Court of Appeal for Ontario

Date: 20220308 Docket: C69450

Feldman, Tulloch and Miller JJ.A.

BETWEEN

Crown Capital Private Credit Fund, LP, by its general partner, Crown Capital Private Credit Management Inc. Applicant

and

Mill Street & Co. Inc. Respondent

Counsel: Micheal Simaan, for the appellants, 997322 Ontario Inc., Monica Murad and Aaron Murad Shayne Kukulowicz, Ted Frankel and Monique Sassi for the respondent, A. Farber & Partners Inc.

Heard: February 28, 2022 by video conference, with further submissions filed in writing

On appeal from the order of Justice Markus Koehnen of the Superior Court of Justice, dated May 5, 2021.

Reasons for Decision

[1] The appellants are Monica Murad and Aaron Murad, two members of the Murad family, who together with the corporations they control, both individually and together, were referred to by the Receiver throughout the receivership of Mill Street & Co. Inc. as “the Murad Parties”. Mill Street and its subsidiaries are owned by members of the Murad family.

[2] The motion judge found that the Murad Parties raised ongoing obstacles to the operation of the receivership and obstructed the Receiver, including by asserting a fraudulent licensing agreement purporting to license certain software by one Murad entity to another. They produced a forged document to make this claim.

[3] In order to facilitate the sale of the debtor company’s interest in another Murad corporation, the motion judge made a non-competition order against all of the Murad Parties, including the appellants. Counsel at the hearing objected on behalf of the appellants because they were not specifically implicated in the obstruction or the fraudulent licensing agreement.

[4] The motion judge determined that it was nevertheless appropriate to include the appellants in the order because the Murad companies are operated as family businesses with all members of the family involved. The Receiver referred to “the Murads” or “the Murad Parties” throughout its reports.

[5] Section 193 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 sets out the jurisdiction for an appeal of an order made in a bankruptcy proceeding. The appellants submit that this court has jurisdiction under s. 193(a) or, in the alternative, that leave to appeal should be granted under s. 193(e).

[6] Section 193(a) grants jurisdiction where “the point at issue involves future rights”. Caselaw has established that present rights altered by the order are not future rights: Ravelston Corp. (Re) (2005), 2005 ONCA 899, 24 C.B.R. (5th) 256 (Ont. C.A.), at para. 18. The right to compete is a present right. Therefore, there is no right of appeal under s. 193(a).

[7] The three-part test for granting leave to appeal under s. 193(e) was recently restated in James Henry Ting (Re), 2021 ONCA 622, at para. 5: there must be an issue of general importance, that is prima facie meritorious, and the appeal would not unduly hinder the progress of the insolvency proceeding.

[8] The appellants assert that the issue of making a non-competition order against a non-party is one of general importance.

[9] However, that issue does not arise in this case because the appellants are “Murad Parties” in this receivership, so found by the motion judge, and have been treated as parties throughout the proceeding.

[10] The appeal is therefore quashed, with costs payable to the respondent. If the parties are unable to agree on costs, the respondent may file a written submission of no more than two pages in length plus a bill of costs within four days of the date of the release of these reasons. The appellants may file a responding written submission of no more than two pages in length within seven days of the same date.

“K. Feldman J.A.”

“M. Tulloch J.A.”

“B.W. Miller J.A.”