One of the duties of a trustee is to examine each claim presented by a potential creditor of the
bankrupt and to determine whether such a claim is valid. A trustee is entitled, under
subsection 135(2) of the BIA, to disallow any claim, priority or security that it finds unproven or
invalid. In the event that a creditor’s claim is disallowed by a trustee, that creditor is entitled to appeal that decision to the superior court in the province. A creditor has 30 days after the
receipt of the trustee’s reasons for disallowance to file an appeal, although an extension may be
requested during that 30‐day period.

Neither the BIA nor the Bankruptcy and Insolvency General Rules, C.R.C. 1978, c. 368, as
amended specifies whether such an appeal is a true appeal or a hearing de novo. A hearing de
would permit a creditor to introduce new evidence on appeal, whereas a true appeal
would restrict the creditor to an appeal based on the record. In the recent case of Re Galaxy
Sports Inc.
, 2004 BCCA 284 (“Galaxy”), the Court reviewed previous case law on this point, much
of which had held that an appeal under subsection 135(4) was a hearing de novo. In rejecting
these cases, the Court stated that “the law in British Columbia is clear that unless the statute
that provides an appeal also states that it is to take the form of a trial de novo, […] the appeal
will be an ordinary appeal.”7 The Court went on to state that to allow a hearing de novo as of
right would be an inefficient use of resources, especially as a trustee has specialized knowledge
and expertise in the field on which they are making a determination.8 However, the Court also
stated that where it is alleged that the trustee has made a reviewable error, the court may
permit the creditor to adduce fresh evidence where it would be in the interests of justice to do

On the issue of the appropriate standards of review for the decisions of a trustee in disallowing
a claim, the standard depends on the nature of the decision. Where the appeal is based on a
trustee erring in law, the standard of review is correctness. Where the error alleged is factual,
the standard is reasonableness.10

In Re Sran, 2010 BCSC 937 (“Sran”), the Court followed the decision in Galaxy, before going one
step further and determining when fresh evidence would be admissible. The Court, quoting
Scott v. Scott, 2006 BCCA 504 (“Scott”), held that fresh evidence would be admissible where:

the evidence was not discoverable by reasonable diligence before the end of the trial;
that the evidence is credible; that it would be practically conclusive of an issue before the
court; and that if believed, the evidence could have affected the result of the trial.11

As the recent case law in British Columbia has not permitted a hearing de novo as of right to a
creditor appealing a disallowance, counsel must ensure that they bring all the evidence to the
attention of the trustee when putting forth a proof of claim. If counsel has new evidence that
they wish to adduce at the appeal, they must either be able to meet the requirements in Scott
or show that not admitting the new evidence would be unjust in the circumstances.