Family law — Husband and wife — Marital property — Matrimonial home, interim sale.

   Application by the husband for the immediate sale of the matrimonial home.  The wife disputed the application on the basis that the house was heavily encumbered, specifically by a loan to the husband to purchase a share in a business. There were also two mortgages in favour of the husband's mother.  The wife had registered a certificate of pending litigation after the other encumbrances were already on title. The wife argued that an accounting of the funds borrowed was necessary prior to any sale.  The wife lived in the home with the two young children of the marriage, but she was unable to maintain the necessary payments.  The husband had received an offer to purchase the home, and he was anxious to accept it.

   HELD:  Application allowed.  There was no equity in the home. Even if all the encumbrances were not paid, there would still be nothing left over for the wife.  Her certificate of pending litigation ranked behind the other encumbrances.  The children were young enough to adapt easily to new surroundings.  Their best interests were not impacted negatively by the sale.

Counsel:

¶ 1      MASTER NITIKMAN:— This is the petitioner's application for orders that the matrimonial home at 6741 Meredith Place, Delta, B.C. be sold, that the petitioner have sole conduct of sale, or, in the alternative, that the parties have joint conduct of sale, that the order for spousal maintenance made December 9, 1997, by consent, be varied to permit house insurance premiums to be deducted, that the respondent (in exclusive possession of the home with the children by virtue of a consent order made December 9), permit attendance at the property for the purpose of an appraisal of the contents, that the wife provide particulars regarding the loss of a certain painting entitled "Messiah", to the insurance adjusters, and for costs.

¶ 2      As there is some urgency to this application, I propose to deal first with the application for an order for sale and conduct of sale.

¶ 3      The subject property was purchased in November 1993, for $325,000.  It was purchased from or through a numbered company, BC349044 Ltd., owned by the petitioner's parents.  The home is registered in the petitioner's name.

¶ 4      The home is encumbered as follows: a mortgage of $280,000 to VanCity Credit Union, registered on April 19, 1995. A mortgage of $325,000 to the petitioner's mother, Beverly Van Deventer-Hansen, another mortgage for $286,000 to the petitioner's mother, and a CPL filed by the respondent on December 1, 1997.

¶ 5      The money from VanCity was borrowed to permit the petitioner to buy 1/3 of the shares of a company, Burrard Autostrasse Ltd., and it also provided the parties with a line of credit.  The money from the petitioner's mother was used for the purchase of the subject property

¶ 6      The respondent resists an order for sale of the home on a couple of grounds: first, she contends that the petitioner has used $80,000 of the money advanced by VanCity for purposes unknown to her.  Respondent's counsel submits that the evidence provides no assurance that all of the mortgage debt to VanCity is properly "shareable" by the spouses.  The limit of the first mortgage is $280,000 but the petitioner's Form 89 indicates that as of February 9, 1998, he owed VanCity an additional $20,000 on an unsecured line of credit.  Second, the petitioner purchased shares in the company for $200,000 in April 1995. The questions raised are: why did VanCity advance $280,000?  What happened to the additional $80,000? Alternatively, did VanCity in fact advance $280,000?  Respondent's counsel says the amount actually advanced in April 1995, is not apparent from the documents. The respondent says she must have an accounting of these funds prior to a sale being ordered.  The respondent submits further that the mortgage to the petitioner's mother is "flexible"; she says no payments are demanded, payments made in the past were in varying amounts and were never strictly enforced. Finally, the respondent doubts that the petitioner is unable, as he claims, to pay the mortgage on the home plus the amount ordered by way of spousal and child support.

¶ 7      When the parties appeared in court on April 15, I asked counsel whether an order for sale could be made with an order that the proceeds of sale all be paid into court pending any agreement or court order with respect to a division of the asset. Counsel requested an opportunity to make brief written submissions on this question.  I have now had an opportunity to review the submissions.

¶ 8      Counsel for the petitioner submits that the court does have the discretion to make an order such as the one contemplated but that in the circumstance of this case, the court ought not exercise that discretion.  Counsel relies on Pearson v. Pearson, [1986] B.C.J. No. 1810 affirmed in Royal Bank of Canada v. Pearson [1987] B.C. J. No. 715

¶ 9      The cases cited are authority for the proposition that the wife's interest in property is not prior to any encumbrances registered prior to her lis pendens and this is so even in circumstances where one of the prior encumbrances is discharged but the person who has paid the debt is entitled to an assignment of the registered judgment against his co-debtor.

¶ 10      The petitioner also relies on Baker v. Baker [1990] B.C.J. No. 1553.  In that case, the parties separated on April 15, 1989, the wife obtained a s. 44 (now s. 57) declaration of no prospect of reconciliation on June 13, 1989, and the husband made an assignment into bankruptcy on July 10, 1989. The family home had been purchased by the husband with money given to him by his grandmother.  The home was registered in his name and the parties had lived in it for approximately seven years.  In or about December 1989, the wife applied to the court for an order that the proceeds of sale of the family home be reapportioned in her favour.  A further complication was that a number of judgments were registered against the husband's registered interest in the home prior to the s. 44 declaration being made.

¶ 11      The court held that the s. 44 declaration served to vest an undivided 1/2 interest in the property in the wife. Second, the judgments registered prior to the wife obtaining this interest, that is, judgments registered prior to June 13, 1989, took priority over the wife's interest.  Although the issue of reapportionment is not before me, the court in Baker held that the court had the discretion to order reapportionment even in the circumstances of an assignment in bankruptcy but the court chose not to exercise that jurisdiction.

¶ 12      As of May 2, 1998, there has been an offer to purchase the matrimonial home for $343,000.  The petitioner is very anxious to accept this offer.  It appears that the home was listed for sale from October 1995, to March 1996, and again from April to October 1996.  Only one offer was received during that time and the present offer is from the same person who made the first and only offer when the home was previously listed.

¶ 13      I agree with the submissions of petitioner's counsel in support of an order for sale of the family home. Based on the authorities provided by the petitioner, the section 57 declaration made on December 9, 1997, vested an undivided 1/2 interest in the home in the respondent.  Her CPL was registered against the property on December 1, 1997, well after the other mortgages.  There is little if any equity in this property.  If the house sells for $343,000, after real estate commission and other expenses of sale, and after the mortgages with priority over the respondent's interest have been paid out, there will be nothing left.  Even if $80,000 was determined not to be a debt for which the petitioner was responsible and if only $220,000 was payable to VanCity to discharge its' mortgage, there would still be nothing left for the respondent unless the petitioner's mother chose to discharge her mortgage without payment: not a likely scenario. It should be noted that the respondent does not dispute that the mortgage held by the petitioner's mother is a valid mortgage in that the money was advanced as a loan to the parties which must be repaid.  She simply says that there is no evidence the petitioner's mother needs the money, or is demanding that mortgage payments be made.

¶ 14      The respondent cannot make any payments toward the house.  By the terms of an earlier court order, she was to pay certain expenses related to the property out of funds paid to her by the petitioner by way of spousal maintenance.  The respondent did not make any of these payments.  The petitioner has been unable to make any payments on the mortgage to his mother since March 1998, although he has been able with difficulty, he says, to keep the VanCity mortgage current.

¶ 15      The only other major asset owned by the parties is the petitioner's shares in the car dealership.  The respondent's entitlement to an interest in that asset may be determined by way of a summary trial or at trial which has been set for three days in November 1998.

¶ 16      I am persuaded that a sale of the home at this time will not impact negatively upon the best interests of the two pre-school age children of the marriage who reside in the home with the respondent.  They are, in my view, young enough to adapt reasonably easily to new surroundings.  Further, I am persuaded by the submissions of the respondent's counsel that the petitioner's business appears to be doing reasonably well. Accordingly, the petitioner may be in a financial position to provide additional spousal maintenance to the respondent provided there is a change in her financial circumstances as a consequence of having to move out of the family residence.

¶ 17      Accordingly, I order that the property be sold and that the parties have joint conduct of sale.

¶ 18      I am assuming that the order for sale and conduct of sale will dispose of most if not all of the matters raised by the Notice of Motion before the court.  The balance of the applications in the Notice of Motion (deduction of insurance premiums from spousal maintenance, attendance at the property for purposes of an appraisal, information about the missing painting to insurance adjusters) are adjourned generally to be reset by counsel if the need arises.

¶ 19      Costs in the cause.

MASTER NITIKMAN

QL Update:  980522
cp/d/sfr/DRS

Master Nitikman