A couple of quick case notes which I thought would be interesting to Trustees and Debtors alike…
Avery’s Trucking Inc. (Re), 2013 NSSC 302
A Trustee in this case acting in its capacity as receiver, sought to enforce its fees in priority to those of not only the unsecured creditors, but also all the creditors including the secured creditors and the crown trusts. The court did a thorough review of when it is acceptable for the Trustee to do so, including citing a couple of Ontario Superior Court actions. However, the court decided that the funds had to be released to the secured creditors, not subject to the trustee’s remuneration. There was no creditor resolution, no direction from the secured creditors to the Trustee to act in a certain manner (such as maintaining heat, collecting rent etc.). It also specifically mentions that the secured creditors property is not considered property of the bankrupt, and therefore would not be subject unless there were specific circumstances.
Witiluk v Gosselin 2013 Canlii 44808 (ON SC)
This is a case in which a person loaned money to another. While the facts aren’t that important, the judge in this case reviewed the requirements for Fraudulent Transactions under the 178(1)(e) of the Bankruptcy and Insolvency Act. The idea behind it being “false pretences” and “fraudulent misrepresentation” are virtually the same, and that each rests, on deceit. There are four required elements 1.) the bankrupt made a representation 2.) the representation was false 3.) the representation was made knowingly, without belief in its truth, or recklessly indifferent to whether it was false 4.) the creditor relied upon the representation in turning over property. It must also be done at the time of the bankruptcy, or before, not after the client had declared bankruptcy. The onus is on the person that was defrauded.