Superior Court of Justice - Ontario
RE: In the Matter of the Bankruptcy of Tourag Ghajar
BEFORE: Associate Justice Rappos
COUNSEL: Brandon Jaffe, for A. Farber & Partners Inc. Calvin Ho, for Nazanen Khorasani
HEARD: October 24, 2023 (via video conference)
E N D O R S E M E N T
1On January 26, 2021, Tourag Ghajar filed an assignment in bankruptcy and A. Farber & Partners Inc. was appointed as trustee of his bankruptcy estate (the "Trustee").
2The Trustee has discovered that, on April 17, 2020, Mr. Ghajar transferred his interest in 524 Bristol Road, Newmarket (the "Property") to his spouse, Nazanen Khorasani (the "Transfer"), for no consideration other than the assumption of the mortgage registered against title to the Property.
3The Trustee brings a motion seeking an order: (a) declaring the Transfer to be a transfer at undervalue and void as against the Trustee under subsection 96(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the "BIA"); and (b) setting aside the Transfer. In the alternative, the Trustee seeks judgment against Ms. Khorasani in an amount equal to the value of the Trustee's interest in the Property as at the date of the Transfer.
4The Trustee and Ms. Khorasani have agreed to a litigation timetable for delivery of materials and the completion of cross-examination/written questions to the Trustee. I hereby approve of the timetable agreed to by the parties.
5An outstanding issue that needs to be determined is whether an Associate Judge, sitting as a Registrar in Bankruptcy under the BIA, has jurisdiction to hear the Trustee's transfer at undervalue motion.
6It appears to be the practice in Ontario that transfer at undervalue motions are heard by Judges, as I was unable to find any reported decision in the province where a registrar in bankruptcy heard and decided a transfer at undervalue motion under section 96 of the BIA.
7Section 192 of the BIA is the principal section of the statute that sets out the power and jurisdiction of registrars.
8As noted in Bankruptcy and Insolvency Law of Canada, 4th Edition at §8.164, "a registrar derives its authority from the Act and the Rules and has no inherent jurisdiction. If authority for an act cannot be found in the BIA or the [Bankruptcy and Insolvency General Rules], then the registrar cannot perform it." The learned authors of the text go on to state that "if the power to hear a matter is not expressly conferred on the registrar by s. 192 or some other section of the Act or the Rules, the registrar has no jurisdiction to hear it."
9Subsection 192(1)(f) permits a registrar to hear and determine any unopposed or ex parte application. Subsection 192(1)(j) permits a registrar to hear and determine any matter with the consent of all parties.
10Both of these subsections are not applicable, as the Trustee's motion is opposed, and Ms. Khorasani does not consent to the motion being heard by an Associate Judge sitting as a Registrar in Bankruptcy.
11Subsection 192(1)(k) permits a registrar to hear and determine any matter relating to practice and procedure in the court. I was unable to locate a reported decision where a registrar in bankruptcy relied on this provision to hear a contested transfer at undervalue motion.
12None of the other subsections of section 192(1) are applicable.
13As the parties did not make submissions to the court on whether "practice and procedure" under section 192(1)(k) could be interpreted to include jurisdiction to hear a transfer at undervalue motion under section 96, I am not in a position to render a decision on this issue.
14Mr. Jaffe noted his concern regarding whether a registrar in bankruptcy has jurisdiction under the BIA to grant declaratory relief. I am aware of the decision in Visual Bible International Inc. v. Cinemavault Releasing Inc., 2005 CanLII 16592 where Master MacLeod (as he then was) questioned whether a Master (now known as an Associate Judge) has jurisdiction to grant declaratory relief.
15I have consulted with Commercial List Team Lead Justice Conway, and she confirmed that the Trustee's motion can be heard by a Commercial List Judge.
16As a result, it is left to another day for the Court to determine whether a registrar in bankruptcy had jurisdiction to hear a contested transfer at undervalue motion without the consent of the parties, especially one that seeks declaratory relief. I note that I am aware of decisions from Manitoba1, Alberta2, and New Brunswick3 where registrars in bankruptcy heard and decided motions under section 96 of the BIA. However, in none of the decisions did the registrar deal with or consider the issue of whether the registrar has authority to grant declaratory relief.
17I hereby order that the Trustee's motion be traversed to be heard by a Judge presiding over the Commercial List.
Associate Justice Rappos
DATE: October 25, 2023
Footnotes
- Bankruptcy of Dwight Logeot, 2022 MBKB 214
- Indarsingh, Re, 2015 ABQB 158 and Mihalich, Re, 2013 ABQB 66
- PricewaterhouseCoopers Inc. v. Legge, 2011 NBQB 255.