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DISCHARGE OF BANKRUPT - Debts not released by discharge

Tuesday, April 13, 2021 @ 6:16 AM  


Lexis Advance® Quicklaw®
Application by Goodman for an extension of time to appeal a finding by an application judge that a debt owing by Goodman to Bannerman survived his discharge from bankruptcy. Goodman was the president and sole shareholder of RNG. Bannerman was the owner and principal of BLL. Pursuant to a 2005 Agreement between the parties, RNG sold Coleman spas and related products to BLL for retail sale. RNG received its spa products from spa manufacturer Maax. Pursuant to the Maax Agreement, RNG agreed that it would sell to retail customers only and that RNG could not sublease or assign any rights. BLL opened a store to sell the products supplied by RNG and went out of business within one year. The arbitrator determined that when Maax found out about the nature of the Agreement, it terminated its contracts with RNG. Bannerman was awarded damages for its business losses. The arbitrator found that Goodman misrepresented the implied term of authority to Bannerman and held that the misrepresentations were negligent and that he should pierce the corporate veil and hold Goodman personally liable. Goodman made an assignment in bankruptcy in 2014 and was discharged in 2017. Bannermann applied to have Goodman’s debt survive the bankruptcy. The application judge considered the findings of the arbitrator from which she drew the inference that Goodman lacked an honest belief in the truth of his statements. Goodman’s proposed grounds of appeal were that there was no clear and conclusive evidence of false pretences and that the losses awarded did not result from the false pretences.

HELD: Application dismissed. The proposed appeal had no merit. The evidence and findings referred to by the application judge could support her inference and conclusions that there was clear and conclusive evidence of false pretences, and there was no basis upon which to overturn them. The false pretences led or induced Bannerman to enter into the agreement or contract. Based on the evidence before the application judge, it was clear that, but for the false pretences that Goodman had authority to enter into the agreement, Bannerman would not have caused BLL to enter into the contract with RNG, and those false pretences were materially connected to the actions of Bannerman that resulted in damage.

Bannerman Lumber Ltd. v. Goodman, [2021] M.J. No. 36, Manitoba Court of Appeal, H.C. Beard J.A., February 18, 2021. Digest No. TLD-April122021004