Sheard (Re)

Sheard (Re)

Section 172.1 applied because CRA's proven claim exceeded 75% of unsecured proven claims; applying s.172.1(3)-(5) and the s.172.1(4) factors the court found the bankrupt's conduct was mismanagement not dishonesty, he had made substantial efforts to pay, and his future ability to pay was limited, so the appropriate disposition was to suspend the discharge and impose a proportionate monetary condition of $5,000 plus statutory reporting obligations until paid.

Citation
2013 NSSC 119
Parties
Bankrupt: Paul MacKenzie Sheard; Tax Authority: Canada Revenue Agency; Trustee: BDO Canada Limited
Court
Supreme Court of Nova Scotia
Jurisdiction
Canada
Judgment Date
5 April 2013
Procedural Posture
Bankruptcy and Insolvency / Hearing on Discharge Application
Outcome
Discharge suspended until condition satisfied; conditional discharge to be granted upon compliance with conditions.
Legal Topics
Discharge, Section 172.1 BIA, Personal Income Tax Debt, Surplus Income, Suspension and Conditions of Discharge
Source Language
English
Bankruptcy and Insolvency Tax Law Procedural Law Discharge Section 172.1 BIA Personal Income Tax Debt Surplus Income Suspension and Conditions of Discharge

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Parties

Paul MacKenzie Sheard

Bankrupt

Canada Revenue Agency

Tax Authority

BDO Canada Limited

Trustee

Procedural Posture

Bankruptcy and Insolvency / Hearing on Discharge Application

Legal Issues

  1. 1 Whether s.172.1 BIA applies and precludes an absolute discharge
  2. 2 Whether the court must refuse, suspend or impose conditions under s.172.1(3)
  3. 3 What factors under s.172.1(4) (circumstances when tax debt incurred, efforts to pay, payments to other debts, future prospects) require as to condition or suspension

Ratio Decidendi

Section 172.1 applied because CRA's proven claim exceeded 75% of unsecured proven claims; applying s.172.1(3)-(5) and the s.172.1(4) factors the court found the bankrupt's conduct was mismanagement not dishonesty, he had made substantial efforts to pay, and his future ability to pay was limited, so the appropriate disposition was to suspend the discharge and impose a proportionate monetary condition of $5,000 plus statutory reporting obligations until paid.

Court Disposition

Discharge suspended until condition satisfied; conditional discharge to be granted upon compliance with conditions.

Orders

  • Bankrupt shall pay $5,000 to the Trustee and shall remain suspended until that sum is paid to the Trustee.
  • While suspended the bankrupt shall file monthly income and expense statements with the Trustee and shall file all income tax returns required by law.