13.14: Endorsements on documents
13.15: When document is filed

Case Summary

The Defendant appealed from a Decision granting a Bankruptcy Order to the Plaintiff. Having found that there was no merit to the ground of Appeal, the Court dismissed the Appeal.

The Defendant had borrowed substantial funds from the Plaintiff. Upon events of default, the Plaintiff filed a Statement of Claim against the Defendant seeking Judgment for the outstanding amount. The Parties later entered into a Forbearance Agreement acknowledging the debt. A repayment schedule was agreed upon. The Defendant consented to a Judgment against it for the full amount owing in the event of the expiry or termination of the forbearance period.

On November 2, 2020, the Plaintiff informed the Defendant that another default had occurred. Seeing that the Defendant did not cure the default, the Plaintiff submitted a Bankruptcy Application (the “Application”) to the Court on July 8, 2021. Due to a processing backlog in the Court of Queen’s Bench at that time, the Application was not stamped filed until September 7, 2021. The stamp date was contrary to a confirmation email from the Court on July 8, 2021, which stated: “If accepted, it will be filed with the date that it was received, regardless of processing times”.

The Chambers Judge determined that, for the purpose of assessing whether there was an act of bankruptcy during the six-month period set out in section 43(1) of the Bankruptcy and Insolvency Act, RSC, 1985, c B-3 (the “BIA”), the Application was filed on July 8, 2021. Relying on Rule 13.15, the Defendant argued that the Chambers Judge had erred in making such finding.

The Court found that the Application was a commencement document and therefore was subject to Rule 13.14(1), which requires the Court, upon being presented with a commencement document for filing, to complete the filing process, stamp the Application, and provide a bankruptcy number.

Noting that the delayed filing was caused by a processing backlog, and that the Plaintiff used diligent efforts to follow up with the Court of Queen’s Bench, the Court held that there was no error in the Chambers Judge’s determination that the filing date was July 8, 2021, which was supported by evidence and the procedural history. Furthermore, dates relied upon by the Plaintiff with respect to the act of bankruptcy and the estimated value of the Defendant’s assets in the Application would remain the same and were within six months of either July 8 or September 7, 2021, thus satisfying sections 42(1)(j) and 43(1) of the BIA. As such, there was no substantial injustice to the Defendant.

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