COURT FILE NO.: 31-2715516
DATE: 20231213
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: In the Matter of the Bankruptcy of Rene Lalande
BEFORE: Associate Justice Rappos
COUNSEL: Carol Allen, for Deborah Lalande
John Delo, representative of A. Farber & Partners Inc.
Rene Lalande, self-represented
HEARD: December 12, 2023 (by video conference)
E N D O R S E M E N T
Nature of Motion
[1] Deborah Lalande, the former spouse of the bankrupt, Rene Lalande, brings a motion for a “Declaration lifting the automatic stay of proceeding”. Ms. Lalande relies on sections 69.3 and 69.4 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the “BIA”) in connection with her motion.
[2] Ms. Lalande brings this motion so that she may continue with family law litigation that she currently is party to with Mr. Lalande.
Background
[3] Mr. Lalande filed an assignment in bankruptcy on February 25, 2021, and A. Farber & Partners Inc. was appointed as trustee in bankruptcy (the “Trustee”).
[4] Mr. Lalande currently remains an undischarged bankrupt, as his discharge hearing on July 20, 2022 was adjourned sine die to allow Mr. Lalande to obtain legal counsel regarding a vehicle he disposed of during his time as an undischarged bankrupt.
[5] Mr. Lalande and Ms. Lalande are parties to family law litigation commenced in Owen Sound bearing Court File No. FS 21-013 (the “Family Law Proceeding”). It is not clear when the proceeding was commenced. The affidavit filed in support of the motion says it was 2019; however, the court file number suggests that it was in 2021.
[6] Mr. Lalande commenced the Family Law Proceeding and was seeking various relief including trust, property and support claims.
[7] Ms. Lalande was not listed as a creditor on Mr. Lalande’s bankruptcy statement of affairs dated February 25, 2021, nor has she filed a proof of claim according to the claims register filed by the Trustee.
[8] Pursuant to the Order of Justice Mandhane on March 9, 2022, Mr. Lalande’s application and all subsequent pleadings were struck, and Ms. Lalande was granted leave to proceed to an uncontested trial. Ms. Lalande was awarded costs of $5,000, which are to be deducted from any equalization payment owed to Mr. Lalande after resolution of the matter or after a trial.
[9] On January 26, 2023, the Court of Appeal dismissed Mr. Lalande’s appeal and awarded costs in favour of Ms. Lalande in the amount of $7,500, which are to be deducted from any equalization payment owed to Mr. Lalande after resolution of the matter or after a trial.
[10] Ms. Lalande is seeking a lifting of the stay of proceedings so that she may proceed with an uncontested trial in the Family Law Proceeding. The parties appeared in the proceeding on July 12, 2023, at which time the matter was adjourned, as Justice Fragomeni was informed of Mr. Lalande’s bankruptcy proceeding and granted Ms. Lalande time to bring a motion to lift the stay.
[11] Further attendances on September 20, 2023 and November 15, 2023 were adjourned, as the lift stay motion had yet to be heard. The next appearance is on December 20, 2023.
[12] Mr. Delo, on behalf of the Trustee, confirmed that the Trustee has consented to the lifting of the stay. Mr. Delo also advised that the Trustee notified Mr. Lalande’s creditors of the Family Law Proceeding and informed them that the Trustee was not going to take steps to pursue Mr. Lalande’s claims in the Family Law Proceeding and that creditors had the ability to take steps under section 38 of the BIA in connection with these claims if they wished to do so.
[13] Mr. Delo also advised that no creditor has taken any step to date in response to the Trustee’s letter.
Request for Adjournment
[14] Mr. Lalande requested an adjournment of this hearing, as he stated that he only received access to the materials on CaseLines yesterday and wants to discuss the matter with his lawyer.
[15] However, an affidavit of service indicates that the motion materials were e-mailed to Mr. Lalande on October 27, 2023.
[16] I refused Mr. Lalande’s request for an adjournment, as I am satisfied, based on the affidavit of service, that Mr. Lalande had plenty of time to review the materials and seek the assistance of a lawyer if he wished to do so.
Law and Analysis
[17] With respect to Ms. Lalande’s motion, it does not appear that the stay of proceedings applies to the Family Law Proceeding.
[18] Subsection 69.3(1) of the BIA provides that “no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for recovery of a claim provable in bankruptcy.”
[19] A “creditor” is defined under subsection 2(1) of the BIA to mean a person having a claim provable under the BIA.
[20] Under subsection 121(1) of the BIA, a provable claim is a debt or liability, present or future, that Mr. Lalande was subject to on February 25, 2021 (the day he became bankrupt) or to which Mr. Lalande may become subject to before his discharge by reason of any obligation he incurred before February 25, 2021.
[21] Ms. Allen, counsel to Ms. Lalande, confirmed that, while costs awards have been granted in favour of Ms. Lalande, it is anticipated that such amounts will be offset against any equalization or other amount that Ms. Lalande is required to pay to Mr. Lalande in the Family Law Proceeding.
[22] There is also nothing in the record as to whether any costs awards were granted prior to Mr. Lalande filing his assignment in bankruptcy.
[23] Accordingly, based on the record before me, Ms. Lalande is not a creditor in Mr. Lalande’s bankruptcy proceeding, and as a result, the stay of proceedings under subsection 69.3(1) of the BIA does not stay the continuation of the Family Law Proceeding.
[24] As a result, an order under section 69.4 of the BIA to lift the stay is not available, as that relief may only be obtained by a creditor under that section.
[25] In my view, the relief sought by Ms. Lalonde is more appropriately described as a declaration that the stay of proceedings does not apply to the Family Law Proceeding. This is evidenced by the language used in the draft order that Ms. Lalande be “authorized to continue to prosecute her motion/claim in action number FS 21/013, a claim in respect of property against Mr. Rene Lalande.”
[26] Given that the Trustee does not intend to continue Mr. Lalande’s claims in the Family Law Proceeding, and none of Mr. Lalande’s creditors have taken steps to do so to date, I am prepared to grant the declaration sought by Ms. Lalande.
[27] I believe that such a declaration is required, as I accept Ms. Allen’s submission that the Court in the Family Law Proceeding has been informed of the existence of the stay of proceedings and expects there to be some resolution from the Bankruptcy Court before they are prepared to allow the uncontested trial to proceed.
[28] In my view, a registrar in bankruptcy has the authority to grant such a declaration in these circumstances, as it falls within a “matter relating to practice and procedure in the courts” (subsection 192(1)k) of the BIA) and constitutes a “necessary [duty] relating to the practice and procedure in the courts” (subsection 192(1)(m) of the BIA).
[29] As a result of the foregoing, Ms. Lalande’s motion is hereby granted. Order to go as electronically amended and signed by me.
Associate Justice Rappos
DATE: December 13, 2023