7.3: Summary Judgment (Application and decision)
9.24: Fraudulent preferences and fraudulent conveyances

Case Summary

The Plaintiff, Environmental Refuelling Systems (“ERS”), applied for Summary Judgment against the Defendants respecting an outstanding account owing for fuel delivered by ERS to the Defendants. ERS also sought to set aside a number of real property conveyances which it alleged were fraudulent (the “Fraudulent Conveyance Applications”) pursuant to Rule 9.24.

The Application engaged issues related to the business relationship between Allan George Dougan Senior (“Dougan Senior”) and his son Allan George Dougan Junior (“Dougan Junior”). Belzil J. determined, pursuant to Rule 7.3, that there was no issue of merit that genuinely required a Trial against Dougan Senior and that ERS’ claim could be determined summarily against him. ERS alleged that Dougan Junior was jointly and severally liable for the debt of his father on the basis that he was Dougan Senior’s partner within the meaning of the Partnership Act, RSA 2000, c P-3, or in the alternative, that Dougan Junior was liable as an agent for Dougan Senior. Belzil J. held that there was no evidence to support a partnership agreement between Dougan Senior and Dougan Junior and that ERS’ assertions fell short of the type of evidence required to establish an agency relationship. On this evidentiary record, Justice Belzil determined that a full Trial would be required to determine the legal business relationship between Dougan Senior and Dougan Junior.

Justice Belzil reviewed Rule 9.24 and noted that in order to establish a claim under the Statute of Elizabeth or Fraudulent Preferences Act, RSA 2000, c F-24 there must be a conveyance of real or personal property; for no or nominal consideration; with intent to defraud, delay, or hinder creditors; the party challenging the conveyance must be someone who was a creditor at the time of the conveyance or someone with a legal or equitable right to claim against the transferor; and the conveyance must have had the intended effect.

In applying the above factors, Belzil J. found that the impugned conveyances were extremely suspicious, amounting to badges of fraud, and that the Defendants had failed to adduce any evidence to rebut the prima facie case of a fraudulent conveyance. Justice Belzil concluded that the Defendants had attempted to deceive the Court and interfere with the administration of justice. Justice Belzil declared the conveyances to be fraudulent and void.

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