Court refuses to help PEI farmer who hid land from creditors
The assets later landed in a company, B&R Farms Ltd., whose sole director and shareholder was the defendant. The farmer’s case was that the defendant held legal title on paper only, that the two would split profits evenly, and that the land would be returned on request, so the company held it on a resulting trust for him.
The defendant denied any such deal. He said he paid substantial value for the property and dealt with the farmer’s brother-in-law, not the farmer. Both sides sought summary judgment.
Justice John K. Mitchell of the Supreme Court of Prince Edward Island refused both. He found the defendant was not a bona fide purchaser for value, pointing to the absence of cheques or records showing payment, and dismissed the defendant’s motion.
He also refused to help the farmer. Granting a resulting-trust declaration, he wrote, would force the court to rely on the farmer’s own scheme to conceal assets from creditors – the sort of arrangement the clean hands doctrine bars.
The judge found the farmer had been insolvent in 2010, carrying a $465,000 judgment, and had shifted the property to keep it beyond his creditors’ reach. When the farmer filed for bankruptcy in 2016 with total debts of $890,822, he did not disclose his interest in the land. Had the assets stayed in his name, the judge noted, creditors could have been paid in full.
