“The matrimonial home occupies a special place in family relations: Bank of Montreal, at p. 113. Sections 21 and 23 of the FLA are intended to protect the interests of spouses in matrimonial property by prohibiting unilateral dealings that threaten to interfere with their interest: see Walduda v. Bell (2004), 2004 CanLII 4037 (ON SC), 7 R.F.L. (6th) 205 (Ont. S.C.), at para. 14.
While a writ of execution may be an “encumbrance” within the meaning of that term in ss. 21 and 23(d) of the FLA, there is an issue as to whether, and in what circumstances, a writ of execution by a third-party creditor can be an “encumbrance” by a spouse. Under s. 23(d) of the FLA, the court may set aside a transaction encumbering an interest in a matrimonial home, and revest the interest if the encumbrance occurred contrary to s. 21(1) – that is, contrary to the prohibition against a spouse encumbering the interest without the consent of the other spouse. Therefore, to engage this section, the spouse must have done something to directly encumber the interest in the matrimonial home. As such, this provision does not typically apply to executions by third-party creditors: see Maroukis v. Maroukis, 1984 CanLII 76 (SCC), [1984] 2 S.C.R. 137, at p. 144.
It is unnecessary in this case to determine whether there are circumstances in which ss. 21 and 23 of the FLA would apply to an execution by a third-party creditor. Assuming, without deciding, that these provisions could be available to permit the court to stay an execution by a third-party creditor, they would only be available where the court can conclude that, by virtue of the execution, the spouse effectively encumbered the interest in the matrimonial home.
For example, in Walduda the spouse borrowed money from her sister to fund the litigation against her husband – knowing that she would be unable to repay the debt – and then consented to judgment in the action to recover the debt. In these circumstances, the application judge found that the spouse had entered into the transaction with the intent of tying up the interest in the matrimonial home. The spouse used the third-party transaction to encumber the matrimonial home, thereby doing indirectly what she could not do directly.
In this case, and unlike the spouse in Walduda, Robert did not execute the promissory notes that led to the judgment for the purpose of tying up Nicole’s interest in the matrimonial home. As noted by the trial judge in the Civil Action, the debts behind the promissory notes were “legitimate marital debts”. Moreover, there is no evidence that Robert was using the debt he owed Harold to encumber OFH. Harold did not consult or confer with Robert before he sued or executed on the judgment and Robert chose not to defend Harold’s claim only after obtaining legal advice that led him to believe that there were no valid defences to Harold’s claim. The fact that Harold knew of Nicole’s interest in the matrimonial home is not sufficient to engage s. 21(1) of the FLA. Speaking of a comparable provision under Nova Scotia’s legislative framework, Bryson J.A. noted that it “contemplates some positive act by an owner that grants an interest to a third party”, and he concluded that third party judgments would not be caught “merely because a creditor knows that a debtor owns a matrimonial home”: Hurst v. Gill, 2011 NSCA 100, 342 D.L.R. (4th) 583, at paras. 65-66.
In my view, the requirements of s. 23(d) of the FLA were not met in this case because Harold’s writ of execution was not an encumbrance of the matrimonial home by Robert. As such, the trial judge ought not to have stayed the writ of execution under that provision.
Nevertheless, as I will explain, the stay of the execution of Harold’s judgment was justified under s. 106 of the CJA. Section 106 provides that “[a] court on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just”. This general authority of the court to stay a proceeding can be applied to the enforcement of a judgment. See Zanetti Estate v. Roltford Developments Ltd., [1990] O.J. No. 2584 (S.C.); Buttarazzi v. Buttarazzi (2009), 2009 CanLII 80136 (ON SC), 84 R.F.L. (6th) 240 (Ont. S.C.); and 1247902 Ontario Inc. v. Carlisle Power Systems Ltd., [2003] O.J. No. 6300 (Div. Ct.), at para.10, aff’d 2005 CanLII 691 (Ont. C.A.).”