Court File and Parties
Court File No.: CV-31-2828093 Date: 2025-09-08 Ontario Superior Court of Justice In Bankruptcy and Insolvency
In the Matter of the Bankruptcy of Skylor Justin Gelinas of the City of North Bay, in the District of Nipissing in the Province of Ontario
Counsel:
- Nathan Sugeng, for the Trustee BDO Canada Limited
- Greg Specht, for the Opposing Creditor, Motor Vehicle Accident Fund
- Skylor Justin Gelinas, on his own behalf
Heard: July 11, 2025, via videoconference
P.J. Boucher, RSJ
Reasons on Application for Discharge
[1] Application for Discharge
Skylor Gelinas applies for an absolute discharge from his bankruptcy. The Motor Vehicle Accident Claims Fund, administered by the Ministry of Public and Business Services and Procurement (the Opposing Creditor), opposes the request, arguing Gelinas should be required to repay the debt owed to the Opposing Creditor.
Background
[2] The Debt in Dispute
The debt in dispute relates to a judgment obtained against Gelinas in a motor vehicle action.
[3] The Motor Vehicle Accident
On August 14, 2011, Gelinas caused a single vehicle accident while he was an uninsured driver. He had not yet turned 20 years of age at the time of the accident.
[4] The Judgment and Payment
A passenger in the motor vehicle sued Gelinas because of injuries suffered in the accident. A judgment was issued and entered in favour of the plaintiff in the amount of $130,000 on September 02, 2021. The Opposing Creditor paid this judgment in full and wrote to Gelinas in March 2022 and enclosed a copy of the judgment and a demand for payment.
[5] The Assignment in Bankruptcy
Gelinas filed an assignment in bankruptcy on May 6, 2022. At the time he listed six creditors; however, only three claims were proven:
a. The Ministry of Training Colleges and Universities - $278.50;
b. The Opposing Creditor - $130,000; and
c. The National Student Loans Service Centre - $19,865.48.
[6] The Trustee's Report and Recommendation
On February 12, 2025, the Trustee filed a Supplementary Report of Discharge of Bankrupt. The Trustee confirmed Gelinas had completed all requirements under the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (the BIA) as determined by the Trustee, and recommended an absolute discharge. Only the Opposing Creditor opposed the request, and a hearing was scheduled.
Positions of the Parties
[7] The Opposing Creditor's Position
The Opposing Creditor submits that Gelinas should be required to pay the entire debt owed to it as a condition of his discharge. This is because Gelinas' assets are not equal to 50% of his debts, and in these situations an unconditional discharge is not available. The Opposing Creditor argues this is essentially a one-creditor bankruptcy. Moreover, the assignment was made to defeat the debt owed pursuant to the motor vehicle judgment. In these situations, the bankrupt should be expected to repay the debt.
[8] Gelinas' Position
Gelinas argues he was told by a fund representative during the litigation that if the judgment was less than $150,000, they would not pursue him for payment. He submits his life has changed significantly since the accident: he has a family and a job. He has done everything the Trustee asked of him and he simply wants to put this behind him and have a clean start. He does not want to suffer under the burden of this debt for decades to come.
The Law
[9] Relevant Provisions of the BIA
The relevant provisions of the BIA are set out below:
Section 172(1) - On the hearing of an application of a bankrupt for a discharge, other than a bankrupt referred to in section 172.1, the court may
(a) grant or refuse an absolute order of discharge;
(b) suspend the operation of an absolute order of discharge for a specified time; or
(c) grant an order of discharge subject to any terms or conditions with respect to any earnings or income that may afterwards become due to the bankrupt or with respect to the bankrupt's after-acquired property.
Section 172(2) - The court shall, on proof of any of the facts referred to in section 173, which proof may be given orally under oath, by affidavit or otherwise,
(a) refuse the discharge of a bankrupt;
(b) suspend the discharge for such period as the court thinks proper; or
(c) require the bankrupt, as a condition of his discharge, to perform such acts, pay such moneys, consent to such judgments or comply with such other terms as the court may direct.
Section 172(3) - Where at any time after the expiration of one year after the date of any order made under this section the bankrupt satisfies the court that there is no reasonable probability of his being in a position to comply with the terms of the order, the court may modify the terms of the order or of any substituted order, in such manner and on such conditions as it may think fit.
Section 172(4) - The powers of suspending and of attaching conditions to the discharge of a bankrupt may be exercised concurrently.
Section 173(1) - The facts referred to in section 172 are:
(a) the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt's unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt's unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible.
[10] Balancing Interests in Discharge Applications
In determining applications for discharge, courts necessarily balance varying interests. While rehabilitation of debtors is central to the BIA (the fresh start principle), fairness to creditors must also be considered to maintain the integrity of the bankruptcy process: Bank of Montreal v. Giannotti at para. 12.
[11] Use of Bankruptcy to Avoid Civil Judgments
Where debtors have used the bankruptcy process to avoid a civil judgment, courts have at times required varying levels of repayment of the debt where the debtor's actions were "wilful and wanton": Kozak v. Richter; Geddes, Re at paras. 9-10.
Analysis
[12] Gelinas' Testimony and Actions
Gelinas testified that when the motor vehicle action was before the court, he was assured by someone from the Opposing Creditor that unless the judgment exceeded $150,000, they would not seek recovery from him for any payments made to the plaintiff. When he received notice of the judgment in March 2022, he contacted the Opposing Creditor, but they had no details about this arrangement. His counsel from the motor vehicle action passed away and so he reached out to his former firm, but they were unable to locate anything to corroborate this discussion. His next step was to contact a Trustee in bankruptcy. He did not pursue an appeal of the judgment. He otherwise followed the advice and direction of the Trustee and filed an assignment within two months of receiving notice of the judgment.
[13] Single Creditor Bankruptcy
There is no suggestion in the evidence that Gelinas was, prior to receiving notice of the judgment, unable to pay his other obligations. When he filed his assignment, the debt owed to the Opposing Creditor represented 86% of his debts. Only three of the six creditors' claims were proven. In my view, in all the circumstances, this is essentially a single creditor bankruptcy.
[14] Moral Responsibility
Gelinas' negligent conduct led to the injuries suffered by the plaintiff in the motor vehicle action. At the time of the accident, he was an uninsured driver. His moral responsibility for the injuries and resulting debt is accordingly heightened.
[15] Changed Circumstances
He was youthful at the time of the accident, having not yet reached 20 years of age. At the time of the assignment, he was single and reported an income of $2,200 per month. By the time of the hearing, he was married with two children. His average monthly income had increased to $3,745, not including his spouse's monthly income of $2,328.
[16] Financial Documentation Issues
Gelinas testified that the chart of income and expenses attached to his affidavit delivered for this hearing was prepared on his behalf by the Trustee. He provided the Trustee with documentation supporting his family income. He provided estimates of his monthly obligations, together with some of the supporting documentation. He testified that the income set out is gross income, though the chart indicates it is net income. It is noteworthy that the chart does not indicate any payment toward income taxes. The annual budget is essentially balanced, which means that the family would be in the red each year because of their income taxes if Gelinas is correct.
[17] Double Accounting in Budget
There are other problems with the budget filed for the hearing. Gelinas acknowledged in cross that the expense labeled "Other (Spouse's debts)" represents credit card payments made by his spouse. Over the past year they totaled $13,750.00. However, he also testified that his spouse uses her credit card to pay bills such as telephone, cable and dining out. The difficulty is that these expenses also have their own headings in the monthly budget, suggesting some double accounting for some of the expenses, totalling hundreds of dollars.
[18] Gelinas' Presentation of Evidence
Gelinas' preparation and presentation of this evidence is unfortunate. He tells the court it would take him decades to pay the debt owed to the Opposing Creditor. He talks about the negative impact the debt would have on the stability of his new family. He asks for a fresh start.
[19] Honesty and Forthcoming Disclosure
And yet, for reasons I have explained, he makes it difficult for the court to determine his actual monthly budget and thus his ability to repay the debt to the Opposing Creditor. Courts have refused to grant absolute discharges where debtors have not been "honest and forthcoming with [the] court as to the true state of their financial affairs and as to their sources of income": Gestetner, Re, 1996 CarswellOnt 5563 (Ont. Gen. Div.) at paras. 5 and 7.
[20] Assessment of Gelinas' Credibility
I attribute the problems with Gelinas' evidence about his financial affairs to carelessness rather than an intentional effort to mislead. He cooperated with the Trustee throughout these proceedings and completed what was asked of him. He prepared the new budget document on a quick turn-around to accommodate the date of the hearing. He readily acknowledged errors with the document in cross-examination. In the end, however, I am satisfied there is some room in his monthly budget to accommodate payment toward the Opposing Creditor's debt.
[21] Responsibility for Litigation Positions
Parties are responsible for the positions they take in litigation. While he believed there had been an agreement that he would not have to repay any judgment under $150,000, Gelinas did very little to pursue that belief after receiving the demand for payment. Instead, he consulted with a Trustee and filed essentially a single creditor assignment in bankruptcy to avoid the judgment when he was otherwise not having any financial difficulties.
[22] Balancing Fresh Start with Integrity of Bankruptcy Process
This debt and these proceedings have had an emotional toll on Gelinas. He was visibly upset during his evidence and submissions. His worry about the negative impact on his family if he does not receive a fresh start appears genuine. But the integrity of the bankruptcy process must be considered and balanced against that fresh start. This is particularly important in situations like this where Gelinas engaged the bankruptcy process to wholly avoid responsibility for personal injuries caused by his conduct.
[23] Determination of Repayment Condition
In my view, Gelinas ought to repay 25% of the debt as a condition of receiving a discharge. This represents a fair and reasonable balancing of the interests at stake in this proceeding. It maintains the integrity of the bankruptcy process while at the same time it facilitates as much as possible Gelinas' fresh start. I am satisfied he has at least $300 of space in his monthly budget, based on his evidence of double accounting for some of his monthly expenses.
Conclusion
[24] Court Order
For these reasons, the court orders:
a. As a condition of his discharge, Gelinas shall repay to the Opposing Creditor the sum of $32,500;
b. Starting October 01, 2025, and on the first day of each month thereafter until it is paid in full, Gelinas shall pay $270.83 per month toward this debt. There will be no interest on this debt provided Gelinas does not default on his monthly payments. In the event of default, interest will accrue at the current post-judgment interest rate.
[25] Costs
No costs were sought at the hearing, and none will be ordered.
Regional Senior Justice P.J. Boucher
Released: September 08, 2025