





CITATION:
Edwards
          Estate v. Food Family Credit Union, 2011 ONCA 497





DATE:
          20110706



DOCKET: C53449



COURT OF APPEAL FOR ONTARIO



Moldaver, MacPherson and Epstein JJ.A.



BETWEEN



In the matter of
          the Bankruptcy of Rodney Patrice Edwards, of the City of Toronto in the
          Province of Ontario (Summary Administration)







and



Rusinek &
          Associates Inc. Trustee of the Estate of Rodney Patrice Edwards, Bankrupt



Applicant (Respondent)



and



Food Family Credit Union



Respondent (Appellant)



Robert G. Tanner, for the appellant



Frank Bennett, for the respondent, Rusinek & Associates
          Inc.



Sean Hanley, for the intervenor, Attorney General of Ontario



Heard
and released orally: July 4, 2011



On appeal from the judgment of Justice Frank N. Marrocco of
          the Superior Court of Justice, dated March 11, 2011, overturning the order of
          Registrar Scott W. Nettie dated October 15, 2010.



ENDORSEMENT



[1]

The appellant Food Family Credit Union (FFCU) appeals
    from the judgment of Marrocco J. of the Superior Court of Justice dated March
    11, 2011 in which he allowed an appeal from the order of Registrar Nettie dated
    October 15, 2010.

[2]

Registrar Nettie had dismissed the Trustees motion
    pursuant to s. 95 of the
Bankruptcy and
    Insolvency Act
, R.S.C. 1985, c. B-3 (
BIA
)
    seeking the return of certain payments from the bankrupt Rodney Edwards to FFCU
    on the basis that they were a fraudulent preference. Registrar Nettie held that
    the Trustees claim fell outside the two year limitation period prescribed in
    s. 4 of the
Limitations Act
,
2002
, S.O. 2002, c. 24 (
LA
). In reaching this conclusion, the
    Registrar determined that the provincial limitation period applied to the federal
BIA
.

[3]

Justice Marrocco disagreed and allowed the appeal. He
    concluded:

In my view, the absence of a specific limitation
    period for commencement of proceedings pursuant to s. 95 represents a
    determination by Parliament that a trustee, acting solely under that section,
    is temporarily restrained only by the section itself; namely, that arms-length
    transfers of property by the bankrupt within three months of the date of the
    initial bankruptcy event are void against the bankruptcy trustee.

The application of a provincial limitation period
    would, thus, trigger a conflict of laws and, in accordance with the doctrine of
    paramountcy, render the
Limitations Act
inoperative.

[4]

With respect, we do not agree with this conclusion. In
Gingras v. General Motors
, [1975] 1
    S.C.R. and
Employers Liability Assurance
    Corp. v. Ideal Petroleum
, [1978] 1 S.C.R. 230, the Supreme Court of Canada
    held that general limitation periods in provincial statutes apply to bankruptcy
    proceedings.

[5]

Nothing in the development of conflict/paramountcy
    doctrine since these decisions calls into question their continuing validity.
    In recent years, the Supreme Court of Canada has consistently emphasized that
    provincial laws should be rendered constitutionally inoperative in relation to
    federal subject matters in only limited circumstances, namely where (1) the
    provincial law is in an operational conflict with a federal law, such that
    there is an impossibility of dual compliance or (2) the operation of the
    provincial law would frustrate the purpose of the federal law: see
Canadian Western Bank v. Alberta
, [2007]
    2 S.C.R. 3 at paras. 74-75. The relationship between s. 4 of the
LA
and s. 95 of the
BIA
does not fall afoul of either of these categories.

[6]

Accordingly, Registrar Nettie was correct to conclude
    that there was no conflict between s. 4 of the
LA
and s. 95 of the
BIA
.
    He reasoned:

In s. 95
BIA
,
    there is no stated limitation period to commence the proceeding contemplated
    therein. Neither is there a general catch all section of the
BIA
which provides for a limitation if
    the
BIA
is otherwise silent. As there
    are provisions of the
BIA
which
    provide for limitation periods, one must assume that Parliament was alive to
    the issue of prescribing time periods within which certain proceedings under
    the
BIA
, such as appeals, must be
    launched, and did not simply omit a limitation period for s. 95
BIA
.

[7]

We agree with this analysis and conclusion.

[8]

In light of our view of the constitutional issue, it is
    necessary to consider the Trustees two additional arguments: (1) the Registrar
    erred by holding that the Trustee discovered the preference issue by May 15,
    2006 for the purposes of the two year limitation period, and (2) the Registrar
    erred by concluding that there was not an implied agreement between counsel
    tolling the operation of the limitation period.

[9]

These submissions challenge the findings of the
    Registrar that involve mixed fact and law. In our view, the Registrars factual
    findings are supported by the record and we see no error in his legal analysis.

[10]

The appeal is allowed, the order of Marrocco J. is set
    aside, and the order of Registrar Nettie is reinstated. The respondent is
    entitled to its costs of the appeal fixed at $8,000, inclusive of disbursements
    and HST payable forthwith by the Trustee personally in its corporate capacity.
    Registrar Netties costs order is reinstated. We would not interfere with
    Justice Marroccos costs order.

[11]

The intervenor Attorney General of Ontario does not
    seek costs and therefore should neither pay nor receive costs.

Moldaver J.A.

J.C. MacPherson J.A.

G.J. Epstein J.A.


