DORNAN (RE), 2016 ABQB 259

MASTER schlosser

1.4: Procedural orders
5.12: Penalty for not serving affidavit of records
5.3: Modification or waiver of this Part
13.5: Variation of time periods

Case Summary

The purpose of this Action was to set aside a transfer of assets by Mr. Dornan, who had a Division 1 Bankruptcy Proposal pending, or to obtain Judgment against Mr. Dornan for the difference between the transfer value and the fair market value of the transferred assets. An Appeal of the Order granting permission for the Action was scheduled to be heard May 27, 2016, but prior to the hearing, Mr. Dornan’s creditors served a Statement of Claim on Mr. Dornan. The deadline for filing the Statement of Defence was April 21, 2016 and the creditors refused to grant an extension of that deadline. Mr. Dornan applied for a Stay of the procedural steps in the Action pending the Appeal of the Registrar’s Order.

Master Schlosser, acting as the Registrar in Bankruptcy, considered the test for granting a Stay under the Bankruptcy and Insolvency Act, RSC 1985, c B-3, and noted that the Applicant was seeking a Stay of up to two procedural steps in the Action. Both Rules 1.4 and 13.5 permitted the Court to extend procedural deadlines and Master Schlosser noted that the time for serving a Statement of Defence was commonly extended as a courtesy between counsel. Under Rule 5.12, the penalty for late production of an Affidavit of Records was usually a monetary sanction, but this sanction was not absolute and could be avoided with “sufficient cause”. The Court noted several cases where an extension of time was granted for filing an Affidavit of Records and concluded that the efficiencies of time and expense supported granting a Stay in this instance.

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