A trustee in bankruptcy sought directions regarding whether settlement proceeds from a motor vehicle accident should be included in the bankrupt’s income for surplus income calculations under s. 68 of the Bankruptcy and Insolvency Act.
The court held that damages for pain and suffering are not income for the purposes of s. 68 because they resemble windfalls unrelated to employment income.
However, compensation for future loss of income constituted income, but should be prorated over the period it replaces rather than counted entirely in the year received.
Statutory accident benefits received in a lump sum were included fully as income due to the bankrupt’s improper payment of the funds to a third party.
Welfare payments were also included as income despite being repayable loans.
Conditions of discharge required payment of surplus income and an additional penalty due to the bankrupt’s failure to disclose litigation and settlement proceeds.