Kratko (Bankrupt), Re, 2003 SKQB 341

• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: July 31, 2003
• Jurisdiction: Saskatchewan
• Citations: 2003 SKQB 341;(2003), 237 Sask.R. 228 (QB Reg.)

Kratko (Bankrupt), Re (2003), 237 Sask.R. 228 (QB Reg.)

MLB headnote and full text

Temp. Cite: [2003] Sask.R. TBEd. AU.044

In The Matter Of the bankruptcy of John Andrew Kratko

PriceWaterhouse Coopers Inc., Trustee of the Estate in Bankruptcy of John Andrew Kratko v. Lena Wojcichkowsky, Executrix of the Estate of John Andrew Kratko, Deceased

(No. BK 9836, Estate No. 23-030726; 2003 SKQB 341)

Indexed As: Kratko (Bankrupt), Re

Saskatchewan Court of Queen's Bench

In Bankruptcy

Herauf, Registrar in Bankruptcy

July 31, 2003.

Summary:

Kratko made an assignment into bankruptcy on August 2, 2001. On May 3, 2002, he was granted a conditional discharge. Kratko died on July 19, 2002, still an undischarged bankrupt. Kratko's major asset was an accidental death insurance policy. The beneficiary was the bankrupt's estate. In Kratko's last will and testament, the respondent was named as residual beneficiary. The trustee applied for directions concerning priority to proceeds of the accidental death policy.

A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy, found that there was no statutory or common law exemptions applicable to the proceeds of the insurance policy and ordered that the proceeds be remitted to the trustee.

Bankruptcy - Topic 440.6

Property of bankrupt - Particular property - Insurance proceeds payable by bankrupt's insurer - [See Bankruptcy - Topic 488 ].

Bankruptcy - Topic 488

Property of bankrupt - Exemptions or exclusions - Trust property - Kratko made an assignment into bankruptcy on August 2, 2001 - Kratko died on July 19, 2002, still an undischarged bankrupt - Kratko's major asset was an accidental death insurance policy - The beneficiary was the bankrupt's estate - The respondent had paid the $162 annual premium which resulted in the subsequent death benefit - The respondent argued that since she had paid the premium, she was the beneficial owner of the policy and Kratko was holding it in trust for her - The Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy, rejected the argument and held that no trust existed - See paragraphs 70 and 71.

Bankruptcy - Topic 2613

Trustees - Duties - Duty to act fairly - Kratko made an assignment into bankruptcy on August 2, 2001 - Kratko died on July 19, 2002, still an undischarged bankrupt - Kratko's major asset was an accidental death insurance policy - The beneficiary was the bankrupt's estate - The respondent had paid the $162 annual premium which resulted in the subsequent death benefit - The respondent was named as a residual beneficiary in Kratko's will - The respondent argued that under the rule in Ex parte James, it would be inconsistent with natural justice and fair dealing to deprive her of the proceeds of the policy - The Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy, held that the rule in Ex parte James was not applicable - See paragraphs 75 to 76.

Insurance - Topic 7151

Life insurance - Beneficiaries - Designation of - Alteration or revocation - Kratko made an assignment into bankruptcy on August 2, 2001 - Kratko died on July 19, 2002, still an undischarged bankrupt - Kratko's major asset was an accidental death insurance policy - The beneficiary was the bankrupt's estate - In Kratko's last will and testament, the respondent was named as residual beneficiary - The respondent argued that Kratko had designated her in his will as the policy's beneficiary - The Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy, rejected the argument - A careful examination of the language of Kratko's will did not support the respondent's contention that Kratko's intent was to designate her as the policy's beneficiary - Kratko was in debt and intended his debts to be paid, with the respondent as a residual beneficiary - See paragraphs 77 to 87.

Practice - Topic 1850

Pleadings - Counterclaim and set-off - Set-off - Equitable set-off - Kratko made an assignment into bankruptcy on August 2, 2001 - Kratko died on July 19, 2002, still an undischarged bankrupt - Kratko's major asset was an accidental death insurance policy - The beneficiary was the bankrupt's estate - The respondent had paid the $162 annual premium which resulted in the subsequent death benefit - During his assignment, the respondent advanced $7,800 to Kratko - The respondent argued that set-off was appropriate in this scenario - The Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy, rejected the argument - Since the respondent was an unsecured creditor of the bankrupt's estate, equitable set-off was not available as there were other unsecured creditors in the bankruptcy who had rights as well - See paragraphs 72 to 74

Trusts - Topic 626

Creation of trust - Transactions creating trusts - Proceeds of life insurance - [See Bankruptcy - Topic 488 ].

Trusts - Topic 2310

Constructive trusts - General principles - Circumstances when not imposed - [See Bankruptcy - Topic 488 ].

Cases Noticed:

Norris (Bankrupt), Re (2002), 229 Sask.R. 317; 39 C.B.R.(4th) 91 (Q.B. Bktcy. Reg.), refd to. [para. 20].

Gray, Re (1988), 67 C.B.R.(N.S.) 161 (Ont. S.C.), refd to. [para. 20].

Munro, Re (1987), 62 Sask.R. 309; 70 C.B.R.(N.S.) 260 (C.A.), refd to. [para. 20].

Patrick Estate (Bankrupt), Re (1999), 181 Sask.R. 165; 9 C.B.R.(4th) 64 (Q.B. Bktcy. Reg.), revd. (1999), 183 Sask.R. 220; 16 C.B.R.(4th) 266 (Q.B.), revd. (2000), 189 Sask.R. 272; 216 W.A.C. 272; 16 C.B.R.(4th) 270 (C.A.), dist. [para. 24].

Condon, Re; Ex parte James (1874), 9 Ch. App. 609 (C.A.), refd to. [para. 31].

Mcdonald, Re (1973), 16 C.B.R.(N.S.) 244 (Ont. H.C.)2, refd to. [para. 31].

Gooderham, Re, [1946] 1 D.L.R. 165 (Ont. C.A.), refd to. [para. 53].

Hoare, Re, [1933] O.R. 474; 2 D.L.R. 780 (C.A.), refd to. [para. 53].

Baltzan Estate v. Royal Bank of Canada et al., [1990] 3 W.W.R. 374; 82 Sask.R. 280 (Surr. Ct.), refd to. [para. 64].

Neale Estate v. Neale Estate (Beneficiaries of), [1975] S.J. No. 103 (Q.B.), refd to. [para. 65].

Robinson v. Robinson Estate (1988), 72 Sask.R. 95 (Q.B.), refd to. [para. 66].

Telford v. Holt, [1987] 2 S.C.R. 193; 78 N.R. 321; 81 A.R. 385, refd to. [para. 72].

Canada Trustco Mortgage Co. v. Sugarman et al. (1999), 126 O.A.C. 253; 12 C.B.R.(4th) 1 (C.A.), refd to. [para. 72].

Re/Max Metro-City Realty Ltd. v. Baker (Trustee of) (1993), 16 C.B.R.(3d) 308 (Ont. Gen. Div. Bktcy.), refd to. [para. 73].

Park City (Bankrupt), Re (2001), 159 Man.R.(2d) 168; 27 C.B.R.(4th) 314 (Q.B. Bktcy. Reg.), affd. (2002), 162 Man.R.(2d) 206; 33 C.B.R.(4th) 79 (Q.B. Bktcy.), refd to. [para. 75].

Authors and Works Noticed:

Feeney, Canadian Law of Wills (4th Ed.), paras. 10.45, 10.46 [para. 81].

Counsel:

Jeffrey M. Lee, for the applicant, PriceWaterhouse Coopers Inc.;

Peter V. Abrametz, for the respondent, Lena Wojcichkowsky.

This application was heard by Herauf, Registrar, of the Saskatchewan Court of Queen's Bench, In Bankruptcy, who delivered the following decision on July 31, 2003.