Corey Brandon Critch

The plaintiff obtained a default judgment against the bankrupt defendant for breach of trust under the Construction Lien Act while the defendant was an undischarged bankrupt.

The plaintiff knew of the bankruptcy but did not disclose it to the Small Claims Court or seek to lift the stay of proceedings.

The plaintiff brought a motion 28 months later seeking a declaration that the judgment survived bankruptcy under s. 178(1)(d) of the BIA and for leave to enforce it.

The Superior Court dismissed the motion, finding the default judgment invalid due to material non-disclosure and declining to exercise its discretion to lift the stay of proceedings retroactively given the plaintiff's deliberate non-compliance and unexplained delay.

The appellant appealed a Small Claims Court decision that dismissed its action and stayed two other actions on the motions judge's own initiative during a default judgment motion.

The Divisional Court allowed the appeal, finding that the motions judge erred in law by failing to follow the mandatory procedural steps under Rule 12.02(4) of the Rules of the Small Claims Court.

The failure to provide notice and an opportunity to make submissions deprived the appellant of procedural fairness.

The dismissed and stayed actions were reinstated.