Court File and Parties

Court File No.: CV-22-00689456-00ES Date: 2023-09-06 Ontario Superior Court of Justice

Between: Shannon D’Onofrio, personally, and in her capacity as estate trustee of the Estate of Brett Riley Applicant And: Rebecca Riley, the Office of the Children’s Lawyer, Business Development Bank of Canada, Snap Financial Group Inc., Canada Imperial Bank of Commerce, The Bank of Nova Scotia, Toronto Dominion Bank, Royal Bank of Canada, Canada Revenue Agency, American Express, CDA Corp. # 7885717, 8660824 Canada Ltd., Prominent Elite Inc., Corp. #8211361 Canada Inc., Corp. #8631751 Canada Corp., Corp. #1042472-2 P&E Capital Inc., and Opaman Corp. Ltd. #1770089-8 Respondents

Counsel: Arieh Bloom and Liza Saad, for the Applicant Lisa Toner, for the Respondent, Rebecca Riley Elaine Yu, for the Respondent, Office of the Children’s Lawyer

Heard: July 7, 2023

Reasons for Judgment Dietrich J.

Overview

[1] The Applicant, Shannon D’Onofrio, in her capacity as the sole Estate Trustee of the Estate of Brett Riley (the “Estate”), brings this application for the court’s advice and direction.

[2] Brett Riley (the “Deceased”) died in an automobile accident at the age of 43 years on April 12, 2022. The Deceased left a last will and testament dated August 7, 2020 (the “Will”).

[3] The Deceased is survived by the Applicant, his common law spouse, with whom he had been living for approximately seven years prior to his death. He is also survived by the children of his previous marriage to the respondent, Rebecca Riley (“Rebecca”), [1] the respondents Liam Riley (“Liam”) and Cooper Riley (“Cooper”), and the Applicant’s daughter, the respondent Skyler Lang (“Skyler”). Cooper and Skyler are minors. Liam is now 18 years of age.

[4] The Applicant seeks advice and direction on a) whether the Deceased held an interest in a residential property on Concession Road 6 West near Branchton, Ontario (the “Concession Road Property”) at the time of his death, and whether the value of the Concession Road Property is exigible for creditors of the Estate; b) whether a legally binding trust was created for the benefit of Liam and Cooper pursuant to clause 2.6 of the Will; and c) whether, if the Concession Road Property is not exigible for the creditors of the Estate, the Applicant should be granted leave to make an assignment of the Estate into bankruptcy.

[5] For the reasons that follow, I find that the Deceased did not have an equitable interest in the Concession Road Property and, therefore, the value of the Concession Road Property is not exigible for the creditors of the Estate. I also find that no legally binding trust was created for the benefit of Liam and Cooper pursuant to clause 2.6 of the Will. Based on the evidentiary record, I decline to grant the Applicant leave to make an assignment of the Estate into bankruptcy at this time.

Background Facts

The Will

[6] The Deceased’s Will was not drafted by a lawyer.

[7] The Will names the Applicant and Chad Martin as Estate Trustees. Mr. Martin renounced his appointment on July 17, 2022.

[8] Clause 2.6 of the Will, entitled “Special Gifts”, provides for the following devises and bequests (verbatim):

I give to my common law spouse Shannon Donofrio of St. George, Ontario, our house located at 19 Beverly St. E., St. George, Ontario N0E 1N0 and any and all of the contents within,

I give to my ex-wife Becky Riley of Branchton, Ontario, in which we are legally separate our house located at 2530 Concession Rd 6 West, Branchton, Ontario N0B 1L0 and any and all of the contents within, All properties are located in Ontario.

Lastly, I Brett Riley request that an amount from $100,000 of any insurance death benefits be paid directly into a trust for my two sons Liam Riley and Cooper Riley and appoint Becky Riley to manage the trust until the my sons are the age of 18.

[9] Clause 3.2 of the Will, entitled “Residue of my Estate”, directs payment of “the proceeds to my common law spouse Shannon Donofrio, Ontario entirely.”

The Real Estate

[10] The property on Beverly St. E. in St. George, Ontario (the “St. George Property”) was held by the Deceased and the Applicant as joint tenants. It passed to the Applicant by right of survivorship.

[11] The Concession Road Property was the matrimonial home of the Deceased and Rebecca, who held it as tenants in common. The post-separation ownership of the Concession Road Property is addressed in a separation agreement dated March 20, 2018 (the “Separation Agreement”).

The Separation Agreement

[12] The Deceased and Rebecca separated on February 1, 2015. They signed the Separation Agreement on March 20, 2018.

[13] Pursuant to clause 1.B. of the Separation Agreement, the parties agreed:

[T]hat the matrimonial home at 2530 Concession #6 West, and all material contents within the home will remain with REBECCA RILEY and be part [of] the financial settlement of separation…. These assets are considered to take the place of any spousal support that REBECCA RILEY would be entitled to based on the incomes of the two parties.

[14] Paragraph 4 of the Separation Agreement states as follows (verbatim):

AGREEMENT TO FORGO SPOUSAL SUPPORT: Due to the fact that BRETT RILEY is forgoing his right to half of the assets including the house, contents and marital assets, both parties agree to forego any right they may have to spousal support during the time this agreement is in effect. Neither party will make any claims for spousal support starting from the time of separation.

[15] Title to the Concession Road Property was never transferred into Rebecca’s name alone. Rebecca continues to reside in the Concession Road Property with Cooper and Liam.

Life Insurance

[16] The Deceased owned three life insurance policies, with a total death benefit value of approximately $1,460,000. Each of the policies has one or more designated beneficiaries, none of which is the Estate. The Applicant is designated as the beneficiary of a SunLife policy with a death benefit of $260,000. The death benefit has been paid to the Applicant. The Deceased owned a second SunLife policy on which Rebecca and the Applicant were designated as beneficiaries, each as to one half of the proceeds. Each has received $250,000. The Deceased also had a $700,000 policy with Canada Life, on which the Applicant is designated as the sole beneficiary. The Applicant used some of those funds to pay down the mortgage on the St. George Property prior to selling it. She purchased a smaller residence to replace the St. George Property. She also used the insurance policy proceeds to make the down payment on the replacement residence.

[17] Pursuant to clause 3.E. of the Separation Agreement, each of Rebecca and the Deceased agreed that:

[A] minimum of $500,000.00 of life insurance will be on the lives of BRETT RILEY AND REBECCA RILEY. The ownership and payment of each policy will be the responsibility of the individual. LIAM RILEY and COOPER RILEY will be named beneficiaries of the policy in trust of the other parent. The intent of the money of the policy is to care for the children in the event of the death of the other party.

[18] The Deceased did not purchase a $500,000 life insurance policy in accordance with this term of the Separation Agreement.

The Private Companies

[19] The Deceased may have had a financial interest in each of the following corporate respondents: CDA Corp. #7885717; 8660824 Canada Ltd.; Prominent Elite Inc.; Corp. #8211361 Canada Inc.; Corp. #8631751 Canada Corp.; Corp. #1042472-2 P&E Capital Inc.; and Opaman Corp. Ltd. #1170089-8 (the “Private Companies”). Each of these corporate respondents was served with the application. None of them has responded to it.

Creditors and Liabilities

[20] The Applicant advertised for creditors on August 24, 2022, and requested that all claims be filed within 60 days. Some creditors responded to the advertisement. Other creditors became known to the Applicant through unpaid account statements that came to her attention. There appear to be secured and unsecured claims against the Deceased personally as well as against some of the Private Companies.

[21] All known creditors and interested parties have been named as respondents, have been served with the application, and have been put on notice of the within proceedings. They were also apprised of this hearing date. None of these creditors is in attendance or represented at the hearing.

[22] In addition to the Estate’s liabilities and the known creditors’ claims, the Office of the Children’s Lawyer (the “OCL”), representing Cooper in this matter, submits that it will commence a dependant’s relief claim against the Estate, on Cooper’s behalf. Liam and Skyler, by a litigation guardian on Skyler’s behalf, might also bring dependant’s relief claims. The Applicant submits that she relied on the Deceased for financial support and that he paid for the majority of their household expenses.

[23] Based on the Applicant’s assessment, the Estate’s liabilities exceed its assets. The Applicant submits that the Estate assets are worth approximately $15,059 and the Estate liabilities are approximately $462,252. The Applicant submits that there are additional liabilities of approximately $219,887 related to the Private Companies.

Issues

[24] The parties agree that the issues in this application are as follows:

1. Does Rebecca own the whole of the Concession Road Property beneficially notwithstanding that title to the Concession Road Property continues to be registered in the names of the Deceased and Rebecca?
2. Is the insurance policy trust described at paragraph 3 of clause 2.6 of the Will (the “Insurance Policy Trust”) a legally binding trust or a precatory expression? If it is a legally binding trust, are the beneficiary designations on the Deceased’s life insurance policies affected such that the policy proceeds fall into and form part of the Estate?
3. If Rebecca owns the Concession Road Property, and the beneficiary designations are unaffected because the Insurance Policy Trust is not legally binding, should the Applicant be permitted to make an assignment of the Estate into bankruptcy pursuant to s. 49(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”) because the Estate’s liabilities exceed its assets?

Law

[25] The Applicant is permitted to bring this application for the opinion, advice, and direction of the court pursuant to the Trustee Act, R.S.O. 1990, c. T.23, s. 60(1).

[26] An estate trustee has a fiduciary obligation to both beneficiaries and creditors of an estate: Cameron Estate v. Button (2005), 16 E.T.R. (3d) 189 (Ont. S.C.), at para. 13.

[27] An estate trustee is obligated to first satisfy the estate’s liabilities before making distributions to beneficiaries. To do otherwise is a breach of the trustee’s fiduciary duty: In the Matter of the Bankruptcy of The Testamentary Estate of Jeffrey James Wilson, 2019 ONSC 1278, 45 E.T.R. (4th) 292, at para. 39.

Issue 1: Is Rebecca the beneficial owner of the Concession Road Property?

[28] For the reasons that follow, I find that Rebecca is the beneficial owner of the Concession Road Property. None of the OCL, Liam, or any of the creditors opposes a declaration that Rebecca is the beneficial owner.

[29] Based on the jurisprudence, once there is a valid agreement to transfer property, the transferee becomes the beneficial owner of the property. If the transferor holds legal title, the transferor holds title to the property in trust for the transferee pursuant to the agreement to transfer that property.

[30] In Klymas v. Burkholder (1976), 22 C.B.R. (N.S.) 216 (Ont. Co. Ct.), spouses had a separation agreement in which the wife agreed to transfer her interest in a property to her husband. The transfer did not occur before the wife made an assignment into bankruptcy. In that case, the court held that once the agreement was executed, equitable title to the property passed to the husband, and the wife held legal title in trust for the husband. See also Godfrey v. Godfrey (1996), , 19 R.F.L. (4th) 58 (Ont. Gen. Div.).

[31] In Schreyer v. Schreyer, 2011 SCC 35, [2011] 2 S.C.R. 605, at para. 15, the Supreme Court of Canada stated that a division of property between spouses, as opposed to a division of the value of assets, gives rise to a proprietary or beneficial interest in the assets themselves, not just their value.

[32] In Thibodeau v. Thibodeau, 2011 ONCA 110, 104 O.R. (3d) 161, the Court of Appeal for Ontario dealt with an award by an arbitrator ordering the parties’ matrimonial home to be sold on consent. The husband was required to pay amounts owing to the wife from his share of the proceeds. The terms of the award were incorporated into a court order, following which the husband made an assignment into bankruptcy. While this case did not involve a transfer of property, the Court of Appeal stated as follows, at para. 26:

I accept at the outset that an agreement between two spouses transferring or agreeing to transfer property from one to another – in a fashion analogous to an agreement of purchase and sale – transfers an equitable interest in the property to the transferee spouse.… The upshot of such an agreement or order is to impose a trust or trust-like condition on the property, rendering the payee spouse’s claim enforceable against the payor’s trustee in bankruptcy.

[33] I agree with the Applicant’s submission that an agreement between parties to transfer property is akin to an agreement of purchase and sale. In Simcoe Vacant Land Condominium Corporation No. 272 v. Blue Shores Developments Ltd., 2015 ONCA 378, 126 O.R. (3d) 39, at paras. 46-48, the Court of Appeal for Ontario explained the trust relationship between the vendor and purchaser that arises post-agreement of purchase and sale and before closing. At para. 46, the Court of Appeal referred to the principle in Lysaght v. Edwards (1876), 2 Ch. D. 499, at p. 506, where Jessel M.R. stated: “[T]he moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser”. At para. 47, citing R. Chambers, “Constructive Trusts in Canada” (1999) 37 Alta. L. Rev. 173, at p. 186, the Court of Appeal went on to describe the trust relationship, known as “equitable conversion”, as “[p]ossibly the oldest, and certainly the most frequent, use of the constructive trust”.

[34] In the same case, the Court of Appeal referred to an earlier decision of that Court in Buchanan v. Oliver Plumbing & Heating Ltd., , [1959] O.R. 238 (C.A.), at pp. 242 and 244, in which it described the qualified nature of the trust that arises from an agreement of purchase and sale:

The relationship created by such a contract does not entail all the obligations of an ordinary trusteeship. The vendor is not a mere dormant trustee; he is a trustee having a personal and substantial interest in the property, a right to protect, and an active right to assert that interest if anything is done in derogation of it.

[T]he trusteeship is not from the beginning an absolute one, for it is recognized that the vendor has a personal and substantial interest in the property which he is bound to protect.

[35] Rebecca submits that the language of the Separation Agreement reinforces the fact that the beneficial interest in the Deceased’s one-half interest in the Concession Road Property passed to her on the signing of the Separation Agreement. She relies on the language in the Separation Agreement at clause 1.B that states that the Concession Road Property “will remain” with Rebecca, and “take the place of any spousal support” to which she might otherwise be entitled. She also relies on paragraph 4 of the Separation Agreement, where the Deceased acknowledged Rebecca’s bargain in which she agreed to forgo spousal support in exchange for the Deceased’s one-half interest in the Concession Road Property.

[36] Rebecca further submits that at paragraph 5 of the Separation Agreement, the parties confirmed that all “property”, as distinct from the value of all property, had been “divided.” Accordingly, the reasoning of the Supreme Court of Canada in Schreyer applies. Because the Deceased agreed in the Separation Agreement to the transfer of his one half of the Concession Road Property to her, Rebecca acquired an equitable interest in the Deceased’s one-half share of the Concession Road Property, which the Deceased held in trust for her.

[37] The Will, made after the Separation Agreement, corroborates the terms of the Separation Agreement. The Will states that Rebecca is entitled to the whole of the Concession Road Property, as part of the financial settlement between the Deceased and her.

[38] Further, Rebecca’s uncontroverted evidence is that the Deceased had agreed in the Separation Agreement to purchase $500,000 of life insurance for the benefit of Liam and Cooper in lieu of mortgage insurance on the Concession Road Property. Had he done so, she submits that the insurance would have been used by her to pay off the mortgage on the Concession Road Property so that it would not have to be sold, and Liam, and Cooper could continue to live in their childhood home. The increased equity in the Concession Road Property would be available for their care and education, and the Concession Road Property would be the asset that would eventually fund Rebecca’s retirement.

[39] None of the parties has brought a challenge to the Will or the Separation Agreement.

[40] Based on the jurisprudence, as applied to the facts, I find that in entering into the Separation Agreement, the Deceased became in equity a trustee of the beneficial interest of his one-half share of the Concession Road Property, which he agreed to transfer to Rebecca. Rebecca became the beneficial owner of the entire interest in the Concession Road Property upon execution of the Separation Agreement. The Deceased acknowledged Rebecca’s legal entitlement to his one-half share in the Concession Road Property that he held in trust by confirming in the Will that Rebecca was entitled to “our house”. Accordingly, I find that no part of the Concession Road Property forms part of the Estate, and the Concession Road Property is not exigible for creditors of the Estate.

Issue 2: Does clause 2.6 of the Will, which purports to create an insurance policy trust, create a legally binding trust?

[41] Paragraph 3 of clause 2.6 of the Will appears to create a trust of insurance policy proceeds for Liam and Cooper. However, the terms of the Insurance Policy Trust are unclear, and there is no insurance policy that names either or both of Liam and Cooper as beneficiaries. Further, the Insurance Policy Trust appears to contradict clause 3.2 of the Will which directs the residue of the Estate to be paid to the Applicant.

[42] For the reasons that follow, I find that the Insurance Policy Trust is not a legally binding trust created for the benefit of the Deceased’s children. The language used in clause 2.6 of the Will regarding certain insurance policy proceeds is precatory. Further, the three certainties required to form a trust are not found within the language of clause 2.6. The Insurance Policy Trust fails to meet the requirements of certainty of intention and subject matter.

Will Interpretation

[43] In interpreting a will, the court’s task is to determine the testator’s actual or subjective intention regarding the disposition of his property. The will must be construed in light of all the surrounding circumstances to determine the testator’s true intention. This exercise requires the court to place itself in the position of the testator when he made the will: Trezzi v. Trezzi, 2019 ONCA 978, 150 O.R. (3d) 663, at para. 13.

[44] Recently, in Ross v. Canada Trust Company, 2021 ONCA 161, 458 D.L.R. (4th) 39, at paras. 37-39, the Court of Appeal for Ontario provided a summary of this approach to the construction of a will, which is commonly referred to as the “armchair rule”. In essence, the judge must concentrate on the circumstances which existed at the time the will was made and which might reasonably be expected to influence the testator in the disposition of his property. The judge must give due weight to those circumstances insofar as they bear on the testator’s intention, review the whole contents of the will, and after full consideration of all the provisions and the language used, try to find what intention was in the mind of the testator. When that opinion has been formed, the court should give effect to it unless there is a rule or principle of law that prohibits the court from doing so. However, having studied the entire will, the court may remain unconvinced that the testator’s intention may be discerned from it alone. In this case, evidence of surrounding circumstances known to him when he made the will is necessarily admissible insofar as it corresponds to the facts and circumstances referred to in the will. Here, the court puts itself in the position of the testator at the time he made the will and reads and construes the will in light of the surrounding facts and circumstances. Sitting in the “armchair” of the testator, the court assumes the same knowledge the testator had at the time of making the will, with regard to the nature and extent of the testator’s assets, the makeup of his family, and his relationship to its members.

[45] In Ross, at paras. 40-41, the Court of Appeal for Ontario observes that in the past, courts resorted to the “armchair rule” when the testator’s intention could not be ascertained from the plain meaning of the will’s language; however, more recently, courts treat the “armchair rule” as an overarching framework within which a judge applies the various tools for will construction at his or her disposal. At para. 41 of Ross, the Court of Appeal for Ontario referred to the decision of the Court of Appeal for Manitoba in Zindler v. Salvation Army, 2015 MBCA 33, 319 Man. R. (2d) 16, at para. 14, where it stated:

Feeney’s [Canadian Law of Wills] concludes that ‘the most recent trend in Canadian cases seems to indicate that evidence of surrounding circumstances should be taken into account in all cases before a court reaches any final determination of the meaning of words’ (at para. 10.54). This is true even if the words, themselves, do not appear to be ambiguous or unclear.

Requirements of a Legally Binding Trust

[46] It is well settled that for a trust to come into existence, it must have three essential characteristics, commonly referred to as the three certainties: i) the language of the alleged settlor must be imperative; ii) the subject matter or trust property must be certain; and iii) the objects of the trust must be certain: Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 5th ed. (Toronto: Thomson Reuters Canada, 2021), at 5.I. (WL) [Waters]; Gicas Estate v. Gicas, 2014 ONCA 490; and Rubner v. Bistricer, 2019 ONCA 733, 50 E.T.R. (4th) 17.

[47] The alleged settlor must use language that clearly shows his or her intention that the recipient should hold property on trust. No trust exists if the recipient is to take the property absolutely, but he or she is put under a moral obligation regarding what is to be done with the property: Waters, at 5.I.

[48] Second, it must be shown that the settlor has so clearly described the property which is to be subject to the trust that it can be definitively ascertained.

[49] Third, the objects of the trust must be equally and clearly delineated. There can be no uncertainty as to whether a person is, in fact, a beneficiary.

[50] If any of these three certainties does not exist, the trust fails to come into existence. It is void: Waters, at 5.I.

Precatory Language

[51] The court is often asked to determine whether a testator intended to create a trust or to merely impose some kind of moral obligation upon a beneficiary who receives property. Where a testator uses such language as “expectation”, “fervent wish”, “desire”, “firm belief” or “purpose”, a moral obligation is created. This language has been referred to as creating “a precatory trust”: Waters, at 5.II.

[52] Courts have moved away from construing words used in a will, which are not of a definite legal character, as creating a trust. In Johnson v. Farney (1913), , 14 D.L.R. 134 (Ont. C.A.), at p. 136, the court referred to the English Court of Appeal’s decision in Atkinson, Re (1911), 80 L.J. Ch. 370 (Eng. C.A.), at p. 373, where it stated that courts “ought to be very careful not to make words mandatory which are a mere indication of a wish or a request.”

[53] In Rudaczyk Estate v. Ukrainian Evangelical Baptist Assn. of Eastern Canada (1989), , 69 O.R. (2d) 613 (H.C.), the court relied on Johnson v. Farney and Bank of Montreal v. Bower (1889), 18 O.R. 226 (C.A.), upholding the principle that permissive language ought not be converted to the mandatory or imperative. In other words, a wish is not a command. In that case, the use of the words “my wish” was merely precatory and not legally binding on the executors of the estate.

[54] To meet the requirement of certainty of intention, the language of the settlor must be imperative. In Rubner, at para. 52, the Ontario Court of Appeal stated:

A trust will only exist where the trustee is obliged to deal with the property on the beneficiary’s behalf. If the purported trustee is permitted, but not required, to deal with the property for the benefit of the beneficiary, then a trust relationship does not exist. [Citations omitted.]

[55] The language used by the Deceased in his attempt to create a legally binding Insurance Policy Trust at clause 2.6 of the Will is not, in my view, imperative. Clause 2.6 states, “I Brett Riley request that an amount from $100,000 of any insurance death benefits be paid directly into a trust for my two sons Liam Riley and Cooper Riley” (emphasis added). The word “request” is not an imperative word, as noted in Johnson v. Farney and, therefore, courts should be careful not to make mandatory words that are not. The Deceased’s “request” may impose on the Estate Trustee a moral obligation, but it does not create a legal obligation.

[56] In looking at clause 2.6 of the Will in its entirety, the Deceased appears to have appreciated the difference between imperative and precatory language. In the first two paragraphs of clause 2.6, the Deceased makes specific gifts. In the first paragraph, he states, “I give to my common law spouse… [the St. George Property]” and in the second paragraph, he states, “I give to my ex-wife… [the Concession Road Property]” (emphasis added). Both of these gifts are made by using imperative language. The provision that follows regarding the Insurance Policy Trust, however, contains precatory language. A “request” is more in the nature of a wish, a hope, or an expectation, as opposed to an imperative direction. Accordingly, the certainty of intention to create a trust is lacking. The Insurance Policy Trust, therefore, does not meet the requirements of a legally binding trust.

[57] Notwithstanding the lack of an imperative direction, the Applicant may be given the opportunity to carry out this moral obligation imposed upon her by the Deceased. This may be done in the context of claims brought for Liam’s and Cooper’s support as dependants of the Deceased.

[58] I agree with the Applicant’s submission, which is also supported by Rebecca, that the Insurance Policy Trust likely fails for lack of certainty of subject matter. Clause 2.6 of the Will offers no guidance regarding which of the Deceased’s three insurance policies (each of which has one or more designated beneficiaries) is to be the source of the $100,000 to fund the Insurance Policy Trust, or how much of this amount is to be allocated to each of Cooper and Liam, respectively. The subject matter of the Insurance Policy Trust is not clearly identifiable. A legally binding trust will feature property that is identifiable, and there must be sufficient certainty respecting the quantum to which a beneficiary is entitled: Rubner v. Bistricer, at para. 57.

[59] Because I have found that the Insurance Policy Trust is not a legally binding trust, I do not need to consider any effect of this determination on the beneficiary designations on the Deceased’s insurance policies. Those designations remain intact.

Issue 3: Should the court grant leave to the Applicant to make an assignment of the Estate into bankruptcy?

[60] The Applicant submits that if the Deceased’s interest in the Concession Road Property does not form part of the Estate, then the liabilities of the Estate exceed its assets. Accordingly, the court should grant leave to the Applicant to make an assignment of the Deceased’s property into bankruptcy.

[61] The Applicant argues that the liabilities of the Estate far exceed its assets. Her evidence is that there are secured and unsecured creditors of the Estate, and hundreds of thousands of dollars are owing to at least eight creditors, including six banks and financial institutions, a credit card company, and the Canada Revenue Agency. She asserts that apart from whatever interest the Deceased may have in the Private Companies, the assets owned by him alone at the time of his death amount only to approximately $15,000. Based on the record, the Private Companies in which the Deceased had or may have had an interest are also indebted to banks and financial institutions.

[62] For the reasons that follow, I decline to grant leave to the Applicant to make an assignment of the Estate into bankruptcy. The Applicant has not met her onus to show that the Estate is insolvent.

[63] Section 49(1) of the BIA states:

49(1) An insolvent person or, if deceased, the executor or administrator of their estate or the liquidator of the succession, with the leave of the court, may make an assignment of all the insolvent person’s property for the general benefit of the insolvent person’s creditors.

[64] In Campbell Estate, 2011 SKQB 463, 89 C.B.R. (5th) 151, at paras. 17-18, the court observed that there is no statutory provision or case authority that explicitly identifies the criteria the court must consider in exercising its discretion to grant leave to permit the assignment of an estate into bankruptcy. However, the court should consider a) whether the applicant has shown that the estate is insolvent; and b) whether there is any indication that the bankruptcy will amount to an abuse of the court’s process or a fraud on the creditors.

[65] Section 2 of the BIA defines an “insolvent person” as a person who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under the BIA amount to $1,000, and a) who is unable to meet his or her obligations as they generally become due; b) who has ceased to pay his or her current obligations in the ordinary course of business as they generally come due; or c) the aggregate of whose property is not, at a fair market valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his or her obligations, due and accruing due.

[66] Based on the Applicant’s due diligence to date, she submits that the Estate’s liabilities exceed its assets. She states that the Estate assets are worth approximately $15,059, and the Estate’s liabilities amount to approximately $462,252. The Applicant further submits that there are additional liabilities of approximately $219,887 related to the Private Companies. The Applicant also submits that there are no Estate funds available to retain an accountant to assess whether the Deceased’s interest in any of the Private Companies has any value.

[67] In making these submissions, the Applicant relies on her affidavit to which she attached her assessment of the known assets and liabilities of the Estate as of July 6, 2022. However, her own evidence is that “it does not appear that the assets will meet the existing liabilities.” The Applicant further deposed that the extent of the Deceased’s interest in the Private Companies is unknown. She deposed that she “cannot determine the financial value of any interest [the Deceased] may have had” in the Private Companies.

[68] In her affidavit, the Applicant also outlines some of the unsuccessful efforts she has undertaken to acquire information regarding the Private Companies, and states that she understands that the Private Companies have little to no assets. There is no documentary (e.g., tax returns, financial statements) or corroborative evidence to support this statement.

[69] In concluding that the Deceased “had no assets shortly before his death”, the Applicant relies on a memorandum that she says the Deceased typed regarding his assets and investments. A copy of that memorandum is attached to the Applicant’s affidavit. It appears that only part of the memorandum is included in the evidence. The purpose for which the memorandum was prepared is also not in evidence. The memorandum is wholly typewritten with the exception of a handwritten date of “Feb 2021” in the top corner of the first page. There is no evidence regarding who added the handwritten date, which is more than a year prior to the Deceased’s death. I do not find the memorandum to be a reliable or particularly helpful document in determining the Deceased’s assets and liabilities at the time of his death, or in determining his investment in the Private Companies, most of which do not appear to be referred to in the memorandum.

[70] On the evidentiary record before the court, I cannot conclude that the Estate’s liabilities, in fact, exceed its assets, or that the Estate assets are insufficient to pay its obligations. There is very little evidence before the court with regard to the Private Companies, apart from the Applicant’s evidence that some or all of them have incurred liabilities of approximately $219,887. For example, there is no evidence as to what the Deceased’s precise interest in each of the Private Companies is, including whether he is a shareholder or investor, the nature of the business carried on by the Private Companies, whether any of the Private Companies owns land, inventory or accounts receivable, or whether the Deceased made shareholder loans to any of the Private Companies, which may be owing to him. Without this information, I cannot conclude that the Estate is insolvent.

[71] Accordingly, I decline, at this stage in the proceeding, to grant leave to the Applicant to make an assignment of the Estate into bankruptcy. This ruling is made without prejudice to the Applicant to seek such relief at a later time with the benefit of additional evidence.

Disposition

[72] I make the following Orders:

1. An Order declaring Rebecca the legal and beneficial owner of the Concession Road Property;
2. An Order declaring that the alleged Insurance Policy Trust at clause 2.6 of the Will is not a legally binding trust; and,
3. An Order denying leave to the Applicant to make an assignment of the Estate into bankruptcy for the general benefit of its creditors, without prejudice to the Applicant to seek such leave at a later date.

Costs

[73] The parties agree that costs in this matter should be decided separately following the release of these reasons, and on submissions by counsel. The Applicant submits that the application is brought for the benefit of all beneficiaries of the Estate, as well as Rebecca regarding the ownership of the Concession Road Property. The parties may arrange a case conference to address the matter of costs.

Dietrich J. Released: September 6, 2023

[1] Several of the parties share the same surname. For clarity, I will refer to them using their first names. In doing so, I intend no disrespect.