Jason Berall

The Proposal Trustee brought a motion to compel the Proposal Sponsor to fund the Trustee's continuing work to resolve outstanding proofs of claim, specifically the Athanasoulis Claim, via a two-phase arbitration.

The Sponsor objected to funding phase 2 of the arbitration, arguing it was an improper delegation of the Trustee's duties under s. 135 of the BIA.

The court agreed with the Sponsor, finding that while phase 1 (fact-finding) was acceptable, phase 2 (final adjudication of damages) improperly delegated the Trustee's statutory responsibility to determine and value the claim.

The Sponsor was not ordered to fund phase 2 of the arbitration but remains obligated to fund the Trustee's reasonable expenses to determine the claim through an alternative process.

The applicants (Sellers) and respondents (Purchasers) disputed the process for valuing shares under a shareholders agreement following the termination of the Sellers' employment.

The Sellers applied to appoint their preferred arbitrator and argued for a full arbitration under the Arbitration Act, 1991.

The Purchasers cross-applied to appoint their preferred arbitrator, seeking a streamlined valuation process and a court declaration on the valuation date.

The court held that the agreement contemplated a formal arbitration under the Act, not merely a valuation.

The court declined to determine the valuation date, leaving it to the arbitrator under the competence-competence principle, and ordered the parties to select a neutral third-party arbitrator.

The appellants appealed a summary judgment holding them liable as guarantors for unpaid principal and interest under promissory notes.

The principal debtor was restricted from making payments by an inter-creditor agreement.

The appellants argued that because the principal debtor was not in default due to the inter-creditor agreement, the guarantees were not triggered.

The Court of Appeal dismissed the appeal, upholding the motion judge's finding that the guarantees were triggered by the failure to pay, regardless of the inter-creditor agreement's restrictions on the principal debtor.