Frank Bennett

The Trustee in Bankruptcy brought a motion for the payout of its 50% share of proceeds from the sale of a property, which had been vested in the Trustee following a finding of fraudulent conveyance.

The bankrupt's spouse brought a cross-motion claiming deductions from the Trustee's share for carrying costs, improvements, and a line of credit debt.

The court granted the Trustee's motion and dismissed the cross-motion, finding that the parties' prior agreement did not provide for such deductions, the expenses did not increase the property's capital value, and the equitable claims were barred by cause of action estoppel.

The Court of Appeal for Ontario dismissed an appeal from a summary judgment that set aside two transactions by a bankrupt: the transfer of his 50% interest in his residence to his wife as an undervalue transfer and fraudulent conveyance, and the transfer of shares in a corporation to a non-arms length creditor as an improper preference.

The appellants argued the claims were time-barred under the Limitations Act, 2002, and constituted an abuse of process.

The Court of Appeal upheld the motion judge's findings, confirming that the limitation period for the Trustee's claims began upon the Trustee's appointment and that the amended statement of claim did not introduce a new cause of action.

The court also rejected the abuse of process argument as speculative.

A cross-appeal on costs by the Trustee, seeking substantial indemnity, was also dismissed, with the court deferring to the motion judge's assessment of partial indemnity costs.

A motion to set aside orders of a chambers judge denying leave to appeal.

The core issue was whether an appeal from a decision denying leave to sue a court-appointed receiver is governed by the Bankruptcy and Insolvency Act (BIA) or the Courts of Justice Act (CJA).

The receiver was appointed under both statutes.

The applicant argued that since the leave to sue provision could be grounded in provincial law under the CJA, the appeal should follow the CJA route, which permits appeals as of right within 30 days.

The respondent argued that the BIA governs because the receivership proceedings are BIA proceedings and the appeal provisions are in operational conflict.

The court held that the BIA governs the appeal route because the leave to sue provision is authorized by the BIA through necessary implication of section 243(1), and federal paramountcy applies to the conflicting appeal provisions.

Following the dismissal of a motion to set aside assignments made by the bankruptcy trustee, the court determined costs.

The bankrupt's request for costs was dismissed as his participation was unnecessary.

The Trustee was awarded costs of $18,500 on a substantial indemnity basis because the moving parties lacked standing as 'aggrieved' persons under the BIA and had impugned the Trustee's integrity.

The moving parties sought an order under section 37 of the Bankruptcy and Insolvency Act to set aside the trustee's assignments of certain causes of action to the bankrupt, David Brook, and to direct a tender or auction process for their sale.

The moving parties argued they were aggrieved because the trustee did not market the causes of action to anyone else, the transaction was improvident, and the private sale process unfairly disregarded creditors' rights.

The court dismissed the motion, finding that the moving parties were not "aggrieved persons" as they were not deprived of a legal right.

Alternatively, the court found the trustee's decision to assign the causes of action to the bankrupt with a sharing arrangement was reasonable, particularly given the unwritten nature of the claims, the need for the bankrupt's active involvement, and the potential for greater upside for the estate compared to a fixed offer.

The bankrupt appealed a decision by the Registrar in Bankruptcy refusing to schedule his discharge application for a hearing before a Commercial List judge.

The Registrar had adjourned the hearing sine die pending the outcome of a separate action by the Trustee against the bankrupt's family for alleged preferential and fraudulent conveyances.

The Superior Court dismissed the appeal, finding that the Registrar properly exercised her discretion by balancing the relevant factors, including prejudice, interests of the parties, and the summary nature of discharge hearings where fraud allegations should be established beforehand.

The appellant, an undischarged bankrupt, sought to appeal an order lifting a stay of proceedings under the Bankruptcy and Insolvency Act that allowed the respondents to pursue claims for pre-bankruptcy breaches of fiduciary duty.

The respondents brought a motion declaring the appellant had no right of appeal under s. 193(b), while the appellant sought leave to appeal under s. 193(e).

The Court of Appeal held that the appellant had no appeal as of right because the order was not likely to affect other cases in the bankruptcy proceeding.

The court also denied leave to appeal, finding that the proposed appeal did not raise an issue of general importance and lacked prima facie merit, as settled law does not require a court to scrutinize the merits of an action when lifting a bankruptcy stay.

The appellants appealed a Master's order dismissing their action for delay at a status hearing and brought a motion to introduce fresh evidence.

The individual appellant had been petitioned into bankruptcy, and the Trustee had sought directions from the Commercial Court regarding the action.

The Master refused to adjourn the status hearing and dismissed the action due to a long pattern of delay and non-compliance with previous orders.

The Divisional Court dismissed the motion to introduce fresh evidence, finding it could have been obtained prior to the hearing with reasonable diligence.

The appeal was also dismissed, as the Master correctly applied the test for dismissal for delay and made no palpable and overriding error.

In a bankruptcy application brought by an unsecured creditor, the respondent debtor moved to compel answers to numerous refusals made during cross‑examination of the applicant’s affiant on the affidavit of verification.

The court considered the permissible scope of cross‑examination in bankruptcy proceedings and held that questions must relate to the statutory requirements under the Bankruptcy and Insolvency Act, the issues in dispute on the bankruptcy application, or the credibility of the affiant.

Many questions sought to revisit issues already determined in an arbitration award and recognition orders, or to explore unrelated receivership proceedings, and were therefore irrelevant.

The court ordered only that the applicant provide evidence of its authorization to commence the application and otherwise dismissed the motion.

The appellant garnishee appealed an order directing payment to the respondent judgment creditor.

The Court of Appeal dismissed the appeal, finding it was open to the motion judge to conclude the appellant had not established any debt owed to him by the debtor company to justify an offset.

The court also upheld the order for direct payment to the respondent, as there was evidence the respondent was the only execution creditor.

A judgment creditor brought a motion under Rule 60.08(16) seeking judgment against a garnishee who was the sole shareholder and director of the corporate judgment debtor.

After extensive post‑judgment proceedings, the court determined that the garnishee had withdrawn approximately $118,000 from the corporation for personal expenses and rejected an accounting “adjusting entry” that purported to offset the debt.

The court held that the entry lacked any legitimate business basis and was intended to conceal the garnishee’s liability to the corporation.

Although the creditor also argued that dividends paid while the corporation was insolvent should be repaid under the Business Corporations Act, the court found the evidence insufficient to establish insolvency at the relevant time.

Garnishment judgment was granted for the amount owed to the creditor and payment was ordered directly to the judgment creditor.

The appellant credit union appealed a Superior Court decision which held that the provincial two-year limitation period did not apply to a trustee's fraudulent preference claim under s. 95 of the Bankruptcy and Insolvency Act due to the doctrine of paramountcy.

The Court of Appeal allowed the appeal, finding no operational conflict or frustration of federal purpose between the provincial Limitations Act and the federal bankruptcy statute.

The court reinstated the Registrar's original order dismissing the trustee's claim as statute-barred.

The appellant appealed the decision of the Superior Court of Justice revoking his discharge from bankruptcy.

The appeal judge had admitted fresh evidence showing the appellant failed to disclose significant assets, and directed him to file a fresh statement of affairs.

The Court of Appeal upheld the decision, finding the failure to disclose significant assets was a serious omission justifying the revocation.

The respondents' cross-appeal on costs was also dismissed.

This is a costs endorsement following an appeal regarding a receivership of public sector organizations operating affordable housing.

The appellants sought costs for a re-argued motion and the appeal.

The Court of Appeal rejected the 'hours times rates' approach, noting that public sector organizations should not be expected to pay full indemnity hourly rates and the hours docketed were excessive.

The court fixed the costs of the re-argued motion at $15,000 and the costs of the appeal at $30,000.

The appellant corporations were placed into receivership.

The boards of directors retained counsel to oppose the receivership and represent the corporations' interests.

The motion judge held that the boards did not have the right to retain counsel without court approval but awarded partial costs on an equitable basis.

On appeal, the Court of Appeal held that the boards retained residual authority to retain counsel without prior approval of the receiver or the court to challenge the receivership or the receiver's actions.

The Court ordered that the reasonable legal fees for the receivership litigation be paid out of the corporations' assets.

The appellants, a non-profit housing co-operative and a co-operative housing federation, appealed an order approving a receivership sale of the co-operative's assets to a municipality-controlled entity.

The appellants argued that the motion judge failed to properly consider the special nature of co-operative housing and the rights of its members.

The Court of Appeal dismissed the appeal, holding that the standard Soundair principles for approving a receiver's sale apply, and that the motion judge correctly balanced the special factors of social housing against the financial realities and statutory framework.

The moving parties, two not-for-profit corporations in receivership, sought an interim order allowing their boards of directors to retain counsel for an appeal and directing that the legal fees be paid from the corporations' assets.

The motion judge had previously ruled the boards could not retain counsel without leave of the court or the receiver's approval.

The Court of Appeal granted the motion, holding that the boards' right to pursue the appeal would be hollow without counsel, and ordered that reasonable legal fees be paid from the corporations' assets.

The applicants sought judicial review of the Region's decision to consent to the sale of a non-profit housing co-operative to the Region's social housing arm.

The Co-op was in receivership due to financial difficulties and need for capital repairs.

The Region consented to the sale without notifying the Co-op's board or members.

The Divisional Court held that the Region's decision was judicially reviewable and that the Region breached its duty of procedural fairness by failing to provide notice and an opportunity to make submissions.

However, given the urgent need for repairs, the court declined to quash the consent and deferred the matter to the Commercial List where the sale motion was pending.

The Registrar and customers of a bankrupt motor vehicle leasing company appealed the dismissal of their motion to vary a vesting order and for leave to sue the trustee in bankruptcy.

The vesting order had transferred the bankrupt's lease portfolio to assignees free and clear of customer claims for security deposits.

The Court of Appeal dismissed the appeal, finding that the appellants' proprietary or economic rights were not directly affected by the order, as the contractual obligation to refund deposits remained with the bankrupt.

The court also held that a motion to vary under s. 187(5) of the BIA or Rule 37.14 cannot be used to substantively change an order or as a substitute for an appeal.

The trustee in bankruptcy appealed the dismissal of its motion to examine the court-appointed interim receiver and to vary a sale approval and vesting order made four years prior.

The Court of Appeal dismissed the appeal, finding that the interim receiver had already provided all necessary information informally, and that the trustee was improperly attempting to use the variation provision to appeal the vesting order out of time.