Anton M. Katz

A commercial tenant brought a motion under s. 37 of the Bankruptcy and Insolvency Act to reverse a bankruptcy trustee’s decision to disclaim a lease following the court-approved sale of the bankrupt landlord’s assets.

The purchaser had insisted that the trustee terminate the tenant’s lease as a condition of closing.

The court held that s. 30(1)(k) of the BIA does not authorize a trustee of a bankrupt landlord to disclaim a lease granted by the landlord; such termination rights are governed by provincial law.

Because the tenant was not in breach and provincial law provided no unilateral termination power, the trustee lacked authority to issue the termination notice.

The notice was declared void and the lease remained in force.

Following earlier reasons, the court addressed clarification requests and determined costs arising from an application concerning enforcement of a settlement agreement.

The applicant succeeded in enforcing payment of £62,000 pursuant to a signed direction, which the respondent had unreasonably delayed delivering.

However, the applicant was unsuccessful on the most contentious issue concerning entitlement to funds in a jointly held Swiss bank account.

Finding divided success and excessive claimed hours in responding to a motion for directions, the court applied Rule 57.01 of the Rules of Civil Procedure and awarded reduced partial indemnity costs.

The applicant sought to enforce the terms of a settlement agreement accepted under Rule 49 of the Rules of Civil Procedure relating to a family dispute over funds held in a joint bank account and payment of £62,000.

The central dispute concerned whether the settlement required that the applicant be solely entitled to withdraw all funds from the joint account once restrictions were removed.

The court held that the executed settlement did not explicitly provide that the funds would be for the applicant’s exclusive use and that a third party joint account holder, who was not a party to the litigation or settlement, could not be bound by the agreement.

The court therefore declined to interpret the settlement as granting exclusive entitlement to the account funds but enforced the agreed payment and the obligation to arrange removal of restrictions on the account.