Court File and Parties

COURT FILE NO.: CV-19-81597 DATE: 2023/04/28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: D. & A. Macleod Company Ltd., in its capacity as Trustee for the Estate of Donna Elizabeth Walker, Plaintiff AND Donna Elizabeth Walker and Barry McGill, Defendants

BEFORE: Justice Robert Smith

COUNSEL: Andrew D Ferguson, counsel for the Plaintiff, D. & A. MacLeod Company Ltd. in its capacity as Trustee Cheryl Letourneau, counsel for the Defendant, Donna Elizabeth Walker Barry McGill, self represented Defendant

HEARD: March 21, 2023

REASONS FOR DECISION

[1] D. & A. MacLeod Company Ltd. (the “Trustee”) is a licensed insolvency Trustee. The Trustee has brought a motion for summary judgment against the Defendants, Donna Elizabeth Walker (“Ms. Walker”) and Barry McGill (“Mr. McGill”) seeking an order setting aside the conveyance, registered on May 3,2019 from Ms. Walker to Mr. McGill, for a consideration of one dollar.

[2] The Trustee submits that the transfer was made at below undervalue, for the purpose of defeating, hindering, or delaying Ms. Walker’s creditors and within 3 months before declaring bankruptcy. As a result, the Trustee submits that the conveyance is void under s. 96(1) of the Bankruptcy and Insolvency Act, RSC 1985, c-B-3 (the “BIA”). The Trustee also alleges that the transfer is void under the provisions of The Fraudulent Conveyances Act, R.S.O. c-F.29 and the Assignment and Preferences Act, R.S.O. c. A. 33.

[3] Ms. Walker does not dispute that she transferred the property located at 5530 Richmond Drive, Long Sault to Barry McGill, who was a close family friend for $1 on May 3, 2019. She also agreed that she declared bankruptcy on July 15, 2019, which is within 3 months of the transfer of the property to Mr. McGill.

[4] Ms. Walker claims that the Trustee made an error when completing her Statement of Affairs when she answered “no” to the questions of whether she had transferred any assets in the last 12 months, or whether she had transferred any real estate or had made any gifts in excess of $500 in the last 5 years. Ms. Walker alleges that the Trustee’s assistant, who interviewed her to complete her Statement of Affairs, entered the wrong answers to the above questions.

[5] Ms. Walker signed the Statement of Affairs and certified that the information provided therein was true and correct. The answers to the 3 questions referred to above should have been “yes” because she had transferred her partially completed residence to Mr. McGill for a dollar within the previous 3 months. The transfer stated that there was nominal consideration and that it was a gift.

Facts

[6] The property located at 5530 Richmond Drive, Long Sault was purchased by Ms. Walker on December 16, 2010 for $20,000 when it was a vacant lot.

[7] The MPAC report assessed the value of her property as of January 1, 2016 at $177,000.

[8] On March 22, 2019, Ms. Walker was ordered to pay costs of $5,203.73 to two of her siblings as a result of litigation involving her mother’s estate. On April 24, 2019 and May 2, 2019 the lawyer representing her siblings in the estate litigation, requested that the order be approved as to form and content.

[9] On May 3, 2019, Ms. Walker conveyed her Richmond Drive property to Mr. McGill for $1 with the explanation that it was a gift.

[10] On July 16, 2019, Ms. Walker filed an assignment in bankruptcy with creditors owed approximately $9,000. The Trustee stated that he would never have recommended that she file for bankruptcy if Ms. Walker had advised him about the transfer and gift of the Richmond Road property to Mr. McGill for a dollar.

[11] As of April 27, 2022, the MPAC market sales report prepared for calculating property taxes, estimated the market value of the Richmond Drive property at $352,000. It is not disputed that the construction of a dwelling on the Richmond Drive property has not been fully completed.

[12] The MPAC property value assessment report indicates that the Richmond Drive property as of January 1, 2016 was worth $77,000. Based on this assessed value and the fact that the lot was initially purchased for $20,000 in 2010, I find that the transfer of the Richmond Drive property to Mr. McGill for $1 was at below market value.

[13] Ms. Walker admitted at the hearing that Mr. McGill was a very close family friend and as such the parties were not dealing at arm’s length.

[14] Ms. Walker stated in her affidavit that she and Mr. McGill agreed that he would complete the construction of the residence on the property and build an in-law suite where she could reside rent free in the future. This alleged agreement was not in writing and therefore could not convey or reserve any interest in land to Ms. Walker. In any event the value of the property conveyed to Mr. McGill, even if under this arrangement, would greatly exceed the amount of one dollar.

[15] Ms. Walker also stated that she hadn’t reviewed her Statement of Affairs before she signed it. She stated that when asked if she had owned a house in the last 5 years, she had answered “hasn’t everyone at my age”.

[16] During his cross-examination the Trustee stated that, he disagreed with Ms. Walker’s evidence in this regard and stated that if she had given the answer indicating that she had owned a house in the last 5 years, his assistant would not have inserted the answer “no”, and there would have been follow-up questions.

[17] The following two issues must be decided:

I. Issue #1 - Have the Defendants raised a genuine issue requiring a trial?; and

II. Issue #2 - Should the transfer of the Richmond Road property from Ms. Walker to Mr. McGill on May 3, 2019, for $1 be set aside pursuant to s. 96(1) of the BIA, the Fraudulent Conveyances Act or the Assignment and Preferences Act?

Issue #1 - Have the Defendants raised a genuine issue requiring a trial?

[18] The Defendants do not dispute that the issue may be decided on a summary motion and do not argue that there is a genuine issue requiring a trial.

[19] In Hyrniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 the Supreme Court stated that a matter may be decided on a motion for summary judgment if the judge can make the necessary findings of fact, can apply the law to the facts and where it is the proportionate, more expeditious and less expensive means to achieve a just result.

[20] Under Rule 20.04(2.1) of the Rules of Civil Procedure. R.R.O. 1990 Reg 144, the court may weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence.

Disposition of Issue #1

[21] The Defendants have not argued that they have raised a genuine issue that requires a trial of this action and I agree. I’m satisfied that the matter may be fairly decided using the fact-finding powers as set out under Rule 20.04(2.1) and that a summary judgment motion is proportionate, expeditious and least expensive means to achieve a just result in the circumstances.

Issue #2 - Should the transfer of the Richmond Road property from Ms. Walker to Mr. McGill on May 3, 2019 for $1 be set aside pursuant to [section 96(1)](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-b-3/latest/rsc-1985-c-b-3.html#sec96subsec1_smooth) of the [BIA](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-b-3/latest/rsc-1985-c-b-3.html), the Fraudulent Conveyances Act or the Assignment and Preferences Act?

I. Section 96(1) of the BIA reads as follows:

Under section 96(1) of the BIA, the Court is empowered to void three types of Transfers at Undervalue or alternatively, to order the difference be paid by the recipient. These scenarios are as follows:

(1) Arm’s Length parties – within one year prior to bankruptcy: if the Transfer at Undervalue was between parties dealing with each other at arm’s length within one year before the bankruptcy and if the Trustee (or creditor) can prove both:

i. the debtor was insolvent at the time of the transfer (or was rendered insolvent by it); and

ii. the debtor intended to defraud, defeat, or delay a creditor;

(2) Non-Arm’s Length parties – between one and five years prior to bankruptcy: if the Transfer at Undervalue was between parties not dealing with each other at arm’s length (for instance, if they are related to each other) more than one but not more than five years before the bankruptcy and if the Trustee (or creditor) can prove either:

i. the debtor was insolvent at the time of the transfer (or was rendered insolvent by it); or alternatively

ii. the debtor intended to defraud, defeat or delay a creditor;

(3) Non-Arm’s Length parties – within one year prior to bankruptcy: if the Transfer at Undervalue was between parties not dealing with each other at arm’s length (related parties, for instance) within one year before the bankruptcy.

[22] I do not accept Ms. Walker’s evidence that the Trustee’s employee entered false and inaccurate information in her Statement of Affairs, where Ms. Walker indicated that she had not transferred or gifted any property to anyone in the last 5 years. I infer that Ms. Walker gave the inaccurate answers to the Trustee’s assistant because she signed the Statement of Affairs stating that the facts contained therein were true. Ms. Walker was aware when she conveyed her property to Mr. McGill for a dollar that a court order would be obtained in the very near future by her siblings in the estate litigation ordering her to pay approximately $5000 in legal costs.

[23] Ms. Walker was very aware that she had transferred her Richmond Road property to Mr. McGill for $1 approximately 2 months before meeting with the Trustee. She was also aware that her siblings were about to obtain a court order against her which would have become a lien on her property. She was aware that her property was worth substantially more than $1 having been valued by MPAC at $177,000 in 2016. She also agreed that Mr. McGill was a very close family friend and that they were not dealing at arm’s length.

[24] I find that the transfer to Mr. McGill for $1 was Undervalue. The vacant lot was purchased in 2012 by Ms. Walker for $20,000 and the property with a partially completed house built on it was valued at hundred and $77,000 in 2016. The Defendants have not provided any evidence that a one dollar value was the fair market value of the property. For these reasons, I find that the property at 5530 Richmond Drive, Long Sault, was transferred Undervalue when it was transferred or gifted to Mr. McGill on May 3, 2019 for $1.

[25] Ms. Walker agreed at the motion that Mr. McGill was a close family friend and that they were non-arms-length parties. The transfer to Mr. McGill was made at Undervalue and I find that Ms. Walker intended to defeat or delay her creditors based on the following circumstances:

a) shortly before she transferred her Richmond drive property she had been ordered to pay costs of approximately $5000;

b) the lawyer for her 2 siblings was in the process of having the order signed and entered which would have become an encumbrance on her property;

c) she had no other substantial creditors at the time she declared bankruptcy and she was rendered insolent by the transfer of her property to Mr. McGill.

[26] I, therefore, find that the transfer from Ms. Walker to Mr. McGill dated May 3, 2019 is void under section 96(1) of the BIA. It is not necessary for me to decide on the applicability of the Fraudulent Conveyances Act or the Assignment and Preferences Act given my ruling under section 96 of the BIA.

Disposition

[27] For the above reasons the Trustee’s motion for summary judgment is granted and I order as follows:

i. the property located at 5530 Richmond Drive, Long Sault, Ontario registered on May 3, 2019 as instrument No. ST104061 is void under section 96(1) of the BIA;

ii. the conveyance registered as Instrument No. ST104061 shall be removed from the property;

iii. the property located at 5530 Richmond Drive remains owned by Donna Elizabeth Walker;

iv. a certificate of pending litigation may be registered against title to the property; and,

v. the Defendants, jointly and severally, shall pay costs to the Plaintiff on a partial indemnity scale in the amount of $15,000 plus HST plus disbursements of $2,885.93 plus HST of $310.04.

Justice Robert Smith

Date: April 28, 2023

COURT FILE NO.: CV-19-81597 DATE: 2023/04/28

ONTARIO SUPERIOR COURT OF JUSTICE

RE: D. & A. Macleod Company Ltd., in its capacity as Trustee for the Estate of Donna Elizabeth Walker, Plaintiff AND Donna Elizabeth Walker and Barry McGill, Defendants

COUNSEL: Andrew D Ferguson, counsel for the Plaintiff, D. & A. MacLeod Company Ltd. in its capacity as Trustee Cheryl Letourneau, counsel for the Defendant, Donna Elizabeth Walker Barry McGill, self represented Defendant

Reasons for decision Robert Smith J.

Date: April 28, 2023