Karafiat v. Webb, 2012 ABCA 115

In this case, the Court of Appeal of Alberta considered whether the Appellant’s secured interest in land was defeated by operation of the Dower Act, RSA 2000, c. D-15. The majority held that s. 3(2)(a) of the Act, which provides that a homestead is terminated upon registration of a title transfer, is inapplicable to transfers between spouses. The Court also considered the boundaries of the spousal consent requirement as a precondition to a married person’s disposition of the homestead, under s. 2(1) of the Act. Berger JA, for the majority, maintained that the requisite consent must operate in connection with the specific transaction in question; a transaction invalid at its inception for lack of dower consent will be cured neither by consent in connection with another transaction, nor by the subsequent cessation of the dower interest.

Co-respondent Franklin Webb, as sole titleholder to his and Carmen Webb’s matrimonial home, had granted an interest in their home via a promissory note as security for his debt to the Appellant. Subsequently, Mr. Webb had registered a transfer of title to joint tenancy in common with Mrs. Webb. Berger JA found that the s. 3(2)(a) provisions for termination of a homestead upon registration of a title transfer, read alongside s. 11(1), must exclude transfers between spouses; transfers registered in the name of a third party would terminate the homestead and extinguish dower rights, but transfers between spouses, including transfers to joint tenancy, would not. Also, Berger JA rejected arguments that either a) Mrs. Webb’s implied dower consent, under s. 25(2), in favour of mortgagee Alberta Treasury Branches, or b) the ultimate cessation of her dower interest due to foreclosure, relieved the Appellant of the burden to prove Mrs. Webb’s consent – knowledge and intent – in connection with the promissory note. The majority declined to validate the transaction merely because the homestead was now defunct. It affirmed the lower court’s decision barring the Appellant’s claim.

Slatter JA dissented as to the consequence of the initial lack of dower consent. He viewed the Appellant’s interest as merely voidable, subject to Mrs. Webb’s dower interest, and fully enforceable upon termination of her dower rights. Moreover s. 3(2)(a) of the Act, in his view, should apply to all registered transfers including those between spouses. Accordingly, Slatter JA found that the transfer to joint tenancy had terminated the Respondent’s original homestead rights and immediately replaced them with new rights under a new title subject to the Appellant’s prior claim. Stressing that the purpose of the Dower Act was to protect a spouse’s interest in the homestead, and not to reorder the priority of creditors or to enable escape from agreements honestly made, Slatter JA would have allowed the appeal.

Link to Decision

Aaron SanFilippo
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