Gagnon (Re), 2013 NSSC 234

IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY Citation: Gagnon (Re), 2013 NSSC 234 Date: July 26, 2013 Docket: B 37108 Registry: Halifax District of Nova Scotia Division No. 01 - Halifax Court No. 37108 Estate No. 51-1504350 IN THE MATTER OF THE BANKRUPTCY OF ROBERT RONALD GAGNON _________________________________________________________________ LIBRARY HEADING __________________________________________________________________ Registrar: Richard W. Cregan, Q.C.

Heard: June 21, 2013 Written Decision: July 26, 2013 Subject: The bankrupt asked for an allowance against surplus income because of expenses arising from his father ’ s illness and death and for substantial repairs to his automobile . Result: The Court held that he should be entitled to some recognition of these expenses in determining his surplus income. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT ’S DECISION . QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET .

IN THE SUPREME COURT OF NOVA SCOTIA IN BANKRUPTCY AND INSOLVENCY Citation: Gagnon (Re), 2013 NSSC 234 Date: July 26, 2013 Docket: B 37108 Registry: Halifax District of Nova Scotia Division No. 01 - Halifax Court No. 37108 Estate No. 51-1504350 IN THE MATTER OF THE BANKRUPTCY OF ROBERT RONALD GAGNON __________________________________________________________________ D E C I S I O N __________________________________________________________________ Registrar: Richard W. Cregan, Q.C. Heard: June 21, 2013 Present: Robert Gagnon representing himself. Jason Breeze representing the Trustee, McCuaig & Company

[ 1 ] This is an application to set the conditions for discharge from bankruptcy of Robert Ronald Gagnon, who made an assignment on June 1, 2011. [ 2 ] Mr. Gagnon and the Trustee agree on the calculation of surplus income except that Mr.

Gagnon says that consideration should be given to certain out of the ordinary expenses which he incurred during his bankruptcy. [ 3 ] In particular he says that he should be given a credit of $3,000 to cover expenses in travelling twice to Ontario to attend his father in his last illness and death , and $5,000 for repairs to his motor vehicle incurred between October 2011 and October 2012. [ 4 ] The amount of unpaid surplus income claimed by the Trustee is $7,000. What is before me is whether this sum should be reduced to reflect these expenses. [ 5 ]

Section 68 of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 ( BIA ) directs that in certain circumstances bankrupts pay surplus income into their estates as calculated by the trustees in accordance with the Superintendent ’ s Standards found in Directive No. 11R2-2012 - Surplus Income. This Directive requires trustees to apply certain rules as to how to calculate surplus income.

Although judgment is required on the part of trustees in applying these rules, they are not given discretion to deviate from them, regardless of the merits of the reasons for doing so put to them. [ 6 ] However, the Court is not bound by these rules. It has discretion to take into account special circumstances and responsibilities of bankrupts. [ 7 ] Mr. Gagnon drove to Cornwall, Ontario to visit his ill father during the period October 12 to 26, 2011 and returned again between March 7 to 19, 2012. His father died on March 12, 2012. [ 8 ] He claims with respect to each trip about $1,500.

He has provided some details for these expenses. Some are expenses of travel such as hotels and others are expenses of everyday living which he would have incurred in any event. [ 9 ] Mr. Gagnon lives in Hammonds Plains with his two sons, aged nine and twelve. He says he needs his automobile to assure his sons are able to be at school, attend sports, and visit their mother and for him to travel to work. He is a member of the Royal Canadian Navy. His work takes him to the different bases in the Halifax area. [ 10 ] His automobile is a 2001 Toyota RAV 4.

Since his bankruptcy he has incurred maintenance expenses of over $5,000. He says the automobile is a necessity both for him and his sons. Considering where he lives and works and his sons ’ circumstances, I think he would have great difficulty without it. [ 11 ] I am satisfied that I have discretion under

Section 68 to take into account special needs of bankrupts in setting surplus income. I considered this sometime ago in Re Morriscey , 2003 NSSC 200 . [ 12 ] The illness and subsequent death of a parent imposes moral and practical responsibilities on surviving children. Some recognition should be given to the expenses incurred in carrying out these responsibilities. They are not the ordinary expenses of everyday life. The claims for the two visits total over $3,000. [ 13 ] They were lengthy visits. The question is how much should Mr. Gagnon ’ s creditors be expected to contribute.

There are no specific accounting rules for me to follow. It requires an exercise of discretion on my part. I think it fair for all concerned that with

respect to this claim I allow Mr. Gagnon $1,500 against the Trustee ’ s calculation of surplus income. [ 14 ] As to his automobile expenses, again the question is how much his creditors should be expected to contribute. The Superintendent ’ s Standards recognize that bankrupts have transportation expenses. They have to travel to work, etc. Are Mr. Gagnon ’ s expenses beyond the normal? His circumstances dictate a fair amount of daily travel.

One has to amortize the cost of an automobile over its useful life and one must spread the costs of repairs over the continual life of the automobile. $5,000 is a substantial amount of money to pay for repairs. Considering the age of the automobile, the benefits of the repairs may not be for long. I think that some portion of this sum should be recognized as an out of the ordinary expense. I allow Mr.

Gagnon $1,000 against the Trustee ’ s calculation of surplus income. [ 15 ] The result is that from the $7,000 sought by the Trustee for surplus income will be subtracted the $1,500 and the $1,000 stated above. [ 16 ] Mr. Gagnon will be entitled to his discharge upon payment to the Trustee of $4,500. R. Halifax, Nova Scotia July 26, 2013