Estate No. 33-2026597
MOTION HEARD: 2026-08-10
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: In the Matter of the Bankruptcy of Elizabeth Susan McLean
BEFORE: Associate Justice Kamal
COUNSEL: Kelli Day, for the Bankrupt
REASONS FOR DECISION
1. The rehabilitative purpose of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”) should not be understood as requiring the Court to consider the debtor's balance sheet in isolation. While the statutory objective is financial rehabilitation, the debtor's ability to achieve that rehabilitation necessarily depends upon the circumstances affecting their capacity to participate in economic life. Where addiction materially contributed to the debtor's financial collapse, evidence of recovery efforts may be relevant to the assessment of financial rehabilitation. Recovery efforts may show that the circumstances contributing to the insolvency are being addressed. They may also show that the debtor is now capable of making meaningful use of the fresh start contemplated by the Act.
2. Elizabeth Susan McLean (aka Elizabeth Fortune) seeks a suspended discharge. I will refer to the Bankrupt as Ms. McLean or the Bankrupt.
3. The Court expressed some concerns about only ordering a suspended discharge and sought submissions on whether it would be appropriate to impose conditions on the discharge.
4. For the following reasons, I am ordering a conditional and suspended discharge along with additional orders to ensure accountability and oversight of the Court, consistent with the objectives of the BIA.
Background
5. Ms. McLean is currently 52 years of age and has been working hard to turn her life around.
6. She was previously bankrupt in 2006 and was discharged in 2007.
7. Her financial difficulties giving rise to the 2006 bankruptcy were predominantly caused by her ex-husband’s excessive spending on drugs and alcohol.
8. In 2014, Ms. McLean separated from her ex-husband. She and her ex-husband struggled with addiction, but Ms. McLean was clean (and sober) at the time of the separation. She was working through “The Twelve Steps” and seeking counselling.
9. On or about August 18, 2015, Ms. McLean made a further assignment in bankruptcy. She says this bankruptcy was a result of the breakdown of her marriage. I have no doubt that her own addiction issues also contributed to her financial circumstances leading to the bankruptcy.
10. She was struggling with addiction.
11. In or about September of 2018, Ms. McLean began receiving outpatient addiction support and ended up taking a medical leave of absence from work on the advice of her doctor.
12. Doyle Salewski Inc. (“DSI” or the “Trustee”) was appointed as the Licensed Insolvency Trustee.
13. Ms. McLean got married to her second husband on July 14, 2018.
14. She stopped working on October 1, 2018 and began receiving long-term disability benefits in February of 2019.
15. In June of 2019, Ms. McLean relapsed and was unable to participate in regular life activities. Her Long-Term Disability (LTD) payments ceased in June of 2019; her benefits were formally terminated in October of 2019, and her employment was terminated in November of 2019 while she was still on medical leave.
16. There is no need to go into significant detail except that the evidence establishes that since 2019, Ms. McLean has experienced exceptional trauma and challenging circumstances. The Court sympathizes with Ms. McLean.
17. In November of 2020, Ms. McLean commenced an action against her LTD provider for unlawfully terminating her LTD benefits.
18. The action is subject to a Timetable pursuant to Rule 48.14(4) of the Rules of Civil Procedure requiring the Parties to set the matter down for Trial by December 31, 2026. Ironically, that timetable was signed by me in September of 2025.
19. The Trustee received their discharge on October 3, 2019.
20. According to the Trustee’s Report and Notice of Intended Opposition, the Trustee opposed the discharge in 2018 on the following grounds:
a. s. 173(1)(m) – surplus income obligations not completed; and
b. s. 173(1)(o) – income and expense statements not provided after June 2017
21. Ms. McLean has now made arrangements with the Trustee to pay the outstanding surplus income amount of $1,588 in monthly instalments of $100 and to provide a Consent to Judgment in favour of the Trustee.
22. The Trustee has advised that they are not seeking further surplus income payments beyond the $1,588 owing for the initial bankruptcy period.
23. Ms. McLean provided her current monthly budget.
24. Ms. McLean has recently been accepted to the Social Service Worker program at St. Lawrence College, which starts in September of 2026. She will be receiving financial aid from the Ontario government for tuition and a portion of her living expenses.
25. Ms. McLean had a recent relapse but is working on a program of recovery again for her addiction. She is engaged in the 12 Steps fellowships, has two counsellors to address addiction and trauma, and is engaged with her family doctor to assist her with receiving services.
26. Ms. McLean also has the support of her family and friends to maintain her sobriety. Particularly, she expressed gratitude for her parents, children, and the team of mental health professionals that continue to help and support her.
27. They say gratitude is an action word. I agree. Gratitude is moving past a quiet feeling into active expression. This includes turning internal appreciation into visible deeds, spoken words, and direct kindness toward other people. One way for Ms. McLean to show gratitude is to continue on her path of addiction recovery.
28. She is motivated to better her life and is optimistic about the future as she enters college next month. She is hopeful that her enrollment at College will eventually enable her to support herself financially, which, in turn, will help her stay healthy.
29. At this time, she continues to experience extreme financial instability. However, her focus is on getting her life back on track through staying clean, engaging in recovery, starting her education and career, and rebuilding her life.
Analysis
General Principles
30. As a starting point, it is necessary to reflect on the purposes behind the bankruptcy system and the BIA. The Supreme Court of Canada has held that the purposes are the equitable distribution of the bankrupt’s assets among its creditors, the bankrupt’s financial rehabilitation, and protecting the public interest. See Scott v. Golden Oaks Enterprises Inc., 2024 SCC 32, at para. 79.
31. One of the primary objects of the BIA is to enable an honest but unfortunate debtor to obtain a discharge from his or her debts, subject to such reasonable conditions, if any, as the court may see fit to impose, so that the debtor can make a fresh start. See Re Goodman, [1995] O.J. No. 72 at paras. 1, 10; Re Simpson, [1984] 50 C.B.R. (N.S.) 109 at para. 5 and Alberta (Attorney General) v. Moloney, 2015 SCC 51.
32. The Supreme Court of Canada recently stated in Poonian v. British Columbia (Securities Commission), 2024 SCC 28:
The Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3 (“BIA”), furthers two important purposes: the equitable distribution of a bankrupt’s assets among creditors and the bankrupt’s financial rehabilitation. Financial rehabilitation means that a debtor will be afforded a “fresh start” when appropriate. The fresh start principle is codified in s. 178(2) of the BIA; it allows a bankrupt to be released from outstanding debts at the end of the bankruptcy process. Thus, subject to reasonable conditions, the BIA permits an honest but unfortunate debtor to be freed from the burdens of indebtedness and to reintegrate into economic life.
33. In my view, when a Bankrupt’s debts arose during a period of active addiction, for example, they accumulated credit-card debt, loans, or unpaid bills while their addiction was disrupting their life, their addiction recovery is not itself the legal definition of “financial rehabilitation.” However, it can be part of the circumstances that make financial rehabilitation meaningful or possible.
34. Someone may have difficulty achieving financial stability while an addiction is active, and overwhelming debt can itself make broader recovery and reintegration more difficult. The two are intertwined.
35. The BIA's financial-rehabilitation objective should be understood in light of the debtor's circumstances, including the circumstances that contributed to their insolvency, and the fresh start is intended to allow the debtor to reintegrate economically.
36. The Court is not required to take into account the debtor's balance sheet alone in order to fulfil the rehabilitative goal of the BIA. Although financial rehabilitation is the legislative goal, the debtor's ability to accomplish that rehabilitation inevitably depends on the factors influencing their ability to engage in the economy. Evidence of recovery efforts may therefore be relevant to the evaluation of financial rehabilitation in cases where addiction materially contributed to the debtor's financial collapse. This is because recovery (including the ongoing journey of recovery) may show that the circumstances that led to the insolvency are being addressed and that the debtor is now able to make meaningful use of the fresh start contemplated by the Act.
37. The debtor's recovery from the underlying circumstances that contributed to the insolvency is evidence that the debtor is now capable of achieving the financial rehabilitation that the BIA is designed to facilitate.
38. The Court must also be aware that mental health and addiction are a matter of health. It should be considered just like we consider physical health conditions. In the same way we would not punish a debtor whose bankruptcy was caused by a heart attack or any other physical health condition, we should not be punishing a debtor who experienced economic issues due to mental health and addiction issues.
Suspended Discharge
39. Section 172 gives the bankruptcy court discretion concerning discharge: it can grant an absolute discharge, suspend the discharge, impose conditions, or refuse it in appropriate circumstances.
40. This discretion operates as part of the BIA's balance between financial rehabilitation and competing objectives. This includes looking at the circumstances of the Bankrupt and maintaining confidence in the bankruptcy system.
41. The Bankrupt seeks a suspended discharge for a period of 14 days. Ms. McLean says this is to account for the previous bankruptcy.
42. I considered the case of Bankruptcy of Alan Bruce Luff, 2001 MBQB 247, in which the Court granted a suspended discharge for 6 months for a bankruptcy that was caused by his addiction to drugs and alcohol, which led to marital breakdown and business failure. However, that was a first-time bankrupt who had been drug-free for one year.
43. In my view, a suspended discharge of 14 days on its own does not meet the objectives of the BIA in this case. During the hearing, I received submissions from counsel for the Bankrupt.
Conditional Discharge
44. After giving time for Ms. McLean and her counsel to speak privately, I received submissions. Ms. McLean is agreeable to conditions on her discharge.
45. In Buote (Re), 2013 ONSC 7025, the Court was dealing with an opposed discharge of a debtor who had a gambling addiction. The Court imposed specific conditions that the bankrupt return before the judge granting the conditional discharge for a pre-determined number of years to report on progress; the bankrupt was banned from gambling and that the bankrupt sign an undertaking to this effect; that the bankrupt not engage in gambling; that the bankrupt attend Gambler’s Anonymous for a specified period of time; that the bankrupt file and pay his or her income taxes as they come due; that the bankrupt makes his or her surplus payments to the trustee in a timely manner; and, that the bankrupt seek the court’s permission before seeking creditor protection in the future.
46. In Lundrigan, Re, 1996 CanLII 5136, the Trustee recommended a condition that the bankrupt attend counselling for his gambling and alcohol addictions (reasons for the bankruptcy) and be required to provide proof that such counselling has occurred. In that case, it was the Bankrupt’s third bankruptcy. The Court found that the bankrupt had learned nothing from his multiple bankruptcies. In refusing the discharge, the Court stated:
I could not ascertain anything from his remarks that would lead me to believe that he has the proper attitude to deal with the rehabilitative aspect of bankruptcy. He is quick to blame the creditors, the Trustee for not considering a proposal rather than an assignment, and his alcohol and gambling addictions. What is obvious is that he fails to take any responsibility for his own actions. This must be the first step on the road to rehabilitation. This is further exemplified by his opposition to any conditions in an order requiring proof of attendance at counselling services for his addictions. (It remains unclear as to whether a bankruptcy court has the authority to impose such a condition). His reason for not agreeing to this term was that it would destroy the anonymity of the services if he had to have proof that he attended. This is not the response expected from a mature individual who is prepared to accept responsibility for his actions.
47. I distinguish the Lundrigan, Re case as the Bankrupt before me demonstrated a commitment to accepting support and services to recover from addiction. She has a sponsor in a 12-step fellowship. She is working the steps. She has two counsellors. She has the support of family and friends. She is working hard to get her life back on track.
48. As mentioned above, mental health and addiction are health conditions and should be treated no differently than physical illnesses. As we would not punish a debtor whose insolvency was caused by a physical illness, we should not punish one whose financial difficulties arose from mental health or addiction challenges. The system needs to encourage rehabilitation, not punishment.
49. While it was openly discussed that Ms. McLean had some setbacks in her recovery, it appeared to me that she is motivated to improve her life. As the court wrote in Olson (Re), 2014 BCSC 2340, “I do not think it is unusual for this to happen. Recovery is not always a linear process, and it may take several relapses before new habits are firmly adopted. The important fact is that the Bankrupt keeps trying and, when he appeared before me, he had six months success behind him.”
50. I echo those comments today. What is important for Ms. McLean is that she keeps trying and remains hopeful for a brighter future.
Conclusion
51. Having thoroughly considered the evidence provided and the law[1], in my view, the following conditions address the various objectives of the BIA, including financial rehabilitation, the circumstances of the Bankrupt, as well as maintaining confidence in the bankruptcy system. Ms. McLean shall be granted a suspended and conditional discharge upon the following conditions:
a. Within 14 days, Ms. McLean shall provide a signed undertaking to her counsel to attend 12-step meetings (Alcoholics Anonymous or Narcotics Anonymous) every day for the next 90 days and then at a minimum of once each week, for the next five years;
b. Within 14 days, Ms. McLean shall provide a signed undertaking to her counsel to engage in counselling services for addiction and mental health issues, including trauma, as recommended by her counsellors and family doctor for at least the next 5 years;
52. The discharge shall be suspended for 14 days.
53. Ms. McLean is also ordered to return to court, before Kamal A.J., every May for the next three years and to provide evidence that:
a. she is not using alcohol or drugs in any way;
b. she has continued to meet the condition set out above, including attending weekly Alcoholics Anonymous or Narcotics Anonymous meetings and following the recommendations of her counsellors and doctor.
54. I note that three years of check-ins are not part of the conditional discharge.
55. This Court also orders that if the Bankrupt seeks to obtain creditor protection in the future, whether under the BIA or another statute, the Bankrupt must obtain leave of the court before filing for such protection.
56. I would like to take this opportunity to express my sympathy to Ms. McLean. I am sensitive to the significant challenges she has faced. The record reflects a history of hardship that understandably evokes compassion, and I acknowledge the effort she has made to improve her life. I am hopeful that this order will assist Ms. McLean in a brighter future.
57. I would also like to thank counsel for her respectful, thoughtful, and diligent representation of Ms. McLean and for her assistance to the Court.
___________________________
Associate Justice Kamal
DATE: August 12, 2026
1In accordance with ss. 172(1)(c) and 172.1(3)(c) of the BIA and the case law cited above