Are you a creditor applying for a bankruptcy order? Skip masters chambers and head straight for a judge

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In the recent decision of Perehudoff (Re), 2021 BCSC 2024, the British Columbia Supreme Court considered the jurisdiction of a master to grant an order adjudging an individual a bankrupt pursuant to section 43 of the Bankruptcy and Insolvency Act, R.S.C., 1985 (“BIA”).

In British Columbia, masters sometimes sit as registrars. The jurisdiction of a master – the types of orders and matters which the master can consider – will change depending on their role. When sitting as a registrar, masters will hear matters related to costs, the settling of orders, and Legal Profession Act reviews, among others. Masters will typically have a separate court list when sitting as a registrar which does not include matters considered in masters’ chambers. 

In Perehudoff, a creditor had applied for an order adjudging Mr. Perehudoff a bankrupt under the BIA. The application was heard in masters chambers.  The master granted the order, and Mr. Perehudoff appealed on, inter alia, jurisdictional grounds.

The court first considered whether the master was sitting as a registrar or a master. The BIA grants limited authority to registrars under section 192(1) to make certain orders, including bankruptcy orders. However, a registrar (or a master sitting as a registrar) may only make such orders if (1) the application is unopposed and (2) the parties consent to a registrar hearing rather than a hearing before a judge. 

In the case at hand, the application was clearly opposed and neither party had consented. If the master had been sitting as a registrar, therefore, the order was beyond the registrar’s jurisdiction. 

The court then considered whether masters have the authority, qua masters, to grant a bankruptcy order. The creditor-applicant argued that masters have the powers of judges under the BIA, and may make final orders outside the jurisdiction of a registrar. 

The court rejected the creditor’s argument. Justice Wilkinson held that masters are excluded from the ability to exercise the powers of a judge to make orders under the BIA because judges and registrars are expressly granted specific authority under the legislation, whereas masters are not.

In sum, if a master is sitting as a registrar, they have limited authority to make orders under the BIA. If sitting as a master, they do not have jurisdiction to make any orders under the BIA, due to the operation of Practice Direction 50 which excludes the ability of masters to make orders of a judge with limited exceptions. A creditor wishing to make an application for a bankruptcy order under the BIA should apply in judges chambers, unless the order is unopposed and the parties agree a registrar can hear the application.

If you or your clients are considering applying for a bankruptcy order against a debtor, it is critical you choose the proper forum and adhere to jurisdictional requirements, lest the application be denied. The lawyers at Gehlen Dabbs are highly experienced and happy to assist with bringing or responding to a bankruptcy application. 

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