Court File and Parties

COURT FILE NO.: 31-2333834 DATE: 20230919

SUPERIOR COURT OF JUSTICE – ONTARIO

(IN BANKRUPTCY AND INSOLVENCY)

RE: In the Matter of the Consumer Proposal of Marcilynn Ayesha Cumberbatch

BEFORE: Associate Justice Rappos

COUNSEL: Matthew Harris, for the Administrator David Sklar & Associates Inc.

HEARD: September 19, 2023 (via videoconference)

ENDORSEMENT

Nature of the Motion

[1] The Administrator, David Sklar & Associates Inc. (the “Administrator”), brings a motion under subsection 66.31(9) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”) for an order reviving the consumer proposal of the debtor, Marcilynn Ayesha Cumberbatch (the “Debtor”), waiving the Debtor’s defaults, and allowing payments to be made forthwith.

[2] For the reasons set out below, the Administrator’s motion is granted.

Background

[3] The Debtor made a consumer proposal on January 10, 2018 under section 66.13 of the BIA (the “Consumer Proposal”). On January 16, 2018, the Administrator filed the Consumer Proposal with the Office of the Superintendent of Bankruptcy (the “OSB”).

[4] Under the Consumer Proposal, the Debtor agreed to pay to the Administrator the sum of $7,800, with monthly payments of $130 per month for a 60-month period.

[5] Under subsection 66.14 of the BIA, in the ten days following the filing of a consumer proposal, an administrator is required to, among other things: (a) send a report to the OSB containing the administrator’s opinion as to whether the consumer proposal is reasonable and fair to the consumer debtor and the creditors, and whether the consumer debtor will be able to perform it; and (b) send a copy of the consumer proposal, the report to the OSB, a statement of affairs, and a proof of claim to every known creditor of the consumer debtor.

[6] Subsection 66.18(1) of the BIA provides a mechanism whereby a consumer proposal is deemed to be accepted by the creditors if no request is made for a meeting of creditors in the 45-day period following the filing of a consumer proposal by the OSB or creditors with proven claims in accordance with subsection 66.15(2).

[7] The 45-day period expired on March 2, 2018. No meeting of creditors was called in accordance with subsection 66.15(2). As a result, the Consumer Proposal was deemed accepted by the Debtor’s creditors on March 3, 2023.

[8] Subsection 66.22(2) of the BIA provides a mechanism whereby a consumer proposal is deemed approved by the Court if no request has been made by the OSB or any interested party for the consumer proposal to be reviewed by the Court, in the 15-day period following deemed acceptance of the consumer proposal, in accordance with subsection 66.22(1).

[9] The 15-day period expired on March 18, 2018. No request for review of the consumer proposal was made in accordance with subsection 66.22(1). As a result, the Consumer Proposal was deemed approved by the Court on March 19, 2018.

[10] The Debtor defaulted in making payments to the Administrator under the Consumer Proposal. As a result of missed payments due in February, March and April 2022, the Consumer Proposal was deemed annulled effective April 30, 2022 in accordance with subsection 66.31(1) of the BIA.

[11] At the time of the annulment, the Debtor had paid $5,460 of the $7,800 payable under the Consumer Proposal.

[12] The Administrator requested the scheduling of this motion on February 2, 2023. The motion was originally before me in writing on April 26, 2023.

[13] On March 24, 2023, the Administrator served its motion record on all of the Debtor’s creditors and the OSB. No party contacted the Court to express any opposition to the Administrator’s motion.

[14] In support of its motion, the Administrator filed an affidavit sworn by the Debtor. In the affidavit, the Debtor confirmed that she defaulted under the Consumer Proposal due to not having enough hours at her job to make the payments. The Debtor indicated that she now has the ability to pay off the remainder of the proposal and will make “missed payments forthwith.”

[15] A representative of the Administrator swore an affidavit confirming that the Administrator reasonably believes it is appropriate to revive the Consumer Proposal.

Attendances Before the Court

[16] As set out in my Endorsement dated April 26, 2023, I questioned whether I had jurisdiction to revive the Consumer Proposal. The reason for this was because subsection 66.12(5) of the BIA provides that “a consumer proposal must provide that its performance is to be completed within five years.” Additionally, subsection 66.24(3) of the BIA provides that the court “shall refuse to approve a consumer proposal if it does not comply with subsections 66.12(5) and (6).”

[17] By the time the motion for revival was before me, the five-year period had already expired.

[18] In the circumstances, I adjourned the motion sine die to allow the Administrator and the Debtor to make submissions on the jurisdiction issue. I suggested that the parties consider the decision of Associate Justice Kaufman (as he then was) in In the Matter of the Consumer Proposal of Shareef Zahrawi, 2022 ONSC 6035, which dealt with the issue of jurisdiction to revive a consumer proposal outside the 5-year period.

[19] The Administrator’s motion was again before me on June 6, 2023. At that time, a representative of the OSB was in attendance. I adjourned the motion sine die so that the Administrator could serve its motion record and its statement of law, my April 26, 2023 endorsement, my June 6, 2023 endorsement, and its notice of return of motion on the OSB.

[20] The Administrator’s motion is before me again for a third time. The affidavit of service sworn September 6, 2023 confirms that the Administrator served its motion record, its statement of law, my April 26, 2023 endorsement, my June 6, 2023 endorsement, and its notice of return of motion, on all of the Debtor’s creditors and the OSB on September 6, 2023.

[21] No party appears before the Court in opposition of the motion.

Issues

[22] The issues before the Court are:

(a) does the Court have jurisdiction under the BIA to revive a consumer proposal after the expiry of the five-year period? and

(b) if the answer to issue one is yes, should the Court exercise such jurisdiction in these circumstances?

Analysis and Law

[23] Subsection 66.12(5) of the BIA provides that “A consumer proposal must provide that its performance is to be completed within five years.”

[24] Subsection 66.24(3) of the BIA provides that “The court shall refuse to approve a consumer proposal if it does not comply with subsections 66.12(5) and (6).”

[25] Subsection 66.31(9) of the BIA provides that:

The administrator may at any time apply to the court, with notice to the official receiver and the creditors, for an order reviving any consumer proposal of a consumer debtor who is not a bankrupt that was deemed to be annulled, and the court, if it considers it appropriate to do so in the circumstances, may make an order reviving the consumer proposal, on any terms that the court considers appropriate. [emphasis added]

[26] With respect to timelines under the BIA, subsection 187(11) provides that:

Where by this Act the time for doing any act or thing is limited, the court may extend the time either before or after the expiration thereof on such terms, if any, as it thinks fit to impose.

[27] In support of its argument that the Court has jurisdiction to revive a consumer proposal outside the five-year period, the Administrator relies on the Supreme Court of Canada’s decision in A. Marquette & Fils Inc. v. Mercure, [1977] 1 S.C.R. 547, where the Supreme Court noted at paragraph 15 that the BIA (then known as the Bankruptcy Act) “clearly has its origins in the business world. Interpretation of it must take these origins into account. It concerns relations among businessmen, and to interpret it using an overly narrow, legalistic approach is to misinterpret it.”

[28] The Administrator also cited the unreported decisions of Master Jean (as she then was titled) dated October 17, 2014 in Re Watts and Re Moore, and the unreported decision of Associate Justice Ilchenko dated September 13, 2022 in Re Molina. In each of these cases, the Court decided that it had jurisdiction to extend the period of time for performance of a consumer proposal beyond the five-year period in certain circumstances.

[29] In In The Matter of The Consumer Proposal of Shareef Zahrawi, 2022 ONSC 6035, the administrator brought a motion for revival of a proposal that was made on October 14, 2014. It was deemed annulled on February 28, 2018. The motion was not heard until October 2022, some eight years after the consumer proposal was made and over four and half years after the deemed annulment.

[30] Associate Justice Kaufman concluded at paragraph 12 of the decision “that the court may order the revival of a consumer proposal after its fifth anniversary, when it is appropriate to do so in the circumstances.” Associate Justice Kaufman came to this conclusion because of the language in subsection 66.31(9) of the BIA that an administrator may bring the application to revive “at any time.”

[31] Based on my review of the above-noted decisions, and given the language of subsection 66.31(9) of the BIA and my discretion to extend timelines pursuant to section 187(11), I am satisfied that the Court has jurisdiction to revive a consumer proposal after the expiry of the five-year period.

[32] With respect to the circumstances where a revival is appropriate, Associate Justice Kaufman noted that a revival would be appropriate “where a proposal is near complete, the debtor defaults shortly before the proposal’s fifth anniversary, and the debtor is able to cure the default shortly thereafter.”

[33] Associate Justice Kaufman went on to identify the following list of relevant factors in paragraph 13 of this decision, which were said to not be exhaustive, and no single factor is determinative:

a) The reason for the consumer proposal’s annulment – the court is more likely to exercise its discretion where a debtor defaults for reasons beyond his or her control, such as sickness or job loss;

b) The amount that has been paid under the proposal – the court is more likely to revive the proposal where the proposal’s terms are nearly completed, and a relatively small amounts remain owing; and

c) Whether there is any creditor opposition. A large creditor’s opposition would militate against granting the order compared to a creditor who was owed relatively small sums.

[34] In the case at bar, the Consumer Proposal was deemed annulled as of April 30, 2022. The administrator moved to schedule a revival motion just over nine months later.

[35] The Administrator has confirmed that, if the Consumer Proposal is revived, the Debtor will pay the amount outstanding under the Consumer Proposal to the Administrator within 30 days of the Court order.

[36] Lastly, no creditor, nor the OSB, has taken any position in connection with the Administrator’s request for a revival, notwithstanding that they have all been served with the motion materials on many occasions.

Disposition

[37] Having regard to these factors, I am of the view that it is appropriate in the circumstances to revive the Consumer Proposal.

[38] As a result, the Administrator’s motion is hereby granted. Order to go as electronically amended and signed by me.

Associate Justice Rappos DATE: September 19, 2023