The applicant, Zeifman Partners Inc., sought declarations that payments made by a now-bankrupt company (Discovery Electric Ontario Limited) to its principal's family and a related company (Tuscany Lighting and Furniture Ltd.) were transfers at undervalue, and payments to a third-party supplier (Boz Electric Supply Ltd.) were preferential.
The court found the payments to the Baldassare family members and Tuscany were void under s. 96(1)(b) of the Bankruptcy and Insolvency Act (BIA), and the principal, Sam Baldassare, was held personally liable for these amounts.
The court dismissed the claim against Boz Electric Supply Ltd., finding those payments were made in the ordinary course of business, thereby rebutting the presumption of preference under s. 95(2) of the BIA.
A limitation period defence raised by all respondents was rejected, as the initiation of a Preference Motion was deemed the commencement of proceedings for the purposes of the Limitations Act, 2002.
