Superior Court of Justice – Ontario (In Bankruptcy and Insolvency)

Court File No.: 31-2659767
Date: 2025-01-29

Style of Cause

Re: In the Matter of the Bankruptcy of Qui Thieu Mac

Before: Associate Justice Rappos

Counsel:
Marvin Zweig, representative of Goldhar & Associates Ltd.
Qui Thieu Mac, self-represented

Heard: January 23, 2025 (virtually)

Endorsement

[1] Goldhar & Associates Ltd., in its capacity as trustee in bankruptcy for Qui Thieu Mac, brings a motion to annul Mr. Mac’s discharge from bankruptcy. The Trustee brings this motion before the Court further to my Endorsement dated November 29, 2024 reported as Re Mac, 2024 ONSC 6675.

[2] Qui Thieu Mac filed an assignment in bankruptcy on July 22, 2020. Mr. Mac previously filed for bankruptcy on November 3, 2005, and received his discharge on November 19, 2006.

[3] At the time he filed for his second bankruptcy, Mr. Mac reported to the Trustee that he had no income. As a result, he had no requirement to pay surplus income to the Trustee in accordance with section 68 of the Bankruptcy and Insolvency Act (“BIA”) and the applicable directive from the Office of the Superintendent of Bankruptcy (“OSB”).

[4] As a second time bankrupt with no surplus income, Mr. Mac was entitled to an automatic discharge from bankruptcy 24 months after he filed his assignment, unless an opposition to the discharge was filed in accordance with the BIA.[^1]

[5] No opposition to Mr. Mac’s discharge was filed by the Trustee, the OSB or any creditor.

[6] As a result, Mr. Mac received his automatic discharge on July 23, 2022.

[7] For this motion, the Trustee’s materials show that it prepared and signed a notice of intended opposition to discharge dated June 25, 2022 and intended to serve and file it in accordance with the BIA.

[8] The Trustee also prepared and signed its Report on Bankruptcy Application for Discharge under subsection 170(1) of the BIA dated June 25, 2022, which indicates the Trustee’s intention to oppose the discharge, due to the prior bankruptcy, Mr. Mac’s failure to provide income and expense statements, and Mr. Mac having brought on, or contributed to the bankruptcy, by gambling. These are all facts under section 173(1) of the BIA that are to be considered by the court on any discharge application.

[9] Through inadvertence, the notice and report were not filed, and this was not discovered by the Trustee until it was preparing a supplementary report for a discharge hearing scheduled for October 23, 2024. That hearing was cancelled.

[10] The Trustee argues that the Court has the ability under the BIA to set aside the automatic discharge received by Mr. Mac.

[11] I have reviewed the Trustee’s materials and the cases cited for this motion. Based on my review, I am satisfied that I have jurisdiction to set aside the automatic discharge under section 187(5),[^2] section 168.1(5),[^3] and section 187(9) of the BIA.[^4]

[12] The Court has previously set out the following criteria to be considered when deciding whether to set aside an automatic discharge:

• (a) whether there is a bona fide error in the trustee failing to send out the required notices;
• (b) whether, if the notices had been sent, creditors would have opposed the discharge;
• (c) whether 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 recovery by the creditors; and
• (d) whether the bankrupt will be prejudiced by setting aside the discharge.[^5]

[13] Based on my review of the Trustee’s materials, I am satisfied that there was, through inadvertence on the Trustee’s part, a bona fide error in the Trustee failing to serve its notice of opposition and Report on the Application for Discharge, and that there would have been opposition to Mr. Mac’s discharge if not for the Trustee’s inadvertence.

[14] With respect to criterion (c), I am satisfied that the Trustee has put sufficient evidence before me to show that a discharge hearing is likely to lead to a result that is appreciably different from an absolute discharge from the perspective of the integrity of the bankruptcy system.

[15] Section 172(2) of the BIA provides that an absolute discharge is not available to a bankrupt if any of the facts listed in section 173(1) of the BIA are proved to exist.

[16] There are a number of section 173(1) facts that have been proved in this case, including:

• (a) section 173(1)(e) – the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs;
• (b) section 173(1)(j) – the bankrupt has on any previous occasion been bankrupt or made a proposal to creditors; and
• (c) section 173(1)(o) – the bankrupt has failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court.

[17] The materials clearly show that Mr. Mac filed for bankruptcy in part due to gambling problems, is a second time bankrupt, and failed to comply with his obligations to produce income and expense statements to the Trustee.

[18] As a result, the integrity of the bankruptcy system requires that, in circumstances such as these, a bankrupt should not obtain the benefit of an absolute discharge where there were many facts proven against him under section 173(1) and he would not have received an absolute discharge but for the inadvertence of the Trustee. This is especially the case where Mr. Mac failed to file any income and expense statements with the Trustee, such that the Trustee was unable to confirm whether Mr. Mac was required to make surplus income payments to the Trustee for the benefit of his creditors.

[19] With respect to criterion (d), Mr. Mac appeared at the motion but did not file any evidence or written submissions in support of his position. His sole submission was that he is entitled to his discharge and should not have to have it reversed due to the Trustee’s error.

[20] I note that when this motion was originally brought before me on November 28, 2024, Mr. Mac did not appear before the Court.

[21] While I appreciate that a bankrupt will always suffer some prejudice if his automatic discharge is set aside, given that he will return to being an undischarged bankrupt, there is no evidence before me to support that Mr. Mac will suffer any further prejudice if his absolute discharge is annulled and he proceeds to a discharge hearing later this year.

[22] As a result, I am satisfied that it is appropriate to exercise the discretion and jurisdiction under the BIA to grant the Trustee’s motion and set aside Mr. Mac’s absolute discharge.

[23] Accordingly, the Trustee’s motion is hereby granted. Order to go as electronically amended and signed by me.

Associate Justice Rappos
Date: January 29, 2025

Footnotes

[^1]: Subsection 168.1(1)(b)(i) of the BIA.
[^2]: “Every court may review, rescind or vary any order made by it under its bankruptcy jurisdiction.”
[^3]: “An automatic discharge is deemed, for all purposes, to be an absolute and immediate order of discharge.”
[^4]: “No proceeding in bankruptcy shall be invalidated by any formal defect or by any irregularity, unless the court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court.”
[^5]: Cameron (Re).