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A trustee in bankruptcy seeking to set aside a transaction as a transfer at undervalue under s.96(1) of the BIA, or as a fraudulent conveyance under s.2 of the Fraudulent Conveyances Act is not subject to the limitation period that the main creditor

Ontario

,

Canada

Background

In Pantziris v. 1529439 Ontario Limited, 2021 ONCA 784, the court made a bankruptcy order against the bankrupt, and appointed the respondent Trustee in bankruptcy. Subsequently, the Trustee took steps to recapture certain assets the bankrupt had disposed of. The bankrupt argued that the Trustee was out of time because the main creditor was aware of the facts underlying the claims advanced by the Trustee more than two years before the Trustee advanced them.

The motion judge analyzed the limitation period, and found that for the purposes of the claims made by the Trustee, limitation period begins to run on appointment by the Court. The trustee cannot be “the person with the claim” under s.5(1) of the Limitations Act until they are appointed. Not does s.12 of the Limitations Act have any effect on the Trustee’s right to bring forward the claims; the Trustee is not a person claiming through a predecessor in right, title or interest. The trustee is claiming in its own right.

Decision/Reasoning

The Court of Appeal agreed with the motion judge’s reasoning. For the purposes of the claims that were made be the Trustee, the Trustee could not be “the person with the claim” under s.5(1) of the Limitations Act until the Trustee had been appointed by the court (para 13). Nor does s.12 of the Limitations Act have any effect on the Trustee’s right to bring forward the claim. The trustee is not “a person claiming through a predecessor in right, title or interest”. The Trustee is claiming in its own right (para 14).

April 14, 2022
Pantziris v. 1529439 Ontario Limited, 2021 ONCA 784