Janet E. Mills

This case concerns an appeal by a creditor, Forty-One Peter Street Inc., from the Trustee's disallowance of its claim in the bankruptcy of John Trevor Eyton.

The claim was based on a debt incurred in 2001, with the last payment in 2016, making it statute-barred under the Limitations Act, 2002.

The court affirmed the Trustee's disallowance, holding that while a statute-barred debt may form the basis for a bankruptcy application, it cannot constitute a provable claim in bankruptcy, as such claims must be recoverable by legal process.

The Master followed appellate court precedents over conflicting Superior Court obiter dicta, emphasizing that allowing such claims would grant an unfair advantage to creditors on otherwise unenforceable debts.

The plaintiff brought a motion to set aside a Registrar's dismissal for delay in a Simplified Procedure action concerning an alleged breach of a commercial lease.

The action was dismissed after five years due to a combination of prior counsel's inaction, misguided procedural steps including an improperly obtained default judgment, and current counsel's inadvertence in tracking the five-year anniversary.

Applying the Reid Factors, the court found the motion was brought promptly, the delay was largely explained by counsel changes and errors, and the defendants failed to establish non-compensable prejudice.

Emphasizing the policy of resolving disputes on their merits, especially when dismissal results from counsel's error, the court granted the motion, setting aside the dismissal.

No costs were awarded, as the defendants' costs were deemed unreasonable and avoidable.

The plaintiff brought a motion for a Certificate of Pending Litigation (CPL) to secure his claimed right to purchase a 45-acre commercial property.

The parties had entered into an Agreement of Purchase and Sale that was amended multiple times to extend due diligence and closing dates.

The defendant purported to terminate the agreement, leading the plaintiff to sue for specific performance.

The court found several triable issues regarding the closing date, deposit requirements, and purchase price, and concluded the plaintiff had a reasonable claim to an interest in the unique property.

The motion for a CPL was granted.

The plaintiff sought an order to compel the sale of assets (a property, rural land, and vehicles) under Rule 45.01 and 45.02 of the Rules of Civil Procedure, alleging asset deterioration and seeking payment into court.

The defendants raised a jurisdictional objection, arguing a Master could not vary a judge's preservation order or grant mandatory injunctive relief.

The Master declined jurisdiction, finding that compelling a sale would effectively set aside or vary existing preservation orders made by a judge, and that mandatory orders are exclusively for judges.

Alternatively, the Master found that even if jurisdiction existed, the relief would not be granted as the assets were adequately protected by existing orders and undertakings, and compelling a sale would prejudice the defendants and a non-party (Jonathan Rewa) without a proven claim.

The motion was dismissed.

The debtor brought a motion seeking to prohibit the Royal Bank of Canada (RBC) from cross-examining him on an affidavit filed in a Certificate of Pending Litigation (CPL) motion.

The CPL motion was part of a civil action related to an alleged fraudulent conveyance, which also formed the basis of RBC's bankruptcy application against the debtor.

The court granted the debtor's motion, affirming the `Re Debtor` principle that a petitioning creditor cannot compel evidence from a debtor to prove a disputed bankruptcy application.

The court held that civil procedure rules allowing cross-examination cannot be used to indirectly circumvent substantive bankruptcy law, especially when the debtor disputes the debt and alleged acts of bankruptcy.

The defendant, RBC Life Insurance Company, brought a motion to compel the plaintiff, Michael Scuglia, to attend an examination for discovery and cross-examination on an affidavit.

The plaintiff resisted, arguing that any form of examination would be harmful to his physical and mental health due to existing medical conditions, including a vascular malformation and conversion disorder.

The court reviewed medical evidence from both parties, finding the plaintiff's medical evidence unpersuasive regarding the risk of serious harm.

The court concluded that the plaintiff failed to meet the high onus to be relieved from discovery obligations and granted the defendant's motion, ordering the plaintiff to attend discovery and cross-examination with appropriate accommodations.

The defendant Mondconsult sought leave to amend its Statement of Defence and Crossclaim to add a breach of contract claim against co-defendant 7 Brighton for failing to obtain wrap-up insurance. 7 Brighton opposed the motion, arguing the amendment introduced a new cause of action outside the limitation period.

The court found the proposed amendment was a new claim and that Mondconsult, with reasonable diligence, ought to have discovered the failure to obtain insurance when served with the Statement of Claim over three years prior.

The motion was dismissed as the claim was statute-barred.

The plaintiff brought a motion to remove Shawna Sosnovich and Devry Smith Frank LLP as counsel for the defendant Anna Chen, alleging a conflict of interest.

The conflict arose because a partner at the firm, Lorne Shapiro, was likely to be a material witness at trial, having provided an affidavit that contradicted the plaintiff's evidence regarding key events leading to the litigation.

The court granted the motion, finding that the proper administration of justice required the removal of counsel due to the inherent conflict between a lawyer's duty of objectivity to the court and the obligation to present evidence favorably to a client, a conflict that cannot be waived.

The plaintiff, Surinder Singh Manchanda, sought leave under Rule 1.08(5) to give evidence and participate in the trial by videoconference from Thailand, due to repeated refusals of his Temporary Resident Visa applications.

The defendants opposed the request.

The court denied the motion, finding that the plaintiff had not demonstrated all reasonable efforts to secure personal attendance, citing his failure to truthfully answer visa application questions and not pursuing judicial review.

Leave was granted to bring the motion again before the trial judge.

Both the plaintiff and defendant brought motions for security for costs.

The plaintiff, Crossover Health Care Fund, LLC, sought security for costs against the defendant's counterclaim, arguing the defendant, Pivotal Therapeutics Inc., had insufficient assets and that significant aspects of the counterclaim were statute-barred.

The defendant, Pivotal Therapeutics Inc., sought security for costs against the plaintiff's main action, arguing the plaintiff was not ordinarily resident in Ontario.

The court granted both motions, ordering the defendant to post $80,000 in security for costs for its counterclaim and the plaintiff to post $45,000 in security for costs for its defence to the main action.

The court found the defendant's valuation of its assets, particularly intellectual property not owned by it, was insufficient to demonstrate solvency for a costs order.

The court also found that many aspects of the counterclaim appeared to be statute-barred under the Limitations Act, 2002, and did not have a real possibility of success.

This motion concerns the taxation of three bankrupt estates following negative comments from the Office of the Superintendent of Bankruptcy (OSB).

The OSB challenged the trustee's practice of obtaining "GST Refund Assignment" agreements from bankrupts to retain Goods and Services Tax (GST) refunds for estate administration costs or conditional orders.

The trustee argued these agreements, if properly worded and understood by the bankrupt, could waive the exempt status of GST refunds, citing *Re McIntyre*.

The court disagreed, finding such agreements unenforceable as GST refunds are Crown debts not assignable under the *Financial Administration Act* and are expressly excluded from divisible property under the *Bankruptcy and Insolvency Act* (BIA) and its Rules when a dividend is available to creditors.

The court held that statutory law cannot be circumvented by contractual agreements, requiring the trustee to return the GST refunds to the bankrupts and restate the estate accounts.

The defendant, a US citizen residing in Texas, brought a motion to stay the plaintiff's breach of employment contract action on the basis of forum non conveniens.

The plaintiff, a consulting firm with its head office in Toronto, hired the defendant to provide services globally.

The employment agreement specified Ontario law as the governing law.

The court applied the test from Club Resorts Ltd. v. Van Breda and the factors from Young v. Tyco, finding that the defendant failed to demonstrate that Texas was a clearly more appropriate jurisdiction.

The motion to stay was dismissed.

The United States Securities and Exchange Commission brought a motion to lift the stay of proceedings under s. 69.4 of the Bankruptcy and Insolvency Act to continue actions enforcing foreign judgments against the bankrupt and the debtor.

The moving party argued the judgments arose from fraud or misappropriation and would survive discharge under s. 178(1).

The respondents opposed, citing a recent US Supreme Court decision and limitation period defences.

The court granted the motion, finding a fair issue to be tried regarding the limitation periods and the nature of the claims, but ordered that no enforcement steps be taken without further leave.

The plaintiffs moved to set aside a Registrar's dismissal, and the defendant cross-moved to dismiss the action for delay.

The court applied the Reid Factors, finding the plaintiffs provided an adequate explanation for delay, demonstrated inadvertence by counsel, and brought the motion promptly.

Crucially, the defendant failed to establish real prejudice.

The court emphasized the policy of resolving disputes on their merits, especially when delay is due to counsel's inadvertence.

The court also declined to enforce a consent order's dismissal clause under Rule 60.12, deeming dismissal an extreme remedy not warranted by the plaintiffs' conduct.

The defendant Casboro Industries Limited brought a motion for security for costs against the plaintiff AAD Investments Inc. under Rule 56.01(1)(d).

The court applied a two-step test, finding that the defendant met its initial onus by demonstrating the plaintiff was a corporation with insufficient assets in Ontario to cover an adverse cost order.

The plaintiff failed to rebut this, as its affidavit evidence regarding assets was found to be materially misleading and false, and it did not establish impecuniosity or a high chance of success.

The court granted the motion, ordering the plaintiff to post $150,000 in security for costs in instalments and pay $23,000 in costs for the motion.

The plaintiffs brought a motion to restore their motor vehicle accident action to the trial list after it was administratively struck.

The defendants brought a cross-motion to dismiss for delay.

The court found a history of inattention and missed deadlines by the plaintiffs' former counsel, with no reasonable explanation for the delay.

The court also found the defendants would suffer non-compensable prejudice if the action proceeded, as discoveries were incomplete and evidence had not been preserved.

The plaintiffs' motion was dismissed, and the action was left to be administratively dismissed.

The creditor sought to lift a stay of proceedings under s. 69.4 of the Bankruptcy and Insolvency Act to allow a civil action for loans and punitive damages to proceed to judgment.

The creditor argued material prejudice and that the debt should survive discharge under s. 178(1)(e) due to fraudulent misrepresentation.

The court found no causal connection between the alleged misrepresentations and the creation of the debt, and that the pleadings lacked particularity for fraud.

The court also determined that the prejudice was subjective, not objective, and that lifting the stay would imperil the approved consumer proposal, which was more favourable to creditors than bankruptcy.

The motion was denied.

The Administrator of a consumer proposal brought a motion to approve legal fees incurred for registering a restrictive covenant against the debtor's property as security for the proposal.

The Office of the Superintendent of Bankruptcy opposed the fees, arguing they were not prescribed by Rule 129 of the Bankruptcy and Insolvency Act.

The court dismissed the motion, holding that the fees prescribed in Rule 129 are exhaustive for Division II consumer proposals, and any administration requiring additional fees must be pursued as a Division I proposal.