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Legal Blog: Collections

Dec
19
2023

Limitation Refreshed

Anderson Sheet Metal Ltd. v. Comtract Compressors Inc. 2023 Ont SCJ

Under s. 13(1) of the Limitations Act, the start date of a limitations period can be “refreshed” by way of an acknowledgment of liability from the debtor. The acknowledgment may be made by way of email, but must be made before the original limitation period expires. In this case, the creditor sent a statement of account, referencing a number of invoices, and asked when more payments would be forthcoming; the debtor responded, “we have obviously been having some difficulties in paying off this account. I will see what I can send you in the next week or so.” That was enough for the judge to conclude that the limitation period re-started from the date of that response and that any invoices that had not expired at that date had a new two-year limitation period.

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Dec
01
2023

Overturned

Subject to a decision of the Supreme Court of Canada, a decision of the Ontario Court of Appeal is binding on that court and any lower court – until it is not. Before the Ontario Court of Appeal will overturn a prior decision of a three-person panel of that court, it will deal with the appeal by way of a five-person panel. This is what happened in Bank of Montreal v. Iskenderov 2023 ONCA 528.

A group of referees on a football field.

Fraudulent Conveyance

In this case, husband and wife were defendants in a fraudulent conveyance action and sought, by way of a summary judgment motion, to dismiss the action on grounds that the limitation period had passed. If the applicable limitation period were the 10-year limitation pursuant to the Real Property Limitations Act (RPLA), the defendants were out of luck; if it were the two-year limitation period pursuant to the Limitations Act, 2002 (New Act), the defendants had a chance.

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Nov
20
2023

Limitations and Assigned Action

AssessNet Inc.  v. Taylor Leibow Inc., bankruptcy trustee 2023 Ont CA

Creditor sued debtors’ former bankruptcy trustee. It first needed to obtain a s. 38 order and an order granting leave to do so under s. 215 of the BIA. The trustee claimed that the action was statute barred. Section 12 of the Limitations Act deals with an assigned action (including an action under s. 38 which was assigned from the current trustee in bankruptcy) has to be brought within 2 years from earlier of the dates that the predecessor and the claimant first knew or ought to have known of the matters in issue. In this case, the fact that the creditor’s representative was an inspector of the bankrupt estate was irrelevant because an inspector owes a duty to act in the best interests of the estate, not in its own best interests and suing the then trustee was not in the best interests of the estate. Further, the claimant was not able to sue the trustee until it obtained the s. 38 and s. 215 orders and the action was commenced within two years of obtaining them.

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Nov
20
2023

Unjust Enrichment

Sase Aggregate Ltd. v. Langdon 2023 Ont CA

Husband stole money from his employer. The employer sued wife claiming that the stolen money went into the renovations of wife’s house. The court found that the wife demonstrated that she used money from legitimate sources to fund the renovations and that there was therefore no unjust enrichment – other than about $177,000 for which wife could not account.  The court held that wife did not knowingly receive the fraudulent funds or knowingly assist husband in his fraudulent conduct. Although stolen money went into their joint account, it was immediately moved to third parties and wife knew nothing about the deposits or the transfers. For whatever reason, the employer was not able to trace where the funds ultimately went.

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Oct
11
2023

Real Property Limitations Act

Bank of Montreal v. Iskenderov et al 2023 Ont CA

A 5-judge panel of the court overruled Anisman v. Drabinsky 2021 Ont CA and decided that an action for a fraudulent conveyance is governed by the 2-year limitation period of the Limitations Act, 2002 rather than the 10-year limitation period of the RPLA. The court also noted that the relief available under the FCA was not the return of title to the name of the fraudulent transferor; rather, it was a declaration that the creditor could treat the transferred property as exigible for the debts that the transferor debtor owed to the creditor.

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Oct
01
2023

Resulting Trust

Posted in Collections

When a purchaser gratuitously places another person on title, the law presumes that this person, who has contributed nothing, holds the property in trust for the purchaser who paid everything. In the case of Costa v. Costa, a 2022 decision of the British Columbia Supreme Court, the judge dealt with types of contribution required to ground an ownership interest.

A person holding a model house in their hands.

On-Again Off-Again

Between 2008 to 2018, a woman and her common law spouse had a classic on-again off-again relationship. Over the years they would live together for some time and then split-up – with the spouse moving into his houseboat. The two would then reconcile and the cycle would continue. No doubt the fact that the two had a child perpetuated this cycle.

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Oct
01
2023

Bankruptcy Rescission

Posted in Collections

In Tran v. Royal Bank of Canada, a 2022 decision of the Ontario Superior Court of Justice, the Court refused to allow a bankrupt to make her bankruptcy vanish without a trace.

An eraser.

Save Me

The case involved a debtor who owed a bank over $480,000. After the debtor ignored the bank’s demands, the bank obtained judgment and successfully petitioned her into bankruptcy. As is often the case, the bankrupt’s parents came to the rescue. The debtor’s father paid the bank $400,000 (less than 83% of the judgment debt) and took an assignment of the bank’s judgment and claim in bankruptcy.

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Aug
09
2023

Discovery RPLA

Browne v. Meunier 2023 Ont CA

The court held that the common law discovery principle applied to a claim under the Real Property Limitations Act regardless that the specific discovery principles are not outlined in that Act – as is done in the Limitations Act, 2002. However, the court also held that the claimant’s predecessor in title ought reasonably to have discovered the problem and that discovery occurred when the predecessor ought to have known, not when the claimant knew or ought to have known. As a result, fraudulent conveyances, which are governed by the RRPLA, are subject to the discovery principle.

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Aug
04
2023

Writ Priority

Senthillmohan v. Senthillmohan 2023 Ont CA

Court directed the sale of the matrimonial home held in joint tenancy by wife and husband. Husband’s execution creditor filed a writ, husband and wife sold the home, and execution creditor agreed to temporarily lift the execution to facilitate the sale with the proceeds in trust. Wife moved to have her portion of the proceeds paid to her without payment of the execution creditor. The creditor took the position that its writ bound the interests of both husband and wife and had to be paid first in priority. The court held that it mattered not whether the wife’s interest was as a joint tenant or tenant in common, the execution binds only the execution debtor’s interest in jointly held property. Wife received her portion of the net sale proceeds without payment to the creditor.

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Aug
01
2023

Ancillary Claims

Posted in Collections

The limitations period for claims dealing with land is 10 years; the ordinary limitations period is only two years. Can an otherwise tenable trust claim in land be defeated by a two-year limitation period because, before the claimant commenced the action, the land was sold? This issue was decided in Studley v. Studley, a 2022 decision of the Ontario Court of Appeal.

A hopscotch court on the ground with numbers from one to ten.

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