The applicant sought a declaration under s. 178(1)(d) of the Bankruptcy and Insolvency Act that a prior judgment debt for breach of trust arising from construction trust funds was not released by the respondent’s bankruptcy discharge.
The respondent argued the original judgment was improperly obtained and that there was no evidence of wrongdoing sufficient to bring the debt within the statutory exception.
The court rejected the procedural challenge, finding the respondent had been properly served and had participated in the earlier proceeding.
Reviewing the evidentiary record, the court held the respondent failed to account for trust funds impressed under the Construction Lien Act and lacked credibility in denying involvement.
The failure to account for the trust funds constituted wrongdoing sufficient to trigger the s. 178(1)(d) exception.
