Smith (Bankrupt), Re, 2009 NSSC 261

• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: June 18, 2009
• Jurisdiction: Nova Scotia
• Citations: 2009 NSSC 261;(2009), 281 N.S.R.(2d) 379 (SC Reg.)

Smith (Bankrupt), Re (2009), 281 N.S.R.(2d) 379 (SC Reg.);

    893 A.P.R. 379

MLB headnote and full text

Temp. Cite: [2009] N.S.R.(2d) TBEd. SE.003

In The Matter Of The Bankruptcy of Angela Lynn Smith

(Court No. 32349; Estate No. 51-1087203; 2009 NSSC 261)

Indexed As: Smith (Bankrupt), Re

Nova Scotia Supreme Court

In Bankruptcy and Insolvency

Cregan, Registrar

September 1, 2009.

Summary:

A bankrupt applied for a discharge from bankruptcy.

A Registrar of the Nova Scotia Supreme Court, In Bankruptcy and Insolvency, granted a discharge conditional on paying certain amounts owed to the Trustee and paying $325 per month in surplus income for nine months.

Bankruptcy - Topic 423.3

Property of bankrupt - Particular property - Disability benefits - [See first Bankruptcy - Topic 8922 ].

Bankruptcy - Topic 440.6

Property of bankrupt - Particular property - Insurance proceeds payable by bankrupt's insurer - A bankrupt's home was destroyed by fire - The bankrupt received $9,159.45 from her insurer to cover the loss of household goods - A Registrar of the Nova Scotia Supreme Court, In Bankruptcy and Insolvency, stated that "the money was used to replace lost personal exempt assets. The replacement assets are then exempt. The Trustee should have no claim to insurance money paid to replace exempt assets. The Trustee is not entitled to this sum." - See paragraphs 21 to 22.

Bankruptcy - Topic 483

Property of bankrupt - Exemptions or exclusions - Property exempt from seizure under provincial laws - A bankrupt failed to disclose to the Trustee that she owned a ride-on lawn mower - A Registrar of the Nova Scotia Supreme Court, In Bankruptcy and Insolvency, stated that "I doubt very much that a significant amount could have been or can now be realized for the benefit of the estate from the mower. In any event I think it may fairly be considered as exempt under section 45 of the Judicature Act, R.S.N.S. 1989, c. 240, being 'household furnishings and furniture which are reasonably necessary for the debtor and his family'. It is something reasonably needed to maintain one's household. Such items mentioned in this section are not property divisible among the creditors because of the provisions of paragraph 67(1)(h) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3" - See paragraph 12.

Bankruptcy - Topic 483

Property of bankrupt - Exemptions or exclusions - Property exempt from seizure under provincial laws - Pursuant to s. 45(1)(c) of the Judicature Act, R.S.N.S. 1989, c. 240, "all cattle, hogs, fowl, sheep and other livestock which are reasonably necessary for the domestic use of the debtor and his family" were exempt property under the Bankruptcy and Insolvency Act - A bankrupt owned three horses, which she alleged were actually owned by her children - A Registrar of the Nova Scotia Supreme Court, In Bankruptcy and Insolvency, held that the horses were owned by the mother and were not exempt assets - The Registrar stated that "I think it would be stretching the meaning of these underlined words [reasonably necessary for the domestic use of the debtor and his family] to find that they cover these horses. There must be a clear element of necessity which I do not think extends to horses used for recreation." - See paragraph 36.

Bankruptcy - Topic 8922

Discharge of debtor - Conditional discharge - Considerations (incl. surplus income) - The 41 year old bankrupt was a former Armed Forces paramedic who was discharged in 2003 on medical grounds (psychological illnesses, including post traumatic stress syndrome) - She received a $1,500 per month disability pension from Veterans Affairs Canada - The Trustee claimed that this income should be included in determining whether the bankrupt, who was seeking a discharge, had surplus income - A Registrar of the Nova Scotia Supreme Court, In Bankruptcy and Insolvency, excluded the pension from the "surplus income" determination - The Registrar stated that "just as for matters of public policy an award of damages for bodily injury or mental suffering is not considered property of the bankrupt divisible to the creditors, so a pension like [the bankrupt's] should not be considered as income for the purpose of calculating surplus income" - See paragraphs 39 to 50.

Bankruptcy - Topic 8922

Discharge of debtor - Conditional discharge - Considerations (incl. surplus income) - [See Bankruptcy - Topic 8925 ].

Bankruptcy - Topic 8925

Discharge of debtor - Conditional discharge - Upon payment to trustee - The 41 year old bankrupt was a single mother of four who was deemed to have made an assignment in bankruptcy in July 2008 when her proposal was rejected - Unsecured debts totalled $203,149 - A judgment creditor was owed $147,149 - The balance was owed to financial institutions - The bankrupt was a former Armed Forces paramedic who was discharged in 2003 due to psychological illness from active service - The bankrupt applied for a discharge - Her total income from her disability pension, CPP Pension, child support, superannuation pension and the Child Tax Benefit was approximately $6,100 per month - In determining whether she had surplus income, the $1,500 disability pension was excluded, leaving approximately $4,600 - Superintendent's Standard Directive No. 11R permitted $3,941 per month for a family of five, leaving a surplus of approximately $650 per month - The bankrupt had not made any payments for surplus income and trustees were permitted to make recommendations of up to 21 months (nine months of bankruptcy period and another 12 months) - There remained significant equity in the family home when sold by the Trustee - A Registrar of the Nova Scotia Supreme Court, in Bankruptcy and Insolvency, granted the bankrupt a discharge conditional upon paying $325 per month surplus income for nine months, plus certain other sums owed to the Trustee.

Cases Noticed:

Brown (Bankrupt), Re (2006), 400 A.R. 320; 23 C.B.R.(5th) 46 (Q.B. Bktcy. Reg.), refd to. [para. 22].

Duffney (Bankrupt), Re (2007), 318 N.B.R.(2d) 88; 821 A.P.R. 88; 32 C.B.R.(5th) 72 (Q.B. Bktcy. Reg.), refd to. [para. 41].

Ford (Bankrupt), Re (2009), 277 N.S.R.(2d) 1; 882 A.P.R. 1; 2009 NSSC 124 (Bktcy. Reg.), refd to. [para. 48].

Authors and Works Noticed:

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis P., Bankruptcy and Insolvency Law of Canada (4th Ed.), p. 4-176, sect. F § 241 [para. 40].

Wood, Roderick J., Bankruptcy and Insolvency Law (2009), p. 112 [para. 45].

Counsel:

Tim Hill, for the bankrupt;

Rubin Dexter, for the Trustee, Darryl Haley.

This application was heard on June 18, 2009, before Cregan, Registrar, of the Nova Scotia Supreme Court, In Bankruptcy and Insolvency, who delivered the following judgment on September 1, 2009.