Canada Mortgage and Housing Corp. v. Gray (2013), 2013 ONSC 1986, 2013 CarswellOnt 5150 (Ont. S.C.J.)
CMHC sought a declaration that the amount of debt owing to from Evan Gray would survive his discharge under Section 178, and for an order allowing them to pursue enforcement. This was a commercial list matter in front of Justice Wilton-Siegel. He used this case as an opportunity to review what would constitute fraudulent misrepresentation for the purpose of Section 178 of the Bankruptcy and Insolvency Act. He stated that false pretenses and fraudulent misrepresentations are not the same. And while the act allows for both to cited to stop a debtor from an absolute discharge, a pretence is simply an attempt to make something that is not the case appear to be true. While misrepresentations, especially fraudulent, requires a. the existence of a representation b. a false representation c. the bankruptcy must know that the representation was false and intended the creditor to act upon it so as to enable the bankrupt to obtain the credit sough and d. that the creditor did rely upon this false representation. Wilful blindness can amount to false representation for the purposes of 178(1)(e) which is also very important, because a bankrupts lack of action can be cause for alarm. Silence, on its own, without silence inferring a representation or constituting wilful blindness will not be a misrepresentation.
In this case, the judge said that Gray didn’t know about the fraudulent scheme and was not willfully blind.