Court File and Parties

COURT FILE NO.: 33-2587911 DATE: 2020/05/20

ONTARIO SUPERIOR COURT OF JUSTICE IN BANKRUPTCY and INSOLVENCY

IN THE MATTER OF THE CONSUMER PROPOSAL OF OCEAN DEZARIE BONNEAU OF THE CITY OF PERTH IN THE PROVINCE OF ONTARIO DENTAL ADMINISTRATOR

BEFORE: Justice Stanley J. Kershman

HEARD IN OTTAWA: April 23, 2020 and May 14, 2020 by Teleconference

APPEARANCE: Matthew Harris, for Harris & Partners Inc. Adam Fisher, Trustee at Harris & Partners Inc. Brenden Higgins, Creditor Ocean Dezarie Bonneau, Debtor

Reasons for Judgment

Introduction

[1] A motion was brought by Harris & Partners Inc., the consumer proposal administrator for Ocean Dezarie Bonneau (“Administrator”) to review her consumer proposal (“Consumer Proposal”), which was deemed to have been accepted by the creditors pursuant to section 66.18 of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (“BIA”).

[2] Due to the ongoing COVID-19 Pandemic, the review occurred by teleconference.

Factual Background

[3] Ocean Dezarie Bonneau (“Debtor”) retained Harris & Partners Inc. who filed a Consumer Proposal under section 66.13 of the BIA dated November 26, 2019. On the same date, the Administrator gave notice by ordinary mail of the Consumer Proposal to the listed creditors provided by the Debtor.

[4] The Consumer Proposal provided for the payment of $165 per month for a period of 60 months for a total of $9,900 in full satisfaction of the unsecured debts listed in her proposal.

[5] According to the Administrator, prior to the 45-day deadline it made a detailed and careful inquiry into the activities of the Debtor, her assets, the value thereof, her conduct and the causes of her insolvency.

[6] On January 10, 2020, the 45-day deadline for creditors to vote expired, and the Consumer Proposal was deemed accepted and approved in accordance with the provisions of the BIA. No meeting of creditors was required. Five creditors voted in favour of the proposal, representing $13,778.23. No creditors voted against the proposal.

[7] On January 3, 2020, the Administrator received communication from the Debtor’s former boyfriend Brenden Higgins (“Mr. Higgins”), who had co-signed or guaranteed a loan with Medicard Finance Inc./iFinance Canada Inc. (“iFinance”) for a debt for cosmetic surgery for the Debtor with a balance of $5,756.20. Mr. Higgins expressed concerns that the Debtor had made all payments on that debt from 2016 until November 2019, when she filed a Consumer Proposal.

[8] On January 8, 2020, the Administrator responded to Mr. Higgins by providing him with a creditor package with certain personal information redacted as the Debtor had advised the Administrator that there was a restraining order against Mr. Higgins.

[9] On January 10, 2020, the Administrator received a demand from Mr. Higgins to have the Consumer Proposal reviewed pursuant to section at 66.22(1) of the BIA.

[10] On January 13, 2020, the Administrator indicated that it was making the application and would advise of the hearing date.

[11] The hearing date for the Court to review the Consumer Proposal was obtained for April 17, 2020.

[12] Mr. Higgins filed a proof of claim on February 25, 2020 in the amount equal to what iFinance claimed was outstanding on the debt.

[13] Since iFinance had not withdrawn its claim, the Administrator indicated that Mr. Higgins’ claim was disputed and that it would issue a notice of disallowance pending resolution of the review of the Consumer Proposal pursuant to section 66.22(1) of the BIA.

[14] Due to COVID-19, the hearing was subsequently postponed to April 23, 2020 at 10 a.m. to be heard by teleconference. The creditors were advised by the Administrator of the change of date and that the matter would be heard by teleconference. The notice to creditors indicated that any creditor wishing to attend should contact the Administrator to obtain the call-in details.

[15] In the circumstances of this case, the Court is satisfied that the notice of hearing of this motion was appropriately given to all interested parties together with the necessary instructions for attending the teleconference.

[16] The hearing started on April 23, 2020. Other than Mr. Higgins, no other creditors appeared. At that time, the Court had questions about various matters. The motion was adjourned to May 14, 2020, and the Court provided an endorsement dated April 27, 2020 setting out what information was required, which was as follows:

1. The bill of sale and financing information for the motorcycle owned by the Debtor and the current ownership;
2. The family income and expenses for Ms. Bonneau in her new family situation;
3. The bill of sale, the financing documents and the ownership for the 2017 Audi, which is in Ms. Bonneau’s name;
4. The fees, disbursements and HST of the Administrator both in a proposal and in a bankruptcy inclusive of legal costs; and
5. The loss of income when the Debtor moved from full-time employment to part-time employment, which she claimed was a cause of her financial difficulty.

[17] The Administrator provided a supplementary report that contained information about the items requested by the Court.

i. Motorcycle

[18] The Administrator reported that the Debtor owns a 2011 Kawasaki EX250JBF. Depending on the condition of the motorcycle, the retail value ranges from $1,000 - $1,700, and the wholesale value ranges from $600 - $1,350.

[19] In a bankruptcy situation, the Administrator said that the vehicle would be claimed as an exempt asset.

ii. Family Income and Expenses for the Debtor in her new Family Situation

[20] The Debtor indicates that her current income is through maternity leave and that she received $896 biweekly or $1,941 per month. There are three people in the household unit: herself, her fiancé and their son born on April 26, 2020. The fiancé refused to divulge his income due to privacy concerns relating to the acrimonious nature of the relationship between the Debtor and Mr. Higgins.

[21] A current income and expense statement along with the calculation of current surplus income was provided by the Administrator.

iii. 2017 Audi

[22] The Debtor provided the Bill of Sale, financing documents and the ownership for the 2017 Audi, which is registered in her name.

iv. Fees and Disbursements in a Proposal or a Bankruptcy inclusive of Legal Costs

[23] There are several scenarios involved in this case because the Debtor moved from being employed to being on maternity leave.

[24] The Administrator provided two charts dealing with fees, disbursements and the rate of return to unsecured creditors.

[25] The first chart provided the Administrator’s fees and disbursements in a Consumer Proposal scenario as of the date of filing of the Consumer Proposal on November 26, 2019. In this scenario, the fees and disbursements would be $3,775.42, while in a bankruptcy, the fees and disbursements would be $6,321.92.

[26] Based on unsecured debt of $20,320, the dividend under the Consumer Proposal would be 28.63%, while the dividend in a bankruptcy would be 16.37%.

[27] In the second scenario as of April 30, 2020, with the Debtor’s income being her maternity leave income, while in a bankruptcy, the fees and disbursements would be $2,270.06, while in a Consumer Proposal situation, the fees and disbursements would be $3,775.42.

[28] Based on unsecured debt of $20,320, the dividend in the Consumer Proposal would be 28.63%, while the dividend in a bankruptcy would be 1.02%.

v. Loss of Income When Debtor Moved from Full-time Employment to Part-time Employment

[29] The Administrator reported that the Debtor was dismissed from one of her two part-time dentistry positions on March 7, 2019.

[30] The dismissal letter reads in part as follows:

Following several warnings, we feel that your combative, and confrontational character can no longer be tolerated.

Unfortunately, we’ve witnessed too many incidences of simple insubordination for this to continue.

You will be compensated for the next two weeks and we wish you best wishes moving forward.

[31] At that time, the Debtor was concerned that the reduced hours would impact her income, and she began to explore options to deal with the debt. According to the Administrator, the Debtor’s income returned to normal by May 2019 (not May 2020 as set out in the Administrator’s report). The Administrator concluded that:

rather than “loss of income”, the reason for financial difficulty would probably be more accurately described over extension of credit and financial mismanagement (in addition to the portion of the credit that the Debtor claims was taken out by her biological mother without her consent).

Preliminary Matter

Restraining Order

[32] The issue of the existence of a restraining order against Mr. Higgins was raised by the Debtor. Paragraph 8 of the Administrator’s report reads in part as follows: “…the Administrator responded to Mr. Higgins by providing a copy of the Creditors Package with certain personal information redacted as the Debtor had indicated to the Administrator that there was a restraining order against Mr. Higgins.”

[33] The Court questioned the Debtor about the existence of a restraining order. After hearing evidence, the Court finds that while the Debtor had spoken to the police about a restraining order, as of April 23, 2020, there was no claim for a restraining order before the Courts against Mr. Higgins. Accordingly, the Court finds that no restraining order has been issued.

Issue

[34] The issue is as follows:

1. Should the Court approve the Consumer Proposal?

The Law

[35] In most cases, if a consumer proposal is accepted or deemed to be accepted, there is no need for Court approval. The proposal is deemed to be approved unless the Official Receiver or “other interested party” requires a formal application to be made for approval pursuant to section 66.22(1) of the BIA.

[36] According to Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, The 2019-2020 Annotated Bankruptcy and Insolvency Act, (Toronto: Carswell Thomson Reuters, 2019), at p. 329, the phrase “other interested party” is given a wide meaning and would appear to embrace any creditor, secured or unsecured, regardless of whether or not the creditor has filed a proof of claim.

[37] In the circumstances of this case, the Court finds that Mr. Higgins is a potential creditor who falls within the category of “other interested party” as the guarantor of the iFinance debt.

Issue #1: Should the Court approve the Consumer Proposal?

Administrator’s Position

[38] The Administrator provided a report in which he goes through the Debtor’s circumstances in detail.

[39] The Administrator prepared a supplementary report dated May 1, 2020 to provide the Court with information requested in its endorsement dated April 27, 2020.

[40] The Administrator argues that the Debtor has complied with the provisions of the BIA. In addition, the majority of the voting creditors approved of the Consumer Proposal. The Administrator therefore argues that the Court should approve the Consumer Proposal and allow it to run its course.

Brenden Higgins’ Position

[41] In responding to the motion, Mr. Higgins provided “reports” instead of affidavits with exhibits. These reports are not signed and are not sworn.

[42] The Court finds that Mr. Higgins was following the lead of the Administrator by filing reports instead of affidavits. At the hearing of the motion, the Court asked Mr. Higgins if the information contained in each of the reports were true. He confirmed that it was. On that basis, the Court accepts Mr. Higgins’ reports as part of the evidence, notwithstanding they are not sworn affidavits.

[43] Mr. Higgins argues that the Consumer Proposal should not be approved for many reasons. The Court will not go into detail as to every reason because voluminous materials were provided. The Court will highlight the major ones.

i. General

[44] Mr. Higgins argues that the Debtor did not miss a payment on her 2014 Honda secured debt and that she was up-to-date on her iFinance loan until she filed the Consumer Proposal.

ii. Motorcycle

[45] Mr. Higgins argues that the Debtor did not disclose her ownership of a 2011 motorcycle and that he was the one who brought it to the attention of the Administrator.

iii. 2017 Audi

[46] Mr. Higgins argues that the Debtor purchased a 2017 Audi after her Consumer Proposal was filed and that she incurred this new debt after filing her Consumer Proposal. On that basis, he argues that she should not be able to compromise old debt and continue to incur new debt.

[47] He argues that $40,000 was financed to buy the Audi.

iv. Household Family Unit

[48] Mr. Higgins initially argued that the Debtor had lived with her parents and not alone in her parents’ house. On that basis, the family unit should include the income of the parents, which would provide her with greater surplus income than the amount calculated by the Administrator.

[49] After the April 23, 2020 hearing, new evidence came to light that the Debtor was now living with her fiancé, Randy Freeman, and not with her parents and that she was expecting a new child, which was born on April 26, 2020, three days after the hearing of the initial motion. The child was born premature. The original delivery date was July 2020. Based on this delivery date, the Debtor would have become pregnant in November 2019. Therefore, at the time she filed the Consumer Proposal, she may not have known that she was pregnant.

[50] Mr. Higgins submitted that the Debtor now lives with Mr. Freeman, his mother and his sister at 5 Ballymore Ave., Ottawa, Ontario. He argues that the new family unit should include the income of Mr. Freeman, his mother and sister.

[51] Mr. Higgins argues that the fiancé’s real name is not Randy Freeman, which is a street name. Mr. Higgins says that his real name is Randy Ouaton-Ntenda-Languy.

[52] Mr. Higgins provided evidence as to the ownership of 5 Ballymore Ave., that it was owned by Mr. Freeman’s mother and that there are no encumbrances against the property.

v. The Debtor’s Employment

[53] Mr. Higgins went into detail about the Debtor’s loss of employment and wondered how she could work 16 hours a day, only two days a week, on a part-time basis.

vi. Fraudulent use of the Debtor’s Credit

[54] The Debtor claims that part of the cause of her financial difficulty was that someone had fraudulently obtained credit in her name and that she was now responsible for those debts. Mr. Higgins went into great detail about these debts and why they were obtained by the Debtor and were not fraudulent.

vii. Sick Leave

[55] Mr. Higgins argues that the sick leave claim by the Debtor was as of March 7, 2020, which was about 10 days after she purchased the Audi. This appeared very odd to him. He wondered why she would go out and purchase a luxury vehicle, and then approximately 10 days later, go on sick leave.

viii. Offences under the BIA

[56] Mr. Higgins argues that the Debtor has committed various offences under sections 198(1)(b) and (c) of the BIA in that:

1. she provided inaccurate information to the Administrator;
2. she did not consult Mr. Higgins about her filing of the Consumer Proposal; and
3. she omitted the motorcycle as one of her assets.

ix. Mr. Higgins as a Creditor

[57] Mr. Higgins argues that while his name is shown as a creditor, there is showing a zero-balance owing to him. His proof of claim was not accepted or denied. He argues that he is a valid creditor in this Consumer Proposal.

Analysis

[58] The purpose of the Court in reviewing the Consumer Proposal is to ensure in part that the Administrator and the Debtor have complied with the provisions of the BIA and that the Consumer Proposal will provide a greater return than will a bankruptcy.

Motorcycle

[59] In the Debtor’s Statement of Affairs, there is no mention of the 2011 Kawasaki motorcycle. Mr. Higgins brought this asset to the attention of the Administrator and the Court.

[60] The Court finds that the Debtor did not disclose the existence of the 2011 motorcycle. The Administrator’s evidence is that the motorcycle is worth between $600 and $1,300 on a wholesale basis, and in the event of a bankruptcy, it would be considered an exempt asset.

[61] On the basis of this non-disclosure alone, the Court would not withhold the approval of the Consumer Proposal.

2017 Audi

[62] A copy of the ownership and financing for the 2017 Audi Q3 was provided in the Administrator’s second supplementary report.

[63] The vehicle was purchased by the Debtor on February 21, 2020. Her 2014 Honda Accord was used as a trade in.

[64] The selling price for the Audi was $22,995. There was a trade-in allowance for the Honda of $8,300. The total inclusive of taxes and other fees was $28,798.78. The cost of borrowing was 10.99%.

[65] The Debtor is the borrower on the conditional sales contract. The Court notes that a full copy of the conditional sales contract was not provided. However, the Court does not see that it would make any difference if there was a guarantor.

[66] Mr. Higgins says that the vehicle cost is $40,000. A review of the conditional sales contract shows with the total purchase price with all of the add-ons plus HST is $27,393.78. The total amount financed after deduction of the trade in allowance and the lien to pay out the vehicle is $28,798.78 with biweekly payments of $238.73. The total amount of all payments once the loan is paid off is $40,345.37. Mr. Higgins claiming that the vehicle cost is $40,000 is to an extent misleading because it includes the financing cost of the vehicle.

[67] According to the evidence, the Audi was purchased approximately three months after the Consumer Proposal was filed, in February 2020.

[68] The Debtor’s uncontradicted evidence is that Randy Freeman, her fiancé, is making the monthly payments.

[69] A review of her most current budget shows that she is not making the monthly payments on the vehicle. Instead, she is paying the insurance on the vehicle at the rate of $438 per month.

[70] The purchase of the Audi was brought to the attention of the Administrator and the Court by Mr. Higgins.

[71] The Court finds it to be very surprising and disturbing that the Debtor bought a luxury vehicle after the filing of her Consumer Proposal. Strictly speaking, there is nothing disentitling her from doing this. However, the optics are very bad considering that she is seeking to compromise her previous debts while at the same time purchasing a luxury vehicle. The Court understands how this purchase would be considered a snub to her creditors and the insolvency system.

[72] Notwithstanding this fact, the Court finds that this does not disentitle the Debtor from making the Consumer Proposal filed.

Household Family Unit

[73] Directive 11R of the BIA at paragraph 4 reads as follows:

Family Unit

4. For the purposes of this Directive, the bankrupt's family unit includes, in addition to the bankrupt, any persons who reside in the same household and who benefit from either the expenses incurred or income earned by the bankrupt, or who contribute to such expenses or earnings. A person who does not reside in the same household shall be considered as a member of the family unit if the person benefits from or contributes to the expenses incurred or income earned by the bankrupt.

[74] In addition, paragraphs 6(2) and (3) read as follows:

Family Situation Adjustment

6. (2) Where the non-bankrupt spouse refuses or neglects to divulge his or her income or expenses, the LIT shall, for the purposes of determining surplus income, apply 50 percent of the applicable Superintendent's standards corresponding to the number of persons in the family unit.

(3) Where a person considered to be a member of the family unit as described in paragraph 4 of this Directive (other than a spouse), who is not a bankrupt, refuses or neglects to divulge his or her income and expenses, this person is deemed not to be a member of the family unit. The LIT shall describe these circumstances in Form 65, Monthly Income and Expense Statement of the Bankrupt/Debtor and the Family Unit and Information (or Amended Information) Concerning the Financial Situation of the Individual Bankrupt and, when required, in Form 82, Report of Trustee on Bankrupt's Application for Discharge.

[75] Having read these paragraphs, the Court interprets them to mean that if Mr. Freeman refuses to provide his income and expense information, then he is deemed not to be a member of the family unit. Based on the evidence, the Court makes a finding that Mr. Freeman has not disclosed the information. Therefore, he is not a member of the Debtor’s family unit.

[76] Mr. Higgins argues that Mr. Freeman’s mother and sister are members of the family unit because they reside in the same dwelling as the Debtor. The Court notes that the Debtor moved into the property owned by Mr. Freeman’s mother where she and her daughter live.

[77] On the facts of this case, the Court finds that Mr. Freeman’s mother and sister are not members of the Debtor’s family unit. Just because the Debtor moved into the home where the mother and daughter were living previously does not mean that the income of the mother and daughter are added to the income of the Debtor’s family unit. That would be inequitable.

[78] Therefore, the Court finds that the Debtor’s family unit is made up of the Debtor and her newborn child.

Debtor’s Employment

[79] The evidence is clear that the Debtor was terminated by one of her employers for cause.

[80] At the present time, the Debtor is on maternity leave for 12 months. After that, she can return to work and her income will be whatever it is at the time.

[81] Unfortunately, COVID-19 has changed the economic landscape for many employees, including people working in the Debtor’s field. There is no certainty that she will find employment at the same level as previously for a variety of reasons, including the changing economy.

[82] The Court finds that the argument made by Mr. Higgins about the Debtor’s income is not relevant to the issue of approving the Consumer Proposal.

Fraudulent Use of the Debtor’s Credit

[83] Mr. Higgins was adamant that there was no fraud by any third party in relation to the credit obtained by the Debtor. He provided a large amount of information to show that this credit was not fraudulently obtained.

[84] The Court questioned the Debtor about the alleged fraudulent activity in her name. She confirmed that the debts related to fraudulent activity are included in the Consumer Proposal. When questioned by the Court as to what she had done about these debts, which she claimed were fraudulent, she said that she had contacted the various creditors who had done their own research. According to the Debtor, the creditors found that no fraud had occurred.

[85] In the Consumer Proposal, the Debtor states that the causes of her financial difficulty are loss of income and fraudulent obtaining of credit in her name. The Debtor claimed that some of the debts included in her Consumer Proposal were fraudulently obtained in her name by another person.

[86] The Court finds that based on the evidence of the Debtor, the debts claimed as fraudulent by the Debtor are not fraudulent. Her oral evidence was that the creditors found them not to be fraudulent. This satisfies the Court that those debts were not in fact fraudulent.

[87] The Court is satisfied that all of the creditors for which fraud is claimed by the Debtor are included in her Consumer Proposal. Based on the evidence of the Debtor, the creditors have found that her liabilities were incurred by her and were not incurred by third party fraud.

[88] This finding does not relate to any possible claim by Mr. Higgins that his signature on the iFinance was improperly obtained.

Sick Leave

[89] The Debtor’s sick leave commenced on March 7, 2020. The Debtor had a high-risk pregnancy. The baby’s due date was not until July 2020. The baby was born premature on April 26, 2020.

[90] The Court does not see the relevance of this argument in relation to the approval of the Consumer Proposal and finds that it is not relevant to the issue before the Court.

Offences Under the BIA

[91] Mr. Higgins argues that the Debtor has committed various offences under the BIA including omitting material information, not consulting him prior to filing her Consumer Proposal and non disclosure of the motorcycle.

[92] Sections 198(1)(b) and (c) are the applicable sections to Mr. Higgins’ argument and read as follows:

198 (1) Any bankrupt who

(b) refuses or neglects to answer fully and truthfully all proper questions put to the bankrupt at any examination held pursuant to this Act,

(c) makes a false entry or knowingly makes a material omission in a statement or accounting,

is guilty of an offence and is liable, on summary conviction, to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding one year or to both, or on conviction on indictment, to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding three years, or to both.

[93] Section 198(1)(b) involves a bankrupt who refuses or neglects to answer fully and truthfully any proper questions put to the bankrupt at an examination held pursuant to the BIA. The Court does not find that an examination of the Debtor was held pursuant to the BIA and therefore finds that this subsection is not applicable.

[94] In relation to making a false entry or knowingly making a material mission statement or accounting, the only material omission would be the omission of the Debtor’s motorcycle as an asset. The words set out in the section are “knowingly makes a material omission”. The Court is not satisfied that the Debtor knowingly made the omission. Her evidence was that she forgot about the motorcycle. The Court is prepared to give her the benefit of the doubt in relation to the omission of the motorcycle from her Statement of Affairs.

[95] As to the issue of the number of people in the family unit, this change occurred after the Consumer Proposal was filed. Therefore, on the facts of this case, the Court does not find them to be relevant to the issue before it.

[96] Mr. Higgins argues that the Debtor did not consult him prior to filing the Consumer Proposal. The Court finds that here is no obligation on the Debtor to have consulted with him prior to filing of the Consumer Proposal. The Court does not consider this to be an offence. In any event, the Court has found that the family unit consists of the Debtor, her newborn child and no one else.

[97] Obtaining credit after the filing of the Consumer Proposal and buying the Audi after filing the Consumer Proposal does not appear to be an offence under section 198(1)(b) or (c) in a proposal.

[98] For those reasons, Mr. Higgins’ arguments in relation to this issue fails.

Other Matters

Complaints to Office of the Superintendent of Bankruptcy (“OSB”)

[99] Mr. Higgins filed a series of complaints with the OSB against the Debtor and the Administrator. The OSB responded in writing to each of the complaints.

[100] In the first complaint, Mr. Higgins made allegations about inaccuracies in the materials filed by the Debtor and that the Debtor had committed various offences. Mr. Higgins also alleges that the Administrator acted in an unethical way. The OSB reviewed the matter and replied in a letter dated February 7, 2020, that based on the information available to it, there was nothing further that could be done. The OSB closed the complaint file.

[101] A second complaint was filed by Mr. Higgins complaining about the actions of the Administrator. The OSB investigated the matter and responded by correspondence dated March 16, 2020. The OSB indicated that after reviewing the matter and Mr. Higgins’ concerns, no action was required. The OSB closed the complaint file.

[102] A third complaint was filed by Mr. Higgins concerning the credit of the Debtor and the administration of the file. The OSB reviewed the matter and provided a letter dated April 16, 2020. The letter said that based on the information available to it, the OSB has reviewed Mr. Higgins’ concerns and no further action was required. The OSB closed the complaint file.

[103] In the correspondence dated April 16, 2020, the OSB deals with Mr. Higgins’ claim of misrepresentation and fraud by the Debtor. The OSB replied as follows:

However, further to your written complaint, you alleged, during our telephone conversation of March 25, 2020, that the Debtor misrepresented certain facts about the nature of her relationship with you on the co-signor portion of the Debtor’s iFinance Medicard loan (the “Loan”) application. You stated that, at the time that you signed as the co-signor for the Loan, the relevant portion of the Loan documents was blank (incomplete). You allege that these were later completed by the Debtor with inaccurate information concerning the nature of your relationship with the Debtor. You allege that, as a result, the Debtor committed fraudulent misrepresentation on the Loan document, and committed a fraud against you.

Pursuant to section 178 of the BIA, debts obtained by fraudulent misrepresentation are not released by an order of discharge or full performance of a proposal. However, the responsibility for demonstrating the debt was obtained by fraudulent misrepresentation rest with the creditor, and must typically be established in court. Our office has not been provided with any evidence demonstrating that the Debtor committed fraud on the Loan application, besides your statements relating to the same. Given the above details, we will not be taking any further action relating to this concern at this time.

[104] The Court finds that it will not, on this motion to approve the Consumer Proposal, enter into an inquiry as to whether the bankrupt has been guilty of fraud or fraudulent breach of trust: Re Kemper (1961), 2 C.B.R. (N.S.) 130 (S.C.).

[105] If Mr. Higgins wishes to pursue the allegation of fraud, the matter must be determined in a separate proceeding, which can be a civil proceeding as opposed to a criminal proceeding.

[106] Therefore, the claim by Mr. Higgins of fraud or fraudulent misrepresentation by the Debtor will not be dealt with in this motion to approve the Consumer Proposal.

Conclusion

[107] The Court has reviewed the dividends payable to the creditors both under bankruptcy and the Consumer Proposal scenarios, both at November 26, 2019 and April 30, 2020. Based on the calculations provided by the Administrator under either scenario, the dividend to unsecured creditors in the Consumer Proposal is far superior to the dividend in a bankruptcy.

[108] Therefore, the Court finds that notwithstanding all of the irregularities and other issues raised in this file, the Debtor’s Consumer Proposal is appropriate and provides a greater return to all unsecured creditors than does a bankruptcy.

[109] For those reasons, the Debtor’s Consumer Proposal is approved.

[110] The Debtor will have to make the payments due for December, January, February, March and April by June 30, 2020.

Costs

[111] The parties requested the opportunity to make costs submissions after the decision is rendered. The Court orders that cost submissions be made orally. The parties shall contact the bankruptcy office to obtain a date. Each party will have 10 minutes to make their argument as to costs by teleconference. Cost outlines will be required from the parties seeking costs at least three days before the hearing of the submissions and are to be distributed to all parties.

[112] Order accordingly.

Justice Stanley J. Kershman Released: May 20, 2020