Niekamp (Bankrupt), Re,

• Jurisdiction: Saskatchewan
• Judge: Thompson
• Neutral Citation: 2013 SKQB 288
• Citation: (2013), 426 Sask.R. 263 (QB Reg.),2013 SKQB 288,426 SaskR 263,(2013), 426 SaskR 263 (QB Reg),426 Sask.R. 263
• Date: 07 August 2013
• Court: Court of Queen's Bench of Saskatchewan (Canada)

Niekamp (Bankrupt), Re (2013), 426 Sask.R. 263 (QB Reg.)

MLB headnote and full text

Temp. Cite: [2013] Sask.R. TBEd. AU.020

In Bankruptcy and Insolvency

In The Matter Of the Bankruptcy of Jerome Cleo Niekamp

(23-840023; 14145; 2013 SKQB 288)

Indexed As: Niekamp (Bankrupt), Re

Saskatchewan Court of Queen's Bench

In Bankruptcy and Insolvency

Judicial Centre of Regina

Thompson, Registrar

August 7, 2013.

Summary:

The bankrupt filed an assignment in bankruptcy in 2006. At that time, he owned a house worth approximately $150,000, secured by a mortgage in the amount of $136,000. The equity in the house was well below the bankrupt's exemption entitlement of $32,000 and the trustee concluded that the home would provide no net realization for the creditors. In 2010, while the bankrupt was still undischarged, the house sold in circumstances characterized as a forced sale (foreclosure). Proceeds of $345,000 were realized. The trustee paid the bankrupt $32,000 from the proceeds, in respect of the limited exemption. The remaining proceeds of approximately $130,288 (the "surplus proceeds") were being held in trust with the trustee. The bankrupt was still in bankruptcy and sought his discharge. The parties requested a determination concerning the character of the surplus proceeds.

A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, held that the proceeds from the sale of the bankrupt's home were property that was divisible to the creditors. An order for the bankrupt's absolute discharge would issue.

Bankruptcy - Topic 417

Property of bankrupt - General - Valuation - [See Bankruptcy - Topic 486 ].

Bankruptcy - Topic 440.3

Property of bankrupt - Particular property - After-acquired property - [See Bankruptcy - Topic 486 ].

Bankruptcy - Topic 483

Property of bankrupt - Exemptions or exclusions - Property exempt from seizure under provincial laws - [See Bankruptcy - Topic 486 ].

Bankruptcy - Topic 485

Property of bankrupt - Exemptions or exclusions - Residence (incl. homestead property) - [See Bankruptcy - Topic 486 ].

Bankruptcy - Topic 486

Property of bankrupt - Exemptions or exclusions - Proceeds from sale of exempt property - The bankrupt filed an assignment in bankruptcy in 2006 - At that time, he owned a house worth approximately $150,000, secured by a mortgage in the amount of $136,000 - The equity in the house was well below the bankrupt's exemption entitlement of $32,000 and the trustee concluded that the home would provide no net realization for the creditors - In 2010, while the bankrupt was still undischarged, the house sold in circumstances characterized as a forced sale (foreclosure) - Proceeds of $345,000 were realized - The trustee paid the bankrupt $32,000 from the proceeds, in respect of the limited exemption - The remaining proceeds of approximately $130,288 (the "surplus proceeds") were being held in trust with the trustee - The bankrupt was still in bankruptcy and sought his discharge - The parties requested a determination concerning the character of the surplus proceeds - The issues were as follows: 1. Were the proceeds of a forced home sale capable of realization; 2. If the proceeds of a forced home sale were capable of realization, what was the appropriate time to value the amount of the bankruptcy estate's entitlement to proceeds; and 3. Did the unique circumstances of this case warrant an equitable determination in respect of the increase in the home value - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, held that the proceeds from a non-voluntary home sale were capable of realization and that the date of realization was the date that should govern the determination of a trustee's claim to surplus proceeds where a bankrupt's home had been sold before the bankrupt's discharge from bankruptcy - With respect to the third issue, the court stated, inter alia, "the integrity of the bankruptcy system would be jeopardized if the bankrupt were permitted to exit from his bankruptcy with funds in excess of $130,000, without having fully paid his creditors for the proven claims of approximately $85,000 with statutory interest, even if he were ordered to make significant surplus income payments to the estate" - The court concluded that the proceeds from the sale of the bankrupt's home were property that was divisible to the creditors.

Cases Noticed:

Armbruster (Bankrupt), Re (2010), 362 Sask.R. 200; 500 W.A.C. 200; 2010 SKCA 125, consd. [para. 14].

Neuls (Bankrupts), Re; Touche Ross Ltd. v. First City Trust Co. et al. (1985), 37 Sask.R. 60; 56 C.B.R. 132 (C.A.), consd. [para. 20].

Hayes, Re, [1931] 1 W.W.R. 301; 12 C.B.R. 225 (Sask. K.B.), refd to. [para. 21].

Deloitte, Haskins & Sells Ltd. v. Zemlak (1987), 58 Sask.R. 203; 66 C.B.R.(N.S.) 1 (C.A.), refd to. [para. 21].

Higgins Co. v. McNabb, [1980] 2 W.W.R. 385; 2 Sask.R. 119; 33 C.B.R.(N.S.) 243 (C.A.), consd. [para. 24].

Holthuysen (Trustee of) v. Holthuysen (1987), 63 C.B.R.(N.S.) 169; 49 Alta. L.R.(2d) 25 (C.A.), refd to. [para. 30].

Gruber (Bankrupt), Re (1993), 143 A.R. 301; 22 C.B.R.(3d) 262; 11 Alta. L.R.(3d) 342 (Q.B. Bktcy.), refd to. [para. 30].

Dodyk (Bankrupt), Re (2001), 290 A.R. 362; 26 C.B.R.(4th) 189; 2001 ABQB 573 (Registrar), refd to. [para. 30].

Prior (Bankrupt), Re, [2003] B.C.T.C. 1475; 47 C.B.R.(4th) 129; 2003 BCSC 1475, refd to. [para. 30].

Agnew (Bankrupt), Re (2005), 258 Sask.R. 158; 2005 SKQB 37, refd to. [para. 32].

CI Paints v. Gazelle (2001), 343 A.R. 1; 2001 ABQB 233, refd to. [para. 37].

MacKay (Bankrupt), Re (2002), 318 A.R. 315; 2002 ABQB 598, refd to. [para. 38].

Royal Bank of Canada v. North American Life Assurance Co. - see Ramgotra (Bankrupt), Re.

Ramgotra (Bankrupt), Re, [1996] 1 S.C.R. 325; 193 N.R. 186; 141 Sask.R. 88; 114 W.A.C. 88, refd to. [para. 38].

Piraux (Bankrupt), Re (2006), 398 A.R. 66; 2006 ABQB 409, consd. [para. 43].

Counsel:

Anne Hardy, for Burlingham Associates Inc., the Trustee;

Devin Dubois, for Jerome Cleo Niekamp, the Bankrupt.

This matter was heard before Thompson, Registrar, of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, Judicial Centre of Regina, who delivered the following judgment on August 7, 2013.