Executive Summary: Key Legal and Evidentiary Issues

• Characterization of the 2019 transfer of a rural acreage from bankrupt debtor Ritchie Poitras to his mother, Rosanna Fayant, as a “transfer at undervalue” under s. 96(1)(b) of the Bankruptcy and Insolvency Act.
• Determination of the fair market value of the acreage at the transfer date versus the actual consideration (documented loans and assumed mortgage) to assess whether the consideration was “conspicuously less” than market value.
• Reliance on findings in the earlier Family Property Judgment (including the $300,000 valuation of the acreage and Poitras’ obstructive conduct) as admissible and probative evidence in the later bankruptcy and appeal proceedings.
• Application of the burden of proof under s. 96 BIA, particularly whether the chambers judge correctly kept the legal onus on creditor Shelley Forester rather than shifting it to transferee Rosanna Fayant.
• Evaluation of Poitras’ intent “to defraud, defeat or delay” Forester as a creditor, inferred largely from his conduct and prior judicial findings, despite limited contemporaneous documentary proof.
• Appellate scrutiny of whether the chambers judge’s findings on value, consideration and intent, and her application of the “conspicuously less” test, disclosed any palpable and overriding error warranting intervention.

Background of the family relationship and property dispute

The litigation arises from the breakdown of the relationship between Shelley Forester and her former spouse, Ritchie Poitras. During their relationship, Poitras acquired a rural acreage that later became the central asset in both their family property dispute and subsequent bankruptcy-related proceedings. When Forester commenced proceedings under The Family Property Act, Poitras swore a property statement in January 2017 valuing the acreage at $300,000, and in 2017 and 2018 he listed the property for sale at asking prices of $360,000 and $327,000. These self-generated valuations and listing prices formed the backbone of the later judicial assessment of the property’s fair market value. In the family proceedings, Forester alleged that Poitras was attempting to put assets beyond her reach. The evidence showed he transferred the acreage to his mother, Rosanna Fayant, during the family litigation, and that he instructed his mother not to cooperate with Forester’s counsel and to “obstruct the process.” He also refused repeated requests to permit a neutral appraisal of the property and threatened to complain to outside bodies if such efforts continued, expressly stating he did not want Forester to benefit from work done on the property. Faced with this obstructive conduct, the family court had to value the acreage using the best available evidence, which was largely Poitras’ own earlier sworn valuation and listing activity.

The family property judgment and financial consequences

In the Family Property Judgment delivered on October 24, 2022, the trial judge (Hildebrandt J.) found the acreage to have a fair market value of $300,000. The court noted that Poitras had earlier given even higher values in a bank credit application, but treated that figure as likely inflated for lending purposes and instead anchored the valuation at the more conservative and internally consistent $300,000 figure he had sworn to shortly after the family petition was issued. That valuation was also supported by his asking prices when he tried to sell the acreage in 2017 and 2018. On the basis of this assessed value and the overall division of family property, the court ordered Poitras to pay Forester a total of $171,500. Of that amount, $150,000 represented Forester’s one-half share of the value of the acreage, and $21,500 represented costs awarded in her favour. This judgment under The Family Property Act established Poitras’ substantial indebtedness to Forester and made her, in practical terms, his largest unsecured creditor. The transfer of the acreage to his mother thus had direct implications for her ability to realize on the family judgment.

Transfer of the acreage to the mother and the bankruptcy

The critical transfer took place on June 24, 2019, after the family proceedings had been commenced but long before the Family Property Judgment was issued. On that date, Poitras transferred legal title to the acreage to his mother, Fayant. In the affidavit of value filed with the land transfer, he declared the value of the property to be $162,000—substantially lower than the figures he had previously sworn to and far below his earlier listing prices. The title was subject to a Bank of Nova Scotia mortgage registered in 2013 with a face amount of $42,200. No direct cash consideration was paid at the time of transfer. Only weeks after Hildebrandt J. released the Family Property Judgment in October 2022, Poitras made an assignment into bankruptcy on November 14, 2022. At that point, Forester’s $171,500 family judgment made her by far his largest unsecured creditor. The bankruptcy estate, however, lacked funds to initiate litigation to challenge the prior transfer of the acreage. The trustee therefore declined to sue. To protect her interests, Forester obtained an order under s. 38 of the Bankruptcy and Insolvency Act (BIA) authorizing her, at her own expense, to bring proceedings in the trustee’s name to attack the 2019 transfer as a transfer at undervalue under s. 96. The s. 38 order also provided that any recovery in excess of what was required to satisfy Forester’s claim would go to the trustee to augment the estate, and that any surplus remaining after all creditors were paid would ultimately belong to Poitras. This ensured that the litigation was conducted for the collective benefit of creditors rather than solely for Forester’s personal gain.

The undervalue application under the Bankruptcy and Insolvency Act

Acting under the s. 38 authorization, Forester applied in the Court of King’s Bench pursuant to s. 96(1)(b) of the BIA. That provision allows a court, on application by the trustee (or a creditor authorized in the trustee’s stead), to declare a “transfer at undervalue” void against the estate or to order the transferee (or a related person) to pay to the estate the difference between the fair market value of what the debtor gave and the value of the consideration received. Under s. 2 BIA, a transfer at undervalue includes a disposition of property where the consideration received is “conspicuously less” than the fair market value of what the debtor provided. Forester argued that Poitras’ transfer of the acreage to his mother fell squarely within this concept. She filed the Family Property Judgment and an affidavit recounting its key findings. She relied on Hildebrandt J.’s conclusion that the acreage was worth $300,000 and on the explicit findings that Poitras had deliberately obstructed discovery of an accurate valuation and had stated an intention to prevent her from benefitting. Forester did not commission a fresh appraisal, pointing out that this had been functionally impossible during the family case due to Poitras’ non-cooperation and that a judicial valuation now existed. In response, Fayant filed evidence attempting to show both that substantial value had changed hands and that the acreage was not worth $300,000 at the time of transfer. She swore that over many years she had provided large loans and financial support to her son, asserting that the acreage transfer was intended as repayment for past loans and as consideration for future financial assistance. She attached some bank records substantiating transfers totaling $32,827.36 between 2016 and 2020 and a one-page, self-prepared spreadsheet totalling $158,911.21 said to represent monies owed between 2009 and 2022. She also expressed the view that the acreage was mid-development in 2019, with limited value. In a second affidavit, she filed a retrospective appraisal dated July 2023, which concluded that the acreage’s value as of June 24, 2019 was $165,000. However, this appraisal was explicitly based on an “extraordinary assumption” that the dwelling was merely “shell space” with no interior finish, with only two baseboard heaters and an electrical panel, and that its condition as of 2019 was derived solely from the client’s (Fayant’s) description. The appraiser stated that any change to this assumption could change the value opinion and acknowledged that the actual 2019 condition of the dwelling was unknown.

Findings of the chambers judge on value, consideration, and intent

The chambers judge was required to determine three core elements under s. 96(1)(b): the fair market value of the acreage at the transfer date; the value of the consideration Poitras actually received; and whether he transferred the property with the intent to “defraud, defeat or delay” a creditor, namely Forester. On the value of the acreage, the judge compared the evidence before the bankruptcy court with the findings in the Family Property Judgment. The only direct valuation evidence filed in the bankruptcy proceedings was Poitras’ own 2019 affidavit of value at $162,000 and the retrospective appraisal at $165,000, both ultimately traceable to Poitras’ or Fayant’s untested assertions about the property’s condition. In contrast, Hildebrandt J. had already evaluated extensive evidence, including Poitras’ earlier sworn property statement, his listing efforts, and his deliberate refusal to permit an appraisal, and had fixed the value at $300,000. The chambers judge concluded, on a preponderance of the evidence, that the acreage’s fair market value at the time of the 2019 transfer was $300,000. The judge also stated that, in any event, the doctrine of estoppel by res judicata applied to the valuation issue, though the appellate court later found it unnecessary to decide that point. On the consideration received, the judge carefully analyzed Fayant’s loan evidence. She found that only $28,691.40 in loans had actually been documented and advanced before the June 2019 transfer; the larger claimed total was unsupported by underlying records. The court also took into account the 2013 mortgage in favour of the Bank of Nova Scotia, which remained on title at the transfer date. In the absence of any evidence as to the outstanding balance, the judge, if anything generously, assumed the full face amount of $42,200 remained owing. Adding the proven loans ($28,691.40) and the assumed mortgage ($42,200), the judge found the total consideration Poitras received to be $70,891.40. Comparing this to the $300,000 fair market value, the judge held that the consideration was “conspicuously less” than market value by almost $230,000. On the question of intent, the judge looked to the Family Property Judgment, which contained specific findings that Poitras had instructed his mother to obstruct the family proceedings, had refused to permit an appraisal to prevent Forester from benefitting from the property, and had effectively admitted he wanted to keep the increased value away from her. The judge considered this to be the clearest and most compelling evidence of Poitras’ intent and concluded that, in transferring the acreage to his mother, he intended to defraud, defeat or delay Forester’s claim as his creditor. Neither Poitras nor Fayant provided contradictory evidence of his intent, despite being in a position to do so. Having found all statutory preconditions met, the chambers judge granted judgment in favour of Forester against Fayant in the amount of $229,108.60, representing the difference between the property’s fair market value and the value of the consideration found to have been received.

Grounds of appeal and treatment of the Family Property Judgment

On appeal to the Court of Appeal for Saskatchewan, Fayant advanced multiple challenges to the chambers decision. She argued that the Family Property Judgment should not have been accepted as evidence of the acreage’s value at the 2019 transfer date or of Poitras’ intent, asserting that she had not been a party to the family case and that importing those findings was procedurally unfair. She also contended that there was no basis in law for applying res judicata or issue estoppel against her and that the family judge’s valuation, determined at a later date for family property purposes, was irrelevant for a bankruptcy undervalue analysis. Further, she claimed the chambers judge had misapplied the burden of proof, effectively forcing her to disprove elements of s. 96, and had failed to properly engage with the jurisprudence on what constitutes “conspicuously less” consideration. Finally, she alleged that the judge’s key findings were palpably wrong. The Court of Appeal first addressed whether it could consider her new challenge to the use of the Family Property Judgment. After reviewing the record, it held that Fayant had never argued in the court below that the Family Property Judgment was inadmissible or devoid of probative value; she had argued only that the bankruptcy court should not be “bound” by it and should consider other evidence. She had been represented by counsel, who filed full evidence and legal briefs, and then chose not to participate when the hearing resumed after settlement discussions failed. The appellate court found that allowing her to raise this new evidentiary attack on appeal would prejudice Forester, who could have sought to introduce the full record or additional evidence if the admissibility or weight of the Family Property Judgment had been properly contested at first instance. Applying settled principles on new issues raised for the first time on appeal, the court declined to entertain this fresh argument. It further confirmed that prior judicial findings can have evidentiary weight even where strict res judicata requirements are not fully met, and that the chambers judge was entitled to rely on the Family Property Judgment as part of the evidentiary foundation in the s. 96 analysis. The Court of Appeal therefore proceeded on the premise that the Family Property Judgment was admissible and entitled to weight, without needing to resolve conclusively whether formal issue estoppel applied as between Fayant and Forester.

Burden of proof, “conspicuously less” test, and factual findings

Turning to the burden of proof, the Court of Appeal held that the chambers judge correctly recognized that Forester, as the s. 96 applicant, bore the legal onus to prove all elements of a transfer at undervalue on a balance of probabilities. References in the reasons to what Fayant had or had not “proven” about the loan amounts were interpreted as findings about the sufficiency of her evidence, not as a shift of the overarching legal burden. The appellate court emphasized that in civil cases the persuasive burden becomes critical only where the evidence is so evenly balanced that the trier of fact cannot otherwise decide; here, the judge clearly found the evidence weighed in Forester’s favour. On the “conspicuously less” requirement, the court looked to authorities such as Peoples Department Stores and subsequent cases, which indicate that while no fixed percentage defines “conspicuous,” the size of the gap between fair market value and consideration is a key factor and the assessment is one of judgment, not mere arithmetic. In cases where the gap was approximately 17 percent, courts had found the difference conspicuous; where it was around 6 percent, some courts had held it was not. Against that backdrop, the Court of Appeal noted that, on the chambers judge’s untainted findings, the consideration of $70,891.40 was less than one quarter of the $300,000 fair market value, creating a very large and obvious discrepancy. The court rejected Fayant’s attempt to recast the consideration as including unproven historical loans or to rely on the retrospective appraisal, given its dependence on uncorroborated assumptions. It concluded that no detailed mathematical or doctrinal analysis was necessary for the judge to find that this shortfall was conspicuously large. With respect to alleged palpable error in the factual findings, the Court of Appeal upheld the chambers judge’s assessment of the evidence. It was reasonable to treat the Family Property Judgment’s 2022 valuation as strong evidence of the 2019 value, especially since neither Poitras nor Fayant explained how or why the value would have dropped so significantly in the interim. It was also reasonable to assign little weight to the retrospective appraisal, which was built entirely on unverified descriptions of the 2019 property condition supplied by an interested party. On intent, the appellate court stressed that s. 96(1)(b) focuses on the debtor’s intent (Poitras), not the transferee’s intent, and that the detailed findings of his efforts to obstruct valuation and keep the value from Forester provided a sound basis to infer an intent to defraud, defeat or delay her claim. The court saw no error in the judge’s reliance on those findings or in her conclusion that the statutory intent requirement was met.

Final outcome and total monetary award in favour of the successful party

In the result, the Court of Appeal dismissed Fayant’s appeal and left intact the judgment in favour of Forester under s. 96(1)(b) of the BIA. That judgment requires Fayant to pay $229,108.60, representing the difference between the acreage’s fair market value ($300,000) and the consideration deemed to have been received ($70,891.40). This payment is to be made for the benefit of the bankruptcy estate, with any surplus after satisfaction of creditors ultimately belonging to Poitras. Forester, as the principal creditor, stands to recover her family property judgment from this amount. The appellate court also ordered that Forester is entitled to have her costs of the appeal, including a prior show-cause hearing, paid by Fayant, fixing those costs at $6,000. When these appellate costs are added to the s. 96 judgment maintained on appeal, the total amount ordered in Forester’s favour in the BIA proceedings is $235,108.60. In addition, separate and unchanged from the appeal, Forester continues to hold the earlier Family Property Judgment against Poitras for $171,500 (comprising $150,000 for her half-interest in the acreage and $21,500 in costs). Taken together, and recognizing that collection flows through the bankruptcy estate, the combined total of judicially ordered amounts in favour of the successful party, Forester, across both the family property and bankruptcy-related decisions is $406,608.60, though actual recovery will depend on the realization and distribution processes in the bankruptcy.