SUPERIOR COURT OF JUSTICE – ONTARIO

(BANKRUPTCY AND INSOLVENCY)

COURT FILE NO.: BK 31-347546
DATE: 20120612

RE: IN THE MATTER OF THE BANKRUPTCY OF THOMAS PIRNER,
OF THE CITY OF TORONTO IN THE PROVINCE OF ONTARIO

BEFORE: JUSTICE NEWBOULD

COUNSEL:
Robert A. Klotz , for the Bankrupt, Thomas Pirner
John Legge , for Diane Pirner

HEARD: June 6, 2012

ENDORSEMENT

[ 1 ] On June 8, 2012 I dismissed an application by Ms. Pirner to annul the bankruptcy of Mr. Pirner, for reasons to follow. These are my reasons.

[ 2 ] Mr. Pirner became bankrupt on May 12, 1998. He has not been discharged. He applied for a discharge but it was adjourned in 1999 by O’Connell J. pending matrimonial litigation proceedings. The matrimonial litigation in question was decided by O’Connell J. in a judgment dated December 1, 2000 in which he held that Mr. Pirner pay child support to his ex-wife, Ms. Pirner, and he dismissed Mr. Pirner’s application to vary earlier child support orders. He found that Mr. Pirner had diverted income to a third party and had engaged in a plan of deceit since 1995. An appeal from this judgment was dismissed by the Court of Appeal on November 30, 2005.

[ 3 ] Mr. Legge contends that the bankruptcy of Mr. Pirner should be annulled under section 181(1) of the BIA, because of the fraud of Mr. Pirner as found by O’Connell J. and of a report of Mr. Jack Marner accepted by O’Connell J. that $558,000 was diverted by Mr. Pirner between 1995 and 1998.

[ 4 ] Mr. Klotz, for Mr. Pirner, contends that the application to annul the bankruptcy should be dismissed on the grounds that it is far too late for the application to be brought at this stage.

[ 5 ] The motion to annul the bankruptcy was brought by Ms Pirner by notice of motion dated February 18, 2012 after Mr. Pirner had applied to be discharged from bankruptcy which was scheduled for hearing on January 4, 2012. That hearing was adjourned by Registrar Donaldson at the request of Mr. Legge on the grounds of late material having been delivered by Mr. Klotz.

[ 6 ] I note that Mr. Legge told Registrar Donaldson that he had brought an earlier application to annul the bankruptcy, but it was unclear to the Registrar when it was filed. Mr. Legge before me asserted that he thought he had brought an earlier application, but he could not tell me when that was done or point me to any document by which such an application was brought. Mr. Klotz was not aware of an earlier application, although he was not the lawyer for Mr. Pirner throughout the piece. I can only deal with what is before me, and that is a notice of motion dated February 18, 2012.

[ 7 ] In my view the application to annul the bankruptcy of Mr. Pirner must be dismissed for the following reasons.

[ 8 ] An application to annul must be brought with diligence after knowledge of the grounds for an annulment are known to the applicant. See Re: Dupas , [1998] A.Q. No. 1371 (Qué. C.A.) . In that case, a delay of two years and nine months was fatal to the application. In Re: Drozdzik (1993), 18 C.B.R. (3d) 238 (B.C.S.C.) , a delay of 20 months was fatal. Other cases Re: Fréchette (Syndic de ), 1998 CarswellQué 1022 (14 months); Re: M.N.R. v. Engdahl (1994), 27 C.B.R. (3d) 114 (Sask. Q.B.), aff’d 29 C.B.R. (3d) 111 (Sask. C.A.) (9 months); Re: Malka (Syndic de ), [2005] J.Q. No. 3374 (C.S.Q.) (8 months); and Re: Gauthier, [2006] J.Q. No. 4538 (6 months) were all dismissed annulment applications for delay.

[ 9 ] In this case, it is at least 12 years since the gravamen of the allegations or facts have been known to Ms. Pirner or her lawyer, Mr. Legge. No satisfactory explanation has been advanced for the delay. The fact that matrimonial claims for support have taken place, or that a claim for fraudulent preferences has been brought by Ms. Pirner against third parties, is no reason why the application to annul could not have been brought in 2000 after the decision of O’Connell J., or in 2005, after the decision of the Court of Appeal dismissing an appeal from that decision.

[ 10 ] Mr. Legge says there is no prejudice to Mr. Pirner caused by the delay. Assuming that is a legitimate factor to be considered, in my view, the delay has caused prejudice. People should be in a position to carry on their lives, both the creditors and the bankrupt. In the case of Mr. Pirner, he has lived for 14 years under the belief that he has been discharged from his debts, and he is entitled to know on what basis he is to carry on. To disrupt that after all this time would be prejudicial to anyone. Positions change. Distributions in this case were made to creditors, including distributions to Ms. Pirner, whose accepted proof of claim of $20,000 was a small fraction of the proven and accepted claims totalling $485,000 in unsecured debt.

[ 11 ] The motive for Ms. Pirner to be applying at this stage is questionable. No evidence has been filed indicating that Mr. Pirner has any assets of consequence that would be available to the creditors. Mr. Legge has asserted, without evidence, that they have located some intellectual property belonging to Mr. Pirner. Mr. Klotz says that he has already advised Mr. Legge that while the intellectual property may name Mr. Pirner as the inventor, it belongs to Mr. Pirner’s employer.

[ 12 ] On cross-examination of Ms. Pirner, when asked why this application was being brought, Mr. Legge said that it was because Mr. Pirner was seeking the discharge of interest on arrears on support payments of some $200,000 (which is not discharged by the bankrupt’s discharge) and some $40,000 interest on arrears of an equalization payment (which is discharged by the bankrupt’s discharge).

[ 13 ] One cannot but help to infer in these circumstances in which annulling the bankruptcy will have little practical effect for Ms. Pirner, and taking into account the timing of this application shortly after Mr. Pirner applied to be discharged, that the motive for the application is one of spite.

[ 14 ] The motion to annul the bankruptcy is dismissed. Cost submissions are to be made in writing as per my endorsement of June 8, 2012.

NEWBOULD J.

Date: June 12, 2012