Case information

Bankruptcy and Insolvency — Trustees — Ponzi scheme — Unjust enrichment — Doctrine of corporate attribution — Limitation periods — Failed financial company — Trustee in bankruptcy attempting to recover funds lost to Ponzi scheme — Whether Court of Appeal erred in declining to address principle of agency and s. 12 of Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, in favour of doctrine of corporate attribution — Alternatively, if principle of agency does not apply or fails on facts of this case, whether Court of Appeal erred in ruling Trustee’s claims were not time-barred — If Trustee’s claims were not time-barred, whether Court of Appeal erred in deciding equitable set-off did not provide complete defence to claims — Whether Court of Appeal erred in affirming trial judge’s conclusion that Lorne Scott and Golden Oakes were not dealing at arm’s length for purposes of s. 95(1)(b) of Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. — Whether, with respect to cross-appeal in court below, Court of Appeal erred in determining referral agreements were unlawful at common law. <br>

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Golden Oaks Enterprises Inc., founded by Joseph Gilles Jean-Claude Lacasse, was a Ponzi scheme. The scheme collapsed in 2013 and both Golden Oaks and Mr. Lacasse, Golden Oaks’ principal and directing mind, went into receivership and made assignments in bankruptcy. A Trustee in bankruptcy was appointed. It began over 80 separate legal actions against creditors in 2015. Seventeen of these actions were brought against individuals and companies who received payments from Golden Oaks in 2012 and 2013, which included commission payments and interest on promissory notes. The theory of these 17 actions was that, as a Ponzi scheme, Golden Oaks was by definition insolvent, it never had enough money to pay what it owed to legitimate creditors, and the commission payments and usurious interest payments to the defendants deprived those creditors of their share of the company’s remaining equity. The 17 actions were heard together in a summary trial.

The trial judge granted a claim under s. 95(1)(b) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, against Mr. Scott for repayment of $72,575 in preferences, while dismissing other claims against him. With respect to the other investor appellants, the trial judge granted claims for repayment of interest in varying amounts between $4,000 and $67,500.

The Court of Appeal dismissed the appeal and allowed the cross-appeal in part.