COURT FILE NO.: 32-1524065

DATE: 20120215

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BANKRUPTCY OF ANDRIS GRAVITIS

BEFORE: Justice Newbould

COUNSEL:
Sam Laufer , self-represented
Andris Gravitis , self-represented

HEARD: February 13, 2012

ENDORSEMENT

[ 1 ] Mr. Laufer appeals from the dismissal by the Registrar of his motion to lift the stay caused by the bankruptcy of Mr. Gravitis. Mr. Laufer says that at the hearing, the lawyer for Mr. Gravitis requested an adjournment but the Registrar said she had read the material and there was no need for an adjournment and dismissed the motion of Mr. Laufer. Mr. Gravitis says he was there and he is not sure exactly what happened but agrees his lawyer intended to ask for an adjournment.

[ 2 ] The trustee in bankruptcy of Mr. Gravitis has not appeared on the motion. I assume from that that he takes no position on it.

[ 3 ] The Registrar in her endorsement said there was no basis to lift the stay because the disability income was referred to in the statement of affairs of Mr. Gravitis and it could be dealt with in the bankruptcy process.

[ 4 ] Section 69.4 of the BIA gives jurisdiction to a court to exempt a creditor from the stay provided for in section 69.3(1). An appeal from a Registrar’s order under section 69.4 will be allowed where it is demonstrated that the Registrar erred in principle or law or failed to take into account a proper factor or took into account an improper factor, which led to a wrong conclusion. See Impact Tool & Mould v. Impact 2006 7498 (ON CA) , 20 C. B.R. (5th) 220.

[ 5 ] Mr. Laufer said that he had no opportunity to make submissions to the Registrar other than to state what conditions he wanted on the adjournment requested by counsel for Mr. Gravitis. I accept that statement. It was an error in principle for the Registrar to have made her decision and endorsed it without hearing submissions from Mr. Laufer. I realize the Registrar’s office is a busy place, but a party should be entitled to make submissions.

[ 6 ] I also think that the brief note of the Registrar as to the reason for dismissing the motion of Mr. Laufer indicates a lack of consideration of all relevant factors. The fact that the disability income was disclosed in the bankrupt’s statement of affairs and will be dealt with in the bankruptcy process, which is the reasoning of the Registrar, does not indicate any consideration was given to material prejudice to Mr. Laufer or why the order was just or equitable, both of which are central to section 69.4 of the BIA.

[ 7 ] The evidence before the Registrar was that Mr. Gravitis was paying surplus income of $625.34 each month to the trustee. That figure according to the trustee is based on the assumption that the garnished amount of $675.49 was not being paid to Mr. Gravitis. Yet that garnished amount was not being paid to Mr. Laufer. Mr. Gravitis acknowledged before me that he received all of the disability payments.

[ 8 ] It is clear that Mr. Laufer’s judgment against Mr. Gravitis falls within section 178(1) of the BIA arising out of a fraud committed while Mr. Gravitis had a fiduciary duty to Mr. Laufer. Mr. Gravitas acknowledges that the judgment will survive his discharge from bankruptcy. That judgment is outstanding in excess of $450,000. Based on Mr. Gravitis’ health and income coming only from CPP and disability income, the only likely source of payment for Mr. Laufer is from his garnishment of the disability payments.

[ 9 ] In the current circumstances, where Mr. Laufer has received nothing for several months, where based on the trustee’s e-mails what should be paid to the trustee is not being paid, with only $1,250 being held by the trustee, and with the trustee’s fees having to be paid from his receipts, with 85% of the outstanding debts being owed to Mr. Laufer, I can only conclude that Mr. Laufer is being prejudiced by the section 69.3(1) stay. In light of the failure of the Registrar to hear argument from Mr. Laufer and to consider the question of prejudice to Mr. Laufer (at least to fail to make any reference to that in her short endorsement) I am in a position to substitute an order that I consider just.

[ 10 ] In the circumstances, I allow the appeal. An order is to issue under section 69.4 of the BIA declaring that the stay of proceedings in section 63.3(1) is no longer operative in respect of Mr. Laufer whose judgment against Mr. Gravitis pursuant to the judgment of Molloy J. dated July 11, 2002 in action 98-CV-140207 is not released from any discharge of Mr. Gravitis from his bankruptcy by virtue of section 178(1) of the BIA.

[ 11 ] Mr. Laufer is entitled to garnishee the disability payment owing to Mr. Gravitis by Canada Life Assurance Co. (Great West Life) from this date. He is also entitled to his share of all payments to be made by the trustee for the date of the bankruptcy up to this date.

[ 12 ] Mr. Laufer has asked for costs. In the circumstances, there is no real prospect of his recovering costs, and I decline to make such an order.

NEWBOULD J.

Date: February 14, 2012