Brian Belmont

The plaintiff and a defendant mortgagee brought a motion for summary judgment and distribution of sale proceeds paid into court following the sale of two properties by power of sale.

The court found that the defendant owners had engaged in fraudulent conduct, including registering sham mortgages and fraudulently discharging a valid mortgage, to defeat creditors.

The court granted summary judgment, reinstated the fraudulently discharged mortgage, and ordered the distribution of the sale proceeds to the valid mortgagees, including their legal costs on a complete indemnity basis.

The appellants, directing minds and associates of two insolvent construction companies, orchestrated a false invoicing scheme to siphon tens of millions of dollars from the debtors.

The monitor and trustee sought to recover the funds as transfers at undervalue under s. 96 of the Bankruptcy and Insolvency Act.

The appellants argued that the companies were financially healthy at the time of the transfers, and that the directing mind's fraudulent intent could not be attributed to the companies under the common law corporate attribution doctrine.

The Court of Appeal dismissed the appeals, holding that the corporate attribution doctrine should be applied flexibly in the bankruptcy context to impute the directing mind's fraudulent intent to the debtor corporations.

This purposive approach prevents fraudsters from benefiting at the expense of legitimate creditors and fulfills the remedial objectives of the bankruptcy legislation.

The Monitor of Bondfield Construction Company Limited and the Trustee in Bankruptcy of Forma-Con Construction brought applications under s. 96 of the Bankruptcy and Insolvency Act to recover tens of millions of dollars transferred out of the debtor companies through a false invoicing scheme and an alleged fund cycling scheme.

The court found that the payments made under the false invoicing scheme were transfers at undervalue made with the intent to defraud, defeat, or delay creditors, and held the participating respondents jointly and severally liable.

The court declined to apply the strict corporate attribution doctrine from Canadian Dredge, instead imputing the directing mind's fraudulent intent to the corporate debtors to fulfill the remedial purpose of s. 96.

The Monitor's claim regarding the fund cycling scheme was dismissed for lack of evidence that the transfers lacked consideration.

The applicant lender sought a declaration that a prior mortgage registered on the respondents' property was a fraudulent sham designed to defeat its security interest.

The respondent lawyer, who acted for both the borrowers and the applicant, registered multiple mortgages on the property, including one to a corporation controlled by his sister, without disclosing them to the applicant.

The court found the prior mortgage was a sham unsupported by any advancement of funds and ordered the land register rectified to delete the fraudulent charge under the Land Titles Act.

The moving party sought an order compelling the responding party to provide further particulars of allegations contained in a statement of defence and counterclaim in a commercial dispute concerning an equity investment and alleged misrepresentations.

The responding party argued that the request amounted to premature discovery and that extensive documentary evidence had already been produced in related proceedings.

The court reviewed the governing principles under the Rules of Civil Procedure regarding when particulars are required to allow a party to plead and to define the issues.

The court held that several allegations concerning breaches of agreements, statutory violations, and misrepresentations required additional specificity.

Particulars were ordered for multiple categories of allegations, subject to later submissions on costs.

The appellants appealed an order dismissing their application to set aside the dismissal of their action.

The action had been dismissed in May 2012, but the appellants subsequently brought two motions for default judgment without disclosing the dismissal or complying with the Registrar's directions.

The motion to set aside the dismissal was brought over a year later.

The Court of Appeal found no error in the application judge's conclusion that the appellants failed to move promptly and lacked a valid explanation for the delay.

The appeal was dismissed with costs.