In re Taylor, (1988) 68 C.B.R. (N.S.) 93 (P.LI.S.C.)

Re Taylor

Prince Edward Island Supreme Court (Trial Division)

McQuaid, J.

Heard — March 23, 1988

Judgment — March 24, 1988

Discharge of bankrupt — Opposition — Foreign creditors not prepared to recognize any order court might make — Foreign creditors having no status before court.

Discharge of debtor — Absolute discharge — $60,000 debt arising from student loans — Limited employment opportunities existing — Bankrupt repaying some of debt voluntarily — Offer by husband of bankrupt to settle for $10,000 refused — Absolute discharge granted.

The bankrupt's application for discharge was opposed by three creditors, all of which were residents of the United States. They made it quite clear that although they opposed the application on whatever grounds were available to them under the Bankruptcy Act, they were not prepared to recognize any order of discharge which the court might make. The debts in question had all resulted from student loans incurred in the bankrupt's unsuccessful attempt to become a dentist.

Held — Absolute discharge granted.

the creditors, in not accepting the full jurisdiction of the court, deprived themselves of any standing before the court. By adopting this stance, they were refusing to submit themselves to the jurisdiction of the same court from which they were seeking relief. Consequently they could not be heard. Although the creditors conceded that a discharge order would preclude them from initiating action on the debt in Canada, that position simply recognized the reality of the law as it exists in Canada and did not amount to a recognition and submission to the jurisdiction of the court.

The bankrupt, a young lady, not long married and the mother of two very young children, was faced with a debt of $60,000. She was presently unemployed and unable to obtain employment as a dental hygienist because of lack of openings in her field. During a relatively short term of employment prior to the birth of her first child, she had managed to repay about $6,300. Subsequent to the termination of her employment, her husband had gratuitously made a settlement offer of $10,000 which had been peremptorily refused. The bankrupt had done all that could be expected of her and there should be an absolute discharge.

Cases considered

Fergusen, Re (1987), 63 C.B.R. (N.S.) 172, 35 D.L.R. (4th) 430, 64 Nfld. & P.E.I.R. 355, 197 A.P.R. 355 (P.E.I.S.C.) — distinguished

Canadian Abridgment (2d) Classification

Bankruptcy XXII. 1.

Application for discharge of bankrupt.

R.J. Keefe, for University of Pennsylvania

B.B. Taylor, for Ms. Taylor.

(No. 973)

March 24, 1988. McQuaid, J.: — This is an application for a discharge pursuant to s. 142 of the Bankruptcy Act with respect to which the only three creditors of the bankrupt, Kathleen Hearn Taylor, have filed a notice of objection.

the aggregate debt is in effect a student loan. The debtor was, at the relevant time, a citizen of the United States, qualified as a dental hygienist. Deciding to advance herself in her profession by becoming a fully qualified dentist, she enrolled in the appropriate faculty of the University of Pennsylvania. There she spent something short of four, out of a necessary eight, semesters, after which she withdrew permanently for medical reasons.

Sometime subsequent thereto she married and settled in Price Edward Island with her husband. She is now the mother of two children, aged approximately two years and one year.

While at the university, she was directed to three different agencies as sources of financial support, one at the federal level, one at the state level and one within the university itself. As I understand the process, the student has no personal access to any funds; they appear to be established as a credit against which only the university can draw.

The present indebtedness, in Canadian funds, would appear to be as follows:

Department of Health and Human Services $ 5,968

Pennsylvania Higher Education 21,957

University of Pennsylvania 31,500

_______

$59,425

_______

This is after having paid slightly over $6,300 earned by the debtor here during some nine months' employment as a dental hygienist prior to the birth of her first child which by chance happened to coincide with the closure of her employer's office. She has not worked since.

There is one preliminary matter which I think requires some comment, but one on which no jurisprudence has been brought to my attention. The creditors have made it quite clear that, although they were before the court opposing the debtor's application on whatever grounds were available to them under the Bankruptcy Act, they were not prepared to recognize any order of discharge which the court might make. It appears to me that by adopting this stance they were refusing to submit themselves to the jurisdiction of the court, the same court from which they were seeking what relief and remedy might be available to them.

They cannot have it both ways. Either they submit to the jurisdiction of the court, in its entirety, or they may not be heard.

They did concede that if the court were to make an order of discharge, either absolute or conditional, they would be precluded from initiating action in the debt in Canada. This position, however, is simply one of recognizing and accepting the reality of the law as it exists in Canada, with respect to which there is little option otherwise. This is a far cry from recognizing and submitting to the jurisdiction of the court which might make any order bringing that law into play.

I would be of the considered opinion, in retrospect, that the creditors, in not accepting the full jurisdiction of the court, deprived themselves of any standing before the court, and consequently may not be heard.

The application will, then, be dealt with on its merits, on the basis of the documents filed by the applicant and by the trustee having regard, as well, to the representations of counsel for the applicant.

the applicant is a young lade, not long married, and the mother of two very young children. She is faced with a debt of some $60,000 arising out of an unsuccessful effort to become a dentist. She is presently unemployed.

She does have a profession, that of dental hygienist, and she is a continuing member of the local professional society. She alleges that she is unable to obtain employment because of lack of openings in her field. She has not actually solicited employment, but alleges that due to the relatively small number of dental offices in the community she would be immediately aware, through her professional associates if any openings did exist. She alleges that there are no such employment opportunities. This is sworn testimony which must be accepted by the court at face value unless there is evidence to the contrary.

If the contrary were a fact, it was open to any objector to adduce evidence to that effect. None was forthcoming. As a matter of fact, it is a mater of record that the president of the Prince Edward Island Dental Hygienists' Association was subpoenaed to attend and testify on behalf of the objector. Such officer was not, in fact, called. Therefore the uncontradicted evidence of the applicant in this regard must stand.

One important factor for the court's consideration is, I think, the attitude of the debtor towards the indebtedness. During the relatively short term of employment, which terminated incidentally for two reasons, the imminent birth of her first child and the closure of her employer's practice, she did manage to repay about $6,300. Subsequently to the termination of her employment, her husband gratuitously made an offer of settlement on a payment of a further sum of $10,000. This offer was peremptorily refused. Only the total balance would be acceptable. Obviously, the creditor does not believe in the "bird in the hand" principle.

Under the circumstances, I believe that the debtor has done all that could be expected of her. She should be discharged absolutely. the trustee has earlier indicated that he has no objection to such a step.

The judgment of this court in Re Ferguson (1987), 63 C.B.R. (N.S.) 172, 35 D.L.R. (4th) 430, 64 Nfld. & P.E.I.R. 355, 197 A.P.R. 355 (P.E.I.S.C.), has been brought to my attention. The opinion which I expressed in that decision remains unaltered. However, it is clear that there are sufficient distinguishing factors in this instance which would bring it within the indicated exceptions.

An absolute discharge will be ordered.

Absolute discharge granted.

[this case distinguished in In the matter of Bialek, (1994) 25 C.B.R. (3d) 271, 1994 Ont CJ LEXIS 2137]