Legal Blog

Depends X 3

The saga of Re Edwards continues (see newsletters of April & August 2011). The credit union that had scooped a bankrupt’s RSP mere days before the bankruptcy, appealed an order of a judge of the Superior Court of Justice, who had overturned an order of the Registrar in Bankruptcy. The Registrar had held that the Ontario Limitations Act applied and that the attack on the credit union’s actions came after the limitation period had expired. The judge decided that the Bankruptcy and Insolvency Act, which sets out time limits for improper preferences, sets out the only limitation periods to which the trustee was subject and took the place of provincial limitation periods.

 The Ontario Court of Appeal agreed with the Registrar and re-instated his order. It held that the time limits in the BIA did not conflict with the limitation periods in the Ontario Limitation Act; rather, they just added to the provincial legislation.

 Accordingly, the trustee was out of time, the credit union was allowed to keep its ill-gotten gains, and the trustee was out the legal fees it paid its own lawyer, costs of the credit union of $8,000 for the appeal and whatever it was ordered to pay on the previous two court appearances. It does not seem fair.