ENDORSEMENT

Introduction

[1] On April 9, 2023, the applicant commenced this application seeking a declaration that he is the beneficial owner of two properties—537 Kilbirnie Private, Ottawa, and 729 St-Joseph Boulevard, Gatineau—as well as all common shares of 6287565 Canada Inc.

[2] The applicant claims that he was in a common-law relationship with the respondent from 1992 to 2023, a period spanning 31 years. He asserts that during this period, he provided funds to purchase and maintain several properties registered in the respondent's name. He further claims that he has always been the sole beneficial owner of 6287565 Canada Inc.

[3] The respondent moves for summary judgment under Rule 16 of the Family Law Rules. She asserts that she was never in a common law relationship with the applicant and therefore challenges the appropriateness of a family law proceeding. However, she acknowledges that the applicant may pursue a civil claim based on the same facts and seek similar relief.

[4] The Court declines to grant summary judgment on this ground. In Ottawa, the Superior Court has jurisdiction to hear both civil and family matters at first instance. Rule 2.01 of the Rules of Civil Procedure provides that a failure to comply with the Rules is an irregularity, and does not render a proceeding a nullity. Where there is non-compliance with the Rules, the Court may grant all necessary relief, on such terms as are just, to secure the just determination of the real matters in dispute. Pursuant to Rule 2.01(2), the court shall not set aside an originating process on the ground that the proceeding should have been commenced by an originating process other than the one employed.

[5] If I had found that the parties were not in a common law relationship—and there is reason to believe they were not—I would have directed that the application proceed as a civil matter. I would also have set a timetable for the exchange of pleadings.

[6] Following the hearing of the motion, the Court invited the parties to address an issue that had not been raised by either party: whether the applicant has standing to assert claims against the properties, given his two prior assignments in bankruptcy. The Court referred the parties to section 71 of the Bankruptcy and Insolvency Act, and to the definition of "property" in section 2. Both parties availed themselves of the opportunity to make submissions.

[7] For the reasons set out below, the Court finds that the applicant lacks standing to bring this application. Accordingly, the application is stayed.

Background

[8] The parties had a child, Carina, in March 1996. They were never married. Beyond these facts, their accounts of the relationship diverge sharply.

[9] The applicant alleges that the parties began dating in 1991 and that the respondent moved into his home at 57 rue du Mistral, Gatineau, in 1992. He states that they lived there together until the property was sold in 2007. He further alleges that the respondent stopped working after Carina's birth, but remained on his business payroll so she would have independent income, despite his financial support of the household. According to the applicant, they shared a domestic life until 2023: living together, dining together, vacationing together, attending family events, and maintaining an intimate relationship.

[10] The applicant moved to the Bahamas in 2015. He alleges that, until 2023, he spent just under six months each year residing with the respondent at her new address on Kilbirnie street in Ottawa.

[11] The respondent alleges that she met the applicant in 1990 and that their brief and tumultuous relationship ended following Carina's birth in 1996. She denies that they were ever in a conjugal relationship. She acknowledges living with the applicant during her pregnancy at his home on rue du Mistral. She further alleges that the applicant was an absent father and that she raised Carina independently. However, she states that she did not prevent Carina from seeing her father, and that the applicant was welcome to visit her at her home when he was in town.

Transfer of 57 du Mistral and Purchase of 537 Kilbirnie

[12] The applicant alleges that he transferred title to the du Mistral property to the respondent in June 1998. Although the land transfer documents record consideration of $123,000, he claims he did not receive this amount. He alleges that ownership was transferred to the respondent in name only, and that he continued to be the property's beneficial owner. The respondent assumed the existing mortgage at the time of transfer, but the applicant alleges that he paid all carrying costs, property taxes and insurance.

[13] The parties offer sharply contrasting explanations for the transfer. The respondent asserts that the property was transferred to her because the applicant was not paying child support and she was raising Carina alone. The applicant, in his affidavit, states that he was opening a third restaurant and that he transferred the property to protect his assets from potential creditors.

[14] The respondent sold the du Mistral property in 2007 and purchased a home at 537 Kilbirnie in Ottawa, where she continues to live with Carina. The property was purchased for $306,888. The applicant alleges that the purchase was funded by proceeds from the sale of the du Mistral property and a vacant land parcel he owned on Tadoussac Street in Aylmer, Quebec. He also alleges that he lived at the Kilbirnie property with the respondent, a claim the respondent denies.

Purchase of 729 Boul. St-Joseph, Gatineau

[15] On October 6, 2004, the respondent acquired 729 Boul. St-Joseph in Gatineau through her corporation, 6287565 Canada Inc. The property is a 17-unit commercial plaza, and the applicant operated one of his restaurants from that plaza.

[16] The applicant alleges that he negotiated the purchase of the property. He states that, although the property was valued for tax purposes at over $1 million, the Transfer of Title records a sale price of only $700,000. The applicant further alleges that he transferred an additional $400,000 to the seller's bank account in Nassau, Bahamas. This separate amount was not included in the purchase price and was allegedly paid to enable the seller to avoid capital gains taxes.

[17] The applicant states that the respondent accessed $141,000 from a line of credit secured against the du Mistral property to help fund the purchase of this commercial property. The respondent also obtained a mortgage of $525,000 to finance the purchase.

The Applicant's Bankruptcies

[18] The applicant made two assignments in bankruptcy: first in 2005 (estate 33-829410) and again in 2011 (estate 33-1571136). His Licensed Insolvency Trustees were Bernier et Associés.

[19] The applicant admits to making several false statements during his bankruptcies. In his Forms 79 (Statement of Affairs), he declared that he had no assets. In his affidavit, he acknowledges this was false, as he held beneficial ownership of the St-Joseph and Kilbirnie properties at the time. He also admits to providing an incorrect address and falsely stating that he was not in a common law relationship for both bankruptcies. The applicant explains that these false statements were made to protect his assets from creditors.

Issue

[20] Does the applicant have standing to pursue a claim for a resulting trust given his two prior bankruptcies?

Analysis

[21] Upon an assignment in bankruptcy, a bankrupt's property vests in the trustee. Section 71 of the BIA provides that, once a bankruptcy order is made or an assignment is filed, bankrupts lose the capacity to deal with their property. Subject to the BIA and the rights of secured creditors, the property immediately passes to the trustee and continues to vest in any successor trustee without further assignment.

[22] Property is defined in s. 2 as:

property means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property;

[23] There is no doubt that the applicant's alleged interests in the properties fall within the broad definition of "property" under the BIA. If the applicant held such interests, they vested in the trustee upon his assignments in bankruptcy in 2005 and 2011.

[24] The applicant contends that he retains standing to pursue his trust claims despite his prior bankruptcies. He argues that he was still in a common law relationship with the respondent at the time of both bankruptcies, and that his trust claims only arose upon their separation. In support, he relies on this court's decision in Elkaim v. Markina.

[25] In Elkaim, the parties were common law partners. Mr. Elkaim, a carpenter, claimed to have contributed money, labour, and management to two properties owned by his former spouse. Before their separation, he made an assignment in bankruptcy and did not disclose a constructive trust claim against his former spouse in his Statement of Affairs.

[26] Justice Perrell held that, in the circumstances before him, Mr. Elkaim did not have an unjust enrichment claim at the time of his bankruptcy. He reasoned that it was not unjust for the former spouse to retain the benefit of Mr. Elkaim's labour during the relationship. The unjustness only arose upon the breakdown of the common law relationship, when it might become inequitable for the former spouse to retain those benefits. Justice Perrell found this approach consistent with public policy, as it prevents creditors from expanding the bankruptcy estate by compelling a bankrupt to pursue claims that would only arise following a genuine relationship breakdown.

[27] Elkaim is distinguishable. First, there are significant doubts as to whether the applicant was in a common law relationship with the respondent at the time of his bankruptcies. Despite claiming a 31-year relationship, the applicant has not produced any photographs, letters, birthday or Father's Day cards, or emails evidencing the relationship. Given that this summary judgment motion was based on the parties not being common law partners, the applicant had an obligation to put his best foot forward. The available evidence falls short of establishing a common law relationship.

[28] Secondly, in Elkaim, the claimant provided labour and asserted a constructive trust. In contrast, the applicant's claim here is properly characterized as one for a resulting trust, which remains relevant in domestic cases.

[29] The principal legal mechanisms for resolving property disputes following the breakdown of a common law relationship are the doctrines of unjust enrichment and resulting trust. The Supreme Court has clarified that the requirement of a "common intention" should no longer be applied to resulting trusts. However, it affirmed that traditional resulting trust principles may still be relevant in disputes between common law spouses.

[30] A resulting trust arises where one partner gratuitously transfers property to the other, and legal title is held solely by the recipient. The fundamental principle of a resulting trust is that it is imposed to return property to the person who transferred it and is entitled to its beneficial ownership, despite title being in another's name. If these elements are demonstrated, the defendant may rebut the presumption that the claimant intended to create a trust, rather than to make a gift. Unlike a claim in unjust enrichment, the claimant need not establish the absence of a juristic reason for the enrichment. In any event, there is no injustice in a common law spouse asserting that property transferred before separation should revert to them, as they remained the beneficial owner throughout.

[31] Thirdly, in Elkaim, there is no suggestion that the labour was provided for any purpose other than the general betterment of the family unit. Had the common law relationship continued, no claim would have arisen. Requiring a bankrupt to disclose such a claim to a trustee could lead to litigation that would not otherwise have materialized.

[32] In contrast, the applicant's evidence indicates that the transfer of the du Mistral property to the respondent, and the purchase of the St-Joseph property using the applicant's funds but registered in the respondent's name, were made with the intent to defeat creditors. The Court of Appeal has recently confirmed that a claimant who was not a creditor at the time of a transfer may challenge a transfer that was made with the intention to defraud creditors generally, whether present or future. To establish a fraudulent conveyance, it is sufficient to plead that, at the time of the transfer, the settlor anticipated potential claims from a general class of future creditors and conveyed the property to defeat such claims if they arose. This is precisely what the applicant says he did.

[33] In D'Alimonte v. Porretta, the plaintiff claimed to be a 50% beneficial owner of a dental clinic. However, at the time she asserted this ownership, she had made an assignment in bankruptcy and declared, as did the applicant, that she had no assets. The motions judge dismissed her claim entirely, reasoning that allowing it to proceed would disregard her wrongful conduct in bankruptcy. This reasoning is directly applicable to the present case:

It may be a simple matter to hide assets from creditors by having others, such as spouses, friends, or family members, hold them in trust. On the basis of Ms. D'Alimonte's pleadings, that seems to be what has happened here. If the parties had remained together, this hiding of assets would have succeeded. To permit Ms. D'Alimonte to proceed with the claim now would be to turn a blind eye to her wrongful conduct in the bankruptcy. It would be to countenance this sort of fraud by finding that, in the minority of cases where it doesn't work out as expected for the debtor, the court will let her proceed as if nothing untoward had happened.

[34] The Court of Appeal upheld the motion judge's order dismissing the action.

[35] Finally, the Court is struck by the applicant's candid admission to a series of disreputable and unlawful actions. Under oath, he acknowledges having conveyed property to defeat potential creditors, failed to disclose assets to his trustee—an offence under section 198 of the BIA—knowingly assisted the seller of the St-Joseph property in evading capital gains taxes, and paid wages to the respondent when she was not an employee. The Court cannot condone such conduct.

[36] The Court directs the Registrar to mail a copy of these reasons, together with the applicant's affidavit, to the applicant's Licensed Insolvency Trustee, Bernier et Associés, and to the Superintendent of Bankruptcy for such action as they consider appropriate. The evidence before the Court did not identify the trustee responsible for the applicant's second bankruptcy. If the trustee was not Bernier et Associés, the Court requests that the Superintendent of Bankruptcy forward these materials to the correct trustee.

Disposition

[37] This application is hereby stayed. The stay may be lifted in accordance with the Bankruptcy and Insolvency Act.

[38] If the parties cannot agree on costs, they may seek directions regarding costs submissions.

Justice A. Kaufman

DATE: October 1, 2025