Mutch (Re), 2014 ABQB 648

Court of Queen’s Bench of Alberta Citation: Mutch (Re), 2014 ABQB 648 Date: 20141022 Docket: BE03 1340409 Registry: Edmonton In the Matter of the Bankruptcy of Sonda Rene Mutch _______________________________________________________ Reasons for Judgment of L. A. Smart, Registrar in Bankruptcy _______________________________________________________ Introduction [1] Sonda Mutch and her late husband Victor Mutch assigned into Bankruptcy in March, 2010. They each received aConditional Order of Discharge on February 7, 2012.

All of the conditions have been met except a relatively small balance outstandingfor surplus income obligations. [2] Victor Mutch passed away on May 28, 2014. Mr. Mutch had a life insurance policy for $145,000 and a RRSP of$14,600.93. Sonda is the designated beneficiary and entitled to receive or has received these amounts. So long as Mr. Mutch was livingthe insurance and RRSP were of such a character so as to be exempt in the Bankruptcy proceedings and unavailable to his creditors. Exemption [3] There is no dispute over the law in this regard as it applies to Mr.

Mutch (see: Re Klatt (Bankrupt), 2005 ABQB 492, ReFirestone, 2003 ABQB 417 and Ramgotra (Trustee of) v North American Life Assurance Co. (1996) (SCC), 37 CBR(3rd) 141 (SCC)). [4] Based on the underlying policy objectives of the relevant exempting legislative provisions as discussed in the abovedecisions, Sonda argues that the exemption ought to extend to the spousal beneficiary of the insurance and the RRSPs. If they are notexempt they vest as after-acquired property with her Trustee in Bankruptcy for distribution to her creditors.

Nonetheless, although thatconsequence would appear to defeat the policy objectives, the applicable statutes and regulations do not expressly or impliedly extendthe exemption to beneficiaries and are therefore of no assistance to Sonda.

Funeral Expenses [ 5 ] Mr. Mutch’s estate is entitled to payment of a CPP death benefit. As the Trustee correctly states these funds are properly forwarded to Mr. Mutch’s Bankruptcy estate. I note however that Sonda has expended approximately $5,300 for funeral expenses. In that regard, I preferred the obiter reasoning of Justice Houlden in Bertram Re (1972) 18 CBR (NS) 64 (Ont SC) to that of Registrar Nettie in Decleva Re , 22 CBR (5th) 80 and have concluded that those reasonable funeral expenses should be treated as a preferred claim in Mr. Mutch’s bankruptcy if a Proof of Claim is filed.

Direction to Trustee [ 6 ] Finally, I note that total proven claims are in the amount of $122,945 and that one of the creditors with a claim of $27,500 has agreed to withdraw her claim. With that in mind, I encourage the trustee to assist Sonda in obtaining a formalized withdrawal of that claim and by allowing anticipated surplus amounts to flow to/or be retained by Sonda rather than have them languish in the Trustee’s estate bank account pending finalization of the bankruptcy estate. If the Trustee requires any orders to effect that result, they may approach me. Heard on the 24 th day of July, 2014.

Dated at the City of Edmonton, Alberta this 22 nd day of October, 2014. L. A. Smart Registrar in Bankruptcy Appearances: D. McDicken Faber & Company for the Trustee Sonda Rene Mutch Bankrupt