Court File and Parties

Court File No.: 31-2881997 Date: 2023-10-25

Superior Court of Justice - Ontario

Re: In the Matter of the Bankruptcy of Hour Media Group Inc.

Before: Associate Justice Rappos

Counsel: Ashley Ferguson, for Johnstone & Cowling Management Inc. Matthew Harris, for Hour Media Group Inc. and Carolyn Michele Hourigan

Heard: October 24, 2023 (via video conference)

Endorsement

[1] Johnstone & Cowling Management Inc. (“JCM”) brings a motion for an order under section 69.4 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”) lifting the stay of proceedings as against the bankrupt, Hour Media Group Inc. (the “Bankrupt”).

[2] JCM wishes to commence an action against the Bankrupt and its principal, Carolyn Michele Hourigan, wherein it will seek, among other things, damages as a result of fraud, breach of trust and conversion.

[3] Ms. Hourigan has filed a consumer proposal, with the proceeding bearing Estate No. 31-2901388. JCM also seeks a lifting of the stay in Ms. Hourigan’s consumer proposal proceeding.

[4] Mr. Harris, on behalf of the Bankrupt and Ms. Hourigan, confirmed that neither of them opposes the relief being sought by JCM.

[5] Harris & Partners Inc. is the trustee in bankruptcy for the Bankrupt and the administrator for Ms. Hourigan. It was served with the motion materials and has taken no position in response to the motion.

[6] I inquired of counsel to JCM whether the Office of the Superintendent in Bankruptcy (the “OSB”) was served with the motion materials. Ms. Ferguson confirmed that the OSB had not been served with the materials.

[7] It is not an uncommon event that motions before the Bankruptcy Court are adjourned to allow for service to be affected on the OSB.

[8] To the extent it is not widely known, it is standard practice in the Bankruptcy Court in Toronto, and has been for many years, that the OSB be served with all motions and applications brought before the Court.

[9] The reason for this is that, pursuant to subsection 5(2) of the BIA, the Superintendent of Bankruptcy supervises “the administration of all estates and matters to which this Act applies.” Subsection 5(4)(a) provides that the Superintendent may “intervene in any matter or proceeding in court, where the Superintendent considers it expedient to do so, as if the Superintendent were a party thereto.” Rule 12 of the Bankruptcy and Insolvency General Rules, C.R.C. 1978, c.368, as amended (the “Bankruptcy Rules”) also sets out that the OSB “may intervene in any application to the court by filing a notice of intervention with the Court.”

[10] It is difficult to see how the OSB could supervise the administration of all BIA estates and matters and exercise its right to intervene in any matter or proceeding if it is not served with all motion and application materials.

[11] In my view, as a result of these statutory provisions, the OSB is an interested party and a party “who will be affected by the order sought” in all motions and applications before the Bankruptcy Court, and thus must be served with all motion and application materials, as required under subrule 37.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended (the “Civil Rules”).

[12] To ensure that the OSB is served in all proceedings, the Bankruptcy Court has been granted the authority, under subrule 9(6) of the Bankruptcy Rules, to require, if it deems necessary, that a copy of “any notice be sent to the Superintendent in any proceeding before it.” As well, subrule 37.07(5) of the Civil Rules permits the Court to “adjourn a motion and direct that the notice of motion be served” on any person who ought to have been served.

[13] Hopefully this endorsement will be of assistance to parties that appear before the Bankruptcy Court, including individuals, counsel, and licensed insolvency trustees, in ensuring that their motions are not adjourned due to lack of service on the OSB.

[14] With respect to the current case before me, I am adjourning it and requiring JCM to serve its motion materials on the OSB. Counsel to JCM shall file an affidavit of service with the Justice Services Online portal and send a copy by e-mail to the Bankruptcy Court Office.

[15] If the OSB has not contacted counsel to JCM or the Bankruptcy Court Office within 10 days of service of the materials, then counsel to JCM shall confirm this in writing to the Bankruptcy Court Office. Once I receive such confirmation, I am prepared to grant the order sought by JCM.

Associate Justice Rappos DATE: October 25, 2023