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The “slip rule” cannot be used to vary a portion of a Corollary Relief Order dealing with division of property

Nova Scotia

,

Canada

Motion Judge Erred by Using “Slip Rule” to Vary Corollary Relief Order In Woods v. Ferguson, 2022 NSCA 1, in 2014, a Corollary Relief Order (“CRO”) was issued, dividing the parties’, Mr. Woods and Ms. Ferguson, property. Mr. Woods owed a significant equalization payment under the CRO. On one of the debts in Mr. Woods’ name was owed to the Canada Revenue Agency (“CRA”) for his unpaid income tax just prior to divorce. The CRO was not appealed.In 2015, Mr. Woods declared bankruptcy, but Ms. Ferguson did not file a claim, believing that the money owed to her under the CRO would be immune from discharge. In 2016, Ms. Ferguson paid off CRA liens that had been placed on the matrimonial home and a rental property. She also paid $2,500 to Mr. Woods to obtain deeds from Mr. Woods’ trustee conveying his interest in the rental property and the matrimonial home to her. Mr. Woods was discharged bankruptcy in 2017. Motion Judge’s Decision In 2018, Ms. Ferguson wanted to an obtain an execution against Mr. Woods to get what she was owed under the CRO. She made a motion under Rule 78.08 (the “slip rule”) of the Nova Scotia Civil Procedure Rules, Royal Gaz Nov 19, 2008, for that purpose. MacKeigan J. concluded (correctly in the opinion of the Court of Appeal) that Ms. Ferguson’s unpaid equalization claim was a claim provable in bankruptcy and was discharged by Mr. Woods’ bankruptcy. However, she treated the trustee deeds and the CRA liens differently. MacKeigan J. ruled that the $2,500 for the trustee deeds was recoverable since it was “outside the equalization payment contemplated by the CRO”. She found that Ms. Ferguson was also entitled to recover the money she spent to discharge the CRA lines since they were a secured debt which would not have been released until paid. Mr. Woods was ordered to pay both these amounts. He appealed the order. There was no cross-appeal by Ms. Ferguson. Appeal Hamilton J.A. delivered the unanimous decision of the Court granting the appeal. She emphasized that the only motion before MacKeigan J. was made pursuant to Rue 78.08 and that there was no application to vary the CRO. In her endorsement, MacKeigan J. never considered the legal principles applicable on a motion pursuant to Rule 78.08 (para 25-27). Though, Hamilton J.A. noted that the result would not have been different had Ms. Ferguson applied to vary the CRO, since the Matrimonial Property Act, R.S.N.S. 1989, c. 275, under which it was issued, does not permit variation of the portion of a CRO dealing with the division of matrimonial property (para 29).Rule 78.08 covers the slip rule which is intended to address “errors”, “mistakes”, and “amendments”. The rule originates from the common law doctrine of functus officio, which, to ensure finality, prevents courts from revisiting or reconsidering final orders. Under functus officio, a court has no jurisdiction to reopen or amend a final decision, except in two cases: (1) where there has been a slip in drawing up the judgment, or (2) where there has been error in expressing the manifest intention of the court. This slip rule has long been codified in rules of court procedure (para 31).Hamilton J.A. stated that it was clear that MacKeigan J. understood the effect of the bankruptcy on the unpaid equalization claim, which she acknowledged can regrettably lead to unfortunate circumstances. However, it was unclear what principles MacKeigan J. applied when she ordered Mr. Woods to reimburse Ms. Ferguson for the cost of the trustee’s deeds and the payments for the release of the CRA liens (para 33-34).There are limited circumstances where the slip rule will apply since the issuance of an order triggers the functus officio doctrine. It can be used to correct accidental slips and oversights, but not “deliberate decisions” or to give effect to “afterthoughts” (para 35). It is properly used to “give effect to the original intention of the court” (para 36). For example, Hamilton J.A. explained how the slip rule has been correctly used to amend a CRO where an asset was inadvertently not dealt with or where a term that the parties had agreed to was mistakenly omitted from the final order (para 37-38).In this case, the slip rule did not apply since it was clear that the judge was not fixing a clerical or accidental mistake in the CRO. Nor was she amending the CRO to provide for something “that should have been but was not adjudicated on” (para 43). Neither the CRA liens, nor the trustee deeds could have been adjudicated on since they did not exist in 2014 when the CRO was released. Hamilton J.A. ruled that MacKeigan’s order was “an afterthought”, an impermissible variation of the CRO (para 43). Therefore, she erred when she varied the CRO by ordering Mr. Woods to pay for the CRA liens and the trustee deeds. The appeal was allowed with no costs since the basis on which it was allowed was raised by the Court and not by the appellant (para 46).

April 14, 2022
Woods v. Ferguson, 2022 NSCA 1