Robert A. Klotz

The bankrupt, his father, and a creditor (his former partner) brought overlapping motions in a bankruptcy proceeding.

The court ordered equitable set-off of multiple costs awards made in family and bankruptcy proceedings between the bankrupt and the creditor, effective September 28, 2018.

The court dismissed the father's claim for a charge over the balance of the costs award, finding that solicitor's liens and charging orders do not apply to non-lawyers who fund litigation.

The balance of the costs award was ordered payable to the bankruptcy trustee.

The court also dismissed the creditor's request for a stay of enforcement and declined to dismiss the creditor's civil action for delay at this stage.

Following the dismissal of the bankrupt's appeal of his discharge conditions, the court determined the issue of costs.

The bankrupt requested that the trustee's costs be paid out of the $61,000 he was ordered to pay into the estate, while the trustee sought substantial indemnity costs of $6,915.31 due to allegations made against it.

The court rejected the bankrupt's request, finding it unfair to impose the costs on the creditors.

The court also declined to award substantial indemnity costs, noting the allegations were not severe enough.

The bankrupt was ordered to pay costs of $4,250 on a partial indemnity basis.

The bankrupt appealed a Registrar's order requiring him to pay $61,000 as a condition of his discharge from bankruptcy, and moved to admit fresh medical evidence regarding his mental health during the period he defaulted on his consumer proposal.

The court dismissed the motion to admit fresh evidence, finding the treating psychiatrist's letters were not sufficiently credible or probative to affect the outcome.

The court upheld the Registrar's decision, concluding there was no error in principle in finding the bankrupt dissipated funds and failed to perform his proposal despite having the means to do so.

The appellant appealed the bankruptcy Trustee's disallowance of her proof of claim for an estimated $500,000 equalization payment against her bankrupt spouse.

The court determined the appeal should proceed as a true appeal based on the record before the Trustee, rather than a hearing de novo.

The court found the appellant failed to provide sufficient evidence to support or quantify her equalization claim, noting that the family law trial judge had previously concluded no equalization payment would be owing.

The appeal was dismissed with no order as to costs.

Plaintiffs commenced an action alleging fraud, deception, and improper conduct arising from a series of mortgage and financial transactions involving real estate properties and business dealings.

The court held the action turned primarily on credibility and preferred the defendant’s evidence over that of the principal plaintiff.

The court found the plaintiff’s testimony inconsistent and unreliable, and concluded many claims were barred by the Limitations Act, 2002 and further defeated by the corporate veil where the transactions involved corporate entities rather than the individual plaintiff.

The plaintiffs failed to establish any contractual or legal basis for personal recovery.

The action was dismissed and judgment was granted on the defendant’s counterclaim for the outstanding mortgage balance.

The applicant brought a motion to annul the respondent’s assignment into bankruptcy, arguing it was filed to stay ongoing family law proceedings and avoid an equalization payment.

The court examined the respondent’s financial circumstances and the timing of the bankruptcy filing under s. 181(1) of the Bankruptcy and Insolvency Act and the principles governing abuse of process.

The respondent had relatively modest debts, significant equity in the matrimonial home, and exempt assets including a pension and RRSPs, indicating he was solvent.

The court concluded that the assignment was motivated by an attempt to derail the family litigation and evade equalization obligations.

The bankruptcy was annulled and property was vested in the applicant to facilitate payment of legitimate creditors and advance the equalization process.

Following dismissal of a motion to annul a bankruptcy, the court determined the appropriate costs award.

The bankrupt sought full indemnity costs based on unproven allegations of fraud, while the opposing party argued for minimal costs in the cause.

The court held that the motion to annul lacked any realistic basis due to extreme delay and that costs should be payable within 30 days.

However, because no findings were made on the fraud allegations, the court awarded costs on a partial indemnity basis.

The court fixed costs at $10,000 inclusive of HST after considering the factors under Rule 57.01 and the allocation of work between the annulment motion and a separate expungement motion.

A creditor and former spouse brought a motion under s. 181(1) of the Bankruptcy and Insolvency Act to annul a bankruptcy more than a decade after the alleged fraudulent conduct giving rise to the request was known.

The moving party relied on earlier family court findings that the bankrupt had diverted income and engaged in deceit prior to the bankruptcy.

The court held that applications to annul a bankruptcy must be brought with diligence once the relevant facts are known.

Given a delay of at least twelve years and the absence of any satisfactory explanation, the motion was fatally late.

The court also noted potential prejudice arising from the long passage of time and questioned the practical purpose of the application.

A trustee in bankruptcy sought directions regarding whether settlement proceeds from a motor vehicle accident should be included in the bankrupt’s income for surplus income calculations under s. 68 of the Bankruptcy and Insolvency Act.

The court held that damages for pain and suffering are not income for the purposes of s. 68 because they resemble windfalls unrelated to employment income.

However, compensation for future loss of income constituted income, but should be prorated over the period it replaces rather than counted entirely in the year received.

Statutory accident benefits received in a lump sum were included fully as income due to the bankrupt’s improper payment of the funds to a third party.

Welfare payments were also included as income despite being repayable loans.

Conditions of discharge required payment of surplus income and an additional penalty due to the bankrupt’s failure to disclose litigation and settlement proceeds.

The applicant sought a bankruptcy order based on a loan debt that had become due more than two years before the bankruptcy application was commenced.

The respondent argued that the claim was statute‑barred under the Limitations Act, 2002 and therefore could not support a bankruptcy application.

The court held that the Limitations Act, 2002 bars a remedy but does not extinguish the underlying debt, meaning the debt may still constitute a debt “owing” for the purposes of the Bankruptcy and Insolvency Act.

The court also found written acknowledgments of the debt within the limitation period that would revive the claim in any event.

The bankruptcy application was granted and a trustee appointed.