David P. Preger

The decision addresses motions regarding the appointment of representative counsel for current and former employees and retirees of Hudson’s Bay Company ULC and related entities in ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Court declined to appoint any of the nominated law firms as representative counsel at this stage, instead appointing the Honourable Herman Wilton-Siegel as an independent third party to evaluate proposals and make a recommendation.

The Court also approved amendments to the Sale and Investment Solicitation Process (SISP) to remove the company’s art and artifact collection from the SISP and to appoint Heffel Gallery Limited to conduct a separate auction for the collection, subject to further court approval of procedures.

The reasons review the legal framework for appointing representative counsel and the importance of balancing stakeholder interests in complex insolvency proceedings.

The Court-Appointed Receiver sought an administration order, approval of its First Report, a vesting order for the sale of the Debtor's property, and sealing relief for confidential appendices.

The Debtor, through its principal, initially indicated opposition and sought an adjournment to obtain legal advice and present evidence of purported second mortgages.

The court denied the adjournment, finding no evidence of other registered mortgages or a basis to compromise the first mortgage.

The court approved the sale, administration, and sealing orders, concluding the property was widely exposed and the sale was in the best interest of the estate.

The appellant, Bon-Star Inc., appealed an order declaring its mortgage a closed mortgage with no prepayment privileges and requiring compensation for lost interest upon prepayment.

The Court of Appeal allowed the appeal in part, varying the declarations to clarify that prepayment privileges were absent in favour of the mortgagor and that compensation for lost interest was required for the specific transaction where the "Due on Sale" clause was not invoked.

The court found the application judge erred in making a broad declaration regarding prepayment without compensation, as specific mortgage terms like the "Due on Sale" clause could alter prepayment conditions.

The court also upheld the application judge's discretionary decisions regarding adjournments and counsel appointment.

Santokh Mahal sought a declaration that his security interest in Golden Miles Food Corporation's personal property was valid and had priority, securing $2,182,914 in advances.

The Applicant, Skymark Finance Corporation, and the Receiver, KSV Restructuring Inc., opposed the motion.

The court granted Mahal a secured claim for $281,600, representing direct personal advances, but dismissed the remaining $1,901,314 claimed for advances made by corporations controlled by Mahal.

The court found that these corporate advances were not indirect debts secured by Mahal's General Security Agreement due to insufficient documentation and lack of PPSA registration by the advancing corporations.

The applicants and respondents, involved in a joint venture for a condominium development, experienced an irrevocable breakdown in their relationship.

Both sides agreed the property should be sold but disagreed on the mechanism: the applicants sought the appointment of a receiver, while the respondents sought a signing officer with limited powers.

The court found it just and convenient to appoint a receiver to conduct the sales process, concluding that a receivership would not stigmatize the property and that the receiver's powers could be appropriately tailored to consider existing offers.

The applicant mortgagee brought an application for declarations that a commercial mortgage registered against the respondent's property was a closed mortgage with no prepayment privilege, that it was entitled to all lost interest to maturity upon any early prepayment, and that forced insurance coverage costs were recoverable.

The respondent corporate mortgagor argued it should be entitled to pay out the mortgage upon a sale without paying interest to maturity.

The court granted the declarations, finding that the mortgage terms clearly prohibited early prepayment and that corporate borrowers do not have a statutory right to redeem a mortgage with only a three-month interest penalty under the Mortgages Act.

The court also found the insurance costs were properly recoverable under the mortgage terms.

This appeal arose from a failed business venture to revive a bankrupt manufacturing company, involving a secured loan and asset transfer via a Quitclaim Deed.

The Court of Appeal heard two appeals: one concerning the enforceability of the Quitclaim Deed for asset transfer, and another regarding compensation for a former operator based on unjust enrichment.

The Court dismissed the appeal concerning the assets, affirming the Quitclaim's unenforceability due to lack of certainty.

However, it allowed the appeal regarding the former operator's salary, finding that unjust enrichment was not established and that the corporate veil could not be pierced to hold the appellant company liable for work done for a subsidiary.

This urgent motion before the Court of Appeal addressed whether a non-party, John Kavanagh, had an automatic right to appeal or should be granted leave to appeal two approval and vesting orders related to the sale of properties in a mortgage enforcement and insolvency proceeding.

The Receiver brought the motion to prevent automatic stays of the property sales.

The court found no automatic right of appeal under s. 193(c) of the Bankruptcy and Insolvency Act (BIA) because the orders were procedural and no loss exceeding $10,000 was demonstrated.

The court also denied leave to appeal under s. 193(e) of the BIA, concluding that the issues raised were not of general importance, lacked prima facie merit, and granting leave would unduly hinder the insolvency proceedings.

Consequently, Kavanagh's notices of appeal were quashed, and his motions for leave to appeal were dismissed, ensuring the property sales could proceed without automatic stays.

The Receiver brought a motion seeking approval of its activities, approval of a sales process for two properties, and an order requiring a tenant to disclose tenancy documentation.

The court declined to grant a generic approval of the Receiver's activities, finding it unnecessary.

The court ordered the tenant to comply with its disclosure obligations, rejecting the tenant's confidentiality objections.

The court approved the proposed sales process and listing agreements, subject to conditions including a time-limited sealing order for appraisals and the circulation of redacted listing proposals to the parties.

The moving parties, Thomas Patrick Farrell and The Midas Investment Corporation, appealed an order dismissing their action concerning the validity of two mortgages and sought a stay of the declaration of validity and enforcement of the mortgages pending the outcome of the appeal.

The court applied the three-part RJR-MacDonald test for stays pending appeal.

While a serious issue was found to exist (though barely), the court determined there would be no irreparable harm to the moving parties and that the balance of convenience did not favour granting a stay.

The motion for a stay was dismissed.

This is a costs endorsement following an appeal.

The appellant, Yong Yeow Tan, was ordered to pay costs to the respondents, C & K Mortgage Services Inc. and the Receiver for Camilla Court Homes Inc. and Elite Homes Inc. C & K Mortgage Services Inc. was awarded $20,000, and the Receiver was awarded $7,500, inclusive of taxes and disbursements.

The applicant mortgagee sought a declaration of entitlement to a yield maintenance payment (prepayment of future interest) following the sale of two mortgaged properties by a court-appointed receiver.

The respondent mortgagors and a second mortgagee opposed the claim, arguing the mortgages were opened by the receiver's actions, triggering the equity of redemption, and that the payment offended the anti-deprivation rule and the Interest Act.

The Superior Court of Justice held that the mortgages remained closed, the receiver's actions did not constitute a realization on the security, and the mortgagee was entitled at common law to the future interest to the end of the term.

The court declared the applicant entitled to $1,473,141.82.

Jereemy Tan, the moving party, sought an extension of time to file a notice of appeal against a Superior Court decision that authorized a Receiver to disclaim an agreement of purchase and sale for a property.

The moving party's counsel inadvertently missed the 10-day appeal deadline, believing it was 30 days.

The Court of Appeal granted the extension, finding the delay was short and excusable, prejudice to respondents negligible, and the proposed appeal met the low threshold for merit.

The court also determined the appeal was "as of right" under sections 193(b) and (c) of the Bankruptcy and Insolvency Act, as the decision could affect other similar cases and involved property exceeding $10,000 in value.

The moving party purchaser entered into an agreement of purchase and sale for a pre-construction condominium and paid a $500,000 deposit, $400,000 of which went directly to the developer.

The developer defaulted on its first mortgage, and a receiver was appointed.

The receiver sought to disclaim the purchaser's agreement.

The purchaser brought a motion to compel the receiver to complete the sale, arguing he had an equitable interest in the property.

The court dismissed the motion, finding that the purchaser's interest was contractually subordinate to the first mortgagee and that the equities did not justify overriding the mortgagee's legal priority.

The applicant sought a declaration regarding the amount owed to discharge a commercial mortgage.

The mortgage had a face value of $3 million, but the net amount advanced was approximately $2.6 million after deducting the lender's financing costs.

The applicant argued it was only required to repay the net amount advanced.

The court held that the express terms of the Mortgage Financing Agreement required the applicant to repay the full $3 million face value, displacing the general equitable rule that a mortgagee can only recover the amount actually advanced.

A court-appointed receiver sought directions regarding the distribution of proceeds from the sale of a property.

The Applicants, who held a second mortgage, claimed priority over the alleged first mortgagee, Pillar Capital Corporation, arguing that the first mortgage had been paid in full and therefore the subsequent assignment to Pillar Capital was a nullity.

The court found that the first mortgage was indeed paid in full on August 15, 2014, and there was no contemporaneous agreement to assign it.

Consequently, the May 5, 2015, assignment of charge to Pillar Capital was deemed a nullity.

The Applicants' claim for priority was upheld, and the Receiver was directed to pay the remaining amount due on the second mortgage from the sale proceeds.

Claims by Pillar Capital for property management fees, maintenance fees, and certain legal fees were rejected due to lack of proof and contractual basis.

A motion judge approved a receiver's sale of a partially constructed property (Birchmount Property) for $3.45 million, free and clear of all mortgages.

The third mortgagee, World Finance Corporation, sought to appeal, claiming an appeal as of right under section 193(b) of the Bankruptcy and Insolvency Act, or alternatively, leave to appeal under section 193(e).

The Court of Appeal held that section 193(b) did not apply because the order pertained only to one bankruptcy proceeding, not multiple similar cases within the same proceeding.

Leave to appeal was also denied because the proposed appeal lacked prima facie merit, did not raise an issue of general importance, and would unduly hinder the bankruptcy proceedings.

The sale was approved to proceed.

A receiver sought to defeat an appeal from a court order approving the sale of real property (a residential condominium project for seniors) to Pinnacle International One Lands Inc. The appellant, Fortress, had competed for the property through a stalking horse bidding process and subsequently submitted competing offers.

The receiver accepted Pinnacle's offer.

Fortress appealed, relying solely on section 193(c) of the Bankruptcy and Insolvency Act, which provides an automatic right of appeal if property involved exceeds $10,000 in value.

The Court of Appeal held that the approval order did not "result in a loss" within the meaning of section 193(c) because the receiver could not have obtained a better deal than Pinnacle's offer.

The court found that Pinnacle's offer had superior practical value due to a higher deposit, all-cash financing, support from the first mortgagee, and the integrity of the sale process.

The union sought leave to proceed with a certification application and unfair labour practice complaint before the Ontario Labour Relations Board following the appointment of a receiver over the debtor company.

The motion judge dismissed the union's motion, finding that the stay imposed by the receivership order prevented the certification application from proceeding and that the union could not pursue an unfair labour practice complaint without a valid certification application.

The Court of Appeal allowed the appeal, holding that the motion judge erred in refusing to lift the stay.

The court found that the motion judge's concerns about the certification application were speculative and unsupported by evidence, and that employees' labour rights should not be unduly inoculated against by insolvency proceedings.

The court granted leave to proceed with both the certification application and the unfair labour practice complaint.

A motion was brought by 40 purchasers of residential units from various Urbancorp entities in CCAA and BIA NOI proceedings.

The purchasers sought the appointment of Dickinson Wright LLP as their representative counsel and an order for their legal fees, capped at $150,000, to be paid and secured by an administrative charge against the four properties.

The properties were vacant land, and the significant deposits received by Urbancorp companies were not held in trust and had been spent.

The motion was supported by Tarion but opposed by the Monitor, the Foreign Representative of Urbancorp Inc., the Urbancorp entities, and certain other purchasers and a secured lender for one project.

The court granted the appointment of Dickinson Wright as representative counsel, but stipulated an opt-in process for purchasers rather than an opt-out.

The court denied the request for an administrative charge for legal fees, ruling that fees and disbursements could be paid by the estates from the distributions made to those purchasers who chose to be represented by Dickinson Wright.