Summit Glen Waterloo/2000 Developments Inc. (Bankrupt), Re, (2016) 351 O.A.C. 241 (CA)

• Judge: Cronk, Pepall and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: May 30, 2016
• Jurisdiction: Ontario
• Citations: (2016), 351 O.A.C. 241 (CA);2016 ONCA 406

Summit Glen Waterloo/2000 Dev., Re (2016), 351 O.A.C. 241 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. MY.027

In the Matter of the Bankruptcy of Summit Glen Waterloo/2000 Developments Inc., of the City of Toronto, in the Province of Ontario

A. Farber & Partners Inc., the Trustee of the Bankruptcy Estate of Montor Business Corporation, Annopol Holdings Limited and Summit Glen Brantford Holdings Inc. (applicant/appellant/ respondent by way of cross-appeal) v. Morris Goldfinger , Goldfinger Jazrawy Diagnostic Services Ltd. , Summit Glen Bridge Street Inc., Mahvash Lechcier-Kimel, Annopol Holdings Limited and Summit Glen Brantford Inc. (respondents) ( respondents/appellants by way of cross-appeal )

(C57879; 2016 ONCA 406)

Indexed As: Summit Glen Waterloo/2000 Developments Inc. (Bankrupt), Re

Ontario Court of Appeal

Cronk, Pepall and Lauwers, JJ.A.

May 30, 2016.

Summary:

A. Farber & Partners Inc. (Farber), in its capacity as the trustee in bankruptcy of five companies, including Summit Glen Waterloo/2000 Developments Inc. (SG Waterloo) and Summit Glen Brantford Holdings Inc. (SG Brantford), asserted claims to funds. Farber asserted that transactions arising from a settlement that SG Waterloo's principal (Lechcier-Kimel) and some of Lechcier-Kimel's companies had entered into with an investor (Goldfinger) were (i) transfers at undervalue under s. 96 of the Bankruptcy and Insolvency Act; (ii) unjust preferences under s. 4 of the Assignments and Preferences Act; (iii) fraudulent conveyances under s. 2 of the Fraudulent Conveyances Act (the FCA); (iv) oppressive under s. 248 of the Ontario Business Corporations Act (the OBCA); and (v) an unjust enrichment. The claims were heard in a hybrid trial, together with the subject matter of two other court files.

The Ontario Superior Court, in a decision reported at [2013] O.T.C. Uned. 6635, rejected Farber's assertions respecting the transactions arising from the settlement. The court set aside a $471,000 payment from SG Brantford to Goldfinger, finding that the payment was contrary to s. of the FCA and oppressive under s. 248 of the OBCA. Farber appealed the refusal to set aside the transactions arising from the settlement. Goldfinger cross-appealed the decision to set aside the $471,000 payment.

The Ontario Court of Appeal dismissed the appeal and cross-appeal.

Editor's note: For decisions in two companion appeals see 351 O.A.C. 267 and 351 O.A.C. 277.

Bankruptcy - Topic 822

Acts of bankruptcy - Fraudulent conveyances - Conveyance to defraud, defeat or delay creditors - See paragraphs 72 to 77.

Bankruptcy - Topic 7211.1

Setting aside transactions prior to bankruptcy - Fraudulent preferences - What constitutes an arm's length transaction - See paragraphs 64 to 87.

Bankruptcy - Topic 7220

Setting aside transactions prior to bankruptcy - Fraudulent preferences - Intention - General - See paragraphs 64 to 84 and 128 to 138.

Bankruptcy - Topic 7231

Setting aside transactions prior to bankruptcy - Fraudulent preferences - What constitutes a preference - See paragraphs 78 to 82 and 128 to 138.

Bankruptcy - Topic 7235

Setting aside transactions prior to bankruptcy - Preferences - What constitutes a transfer at undervalue - See paragraphs 51 to 77.

Company Law - Topic 9781

Actions against corporations and directors - Action for oppressive conduct - When available - See paragraphs 88 to 104 and 119 to 125.

Company Law - Topic 9783

Actions against corporations and directors - Action for oppressive conduct - Persons entitled - See paragraphs 95 to 97 and 119 to 125.

Company Law - Topic 9785

Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - See paragraphs 88 to 104.

Fraud and Misrepresentation - Topic 1458

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Intention required - See paragraphs 78 to 87 and 128 to 138.

Restitution - Topic 64

Unjust enrichment - General - Juristic reason for enrichment - See paragraphs 105 to 118.

Counsel:

Patrick Shea and Brent Arnold, for the appellant/respondent by way of cross-appeal;

Maurice J. Neirinck and Michael McQuade, for the respondents/appellants by way of cross-appeal.

This appeal and cross-appeal were heard on October 14 and 15, 2015, by Cronk, Pepall and Lauwers, JJ.A., of the Ontario Court of Appeal. Pepall, J.A., released the following judgment for the court on May 30, 2016.