2023 NBCA 75, 2023 NBCA 75

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 114-22-CA SASHA CONTRACTING AND RENOVATION INC., RUSCANA INTERTRADE INC., ALEXANDR PETUKHOV, ALEXANDER PETUKHOV AND ALEXANDR SASHA PETUKHOV APPELLANTS SASHA CONTRACTING AND RENOVATION INC., RUSCANA INTERTRADE INC., ALEXANDR PETUKHOV, ALEXANDER PETUKHOV ET ALEXANDR SASHA PETUKHOV APPELANTS - and - - et - ANIRBAN GHOSH AND JAYA GHOSH RESPONDENTS ANIRBAN GHOSH ET JAYA GHOSH INTIMÉS Sasha Contracting and Renovation Inc., Ruscana Intertrade Inc., Alexandr Petukhov, Alexander Petukhov and Alexandr Sasha Petukhov v.

Anirban Ghosh and Jaya Ghosh, 2023 NBCA 75 CORAM: The Honourable Justice Baird The Honourable Justice French The Honourable Justice LeBlond Sasha Contracting and Renovation Inc., Ruscana Intertrade Inc., Alexandr Petukhov, Alexander Petukhov et Alexandr Sasha Petukhov c.

Anirban Ghosh et Jaya Ghosh, 2023 NBCA 75 CORAM : l’honorable juge Baird l’honorable juge French l’honorable juge LeBlond Appeal from a decision of the Court of King’s Bench: October 13, 2022 Appel d’une décision de la Cour du Banc du Roi : le 13 octobre 2022 History of Case: Historique de la cause : Decision under appeal: 2022 NBKB 192 Décision frappée d’appel : 2022 NBBR 192 Preliminary or incidental proceedings: None Procédures préliminaires ou accessoires : aucune Appeal heard: February 22, 2023 Appel entendu : le 22 février 2023

Judgment rendered: August 31, 2023 Jugement rendu : le 31 août 2023 Reasons for judgment by: The Honourable Justice French Concurred in by: The Honourable Justice Baird The Honourable Justice LeBlond Counsel at hearing: For the appellants: Dale T. Briggs For the respondents: René A. LeBlanc Motifs de jugement : l’honorable juge French Souscrivent aux motifs : l’honorable juge Baird l’honorable juge LeBlond Avocats à l’audience : Pour les appelants : Dale T. Briggs Pour les intimés : René A. LeBlanc THE COURT The appeal is dismissed with costs of $3,000. [ 1 ] LA COUR L’appel est rejeté avec dépens de 3 000 $.

The judgment of the Court was delivered by FRENCH, J.A. I. Introduction and Overview [1] This is an appeal from an order that declares a transfer of real property by Sasha Contracting and Renovation Inc. to be null and void. The property was transferred in 2013 to Ruscana Intertrade Inc., which was both related to and a creditor of Sasha. [ 2 ] A year prior to the transfer, Sasha contracted to construct a home for Anirban Ghosh and Jaya Ghosh on land they owned in Dieppe, New Brunswick. Before the work was completed, Mr. and Ms. Ghosh terminated the contract over concerns regarding the quality of Sasha’s work.

In response, Sasha filed a Claim for Lien against the property, and commenced an action against the Ghoshes, claiming $95,462.65. [ 3 ] In June 2013, the Ghoshes filed a Statement of Defence and Counterclaim, claiming $98,139.98 from Sasha. Two months later, Sasha transferred the property, its most significant asset, to Ruscana.

[ 4 ] The trial of their conflicting claims regarding the construction of the home took place over 12 days, during a three-year period, and, in October 2018, a judge granted Mr. and Ms.

Ghosh judgment against Sasha in the amount of $96,461.09, plus costs. [ 5 ] After securing judgment, the Ghoshes discovered Sasha had transferred the property to Ruscana and, in February 2019, they commenced an action seeking an order declaring the transfer to be null and void pursuant to ss. 2(1) and (2) of the Assignments and Preferences Act , R.S.N.B. 2011, c. 115 (the “ APA ”), and granting an oppression remedy under s. 166 of the Business Corporations Act, S.N.B. 1981, c.

B-9.1 (the “ BCA ”). [ 6 ] Sasha, Ruscana, Alexandr Petukhov, Alexander Petukhov and Alexander Sasha Petukhov filed a defence to the action, and they brought a motion for

summary judgment to have the action dismissed on the basis that the Ghoshes were not creditors of Sasha at the time the property was transferred. They maintained Mr. and Ms. Ghosh did not become creditors until judgment was entered in 2018. They also asserted the transfer was made for valuable consideration and for a business purpose, not for the purpose of defeating or delaying Sasha’s creditors. The motion judge concluded the claim advanced by Mr. and Ms. Ghosh in their Counterclaim made them “creditors,” within the meaning of the APA and the BCA, and they were therefore entitled to seek relief under both acts. [ 7 ] Mr. and Ms. Ghosh also brought a motion for

summary judgment, and the judge declared the transfer to be null and void on the basis it was:

a) done with the intent to defeat, delay or prejudice Sasha’s creditors, as contemplated by s. 2(1) of the APA ;

b) made with the intent to give Ruscana an unjust preference (over Sasha’s other creditors), as contemplated by s. 2(2) of the APA ; and

c) oppressive, as against the Ghoshes, as contemplated by s. 166 of the BCA . [ 8 ] On appeal, the defendants/appellants contend the motion judge erred by:

a) finding the Ghoshes were, at the time of the transfer in 2013, “creditors” of Sasha, within the meaning of the APA and the BCA ;

b) failing to recognize that Sasha received “valuable consideration” for the transfer, which precluded the application of ss. 2(1) and (2) of the APA ; and

c) misapprehending evidence that established the transfer was undertaken for a legitimate business purpose and not oppressive within this meaning of s. 166 the BCA . [ 9 ] The provisions of the APA applicable to the issues in this appeal are attached as

Schedule “A.” [ 10 ] I would dismiss the appeal for the reasons that follow. II. Context A. Mr. Petukhov, Sasha, Ruscana and the contract with Mr. and Ms. Ghosh [ 11 ] Since 1999, Mr. Petukhov operated a construction business under the registered business name “Sasha

Contracting and Renovation.” In 2004, he incorporated the business as Sasha Contracting and Renovation Inc. He was its sole director. In December 2001, Mr. Petukhov incorporated Ruscana Intertrade Inc. He was also its sole director. [ 12 ] In March 2012, Mr. Ghosh met Mr. Petukhov at the Greater Moncton Home Show, where Mr. Petukhov was manning a booth under the banner “Ruscana Building Products.” They discussed the construction of a home on the Ghoshes’ vacant lot of land in Dieppe. [ 13 ] In April 2012, Mr. Petukhov provided Mr.

Ghosh with written quotes for the construction of a home and, by May 2012, they signed a contract. Both the quotes and the contract identified Sasha, not Ruscana, as the contracting party responsible for the construction. This said, they also referred to Ruscana; the email address was ruscana@rogers.com , and the website was www.ruscana.com. In response to Mr. Ghosh’s inquiries about the role of Sasha as the contracting party, rather than Ruscana, Mr. Petukhov explained that Sasha was responsible for the construction, and Ruscana would supply Sasha with the foundation and roofing materials.

While the notes to Ruscana’s 2013 Financial Statements indicate it operated a metal roofing sales and installation business, it also sold insulated concrete forms (ICFs), autoclaved aerated concrete (AAC), metal roofing and other home construction materials. [ 14 ] On signing the contract, Mr. Ghosh paid Sasha $2,000. He paid a further $88,000 in July 2012 and another $66,000 in November 2012.

However, because of concerns over defects in construction, on December 13, 2012, the Ghoshes refused to pay the final instalment due under the contract and they refused to allow Sasha to perform any further work on their home. [ 15 ] On January 11, 2013, Sasha filed a Claim for Lien, under the Mechanics’ Lien Act , R.S.N.B. 1973, c. M-6 , and, on April 8, 2013, it filed its Statement of Claim. On June 3, 2013, Mr. and Ms. Ghosh filed a Statement of Defence and Counterclaim, claiming damages for negligence and poor workmanship by Sasha.

In June 2013, Sasha filed a Demand for Particulars and, in July 2013, Mr. and Ms. Ghosh filed a Statement of Particulars. [ 16 ] The following month, in August 2013, Sasha transferred the property. [ 17 ] There is no dispute that Sasha was in insolvent circumstances when it transferred the property, which is a precondition to the making of an order under s. 2 of the APA .

Characterizing the circumstances surrounding transfer in general terms, the motion judge stated that Sasha “conveyed its largest asset but received nothing in return except forgiveness of only part of its debts and the repayment by Ruscana of [a] $650,000 mortgage […]” (para. 24). In relation to it being in insolvent circumstances , the judge explained : […] was Sasha insolvent or on the verge of insolvency at the time of the transfer? While Mr.

Petukhov states in his affidavit that the company was not insolvent or on the verge of insolvency in the summer of 2013, the following facts would suggest otherwise: 1) Sacha did not enter into any new contracts after the contract with Mr. and Mrs. Ghosh, which was signed in 2012; and the company did not perform any work after approximately August 2012; 2) Sacha owed Ruscana, an affiliated company, some $828,000 effective December 31, 2012; 3) Sacha owed nearly $500,000 to Petukhov as of December 31, 2012; and 4) Sacha had net losses that year in the amount $118,000.

Also, counsel for Sacha expressly admitted at the hearing that Sacha was insolvent in 2013. Based on those facts, I find that Sacha was insolvent or was on the verge of insolvency when the transfer was undertaken, triggering both sections 2(1) and 2(2) of the Assignments and Preferences Act . [paras. 54-56]

B. The Consideration and the Value of the Property [ 18 ] The appellants maintained the intent was to transfer the property at fair market value (FMV). The judge found that the evidence offered to support this assertion gave rise to unanswered questions. It was inconsistent with the stated intention to transfer at FMV. [ 19 ] In October 2012, a year prior to the transfer, Sasha granted a $650,000 mortgage to private lenders, at 12% interest. Since both Ruscana and Mr.

Petukhov guaranteed t his mortgage, they were liable for that amount, at least contingently, before Sasha transferred the property. [ 20 ] The appellants did not provide an appraisal of the property as of the time the property was transferred, in August 2013, or any other time. The appellants relied on the portion of an email exchange with their accountant that indicated the transfer ought to occur at FMV; however, the $30,000 per acre value identified in that correspondence came from the appellants, not the accountant.

This per acre valuation produced a property value of $240,000, based on its eight acres of land. Ther e was no indication where the $30,000 per acre amount came from, nor was there any explanation as to why it would be reasonable to value a property that was not vacant land based on a per acre amount. They did not provide an affidavit from the accountant.

The motion judge noted the accountant refused to speak with the appellant’s lawyer and co-operate in the litigation. [ 21 ] Although the $240,000 FMV amount became the purchase price in the Agreement of Purchase and Sale between Sasha and Ruscana, as will be explained, neither that amount nor the terms of the Agreement were consistent with the transaction that was finalized. [ 22 ] The Agreement provides that Sasha is to sell, and Ruscana is to purchase, the “lands and premises” for a price of $240,000.00 plus HST, which is payable by the reduction of debt, without any payment of cash: PURCHASE PRICE: $240,000.00 plus HST payable as follows :

a) The balance of the Purchase Price, as defined in this Agreement of Purchase and Sale will be paid by virtue of the reduction in an equal amount of monies currently owed by the Vendor to the Purchaser which is well in excess of the amount defined as the Purchase Price under and by virtue of this Agreement.

b) the purchase price tendered herein for the Premises shall be exclusive of any HST, however […] Also, the net cashflow impact of this transaction will be NIL dollars. [Emphasis added] [ 23 ] Additionally, the Agreement provides that the closing date is “[o]n or before the 22 nd day of August, 2013 free and clear of all or any tenancies, liens or encumbrances ” (emphasis added). Despite this, it is not disputed that there was never any expectation Sasha would pay out its $650,000 mortgage on closing or Ruscana would acquire the property “free and clear” of that mortgage (of which it was a guarantor).

On the contrary, it was intended the property would be transferred, subject to the mortgage, and Ruscana would thereafter refinance the property. [ 24 ] Indeed, before the motion judge, the appellants maintained, albeit eight years after the transfer and when consideration was an issue in this litigation, that the consideration for the transfer was approximately $890,000; that is, the aggregate of the $240,000 in debt forgiven by Ruscana, and the assumption (at least in practical terms) of Sasha’s $650,000 mortgage. [ 25 ] Lastly, regarding the consideration for the property transferred, the notes to Ruscana’s financial statements (for the year ended December 31, 2013, four months after the transfer) indicate it then owned land and building(

s) that have a cost of $240,000 and $779,836, respectively. Hence a total of $1,019,836. [ 26 ] In sum, the transaction was inconsistent with both the appellants’ representation that the intent was to transfer

the property at FMV (of $240,000) and the transaction documents. [ 27 ] In relation to the judge’s assessment of the value of the property (relative to the consideration received by Sasha), the evidence considered by him included the circumstances and terms of a mortgage granted by Ruscana following the transfer. In August 2014, Ruscana granted a collateral mortgage to the Royal Bank of Canada to secure any and all indebtedness of Ruscana to the Bank, limited to $1,500,000.

While the record does not indicate what other indebtedness the collateral mortgage secured, if any, the judge noted that the bank advanced $900,000 to Ruscana under this mortgage. As will be explained below, the appellants stated that one of the objectives of the transfer to Ruscana was to permit it to be able to borrow funds based on the property. [ 28 ] In the end, the motion judge decided the consideration did not bear a fair and reasonable relation to the value of the property transferred. On appeal, the appellants submit the judge misapprehended the evidence respecting the consideration for the transfer.

As will be explained below, I disagree. C. The Intent of the Transfer [ 29 ] Regarding the appellants’ assertion that Sasha transferred the property to Ruscana to achieve a legitimate business purpose, the judge reproduced the relevant evidence offered in Mr.

Petukhov’s affidavit: On or around August 21 2013, in an effort to reduce the debt owing by the Defendant Sasha to the Defendant Ruscana Intertrade Inc. (the “Defendant Ruscana”) and in turn, to secure financing for the Defendant Ruscana for its future business ventures, the Defendant Sasha made the business decision to transfer the Property to the Defendant Ruscana for the initial amount of $240,000.00 + HST, to be paid by way of reduction of debt (the “Transfer”). [Emphasis added] [ 30 ] The judge also reproduced the relevant evidence offered in the affidavit sworn by Mr.

Petukhov’s wife: The Transfer was undertaken to reduce the amount of debt owing by the Defendant Sasha to the Defendant Ruscana as well as to reduce the losses of the Defendant Sasha . I am advised by Terry Bachmann of Bachmann Wood & Associates and verily believe to be true that both these elements taken together were making it difficult for the Defendant Ruscana to secure financing necessary for its future business ventures .

A copy of the e-mail correspondence from Terry Bachmann of Bachmann Wood & Associates to myself dated August 14, 2013 outlining this advice is attached hereto and marked as Exhibit “C”. [Emphasis added] [ 31 ] After considering their explanation in the context of the circumstances surrounding the transfer, the judge concluded the decision to convey Sasha’s property was made with an intent to benefit Ruscana, not Sasha.

Although he acknowledged the appellants’ contention that the Ghoshes’ Counterclaim had no bearing on the decision to transfer the property since they believed Sasha would recover judgment against Mr. and Ms. Ghosh, not the reverse, the judge did not find this persuasive. III. Analysis

(1) The appellants contention that the motion judge erred in finding the Ghoshes were “creditors” for the purposes of s. 2 of the APA and s. 166 of the BCA (

a) Overview [ 32 ] What follows are my reasons for accepting the appellants’ submission the motion judge erred in concluding non-judgment claimants may be recognized as “creditors” under the APA or the BCA in the same manner they may be found to be “ creditors and others” under the Fraudulent Conveyances Act 1571 (UK), 13 Eliz. 1, c. 5 (commonly called the Statute of Elizabeth ) . In my view, this does not correctly reflect the significant body of jurisprudence regarding the meaning of “creditor” and “creditors and others” under such legislation.

[ 33 ] However, t he motion judge was correct to conclude Mr. and Ms. Ghosh had standing to claim an oppression remedy under the BCA . Even if they were not “creditor[s] of the corporation” within the definition of “complainant” under s. 163 of the BCA , they are undoubtedly “other person[s]” who are “proper person[s] to make an application” for an oppression remedy.

As a result, I would dismiss this ground of appeal. [ 34 ] The meaning of “creditors,” for the purpose of establishing the class of persons entitled to standing to apply to the court for, and to receive the benefit of, an order under s. 2 of the APA or s. 166 of the BCA is not as straightforward as one might reasonably expect.

The meaning of “creditor” under such legislation has not been previously addressed by this Court. [ 35 ] In this case, the requisite analysis was hindered by the limited jurisprudence identified and canvassed before the motions judge and this Court. [ 36 ] Before the motion judge, to support their position that the Ghoshes were not “creditors” at the time of the transfer and were not able to claim the benefit of either the APA or the BCA , the appellants relied on 1280055 Alberta Ltd. v. Zaghloul , 2012 ABQB 10 , [2012] A.J. No. 16 (QL) . [ 37 ] Zaghloul provides a good

summary of the significant distinction in the jurisprudence between (1) the expansive

interpretation attributed to “creditors and others,” as used in the Statute of Elizabeth , and fraudulent conveyance legislation enacted by some provinces (which similarly refers to “creditors and others”) and (2) the restricted

interpretation given to “creditors,” within the meaning of fraudulent preference legislation enacted by some provinces, which is similar to the APA . [ 38 ] However, Zaghloul is of limited value for the proposition advanced by the appellants. First, as the motion judge rightly found, the facts in Zaghloul distinguish it from the present case.

Second, the comments made in Zaghloul regarding the meaning of “creditor” are limited and insufficient to ground the appellants contention that the Ghoshes were not “creditors” of Sasha. [ 39 ] In any event, the motion judge relied on 1007374 Alberta Ltd. v Ruggieri , 2014 ABQB 641 , [2014] A.J. No. 1165 (QL) , aff’d 2015 ABCA 205 , [2015] A.J. No. 653 (QL) , to determine that “a ‘creditor’ is not necessarily defined differently, whether under the Statute of Elizabeth or the Fraudulent [ Preferences ] Act.

Both approaches seem to recognize someone who is advancing an as-yet-unadjudicated claim as being a ‘creditor’” (para. 47). Ruggieri was appealed but the Alberta Court of Appeal did not address the part of the decision relied upon by the motion judge. [ 40 ] What follows are my reasons for accepting the appellants’ submission that this is not a correct statement of the law but deciding that t he motion judge was correct to conclude Mr. and Ms. Ghosh had standing to advance a claim under the BCA . (

b) The Definition of “Creditor” Under The Debtor Transactions Act Does Not Apply [ 41 ] The parties jointly submitted, and the motion judge accepted, that the law applicable to the 2013 transfer at issue was that which existed prior to the Debtor Transactions Act , S.N.B. 2015, c. 23 , coming into force on December 1, 2019. Upon it becoming effective, the Statute of Elizabeth ceased to be in force (s. 28), and the Assignments and Preferences Act , R.S.N.B. 2011, c. 115 , was repealed (s. 29). Until then, the Statute of Elizabeth applied in the province (see McGillan v. McGillan , [1947] N.B.J.

No. 11 (QL) (C.A.) ). [ 42 ] However, before moving on, I will pause to briefly draw attention to the fact that the jurisprudence relating to the meaning of “creditor,” in contrast to the meaning of “creditors and others,” has long been recognized as challenging, and in need of greater clarity and/or change. [ 43 ] In 1976, Professors Karl J. Dore and Robert W.

Kerr addressed the state of the law in relation to the issue of whether a person who holds a claim at the time of an impugned transfer (but does not hold a judgment) is a “creditor” under fraudulent preference legislation (like the APA ), which is the issue in this case. In the Third Report of the Consumer Protection Project, Vol. II, Legal Remedies of the Unsecured Creditor After Judgement (Fredericton, N.B.: Department of Justice, Law Reform Division, 1976), they expressed the view, that:

A person whose claim against the debtor is for damages as a result of a tort or other unliquidated claim , does not become a creditor until he obtains judgment. Such a person can attack the transaction under the English statute [the Statute of Elizabeth ], but this attack will often fail because the impugned transaction was merely a preference to another creditor. As noted previously, preferences usually are not subject to attack under the English statute. [Emphasis added; footnote omitted; pp. 144-145] [ 44 ] The authority provided for this opinion was Ashley v. Brown , [1890] O.J.

No. 36 (QL) (C.A.) , and Gurofski v. Harris , [1896] O.J. No. 120 (QL) (Ont.

O.H.C.) . [ 45 ] Their corresponding recommendation in the Report was that the “term ‘creditor’ [should] be generally defined to include a person who has a cause of action against another person, without regard to whether the claim is liquidated or whether a judgment has been obtained upon the cause of action […]” (p. 154). [ 46 ] Reflecting generally this view, more than 40 years later the law in New Brunswick changed with the Debtor Transactions Act , which provides that a “creditor” includes a person who has a right to the satisfaction of an obligation owed by a debtor, whether “liquidated or unliquidated”: “creditor” means, subject to

section 12, a person who has a claim. “claim” means the right to satisfaction of an obligation owed by a debtor, whether the obligation is (

a) liquidated or unliquidated, (

b) absolute or contingent, (

c) certain or disputed, or (

d) currently payable or payable in the future. « créancier »

Sous réserve de l’article 12, s’entend du titulaire d’une créance. « créance » Droit à l’exécution d’une obligation par son débiteur laquelle peut:

a) avoir une valeur déterminée ou non;

b) être absolue ou éventuelle;

c) être certaine ou contestée;

d) être échue actuellement ou éventuellement. [ 47 ] It was not disputed that the Ghoshes would meet this definition of “creditors.” I now turn to the meaning of “creditor” under the APA . (

c) Pre-December 2019 − the Meaning of “Creditor” [ 48 ] Despite the existence of fraudulent preference legislation since the late 1800s, there are no reported cases from New Brunswick courts that have determined the meaning of “creditor” under the APA . [ 49 ] The enactment of the APA , and similar fraudulent preference legislation in other provinces, arguably expanded the type of transactions that could be set aside by specifically targeting those that preferred one or some creditor(

s) over the debtor’s other creditors, which, as Professors Dore and Kerr noted above, were not usually subject to attack under the Statute of Elizabeth . This reflected the notion that, on insolvency, all unsecured creditors ought to be paid, or share, pari passu . [ 50 ] However, unlike the Statute of Elizabeth , which applied to “creditors and others,” the “new” preference

legislation referred only to “creditors.” The considerable body of Canadian jurisprudence that followed overwhelmingly interpreted this legislative distinction as intending the scope of those with standing as “creditors,” under fraudulent preference legislation, to be much more limited than the class of those with standing as “creditors and others,” under the Statute of Elizabeth or provincial fraudulent conveyance legislation (that also refers to “creditors and others”). As this is directly contrary to the finding of the motion judge and the decision(

s) relied on by him, I will elaborate further. [ 51 ] Given the lengthy existence of the Statute of Elizabeth , it is not surprising that it is often pleaded and applied as though its well known requirements were a principle of common law, without any reference to its provisions. Despite this practice, it is helpful to set out its

preamble:

An Act against Fraudulent Deeds, Gifts, Alienations, etc.

For the avoiding and abolishing of feigned, covinous and fraudulent feoffments, gifts, grants, alienations, conveyances, bonds, suits, judgments and executions, as well of lands and tenements as of goods and chattels, more commonly used and practised in these days than hath been seen or heard of heretofore: (2) which feoffments, gifts, grants, alienations, conveyances, bonds, suits, judgments and executions, have been and are devised and contrived of malice, fraud, covin, collusion or guile, to the end, purpose and intent, to delay, hinder or defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties, forfeitures, heriots, mortuaries, and reliefs, not only to let or hindrance of the due course and execution of law and justice, but also to the overthrow of all true and plain dealing, bargaining, and chevisance between man and man, without the which no commonwealth or civil society can be maintained or continued [...] [Emphasis added] [ 52 ] Since the Statute of Elizabeth was enacted over 450 years ago, naturally, there is an abundance of jurisprudence that has considered the meaning of both “creditor” and of “others.” Summarizing the Canadian jurisprudence on “who can challenge” a transaction under the Statute of Elizabeth , based on “creditors and others,” Professor C.R.B.

Dunlop stated in Creditor-Debtor Law in Canada , 2nd ed. (law stated as of August 1, 1996): The Statute of Elizabeth declared conveyances to be void as against “creditors and others” whose claims “are, shall or might be in any wise disturbed, hindered, delayed or defrauded”. The term creditor is capable of a fairly clear

interpretation but the courts have had more trouble giving content to and placing limits on the potentially all-embracing word “others” . Here as elsewhere, much of the law of fraudulent conveyances has been settled in the cases rather than flowing necessarily from the statute itself. [Emphasis added; p. 617] [ 53 ] In making the statement that the term “creditor” is capable of a fairly clear

interpretation, Professor Dunlop footnotes the entirety of

chapter 2 of his book, which is entitled: “The Concept of Debt”. In that

chapter he states: The above discussion indicates that the word “debt” is not today a term of art with a clear, never-changing denotation. Instead of trying to define a core meaning, it would seem better to agree with the editors of the Corpus Juris Secundum that “[the word] takes shades of meaning from the occasion of its use, and color from accompanying use, and it is used in different statutes and constitutions in senses varying from a very restricted to a very general one”.

One can say that the most common use of the word “debt” is to describe an obligation to pay a sum certain or a sum readily reducible to a certainty. The obligation may or may not depend on an express or implied contract, depending on the context in which the word is used, but to this writer the essence of the term is that, if there is an obligation to pay a certain or ascertainable sum, the courts should tend not to concern themselves with the precise nature of the cause of action.

Claims for unliquidated damages will generally not be describable as debts unless the context suggests or a statute provides otherwise. [Emphasis added] [ 54 ] However, as Professor M.A. Springman observed in Frauds on Creditors: Fraudulent Conveyances and Preferences (looseleaf to May 2023), despite Professor Dunlop’s comment that the “term creditor is capable of a fairly clear

interpretation,” there is uncertainty regarding the status of certain non-judgment claimants as “creditors”. Like Professor Dunlop he states that, in most cases, “persons with unliquidated claims are not ‘creditors ’”: Although Dunlop has said that the “term creditor is capable of a fairly clear

interpretation”, there still appears to be some lingering confusion concerning the standing of certain non-judgment creditors or claimants to bring an action on their own behalf under the Fraudulent Conveyances Act model. In most cases, the courts have held that persons with unliquidated claims are not “creditors”. (An unliquidated claim refers to a claim for a sum of money that, while it may be specified as a definite figure, requires some sort of analysis or investigation beyond a mere arithmetical calculation.) [Emphasis added; §13:4 ]

[55] A number of reported decisions are frequently cited in connection with the expansive meaning attributed to“creditors and others” under the Statute of Elizabeth and the distinct

interpretation of “creditors” under fraudulent preference legislation.Commonly, courts have relied on a broad

interpretation of “others” to allow a claimant to seek relief under the Statute of Elizabeth wherethey have decided the claimant is not clearly a “creditor.” [56] In addition to Ashley v. Brown and Gurofski v. Harris, cited by Professors Dore and Kerr, there is, for example,Hopkinson v. Westerman, [1919] O.J.

No. 127 (QL) (C.A.), where it was decided that a claimant fell within the meaning of “others,”even though the claimant’s damages claim in tort precluded him from being a “creditor.” Merideth C.J.C.P. explained why a tort claimcame within the meaning of “others:’ […] “The well-nigh universal rule is that claims for damages arising from torts are within the protection of the statutes againstfraudulent conveyances.” It is difficult to see how it could be otherwise under the statute of Elizabeth, upon which this action is based,the words of that Act (13 Eliz. ch. 5, sec. 1) being: “For the avoiding and abolishing of feigned, covinous and fraudulent ... conveyances... devised and contrived ... to delay, hinder or defraud creditors and others of their just and lawful actions ...” What “others” can it besuggested can better come within the meaning of that word than such others as have actions pending in which they are sure torecover large damages?

I know of none. [Emphasis added; footnote omitted; para. 9] [57] Addressing directly why the claimant’s damages claim in tort was not a debt, and the holder was not a“creditor” under the Ontario Assignments and Preferences Act until judgment is entered, Middleton J. stated, in concurring reasons: But in order to make a transaction open to attack under 13 Eliz. ch. 5, it is not necessary that there should be an existing debt.The statute is for the protection of “creditors and others,” and in this respect differs from our Ontario statute, which avoids preferentialtransactions at the instance of “creditors” only (Assignments and Preferences Act, R.S.O. 1914, ch. 134, sec. 5.) Ever since Longeway v.

Mitchell (1870), 17 Gr. 190, there has been no room for doubting that a class action will lie attacking aconveyance as fraudulent, either under the statute of Elizabeth or under the Provincial statute, without awaiting the recovery of judgmentand issue of execution. When the attack is under the Provincial Act, the plaintiff must prove that he is a "creditor" within themeaning of that Act, and it is now clearly determined that one who has a claim for damages is not a creditor until his claimpasses into a judgment: Ashley v. Brown, 17 A.R. 500; Gurofski v.

Harris, 27 O.R. 201, 23 A.R. 717. [Emphasis added; paras. 26-27] [58] Similarly, in Bell v. Williamson and Moulton, [1945] O.J. No. 562 (QL) (C.A.), Robertson C.J.O. concludedthat, where a claim is not a debt, but only a claim for unliquidated damages in tort or contract, the claimant is not a “creditor”; however,the effect of the words “or others” following the word “creditors” is to give to such persons a right of action to have a transaction setaside. [59] Citing Bell v. Williamson, Feldman J.A. stated, in Stone v.

Stone, (ON CA), [2001] O.J.No. 3282 (QL) (C.A.), that “a person may fall within the words ‘or others’ even if the person has, at the time of the impugnedtransaction, only a claim for unliquidated damages in contract or in tort”: The first issue to be determined is whether, and if so, when is a spouse a “creditor or other” of the other spouse in respect of the right toan interest in the net family property of the other spouse, within the meaning of s. 2 of the Fraudulent Conveyances Act.

The Fraudulent Conveyances Act Longstanding case law decided under the Fraudulent Conveyances Act has addressed the issue of who is a “creditor or other” for thepurpose of s. 2. In Hopkinson v. Westerman (1919), (ON CA), 45 O.L.R. 208 at p. 211, 48 D.L.R. 597 (C.A.), thecourt held that “others” extended to persons who, though not judgment creditors, had pending actions in which they were sure torecover damages. In that case, the person who transferred the land was a defendant in a tort action. In Bell v.

Williamson, (ON CA), [1945] O.R. 844, [1946] 1 D.L.R. 372 (C.A.), the court similarly held that the claimant need not be a judgmentcreditor at the time of the conveyance, but a person may fall within the words “or others” even if the person has, at the time of theimpugned transaction, only a claim for unliquidated damages in contract or in tort. Robertson C.J.O. stated at p. 848 O.R.:

I do not doubt for a moment that a transaction may be null and void within s. 2 of The Fraudulent Conveyances Act, although theplaintiff who brings the action attacking it may, at the time of the transaction, and even when action is brought attacking it, havehad nothing more than a claim for unliquidated damages in contract or in tort. The effect of the words “or others” following theword “creditors” is to give to such persons a right of action to have a transaction set aside as null and void as against them, ifmade with the required intent. … This

interpretation of the phrase “creditors or others” has been applied many times including in the family law context: See for example:Shephard v. Shephard (1925), 56 O.L.R. 55[5], (ON CA), [1925] 2 D.L.R. 897 (C.A.); Ferguson v. Lastewka, (ON SC), [1946] O.R. 577, [1946] 4 D.L.R. 531 (H.C.J.); Oliver v. McLaughlin (1893), 24 O.R. 41 (Q.B.); Murdoch v.Murdoch (1976), (AB KB), 26 R.F.L. 1, 1 A.R. 378 (T.D.); Chan v. Chan, [1993] B.C.J. No. 442 (S.C.); and Lepore v.Lepore, [1988] O.J. No. 733 (Dist.

Ct.), aff’d by Ontario Court of Appeal (October 22, 1990). [Emphasis added; paras. 22-23] [60] It is common in the caselaw to find the attention focused on whether a claimant falls within the meaning of“others” without expressly stating why the claimant is not a “creditor,” although in most such cases, if not all, the reason is apparent(See, for example, Milavsky v. Milavsky, 2011 ABCA 231, [2011] A.J. No. 841 (QL); Palechuk v. Fahrlander, 2006 ABCA 242, [2006]A.J. No. 1025 (QL)). In Mawdsley v. Meshen, 2012 BCCA 91, [2012] B.C.J.

No. 377 (QL), Newbury J.A. offers the followingcomments on “creditors,” versus the phrase “creditors and others”: The word “creditor” normally refers to a person to whom a debt or obligation is owed, or to someone entitled to the fulfilment of an obligation: see Black’s Law Dictionary (9th ed.) and Dictionary of Canadian Law (3rd ed.). The courts have historically regarded “andothers” in the FCA as referring to persons who do not have debts owing to them by the transferor, but who do have ‘just claims’ not yetbrought to fruition in terms of legal process. Thus in Penny v.

Fulljames (1920) (MB KB), 50 D.L.R. 553 (Man. K.B.),it was said the statute protects “the person who, at the time of the conveyance ... had a claim for unliquidated damages in respect ofwhich judgment had not then been recovered.” (At 554.) In Murdoch v. Murdoch, (AB KB), [1977] 1 W.W.R.16 (Alta. S.C.), it was said “creditors and others” is wide enough to include “any person who has a legal or equitable right of claim” andthat the claim could arise “out of a contract, express or implied, or other legal obligation.” (At 20; see also Krumm v.

McKay 2003ABQB 437at paras. 29-30.) [para. 75] [61] In concluding this part, I would underscore the very clear distinction drawn in the jurisprudence between thestatutory use of “creditors” on one hand and “creditors and others” on the other. I would also echo Professor Springman’s observationthat the jurisprudence leaves some uncertainty regarding the status of certain non-judgment claimants and that, typically, “persons withunliquidated claims are not ‘creditors’.” (

d) The Decision of the Motion Judge and the Decision(

s) relied upon [62] As noted, the motion judge relied on Ruggieri as standing for the proposition that a person “whose claim hasyet to be adjudicated is, indeed, a ‘creditor’ for the purposes of [the Alberta] Fraudulent Preferences Act” (para. 44), in the same manneras this person would be a “creditor and other” under the Statute of Elizabeth. In his reasons for decision, the motion judge mistakenlyrefers in some places to the Fraudulent Conveyances Act; however, the judge clearly recognized that the court in Ruggieri wasconsidering Alberta’s Fraudulent Preferences Act. I have changed this to avoid confusion.

The motion judge explained: The Alberta court [in Ruggieri] first considered the requirements of the Statute of Elizabeth, writing: The Party challenging the Conveyance must be someone who was a Creditor at the time of the Conveyance or someone with a legal orequitable right to claim against the Transferor [90] It is clear that there need not be a judgment at the time of transfer - only a claim. See Proprietary Industries Inc. v Workum,2005 ABQB 610. […] [93] There is no reason to find other than that this element [of the test for the Statute of Frauds] has also been proven.

Then, when considering the Fraudulent [Preferences] Act, the Court [in Ruggieri] wrote: [96] This Statute adds one further step beyond the requirements of the Statute of Elizabeth, 1571 − that the conveyor be insolvent or onthe eve of insolvency. This would seem to suggest that a “creditor” is not necessarily defined differently, whether under the Statute of Elizabeth or theFraudulent [Preferences] Act. Both approaches seem to recognize someone who is advancing an as-yet-unadjudicated claim asbeing a “creditor.” In the end, this Court is not convinced that the Plaintiffs, Mr. and Mrs.

Ghosh, are not “creditors” as that term is used in the Assignmentsand Preferences Act and the Business Corporations Act. Rather, it would seem that in order for the legislation to attain its clearobjective, a broad and purposive definition is warranted, one that seeks to ensure that a party that is insolvent or on the verge ofinsolvency cannot convey its assets to a related company and render itself judgment-proof without allowing a court to consider whetherthe conveyance was done to defeat creditors or in order to prefer a creditor over others who have a claim against that party.

If the Defendants’ position were accepted, any party facing a lawsuit could, on the day prior to the release of the Court's decision,convey all of its assets to another person or company and render itself judgment-proof with impunity. Such a result would beunreasonable and would render the clear purpose of the Assignments and Preferences Act and the oppression provisions of BusinessCorporations Act effectively toothless. In the end, I am not convinced that the Defendants have established that there is no triable issue as to whether the Plaintiffs are“creditors.” Quite the contrary.

The Court is satisfied that Mr. and Mrs. Ghosh, at the time of the conveyance in 2013, were“creditors” for the purposes of both the Assignments and Preferences Act and the Business Corporations Act. [Some emphasismine; paras. 45-50] [63] The court in Ruggieri seems to have regarded standing under the Alberta Fraudulent Preferences Act to havebeen settled by its prior determination in relation to the Statute of Frauds, based on the view that “There need not be a judgment at thetime of transfer − only a claim. See Proprietary Industries Inc. v Workum, 2005 ABQB 610” (emphasis added; para. 90).

In other words,it appears the court in Ruggieri concluded the analysis was the same under both pieces of legislation, relying on Workum. [64] In Proprietary Industries Inc. v. Workum, 2005 ABQB 610, [2005] A.J. No. 1113 (QL) an action had beencommenced to set aside a transfer to a spouse based on the Statute of Elizabeth and the Fraudulent Preferences Act. The spouse appliedto have the claim against her struck out; she claimed that since Proprietary Industries did not have a judgment against her, it could notadvance a claim under either the Statute of Elizabeth or the Fraudulent Preferences Act.

The judge concluded that: I do not agree that PPI is precluded from adding Ms. Workum on the basis that she is not yet a judgment creditor. Ms. Workum citedKrumm v. McKay (2003), 2003 ABQB 437 , 17 Alta L.R. (4th) 103 (Q.B.) for the proposition that PPI must be a judgmentcreditor before availing itself of either the Statute of Elizabeth or the Fraudulent Preferences Act. In fact, the case is authority for thecontrary position. I need only quote two passages. At paragraph 29-30, Romaine J. said: “The Statute of Elizabeth applies to conveyances made against “creditors and others”.

Unless specifically defined in a particularstatute, the term “creditor” bears the meaning ascribed to it in everyday usage. The general meaning of “creditor” is a person to whom adebt is payable: First Edmonton Place Ltd. v. 315888 Alta Ltd. (1988), (AB KB), 60 Alta L.R. (2d) 122 at p. 163. InMurdoch v.

Murdoch et al, (AB KB), [1977] 1 W.W.R. 16 at p. 20, Bowen J. defines the words “creditors andothers” under the Statute of Elizabeth as “wide enough to include any person who has a legal or equitable right ... by virtue ofwhich he is, or may become, entitled to rank as a creditor.” Relying on these cases, the Applicant submits that he became a creditorof 715302 on August 8, 2000 when he advanced funds to 715302, and the fact that the debt was not yet payable under the promissorynote does not preclude him from that status.

I agree that the Applicant falls within the category of “creditors and others” under thestatute.” At paragraph 40, she said:

“Although a few cases have suggested that contingent or subsequent creditors such as guarantors may have standing under theFraudulent Preferences Act, (Howcroft, supra at page 507), the issue of whether a debtor whose debt has not yet become payableat the time of an impugned transaction has standing has not yet been determined. I find that such a debtor is a creditor under theAct, as this aligns the Alberta legislation with the fraudulent preferences legislation of other provinces, with the Statute ofElizabeth, and with the general commercial understanding of the term creditor”. […] With respect to the Fraudulent Preferences Act, the

interpretation given to the difference in wording cannot be supported by anyunderlying rationale. As Romaine J. said in Krumm, an

interpretation which gives a broad meaning to the word “creditor” accords withthe general commercial understanding of the term. Moreover, as stated above, requiring PPI to wait until its claim against Mr. Workumis perfected would give a hollow remedy to PPI if Ms. Workum chose to transfer the property in such a manner that would defeat PPI’sclaim against her. To the extent that the statements of Phillips J. in Massey v. Brost (AB KB), [1996] A.J. No. 424 (Q.B.) conflict withKrumm, I prefer the reasoning in Krumm.

In Massey, Phillips J. said the following at paragraph 102: “It is interesting to note that under the Statute of Elizabeth, the Courts have consistently stated that a creditor need not have reduced hisclaim to judgment in order to have status as a creditor under the Statute. That in itself is usually one of the principal reasons for bringingan action under the Statute of Elizabeth, as opposed to the fraudulent conveyance provisions of The Fraudulent Preferences Act. Fromthe facts of this case and following this line of reasoning, Mr.

Massey was not a creditor in the strictest terms at the time of theconveyance of the Eldorado home, since as at that time his action for fraud and/or conversion against Mr. Boist and Exactor was notreduced to a judgment.” [Emphasis added; paras. 13-14, 16-17] [65] Respectfully, I do not agree “the

interpretation given to the difference in wording [in the legislation] cannot besupported by any underlying rationale” nor do I read Krumm v. McKay, 2003 ABQB 437, [2003] A.J. No. 724 (QL), as standing for theproposition that “only a claim” is required to qualify as a “creditor,” which seems to be the opinion expressed in Workum and applied inRuggieri (as well as a number of other subsequent decisions of the Alberta courts, excepting Tiamat Resources Inc. v. ProcyonResources Corp., 2021 ABQB 509, [2021] A.J. No. 904). [66] In my opinion, Master Hanebury’s

summary of the law in Zaghloul accurately captures the ratio of Krumm v.McKay in connection with this issue. [67] Mr. Zaghloul transferred a home to his wife for nominal consideration. He later delivered a promissory note to1280055 Alberta Ltd.

When he did not pay, 128 Ltd. commenced an action on the note and a second action to set aside the transfer underboth the Fraudulent Preferences Act and the Statute of Elizabeth. [68] Master Hanebury concluded 128 Ltd. was not a “creditor” at the time of the transfer (under the FraudulentPreferences Act) because the promissory note was not delivered until after the transfer. In other words, 128 Ltd. had no claim at the timeof the transfer and was a subsequent claimant or creditor.

However, she decided that 128 Ltd.’s claim on the note was sufficient to bringit within the meaning of “creditors and others,” as established by a long line of jurisprudence regarding subsequent creditors under theStatute of Elizabeth. [69] In summarizing the distinction between “creditors” and “creditors and others” under the different legislativeregimes, Master Hanebury provides her understanding of Krumm v. McKay: The two Acts have different ambits. The Fraudulent Preferences Act can only be relied upon by creditors and the purpose of s. 3 isto restrict the debtor’s ability to prefer one creditor over another.

The Statute of Elizabeth is broader and its goal is to set asidetransfers designed to hinder or delay creditors or others in the collection of their claims. 128 Ltd. relies on a number of decisions from other provinces to argue that the Statute of Elizabeth applies to subsequentcreditors: Newlands Sawmills Ltd. v. Bateman, (BC CA), [1922] 3 W.W.R. 649 (B.C.C.A.); Bludoff v. Osachoff, (SK CA), [1928] 2 W.W.R. 150 (Sask. C.A.); Ewachowski v. Marischuk et. al., [1917] 3 W.W.R. 747 (Man. Q.B.).

It relies on the decision of this Court in Krumm v. McKay 2003 ABQB 437, para. 30, to argue that both Acts apply to subsequentcreditors and therefore it has standing to set aside the transfer, with the result that there is no arguable defence. It is correct that the Alberta Court of Queen’s Bench held in Krumm that both Acts applied to the situation before it and thetransfers were fraudulent. However, a review of the facts in that case indicates that, unlike the facts in the case before this Court, thedebt in issue existed at the time of the transfer, although it was not yet due.

The Court noted that for the Fraudulent Preferences Act to apply one must be a creditor at the time of the impugned transaction, and theissue of whether a creditor could include someone whose debt has not yet become payable at that time had yet to be determined. TheCourt determined the issue and held that a creditor whose debt had not yet matured came within the definition of creditor. This case does not stand for the proposition that the Fraudulent Preferences Act applies when there is no type of debtor-creditorrelationship at the time the debtor transferred his property. The case does not go that far.

Therefore, as the law now stands in Alberta,under the Fraudulent Preferences Act, to have standing the complaining creditor must show that at the time of the impugnedtransaction he was either an existing creditor, or a creditor whose debt had not yet come due. Therefore, in relation to theapplicability of that Act to the facts in this case, there is an arguable defence. [Emphasis added; footnote omitted; paras. 45-50] [70] In essence, Master Hanebury read Krumm v.

McKay as determining that a claimant, whose debt had not yetmatured, was a “creditor.” This aligns generally with my reading of the decision and it does not provide a basis for the contention thatany person whose claim has yet to be adjudicated is a “creditor.” [71] In Krumm v. McKay, Romaine J. explained that the “general meaning of ‘creditor’ is a person to whom a debtis payable: First Edmonton Place Ltd. v. 315888 Alta Ltd. (1988), (AB KB), 60 Alta L.R. (2d) 122 at p. 163” (para.29).

The debt in Krumm, as represented by the promissory note, existed at the time of the impugned transfers, although it was not due atthat time. A subsequent standstill agreement specified dates for repayment.

Romaine J. acknowledges the Fraudulent Preferences Act ismore restrictive than the Statute of Elizabeth, in that (1) it requires that the debtor be insolvent, and (2) it is limited in its application to“creditors.” She concluded that, “while the debt existed in the sense that it was ‘an obligation to pay a sum certain or a sum readilyreducible to certainty’ (Dunlop, supra at p. 16), it was not yet payable” (para. 38). [72] Romaine J. decided whether a person to whom a debt is owed, which is not yet payable (at the time of animpugned transfer), has standing as a “creditor.” Significantly, the nature of the debt under the promissory note in issue was trulyemblematic of a debtor-creditor relationship.

It gave rise to an obligation to pay a certain or ascertainable sum; it was a liquidated claimapart from the obligation relating to the timing of payment. The holder of the note was not like a person advancing an unliquidated claimin tort, or otherwise, or a subsequent or contingent claimant/creditor. Deciding the holder of the note was a “creditor,” despite the issueregarding the timing of the obligation to pay, is consistent with a purposive and liberal

interpretation of the word and the jurisprudenceregarding the nature of a debt and the meaning of “creditor,” notwithstanding that typically, persons with unliquidated claims have beenfound not to be a “creditor.” [73] In any event, in my view, nothing in Krumm, or any liberal

interpretation of “creditor,” can provide a basis forsimply expanding its meaning so as to be the equivalent of the expansive judicial

interpretation given to “creditors and others.” [74] In sum, while I would wholeheartedly adopt an

interpretation of “creditor” under the APA that includes aperson who holds a debt that is not due and payable at the time of transfer, it was an error to conclude that, to be a “creditor,” there “neednot be a judgment at the time of transfer − only a claim” and equate the meaning of “creditor” with “creditors and others.” [75] Although I have accepted the appellants’ submission that Mr. and Ms. Ghosh were found to be “creditors”under the APA based on an error of law, I do not accept their submission it was an error to permit the Ghoshes to advance a claim underthe BCA. (

e) The BCA

[ 76 ] I do not agree that since the motion judge erred in determining Mr. and Ms. Ghosh were creditors under the APA , he also erred in finding they had standing to advance a claim under s. 166 of the BCA . [ 77 ] Admittedly, the portion of the motion judge’s reasons that is reproduced above could be taken as indicating that, based on his decision the Ghoshes were “creditors” under the APA , they must necessarily also be “creditors” under the BCA .

However, from a reading of his decision in context and in view of the pleadings and submissions made to him, it was apparent their standing to claim an oppression remedy under the BCA stood to be determined based on the criteria used to establish whether a person is a “ complainant ” under s. 166 . It was not limited to determining whether they were “creditors.” [ 78 ]

Section 163 of the BCA defines “complainant” for the purposes of

Part XV, which includes the oppression remedy under s. 166: “complainant” means (

a) a registered holder or beneficial owner, or a former registered holder or beneficial owner, of a share of a corporation or any of its affiliates, (

b) a director or an officer or a former director or officer of a corporation or of any of its affiliates, (

c) a creditor of the corporation , (

d) the Director, or (

e) any other person who, in the discretion of the Court, is a proper person to make an application under this Part . [Emphasis added] « plaignant » désigne :

a) un actionnaire inscrit ou propriétaire à

titre de bénéficiaire, ancien ou actuel, d’une corporation ou de l’un quelconque de ses affiliés,

b) un administrateur ou un dirigeant, ancien ou actuel, d’une corporation ou de l’un quelconque de ses affiliés,

c) un créancier de la corporation ,

d) le Directeur, ou

e) toute autre personne qui, à la discrétion de la Cour, a qualité pour présenter une demande visée à la présente

Partie . [Gras ajouté.] [ 79 ] The BCA does not define “ creditor.” Its meaning must be determined in the context of the BCA . Additionally, unlike under the corporations acts of some other jurisdictions, a “creditor” is entitled, as of right, to apply for an oppression remedy under s. 166 . In some jurisdictions, the corporations legislation permits a creditor to seek an oppression remedy only in the discretion of the court.

In my view, this distinction has a bearing on the meaning and intended scope of “proper persons” to make an application under para. (e). [ 80 ] Although the judge’s reasons for decision focused on the contentious question of whether Mr. and Ms. Ghosh were “creditors” under the APA , it is clear it was apparent to him that the real issue challenged by the appellants was whether the Ghoshes had standing as “complainants” under s. 166 , which is determined on the definition reproduced above. [ 81 ] Regardless of whether the judge was speaking loosely when he said Mr. and Ms.

Ghosh were “creditors” under the BCA , or that was the extent of his analysis, the fact is that their claim against the appellants brings them within the meaning of “complainants” under para. (e), as another person who is a proper person to make an application under s. 166 , if not under para. (c), as “creditors” of Sasha. In the absence of any written or meaningful oral submissions on this issue, I see no need to address this matter any further and I would dismiss this ground of appeal.

(2) The appellants’ contention the motion judge erred in failing to recognize that Sasha received valuable consideration for the transfer

[ 82 ] The appellants contend the motion judge erred in mixed law and fact in failing to recognize that Ruscana’s assumption of existing encumbrances constituted valuable consideration. Although the appellants raised this as an independent ground of appeal, they also raise it in connection with their contention that the judge erred in finding there was an intent to give an unjust preference and to defeat their creditors. [ 83 ] In my opinion, there is no doubt the motion judge recognized that the transferred property was subject to a $650,000 mortgage.

For the purposes of the oppression remedy under the BCA , it does not matter whether the assumption (or payout) of the mortgage is viewed as part of the consideration for the acquisition of the property (which is how the transaction is reflected on Ruscana’s financial statements), or the value of the property transferred is lower than its FMV because of being received subject to the assumed liability. For that analysis, it is a distinction without a difference. Moreover, the judge’s decision did not turn on the finding that there was no consideration. There is no merit to this ground of appeal.

(3) The appellants’ contention the motion judge erred in finding that the acts of Sasha and Mr. Petukhov were oppressive within the meaning of s. 166 and not for a legitimate business purpose [ 84 ] The appellants’ submission in relation to this ground is two-fold. First, they maintain the evidence does not support a reasonable expectation on the part of Mr. and Ms. Ghosh or that this expectation was not met.

Second, they contend that, other than the timing of the transfer, there is no evidence to indicate the transfer was oppressive. [ 85 ] In relation to whether reasonable expectations exist, the Supreme Court in BCE Inc. v. 1976 Debentureholders , 2008 SCC 69 , [2008] 3 S.C.R. 560 , stated: Factors that emerge from the case law that are useful in determining whether a reasonable expectation exists include: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders. [para. 72] [ 86 ] The appellants do not identify any error in the motion judge’s assessment of the factors relevant to a determination of whether there was a reasonable expectation on the part of Mr. and Ms.

Ghosh. They effectively seek to have this Court reconsider that issue on the evidence de novo . [ 87 ] Mr. Petukhov was the sole director of both Sasha and Ruscana, and there is nothing that indicates he was not making all the relevant decisions for both Sasha and Ruscana. When he and Mr. Ghosh first discussed the construction of the home, Mr. Petukhov was working at a booth representing Ruscana. Mr. Ghosh’s concerns over the construction contract being somewhat unexpectedly raised with Sasha were mitigated by Mr. Petukhov.

When the property was transferred by Sasha, seven to eight months after it stopped working on the home and a few months after the Counterclaim, Ruscana and Mr. Petukhov wound up with the only asset of Sasha’s that had any real value and Sasha was insolvent and abandoned. [ 88 ] In my opinion, the evidence provided a basis upon which the judge could conclude there was a reasonable expectation, it was not met, and the result of the conduct was oppressive. In the absence of the identification of a palpable and overriding error, this ground of appeal must be dismissed. IV.

Motion [ 89 ] In the circumstances, it is not necessary to address Mr. and Ms. Ghosh’s motion to admit fresh evidence for the purpose of proving fraudulent intent. V. Disposition [ 90 ] For the reasons given above, I would dismiss the appeal and order the appellants pay costs of $3,000.

SCHEDULE “A” /

ANNEXE « A » Assignments and Preferences Act , R.S.N.B. 2011, c. 115 . Unjust preferences 2

(1) Subject to the provisions of

section 3 , every gift, conveyance, assignment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other property, real or personal, made by a person at a time when that person is in insolvent circumstances, or is unable to pay that person’s debts in full, or knows that that person is on the eve of insolvency, with intent to defeat, delay or prejudice that person’s creditors, or any one or more of them, is void, as against a creditor injured, delayed or prejudiced. 2

(2) Subject to the provisions of

section 3 , every gift, conveyance, assignment or transfer, delivery over or payment of goods, chattels or effects, or of bills, bonds, notes or securities, or of shares, dividends, premiums or bonus in any bank, company or corporation, or of any other property, real or personal, made by a person at a time when that person is in insolvent circumstances, or is unable to pay that person’s debts in full, or knows that that person is on the eve of insolvency, to or for a creditor with intent to give that creditor an unjust preference over the other creditors, or over any of them, is void, as against a creditor injured, delayed, prejudiced or postponed. […] Assignments and payments protected 3

(1) Nothing in

section 2 applies to any assignment made under the Bankruptcy and Insolvency Act (Canada) , nor to any sale or

Loi sur les cessions et préférences , L.R.N.-B. 2011, ch. 115. Préférences injustifiées 2

(1) Sous réserve des dispositions de l’

article 3 , les donations, transferts, cessions, remises ou paiements, soit d’objets ou de biens personnels, soit de lettres, d’obligations, de billets ou de valeurs, soit d’actions, de dividendes, de primes ou de bonis d’une banque, d’une compagnie ou d’une personne morale, soit de tous autres biens réels ou personnels qu’effectue une personne qui se trouve en état d’insolvabilité ou dans l’impossibilité de payer intégralement ses dettes ou qui se sait sur le point d’être insolvable, avec l’intention de frustrer, de tenir en suspens ou de léser ses créanciers ou l’un quelconque ou plusieurs d’entre eux sont inopposables aux créanciers frustrés, tenus en suspens ou lésés. 2

(2) Sous réserve des dispositions de l’

article 3 , les donations, transferts, cessions, remises ou paiements, soit d’objets ou de biens personnels, soit de lettres, d’obligations, de billets ou de valeurs, soit d’actions, de dividendes, de primes ou de bonis d’une banque, d’une compagnie ou d’une personne morale, soit de tous autres biens réels ou personnels, effectués à un créancier ou à son profit par une personne qui se trouve en état d’insolvabilité ou dans l’impossibilité de payer intégralement ses dettes ou qui se sait sur le point d’être insolvable avec l’intention de lui procurer une préférence non justifiée sur les autres créanciers ou sur l’un quelconque d’entre eux, sont inopposables aux créanciers frustrés, tenus en suspens, lésés ou rétrogradés. […] Protection des cessions et des paiements 3

(1) Les dispositions de l’

article 2 ne s’appliquent ni à une cession faite en vertu de la

Loi sur la faillite et l’insolvabilité (Canada) , ni aux ventes ou paiements faits de bonne foi, dans le cadre normal de l’exploitation d’une entreprise ou

payment made in good faith in the ordinary course of trade or calling to innocent purchasers or parties, nor to any payment of money to a creditor, nor to any genuine gift, conveyance, assignment, transfer, or delivery over of any goods, securities or property of any kind as above mentioned, that is made in consideration of any present actual payment in money made in good faith, or by way of security for any present actual advance of money made in good faith, or in consideration of any present actual sale and delivery of goods or other property made in good faith, if the money paid, or the goods or other property sold or delivered, bears a fair and reasonable relative value to the consideration for it. […] de l’exercice d’une activité, à des personnes ou parties de bonne foi, ni au paiement d’une somme à un créancier, ni aux donations, transferts, cessions ou remises d’objets, valeurs ou biens du genre susmentionné, qui sont effectués en contrepartie du paiement actuel, effectif et de bonne foi d’une somme ou en garantie du versement actuel, effectif et de bonne foi d’un acompte ou en contrepartie de la vente et de la livraison actuelles, effectives et de bonne foi d’objets ou autres biens, s’il existait un rapport juste et raisonnable entre la somme payée, les objets ou les autres biens vendus ou livrés et la contrepartie. […] Version française de la décision de la Cour rendue par LE JUGE FRENCH I.

Introduction et aperçu [1] Il s’agit d’un appel interjeté d’une ordonnance déclarant la nullité du transfert d’un bien réel de la part de Sasha Contracting and Renovation Inc. Le bien a été transféré en 2013 à Ruscana Intertrade Inc., qui était à la fois apparentée à Sasha et créancière de celle-ci. [2] Un an avant le transfert, Sasha s’est engagée contractuellement à construire une maison pour Anirban Ghosh et Jaya Ghosh sur un terrain qui leur appartenait, situé à Dieppe, au Nouveau-Brunswick.

Avant l’achèvement des travaux, M. et M me Ghosh ont résilié le contrat en raison de préoccupations quant à la qualité du travail de Sasha. En réponse, Sasha a déposé une revendication de privilège à l’encontre du bien et a intenté une action aux Ghosh, réclamant la somme de 95 462,65 $. [3] En juin 2013, les Ghosh ont déposé un exposé de la défense et demande reconventionnelle, réclamant la somme de 98 139,98 $ de Sasha.

Deux mois plus tard, Sasha a transféré le bien, son plus important élément d’actif, à Ruscana. [4] Le procès de 12 jours portant sur leurs demandes contradictoires quant à la construction de la maison s’est tenu sur une période de trois ans, et, en octobre 2018, un juge a accordé à M. et à M me Ghosh un jugement contre Sasha pour la somme de 96 461,09 $, dépens en sus. [5] Après avoir obtenu le jugement, les Ghosh ont découvert que Sasha avait transféré le bien à Ruscana et, en février 2019, ils ont intenté une action sollicitant une ordonnance déclarant la nullité du transfert sur le fondement des par. 2(1) et 2(2) de la

Loi sur les cessions et préférences , L.R.N.-B. 2011, ch. 115, (la LCP) et accordant un redressement pour abus de droit en vertu de l’art. 166 de la

Loi sur les corporations commerciales , L.N.-B. 1981, ch. B-91 (la LCC). [6] Sasha, Ruscana, Alexandr Petukhov, Alexander Petukhov et Alexander Sasha Petukhov ont déposé une défense contre l’action et ont présenté une motion en jugement

sommaire en vue d’obtenir le rejet de la poursuite au motif que les Ghosh n’étaient pas des créanciers de Sasha au moment du transfert du bien. Ils soutiennent que M. et M me Ghosh ne sont devenus créanciers que lorsque le jugement a été rendu, en 2018. Ils ont aussi affirmé que le transfert a été effectué moyennant contrepartie à

titre onéreux et à des fins commerciales, et non afin de frustrer ou de tenir en suspens les créanciers de Sasha. Le juge saisi de la motion a conclu que la demande présentée par M. et M me Ghosh dans leur demande reconventionnelle faisait d’eux des [TRADUCTION] « créanciers » au sens

de la LCP et de la LCC, et qu’ils avaient par conséquent le droit de demander une réparation sous le régime de ces deux lois. [7] M. et M me Ghosh ont eux aussi déposé une motion en jugement

sommaire, et le juge a déclaré le transfert nul et sans effet au motif qu’il avait :

a) été effectué avec l’intention de frustrer, de tenir en suspens ou de léser les créanciers de Sasha, comme l’envisage le par. 2(1) de la LCP;

b) été effectué avec l’intention de procurer à Ruscana une préférence non justifiée (sur les autres créanciers de Sasha), comme l’envisage le par. 2(2) de la LCP;

c) abusé des droits des Ghosh, comme l’envisage l’art. 166 de la LCC. [8] En appel, les défendeurs/appelants soutiennent que le juge saisi de la motion a commis les erreurs suivantes :

a) il a conclu que les Ghosh étaient, au moment du transfert en 2013, des « créanciers » de Sasha, au sens de la LCP et de la LCC;

b) il a omis de reconnaître que Sasha avait reçu une [TRADUCTION] « contrepartie à

titre onéreux » pour le transfert, ce qui empêchait l’application des par. 2(1) et (2) de la LCP;

c) il a interprété erronément la preuve établissant que le transfert avait été entrepris à des fins commerciales légitimes et non abusives au sens de l’art. 166 de la LCC. [9] Les dispositions de la LCP qui s’appliquent aux questions en litige dans le présent appel sont reproduites à l’annexe A. [10] Je rejetterais l’appel pour les motifs qui suivent. II. Contexte A. M. Petukhov, Sasha, Ruscana et le contrat passé avec M. et M me Ghosh [11] M. Petukhov exploitait depuis 1999 une entreprise de construction exerçant ses activités sous la raison sociale enregistrée « Sasha Contracting and Renovation ».

En 2004, il a personnalisé l’entreprise sous le nom de Sasha Contracting and Renovation Inc. Il en était le seul administrateur. En décembre 2001, M. Petukhov a personnalisé Ruscana Intertrade Inc. Il en était aussi le seul administrateur. [12] En mars 2012, M. Ghosh a rencontré M. Petukhov au Salon de l’habitation du Grand Moncton, où M. Petukhov occupait un kiosque portant la bannière « Ruscana Building Products ». Ils ont discuté de la construction d’une maison sur le terrain non bâti des Ghosh, à Dieppe. [13] En avril 2012, M. Petukhov a fourni des estimations écrites à M.

Ghosh pour la construction d’une maison et, en mai 2012, un contrat avait été signé. Les estimations et le contrat nommaient tous les deux Sasha, et non Ruscana, comme la

partie contractante responsable de la construction. Cela dit, ils mentionnaient aussi Ruscana, l’adresse de courriel était ruscana@rogers.com et

le site Web avait l’adresse www.ruscana.com. En réponse aux questions de M. Ghosh quant au rôle de Sasha, plutôt que Ruscana, en qualité de

partie contractante, M. Petukhov a expliqué que Sasha était responsable de la construction et que Ruscana fournirait à Sasha les matériaux pour la fondation et la couverture. Même si les notes accompagnant les états financiers de Ruscana pour l’année 2013 indiquaient qu’elle exploitait une entreprise de vente et d’installation de couvertures métalliques, elle vendait aussi des coffrages à béton isolé, du béton cellulaire durci en autoclave, des couvertures métalliques et d’autres matériaux de construction résidentielle. [14] À la signature du contrat, M. Ghosh a versé la somme de 2 000 $ à Sasha.

Il a versé une somme additionnelle de 88 000 $ en juillet 2012, puis 66 000 $ en novembre 2012. Toutefois, en raison de préoccupations quant à des vices de construction, les Ghosh ont refusé, le 13 décembre 2012, de faire le dernier versement exigible au

titre du contrat et ont refusé de permettre à Sasha d’effectuer d’autres travaux sur leur maison. [15] Le 11 janvier 2013, Sasha a déposé une revendication de privilège sous le régime de la

Loi sur le privilège des constructeurs et des fournisseurs de matériaux , L.R.N.-B. 1973, ch. M-6, et, le 8 avril 2013, elle a déposé son exposé de la demande. Le 3 juin 2013, M. et M me Ghosh ont déposé un exposé de la défense et demande reconventionnelle par lequel ils sollicitaient des dommages-intérêts pour négligence et construction de piètre qualité de la part de Sasha.

En juin 2013, Sasha a déposé une demande de précisions et, en juillet 2013, M. et M me Ghosh ont déposé un exposé des précisions . [16] Le mois suivant, en août 2013, Sasha a transféré le bien. [17] Il n’est pas contesté que Sasha était en état d’insolvabilité lorsqu’elle a transféré le bien, ce qui est une condition préalable au prononcé d’une ordonnance fondée sur l’art. 2 de la LCP.

Dans sa description des circonstances du transfert en termes généraux, le juge saisi de la motion a déclaré que Sasha a [TRADUCTION] « transféré son plus gros actif, mais n’a rien reçu en retour, si ce n’est l’annulation de seulement une

partie de ses dettes et le remboursement par Ruscana [d’un] prêt hypothécaire de 650 000 $ » (par. 24). S’agissant de l’état d’insolvabilité dans lequel elle se trouvait, le juge a expliqué ce qui suit : [TRADUCTION] […] il faut se demander si Sacha était insolvable ou sur le point de l’être au moment du transfert. Bien que M.

Petukhov affirme dans son affidavit que la compagnie n’était pas insolvable ou sur le point de l’être à l’été 2013, les faits suivants laissent entendre le contraire : 1) Sacha n’a conclu aucun nouveau contrat après avoir conclu celui avec M. et M me Ghosh, qui a été signé en 2012; et la compagnie n’a effectué aucun travail après environ août 2012; 2) en date du 31 décembre 2012, Sacha devait à Ruscana, une compagnie apparentée, quelque 828 000 $; 3) en date du 31 décembre 2012, Sacha devait près de 500 000 $ à M. Petukhov; 4) Sacha a eu des pertes nettes cette année-là de 118 000 $.

En outre, les avocats de Sacha ont explicitement admis durant l’audience que Sacha était insolvable en 2013. Sur le fondement de ces faits, je conclus que Sacha était insolvable ou sur le point de l’être au moment où le transfert a été effectué, de sorte à faire intervenir tant le par. 2(1) que le par. 2(2) de la

Loi sur les cessions et préférences . [par. 54 à 56] B. La contrepartie et la valeur du bien [18] Les appelants ont soutenu que leur intention était de transférer le bien moyennant la juste valeur marchande. Le juge a conclu que la preuve présentée à l’appui de cette assertion soulevait des questions qui ont été laissées sans réponse. Elle était incompatible avec l’intention déclarée de transférer le bien moyennant la juste valeur marchande.

[19] En octobre 2012, soit un an avant le transfert, Sasha a consenti un prêt hypothécaire de 650 000 $ à des prêteurs privés, à un taux d’intérêt de 12 %. Étant donné que Ruscana et M. Petukhov s’étaient tous les deux portés garants de ce prêt hypothécaire, ils étaient responsables de ce montant, du moins conditionnellement, avant le transfert du bien par Sasha. [20] Les appelants n’ont pas fourni d’évaluation du bien à la date de son transfert, en août 2013, ou à toute autre date. Les appelants ont invoqué une

partie d’un échange de courriels avec leur comptable, dans laquelle il était indiqué que le transfert devrait être effectué moyennant la juste valeur marchande du bien. Toutefois, la valeur de 30 000 $ de l’acre mentionnée dans cette correspondance provenait des appelants et non du comptable. Cette évaluation du prix par acre donnait une valeur de 240 000 $ pour la propriété, qui comptait huit acres.

Rien n’indiquait d’où provenait le prix de 30 000 $ par acre, et il n’y avait aucune explication quant à la raison pour laquelle il serait raisonnable d’évaluer une propriété qui n’était pas un terrain vacant selon un prix par acre. Ils n’ont pas fourni un affidavit du comptable.

Le juge saisi de la motion a fait remarquer que le comptable avait refusé de parler à l’avocat des appelants et de collaborer au litige. [21] Même si la juste valeur marchande de 240 000 $ est devenue le prix d’achat prévu dans la convention d’achat- vente conclue par Sasha et Ruscana, comme nous l’expliquerons ci-dessous, ni ce montant ni les conditions de la convention n’étaient cohérents avec la transaction qui a été finalisée. [22] La convention prévoit que Sasha doit vendre à Ruscana les [TRADUCTION] « terrains et locaux » à un prix de 240 000 $, TVH en sus, montant payable par la réduction de la dette sans aucun paiement en espèces : [TRADUCTION] PRIX D’ACHAT : 240 000,00 $, plus la TVH, payable ainsi :

a) le solde du prix d’achat défini dans la présente convention d’achat-vente sera payé par réduction, d’une somme équivalente, de la somme actuellement due à l’acheteur par le vendeur , somme qui dépasse de loin le montant défini comme prix d’achat dans la présente convention.

b) le prix d’achat des locaux présenté aux présentes exclut la TVH, toutefois […] En outre, les répercussions de la présente transaction sur le flux net de trésorerie seront de zéro dollar. [Gras et soulignement ajoutés.] [23] De plus, la convention prévoit que la date de clôture est [TRADUCTION] « le 22 août 2013, ou avant cette date, libre et quitte de tout privilège et de toute tenance ou charge » (soulignement et italiques ajoutés).

Malgré ce fait, il n’est pas contesté qu’on ne se soit jamais attendu que Sasha débourserait son prêt hypothécaire de 650 000 $ à la clôture ou que Ruscana ferait l’acquisition du bien [TRADUCTION] « libre et quitte » de ce prêt hypothécaire (dont elle s’était portée garante).

Au contraire, on s’attendait à ce que le bien soit transféré sous réserve de l’hypothèque et à ce que Ruscana refinance le bien par la suite. [24] En effet, devant le juge saisi de la motion, les appelants ont soutenu, bien que ce fût huit ans après le transfert et lorsque la contrepartie était une question en litige en l’espèce, que la contrepartie pour le transfert était d’environ 890 000 $, ce montant représentant la somme de la remise de dette de 240 000 $ par Ruscana, et la prise en charge (du moins, en termes concrets) de l’hypothèque de 650 000 $ de Sasha. [25] Enfin, pour ce qui est de la contrepartie pour le bien transféré, les notes accompagnant les états financiers de Ruscana (pour l’exercice terminé le 31 décembre 2013, soit quatre mois après le transfert) indiquent qu’elle possédait alors un bien- fonds et des bâtiments d’un coût respectif de 240 000 $ et de 779 836 $, donc, au total, 1 019 836 $. [26] Somme toute, la transaction était incompatible avec les assertions des deux appelants selon lesquelles l’intention était de transférer le bien à sa juste valeur marchande (de 240 000 $) ainsi qu’avec les documents afférents à la transaction. [27] S’agissant de l’évaluation du bien réalisée par le juge (relativement à la contrepartie que Sasha a reçue), la preuve qu’il a examinée comportait notamment les circonstances et les conditions d’une hypothèque consentie par Ruscana à la suite du transfert.

En août 2014, Ruscana a consenti une hypothèque accessoire à la Banque Royale du Canada pour garantir toutes les dettes

qu’elle devait à la Banque, jusqu

[…]