Legal Blog

Contempt (2) Update

In our newsletter of June 2015, we discussed Walchuk Estate v. Houghton, a 2015 decision of the Ontario Superior Court of Justice. In that case, the debtor failed to attend an examination in aid of execution and the creditor obtained a court order pursuant to which the debtor was ordered to attend the examination on a specified date and to bring specified documents. The debtor assigned himself into bankruptcy. He then attended the examination, but brought no documents. Instead, he brought a notice of stay of proceedings that his trustee in bankruptcy issued for him.

The creditor moved for a contempt order and the motions judge held that the intervening bankruptcy did not affect a determination as to whether the debtor was in contempt of a previous order. The debtor appealed that decision.

Stay

The Court of Appeal dealt with the appeal in 2016. It noted that section 69.3 of the Bankruptcy and Insolvency Act imposes a stay on all proceedings, including contempt proceedings, if the alleged contempt took place after the date of bankruptcy. In this case, the order to produce documents and answer questions was stayed because of the bankruptcy and the examination about which the plaintiff complained took place after the bankruptcy.

The Court held that “such an attendance is exactly the kind of proceeding that s. 69.3 of the BIA was intended to stay. Given the order to attend the examination was stayed as of (the debtor’s) bankruptcy …, we are unable to see how his failure to bring the specified documents could possibly found contempt. Further, we observe the bankruptcy process is intended to be a single forum for creditors.”

The Court allowed the appeal.

Image courtesy of quicksandala.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.