IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Grant Bros. Contracting Ltd. v. Grant, 2005 NSSC 358
Date: 20051230
Docket: SH 217342 (B-26325)
Registry: Halifax
IN THE MATTER OF The bankruptcy of Grant Bros. Contracting Limited, a body corporate
and
IN THE MATTER OF An application by Deloitte & Touche Inc., Trustee of the Estate of the Bankrupt against Dr. Neil Grant and Dr. Neil Grant (1997) Professional Corporation, pursuant to Subsections 91(1), 95(1) and 95(2), 98(1) and 98(2), 100(1) and 100(2), and 165(1) and 165(2) of the Bankruptcy and Insolvency Act (“Act”)
LIBRARY HEADING
Judge: The Honourable Justice Glen G. McDougall
Heard: June 29, 2005, in Halifax, Nova Scotia
Subject: A Trustee appointed under the Bankruptcy and Insolvency Act (the “BIA”) seeks an order for the return of a $110,207.49 payment made to the bankrupt company which was re-directed by the company president to another company controlled by his brother thereby frustrating distribution by the Trustee.
Summary: A Receiver was appointed for Grant Bros. Contracting Limited (“Grant Bros.”) under a General Security Agreement (the “GSA”). Subsequently, a Trustee was appointed under the BIA. Between the time after the appointment of a Receiver and prior to the appointment of a Trustee a payment of $110,207.49 was received by Grant Bros. Instead of handing over the cheque to the Receiver and with full knowledge of the appointment under the GSA, the company president re-directed the cheque to his brother who arranged to have the cheque deposited to the account of his Professional Corporation. The full proceeds of the cheque were paid out of the Professional Corporation with $25,680.47 going to the brother of the president of Grant Bros. to repay him for a personal loan of $25,000.00 that he had earlier made to Grant Bros. (along with interest) with the remaining $84,527.02 paid in two installments to the company president personally. None of the funds found there way back to Grant Bros. (or the duly appointed Receiver and/or Trustee), although the president claims to have used the $84,527.02 to pay other unsecured creditors of the company. Demands for repayment of these funds went unheeded.
Issue: Is the Trustee entitled to the repayment of the funds, or some portion of them, that were intercepted and redirected by Grant Bros.’ president to a company controlled by his brother and subsequently disbursed to the company president and his brother personally thereby avoiding Grant Bros.’ Receiver/Trustee?
Result: An order was granted making the Professional Corporation and its president/director (the brother of Grant Bros.’ president), jointly and severally liable for the repayment of the total sum of $110,207.49 to the Trustee. Relief was granted under sections 91, 95, 98, 100 and sub-sections (1) and (2) of Section 165 of the BIA.
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