Goertz (Bankrupt) v. Goertz et al., (1994) 122 Sask.R. 93 (QB)

• Judge: Klebuc, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: June 15, 1994
• Jurisdiction: Saskatchewan
• Citations: (1994), 122 Sask.R. 93 (QB)

Goertz v. Goertz (1994), 122 Sask.R. 93 (QB)

MLB headnote and full text

Peat Marwick Thorne Inc. as Trustee in Bankruptcy of The Estate of Otto P. Goertz (applicant) v. Lynn Octavia Goertz and Otto P. Goertz (respondents)

(1994 Q.B. No. 5809)

Indexed As: Goertz (Bankrupt) v. Goertz et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Klebuc, J.

June 15, 1994.

Summary:

A trustee in bankruptcy applied for, inter alia, declarations that the bankrupt breached s. 91(2) of the Bankruptcy and Insolvency Act, ss. 3 and 4 of the Fraudulent Prefer­ences Act and s. 3 of the Statute of Eliza­beth.

The Saskatchewan Court of Queen's Bench allowed the application in part.

Bankruptcy - Topic 481

Property of bankrupt - Exemptions or exclusions - General - The Saskatchewan Court of Queen's Bench held that where a disposition of property was declared void as against the transferor's trustee in bank­ruptcy, any exemption rights held by the bankrupt with respect to such property immediately prior to the assignment in bankruptcy, revive - See paragraphs 54, 56, 58.

Bankruptcy - Topic 492

Property of bankrupt - Exemptions or exclusions - Time for determination of - The Saskatchewan Court of Queen's Bench held that a bankrupt was entitled to claim an exemption at any time before the trustee completed administration of the bankrupt's estate, regardless that the bank­rupt failed to claim the exemption at the time of filing for bankruptcy - See para­graph 59.

Bankruptcy - Topic 6452

Administration of estate - Actions by trustee - For possession of assets fraudu­lently conveyed - The Saskatchewan Court of Queen's Bench held that a trustee in bankruptcy may seek relief pursuant to the Statute of Elizabeth and the Fraudulent Preferences Act in addition to those avail­able under the Bankruptcy and Insolvency Act - See paragraph 38.

Bankruptcy - Topic 7212

Setting aside transactions prior to bank­ruptcy - Fraudulent preferences - What constitutes a fraudulent preference - A husband transferred to his wife all his interest in solely-owned and jointly-owned farm lands and the jointly-owned matrimonial home, 13 months prior to making an assignment in bankruptcy, in alleged repayment of loans - The Saskatchewan Court of Queen's Bench held that the husband contravened ss. 3 and 4 of the Fraudulent Preferences Act and that the transfers were void as against the trustee in bankruptcy - See paragraphs 39 to 46.

Bankruptcy - Topic 7226

Setting aside transactions prior to bank­ruptcy - Fraudulent preferences - Practice - Application to set aside - Authority of trustee - [See Bankruptcy - Topic 6452 ].

Bankruptcy - Topic 7323

Setting aside conveyances prior to bank­ruptcy - Settlements - Settlement defined - A husband transferred to his wife his interest in solely-owned and jointly-owned farm lands and the jointly-owned matrimonial home, 13 months prior to making an assignment in bankruptcy, in alleged repayment of loans - The Sas­katchewan Court of Queen's Bench held that the conveyance constituted a settle­ment within s. 91(2) of the Bankruptcy and Insolvency Act, made at a time when the husband was unable to pay all of his debts without the benefit of these assets - The transfers were not in good faith within s. 91(3) of the Act or for valuable consider­ation, there being no legally enforceable debt between the husband and wife - The court found the transfers void as against the trustee in bankruptcy - See paragraphs 25 to 37.

Damages - Topic 1336

Exemplary or punitive damages - Bank­ruptcy proceedings - [See Practice - Topic 7470.2 ].

Fraud and Misrepresentation - Topic 1405

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under the Statute of Elizabeth - Convey­ance defined - A husband transferred to his wife all his interest in solely-owned and jointly-owned farm lands and the jointly-owned matrimonial home, 13 months prior to making an as­signment in bankruptcy, in alleged repay­ment of loans - The Sas­katchewan Court of Queen's Bench held that the husband contravened the Statute of Elizabeth and that the trans­fers were void as against the trustee in bankruptcy - See paragraphs 49 to 50.

Practice - Topic 7470.2

Costs - Solicitor and client costs - Enti­tlement to - Bankruptcy proceedings - A trustee in bankruptcy successfully applied to set aside transfers of land made by the bankrupt to his wife just prior to his bank­ruptcy - The parties did not conceal their actions or in any way attempt to mislead the trustee - The Saskatchewan Court of Queen's Bench held that the trustee was not entitled to punitive damages, but was entitled to costs on a solicitor and client basis - See paragraphs 68 to 70.

Real Property - Topic 6681

Partition - Bars - General - The Sas­katchewan Court of Queen's Bench held that the owner of one moiety or more was not entitled as a matter of right under the Partition Act to a sale where special cir­cumstances exist - See paragraphs 63 to 67.

Words and Phrases

Settlement - The Saskatchewan Court of Queen's Bench discussed the meaning of the word "settlement" as found in s. 91(2) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 - See paragraphs 20 to 24.

Cases Noticed:

Frobisher Ltd. v. Canadian Pipelines & Petroleums Ltd. (1957), 23 W.W.R.(N.S.) 241 (Sask. C.A.), refd to. [para. 16].

Lamb v. Lamb, Lamb (F.J.) Development Ltd. and Lark Haven Developments Ltd. (1984), 32 Sask.R. 1 (C.A.), refd to. [para. 16].

Clark (W.) Land Services Ltd. v. Roxy-Clarion Petroleum Ltd. et al. (1988), 70 Sask.R. 217 (C.A.), refd to. [para. 17].

Maksymew et al. v. Maksymew (1986), 51 Sask.R. 62 (C.A.), refd to. [para. 17].

Wilson and Wilson (Bankrupt), Re (1988), 88 A.R. 205; 69 C.B.R.(N.S.) 156 (C.A.), refd to. [para. 20].

Springridge Farms Ltd. (Bankrupt) v. Spence (1991), 95 Sask.R. 193; 7 C.B.R.(3d) 228 (Q.B.), refd to. [para. 20].

Bozanich, Re, [1942] S.C.R. 130; 23 C.B.R. 234, refd to. [para. 21].

Shickele, Re, [1977] 5 W.W.R. 421; 25 C.B.R.(N.S.) 67 (B.C.S.C.), refd to. [para. 21].

Betty Shop Ltd. (Bankrupt) v. Hanen In­vestments Ltd. et al. (1987), 76 A.R. 129; 63 C.B.R.(N.S.) 176 (Q.B.), refd to. [para. 21].

Whetstone, Re (1984), 52 C.B.R.(N.S.) 280; 47 O.R.(2d) 719; 12 D.L.R.(4th) 249 (S.C.), refd to. [para. 21].

Cohen v. Mahlin (1926), 7 C.B.R. 655 (Alta. T.D.), refd to. [para. 21].

Jobin (Bankrupt) c. Monarch Life Assurance Co. (1986), 1 Q.A.C. 99; 63 C.B.R.(N.S.) 277 (C.A.), refd to. [para. 22].

Ramgotra (Bankrupt), Re (1993), 108 Sask.R. 257 (Q.B. Bktcy.), affd. (1994), 120 Sask.R. 277; 68 W.A.C. 277 (C.A.), refd to. [para. 22].

Royal Bank of Canada v. Oliver and Babiy (Bankrupts) (1992), 102 Sask.R. 48 (Q.B.), refd to. [para. 23].

Klassen (Bankrupt)(No. 2), Re (1990), 90 Sask.R. 29; 1 C.B.R.(3d) 263 (Q.B.), refd to. [para. 23].

Geraci, Re (1970), 14 C.B.R.(N.S.) 253 (Ont. C.A.), refd to. [para. 24].

Murray v. Saskatoon (City)(No. 2), [1952] 2 D.L.R. 499 (Sask. C.A.), refd to. [para. 26].

Bank of Montreal v. Ostapowich (1992), 98 Sask.R. 198 (Q.B.), refd to. [para. 26].

Kozan Furniture (Yorkton) Ltd. Estate v. Countrywide Factors Ltd. (1977), 14 N.R. 91; 23 C.B.R.(N.S.) 97 (S.C.C.), refd to. [para. 32].

Koop v. Smith (1915), 51 S.C.R. 554; 8 W.W.R. 1203; 25 D.L.R. 355, refd to. [para. 32].

Antonation Estate v. Antonation (1978), 13 A.R. 1; 29 C.B.R.(N.S.) 46 (C.A.), refd to. [para. 32].

Haley, Re (1944), 25 C.B.R. 170 (Ont. H.C.), refd to. [para. 34].

Barnett, Re (1983), 43 A.R. 215; 46 C.B.R.(N.S.) 211 (Q.B.), refd to. [para. 34].

Hansen, Re (1977), 26 C.B.R.(N.S.) 57 (Ont. H.C.), refd to. [para. 35].

Appleby Estates Ltd., Re (1984), 5 O.A.C. 39; 48 O.R.(2d) 1 (C.A.), refd to. [para. 35].

Thimianis, Re (1985), 54 C.B.R.(N.S.) 314 (Ont. S.C.), refd to. [para. 36].

Dondee Stock Farms Ltd. (Bankrupt), Re (1993), 117 Sask.R. 1 (Q.B. Bktcy.), appld. [para. 41].

Hayes, Re, [1931] 1 W.W.R. 301; 12 C.B.R. 225; 25 Sask. L.R. 257 (K.B.), refd to. [para. 51].

Neuls (Bankrupt), Re; Touche Ross Ltd. v. First City Trust Co. et al. (1985), 37 Sask.R. 60; 56 C.B.R.(N.S.) 132 (C.A.), dist. [para. 52].

Gervais v. Canadian Imperial Bank of Commerce (1985), 56 C.B.R.(N.S.) 238 (Sask. C.A.), dist. [para. 54].

Camgoz (Bankrupt), Re (1988), 70 Sask.R. 70; 70 C.B.R.(N.S.) 131 (Q.B.), dist. [para. 54].

Andrew v. FarmStart, [1989] 2 W.W.R. 127; 71 Sask.R. 146 (C.A.), dist. [para. 55].

Hammill, Re (1984), 54 A.R. 132; 52 C.B.R.(N.S.) 125 (Q.B.), dist. [para. 55].

Sather v. Household Realty Corp. (1980), 35 C.B.R.(N.S.) 302 (B.C.C.A.), dist. [para. 55].

Holthuysen (Trustee of) v. Holthuysen, [1987] 2 W.W.R. 304; 63 C.B.R.(N.S.) 169 (Alta. C.A.), consd. [para. 58].

Kreutzweiser, Re (1966), 10 C.B.R.(N.S.) 217 (Ont. S.C.), affd. [1967] 2 O.R. 108; 62 D.L.R.(2d) 455 (C.A.), appld. [para. 59].

Royal Bank of Canada v. Babiy and Oliver (1991), 93 Sask.R. 161; 4 W.A.C. 161 (C.A.), refd to. [para. 61].

Grunert v. Grunert (1960), 32 W.W.R.(N.S.) 509 (Sask. Q.B.), dist. [para. 64].

Coburn v. Coburn (1984), 36 Sask.R. 41 (Q.B.), refd to. [para. 64].

Petryshyn v. Petryshyn (1976), 29 R.F.L. 379 (Sask. Q.B.), refd to. [para. 64].

Giesbrecht v. Giesbrecht, [1976] 6 W.W.R. 272 (Sask. Q.B.), refd to. [para. 64].

Bay v. Bay (1984), 38 Sask.R. 101 (Q.B.), folld. [para. 65].

Canadian Imperial Bank of Commerce v. Graat (1992), 5 B.L.R.(2d) 271 (Ont. Gen. Div.), refd to. [para. 68].

Flynn (Thomas) & Son Construction (Toronto) Ltd. v. Laporte (1990), 78 C.B.R.(N.S.) 158 (Ont. S.C.), refd to. [para. 68].

Nuove Ceramiche Ricchetti S.p.A. v. Mastrogiovanni (1988), 76 C.B.R.(N.S.) 310 (Ont. S.C.), refd to. [para. 68].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 33 [para. 63]; sect. 62(3) [para. 21]; sect. 67(1)(b) [para. 51]; sect. 90(1) [para. 22]; sect. 91 [paras. 19, 13]; sect. 91(1) [para. 57]; sect. 91(2) [paras. 1-2, 20-22, 25, 37, 48, 61, 71]; sect. 91(3) [paras. 21, 25, 34, 36]; sect. 91(3)(b) [paras. 33, 35-36]; sect. 92, sect. 93 [para. 19].

Bankruptcy and Insolvency Rules, rule 4, rule 89 [para. 15].

Exemptions Act, R.S.S. 1978, c. E-14, generally [para. 51]; sect. 2(10), sect. 2(11) [para. 52].

Fraudulent Preferences Act, R.S.S. 1978, c. F-21, sect. 3 [paras. 1-2, 13, 38-39, 48, 61, 71]; sect. 4 [paras. 1-2, 14, 17, 47-48]; sect. 8 [paras. 47-48].

Homesteads Act, S.S. 1989-90, c. H-5.1, generally [para. 51]; sect. 2(c) [para. 52].

Land Titles Act, R.S.S. 1978, c. L-5, sect. 240 [para. 61].

Partition Act, 1539 (Imp.), 31 Hen. 8, c. 1, generally [para. 63]; sect. 4 [paras. 64-65].

Partition Act, 1540 (Imp.), 12 Hen. 8, c. 12, generally [para. 63]; sect. 4 [paras. 64-65].

Partition Act, 1868, 31 & 32 Vict., c. 40, generally [para. 63]; sect. 4 [paras. 64-65].

Queen's Bench Act, R.S.S. 1978, c. Q-1, sect. 45(19) [paras. 63, 67].

Rules of Court (Sask.), Queen's Bench Rules, rule 165 [paras. 15-16].

Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1, generally [para. 51]; sect. 2(1)(h), sect. 2(1)(u), sect. 65 [para. 52].

Statute of Elizabeth, sect. 1 [para. 49]; sect. 3 [para. 1]; sect. 5 [para. 49].

Authors and Works Noticed:

Dunlop, Creditor-Debtor Law in Canada (1981), generally [para. 41].

Halsbury's Laws of England (4th Ed. 1982), vol. 39, p. 349, paras. 527-529 [para. 62].

Houlden and Morawetz, Bankruptcy and Insolvency Law of Canada (3rd Ed. 1989), vol. 1, pp. 134, 135 [para. 41].

Houlden and Morawetz, The Annotated Bankruptcy and Insolvency Act (1994), p. 226 [para. 24].

Counsel:

R.L. Miller and W.J. Matkowski, for the applicant;

The respondents appeared on their own behalf.

This application was heard before Klebuc, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following judgment on June 15, 1994.