Rideout (Re), 2022 ABKB 653

Court of King’s Bench of Alberta Citation: Rideout (Re), 2022 ABKB 653 Date: 20221003 Docket: B203 188367 Registry: Edmonton In the Matter of the Bankruptcy of Troy Cecil Rideout (Ordinary Administration) _______________________________________________________ Reasons for Decision of W.S. Schlosser , Registrar in Bankruptcy _______________________________________________________ [ 1 ] This is a contested taxation of a Trustee’s Final Statement of Receipts and Disbursements (FSRD). The Office of the Superintendent of Bankruptcy (OSB) suggests a reduction of $8,893.38.

Total fees and disbursements (as claimed) amount to $30,155.11, as against a recovery of the same amount. The OSB has provided a detailed analysis of the Trustee’s charges. The Trustee has replied, and the matter was heard August 10, 2022 in contested bankruptcy chambers. [ 2 ] The Trustee’s charging protocol is set out in Carde (Re) , 2022 ABQB 154 .

As noted in that decision, the ‘time records’ are not, in fact, a record of time spent on any particular task but, instead, the Trustee's opinion about the proper amount of time that should be allotted for each task, apportioned between the Trustee and various members of his staff. [ 3 ] The Trustee’s billing approach remains vulnerable to the criticisms leveled in the Carde decision, notwithstanding that the rates are within the range of rates ordinarily charged by LIT's in this province. [ 4 ] After the FSRD was submitted to the OSB for comment, and, while waiting to hear from the OSB, a new creditor (CMHC) emerged to claim a shortfall in their mortgage action in the amount of $209,348.18.

To that point, total admitted or proved unsecured claims totaled $138,896.11. [ 5 ] While the matter awaited a hearing date, the Trustee called a meeting of creditors. CMHC attended. The Trustee put the FSRD and the OSB's comment materials before this (now) major creditor at the meeting and CMHC approved the FSRD as tendered, without reduction. [ 6 ] I take notice that CMHC is a sophisticated litigant. It is not clear whether this creditor submitted the Trustee’s accounts to the type of scrutiny normally applied to their foreclosure lawyers.

The materials suggest that this creditor wanted to accelerate the Trustee’s discharge so that the bankrupt would no longer enjoy the protection of the Act and that their rights will be restored. [ 7 ] Mr. Rideout was not a compliant or a cooperative bankrupt and remains undischarged, as he did not comply with a Compelling Order granted in September of 2018. [ 8 ] I note that the Estate was initially on the threshold between

summary and ordinary administration. It was started as a

summary administration estate and later converted to ordinary administration. [ 9 ] Section 39(1) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 ( BIA ) permits the Trustee’s renumeration to be approved by the creditors. This, typically, is given great weight by the Court. It does not affect the right of the OSB to comment, or the Court to tax. The motives of the approving creditor are largely irrelevant. However, Creditors cannot approve charges that are not permitted by the Act . [ 10 ] I have considered the Trustee’s submissions, the OSB's comments and the fact of approval of the Trustee’s accounts by the majority creditor.

[11] The Trustee’s FSRD is taxed as submitted subject to the following reductions: fax, internet and e-mail charges in the amountof $60 are to be removed (Carde paras 34-42), as are counseling charges (1.1 hours beyond the amount permitted by the tariff) (Carde,paras 43-45). ‘Bank fees’ claimed as a disbursement are also to be removed as there are no charges payable to any financial institutionthat correspond to this amount. [12] An interim draw of $15,000 has already been approved. Delay [13] The OSB’s comment letter was provided September 2, 2021; 225 days after the Trustee had submitted its FSRD.

This delay isnot fully explained by the OSB. Some explanation for the lengthy delay would be welcomed by the Court and Trustee. If the OSBanticipates a delay of longer than 30 to 60 days, the Trustee should be informed promptly so that the Trustee can have an opportunity toapply for an interim draw, at least for amounts that are not likely to be in dispute. Costs [14] Costs are in the discretion of the Court (BIA

section 197). Costs may be awarded against the Trustee personally. Re PaquinMotors Ltd, (1947) (ON SC), 28 CBR 266 at page 274 (Ontario High Court), for an ill advised motion for advice anddirections. [15] Costs may be awarded in favor of the OSB (Re Dondale, 2007 BCSC 1300, at para 25 and the cases cited there). Costs maybe awarded against the OSB (Re Dondale, at para 28), in that case for intervening in a matter as a ‘test case’ in order to settle conflictingauthorities. [16] This is not a test case. It is a taxation at the Registrar’s level.

The OSB has a right to comment and request taxation, which isafforded by sections: 5(3)(g), 28(1)(c), 152(3),(4) of the BIA and r 63. This is part of the OSB’s supervisory function and should not, inmy view, be impaired in any way by the threat of costs. At this level, costs should not be awarded against the OSB for exercising itsstatutory function unless there is an element of bad faith, or improper purpose (eg: Re Tychon, 2018 ABQB 668 at para 22 and the casescited there). In an appropriate case, a Trustee may claim costs for successfully defending a contested FSRD from the estate.

But thatoption is not available here; the Trustee has already claimed it all. [17] This taxation and those in Re Carde, which involve the same Trustee, are about conflicting opinions: the Trustee’s opinionabout what certain tasks are worth, and the Superintendent's opinion that, in the circumstances of this estate, those costs should be less.Section 152(4) of the BIA provides that the Superintendent may comment and that the comments shall be placed before the taxingofficer for consideration. The taxation process in this jurisdiction usually takes the form of a desk application.

Contested taxationsnormally involve a hearing in bankruptcy chambers. This is the most expedient way to deal with matters such as these as it is difficult forthe Court to accommodate complex write-in applications. [18] But for the creditor approval, there would have been mixed success on this taxation. The OSB, in issuing their letter ofcomment, merely exercised their supervisory function and their right to review and comment as afforded by the Act.

If the Trusteewishes to resist the OSB's conclusions and recommendations it is the Trustee’s application and burden (Carde para 13, Re Haramboure,(2001) 2001 BCSC 695 , 25 CBR (4th) 263). This is not a circumstance where costs should simply follow the event. As notedabove, costs against the OSB will not be awarded unless their conduct is shown to be egregious, or in bad faith. [19] It is hoped that the Trustee will consider the OSB's comments to effect further efficiencies for future estates. [20] On submission of an FSRD, revised as indicated, the Trustee may obtain its discharge.

Heard on the 10th day of August, 2022. Dated at the City of Edmonton, Alberta this 3rd day of October, 2022. W.S. Schlosser Registrar in Bankruptcy Appearances: Kathleen Jacob

James Moses for the Applicant/Trustee Jennifer Kidd Scott Guertin for the Office of the Superintendent of Bankruptcy