Pantziris (Re), 2016 ONSC 1329

CITATION: Pantziris (Re), 2016 ONSC 1329

COURT FILE NO.: 31-457522

DATE: 20160224

SUPERIOR COURT OF JUSTICE – ONTARIO

IN BANKRUPTCY AND INSOLVENCY

RE: IN THE MATTER OF THE BANKRUPTCY OF SPIROS PANTZIRIS, AN INDIVIDUAL RESIDING IN THE CITY OF TORONTO, PROVINCE OF ONTARIO

BEFORE: HAINEY J.

COUNSEL: Frank Bennett, for Spiros Pantziris and Julie Taylor Pantziris, also known as Julie Taylor

Lou Brzezinski and Aaron Grossman, for the Respondent, Albert Gelman Inc., Trustee in Bankruptcy of Spiros Pantziris

Anthony J. O’Brien, for Opposing Creditor, Cobalt Capital CA Textile Investments L.P. and Cobalt Capital Inc.

HEARD: February 22, 2016

ENDORSEMENT

Background

[1] This is an appeal by the Bankrupt, Spiros Pantziris, from the decision of the Registrar in Bankruptcy, Master Jean, dated October 20, 2015 refusing the Bankrupt’s motion for an order scheduling his Discharge Application for a hearing before a Judge on the Commercial List.

[2] The Bankrupt made an application for a discharge from bankruptcy nine months after he was adjudged bankrupt. The Trustee and a major creditor, Cobalt Capital CA Textile Investments L.P. filed objections to his discharge.

[3] The Trustee initially requested a hearing date for the Discharge Application on August 29, 2014. The hearing was scheduled for March 2, 2015, which was the earliest date available.

[4] On March 2, 2015, the Trustee requested that the Discharge Hearing be adjourned pending a decision in an action brought by the Trustee in July 2014 against the Bankrupt’s mother and wife and other related parties in which it is alleged that the Bankrupt made preferential and fraudulent conveyances.

[5] On March 10, 2015, the Registrar in Bankruptcy adjourned the Bankrupt’s hearing for his Discharge Application sine die pending the Trustee’s prosecution of its action against the Bankrupt’s family.

[6] On October 20, 2015, the Bankrupt applied to have the hearing of his Discharge Application scheduled for a hearing before a Judge on the Commercial List. Master Jean dismissed the application without prejudice to the Bankrupt reapplying if there is continued delay in the litigation between the Trustee and the Bankrupt’s family.

[7] The Bankrupt appeals from this decision on the ground that the Registrar in Bankruptcy erred in law and/or principle by deferring the Bankrupt’s right to a hearing of his Discharge Application pending further delay in the Trustee’s action against the Bankrupt’s family.

Standard of Review

[8] Mr. Bennett, on behalf of the Bankrupt, submits that the standard of review I must apply to Master Jean’s decision is “correctness”. I do not accept this submission.

[9] The Ontario Court of Appeal made it clear in the case of Toronto-Dominion Bank v. Hylton, 2010 ONCA 752 that in reviewing a lower court’s decision to allow or deny an adjournment request the appellate court’s “inquiry must focus on whether the court below took account of relevant considerations in balancing the competing interests and made a decision that was in keeping with the interests of justice”.

Discussion

[10] I find that Master Jean did exactly that in deciding not to schedule the Bankrupt’s hearing of his Discharge Application before a Commercial List Judge. She took into account all of the relevant considerations and balanced the Parties’ competing interests. Her decision was in keeping with the interests of justice.

[11] The following extracts from Master Jean’s endorsement demonstrate that she carefully considered all of the relevant factors and properly balanced them in favour of deferring the hearing of the Bankrupt’s Discharge Application until the preference and fraudulent conveyance allegations are determined:

This issue on the motion before me today is whether the bankrupt’s discharge hearing ought properly be scheduled for hearing before a commercial list judge. While I would agree that a bankrupt is entitled to his day in court – i.e. whether he be discharged – that right or entitlement does not supersede the rights of the Trustee and/or creditors. This court is called upon regularly to determine whether a case be adjourned or whether the case be scheduled for hearing. In my role as lead for bankruptcy masters, the scheduling of bankrupt’s discharge hearings have been delegated to me. In determining whether the case is to be scheduled (or adjourned) is a matter of discretion, which I exercise having regard to a number of factors including:

1. prejudice to the respective parties

2. the interests of the parties

3. the interests of society in tri-partite proceedings

4. whether the case is ready for hearing

5. other relevant factors.

1), 2), 3). In this case, the bankrupt desires to be discharged and to move forward. However, the creditor has opposed discharge. There is litigation pending in the commercial list in which the Trustee alleges that preferences or fraudulent conveyances were given by the bankrupt to the bankrupt’s family members. If proven, alleged fraud and other related 173(1) facts are relevant on the discharge hearing.

I agree with the submissions of counsel for the Trustee that such allegations are properly established in the proper forum and that a discharge hearing is not so much a forum. A discharge hearing is intended to be a summary proceeding and allegations of fraud are considered if previously established. See the decision of Newbould J. in Re Bankruptcy of Zeev Saban, 2012 ONSC 6700 at paras. 13-14. If the discharge hearing is scheduled forthwith, it is my view that there would be prejudice to the Trustee and the creditor inasmuch they would not be in a position to establish this fact on the hearing. As well, while the parties’ interests are considered, this court considers the interests of society and the integrity of the insolvency system. This court also has an interest to ensure that insolvency legislation is upheld and that misconduct, if proven, is considered and the appropriate relief granted.

4. It is my view that this case is not ready for hearing. …

(b) I also consider the court’s authority to control its process. The court has jurisdiction to schedule / not schedule to promote or improve efficiencies in the proper and just adjudication of matters before the court. It would not be in the interests of justice to allow the bankrupt’s discharge hearing to proceed in these circumstances.

[12] I am satisfied from her endorsement that Master Jean carefully considered and properly balanced all of the relevant factors in deciding not to schedule the hearing of the Bankrupt’s Discharge Application. I have decided that I should not interfere with her decision. In my view, she properly exercised her discretion in declining to schedule the hearing of the Bankrupt’s Discharge Application.

[13] In arriving at my decision not to interfere with Master Jean’s decision I have also considered the following factors:

(a) The delay in the progress of the Trustee’s action against the Bankrupt’s family is primarily due to the Bankrupt’s family’s motion to remove Blaney McMurtry LLP from the record. This motion is based upon two affidavits from the Bankrupt who is partly to blame for this delay; and

(b) Mr. Bennett’s suggestion that the Trustee’s allegations of a preference and a fraudulent conveyance should be dealt with on the hearing of the Bankrupt’s Discharge Application is contrary to the established law governing discharge hearings. Newbould J. made this clear in Re Bankruptcy of Zeev Saban, [2012] O.J. No. 5640 at para. 13 as follows:

13. Third, and perhaps most importantly, in Ontario, unlike some other provinces, the weight of authority is that because an application for discharge is intended to be a summary hearing, issues of fraud are not to be explored and are to be considered only if fraud has previously been established. …

Conclusion

[14] For the reasons outlined above, the Bankrupt’s appeal is dismissed.

Costs

[15] I urge the parties to settle the issue of costs. If they cannot, they may file brief written submissions of not more than three pages and costs outlines.

HAINEY J.

Date: February 24, 2016