DATE: 20061026

DOCKET: C44634

COURT OF APPEAL FOR ONTARIO

RE:

HARRIS & PARTNER INC., TRUSTEE IN BANKRUPTCY FOR EUSTACE CLARKE (Plaintiff/Appellant) – and – VERLYN FRANCIS (Defendant/Respondent)

AND RE:

EUSTACE CLARKE (Plaintiff/Appellant) – and – VERLYN FRANCIS (Defendant/Respondent)

BEFORE:

MACPHERSON, CRONK AND GILLESE JJ.A.

COUNSEL:

Paul D. Koven

for the appellant, Eustace Clarke

Beth Symes

for the respondent, Verlyn Francis

Brandon Jaffe

for Harris & Partner Inc.

HEARD & RELEASED ORALLY:

October 13, 2006

On appeal from the order of Justice Sandra Chapnik of the Superior Court of Justice dated November 16, 2005.

E N D O R S E M E N T

[1] Eustace Clarke appeals from the order of Chapnik J. dated November 16, 2005, dismissing two actions against Verlyn Francis. The first action was dismissed on consent and is not in issue. The second action was dismissed on the ground that the action, which had vested in Mr. Clarke’s trustee in bankruptcy, had been abandoned. Mr. Clarke appeals and asks for an order returning the second action to him on his discharge from bankruptcy. In addition, he moves for leave to adduce fresh evidence consisting of the consent of the inspector to continue the action.

[2] By operation of law, the action in question had vested in the trustee in bankruptcy. When the respondent brought her motion, the trustee was forced to decide whether to proceed with that action. If the trustee chose not to proceed, it was open to the motion judge to find that the trustee had abandoned the action. See: Hall‑Chem Inc. v. Vulcan Packaging Inc. (1994), 1994 1384 (ON CA), 120 D.L.R. (4th) 552 (Ont. C.A.). Consequently, there is no basis on which to interfere with the motion judge’s determination that while an order to continue had been obtained, as neither the trustee nor the creditors wished to pursue the action, the action should be dismissed as abandoned.

[3] Furthermore, there is no basis for interfering with the motion judge’s finding that the appellant declared bankruptcy on the eve of trial in order to defeat the interests of his creditors in any proceeds he might have obtained pursuant to that action. To re‑assign the action to the appellant, in such circumstances, would pervert one of the fundamental purposes of bankruptcy litigation, namely, to ensure the equitable distribution of the bankrupt’s assets among his or her creditors.

[4] In light of these conclusions, there is no need to address the issue of Mr. Clarke’s standing at the motion below nor is it necessary to decide his motion for leave to adduce fresh evidence.

[5] Accordingly, the appeal is dismissed with costs to the respondent fixed at $18,000.00, inclusive of disbursements and GST. No costs are payable by or to the trustee.

“J.C. MacPherson J.A.”

“E.A. Cronk J.A.”

“E.E. Gillese J.A.”