Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1541334
22 www.lexpert.ca Top 10 Business Decisions Aquino v. Bondfield Construction Co., 2024 SCC 31 • John Aquino; 2304288 Ontario Inc.; Marco Caruso; Giuseppe Anastasio, also known as Joe Ana; and Lucia Coccia, also known as Lucia Canderle > Law Office of Terry Corsianos; Corsianos Lee, Vaughan > Terry Corsianos, George Corsianos, and Jacob Lee • Ernst & Young Inc., in its capacity as Court- Appointed Monitor of Bondfield Construction Company Limited > Cassels Brock & Blackwell LLP and Norton Rose Fulbright Canada LLP > Alan Merskey and Stephen Taylor • KSV Kofman Inc., in its capacity as Trustee in Bankruptcy of 1033803 Ontario Inc. and 1087507 Ontario Limited > Torys LLP > Jeremy Opolsky and Alex Bogach • Attorney General of Ontario > Ministry of the Attorney General – Crown Law Office – Civil > Dona Salmon and Jennifer Boyczuk • Insolvency Institute of Canada > Davies Ward Phillips & Vineberg LLP > Natasha MacParland, Chanakya A. Sethi, Rui Gao, and J. Henry Machum Scott v. Golden Oaks Enterprises Inc., 2024 SCC 32 • Lorne Scott, Janet Arsenault, Jeremy Mitchell, Josée Bouchard, Le Thu Nguyen, Mark McKenna, Judy McKenna, Susan McKillip, 1531425 Ontario Inc., Joe Messa, and Ernest Toste > David | Sauvé > Charles R. Daoust • Doyle Salewski Inc., in its capacity as Trustee in Bankruptcy of Golden Oaks Enterprises Inc., and Joseph Gilles Jean Claude Lacasse > Chaitons LLP, Torkin Manes LLP > Harvey G. Chaiton, Doug Bourassa, and Laura Culleton • Attorney General of Ontario > Ministry of the Attorney General – Crown Law Office – Civil > Dona Salmon and Jennifer Boyczuk • Insolvency Institute of Canada > Davies Ward Phillips & Vineberg LLP > Natasha MacParland, Chanakya A. Sethi, Rui Gao, and J. Henry Machum CLIENTS > FIRMS > LAWYERS IN THESE two cases, the Supreme Court of Canada clarified corporate attribu- tion in insolvency-related recovery and its interaction with s. 96 and limitations analysis, which had direct implications for trustees, monitors, and creditors. In Aquino, the court confirmed that a transfer-at-undervalue claim under s. 96(1)(b)(ii)(B) can succeed "even if the debtor was not insolvent" at the time, with intent often inferred via recog- nized "badges of fraud." It directed that corporate attribution be applied "purpo- sively, contextually, and pragmatically" and held that the traditional "fraud" and "no benefit" exceptions do not apply to s. 96 claims. This approach enables recovery of fraudulently transferred assets that diminished the estate, rein- forcing creditor protection. Commenting on the practical effect, Torys LLP partner Jeremy Opolsky said the ruling "is going to make it easier for insolvent companies to collect on behalf of their creditors from corpo- rate insiders who defraud," adding: "The reason why we have a corporate attribu- tion or corporate identification doctrine is that corporations don't have a mind of their own. They act through people. They think through people." He framed the core inquiry: "What does a company know? What does it think? What does it mean? What does it intend?" and emphasized, "What this case says is, the starting point for that consideration is not a rigid test, but instead, you have to look at why you're asking the question in the first place." In Scott, the court confirmed that these attribution principles "apply to one-person corporations" and upheld judicial discretion to refuse attribu- tion where it would undermine the purposes of the limitations and bank- ruptcy regimes; the trustee's actions were "not statute-barred." The court also concluded that investors "cannot rely on the principles of " equitable set-off, and that certain referral agreements were "illegal contracts at common law." As Charles Daoust, a founding member of David | Sauvé LLP, observed, "It is a disappointing result for our clients, all of whom were victims and lost money AQUINO V. BONDFIELD CONSTRUCTION CO., 2024 SCC 31 AND SCOTT V. GOLDEN OAKS ENTERPRISES INC., 2024 SCC 32 in the Ponzi scheme and have been involved in this litigation for close to a decade." He added, "More generally, the court's answers to the question left open in Deloitte in relation to the corporate attribution doctrine are not as reassuring as we would have hoped. The result is a more flexible approach, but as with other areas of the law, an approach of this nature often introduces some uncertainty into the law."