Fougere (Re), 2020 NSSC 129

SUPREME COURT OF Nova Scotia IN BANKRUPTCY AND INSOLVENCY Citation: Fougere (Re) , 2020 NSSC 129 Date: 20200406 Docket: No. 43912 Registry: Halifax Estate Number : 51-126192 In the Matter of: The amended proposal of Rene Richard Fougere Judge: Raffi A. Balmanoukian, Registrar Heard: April 3, 2020, in Halifax, Nova Scotia Counsel: Matthew Munro, of Powell Associates Ltd., proposed Trustee Balmanoukian, Registrar: [ 1 ] This is an application to approve a Division I proposal pursuant to

Section 58 of the Bankruptcy and Insolvency Act , RSC 1985, c. B-3 , as amended (the “ BIA ”). [ 2 ] The matter was originally docketed for April 3, 2020. Creditors received notice of the date and time of the hearing, with the venue as the Law Courts in Halifax. [ 3 ] In light of the Covid-19 pandemic and restricted “normal” hearings, I was asked to approve this Division I proposal on a “desktop” basis; that is, without appearance by the Trustee.

The Trustee acknowledged that the Court was not physically sitting, in that it emailed the Court on April 2, 2020 that it “ had a hearing scheduled tomorrow” (my emphasis). It asked for the matter to “proceed without the requirement for Trustee attendance.” [ 4 ] The Court’s pandemic-driven “essential services” model restricts hearings to those deemed urgent or essential by the presiding jurist, with remaining matters adjourned without day.

That model was implemented on March 19, 2020, well before the “ask” of April 2, 2020. [ 5 ] I refused to approve, or adjudicate, the matter without an open hearing (whether physical or virtual), with the capability of affected parties to appear and be heard. The matter is adjourned without day. These are my reasons. [ 6 ] First, and at least arguably foremost, we have Open Courts in this country. We do not have Star Chambers. In times of crisis, it is more important than ever that not only does the rule of law prevail, but that it be seen as an open, steadying and consistent hand.

As Chief Justice Wood put it in an op-ed piece published in the Nova Scotia media and on the Court website on March 24, 2020: Courthouses are busy places; practical steps like postponing jury trials, alternative methods for filing documents, hearing matters by telephone and video, and adjourning all non-urgent proceedings have drastically reduced the number of people coming through our doors. Because the fact is, the courts cannot close. As the third branch of government, an independent judiciary is vital for our Canadian democracy to function. It is never more important than in times of crisis.

Judges provide resolution of disputes for all aspects of society. They uphold individual rights, enforce laws, respond to urgent circumstances facing children and families, provide oversight of government actions and ensure that the rule of law prevails. Like many sectors right now, the judicial system is grappling with fewer human resources, more people working from home and increased demands on existing technology. [ 7 ] Applications to approve Division I proposals are heard in open Court. Creditors receive notice.

In this case, a creditor who wished to appear would have received notice of the time and place of hearing at the Law Courts in Halifax, but there was nobody in Court at the appointed intersect. Chances are, an attendant creditor or other interested person would not have been admitted to the building. [ 8 ] It is highly inappropriate to ask the Court to “sign off” outside of Court when it is not known what, if any, creditor objects.

Indeed, I only have jurisdiction to approve proposals when they are not opposed, or if the relevant parties consent to my hearing the matter: BIA s. 192(1) (d), 192(1) (j). [ 9 ] How am I to know if a creditor objects? I don’t.

[ 10 ] Even if there is no objecting creditor, alternate hearing methods, including virtual ones, do not displace the Open Court principle. The slogan – originating during Watergate, I’m told – that “democracy dies in darkness” is more than mere alliterative wordsmithing.

In my view, it is even more important at a time when individuals are placed under constraints and restrictions for collective health and welfare, that rights and liberties that are not required to be compromised unequivocally are not. [ 11 ] When a matter is heard other than in open court, or if part or all of a file is not available to the public at large, there has to be a good reason in law, such as is sometimes the case in family or criminal matters. Mere personal efficacy is not one of them, even if nobody from the media or public shows an interest and even if nobody except the Court objects.

For examples, see Hong v. Lavy , 2019 NSSC 271 ; Rhyno v. Nova Scotia Barristers’ Society , 2019 NSCA 67 , and my own comments in Re Haring , 2018 NSSC 241 . [ 12 ] If and when I hear the matter, it will be in an accessible proceeding. Affected parties, including creditors, would be required to be served with the date, time, and method of hearing, and of their means of participation (e.g. video or teleconference coordinates). If the price of liberty is vigilance, one of justice’s virtues is transparency. It was inappropriate for the trustee to suggest a method that short circuits any element of due process.

Even obliquely. Even a little. [ 13 ] In addition to the requirement for an open proceeding, for me to hear the matter presently I would need to be convinced that it falls under the “urgent or essential” criteria currently in effect under the essential services delivery model. [ 14 ] I turn now to that threshold. [ 15 ] The Trustee was asked to provide comments as to how, if at all, this matter could fall under that rubric. To date, I have received none. I however outline the following timeline and circumstances. [ 16 ] Mr. Fougere, now 51, filed for his first bankruptcy in 2000.

He was undischarged, for reasons indeterminate on the material before me. [ 17 ] He filed a consumer proposal on May 30, 2019. It was deemed approved on July 29, 2019, which had the effect of annulling the generation-old bankruptcy. All of the 2019 creditors are commercial “high street” lenders. [ 18 ] Mr. Fougere defaulted, almost immediately, on August 1, 2019 – eight months ago.

One may hypothesize on whether this was part of the “game plan” towards formulating and presenting the current Proposal, but I have no evidence on this one way or the other, at present. [ 19 ] He filed a Division 1 proposal on January 29, 2020 – just under two months ago, and just under six months after his default. A creditor objected to its initial terms, which were enhanced somewhat. Attending creditors voted in favour of the amended plan on February 19, 2020. [ 20 ] There seems to have been little urgency on the part of Mr.

Fougere either to take care of his 2000 bankruptcy, or to address his August 2019 default by way of expediting the proposal currently before me. The creditors do not appear to have pushed the matter forward and, as noted, they are all institutional lenders. There are no non-exempt assets in which there is any distributable equity.

The proposal has only a limited net benefit to creditors over what is anticipated to be received (by way of s. 68 surplus income payments) in a bankruptcy. [ 21 ] While I remain open to receive submissions on the point, I would need to be convinced how the foregoing fact situation falls within the narrow “urgent or essential” criteria currently in effect in Nova Scotia.

If I was so convinced, I repeat unequivocally that impacted parties would receive due notice of date and time, and means by which they could participate, and the public will have a method by which that information can be obtained as well (likely through a docket posting on the Court website). [ 22 ] The costs of such submissions, and of any subsequent notice (at any time), are to be borne by the Trustee and not part of any ultimate proposal or estate. This should never have come before me in this fashion and the throw-away costs of it coming before me properly should not be borne by anyone other than the Trustee.

Conclusion [ 23 ] The application is adjourned without day. Balmanoukian, R.