Legal Blog

Undervalue Transfer – Trust

E. Sands & Associates v. Gidda 2025 Ont SCJ

Trustee in bankruptcy moved to set aside, under s. 96(1)(b) of the Bankruptcy and Insolvency Act (BIA), a previous house transfer from the bankrupt to a non-arms length transferee. The transfer was under value. The transferee argued that the bankrupt had been a trustee under an express trust in favour of the transferee and was merely transferring the legal interest back to the transferee. The alleged express trust was not in writing and was therefore invalid pursuant to s. 9 of the Statute of Frauds. The transferee wanted the trustee to reimburse it for paying mortgage and other expenses to maintain the property while she lived there; however, the judge noted that these expenses did not increase the capital value of the property and that, therefore, the bankrupt was never enriched and the transferee never suffered a detriment because of those payments.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.