ITA-4041-96
MONTRÉAL, QUEBEC, THIS 11th DAY OF JUNE 1997
PRESENT: RICHARD MORNEAU, ESQ., PROTHONOTARY
BETWEEN:
In the matter of the Income Tax Act,
- and -
| In the matter of an assessment or assessments by the Minister of National Revenue under one or more of the Income Tax Act, the Canada Pension Plan and the Unemployment Insurance Act, |
|
AGAINST:
JEAN GUY VENNES,
Debtor,
AND
PAUL VENNES,
Opposant.
ORDER
This opposition is dismissed with costs.
Richard Morneau
Prothonotary
Certified true translation
C. Delon, LL.L.
ITA-4041-96
BETWEEN:
In the matter of the Income Tax Act,
- and -
| In the matter of an assessment or assessments by the Minister of National Revenue under one or more of the Income Tax Act, the Canada Pension Plan and the Unemployment Insurance Act, |
|
AGAINST:
JEAN GUY VENNES,
Debtor,
AND
PAUL VENNES,
Opposant.
REASONS FOR ORDER
RICHARD MORNEAU, ESQ.,
PROTHONOTARY:
This is a motion in opposition to this Court by the opposant under article 597 of the Code of Civil Procedure seeking the nullity of a seizure in execution of immovable property carried out by the judgment creditor against an immovable consisting of a lot and building, known as civic number 5175, 18ième rue, Grand-Mère (hereinafter the "immovable").
Analysis
The opposant, who happens to be the father of the judgment debtor, contends that he is the owner of the immovable because he purchased it by notarized act on December 24, 1992, from Réjean Fortin, a person who was a business partner of the judgment debtor for several years (act of sale of December 1992).
It is essentially on the basis of that act of sale that the opposant is claiming ownership of the immovable.
It was also established in evidence that certain third parties - the broker who insured the immovable and the real estate agent retained to sell the immovable in 1996 - had relied on that act of sale (and thus on the fact that the opposant is the registered owner for the purpose of registration) and treated the opposant as the true owner in the course of their business.
However, there is more evidence than this, and it is not evidence that assists the opposant in discharging his burden of proof.
Réjean Fortin, who was the vendor in the December 1992 act of sale, claims to have acquired the immovable previously from the judgment debtor by a notarized act of sale dated January 14, 1991 (the January 14, 1991 act of sale). To all appearances, this transferred the immovable from the patrimony of the judgment debtor - who was then having increasing financial difficulties - to the patrimony of Mr. Fortin who, armed with his status as owner, was apparently free to sell it to the opposant in December 1992.
However, on January 16, 1991, two days after the January 14, 1991 act of sale, the judgment debtor and Réjean Fortin signed a private document that can only be described as a counter letter, the ultimate purpose of which was to establish the real intent, the real agreement between the parties, that is, that the judgment debtor would remain the real owner of the immovable notwithstanding the sale two days earlier. The relevant clauses of that counter letter read as follows:
[translation]
| ONE THOUSAND NINE HUNDRED NINETY-ONE |
|
January 16, 1991
JEAN-GUY VENNES, unemployed, residing at 5175 18e Rue, Grand-Mère.
AND
REJEAN FORTIN, businessman, residing at 1797 12e Avenue, Grand-Mère.
DECLARE as follows:
| 1. That by act of sale received before Jean Trépanier, notary, on January 14, 1991, ----------- as number 7028 ---------- of his minutes, a certified copy of which was registered at the Shawinigan registry office on January 16, 1991, ---------- as number 165002 ---------- the said Réjean Fortin purchased from Jean-Guy Vennes the following immovable, to wit: |
|
DESCRIPTION
| 2. That the said sale exists and is genuine. |
|
| 3. That Réjean Fortin made the said purchase as nominee for Jean-Guy Vennes. |
|
| 4. That Jean-Guy Vennes is the true owner of the immovable hereinbefore described. |
|
| Now therefore, Réjean Fortin, at the request of Jean-Guy Vennes, undertakes to sign all necessary documents to convey or transfer the immovable hereinbefore described to Jean-Guy Vennes or to such other person as he may designate, on the conditions stipulated in the act hereinbefore referred to. |
|
| In the event that Réjean fails to comply with the undertakings made herein, Jean-Guy Vennes may register this document against the immovable hereinbefore described and it shall constitute good, valid and proper title for his benefit on the conditions set out in the act hereinbefore referred to. |
|
| The revenue from the said immovable shall belong to Jean-Guy Vennes who shall pay all charges against the said immovable and who undertakes to indemnify Réjean Fortin for all damages or inconvenience that Réjean Fortin may suffer by reason of his apparent ownership of the said immovable. |
|
at Grand-Mère
this 16th day of January 1991
(s) Jean-Guy Vennes (s) Réjean Fortin
Jean-Guy Vennes Réjean Fortin
(s) Paul Vennes (s) Viviane Poitras
Witness Witness
Clearly, as the creditor argued, what we have here is simulation within the meaning of articles 1451 and 1452 of the C.C.Q. Those articles read as follows:
| Art. 1451. Simulation exists where the parties agree to express their true intent, not in an apparent contract, but in a secret contract, also called a counter letter. |
|
| Between the parties, a counter letter prevails over an apparent contract. |
|
| Art. 1452. Third persons in good faith may, according to their interest, avail themselves of the apparent contract or the counter letter; however, where conflicts of interest arise between them, preference is given to the person who avails himself of the apparent contract. |
|
This situation is covered by the following comments of the author Jean-Louis Baudoin, Les Obligations, 4th edition, Éditions Yvon Blais, page 282, para. 496:
[translation]
| 469 - Sham act - Simulation may take various forms, depending on whether the parties wished to totally suppress the apparent act or simply to change the effects thereof. The sham act is intended to suggest that there is an agreement between the parties, when in fact there is none. In that case, the counter letter, the real agreement between the parties, completely annihilates the apparent act. The parties intended to suggest that they had entered into a contract when in reality they never intended to contract. The technique of the sham act is often used as a way of misleading creditors. The debtor has apparently divested himself or herself of property to a third party, but reserves full ownership by counter letter. |
|
| (Emphasis mine, citations omitted) |
|
Because Mr. Fortin is a party to the counter letter and the opposant intervened in it as a witness, it seems to me that we must inevitably conclude that the simulation of January 1991 was on-going and taints the December 1992 act of sale. That act of sale was designed to suggest that there had been a genuine sale, whereas Mr. Fortin and the opposant knew perfectly well that Mr. Fortin was not the true owner, and so he could not really sell the immovable.
The judgment debtor must therefore be regarded as having at all times continued to be the owner of the immovable, since the January 14, 1991 act of sale and the December 1992 act of sale must be regarded as shams, as against the creditor, which cannot be set up against her.
Moreover, in the circumstances, there are serious, precise and consistent presumptions or indications, in my view, that the judgment debtor's status was that of the real owner of the immovable.
He lived in the immovable at all times. Even after the so-called sale in December 1992, he was the one who continued to make the payments on the hypothec on the immovable directly. The Court also concludes that he never really paid rent; the amounts paid out by the judgment debtor corresponded to the monthly payment on the hypothec and to the other payments that are the responsibility of a real owner. In my view, these indications outweigh the testimony of any third party who did not, for the purposes of its own business, go beyond what the December 1992 act of sale was intended to suggest.
Moreover, the opposant has relied on the institution of possession to set himself up as the owner of the immovable. It seems to me that this argument cannot stand in this instance, since under article 922 of the C.C.Q. possession must be unequivocal in order to produce effects. In view of the existence of the counter letter of January 16, 1991, it would be hard to argue that this was the case here.
Having regard to this analysis, there is no need, in my view, to delve any deeper into an examination of the chain of title to the immovable or of the hypothecary loans with which it was charged at any given time.
For these reasons, this opposition will be dismissed with costs.
Richard Morneau
Prothonotary
Montréal, Quebec
June 11, 1997
Certified true translation
C. Delon, LL.L.
Federal Court of Canada
Court file No. ITA-4041-96
between
In the matter of the Income Tax Act,
- and -
| In the matter of an assessment or assessments by the Minister of National Revenue under one or more of the Income Tax Act, the Canada Pension Plan and the Unemployment Insurance Act, |
|
AGAINST:
JEAN GUY VENNES,
Debtor,
AND
PAUL VENNES,
Opposant.
REASONS FOR ORDER
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE NO: ITA-4041-96
STYLE OF CAUSE: In the matter of the Income Tax Act,
| In the matter of an assessment or assessments by the Minister of National Revenue under one or more of the Income Tax Act, the Canada Pension Plan and the Unemployment Insurance Act, |
AGAINST:
JEAN GUY VENNES,
Debtor,
AND
PAUL VENNES,
Opposant.
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: May 27, 1997
REASONS FOR ORDER BY: Richard Morneau, Esq., Prothonotary
DATE OF REASONS FOR ORDER: June 11, 1997
APPEARANCES:
Richard Turgeon for the judgment creditor
Stéphane Cléroux for the opposant
SOLICITORS OF RECORD:
George Thomson for the judgment creditor
Deputy Attorney General of Canada
Montréal, Quebec
Stéphane Cléroux for the opposant
Champagne Cléroux
Montréal, Quebec
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