George Benchetrit

Prior to its bankruptcy, the bankrupt company deducted pension contributions from its employees' pay but failed to remit them, instead commingling the funds in its general bank account.

The account balance subsequently fluctuated and went into a negative balance before returning to a positive balance on the date of bankruptcy.

The employees claimed the unremitted contributions as trust property under s. 67(1)(a) of the Bankruptcy and Insolvency Act.

The Court of Appeal held that while a trust was initially created, the trust property ceased to be identifiable and could not be traced once the account went into overdraft.

Consequently, the funds in the account at the date of bankruptcy were not trust funds, and the Trustee's disallowance of the employees' claim was upheld.

The appellant appealed an order refusing an adjournment of an application.

The Court of Appeal found no error in the application judge's exercise of discretion, noting the appellant had ample time to prepare materials and was on notice that further adjournments would be opposed.

The Court also refused to admit fresh evidence, as it was available prior to the application and the appellant failed to provide a satisfactory explanation for the lack of diligence.

The appeal was dismissed with costs.

The court-appointed interim receiver brought a motion to lift a stay pending appeal of an order approving the sale of the bankrupt companies' assets.

The appellants opposed the sale.

The Court of Appeal found that the appeal had questionable merit and that delaying the sale of the business as a going concern would cause manifest prejudice.

The motion was allowed, the stay was lifted, and the receiver was authorized to complete the sale.

Following the dismissal of their appeal, the appellants made written submissions regarding costs.

They argued that costs should not be awarded on a joint and several basis, and that four appellants whose judgments were satisfied while the case was under reserve should not bear any costs.

The Court of Appeal agreed, ordering costs against the remaining appellants on a several, pro rata basis rather than jointly and severally, noting that a joint and several order would be unusually onerous.

The appellants, Canadian 'Names' in the Lloyd's insurance market, appealed a decision allowing the registration and enforcement of U.K. judgments against them for unpaid reinsurance premiums.

They argued that the U.K. proceedings denied them natural justice by preventing them from litigating fraud claims before judgment, and that enforcing the judgments would be contrary to Ontario public policy because Lloyd's had breached the prospectus requirements of the Ontario Securities Act.

The Court of Appeal dismissed the appeal, finding no denial of natural justice because the U.K. courts assumed the fraud allegations were true but found they did not provide a legal defence.

The Court also held that enforcing the judgments was not contrary to public policy, emphasizing international comity and the fact that Ontario courts had previously determined England was the proper forum for the dispute.