Bankruptcy and Insolvency Law - ODC

The appellants, construction trades, appealed a Master's decision granting summary judgment dismissing their breach of trust actions against the respondents and refusing to lift bankruptcy stays.

The Divisional Court upheld the Master's finding that the appellants' breach of trust claims were discovered when they signed minutes of settlement in 2009, making their 2012 and 2013 actions statute-barred under the Limitations Act, 2002.

Consequently, there was no basis to lift the bankruptcy stays under s. 69.4 of the Bankruptcy and Insolvency Act.

The appeals were dismissed.

The Trustee in Bankruptcy brought a motion to quash an appeal filed by the bankrupt's former spouse.

The former spouse had appealed an order made by a Master, arguing the Master acted in her capacity as a Superior Court Master rather than a Registrar in Bankruptcy, which would give the Divisional Court jurisdiction.

The Divisional Court found that the Master was acting in her capacity as a Registrar in Bankruptcy when she dismissed the motion to vary.

Consequently, the Divisional Court lacked jurisdiction to hear the appeal, as appeals from a Registrar in Bankruptcy must be brought before a single judge on the Commercial List.

The motion to quash the appeal was granted.

The appellant appealed an order requiring her to attend an examination in aid of execution, arguing the Master erred because she had filed for bankruptcy two days prior, triggering an automatic stay under s. 69.3(1) of the Bankruptcy and Insolvency Act.

The respondent argued the underlying default judgment declared the debt survived bankruptcy under s. 178(1).

The Divisional Court allowed the appeal, finding that s. 178(1) applies to discharge, not the automatic stay, and the Master erred in granting the order while the stay was in effect.

The applicant sought an order approving the sale of its assets to a purchaser under the Companies' Creditors Arrangement Act.

The transaction was a credit-bid that would result in the continuation of a substantial portion of the business, saving jobs and stores.

An unsecured creditor objected because the transaction did not treat all unsecured creditors equally, as the purchaser assumed only certain critical supplier liabilities.

The court approved the transaction, finding that under s. 36 of the CCAA, there is no requirement that all creditors be treated equally in a sale, and the transaction was more beneficial than a liquidation.

The appellant appealed a trial judgment finding him liable for civil fraud and ordering him to pay $30,526 plus costs.

The respondent had paid the appellant's CRA tax lien to clear title to a jointly owned family residence transferred to her pursuant to a family law settlement, and subsequently sued him after he declared bankruptcy, alleging his failure to disclose the tax debt constituted fraudulent misrepresentation.

The Divisional Court allowed the appeal and dismissed the action, finding the trial judge erred in law by applying a test for fraudulent non-disclosure rather than the strict four-part test for fraudulent misrepresentation, and made palpable and overriding errors of fact unsupported by the evidence.

The appellants appealed the dismissal of their motion for summary judgment.

The underlying action was a subrogated claim brought by an insurer in the names of the respondents for damages arising from a fuel oil spill.

The appellants argued the action was a nullity because the respondents were undischarged bankrupts when the claim was issued, meaning their causes of action had vested in their Trustees.

The Divisional Court dismissed the appeal, finding that the insurer's subrogation rights crystallized before the husband's assignment in bankruptcy, and the Trustee had disclaimed interest in the insurance claims.

Thus, the insurer was entitled to commence the action in the husband's name.

The prospective appellant sought leave to appeal an order requiring its representatives to re-attend an examination and pay costs.

The appellant argued the underlying contempt motion was a nullity because it was brought on the civil motion list rather than in Bankruptcy Court.

The Divisional Court dismissed the motion for leave to appeal, finding no reason to doubt the correctness of the motion judge's conclusion that the motion was properly brought in both emanations of the Superior Court.

The appellants obtained a default judgment against the respondent, an undischarged bankrupt, after successfully moving to lift a bankruptcy stay and striking his pleadings without providing him notice.

The respondent successfully moved to set aside the default judgment.

The appellants appealed, arguing the bankrupt lacked standing under the Bankruptcy and Insolvency Act to bring the motion to set aside and that he was not entitled to notice.

The Divisional Court dismissed the appeal, holding that the bankrupt had standing to defend an action involving claims of fraud that would survive bankruptcy, and that he was entitled to notice of the motion to strike under the Rules of Civil Procedure once the stay was lifted.

The defendant sought leave to appeal a decision dismissing its motion to strike the plaintiff's claims for punitive and aggravated damages.

The defendant argued that the bankruptcy trustee lacked the legal capacity to advance these in personam claims on behalf of the bankrupt company.

The Divisional Court dismissed the motion for leave to appeal, finding no conflicting decisions and no good reason to doubt the correctness of the motion judge's conclusion that it was not plain and obvious the trustee lacked capacity.

The applicant sought leave to appeal a costs award made by the motion judge following the dismissal of a motion against two landlords of a bankrupt tenant.

The applicant argued that the reasons for the costs award were unclear and that the costs outline improperly included attendances for mediation and an offer to settle that did not meet Rule 49 criteria.

The Divisional Court dismissed the motion for leave, finding that there were ample grounds for the motion judge's exercise of discretion, including the urgency of the motion, the resounding success of the landlords, and the significant effort required to prepare materials.

Following the dismissal of the moving party's motions for leave to appeal and for a stay, the successful responding parties sought their costs on a partial indemnity basis.

The moving party failed to provide any costs submissions.

The court considered the principle of proportionality and the moving party's conduct which thwarted the bankruptcy trustee's mandate.

Costs were fixed at $20,000 for the trustee and $7,323.41 for the applicants, payable by the moving party.

The mother sought leave to appeal an order severing the father's bankruptcy file from the outstanding family law claims.

The mother argued that a previous case management order had consolidated the matters and that the trial judge erred in severing them.

The Divisional Court dismissed the motion for leave to appeal, finding no conflicting decision and concluding that the trial judge had the authority to manage the trial process.

The court emphasized that further delay was undesirable.

The moving party sought leave to appeal an order appointing an investigative receiver over it.

The moving party argued the motion judge erred by not first finding evidence of fraud or dissipation of assets.

The Divisional Court dismissed the motion, finding the motion judge applied the correct test under s. 101 of the Courts of Justice Act and that the appointment was just and convenient given the interconnectedness of the moving party with bankrupt companies and the flow of funds between them.

The test for leave to appeal was not met.

The plaintiffs appealed an order refusing to set aside a registrar's order that dismissed their motor vehicle accident claim for delay.

The defendant had entered bankruptcy shortly after being served, triggering an automatic stay under the Bankruptcy and Insolvency Act.

The Divisional Court allowed the appeal, finding that the Master erred by failing to consider the ultimate justice of the case, given the lack of prejudice to the insurer.

Furthermore, the court held that the bankruptcy stay deprived the registrar of jurisdiction to dismiss the action, rendering the dismissal order a nullity.

The appellant appealed the dismissal of its motion under Rule 45.02 for an order preserving a sum of money held as cash collateral.

The appellant argued that its obligations under a Letter of Credit Agreement were discharged because the respondent entered into a forbearance agreement with the principal borrower, materially altering the guaranteed loan.

The Divisional Court dismissed the appeal, finding that the agreement was for a standby letter of credit, not a guarantee, and thus the law of guarantees did not apply.

Furthermore, the cash collateral was not a specific fund to which the appellant had a proprietary claim, and the appellant had implicitly ratified the forbearance agreement by participating in the borrower's insolvency proceedings without objection.