SUPERIOR COURT OF JUSTICE

IN BANKRUPTCY AND INSOLVENCY

ESTATE NO.: 32-1273918
HEARD: 20130729
RELEASED: 20130729

In the Matter of the Bankruptcy of Michael Henry Preston
of the Town of Port Dover, in the
Province of Ontario

BEFORE: MASTER D. E. SHORT, Registrar in Bankruptcy

HEARD: July 29, 2013

REASONS FOR DECISION

I. Contested Discharge

[1] Mr Preston filed for bankruptcy on October 14th, 2009. It appears his bankruptcy was a consequence of the insolvency of his company Max Air.

[2] This case presents yet another difficulty arising from the making of restitution orders against the bankrupt arising out of the same series of transactions.

[3] In this case, a group of individuals who complained to the Ministry of Corporate and Consumer Affairs was successful in obtaining anorder as a result of a proceeding before Justice of the Peace, A. L. Hefkey in Newmarket on Monday, October 15, 2012.

[4] Mr. Preston testified that he chose to plead guilty in that matter rather than put both himself and the complainants through the expense and time required for the matter to be heard.

[5] He did not anticipate being given the 160 day sentence that was awarded by the Justice of the Peace. His sentence has been served. As well, the judicial officer made an award in favour of five groups of complainants under the Consumer Protection Act.

[6] One of the complainants, Mr. McGrory was awarded the sum of $7600 by the Justice of the Peace. In the course of argument it became clear that the representative presenting Mr. McGrory’s submissions in opposition to the discharge was Patrick Bloomfield. He is a trustee in bankruptcy who appears regularly in this court.

[7] Mr. Bloomfield advises that he attempted to make a claim in this bankruptcy but since his $15,000 deposit was paid to the company and not Mr. Preston, he was not included in the list of creditors in this bankruptcy.

[8] Nevertheless there is an order that requires Mr. Bloomfield and his wife to be refunded their deposit in the amount of $15,000 by Mr. Preston as a condition of his probation.

[9] I find it somewhat disingenuous the two creditors holding a judgment for a 100% recovery on the amount claimed to be owed to them would attend with a view to increasing the obligation of the bankrupt by requiring payments on account of a substantial income tax debt owed by Mr. Preston; but which, for whatever reason, CRA has chosen not to attend before me today to raise as an objection to the discharge.

[10] Mr. Preston makes a strong case for the need to be able to get out of bankruptcy so that he can concentrate on earning enough money to pay the amounts owing to the objecting creditors.

[11] He has already served jail time. It will be a breach of his probation order if he doesn’t make payment in full within two years.

[12] It seems to me that something needs to be paid on account of the income tax debt. In the circumstances I’m satisfied that a roughly 5% amount in the total amount of $8000 together with $800 on account of the trustee fees owing will be a sufficient financial condition.

[13] The discharge will be suspended for a period of six months from the date that the last of Mr. Preston’s 2009 through 2012 income tax returns are filed.

[14] I see no value in making it a condition of the discharge of the bankrupt that he comply with the order made in the Consumer Protection proceeding. It is my hope that by establishing a reasonable target for obtaining his discharge from bankruptcy, Mr. Preston will be put in a position whereby he can meet the terms obtained by the opposing creditors through the other proceeding.

Master D. E. Short
Registrar in Bankruptcy

July 29, 2013

DS/ B20