Acquilini v Gunsten, 2021 ABQB 441

Court of Queen’s Bench of Alberta Citation: Acquilini v Gunsten, 2021 ABQB 441 Date: 20210604 Docket: 2001 16044 Registry: Calgary Between: Francesco Aquilini as trustee for the Francesco Aquilini Asset Trust Plaintiff - and - Brian Gunsten and Theressa Gunsten Defendants _______________________________________________________ Reasons for Decision of J.T. Prowse , Master in Chambers _______________________________________________________ [ 1 ] I shall refer to the plaintiff as “Acquilini”. I shall refer to the defendant Brian Gunsten as Mr. Gunsten and the defendant Theressa Gunsten as Ms. Gunsten.

The Gunstens are spouses. [ 2 ] Acquilini is a judgment creditor of Mr. Gunsten. It seeks to set aside his transfer of his interest in the matrimonial home to Ms. Gunsten. [ 3 ] The Alberta Law Reform Institute authored a report on Reviewable Transactions (final report 108 – March 2016) where it made the following observations regarding this type of litigation: Current law offers one set of rules for attacking all transfers of property that have the effect of hindering or defeating creditors.

This produces uncertain and unfair results in some cases, the most significant of which are those involving payments of money and transfers of property in satisfaction of legally recognized spousal claims to support and division of property. Questions abound. Is a transfer of property pursuant to a spousal property settlement void or valid according to whether a debtor-transferor was not conscious of its effect on his or her creditors rights of recovery? Can a transfer of property under a bona fide settlement agreement or court order be undone if it

is subsequently challenged by creditors of the transferring spouse? [4] At the time of the report, ALRI noted that the proposal of the Uniform Law Conference of Canada was that this type of‘spousal transaction’ should only be set aside where the spouses collusively intended to defeat the creditors of one of them. While thisrecommendation has not been incorporated into the statutory law of Alberta, the case law considering the various statutory obligationswhich are in effect can, in my view, be interpreted in this fashion. [5] I find that the transfer to Ms.

Gunsten in question should not be set aside for the following reasons: • The separation agreement between Mr. and Ms. Gunsten resulted from a long-standing breakdown in their marriage, whichmarriage was in any event coming to an end. The separation was not a false or made up event, designed to avoid creditors of Mr.Gunsten. • The amount of value provided to Ms. Gunsten under the separation agreement in question was reasonable and proportionate in thecircumstances. Mr.

Gunsten’s ‘equity’ in the home (given his exemption of $20,000 as it was his primary residence, and he has not yetestablished another primary residence) was in the vicinity of $15,000 to $20,000. In return for the transfer of this equity, Ms. Gunstenreleased all claims for future alimony. • Ms. Gunsten was unaware of the existence of Acquilini as a creditor when she entered into the settlement agreement, nor is thereany evidence that she knew that Mr. Gunsten was insolvent at the time of the conveyance.

Existing Alberta case law [6] The two most relevant cases provided to the Court in this matter are Re: Laventure, (1985), (AB KB), 44R.F.L. (2d) 158, 59 A.R. 28, 1985 CarswellAlta 336 (Alta. Q.B.) and Exelby & Partners LLP v. Gibson, 2005 ABQB 16, 2005CarswellAlta 24 (Alta. Q.B.). [7] The facts in Laventure are summed up in its headnote: The spouses were married in 1961, separated in 1979 and divorced in 1980. On 25th February 1980 the husband transferred his interestin the matrimonial home to the wife and the wife assumed the mortgage which was registered against the home.

The wife agreed toaccept the house in settlement of her rights to maintenance and to a division of matrimonial property. The husband became a bankrupt on16th January 1981. The trustee in bankruptcy subsequently applied to have the transfer declared void as against him. [8] The Court in Laventure declined to declare the transfer void.

Among the conclusions were the following: [para 8] The evidence as a whole, and particularly that quoted above, satisfies me that the parties acted in good faith in making thetransfer as part of a marriage breakdown settlement and that the wife's assumption of the mortgage on the land constituted "valuableconsideration", particularly since the evidence shows she has made approximately $10,000 in payments on that mortgage and one mightreadily consider those payments as being part performance of her undertaking to assume the mortgage.

Further, I find that the wife'sundertaking to accept the home in settlement of her matrimonial property rights (thereby in effect undertaking not to sue therefor, in fact)constitutes valuable consideration. The court need not inquire into the adequacy of the valuable consideration. It is sufficient if theconsideration is not grossly inadequate. [para 11] Still further it is clear from the evidence that the intent of both parties in making the transfer was to settle the matrimonialproperty between them on their separation.

Such being the case, it cannot be said that the transfer was given with a view to giving apreference. Again the motion must fail under these sections. [9] The facts in Exelby were as follows (at paragraphs 2 to 6 of the decision): The Bankrupt and Julliane Gibson were married in 1995. They purchased a matrimonial home in Fort McMurray in joint names in March1998. This consisted of a mobile home and real property, the legal description being ... (the "Property"). The married couple separated on January 5, 2003.

On October 10, 2003, the Bankrupt transferred his interest in the Property to the wifefor a stated consideration of $1.00. At the date of the transfer, the Property was subject to one financial encumbrance, a mortgage showing an original principal amount of$120,583.00 registered against the title on March 10, 1998. The outstanding balance on the mortgage was $101,457.00 at October 30,2003. The Bankrupt filed an Assignment in Bankruptcy on October 30, 2003 and Exelby and Partners LLP were appointed Trustee of theEstate (the "Trustee"). The Trustee filed a Notice of Motion for this relief on May 28, 2004.

The claim was based on a lack of consideration for the transfer, aclaim that it was a fraudulent preference and that it was void under ss.91, 95 and 98 of the Bankruptcy and Insolvency Act, R.S.C. 1985,c.B-3 for, among other things, having been made within three months of the date of the bankruptcy. [10] In Exelby at paragraph 25 the Court upheld the Registrar’s refusal to set aside the transfer of the matrimonial home, stating asfollows: That Judgment [Laventure] demonstrates an analysis of the same sort of arguments that have been raised by the Trustee in argumentbefore me. See paragraphs 23, 24 and 25.

The same sort of analysis applies to this case, the evidence relied upon by the Registrarovercomes all those objections, demonstrating a lack of intent on the part of the wife to defraud, a lack of knowledge of insolvency and

overcoming the presumption raised by the relationship between the parties. [emphasis added] [ 11 ] My decision is based on the same factors underlined in the preceding paragraph. Conclusion [ 12 ] The application to set aside the transfer from Mr. Gunsten to Ms. Gunsten is dismissed. No costs are awarded under my disposition as Mr. and Ms. Gunsten were self-represented. Heard on the 3 rd day of June, 2021. Dated at the City of Calgary, Alberta this 4 th day of June, 2021. J.T. Prowse M.C.C.Q.B.A. Appearances: Chadwick Newcombe Kahane Law Office for the Plaintiff Brian Gunsten self represented litigant Theressa Gunsten self represented litigant