In the Matter of the Bankruptcy of Alan Saskin

Court File No.: 31-2117602

Date: 2024-06-17

Ontario Superior Court of Justice In Bankruptcy

In the Matter of the Bankruptcy of Alan Saskin of the City of Toronto, in the Province of Ontario

Before: Associate Justice Ilchenko, Registrar in Bankruptcy

Counsel appearing at the Discharge Hearing and at Case Conferences preparatory to Discharge Hearing:

Fred Tayar (“Tayar”), Colby Linthwaite (“Linthwaite”) and Joshua Tayar (“Joshua”) for Bankrupt Alan Saskin (the “Bankrupt”)

Robert Drake (“Drake”), Mario Forte (“Forte”), Gary Abrahamson LIT (“Abrahamson”), David Filice, LIT (“Filice”), Adam Erlich LIT (“Erlich”) and Joshua Sampson LIT (“Sampson”) for Trustee in Bankruptcy of the Bankrupt, Fuller Landau Group Inc. (the “Trustee”), opposing discharge

Emilio Bisceglia (“Bisceglia”) and R. Battista Frino (“Frino”) for Alpa Stairs and Railing Inc. (“Alpa”) Opposing Creditor

Kevin Sherkin (“Sherkin”), Bobby Sachdeva (“Sachdeva”) and Matthew Walwyn (“Walwyn”) for Speedy Electrical Contractors Ltd.(“Speedy”), Dolvin Mechanical Contractors Ltd.(“Dolvin”), Franline Investments Limited (“Franline”), and Downing Street Financial Inc. (“Downing Street”) (collectively the “MT Creditors”), Opposing Creditors

Neil Rabinovitch (“Rabinovitch”) and Kenneth Kraft (“Kraft”) for Adv. Guy Gissin, (“Gissin”) in His Capacity as the Israeli Functionary (the “Israeli Representative”) of Urbancorp Inc. (“UCI”) in certain Proceedings in the Courts Israel (the “Israeli Proceedings”) as well as Hylton Levy LIT (“Levy”) financial advisor to Israeli Representative, Opposing Creditors

Edward Park (“Park”), Kelly Smith-Wayland and Kevin Dias for Department of Justice (“DOJ”), Counsel for Canada Revenue Agency (“CRA”), Opposing Creditor

Matthew Gottlieb (“Gottlieb”), Andrew Winton (“Winton”) and Joseph Stonehouse (“Stonehouse”) Counsel for Doreen Saskin

Adam M. Slavens (“Slavens”), for Tarion Warranty Corporation, as well as in his own capacity as a possible witness requested to be subpoenaed at the Discharge Hearing

Harvey Chaiton, (“Chaiton”) Counsel for Jeremy Cole and MNP LLP, accountants for the Bankrupt, and for certain relevant Urbancorp Group companies

Superintendent of Bankruptcy not appearing

Heard: Trial of Bankrupt’s Discharge heard on:

January 17, 18, and 19, 2023 in person,

July 18, 19, and 20, 2023 in person,

July 27 and 29, 2023 by Zoom,

August 11, 2023 by Zoom,

September 27 and 29 , 2023 by Zoom,

October 26 and 27, 2023 by Zoom and

November 16, 2023 by Zoom

ENDORSEMENT

[1] The Bankrupt appears on his discharge hearing (the “Discharge Hearing” or the “Discharge”) seeking an Absolute Discharge.

[2] The Bankrupt filed a notice of intention to make a proposal (the “NOI”) commencing Division 1 Proposal Proceedings (the “Proposal Proceedings”) under Part III of the Bankruptcy and Insolvency Act (the "BIA") on April 29, 2016 appointing The Fuller Landau Group Inc. as the Proposal Trustee (the “Proposal Trustee”).

[3] On October 27, 2016, a Holding Proposal (the “Holding Proposal”) was filed by the Bankrupt with the Official Receiver. A meeting of creditors to consider the Holding Proposal was adjourned without a fixed date by the creditors, but no vote was ever held.

[4] On July 23, 2019 the Bankrupt assigned himself into bankruptcy and the Proposal Trustee became the Bankruptcy Trustee of the Bankrupt.

[5] Evidence presented indicated that this occurred at the time that certain of the creditors had brought a motion to terminate the Proposal Proceedings.

[6] The Bankrupt was the manager of numerous corporations and partnerships which developed condominiums and other development properties in or about the City of Toronto.

[7] Many of these entities filed notices of intention, and later, obtained stays of proceedings under the Companies' Creditors Arrangement Act ("CCAA"). KSV Kofman Inc. ("KSV") is the monitor appointed by the Court for many of these corporations or other entities. Alvarez & Marsal Inc. was appointed as Court Appointed Receiver of other entities (the “Receiver”). Fuller Landau Group Inc. was also appointed Monitor in other CCAA proceedings involving certain of the Urbancorp entities. I will collectively and without specificity refer to the collection of Urbancorp corporations and other entities as the “Urbancorp Group”.

[8] As a result of the decision of Chief Justice Morawetz in Urbancorp, 2021 ONSC 3593, a Bankruptcy Order was entered into with respect the entity Urbancorp Management Inc. (“UMI”), which featured prominently at this discharge hearing, and KSV was appointed as Trustee in Bankruptcy. At this hearing the relief sought by Doreen against this entity of appointing a Court Appointed Receiver was rejected.

[9] Also, Urbancorp Toronto Management Inc. (“UTMI”) another Urbancorp Group entity that figures prominently at this Discharge Hearing, was in CCAA proceedings, where again KSV was the Monitor. UTMI was also eventually assigned into Bankruptcy.

[10] Neither KSV or Alvarez & Marsal Inc. (“Alvarez”) or its counsel appeared at the Discharge Hearing. I will refer generally to the CCAA Proceedings involving the various Urbancorp Group of Companies collectively where KSV, Alvarez or Fuller Landau Inc. were appointed as Monitor collectively as the “CCAA Proceedings”. I will refer to the Receiverships of Certain of the Urbancorp Group of Companies had receivers appointed by the Court collectively as the “Receivership Proceedings”.

[11] Counsel for certain of the MT Creditors is an inspector of this Bankruptcy Estate, as is Gissin. The MT Creditors and the Israeli Representative have had extensive involvement in the Urbancorp CCAA Proceedings and the Receivership Proceedings.

[12] It is also of relevance that prior to the Discharge Hearing, Registrar Jean granted an Order in this Bankruptcy Estate dated December 14th, 2020 under Section 38 of the BIA in favour of Alpa (the “S.38 Order”), to commence proceedings (the “s.38 Proceeding”) dealing with reversing certain alleged transactions (the “Alleged Reviewable Transactions”) entered into by the Bankrupt, including relating to the Condominium and the Wine Collection (each as defined below) involving Doreen, the wife of the Bankrupt as well as certain children and sons-in-law of the Bankrupt. The Israeli Representative and certain of the MT Creditors are also creditors that have agreed to participate in that s.38 Proceeding.

[13] The commencement of this s.38 Proceeding increased the evidentiary complexity of this proceeding, as well as s.163 examinations conducted prior to the Discharge Hearing, given the jurisprudence limiting questions to be asked at a s.163 examination or a discharge where other proceedings have been commenced, which will be dealt with subsequently in these Reasons.

[14] The Bankrupt has also brought a motion to Expunge the proof of claim filed by Alpa in the Bankruptcy (the “Expungement Motion”). The Expungement Motion for the Alpa claim has not been heard at the time of the Discharge Hearing.

[15] Also in connection with the Expungement Motion, I granted relief striking certain evidence filed by Alpa, but admitting other evidence, and setting ground rules for the obtaining of further evidence and conducting examinations in connection with the Expungement Motion, (the “Strike Motion”) with reasons at: Re Saskin, 2023 ONSC 4695.

[16] In a motion (the “Standing Motion”) heard on April 5, 2022 and in reasons released on June 20, 2022 (the “Standing Endorsement”) I granted standing to certain of the MT Creditors and to the Israeli Representative to appear and provide evidence and submissions on the issue of the potential effect of the Expungement Motion on their interests as Participating Creditors in the s.38 Proceeding, as governed by the s.38 Order.

[17] I also denied a motion for Security for Costs brought by Alpa against the Bankrupt in response to this Expungement Motion with reasons at Saskin v City of Toronto, 2022 ONSC 7377 (the “Alpa Security for Costs Motion”).

[18] In addition, Alpa, also served a motion under s.69.4 of the BIA for leave to lift the stay of proceedings against the Bankrupt to obtain a judgement and declaration under s.178 of the BIA (the “Alpa Leave Motion”) with respect to the claims made against the Bankrupt under the trust provisions of the Construction Act, RSO 1990, c C.30 (the “Construction Act”) in the Alpa Proof of Claim (the “Alpa Claim”), the same claim the Bankrupt is seeking to expunge. The Alpa Leave Motion has also not been heard at the time of the Discharge Hearing.

[19] I also issued reasons on a S.163(2) Motion brought by the Bankrupt requesting to examine Rabinovitch and Sherkin at Saskin v City of Toronto, 2022 ONSC 7378 (the “S.163(2) Motion”).

[20] I also have made numerous scheduling endorsements governing the hearing of this discharge and the evidence to be heard on the hearing (collectively, the “Scheduling Endorsements”).

[21] The relevant portions of the September 22, 2022 Scheduling Endorsement read:

“Ms. Smith Wayland is appearing for CRA on this discharge and advises that CRA will be opposing the discharge.

Mr. Rabinovitch advises that the Israeli Representative will also be opposing.

Counsel advise on Mr. Sherkin's behalf that certain of the Miller Thomson Creditors will also be opposing, as will the creditors represented by Mr. Bisceglia and Ms. Frino.

Given those numbers of oppositions three full days is an appropriate length of hearing.

Mr. Rabinovitch will be at a hearing in Manitoba on the originally contemplated dates in the week of December 5th.

Fortunately all counsel are available on January 17, 18 and 19 2023, so I would ask that the Bankruptcy Court book those dates for the Saskin Discharge hearing.

Mr. Bisceglia raised the issue of wishing to have further s.163(1) examinations of the

Bankrupt conducted prior to the discharge, to be completed by the end of October.

There are inspectors so the Trustee does not require my permission to conduct the examination. If there are issues about the conduct of the examination I can be spoken to, but I do not wish that examination to affect the timing of the discharge and the schedule that counsel have agreed to for the exchange of affidavit Evidence in Chief in the hybrid trial of the Discharge.

Evidence on the Discharge will be exchanged as follows:

1. Trustee to serve and file the Supplementary Report by November 11, 2022;

2. All Affidavits of all Opposing Creditors detailing their grounds of opposition to be served and filed by November 25th, 2022;

3. Bankrupt to serve and file the Bankrupt's Affidavit by December 15th, 2022;

4. Further Pre-Discharge Hearing Case Conference to be held at 9:30 on December 16th, 2022 to deal with any trial management and evidentiary issues.

With respect to the nature of the hearing, given the uncertainty of what the COVID situation will be in January, I will not be imposing at this point any in-person hearing requirement permitted under the Practice Direction. That can be finally determined at the December 16th Case Conference.”

[22] In the further case conference on December 16, 2022 I made the following endorsement regarding the status of the exchange of materials:

“Given the issues raised by me and the other parties regarding the current status of the

exchange of materials under the schedule in my prior endorsement and solutions to get

back on schedule and deal with the evidentiary and practical issues for the conduct of

the discharge hearing, this Case Conference will resume on Tuesday December 20,

2022 at 2:30 PM by Zoom.”

[23] At the December 20, 2022 case conference I made the following endorsement to resolve the requests to adjourn the trial for further examinations and for the provision of evidence prior to Trial:

“Given my endorsement of September 22, 2022, I am satisfied that there is ample evidence already before the Court, over years of proceedings, both in this Court and before the Commercial List, to enable the Creditors to prepare their materials supporting their Notices of Opposition to the Bankrupt's Discharge, notwithstanding that there are apparently 31 of 400+ questions to the second s.163(1) examination of the Bankrupt (the first being in 2019) that remain the subject of the Refusals motion brought by counsel for Alpa.

Similarly, I am not going to adjourn the three days of the Discharge Hearing that was scheduled in September, after counsel agreed to those dates in September, pending a motion to compel Doreen Saskin to attend a s.163(1) examination, which examination was not contemplated in September.

In order that the Bankrupt knows what case he is to meet, and provide responding evidence on his discharge:

1. All Affidavits of all Opposing Creditors detailing their grounds of opposition, and the evidence in support of those grounds to be served and filed by January 6, 2023;

2. Bankrupt to serve and file the Bankrupt's Affidavit by January 13th, 2023;

To be clear, these materials shall form the evidence in Chief for the Bankrupt's Discharge for the Creditor witnesses and the Bankrupt. The witnesses will be subject to Cross-Examination at the hearing and redirect, but there will be no more in-Chief evidence, in order that the hearing can be completed in three days.

I will set aside January 9th at 9:30 on my Taxation day for a Case Conference, if one is necessary for further scheduling and trial management issues, and in particular whether after being served with the materials of the Opposing Creditors, it is physically realistic for Mr. Tayar to answer those materials by the January 13th, 2023 deadline, or other issues. Mr. Tayar to submit a request form to trigger that Conference.

Mr. Sachdeva and Mr. Rabinovitch advise that they will canvas time allocation issues amongst the Opposing Creditors to avoid duplication of testimony and cross-examination.”

[24] All underlined text in these reasons is emphasis added by me for these reasons.

[25] The Court has considered all materials and arguments raised by all of the parties on this Discharge Hearing. Any failure by the Court to refer in these reasons to specific arguments and materials raised does not reflect that the Court has not considered those arguments.

Method of Hearing

[26] Given the number of parties, the number and complexity of the issues, and the quantity of documentation sought to be introduced as evidence, a hybrid trial was ordered in the Scheduling Endorsements, with examination in chief being provided through affidavit evidence and cross-examination conducted, mostly in person, at the hearing.

[27] This did not eliminate evidentiary issues coming up at Trial that needed to be dealt with prior to testimony of witnesses commencing, so several days equivalent of trial were spent dealing with those issues.

[28] The total pages of documents uploaded by the parties on this Discharge Hearing, as well as the transcripts of the Trial and the Exhibits filed at Trial, totaled in excess of 15,608 pages as recorded by Caselines. Counsel provided excellent hyperlinked materials and should all be commended in dealing with the complexity of this Discharge.

[29] In particular I would like to thank Mr. Walwyn, Ms. Frino and Mr. Linthwaite and Mr. Joshua Tayar for assisting Mr. Registrar Christopher Riley in managing the difficult task of assembling the physical and Caselines exhibits that permitted these reasons to be written.

[30] I would also like to specifically commend Mr. Registrar Christopher Riley for his exemplary assistance throughout the Trial and afterward.

[31] I will provide the reasons for those decisions on the inclusion and exclusion of evidence, and the striking of paragraphs of certain affidavits filed as a separate portion of these reasons.

Motions at Outset of Trial to not grant Standing to Certain Opposing Creditors, to adjourn the Trial and to Make Evidentiary Rulings:

[32] At the outset of Trial counsel for the Bankrupt sought to exclude a number of the opposing creditors on the basis of lack of standing. As each of these arguments were particular to the claims made by those opposing creditors, the specifics of the alleged deficiencies of that opposing creditors’ standing will be dealt with in the sections dealing with the evidence of that opposing creditor.

[33] For the purposes of these Reasons, I will refer to the Israeli Representative, the MT Creditors actually opposing the discharge with standing and Alpa as the collective “Opposing Creditors”. I do not include CRA and the Trustee who are also opposing the discharge of the Bankrupt, who I will refer to individually, given their differing status at discharge, and the specific legal nature of their arguments.

[34] As an alternative argument Counsel for the Bankrupt also sought a blanket ruling that questions not relating to specific declared s.173 facts be globally banned. In each case the issue arises from the situation that this discharge hearing is occurring prior to the final determination of a number of the constellation of legal proceedings involving the Bankrupt, his family and the Urbancorp Group, and their assets, both in Ontario and in Israel. That request also raises the practicalities of how that requested ban could work in a trial setting.

[35] With respect to both issues, at the outset of trial counsel for the Opposing Creditors rejected the request for the determination that they lacked standing, and rejected the imposition of a blanket ban on evidence. The Opposing Creditors asked again for the adjournment of the entirety of the Discharge Hearing pending determination of the outstanding litigation, because their argument was that the Discharge Hearing needed to have those determinations made in the, inter alia, s.38 Proceeding, the Alpa Leave Motion, and the Israeli Proceedings, because those issues were all relevant to the Determination of the terms of Discharge of the Bankrupt.

[36] Counsel for the Bankrupt opposed the adjournment arguing that the jurisprudence was that the Discharge Hearing should not be delayed for the determination of all of the outstanding litigation. Counsel for the Trustee and the CRA did not support the adjournment request.

[37] In Re Gawri, 2017 ONSC 1070, Conway, J. set out the factors to be reviewed in whether a discharge hearing should or should not be scheduled. In that case there was an action dealing with a Fraudulent Conveyance that had been set down for trial and was awaiting a Trial Scheduling Court at the time that the Bankrupts moved before Conway, J. for an Order to have the discharge hearing scheduled, notwithstanding the pending trial in the Fraudulent Conveyance Action. Conway, J. set out the following test:

“4 I have reviewed the case law put forth by counsel (in particular, Lechcier-Kimel, Re, 2016 ONSC 1185 (Ont. S.C.J.); Pantziris, Re, 2016 ONSC 1329 (Ont. S.C.J.); Kemila, Re, 1987 CarswellBC 236 (B.C. S.C.) and Horwitz, Re (1984), 52 C.B.R. (N.S.) 102 (Ont. H.C.)).

5 The following principles emerge from that review:

1. A DH is intended to be a summary process and not the forum in which the court investigates allegations of fraud (see Saban, Re, [2012] O.J. No. 5640 (Ont. S.C.J. [Commercial List]), at para. 13).

2. Courts have adjourned a DH where a secured creditor seeks to rely on findings in a civil action under s. 173(1)(l) of the BIA as a factor in whether, or on what terms, a discharge should be granted.

3. Whether the DH should be adjourned is a matter of discretion. The factors to be taken into account in the exercise of that discretion are set out in Pantziris and include prejudice to the parties, the interests of the parties, the interests of society in tri-partite hearings, the court’s ability to control its own process, and what (if any) has been the course of dealing in the civil action. I disagree with Mr. Zeitz that the courts have not taken into account the interests of the bankrupt in moving forward with a DH (see for example, Master Jean’s comments set out in para. 11 of Pantziris). It is clear that all of the interests are to be taken into account - the bankrupt’s, the creditors’ and the court’s. For that reason, it is not automatic that a DH be postponed if there is an ongoing action nor is it automatic that a DH be scheduled regardless of the ongoing action. It depends on the facts of the case and the exercise of the court’s discretion. I also note that courts have enabled a bankrupt to reapply for a DH if there has been delay in moving the civil action forward (see Sidhu, Re, 2004 BCSC 1589 (B.C. S.C. [In Chambers]) and Kemila, Re, 1987 CarswellBC 236 (B.C. S.C.)). ”

[38] The decision of Hainey, J. in Pantziris, Re, 2016 ONSC 1329 (“Pantziris”) cited by Conway, J. in Gawri, upheld the decision of AJ Jean in adjourning the discharge hearing of the Bankrupts pending the outcome of a fraudulent conveyance action. The “factors” considered by AJ Jean, upheld by Hainey, J. and cited by Conway, J. in Gawri, read as follows:

“This issue on the motion before me today is whether the bankrupt’s discharge hearing ought properly be scheduled for hearing before a commercial list judge. While I would agree that a bankrupt is entitled to his day in court — i.e. whether he be discharged — that right or entitlement does not supersede the rights of the Trustee and/or creditors. This court is called upon regularly to determine whether a case be adjourned or whether the case be scheduled for hearing. In my role as lead for bankruptcy masters, the scheduling of bankrupt’s discharge hearings have been delegated to me. In determining whether the case is to be scheduled (or adjourned) is a matter of discretion, which I exercise having regard to a number of factors including:

1. prejudice to the respective parties

2. the interests of the parties

3. the interests of society in tri-partite proceedings

4. whether the case is ready for hearing

5. other relevant factors.

1), 2), 3). In this case, the bankrupt desires to be discharged and to move forward. However, the creditor has opposed discharge. There is litigation pending in the commercial list in which the Trustee alleges that preferences or fraudulent conveyances were given by the bankrupt to the bankrupt’s family members. If proven, alleged fraud and other related 173(1) facts are relevant on the discharge hearing.

I agree with the submissions of counsel for the Trustee that such allegations are properly established in the proper forum and that a discharge hearing is not so much a forum. A discharge hearing is intended to be a summary proceeding and allegations of fraud are considered if previously established. See the decision of Newbould J. in Re Bankruptcy of Zeev Saban, 2012 ONSC 6700 at paras. 13-14. If the discharge hearing is scheduled forthwith, it is my view that there would be prejudice to the Trustee and the creditor inasmuch they would not be in a position to establish this fact on the hearing. As well, while the parties’ interests are considered, this court considers the interests of society and the integrity of the insolvency system. This court also has an interest to ensure that insolvency legislation is upheld and that misconduct, if proven, is considered and the appropriate relief granted.

4. It is my view that this case is not ready for hearing.

(b) I also consider the court’s authority to control its process. The court has jurisdiction to schedule / not schedule to promote or improve efficiencies in the proper and just adjudication of matters before the court. It would not be in the interests of justice to allow the bankrupt’s discharge hearing to proceed in these circumstances.”

[39] In addition Hainey, J. reviewed the following factors:

“13 In arriving at my decision not to interfere with Master Jean’s decision I have also considered the following factors:

(a) The delay in the progress of the Trustee’s action against the Bankrupt’s family is primarily due to the Bankrupt’s family’s motion to remove Blaney McMurtry LLP from the record. This motion is based upon two affidavits from the Bankrupt who is partly to blame for this delay; and

(b) Mr. Bennett’s suggestion that the Trustee’s allegations of a preference and a fraudulent conveyance should be dealt with on the hearing of the Bankrupt’s Discharge Application is contrary to the established law governing discharge hearings. Newbould J. made this clear in Saban, Re, [2012] O.J. No. 5640 (Ont. S.C.J. [Commercial List]) at para. 13 as follows:

13. Third, and perhaps most importantly, in Ontario, unlike some other provinces, the weight of authority is that because an application for discharge is intended to be a summary hearing, issues of fraud are not to be explored and are to be considered only if fraud has previously been established. ...”

[40] Where these decisions are important in the context of this Discharge Hearing, is that counsel for the Bankrupt cited at the outset of trial the decisions in Horwitz, Re 1984 CarswellOnt 149, [1984] O.J. No. 1018, 26 A.C.W.S. (2d) 270, 52 C.B.R. (N.S.) 102 (“Horwitz”) and Re Bankruptcy of Zeev Saban, 2012 ONSC 6700 (“Saban”) (Saban cited in both Gawri and Pantziris) as the basis for deciding that the Discharge Hearing should go ahead, but that certain issues were not to be determined at the Discharge Hearing, or questioned about.

[41] In particular the subject matter of:

1. the claim of Alpa under s.13 of the Construction Act, which is the subject of the Bankrupt’s Expungement Motion, and also the subject of an as-yet unscheduled s.69.4 Motion by Alpa Leave Motion to obtain a determination of the Alpa s.178 Claim as a breach of trust under the Construction Act; or

2. alleged transfers to family members and others that are the subject matter of the choses in action assigned to creditors under the s.38 Order, and the s.38 Proceedings, to set aside the Alleged Reviewable Transactions, assigned to Alpa, certain of the MT Creditors and the Israeli Representative who are participating in the s.38 Proceedings; or

3. the subject matter of the Israeli litigation, as given leave to be determined in Israel by the Myers, J. Lift Stay Order under s.69.4 (as specifically defined below); or

4. in the case of the MT Creditors, that their use of the words “..he lied to us” in certain of the affidavits filed by the MT Creditors presupposed a s.178 Debt request at some point,

and that therefore their claims did not provide them with standing or should be determined at this Discharge Hearing, and no questions should be asked relating to them. So the application of Horwitz and Saban need to be carefully reviewed.

[42] In Horwitz, Osborne, J. (the Elder) was hearing the Trial of an issue ordered by Ewaschuk, J. that had adjourned the Discharge Hearing of the Bankrupt, in order to determine issues raised by Royal Bank and Bank of Nova Scotia regarding the propriety of certain mortgages granted by the Bankrupt. As a result Osborne, J. in Horwitz was not actually hearing the discharge hearing, as that hearing had already been adjourned to allow the trial of the issue. That is not the case with this Discharge Hearing.

[43] As Osborne, J. states in the commonly cited paragraphs, including by counsel for the Bankrupt at this hearing:

“11 This is not an academic exercise. This is a trial dealing with issues which are said to have relevance to a discharge hearing. I think, therefore, that it would be helpful to consider how the issues raised by the creditors should be dealt with. I do this out of serious concern as to the apparent translation of a summary discharge hearing into a hearing involving pleadings, discoveries and now a trial.

12 An application for discharge was always intended to be a summary hearing. Issues such as settlements or fraudulent preference or fraudulent representations leading to the extension of credit are not to be explored on a discharge application. Those matters are factors to be considered by the court on an application for discharge by the plain wording of s. 143(1)(h), (k). In that the discharge hearing is a summary hearing, it is not the appropriate forum in which to determine whether there has been a settlement or fraudulent preference or an extension of credit because of the bankrupt’s fraud. Those are matters to be weighed and considered on the bankrupt’s application for discharge, after they have already been established. The discharge hearing is not the forum in which s. 143 factors are to be established ab initio, nor do I think the proper approach to be taken is to adjourn the application for discharge by resorting to the vehicle of a direction of a trial on an issue.

13 It is probable that the trustee declined to challenge the alleged fraudulent preference or settlement to which I have earlier referred. Under s. 20 of the Bankruptcy Act, if the Royal Bank or Bank of Nova Scotia did not agree with the trustee’s response or lack of response to the alleged preference or settlement, either creditor could have taken action on its own. The trustee can still pursue that issue and the general issue of the bankrupt’s fraud. If the bankrupt committed a fraud, as alleged, in my view the trustee could and should have pursued it. These unresolved matters are not to be explored and determined on the bankrupt’s application for discharge.”

[44] In effect, Osborne, J. was disagreeing with the conceptual premise of the Ewaschuk, J. Order directing the Trial of the issue by him.

[45] But then Osborne, J. , despite these conceptual misgivings, proceeded to determine the issues that he was directed to determine, and made the determination at the trial of the issue that the bankrupt did not obtain credit by a fraud and that the conveyances referred to were not fraudulent preferences. It appears from the report of the Horwitz case that these issues were the only s.173 facts that were being determined at the discharge hearing.

[46] However, the fundamental issue in this Discharge Hearing is that the Bankrupt is seeking to have his discharge heard prior to the determination of the other surrounding litigation issues. In Horwitz, cited by the Bankrupt, the actual Discharge Hearing was actually adjourned to determine the issue by a Trial of the Issue before Osborne, J., which this Bankrupt had argued against in this Discharge Hearing.

[47] Saban, also cited by the Bankrupt in this hearing, and by Conway, J. in Gawri and by Hainey, J. in Pantziris, was an appeal by the opposing creditor to Newbould, J. from the disposition of a Discharge Hearing by (now) Mills, J. In the relevant grounds of appeal in Saban the Opposing Creditor wanted to overturn the decision of (now) Mills, J. who had failed to make findings of fraud under s.173(1) (k) or an offence under s.173(1)(l).

[48] Newbould, J. stated the following before quoting paragraph 12 above from Horwitz:

[13] Third, and perhaps most importantly, in Ontario, unlike some other provinces, the weight of authority is that because an application for discharge is intended to be a summary hearing, issues of fraud are not to be explored and are to be considered only if fraud has previously been established. In Re Horwitz (1984), 52 C.B.R. (N.S.) 102, aff’d (1985) 53 C.B.R. (N.S.) 275,Osborne J. (as he then was) in hearing a trial of an issue as to fraud that had been ordered in a bankruptcy discharge hearing stated his concerns regarding the trial of an issue in a discharge hearing:

[Horwitz para 12]

[14] See also Re Gura (1989), 73 C.B.R. (N.S.) 250 (Granger J.) for the same principles.

[15] What the Registrar did in this case, therefore, in not making any express finding of fraud appears to be in conformity with the settled law of Ontario regarding the proof of fraud required in a discharge hearing.

[17] It would be inappropriate in my view for the reasons stated in Re Horwitz and Re Gura for a Registrar on a discharge hearing to get into whether an offence under the Criminal Code had been proven….”

[49] Gura, Re 1989 CarswellOnt 156, [1989] C.L.D. 797, [1989] O.J. No. 600, 15 A.C.W.S. (3d) 6, 73 C.B.R. (N.S.) 250 (“Gura”) cited by Newbould, J. in Saban, Granger, J. sets out the law in Ontario on this issue:

“30 Although the reasoning and procedure adopted in Re Hashem, supra, is attractive, it appears to be at odds with the prevailing decisions in Ontario and other provinces. In Re Gothe (1986), 1986 1135 (BC SC), 62 C.B.R. (N.S.) 182 at 190 (B.C.S.C.), MacDonald L.J.S.C. rejected the approach in Re Hashem, and followed Re Kemper and Osborne J.’s statement in Re Horwitz, stating:

“31 In Re Hashem (1984), 1984 2378 (SK QB), 54 C.B.R. (N.S.) 156, 36 Sask. R. 179 (Q.B.), MacLeod J. did not agree with the position taken by the judges in the three previous decisions cited and held that the words in s. 142(2) of the Bankruptcy Act, “on proof of any of the facts mentioned in s. 143,” were intended to mean proof in the bankruptcy proceedings. With respect, I am of the opinion that the court is bound by the decision of the British Columbia Supreme Court in Kemper and should follow the law as stated in the three decisions previously cited and would note that this position has also been approved by Dickson J. in Rice v. Copeland (1965), 1965 532 (MB QB), 7 C.B.R. (N.S.) 288, 51 W.W.R. 227, 51 D.L.R. (2d) 147 (Man.), and by Johnson J. in Sherwood Credit Union Ltd. v. Giesbrecht, 19 C.B.R. (N.S.) 301, [1975] W.W.D. 8 (Sask.). On the authority of the cases heretofore cited, I would rule that the creditors have not established fraud under s. 143(1)(k) of the Bankruptcy Act.”

32 Accordingly, Fidelity must prove fraud outside the bankruptcy proceeding and proof of a finding of fraud must be adduced at the discharge hearing. Therefore, I cannot order the trial of an issue to determine if Gura has been guilty of fraud.

[50] The specific quote from Smily, J. in Re Kemper, [1961] O.W.N. 288, 2 C.B.R. (N.S.) 130 (H.C.) (“Kemper”) at .p134 referred to in Gura above, and also cited by counsel for the Bankrupt at this Discharge Hearing, is:

“16 However, I do not think the Bankruptcy Act contemplates that on an application by the debtor for his discharge an issue might be directed to determine whether he was guilty of fraud. I think there has to be a conviction or a finding by a judgment of the Court in a civil proceeding indicating fraud or fraudulent breach of trust ... so as to make clause (k) of s. 130 applicable on the application for the bankrupt’s discharge.”

[51] There is no evidence before me on this hearing that fraud has been previously proven against this Bankrupt in civil or criminal proceedings. Similarly, no judgment has been entered into evidence on this Discharge Hearing declaring any transactions to be fraudulent conveyances in relation to the Bankrupt. As noted previously, the s.38 Proceeding to set aside the Alleged Reviewable Transactions is proceeding, the Alpa Leave Motion has not been scheduled, and the Israeli Proceedings are also proceeding.

[52] Accordingly, this binding precedent of Gura and Kemper prevents me from determining issues at this Discharge Hearing under s.173(1)(k) and (l) as to whether fraud or other offence has been proven, and determining whether a fraudulent conveyance or preference has been made under s.173(1)(h) or otherwise.

[53] With respect to the request for adjournment of the Discharge Hearing pending the determination of the Alleged Reviewable Transactions or possible s.178 issues in the s.38 Proceeding, the Alpa Leave Motion, or the Israeli Proceedings, applying the tests in Gawri and Pantziris, and exercising my Registrar’s Discretion, I rejected the requests for adjournment after reviewing the following factors:

1. prejudice to the respective parties 2) the interests of the parties and 3) the interests of society

[54] The Proposal Proceedings commenced in 2016 and the Bankruptcy commenced in 2019. There have been numerous examinations conducted of the Bankrupt and other parties, some of which I have detailed here, with undertakings and documents being answered and provided, although it is disputed by certain of the Opposing Creditors whether these undertakings have been fulfilled by the Bankrupt.

[55] The continued passage of time without a discharge hearing is by its very nature prejudicial to the Bankrupt, and may also be prejudicial to the creditors given that with the effluxion of time memories fade and documentation necessary for this discharge may become increasingly unavailable.

[56] I have attempted to Case Manage this Discharge Hearing over a 2 year period to get to a discharge hearing where the issues were defined by Affidavit evidence, and where counsel for the Bankrupt, the MT Creditors, Alpa, CRA, the Israeli Representative and the Trustee, their counsel and their witnesses were all available.

[57] I have provided dates prior to the Trial for parties to ask for assistance to deal with procedural and evidentiary issues, such as this issues raised at the outset of Trial that counsel did not take advantage of prior to the first day of Trial.

[58] These evidentiary issues, and yet another adjournment request, should not have consumed much of the first day of Trial if ALL counsel had taken advantage of the availability of the Court to deal with these issues at some point prior to the first day of Trial.

[59] Other than Alpa, the Israeli Representative and the MT Creditors, there are other creditors, such as CRA, and the Trustee on behalf of the general body of creditors, that are also affected materially by a further delay of the Discharge Hearing.

[60] CRA in particular, should not have to wait for the other creditors to have determinations made in their extraneous litigation prior to making its submissions on discharge, given the very significant proven CRA claim in this Bankruptcy.

[61] The Trustee in this case is currently unfunded and there have been minimal recoveries in this estate. Counsel for the Trustee, Drake and Forte, and the rotating LIT representatives of the Trustee- Abrahamson Filice, Erlich, and Sampson attended (on different days) the 14 days of hearing of the Trial in admirable (unpaid) fulfillment of their duties under the BIA. Further delay of the Discharge Hearing, and the duties imposed by the BIA on the Trustee in relation to discharge, increases the unfunded liability of the estate for professional fees, if so charged.

[62] Only the Israeli Representative and Alpa opposed specifically on s.173(1)(l) and only Alpa opposed on s.173(1)(h).

[63] Neither Alpa, the MT Creditors or the Israeli Representative are having their rights to pursue these other claims prejudicially affected by having the Discharge Hearing continue, now, prior to the determination of their other litigation. The only conceivable prejudice is that these additional grounds of opposition will not be considered, as the jurisprudence binding on the Court prevents them from being determined at the hearing, being dealt with in other Courts.

[64] I am acutely aware that this Discharge Hearing, and the Bankruptcy Court proceedings relating to the Bankrupt generally, also exists within the universe of CCAA, Bankruptcy and Receivership Proceedings relating to the Urbancorp Group of Companies, and further delay and uncertainty with respect to the completion of the Discharge Hearing cannot improve the prospects of completion of those other proceedings.

[65] In addition, I have devoted most of my Special Appointment hearing time over the last 3 years, and many Case Conferences, to scheduling this Discharge Hearing, in coordination with all of the other Saskin-related Bankruptcy proceedings, as detailed in the Scheduling Endorsements. The Bankruptcy Court needs to deal with this Discharge Hearing as the volume of unresolved Saskin-related litigation is having a deleterious effect on the hearing of unrelated matters.

4 Whether the case is ready for hearing and 5) the court’s ability to control its own process, and what (if any) has been the course of dealing in the civil action:

[66] Unlike Gawri where the matter had been set down for trial, there was no evidence as at the date of the adjournment request at the dawn of the Discharge Hearing on January 13, 2024 that any of the outstanding proceedings were to be determined imminently.

[67] Balancing all of these factors, and applying my Registrars discretion I refused to adjourn the Discharge Hearing, on the first day of the Discharge Hearing.

[68] I also made determinations as to standing of the Israeli Representative, Alpa, and the MT Creditors to appear and oppose the discharge, accepting that they did have standing and rejecting the arguments by the Bankrupt that they did not. I will provide the specific reasons for the rejection of each request when I discuss the evidence of each of the Opposing Creditors.

Request for Blanket Orders regarding admission of evidence:

[69] In addition, on both the first and second days of the Discharge Hearing counsel for the Bankrupt made additional submissions about obtaining a blanket ruling on what questions that counsel for the Opposing Creditors could ask in cross-examination, and in particular evidence going towards proving that there was fraud, fraudulent conveyances or s.178 debts, which could not be determined on a discharge hearing, as per their interpretation of Horwitz and Saban.

[70] In this regard they cited the following quotation from the Court of Appeal decision in Bruno v. Dacosta, 2020 ONCA 602 (“Bruno”):

“[65] This case highlights the deplorable tendency in civil cases of admitting evidence subject only to the weight to be afforded by the trial judge: “Seduced by this trend towards [evidentiary] flexibility, some judges in various jurisdictions have been tempted to rule all relevant evidence as admissible, subject to their later assessment of weight”: Teva Canada Ltd. v. Pfizer Canada Inc., 2016 FCA 161, per Stratas J.A. at para. 83. This is legal heresy, as Stratas J.A. noted, citing R. v. Khelawon, 2006 SCC 57, [2006] 2 S.C.R. 787, at para. 59. I agree with his trenchant comments.

[71] Although a fine quote, in Bruno the Court of Appeal actually allowed the appeal on the basis that “…the reasons for decision are insufficient to permit meaningful appellate review.”

[72] That quote above exists in the section “Some Trial Practice Notes” which leads off with the sentence:

“ [53] There were errors made in the admission and use of the joint document book that further frustrated appellate review and that should not happen in other cases.”

[73] The problem being dealt with was summed up as:

“[56] At the opening of the trial, Mr. McKenna read the parties’ initial agreement with respect to evidence into the record:

The documents contained in the Joint Document Brief are relevant, authentic and the dates of the documents are accurately reflected on their face. Neither of the parties are to be considered as having accepted the truth of the contents of all of the documents. Further, both parties reserve their rights to challenge what is stated in the documents, lead further evidence which may or may not be inconsistent with the documents and argue as to the interpretation and weight to be given to the documents.

[57] This agreement was not helpful to the trial judge because of its ambiguity, which he should have probed immediately and carefully with some obvious questions, among them: If a document is not challenged, is its hearsay content deemed to be admitted? If not “all” documents, then which?”

[74] This argument was lead on the second day of the Discharge Hearing, and this nuance of this case as to the context of the quote employed was not provided to the Court in the Bankrupt’s submissions. It should have been.

[75] I do not disagree with the fine rule generally suggested by counsel for the Bankrupt, that the Court should rule on relevance and admissibility of evidence at trial, rather than admitting it all and then assessing weight. However, it was the applicability of the suggested remedy that I, as well as counsel for the Opposing Creditors, had issue with.

[76] In any event, the force of the Bankrupt’s argument was that I should pre-rule, prior to having heard the cross-examining counsel ask the actual questions, on the basis that as Horwitz and Saban proscribed matters not be determined on a discharge hearing. Therefore the evidence related to those issues could not be relevant, and therefore questions should be pre-empted from being asked.

[77] First of all, in Horwitz, Osborne, J. did in fact go ahead and deal with the trial of the issue, as ordered by Ewaschuk, J. and admitted and reviewed the evidence on that issue of the alleged fraudulent misrepresentation.

[78] Neither Horwitz nor Saban contains the determinations that the Bankrupt suggested they did about the evidence relating to fraudulent obtaining of credit for Horwitz, and of Fraud for Saban, being inadmissible.

[79] Secondly, in Bruno the technical admissibility and confusion over what evidence the parties had actually agreed at trial was admissible pursuant to their joint document book was the issue, such that Court of Appeal had difficulty in determining the actual record that was before the Trial Judge, amongst other issues.

[80] The biggest issue is that this “summary hearing” of this Bankrupt’s discharge is proceeding under the BIA without many of the ordinary features of Civil Litigation leading to a trial, as mentioned by Osborne, J. in Horwitz of pleadings, and affidavits of documents, and discoveries and pre-trials established by the Civil Rules.

[81] There have been almost 16,000 pages of documents filed on this hearing. Parties did not agree on a joint documents book. Cooperation and communication between the parties and their counsel has been scant, despite my many attempts to provide structure through the Scheduling Endorsements, my ordering a hybrid trial with affidavits substituting for evidence in chief being exchanged, and the many opportunities I provided at many case conferences for the parties to deal with these evidentiary issues at some point prior to the first and second day of the Discharge Hearing.

[82] Another issue is that a particular piece of evidence could be used to try to prove multiple s.173 facts. So predetermining on the basis that the evidence could not be admitted because it was relevant to s.173(1)(l) or (h) which could not be determined on discharge, due to my ruling as per Horwitz and Saban, creates the problem that the same piece of evidence could also be relevant to proving a breach of the Bankrupt’s duties, under s.173(1)(o), for example.

[83] How would a blanket rule work in practice? Am I to guess what evidence counsel for the opposing creditors were to introduce and to ask questions relating to on cross-examination and preemptively stop them?

[84] The only practical solution was the one I adopted, where I ruled that counsel for the opposing creditors would put forward whatever document they wish to cross-examine on, and counsel for the Bankrupt could object to the introduction of the evidence and the questioning, on any evidentiary ground they wished, including that it was not relevant to any permissible s.173 fact under Horwitz and Saban that could be proven on a Discharge Hearing.

[85] In addition, as will be detailed in the individual sections relating to the evidence of the Opposing Creditors, counsel for the Bankrupt separately succeeded in striking certain evidence filed as part of the Affidavits of certain of the Opposing Creditors, particularly from the 1801 page Affidavit of Zena Hanson sworn on behalf of Alpa on January 4, 2023 (the “Hanson Affidavit”). I also excluded certain examination evidence previously obtained under s.163(1) of the BIA.

The Bankruptcy

[86] The personal bankruptcy of the Bankrupt cannot be divorced from the larger constellation of proceedings that surround the personal Bankruptcy. This Discharge Hearing is a part of a series of engagements in the Bankruptcy Estate that I have attempted to Case Manage, and the factual, procedural and legal context of this Discharge Hearing must be placed within the environment of those other related proceedings, and the wider corporate Insolvency Proceedings of the Urbancorp Group, that the Bankrupt in this Discharge Hearing was the Principal of.

[87] The date of the formal assignment into Bankruptcy of the Bankrupt was July 23, 2019.

[88] The Trustee has filed for this discharge hearing the Trustee's Report on the Bankrupt's Application for Discharge (Subsection 170(1)), dated March 20, 2020 (the “Original s.170 Report”), the Trustee's Supplementary Report dated September 22, 2021 (the “September 22nd Supplementary Report”), and the Trustee’s Second Supplementary s.170 Report dated November 24, 2022 (the “2nd Supplementary Report”) (collectively the “s.170 Report”).

[89] The Original s.170 Report was Exhibit “A” to the 2nd Supplementary Report.

[90] The September 22nd Supplementary Report attaches at Exhibit “A” the Report to Creditors dated August 12, 2019 made by the Trustee in the original Proposal Proceedings relating to the Bankrupt (the “Preliminary Report”) containing at Appendix “A” to the Preliminary Report an Organization Chart for the Urbancorp Companies referred to at Trial by numerous parties (the “Organization Chart”). The complete September 22 Report was entered into evidence at the Trial as Exhibit “C”.

[91] The limited funding available to the Trustee to administer this Bankruptcy Estate was summarized in the September 22nd Supplementary Report as:

“17. The Trustee had limited funding in the estate which comprised a $25,000 third party deposit from Doreen Saskin (the Bankrupt's spouse) and requested funding from these creditors which, other than an additional $8,000 creditor contribution, did not materialize. In fact, certain of the preliminary enquiries were taken by counsel to the Israeli Functionary and counsel to other creditors in order to defray expenses to the estate.”

[92] The Original s.170 Report states:

“11. Are there other facts, matters or circumstances that would justify the Court in refusing an absolute order of discharge? Yes

“1) Mr. Saskin has no monthly income and all of his personal expenses are paid by either his spouse or by family trusts in which Mr. Saskin is not the beneficiary.

2. Creditors have alleged that certain assets claimed by the Bankrupt to be owned either by family members or a family trust, are in fact assets owned by the Bankrupt and proceeds thereof should be made available to the Bankrupt's creditors. Due to the lack of funding in the estate, certain creditors have undertaken their own investigations into the ownership of assets and these investigations are ongoing. Two assets for which ownership of the proceeds of realization are in dispute are:

A) The family home which was sold subsequent to the date of bankruptcy. The Bankrupt has asserted the family home is owned 100% by his spouse. Creditors have alleged that Mr. Saskin over the years directly or indirectly financially contributed to the family home and is a part owner as reflected on certain statements of net worth provided by the Bankrupt and for the Urbancorp group of companies historically to his creditors and Tarion. Counsel to the Bankrupt's spouse has consented to the Trustee filing a restriction on tide against the new family home which restrict a transfer of ownership or the further encumbering of the property.

B) Proceeds from the sale of a wine collection - the bankrupt asserts the wine is owned by a corporation controlled by a family trust. The proceeds from the liquidation of the wine collection in the amount of $40,104.35 are being held by the Trustee in a separate trust account until the entitlement is determined.

3. Certain creditors have asserted, in addition to the above, that all asset acquisitions which were funded by one of the Urbancorp corporate entities (controlled by a family trust) were in fact assets of bankrupt and should vest with the Trustee,

Due to the limited funding in the estate, certain creditors are determining whether they wish to undertake section 38 proceedings under the BIA to further investigate and potentially recover on the items addressed above.”

[93] In the updated April 28, 2023 Claims Register filed by the Trustee on this Discharge Hearing, the total proven claims admitted for dividend in the Bankruptcy Estate are $15,107,097.75.

[94] The largest individual creditors with proven unsecured claims over $1 Million are:

Dolvin $2,584,568.54 (Opposing Creditor)

CRA $2,371,447.17 (Opposing Creditor)

Terra Firma Capital Corporation

(assigned to Israeli Representative) $2,144,666.50 (assigned to Israeli Representative - Opposing Creditor)

Paramount Structures Ltd. $1,550,000.00 (Not Opposing)

Franline $1,440,872.00 (Opposing Creditor)

Speedy $1,284,727.00 (Opposing Creditor)

Cooltech Mechanical Ltd. $1,181,684.04 (Not Opposing)

[95] As a collectivity, the MT Creditors opposing the Discharge have proven claims totaling approx. $5.3 million, and represented the largest bloc of the Opposing Creditors, including the Terra Firma Claim assigned to the Israeli Representative, are whose collective claims totaled $7.688 million.

[96] CRA is also opposing with its additional proven $2.37 million claim.

[97] The Total claims opposing the discharge of the Bankrupt total $10.058 million or about 2/3 of the value of all of the proven claims.

[98] According to the Updated Claims Register the $4,000,000 Downing Street Proof of Claim, and the $568,425.54 Toro claim were not proven at the time of the Discharge Hearing.

[99] In addition Alpa is an opposing creditor with a claim of $244,727.68, which the Bankrupt is seeking to Expunge in the Expungement Motion that had not been heard at the time of the Discharge Hearing.

[100] In addition, numerous contingent claims have been filed in the Bankruptcy Estate, but had not been determined at the date of the Discharge Hearing, totaling $113,762,824.35, including a $64,300,000.00 claim filed by the Israeli Representative on behalf of certain members of, and investors in, the Urbancorp Group in relation to ongoing proceedings in Israel.

[101] Notably, there are almost no proven claims for consumer type debt for credit cards or unsecured lines of credit or conventional secured debt such as car loans or leases or home mortgages or lines of credit. The only claims filed were some apparent credit card debts with Royal Bank of Canada for $16.30 and $1,632.

[102] With respect to recoveries in the Bankruptcy Estate the Trustee reports in the September 22nd Supplementary Report:

“12. As set out in the Trustee's Preliminary Report to Creditors, at the date of bankruptcy, the assets of the Bankrupt consisted of personal effects including clothing, which is exempt property under the BIA, a locked-in RRSP of approximately $7,000, a vehicle lease, and various share interests in partnership and corporations related to the Urbancorp Group. The assets and holdings were summarized and included in a chart (with accompanying notes) as an appendix to the Preliminary Report. A copy of the Preliminary Report is attached as Appendix "A" to this Report.

13. In addition to the above, the Bankrupt advised the Trustee that as of the date of his bankruptcy the Bankrupt was unemployed and was not currently earning any income and was being supported by his spouse and family trusts.

14. Accordingly, the Bankrupt has not made any surplus income payments to the estate and there have been no realizations by the Trustee in the Estate.”

And in the 2nd Supplementary Report:

“11. At the date of bankruptcy, the assets of the Bankrupt consisted of personal effects including clothing, which is exempt property under the BIA, a locked-in RRSP of approximately $7,000, a vehicle lease, and various share interests in partnership and corporations related to the Urbancorp Group. As well, the income and expense reporting filed by the Bankrupt with the Trustee, asserts that all expenses of the Bankrupt are paid for by his spouse and that he has no income.”

[103] Fortunately, the CRA in the Waza Affidavit (as defined below) attached the Statement of Affairs sworn July 18, 2019 as part of the Creditors Package circulated by the Trustee on July 30, 2019 when the bankruptcy occurred (the “Bankruptcy Statement of Affairs”). All of the parties, including counsel for the Bankrupt and the Trustee, acknowledged that this was an accurate copy of the Bankruptcy Statement of Affairs and could be used on this Discharge Hearing as an exhibit.

[104] The Bankruptcy Statement of Affairs sworn by the Bankrupt states the following with respect to the declared assets of the Bankrupt at the date of Bankruptcy:

Personal effects, clothing - $13,000 – estimated to realize 0

Policies and RRSP’s -locked in RRSP - $7,086.01- estimated to realize 0

Securities – various interests in partnerships and corporations $1.00- estimated to realize $1

Leasehold interest in Tesla - $1.00 – estimated to realize - $1

Total $20,088.01 estimated to realize $2.00

[105] The declared creditors on the Bankruptcy Statement of Affairs were $3,866,766.96, all unsecured. As noted, the current total proven claims in the Bankruptcy Estate are $15,107,097.75 with a further $166,113,540.40 in unproven contingent claims, both secured and unsecured.

[106] No amounts whatsoever have been realized in the Bankruptcy Estate since the date of Bankruptcy of July 23, 2019.

[107] The central issue on this Discharge, and in the administration of the Bankruptcy Estate, was the general disbelief of the Opposing Creditors that the Bankrupt who states in the Affidavit sworn January 13, 2024 for this Discharge Hearing (the “Saskin Affidavit”):

“3. In or about 1991, I commenced a land development business under the name "Urbancorp". During the following 24 years, I acted as the president of many companies that carried the Urbancorp name. These companies (collectively, "the Urbancorp Group" or "Urbancorp") developed land and, alone and with partners, built more than 5,000 homes in the Greater Toronto Area ("GTA").”

had no realizable personal assets to pay his personal creditors after 24 years of operating the Urbancorp Group.

[108] The entirety of the Proposal Proceedings and the Bankruptcy of the Bankrupt was characterized by attempts by the Opposing Creditors, and in particular the MT Creditors, Alpa and the Israeli Representative, to determine why there was this dearth of personal realizable assets. That struggle continued at this Discharge Hearing.

[109] With respect to paragraphs

“9A Sold or disposed of any of your property?” ,

“9C . Had any property seized by a creditor?” and

“10A. Sold or disposed of any property?”

of the Bankrupt’s Statement of Affairs, the Bankrupt answered “Yes” . The further explanations in the Bankruptcy Statement of Affairs are:

“9A:

1. RRSP was liquidated April 28, 2016. Total proceeds were $382,279, of which $114,422 was paid to CRA for taxes, and the remainder was utilized for legal services.

2. 2 vehicles were sold in the last 12 months, with total proceeds of $140,000. The proceeds were used to fund retainers for legal services.

9C:

Paramount Structures Ltd. seized $4,812.56 from a CIBC personal bank account on March 14, 2016.

10A:

1. RRSP was liquidated April 28, 2016. Total proceeds were $382,279, of which $114,422 was paid to CRA for taxes, and the remainder was utilized for legal services.

2. 2 vehicles were sold in the last 12 months, with total proceeds of $140,000. The proceeds were used to fund retainers for legal services.”

[110] As part of this Creditor’s Package was the “Form 65 Income And Expense Statement of the Bankrupt and the Family Unit”. In the Form 65 signed by the Bankrupt, the Bankrupt stated that:

Total Monthly Income - $0

Total Monthly Income of the Family Unit $0

Bankrupt’s Portion of the available monthly income of the Family Unit -$0

Total Monthly Discretionary Expenses (Family Unit) $0

Monthly Surplus or Deficit Family Unit $0

The Note to the Form 65 states:

“Spouse income unknown. Spouse pays all household expenses.”

[111] The Trustee has opposed the discharge of the Bankrupt under the provisions of s.173(1)(a) of the BIA. Specifically, the Trustee has stated in its Original s.170 Report:

6. (a) Did the bankrupt fail to perform any of the duties imposed on him/her under the Act? No

(b)Can the bankrupt be justly held responsible for any of the facts referred pursuant to section 173 of the Act? Yes

The bankrupt can be held responsible for the following:

The assets are not 50 cents on the dollar on unsecured liabilities

c) Did the bankrupt commit any offence in connection with the bankruptcy? No

9. (a) Is it the intention of the trustee to oppose the bankrupt’s discharge? Yes

sec. 173(1)(a) - assets of the bankrupt are not of a value equal to fifty cents on the dollar of the bankrupt's unsecured liabilities,

“11. Are there other facts, matters or circumstances that would justify the Court in refusing an absolute order of discharge? Yes

1. Mr. Saskin has no monthly income and all of his personal expenses are paid by either his spouse or by family trusts in which Mr. Saskin is not the beneficiary.

2. Creditors have alleged that certain assets claimed by the Bankrupt to be owned either by family members or a family trust, are in fact assets owned by the Bankrupt and proceeds thereof should be made available to the Bankrupt’s creditors. Due to the lack of funding in the estate, certain creditors have undertaken their own investigations into the ownership of assets and these investigations are ongoing. Two assets for which ownership of the proceeds of realization are in dispute are:

A) The family home which was sold subsequent to the date of bankruptcy. The Bankrupt has asserted the family home is owned 100% by his spouse. Creditors have alleged that Mr. Saskin over the years directly or indirectly financially contributed to the family home and is a part owner as reflected on certain statements of net worth provided by the Bankrupt and/or the Urbancorp group of companies historically to his creditors and Tarion. Counsel to the Bankrupt’s spouse has consented to the Trustee filing a restriction on title against the new family home which restrict a transfer of ownership or the further encumbering of the property.

B) Proceeds from the sale of a wine collection - the bankrupt asserts the wine is owned by a corporation controlled by a family trust. The proceeds from the liquidation of the wine collection in the amount of $40,104.35 are being held by the Trustee in a separate trust account until the entitlement is determined.

3. Certain creditors have asserted, in addition to the above, that all asset acquisitions which were funded by one of the Urbancorp corporate entities (controlled by a family trust) were in fact assets of bankrupt and should vest with the Trustee.

Due to the limited funding in the estate, certain creditors are determining whether they wish to undertake section 38 proceedings under the BIA to further investigate and potentially recover on the items addressed above.”

[112] In the 2nd Supplementary Report on the issue of the Trustee’s continued opposition to discharge the Trustee states:

“12. The Bankrupt has generally cooperated with the Trustee and, as far as the Trustee is aware, has complied with his duties under the BIA. However, the Trustee is aware of the following facts, matters, or circumstances that would justify the court in refusing an unconditional order of discharge:

a. the assets of the Bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt's unsecured liabilities; and

b. the Opposing Creditors have advised the Trustee that the Bankrupt has failed to comply with his undertaking to answer certain questions given on s. 163 examinations.

13. The Trustee has also been made aware that the Opposing Creditors still oppose the Bankrupt's discharge, and the Trustee expects that those Opposing Creditors will marshal any evidence supporting that position for the Bankrupt's discharge hearing.”

[113] The inspectors of the Bankruptcy Estate that had been appointed were at the time of the s.170 Report:

Jeremy Sacks

Zena Hanson

Guy Gissin

Noah Goldstein

Ovais Qassim

[114] The OSB has not been involved in this estate and no s.161 examination had been conducted prior to the hearings. Numerous s.163 examinations were conducted however, some of which evidence was utilized at this hearing.

[115] With respect to the calculation of Surplus Income, the Bankrupt submitted to the Trustee Statements of Income and Expenses, some of which were made exhibits to this trial in Exhibit 23. Those Statements of Income and Expenses commence in August of 2019, and until March 2021 are uniformly in the monthly amount of $1394.17 for cell phone, car payments and car insurance, with all entries stating “paid by spouse”.

[116] After the March 2021 statement to the last statement for December 2022 the car lease amount was reduced, and the total expense amount is under $1300 in varying amounts, all “paid by spouse”. The “family actual income” in each statement is stated as “0”.

[117] Superintendent Directive No. 11R2-2021 — Surplus Income (the “Surplus Income Directive”) requires the following:

“3. Family Unit — In determining the bankrupt's personal and family situation for the purposes of subsection 68(3) of the Act, it is necessary to establish the earnings and expenses of both the bankrupt and the bankrupt's family unit. The bankrupt must disclose the earnings and expenses of each member of the family unit by providing the LIT with income and expense statements for the entire period of bankruptcy. LITs must use their professional judgment in exercising their duty to apply due diligence when determining the bankrupt's average monthly income. The LIT's file should clearly document the method by which he/she calculated the amount, if any, the bankrupt is required to pay to the estate. As well, the LIT may question each member of the family unit as to their earnings and expenses.

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.

5. Family Situation Adjustment — (1) The amount that the bankrupt is required to pay to the bankrupt's estate as determined in paragraph 5(6) or 5(7) of this Directive shall be adjusted to the same percentage as the bankrupt's portion of the family unit's available monthly income.

(2) (See example in Appendix B.) — 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 (Appendix A) corresponding to the number of persons in the family unit.”

[118] None of the Statements of Income and Expenses submitted by the Bankrupt, and entered into evidence on this Discharge, contain any information relating to “… the earnings and expenses of each member of the family unit”.

[119] The Bankrupt specifically filed a “Notice Of Dispute Of Statements Made In The Trustee’s Supplementary Report” dated January 11, 2023 (the “Bankrupt’s Notice of Dispute”) with respect to the following statements made in the Trustees 2nd Supplementary Report:

“1. “[T]he Trustee is aware of the following facts, matters, or circumstances that would justify the court in refusing an unconditional order of discharge:

b. the Opposing Creditors have advised the Trustee that the Bankrupt has failed to comply with his undertaking to answer certain questions given on s. 163

examinations.”1

2. “During the last scheduling attendance before Associate Justice llchenko on September 22, 2022, a timetable was set down for the scheduling of section 163(1) examinations of the Bankrupt and the Bankrupt's spouse which were scheduled for October 31, 2022.”2”

[120] A great deal of time at trial was spent dealing with issues of whether the Bankrupt had properly accounted to the Trustee, the Inspectors and the Creditors with respect to his assets, the ownership of assets by other Saskin Family members or Family Trusts. All parties referred to the September 22, 2021 Report, the Preliminary Report and the Organization Chart.

[121] In these circumstances, it is valuable to set out the complex corporate background to this Discharge Hearing from the September 22, 2021 Report, which was filed by the Trustee in the context of the s.163(2) Motion, as to the Trustees explanation as to how this Bankruptcy occurred:

“1. Mr. Saskin ("Mr. Saskin" or the "Bankrupt") is the president and shareholder of Urbancorp Holdco Inc., which in turn owns 100% of Urbancorp Inc., a real estate development company that owns numerous corporate entities, including general partnerships, limited partnerships and corporations (collectively, the "Urbancorp Group"). Mr. Saskin founded the Urbancorp Group's real estate development business in I991.

2. In April 2016, certain of the companies in the Urbancorp Group commenced Proposal restructuring proceedings under the BIA. The Proposal restructuring proceedings were subsequently converted to proceedings under the Companies Creditors Arrangement Act (Canada) (the "CCAA") and are ongoing. The CCAA proceedings are being conducted by two monitors who have received enhanced powers from the Court to do so. Mr. Saskin has no role in the conduct of the CCAA proceedings in respect of the Applicants thereunder. In addition, Urbancorp Inc. is subject to court proceedings in Israel, which commenced on or about April 24, 2016 pursuant to an Order of the Israeli Court which subsequently has been recognized by the Ontario Superior Court of Justice ("Commercial List").

3. On April 29, 2016, Mr. Alan Saskin filed with the Official Receiver a Notice of lntention to Make Proposal ("NOI"), pursuant to subsection 50.4(1) of the BIA. On the same date the Office of the Superintendent of Bankruptcy confirmed the filing. The Fuller Landau Group Inc. was named as proposal trustee ("Fuller Landau" or the "Proposal Trustee") under the NOL

4. Corresponding to the end of the time period permitted for the filing of a proposal under the BIA, the Bankrupt filed a holding proposal to creditors with the Official Receiver on October 27, 2016 (the "Holding Proposal").

5. The intent of the Holding Proposal was to provide the Bankrupt and the Proposal Trustee with sufficient time to permit the Urbancorp Group to complete their realizations and claims process such that creditors would have the opportunity to benefit from distributions which may be made to the Bankrupt from the CCAA proceedings, and from additional contributions from other recipients of distributions from those proceedings who were expected to agree to help fund a successful definitive amended proposal.

6. A meeting of creditors in respect of the Holding Proposal was held on November 16, 2016 (the "Creditors Meeting"). A vote to adjourn the Creditors Meeting without a fixed return date was approved by the creditors.

7. On May 6, 2019, an Amended Proposal was filed with the Official Receiver. The reconvened general meeting of creditors to vote on the Amended Proposal was to be held on May 23,2019.

8. On May 22, 2019, the Ontario Superior Court of Justice (Commercial List) granted a motion brought by Toro Aluminum (A Partnership), Speedy Electric Contractors Limited, Dolvin Mechanical Contractors Ltd. Franline Investments Limited and Guy Gissin in his capacity as the Israeli Court Appointed Representative to adjourn the Reconvened General Meeting.

9. The Amended Proposal never went to a vote of creditors and on July 23, 2019 the Debtor filed an assignment in bankruptcy and Fuller Landau was appointed as trustee in bankruptcy (the "Trustee") of the bankrupt estate, which was subsequently affirmed by the creditors at the first meeting of creditors.

ESTATE REALIZATIONS

12. As set out in the Trustee's Preliminary Report to Creditors, at the date of Bankruptcy, the assets of the Bankrupt consisted of personal effects including clothing, which is exempt property under the BIA, a locked-in RRSP of approximately $7,000, a vehicle lease, and various share interests in partnership and corporations related to the Urbancorp Group. The assets and holdings were summarized and included in a chart (with accompanying notes) as an appendix to the Preliminary Report. A copy of the Preliminary Report is attached as Appendix "A" to this Report.

13. In addition to the above, the Bankrupt advised the Trustee that as of the date of his bankruptcy the Bankrupt was unemployed and was not currently earning any income and was being supported by his spouse and family trusts.

14. Accordingly, the Bankrupt has not made any surplus income payments to the estate and there have been no realizations by the Trustee in the Estate.”

[122] So, unusually for the manner in which the Bankruptcy occurred on July 23, 2019, and relevant to the issue of determining whether a s.173(1)(j) fact has been proven, the assignment by the Bankrupt occurred after the Proposal Proceedings had been running since April 29, 2016, when a Notice of Intention to Make a Proposal had been filed on October 27, 2016, a holding proposal had been filed to stop the 6 month clock of s.50.4(9) of the BIA, and then negotiations ensued regarding the terms of an acceptable proposal.

[123] An Amended Proposal was filed with the Official Receiver on May 6, 2019 (the “Amended Proposal”) that had the terms of

1. a payment of $250,000 in cash,

2. an assignment by the Saskin family of its interest in the first $7.5 million that the Saskin family may have been entitled to receive from the CCAA Proceedings, and 50% of the additional surplus funds above $7.5 million; as well as

3. recoveries from any preferences or transactions at undervalue by creditors or the Proposal Trustee under s.95-101 of the BIA, which term the Proposal Trustee pointed out was in conflict with the terms of the release in the Amended Proposal.

[124] Although much testimony was disputed between the various witnesses, what can be determined is that after negotiations lasting 33 months, and a rancorous cross-examination of the Bankrupt in what was deemed to be an examination under s.163 of the BIA that was held on May 14, 2019 (the “2019 Examination”), and adjourned subject to the provision of answers to over 38 Undertakings, certain of the creditors had brought a motion to bring the proposal proceedings to an end, and the Bankrupt made the assignment into Bankruptcy on July 23rd, 2019, without the Amended Proposal ever being voted on.

[125] Aspects of the evidence contained in the Preliminary Report was used as both sword and shield by the Opposing Creditors, as well as the Bankrupt at this Discharge Hearing. Relevant portions of the Preliminary Report read:

“The Debtor filed a Notice of Intention to Make a Proposal (“NOI”) under the Bankruptcy and Insolvency Act (“BIA”) on April 29, 2016 and The Fuller Landau Group Inc. ("Fuller Landau") consented to act as the licensed Insolvency Trustee (the “Proposal Trustee”) in the administration of the proposal.

Pursuant to the proceeding, a Holding Proposal to creditors was filed with the Official Receiver on October 27, 2016 (the 'Holding Proposal ) and a meeting of creditors was held on November 1, 2016 (the "Holding Proposal Creditors Meeting'').

The intent of the Holding Proposal was to provide the Debtor and the Proposal Trustee with sufficient time to permit the Urbancorp CCAA Entities and the Cumberland Group (both as defined below) to complete their realizations and claims processes such that creditors would have the opportunity to benefit from distributions which may be made to the Debtor, and from such additional contributions from other recipients of distributions from those proceedings and otherwise who are expected to agree to help fund a successful definitive amended proposal. The Debtor expected that the contributions would significantly increase the recovery to creditors over that which they would realize in a bankruptcy scenario.

As described in the Holding Proposal and reiterated in the Amended Proposal, because of financial and regulatory difficulties the Urbancorp CCAA Entities and the Cumberland Group real estate development entities related to the Debtor, were granted protection under various CCAA Proceedings (described in the section below).

Prior to the CCAA Proceedings, the Debtor attempted over several months to reach informal settlements with certain creditors but without overall success. As a result of the quantum of various personal obligations, the CCAA Proceedings, litigation including proceedings commenced in Israel with respect to Urbancorp Inc. and Construction Act (Ontario) breach of trust claims, Mr. Saskin required a stay of proceedings in order to bring stability to his personal creditor situation.

A vote to adjourn the Holding Proposal Creditors Meeting without a fixed return date was approved by the creditors.

SECTION B- FINANCIAL POSITION AND ASSETS OF THE BANKRUPT

The Debtor's sworn Statement of Affairs show that the assets of the Debtor consist of a) personal effects including clothing which is exempt property under the BIA, a locked-in RRSP of approximately $7,000, which is exempt property under the BIA, a leased Tesla vehicle, and various share interests in partnerships and corporations related to the Urbancorp Group. These assets and holdings were summarized by the Proposal Trustee and included in a chart and notes attached as Appendix "A"

The Proposal Trustee noted in its report on the Amended Proposal that the the [sic] estimated realizable value of these assets detailed in Appendix "A" is limited to:

1. a potential entitlement to litigation proceeds from Urbancorp Downtown Developments Inc. ("UDDI"), however, at this time the quantum, if any, is unknown; and

2. the Debtor is the sole shareholder of Urbancorp Renewable Power Inc. ("URPT"), a company in Receivership under KSV's administration. URPI is/was the servicer/manager of various geothermal services provided to the Bridge, Fuzion, Edge and Curve condominium projects pursuant to which URPI is entitled to receive an on-going fee of 3% of revenue generated from the services provided to the relevant condominium corporations and responsible for maintenance costs. As a consequence of any process to dispose of the interests in the geothermal facilities and related rights and entitlements, it is not clear what value would accrue to URPI and the Debtor arising from such a process.

Since issuing the report on the Amended Proposal, the Debtor has advised that both UDDI and URPI are owned by Aubergine Investments Inc. ("Aubergine"). The Trustee has been provided with transfer agreements dated June 1, 2012 reflecting the transfer of the URPI shares and the UDDI shares from the Debtor to Aubergine.

In addition to reviewing with the Debtor his various share interests in partnerships and corporations, the Trustee has undertaken a review of:

the impact, if any, of the reorganization of the Urbancorp group of companies in 2015 on the Debtor's property, assets, or interests;

the settlement of property into either of the three discretionary trusts, being The Doreen and Alan Saskin Family Trust, the A. Saskin Family Trust and the Webster Family Trust;

the Debtor's personal tax returns;

the Debtor's bank account for the period January 1, 2011 to April 30, 2016 and March 1, 2015 to April 30, 2016 RRSP accounts; and

the Urbancorp Group's accounting records for the period for the period of January 1, 2014 to April 29, 2016, in respect of any amounts due and owing and payments made to the Debtor.

Attached as Appendix "B" is a report on the Trustee's review of the above which creditors are encouraged to review in detail. There is certain outstanding information which once available will be circulated if considered necessary or provided to the inspectors elected at the meeting.

Realization of Assets

Below is a summary of the Debtor's known assets and potential recovery:

Asset: Realizable value:

Personal effects, clothing Exempt

RRSP Exempt

Leasehold interest in Tesla vehicle Unknown

Share interest in corporations and partnerships Unknown

(Summarized in Appendix "A")

Preference and TUV recovery Unknown

(see section below)

At this time, the realizable value of the Debtor's assets is unknown. The Trustee will develop a realization strategy for any assets which may come into its possession over the bankruptcy proceedings. Any sale process or transaction executed by the Trustee will be subject to inspector approval.

SECTION C-BOOKS AND RECORDS

Since its appointment as Proposal Trustee, the Trustee has been provided and has taken possession of the Debtor's books and records in order to complete its duties and obligations under the BLA. In this regard, the Trustee has obtained and reviewed the following:

the Trust Agreements and relevant general ledger details

the settlement of property into the three discretionary trusts, being The Doreen and Alan Saskin Family Trust, the A. Saskin Family Trust and the Webster Family Trust;

the Debtor's personal tax returns for the years 2011 to 2015;

the Debtor's bank account for the period January 1, 2011 to April 30, 2016 and March 1, 2015 to April 30, 2016 RRSP account;

memos provided by the Debtor's external accountant; and

the Urbancorp Group's accounting records for the period of January 1, 2014 to April 29, 2016, in respect of any amounts due and owing and payments made to the Debtor.

SECTION E - CURRENT INCOME

Based on information provided by the Debtor, he is currently unemployed and is not currently earning any income. Accordingly, the Debtor is not making any contributions of surplus income to the Trustee. However, we note that in certain examinations of the Debtor, the Debtor indicated that he has been working for Mattamy Homes. The Trustee has not been advised of any compensation for this work.

SECTION F-LEGAL PROCEEDINGS, TRANSFERS UNDER VALUE AND PREFERENCES

No legal proceedings have been commenced by the Trustee. As noted in Section B above, the Trustee has received copies of the Debtor's bank statements from 2011 to April 2016 and has completed a cursory review. Details of the results of Trustee's review and investigation are outlined in Appendix "B". As noted in Appendix "B" there is certain outstanding information which the Trustee has been requested from the Debtor and which remains outstanding as of the date of this report, accordingly it is uncertain whether there will be any transactions subject to challenge by the Trustee or the creditors pursuant to the provisions of the BIA.

SECTION G- ANTICIPATED REALIZATION AND PROJECTED DISTRIBUTION

The recovery from any of the Debtor's assets is uncertain and the Trustee is therefore unable to provide any estimate of anticipated realization and/or whether there will be surplus funds net of costs available for distribution to creditors.”

[126] Given the grounds of opposition cited by the Trustee, CRA, the MT Creditors and the Israeli Representative, the Preliminary Report, and in particular Exhibits A and B to that Report, being the Organization Chart and the Trustee’s analysis of the possible realizations in the Bankruptcy and Proposal scenarios (the “Trustee’s Realization Analysis”) played a central role in this Discharge Hearing. As a result I have attached at Schedule A to these reasons the complete Exhibits A and B of the Preliminary Report.

[127] In the Trustee’s Realization analysis in the Preliminary Report the Trustee advises that the Trustee conducted the following investigation of the Debtor’s assets and realizable value:

“The Proposal Trustee's review included discussions with the Debtor and advisor, legal counsel, and external accountant. As well, the Proposal Trustee reviewed:

memos provided by the Debtor's external accountant; the Debtor's bank statements for the period January 1, 2011 to April 30, 2016;

the Debtor's investment (RRSP) account for the period January 1, 2015 to April 30, 2016;

the Debtor's tax returns for the years 2011 to 2015;

the Trust Agreements and relevant general ledger details; and

the Urbancorp Group's corporate accounting records.

The Proposal Trustee has not audited or verified such information and/or supporting documents for accuracy, or completeness. Accordingly, the Proposal Trustee expresses no opinion or other form of assurance with respect to such information.”

[128] A central issue on this Discharge, are allegations regarding the prior or current involvement of UTMI, UMI, The Webster Family Trust (“Webster Trust”), The A. Saskin Family Trust (the “Saskin Trust”), and the Doreen and Alan Saskin Family Trust (the “Doreen and Alan Trust”), in addition to Doreen, in providing remuneration or payment of the expenses of the Bankrupt, which was the evidence of the Bankrupt, both before and after the commencement of the Proposal Proceedings, and after the occurrence of the Bankruptcy.

[129] The Trustee’s Realization Analysis in the Proposal Proceedings states the following with respect to their review of the transactions entered into by the Bankrupt with respect to these entities prior to the filing of the Holding Proposal in April of 2016:

“III. Urbancorp Toronto Management Inc. ("UTMI") Ownership:

All issued and outstanding shares of UTMI are owned by Alan Saskin.

Transfer Summary:

On December 11, 2015, the following transactions occurred between UTMI and certain companies within the Urbancorp group:

UTMI entered into an agreement of purchase and sale to sell to UCI the promissory note/loan receivable in the principal amount of $6,000,000 owing to UTMI from Bay LP in exchange for 100 Class B Special Shares in the capital of UCI.

UTMI subsequently entered into an agreement of purchase and sale to transfer to UHI the 100 Class B Special Shares in the capital of UCI. In return, UTMI received 100 Class B Special Shares of UHI.

Impact on Saskin creditors: As a result of the issuance of special shares to track any equity associated with these assets, there appears to be no prejudice to Alan Saskin or his creditors resulting from the above transfer.

IV. Urbancorp Management Inc. ("UMI")

Ownership: All issued and outstanding shares of UMI are owned by the Doreen and Alan Saskin Family Trust.

Transfer Summary: On December 11, 2015, the following transactions occurred between UMI and certain companies within the Urbancorp group:

UMI entered into an agreement of purchase and sale to transfer to Urbancorp Realtyco Inc. ("Realtyco") various assets held in certain projects in exchange for the assumption of tenant deposits and mortgages related to the transferred assets, and issued UMI 90 Common Shares in Realtyco capital. Upon the incorporation of Realtyco, UMI subscribed for 10 Common Shares.

The following assets were transferred from UMI to Realtyco:

a) Bay LP - promissory note receivable in the principal amount of $2,000,000;

b) Westside - seven residential units and parking and lockers, if any; and

c) Curve - nine residential units and parking and lockers, if any.

UMI subsequently entered into two additional agreements of purchase and sale as detailed below:

a) an agreement of purchase and sale with UCI to transfer the 100 Common Shares of Realtyco. In return, UMI received 100 Class A Special Shares in the capital of UCI; and

b) an agreement of purchase and sale with UHI to transfer the 100 Class A Special Shares in the capital of UCI. In return, UMI received 100 Class A Special Shares in the capital of UHI.

Impact on Saskin creditors: As a result of the issuance of special shares to track any equity associated with these assets, there appears to be no prejudice to Alan Saskin or his creditors resulting from the above transfer.

B. THE WEBSTER FAMILY TRUST, THE A. SASKIN FAMILY TRUST AND THE DOREEN AND ALAN SASKIN FAMILY TRUST

The Proposal Trustee has been advised of three family trusts being:

1. The Webster Family Trust (the "Webster Trust") The Webster Family Trust was settled pursuant to a trust deed dated October 1, 2011. The settlor of the trust was Ben Saskin, and Alan Saskin was named trustee of the trust. The beneficiaries of this trust are Doreen Saskin, and each of the children, grandchildren, and remoter issue of Alan and Doreen Saskin. The Debtor advises that the Webster Trust was created to own the shares of Urbancorp Power Holdings Inc. ("UPHT), UPHI has three subsidiaries which own geothermal assets in condominium projects (Vestaco Homes Inc ., Vestaco Investments Inc ., and 228 Queens Quay West Limited). In December, 2015, all shares of UPHI were transferred to Urbancorp Holdco Inc. in exchange for 100 Class C Special Shares of Urbancorp Holdco Inc. The Proposal Trustee has been advised that in addition to owning the holdings set out above, the Webster Trust is the only trust that has cash deposits into it and withdrawals from it. The Proposal Trustee has reviewed the general ledger of the Webster Trust for the period January 1, 2011 to January 28, 2016, being the last date the general ledger was updated, and a summary of activity for the period is provided below:

Receipts	Amount ($ '000)
Deposit from UMI on November 13, 2011	2,500
Total	2,500
Payments
Various withdrawal transactions during 2011 and 2012 for the benefit of certain family members of the Debtor	810
Wire transfer to the Debtor's personal bank account on January 17, 2012	300
RRSP contribution on behalf of the Debtor in 2012	140
Wire transfers to Urbancorp Management Inc.	1,200
Unknown	50
Total Payments	2,500

2. The A. Saskin Family Trust

The A. Saskin Family Trust was settled pursuant to a trust agreement dated April 3, 1998. The settlor of the trust was Ben Saskin. Doreen Saskin and Ted Saskin are appointed trustees pursuant to the deed. The beneficiaries of the trust are the children of Alan and Doreen Saskin, and any grandchildren they may have. The Debtor advises that this trust has no assets, and that no trust returns have been filed for at least the last ten years.

3. The Doreen and Alan Saskin Family Trust

The Doreen and Alan Saskin Family Trust was settled pursuant to a trust agreement dated November 10, 1987. The settlor of the trust was Ben Saskin. The trust agreement named Alan Saskin, Theodore Saskin, and Doreen Saskin the trustees of the trust. The beneficiaries of the trust are the spouse (including widow) of Alan Saskin, and the children of Alan Saskin, including their spouses (and widows/widowers). The Debtor has advised that the trust corpus consists of the common shares of Urbancorp Management Inc. The Debtor has further advised that no property has been transferred out of this trust. The Debtor has also advised that no tax returns have been filed in the last five years as no income was earned, and no distributions have been made.

[130] With respect to tax income reported by the Bankrupt on his income tax returns in the years prior to the Bankruptcy the Trustee stated the following in the Preliminary Report:

“C. PERSONAL TAX RETURNS

The Proposal Trustee has reviewed the Debtor's 2011 to 2015 personal tax returns. The sources of income, losses and deductions reported on the tax returns are summarized in the table below:

	2015	2014	2013	2012	2011
Partnership Income (losses)	978,661	(785,952)
T2125 Summary	(590,561)	1,000,000	4,249,763	499,763
Rental Income				176,000
Self Employment Income (losses)	(3,018,912)	(590,561)	11,792,706	539,937	(5,379,682)
Taxable Capital Gains	(82,456)	1,500,000	2,382
RRSP				140,000
Losses of other years	(11,497,123)	(2,067,258)
Taxes Payable	164,191	54,942	48,120

Attached as Exhibit "1" are the details of the information reported on the Debtor's personal tax returns. Based on discussions with the Debtor's accountant, the Proposal Trustee has been advised that the income reflected in the Debtor's returns does not equate to cash received by the Debtor and was structured in this manner for tax planning purposes.”

[131] With respect to the monies passing through the Bankrupt’s accounts in the years prior to the filing of the Holding Proposal the Trustee states the following in the Preliminary Report:

“D. BANK AND RRSP ACCOUNTS

The Proposal Trustee has reviewed the Debtor's bank 2011 to April 2016 bank account statements and notes that deposits, transfers and credit memos over the period totalled approximately $5.7 million. A summary by calendar year is set out below:

	2011	2012	2013	2014	2015	2016	Total
Total deposits	51,249.25	1,214,334.42	1,296,652.41	1,801,795.34	113,535.74	9,902.50	4,487,570.21
Total internet banking transfers	22,000.00	107,000.00	337,500.00	132,500.00	122,700.00	15,000.00	736,700.00
Total credit memos		327,100.00	56,587.64	24,000.00	56,245.86		463,933.50
Total	73,249.25	1,648,434.42	1,690,740.05	1,936,295.34	260,336.74	81,147.91	5,688,203.71

The Proposal Trustee undertook a review of the Urbancorp Group's records in order to attempt to identify the source of cash receipts for any amount of $100,000 or greater. Details of the Proposal Trustee's investigation is summarized below:

Date	Source	Amount
30-Jan-12	Webster Family Trust	$300,000
27-Dec-12	Urbancorp Toronto Management Inc.	$1,000,000
04-Dec-12	Urbancorp Toronto Management Inc.	$500,000
05-Dec-13	Urbancorp Toronto Management Inc.	$350,000
06-Dec-13	Urbancorp Toronto Management Inc.	$250,000
30-May-14	Urbancorp Toronto Management Inc.	$130,000
23-Jun-14	2234672 Ont. Ltd.(Cooltech)	$500,000
23-Sep-14	Unknown	$1,000,000
Total		$4,030,000

As detailed in the section below, the $1 million payment dated September 23, 2014 appears to have been subsequently advanced to UTMI. The Proposal Trustee has inquired with the Debtor as to the source of this unknown deposit and will further report to the creditors as the information becomes available.

The Proposal Trustee identified payment transactions of $100,000 or greater over the same period which total $3.78 million and are detailed below:

Date	Payee	Amount
13-Feb-12	Unknown	$300,000.00
04-Jan-13	Urbancorp Toronto Management Inc.	$1,000,000.00
28-Jan-14	Urbancorp Toronto Management Inc.	$500,000.00
04-Feb-14	Unknown	$100,000.00
03-Mar-14	Unknown	$100,000.00
06-Mar-14	Unknown	$150,000.00
02-Jun-14	Receiver General	$130,000.00
27-Jun-14	TCC/Urbancorp (Bay/Stadium)	$500,000.00
25-Sep-14	Urbancorp Toronto Management Inc.	$1,000,000.00
Total		$3,780,000.00

As noted above, many of the payments have been issued to companies within the Urbancorp Group. The Proposal Trustee has inquired with the Debtor as to the payees of the unknown payments and will further report to the creditors as the information becomes available.

In addition to the locked in RRSP reflected on the Debtor's statement of affairs, the Proposal Trustee was advised of a self-directed RRSP account. The Proposal Trustee was provided with the Debtor's March 1, 2015 to April 2016 self-directed RRSP account statements which reflect a balance of $382,279.52 as at February 29, 2016 (including a $50,000 contribution in February 2016). This RRSP account was liquidated prior to the NOI filing, and the proceeds used for taxes and legal services.”

[132] Unlike the statements objected to by the Bankrupt in the 2nd Supplementary Report though the Bankrupt’s Notice of Dispute, there is no evidence before the Court that Bankrupt disagreed with these findings by the Trustee, and the Trustee makes clear in the Preliminary Report that it was relying on information received from the Bankrupt and MNP.

[133] The Bankrupt referred to these statements as a partial defence to allegations made by certain of the Opposing Creditors that he had not fulfilled his duties under the BIA. No part of any of the s.170 Report, other than the statements objected to in the Bankrupt’s Notice of Dispute was sought to be struck by the Bankrupt.

[134] The evidentiary value of a report by a Trustee under s.170 of the BIA is expressed as follows in Bankruptcy and Insolvency Law of Canada, Fourth Edition, by The Honourable Mr. Justice Lloyd W. Houlden, Mr. Justice Geoffrey B. Morawetz, and Dr. Janis P. Sarra (“Houlden & Morawetz”) § 7:79. Trustee's Report to the Court—Effect of the Report:

The trustee's report is evidence of the statements contained in it: s. 170(5). The predecessor section to s. 170(5) provided that the report was prima facie evidence of the statements contained in it. The words “prima facie” were dropped in the 1970 revision of the revised statutes: see R.S.C. 1970, c. B-3, s. 140. The omission of the words prima facie does not appear to have altered the effect of the subsection: see Re Leach (1996), 1996 5408 (NS SC), 42 C.B.R. (3d) 173, 1996 CarswellNS 461 (N.S. S.C.).

Since the report is evidence of the statements contained in it, it is unnecessary for the trustee to give oral evidence of what is contained in the report: Re Lefebvre (1932), 13 C.B.R. 396 (Que. S.C.). Unless contradicted by other evidence, the court must accept the statements contained in the report: Re Barrick (1980), 36 C.B.R. (N.S.) 286 (B.C. C.A.); Re Crowley (1984), 1984 5444 (NS SC), 54 C.B.R. (N.S.) 303, 66 N.S.R. (2d) 390, 152 A.P.R. 390 (T.D.).

Where the trustee's report is positive, it is up to the opposing creditors to provide evidence to prove the facts referred to in s. 173: Re Tanner (1993), 1993 820 (BC SC), 21 C.B.R. (3d) 244, 1993 CarswellBC 559 (B.C. S.C.); Re Bualzyk (1998), 4 C.B.R. (4th) 47, 1998 CarswellOnt 2318 (Ont. Gen. Div.).

“Statements” in s. 170(5) include not only statements of facts but also opinions of the trustee: Re Nightingale (1988), 72 C.B.R. (N.S.) 151 (N.S. T.D.); Re Barrick (1980), 36 C.B.R. (N.S.) 286 (B.C. C.A.). Thus, if the trustee reports that the bankruptcy was caused by inexperience, neglect of business affairs, etc., that is a statement coming within s. 170(5). However, if the trustee makes such statements, it should give the reasons which form the basis for the opinion: Re Crowley (1984), 1984 5444 (NS SC), 54 C.B.R. (N.S.) 303, 66 N.S.R. (2d) 390, 152 A.P.R. 390 (T.D.).

Although great weight should be given to recommendations contained in the trustee's report, the court is not bound by them: Re Young (1928), 10 C.B.R. 53 (N.B. K.B.); Re Kemper, [1961] O.W.N. 288, 2 C.B.R. (N.S.) 130 (S.C.); Re Leach (1996), 1996 5408 (NS SC), 42 C.B.R. (3d) 173, 1996 CarswellNS 461 (N.S. S.C.); Re Woodrow (1997), 1997 9687 (SK QB), 46 C.B.R. (3d) 310, 1997 CarswellSask 156 (Sask. Q.B.); Re Barrick (1980), 36 C.B.R. (N.S.) 286 (B.C. C.A.); Re Crowley (1984), 1984 5444 (NS SC), 54 C.B.R. (N.S.) 303, 66 N.S.R. (2d) 390, 152 A.P.R. 390 (T.D.); Re Simpson (1984), 50 C.B.R. (N.S.) 109 (B.C. S.C.); Re Safatli (1995), 34 C.B.R. (3d) 40, 1995 CarswellNS 46 (N.S. S.C.). Thus, if the trustee recommends an absolute discharge for the bankrupt, the court may decide not to follow the recommendation but instead impose a conditional order: Re Letts (1995), 1995 4090 (SK QB), 37 C.B.R. (3d) 38, 1995 CarswellSask 584 (Sask. Q.B.).”

[135] As stated by Kershman, J. in Re Chang, 2021 ONSC 3483 (“Chang”):

“[124] The bankrupt can contest the statements contained in the trustee’s report and must, under s. 170(6) of the BIA, at or before the time appointed for the hearing of the application of discharge, give notice in writing to the trustee specifying the statements in the report that he proposes at the hearing to dispute.

[125] If the bankrupt does not give notice in writing as required by s. 170(6) of the BIA, the court will take the facts as stated in the report as being established: Roy (Re) (1987), 66 C.B.R. (N.S.) 280 (Ont. S.C.); Grenier c. Bolduc (1957), 37 C.B.R. 162 (Que. C.A.). Similarly, if the bankrupt calls no evidence to contradict what is contained in the report, the court will accept the facts as stated in the report: Upham (Re) (1985), 57 C.B.R. (N.S.) 134 (N.S.S.C.).”

[136] It should be noted that the 2nd Supplementary Report filed by the Trustee for this Discharge Hearing incorporates and conglomerates as part of the s.170 Report:

1. the September 22, 2021 Report, which

2. specifically incorporates the Preliminary Report to Creditors in the Bankruptcy, which

3. specifically incorporates the Trustee’s Realization Analysis from the Proposal Proceedings.

[137] Because of this the Trustee’s Realization Analysis was specifically incorporated into the complete s.170 Report, and therefore the above jurisprudence regarding its admissibility and the deference accorded to all of this evidence presented by the Trustee is applicable to the entirety of the s.170 Report, including the Preliminary Creditors’ Report and the Trustee’s Realization Analysis.

[138] As is the ordinary practice of the Court, and per Re Lefebvre the Trustee did not provide Oral Testimony, but both the Trustee and its Counsel did provide information to the Court when asked for assistance by the Court throughout the hearing, which was very helpful to the Court and not objected to by any party.

[139] At the hearing of the Discharge the Trustee was requesting a Conditional Discharge Order with payment by the Bankrupt in the amount of $600,000.

The Opposing Creditors

The CRA - Proven claim of $2,371,447.17

[140] In this bankruptcy the CRA initially filed a proof of claim in the amount of $11,047,168.68. This Proof of Claim (the “Initial CRA Proof of Claim”) was attached as exhibit “B” to the Affidavit of Ursula Waza, a Complex Case Officer for the CRA, sworn on November 24, 2022. (the “Initial CRA Affidavit”).

[141] This Initial CRA Proof of Claim was the combined collective amount of:

a) personal tax in the amount of $3,774,802.75 for tax years 2012 and 2016 consisting of the Principle amount of $3,059,451.16 and the remainder including CPP and AI arrears as well as penalty and interest;

b) Directors liability for HST owing by Epic on Triangle Park Inc. for the years 2015, and 2016 in the Principal amount of $2,714,726.96 and interest and penalty for a total claim of $3,074,737.39;

c) Directors liability for HST owing by Edge on Triangle Park Inc. for the years 2015, and 2016 in the Principal amount of $3,510,725.11 and interest and penalty for a total claim of $4,197,628.54

[142] In a Supplemental Affidavit of Waza sworn on January 5, 2023 (the “CRA Supplemental Affidavit”) the CRA submitted a revised, reduced proof of claim. As stated in the CRA Supplemental Affidavit:

“5. On January 4, 2023, the CRA submitted a further amended proof of claim to the Trustee in the total amount of $10,096,946.03. The further amended proof of claim reflects an income tax reassessment issued by the CRA in March 2022 with respect to the 2012 taxation year. The further amended proof of claim amount is less than the proof of claim originally filed in the amount of $11,047,168.68.”

[143] Finally, the CRA submitted a further Supplemental Proof of Claim (the “Final CRA Proof of Claim”), as exhibit A to the Further Supplemental Affidavit sworn by Waza on August 29, 2023 (the “Final CRA Affidavit”).

[144] As stated the Final CRA Proof of Claim was only with respect to the individual tax liability of the Bankrupt for the tax years 2012 and 2016, and no longer included the HST director liability components, or penalty or interest claims.

[145] As stated in the Final CRA Affidavit:

“5. On or about March 23, 2023, the CRA submitted a further amended proof of claim to the Trustee in the total amount of $2,371,447.17 The further amended proof of claim is reflective of the principal tax portion of the income tax debt assessed against Mr. Saskin pursuant to the Income Tax Act.”

[146] As advised at trial by counsel for the Bankrupt and for CRA, the Bankrupt had filed appeals of the certain Assessments with the Tax Court of Canada, and CRA and the Bankrupt had settled this litigation.

[147] The Bankrupt, the Trustee and CRA agreed that the amount of $2,371,447.17 was the amount that the Court was to consider for the purposes of this Discharge Hearing as the admitted claim of CRA, and that the source of this liability is for capital gains income, not self-employment income, or director liability, and no interest or penalty component, all principal.

[148] As part of this settlement was the withdrawal of certain director liability claims that had been filed by CRA. Counsel for the CRA and for the Bankrupt explained that the Bankrupt had raised the issue that the assessments of the director claim had been done by CRA post-bankruptcy against the Bankrupt without first obtaining leave to do so, apparently raising the decision of the Quebec Court of Appeal in Girard (Syndic de), 2014 QCCA 1922. Accordingly, I will not consider the previously filed director liability claims as part of the proven claims in this Discharge Hearing, either by quantum of source of liability.

[149] Although a large amount, counsel for CRA, the Trustee and the Bankrupt all agreed that as the amount of $15,107,097.75 was the amount of the proven claims in the Bankruptcy Estate at the time of the discharge hearing, and the amount of $2,371,447.17 of proven “personal tax debt” accepted as owing to CRA in the Final CRA Proof of Claim is 15.69% of the total current proven claims in the estate, and that therefore the provisions of s.172.1 of the BIA are inapplicable to this discharge.

[150] I agree with those submissions and make the finding that for the purposes of this discharge that the statutory prohibition on Absolute Discharge enforced by s.172.1 of the BIA is inapplicable at the Discharge Hearing, although as stated in the jurisprudence below cited by both the Bankrupt and the CRA, the tests that are applicable on discharge in a s.172.1 situation are also applicable to evaluating other large tax debt non-s.172.1 bankrupt discharges, such as this one.

[151] Waza was not called as a witness for cross-examination at this discharge hearing by any party. No evidence of the CRA was sought to be struck by the Bankrupt at the Discharge.

[152] The CRA opposed on a single ground in the CRA Notice of Opposition dated April 23rd, 2020 (the “CRA Opposition”) at Appendix D to the Trustee’s Supplementary Report under s.173(1)(a).

[153] The CRA’s position with respect to the tax debt component that the Bankrupt should be liable to pay an additional conditional Order in the normal range requested of 10% to 20% of the principal of $2,371,447.17, a suspension of one or two years or a combination. Arithmetically, the CRA is asking for an additional conditional payment order for the CRA debt in the range of $237,145 and $474,290.

Alpa – Proven claim $244,727.68

[154] Alpa in its Notice of Opposition dated March 17, 2020 (the “Alpa Opposition”) opposed the Bankrupt’s discharge on the grounds in s.173(1)(a),(b),(c),(d),(e),(f),(h),(i),(l) and (o). The Alpa Opposition makes a verbatim statutory recitation of the section 173 facts opposed on.

[155] Alpa is requesting an Order refusing the Bankrupt’s Discharge.

[156] Alpa has been in the eye of the hurricane of swirling Saskin litigation that I have dealt with in the 2 ½ years prior to the Discharge Hearing.

[157] Alpa is the party that obtained the Section 38 Order and commence the s.38 Proceeding against family members and corporations related to the Bankrupt, the Bankrupt is seeking to expunge the Alpa Claim in the Expungement Motion, but that motion has not been heard yet although I rejected the Security for Costs motion brought by Alpa for the Bankrupt to post-security for costs on the Expungement Motion (Saskin v. City of Toronto, 2022 ONSC 7377), and I granted partial relief to the Bankrupt on the Strike Motion (Re Saskin, 2023 ONSC 4695) by striking portion of prior affidavits and exhibits filed by Alpa on the Expungement Motion.

[158] Alpa has also advised that it will be bringing the Alpa Leave Motion to obtain leave to determine whether its claim against the Bankrupt is a s.178 debt, but the Alpa Leave Motion has not been scheduled or determined at the time of the Discharge Hearing.

[159] Counsel for Alpa, Bisceglia and Frino, were not directly involved in the s.163(2) motion with respect to the further examination of Sherkin counsel for the Miller Thomson Creditors (settled with Rabinovitch) in the s.163(2) motion, and the Standing Motion on the Expungement Motion brought by Dolvin and the Israeli Representative, but Alpa supported the granting of standing on that motion (Saskin v City of Toronto, 2022 ONSC 7378).

Evidence of Alpa on Discharge Hearing

[160] The evidence of Alpa on the Discharge hearing was the Hanson Affidavit sworn January 4, 2023 (the “Hanson Affidavit”)(Exhibit “B”-H134-H1934). This affidavit alone comprised 1800 of the 15,608 pages of documents filed in Caselines for the Discharge Hearing.

[161] As a pdf, the Hanson Affidavit was 60MB, and with exhibits A-KK, and was so large that Caselines struggles to open it as a singular exhibit without crashing, due to memory restrictions in Caselines on document sizes, at least at the Court’s end.

[162] Alpa at the time of the Discharge Hearing had a proven claim accepted by the Trustee of $244,727.68 (the “Alpa Proof of Claim”). The claim of Alpa is essentially a claim under s.8 and s.13 of the Construction Act that certain of the Urbancorp Companies had breached the statutory trust, and that the Bankrupt as Director had “assented to, or acquiesced in” that breach, and was therefore liable to Alpa,

[163] The Bankrupt has brought the Expungement Motion to, inter alia, expunge the Alpa Proof of Claim. That Expungement Motion had not been heard at the time of the Discharge Hearing.

Motion by Bankrupt to deny standing to Alpa at Discharge Hearing

[164] As mentioned earlier the Bankrupt at the outset of trial sought to deny standing to Alpa on the basis that its claim could be a s.178 debt, and therefore Alpa having a possible undischargeable claim had no standing to appear at the Discharge Hearing.

[165] For this proposition the Bankrupt cited Re Stampatori [1987] O.J. No. 1999 1987 CarswellOnt 153, [1987] C.L.D. 257, 62 C.B.R. (N.S.) 318 (“Stampatori”). In that case Sutherland, J. was dealing with the discharge of a Bankrupt that had run a travel agency as a sole proprietor and had one remaining opposing creditor, Alitalia. Alitalia alleged that the Bankrupt had absconded with trust funds received from Alitalia ticket sales. The Bankrupt cited the following two paragraphs:

“On behalf of the sole remaining creditor, Mr. Burgess submitted that there was a claim for Alitalia of some $40,000 and it did arise in respect of trust funds. It is my opinion that if that is true, the claim is a claim that, under the provisions of s. 148 of the Bankruptcy Act, would survive the bankruptcy and the discharge in the sense that it would not be reduced or affected by either.

Under a decision last year by Campbell, J. in a case known as Re Taylor, (1986) 58 C.B.R. (NS) it was held that an opposing creditor whose claim a is one that would survive a discharge, does not have status to oppose a discharge.”

[166] The cite for the case is problematic as 62 C.B.R. (N.S.) 318 is also shared by the 1986 case Re Walsh. Thomson Reuters has no text only the headnote of this case.

[167] The Stampatori case was provided at the Trial to the Court and other counsel by Tayar in paper format. Other counsel were not aware of the Standing issue prior to it being raised on the first day of Trial, and could not meaningfully respond to it.

[168] The Bankrupt argued that like Alitatia, since Alpa’s claim was based on an alleged Statutory Breach of Trust claim, Alpa similarly had no standing on the Discharge Hearing.

[169] However, the Bankrupt did not draw the Court’s attention to the following paragraph of Stampatori in argument:

If on the other hand Alitalia's claim does not arise because of the breach of a trust or fiduciary obligation, the situation is one in which a sole creditor six and a half years after the bankruptcy is opposing the discharge of a bankrupt who does not now have any surplus income. The bankrupt has been gainfully employed. There is no finding that he diverted any funds for purposes other than those of trying to keep the business going. I find that there has been no stashing or secreting away of assets. There has been no serious suggestion of that.

In either event of the Alitalia claim, it is my decision that the appropriate result in this case is that Mr. Stampatori be given, at this late stage, an absolute discharge.

[170] Or, in other words, despite the Bankrupt’s submissions, Sutherland, J. did not deny Alitalia standing at the discharge on the basis of their possible s.178 debt, and made no determination of the discharge based on that issue.

[171] Stampatori has apparently only ever been mentioned one time in Re Kanovsky, 2000 MBQB 206, [2000] M.J. No. 550, 101 A.C.W.S. (3d) 464, 152 Man. R. (2d) 15, 21 C.B.R. (4th) 273 which mentioned the existence of Stampatori, but the case was never raised by the parties or considered by the Court so the submission by the Bankrupt that there is a “Stampatori Rule” of Standing in Bankruptcy Discharge is a false submission.

[172] The reference in Stampatori to Re Taylor 1985 842 (BC SC), 1985 CarswellBC 492, [1985] B.C.W.L.D. 3824, [1985] B.C.W.L.D. 3871, [1985] W.D.F.L. 2140, [1985] W.D.F.L. 2144, 35 A.C.W.S. (2d) 190, 48 R.F.L. (2d) 214, 58 C.B.R. (N.S.) 274 (“Taylor”) appears to refer to this quote in Taylor:

“27 I find certain comments made by Hope J. in Re Miller, supra, instructive. In that case the former wife of the bankrupt objected to his discharge from bankruptcy. The claim of the wife against the bankrupt arose out of a separation agreement which was approved in and formed part of the decree nisi. The former wife had recovered judgment against the bankrupt as a result of his failure to discharge a second mortgage on the property which had been transferred to the wife. The bankrupt contended that his former wife had no status to oppose the discharge because her claim arose as a result of a form of maintenance granted by the decree nisi.

28 An absolute discharge was granted, it being found that the claim of the former wife was for maintenance within the meaning of the Divorce Act. As a result, her claim was unaffected by an order of the bankruptcy court, and she had no status to object to the discharge of the bankrupt.”

[173] However, it appears that the Miller case relied on in Re Taylor above, (1980 1004 (AB KB), 34 C.B.R. (N.S.) 172 (Alta. Q.B.)), the central finding was set aside by the Alberta Court of Appeal (Miller, Re 1981 ABCA 335, 1981 CarswellAlta 313, [1981] A.J. No. 4, [1996] 3 W.W.R. 421, [1996] A.W.L.D. 123, [1996] W.D.F.L. 298, 36 Alta. L.R. (3d) 29, 37 C.B.R. (3d) 316) that reversed the findings of the Trial judge in determining the existence of s.178 debt for maintenance. So it appears that the Miller case, relied on in Taylor, which was then relied on in Stampatori for the existence of this alleged rule, may not have been good law in the first place, or anymore.

[174] So it appears in Stampatori that Sutherland, J.:

1. never actually determined whether Alitalia did or did not have a s.178 claim;

2. did not deny Alitalia standing at the discharge in any event, making the statement referred to by the Bankrupt as a principle binding on this Court, to instead be complete obiter;

3. was dependent on reasoning in prior jurisprudence in Taylor, reliant on the trial decision in Miller, the factual basis of which was overturned by appeal.

[175] The Bankrupt did not advise the Court of any of these weaknesses in the Stampatori argument. He should have.

[176] Whatever this teetering Jenga-tower of jurisprudence supporting Stampatori relied on by the Bankrupt is reliable or not, nowhere in any of these decisions is the basis upon which the Courts concluded:

“her claim was unaffected by an order of the bankruptcy court, and she had no status to object to the discharge of the bankrupt”

because it ignores the widely recognized doctrine that creditors with s.178 debts, if they also have proven claims with the Trustee, can actually participate in Bankruptcies, and may be paid dividends in the bankruptcy estate, and have all of the other benefits of creditors with proven claims.

[177] As stated in Houlden & Morawetz: § 7:185. Debts not Released by an Order of Discharge—Generally”

“…The claims listed in s. 178(1) are properly provable in bankruptcy. Proofs of claim may be filed for them and the creditor can receive a dividend on them: Trusts & Guarantee Co. v. Brenner (1932), 1932 14 (ON CA), 13 C.B.R. 518, affirmed in part 1933 14 (SCC), 15 C.B.R. 112 (S.C.C.); B. (S.M.A.) v. H. (J.N.) (1993) 1993 14745 (BC SC), 23 C.B.R. (3d) 81, 87 B.C.L.R. (2d) 341, [1994] 4 W.W.R. 281, 1993 CarswellBC 577 (S.C.), affirmed (1994), 1994 8698 (BC CA), 31 C.B.R. (3d) 302, 100 B.C.L.R. (2d) 86, [1995] 2 W.W.R. 744, 1994 CarswellBC 6, 53 B.C.A.C. 181, 87 W.A.C. 181 (C.A.). The fact that a creditor with a claim coming within s. 178(1) has filed a proof of claim in the bankruptcy does not release the bankrupt from liability for the debt: Algoma Steelworkers Credit Union Ltd. v. Kennedy (1973), 1973 533 (ON SC), 18 C.B.R. (N.S.) 51 (Ont. Dist. Ct.); Haman v. Pomerleau (1971), 16 C.B.R. (N.S.) 146 (Ont. Dist. Ct.); Van Norman v. Van Norman (1990), 1990 12438 (BC SC), 3 C.B.R. (3d) 290, 30 R.F.L. (3d) 140, 1991 CarswellBC 459, affirmed 1993 2474 (BC CA), 18 C.B.R. (3d) 123, 75 B.C.L.R. (2d) 306, 44 R.F.L. (3d) 406, [1993] 4 W.W.R. 513, 100 D.L.R. (4th) 341, 22 B.C.A.C. 203, 38 W.A.C. 203, 1993 CarswellBC 536 (C.A.).”

[178] As per Re McNary (2001), 2001 SKQB 171, 206 Sask. R. 115, 2001 CarswellSask 268 (Sask. Q.B.) (“McNary”) as cited in Houlden & Morawetz at § 7:86. “Objections by Creditors to Discharge—Who May Object”:

“…if an unsecured creditor has proved a claim, the creditor is entitled to object to the discharge of the bankrupt. If a trustee has allowed a contingent claim as a provable claim and has valued it, the bankrupt cannot on his or her application for discharge contest the validity of the claim. If the bankrupt wishes to challenge the trustee's admission of the claim, he or she must follow the procedure set out in s. 135(5) and apply to expunge it. The contingent creditor has the right in these circumstances to object to the bankrupt's discharge.”

[179] So if a creditor has a proven claim, it would appear that the accepted jurisprudence is that the creditor can object to Discharge, and that creditors with s.178 debts can still prove their claims.

[180] So on that accepted Jurisprudence a s.178 creditor, or potential s.178 creditor, if they have a proven claim, has the same rights as any other kind of creditor with a proven claim entitled to a dividend, who obviously would have an interest in making submissions at the Discharge hearing to increase the size of that dividend through the ordering of a payment condition at Discharge.

[181] Why should they not have standing? How in those circumstances is that creditor with a proven claim, entitled to a dividend in the Bankruptcy, “unaffected by an order of the bankruptcy court” per Taylor?

[182] In the circumstances of Alpa, the Alpa Proof of Claim at the time of the Discharge Hearing was a proven, unexpunged claim. Therefore Alpa has all of the rights of a proven creditor including the right to opposed discharge.

[183] If Alpa ever does bring a motion to obtain leave to pursue its s.178 claim, and if that motion is granted, and if a s.178 debt is proven against the Bankrupt in the far future, that is all speculative.

[184] Therefore I denied the Bankrupt’s motion to deny Alpa standing.

Motion to Strike Hanson Affidavit

[185] The Bankrupt also sought to strike the entirety, or in the alternative, many paragraphs of the Hanson Affidavit as a result of endemic problems with the admissibility of evidence presented by Alpa in materials filed throughout this Bankruptcy.

[186] In the Strike Motion Endorsement (Re Saskin, 2023 ONSC 4695), for the Strike Motion that was heard on May 18, 2023 between the first three days of the Discharge Hearing in January and the next three days of the Discharge Hearing in July 2023, I stated the following with respect to the Affidavit of Zena Hanson filed by Alpa in Response to the Bankrupt’s Expungement Motion and on the prior Alpa Security for Costs Endorsement (Saskin v. City of Toronto, 2022 ONSC 7377):

“[16] The Bankrupt has objected to the evidence filed by Alpa on the Expungement Motion, and for this Strike Motion, for reasons similar to the misgivings I expressed above (a year ago) with respect to the evidence filed by Alpa on the Security for Costs Motion.

[17] The crux of the issue on this Strike Motion is the chronic habit of counsel for Alpa of recycling prior Alpa affidavit materials in unrelated motions, and the affidavit and other materials of other parties in other proceedings, and repackaging those materials in whatever motions happen to be before the Court, whether they fit or not.”

[187] The reference to my prior Security for Costs Endorsement related to the following:

“[74] From the review of the Hanson Transcript, as I have highlighted above, it is apparent that for many of the issues that would be required to be proven by Alpa under s.8 and s.13 of the Construction Act to support a finding that the Urbancorp Companies had breached trust and the Bankrupt had “assented to, or acquiesced in” that breach and was therefore liable to Alpa, as alleged in the Alpa Proof of Claim and the Hanson Proof of Claim Affidavit, the evidence relied upon by Hanson is not in her direct knowledge, but rather Hanson is relying on evidence in:

1. the Gissin Affidavit;

2. the transcript of the examination of Jeremy Cole, (“Cole”) the accountant for the Bankrupt and his family companies, under the provisions of s.163 of the BIA held on November 29, 2019 (the “Cole s.163 Examination”) (at Exhibit “M” to the Hanson S.38 Affidavit);

3. information and belief statements in the Hanson S.38 Affidavit regarding the occurrences of alleged transfers at undervalue based on information provided by Jeremy Sacks, another inspector of the Bankruptcy Estate of the Bankrupt, and counsel for other creditors of the Bankrupt (“Sacks”), and in particular, Sacks advising Hanson of the testimony of the Bankrupt at a s.163 examination under the BIA, which transcript is not attached to the Hanson S.38 Affidavit (although some exhibits to that examination are).

[75] As I pointed out to counsel for Alpa at the hearing, pointing at an affidavit of another party, in another proceeding, and saying that you agree with their evidence, does not make that evidence admissible for the purpose of proving matters in issue in this Motion.”

[188] In the Strike Motion Endorsement, I dealt with evidence derived by Hanson from the same Montgomery Affidavit that Alpa sought to introduce in the Hanson Affidavit for this Discharge Hearing:

“[236] Alpa argued that as Newbould, J. had “accepted” the Montgomery Affidavit for the purpose of appointing A&M as Receiver, it is “reliable” and therefore should be accepted as evidence on the Expungement Motion as an exhibit to the Hanson Expungement Affidavit, and not struck on this Strike Motion.

[237] There is no evidence before me to prove that proposition, and in fact, it appears that the Appointment Order, and the appointment of A&M as Receiver, may have been subject to the reservation of rights, by various parties, the outcome of which is equally not in evidence before me.

[238] As I had alluded to in my Security for Costs Endorsement, a year ago, use of affidavits filed in other proceedings, by other parties, for other purposes, to prove the facts on the Expungement Motion was likely to be problematic

[243] On the applicable tests of Harrington, Hendley, Carter and particularly Mallard, the evidence of Hanson in Paragraph 24 appears to be solely derived from the Montgomery Affidavit and the Second Report, is therefore inadmissible hearsay evidence, from an affidavit and a report filed by parties to another proceeding, for another purpose, who are not present in this proceeding, and where there is no indication that Montgomery or CIBC or A&M are even aware of the attempted use of their evidence in this proceeding and their position on the issue.

[244] Reports of Court Appointed Receivers are admissible evidence in their own Receivership Proceeding due to the deference given to the Court’s Officer, but the Second Report is being attempted to be entered for the truth of its statements outside of the Receivership Proceeding, and therefore suffers from the same issues as the Affidavit from a third party in Mallard, and therefore Hanson’s references to the findings of the Second Report of the Receiver are also impermissible hearsay from an inadmissible source, particularly given that A&M is a Court Officer subject to the strictures of other Orders issued by a different Court. Paragraph 24 is struck.

[189] To review, in R. v. Khelawon 2006 SCC 57, [2006] 2 SCR 787 (“Khelawon”) at para. 35:

“Our adversary system puts a premium on the calling of witnesses, who testify under oath or solemn affirmation, whose demeanor can be observed by the trier of fact, and whose testimony can be tested by cross-examination. We regard this process as the optimal way of testing testimonial evidence. Because hearsay evidence comes in a different form, it raises particular concerns. The general exclusionary rule is a recognition of the difficulty for a trier of fact to assess what weight, if any, is to be given to a statement made by a person who has not been seen or heard, and who has not been subject to the test of cross-examination. The fear is that untested hearsay evidence may be afforded more weight than it deserves.”

[190] I have dealt with many of these issues in great detail in the Strike Motion, where in many cases the exact same issues were dealt with, again, at the Discharge Hearing, in a different evidentiary context.

[191] I summarized the law on the specific issue in the Strike Motion Endorsement:

“[239] A year later, the Bankrupt cites the following cases on these specific issues:

a) L.M.U. v. R.L.U., 2004 BCSC 95:

“Just because documents are marked as exhibits to an affidavit does not convert them into admissible evidence, particularly where they are tendered for proof of their truth…”

b) MacAulay v. Ali, 2013 NSSC 271 at 7:

“The deponents of both affidavits had no personal knowledge of the materials

attached as exhibits. Their affidavits might be sufficient to prove that the

documents were produced in the litigation; however, that is not sufficient to allow

them to be admitted for the truth of their contents.”

c) Mallard at 12:

“As will be seen, most of the documents were created by some person other than

the defendant. If they are to be admissible in this proceeding it must be done

through that person. The defendant cannot render them admissible by simply

attaching them to his affidavit and calling them exhibits.”

d) Harrington v. Margerison, 2015 BCSC 603 at para. 28 (“Harrington”); Hendley, Re, 2016 ABQB 721, 43 C.B.R. (6th) 219 at para. 25 (“Hendley”) Carter v. Canada (Attorney General), 2011 BCSC 1371 at paras. 26, 28 (“Carter”); and Mallard at para. 14 all for the proposition,

“an affidavit exhibited to another person's affidavit is not admissible evidence.”

[240] Mallard specifically states the following in a fact situation similar to this one, at 14:

“(g) Exhibits #7 and #8 - these are copies of an affidavit of a third party and attached exhibits. They were filed in an Alberta action. While affidavits of third parties could be admitted in these proceedings, they must be sworn by the person within these proceedings. Old affidavits cannot simply be filed in this action. Accordingly, these documents are not admissible.”

Montgomery Affidavit

[192] In the case of paragraphs 24-29 of the Hanson Affidavit, Hanson sought to introduce evidence of Montgomery in a Montgomery Affidavit sworn on May 25, 2016 and filed by CIBC in the receivership of Leslieville and Beach project, Hanson summarized the evidence from the Montgomery Affidavit, and added her conclusions from reading that affidavit for their truth.

[193] The Bankrupt objected to the introduction of that evidence, both as information belief evidence and on the basis that Montgomery was not a witness being called at the Discharge Hearing or with the Bankrupt being given an opportunity to cross-examine.

[194] I struck that evidence in the Strike Motion Endorsement, and also struck it again at the Discharge Hearing as violating the General Exclusionary Rule for hearsay, and the specific jurisprudence I have cited above.

[195] Alpa argued that since Newbould, J. had “accepted” that evidence in a receivership motion 7 years ago, it was “reliable”. I determined that argument met no known exception to the General Exclusionary Rule and while that may have been true to the parties in that proceeding, they had the opportunity to cross-examine Montgomery in that proceeding.

[196] There is no similar opportunity in taking a 7 year old affidavit, sworn in a different proceeding, for a different purpose, for different relief, and then with Hanson reading it and swearing it was true, and editorializing on Montgomery’s 7 year old evidence, for which there may have been contradictory evidence filed in that proceeding which this Court would have been unaware of, afforded no such opportunity.

[197] I struck paragraphs 24-29 of the Hanson Affidavit as well as the Montgomery Affidavit at Exhibit N. I also rejected attempts to sub-peona Montgomery mid-trial as violating my Scheduling Endorsements.

Report of KSV

[198] Similarly, the spin put by Hanson on the Report of KSV dated June 9, 2016 at paragraph 23 of the Hanson Affidavit, as well as the factual conclusions she makes in that paragraph I also struck out as inadmissible hearsay evidence of the workings of the Urbancorp Group by Hanson who had no first-hand knowledge apart of what was in the Report.

[199] However the Report itself at Exhibit L is generally admissible as a Court Report of a Court Officer on the law as I set out above with respect to Report evidence of a Trustee being generally admissible, although I have not relied on that KSV Report, in any way, in making any factual or legal determinations on this Discharge Hearing.

2019 Examination and 2022 Examination

[200] In paragraphs 31-36 Hanson summarizes and characterizes the testimony of the Bankrupt at the in either the 2019 Examination and 2022 Examination (as defined below) and summarizes and draws conclusions from the Bankrupt’s testimony. She also passes along the conclusions of Sacks, counsel for the MT Creditors and summarizes the exhibits filed in certain exhibits filed in the examination(s). In these paragraphs, Hanson makes no actual quotations from that evidence other than her own narrative, which is sought to be admitted for their truth. All of this violates the General Exclusionary Rule for Hearsay Testimony.

[201] The Evidence of the Bankrupt himself from the 2019 Examination and the 2022 Examination, as well as his evidence relating to the exhibits he was questioned upon, as well as those exhibits themselves are admissible on this Discharge Hearing, as per s.163(3) of the BIA as evidence in its own right, and not through Hanson summarizing in the Hanson Affidavit, as the Best Evidence as to what was said, and what the Bankrupt’s Testimony was with respect to those exhibits. The 2019 Examination Transcript and the 2022 Examination Transcript themselves were admitted as evidence.

[202] The testimony of Hanson in paragraphs 31-36 of the Hanson Affidavit was struck, although some of the exhibits themselves, which were put to the Bankrupt on cross-examination at the Discharge Hearing were admitted separately as Trial exhibits.

Cole Transcript

[203] Alpa sought to introduce the transcript of the s.163 testimony of Jeremy Cole, the accountant at MNP generally responsible for the Bankrupt and for the Urbancorp Group held on November 29, 2019 (the “Cole Transcript”). On the Expungement Motion Alpa sought to introduce the Cole Transcript as an exhibit to the affidavits filed on that motion by Alpa.

[204] For the reasons set out in the Strike Motion Endorsement, which, inter alia, dealt with the technical objection by the Bankrupt to admissibility based on the interpretation of the wording of s.163(3) of the BIA, I permitted the use of the Cole Transcript, subject to my regulating the behavior of the parties through future timetabling and attendance at Case Conferences and full participation of Chaiton, counsel for Cole, in any future proceedings.

[205] In the Strike Motion Endorsement, released after I was asked to rule on the admissibility of the Cole Transcript at the Discharge Hearing, I wrote the following which summarizes the basis on which I excluded the use of the Cole Transcript from use at the Discharge Hearing:

“[196] Utilizing my Judicial discretion as Registrar under the BIA, and after taking into account all of the factors set out above as summarized above, and guided by the overriding interests of justice to determine whether it is just that the order be made, I cannot agree with the Bankrupt that the Cole Transcript itself is inadmissible evidence on the Expungement Motion as a result of the provisions of s.163(3) of the BIA, and decline to strike the Cole Transcript itself as evidence on the Expungement Motion, on that basis.

[197] The Cole Transcript, and the properly identified and marked exhibits and answers to undertakings given on that Cole Examination are admissible on the Expungement Motion. Those versions of these documents have already been presented to Cole for identification, and those should be the authoritative evidence of what the witness was reviewing when he made statements in the Cole Transcript.

[198] There should be no confusion or thought that this decision is somehow contradictory with my decision during the hearing of the bankruptcy discharge of this Bankrupt to not allow the Cole Transcript to be entered into evidence at that Discharge Hearing.

[199] The basis of that decision was specifically not my interpretation of s.163(3). I did not allow the admission of the Cole Transcript at the Discharge Hearing by Alpa, despite it being attached (again) as an exhibit to the Hanson Affidavit filed by Alpa as its evidence in chief at the Discharge Hearing pursuant to the numerous scheduling endorsements made by me leading up to that Discharge Hearing.

[200] Alpa was attempting to use the statements made by Cole in the Cole Transcript for their truth at the actual in-person Discharge Hearing, which was a hybrid trial where affidavits formed the in-chief evidence, with live cross-examination in person before me, without calling Cole as a witness to allow cross-examination, and Cole and his counsel were not even available to attend the hearing during the 7 days of witness testimony.

[201] Despite my Security for Costs Endorsement, and despite two years of scheduling endorsements and timetables for the Discharge Hearing, and despite a 5 month gap between the first three days of in-person testimony, and the second three days of in-person testimony, Alpa attempted to enter the Cole testimony at the discharge hearing without having Cole and his counsel present or available to argue the issue, or to represent Mr. Cole at the discharge.

[202] The calling of Cole as a witness at the trial of the discharge hearing was never contemplated or suggested by Alpa in any prior case conferences. Reminiscent of the last minute summons to Cole issued for this Strike Motion, Alpa issued a summons for Cole on the Monday before the Tuesday July 18th recommencement of the trial of the Bankruptcy Discharge, which had been adjourned for five months from January 2023. Cole was not available to appear, and neither was his counsel.

[203] Two different case conferences were called prior to that July 18th recommencement of trial, where the counsel assembled were asked whether there were any specific evidentiary issues that need to be dealt with, prior to the recommencement of the trial, and the calling of Cole as a witness was not raised by Alpa at either case conference.

[204] Those were the circumstances in which I refused to admit the Cole Transcript as evidence on the Discharge Motion, for reasons of the fairness of the process and the failure by Alpa to adhere to my many prior scheduling endorsements, and not under the interpretation of s.163(3) argued by the Bankrupt on this Strike Motion.”

[206] For these reasons, namely the behavior of Alpa, the violation of my scheduling Orders, and the unavailability of Cole and Chaiton when purported to be subpoenaed by Alpa to attend the Discharge Hearing, without obtaining any prior permission from me to issue such a subpoena, I did not permit the Cole Transcript to be entered into evidence by Alpa at the Discharge Hearing and struck exhibit U to the Hanson Affidavit, being the Cole Transcript.

[207] For similar reasons to the attempt to characterize in the Hanson Affidavit the testimony of Cole by Hanson, as with the testimony of the Bankrupt in the 2019 Examination and the 2022 Examination, I struck paragraphs 37-43 of the Hanson Affidavit as impermissible hearsay as to the testimony of Cole, and legal conclusions drawn by Hanson from Cole’s testimony, a non-expert, non-lawyer, non-accountant manager of Alpa’s legal and credit department.

[208] I also struck exhibit X to the Hanson Affidavit, the copy of the Minutes of the Third Meeting of Creditors in the Bankruptcy, offered as proof of the facts in it, and in paragraph 41 of the Hanson Affidavit.

[209] I did not strike out Exhibits V,W, and X1, which were Property Parcel Registrars that were admissible as official government records, but did strike Hanson’s non-expert conclusions of their legal effect.

S.38 Order

[210] I struck out paragraphs 45 and 46 of the Hanson Affidavit as mischaracterizations and non-expert conclusions of the legal effect of the s.38 Order and its implementation.

Exhibits proving alleged Breach of Trust:

[211] I struck out paragraphs 48-51 of the Hanson Affidavit where Hanson was making non-expert conclusions and making impermissible hearsay statements that violate the General Exclusionary Rule, drawn from assorted pieces of evidence that Hanson could not authenticate, or did not have any expertise to make legal conclusions from, to make evidentiary submissions that the trust provisions of s.8 and 13 of the Construction Act had been breached by the Bankrupt, some on information and belief based on the statements of Cole in the Cole Transcript, that had also been excluded as evidence from this Discharge Hearing.

[212] I also specifically excluded exhibits DD, EE, and FF of the Hanson Affidavit, to the extent that they were not documents that were separately admitted as exhibits at this trial. Exhibit FF, a Toronto Life Article, where neither the author, nor the homeowners interviewed were called as witness, I did not permit this magazine article being put to the Bankrupt in cross-examination, having the probative value of absolutely nothing.

[213] I also excluded as evidence Exhibit KK to the Hanson Affidavit a Chart of Undertakings, Refusals and Under Advisements, prepared by counsel for the MT Creditors, but not agreed to jointly by counsel for the Bankrupt, as being impermissible hearsay and having no probative value, being a non-agreed to by the Bankrupt summary, where the transcript of the 2022 Examination was best evidence of the content of the undertakings and refusals given.

MT Creditors- Proven Claims - Dolvin $2,584,568.54 and Toro/Franline - $1,440,872.00

[214] In the Notice of Opposition dated April 18, 2020, (the “MT Creditors Opposition”) filed jointly by Speedy, Dolvin, Franline and Downing, these creditors did not specify which s.173 Facts they were opposing under, rather making specific factual allegations.

[215] These factual allegations all appeared to be made towards proving a fact under s.173(1)(o) and breaches of the duties of the Bankrupt under s.158 of the BIA.

[216] These allegations read:

“TAKE NOTICE THAT Speedy Electrical Contractors Ltd ., Dolvin Mechanical Contractors Ltd ., Franline Investments Limited, and Downing Street Financial Inc. intend to oppose the discharge of the bankrupt on the following grounds:

1 Alan Saskin ("Saskin") failed to make discovery of and deliver all his property that is under his possession or control to the trustee, including the following:

(a) wine collection;

(b) art collection;

(c) bicycles; and

(d) jewelry.

2. Saskin failed to make or give all the assistance within his power to the trustee in making an inventory of his assets.

3. Saskin failed to deliver to the trustee, for cancellation, all credit cards issued to and in the possession or control of the bankrupt, including the following:

(a) Mastercard from RBC;

(b) US Dollar VISA Gold from RBC;

(c) Avion Visa from RBC;

(d) Visa card from CIBC; and

(e) American Express credit card.

4. Saskin failed deliver to the trustee all books, records, documents, writings and papers including, without restricting the generality of the foregoing, title papers, insurance policies and tax records and returns and copies thereof in any way relating to his property or affairs, including the following:

(a) personal credit card statements set out above;

(b) insurance policies for his art and jewelry collection; and

(c) financial disclosure with respect to Urbancorp Management Inc ., including bank statements, copies of cancelled cheques, financial statements, and tax returns.

5. Saskin failed to make disclosure to the trustee of all property disposed of by transfer at undervalue within the period beginning on the day that is five years before the date of the initial bankruptcy event and ending on the date of the bankruptcy (April 29, 2011), including the following:

(a) $1.5 million transferred to Saskin's wife, Doreen Saskin ("Doreen") on September 29, 2011;

(b) approximately $750,000 transferred to Doreen in the form of payments for improvements to the matrimonial home registered in her name;

(c) transfers to Doreen to pay Doreen's credit cards

(d) various transfers to Saskin's son, Evan Saskin, or for his benefit, in the total amount of $509,262.39;

(e) various transfers to Saskin's daughter, Jyll Saskin, or for her benefit, in the total amount of $37,174.14;

(f) $23,720.40 transferred to Jyll Saskin's husband, Phillip Gales, on December 12, 2014;

(g) various transfers to Andrew Saskin, or for his benefit, in the total amount of $81,952.61; and

(h) $150,000 transferred to Landmark Building Corp on March 6, 2014 for no consideration, which company is non-arms length with Saskin.

6. Saskin failed to make disclosure to the trustee of all property disposed of within the period beginning on the day that is one year before the date of the initial bankruptcy (April 29, 2015), including the following:

(a) transfers to Saskin's wife, Doreen Saskin; and

(b) transfers to Saskin's daughter, Jyll Saskin.

7 Saskin failed to aid to the utmost of his power in the realization of his property and the distribution of the proceeds among his creditors;

8. Saskin failed to examine the correctness of all proofs of claims filed

The Miller Thomson Creditors are requesting an Order refusing the Bankrupts Discharge.

[217] From my rulings I did not permit leading of evidence relating to proving issues that were before the Courts in the s.38 Proceeding, and the Israeli Proceedings permitted under the Myers, J. Lift Stay Order. In particular of the grounds of opposition set out in the MT Creditors’ Opposition, evidence was not led with respect to 1(a),(b) and (d), the specific cards listed at (a)-(e) of 3, but not 3 itself with respect to the Aubergine TD Credit Card, 4(b), 5, 6 and 8. A great deal of time was spent on the more generally described allegations of the alleged failure by the Bankrupt to fulfill duties.

[218] The evidence for the MT Creditors at the Discharge Hearing was the Affidavit of Brian Delgado the CFO of Toro Group of Companies (“Delgado”), and specifically involving the claim of Franline in the Delgado Affidavit sworn August 9, 2019 (the “Delgado Affidavit”) and the Affidavit of Camillo Debonaventura (“Camillo”) sworn January 6th, 2023 (the “Camillo Affidavit”) for Dolvin.

[219] In each case the affidavits attached the Proofs of Claim filed in the Bankruptcy and supporting documentation.

Dolvin Claim

[220] The basis of the claim of Dolvin in the Camillo Affidavit was a promissory note signed by the Bankrupt dated February 18, 2014 in the principle amount of $859,890 due April 30, 2015 and accruing interest and costs, for which the Bankrupt was jointly and severally liable with UTMI, as well as an additional promissory note signed by the Bankrupt dated May 1, 2014 in the amount of $1,181,684.04 due March 31, 2015 and accruing interest and costs, as well as an additional amount of $500,000 pursuant to a confirmation signed by the Bankrupt on July 3, 2014, for which the Bankrupt was solely liable (collectively the “Dolvin Promissory Notes”).

[221] In addition, the Affidavit of Jeremy Sacks sworn to support the Dolvin Proof of Claim attached to the Camillo Affidavit alleges that additional amounts of $3,230,756.81 are owing by the Bankrupt as Director as a breach of Trust under s.13 of the Construction Act, for work allegedly done by Dolvin on the Edge on Triangle Park, Westside and the Curve projects, as well as an additional legal costs claim of $70,000.

[222] The Trustee admitted a claim by Dolvin in the amount of $2,584,568.54, which appears to only be for the amounts owing under the Dolvin Promissory Notes, while there is a $3,885,663.96 claim by Dolvin which is listed as contingent on the Updated Claims Register which appears to be the s.13 Construction Act claim. Accordingly I have only considered the portions of the Dolvin Claim that have been proven under the Dolvin Promissory Notes.

Toro/Franline Claim

[223] The basis of the claim of Franline in the Delgado Affidavit was a promissory note signed by the Bankrupt dated May 1, 2014 in the principle amount of $899,074 due May 31, 2015 and accruing interest and costs, as well as an additional promissory noted signed by the Bankrupt dated August 27, 2014 in the amount of $557,500 due August 27, 2015 and accruing interest and costs, as well as legal costs of $10,000 and subtracting a $100,000 payment already received (collectively the “Franline Promissory Notes”). In each case the Bankrupt was solely liable under each of the Franline Promissory Notes.

[224] The Trustee admitted a claim by Franline in the amount of $1,440,872.00.

[225] In each case the Delgado Affidavit and Camillo Affidavit have the following identical wording:

Delgado Affidavit:

2. In early 2014, Saskin approached Toro and advised he required an injection of capital for some of his projects ( Edge and Westside) and asked if he could personally borrow funds. Alan confirmed to us at that time he was the sole owner of the Urbancorp Group of Companies. It was on that basis that we made the loan to him.

3. After the insolvency filing we were surprised to learn that Alan, despite his advice did not own all of the Urbancorp Group of Companies and a substantial portion of the company was owned by his wife Doreen and Family Trusts ( he lied to us). If Alan had told us the truth at the time we would have insisted that all owners including Doreen become borrowers of the funds.

Camillo Affidavit:

2. In early 2014, Saskin approached Dolvin and advised he required an injection of capital for some of his projects and asked if he could personally borrow funds. Alan confirmed to us at that time he was the sole owner of the Urbancorp Group of Companies. It was on that basis that we made the loan to him.

3. After the insolvency filing we were surprised to learn that Alan, despite his advice did not own all of the Urbancorp Group of Companies and a substantial portion of the company was owned by his wife Doreen and Family Trusts ( he lied to us). If Alan had told us the truth at the time we would have insisted that all owners including Doreen become borrowers of the funds.”

Position of the Bankrupt

[226] The Bankrupt did not specifically dispute that he signed the promissory notes that formed the basis of the Dolvin and Toro/Franline claims. The Bankrupt’s specific evidence in the Saskin Affidavit was that the promissory notes that he signed personally with Dolvin and Toro Franline were to replace prior equity investments in certain projects that Dolvin and Toro/Franline had invested in the Saskin Affidavit:

“32. One aspect of Urbancorp's pre-Israeli Debenture Bond-Loan business practices was its occasional agreements with the trades which worked on its developments. These trades were given the opportunity to invest in the specific project upon which they worked: they would advance funds in exchange for equity in the Urbancorp company building the project. None of these investments were secured or guaranteed, but the trades were typically willing to take the associated risk, as the returns could be very substantial.”

[227] The Bankrupt’s in-chief evidence and evidence on cross-examination, was that as part of the Israeli Bond financing, in order to reduce equity positions held by trades in projects, such as Dolvin and Franline, that the equity investments in projects needed to be reconstituted. As stated by the Bankrupt in paragraph 33 of Saskin Affidavit:

“33. The auditors suggested that Urbancorp debentures would be more attractive in the market if more equity was available, and that to achieve that end the trades' investments could be re-structured as personal loans to me. Eventually, I agreed with this suggestion.”

34. The relevant trades also agreed, and so these restructurings were performed, further to which I executed promissory notes in favour of certain trades, in exchange for their release of their equity investments in the relevant Urbancorp companies. (These are hereinafter the "Restructurings").

35. Around the same time, in some cases, Urbancorp received further advances from certain of the trades, in exchange for promissory notes I executed in my personal capacity. As with the Restructurings, these further advances were (generally) arranged as personal loans to me alone in order to preserve equity in the proposed debenture­ issuer Urbancorp companies, (on which more below.)

36. In total, I executed promissory notes in favour of trades with a face value of approximately $6 million (collectively, the "Notes"). I did not personally receive any of the funds derived from the advances evidenced by the Notes. Urbancorp companies received and used those funds.

37. With the benefit of hindsight, I realize that I made a mistake. I would have been better off without liability for $6 million I had not received. At the time, I had believed that the amounts owing to the trades could be satisfied from the fees I earned from Urbancorp's business. However, when many of the Urbancorp companies went into CCAA protection, I stopped earning fees, which meant that when the trades made demand for payment of the notes, I was unable to satisfy them.

[228] With respect to the allegations made in each of the Delgado and the Camillo Affidavits regarding the misleading statements allegedly made to them that allegedly induced them to have the Bankrupt sign the relevant promissory notes alone, the evidence of the Bankrupt was:

In relation to Tor/Franline

“ 41…I cannot say which project that was, because I did not personally negotiate or discuss the advances underlying either Franline Note with Franline's representatives. Such negotiations with trades were the responsibility of Tony Manocchio, formerly an Urbancorp executive. I would typically just review and then execute the agreements Mr. Manocchio had worked out. I certainly never told anyone from Franline or Toro that I was the sole owner of the Urbancorp. Group of Companies.”

In relation to Dolvin:

“43. As with the Franline Notes, this transaction was negotiated by Mr. Manocchio with the assistance of other Urbancorp employees, and I was not personally involved in the discussions.”

Cross-examination of Delgado and Camillo:

[229] On cross-examination neither Delgado nor Camillo could testify that they had been advised personally by the Bankrupt that “he was the sole owner of the Urbancorp Group of Companies. It was on that basis that we made the loan to him” as they both swore. It did not appear that either Delgado or Camillo had first-hand knowledge of the negotiations between the Bankrupt and/or Manocchio and the principals of Dolvin and Toro/Franline respectively, and Camillo only knew as a result of undeclared hearsay from his father.

[230] Consequently, neither Toro/Franline or Dolvin presented direct evidence that contradicts the evidence of the Bankrupt on this issue, or that they had been misled as they swore in paragraphs 2 and 4 of the respective Delgado Affidavit and the Camillo Affidavit.

[231] Accordingly the allegations made in paragraphs 2 and 4 of the Delgado Affidavit, and paragraphs 2 and 4 of the Camillo Affidavit have not been proven for the purposes of this Discharge Hearing.

[232] However, it is proven that the Bankrupt admittedly signed the promissory notes described in each of the Delgado Affidavit and the Camillo Affidavit, and that the Bankrupt did not have sufficient exigible assets to pay the amounts owing under those promissory notes when they became due, as the Bankrupt admitted in the Saskin Affidavit as:

“37…At the time, I had believed that the amounts owing to the trades could be satisfied from the fees I earned from Urbancorp's business. However, when many of the Urbancorp companies went into CCAA protection, I stopped earning fees, which meant that when the trades made demand for payment of the notes, I was unable to satisfy them.”

[233] That evidence is very relevant to the grounds of opposition raised by the Trustee under the provisions of s.173(1)(a), as supported by the other Opposing Creditors.

Standing of the MT Creditors:

[234] The Bankrupt on the initial day of Trial brought a motion that the MT Creditors not be granted standing on the basis under the jurisprudence cited in the Stampatori case, which was also raised in in relation to Alpa and the Israeli Representative. In the case of Dolvin and Toro/Franline, that reason alleged was that the words “…(he lied to us)…” in both the Camillo Affidavit and the Delgado Affidavit, gave rise to the possibility that the claims of both Dolvin and Toro/Franline were debts not discharged under s.178(1)(e) of the BIA.

[235] This argument was even more tenuous than with respect to the same issue raised with respect to the Israeli Representative’s claim and the argument made with respect to the Alpa s.13 Construction Act trust claim under s.178(1)(d) of the BIA.

[236] Both Dolvin and Franline have claims of debt based on promissory notes signed by the Bankrupt, and both Dolvin and Franline have had their claims with respect to those promissory notes accepted as proven by the Trustee.

[237] Whether or not Dolvin or Franline have some additional ability to pursue a s.178 debt determination in the future, there is no evidence they have done so to date. The mere statement “…(he lied to us)…” in their affidavits is not sufficient to disqualify them from having standing as creditors with proven claims to oppose the discharge, as set out in the jurisprudence I reviewed in dealing with the similar arguments made against Alpa.

[238] After taking into account all of the factors set out above, and in particular the general rule in Gariepy that “Ultimately, the court can and must control its own process”, and after examining all the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made, I granted standing to Dolvin and to Toro/Franline to appear and provide evidence and submissions on the Discharge Hearing of the Bankrupt, as creditors with proven claims.

[239] I also rejected the Bankrupt’s motion to strike the Camillo Affidavit on the basis that Camillo was unavailable initially in person as a witness in January due to an admitted scheduling error by counsel, and for technical reasons could not be linked in by Zoom. I held that any prejudice to the Bankrupt could be alleviated by rescheduling the testimony of Camillo to the summer by Zoom, and the Bankrupt was not actually prejudiced as counsel for the Bankrupt conducted a very effective cross-examination of Camillo by Zoom.

Indications of Animus by Bankrupt and attitude to creditors

[240] An indication of the Animus that was apparent between the Bankrupt and the principles behind the MT Creditors instructing Sherkin and Sachdeva was the following statement (January 18, p.147, at 25), during cross-examination by Sherkin:

“Q. Right, so while you’re bankrupt, while your creditors have zero, you spent $10,000 on a - what’d you buy, a 10-speed bike?

A. I just – you say my creditors have zero. I think you mean they are not able to claim on their money from me. They’re certainly wealthy individuals. They don’t have zero.”

[241] There was no evidence before the Court of the net-worth or other indications of wealth on the part of the principals of the MT Creditors. But I found that jab by the Bankrupt revelatory of his attitude towards the MT Creditors specifically, and toward these proceedings and his Bankruptcy generally, and egregious.

[242] The Bankrupt had at the time of the Discharge Hearing in excess of $15 Million in proven creditors, of which the MT Creditors, and in particular Dolvin, had proven claims approximately $2.6 million, Franline $1.44 Million and Speedy $1.284 million totaling approximately $5.3 million.

[243] The taxpayer, as represented by CRA, has a claim almost equal in size to Dolvin, and certainly cannot be classified as representing the interests of a few “wealthy individuals”.

[244] Approximately 2/3 of the proven creditors by value opposed the Bankrupt’s discharge. This is not the case of a few “wealthy individuals” vexatiously opposing the Bankrupt’s discharge.

[245] It also leads to the question in mind of the Court of why precisely it is that in excess of $15 million in personal proven creditors “…are not able to claim on their money from me”.

[246] Sherkin’s cross-examination style was certainly combative, and required constant intercession from counsel for the Bankrupt and the Court to keep the cross-examination focused on issues relevant to discharge, and within permissible rules of evidence relating to cross-examination on issues relevant to the Discharge Hearing.

[247] But that statement of the Bankrupt was a microcosm of the “can’t catch me” attitude from the Bankrupt that I observed throughout this Discharge Hearing, as well as the answers and evidence given by the Bankrupt, and the manner in which it was given at the preceding 2019 Examination and the 2022 Examination (as defined below).

The Israeli Representative – Proven Claim of $2,144,666.50

[248] The Israeli Representative opposed the discharge of the Bankrupt in the Notice of Opposition dated April 22, 2020 (the “Israeli Representative Opposition”) on the grounds in s.173(1)(a),(b),(c),(d),(e),(l) and (o), citing the specific statutory wording of those paragraphs.

[249] The proven claim in this Bankruptcy Estate that the Israeli Representative appears on at this Discharge Hearing is NOT the claim of the Israeli Representative through UCI against, the Bankrupt in the amount of $64,300,000 filed with the Trustee, which is a contingent unproven claim.

[250] This claim in the Bankruptcy actually filed on behalf of UCI by the Israeli Representative is subject to determination in the Israeli Courts in the Israeli Proceedings by reason of the Endorsement of Myers, J. in Proposal of Alan Saskin, Re, 2018 ONSC 550, (Exhibit 55) (the “Myers, J. Lift Stay Endorsement”) for the Order of Myers, J. (the “Myers, J. Lift Stay Order”). In the Myers, J. Lift Stay Endorsement, Myers, J. stated the following in respect of lifting the stay of proceedings in the (then) Proposal Proceedings of the Bankrupt to allow the Israeli Representative to:

“… lift the stay of proceedings under s. 69.1 of the BIA to allow him to continue in Israel two claims against Mr. Saskin.

[4] Mr. Gissin has brought one claim on behalf of Urbancorp Inc. It involves allegations that Mr. Saskin and parties related to him violated Israeli securities laws in relation to a bond issuance under which Urbancorp Inc. raised a substantial amount of money for the Urbancorp group of companies on Israeli financial markets not very long before much of the Urbancorp group filed for bankruptcy protection here. The other claim that Mr. Gissin has commenced against Mr. Saskin is made on behalf of Israeli bondholders. They make allegations of fraudulent misrepresentation, breaches of fiduciary duties, and similar claims in relation to the Israeli bond financing transaction. In that case, there are several separate defendants who were associated with the transaction including a Deloitte affiliate.

[5] Urbancorp Inc. has filed a proof of claim in this proposal proceeding seeking $96 million NIS (approximately $32.6 million CDN). At an initial meeting of creditors for this proposal, the Official Receiver declined to allow the Israeli functionary to vote on the claim because the claim is contingent upon relief being granted here or in Israel. If the claim is proven, the Israeli bondholders represented by Mr. Gissin will hold over 90% of the claims against Mr. Saskin. Mr. Gissin similarly represents potentially dominating creditors of some of the Urbancorp entities that are under CCAA protection as well.”

[251] The Myers, J. Endorsement states that the Israeli Representative:

“[19]…and the plaintiffs in the two Israeli actions will take no steps to enforce any order or judgment that they may obtain in Israel against Mr. Saskin without leave of this court. The leave granted, at this stage, is only to allow the litigation to determine the validity of and quantify the plaintiffs’ claims.”

[252] Myers