2013 NBCA 47, 2013 NBCA 47

COURT OF APPEAL OF NEW BRUNSWICK 35-13-CA RACHELLE RAE GORAL and LORI ANN KIERSTEAD APPELLANTS RACHELLE RAE GORAL et LORI ANN KIERSTEAD APPELANTES -and- - et - SCARLETT CORMIER RESPONDENT SCARLETT CORMIER INTIMÉE Goral and Kierstead v. Cormier, 2013 NBCA 47 Goral et Kierstead c.

Cormier, 2013 NBCA 47 CORAM: The Honourable Justice Robertson The Honourable Justice Richard The Honourable Justice Bell CORAM : L’honorable juge Robertson L’honorable juge Richard L’honorable juge Bell Appeal from a decision of the Court of Queen’s Bench: February 4, 2013 Appel d’une décision de la Cour du Banc de la Reine : Le 4 février 2013 History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : Inédite Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : S.O.

Appeal heard: June 25, 2013 Appel entendu : Le 25 juin 2013 Judgment rendered: June 25, 2013 Jugement rendu : Le 25 juin 2013

Reasons for judgment by: The Honourable Justice Richard Motifs de jugement : L’honorable juge Richard Concurred in by: The Honourable Justice Robertson The Honourable Justice Bell Souscrivent aux motifs : L’honorable juge Robertson L’honorable juge Bell Counsel at hearing: For the appellants: Basile Chiasson, Q.C. For the respondent: Martin J. Siscoe Avocats à l’audience : Pour les appelantes : Basile Chiasson, c.r. Pour l’intimée : Martin J. Siscoe THE COURT The appeal is dismissed with costs of $3,500.

The judgment of the Court was delivered by RICHARD J.A. (Orally) [ 1 ] Eric Cormier and Scarlett Cormier married in the early 1970s and separated in 2004. In 1980, Mr. Cormier’s mother gifted certain lands to her children, including a cottage to him. From 1980 until 2002, the cottage property was the summer residence for Eric and Scarlett Cormier and their children. In 2002, the cottage was destroyed. In 2006, a parcel from the cottage property was sold to a neighbour. At the time, Mr. Cormier, acting through his solicitor, Charles Johnstone, obtained a waiver of interest from his wife.

In effecting the transfer, Mr. Cormier deposed that he and his wife had occupied the property as a marital home. [ 2 ] In 2007, the Canada Revenue Agency issued an Order for Seizure and Sale against Mr. Cormier and took steps to sell the cottage property. Instead of selling it to a stranger, Mr. Cormier sold the property to two of his nieces and used the proceeds of the sale to satisfy his debt to the Canada Revenue Agency. In effecting the transfer, Mr. Cormier deposed that the property had “not been occupied” as a marital home.

Because they knew the property had been occupied as the Cormier family cottage, the two nieces inquired of their lawyer, Mr. Johnstone, who was also Mr. Cormier’s lawyer in the transaction. Incidentally, Mr. Johnstone was also the lawyer who acted for Mr. Cormier when he had sold a parcel to the neighbour in 2006. Mr. Johnstone assured them that the property was, in fact, non-marital property. Thus reassured, the nieces proceeded with the purchase without the participation of their aunt Scarlett.

The two nieces, the appellants Rachelle Rae Goral and Lori Ann Kierstead, mortgaged the property and built a cottage upon it. [ 3 ] When Scarlett Cormier learned the cottage property had been sold without her knowledge or consent, she commenced an action to have the conveyance set aside. On February 4, 2013, a judge of the Court of Queen’s Bench issued the order sought. The judge concluded that the cottage property had been a marital home and that Ms. Cormier’s consent to the transfer

was necessary. Because he found both nieces had actual notice that the property had been one of Eric and Scarlett Cormier’s maritalhomes, the judge ruled that the transaction could not be saved by ss. 19(2) and (3) of the Marital Property Act, S.N.B. 1980, c. M-1.1(the Act) (since repealed and replaced by R.S.N.B. 2012, c. 107). [4] Ms. Goral and Ms. Kierstead appeal the trial judge’s decision.

They allege he erred inconcluding that the cottage property was a marital home and in not saving the transaction under s. 19 of the Act. [5] The appellants do not allege any palpable and overriding errors in the judge’s findings of fact,nor do they allege application of the wrong principles of law.

They acknowledge the questions raised in this Court fall within thecategory of “mixed fact and law.” Thus, unless some extricable error in principle can be identified, in which case a correctness standardmight be applicable, the trial judge’s decision “should not be overturned absent palpable and overriding error”: Housen v. Nikolaisen,2002 SCC 33, [2002] 2 S.C.R. 235, at para. 36.

No such error has been demonstrated in the present case. [6] The Marital Property Act provides that “[p]roperty that is or has been occupied by a personand his or her spouse as their family residence is a marital home” (s. 16(1)), and that a family can have “more than one marital home” (s.16(2)). The Act prohibits a spouse from disposing of any interest in a marital home unless the other spouse joins in the instrument,consents to the disposition, has released all rights to the home or the rights have otherwise been released or the disposition authorized bya Court: s. 19(1).

A disposition that contravenes s. 19(1) can be set aside unless the property was acquired by another “for value, in goodfaith and without notice that the property was at the time of disposition a marital home”: s. 19(2). The person who acquires property thatis conveyed in contravention of s. 19(1) can rely on an affidavit of the person making the disposition unless the purchaser has actualnotice of facts to the contrary: s. 19(3). [7] Invoking the definition of “marital property” in s. 1 of the Marital Property Act, Ms. Goral andMs.

Kierstead argue the cottage property was not marital property because it had been acquired by way of gift from Mr. Cormier’smother. “Marital property” is defined to exclude property “that is not a family asset” that was acquired by way of a gift to one spouseonly (emphasis added). This ground of appeal is devoid of any merit because, although Mr. Cormier acquired the cottage property byway of a gift from his mother, the property became a marital home when he and his spouse, together with their children, occupied it as afamily residence. A marital home is specifically included as a family asset. [8] Ms.

Goral and Ms. Kierstead also submit that the conveyance of the cottage property shouldnot have been set aside because they acquired it for value, in good faith and without notice that it was a marital home. In asserting thatthey did not have notice that the cottage property was a marital home, they rely on Mr. Cormier’s affidavit and on the advice Mr.Johnstone gave to them. This argument is untenable. Section 19(3) of the Act, which allows a person to rely on a marital propertyaffidavit, is not applicable because Ms. Goral and Ms.

Kierstead had actual notice that the property had been used as a family residenceby Eric and Scarlett Cormier and their children. In fact, it is that notice that prompted them to inquire with their solicitor, who wasrepresenting all parties to the transaction. He was also the same solicitor who had acted for Mr. Cormier when he conveyed a parcel ofthe cottage property to a neighbour - a transaction in which he had deposed that he and his spouse had occupied the land as their maritalhome.

The fact is that both they and their solicitor had actual knowledge that the property had been used as the Cormier family residence.The judge made a finding of fact to that effect, and that finding is unassailable. Moreover, the solicitor specifically knew Mr. Cormierconsidered it to be a marital home. There is nothing in the circumstances that would create an exception to the general rule thatknowledge of the agent, in this case the solicitor, operates as notice to the principal: Irving Oil Limited v. S & S Realty Ltd. (1983), (NB CA), 48 N.B.R. (2d) 1, [1983] N.B.J. No. 212 (C.A.) (QL), at paras. 12-15.

Any recourse Ms. Goral and Ms. Keirsteadmight have against their solicitor as a result of the advice they received from him was not an issue in this action. [9] In a separate ground of appeal, the appellants submit that the judge disregarded both the fact ofthe existence of a mortgage on the property and the increase in the property’s value resulting from their improvements to the land. This,too, is an unmeritorious argument. The fact is, the trial judge was aware of these circumstances and weighed them in the balance.

Ascounsel for Scarlett Cormier rightfully points out, the Mortgagee, like the appellants, can always pursue its own remedies. [10] For these reasons, I would dismiss the appeal. I would order Ms. Goral and Ms. Kierstead to payto Scarlett Cormier costs in the amount of $3,500, for which Ms. Goral and Ms. Kierstead will be jointly and severally liable. ___________________________ J.C. MARC RICHARD, J.A. WE CONCUR:

_____________________________ J.T. ROBERTSON, J.A. _____________________________ B. RICHARD BELL, J.A.