Mr. and Mrs. Purple owned their matrimonial home as joint tenants.During their marriage, Mr. Purple demanded on several occasions that Mrs. Purple and her children (Mr. Purple's stepchildren) leave, only to later reconcile.Prior to his death, the husband obtained a divorce and applied for division of the matrimonial home according to relevant legislation, but Mr. Purple died before the property division occurred.The Administrator of the estate applied for property division under the relevant legislation. The issue that arose was whether or not the home formed part of Mr. Purple's estate or whether it passed to Mrs. Purple by way of survivorship.

a. Read Dunn Estate v. Dunn, along with the course text book and determine whether the house formed part of Mr. Purple's estate or it passed to Mrs. Purple by way of survivorship.Be sure to explain your answer, and provide examples where appropriate. (worth five marks)

ii. David Yellow owned and operated Yellow's General Hardware Store, as well as the land and buildings where he carried on business.His younger brother, John, worked for him as a manager.His daughter, Susan, also worked for Mr. Yellow.David died, leaving a will in which he gave his business and real property to John for life, with the remainder to Susan.John and Susan could not agree on how to run the business or take care of the property.Ultimately, John fired Susan.Over the next few years, the business did poorly and John allowed the warehouse and other buildings on the property to fall into a state of disrepair.

a. Susan commenced a lawsuitto force John to keep the buildings and property in a state of repair.What is the likelihood that she will be successful?Explain your answer.

b. John died and in his will he left the entire estate, including the business and buildings tohis wife.Who has entitlement in this situation?Explain your answer.

Case Study to read

Alberta Court of Queen's Bench Dunn Estate v. Dunn

Date: 1994-01-20

C.J. Robinson, for plaintiff. L.M. Ares, for defendant.

(Doc. Edmonton 9103-02044)

January 20, 1994.

[1] TRUSSLER J.: - This action involves a dispute over matrimonial property. The plaintiff is the administrator of the estate of the deceased husband and the defendant is the surviving former wife.

[2] Counsel were able to agree on the following facts, which were put before me at the beginning of the trial:

1. The parties met February 1, 1988, and were engaged on April 9, 1988.

2. Veronique has three children from a previous marriage. Terry had two daughters from a previous marriage.

3. Until July, 1988, Veronique resided in Stony Plain, Alberta. She was employed full time with Alberta Fish & Wildlife, earning an income of approximately $29,000.

4. Terry was employed full time with Esso Resources, initially at Rainbow Lake and effective April 5, 1988, at Edson, Alberta. In the months of April, May and June, 1988, Terry rented an apartment in Edson.

5. During the months of April, May and June, 1988, Terry and Veronique spent a considerable amount of time at each other's residences.

6. Commencing April, 1988, Veronique began handing over her paycheque, tax and pension refund and other funds to Terry who would together with his own paycheque and income, deposit the funds initially in his own personal account and later in the joint account. The parties opened a joint chequing and joint savings account with the Royal Bank in May, 1988.

7. Terry and Veronique chose together the home situated at 1630-52nd Street, Edson, Alberta. The home was purchased for $105,000 on April 30, 1988, with a closing date of June 30, 1988. Both parties signed the mortgage for $78,000 on June 18, 1988. Mortgage insurance was purchased. Title was taken in the joint names of the parties. The fair market value is $108,000.

8. Some of Veronique's household furnishings and contents were sold prior to the move to Edson. The funds were placed either in Terry's personal account or the joint account.

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9. In the spring of 1988, Terry netted $22,103.98 from the sale of a home owned with his previous wife. This sum was invested into and formed part of the downpayment for the Edson home referred to in paragraph 7.

10. The parties moved to their new home in Edson in July, 1988 and were married in the home on August 7, 1988.

11. Veronique gave up her job with the Government of Alberta Fish & Wildlife, Stony Plain, to live with Terry in Edson. Veronique obtained a six month, full time temporary contract position with the Government of Alberta Forestry in Edson which started in August, 1988.

12. Terry and Veronique both deposited their paycheques and any other income into the joint accounts. All expenses, including the mortgage payment, were paid from the joint account.

13. Veronique was employed with Alberta Forestry in Edson from August, 1988 to February, 1989; on UIC from February, 1989 to June, 1989; Alberta Motor Vehicles from June, 1989 to August, 1989. She was offered full-time employment with Alberta Transportation effective August 14, 1989 but as a result of the events described in paragraph 13 [sic] was forced to decline the position.

14. In August, 1989, Terry told Veronique and her three children to move out of the matrimonial home. Terry rented a van and Veronique and children moved to Calgary on August 19, 1989. At the end of August, 1989, Terry asked Veronique to reconcile and moved Veronique and the children back to Edson on September 7, 1989.

15. Terry did not allow Veronique and the children to return to the matrimonial home. Terry rented a mobile home in Edson for Veronique and the children.

16. Terry resided with Veronique and the children in the mobile home from September, 1989 to May 5, 1990. During this time, Terry did not support Veronique or the children. Veronique lived on Unemployment Insurance, Social Assistance, and some short term employment.

17. Terry continued to make the mortgage payments on the matrimonial home from the date of separation until his death. On August 31, 1990, the balance owing on the mortgage was $73,636.67. At the date of his death, the balance outstanding on the mortgage was $69,556.78. The mortgage payments were $764 per month.

18. Veronique and the children moved back into the matrimonial home on May 5, 1990.

19. In August, 1990, Terry told Veronique and the children to leave the matrimonial home. Veronique was only allowed to take her clothing and personal effects and was given no money by Terry. Terry retained Veronique's rings and the furnishings and contents owned by Veronique prior to the marriage, as well as those items purchased by the parties. Some of Veronique's furnishings were placed in storage by Terry.

20. Veronique and the three children moved to Hay River, Northwest Territories where they lived for a period of time with her parents and friends. Veronique

1994 CanLII 9136 (AB QB)

supported herself and the children through Social Assistance, charity from friends and family, and some employment.

21. Terry filed a Petition for Divorce on January 30, 1991. Veronique was personally served on February 8, 1991 and noted in default on April 8, 1991. Divorce Judgment was granted on April 18, 1991. No corollary relief Order was made.

22. Terry filed a Statement of Claim for division of matrimonial property on January 30, 1991. Veronique was noted in default on April 8, 1991, which was set aside by consent Order on May 20, 1992. Veronique filed a statement of Defence and Counterclaim on May 28, 1992. Examinations for Discovery of Terry were held on September 22, 1992. Terry had not complied with all of his undertakings prior to his death. Examinations for Discovery of Veronique were held on September 16, 1993.

23. Terry paid no support for Veronique or her children.

24. Terry gave two cheques to Veronique: August 21, 1989 in the sum of $ 1,400; January 2, 1990 in the sum of $130.

25. From January, 1991 until March, 1992, Terry had an adult female living with him in the matrimonial home. She purchased groceries and did housework.

26. On December 28, 1992, Terry died.

27. Veronique applied for the mortgage insurance payout after Terry's death. Title to the former matrimonial home is now clear.

28. The Public Trustee was advised in writing on January 12, 1993 that Veronique wanted possession of the furniture purchased by the parties during the time that they were together (inter alia).

29. On January 25, 1993, the Public Trustee for the Province of Alberta, filed a Certificate of Lis Pendens against the title to the matrimonial home, effectively preventing Veronique from taking title to the matrimonial home by right of survivorship.

30. As no Will was found, Letters of Administration were granted by the Honourable Mr. Justice J. B. Dea on April 20, 1993, to the Public Trustee of Alberta.

31. Members of Terry Dunn's family and possibly others had access to the Edson home prior to the sealing of the house by the RCMP and the Public Trustee on January 5, 1993. There was evidence indicating that personal papers had probably been gone through and items removed from the home.

32. The Public Trustee refused to allow Veronique access to the Edson home.

33. Veronique applied for exclusive possession of the matrimonial home and contents on July 9, 1993. The Public Trustee opposed the application. The application was refused as this matter was directed to proceed to trial on October 14 and 15, 1993.

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[3]

34. On July 21, 1993 the Public Trustee, without Veronique's knowledge or consent, released some of the household goods and contents to Cheryl Dunn, the former wife of Terry. The items given to Cheryl Dunn are listed in the report from the Public Trustee dated July 26, 1993.

35. Without Veronique's knowledge or consent, the Public Trustee removed the remaining household contents and furnishings from the Edson home sometime in July, 1993 and placed the items in storage.

36. The household goods and contents referred to in paragraph 35 were sold by auction on September 11, 1993. The auction was held without Veronique's knowledge or consent.

Counsel were also able to agree on the following:

1. Veronique's household furnishings and contents owned prior to the marriage which were placed in storage in Edson or retained by the deceased.

2. Household furnishings and contents purchased by the deceased and the defendant prior to their marriage which remained with the deceased after the separation.

3. Household furnishings and contents purchased by the deceased and the defendant during their marriage which remained with the deceased after the separation.

4. Gifts by the deceased to the defendant which were retained by the deceased after the separation.

Counsel stated the issues as follows:

1. Does Veronique Dunn take the jointly owned matrimonial home by right of survivorship without any further claim from the Husband's estate?

OR

2. Does the matrimonial home still form part of the matrimonial property subject to

division under the Matrimonial Property Act"?

3. If the matrimonial home still forms part of the matrimonial property, what share of the matrimonial home is each party entitled to and what exemptions (if any) are the parties entitled to?

4. Is Veronique entitled to occupation rent and pre-judgment interest and if so, in what amount?

5. Is the estate entitled to an accounting for the reduction in mortgage principal or mortgage payments from the date of separation to the date of death and if so, in what amount?

[4]

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[5]

6. What value is Veronique entitled to for the household goods and contents owned by her prior to the marriage and disposed of by the Estate without her knowledge or consent?

7. What value is Veronique entitled to for the household goods and contents purchased by the parties prior to and during the marriage and disposed of by the Estate without her knowledge or consent?

8. Is Veronique entitled to damages for the disposal of the household goods and contents without her consent? If so, against whom and in what amount?

Counsel were also able to agree to the distribution of some of the property:

Agreed Items

1. RRSP

2. Truck

3. Honda

4. Storage Debt 5. Utility Trailer 6. Rings

Value Distribution

$37,668 $4,520 from Estate to Veronique

$ 2,631 $1,316 from Estate to Veronique

$ 3,714 $1,857 from Estate to Veronique

$ 3,700 100% from Estate to Veronique

$ 990 $445 from Estate to Veronique

$ 990 100% from Estate to Veronique

[6]

there may be some difficulty with the

problem with service of the petition on

which was granted on affidavit evidence, was based on one year's separation. It is clear from the evidence given at trial that the parties had not been separated for one year when the divorce was granted. It was decided that any application to set aside the divorce should be placed before the judge who granted the divorce. While the outcome of any application might affect the ultimate distribution of the estate, it is not relevant to the issues before me.

It should be pointed out that

during the course of the trial, it came to light that divorce that was granted. Aside from a possible the respondent, it would appear that the divorce,

1994 CanLII 9136 (AB QB)

[7] The first issue to be decided is whether Ms Dunn takes the jointly owned former matrimonial home by right of survivorship. In other words, was the joint tenancy severed in this case due to the fact that the parties were divorced and a matrimonial property action was proceeding?

[8] The onus is on the administrator of the estate to show that the tenancy was severed. A joint tenancy can be severed by the unilateral act of one joint tenant with respect to his interest, by mutual agreement, or by any course of dealing which shows that the interests of all were mutually treated as constituting a tenancy in common (Sorenson v. Sorenson (1977), 90 D.L.R. (3d) 26 (Alta. C.A.)).

[9] Divorce alone does not sever a joint tenancy. Neither does the commencement of a matrimonial property action. It is necessary to look at all the circumstances to ascertain if there was an intention to sever or if one of the parties, by unilateral act, severed the tenancy. In this case, there is nothing to indicate the destruction of the joint tenancy. The deceased, if he had wished, could have taken steps to sever the tenancy but he did not do so. Nothing done by Ms Dunn, including her leaving the matrimonial home, severed the tenancy.

[10] The administrator of Mr. Dunn's estate argues that notwithstanding the right of survivorship, the former matrimonial home still forms part of the matrimonial property subject to division under the Matrimonial Property Act, R.S.A. 1980, c. M-9. The Supreme Court of Canada decision in Donkin v. Bugoy (1985), 47 R.F.L. (2d) 113, and the New Brunswick Queen's Bench decision in Morgan v. Davis (1984), 42 R.F.L. (2d) 435, were cited as being persuasive in this regard.

[11] The matrimonial home is now free from any encumbrances. The mortgage was paid as a result of Ms Dunn applying for payment under the policy of mortgage insurance. That policy was a joint policy and under the circumstances of this case, payment was made because of Ms Dunn's right to a benefit. Neither Mr. Dunn, while alive, nor his estate has a right to claim a benefit under the policy. As a result, only the equity in the estate prior to Mr. Dunn's death would be eligible for distribution.

[12] The question to be determined is whether the right of survivorship of a joint tenant or the Matrimonial Property Act takes precedence. Counsel for the estate refers to s. 16 of the Matrimonial Property Act as support for the position that the Matrimonial Property Act prevails. Section 16 reads as follows:

1994 CanLII 9136 (AB QB)

[13]

16 Where a person dies after commencing an action under this Part,

(a) the action may be continued by the estate of the deceased person, and

(b) the rights conferred on that person under this Part prior to that person's death survive that person's death for the benefit of that person's estate.

However, s. 11 (3) also offers some assistance:

(3) When a matrimonial property order is made in favour of a surviving spouse, the Court, in addition to the matters in section 8, shall take into consideration any benefit received by the surviving spouse as a result of the death of the deceased spouse.

[14]

insurance or the right to property by survivorship.

This provision contemplates a surviving spouse receiving benefits such as

[15] I am of the opinion that the residential property in question passed to Veronique Dunn on the death of Terry Dunn by right of survivorship and it does not form part of the estate of Mr. Dunn. At the date of trial, the house no longer formed part of the matrimonial property and, therefore, is not subject to division. However, the court must take into account this benefit received by Ms Dunn as a result of the death of Mr. Dunn pursuant to s. 11(3) of the Act when making a matrimonial property order.

[16] Given my decision on the right to survivorship of joint property, it is not necessary to make a determination on the question of exemptions. However, it should be pointed out that both parties contributed exempt property to the purchase. It was clear on the evidence that Mr. Dunn gifted one half of his exemption to Ms Dunn when she moved to Edson to live with him.

[17] The next issue to be determined is whether Ms Dunn is entitled to occupation rent for the time that Mr. Dunn and the estate have been in possession of the house to her exclusion. The circumstances of her being forced from the house and the subsequent denial of even access to the house by the administrator make it equitable that Ms Dunn should have occupation rent from the time of her departure. On the other hand, Mr. Dunn made the mortgage payments and must have credit for them. I am of the opinion that these two items should offset each other. Counsel for Ms Dunn put forward two options for determining these issues but the evidence of the rental value of the house was not satisfactory. Also, pursuant to s. 11(3), I have taken into account the benefit that Ms Dunn has received by taking the house by survivorship.

1994 CanLII 9136 (AB QB)

[18] Finally, Ms Dunn is entitled to the return of all household goods owned by her prior to the marriage and one half of the household goods accumulated during the marriage. Of serious concern is the sale by auction of the household items. Apparently, the items were to be stored but as a result of an error or misunderstanding, they were auctioned for sale.

[19] To the credit of the Public Trustee, after the evidence had been heard, counsel for the Public Trustee indicated that the Office of the Public Trustee would take responsibility for those items which had been sold. During the time that this judgment has been reserved, counsel appeared before me, and after submissions were made, the amount that should be paid to Ms Dunn was assessed at $16,500. Generally, executors of estates would be well advised to have regard to ss. 13 and 14 of the Matrimonial Property Act.

[20] Ms Dunn has been forced to live in poverty while awaiting a fair division of the matrimonial assets. It is a fitting case for the court to exercise its discretion to award prejudgment interest. Ms Dunn is also entitled to her costs throughout the proceedings, including reasonable disbursements.

Order accordingly.

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