Bankruptcy and the Family Farm

Abstract

Reaching an outcome that they admitted to appear unjust, the judges of the Supreme Court of Canada in Schreyer v Schreyer affirmed that the husband’s discharge from bankruptcy released him from an unliquidated equalization claim owed to his wife under provincial family law. The Court’s assertions that the outcome, though unavoidable, looked unfair and that Parliament should amend the Bankruptcy and Insolvency Act invite further analysis. The Court might have been less prescriptive in its call for reform, given that its judgment did not attend to complexities arising from the provincial law respecting spousal entitlements and exemptions from seizure. The first part of this paper presents the facts and decision. The second part critically draws out the Court’s attitude towards variation within family law across Canada, notably its objection to the ordinary effects of divided legislative competence in a federation and to doctrinal distinctions. The third part highlights the potential role of an application for lifting the bankruptcy stay. The Court approved that remedial route for spouses regarding assets that are exempt from seizure and this endorsement may be the judgment’s most lasting contribution. The fourth part argues that the Court’s focus on the federal statute and on exempt assets as a class led it to overlook the specificity of the asset at issue, a family farm. The source of injustice to women underscored by this judgment may lie not in federal law, but in provincial law and policy. That is, even absent a bankruptcy, gendered assumptions about the character of farm families and the overweening concern for preserving family farms may deprive a spouse of her equitable share of family property.