Mar 18, 2014

Summary of Goertz (Trustee of) v. Goertz

Goertz (Trustee of) v. Goertz, 1994 CanLII 4872 (SK QB)
The Trustee sought a declaration that a transfer by the Bankrupt to his wife of his interest in certain lands was a settlement prohibited by s.91 of the Bankruptcy Act, contravened The Fraudulent Preferences Act, and contravened The Statute of Elizabeth. For related proceedings, see [1993] 3 WWR 404, 109 SaskR 153 (C.A.).ISSUES: 1)Did the transfer constitute a settlement under s.91? 2)Did the transfer offend The Fraudulent Preferences Act? 3)Did the transfer offend The Statute of Elizabeth? 4)Is any part of the transferred land exempt?HELD: Declaration granted. 1)Where the donor intends the property, whether conveyed as a gift or otherwise, to be kept for the benefit of the donor or donee, either in its original form or in a form that can be traced, the disposition constitutes a settlement that is void as against the trustee in bankruptcy, if the donor at the time of the impeached transaction is unable to pay all of his debts without the aid of the property transferred. The transaction in this case was found to fit within this test with the result that it was void as against the Trustee. 2)The Trustee was also entitled to the relief sought under s.3 of the F.P.A. The Trustee had established as of the date and time Mr. Goertz executed and delivered the Impeached Transfers to Mrs. Goertz that: (1) Mr. Goertz was in insolvent circumstances; or (2) that he was unable to pay his debts in full; or (3) that he knew he was on the eve of insolvency; and (4) that he participated in the Impeached Transaction with the intent to defeat, hinder, delay or prejudice his creditors or any one or more of them. 3)The court was satisfied that the Claimed Lands were transferred to Mrs. Goertz with the intent of hindering, delaying, prejudicing or defrauding Mr. Goertz's creditors in contravention of the provisions of The Statute of Elizabeth. 4)The Bankrupt was entitled to claim an exemption for that part of the transferred lands constituting his homestead, notwithstanding that he had not made such a claim when making his assignment into bankruptcy and notwithstanding that he had voluntarily conveyed his interest in the homestead away prior to the bankruptcy. 5)The court found that the joint tenancy of the Bankrupt and his wife was severed and ordered sale of the transferred lands, with the exception of the homestead. The court also ordered costs to the Trustee as between solicitor and client.