The bankrupts appealed a Superior Court decision that lifted an automatic stay under s. 69.4 of the Bankruptcy and Insolvency Act, allowing the respondent bank to proceed with an action for fraudulent misrepresentation.
The bankrupts had continued to draw on a line of credit after the collateral mortgage securing it was discharged.
The Court of Appeal dismissed the appeal, agreeing with the appeal judge that the background circumstances could support an inference that the bankrupts' use of the line of credit amounted to a false representation or false pretence.
