Lepage (Bankrupt), Re

• Jurisdiction: Ontario
• Court: Court of Appeal (Ontario)
• Judge: Sharpe, Juriansz and Roberts, JJ.A.
• Citation: 2016 ONCA 403,(2016), 349 O.A.C. 208 (CA)
• Date: 04 April 2016

Lepage (Bankrupt), Re (2016), 349 O.A.C. 208 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. MY.025

In the Matter of the Bankruptcy of Raymond Stephen Paul Lepage

(C60861; 2016 ONCA 403)

Indexed As: Lepage (Bankrupt), Re

Ontario Court of Appeal

Sharpe, Juriansz and Roberts, JJ.A.

May 27, 2016.

Summary:

The trustee in bankruptcy had the value of the residence of the bankrupt (Lepage) appraised early in the bankruptcy in 2010, and concluded that it had negative equity and no value to the estate. On Lepage's application for discharge in 2015, the trustee reported that no amounts were realized on Lepage's property. In 2015, the Canada Revenue Agency (CRA), the sole unsecured creditor, obtained a new appraisal of Lepage's house. The appraisal indicated that there had been a significant increase to the equity in the property. As a result, the CRA objected to the trustee's report. The motion judge ruled, pursuant to ss. 67(1)(c) and 71 of the Bankruptcy and Insolvency Act (BIA), that the increase in equity in Lepage's house was after-acquired property that accrued to the estate and hence to the benefit of the CRA. However, the motion judge found that the trustee made representations to Lepage in 2010 that the trustee would disclaim the property. The motion judge found that the representations were relied upon by Lepage and that they precluded the trustee from claiming the entire increase in value of the equity. Although Lepage sought credit for all interest, principal, taxes and insurance payments, the motion judge declined to grant him credit for all of those amounts, because he found that Lepage would have incurred living expenses elsewhere. However, the motion judge ruled that Lepage was entitled to credit for the reduction in the principal amount of the mortgage from October 31, 2010, the date the trustee's representations were made, to the date of Lepage's discharge. The CRA appealed. The CRA argued that the motion judge erred in applying the doctrine of promissory estoppel and in giving Lepage credit for the reduction in the principal amount of the mortgage.

The Ontario Court of Appeal allowed the appeal. The motion judge erred by failing to apply the provisions of ss. 67, 68 and 71 of the BIA to Lepage's surplus income and thereby allowed Lepage to retain the after-acquired equity that was created in his house.

Bankruptcy - Topic 440.3

Property of bankrupt - Particular property - After-acquired property - See paragraphs 1 to 27.

Estoppel - Topic 1389

Estoppel in pais (by conduct) - Circumstances where doctrine not applicable - Lack of prejudice or detrimental reliance by person raising estoppel - See paragraphs 12 to 16.

Counsel:

Stephanie Lauriault and Pierre-Paul Trottier, for the Attorney General of Canada;

J. Alden Christian, for Raymond Lepage;

Keith MacLaren, for the Trustee.

This appeal was heard on April 4, 2016, before Sharpe, Juriansz and Roberts, JJ.A., of the Ontario Court of Appeal. The Court of Appeal delivered the following decision on May 27, 2016.