This was an Appeal from a Chambers Decision dismissing the Appellant’s Application to lift Stays of Proceedings imposed under Section 69.3 of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (the BIA). The Appellant alleged fraudulent misrepresentation against the Respondents, asserting that their misstatements induced her to consent to transactions that prejudiced her financial interests. The Appeal raised issues concerning the interpretation of Section 178(1)(e) of the BIA and compliance with Rule 13.7 of the Rules.

The Chambers Judge dismissed the Application, finding that the Appellant’s pleadings lacked the specificity required under Rule 13.7 to establish a claim for fraudulent misrepresentation. The Judge further determined that the Appellant’s claims did not meet the criteria for the exception to discharge under Section 178(1)(e) of the BIA, as the alleged misrepresentations did not directly cause a transfer of property from the Appellant to the Respondents. The Appellant contended that the Chambers Judge applied an overly narrow interpretation of Section 178(1)(e) and failed to properly assess her allegations of liability arising from fraudulent misrepresentations.

On Appeal, the Court of Appeal concluded that the Chambers Judge erred in interpreting Section 178(1)(e) and in dismissing the Appellant’s Application without fully addressing her evidence. The Court noted that Rule 13.7 requires parties alleging misrepresentation to particularize their claims clearly and precisely. While the Appellant’s pleadings were imperfect, the Court held that her Affidavit evidence provided sufficient detail to establish an arguable claim.

The Appeal was allowed. The Court lifted the Stays of Proceedings but required the Appellant to amend her Statement of Claim within 60 days of the Decision.