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Legal Blog:
Dec
01
2022
Concepts
We frequently review cases that raise some interesting legal concepts, but whose facts are so convoluted or whose issues are so diverse that they are difficult to summarise. Invariably, these cases gravitate to the bottom of the pile. Sometimes, they stay at the bottom and are then discarded; other times, they get appealed and the appeal decisions are usually more focused. We will now review two such decisions, both appealed, so that we can move the cases out of the pile.
Deemed Admission
Rule 19.02(1)(a) states that a defendant who has been noted in default (for failing to file a statement of defence in time) is deemed to admit the truth of the allegations of fact made in the statement of claim. However, we often see allegations in a statement of claim that are not merely allegations of fact. They are allegations of mixed fact and law or, in some cases, conclusions of law. So, what exactly is being admitted when a defendant is noted in default? This question was answered in Paul’s Transport Inc. v. Immediate Logistics Limited, 2022ONCA573.
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01
2022
Bankruptcy & Fraud
We have discussed s. 178(1) of the Bankruptcy and Insolvency Act on a number of occasions, most recently in February 2022. Section 178(1) lists exceptions to the general rule that a bankruptcy wipes out all debts. The two exceptions on which we rely the most in our practice are found in subsections (d) and (e). Bankruptcy does not discharge a debt or liability arising (d) out of fraud while acting in a fiduciary capacity or (e) when property or services are obtained by false pretences or fraudulent misrepresentation.
Assume that a creditor obtains a consent or default judgment against a debtor for a debt that arose due to fraud, but that the judgment mentions nothing about the fraud; it is just a judgment for the debt. The debtor then assigns into bankruptcy. Can the judgment creditor rely on the judgment and other evidence to allege that the judgment should survive the bankruptcy? As almost always, it depends.
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