Laura L. Bevan

The appellants, undischarged bankrupts, sought to have administrative penalties and disgorgement orders imposed by the British Columbia Securities Commission released upon bankruptcy discharge.

The Commission had sanctioned the appellants for market manipulation contrary to the Securities Act, ordering $13.5 million in administrative penalties and approximately $5.6 million in disgorgement orders.

The majority held that neither the administrative penalties nor the disgorgement orders fall within s. 178(1)(a) of the BIA because orders of an administrative tribunal registered with a court are not 'imposed by a court' within the meaning of that provision.

As to s. 178(1)(e), the majority held that administrative penalties do not result directly from the fraudulent scheme and therefore are dischargeable, but the disgorgement orders — representing the exact value of property obtained by fraud — are directly linked to the fraudulent misrepresentation and survive bankruptcy.

The dissent would have held that both orders survive under s. 178(1)(e) as debts resulting directly from deceitful conduct, without requiring a correspondence between the debt quantum and the gain derived.

The appellant appealed a motion judge's decision dismissing his action as frivolous and vexatious under Rule 2.1.01 of the Rules of Civil Procedure.

The action named numerous defendants including government entities, corporations, and political parties, alleging perceived personal wrongs.

The motion judge found the statement of claim contained nonsensical allegations that disclosed no cause of action against any defendant.

The Court of Appeal upheld the dismissal, finding both the underlying action and the notice of appeal to be frivolous and vexatious, as the appeal grounds merely reiterated the same problematic allegations from the statement of claim without demonstrating any merit.