



COURT OF APPEAL FOR ONTARIO

CITATION: Holmes v. Stockton Estate, 2018 ONCA 273

DATE: 20180319

DOCKET: C63987

Simmons and Pepall JJ.A. and Fragomeni J. (
ad
    hoc
)

BETWEEN

Muriel Holmes

Plaintiff (Respondent)

and

The
    Estate of Robert White Stockton, Joanne Tait-Stockton

and John Robert Stockton

Defendants (Appellants)

Todd D. Storms, for the appellants

Allen Wilford, for the respondent

Heard and released orally: March 12, 2018

On appeal from the judgment of Justice B.A. Glass of the
    Superior Court of Justice, dated May 30, 2017.

REASONS FOR DECISION

[1]

The appellants appeal from a summary judgment granted by Glass J., dated
    May 30, 2017. In very brief and conclusory reasons, the motion judge granted
    far-reaching relief in favour of the respondent. We are of the view that the
    bulk of the relief ordered cannot stand. We reach this conclusion for the
    following reasons.

[2]

The amounts found owing to the respondent by the appellants, the Estate
    of Robert White Stockton and Joanne Tait-Stockton (Tait-Stockton), on account
    of a 1994 second mortgage and a 1997 judgment on the covenant in the 1994
    second mortgage are duplicated in the judgment. More importantly, the underlying
    1994 second mortgage was extinguished by power of sale proceedings, and the
    underlying debt on the 1994 second mortgage was extinguished by the
    bankruptcies of the deceased, Robert White Stockton (the deceased), and Tait-Stockton.

[3]

In the latter regard, we observe that neither the parties nor the court,
    in agreeing to, or making, the 1994 consent judgment in the matrimonial
    proceeding under which the 1994 second mortgage was mandated, had authority to
    alter the relative priorities under the
Bankruptcy and Insolvency Act
,
    R.S.C. 1985, c. B-3. Accordingly, we disagree with the motion judges
    conclusions that the 1994 second mortgage remained a secured debt in favour of
    the respondent and that the mortgage debt was not subsequently extinguished by
    the bankruptcies of both the deceased and Tait-Stockton.

[4]

Further, in relation to the finding of a fraudulent conveyance from the
    deceased to Tait-Stockton of the property subject to the 1994 second mortgage
    (the Property), the respondent continued to hold her second mortgage
    following the impugned transfer, Further, and in any event,  the Property was subsequently
    transferred under power of sale proceeding by the first mortgagee on December
    20, 1996  which was after the impugned conveyance to Tait-Stockton  with no
    payout to the respondent on the 1994 second mortgage or to Tait-Stockton. The
    respondent did not advance a claim of improvident sale or otherwise challenge
    the propriety of the first mortgagees conduct of the power of sale. The first
    mortgagee obtained appraisals, and there was no evidence that the first
    mortgagee lacked independence. In all the circumstances, we fail to see the
    basis for any finding that the impugned conveyance was made with an intention
    to defeat, hinder, delay, or defraud creditors.

[5]

In any event, we observe that the respondent knew of the conveyance of
    the deceaseds interest in the Property prior to the bankruptcies of both the
    deceased and Tait-Stockton. The respondent could and should have raised any
    challenge to the impugned conveyance in the bankruptcy proceedings so that any
    fruits of any improper transfer could have been available to be shared rateably
    with other unsecured creditors.

[6]

As for the respondents claim to the proceeds of sale of farm equipment
    sold by the deceased, the respondents claim is statute-barred.
[1]


[7]

Lastly, the respondents claim for child support of $22,500 plus
    interest, together with unpaid costs awards relating to child support totalling
    $1,750 plus interest, survived the deceaseds bankruptcy. The respondent shall
    have judgment for the principal amounts, as noted, plus interest at the
    prejudgment rate prevailing at June 4, 1999 in relation to the child support of
    $22,500; at July 8, 1993 in relation to the $1,000 costs award; and at September
    15, 1999 in relation to the $750 costs award.

[8]

The motion judges order is set aside. The above judgment is substituted
    together with orders dismissing the balance of the respondents action and
    setting aside the orders of Gunsolus J. renewing and authorizing the
    re-issuance of writs of seizure and sale (which related to amounts claimed to
    be owing on the 1994 second mortgage). There will be no order as to costs of
    the motions below or of this appeal.

Janet Simmons J.A.

S.E. Pepall J.A.

Fragomeni J. (
ad hoc
)





[1]
The only evidence of this claim that the respondent could identify in the appeal
    record was a financial statement in the 1990s matrimonial proceedings between
    the respondent and the deceased.


