John D. Dempster

Opposed bankruptcy discharge where the trustee alleged arrears of surplus income and non-compliance with income reporting obligations.

The trustee had calculated surplus income strictly according to the Office of the Superintendent of Bankruptcy’s Directive 11 standards and believed he had no discretion to consider the bankrupts’ personal and family circumstances.

The court held that under s. 68(3) of the Bankruptcy and Insolvency Act trustees must exercise professional judgment and consider both the Superintendent’s Standards and the bankrupt’s personal and family situation when determining surplus income.

Because the trustee and bankrupts ultimately agreed the guideline calculation produced hardship and that the amounts already paid were appropriate, the court fixed the surplus income at that amount.

Absolute discharges were granted.

Opposed discharge hearing under s. 172 of the Bankruptcy and Insolvency Act following a voluntary assignment in bankruptcy.

The trustee’s report recommended an absolute discharge despite calculated surplus income obligations, citing the bankrupt’s advanced age, dementia, and financial circumstances.

The court reviewed the trustee’s discretion regarding surplus income calculations and emphasized that trustees are not required to rigidly apply the Superintendent’s standards where an agreement exists and has been complied with.

Finding the trustee and bankrupt had agreed on the surplus income obligation and that the bankrupt had paid the agreed amount, the court fixed the surplus income at the amount already paid into the estate.

An absolute discharge was granted.

The proposal trustee brought a motion seeking approval of its fees and disbursements following the failure of a consumer proposal under Division I of the Bankruptcy and Insolvency Act.

The debtor’s proposal had been refused by creditors, resulting in a deemed assignment in bankruptcy.

The court considered whether the trustee’s fees could be paid from the bankrupt estate as a preferred claim under s. 136(1)(b) of the Act.

Finding that the services were properly performed and that the proposal was reasonable in the circumstances, the court approved the trustee’s fees and disbursements.

The motion was granted and the fees were ordered to be treated as a preferred claim in the estate.

The trustee brought a motion seeking court approval to amend a previously approved consumer proposal under Division I of the Bankruptcy and Insolvency Act to extend the debtor’s payment deadline by two years.

The court considered whether it had jurisdiction to amend a court‑approved proposal and the circumstances in which such a motion is required.

The court held that it has jurisdiction to amend a proposal on motion with notice to creditors and the Office of the Superintendent of Bankruptcy, but that such a motion is necessary only where a material change affecting the substance of the proposal is sought.

Changes merely affecting the timing of payments that do not alter the total return to creditors are not material changes.

The motion to approve the amendment extending the payment period was granted.

A trustee brought a motion seeking court approval to amend an existing court‑approved consumer proposal under Division I of the Bankruptcy and Insolvency Act.

The proposed amendment would include approximately $33,000 in post‑proposal tax liabilities in exchange for an additional $1,500 payment, thereby reducing the return to original creditors.

The court found the amendment constituted a material change and that the record did not demonstrate creditors were adequately informed of the nature and effect of the proposed amendment.

The court held that creditors must be properly notified and given an informed opportunity to assess the revised proposal.

The motion was dismissed without prejudice to bring a new motion on proper notice to creditors and the Office of the Superintendent of Bankruptcy.