Schreyer (Bankrupt), Re, 2014 MBQB 44

• Judge: Clearwater, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: February 25, 2014
• Jurisdiction: Manitoba
• Citations: 2014 MBQB 44;(2014), 302 Man.R.(2d) 205 (QB)

Schreyer (Bankrupt), Re (2014), 302 Man.R.(2d) 205 (QB)

MLB headnote and full text

Temp. Cite: [2014] Man.R.(2d) TBEd. MR.013

In The Matter Of: The Bankruptcy and Insolvency Act of Canada, R.S.C. 1985, c. B-3

In The Matter Of The Bankruptcy Of: Anthony Leonard Schreyer

Anthony Leonard Schreyer (applicant/respondent) v. Susan Wilma Schreyer (respondent/applicant)

(BK 12-01-02758; 2014 MBQB 44)

Indexed As: Schreyer (Bankrupt), Re

Manitoba Court of Queen's Bench

Winnipeg Centre

Clearwater, J.

February 25, 2014.

Summary:

The bankrupt and his wife separated in 1999. The wife claimed support and a division of property. In 2000, the parties consented to an order referring an accounting and valuation of assets to a Master. In 2001, the bankrupt made his assignment into bankruptcy. He did not disclose his wife's equalization claim nor was she aware of the bankruptcy. The bankrupt received an absolute discharge in 2002. He was left with exempt farm property, including the home quarter section, in which there was significant equity. In 2004, at a pretrial conference, the bankrupt informed his wife of his bankruptcy and absolute discharge. Clearwater, J., made a new order for a reference to a Master, including all issues arising from the bankruptcy. In 2007, the Master determined that the wife was entitled to an equalization payment. On appeal, the Court of Appeal determined that the bankrupt had been released from his obligation to make an equalization payment by his discharge. In 2011, the Supreme Court of Canada upheld the decision. The wife moved for an order under s. 187(5) of the Bankruptcy and Insolvency Act.

A Registrar of the Manitoba Court of Queen's Bench, in a decision reported at (2013), 295 Man.R.(2d) 127, held that the equities in the matter justified the granting of an order under s. 187(5) setting aside any order discharging the bankrupt's trustee on the ground that the wife was not given notice of the bankruptcy or the application for discharge. At the very least, the bankrupt misled the trustee. The court also set aside the absolute order of the discharge for the same reasons. The wife was granted leave to continue her equalization claim regarding the exempt property held by the bankrupt. Given that no other creditors were affected by the wife's claim, the court granted a new order of discharge which was without prejudice to the wife continuing her claim. The bankrupt appealed.

The Manitoba Court of Queen's Bench dismissed the appeal.

Bankruptcy - Topic 6463

Administration of estate - Actions against bankrupt - Leave to commence action or lifting of stay - The bankrupt and his wife separated in 1999 - When he assigned into bankruptcy in 2001, the bankrupt did not disclose the wife's equalization claim nor was the wife made aware of the bankruptcy - He received an absolute discharge in 2002, which left him with exempt farm property in which there was considerable equity - After the Supreme Court of Canada held that the absolute discharge released the bankrupt from his obligation to make an equalization payment, the wife moved for an order under s. 187(5) of the Bankruptcy and Insolvency Act - A Registrar granted the motion, setting aside the absolute discharge and granting the wife leave to continue her equalization claim - The bankrupt appealed, asserting, inter alia, that neither the Registrar nor the court had jurisdiction under s. 187(5) to set aside an absolute order of discharge - The Manitoba Court of Queen's Bench dismissed the appeal - While there was dicta to that effect in the authorities referenced by the bankrupt, there was authority to the contrary - The court had jurisdiction in the appropriate fact situation and on appropriate evidence to review, rescind or vary any order, including a final order, made under its bankruptcy jurisdiction - See paragraphs 11 to 14.

Bankruptcy - Topic 6463

Administration of estate - Actions against bankrupt - Leave to commence action or lifting of stay - The bankrupt and his wife separated in 1999 - When he assigned into bankruptcy in 2001, the bankrupt did not disclose the wife's equalization claim nor was the wife made aware of the bankruptcy - He received an absolute discharge in 2002, which left him with exempt farm property in which there was considerable equity - After the Supreme Court of Canada held that the absolute discharge released the bankrupt from his obligation to make an equalization payment, the wife moved for an order under s. 187(5) of the Bankruptcy and Insolvency Act - A Registrar granted the motion, setting aside the absolute discharge and granting the wife leave to continue her equalization claim - The bankrupt appealed, asserting, inter alia, that the Registrar had erred in the exercise of his discretion in failing to (i) take into account the wife's "extreme delay"; (ii) consider whether the wife's claims would have prevented his absolute discharge; and (iii) properly examine the situation's equities - The Manitoba Court of Queen's Bench dismissed the appeal - The Registrar properly considered the equities of the situation - This decision would have been different if the Registrar's granting of relief had affected any unsecured creditor or any person other than the bankrupt and the wife - There had been a significant delay in bringing this motion - However, this was a unique situation in that no unsecured creditor had a proprietary interest in the exempt assets - The unfairness to the wife was clear to all - It was equitable to grant the orders as made by the Registrar so as to permit the wife to have her outstanding claims heard and determined - See paragraphs 15 to 24.

Bankruptcy - Topic 6741

Practice - Jurisdiction - General - [See first Bankruptcy - Topic 6463 ].

Bankruptcy - Topic 6753

Practice - Jurisdiction - Registrars - [See first Bankruptcy - Topic 6463 ].

Bankruptcy - Topic 6766

Practice - Orders - Variation or rescission of - [See first Bankruptcy - Topic 6463 ].

Bankruptcy - Topic 6786

Practice - Stay of proceedings - Proceeding for the recovery of a claim against the bankrupt (incl. lifting of stay) - [See both Bankruptcy - Topic 6463 ].

Bankruptcy - Topic 6884.2

Practice - Appeals - From registrar's decision - Standard of review - The bankrupt and his wife separated in 1999 - When he assigned into bankruptcy in 2001, the bankrupt did not disclose the wife's equalization claim nor was the wife made aware of the bankruptcy - He received an absolute discharge in 2002, which left him with exempt farm property in which there was considerable equity - After the Supreme Court of Canada held that the absolute discharge released the bankrupt from his obligation to make an equalization payment, the wife moved for an order under s. 187(5) of the Bankruptcy and Insolvency Act - A Registrar granted the motion, setting aside the absolute discharge and granting the wife leave to continue her equalization claim - The bankrupt appealed, asserting that (1) neither the Registrar nor the court had jurisdiction under s. 187(5) to set aside an absolute order of discharge and (2), alternatively, if the court did have such jurisdiction, the Registrar had erred in the exercise of his discretion in failing to (i) take into account the wife's "extreme delay"; (ii) consider whether the wife's claims would have prevented his absolute discharge; and (iii) properly examine the situation's equities - The Manitoba Court of Queen's Bench stated that the issue of the court's jurisdiction to set aside a final order raised a question of law and the standard of review was correctness - Regarding the alternate grounds of appeal, the standard of review was one of palpable and overriding error regarding questions of fact, inferences of fact and questions of fact and law (unless the question of law could clearly be severed from the questions of fact such that the standard of correctness applied) - See paragraphs 7 to 10.

Bankruptcy - Topic 8910

Discharge of debtor - Absolute discharge - Rescission of - [See both Bankruptcy - Topic 6463 ].

Bankruptcy - Topic 8989

Discharge of debtor - Liabilities not released by discharge - Marital property claim or judgment - [See second Bankruptcy - Topic 6463 ].

Family Law - Topic 773

Husband and wife - Actions between husband and wife - Property - Where spouse declares bankruptcy - [See second Bankruptcy - Topic 6463 ].

Cases Noticed:

Schreyer v. Schreyer (2009), 245 Man.R.(2d) 86; 466 W.A.C. 86; 2009 MBCA 84, affd. (2011), 418 N.R. 61; 268 Man.R.(2d) 154; 520 W.A.C. 154; 2011 SCC 35, refd to. [para. 2].

Heritage Salmon Ltd. v. Atlantic Ova Pro Ltd. - see Atlantic Ova Pro Ltd., Re.

Atlantic Ova Pro Ltd., Re (2006), 246 N.S.R.(2d) 95; 780 A.P.R. 95; 23 C.B.R.(5th) 167; 2006 NSSC 224 (Bktcy.), refd to. [para. 10].

Holmes (G.W.) Trucking (1990) Ltd. (Bankrupt), Re (2005), 238 N.S.R.(2d) 219; 757 A.P.R. 219; 15 C.B.R.(4th) 191; 2005 NSSC 290, refd to. [para. 10].

Olympia & York Developments Ltd. (Bankrupt), Re (1998), 80 O.T.C. 369; 4 C.B.R.(4th) 189 (Gen. Div.), refd to. [para. 10].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 10].

Swansborough, Re (1980), 33 C.B.R.(N.S.) 281 (Ont. S.C. Registrar), refd to. [para. 13].

Traders Finance Corp. v. Garage Morrissette & Fils ltée (1960), 1 C.B.R.(N.S.) 267 (Que. Sup. Ct.), refd to. [para. 13].

Hildebrand v. Hildebrand (1999), 140 Man.R.(2d) 316 (Q.B. Master), refd to. [Schedule A].

Johnson v. Johnson (2005), 191 Man.R.(2d) 41; 2005 MBQB 4 (Master), refd to. [Schedule A].

Fitch v. Official Receiver, [1996] 1 W.L.R. 242 (C.A.), refd to. [Schedule A].

Benigno, Re (1999), 14 C.B.R.(4th) 173 (N.S.S.C. Bktcy. Reg.), refd to. [Schedule A].

Pascual, Re (1990), 1 C.B.R.(3d) 209 (Ont. S.C.), refd to. [Schedule A].

Clement (Bankrupt), Re (2011), 516 A.R. 160; 79 C.B.R.(5th) 139; 2011 ABQB 275 (Reg.), refd to. [Schedule A].

Elias v. Hutchison - see Catalina Exploration & Development Ltd., Re; Elias and Catalina Exploration & Development Ltd. v. Hutchison.

Catalina Exploration & Development Ltd., Re; Elias and Catalina Exploration & Development Ltd. v. Hutchison (1980), 27 A.R. 13; 35 C.B.R.(N.S.) 30 (Q.B.), affd. (1981), 27 A.R. 1; 37 C.B.R.(N.S.) 149 (C.A.), refd to. [Schedule A].

HOJ National Leasing Corp. (Bankrupt), Re (2008), 245 O.A.C. 1; 42 C.B.R.(5th) 208; 2008 ONCA 390, refd to. [Schedule A].

Merrick, Re (1989), 73 C.B.R.(N.S.) 85 (Ont. H.C.), refd to. [Schedule A].

Pirner (Bankrupt), Re, [2012] O.T.C. Uned. 3435; 2012 ONSC 3435, refd to. [Schedule A].

Bryden, Re (1975), 21 C.B.R.(N.S.) 166 (B.C.S.C.), refd to. [Schedule A].

Kerr v. Baranow, [2011] 1 S.C.R. 269; 411 N.R. 200; 300 B.C.A.C. 1; 509 W.A.C. 1; 274 O.A.C. 1; 2011 SCC 10, refd to. [Schedule A].

Kanovsky (Bankrupt), Re (2012), 285 Man.R.(2d) 264; 2012 MBQB 265, refd to. [Schedule A].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 187(5) [para. 5].

Authors and Works Noticed:

Boyd, Susan and Sarra, Janis, Out in the Cold: Schreyer v. Schreyer's Call for Law Reform (2011), 27 Can. J. Fam. L. 97; 27 Rev. Can. D. Fam. 97, generally [Schedule A].

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis P., The 2013-2014 Annotated Bankruptcy and Insolvency Act (2013-2014), p. 935 [paras. 8, 9].

Klotz, Robert A., Bankruptcy for the Matrimonial Court Judge (2006), generally [Schedule A].

Klotz, Robert A., Blunting the Bankruptcy Bombshell: Insolvent Spouses in Matrimonial Litigation (1998), generally [Schedule A].

Sarra, Janis P., ed., Annual Review of Insolvency Law (2011), generally [Schedule A].

Slay, Mark R., Schreyer v. Schreyer: Should British Columbia Care? (2011) 27 Can. J. Fam. L. 121; 27 Rev. Can. D. Fam. 121, generally [Schedule A].

Wood, Roderick J., Essentials of Canadian Law: Bankruptcy and Insolvency Law (2009), pp. 4, 5 [Schedule A].

Counsel:

Donald G. Douglas and Andrea R. Doyle, for the appellant/respondent;

Alain J. Hogue, for the respondent/applicant.

This appeal was heard by Clearwater, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on February 25, 2014.