DATE: 20011101 DOCKET:C33481

COURT OF APPEAL FOR ONTARIO

RE:

MICHAEL RINALDO (Plaintiff (Appellant)) – and – GRANT THORNTON LIMITED, Trustee of the Estate of Simon Rosenfeld, a bankrupt, and LOUISE ROSENFELD, also known as LOUISE GAUTHIER (Defendants (Respondents))

BEFORE:

ABELLA, GOUDGE AND SIMMONS JJ.A.

COUNSEL:

John E. Callaghan

For the appellant

Jerry Levitan and Michael Gayed

For the respondent

HEARD:

October 24, 2001

On appeal from the judgment of Justice Colin Campbell dated December 13, 1999.

E N D O R S E M E N T

Orally Released: October 24, 2001

[1] The central issue in this appeal is whether the trial judge erred in applying the law relating to the burden of explanation in this fraudulent conveyance action. He correctly set out that law as stated in Koop v. Smith, [1915] 1 S.C.R. 533, which requires a sufficient showing both of the closeness of the relationship between the parties to the challenged conveyance and the suspiciousness of the circumstances surrounding the conveyance before the burden of explanation arises.

[2] While his reasons might have been more clearly expressed, on a fair reading of them, we find that the trial judge concluded that, in the circumstances before him, the threshold necessary to put the burden of explanation on the defendant had not been reached. Particularly in light of the absence of evidence that there were other creditors at the time of the conveyance or that the defendant was unable then to meet his debts as they came due, this was a finding that was open to him on the evidence.

[3] The trial judge then properly went on to consider whether, without placing a burden of explanation on the defendant, he could conclude that the conveyance was done with the requisite intent. He found that he could not. Again, this conclusion is reasonable and one with which we cannot interfere.

[4] Given our conclusion, it is unnecessary for us to deal with whether Mr. Justice Campbell was correct that, in any event, the release protects the respondent in this case.

[5] The appeal must be dismissed with costs. As with the costs order at trial, these costs shall not be payable or recoverable until such time as Mr. Rosenfeld’s debt to the appellant has been discharged.

[6] The order of Doherty J.A. dated February 21, 2000 is exhausted as of the determination of this appeal. The appellant is of course able to seek a further stay if advised.

“R. S. Abella J.A.”

“S.T. Goudge J.A.”

“J. Simmons J.A.”