Richard Derek Howell

The appellant, Vdopia Inc., appealed an order requiring it to pay US$373,731.23 to the court-appointed receiver of the respondents.

Vdopia Inc. argued that the motion judge erred by not considering its outstanding counterclaim for equitable set-off.

The Court of Appeal found no error, affirming that the motion judge's finding of indebtedness was well-supported by the record and that the appellant failed to adduce any evidence to support its set-off claim despite ample notice.

The appeal was dismissed, and costs were awarded to the receiver.

This appeal addresses whether a trustee in bankruptcy can initiate an equalization claim under the Family Law Act (FLA).

The Court of Appeal held that while an unexercised equalization entitlement constitutes "property" under the Bankruptcy and Insolvency Act (BIA) and vests in the trustee, the "personal as between the spouses" provision in s. 7(2) of the FLA prevents anyone other than a spouse from initiating such a claim.

The court found no operational conflict between the FLA and BIA, thus dismissing the trustee's appeal to initiate the claim.

A bankruptcy trustee applied to commence an equalization claim under the Family Law Act on behalf of a bankrupt husband, where neither spouse had initiated such a claim post-separation.

The court dismissed the application, holding that the right to an equalization of net family property is inchoate and personal to the spouses until exercised.

It does not become "property" within the meaning of the Bankruptcy and Insolvency Act and therefore does not vest in the trustee until a spouse has commenced the claim.

The court also found no basis for a federal paramountcy argument as there was no conflict between the statutes if the right remained unexercised.