2017 NBCA 33, 2017 NBCA 33

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 43-16-CA PETER O’NEILL and KELLY O’NEILL APPELLANTS PETER O’NEILL et KELLY O’NEILL APPELANTS - and - - et - MELODY EDMANSON RESPONDENT MELODY EDMANSON INTIMÉE O’Neill et al. v. Edmanson, 2017 NBCA 33 O’Neill et autre c.

Edmanson, 2017 NBCA 33 CORAM: The Honourable Justice Quigg The Honourable Justice Green The Honourable Justice Baird CORAM : l’honorable juge Quigg l’honorable juge Green l’honorable juge Baird Appeal from a decision of the Court of Queen’s Bench: May 27, 2016 Appel d’une décision de la Cour du Banc de la Reine : le 27 mai 2016 History of Case: Historique de la cause : Decision under appeal: 2016 NBQB 100 Décision frappée d’appel : 2016 NBBR 100 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o. Appeal heard: February 16, 2017 Appel entendu : le 16 février 2017

Judgment rendered: August 17, 2017 Reasons for judgment by: The Honourable Justice Baird Concurred in by: The Honourable Justice Quigg The Honourable Justice Green Jugement rendu : le 17 août 2017 Motifs de jugement : l’honorable juge Baird Souscrivent aux motifs: l’honorable juge Quigg l’honorable juge Green Counsel at hearing: For the appellants: Andy Wayne Lodge For the respondent: David M. Lutz, Q.C. Avocats à l’audience : Pour les appelants : Andy Wayne Lodge Pour l’intimée : David M. Lutz, c.r. THE COURT The trial judge’s decision to dismiss the action for slander of title is upheld.

The trial judge’s failure to grant the declaratory relief sought is reversed. The appellants are awarded fifty percent of their trial costs pursuant to Rule 59.01, Tariff “A”, Scale 3. The appeal is allowed in part with costs of $5,000. LA COUR La décision du juge du procès de rejeter l’action pour discrédit de

titre est confirmée. L’omission du juge du procès de prononcer le jugement déclaratoire sollicité est infirmée. Les appelants se voient adjuger cinquante pour cent de leurs dépens du procès conformément à la règle 59.01, tarif « A », échelle 3. L’appel est accueilli en

partie avec dépens de 5 000 $. The judgment of the Court was delivered by BAIRD, J.A.

I. Introduction and Background [ 1 ] This appeal raises questions concerning the appropriateness of the registration of a Certificate of Pending Litigation ( lis pendens ), against property owned by a non-party to ongoing divorce proceedings, who did not receive notice their land was being encumbered, and where the process set out in Rule 42 of the Rules of Court was not followed.

Of greater interest to the Court is whether or not an unproven claim to an equal division of marital property can create a vicarious equitable interest in property by virtue of the Marital Property Act , S.N.B. 2012, c. 107 (the “ Act ”) alone. Of secondary interest is whether the appellants have a valid claim of slander of title. [ 2 ] Mr. and Mrs. O’Neill (collectively, “the O’Neills”) are a married couple who reside in Rothesay, New Brunswick. In 2012, they purchased a house and an adjacent vacant lot on Second Street, with the intention of reselling both for personal gain.

The properties were registered as separate parcels and each property had its own distinct parcel identifier number. Title was registered in the O’Neills’ names as joint tenants, and was subject to a $175,000 mortgage registered in their names. [ 3 ] Mr. O’Neill and Timothy Edmanson are co-workers. Either late in 2012 or early in 2013, Mr. O’Neill approached Mr. Edmanson with a business proposition. He suggested they jointly renovate the house, sharing the labour costs as well as the cost of materials, following which the house would be sold and any profits realized would be equally shared.

This oral agreement was not reduced to writing. [ 4 ] The renovation project commenced in 2013. Mr. Edmanson did much of the labour, and he and Mr. O’Neill hired subcontractors for the more specialized work. A joint account for materials was opened at a local hardware store. The trial judge found Mr. Edmanson invested approximately $40,000 in the renovations of the house. [ 5 ] In December 2013, the O’Neills re-mortgaged the house. In the interim, Mr. and Mrs. Edmanson (“the Edmansons”) separated. In March 2014, Mrs.

Edmanson filed an Application for divorce, Form 81A, in which she claimed an equal division of marital property. On April 9 she amended the Application, seeking a Certificate of Pending Litigation against the O’Neills’ house; however, they were not joined as third parties. The property account number (“PAN”), which was attached as Exhibit “B” to the affidavit Mrs. Edmanson filed with the Application, identified the O’Neills as the registered owners of the property. Mrs.

Edmanson made no claim against the vacant lot at that time. [ 6 ] A Certificate of Pending Litigation was issued, and was registered against the house without notice to the O’Neills. On April 17, Mrs. Edmanson amended her Certificate of Pending Litigation to add the vacant lot, without first having amended the original Application to identify on what basis she believed she had a claim against it.

In September she attempted to correct the previous errors by filing an Amended Application, in which she named the O’Neills as third parties, and attached a proper description of both properties as required by Rule 42.03. [ 7 ] In May 2014, the O’Neills listed the house and the vacant lot for sale. They quickly negotiated a price for the sale of the vacant lot. Shortly after, they became aware, through their legal counsel, that Mrs. Edmanson had registered Certificates of Pending Litigation against both their house and vacant lot.

Fearful they would lose the sale of the lot, they stalled the buyer on three occasions, while they unsuccessfully attempted, through the efforts of their legal counsel, to secure the agreement of Mrs. Edmanson to remove the Certificates. On July 10, 2014, they filed a Notice of Action with Statement of Claim Attached, naming Mrs. Edmanson as the defendant. In the Statement of Claim, the O’Neills sought a declaration that Mrs. Edmanson did not have an equitable interest in their properties, damages for slander to the title of their properties, and costs.

At the same time, they filed a Notice of Motion seeking an order to revoke the Certificates of Pending Litigation, on the basis they had been improperly filed, and they had not received notice of their registration, as required by Rule 42.03. In her Statement of Defence, Mrs. Edmanson admitted she registered an Amended Certificate of Pending Litigation against the vacant lot without first having amended her Application; however, she maintained she had a lawful right to do so by virtue of the Act.

On August 22, 2014, following an appearance before a motion judge, the O’Neills executed a Consent Order in which they agreed to hold 25% of the proceeds from the sale of the vacant lot, in trust, in exchange for a release of the Certificate of Pending Litigation registered against it, in order to facilitate the sale. The Order did not expressly limit their rights to pursue the Notice of Action against Mrs. Edmanson. At the same time, Mr.

Edmanson signed a Letter of Direction in which he assigned “all of my legal interests, if any”, in the house and the lot to the O’Neills. [ 8 ] The O’Neills have paid all expenses for the house except for a period of several months between 2014 and 2015 when Mr. Edmanson occupied it and paid the mortgage as a form of rent. The renovation costs for the house were approximately $100,000. The parties agree the property will not garner a profit. In November 2014, Mrs.

Edmanson released the Certificate of Pending Litigation registered against the house, following an all-inclusive marital property settlement she reached with her husband. In May 2015, the O’Neills’ Notice of Action proceeded to a hearing. At the time of the hearing, the house remained unsold.

[ 9 ] In addition to their claim for a declaration that Mrs. Edmanson did not have an “interest” in their properties, the O’Neills requested full reimbursement of their legal fees as compensatory damages for the slander of their title, which at the time exceeded $20,000. Citing ss. 2 and 3 of the Act as his authority, the trial judge dismissed their claims finding Mrs. Edmanson had an equitable interest in both properties. The trial judge relied on the affidavits filed by Mrs. Edmanson as proof of her claims. As will be seen, the affidavits were inaccurate with respect to substantive elements.

For the reasons that follow, I would allow the appeal in part. II. Grounds of Appeal [ 10 ] The O’Neills come before this Court raising three main grounds of appeal. First, they assert the trial judge erred in law when he found Mr. Edmanson had an equitable interest in both properties and therefore, by legal extension, Mrs. Edmanson had a corresponding interest by virtue of the Act .

Second, they submit the Certificates of Pending Litigation were improperly obtained, on the grounds the process set out in Rule 42 was not followed in material respects, title to their property was defamed and the errors could not be cured through the application of Rule 2.02. Third, they assert the trial judge erred when he failed to rule with respect to the admissibility of the invoices for legal services the O’Neills incurred to clear the title to their properties.

The trial judge marked the invoices for identification; however, despite several requests by counsel they be marked as exhibits, there was no ruling. III. Standard of Review [ 11 ] In Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235, the Supreme Court clarified the standard of review with respect to questions of law and fact, or mixed law and fact (see paras. 8-10, and 32-33). In brief, the decision establishes the standard of review is correctness for questions of law and the standard of palpable and overriding error for questions of fact, or mixed law and fact.

Housen has been followed and applied by this Court on numerous occasions, to the point where it has become trite (see Milton v. Milton , 2008 NBCA 87 , 338 N.B.R. (2d) 300, per Larlee J.A. at para. 14; Yorke v. Yorke , 2011 NBCA 79 , 378 N.B.R. (2d) 141, per Larlee J.A. at para. 9; LeBlanc et al. v. Canadian Union of Public Employees, Local 558 , 2016 NBCA 11 , 447 N.B.R. (2d) 365, per Richard J.A. at para. 19). [ 12 ] In LeBlanc v. St. Coeur and St.

Coeur , 2007 NBCA 32 , 313 N.B.R. (2d) 341, this Court states judges at first instance are required to “apply the governing legal principles, assess the evidence and exercise [their] discretion” (para. 6). Decisions will only be reversed if it is “established that [the judge] misdirected [himself or herself] on the law, did not apply the proper principles or […] misapprehended the facts […]”, referencing Doiron v. Haché , 2005 NBCA 75 , 290 N.B.R. (2d) 79, at para. 58 , and the cases cited therein. [ 13 ] Recently, in Houk v. Daniels Investments Saskatoon Ltd. , 2016 SKCA 147 , [2016] S.J.

No. 630 (QL), the Court discusses the standard of review with regard to Certificates of Pending Litigation: A Chambers judge’s decision whether to vacate a certificate of pending litigation is discretionary in nature and thus entitled to deference by this Court. However, before that discretion can be exercised, a Chambers judge must correctly identify the law which governs the exercise of discretion. Whether he erred in that determination is a question of law subject to review by this Court using a standard of correctness (see Housen v. Nikolaisen , 2002 SCC 33 at para 8 , [2002] 2 SCR 235; St.-Jean v.

Mercier , 2002 SCC 15 at paras 33-34 , [2002] 1 SCR 491; Valley Beef Producers Co-Operative Ltd. v Farm Credit Corp ., 2002 SKCA 100 at para 96 , 223 Sask R 236). [para. 10] [ 14 ] It is my opinion, the trial judge’s analysis concerning the application of the Act , in the facts of this case, is reviewable on the standard of correctness. The trial judge’s decision to use Rule 2.02 as a curative provision will be reviewed on the standard of correctness. The failure of the trial judge to rule with respect to the admissibility of invoices for legal services will be reviewed on the standard of reasonableness. IV.

Analysis A. The Marital Property Analysis

[ 15 ] Mrs. Edmanson bore the evidentiary burden to establish an “interest” in the O’Neills’ properties. It is my opinion she failed to discharge that burden. I will explain. The affidavit Mrs. Edmanson filed with the Amended Application for divorce stated the following at para. 4: I previously filed an Application on March 14 th , 2014 with an Affidavit dated March 10 th , 2014. In that Affidavit, a copy of which is hereto attached as Exhibit “A” (without exhibits), I outlined in January 2013 the respondent purchased a home located at 69 Second Street, Rothesay New Brunswick, PID 234823.

He did so with another partner at Investors Group, being Peter O’Neill. The respondent works at Investors Group. I specifically stated at paragraphs 15, 16, 17, 19, 20, 23 the following: In January 2013, the respondent purchased a home located at 69 Second Street, Rothesay New Brunswick, PID 234823, with another friend of his from Investors Group, Peter O’Neill. They did this as flipping houses to earn income. The respondent is currently living in the house and has furnished it. They had it listed for sale for a short time. I understand now it is no longer listed.

However I wish to be informed if it does become listed again and any proceeds he receives be held in trust. A copy of Service New Brunswick Pan Information is hereto attached as Exhibit “B”. I would ask the respondent to produce any agreement he had in regard to the house located at 69 Second Street, Rothesay, New Brunswick, PID 234823. […] We have a Line of Credit for $35,000. I have never used the Line of Credit. The respondent used the Line of Credit to fund the second home he purchased and attempted to flip.

My name is attached to this even though I have never used it. [ 16 ] In para. 5 of the same affidavit, Mrs. Edmanson added the following: “They did this and it is my understanding from the respondent to flip the house and make income off of it. There is a mortgage and the respondent put in several thousand dollars from our accounts”. [ 17 ] The above assertions were accepted by the trial judge as proof Mrs. Edmanson had an equitable “interest” in the O’Neills’ properties by virtue of her marriage to Mr. Edmanson. The following are critical observations in my view: 1) Mrs.

Edmanson did not claim against the vacant lot when she filed her Application. She subsequently obtained a Certificate of Pending Litigation against the lot without first amending her Application to claim against it; 2) Mrs. Edmanson stated her husband “purchased” the house on Second Street in 2013. This statement was not true. Exhibit “B” to her affidavit showed title was registered to Mr. and Mrs. O’Neill in 2012, consistent with Mr. O’Neill’s testimony he and his wife purchased the two properties the year prior to the oral agreement reached with Mr. Edmanson as noted; 3) Mrs.

Edmanson asserted her husband “used the Line of Credit to fund the second home he purchased”, and that he had invested “thousands of dollars” in it. There was no evidence to support this assertion; 4) At para. 10 of the affidavit, Mrs. Edmanson deposed: “I am informed by my solicitor and do verily believe the respondent, if there is any equity in the house, [I] would receive 50%. Given that this is marital property I am asking any funds be held in trust and I be made aware of any sale”. [ 18 ] In his reasons, the motion judge relied on ss. 2 and 3 of the Act to ground his conclusion that Mrs.

Edmanson had an equitable interest in both of the O’Neill properties.

[ 19 ] Sections 2 and 3 of the Act read as follows: Joint responsibilities of spouses 2 Child care, household management and financial provision are joint responsibilities of spouses and are recognized to be of equal importance in assessing the contributions of the respective spouses to the acquisition, management, maintenance, operation or improvement of marital property; and, subject to the equitable considerations recognized elsewhere in this Act, the contribution of each spouse to the fulfilment of these responsibilities entitles each spouse to an equal share of the marital property and imposes on each spouse, in relation to the other, the burden of an equal share of the marital debts.

Application for division of marital property 3

(1) Each spouse, on application to the Court, is entitled to have the marital property divided in equal shares if (

a) a judgment granting a divorce is rendered, (

b) a marriage is declared a nullity, (

c) the spouses are living separate and apart and there is no reasonable prospect of the resumption of cohabitation, or (

d) a marriage has broken down and there is no reasonable prospect of reconciliation, whether or not the spouses are living separate and apart. 3

(2) Subject to subsection (4), no application shall be made under subsection (1) later than 60 days after a spouse ceases to be a spouse by reason of a divorce or declaration of nullity. 3

(3) For the purposes of this section, a person whose marriage is declared a nullity shall be deemed to have been a spouse during the period between the purported solemnization of marriage and the declaration of nullity. 3

(4) The Court may extend the limitation period by such length of time and on such terms as it considers just, if a person is prevented from making an application within Responsabilité commune des conjoints 2 Le soin des enfants, la gestion domestique et l’apport financier relèvent de la responsabilité commune des conjoints et sont considérés au même

titre dans l’évaluation de leur contribution respective à l’acquisition, à l’administration, à l’entretien, à l’exploitation ou à l’amélioration des biens matrimoniaux. Compte tenu des considérations équitables que reconnaît la présente loi, la contribution de chaque conjoint en vue d’assumer cette responsabilité lui donne droit à une part égale des biens matrimoniaux tout en lui imposant à l’égard de l’autre une part égale du fardeau des dettes matrimoniales. Requête en répartition des biens matrimoniaux 3

(1) Sur requête adressée à la Cour, chaque conjoint a droit à une répartition égale des biens matrimoniaux sous l’une des conditions suivantes :

a) un jugement de divorce a été prononcé;

b) le mariage a été déclaré nul;

c) les conjoints vivent séparés et il n’existe aucun espoir raisonnable de reprise de la cohabitation;

d) le mariage s’est dissous et il n’existe aucun espoir raisonnable de réconciliation, que les conjoints vivent séparés ou non. 3

(2) Sous réserve du paragraphe (4), le conjoint ne peut présenter la requête que prévoit le paragraphe (1), s’il s’est écoulé plus de soixante jours depuis qu’il n’est plus un conjoint en raison d’un divorce ou d’une déclaration de nullité du mariage. 3

(3) Pour l’application du présent article, la personne dont le mariage est déclaré nul est réputée avoir été un conjoint pendant la période comprise entre la prétendue célébration du mariage et la déclaration de nullité. 3

(4) La Cour peut proroger le délai pour la durée et aux conditions qu’elle estime justes, lorsqu’une personne ne peut présenter sa requête dans le délai fixé au paragraphe (2) en raison de l’un ou l’autre des motifs

the limitation period fixed in subsection (2) by (

a) lack of knowledge of the granting of a divorce or a declaration of nullity, or of the date of it, or (

b) circumstances reasonably beyond his or her control. suivants :

a) sa méconnaissance soit du prononcé d’un jugement de divorce ou d’une déclaration de nullité du mariage, soit de la date de ceux-ci;

b) l’existence de circonstances raisonnablement indépendantes de sa volonté. [ 20 ] The Act establishes a statutory regime for the division of marital and non-marital assets on the breakdown of a marriage. The presumption there will be an equal division of all assets acquired during the marriage, is potentially overtaken by ss. 6, 7 and 9, in those cases where there are business assets, or when a court finds an equal division of marital property would be inequitable.

The analysis is contextual in consideration of the acquisition, use, maintenance of, and the character of the asset and its provenance. [ 21 ] In Yorke , Larlee J.A. states: Like all other common law provinces in Canada, New Brunswick’s Marital Property Act provides for a presumptive statutory right to an equal division of all marital assets.

Section 2 recognizes marriage as an equal economic partnership. It gives equal status to joint responsibilities of spouses whether they are child care, household management or financial provision. These joint responsibilities of spouses are recognized to be of equal importance in assessing the contributions of the respective spouses to the acquisition, management, maintenance, operation or improvement of marital property.

The contribution of each spouse to the fulfillment of these responsibilities entitles each spouse to an equal share of the marital property and imposes on each spouse, in relation to the other, the burden of an equal share of the marital debts. In a nutshell, the statute provides for orderly and equitable settlement between equals upon marriage breakdown. The definition of family asset also plays a role in this decision. The Act , at

section 1, defines “family assets” as “... property, whether acquired before or after marriage , owned by one spouse or both spouses and ordinarily used or enjoyed for shelter or transportation or for household, educational, recreational, social or aesthetic purposes by both spouses or one or more of their children while the spouses were cohabiting”.

Section 6 of the Act provides for the exclusion of a family asset where it was acquired before the spouses married, if, in the discretion of the Court, it would be unfair and unreasonable to the owner to include the family asset in the division of marital property. The Court must take into account the circumstances of the case as well as one or more of the three following considerations: no substantial contribution by the non-owning spouse to the family asset; the cohabitation of the spouses was of short duration; and the spouses had an agreement, arrangement or understanding.

Although the general scheme of the Act provides for a presumption of equality, s. 7 of the Act provides six criteria to be considered if the Court is of the opinion that a division of the marital property in equal shares would be inequitable: any agreement other than a domestic contract; the duration of the period of cohabitation under the marriage; the duration of the period during which the spouses have lived separate and apart; the date when the property was acquired; the extent to which property was acquired by one spouse by inheritance or by gift; or any other circumstances relating to the acquisition, disposition, preservation, maintenance, improvement of the property. [paras. 11-14] [ 22 ] The trial judge’s analysis begins with the following statement: “The Marital Property Act has the effect of treating most of the husband’s property or a wife’s property as ‘their’ property.

According to s. 2, usually marital life ‘entitles each spouse to an equal share of the marital property’ when the marriage breaks down[.]” (para. 15). I agree. [ 23 ] Referring to s. 2 of the Act , however, the trial judge concludes: 1. Mr. Edmanson’s investment in the O’Neills’ house gave him an enforceable equitable interest in the property;

2. The investment was made while Mr. Edmanson was married and living with his wife; therefore, in effect, she became a co-ownerof his equitable interest in the property; 3. Mrs. Edmanson made a claim for a division of marital property; 4. Mrs. Edmanson was acting within her legal rights to file the Certificates of Pending Litigation against both of the properties onSecond Street to give notice of her claim to an interest in those lands under the Marital Property Act. Thus the filing of those certificatesdid not amount to a slander of title. [para. 33] [24] With respect, the finding that Mr.

Edmanson had an equitable interest in the properties, and therefore, byextension, Mrs. Edmanson acquired an equitable interest in his share was made without an evidentiary foundation. [25] I agree it is possible a Certificate of Pending Litigation could be registered against property registered or heldin the name of the other spouse, either alone or jointly with a third party or parties. Several decisions have identified that in thosecircumstances, there must be proof, beyond conjecture, that marital funds were invested, or marital assets were leveraged in order toacquire the property (see Carey v.

Almuli, 2013 ONSC 6976, [2013] O.J. No. 5095 (QL), at para. 18). In Carey, the wife obtained an exparte Certificate of Pending Litigation which she registered against a condominium her husband purchased shortly following theirseparation. In the supporting affidavit, she deposed her husband had used funds from their joint bank account to purchase the propertyand she believed he was selling the asset and was leaving Canada in order to avoid his support obligations.

At the revocation hearing,Kiteley J. found she had discretion to discharge the Certificate on the basis the wife failed to establish she had a reasonable claim to aninterest in the property, and her interest could be protected through another form of security. She states: Mr. Kleinman relies on McMurdo v McMurdo Estate (1988), (ON SC), 13 R.F.L. 3rd 317 in which Master Peppiattdeclined to grant an order for a CPL in an application to set aside a marriage contract and then assert claims pursuant to

Part I of theFamily Law Act, and alternatively to claim a 1/2 interest in the former matrimonial home. At paragraph 12, Master Peppiatt noted thatthe basic scheme is set out in s. 5 of the Family Law Act and it provides for a claim to the value of net family property, not a claim to theproperty itself. He held that the Act does not establish that one spouse has an interest in any of the property of the other spouse saveinsofar as the court may make an order under s. 9(1)(

b) or (d). Mr. Kleinman also relied on Winick v. Winick 2008 CarswellOnt 6099. Lemon J. had granted an order authorizing the issuance of aCPL. Ricchetti J. made an order discharging it on the basis that the applicant had asserted a claim only for spousal and child support andwas attempting to use the CPL as security for the support obligations of the respondent. He referred to it as an attempt to obtainexecution before judgment which is not permitted except in rare circumstances.

He noted with approval the decision in McMurdo that aclaim under the Family Law Act does not create an interest in land. [paras. 15-16] [26] In Tkalych v. Tkalych, 2001 SKQB 208, [2001] S.J. No. 351 (QL), as an example, the husband unsuccessfullyapplied for an order revoking a Certificate of Pending Litigation registered by the wife against a condominium jointly owned betweenhim and their son. Ryan-Froslie J. canvassed the interplay between the Matrimonial Property Act, 1997, S.S. 1997, c. M-6.11 and s. 46of the Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01.

She was satisfied the wife had provided sufficient proof to establish that the fundsused to purchase the condominium were matrimonial property and were therefore traceable. In contrast, in Winick v. Winick, [2008] O.J.No. 4091 (Ont. S.C.) (QL), the applicant stated she was concerned the respondent would abscond from Canada and would eitherencumber, transfer or dispose of property which was registered in his name, and she sought a Certificate of Pending Litigation on thatbasis. There was no proof offered to support her assertions.

I quote from the decision where Ricchetti J. found a Certificate of PendingLitigation was an inappropriate remedy on the basis: “[t]he Applicant wants a ‘guarantee’ of payment of the support and the Certificateof Pending Litigation was the mechanism employed to obtain this ‘guarantee’” (para. 34). [27] In Fonagy v. Hicks, 2016 SKCA 122, [2016] S.J. No. 531 (QL), the husband successfully appealed a decisionrevoking a Certificate of Pending Litigation he registered against a condominium his former wife purchased together with their sonfollowing separation. Jackson J.A., quoting Fisher v.

Campbell Custom Homes Ltd., 2007 SKCA 109, [2007] S.J. No. 543 (QL) states atpara. 1: “a lis pendens will be vacated only where it is clear that the plaintiff’s claim cannot, in the circumstances pleaded, give him anyright in the land in question”. [28] There may be situations where, for example, a married person acquires assets using non-marital funds. Thoseinvestments would not by themselves qualify for an equal division under ss. 2 and 3 of the Act, without further analysis. The tracing ofthe funds, as well as the use of the asset, are critical considerations.

In addition, the Act recognizes there could be marriage contracts andpre-nuptial agreements, which set out the division of assets and debts on marriage breakdown. The Act also exempts from division, in

certain circumstances, assets such as inheritances or assets acquired before marriage. [ 29 ] In my opinion, it is an incorrect

interpretation of the Act to state, carte blanche , that all assets acquired by married couples during their marriage will be divided equally on marriage breakdown. This

interpretation flies in the face of the possible exceptions, as noted. In the case at bar, Mrs. Edmanson offered no proof to support her assertion that marital funds were used to renovate the O’Neills’ house, and she offered no evidence to support her claim that she had an interest in the vacant lot. The registration of a Certificate of Pending Litigation operates in a similar way as an injunction, and serves notice there is ongoing litigation with respect to real property in which the claimant asserts an interest.

The registration of a Certificate of Pending Litigation , in these circumstances, was an offensive use of Rule 42 in my opinion. [ 30 ] I also observe that s. 17(4) of the Land Titles Act , S.N.B. 1981, c. l-1.1 provides, unless the contrary is expressed in the “title register”, all registered land is by implication subject to listed “overriding incidents”, including “[…] any right of a spouse of the registered owner to occupy the land under the Marital Property Act ”: s. 17(4) (c). Mr.

Edmanson did not fall within one of the exceptions listed in s. 17(4) of the Land Titles Act ; therefore, he did not have a legal interest or title to the O’Neills’ properties. At best, he had an enforceable contract (see Glennie J. in Stolt Sea Farm and Corey Feed Mills v. Silver Harvest , 2006 NBQB 187 , 298 N.B.R. (2d) 218, at paras. 50-56 ). [ 31 ] In the Province of Ontario, the Courts of Justice Act , R.S.O. 1990, c.

C.43 as well as the Ontario Rules of Civil Procedure require that once a Certificate of Pending Litigation is obtained, it must be served on all parties against whom an interest in land is claimed. Section 103(4) of the Courts of Justice Act also provides that any “party” who registers a Certificate of Pending Litigation without the requisite reasonable legal claim to an interest in the property, will be liable for the damages that result.

An “undertaking as to damages” must be executed by the claimant as a form of guarantee with respect to the damages a property owner suffers as a result of an unreasonable claim. Although the Province of New Brunswick does not have a similar requirement, Rule 42.03 requires that a Notice of Motion be filed when an Order to register a Certificate of Pending Litigation is sought, and where there has not been a description of the lands sufficient for registration. In the matter at hand, setting aside the procedural irregularities as noted, as a matter of common sense and public policy, Mrs.

Edmanson should have served notice she was registering a Certificate of Pending Litigation against the O’Neills’ properties (see Garnett J. in MacLean Sports v. Fredericton , 2010 NBQB 271 , 363 N.B.R. (2d) 211, at para. 17 ). Surely, a landowner has the right to be compensated when a Certificate of Pending Litigation has been improperly registered against his or her property. B. Could Rule 2.02 be Invoked to Cure the Flawed Process? [ 32 ] Rule 2.02 provides: 2.02 Effect of Non-Compliance A procedural error, including failure to comply with these rules or with the procedure prescribed by

an Act for the conduct of a proceeding, shall be treated as an irregularity and shall not render the proceeding a nullity, and all necessary amendments shall be permitted or other relief granted at any stage in the proceeding, upon proper terms, to secure the just determination of the matters in dispute between the parties.

In particular, the court shall not set aside any proceeding because it ought to have been commenced by an originating process other than the one employed. 2.02 Effet de l’inobservation Tout vice de procédure, y compris l’inobservation des présentes règles ou de la procédure judiciaire prescrite par une loi, sera considéré comme une irrégularité et n’aura pas pour effet d’annuler l’instance. La cour doit, au cours de l’instance, permettre les modifications et accorder les mesures de redressement nécessaires aux conditions appropriées afin d’assurer une solution équitable du litige.

Ainsi, la cour n’annulera pas une instance en raison du fait qu’elle devait être introduite au moyen d’un autre acte. [ 33 ] The original Application for divorce did not include a claim for a Certificate of Pending Litigation against the O’Neills’ properties, as noted. The Amended Application for divorce included the PAN for the O’Neills’ house only, and not the vacant lot (Exhibit “B”); however, an Amended Certificate of Pending Litigation was issued with respect to the vacant lot with no supporting amendment to the original pleadings.

The trial judge observed that neither of the certificates was placed in evidence and he opined the “evidence is incomplete” (para. 10). He referred to the letter that accompanied Mrs. Edmanson’s Amended Application which stated: “[t]he property may be sold by Mr. Edmanson. As such we respectfully request that you sign the enclosed Certificate of Pending Litigation as soon as possible in fear Mr. Edmanson may dispose of the assets”. The trial judge queried:

[…] Although the evidence is not clear, that document filed on April 9, 2014 may have been the basis for the issuance of the Certificate of Pending Litigation against the lot[.] [para. 11] He added: The PID for the extra lot that was part of 69 Second Street was not in the request for relief paragraphs in her Amended Application. Instead the second PID was an Exhibit “B” to her accompanying affidavit. From the point of view of the O’Neills, that is a fatal flaw to the registration of the Certificate of Pending Litigation against the vacant lot; from the point of view of Ms. Edmanson that is a minor issue that is not legally significant. [ 34 ] Rule 42 is specific with respect to process:

42.01 When Issued A Certificate of Pending Litigation (Form 42A) may be issued in any proceeding in which any title to, or interest in, land is brought in question. 42.02 Where Issued Without Notice Where, in an originating process or pleading, there is included a claim for a certificate of pending litigation and a description, sufficient for registration, of the land in question, the clerk shall, on the request of any party, issue such certificate without notice or order. 42.03 Where Motion to be Made on Notice Where an originating process does not include a claim for a certificate of pending litigation or a description, sufficient for registration, of the lands in question, any party may apply to the court for an order that the clerk issue such certificate; and the notice of motion shall contain a description, sufficient for registration, of the lands in question. 42.04 Revocation or Amendment of Certificate The Court (

a) on motion by any person claiming title to or an interest in the lands in question, and (

b) on such terms as may be just, may order the clerk to issue a certificate (Form 42B) revoking or amending the certificate of pending litigation. 42.01 Condition d’émission Un certificat d’affaire en instance (formule 42A) peut être émis dans toute instance où un

titre ou un droit foncier est en cause. 42.02 Émission sans préavis Lorsque l’acte introductif d’instance ou la plaidoirie contient une demande de certificat d’affaires en instance et une description du bien-fonds suffisante pour l’enregistrement, le greffier doit, sur demande d’une partie, sans préavis ni ordonnance, émettre le certificat. 42.03 Par voie de motion Si l’acte introductif d’instance ne contient ni demande de certificat d’affaire en instance ni description des biens-fonds suffisante pour l’enregistrement, une

partie peut demander à la cour d’ordonner au greffier d’émettre le certificat. L’avis de motion doit contenir une description des biens-fonds suffisante pour l’enregistrement. 42.04 Révocation ou modification du certificat La cour peut,

a) sur motion de toute personne qui prétend avoir un

titre ou un droit sur les biens-fonds et

b) aux conditions qu’elle estime justes, ordonner au greffier d’émettre un certificat (formule 42B) de révocation ou de modification du certificat d’affaire en instance. [ 35 ] Rule 42 requires the applicant to establish the following before a Certificate of Pending Litigation can be issued:

i) That title to or an interest in land is “brought” into question;

ii) That there is a description sufficient for registration of the land in question that accompanies the application; iii) That if the originating process does not include a description sufficient for registration, any party may apply by Notice of Motionfor an order giving notice to the person against whom the certificate is requested, and the Notice of Motion “shall” contain a descriptionsufficient for registration of the lands in question. [36] With respect to the first requirement, the O’Neills assert Mrs.

Edmanson did not have a “potential ownershipinterest, or any legal interest of any kind whatsoever, in the [h]ouse and/or the [l]ot”, and the initiation of divorce proceedings as well asthe registration of the Certificate of Pending Litigation did not create an “interest” in their land. I agree. The mere filing of a claim underthe Divorce Act or provincial family law legislation does not presumptively create an interest in land: see McMurdo v. McMurdo Estate,[1988] O.J. No. 345 (Ont. H.C.) (QL); and Rauf v. Rauf, [1983] O.J. No. 2131 (Ont. H.C.) (QL).

The applicant must provide proof of hisor her “interest” in the land (see MacLean Sports Ltd., at para. 17). The Act, on its own, does not create an interest in land for thepurposes of the Rule. On the issue of notice, see Ms. P.H. v. Mr. P.H., 2008 NBCA 17, 328 N.B.R. (2d) 245, per Bell J.A., as he thenwas. In that decision, the Court comments on the issue of notice, pursuant to Rule 73.07, to non-parties whose interests may be affectedin matrimonial proceedings.

He states the use of this Rule is to be encouraged so as to avoid a “multiplicity of proceedings and delays”(para.19) which is precisely what happened in this matter. [37] In Evan Ross et al. v. The Toronto-Dominion Bank, et al., 2016 NBQB 75, 448 N.B.R. (2d) 393, Glennie J.concludes: In Kilb et al. v. Birkhofer et al.

(2007) NBQB 80 , the Court found that “... to have a certificate of pending litigation issued, theplaintiffs must show that a title or interest in land is brought into question in the proceeding.” Once the Certificate of Pending Litigation is filed, notice to all the world is given that title of the land is being questioned and warns allagainst dealing with the defendant with respect to that land until the contest is determined: McTaggart v. Toothe (1884), 10 P.R. 261.

Although it has been held that a certificate of pending litigation is not an encumbrance, its practical effect is to act as an injunction so asto prevent the defendant from dealing with the land until the lawsuit is finished: Mactan Holdings Ltd. v. 431736 Ontario Ltd. (1980) (ON SC), 118 D.L.R. (3d) 91 (Ont. H.C.J.). [paras. 19-21] [38] In Century 21 Real Estate Canada Ltd. v. Tri-Town Realty Ltd. et al. (1989), (NB KB), 99N.B.R. (2d) 369, [1989] N.B.J.

No. 611 (Q.B.) (QL), the plaintiff sought revocation of a Certificate of Pending Litigation on the basisthere was no “interest” in land in the “broad or intangible sense” demonstrated in the evidence. Higgins J., referring to Keppell v. Bailey(1834), 39 E.R. 1042, at p. 1049, found the plaintiff’s claim did not identify or define an interest in the lands as required in Rule 42 andhe revoked the Certificate. [39] Similarly, in Michaud v. Bank of Montreal (1995), (NB KB), 166 N.B.R. (2d) 341, [1995]N.B.J.

No. 386 (Q.B.) (QL), Larlee J. (as she then was), revoked a Certificate of Pending Litigation where title to property was registeredin the name of the estranged wife. She found: “[t]he plaintiff’s claim does not in my view bring into question any title or interest in land,nor would such claim if successful result in Mr.

Michaud obtaining an interest in the subject lands” (para. 27). [40] In the case at bar, it is my view the Certificate of Pending Litigation which was registered against the vacantlot, in particular, was invalid due to procedural irregularities, and as noted, could not be cured through the application of Rule 2.02. Inaddition, as the appellants correctly submit, the affidavits filed by Mrs. Edmanson did not prove she had an “interest” in the O’Neills’land.

To apply Rule 2.02, as the trial judge did, not only overlooked substantive breaches of Rule 42, but it also deprived the O’Neills ofa remedy in compensation for the expenses they incurred to clear the title to their properties. In my view, this is not the intent of Rule2.02. C. The Claim for Slander of Title [41] A claim for damages on the grounds of slander of title is not common although, as will be seen further in thesereasons, several appellate courts have been asked to consider the claim, most commonly in the commercial law context.

The O’Neillsunsuccessfully sought damages for what they asserted was a slander of their title. They sought payment for lost opportunities, generaldamages for the slander of title, general damages for the increased cost of borrowing due to their impaired credit, and the costs of theiraction. Before us, they acknowledged their damages were limited to their legal fees.

[42] In Captain Developments Ltd. v. Nu-West Group Ltd., [1982] O.J. No. 3369 (Ont. H.C.) (QL) the Court statesthe essential elements of the tort were as outlined in Fleming, The Law of Torts, 5th ed. (1977), at pp. 697-99. A plaintiff must provemalicious intent on the part of the defendant. The plaintiff must also establish he or she was unable to “dispose of the property or that itlowered the price”, there must be evidence the defendant knew he or she was making an untrue statement, and there was no basis tobelieve that what he or she was stating was true (see Halsey v. Brotherhood (1881), 19 Ch.

D. 386 at pp. 389-390; and S. & S. IndustriesInc. v. Rowell, (SCC), [1966] S.C.R. 419, [1966] S.C.J. No. 22 (QL)). See also, Almas et al. v. Spenceley, (ON CA), [1972] 2 O.R. 429 (C.A.) (QL); Dyne Holdings Ltd. v. Royal Insurance Co. of Canada, (PE SCAD),[1996] P.E.I.J. No. 28 (C.A.) (QL); Adroit Resources Inc. v. Tres-Or Resources Ltd., 2008 BCSC 1211, [2008] B.C.J. No. 1701 (QL);and Monument Mining Limited v. Balendran Chong & Bodi, 2012 BCSC 1769, [2012] B.C.J. No. 2494 (QL). [43] As Robertson J.A. observes in A.I. Enterprises and Schelew v.

Bram Enterprises and Jamb Enterprises, 2012NBCA 33, 387 N.B.R. (2d) 215 (affirmed in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] 1 S.C.R. 177): […] [w]hile the elements of the tort and the tort itself are unlikely to be staples of the law school curriculum, the Supreme Court ofCanada recognized the tort in S. & S. Industries Inc. v. Rowell, (SCC), [1966] S.C.R. 419, [1966] S.C.J. No. 22 (QL).Citing Bowen L.J. in Skinner v.

Perry (1893), 10 R.P.C. 1, the Supreme Court described the tort in terms of a person who falsely andmaliciously (“without reasonable and probable cause”) made a statement with respect to the property of another person which wascalculated to cause damage to the owner of that property. In England, the establishment of the tort requires “malice”: see Halsbury’s Laws of England, 4th ed., Vol. 45 (London: Butterworths, 1985) at para. 1531.

There is Ontario jurisprudence dealing with a claim forslander of title based on a Certificate of Pending Litigation and a finding that the claim was not sustainable because the certificate wasissued as part of the process of the court: see Tersigni v. Fagan, [1959] O.J. No. 65 (C.A.) (QL); Pete and Martys (Front) Ltd. v. MarketBlock Toronto Properties Ltd., [1985] O.J. No. 564 (H.C.J.) (QL); and Geo. Cluthe Manufacturing Co. v. ZTW Properties Inc., (ON SC), [1995] O.J. No. 4897 (D.C.) (QL). [para. 86] [44] The respondent, relying on Tersigni v. Fagan, [1959] O.J.

No. 65 (C.A.) (QL), submits she cannot be heldaccountable, as the Certificates of Pending Litigation are issued as a process of the court. In my view, the result in Tersigni isdistinguishable. In that case, the Court found the statement was issued as part of the process in the action, and on that basis was“privileged” and therefore did not form the legal basis for an action in slander of title. In Geo. Cluthe Manufacturing Co. v. ZTWProperties Inc., (ON SC), [1995] O.J. No. 4897 (D.C.) (QL), the Court referred to Tersigni but dismissed theplaintiffs’ claim on the basis it was not “valid in law”.

The Court in Captain Developments Ltd. described the action of the defendant as adeliberate publication or distribution of a statement known to be false with the intent of causing harm. The plaintiff’s success in that casewas based on the Land Titles Act, R.S.O. 1980, c. 230 (then in force), which created a statutory cause of action for slander of title withoutthe necessity to prove malice. As observed, the Province of New Brunswick does not have similar statutory provisions. [45] In Western Surety Company v. Hancon Holdings Ltd. et al., 2007 BCSC 180, [2007] B.C.J.

No. 250 (QL),Gerow J. concluded a slander of title can occur even though there was no proof of malicious intent (paras. 54-56). In 1026238 B.C. Ltd. v.Pastula, 2016 BCSC 1812, [2016] B.C.J. No. 2068 (QL), Armstrong J., citing Western Surety, acknowledged premature registration of aconsent judgment against a property can constitute slander of title (para. 40). Likewise, in Re Hawksmoor Investments Ltd. and MarrConstruction Ltd., (ON SC), [1973] 1 O.R. 313 (Ont.

H.C.) (QL), Donohue J. found a defendant’s decision to file aCertificate of Pending Litigation against the plaintiff’s property was motivated by the desire to place it in a position of “susceptibility” toencourage a settlement, and it was considered to be a slander of title. [46] Donohue J.’s analysis in Re Hawksmoor Investments Ltd. and the evolving jurisprudence concerning whatconstitutes “malice” are relevant. There must be evidence of a dishonest or improper motive which goes beyond mere carelessness beforethe tort is sustainable. Mrs. Edmanson’s affidavit evidence does not fall into the above category.

In my opinion, there is a legitimatedistinction to be made between the registration of a Certificate of Pending Litigation, which is Rules compliant, and a certificate issuedon the basis of inaccurate information. Clearly, a properly issued Certificate of Pending Litigation will withstand scrutiny. On their face,had the facts Mrs. Edmanson deposed been supported by evidence, arguably, she would have satisfied Rule 42; however, as noted, theywere not.

In this case, the filing of erroneous information may be described as a careless action which was designed to protect aperceived interest in ongoing marital litigation, but, in my view, it could not be said to rise to the level of malice as is described in thejurisprudence. [47] Mr. and Mrs. O’Neill sold their vacant lot for the asking price, although the sale was delayed due to theirefforts to have the Certificates of Pending Litigation revoked by court order or vacated by agreement. They incurred additional legalfees.

The house was originally listed for sale at $298,500; however, the sale price was later reduced to $262,900. There was no evidencethe reduction was a direct result of the filing of the Certificates of Pending Litigation. It is on the basis of their increased legal fees theO’Neills claim their loss as observed. Their increased legal fees extend from the date they discovered their properties were encumberedin the spring of 2014, to December 2014, when the Certificate of Pending Litigation against their house was removed.

D. The Trial Judge’s Decision on Costs [ 48 ] The trial judge found the following with respect to costs: This matter was complicated by the lack of clarity of the pleadings for a divorce and division of marital property, especially with the second PID in an Exhibit “B” to a supporting affidavit. Also the failure of Ms. Edmanson to formally join the O’Neills as parties to the proceeding was not helpful. Ms. Edmanson is responsible for those irregularities. They appear to have contributed to the dispute and encouraged the O’Neills to commence this action. Thus although Ms.

Edmanson has been successful in this action, I will not allow her any costs against the O’Neills. [Paras. 34-35] [ 49 ] He concluded it would have “been preferable” for Mrs. Edmanson to have joined the O’Neills as third parties (para. 29). He found the divorce and marital property proceedings were “awkwardly pleaded and repleaded” (para. 30). He observed the “matter was complicated by the lack of clarity of the pleadings for a divorce and division of marital property, especially with the second PID in an Exhibit ‘B’ to a supporting affidavit” (para. 34). Finally, he found Mrs.

Edmanson was responsible for “those irregularities” and that “[t]hey appear to have contributed to the dispute and encouraged the O’Neills to commence this action” (para. 35). He failed to rule with respect to the admissibility of the invoices for legal fees. The Notice of Action was then summarily dismissed without costs to either party. In my opinion, at the very least, the O’Neills were entitled to partial indemnification of their trial costs. To deny them costs in the facts of this case amounted to giving Mrs.

Edmanson a free pass for errors that were not only procedural, but represented a substantive violation of Rule 42. [ 50 ] During the trial, counsel for the O’Neills attempted to introduce invoices for legal fees they had incurred over the span of over three years. The invoices were marked by the trial judge for identification. Counsel for Mrs. Edmanson objected to their admission on the basis she had not seen the invoices prior to trial, and she requested, and was given, detailed statements for her review. The trial judge ordered the parties to participate in an examination for discovery during the trial.

Despite requests by counsel for the O’Neills that the invoices be marked as exhibits, the trial judge did not make a ruling concerning their admissibility. I conclude the failure to rule with respect to their admissibility was inconsequential to the outcome. The determination of costs is discretionary. In this case there was insufficient evidence to permit the court to properly quantify the legal fees directly attributable to the filing of the Certificates of Pending Litigation alone (see Gubo Estate v. Cotroneo , [2007] O.J.

No. 1479 (S.C.J.) (QL) , per Sheppard J., where the invoices were admitted as proof of loss; however, for different reasons, the court ordered each party to bear their own costs). [ 51 ] The practice of family law has been described by this Court as a “pantheon” (see Green J.A. in Province of New Brunswick, as represented by the Minister of Justice and Consumer Affairs v. C.M. and P.M. , 2012 NBCA 45 , 397 N.B.R. (2d) 321, at para. 37 ). That “pantheon” is governed by specific rules of procedure and evidence, for which compliance is expected.

The practice of family law is challenging and is one of the more complex areas of law. It is full of emotion, and clients are often demanding and fearful of loss. They expect their lawyers to perform miracles; however, the elasticity of the law has its limits. [ 52 ] To assign a spouse a vicarious equitable interest in property registered in the name of a non-party to marital property proceedings, by virtue of ss. 2 and 3 of the Act without proof of that interest, is an error in law, in my opinion, and the O’Neills were entitled to such a declaration.

In failing to grant the declaratory relief sought by the O’Neills, the trial judge committed reversible error. As noted, the O’Neills were entitled to a declaration; therefore, their appeal from the trial judge’s disposition in this regard allows for the consideration of their costs. As was stated by Quigg J.A. in Noble and O’Brien v. Arsenault and Arsenault , 2014 NBCA 39 , 420 N.B.R. (2d) 133: […]an elementary proposition: appeals are from the actual disposition of the case, not from reasons given in support: Veno v. United General Insurance Corporation , 2008 NBCA 39 , 330 N.B.R. (2d) 237, at para. 77 ; J.D.

Irving, Limited v. Hughes and Astle , 2010 NBCA 23 , 358 N.B.R. (2d) 49, at para. 24 . [para. 1] [ 53 ] To award the O’Neills full reimbursement of their legal costs would, in essence, amount to an award of solicitor-client costs: see Estate of Jarvis Hayward Estabrooks et al. v. Barry et al. and Macey , 2016 NBCA 55 , 452 N.B.R. (2d) 296, at paras. 44-47 and Calvy v. Calvy (2014), 426 N.B.R. (2d) 390 , [2014] N.B.J. No. 282 (C.A.) (QL), at para. 9 .

[54] I am not persuaded Mrs. Edmanson’s conduct rose to the level as was described in the above jurisprudence. Inmy opinion, the O’Neills did not meet the threshold test of malice, and the trial judge’s decision in this regard was correct. I ampersuaded, however, the O’Neills are entitled to partial reimbursement of the costs of their action on the basis the process employed byMrs. Edmanson was flawed. In

summary, the O’Neills were entitled to notice that their lands were encumbered. Mrs. Edmanson failed toestablish an equitable interest in the O’Neills’ properties as set out in Rule 42, and she persisted for months and would not release theproperties. Consequently, the O’Neills incurred legal costs that were directly related to her actions. In Robichaud et al. v.

PharmacieAcadienne de Beresford Ltée et al., 2008 NBCA 12, 328 N.B.R. (2d) 205, Drapeau C.J.N.B, states the following with respect to Rule 59: […] In the case at bar, nothing in Rules 59.01 and 59.02 warrants a departure from Tariff “A”, the presumptive basis for the assessmentof costs on a motion for judgment. Likewise, nothing in those Rules militates against the application of the “basic” figure for costs,namely Scale 3 of Tariff “A”. [para. 42] (see also La Société des Acadiens du Nouveau-Brunswick Inc. andL'association des conseillers scolaires francophones du Nouveau-Brunswick v.

Minority Language School Board No. 50 (1983), (NB KB), 48 N.B.R. (2d) 361, [1983] N.B.J. No. 245 (Q.B.) (QL), Richard C.J.Q.B.; Saint John Regional Hospital v.Comeau, Smith, MacDonald, Dornan and Lamon and MacDonald and Dornan v. Comeau, 2003 NBCA 17, 256 N.B.R. (2d) 356; Dupuisv. City of Moncton, 2005 NBCA 47, 284 N.B.R. (2d) 97, leave to appeal refused at [2005] S.C.C.A. No. 136; McKeen v. The MortgageMakers Inc. and Libby, 2009 NBCA 61, 349 N.B.R. (2d) 115). [55] The question at issue in these proceedings is not inconsequential.

I say this as I am not able to find a decisionfrom this Court or any other court in this Province on point. The question whether, or not, a person has a vicarious equitable interest inthe property of a non-party to divorce proceedings by virtue of the marriage relationship, per se, without proof, is an issue which has thepotential to influence the practice of family law in this Province. In my view, the practice of registering Certificates of PendingLitigation, particularly in the circumstances of a case such as this, should be discouraged. There are other options available to a spouse.

Irefer to s. 11 of the Act as an example. [56] This decision, left undisturbed, endorses the principle that a vicarious equitable interest can be created byvirtue of the Act itself. This is not what the Act intended. I can find no authority which validates this

interpretation. As an aside, there wasno cross-appeal on the issue whether the matter should have been decided on the basis of constructive or resulting trust. Although therespondent advanced this argument in her submission, it is not before us. [57] The trial judge’s dismissal of the slander of title claim is upheld. The trial judge’s decision concerning thevalidity of the Certificates of Pending Litigation was wrong; therefore, his decision not to grant costs remains open. V.

Disposition [58] In the special circumstances of this case, I would assess the value of the O’Neills’ claim at $24,000, theapproximate amount of their legal fees claimed at trial. I would award them one half of their party-and-party costs on this amountpursuant to Rule 59.01, Tariff “A”, Scale 3. [59] I would allow the appeal in part and I would award the appellants costs of $5,000 on the appeal. Version française de la décision de la Cour rendue par LA JUGE BAIRD

I. Introduction et contexte [1] Le présent appel soulève des questions au sujet du bien-fondé de l’enregistrement d’un c ertificat d’affaire en instance ( lis pendens ) grevant des biens appartenant à une personne qui n’est pas

partie à une instance de divorce en cours et qui n’a pas été avisée que ses biens faisaient l’objet d’un grèvement, dans un contexte où la procédure prévue par la règle 42 des Règles de procédure n’a pas été suivie. La Cour est surtout intéressée par la question de savoir si une revendication non prouvée d’un partage égal des biens matrimoniaux peut créer un intérêt en equity du fait d’autrui sur un bien en vertu de la seule

Loi sur les biens matrimoniaux , L.N.-B. 2012, ch. 107 (la « Loi »). La question de savoir si les appelants sont fondés à intenter une action pour discrédit de

titre est d’intérêt secondaire. [2] M. et M me O’Neill (collectivement appelés « les O’Neill ») sont mariés et résident à Rothesay, au Nouveau-Brunswick. En 2012, ils ont acheté une maison ainsi qu’un terrain vague adjacent donnant sur la rue Second avec l’intention de les revendre pour en tirer un gain personnel. Les biens ont été enregistrés à

titre de parcelles distinctes, chacun d’eux ayant son propre numéro d’identification de parcelle. Les titres de propriété ont été enregistrés au nom des O’Neill en qualité de tenants conjoints, et ils étaient grevés d’une hypothèque de 175 000 $ enregistrée à leurs noms. [3] M. O’Neill et Timothy Edmanson sont des collègues de travail. Vers la fin de l’année 2012 ou au début de l’année 2013, M. O’Neill s’est entretenu avec M. Edmanson pour lui faire une proposition d’affaire.

Il lui a suggéré de rénover ensemble la maison en partageant les coûts de la main-d’œuvre et des matériaux, les bénéfices réalisés étant ensuite partagés également une fois que la maison serait vendue. Cette convention orale n’a pas été couchée par écrit. [4] Le projet de rénovation a commencé en 2013. M. Edmanson a fait le gros du travail manuel et lui-même et M. O’Neill ont engagé des sous-traitants pour effectuer les travaux plus spécialisés. Un compte conjoint a été ouvert dans une quincaillerie locale en vue de l’achat des matériaux de construction. Le juge du procès a conclu que M.

Edmanson avait investi environ 40 000 $ dans les travaux de rénovation de la maison. [5] En décembre 2013, les O’Neill ont réhypothéqué la maison. Dans l’intervalle, M. et M me Edmanson (« les Edmanson ») se sont séparés. En mars 2014, M me Edmanson a déposé une requête en divorce établie au moyen de la formule 81A dans laquelle elle demandait un partage égal des biens matrimoniaux. Le 9 avril, elle a modifié sa requête, sollicitant l’enregistrement d’un c ertificat d’affaire en instance contre la maison des O’Neill; toutefois, ces derniers n’ont pas été joints comme parties.

Le numéro de compte du bien (« NCB »), qui était annexé à

titre de pièce « B » à l’affidavit accompagnant la requête de M me Edmanson, identifiait les O’Neill comme étant les propriétaires enregistrés du bien. M me Edmanson n’a présenté aucune demande relativement au terrain vague à ce moment-là. [6] Un c ertificat d’affaire en instance a été délivré et enregistré contre la maison sans que les O’Neill en soient avisés. Le 17 avril, M me Edmanson a modifié son certificat d’affaire en instance pour y ajouter le terrain vague sans avoir au préalable modifié sa requête initiale pour préciser pour quel motif elle avait la conviction qu’elle avait un intérêt sur ce bien.

En septembre, elle a essayé de corriger les erreurs commises en déposant une requête modifiée dans lequelle elle nommait les O’Neill comme mis en cause et en annexant une description appropriée des deux biens comme le prescrit la règle 42.03. [7] En mai 2014, les O’Neill ont mis en vente la maison et le terrain vague. Ils ont rapidement négocié un prix de vente pour le terrain vague. Peu après, leur avocat les a informés que M me Edmanson avait enregistré des certificats d’affaire en instance contre leur maison et le terrain vague.

Craignant de perdre l’occasion de vendre le terrain, ils ont fait attendre l’acquéreur à trois reprises pendant qu’ils tentaient en vain, grâce aux efforts de leur avocat, d’obtenir de M me Edmanson qu’elle consente à révoquer les certificats. Le 10 juillet 2014, ils ont déposé un avis de poursuite accompagné d’un exposé de la demande nommant M me Edmanson comme défenderesse. Dans l’exposé de la demande, les O’Neill sollicitaient une déclaration portant que M me Edmanson ne possédait aucun intérêt en equity sur leurs biens, des dommages-intérêts pour discrédit de

titre relativement à leurs biens, et les dépens. Ils ont simultanément déposé un avis de motion dans lequel ils sollicitaient une ordonnance révoquant les certificats d’affaire en instance au motif qu’ils n’avaient pas été correctement déposés et qu’ils n’avaient pas été avisés de leur enregistrement comme le prescrit la règle 42.03. Dans son exposé de la défense, M me Edmanson a reconnu avoir enregistré le c ertificat d’affaire en instance contre le terrain vague sans avoir modifié au préalable sa requête, mais elle a affirmé que la Loi l’habilitait à le faire .

Le 22 août 2014, après avoir comparu devant le juge saisi de la motion, les O’Neill ont signé une ordonnance par consentement dans laquelle ils convenaient de détenir en fiducie 25 % du produit de la vente du terrain vague en échange de la renonciation au certificat d’affaire en instance enregistré contre le terrain dans le but d’en faciliter la vente. L’ordonnance ne limitait pas expressément leur droit d’aller de l’avant avec leur avis de poursuite contre M me Edmanson. Au même moment, M.

Edmanson a signé une lettre d’instructions dans laquelle il cédait aux O’Neill [TRADUCTION] « tous ses intérêts en common law, le cas échéant », dans la maison et le terrain.

[8] Les O’Neill ont payé toutes les dépenses concernant la maison à l’exception d’une période de plusieurs mois entre 2014 et 2015 pendant laquelle M me Edmanson l’a occupée et a payé l’hypothèque à

titre de loyer. Les frais de rénovation de la maison se sont élevés à environ 100 000 $. Les parties conviennent que la vente du bien ne rapportera aucun bénéfice. En novembre 2014, M me Edmanson a révoqué le c ertificat d’affaire en instance enregistré contre la maison par suite d’un règlement amiable global de répartition des biens matrimoniaux qu’elle avait conclu avec son mari. En mai 2015, l’avis de poursuite des O’Neill a donné lieu à une audience.

La maison n’avait toujours pas été vendue à la date de l’audience. [9] Outre leur demande de déclaration portant que M me Edmanson ne détient aucun « intérêt » sur leurs biens, les O’Neill sollicitaient le remboursement intégral de leurs honoraires d’avocat en dédommagement du discrédit de leur

titre de propriété, honoraires qui dépassaient alors la somme de 20 000 $. Citant les art. 2 et 3 de la Loi à l’appui de sa décision, le juge du procès a rejeté leur demande en concluant que M me Edmanson détenait un intérêt en equity sur les deux biens. Le juge du procès s’est fondé sur les affidavits déposés par M me Edmanson à

titre de preuve de ses revendications. Comme on le verra, ces affidavits étaient inexacts relativement à des éléments de fond. Pour les motifs exposés ci-dessous, je suis d’avis d’accueillir l’appel en partie. II. Les moyens d’appel [10] Les O’Neill soulèvent trois moyens d’appel principaux devant notre Cour. Premièrement, ils affirment que le juge du procès a commis une erreur de droit en concluant que M. Edmanson détenait un intérêt en equity sur les deux biens et que, par conséquent, par extension, M me Edmanson avait un intérêt correspondant en vertu de la Loi .

Deuxièmement, ils font valoir que les certificats d’affaire en instance ont été irrégulièrement obtenus en invoquant le fait que la procédure énoncée dans la Règle 42 n’a pas été suivie à plusieurs égards importants, que leur

titre de propriété des biens a été discrédité et que l’application de la Règle 2.02 ne permettait pas de remédier à ces erreurs. Troisièmement, ils font valoir que le juge du procès a commis une erreur en ne statuant pas sur l’admissibilité des factures relatives aux frais d’avocat que les O’Neill avaient engagés pour dégrever leurs titres de propriété. Le juge du procès a coté les factures à des fins d’identification; toutefois, bien que l’avocat ait demandé à plusieurs reprises qu’elles soient cotées comme pièces, aucune décision n’a été rendue. III. Norme de contrôle [11] Dans l’arrêt Housen c.

Nikolaisen , 2002 CSC 33 , [2002] 2 R.C.S. 235, la Cour suprême a clarifié la norme de contrôle applicable aux questions de droit et de fait ou aux questions mixtes de droit et de fait (voir les par. 8 à 10, 32 et 33). En un mot, la décision établit que la norme de contrôle applicable aux questions de droit est celle de la décision correcte tandis que celle de l’erreur manifeste et dominante s’applique aux questions de fait ou aux questions mixtes de droit et de fait. Notre Cour a suivi et appliqué l’arrêt Housen à de nombreuses reprises au point qu’il est devenu banal (voir les arrêts Milton c.

Milton , 2008 NBCA 87 , 338 R.N.-B. (2 e ) 300, motifs de la juge d’appel Larlee, au par. 14; Yorke c. Yorke , 2011 NBCA 79 , 378 R.N.-B. (2 e ) 141, motifs de la juge d’appel Larlee, au par. 9; LeBlanc et autres c. Syndicat canadien de la fonction publique,

section locale 558 , 2016 NBCA 11 , 447 R.N.-B. (2 e ) 365, motifs du juge d’appel Richard, au par. 19). [12] Dans l’arrêt LeBlanc c. St. Coeur et St. Coeur , 2007 NBCA 32 , 313 R.N.-B. (2 e ) 341, notre Cour a déclaré que « l’application des principes juridiques pertinents, une appréciation de la preuve et l’exercice de [leur] pouvoir discrétionnaire » sont exigés des juges du procès (par. 6).

Leurs décisions ne seront infirmées que s’il est « établi [que les juges se sont] mal enqui[s] du droit, [qu’ils n’ont] pas appliqué les principes voulus ou [qu’ils ont] donné des faits une appréciation qui est erronée […] », la Cour invoquant l’arrêt Doiron c. Haché , 2005 NBCA 75 , 290 R.N.-B. (2 e ) 79, au par. 58 , et les causes qui y sont citées. [13] Plus récemment, dans l’arrêt Houk c. Daniels Investments Saskatoon Ltd. , 2016 SKCA 147 , [2016] S.J.

No. 630 (QL), la Cour a traité en ces termes de la norme de contrôle applicable aux certificats d’affaire en instance : [TRADUCTION] La décision rendue par un juge siégeant en cabinet sur la question de savoir si un certificat d’affaire en instance doit être annulé est de nature discrétionnaire et notre Cour doit donc faire preuve de retenue à son égard. Toutefois, pour que ce pouvoir discrétionnaire puisse être exercé, le juge siégeant en cabinet doit avoir au préalable correctement identifié la règle de droit qui régit l’exercice de ce pouvoir.

La question de savoir s’il a commis une erreur dans cette décision est une question de droit que notre Cour peut réviser en appliquant la norme de la décision correcte (voir Housen c. Nikolaisen , 2002 CSC 33 , [2002] 2 R.C.S. 235, au par. 8 ; St.-Jean c. Mercier , 2002 CSC 15 , [2002] 1 R.C.S. 491 aux par. 33 et 34 ; Valley Beef Producers Co-Operative Ltd. c Farm Credit Corp ., 2002 SKCA 100 , 223 Sask. R.

236), au par. 96. [par. 10] [14] À mon avis, l’analyse que le juge du procès a faite de l’application de la Loi , en l’espèce, est susceptible de contrôle selon la norme de la décision correcte. Par conséquent, la décision du juge du procès d’utiliser la règle 2.02 comme une disposition réparatrice fera l’objet d’un contrôle selon la norme de la décision correcte. L’omission du juge du procès de statuer sur l’admissibilité des factures relatives aux services juridiques sera révisée selon la norme de la raisonnabilité. IV. Analyse A.

L’analyse relative aux biens matrimoniaux [15] Il incombait à M me Edmanson d’établir qu’elle détenait un « intérêt » sur les biens des O’Neill. Selon moi, elle ne s’est pas acquittée de ce fardeau. Je m’explique. L’affidavit que M me Edmanson a déposé en même temps que sa requête en divorce modifiée renferme les extraits suivants au par. 4 : [TRADUCTION] J’ai déjà déposé le 14 mars 2014 une requête accompagnée d’un affidavit daté du 10 mars 2014. Dans cet affidavit dont une copie est jointe à la présente à

titre de pièce « A » (sans pièces), j’ai précisé qu’en janvier 2013, l’intimé a acheté une maison située au 69, rue Second à Rothesay, au Nouveau-Brunswick, NID 234823. Il a effectué cet achat avec un autre associé au sein du Groupe Investors, Peter O’Neill. L’intimé travaille à Groupe Investors. J’ai expressément déclaré ce qui suit aux paragraphes 15, 16, 17, 19, 20 et 23 : [TRADUCTION] En janvier 2013, le défendeur a acheté avec Peter O’Neill, un de ses amis à Groupe Investors, une maison située au 69, rue Second à Rothesay, au Nouveau-Brunswick, portant le NID 234823.

Ils l’ont achetée dans le but de la revendre rapidement à un prix supérieur en vue de gagner un revenu. Le défendeur réside actuellement dans la maison et il l’a meublée. Pendant une courte période, ils l’ont inscrite en vue de la vente. Je comprends que la maison n’est actuellement plus inscrite. Toutefois, je souhaite être informée si la maison venait à être réinscrite en vue de la vente, afin que le produit tiré de la vente soit détenu en fiducie. Une copie des renseignements relatifs au NCB de Service Nouveau-Brunswick est jointe au présent affidavit à la pièce B.

Je souhaiterais que le défendeur produise tous les accords passés relativement à la maison située au 69, rue Second à Rothesay, au Nouveau-Brunswick, portant le NID 234823. […] Nous avons une marge de crédit de 35 000 $. Je ne l’ai jamais utilisée. Toutefois, le défendeur l’a utilisée pour financier l’achat de sa deuxième maison destinée à une revente précipitée.

Mon nom est rattaché à cette marge de crédit bien que je ne l’aie jamais utilisée. [16] Au par. 5 du même affidavit, M me Edmanson a ajouté ce qui suit : [TRADUCTION] « Ils ont agi de la sorte dans le but de revendre la maison et de réaliser un bénéfice, selon ce que j’ai cru comprendre de l’intimé. La maison est hypothéquée et l’intimé y a investi plusieurs milliers de dollars prélevés sur nos comptes ». [17] Le juge du procès a accepté ces assertions à

titre de preuve que M me Edmanson possédait un « intérêt » en equity sur les biens des O’Neill en vertu de son mariage avec M. Edmanson. Je suis d’avis que les observations suivantes sont critiques : 1. M me Edmanson n’a présenté aucune demande relativement au terrain vague lorsqu’elle a déposé sa requête. Elle a ensuite obtenu un c ertificat d’affaire en instance contre le terrain sans avoir au préalable modifié sa requête pour l’inclure dans sa demande; 2. M me Edmanson a déclaré que son mari avait [TRADUCTION] « acheté » la maison de la rue Second en 2013. Cette assertion était

fausse. La pièce « B » annexée à son affidavit montrait que le

titre de propriété avait été enregistré aux noms de M. et M me O’Neill en 2012, ce qui concordait avec le témoignage de M. O’Neill selon lequel lui-même et son épouse avaient acquis les deux biens au cours de l’année qui avait précédé la convention orale conclue avec M. Edmanson comme je l’ai indiqué; 3. M me Edmanson a affirmé que son mari avait [TRADUCTION] « utilis[é] [la marge de crédit] pour financer l’achat de sa deuxième maison » et qu’il avait investi des « milliers de dollars » dans celle-ci. Or, aucune preuve n’étayait cette assertion; 4.

Au par. 10 de son affidavit, M me Edmanson déclare : [TRADUCTION] « mon avocate m’a informée et j’ai tous les motifs de croire qu’à supposer que la maison ait une valeur nette réelle, [je] recevrais 50 % de celle-ci.

Étant donné qu’il s’agit d’un bien matrimonial, je demande que les fonds soient détenus en fiducie et que l’on m’informe de toute vente ». [18] Dans ses motifs, le juge saisi de la motion a invoqué les art. 2 et 3 de la Loi à l’appui de sa conclusion selon laquelle M me Edmanson détenait un intérêt en equity sur les deux biens des O’Neill. [19] Voici le texte des articles 2 et 3 de la Loi : Joint responsibilities of spouses 2 Child care, household management and financial provision are joint responsibilities of spouses and are recognized to be of equal importance in assessing the contributions of the respective spouses to the acquisition, management, maintenance, operation or improvement of marital property; and, subject to the equitable considerations recognized elsewhere in this Act, the contribution of each spouse to the fulfilment of these responsibilities entitles each spouse to an equal share of the marital property and imposes on each spouse, in relation to the other, the burden of an equal share of the marital debts.

Application for division of marital property 3

(1) Each spouse, on application to the Court, is entitled to have the marital property divided in equal shares if (

a) a judgment granting a divorce is rendered, (

b) a marriage is declared a nullity, (

c) the spouses are living separate and apart and there is no reasonable prospect of the resumption of cohabitation, or (

d) a marriage has broken down and there is Responsabilité commune des conjoints 2 Le soin des enfants, la gestion domestique et l’apport financier relèvent de la responsabilité commune des conjoints et sont considérés au même

titre dans l’évaluation de leur contribution respective à l’acquisition, à l’administration, à l’entretien, à l’exploitation ou à l’amélioration des biens matrimoniaux. Compte tenu des considérations équitables que reconnaît la présente loi, la contribution de chaque conjoint en vue d’assumer cette responsabilité lui donne droit à une part égale des biens matrimoniaux tout en lui imposant à l’égard de l’autre une part égale du fardeau des dettes matrimoniales. Requête en répartition des biens matrimoniaux 3

(1) Sur requête adressée à la Cour, chaque conjoint a droit à une répartition égale des biens matrimoniaux sous l’une des conditions suivantes :

a) un jugement de divorce a été prononcé;

b) le mariage a été déclaré nul;

c) les conjoints vivent séparés et il n’existe aucun espoir raisonnable de reprise de la cohabitation;

d) le mariage s’est dissous et il n’existe aucun

no reasonable prospect of reconciliation, whether or not the spouses are living separate and apart. 3

(2) Subject to subsection (4), no application shall be made under subsection (1) later than 60 days after a spouse ceases to be a spouse by reason of a divorce or declaration of nullity. 3

(3) For the purposes of this section, a person whose marriage is declared a nullity shall be deemed to have been a spouse during the period between the purported solemnization of marriage and the declaration of nullity. 3

(4) The Court may extend the limitation period by such length of time and on such terms as it considers just, if a person is prevented from making an application within the limitation period fixed in subsection (2) by (

a) lack of knowledge of the granting of a divorce or a declaration of nullity, or of the date of it, or (

b) circumstances reasonably beyond his or her control. espoir raisonnable de réconciliation, que les conjoints vivent séparés ou non. 3

(2) Sous réserve du paragraphe (4), le conjoint ne peut présenter la requête que prévoit le paragraphe (1), s’il s’est écoulé plus de soixante jours depuis qu’il n’est plus un conjoint en raison d’un divorce ou d’une déclaration de nullité du mariage. 3

(3) Pour l’application du présent article, la personne dont le mariage est déclaré nul est réputée avoir été un conjoint pendant la période comprise entre la prétendue célébration du mariage et la déclaration de nullité. 3

(4) La Cour peut proroger le délai pour la durée et aux conditions qu’elle estime justes, lorsqu’une personne ne peut présenter sa requête dans le délai fixé au paragraphe (2) en raison de l’un ou l’autre des motifs suivants :

a) sa méconnaissance soit du prononcé d’un jugement de divorce ou d’une déclaration de nullité du mariage, soit de la date de ceux-ci;

b) l’existence de circonstances raisonnablement indépendantes de sa volonté. [20] La Loi établit un régime qui prévoit la répartition des éléments d’actif matrimoniaux et non matrimoniaux en cas de rupture d’un mariage. La présomption selon laquelle il y aura répartition en parts égales de tous les éléments d’actif acquis pendant le mariage peut être supplantée par les art. 6, 7 et 9 dans les cas où il existe des actifs commerciaux ou lorsque la Cour arrive à la conclusion qu’une répartition égale des biens matrimoniaux serait inéquitable.

L’analyse est contextuelle et tient compte de l’acquisition, de l’utilisation, de l’entretien et de la nature de l’élément d’actif et sa provenance. [21] Dans l’arrêt Yorke , la juge d’appel Larlee a déclaré ce qui suit : À l’instar des lois en la matière en vigueur dans toutes les autres provinces de common law au Canada, la

Loi sur les biens matrimoniaux du Nouveau-Brunswick prévoit, par présomption, un droit d’o

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