Court File and Parties

Court File No.: 31-2659767 Date: 2024-11-29

Superior Court of Justice – Ontario (In Bankruptcy and Insolvency)

Re: In the Matter of the Bankruptcy of Qui Thieu Mac

Before: Associate Justice Rappos

Counsel: Marvin Zweig, representative of Goldhar & Associates Ltd.

Heard: November 28, 2024 (virtually)

Endorsement

[1] Qui Thieu Mac filed an assignment in bankruptcy on July 22, 2020 and Goldhar & Associates Ltd. was appointed as trustee in bankruptcy. It is a bankruptcy governed by the summary administration provisions of the Bankruptcy and Insolvency Act (“BIA”).

[2] Mr. Mac previously filed for bankruptcy on November 3, 2005, and received his discharge on November 19, 2006.

[3] At the time he filed for his second bankruptcy, he reported to the Trustee that he had no income. As a result, he had no requirement to pay surplus income to the Trustee in accordance with section 68 of the BIA and the applicable OSB directive.

[4] Under subsection 168.1(1)(b)(i) of the BIA, as a second time bankrupt with no surplus income, Mr. Mac was entitled to an automatic discharge from bankruptcy 24 months after he filed his assignment, unless an opposition to the discharge was filed in accordance with the BIA.

[5] Mr. Mac received his automatic discharge on July 23, 2022, as no opposition was filed by the Trustee, the OSB or any creditor.

[6] The Trustee brings a motion to annul Mr. Mac’s discharge from bankruptcy. The evidence filed by the Trustee indicates that it prepared and signed a notice of intended opposition to discharge dated June 25, 2022 and intended to serve and file it in accordance with the BIA.

[7] The Trustee also prepared and signed its Report on Bankruptcy Application for Discharge under subsection 170(1) of the BIA dated June 25, 2022, which indicates the Trustee’s intention to oppose the discharge, due to the prior bankruptcy, Mr. Mac’s failure to provide income and expense statements, and Mr. Mac having brought on, or contributed to the bankruptcy, by gambling. These are all facts under section 173(1) of the BIA that are to be considered by the court on any discharge application.

[8] Through inadvertence, the notice and report were not filed, and this was not discovered by the Trustee until it was preparing a supplementary report for a discharge hearing scheduled for October 23, 2024. That hearing was cancelled.

[9] The Trustee served its motion materials on Mr. Mac and the OSB. Neither has taken any steps to oppose the motion.

[10] The Trustee cites no section of the BIA that it is relying on for the purposes of this motion. The Trustee did not file any legal submissions for the motion.

[11] As I have previously written, as noted in Bankruptcy and Insolvency Law of Canada, 4th Edition at §8.164, “a registrar derives its authority from the Act and the Rules and has no inherent jurisdiction. If authority for an act cannot be found in the BIA or the [Bankruptcy and Insolvency General Rules], then the registrar cannot perform it.” The learned authors of the text go on to state that “if the power to hear a matter is not expressly conferred on the registrar by s. 192 or some other section of the Act or the Rules, the registrar has no jurisdiction to hear it.”

[12] In the circumstances, I was required to consider which sections of the BIA may grant authority to the Court to annul an automatic discharge.

[13] Subsection 180(1) provides that “where a bankrupt after his discharge fails to perform the duties imposed on him by this Act, the court may, on application, annul his discharge.” That section is not applicable, as the Trustee has raised no issues regarding Mr. Mac’s conduct following his discharge from bankruptcy.

[14] In Cameron, Re, Justice Blair (as he then was) held that subsection 187(5) of the BIA was applicable to a motion to annul a discharge. That section provides that “Every court may review, rescind or vary any order made by it under its bankruptcy jurisdiction.”

[15] In Cameron, Re, Justice Blair set out factors the court is to review when considering whether to annul a discharge. Blair J. referred to Tong, Re as a precedent for an annulment motion under subsection 187(5) of the BIA.

[16] Justice Blair also referred to the decision of Justice Farley in Baker, Re, where Farley J. considered a motion for annulment of an automatic discharge because of inadvertence of the trustee by applying subsection 187(9) of the BIA.

[17] That section provides that “no proceeding in bankruptcy shall be invalidated by any formal defect or by any irregularity, unless the court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court.”

[18] In my view, even in circumstances where a motion is unopposed, a trustee in bankruptcy must provide legal submissions where it is requesting an annulment of a discharge from bankruptcy. As no submissions considering the applicable law and cases were filed, I am adjourning this motion sine die.

[19] The Trustee shall review these decisions, note them up, review the applicable sections of Houlden & Morawetz, and prepare legal submissions that set out the section(s) of the BIA should be applied by the Court, and how the facts of the case support the granting of the annulment motion based on the tests set out in the relevant jurisprudence.

Associate Justice Rappos Date: November 29, 2024

Citations

[1] Cameron, Re, 26 O.R. (3d) 794, 36 C.B.R. (3d) 272, 1995 CarswellOnt 947 (SCJ), para. 7. [2] Ibid., paras. 11-12. [3] Tong, Re, 23 C.B.R. (3d) 39, 1993 CarswellOnt 244 (SCJ). [4] Baker, Re, 21 O.R. (3d) 501, 29 C.B.R. (3d) 10, 1994 CarswellOnt 314 (SCJ).