Facing insolvency, the taxpayer's husband made a proposal in 2003, under the Bankruptcy and Insolvency Act, providing for monthly payments to his creditors. The creditors, including the CRA, agreed. The husband transferred a house to the taxpayer, and subsequently defaulted on the BIA agreement. The creditors, including the CRA, agreed to a second proposal which effectively picked up where the first proposal left off.
Boyle J. found that, while the second proposal was intended as a continuation of the first, it was nevertheless a distinct proposal. Accordingly, when the taxpayer's husband defaulted on the first agreement, he was again liable to the CRA for taxes owing. By operation of s. 160(1), the taxpayer became jointly and severally liable with her husband for all the taxes owing, and her liability was not later canceled by the second BIA agreement with the CRA.