A creditor commences an action against a debtor and obtains a
judgment after a trial. The debtor then appeals and loses. The
creditor does its due diligence and tracks down land that the
debtor owns. The creditor files a writ of seizure and sale and
commences proceedings whereby the land is to be sold to pay the
judgment debt. By this time, the judgment debt, including interest,
is $200,000 and the costs that the creditor has incurred have
ballooned to $110,000. Not to worry, the equity in the land is
$320,000 and payday is coming.
However, not so fast. Just before the sale takes place, the
debtor assigns himself into bankruptcy. Aside from cursing, what is
the creditor to do? According to a seemingly little-known provision
of the Bankruptcy and Insolvency Act ("BIA"), depending
upon the facts the creditor may recoup much of the costs spent in
chasing the debtor. An example is set out in Re Walker, a 2010
British Columbia Supreme Court decision.
