Gaastra v Tri-Link Consultants Inc., 2012 ABQB 271

Court of Queen ’ s Bench of Alberta Citation: Gaastra v Tri-Link Consultants Inc., 2012 ABQB 271 Date: 20120425 Docket: 0901 12399 Registry: Calgary Between: Hans Gaastra, 605687 Saskatchewan Ltd. and 625252 Saskatchewan Ltd.

Plaintiffs - and - Tri-Link Consultants Inc., 4040392 Manitoba Ltd., Klaus Link, Debbie Standon, Glenn Watts, 973632 Alberta Ltd., 963989 Alberta Ltd., 1251748 Alberta Ltd. (carrying on business under the trade name of Canadian Achievers Financial), Oliver Forest & Carrington Ltd., Evanworth Mortgage Investment Corporation and Sherbrook Mortgage Investment Corporation Defendants _______________________________________________________ Memorandum of Decision of Motion of the Honourable Mr. Justice R. J.

Hall _______________________________________________________ [ 1 ] The Defendant Glenn Watts is presently in bankruptcy. By virtue of the provisions of s. 69(1) (

a) of the Bankruptcy and Insolvency Act (“ BIA ”), no creditor has any remedy against him or his property, or shall commence or continue any action for the recovery of a claim provable in bankruptcy. However, s. 69.4 of the Act provides that a Court may lift the statutory stay of proceedings, if the Court is satisfied that the person pursuing the action is likely to be materially prejudiced by the operation of that stay, or that it is equitable on other grounds to make such a declaration.

[2] Leading decisions as to when the court should exercise the discretion granted by 2. 694 are Re Ma, (ONCA), [2001] O.J. No. 1189, Ontario Court of Appeal, and Re Advocate Mines Ltd., [1984] O.J. No. 2330. Included amongst the list ofsituations where the Court should exercise its discretion to lift the statutory stay is an action against the bankrupt for a debt to which adischarge would not be a defence. [3] The whole of the Action is grounded on allegations of fraud. Mr. Watts is a defendant in his own right.

He was also, atmaterial times, the director and controlling mind of the Defendants 973632 Alberta Ltd. 963989 Alberta Ltd., 1251748 Alberta Ltd,Oliver Forrest and Carrington Ltd., Evanworth Mortgage Investment Corporation, Sherbrook Mortgage Corporation and the newly addedEvanworth Mortgage Investment

(2007) Corporation. As such he is centrally involved in the activities of those corporate entities. [4]

Section 178 of the Act provides that an order of discharge does not release a bankrupt from any debt or liability arising out offraud, false pretenses or fraudulent misrepresentation. [5] Thus the allegations against Mr. Watts, if proven, would be matters in respect of which a discharge would not be a defence. [6] The Courts have recognized that a claimant who claims to have been defrauded would be materially prejudiced by the staycreated in s. 69 of the Act and it would be equitable to lift the stay to allow the claim to proceed.

The claimant is not put to the task ofproving a prima facie case of fraud; however the Court must be persuaded that there is some case, before lifting the stay. (Re Ma,, supra). [7] Mr. Watts references a decision of the Registrar in Bankruptcy for the Ontario Superior Court of Justice in Bankruptcy andInsolvency, Re Sheikh, (2011 ONSC 939). There the Registrar was asked to lift the stay and to allow the Moving Party to makeallegations of fraud against the bankrupt. However, examinations of the affiant for the Moving Party disclosed that he had no evidencethat the bankrupt and the others had committed fraud.

The Registrar held that while the threshold to lift a stay in a case alleging fraudwas “quite low”, there was nevertheless a threshold, requiring the Moving Party to show that there was some case to be met, and theMoving Party had not met that threshold. The Registrar therefore refused to lift the stay. [8] Mr. Watts argues that to be the case here.

He has referenced excerpts from the Questioning of the Plaintiff and fromexaminations conducted on his affidavits, with intent of satisfying the Court that there is no case to be met and that the Plaintiffs have noevidence of fraud. [9] I have read the excerpts referred to by Mr. Watts. I have also read the affidavits of Mr. Gaastra and the remainder of thetranscripts. I do not agree with Mr. Watts. There are many indicia that the defendants controlled by Mr. Watts and Mr. Watts himselfhave failed to properly explain how the Plaintiffs’ investments of in excess of $1.8 million have dissipated.

Absent a full and transparentexplanation by those defendants, some case for a finding of fraud against Watts is put forward by the Plaintiffs. Fraud can be difficult toprove without full examination or cross examination of the defendants and their documentation. For the purposes of this application, thePlaintiffs need not prove a prima facie case, only that there is a case to be met. A review of the merits of the case leads me to find thatthe Plaintiffs have done so. [10] Accordingly, I direct that the stay of these proceedings against Mr.

Watts, created by s. 69 of the BIA, be lifted pursuant to s.69.4 of the Act. Heard on the 11th day of April, 2012. Dated at the City of Calgary, Alberta this 25th day of April, 2012.

R. J. Hall J.C.Q.B.A. Appearances: Kari L. Sejr for the Plaintiffs R. Morris for the Plaintiffs Steve Kaczkowski for the Defendants Evanworth Mortgage Investment Corporation (2007) and Evanworth Financial Ltd. Peter Leveque for the Defendants 973632 Alberta Ltd., Evanworth Mortgage Investment Corp. Sherbrooke Mortgage Investment Corp. and Ms. Debbie Standon J. Symonds for the Defendants 1251748 Alberta Ltd., 973989 Albert Ltd. and Oliver Forest & Carrington Ltd. Paul Malone for the Defendants Tri-Link Consultants Inc., 4040392 Manitoba Ltd. and Klaus Link R. Price for Mr. Watts’ Estate in Bankruptcy Mr. Glenn Watts Self-represented