HER MAJESTY THE QUEEN IN RIGHT OF CANADA, AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE Creditor AND: Christian Boily 27-9340, rue Lajeunesse Montréal, QuEbec H2M 1S4 Judgment Debtor/Respondent AND: 9381-2592 Québec Inc. 10242, rue Waverly Montréal, QuEbec H3L 2W1 Garnishee AND: LUCE PAQUET 10242, rue Waverly Montréal, QuEbec H3L 2W1 Third Party ORDER v. REASONS, 2020 FC 490

Date: 20200407 Docket: ITA-4714-19 Citation: 2020 FC 490 [ENGLISH TRANSLATION] Ottawa, Ontario, April 7, 2020 PRESENT: The Honourable Mr.

Justice Gascon IN THE MATTER OF the Income Tax Act , and IN THE MATTER OF ONE or more assessments by the Minister of National Revenue under the Income Tax Act BETWEEN: HER MAJESTY THE QUEEN IN RIGHT OF CANADA, AS REPRESENTED BY THE MINISTER OF NATIONAL REVENUE Creditor AND: Christian Boily 27-9340, rue Lajeunesse Montréal, QuEbec H2M 1S4 Judgment Debtor/Respondent AND: 9381-2592 Québec Inc. 10242, rue Waverly Montréal, QuEbec H3L 2W1 Garnishee AND: LUCE PAQUET 10242, rue Waverly Montréal, QuEbec H3L 2W1 Third Party ORDER AND REASONS I.

Overview [ 1 ] The creditor, Her Majesty the Queen in Right of Canada [Her Majesty], represented by the Minister of National Revenue [Minister], submits that the judgment debtor, Christian Boily [Mr. Boily], sold an immovable located at 10240 and 10242 Waverly Street in Montreal [Immovable] with the intention of defrauding the Minister. The Minister alleges that Mr. Boily sold the Immovable to the garnishee, 9381-2592 Québec Inc. [2592 Québec Inc.], for the benefit of the third party, Luce Paquet [Ms. Paquet], to avoid repaying his tax debt to Her Majesty. This tax debt totals an amount owing of $99,367.35.

The Minister maintains that the notarial sales contract between Mr. Boily and 2592 Québec Inc. may not be set up against him, by virtue of the principles of Paulian action provided for in articles 1631 and 1633 of the Civil Code of Quebec , CQLR c CCQ-1991 [ CCQ ]. [ 2 ] On August 19, 2019, the Court issued an interim charging order against the Immovable [Order], in response to the ex parte motion filed by the Minister under sections 358 et seq. and 458 et seq. of the Federal Courts Rules , SOR/98-106 [ Rules ].

The Court then declared itself to be satisfied, prima facie and subject to evidence to the contrary, that Mr. Boily has an interest in the Immovable and that an interim charging order should be made. The Order also provides that unless sufficient reasons to justify a decision to the contrary are

presented at a hearing during which the Court will examine in detail the Minister’s allegations, the Immovable will be permanently encumbered with a charge for the payment of the monies owed by Mr. Boily and the related costs. [ 3 ] Pursuant to a motion presented in response to the Minister’s ex parte motion, Mr. Boily, 2592 Québec Inc. and Ms. Paquet are now asking the Court to set aside the Order, to declare the sale of the Immovable valid and enforceable against Her Majesty, to declare valid and enforceable against Her Majesty the assignment to Ms. Paquet of the rights, titles and interests of Mr.

Boily in her share of the balance of the sale price of the Immovable, and to write off the interim charge registered on the Immovable by Her Majesty. Mr. Boily makes three main claims in support of his objection: (1) the sale of the Immovable is valid since it was not concluded fraudulently; (2) the transfer of the balance of the sale price of the Immovable to Ms. Paquet is not a gratuitous act or a donation, but constitutes a reimbursement of the debt that Services d’entretien Boily Ltd. [Boily Ltd.] owed to Ms. Paquet; and

(3) Mr. Boily was solvent at the time of the sale and the sale did not have the effect of making him insolvent. [ 4 ] The Court must therefore determine, following the Order to guarantee payment of the monies owed to Her Majesty by Mr. Boily, whether the interim charge imposed and registered must permanently encumber the Immovable, and whether the sale of the Immovable to 2592 Québec Inc. and the assignment of Boily’s rights to Ms. Paquet is invalid and unenforceable against Her Majesty. [ 5 ] For the reasons that follow, Mr. Boily’s motion will be dismissed. After considering the evidence presented by Mr.

Boily and the Minister’s motion record, and considering the written and oral submissions of the parties, I am not persuaded that Mr. Boily has presented sufficient reasons to set aside the Order. Rather, it is necessary to declare the sale of the Immovable and the assignment to Ms. Paquet unenforceable against Her Majesty and to permanently encumber the Immovable with a charge for the payment of Mr. Boily’s tax debt and the costs relating to this motion. II. Factual Background [ 6 ] Mr.

Boily is an accountant, president of Boily Ltd., as well as president and sole shareholder of 9024-8188 Québec Inc. [8188 Québec Inc.]. Boily Ltd.’s shares are held by 8188 Québec Inc. Mr. Boily declares that he was the de facto spouse of Ms. Paquet from 1992 until their separation in May 2018. [ 7 ] Boily Ltd. was subject to a tax audit by the Minister, which revealed that between January 18, 2010, and December 15, 2015, Boily Ltd. Had allegedly cashed, without declaring them as income, at least 346 cheques totaling $485,077. The audit also revealed an appropriation by Mr.

Boily of Boily Ltd.’s funds, the latter having personally cashed those cheques. [ 8 ] Notices of reassessment [Notices] were therefore established by the Minister against Mr. Boily for the years 2010 to 2015.

These notices are as follows: Year Date of the reassessment procedure Assessment amount Disputed or not 2010 March 2, 2017 $21,742.92 Disputed 2011 March 2, 2017 $38,804.62 Disputed 2012 March 2, 2017 $51,867.38 Disputed 2013 March 16, 2017 $58,420.20 Disputed 2014 July 17, 2017 $17,269.83 Not Disputed 2015 July 17, 2017 $76,625.44 Not Disputed [ 9 ] Since the notices for the years 2010 to 2013 are disputed by Mr. Boily before the Tax Court of Canada, the Minister could not take recovery action against them. The Minister therefore initiated recovery procedures for Mr.

Boily’s tax debt covering the years 2014 to 2016. Mr. Boily’s tax debt, which was the subject of the Minister’s appeal in this case is $99,367.35, and comes from the two Notices for the years 2014 and 2015 and from a first notice of assessment for the year 2016. This amount bears interest compounded daily at the rate specified in the Income Tax Act, RSC 1985, c 1 (5th Supp .) [ ITA ]. [ 10 ] On April 9, 2019, a certificate bearing the number ITA-4714-19 and having, under the terms of

section 223 of the ITA , the same effect as a judgment from the Court, was issued attesting to the debt of Mr. Boily to Her Majesty. This certificate established that an amount of $94,715.47 had not been paid by Mr. Boily on that date. Following various garnishment attempts made by the Minister, less than $2,000 was able to be seized from Mr. Boily’s financial institutions on April 29, 2019. [ 11 ] The facts relating to the Immovable at the heart of this case can be summarized as follows. They are mainly found in Brigitte Raynault’s affidavit, the Minister’s collection officer and person responsible for Mr.

Boily’s file, filed by the Minister in support of the ex parte motion. In 2001, Mr. Boily and Ms. Paquet jointly acquired the Immovable, and they held it in co-ownership until its sale in August 2018. On August 1, 2018, Mr. Boily and Ms. Paquet sold the immovable to 2592 Québec Inc., a company created just a month earlier in July 2018 and which is administered and owned solely by Ms. Paquet. [ 12 ] The Immovable was sold to 2592 Québec Inc. for $729,000. At the time of the sale, the Immovable was encumbered with two mortgages, namely, (1) a conventional mortgage which had been jointly signed by Mr. Boily and Ms.

Paquet in favour of the National Bank of Canada [NBC] in January 2014, and whose balance was $368,699.58; and (2) a legal hypothec published by the Ministère du Revenu du Québec [MRQ] on behalf of Mr. Boily, for the amount of $45,389.49. The MRQ hypothec was published on June 7, 2018, less than a month before the creation of 2592 Québec Inc. and two months before the sale of the Immovable.

During the sale of the Immovable, 2592 Québec Inc. also contracted a new real estate mortgage of $425,000 with TD Bank. [ 13 ] According to the statement of disbursements provided by 2592 Québec Inc., the proceeds from the sale of the Immovable were distributed as follows: (1) $368,669.58 to the NBC for the balance of its conventional mortgage; (2) $45,489.94 to the MRQ representing all of the legal hypothec; (3) $725 for notary fees; and (4) $9,200.48 to Mr. Boily and Ms. Paquet. The deed of sale provided that the

balance of the sale price of $305,015 was payable only to Ms. Paquet on or before August 1, 2028, Mr. Boily having ceded all rights, titles and interests in the balance of the sale price. [ 14 ] The Minister alleges that Mr. Boily therefore made, at the time of the sale of the Immovable, a donation of $152,075 to Ms. Paquet, representing half of the balance of sale, when he was in debt to Her Majesty and that he then became insolvent (or would have become insolvent by the effect of the sale). [ 15 ] The Minister’s research indicated that Mr. Boily has little or no assets. More specifically, Mr.

Boily had liquidated almost all of his RRSPs when he was in debt to Her Majesty, withdrawing $111,292 from the National Bank Trust in 2015, $47,540 in 2016, and finally $18,227 in 2017. In terms of Mr. Boily and Boily Ltd.’s tax returns, Mr. Boily only reported a net rental income of $5,242 and a capital gain of $26,230 for the year 2018. As for Boily Ltd., it has not declared any income since July 31, 2015, and also has a tax debt of $319,193.63 owed to Her Majesty. The Minister considers that the possibility of collecting this debt is almost nonexistent.

As for Boily Ltd.’s property, the Register of Personal and Movable Real Rights indicates that Boily Ltd. was the owner or lessor of several vehicles that were sold or transferred during the year 2018 to 9373-7179 Québec Inc. [7179 Québec Inc.], a company created in February 2018, which is also administered and owned solely by Ms. Paquet. [ 16 ] Furthermore, the evidence also indicates that the Minister encountered several difficulties locating Mr. Boily and that he was unable to question him about his property. Despite numerous attempts to serve by a bailiff at three different addresses associated with Mr.

Boily, it was not possible to serve Mr. Boily with the proceedings filed in this case. Neither the manager for the apartment that Mr. Boily rents on Lajeunesse Street nor Ms. Paquet were able to indicate his whereabouts. On the other hand, a neighbour of Mr. Boily at 10240 rue Waverly indicated to Ms. Raynault, on June 11, 2019, that Mr. Boily still seemed to live at this address. She also mentioned that she sees his truck in the parking lot every night, and that she saw him at the residence about two weeks earlier. [ 17 ] On December 3, 2019, Mr.

Boily assigned his property under the terms of the Bankruptcy and Insolvency Act , RSC 1985, c B-3 [ BIA ], and a notice of stay of proceedings was sent to the Court by Mr. Boily’s trustee in bankruptcy on December 23, 2019. Pursuant to an order issued by the Court on January 13, 2020, to adjourn the hearing of this motion until February 26, 2020, the Court indicated that it was of the opinion that Her Majesty is a secured creditor and that under paragraph 69.3(2) of the BIA , the notice of stay of proceedings relating to Mr.

Boily does not apply to the Order and to Her Majesty’s recourse in this case, because such a stay cannot prejudice secured creditors. The Court reiterated this finding at the hearing on February 26, 2020, when it dismissed a motion filed at the hearing by Mr. Boily to obtain a stay of proceedings. III. Analysis [ 18 ] Mr. Boily, 2592 Québec Inc. and Ms. Paquet submit that the sale of the Immovable is valid and was not initiated with fraudulent intent, because the payment of the balance of the sale price to Ms. Paquet was made as a reimbursement and did not constitute a donation, and Mr.

Boily was solvent at the time of the sale of the Immovable and was not rendered insolvent following this sale. [ 19 ] According to Mr. Boily, the proceeds from the sale of the Immovable were used to settle his exclusive debts in the order of $414,059.52 (or the amounts of $368,669.58 owed to the NBC on his conventional mortgage and $45,389.94 owed to the MRQ for his legal hypothec). According to Mr. Boily, the sale of the Immovable had the dual objective of discharging his own debts and reimbursing Ms.

Paquet for financing the operations of Boily Ltd., which she allegedly carried out with her personal accounts over the years. Mr. Boily maintains that in January 2014, he allegedly obtained, jointly with Ms. Paquet, a line of credit with the NBC (before being granted the conventional mortgage for the benefit of the NBC), but that this line of credit had allegedly been used mainly for the purposes of Boily Ltd.. The joint real estate mortgage on the Immovable, granted by the NBC on January 31, 2014, aimed to guarantee this line of credit. Thus, according to Mr.

Boily, although the line of credit and the conventional mortgage were both worded in the joint names of Ms. Paquet and himself, he was entirely responsible for the monies owed to the NBC. Mr. Boily also claims that, since the proceeds of the sale were used exclusively for his own ends and those of his company Boily Ltd., it was allegedly agreed between the parties that the balance of the sale price of the Immovable would be paid to Ms. Paquet as partial reimbursement for her share of co-ownership in the Immovable. [ 20 ] I am not satisfied by Mr. Boily’s submissions and by the evidence presented by Mr.

Boily, 2592 Québec Inc., and Ms. Paquet to have the Order set aside. On the contrary, for the reasons that follow, I conclude instead that, on a balance of probabilities, the evidence before me establishes that the sale of the Immovable to 2592 Québec Inc. and the assignment to Ms. Paquet of Mr. Boily’s interests in the Immovable are invalid and unenforceable against Her Majesty, and that the interim charge imposed and registered following the Order to guarantee payment of the monies owed to Her Majesty by Mr. Boily must permanently encumber the Immovable. [ 21 ] The notarial sales contract between Mr.

Boily, for his half of the Immovable’s co-ownership, and 2592 Québec Inc., may be declared unenforceable against Her Majesty, under the principles of the action for unenforceability provided for in articles 1631 et seq. of the CCQ, if the following three elements are satisfied: (1) all the criteria of the action for enforceability are met; (2) the act concluded is partly a gratuitous contract as defined by

article 1381 of the CCQ, such that the irrefutable presumption of the fraudulent intention provided for in

article 1633 of the CCQ is triggered; and (3) the act made Mr. Boily insolvent. In my opinion, the evidence before me establishes, on a balance of probabilities, that these conditions are all met. [ 22 ] The relevant provisions of the CCQ are as follows:

1015. The shares of co-owners arepresumed equal. Each co-owner has the rights andobligations of an exclusive owneras regards his share. Thus, eachmay alienate or hypothecate hisshare and his creditors may seizeit. ... 1381. A contract is onerous wheneach party obtains an advantage inreturn for his obligation. When one party obligates himselfto the other for the benefit of thelatter without obtaining anyadvantage in return, the contract isgratuitous. ... "Paulian action " "1631. ""A creditor who suffersinjury through a juridical act madeby his debtor in fraud of his rights,in particular

an act by which thedebtor renders or seeks to renderhimself insolvent, or by which,being insolvent, he grantspreference to another creditor,may obtain a declaration that theact may not be set up against him." "... " "1633. ""A gratuitous contract ora payment made in performance ofsuch a contract is deemed to bemade with fraudulent intent, evenif the other contracting party orthe creditor was unaware of thefacts, where the debtor is orbecomes insolvent at the time thecontract is formed or the paymentis made. " 1015. Les parts des indivisairessont présumées égales.

Chacun des indivisaires a,relativement à sa part, les droits etles obligations d’un propriétaireexclusif. Il peut ainsi l’aliéner oul’hypothéquer, et ses créancierspeuvent la saisir. ... 1381. Le contrat à

titre onéreux estcelui par lequel chaque partieretire un avantage en échange deson obligation. Le contrat à

titre gratuit est celuipar lequel l’une des partiess’oblige envers l’autre pour lebénéfice de celle-ci, sans retirerd’avantage en retour. ... De l’action en inopposabilité 1631. Le créancier, s’il en subit unpréjudice, peut faire déclarerinopposable à son égard l’actejuridique que fait son débiteur enfraude de ses droits, notammentl’acte par lequel il se rend oucherche à se rendre insolvable ouaccorde, alors qu’il est insolvable,une préférence à un autrecréancier. ... 1633. Un contrat à

titre gratuit ouun paiement fait en exécution d’untel contrat est réputé fait avecl’intention de frauder, même si lecocontractant ou le créancierignorait ces faits, dès lors que ledébiteur est insolvable ou ledevient au moment où le contratest conclu ou le paiement effectué. [23] Under the terms of these articles, a certain number of criteria must be satisfied before a declaration of unenforceability of the sale ofthe Immovable can be pronounced by the Court: (1) the sale must be a juridical act; (2) the contested sale must cause prejudice to HerMajesty; (3) the sale must have been done in fraud of Her Majesty’s rights, which includes the act by which Mr.

Boily becomesinsolvent; (4) the claim must be certain, liquid and exigible at the time the Paulian action is instituted (or the objection is instituted byHer Majesty in a judicial proceeding), and must precede the sale; and (5) the declaration of inoperability must be sought within one yearfrom the day on which Her Majesty learned of the injury (Déziel (Re), 2006 FC 1481 at paras 47, 52, 75; Vaillancourt v Vaillancourt,2007 FC 1294 [Vaillancourt] at para 7; Realstar Hotel Services Corp c 3099-1103 Québec Inc., 2005 QCCA 555 at paras 20 et seq.;Duchesne c Demers, [2004] RJQ 2909, (QCCA) at para 33). [24] The evidence shows that all of these criteria are met here.

It is not disputed that the sale of the Immovable is a juridical act, that HerMajesty’s tax claim against Mr. Boily was certain, liquid and exigible at the time the objection was instituted by Her Majesty as part ofthe these judicial proceedings that this claim preceded the sale of the Immovable, and that the declaration of inoperability was soughtwithin one year from the day on which Her Majesty learned of the injury. It remains to be determined whether the sale of the Immovablewas concluded in fraud of Her Majesty’s rights, whether it causes her prejudice and whether the sale made Mr. Boily insolvent. [25]

Article 1633 of the CCQ creates an irrefutable presumption of fraud of the rights of a creditor when his debtor concludes agratuitous contract, where the debtor is or becomes insolvent at the time the contract is signed or the payment is made.

Article 1381 ofthe CCQ stipulates for its part that a contract is gratuitous when one party obligates himself to the other for the benefit of the latterwithout obtaining any advantage in return, Finally,

article 1015 of the CCQ provides that the notarial deed which designates the partiesas co-owners and which does not mention the respective shares of each party creates a presumption of equality of shares.

[26] Mr. Boily and Ms. Paquet were both co-owners of the Immovable, and they were also both debtors under the conventional mortgagegranted by the NBC. According to the evidence on the record, from the sale price of $729,000, the common expenses of Mr. Boily andMs. Paquet amounted to $725 for the notarial services and to $368,699.58 for the balance of the mortgage due to the NBC. Assumingthat the seller’s net profit of $9,200 was shared between the two, a balance of $175,187.71 (or $350,375.42 divided by 2) was due toeach of Mr. Boily and Ms. Paquet. However, Mr.

Boily only received a discharge from the MRQ for $45,389.94. I agree with theMinister that, in the circumstances, this imbalance between the monies owed and received leads to the conclusion that Mr. Boily’sintentions were fraudulent, that is, Mr. Boily intended to benefit Ms. Paquet and her company 2592 Québec Inc., without justconsideration. [27] In support of their motion to set aside the Order and the interim charge on the Immovable, Mr. Boily, 2592 Québec Inc. and Ms.Paquet produced affidavits by Mr. Boily and Ms. Paquet, both dated on September 16, 2019.

According to the assertions contained inthose affidavits and the written claims resumed at the hearing by their lawyer, Mr. Boily submitted that the Order was without basis infact and in law and that the sale of the Immovable was fully enforceable against Her Majesty because the sale of the Immovable wasonerous and that he did not become insolvent at the time of the sale. [28] Mr. Boily claims that the line of credit obtained jointly with Ms. Paquet was used exclusively by him and for the purposes of BoilyLtd. I am not satisfied.

Following my review of the evidence on record, I conclude that the evidence presented by Mr. Boily and Ms.Paquet on the use of the joint line of credit is not credible and is clearly contradictory, and that it does not allow one to conclude that theconventional mortgage granted by the NBC constituted, as Mr. Boily claims, an exclusive debt of the latter. Whereas Mr. Boily stated inhis affidavit that the line of credit was used [translation] "“exclusively”" for the purposes of Boily Ltd. and that [translation] "“at no timewas the line of credit used for the personal purposes of [Ms.

Paquet] or for the couple’s daily expenses”", Ms. Paquet’s version is quitedifferent. Rather, Ms. Paquet stated that the line of credit was used [translation] "“mainly”" for the purposes of Boily Ltd., and that it[translation] "“was rarely used for my own benefit or the couple’s daily expenses”". I also observe that, according to the documents insupport of Mr. Boily’s affidavit, a significant part of the transfers from the mortgage line of credit to Mr. Boily ($144,000) were madefor his personal expenses.

However, there is nothing to determine, on a balance of probabilities, that these amounts were allegedly usedexclusively for Mr. Boily and not for the couple’s expenses. [29] Mr. Boily also stated that he allegedly transferred amounts from his personal account to the account of Boily Ltd., and that the latterallegedly used those amounts in the course of its activities. However, although according to Mr.

Boily, the line of credit was used inexcess of $367,000 at the end of July 2014, and that at least $227,500 constituted advances made to Boily Ltd. from January to May2014, no trace of these payments or monies owed to a shareholder appears in the financial statements of Boily Ltd.. Similarly, theevidence from Ms. Raynault’s affidavit in response indicates that no amount of this nature appears on the balance sheet of 8188 Québecfor the year ending July 31, 2014, nor is it found in the company’s debts. In other words, the amounts that Mr.

Boily claims were paidfor the purposes of Boily Ltd. from the line of credit do not appear anywhere in that business’s books. [30] In addition, Mr. Boily claims that Ms. Paquet transferred personal funds to the Boily Ltd. accounts. He therefore submits that, sincethe proceeds of the sale were allegedly used exclusively for the benefit of Mr. Boily, it was agreed between the parties that the balanceof the sale price of the Immovable would be paid to Ms. Paquet [translation] "“as reimbursement”", and therefore in return for hercontribution to the Boily Ltd. business. Ms.

Paquet’s affidavit echoes these comments by laconically indicating that the balance of thesale price of the Immovable was allegedly [translation] "“paid to her as a reimbursement”" and that she had consented that they represent[translation] "“receipt for monies owed”". But nowhere in her affidavit does Ms. Paquet indicate the nature of this reimbursement or theamounts that were allegedly owed to her by Boily Ltd. Nor did Ms. Paquet’s affidavit mention, in any way, that she allegedly fundedBoily Ltd.’s operations from her personal accounts over the years, and she does not provide any details in this regard.

There are only thegeneral assertions contained in the written submissions from counsel for Mr. Boily to the effect that Ms. Paquet allegedly transferredsignificant amounts from her accounts and personal lines of credit to the accounts of Boily Ltd. in order to assist this company infinancing its daily business activities. But there is no clear, convincing and cogent evidence on the record in this regard from Ms. Paquet,which would show the funding of Boily Ltd. by Ms. Paquet, and which would be sufficient to satisfy the balance of probabilities test.

Inother words, the relevant evidence does not allow me to determine that, in all likelihood, the fact alleged by Mr. Boily took place (FH vMcDougall, 2008 SCC 53 at paras 45-46). [31] According to Mr. Boily and Ms. Paquet, the sale of the Immovable was an onerous contract, and the irrefutable presumption ofarticle 1633 of the CCQ would not be applicable in this case.

In support of their argument, they submit that the Québec Court of Appealhas recognized that there was no intention of defrauding in the context of a married couple who transferred assets between them so as notto put at risk the future of their company as well as the financial future of the family (Kiliaris c Agence du Revenu du Québec, 2015QCCA 416). Moreover, they argue that they were not related persons at the date of the sale of the immovable as they allegedly broke uparound May 1, 2018. Therefore, Ms. Paquet’s knowledge of Mr. Boily’s insolvency should not apply.

For the reasons set out above, I donot agree with these submissions, since there is simply no proof that amounts were transferred from Mr. Boily to the company Boily Ltd.I consider instead that the sale of the Immovable can be described as a gratuitous contract because Mr. Boily found himself receiving aconsideration far below the value of his assets (Hotte c Lajeunesse, 2013 QCCS 6944 [Hotte] at paras 80-81). [32] According to the preponderance of evidence, the assignment to Ms. Paquet of Mr.

Boily’s rights, titles and interests in the balance ofthe sale price and the deferral of payment has all the attributes of

an act by gratuitous title, deemed to be done with the intention todefraud. The deed of sale provides that Mr. Boily assigns all his rights, titles and interests in the $305,015 balance of the sale price to Ms.Paquet, and that the final payment is payable only on August 1, 2028, with the possibility of prepayment. All of the evidence before meconvinces me that with respect to Mr. Boily, the sale of the Immovable is a gratuitous contract. [33] In terms of solvency, Mr. Boily submits that he was not insolvent at the time the sale of the Immovable was concluded or when thepayment was made.

He argues that at the time of the sale and after, he was still able to discharge his debts and obligations as theybecame due (National Bank of Canada v. B.(C.), [2000] RJQ 658, (QCCA)). [34] Again, however, neither Mr. Boily nor Ms. Paquet provided any evidence whatsoever on Mr. Boily’s creditworthiness. On thispoint, Mr. Boily’s affidavit comes down to a few words that are not corroborated by any supporting material: Mr. Boily is content tostate that at the time of the sale, he was [translation] "“solvent”". No further details are provided. I point out that at no time did Mr. Boily

state that he was able to discharge his debts and obligations as they became due, and even more, that he could in particular, pay monthly rent, Hydro-Québec bills or monthly credit card bills. Only written submissions from his lawyer do so. Ms. Paquet’s affidavit is equally silent on the creditworthiness of Mr. Boily. Ms. Paquet is content to reiterate that to the best of her knowledge, Mr. Boily [ translation ] " “was creditworthy” " , without any other details. [ 35 ] Faced with this total absence of clear, convincing and cogent evidence of solvency on the part of Mr.

Boily, I note that the two affidavits signed by Ms. Raynault contain multiple details on Mr. Boily’s lack of assets, on his debts to other creditors, on the multiple transactions that Mr. Boily made to liquidate his RRSPs, to offload his assets and to transfer the assets of his companies to a company owned by Ms. Paquet, on the gift of his co-ownership in the Immovable (worth $152,075) to Ms. Paquet, and on the fruitless steps taken by the Minister to try to trace Mr. Boily’s personal assets. I accept the facts contained in Ms. Raynault’s affidavit, which are not seriously disputed by Mr. Boily. In

summary, I am satisfied that all of the evidence on the record shows that Mr. Boily has divested himself of his assets so that his liabilities exceed them. In addition, the facts show that the Immovable was the only property against which Her Majesty could have enforced her tax claim against Mr. Boily. [ 36 ] In this context, I have no hesitation in concluding that, on the preponderance of the evidence before me, Mr. Boily was insolvent at the time of the sale of the Property, or that at the very least, the sale of the Immovable and the assignment of all of his interests in the Immovable to Ms.

Paquet made him insolvent. Also, the sale of the Immovable and the assignment to Ms. Paquet of Mr. Boily’s rights, titles and interests in the Immovable’s balance of the sale price caused prejudice to Her Majesty by depriving her of Mr. Boily’s equity in the only property against which Her Majesty could have enforced her claim against Mr. Boily. [ 37 ] Furthermore, I share the Minister’s opinion that, in the circumstances of this case, Ms. Paquet could not have been ignorant of Mr.

Boily’s insolvency, because the courts have recognized that there is a presumption of knowledge of the insolvency of the debtor by the creditor in the case of related persons ( Hotte at para 87 ). I add that, despite Mr. Boily’s claims that he and Ms. Paquet allegedly live separately and that he has allegedly been living at an address on Lajeunesse Street in Montreal since May 2018, the evidence contained in Ms. Raynault’s affidavits indicates that, on a balance of probabilities, Mr. Boily does not live on rue Lajeunesse but allegedly still lives in the Immovable.

Finally, I note that, in the months preceding the sale of the Immovable, Ms. Paquet suddenly found herself in charge of the management and operation of several of Mr. Boily’s businesses via 7179 Québec Inc. and 2592 Québec Inc. [ 38 ] For all of these reasons, I share the Minister’s opinion to the effect that the sale of the Immovable and the assignment of Mr. Boily’s interests to Ms. Paquet was concluded in fraud of Her Majesty’s rights, which caused her prejudice, and that it made Mr. Boily insolvent. IV. Conclusion [ 39 ] For the foregoing reasons, the motion of Mr. Boily, 2592 Québec Inc. and Ms.

Paquet is dismissed, the sale of the Immovable to 2592 Québec Inc. and the assignment of Mr. Boily’s interests to Ms. Paquet are declared unenforceable against Her Majesty, and the Immovable is permanently encumbered with a charge for the payment of Mr. Boily’s tax debt and the costs relating to this motion. The Court recognized in Vaillancourt that an interim charging order could be made in respect of an immovable registered in the name of a third party, as is the case here. [ 40 ] Her Majesty is entitled to her costs against Mr. Boily, 2592 Québec Inc. and Ms. Paquet.

JUDGMENT in ITA-4714-19 THE COURT DECLARES AND ORDERS that: 1 . The motion of the judgment debtor, the garnishee and the third party to set aside the interim charging order dated August 19, 2019, is dismissed, with costs. 2 . The sale and assignment of the real property described in Appendix A, which occurred on August 1, 2018, by deed of sale between the judgment debtor, the garnishee and the third party, as well as the assignment to the third party of the rights, titles and interests of the judgment debtor in his share of the balance of the sale price of the immovable, is unenforceable against the creditor. 3 .

The immovable at issue described in Appendix A be permanently encumbered with a charge for the payment to the creditor of the judgment debtor’s unpaid amount of the claim at issue and the costs associated with both the motion that led to issuing the orders of August 19, 2019, and this motion, which is dismissed with costs. “ Denis Gascon ” Judge Certified true translation On this 5th day of May 2020 Sebastian Desbarats, Translator APPENDIX A

[translation] DESCRIPTION A SITE facing onto Waverly Street, in the City of Montréal (borough of Ahuntsic—Cartierville), known and designated as lot number ONE MILLION FOUR HUNDRED EIGHTY-SIX THOUSAND TWO HUNDRED TWENTY-ONE (1,486,221) of the CADASTRE OF QUEBEC, in the registration division of Montréal. WITH all the buildings erected thereon, and in particular the building bearing civic numbers 10240 and 10242, Waverly Street, City of Montréal (borough of Ahuntsic—Cartierville), province of Quebec, H3L 2W1, whose northwest wall is adjoining, together with all appurtenances and dependencies.

SUBJECT to a servitude in favour of the City of Montréal established in accordance with deed number 4 461 026, published in Montréal. FEDERAL COURT SOLICITORS OF RECORD DOCKET: ITA-4714-19 STYLE OF CAUSE: IN THE MATTER OF THE INCOME TAX ACT , BETWEEN HER MAJESTY IN RIGHT OF THE QUEEN AND CHRISTIAN BOILY AND 9381-2592 Québec Inc. AND LUCE PAQUET PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: FEBRUARY 26, 2020 REASONS FOR JUDGMENT AND JUDGMENT: GASCON J.

DATED: APRIL 7, 2020 APPEARANCES : Stéphanie Lauriault FOR THE CREDITOR Piero Iannuzzi For the JUDGMENT DEBTOR, GARNISHEE AND THIRD PARTY SOLICITORS OF RECORD : Attorney General of Canada Montréal, Quebec FOR THE CREDITOR Mitchell Gattuso S.e.n.c. Montréal, Quebec For the JUDGMENT DEBTOR, GARNISHEE AND THIRD PARTY