Cattanach,
J:—The
Minister
of
National
Revenue
certified,
under
section
223
of
the
Income
Tax
Act,
that
Kenneth
Allen
had
not
paid
tax
assessed
against
him
and
produced
to
this
Court
a
certificate
to
that
effect,
which
upon
production
shall
be
registered
and
upon
registration
all
proceedings
may
be
taken
thereon
as
if
it
were
a
judgment
of
this
Court
which
it
is
not.
The
registration
was
not
contested
and
the
Minister
obtained
writs
of
execution
and
placed
them
in
the
hands
of
the
sherriff
of
the
County
of
Hastings
and
the
sheriff
of
the
County
of
Grey
to
levy
execution
on
the
goods,
chattels
and
lands
and
tenements
of
the
debtor
in
satisfaction
of
the
certificate
registered.
This
the
sheriffs
did.
The
bulk
of
the
assets
seized
were
horses
bred
or
raised
for
the
use
or
sale
for
showing
purposes.
Some
of
those
horses
seized
were
registered
with
the
Livestock
Branch
of
the
Department
of
Agriculture
with
Kenneth
Allen
as
the
owner.
Other
horses
seized
were
not
registered.
By
an
amended
statement
of
claim
dated
November
4,
1980,
the
material
allegations
of
which
are
substantially
the
same
as
the
preceding
instruments,
the
plaintiffs
sue
the
defendant
inter
alia
for
damages
for
wrongful
seizure
and
detention
of
their
property
and
a
declaration
that
the
property
seized
was
that
of
the
plaintiffs
rather
than
that
of
Kenneth
Allen
and
accordingly
was
not
subject
to
seizure
by
a
creditor
of
Allen.
Thus
the
crucial
fact
upon
which
the
issues
in
this
action
fall
to
be
determined
is
the
ownership
of
the
property
that
was
seized.
Is
the
owner
the
plaintiffs
or
was
it
Allen,
the
judgment
debtor,
of
the
defendant?
By
statement
of
defence
dated
November
13,
1980
the
defendant
denies
the
allegation
in
the
statement
of
claim
that
the
assets
seized
were
the
property
of
the
plaintiffs
but
alleges
that
those
assets
were
the
property
of
the
judgment
debtor
and
seized
as
such.
Subsequent
to
the
filing
of
the
statement
of
defence
certain
documents
incidental
to
the
transfer
of
the
property
were
eventually
produced,
such
as
a
chattel
mortgage
and
a
promissory
note
as
a
consideration
for
a
sale.
As
a
consequence
the
defendant
now
moves
to
amend
Her
statement
of
defence
to
plead
and
rely
upon
sections
2
and
3
of
the
Fraudulent
Conveyances
Act,
RSO
1970
c
182,
as
a
defence
and
to
plead
particulars
of
three
transactions
alleged
to
be
fraudulent:
(1)
a
sale
of
assets
in
June
1978
from
Mrs
Emily
Allen
to
the
corporate
plaintiff
identified
by
a
number
rather
than
a
name
as
not
being
a
conveyance
to
a
bona
fide
purchaser
for
good
consideration,
(2)
a
chattel
mortgage
between
Emily
Allen
and
Ken
Allen
and
Sons
Limited
as
being
without
consideration
for
the
sole
purpose
of
defrauding
creditors,
and
(3)
a
gift
of
a
tractor
to
a
minor
son
of
the
judgment
debtor
and
subsequent
sale
by
the
minor
to
the
numbered
but
unnamed
plaintiff
as
being
conveyances
to
defraud
creditors.
The
defendant
also
moved
to
amend
Her
defence
by
pleading
subsection
3(6)
of
the
Crown
Liability
Act
which
preserves
the
exemption
of
liability
in
the
prerogative
and
statutory
power
of
the
Crown.
At
the
conclusion
of
the
hearing
of
argument
on
the
matter
I
allowed
the
amendment
to
plead
the
provision
of
the
Crown
Liability
Act
but
I
reserved
the
application
for
leave
to
plead
the
Fraudulent
Conveyances
Act
the
question
being
raised
whether
that
statute
is
susceptible
of
constituting
a
defence
and
being
pleaded
as
such.
As
I
appreciated
the
contention
of
counsel
for
the
plaintiffs
in
this
respect
it
was:
(1)
That,
a
conveyance
that
is
fraudulent
and
void
as
against
creditors
is
not
void
but
voidable
and
it
is
well
settled
that
it
is
good
as
between
the
parties
to
it;
(2)
that,
accepting
the
premise
that
the
conveyance
is
voidable,
rather
than
void
ab
initio,
there
must
be
a
positive
declaration
that
the
voidable
conveyance
is
voided;
(3)
that,
accepting
the
second
premise,
the
action
seeking
the
declaratory
relief
(under
a
combined
reading
of
Rules
400
and
603
of
the
Federal
Court
Rules,
see
Mahoney,
J
in
Doucette
v
Minister
of
Transport
T-975-79,
March
27,
1979)
must
be
by
statement
of
claim
in
this
Court
at
least;
(4)
that,
a
statement
of
claim
seeking
to
declare
a
conveyance
found
to
be
fraudulent
to
be
void
is
not
within
the
jurisdiction
of
this
Court
not
being
a
law
of
Canada
within
the
meaning
of
McNamara
Construction
(Western)
Ltd
v
The
Queen
[1977]
2
SCR
654.
As
I
conceive
the
effect
of
sections
2
and
3
of
the
Fraudulent
Conveyances
Act
to
be
it
is
that
a
conveyance
that
it
fraudulent
and
void
as
against
creditors
is
not
absolutely
void
but
voidable
and
is
good
as
between
the
parties
to
it.
Under
section
3
section
2
(which
provides
that
a
conveyance
made
to
defeat
creditord
is
void
as
against
such
persons
and
their
assigns)
does
not
apply
to
property
conveyed
upon
good
consideration
and
bona
fide
to
a
person
without
knowledge
at
the
time
of
the
conveyance
of
the
intention
to
defraud.
Thus
where
a
conveyance
is
made
upon
good
consideration
the
onus
is
to
show
the
fraudulent
intent
of
both
parties
to
the
conveyance.
Where
the
conveyance
is
voluntary
it
is
necessary
to
show
the
fraudulent
intention
of
the
maker
only.
The
clear
purpose
of
the
defendant
in
seeking
to
amend
Her
statement
of
defence
as
She
does
by
pleading
the
Fraudulent
Conveyances
Act
is
for
that
pleading
to
serve
as
a
vehicle
for
allegations
of
fact
to
permit
adducing
evidence
to
establish
these
facts
from
which
a
finding
of
fact
can
be
made
by
the
trial
judge
that
title
to
the
assets
had
not
been
effectively
vested
in
the
plaintiffs.
The
defendant
does
not
seek
declaratory
relief.
I
made
the
suggestion
during
argument
that
there
was
no
vital
necessity
to
plead
the
statute
as
such
but
merely
the
facts
to
bring
the
matter
within
the
operation
and
application
of
the
provincial
law.
I
can
see
no
impediment
to
pleading
a
provincial
law
as
a
defence
in
a
matter
before
this
Court
and
I
have
in
mind
such
legislation
as
the
Statute
of
Frauds
and
the
Statute
of
Limitations.
If
as
I
believe
to
be
the
case,
the
facts
do
bring
the
conveyances
within
the
Fraudulent
Conveyances
Act
there
can
likewise
be
no
impediment
to
pleading
the
statute
itself
as
a
defence.
Furthermore
in
the
particulars
in
the
proposed
amendment
to
the
defence
there
are
allegations
that
the
property
was
not
conveyed
upon
good
consideration
in
the
transactions
in
the
chain
of
title
(two
links
are
alleged
to
be
defective)
and
that
the
conveyances
were
not
bona
fide
thus
excluding
the
conveyances
from
the
exception
in
section
3
and
accordingly
section
2,
by
which
a
conveyance
of
property
to
defeat
creditors
is
void
as
against
those
persons,
remains
inviolate.
There
were
satisfactory
reasons
why
this
more
particular
defence
was
not
pleaded
before
rather
than
a
general
denial
but
documents
were
found
and
produced
by
the
plaintiffs
which
were
previously
said
to
be
unavailable,
(ie
the
promissory
note
as
the
chattel
mortgage)
and
accordingly
there
is
substance
to
the
proposed
amendment
and
the
amendments
are
essential
to
bring
the
complete
issues
in
dispute
before
the
trial
judge.
Therefore
I
grant
the
motion
made
by
the
defendant
and
She
may
amend
Her
statement
of
defence
accordingly.
By
doing
so
I
am
not
to
be
construed
as
having
decided
the
contentions
made
by
the
plaintiffs
and
counsel
for
the
plaintiffs
is
at
liberty
to
repeat
those
contentions
before
the
trial
judge
and
the
trial
judge
is
untrammelled
by
any
remarks
I
have
here
made.
Counsel
for
the
plaintiffs
suggested
that
if
I
should
reach
the
conclusion
which
I
have
that
then
the
defendant
should
be
subject
to
terms
and
conditions
with
respect
to
expenditures
incurred
by
reason
of
the
seizure
and
the
like.
I
do
not
think
so.
The
plaintiffs
seek
expemplary
damages
and
costs
upon
a
solicitor
and
client
basis
in
the
event
of
their
success
at
trial.
For
me
to
impose
conditions
would,
in
my
view,
be
a
usurpation
of
the
function
of
the
trial
judge
without
the
benefit
of
the
vive
voce
evidence
that
will
be
given
before
and
I
decline
to
do
so.
However
the
solicitor
for
the
defendant
did
consent
to
the
costs
of
the
motion
being
costs
to
the
plaintiffs
in
any
event
in
the
cause
regardless
of
Her
success
as
being
consistent
with
the
practice
in
instances
such
as
this.
I
shall
therefore
so
order.
ORDER
It
is
ordered
that
the
defendant
shall
have
leave
to
amend
Her
statement
of
defence
attached
to
the
notice
of
motion
herein.
Since
assurances
have
been
forthcoming
from
counsel
for
the
parties
that
further
discoveries
are
not
necessary
there
shall
be
no
terms
in
these
respects.
The
plaintiffs
shall
be
entitled
to
the
costs
of
this
motion
in
any
event
in
the
cause.
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