Cardwell et al., Re, (2006) 278 Sask.R. 106 (QB Reg.)

• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: April 12, 2006
• Jurisdiction: Saskatchewan
• Citations: (2006), 278 Sask.R. 106 (QB Reg.);2006 SKQB 164

Cardwell, Re (2006), 278 Sask.R. 106 (QB Reg.)

MLB headnote and full text

Temp. Cite: [2006] Sask.R. TBEd. AP.083

In The Matter Of the consumer proposals of Dean Andrew Cardwell and Donna Elizabeth Rederburg (applicants);

And In The Matter Of applications under s. 178(1.1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended.

(Bankruptcy Nos. 13324; 13329; Estate Nos. 23-025868; 23-025961; 2006 SKQB 164)

Indexed As: Cardwell et al., Re

Saskatchewan Court of Queen's Bench

In Bankruptcy and Insolvency

Herauf, Registrar in Bankruptcy

April 12, 2006.

Summary:

Cardwell and Rederburg had outstanding student loans when they made consumer proposals under the Bankruptcy and Insolvency Act. At least one of the student loan creditors consented to the proposal by voting for acceptance. Cardwell and Rederburg completed the proposals. At least one student loan creditor recommenced pursuing payment. Cardwell and Rederburg applied for a declaration that, under s. 66.28(2) of the Act, completion of a proposal released the debtor from debts falling within s. 178, including student loan debts, if the creditor consented to the proposal. Cardwell also applied for release of the debt under s. 178(1.1) of the Bankruptcy and Insolvency Act.

A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, declined to grant the declaration. While the court held that s. 178(1.1) applied to proposals as well as bankruptcies, the court declined to grant the relief to Cardwell as he had failed to meet the requirements of good faith and continuing financial difficulty.

Bankruptcy - Topic 2103

Proposals - General principles - Application of bankruptcy provisions to proposals - Debtors with outstanding student loans made consumer proposals - At least one student loan creditor consented - After completing the proposals, the debtors applied for a declaration that, under s. 66.28(2) of the Bankruptcy and Insolvency Act, completion of a proposal released the debtor from debts falling within s. 178, including student loan debts, if the creditor consented to the proposal - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, declined to grant the declaration - Master Bolton correctly interpreted s. 66.28(2) in Slaney, Re (2004 B.C.S.C.) as requiring the student loan creditor to assent not only to the proposal but also to the release of the debt on completion - This accorded with the Act's object and Parliament's intention to treat consumer debtors and bankrupts similarly with respect to s. 178 debts - Further, ss. 66.28(3) and 62(3) verified the non-release of a s. 178 debt where a creditor simply assented to the proposal - See paragraphs 4 to 26.

Bankruptcy - Topic 2103

Proposals - General principles - Application of bankruptcy provisions to proposals - Cardwell obtained a degree in education in 1995 - After Canada Student Loans (CSL) garnished his pay, he made a consumer proposal - The student loan creditors consented to the proposal - After Cardwell completed the proposal, CSL reactivated collection - Cardwell applied for release of the debt under s. 178(1.1) of the Bankruptcy and Insolvency Act - At issue was whether s. 178(1.1) applied to proposals and, if so, whether the relief should be granted - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, held that s. 178(1.1) applied to proposals as well as bankruptcies - To hold otherwise would put persons who completed proposals in a worse position than those who went into bankruptcy - However, Cardwell's situation did not meet the requirements of good faith and continuing financial difficulty - He had not attempted to make any payments until enforcement action was brought against him - At present, he was gainfully employed as a teacher and earned substantial remuneration - To allow the application would make a farce of s. 178(1.1) - See paragraphs 42 to 59.

Cases Noticed:

Slaney, Re, [2004] B.C.T.C. Uned. 162; 4 C.B.R.(5th) 95 (S.C.), consd. [para. 11].

Skytal Ltd. v. Schiber (1997), 31 O.T.C. 389; 46 C.B.R.(3d) 275 (Gen. Div.), affd. (1999), 115 O.A.C. 197; 9 C.B.R.(4th) 129 (C.A.), refd to. [para. 20].

Trade Collection & Mercantile Agency v. Derome (1934), 16 C.B.R. 158 (Que. S.C.), refd to. [para. 20].

Canada (Attorney General) v. Snopko, [2004] O.T.C. 152; 48 C.B.R.(4th) 41 (Sup. Ct.), consd. [para. 27].

Hancor Inc. et al. v. 118353 Canada Ltée et al. (1995), 191 N.R. 360; 37 C.B.R.(3d) 117 (F.C.A.), refd to. [para. 29].

Perrette Inc. (Bankrupt), Re (1998), 2 C.B.R.(4th) 165 (Que. C.A.), leave to appeal refused (1998), 235 N.R. 398 (S.C.C.), refd to. [para. 30].

Minto (Bankrupt), Re (1999), 191 Sask.R. 1; 14 C.B.R.(4th) 235 (Q.B. Reg.), consd. [para. 33].

Kelly (Bankrupt), Re (2000), 20 C.B.R.(4th) 251 (Ont. Dep. Reg.), refd to. [para. 54].

Lowe (Bankrupt), Re, [2004] A.R. Uned. 252; 2 C.B.R.(5th) 277 (Q.B.), refd to. [para. 58].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 62(3) [para. 23]; sect. 66(1), sect. 66.4(1) [para. 27]; sect. 66.28(2) [para. 5]; sect. 66.28(3) [para. 23].

Authors and Works Noticed:

Houlden, Lloyd W., and Morawetz, Geoffrey B., The 2004 Annotated Bankruptcy and Insolvency Act, ss. E18(4), E35.8 [para. 10].

Counsel:

Anne E. Hardy, for the applicants;

Marlon Miller, for Her Majesty the Queen in Right of Canada as represented by the Minister of Human Resources Development.

These applications were heard by Herauf, Registrar in Bankruptcy, of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, who delivered the following judgment on April 12, 2006.