Bankruptcy and Insolvency Law - OCA

The appeal concerns who is liable for outstanding municipal taxes in a receiver's sale of assets with an approval and vesting order (AVO).

The motion judge found the purchaser liable because the taxes were not yet due at closing.

The Court of Appeal reversed, holding that under s. 307(3) of the Municipal Act, liability for the taxes arose on January 1 of the relevant taxation years, prior to closing.

Therefore, the liability remained with the vendor (the receiver) and was vested out of the purchased assets by the AVO.

The court-appointed receiver brought a motion seeking a declaration that the debtor had no automatic right of appeal from an Approval and Vesting Order under the Bankruptcy and Insolvency Act, and an order denying leave to appeal.

The debtor argued it had an automatic right of appeal under s. 193(a) or (c) of the BIA, or alternatively sought leave under s. 193(e).

The Court of Appeal held that the debtor had no automatic right of appeal, as the order did not affect future rights or result in a direct loss exceeding $10,000.

The Court also denied leave to appeal, finding the proposed appeal lacked merit, did not raise an issue of general importance, and would unduly hinder the insolvency proceedings.

The appellant, Bank of Montreal, sought to appeal an order lifting a stay of proceedings in a receivership, which allowed the respondent to terminate a project agreement.

The appellant argued it had an automatic right of appeal under s. 193(c) of the Bankruptcy and Insolvency Act, or alternatively, sought leave to appeal under s. 193(e).

The Court of Appeal held that the order lifting the stay was procedural, did not directly bring into play the value of the debtor's property, and did not directly result in a loss, meaning there was no automatic right of appeal.

The court also denied leave to appeal, finding the proposed appeal was not prima facie meritorious, did not raise issues of general importance, and would unduly hinder the insolvency proceedings.

The appellant, an undischarged bankrupt, commenced an action against his former landlord for the disposal of business assets and related mental distress.

The motion judge dismissed the action as a nullity, finding that only the trustee in bankruptcy had the capacity to sue.

On appeal, the appellant argued the assets were exempt 'tools of the trade' under the Bankruptcy and Insolvency Act.

The Court of Appeal dismissed the appeal, noting the exemption limit was only $11,300, the claim sought damages rather than the return of property, and the mental distress claim was inextricably linked to the property claim belonging to the bankrupt estate.

The appellant appealed a judgment dismissing a motion for a declaration that a debt arising from a 2016 default judgment survived the respondent's bankruptcy discharge under s. 178(1)(d) of the Bankruptcy and Insolvency Act.

While it was undisputed that the respondent fraudulently embezzled funds from their shared corporation, the motion judge found no evidence that the respondent owed the appellant a fiduciary duty as a co-director or shareholder.

The Court of Appeal found no reviewable error in the motion judge's conclusion that there was no power imbalance requiring absolute loyalty, and dismissed the appeal.

The applicant, an experienced litigation lawyer, sought leave to bring a motion to set aside the Registrar's dismissal of his appeal in a bankruptcy proceeding.

The appeal had been dismissed for failure to perfect it within the ordered timeframe.

The court found that the applicant's conduct, including repeated delays and failure to comply with rules, indicated an attempt to stall the enforcement of the bankruptcy order.

The motion for leave was dismissed with costs.

The moving party law firm sought an order under Rule 15.04 of the Rules of Civil Procedure to be removed as the lawyer of record for the appellant in a receivership proceeding.

The firm had filed a notice of appeal on behalf of the appellant to prevent the sale of two condominium units, despite intending to have no further involvement.

The Court of Appeal dismissed the motion, finding that the firm had launched a 'zombie appeal' that jeopardized the receivership proceedings and abused its status as an officer of the court.

The firm was ordered to remain on the record until the final disposition of the receiver's motion to quash the appeal, prioritizing the administration of justice over the firm's interests.

The appellant appealed an order varying a default judgment to include a declaration that the judgment debt survives his bankruptcy under s. 178(1)(d) of the Bankruptcy and Insolvency Act.

The appellant argued the motion judge erred by admitting fresh evidence and finding the pleadings sufficiently particularized a claim for misappropriation while acting in a fiduciary capacity.

The Court of Appeal dismissed the appeal, holding that fresh evidence is admissible on a Rule 59.06(2) motion to vary, and the pleadings were sufficient to ground the claim.

The trustee in bankruptcy of a company that operated a Ponzi scheme brought actions against investors to recover usurious interest and commission payments.

The trial judge ordered repayment of preferences and usurious interest, finding the investors knew or ought to have known the returns were too good to be true.

On appeal, the investors argued the claims were statute-barred and that the corporate attribution doctrine should impute the fraudster's knowledge to the company.

The Court of Appeal dismissed the appeal, holding that public policy grounds justified exercising discretion not to apply the corporate attribution doctrine, as doing so would perversely allow fraudsters to benefit at the expense of legitimate creditors.

The trustee's cross-appeal was allowed in part, including findings that referral agreements were illegal contracts at common law and that certain defendants were not entitled to dividends until other creditors were satisfied.

The moving parties, representing U.S. class action claimants, sought leave to appeal a supervising judge's order in a CCAA proceeding.

The supervising judge had dismissed their motion seeking to be treated as unaffected creditors or to have an expedited adjudication of their claims prior to a creditor vote.

The Court of Appeal denied leave, finding that the proposed appeal was not prima facie meritorious and did not raise issues of significance to the insolvency practice.

The Court emphasized the high level of deference owed to a CCAA supervising judge's discretionary decisions balancing stakeholder interests.

The respondent, KingSett Mortgage Corporation, moved to quash an appeal brought by 30 Roe Investments Corp. from an order appointing a receiver over nine condominium units. 30 Roe argued it had an appeal as of right under s. 193(c) of the Bankruptcy and Insolvency Act and alternatively sought leave to appeal under s. 193(e).

The Court of Appeal granted the motion to quash, confirming that no appeal as of right exists from a receivership order under s. 193(c).

The Court also dismissed the motion for leave to appeal, finding the proposed appeal lacked merit, did not raise an issue of general importance, and would unduly hinder the receivership proceedings.

The appellants, directing minds and associates of two insolvent construction companies, orchestrated a false invoicing scheme to siphon tens of millions of dollars from the debtors.

The monitor and trustee sought to recover the funds as transfers at undervalue under s. 96 of the Bankruptcy and Insolvency Act.

The appellants argued that the companies were financially healthy at the time of the transfers, and that the directing mind's fraudulent intent could not be attributed to the companies under the common law corporate attribution doctrine.

The Court of Appeal dismissed the appeals, holding that the corporate attribution doctrine should be applied flexibly in the bankruptcy context to impute the directing mind's fraudulent intent to the debtor corporations.

This purposive approach prevents fraudsters from benefiting at the expense of legitimate creditors and fulfills the remedial objectives of the bankruptcy legislation.

The appellants appealed the orders of a motion judge who granted a declaration that previous court orders survived the appellants' bankruptcy.

The motion judge provided no reasons for her decision or for the costs order.

Both parties asked the Court of Appeal to set aside the order.

The Court of Appeal allowed the appeal, finding that the failure to provide reasons incapable of meaningful appellate review constituted an error in law, and ordered a new hearing before a different judge.

In a CCAA proceeding, the Monitor sought leave to appeal an order dismissing its motion for a declaration that funds swept into a UK bank account were subject to a statutory trust under the Construction Lien Act.

The CCAA judge had found the funds were irreconcilably commingled and could not be traced.

The Court of Appeal refused to admit fresh evidence and denied leave to appeal, finding the proposed appeal was not prima facie meritorious and the decision was fact-specific and consistent with established jurisprudence regarding tracing.

The moving parties (debtors) sought leave to appeal under s. 193(e) of the Bankruptcy and Insolvency Act from an order approving a court-appointed receiver's proposed sale process and list prices for five commercial properties.

The debtors argued the motion judge failed to apply the correct legal test (the Soundair test) and was unduly deferential to the receiver's business judgment.

The Court of Appeal dismissed the motion for leave, finding that the motion judge had implicitly applied the Soundair test, the proposed appeal lacked prima facie merit, did not raise an issue of general importance, and would unduly hinder the progress of the receivership proceedings.

The moving parties, a syndicate of six banks, sought to partially lift an automatic stay of a bankruptcy order pending appeal under s. 195 of the Bankruptcy and Insolvency Act.

The banks argued that the appellant was frustrating the bankruptcy process and might dissipate her assets.

The court found that the appellant's grounds of appeal were extremely weak and that maintaining the stay would prejudice the banks by preventing the trustee from identifying and preserving assets.

The court granted the motion, partially lifting the stay to allow the trustee to exercise specific powers under the BIA.

The appellant sought to appeal the dismissal of his summary judgment motion regarding fraudulent conveyances.

The motion judge had dismissed the motion on the basis that the underlying debt was discharged in bankruptcy and the appellant had failed to follow the correct procedure under the Bankruptcy and Insolvency Act.

The Court of Appeal quashed the appeal, finding that the motion judge's order was interlocutory because it did not determine the substantive rights of the parties.

Therefore, the appeal properly lies to the Divisional Court with leave.

The appellants, whose assets were managed by a court-appointed receiver, were reassessed by the CRA for unpaid taxes arising from shareholder loans.

They sought to sue the receiver for gross negligence in failing to engage in tax planning.

The accounting firm also sought leave to crossclaim against the receiver.

The Court of Appeal upheld the motions judge's decision dismissing the actions, finding that leave was required to sue the receiver and that the appellants failed to establish a prima facie case of gross negligence or wilful misconduct.

The moving party brought a motion to determine whether the appellant required leave to appeal an order dismissing a claim for occupation rent against a receiver.

The Court of Appeal held that the appellant had an automatic right of appeal under s. 193(c) of the Bankruptcy and Insolvency Act because the appeal directly involved property exceeding $10,000 in value.

The motion was dismissed, and the appeal was permitted to proceed without leave.

The moving parties sought directions on whether they required leave to appeal an order made by a CCAA judge dismissing their jurisdictional challenge to a contract dispute motion brought by the responding parties.

The moving parties also sought a stay of the contract dispute motion pending their appeal.

The responding parties brought a cross-motion to expedite the hearing of the leave to appeal motion.

The Court of Appeal held that the CCAA judge's order was 'made under' the CCAA, meaning leave to appeal was required under s. 13.

The Court expedited the leave to appeal motion and granted a stay of the contract dispute motion pending the determination of the leave motion, finding that the balance of convenience favoured a stay.