James H. Grout

The appellants appealed an order striking out their action under Rule 2.1 of the Rules of Civil Procedure as an abuse of process.

The appellants had previously failed to set aside a default judgment obtained against them and subsequently brought a new action claiming damages and alleging fraud regarding the service of the original claim.

The Court of Appeal upheld the motion judge's finding that the new action was an attempt to relitigate issues already decided and dismissed the appeal.

The applicant sought court sanction of a plan of compromise and arrangement under the Companies’ Creditors Arrangement Act to resolve extensive litigation arising from the audit of Castor Holdings Ltd. The plan involved contributions from partners, insurers, and related entities totaling approximately $220 million and included third‑party releases.

A creditor group opposed the sanction, arguing that the releases violated Quebec civil law and that the claims process was unfair.

The court rejected these objections, finding the expert evidence unreliable, confirming that federal insolvency law permits third‑party releases notwithstanding provincial law, and concluding the plan was fair and reasonable given overwhelming creditor approval.

The plan was sanctioned.

In bankruptcy proceedings arising from non-payment under a promissory note tied to the sale of a New York condominium, the court interpreted the note's limited recourse clause as capping recovery at one-third of sale proceeds rather than restricting recourse solely to identifiable sale proceeds in specie.

On that interpretation, the creditor remained an unsecured creditor after the debtor received the sale proceeds and therefore had standing to pursue a bankruptcy order.

The creditor's motion for a Rule 39.03 examination was dismissed because no further factual inquiry was necessary to answer the debtor's legal motion.

The debtor's motion to dismiss or strike the bankruptcy application was also dismissed, and the application was adjourned by agreement pending further materials and cross-examinations.