July 25th, 2021
The Dower Act was introduced in Alberta in 1917 to protect the rights of a spouse not named on the property title. Today, the Dower Act remains relevant to married couples. Understanding what the Dower Act is, how “value” of a titled property is determined and how that may affect compensatory or punitive judgment by a court is important for married couples who are seeking a divorce.
The Dower Act protects the rights of a married spouse who is not registered on title to real property by giving the unmarried spouse rights to the homestead. A “homestead” is defined in Section 1 of the Dower Act as a parcel of land “on which the dwelling house occupied by the owner of the parcel as the owner’s residence is the situation, and that consists of not more than 4 adjoining lots in one block in a city, town or village… or no more than one quarter section of land other than land in a city, town or village.”
The Dower Act prohibits the disposition of a homestead by a married spouse without the consent, in writing, of the other spouse or an order of the court dispensing with consent of the spouse. Section 11 of the Dower Act provides for a remedy of a spouse if these requirements are not met, and a homestead is disposed of by a married spouse.
Under Section 11 of the Dower Act, (1) A married person who without obtaining
a) the consent in writing of the spouse of the married person,
Or
b) an order dispensing with the consent of the spouse, makes a disposition to which a consent is required by this Act and that results in the registration of the title in the name of any other person, is liable to the spouse in an action for damages.
2) The amount of the damages for which the married person is liable to the spouse is a sum equivalent to
a) 1/2 of the consideration for the disposition made by the married person, if the consideration is of a value substantially equivalent to that of the property transferred,
Or
b) 1/2 of the value of the property at the date of the disposition, whichever is the larger sum.
Section 11(2)(a) of the Dower Act is clear that the remedy for an improper disposition of the homestead is 1/2 of the consideration of the disposition. The wording of Section 11(2)(b), on the other hand, creates two possible interpretations. The “value of the property at the date of disposition” may either be calculated as the gross value of the homestead or the net value of the homestead. The case of Joncas v. Joncas dealt with this exact issue if interpreting the word “value” in Section 11(2)(b) in the Alberta Court of Appeal decision.
In Joncas v Joncas, 2017 ABCA 50 (CanLII), the parties separated in May 2013 after a 21-year marriage. The parties owned a house known as the “Edgedale Property” which was used as a rental property after the parties moved into the matrimonial home in 1998. Upon separation, the wife remained in the matrimonial home and the husband sold the Edgedale Property to fund the purchase of a new home. The wife did not consent to the transfer of the Edgedale Property.
The husband sold the Edgedale Property for $325,000. The net proceeds of the sale were $121,019 after satisfying debts, including a line of credit registered against the property in the amount of $199,599. The husband also paid capital gains in the amount of $33,320. The wife brought an action against the husband in September 2015 for wrongfully disposing of the Edgedale Property, claiming damages in the amount of $162,500.
The husband agreed in court, before the Master, to pay damages in the amount of $60,500 which constituted half of the net proceeds of the sale. This did not settle the case as the Master granted the wife permission to bring a further application before a judge in the Court of Queen’s Bench for further damages. The wife subsequently applied to the Court of Queen’s Bench for summary judgment in the amount of $162,500, less the $60,500 awarded by the Master. The wife was successful and was awarded the sum of $162,500, representing 1/2 the consideration for the disposition pursuant to Section 11(a) of the Dowery Act.
The husband appealed the decision, and the appeal was subsequently dismissed.
The Court addressed the argument by the husband, which was not a ground for appeal, that the meaning of “value” in Section 11(2)(b) should be “net value”, but the Court provided little direction on the issue. Since the Edgedale Property was valued at $325,000, the exact amount that it was sold for, the Court did not opine on the meaning of section 11(2)(b).
The decision of Joncas v. Joncas creates an interesting dilemma. Since the Court stopped short of reaching a conclusion, we will not likely have a clear answer until there is another decision on this issue. A broad review of the Dower Act provides some insight into a more likely interpretation of Section 11(2)(b).
There appears to be an intention within the Dower Act that any disposition without consent is met with a penalty. This is evidenced in Section (2)(3) of the Dower Act, which appears to make disposition without consent a quasi-criminal offense. Section (2)(3) of the Dower Act states that “[a] married person who makes a disposition of a homestead in contravention of this section is guilty of an offense and liable to a fine of not more than $1000 or to imprisonment for a term of not more than 2 years.”
The Dower Act also contains a provision to secure the payment of a judgment secured under Section 11 to a spouse. Section 13 (1) of the Dower Act provides that, if a spouse recovers judgment pursuant to Section 11 and, such amount is not paid, the spouse may apply to the Court for an order directing payment of the unsatisfied judgment out of the General Revenue Fund. This securing of funds for spouses who were the victim of a prohibited disposition appears to further reinforce that they are being compensated and the married person is being penalized.
If the remedies under the Dower Act are intended to be a penalty, then the most likely interpretation of Section 11(2)(b) is that the “value” is gross value. Providing the spouse with the gross value for the homestead would ensure that the married spouse who improperly disposed of the homestead is penalized. Unfortunately, until this issue is brought before the courts, there will not be a definitive answer on how to correctly interpret the meaning of “value” in Section 11(2)(b) of the Dower Act.