THE BANK OF NOVA SCOTIA, a Canadian chartered bank with a registered office in the City of Saint John, Province of New Brunswick APPLICANT v. ATCON GROUP INC., ATCON HOLDINGS INC., ATCON PROPERTY HOLDINGS INC., ATCON VENEER PRODUCTS, 2011 NBQB 100

N/M/17/10 2011 NBQB 100 IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK IN BANKRUPTCY AND INSOLVENCY JUDICIAL DISTRICT OF MIRAMICHI IN THE MATTER OF RECEIVERSHIP OF: ATCON GROUP INC., ATCON HOLDINGS INC., ATCON PROPERTY HOLDINGS INC., ATCON VENEER PRODUCTS INC., ATCON LOGISTICS INC., ATCON CONSTRUCTION INC., ATCON MANAGEMENT SERVICES INC., ATCON CIVIL LTD., DYCON CONSTRUCTION LTD., ATCON STRUCTURES INC. AND ENVIREM TECHNOLOGIES INC. PURSUANT TO

Section 33 of The Judicature Act, R.S.N.B. 1973, Ch. J-2, Rule 41 , Rules of Court, New Brunswick and

Section 243 of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 BETWEEN: THE BANK OF NOVA SCOTIA, a Canadian chartered bank with a registered office in the City of Saint John, Province of New Brunswick APPLICANT -and- ATCON GROUP INC., ATCON HOLDINGS INC., ATCON PROPERTY HOLDINGS INC., ATCON VENEER PRODUCTS INC., ATCON LOGISTICS INC., ATCON CONSTRUCTION INC., ATCON MANAGEMENT SERVICES INC., ATCON CIVIL LTD., DYCON CONSTRUCTION LTD., ATCON STRUCTURES INC., AND ENVIREM TECHNOLOGIES INC., all of which are carrying on business in the Province of New Brunswick RESPONDENTS Before: Thomas W.

Riordon Date of hearing: March 18, 2011 Date of decision: April 12, 2011 Appearances (in person): Mr. Sam Rappos -on behalf of Ernst & Young Inc. along with Mr. George Kinsman of Ernst & Young Inc. Mr. Joshua McElman -on behalf of the Bank of Nova Scotia Ms. Natalie LeBlanc –on behalf of the Province of NB

Mr. Gerald Smith -on behalf of Mr. Robert W. Tozer along with Mr. Tozer Appearances (via telephone conference call): Mr. James Mosher -on behalf of PriceWaterhouseCoopers Inc. Mr. Shawn Goguen –on behalf of PriceWaterhouseCoopers Inc. Mr. Paul Hickey –on behalf of Ernst & Young Inc. Mr. Robert Creamer –on behalf of Caterpillar Financial Services Inc. Mr.

William Kean –on behalf of GE Canada Equipment Financing G.P., General Electric Canada Equipment Financing G.P., GE Canada Leasing Services Company, GE VFS Canada Limited Partnership, General Electric Canada Real Estate Finance Inc. and GE Vehicle and Equipment Leasing , J. Riordon [ 1 ] The present motion is brought on behalf of Ernst & Young Inc. The Receiver, Receiver Manager of the respondent companies, the Atcon companies.

[ 2 ] Ernst & Young Inc. ask for two orders: 1) (

a) authorizing and directing Sun Life Financial (Sunlife) to terminate a life insurance policy on the life of Robert W. Tozer and pay its cash surrender value to the Receiver; (

b) authorizing and empowering the Receiver to utilize the cash surrender value of the Sunlife policy for the purpose of making payments required or permitted by the receivership order; and 2) A declaration (a)that Atcon Group is the owner of all issued shares of a Swedish company known as OPI. Aktiebolag (OPI); (

b) that the only physical share certificates received by Atcon Group with respect to OPI were those issued in December 2000 and that no such certificates were issued in regard to a November 2003 share issuance; (

c) that Robert Tozer and other officers of any of the respondent companies assist the Receiver in matters involving OPI and its efforts in selling the interests of the Atcon companies in OPI and its wholly owned subsidiary, Vanerply AB, another Swedish company, and; (

d) to direct that authorities in Sweden assist and aid the Receiver in regard to the possession, control and sale of the Atcon Groups interests in the Swedish companies. Background Information [ 3 ] Following applications made by the Bank of Nova Scotia brought pursuant to

Section 33 of the Judicature Act , the Rules of Court and the Bankruptcy and Insolvency Act (Canada) , Ernst & Young Inc. were appointed as Receiver, Receiver Manager of the respondent companies. The receivership orders appointing them as Receiver, Receiver Manager were issued on March 2 nd and 30 th 2010. [ 4 ] The receivership orders authorized Ernst & Young Inc. to take possession of the property of the Atcon companies, to take any steps reasonably necessary to the exercise of its powers and to apply to the court for advice and directions among other things.

In that regard the present motion was brought on behalf of Ernst & Young Inc. in mid November and although originally scheduled for hearing in late November, was rescheduled for March 18, 2011. [ 5 ] I will address the two different issues separately. The Atcon Groups involvement in OPI and Vanerply [ 6 ] Should the court grant an order that Atcon Group Inc. is the owner of all issued shares of OPI? This question was addressed with oral reasons on March 18 th . The order applied for was not opposed and was approved and issued.

Brief oral reasons were given at the time and I said I would elaborate further later, I now attend to that. [ 7 ] Atcon Group Inc., one of the respondent companies has an interest in a Swedish company known and referred to as OPI AB (OPI). This company is registered with the Swedish companies registration office. OPI is a holding company, its primary asset being shares of Vanerply AB (Vanerply). The latter company is also a Swedish Corporation registered with the Swedish Companies Registration Office.

Vanerply is a company that manufactures and distributes plywood in the domestic Swedish market as well as in the export market. [ 8 ] On December 15 th , 2000, 504040 NB Ltd. which is now Atcon Group Inc. acquired all issued shares of OPI. Share certificates 1-1000 were issued (the December 2000 Share Certificates). This at the time comprised all issued shares of OPI. [ 9 ] A corporate organization chart filed in these proceedings attached as exhibit one to an affidavit which Mr. Robert Tozer swore on March 12, 2010, identifies OPI as a wholly owned subsidiary of Atcon Group Inc.

OPI was previously identified as a wholly owned subsidiary of Atcon Group Inc. in a credit agreement dated June 30 th , 2009 between the Bank of Nova Scotia and the Atcon companies.

An earlier credit agreement involving the Atcon companies in 2006 identifies OPI as a wholly owned subsidiary of Atcon Group Inc. and states that 1000 shares of OPI were owned by Atcon Group Inc. [ 10 ] Following the appointment of Ernst & Young Inc. as Receiver in these proceedings it reviewed files and attempted to locate the share register of OPI.

Despite much effort it has not been able to locate the share register. [ 11 ] From a review of documents found and available, Ernst & Young Inc. became aware that possibly 2000 shares of OPI had been issued instead of the 1000 shares initially thought to have been issued. According to documents filed with the Sweden Companies Registration office dated November 3, 2003, some signed by Mr.

Robert Tozer, a further 1000 additional shares were issued by OPI to Atcon Group Inc. on November 3 rd , 2003. [ 12 ] An extensive review of books, records and files by Ernst & Young Inc. to locate the certificate or certificates for these additional 1000 shares has been unsuccessful. Ernst & Young Inc. has consulted with the OPI auditors in Sweden and with legal counsel who acted for OPI and who were involved as counsel when the share issuance allegedly occurred.

Other investigations have been made. [ 13 ] Despite efforts made, Ernst & Young Inc. are unable to find the share certificates or evidence that in fact the physical share certificates were created and issued to Atcon Group Inc. in the November 2003 share issuance as contemplated. Likewise, their review shows no evidence that Atcon Group Inc. has transferred any interest in the shares that it owned in OPI and more specifically the 1000 shares allegedly and apparently acquired by it in November 2003. [ 14 ] According to the affidavit of Mr.

Tozer sworn on March 1, 2011 (para 23): “The mill in Sweden owed Atcon at least $1,500,000.00 in 2003 and we were planning to take back shares as the mill did not have the cash available.” [ 15 ] Mr. Tozer went on to say that he recalls seeing some minutes of meetings or resolutions but does not recall further details. According to Mr. Tozer, OPI’s Swedish lawyer likely prepared the certificates and may have the company book and that different lawyers were involved over the years. The identity of the lawyer allegedly involved in the share issuance of November 2003 is not disclosed. [ 16 ] Mr.

Tozer also states that he contacted the Director of Operations of the company in Sweden who told him he did not know where the share certificates might be. He also notes that counsel for the Bank of Nova Scotia investigated shareholdings when refinancing had been completed in 2009 and that the record verified that the Atcon Holdings in OPI were 1000 shares. He knows of no changes or issuance of shareholdings since that review which was done in 2009. Mr.

Tozer goes on to say that he has no memory of seeing the additional share certificates and no knowledge of their whereabouts. [ 17 ] Attached as Exhibit C to the affidavit of Mr. Tozer is a chart prepared in June 2009 in relation to the refinancing with the Bank of Nova Scotia. It sets out the specifics of the securities pledged. That document shows that Atcon Group Inc. owns 1000 common shares of OPI AB and that this is 100% of that class of shares owned by Atcon Group Inc. in that company.

Decision [ 18 ] With that background information I will know address this issue. [ 19 ] Ernst & Young Inc. as authorized by the Court has taken possession of the property and assets of the respondent companies. It has a duty to preserve and realize the assets of the Atcon companies for the benefit of all of the creditors. [ 20 ] I am satisfied, and it is my decision, that the relief asked for in regard to the OPI shares should be granted. 1) It is not disputed that OPI is a wholly owned subsidiary of Atcon Group Inc. and the motion is not opposed. 2) Mr.

Robert Tozer has stated that OPI is a wholly owned subsidiary of Atcon Group Inc. (

a) Reference can be made to his sworn affidavit of March 12, 2010 which has attached to it a copy of the organizational chart of the Atcon companies. This chart identifies OPI as a wholly owned subsidiary of Atcon Group Inc. (

b) Attached to the affidavit of Mr. Tozer sworn on March 11 th , 2011 is a copy of another chart completed in June 2009. This chart notes that 100% of the shares of that class are owned by Atcon Group Inc.

3) In his affidavit of March 11, 2011, Mr. Robert Tozer does not say that additional share certificates were issued but states that if they were he does not remember seeing them and has no knowledge of their whereabouts. 4) Ernst & Young Inc. have made diligent efforts to find the share certificates for the 1000 shares allegedly issued in November of 2003.

The certificates in question were either never in fact physically issued or have been lost or misplaced. 5) There is no evidence that any other share certificates were issued by OPI or that the 1000 shares in question or any shares that were owned by Atcon Group Inc. in OPI were transferred to any third party for consideration or otherwise. 6) There is no evidence other than that OPI is a wholly owned subsidiary of Atcon Group Inc. 7) Diligent efforts were made by the Receiver to locate the OPI Share Register and the certificates in question but without success. 8) Based on the documentation available which includes the OPI 2009/10 Annual Report and information obtained by the Receiver and information from OPI Swedish accountants and legal counsel it appears that there are in fact 2000 issued and outstanding shares of OPI and that the owner of all issued shares is Atcon Group Inc. 9) The share certificates of OPI were pledged to the Bank of Nova Scotia as part of the security given to the bank by the Atcon companies.

Earlier, they had been pledged to other financial institutions. It was represented by Atcon Group Inc. that it was the owner of all issued and outstanding shares of OPI. The Bank of Nova Scotia continues to hold the certificates issued in December 2010 as part of its security. 10) Documents filed with the Sweden Companies Registration office, some of which were signed by Mr. Robert Tozer on behalf of OPI and Atcon Group Inc. confirm that 1000 additional shares were issued to Atcon Group Inc. on November 3 rd , 2003.

Minutes of the board and extra general minutes of that day confirm issuance of an additional 1000 shares to Atcon Group Inc. Reference can be made to pages 186-190 of the Record which are copies of corporate Minutes signed by Mr. Robert Tozer and which include a report by the auditor, Grant Thornton dated November 3 rd , 2003. 11) According to Corporate records, 1000 shares were issued to Atcon Group Inc. for a subscription price of 10,850 Swedish Krona (Canadian $1,590.000.00 current exchange rate). Mr.

Tozer in his affidavit of March 1 st , 2011 says he recalls that the mill in Sweden owed Atcon at least, $1,500,000.00 in 2003 and that Atcon planned to take back shares for this debt. [ 21 ] For the foregoing reasons so as to assist the Receiver in its efforts to realize on the assets of Atcon Group Inc. which includes the shares of OPI, I did grant the relief requested and signed an order to that effect. The draft order which was attached to the motion was approved, signed and filed on March 18 th , 2011.

Sun Life Policy [ 22 ] Should an order issue authorizing and directing Sun Life Financial to terminate the policy and pay the cash surrender value to the Receiver on its application for termination of the policy. [ 23 ] This is an application brought on behalf of Ernst & Young Inc., Receiver, Receiver Manager of Atcon Group Inc. for an order requiring Sun Life Financial to terminate a Sun Life Policy of insurance and pay its cash surrender value to Ernst & Young Inc.

It also asks that Ernst & Young Inc. be authorized to use the cash from the surrender of the policy for the purpose of making payments permitted by the receivership order. [ 24 ] In the present matter, Atcon Group Inc. is the policy holder of a life insurance policy on the life of Mr. Robert Tozer. The event insured against is the death of Robert Tozer. The beneficiary is Atcon Group Inc., that company is in receivership. [ 25 ] Ernst & Young Inc. was appointed the Receiver, Receiver Manager of Atcon Group Inc. by a court order dated March 2, 2010.

It was also appointed as a Receiver, Receiver Manager of other named respondent companies, some on March 2, 2010 and others on March 30, 2010. Later, on April 26, 2010, Ernst & Young Inc. was appointed as trustee of the Estate of Atcon Group Inc. under the Bankruptcy

and Insolvency Act (Canada) . [ 26 ] The event insured against, the death of Robert Tozer has not happened. The beneficiary under the policy is not the spouse, child, grandchild or parent of the person insured. Accordingly, the provisions of

Section 157 of the Insurance Act, S.N.B. Ch. I-12 do not apply. [ 27 ] There is not a lot of dispute over the background facts. Sun Life Policy No. 7672321 was issued in April of 1992 insuring the life of Mr. Robert W. Tozer. The owner and beneficiary of the policy at that time was Atco Construction Ltd. Later the policy was reissued as Sun Life Policy No. LI-R656,057-5. [ 28 ] In 2002 Atco Construction Ltd. assigned the Sun Life Policy to a company known as 504040 NB Ltd. Later through restructuring and amalgamations, this company continued and carried on as Atcon Group Inc.

Although the owner of the Sun Life policy is actually named as 504040 NB Ltd. construction, that company through restructuring has become and is now Atcon Group Inc. [ 29 ] In 1978, Robert W. Tozer and Terrance Taylor incorporated a construction company, Atco Construction Inc. (Atco), Mr. Tozer was the company president, Mr. Taylor was secretary treasurer and both were directors and controlled the company. [ 30 ] Some 14 years later, after meeting with Mr. Dana Waye, a representative of Sun Life Assurance Company of Canada (Sun Life) two whole life insurance policies were obtained on the lives of Mr.

Taylor and Mr. Tozer. The company Atco Construction Inc. was designated as the owner and beneficiary of the policies. The named beneficiaries were revocable. The policies had guaranteed premiums, guaranteed cash values and participated in dividends of Sun Life which were credited to the policy and tax sheltered. After a number of years, a premium offset option would eliminate the payment of premiums if exercised. [ 31 ] In 1997, Mr.

Taylor retired from the business and the policy on his life was transferred from Atco to him and his wife was designated as the beneficiary of that policy. [ 32 ] Over the years some corporate re-organization of Atco was done. The policy on the life of Mr. Tozer, No. 7672321 was transferred in April 2002 to another corporation in which Mr. Tozer was involved 504040 NB Ltd. It is my understanding that this was set up as a holding company. Some time later after further corporate restructuring and amalgamations this company became Atcon Group Inc.

It continues to exist today under that name. [ 33 ] In the interim, Sun Life amalgamated with Clarica in 2000 and the policy was reconstructed with a new number, LI-R656,057-5. It continued to be a revocable beneficiary policy. The policy provides for a death benefit payable of $1,200,000.00. Premiums were payable annually beginning April 14 th , 1992 and after the initial payment the annual premiums were $13, 469.47. These annual premiums were paid in monthly instalments. [ 34 ] By 2002, the growth in the policy was such that after that time, premiums thereafter were paid from the dividends earned.

The premium offset option was exercised. All premiums thereafter were paid from the dividends and the policy has continued to be in full force and intact.

No other changes nor assignments of the policy were made and it was not insofar as I know specifically assigned as security for any loans or other obligations of Atcon Group Inc. [ 35 ] Eventually, the Atcon Group of companies encountered financial difficulties and, as mentioned earlier, in March of 2010, Ernst & Young Inc. was appointed as Receiver, Receiver Manager of Atcon Group Inc. and many other affiliated companies in that organization. [ 36 ] In May 2010, it came to the attention of the Receiver that Atcon Group Inc. was the named beneficiary and owner of a life insurance policy with Sun Life insuring the life of Mr.

Tozer. A statement in relation to the policy dated April 14 th , 2010 was sent out by Sun Life to the home address of Mr. Tozer. That statement shows an annual premium of $13,175.39 of which $8,111.55 was paid by the current dividends allotted and $4,363.84 was withdrawn from existing dividends. That statement showed a death benefit payable of $1,344,171.00 and a total cash surrender value of $272,727.18. [ 37 ] The Receiver in its report says: “ The existence of the Sun Life Policy came to the Receiver’s attention on May 19, 2010 as a result of correspondence from Mr.

Tozer to the Receiver requesting that two (2) insurance policies be transferred into his name. As a result of this correspondence, Mr. Christopher Mediratta, CA CIRP, of the Receiver’s office, contacted Ms. Lisa Godin, the former controller of the Atcon group of companies, to obtain further details on the insurance policies. Ms. Godin subsequently provided information regarding the 2 insurance policies referred to by Mr. Tozer. Ms. Godin also provided information on a third insurance policy, the Sun Life Policy, which was not referenced by Mr.

Tozer in his correspondence.” [ 38 ] With this information the Receiver made further investigation and inquires. Additional information was obtained. [ 39 ] As of June 10 th , according to information provided to Ernst & Young Inc. by Sun Life, the cash surrender value of the policy was $287,845.74.

As of the date of the hearing I was told by counsel representing Ernst & Young Inc. that the current cash surrender value was in the range of $300,000.00. [ 40 ] After becoming aware of the existence of this policy, officials of Ernst & Young Inc. communicated with Sun Life and obtained further information including a copy of the policy. A copy of that policy is attached to the documents filed in relation to the present motion. One of the provisions of the policy provides: “Sun Life, on request, “will pay the guaranteed value of the policy plus the cash value of any dividends less any advances with interest.

Payment of this amount terminates the policy.”

[ 41 ] In its notice to Sun Life dated May 25 th , 2010, Ernst & Young Inc. informed them of the Atcon Group Inc. receivership and that they had been appointed as the Receiver of the company and asked that no other person be allowed to change, alter or take possession of the policy including its cash surrender value. [ 42 ] A representative of Ernst & Young Inc. then met with Mr. Robert Tozer to discuss the matter. It then sent an e-mail to Mr. Tozer giving him until June 4 th the opportunity to pay the cash surrender value in exchange for an assignment of the policy to him. [ 43 ] Counsel for Mr.

Tozer, at the time Mr. James Mockler, responded by letter of June 4 th addressed to Sun Life with a copy to Ernst & Young Inc. The letter says that in their opinion 504040 NB Ltd. always held the life insurance policy “in trust” for the benefit of Robert Tozer and as part of his employment package. [ 44 ] On June 4 th , Sun Life informed Ernst & Young Inc. that it would require further documentation and approval from the court if action would be taken on the policy.

It pointed out that the value of the policy was over the amount of $100,000.00 referring to a clause in the receivership order of March 2, 2010. [ 45 ] Officials of Ernst & Young Inc. then reviewed the books and records of the Atcon Group of companies to determine if there might be any reference to ownership of the policy or record of payment of premiums. No reference to the Sun Life policy was found in any books or records they reviewed including company financial statements. [ 46 ] Ernst & Young Inc. asked Sun Life to confirm if they had information on how premiums were paid prior to 2002.

Sun Life confirmed that according to their records the first monthly premiums were paid by cheque dated April 14 th , 2002 from the account of Atco Construction Ltd. The subsequent monthly premiums were paid from that company’s bank account by automatic payment plan authorization. Payment of the premiums in that fashion continued until such time as the option was exercised for the premium offset from dividends effective April 2002.

Sun Life confirmed that the premiums for the policy in question were paid monthly out of business bank accounts of Atco and then Atcon until the policy went on premium offset. [ 47 ] On filing the present motion, Ernst & Young Inc. submitted it’s Eleventh Report which summarizes information on the corporate history of Atcon Group Inc., the background on the Sun Life policy and it reviewed discussions and correspondence as well as a

summary of the relief asked for. [ 48 ] The relief asked for by Ernst & Young Inc. is opposed by Mr. Robert Tozer. It is maintained that the insurance policy in question was held by the company, Atcon Group Inc. in trust for him as part of his terms of employment. [ 49 ] Prior to the hearing of the present motion, after having the opportunity to review the material filed in support of the motion, on behalf of Ernst & Young Inc, a number of demands and questions were made to the Receiver by counsel on behalf of Mr. Tozer. Those inquiries were responded to by Ernst & Young Inc.

All of these documents and Supplements to the Reports prepared by the Receiver form part of the record. [ 50 ] Mr. Robert Tozer opposes the relief which is asked for by Ernst & Young Inc. In support of his position, affidavits sworn by him, and also those of Mr. Dana Waye, the Sun Life agent who sold the policy, Mr. Hal Raper, James Mockler and Joe Daley were filed. [ 51 ] Mr. Tozer in his affidavit reviews briefly how Atco Construction Inc. began. He states that as bank financing for company operations increased, at the request of their bankers, security for the loans by way of term life insurance was obtained.

He says that in 1992, when he was 36, he and Mr. Taylor met with Dana Waye to discuss investment for retirement. [ 52 ] According to Mr. Tozer, Mr. Waye recommended Whole Life Insurance Policies that would grow in value, participate in dividends with a guaranteed value and guaranteed premiums. The insurance was purchased, it was agreed that the company would hold each policy and that the beneficiary would be revocable.

He states that it was understood that if either of them retired, he would take the policy with him and if one of them died before retirement the proceeds of the life insurance policy would be paid to the corporation. [ 53 ] Mr. Tozer notes that he and Mr. Taylor agreed with the recommendation of Mr. Waye. He points out that a written agreement was not necessary as they trusted each other and controlled the corporation. According to Mr. Tozer, the insurance policies were not accounted for and not considered to be assets of the corporation. [ 54 ] When Mr.

Taylor retired in 1997, taking early retirement, the policy on his life was transferred to him. This, according to Mr. Tozer, took place and occurred as intended. [ 55 ] The other policy on the life of Mr. Tozer remained with the company. Sometime around this time, Mr. Tozer arranged to incorporate 504040 NB Ltd. as a holding company and Atcon Construction Inc. (previously known as Atco Construction Inc.) transferred the Sun Life Policy to it. This holding company eventually became Atcon Group Inc. [ 56 ] Mr.

Tozer states that he had no formal employment package with Atcon and determined his salary and benefits from time to time. He questions some of the contents of the Receivers reports and alleges that Chris Mediratta was overbearing and hostile toward him. He says that he considered the policy to be his and that the company was holding it and it held it for him until he retired. [ 57 ] Mr. Dana Waye confirms that in 1992 he discussed the benefits of a “whole life policy” with Mr. Tozer and Mr. Taylor and that they decided to get the insurance. According to Mr. Waye it was the intent of Mr. Taylor, Mr.

Tozer and himself that when one of them retired from the business he would take the whole life policy with him. He says that when it would be taken from the company taxes owing would be paid. [ 58 ] Mr. James Mockler is the former solicitor of Mr. Tozer in this matter. He says that the Eleventh Report of the Receiver contains

several distortions and misstatements. He states any reference he made in correspondence to an employment package did not refer to a formal contractual arrangement. He refers to making contact with Mr. Waye and of the willingness of Mr. Waye to complete an affidavit. This is in respect to what is said by the Receiver in it’s Eleventh Report in relation to conversations a representative of the Receiver had with Mr. Waye. The report mentions that in discussions with Mr. Waye he informed them that he had been approached by Mr. Mockler for an affidavit in support of Mr.

Tozer’s position and that he had declined to do so. [ 59 ] Mr. Hal Raper is a chartered accountant. He says that it would be unusual for a T4 statement to be issued to an employee to contain any reference to dividends and/or premiums paid on a life insurance policy. [ 60 ] Joe Daley, who is affiliated with Assumption Life, says that he was approached by Mr. Tozer to establish a pension for the Atcon employees. As a result, he arranged for an employee pension plan but that Mr.

Tozer himself chose not to participate in the plan saying that he had already looked after his own pension plan. [ 61 ] It is asked on behalf of Mr. Tozer that the relief requested by the Receiver be denied. He is asking for a declaration to issue that the insurance policy in question had been held by Atcon Group Inc. for Mr. Robert Tozer. It is submitted on his behalf that the motion of the Receiver is irregular, not supported by sworn affidavit evidence and that the only evidence before the court supports a conclusion that the insurance policy in question was and is held in trust by Atcon Group Inc. for Mr.

Tozer. [ 62 ] It is submitted on behalf of Ernst & Young Inc. that the owner and beneficiary of the insurance policy is Atcon Group Inc. It is pointed out that all premiums were paid by Atco Construction Inc. which later became Atcon Construction Inc. until 2002 and after that by dividends earned on the policy. It argues that as Ernst & Young Inc. is the Receiver of the property of Atcon Group Inc., it is entitled to terminate the Sun Life policy and receive the cash surrender value for the benefit of creditors of the respondent Atcon companies. [ 63 ] The Receiver disputes that Mr.

Tozer has a proprietary interest in the policy and says that there is no evidence to support a conclusion that the policy was held in trust for him. [ 64 ] It is advanced on the Receivers behalf that at most, based on Mr. Tozer’s evidence, there could be what can be described as an arrangement or understanding that when Mr. Tozer retired the policy of insurance would be assigned to him. It is however pointed out that such a scenario no longer exists and that Atcon is now in Receivership. [ 65 ] It is submitted that Mr.

Tozer as a consequence, has no authority to transfer the policy and further that he is not retired, did not retire and in the circumstances that now exist will not retire from the respondent companies. [ 66 ] It is argued that as Atcon Group Inc. is identified as the owner and beneficiary, Mr. Tozer has the onus of establishing that he has a proprietary interest in it. This it says, is analogous to the onus placed on a party that claims an interest in property that is in possession of a trustee in bankruptcy under

Section 81 of the Bankruptcy and Insolvency Act . [ 67 ] Counsel for Ernst & Young Inc. maintain that the evidence put forth by Mr. Tozer does not show that a trust was created and there is no convincing evidence to show a clear intention to create a trust. [ 68 ] As stated above it is argued on behalf of Mr. Tozer that at all times the company held the policies for the benefit of Mr. Tozer and Mr. Taylor. When Mr. Tozer retired in 1997 in accordance with the intention of the parties, he took his policy with him. Mr. Tozer remained with the company and he says it was the plan that he would do likewise later.

It is said that Mr. Tozer brought the policy in existence, “used his life to create the policy” and directed his corporation to hold the policy on his behalf. According to counsel for Mr. Tozer the purpose and intentions were clear as is shown by the actions and circumstances described in the affidavits of Mr. Waye and Tozer. Reliance is placed on Section 67 (1) (

a) of the Bankruptcy and Insolvency Act . [ 69 ] It is said on behalf of Mr. Tozer that the Receiver obtained no greater interest in the debtor company’s property than the debtor had himself, that the policy is impressed with a trust and not available to the Receiver. [ 70 ] Counsel for Mr. Tozer questions and objects to the procedure used by the Receiver to address this issue. He describes this issue as substantive and not one that is administrative in nature. In this situation with a substantive issue to be tried it is maintained that an action should have been commenced.

Alternatively, it is asked that the court direct the trial of this issue. [ 71 ] The use of a Report by the Receiver in support of a motion rather than sworn affidavits is also questioned. It is argued that this is not proper and improper in the present circumstances which involve serious and contentious issues. [ 72 ] It is conceded on behalf of Mr. Tozer that the policy in question is not protected by the provisions of

Section 157 of the Insurance Act, S.N.B Ch I-12. Thus the asset is not exempt from seizure by virtue of Section 67 (1) (b)of the Bankruptcy and Insolvency Act . Analysis and Decision Trial of an Issue [ 73 ] It is submitted on behalf of Mr. Tozer that the present matter involves substantive issues and disputed questions of fact. As such, it is said that an action should have been commenced rather than proceed by way of motion. Alternatively, the court is asked to direct the trial of an issue. [ 74 ] I do not think that I must go into a lot of detail to address this question. Rule 37.10 of the Rules of Court does allow the court to

direct the trial of an issue and give directions all upon terms as may be just. [75] Should the questions that are to be determined in relation to the Sun Life Insurance Policy be determined by way of the presentmotion or should a trial be directed to decide those issues? This as I see it, is a matter for judicial discretion having regards to allcircumstances. Reference can be made to the decision of Shields v. Shields Estate (SCC), [1924] S.C.R. 25. [76] All of the required material and evidence to determine these questions are now before the court. There is no substantial dispute offact.

The substantive issue as to whether the Sun Life policy is held in trust for Mr. Tozer can be addressed and determined from theevidence before the court. [77] Mr. Tozer has had ample opportunity to respond to the intended actions of the Receiver. This issue was first brought to hisattention by representatives of the Receiver in May 2010. The motion was brought in mid November and the hearing was adjourned toallow Mr. Tozer an opportunity to respond which he in fact did. [78] There is no formal trust agreement. All relevant evidence and all available evidence, except possibly some evidence of Mr.

Taylor,is presently before the court. If Mr. Taylor would have been able to add anything to assist in determining the present issue, one wouldexpect that it might have been obtained. The material facts, as I understand them, are not controverted. [79] In all the present circumstances I am not convinced that the present issue should or need be determined by a trial. I thereforeexercise the discretion which I understand I have and deny the request made on behalf of Mr. Tozer to direct the trial of an issue. In sodoing I see no procedural unfairness in that Mr.

Tozer has had a full opportunity to be heard and to respond to the applications brought onbehalf of the Receiver of the respondent companies. He has had a full opportunity to provide relevant evidence in regard to the matters inissue. Receivers Evidence By Way Of Reports [80] It is argued on behalf of Mr.

Tozer that as this issue is one that is contentious, that the evidence of the Receiver should be in theform of a sworn affidavit rather than in the form of Reports. [81] In the motion which is dated November 18th, the documentary evidence relied upon by Ernst & Young Inc. includes Reports prepared by the Receiver. Those are the Eleventh Report dated November 17th, 2010 (Sun Life Policy) and the Twelfth Report of the same date (the OPI AB shares). Later, on February 24th, 2011, counsel for Mr. Tozer asked for clarification concerning the EleventhReport.

To respond to that request and answer the questions raised, a Supplement to the Eleventh and Twelfth Report dated February 28th, 2011 was prepared and delivered by the Receiver. Later, a Second Supplement to the Eleventh and Twelfth report was completed on March 7th, 2011. This dealt mainly with a number of comments contained in Mr. Tozer’s affidavit which was sworn on March 1st,2011. [82] Finally, a Third Supplement to the Eleventh and Twelfth Report of the Receiver was prepared on March 14th, 2011, delivered andfiled.

This short report addresses how the insurance premiums on the policy had been paid. [83] In support of the argument that sworn affidavit evidence rather than the Receiver’s Reports should be filed in support of the presentmotion, counsel for Mr. Tozer relied upon the decision of Farley J in Bell Canada International Inc. (ON). Thefollowing paragraph of that decision was quoted: “ L raised a concern about this motion by BCI not being supported by anything other than the Monitor’s report. This concernhas been raised as a general problem quite recently.

I have indicated within the past month that, in my view, it is desirable tohave an affidavit from someone in the moving party’s camp if the matter is reasonably expected to be contentious. If a matterturns contentious, it may be necessary to provide such an affidavit before the hearing with sufficient time to cross examine on it ifnecessary or to adjourn the hearing to allow for same.” [84] From my reading of the Bell Canada International Inc. (BCI) decision of Justice Farley, he did not say that sworn evidence from acourt officer must be filed to support a motion in contentious matters.

In that case, BCI brought a motion to authorize entering into avoting agreement to vote it’s interests in shares of a third corporation to approve a sale agreement. [85] The only evidence before the court was the report of the court appointed monitor. One of the minority shareholders of thesubsidiary company raised concerns about the evidence in support of the application, the monitor’s report. It was in that context thatJudge Farley said it would be desirable to have a sworn affidavit if the matter was expected to be reasonably contested.

He did not saythat the court appointed officer of the monitor must file an affidavit. [86] At paragraph 6 of the BCI case, the following is written: “L disputes that the Monitor's report is evidence but gives no basis for such a submission. With respect, I disagree. I do notthink it necessary to delve deeply into this question but I do think it suffice to observe that such a report by a court appointedofficer is recognized by the common law as being admissible evidence in a proceeding.

For instance, see John Henry Wigmore,Evidence in Trials at Common Law (Little Brown & Company, Toronto & Boston; 1974) at pp. 791-6, Volume 5 (section 1670)

discusses the ancient origins of reports being received as admissible evidence, stating at p. 791: • A report is to be distinguished from a return, as already defined (s. 1664 supra,) in that the latter is typically concerned withsomething done or observed personally by the officer, while the former embodies the results of his investigation of a matter notoriginally occurring within his personal knowledge.

The older term customarily applied to the former type of statement -"inquisition" or "inquest" - suggest more clearly its special quality, namely that of resting upon means of information other thanoriginal personal observation. • Now an inquisition or report, if made under due authority, stands upon no less favourable a footing than other officialstatements.

As a statement made under official authority, or duty, it is admissible under the general principle (sc 1633, 1635supra).” [87] In the case of Re Impact Tools & Mould Inc. (2007), 2007 CarswellOnt 9136, 41 C.B.R. (5th) 112, the Court had to deal withseveral motions, one by a trustee in Bankruptcy to examine a court appointed Receiver. At paragraph 15 Justice Brockenshire said: “While s. 163(1) of the Bankruptcy and Insolvency Act gives broad powers to a trustee to carry out examinations, that power isdirected primarily against the bankrupt and then other persons.

What is sought here is an order for the examination of a courtappointed Receiver. The case law, quoted by counsel on both sides, of Anvil Range Mining Corp., Re (2001), (ON SC), 21 C.B.R. (4th) 194 (Ont. S.C.J. [Commercial List]), Confectionately Yours Inc., Re (2001), (ON SC),25 C.B.R. (4th) 24 (Ont. S.C.J. [Commercial List]) and Bell Canada International Inc., Re, (ON SC), [2003]O.J. No. 4738 (Ont. S.C.J. [Commercial List]), all decisions of Farley J., plus the appeal decision in Confectionately Yours Inc., Reat (2002), (ON CA), 36 C.B.R. (4th) 200 (Ont.

C.A.), all make it clear that a court appointed Receiver is anofficer of the court, whose reports are to be accepted and do not have to be supported by affidavit except in the most unusual ofcircumstances, and that such court officer is, again except in the most unusual circumstances not to be subjected to anexamination. The one exception is when the Receiver's own accounts for fees and disbursements are brought before the court.The Receiver is then not acting in the general interest of the estate, and should support the claim by affidavit and with leave, besubject to examination.

I see nothing exceptional in the circumstances here, and was not pointed to any area in which Mr.Bennett could point to a lack of information or a refusal to provide information which would in any way support his application.I rule that a court appointed Receiver cannot be examined except by leave, which leave should only be granted in the mostunusual of circumstances, which have not been demonstrated here.” [88] The subject of reports prepared by a court appointed Receiver and whether such person ought to be questioned by way of cross-examination on a report that is made to the court was addressed in the case of Re: Ravelston Corp (ON SC), 2007 CarswellOnt 661, 29 C.B.R (5th) 1.

The majority shareholder of the company in that matter opposed the relief sought by the Receiverand had submitted questions to the Receiver which were responded to. [89] At paragraphs 37 to 40 of the decision Justice Cumming said: “ Issue #1 Is an examination of the Receiver appropriate in the circumstances? 37 The Receiver had declined to volunteer for an out-of-court examination. A court-appointed Receiver is not generallysubject to cross-examination on the contents of its reports. There are exceptional situations.

See for example Re BakematesInternational Inc (alternate.: Re Confectionately Yours, Inc.) (2001), (ON SC), 25 C.B.R. (4th) 24 at para. 2(Ont. Super. Ct.), var'd on other grounds, (2002), (ON CA), 219 D.L.R. (4th) 72 (Ont. C.A.), leave to appeal toS.C.C. ref'd, [2002] S.C.C.A. No. 460; Mortgage Insurance Co. of Canada v. Innisfil Landfill Corporation (1995), (ON SC), 30 C.B.R. (3d) 100 at para. 5 (Ont. Gen. Div.); Re. Anvil Range Mining Corp. (2001), (ON SC), 21C.B.R. (4th) 194 at para. 4 (Ont.

Super Ct.); Edmonton Region Community Board for Persons with Developmental Disabilities v.Aboriginal Partners & Youth Society, [2004] A.J. No. 506 at para. 18 (Q.B.); and Edmonton Region Community Board for Personswith Developmental Disabilites v. Aboriginal Partners & Youth Society, 2004 ABQB 423 , [2004] A.J. No. 710 at paras. 17-22 (Q.B.) 38 In Bell Canada International Inc., (ON SC), [2003] O.J. No. 4738 at para 8 (Super. Ct.), Farley J. of thisCourt stated: • [A] court officer may be (cross) examined in unusual circumstances.

It would seem to me that unusualcircumstances would include the situation where the officer of the court refused to cooperate in clarifying a part of his report orin not expanding upon any element in the report as may be reasonably requested. Frequently, such can be accomplished byquestions and answers in writing or an interview (depending on the circumstances it may be desirable to have a recording made,or a

summary memo). The reasonability of a request must take into account the objectivity and neutrality of the officer of thecourt (see Re Confederation Treasury Services Ltd., (1995), (ON SC), 37 C.B.R. (3d) 237 (Ont. Gen. Div.)) whereI described the necessity for such and the caution that woe betide any officer of the court who did not observe his duty to beneutral and objective).

Bakemates [Re Confectionately Yours] clarifies that an officer of the court when dealing with the questionof his fees and disbursements is to be treated as an ordinary litigant as having an understandable self interest in the outcome;therefore fees and disbursements are to be supported by an affidavit and the officer of the court is in that respect open to crossexamination. [emphasis added.] 39 CBCC submits that the Receiver is not acting in an objective and neutral manner in dealing with CBCC's questions or theinterests of its stakeholders. 40 In my view, the evidentiary record did not support the allegation that the Receiver was not acting in an objective andneutral manner.

There was no good reason to depart from the norm that a court-appointed Receiver is not subject to cross-

examination on its reports.” [90] On appeal of that decision to the Ontario Court of Appeal that court concluded that it saw no reason to interfere with the thorough and balanced decision of the motions judge, Re Ravelston Corp. 2007 ONCA 135 , 2007 CarswellOnt 1115, 29 C.B.R. (5th) 45,85 O.R. (3d) 175. [91] In the present matter I see nothing that is exceptional here that would require a departure from the normal practice and procedure. The Receiver, Ernst & Young Inc., as a court appointed Receiver is an officer of the court. Their reports can be accepted as evidenceand do not have to be supported by affidavit.

That is unless or except if there are unusual circumstances. [92] I do not find any unusual circumstances. Basically the Receiver reported on its ongoing work as the Receiver for the Atconcompanies and its involvement with the Sun Life policy along with what information it obtained in regard to that policy. Ernst & YoungInc. reported on its investigations and inquiries and provided the details about the policy that it obtained. They include the background,history, who it dealt with, relevant documents, copies of the documents and related matters.

This was and is all part of its ongoingresponsibility in regard to the property of the respondent, Atcon companies. [93] Several questions were put to the Receiver in writing by counsel for Mr. Tozer and those questions were answered by the Receiverin a spirit of co-operation. There was no refusal to provide information and I have not been made aware of any relevant information thathas not been disclosed, nor has it been established that the Receiver did not act objectively.

The role of the court appointed Receiver wassummarized by Justice Cumming in the Ravelston decision in the following terms: “The role of the court-appointed Receiver 60 A court-appointed Receiver is an officer of the Court appointed to discharge certain duties prescribed by the appointmentorder. Parsons et al. v. Sovereign Bank of Canada, (UK JCPC), [1913] A.C. 160 at 167 (J.C.P.C.). 61 When a court-appointed Receiver is appointed in the normal course, "the Receiver-Manager is given exclusive control overthe assets and affairs of the company and, in this respect, the board of directors is displaced." TD Bank v.

Fortin et al. (1978), (BC SC), 85 D.L.R. (3d) 111 at 113 (B.C.S.C.). The essence of a Receiver's power is to settle liabilities andliquidate assets. 62 It is well established that a court-appointed Receiver owes duties not only to the Court, but also to all parties interested inthe debtor's assets, property and undertakings. This includes competing secured claimants, guarantors, creditors or contingentcreditors and shareholders. Ostrander v. Niagra Helicopters Ltd. (1974), (ON SC), 1 O.R. (2d) 281 (Ont.

H.C.J.)[Ostrander]. 63 A Receiver has the duty to exercise such reasonable care, supervision and control of the debtor's property as an ordinaryperson would give to his or her own. A Receiver's duty is to discharge the Receiver's powers honestly and in good faith. AReceiver's duty is that of a fiduciary to all interested stakeholders involving the debtor's assets, property and undertaking.Ostrander, supra at 286. 64 It is appropriate for a Receiver to consider negative economic factors such as cost, time and risk. See generally NationalTrust Company v.

Massey Combines Corporation (1988), 69 C.B.R. (N.S.) 171 at 179 dealing with the test to be employed inconsidering whether to approve a sale of assets.” [94] It is my conclusion for reasons as above set out that there are no exceptional or unusual circumstances here that would requirethat the application be supported by way of a sworn affidavit of the Receiver.

Is the Sun Life Policy Trust Property? [95] I have above quoted from the Ravelston decision as to the role of the court appointed Receiver who must preserve the assets of adebtor company and realize on those assets for the benefit of all creditors. [96] The evidence establishes that Atcon Group Inc. is the documented owner and beneficiary of the Sun Life Policy. [97] Mr. Tozer challenges the legal recorded ownership of the policy. He says that he is the owner, that is he is the beneficial ownerand that the policy was always held by Atcon Group Inc. and predecessor companies in trust for his benefit.

Essentially, it is advancedthat the policy was held in trust for him until retirement at which time the policy would be transferred to him. [98] There are no documents or written records that in any way confirm or suggest that the policy was held in trust for Mr. Tozer. According to Mr. Tozer, when arrangements were made to obtain the life insurance policies back in 1992 it was decided that the

corporation would hold each policy and be named as a revocable beneficiary. Although not documented, he says that the intention was that if either he or Mr. Taylor retired, the policy would be assigned on this event happening. If one of them died before retirement, it was the plan and the intention that the proceeds go to the corporation. [ 99 ] Although it is acknowledged by counsel for Mr. Tozer that property as defined in the Bankruptcy and Insolvency Act does include an insurance policy’s cash surrender value, it is advanced that it is not available for creditors in this case. Reliance is placed on Section 67(1)(

a) of that Act. “67.

(1) Property of bankrupt – The property of a bankrupt divisible among his creditors shall not comprise (

a) Property held by the bankrupt in trust for any other person,” [ 100 ] The question that must be determined is whether the cash surrender value of the Sun Life Policy is property of Atcon Group Inc. or is subject to a trust in favor of Mr. Robert Tozer. [ 101 ] A trust can come into existence either by intention or by imposition of law. In the text Waters’ Law of Trusts in Canada, 3 rd ed. The following is written at pages 19 and 20: “A trust can come into existence in one of two ways.

It is either clear from a man’s words or acts that he intends to settle property by way of a trust, or the law imposes trust machinery in a given situation to ensure that property passes from one party to another. What we are therefore concerned with is discovering the intention of a man, or the circumstances under which the law will deem a trust to arise in order to secure some result the law considers equitable. If we are looking for the intention of a man, we may find that his oral or written words state quite clearly that he is making certain property subject to a trust.

His words, however, may not be clear; we then have to examine them carefully in order to determine whether his true intention is to make property subject to a trust. We have to infer his intention. On the other hand, if we wish to know whether the law requires A to hold certain property for B, regardless of intention, we have to discover what the circumstances are in which the law imposes this requirement, and whether A and B come within one of those circumstances.

Since the seventeenth century common law courts have employed various terms to describe those various situations and the terms which have become familiar are “express trusts”, “implied trusts”, “resulting trusts”, and “constructive trusts”. But the courts have differed quite considerably in the ambit of meaning which they have associated with those terms, and since the nineteenth century, when writers began to compose treatises on the law of trusts, they have introduced further refinements into the use of those terms.

Today, however, though the differences of usage still exist, and the student of trust law will observe those differences in judgments and non-judicial writing, there is no dispute that trusts arise either by intention or by imposition of law. The differences exist as to the naming of one or another particular type of trust.” [ 102 ] It is my understanding of the law in the present situation to find that a trust is established: 1. The intention of the settler to create a trust must be clear, 2. The subject matter of the trust must be certain, and 3. The objects or beneficiaries of the trust must be certain.

If any of these do not exist, there is no trust. [ 103 ] In this present matter, if a trust is found to have been established the subject matter of the trust would be the Sun Life policy which includes its cash surrender value. The objects or beneficiaries of the trust would be Mr. Robert Tozer. [ 104 ] The issue then becomes whether there is a clear intention on the part of the settlor (Atco Construction Inc., now Atcon Group Inc.) to create a trust. [ 105 ] Does the evidence establish on a balance of probabilities on an objective test that there was certainty of intent to create a trust?

Reference can be made to Re Infoplace Ticket Centres Ltd. 2009 CarswellOnt. 8082 , 62 C.B.R. (5 th ) (135) :

“The Motion 1 The City of Mississauga ("City") moves by way of an appeal the disallowance by Grant Thornton Limited in its capacity asthe Trustee in bankruptcy of Infoplace Ticket Centres Ltd. ("Infoplace"), pursuant to s. 81 of the Bankruptcy and InsolvencyAct ("BIA") of a claim of the City. 2 The City claims to have a trust interest (whether by express, implied or constructive trust) within the ambit of s. 67(1)(

a) ofthe BIA in certain funds such that those funds should not form part of Infoplace's estate in bankruptcy. 3 To constitute a trust an arrangement must include the "three certainties" of a trust, being: certainty of intent, of subjectmatter and of object. 4 The only criterion in issue on this appeal is that of "certainty of intent".

That is, does the evidence establish on a balance ofprobabilities on an objective test, that there was certainty of intent to create a trust?” [106] Counsel for Mr.Tozer says there is ample evidence to establish certainly of intent so as to conclude that an expressed or implied trust was established. Itis submitted that on a balance of probabilities it has been proven that the policy was put in the company name for the benefit of Mr.Tozer. This it is said established either an expressed or implied trust. It is argued on behalf of Mr.

Tozer that to ignore a trust in thesecircumstances would result in an unexpected and unfair windfall for the major creditor of Atcon Group Inc. [107] Authorities insupport of the position of Mr. Tozer relied upon include the decision of Randall v. Nickerson (1984) (NB CA), 58N.B.R. (2d) 414 (NBCA). The above referred to text of Waters’, Law of Trusts in Canada, is also relied upon. The following passagesfrom that text are quoted in the brief submitted on behalf of Mr. Tozer: “A trust can come into existence in one of two ways.

It is either clear from a person’s words or acts that there is an intention tosettle property by way of a trust, or the law imposes trust machinery in a given situation to ensure that property passes from oneparty to another. What we are therefore concerned with is discovering the intention of a person, or the circumstances underwhich the law will deem a trust to arise in order to secure some result the law considers equitable. If we are looking for suchintention, we may find that oral or written words state quite clearly that certain property is to be subject to a trust.

The words,however, may not be clear; we then have to examine them carefully in order to determine whether there is indeed an intention tomake property subject to a trust. We have to infer intention.” (Page 19) “In the common usage of today, the terms ‘express’ and ‘implied’ refer to the intention of the alleged settlor. If he clearly andspecifically says that certain property is to be held in trust, then he has created an express trust.

Similarly, if his language has tobe construed in order for its legal meaning to be discovered, and it is found that the maker of the statement intended a trust, thenhe has created a trust arising by implied intent.” [108] In the Randalldecision Justice LaForest (as he then was) said: “23 In cases of this kind, the lack of consideration gives rise to the question whether a resulting trust was created.

For, certainexceptions apart, when a person conveys a piece of land to another without consideration, the law assumes in the absence ofevidence that no gift was intended and that a resulting trust arises in favour of the transferor. But I am not relying on thatpresumption here or on a consequent resulting trust. Rather, in my view, there is ample evidence here of an implied trust, i.e.,one which, though not expressed, is intended by the parties as revealed by their words and conduct.

For a discussion of theconfused terminology in this area see Donovan Waters, Law of Trusts in Canada, c. 10, especially at pp. 278-279. 24 What the words and conduct of the parties reveal here is that they intended Mr. Randall and Mrs. Nicklin to hold theproperty for the benefit of Mr. Randall during his lifetime, after which it was to go to the survivor. The whole transaction was adevice to protect Mr. Randall from himself; to prevent him from selling the property and dissipating his major source ofsecurity. The proper course for Mrs.

Nicklin to follow when asked to join in the deed would have been to refuse to sign it. Thatwould effectively have accomplished what was intended when the property was transferred in joint tenancy. Certainly Mrs.Nicklin had no right to retain money for herself in return for her signature. When received, that money was impressed with atrust in Mr. Randall's favour. When the Nicklins took the $ 10,000.00, therefore, they were taking trust money.” [109] In circumstancessuch as the present, Mr.

Tozer must have the onus of establishing that Atcon Group Inc. holds the Sun Life policy and its cash surrendervalue in trust for his benefit. This must be established on a balance of probabilities. This is a commercial matter and there are manyunpaid creditors who have substantial amounts owing. It is obviously in the interest of Mr. Tozer that he maintain and try to endeavourthat this asset is trust property and exempt from property available for creditors. Property that is otherwise subject to the receivershipand bankruptcy of Atcon Group Inc.

If it is held in trust and exempt he will be entitled to the substantial cash surrender value and thebenefits of the policy at the expense of the creditors.

[110] It is my conclusionfrom my assessment of all the evidence that it does not establish an express or implied trust in favour of Mr. Robert Tozer. As I weighthe evidence it has not been proven that there was certainty of intent to create a trust. [111] None of thedocumentary evidence makes any reference to the Sun Life Policy being held in trust and in fact contradicts evidence that there was atrust agreement. [112] The application for the insurance policy which is dated April 14th, 1992 (Page 231 of the record) states that the owner of the policy is Atco ConstructionLtd. There was no reference to any trust.

The policy that was issued by Sun Life does not indicate that it is was issued subject to anytrust. [113] Similarly, thetransfer of title of the insurance contract from Atco Construction Inc. to 504040 NB Ltd (Page 387 of the record) which was completed on January 22nd, 2002, makes no express or implied reference to any trust. [114] This title transferchange document was signed by Mr. Tozer on behalf of Atco Construction Inc. approximately five years after the retirement of Mr.Taylor. It contains a clause describing Atco Construction Inc. as the owner of the policy with no reference to any trust.

The form in facthas printed on it a caution which reads as follows: “CAUTION - This form has been prepared by Sun Life for your convenience but is not suitable for all purposes. Make sure itwill carry out your intentions before signing. Sun Life cannot be responsible for the effect or sufficiency of the completed form.” [115] The title changedocument that was completed on May 5, 1997 from Atco Construction Inc. to Mr. Terrance Taylor (Page 386 of the record) describesthat company as the owner of the policy with no indication of any trust.

Likewise, the form request for premium offset (Page 224 of the record) dated October 17th, 2001 which is signed by Mr. Tozer on behalf of Atco as owner makes no mention that the policy is beingheld in trust. [116] There are no writtendocuments, and no objective evidence, such as a letter, memo, corporate resolution, evaluation, estate planning or retirement planningdocument that independently corroborate that the policy was held by the Company in trust for Mr. Taylor. [117] The onus of provingthe existence of a trust in this insolvency setting is high.

The evidence required to establish a trust and that it was the intention of thesettler to create a trust must be clear. The evidence of a clear intention to create a trust in this matter is deficient and does not show acertainty of intent to create a trust. [118] In regard to the onusof establishing the validity of a trust and the subject of certainty of intent the following is stated at paragraphs 32 and 33 of Abakhan & Associates Inc. (Trustee of) v. 554925 B.C.

Ltd. 2004 CarswellBC 3043, 2004 BCSC 1612, 7 C.B.R. (5th) 8: “32 The onus is on 554925 to establish that a valid trust was in existence at the date of the bankruptcy: Re Kenny (1997), (ON SC), 149 D.L.R. (4th) 508 (Ont. G.D.). For a valid trust to be established, three "certainties" must beestablished: (1) certainty of intent; (2) certainty of subject matter; and (3) certainty of object. I cannot be satisfied that any of thethree certainties have been established. 33 Regarding "Certainty of Intent", it must be established that there was a clear intent to create a trust (Re Ont.

WorldairLtd. (1983), 45 C.B.R. (N.S.) 116 (Ont. H.C.), aff'd (1983), 48 C.B.R. (N.S.) 112 (Ont. C.A.) and the language used by the settlormust be imperative (Re Allan Realty of Guelph Ltd. (1979), (ON SC), 29 C.B.R. (N.S.) 229 (Ont. S.C.)). As well,the intention of the settlor of the trust must be ascertained at the time of the settling of the property transferred upon the trustee:Re New Home Warranty of British Columbia Inc. (2002), 2002 BCSC 439 , 33 C.B.R. (4th) 257 (B.C.S.C.).

For the trustto be valid, the certainty of intent must be made known to the trustee: Re New Home Warranty of British Columbia Inc. (2000),2000 BCSC 1879 , 29 C.B.R. (4th) 232 (B.C.S.C.).” [119] The evidence in theaffidavits’ of Mr. Tozer and Mr. Waye say that the intention was that if Mr. Tozer retired the policy would be transferred to him.

I donot think on an objective test that this establishes the “certainty of intent” on a balance of probabilities necessary to create a trust. [120] On the materials andevidence before me I am not able to conclude that there was the “certainty of intent” to create a trust which is an essential characteristicfor creating a trust. The evidence does not support such an intent at the time of the settling of the property in the name of the company.

[ 121 ] It does indicate that there was a plan contemplated that on retirement of Mr. Tozer, Atcon Group Inc. under the control of Mr. Tozer would direct a transfer of the policy to him. This is what was done on the retirement of Mr. Taylor. The fact that this was discussed and possibly planned without anything further is not sufficient to create a trust. The situation has changed rather considerably, Atcon Group Inc. and related companies were placed in receivership and are bankrupt. As a consequence, the employment of Mr. Tozer was terminated. As such he will not be retiring.

Retirement was a condition of the transfer of ownership of the policy according to the evidence. [ 122 ] From my review and consideration of all evidence, the documentary evidence and the surrounding circumstances at the time the Sun Life Policy was issued and afterwards, I cannot conclude that it was held in trust for Mr. Tozer by the owner, that is Atcon Group Inc. Disposition [ 123 ] For the foregoing reasons it is my conclusion that Mr. Robert Tozer is not the beneficiary of a trust in regard to the Sun Life Policy. The policy does not qualify for exemption as being trust property.

Atcon Group Inc. is the owner and beneficiary of the insurance policy. The Receiver, Receiver Manager of that company, Ernst & Young Inc. is entitled to possession of the life insurance policy and has the power to surrender it for its cash surrender value and to use these funds for the benefit of the creditors. [ 124 ] As was suggested at the hearing, no action to surrender this policy will be undertaken by Ernst & Young Inc. until the expiry at least 30 days from the date hereof or until any appeal of this decision is finally determined. Also, during that period of time, Mr.

Tozer will have the opportunity and option to have the policy assigned to him on payment of its cash surrender value. [ 125 ] The option must be exercised within 30 days of the date of this decision or within 30 days after the final determination of any appeal of this decision. [ 126 ] I make no order as to costs. _______________________________ Thomas W. Riordon, J.C.Q.B.