Bankruptcy and Insolvency Law - OCA

The appellant developer appealed two summary judgments ordering the return of deposits paid for commercial and residential condominium units in a development.

The respondents had sought to rescind the purchase agreements based on material changes to the development disclosed in revised disclosure statements.

After the developer's financial difficulties led to receivership, the receiver conveyed the units to a third party, making performance impossible.

The motion judge found the agreements were terminated through no fault of the purchasers and ordered return of deposits with interest.

The appellate court upheld both judgments, finding the purchasers had not breached the agreements and were entitled to relief under the contractual termination provisions.

The appellant appealed a motion judge's order regarding the distribution of funds following the sale of a property by a court-appointed receiver.

The appellant argued that the entire first mortgage ranked in priority to the receiver's charge for fees and expenses.

The Court of Appeal dismissed the appeal, agreeing with the motion judge that the receiver's charge was subordinate only to the specific financial interest of the assignee who held the mortgage as security for a loan, rather than the entire principal amount of the first mortgage.

The appellant union appealed a decision finding that the CCAA judge had no jurisdiction to apply the American doctrine of equitable subordination to subordinate the claims of the respondent parent company.

The Court of Appeal dismissed the appeal, holding that the CCAA does not provide express or implied authority to apply equitable subordination, and that the doctrine does not fall within the scheme of the statute, which focuses on the implementation of a plan of arrangement or compromise rather than legislating a scheme of priorities.

The appellant sought leave under s. 215 of the Bankruptcy and Insolvency Act to sue a litigation committee for defamation regarding a report sent to s. 38 litigation participants.

The motion judge dismissed the motion, finding the words were not defamatory and were protected by qualified privilege.

On appeal, the appellant sought to introduce fresh evidence that the report was sent to non-participants.

The Court of Appeal dismissed the appeal and the fresh evidence application, upholding the finding that the words were not defamatory and noting the appellant had no reputation to protect among the recipients.

The respondent obtained a money judgment against the appellant and secured an order compelling him to attend an examination in aid of execution with specified documents.

The day before the examination, the appellant made an assignment in bankruptcy.

He attended the examination but brought a Notice of Stay of Proceedings instead of the documents.

The motion judge allowed the respondent's contempt motion to proceed.

The Court of Appeal allowed the appeal, holding that the examination was stayed by section 69.3 of the Bankruptcy and Insolvency Act upon the bankruptcy, and therefore the failure to bring documents could not found contempt.

The moving party, a director of the debtor companies, sought leave to appeal orders approving the sale of a lawsuit commenced by the debtors against their secured creditor.

The receiver had accepted a credit bid from the secured creditor to purchase the action.

The Court of Appeal dismissed the motion for leave to appeal, finding that the receiver's authority to sell the action was already determined in prior unappealed orders (res judicata) and that the proposed appeal lacked prima facie merit.

The appellant obtained a civil judgment in excess of $1 million against the respondent for an unprovoked assault that caused permanent brain damage.

The respondent subsequently filed for bankruptcy.

The appellant moved for a declaration that the judgment survives bankruptcy under s. 178(1)(a.1) of the Bankruptcy and Insolvency Act as an award for bodily harm intentionally inflicted.

The motion judge dismissed the motion, finding no intent to injure.

The Court of Appeal allowed the appeal, holding that the respondent's act of punching the appellant in the head with a closed fist demonstrated the requisite intent to inflict bodily harm, and the judgment therefore survives the bankruptcy discharge.

The Ministry of the Environment appealed a CCAA judge's order declaring that environmental remediation orders issued against the insolvent respondents were financial in nature and subject to a CCAA stay of proceedings.

Applying the Supreme Court's decision in AbitibiBowater, the Court of Appeal held that ongoing environmental remediation obligations are only provable claims if it is sufficiently certain that the province will perform the work and seek reimbursement.

The Court found it was not sufficiently certain the MOE would perform the remediation for most of the sites, as the orders were also directed at subsequent owners.

The appeal was allowed, and the stay was modified to apply only to the portion of the London property still retained by the respondents.

The Ministry of the Environment appealed a CCAA judge's decision that environmental remediation orders issued against an insolvent company were subject to a stay of proceedings.

The insolvent company had abandoned a contaminated site after selling its other assets.

Applying the Supreme Court's decision in AbitibiBowater, the Court of Appeal found it was sufficiently certain that the Ministry would perform the remediation work itself, making the regulatory orders in substance a provable monetary claim in the insolvency.

The appeal was dismissed.

The Ministry of Training, Colleges and Universities granted funds to a First Nations limited partnership to provide skills training.

The partnership applied to dissolve and an interim receiver was appointed.

The application judge found that the unspent grant moneys were subject to a Quistclose trust for the Ministry's benefit and ordered the receiver to return them.

The Court of Appeal allowed the receiver's appeal, finding that the funding agreement characterized unused funds as a debt, not a trust, and gave the partnership significant discretion to spend the funds.

Therefore, the requirements for a Quistclose trust were not met and the funds were available for distribution in the receivership.

The trustee in bankruptcy brought a motion under s. 95 of the Bankruptcy and Insolvency Act to set aside a pre-bankruptcy payment as a preference.

The respondent argued the motion was time-barred under the Limitations Act, 2002.

The trustee contended that the limitation period was suspended by the stay of proceedings under s. 195 of the BIA during the bankrupt's appeal of the bankruptcy order.

The Court of Appeal held that s. 195 does not extend, suspend, or vary the limitation period, and dismissed the appeal, confirming the motion was statute-barred.

The Superintendent of Bankruptcy sought to appeal a Superior Court decision that found no operational conflict between the Highway 407 Act's vehicle permit denial provisions and the Bankruptcy and Insolvency Act's discharge provisions.

The Superintendent had not been a party to the lower court proceedings. 407 ETR moved to quash the appeal for lack of standing.

The Court of Appeal held that while the Superintendent does not have an automatic right to appeal as a non-party, the court has jurisdiction under s. 193(e) of the BIA to grant leave to appeal in exceptional circumstances.

Finding that the Superintendent was deprived of notice below and raised issues of systemic importance, the Court granted an extension of time and leave to appeal.

The Court of Appeal issued a costs endorsement following an appeal in CCAA proceedings.

The appellant, Computershare Trust Company of Canada, was ordered to pay costs of the appeal to the respondent Crystallex International Corporation in the amount of $110,688.00, and to the respondent Tenor Capital Management Company, L.P. and Affiliates in the amount of $80,000.

Both amounts are inclusive of disbursements and HST.

The unions sought leave to appeal an order granting super priority to a DIP lender over provincial pension legislation in a CCAA restructuring.

The Court of Appeal denied leave, finding the proposed appeals lacked sufficient merit.

The court upheld the motion judge's application of the doctrine of paramountcy, agreeing that without the DIP financing and super priority, the objectives of the CCAA would be frustrated and the company would be forced into bankruptcy.

The appellant appealed the dismissal of its action brought pursuant to s. 38(1) of the Bankruptcy and Insolvency Act to set aside alleged fraudulent conveyances.

The motion judge had dismissed the action as an abuse of process and barred by res judicata due to the bankrupt's discharge and the dismissal of a prior action.

The Court of Appeal allowed the appeal, holding that under s. 38(1), the appellant was advancing the Trustee's claim, not its own personal claim, meaning the action was not a collateral attack on the discharge order or barred by res judicata.

The Court also dismissed the respondents' motion to review a decision refusing to order security for costs against the appellant's counsel, who was acting on a contingency fee basis.

The appellant challenged an order declaring that a judgment debt survived bankruptcy.

He argued that the respondent had delayed too long in bringing the application before the bankruptcy court and that a prior criminal compensation order concerning the same debt rendered further civil proceedings unnecessary.

The court rejected both submissions, finding no statutory bar, no prejudice arising from delay, and no legal basis for the proposition that the criminal compensation order displaced the respondent's bankruptcy remedy.

The appeal was dismissed.

The appellant appealed an order setting aside a civil jury verdict and directing a new trial after the trial judge concluded there was no evidence to support the jury's finding.

The dispute arose from a creditor's claim, authorized under s. 38 of the Bankruptcy and Insolvency Act, to recover from settlement proceeds allegedly attributable to the respondent's pre-bankruptcy wage loss claim in motor vehicle litigation.

The Court of Appeal held there was some evidence from which the jury could infer that part of the settlement compensated pre-bankruptcy income loss, such that the trial judge erred in invoking the 'no evidence' rule under Rule 52.08(1)(c).

The appeal was allowed, judgment was entered for the appellant, and the respondent's cross-appeal was dismissed.

A receiver appointed at the instance of a secured creditor sought recovery of deferred management fees withdrawn before receivership and operating funds deposited into a new bank account shortly before the appointment.

The Court of Appeal held that both claims were subject to equitable setoff because the respondent's cross-obligations arose from the same management relationship and were closely connected to the receiver's claims.

The court rejected arguments that the new account involved conversion or that the management agreement created a trust excluding the respondent's claims.

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

The appellant challenged a Commercial List order refusing an adjournment and dismissing its appeal from the disallowance of a proof of claim in a winding-up proceeding for want of prosecution.

The Court of Appeal held that the motion judge was aware of the full context, including the appellant's prolonged inaction, failure to file responding materials, and failure to explain either the asserted conflict with counsel or the delay.

The court rejected the appellant's procedural fairness argument and found no error in the exercise of discretion.

The appeal was dismissed with costs.

On a motion to quash an appeal from a sale approval order in a receivership, the court held that an unsuccessful prospective purchaser had no standing to appeal because the order did not finally dispose of any legal or proprietary right of that bidder.

The court emphasized that the purpose of a sale approval motion is to determine whether the proposed sale is in the best interests of parties directly interested in the proceeds, primarily creditors, not disappointed bidders.

The court rejected arguments that the bidder acquired appeal rights through the terms of a prior negotiation order or by being heard below.

The appeal was quashed with costs to the moving party.