Re Angiulli, 2024 ONSC 6244

minicounsel

COURT FILE NO.: 31-2035452

DATE: September 26, 2024

(Ordinary Administration)

BEFORE: Associate Justice Ilchenko, Registrar in Bankruptcy

Bankrupt appears, unrepresented - formerly represented by Macdonald Allen at Weir & Foulds LLP (“Allen”)

David Filice, LIT (“Filice”) and Joshua Sampson LIT (“Sampson”) for Trustee in Bankruptcy of the Bankrupt, Fuller Landau Group Inc. (the “Trustee”), opposing discharge

Brandon Jaffe, counsel to the Trustee, not required to appear (“Jaffe”)

Opposing Creditor Stefano Angiulli not appearing although duly served (the “Opposing Creditor”), formerly represented by Arash Jazayeri (“Jazayeri”)

Superintendent of Bankruptcy not appearing

HEARD:

Initial short discharge hearing heard on July 21, 2022 and adjourned to a scheduling case conference on December 8, 2022

Trial of Bankrupt’s Discharge heard on April 11, 2024, with further materials to be filed by the Trustee by June 11, 2024

E N D O R S E M E N T

Overview

1The Bankrupt appears on her discharge hearing (the “Discharge Hearing” or the “Discharge”). She is no longer represented by counsel, formerly being represented by Allen at Weir & Foulds.

2The Opposing Creditor Stefano Angiulli is the brother of the Bankrupt. He was previously represented by Jazayeri but chose to discharge him and attempted to comply with my Orders regarding the filing of admissible materials using his own resources, which was a poor choice.

3The circumstances of the central conflict in the Proposal Proceedings, and this Bankruptcy, are summarized in the following allegations made in the Notice of Opposition of the Opposing Creditor filed on December 6, 2021 (the “Notice of Opposition”) when the Opposing Creditor was still represented by Jazayeri:

“2. Steve's claim in this bankruptcy is for $116,257.40 for a claim, which he submitted to the trustee and which was accepted by the trustee, arising from an estate dispute with the bankrupt.

The Bankrupt, Ms. Grace Dasberg and Mr. Angiulli are siblings and they are the only children of their mother who passed away on May 27, 2009. Their mother's only asset of significant monetary value was her home which she left to her three children in equal parts. The mortgage on her home had been long paid off.
Their mother did not have education and was not able to read. Just prior to passing, the Bankrupt had fooled their mother into signing a trust agreement which effectively gave control of the home to the Bankrupt. In 2007, it was discovered that the Bankrupt had taken out a $285,000 mortgage against their mother's home. After their mother passed away, the house sold for $260,000, and in effect Ms. Dasberg and Mr. Angiulli had received nothing of monetary value in inheritance from their mother's deceased estate.
Ms. Dasberg and Mr. Angiulli took the Bankrupt to court and were successful against the Bankrupt in the form of a settlement and this forms the basis of the debt currently owed to Mr. Angiulli by the Bankrupt's estate. It is noteworthy, that Ms. Dasberg had signed over her portion of her claim to Mr. Angiulli, as Mr. Angiulli had the wherewithal to pursue the Bankrupt.”

4Whatever the truth of these allegations made by the Opposing Creditor, as a judicial finding of fact was not made due to the approval of the settlement, this underlying family drama became the central issue driving the administration of this Bankruptcy Estate, resulting in egregious conduct and failure to fulfill duties under the Bankruptcy and Insolvency Act RSC 1985, B-3. (the "BIA") by the Bankrupt, her common law husband Keith G. McDowell (“McDowell”) as well as by the Opposing Creditor as creditor and inspector, and bringing all into conflict with the Trustee and its counsel Jaffe.

Prior Family Litigation

5The evidence underlying the prior litigation between the Bankrupt and the Opposing Creditor is attached to the admitted Proof of Claim of the Opposing Creditor (the “Opposing Creditor Proof of Claim”).

6In a Judgment by MacDougall, J. dated June 6^th, 2012 (the “Mother’s House Judgment”) made on the consent of the parties after a settlement made at a Pre-Trial Conference in Application 68199/10 in the estate of Cecilia Angiulli, the mother of Bankrupt (“Cecilia”), the Bankrupt consented to the Mother’s House Judgment to pay $70,000 to her brother the Opposing Creditor and to Grace Dasberg (“Grace”), her sister. The Mother’s House Judgment also provided a mechanism for the division of Cecilia’s jewellery and the transfer of some of Cecilia’s fur coats to Grace. The Application was otherwise dismissed on consent due to the issuance of the Mother’s House Judgment.

7The Bankrupt did not pay the amounts she consented to pay under the Mother’s House Judgement. The Opposing Creditor and Grace then brought enforcement proceedings, resulting in a further $46,257.40 in enforcement costs and interest.

8The Trustee admitted the Opposing Creditor’s claim at $116,257.40.

9The Opposing Creditor claimed that Grace had assigned her interest in the claim under the Mother’s House Judgment to him, but no assignment document is attached to the Opposing Creditor’s Proof of Claim. Grace played no role in this Discharge or the prior case conferences. The Trustee accepted the Opposing Creditor Proof of Claim, with the assignment, as proven by the Opposing Creditor. No party moved to expunge the Opposing Creditor Proof of Claim.

10In his Proof of Claim the Opposing Creditor claims that the claim is a s.178 debt but there is no evidence in the Mother’s House Judgment of any such declaration by MacDougall, J. As it appears that the Mother’s House Judgment resulted from a consensual settlement at a pre-trial conference, it is unlikely it was ever declared a s.178 debt, despite what the Opposing Creditor claimed.

11To the knowledge of the Court no creditors, the Trustee, or the other Inspector Plumb (as defined below) took issue with the priority of the Opposing Creditor’s Proof of Claim under the provisions of s.137 of the BIA which reads:

137 (1) A creditor who, at any time before the bankruptcy of a debtor, entered into a transaction with the debtor and who was not at arm’s length with the debtor at that time is not entitled to claim a dividend in respect of a claim arising out of that transaction until all claims of the other creditors have been satisfied, unless the transaction was in the opinion of the trustee or of the court a proper transaction.

on the basis that the Opposing Creditor was the brother of the Bankrupt and therefore under the provisions was a “related person” under the provisions of s.4(2)(a) and (3)(e) and the presumption under s.4(5) that related persons do not deal at arm’s length.

12Given the level of acrimony during the Bankruptcy, this is likely correct as the Opposing Creditor’s Proof of Claim is based on the Mother’s House Judgment that the Bankrupt consented to, then reneged on paying.

13However, as was revealed in the transcripts of the Examinations (as defined below), the answers to undertakings provided by and the Bankrupt, McDowell, and from the court materials filed in undisclosed litigation involving the Bankrupt, McDowell and the Opposing Creditor and for this Discharge, it appears that the Bankrupt, McDowell, the Opposing Creditor and Edward Lawrence Stone (the former lawyer and business partner of McDowell and the Bankrupt) (“Stone”) had a long business relationship. From evidence filed for this Discharge by the Trustee, the Bankrupt and the Opposing Creditor, it is clear that at least hundreds of thousands of dollars of payments flowed from Stone’s client Trust account for McDowell (the “Stone Trust Account”) to corporations controlled by the Opposing Creditor and McDowell, certain of which employed the Bankrupt.

14It appears from the expenses claimed in the Proof of Claim that the Opposing Creditor and Grace continued to attempt to enforce the Mother’s House Judgement against the Bankrupt throughout 2012 and 2013 and obtained and enforced Writs of Seizure and Sale of Land, apparently without much success. A garnishment of an RBC account apparently resulted in a collection of $1,160.84 which the Opposing Creditor properly deducted in his Proof of Claim.

15So, in short:

the Bankrupt consented to the Mother’s House Judgment in 2012 to pay her siblings $70,000;
in exchange her siblings had consented to the dismissal of the Application brought by them in 2010 against the Bankrupt in her personal capacity, and as power of attorney for Cecilia and as Estate Trustee of Cecilia’s Estate; and then
the Bankrupt reneged on paying amounts owing under the Judgment that she had consented to, then filed a Proposal in September 2015, and then become Bankrupt when the proposal was voted down by the Opposing Creditor.

Prior Bankruptcy Proposal Proceedings

16The Bankrupt is a first time Bankrupt.

17The Bankrupt filed a Division 1 Proposal (the “Proposal”) on or about September 10, 2015 (the “Proposal Proceedings”) under Part III of the BIA appointing Geary and Company Limited (practice now incorporated in Fuller Landau Group Inc.) as the Proposal Trustee (“Geary”).

18Under the terms of the Proposal the amount of $85,200 was proposed to be paid under the proposal over a 60-month period with monthly payments of $1420, that the Geary estimated would result in a 22% dividend to the Creditors.

19The total declared creditors of the Bankrupt on the Statement of Affairs in the Proposal sworn September 10, 2015 (the “Proposal Statement of Affairs”) totalled $387,860.50 unsecured and $346,090.00 secured.

20The Opposing Creditor was included on the Proposal Statement of Affairs as an unsecured creditor at $70,000.

21Other notable unrelated unsecured creditors were:

CIBC with debts listed of $63,815.72, $68,206.50, and $3220,

American Express with claims of $15,800 and $7250,

JP Morgan Chase Bank with $12,000,

MBNA for $13,500 and $1500,

National Bank with $20,500,

RBC with $17,400,

Scotiabank with $22,000 and

her prior counsel Walker Head with $3,732.85.

From the file numbers the majority of these debts appear to be credit cards, while the CIBC unsecured debts appear to be lines of credit and credit cards.

22There is another individual creditor disclosed, Boyd Woods, with a $40,000 claim, but it does not appear that this claim was ever proven.

23RBC was also the sole significant Secured Creditor with a declared claim of $336,740. The Proposal Statement of Affairs states “Real Property or Immovable - House - 50% pursuant to trust interest”

24The sole non-exempt asset with equity declared on the Proposal Statement of Affairs was a house – “50% pursuant to trust interest” with an estimated dollar value of $560,000, the RBC secured claim of $336,740, leaving $84,646 in equity.

25The reasons for financial difficulties section stated:

“14. Give reasons for your financial difficulties:

“Unable to manage debt related to medical expenses for autistic son combined with inability to pay liabilities as due and unwise use of consumer credit.”

26The Bankrupt did not list any dispositions of property prior to the Proposal.

27The full name of the spouse of the Bankrupt is stated as “Keith McDowell”. McDowell was never declared as a creditor by the Bankrupt and filed no Proof of Claim.

28In the Sworn Statement of Income and Expenses for the surplus income calculation the Bankrupt lists Zero income and Zero Expenses.

29With respect to all of the questions on the Sworn Statement of Affairs that deal with property transfers, payments to Creditors, property seizures or gifts to relatives in excess of $500 within the five-year period preceding the Proposal, the Bankrupt answered “NO” to all, which, as will be seen from these reasons, was manifestly and comprehensively incorrect.

30In the Trustees Report on the Proposal dated September 15, 2015 (the “Proposal Report”) the Geary states the following, based on information provided by the Bankrupt:

“A. Background

The debtor has had limited or no income for a period of time. Expenses are paid by common law spouse. She has had significant additional expenses related to the special needs of her son who suffers from autism. Also she has given financial support and access to credit to her brother.”

“Although not specified in the terms of the proposal, the proposal will

be funded by the debtor's common law spouse.”

“E. Identification & Evaluation of Assets

The debtor has, pursuant to a trust interest held by her common law spouse, a 50% interest in the family home. If subject to sale within a bankruptcy proceeding it appears that there may be a net realization to unsecured creditors of approximately $84,000 (this amount has allowed for payment of secured creditors, arrears of property taxes, validity of trust agreement and costs of disposition). The amounts are based upon an updated to current appraised report and solicitors letter of opinion regarding the trust agreement, both provided by the debtor's common law spouse.

Other assets have no equity or are not realizable.”

“Recommendations

In the event of a bankruptcy the realization to creditors could be approximately 21.5%.

Although this amount is only marginally less than the realization from this proposal it is subject to the following uncertainties;

That the family home may receive less in sale than in appraisal
That the debtor's common law spouse may challenge the Trust agreement. He states that 100% of the downpayment, mortgage payments and up keep have been paid by him.
That a court may find in favour of the common law spouse based upon the precedent Yale vs McMaster.

Because of the certainty provided by the proposal the Trustee recommends acceptance of this proposal.”

31A meeting of creditors to consider the Proposal was held on September 24, 2015 where the creditors present and voting rejected the proposal, resulting in a deemed Bankruptcy.

32It appears from the minutes of the Meeting of Creditors that American Express and Capital One voted in favour of the Proposal with votes of $41,400.04.

33The Opposing Creditor voted against with votes of $116,257.40 with his accepted proven claim. The Proposal failed.

The Bankruptcy Estate

34At the first meeting of creditors in the Bankruptcy the Opposing Creditor and Nicole Plumb from FCT – collection agents in this Bankruptcy for Amex Bank, Capital One, Aktiv Capital, and Rogers Communications (“Plumb”), were appointed the Inspectors of the Bankruptcy Estate.

35In the Dividend sheet date November 18, 2021 (the “Dividend Sheet”) appended to the Trustees Statement of Receipts and Disbursements dated November 18, 2021 (the “SRD”), at Appendix B to the Trustee’s Supplementary s.170 Report dated April 11, 2024 (the “2024 Supplementary Report”), the proven unsecured creditors total $347,286.02. The SRD was approved by both Inspectors, being the Opposing Creditor and Plumb, but has not been taxed by the Court to date.

36However, all of the Bills of Costs of Jaffe, totalling $128,886.75 have been approved by the Court. The reason for the high legal costs of the estate, over a 9 year period, brought on by the conduct of McDowell, the Bankrupt, and in part the Opposing Creditor, will be expanded on in these Reasons.

37Notable proven creditors in the Bankruptcy Estate were CIBC with a combined claim of $151,096.62 (43% of proven claims), the Opposing Creditor with $116,257.40 (33% of proven claims) with RBC, Scotiabank, Sears, Capital One, National Bank, RBC, Amex and Aktiv Capital all having credit card and line of credit claims of less than $20,000 and forming the other 24% of the claims.

38From the Dividend Sheet listing proven claims it appears the Bankrupt had obtained 11 different unsecured credit cards and lines of credit totalling proven unsecured credit obtained of $231,031.02, while claiming to be unemployed and having no income for 20 years, and having all of her expenses paid by McDowell in her initial Sworn Statement of Affairs and Sworn Statement of Income and Expenses.

39The Bankrupt also declared further unsecured debt to MBNA for two credit cards in total additional amount of credit obtained of $15,000, that was not proven.

40It appears that the Bankrupt obtained and utilized a total of 15 different sources of unsecured credit, while claiming to be unemployed, and having all her expenses paid by McDowell.

41The estimated final dividend to be paid in the estate in the SRD is $177,988.62, with net dividends after Levy totalling $169,089.09 being paid, or 48% of proven claims, AFTER payment of Trustee Fees, Legal Fees and expenses of administration over a 9 year period. As at the date of the SRD interim Dividends of $84,306.80 have been paid.

42This is far in excess of the 21.5% recovery that the creditors voting on the Proposal were advised would be the maximum net realization in a Bankruptcy, and the $85,000 or 21.9% offered in the Proposal.

43In the circumstances of the litigation and conduct of the Bankrupt, the Opposing Creditor and McDowell, and their confederates, this was an amazing result by the Trustee and Jaffe.

44To date the Opposing Creditor has received interim dividend payments to date of $56,604.23 and the SRD calculated a further interim dividend payable to the Opposing Creditor of $27,376.03, net of levy, if no further costs were to be incurred.

45Pursuant to the terms of certain minutes of settlement, the Trustee agreed to limit its fees to $7,833.75 for almost a decade of work, thus significantly boosting dividends to creditors.

46The only outstanding matter as at the time of the filing of the SRD in November of 2021 was the discharge of the Bankrupt.

47For the reasons set out below, the conduct of the Bankrupt and the conduct of the Opposing Creditor in scheduling the discharge hearing and not complying with the Scheduling Endorsements of the Court, delayed the hearing of the discharge from the initial date of July 21, 2022, to a Scheduling Case Conference on December 8, 2022, to a April 11, 2024 Discharge Hearing, which the Opposing Creditor then failed to attend.

48In the SRD the Trustee reports recoveries of $435,382.36, far in excess of the $84,646 in real property equity reported by the Bankrupt on the Statement of Affairs in the Proposal as her only substantive asset.

49The reasons for this 514% differential between reported assets and actual recoveries by the Trustee, and the acrimony and difficulty in the Administration of this Estate, is relevant to the Discharge of the Bankrupt.

50All underlined text in these reasons is emphasis added by me for these reasons.

51The 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

Section 170 Reports and Opposition by Geary

52The Trustee has filed for this discharge hearing the Trustee's Report on the Bankrupt's Application for Discharge (Subsection 170(1)), dated June 21, 2016 filed by Geary (the “Original s.170 Report”), the Supplementary Report dated July 4, 2022 (the “2022 Supplementary Report”) the Supplementary Report dated April 26, 2023 (the “2023 Supplementary Report”) and the Supplementary Report dated April 1, 2024 (the “2024 Supplementary Report”)(collectively, the “s.170 Reports”).

53On my Orders, after the hearing of the discharge, in order to complete the Court Record due to the non-attendance of the Opposing Creditor, the Trustee also filed as part of its s.170 Reports the backing documentation to those reports, including the transcripts of the s.163 Examinations of the Bankrupt and McDowell, the Proposal Report filed by Geary (the “Proposal Report”), Answers to Undertakings by McDowell and the Bankrupt as summarized by Jaffe in a letter to the Trustee dated August 22, 2018 (the “Answers to Undertakings”), the Opposing Creditor’s Proof of Claim and the SRD filed by the Trustee in this Estate, and approved by the Inspectors.

54In addition, the Trustee filed:

The Report of the Trustee dated February 14, 2017 (the “Hollywood Sale Approval Report”) dealing with the approval of the sale by the Trustee of a property at 3315 Hollywood Court Pickering (the “Hollywood Court Property”) for $720,000.
The Report of the Trustee dated October 23, 2020 (the “Nadia Settlement Approval Report”) dealing with the approval of the settlement and the sale of the Trustee’s interest in a property at 9 Nadia Court in Whitby (the “Nadia Court Property”) to McDowell for $65,000.

(Collectively the motions before the Commercial List that these Reports were filed for will be referred to as the “Approval Motions”)

55Collectively, I will refer to all those reports and all of the supporting information for those Reports provided by the Trustee to the Court on its instruction as the “Approval Reports” in these Reasons.

56In the Original s.170 Report Geary reported:

“6(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 labilities.

Bankrupt failed to perform the duties imposed under this act or to comply with any order of the court.”

“The bankrupt failed to perform the following duties:

Deliver all documents relating to his property or affairs
Give all the assistance within his power to the trustee in making an Inventory of his assets
Attend the first meeting of his creditors
Aid in the realization of his property and distribution of the proceeds Bankrupt failed to provide monthly Income and expense reports.

Ongoing review of possible undisclosed assets.”

And

“Bankrupt failed to attend both mandatory counselling sessions. “

And

“Trustee requires further Investigation of possible undisclosed assets.”

And

“Ongoing review of possible undisclosed assets.

Trustee Is awaiting payment regarding asset realization in respect to equity in real property.”

57At that point regarding the Surplus Income schedule, Geary reported:

“Amount bankrupt has agreed to pay monthly to repurchase assets …Equity In real property---$84,646.00”

58Geary opposed the Bankrupt’s discharge on the following grounds on June 21, 2016:

“There are unresolved issues regarding possible undisclosed assets.”

From the Original s.170 Report and the Opposition, it appears Geary was opposing on the basis of s.173(1)(a),(d),(j),(m), and (o).

59The Trustee in the 2024 Supplementary Report makes the following recommendation on Discharge:

“31. As a result of the failure by the Bankrupt to disclose the fact of being undischarged and obtaining credit of $1,000 or more (as detailed above in paragraphs 8 to 11), the Trustee would recommend a 6-month suspension or other appropriate length of time at the discretion of the Court.”

Realization by Trustee on Assets not disclosed by the Bankrupt

60The Nadia Court Settlement Approval Report stated the following with respect to the Bankrupt’s failure to disclose to the Trustee or Geary her interest in real property assets:

“3. As of the Date of Bankruptcy, the Debtor was the sole registered owner of property municipally known as 9 Nadia Court, Whitby, Ontario (the "Nadia Court Property").

As of the Date of Bankruptcy, the Debtor was also the sole registered owner of property municipally known as 3315 Hollywood Court, Pickering, Ontario (the "Hollywood Court Property").
As of the Date of Bankruptcy, the Debtor was also the registered owner of 1622 Central Street, Claremont, Ontario (the "Central Property").
The Debtor did not disclose her ownership of the Hollywood Court Property in her Statement of Affairs filed in connection with her proposal, or otherwise. The Trustee learned of the Debtor's interest in the Hollywood Court Property when, in December, 2017, it received an offer to purchase its interest in the Hollywood Court Property from 558367 Ontario Inc. ("55 Ontario") and 711053 Ontario Inc. ("71 Ontario").
The Trustee, 55 Ontario, and 71 Ontario litigated the entitlement of 55 Ontario and 71 Ontario's option to purchase the Hollywood Court Property. The parties, on consent, agreed to a sale of the Hollywood Court Property and to hold the proceeds of sale to the credit of their litigation. After the sale of the Hollywood Court Property, the Trustee, on consent of all parties, held the sum of $367,254.00 (the "Hollywood Court Proceeds").
The Trustee, 55 Ontario, and 71 Ontario agreed to settle their respective entitlement to the Hollywood Court Proceeds. The parties agreed that 55 Ontario and 71 Ontario would receive $115,000.00 from the Hollywood Court Proceeds. The Trustee received the balance of the funds, $252,254.00.”

61I will use the defined term “Central Property” in these reasons as defined in the Nadia Court Settlement Approval Report (collectively the Nadia Court Property, the Hollywood Court Property and the Central Property being the “Properties”). I will also use the defined terms 55 Ontario and 71 Ontario.

62The Trustee on the Approval Motions before the Commercial Court obtained a Sale Approval and Vesting Order for the Hollywood Court Property from Justice Wilton-Siegel on March 2, 2017 pending the settlement of entitlement to the proceeds between the Trustee and 71 Ontario Inc. and 55 Ontario Limited.

63As noted in the Hollywood Court Approval Report, the issue with the purported option claimed by 55 Ontario and 71 Ontario was the conduct of the Bankrupt, McDowell and of the principals of 55 Ontario and 71 Ontario.

64The Opposing Creditor alleged that the principals of 55 Ontario and 71 Ontario were confederates of McDowell and were interfering in the sale of the property by the Trustee at McDowell’s behest by claiming that they had an enforceable option:

“26. Mr. Hoban wrote Mr. Renz a letter dated January 19, 2017 wherein he takes the position that the Option does not create "an enforceable interest in land. Mr. Renz responded in his letter to Mr. Hoban dated January 20, 2017 wherein he alleges that the Debtor had "acknowledged in writing [that the Option] remained in force and had been exercised." Attached as Appendix "S" to this Report is a copy of Mr. Hoban's January 19ᵗʰ letter to Mr. Renz and Mr. Renz' responding letter of January 20ᵗʰ.

To date, Mr. Renz has not produced any written acknowledgment by the Debtor that the Option remains in force and has been exercised.
On or about January 30, 2017, the Trustee spoke with the Debtor to discuss this matter.

The Debtor told the Trustee that sometime in 2016, well after the failure of her Proposal, Richard Rondeau, a representative of the Vendors, visited her at her home and presented a handwritten document to her to sign. Mr. Rondeau said the document was backdated in order to make it effective. The Debtor signed the document but did not keep a copy.”

65After considerable effort on the part of the Geary and Jaffe, a settlement was entered into with 55 Ontario and 71 Ontario for $115,000 and the Bankrupt Estate received $252,254.00 from the sales proceeds, after the mortgages on the property were paid. The Trustee estimated that the legal fees alone on the property for the litigation with 71 Ontario and 55 Ontario were $85,339.

66The Trustee also settled with McDowell with respect to the Bankrupt’s interest in the Nadia Court Property, for payment of the sum of $65,000 to the Trustee, to release the Estate’s interest in the Nadia Court Property. The Minutes of Settlement were approved by the Order of Justice Pattillo on October 21, 2021.

67The value of the Trustee’s interest in the Nadia Court equity was calculated in taking into account the increase in value from 2015 at the time of the Bankruptcy and the time of the sale, the then current valuation of $780,000, the mortgage on the property of $337,500, claimed payments made by McDowell of the mortgage and other expenses from 2015-2019, as well as the legal chaos of the trust and other proprietary claims of McDowell and costs of further litigation.

68The Trustee’s reasoning was as follows at Exhibit C to that Report:

“4) Case law is supportive of valuation at current date. This position must be moderated by the possibility of Keith claiming 100% Interest in the subject properties. Although success is unlikely for Keith such a challenge would incur additional legal costs and thereby erode benefit to creditors. We therefore recommend a midpoint settlement of $64,931 say $65,000.

To avoid further litigation we recommend:

a) we accept Keith has a proper 50% claim to Nadia Court and Hollywood Court and

b) that we have target settlement amount to be paid by Keith of $64,931, say $65,000.

McDowell states that since 2015 through 2019 he has paid $76,744 towards mortgage, utilities, and house operating expenses.

We have adjusted the settlement recommendation by 50% ($38,372) to reflect his contribution to the equity of the bankrupt.”

69The Opposing Creditor opposed the approval of this settlement with McDowell, while the other inspector Plumb approved, necessitating the Trustee obtaining the Order from Patillo, J. approving the Settlement.

70Despite the approval of the Minutes of Settlement in 2021 by Patillo, J., and the Opposing Creditor receiving an interim dividend in the amount of almost $30,000, and despite being an inspector of the estate receiving a total possible dividend approaching $60,000, the Opposing Creditor attempted to file materials on this Discharge taking issue with the fees charged by Jaffe, and the conduct of Geary and the Trustee.

71This necessitated my review of the entirety of the administration in the context of this discharge hearing, given the allegations made against the Trustee, as well as to evaluate the causes of the difficulties, and the role played by the Bankrupt and McDowell in exacerbating the difficulties.

72From my review, this estate was extraordinarily difficult to administer, in part because of the conduct of the Bankrupt, McDowell and their confederates, which I will detail, and in part because of the conduct of the Opposing Creditor.

73In the SRD that was approved by the Opposing Creditor as Inspector, the Trustee had limited its fees to $7833.75 in fees for (at that point) 6 years of work, and Jaffe had approved by the Court 4 Bills of Costs totaling $119,815.55 for very difficult litigation involving properties that were not particularly valuable on an individual basis, once multiple mortgages granted by the Bankrupt were taken into account that soaked up the equity.

74I asked the Trustee and Jaffe to detail for me the additional costs of the conduct of the Opposing Creditor in his behavior and that amount was estimated by the Trustee as $14,016 of additional legal costs.

75In these circumstances, having been one of the Judges that reviewed and approved the Bills of Costs of Jaffe, and having reviewed the terms of the settlements and the rationale for those settlements, I cannot disagree with the decisions of Jaffe, Geary and the Trustee to settle these claims to the Bankrupt’s equity in the Properties.

76Beyond the issues of beneficial ownership, it appears that McDowell did provide some proof to the Trustee that he did pay some carrying costs of the Properties, making the possible resulting trust claims a significant impediment to realization by the Trustee on the equity.

77If the litigation continued, it would be likely that, notwithstanding some of the legally ridiculous positions being taken by McDowell, 55 Ontario and 71 Ontario, that any incremental benefit in recoveries would have been consumed by the legal costs of obtaining it.

78The decisions by Geary and the Trustee, with the assistance of Jaffe, resulted in an approximate 50% net dividend to creditors AFTER payment of administration costs in very difficult circumstances, and I cannot take issue with their decisions.

79This is not to forgive the conduct of the Bankrupt and McDowell created the conditions under which that legal and practical decision had to be made by the Trustee with the assistance of Jaffe.

80The July 2022 Report states that the Bankrupt “fully cooperated” with the Geary and the Trustee in the realization on the Hollywood Court Property, but I cannot agree. The evidence in the Approval Reports on the sale and settlement of the equity of these properties, as well as the testimony of the Bankrupt and McDowell in their s.163 Examinations, indicates the opposite.

81If the Bankrupt had not entered into the various legally dubious “Trust” and “Option” agreements at the behest of, and drafted by, McDowell and the principals of 55 Ontario and 71 Ontario, that clogged title to the Properties and necessitated the legal costs of achieving the settlements, there was the possibility all the proven unsecured creditors in this Bankruptcy would have been paid in full.

The Properties

82On materials filed by the Trustee, answers given by the Bankrupt at her s.163 Examination by Jaffe (the “Bankrupt’s Examination”) and the s.163 Examination of McDowell (the “McDowell Examination”) both held on June 11, 2018 (collectively, the “Examinations”), the answers to some of the undertakings given by the Bankrupt and McDowell at the Examinations, as well as property searches and registered instruments submitted by the Opposing Creditor, in the materials he attempted to file for the discharge, which I will deal with subsequently, the following picture emerges of the complex dealings with real property by the Bankrupt and McDowell prior to the Bankruptcy.

The Properties

Property	Date of Purchase	Date of Sale	Consideration	Mortgage	Settled Equity Amount paid to Trustee
9 Nadia Court, Whitby	Feb 4, 2005 - By Bankrupt from vendor 1466098 Ontario Ltd Feb 15, 2005 Transferred to Bankrupt and McDowell Feb 20, 2005 – Trust agreement and right of first refusal by Bankrupt and McDowell giving 50% interest to Angela and McDowell, and right of first refusal to McDowell to buy Bankrupt’s interest February 25, 2006 – transfer of McDowell’s interest to Bankrupt alone with 100%	Owned at Bankruptcy	$350,000 $203,366.00 paid on closing, allegedly by McDowell from monies received for his services to “The Gates of Whitby” development	$150,000 VTB on purchase to vendor 1466098 Ontario Ltd. June 16, 2006 Mortgage to RBC of $450,000 to pay out VTB June 29, 2007 – McDowell allegedly provides $337,500 to the Bankrupt to pay to RBC- allegedly paying out mortgage CIBC registered writ against property under judgement against the Bankrupt on September 17, 2013 and when unsatisfied scheduled a Sherriff’s Sale for September 25, 2015, which was stopped by Geary after filing of Proposal	Trustee realized $65,000 in settlement approved by Court on Motion opposed by the Opposing Creditor
3315 Hollywood Court, Pickering	June 22, 2006 – Purchase by Bankrupt from 711053 Ontario Inc. and 562503 Ontario Limited June 16, 2006 - Trust agreement and right of first refusal by Bankrupt and McDowell giving 50% interest to Angela and McDowell, and right of first refusal to McDowell to buy Bankrupt’s interest Vendors took position that they too had a competing right of first refusal that they registered 7 years later on June 17, 2013 but that had an explicit option expiry date of June 16, 2018	Owned at Bankruptcy	$280,000	Allegedly Financed with mortgage advance from either the VTB or the RBC on Nadia Court Property But- Bankrupt also granted charges to 740690 Ontario Limited on April 22nd, 2010 in amount of $150,000 Then another charge to 558367 Ontario Inc. in amount of $250,000 on March 22, 2012	Sold by Trustee after litigation and proceeds of $252,254.93 recovered after payment of settlement amount out of net sale proceeds with vendors of alleged “right of first refusal”
23 Mansbridge Crescent Ajax	June 7, 2005 by Bankrupt from Medallion Developments (Castlefields) Limited All prior to transfer purchase documents signed by McDowell, or by McDowell (in Trust) but title taken by Bankrupt alone	Sold by Bankrupt on September 19, 2008	$219,714.30 Allegedly Down payment of $200,000 paid by McDowell provided to “Gates of Whitby” on January 21, 2005 and that McDowell alleges he assisted Medallion with the development of the property	CIBC Mortgage - $100,000	None- sold before Bankruptcy
1622 Central Street Claremont	August 22, 2008 by Bankrupt from John and Alana Barker	Property transferred on February 2, 2012 to McDowell’s daughter Lindsay McDowell	Original consideration unknown Transferred for consideration of $0.00 –	RBC Mortgage on August 22, 2008 – discharged on March 9, 2012 558367 Ontario Inc. in amount of $100,000 on May 17, 2011 discharged on March 9, 2012 Mortgage obtained by Lindsay for $245,000 on February 29, 2012 but consideration for discharge of both prior mortgages not declared on Land Transfer Tax Affidavit despite being assumed by Lindsay until discharge on March 9, 2012	Not Settled
712 Gibbons Street Oshawa (the “Gibbons Property”) Parents Home Subject Property of Mother’s House Judgement	December 6, 1996 – transfer to Bankrupt	October 1, 2009 Transfer to John Phyllis and Charles Palmer		Charge to BNS on December 12, 1997 Then to RBC on November 17, 2006 for $285,000, discharging BNS charge	None- sold before Bankruptcy

83On the Proposal Statement of Affairs, and in the Proposal Report, only the Nadia Court Property was properly disclosed to the Trustee and the Creditors, at a claimed value of $550,000 with secured claims declared of $336,740 and realizable equity of $84,646 and a claim that ownership was limited to “50% pursuant to trust interest”. Only RBC was revealed as a secured creditor on the Proposal Statement of Affairs.

84As noted, the Bankrupt answered “No” to the questions “Have you sold or disposed of any property” and “Made any gifts to relatives or others in excess of $500” within 5 years of the date of the filing the Proposal September 24, 2015.

85In the Bankrupt’s Examination the Bankrupt blamed Geary for any alleged non-disclosure, claiming to have properly disclosed all her interests in the Properties.

86On this issue, the initial intake form containing Geary’s notes from the initial consultation with the Bankrupt, at Exhibit B to the 2023 Supplementary Report the only information provided by the Bankrupt relating to the Hollywood Court Property was:

“Vacant Land, Pickering ON, repossessed by vendor pursuant to agreement of purchase and sale”

And the Central Property:

“House, Central St. Pickering, transferred to daughter of spouse pursuant to Trust agreement, no consideration.”

And the Nadia Court Property:

“50% pursuant to trust interest (secured) 545,000”

And with respect to Household income and expenses:

“spouse declines to disclose” income

“household and living expenses paid by spouse”

87None of those assertions made by the Bankrupt to Geary turned out to be either legally or factually correct or complete.

88With respect to her income and expenses, in an Affidavit sworn by the Bankrupt on April 19^th, 2023 (the “Bankrupt’s 2023 Affidavit”) that was attached to the 2023 Supplementary Report, the Bankrupt claims that her only income is $231.60 monthly from her CPP and McDowell’s $1793.63 from CPP and OAS totaling monthly family income of $2,025 with expenses at $5372.

89The Bankrupt stated that the deficit is being made up as follows in the Bankrupt’s 2023 Affidavit:

“The deficit between our household income and expenses is currently being funded by my common law spouse who has had to and will continue to request repayment of previous loans/advances he made to his friends and family over the years.”

90However, the Trustee states in the [2024] Supplementary Report:

“15. While the April 2023 I&E Affidavit includes three months of her own bank account statements, no documentation or account statements from her common law spouse has been provided to the Trustee to confirm the source or identity of the friend or family member who have repaid loans/advances to the common law spouse to bridge the recurring monthly deficit.”

91The Bankrupt also asserted that she had not worked for decades and had no income whatsoever and listed “0” as her total monthly income and “0” as her family expenses on her Statement of Income and Expenses sworn as part of the Statement of Affairs.

92By my count from these materials filed in Court, the Bankrupt purchased properties worth at least $1 Million in the 10 years prior to bankruptcy, mostly in the years 2005-2006, applied for and granted, and refinanced at least 9 different mortgages over the Properties she owned, totaling mortgage advances of at least $1,485,000, all the while claiming to earn no income. She also obtaining $250,000 of unsecured consumer debt and owed the Opposing Creditor under the Mother’s House Judgment another $116,257.40 at the date of Bankruptcy on a Consent Court Judgment with writs, as a result of her selling the Gibbons Street Property in 2009.

93Some of these mortgages were granted to CIBC, BNS, and RBC, all financial institutions with strenuous documentation requirements for Mortgage Applications. It does not appear that any party guaranteed these mortgages to these institutions. How does an unemployed borrower like the Bankrupt truthfully obtain financing from these Schedule 1 Banks with no ability to prove they could pay the monthly payments?

94What did the Bankrupt provide in the way of financial information to RBC, BNS, CIBC and the assorted private lenders that would induce them to provide mortgage financing to a Mortgagor with no income and many debts?

95In the Examinations, the Bankrupt and McDowell testified that all of the money for all of these transactions came from McDowell, which directly contradicts all of the information initially provided to the Trustee. The Bankrupt and McDowell in their testimony contradicted each other, and sometimes themselves in the Examinations, and as well as in the materials that the Bankrupt filed for this Discharge, and in court materials she and McDowell filed in other undisclosed Court proceedings.

The CIBC Action against Bankrupt and Sheriffs Sale of Nadia Court Property

96It should be noted that CIBC registered a writ against the Nadia Court Property under a judgement against the Bankrupt on September 17, 2013, presumably in action CV-12-4557 (the “CIBC Action”) reported on the Proposal Statement of Affairs in the amount of $63,815.72.

97When the writ went unsatisfied, CIBC scheduled a Sherriff’s Sale for September 25, 2015, 15 days after the Proposal was filed, which was stopped by Geary, after allegedly being alerted by the Opposing Creditor.

98It should be noted this enforcement against the Nadia Court Property by CIBC was occurring at the exact same time that the Bankrupt was offering the Proposal to creditors which was premised on the equity in the same Nadia Court Property claimed to be the Bankrupt’s sole realizable asset. While the Durham Sherriff was scheduled to sell that same property, thus extinguishing the Bankrupt’s (and allegedly McDowell’s) equity, 2 weeks after the Proposal was filed.

99Nowhere in the notes by Geary of the July 14 initial meeting at Exhibit B to the 2023 Supplementary Report was there any mention or warning by the Bankrupt to Geary that the CIBC had scheduled a Sherriff’s Sale of the Nadia Court Property. The only mention is in the section:

“has any creditor commenced Court action against you – if yes details

To which the Bankrupt answered:

“Stefano Angiulli, CIBC”.

100The total proven claims of CIBC in the Bankruptcy Estate are $151,096.72 on three unsecured lines of credit and a credit card.

101I have set out the details of the CIBC Action below, in the same section as details of all of the other litigation that the Court could locate that McDowell and the Bankrupt failed to provide information on, in breach of the Bankrupt’s duties, and McDowell’s specific undertaking given at the McDowell Examination.

RBC Action against Bankrupt:

RBC Action against Bankrupt

102In addition, at the time of the Bankruptcy, RBC had also obtained Judgment against the Bankrupt on December 3rd 2012 in an action in Toronto commenced earlier in 2012 in the amount of $17,304.84 and interest at 19.99% from December 2012 where RBC through its counsel Lee Bowden Nightingale registered Writs of Seizure and Sale against the Bankrupt on December 18, 2012 (the “RBC Action”)

103It is unclear whether the Bankrupt was aware that this RBC Action had been commenced by RBC when she transferred title to the Central Property in February 2012, and granted mortgages on the Hollywood Court Property in 2012, prior to the RBC writ coming into force in December of 2012.

The “Trust Agreements”

104As only the Bankrupt was on title on most of the Properties, were these financial institutions advised of the alleged Trust Agreements granted by the Bankrupt in favour of McDowell and Lindsey that encumbered the equity to certain of the Properties? There is no indication in the documentation that I have seen that McDowell signed any guarantee of these mortgages on the Properties, or that it was ever disclosed to these financial institutions that he had an alleged beneficial interest in these properties.

105Did the Bankrupt claim the Principal Residence Exemption for the profit on any of the properties that she sold, or properly report the capital gain on those year’s tax returns?

106The reality is that with respect to the Properties where the Trustee settled the purchase of the equity with McDowell, it would not have been possible for McDowell to buy and finance with a conventional mortgage because of his admitted (corroborated by the Bankrupt) “bad credit rating” or less subtly, on the evidence before this Court, multiple judgments, writs of execution and guarantee liabilities that McDowell was seeking to avoid, with the assistance of the Bankrupt, and which none of McDowell, the Bankrupt or the Opposing Creditor saw fit to disclose to the Trustee or this Court.

107Even without the additional issue of there having been writs issued against McDowell in at least one lawsuit (discussed below), which would have made McDowell owning and trading in real estate problematic, the Bankrupt was essential to these schemes.

108The Bankrupt entering into the nonsensical “trust” agreements with McDowell on each property effectively meant that the creditors of McDowell, by stepping into his shoes, would have had a claim to that Trust interest, had they known about it. The granting of the “Trust” interest to McDowell but also created a claim against the property and McDowell by her own creditors, and by the Trustee, to set aside the granting of the Trust interest.

109I also note that if these “trust” transactions been properly reported to CRA, then it is also likely that significant tax liability for McDowell, the Bankrupt and Lindsay could have been incurred.

110In the Notices of Assessment for the Bankrupt filed by the Trustee at Tab H to the 2023 Supplementary Report, the Bankrupt reported:

Year	Income Declared
2011	219.00
2012	23.00
2013	0
2014	0
2015	missing
2016	360
2017	missing
2018	0
2019	0
2020	0
2021	1578

111It appears clear that the Land Transfer Tax Affidavit to the transfer from the Bankrupt to Lindsay of the Central Property was also improperly sworn by the Bankrupt, given that from the registrations on the Abstract of Title, Lindsay obtained title to the Central Property subject to existing mortgages and that the Effort Trust mortgage was only obtained and the existing mortgages were paid out a month after closing, making that Affidavit false, as it did not disclose the mortgage assumption as consideration.

112In the July 2022 Report the Trustee reports, based on the information the Trustee had available at the time:

“7. The bankrupt has lived in a common law relationship with her spouse since 1991 and has a (18) year old son and resides with them in a house municipally known as 9 Nadia Court in Whitby Ontario (the "Nadia Court Property"). The bankrupt is currently unemployed and receiving a small monthly amount through CPP and the child tax benefit. The bankrupt has been unemployed for the last fifteen (15) to seventeen (17) years due to a need to care for her son who has been diagnosed with autism. Prior to her unemployment, the bankrupt worked as a site supervisor in a construction site for four (4) years and earned an estimated gross amount of $40,000 in the last year of her employment. Throughout their common law relationship, the bankrupt's spouse has been the primary wage earner. The Trustee has been recently advised that the bankrupt's spouse suffered a stroke in September 2021, which has negatively impacted their household income as he is no longer able to work.”

113As will be seen from:

a) the testimony of the Bankrupt and McDowell at their s.163 Examinations, as well as

b) the Court records not available to the Trustee due to McDowell’s failure to answer his undertakings from those Examinations,

the above statement in the 2022 Report, based on the information provided by the Bankrupt, is incomplete, and aspects of the information provided to the Trustee by the Bankrupt and McDowell are demonstrably false and contradicted by the Court record, pleadings and affidavits filed by the Bankrupt and McDowell in prior Court proceedings in Toronto, Peel and Durham Regions, that that the Bankrupt and McDowell failed to disclose in answers to the undertakings they gave at the Examinations.

Opposition by Opposing Creditor

114The Opposing Creditor opposed the Discharge of the Bankrupt, while represented by Jazayeri by filing an opposition on December 6, 2021 (the “Opposition”). The Opposition does not cite specific s.173 Facts.

115Given the centrality that it plays within the administration of the estate, and the combination of inside information and hatred of his sister it displays, I will set it out in its entirety:

“1. The creditor, Stefano Angiulli (hereinafter "Mr. Angiulli"), and the bankrupt, Angela Angiulli (hereinafter "Bankrupt") are siblings.

Steve's claim in this bankruptcy is for $116,257.40 for a claim, which he submitted to the trustee and which was accepted by the trustee, arising from an estate dispute with the bankrupt.
The Bankrupt, Ms. Grace Dasberg and Mr. Angiulli are siblings and they are the only children of their mother who passed away on May 27, 2009. Their mother's only asset of significant monetary value was her home which she left to her three children in equal parts. The mortgage on her home had been long paid off.
Their mother did not have education and was not able to read. Just prior to passing, the Bankrupt had fooled their mother into signing a trust agreement which effectively gave control of the home to the Bankrupt. In 2007, it was discovered that the Bankrupt had taken out a $285,000 mortgage against their mother's home. After their mother passed away, the house sold for $260,000, and in effect Ms. Dasberg and Mr. Angiulli had received nothing of monetary value in inheritance from their mother's deceased estate.
Ms. Dasberg and Mr. Angiulli took the Bankrupt to court and were successful against the Bankrupt in the form of a settlement and this forms the basis of the debt currently owed to Mr. Angiulli by the Bankrupt's estate. It is noteworthy, that Ms. Dasberg had signed over her portion of her claim to Mr. Angiulli, as Mr. Angiulli had the wherewithal to pursue the Bankrupt.
It is noteworthy, that the Bankrupt did not pay her own lawyers, Walker Head Lawyers, in full in the dispute with her siblings, as they also remain creditors of her bankrupt estate.
On or about September 10, 2015, the Bankrupt filed a proposal pursuant to the Bankruptcy and Insolvency Act ("BIA").
On September 24, 2015 the creditors rejected the Bankrupt's Proposal and the Bankrupt was made bankrupt.
At the time of her proposal, however, the Bankrupt had lied on sworn statements as to her assets. As per the Report of the Trustee dated October 23, 2020, the Bankrupt did not disclose her ownership of the property at 3315 Hollywood Court, Pickering, Ontario (the "Hollywood Court Property").
At the Date of bankruptcy, the Bankrupt was residing at 9 Nadia Court, Whitby, Ontario (the "Nadia Court Property").
The Bankrupt was also the registered owner of a third property at 1622 Central Street, Claremont, Ontario (the "Central Property") which was also not disclosed to the Trustee.
The Hollywood Court Property was uncovered by the Trustee through Mr. Angiulli's efforts.
The Bankrupt's Proposal clearly hid assets which would have been distributed the creditors. According to the statement of affairs the Bankrupt had $84,646 in net realizable assets (this was based on only a 50% share for the Bankrupt and not 100%) and the Trustee recovered $252,254.00 from the Hollywood Court Property, which was not even the Bankrupt's main residence. Together the Bankrupt's assets where much closer to her stated unsecured debts, than she put forward. Moreover, she had an income and could have taken care of her debts as they became due.
She, however, chose to proceed with a falsified proposal instead to take advantage of the insolvency regime designed to help debtors in good faith to rehabilitate.
The Bankrupt's common law partner of over 30 years and business partner is Mr.Keith McDowell ("Mr. McDowell").
The Trustee and Mr. McDowell have entered into a settlement agreement on September 22, 2020 (the "Minutes of Settlement") that was approved by the court settling a claim of Mr. McDowell based on alleged "Trust Agreements" dated February 201112, 005 and June 16ᵗʰ, 2006 (the "Trust Agreements").
The Trustee entered into the Minutes of Settlement in order to avoid costly litigation on the basis of commercial reasonableness of entering into that agreement and the approval by the court was an approval of the minutes of settlement and not approval of the Trust Agreements.
These Trust Agreements are forgeries and a continuation of the Bankrupt and Mr.McDowell's lies and deception.
Ms. Angiulli is not a good faith bankrupt and is taking advantage of the bankruptcy regime.
Ms. Angiulli has abused the process.
Ms. Angiulli has misrepresented her income and expenses, assets and liabilities.
Ms. Angiulli declared bankruptcy in order to avoid making payment on a judgment.
Ms. Angiulli has omitted to keep such books of account as are usual and proper in the business carried on by the her.
Ms. Angiulli brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of her business affairs.
Ms. Angiulli has put the Mr. Angiulli and Walker Head Lawyers to unnecessary expense by a frivolous or vexatious defence to any action properly brought against the her.
Ms. Angiulli has on any previous occasion been bankrupt or made a proposal to creditors.
Ms. Angiulli has committed fraud or breach of trust on the creditors.
Ms. Angiulli has been living beyond her means prior to bankruptcy and continues to do so by defrauding others.
Ms. Angiulli has represented that her assets are not of a value equal to 50% of her unsecured liabilities.
Ms. Angiulli ought to have been paying surplus income to the Trustee. She has access surplus income available, to pay out her bankrupt Estate in full. She also has the ability to increase her income significantly. She overstates her expenses.
Ms. Angiulli, could have made a viable proposal, or a reasonable payment arrangement, but instead chose to declare bankruptcy.
Given the foregoing, Mr. Angiulli requests the imposition of a condition of discharge that the bankrupt pay to the Trustee substantially all of proven claims, plus his costs of this discharge proceeding.

116In my scheduling endorsements of July 21, 2022, December 8, 2022 and April 11, 2024 (collectively the “Scheduling Endorsements”) I gave the Trustee, the Opposing Creditor and the Bankrupt opportunities to file proper materials to remedy the issues with the materials filed by the Opposing Creditor that I had initially raised when this matter appeared before me first on a “Long Discharge” hearing on July 21, 2022 scheduled for 20 Minutes:

“This matter was scheduled for 20 Minutes. The Opposing Creditor wished to adjourn this discharge to be heard for “at least 6 hours”.

The Opposing Creditor, the Brother of the Bankrupt, prepared his own opposition materials, including a 9 page Notice of Opposition that does not meet the requirements of s.170(7) nor BAIR 118, a purported factum that in no way meets the definition of a Factum under the Rules of Civil Procedure and a 363 page Affidavit containing 42 exhibits, not one of which is properly commissioned, and therefore not admissible as evidence.

According to the Affidavits of Service filed, the Notice of Opposition was served on July 12, 2022, the Affidavit on July 14, 2022, and the Factum on July 18, 2022. EACH BY REGULAR LETTER MAIL. FROM FLORIDA

Therefore none of these documents were properly served in accordance with the provisions of BAIR 6. I could have struck all of them from the record on that basis alone, and proceeded with the discharge.

The Factum is not a Factum but a series of grievances, which grievances are also common to the Notice of Opposition that does not concisely state the specific grounds of opposition under s.173 and therefore not a valid opposition, and was also not properly filed with the Court.

The Affidavit is prolix, and has many statements that could be struck as scandalous, or as non-expert opinion, or speculation, or hearsay or are accusations relating to the conduct of the Bankrupt, her family and the Trustee that appear to be wholly unsubstantiated.

There are mentions of recordings made of the Trustee Mr. Geary by the Opposing Creditor that may have serious implications for the Opposing Creditor outside of these Bankruptcy Proceedings, particularly if that recording occurred across the Canada-US Border.

In the nature of vexatious proceedings, there appear to be many statements that relate to matters that have already been decided by the Court, and in particular by the Order of Pattillo, J. dated October 21, 2021 implementing the settlement made by the Trustee relating to the purchase of the Bankrupt’s interest in the Nadia Court and Hollywood Court properties.

The Opposing Creditor as inspector did not agree with that settlement but the Court approved the settlement and that Order was apparently not appealed.

More importantly, the materials filed do not properly address, in any way, the actual purpose of a discharge hearing, to determine whether the Bankrupt can be discharged absolutely, or if a s.173 Fact is proven, some other form of discharge Order.”

117I imposed a schedule for the exchange of materials for the Trustee, Jazayeri, and Allen the counsel who at that time was representing the Bankrupt.

118The Opposing Creditor, making the decision to discharge his lawyer and represent himself, did not comply with my July 21, 2022 scheduling endorsement and at a Case Conference on December 8, 2022 I found as follows:

“As I feared, the Trustee has run into trouble and requires a Case Conference.

The Opposing Creditor, having discharged his lawyer, has, again, prepared his own

opposition materials, re-serving substantially the same Notice of Opposition that I found

last July did not meet the requirements of s.170(7) nor BAIR 11.

He also served another 366 page Affidavit, one part sworn on August 10, 2022 and the

second part sworn December 1st, 2022 (in violation of my scheduling endorsement)

containing collectively 48 exhibits, and again not one of which is properly

commissioned, and therefore not admissible as evidence.

As pointed out in my prior endorsement, a Notice of Opposition that does not concisely

state the specific grounds of opposition under s.173 is therefore not a valid opposition,

and was also not properly filed with the Court.

Once again, both parts of the Affidavit are prolix, has many statements that could be

struck as scandalous, or as non-expert opinion, or speculation, or hearsay or are

accusations relating to the conduct of the Bankrupt, her family and the Trustee that

appear to be wholly unsubstantiated.

There is, once again an attempt to enter into evidence recordings made of the Trustee

Mr. Geary by the Opposing Creditor that I already warned him may have serious

implications for the Opposing Creditor outside of these Bankruptcy Proceedings.

In the nature of vexatious proceedings, there appear to be many statements that relate

to matters that have already been decided by the Court, and in particular by the Order

of Pattillo, J. dated October 21, 2021 implementing the settlement made by the Trustee

relating to the purchase of the Bankrupt’s interest in the Nadia Court and Hollywood

Court properties.

The Opposing Creditor as inspector did not agree with that settlement but the Court

approved the settlement and that Order was apparently not appealed. It appears from

the Bills of Costs of the Estate Solicitor Mr. Jaffe that the Opposing Creditor attached to

his second “affidavit” that he, as an inspector of the Bankruptcy Estate, without

resigning, opposed these approvals with counsel. How he remains an inspector of the

Estate is a mystery. Why costs were not awarded against him is a mystery.

More importantly, the materials filed yet again do not properly address, in any way, the

actual purpose of a discharge hearing, to determine whether the Bankrupt can be

discharged absolutely, or if a s.173 Fact is proven, some other form of discharge Order.”

119As a result of the violation of my prior endorsement, and because of the deficiencies of the materials as described in my December 8, 2022 Endorsement, I held that the Opposing Creditor would not have another opportunity to file admissible materials:

” I have given the Opposing Creditor 6 months to provide proper admissible materials. He has chosen not to do so. He will not have another chance to further delay this Discharge.

I cautioned everyone at the prior hearing and this hearing, that the Trustee is not a Charity. If the accusations being made are found by me to be unfounded, frivolous or vexatious, this Court has the discretion award costs against opposing creditors for unnecessarily increasing the costs of the Bankruptcy Trustee and the Estate through their oppositions. It appears that the Opposing Creditor has already done so in his failed oppositions to the Transactions approved by the Court. While an inspector with fiduciary obligations owing to the Bankruptcy Estate.

I, again, advised the Opposing Creditor that if his allegations are found to be unsubstantiated at the Discharge Hearing, there is the possibility of adverse costs awards being made AGAINST the Opposing Creditor, particularly given the accusations again made in the materials filed to date relating to the Trustee.

The purpose of the discharge hearing is to determine on behalf of all of the creditors what the proper discharge Order is, not the airing of individual grievances of a single creditor going back decades. It is a summary hearing designed solely for that purpose, and not to deal with the raft of irrelevant issues raised in the Opposing Creditor’s materials.

The Opposing Creditor comprises less than 1/3 of the total creditors and the Trustee has already made distributions of substantially all of the realizations in the Estate. Including to the Opposing Creditor.

To reiterate, again, complaints by the Opposing Creditor relating to the alleged conduct of the Trustee, WILL NOT, IN ANY WAY, be the subject matter for argument at this discharge hearing, which is to deal SOLEY with the conduct of the BANKRUPT.

120In that December 28, 2022 Scheduling Endorsement I instructed the Trustee and the Bankrupt as to what additional materials needed to be filed to allow the discharge hearing to proceed.

121However in the purported affidavits filed by the Opposing Creditor, which were not properly sworn were documents that had the separate ability to be admitted on their own, and in particular Abstracts of Title to the Properties, and copies of the registered instruments and charges affecting the Properties, which are separately admissible under the provisions of the Ontario Evidence Act, RSO 1990, c E.23.

122In any event the Bankrupt, while still represented by McDonald, filed an Affidavit sworn September 7, 2022 (the “Bankrupt’s 2022 Affidavit”) in response to the materials attempted to be filed by the Opposing Creditor and in those affidavits took no issue that the Abstracts of Title and Registered Instruments reproduced there were not authentic.

123At the Discharge Hearing on April 11, 2024, I requested the Trustee to file further materials so the Court could deal with the allegations made in the Opposing Creditors Notice of Opposition, as they were serious accusations regarding the conduct of the Bankrupt, McDowell and the Trustee, and had to be addressed in some way as a result of the failure of the Opposing Creditor to file admissible evidence on the hearing, and to attend the Discharge Hearing.

124Nevertheless, the broad allegations of misconduct levelled at the Bankrupt and the Trustee in the Materials filed by the Opposing Creditor, which are also the basis for many of the grounds of opposition in the Opposing Creditor’s Notice of Opposition which was not withdrawn, and the content of the s.170 Reports filed by Geary and the Trustee, necessitates a review by the Court of the proprietary realizations in order to determine whether in fact s.173 facts have been proven, and for the purpose of determining the proper discharge condition.

125Essentially, the allegations of the Opposing Creditor in his materials were that since he had been in the development business with McDowell and the Bankrupt, he alleged that the Bankrupt’s narrative that she was an unemployed stay-at-home mom, with McDowell and his “business” paying all of the bills, and that she signed what even McDowell and Stone put in front of her, was false.

126Instead, the Opposing Creditor presented the competing narrative that the Bankrupt was a full partner in McDowell’s “business” holding real property for McDowell and utilizing her credit rating to obtain credit to be utilized by McDowell, because McDowell could not hold property or obtain credit in his own name, and that the Bankrupt had fundamentally mislead Geary and the Trustee in this Bankruptcy.

127But, as will be seen regarding litigation engaged in by the Bankrupt, Stone, McDowell and the Opposing Creditor, while they still had a business relationship, these parties had a far more complicated, and at some points mutually beneficial relationship, and the Opposing Creditor was not transparent in propounding in his “My Sister Stole my Mother’s House and McDowell is a crook” narrative in these proceedings. He obviously knew far more about McDowell’s and the Bankrupt’s business dealings than he advised the Trustee, possibly in breach of his duties under s.4.2 of the BIA and his fiduciary obligations to creditors as an inspector of the Bankruptcy Estate.

128The Trustee fulfilled its duties as requested by June 11, 2024, as requested under the terms of the Scheduling Endorsements.

129The OSB has not been involved in this estate and no s.161 examination had been conducted prior to the hearings.

130Several s.163 examinations were conducted however, some of which evidence was utilized at this hearing.

“Not a spouse” Allegations by Opposing Creditor

131The Opposing Creditor made much of the issue that in every Mortgage executed by the Bankrupt dealing with the Properties, that was filed for this discharge hearing, the Bankrupt swore the required Statutory Declaration “I am not a spouse”.

132This was despite throughout this period the Bankrupt and McDowell both provided sworn testimony that the Bankrupt was the common law spouse of McDowell for almost 30 years.

133There was no evidence and argument before the Court on this discharge as to whether McDowell and the Bankrupt were “spouses” or whether any of the Properties constituted a “Matrimonial Home” each term as specifically defined in the Family Law Act, RSO 1990, c F.3 (the “FLA”).

134 Section 21 of the FLA reads:

“Alienation of matrimonial home

21 (1) No spouse shall dispose of or encumber an interest in a matrimonial home unless,

(a) the other spouse joins in the instrument or consents to the transaction;

(b) the other spouse has released all rights under this Part by a separation agreement;

(d) the property is not designated by both spouses as a matrimonial home and a designation of another property as a matrimonial home, made by both spouses, is registered and not cancelled. R.S.O. 1990, c. F.3, s. 21 (1).”

135As noted by Tarnopolsky, J.A. for the Court of Appeal in Stoimenov v. Stoimenov et al., 1985 ONCA 2166 the purpose of the section and the implications for contravention were to protect the other spouse from having the Matrimonial Home alienated without consent:

“In considering the protection given to spouses by s. 42 of the Act it is necessary to start, as the learned trial judge did, by pointing out that cl. (1)(a) thereof was contravened in that no interest in a matrimonial home can be disposed of or encumbered unilaterally unless "the other spouse joins in the instrument or consents to the transaction" and, in this case, the wife did not join in or consent to the mortgage transactions entered into by the husband. However, s-s. (2) provides that a transaction effected in contravention of s-s. (1) may be set aside under s. 44, unless the transferee acquired the interest for value, in good faith and without notice that the property was, at the time of transfer, a matrimonial home. Since the learned trial judge was satisfied that the three mortgagees acquired their respective mortgage interests for value, she turned her attention to the question of notice. Because the opening clause of s-s. 42(3) makes it clear that s-s. (2) may be subject to provisions contained in s-s. (3), the trial judge analyzed s-s. (3) to determine the requisite notice. Subsection (3) provides that an affidavit of the transferor-spouse verifying, inter alia, that he is not or was not a spouse at the time of the disposition or that the property has never been occupied by the transferor and his spouse as their matrimonial home "shall, unless the person to whom the disposition or encumbrance is made had actual notice to the contrary, be deemed to be sufficient proof that the property is not a matrimonial home". From this she concluded at p. 75 O.R., p. 180 R.F.L.:

“As the word "shall" is mandatory, the affidavit alone, in the absence of actual notice to the contrary, is determinative of the status of the property for the purposes of an application to set aside under ss. 42(2) and 44(d).”

After observing that

“The insertion of s. 42(3) can be viewed as evidence of an intention on the part of the Legislature to address the problem of balancing the interests of wronged spouses and those of innocent third parties, and also to promote certainty in conveyancing practice respecting matrimonial homes ...”

and that cl. 45(1)(f) of the Act provides an alternative remedy for a wronged spouse against the person who swore the false affidavit or anyone who knew it to be false, she summed up at p. 76 O.R., p. 181 R.F.L.:

“In a nutshell, an affidavit verifying one of the situations prescribed in cls. (a) to (d) of s. 42(3) is sufficient to deem the property not to be a matrimonial home for the limited purposes of an application to set aside the conveyance of an interest in such property, unless the grantee or mortgagee had actual notice "to the contrary".”

136The usual situation is where the non-consenting spouse seeks to set aside a mortgage or transfer done without their consent, and the issue usually turns on whether the financial institution granting a mortgage, or the transferee of the property, had actual notice of the lack of spousal consent, or sufficient information relating to that evidence to allow the Court to impute notice.

137To the extent that either McDowell or Lindsay ever had a legally enforceable interest in any of the Properties, there is no evidence they ever raised the issue that the mortgages on any of Properties were granted by the Bankrupt without their consent, and the validity of the Mortgages is not an issue at this discharge. In fact on the evidence I have reviewed as outlined in these reasons, I can only conclude that these transfers and mortgages were granted with the knowledge and at the behest of McDowell, as both the Bankrupt and McDowell testified in the Examinations that he received some of the mortgage proceeds for use in his “business”.

138Despite the vociferousness of the Opposing Creditors allegations on the “I am not a Spouse” topic they are legally a red herring, but the lack of candor on this issue on all the real property transaction documentation does not bolster the Bankrupt’s credibility on the totality of the evidence before the Court.

The s.163 Examinations of the Bankrupt and McDowell

139Having read the approximately 1200 questions posed by Jaffe in the transcripts of the s.163(1) Examinations of the Bankrupt and McDowell, it is my impression that Jaffe made a valiant attempt to pin down clear factual statements for the Court’s use in the transcripts, through a vortex of forgetfulness, obfuscation, feigned naiveté and interruptions by McDowell and the Bankrupt, about issues and facts that should not have been difficult to recall.

140McDowell sent Jaffe to ask the Bankrupt, the Bankrupt sent Jaffe back to ask McDowell.

141Undertakings were resisted, then given, then ultimately it appears mostly not answered, based on the documentation provided by the Trustee to the Court for this Discharge Hearing.

142Under s.167 of the BIA:

“Any person being examined is bound to answer all questions relating to the business or property of the bankrupt, to the causes of his bankruptcy and the disposition of his property.”

143Also as stated 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 and Morawetz”) § 7:55. Use of Examination:

“Section 163(3) provides that the evidence of any person examined under ss. 163(1) and (2) shall, if transcribed, be filed in court, and may be read in any proceedings before the court under the Bankruptcy and Insolvency Act to which the person examined is a party.”

144Under s.158 of the BIA, the Bankrupt has the following duties applicable to the context of s.163 examinations under the BIA, and undertakings given in those examinations:

“(b) 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;

(f) make disclosure to the trustee of all property disposed of within the period beginning on the day that is one year before the date initial bankruptcy event or beginning on such other antecedent date as the court may direct, and ending on the date of the bankruptcy, both dates included, and how and to whom and for what consideration any part thereof was disposed of except such part as had been disposed of in the ordinary manner of trade or used for reasonable personal expenses;

(g) 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, both dates included;

(j) submit to such other examinations under oath with respect to his property or affairs as required;

(k) aid to the utmost of his power in the realization of his property and the distribution of the proceeds among his creditors;”

145As I stated in Re Biskupski 2023 CarswellOnt 3291, 2023 ONSC 1694, 16 P.P.S.A.C. (4th) 189, 2023 A.C.W.S. 1056:

“[148] The statutory wording regarding “all his property” and “the particulars of the Bankrupt’s assets” and “aid to the utmost of his power” and “…do all such acts and things in relation to his property…as may be reasonably required by the trustee” all indicate as statutory intent to impose on bankrupts a high standard in proving that they have fulfilled their duties under the BIA, not merely a factual compliance.

149As stated in Jefferson, the BIA imposes a duty on the Bankrupt to “…actively aid his Trustee or his creditors in mitigating the damage wrought by his assignment.” and not “…remain passive and hope that the financial storm would blow over.”

146McDowell provided more answers regarding the Bankrupts purchase of the undisclosed properties. The highlights of his testimony were:

He claims to have used his moneys from his “business” and “deals” and, with respect to the Mansbridge Property, his inheritance from his mother, to provide all of the original downpayments for most of the Properties.
His “business” was working with developers to approach farmers to sell properties for land assemblies, for which he was paid commissions by the Developers, or in the case of the Hollywood Court Property, granted an option to purchase a property as payment.
That he provided to the Bankrupt cheques, sometimes from third parties payable to McDowell, sometimes from his BNS account, as well as cash, which the Bankrupt deposited in her accounts, either at RBC or CIBC, and then used to pay the mortgages she had granted as registered owner on the Properties, insurance, and the property taxes.
That the Bankrupt paid no money for either downpayments or carrying expenses for the Properties, despite being the Registered owner of all of the Properties;

147As to the crucial issue as to why the Bankrupt was registered owner of properties she did not pay for, and why McDowell was put on title to the Nadia Court Property three weeks after the Bankrupt purchased it, then was removed again a year later for the Bankrupt to again be sole owner, despite being unemployed, McDowell stated the following:

Q. Okay. Why would you have Angela transfer the property just three weeks later to you and Angela?

A. I'm sorry, I don't understand.

A. I, I've never owned that property in my name.

Q. That's not true. That's not true. Look. I'm not lying to you. I'm just -- this is the public record. If you're telling me the public record is inaccurate, tell me why...

A. Okay. My name -- yeah. And I wanted my name off it for obvious reasons.

Q. Well, no, we're going to get into what the obvious reasons are but like first, you get it into your name three weeks later, so the first question is not why you wanted it off, but she already took it in her name, now, you're putting it into her, your name and her name. My question is why did you -- she buy it and then three weeks later, transfer it into both of your names?

A. I don't know. I don't...

Q. And we know that you let a year go by...

A. I don't -- I've never knew, to be honest with you, not, I'll have to search my memory but I never thought I was ever on title with that property.

Q. You were for a year.

A. Was I?

Q. And then a year later -- did you own it? I guess if you don't know or remember ever owning it, asking you whether you owned it as tenants or commoner or joint tenants is an empty question.

A. M'hmm.

Q. But we may need to -- and then you, a year later you transferred it just, you and Angela, transferred it to Angela. And it seemed -- and then the next day, you can see, or on the same day, there's a charge put on in favour of the Royal Bank of Canada. Do you see that for...

A. M'hmm.

Q. ...450,000 bucks?

A. Oh, likely I wanted to borrow money and I’m, my credit wasn't good, that's maybe why.

Q. Well, maybe you’d like to find out so...

A. Okay.

Q. Okay. Let's step back. So you're telling me that you were in business, you were buying and selling properties. As a result of your active business and potential exposure to risk, the risk from, and I’m, tell me whether you agree or disagree, this, you haven't said this yet, from creditors pursuing you in civil lawsuits and creditors otherwise...

A. It's a protection because I don't hold anything in my name. Never have. It's always a company. But I've never really had anything in my name.

Q. So it's been your practice ever since you handed in your real estate broker's licence, from that time forward to not hold legal ownership...

A. Correct.

Q. ...or property in your name. And the purpose was to protect these assets, which are now in your family's name, against the claims of your creditors?

A. Correct.

Q. And what creditors if any did you have in 2005?

A. No idea.

Q. Did you have creditors?

A. Not to my knowledge.

Q. Were you a defendant in any lawsuits in this period of time?

A. Not to my knowledge. I'd have to get back to you on that.

Q. But it's possible?

A. Yes, it is.

Q. And will you get, will you get back to me...

A. Yes.

Q. ...sir? So this is an undertaking?

A. Yeah.

Q. I restricted the year 2005, I think we've, well, I'm going to expand that to like 2004 to 2010. Let me know.

A. Okay.

UNDERTAKING”

148As to why and how the Bankrupt would take out mortgages on the properties she was registered owner of, and gave McDowell the Mortgage proceeds, McDowell explained:

Q. All right. And back to -- so in 2006, Angela mortgages the place for 450. Did any portion of 450 have to go out, payout prior, a prior mortgage?

A. No, there's no prior mortgage to my knowledge. Again...

Q. No prior mortgage? Okay. And so did Angela use the money or did...

A. Likely myself.

Q. So she just gave you the money?

A. That's...

Q. That’s your evidence?

A. Yeah.

149McDowell testified that he would not permit the Trustee to send an appraiser in to the Nadia Court Property to appraise it.

150McDowell acknowledged that he had drafted the “Trust Agreements” on the Nadia Court Property, the Hollywood Court Property and the Central Property which were reviewed by Stone, his and the Bankrupt’s lawyer and business partner at the time, and that in his view the “Trust Agreements” had the following effect:

Q. I'm sorry. Trustee, when you say it's a Trust Agreement, so someone holds the property on trust for someone else. Who's the trustee?

A. Oh, I, I prepared this for an agreement between Ang and myself so that if we separated or something, or if something happened, then it would fall into place.

Q. Okay. Let’s read it.

A. She, she held the, the property in trust for both of us.

Q. So your understanding of this Trust Agreement is, while she may be the registered owner of the entire property, this agreement supersedes the registration against title and as between Angela and me, you, me being Keith...

A. That's correct.

Q. ...that she holds half for me...

A. That's correct.

Q. That's your understanding? And you did this in order to protect yourself and your family for contingent creditors because you were...

A. And also if something, our relationship fell apart.

Q. Okay.

A. Or if she passed away or I passed away.

Q. And this document going back, are you two separated?

A. No.

Q. Has there been a sale of the property?

A. No.

Q. And have either of you died?

A. No.

Q. So those are the three events that give rise to the creation of your 50 percent net interest in this property, correct?

A. Maybe in your eyes. My eyes is...

Q. I'm just reading the, I'm just reading...

A. I know...

Q. ...your document.

A. That's correct. My eyes is that I own 50 percent of that property no matter what.

Q. But you, you're saying that despite the intent of the document is, is that I would always hold a 50 percent interest regardless of the circumstances and in fact, it did not require any of these three triggering events, separation, sale or death, for me to trigger my right.

A. Correct.

Q. All right. But you will agree with me that none of these three events have happened.

A. No.

Q. Right. And...

A. These are the documents to protect my ass in case something happened.

Q. Oh, I understand. You're holding, on the one hand, you are -- see, from your creditor's perspective, they may not like it, but it's all a question, because you're taking property and putting it outside their reach because you're not a legal owner

A Yeah.

Q. And then you're relying on this document as between you and Angela, the person whom you live in a common-law relationship and you're thinking it's only upon separation, death or otherwise, would I ever have to rely on this document to assert an interest against Angela, but you didn't think of one eventuality, which is that she may lose her interest in this property not by, you know, by, by bankruptcy since it was transferred to a trustee in bankruptcy. And your evidence is despite the fact that you didn't contemplate that and put that in the agreement, the intent of the agreement is, is that I would always have a half, 50 percent interest because I am the person who gave the money. Let me ask you the other question. Why didn’t you claim -- since it's all your money, why didn't you claim 100 percent?

A No, because...

Q. That's my question. No is not an answer.

A. She's living with me. She deserves half of whatever we get and that's the way it just -- you're married, are you going to screw up your wife for 50 percent of your house? I'm asking you.

Q. And in this document, it appears that Angela as the owner gives to you the right to purchase her interest in the property. Is that your...

A. That's correct

Q. And why did you prepare this document?

A. Just in case there's a problem, that I could buy her out because I wasn't intending to move.

Q. Have you ever exercised this Right of First Refusal?

A. No.

151With respect to the Central Property, McDowell says he gave proceeds of his inheritance to the Bankrupt to purchase the Mansbridge Property, that the Bankrupt held in Trust for Lindsay, which was then sold and the proceeds used by the Bankrupt to purchase the Central Property, which the Bankrupt again held in Trust for Lindsay. Except the Central Property purchase by the Bankrupt occurred on August 22, 2008, and the Mansbridge Property sale by the Bankrupt occurred on September 19, 2008, so how were those Mansbridge Property proceeds used to buy the Central Property by the Bankrupt, when the Central Property transaction closed a month prior to the creation of the Mansbridge Property proceeds?

152McDowell, alternatively, testified that the Mansbridge Property was sold by the Bankrupt and the Hollywood Court Property was purchased by the Bankrupt so:

a) that Lindsay could be closer to her birthmother; or

b) These properties were held in Trust by the Bankrupt for Lindsay either to

i) protect Lindsay from her ex-partner, or

ii) because Lindsay couldn’t afford the payments on the house.

c) The Bankrupt transferred the Hollywood Court Property to Lindsay for no consideration in 2012 because Lindsay could now make the payments on the Hollywood Court Property.

153When asked about how the alleged Trust Agreement on the Hollywood Court Property worked McDowell testified:

Q. By your own document, she could compel Angela to deliver title to her.

“A. Yeah. But that wasn’t going to happen until she could afford the house herself. She took in dogs, she took in tenants, she, she did cleaning. She did everything to prove that she can afford.

Q. And so you’re saying -- I thought the reason was that she didn’t want her lovely ex...

A. Oh, yeah...

Q. ...who was threatening her.

A. No, no. That was, that was the first house. This is the second house.

Q. It wasn’t the same safety concern?

A. Yeah to some degree, to some degree but there was also a financial thing there too. Yeah.

Q. Meaning you wanted to show that she was fiscally responsible before you gift her the house?

A. Damn right.

Q. But now, you have to understand, this is 2012, and I assume Angela wasn’t solvent then, and she’s conveying property that’s worth how much? What’s it worth today, 500/600?

A. Yeah. I would think so.

154With respect to the issue of whether any of the more than $250,000 in proven unsecured consumer credit that the Bankrupt incurred was utilized to assist McDowell and his business:

Q. Yeah. Yeah. And your evidence is, is that Angela has no source of income and that although she would have paid this from her accounts, which we’ll get shortly, her only source of income, was you. Revenue, what other sources of revenue...

A. Hundred and, 110 percent. The only thing is when I close deals, I don’t think -- you better ask Angela. I think I paid directly to the lawyer.

Q. And if you just look, we’ve got American Express, Capital One, CIBC, JP Morgan Chase Bank, MBNA bank, MBA bank proposals, National Bank, RBC, et cetera. And they all up to me to either be small loans or credit cards.

A. Correct.

Q. And you indicated to me that some of these liabilities were yours?

A. Basically, the, them all. Well, I shouldn't say that. I, I don't, I...

Q. What do you mean? Expand on your answer please and thank you.

A. I'm not sure what belonged to her, but if I needed money for a deal or something like that, I would go to her and she would borrow, like, like she did.

Q. So you're saying she's borrowed -- your evidence is that, at your request, she would take loans from her credit cards and advance you the loan proceeds for...

A. No.

Q. ...placing it into your business?

A. Not, not really. No. That's incorrect.

Q. Well, what is...

A. If...

Q. What is it?

A. If, if, if I couldn't make the payments, then she’d make the payments out of the credit cards.

Q. The payments of what?

A. House. House. She had good credit, I had no credit.

Q. So you're saying, your evidence is -- let me see if I understand this, and I'll set the record that she's got mortgage payments on Hollywood Court to make...

A. M'hmm.

Q. ...which she made I think up until, they didn't go into default until 2016, correct?

A. I think I made direct payments to the mortgage person.

Q. For Hollywood Court?

A. No. Yeah, for Hollywood Court.

Q. Are you going to give me that evidence...

A. Yeah.

Q. Undertaking to give me that evidence?

A. Yeah. I don't know how I can get the...

Q. It's in your interest because what you're now telling me and I'm going to have explore this with some care, you're telling me is that I've asked you for an undertaking to give me evidence that you met the monthly expenses for all these properties, Mansbridge, Central, Hollywood and Nadia where you live.

A. Correct.

Q. Your evidence is, is that on monthly basis, I would take money either from the BNS account or I would have cash from some of my transactions with my builders and I would give it to Angela and Angela would make these payments from her bank account, correct?

A. That’s correct.

Q. And now I produced to you her Statement of Affairs and I’ve run through that there are about 15 creditors totalling about, a little bit less than $400,000, 387,860.50 according to Angela.

A. Yeah.

Q. And other than her brother, Stefano Angiulli, that, and a lawyer for Walker Head Lawyers, that everyone else seems like to be consumer debt.

A. Yeah.

Q. And the evidence further is so there's some $300,000 of consumer debt, and your evidence is that many of these borrows, not all, one would have to take a look at the records, was when you were short of money, Angela would borrow against some of these cards because her credit was good, to make payments against Nadia Court, mortgage payments for example? Tell me where I'm wrong.

A. No...

Q. I'm just trying to understand the facts.

A. I don't know which, how she borrowed the money or whatever, but that's very possible.

155So, to summarize McDowell’s sworn testimony:

The Bankrupt would act as a straw purchaser for McDowell to purchase the Properties in her name, but for which McDowell provided the down-payment;
That the Bankrupt, despite earning no income for 20 years, applied for and was granted Mortgages on each of the Properties;
The Bankrupt did this because McDowell’s “credit was not good” and to protect himself from creditors he did not want to go on title;
The one time McDowell permitted himself to be put on title to the Nadia Court Property for a year, he removed himself off title and the Bankrupt remained and obtained a $450,000 Mortgage was because “Oh, likely I wanted to borrow money and I’m, my credit wasn't good, that's maybe why.”, or in other words, so that McDowell could obtain credit on the basis of likely false and misleading credit information being provided by the Bankrupt and McDowell as to who the actual borrower was and their creditworthiness;
That McDowell provided the Bankrupt with endorsed cheques he received from third parties and cash which she would deposit into her account, and then use that money to pay the Mortgages and other carrying costs;
That after purchasing the Properties, the Bankrupt signed purported “trust agreements” and a “right of first refusal” to the Properties that purported to grant Trust interests to McDowell and Lindsay, or “Option Agreements” to 55 Ontario and 71 Ontario, but these purported agreements were never registered on title 7 years later, and these encumbrances appear not to have been revealed to the Mortgagees on the Properties, or the Title Insurer on the Properties, First Canadian Title prior to their granting credit or title insurance to the Bankrupt within that 7 year period.
That when McDowell didn’t have the money to make the payments on the Properties, the Bankrupt would borrow on her credit cards and lines of credit and made the payments herself from her consumer credit, and also possibly advanced funds to McDowell to use in his “Deals”, and that of the consumer credit the Bankrupt obtained, despite not being employed for 20 years, McDowell confirmed “Basically, the, them all.” were obtained for him, then realized what he had said, and began furiously backpedaling.
That with respect to Stone, McDowell’s and the Bankrupt’s lawyer on many of the transactions involving the Properties,

“A. Just for your own information, this lawyer took me for over 1,000,000 bucks out of his trust account, out of his trust account. And I can prove to you”

but McDowell and the Bankrupt never sued or made a claim against Stone or his LawPro insurance, and if this statement is true, constitutes another possible asset that the Bankrupt didn’t declare.

It is entirely unclear why all of this maskirovka of legal ownership by the Bankrupt, then beneficial ownership through Trust Agreements by McDowell, was entered into by McDowell, who stated he usually proceeded through corporations. As will be discovered, if McDowell had large personal liabilities that he was hiding from, how does corporate ownership help if McDowell owned the shares of the corporations that creditors could seize? Was the Bankrupt the legal owner of the Corporate shares of McDowell’s corporations as well, to continue the shell game with McDowell’s creditors? Unknown.
It also unknown whether the inability of McDowell to continue to use the Stone Trust Account (as defined below) as a conduit for funds from his real estate transactions was severely complicated by Stone’s restriction by the LSO from Real Estate practice in 2008 and eventual disbarment in 2012, necessitating a different conduit, and whether that new conduit was the Bankrupt and Lindsey.

156The Bankrupt’s testimony in her s.163 Examination is similarly startling:

She had not worked in 20 years, back from 2018 when the s.163 examination was conducted, so approximately 1998;
That she had lent money to the Opposing Creditor;
That McDowell paid all household expenses (Q.41), but that she also paid household expenses using her credit cards (Q.427-448)
She would deposit cheques and cash provided by McDowell mostly in her Bank account at CIBC to pay the household expenses;
Her only source of money to pay household expenses was McDowell (Q.94-95, 246,) but simultaneously she also testified that the credit cards and lines of credit she obtained were also used to pay household expenses (Q.427-448);
That she sold a hotel in 1994 for $300,000 and gave $60,000 to her Mother in 1994;
Her mother died in 2009, and prior to that time the Bankrupt had obtained a half interest in the Gibbons Property;
That she sold the Gibbons Property in 2009 for $240,000 and after paying encumbrances of $100,000 she received $140,000, and she deserved to get the Gibbons Property because she had been paying her parents’ expenses and had lent money to both her sister and the Opposing Creditor;
With respect to the disposition of the $140,000 from the sale proceeds of the Gibbons Property the Bankrupt’s testimony was as follows:

“174. Q. Okay. So what was the disposition? What's your evidence regarding disposition of this 100,000?

A. You mean where it went?

Q. Yeah.

A. Okay. First of all, my sister, I lent her $15,000 that I never got back. That's just one thing that I have.

Q. And...

A. And when I went to ask her for the money back...

Q. One second please.

A. Oh, sorry.

Q. Okay. So this one was made in 1995 and your sister never paid you back? Did you ever make demands on her?

A. Yes.

Q. Did you ever commence legal proceedings?

A. No, because it was my family. I know you think I'm stupid when it comes to my family and I am.

Q. Okay. But what I'm most interested in is what happened to the 100,000.

A. Well, there are cheques that my brother has forged, just some because he went and stole all the other ones, cheques from my accounts that he would just write to himself.

Q. You're saying this is was not your signature?

A. No, none of them are. If you look at it...

Q. Yeah, it’s hard. But unfortunately I can tell that there's a little bit of something odd here, but I cannot conclude who is Stefano Angiulli. Okay, well just moving forward, if he stole all this money and, and then he sued you, why didn't you make a counterclaim against him?

A. I was afraid of him. He had threatened me. I went to the police a few times. And you know what they said to me? They said, well, next time he tries to threaten you or hurt you, make sure you have it on tape and then come and get us or call us then. I've gone, I went twice to the police for that.

Q. Lovely.

A. You have no idea what this guy is capable of, nobody does. Anyone who's met him knows. You want to know where the rest of the money went?

Q. Well, I’m going to...

A. Another...

Q. ...find out...

A. Okay, then.

Q. I want it more positively because I don't, you know, you don't have any of it now and you...

A. No.

Q. ...you can provide me with an undertaking, Angela, to provide me with details of this, because this can take me a couple of hours to do this on the...

A. Okay.”

None of the monies used to purchase the Properties came from the Bankrupt and all came from McDowell;
McDowell paid all of the expenses and mortgages on the Properties, but that she may have also paid some of the expenses using her consumer credit;
That the reason the Bankrupt went on title to Properties when McDowell was providing the monies to purchase the Properties was:

“230. Q. And why was property in your name, not in Keith's name if he put all the money in?

A. Because he didn't want to be sued because he was in real estate.

Q. Well, no one can prevent themselves from being sued. Is that the reason?

A. I'm sorry. Yes.”

The reason that McDowell went onto the Nadia Court Property, stayed on title for a year and was removed was:

“254. Q. So your evidence is that since the date of the acquisition, you, he would provide you with money by cash or cheque and you would make the property taxes and mortgage payments for Nadia Court from that?

A. Correct.

Q. And do you, do you know why after the purchase in your name, you transferred it to your name and his name, and then just a short while later, it was transferred back into your name alone?

A. I think so.

Q. Do you; do you agree with me that that in fact happened?

A. Yes.

Q. And if you go look at the Parcel Register in front of you, it will give you the exact dates on Exhibit 2 to your...

A. Yes.

Q. ...exam, or actually, yeah, Exhibit 3 to your examination?

A. Yes.

Q. All right. Do you recall why?

A. If I remember correctly, he was going into a deal of some sort and they, he needed to show that he had some type of collateral, and so we'd put him back on the property. And then after that was done, he came back off the property.

Q. So the title flipped in and out of his name at his convenience and at his direction?

A. Absolutely.

Q. And your understanding, you held it even though he put all the money in, because he had creditors and he wanted to shield his assets from his creditors?

A. Right.

Q. And based on those facts, why wouldn't he claim 100 percent interest in the property?

A. He probably should have.

Q. Okay. And is your evidence that up until the date of your bankruptcy and even today that, or actually, up to the date of your bankruptcy and the, and the close to three years since, that you maintained the same arrangement where he gives you money on a monthly basis?

A. Yes.

Q. And you have no independent sources of income?

A. None. No.”

As to why the Hollywood Court Property was not included on the Statement of Affairs:

“272. Q. And on your Statement of -- you were still the owner of that property as of the day of your bankruptcy, correct?

A. Yes.

Q. And if you review Exhibit 1, I don't see any reference to the Hollywood Court property.

A. What do you mean?

Q. You're not noted as the owner.

A. Where are you looking? I, I'm not...

Q. Page 1 of, of, of the Statement of Affairs. See it?

A. I'm sorry, what am I looking for?

Q. Why didn't you list -- you're the registered owner of the Pickering property, the Hollywood Crescent property...

A. Right.

Q. ...as of the date of bankruptcy.

A. Right.

Q. And I don't note that you've ever noted that interest...

A. Oh, I know what you're asking me now. The reason we didn't put it on here, is that what you're asking me?

Q. Yes.

A. Oh, we didn't put it on there because we didn't think it was an asset at the time.

Q. Why not?

A. Because Rick Rondeau said it wasn't.

Q. What?

A. Because Rick Rondeau said it wasn't.

Q. Why would you listen to Rick Rondeau about it?

A. I don't know.

Q. No disrespect to Mr. Rondeau. Okay. But wouldn't it have been your obligation to disclose it and then figure out that it'll have value, because you were the registered owner, even if you just noted it as a dollar and left us investigate whether it has value or not?

A. We told, what's his name, Geary, we told him about it. Or he gave him all the information.

Q. What do you mean “he gave him all the information”?

A. I gave him the offer and told him there's no value of it, because Rick Rondeau said there was no value because he was able to buy it back at 25 percent less than what we paid for it.”

That the Bankrupt’s understanding of the “Trust Agreements” she signed was:

“318. Q. So I understand by this that he is saying, this document says even though he's put all the money in, even though he keeps the property up and the property's registered in your name, he claims a half interest in this property in the event of a separation, sale or death of one of the above parties. Right?

A. Yes.”

With respect to the use of the proceeds of the $250,000 in proven consumer credit the Bankrupt obtained and utilized, despite having no employment for 20 years:

“427. Q. Okay. Now, in your Statement of Affairs, it indicates the substantial amount of consumer credit.

A. Yes.

Q. Did you at any point in the three years prior to your bankruptcy borrow money against your credit cards and, and use the funds to make mortgage payments for either Nadia Court, Hollywood Crescent or Central?

A. No.

Q. So your evidence is -- let's go back, take a look at this.

A. Okay. I don’t -- here. Okay, you asked me did I, did I take some money from those cards in order to pay for, like mortgage payments and stuff, is that what you're saying?

Q. Yes, and household expenses and other living expenses. Keith gave, gave evidence, I'll let you know, that...

A. Okay.

Q. ...he thought that all or substantially all of your bankruptcy indebtedness was funds that you borrowed off of your cards and gave to him to make, help him out. What do you say to that?

A. I was just, I just don't want to keep, I've kept borrowing money just to keep everything afloat at that point.

Q. Borrowing money from whom?

A. My credit cards.

Q. Okay. Let's just...

A. And -- okay. Is that what...

Q. Right?

A. ...you're saying?

Q. Yes. Exactly what I'm saying.

A. And also a lot of the...

Q. Go ahead.

A. A lot of the money also went for my son's therapy.

Q. So you're, you're saying you would borrow funds from your credit cards.

A. Well you’d use your credit cards, yeah.

Q. What?

A. You would use the credit cards to pay for things.

Q. Okay. You're saying they're all for charge services or are they actual cash advances?

A. Some are cash advances also.

Q. And you would use the cash advances to meet household expenses.

A. Like food and stuff like that, yes.

Q. Property taxes?

A. No. Unless...

Q. Mortgage, mortgage payments?

A. No. Keith still took care of all that.

Q. And expenses for your child, Nicolas.

A. Yeah.

Q. So we're going to get your, we have the undertaking on the bank records for three years prior to bankruptcy for your CIBC and Royal Bank account.

A. I can do my best efforts.

Q. Yeah. And then if your best efforts do not succeed, you will cooperate with the trustee to make requisitions to the bank to produce these records?

A. Yes, absolutely.

Q. Okay. And you’ll do so on an expedited basis?

A. Okay.

Q. And so your evidence is that if you took cash advances from any of the creditors who are creditors in your bankruptcy, they did not go to meet the mortgage expenses of any of the four properties that we reviewed this morning.

A. That, that’s right, Keith took care of all that.

Q. That would be Nadia, Central, Mansbridge and Pickering, you know, the Hollywood Crescent.

A. Yes. But once Lindsay took over Central, she's been paying for everything.

Q. Yes. Okay. I got that you're not paying for it.

A. Oh, god, no. I wouldn’t...”

157It is not apparent that the Bankrupt ever fulfilled the undertaking to produce her banking records to the Trustee on the materials before me.

158At no point in her Testimony did the Bankrupt reveal that:

she had settled with her sister and the Opposing Creditor the lawsuit relating to her mother’s house, and
that the Opposing Creditor’s Proof of Claim largely consists of the payment under that settlement, and
she had not made these payments and then filed the Proposal after the Opposing Creditor brought proceedings to enforce the Mother’s House Judgement.

159So, to summarize, the Bankrupt admitted that,

despite having no income for 20 years, she somehow obtained almost $250,000 in proven unsecured consumer credit which she used to both pay household expenses (which contradicted her prior statements to the Trustee that McDowell paid all of the household expense and her own testimony); and
She also did not refute the testimony of McDowell that she advanced monies borrowed on credit cards and lines of credit to him to use in his “deals”; and
despite having no income for 20 years and having signed unregistered trust agreements on properties granting an unregistered Trust interest to McDowell on the Properties, somehow obtained multiple mortgages with mortgage proceeds in excess of $1,000,000 on the properties, presumably on the basis she was the sole legal and beneficial owner of Properties, despite knowingly signing trust agreements in favour of McDowell and Lindsay that gave them unregistered encumbrances, with the proceeds not being accounted for to the Trustee, and possibly being given to McDowell to use in his business;
There is also the possibility that from the increase of the mortgage amounts on the Properties through refinancing mortgages, that additional monies were obtained by the Bankrupt, but it is unknown where those proceeds may have been sent, or whether she transferred these monies to McDowell to finance his “business”.

160As dryly noted by Jaffe in reporting to the Trustee on the outcome of the Examinations on June 11, 2018:

“In telephone conversations and email with Mr. Keith McDowell ("Keith") and Ms. Angela Angiulli ("Angela") we have implored them to deliver responses to all the undertakings. Keith advises that further responses to undertakings shall be forthcoming.

As a general remark, the lack of full productions by Keith and Angela makes a clean opinion on the issues difficult. For example, I reference the updated undertaking charts. Despite frequent prompts, the majority of undertakings remain unfulfilled.”

161Jaffe in these statements was being kind to the state of compliance by the Bankrupt and McDowell with the undertakings given at the Examinations, and their duties under the BIA.

162From the record before the Court, it does not appear that the Bankrupt or McDowell in the 6 years since Jaffe’s report have complied with those Undertakings or those duties.

163On the review of this evidence, I can only conclude this was deliberate conduct on the part of the Bankrupt and McDowell to stymie the Trustee’s efforts to realize on their web of related party and non-arms-length transactions.

164It also appears from the record that, despite his filing of histrionic inadmissible court materials, the Opposing Creditor, given knowledge that can be imputed from what appears to have been his longstanding and profitable prior business relationship with McDowell, the Bankrupt and Stone, was also selectively candid about providing information that would assist in the realization by the Trustee on behalf of all of the creditors, 2/3 of which by value where not him, also in breach of his fiduciary duties to all of the Creditors and the Trustee as an Inspector of the estate.

Undisclosed litigation involving McDowell, the Bankrupt and the Opposing Creditor:

Undisclosed litigation involving McDowell, the Bankrupt and the Opposing Creditor

165It appears from the materials before the Court that, contrary to s.167 of the BIA, McDowell did not fulfill his undertakings given at the McDowell Examination, and in particular:

“To find out and advise about whether or not the witness had creditors or was a defendant in any lawsuit during the period between 2004 to 2010;

166What were McDowell and the Bankrupt trying to hide? Plenty, as it turns out.

Role of Bankruptcy Court on Discharge:

Role of Bankruptcy Court on Discharge

167In Syndic d'Isolation Techno-Pro inc., Re 2019 QCCS 5825, 307 A.C.W.S. (3d) 240, 71 C.B.R. (6th) 285, EYB 2019-311307 (“Techno-Pro”) Riordan, J.S.C. stated following regarding the Court having to intervene in Bankruptcy proceedings it is supervising to deal with obvious impropriety, generally:

“105 Moreover, the judge in Tariq recognizes this. Although an application of the court's inherent jurisdiction or discretionary power was neither sought nor required there, the judge nevertheless accepts the possibility of unilateral intervention when he states that this was not "one of those exceptional cases where a registrar might be able to act proprio motu (sic) « contrôler les abus manifestes de façon à maintenir la crédibilité générale du système. » of the BIA".

106 In our view, the present matter is, in fact, one of those exceptional cases.

107 Everything said, it simply does not make sense that a court should be barred from acting on its own initiative in situations like we have here. The actions to be sanctioned under section 125 are serious. They would include at the very least some level of improper behaviour, and could go as far as fraud or criminal acts.

108 Where the Court becomes aware of such circumstances in a proceeding of which it is seized, it cannot sit idly by and allow an injustice to be perpetrated simply because that proceeding is invalid for procedural reasons - or otherwise. We have the implicit power to intervene based on a large and liberal interpretation of the provisions of the BIA. We could also justify our intervention on the basis of an exercise of our discretion or inherent jurisdiction to see that justice is done.”

It is trite that Discharge is specifically within the Jurisdiction of the Registrar in Bankruptcy under s.192(1)(c) and also

“ (g) to summon and examine the bankrupt or any person known or suspected to have in his possession property of the bankrupt, or to be indebted to him, or capable of giving information respecting the bankrupt, his dealings or property”

168The Jurisprudence is also clear that the position of Registrar, particularly in a discharge situation, is not to passively sit and accept input of evidence, particularly in circumstances such as this where all of the parties appearing before me on the final discharge Zoom hearing on April 11, 2023 were unrepresented by Counsel at that hearing, including the Trustee, and the Opposing Creditor did not show up.

169As stated by Hood, J. in King, Re 1993 CarswellBC 547, [1993] B.C.W.L.D. 1188, [1993] B.C.J. No. 854, 19 C.B.R. (3d) 107, 39 A.C.W.S. (3d) 926 (“King”):

“32 Markel is also a reminder of the common problems which masters and judges often face in such summary proceedings. I refer to lack of sufficient evidence upon which to properly exercise his discretion, generally resulting from the opponents of the application not adducing evidence or any sufficient evidence. Here, lack of sufficient evidence, pertaining to the bankrupt's assets, dealings and transactions, was the initial problem which the master, and Revenue Canada as well, attempted to resolve by questioning the bankrupt. It is clear that the master was still not satisfied that he had sufficient evidence before him to enable him to exercise his discretion, and for that reason sought to have Dr. Blaxland and Mr. Jewett attend and give evidence on the matters of concern to which I have referred. It seems to me that there should be no question but that the evidence of Dr. Blaxland, and that of Mr. Jewett, who apparently was involved in the transactions, and who the bankrupt says gave him bad advice in relation to these matters, should be before the master, in order that he may properly exercise his discretion and discharge his duty, to which I will refer in a moment, to all concerned.

33 Counsel submits that it is the law that in a civil matter a judge has no right to call a witness, not called by either party, unless the judge does so with the consent of both of the parties; that in a criminal matter a judge may call such a witness, but only in limited circumstances which are not applicable to the case at bar. He cites Fowler v. Fowler, [1949] O.W.N. 244 (C.A.), Re Enoch & Zaretzky, Bock & Co. (1909), [1910] 1 K.B. 327 (C.A.), and R. v. Harris, [1927] 2 K.B. 587 (C.C.A.). Counsel says that the same rule applies to a master in bankruptcy sitting on an application to discharge. The master had no jurisdiction to call Dr. Blaxland and Mr. Jewett as witnesses, and to give evidence.

34 I am not satisfied that the principles referred to in these cases should be applicable to a master sitting in bankruptcy on an application for discharge. This is not a trial or litigation process where the issues to be decided are solely between the parties, and are decided on the evidence adduced by their counsel. It is a form of summary proceeding which, although somewhat limited by the provisions of ss. 172 and 173 of the Act, may involve investigative procedures by the master, as well as the trustee and creditors.

35 It is trite law that in exercising his judicial discretion on the application, the master must give careful consideration to the interests and rehabilitation of the bankrupt, and to the interests of the bankrupt's creditors. But he must also give consideration to the public interest which requires the court to preserve the integrity of the legislation and its machinery. The court must guard against laxity in granting discharges, and other abuses of the discharge process, so as not to offend commercial morality. See in this regard the decision of Henry J. in Re Hood (1975), 1975 ONSC 1976, 21 C.B.R. (N.S.) 128 (Ont. S.C.), particularly at pp. 136-137. There his Lordship reviews the general objective of the Act, the process of discharge and the interests to be considered in that process. After noting the importance of the principles of business and social morality he states:

In my judgment, therefore, it is imperative that, unless there are compelling reasons to the contrary, when an application for discharge of a bankrupt comes before the court and some objection is taken to the discharge, the bankrupt should be present and objecting creditors should have an opportunity of examining him if they are so advised; it is also important that the court itself be given an opportunity to examine the bankrupt having in mind the principles that I have set out. (My emphasis)

36 The court has always been empowered to bring the bankrupt before the court and to examine him. Rule 106 specifically empowers the court to do so. It is equally imperative, given the interests which the court must have regard to on the application, that objecting creditors, and the court as well, should have the opportunity, in a given case, of examining other persons who can give evidence with regard to the property and dealings of the bankrupt, and which should be before the court for the responsible exercise of the court's discretion. And other provisions of the Act, to which I will refer again in a moment, empower the master, directly and indirectly, to do so.

37 To give proper consideration to the public interests to which I have referred, as well as to the interests of the bankrupt and the interest of the creditors, there must be a fair hearing and proper evidence before the master on which his discretion can be exercised. But the necessary evidence often is not forthcoming. It is naive to believe that the bankrupt will bring forth the evidence which the master requires to enable him to exercise his jurisdiction. Again, history shows that creditors, even though represented by counsel, often do not bring forth the necessary evidence. In any event, the master should not have to depend on creditors as the only means of bringing forth the required evidence, although often a creditor will do so, particularly if requested by the master.

38 What then is the master to do when the necessary evidence is not before him? While the proceeding is summary in nature, it is not perfunctory. To simply dismiss the application because of the lack of sufficient evidence would not be appropriate. An adjournment might be, if the situation was such that a referral to a judge was necessary to obtain an order directing an issue to be tried by the master or a judge. But that situation would not arise until all available evidence was before the master. The answer is the master should be empowered to summon witnesses, and to examine them, if and when necessary, to ascertain evidence pertaining to the bankrupt's assets and transactions sufficient to enable the master to exercise his jurisdiction. In this regard, in my opinion, it is implicit in the master's power under s. 192(1)(c) to grant orders of discharge that to that end he is entitled to summon and question witnesses.

55 In summary, in my opinion the bankrupt cannot succeed factually or in law. The position of a master sitting on an application to discharge is perhaps somewhat unique. It is a summary type of proceeding or hearing, which is intended to be both expeditious and inexpensive. While it is more an adversarial, as opposed to inquisitorial, proceeding, it does have some characteristics of the latter. It often involves, of necessity, investigation or inquiry by the master seeking to ascertain evidence relevant to the issue which he has to decide, that is, whether the bankrupt should be discharged and, if so, whether conditions should be imposed. The investigation is usually brought about because there is insufficient relevant evidence before him on which to properly exercise his judicial discretion. This generally arises because lay persons are appearing on the application, or because the opposing creditor or creditors have not brought forth sufficient evidence, or any evidence, on the issues to be decided. He must have regard not only to the interests of the bankrupt and of the creditor or creditors, but also to the interests of the public and the integrity of the system. In order to be fair to all three interests, and the third is at least as important as the other two, he must have sufficient evidence before him.

56 The investigation often is done by the master simply questioning the bankrupt or a creditor attending the hearing and who can give evidence on the issues. Often questioning by counsel alone brings forth sufficient evidence to enable the master to perform his task. But when necessary, he may summon and examine the bankrupt or any other person known or suspected to have in his possession property of the bankrupt, or to be indebted to him, or capable of giving information respecting the bankrupt, his dealings or property. The master sitting on such a hearing then has a different role, and takes more part in the proceedings than does a trial judge, where the issues to be decided are solely between the parties whose interests are represented by advocates who adduce the evidence. The master or judge has a discretion to question the witnesses, as well as to call them, not only for the purpose of clarifying testimony or evidence, but also to ascertain other evidence, not brought out by counsel, relevant to the issue of discharge and which would enable him to properly exercise his discretion.

57 The principles set out in such cases as Fowler and Enoch therefore are not applicable to a master or a judge sitting on an application to discharge. Again, the principles referred to in such cases as Majcenic and Johnston cannot be rigidly applied in the case of a master hearing the application, because it is his duty to assure that there is sufficient evidence before him on which to exercise his discretion. The degree to which he can intervene then, is greater than that of a trial judge. And it will depend on the circumstances of the case, and in the main his view of the evidentiary base before him. In the exceptional case where he is required to call witnesses and to examine them himself, his intervention, perhaps participation is more accurate, will be substantial. However, even then the image of judicial impartiality must be maintained to the extent that it is reasonably possible to do so within the context of his task; although it is difficult to envisage proper conduct on his part which would invoke the principles referred in Majcenic given that task and those circumstances.”

170In this case McDowell gave an undertaking to the Trustee to produce information relating to the civil litigation he was involved with and then failed, or chose not to, comply with that undertaking.

171The Opposing Creditor failed or chose not comply with my Scheduling Orders to produce admissible evidence, and was clearly not completely forthright about the degree of his involvement in the prior business of McDowell and the Bankrupt, and the profits he reaped from that business, but also there clearly was information produced by the Opposing Creditor to the Trustee that undermined the narrative propounded by the Bankrupt and McDowell, and resulted in substantial realization by the Trustee, for the benefit of all creditors from the Properties.

172In this case, obtaining the prior Court records of this prior litigation, even if revealed, would also have been practically problematic for the Trustee, as access was difficult to obtain to old paper records, even when requested by me from storage due to their age, paper format, and the records being located in many different Courthouses and storage facilities, in Toronto, Central East, and Central West Judicial Regions.

173This is clearly as case, per King, that I have “…insufficient relevant evidence before him on which to properly exercise his judicial discretion” on discharge, and the “…interests of the public and the integrity of the system” required a determination whether the Bankrupt’s and McDowell’s narrative or the Opposing Creditor’s was correct.

174Per Techno-Pro I have therefore exercised my:

“…implicit power to intervene based on a large and liberal interpretation of the provisions of the BIA. We could also justify our intervention on the basis of an exercise of our discretion … to see that justice is done”

to obtain the Court Records to provide the answers the Bankrupt, the Opposing Creditor and McDowell failed, or were unwilling to provide.

175To assist the Trustee in dealing with the failure of McDowell to fulfill the Bankrupt’s duties and McDowell’s undertakings, and who would not have had ready access to these Court Records, it appears that, in Toronto Region alone, where some paper Court Records from this era had been entered into the electronic FRANK system, that despite McDowell’s amnesia at the McDowell Examination, that McDowell, the Bankrupt, Stone and the Opposing Creditor were involved in, at least, the following litigation I was able to locate:

Action No	Date Claim Issued	Plaintiffs	Defendants	Disposition
CV-96-CU103806	May 8, 1996	Key Financial Planners	Angela Angiulli, Keith McDowell and E. Larry Stone	Case Conference June 3, 2002 with Justice Wilkins Certificate of Judgment dated June 3, 2002 No information on writs issued File inactive
CV-96-CU109269	July 24, 1996	Adaco Resources Inc., Glynburn Equities Inc., Angela Angiulli, Keith McDowell, Lawrence Stone (the “Adaco Action”)	Cornerstone Securities Canada, Merit Investment Corp., Gerry Fields	Order Dismissing Action by Master Garfield on June 20, 1997
CV-98-CV142972	March 4, 1998	C&K Mortgage Services Inc.	Linchris Homes Limited, Keith McDowell and the Public Guardian and Trustee	Amount of $16,413.62 paid into Court by Order of Epstein, J. on March 25, 1998 by the City of Kingston, entitlement to be determined with remaining Respondents and Applicant Mortgagee McDowell being pursued as guarantor of mortgage Case Conference with Justice Wilkins on May 9, 2003 File Inactive
00-CV-188332SR	April 6, 2000	TCE Capital Corporation	E. Lawrence Stone and Keith G. McDowell	Unknown
07-CV-330505PD	April 2, 2007	Rich-Ad Management Limited (the “Rich-Ad Action”)	Keith McDowell, 1628719 Ontario Ltd. (“162819”) and 1638034 Ontario Limited (“1638034”)	Default judgment issued on July 23, 2007 in the amount of $535,470.89 against McDowell, 162719 and 1638034 (the “Rich-Ad Judgment”) Order by Master Birnbaum on December 4, 2007 for McDowell to attend Judgment Debtor exam on February 22, 2008 Order of Justice Ellen MacDonald on March 5, 2008 denying motion by McDowell and other defendants to stop sale of property Writs of seizure and sale issued in Toronto, Simcoe, Niagara, Durham and Northumberland against McDowell as guarantor in amount of $145,032.00 issued on August 15, 2008 to recover remaining amounts owing under the Rich-Ad Judgment after application of sale proceeds to Mortgage.
CV-07-CV339979 (the “Sutton Action”)	September 13, 2007	Sutton Group Professional Realty Inc.	Lawrence Stone, 1522914 Ontario Inc. and Keith McDowell	Order to add the Opposing Creditor Stefano Angiulli and 1725791 Ontario Inc as defendants denied by AJ Graham on October 31, 2008 and upheld by Divisional Court Judgment against Stone granted after defence struck on July 12, 2010 in amount of $172,840 Remainder of Action Dismissed for Delay on July 4, 2011
CV-12-4557-SR	October 15, 2012	CIBC	Angela Angiulli, also known as Angela Boneham, also known as Angela A Angiulli also known as Angela A Boneham also known as Angela Anguiuelli	Summary Judgment by Andre, J. issued on September 17, 2013 in amount of $58,815.72 and $5,000 in costs. Writs of Seizure and sale issued September 19, 2013 in Durham to secure Nadia Court Property. Notice of Garnishment issued against Weir & Foulds Trust account on September 26, 2014. Order to amend Style of Cause in all of the names and aliases of the Bankrupt granted on February 20, 2014. Sherriff’s Sale of Nadia Court property scheduled for September 25, 2015, stayed by filing of Proposal.

176There appear to be many other pieces of litigation involving McDowell, his companies and Stone, in Durham and York Regions, Barrie, Parry Sound and the Muskoka’s, but they may predate the data entry into FRANK preventing them from being searched for province-wide. But, again, this expedition is necessary only because of the failure of the Bankrupt, McDowell and the Opposing Creditor to be candid or fulfill duties and undertakings imposed on or given by them.

177Interestingly, the Bankrupt appears as a defendant in one of these actions, and as a Plaintiff in another.

178From these cases alone it appears that the Mansbridge Property sale by the Bankrupt in September 19, 2008, the Central Street Property purchase in 2008, with the Bankrupt acting as a straw purchaser for McDowell, the sale of the Gibbons Property by the Bankrupt that brought about the Mother’s House Judgment, and many of the mortgages, options and charges granted on the Hollywood Court Property by the Bankrupt, all occurred after the Rich-Ad Judgment against McDowell in July 2007 and August 2007 when the writs under that Judgment were already in place for McDowell under that Judgment.

179Similarly, mortgage financing by the Bankrupt on both the Nadia Court Property and the Central Property occurred after the writs against McDowell under the Rich-Ad Judgment were registered against McDowell in Durham.

180The Central Property was mortgaged by the Bankrupt on August 22, 2008 , exactly one week after writs were issued against McDowell by Rich-Ad.

181None of these transactions would have been possible, without alerting the writ holder, if McDowell had been the registered owner of these properties, and without paying the Rich-Ad Judgment.

182Geary had previously checked to see if McDowell had any insolvency filings and found none. Sampson updated that search and advised the Court that as of the date of these Reasons, McDowell had never filed any form of insolvency proceeding.

The Linchris Homes Action by McDowell:

The Linchris Homes Action by McDowell

183Linchris Homes Limited appears in the jurisprudence in two other actions. In Linchris Homes Ltd. v. Construction Ravin Boise Inc., 1998 ONCA 2167 Austin J.A. granted security for costs on an appeal by Linchris from Summary Judgment, where he states:

“[6] Keith McDowell, the principal of the plaintiff, was cross-examined on June 11, 1998. In the absence of financial statements which he undertook to produce (but failed to do so), he said that he did not believe that those financial statements would show any activity in the company in the last four years. Asked whether there were any assets in the company, whether it owned any land, he responded "Not to my knowledge". He also indicated that the company had neither income nor debts.”

7An affidavit sworn by Mr. McDowell on October 26, 1998 indicates that the company "...has, however, in fact, carried on business continuously and presently holds interests in a number of properties all as set out in Schedule A hereto". Schedule A lists nine properties but provides no information as to the nature of the interest held by the plaintiff in any of them. There is no indication that the plaintiff has any equity.

8I therefore conclude that there is good reason to believe that the appellant has insufficient assets in Ontario to pay the costs in issue.”

184In 755568 Ontario Ltd. v. Linchris Homes Ltd. (Gen. Div.), 1990 ONSC 6665, Granger, J. stated the following, in denying the appeal of a Master’s decision to not grant leave to a party under the implied undertaking to provide discovery transcripts to the police, in order to commence a criminal investigation of the alleged payment of a secret commission by McDowell:

“The plaintiff 755568 Ontario Limited (755568) appeals from the order of Master Sedgwick dated May 30, 1990 dismissing its motion for leave to provide copies of the transcripts of the examinations for discovery of the defendants to the police.

On January 14, 1988, 755568 purchased approximately 100 acres of land near Newcastle, Ontario for $990,000. On October 18, 1988, 755568 listed the property for sale for $4,000,000. The listing broker was W. Frank Real Estate Limited (Frank Real Estate) and the listing agent was Carmel Attard (Attard), now deceased.

On October 18, 1988 Keith McDowell (McDowell) the owner of Linchris Homes Limited (Linchris) submitted an offer through Alice Auliff (Auliff), an agent employed by Bowes & Cocks Limited (Bowes & Cocks) to purchase the property for $4,000,000. On October 19, 1988 the plaintiff accepted the offer which was conditional on soil testing. The condition was waived by Linchris on December 20, 1988 and the sale was to close on March 28, 1989.

On November 18, 1988 Linchris privately sold its equity in the property for $6,000,000 with the sale to close on March 28, 1989. After 755568 learned of the resale for an additional $2,000,000 it launched this action in an attempt to recover its perceived loss, claiming that the agents on the initial sale acted improperly. The plaintiff alleges that at the time it sold the property, McDowell advised Auliff that if Linchris decided to sell the property, it would list the property with Auliff. The plaintiff alleges that in January 1989, because Linchris had sold its equity privately, McDowell offered Auliff a free trip and cellular telephone for failing to list the property with her. The plaintiff also alleges that in the same conversation McDowell through Auliff offered Attard, who has since died, an all-expense-paid trip anywhere in the world. According to the plaintiff it was unaware that the offered benefits were to compensate Auliff for her lost listing commission on the resale and as a reward to Attard for showing the property. Auliff refused any offer and Attard advised the plaintiff of the offered trip.

The defendants claim that the statement to list the property on resale occurred after the agreement to purchase between 755568 and Linchris was executed. The defendants Auliff and Attard have a different version of the circumstances surrounding and the intended effect of the benefit offered by McDowell.

The plaintiff alleges that the transcripts of the examinations for discovery of McDowell, Auliff and Attard in this action provide reason to believe that individually or collectively they offered and accepted a secret commission contrary to the provisions [s. 426 am. R.S.C. 1985, c. 27 (1st Supp.), s. 56] of the Criminal Code, R.S.C. 1985, c. C-46:”

The Sutton Group Action

185In Sutton Group Professional Realty Inc. v. Edward Lawrence Stone, 1522914 Ontario Inc. and Keith MacDowell 2008 ONSC 84103, (“Sutton”) AJ Graham wrote the following relating to the relief sought where the plaintiff Sutton Group was seeking the declaration of a constructive trust for a commission claimed on the sale of a million dollar property in Ramara:

“4. The addition of nine new defendants, including the defendant Stone’s spouse Elizabeth Stone and his brother-in-law Stefano Angiulli, four numbered corporations of which Angiulli is an officer, director and principal, and three numbered corporations, including 1725791 Ontario Ltd., of which the defendant MacDowell is a principal.”

186With respect to Stone, the lawyer that McDowell testified “took me for a $1 Million”, and then died, the litigation where McDowell and Stone are co-defendants, or in one case co-Plaintiffs, seems to suggest a far more nuanced mutually beneficial relationship.

187In the Sutton litigation the Plaintiff alleged that McDowell was using the Stone Trust Account held for McDowell and his companies as a clearing house for payments from and to McDowell, which were not being deposited in McDowell’s own personal accounts, to facilitate the failure to pay Sutton’s real estate Commission. Essentially, the allegation was that 1522914 Ontario Inc.(“1522914”), a McDowell controlled company, sold a piece of property for $4 Million, and proceeds were deposited in the Stone Trust Account.

188McDowell directed Stone to make payments from the monies deposited to McDowell’s Client Trust account to a number of persons or entities controlled by either McDowell, the Opposing Creditor or both, with money never being paid directly out of the Trust account to McDowell in his own name, in order to defeat creditor claims.

189Sutton Group claimed it was entitled to a commission for introducing the purchaser, but failing having a proper listing agreement claimed a constructive trust in the funds, and wanted a tracing order into the hands of McDowell, the Opposing Creditor and their companies and properties purchased with the funds. Ultimately, AJ Graham found that there could not legally be a constructive trust but a breach of contract, so the Opposing Creditor and his companies were not added as defendants, but a Judgement was obtained by the Plaintiff against Stone.

190In an Examination for Discovery conducted on June 30, 2008, according to the Discovery transcript filed on the Motion, Stone provided the following testimony:

McDowell was his most important client;
Stone allowed McDowell to use his law office to conduct business, but did not charge him rent;
McDowell did “…an awful lot of business” with the Opposing Creditor, his brother in law;
The Particular Corporate defendants that Sutton wished to add as defendants having received payments from Stone were controlled by McDowell alone:

Inter-Global Investments Inc., (“Inter-Global”)

1638034 Ontario Limited (“1638034”)

and 1725791 Ontario Limited

and, corporations where the Opposing Creditor was director and officer or both he and McDowell were:

1713239 Ontario Limited (Both), (“1713239”)

1713496 Ontario Limited, (“1713496”)

1628719 Ontario Limited (Both), (“1628719”)

1696837 Ontario Limited. (“1696837”)

191This is the same Stone Trust Account ledger produced by McDowell to the Trustee in this Bankruptcy in the answers to undertakings provided by the Bankrupt and McDowell, and excerpts were filed in Court for this Discharge, and in fact many of the exact same pages of the Stone Trust Ledger involving the transaction at issue in the Sutton Action, also reappear in the Answers to Undertakings provided by McDowell to Jaffe, and as exhibits to the Trustee’s Supplementary Report and the Bankrupt’s Affidavit.

192Excerpts from Stone’s Trust ledger showing that the $337,500 provided by McDowell to the Bankrupt to pay the RBC Mortgage on the Nadia Court Property appeared to come from a transfer from a Stone file involving “1522914 Ontario Inc. in Trust – 1522914 Ontario Limited 1^st Mtg Marano”, with 1522914 Ontario Inc. also being the McDowell company that was a co-defendant with McDowell in the Sutton Action.

193There are many, many instances in the excerpts of that Stone Trust ledger filed for this discharge of payments in amounts exceeding 100s of thousands of dollars being made to and from Inter-Global, 1638034, 1713239, 1713496, 1628719 and 1696837, corporations either controlled by McDowell, the Opposing Creditor or both.

194So the simple victimhood narrative propounded under oath by McDowell at the s.163 examination does not accurately describe his relationship with Stone, or for that matter with the Opposing Creditor.

195It certainly appears that McDowell, with the assistance of Stone, the Bankrupt and the Opposing Creditor, used the Stone Trust Account to ensure moneys could be transferred without touching any account in the name of McDowell, presumably to complicate collection efforts, as alleged by the Opposing Creditor.

The Rich-Ad Action

196The Corporations 1638034 (McDowell alone corporation) and 1628719 (both McDowell and the Opposing Creditor corporation) as well as McDowell were defendants in the Rich-Ad Action.

197In that case, according to the statement of claim issued on April 7, 2007 Rich-Ad was a mortgagee that granted a $425,000 Mortgage to 1628719 on a property in Burks Falls, District of Parry Sound. McDowell and 1638034 were the guarantors. The mortgage had an interest rate of 30% and the balance was due on September 9, 2006, but was extended several times to December 9, 2006. The mortgage fell into default on that date and Notices of Sale were issued on January 29, 2007.

198It appears that Rich-Ad held other security in addition to the Mortgage and the mortgage indebtedness was reduced. The claim was not defended and default judgment was issued on July 23, 2007. On November 15, 2007 1638034 paid $290,000.18 under the judgment, leaving approximately $300,000 in exchange for Rich-Ad forbearing on sale of the property.

199McDowell failed to attend a Judgment Debtor examination on October 23, 2007 and Rich-Ad obtained an Order for McDowell to reattend from Master Birnbaum on December 4, 2007 (the “Birnbaum Reattendance Order”).

200One illustrative vignette about McDowell that arose in the Rich-Ad Action was that in her Endorsement for the Birnbaum Reattendance Order, Master Birnbaum permitted Rich-Ad to serve her Order on McDowell by mailing it to the address on his drivers license and to Stone, because counsel for Rich-Ad provided evidence that McDowell had improperly put as his home address on his drivers license a rent-a-mailbox store on Victoria Park in Scarborough, which also happened to be the registered Corporate address for many of his corporations, rather than his actual residence, as required. They also presented evidence that McDowell’s only “office” was Stone’s law office, which likely became inconvenient after Stone’s restriction from Real Estate Practice in November 2008, and eventual disbarment for Mortgage Fraud in August 2012.

201The Mortgagee entered into an agreement to sell the property with a third party with a closing scheduled for March 7, 2008.

202The Defendants brought a motion to enjoin the sale and to extend the time to redeem the Mortgage on the basis that the Defendants had a firm offer for the property. The Motion was brought by Stone. McDowell swore an affidavit, inter-alia, confirming he was sole officer director and shareholder of 1638034 and a signing officer and secretary of 1628719.

203In response the Mortgagee filed an affidavit detailing all of the attempts by the Defendants to redeem the Mortgage. One exhibit to that Affidavit was a Net worth statement provided by McDowell to Rich-Ad when the Mortgage was obtained that stated that as at March 9, 2006 McDowell’s assets were valued at $14.9 Million, his liabilities were only $3,000,000, leaving a claimed net worth by McDowell in March of 2006 of $11.9 Million (the “McDowell Net Worth Statement”).

204Most relevant to this Discharge Hearing, none of the Nadia Court Property, the Hollywood Court Property or the Mansbridge Property appear on this Net Worth statement, despite McDowell claiming in his testimony at the McDowell examination that he had beneficial interests in each property through the Trust agreements signed by the Bankrupt, or by providing the funds for the transactions.

205It should be noted that the Nadia Court Property transaction where McDowell transferred back his legal interest in the Nadia Court Property so the Bankrupt had registered on title again a 100% legal interest, testifying in the McDowell Examination that he didn’t want to own anything in his name, occurred just one month after McDowell proffered this McDowell Net Worth Statement to Rich-Ad claiming to have an $11.9 Million net worth.

206Also, for the same time period that this $11.9 Million Net Worth Statement was proffered by McDowell to Rich-Ad to obtain mortgage financing, the Bankrupt’s and McDowell’s sworn testimony at the Examinations was that the Bankrupt was holding legal title to the Properties and obtaining mortgages because McDowell couldn’t because he had “bad credit”. Which is it?

207After reviewing all of the evidence of indulgences being granted to McDowell and the Corporate Defendants, Justice Ellen McDonald on March 5, 2008 denied the Motion and allowed the Mortgagee to close its transaction to sell the property for $270,000 which was not sufficient to pay out the amounts owing under the Mortgage.

208Justice MacDonald stated in her Endorsement:

“I heard this motion on an urgent basis. This Motion is dismissed. The closing for March 7, 2008 can proceed. The Plaintiff has an absolute right to sell the land in question. The Defendants, and Mr. McDowell in particular, have no credibility as displayed in the Record of the Plaintiff, and the record before the Court. Costs to the Responding party are fixed at $6000 payable forthwith.”

209Writs were obtained by Rich-Ad against McDowell as guarantor in amount of $145,032.00 on August 15, 2008 to recover remaining amounts owing under the Rich-Ad Judgment after application of sale proceeds to Mortgage.

210One month after that Judgment, on September 19, 2008 the Bankrupt sold the Mansbridge Property.

The Adaco Action

211The sworn narrative in the Bankrupt’s Affidavit, the Bankrupt’s Examination, and the McDowell Examination that the Bankrupt’s testimony that:

“I worked until, gosh, almost 20 years ago I guess. Yeah, I haven't really worked for almost 20years.”(Q.31)

212And in McDowell’s testimony in June of 2018:

“92 Q. When did you meet her?

A. I've been with Angela 28 years, 28, 27, somewhere there.

Q. Good. All right. Have you lived common-law with Angela for the last 28 years?

A. Yeah.

Q. And has that cohabitation been continuous?

A. That's correct.

Q. What does Angela do for, for employment income?

A. She doesn't have it.

Q. She hasn't been working?

A. No.

Q. For how long has Angela not worked?

A. Basically since I've met her.

Q. And have, what income does she live off of?

A. Me.

Q. No idea? You -- and you've been living common-law with Angela for 28 years, do you have -- how many bank, joint bank accounts do you have?

A. Not one.

Q. And so she maintains her finances and you maintain yours?

A. I give her cheques or cash, whatever, for household expenses and she looks after everything.

Q. How much?

A. Depends upon the month.

Q. Would she have any independent sources of income?

A. No.

Q. And for how long has she had no independent sources of income?

A. Since I met with her, or I lived with her. That's 27 years.”

213Essentially their sworn testimony was that the Bankrupt has not worked in the 28 years since 1990 and has been dependant on McDowell to pay all of their bills.

214So it is very surprising that in the Adaco Action, commenced by Stone within that 28 year period on July 24, 1996 on behalf of Adaco Resources Inc., Glynburn Equities Inc. (which appears to be a McDowell company), the Bankrupt, McDowell and Stone as Plaintiffs against Cornerstone Securities Canada Inc., Merit Investment Corporation and Gerry Field, that the Bankrupt is described as:

“3 .The Plaintiffs Angela Angiulli ("Angiulli") and Keith McDowell ("McDowell") are managers, both of the City of Scarborough.”

7 At all material times the Plaintiff Glynburn was acting as consultant for Adaco, and was mandated by Adaco to seek sources of funding subject to its acceptance for:

A its resource operations in Red Lake, Ontario, and

B the acquisition of a publicly trading company ("the Vehicle") trading on the Canadian Dealer Network ("CDN") in the province of Ontario.

At all material times the Plaintiffs Angiulli, McDowell and Stone were representing Glynburn Equities Inc. in its business of locating an acceptable funding source for Adaco. They sought assistance in this regard through Myrna who was personally known to them: Myrna had up to then been a representative of Merit, a reputable, well-established securities' company.
Fields represented that he would, inter alia, together with Kazman and Merit, raise $1,250,000.00 million gross, of which Adaco would net $1,100,000.00. He further represented that he would forthwith obtain for Adaco a publicly trading vehicle, being free and clear of all debt and being an active trader with a good record trading on the CDN for the sum of $70,000.00, notwithstanding that such vehicles generally cost up to $250,000.00. In consideration for the foregoing promises Fields required that Cornerstone be given a 20% undiluted equity position in Adaco and a 2-year $7,500.00 per month management fee.”

215The claim by the Plaintiffs, including the Bankrupt, was for the termination of an alleged letter agreement appointing the Defendants, including well-known securities lawyer Gerry Fields, as the exclusive fiscal agents for the Plaintiffs for 24 months to raise the funding for Adaco and the return of a standby fee paid by the Plaintiffs to the Defendants. The Plaintiffs alleged multiple misrepresentations by the Defendants and in addition sought damages against each of the defendants of $500,000 and punitive damages of $5,000,000.

216As the Claim is drafted by Stone, in appears the Bankrupt played a central role in not agreeing to the additional terms sought to be imposed by the Defendants, which was subject to her specific ratification.

217Also, specifically:

“30. Angiulli then began telephoning Cornerstone on a regular basis to obtain the return of the original documents and Minute Book, but unsuccessfully. As a result of the information obtained in the preceding paragraph, Angiulli demanded a return of the $7,500.00 standby fee and an end to all further discussions and negotiations and a termination to all business dealings between the Plaintiffs and Cornerstone.”

218The Equifax search at Tab J to the 2023 Supplementary Report lists both Adaco and McDowell’s company Inter Global as prior employers of the Bankrupt.

219But in the case of Adaco, the Bankrupt was a Plaintiff making claims in her own personal capacity, which is evidence that she was far more than a mere employee. Her own pleadings suggests that she was a leading player in the Adaco Action, a “manager” and the party whose consent was needed to the May 30, 1996 Letter Agreement that was negotiated by Stone and:

“Fields insisted that the letter be signed and that a standby fee of $10,000.00 be put up though Stone explained that he could sign conditionally only, subject to the ratification of his two associates, the co-Plaintiffs Angiulli and McDowell. Fields acknowledged this.”

220It appears that trouble ensued when the Plaintiffs, and in particular McDowell’s company Glynburn, bounced a deposit cheque for the Standby Fee of $7500, as the Plaintiffs were using funds received from investor subscriptions from a different private placement McDowell was involved in, to negotiate the post-dated cheque in this transaction:

“20. Stone at the insistence of Fields delivered a postdated cheque to Fields from Glynburn though Fields was informed that the processing of the cheque might have to be delayed by a further day or two. Fields was made aware that the funds to cover the postdated cheque were coming from a private placement already in place of which he was aware and that the cash subscriptions coming into it were being delayed. As it turned out, Glynburn required a delay of some further two days before the cheque was negotiated, but Cornerstone refused and deposited the cheque. It was subsequently dishonoured.”

221However it was that McDowell could use funds paid for subscriptions in one private placement to negotiate a $7500 cheque on a entirely different deal, it is evidence that this transaction was not a one-off, and that the band of McDowell, the Bankrupt and Stone were at some point in the business of soliciting financing for junior mining companies.

222This certainly ruins the narrative propounded throughout these proceedings of the Bankrupt as being unemployed for three decades, passively accepting McDowell’s largesse to pay her family expenses.

223It is very difficult to reconcile the testimony of the Bankrupt and McDowell regarding her financial status and employment history with the description of the activities of the Bankrupt in her own Adaco Action Statement of Claim, apparently actively participating in raising funding for a junior mining company, within the time-period that McDowell testified the Bankrupt had no employment.

224The Adeco Action was dismissed on Consent on June 20, 1997.

CK Mortgage Action

225The CK Mortgage Action was commenced on March 4, 1998 under the Municipal Sales Tax Act, R.S.O 1990, C.M-60 by CK against the City of Kingston, Linchris, McDowell and the Public Guardian Trustee for an Order to pay out of Court $16,413.62 monies paid into Court by the City of Kingston of the surplus funds after the City of Kingston sold a property mortgaged by Linchris at a tax sale on April 1, 1997 and the remaining proceeds were paid into Court.

226CK (previously administered by Price Waterhouse Limited) was the court appointed trustee substituted for the first mortgagees Richard Chopping and Ronald Kessler by the Orders of Houlden, J.A. dated January 19th, 1993 and June 15, 1993 when the mortgage portfolio was sold by PWL to the purchaser of the portfolio that brought this action. CK was also the second mortgagee.

227The first charge granted by Linchris on April 10, 1990, was in the amount of $450,000The second charge on the property granted by Linchris to CK on January 3, 1991 was $2,000,000.

228Linchris was the owner and McDowell was the guarantor of both of the Mortgages.

229Default occurred under the Mortgages on April 10, 1991, but CK only received notice of tax arrears in April of 1995. The Tax arrears at the time of the registration of the certificate were $47,400.89. The Property was sold for $105,000, leaving only $16,413.62 to be paid to the Mortgagees.

230As of May 1996 the amount due and owing under the first mortgage alone, guaranteed by McDowell was $816,077.

231It appears from the Application Record that Linchris was dissolved by Notice of Dissolution at some point prior to April 1, 1997, necessitating putting the Public Guardian and Trustee on notice.

232As McDowell was the guarantor of these two Mortgages it appears that McDowell had at least a $800,000 guarantee liability to CK on March 25th, 1998 when Epstein, J. (as she then was) signed and order directing the payment out of Court under the first mortgage, and likely had at least a further $2,000,000 guarantee liability to CK under the Second Mortgage, as the remaining proceeds from the tax sale of $16,413.62 would not have paid out either mortgage.

233Consequently, McDowell in 1998 likely owed at least $2.8 million to CK. It is unclear what happened with respect to this McDowell indebtedness after that.

234It is also unclear how McDowell obtained Mortgages with Mortgage proceeds totalling $2,450,000 secured on a property that only sold for $105,000. The Mortgages appear to only relate to this property, not global security for advances secured on several properties.

235Curiously, from the McDowell Net Worth Statement provided by McDowell to Rich-Ad that stated that as at March 9, 2006, 8 years after the CK Mortgage Action, McDowell’s assets were valued at $14,900,000, his liabilities were $3,000,000. Curiously, the liability to CK is not specifically mentioned as a liability.

The CIBC Action

236In the CIBC Action, Summary Judgment was granted by Andre, J. on September 17, 2013 in amount of $58,815.72 and $5,000 in costs. The action had been commenced on October 15, 2012. The Statement of Claim did not have an explicit request for a declaration that the debts being claimed were debts to which s.178 of the BIA applies, nor did the Judgment contain such a declaration.

237It appears from the CIBC Motion materials that the Bankrupt did serve a pro-forma one page Statement of Defence by Fax sent from McDowell’s company Inter Global at 9:08 PM on November 15, 2012.

238It appears that Weir & Foulds prepared the defence for the Bankrupt, but did not go on the record, as the Backsheet on the Defence is in the Bankrupt’s own name, but the form of Statement of Defence was faxed by Weir & Foulds to Inter Global earlier at 7:59 PM and Interglobal then re-faxed the Statement of Defence to counsel for the CIBC at 9:08 PM the same day.

239There is no record in the Court Case History Report that the Bankrupt ever actually filed the Statement of Defence with the Court.

240There appear to have been no discoveries, and the Bankrupt did not defend the Summary Judgment Motion.

241The action was for collection of amounts owing by the Bankrupt under a personal line of Credit the Bankrupt applied for on August 22, 2008 and a CIBC Aventura Visa Card. The Limit on the Line of Credit was $18,000.

242CIBC sued for the unpaid amount of $18,563.54 under the Line of Credit and $39,328.45 under the VISA card.

243The Bankrupt applied for this credit from CIBC by Telephone and was interviewed by a CIBC Credit agent on August 22, 2008. This interview was recorded and archived (the “CIBC Transcript”).

244As this CIBC Action was brought under the Simplified Rules, on July 3, 2013 counsel for CIBC served on the Bankrupt a Request to Admit (the “CIBC Request to Admit”) that the CIBC Transcript of the interview was an accurate transcript from which the Credit Application was prepared and that the Credit Application and Credit Agreements were accepted by the Bankrupt. The Bankrupt did not respond to the Request to Admit.

245The implications of that failure under the Simplified Rules to respond by the Bankrupt are succinctly and correctly stated in the Court Materials filed by CIBC on the Summary Judgment Motion:

“3. Rule 51.03 (1): A party on whom a request to admit is served shall respond to it within twenty days after it is served by serving on the requesting party a response to request to admit (Form 51B).

Rule 51.03 (2): Where the party on whom the request is served fails to serve a response as required by subrule (1), the party shall be deemed, for the purposes of the proceeding only, to admit the truth of the facts or the authenticity of the documents mentioned in the request to admit.
Rule 51.06 (2): Where an admission of the truth of a fact is made by a party in a pleading, any party may make a motion in the same proceeding to a judge for such order as he or she may be entitled to on the admission without waiting for the determination of any question between the parties, and the judge may make such order as is just.”

246Accordingly, the CIBC Transcript and documents attached to the CIBC Request to Admit are deemed to be authentic. As a result, the record of the CIBC Transcript was included in the Summary Judgment Motion materials before Justice Andre, and were part of the official evidentiary record upon which Andre, J. granted the Summary Judgment Order.

247In the CIBC Transcript the Bankrupt states the following regarding her income and employment as at August of 2008 (“J” being “Joanne” the CIBC Agent and “CX” being the Bankrupt):

“J: So, uhm, currently I have your address as 712 Gibbons street in Oshawa, Ontario?

Cx: Yup.

J: And what is your occupation?

Cx: well, I do real-estate plan development.

J: Oh, okay.

Cx: ...and management. But I do a little bit of both.

J: Okay. Excellent. And will the line of credit be used on behalf of anyone other than the named account holder?

Cx: Absolutely not!

J: [laughs] "I'm not applying for somebody else!" [Laughs]

Cx: [laughs] absolutely not!

J: Excellent. And I have on file that you're common-law with one dependent?

Cx: Ah, yes.

J: Okay. And I'm just going to update your employment information.

Cx: Okay.

J: Now we've got a couple of things here, we've got "Adco"? "Addaco" tabaco?

cx: My Mining company

J: you're still there

cx: oh ya

J: You own that company?

cx: Ah good part of it yes

J: ok, and ah that's Victoria Park in Scarborough

cx: yup

J: And what would you say your income is there?

cx: Just on that or everything I do?

J: Just there

cx: (Talks over J) I say anywhere between I'm averaging eighty to a hundred and that doesn't even include the investments I have

J: so that's total

cx: yup

J: okay

cx: Probably this year I'm going to be showing more than that probably close some of the other deals I was involved in.

J: Oh Ok and then the other one we had was um ah Angeline investments Inc.

cx: yup

J: And that's part of the hundred and eighty thousand?

cx: Ah that's actually something I'm doing separately, that's what I do land development with

J: Oh Ok, and that's also Victoria park in Scarborough

cx: (Muffled) yup

J: And then we have other income (laughs)

J: And then rental property

cx: (talks over J) I've also got income properties don't know if you need to know that or not but ?

J: uhm well how much would you say your total um.

cx: (cuts in) from rental properties over three thousand a month.

J: Three thousand a month ok, Excellent ok so I've got that all updated there appreciate that

cx: Okay”

248So, to review, the Bankrupt, to obtain unsecured consumer credit from CIBC in August of 2008 represented that:

She owned “a good part of” Adaco Mining, “my mining company”, which contradicts her own pleadings filed by Stone in the Adaco Action, which state nowhere that the Bankrupt was the significant shareholder of Adaco, and which state that the Bankrupt, McDowell and Stone were working for McDowell’s Company Glynburn in “locating an acceptable funding source for Adaco”;
That she was still working for Adaco in August 2008, 12 years after the Adaco Action had been commenced, and her income was “averaging eighty to a hundred and that doesn't even include the investments I have” and that “Probably this year I'm going to be showing more than that probably close some of the other deals I was involved in”;
She made these representations of ownership and income from Adaco despite the fact that it appears that Adaco was a public company as at December 5^th, 2000 according to the May 25^th, 2001 Ontario Securities Commission Bulletin, and appears to have been dissolved after December 2004 for failure to comply with the Corporations Tax Act according to the Ontario Gazette vol 137-41 – October 9^th, 2004;
That she had additional income from Angeline Investments, “…that's what I do land development with.”;
That “…I've also got income properties” that she was earning over $36,000 a year from;
So, it would appear that the Bankrupt’s credit application listed income in 2008 of at least $136,000, not counting the alleged Angeline Investments income;
She gave her address to CIBC as the Gibbons Property, when at the time it appears she was living at the Nadia Court Property, based on her and McDowell’s Testimony in the Examinations;
She gave the Corporate Addresses as “Victoria Park” in Scarborough which was the address of the Mailbox rental that McDowell used, as discovered by counsel for Rich-Ad;

249It cannot be overstated by the Court how wildly at variance these statements made by the Bankrupt to obtain almost $60,000 in unsecured consumer credit from CIBC in 2008, are from the information the Bankrupt and McDowell provided to Geary, the Trustee, in her sworn statement of Affairs, in the her sworn testimony in the Examinations and Answers to Undertakings and in the Affidavits filed by the Bankrupt, and in particular, her and McDowell’s constant sworn assertions that she had been unemployed for 30 years, as quoted throughout in these Reasons.

250What is even more concerning is that the Bankrupt was served with the CIBC Request to Admit, that attached the CIBC Transcript in the summer of 2013, two years prior to filing the Proposal. The Bankrupt KNEW that CIBC had a recording of her making these representations that she had an income of in excess of $140,000, owned a mining company, owned a real estate development company and owned income properties, and STILL represented to Geary, in her Sworn Statement of Affairs and Income and Expense Statements and in the Examinations that she had “Zero” income and that her only asset was a half interest in the Nadia Court Property, WHILE CIBC was actively trying to seize that property, which the Bankrupt sought to prevent by filing the Proposal.

Disbarment of Stone

251Also not mentioned by McDowell in his examination was that Stone was permitted to resign in August 2012 by the Law Society in Law Society of Upper Canada v. Edward Lawrence Stone, 2012 ONLSHP 116, after being found guilty of professional misconduct in Law Society of Upper Canada v. Edward Lawrence Stone, 2011 ONLSHP 159 in respect of Mortgage Fraud against institutional lenders in 12 Mortgage “quick flip” transactions, none involving the Properties.

252From 2011 ONLSHP 159 it appears that Stone had ceased practicing real estate law on November 11, 2008, after giving the following undertaking to the Law Society:

“[260] Exhibit 17 includes an undertaking by the Lawyer signed November 11, 2008 whereby at paragraph 1 the Lawyer agreed to the following:

I UNDERTAKE that I will not directly or indirectly, including by instructing another lawyer or non-lawyer, engage in the practice of real estate law. I undertake that I will not register any instrument under the Land Titles Act; nor will I act in the actual or contemplated transfer, charging, insuring or otherwise affecting, an estate, right or interest in land. I undertake that I will not engage in the provision of any services relating to real estate law, including without limitation any of the following services: receiving instructions, preparing documents, searching and/or providing opinions or certificates with respect to the title, transfer or charge, and/or with respect to the issuance of any title insurance policy.

I acknowledge that this Undertaking and Acknowledgement remains in full force and effect until such time as I am relieved of its terms by the Law Society.”

253In addition, in 2012 ONLSHP 116 the panel on sentencing found:

“[31] The aggravating factors are as follows:

The Lawyer has a previous discipline history including a 1974 suspension for one year after he was found to have “invested money on behalf of clients in companies in which he had an interest without disclosing his interest and without advising them to obtain independent legal advice” as well as a 2005 admonition for acting in a conflict of interest and “in doing so … preferred his own interests to those of his client from the period of late 2000 to January 2001 and failed to recommend independent legal advice to the client.” Clearly these blemishes are aggravating factors when one considers that the Lawyer has failed to act honestly and candidly in the past, which is clearly the same problem he faced in this hearing.”

Surplus Income:

Surplus Income

254Superintendent 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.

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.
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.”

255Based on the statements filed by the Bankrupt, the Trustee determined there was no surplus income payable, but the Opposing Creditor opposed the discharge on the basis that the Bankrupt was misstating her income and expenses.

256It is not clear from the evidence before the Court where the Bankrupt was spending the monies provided purportedly by McDowell and in what quantities, and whether those would constitute allowable expenses under the Surplus Income Directive.

257In the Bankrupts Affidavit of Assets and Liabilities sworn on April 19, 2023 (the “Bankrupt’s 2023 Affidavit”), being Exhibit G to the 2023 Report the Bankrupt attaches three months of Bank Statements from January through March 2023 in an effort to show here sources of income and to prove the expense for her son’s treatment.

258In that Affidavit she lists her expenses as follows:

The following are the family's approximate monthly expenses:

ITEM	AMOUNT
Mortgage	$2,045.99
Property Taxes	590.74
Heating/Gas/Oil	251.05
Telephone	150.00
Cable	196.55
Hydro	55.00
Water	81.00
Prescriptions/Medications	40.00
Grocery/Food	1,100.00
Grooming/Toiletries Clothing	200.00
Clothing	200.00
Insurance – House	462.49
Total	$5372.82

4 Although some of our monthly expenses vary, I do not have any other monies which would be available to the Trustee for the benefit of creditors. The deficit between our household income and expenses is currently being funded by my common law spouse who has had to and will continue to request repayment of previous loans/advances he made to his friends and family over the years.

5 I have attached as Exhibits A, B, and C the last three (3) months of my bank statements.

As shown in the bank statements:

a) we occasionally pay for a tutor, Eli Dwor, for our son by e-transfer at the rate of $25 per hour; and

b) Matthew occasionally sends me a modest amount of money to assist with some of our household expenses when he has surplus money to do so.”

259However, in the Statement of Income and Expenses attached to the 2022 Report at Exhibit I (the “2022 I&E Statement”), the Bankrupt reported to the Trustee that as at May of 2022 her “mortgage” was $1,400, and that her combined car and house insurance were $425 per month, with a total deficit of $1805.43 on family income of $3,101.98.

260The Bank Statements offered as evidence of impecuniosity show the following payments not listed in the Bankrupt’s Affidavit they are attached to:

January 2023 Bank Statement

“Branch Bill Payment Capital One” - $3364.59”

Preauthorized Payment Zenith Ins - $462.49

Pre-authorized payment CLA Insurance – $125.04

Pre-Authorized payment Manulife - $818.41”

In that month the Bankrupt received ETransfers totaling $4,310, and the climate action payment of $153.73, Canada PRO $54.00 and Canada GST $193.25.

The total insurance expenses paid in that month by the Bankrupt alone paid through that account total $1,405.94, or 70% of the total family income the Bankrupt was declaring in 2023.

261None of the expenses described in the 2022 I&E Statement appear to be paid from this Bank Account, but the Bankrupt admits she has a Capital One Card, obtained post-Bankruptcy, but does not attach the statements from that Credit Card to support her claim for expenses.

262She explains this as follows in this Affidavit:

“9. In or around January 2018, my common law spouse submitted an online application for a Capital One credit card to be issued in my name. Capital One was an existing creditor in my bankruptcy so I did not know that I had a separate obligation to inform Capital One of my status as an undischarged bankrupt. I use the Capital One card for groceries, gas, and other household expenses but my spouse pays off the balance each month. Capital One has not requested that the credit card be cancelled since being informed by the Trustee that I was an undischarged bankrupt.”

263However on the 21^st June of 2022 the Bankrupt swore another Affidavit of Post Bankruptcy Assets, and Liabilities (the “Bankrupt’s 2022 Affidavit”) at Exhibit J to the 2022 Report, where she swore:

“1. That I do not have any assets that were acquired post-bankruptcy;

That I do not have any liabilities that were acquired post-bankruptcy;
That I am compliant with filing of all my income taxes, including 2021 income taxes.”

264Similarly:

February 2023 Bank Statement

“Branch Bill Payment- Capital One-MC - $2000”

“Preauthorized Payment Zenith Ins - $462.49”

“Pre-authorized payment CLA Insurance – $125.04”

“Pre-Authorized payment Manulife - $818.41”

In this Month deposits of $2000, $375, and $600 were made from sources unknown.

March 2023 Bank Statement

“Online Bill Payment Capital One MC - $800

“Preauthorized Payment Zenith Ins - $462.49”

“Pre-authorized payment CLA Insurance – $125.04”

“Pre-Authorized payment Manulife - $818.41”

In this month deposits of $17, $80, and $1000 were made from sources unknown.

In additional printouts obtained from the Bank, the $1000 Etransfer $500 and $800 deposits came from McDowell’s company Inter Global, a frequent recipient of funds from the Stone Trust Account, which the Equifax search also lists as a prior employer of the Bankrupt.

265NONE of these Inter Global deposits, in any way, have been declared by the Bankrupt as family income. In just the three months of Bank Statements that Bankrupt attached to this Affidavit, there are deposits made to the Bankrupt’s account that total $8,382, which if extrapolated for the whole of 2023 at the same rate would exceed $33,528 of undeclared additional family income.

266From the Credit Report enquiries on the Transunion Credit Report at Exhibit I to the 2023 Supplementary Report and the Equifax Credit Report at Exhibit J, it appears that further applications for credit may have been made in the name of the Bankrupt post-Bankruptcy with MBNA in 2018 and 2020, Royal Bank Classic Visa in 2016, Rogers Bank in 2016 and Mortgage Outlet Inc. in 2020

267None 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”, and it certainly appears that for those three months of Bank Statements, the Capital One Card obtained post-Bankruptcy was used to purchase at least $6,164.59 if these payments were to pay the balance in full.

268From the Equifax Credit Report it appears that the credit limit on that card was $7000, and that as of the January 13, 2023 report date, going back to 2021 the Bankrupt had carried a balance as high as $6525 on that card and had an average monthly balance in the $2000-$4000 range for that period.

Evidence of the Bankrupt:

Evidence of the Bankrupt

269The Bankrupt is seeking an absolute discharge.

270As evidence on this Discharge Hearing, the Bankrupt has filed the Amended Affidavit of the Bankrupt sworn on September 7, 2022 (the “Bankrupt’s 2022 Affidavit”), as well as the Bankrupts 2023 Affidavit.

271In addition, filed on this Discharge as admissible evidence were the Examination Transcripts from the Examinations of McDowell and the Bankrupt and the testimony described above that was taken before the Bankrupt’s Affidavits were sworn.

272The Bankrupt’s 2022 Affidavit was provided in response to the allegations made by the Opposing Creditor in the “Affidavits” that he attempted to file to support his allegations in the Notice of Opposition.

273One third of this affidavit is spent accusing the Opposing Creditor of misleading the Court that he was not resident in Florida. Each of the Affidavits attempted to be filed by the Opposing Creditor were sworn by a Florida Notary Public, and at the scheduling hearings the Opposing Creditor clearly stated he was in Florida. The Court was not mislead.

274The Bankrupt proceeded to state that part of that attempt to mislead the Court was the use of an address owned by a Donald Jones which the Bankrupt states:

A review of the parcel register for this address indicates that one of the owners of the property is Donald Jones. Mr. Jones and Stefano have been friends for years. Mr. Jones is a former lawyer in Oshawa who was disbarred and jailed for the disappearance of nearly $4 million of client’s and investors’ money. I was one of Mr. Jones’ victims and lost approximately $30,000 in his scheme. A copy of a newspaper article referring to Mr. Jones’ guilty plea is attached as Exhibit “2”.
Stefano move to Florida after he repeatedly took advantage of me financially. I had provided various loans to Stefano that he never paid back. Stefano forged cheques to himself from my cheque book and used my credit cards without authorization to rack up various charges for music equipment, and alcohol – none of which he ever paid back. When I discovered what Stefano had done I regrettably chose not to sue him because he had moved to Florida and I didn’t think I would ever be able to collect from him. He was also still my brother, and I felt bad for him.

275As noted above, the Bankrupt in the Bankrupt’s examination also accused the Opposing Creditor of being a cocaine addict, that she loaned him money that he did not pay back, that he was violent and also implied in her testimony that her brother was a criminal.

276What that Bankrupt failed to reveal in any evidence placed before this Court is that her brother, the Opposing Creditor, appears to have had a long-standing business relationship with McDowell, and that his corporations received at least hundreds of thousands of dollars of payments from the Stone Trust Account held by Stone for McDowell, from which she also received payments.

277From just the litigation in the Toronto Region, it appears that this relationship was still in place when the Sutton Action was commenced where the Opposing Creditor’s corporations were paid hundreds of thousands of dollars out of the Stone Trust Account held for McDowell.

278These statements in this Affidavit also are not in accord with the Statement of Affairs, or her testimony in the Bankrupt’s Exam, where she did not declare that she had some kind of an alleged set off claim against the Opposing Creditor for the alleged amounts that she lent to him, being a possible asset of the Bankruptcy Estate, or a set-off to the amount claimed in the Opposing Creditor’s Proof of Claim, or that at some point the Opposing Creditor used her chequebook and also her credit cards.

279It should also be noted she did not declare as an asset in her statement of affairs. that she had a possible s.178 debt in the amount of $30,000 claimable by the Bankruptcy estate against Donald Jones, that she chose to reveal in this Affidavit.

280Like her other former lawyer and business partner Stone, Jones was disbarred in 1991: Re Donald Stewart Jones 1991 ONLST 443. Jones was also criminally convicted of Fraud, for stealing from clients. His father, a co-partner in his practice, was also disciplined by the LSO.

281With respect to the various properties that the Bankrupt failed to declare to the Trustee, the Bankrupt blamed Geary. She stated the following with respect to the Hollywood Property:

3315 Hollywood Court Property

I deny the allegation that I withheld assets or that I intentionally failed to disclose an interest in the 3315 Hollywood Court Property (the “Hollywood Property”).

9.During one of my initial meetings with the trustee, Timothy Geary, I had told him about the Hollywood Property. I had also told Mr. Geary that I understood from the builder of the Hollywood Property that because we had not entered into a construction contract within two years, the builder had an irrevocable option to re-purchase the Hollywood Property from me, which the builder intended to exercise. A copy of this agreement is attached as Exhibit “4”.

In the agreement you can see my name is spelled correctly. I believe it must have been the lawyer that accidentally registered my name incorrectly on title.
After further discussion with the trustee, and the trustees negotiations with the builder it became apparent that I did have an interest in the Hollywood Property. The trustee was ultimately able to realize on that asset and on March 2, 2017 obtained an Approval and Vesting Order to sell the Hollywood Property. A copy of the Approval and Vesting Order is attached as Exhibit “5”.’

282The Trustee filed the notes taken by Geary at the initial interview with the Bankrupt for the Proposal. Contrary to the statements in the Bankrupt’s Affidavit Geary’s notes state:

Hollywood Property: The notes state “Vacant land, Pickering, repossessed by vendors pursuant to agreement of purchase and sale”
Nadia Court: “50% pursuant to Trust interest (secured) $545,000
Central Property: “house, central St. Pickering, transferred to daughter of spouse pursuant to Trust agreement, no consideration”

283With respect to the Nadia Property and the Central Property the Bankrupt swears to the following:

Nadia Court Property

On October 21, 2021, the Court approved the Minutes of Settlement dated September 22, 2020 between the trustee and Keith McDowell (“Keith”) and the sale of the trustee’s right, title and interest in the property municipally known as 9 Nadia Court (the “Nadia Property”). A copy of this Order is attached as Exhibit “6”.
Stefano initially opposed the motion. However, I understand from the trustee and believe that shortly before the motion was returnable, Stefano settled with the trustee and consented to the relief being sought. attended that hearing and had an opportunity to make submissions during that hearing which were not accepted.

1622 Central Street Property

On February 11, 2014, Stefano commenced an action in the Ontario Superior Court of Justice against me and Lindsey McDowell (the “Central Street Action”). In the Central Street Action, Stefano alleged that I fraudulently conveyed a property municipally known as 1622 Central Street in Pickering, Ontario (the “Central Property”) to Lindsey McDowell.
The caution that the trustee had filed against the Central Property was lifted as part of the Minutes of Settlement between Keith McDowell and the trustee that were approved by the Court.
Stefano did not take any steps to advance the Central Street Action against Lindsey McDowell, and on February 21, 2019, the Central Street Action was dismissed for delay. A copy of this Order is attached as Exhibit “7”.”

I will adopt the defined term Central Street Action from the Bankrupt’s Affidavit for these reasons.

284That Central Street Action, cited in this Affidavit, was commenced by the Opposing Creditor against the Bankrupt and Lindsey on February 11, 2014, claiming that the transfer of the Central Street property to Lindsey on February 2, 2012 was a fraudulent conveyance. The Bankrupt and Lindsey filed a Statement of Defence on July 31, 2014.

285No Order continuing the Central Street Action was obtained under R.11.02 by the Opposing Creditor when the Bankrupt became bankrupt on September 24, 2015.

286The Central Street Action was dismissed for delay by the Registrar under R.48.14 on February 21, 2019.

287On October 6, 2022, while I was case managing this Bankruptcy, Lindsey brought a Motion to set aside a Certificate of Pending Litigation obtained by the Opposing Creditor on June 14, 2014.

288Startlingly, in the Statement of Defence (the “Central Street Defence”) filed by the Bankrupt and Lindsey filed on August 1, 2014 in the Central Street Action Bankrupt plead, and therefore is deemed to admit under R.25.01(1)-(2), the following:

“5. In June 2005, Lindsey's father purchased a property in Ajax for Lindsey to

reside in (the "Ajax Property"). Lindsey's father was unable to qualify for a mortgage

so, Angela became the registered owner of the Ajax Property to obtain financing.

Lindsey lived in the Ajax Property and Lindsey's father and Lindsey paid for all of its

expenses.

In August 2008, the Ajax Property was sold and the proceeds of sale were

to be used to purchase a property located at 1622 Central Street, Claremont, Ontario,

Township of Pickering (the "Pickering Property") for Lindsey to reside in. Again, in

order to obtain financing, Angela was the registered owner of the Pickering Property.

Lindsey lived in the Pickering Property and Lindsey's father and Lindsey

paid the mortgage, insurance and expenses.

In or about November 2011, Lindsey determined that she would likely be

able to afford the Pickering Property on her own and she advised her father and Angela

of same. Thereafter, Lindsey gave notice that she no longer required social assistance.

On February 29, 2012, the Pickering Property was transferred from

Angela to Lindsey. On March 1, 2012, Lindsey obtained a mortgage for the Pickering

Property in her own name.

Since the transfer of the Pickering Property, Lindsey has paid the

mortgage, taxes, insurance and other expenses. Lindsey arranged for a paying tenant

at the Pickering Property who contributes towards the expenses for the Pickering

Property. Angela has not made payments towards costs and expenses for the Pickering Property.

The Estate Action

In 2010, the Plaintiff and Angela's sister commenced an action against

Angela with respect to the estate of their mother ("Estate Action"). The Estate Action

was resolved on consent on June 12, 2012 and Angela was ordered to pay the sum of

$70,000.00 to the Plaintiff and her sister (the "Estate Judgment"). Lindsey was not

aware of and had no knowledge of the Estate Action, or the Estate Judgment until being served with the Statement of Claim in this action. Lindsey was not involved whatsoever in the Estate Action.

Angela specifically denies that she told the Plaintiff that she will never

render payment of the amounts due and owing to the Plaintiff pursuant to the Estate

Judgment as alleged in paragraphs 7 and 22 of the Statement of Claim.

No Fraudulent Conveyance

The Defendants deny the allegations in paragraphs 8, 11, 12, 15 and 17 of

the Statement of Claim that the transfer of the Pickering Property was done to frustrate

the collection of the Estate Judgment or a fraudulent conveyance. The Defendants

deny the allegation in paragraph 16 of the Plaintiff's Statement of Claim that the transfer

of the Pickering Property was substantially below market value or in any way improper.

With respect to the allegations in paragraph 9 of the Statement of Claim, the

Defendants deny that Angela was the sole beneficial owner of the Pickering Property.

Further, the Defendants deny any that they intended to or that they did in fact defeat,

hinder, delay or defraud the Plaintiff.

“Angela's Claim for Set-Off

Angela loaned the Plaintiff approximately $55,000 to pay for rent and living

expenses while he was living in Florida. It was a term of the loan that the Plaintiff would

repay all amounts that he received from Angela in full. Angela also guaranteed a loan

from Lindsey's father to the Plaintiff in the amount of approximately $150,000 for a down payment for a house and furniture, as well as ongoing expenses for the Plaintiff's

Ontario house in the amount of approximately $8,000 per month for approximately a

year.

Further, in or around 2010, the Plaintiff improperly and unlawfully obtained

a credit card in Angela's name without her consent. The Plaintiff made purchases on

the improperly obtained credit card in the amount of $60,000 on the credit card in

Angela's name. Angela was responsible for repaying the credit card debt.

Despite repeated requests, the Plaintiff has failed or neglected to repay any amounts owing to Angela.
Angela has incurred significant damages as a result of the Plaintiff's failure to repay the loans she gave him and his use of an unlawfully obtained credit card in Angela's name totalling approximately $361,000. Angela pleads and relies on the doctrine of equitable set-off.”

289The extremely concerning issues raised by this sworn testimony and deemd admissions made in the Bankrupt’s Statement of Defense of the Central Street Action of the Bankrupt is:

The Opposing Creditor was the creditor whose votes were sufficient to reject the Bankrupt’s Proposal. If these admissions made by the Bankrupt in her Statement of Defence are true, why was Geary not informed of the existence of a possible $361,000 set-off claim not made against the amounts claimed in the Opposing Creditor’s Proof of Claim by the Bankrupt in fulfilment of the Bankrupt’s duties under s.158 (m) and (n) of the BIA?
As the Opposing Creditors Proof of Claim is for the amount of $116,257.40, if the admissions made by the Bankrupt in the above Statement of Defence were true and enforceable, this could have resulted in a $244,742.60 Judgment in favour of the Bankruptcy Estate against the Opposing Creditor in the Central Street Action under the provisions of s.111(3) of the Courts of Justice Act, or more relevantly for this discharge, a $244,742 undeclared asset of the Bankruptcy Estate, sufficient to pay out all of the Creditors with the other realizations, other than the Opposing Creditor, who would have no claim, and could not be an inspector, if this claimed set-off was valid.
Even more bizarrely, given that the Bankrupt’s other evidence was that McDowell paid all of her expenses and she had no assets, if in fact “…[the Bankrupt] also guaranteed a loan from [McDowell] to the [Opposing Creditor] in the amount of approximately $150,000 for a down payment for a house and furniture” then,

a) If she HAD paid McDowell under that Guarantee of the Opposing Creditor’s alleged guarantee liability, that may have been a related party preferential payment to McDowell the Bankrupt had not disclosed to Geary, and the payment was subject to being set aside under s.95 and s.96 of the BIA at the time of the Bankruptcy in 2015 because, from materials filed in the Central Street Action, it appears that the Bankrupt acknowledges the validity of the Debt, possibly tolling those limitation periods to the time these materials in the Central Street Action were filed; or

b) If any Guarantee payment to McDowell HAD been properly disclosed, then it was possible that the Trustee would have had a larger recovery from the settlement with McDowell, as the Trustee had a possible claim against McDowell to set off against his claims to having made payment of the carrying costs on the various Properties;

c) Also, if she HAD paid McDowell under the Guarantee, she would have had a subrogation right to recover against the Opposing Creditor, that would have passed to the Trustee on her Bankruptcy, again reducing the recovery of the Opposing Creditor, as a set-off against his provable claim and increasing the recovery of the other creditors.

d) If she HAD NOT paid McDowell under that Guarantee, then that was a related party contingent liability to McDowell that the Bankrupt had not disclosed to Geary, and from the materials filed in the Central Street Action it appears that the Bankrupt acknowledges the validity of the Debt;

Now knowing that at the time of all of the 2008 maneuvering with the Central Property, as factually admitted to in the Central Street Defence, McDowell was dodging payment on the 2007 Rich-Ad Judgment and 2008 writs, and an Order to appear on a Judgment Debtor examination, the admissions made by the Bankrupt in paragraphs 5-7 of that Defence may be indicative of the necessary intentions and factors described by the Court of Appeal in Ontario Securities Commission v. Camerlengo Holdings Inc., 2023 ONCA 93 at paragraphs 11 and 12.
In effect, the Central Street Defence is arguing that there was no intention in the transfer of the Central Street Property to defeat the Mother’s House Judgment held by the Opposing Creditor, because the actual purpose of the Central Street Property transactions being done through the Bankrupt to assist in McDowell hindering collection on (at least) the Rich-Ad Judgment that was then stalking him. The words "Lindsey's father was unable to qualify for a mortgage” are quite evocative of that intention, without saying WHY, in particular, McDowell could not qualify for a mortgage in 2005 and 2008, despite McDowell submitting the McDowell Net Worth Statement to Rich-Ad in March of 2006 stating his net worth at that particular time was $11.9 Million.

“Well I wasn’t trying to defeat, hinder, delay or defraud THAT Mother’s House Judgment” is a poor argument.

Issues with Bankrupts conduct dealt with in 2024 Supplementary Report

290As a result of the Opposing Creditor’s failure to provide admissible materials to support the large number of serious allegations he made regarding the conduct of the Bankrupt, McDowell, Lindsay, and the Trustee and its counsel, in the Notice of Opposition and then in his inadmissible Court materials, I asked the Trustee to deal with these issues in its 2023 Report so that the Court could have some admissible evidence to review the conduct of the Bankrupt for the purposes of this discharge.

Failure to attend meetings of creditors in the Proposal and the Bankruptcy;

291The Bankrupt did not attend either pre-covid in person creditors meetings on September 24, 2015, contrary to s.158(h) claiming that she advised Geary that she feared the Opposing Creditor and was concerned about her personal safety. There is no evidence before the Court to prove or disprove what the Bankrupt told Geary or the truth of these allegations to prove “other sufficient cause” existed. Given that Geary opposed the Bankrupt’s discharge on this basis, it appears that Geary did not believe there was sufficient cause.

292Given all of the other serious substantive issues relating to the Bankrupt’s conduct, this a technical breach of the Bankrupt’s duties.

Failure to attend counselling sessions:

293Geary opposed the Bankrupt’s discharge on June 21, 2016 on the basis that the Bankrupt failed to attend either mandatory counselling session. The Bankrupt started complying on July 26^th, 2016 by attending her first mandatory counseling session, and then took a 6 year break from her BIA duties, and attended her second mandatory counseling session on June 27, 2022, less than one month before her first discharge hearing before me on July 21, 2022.

294Under section 157.1(3) of the BIA:

“(3) Subsection 168.1(1) does not apply to an individual bankrupt who has refused or neglected to receive counselling under subsection (1).”

295The effect of s.157.1(3) is that it prohibits a Bankrupt who has not complied with attending the two mandatory counseling sessions being granted an automatic discharge from bankruptcy under Section s.168.1, denoting the seriousness with which the BIA takes the Bankrupt complying with her duties in this regard.

296The nature of the Bankrupts dilatory compliance cannot be credited as fulfilling the statutory intent to impose on bankrupts a high standard in proving that they have fulfilled their duties under the BIA, not merely a factual compliance.

297The OSB takes counselling seriously as a tool to change the Bankrupt’s behaviour to prevent recurrence of Bankruptcy and has set up a detailed system to ensure Bankrupt and LIT compliance in Superintendent’s Directive “No. 1R6 — Counselling in Insolvency Matters” (the “Counselling Directive”)

298In this case the Bankrupt, from her own and McDowell’s sworn testimony admittedly obtained:

More than a dozen proven sources of unsecured consumer credit, totalling almost $250,000 in unsecured consumer debt,
additionally granted mortgages of almost $1 Million on properties where she held legal title,
often for the benefit of McDowell because of his “bad credit”, to whom she turned over loan proceeds on occasion,
while claiming to be unemployed for 20 years, and
almost lost the Nadia Court Property when the CIBC obtained a judgment and scheduled a Sherriff’s Sale, which was only prevented by the intervention of the Proposal Proceedings and Geary, and
By her own admissions she allowed the Opposing Creditor to use her chequebook, and allowed McDowell to obtain a Capital One Card in her name, while bankrupt, that she continued to use for years afterward and ran to the limit on occasion.

299This Bankrupt was in great need of counseling, and her “compliance” with her duties after 6 years is indicative with the manner in which she conducted herself in this Bankruptcy. She did not fulfill this duty in accordance with the BIA.

Ownership of LPS Cleaning Services Inc.(“LPS”)

300The Opposing Creditor alleged that the Bankrupt was an employee and shareholder of LPS, which had apparently boasted online that it had $5 Million in annual revenue.

301In the Bankrupt’s Affidavit the Bankrupt denies the allegation that she is a shareholder but admits she did assist Lindsey by providing unpaid services but no longer assists with the business.

302The Trustee did some investigating and LPS was incorporated in 2016 by Lindsey. The Bankrupt is not an officer or director. Lindsey provided to the Trustee the following information in April 2023 as stated in the 2023 Supplementary Report:

“a. The Bankrupt has never held any ownership interest in LPS and Lindsey has always been the sole shareholder.

b. The Bankrupt is her father's spouse.

c. That the Bankrupt has assisted with administrative tasks at LPS over the years including cleaning the occasional property where Lindsey was unable to do so directly.

d. No salary/wages were paid to the Bankrupt for this assistance; however, the Bankrupt was provided use of a company vehicle and a company credit card to pay for meals and gas.

e. Lindsey/LPS paid for the Bankrupt's cell phone and her son's cell phone.

f. LPS no longer provides a company vehicle or credit card to the Bankrupt or her spouse, and no longer pays her cell phone bill.”

303As Kershman, J. found in In Re Berthiaume, 2019 ONSC 2727:

“[27] The court finds that where individuals work for relatives or their income is controlled by relatives, the court may impute income to the Bankrupt. In this case, the Bankrupt works for his wife’s company and his income has decreased by 75–80 percent of his pre-bankruptcy income.”

304Essentially Lindsey has provided evidence to the Trustee that during the Bankruptcy the Bankrupt, was not providing full, accurate and complete disclosure to the Trustee of her income and expenses, given that she had been given in-kind benefits by Lindsey of a vehicle and access to corporate credit card, also a violation of s.158(a.1) which reads:

“(a.1) in such circumstances as are specified in directives of the Superintendent, deliver to the trustee, for cancellation, all credit cards issued to and in the possession or control of the bankrupt”

And Superintendent’s Directive “No. 3 — Duties of the Bankrupt to Deliver Credit Cards to the Trustee” (the “Credit Card Directive”) which states:

“4. Policy — In all circumstances, the trustee shall require that the bankrupt deliver to the trustee, for cancellation, all credit cards issued to and in the possession or control of the bankrupt except those credit cards mentioned in paragraph 5 of this Directive, notwithstanding that there may not be any amount outstanding to the issuer of the credit cards.

The bankrupt is not required to deliver to the trustee, for cancellation, a credit card in the possession and control of the bankrupt where the credit card was issued to a third party (e.g., employer, spouse, friend, parent) and the issuer or the third party has authorized the bankrupt to continue to possess and use the credit card. The trustee must conserve documentation in the estate file justifying this exception”

305The email from Lindsey does not specify the time periods involved or the amounts that the Bankrupt received in-kind for the use of a car and a credit card in exchange for her services.

306As it appears that the Trustee was never advised of the LPS credit card that the Bankrupt had access to during the Bankruptcy, so the provisions of Paragraph 5 of the Credit Card Directive could not have been fulfilled.

307Depending on the time period that LPS was providing the Bankrupt with a vehicle and paying for vehicle expenses, this may make any Income and Expense statement provided to Geary in 2016 by the Bankrupt, which stated that she had zero income and zero expenses, was demonstrably false as she was in fact receiving benefits from LPS.

308It is also unclear whether the Bankrupt ever reported these benefits of employment given to her by LPS to CRA on her tax returns, as in 2016 the Bankrupt reported $360 in income, the 2017 Notice of Assessment is not before the Court, and the Bankrupt reported Zero income in 2018-2020.

309The Bankrupt’s Affidavit of Income and Expenses at Exhibit G to the 2023 Supplementary Report reveals no vehicle expenses, at all.

310Whatever the credibility and scant detail of Lindsey’s admissions about the Bankrupt’s behaviour, those admissions clearly implicate the Bankrupt in clear breaches of her duties under s.68, s.158(a.1) of the BIA and the Credit Card Directive.

Post Bankruptcy Credit Obtained by Bankrupt:

311The Bankrupt admits the following in the Bankrupt admits the following:

312This is in clear violation of the Bankrupt’s duties under s.158(a.1) of the BIA and the Credit Card Directive, and possibly a Bankruptcy Offence under:

198 (1)(e) Any bankrupt who:

(e) after or within one year immediately preceding the date of the initial bankruptcy event, obtains any credit or any property by false representations made by the bankrupt or made by any other person to the bankrupt’s knowledge,

And s.199 which reads:

199(b) An undischarged bankrupt who:

(b) obtains credit to a total of $1,000 or more from any person or persons without informing them that the undischarged bankrupt is an undischarged bankrupt,

313It also continues the disturbing “business as usual” after bankruptcy of McDowell continuing to obtain credit using the Bankrupt, at its most charitable, as a straw borrower due to his inability to obtain credit, which is what the Bankrupt and McDowell admitted to in the Examinations for the pre-bankruptcy unsecured consumer indebtedness and mortgages. At absolute best the Bankrupt continues to be in the thrall of McDowell and continues to obtain credit on his behest. At worst, she is an equal directing mind of McDowell’s “business” and obtained credit for use in that “business” while Bankrupt.

314Whether the Bankrupt is a witting or unwitting participant cannot be determined on the evidence before the Court, but clearly the behaviour that was evident before bankruptcy continues after bankruptcy, in violation of her duties under the BIA as enumerated above, which is supremely relevant to discharge.

Summary of Oppositions

315As the Opposing Creditor did not specify the exact s.173 Facts he was opposing under, and neither did Geary, I have summarized the assertions made in the oppositions as under the following s.173 facts.

Creditor	Proven Claim	a	b	c	d	e	f	g	h	i	j	k	l	m	n	o	Order requested
Geary and Trustee	N/A	X			X						X			X		X	As a result of the failure by the Bankrupt to disclose the fact of being undischarged and obtaining credit of $1,000 or the Trustee would recommend a 6-month suspension or other appropriate length of time at the discretion of the Court.
Opposing Creditor	$116,257.40	X	X		X	X	X				X	X	X	X		X	Pay 100% of Proven Claims and all costs of administration

LAW AND ANALYSIS

Law related to determination of discharge of the Bankrupt generally

Law and Analysis

316The general principals related to discharge were summarized by Hallett, J. in Crowley, Re 1984 NSCA 5444, 1984 CarswellNS 25, [1984] N.J. No. 52, 152 A.P.R. 390, 29 A.C.W.S. (2d) 462, 54 C.B.R. (N.S.) 303, 66 N.S.R. (2d) 390, (“Crowley”) which has been cited with approval or followed 92 times in other jurisprudence, including by many Judges and Registrars in Bankruptcy

E N D O R S E M E N T

Overview

Prior Family Litigation

Prior Bankruptcy Proposal Proceedings

The Bankruptcy Estate

Section 170 Reports and Opposition by Geary

Realization by Trustee on Assets not disclosed by the Bankrupt

The Properties

The CIBC Action against Bankrupt and Sheriffs Sale of Nadia Court Property

RBC Action against Bankrupt

The “Trust Agreements”

Opposition by Opposing Creditor

“Not a spouse” Allegations by Opposing Creditor

The s.163 Examinations of the Bankrupt and McDowell

Undisclosed litigation involving McDowell, the Bankrupt and the Opposing Creditor

Role of Bankruptcy Court on Discharge

The Linchris Homes Action by McDowell

The Sutton Group Action

The Rich-Ad Action

The Adaco Action

CK Mortgage Action

The CIBC Action

Disbarment of Stone

Surplus Income

Evidence of the Bankrupt

Issues with Bankrupts conduct dealt with in 2024 Supplementary Report

Summary of Oppositions

Law and Analysis

E N D O R S E M E N T

Overview

Prior Family Litigation

Prior Bankruptcy Proposal Proceedings

The Bankruptcy Estate

Section 170 Reports and Opposition by Geary

Realization by Trustee on Assets not disclosed by the Bankrupt

The Properties

The CIBC Action against Bankrupt and Sheriffs Sale of Nadia Court Property

RBC Action against Bankrupt

The “Trust Agreements”

Opposition by Opposing Creditor

“Not a spouse” Allegations by Opposing Creditor

The s.163 Examinations of the Bankrupt and McDowell

Undisclosed litigation involving McDowell, the Bankrupt and the Opposing Creditor

Role of Bankruptcy Court on Discharge

The Linchris Homes Action by McDowell

The Sutton Group Action

The Rich-Ad Action

The Adaco Action

CK Mortgage Action

The CIBC Action

Disbarment of Stone

Surplus Income

Evidence of the Bankrupt

Issues with Bankrupts conduct dealt with in 2024 Supplementary Report

Summary of Oppositions

Law and Analysis

Cited By (2 cases)

In the Matter of the Proposal of Christopher Lemieux, 2026 ONSC 1470

Victor Osztrovics (Re), 2025 ONSC 6174

Cited By (2 cases)

In the Matter of the Proposal of Christopher Lemieux, 2026 ONSC 1470

Victor Osztrovics (Re), 2025 ONSC 6174