Eric Golden

Following a decision granting judgment in favour of the respondents on an application involving a mortgagee's right to sell property, the respondents sought costs of $270,292.15.

The applicant opposed costs on the basis that the respondents had provided a misleading answer to the court regarding the arm's-length nature of a proposed purchaser, which was subsequently assigned to an entity connected to an investor behind the second mortgage.

The court found the respondents' refusal to answer follow-up questions about the assignment and the relationship between the purchaser and the investor raised serious doubts about the accuracy of representations made during the proceeding.

Exercising its discretion to depart from the general principle that costs follow the event, the court declined to award costs to the successful party as a sanction for non-cooperation with the court.

The moving party, Hermina Developments Inc., sought a stay of an order permitting the respondents to sell a 26.7-acre parcel of land in Woodstock, Ontario, pending appeal.

The Court of Appeal for Ontario dismissed the motion, finding that while there was a serious issue to be tried, Hermina failed to establish irreparable harm or that the balance of convenience favoured a stay.

The court held that any losses could be compensated by damages and that the property was not unique.

The respondents were awarded costs.

The applicant, a commercial real estate financing company, sought a receivership order over the debtor and beneficial owners of properties due to loan default, outstanding interest, and unpaid municipal taxes.

The court considered factors for appointing a receiver, including the contractual right to appointment and the respondents' lack of transparency and uncertain sale prospects.

The application was granted, and a receiver was appointed.

The Receiver, B. Riley Farber Inc., brought a motion for directions in an appeal proceeding concerning an Approval and Vesting Order (AVO) for the sale of real property.

The appellants, 1000162497 Ontario Inc. and Maplequest Uptown Developments Inc., sought to enjoin the sale, claiming an automatic right of appeal and stay under the Bankruptcy and Insolvency Act (BIA).

The Court of Appeal determined that the appeal was governed by the BIA but found no automatic right of appeal under s. 193(c) because the appellants failed to provide credible evidence that the property's value involved in the appeal exceeded $10,000 in loss.

Consequently, no automatic stay under s. 195 of the BIA applied.

The court also stated that even if a stay were applicable, it would be lifted due to lack of merit and the balance of convenience favoring the Receiver.

Wiseway Global Canada Consulting Ltd. sought leave to further amend its statement of claim following examination for discovery.

CTBC Bank Corp. (Canada) opposed the motion, arguing that many proposed amendments improperly pleaded evidence and argument, contained unnecessary repetition and inconsistencies, and included unsupported or scandalous headings.

The court, applying Rule 26.01 of the Rules of Civil Procedure, granted leave in part.

It allowed most of the proposed amendments, emphasizing that a statement of claim should contain all material facts and that inconsistencies with a reply are not a bar to amendment.

However, the court denied leave for certain paragraphs and a heading that were found to improperly plead evidence or argument, or were unsupported by material facts (specifically, the "Ponzi scheme" characterization).

In the receivership of the Stateview entities, Tarion Warranty Corporation brought a motion seeking declaratory relief on behalf of purchasers who had paid deposits for pre-construction homes.

Tarion argued that the deposits were subject to an express or constructive trust and sought a remedial constructive trust to elevate the purchasers' priority.

The court dismissed the motion, finding that the purchasers had contractually subordinated their interests to secured lenders.

While an express trust existed for contracts with early termination provisions, the funds were not segregated.

The court declined to impose a remedial constructive trust, as doing so would improperly upset the priority scheme under the Bankruptcy and Insolvency Act.

This motion concerned the priority of new home purchasers' deposits in the bankruptcy of residential real estate developers (Stateview entities).

Tarion Warranty Corporation sought declaratory relief, arguing that the deposits were subject to express or constructive trusts due to unjust enrichment, which would elevate purchasers' claims.

The court dismissed Tarion's motion, finding that purchasers' agreements contained subordination clauses giving priority to secured lenders.

The court also determined that while express trusts existed for some purchasers with early termination provisions, these were not statutory deemed trusts.

Furthermore, there was no unjust enrichment for purchasers without express trusts, as the operation of the Bankruptcy and Insolvency Act constituted a juristic reason.

The court declined to impose a remedial constructive trust, emphasizing the high bar for such remedies in insolvency proceedings and the lack of a close causal connection between the deposits and the real property proceeds.

The moving party brought a motion for leave to appeal an unreported order of Myers J. The Divisional Court dismissed the motion for leave to appeal and ordered the moving party to pay costs of $5,000 to the responding party.

Money Gate Corporation (MGC) brought a motion for an extension of time to file its notice of appeal and a declaration that it had an appeal as of right under s. 193(c) of the Bankruptcy and Insolvency Act (BIA), or alternatively for leave to appeal under s. 193(e).

The underlying matter involved a receivership where a motion judge had dismissed MGC's claim for payment from the proceeds of a property sale, finding no valid assignment of a second mortgage and that MGC was not the registered owner.

The Court of Appeal granted the extension of time, finding MGC's grounds of appeal not frivolous and no real prejudice to the responding parties.

Crucially, the court declared that MGC had an appeal as of right under s. 193(c) of the BIA, concluding that the motion judge's order finally determined MGC's economic interests in the property proceeds, distinguishing it from a mere priorities dispute.

The applicants sought a declaration that a 2001 easement and restrictive covenant registered on title to a former golf course prohibited the respondent from developing the lands for residential use.

The respondent argued the covenant only protected storm water management access and did not prevent development.

The court applied contract interpretation principles and found the plain language of the restrictive covenant, read in context, constituted a complete prohibition on building structures on the golf course lands.

By operation of the Land Titles Act, the covenant was deemed to expire 40 years after registration, prohibiting residential development until 2041.

The Court of Appeal for Ontario heard two appeals concerning a priority dispute over accelerated interest in closed mortgages and a costs order in a receivership.

The primary issue was whether the first mortgagee, First National Financial GP Corporation (FN), was entitled to future, unearned, accelerated interest upon the early discharge of its closed mortgages due to the mortgagors' default and court-ordered sale.

The court found that the trial judge erred by failing to conduct a full contractual analysis of the mortgage provisions and by relying on a standalone common law entitlement to accelerated interest.

The Court of Appeal held that the mortgage terms explicitly provided for FN's entitlements upon default, which did not include accelerated interest.

The appeal regarding accelerated interest was allowed.

The appeal concerning the receiver's costs was dismissed, as the trial judge's discretion was properly exercised.

Following a successful Application for Directions regarding an arbitration, the applicant sought costs of $11,743.35 on a partial indemnity basis.

The respondents argued for divided success and sought their own costs.

The court found the applicant was entirely successful on the substantive issues and that the respondents' actions had unnecessarily complicated and delayed the arbitration.

The court awarded costs to the applicant fixed at $9,000 payable forthwith.

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 appellant, Canada Investment Corporation (CIC), appealed an order directing that surplus proceeds held for CIC from a receivership sale be paid to the respondent creditors.

The respondents had successfully challenged the validity of CIC's pre-assignment expenses in a related action.

The Court of Appeal dismissed the appeal, finding that the claims process did not require a statement of claim, the onus correctly shifted to CIC to dispute the Receiver's recommendation, and issue estoppel precluded CIC from re-litigating the quantification of pre-assignment expenses already decided in the related action.

The appellant entered into an agreement of purchase and sale for a residential unit in a condominium project and paid a $500,000 deposit, mostly directly to the developer.

The developer was subsequently placed into receivership by the first mortgagee.

The receiver disclaimed the appellant's agreement of purchase and sale.

The appellant sought an order requiring the receiver to complete the sale, arguing he had an equitable interest in the property.

The Court of Appeal upheld the motion judge's dismissal, finding that the agreement explicitly subordinated the purchaser's interest to any mortgages and that the appellant's equitable claims could not defeat the mortgagee's prior secured legal interest.

The applicant, a first mortgagee, sought a declaration of entitlement to a yield maintenance payment of approximately $1.5 million following the court-appointed receiver's sale of two commercial properties.

The mortgagors and a second mortgagee opposed the payment, arguing it was not contractually authorized, offended the anti-deprivation rule, violated the Interest Act, and that the receiver's sale constituted a realization on security triggering the equity of redemption.

The court held that the mortgages were closed and, under common law, the mortgagee was entitled to lost future interest upon early discharge.

The court rejected the statutory and common law defenses, noting the court orders explicitly deemed the mortgagee was not realizing on its security.

The applicant was awarded $1,473,141.82.

The Proposal Trustee brought a motion for court approval of the amended joint proposal of Artiva Inc. and Livewell Foods Canada Inc. under s. 58 of the Bankruptcy and Insolvency Act, and a related plan of arrangement under the Canada Business Corporations Act.

The proposal was supported by the majority of creditors, but opposed by a dissenting creditor who sought an adjournment due to late delivery of proofs of claim.

The court denied the adjournment, finding the time to challenge claims for voting purposes had expired.

The court approved the proposal and arrangement, finding them viable, made in good faith, and likely to generate a superior recovery for creditors than bankruptcy.

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 noteholders appealed the Proposal Trustee's disallowance of their unsecured claims in the BIA proposals of several subsidiary corporations.

The Trustee had determined that the subsidiaries' guarantees were limited to an initial US$3 million advance and did not cover a subsequent US$12 million advance, and that the initial advance had been fully satisfied by a property transfer.

The Superior Court upheld the Trustee's interpretation of the guarantees but found an error in the debt allocation, ruling that US$828,000 of the guaranteed debt remained outstanding and should be recognized as an unsecured claim.

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.