The applicant sought a declaration that a judgment debt arising from the respondent’s misappropriation of corporate funds while acting in a fiduciary capacity would survive bankruptcy under s. 178(1)(d) of the Bankruptcy and Insolvency Act.
The respondent conceded the debt fell within the statutory category but argued that the application was hypothetical because no bankruptcy had yet occurred.
The court rejected that argument, holding that a declaration could properly be issued in advance of a bankruptcy where the debtor’s financial circumstances and the existence of an unsatisfied judgment made the issue practical and not merely theoretical.
Following earlier reasoning on the same factual background, the court declared that the debt would survive bankruptcy and awarded substantial indemnity costs.
