May 12, 2017

Summary of Royal Bank of Canada v Racher

Royal Bank of Canada v Racher, 2017 ABQB 181 (CanLII)

Royal Bank of Canada (“RBC”), a creditor of James Racher (“Mr. Racher”), sought to set aside a conveyance of lands which was jointly owned by Mr. Racher and Audrey Racher (collectively the “Rachers”) to Mrs. Racher alone. It applied on the basis that the land was undervalued, and that the sale constituted a fraudulent conveyance prior to Mr. Racher’s bankruptcy.

Justice Eamon noted that most of the written evidence was conflicted, and it was not possible to “resolve a material credibility dispute” in Chambers, based only on inconsistent Affidavit evidence. Eamon J. noted that neither party applied to adduce oral evidence, or for pre-Trial disclosure, though the Court had the authority to consider such evidence pursuant to Rule 3.14(1).

RBC argued that the Court should apply Summary Judgment principles to interpreting the issues, even though it did not rely upon Rule 7.3 or request Summary Judgment in its Originating Application. If Summary Judgment principles were to apply, RBC submitted that the Court would be entitled to presume that the best evidence from each party was before the Court, and that self-serving evidence would not create a triable issue. Justice Eamon declined to apply Summary Judgment principles, and held that it could cause unfairness to the Rachers if Summary Judgment principles were applied when they were not originally requested by RBC. Eamon J. assessed whether there were “sufficient findings on the record to arrive at a fair and just disposition”, noting that contests of credibility could not be tried in Chambers, but that conflicts within the parties’ Affidavits which did not affect essential facts or constitute a difference in opinion only, could be heard in Chambers. Justice Eamon emphasized that, where “final relief” is sought, a self-serving Affidavit on its own may not be enough to create a triable issue.

Eamon J. reviewed the nature of the issues (whether a transfer was undervalued, whether a fraudulent conveyance occurred, and whether an exemption existed) in order to decide whether, pursuant to Rules 3.2(6), 3.12, and 7.1(1)(a), the issues could be assessed summarily in Chambers, or referred to a Trial of the issues.

In the result, Justice Eamon declared that the land transfer was at undervalue and was void as against the trustee in bankruptcy and RBC.