Tardiff Agency v. Burlingham Assoc., (2015) 473 Sask.R. 159 (QB Reg)

Court:Court of Queen's Bench for Saskatchewan
Case Date:March 31, 2015
Jurisdiction:Saskatchewan
Citations:(2015), 473 Sask.R. 159 (QB Reg);2015 SKQB 87
 
FREE EXCERPT

Tardiff Agency v. Burlingham Assoc. (2015), 473 Sask.R. 159 (QB Reg)

MLB headnote and full text

Temp. Cite: [2015] Sask.R. TBEd. MY.002

In The Matter Of the Consumer Proposal of Owen Scott Bushey

Andre Tardiff Agency Limited (applicant) v. Burlingham Associates Inc., Administrator Of the Proposal of Owen Scott Bushey (respondent)

(Estate No. 23-1307975; 19504; 2015 SKQB 87)

Indexed As: Tardiff (Andre) Agency Ltd. v. Burlingham Associates Inc.

Saskatchewan Court of Queen's Bench

In Bankruptcy and Insolvency

Thompson, Registrar

March 31, 2015.

Summary:

The claimant appealed from the Administrator's disallowance of its claim for $176,459.65, in the consumer proposal of the debtor "Bushey". The disallowed claim arose from a guarantee the debtor and his wife executed in favour of the claimant. Under the guarantee, the debtor agreed to be liable for the outstanding debt of "Bushey's Repairs". Three years later, Bushey's Repairs amalgamated. The claimant continued to extend credit to the amalgamated corporation, "Bushey Enterprises". Bushey Enterprises was deemed bankrupt after it defaulted on the terms of a Division I proposal. The Division I proposal was annulled.

A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, allowed the claim.

Bankruptcy - Topic 2481

Proposals - Practice - General - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, commented on the steps of the consumer proposal process, "designed to avoid the expense and time required in a bankruptcy or a commercial Division I proposal." - See paragraphs 93 to 97.

Bankruptcy - Topic 6712

Practice - General principles - Venue (incl. transfer of proceedings) - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, reviewed the jurisdiction and authority of the courts under the Bankruptcy and Insolvency Act (BIA), and stated that "the case law explaining its mechanics highlights some of the complexities that arise in ascertaining the proper forum. ... While each of the provincial superior courts are conferred with competence to hear matters under the BIA, it does not follow that a party can choose the forum to hear proceedings under the BIA without regard to the location of the insolvency administration. Nor does it follow that the location of the BIA filing automatically determines the proper forum to hear an application relating to that filing. ... While the forum is not so clear for consumer proposal-related court applications, I am prepared to accept that a 'locality of the debtor' test applies to ascertain the forum governing this application. Section 66.4(1) of the BIA provides this Court with flexibility that allows it to address gaps in the consumer proposal provisions" - See paragraphs 63 to 72.

Bankruptcy - Topic 6712

Practice - General principles - Venue (incl. transfer of proceedings) - "Locality of a debtor" was defined in s. 2 of the Bankruptcy and Insolvency Act - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, accepted that a "locality of the debtor" test applied to ascertain the forum governing this consumer proposal-related court application - "Although the consumer proposal process is considered to be less formal and rigorous than the processes for Division I proposals, bankruptcy and receivership, the principles behind the court filing location requirements remain pertinent to the administration of a consumer proposal. To find otherwise would defeat the objectives of economy and efficiency that underlie the consumer proposal concept. If an administrator is required to deal with a number of inter-jurisdictional applications outside of its home forum, the cost in time and money will quickly eat into any benefit the creditors may have obtained otherwise." - See paragraph 73.

Bankruptcy - Topic 6712

Practice - General principles - Venue (incl. transfer of proceedings) - The claimant appealed from the Administrator's disallowance of its claim in the consumer proposal of the debtor - The debtor's commercial operations had changed and moved between three provinces over the course of the debtor's relationship with the claimant - The bulk of the relations between the debtor and claimant originated in Ontario - The consumer proposal was filed in Saskatchewan - Both the Ontario Superior Court and the Ontario Court of Appeal had concluded that Saskatchewan was the proper forum, and transferred the appeal (Bankruptcy and Insolvency Act, s. 187(10)) - The Administrator submitted that the claimant lost the right to appeal when it filed in the wrong court - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, agreed with the Ontario courts that Saskatchewan was the proper forum - The debtor lived in Saskatchewan when he filed his consumer proposal in Saskatchewan with a trustee located in Saskatchewan - The administration of the consumer proposal carried out in Saskatchewan - However, there was no reason to conclude that the claimant appealed the disallowance in Ontario for wrong purposes - The proper forum issue was neither simple nor clear in this case - See paragraphs 76 to 80.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - This application concerned the claimant's appeal from the Administrator's disallowance of its claim in the consumer proposal of the debtor - The debtor's commercial operations had changed and moved between three provinces over the course of the debtor's relationship with the claimant - The application had already been considered by the Ontario Superior Court and the Ontario Court of Appeal - Both courts had concluded that Saskatchewan was the proper forum to hear it, and transferred the file (Bankruptcy and Insolvency Act (BIA), s. 187(10)) - The Administrator submitted that the application that was filed in Ontario was a nullity - Hence, the appeal of disallowance was out of time for improper filing - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, disagreed - There was no evidence that the Saskatchewan Court of Queen's Bench was seized with the matter of consumer proposal administration at the time of the application - Further, s. 187(10) of the BIA contemplated transfers between bankruptcy districts and divisions where proceedings were initiated in the wrong court - "The concept of 'transfer' implies the continuance of the proceeding, not a nullification." - There was nothing in s. 187(10) that limited a court's discretion to transfer a wrongly filed application - See paragraphs 81 to 90.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - Section 135 of the Bankruptcy and Insolvency Act set out the process for admitting or disallowing proofs of claim - In cases where a trustee/administrator disallowed the claim, the disallowance was final and conclusive, unless the claimant appealed the disallowance within 30 days of the disallowance having been served upon the applicant - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, stated that "[a]lthough some jurisdictions have determined that the appeal right can only be preserved if the appeal is served, filed and heard within the 30 day period (unless an application to extend the appeal period is also made within the 30 day period) this is not the law in Saskatchewan." - See paragraph 100.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - The Administrator served the claimant with the Notice of Disallowance on April 5, 2012 - The claimant filed the Notice of Motion in Ontario on May 3, 2012, and served the Notice of Motion on the Administrator on May 4, 2012 (29 days after the disallowance had been served on the claimant) - The Administrator submitted that the limitation period rendered this application barred; i.e., a party appealing from disallowance was required to serve, file, and set the hearing within the 30 day limitation period or seek leave to extend the 30 day period, prior to its expiry - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, on the authority of Henry v. Workers' Compensation Board (Sask.) (1999), found that the applicant preserved its right to appeal the disallowance when it served and filed the notion of motion to appeal within the 30 day limitation period - See paragraphs 99 to 105.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - The claimant appealed from the Administrator's disallowance of its claim in the consumer proposal of the debtor "Bushey" - The disallowed claim arose from a guarantee the debtor executed in favour of the claimant - Under the guarantee, the debtor agreed to be liable for the outstanding debt of "Bushey's Repairs" - Three years later, Bushey's Repairs amalgamated - The claimant continued to extend credit to the amalgamated corporation, "Bushey Enterprises" - Bushey Enterprises was deemed bankrupt after it defaulted on the terms of a Division I proposal - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, considered the nature and scope of this appeal under s. 135 of the Bankruptcy and Insolvency Act, and determined that the appeal should proceed on a de novo basis - "[O]ther relevant material also appears on the record of the Amalgamated Entity's insolvency court file. Both parties referred to material on that file during the hearing ... [I]nformation in this file ought to be considered to ensure that this Court has a fulsome understanding of the circumstances ... . In view of the circumstances of this case and the inter-relationship between the Debtor's consumer proposal and the Amalgamated Entity's insolvency proceedings ... a de novo examination of the material is more appropriate." - See paragraphs 106 to 109.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - The claimant appealed from the Administrator's disallowance of its claim in the consumer proposal of the debtor - The disallowed claim arose from a guarantee the debtor and his wife executed in favour of the claimant - Under the guarantee, the debtor agreed to be liable for the outstanding debt of "Bushey's Repairs", the principal debtor - Three years later, Bushey's Repairs amalgamated - The claimant continued to extend credit to the amalgamated entity - The Administrator, in disallowing the consumer proposal, determined that the guaranteed portion of the debt was limited to the $3,000 loan requested by the principal debtor on the credit application form - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, found that the credit limit requested on the application form did not limit the principal debtor's liability to the claimant, or, by consequence, the debtor's guarantee of that liability - The claimant extended credit to the principal debtor and the amalgamated entity, and those companies accepted the credit - Moreover, the reasons the debtor provided for his financial difficulties referred to a guarantee and to the debts of an amalgamated entity - It could be inferred that the debtor did not consider the lending arrangement of the amalgamated entity to be limited to $3,000 - See paragraphs 112 to 115.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - The claimant appealed from the Administrator's disallowance of its claim in the consumer proposal of the debtor "Bushey" - The disallowed claim arose from a guarantee the debtor executed in favour of the claimant - Under the guarantee, the debtor agreed to be liable for the outstanding debt of "Bushey's Repairs", the principal debtor - Three years later, Bushey's Repairs amalgamated - The claimant continued to extend credit to the amalgamated entity - The Administrator, in disallowing the consumer proposal, determined that the obligations of the principal debtor were extinguished when that corporation amalgamated - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, first determined that Ontario's law was the proper law to apply, and concluded that s. 179 of the Ontario Business Corporations Act operated to continue the principal contract liability - The liabilities and rights of each amalgamating party continued to exist in the amalgamated entity once the articles of amalgamation became effective (s. 179(b)) - The general principle of continuing liability was affirmed by the Supreme Court of Canada in R. v. Black and Decker Manufacturing Co. (1975) - The amalgamation of the principal debtor did not affect the continuing liability of the amalgamated entity on the principal contract - See paragraphs 136 to 144.

Bankruptcy - Topic 6885.1

Practice - Appeals - From trustee's decision - The claimant appealed from the Administrator's disallowance of its claim in the consumer proposal of the debtor "Bushey" - The disallowed claim arose from a guarantee the debtor executed in favour of the claimant - Under the guarantee, the debtor agreed to be liable for the outstanding debt of "Bushey's Repairs", the principal debtor - Three years later, Bushey's Repairs amalgamated - The claimant continued to extend credit to the amalgamated entity - The Administrator, in disallowing the consumer proposal, determined that the amalgamation of the principal debtor extinguished the debtor's liability for the guarantee - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, concluded that the claim for the guarantee debt ought to have been allowed - "Although the amalgamation constituted a fundamental change that altered the Debtor's risk on the guarantee, I find that the conduct of the Debtor and the Claimant supports the Claimant's submission that both parties considered the guarantee to have continued as a part of the bargain that the Claimant would continue to provide credit to the Amalgamated Entity." - See paragraphs 145 to 155.

Conflict of Laws - Topic 7285

Contracts - Jurisdiction - Real and substantial connection - The claimant appealed from the Administrator's disallowance of its claim in the consumer proposal of the debtor - The disallowed claim arose from a guarantee the debtor executed in favour of the claimant - Under the guarantee, the debtor agreed to be liable for the outstanding debt of the primary debtor - The claimant submitted that Ontario's law was the proper law to apply in assessing the enforceability of the contacts in this case - A Registrar of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, agreed - Both contracts had the closest and most real connections to Ontario - Both contracts were formed in Ontario - At the time of contract formation, the debtor lived in Ontario and operated the business of the principal debtor in Ontario - The claimant and the principal debtor were both located in Ontario at the time the contracts were entered into - The principal debtor was an Ontario Business Corporation Act company and the amalgamated entity was also incorporated under that Act - The only connection between the contracts and Saskatchewan was the connection that arose when the debtor moved from Ontario to Saskatchewan - See paragraphs 122 to 127.

Guarantee and Indemnity - Topic 321

The contract - Extent of guarantee - General - [See seventh Bankruptcy - Topic 6885.1 ].

Cases Noticed:

Tardiff (Andre) Agency Ltd. v. Burlingham Associates Inc., [2013] O.A.C. Uned. 31; 2013 ONCA 46, agreed with [paras. 11, 48 et seq.].

Lévy (Sam) & Associés Inc. v. Azco Mining Inc., [2001] 3 S.C.R. 978; 280 N.R. 155; 2001 SCC 92, refd to. [para. 69].

Hertz v. 1593658 Ontario Inc. (Bankrupt) (2011), 410 Sask.R. 1; 2011 SKQB 379, refd to. [para. 77].

Minister of National Revenue v. Engdahl (1994), 122 Sask.R. 247; 27 C.B.R.(3d) 114 (Q.B. Bkcy.), consd. [para. 95].

Automotive Finance Corp. v. Davies et al., [2002] B.C.T.C. 509; 33 C.B.R.(4th) 22; 2002 BCSC 509, consd. [para. 97].

Pachal's Beverages Ltd., Re, [1973] 1 W.W.R. 217 (Sask. Q.B.), consd. [para. 101].

Henry v. Workers' Compensation Board (Sask.) (1999), 177 Sask.R. 35; 199 W.A.C. 35; 172 D.L.R.(4th) 73, appld. [para. 103].

South Beach Homes Ltd. (Bankrupt), Re (2010), 357 Sask.R. 82; 2010 SKQB 182, appld. [para. 106].

Imperial Life Assurance Co. of Canada v. Colmenares, [1967] S.C.R. 443, refd to. [para. 124].

O'Brien et al. and United Transportation Union v. Canadian Pacific Railway Co., [1972] 3 W.W.R. 456 (Sask. C.A.), refd to. [para. 124].

R. v. Black & Decker Manufacturing Co., [1975] 1 S.C.R. 411; 1 N.R. 299, consd. [para. 142].

Town of Truro v. Toronto General Insurance Company, [1974] S.C.R. 1129; 6 N.S.R.(2d) 163, consd. [para. 151].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 66.4(1) [para. 72]; sect. 135(4) [para. 99]; sect. 183(1), sect. 183(1.1) [para. 66]; sect. 187(10) [para. 10]; sect. 192(1)(j), sect. 192(1)(k), sect. 192(1)(l) [para. 54].

Business Corporations Act, R.S.O. 1990, c. B-16, sect. 179 [para. 141].

Court Jurisdiction Proceedings and Transfer Act, S.S. 1997, c. C-41.1, generally [para. 89].

Counsel:

Anne Hardy and E. Dean Burlingham, for the respondent, Burlingham Associates Inc.;

Allen Morris solicitor, for the applicant, Andre Tardiff Agency Ltd.

This application was heard before Thompson, Registrar, of the Saskatchewan Court of Queen's Bench, In Bankruptcy and Insolvency, who delivered the following judgment, dated March 31, 2015.

To continue reading

FREE SIGN UP