Hamm v. Metz et al., 2002 SKCA 11

• Judge: Sherstobitoff, Lane and Jackson, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: May 28, 2001
• Jurisdiction: Saskatchewan
• Citations: 2002 SKCA 11;(2002), 217 Sask.R. 1 (CA)

Hamm v. Metz (2002), 217 Sask.R. 1 (CA);

    265 W.A.C. 1

MLB headnote and full text

Temp. Cite: [2002] Sask.R. TBEd. FE.011

Fred Hickmore (defendant/appellant) v. Horst Hamm, Laurel Jane Hamm and Christopher Klaus Hamm, Dieter Hare Hamm and Willi Arthur Hamm, minors suing by their Litigation Guardian, Horst Hamm (plaintiffs/respondents)

(File No. 2966)

Douglas Wayne Talaber (defendant/appellant) v. Horst Hamm, Laurel Jane Hamm and Christopher Klaus Hamm, Dieter Hare Hamm and Willi Arthur Hamm, minors suing by their Litigation Guardian, Horst Hamm (plaintiffs/respondents)

(File No. 2979; 2002 SKCA 11)

Indexed As: Hamm v. Metz et al.

Saskatchewan Court of Appeal

Sherstobitoff, Lane and Jackson, JJ.A.

January 17, 2002.

Summary:

Metz's property and the neighbouring properties burnt down. While under investigation for arson, Metz conveyed properties to Talaber, her nephew, and Hickmore, the man with whom she was having a relationship. She was found guilty of arson. The neighbours, the Hamms, settled their loss with the Saskatchewan Government Insurance (SGI). The SGI, on the Hamms' behalf, sought to have the property conveyances set aside as being fraudulent conveyances.

The Saskatchewan Court of Queen's Bench, in a decision reported 165 Sask.R. 193, held that Metz, Talaber and Hickmore had participated in a fraudulent scheme to defeat Metz's creditors. The subject transactions were void as against Metz's creditors. Hickmore and Talaber appealed.

The Saskatchewan Court of Appeal allowed the appeal in part.

Evidence - Topic 512

Presentation of evidence - Rebuttal evidence - To contradict witnesses - While under investigation for arson, Metz conveyed properties to Hickmore, the man with whom she was having a relationship - Neighbours who lost property in the fire sought to have the property conveyances set aside as being fraudulent conveyances - During his examination and cross-examination, Hickmore maintained that, at the time he purchased the properties, he was unaware of any criminal charges against Metz or her potential civil liability arising from fire - He was not cross-examined respecting an interview or statement given to an insurance investigator - The trial judge allowed rebuttal evidence from the investigator which contradicted Hickmore - On appeal, Hickmore argued that the rebuttal evidence was inadmissible - The Saskatchewan Court of Appeal held that, while Hickmore should have been given an opportunity, during cross-examination, to give his explanation of the interview with the investigator, the failure to give him that opportunity did not, in the circumstances of this case, render the rebuttal evidence inadmissible - See paragraphs 18 to 24.

Execution - Topic 748.1

General rules - Exemptions - House - While under investigation for arson, Metz conveyed property to Hickmore, the man with whom she was having a relationship - Neighbours who lost property in the fire sought to have the property conveyances set aside as being fraudulent conveyances - Hickmore argued that the property which he received from Metz was her residence and thus exempt from seizure to the extent of $32,000 (Exemptions Act, s. 2(1)) - The Saskatchewan Court of Appeal held that Metz was entitled to convey an interest worth $32,000 to Hickmore - If property was exempt from seizure, disposition of it could not, by definition, delay, hinder or defraud creditors within the meaning of the Statute of Elizabeth (1571) - See paragraphs 36 to 42.

Fraud and Misrepresentation - Topic 1272

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - What constitutes a creditor or person entitled to impeach - While under investigation for arson, Metz conveyed properties to Talaber and Hickmore - The Hamms, neighbours who lost property in the fire, were successful in their action to have the property conveyances set aside as being fraudulent conveyances under the Fraudulent Conveyances Act (Sask.) and the Statute of Elizabeth (1571) - Talaber and Hickmore appealed - They argued that the Hamms, being mere claimants in tort, and not having proceeded to judgment yet, were not creditors within the meaning of either statute - The Saskatchewan Court of Appeal held that the Fraudulent Preferences Act (s. 3) gave standing to sue only to creditors, which the Hamms were not - The Statute of Elizabeth gave standing to "creditors and others" - Therefore the Hamms had authority to sue under that statute - However, they could not succeed in the action because they had not yet proven their tort claim against Metz - See paragraphs 26 to 35.

Fraud and Misrepresentation - Topic 1275

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - Fraudulent intent - Metz's property and the neighbouring properties burnt down - While under investigation for arson, Metz conveyed properties to Talaber, her nephew, and Hickmore, the man with whom she was having a relationship - Metz was convicted - The neighbours settled their loss with the Saskatchewan Government Insurance (SGI) - The SGI sought to set aside the conveyances under the Fraudulent Preferences Act or the Statute of Elizabeth - The trial judge declared the conveyances void as against Metz's creditors - There was fraudulent intent given the following badges of fraud: Metz kept residual control over the properties under powers of attorney; she maintained her name on the "For Sale" signs on the properties; she resided in one of the properties rent free; and Talaber paid for the properties from allegedly secret cash funds and rejected early sale offers - Hickmore and Talaber appealed - The Saskatchewan Court of Appeal held that, given the circumstances of the transaction, the relationship between Metz and the appellants, and the badges of fraud referred to by the trial judge, the trial judge was justified in finding fraudulent intent in the absence of credible evidence to the contrary - See paragraph 46.

Fraud and Misrepresentation - Topic 1278

Fraudulent conveyances and preferences - Conveyances and preferences impeachable by creditors or others - What constitutes "to delay or hinder" - [See Execution - Topic 748.1 ].

Fraud and Misrepresentation - Topic 1402

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under Statute of Elizabeth (1571) - Scope of statute - [See Fraud and Misrepresentation - Topic 1272 ].

Fraud and Misrepresentation - Topic 1403

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under Statute of Elizabeth (1571) - Intention required - [See Fraud and Misrepresentation - Topic 1275 ].

Fraud and Misrepresentation - Topic 1452

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Creditor defined - [See Fraud and Misrepresentation - Topic 1272 ].

Fraud and Misrepresentation - Topic 1455

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Conveyance to defeat creditors - [See Fraud and Misrepresentation - Topic 1275 ].

Fraud and Misrepresentation - Topic 1505

Fraudulent conveyances and preferences - Sale or transfer by debtor to third parties - Liability of third parties - While under investigation for arson, Metz conveyed properties to Talaber and Hickmore - Neighbours who lost property in the fire were successful in their action to have the property conveyances set aside as being fraudulent conveyances under the Fraudulent Conveyances Act (Sask.) and the Statute of Elizabeth (1571) - Talaber and Hickmore appealed - They argued that the trial judge erred in making an order compelling Talaber to account for the proceeds of the sale of a property, and, in effect, giving the creditors judgment for the amount determined to have been received by him, and, in default, judgment for $28,000 (price Talaber resold the property for) - They argued that the Statute of Elizabeth did not authorize any such remedy - The Saskatchewan Court of Appeal held that the remedy was authorized under s. 13 of the Fraudulent Preferences Act which applied to a transaction "that in law is invalid against creditors" - This phrase was broad enough to encompass the transactions in this case - The court stated that the money should have been ordered paid into court for the general benefit of Metz's proven creditors - See paragraphs 47 to 50.

Fraud and Misrepresentation - Topic 1505

Fraudulent conveyances and preferences - Sale or transfer by debtor to third parties - Liability of third parties - While under investigation for arson, Metz conveyed properties to Talaber and Hickmore - The Neighbours who lost property in the fire were successful in their action to have the property conveyances set aside as being fraudulent conveyances under the Fraudulent Conveyances Act (Sask.) and the Statute of Elizabeth (1571) - Talaber and Hickmore appealed - They argued that the trial judge was without power to grant the judgment for rentals received, or to compel them to account for them, as no such power was granted in either the Fraudulent Preferences Act or the Statute of Elizabeth - The Saskatchewan Court of Appeal rejected the argument - Based on the analytical framework of unjust enrichment and the remedial constructive trust, Talaber and Hickmore should account for the rents received, as they were merely "trustees" of the rents derived from the property - See paragraphs 51 to 60.

Restitution - Topic 62

Unjust enrichment - General - What constitutes - [See second Fraud and Misrepresentation - Topic 1505 ].

Restitution - Topic 123

Unjust enrichment - Remedies - Constructive trust - [See second Fraud and Misrepresentation - Topic 1505 ].

Cases Noticed:

Browne v. Dunn (1893), 6 R. 67 (H.L.), refd to. [para. 20].

R. v. Paris (G.W.) et al. (2000), 138 O.A.C. 287; 150 C.C.C.(3d) 162 (C.A.), refd to. [para. 22].

R. v. Nissan (A.) (1996), 89 O.A.C. 389 (C.A.), refd to. [para. 23].

Lensen v. Lensen, [1987] 2 S.C.R. 672; 79 N.R. 334; 64 Sask.R. 6, refd to. [para. 25].

Board of Education of Long Lake School Division No. 30 v. Schatz and Irwin et al., [1986] 5 W.W.R. 355; 49 Sask.R. 244 (C.A.), refd to. [para. 25].

Huss v. Lakin, [1925] 1 D.L.R. 38 (Sask. K.B.), refd to. [para. 30].

Petryshyn v. Kochan, [1940] 2 W.W.R. 353 (Sask. K.B.), refd to. [para. 30].

Scott v. Scott (1965), 52 W.W.R.(N.S.) 561 (Sask. Q.B.), refd to. [para. 30].

Hopkinson v. Westerman (1919), 45 O.L.R. 208 (C.A.), refd to. [para. 31].

Bell v. Williamson, [1945] O.R. 844 (C.A.), refd to. [para. 31].

Banque canadienne nationale v. Tencha, [1928] S.C.R. 26, refd to. [para. 38].

Mathews v. Feaver (1786), 1 Cox Eq. Cas. 278; 29 E.R. 1165, refd to. [para. 39].

Sims v. Thomas (1840), 12 Ad. & El. 536; 113 E.R. 916, refd to. [para. 39].

Popoff v. Dootoff, [1937] 2 W.W.R. 186 (Sask. C.A.), refd to. [para. 39].

Higgins Co. v. McNabb, [1980] 2 W.W.R. 385; 2 Sask.R. 119 (C.A.), refd to. [para. 40].

Neuls (Bankrupts), Re; Touche Ross Ltd. v. First City Trust Co. et al. (1985), 37 Sask.R. 60 (C.A.), refd to. [para. 40].

McLean v. Ratekin, [1928] 2 W.W.R. 421 (Sask. C.A.), refd to. [para. 44].

Koop v. Smith (1915), 51 S.C.R. 554, refd to. [para. 46].

Westinghouse Canada Ltd. v. Buchar (1975), 9 O.R.(2d) 137 (C.A.), refd to. [para. 49].

Allen v. Allen; Canadian Credit Men's Trust Association v. Allen, [1948] 2 D.L.R. 778 (B.C.S.C.), refd to. [para. 49].

Barregar v. Turi et al., [1997] B.C.T.C. Uned. 234 (S.C.), refd to. [para. 49].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 55].

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91, refd to. [para. 57].

Statutes Noticed:

Exemptions Act, R.S.S. 1978, c. E-14, sect. 2(1) [para. 37].

Fraudulent Preferences Act, R.S.S. 1978, c. F-21, sect. 3 [para. 27]; sect. 13 [para. 48].

Statute of Elizabeth (1571), 13 Eliz., c. 5, generally [para. 28].

Authors and Works Noticed:

Dunlop, C.R.B., Creditor-Debtor Law in Canada (2nd Ed. 1995), pp. 481 to 489 [para. 38]; 617 et seq. [para. 30].

Springman, M.A., Stewart, G.R., and MacNaughton, M.J., Fraudulent Conveyances and Preferences (1994), p. 12-2 [para. 30].

Waters, Donovan W.M., The Law of Trusts in Canada (2nd Ed. 1984), p. 388 [para. 59].

Counsel:

D.G. MacKay, for the appellant, Hickmore;

E.F.A. Merchant, Q.C., for the appellant, Talaber;

J.G. Brick and P. Korpan, for the respondents.

This appeal was heard on May 28, 2001, before Sherstobitoff, Lane and Jackson, JJ.A., of the Saskatchewan Court of Appeal.

Sherstobitoff, J.A., delivered the following judgment for the Court of Appeal on January 17, 2002.