Will A Court Order A Declaration That A Judgment Will Survive Bankruptcy?

In a trust claim, it has become commonplace to seek a request for a declaration that, if there is judgment for breach of trust, the judgment will survive the subsequent bankruptcy of the judgment debtor. Will that request for relief ever be granted? This question was answered, in part, in B2B Bank v. Batson, a 2014 Ontario Superior Court of Justice decision.

Background

Section 178(1)(d) of the Bankruptcy and Insolvency Act  states that an order of discharge does not release a bankrupt from a debt arising out of fraud, embezzlement, misappropriation, or defalcation while acting in a fiduciary capacity. Under the trust sections of the Construction Lien Act, when a payor receives money, the payor holds that money in trust for the person with whom it contracted, one rung below it on the construction ladder. Once the payor breaches that trust, the payor falls afoul of section 178(1)(d).