Frank Bennett

The Trustee in Bankruptcy brought a motion for the payout of its 50% share of proceeds from the sale of a property, which had been vested in the Trustee following a finding of fraudulent conveyance.

The bankrupt's spouse brought a cross-motion claiming deductions from the Trustee's share for carrying costs, improvements, and a line of credit debt.

The court granted the Trustee's motion and dismissed the cross-motion, finding that the parties' prior agreement did not provide for such deductions, the expenses did not increase the property's capital value, and the equitable claims were barred by cause of action estoppel.

The Court of Appeal for Ontario dismissed an appeal from a summary judgment that set aside two transactions by a bankrupt: the transfer of his 50% interest in his residence to his wife as an undervalue transfer and fraudulent conveyance, and the transfer of shares in a corporation to a non-arms length creditor as an improper preference.

The appellants argued the claims were time-barred under the Limitations Act, 2002, and constituted an abuse of process.

The Court of Appeal upheld the motion judge's findings, confirming that the limitation period for the Trustee's claims began upon the Trustee's appointment and that the amended statement of claim did not introduce a new cause of action.

The court also rejected the abuse of process argument as speculative.

A cross-appeal on costs by the Trustee, seeking substantial indemnity, was also dismissed, with the court deferring to the motion judge's assessment of partial indemnity costs.

A motion to set aside orders of a chambers judge denying leave to appeal.

The core issue was whether an appeal from a decision denying leave to sue a court-appointed receiver is governed by the Bankruptcy and Insolvency Act (BIA) or the Courts of Justice Act (CJA).

The receiver was appointed under both statutes.

The applicant argued that since the leave to sue provision could be grounded in provincial law under the CJA, the appeal should follow the CJA route, which permits appeals as of right within 30 days.

The respondent argued that the BIA governs because the receivership proceedings are BIA proceedings and the appeal provisions are in operational conflict.

The court held that the BIA governs the appeal route because the leave to sue provision is authorized by the BIA through necessary implication of section 243(1), and federal paramountcy applies to the conflicting appeal provisions.

Following the dismissal of a motion to set aside assignments made by the bankruptcy trustee, the court determined costs.

The bankrupt's request for costs was dismissed as his participation was unnecessary.

The Trustee was awarded costs of $18,500 on a substantial indemnity basis because the moving parties lacked standing as 'aggrieved' persons under the BIA and had impugned the Trustee's integrity.

The moving parties sought an order under section 37 of the Bankruptcy and Insolvency Act to set aside the trustee's assignments of certain causes of action to the bankrupt, David Brook, and to direct a tender or auction process for their sale.

The moving parties argued they were aggrieved because the trustee did not market the causes of action to anyone else, the transaction was improvident, and the private sale process unfairly disregarded creditors' rights.

The court dismissed the motion, finding that the moving parties were not "aggrieved persons" as they were not deprived of a legal right.

Alternatively, the court found the trustee's decision to assign the causes of action to the bankrupt with a sharing arrangement was reasonable, particularly given the unwritten nature of the claims, the need for the bankrupt's active involvement, and the potential for greater upside for the estate compared to a fixed offer.

The bankrupt appealed a decision by the Registrar in Bankruptcy refusing to schedule his discharge application for a hearing before a Commercial List judge.

The Registrar had adjourned the hearing sine die pending the outcome of a separate action by the Trustee against the bankrupt's family for alleged preferential and fraudulent conveyances.

The Superior Court dismissed the appeal, finding that the Registrar properly exercised her discretion by balancing the relevant factors, including prejudice, interests of the parties, and the summary nature of discharge hearings where fraud allegations should be established beforehand.

In a bankruptcy application brought by an unsecured creditor, the respondent debtor moved to compel answers to numerous refusals made during cross‑examination of the applicant’s affiant on the affidavit of verification.

The court considered the permissible scope of cross‑examination in bankruptcy proceedings and held that questions must relate to the statutory requirements under the Bankruptcy and Insolvency Act, the issues in dispute on the bankruptcy application, or the credibility of the affiant.

Many questions sought to revisit issues already determined in an arbitration award and recognition orders, or to explore unrelated receivership proceedings, and were therefore irrelevant.

The court ordered only that the applicant provide evidence of its authorization to commence the application and otherwise dismissed the motion.

A judgment creditor brought a motion under Rule 60.08(16) seeking judgment against a garnishee who was the sole shareholder and director of the corporate judgment debtor.

After extensive post‑judgment proceedings, the court determined that the garnishee had withdrawn approximately $118,000 from the corporation for personal expenses and rejected an accounting “adjusting entry” that purported to offset the debt.

The court held that the entry lacked any legitimate business basis and was intended to conceal the garnishee’s liability to the corporation.

Although the creditor also argued that dividends paid while the corporation was insolvent should be repaid under the Business Corporations Act, the court found the evidence insufficient to establish insolvency at the relevant time.

Garnishment judgment was granted for the amount owed to the creditor and payment was ordered directly to the judgment creditor.