Ontario civil | Bankruptcy and Insolvency
Administration of estates
Trial judge failed to give effect to all words of release
Company granted two charges over property to creditor, to secure money it borrowed and to secure guarantees it provided in support of two promissory notes from K, principal of company, and G. Creditor brought action against G and K on promissory notes and separate action against company, and it obtained default judgment against company and K. G brought action against K and his companies, which was settled, and parties entered into mutual release. G incorporated numbered company and creditor assigned charges on company’s property and default judgment to numbered company for valuable consideration. Subsequent to assignment, company was adjudged bankrupt. Property was sold. Numbered company filed proof of claim in bankruptcy for $765,792.38, reflecting charges. Trial judge allowed numbered company’s claims as assignee, rejecting argument that release applied to bar numbered company’s claims as assignee. Trustee in bankruptcy appealed. Appeal allowed. When considered as whole, release applied to companies controlled by G, including numbered company, and to subject matter of numbered company’s claims. Trial judge failed to give effect to all words of release. Numbered company was company under G’s control and was captured by definition of parties included in release. Result made commercial and practical sense, and was consistent with purpose underlying settlement. Parties to settlement, read to include numbered company, gave up claims to proceeds generated by company, including proceeds from sale of property. It was not open to G, through numbered company, to circumvent his obligations. Trial judge erred in not considering entire contract when interpreting its proper meaning and scope and claims of numbered company were disallowed.
Montor Business Corp. (Trustee of) v. Goldfinger (May. 30, 2016, Ont. C.A., E.A. Cronk J.A., S.E. Pepall J.A., and P. Lauwers J.A., CA C57898) Decision at 237 A.C.W.S. (3d) 296 was varied. 266 A.C.W.S. (3d) 21.
Trial judge failed to give effect to all words of release
Company granted two charges over property to creditor, to secure money it borrowed and to secure guarantees it provided in support of two promissory notes from K, principal of company, and G. Creditor brought action against G and K on promissory notes and separate action against company, and it obtained default judgment against company and K. G brought action against K and his companies, which was settled, and parties entered into mutual release. G incorporated numbered company and creditor assigned charges on company’s property and default judgment to numbered company for valuable consideration. Subsequent to assignment, company was adjudged bankrupt. Property was sold. Numbered company filed proof of claim in bankruptcy for $765,792.38, reflecting charges. Trial judge allowed numbered company’s claims as assignee, rejecting argument that release applied to bar numbered company’s claims as assignee. Trustee in bankruptcy appealed. Appeal allowed. When considered as whole, release applied to companies controlled by G, including numbered company, and to subject matter of numbered company’s claims. Trial judge failed to give effect to all words of release. Numbered company was company under G’s control and was captured by definition of parties included in release. Result made commercial and practical sense, and was consistent with purpose underlying settlement. Parties to settlement, read to include numbered company, gave up claims to proceeds generated by company, including proceeds from sale of property. It was not open to G, through numbered company, to circumvent his obligations. Trial judge erred in not considering entire contract when interpreting its proper meaning and scope and claims of numbered company were disallowed.
Montor Business Corp. (Trustee of) v. Goldfinger (May. 30, 2016, Ont. C.A., E.A. Cronk J.A., S.E. Pepall J.A., and P. Lauwers J.A., CA C57898) Decision at 237 A.C.W.S. (3d) 296 was varied. 266 A.C.W.S. (3d) 21.
