Legal Blog

More Bulk

In our last newsletter, we promised to inform you of the latest case under the Bulk Sales Act (“BSA”): National Trust Co. v. H & R Block Inc., a 2001 unreported decision of the Ontario Court of Appeal.

Block purchased the assets of Tax Time for $800,000 without a BSA affidavit but ensured that Tax Time paid the sale proceeds to its secured creditors. National Trust subsequently won a judgment against Tax Time for $205,000 plus interest and costs; National Trust had commenced its action before the Block purchase.

The majority held that Block was liable for $205,000 plus interest because of its failure to comply with the BSA. It held that the fact that the secured creditors had priority did not matter. National Trust could have tried to block the sale or to increase the purchase price and lost its opportunity because of Block’s breach of the Act. The costs of National Trust’s action against Tax Time were not included in the damages because they were not a debt at the time of the purchase.

The reasons referred a few times to the fact that a BSA action is made on behalf of all creditors. However, there was no mention in the reasons about payment of the award to a trustee. National Trust got it all.