Holmes v Holmes, 2023 ABKB 1

Court of King’s Bench of Alberta Citation: Holmes v Holmes, 2023 ABKB 1 Date: 20230104 Docket: 4803 196027 Registry: Edmonton Between: Susan Marie Holmes Applicant - and - Peter Leigh Holmes Respondent _______________________________________________________ Reasons for Decision of the Honourable Justice Kevin Feth _______________________________________________________ [ 1 ] Susan Holmes and Peter Holmes are married and jointly own their matrimonial home. They have been separated since 2018 when Mr. Holmes vacated the house. [ 2 ] Mr. Holmes reportedly has a history of mental health issues.

Since the separation, he has not maintained steady employment. [ 3 ] The parties’ debts substantially outweigh their assets, although the matrimonial home is mortgage free. Ms. Holmes estimates the value of the debts at $600,000. [ 4 ] The parties have two significant assets – the matrimonial home and a 2011 motorhome. Ms. Holmes values the house at $320,000 and the motorhome at $40,000. [ 5 ] In August 2022, Amex Bank of Canada registered a writ against the title to the matrimonial home for a claim of $10,745 plus costs. Ms.

Holmes learned of the writ a few days later and believes it relates to credit card debt incurred by Mr. Holmes.

[ 6 ] Ms. Holmes is concerned that Mr. Holmes is accumulating further debt and that his creditors will seek to place other charges on his interest in the matrimonial home. [ 7 ] Ms. Holmes seeks interim relief under s 9 of the Matrimonial Property Act , RSA 2000, c M-8 ( MPA ). First, she requests that title to the matrimonial home be transferred to her but accompanied by a preservation order directing her not to sell the property. She submits that this step will protect her interest in the matrimonial home from Mr. Holmes’ creditors.

Second, she asks for an Order transferring ownership of the motorhome to her so that she may sell it and apply the proceeds to matrimonial debt, specifically repair expenses and an ATB Financial loan for the motorhome exceeding its value. Third, she proposes that Mr. Holmes be removed as a director and shareholder of the parties’ two companies, transferring control to her, but with a direction that she preserve the companies subject to ordinary business operations. [ 8 ] For the reasons to follow, the application is dismissed.

Preliminary issues [ 9 ] This application suffers from three preliminary concerns: no matrimonial property action has been filed, permission was not granted to Ms. Holmes in Family Docket Court to apply for an interim distribution of property, and Mr. Holmes might not have received proper notice of the relief being sought.

a) No underlying matrimonial property action [ 10 ] In January 2022, Ms. Holmes filed a Statement of Claim seeking a divorce from Mr. Holmes. The Statement of Claim contains no action for the division of matrimonial property. Mr. Holmes was noted in default in August 2022. [ 11 ]

Section 4 of the MPA directs: “An application for a matrimonial property order shall be made by statement of claim.” The requirement is repeated in Rule 12.8 of the Alberta Rules of Court , Alta Reg 124/2010 and was confirmed in Coyle v Coyle ( Estate of) , 2005 ABQB 436 at para 28 , Mew v Mew , 2011 ABQB 531 at para 11 (varied on other grounds), and NLZ v JDV , 2019 ABQB 720 at paras 25-26 . [ 12 ]

Section 1 (

d) of the MPA defines “matrimonial property order” as “a distribution by the Court under

section 7 and an order under

section 9” of the Act .

Section 7 permits the Court to make a distribution between the spouses of all the property owned by both spouses and by each of them. [ 13 ]

Section 9 appears to authorize an interim distribution of matrimonial (or family) property. In McLeod v McLeod , 2017 ABQB 581 , at paras 10-18 , Justice Khullar (as she then was) reviewed the prevailing case law and concluded that the authority to grant an interim matrimonial property order may be found in s 9(3)(

j) of the MPA : 9(3) To give effect to an order under this

section [to distribute property] the Court may do any one or more of the following: ... (

j) make any other order that in the opinion of the Court is necessary. [ 14 ] Justice Khullar observed that an expansive

interpretation of s 9(3)(

j) is supported by the objects of the MPA and s 10 of the

Interpretation Act , RSA 2000, c I-8 : 10 An enactment shall be construed as being remedial, and shall be given the fair, large and liberal construction and

interpretation that best ensures the attainment of its objects. [ 15 ] That conclusion has been endorsed repeatedly since then: Blume v Blume , 2022 ABQB 539 at para 17 [ Blume ]; BDM v MMM , 2020 ABQB 288 at para 111 ; Wolf v Wolf , 2019 ABQB 200 at para 45 [ Wolf ]. [ 16 ] I note the Alberta Court of Appeal declined to squarely resolve whether this Court has jurisdiction to make an interim distribution of property in Garnett v Garnett , 2019 ABCA 282 at para 23 [ Garnett ]. However, without answering the general question, the Court of Appeal held that a chambers judge has clear jurisdiction to order the sale of a jointly owned matrimonial home under both Rule 6.25(1)(

c) and s 15 of the Law of Property Act , RSA 2000, c L-7 . [ 17 ] Here, Ms. Holmes filed a Statement of Claim seeking a divorce. A divorce action is governed by the Divorce Act , RSC 1985, c 3 (2d Supp), which is Federal legislation. Under the Divorce Act , the relief that may be requested and received is a divorce, spousal support, child support, custody of children, and access to children. [ 18 ] Under the MPA, which is Provincial legislation, the court has jurisdiction to deal with the division of matrimonial property.

By virtue of ss 3(2) and 4 of the MPA and Rule 12.9 of the Rules of Court the two actions may be joined, but they remain separate actions: Lord v Bell-Lord , 2007 ABQB 274 at para 30 . See also Rules 12.7 and 12.8 of the Rules of Court. [ 19 ] Ms. Holmes does not seek relief under Rule 6.25(1)(

c) or the Law of Property Act and no application is before me to amend the Statement of Claim to add an action for the division of matrimonial property. [ 20 ] Absent a Statement of Claim for Division of Matrimonial Property, this Court is precluded from transferring title to the matrimonial home, the registration of the motorhome, or the shares in the companies into the sole name of Ms. Holmes utilizing s 9 of the MPA . I therefore cannot exercise any discretion to order an interim distribution of matrimonial property.

b) No permission to apply for an interim distribution of matrimonial property

[ 21 ] Once an action for the distribution of matrimonial property is in place, an application for an interim distribution can be brought by a Family Application, after an initial appearance in Family Docket Court. [ 22 ] The parties appeared in Family Docket Court on November 25, 2022. Ms. Holmes obtained permission to file an application for a “property – preservation order.” The Court’s Endorsement is silent about an interim transfer of property.

The Endorsement also says nothing about amending the pleadings to add a matrimonial property claim. [ 23 ] When the Family Application was filed on December 7, 2022, the remedies sought were more extensive than a preservation order. Generally, the Application sought the following:

a) the transfer of title to the matrimonial home into Ms. Holmes’ name alone and a direction that she preserve the property;

b) the transfer of the registration of the motorhome into Ms. Holmes’ name alone, authority to sell the motorhome without Mr. Holmes’ consent, and a direction to pay the registered debt against the motorhome with the sale proceeds and that any remaining proceeds be held in trust pending an agreement between the parties or a Court Order; and

c) an Order directing that Mr. Holmes be removed as a shareholder and director of two companies operated by Ms. Holmes. [ 24 ] Permission to seek an interim distribution of matrimonial property was not granted by the Family Docket Justice. I decline to consider this part of the application for that reason as well.

c) Inadequate notice [ 25 ] This Family Application was heard in morning Chambers. Mr. Holmes was told about a possible application for a preservation order when he appeared in Family Docket Court, but I have no Affidavit of Service confirming whether or when he was served with the Family Application. [ 26 ] In Chambers, counsel for Ms. Holmes noted that Mr. Holmes informed her two days earlier that he was in a hospital. However, he did not expressly request an adjournment. [ 27 ] Counsel informed me that Mr. Holmes, who is self-representing, delivered some response materials to her.

The Court has no record of anything being filed by him, but the unfiled material was delivered to me by counsel. The information contains an unsworn statement from Mr. Holmes in which he disputes some of Ms. Holmes’ evidence. He denies taking out loans against the matrimonial home and asserts that he will seek legal representation in the New Year. Nothing in the information suggests that he consents to the interim transfer of the matrimonial home, the motorhome, or the corporate shares.

While the information is not properly in evidence, it demonstrates the risk of proceeding without proof of service and hearing from Mr. Holmes. [ 28 ] The Family Docket Court Endorsement does not suggest that a possible interim distribution of property was discussed in Mr. Holmes’ presence. The Family Application was not filed until 9 days before the hearing date. The specific date of service has not been provided (if he was served at all). Mr. Holmes’ apparent hospitalization shortly before the Chambers appearance was for an unknown duration.

Until then, he was engaging in the litigation, notwithstanding that he was noted in default. The pleadings did not inform him about the possibility of distributing matrimonial property. [ 29 ] Ms. Holmes’ evidence asserts that Mr. Holmes has a history of mental health issues. His unsworn information (although not properly in evidence) confirms that he suffers from anxiety. I have substantial concerns about his ability to adequately understand and respond to the Application on short notice. No urgency is demonstrated.

After more than fours years of separation, only one writ totalling $10,745 plus costs is registered against the title to the matrimonial home. No imminent harm to the motorhome or the companies is identified. In these circumstances, the application should be adjourned in any event so that Mr. Holmes may obtain legal advice or representation, properly prepare himself, and appear when he is well enough to do so. The merits of the interim distribution application [ 30 ] While I decline to determine the merits of the application for an interim distribution, Ms.

Holmes’ counsel invited my guidance in assisting the parties with any future request for an interim distribution or an order preserving property. I therefore offer a few comments.

a) Interim distribution of property [ 31 ] An interim distribution means that matrimonial property is distributed to one or both parties prior to trial, pending the final resolution of the property division.

The distribution is “effectively an advance on the party’s ultimate entitlement to their share of the matrimonial property under the Matrimonial Property Act as determined at trial”: Fleming v Fleming , 2016 ABCA 88 at para 22 . [ 32 ] The interim distribution of property may be re-addressed at the conclusion of the trial: SLT v AKT , 2007 ABQB 81 at para 22 [ SLT ]. [ 33 ] The Alberta Court of Appeal has encouraged parties “not to settle matrimonial property by installment, but rather in a cohesive manner, as expeditiously and economically as possible”: Garnett at para 24 . [ 34 ] An interim distribution is an extraordinary remedy.

Generally, it should not be made if doing so will affect the final property rights of the parties: Melik v Ducholke , 2003 ABQB 924 at para 4 ; Wolf at para 47 .

[35] The Court’s discretion to grant an interim distribution of matrimonial property is guided by balancing several non-exhaustivefactors, including: a. The potential benefit to each party; b. The potential prejudice to each party, including tax implications and the risk of dissipation; c. Whether the distribution will determine the final disposition of property, including for specific assets; d. The extent to which any potential prejudice is mitigated by the availability of other matrimonial assets to equalize the finaldistribution of matrimonial property; e.

Whether the value of the net assets for final distribution substantially exceeds the amount sought for an interim distribution; f. Whether the final distribution of property is subject to exemption claims pursuant to ss 7(2) and 7(3) of the MPA; g. Whether and to what extent an unequal distribution of property is possible at trial after considering the matters indicated in s 8 ofthe MPA; h. Whether urgency has been demonstrated; i.

Whether the piecemeal distribution of property invites unnecessary litigation and expense, undermines judicial economy, ordissuades a litigant from advancing the claim in a diligent manner; and j. Whether a fundamental imbalance exists between the parties in their ability to protect their respective interests absent an interimdistribution.

See: Blume at para 17-19; Wolf at paras 46-48; McLeod at paras 10-18; Grant v Grant, 2010 ABQB 553 at paras 34-38; SLT at paras 40and 47; Bennett v Stoppler, 2003 ABQB 723 at paras 15 and 17; Gartner v Ewasiuk, 2002 ABQB 797 at para 8 [Gartner]; Conley vConley (1985), (SK KB), 44 Sask R 76 (QB), leave to appeal to Sask CA refused (1985), (SKCA), 47 Sask R 279 (CA); Geransky v Geransky, 2012 SKQB 218 at paras 32-33. [36] The Court may make related Orders to implement the interim distribution and to preserve a party’s interests: Blume at para20. [37] Ms.

Holmes’ evidence does not currently address the relevant factors with specificity. For example, little justification isoffered for transferring title to the matrimonial home into her name alone. Only one writ from a creditor is identified after more than fouryears of separation. The amount is modest. Scant evidence is provided of Mr. Holmes accumulating additional debt since separationresulting in more charges against the home. No evidence is presented showing that creditors are demanding the house be sold.

Ms.Holmes does not explain why her financial interest in the matrimonial home will be compromised if the house is sold to meet thedemands of Mr. Holmes’ creditors. No urgency is presented. Moreover, Ms. Holmes has not explained why the Court should assist her infrustrating the collection efforts of Mr. Holmes’ creditors. [38] As for the motorhome, Ms. Holmes has not established that the asset is rapidly or significantly depreciating in value. Shealludes to the borrowing costs and wanting to pay down the loan secured against the motorhome, but no details are provided.

Repairexpenses are mentioned, but no prejudice is identified if payment is delayed. [39] For the corporate shares, Ms. Holmes provides no evidence about the value of the companies or the nature of the business. Adraft Matrimonial Property Statement attached to her Affidavit indicates the value is “nominal”. She suggests that the companies havelines of credit with a bank and the debts exceed the value of the companies. However, she does not explain whether additional borrowingis available on the credit lines, nor how removing Mr. Holmes as a shareholder protects any remaining credit. [40] Mr.

Holmes is a director and shareholder, but Ms. Holmes apparently runs the companies. She deposes that since theseparation, Mr. Holmes has contacted her clients and tried to sabotage and terminate her contracts. She does not indicate whether any ofthat behaviour occurred recently. She does not explain why removing him as a shareholder would stop any attempted interference withthe business. [41] Ms. Holmes argues that Mr. Holmes’ shareholder status has allowed him to access the companies’ bank account and removemoney, but she fails to identify the amount or when it was withdrawn. In September 2022, Mr.

Holmes obtained unspecified statementsfrom the bank, resulting in a charge of $770 against the companies’ bank account. No other details are provided. [42] If a Statement for Claim for Division of Matrimonial Property is filed, this Court has the jurisdiction to make an interim orderdistributing shares in the two corporations: SLT at paras 3 – 6, 22. However, compelling Mr. Holmes to relinquish his status as a directorof either company is not a distribution of property.

Concerns about a director’s misconduct might be addressed through the oppressionremedies under s 242 of the Business Corporations Act, RSA 2000, c B-9, but no such application has been filed. [43] Without deciding the merits of any proposed interim distribution of property, the application raises concerns about thepiecemeal distribution of some property with no plan for resolving the balance of the parties’ dispute in a timely and efficient manner.The parties might be better served by adopting a Litigation Plan that moves the division of matrimonial property to a

Summary Trial. Itherefore grant permission for Ms. Holmes to bypass Family Docket Court to bring an application in Family Chambers, on notice, toamend her Statement of Claim by adding a division of matrimonial property claim and to seek an order imposing a Litigation Plan on theparties to move the amended action towards a trial. A proposed Litigation Plan shall accompany the application.

b) Preservation order

[44] The Court’s authority to grant an order preserving property pending a final resolution of the parties’ family property issues isset out in

Part 6, Division 3 of the Rules of Court. The relevant provisions of Rule 6.25(1) provide: 6.25(1) On application, the Court may make one or more of the following orders: (

a) an order for the preservation or custody of property that is in dispute or that may be evidence in an action; ... (

c) an order for the sale of property and payment of the proceeds into Court if the property is perishable, likely to deteriorate or likely tolose its value, or for any other reason should be sold; (

d) if property is sought to be retained or attached under a lien or otherwise as security for money, an order (

i) that the person otherwise entitled to possession of the property be given possession, (ii) that possession of the property be given to a party pending the outcome of the action on payment of an amount into Court or onsecurity being given to the Court, or (iii) that possession be given to a person named by the Court in a form and manner satisfactory to the Court; [45] Rule 6.25(1) grants “fairly broad powers to the Court to make an order preserving property in dispute”: Hong v Hong, 2020ABQB 349 at para 21. [46] Subsection 9(3)(

j) of the MPA might also provide authority to grant a preservation order: SFM v MRM, 2020 ABQB 302 atparas 44-50 [SFM]; Gartner at paras 1, 2 and 7. However, the power to “make any other order that ... is necessary” can only be used “togive effect to an order under [section 9]”: SFM at para 48. I have no authority to grant an order under s 9 in this case given the lack of afiled matrimonial property claim. [47] A preservation order is a form of prejudgment relief and should be granted only in rare instances: Athabasca Minerals Inc vSyncrude Canada Ltd, 2017 ABQB 47 at paras 57–62 [Athabasca]. The Court must exercise restraint when: (

i) deciding whether togrant a preservation order; and (ii) determining its appropriate scope: Athabasca at para 62. [48] A preservation order is “a form of proprietary injunction because it requires a respondent to do something”: QuestorTechnology Inc v Stagg, 2021 ABQB 644 at para 35 [Questor].

The property sought to be preserved is “the property actually claimed inthe proceeding”: Reddick v MacInnis, 2018 NSSC 201 at para 10. [49] The law concerning preservation orders was summarized in Hoff et al v Gerk et al (1999), 1999 ABQB 744 , 252 AR86 at 98-99 (QB): A preservation order under rule 467 [now Rule 6.25] is pretrial injunctive relief. It is an extraordinary remedy that should be grantedonly in exceptional circumstances. To be entitled to such relief, the plaintiff must establish a prima facie case and a real and substantialrisk of the dissipation or disposal of assets.

The plaintiff must also give an undertaking for damages which other parties may suffer if therelief is held to have been improperly granted. [50] The purpose of a preservation order is to “preserve the disputed property until trial so that the property will be available to bereturned to the plaintiff if successful at trial”: Gemba Fund One LLC v Tolosa Development Corp, 2016 ABCA 241 at para 20;Athabasca at para 111. [51] Here, Ms.

Holmes is seeking a preservation order in respect of the matrimonial home and the parties’ two companies.However, no claim has been commenced respecting this property, so there is technically no property in dispute to be preserved. [52] In exercising its discretion, a Court may grant a preservation order if it is satisfied the applicant has met the customarytripartite test for an interlocutory injunction set out in American Cyanamid Co v Ethicon Ltd, [1975] 1 ALL ER 504 (HL): 1. there is a serious issue to be tried, 2. risks to the property in question create the potential for irreparable harm, and 3. the balance of convenience favours the party who seeks preservation of the property.

See: Questor at para 37; Athabasca at paras 64, 70 and 73; Peregrym v Peregrym, 2015 ABQB 176 at para 380; SJB v RDBB, 2019ABQB 624 at para 108, affirmed by 2020 ABCA 108. [53] Even if a matrimonial property claim was in place, the evidence is currently insufficient for this Court to undertake ananalysis of the tripartite test. Conclusion [54] The application for an interim distribution of matrimonial property and the preservation of property is dismissed. [55] If Ms.

Holmes wishes to amend her Statement of Claim to add a division of matrimonial property claim, permission is grantedto bypass Family Docket Court and to proceed to Family Chambers on notice to Mr. Holmes. Further, if she wants a Litigation Planimposed on the parties to move this action towards trial, including a

Summary Trial, she may include that request in the FamilyChambers application, accompanied by the proposed Litigation Plan.

Heard on the 16 th day of December, 2022. Dated at the City of Edmonton, Alberta this 4 th day of January, 2023 . Kevin Feth J.C.K.B.A. Appearances: Noori Sidhu Verhaeghe Law for the Applicant Peter Leigh Holmes Did not appear