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Courts' Competence to Make Orders Regarding Moveable Property

February 18, 2022

Alberta

,

Canada

Issue

Does the Alberta Court of Queen's Bench have jurisdiction to make an order related to matrimonial or family property located in a foreign jurisdiction?

Conclusion

Section 9(1) of the Matrimonial Property Act (the "Act") directs that, if part of the property of the spouses is situated in Alberta and part elsewhere, the Court may distribute the property situated in Alberta such that the distribution is just and equitable with respect to all of the property (both local and foreign). However, the Act does not speak to the jurisdiction of a court to make an order distributing foreign property directly. (Matrimonial Property Act)

As a general rule, courts in one country have no jurisdiction to deal with immovable property in another jurisdiction. However, in Welsh v. Welsh ("Welsh"), the Alberta Court of the Queen's Bench cited Jeske v. Jeske ("Jeske") for the proposition that courts have jurisdiction to deal with moveable property located in a foreign jurisdiction. (Welsh v. Welsh)

However, in Ward v Allison, the Saskatchewan Court of the Queen's Bench cited both Jeske and Welsh and noted that the law that governs a superior court’s jurisdiction to make orders with respect to moveable, (as compared to immoveable,) property lying outside its jurisdiction is unsettled. (Ward v Allison)

Despite the mixed caselaw regarding courts' jurisdiction to make orders regarding foreign moveable property, the cases below provide that, in certain circumstances, courts may exercise in personam jurisdiction with respect to the distribution of foreign property.

Courts may affect rights to foreign immovables by exercising in personam jurisdiction and enforcing a personal obligation between the parties. In order for a court to exercise in personam jurisdiction to affect interests in foreign immovable four requirements must be met:

1. The Court must have jurisdiction over the defendant;

2. The parties must have a personal obligation running between them;

3. The local court must have the ability to supervise the execution of the judgment; and

4. The Court will not exercise jurisdiction if the order would be of no effect in the lex situs, but the mere fact that courts in the situs would not recognize the personal obligation will not bar the exercise of in personam jurisdiction. (Welsh v. Welsh)

In Welsh v. Welsh, the Court held that it could exercise in personam jurisdiction to affect the husband and wife's interests in foreign immovable property. All four criteria for the Court to exercise in personam jurisdiction over the husband were met and the Court held that it could order the husband to give the wife exclusive possession of the foreign property. The Court elected to grant the wife exclusive possession of the foreign property.

In Mitrovic v. Mitrovic, the Court dealt with the distribution of marital property which included real property located in Croatia. The Court stated that, as a domestic court, its jurisdiction to deal with immovables in a foreign country was tenuous. However, it noted that the Court had in personam jurisdiction over the husband. The Court made an in rem decision on the ownership of foreign real estate based on the in personam jurisdiction it had over the husband and awarded the wife a 1/4 beneficial interest in the Croatian property.

In T.L.P. v. F.J.P. the Court directed that a property in Scottsdale, Arizona to be put up for sale and the net sale proceeds divided equally between the husband and wife. The Court noted that it had in personam jurisdiction over the parties because they both resided in Alberta. As a result, the Court held that it could order the parties to sell the subject property even though it has no jurisdiction to actually make an order or direction with respect to the property itself.

Law

Section 9(1) of the Matrimonial Property Act, RSA 2000, c M-8 (the "Act") directs that, if part of the property of the spouses is situated in Alberta and part elsewhere, the Court may distribute the property situated in Alberta such that the distribution is just and equitable with respect to all of the property (both local and foreign):

Power of the Court

9(1) If part of the property of the spouses is situated in Alberta and part elsewhere, the Court may distribute the property situated in Alberta in such a way as to give effect to the distribution under section 7 of all the property wherever it is situated.

The Act does not speak to the jurisdiction of a court to make an order distributing the foreign property directly.

As a general rule, courts in one country have no jurisdiction to deal with immovables in another. In Welsh v. Welsh, 2011 ABQB 686 (CanLII) ("Welsh"), Read J. of the Alberta Court of the Queen's Bench cited Jeske v. Jeske, 1982 CanLII 725 (BC SC) ("Jeske") for the proposition that courts have jurisdiction to deal with moveable property located in a foreign jurisdiction:

[14] The Osoyoos property is, of course, located outside of Alberta. As a general rule, courts in one country have no jurisdiction to deal with immovables in another: Duke v. Andler, [1932] S.C.R. 734 (S.C.C.), at 738-39. This restriction on jurisdiction applies equally to immovables located in another province of Canada: Jean-Gabriel Castel & Janet Walker, Canadian Conflict of Laws 6th ed. (Markham: LexisNexis Canada, 2005). [...]

[...]

[36] Bank accounts are moveable property. Unlike immovables, courts have jurisdiction to deal with moveables located in a foreign jurisdiction: Jeske v. Jeske (1982), 1982 CanLII 725 (BC SC), 39 B.C.L.R. 396. Therefore, this Court may affect rights to bank accounts located in British Columbia.

However, in Ward v Allison, 2019 SKQB 95 (CanLII), the Saskatchewan Court of the Queen's Bench cited both Jeske and Welsh and noted that the law that governs a superior court’s jurisdiction to make orders with respect to moveable, (as compared to immoveable,) property lying outside its jurisdiction is unsettled:

[119] In Jeske v Jeske (1982), 1982 CanLII 725 (BC SC), 39 BCLR 396 (WL) (BCSC), the British Columbia court took the view it had authority over moveable assets outside its jurisdiction, where one party lived in British Columbia while the other lived in Alberta at the time of the trial. Although the parties resided in Alberta while together and all family assets were located in Alberta – including the family home, a cottage property, a family business, cars, and one party’s life insurance policy – the petition for matrimonial property division was filed in British Columbia. The British Columbia Supreme Court held that there existed “no authority to suggest that the courts of the province of British Columbia have jurisdiction in a divorce case to deal with real property outside the province of British Columbia” (para. 20) but found that it did have jurisdiction to deal with the moveable assets of this marriage. Having said that, the court further indicated that the law to be applied to the moveable property was the Matrimonial Property Act, RSA 1980, c M-9 (since rep) [the Alberta legislation]” (para. 16).

[120] In Welsh, the Alberta Court of Queen’s Bench was tasked with determining whether it had jurisdiction to make orders respecting bank accounts located outside of Alberta, while considering an application for matrimonial property division. It noted:

34 Ms. Welsh seeks an order prohibiting the paying out or dissipation of assets in bank accounts. Some of these accounts are in British Columbia, which again raises the problem of the court issuing an order affecting rights to property located in a foreign jurisdiction.

35 The Bank Act, S.C. 1991, c. 46, s. 461(4), states that the indebtedness of a bank by reason of a deposit in an account is located in the same place as the branch of the account. Therefore, bank accounts in branches outside of Alberta are located in a foreign jurisdiction.

36 Bank accounts are moveable property. Unlike immoveables, courts have jurisdiction to deal with moveables located in a foreign jurisdiction: Jeske v. Jeske (1982), 1982 CanLII 725 (BC SC), 39 B.C.L.R. 396 (B.C. S.C.). Therefore, this Court may affect rights to bank accounts located in British Columbia.

[121] The law that governs a superior court’s jurisdiction to make orders with respect to moveable (unlike unmoveable) property lying outside its jurisdiction is unsettled. Only one Saskatchewan case explicitly stated this Court lacks such jurisdiction but all the Saskatchewan authorities imply the court only has indirect jurisdiction to consider such property when applying ss. 21(3)(p) of FPA.

[122] Following the authorities in Chaplin, Middleton, McCalla and Hlynski, I am satisfied this Court does not have jurisdiction to order distribution of the BMO asset in Alberta.

[123] I find this Court does not have direct jurisdiction over the BMO Alberta account. However, pursuant to ss. 21(3)(p) of the FPA, the value of property situated outside Saskatchewan can be considered when the court considers whether it would be unfair or unequitable to make an equal distribution of property in Saskatchewan.

[124] A conflict of laws analysis is necessary and plays an integral role in considering whether the BMO account’s presence in Alberta means that Alberta law should apply or Saskatchewan law should apply to the funds which are owned by the petitioner and traced to the inheritance from her grandmother. This is integral to the issue of how to deal with the issue under ss. 21(3)(p) of the FPA and the question of whether it would be unfair to make an equal division of property in Saskatchewan.

The Alberta Court of Appeal in Chikonyora v Chikonyora, 2013 ABCA 320 (CanLII), noted that section 9(1) of the Act authorizes Alberta courts to distribute property situated in Alberta in a manner that equalizes the foreign-held assets of one or both of the spouses. The Court declined to deal with the issue of the Court’s jurisdiction regarding foreign property:

[14] In our view Justice Jerke erred in law in holding as he did that the Court of Queen’s Bench of Alberta did not have jurisdiction to compel the respondent to provide disclosure regarding her Zimbabwe properties.

[15] It must be borne in mind that the order granted by Justice Millar was for disclosure only. In no way did Justice Millar purport to deal with any foreign property moveable or immovable. That he had jurisdiction to issue the order for disclosure he did is clear from the provisions of the Matrimonial Property Act RSA 2000 c-M-8 (the Act).

[16] In particular, there is a statutory obligation on each spouse to disclose all particulars of all their property whether situated in Alberta or not. Specifically section 31 of the Act states:

Disclosure of property by spouses

31(1) If an application has been commenced under Part 1, each spouse shall file with the Court and serve on the other spouse a statement, verified by oath, disclosing particulars of all the property of that spouse, whether it is situated in Alberta or elsewhere.

(2) A statement made under subsection (1) shall include particulars of property disposed of by that spouse within one year before the application was commenced.

(3) A statement made under subsection (1) shall

(a) be in the form, and

(b) contain the information,

prescribed by the regulations.

[17] Furthermore, by virtue of section 7(3) and 8(d) of the Act, a court is directed to take into consideration “the income, earning capacity, liabilities, obligations, property and other financial resources” of each spouse both at the time of marriage and time of trial when making a property division. If one spouse is earning rental income from a foreign owned property that fact should be taken into consideration by the court when determining how to divide the property.

[18] Finally, section 9(1) of the Act authorizes Alberta courts to distribute property situated in Alberta in a manner that equalizes the foreign held assets of one or both of the spouses. Section 9(1) provides:

9(1) If part of the property of the spouses is situated in Alberta and part elsewhere, the Court may distribute the property situated in Alberta in such a way as to give effect to the distribution under section 7 of all the property wherever it is situated.

In order to discharge properly this function it seems obvious that a court would require disclosure with respect to property located outside the province of Alberta.

[19] The issue as to what jurisdiction if any the Court of Queen’s Bench of Alberta has regarding foreign property was not before the court below. The order that was sought, and granted by Justice Millar, was for disclosure only. Justice Millar had jurisdiction to grant that order and Justice Jerke erred in law in holding otherwise.

[20] As the issue of the court’s jurisdiction regarding foreign property was not properly before the court, there is no reason for that issue to be considered much less dealt with on this appeal. Accordingly we allow the appeal on the basis that Justice Millar had the requisite jurisdiction to make the order for disclosure that he did pursuant to the terms of the Act.

Despite the mixed caselaw regarding courts' jurisdiction to make orders regarding foreign moveable property, the cases below provide that, in certain circumstances, courts may exercise in personam jurisdiction with respect to the distribution of foreign property.

In Welsh v. Welsh, 2011 ABQB 686 (CanLII), Read J. of the Alberta Court of the Queen's Bench noted that, despite the fact that, as a general rule, courts in one country have no jurisdiction to deal with immovable property in another, courts may affect rights to foreign immovables by exercising in personam jurisdiction and enforcing a personal obligation between the parties. In order for a court to exercise in personam jurisdiction to affect interests in foreign immovable four requirements must be met:

1. The Court must have jurisdiction over the defendant;

2. The parties must have a personal obligation running between them;

3. The local court must have the ability to supervise the execution of the judgment; and

4. The Court will not exercise jurisdiction if the order would be of no effect in the lex situs, but the mere fact that courts in the situs would not recognize the personal obligation will not bar the exercise of in personam jurisdiction.

The Court stated:

[14] The Osoyoos property is, of course, located outside of Alberta. As a general rule, courts in one country have no jurisdiction to deal with immovables in another: Duke v. Andler, 1932 CanLII 32 (SCC), [1932] S.C.R. 734 at 738-39. This restriction on jurisdiction applies equally to immovables located in another province of Canada: Jean‑Gabriel Castel & Janet Walker, Canadian Conflict of Laws 6th ed. (Markham: LexisNexis Canada, 2005). However, courts may affect rights to foreign immovables by exercising in personam jurisdiction and enforcing a personal obligation between the parties: Duke, supra at 739; Mitrovic v. Mitrovic, 2007 ABQB 44 at para. 25.

[15] Catania v. Gianattasio 1999 CanLII 1930 (ON CA), [1999] O.J. No. 1197; (1999), 118 O.A.C. 330 (C.A.) lists four requirements that must be met before a court will exercise in personam jurisdiction to affect interests in foreign immovables:

1. The Court must have jurisdiction over the defendant;

2. The parties must have a personal obligation running between them;

3. The local court must have the ability to supervise the execution of the judgment; and

4. The Court will not exercise jurisdiction if the order would be of no effect in the lex situs, but the mere fact that courts in the situs would not recognize the personal obligation will not bar the exercise of in personam jurisdiction.

In this case, the Court held that it could exercise in personam jurisdiction to affect the husband and wife's interests in foreign immovable property. With respect to the first requirement, the Court held that it was satisfied. The wife resided in Alberta and the husband had agreed on the record to attorn to Alberta and had brought the action for divorce and division of matrimonial property in Alberta. The second requirement, that the parties have a personal obligation running between them, was satisfied by the legal obligation imposed by the Act. The Court held that the third requirement was satisfied by the husband's corporation being registered in Alberta and his having family in Alberta. The Court explained that the fourth requirement was satisfied since British Columbia law did not prevent the husband from giving exclusive possession of the foreign property to the wife. As the wife met all four criteria for the Court to exercise in personam jurisdiction over the husband, the Court held that it could order the husband to give the wife exclusive possession of the foreign property:

[16] Since an order granting Ms. Welsh possession of the matrimonial home would affect rights to a foreign immovable, I can only grant the order sought if these requirements are met.

[17] At first blush, the requirement that the Court have jurisdiction over the defendant seems easily met. This Court has jurisdiction over the Defendant Ms. Welsh, who currently resides in Alberta. However, in this case, it is Ms. Welsh who has brought the application. As a consequence, in my view, I cannot grant the order unless this Court could also exercise in personam jurisdiction over Mr. Welsh, the Respondent to the application.

[18] I conclude, however, that this Court has jurisdiction over Mr. Welsh because he agreed on the record to attorn to Alberta. In addition, he is the Plaintiff in these proceedings and the party who brought the action for divorce and division of matrimonial property in Alberta.

[19] Historically, a contractual or equitable obligation between the parties met the second requirement: that the parties have a personal obligation running between them. Here the requirement is complicated by the fact that unlike most cases, where the parties have a contract or trust relationship, in this case a statute, the Matrimonial Property Act, R.S.A. 2000 c. M-8 [“MPA], grants the Court the ability to distribute property or assign rights between the parties.

[20] In Mitrovic, supra, Veit J. considered whether to exercise in personam jurisdiction to award a wife an interest in property held by the husband in Croatia, under the MPA. Justice Veit specifically addressed the second requirement, and concluded: “Mr. Mitrovic has an obligation to his wife; this is not only the moral obligation imposed by the marriage itself but the legal obligation imposed by the Matrimonial Property Act.”: Mitrovic, supra at para. 25. The wife received half of the husband’s interest in the property.

[21] In Mitrovic, the order was made under s. 7 of the MPA which expressly provides that the court is to distribute the property “in a manner that it considers just and equitable.” Ms. Welsh seeks a matrimonial possession order under s. 19 of the MPA. This provision does not contain a specific reference to equity. However, when read in the context of the rest of Act, particularly the factors set out in s. 20, it seems clear that the court is to grant an order for matrimonial home possession on equitable principles.

[22] Based on the reasoning in Mitrovic, I find that Ms. Welsh meets the second requirement, and there is a personal obligation between the parties.

[23] The third factor concerns the Court’s ability to supervise the judgment. This depends upon Mr. Welsh’s presence in Alberta. Currently, Mr. Welsh lives in British Columbia. However, his corporation, R. J. Welsh Holdings is registered in Alberta and Mr. Welsh also has family in Alberta. In addition, he has bank accounts in Alberta.

[24] Mr. Welsh has not obeyed all of this Court’s orders in the past. Indeed, he has now questioned the jurisdiction of this Court. However, in my view, he has a sufficiently significant connection to Alberta that the execution on the judgment can be supervised by this Court. Therefore, the third requirement is satisfied.

[25] The fourth requirement has created some confusion. Although it sounds limiting, it merely requires that the defendant have the ability to transfer an interest in the immovable according to the laws of the lex situs. In other words, such a transfer must not be illegal or impossible according to the laws where the property is situated: Minera Aquiline Argentina SA v. IMA Exploration Inc., 2006 BCSC 1102 at paras. 175‑77.

[26] Nothing in British Columbia law prevents Mr. Welsh from giving exclusive possession of the home in Osoyoos to Ms. Welsh. Such a transfer is neither illegal nor impossible.

[27] As Ms. Welsh meets all four criteria for the Court to exercise in personam jurisdiction over Mr. Welsh, I find that this Court may order Mr. Welsh personally to give Ms. Welsh exclusive possession of the Osoyoos property.

The Court granted the wife exclusive possession of the foreign property:

[33] Weighing the factors in the MPA as well as Mr. Welsh’s failure to properly maintain the Osoyoos property, I find that Ms. Welsh should receive exclusive possession of the Osoyoos property.

In Mitrovic v. Mitrovic, 2007 ABQB 44 (CanLII), Veit J. of the Alberta Court of the Queen's Bench dealt with the distribution of marital property. Included in the marital property was real property located in Croatia. The Court stated that, as a domestic court, its jurisdiction to deal with immovables in a foreign country was tenuous. However, it noted that the Court had in personam jurisdiction over the husband. Therefore, the Court was in a position to order the husband to make orders and to proceed in contempt against him should he wilfully refuse to do so. Further, the husband had a moral obligation to his wife and also had a legal obligation imposed by the Act. The Court made an in rem decision on the ownership of foreign real estate based on the in personam jurisdiction it has over the husband and awarded the wife a 1/4 beneficial interest in the Croatian property:

[2] The Croatian property is matrimonial property because it was purchased by Mr. Mitrovic subsequent to the marriage. It is not exempt property because it is not inherited property; while it is true that Mr. Mitrovic acquired the right to purchase the property because his mother had lived in it, the property was not owned by his mother and he did not acquire it from her through inheritance but through the State, by way of purchase. I am satisfied from the evidence that Mr. Mitrovic’s sister acquired a beneficial interest in the Croatian property during the course of the marriage; because of the sister’s interest in the property, it is not appropriate for the court to order that the property be sold. In the result, Ms. Mitrovic has a claim to 1/4 of the Croatian property. If there had been reliable evidence of the value of that property, I would have taken that value to assess the value of Ms. Mitrovic’s interest in the property. The evidence led by Ms. Mitrovic is not “best evidence” according to the technical definition of that expression: internet postings of offers in the international market to sell property of the same general type as the flat owned by Mr. Mitrovic is not a reliable guide to the actual market value of that specific property. In the circumstances, this is one of the few situations in which a Canadian court must make an in rem decision on the ownership of foreign real estate based on the in personam jurisdiction it has over Mr. Mitrovic: Ms Mitrovic is awarded a 1/4 beneficial interest in the Croatian property and Mr. Mitrovic is appointed the trustee of Ms. Mitrovic’s interest in that property. Mr. Mitrovic is to provide Ms. Mitrovic with 1/4 of the rents if the property should be rented, and is to provide Ms. Mitrovic with 1/4 of the net proceeds of sale if the property is sold.

[...]

[25] As the citations noted above demonstrate, in weighing what should be done with the Croatian property, the court’s starting point is its recognition that its jurisdiction, as a domestic court, to deal with immovables in a foreign country is tenuous. However, this court does have in personam jurisdiction over Mr. Mitrovic: he resides in Alberta, and is likely to continue to do so because of the presence of his daughter in this province. Therefore, the court is in a position to order Mr. Mitrovic to do things and to proceed in contempt against him should he wilfully refuse to do so. Moreover, according to the factors identified by Professor McLeod, Mr. Mitrovic has an obligation to his wife; this is not only the moral obligation imposed by the marriage itself but the legal obligation imposed by the Matrimonial Property Act.

[26] Taking all of those factors into account, I have concluded that the fairest way to distribute Mr. Mitrovic’s interest in the Croatian property would be to make Ms. Mitrovic a 1/4 owner of the property, (½ of Mr. Mitrovic’s ½ interest) with an obligation to pay reasonable management fees and expenses while the property is still owned by the Mitrovices, but a right to 1/4 of the net rents obtained from the property and 1/4 of the net proceeds of any sale of the property. Mr. Mitrovic is appointed Ms. Mitrovic’s trustee with respect to his wife’s interest in the property. On June 30 of every year, he will provide her with a report in writing concerning the status of the property, the expenses that have been paid relative to it (taxes, upkeep, etc.) along with an accounting of all monies received from the property.

In T.L.P. v. F.J.P., 2007 ABQB 600 (CanLII) (affirmed Patton v. Patton, 2008 ABCA 334 (CanLII)), the Alberta Court of the Queen's Bench directed that a property in Scottsdale, Arizona to be put up for sale and the net sale proceeds divided equally between the husband and wife. The Court cited Mitrovic for the authority to make that order and noted that the Court had in personam jurisdiction over the parties because they both resided in Alberta. As a result, the Court held that it could order the parties to sell the subject property even though it has no jurisdiction to actually make an order or direction with respect to the property itself:

[9] The parties agree that a divorce should be granted and that the parties should have joint custody of the children. The substantive issues to be resolved include the division of matrimonial property and the appropriate levels of child support and spousal support. Included in the consideration of those issues are questions relating to the method of valuing the matrimonial property, determining the appropriate guideline income for both parties and the factors to consider in determining spousal support.

[...]

[28] Instead, at the conclusion of the trial, and recognizing that the Scottsdale property was held in the Plaintiff’s name, I directed that the Plaintiff hold a one half interest in the Scottsdale property in trust for the Defendant. The property shall be put up for sale and the net sale proceeds divided equally between the parties. The equal division assumes fair market value is obtained for the property. If the parties cannot agree on the sale price, either one may seek further direction from the Court. In making such an order, I followed the approach of Justice Veit in Mitrovic v. Mitrovic, 2007 ABQB 44 at paras. 24 to 26. As in Mitrovic, this Court has in personam jurisdiction over the parties. They both reside in Alberta, their children live here and they have property here. Accordingly, this Court can order the parties to sell the subject property though it has no jurisdiction to actually make an order or direction with respect to the property itself.

[29] I accept the Defendant’s evidence that the Plaintiff found and purchased the property with the Defendant’s line of credit, putting title solely in her name, and sometimes made it difficult for him to access the property. In the circumstances, the furnishings in that residence are deemed to be property in her sole possession.

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