Summary

37198

Cyrénus Dugas v. Peter Gaudet, et al.

(New Brunswick) (Civil) (By Leave)

Keywords

None.

Summary

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.

Bankruptcy and Insolvency – Legislation – Interpretation – Trusts – Fiduciary duty – If a creditor intends to invoke subsection 178(1) of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (“BIA”) to enforce its claim after the bankrupt has been discharged, when and before which court must this intention be made known – If the underlying debt is a judgment, what evidence may be considered to determine whether subsection 178(1) of the BIA applies – What safeguards are needed to prevent re-litigation of the facts underlying the judgment – Is intentional misconduct required to constitute “misappropriation or defalcation while acting in a “fiduciary capacity” pursuant to paragraph 178(1(d) of the BIA – What is the scope of the phrase “debt or liability” as contained in s. 178(1) of the BIA.

The applicant and his wife transferred the beneficial interest in the main assets of their commercial fishing business, including a snow crab license (the “License”). The sale agreement included a warranty by the applicant that the License was “transferable” to the named purchaser, 508571 N.B. Ltd., and that the applicant would take the steps necessary to effect the transfer. A Declaration of Trust and Indemnity confirmed that Adam Gaudet and 508571 N.B. Ltd. had purchased the License and were its true owners. The respondents paid the purchase price, and over three years, the applicant continued to hold the License in his name and to act as vessel captain, with all earnings from the License going to its beneficial owners. The applicant did not submit the transfer request within the time prescribed and when he did, the Department treated it as out of time. The applicant ended the arrangement with the respondents, claiming the Department might cancel the License if they tried to transfer it. The respondents commenced an action for breach of fiduciary and contractual obligations, and the parties ultimately executed a Consent Judgment pursuant to which the applicant was to pay certain sums. When he failed to do so and made an assignment in bankruptcy, the respondents commenced the current action. The New Brunswick Court of Queen’s Bench and the appellate court held in favour of the respondents.

Lower Court Rulings

February 27, 2015
Court of Queen’s Bench of New Brunswick

MC-506-05, 2015 NBQB 059
Sale agreement and trust held valid; consent judgment held void ab initio; applicant liable for misappropriation of license pursuant to s. 178(1)(d) of the BIA; mandatory order that applicant facilitate transfer of license and pay damages of $2,384,162
April 14, 2016
Court of Appeal of New Brunswick

17-15-CA, 2016 NBCA 19
Appeal dismissed
 

loading