British Columbia·Exclusive

Bankruptcy claimant protected, despite spending spree

An Ontario woman stands to lose her home over shared debts her former common-law husband has been shielded from for years, because he claimed to be bankrupt when he admits he really wasn't.

Ex-girlfriend stuck with over $100K in debts blows the whistle

Bankruptcy spending spree

10 years ago
Duration 1:24
An Ontario woman could lose her home over shared debts her former common-law husband has been shielded from for years, because he claimed to be bankrupt when he was not.

An Ontario woman stands to lose her home over shared debts her former common-law husband has been shielded from for years, because he claimed to be bankrupt when he admits he really wasn’t.

"I’m left holding over $100,000 in debt that he easily could have paid into," said Kim Dickey, who is being chased by creditors. "Unless I win a lottery, there’s no job that I can get that can, you know, satisfy this debt."

Dickey is speaking out after her complaints about Dale Morrell’s spending to the bankruptcy trustee and the federal regulator brought no relief.

Kim Dickey has sent several complaints about Dale Morrell's bankruptcy claim to the authorities. (CBC)

"It is just outrageous. I mean, this was all in plain view," said Dickey, from Oakville, Ont. "Everybody knew it. And nobody did anything."

When she separated from Morrell in 2007, she got their house and he got their successful courier business. They also had $130,000 in shared debts.

He filed for bankruptcy soon afterward, while going on spending sprees, which is against the rules.

Excessive spending

Court documents filed by his bankruptcy trustee claim Morrell charged $24,000 to credit cards in the two months before filing for bankruptcy. The money was spent on gambling, travel and "other excessive consumer spending," according to the trustee.

Morrell confirmed he went to Las Vegas, Costa Rica, and Aruba in 2007 and 2008. He also told Go Public he was not really insolvent and knew he was breaking rules.

"It’s not like I had a lot of money … I have to live. Did I take some trips? Yeah I did," said Morrell.

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"The only reason I went bankrupt is because I trusted the [bankruptcy] trustee … he gave me bad advice."

The Toronto-area trustee who took Morrell’s case is Kevin Thatcher, who runs a dozen offices and advertises on TV that he helps people get out of debt.

Trustees are private practitioners, licensed by the government, to administer bankruptcies and distribute any available money to creditors. They are supposed to represent the public's interests.

Most bankrupt Canadians are shielded from creditors for less than a year. At that point, they are discharged from the bankruptcy and if they have money, much of it goes to pay their debts.

Protected for years

Morrell remains protected from creditors, five years after filing his claim, because Thatcher has not discharged his bankruptcy.

Bankruptcy trustee Kevin Thatcher appears in TV ads offering to help people get out from under insurmountable debts. (YouTube)

"Something should have been done. And I literally beat the door down. I wrote to Ottawa. I begged. I pleaded," she said. "He [Morrell] has been coddled in this bankruptcy. There is no watchdog."

Both Dickey and the trustee are opposing a full discharge of Morrell's case, because of his conduct. That means it has to be heard in court. The case has been adjourned three times, with no resolution or new date set.

"It’s a bureaucratic gong show," said Dickey. "I never had any idea it would go on for this long."

Experts say a questionable bankruptcy like this should not drag on this long.

"My question for the trustee would be, ‘Why is the file still open?'" said Toronto bankruptcy trustee Doug Hoyes. "The trustee should be removing themselves from the file so the creditors can then take whatever action they want."

Life goes on

In the years since claiming to be bankrupt, Morrell got remarried. The wedding, which he said was paid by his new father-in-law, took place at a resort in Cancun.

The new couple bought and sold a half-million dollar home, which was in his wife’s name, for a profit. Morrell said most of the money went to cover mortgages and other costs.

Toronto bankruptcy trustee Doug Hoyes doesn't understand why the case wasn't wrapped up long ago. (CBC)

"He can just put property in somebody else’s name and I can continue to circle the drain financially," said Dickey.

She has paid $37,000 toward the old joint debt and wants to avoid filing for bankruptcy. She said the new business she started is failing and she fears she may be forced to sell her house, if she is stuck paying Morrell's share of the debt.

Morrell and his wife now live in a new home in Hamilton — also not in his name — which he said was financed by his in-laws and a mortgage.

He said he draws $4,000 a month from his courier business, but said that goes to support his family. With legal fees and loans from his in-laws, he said he is further in debt than ever. He admitted he wants his bankruptcy case to stay in limbo as long as possible.

'They can't touch me'

"As long as I am bankrupt, nobody will bother me. They can’t touch me," Morrell told Go Public. "As soon as it gets discharged, all the lawyers and vultures will come after the money."

Information given to the trustee by Dale Morrell's ex suggests he withdrew $62,725 from ATM machines in the months before and after claiming bankruptcy. (CBC)

At first, Thatcher told Go Public he couldn’t recall the details of Morrell’s case. He later said the case will be delayed until summer, because he needs more time to do paperwork.

A bankruptcy registrar who last heard the case in court, suggested Morrell is working the system.

"[Morrell] … for all intents and purposes … seeks to enjoy the continued protection of the insolvency legislation," wrote May Jean in December.

The federal Office of the Superintendent of Bankruptcy (OSB), which oversees all bankruptcies and regulates trustees like Thatcher, has known about this case since 2010, when Dickey filed her first complaint.

"Ultimately, if a trustee is not acting in the best interest of the system, is not following the rules, the OSB does have the power to suspend licences," said Hoyes.

In May 2012, the OSB wrote to Thatcher asking for an explanation for the delays. "The delay in this estate must be rectified as quickly as possible," the letter said.

The OSB told Go Public it does not keep tabs on how long trustee’s files are kept open. It also said Thatcher is working at closing Morrell's file.

Dickey now wonders how many other questionable bankruptcies are simply rubber-stamped — and the debts wiped out — by trustees who don’t look closely enough at what’s going on.

She said the only reason Thatcher knows about Morrell’s spending, is because she gave him the evidence.

"This [questionable bankruptcy] happened extremely easily," she said. "And it could happen to anybody."

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  • CBC News hosted a Live Chat Monday evening on the issues raised in this story. You can replay the conversation below


  • An earlier version of this story said Doug Hoyes is a bankruptcy lawyer. In fact, he is a bankruptcy trustee.
    Sep 12, 2013 5:08 PM PT