J. Ross Macfarlane

The appellant creditor appealed a decision upholding the Trustee's disallowance of its unsecured claim in the bankruptcy.

The claim was based on a promissory note and subsequent agreement, but no payments or acknowledgments had been made for over two years prior to the bankruptcy, rendering it statute-barred under the Limitations Act, 2002.

The court held that a statute-barred claim, being unenforceable at law, is not a claim to which the bankrupt is 'subject' under section 121(1) of the Bankruptcy and Insolvency Act, and is therefore not provable in bankruptcy.

The appeal was dismissed.

This costs endorsement from the Ontario Court of Appeal addresses the disposition of costs following a partial appeal.

The court had previously allowed the appeal in part, setting aside a motion judge's costs award against the appellants and remitting a narrow issue for trial.

The parties could not agree on costs for their respective summary judgment motions.

The court ordered that the costs on the summary judgment motions and the action to-date be reserved to the trial judge, as the trial judge would be best placed to assess these costs in the context of the final disposition of the action.

The court also clarified that the motion judge's original costs order remained against one corporate defendant.

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 Royal Bank of Canada sought to recover over $3 million from individual defendants under personal guarantees for a family company's loans.

The defendants appealed a summary judgment, arguing that their liability was joint and several and limited to a global amount based on bank employee misrepresentations.

The Court of Appeal allowed the appeal, finding the motion judge erred by not adequately explaining the rejection of the defendants' unchallenged evidence regarding misrepresentation and by misapplying the entire agreement clause.

A trial was ordered to determine the scope of liability under the guarantees.

The Royal Bank of Canada (RBC) brought an action against Dr. Chul Yung Kim, seeking a declaration that a loan debt was obtained by false pretenses or fraudulent misrepresentation and therefore not released by his discharge from bankruptcy under section 178(1)(e) of the Bankruptcy and Insolvency Act.

The court found that Dr. Kim knowingly made false representations in his Personal Statements of Affairs regarding the ownership and value of a condominium and an aircraft to induce RBC to approve a loan facility and subsequent temporary loan increases.

RBC was found to have relied on these false representations.

The court concluded that Dr. Kim's conduct constituted socially unacceptable behavior that Parliament intended to exclude from bankruptcy protections.

Judgment was granted in favour of RBC, declaring the debt not released by bankruptcy and awarding damages for fraud.

The creditor, Royal Bank of Canada, appealed a decision of a Registrar in Bankruptcy who held that its bill of costs was an unsecured claim and not subject to taxation.

The creditor had submitted a bill of costs to the trustee, asserting a preferred claim under sections 70(2) and 136(1)(g) of the Bankruptcy and Insolvency Act.

The Superior Court of Justice allowed the appeal, finding that the bill of costs was a proper preferred claim and that such bills delivered to a trustee do not require taxation by the bankruptcy court.

The Royal Bank of Canada (RBC) was successful in its motion for summary judgment to enforce guarantees against the defendants.

This endorsement addresses RBC's request for costs of both the motion and the action on a substantial indemnity basis, as provided for in the guarantees.

The defendants argued for partial indemnity costs due to alleged unfair conduct by RBC.

The court found no reason to depart from the contractual provision for substantial indemnity costs, as the defendants' allegations of inequitable conduct were not substantiated.

The court also found the requested amount of $84,490.38, inclusive of fees, disbursements, and HST, to be fair and reasonable.

Following the dismissal of the plaintiff's four summary judgment motions, the successful defendants sought costs of $59,863.88 on a partial indemnity basis or $64,025.38 on a substantial indemnity basis.

The plaintiff argued for costs of $14,000.

The court declined to award substantial indemnity costs and found the defendants' claimed costs excessive due to duplication of materials across the four actions and inclusion of costs for the main action.

Applying Rule 57.01 and the principle of what is fair and reasonable for the unsuccessful party to pay, the court fixed costs at $25,000 inclusive of HST.

The plaintiff, Royal Bank of Canada, sought costs on a partial indemnity scale after being successful on a legal issue concerning the application of *Lawyers’ Professional Indemnity Company v. Rodriguez*.

The defendant, Chul Yung Kim, argued for mixed success due to the plaintiff narrowing 17 allegations of fraudulent misrepresentation to four during the summary judgment process, proposing a lower costs award.

The court found mixed success to the extent the allegations were narrowed but noted the *LawPro* issue was predominant.

The court reduced the plaintiff's claimed fees by one-third and awarded costs of $13,581.50 to the plaintiff.

The respondents, who succeeded in a summary judgment motion dismissing the appellant's claim regarding ownership of coating equipment sold during a bankruptcy proceeding, sought security for costs on the appeal.

The motion judge found no credible evidence supporting the appellant's ownership claim.

The appellant appealed on four grounds, all challenging the motion judge's credibility findings.

The Court of Appeal found the appeal entirely factual with no basis for establishing a palpable and overriding error, and determined the appellant corporation had insufficient assets in Ontario to pay costs.

The defendant bankrupt brought a motion for summary judgment to dismiss the plaintiff bank's action.

The bank sought a declaration under s. 178(1)(e) of the Bankruptcy and Insolvency Act that its prior default judgment against the defendant survived bankruptcy due to fraudulent misrepresentation.

The defendant argued the bank was barred from leading extraneous evidence of fraud not pleaded in the original action, relying on Rodriguez.

The court distinguished Rodriguez, finding the rule against extraneous evidence does not apply where the creditor had no knowledge of the fraud prior to obtaining judgment.

The court dismissed the motion, finding genuine issues for trial regarding the defendant's knowledge of the false representations and the bank's reliance on them.

The defendants brought a motion for summary judgment seeking to dismiss the plaintiffs' claims, rescind an Agreement of Purchase and Sale (APS), and recover a $5,000 deposit.

The dispute arose from the plaintiffs' alleged failure to disclose a license agreement with Trillium Railway Co. Ltd. for a 17-foot strip of land, which included significant property improvements, prior to the execution of the APS.

The plaintiffs asserted they disclosed this information before the APS, while the defendants claimed they learned of it much later.

Applying the Hryniak v. Mauldin framework, the court weighed the evidence, including email communications and party conduct, and found the plaintiffs' claim of early disclosure not credible.

The court concluded that the plaintiffs' failure to disclose the Trillium agreement constituted deliberate misrepresentation, entitling the defendants to rescind the APS.

Summary judgment was granted in favour of the defendants, dismissing the plaintiffs' claims, terminating the APS, and ordering the return of the deposit with interest.

The plaintiff credit union brought four actions for repayment of commercial loans against the defendants.

The defendants counterclaimed, alleging fraud and misconduct by a former employee of the plaintiff who negotiated the loans.

The plaintiff moved to strike the amended statements of defence and counterclaim.

The court granted the motion, finding that the defendants' pleadings contained sweeping conclusory allegations devoid of supporting material facts, failing to meet the requirements of Rule 25.06.

The pleadings were struck with leave to amend.

The appellants appealed a trial judgment ordering payment of over $4.2 million arising from breach of repair and maintenance obligations under a commercial lease for hotel and restaurant premises.

They argued the trial judge erred in interpreting the lease as imposing an enhanced repair standard and that there was insufficient evidence establishing the condition of the premises at the start of the lease.

The Court of Appeal rejected both arguments, holding that the lease language and commercial context supported the trial judge’s interpretation.

The court further held that evidence including contractual representations, inspection reports, and witness testimony provided a sufficient basis to compare the condition of the premises over time.

The appeal was dismissed and costs were awarded to the respondents.

BDO Canada Limited, the court-appointed receiver of Delta Logistics Transportation Inc., moved for an order requiring 2337764 Ontario Inc. to deliver possession of seven trucks over which 233 asserted a possessory lien under the Repair & Storage Liens Act (RSLA).

The receiver sought to take possession and sell the trucks for the benefit of creditors, arguing its powers derived from the broad court appointment order under the Bankruptcy & Insolvency Act (BIA). 2337764 Ontario Inc. contended that the court lacked jurisdiction, asserting its possessory lien rights and arguing that the matter should proceed under the RSLA's dispute resolution provisions.

The court distinguished the powers of a court-appointed receiver from those of a trustee in bankruptcy, emphasizing the receiver's fiduciary duty to all stakeholders and the supremacy of the court order.

The motion was granted, requiring 2337764 Ontario Inc. to deliver the vehicles to the receiver, with the lien claim to be determined later from the sale proceeds.

The applicant sought substantial indemnity costs after successfully litigating a right-of-way dispute.

The respondents, through new counsel, argued for lower costs, citing ineffective prior representation and a late concession.

The court awarded the applicant $20,000 in all-inclusive costs, finding that the respondents' conduct, including an adjournment, unhelpful affidavits, and a late major concession, warranted more than partial indemnity.

The court also clarified its earlier order regarding the registration of the court orders on title at the respondents' expense.

The applicant sought a declaration and injunction to remove fences obstructing an express mutual right-of-way on adjacent properties.

The respondents claimed abandonment of the right-of-way and possessory rights for a board fence erected prior to Land Titles conversion, and conceded the removal of a chain link fence erected after conversion.

The court found no evidence of abandonment of the right-of-way prior to Land Titles conversion and ordered the removal of all obstructing fences, issuing a permanent injunction against interference.

The moving party sought to set aside a registrar’s default judgment obtained by a bank arising from a corporate lease financing arrangement and a personal guarantee.

The court first considered whether the default judgment was an irregularity under Rule 19.08(1) of the Rules of Civil Procedure and concluded that the claim had been properly served and sufficiently particularized.

Applying the five‑factor test from appellate authority governing the setting aside of default judgments, the court found that although the motion was not brought with unexplained delay, the moving party had no arguable defence on the merits.

The corporate borrower had ceased operations and the guarantor had defaulted under a personal guarantee securing the company’s obligations.

Given the absence of a defence and the prejudice to the lender caused by ongoing storage costs for repossessed equipment, the court declined to set aside the default judgment.

The Receiver brought a motion to distribute funds to the secured creditor, RBC, and to approve its fees.

The Union opposed, claiming a super-priority for unpaid pension and other benefits under the BIA over all companies in the receivership, and sought to claw back the Receiver's fees.

The court held that the CRA's deemed trust for unremitted source deductions under the Income Tax Act takes priority over the Union's BIA super-priority claims.

The court also rejected the Union's attempt to extend its claims to other corporate entities in the group, finding no evidence they were related employers or participated in the pension plan.

The Union's attempt to claw back the Receiver's fees was dismissed as an impermissible collateral attack.

The defendant brought a motion to set aside a noting in default, a default judgment of over $100,000, and related enforcement steps.

The plaintiffs, who were elderly, had pledged their securities and co-signed a loan for the defendant, who subsequently defaulted.

The court applied the Mountain View Farms test and found the defendant's delay in responding to the claim was deliberate and inexcusable, and his proposed defence lacked an air of reality.

The motion was dismissed, and the stay of garnishment was lifted.