2018 ONCJ 41, 2018 ONCJ 41

Ontario Court of Justice CITATION: Ontario (Director, Family Responsibility Office) v. Fiorito , 2018 ONCJ 41 DATE: January 22, 2018 Court File No. FO-15-020-E000 Recipient Counsel The Director, Family Responsibility Office C. Hodgkin for the benefit of Jefferson Ross John Wiggins Payor Anna Maria Fiorito L. DiPierdomenico Heard: December 6, 2017 ENDORSEMENT 1 . On this default hearing the support payor raised the following preliminary issue: does the Ontario Court of Justice have jurisdiction to hear a default hearing while the support payor is an undischarged bankrupt? Facts 2 .

By Order of Justice Bondy [1] dated October 7, 2014 and made on consent, the support payor, Anna Maria Fiorito (“Anna”), was required to pay to the support recipient, Jefferson Ross John Wiggins (“Jefferson”) $2,388.00 per month for the support of their three children. 3 . The October 7, 2014 Order remains outstanding. 4 . By Order of Justice Hebner, dated January 22, 2016, Anna was ordered to pay Jefferson $100.00 on account of a child’s glasses and $896.00 for her half of dental expenses claimed. 5 . These two orders were filed with the Director, Family Responsibility Office (“FRO”) for enforcement. 6 .

On February 20, 2016, Anna filed an assignment in bankruptcy. Heather Ann Bishop was appointed as Trustee of the estate of the bankrupt (“the Trustee”). 7 . FRO sent a Proof of Claim dated August 26, 2016 to the Trustee. The Proof of Claim stated that as of the date of the bankruptcy, Anna was indebted to Jefferson in the amount of $5,121.16. 8 . The arrears of child support have increased since Anna filed her assignment in bankruptcy. As of November 27, 2017, Anna is in arrears of child support under the two orders in the amount of $51,113.68.

Position of the parties 9 . Anna’s position is that in Ontario it is only the Superior Court of Justice that has jurisdiction over bankruptcy matters. As a consequence, she argues, once a support payor makes an assignment in bankruptcy and for so long as that person remains an undischarged bankrupt, the Ontario Court of Justice has no jurisdiction over that person in relation to debts provable in bankruptcy. The support claim is one that is provable in bankruptcy. 10 .

FRO argues that under the Bankruptcy and Insolvency Act R.S.C., 1985, c.B-3 (the “ BIA ”) enforcement of support orders is not stayed by a support payor’s assignment in bankruptcy. The only restriction on the enforcement of a support claim against an undischarged bankrupt is that it cannot proceed against:

a) a property that has vested in the Trustee; or

b) an amount payable to the estate of the bankrupt. Applicable Legislation 11 . Default hearings are provided for under s.41 of the Family Responsibility and Support Arrears Enforcement Act , 1996, S.O. 1996, c.31 (“ FRSAEA ”). The subsections relevant to the issue of jurisdiction are as follows: Default hearing 41.

(1) When a support order that is filed in the Director’s office is in default, the Director may prepare a statement of the arrears and, by notice served on the payor together with the statement of arrears, may require the payor to deliver to the Director a financial statement and such proof of income as may be required by the regulations and to appear before the court to explain the default. Presumptions at hearing

(9) At the default hearing, unless the contrary is shown, the payor shall be presumed to have the ability to pay the arrears and to make subsequent payments under the order, and the statement of arrears prepared and served by the Director shall be presumed to be correct as to arrears accruing while the order is filed in the Director’s office. Powers of court

(10) The court may, unless it is satisfied that the payor is unable for valid reasons to pay the arrears or to make subsequent payments under the order, order that the payor, (

a) pay all or part of the arrears by such periodic or lump sum payments as the court considers just, but an order for partial payment does not rescind any unpaid arrears; (

b) discharge the arrears in full by a specified date; (

c) comply with the order to the extent of the payor’s ability to pay; (

d) make a motion to change the support order; (

e) provide security in such form as the court directs for the arrears and subsequent payment; (

f) report periodically to the court, the Director or a person specified in the order; (

g) provide to the court, the Director or a person specified in the order particulars of any future change of address or employment as soon as they occur; (

h) be imprisoned continuously or intermittently until the period specified in the order, which shall not be more than 180 days, has expired, or until the arrears are paid, whichever is sooner; and (

i) on default in any payment ordered under this subsection, be imprisoned continuously or intermittently until the period specified in the order, which shall not be more than 180 days, has expired, or until the payment is made, whichever is sooner. Definition

(25) In this section, “court” means the Ontario Court of Justice or the Family Court. 2005, c. 16, s. 24 . 12 . The provisions of the BIA to be considered are as follows: Stay of proceedings — notice of intention 69

(1) Subject to subsections (2) and (3) and sections 69.4, 69.5 and 69.6, on the filing of a notice of intention under

section 50.4 by an insolvent person, (

a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy, Stays of proceedings — bankruptcies 69.3

(1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy. Non-application of certain provisions 69.41

(1) Sections 69 to 69.31 do not apply in respect of a claim referred to in subsection 121(4). No remedy, etc.

(2) Notwithstanding subsection (1), no creditor with a claim referred to in subsection 121(4) has any remedy, or shall commence or continue any action, execution or other proceeding, against (

a) property of a bankrupt that has vested in the trustee; or (

b) amounts that are payable to the estate of the bankrupt under

section 68. Family support claims 121

(4) A claim in respect of a debt or liability referred to in paragraph 178(1)(

b) or (

c) payable under an order or agreement made before the date of the initial bankruptcy event in respect of the bankrupt and at a time when the spouse, former spouse, former common- law partner or child was living apart from the bankrupt, whether the order or agreement provides for periodic amounts or lump sum amounts, is a claim provable under this Act. Debts not released by order of discharge 178

(1) An order of discharge does not release the bankrupt from (

b) any debt or liability for alimony or alimentary pension; (

c) any debt or liability arising under a judicial decision establishing affiliation or respecting support or maintenance, or under an agreement for maintenance and support of a spouse, former spouse, former common-law partner or child living apart from the bankrupt; Courts vested with jurisdiction 183

(1) The following courts are invested with such jurisdiction at law and in equity as will enable them to exercise original, auxiliary and ancillary jurisdiction in bankruptcy and in other proceedings authorized by this Act during their respective terms, as they are now, or may be hereafter, held, and in vacation and in chambers: (

a) in the Province of Ontario, the Superior Court of Justice; Legal Considerations 13 . At a default hearing, a support payor who is in arrears of support is required to provide a financial statement, proof of income and appear before the Court to explain the default: FRSAEA , ss. 41(1). 14 . The support payor has the onus of proving why he or she does not have the ability to pay the arrears and make subsequent payments due under the outstanding order: FRSAEA , ss. 41(9). 15 . If the Court is not satisfied that the support payor is unable, for valid reasons, to pay the arrears or make the subsequent payments,

it may make a number of orders designed to facilitate and encourage compliance with the outstanding support order: FRSAEA, ss.41(10). 16. In a non-family court jurisdiction – as is the case in Essex County – the Court with jurisdiction to conduct the default hearing isthe Ontario Court of Justice: FRSAEA, ss. 41(25). 17. Under the BIA, the enforcement of most claims against an undischarged bankrupt are stayed: BIA, 69.3(1). The stay ofenforcement does not apply to claims of support: BIA, ss. 69.41(1), 121(4) and 178(1)(

b) and (c). However, the BIA does precludesupport enforcement proceedings against property of the bankrupt that has vested in the Trustee or amounts that are payable to thebankrupt’s estate: BIA, ss. 69.41(2). 18. In Beattie v. Ladouceur (ON SC), [2001] O.J. No. 4852 Ont. (SCJ), Justice Polowin held at paras. 66 and 67that; “… it is my view that a reading of subsections 69.3(1), 69.41(1), 121(4) and 178(1) together make clear that the BIA provides no stay ofproceedings as a result of bankruptcy insofar as a claim in respect of a debtor relates to liability for support.

Support claims, therefore, are not stayed by bankruptcy proceedings…” Application of Legal Considerations 19. I agree with counsel for the support payor that a judge of the Ontario Court of Justice is without jurisdiction to deal withbankruptcy matters. Subsection 183(1)(

a) makes that very clear.[2] However, a default hearing is not a bankruptcy matter. It is a familylaw procedure, the purpose of which is to provide one method for the enforcement of support orders. 20. As the default hearing deals with the indebtedness of the payor to pay support, it is not caught by the stay provisions of the BIA. The only limitations upon the remedies that may be imposed by the Court on a default hearing under ss. 41(10) are against certainproperty described at BIA ss. 69.41(2) which is set out above. 21.

The default hearing provisions of the FRSAEA and the partial stay provisions of the BIA are not in conflict. They are compatible. Both allow for the important legislative and social objectives of supporting families and ensuring support obligations are honoured: McLarty v. Ontario (Director, Family Responsibility Office) (2001), (ON CA), 53 OR (3d) 161 (ONCA) para. 21and Marzetti v. Marzetti, (SCC), [1994] 2 S.C.R. 765 at para. 78-80. 22.

Allowing a default hearing to proceed, with respect to an undischarged bankrupt, will ensure all available statutory remedies canbe pursued to ensure the prompt payment of support ordered to meet the needs of – in this case – the children of the payor. 23. Having found that the default hearing is not a bankruptcy matter and that it is not stayed under the BIA, the FRSAEA makes itclear at ss. 41(25) that the jurisdiction to conduct a default hearing in a non-family court jurisdiction lies solely with the Ontario Court ofJustice. 24. Despite Mr.

DiPierdomenico’s interesting argument, Anna’s request to dismiss the default hearing for lack of jurisdiction isdismissed. 25. This matter is adjourned to January 31, 2018 at 10:00 AM in courtroom number 4 to

schedule a date for the resumption of thedefault hearing Date released: January 22, 2018 Original Signed and Released

Tobin, J.