IN THE SUPREME COURT OF NOVA SCOTIA
IN BANKRUPTCY
Citation: Dorey, Re, 2008 NSSC 234
Date: 20080731
Docket: B 31844
Registry: Halifax
District of Nova Scotia
Division No. 1
Court No. 31844
Estate No. 51-933191
In the Matter of the Bankruptcy of Gregory Paul Dorey
IN THE MATTER OF THE APPLICATION OF GENEVA FLORENCE HEMEON FOR LEAVE TO CONTINUE AN ACTION AGAINST THE BANKRUPT’S INSURER
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2006 S.K. No. 268782
IN THE SUPREME COURT OF NOVA SCOTIA
BETWEEN:
GENEVA FLORENCE HEMEON
PLAINTIFF
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THE MUNICIPALITY OF THE DISTRICT OF
WEST HANTS, CHERYL LYNN
LAWRENCE, JOHN KENNETH LAWRENCE and
GREGORY DEAN DOREY
DEFENDANTS
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LIBRARY HEADING
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Registrar: Richard W. Cregan, Q.C.
Heard: May 30, 2008
Written Decision: July 31, 2008
Subject: Whether the applicant should be allowed under Section 69.4 of the Bankruptcy and Insolvency Act to proceed with an action against a now discharged bankrupt for damages arising from misrepresentations alleged to have been made before his assignment in bankruptcy in hope of being able to collect under a liability policy held at the time by the bankrupt but where coverage has not been admitted by the insurer.
Summary: The Applicant relied on the Buchanan case a recent decision of the Court of Appeal of Nova Scotia which held that although the defendant may be a discharged bankrupt, thereby discharged of responsibility for the debt, the underlying obligation continues and the plaintiff could proceed against the insurer. The bankrupt argued that this case did not apply when the insurer has not admitted coverage.
Held: The insurer cannot rely on a self serving non admission of coverage. Whether it is admitted or not does not affect the continued existence of the underlying liability. The better way to approach the problem is to rely on Re Ma and related cases and ask whether in the circumstances the Applicant is being “materially prejudiced” by the stay imposed by the BIA. The court was satisfied that she was. She was granted the declaration sought.
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