COURT OF APPEAL FOR ONTARIO

CITATION: Keenan v. Raymond Chabot Inc., 2016 ONCA 487

DATE: 20160617

DOCKET: C61552, M46376 and M46459

Cronk, Blair and MacFarland JJ.A.

In the Matter of the Bankruptcy of Joseph Robert Keenan

BETWEEN

Joseph Robert Keenan and Keenan Family Trust

Appellants

and

Raymond Chabot Inc.

Respondent

Martin Z. Black, for the appellant Keenan Family Trust

Joseph Robert Keenan, In Person

Craig M. Bater and Emily G. Villeneuve, for the respondent

Heard: June 16, 2016

On appeal from the order of Justice Robert N. Beaudoin of the Superior Court of Justice, In Bankruptcy and Insolvency, dated December 15, 2015, and on various motions relating to that order.

ENDORSEMENT

[1] There are three matters before the court. First, an appeal has been brought in the names of Joseph Robert Keenan and “Keenan Family Trust” (the “Trust”) (C61552) from the order of Beaudoin J. of the Superior Court of Justice in Bankruptcy and Insolvency, dated December 15, 2015, granting a declaration that the Trust is invalid and vesting certain real property and a bank account ostensibly owned by the Trust in Robert Keenan’s Trustee in Bankruptcy, the respondent Raymond Chabot Inc. (the “Trustee in Bankruptcy”).

[2] The appeal on behalf of the Trust was perfected by a solicitor, Martin Z. Black. Robert Keenan purports to act on his own behalf on the appeal. However, he is an undischarged bankrupt. Moreover, he has failed to perfect the appeal.

[3] Second, the Trustee in Bankruptcy has moved in this court (M46376) for orders dismissing the appeal: i) as against the Trust on the basis that the appeal is a nullity due to lack of standing and an abuse of process; and ii) as against Robert Keenan on the ground that he has failed to perfect his appeal within the required time period.

[4] With respect to the Trust, the Trustee in Bankruptcy takes the position that the Trust, as an inter vivos trust, is not a legal entity and can only operate through its trustees. It argues that the appeal is a nullity because there is no validly appointed trustee of the Trust, with lawful authority to retain or instruct counsel on behalf of the Trust, file a notice of appeal or conduct an appeal. Further, Robert Keenan, as an undischarged bankrupt, is precluded from acting as trustee of the Trust.

[5] The third matter before the court is a cross-motion (M46459) purportedly brought by the trustee of the Trust, one Ghassan Mantache, for various relief, including orders: i) for leave to amend the title of proceedings in the appeal to substitute Mr. Mantache as a named appellant in place of the Trust; ii) removing the law firm of Augustine Bater Binks LLP as counsel for the Trustee in Bankruptcy; and iii) for leave to file an amended factum on appeal containing references to matters set out in several affidavits filed in support of the cross-motion or in response to the Trustee in Bankruptcy’s motion. The grounds for this cross-motion include claims that the Trust was named as an appellant by mistake and “in haste and in error”, and that Mr. Mantache, as the trustee of the Trust, was the proper party to be named as appellant.

[6] Extensive materials have been filed with this court in support of the two motions described above, including affidavits sworn by the Trustee in Bankruptcy, Mr. Mantache, Robert Keenan and others. Based on all the materials filed, the following facts emerge:

1. on the motion before Beaudoin J., the Trustee in Bankruptcy sought, among other things: i) directions regarding the administration of Robert Keenan’s bankrupt estate; and ii) declarations that the Trust was invalid, that the assets purportedly owned by the Trust were the property of Robert Keenan, and that those assets vested in the Trustee in Bankruptcy;

2. at the time of the motion before Beaudoin J., Robert Keenan was an undischarged bankrupt. He remains an undischarged bankrupt to date;

3. the Trustee in Bankruptcy’s motion was originally returnable on December 22, 2015. The hearing date was subsequently advanced to December 15, 2015;

4. Robert Keenan did not attend on the motion before Beaudoin J. He maintains that he did not receive proper notice of the advanced hearing date of December 15, 2015, that he was out of the country on that date, and that he only learned of the results of the motion on his return to Canada on December 16, 2015, the day after Beaudoin J’s order;

5. no one attended on the motion before Beaudoin J. on behalf of the Trust, nor was the Trust given any notice of, at least, the December 15, 2015 hearing date;

6. the affidavits before this court contain suggestions that Robert Keenan’s former wife, Maria Ene, was named a co-trustee of the Trust in 2009 and that she was replaced on January 15, 2015 by Mr. Mantache, as sole trustee of the Trust;

7. Robert Keenan’s sworn evidence on a judgment debtor examination in November 2014 contradicts the information set out above regarding the timing of Ms. Ene’s alleged appointment as a trustee of the Trust and her suggested status as a co-trustee;

8. the Trustee in Bankruptcy has sworn that copies of the motion record for the motion before Beaudoin J. were provided to Ms. Ene and Mr. Mantache in advance of the December 22, 2015 hearing date “as a matter of courtesy”. Nonetheless, the hearing proceeded in the absence of both Robert Keenan and any representative of the Trust;

9. Robert Keenan filed extensive materials in opposition to the relief sought by the Trustee in Bankruptcy on the motion before Beaudoin J.;

10. Mr. Mantache has filed an affidavit in which he indicates that he is the Trustee of the Trust, that he instructed counsel to bring the current appeal on behalf of the Trust and its beneficiaries and that he was not aware that the Trustee in Bankruptcy was bringing a motion returnable before Beaudoin J. on December 15, 2015 to declare the Trust invalid, “otherwise [he] would have intervened on behalf of the Trust”;

11. Mr. Mantache has now also sworn that he signed an amendment to the Trust on or before January 15, 2015, whereby he agreed to accept the position of Trustee to the Trust as of that date;

12. a copy of the trust amendment document has been produced as an exhibit to an affidavit sworn by Robert Keenan. In addition to the appointment of Mr. Mantache as trustee of the Trust, it records the resignation of Ms. Ene as trustee of the Trust, as of January 15, 2015;

13. Mr. Mantache has further sworn that he “would have intervened in the Respondent’s motion, but I never got that chance, as the motion proceeded on December 15, 2015 before Justice Beaudoin without notice to me”; and

14. with a very brief endorsement, Beaudoin J. granted the relief sought by the Trustee in Bankruptcy, including a declaration that the Trust was invalid and various vesting orders.

[7] In light of the irregularities, the conflicting evidence filed with this court regarding the existence and identity of any trustees of the Trust, and the manner in which the hearing before Beaudoin J. proceeded, all as outlined above, this court cannot be satisfied that the hearing before Beaudoin J. proceeded on proper notice to the Trust and others whose interests could be affected by the relief sought on the motion. Nor, in the absence of reasons for and any factual findings in support of the relief granted by Beaudoin J., is this court in a position to assess the foundation for the relief granted by him, including regarding the validity or invalidity of the Trust.

[8] Furthermore, on the state of the record before this court, we cannot be confident that Robert Keenan received proper notice of the actual hearing date for the motion before Beaudoin J.

[9] In our view, in these unusual and complicated circumstances, the interests of justice and procedural fairness require a new hearing of the Trustee in Bankruptcy’s motion below in the Superior Court of Justice. Counsel for the Trustee in Bankruptcy and the Trust agree. We therefore order as follows:

1. the Trustee in Bankruptcy’s motion to dismiss the appeal of the Trust is dismissed. Its motion to dismiss the appeal of Robert Keenan is allowed, Mr. Keenan being an undischarged bankrupt and his purported appeal not having been perfected in any event;

2. the cross-motion brought by the alleged trustee of the Trust, Mr. Mantache, is dismissed in its entirety, without prejudice to renewal, in the Superior Court of Justice, on proper materials, of the request for leave to amend the title of proceedings to substitute the appropriate trustee in place of the named Trust and the other relief requested on the cross-motion, if so advised;

3. the order of Beaudoin J. dated December 15, 2015 is set aside;

4. a new hearing of the Trustee in Bankruptcy’s notice of motion dated October 2015 shall be conducted in the Superior Court of Justice, preferably before Beaudoin J. if possible, on the first date available through the offices of the Registrar of that court; and

5. the new hearing of that motion shall be on proper notice to Mr. Mantache, Robert Keenan, Ms. Ene, Martin Z. Black (solicitor for Mr. Mantache) and the beneficiaries of the Trust.

[10] The appeal is allowed to the extent set out in these reasons. In all other respects, the appeal is dismissed. This is not a proper case for an award of costs on either of the two motions before this court or on the appeal.

“E.A. Cronk J.A.”

“R.A. Blair J.A.”

“J. MacFarland J.A.”