Morris Bureau Applicant v. Thierry Daniel Jean Paul Darde Respondent LIBRARY HEADING Judge : The Honourable Justice M. Heather Robertson, 2012 NSSC 344

SUPREME COURT OF NOVA SCOTIA Citation: Morris Bureau v. Darde, 2012 NSSC 344 Date: 20121003 Docket: Hfx No. 347331 Registry: Halifax Between: Morris Bureau Applicant v. Thierry Daniel Jean Paul Darde Respondent LIBRARY HEADING Judge : The Honourable Justice M. Heather Robertson Heard: December 1, 2011 and July 17, 2012, in Halifax, Nova Scotia Final Written Submissions: July 31 and August 23, 2012. Written Decision: October 3, 2012 Subject: Debt to solicitor - taxed costs - surviving bankruptcy

Summary: In a divorce proceeding that involved 17 days of trial the client misrepresented that he had arranged two lines of credit to pay off continuing trial costs but filed for bankruptcy, later claiming his lawyer had urged him to commit fraud. Issue: The operation of s. 178(1)(e) - whether the debt survives the discharge in bankruptcy. Result: Court satisfied the respondent obtain legal services through false pretense and fraudulent misrepresentation. The debt survives the discharge in bankruptcy by operation of 178 (1)(

e) of the Bankruptcy and Insolvency Act .

THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET . SUPREME COURT OF NOVA SCOTIA Citation: Morris Bureau v. Darde , 2012 NSSC 344 Date: 20121003 Docket: Hfx No. 347331 Registry: Halifax Between: Morris Bureau Applicant v. Thierry Daniel Jean Paul Darde Respondent Judge: The Honourable Justice M. Heather Robertson Heard: December 1, 2011 and July 17, 2012, in Halifax, Nova Scotia Final Written Submissions: July 31 and August 23, 2012 Written Decision: October 3, 2012 Counsel: Marc Dunning, for the applicant Patrick MacEwen, for the respondent Robertson, J. : [ 1 ] This is an application pursuant to s. 178(1) (

e) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3, wherein the applicant, Morris Bureau, Barristers and Solicitors, asks for a ruling that the balance of an account owed to them for their representation of the respondent, Thierry Daniel Jean Paul Darde ( “ Mr. Darde ” ), should survive a discharge in bankruptcy dated March 30, 2011 and remain owing to them, pursuant to s. 178(1)(

e) of the Bankruptcy and Insolvency Act .

[ 2 ] Morris Bureau represented the respondent in his divorce. The matter was set for trial to be heard June 10, 11, 12, 13, 16 and 17, 2008. A retainer of $30,000 was requested of the respondent. Estimates first given to Mr. Darde by Ms. Amanda Carew of Morris Bureau were that the trial costs would be between $35,000 and $40,000. [ 3 ] These estimates became inaccurate, as the trial proceeded because all matrimonial issues were relentlessly contested. Eventually, January 19, 20, 21, 22, 26, 27, 28, 29 and 30, March 23 and 25, 2009 were secured as continuing trial dates.

A six-day trial had turned into a17-day trial. [ 4 ] Mr. Darde has not paid the originally requested $30,000 retainer, but did pay all accounts rendered to him up to and including October 2008. [ 5 ] However, it is the evidence of both Ms. Amanda Carew and Richard Bureau of Morris Bureau (by affidavit and vive voce ) that a further request of a $50,000 retainer was made in the fall of 2008 to cover the legal fees that would be incurred in the continuation of the trial. Both these solicitors also testified Mr.

Darde explained that he had arranged two lines of credit by credit card applications that he would draw on to pay the balance of his legal fees. Both also testified that he asked that he not be required to draw down the lines of credit until the end of the trial when the fees would then have been incurred, to avoid building up steep interest expense. [ 6 ] Morris Bureau agreed to this arrangement, they say because Mr.

Darde had an established track record of paying his accounts as they related to the first half of the trial and some subsequent interim issues that arose just after the first portion of the trial. [ 7 ] The trial was completed. Morris Bureau had their outstanding account taxed at $52,782.50 before Adjudicator J. W. Stephen Johnson on June 11, 2009. Mr. Darde was served the notice of taxation, dated April 18, 2011, but did not attend on June 11. [ 8 ] Soon after the notice of taxation was served on Mr.

Darde, he filed for bankruptcy and was subsequently discharged on March 30, 2011. [ 9 ] The applicants say that Mr. Darde obtained their services by false pretense or fraudulent representation, having represented to both Mr. Bureau and Ms.

Carew that he had a brand new credit card which he showed them, that had a limit of $25,000 and that he had also been approved for a second facility, also with a limit of $25,000 and that there were no outstanding balances against them. [ 10 ] On this basis he asked Morris Bureau to complete his divorce and receive payment of all outstanding legal fees at the end of trial. [ 11 ] The applicants says that it has established fraudulent misrepresentation: (

I) the representation was made; (ii) the representation was false; (iii) the representation was made knowingly, without belief in its truth, or with reckless indifference as to whether it was true or false; and (iv) Morris Bureau relied on the representations and supplied the legal services on the basis of the arrangement they say was made.

[12] They rely on Derry v. Peek (1889), 14 App. Cas. 337; C.I.B.C. v. Aksoy , 75 C.B.R. (N.S.) 248, [1989] C.L.D. 929 (Ont. Dist.Ct. May 03, 1989); Bankruptcy of Raymond George Gushue, 2004 NSSC 64; Re Kurtz (2002) (ON SC), 35 C.B.R. (4th) 273; Bankruptcy and Insolvency Act, Holden and Moriwitz, pp. 786-788. [13] Mr. Darde filed affidavit evidence and also testified before me. [14] Also in evidence was a statement of Mr.

Darde’s living expenses filed with the Family Division, dated December 10, 2007, aNotice of Bankruptcy and of Impending Automatic Discharge, dated June 25, 2009, filed by his trustee, Green Hunt Wedlake Inc., whichrecites credit card debt to several creditor banks. [15] Mr. Darde’s explanation as to how the additional trial costs were to be paid was significantly different than that of Mr. Bureauand Ms. Carew.

He stated that he had paid in excess of $60,000 by the end of June, 2008, for legal costs relating to the divorce andbelieved that he had then paid in full for all legal services relating to the divorce, notwithstanding that eleven more days of trial werescheduled. [16] As to an explanation of how the balance of the trial costs for the additional 11 days of trial could be paid, he testified that hetold his solicitors he was having financial difficulties and explained that he intended to file for bankruptcy. Mr.

Darde was very vagueabout the dates upon which he might have had this discussion with his solicitors. [17] He testified that in a conversation he had with Mr. Bureau alone, that Mr. Bureau advised him he should apply for credit cardsand/or lines of credit prior to filing for bankruptcy, pay Morris Bureau in full and then proceed to file for bankruptcy. [18] Mr. Darde then testified that in conversation with another solicitor, he discussed this idea, realized it was a fraud and chose notto do so. [19] He testified by affidavit that he met with the Trustee in Bankruptcy in June 2009 and destroyed his credit cards.

He noted thathe listed the outstanding legal account on his list of liabilities in the bankruptcy. [20] Mr Darde testified that Mr. Bureau had sent him emails asking for the credit card arrangements, but he did not attach anyemails to his affidavit. He also testified he could not recall any discussion with his solicitors Bureau and Carew for the additional$50,000 retainer. He denied saying he had been pre-approved with two lines of credit. [21] Mr. Darde is simply not credible on the issue of these discussions.

He is a very disgruntled litigant, who feels he had paidenough when the fees topped $60,000. [22] On the one hand he has very poor recall of any discussions about additional fees but then recalls in detail how Mr. Bureaucounselled him to commit fraud testifying “He said just apply for the credit cards, everything that you can then pay me, then . . . youmay apply for bankruptcy but don’t tell Ms. Carew. Then you tell Ms. Carew you have the credit arrangements.” I simply do not believethis evidence in light of all the evidence that is before me. In particular, I accept the testimony of Mr. Bureau and Ms.

Carew as truthful. It is interesting to note that Mr. Darde had five credit cards at the time he declared bankruptcy. [23] I am satisfied on the evidence before me that Mr. Darde obtained legal services from Morris Bureau through false pretence andfraudulent misrepresentation knowing then to be untrue. His solicitors accepted his representation and continued to represent him for thebalance of the divorce proceeding. [24] Accordingly, I am prepared to issue an order pursuant to s. 178(1)(

e) of the Bankruptcy and Insolvency Act to order Mr. Darde to pay a total of $53,035.73 for legal fees and disbursements plus costs in theamount of $500 plus disbursements to the applicants.

Justice M. Heather Robertson