Stéphanie Lauriault

The Superintendent of Bankruptcy brought a motion seeking orders to provide flexibility to the administration of Ontario insolvency estates affected by COVID-19.

The relief sought included increasing payment defaults/time for deemed annulment of consumer proposals under s. 66.31(1) BIA, extending timelines for creditor meetings (ss. 51, 66.15, 102 BIA) and mediations (rules 105(4), (10) BIGR), extending time for court referrals (s. 170.1(3) BIA), applying the order to all active and future insolvency filings until June 30, 2020, and dispensing with notice.

The court granted the requested relief, finding jurisdiction under ss. 66.31(1) and 187(11) of the BIA, and its inherent jurisdiction, given the exceptional circumstances of the pandemic.

The bankrupt, a 42-year-old second-time bankrupt, applied for a discharge.

The Canada Revenue Agency opposed the discharge on the grounds that it was a tax-driven bankruptcy, with the bankrupt owing over $660,000 in personal income taxes.

The court found that the bankrupt failed to cooperate with a CRA audit, transferred his business to his sister to avoid paying taxes, and artificially lowered his income to avoid surplus income payments.

The court ordered a conditional discharge requiring the payment of $150,000 and suspended the discharge for 18 months.

Dr. Baldeep Kaur Saran, a dentist, applied for a discharge from bankruptcy, which was opposed by her Trustee and the Canada Revenue Agency (CRA).

The bankruptcy was tax-driven, stemming from her participation in a 'natural person' detaxing scheme and a charitable giving scheme, resulting in over $3.1 million in tax debt (including penalties and interest).

The court found that her assets were less than 50 cents on the dollar of unsecured liabilities and that she contributed to the bankruptcy through unjustifiable extravagance in living.

The court rejected her claims of being duped and imputed income to her based on her past earnings and her husband's control over their combined income.

A conditional discharge was granted, requiring her to pay an additional $200,000 to the Trustee, file accurate tax returns, remain current with CRA obligations, and her discharge was suspended for a minimum of 36 months.

The bankrupt, a 72-year-old self-employed businessman with significant tax debts, applied for a discharge from bankruptcy.

The discharge was opposed by the Canada Revenue Agency and the Trustee in Bankruptcy.

The court found that the bankrupt had engaged in unjustifiable extravagance and had structured his affairs through a family trust to artificially lower his income.

The court granted a conditional discharge, requiring the bankrupt to pay $100,000 to the Trustee for the benefit of his creditors.

The bankrupt, Charles Rotenberg, applied for a discharge from his third bankruptcy, which was opposed by the trustee and the Attorney General of Canada (Canada Revenue Agency).

The court refused an adjournment request by the bankrupt, noting the long history of the matter and previous adjournments.

The court reviewed the bankrupt's history of multiple bankruptcies, consistent failure to file tax returns and pay income tax, and lack of cooperation with the trustee.

Despite counsel's argument for a conditional discharge, the court found the bankrupt lacked insight and a concrete plan to address his financial situation, and his recent actions were "too little too late." The discharge was refused on grounds including previous bankruptcies, failure to perform duties under the Bankruptcy and Insolvency Act, failure to comply with surplus income requirements, and assets not equaling fifty cents on the dollar of unsecured liabilities.

Leave was granted to re-apply in 48 months, conditional on full tax compliance.

The applicants sought an order requiring the Canada Revenue Agency to return funds seized from a tax debtor and pay them into court pending the outcome of a related proceeding.

The applicants alleged the tax debtor had misappropriated the funds from an estate.

The court dismissed the application, finding that even if it had jurisdiction to make the order, there was no need to do so because the funds were secure in the hands of the Receiver General and did not require preservation by payment into court.

The Attorney General of Canada appealed a motion judge's decision granting an undischarged bankrupt credit for the reduction in the principal amount of his mortgage based on promissory estoppel.

The Trustee had represented it would disclaim the property, leading the bankrupt to continue making mortgage payments.

The Court of Appeal allowed the appeal, finding that the motion judge erred by failing to apply the surplus income provisions of the Bankruptcy and Insolvency Act.

As an undischarged bankrupt, the respondent was not entitled to build equity or be reimbursed for mortgage payments claimed as reasonable living expenses, and all after-acquired equity vested in the Trustee.

Following the dismissal of a motion for partial default judgment and partial summary judgment, the court considered the appropriate costs award.

The defendant Crown sought substantial indemnity costs including significant expert disbursements.

The court reviewed the general principles governing costs under Rule 57 of the Rules of Civil Procedure and s. 131 of the Courts of Justice Act.

It concluded that the moving party's evidence supporting an alleged equitable mortgage was deficient and unreasonable in the context of the summary judgment motion.

Substantial indemnity costs and expert disbursements were awarded to the Crown.

The applicants sought an extension of time to file a notice of appeal and leave to appeal from an order refusing to grant a charging order for a solicitor's lien and a salvage lien against a bankrupt's estate.

The Court of Appeal granted the extension of time, finding a bona fide intention to appeal and no prejudice.

The Court also granted leave to appeal under s. 193(e) of the Bankruptcy and Insolvency Act, finding that the proposed appeal raised issues of general importance to bankruptcy practice and was prima facie meritorious.

A creditor applied under s. 37 of the Bankruptcy and Insolvency Act to vary a trustee’s decision not to realize on a bankrupt’s residential property, which initially had negative equity but later increased in value prior to discharge.

The court considered whether post‑bankruptcy increases in real property equity constituted after‑acquired property divisible among creditors.

The court held that increases in equity prior to discharge generally vest in the trustee for the benefit of creditors unless the trustee has formally divested the property.

However, because the bankrupt relied on representations from the trustee and continued making mortgage payments that reduced principal, equitable considerations applied.

The bankrupt was credited for principal reduction on the mortgage, while the creditor was entitled to the remaining increase in equity beyond the original appraisal.

The moving party sought partial summary judgment and default judgment declaring an equitable mortgage or equitable interest over two Ottawa properties, asserting priority over liens registered by the Canada Revenue Agency for tax debts of one of the defendants.

The claim relied primarily on a written agreement and the alleged use of funds provided by the moving party in property transactions.

The court held that the agreement did not establish the essential elements of an equitable mortgage, including a clearly defined debt and intention to charge specific property as security.

Significant disputes existed regarding the source of funds and the parties’ intentions, raising credibility issues.

The court concluded that these issues required viva voce evidence at trial and dismissed the motion for summary judgment.

A bankrupt chiropractor applied for discharge from bankruptcy arising primarily from large personal income tax liabilities exceeding $200,000.

The Canada Revenue Agency, the trustee, and the Office of the Superintendent of Bankruptcy opposed discharge, alleging improper asset transfers, inaccurate disclosures, and failure to make reasonable efforts to pay tax debts.

The court found that the bankruptcy was tax-driven under s. 172.1 of the Bankruptcy and Insolvency Act and that the bankrupt had transferred assets to his spouse at artificially low values and failed to disclose significant transactions, including RRSP withdrawals and property transfers.

The court also determined that the bankrupt’s reported income was artificially low and imputed a higher income based on professional capacity.

Balancing the statutory factors and the need to maintain the integrity of the bankruptcy system, the court granted a conditional discharge requiring substantial payments and further financial disclosure.

The court determined whether agreed costs arising from a successful Rule 21 determination of a question of law should be payable immediately or in the cause pending appeal.

The underlying motion, brought by the tax authority under Rule 21.01(1)(a) of the Rules of Civil Procedure, sought determination of a legal issue prior to trial.

The court held that the Rule 21 proceeding constituted a discrete proceeding capable of disposing of the action and therefore warranted immediate costs consequences.

The successful parties were awarded agreed partial indemnity costs payable forthwith rather than in the cause.

The existence of a pending appeal did not justify delaying payment of the costs.