Armstrong et al. v. Lang, (2011) 304 B.C.A.C. 176 (CA)

• Judge: Mackenzie, Saunders and Chiasson, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: February 16, 2011
• Jurisdiction: British Columbia
• Citations: (2011), 304 B.C.A.C. 176 (CA);2011 BCCA 205

Armstrong v. Lang (2011), 304 B.C.A.C. 176 (CA);

    513 W.A.C. 176

MLB headnote and full text

Temp. Cite: [2011] B.C.A.C. TBEd. AP.056

A. Gordon Armstrong, Jeff Burghardt, Geoffrey Crampton, Lynda Cranston, Robert L. Heinkel, Peter Lusztig, Chris Mazurkewich, Janet Pau, R.M. Louise Simard, Peter Speer and John Van Luven as Trustees of the Healthcare Benefit Trust (respondents/plaintiffs) v. Margaret Lang also known as Margaret Maaren (appellant/defendant)

(CA037738; 2011 BCCA 205)

Indexed As: Armstrong et al. v. Lang

British Columbia Court of Appeal

Mackenzie, Saunders and Chiasson, JJ.A.

April 20, 2011.

Summary:

Trustees of a group pension plan applied for an order under s. 178(1)(d) of the Bankruptcy and Insolvency Act that the amount owed by a former bankrupt (Lang) to the trustees for reimbursement of long term disability benefits survived the bankruptcy.

The British Columbia Supreme Court, in a decision reported at [2009] B.C.T.C. Uned. 1634, allowed the application. Lang appealed.

The British Columbia Court of Appeal dismissed the appeal.

Bankruptcy - Topic 8983

Discharge of debtor - Liabilities not released by discharge - Act of defalcation or misappropriation in fiduciary capacity - For 12 years ending in 2002, Lang received long term disability benefits from a group pension plan - The plan provided that the benefits paid were to be reduced by 100% of any amount received from the Workers' Compensation Board (WCB) - After pursuing an appeal process, Lang eventually received a retroactive WCB award of $170,336.04 - Lang did not disclose the award to pension plan's trustees, did not respond to repeated requests from the trustees inquiring about the award and did not refund the $170,336.04 overpayment - The trustees obtained a default judgment against Lang for the overpayment - Within two weeks of the judgment, Lang made an assignment into bankruptcy, showing the overpayment as an unsecured debt - Her unsecured assets were minimal - There was no recovery by the trustees - Lang was discharged from bankruptcy - The trustee applied for an order under s. 178(1)(d) that the debt survived the bankruptcy - Section 178(1)(d) provided that "An order of discharge does not release the bankrupt from ... any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity." - A chambers judge allowed the application - The British Columbia Court of Appeal dismissed an appeal - Lang purposely kept money which she was aware that she was required to repay - Her actions involved "some element of wrongdoing, improper conduct or improper accounting" - That satisfied the misappropriation requirement of s. 178(1)(d) - Further, she had a fiduciary duty effectively to pursue her WCB claim and on receipt of the money in response to that claim to refund any overpayment to the pension plan - See paragraphs 30 to 47.

Cases Noticed:

Skelly (Bankrupt), Re, [2007] B.C.T.C. Uned. D04; 32 C.B.R.(5th) 162; 2007 BCSC 736, refd to. [para. 8].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272; 2009 SCC 48, refd to. [paras. 8, 44].

Napier v. Hunter - see Napier and Ettrick (Lord) et al. v. Kershaw (R.F.) Ltd. et al.

Napier and Ettrick (Lord) et al. v. Kershaw (R.F.) Ltd. et al., [1993] A.C. 713; 148 N.R. 81 (H.L.), refd to. [para. 12].

Smith v. Henderson et al. (1992), 10 B.C.A.C. 249; 21 W.A.C. 249; 64 B.C.L.R.(2d) 144 (C.A.), refd to. [para. 16].

Simone v. Daley et al. (1999), 118 O.A.C. 54; 43 O.R.(3d) 511 (C.A.), refd to. [para. 16].

Confederation Life Insurance Co. v. Waselenak et al., [1998] 5 W.W.R. 712; 210 A.R. 241 (Q.B.), affd. (2000), 255 A.R. 357; 220 W.A.C. 357; 2000 ABCA 136, refd to. [para. 16].

Ross & Associates v. Palmer (2001), 153 Man.R.(2d) 147; 238 W.A.C. 147; 2001 MBCA 17, refd to. [para. 16].

Valastiak v. Valastiak (2010), 283 B.C.A.C. 204; 480 W.A.C. 204; 3 B.C.L.R.(5th) 1; 2010 BCCA 71, folld. [para. 17]; refd to. [para. 37].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 18].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 18].

Colonial Furniture Co. (Ottawa) v. Tanner (Saul) Realty Ltd. et al. (2001), 140 O.A.C. 384; 52 O.R.(3d) 539 (C.A.), refd to. [para. 21].

Grebely et al. v. Economical Mutual Insurance Co. et al. (1999), 239 A.R. 92; 1999 ABQB 97, refd to. [para. 22].

Somersall v. Friedman et al., [2002] 3 S.C.R. 109; 292 N.R. 1; 163 O.A.C. 201; 2002 SCC 59, refd to. [para. 23].

Warrington v. Great-West Life Assurance Co. (1996), 81 B.C.A.C. 164; 132 W.A.C. 164; 24 B.C.L.R.(3d) 1; 139 D.L.R.(4th) 18 (C.A.), refd to. [para. 24].

Castellain v. Preston (1883), 11 Q.B.D. 380 (C.A.), refd to. [para. 25].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 178(1)(d) [paras. 1, 36].

Counsel:

D. Crane, for the appellant;

M. Morgan and L. Cook, for the respondent.

This appeal was heard at Vancouver, British Columbia, on February 16, 2011, by Mackenzie, Saunders and Chiasson, JJ.A., of the British Columbia Court of Appeal. On April 20, 2011, the judgment of the Court of Appeal was delivered with the following opinions:

Mackenzie, J.A. - see paragraphs 1 to 29;

Chiasson, J.A. (Saunders, J.A., concurring) - see paragraphs 30 to 48.