The Attorney General of Canada appealed a motion judge's decision granting an undischarged bankrupt credit for the reduction in the principal amount of his mortgage based on promissory estoppel.
The Trustee had represented it would disclaim the property, leading the bankrupt to continue making mortgage payments.
The Court of Appeal allowed the appeal, finding that the motion judge erred by failing to apply the surplus income provisions of the Bankruptcy and Insolvency Act.
As an undischarged bankrupt, the respondent was not entitled to build equity or be reimbursed for mortgage payments claimed as reasonable living expenses, and all after-acquired equity vested in the Trustee.
