Case information

None.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Civil procedure – Bankruptcy and insolvency – Abuse of process – Security for costs – Motion judge dismissing respondent’s action under s. 38 of Bankruptcy and Insolvency Act on basis of abuse of process, res judicata and issue estoppel – Court of Appeal refusing to order security for costs pending appeal and allowing respondent’s appeal – Whether distinction made by Court of Appeal between underlying action and statutory action is inaccurate – Whether interpretation and application of s. 38 by Court of Appeal conflicts with other provisions of Bankruptcy and Insolvency Act, conflicts with other decisions or results in absurd consequence – How cost orders should be addressed in contingency fee situations – Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 38.

After obtaining judgment against the applicant David Robin Sloan, the respondent learned that Mr. Sloan had apparently transferred the matrimonial home to his wife, the applicant Valerie Francis Sloan, for no consideration, 45 days after being served with the statement of claim. As a consequence, the respondent commenced an action (the 2002 action) against Mr. Sloan, his wife and their company, the applicant Cave Hill Properties Ltd. to set this transfer aside as a fraudulent conveyance. On January 13, 2004, Mr. Sloan declared personal bankruptcy. This stayed the 2002 action. Mr. Sloan listed the respondent as a creditor in the amount of $8.7 million. The respondent proved its claim in bankruptcy. On April 6, 2006, the respondent obtained an order pursuant to s. 38(1) of the Bankruptcy and Insolvency Act authorizing it to commence and prosecute proceedings against the applicants. The applicants moved to dismiss the action subsequently brought by the respondent. The motion judge found that the action was an abuse of process and barred by res judicata and issue estoppel because of the discharge in bankruptcy and the dismissal of the prior action for the same relief brought by the respondent in its own capacity. The Court of Appeal allowed the respondent’s appeal and dismissed the applicants’ motion to dismiss the action.