2017 QCCA 1386, 2017 QCCA 1386

Syndic de Goulakos 2017 QCCA 1386 . COUR D'APPEL CANADA PROVINCE DE QUÉBEC GREFFE DE MONTRÉAL N o : 500-09-025846-163 (500-11-048360-156) PROCÈS-VERBAL D'AUDIENCE DATE : Le 15 septembre 2017 CORAM : LES HONORABLES PAUL VÉZINA, J.C.A. GENEVIÈVE MARCOTTE, J.C.A. MARIE-JOSÉE HOGUE, J.C.A. APPELANT AVOCATS SOCRATES GOULAKOS Me GERALD N. APOSTOLATOS Me Caroline Dunberry (Langlois avocats, S.E.N.C.R.L.) INTIMÉE AVOCATS DRUMMCOR EQUITIES INC. Me DAVID STOLOW Me ROBERT KUGLER (Kugler, Kandestin s.e.n.c.r.l., L.L.P.) MIS EN CAUSE LITWIN BOYADJIAN INC., ès-qualités de syndic Absente et non représentée

JULIE GAVARIS 2729661 CANADA INC. LE SURINTENDANT DES FAILLITES Absents et non représentés En appel d'un jugement rendu le 6 janvier 2016 par l'honorable David R. Collier de la Cour supérieure, district de Montréal. NATURE DE L'APPEL : Faillite et insolvabilité - Mise en faillite. Greffières d’audience : Alya Elisio et Elisabeth Lanctôt Salle : — AUDITION 9 h 30 Audition continuée du 11 septembre 2017. Les parties ont été dispensées de se présenter PAR LA COUR : Arrêt – voir page 3. Fin de l’audition. Alya Elisio et Elisabeth Lanctôt Greffières d’audience

PAR LA COUR JUDGMENT [ 1 ] The appellant appeals from a judgment of the Superior Court, District of Montreal, rendered on January 6, 2016 by the Honourable David R. Collier granting, inter alia , the respondent’s Application in bankruptcy and declaring the appellant bankrupt. [ 2 ] The hearing lasted four days during which various witnesses were heard. [ 3 ] The respondent filed an Application for the issuance of a bankruptcy order against the appellant further to his default on an $800,000 loan made to him pursuant to a loan and settlement agreement dated June 27, 2014.

The loan was used to satisfy five judgment debts outstanding against him. [ 4 ] Under the terms of the agreement, the loan was to be fully repaid no later than December 31, 2014. [ 5 ] The respondent submitted that the appellant committed

an act of bankruptcy within the six months preceding the filing of the Application by failing to meet his liabilities generally as they became due. [ 6 ] The appellant contested the Application, arguing that he is able to pay his debts as they become due and that the respondent’s Application is strategic. Referring to an ongoing dispute with the respondent’s principal, he insisted that the respondent’s goal was to put an end to their dispute by making sure that he will not be able to pursue the claim filed against him.

Consequently, he asked the judge to dismiss the Application or, alternatively, to suspend it. [ 7 ] The judge refused to do so. [ 8 ] He concluded that the requirements for a bankruptcy order have been met. The appellant has debts amounting to at least $1,000 ( s.43(1) (

a) of the Bankruptcy and Insolvency Act ( BIA )) and has ceased to meet his liabilities generally as they become due ( s. 42(1) (

j) of the BIA ).

He then looked at the claim filed by the appellant and concluded that it does not appear to raise a bona fide dispute. [ 9 ] He therefore refused to exercise his discretion to dismiss or stay the bankruptcy application. [ 10 ] Before the Court, the appellant maintains that the judge did not apply the proper legal test for determining the existence of a bona fide dispute, that he erred in concluding that he was unable to pay his debts and that he committed a palpable and overriding error of fact by failing to conclude that the Application should be dismissed for other sufficient cause pursuant to section 43(7) of the BIA . [ 11 ] The Court is of the view that none of these grounds are well-founded. [ 12 ] The judge’s conclusion that the appellant is indebted for more than $1,000 is uncontested. [ 13 ] The appellant rather contests the conclusion that he is indebted to numerous creditors and that he committed

an act of bankruptcy by ceasing to pay his debts as they became due. For him, the respondent is his only relevant creditor since the other creditors who were insisting on being paid have been paid while those remaining are not pressing for payment. [ 14 ] The respondent’s argument cannot be accepted. [ 15 ] The mere fact that he borrowed $800,000 in June 2014 to satisfy five judgments rendered against him and failed to reimburse that loan on time speaks for itself.

Moreover, the uncontested evidence shows that he had already been in default towards the Scotia Bank for many years when the Application was filed and that it is his brother who thereafter paid his debt to the bank.

The evidence also reveals the existence of other creditors. [ 16 ] The judge undertook a thorough analysis of this evidence and the appellant has failed to show that the judge committed a palpable error in his appreciation of same. [ 17 ] The appellant also failed to convince the Court that the judge did not apply the proper legal test in determining whether the legal proceedings filed by him raise a bona fide dispute as to the $800,000 debt. [ 18 ] It is uncontested that the appellant did not repay the loan on December 31, 2014 and, as such, was served several default notices

on or about January 12, 2015. [ 19 ] It is also uncontested that roughly one week later he instituted proceedings against various defendants, including the respondent, through which he claims that the respondent and others in the same group owe him $231,764. [ 20 ] The reasons for judgment show that the judge considered all the circumstances surrounding the loan and the claim. He took into consideration the undertakings made by the parties in the loan and settlement agreement and the claim filed by the appellant, including its timing.

He also heard the appellant, who recognized that the filing of the claim in January was to defeat an eventual application for bankruptcy, and came to the conclusion that the claim does not raise a bona fide dispute with respect to the $800,000 debt. [ 21 ] Nothing the appellant points to suggests that in doing so the judge did not apply the proper test or otherwise exercised his discretion improperly. For these reasons, the Court: [ 22 ] DISMISSES the appeal. PAUL VÉZINA, J.C.A. GENEVIÈVE MARCOTTE, J.C.A. MARIE-JOSÉE HOGUE, J.C.A.