Giroux (Re), 2015 ONSC 2570

CITATION: Giroux (Re), 2015 ONSC 2570

COURT FILE NO.: 31-184450/14

DATE: 2015-04-23

SUPERIOR COURT OF JUSTICE - ONTARIO

IN THE MATTER OF THE BANKRUPTCY OF MARC ROLAND GIROUX

OF THE CITY OF SUDBURY, IN THE PROVINCE OF ONTARIO

BEFORE: The Honourable Mr. Justice J.S. Poupore

COUNSEL: Marc Roland Giroux, acting in person

Linda Susan Delwo, acting in person

Barry Peake, for Paddon & Yorke Inc., Trustee in Bankruptcy in the Estate of Marc Roland Giroux

HEARD: April 16, 2015

ENDORSEMENT

Introduction

[1] Marc Roland Giroux was declared a bankrupt on March 5, 2014. The reasons given for his bankruptcy were a workplace injury with ongoing medical conditions, a separation and legal costs which were assessed against him in protracted custody and access litigation. The total proven unsecured liabilities on the date of bankruptcy were $196,577.41.

[2] The bankrupt’s discharge was opposed by the trustee in bankruptcy because the bankrupt had agreed to pay the trustee $500. Further opposition was filed by a creditor, Linda Susan Delwo, a party to the litigation referred to above who was awarded substantial costs against the bankrupt which have not been paid.

[3] The basis of Ms. Delwo’s objection is that the bankrupt is dishonest; he contributed to his own bankruptcy by rash speculation and extravagant living; he was untruthful in prior court proceedings; and he has been untruthful in his bankruptcy matters.

[4] It was not contested by the bankrupt that there is a post-discharge agreement for him to pay the trustee $500. It was further not contested that Ms. Delwo is a creditor of the estate with a proven debt in the amount of $19,167.48.

[5] Mr. Giroux has never before been bankrupt. He would otherwise have been entitled to an automatic discharge save for the trustee’s and Ms. Delwo’s opposition. Pursuant to s. 172 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”), the court may grant or refuse the discharge. The discharge may be refused or made conditional on proof of any of the factors listed in s. 173 of the BIA by an objector. The onus is on the objector on a balance of probabilities.

Evidence

[6] The bankrupt was sworn in and questioned by Ms. Delwo. Some questions were permitted about the veracity of the bankrupt’s affidavits sworn in the custody litigation. It is clear after examining the documents filed by the bankrupt in that litigation that his position taken was different on the same issue depending on the affidavit being read.

[7] More important however was the examination of the bankrupt on his Form 79 Statement of Affairs filed in the bankruptcy.

[8] The evidence discloses that a transfer of land, referred to as the “hunt camp”, was registered on February 11, 2004, in the bankrupt’s name. The consideration disclosed was $15,000. The bankrupt’s father, Roger Giroux, gave evidence that he paid $25,000 for the hunt camp at that time but the land was registered in his son’s name because of a serious heart condition he had at the time.

[9] The evidence further discloses that a transfer of land, the hunt camp, was registered on November 2, 2012, in the bankrupt’s father’s name. The consideration disclosed was $2.00. The bankrupt’s father testified that this was simply a transfer back to him as the true owner of the land because he became well in 2008-2009 and he wished to will the property to his grandchildren. No explanation was proffered for why the transfer was not registered until late 2012.

[10] Ms. Delwo’s affidavit discloses that the judgment in the before mentioned litigation was delivered on October 9, 2012. The last paragraph of the judgment reads:

If the parties are unable to agree on the costs of this proceeding, they shall communicate with the Trial Coordinator, within twenty (20) days of this Ruling, to set a date and time to argue costs, failing which neither party will be awarded costs.

[11] The costs order was handed down on May 17, 2013. Ms. Delwo and her daughter were both awarded substantial costs.

[12] The bankrupt failed, as he was required, to disclose on his Form 79 Statement of Affairs that he disposed of the hunt camp to his father within five years of the bankruptcy.

[13] The evidence discloses that the bankrupt purchased a motor vehicle in 2012 for $5,000. He swore in a family law financial statement dated July 10, 2012, that the vehicle had a value of $5,300. The bankrupt’s evidence at this hearing was that he transferred the ownership of this vehicle to a relative in December 2013 for a consideration of $1,500 which was never paid. Ms. Delwo’s affidavit evidence states that she observed this same vehicle at the bankrupt’s residence on July 25, 2014, bearing the same Ontario licence plates that were registered in the bankrupt’s name prior to the time he purportedly transferred the vehicle. The bankrupt’s explanation was that the vehicle was at his residence because he was doing repairs to it for the relative that he sold it to but failed to pay him for it.

[14] The evidence discloses that the bankrupt possessed another vehicle which he stated he gifted to a relative but the transfer of ownership was never completed. This vehicle was involved in a motor vehicle accident in 2013. The insurance proceeds of $5,000 for the vehicle were paid to the bankrupt in 2013. These funds were never accounted for by the bankrupt in his Form 79 Statement of Affairs.

[15] The bankrupt’s Form 79 Statement of Affairs discloses that he cashed in an RRSP in October 2013. He received $5,330.14 which he used for living expenses and paying debts. This RRSP was not disclosed by the bankrupt in his sworn financial statement dated July 30, 2012, which was filed in the custody litigation.

[16] The same financial statement did disclose a RESP valued on July 30, 2012, at $15,530.25. Mr. Giroux stated that he disposed of that RESP for living expenses. He did not disclose these facts in his Form 79 Statement of Affairs.

[17] The evidence at the hearing discloses that the bankrupt is receiving an Ontario Works monthly allowance in the amount of $656 as a single individual living alone. This amount is calculated on a need of $280 as a basic allowance and $376 for shelter. The evidence further discloses that the bankrupt has not paid his rent for months and, therefore, is incurring further debt.

[18] The bankrupt’s sworn testimony was that he was living alone in an apartment owned by his father. The father on the other hand testified that the bankrupt was living with another individual in a relationship and has been for some time.

[19] The objecting creditor at the conclusion of the hearing requested that the court find that the bankrupt is not entitled to a discharge or, at best, a conditional discharge because of the fraud he committed in disposing of assets and not disclosing all of the information he was required to in his Form 79 Statement of Affairs.

[20] At the conclusion of the hearing, the trustee renewed his request for the payment by the bankrupt to the estate of $500 pursuant to the post-bankruptcy agreement. The trustee also added a request for an order under s. 96 of the BIA as a result of the bankrupt’s disposition of the hunt camp.

Conclusion

[21] I am satisfied on the evidence that the bankrupt Mark Roland Giroux received clear and unencumbered title to the hunt camp property by the transfer registered on February 11, 2004. I reject the evidence of the bankrupt and his father that the intention was that the hunt camp title was being held in some form of trust by the bankrupt for his father.

[22] I further find on the evidence that the bankrupt’s transfer of the hunt camp on November 2, 2012, was completed within five years prior to his bankruptcy at a time when the bankrupt was insolvent with the intention to defraud and defeat his creditors. The transfer consideration was undervalue and not at arms’ length.

[23] The bankrupt’s evidence was that the hunt camp’s value on the date of bankruptcy was $15,000. The bankrupt’s father’s evidence was that the hunt camp’s value on the date of bankruptcy was $40,000. The bankrupt’s father was at one time a real estate broker and is experienced in real estate transactions.

[24] As a result of the bankrupt’s failing to be truthful on his Form 79 Statement of Affairs and his contravention of ss. 173 and 96(1) of the BIA, I find that his bankruptcy discharge must be suspended and conditional upon an order under s. 96 of the BIA.

Order to Go:

[25] The bankrupt Marc Roland Giroux’s discharge in bankruptcy shall be suspended for a period of two years.

[26] The transfer of land registered as SD239309 dated 2012 11 02 between Marc Roland Giroux as transferor and Roger Giroux as transferee for a consideration of $2 is declared undervalue and is void against the trustee.

[27] The trustee may, if required, seek further direction from the court to complete its duties under the bankruptcy on notice to the objecting creditor, Marc Roland Giroux and Roger Giroux.

[28] Unless objected to by the bankrupt within 15 days of this order, the objecting creditor Linda Susan Delwo shall have her costs of this proceeding as a first charge on the funds paid to the estate, as a result of this order, fixed in the amount of $5,000 inclusive of taxes and disbursements.

The Honourable Mr. Justice J.S. Poupore

Date: April 23, 2015