The applicant sought a bankruptcy order against the respondent, her estranged spouse, relying primarily on arrears of spousal support enforced through the Family Responsibility Office.
The respondent argued the application was brought for an improper collateral purpose and that the alleged debt was subject to a bona fide dispute in ongoing family and civil proceedings concerning allegations of fraud involving family businesses and a request to set aside the separation agreement.
The court held that bankruptcy proceedings should not be used to obtain collateral litigation advantages and that the support obligations and related financial issues were actively disputed in other proceedings.
Exercising discretion under s. 43(7) of the Bankruptcy and Insolvency Act, the court concluded there was sufficient cause to dismiss the bankruptcy application.
