The plaintiffs sued the defendant, a land use consulting company, for professional negligence causing pure economic loss.
The defendant third-partied its lawyers and subsequently filed for bankruptcy, staying the action.
The plaintiffs moved to lift the stay under the Bankruptcy and Insolvency Act to access the bankrupt's professional liability insurance.
The third parties opposed, arguing that under Ontario law (Perry v. General Security Insurance), s. 132 of the Insurance Act does not permit direct recovery against an insurer for pure economic loss.
The Registrar granted the motion, lifting the stay to allow the plaintiffs to amend their claim to seek a declaration that the bankrupt holds the insurance policy in trust, thereby utilizing equitable principles to bypass the strictures of s. 132.
