Executive Summary: Key Legal and Evidentiary Issues

• The case centered on whether the 2017 transfer of three properties by S.K. Export Inc. to Maple Product KNB Inc. was executed to avoid enforcement of a 2019 judgment.

• Defendants failed to respond to the 2022 legal action, resulting in a noting in default; they later sought to have this set aside under Rule 21.03(1).

• The evidence submitted by the defendants did not sufficiently establish fair market value was paid for the transferred properties.

• Defendants admitted to discarding court documents based on a belief that prior litigation outcomes ended the matter, undermining claims of good faith.

• The plaintiff filed the action within the five-year limitation period under section 27(2) of the Debtor Transactions Act, triggered by the actual discovery of the transfers.

• The Court held that the evidentiary record did not establish a triable defence, and denied the motion to set aside the default, awarding $2,000 in costs to the plaintiff.

Background and dispute origins
This case was brought by Producteurs et productrices acéricoles du Québec (PPAQ), the Quebec maple syrup producers’ federation, against S.K. Export Inc., Étienne St-Pierre, Maple Product KNB Inc., and Julienne Bossé. PPAQ sought enforcement of a judgment obtained on February 7, 2019, for $977,930.00 against S.K. Export and St-Pierre, relating to violations of Quebec’s maple syrup marketing regulations. PPAQ alleged that the defendants transferred property and assets to avoid satisfying the judgment.

Property transfers and allegations
PPAQ discovered that on July 20, 2017, three properties (PIDs 50029727, 50254929, and 50367945) formerly owned by S.K. Export were transferred to Maple Product KNB Inc., a company owned by Julienne Bossé. Both she and St-Pierre resided at 7375 Route 17, Kedgwick, New Brunswick—the same address used by both companies. PPAQ claimed the transfer was fraudulent under the Debtor Transactions Act, SNB 2015, c 23, as it aimed to shield assets from enforcement.

Defendants’ response and motion to set aside default
S.K. Export and St-Pierre were personally served on November 22 and November 30, 2022, respectively. No defence was filed, and they were noted in default on January 23, 2023. On November 4, 2024, the defendants filed a motion to set aside the noting in default. In affidavits, St-Pierre and Bossé stated they discarded legal documents because they believed previous court decisions (including 2015 NBCA 30) ended the matter. They claimed no knowledge of the 2019 judgment or 2022 action until October 25, 2024, when a journalist brought it to their attention.

They argued the property transfers were legitimate business transactions. Bossé borrowed $190,000 from CBDC and secured the loan with collateral mortgages. An additional $50,000 line of credit was assumed, and $84,475.06 was paid to discharge existing mortgages of $80,108.13 on the properties. They claimed these transactions were unrelated to the later judgment.

Policy terms and statutory clauses at issue
The action was brought under the Debtor Transactions Act, and specifically involved the limitation period in section 27(2), which extends the filing period to five years if the transaction was concealed. The Court noted that this section does not include an “ought to have known” qualifier and ruled that the action was filed within the allowable timeframe, on July 13, 2022, regarding a transaction dated July 20, 2017.

Court’s analysis and findings
Applying the four-part test from Royal Bank of Canada v. Ruddock, 2009 NBCA 25, the Court found:

• The defendants lacked a continuing intention to defend, as they admitted to discarding court notices.

• Their explanation for the default was not reasonable, resting on a belief that prior litigation outcomes excused further engagement.

• Their motion was not made promptly but coincided with a scheduled enforcement hearing.

• Most critically, they failed to establish a triable defence. While some consideration was shown (e.g., the mortgage payments), no evidence established the fair market value of the properties or that full compensation was made.

Documents such as financial statements, banking records, or valuations were not submitted. The only records provided were a CBDC term sheet, promissory note, collateral mortgage, a trust statement indicating mortgage payments, and partial bookkeeping excerpts from 2017.

The Court noted this evidence was insufficient, with many critical facts left unproven. It emphasized that the burden of demonstrating a triable defence lies with the moving party, and failure to do so is fatal to such a motion.

Outcome
The Court, per Chief Justice Tracey K. DeWare, denied the defendants’ motion to set aside the noting in default. It found no valid defence was established, and the procedural failings of the defendants were substantial. Costs of $2,000 were awarded to the plaintiff. The judgment was dated January 10, 2025, and issued in English, with translation pending.