Savary (Re), 2018 NSSC 337

SUPREME COURT OF Nova Scotia IN BANKRUPTCY AND INSOLVENCY Citation: Savary (Re) , 2018 NSSC 337 Date: 20181213 Docket: No. 40060 Registry: Halifax Estate Number : 51-2050588 In the Matter of: The bankruptcy of Brian Andrew Savary Judge: Raffi A. Balmanoukian, Registrar Heard: December 13, 2018, in Digby, Nova Scotia Counsel: Lawrence Crandall, for the Trustee, Grant Thornton Limited Mark Charles (limited retainer), for the Bankrupt, Brian Andrew Savary Sharon Cochrane, for the objecting creditor, Kimball Law Inc. Oliver Janson, notified person, on his own behalf D.

Bruce Clarke, QC, for a notified entity, Nova Scotia Barristers’ Society (written submissions only) Balmanoukian, Registrar (orally): [ 1 ] Good afternoon everyone. This is a decision in the motions before me in the matter of the bankruptcy of Brian Andrew Savary. I will say at inception as I do with most oral decisions: that if this is transcribed, I reserve the right to edit for grammar and syntax, although not the substantive outcome of this decision [1] . [ 2 ] There are three applications before me. First, for the discharge of the bankrupt.

Second - and if I may say so primarily - for an examination under subsection 163(2) of the Bankruptcy and Insolvency Act , RSC 1985, c. B-3 as amended; and third, for a review of an ex parte Order restricting registrations and recordings on certain parcels of land. [ 3 ] For the record, we had in attendance Mr. Crandall for the Trustee Grant Thornton; Ms. Cochrane for the objecting creditor of Kimball Law; Mr. Janson (a solicitor who had been involved with file matters that are the subject of a portion of this motion); and Mr. Charles for Mr.

Savary personally. [ 4 ] It’s common ground that the discharge application be adjourned sine die and it is so ordered. [ 5 ] The real property application is ancillary to the issues raised in the application for examination and I will return to that in due course. [ 6 ] As to the

Section 162 application: I have no hesitation in finding that there are serious questions to be answered by the bankrupt and an examination under 162(2) and/or 162(1) is warranted. At present a 162(1) examination is contemplated but not yet in motion. [ 7 ] It is also common ground that if there is more than one exam - that is, by creditor and the Trustee - that they be held in common and that they be held before me as Registrar under subsection 192(1) (

b) of the Bankruptcy and Insolvency Act and Rule 115 of

the Bankruptcy and Insolvency Act General Rules. [8] I indicated this morning that I would not yet preside over an examination of any counsel encompassed in Ms. Cochrane’smotion under 192(1)(g), although the parties may make such an application if the admissible evidence of Mr. Savary so warrants. [9] The real question at this point is the scope of the examination. In my opinion, subsection 163(2) is more limited thansubsection 163(1), and I agree with the able written submissions of the Nova Scotia Barristers’ Society in this regard.

If the Trusteeproceeds with this examination - that is under subsection 162(1) - the gap between the two is essentially moot. [10] If not, in my view the “administration of the estate” wording in subsection 163(2) is broad enough to capture most, if not all ofthe financial issues at stake in Ms. Cochrane’s motion. I remain seized for any residual evidentiary objection or objections that aparticular line of inquiry falls outside the scope of 163(2). [11] Turning to the real point of contention, the motion calls for production of files or parts of files from various law firms andothers.

There is a very open question in many of them as to who was the client and whether there was more than one client, or whetherMr. Savary was a or the client. [12] Questions exist as to whether there are exceptions to privilege that will compel production. I’m not prepared to so rule at thisjuncture. In my opinion, suspicion of the bankrupt’s conduct - to be clear, there is no current allegation of malfeasance against anysolicitor - is not adequate to lift the lid on the sacrosanct protection of privilege. [13] It is for the client, whomever it may be, to waive this privilege.

Not for the solicitor or for the Court, subject to limitedrecognized exceptions. Privilege can not be a cloak for fraud, but neither can it be a bootstraps argument based solely upon hypothesis orsupposition or suspicion. [14] So, turning to the specific items in Ms. Cochrane’s motion, at the

Section 163 exam which I will discuss in due course, I amordering as follows: [15] First - the Credit Union records: these are not privileged and must be obtained and produced by Mr. Savary to the Trustee andto the objecting creditor. [16] Second - the files of Messers. Melnick, Bureau, Enman, Janson, and of Ms. MacLean[2]: Mr. Savary may be asked if he, aloneor in conjunction with others, engaged these lawyers or law firms for the financial transactions noted in the Notice of Motion.

He mayalso be asked about the underlying financial matters raised in the motion and his involvement, if any, with those transactions, includingfunds or property received or disbursed by or to him or at his order; but not as to any legal counsel sought or received. In other words, hemay be asked what the case law calls the “facts of engagement” but not the “communication”.

He may also be asked aboutdocumentation pertaining to facts but not solicitor/client communications. [17] Third - the Auto Capital file does not include any known questions of privilege and must be disclosed to the Trustee and to theobjecting creditor. [18] Fourth - I’ve had more difficulty with the MacGillivray [Law] file[3]. There is sufficient ambiguity around lawyers’ accountsand their context and content that I do not consider it appropriate to order financial disclosure at this time. See for example Maranda v.Richer, 2003 SCC 67 , [2003] 3 SCR 193[4].

What I can and will order is disclosure by MacGillivray Law and [by] thebankrupt of all disbursements, net of fees, to Mr. Savary or his order, other than to fees, experts, reimbursement of medical expenses, orother litigation expenses. In other words: how much was disbursed to Mr. Savary or his order, net of these sums, and when? I also orderthem to disclose how much of this pertains to pecuniary and non-pecuniary damages if this was not on a global or all-inclusive basis. [19] I also make the following ancillary orders. [20] First, there will be an examination of Mr.

Savary at a time to be determined at the conclusion of this hearing. [21] Second, Mr. Savary is to receive notification through Mr. Charles of this ruling and the date, time and place of examinationforthwith. Mr. Savary is further to be advised that absent exigent circumstances this will not be postponed or adjourned. Lateengagement or changing counsel is not an exigent circumstance. [22] The same comments go for the Trustee, who has indicated that it may or may not engage counsel. [23] I note for the record, that Mr.

Charles attended this morning as a watching brief; if he is no longer engaged in the file, he is toadvise the Court forthwith on the happening of such event. He’s also to advise the Trustee. [24] Third, Mr. Savary is to produce the documentation in this decision to the Trustee and the objecting creditor no later than 20days prior to the examination. [25] Fourth, the Trustee is to advise all persons noted in Ms. Cochrane’s amended motion no later than 20-days prior to theexamination, if it is proceeding under 162(1). [26] Fifth, if desired I will act as referee with respect to any disputed documentation.

This may be submitted to me under seal at orbefore, but ideally before, the hearing. [27] Sixth, all persons noted in Ms. Cochrane’s amended Notice of Motion are to receive a copy of the order arising from thisdecision upon issuance. [28] Seventh, nothing in this ruling precludes any person from making an application for further examination, production,evidentiary ruling, or examination of third parties.

[ 29 ] Eighth, the order with respect to real property will remain in effect pending further order of a Court of competent jurisdiction. [ 30 ] Ninth and to reiterate, the application for the discharge of the bankrupt is adjourned sine die . [ 31 ] Tenth, any person wishing to intervene, object, participate in, or make written submissions shall do so not later than 20 days prior to the examination, with notice to the Court and all persons noted in Ms.

Cochrane’s amended motion. [ 32 ] Eleventh and finally, I will hear from the parties as to costs, if they are unable to agree, or at the examination if they so wish. [ 33 ] [The Court then discussed the form of order and scheduling with those in attendance; the matter was set down for March 18, 2019 at 10:00 at the Courthouse in Digby, Nova Scotia] [ 34 ] Ok, so we are adjourned. Balmanoukian, R.