Russell (Re)

Russell (Re)

Allowing the debtor to make distributions directly to creditors contravened the statutory requirement in s.60(2) and constituted a default of the proposal; inspector approval and absence of measurable harm do not excuse delegation of core trustee duties, so a fee reduction is warranted to mark the court's...

Source-derived case information.

Citation
2021 BCSC 1708
Parties
Trustee / Applicant: E. Sands & Associates Inc.; Regulator / Respondent: Office of the Superintendent of Bankruptcy; Debtor / Proposal Proponent: Ronald Howard Russell; Debtor / Company: Kerrisdale Equipment Ltd.; Sole Inspector: Noah Russell
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
27 August 2021
Procedural Posture
Bankruptcy and Insolvency Proposal Taxation / Taxation of Trustee's Final Statement of Receipts and Disbursements
Outcome
Trustee's claimed fee reduced by 15% to $13,651.92; GST payable on approved amount; Final Statement of Receipts and Disbursements otherwise approved; parties bear their own costs.
Legal Topics
Trustee's Fees, Proposal Administration, Default in Performance of Proposal, Taxation of Accounts, Superintendent of Bankruptcy Oversight, Delegation of Statutory Duties
Source Language
english
Bankruptcy and Insolvency Administrative Law Trustee's Fees Proposal Administration Default in Performance of Proposal Taxation of Accounts Superintendent of Bankruptcy Oversight Delegation of Statutory Duties

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Parties

E. Sands & Associates Inc.

Trustee / Applicant

Office of the Superintendent of Bankruptcy

Regulator / Respondent

Ronald Howard Russell

Debtor / Proposal Proponent

Kerrisdale Equipment Ltd.

Debtor / Company

Noah Russell

Sole Inspector

Procedural Posture

Bankruptcy and Insolvency Proposal Taxation / Taxation of Trustee's Final Statement of Receipts and Disbursements

Legal Issues

  1. 1 Whether the trustee breached statutory duties by permitting the debtor to make distributions contrary to s.60(2) BIA and the terms of the proposal
  2. 2 Whether the trustee's fee should be reduced for that breach and, if so, by how much
  3. 3 Whether inspector approval or creditor/debtor consent excuses non-compliance with statutory requirements

Ratio Decidendi

Allowing the debtor to make distributions directly to creditors contravened the statutory requirement in s.60(2) and constituted a default of the proposal; inspector approval and absence of measurable harm do not excuse delegation of core trustee duties, so a fee reduction is warranted to mark the court's displeasure and uphold the integrity of the insolvency system. A 15% reduction on the claimed fee was appropriate in the circumstances.

Court Disposition

Trustee's claimed fee reduced by 15% to $13,651.92; GST payable on approved amount; Final Statement of Receipts and Disbursements otherwise approved; parties bear their own costs.

Orders

  • Reduce trustee's fee from $16,061.09 to $13,651.92 (15% reduction)
  • Trustee entitled to GST on the approved fee of $13,651.92