Appleby Estates Ltd., Re, (1984) 5 O.A.C. 39 (CA)
Judge | Lacourcière, Blair and Thorson, JJ.A. |
Court | Court of Appeal (Ontario) |
Case Date | April 02, 1984 |
Jurisdiction | Ontario |
Citations | (1984), 5 O.A.C. 39 (CA) |
Appleby Estates Ltd., Re (1984), 5 O.A.C. 39 (CA)
MLB headnote and full text
Re Appleby Estates Ltd.; Smith, Klymas, Selk Ltd., The Trustee of the Estate of Appleby Estates Ltd., a bankrupt v. McKay
Indexed As: Appleby Estates Ltd., Re
Ontario Court of Appeal
Lacourcière, Blair and Thorson, JJ.A.
September 27, 1984.
Summary:
The shares of a company were owned equally by a husband and wife. The husband ran the company until his death in 1977. After his death, the wife attempted unsuccessfully to operate the business and the company became bankrupt in 1978. After her husband's death and prior to the bankruptcy two company transactions took place which benefited the wife. The trustee applied successfully to have these transactions set aside as fraudulent preferences under ss. 73 and 74 of the Bankruptcy Act. The wife appealed.
The Ontario Court of Appeal allowed the appeal and held that the transactions were not fraudulent and void because the wife was not a creditor against whom ss. 73 and 74 applied.
Bankruptcy - Topic 2601
Trustees - General - The Ontario Court of Appeal discussed the principle that where it would be unfair for a trustee to take full advantage of his legal rights, the court will order him not to do so and will order him to return money which he may have collected (Re Condin; Ex parte James (1874), 9 Ch. App. 609) - See paragraphs 15 to 19.
Bankruptcy - Topic 7213
Setting aside transactions prior to bankruptcy - Fraudulent preferences - Creditor - What constitutes - The Bankruptcy Act, ss. 73 and 74, provided for the setting aside of fraudulent preferences by debtors in favour of creditors close to the time of the debtor's bankruptcy - The Ontario Court of Appeal examined two transactions in favour of a shareholder made by a company prior to its bankruptcy and held that the transactions were not void under ss. 73 and 74, because the shareholder was not a creditor of the company within the meaning of the sections - See paragraphs 1 to 20.
Cases Noticed:
Van der Liek, Re (1970), 14 C.B.R.(N.S.) 229, ref'd to. [para. 9].
Condon, Re; Ex parte James (1874), 9 Ch. App. 609, consd. [para. 15].
Clark (A Bankrupt), Re, Ex parte The Trustee v. Texaco Ltd., [1975] 1 W.L.R. 559, ref'd to. [para. 17].
McDonald, Re (1971), 16 C.B.R.(N.S.) 244, ref'd to. [para. 18].
Kelly, Re (1980), 27 O.R.(2d) 478, ref'd to. [para. 18].
Statutes Noticed:
Bankruptcy Act, R.S.C. 1970, c. B-3, sect. 73, sect. 74 [para. 1]; sect. 295 [para. 13].
Authors and Works Noticed:
Williams on Bankruptcy (18th Ed.), p. 279 [para. 18].
Counsel:
G.J. Smith, Q.C., for McKay;
W.J. Meyer, Q.C., for the trustee.
This appeal was heard on April 2, 1984, before Lacourcière, Blair and Thorson, JJ.A., of the Ontario Court of Appeal. The following decision of the Court of Appeal was delivered by Blair, J.A., and released on September 27, 1984:
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