COURT OF APPEAL FOR ONTARIO

CITATION: Walchuk v. Houghton, 2016 ONCA 643

DATE: 20160825

DOCKET: C60317

Feldman, Simmons and Lauwers JJ.A.

BETWEEN

Mary Walchuk,

Estate trustee for Walter Walchuk, deceased

Plaintiff

(Respondent in Appeal)

and

Walter Houghton also known as Wilfred Houghton

also known as Wilfred W. Houghton

also known as Wilfred P. Houghton

Defendant

(Appellant)

Michael Jaeger, for the appellant

Andrew Sheremeta, for the respondent

Heard: August 22, 2016

On appeal from the judgment of Justice R. John Harper of the Superior Court of Justice, dated March 9, 2015 with reasons reported at 2015 ONSC 1291.

ENDORSEMENT

[1] The respondent obtained a money judgment against the appellant in February 2011. The appellant failed to attend an examination in aid of execution. On September 5, 2014, the motion judge issued an order compelling the appellant to attend to be examined on September 17, 2014, and to bring specified documents to the examination. On September 16, 2014, the appellant made an assignment in bankruptcy.

[2] The appellant attended the examination scheduled for September 17, 2014 but did not bring the specified documents. Instead, he brought a Notice of Stay of Proceedings issued in accordance with s. 69 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

[3] The respondent then moved for an order finding the appellant in contempt of the court’s September 5, 2014 order. The motion judge ruled that the motion could proceed despite the appellant’s bankruptcy. He said:

I am of the view that the motion for contempt before me is one that goes directly to the issue of the court's ability to enforce its judgments. The order I made was one that called for the defendant to do certain things. Whether he did them or not cannot be caught up in his choice of the timing of his filing for bankruptcy. I find that the motion for contempt may proceed.

[4] The appeal of this judgment must be allowed.

[5] Section 69.3 of the Bankruptcy and Insolvency Act imposes a stay on proceedings that comes into force on bankruptcy. It provides:

69.3(1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy.

[6] The respondent argues that contempt proceedings are not a claim provable in bankruptcy. We agree, but this does not end the inquiry as to the effect of the stay in this instance.

[7] The respondent relies on cases in which contempt proceedings continued outside of the bankruptcy. In Manis v. Manis (2001), 2001 CanLII 3851 (ON CA), 55 O.R. (3d) 758 (C.A.), the husband was required to discharge the mortgage on the matrimonial home and to make arrangements for a substitute security for a joint line of credit. He disobeyed those orders and made a questionable voluntary assignment in bankruptcy after failing to comply with court orders for four months. This court permitted the contempt proceeding to continue. In 822878 Ontario Ltd. v. Firth, 2013 ONSC 2422, 5 C.B.R. (6th) 303 (Turnbull J.) and 2013 ONSC 4248, 5 C.B.R. (6th) 284 (Ramsay J.), the court found that the defendant had failed to comply with the order of Parayeski J. to appear at a judgment-debtor examination and to bring with him certain relevant documents. At the examination, he refused to answer questions about his pertinent assets and did not bring the documents he was ordered to bring. Five months later he declared bankruptcy. The court allowed the contempt proceeding to continue.

[8] However, the act of Mr. Houghton alleged to be contemptuous occurred after the bankruptcy, not before, making this case quite different. The respondent was unable to bring cases to our attention supporting her position on this point.

[9] At the base of the judgment is the September 5, 2014 order of the motion judge requiring that Mr. Houghton attend for his judgment-debtor examination on September 17, 2014. The examination was clearly in aid of execution. Such an attendance is exactly the kind of proceeding that s. 69.3 of the BIA was intended to stay. Given the order to attend the examination was stayed as of Mr. Houghton’s bankruptcy on September 16, 2014, we are unable to see how his failure to bring the specified documents could possibly found contempt.

[10] Further, we observe the bankruptcy process is intended to be a single forum for creditors: Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379 at para. 22. Permitting the contempt process to unfold in the present circumstances would offend this principle.

[11] The appeal is allowed with costs payable to the appellant by the respondent in the amount of $10,000 net of previous costs awards, inclusive of interest, taxes and disbursements.

"K. Feldman J.A."

"Janet Simmons J.A."

"P. Lauwers J.A."