Court of Appeal for Ontario

Citation: RREF II BHB IV Portofino, LLC v. Portofino Corporation, 2015 ONCA 906 Date: 2015-12-21 Docket: M45402 (C60169)

Before: MacPherson, Sharpe and van Rensburg JJ.A.

Between:

RREF II BHB IV Portofino, LLC Applicant

and

Portofino Corporation Respondent

Counsel: Tony Van Klink, for the appellant, BDO Canada Limited, Receiver of Portofino Corporation Gino Morga, Q.C., for the respondent, Remo Valente Real Estate (1990) Limited David A. Taub, for RREF II BHB IV Portofino, LLC

Heard: December 17, 2015

Endorsement

[1] The respondent, Remo Valente Real Estate (1990) Limited ("Valente") is the plaintiff in a pending civil action. Valente obtained a pre-trial order requiring the defendant, Portofino Corporation ("Portofino"), to post security for its claim of oppression and breach of contract. Valente succeeded at trial on the oppression claim but that judgment was reversed on appeal and the contract claim was remitted for trial. A further order (of Quinn J.) was made in the civil action, that the security, consisting of a letter of credit, continue in place.

[2] Before the contract claim was tried, the appellant was appointed by the court as Portofino's receiver pursuant to s. 243 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(the "BIA") at the request of a secured creditor, Bank of Montreal. The bank's security in Portofino was assigned to RREF II BHB IV Portofino, LLC. The receivership order expressly provided that the civil action was not stayed.

[3] The appellant receiver then moved for an order to release the security. The motion was brought in two proceedings: for advice and directions in the receivership proceedings and for the variation of the order of Quinn J. in the civil action, so that the letter of credit could be cancelled. The motion judge, Carey J., declined to cancel the letter of credit. The appellant seeks to appeal that order to this court. The order is a single order, styled in both the civil action and the receivership proceedings.

[4] The appellant contends that it has a right to appeal this interlocutory order under sections 193(a) or (c) of the BIA on the basis that the order was made in the receivership. However, in July 2015 the appellant brought a motion before a single judge of this court in chambers seeking leave to appeal the order under s. 193(e) of the BIA. In argument, the appellant asserted that it had a right of appeal (without leave) under sections 193(a) and (c), but requested leave to appeal, if necessary.

[5] In deciding the appellant's motion, the chambers judge expressed doubt as to whether the provisions of the BIA relied upon were applicable, suggesting that the proper appeal route was to the Divisional Court. He denied leave to appeal under s. 193(e) of the BIA and concluded there was no right to appeal under ss. 193(a) and (c). He did not quash the appeal, nor was he asked to do so.

[6] The appellant now submits that, as a single judge, the chambers judge had no jurisdiction to make an order that had the effect of quashing its appeal: see TFP Investments Inc. (Trustee of) v. Singhal (1993), 3 C.B.R. (3d) 225 (Ont. C.A.). Needless to say, that position is inconsistent with the appellant's approach to the motion before the chambers judge, where all aspects of s. 193 were argued. Nevertheless, we agree that a single judge has no jurisdiction to quash an appeal and that only a panel of three judges can conclusively rule that this court does or does not have jurisdiction.

[7] However, in our view, the appellant's contention that an appeal lies to this court is misconceived.

[8] The order appealed from is interlocutory. Under s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the appeal of an interlocutory order is to the Divisional Court, with leave.

[9] Section 193 of the BIA authorizes the appeal of both interlocutory and final orders to this court, in the circumstances outlined in (a) through (d), or with leave of the court, under (e), but only an order made by a bankruptcy court judge is subject to the appeal routes in s. 193 of the BIA. Section 183 provides that a bankruptcy court has jurisdiction in bankruptcy and in other proceedings authorized by the BIA.

[10] The appellant says Carey J. was acting in proceedings authorized by the BIA, because one of the motions resulting in his order was a motion for directions in the receivership. This would mean that, simply by bringing the motion in both the civil action and the receivership, the appellant would have open the route to appeal to this court under s. 193 of the BIA.

[11] We disagree. Although the order under appeal was made at the request of a receiver, and styled in the receivership as well as the civil action, the relief sought was against the plaintiff in the civil action, and involved an attempt to vary an order made by another judge in that proceeding. The substance of what the receiver was seeking was a variation under rule 59.06 of the order of Quinn J., which was an order made in the civil action.

[12] The act of styling the motion in the receivership as well as the civil action did not give the appellant automatic access to the appeal routes under the BIA. The jurisdiction of the court is governed by the substance of the order made. The order dismissed a motion to vary an order made in a civil action, and required the continued posting of security in that action. This was not an order in proceedings authorized by the BIA. As such, the proper route of appeal is to the Divisional Court, with leave.

[13] As this court has no jurisdiction to entertain the appeal, the appeal is quashed.

[14] The appellant receiver shall pay the costs of the respondent Valente, fixed at $5,000, inclusive of disbursements and applicable taxes. Although RREF II BHB IV Portofino, LLC appeared and supported the appellant's position, no costs were sought by or from this party.

"J.C. MacPherson J.A."

"Robert J. Sharpe J.A."

"K. van Rensburg J.A"