Court File and Parties
Court File No.: FC-23-24 Date: 2025-09-26 Superior Court of Justice - Ontario Location: Bracebridge
Re: Kimberly Runions, Applicant And: William Holmes, Respondent
Before: The Honourable Madam Justice R.S. Jain
Counsel:
- T. Gronfors, Counsel for the Applicant
- D. Winnitoy, Counsel for the Respondent
Heard: September 18, 2025
Ruling on Motion
Introduction
[1] In simple terms, this is the Applicant's motion seeking an order lifting the automatic stay of proceedings on the bankruptcy of the Respondent. Specifically, the Applicant's motion is seeking the following orders:
Leave to continue the application against the Respondent and adding Morgan & Partners Inc., Trustee in Bankruptcy of William Holmes ("the Bankruptcy Trustee") as a co-Respondent;
Leave to amend the Application to include relief sought against the Bankruptcy Trustee;
An order that a number of matters be tried in this application as listed in #3 (a) to (j) of the Notice of Motion;
An order that the Bankruptcy Trustee shall not be subject to questioning, production of documents or costs if they do not defend against the proceedings;
An order that the Respondent produce the disclosure set out in the letter of the Applicant's business valuation expert, dated February 24, 2025, within 30 days; and
Costs.
[2] The Respondent opposes the Applicant's motion. The Respondent asserts that the Applicant's motion is in the wrong forum and that it should be brought in bankruptcy court. The Respondent relies on s. 69.1(1) of the Bankruptcy and Insolvency Act (hereinafter referred to as the "BIA") in which all proceedings for recovery of claims provable in bankruptcy against him were stayed. He says that the Applicant must obtain an order lifting the stay of proceedings under s. 69.4 of the BIA. He says that the Applicant does not have an admitted claim in the bankrupt estate of the Respondent.
Issues
[3] In this motion, the court must answer the following questions:
If an order to lift the stay of proceedings on the bankruptcy of the Respondent is required, what is the proper forum for such a motion? Should the family court lift the stay of proceedings? If the stay of proceedings should be lifted by the family court, should the Applicant's other requests for relief listed at para. 1 of this decision be granted?
Should the court order that the Respondent produce the disclosure set out in the letter from the Applicant's business valuation expert, dated February 24, 2025?
Decision
[4] The Applicant's motion requesting an order lifting the stay was brought in the wrong forum. The Applicant is required to obtain an order to lift the stay of proceedings if she is to continue in her property claims against the Respondent. That order lifting the stay of proceedings must be obtained in the bankruptcy court. Since the stay of proceedings is not being lifted, it is not necessary for the court to consider the other forms of relief sought by the Applicant listed in #1-4 at para. 1 of this decision.
[5] The disclosure requested by the Applicant's business valuation expert was requested prior to the Respondent declaring bankruptcy. The disclosure has relevance to both the valuation of the Applicant's trust claims, and the support issues in the Application. The support issues have not been stayed by the bankruptcy of the Respondent. The court shall order that the Respondent produce the disclosure requested in the letter from the Applicant's business valuation expert, dated February 24, 2025.
Background and Facts
[6] The Applicant and Respondent were in an 8-year relationship and resided together from approximately 2014 until 2022. They never married. They did not have any children together. The litigation commenced in 2023, and the issues include spousal support and ownership of property. The parties jointly owned a home in Kilworthy as joint tenants ("the Kilworthy home"). The parties consented to an order that the Respondent would purchase the Applicant's interest in the Kilworthy home for a buyout figure of $222,000 based on an appraised value of $880,000. When the Kilworthy home was sold for less than the appraised value, the Applicant brought a motion for enforcement. Justice Krause ordered that the Applicant receive $222,000 from the net sale proceeds.
[7] The Applicant is seeking a declaration that the parties had a joint family venture to which the parties jointly contributed toward, comprised of three businesses that operated during their common law relationship. The principal asset in question is the ownership of a company, Muskoka Wifi Inc., and its successors, which company the Applicant asserts that the parties started together. She says that she understood herself to be an owner of the business at all times. She alleges that she made several sacrifices in her career to create and fund the joint venture owned by her and the Respondent. On the eve of the separation, the Applicant says the Respondent signed a partnership agreement with other investors and took shares that were designated for the Applicant, for himself. The Applicant says she is a beneficial owner of Muskoka Wifi Inc. through her unjust enrichment and joint family venture claim.
[8] The Applicant retained David Holmes, of RH Partners, to provide a valuation of the Respondent's interest in Muskoka Wifi Inc., on the date of separation, as part of qualifying her claimed interest. Pursuant to a consent order dated October 7, 2024, the Respondent agreed to cooperate with the disclosure requests of the Applicant's expert. The Applicant's expert sent a letter dated February 24, 2025, outlining his additional disclosure requests. This letter was provided through counsel to the Respondent on February 28, 2025. The Applicant says that her expert requires the outstanding disclosure to complete his mandate.
[9] The Respondent opposes the Applicant's motion. He filed for bankruptcy on June 25, 2025. He is an undischarged bankrupt. The Respondent asserts that the Applicant does not have an admitted claim in the bankrupt estate of the Respondent. The Respondent says that he did not name the Applicant as a creditor because it is his position that she has not proven that she is entitled to a constructive trust or joint family venture. He asserts that the Applicant was not a partner in Muskoka Wifi Inc., she was an employee. He says that she did not suffer a deprivation because she was paid. The Respondent asserts that the Applicant was never "cut out" of the business. He says that the shareholders did not want her involved, and the shareholder agreement shows she was not a shareholder in Muskoka Wifi Inc.
[10] There is no signed contract or agreement that confirmed the Applicant's claims to be a shareholder. The Respondent says the Applicant was an employee of Muskoka Wifi Inc. and she was terminated. He asserts that on separation, he maintained his interest in the asset, Muskoka Wifi Inc., because he was an owner, and so there was a juristic reason for him to be entitled to the value of the asset. Therefore, he asserts the Applicant has no claim for unjust enrichment or joint family venture.
[11] The Respondent submits that the Applicant has brought her motion in the wrong forum. He says that the Applicant has not brought a motion in bankruptcy court to lift the stay of proceedings as required by s. 69.4 of the BIA. He says that the Applicant was given notice that this motion was in the wrong court by an email from the Bankruptcy Trustee, dated August 18, 2025. Upon being served with the Applicant's motion, the Bankruptcy Trustee sent an email to the Applicant's counsel asking whether the "moving party requested and obtained from the Bankruptcy court a lifting of the Stay of proceedings under the Bankruptcy and Insolvency Act pursuant to s. 69.4?" If not, the Bankruptcy Trustee warned the Applicant's counsel that the Applicant's motion may be in trouble, because he has "not received or been served with any material requesting the Lift stay motion before the Bankruptcy court in Toronto." The Respondent asks that the court dismiss the Applicant's motion with costs on a full recovery basis.
Analysis
[12] The BIA imposes an automatic stay on the legal proceedings on the bankruptcy of any debtor, meaning that no creditor can commence or continue any action for the recovery of a claim provable in bankruptcy. The effect of bankruptcy on a debtor is to stay all claims provable in bankruptcy until the trustee's discharge, unless the bankruptcy court grants leave to proceed by lifting the stay. That automatic stay does not apply to all claims, including the Applicant's claim for support.
[13] The Applicant asserts that the complex issues stemming from the breakdown of this relationship require a family court to "penetrate the scheme of the Respondent to oust and defeat the Applicant's claims." She submitted that when it comes to lifting the stay of the Applicant's remaining claims, several decisions of the court have found that the family court has jurisdiction to do so and that it is appropriate for family law actions to proceed in certain circumstances, particularly when the family court matter is already at an advanced stage. She argues that the case at bar fits those circumstances, as the Application was issued in March 2023, the parties had a settlement conference, and the next step is a settlement conference/trial scheduling conference on October 16, 2025.
[14] Counsel for the Applicant submitted that it is a practical use of judicial resources for the stay issue to be addressed in the forum where there is already a motion pending, in this case, the motion pending is for disclosure and to add the Bankruptcy Trustee as a Respondent. In addition to being at an advanced stage in family court, the determination of the Applicant's trust claim as a non-married spouse, is best suited for family court.
[15] Counsel for the Applicant advised the court that his client's Notice of Motion contained one error, as set out in #3(b). The Applicant is not pursuing relief in family court pertaining to the Applicant's unjust dismissal claim, which is a separate matter and is in civil court. Counsel for the Applicant advised that all interested parties to the motion were served. They did not file any response.
[16] The Applicant submitted that in Ontario, the court vested with jurisdiction in bankruptcy proceedings under the BIA is the Superior Court of Justice. She argued that all judges of the Superior Court of Justice have jurisdiction to deal with bankruptcy matters, and that as a branch of the Superior Court of Justice, the Family Court in Ontario has the authority to lift a bankruptcy stay for non-support family law claims. With respect, I do not agree.
[17] If an order to lift a stay of proceedings is required, it must be obtained from the bankruptcy court. "The effect of bankruptcy [on a debtor] is to stay all claims provable in bankruptcy until the trustee's discharge, unless the bankruptcy court grants leave to proceed by lifting the stay." The family law proceedings are stayed with respect to all property claims, and therefore, the judge presiding over a family court matter cannot grant an order lifting the stay of proceedings to pursue any action against the bankrupt's property. The property vests with the trustee in bankruptcy. Anyone making a claim to assets that have vested with the trustee in bankruptcy must make their claim with the bankruptcy court. It is the bankruptcy court that will determine whether it is in fact a valid claim.
[18] Constructive trust and unjust enrichment claims are property claims. If a bankrupt made a successful constructive trust claim to assets owned by their spouse, the bankrupt's interest, in the assets, if any, would vest with the trustee in bankruptcy. Similarly, like the case at bar, in a case where the spouse of a bankrupt has brought a constructive trust or unjust enrichment claim to assets that have vested with the trustee in bankruptcy, then they make a claim with the bankruptcy file, and the bankruptcy court will determine whether it is in fact a valid constructive trust claim. Family law proceedings cannot be used to circumvent the other creditors of the bankrupt. The Applicant cannot jump the queue of the other secured creditors that the Respondent has. The only way for the Applicant to continue her property claim is if she first obtains an order from the bankruptcy court to lift the stay of proceedings imposed by s. 69.3 of the BIA.
[19] The stay of proceedings was made in the Respondent's bankruptcy court matter, therefore, the order lifting the stay must be made in the bankruptcy court. Bankruptcy matters are best suited for bankruptcy court. In my view, that is the proper jurisdiction for the Applicant's motion. It is the lift of the stay in bankruptcy court that allows the equalization or property issues in the family court matter to continue. In my view, I do not have the jurisdiction without a declaration under s. 69.4 of the BIA. Simply put, the Applicant must go to bankruptcy court to lift the stay.
[20] In this case, the Bankruptcy Trustee has provided the Applicant with a notice of disallowance of her claim of $200,000. Her claim was written down by the Bankruptcy Trustee to $1.00. The Applicant has not appealed yet. Counsel for the Respondent has said that the Applicant still must prove unjust enrichment, and that as the Bankruptcy Trustee has not approved her admitted claim, she has no valid claim in the bankruptcy. She was not a creditor listed in the bankruptcy because she has not proven her claim.
[21] Counsel for the Applicant said that the Respondent has already transferred the shares in Muskoka Wifi Inc. for just $1. He said they were transferred "the day before the bankruptcy" and he submits that this is a fraudulent conveyance that should be concerning to the Bankruptcy Trustee. Counsel for the Respondent asserted that the shareholders agreement said that the Respondent had to sell/transfer his shares, so he did. It was not a scheme. In my view, this issue is for the bankruptcy court to determine. They are the experts regarding bankruptcy.
[22] Counsel for the Applicant said that if this court dismisses her motion, the Applicant may still appeal the decision of the Bankruptcy Trustee disallowing her claim. However, the challenge is that disclosure is still required from the Respondent because they don't have the evidence of the Muskoka Wifi Inc. business value.
[23] In my view, the family court does have jurisdiction to grant the orders sought regarding disclosure because that information is relevant to both the Applicant's property claim and support claim. No leave order is required for the support claim, as it is not stayed.
[24] I am concerned about the outstanding disclosure order dated October 7, 2024, that predates the bankruptcy. The October 7, 2024, order outlines the initial set of documents the Respondent was to produce and contains the Applicant's expert's initial disclosure requests. It also indicated that the Respondent would cooperate with the business valuator regarding further requests for disclosure. The Applicant's expert's letter dated February 24, 2025, outlines his additional disclosure requests. This was provided to the Respondent through counsel on February 28, 2025, many months prior to the Respondent declaring bankruptcy. All the items in the disclosure request are with respect to the day before the separation. In my view, the Applicant's business valuation expert needs that information to quantify the Applicant's trust claim, and further, it is relevant to the Applicant's spousal support claims.
Order
[25] For the reasons set out above, the Orders to go:
The Applicant's motion to lift the stay of proceedings bankruptcy and all relief sought in her Notice of Motion listed at #1 through to #5 are hereby dismissed.
The Respondent shall produce the disclosure set out in the letter of the Applicant's business valuation expert, dated February 24, 2025, within 30 days.
[26] There has been mixed success. If counsel cannot agree on costs, I will receive written submissions on a 7-day turnaround, commencing with the Applicant on or by October 10, 2025, followed by the Respondent's responding submissions on or by October 17, 2025, then the Applicant's reply submissions, if any, on or by October 24, 2025. Cost submissions shall be no more than 2 pages in length (12 pt font size, regular 1-inch margins, 1.5 spacing), exclusive of any costs outline or offers to settle. All costs submissions shall be delivered via email through my judicial assistant at BarrieSCJJudAssistants@ontario.ca. If no submissions are received on or by October 24, 2025, the issue of costs will be deemed to have been settled between the parties.
R.S. Jain J.
Date: September 26, 2025
Footnotes
[1] Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 69(1)
[2] Order of Justice Douglas, dated August 21, 2023.
[3] Order of Justice Krause, dated March 7, 2024.
[4] BIA, s. 69.4.
[5] Exhibit "N" in the Affidavit of the Respondent, dated August 18, 2025, is an email sent to the Applicant's counsel by the Bankruptcy Trustee, Mr. John Morgan.
[6] BIA, s. 69.1(1).
[7] BIA, s. 69.3(1).
[8] See BIA, s. 183(1); and Chapple (Re), at para. 23: "All judges of the Superior Court of Justice have jurisdiction to deal with bankruptcy matters."
[9] Liddell v. Liddell, 2011 ONSC 586, 100 R.F.L. (6th) 418, at para. 24.
[10] Schreyer v. Schreyer, 2011 SCC 35, [2011] 2 S.C.R. 605, at para. 25.