Alexander Soutter

An appeal from a Superior Court decision regarding the provability of a former employee's profit-sharing claim in the bankruptcy of a real estate development company.

The trustee disallowed the claim on the grounds that it was an equity claim and too contingent and remote.

The appeal judge allowed the appeal, finding the profit-sharing claim was a claim for unliquidated damages for breach of contract, not an equity claim, and was therefore provable.

The Court of Appeal dismissed the appeal, upholding the lower court's decision and confirming that the profit-sharing claim is a provable claim that takes priority over the limited partners' equity claims.

This is a costs decision following an application concerning the interpretation of section 17 of the Mortgages Act and its interaction with section 8 of the Interest Act.

The court had previously determined that the first mortgagee was not entitled to charge three months' interest as a penalty.

The applicants were successful and awarded $65,625.00 with pre-judgment interest.

In this costs decision, the court awarded the successful applicants $36,000 in all-inclusive costs, comprising $10,011.03 for the period prior to the offer to settle and $15,508.87 on a substantial indemnity basis after the offer, as the applicants beat their August 12, 2024 offer to settle.

The court considered an application by Aggregated Investments Inc. for the appointment of a receiver over the assets of the respondents, including real property, under the Courts of Justice Act and the Bankruptcy and Insolvency Act.

The application was dismissed.

The court found that a bona fide defence existed regarding the underlying debt, specifically whether Aggregated breached its duty of good faith by accepting a reduced recovery and shifting value to a related party.

The court held that the appointment of a receiver was not just or convenient in the circumstances, given the triable issue as to the propriety of the debt and the conduct of Aggregated.

This case conference addressed a dispute over the final form of an order previously issued by a retired judge.

The respondents sought to include language regarding the return of shares, which the applicant contended was never an issue before the court.

The court, interpreting the original order and the scope of the prior hearing, determined that the retired judge had made no finding or determination on the return of shares.

Consequently, the court declined to include the proposed language, settling the order in the form submitted by the applicant.

The parties attended a case conference to settle the form of an order arising from a previous decision by a retired judge.

The respondents sought to include language requiring the return of shares, which the applicant opposed.

The court found that the previous judge made no determination regarding the return of shares, as the issue was not before the court during the prior hearing.

The court declined to include the respondents' proposed language and settled the order in the form submitted by the applicant.

The court determined the scale and quantum of costs following previous motions.

Primont Homes (Vaughan) Inc. sought substantial indemnity costs, arguing delay and unproven fraud allegations by the defendants, Maplequest (Vaughan) Developments Inc. and 2373480 Ontario Inc. The defendants argued for reduced partial indemnity costs due to mixed success and over-lawyering by Primont.

The court found partial indemnity was appropriate, rejecting substantial indemnity as the fraud allegations were not adjudicated on their merits.

The court also reduced Primont's requested quantum due to its unsuccessful abuse of process argument and duplicative work by its multiple timekeepers, ultimately awarding $140,000.00 in partial indemnity costs.

The plaintiff, Primont Homes (Vaughan) Inc., sought an interlocutory injunction to prevent the defendants, Maplequest (Vaughan) Developments Inc. and 2373480 Ontario Inc., from dealing with certain land lots, asserting a contractual right to acquire them.

The defendants moved to dissolve an existing interim injunction, arguing the plaintiff failed to provide an adequate undertaking as to damages and made material non-disclosures.

The court dismissed the defendants' motions to dissolve the interim injunction, finding them precluded by Rule 2.02 due to significant delay.

The court then granted the plaintiff's motion for an interlocutory injunction, determining there was a serious issue to be tried regarding the enforceability of the agreement and entitlement to specific performance, that the plaintiff would suffer irreparable harm due to the primary defendant's inability to satisfy a damages award, and that the balance of convenience favored maintaining the injunction.

The court also found the plaintiff's undertaking as to damages sufficient given the defendants' failure to quantify their potential damages from delay.

The Applicant, a mortgagee, sought to vary a previously consented receivership order concerning three properties (Harwood Properties) in Ajax.

The original order, which appointed a receiver, included provisions requiring consultation with the Town of Ajax on sales and a new development agreement with a right of re-purchase for the Town.

These terms were agreed upon in exchange for the Town's consent to the receivership and a stay of its own action regarding a re-purchase right and priority dispute.

The Applicant argued that changed circumstances, specifically the unacceptability of the development agreement terms to potential purchasers, justified varying the order and determining the priority of its mortgage over the Town's re-purchase right.

The court dismissed the motion, emphasizing the finality of consent orders and that the Applicant had agreed to the terms, which resolved a pending priority dispute.

The court found no misrepresentation by the Town that would vitiate the Applicant's consent and held that the comeback clause should not be used to prejudice parties who relied on the original order.

The Limited Partners of YG Limited Partnership appealed a motion judge's order denying them standing to oppose a creditor's (CBRE Limited) appeal of a disallowed proof of claim under s. 135(4) of the Bankruptcy and Insolvency Act (BIA).

The Court of Appeal for Ontario dismissed the appeal, holding that limited partners do not possess a direct economic interest in the claim sufficient for common law standing, nor are they granted standing under s. 135(4) or s. 37 of the BIA.

The court emphasized that the BIA is a complete code designed for expeditious resolution of bankruptcy matters, and equity owners are generally excluded from direct participation in creditor claim appeals.

This endorsement concerns a motion by Acerus Pharmaceuticals Corporation and its subsidiaries (the Applicants) under the Companies’ Creditors Arrangement Act (CCAA) for approval of a Subscription Agreement, a reverse vesting order (ARVO), releases for various parties, a sealing order, and an extension of the stay of proceedings.

The proposed transaction involves First Generation Capital (FGC), the majority shareholder and secured creditor, acquiring the Applicants' business via a credit bid and share transaction, with excluded assets and liabilities vested out to Residual Cos.

The court analyzed the necessity and fairness of the ARVO structure, the sales process, the benefit to creditors compared to bankruptcy, and the appropriateness of the releases, ultimately granting all requested relief.

The Proposal Trustee sought directions from the court regarding the procedure for determining a complex proof of claim filed by Maria Athanasoulis, comprising a wrongful dismissal claim and a significant profit share claim, within the context of a court-approved proposal under the Bankruptcy and Insolvency Act.

The motion addressed disagreements among stakeholders (Athanasoulis, Sponsor, and Limited Partners) on how to proceed with the claim's determination and subsequent appeal, particularly concerning the scope of evidence, the nature of the appeal (true appeal vs. de novo), and the standing of the Limited Partners.

The court provided detailed directions to ensure procedural fairness and efficiency, deferring the valuation of future-oriented damages until after the provability of the profit share claim is determined on appeal, and limiting the Limited Partners' standing to specific issues.

The Proposal Trustee brought a motion to compel the Proposal Sponsor to fund the Trustee's continuing work to resolve outstanding proofs of claim, specifically the Athanasoulis Claim, via a two-phase arbitration.

The Sponsor objected to funding phase 2 of the arbitration, arguing it was an improper delegation of the Trustee's duties under s. 135 of the BIA.

The court agreed with the Sponsor, finding that while phase 1 (fact-finding) was acceptable, phase 2 (final adjudication of damages) improperly delegated the Trustee's statutory responsibility to determine and value the claim.

The Sponsor was not ordered to fund phase 2 of the arbitration but remains obligated to fund the Trustee's reasonable expenses to determine the claim through an alternative process.

The appellant tenant, Hudson's Bay Company (HBC), appealed a motion judge's decision regarding relief from forfeiture under s. 20 of the Commercial Tenancies Act, seeking rent abatement due to COVID-19 impacts.

The respondent landlords (Oxford and affiliates) cross-appealed the deferral of rent payments and reduction of interest rates.

The Court of Appeal dismissed HBC's appeal, affirming that s. 20 does not permit rent abatement or reduction as it would rewrite the lease.

The court allowed the landlords' cross-appeal, finding that deferrals should only be granted to allow the tenant to comply, not to mitigate economic harm, and that the interest rate should not have been varied from the lease terms.

Following cross-motions for summary judgment where the plaintiff was successful in recovering the residual proceeds of a power of sale, the court determined costs and prejudgment interest.

The court awarded the plaintiff costs of $45,515.37, noting the plaintiff beat its Rule 49 offer and the defendants unreasonably rejected a settlement proposal.

The court also awarded prejudgment interest at 2% from the date of the power of sale.

Capital Sewer Servicing Inc. appealed a Superior Court decision that found it liable to indemnify and defend Crosslinx Transit Solutions Constructors under a subcontract.

The dispute arose from property damage claims by third parties during a light rail transit project.

Capital argued that Crosslinx, by undertaking to provide wrap-up insurance, had assumed the risk of such damages, and that the "hold harmless" clause did not include a duty to defend.

The Court of Appeal dismissed the appeal, affirming that a covenant to insure does not, as a matter of law, automatically transfer risk.

The court emphasized that contractual intent is derived from a holistic reading of the agreement, and found the subcontract's express indemnity provisions, coupled with the mutual intent clause, clearly imposed the obligation on Capital.

The "hold harmless" provision was also found to include a duty to defend, given the broad definition of "Claims" in the contract.

In the context of CCAA proceedings, the moving party sought an order declaring that the limitation period for its action against the debtor was suspended by a prior tolling order, or alternatively, an order lifting the stay of proceedings nunc pro tunc to regularize its action.

The court held that the tolling order did not apply to third-party claims against the debtor.

Furthermore, applying the Supreme Court's decision in Green, the court held it had no authority to grant a nunc pro tunc order lifting the stay because the moving party failed to seek leave before the limitation period expired.

The motion was dismissed.

The plaintiff sued for specific performance of an agreement of purchase and sale, alleging the defendants acted in bad faith by relying on a solicitor approval condition to annul the deal.

The plaintiff brought a motion seeking a ruling that the defendants impliedly waived solicitor-client privilege by pleading they acted in good faith on their solicitor's advice.

The court dismissed the motion, finding that the defendants did not base their defence on their state of mind, but merely answered the bad faith claim, and that the solicitor approval clause gave them an absolute right to cancel without waiving privilege over the solicitor's reasons.

The defendants brought a motion for leave to amend their statement of defence to withdraw an admission that they had entered into a conditional agreement of purchase and sale for a farm.

The plaintiff opposed the withdrawal.

The court applied the three-part test for withdrawing an admission and found that the proposed amendment raised a triable issue, as one of the three joint tenants had not signed the agreement.

The court also found that the admission was inadvertent and that there was no prejudice to the plaintiff, who had known from the beginning that the document was missing a signature.

The motion was granted.

The applicant, a dissenting shareholder in a corporate amalgamation, applied to the court to fix a fair value for his shares under s. 185 of the Business Corporations Act.

The respondent argued the application was out of time, but the court exercised its discretion to extend the deadline.

The court rejected the applicant's claimed value based on an informal statement by the CEO, as well as the respondent's heavily discounted offer.

Relying on the implied share value from the amalgamation exchange ratio, the court fixed the fair value at $0.236 per share, awarding the applicant $271,400 plus partial indemnity costs.