale provisions within the stipulated period and might therefore have lost any potential exemption. Whether Mr. Russell’s apparent exemption should, as a matter of public policy, apply in relation to outsiders such as the judgment creditor Lalji is a matter which should perhaps be decided by a court; however, since Mr. Russell has not responded to any of the process instituted during 2013, it does not

appear that this is the appropriate file on which to clarify any policy issues. 4. By virtue of his writ of enforcement, does the judgment creditor have priority over Ms. Turner’s claim under the Matrimonial Property Act ? [ 29 ] The judgment creditor does have priority over Ms. Turner’s claim under the Matrimonial Property Act. [ 30 ] Even assuming, for the purposes of this application, that Ms. Turner’s claim for an unequal division of the matrimonial property and for a charge on Mr. Russell’s interest in that property crystallized on October 29, 2013 when Mr.

Russell was noted in default (and this is almost undoubtedly too generous to Ms. Turner since her amended statement of claim posits, for example, three potential amounts of occupancy rent such that a court order establishing the size of her claim for occupancy rent appears to be required), that claim only crystallized a long time after the judgment creditor’s claim which might be said to have finally crystallized, at the latest, 180 days after the filing of the notice of sale of Mr. Russell’s interest, or July 23, 2013.

According to the principles set out in the case law cited by both parties and exemplified by the Supreme Court of Canada’s decision in Maroukis , a spouse’s claim to matrimonial property only attaches to specific assets upon a court order. The judgment creditor therefore has priority over Ms. Turner’s interest. [ 31 ] Ms. Turner’s reliance on the Stochinsky decision is not, in fact, helpful to her. That decision establishes only that a stay may be granted where, among other conditions, there is a serious issue to be tried.

Since all Canadian courts are bound by decisions of the Supreme Court of Canada, there simply is not serious issue to be tried with respect to the priority between the judgment creditor and the spouse who claims an unequal division of matrimonial property. [ 32 ] In

summary on this point, Ms. Turner’s claim against Mr. Russell’s interest in the matrimonial property does not have priority over the judgment creditor’s judgment. The judgment creditor is therefore entitled to initiate process to recover the amount of his judgment, plus costs, from Mr. Russell’s interest. Ms. Turner will, of course, be entitled to make a claim to any sale proceeds in excess of the judgment creditor’s judgment, plus costs. 5.

Should the court direct the civil enforcement agency to change the minimum list price or the minimum sale price? [ 33 ] There is no basis here for the court to order the civil enforcement agency to change its minimum list price. [ 34 ] The agency correctly argues that, even using Ms.

Turner’s submissions concerning the appropriate list price, once substantial deductions are taken from that price for various costs (including the costs of the mortgagee at approximately $5,000.00 and the costs of the civil enforcement agency at a minimum of $3,000.00) and clogs, including the mortgage and the employment standards award, the minimum list price which it proposes suggests only a reasonable deduction from the mathematical value of the half interest. Moreover, as the information provided by Ms.

Turner also candidly acknowledges, since the individual who prepared the comparative market analysis did not have access to the home, and since the condition of the home is a critical factor in any market analysis, Ms. Turner’s own suggested market price is subject to qualification.

Finally, in addition to the dollar reductions which must be made to the estimated value of the home, and the concern about the current state of that home, we must also accept that the ownership of a one-half interest in a residence to which one can have no access is not an easily marketable asset and one for which a considerable discount must be envisaged. In

summary, the agency’s proposed list price for the Russell interest is within a reasonable range. [ 35 ] However, there is a basis here for the court to order the civil enforcement agency to change its minimum sale price. [ 36 ] The minimum sale price should be at least $--,---.00, the amount which the agency says it has already been offered, rather than the $24,000.00 mentioned in the notice of sale. But even $--,---.00 may not be a sufficiently high minimum: the civil enforcement agency does not advise how much, and what type of advertising, if any, the real estate agent who listed Mr.

Russell’s interest in the property has engaged in. If the property has not, in fact, yet been listed in any MLS services, it’s possible that the agent has not yet seen the best offer that would be made for Mr. Russell’s interest. It is likely that the market for half interests in matrimonial residences is extremely narrow and specialized. The court is entitled to know what efforts have been made by the judgment creditor to ensure that the best possible price for the interest has been obtained. 6. Should Ms.

Turner be allowed to embark on her own sale of the matrimonial property? [ 37 ] To the extent that it has not been made clear through addressing the various issues raised by the parties, the court notes, in

summary, that there is no objection in principle to Ms. Turner’s application to be allowed to list her undivided half interest in the home for sale herself. When a home is in foreclosure, the owner may be allowed to list the home for sale during the redemption period. The owner is presumably more interested than the mortgagee in obtaining the best possible price for the home and perhaps may be counted on to deploy all reasonable methods to achieve the best possible results for themselves. [ 38 ] The problems facing Ms.

Turner with respect to her application to sell the home herself are not therefore issues of principle, but problems of fact. First, given that the mortgagee has an interest in the home, in my view, the mortgagee should have been given notice of Ms. Turner’s application. Second, because Mr. Russell’s interest in the matrimonial home has already been attached by the

judgment creditor Lalji, Ms. Turner cannot sell Mr. Russell’s interest in the matrimonial home. [ 39 ] Of course, Ms. Turner also continues to be entitled to pay off the judgment creditor to remove his ability to sell Mr. Russell’s interest in the property and to pay off the mortgagee to remove its ability to foreclose. 7. Costs [ 40 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision. Heard on the 14 th day of November, 2013. Dated at the City of Calgary, Alberta this 4 th day of December, 2013 . J.B. Veit J.C.Q.B.A. Appearances: Yvonne M.

Williamson, student-at-law, Beaumont Church LLP for the Applicant, Ms. Turner Daniel D. Peterson Q.C., D'Arcy & Deacon LLP for the judgment creditor Majid Lalji