Newfoundland and Labrador Housing Corp. v. Ennis, (1987) 64 Nfld. & P.E.I.R. 22 (NFTD)

• Judge: Cameron, J.
• Court: Supreme Court of Newfoundland and Labrador (Canada)
• Case Date: November 28, 1986
• Jurisdiction: Newfoundland and Labrador
• Citations: (1987), 64 Nfld. & P.E.I.R. 22 (NFTD)

NLHC v. Ennis (1987), 64 Nfld. & P.E.I.R. 22 (NFTD);

    197 A.P.R. 22

MLB headnote and full text

Newfoundland and Labrador Housing Corporation (plaintiff) v. Patrick Ennis (defendant)

(1986 St. J. No. 315)

Indexed As: Newfoundland and Labrador Housing Corp. v. Ennis

Newfoundland Supreme Court

Trial Division

Cameron, J.

March 5, 1987.

Summary:

The defendant Ennis and one Whalen formed a company, Crown Investcorp Limited, for the purpose of purchasing a hotel. Ennis held 25 of the 100 issued shares of the company and was an officer of the company. A fire occurred at the hotel and Whalen, without the knowledge of Ennis, on behalf of Crown executed an agreement of purchase and sale, in December 1985, with the Newfoundland and Labrador Housing Corporation. In January 1986 Ennis executed a mortgage against Crown to secure his $35,000.00 investment in Crown. The mortgage was not registered at the time of execution. Prior to the completion of the sale to the Housing Corporation, Crown sold the property to a third party. In a decision reported at (1986), 60 Nfld. & P.E.I.R. 108; 181 A.P.R. 108, the Newfoundland Supreme Court, Trial Division, set aside the sale and ordered that the property be conveyed to the Housing Corporation. The Housing Corporation applied for a declaration that its interest in the property took priority over Ennis' interest.

The Newfoundland Supreme Court, Trial Division, allowed the Housing Corporation's action. The court held that the failure to prove the mortgage upon registration pursuant to s. 11 of the Registration of Deeds Act, rendered the mortgage between Crown and Ennis ineffectual; therefore, the agreement between the Housing Corporation and Crown, being first in time, took priority.

Fraud and Misrepresentation - Topic 1283

Fraudulent conveyances and preferences - Conveyances impeachable by creditors or others - Conveyances between persons in close relationship - A shareholder and officer of a company invested $35,000.00 in a company established for the purpose of purchasing a hotel - The hotel was destroyed by fire and the shareholder executed a mortgage to secure his investment - Prior to the execution of the mortgage, and unknown to the shareholder, the property was sold to the Newfoundland and Labrador Housing Corporation - The Housing Corporation alleged that the mortgage was void pursuant to the Fraudulent Conveyances Act - The Newfoundland Supreme Court, Trial Division, held that the conveyance was not void under the Act - The court discussed the close relationship between the parties - The court stated that although the relationship was suspicious and could establish a prima facie case of a fraudulent conveyance, there was valuable consideration for the mortgage and there was no fraudulent intent on the part of the company to defeat its creditors - See paragraphs 14 to 28.

Fraud and Misrepresentation - Topic 1275

Fraudulent conveyances and preferences - Conveyances impeachable by creditors or others - Fraudulent intent - [See Fraud and Misrepresentation - Topic 1283 below].

Real Property - Topic 7824

Title - Registration of instruments - Requirement of registration - Proof of instrument - Effect on registration - A shareholder and officer of a company, Crown, invested $35,000.00 in a company established for the purpose of purchasing a hotel - The hotel was destroyed by fire and the shareholder executed a mortgage to secure his investment - Prior to the execution of the mortgage and unknown to the shareholder the property was sold to the Newfoundland and Labrador Housing Corporation - The mortgage was subsequently registered but not proved as required by s. 11 of the Registration of Deeds Act - The Newfoundland Supreme Court, Trial Division, held that the mortgage between the company and the shareholder was ineffectual, because the failure to properly prove the mortgage was fatal to its registration - The court held that the provisions of s. 11 of the Registration of Deeds Act were imperative - The court also held that the prior purchase by the Housing Corporation could not be defeated by the subsequently registered mortgage - See paragraphs 29 to 42.

Statutes - Topic 1626

Interpretation - Extrinsic aids - Other statutes - Similar statutes in other jurisdictions - In interpreting various sections of the Fraudulent Conveyances Act and the Registration of Deeds Act, the Newfoundland Supreme Court, Trial Division, examined similar provisions in various Irish and English statutes - See paragraphs 14 to 42.

Cases Noticed:

Holmes v. Holmes et al. (1913), 6 Sask.L.R. 171, refd to. [para. 15].

Re Wise; Ex parte Mercer (1886), 17 Q.B.D. 290 (C.A.), refd to. [para. 16].

Mandryk v. Merko (1971), 19 D.L.R.(3d) 238 (Man. C.A.), refd to. [para. 16].

Freeman v. Pope (1870), 5 Ch. App. 538, refd to. [para. 16].

Dougmar Realty Holdings Ltd., Re, [1967] 1 O.R. 66, refd to. [para. 17].

Sheppard v. Sheppard, [1925] 2 D.L.R. 897 (Ont. C.A.), refd to. [para. 17].

Koop v. Smith (1915), 51 S.C.R. 554, appld. [para. 18].

Lee v. Lee and Snelgrove (1978), 19 Nfld. & P.E.I.R. 60; 50 A.P.R. 60, refd to. [para. 19].

Mulcahy et al. v. Archibald (1898), 28 S.C.R. 523, refd to. [para. 20].

Middleton v. Pollock (1876), 2 Ch. D. 104, refd to. [para. 21].

Wood v. Dixie (1845), 7 Q.B. 892; 115 E.R. 724, refd to. [para. 26].

Hillingdon Estates Co. v. Stonefield Estates Ltd., [1952] 1 Ch. 627, refd to. [para. 31].

Morecock v. Dickins (1768), Amb. 678, refd to. [para. 33].

Drew v. Lord Norbury (1846), 9 Ir. Eq. Rep. 171, refd to. [para. 34].

Robson v. Waddell (1865), 24 U.C.Q.B. 574, refd to. [para. 35].

Burchell v. Bigelow (1904), 40 N.S.R. 493 (C.A.), refd to. [para. 35].

Rooker v. Hoofstetter (1896), 26 S.C.R. 41, refd to. [para. 36].

Anton v. Erich Maaser Construction Limited et al. (1978), 86 D.L.R.(3d) 320 (Ont. C.A.) reversing 74 D.L.R.(3d) 452, refd to. [para. 36].

LeNeve v. LeNeve (1747), Amb. 436; 26 E.R. 1172, refd to. [para. 40].

Williams v. Miller, Miller and Miller (1982), 44 Nfld. & P.E.I.R. 120; 130 A.P.R. 120, refd to. [para. 40].

Bellamy v. Sabine (1857), 44 E.R. 842, refd to. [para. 44].

Syndicat Lyonnais du Klondyke v. McGrade (1905), 36 S.C.R. 251, refd to. [para. 46].

Clerque v. McKay (1903), 6 O.L.R. 51; affirmed 8 O.L.R. 84, refd to. [para. 48].

Leftley v. Moffat (1925), 57 O.L.R. 260, refd to. [para. 48].

Statutes Noticed:

Fraudulent Conveyances Act, S.N. 1974, c. 29, sect. 3 [paras. 11, 14, 16]; sect. 4 [paras. 14, 25]; sect. 5 [paras. 14, 25, 26].

Registration of Deeds Act, R.S.N. 1970, c. 328, sect. 7 [paras. 29, 33, 36, 38, 39]; sect. 9 [paras. 29, 31, 32, 34, 39, 40, 42]; sect. 11 [paras. 7, 29, 30, 37]; sect. 40 [para. 29].

Authors and Works Noticed:

Dunlop, Creditor-Debtor Law of Canada (1981), p. 523 [para. 26].

Anger and Honsberger, Law of Real Property (2nd Ed. 1985), vol. 2, pp. 1592 [para. 31]; 1719 [para. 45].

Counsel:

James J. Greene, Q.C., for the plaintiff;

Malcolm MacKillop, for the defendant.

This case was heard on November 28, 1986, before Cameron, J., of the Newfoundland Supreme Court, Trial Division, who filed the following judgment on March 5, 1987: