The bankrupt company's creditors appealed an order dismissing their motion under s. 135(5) of the Bankruptcy and Insolvency Act to challenge a proof of claim filed by a judgment creditor.
The proof of claim was based on a Singapore judgment.
The creditors argued that the judgment creditor received payments from a third party that should be set off against the judgment debt to prevent double recovery.
The Court of Appeal dismissed the appeal, holding that the creditors did not have an unqualified right to challenge a valid judgment debt under s. 135(5).
The court further held that the creditors were privies of the bankrupt company and were barred by the doctrine of res judicata from re-litigating the mitigation and set-off issues, which had already been determined in the Singapore proceedings.
