Sharoon J. Gill

The plaintiff brought a motion seeking a finding of contempt against the defendant for failing to comply with court orders requiring attendance at an examination in aid of execution and production of documents.

On the eve of the motion, the defendant filed for bankruptcy and argued that the motion was stayed under s. 69.3(1) of the Bankruptcy and Insolvency Act.

The court considered conflicting authorities regarding whether contempt proceedings are barred by a bankruptcy stay.

It held that contempt proceedings aimed at enforcing compliance with court orders are not remedies recoverable in bankruptcy and therefore are not stayed.

Leave was granted for the plaintiff to proceed with the contempt motion.

A co-mortgagor brought a motion to set aside a default judgment obtained by a lender on a mortgage securing a $50,000 loan used by the co-defendant spouse for business purposes.

The moving party argued she misunderstood the deadline to file a defence and moved promptly after retaining counsel.

The court applied the principles governing the setting aside of default judgments, including whether the default was explained, whether the motion was brought promptly, and whether there was an arguable defence.

Although two proposed defences lacked merit, the court found that evidence suggesting the debt may have been paid in the co-defendant’s bankruptcy raised an arguable defence.

In the interests of justice and absent procedural prejudice to the lender, the default judgment was set aside and the defendant was permitted to file a defence.