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DISCHARGE OF BANKRUPT - Conditional discharge - Upon total or partial repayment

Monday, August 09, 2021 @ 9:18 AM  

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Appeal by Perrier from a decision dismissing his appeal from a conditional discharge from bankruptcy. The registrar ordered the appellant to pay $150,000 in monthly instalments of not less than $1,000. The appellant argued the chambers judge erred in law by finding him to be responsible for the fact his assets were less than 50 cents on the dollar in comparison to his liabilities and by regarding cases involving income tax liability as a special category. While self‑employed, from 1997 to 2007 inclusive, the appellant failed to pay his income taxes. He made an assignment into bankruptcy in 2009. CRA filed a proof of claim for income taxes in the amount of $715,645, of which $287,271 was the debt for taxes owed and $468,373 was interest and penalties. Proven claims in the bankruptcy amounted to $1,026,810. When he applied for discharge in 2016, the appellant was 49, in good health and employed earning $72,000 a year. He had no dependents or support obligations. The registrar considered the appellant solely responsible for the accrual of the tax debts. The registrar accepted CRA’s submissions that the appellant had the ability to contribute to a conditional order, his income would likely increase over time, given his expertise and experience, and his claimed expenses were excessive.

HELD: Appeal allowed in part. The chambers judge did not intervene in the registrar’s fact-finding process and did not make any erroneous findings of fact himself. There was evidence upon which the appellant could properly be found to have been at fault. It was not an error of law to find the appellant to be responsible for the fact his assets were less than 50 cents on the dollar in comparison to his liabilities. Neither the registrar nor the chambers judge regarded all cases involving income tax liability as a special category. Tax obligations were rarely unforeseen and rarely unpaid over long periods, except where the taxpayer was reckless or wilfully blind. The circumstances of this bankruptcy did not support the imposition of conditions that would not be satisfied for 12 years, until the appellant was into his retirement years. Given the registrar’s findings of fact, including the fact the appellant paid no taxes for an extended period, had no dependents and was alone dependent on his income, and was steadily employed and able to generate income surplus to his needs, the appellant should be required to make a substantial payment to CRA. However, with a view to imposing conditions that would permit him to make a fresh start, the appellant was required to pay $45,000 in minimum monthly instalments of $750 over five years.

Perrier v. Canada (Revenue Agency), [2021] B.C.J. No. 1456, British Columbia Court of Appeal, H. Groberman, P.M. Willcock and G. Dickson JJ.A., July 6, 2021. Digest No. TLD-August92021002