Erin Craddock

Following a successful motion to approve a proposal to creditors under the Bankruptcy and Insolvency Act, the Proposal Trustee and the debtor sought costs against the sole opposing creditor.

The opposing creditor argued that costs should not be awarded against creditors in insolvency proceedings on policy grounds.

The court rejected this argument, finding that the creditor was not relieved from paying costs after unsuccessfully opposing the motion.

The court awarded partial indemnity costs of $20,000 to the Proposal Trustee and $20,226.44 to the debtor.

The moving party, having successfully obtained an order declaring that no secured indebtedness was owing by the debtor to a related company, sought costs of the motion.

The moving party sought costs on a substantial indemnity scale, arguing it undertook actions that benefited all creditors.

The court declined to award substantial indemnity costs, finding no reprehensible conduct.

The court fixed costs on a partial indemnity scale at $89,339.63, payable jointly and severally by the debtor and the related company, as both had actively opposed the motion.

The Proposal Trustee brought a motion for court approval of the debtor company's amended proposal to creditors under s. 58 of the Bankruptcy and Insolvency Act.

An opposing creditor argued the proposal should be rejected under s. 59(3) because the debtor failed to perform its statutory duties by initially omitting the creditor's claim and a related party's secured debt from its statement of affairs.

The court found the debtor had failed in its duties but exercised its discretion to approve the proposal, noting the debtor provided reasonable security for the payments, the proposal offered a better return than bankruptcy, and it was supported by the vast majority of creditors.

In a bankruptcy proposal proceeding, a creditor (Moroccanoil) moved for an order declaring that no secured indebtedness was owing by the debtor (CHL) to a related company (BEI) and prohibiting a credit bid based on that debt.

The court found that the alleged debt, which consisted of management fees agreed to in 2019 for services rendered in previous years, was based entirely on past consideration.

Applying the rule that past consideration is not good consideration, the court held the agreement unenforceable and granted the order prohibiting the credit bid.

The Proposal Trustee brought a motion for advice and directions, seeking an order to not undertake the adjudication of a proof of claim filed by Moroccanoil and a cross-motion by the insolvent Company, and instead lift the stay of proceedings to allow the claims to be determined in ongoing U.S. litigation.

The Court dismissed the motion, finding that section 135(1.1) of the Bankruptcy and Insolvency Act unambiguously requires the Proposal Trustee to determine and value the claim, and the Court's inherent jurisdiction does not extend to displacing this mandatory statutory process.

The applicant sought to set aside an arbitration award of $625,551.19 in favour of the respondent partnership, arguing a denial of natural justice and procedural fairness.

The applicant claimed the arbitrator failed to apply common law principles requiring dissolution and an accounting before a partnership can sue a partner, and improperly denied documentary productions.

The Superior Court of Justice dismissed the motion, finding the arbitrator's decisions were reasonable, the applicant was estopped from changing his legal position late in the arbitration, and the production rulings were procedural matters within the arbitrator's jurisdiction.

The Bank of Montreal applied for a receiver over a group of fitness clubs (the Crunch Group) following defaults on credit facilities.

The parties reached an agreement where the debtors' nominee would purchase the debt and security.

The Bank accepted the offer but subsequently refused to provide a fully executed copy of the agreement, causing the purchaser to lose financing and fail to close on the scheduled date.

The court found the Bank's actions, including abruptly closing the debtors' bank accounts and unreasonably refusing to deliver the executed agreement, breached the duty of good faith.

The court ordered the Bank to close the transaction.

CIM Bayview filed a Notice of Intention to Make a Proposal under the BIA and sought to disclaim an Amended Option Agreement that granted Bryton Creek the right to purchase a development property.

CIM Bayview argued the option could be disclaimed, vested out, or was void for imposing a criminal rate of interest or violating the Interest Act.

The court dismissed CIM Bayview's motion, finding the option created an immediate interest in land that could not be disclaimed or vested out.

The court also found the option did not constitute a criminal rate of interest or a penalty.

The court lifted the stay of proceedings to allow Bryton Creek to exercise its option.

The defendant moved to set aside a default judgment arising from a personal injury action after a pedestrian tripped on an access ramp at a commercial plaza.

The court considered the established factors governing whether a default judgment should be set aside, including promptness of the motion, explanation for the default, existence of an arguable defence, prejudice to the parties, and the interests of justice.

The evidence showed the defendant had repeated notice of the claim, the motion for default judgment, and subsequent enforcement steps but failed to respond for several years.

The court found the delay unexplained, the asserted defence unsupported, and concluded the defendant had deliberately ignored the proceedings while taking a calculated risk.

In the interests of justice, the default judgment was allowed to stand.