Court File and Parties

COURT FILE NO.: 31-1571489 DATE: 2017-04-28 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

IN THE MATTER OF the Bankruptcy of Nicole Jean St. Dennis (aka Nicole Vachon) of the Town of Onaping, in the District of Greater Sudbury, in the Province of Ontario Applicant – and – HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, as represented by the Ministry of Training, Colleges & Universities Respondent

Counsel: David Reynolds, Trustee for the applicant [1] Stefan Zhelev, for the respondent

HEARD: February 6, 2017

Ruling on Application

HENNESSY, J.

[1] This case involves an interpretation of s. 178(1)(g)(ii) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, and the issue of the discharge of a student loan debt.

Facts

[2] The applicant, Nicole Jean St. Dennis, attended post-secondary studies on two distinct occasions.

[3] In her first course of study, Ms. St. Dennis obtained student loans in the amount of $13,370 in connection with a Bachelor of Science program at Laurentian University. She obtained the loan money between August 1996 and April 2001. Ms. St. Dennis graduated from Laurentian University in October 2004.

[4] In her second course of study, Ms. St. Dennis attended Cambrian College between 2006 and 2007, but did not obtain student loans. She left the program in April 2007.

[5] With respect to her student loans, Ms. St. Dennis reduced the principal balance through two programs: Loan Forgiveness and Ontario Students Opportunity Grant. She was also relieved of interest payment obligations from February 2002 to January 2006 and from March 2006 to July 2006, during her second period of studies.

[6] Ms. St. Dennis filed an assignment in bankruptcy on December 3, 2011.

The Legislation

[7] Section 178(1)(g)(ii) of the Bankruptcy and Insolvency Act reads as follows:

178 (1) An order of discharge does not release the bankrupt from

(g) any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred

(ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student;

[8] By virtue of this section, some student loan debt survives a bankruptcy in certain circumstances. Student loan debt is not discharged by a bankruptcy if the bankruptcy occurred within seven years after a person ceased being a student.

Issue and Party Positions

[9] This case involves a determination of when Ms. St. Dennis “ceased” to be a student for the purpose of determining whether seven years have passed. I must consider whether Ms. St. Dennis ceased to be a student in October 2004 when she graduated from Laurentian University with a Bachelor of Science or did she cease to be a student in 2007 when she left Cambrian College? The question has been framed in other cases as, can there be more than one date on which an individual ceases to be a student.

[10] The Applicant requests a declaration that Ms. St. Dennis ceased to be a student with respect to her student loans in October 2004, and a declaration that those student loans were discharged by virtue of Ms. St. Dennis’ assignment in bankruptcy.

[11] In this case, the respondent argues that the single date approach respects the plain meaning of the words of s. 178(1)(g)(ii) and that Ms. St. Dennis is not released from her student loan obligations because her filing in bankruptcy occurred within seven years after the date on which Ms. St. Dennis ceased to be a student in April 2007.

[12] The applicant urges the court to adopt the multiple date approach as consistent with the legislative intent, and allow Ms. St. Dennis’ student loans to be discharged because the assignment in bankruptcy occurred more than seven years after the period of study related to the loan.

Discussion

[13] There are two major trends of judicial interpretation of the meaning of the phrase “ceases to be a full or part-time student”.

[14] Most recently, the competing interpretations were fully discussed in Mallory (Re), 2015 BCSC 5, 19 C.B.R. (6th) 195, where Gaul J. found that the correct interpretation was that there can only be one date upon which a bankruptcy ceased being a student and that is the end of the bankrupt’s period of studies prior to their assignment. In Mallory (Re), Gaul J. reviewed all of the jurisprudence from across the provinces, and adopted an interpretation consistent with his finding that the intent and purpose of the section was to thwart or prohibit opportunistic bankruptcies as set out in Québec (Procureur general) c. N.P., 2011 QCCA 726, 83 C.B.R. (5th) 1: paras. 74-75.

[15] The respondent urges this court to adopt the reasoning in Mallory and to find that there is a single date upon which a person ceases to be a student before the delay period with respect to student loans begins to run.

[16] Before this court, the applicant urged the court to reject this view of the intent of Parliament and to adopt the reasoning in Attorney General of Canada v. Collins, 2013 NLCA 17, 334 Nfld. & P.E.I.R. 318, which supports a multiple date approach. In Collins, the court found that the seven year delay in discharging student loan debt begins to run from the date when the debtor ceased to be a student in relation to that loan: para 22.

[17] The applicant argued that the court in N.P. and Mallory (Re) adopted a flawed understanding of the actual data behind the legislative intent. The applicant submitted that the statutory interpretation in Collins was preferable and consistent with the overall purpose and intent of the Bankruptcy and Insolvency Act.

[18] For the following reasons I prefer the reasoning adopted by the court in Collins, which would support the multiple dates approach to the section. The court in Collins reasoned as follows:

a. First, look at broad purpose of the Act first, which is to facilitate return to stable participation in social economic life (para. 14) b. Then, look at specific intent of the section where it creates an exception to broad purpose, which supports a narrow interpretation (para. 15) c. Thus a narrow interpretation of s. 178(g)(ii) coupled with a return to studies fulfils broad purpose of Bankruptcy and Insolvency Act, by facilitating future participation in the economy (para. 21)

[19] On the other hand, the reasoning in Mallory (Re) focuses first on the plain meaning of the words of s. 178(1)(g)(ii) and finds that the use of the definitive article “the” leads inevitably to the conclusion that there is a single date on which a person ceases to be a student: para. 67. In my view, the use of definitive articles does not solve the ambiguity created by facts of this case.

[20] When the court in Mallory (Re) considered the intent and purpose of s. 178(g)(ii), the focus was primarily on recent amendments to the section and comments made by senior bureaucrats before a Parliamentary committee: para. 72. However, there is no reference in this discussion to the overall intent and purpose of the Bankruptcy and Insolvency Act and how this section creates an exception to the discharge of debts.

[21] The applicant before this court attempted to demonstrate that the bureaucrats were relying on flawed data. In my view, it is not necessary or useful to go behind the representations made at the committee level.

[22] I find that the interpretation of s. 178(1)(g)(ii) must be guided by the overall purpose of the Bankruptcy and Insolvency Act, namely rehabilitating and reintegrating individuals to allow for future participation in the Canadian economy. I also find that there is no inconsistency between the multiple date approach and the purpose and intent of the section as adopted in Mallory (Re), i.e., discouraging opportunistic bankruptcies. One way or the other, the bankrupt has to wait seven years to have a student loan debt discharged. In this case, the respondent is really asking that the bankrupt should wait ten years before the debt can be discharged. I do not see how the multiple date approach thwarts the legislative intent to discourage opportunistic bankruptcies. I do however see that permitting a bankrupt to discharge her debts after seven years from the date of the program to which the student loan was connected goes some distance in promoting the intent and purpose of the Bankruptcy and Insolvency Act – that is to promote the rehabilitation of debtors, providing them with a fresh start while all the while discouraging any abuse of the bankruptcy system.

Conclusion

[23] I find that for the purposes of Ms. St. Dennis’ student loans, she ceased to be a student in October 2004. Therefore, the seven year delay requirement has been met. Accordingly, Ms. St. Dennis’ indebtedness for the student loans obtained prior to October 1, 2004 was discharged by her assignment in bankruptcy.

[24] If the parties cannot agree on costs they may make brief submissions. The applicant is to have his materials in by May 25, 2017, and the Respondent by May 30, 2017.

The Honourable Madam Justice Patricia C. Hennessy

Released: April 28, 2017

Footnotes

[1] Rule 15.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states that individuals to a proceeding may appear in person or be represented by a lawyer. For this occasion only, I granted leave to the Trustee to appear before me on this application.