Pitblado LLP v. Houde, 2015 MBQB 85

• Judge: Bond, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: May 15, 2015
• Jurisdiction: Manitoba
• Citations: 2015 MBQB 85;(2015), 318 Man.R.(2d) 39 (QB)

Pitblado LLP v. Houde (2015), 318 Man.R.(2d) 39 (QB)

MLB headnote and full text

Temp. Cite: [2015] Man.R.(2d) TBEd. JN.014

Pitblado LLP (plaintiff) v. Penny Lynne Houde (defendant)

(CI 13-01-81739; 2015 MBQB 85)

Indexed As: Pitblado LLP v. Houde

Manitoba Court of Queen's Bench

Winnipeg Centre

Bond, J.

May 15, 2015.

Summary:

Laurence and Penny Houde jointly owned property. In June 2009, Laurence transferred his half interest to Penny for "one dollar and other good and valuable consideration". In June 2012, Pitblado LLP was granted judgment against Laurence for $17,792.21. In September 2012, Laurence made an assignment in bankruptcy. Pitblado's action sought to have the transfer set aside as a transfer at undervalue under s. 96 of the Bankruptcy and Insolvency Act. Penny asserted that she had given good and valuable consideration to Laurence that was sufficient to validate the transfer. Pitblado moved for summary judgment on the basis that Penny had not demonstrated an issue to be tried. Penny moved for summary judgment on the basis that the s. 96 that was relied on by Pitblado was not in force at the time of the transfer and, therefore, did not apply. Pitblado's motion was deferred until Penny's motion was determined.

The Manitoba Court of Queen's Bench denied Penny's motion.

Bankruptcy - Topic 7209

Setting aside transactions prior to bankruptcy - General - Practice - Trial or summary determination - Laurence and Penny Houde jointly owned property - In June 2009, Laurence transferred his half interest to Penny for "one dollar and other good and valuable consideration" - In June 2012, Pitblado LLP was granted judgment against Laurence for $17,792.21 - In September 2012, Laurence made an assignment in bankruptcy - Pitblado's action sought to have the transfer set aside as a transfer at undervalue under s. 96 of the Bankruptcy and Insolvency Act - Penny moved for summary judgment, asserting that she had given good and valuable consideration to Laurence that was sufficient to validate the transfer - The Manitoba Court of Queen's Bench held that it was not appropriate to grant summary judgment - There was at least an air of reality to Pitblado's assertions that the payments claimed by Penny as consideration for the transfer could not be so - Penny's argument depended on agreements between herself and Laurence that were not in evidence - The nature of those agreements could not be determined on the evidence before the court - Further, there was an air of reality to Pitblado's claim that Laurence was unable to meet his obligations as they came due in June 2009 - Finally, there was some evidence that the transfer was intended to defeat or delay Laurence's creditors - That intent, while it might be inferred, was something to be determined through viva voce evidence - See paragraphs 46 to 56.

Bankruptcy - Topic 7244

Setting aside transactions prior to bankruptcy - Fraudulent preferences - Evidence and proof - [See Bankruptcy - Topic 7209 ].

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - [See Bankruptcy - Topic 7209 ].

Statutes - Topic 2263

Interpretation - Presumptions and rules in aid - Against interference with vested rights - Laurence and Penny Houde jointly owned property - In June 2009, Laurence transferred his half interest to Penny for "one dollar and other good and valuable consideration" - In June 2012, Pitblado LLP was granted judgment against Laurence for $17,792.21 - In September 2012, Laurence made an assignment in bankruptcy - Pitblado's action sought to have the transfer set aside as a transfer at undervalue under s. 96 of the Bankruptcy and Insolvency Act - Penny moved for summary judgment on the basis that the s. 96 that was relied on by Pitblado was not in force at the time of the transfer and, therefore, did not apply - The Manitoba Court of Queen's Bench, having found that the current s. 96 applied and there was no retrospective application, also rejected Penny's argument that to apply the current s. 96 would violate the presumption against legislative interference with vested rights - The presumption was rebuttable by legislative intention expressed in a transitional provision or by implication - Here, both the old and the current regimes interfered with vested rights - The Act was specifically intended to interfere with vested rights when necessary to protect the interests of creditors from efforts by a debtor to put his or her assets out of reach - The Act's intent was to protect all creditors equally - As this required the review of transfers of property even to innocent transferees, the interference with vested rights was necessary - See paragraphs 40 to 45.

Statutes - Topic 2272

Interpretation - Presumptions and rules in aid - Presumption against retrospective or retroactive operation - Laurence and Penny Houde jointly owned property - In June 2009, Laurence transferred his half interest to Penny for "one dollar and other good and valuable consideration" - In June 2012, Pitblado LLP was granted judgment against Laurence for $17,792.21 - In September 2012, Laurence made an assignment in bankruptcy - Pitblado's action sought to have the transfer set aside as a transfer at undervalue under s. 96 of the Bankruptcy and Insolvency Act - Penny moved for summary judgment on the basis that the s. 96 that was relied on by Pitblado was not in force at the time of the transfer and, therefore, did not apply - The Manitoba Court of Queen's Bench found that the current s. 96 applied and there was no retrospective application - However, even if the application of the current s. 96 had resulted in a retrospective application, it would apply - The presumption against retrospective application was rebuttable where such an application was intended by the legislators - It was necessary to consider the Act's purpose, which was to ensure fair treatment of unsecured creditors following bankruptcy - The difference between the "old" and the current s. 96 was in relation to the circumstances under which a transfer might be deemed void - There were some differences, but the principles remained the same - The amendments simplified and clarified the provisions - See paragraphs 34 to 39.

Statutes - Topic 6703

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - What constitutes retrospective or retroactive operation - Laurence and Penny Houde jointly owned property - In June 2009, Laurence transferred his half interest to Penny for "one dollar and other good and valuable consideration" - In June 2012, Pitblado LLP was granted judgment against Laurence for $17,792.21 - In September 2012, Laurence made an assignment in bankruptcy - Pitblado's action sought to have the transfer set aside as a transfer at undervalue under s. 96 of the Bankruptcy and Insolvency Act - Penny moved for summary judgment on the basis that the s. 96 that was relied on by Pitblado was not in force at the time of the transfer and, therefore, did not apply - The Manitoba Court of Queen's Bench found that the current s. 96 applied and there was no retrospective application - Section 96 came into force in September 2009 - See paragraphs 8 to 15 - The issue was one of retrospective, rather than retroactive, application - Here, the legally relevant facts were properly characterized as "successive facts" - The transfer occurred and was complete on one date - The transfer established ongoing ownership - The assignment occurred on another date, later in time - The Act only applied to the transfer after the filing of the bankruptcy (the final act) - Since the final act occurred after the current s. 96 came into force, there was no retrospective application - The operation of the statute was only brought about by the assignment in bankruptcy, which was well after the current s. 96 came into force - See paragraphs 22 to 33.

Statutes - Topic 6703.1

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Retroactivity and retrospectivity distinguished - The Manitoba Court of Queen's Bench discussed the difference between retrospective and retroactive legislation - See paragraphs 23 to 25.

Statutes - Topic 6705

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Presumption against retrospectivity or retroactivity rebutted - [See Statutes - Topic 2263 ].

Cases Noticed:

Indarsingh (Bankrupt), Re, [2015] A.R. Uned. 216; 2015 ABQB 158, refd to. [para. 10].

Anderson (Bankrupt), Re, [2012] B.C.T.C. Uned. 956; 2012 BCSC 956, refd to. [para. 18].

Épiciers Unis Métro-Richelieu Inc. v. Collin, [2004] 3 S.C.R. 257; 326 N.R. 89; 2004 SCC 59, refd to. [para. 24].

Benner v. Canada (Secretary of State), [1997] 1 S.C.R. 358; 208 N.R. 81, refd to. [para. 30].

Page Estate v. Sachs (1993), 61 O.A.C. 122; 99 D.L.R.(4th) 209 (C.A.), refd to. [para. 34].

Hudson v. Benallack, [1976] 2 S.C.R. 168; 7 N.R. 119, refd to. [para. 36].

Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271; 7 N.R. 401, refd to. [para. 41].

Hryniak v. Mauldin (2014), 453 N.R. 51; 314 O.A.C. 1; 366 D.L.R.(4th) 641; 2014 SCC 7, refd to. [para. 46].

Ryan v. Canadian Farm Insurance Corp. et al. (2014), 309 Man.R.(2d) 286; 2014 MBQB 178, refd to. [para. 46].

Hydro Electric Board (Man.) v. Inglis (John) Co. et al., [2000] Man.R.(2d) Uned. 183; 2000 MBQB 218, refd to. [para. 52].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 96 [para. 15].

Authors and Works Noticed:

Côté, Pierre-André, Beaulac, Stéphane and Devinat, Mathieu, The Interpretation of Legislation in Canada (4th Ed. 2011), pp. 135 to 137 [para. 30].

Driedger, Elmer A., Statutes: Retroactive Retrospective Reflections (1978), 56 Can. Bar. Rev. 264, pp. 268, 269 [para. 24]; 276 [para. 33].

Gurofsky, Robyn, Fraudulent Preferences and Transfers at Undervalue: A Review of the Legal Developments under the Bankruptcy and Insolvency Act in Sarra, Janis, P., ed., Annual Review of Insolvency Law 2011 (2012), pp. 584, 585 [para. 37].

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis P., Preferences and Transfers at Undervalue (2014, Release 9), p. 4-70 [para. 38].

Morawetz, G.B. and Sarra, Janis, Bankruptcy and Insolvency Law in Canada (4th Ed. 2013) (Looseleaf), vol. 2 [para. 10].

Sullivan, Ruth, Sullivan on the Construction of Statutes (6th Ed. 2014), §§25.12 [para. 23]; 25.26 [paras. 29, 30]; 25.76 [para. 33]; 25.159 [para. 42].

Counsel:

Thomas W. Turner, for the plaintiff;

Sean C. Brennan and Brenden D. Collins (Student-at-Law), for the defendant.

This motion was heard by Bond, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on May 15, 2015.