Geoff Daley

The appeal concerns who is liable for outstanding municipal taxes in a receiver's sale of assets with an approval and vesting order (AVO).

The motion judge found the purchaser liable because the taxes were not yet due at closing.

The Court of Appeal reversed, holding that under s. 307(3) of the Municipal Act, liability for the taxes arose on January 1 of the relevant taxation years, prior to closing.

Therefore, the liability remained with the vendor (the receiver) and was vested out of the purchased assets by the AVO.

The plaintiff sought costs following a successful motion to determine priority between creditors after a judicial sale.

The plaintiff had made an offer to settle for $25,000, which was beaten at the hearing.

The court found the responding party's conduct to be particularly egregious, noting a combination of deceit, frivolous arguments, and repetitive proceedings designed to make collecting a simple debt as expensive as possible.

Consequently, the court awarded the plaintiff full indemnity costs fixed at $150,000.