COURT FILE NO.: 35-2225602T
DATE: 20190916
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
BETWEEN:
MNP Limited Receiver
Royal Bank of Canada
Applicant
- and -
Grant Gustin
Respondent
J. Ross MacFarlane, for MNP Limited, the Receiver
Timothy C. Hogan, for the applicant, Royal Bank of Canada
Benjamin Blay, for the respondent
HEARD: September 13, 2019
RADY J.
Introduction
[1] MNP, the Court appointed Receiver, seeks the Approval of its first report dated August 30, 2019 and various related relief. The only controversy is whether the Court can and should order the relief sought in para. 8 of the proposed draft order. It authorizes the Receiver to file an assignment in bankruptcy on behalf of the debtor. Royal Bank of Canada supports the relief and Mr. Gustin opposes.
[2] I pause here to note that the receiver was also seeking relief against 1886890 Ontario Limited and Frank Gustin, who is Grant Gustin’s father. He and the numbered company filed a responding motion record opposing some of the relief the Receiver’s being requested. I am advised that the Receiver and Mr. Gustin Sr. have reached an accommodation and as a result, he did not participate in the motion.
Facts
[3] Grant Gustin has been a farmer operating a hog and cash crop farm in Petrolia on land he owned at 4715 Lasalle Line and also rented elsewhere.
[4] Royal Bank of Canada holds a mortgage on the property and a first ranking general security agreement. Mr. Gustin is in default, which led to the appointment of the Receiver. Mr. Gustin has not been cooperative, and there is evidence in the record that he has withheld relevant information and has or has threatened to remove assets from the Receiver’s reach.
[5] The Receiver and Royal Bank of Canada say that he misrepresented that he was the owner of 931 hogs. The hogs may be owned by J. A. Cryderman Farms Inc. They are being managed by Scott Leystra, a business associate of Mr. Gustin.
[6] Mr. Gustin also has made eight payments totaling $242,047 to Mr. Leystra between March and May 2019. There is also an issue respecting the ownership of certain equipment and stored grain (which was the subject of Mr. Gustin Senior’s response to the motion). Mr. Gustin has said some of the equipment and crops are jointly owned with or owned outright by his father.
The Law
[7] As already noted, the Receiver seeks authority from the Court to make an assignment in bankruptcy of the debtor. Obviously, it is not a creditor.
[8] It wishes to avail itself of the enhanced powers available to a trustee in bankruptcy under ss. 158 and 161-167 of the Bankruptcy & Insolvency Act. This is necessary given Mr. Gustin’s lack of cooperation and misrepresentations.
[9] In support of the relief sought, Royal Bank of Canada submits that Mr. Gustin has committed acts of bankruptcy as defined in s. 42(1) of the BIA and in particular subsections (f), (g), (h) and (j). He availed himself of the provisions of the Farm Debt Mediation Act, thereby acknowledging his insolvency.
[10] As a preliminary matter, ss. 43-48 of the BIA protects farmers from creditor applications for bankruptcy orders. Section 48 provides:
Sections 43 to 46 do not apply to individuals whose principal occupation and means of livelihood is fishing, farming or the tillage of the soil or to any individual who works for wages, salary, commission or hire at a rate of compensation not exceeding twenty-five hundred dollars per year and does not on their own account carry on business.
[11] The Receiver and Royal Bank of Canada submit that Mr. Gustin is no longer entitled to the protection afforded by the BIA because he ceased being a farmer when the Receiver was appointed.
[12] There is authority supporting the Court’s power to grant this form of relief in Royal Bank of Canada v. Sun Squeeze Juices Inc., [1994] O.J. No. 567 (Gen. Div.) aff’d 1994 Carswell Ont. 310 (C.A.); and Bank of Montreal Owen Sound Golf and Country Club Ltd., 2012 ONSC 557.
[13] On behalf of Mr. Gustin, Mr. Blay opposes the relief for the following reasons:
an assignment is premature because there is no evidence of what the creditor’s position will be on liquidation;
Royal Bank of Canada is a single, secured creditor and as a result, must show special circumstances;
the cases relied upon both involved corporations rather than individuals; and
there are remedies available under provincial legislation for improper conveyances etc. and resort to the BIA is unnecessary.
Analysis
[14] I agree with the Receiver and Bank that Mr. Gustin ceased to fall within the ambit and protection of s. 48 of the BIA upon the appointment of the Receiver. His principal occupation and means of livelihood can no longer be said to be from active farming.
[15] Further, the Court is empowered to authorize the Receiver to file an assignment in bankruptcy. There is ample authority supporting that conclusion, including the decisions to which reference has been made, but also the cases cited in those decisions. There is no sound basis to distinguish the cases because the debtors were corporations. There is no legal distinction between a person and a corporation.
[16] Nor is Royal Bank of Canada a sole creditor. A list of Mr. Gustin’s unsecure Creditors is found in the material filed.
[17] Finally, while there may well be remedies available under provincial statues, it is needlessly inefficient and expensive to be required to resort to them. And more importantly, it would serve to delay the orderly execution of the Receiver’s undertaking.
[18] I am satisfied that the relief sought should be granted as requested and I have signed the order provided.
Justice H. A. Rady
Released: September 16, 2019
COURT FILE NO.: 35-2225602T
DATE: 20190916
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MNP Limited Receiver
Royal Bank of Canada
Applicant
- and -
Grant Gustin
Respondent
REASONS FOR JUDGMENT
J.
Released: September 16, 2019