Fact that psychiatrist was bankrupt’s treating physician was not proper basis for rejecting evidence

Ontario civil | Bankruptcy and Insolvency | Discharge of bankrupt | Conditional discharge

Bankrupt declared bankruptcy after breakdown of his marriage. Bankrupt’s discharge was annulled. Bankrupt’s mental and emotional health deteriorated significantly. Bankrupt made consumer proposal. Although bankrupt received proceeds from matrimonial settlement in amount greater than total consumer proposal payments he eventually defaulted and proposal was annulled. Registrar ordered bankrupt’s discharge on conditions that bankrupt pay amount remaining due under proposal and attend second counselling. Bankrupt’s appeal was dismissed. Appeal judge refused to consider bankrupt’s fresh evidence of psychiatric reports. Bankrupt appealed. Appeal allowed; discharge granted. Neither Registrar nor appeal judge gave proper consideration to psychiatric evidence. Fact that psychiatrist was bankrupt’s treating physician was not proper basis for rejecting evidence. Basis upon which appeal judge found that evidence was not sufficiently credible or sufficiently probative were unclear. Mental health issues from which bankrupt was suffering at time settlement was received were significant and clearly could have affected his thinking and actions. There was no evidence that bankrupt personally benefitted from settlement funds. Condition imposed by Registrar that bankrupt pay $61,000 was based on incomplete understanding of mental health issues and could not be justified. Bankrupt had been effectively operating under suspension for more than three year so further period of suspension would not accomplish any purpose. 

Kuczera (Re) (2018), 2018 CarswellOnt 4892, 2018 ONCA 322, I.V.B. Nordheimer J.A., J. MacFarland J.A., and Grant Huscroft J.A. (Ont. C.A.); reversed (2017), 2017 CarswellOnt 13306, 2017 ONSC 5140, F.L. Myers J. (Ont. S.C.J. [Commercial List]).

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