The petitioning creditor obtained a judgment against the debtor on a promissory note and subsequently filed a petition for a receiving order based on this single debt.
The bankruptcy judge granted the petition, finding that the unpaid judgment automatically constituted special circumstances under s. 42(1)(j) of the Bankruptcy and Insolvency Act.
On appeal, the Court of Appeal held that while a judgment constitutes a continuing demand, a single judgment debt does not automatically establish an act of bankruptcy.
The court must consider all circumstances, including the size of the judgment, how long it has been outstanding, and collection efforts.
The appeal was allowed, the receiving order set aside, and the matter remitted to the bankruptcy judge.