Eric Bédard

The appellants challenged a permanent injunction restraining a Canadian bank from honouring a letter of counter-guarantee in favour of a Greek bank.

The Greek bank had paid the beneficiary of an underlying letter of guarantee despite an interim order of an ICC arbitral tribunal prohibiting payment, and despite knowledge that the final arbitral award was imminent.

The majority held that where a beneficiary of a counter-guarantee has knowledge of and participates in a third party's fraud under the primary letter of guarantee, that fraud becomes the beneficiary's own and the fraud exception to the autonomy of letters of credit applies.

The dissent would have allowed the appeal, finding that the Greek courts' determination that the demand for payment was valid could not be disregarded, and that the beneficiary was innocent of any fraud.

Appeal dismissed, Karakatsanis and Côté JJ. dissenting.

The Court of Appeal considered appeals regarding the priority of claims in the receivership of Bridging Finance Inc. and its investment funds.

The motion judge had previously granted priority to Statutory Rescission Claims but denied it to Redemption Claims.

The Court of Appeal dismissed the appeal by Redemption Claimants, affirming that their claims had not crystallized and were subject to Bridging's discretion, thus lacking priority.

It allowed the appeal by General Unitholders, reversing the priority granted to Statutory Rescission Claims.

The court held that neither the language of the Ontario Securities Act (s. 130.1) nor the inherent nature of the rescission remedy provided a basis for statutory or de facto priority.

Consequently, the court ordered that all Unitholders, including Redemption Claimants, Statutory Rescission Claimants, and General Unitholders, shall rank pari passu with respect to the distribution of proceeds from the Bridging Funds.

The Court of Appeal considered appeals regarding the priority of claims in the receivership of Bridging Finance Inc. and its investment funds.

The motion judge had previously granted priority to Statutory Rescission Claims but denied it to Redemption Claims.

The Court of Appeal dismissed the appeal by Redemption Claimants, affirming that their claims had not crystallized and were subject to Bridging's discretion, thus lacking priority.

It allowed the appeal by General Unitholders, reversing the priority granted to Statutory Rescission Claims.

The court held that neither the language of the Ontario Securities Act (s. 130.1) nor the inherent nature of the rescission remedy provided a basis for statutory or de facto priority.

Consequently, the court ordered that all Unitholders, including Redemption Claimants, Statutory Rescission Claimants, and General Unitholders, shall rank pari passu with respect to the distribution of proceeds from the Bridging Funds.

The Receiver brought a motion for an order approving an interim cash distribution of $78 million to the two institutional unitholders in Bridging SMA 2 LP.

The court found it appropriate to make an interim distribution but reduced the amount to $46 million to account for the potential impact of substantively consolidating the various Bridging Funds, an issue that had yet to be determined.

The Receiver brought an unopposed motion for a Claims and Unitholdings Identification Order and for approval of its activities as described in its 12th Report.

The court found the proposed order practical and reasonable to assist the Receiver with the distribution process.

The motion was granted and the Receiver's activities were approved.