Munro (Re), 2016 ABQB 640

Court of Queen’s Bench of Alberta Citation: Munro (Re), 2016 ABQB 640 Date: 20161115 Docket: B103 715183; B103 715254 Registry: Edmonton In the Matter of the Bankruptcies of Barry Thomas Munro and Soojandra Sally Munro (aka Sally Munro) Between: Cedar II Mortgage Corporation (c/o Caplink Financial Corporation), Supreme Capital Inc., Dan Echino, Corlac Resources Ltd., Dr. Alain Brassard and Daniel Viard Applicants - and - Soojandra Sally Munro and Barry Thomas Munro Respondents _______________________________________________________ Memorandum of Decision as to Costs of the Honourable Mr. Justice B.R.

Burrows _______________________________________________________ [ 1 ] On September 28, 2016, I dismissed the Appellants’ appeal from the decision of the Registrar granting conditional discharges to the Respondents in their respective bankruptcies ( 2016 ABQB 541 ). The Respondents now seek costs of the appeal on an

enhanced level. Both Counsel have provided written submissions. [ 2 ] The Respondents submit that because on the appeal the Appellants alleged fraud on the part of the Respondents, and because I did not conclude that fraud had been established, this is a proper case for an award of enhanced costs to deter irresponsible allegations of fraud. [ 3 ] Before the Registrar, the Appellants alleged several of the BIA s. 173 facts, the presence of which requires that a bankrupt’s discharge be refused, suspended or granted subject to a condition.

One of the BIA s. 173 facts so alleged was that “the bankrupt has been guilty of any fraud or fraudulent breach of trust.” ( BIA s. 173((1)(k)). The Registrar found that another of the BIA s. 173 facts alleged had been established and did not deal with the issue of fraud. [ 4 ] On the appeal, the Appellants submitted that this was an error on the part of the Registrar – that the Registrar ought to have “given consideration to the allegations of fraud . . . and the very significant evidence provided in support of those allegations.” [ 5 ] I found on the appeal that the Registrar had not erred in that regard.

I said: (para. 32) I agree that it was important to that end [determining what conditions of discharge to impose] that the Registrar determine what the evidence established concerning the conduct of the Bankrupts. In my view, the Registrar did so. That he assessed the evidence in the context of whether or not the Bankrupts had performed the duties imposed on them under the BIA (BIA s. 173(1)(o)) rather than whether their conduct amounted to fraud under BIA s. 173(1)(

k) is, in my view, inconsequential. [ 6 ] The record of proceedings before the Registrar indicates that the Respondents also sought enhanced costs before the Registrar on the basis that the Appellants had alleged but did not prove fraud. They did not succeed on that point. The Registrar awarded costs of the discharge application to the Appellants who had successfully opposed the discharges. He ordered that those costs he awarded be assessed or agreed on the basis of

Schedule C, Column 2, and that they would have priority in the bankruptcy distribution. The Respondents did not appeal any aspect of the Registrar’s disposition, including his award of costs to the Appellants. [ 7 ] I also dismiss the Respondents’ application for enhanced costs in respect of the appeal. [ 8 ] It was established to the Registrar’s satisfaction that, to the prejudice of their creditors, the Respondents had significantly understated the income they received during the bankruptcy.

The Registrar found it appropriate to impute to them very substantially greater income than they declared and to require as a condition of their discharge that they make a substantial monthly payment to the trustee for 21 months. I found on the appeal that he made no error in doing so. [ 9 ] There has been no judicial determination one way or the other as to whether the Respondents’ conduct amounted to fraud.

The position taken by the Respondents on the appeal (that for the purpose of determining the proper disposition of the discharge application such a finding ought to be made) was not irresponsible or unreasonable. It was simply not accepted. [ 10 ] The repetition of the allegations of fraud on the appeal was no more inappropriate than the original statement of those allegations before the Registrar.

Notwithstanding that the Appellants made those allegations before the Registrar, the Appellants were awarded costs and the Respondents did not appeal that award. [ 11 ] In these circumstances, in my view, an award of enhanced costs on the appeal is not appropriate. [ 12 ] The Respondents are entitled to costs as against the Appellants (not enhanced costs) as a result of the appeal being dismissed. [ 13 ] I award them costs to be assessed or agreed on the basis of

Schedule C, Column 2. The amount of those costs is to be deducted from the amount of the costs awarded to the Appellants by the Registrar and for which the Appellants were granted priority in the bankruptcy distribution. By written submissions filed the 28 th day of October, 2016. Dated at the City of Edmonton, Alberta this 15 th day of November, 2016. B.R. Burrows J.C.Q.B.A. Appearances: Brian W. Summers for the Applicants

Michael J. McCabe, Q.C. for the Respondents