Legal Blog:

Bankruptcy Discharge Exceptions

Alberta Securities Commission v. Hennig 2021 Alta (CA)

A bankruptcy discharge normally discharges all debts, but there are exceptions under section 178(1) of the BIA. The Alberta Securities Commission concluded that the bankrupt had contravened Alberta securities laws, but never indicated that the bankrupt was fraudulent. It required payment of an administrative penalty and costs of the hearing. The court held that this order was not a penalty (for punishment) imposed by a court in respect of an offence; it was merely an administrative penalty to protect the public. Therefore ss. 1(a) did not apply. The court held that the bankrupt was not held to have obtained property or services by false pretences or fraudulent misrepresentation pursuant to ss.1(e) for 3 reasons: he was never held to have been fraudulent, there was no link between the debt and the alleged improper actions, and only the victim of fraudulent behaviour can claim the benefit of the subsection.

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Costs & Interest

An action progresses through pre-trial procedures all the way to trial and judgment. You might think that the matter is finally over, but think again. The judge still has to fix costs payable to the successful litigant and, if the plaintiff is successful, the judge has to set the interest on the judgment amount. Sometimes, the fight for the icing on the cake is more intense than the fight for the cake and, in some cases, the icing is thicker than the cake. This was demonstrated in 1157391 Ontario Inc. v. Ortiz, a 2020 decision of the Ontario Superior Court of Justice, appealed unsuccessfully to the Ontario Divisional Court. The Divisional Court’s 2021 decision made no mention of interest and costs; accordingly, we assume that this aspect of the judgment had not been in issue on the appeal.

Merits

The owners terminated a contract after the contractor had achieved the first construction milestone set out in the prime contract. The contractor registered a claim for lien and commenced an action to enforce it. It claimed $124,000 for money that had been due under the contract for the first milestone draw plus $6,000 for extras and $35,000 for lost profit arising from the early termination of the contract.

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