Philip J. Gertler

The Trustee sought approval of an in-bankruptcy Division I Amended Proposal for the Debtor.

The Office of the Superintendent in Bankruptcy (OSB) opposed the approval, citing a complete lack of disclosure and untruths by the Debtor throughout the bankruptcy process, including her second bankruptcy.

The court applied the three-pronged test for proposal approval (reasonableness, benefit to creditors, good faith) and considered the public interest in the integrity of the bankruptcy system.

Despite 100% creditor approval, the court found the Debtor failed to meet her disclosure responsibilities, particularly regarding income, assets, and the use of credit for gambling and alleged medical expenses, and inconsistencies regarding her marital status and property transfers.

The court concluded that approving the proposal would not uphold the integrity of the bankruptcy system and dismissed the motion.

The Bankrupt sought to expunge or reduce a creditor's claim, and the motion was entirely successful.

This endorsement addresses the costs of that expungement motion.

The court found the creditor's conduct in opposing the motion to be reprehensible, scandalous, or outrageous, having taken inconsistent legal and factual positions across various proceedings.

Substantial indemnity costs were awarded to the bankrupt due to the creditor's conduct and the complexity and importance of the issues.

The plaintiff mortgagee brought a motion for payment of funds held in court from the sale of the defendants' home.

The defendants opposed, arguing the plaintiff's claim merged in a default judgment, the mortgage was released by an agreement to take keys to a separate condominium, and the plaintiff breached duties as a mortgagee in possession.

The court rejected the defendants' arguments, finding no requirement for a monetary judgment before enforcing security, the alleged agreement could not bind the proceeds in court given a prior consent order, and claims of improvident realization were not properly before the court.

The motion was granted.

The Consumer Proposal Administrator brought a motion to tax its Final Statement of Receipts and Disbursements after the Office of the Superintendent of Bankruptcy (OSB) issued a negative comment letter.

The OSB objected to the Administrator claiming legal costs for a prior Revival Motion, arguing it exceeded the tariff in Rule 129 of the Bankruptcy Rules.

The court found that issue estoppel applied because the OSB had notice of the Revival Motion, did not object, and did not appeal the resulting order granting costs.

However, because the Administrator's own incorrect assumption about the deceased debtor's estate caused the default necessitating the Revival Motion, the court reduced the Administrator's tariff fees to offset the legal costs, approving a total of $4,760.40.

This motion, brought within a receivership, addressed a dispute between Sluyter Isaac Investments Inc., a secured creditor, and 1902408 Ontario Ltd., the registered owner of the Brockville Property.

Sluyter claimed $600,000 plus interest and costs, asserting a secured interest in fixtures attached to the property, and sought payment from the net proceeds of sale. 1902408 Ontario Ltd. opposed, arguing the claim was statute-barred.

The court held that Sluyter's claim to enforce its security interest in fixtures, arising under the Personal Property Security Act, is an interest in personal property, not real property, and is therefore subject to the two-year limitation period under the Limitations Act, 2002, rather than the ten-year period under the Real Property Limitations Act.

A trustee in bankruptcy appealed a master's order refusing to enforce payment of surplus income required under a conditional discharge order.

The issue was whether the enforcement mechanism under s. 68(13) of the Bankruptcy and Insolvency Act could be used where surplus income had already been fixed as a condition of discharge.

The court held that a conditional discharge order requiring payment of surplus income can simultaneously constitute an order under s. 68(10)(c).

Accordingly, the trustee may use s. 68(13) to require an employer to remit surplus income to the trustee.

The master erred in law in concluding that the trustee's only remedy was under s. 176 or by seeking revocation of discharge.

A bankrupt sought discharge while the trustee opposed on the basis that the bankrupt abandoned a matrimonial equalization claim that could have generated funds for creditors.

The trustee argued the bankrupt’s change of litigation position caused the estate to incur substantial legal fees and lost a potential recovery.

The court held that the Bankruptcy and Insolvency Act duty requiring a bankrupt to aid in realization of assets does not obligate a bankrupt to alter positions in separate family litigation, particularly where doing so would affect personal family interests.

The trustee’s litigation strategy was reasonable but the costs could not be shifted to the bankrupt absent an agreement or misconduct.

The court granted the discharge with only a short suspension reflecting prior delay.

Following the dismissal of a bankrupt’s appeal from a surplus income order under s. 68 of the Bankruptcy and Insolvency Act, the court determined the appropriate costs payable to the trustee.

The trustee sought costs on a substantial indemnity basis on the ground that the appeal lacked merit and that notice had been given of the intention to seek elevated costs.

The court declined to award substantial indemnity costs and instead applied the usual partial indemnity standard.

Considering the factors under Rule 57.01 of the Rules of Civil Procedure, including the bankrupt’s financial circumstances, the court fixed costs at a reduced amount inclusive of HST.

The bankrupt appealed an order fixing surplus income obligations under s. 68 of the Bankruptcy and Insolvency Act and directing the Workplace Safety and Insurance Board to remit monthly payments to the trustee.

The appellant argued the registrar lacked jurisdiction because no mediation had occurred and that workers’ compensation benefits were exempt from seizure under provincial legislation.

The court held that mediation was not a prerequisite because the trustee could apply under s. 68(10)(c) where the bankrupt failed to comply with surplus income requirements.

It further held that workers’ compensation benefits form part of a bankrupt’s “total income” under s. 68 and may be attached through an order served on a payor.

The appeal was dismissed.