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Insolvency - BIA - Undischarged Bankrupt

. Johnson v. Fisher

In Johnson v. Fisher (Ont CA, 2020) the Court of Appeal makes a straightforward point regarding an undischarged bankrupt:
[1] The appellant filed an assignment into bankruptcy on June 14, 2017. He subsequently commenced an action against the respondent for damages for solicitor’s negligence. At the time, he was an undischarged bankrupt.

[2] The motion judge properly struck out his claim on the basis of lack of legal capacity.

[3] Under s. 71 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, on bankruptcy, a bankrupt ceases to have any capacity to dispose of or otherwise deal with their property, which shall, subject to the Act and to the rights of secured creditors, pass to and vest in the trustee in bankruptcy. Property includes a cause of action.

[4] In this case, the appellant had no power to initiate the action against the respondent while still an undischarged bankrupt as the cause of action vested in the trustee.

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Last modified: 10-01-23
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