Court File and Parties

Court File No.: BK-18-208302-OT31

Ontario Superior Court of Justice In Bankruptcy and Insolvency

In the Matter of the Bankruptcy of Anthony Falasca, also known as Tony Falasca, of the City of Hamilton, in the Province of Ontario

Before: Penny J.

Counsel: H.W. Reininger for the Appellant R. Klotz for the Respondent S. Kar for the Intervenor, Attorney General for Ontario

Heard: March 4, 2019 Released: March 8, 2019

Reasons on Appeal

Overview

[1] Following argument in this matter I granted an appeal from the January 17, 2019 order of Registrar in Bankruptcy, Master Jean, and set aside her decision of that date, with reasons to follow. These are those reasons.

[2] In her decision, Master Jean held that because the debtor in this case resides in Hamilton, this application should have been commenced in Hamilton, not Toronto. She also held that only the Hamilton court has jurisdiction to hear this matter. Accordingly, Master Jean purported to transfer this matter to the Hamilton court. In reaching this conclusion, Master Jean relied on s. 43(5) of the BIA which provides that a bankruptcy application shall be filed “in the court having jurisdiction in the judicial district of the locality of the debtor.”

[3] Master Jean did not have the benefit of submissions from Her Majesty The Queen As Represented By The Attorney General For Ontario, who has intervened on this appeal. Having reviewed the material filed by the Attorney General, I am satisfied that the Registrar in Bankruptcy erred in concluding that the Toronto court lacked jurisdiction to issue the application, erred in concluding that this application should have been commenced in and can only be heard by the Hamilton court and erred in purporting to transfer this application to the Hamilton court.

Background

[4] The applicant, Goldcourt Developments Inc., issued this application in the City of Toronto on June 11, 2018. The application was issued by Registrar in Bankruptcy, Master Jean. The application indicated that it would be heard before the presiding Judge in chambers or, if unopposed, before the Registrar in chambers at 393 University Ave. in Toronto on July 17, 2018.

[5] The debtor opposed the application. As a result, on July 17, 2018 Master Mills adjourned the application to August 14, 2018. The matter came before Master Jean on August 14, 2018; she adjourned the application to a 9:30 AM appointment before a Commercial List judge. By this point, both parties wanted to bring interlocutory motions: the debtor to cross examine the applicant’s affiant and the applicant to strike out portions of the debtor’s dispute notice. Accordingly, on August 21, 2018, Justice Conway ordered counsel to “bring these motions before the Registrar in Bankruptcy as quickly as possible.”

[6] The motions came before Master Jean on September 17, 2018. Master Jean found that the motions were not yet ready to proceed. She made certain scheduling orders and told the parties to request a date when the case was ready. On November 26, 2018, Master Jean made a “special appointment” endorsement in which she ordered the motions to proceed for two hours on January 17, 2019.

[7] As noted above, on January 17, 2019, Master Jean held, on her own motion, that the application ought to have been commenced in Hamilton and transferred the application, including the motions, to Hamilton.

Analysis

[8] For an appeal of a Registrar’s decision to succeed, the court must be satisfied that the Registrar erred in principle, erred in law, failed to take a proper factor into account or took an improper factor into account which demonstrably led to a wrong decision. In this case, the Registrar is said to have erred in law.

[9] The Attorney General was granted leave by Justice Pattillo to intervene on this appeal and to file evidence and a factum. Evidence was provided on behalf of the Attorney General by Mr. Frank Pignoli, a lawyer employed by MAG with responsibilities for developing and maintaining policies, procedures and administrative initiatives, as well as providing operational support and advice to the Court Services Division, in civil, enforcement and bankruptcy matters. The evidence filed by the Attorney General was uncontradicted. Both the applicant and the respondent agreed with the Attorney General’s submission.

[10] For purposes of my disposition of this appeal, the key evidence of the Attorney General is as follows.

[11] Each province constitutes a bankruptcy district which the federal Governor in Council may divide into two or more bankruptcy divisions. Ontario currently has five bankruptcy divisions. Each bankruptcy division, in turn, comprises specific geographic areas. Hamilton falls under Bankruptcy Division 32, which is administered out of the “bankruptcy court” of Toronto. The Toronto court is therefore the court designated to hear bankruptcy applications pertaining to debtors residing in Hamilton. Such applications are issued by the Registrar in Bankruptcy in the Toronto court and filed in that court. [1]

[12] Under s. 184 of the BIA, the Chief Justice of the Ontario Superior Court of Justice appoints and assigns registrars and deputy registrars in bankruptcy to exercise the powers conferred on them by the BIA. The Chief Justice has appointed bankruptcy registrars in London, Ottawa, Sudbury and Toronto. There is no registrar in bankruptcy based in Hamilton or in Central West Region (although I understand that there are now Toronto-based masters with designations as registrars in bankruptcy who circuit to Hamilton from time to time and that there may be plans to establish a bankruptcy sitting for those masters in Hamilton on a regular basis sometime in the future). There is, however, currently no Practice Direction establishing bankruptcy sittings of the Superior Court in Hamilton and there are no sittings of registrars in bankruptcy in Hamilton.

[13] In these circumstances, I conclude that the bankruptcy court having jurisdiction in the judicial district of the locality of the debtor, in this case, is Toronto. This is consistent with the fact that this very application (which indicates on its face that the debtor resides in Hamilton) was issued in Toronto by a Registrar in Bankruptcy for Toronto. As such, I find that Master Jean erred in law by concluding that, for the purposes of this bankruptcy application, the judicial district of the locality of the debtor was and could only be Hamilton.

[14] In addition, Master Jean purported to transfer this application to Hamilton under s. 187(10) of the BIA, relying on the power of the court to transfer proceedings to “the proper court.” However, for the reasons set out above, the “proper court” for the purposes of this application is the Toronto court. In addition, there is currently no Registrar in Bankruptcy in Hamilton to receive or process these proceedings.

[15] Finally, once it was clear the application was opposed, Master Jean referred this matter to the Toronto Commercial List to schedule the hearing of the application. Conway J. ordered that the interlocutory motions, which were contemplated to be heard in advance of the application, be heard by the Registrar in Bankruptcy. This can only have meant a Registrar in Bankruptcy in Toronto. In the circumstances, Master Jean did not have the jurisdiction to circumvent the order of Conway J. by, on her own motion, declaring that this matter could not be heard in Toronto and could only be heard in Hamilton. For this reason as well, I would allow the appeal.

[16] For all of these reasons the appeal is allowed and the decision of the Registrar in Bankruptcy dated January 17, 2019 is set aside.

Penny J. Date: March 8, 2019

Footnotes

[1] Matters involving bankruptcy and insolvency clearly fall within the jurisdiction of the Ontario Superior Court of Justice, s. 183(1) of the BIA. Nothing I say in these reasons should be taken to limit, in any way, that plenary jurisdiction.