COURT OF APPEAL FOR ONTARIO
Roberts J.A. (Motion Judge)
In the Matter of the Bankruptcy of Douglas Grozelle, of the City of Hamilton, in the Province of Ontario
James Gibson, for the appellants/moving parties, Robyn Lee, 13877035 Canada Inc., 13876985 Canada Inc., John McMullan, Krista McMullan, Hardial Singh, SS Singh Enterprises, Christopher Chetty, Chris Chetty Financial Inc., Shan Singh, CCSS Fin Fund Inc., QQ21 Fund Inc., 13176100 Canada Ltd. and Force One Marketing Corporation
David Ward and Armando Ranjbar, for the respondent/responding party, Grant Thornton Limited in its capacity as trustee in bankruptcy of Douglas Grozelle
Heard: June 10, 2026
REASONS FOR DECISION
Overview
1The moving parties were investors in what Myers J. found was a Ponzi scheme perpetrated by the bankrupt, Douglas Grozelle. The trustee in bankruptcy successfully obtained a declaration that certain investment returns received by the moving parties were fraudulent conveyances (the “clawback order”). Myers J. bifurcated the trustee’s motion into two parts and deferred the disposition of the costs of the trustee’s motion until final determination of the second part of the motion.
2A group of investors in Grozelle’s scheme, many of whom are now the moving parties on this motion, brought a cross-motion for directions concerning the appropriate procedure for determining the clawback claims, the methodology for identifying net winners and net losers, and certain concerns about the administration of the bankruptcy estate. The cross-motion was dismissed with costs of $180,000 ordered against the moving parties (the “costs order”).
3The moving parties bring this motion for leave to amend their notice of appeal to seek leave to appeal the costs order. They have not appealed from the dismissal of their cross-motion. They have appealed from the clawback order, which they argue is inextricably bound up with the issues on the cross-motion and the costs order.
Issues
4Before the amendment question can be determined, it is necessary to determine two other issues:
(1) First, whether the costs order is an order made under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), and, if so, whether the moving parties must obtain leave to appeal the $180,000 order under s. 193(e) of the BIA. The parties submitted further written arguments on this issue, which I have received and reviewed.
(2) Second, if the costs order is not an order made under the BIA, whether the appeal from the costs order, which would otherwise lie to the Divisional Court with leave, should be consolidated with the appeal from the clawback order, pursuant to s. 107(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”).
5For the reasons that follow, I am of the view that the costs order was a procedural order made under the statutory powers of the BIA and that leave to appeal is therefore required under s. 193(e) of the BIA. I further conclude that leave to appeal should not be granted. As a result, I dismiss the moving parties’ motion.
Analysis
i. Does s. 193 of the BIA apply?
6I disagree with the moving parties’ submissions that the costs order was a freestanding order related to the fraudulent conveyances declaration and should be subject to the appeal provisions of the CJA.
7The jurisdiction of the court for the purposes of appeal is governed by the substance of the order made: RREF II BHB IV Portofino, LLC v. Portofino Corporation, 2015 ONCA 906, 33 C.B.R. (6th) 9, at para. 12; Dal Bianco v. Deem Management Services Limited, 2020 ONCA 585, 82 C.B.R. (6th) 161, at para. 11. The costs order followed the moving parties’ unsuccessful cross-motion, which focused on administrative and procedural matters within the bankruptcy. Myers J. made the costs order pursuant to the authority conferred under s. 197(1) of the BIA. That there was authority for the court to make the costs order under the CJA is of no moment. Where the authority to make the order is under the BIA and under provincial legislation in bankruptcy proceedings, the appeal is governed by the BIA as a matter of paramountcy: Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13, at paras. 5, 66-67; Dal Bianco, at para. 6.
8Accordingly, the moving parties’ proposed appeal of the costs order is under s. 193 of the BIA.
ii. Is leave to appeal required under s. 193(e) of the BIA?
9I reject the moving parties’ argument that their proposed appeal from the $180,000 costs order is as of right under s. 193(c) of the BIA. It is well-established that s. 193(c) is to be construed narrowly, rejecting an expansive application of the automatic right of appeal contained in that section. The approach to be followed is “alive to and satisfies the needs of modern, ‘real-time’ insolvency litigation” and dictates that: “s. 193(c) does not apply to (i) orders that are procedural in nature, (ii) orders that do not bring into play the value of the debtor's property, or (iii) orders that do not result in a loss”: 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 396 D.L.R. (4th) 635, at para. 53.
10The essence of the bankruptcy regime is to promote the efficient and expeditious resolution of a bankruptcy, one of the principal objectives of bankruptcy legislation, which necessarily requires the court to control the appeal process in bankruptcy matters: 2403177 Ontario Inc., at para. 47. It would be contrary to the legislative purpose of the bankruptcy regime to allow an automatic right of appeal for costs orders that under any other regime, including the CJA, would require leave to appeal.
11The proposed appeal relates to the monies that the appellants have to pay in costs, not the bankrupt’s property or any loss to the bankrupt’s property exceeding $10,000. Rather, the costs order serves to reimburse the trustee for its costs in responding to the unsuccessful cross-motion. The costs order is therefore entirely procedural. As a result, leave to appeal is required under s. 193(e) of the BIA: Osztrovics Estate v. Osztrovics Farms Ltd., 2015 ONCA 463, 27 C.B.R. (6th) 156.
iii. Should leave to appeal the costs order be granted under s. 193(e) of the BIA?
12The moving parties submit that the issue of leave to appeal should be left to the appeal panel. There is no justification for doing so. As a single judge of this court, I clearly have jurisdiction to determine the question of leave to appeal under s. 193 of the BIA. Moreover, as this court recently instructed in North House Foods Ltd. (Re), 2025 ONCA 563, 20 C.B.R. (7th) 1, at para. 34: “Motions for leave to appeal under s. 193(e) are to be brought to a single judge in chambers.” Motions for leave to appeal may be put before an appeal panel but it is not mandatory to do so. Further, delaying this issue to the appeal panel would only interfere with the speedy administration of the appeal and simply cause more costs to be incurred in this bankrupt estate.
13I turn finally to the question of whether leave to appeal the costs order should be granted. I am not persuaded that it is in the interests of justice to do so, having regard to the well-established criteria set out by this court in Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29, and as followed in subsequent cases of this court:
(1) The proposed appeal does not raise any issue of general importance to the practice in bankruptcy or insolvency matters. The costs order was a run-of-the-mill costs order following an unsuccessful motion.
(2) The proposed appeal is not prima facie meritorious. It is a high hurdle to obtain leave to appeal a costs order because of its discretionary nature and the considerable appellate deference owed to the judge’s exercise of discretion in making it. This deference is only displaced where the costs order is the product of an error in principle or plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.
(3) Finally, the proposed appeal would hinder the progress of the bankruptcy proceedings. If leave to appeal were granted, the trustee would have to use non-existent or scant resources to respond to an appeal that prima facie lacks merit and to delay the reimbursement of its costs expended to respond to the cross-motion.
14Leave to appeal the costs order is therefore denied.
Conclusion
15In summary, I conclude that the costs order is an order made under the BIA and that leave to appeal is required under s. 193(e) of the BIA. I further determine that leave to appeal should not be granted. As a result, it is unnecessary to consider the issues of consolidation and amendment.
Disposition
16The moving parties’ motion is dismissed.
17The trustee is entitled to its costs from the moving parties. Although the parties submitted costs outlines at the hearing of the motion, those outlines did not include the fees for the supplementary written submissions submitted by the parties. If the parties are unable to agree on the disposition of costs, they may deliver brief written submissions of no more than one page, plus a revised costs outline, within 10 days of the release of these reasons.
“L.B. Roberts J.A.”