In the Matter of the Bankruptcy of Victor Osztrovics

Court File No.: Court No. 32-1493347
Date: November 3, 2025
Ontario Superior Court of Justice
In Bankruptcy and Insolvency

Before: Associate Justice Ilchenko, Registrar in Bankruptcy

Counsel

Christopher VanBerkum for Department of Justice, counsel to Canada Revenue Agency ("CRA")

Ken Page for Bankrupt (the "Bankrupt")

Greg Prince, LIT and Tammy Muradova, LIT for PricewaterhouseCoopers Inc., the discharged Trustee in Bankruptcy of the Bankrupt (the "Trustee")

Dan Marshall for Superintendent of Bankruptcy (the "OSB") opposing Bankrupt's Motion

Hearing History

HEARD: Discharge Refused by (now) Mills, J. on November 4, 2017 (the "Refusal Order"), Special Appointment Case Conferences for Motion to vary Refusal of Discharge heard by me on August 16, 2023, February 28, 2024, October 16, 2024 and February 26, 2025 setting document production timetable and requiring attendance of Trustee, OSB and CRA. Motion Heard on July 24, 2025 with further materials from prior discharge hearing before (now) Mills, J. in 2017 to be filed by September 1, 2025.

Endorsement

[1] The Motion

[1] The Bankrupt is seeking an Order varying the Refusal Order, inter alia, under the provisions of s.187(5) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3, as amended (the "BIA"), and seeks a discharge Order imposing a short suspension recognizing the prior bankruptcy filed by the Bankrupt in 1994.

[2] The Trustee, CRA as the largest creditor, and the OSB oppose the Bankrupt's Motion.

The Bankruptcy Proceedings

[3] The Bankrupt was deemed Bankrupt on June 21, 2011 with the unanimous rejection by his creditors of a Division I proposal put forward on May 2, 2011.

[4] The cause of bankruptcy is cited to be the business failure of True Blend Tobacco Company Inc. ("True Blend"), a company co-owned by the Bankrupt (25%), his spouse (25%) and a business associate, Brian Poreba (50%) ("Poreba").

[5] The Bankrupt is a second time Bankrupt. He previously made an assignment into bankruptcy on April 2, 1994 to deal with the liabilities that arose from the failure of a St. Hubert Restaurant Franchise he had operated. He was discharged automatically on January 25, 1995.

[6] On this Motion the Trustee has filed the Responding Motion Record of the Trustee that was before (now) Mills, J., that contains, inter alia, the 4th Supplementary s.170 Report dated October 19, 2017 (the "4th Report") which contains the First, Second, Supplementary Second, Third, and Supplementary Third Reports (without exhibits)(with the 4th Report, collectively the "Reports").

[7] Also filed with the Court after the hearing at my Order by the Trustee were the Motion Record filed by the Trustee for the Prior Variation Motion brought in 2013 under s.187(5) of the BIA, which will be detailed below.

[8] Also filed with the Court as Exhibit 1 to this Motion was the Application Record of the Trustee in Oppression Proceedings dated January 13, 2016 (the "Oppression Application Record") against the wife and mother of the Bankrupt relating to the Transfer by the Bankrupt to his mother of shares of Osztrovics Farms Ltd. ("OFL"), while Bankrupt, and the alleged transfer of the business of OFL to Vio Farms Ltd. ("VFL"), a corporation owned by his Mother.

[9] The Final Statement of Receipts and Disbursements in the Estate, filed to obtained the Trustee's Discharge, dated December 19, 2017 (the "SRD") was filed as Exhibit 4 to this Motion by CRA.

[10] In the SRD, the Proven Creditors are listed at $14,949,376.25, with CRA having a proven claim of $4,151,187.54. The next largest creditor is TD Bank with a combined claim of approx. $870,000 and the rest of the Proven Claims appear to be farmers and suppliers to the Bankrupt and his corporate entities.

[11] The Receipts in the Bankruptcy Estate as listed in the SRD were $1,247,370.32, the majority of which ($1,050,000) were settlement funds from the oppression litigation relating to the transfer by the Bankrupt of his shares in OFL to his Mother, while Bankrupt. The other source was the trustee's borrowings from CRA to fund the Bankruptcy.

[12] All of the recoveries in the estate were consumed by the professional costs of the Trustee, the interim Receiver, and their counsel in litigating with the Bankrupt, OFL and his family. Creditors, including CRA, received no dividends in the Bankruptcy estate.

[13] The Notes to the SRD read:

"1. On April 1, 2011, as a result of concerns that Mr. Osztrovics assets were being dissipated, certain farmers obtained an order for a Mareva injunction against Mr. Osztrovics ("Osztrovics" or the "Bankrupt"), True Blend Tobacco Company Inc., a company partially owned and controlled by Mr. Osztrovics and others prohibiting them from dealing with or disposing of any of their respective properties, assets and undertakings (the "Property").

2 On May 2, 2011, Mr. Osztrovics filed a Notice of Intention to Make a Proposal (the "NOI"), pursuant to section 50.4 of the Bankruptcy and Insolvency Act (Canada) (the "BIA") and Schwartz Levitsky Feldman Inc. agreed to act as trustee under the NOI. On May 1O, 2011, by order of the Court, PricewaterhouseCoopers Inc. ("PwC"), LIT, was appointed as interim receiver (the "Interim Receiver") of all of the property of True Blend, Osztrovics and others.

3 On May 30, 2011, Mr. Osztrovics filed a proposal pursuant to the provisions of the BIA (the "Proposal"). A meeting of Mr. Osztrovics' creditors was held on June 21, 2011 to consider and vote on the Proposal (the "Meeting"). At the Meeting the creditors rejected Mr. Osztrovics' Proposal, whereupon Mr. Osztrovics was deemed to have made an assignment in bankruptcy. At the Meeting, PwC substituted the former trustee as licensed insolvency trustee of the bankrupt estate of Mr. Osztrovics (the "Trustee").

4 As a result of Osztrovics' bankruptcy, PwC's duties and obligations as Interim Receiver in connection with Mr. Osztrovics' assets expired on June 21, 2011.

5 During the bankruptcy administration the Trustee was required to expend considerable time and expense reviewing Mr. Osztrovics' affairs and valuing the assets forming part of his estate, including understanding the fair market value of the Osztrovics Farms Ltd., ("OFL") shares previously held by the Bankrupt, and realizing upon same for the benefit of creditors, all as more fully detailed in the Trustee's reports to Court (the "Reports").This resulted in considerable litigation with OFL and others.

6 During the administration of the estate the Trustee filed a total of four Reports and 2 supplemental reports with the Court regarding the administration of the estate and sought orders of the Court for the production of books and records relating to OFL and examinations of the Bankrupt's wife and mother. The Trustee's third report dated January 8, 2016 sought the appointment of an Interim Receiver over OFL and others, which ultimately resulted in mediation (the "Mediation") being held in March 2016 regarding the OFL shares held by the estate.

7 Following the Mediation, on March 23, 2016, the Trustee reached an all-inclusive settlement, pursuant to which the Trustee sold the OFL shares previously held by the Bankrupt to Elisa Osztrovics and received $1,050,000, which was received by the Trustee on May 25, 2016.

8 During the administration of the estate, due to the significant litigation and contested actions affecting the administration of the estate, loans were provided to the estate totalling $402,000, which were repaid in 2016 when funding became available.

9 As at the date of bankruptcy, Mr. Osztrovics' Statement of Affairs included the OFL shares valued at $25,000, which were realized upon by the Trustee for $1,050,000. During the bankruptcy administration the Trustee has collected $371 from a bank account and collected a utility refund of $15,068. All other assets listed on the Statement of Affairs were exempt assets.

10 During the bankruptcy administration, criminal proceedings were commenced against the bankruptcy and his former business partner, Mr. Brian Poreba. On September 13, 2016, the criminal proceedings against the Bankrupt were resolved. The Bankrupt pleaded guilty to offences under section 30 (1) of the Excise Act, was convicted and ordered to pay a fine and restitution. As a result, the estate received $10,000.

11 The Bankrupt's discharge hearing was heard on October 30, 2017 before Master J.E. Mills, who concluded that the Bankrupt's application for a discharge be refused. Accordingly, at the time of completing this statement of receipts and disbursements, Mr. Osztrovics is an undischarged bankrupt.

12 At the commencement of the bankruptcy administration, a Third Party Retainer of $25,000 was provided to the Trustee by Michael Sloen Farms Ltd., which was initially used to fund the costs of the administration of the estate and was repaid as soon as funds became available to the Trustee.

13 The Trustee is now in a position to complete the administration of the estate."

[14] From the materials filed by the Trustee, the Inspectors approved the Trustee opposing the discharge of the Bankrupt, and approved the SRD as filed.

[15] The disbursements in the SRD in the amount of $1,247,370.32 were approved by Registrar Jean on June 15, 2018. The taxation was not appealed.

[16] The Trustee was discharged in or around 2018 and as a result the stay of proceedings was lifted under the provisions of s.69.3(1.1) of the BIA in or around 2018.

[17] Filed on this Motion by both the CRA and the OSB is the Report under s.170(3) of the BIA by the OSB dated October 24, 2017 containing, inter alia, the Transcript of the Bankrupt's s.161 examination and documents from the Bankrupt's prior proposal proceedings (the "OSB Report").

The Refusal Order Sought to be Varied

[18] The decision of Registrar Mills (as she then was) (now Mills, J.) dated November 4, 2017 (Unreported) refusing the discharge of the Bankrupt that the Bankrupt is seeking to vary, states in its entirety:

"[1] The Bankrupt has requested this application for discharge. The Trustee and the OSB oppose the application on the basis the Bankrupt has failed to co-operate with the Trustee in the administration of the estate and has failed to comply with the duties imposed upon a bankrupt under the provisions of the Bankruptcy and Insolvency Act ("BIA"). Having heard the testimony of the Bankrupt, and having considered the submissions of counsel and of the OSB, it is my view the Bankrupt's application for discharge must be refused. To do otherwise would undermine the integrity of the bankruptcy and insolvency system.

[2] The Bankrupt was deemed bankrupt on June 21, 2011 with the unanimous rejection by his creditors of a Division I proposal put forward on May 2, 2011. The cause of bankruptcy is cited to be the business failure of True Blend Tobacco Company Inc. ("True Blend"), a company co-owned by the Bankrupt (25%), his spouse (25%) and a business associate, Brian Poreba (50%). The Bankrupt's proven unsecured claims amount to $14,949,376.25. Canada Revenue Agency is the largest single creditor in the estate with a debt in excess of $8.3 million.

[3] The bankrupt has spent his entire life on the farm. He was born and raised on the family farm. He spent a number of years operating his grandfather's farm and now resides on a farm which was previously owned by his parents. For a short period of time, the bankrupt operated a St. Hubert's restaurant franchise in the town of Kitchener. That business failed in 1991 and was the cause of the bankrupt's first bankruptcy assignment in 1994 from which he was automatically discharged.

[4] In 1999, the bankrupt incorporated Osztrovics Farm Limited ("OFL"). The bankrupt held 51 % of the shares in OFL with his wife owning 49%. On his Statement of Affairs, the Bankrupt valued the shares at $25,000. After the deemed assignment and after all assets of the Bankrupt had vested with the Trustee, the Bankrupt transferred his 51% shareholding in OFL to his mother, Violet Osztrovics, pursuant to a shareholders agreement. The transaction was only disclosed as a result of the Bankrupt's examination by the OSB pursuant to the Debtor Compliance Referral Program. The Trustee was not informed of the transaction.

(5] This resulted in extensive litigation between the Trustee and the Bankrupt's family members. The Bankrupt did not in any way assist the Trustee with the efficient and effective realization of his property, as is mandated by the BIA . After significant time, effort and expense were expended, a settlement was reached for a valuation of the OFL shares which resulted in a realization to the estate of $1,050,000. Unfortunately a substantial amount of this settlement will be lost to the creditors as a result of the significant professional fees incurred in the protracted legal proceedings.

[6] The bankrupt failed to maintain appropriate books and records for True Blend. As a result, significant assets, inventory and receivables could not be properly accounted for by the Bankrupt. Criminal proceedings were pursued and the Bankrupt pled guilty to offenses under the Excise Act for which he was ordered to pay a fine and a restitution order. The Trustee has received $10,000 in satisfaction of the restitution order. As a result of the plea agreement negotiated by the Bankrupt, charges in respect of certain BIA offenses were withdrawn.

[7] The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing. The Bankrupt is now employed by Vio Farm Limited ("VFL"), his mother's recently incorporated company, and is purportedly paid $800 per month for his services or such other amount as his mother sees fit to pay. All income payments are made in cash and are held by the Bankrupt in a cupboard at home as he no longer operates a bank account. There is no means by which to independently verify the income purportedly paid to Bankrupt.

[8] The house in which the Bankrupt and his family reside is owned by OFL. According to the Bankrupt's income and expense statement, rent of $1200 per month is paid however, no proof of payment has been provided to the Trustee. The motor vehicles driven by the Bankrupt are owned by OFL and by VFL. They are not disclosed as taxable benefits on the T4 statements issued to the Bankrupt .

[9] The Bankrupt has not adequately responded to the Trustee's inquiries for documents to substantiate the income and expenses for the period of the bankruptcy. Further, the Bankrupt has frustrated the Trustee's efforts to realize on assets for the benefit of the estate. The Bankrupt is engaged in the family business and cannot hide behind the corporate veils of OFL and VFL, claiming that his wife and his mother acted independently in thwarting the efforts of Trustee. I do not find the Bankrupt's evidence in this regard to be credible, particularly since it was the Bankrupt who set this course of action by wrongfully transferring the OFL shares to his mother following his assignment in bankruptcy.

[10] Throughout this bankruptcy it is apparent to me that the Bankrupt has demonstrated a total disregard for his duties under the BIA as well as a complete indifference to his many creditors, several of whom are farmers from his community. The Bankrupt does not strike me as the honest but misfortunate debtor for whom the BIA is intended to provide relief. Having filed a prior bankruptcy, the Bankrupt cannot plead ignorance as to his obligations. To the contrary, the Bankrupt appears to have utilized his knowledge of the insolvency system to undermine and frustrate the efforts of the Trustee. There certainly is no evidence before me of any rehabilitation of the Bankrupt from either of his assignments.

[11] S. 173(1)(a), (b), (c), (d), (e), (j), (1) and (o) facts have been established.

[12] In the circumstances, the only appropriate disposition for this application is a refusal of the Bankrupt's discharge. To order otherwise, in my view, would undermine the public's confidence in the integrity of the bankruptcy and insolvency process."

[19] From the reasons of (now) Mills, J. the key issues that resulted in the Refusal of the Bankrupt's Discharge were:

1. The Transfer of the shares owned by the Bankrupt in Osztrovics Farm Limited to his mother after the assignment, after the Trustee was deemed the owner of the shares;

2. Failing to advise the Trustee of the Transfer;

3. Bankrupt did not in any way assist the Trustee with the efficient and effective realization of his property, as is mandated by the BIA.

4. As a result of the transfer, significant professional costs had to be expended to recover value for the Bankruptcy Estate;

5. The bankrupt failed to maintain appropriate books and records for True Blend.

6. Significant assets, inventory and receivables could not be properly accounted for by the Bankrupt.

7. Bankrupt pled guilty to offenses under the Excise Act for which he was ordered to pay a fine and a restitution order and the Trustee has received $10,000 in satisfaction of the restitution order.

8. The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing.

9. The use of vehicles by the Bankrupt were not disclosed as taxable benefits on the T4 statements issued to the Bankrupt.

10. No proof of payment of rent by the Bankrupt to OFL has been provided to the Trustee.

11. The Bankrupt has not adequately responded to the Trustee's inquiries for documents to substantiate the income and expenses for the period of the bankruptcy.

12. The Bankrupt has frustrated the Trustee's efforts to realize on assets for the benefit of the estate by remaining engaged in the family business and hiding behind the corporate veils of OFL and VFL, claiming that his wife and his mother acted independently.

13. Throughout this bankruptcy the Bankrupt has demonstrated a total disregard for his duties under the BIA as well as a complete indifference to his many creditors, several of whom are farmers from his community.

14. Bankrupt appears to have utilized his knowledge of the insolvency system to undermine and frustrate the efforts of the Trustee.

[20] Under the tests I will set out in these reasons, the onus is on the Bankrupt to provide evidence on this Motion that he has dealt with each of these issues on the "road map" set out by (now) Mills, J., and is now rehabilitated.

Prior Section 187(5) Variation Motion Involving This Bankrupt

[21] This is not the first motion under s.187(5) with respect to this Bankrupt. In 2014 the Trustee brought a Motion to set aside the Bankrupt's automatic discharge on the grounds that it was inadvertently obtained due the failure of the Trustee or Creditors to oppose the Bankrupt's automatic discharge due to the Trustee failing to send notices of the impending discharge.

[22] Registrar Short in PricewaterhouseCoopers Inc. v. Osztrovics 2014 ONSC 1567 (the "Prior Variation Reasons") set aside the automatic discharge, making findings of fact relevant to this motion by the Bankrupt:

"6 In its First Report to the Court the Trustee reported that it had been engaged for over two years in an on-going struggle to obtain necessary information for the proper administration of the Bankrupt estate from Victor. The Trustee's factum asserts that "Victor's dishonesty and failure to comply with his obligations under the Bankruptcy and Insolvency Act ... has increased the cost of the administration of the estate and resulted in on-going delays in realizing a return for Victor's creditors."

37 Victor Osztrovics went into bankruptcy on June 21, 2011 by virtue of a deemed assignment which resulted from a creditors' rejection of the proposal outlined above. PwC was appointed his Trustee in Bankruptcy that same day.

38 But for his voluntarily making a proposal to his creditors, Victor might well have been able to rely upon the protection in Section 48 of the BIA accorded to individuals whose principal means of livelihood is farming.

39 At this stage I simply observe that having elected to follow a path that lead to a deemed bankruptcy Mr Osztrovics became subject to the obligations to provide information to his trustee with respect to his affairs. In particular Section 158 (k) obliges him to aid "to the utmost of his power in the realization of his property and the distribution of the proceeds among his creditors".

40 I am not satisfied on the record before me that he has demonstrated that he has to date done his utmost to assist in such realization.

44 I am not satisfied that these complaints are relevant to the issue of setting aside the discharge. Regardless of the veracity of these claims, in my view the Bankrupt's obligations under Section 158 are not reduced or negated in any way notwithstanding any bias that has been perceived by the bankrupt.

X. Surplus Income?

45 The Trustee has had ongoing difficulties calculating the surplus income payments the Bankrupt is required to make to the estate due to the Bankrupt's failure to meet his disclosure obligations.

49 Here the trustee reports that it is not in a position to determine the appropriate level of surplus income (if any) due to the failure of the bankrupt and his relatives to provide full disclosure. Those issues are the subject of separate reasons to be found at 2014 ONSC 1691 .

50 In this regard it was argued on his behalf that Mr. Osztrovics only submitted income and expense statements to PwC for the months of June 2011 through November 2011.

51 The factum filed on his behalf asserts that:

21. Osztrovics was advised by Randall Smith ("Smith"), a representative of PwC that because his income statements remained unchanged during those times, he did not need to provide any further statements to PwC, until and when his monthly information changed.

52 The trustee disputes this assertion. It seems to me that to base any determination of surplus income on such a length of time would be inadequate. This particular case where the income of the family was cyclical having regard to the timing of the sale of various crops during the year.

53 I'm not satisfied that there could be a valid automatic discharge in this case without a determination as to whether or not surplus income was payable at any time during the initial 24 months. If there was any surplus income in that period of it would have triggered a 36 month payment period. I come to this conclusion notwithstanding the assertion in the Bankrupt's factum that:

22. At no time following the submission of his income and expense forms did PwC seek further information from Osztrovics, nor was he at any time required to make surplus income payments pursuant to section 68 of the BIA ."

[23] Applying the decision of Farley, J. in Baker, Re 1994 CarswellOnt 303, 28 C.B.R. (3d) 107, 51 A.C.W.S. (3d) 13 and Blair, J. (as he then was) in Re Cameron, 1995 CarswellOnt 947, [1995] O.J. No. 3820, 26 O.R. (3d) 794, 36 C.B.R. (3d) 272, 59 A.C.W.S. (3d) 583 ("Cameron"), and particularly Blair, J's (as he then was) test:

"That being the case, and while I recognize the argument that all the bankrupt will lose is the automatic absolute discharge that he or she may not have had in any event, I am of the view that something more must be shown than simply the likelihood of an absolute discharge itself not being granted.

In my opinion it is incumbent upon the trustee and/or the creditors on a motion such as this to show, with proper evidence, that a discharge hearing is likely to lead to a result that is appreciably different than an absolute discharge from either the perspective of the integrity of the bankruptcy system or of recovery by the creditors.

By "appreciably different" I mean something more than the likelihood that a discharge might be granted subject to a brief suspension or made conditional upon a recovery payment that can have no practical or meaningful significance to the creditors in terms of their recovery...."

[24] Registrar Short stated:

"61 Based on the evidence before me, and the foregoing analysis of it, I am persuaded that a discharge hearing, if one were to occur, would lead to a result "appreciably different" from an absolute discharge in the sense that Justice Blair has used that phrase above."

69 I am satisfied in this case that I am entitled to rely upon the report in support of my determination that the trustee has satisfied the onus to show, with proper evidence, that a discharge hearing is likely to lead to a result that is appreciably different than the existing automatic absolute discharge from both the perspective of the integrity of the bankruptcy system or of possible recovery by the creditors.

70 If the bankrupt had one dollar of surplus income over the first 24 months from the date of bankruptcy, Directive No.11R2-2013 provides, in paragraph 7(3), that the bankrupt's obligation would continue for an additional 12 months such that he would not have been eligible for a discharge prior to June 21, 2014.

XIII. Disposition

71 Through inadvertence the Trustee failed to send out the required Notices of Impending Automatic Discharge to the creditors of the Bankrupt and did not file its Notice of Intended Opposition to Discharge of Bankrupt and the Report of Trustee on Bankrupt's Application for Discharge until July 19, 2013. I have no doubt that had notices been sent, creditors would have opposed the discharge.

72 As a result of the foregoing analysis the Trustee's application to set aside the automatic discharge of Victor Osztrovics is granted. The trustee shall issue the necessary notices and reports as contemplated by section 168.1 of the BIA prior to April 30, 2014. If the trustee takes no steps towards issuing such notices then the bankrupt shall receive an automatic discharge as of June 21, 2014.

73 To the extent that further information is obtained prior to any discharge hearing being scheduled I anticipate that the trustee will deliver further reports as appropriate.

74 This application was necessitated due to inadvertence on the part of the trustee. In the circumstances, as an indulgence is being granted, I think this is an appropriate case for no order as to costs being made."

[25] Other reported decisions related to this Bankruptcy were the decisions of:

a) Registrar Short (unreported) and then Wilton-Siegel, J, regarding production of documents and examinations of related parties under s.163 and s.164 of the BIA Osztrovics (Trustee of) v. Osztrovics Farms Ltd. 2015 ONSC 2079, 24 C.B.R. (6th) 238, 253 A.C.W.S. (3d) 28, (the "Examination and Production Reasons")

b) leave to appeal the Examination and Production Reasons refused by D.M. Brown, J.A. 2015 ONCA 463, 255 A.C.W.S. (3d) 260, 27 C.B.R. (6th) 156; (the "Appeal Reasons"); and

c) the decision of Registrar Short in relation to an appeal from the disallowance of a proof of claim filed in the Bankruptcy Estate of the Bankrupt's business partner in Poreba, Re 2014 ONSC 277, [2014] O.J. No. 457, 237 A.C.W.S. (3d) 579. (the "Poreba Reasons")

Evidence of the CRA

[26] On this Motion the CRA has filed the Affidavit of Teri McNamee sworn July 17, 2025 (the "CRA Affidavit"), and exhibits thereto, as Exhibit 3 to this Motion.

[27] The CRA Affidavit has the following evidence relevant to this Motion:

"Regarding the claim of His Majesty the King:

4. On May 27, 2014, CRA filed a proof of claim dated May 26, 2014 in the bankruptcy of Mr. Osztrovics in the amount of $8,302,375.08. That same day, CRA filed a proof of claim dated May 26, 2014 in the bankruptcy of Brian Poreba ("Mr. Poreba") in the amount of $8,302,375.08.

5. These claims related to a penalty imposed jointly and severally against Messrs. Osztrovics and Poreba pursuant to section 239 of Excise Act, 2001, SC 2002, c. 22, regarding the Minister of National Revenue's determination that Messrs. Osztrovics and Poreba failed to pay import duties which ought to have been paid with respect to five containers (totalling 71,850 kilograms) of partially manufactured tobacco imported to Canada under tobacco licenses held by Messrs. Osztrovics and Poreba.

6. On August 22, 2014, by Notices of Disallowance, the Trustee disallowed the claims made by CRA against Messrs. Osztrovics and Poreba.

7. On September 19, 2014, Her Majesty the Queen in Right of Canada, as represented by the Minister of National Revenue (the "Crown"), brought motions in the bankruptcies of Messrs. Osztrovics and Poreba, seeking to set aside the Trustee's Notices of Disallowance and to allow CRA's claims in full.

8. On July 6, 2015, the Trustee and Crown agreed to the settlement of CRA's claims as follows:

(i) The Trustee agreed to withdraw the Notices of Disallowance.

(ii) CRA agreed to amend the proofs of claim such that the amount claimed against Mr. Osztrovics was $4,151,187.54 and the amount claimed against Mr. Poreba was $4,151,187.54.

(iii) The Trustee accepted the amended proofs of claim.

(iv) CRA agreed to then withdraw the motion seeking to set aside the Notices of Disallowance, on a without costs basis.

A true copy of the Minutes of Settlement setting out this settlement and details of the Crown's claim is attached hereto as Exhibit "A".

9. Additionally, following the distribution to creditors in the bankruptcy of Mr. Poreba, CRA agreed to lend its dividend from the Crown's claim against Mr. Poreba, in the amount of $198,000.00 to the Trustee for the purpose of paying the (then) outstanding legal and administrative costs in the Osztrovics Estate. The Trustee and Crown agreed that this loan would bear interest at a rate of 7% per annum and will be payable from the Osztrovics Estate. (See Exhibit "A".)

Regarding the balance on the amount assessed against Mr. Osztrovics:

10. To date, CRA has received no payment out of the Osztrovics Estate, both on the claim against Mr. Osztrovics or the loan agreed to by the Trustee.

Regarding Mr. Osztrovics and the 2023 taxation year:

11. The CRA is in receipt of a T4 RSP slip (that is, a Registered Savings Plan Tax Receipt) from the Toronto-Dominion Bank ("TD") issued to Mr. Osztrovics by TD for the 2023 taxation year. It indicates an investment by Mr. Osztrovics with a Fair Market Value ("FMV") of $2,920.32. The CRA is in receipt of a T4 RSP slip from CI Investments Inc. issued to Mr. Osztrovics by CI Investments Inc. for the 2023 taxation year. It indicates an investment by Mr. Osztrovics with a FMV of $86,587.17.

12. Attached hereto as Exhibit "B" are true copies of the CRA's ACSES Database, indicating the contents of the T4 RSP slips issued to Mr. Osztrovics by TD and CI Investments Inc. for the 2023 taxation year.

Regarding Mr. Osztrovics and the 2024 taxation year:

13. I have reviewed the records of the CRA, and I have identified a tax return from Mr. Osztrovics for the 2024 taxation year, received on July 9, 2025—and then assessed on July 17, 2025. The amount owing on the assessment, inclusive of taxes, interest, and penalties is $6,179.09—which is unpaid. A printout of CRA records ("Income and Deductions", dated July 17, 2025) showing the information in Mr. Osztrovics' return and the amounts assessed and owing are attached hereto as Exhibit "C".

14. The CRA is in receipt of a T4 RSP slip from TD issued to Mr. Osztrovics by TD for the 2024 taxation year. It indicates an investment by Mr. Osztrovics with a FMV of $3,066.34. The CRA is in receipt of a T4 RSP slip issued to Mr. Osztrovics by Industrielle Alliance, Assurance et services financiers inc. ("Industrielle Alliance") for the 2024 taxation year. It indicates an investment by Mr. Osztrovics with a FMV of $67,277.16—and a withdrawal of $25,000.00. That $25,000.00 withdrawal is indicated in Mr. Osztrovics' 2024 tax return (see Exhibit "C").

15. Attached hereto as Exhibit "D" are true copies of the CRA's ACSES Database, indicating the contents of the T4 RSP slips issued to Mr. Osztrovics by TD and Industrielle Alliance for the 2024 taxation year.

Address of Mr. Osztrovics:

16. The address on file for Mr. Osztrovics at the CRA is: 467 Second Concession Rd. RR3, Princeton, ON NOJ 1V0.

Corporate searches:

17. On June 10, 2025, I completed a search of the Ontario Business Registry of the Ministry of Public and Business Service Delivery.

18. I identified a corporation incorporated as ONTARIO NATURAL ORGANICS INC. on August 14, 2024, with a head office at 467 Second Concession Rd, Princeton, Ontario, N0J 1V0, Canada. The only identified active director and active officer for ONTARIO NATURAL ORGANICS INC. was Victor John Osztrovics, with an address for service at 467 Second Concession Rd, Princeton, Ontario, N0J 1V0, Canada.

19. Attached hereto as Exhibit "E" is a copy of the Profile Report and Certificate of Status for ONTARIO NATURAL ORGANICS INC. from the Ontario Business Registry, as of June 10, 2025."

[28] Ms. McNamee testified to some corrections to paragraphs 9 and 10 of the CRA Affidavit confirming the repayment from this Bankruptcy estate of the CRA loan of dividends CRA received from the Poreba Bankruptcy Estate, to fund the Trustee in this Bankruptcy estate, and confirming that CRA received no dividend payments in the estate. This corrected evidence was not objected to by the Bankrupt.

Evidence of the Bankrupt

[29] The Bankrupt swore an affidavit on October 11, 2023 (the "Bankrupt's Affidavit") for the initial return of this Motion, which was identified as Exhibit 5 to this Motion.

[30] The relevant paragraphs read:

"2. I am the Bankrupt by virtue of a Deemed Assignment which resulted in the creditors rejecting a Proposal I made under the Bankruptcy and Insolvency Act . The Proposal was filed with Schwartz Levitsky Feldman Inc., and contemplated payment to unsecured creditors of the sum of $70,000.00 over 24 moths [sic]. It was rejected and Price Waterhouse Cooper [sic] became Licensed Insolvency Trustee.

3. Price Waterhouse Cooper [sic] issued an automatic discharge after 9 months. They then sought to reverse their position based on the fact that I had a prior bankruptcy. After a Court Motion my automatic discharge was set aside.

4. My prior bankruptcy referred to a failed St. Hubert restaurant which I attempted to open earlier in my life.

5. I remain undischarged. I had received an Automatic Discharge which was subsequently set aside. After a hearing, my discharge was refused by then Master Mills pursuant to written reasons issued November 4, 2017 after a hearing on October 30,2017. Annexed hereto and marked as Exhibit "A" to this my Affidavit is a true copy of those reasons.

6. My family had been in tobacco farming in Burford, Ontario since the 1930's. I was involved in the family business since 1984. True Blend Tobacco started in 2008 as a partnership between myself and Brian Poreba. The partnership held the tobacco license until until [sic] May 2011. We requested it be transferred to True Blend Tobacco Company Inc. in October of 2009. The necessary forms were sent along with a cheque for $5000.000 which was cashed. The license was never transferred. Had the transfer been completed I would not have the personal liabilities which I am now responsible for.

7. The shareholders of True Blend Tobacco Company Inc. were myself, Elysia Osztrovics and Brain Poreba.

8. My mother Violet Osztrovics never had any involvement in True Blend Tobacco.

9. Our farm operated under the name Osztrovics Farm Ltd, ("OFL"). It was owned by my mother, my wife and myself. My mother transferred ownership into that corporation pursuant to an estate freeze. I was formerly a Director and minority Shareholder. After my bankruptcy, my shares were transferred to my mother pursuant to the terms of a Shareholder Agreement. That transaction was attacked by Price Waterhouse Cooper [sic] and ultimately a resolution was reached.

10. The bankruptcy related to an entity called Tru Blend [sic] Tobacco Company Inc. ("Tru Blend") Third party Purchasers did not pay for tobacco purchased from Tru Blend [sic]. Tru Blend [sic] in turn became unable to pay local tobacco farmers. A Maerva [sic] Injunction was issued against Tru Blend [sic] and myself on April 1, 2011. This led to my bankruptcy. As the Tobacco license was still in the name of the partnership I was personally responsible for the debts to the local farmers.

11. The largest single creditor in my bankruptcy is CRA. To this day I do not understand the nature of their claim. We had attempted to transfer the license for the tobacco prior to the Receivership. We paid the Government a fee of $5,000.00 and the transfer was never effected. Excise Taxes are normally on the processing end of tobacco and not the raw materials. This is why I do not understand the quantum or the assessment that was levied against me. Regardless, I acknowledge that the claim existed.

EFFECTS OF BANKRUPTCY AND MAERVA [sic] INJUNCTION

12. Once the Maerva [sic] Injunction was granted, I was financially crippled. I lost my bank accounts, credit cars and had no access to the records of Tru Blend [sic] in order to defend my position. I was unable to obtain access to the records, despite requesting Price Waterhouse Cooper.[sic]

13. The result of this is that I essentially only worked for nominal amounts and cash for several years. I am now 61 years old and drive a 2014 vehicle which was purchased for $1,500.00. I am living in a basement apartment on a farm pursuant to a Lease. The Landlord is in no way related to me.

14. My wife passed away in June 2019. My 3 children are now adults and none of them live with me or are dependent on me. My oldest son lives in Brantford and is an electrician, my daughter is a hair stylist in Burford, and my second son is operating his own farm nearby. None of them are financially depended on me and I couldn't assist them even if I wanted to.

EVENTS WITH LICENSED INSOLVENCY TRUSTEE

15. The Licensed Insolvency Trustee has alleged that I did not cooperate with them in the course of the bankruptcy. As indicated, I did not have a bank account. I was being assisted by friends and family. This is particularly so in the farming community wherein people were able to provide me meat and food they had grown. This remains true to this day.

16. I did provide cooperation with the Licensed Insolvency Trustee. At some point in the bankruptcy I spoke with Randall Smith at MNP LLP, who advised me that if all of my income and expense statements were the same, I was not required to send further statements. This position changed by the Licensed Insolvency Trustee.

17. Between July 18, 2013 and September 17, 2023 [SIC- actual date on letter is September 17, 2013] , correspondence was exchanged between counsel for the Licensed Insolvency Trustee, Chris Horkins and my then counsel, John McNair. There was disclosure sought by the Licensed Insolvency Trustee, and a review of correspondence indicates everything was provided. Annexed hereto and marked as Exhibit "B" to this my Affidavit are true copies of the exchanges.

18. By reference to the documents in Exhibit "B", all information provided relating to my RRSP's, life insurance policies, tax returns and income and expenses were provided. In addition, my mother provided her life insurance particulars.

19. I was unaware of any other documentation which the Licensed Insolvency Trustee sought.

CURRENT CIRCUMSTANCES

20. As indicated, I am 61 years of age, widowed and live in a basement apartment. Annexed hereto and marked as Exhibit "C" to this my Affidavit is a true copy of my current lease.

21. I own a 2014 Trax which I purchased for $1,500.00.

22. I am no linger [sic] involved in the tobacco business and the farm which I am working on grows crops. I continue to be assisted from friends, who provide me with food from their farms.

23. My daughter Andrea is my oldest child. She is a hair stylist living in Burford. My second child in Eric who lives and works on a farm nearby. M [sic] youngest son Jason is an electrician living in Brantford.

24. I did not inherit anything from my wife's estate.

25. I have filed my income taxes every year. Annexed hereto and marked as Exhibit "D" to this my Affidavit are my Notices of Assessment for the years 2019-2021. My total income has ranged from approximately $18,000.00 to $26,000.00.

26. I have no intention of going back into the tobacco industry or operating any business ventures of any kind. I do wish to put all of the circumstances behind me so that hopefully one day, I can retire without my bankruptcy hanging over my [sic]. It is causing me undue stress."

[31] The Bankrupt filed a second Affidavit sworn April 30, 2025 which was identified as Exhibit 6 to this Motion (the "Bankrupt's Supplementary Affidavit"). The relevant portions of the Bankrupt's Supplementary Affidavit are:

"2. The purpose of this Affidavit is to update and supplement my Affidavit previously sworn in this matter on October 11, 2023.

3. I continue to live in the same place and work on the same farm. Annexed hereto and marked as Exhibit "A" to this my Affidavit are my Notices of Assessment for 2022 and 2023. My income did go up in 2023 due to my obtaining additional work on the same farm. In farming, income can fluctuate from year to year, depending on the crop output and weather conditions.

4. I confirm I have not acquired any new assets nor do I have any liabilities.

5. Annexed hereto and marked as Exhibit "B" to this my Affidavit is a current budget for myself, based on my current circumstances. I am living in the same place. My expenses have gone up as my roommates have moved out and I am forced to pay for the entire unit. I am seeking alternate accommodation but there is little available in the area where I work.

6. I do wish to clarify the situation with the tobacco taxes. Tru Blend [sic] was originally a partnership between myself and Brian Poreba. As sworn in my prior Affidavit it was the intention to transfer the license to Tru Blend [sic] Tobacco Company Inc. The application to transfer was filed and the $5,000.00 transfer fee was paid to the Government. I do not know why the license was never transferred to the corporation. Had the license been transferred the assessments which were the subject of the HST liability would be with the corporation and not myself.

7. I have also looked into the HST liability. I did not understand why I had been assessed with a liability in excess of $8 million dollars. I am advised by my solicitor, Kenneth H. Page and verily believe that he reviewed the Court file and found a copy of an Affidavit filed by Randy McKeown, a collection officer with the Toronto West - Thunder Bay Tax Services Office. The Affidavit contains some exhibits and others were missing. At Exhibit B to the Affidavit is a copy of a letter wherein myself and Brian Poreba were assessed with a penalty of $8,313,045.00. It was assessed against us as partners in Tru Blend [sic]. The assessment appears to be double the amount of duty which ought to have been paid. Again, if the license had been in the name of the corporation and not the partnership this would not have been my liability.

8. The assessment appears to have been sent to a post office box for Tru Belnd [sic] on May 27, 2011. The Maerva [sic] Injunction had been granted on April 1, 2011. By May 27, 2011, I had no access to the building and/or records or any post office box of Tru Blend. Prior to my current solicitor showing me this letter I had never seen it. Likewise, I had never seen the Proof of Claim filed with the Court. Annexed hereto and marked as Exhibit "C" to this my Affidavit is a true copy of the Affidavit of Randy McKeown referred to herein. I note that certain exhibits are missing and were not in the Court file."

9. I do wish to have my discharge. I have no intention of starting a corporation or entering into a business venture. I would like to receive my CPP and OAS without the concern that they could be set off by the Government due to my non discharge. I also find the lack of discharge mentally stressful and I do seek to be discharged for my own piece of mind."

[32] It appears from the decision of McDermid, J. granting the Mareva Injunction (discussed below) the proper corporate name is "True Blend Tobacco Company Inc."

[33] The income and expense statement at Exhibit "B" to the Bankrupt's Supplementary Affidavit indicates that the Bankrupt earned in March 2025 at total of $5771, consisting of net employment income of $5,016, and pension income of $765. On an annual basis, if that net income is correct, the Bankrupt is earning approximately $69,252 net per annum.

[34] The Bankrupt declared non-discretionary medical expenses of $778 and total expenses of $4948 of which the majority of the discretionary expenses is paid for rent of $2350. None of the remaining discretionary expenses declared appear unusual.

[35] The Bankrupt also filed his Tax Return for Tax Year 2024. The Bankrupt reported total income consisting of almost $53,000 in employment income, almost $9000 in CPP Benefits and $25,000 in RRSP income, which the Bankrupt explained as him making withdrawals to purchase a vehicle and to pay medical expenses.

[36] The withdrawal from his RRSP resulted in an income inclusion that resulted in a balance owing for 2024 of $5676.86.

[37] Also filed with the Court after the hearing at my Order by the Trustee were the prior Affidavits of the Bankrupt:

1. Affidavit sworn on November 4, 2013 for the Prior Variation Motion (the "Prior Variation Affidavit")

2. Affidavit sworn March 6, 2017 for the Prior Discharge Hearing (the "Prior Discharge Affidavit").

Cross Examination of the Bankrupt

[38] The Bankrupt was cross-examined by counsel for CRA and by Marshall on behalf of OSB.

[39] With respect to the following statements made in the Bankrupt's Supplementary Affidavit,

"9. I do wish to have my discharge. I have no intention of starting a corporation or entering into a business venture. I would like to receive my CPP and OAS without the concern that they could be set off by the Government due to my non discharge. I also find the lack of discharge mentally stressful and I do seek to be discharged for my own piece of mind."

Counsel for CRA examined the Bankrupt on the issue of the incorporation by the Bankrupt of Ontario Natural Organics Inc, ("NewCo") on August 14, 2024, and appointment of the Bankrupt as sole Officer and Director:

Q. Turning your attention back to the April 30, 2025 affidavit. At paragraph nine, you state, "I have no intention of starting a corporation or entering into a business venture." Is that - do you see that, Mr. Osztrovics?

A. Yeah. Mm-hmm. Mm-hmm.

Q. I put it to you that less than a year earlier, did you incorporate Ontario Natural Organics, Inc.?

A. Yes, I did.

Q. And did you incorporate that in approximately August 2024, or August 14, 2024 to be specific?

A. Yes. Mm-hmm.

Q. And are you the registered director and officer of Ontario Natural Organics, Inc.?

A. Yes.

C. VANBERKUM: Q. I'm going to show you the revised book of documents from the Crown. So, this is tab 1 for the reference. And the first is - it's called a Profile Report, and it's from the Ministry of Public and Business Services Delivery. Do you see this on the screen, sir?

A. Yeah. Mm-hmm.

Q. And is this reflecting what you understand to be the nature of the corporation? That - and it specifically has a name,…

A. Mm-hmm.

Q. ...Ontario Natural Organics, Inc.?

A. Right.

Q. And that it is an active corporation in Ontario?

A. Well, it's not really active, it's just nothing has been done. It's just sitting with - anticipating my future; you know, my ability to continue to work because of - I'm getting up in age, and the physical part that I'm currently doing, I can't do forever. And I'm just concerned, and I had no idea that one could make a company to do things on an easier scale. There was no ill intention to do this. I'm just trying to look out for myself going forward. That was all. And there's no - nothing's been done. It's just sitting in limbo, so....

Q. Just to make sure that I put this document to you, I understand that you didn't complete this corporate search, so this was completed by someone else, but if the information in this profile report - just to make sure it's also - the head office is your address, is that correct?

A. Correct. Mm-hmm.

Q. 467 2nd Concession Road?

A. Correct.

Q. And this is you, Victor John Osztrovics,…

A. Mm-hmm.

Q. ...active director?

A. Yeah.

Q. And same person, this is you, active officer?

A. Correct.

Q. And you have the position of president?

A. Correct.

Q. The second document which is attached to the same, so tab 2 of the book of documents. This is a certificate of status. So, it was similarly a corporate search for the Ministry of Public and Business Service Delivery in Ontario.

A. Mm-hmm.

Q. And this is the corporate number and corporate name that we were referring to, Ontario Natural Organics, Inc.?

A. Mm-hmm.

Q. And it's - this is correct? The one that we were referring to before is the same corporation in August 14, 2024, has not been dissolved. Is that the current status?

A. Correct. But there's no activity, so....

C. VANBERKUM: Q. So, returning to your April 30, 2025 affidavit.

A. Mm-hmm.

Q. Bringing you to paragraph four. I'm sorry. I'm sorry, Mr. Osztrovics. Just to clarify, you said that you created the corporation anticipating a time when you were no longer able to work?

A. Correct.

Q. But on April 30th, you said that you have no intention of starting the corporation or entering into a business venture. So, this is - April 30th is after the August 14, 2024 corporation. Excuse me. Incorporation date.

A. Mm-hmm.

Q. So, I --

A. That --

Q. Has there been a change since your incorporation date?

A. Since that incorporation, I just - at the time, I wasn't aware that a bankrupt could not start a corporation. And I thought possibly that I could - being my farming background, that I could purchase farm products and sell it. But that - apparently, since this time has - will not materialize. So, that's why I haven't done nothing with the company. I haven't - there's no bank account. There's no nothing, no activity. That's why I just - I don't believe I'm going to be going forward. Probably winding it down, I believe. So, I was just trying to look out for my well-being, because I'm getting up in age and, you know, retirement if it's possible, you know? I have to make a living somehow."

[40] With respect to the following statement made in the Bankrupt's Supplementary Affidavit:

"4. I confirm I have not acquired any new assets nor do I have any liabilities."

Counsel for CRA elicited the following testimony:

Q. I'm going to bring you to paragraph four of your affidavit. It's actually just a sentence. It says, "I confirm I have not acquired any new assets, nor do I have any liabilities."

A. Correct.

Q. So, the liabilities portion first. Do you - when you completed your return for this year --

A. Mm-hmm.

Q. I'm sorry, when you completed your return for the 2024 tax year, did you have an amount owing?

A. There is an amount owing, correct.

Q. So, do you still take the position that you have no liabilities?

A. Well, that has since - you know, since I did my tax return, there's a liability to Revenue Canada.

Q. And when you say, "I confirm I have not acquired any new assets," new assets since when?

A. I have - I'm confused. What do you mean, new assets?

Q. A moment ago, you explained that part of it was that you acquired a new car?

A. Right. Okay. A car, sorry. Yeah.

Q. The other is - I guess part of it is just a time question. So, new since when? When was the last time you acquired a major asset, not including the car?

A. It's been a long time, any major assets, since probably before the bankruptcy.

Q. Okay. And it's your testimony, or, I'm sorry, it's your - in your affidavit you said that you had no inheritance from the estate of your late wife, sir?

A. No.

Q. And no inheritance from the estate of your late mother or father?

A. No.

[41] It was later clarified by all parties that the Bankrupt's wife had passed away, as had his father, but his mother was alive, but suffering serious health issues.

[42] Marshall on behalf of CRA obtained the following admissions from the Bankrupt:

Q. The summary of your 2024 tax returns indicated that you received a T4 slip from a company called 24 South Inc. Is that correct?

A. Correct. Mm-hmm.

Q. Okay. And who are the principals of that company?

A. Who are the principals?

Q. Yes.

A. I believe my son and my family - my three siblings.

Q. I see. And how long have you been working for them?

A. Maybe just two years, I believe. It hasn't been long. Two to three years.

Q. Two, three years? Okay. Did they issue you a reporting slip for the years prior to 2024?

A. Yes, as I filed my 2023 tax return. I've always had my tax return up to date since I went bankrupt. We provide it to Price Waterhouse and - yeah.

Q. Okay. And your current address is still 467 2nd Concession Road in Princeton. Is that correct?

A. Mm-hmm. Correct.

Q. That's correct. Okay. Now, the T4 RRSPs that you received from TD Bank,…

A. Mm-hmm.

Q. ...Industrial Alliance, and CI Investments…

A. Mm-hmm.

Q. ...have different addresses. The ones from the TD Bank indicate the address you just indicated, 467 2nd Concession, your current address. The other two, they list the address for Osztrovics Farms and Vito's Farms Limited (ph). Why is that?

A. They never - they never got around to changing it, because originally that was back 35 years ago plus. That's where I was living or - and the address was never changed. I still get mail addressed to the farm location as we speak, because if you don't notify them and - yeah. So....

Q. Okay. And what is your role in Osztrovics Farms Limited right now?

A. I have no role in it right now currently. It's 24 South.

Q. Okay. The reason I ask is an internet search of your name comes up, and I can do a share screen if you like.

A. Mm-hmm.

D. MARSHALL: Q. Okay. If you can see that, there's a Google search of Mr. Osztrovics' name. It comes before the hit here for the Canadian Seed Institute. If we go to that site.

D. MARSHALL: Q. All right. As I was saying, yeah, if you do a search of the bankrupt's name up here, you come up with a hit here for the Canadian Seed Institute. If we go over to that website, and here we find Osztrovics Farms Limited at the address 26 Lawrence Road, which is on the T4 RRSPs slips that I mentioned, effective from January 11, 2019, last updated I presume by the last inspection date by May 29th of last year. Contact person given for this entity is the bankrupt. Why is that, Mr. Osztrovics?

A. Why is that?

Q. Yeah.

A. That's regarding the organic certification, and…

Q. Okay.

A. ...that's - I don't know if I can see that. That was implemented to the farm back in 1996. So, they just continue to use my name, but it's actually my son, Eric, that operates it. So, I wasn't aware of that. So, yeah.

A. In 2019. Just to add if I may, there - even after - and I believe so going forward, I have seen my name come off and on to the - like, for example, Hydro One, they have Osztrovics Farms and slash my name included, and it was never removed. So, that's the answer to this question about the seed source. So, there's many things that my name was on that I never knew about or didn't both to remove because it - yeah, because I'm not in any way in the operation side of Osztrovics Farms."

[43] The website that Marshall is referring to for the Ontario Seed Institute that was shown to the Bankrupt on Zoom (but was not in the filed materials) has a registration that states, at the date of these Reasons:

Osztrovics Farms Ltd.

Organic Client #: 4205-FAR

Contact: Victor Osztrovics

Status: Certified

Address:

26 Lawrence Road

N0E 1A0 Burford , ON

Canada

Phone: 519-755-8836

Product certification

First Effective Date: January 11, 2019

Last Inspection Date: May 29, 2024

Date Cancelled:n/a

Date Withdrawn:n/a

Date Suspended:n/a

[44] In re-examination by Page:

Q. In your cross-examination, Mr. Osztrovics, you indicated you bought a car in the last year or two?

A. Mm-hmm. Correct.

Q. What kind of car was that?

A. It's a Chevy Trax, 2014.

Q. 2014. How much did you pay for it?

A. I paid $7,200.

Q. Okay. And just to clarify for the court, what exactly are you doing for employment right now?

A. I work for 24 South. I'm the - I take care of the cash crop portion.

Q. On a day-to-day basis, what do you do?

A. Currently, we're watering, irrigating. I do seed planting, fertilize application, monitoring crops, just the day-to-day farming stuff. Yeah.

Q. And that's seasonal?

A. That's seasonal, correct.

Q. Did you have other employment during the winter months?

A. No, I don't.

Q. And do you collect EI or anything like that in the winter?

A. No. I did it one time a few years ago, but it's been a while. So....

Q. Okay. And he asked you about the inheritance. Has anyone ever asked you since the discharge hearing for copies of any records relating to the inheritances by the - your wife's estate?

A. No. No, not that I'm aware of.

Law and Analysis

Legislation

[45] Section 187(5) of the BIA reads:

(5) Every court may review, rescind or vary any order made by it under its bankruptcy jurisdiction.

Positions of the Parties on Test to be Employed on this Motion

[46] The CRA and the Bankrupt did not argue in detail in their facta what test the Court should employ in reconsidering a prior refused Discharge Order.

[47] The CRA's submissions were the following:

"3. The Bankrupt should not be discharged (or there is no reason to vary the Order)."

[48] The footnote to this assertion reads:

"1 The Bankrupt refers the Court to s. 187(5) of the Bankruptcy and Insolvency Act , RSC 1985, c. B-3 ("BIA"), which provides that "[e]very court may review, rescind or vary an order made by it under its bankruptcy jurisdiction."

The Court should not hear a motion under s. 187(5) of the BIA if its only purpose it to obtain an opportunity to appeal where the time to appeal has elapsed: Re Catalina Exploration and Development Ltd . (1981), 1981 ABCA 31 . Additionally, jurisprudence reviewed by the Ontario Court of Appeal in HOJ National Leasing Corp. (Re) , 2008 ONCA 390 at paras. 26-30 (" HOJ "), suggests this is not the right application of s. 187(5) of the BIA:

A thorough and instructive review of the jurisprudence of s. 187(5) is to be found in L.W. Houlden, G.B. Morawetz & J. Sarra, Bankruptcy and Insolvency Law of Canada, 3rd ed., looseleaf, (Scarborough, Ont.: Carswell, 1993) pp. 7-20.2 to 7-24.1; 7-31 to 7-32. Among the principles governing the court's application of s. 187(5) , is that the jurisdiction given by s. 187(5) should be sparingly exercised. Although s. 187(5) contains no time limit, because bankruptcy proceedings often take place in real time, a motion to vary should be made promptly: 1064521 Ontario Ltd. (1998) , 38 O.R. (3d) 407 (Gen. Div.). Moreover, as the court should not consider a motion to vary an earlier order on the record, the moving party should bring forward new evidence of a substantial nature that was not available at the original hearing: Re Strachan (1980), 34 C.B.R. (N.S.) 136 (Ont. S.C.) . [emphasis added]

While not addressed in the Order, the Crown takes the position that a refusal of discharge results in a reapplication for discharge, with or without conditions for reapplication: see Re Angiulli , 2024 ONSC 6244 at paras. 433 and 436 ; see also MacLean (Re) , 2012 NSSC 24 at para. 7 ; see also Re Boivin , 2008 BCSC 221 at para. 16 ."

[49] The Bankrupt cited general principles of application on discharge and made the following submission in his Factum:

"20. SUBMISSION - In the case of Re: Levine and Levine the Court found that it may only vary an Order of refusal. Re: Levine and Levine (1943) , 24 CBR 262 (OnSC) 1943368 (ONSC)

21. SUBMISSION - If the Court refuses the discharge and does not fix a date under which the Applicant may be discharged, then a discharge can only be made by way of a variation under s.187(5) of the Bankruptcy and Insolvency Act ."

[50] Page for the Bankrupt also cited Gestetner, Re 1996 CarswellOnt 5563 ("Gestetner") and advised that he had obtained a discharge for Mr. Gestetner after the initial refusal in that case, through the use of the variation provisions of s.187(5).

[51] As I advised the parties at the hearing, to my knowledge the test on reconsideration that I was to employ on this Motion was considerably more complicated and nuanced than what was argued in their Facta.

[52] Given seriousness of the findings made by Mills, J. in this case as the basis for the refusal, I advised that I would thoroughly review that jurisprudence in my reasons before making a decision on the Bankrupt's motion.

Jurisprudence Regarding Variation of Orders Generally Under the BIA

[53] The Court has considered all materials and arguments raised by all parties on this Motion. Any failure by the court to refer to specific arguments and materials raised by the Parties does not reflect that the Court has not considered those arguments.

[54] Houlden & Morawetz summarizes the law regarding variation of Orders generally under the BIA:

"Section 187(5) gives power to the court to review, rescind or vary any order made by it under its bankruptcy jurisdiction. In the ordinary civil courts once an order is signed and entered, the court is functus and has no power to rehear it: Re Suffield and Watts; Ex parte Brown (1888), 20 Q.B.D. 693 (C.A.) . However, in bankruptcy, the situation is different. To advance the ends of justice, s. 187(5) gives the court a wide discretion to review, rescind or vary an order made by it: Re Bryant Isard & Co. (1922), 3 C.B.R. 534 (Ont.S.C.) . The jurisdiction given by s. 187(5) should be sparingly exercised; it is a matter of indulgence and must be carefully guarded: Elias v. Hutchison (1980) , 12 Alta. L.R. (2d) 241, 35 C.B.R. (N.S.) 30, ( sub nom. Catalina Exploration & Dev. Ltd. v. Hutchison ) 27 A.R. 13, affirmed (1981), 1981 ABCA 31 , 14 Alta. L.R. (2d) 268, 37 C.B.R. (N.S.) 149, 27 A.R. 1, 121 D.L.R. (3d) 95 (C.A.); Cockfield Brown Inc. (Trustee of) v. Réseau de télévision TVA Inc . , 70 C.B.R. (N.S.) 59, ( sub nom. Cockfield Brown Inc. (Faillie), Re; Reséau de télévision TVA Inc. c. Giroux 16 Q.A.C. 300, ( sub nom. Re Cockfield Brown Inc. (Syndic de, Re)) [1988] R.J.Q. 1807 (Que. C.A.); Re Amertek (1998) , 4 C.B.R. (4th) 23, 1998 CarswellOnt 2771 (Ont. Gen. Div.)."

[55] The first case to have interpreted what is now s.187(5) was Fisher, J. in Re Bryant Isard & Co. (1922), 3 C.B.R. 534 (Ont.S.C.), ("Bryant Isard") who stated:

"1 This is an application by Kent for review of my judgment herein dated November 2, 1922 ( 3 C.B.R. 352 ), under sec. 74 of The Bankruptcy Act [ 1 C.B.R. 79 ]. This section, as I understand it, gives to the Court discretion of a wide character to advance the ends of justice, and where a prima-facie case is made out, the Court ought not to be restrained from properly exercising its discretion and indulgence. An application for review may be founded on other admissible evidence than that which might have been before the Court on the original hearing, but new evidence merely corroborative of what was heard at the trial is not admissible."

[56] Killeen, J. in Re Amertek (1998), 4 C.B.R. (4th) 23, 1998 CarswellOnt 2771 (Ont. Gen. Div.) ("Amertek") states:

"34 I note, first, here that CCC's motion was only launched on March 10, 1998, and was made returnable on March 13 in London Motions Court. This means, of course, that CCC is attempting to rescind or change a Proposal approval order some 14 months or more after it was issued and fully acted upon.

35 Section 187(5), which sets out the court's power to review its own orders, provides simply that "[e]very court may review, rescind or vary any order made by it under its bankruptcy jurisdiction".

36 It is but obvious that this subsection does not give the court a blank cheque to re-write its orders willy-nilly. Many courts have said that the jurisdiction given by the subsection must be exercised sparingly; that it is a matter of indulgence and must be carefully guarded: see Houlden and Morawetz, The 1998 Annotated Bankruptcy and Insolvency Act , p.538 and the cases referred to therein. It has also been held that, although s.187(5) contains no specific time limit, an application under it must be made promptly and within a reasonable time of acquiring knowledge of the order sought to be varied or rescinded: see Swanborough, Re (1980), 33 C.B.R. (N.S.) 281 (Ont. S.C.) ."

[57] With respect to the relationship of variation Motions with appeals Houlden & Morawetz states:

"The court should not entertain an application under s. 187(5) if the only purpose of the application is to obtain another opportunity for appealing when the applicant has let the time for appealing go by: Re Tobias & Co.; Ex parte Tobias , [1891] 1 Q.B. 463 (D.C.) ; Elias v. Hutchison (1980) , 12 Alta. L.R. (2d) 241, 35 C.B.R. (N.S.) 30, ( sub nom. Catalina Exploration & Dev. Ltd. v. Hutchinson ) 27 A.R. 13, affirmed (1981), 1981 ABCA 31 , 14 Alta. L.R. (2d) 268, 37 C.B.R. (N.S.) 149, 27 A.R. 1, 121 D.L.R. (3d) 95 (C.A.).

Section 187(5) is not an alternative remedy to an appeal (see below (e) Appeals and Applications Under s. 187(5)), nor is it designed merely to give a disgruntled party an opportunity to re-litigate questions and issues already decided. There must be new material or material indicating a change in circumstances for the court to make an order under s. 187(5): Re David (1993), 20 C.B.R. (3d) 55, 1993 CarswellOnt 211 (Ont. Gen. Div .) ; Re NsC Diesel Power Inc. (1998) , 6 C.B.R. (4th) 96, 170 N.S.R. (2d) 236, 515 A.P.R. 236, 1998 CarswellNS 331 (C.A.)."

[58] In Re NsC Diesel Power Inc. (1998), 6 C.B.R. (4th) 96, 170 N.S.R. (2d) 236, 515 A.P.R. 236, 1998 CarswellNS 331 (C.A.). ("NsC"), Hallett, J.A. (of Re Crowley fame) was writing for the Nova Scotia Court of Appeal on a motion for Orders allowing a creditor to examine a former employee of the debtor company under s.163(2) of the BIA, and the production of documents by third parties under s.164 of the BIA. He summarized the law as it then was with respect to variation motions under s.187(5) generally:

"46 The legal principles that would apply to a reconsideration motion under s. 187(5) of the Act are set out in Houlden & Morawetz text Bankruptcy & Insolvency Law of Canada, 3rd edition , vol. 2, at pp. 7-20 to 7-25 as follows:

(a) The jurisdiction given by Section 187(5) should be sparingly exercised; it is a matter of indulgence and must be carefully guarded.

(b) The discretion given by Section 187(5) must be exercised judicially ... different considerations apply to the exercise of the discretion according to the character of the Order sought to be varied or rescinded.

(c) The sub-section permits a judge to deal with continuing matters in the bankruptcy so as not to be bound by an earlier decision, if circumstances have changed... there must be a fundamental change in circumstances between the original hearing and the time when a review is sought, or evidence must have been discovered which was not known at the time of the original hearing and which would have led to a different result.

(d) The question on a Section 187(5) application is not, as in an appeal, whether the original Order ought to have been made, but whether an Order ought to remain in force in the light of either of changed circumstances or in the light of fresh evidence.

(e) The onus is on the applicant to satisfy the Court that the Order should be varied or rescinded.

(f) Section 187(5) is not an alternative remedy to an appeal, nor is it designed merely to give a disgruntled party an opportunity to relitigate questions and issues already decided. There must be new material or material indicating a change in circumstances for the Court to make an Order under Section 187(5).

(g) If the applicant intends to proceed on the record that was before the Court when the original Order was made, the proper mode of proceeding is ordinarily an appeal. If there is new evidence or evidence of a change of circumstances, then an application under Section 187(5) is the appropriate remedy.

(h) Although Section 187(5) contains no time limit, an application must be made promptly and within a reasonable time of acquiring knowledge of the order sought to be varied or rescinded."

47 Section 187(5) of the Act is not an alternative remedy to an appeal of the original order of Justice Hood. Nor is it an opportunity to have an issue relitigated."

[59] In Re Catalina Exploration and Development Ltd. (1981), 1981 ABCA 31 121 DLR (3d) 95, 14 Alta LR (2d) 268, 27 AR 1, 37 CBR (ns) 149, [1981] AJ No 896 (QL) ("Catalina") (cited by CRA) the Alberta Court of Appeal in quashing an actual appeal and also refusing to vary an order under the predecessor of s.187(5) for leave to sue the Trustee under the predecessor of s.215 states:

"[31] While the language of this section is broad, it seems to me that it is designed to permit of a judge to deal with continuing matters in the bankruptcy so as not to be found by an earlier decision if faced by changing circumstances. Thus, while a judge might approve the appointment of a trustee, he at a future date might alter that order by appointing more than one trustee or removing a trustee. He might refuse a discharge to a bankrupt but later, having regard to then circumstances, vary that order so as to permit of a discharge on terms and he might again at a future date vary that order. Similarly, the manner of remuneration might from time to time be subject to variation and review. Against this, however, there is that type of case where a final adjudication has to be made. The claim of one class of creditors over another has to have priority. The question whether a particular piece of property forms part of the bankrupt's estate; the validity of the claim or the amount of the claim, are all matters which should be the subject of a final adjudication in respect of which an appeal with leave would lie, but surely, adjudication of claims of that sort cannot be the subject of repeated applications. There have been cases where an order disallowing a creditor's claim has been reviewed, but new evidence was available and it was apparently very cogent evidence, but I am of the view that by and large claims capable of final determination should not be the subject of repeated applications. The learned authors of Houlden and Morawetz Bankruptcy Law of Canada in their 1980 revision of an earlier text, in dealing with this subject say this:

"The power given by Sec. 157 (5) can only be applied in respect of judgments on interlocutory matters and not where a final judgment dealing with the rights of the parties has been given; in the latter type of situation an appeal under Sec. 163 is the proper remedy. A judgment dismissing a petition for a receiving order is a final judgment and an appeal under Sec. 157 (5) is the appropriate recourse: Traders Finance Corpn. Ltd. v. Garage Morrissett et Fils Ltee , (1960) Que. S.C. 712, 1 C.B.R. (N.S.) 267 ."

[60] The above quotation from Catalina supports the proposition that the Court can vary a refused discharge Order under s.187(5), which that quotation in Catalina would suggest is not a "final and conclusive adjudication". The more the commonly quoted proposition for Catalina, is quoted in HOJ National Leasing Corp. (Re), 2008 ONCA 390 ("HOJ")(cited by CRA):

"[27] It has been said that s. 187(5) is unique to insolvency in that it allows the court to review and rescind or vary an order made by a court of co-ordinate jurisdiction, and applies to any order made in the exercise of bankruptcy jurisdiction: Fitch v. Official Receiver , [1996] 1 W.L.R. 242 (C.A.) , discussing s. 375(1) of the English Insolvency Act 1986, which is virtually identical to s. 187(5) of the BIA . However, unlike rule 37.14(1), no conditions apply before resort can be had to s. 187(5) . As I will explain, a motion under s. 187(5) cannot be brought as a substitute for an appeal, such as when the time to appeal has expired. An appeal is brought when it is believed that there is reversible error in the court below. A motion under s. 187(5) is essentially different. As the English Court of Appeal states in Fitch at p. 246, for the provision to apply, there must be a fundamental change in circumstances, between the original hearing and the time of the motion to vary, or evidence must have been discovered that was not known at the time of the original hearing and which could have led to a different result. Or, as the leading Canadian case has put it, the court should not hear a motion under s. 187(5) if its only purpose it to obtain an opportunity to appeal where the time to appeal has elapsed: Re Catalina Exploration and Development Ltd. (1981), 1981 ABCA 31 , 121 D.L.R. (3d) 95 (Alta. C.A.), rev'g (1980) , 35 C.B.R. (N.S.) 30 (Alta. Q.B.). By this motion and the appeal, the Registrar asks that the court rehear the trustee's motion for directions and make another order in the place of the one already made, drawn up, entered and acted upon. This, of course, the court cannot do."

And

"[40] In summary, on a motion to vary, the jurisprudence clearly establishes that the court can rectify an order or a judgment that fails to correctly state what the court actually decided or ordered. On a motion to vary, the court cannot, as the Registrar sought to do in its motion, substantively change the impugned order. In this regard, the Registrar's motion was doomed to fail from the outset. Although the motion judge decided the motion on other grounds, she could have decided it on this ground. As a matter of principle, in my view the term "vary" should be similarly interpreted under both rule 37.14 and s. 187(5) of the BIA . Moreover, considering the time requirement in rule 37.14(1) and the s. 187(5) jurisprudence, it is clear that a motion to rescind or vary an order or a judgment must be made expeditiously and, if possible, before the order or judgment has been acted on. In this case, the Registrar's motion to vary Campbell J.'s vesting order was heard more than two years after the order, which in the interim had been acted on by the assignees and by HOJ's customers."

Jurisprudence Considering Variation of Discharge Orders and Refused Discharges

[61] With respect to Motions to rescind or vary discharge Orders generally, Houlden & Morawetz states:

"In deciding whether to rescind a suspended order of discharge, the court held that s. 180(2) was a more appropriate provision than s. 187(5) for determination of the matter. Section 180(2) specifies that where it appears to the court that the discharge of a bankrupt was obtained by fraud, the court may annul the discharge: Re Hogg (2005), 2005 CarswellMan 198, 12 C.B.R. (5th) 20, 2005 MBQB 109 (Man. Q.B.) .

The registrar rejected a request by a trustee and an opposing creditor to vary or modify a bankrupt's conditional order of discharge under s. 187(5) of the BIA , concluding that the trustee and opposing creditor had not brought new information before the registrar and there was no evidence of fraud on the part of the bankrupt: Re Cameron (2007), 2007 CarswellBC 98, 2007 BCSC 81 , 31 C.B.R. (5th) 212 (B.C. S.C.).

The power to vary under s. 187(5) of the BIA requires new evidence of a substantial nature that could not have been known by reasonable diligence; and s. 187(5) does not permit rehearing an application based on evidence that could have been before the registrar when the discharge order was made since no special circumstances existed : Re Cameron (2007), 2007 CarswellBC 98, 2007 BCSC 81 , 31 C.B.R. (5th) 212 (B.C.S.C.) (Registrar).

The Registrar of the Manitoba Court of Queen's Bench reviewed the considerations taken into account by courts in determining whether to annul a discharge under s. 180 of the BIA or to annul the discharge order under s. 187(5) of the BIA. For s. 187(5) to apply, there must be a fundamental change in circumstances between the original hearing and the time of the motion to vary; or evidence must have been discovered that was not known at the time of the original hearing and that could have led to a different result. In applying these principles to the facts of this case, Registrar Sharp found that notwithstanding the bankrupt's breach of duty, the bankrupt had responded to the application, and offered a very detailed and well-documented explanation for her breach and non-compliance. Registrar Sharp concluded that her explanation constituted fresh evidence and changed circumstances not within the bankrupt's control that made it difficult or impossible for her to comply with her discharge order. Registrar Sharp accepted that there were a series of financial setbacks experienced by the bankrupt after the granting of the discharge order; and also took into account the fact that the bankrupt has primary responsibility for two minor children. Registrar Sharp was persuaded that the appropriate disposition was to apply the alternative relief available under s. 187(5) and vary the original order to extend for a further period of 24 months the time for complying with the payment provision in the discharge order: Re Kramer , 2012 CarswellMan 170, 88 C.B.R. (5th) 196, 2012 MBQB 94 (Man. Q.B.) .

The Superior Court of Québec exercised its discretion under s. 187(5) of the BIA and varied a discharge order such that the refusal of the discharge was now subject to a term, in this case, that the bankrupt could not seek discharge until the fifth anniversary of the filing date. Justice Pinsonnault noted that the power to review, rescind, or vary any order pursuant to s. 187(5) of the BIA must be exercised judicially and with caution, as it is a review of orders previously rendered under the bankruptcy jurisdiction. However, in such circumstances, as exceptional as they may be, the court must assess the evidence. Each case must be decided on its own facts and merits. Here, the bankrupt's bankruptcy had been brought on by unjustifiable extravagance in living with the help of credit cards; yet Pinsonnault J. was concerned that the bankrupt not spend the rest of his life as an undischarged bankrupt because of his abuse of the BIA. Justice Pinsonnault also noted that the indebtedness that the bankrupt contracted with repeated fraudulent representations and behaviour would not be released by an eventual order of discharge: Re Bhattacharjee , 2016 CarswellQue 7870, 2016 QCCS 3978 (C.S. Que.) .

A master of the Ontario Superior Court of Justice held that if the court does not fix a time within which an application for discharge may be brought on again, after discharge is refused, the only way of varying such an order of refusal is by way of an application under s. 187(5) of the BIA : Re Imlau , 2018 CarswellOnt 18520 (Ont. S.C.J.) ."

[62] Houlden & Morawetz states the following specifically in § 7:111. Discharge Refused—Application for Discharge After a Discharge has been Refused:

"In Re Osesky (2002), 31 C.B.R. (4th) 80, 2002 CarswellMan 62, 2002 MBQB 45 , 161 Man. R. (2d) 314 (Man. Q.B.), the bankrupt had been refused a discharge with liberty to reapply after one year. The bankrupt reapplied after the one year. The registrar was of the opinion that the critical issue was what the bankrupt had done during the one-year period to demonstrate that he was rehabilitated. The registrar found that the bankrupt had not been diligent in providing monthly income and expense reports to the trustee, that he had not made any effort to make payments to the trustee, that he had not curtailed his living expenses, and that the evidence of his employment was unclear. In light of these findings, the registrar was of the view that the bankrupt had shown a cavalier attitude to the bankruptcy process. Accordingly, he dismissed the application but gave the bankrupt the liberty to reapply after one year.

A bankrupt's application for discharge was refused. The court found that the bankrupt's decision to make an assignment in bankruptcy arose largely from judgments against him. Discharge from bankruptcy was refused in the first instance on the basis that the bankrupt had not been forthcoming regarding documents and information respecting his business transactions. The value of the assets was also not equal to 50 cents on the dollar of his unsecured liabilities. The court found that nothing had happened to change that fact over eight years following the previous decision. The paltry recovery of assets had only covered the trustees' costs and legal fees, not distribution to creditors. The court held that where judgment is obtained arising from wilful or discreditable conduct of the bankrupt, his financial circumstances cannot be said to have arisen from circumstances for which he cannot be justly held responsible. Absolute discharge was refused, with the court observing that the bankrupt would be eligible to reapply in two years : Re Montalban , 2013 CarswellBC 1003, 100 C.B.R. (5th) 167, 2013 BCSC 683 (B.C. S.C.) ."

[63] In Montalban, Re 2013 CarswellBC 1003, 2013 BCSC 683, [2013] B.C.W.L.D. 4481, [2013] B.C.W.L.D. 4482, [2013] B.C.W.L.D. 4483, [2013] B.C.W.L.D. 4484, [2013] B.C.W.L.D. 4485, [2013] B.C.W.L.D. 4486, [2013] B.C.J. No. 788, 100 C.B.R. (5th) 167, ("Montalban") Fitzpatrick, J. was dealing with a Bankrupt whose discharge was refused in 2003 and who sought to be discharged again in 2013. Fitzpatrick, J. stated:

"33 To a large extent, the major concerns of the trustee and the creditors on this application were also raised before the court and were addressed in the reasons for judgment of Master Tokarek after a 3-day hearing in August 2004: Montalban (Re) (27 August 2004), Vancouver No. 236895 (B.C.S.C.) (the "Reasons"). Master Tokarek refused to grant a discharge and also ordered that Mr. Montalban could not reapply for any discharge for a one-year period.

34 Much of the evidence before Master Tokarek was before me on this application. I do not propose to revisit the details of that evidence given that it was summarized by Master Tokarek in conjunction with his findings and rulings. No appeal was taken from Master Tokarek's order refusing the discharge at that time. Therefore, I start from the proposition that the Reasons reference the substantial findings of the court under s. 173 that gave rise to a refusal of the discharge. As such, I will also not revisit Master Tokarek's findings on this application.

44 On this application, Mr. Montalban has further failed to satisfy the onus under this subsection. His new affidavits (#10 sworn March 12, 2012 and #11 sworn May 21, 2012) are entirely insufficient, particularly, as is discussed below, in the context of requested disclosure that Master Tokarek found was required, but which was not provided by Mr. Montalban in accordance with the Reasons.

48 This was the most substantive basis upon which Master Tokarek refused to grant any discharge in 2004. As earlier stated, both Rubysea and the Berrys took the position that there were substantial matters that had to be addressed by Mr. Montalban towards explaining his involvement in various transactions and providing appropriate documentation relating to those transactions. In addition to substantial evidence presented by those creditors at the hearing, lengthy submissions were made to Master Tokarek on these issues.

52 Since the discharge hearing, Mr. Montalban has, of course, had the benefit of reading the Reasons in terms of understanding what was required by way of further explanation to satisfy concerns that he had not adequately disclosed his involvement in M2 Energy. The inadequacy of Mr. Montalban's explanation and the lack of records produced by him were explained in the Reasons in a clear and concise manner.

53 In addition, since the 2004 hearing, there have been countless letters from the trustee or counsel requesting that Mr. Montalban respond to the outstanding document deficiencies identified in the Reasons.

54 Nevertheless, the only further "explanation" from Mr. Montalban surfaced some seven and a half years later, in Mr. Montalban's affidavit #10 sworn on March 12, 2012 in support of this application. Essentially, that explanation is the same as before, namely that he does not, nor did he ever have shares in M2 Energy or receive any income from M2 Energy. Although he did introduce potential investors, he was never an officer or director of M2 Energy; rather, M2 Energy was controlled by his brother. Finally, his wife purchased 100,000 shares, which were addressed in the context of his divorce proceedings and which did produce some proceeds for the estate.

55 The inescapable conclusion is that Mr. Montalban refuses to comply and provide the disclosure and documentation that Master Tokarek indicated was required.

58 Mr. Montalban's response is the same with respect to M2 Energy in that he continues to refuse to disclose the extent of his involvement and related documentation. Mr. Montalban asserts that, as with the other matters, he cannot "prove a negative". Nevertheless, Master Tokarek was not convinced that his assertions were true. There is no "new" basis advanced at this time upon which he denies that he had any involvement with these offshore companies.

62 I do not consider that Mr. Montalban's current or further explanation provides any further clarity regarding these transactions. While the SEC document is of some assistance, I agree with Master Tokarek's observation that it is entirely unbelievable that no other records were kept or are available at this time in respect of these significant transactions, including the earning of a $1 million management fee.

73 Mr. Montalban has offered no further explanation in respect of this issue. Accordingly, it remains the case that this ground of opposition has been made out and must result in a refusal of an absolute discharge at this time.

81 Despite Master Tokarek's findings regarding Mr. Montalban's lack of cooperation in his bankruptcy, the Master presented a road map of sorts to Mr. Montalban to remedy his failings as identified on the application. The Master noted that the opposing creditors were entitled to the explanations and supporting documentation that had been requested but had not yet been produced: Reasons at para. 44. In the face of Mr. Montalban's continuing assertions that he was being honest and candid, the Master reminded him that the onus was on him to satisfy the concerns regarding these matters: Reasons at paras. 45-46.

122 The Supreme Court of Canada in Industrial Acceptance Corp. v. Lalonde , [1952] 2 S.C.R. 109 (S.C.C.) , at 120, stated that a refusal of a discharge ought to be imposed only in extreme cases or where the conduct of the debtor has been particularly reprehensible:

...The purpose and object of the Bankruptcy Act is to equitably distribute the assets of the debtor and to permit of his rehabilitation as a citizen, unfettered by past debts. The discharge, however, is not a matter of right and the provisions of ss. 142 and 143 [now 172 and 173] plainly indicate that in certain cases the debtor should suffer a period of probation. The penalty involved in the absolute refusal of discharge ought to be imposed only in cases where the conduct of the debtor has been particularly reprehensible, or in what have been described as extreme cases.

[Emphasis added.]

See also Patterson at para. 20 and Crowley at para. 12.

123 The bankrupt's conduct both before and after the bankruptcy may be considered: Links v. Robinson (Trustee of) (1970), 1970 ALTASCAD 12 , 16 C.B.R. (N.S.) 180 , [1970] A.J. No. 172 (Alta. C.A.) .

132 The difficulty with a suspended sentence is that it does little to address the twin principles of rehabilitating the bankrupt and upholding the integrity of the bankruptcy system.

133 I am sure that Mr. Montalban's interests are well served by obtaining his discharge, so that he may carry on with his life. But it is in considerable doubt that the process to date has resulted in him being rehabilitated. Despite being in bankruptcy for many years, and even after the 2004 hearing, he was and continues to be in breach of his duties to this day, principally relating to the Viral and surplus income matters.

134 More importantly, however, a suspended discharge - or even a conditional discharge - as a "sentence" severely challenges the integrity of the bankruptcy system. In this case, Mr. Montalban, as found by Master Tokarek, has been a recalcitrant and uncooperative participant in this bankruptcy process. Since 2004 he has patiently waited while doing little toward addressing the court's concerns. He now renews his application some eight years later. Many creditors in such circumstances, already suffering their initial losses, may choose not to renew their opposition by reason of the passage of time, loss of interest, personnel changes, cost and the like. However, Rubysea and the Berrys have steadfastly maintained their opposition, no doubt at great cost to them. Some might say that they are throwing good money after bad. Still others might say that they are seeking justice in the hopes that the bankruptcy system will adequately respond to Mr. Montalban's shortcomings.

135 Generally speaking, that such a bankrupt could simply wait out or wear down the patience of his opposing creditors would offend the public interest concerns that apply here. In short, in these circumstances where there is clear misconduct both before and after the bankruptcy, it offends commercial morality to suggest that a "sentence" can be imposed upon a bankrupt that will simply allow him to be free of these complaints by waiting a further period of time. Nor is the fact that creditors may not be opposing the discharge a controlling factor. The court must, even if there is no opposition from a creditor, consistently apply the principles applicable on a discharge application.

136 I note that the discharge was suspended by the court in Alton for 18 months. In that case, however, there was no allegation that the bankrupt had refused to cooperate with the trustee, had failed to make adequate disclosure, or had concealed assets.

137 In Mancini (Trustee of) v. Mancini (1987), 63 C.B.R. (N.S.) 254 (Ont. S.C.) , the court refused a discharge in favour of a bankrupt after a three-year bankruptcy, with liberty to reapply after two years. In that case, the bankrupt had failed to comply with the duties imposed on him. He had failed to answer all questions relating to his business or property. He had not kept proper business records, nor did he deliver books and records pursuant to court orders. Further, he did not explain where his assets went. The court stated that, if the bankrupt was discharged, many of the missing assets may come back in unexplained ways, just as they had first disappeared. As in this case, the bankrupt had operated through a number of companies. The court found that the bankrupt had gone through the fiction of pretending to cooperate with the trustee when, in fact, he had not so cooperated. The court stated at 258:

...I am doubtful if there is any method under our law by which this bankrupt can be forced to co-operate or to give complete and honest answers. If he were discharged, there would be even less possibility of the facts being discovered.

138 As indicated above, the court in Mancini recognized that there were limits to what might be achieved by a refusal of the discharge. The court's order clearly anticipated that, despite the serious findings of misconduct, a renewal of the application would take place to consider what might transpire between the bankrupt, the trustee and the OSB's office before the next discharge application:

[40] While I understand the frustration that the trustee has been faced with because of the conduct of the bankrupt, the trustee has an obligation under the Act to act fairly with him. It would appear that animosity has grown up, particularly between counsel for the trustee and the bankrupt, which may have clouded some of the issues. The trustee and the superintendent cannot go on for an unlimited time in their investigations. However, I am not satisfied that the bankrupt will ever co-operate, and I believe he will do his best to conceal what assets he has.

139 In Bruneau, Re , [1995] B.C.J. No. 891 (B.C. Master) , Master Patterson refused a discharge because the bankrupt failed to fully comply with three separate court orders for production of documents. The bankrupt had been in bankruptcy for two years. The court found that the lack of cooperation, while possibly resulting from a lack of understanding of the process, was more likely a deliberate intent to frustrate the process and obtain a discharge. The court held that, despite the lack of opposition from any creditor, it had a responsibility to maintain the integrity of the process. It refused her discharge, with leave for her to reapply in two years.

140 In Touhey and Fox, Re , issues about lack of disclosure of assets resulted in the court refusing any discharge. The bankrupt individuals had been in bankruptcy for one and two years, respectively. No time limit was set with respect to any renewed application.

141 In Mott, Re , the court, after a four-year bankruptcy, refused a discharge based on various grounds being established. The Registrar stated:

[17] ...I am inclined to reject the submission of the Bankrupt for a discharge, and accept the submissions of counsel for the Opposing Creditor that a refusal be made. In so doing, I am cognizant of the harshness of this outcome, but I am not satisfied on the evidence before me that the Bankrupt's affairs have been fully investigated or, even more importantly, disclosed by the Bankrupt. Until that occurs, the integrity of the insolvency system cannot be satisfied. ...

142 What can be taken from the above cases is that most applications for discharge come on for hearing within a reasonable period of time after the date of the bankruptcy. At that point, the court is in the position to assess the bankrupt's conduct. That is exactly what happened in this case at the hearing before Master Tokarek. In light of the court's refusal of a discharge and Mr. Montalban's continued intransigence in addressing the issues raised by the Master, one might conclude, as the court did in Mancini, that cooperation is never going to be forthcoming. In fact, Master Tokarek was quite prescient in stating:

[59] ...I expect that if you cannot talk honestly and reasonably answer these three or four things within the space of a year, you are never going to be able to answer them, or you are never going to want to, one or the other. ...

143 Mr. Montalban points out that despite ten years of bankruptcy and the efforts of the trustee and creditors to locate further assets, they have been unable to do so. He also says that the trustee has not cross-examined him on his affidavits in terms of testing his continued assertions as to his lack of documents and assets. He says that these proceedings cannot go on forever. Yet it is self-evident that the ability of the trustee and the creditors to locate assets hinges on the disclosure of information and documentation, which they have little of at this point.

144 I agree that it is unlikely, particularly at this late stage, that Mr. Montalban will ever comply in producing documents and disclosing assets relating to his pre-bankruptcy transactions. In that event, it would be open to the court to conclude that keeping Mr. Montalban in bankruptcy for a further period of time beyond the current ten years will be of little benefit to any of Mr. Montalban, the creditors, and the public. As such, notwithstanding my concerns about addressing the twin principles of rehabilitation and the public interest, one might conclude that the ten-year period has been a sufficient penalty in the circumstances or that the court should suspend the discharge for a further period of time, as suggested by Mr. Montalban.

145 What drives me from such a conclusion, however, are Mr. Montalban's continuing breaches of his duties under the BIA relating to the Viral matter and the failure to pay surplus income.

146 The Viral matter speaks to the fact that Mr. Montalban is far from rehabilitated, as he continues to flout the requirements of the BIA .

147 The failure to pay surplus income does nothing to serve the interests of the creditors and the public interest in terms of ensuring that the bankrupt lives within certain means during the bankruptcy process and that creditors benefit from any funds received beyond the limits established by the OSB.

148 His inconsistent testimony in the matrimonial trial is also of concern.

149 In Messier, Re (1980), 36 C.B.R. (N.S.) 118 , [1980] A.J. No. 970 (Alta. Q.B.) , the court refused a discharge in favour of a bankrupt who had been in bankruptcy for four years. The court found misconduct both before and after the bankruptcy. It stated:

[12] Comparing those remarks to the present situation there has been no equitable distribution of any assets of the debtor. He has not shown any indication of rehabilitation. The applicant here has displayed a flagrant and callous disregard for the rights of his creditors before and after bankruptcy. I consider this to be particularly reprehensible conduct and I find this to be indeed an extreme case. This man has increased his indebtedness by $100,000 or more in the four years that he has been an undischarged bankrupt. I think it would be entirely irresponsible to discharge the applicant and allow him to go around seeking credit without being under the duty to disclose his financial past. I therefore refuse to discharge the bankrupt.

Conclusion

150 I have concluded that the circumstances in this case are extreme and that Mr. Montalban's conduct, both before and after his bankruptcy, requires the censure - or more accurately, the continuing censure - from the court.

151 In my view, a conditional order is not appropriate, although Mr. Montalban would be best served by using his available financial resources to pay the trustee the amount of surplus income that he owes as soon as possible. A suspended order of discharge for a further period of time is somewhat attractive, but it does not adequately respond to the public interest and rehabilitation concerns that arise given the recent transgressions relating to the Viral matter and the failure to play surplus income.

152 Mr. Montalban's application for discharge is therefore refused. He will be at liberty to renew any further application after a two-year period. At that time, he will be approximately 60 years of age. As he already acknowledges, his remaining working years will have been further diminished. That circumstance will no doubt heighten his interest in dealing with these outstanding matters, particularly as they relate to the payment of the surplus income that he owes at this time.

153 On the renewal of any application, the court will be at liberty to consider the circumstances that exist at that time and decide whether a discharge order is appropriate."

[64] In Re Strachan 1980 CarswellOnt 153, [1980] O.J. No. 2963, 34 C.B.R. (N.S.) 136, 4 A.C.W.S. (2d) 74) ("Strachan") Henry, J. states in regard to the predecessor of s.187(5):

10 As to s. 157(5), in my opinion the onus is on the bankrupt to satisfy the court that the order should be varied or rescinded. Given the fact that an appeal lies from orders of a judge in bankruptcy, it may be taken that if the bankrupt intends to proceed on the record in first instance, that route ought to be followed. If, however, he wishes to adduce new evidence or to draw the court's attention to a material argument or point of law that was overlooked in first instance, then s. 157(5) may be appropriate . The jurisprudence to date, however, is to the effect that substantial new evidence not available at the original hearing must be offered: see Re Trenwith , [1933] O.W.N. 639 , 15 C.B.R. 107 ; Re Malartic Hygrade Gold Mines Ltd.; Lionel Berube Inc. v. Minaco Equipment Ltd . (1966), 10 C.B.R. (N.S.) 34 (Ont.) ; Re Bryant Isard & Co.; Kent's Claim (1922), 23 O.W.N. 464 , 3 C.B.R. 534 (C.A.) ; Re Capital Trust Corpn.; Lamarre v. Dolan (1943), 24 C.B.R. 207 (Que.) . Having in mind that the principal object of the Act is to rehabilitate the bankrupt, that requirement should be construed liberally so as to avoid the expense of an appeal if in the particular case the court considers that the hearing upon which the order was made was in some way incomplete by the omission of material evidence or argument.

11 In my opinion this power to vary the order, which is of general application to all orders under the Bankruptcy Act , is of limited application in the case of an order for discharge of the bankrupt made pursuant to s. 142(2) (c) of the Act . That requires him as a condition of his discharge to pay moneys or consent to judgment in favour of the trustee. In my opinion the bankrupt is not at liberty to apply under s. 157(5) to vary the order on grounds that he now finds himself unable to comply with the order by reason of financial hardship. It is to be assumed that his ability to comply was determined on the application for discharge subject to the possibility that, as I have said, something was lacking in the way of a full and complete hearing that attracts the discretion of the court to reopen it."

Summary of Tests Under Section 187(5) for Motion to Vary a Refused Discharge Order

[65] From Fitzpatrick, J.'s reasons in Montalban, and the general s.187(5) jurisprudence I have cited, the following principles must be considered by a Court hearing a Motion to vary a Refused Discharge Order:

a. The Motion is not a trial de novo of the initial discharge and the findings of fact of the initial Judge refusing the discharge will not be re-heard; (Montalban, NsC)

b. Section 187(5) is not an alternative remedy to an appeal, nor is it designed merely to give a disgruntled party an opportunity to re-litigate questions and issues already decided. There must be new material or material indicating a change in circumstances for the court to make an order under s. 187(5) (NsC, Catalina, HOJ, Strachan);

c. The question on a Section 187(5) application is not, as in an appeal, whether the original Order ought to have been made, but whether an Order ought to remain in force in the light of either of changed circumstances or in the light of fresh evidence. (NsC, HOJ, Strachan, Levine)

d. S.187(5) gives to the Court discretion of a wide character to advance the ends of justice, and where a prima-facie case is made out, the Court ought not to be restrained from properly exercising its discretion and indulgence; (Bryant Isard, NsC)

e. The discretion given by Section 187(5) must be exercised judicially and different considerations apply to the exercise of the discretion according to the character of the Order sought to be varied or rescinded (NsC)

f. The onus is on the applicant to satisfy the Court that the Order should be varied or rescinded (NsC, Strachan)

g. That Motions under s.187(5) do not give the Court a blank cheque to re-write its orders willy-nilly and the jurisdiction given by s.187(5) must be exercised sparingly as an indulgence and must be carefully guarded; (Amertek)

h. That a Motion under s.187(5) must be made promptly and within a reasonable time of acquiring knowledge of the order sought to be varied or rescinded (Amertek, NsC, HOJ)

i. If the prior judge issuing the refusal provided a "roadmap" for the Bankrupt to follow to be discharged, then the Bankrupt must provide evidence that the issues on the "roadmap" that caused the Court to refuse his discharge have been remedied; (Montalban)

j. The Bankrupt must provide evidence of "what is new" to provide the basis for the Court to discharge the Bankrupt after the discharge was initially refused and the mere passage of time is not a ground to set aside a refused discharge, or as stated in Montalban by Fitzpatrick, J.:

"Generally speaking, that such a bankrupt could simply wait out or wear down the patience of his opposing creditors would offend the public interest concerns that apply here."

This principle is also echoed in:

i) Cameron, Strachan - that the power to vary under s. 187(5) of the BIA requires new evidence of a substantial nature that could not have been known by reasonable diligence;

ii) Cameron - that s. 187(5) does not permit rehearing an application based on evidence that could have been before the Registrar when the discharge order was made since no special circumstances existed;

iii) Kramer- that for s. 187(5) to apply, there must be a fundamental change in circumstances between the original hearing and the time of the motion to vary; or evidence must have been discovered that was not known at the time of the original hearing and that could have led to a different result;

iv) Bryant Isard - that an application for review may be founded on other admissible evidence than that which might have been before the Court on the original hearing, but new evidence merely corroborative of what was heard at the trial is not admissible; and

v) NsC, HOJ - that s.187(5) permits a judge to deal with continuing matters in the bankruptcy so as not to be bound by an earlier decision, if circumstances have changed... there must be a fundamental change in circumstances between the original hearing and the time when a review is sought, or evidence must have been discovered which was not known at the time of the original hearing and which would have led to a different result;

vi) NsC, Strachan - that if the applicant intends to proceed on the record that was before the Court when the original Order was made, the proper mode of proceeding is ordinarily an appeal. If there is new evidence or evidence of a change of circumstances, then an application under Section 187(5) is the appropriate remedy.

k. The conduct of the Bankrupt and the bankrupt's fulfillment of duties since the date of the refusal must also be assessed to determine the rehabilitation of the Bankrupt and whether the Court should exercise its discretion to allow the Bankrupt to be discharged (Montalban)

i) This principle is echoed in Osesky that the critical issue was what the bankrupt had done during the one-year period since the refusal to demonstrate that he was rehabilitated.

Analysis

[66] Utilizing the methodology set out by Fitzpatrick, J. in Montalban, the Court must review:

1. the findings of fact made at the Discharge Hearing in the Refusal Order,

2. review the "road map" set out in the Refusal Order that the Bankrupt must comply with to vary the Refusal Order;

3. review any other prior findings of fact and law relating to the Bankrupt and his conduct;

4. review the "new evidence" filed on the variation Motion by the Bankrupt to determine what "new evidence" the Bankrupt has filed to show "what is new" and the "fundamental change in circumstances" between the making of the Refusal Order and the current Motion;

5. Assess the conduct of the Bankrupt and the fulfillment of duties since the Refusal Order to determine whether the evidence provided by the Bankrupt on this Motion proves that the Bankrupt has been rehabilitated, and has followed the "road map" to discharge set out in the Refusal Order.

Bankrupt's Compliance with Surplus Income Reporting Obligations

[67] One of the central issues relating to both the Prior Variation Reasons and the Refusal Order was the issue of the Bankrupt's failure as alleged by the Trustee to fulfill his obligation to provide income and expense statements and supporting documentation requested by the Trustee to calculate the Bankrupt's surplus income obligations.

[68] In the Bankrupt's Affidavit the position of the Bankrupt on his compliance with his surplus income obligations and duties to cooperate with the Trustee as follows:

"16. I did provide cooperation with the Licensed Insolvency Trustee. At some point in the bankruptcy I spoke with Randall Smith at MNP LLP [sic], who advised me that if all of my income and expense statements were the same, I was not required to send further statements. This position changed by the Licensed Insolvency Trustee.

17. Between July 18, 2013 and September 17, 2023 [sic- actual date on letter is September 17, 2013] , correspondence was exchanged between counsel for the Licensed Insolvency Trustee, Chris Horkins and my then counsel, John McNair. There was disclosure sought by the Licensed Insolvency Trustee, and a review of correspondence indicates everything was provided. Annexed hereto and marked as Exhibit "B" to this my Affidavit are true copies of the exchanges."

[69] I note that the same argument in paragraph 16 on this Motion was raised by the Bankrupt both at the Prior Variation Motion and at the Discharge Hearing before (now) Mills, J.

[70] In the Previous Variation Reasons, Registrar Short, 12 years ago in 2013, made the following findings on the Surplus Income issue:

"45 The Trustee has had ongoing difficulties calculating the surplus income payments the Bankrupt is required to make to the estate due to the Bankrupt's failure to meet his disclosure obligations.

49 Here the trustee reports that it is not in a position to determine the appropriate level of surplus income (if any) due to the failure of the bankrupt and his relatives to provide full disclosure. Those issues are the subject of separate reasons to be found at 2014 ONSC 1691 .

50 In this regard it was argued on his behalf that Mr. Osztrovics only submitted income and expense statements to PwC for the months of June 2011 through November 2011.

51 The factum filed on his behalf asserts that:

21. Osztrovics was advised by Randall Smith ("Smith"), a representative of PwC that because his income statements remained unchanged during those times, he did not need to provide any further statements to PwC, until and when his monthly information changed.

52 The trustee disputes this assertion. It seems to me that to base any determination of surplus income on such a length of time would be inadequate. This particular case where the income of the family was cyclical having regard to the timing of the sale of various crops during the year.

53 I'm not satisfied that there could be a valid automatic discharge in this case without a determination as to whether or not surplus income was payable at any time during the initial 24 months. If there was any surplus income in that period of it would have triggered a 36 month payment period. I come to this conclusion notwithstanding the assertion in the Bankrupt's factum that:

22. At no time following the submission of his income and expense forms did PwC seek further information from Osztrovics, nor was he at any time required to make surplus income payments pursuant to section 68 of the BIA ."

[71] In the Refusal Order, (now) Mills, J., almost 8 years ago in 2017, made the following findings relating to the Surplus Income issue:

"[7] The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing. The Bankrupt is now employed by Vio Farm Limited ("VFL"), his mother's recently incorporated company, and is purportedly paid $800 per month for his services or such other amount as his mother sees fit to pay. All income payments are made in cash and are held by the Bankrupt in a cupboard at home as he no longer operates a bank account. There is no means by which to independently verify the income purportedly paid to Bankrupt.

[8] The house in which the Bankrupt and his family reside is owned by OFL. According to the Bankrupt's income and expense statement, rent of $1200 per month is paid however, no proof of payment has been provided to the Trustee. The motor vehicles driven by the Bankrupt are owned by OFL and by VFL. They are not disclosed as taxable benefits on the T4 statements issued to the Bankrupt.

[9] The Bankrupt has not adequately responded to the Trustee's inquiries for documents to substantiate the income and expenses for the period of the bankruptcy…."

[72] The Bankrupt continues to rely on the excuse that Randall Smith of PWC (not MNP LLP) "at some point in the bankruptcy" absolved him from filing further income and expense statements outside of the June-November 2011 period.

[73] If that was the Bankrupt's understanding, it was clear that as of the hearing before Registrar Short in 2013 that the Trustee disputed the veracity of that position taken by the Bankrupt that somehow Randall Smith granted him an exemption from his obligations under the BIA and the Surplus Income Directive, and that Registrar Short agreed with the Trustee.

[74] As stated in the above excerpt, one of the reasons that the Bankrupt's automatic discharge was revoked by Registrar Short was the failure of the Bankrupt to provide income and expense documentation to determine the automatic discharge period under s.168.1 of the BIA, the length of which is dependant on whether the Bankrupt is found to owe surplus income.

[75] If there was some doubt about his obligations under s.68 and the Surplus Income Directive, prior to having his automatic discharge order revoked by Registrar Short, for inter alia, his failure to comply with his surplus income reporting obligations, the decision of Registrar Short should have settled the issue in the mind of the Bankrupt.

[76] But 4 years later he again raised the exact same "Randall Smith" defence in his Motion to obtain a discharge Order before (now) Mills, J.

[77] For that hearing the Bankrupt filed the Discharge Motion Affidavit, in which he stated:

"16. In its most recent report, PWC makes unsupported assertions that it was unable to determine my surplus income during my bankruptcy, yet fails to produce or point to any correspondence or supporting evidence to demonstrate that it actually requested supporting documentation from me. To date, PWC has placed no sworn evidence before this Court regarding my alleged failure to produce evidence regarding my surplus income during my bankruptcy.

21. I am advised by Mr. McNair that in response to his query as to whether I had been required to make any Section 68 payments that PWC has been unsuccessful in obtaining the financial information needed to assess whether I had surplus income. I am also advised and do verily believe that at that time, the Trustee advised Mr. McNair that four items remained outstanding. Those requests for information, along with a further request were contained in a follow up letter to Mr. McNair on July 18, 2013 from PWC's counsel (the "PWC Letter"). In particular, the Trustee noted it had yet to receive the following:

e) I was advised by Randall Smith of PWC that because my income and expenses did not change, it was unnecessary to continue delivering statements at monthly intervals, but we would provide a further income and expense statement.

25. On September 17, 2013, Mr. McNair forwarded a copy of my complete income and expense statement to PWC's counsel. Attached hereto and marked as Exhibit "H" is a true copy of Mr. McNair's letter and my expense report

26. Contrary to the assertions of PWC throughout its report, the first time I was asked to provide additional information to the Trustee was through its meeting and subsequent correspondence with Mr. McNair.

MY INCOME/ EXPENSES POST-BANKRUPTCY

28. While PWC contends throughout its report that I have not provided it with satisfactory documentation to verify my income and expenses, noticeably absent from the report is any correspondence from PWC to me requesting same. I never received any such correspondence.

29. Shortly after my bankruptcy, I met with Randall Smith from PWC. Mr. Smith worked with me to prepare my income and expense reports. We discussed the fact that OFL is responsible for paying some of the household related expenses and how I ought to fill out my report. Mr. Smith admitted he was uncertain how to address these issues. Nevertheless, each report between June 2011 and November 2011 was filled out with Mr. Smith's guidance and assistance. Mr. Smith was well aware of my financial situation and provided me with assurances that I was properly completing the forms.

30. In addition to Mr. Smith's assurance, I note that at no time following the filing of my monthly income and expense forms with PWC did I receive a phone call or other correspondence requesting additional information. Such documentation is conspicuously absent from PWC's report and motion material in which they sought the setting aside of my automatic discharge.

31. Upon receipt of PWC's motion to set aside my automatic discharge, I went through all of my records and note that the only correspondence received from PWC in this regard was on October 17, 2011. That letter is attached hereto and marked as Exhibit "I" to this my Affidavit.

32. PWC states in its report at paragraph 27, that our household experienced a cash shortfall in excess of $4,500 during a 6 month period from June 2011 to November 2011 and criticizes me for failing to explain the shortfall. I would note however, that I was at no time prior to PWC's motion to set-aside my automatic discharge called upon to explain this shortfall, nor am I aware of any obligation on my part to do so. PWC had numerous opportunities to request further information from me and chose not to.

33. At paragraphs 31 and 32 of PWC's report, it is stated that following a meeting with estate inspectors, the inspectors unanimously resolved to defer the determination of my alleged "Surplus Income" pending PWC's receipt of further income and expense forms. PWC further indicates that it was not until September 17, 2013 that I provided same. Again, however, despite PWC's numerous contentions, it has failed to point to any correspondence prior to its letter of July 18, 2013 directed to Mr. McNair requesting such information.

34. In response to PWC's request for further information, and after consulting with Mr. McNair, I executed the income and expense form for the month of August 2013 which appeared at Tab G of PWC's Motion Record seeking the setting aside of my automatic discharge. Attached hereto and marked as Exhibit "J" to this my Affidavit I have reproduced those income and expense forms.

MY CONDUCT AS A BANKRUPT

35. I am aware of no failure to perform the duties imposed on me pursuant to section 158 of the BIA and can only respond that anytime I was requested to undertake an action, I complied with that request to the best of my ability. To the extent information was not provided, it was either because it did not exist, or PWC made no request for same."

[78] However, in the 4th Report filed by the Trustee for the Discharge Hearing 8 years ago, made specific answer to the "Randall Smith absolved me of my duties" defence attaching the Supplementary Second Report dated November 8, 2013, prepared 12 years ago, which states:

"7. Attached hereto as Appendix "A" is an email from Mr. Randall Smith of the Trustee's office to Victor dated December 21, 2011 (the "December 2011 Email") which, among other things, references prior discussions between Mr. Smith and Victor regarding the reporting of his income and expenses. The December 2011 Email clearly outlines the Trustee's expectation regarding Victor's reporting of his monthly income and expenses, as it requests that Victor submit his income and expense forms for the months of October and November, which were outstanding, by no later than January 6, 2012 and that Victor submit his income and expense form for December and "all subsequent months within 10 days of month-end"."

[79] The even bigger issue in the Reports with the surplus income calculation was that many of the Bankrupt's expenses were being paid by OLF, and the Trustee needed to have access to that information to confirm that as the corporation was paying the expenses, whether they should not be deducted from the Bankrupt's income for Surplus Income Calculation purposes. Ultimately the Examination and Document Production Motion had to be brought by the Trustee to obtain documents from OLF and to examine the Bankrupt's mother on, inter alia, these issues. The Trustee concluded that based on the information that they had, that the Bankrupt could have owed surplus income. The Bankrupt disagreed.

[80] Having this evidence of the Bankrupt before her, (now) Mills, J. 8 years ago made specific findings of fact and law that the Bankrupt, despite the above evidence,

"[7] The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing.

[9] The Bankrupt has not adequately responded to the Trustee's inquiries for documents to substantiate the income and expenses for the period of the bankruptcy…."

[81] The Bankrupt did not appeal those findings. And yet, 14 years after his Bankruptcy, 11 years after the Prior Variation Order, and 8 years after the Refusal Order, the Bankrupt continues to relitigate the same issues about his compliance with his Surplus Income Obligations.

[82] As I have summarized in detail the jurisprudence states:

a. This Motion is not a trial de novo of the initial discharge and the findings of fact of the initial Judge refusing the discharge will not be re-heard; (Montalban, NsC)

b. Section 187(5) is not an alternative remedy to an appeal, nor is it designed merely to give a disgruntled party an opportunity to re-litigate questions and issues already decided. There must be new material or material indicating a change in circumstances for the court to make an order under s. 187(5) (NsC);

c. The question on a Section 187(5) application is not, as in an appeal, whether the original Order ought to have been made, but whether an Order ought to remain in force in the light of either of changed circumstances or in the light of fresh evidence. (NsC)

[83] The Bankrupt by relitigating the "Randall Smith told me I didn't have to do it" and "blame PWC" evidence when there are TWO prior judicial decisions that did not accept that same evidence brings into question whether Bankrupt has in fact been rehabilitated since the Refusal Order in 2017.

[84] The findings of (now) Mills, J. on this issue in the Refusal Order are clear, unambiguous and damning.

[85] As I stated in Re Angiulli 2024 CarswellOnt 17557, 2024 ONSC 6244 ("Angiulli"), I wrote the following regarding the obligations of the Bankrupt to fully and completely cooperate with the Trustee's requests for information to permit the Trustee to determine the Bankrupt's Surplus income obligations:

"[395] The duty to properly disclose Income and Expenses under the BIA is a fundamental positive duty of the Bankrupt, not the duty of the Trustee or creditors to catch the Bankrupt out and force her to.

[396] The Surplus Income Directive is clear and the Bankrupt's duties to produce accurate income regarding income and expenses in accordance with the BIA, the Surplus Income Directive and the related jurisprudence. It is the bankrupt's obligation to provide this information.

[397] If McDowell refuses to provide his income there is a mechanism in the Surplus Income Directive of how the Trustee is to make the calculation, however nothing in that excuses the Bankrupt from not fulfilling her obligations to provide clear, accurate and fulsome disclosure of what her actual lifestyle during bankruptcy is.

[398] In Re Conforti 2015 CarswellOnt 5423, 2015 ONCA 268, [2015] O.J. No. 1986, 24 C.B.R. (6th) 286, 253 A.C.W.S. (3d) 281, 334 O.A.C. 34 ,("Conforti"), Peppall, J.A. set out the general policy considerations behind s.68 and how it is to be implemented and interpreted:

"25 Under ss. 68(3) and (4) of the BIA, the Trustee is required to determine whether the bankrupt has surplus income and, if so, fix the amount the bankrupt is required to pay to the estate. In making that determination, the trustee is to have regard to the applicable standards and to the personal and family situation of the bankrupt. Under the statutory scheme, the trustee obtains proof of income and expense information for the bankrupt's family unit (which includes the bankrupt), determines the total monthly income of the bankrupt's family unit, deducts certain non-discretionary expenses such as spousal and child support payments and "expenses associated with a medical condition," and then uses the standards in the applicable Superintendent's Directive to ascertain whether there is any surplus income. Subject to certain adjustments, if the bankrupt has monthly surplus income equal to or greater than $200, the bankrupt is required to pay 50 per cent to the estate for the benefit of creditors. Other provisions in the Superintendent's Directive address the duration of the payments of surplus income."

[399] Proper implementation of the Trustee's duties under s.68 and the Surplus Income Directive is only possible if the Bankrupt provides complete and accurate surplus income information to the Trustee. The Surplus Income Directive requires this compliance:

"8(3) If the bankrupt fails to provide the LIT with the information needed to determine the average monthly income in accordance with paragraph 8(2) of this Directive, the LIT SHALL oppose the discharge of the bankrupt."

[400] As stated by Lane J. in Martino (Re) ("Martino"):

"[20] In summary, I accept the Trustee's evidence that the level of co-operation fell far short of the openness expected of Bankrupts. Persons seeking the benefit of relief from their debts must make total disclosure of their affairs. It is not good enough to say, as these Bankrupts say through their counsel, that it is not their fault that the Trustee did not ask the right questions. This is not a game of 'Catch me if you can', and those who play that game can expect little sympathy from the court."

[401] In Re Biskupski, 2023 ONSC 1694, I summarized the jurisprudence relating to the fulfilment of duties under the BIA, and in particular the finding of a s.173(1) (o) fact:

"[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.

[149] As 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."

[150] Despite the efforts of his able counsel to cast the Bankrupt's behavior as "strongly supporting" his compliance with his duties in aiding the Trustee in taking possession of the Opoka, the evidence I have cited above and in the Chronology does not bear this out, and I cannot find that this Bankrupt's conduct constituted "…actively aid(ing) his Trustee", per Jefferson to locate and secure the Opoka "…to the utmost of his power"."

[402] Under the provisions of S.158 of the BIA:

"A bankrupt shall:

(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;

(e) make or give all the assistance within his power to the trustee in making an inventory of his assets;

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

(n.1) inform the trustee of any material change in the bankrupt's financial situation;

(o) generally do all such acts and things in relation to his property and the distribution of the proceeds among his creditors as may be reasonably required by the trustee, or may be prescribed by the General Rules, or may be directed by the court by any special order made with reference to any particular case or made on the occasion of any special application by the trustee, or any creditor or person interested;"

[86] In this case, the Bankrupt relitigating the un-appealed findings of fact and law made by both Registrar Short and (now) Mills, J., that he had not fulfilled his surplus income reporting obligations under the BIA from 2011 to 2017, by again raising the argument that those obligations had somehow been waived by the Trustee, raise grave doubts as to the rehabilitation of this Bankrupt since the Refusal Order in 2017.

[87] The Bankrupt also argues that the correspondence between his counsel and counsel for the Trustee attached to the Bankrupt's Affidavit and the Bankrupt's Supplementary Affidavit indicates his compliance with his duties to provide information requested by the Trustee. However, that correspondence appears to indicate the opposite.

[88] I have reviewed the correspondence at Exhibit B to the Bankrupt's Affidavit for the period July 28, 2013 and September 17, 2013 (NOT September 17, 2023 as stated in the Bankrupt's Affidavit) as well as the correspondence appended to the Supplementary Third Report for the period September 20, 2016 to May 29, 2017.

[89] That correspondence appears to all have been before (now) Mills, J. at the Discharge Hearing and she found:

"[7] The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing."

and

"[9] The Bankrupt has not adequately responded to the Trustee's inquiries for documents to substantiate the income and expenses for the period of the bankruptcy."

[90] I cannot fathom how or why the Bankrupt is swearing 8 years later in 2023 that he complied with his obligations to provide surplus income information by relying on documentation and correspondence that (now) Mills, J. had previously reviewed, and then made specific findings of fact and law that he did not.

[91] The Surplus Income issue despite the passage of 14 years since the date of the Bankruptcy. The Trustee argued, and (now) Mills, J. agreed, that the Trustee could not properly confirm whether the Bankrupt had an obligation to pay surplus income, because they could not obtain cooperation from the Bankrupt or OFL to provide the documentation requested to determine what the true income and expenses of the Bankrupt were being paid in the context of being employed by his family in OFL and getting admitted benefits of employment from OFL.

[92] There is no evidence before me, other than the Bankrupt's assertions that he fulfilled his duties, which (now) Mills, J. found otherwise in 2017, that the Bankrupt ever attempted to remediate his conduct on this issue after the Refusal Order. He could still owe a significant surplus income obligation going back to the date of Bankruptcy, which the Trustee has never been able to confirm due to his failure to cooperate, which is important given that the litigation with the Bankrupt and his family has consumed all of the recoveries to date in this estate.

Issues Regarding the Mareva Injunction Causing the Bankruptcy Raised by the Bankrupt

[93] Cited in the Second Report, in 1787811 Ontario Inc. v True Blend Tobacco Company Inc. (cited in the endorsement as 2011 ONSC 2080 but does not appear in under that citation, or any other citation that I could locate) on April 1, 2011 McDermid J. granted a Mareva Injunction against, inter alia, the Bankrupt made the following findings of fact in granting the injunction:

"[4] I am satisfied on a balance of probabilities on the material before me of the following:

a. The plaintiffs, acting in good faith on representations made by the defendants, entered into written contracts to grow and deliver tobacco to the defendants and the defendants agreed to pay them for that tobacco upon delivery in accordance with prevailing customs in the industry and the terms of the contracts.

b. When some of the plaintiff delivered their tobacco to the defendants, it was weighed and the defendants provided a cheque which, upon presentation, was returned for insufficient funds. In some cases further cheques were provided which, again, were not honoured upon presentation.

c. The net result is that the defendants failed to pay the plaintiffs in accordance with the terms of be contract when the plaintiffs delivered the tobacco to the defendants.

d. The defendants made repeated promises to pay the plaintiffs which they did not keep.

e. The defendants have arranged for the sale of tobacco delivered by the plaintiffs to third parties.

f. The plaintiffs have not been paid for the tobacco that the defendants have arranged to have delivered to the third parties.

g. As a result of non-payment, promises that were repeatedly broken, and mounting concerns, the plaintiffs refused to deliver the additional tobacco called for by their contracts.

h. In fact, the Bond restricted the defendants from receiving any further tobacco until they paid for the tobacco they had already received from the plaintiffs.

i. The plaintiffs advised the defendants of an offer to purchase 1,000,000 pounds of the unsold tobacco at a reduced price but the defendants told them not to sell because they required the tobacco to meet existing contracts and that the plaintiffs would be paid soon. This did not happen.

[5] The plaintiffs claim that the defendants owe them $4,157,207.24 for tobacco that has been delivered and $8,578,156.14 for tobacco that the plaintiffs have been unable to deliver because the defendants have not paid for the tobacco they already received.

[6] In paragraph 42 of the affidavit of Michael Sieon sworn April 1,201 l, he deposes that he attended a meeting with the defendant Victor Osztrovics who told him that 1,000,000 pounds of the plaintiffs' tobacco had been shipped to a Mohawk reservation.

[7] Exhibit H to his affidavit is an e-mail referred to in paragraph 45 of that affidavit which purports to be a message from a Dennis Makepiece to Victor Osztrovics with a copy to Grant Sanders dated February 23, 2011. It makes reference to potential sales of tobacco to buyers in other counties and the transportation of tobacco to North Carolina.

[8] In his affidavit sworn April 1, 2011, Jeff Neville deposes that he attended at the defendants' facility on March 18, 2011 and saw four transport trucks preparing to exit the premises. He used his vehicle to block them and spoke with the drivers of the trucks who advised him that they contained flue-cured tobacco for delivery to Albany New York. Photographs of the trucks are attached as Exhibit A.

[11] Based on the material before me, I find that the plaintiffs have:

a. Made full and frank disclosure of all material matters within their knowledge.

b. Set forth particulars of their claims against the defendants including the grounds for their claims and the amount claimed.

c. Set forth particulars of assets they believe are owned by the defendants in Ontario.

d. Given an undertaking as to damages.

[12] I am satisfied that the plaintiffs have made out a strong prima facie case on the material filed and I have no hesitation in finding on a balance of probabilities that there are sufficient grounds to believe that there is a present and substantial risk of the defendants' assets, and tobacco delivered by the plaintiffs to the defendants for which they have not received payment, being removed from the jurisdiction or being dissipated or disposed of before a judgment or award is satisfied. In fact, it appears most probable that the defendants presently are selling tobacco delivered by the plaintiffs for which the plaintiffs have not been paid to third parties outside this jurisdiction. Unless this activity is stopped as soon as possible, the plaintiffs will suffer irreparable harm."

[94] After the Mareva Injunction was issued, the Bankrupt took the position that the filing of a Notice of Intention to Make a Proposal stayed the Mareva Injunction. Justice Morawetz (as he was then) disagreed, stating:

"The filing of a Notice of Intention, absent further order of the Court, does not, in my view have the effect of vacating or staying the effect of the [Mareva Order]. To hold otherwise would potentially harm the interests of creditors which would result in an outcome that runs counter to the relief granted on April 1, 2011. However, in the event I am in error, I am satisfied that the Record supports the requested relief in the form of an Interim Receivership Order under s.47.1 of the BIA. Such an Order is necessary for the protection of the Debtor's estate, as well as the interests of the Applicant."

[95] The Bankrupt blames the Mareva Injunction in the Bankrupt's Affidavit and the Bankrupt's Supplementary Affidavit for preventing him from defending himself, destroying his business, causing the bankruptcy and preventing him from finding about the CRA assessment mailed to him.

[96] What he does not do is accept any responsibility for why the injunction was issued in the first place, based on the findings of fact and law of McDermid, J. as set out in his reasons. The extraordinary relief granted by McDermid, J. was not randomly visited on the Bankrupt and True Leaf. From the findings of fact the injunction was necessary because the Bankrupt's conduct and statements to witnesses regarding the dissipation of his assets, which continued after his Bankruptcy when he transferred the OFL shares, the property of the Trustee, to his wife, necessitating expensive litigation to make some recovery to the Estate.

[97] None of this is indicative of rehabilitation.

Tax Issues Raised by Bankrupt

[98] In his Supplementary Affidavit, the Bankrupt asserts:

"7. I have also looked into the HST liability. I did not understand why I had been assessed with a liability in excess of $8 million dollars."

[99] Firstly, it is not HST liability. He plead guilty to one count of a breach of the Excise Act, RSC 1985, c. E-14, not the Excise Tax Act R.S.C., 1985, c. E-15 under which HST is assessed and collected, and paid as part of his sentence restitution to the Crown.

[100] The criminal documentation is attached as Appendices to the 4th Report that was filed for the Discharge Hearing before (now) Mills, J., and were served by the Trustee on the Bankrupt and his counsel prior to that hearing.

[101] The Bankrupt, along with his wife Elysia Ozstrovics and also Brian Poreba, Alexander Sales, Paul Bandur, Jay Clare and Walter Clare were charged by the RCMP on or about September of 2014 with a number of offences relating to the operations of True Leaf.

[102] With respect to the Bankrupt and his wife, they were charged with:

Count #1 Brian POREBA, Alexander SALES, Victor OSZTROVICS and Walter CLARE on or about the 25ᵗʰ day of November, 2011 at the County of Brant in the said not being a licensed tobacco manufacturer or cigar manufacturer, or an excise warehouse license holder, did unlawfully sell raw leaf tobacco, to wit: 550 kilograms of raw leaf tobacco, not properly stamped or packaged contrary to section 30(1) of the Excise Act, 2001 .

Count #2 Brian POREBA, Alexander SALES, Victor OSZTROVICS and Walter CLARE on or about the 25th day of November, 2011 at the County of Brant in the said Region did have in their possession proceeds of property to wit $5450 of a value exceeding five thousand dollars knowing that all of the proceeds of property was obtained by the commission in Canada of an offence punishable by indictment contrary to section 354(1) (a) of the Criminal Code .

Count #24 Elysia OSZTROVICS on or about the 15ᵗʰ day of July, 2011 at the County of Brant in the said Region, with intent that Victor OSZTROVICS should defraud his creditors, Elysia OSZTROVICS did receive from Victor OSZTROVICS certain property of Victor OSZTROVICS to a cheque for $10 000 by which an offence under section 392 (a) of the Criminal Code had -been committed contrary to section 392(b) of the Criminal Code .

Count #25 Victor OSZTROVICS on or about the 15ᵗʰ day of July, 2011 at the County of Brant in the said Region, did with intent to defraud his creditors conceal his property to wit a cheque for $10 000 in the name of Alysia OSZTROVICS contrary to section 392 (a)(i) of the Criminal Code

Count# 28 Victor OSZTROVICS on or about the 4th day of November, 2013 at the City of London in the Southwest Region, being specially permitted by law to make a statement by affidavit to wit an affidavit under the Bankruptcy and Insolvency Act did make a false statement to wit: ''To date, True Blend is a creditor of Dynasty in the amount of $70,000" knowing that such statement was false contrary to section 131 of the Criminal Code .

[103] Poreba and the other defendants faced the bulk of the other charges including possession of proceeds of crime under the Criminal Code, possession of Marijuana methamphetamine and ketamine for the purpose of trafficking, firearms offences and in the case of Walter Clare, making threats to cause serious bodily harm to police officers.

[104] The Bankrupt plead guilty in May 2011 to Count #1 and in exchange the Crown withdrew Counts #25 and #28 against the Bankrupt and Count #24 against his wife.

[105] With respect to the claim of CRA, the Bankrupt has attached the appeal materials filed by CRA for the Appeal of the Disallowance of the proof of CRA against both Poreba in his Bankruptcy and this Bankrupt in the amount of $8,313,045.

[106] It should be noted that the Proof of Claim of CRA that the Bankrupt attached at Exhibit C to the Supplementary Affidavit is the Proof of Claim dated June 20, 2011 filed in the Bankrupt's Proposal proceedings dated May 31, 2011, where the meeting of creditors was held on June 20, 2011, the next day.

[107] The Bankrupt attended that Meeting, and it appears that the Proposal Trustee SLF admitted the CRA claim, but it is unclear from the Minutes and attendance list of the Meeting attached to the OSB Report whether the CRA attended or filed a voting letter. The Bankrupt as Debtor for the Proposal had the same duties under s.158 (m) to examine claims and advise the Proposal Trustee of their veracity, but it is unclear whether the Proposal Trustee had the Bankrupt examine the CRA claim.

[108] In the Affidavit of Randy McKeown sworn September 19, 2014 on behalf of CRA, the Affidavit states:

"5. The Debt arose under the Excise Act, 2001 (the "Act"). By way of assessment, notice of which is dated May 26, 2011 (the "Assessment"), Mr. Osztrovics was assessed a penalty pursuant to the Act (the "Penalty").

6. The Penalty was imposed under section 239 of the Act for a violation of section 42 of the Act. Attached as Exhibit "B" is a letter, dated May 27, 2011, notifying Mr. Osztrovics of the Penalty Assessment."

[109] The May 27, 2011 letter appended reads, which the Bankrupt claims he never received because of the Mareva Injunction, states:

"This letter is to inform you that the Canada Revenue Agency (CRA) has completed a review of your tobacco license for the month of September 2010. As such, I regret to inform you that a penalty assessment has been processed under your current Tobacco License in the amount of $8,313,045.00.

Please be advised that a Notice of Assessment confirming the above result will be sent to you under separate cover.

Namely, this penalty assessment is based on documentation reviewed during the period noted and subsequently confirmed by the Canada Border Services Agency (CBSA) and your customs broker Parkview Brokerage. The documents indicate that imports of Partially Manufactured Tobacco (PMT) were conducted during the month of September, which were not recorded in your books and records. There were a total of 5 separate imports supplied by Optima Tobacco Corp, on the 10ᵗʰ, 11ᵗʰ, 13ᵗʰ, 16ᵗʰ and 17th of September. Each shipment contained 14,370 kg of PMT and all documents indicate that True Blend was the importer of record.

The Agency has previously asked for and not received any further detail with respect to these imports. As such, to date the Agency has been unable to locate the whereabouts of this tobacco, who had ordered this tobacco, the location to which it was delivered, who had paid for the tobacco, how actual payment was made and, whether it was further manufactured as required.

Therefore, under section 42 .(1) of the Excise Act, 2001 , you as the importer of record, are responsible for the duty on this tobacco. In addition, the PMT was relieved of duty by virtue of subsection 42(2). As you cannot account for the PMT, then it is reasonable to assume for the purpose of section 239 that the PMT was diverted for a purpose other than that specified in subsection 42(2). Consequently, True Blend is liable under section 239 to a penalty equal to 20% of the duty that was payable on the importation but relieved under subsection 42(2).

The duty applicable would be based on Schedule 1 subsection 3(b), which states that the duty applicable for tobacco products entering the domestic market is $2.8925 per 50 grams or fraction of 50 grams contained in any package. As each container contained 14,370 kg of PMT, the duty applicable would be as follows:

Total PMT (kg) per, container 14,370.00

Total PMT (kg) missing per 5 containers 71,850.00

Duty Rate/kg $57.85

Duty Liability $4,156,522.50

Based upon the duty liability calculated above, the penalty amount would be 200% of the duty imposed upon the PMT. Therefore, the net penalty assessment for the 5 imports that occurred during the period of September 1, 2010 to September 30, 2010 would be $8,313,045.00"

[110] As set out in the CRA Affidavit, the Trustee and CRA settled the disallowance of the CRA Proof of Claim, which the Trustee withdrew, and the final proven claim in the SRD for CRA is $4,151,187.54 in this Bankruptcy Estate, effectively splitting the original $8 million claim between this Bankruptcy Estate and the Poreba Bankruptcy Estate.

[111] It appears, despite the statements made by the Bankrupt regarding liability that Poreba and the Bankrupt as licensees could not account for the importation of almost 72 Tonnes of tobacco. As a result CRA assessed duty and penalties against them as the importing licensees for the value at the duty rate per kg on the missing 72 Tonnes of tobacco, and a 200% penalty. That is the basis of the CRA's proven claim.

[112] Given that there have been no recoveries for CRA, what are statements in the Bankrupt's Supplementary Affidavit calling into question the CRA debt intended to show, precisely?

[113] As part of his plea negotiations all of the other charges against him and his wife under the Excise Act, the BIA and Criminal Code were withdrawn by the Crown. He is deemed to know and admit the facts of the offence under the Excise Act.

[114] Is he now resiling from the facts he admitted to as part of his guilty plea and plea deal that resulted in the Crown withdrawing the remaining charges against him and his wife, most of which were more serious charges under the BIA and the Criminal Code, including being in possession of the proceeds of crime, and concealing his property to defraud creditors?

[115] I also do not understand the statements made in his Affidavits filed for this Motion, that had the licenses been transferred properly by the government from the names of Poreba and the Bankrupt to True Leaf, that somehow the Bankrupt would have been individually absolved of any liability as an officer, director, principal and operating mind of True Leaf at the time the 72 Tonnes of tobacco went missing under the provisions of the Excise Act.

[116] I was not directed to any jurisprudence or legislation that would suggest that the mere administrative transfer of the tobacco license from Poreba and the Bankrupt to their corporation True Leaf would have absolved them of responsibility as Directors, Officers and directing minds, for the Duty owing to CRA under the provisions of the Excise Act, if 72 tonnes of tobacco was imported by True Leaf and then disappeared.

[117] This appears to be another case where the Bankrupt is blaming others for his own predicament. In this case, in his s.161 examination by the OSB he blamed a "Grant Saunders" and unnamed Aboriginal tobacco merchants for the problems in True Leaf, and with respect to the missing 7 tonnes of tobacco that the CRA imposed duty on him and Poreba as the individual licensees under whose licenses the tobacco was bought:

"In my view, the only persons with the cash to be able to handle such a transaction would have been native. Not to many small guys could handle this kind of thing."

[118] As stated by D.M. Brown, J. (as he then was) in Tatiana Baran (Re), 2013 ONSC 7501, 235 ACWS (3d) 21, [2014] 2 CTC 186, 7 CBR (6th) 1, [2013] CarswellOnt 16766:

"[13] The Court of Appeal, in Re Norris stated that while it was open to a trustee to call for evidence to support a proof of claim filed by the CRA, the delivery of a notice of assessment would fully answer that request. A trustee cannot disallow an assessment made pursuant to the Income Tax Act. A taxpayer who objects to an assessment may file a notice of objection and exercise appeal rights under the ITA to the Tax Court, and a trustee, like anyone else, must seek its remedy within the ITA."

[119] The claim by CRA was admitted by this Trustee in this Bankruptcy at the amount of $4,151,187.54. The Proven Claim of CRA was not expunged.

[120] These statements made by the Bankrupt in the Supplementary Affidavit are further evidence that the Bankrupt cannot accept his own responsibility for the situation that he finds himself in.

[121] From my review of the thousands of pages of documentation that have been filed with the Court for this Motion, going back to the commencement of the Proposal proceedings in 2011, the Bankrupt has consistently attempted to offload responsibility for his conduct and predicament on, in turn, Poreba, Grant Saunders, the Trustee, Ken Page as Counsel for the Proposal Trustee and Alan Page the Proposal Trustee with respect to his being found in breach of the Mareva Injunction and having the Injunction confirmed as a Interim Receivership Order by (now) Chief Justice Morawetz, Randall Smith of PWC, PWC generally, CRA, his former counsel McNair whose advice he was following, the other farmer inspectors who lost money and who he alleges were conniving to destroy him and his family, counsel for the Trustee Chris Horkins, and many, many others.

[122] None of this is indicative of rehabilitation.

Continuing Credibility Issues

[123] In the Refusal Order (now) Mills, J. made the following findings of credibility and the failures of the Bankrupt to provide information to the Trustee regarding transactions he entered into regarding the transfer of his OFL shares to his Mother and his employment by family companies:

[4] …The transaction was only disclosed as a result of the Bankrupt's examination by the OSB pursuant to the Debtor Compliance Referral Program. The Trustee was not informed of the transaction.

[7] The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing. The Bankrupt is now employed by Vio Farm Limited ("VFL"), his mother's recently incorporated company, and is purportedly paid $800 per month for his services or such other amount as his mother sees fit to pay. All income payments are made in cash and are held by the Bankrupt in a cupboard at home as he no longer operates a bank account. There is no means by which to independently verify the income purportedly paid to Bankrupt.

[9]…The Bankrupt is engaged in the family business and cannot hide behind the corporate veils of OFL and VFL, claiming that his wife and his mother acted independently in thwarting the efforts of Trustee. I do not find the Bankrupt's evidence in this regard to be credible, particularly since it was the Bankrupt who set this course of action by wrongfully transferring the OFL shares to his mother following his assignment in bankruptcy

[124] On a Motion to set aside a refusal, particularly a refusal supported by withering assessments by (now) Mills, J. of his conduct and credibility, this Bankrupt must be as transparent as possible in his evidence as to his current situation, and the "fundamental changes of circumstances" (per Kramer, NSC and HOJ) that have occurred since the Refusal Order, in order to ameliorate the prior assessments of Mills, J., and to demonstrate to the Court that he has been rehabilitated, by following the "road map" set out for him to obtain his discharge, on the tests that I have set out.

[125] But 8 years later the Bankrupt is again being caught out, easily, on his evidence. As I have set out in detail, when the Bankrupt states in the Bankrupt's Affidavit:

26. I have no intention of going back into the tobacco industry or operating any business ventures of any kind.

And in the Bankrupt's Supplementary Affidavit:

"9…. I have no intention of starting a corporation or entering into a business venture."

those statements are false, because as he testified with respect to NewCo incorporated by him in August of 2024:

"A. Well, it's not really active, it's just nothing has been done. It's just sitting with - anticipating my future; you know, my ability to continue to work because of - I'm getting up in age, and the physical part that I'm currently doing, I can't do forever. And I'm just concerned, and I had no idea that one could make a company to do things on an easier scale. There was no ill intention to do this. I'm just trying to look out for myself going forward. That was all. And there's no - nothing's been done. It's just sitting in limbo, so...."

And

"A. Since that incorporation, I just - at the time, I wasn't aware that a bankrupt could not start a corporation. And I thought possibly that I could - being my farming background, that I could purchase farm products and sell it. But that - apparently, since this time has - will not materialize. So, that's why I haven't done nothing with the company. I haven't - there's no bank account. There's no nothing, no activity. That's why I just - I don't believe I'm going to be going forward. Probably winding it down, I believe. So, I was just trying to look out for my well-being, because I'm getting up in age and, you know, retirement if it's possible, you know? I have to make a living somehow."

[126] In other words, despite what he swore in 2023 and particularly in April 2025, he had incorporated NewCo in August of 2024 for the express purpose of "entering into a business venture" to purchase and sell farm products, contradicting his sworn Bankrupt's Supplementary Affidavit.

[127] Also, when the Bankrupt states in the Bankrupt's Affidavit:

"13. The result of this is that I essentially only worked for nominal amounts and cash for several years. I am now 61 years old and drive a 2014 vehicle which was purchased for $1,500.00."

And

"14. My wife passed away in June 2019. My 3 children are now adults and none of them live with me or are dependent on me. My oldest son lives in Brantford and is an electrician, my daughter is a hair stylist in Burford, and my second son is operating his own farm nearby . None of them are financially depended on me and I couldn't assist them even if I wanted to."

"22. I am no linger involved in the tobacco business and the farm which I am working on grows crops . I continue to be assisted from friends, who provide me with food from their farms."

"23. My daughter Andrea is my oldest child. She is a hair stylist living in Burford. My second child in Eric who lives and works on a farm nearby . M [sic] youngest son Jason is an electrician living in Brantford."

[128] And in the Bankrupt's Supplementary Affidavit:

"3. I continue to live in the same place and work on the same farm. Annexed hereto and marked as Exhibit "A" to this my Affidavit are my Notices of Assessment for 2022 and 2023. My income did go up in 2023 due to my obtaining additional work on the same farm . In farming, income can fluctuate from year to year, depending on the crop output and weather conditions."

[129] He fails to provide the additional information that the "farm" he currently works for is owned by his son and his siblings, through 24 South Inc., as he admitted in his cross-examination testimony. The Bankrupt's Affidavit even cross-examines itself between paragraphs whether his second son Eric "works on farm nearby" or is "operating his own farm nearby", a crucial distinction. It appears that his son Eric and the Bankrupt's unnamed siblings are the Bankrupt's current employers. That crucial evidence is nowhere in either of the Bankrupt's affidavits.

[130] One of the reasons for refusal by (now) Mills, J.:

"The Bankrupt is engaged in the family business and cannot hide behind the corporate veils of OFL and VFL…"

[131] Knowing that, why would the Bankrupt attempt to obscure that he continues to work for his family, just as he did when his Discharge was Refused? This not only raises further credibility issues that the Bankrupt is yet again hiding behind fresh corporate veils, but is also relevant to the discharge, on the principles enunciated by Kershman, J. 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."

And again in Saran (Re), 2018 ONSC 6045:

[170] The Court finds that when individuals work for relatives, or if their income is controlled by the relatives, the Court has the ability to impute income to the Bankrupt. In this case, the Bankrupt worked for her husband's companies and her income has been decreasing while Mr. Saran's income has been increasing. Therefore, the Court exercises its authority and imputes income to the Bankrupt even though she is working the same number or more hours. Accordingly, based on her past earnings, the Court imputes income to the Bankrupt of $280,000 per year.

[183] The Court takes note that the income of the spouse of the Bankrupt, in this case, Mr. Saran, is a factor to be considered in directing if a conditional discharge should be made and for how much. See: McCamley (Re) (1982), 43 C.B.R. N.S. 66 (Ont. H. Ct. J.) ; Baum (Re) (1988), 70 C.B.R. N.S. 263 (Ont. H. Ct. J.) . In this case, the combined income of the Bankrupt and her spouse is in excess of $400,000 per year."

[132] Even on small issues the Bankrupt is caught out. In the Bankrupt's Affidavit he states:

"21. I own a 2014 Trax which I purchased for $1,500.00."

[133] In the Bankrupt's Supplementary Affidavit he states:

"4. I confirm I have not acquired any new assets nor do I have any liabilities."

[134] However in his testimony he admits:

Q. In your cross-examination, Mr. Osztrovics, you indicated you bought a car in the last year or two?

A. Mm-hmm. Correct.

Q. What kind of car was that?

A. It's a Chevy Trax, 2014.

Q. 2014. How much did you pay for it?

A. I paid $7,200.

[135] In other words, contrary to his Affidavit evidence, the Bankrupt has after-acquired property, that may have a value greater than the Ontario provincial exemption for a vehicle, for which he paid an amount that may contradict the stated value of the vehicle in his prior affidavits.

[136] He also admitted that at the time of the hearing he had a tax liability of approx. $6000 owing to CRA for tax owing in 2024, as a result of the income imputation of making a withdrawal of $25,000 from his RRSP.

[137] The amounts involved are not huge, but given the steep credibility slope the Bankrupt has to climb to establish his rehabilitation, given the prior credibility findings of (now) Mills, J., these constant easily proven misrepresentations do not in any way assist in that trek.

[138] If he cannot be truthful on these simple issues, how can he be believed on more complex issues, such as whether the income he is reporting is accurate, given that he is admittedly employed by his son and his siblings.

[139] From the evidence presented at the hearing, there is nothing to corroborate:

• whether the Bankrupt does or does not have an inheritance or survivorship claim against his wife's estate, which would be after-acquired property of the Bankruptcy estate despite the discharge of the Trustee, or

• where the shares of OFL that his wife owned at the time of the settlement with the Trustee went, or

• who the actual shareholders of 24 South Inc. are, and whether he has beneficial interest in that company, or

• whether the Bankrupt receives similar undeclared benefits of employment by 24 South Inc. that (now) Mills, J. found he was receiving from OFL;

all of which are very relevant in determining a discharge condition should the Bankrupt meet the tests I have set out in varying his Refusal Order.

[140] The Bankrupt argued that there is no evidence before the Court to support the arguments raised with respect to these issues raised by CRA and OSB.

[141] Exactly. It's the Bankrupt's Motion, why wasn't that evidence provided by the Bankrupt who bears the onus to do so?

[142] The Bankrupt had 8 years since the Refusal Order and 2 years since the Bankrupt commenced this Motion to vary the Refusal Order, to put his best foot forward to prove that he had been rehabilitated and that the Refusal Order should be varied, but the evidence he has put forward continues to obfuscate his current financial position.

Has the Bankrupt Followed the "Road Map" in the Refusal Order?

[143] In reviewing the key issues that resulted in the Refusal of the Bankrupt's Discharge, after assessing the evidence and testimony of the Bankrupt, CRA, the OSB and the Trustee, the following issues cannot be dealt with prospectively by the Bankrupt since the Refusal Order:

1. The Transfer of the shares owned by the Bankrupt in Osztrovics Farm Limited to his mother after the assignment, after the Trustee was deemed the owner of the shares;

2. Failing to advise the Trustee of the Transfer;

3. Bankrupt did not in any way assist the Trustee with the efficient and effective realization of his property, as is mandated by the BIA.

4. As a result of the transfer, significant professional costs had to be expended to recover value for the Bankruptcy Estate

[144] These issues were dealt with by the Settlement with the Bankrupt's wife, but the damage had been done relating to this transaction, and the Bankrupt's conduct and the conduct of his family resulted in no recovery to the Creditors. This was one of the chief grounds for the refusal of the Discharge by (now) Mills, J.

[145] Similarly the following issues are historical and cannot be dealt with prospectively since the Refusal Order:

5. The bankrupt failed to maintain appropriate books and records for True Blend.

6. Significant assets, inventory and receivables could not be properly accounted for by the Bankrupt.

7. Bankrupt pled guilty to offenses under the Excise Act for which he was ordered to pay a fine and a restitution order and the Trustee has received $10,000 in satisfaction of the restitution order.

[146] However with respect to the following issues identified by (now) Mills, J. in the Refusal Order, the Bankrupt could have demonstrated rehabilitation and discharged his onus to prove that he had been fully cooperative post-bankruptcy, but has failed to do so, for the reasons I have set out above reviewing the evidence before me:

8. The Bankrupt has failed to provide sufficient information to permit the Trustee to properly calculate whether there is a surplus income obligation owing.

9. The use of vehicles by the Bankrupt were not disclosed as taxable benefits on the T4 statements issued to the Bankrupt.

10. No proof of payment of rent by the Bankrupt to OFL has been provided to the Trustee.

11. The Bankrupt has not adequately responded to the Trustee's inquiries for documents to substantiate the income and expenses for the period of the bankruptcy.

12. The Bankrupt has frustrated the Trustee's efforts to realize on assets for the benefit of the estate by remaining engaged in the family business and hiding behind the corporate veils of OFL and VFL, claiming that his wife and his mother acted independently.

13. Throughout this bankruptcy the Bankrupt has demonstrated a total disregard for his duties under the BIA as well as a complete indifference to his many creditors, several of whom are farmers from his community.

14. Bankrupt appears to have utilized his knowledge of the insolvency system to undermine and frustrate the efforts of the Trustee.

[147] The onus was on the Bankrupt to provide evidence on this Motion that he has dealt with each of these issues on the "road map" set out by (now) Mills, J., and is now rehabilitated. He did not meet that onus, particularly with respect to the Surplus Income Issue, where the Bankrupt continues to insist he is in compliance, despite (now) Mills, J. finding specifically he was not.

Has the Bankrupt Met the Tests to Vary the Refusal Order

[148] It appears that contrary to Montalban, NsC, Catalina, HOJ and Strachan much of the evidence put forward on the motion by the Bankrupt, that I have dealt with in detail, and particular the issues rearguing whether he was in compliance with his duties relating to surplus income duties and other bankruptcy duties, and the events surrounding the issuance of the Mareva injunction were collateral attacks on the Refusal Order, on the same evidence as already dealt with in 2017 by (now) Mills, J. who made contrary, un-appealed findings of fact and law.

[149] As stated in NsC, Montalban, and Catalina and this Motion is:

a) not a trial de novo of the initial discharge and the findings of fact of the initial Judge refusing the discharge;

b) not an alternative remedy to an appeal; and

c) not designed to give the Bankrupt an opportunity to re-litigate questions and issues already decided;

But much of the evidence filed by the Bankrupt on this Motion does relitigate those decided issues.

[150] The onus is on the Bankrupt to satisfy the Court that the Order should be varied or rescinded and to provide new evidence indicating a change in circumstances for the court to make an order under s. 187(5) per NsC and Strachan.

[151] In this case, other than the Bankrupt now being 61 years old, preparing for retirement due to the physical nature of farming, and having lost his wife, I do not find there is sufficient "new evidence of a substantial nature" before me on this motion per Montalban, Cameron and Strachan to meet the tests to set aside the Refusal Order.

[152] The Bankrupt still (as it turns out, but not initially admitted by the Bankrupt) works for his family in a different corporation 24 South Inc., which raises the same transparency issues that were before (now) Mills, J. in terms of the Bankrupt's income and expenses, and after acquired property, when he was employed by his family in OFL.

[153] With respect to the promptness of the Motion, the motivation of the Bankrupt appears to be the concern that CRA will set off against CPP and OAS the unpaid amounts owing to CRA, as there is no stay of proceedings in place.

[154] That may be a valid concern, but with the Discharge of the Trustee in 2018, as I pointed out at the hearing, the CRA has had the ability to enforce its remedies since the stay was lifted under s.69.3(1.1) on the Trustee's discharge. There is no evidence before me that CRA, or any of the other creditors, have done so, to date.

[155] As I have set out above, I have struggled to find what the Bankrupt has done to follow the "roadmap" for the Bankrupt to follow to be discharged, to remedy the issues identified by Mills, J. per Montalban.

[156] As argued by counsel for CRA, Marshall for OSB and Prince for the Trustee the mere passage of time is not a ground to set aside a refused discharge, as summarized in Montalban by Fitzpatrick, J.:

"Generally speaking, that such a bankrupt could simply wait out or wear down the patience of his opposing creditors would offend the public interest concerns that apply here."

Which is echoed in Cameron, Strachan, Kramer, Bryant Isard, NsC, HOJ and Osesky.

[157] The Bankrupt has demonstrated that time has passed and that he is approaching retirement and will likely suffer increasing health issues.

[158] However, the Bankrupt has presented no evidence on this motion that there has been a fundamental change in circumstances between the original hearing and the time of this Motion, or that evidence has been discovered and put before this Court on this Motion which was not known at the time of the original hearing and which would have led to a different result, per NsC, HOJ, and Kramer to justify varying the Refusal Order.

Disposition

[159] In the context of this Motion, on all of the evidence before me, and in exercising my discretion as Registrar, I am NOT satisfied that the relief requested by the Bankrupt should be granted.

[160] After considering all of the factual admissions made by the Bankrupt, and in the Bankrupt's motion materials, which I have summarized above and will not repeat, and after considering the Reports, the evidence filed by CRA, and the submissions of the Bankrupt, the Trustee, CRA and OSB, I find that on the evidence before me on this Motion that the Bankrupt has not met the onus to establish that the Refusal Order should be varied as requested, and that my Judicial discretion as Registrar under the BIA should NOT be exercised to do so.

[161] However, I will seize myself of this Bankruptcy Estate and if the Bankrupt wishes to reapply for a variation on the presentation of:

1. "new evidence of a substantial nature" that there has been a fundamental change in circumstances between the original hearing and the time the next motion; or

2. evidence that has been newly discovered which was not known at the time of the original hearing before (now) Mills, J. and which would have led to a different result;

then he may reapply after the expiry of 6 months from the date of the issuance of these Reasons and I will hear that Motion on a date to be arranged with counsel for CRA, OSB and the Trustee at a Case Conference before me.

[162] Prince for the Trustee raised the issue that the majority of the Creditors that remain unpaid in this Bankruptcy were farmers and tradespeople. As I advised the parties at the hearing, currently the status quo is that these parties, along with CRA, are not bound by the BIA stay, as that was lifted by the Discharge of the Trustee under the provisions of s.69.3(1.1) of the BIA.

[163] If the Bankrupt succeeds in obtaining a discharge Order on a subsequent motion for variation, then the interests of those parties, as well as CRA, would be effected as the issuance of a Discharge Order would compromise their claims provable in Bankruptcy, which would affect the status quo where they can now still exercise their remedies against the Bankrupt, not being subject to a stay.

[164] Accordingly, if there will be a reapplication for a variation of the Refusal Order, then I will require that notice be given of the hearing to the proven creditors in the Bankruptcy Estate, as their interests could be affected by the result of the Motion.

[165] Given the relief requested, and the relief obtained, I believe that the result should be memorialized through a formal Order. I would ask that the parties provide to me through the Bankruptcy Court Office a settled word version of a Draft Order.

Costs

[166] I would urge the parties to consult and determine whether they can consensually agree on a costs Order for this Motion.

[167] If they cannot, then, if any choose to pursue costs, CRA, the Trustee and the OSB are to file costs submissions not exceeding 3 pages in length (for each party seeking costs), to be served on counsel for the Bankrupt and filed with the Court by December 15th, 2025.

[168] Responding cost submissions from the Bankrupt to be served on opposing parties and filed with the Court by January 15, 2026.

___________________________

Associate Justice Ilchenko

Registrar in Bankruptcy

Superior Court of Justice