COURT OF APPEAL FOR ONTARIO

2016 ONCA 225

DATE: 20160322

DOCKET: M46061 (C61637)

Brown J.A. (In Chambers)

BETWEEN

2403177 Ontario Inc.

Applicant (Respondent/

Responding Party)

and

Bending Lake Iron Group Limited

Respondent (Appellant/

Responding Party)

Kenneth Kraft, for the moving party, A. Farber & Partners Inc.

Robert MacRae, for the responding party, Bending Lake Iron Group Limited

Heard: March 8, 2016

ENDORSEMENT

I. OVERVIEW

[1] This motion considers the somewhat awkward and anachronistic appeal provisions contained in s. 193 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”). A. Farber & Partners Inc. was appointed receiver of the property of Bending Lake Iron Group Limited (the “Debtor”) pursuant to s. 243(1) of the BIA. The Receiver moves for directions whether the Debtor requires leave to appeal under s. 193(e) of the BIA from the approval and vesting order made by the motion judge on January 8, 2016, 2016 ONSC 199, transferring all the Debtor’s property to an unrelated purchaser, Legacy Hill Resources Ltd. (“Legacy Hill”). At the conclusion of the hearing, I held that the Debtor did require leave to appeal and set a timetable for its leave motion. These are my reasons for so ordering.

II. HISTORY OF THE RECEIVERSHIP

[2] The Debtor went into receivership on September 11, 2014 on the application of its secured creditor, 2403177 Ontario Inc. (the “Receivership Order”). The Debtor’s major asset is an undeveloped iron ore mine site located northwest of Thunder Bay, Ontario.

[3] By order dated November 27, 2014, the court approved a Sales and Investor Solicitation Process for the Debtor’s property (the “SISP Order”). Significantly, the Debtor consented to the SISP Order.

[4] In November 2015, the Receiver moved for court approval of an asset purchase agreement it had entered into with Legacy Hill for substantially all of the Debtor’s property (the “Sale Agreement”). The Debtor opposed the motion and, in turn, brought its own motion seeking a variety of relief, including the postponement of the sale of its property.

[5] The motion judge approved the Sale Agreement and ordered the vesting of the Debtor’s property in Legacy Hill upon the filing of a receiver’s certificate (the “Approval and Vesting Order”). As well, the motion judge dismissed the Debtor’s motion to postpone the sale and for other relief.

[6] The Debtor filed a notice of appeal dated January 13, 2016 seeking to set aside the Approval and Vesting Order. Section 195 of the BIA provides that all proceedings under an order appealed from are stayed until the appeal is disposed of. However, the Debtor did not perfect its appeal within the time required by the Rules of Civil Procedure, and this court has issued a notice of intention to dismiss the appeal for delay unless it is perfected by March 22, 2016.

[7] Legacy Hill is not prepared to close the Sale Agreement until the Debtor has exhausted its appeal rights in this court.

[8] The Receiver moves for a declaration that the Debtor requires leave to appeal. Granting such relief would quash the Debtor’s existing notice of appeal.

III. ISSUE ON THE MOTION

[9] The central issue on this motion is whether the Approval and Vesting Order falls into any of the categories of cases identified in s. 193 of the BIA in which an appeal lies as of right to this court, or whether the Debtor must obtain leave to appeal under s. 193(e). Section 193 of the BIA provides:

Unless otherwise expressly provided, an appeal lies to the Court of Appeal from any order or decision of a judge of the court in the following cases:

(a) if the point at issue involves future rights;

(b) if the order or decision is likely to affect other cases of a similar nature in the bankruptcy proceedings;

(c) if the property involved in the appeal exceeds in value ten thousand dollars;

(d) from the grant of or refusal to grant a discharge if the aggregate unpaid claims of creditors exceed five hundred dollars; and

(e) in any other case by leave of a judge of the Court of Appeal.

[10] The Debtor submits that the Approval and Vesting Order falls within ss. 193(a), (b), and (c), and therefore an appeal lies as of right. I shall consider the Debtor’s submissions on each sub-section in turn.

IV. SECTION 193(a): DOES THE APPROVAL AND VESTING ORDER INVOLVE FUTURE RIGHTS?

A. Positions of the parties

[11] The Debtor submits the point in issue in its appeal involves future rights. The Debtor makes the following submissions in its factum:

[T]here remains outstanding a Notice of Motion seeking a finding that the Receiver has violated the Crown’s fiduciary duty to Aboriginal Peoples, as well as the Honour of the Crown, such duties being owed by the Receiver as an Officer of the Court. This motion has not been heard as of yet.

The future rights of the “affected Aboriginal communities” will very much be affected by the confirmation of the Vesting Order as granted by [the motion judge].

[12] In order to assess this submission, some review is required of the evidence the Debtor placed before the motion judge on the sale approval motion about “affected Aboriginal communities” and of the relief the Debtor plans to seek in a further motion before the motion judge.

B. Debtor’s evidence concerning “affected Aboriginal communities”

[13] Mr. Henry Wetelainen, the President and CEO of the Debtor, swore an affidavit which was filed in opposition to the Receiver’s motion to approve the Sale Agreement. In it, he deposed that, in early 2015, after the Receivership Order had been made, he held discussions with Legacy Hill about a possible “partnership/co-operative development in rescuing [the Debtor] from receivership.” He described his discussions with Legacy Hill as attempts to attract a financial partner to assist in the refinancing of the Debtor in order to terminate the Receivership.

[14] At various points in his affidavit, Mr. Wetelainen stated he had pursued those discussions as part of his “continued efforts on behalf of [the Debtor] and its creditors, shareholders, stakeholders and affected Aboriginal communities.” He deposed that the termination of the receivership would have a “concurrent benefit to [the Debtor], its creditors, shareholders, stakeholders and affected Aboriginal communities.”

[15] Despite having pursued discussions with Legacy Hill in early 2015, Mr. Wetelainen opposed the Sale Agreement. He took the position that Legacy Hill had breached a fiduciary duty owed to the Debtor by dealing with the Receiver. Frankly, it is difficult to understand that position given that under the Receivership Order and the SISP Order, Mr. Wetelainen, as an officer of the Debtor, was not permitted to pursue the discussions he did with Legacy Hill without the knowledge and concurrence of the Receiver.

[16] In any event, Mr. Wetelainen’s evidence disclosed that the main reason he opposed the Sale Agreement was that he wanted more time for the Debtor to find financing to take out its secured creditors and terminate the receivership. In his affidavit, he explained why the Debtor was seeking orders to postpone approval of the Sale Agreement:

The Orders being sought from the Court will ensure that all of the creditors, shareholders, stakeholders and affected Aboriginal communities be given an appropriate period of time pursuant to Court Order to permit [the Debtor] to complete the Corporate requirement for the purpose of providing the creditors, shareholders, stakeholders and affected Aboriginal communities to invest in Special Shares in [the Debtor] in order to retire the debt that [the applicant] has agreed to reduce to the amount as reflected in the Assets Purchase Agreement.

The net result of the successful refinancing of [the Debtor] will be that all the shareholders will have their share value protected and [the Debtor] will be required to deal with unsecured creditors in a fair fashion. At all times during the financing proceedings with [Legacy Hill], I anticipated that there would be a compromise with respect to the amount of debt owed to the Applicant.

[17] In Mr. Wetelainen’s view, the Sale Agreement is a “disasterous agreement that will wipe out millions of dollars of shareholder value, creditor obligations to stakeholders and various Aboriginal communities.”

[18] A further reason given by Mr. Wetelainen for his opposition to the Receiver’s sale was that an asset purchase by Legacy Hill ran “a very substantial risk of [Legacy Hill] alienating all of the affected Aboriginal communities as well as the members of the communities where a workforce would have been drawn from and whose cooperation would have been received. The Aboriginal Employment Preferences Policy identifies these clearly articulated goals.”

C. The Debtor’s pending motion

[19] The Debtor intends to bring a motion before the motion judge at the end of May seeking an order that it be granted leave to commence an action against the Receiver “for damages as a result of the failure of the Receiver to uphold the honour of the Crown and the Crown’s fiduciary duties to Aboriginal peoples including the Aboriginal communities affected by the actions of the Receiver.” In its notice of motion, the Debtor asserts it had provided “continual notice” to the Receiver that Aboriginal communities were directly affected by the receivership, yet the Receiver failed to maintain the honour of the Crown by not notifying affected Aboriginal communities of its intention to seek a sale of the Debtor’s assets.

D. Analysis

[20] The concept of “future rights” as a category of cases appealable to this court as of right traces its origins to the late nineteenth century federal Winding-Up Act.[^1] The passage of time has not improved the clarity of the concept. In Elias v. Hutchinson,[^2] McGillivray C.J.A. commented, at para. 20, that “the authorities leave me in a state of uncertainty as to what a future right is at all, let alone what there is about a future right that would require a treatment of cases involving future rights different from cases that do not involve future rights.”

[21] Although the category of “future rights” increasingly seems an anachronistic and confusing basis upon which to ground appeal rights, courts have attempted to cloak the term “future rights” with some practical meaning. In Re Ravelston Corp.,[^3] Doherty J.A. stated, at para. 18:

The meaning of the phrase "future rights" is not obvious. Caselaw holds that it refers to future legal rights and not to procedural rights or commercial advantages or disadvantages that may accrue from the order challenged on appeal … Rights that presently exist, but may be exercised in the future or altered by the order under appeal are present rights and not future rights… [Citations omitted.]

[22] Doherty J.A. went on to adopt, at para. 19, the view expressed in Elias v. Hutchison, at paras. 100-101,that s. 193(a) of the BIA “must refer to rights which could not at the present time be asserted but which will come into existence at a future time.”

[23] More recently, Blair J.A., in Business Development Bank of Canada v. Pine Tree Resorts Inc.,[^4] stated, at para. 15:

“Future rights” are future legal rights, not procedural rights or commercial advantages or disadvantages that may accrue from the order challenged on appeal. They do not include rights that presently exist but that may be exercised in the future.

[24] The Debtor’s argument that the Approval and Vesting Order involves the future rights of “affected Aboriginal communities” is vague and difficult to follow. Nevertheless, I do not accept it for several reasons.

[25] First, for an order to involve future rights, it must involve the future rights of those with an economic interest in the debtor company – i.e. its creditors or shareholders.[^5] On the sale approval motion, the Debtor did not adduce evidence that any “affected Aboriginal community” had such an economic interest in the Debtor, nor did any “affected Aboriginal community” adduce such evidence on the motion. The Receiver, in its December 21, 2015 Supplemental Report to its Third Report, informed the court that based on its review of the Debtor’s creditors listing, “no Aboriginal groups are creditors of [the Debtor].”

[26] Second, at this stage of the process it does not lie in the Debtor’s mouth to contend that the Receiver failed to give proper notice to “affected Aboriginal communities”. The time to raise such an issue was when the Receiver sought approval of the SISP Order, yet the Debtor consented to that order.

[27] Third, to the extent that the Approval and Vesting Order affects the rights of those with an economic interest in the Debtor, it affects the present, existing rights of the Debtor’s creditors and shareholders, not their future rights.

[28] Finally, it is clear from Mr. Wetelainen’s affidavit that the Debtor’s real complaint about the effect of the Approval and Vesting Order is one concerning the “commercial advantages or disadvantages that may accrue from the order challenged on appeal.” Mr. Wetelainen objected to the Sale Agreement because its approval would wipe out shareholder equity and preclude efforts by the shareholders to raise financing to pay out the Debtor’s secured creditors. That has nothing to do with “future rights” within the meaning of s. 193(a).

[29] I conclude that the point in issue in the Debtor’s challenge of the Approval and Vesting Order does not involve future rights within the meaning of s. 193(a) of the BIA.

V. SECTION 193(b): WILL THE APPROVAL AND VESTING ORDER AFFECT OTHER CASES OF A SIMILAR NATURE IN THIS PROCEEDING?

A. Positions of the parties

[30] The Debtor submits that the Approval and Vesting Order is likely to affect other cases of a similar nature in the receivership proceeding. In its factum, the Debtor argues that in granting the Approval and Vesting Order the motion judge failed “to deal with the rights of the affected Aboriginal communities,” an issue the Debtor wishes to raise on its appeal. The Debtor argues that the same issue will lie at the heart of its motion before the motion judge later in May seeking leave to sue the Receiver. The Debtor contends that because the Approval and Vesting Order likely will affect its motion for leave to sue the Receiver, s. 193(b) of the BIA applies.

[31] The Receiver disputes that the issues on appeal would impact other issues in the receivership.

B. Analysis

[32] The jurisprudence under s. 193(b) of the BIA has consistently interpreted the section as meaning that a right of appeal will lie where “the decision in question will likely affect another case raising the same or similar issues in the same bankruptcy proceedings.”[^6] The cases have expressed different views on whether the decisions covered by s. 193(b) can only concern rights asserted against the bankrupt by parties other than the bankrupt, or whether the issue may concern rights asserted by multiple persons against the bankrupt, rather than one person’s rights arising in multiple contexts.[^7] Regardless, s. 193(b) must concern “real disputes” likely to affect other cases raising the same or similar issues in the same bankruptcy or receivership proceedings.[^8]

[33] Section 193(b) possesses several anachronistic features. First, while permitting an appeal of right on an issue that likely will arise again in an insolvency proceeding might appear to foster the efficient conduct of insolvency proceedings, in reality any automatic appeal right will slow down insolvency proceedings which usually operate on a “real-time” basis. As well, the language of s. 193(b) does not measure the overall significance of the issue to the proceeding – minor issues which might arise again are treated in the same fashion as major ones. Finally, most contemporary insolvency litigation sees one judge assigned to manage the proceeding from its inception to its end. Under a “one judge” model of case management, common or repeat issues tend to get grouped together for adjudication at one time, not at different stages of the proceeding.

[34] I do not accept the Debtor’s submission that the Approval and Vesting Order is likely to affect other cases of a similar nature in the receivership proceedings.

[35] The Receiver filed evidence on this motion which shows the Debtor did not raise any issue about a receiver’s constitutional duty to consult “affected Aboriginal communities” either in its materials or during its submissions on the sale approval motion. The Debtor does not dispute this evidence. Accordingly, the Debtor will be seeking to raise the duty to consult issue for the first time on appeal.

[36] In the normal course, appeals are not the proper forum in which to raise brand new issues that significantly expand or alter the landscape of the litigation.[^9] The burden rests on an appellant to persuade the court that all the facts necessary to address the point are before the court as fully as if the issue had been raised in the court below.[^10] It is far from clear that the Debtor would succeed in persuading this court that the interests of justice require an exception to this normal course of litigation. The Debtor faces several high hurdles.

[37] First, the Debtor consented to the SISP Order which authorized the Receiver to proceed with the sales process. The Debtor did not raise the issue of a duty to consult “affected Aboriginal communities” about a sale at that time; it is difficult to conceive how it can do so now.

[38] Second, it is very doubtful that the Debtor has standing to advance on appeal an argument based on the duty to consult. As the Supreme Court of Canada explained in Behn v. Moulton Contracting Ltd.,[^11] at para. 30:

The duty to consult exists to protect the collective rights of Aboriginal peoples. For this reason, it is owed to the Aboriginal group that holds the s. 35 rights, which are collective in nature… But an Aboriginal group can authorize an individual or an organization to represent it for the purpose of asserting its s. 35 rights. [Citations omitted.]

[39] No evidence was led on this motion to suggest that any Aboriginal group had authorized the Debtor to represent it for the purpose of asserting rights under s. 35 of the Constitution Act, 1982.

[40] Third, s. 193(b) of the BIA requires that the order sought to be appealed is likely to affect “other cases of a similar nature in the bankruptcy proceedings.” Here, the Approval and Vesting Order disposed of all the property of the Debtor. Consequently, there will not be any other case dealing with the disposition of the Debtor’s property in this receivership.

[41] The final hurdle is that only after the Debtor received the January 8, 2016 reasons of the motion judge granting the Approval and Vesting Order did it launch its motion for leave to sue the Receiver for its alleged breach of the duty to consult. That sequence of events strongly suggests that, having unsuccessfully opposed the Receiver’s sale, the Debtor looked for some procedural device to fit itself into s. 193(b). Its motion for leave to sue the Receiver was the result. In my view, a party cannot create a “case” after the impugned order was made in order to invoke s. 193(b). Consequently, the Debtor’s pending motion for leave to sue does not qualify as a case of a similar nature in the receivership.

[42] For those reasons, the Approval and Vesting Order does not fall within s. 193(b) of the BIA.

VI. SECTION 193(c): DOES THE PROPERTY INVOLVED IN THE APPEAL EXCEED IN VALUE $10,000?

A. Positions of the parties

[43] The Debtor submits that the Approval and Vesting Order will transfer property in excess of $10,000 and, therefore, falls within s. 193(c) of the BIA because “the property involved in the appeal exceeds in value ten thousand dollars.”

[44] While the actual sale price is subject to a confidentiality order pending the closing of the transaction, there is no dispute that the sale price significantly exceeds $10,000. Nor is there any dispute that if the transaction closes, the Debtor’s secured lenders will suffer a significant shortfall.[^12]

[45] On its part, the Receiver submits that an approval and vesting order forms part of the methods a receiver employs to dispose of a debtor’s assets and, as such, is a matter of procedure that does not fall within s. 193(c).

B. Analysis

[46] The history of the interpretation of s. 193(c) is an unusual one. Under the modern approach to statutory interpretation, the words in a statute must be read in their entire context, in their grammatical and ordinary sense, and in keeping with the scheme and object of the Act.[^13] By contrast, as the Manitoba Court of Appeal observed at para. 9 in Re Dominion Foundry Co.,[^14] the interpretation of the phrase “the property involved in the appeal” found in s. 193(c) historically has proceeded in a different fashion, drawing heavily upon cases interpreting a similar provision in the federal Winding-Up Act,[^15] as well as on the jurisprudence considering former provisions in the Supreme Court of Canada Act which linked the right to appeal to “the amount or value of the matter in controversy.”[^16]

[47] Courts have observed that the availability under s. 193(e) of a right to seek leave to appeal in circumstances falling outside those captured by automatic rights of appeal in ss. 193(a) to (d) signals the need for appeal courts to control bankruptcy proceedings in order to promote the efficient and expeditious resolution of the bankruptcy, one of the principal objectives of bankruptcy legislation.[^17] However, courts across the country tend to part company on whether securing those objectives of the BIA is fostered by a “broad, generous and wide-reaching” interpretation of the appeal rights contained in BIA ss. 193(a) to (d) – with the bar set low to fall within s. 193(c)[^18] – or by interpretations conducted within the context of the demands of “real time litigation” characteristic of contemporary insolvency and restructuring proceedings.[^19]

[48] In my view, two contextual factors should inform any application of the sub-section.

[49] First, the predecessor section to the modern s. 193(c) was enacted in 1919, at a time when the then Bankruptcy Act did not include the right to seek leave to appeal in the event a decision did not fall within one of the categories giving automatic rights of appeal. As Doherty J.A. observed in Re Ravelston Corp., the earlier absence in s. 193 of an ability to seek leave to appeal prompted courts to give categories of appeals as of right a wide and liberal interpretation in order to avoid closing the door on meritorious appeals. The 1949 inclusion of the leave to appeal right now found in s. 193(e) removes the need for such a broad interpretative approach.

[50] Second, Canada’s other major insolvency statute, the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the “CCAA”), contains, in s. 13, an across-the-board requirement to obtain leave to appeal from any order made under that Act. The automatic right of appeal provisions in ss. 193(a) to (d) of the BIA do not work harmoniously with the CCAA’s appeal regime.

[51] For example, if one were to accept the Debtor’s argument that whenever the value of the property transferred by a sales approval and vesting order exceeded $10,000 an appeal as of right to this court exists, then, as the Manitoba Court of Appeal noted, at para. 7, in Re Dominion Foundry Co., an appeal as of right would exist in almost every case because very few insolvency cases would involve property that did not exceed the statutory threshold. Blair J.A. repeated that concern in Business Development Bank of Canada v. Pine Tree Resorts Inc., at para. 17. By contrast, a challenge to a sales approval and vesting order obtained by a debtor company under the CCAA would require obtaining leave to appeal under s. 13 of that Act.

[52] In my view, no principled basis exists to distinguish the treatment of a sale by a receiver or trustee, from that by a CCAA debtor company. In each case, approval of the sale would require consideration of the types of principles articulated in Royal Bank of Canada v. Soundair.[^20] A need for the legislative harmonization of appeal rights in insolvencies is apparent.

[53] In my view, these contextual factors militate against employing an expansive application of the automatic right of appeal contained in s. 193(c) and, instead, point to the need for an approach which is alive to and satisfies the needs of modern, “real-time” insolvency litigation. I shall employ such an approach in applying the following three principles that have emerged from the jurisprudence: s. 193(c) does not apply to (i) orders that are procedural in nature, (ii) orders that do not bring into play the value of the debtor’s property, or (iii) orders that do not result in a loss.

Is the order procedural in nature?

[54] The caselaw holds that s. 193(c) of the BIA does not apply to decisions or orders that are procedural in nature, including orders concerning the methods by which receivers or trustees realize an estate’s assets.

[55] In Re Dominion Foundry Co., the motion judge had dismissed a request to set aside a sale of assets by a trustee in bankruptcy on the grounds that the sale was improvident and the trustee had acted improperly. The Manitoba Court of Appeal held, at para. 20, that although the sale involved assets whose value exceeded the statutory threshold, an order concerning the method by which the trustee disposed of assets did not fall within s. 193(c). Consequently, where a person seeks to challenge an order on appeal by calling into question the methods employed by a trustee to dispose of the assets of the bankrupt, the order involves a matter of procedure which does not fall within s. 193(c).

[56] The Alberta Court of Appeal reached a similar result in Alternative Fuel Systems Inc. v. EDO (Canada) Ltd. (Trustee of).[^21] There, the trustee had invited tenders for the purchase of the bankrupt’s equipment. When tenders closed, the trustee determined that Alternative’s tender was the highest. Once another tenderer, Impco Technologies Inc., found out that it was not the highest bidder, it submitted a second tender offering substantially more than Alternative. The trustee sought directions from the court. The bankruptcy judge directed the trustee to accept Impco’s second, higher tender. Alternative filed a notice of appeal and moved before the Alberta Court of Appeal for a determination that it could appeal as of right under s. 193(c) because the value of the property involved exceeded the statutory threshold.

[57] O’Leary J.A., following Re Dominion Foundry Co., held that Alternative had no right of appeal under s. 193(c). He reasoned, at para. 12, that the bankruptcy judge’s order was essentially a procedural direction to the trustee in the face of Alternative’s challenge to the method by which the equipment was sold, by-passing the tender process.

[58] In the present case, the overwhelming majority of the Debtor’s grounds of appeal are process-related, involving issues concerning the Debtor’s dealings with Legacy Hill following the Receivership Order, the Receiver’s disclosure of information about the Sale Agreement, the negotiation process it followed with Legacy Hill, its treatment of persons affected by the Sale Agreement, and the adequacy of notice it gave to “affected Aboriginal communities.” Those grounds of appeal are procedural in nature and do not fall within s. 193(c).

Does the order put into play the value of the Debtor’s property?

[59] The second principle emerging from the caselaw is that s. 193(c) is not engaged where the decision or order does not call into play the value of the debtor’s property. In Business Development Bank of Canada v. Pine Tree Resorts Inc., Blair J.A. considered whether an order appointing a receiver over assets of debtor corporations that exceeded $10,000 in value fell within s. 193(c). He concluded that it did not stating, at para. 17, that “an order appointing a receiver does not bring into play the value of the property; it simply appoints an officer of the court to preserve and monetize those assets, subject to court approval.”

[60] In the present case, the Approval and Vesting Order marked the final step in the Receiver’s monetization of the Debtor’s assets. The property of the Debtor is to be converted through the Sale Agreement into a pool of cash and, as stated in the Approval and Vesting Order, “the net proceeds from the sale of the Purchased Assets shall stand in the place and stead of the Purchased Assets.” The ground of appeal advanced by the Debtor to the effect that the sale process should be postponed to let shareholders re-finance the company does not bring into play the value of the Debtor’s property, so s. 193(c) does not apply.

Does the order result in a gain or loss?

[61] Finally, for s. 193(c) to apply, the order in question must contain some element of a final determination of the economic interests of a claimant in the debtor. In Trimor Mortgage Investment Corporation v. Fox,[^22] Paperny J.A. described this aspect of s. 193(c) at para. 8:

The test to be applied under this section was originally articulated in Orpen v Roberts, 1925 2 (SCC), [1925] SCR 364 at 367, [1925] 1 DLR 1101, and confirmed in Fallis and Deacon v United Fuel Investments Ltd., 1962 96 (SCC), [1962] SCR 771, 4 CBR (NS) 209, which set out that the amount or value of the matter in controversy is the loss which the granting or refusal of that right would entail.

[62] The Approval and Vesting Order did not determine the entitlement of any party with an economic interest in the Debtor to the sale proceeds. In that sense, no interested party gained or lost as a result of the order.

[63] However, one ground of appeal set out in the Debtor’s notice of appeal is that the motion judge erred in law in finding that the Receiver had not acted improvidently. In its factum, the Debtor contends that the Receiver’s sale of its property is improvident because it would result in a loss of $125 million to its shareholders. In support of that ground of appeal, on this motion the Debtor relied on a memo prepared by Broad Oak Associates dated February 3, 2014, half a year before the Receivership Order was made. Using an iron ore pellet price of US$100 per tonne, Board Oak placed the value of a fully-developed Bending Lake iron ore project in the range of US$100 million to $300 million. This, the Debtor argues, shows that the Approval and Vesting Order selling its undeveloped mine site assets resulted in a loss to shareholders of an amount exceeding $10,000 in value, giving it a right to appeal under s. 193(c).

[64] I do not accept the Debtor’s submission. The determination of whether “the property involved in the appeal exceeds ten thousand dollars” is a fact-specific one. In order to bring itself within s. 193(c), the Debtor must do more than make a bald allegation of improvident sale. This is real-time insolvency litigation in which delays in the proceeding can prejudice the amounts fetched by a receiver on the realization process. The Debtor must demonstrate some basis in the evidentiary record considered by the motion judge that the property involved in the appeal would exceed in value $10,000, in the sense that the granting of the Approval and Vesting Order resulted in a loss of more than $10,000 because the Receiver could have obtained a higher sales price for the Debtor’s property. Bald assertion is not sufficient, otherwise a mere bald allegation of improvident sale in a notice of appeal could result in an automatic stay of a sale approval order under BIA s. 195 as the appellant pursues its appeal.[^23]

[65] In the present case, the evidentiary record discloses that there were no competing bids for the Debtor’s property for the motion judge to consider; only Legacy Hill expressed a serious enough interest to lead to a Sale Agreement with the Receiver.

[66] Neither the Debtor nor its shareholders put before the motion judge a valuation of the Debtor made near in time to the execution of the Sale Agreement. Mr. Wetelainen did not attach the pre-receivership Broad Oak memo to the affidavit he placed before the motion judge. By contrast, the Receiver reported to the motion judge that the market price of iron ore had declined to the mid-US$50 per tonne range, making a court sanctioned sales process “very challenging in the current market conditions.” The market price for iron ore reported by the Receiver was far below the pre-receivership assumptions used by Broad Oak.

[67] Nor did Mr. Wetelainen depose on the sale approval motion that the Debtor’s property was worth over $100 million. Instead, in his affidavit he stressed the need to postpone the sale to allow the Debtor’s shareholders time to negotiate a compromise of the secured debt and then pay off the compromised debt.

[68] Finally, the Debtor’s secured lenders supported the Sale Agreement, notwithstanding that they would suffer a significant shortfall on the sale.

[69] Taken together, those facts do not disclose any basis in the evidentiary record for the Debtor’s assertion that the sale would result in a loss of rights greater than $10,000 because the Receiver could have obtained a higher price for the Debtor’s property. Accordingly, I am not persuaded that there is any evidentiary basis to the Debtor’s bald assertion in its notice of appeal that the Approval and Vesting Order sanctioned an improvident sales transaction which resulted in a loss to the Debtor within the meaning of s. 193(c).

[70] I conclude that the Approval and Vesting Order does not fall within s. 193(c) of the BIA.

VII. DISPOSITION

[71] For these reasons, I granted the Receiver’s motion and ordered that the Debtor requires leave to appeal from the Approval and Vesting Order. The Debtor’s notice of appeal dated January 13, 2016 is quashed.

[72] The parties agreed to the following timetable for the filing of materials on the Debtor’s leave to appeal motion:

(i) The Debtor would file its leave materials by March 28, 2016;

(ii) The Receiver would file any responding materials by April 4, 2016;

(iii) The Debtor would file reply materials, if any, by April 11, 2016.

[73] I directed that the leave materials be placed before a panel for consideration on April 12, 2016. I did so, in part, to obviate the need for Debtor’s counsel to travel down to Toronto for an oral Chambers leave motion.

[74] The parties may serve their leave materials electronically. Although the parties will need to file the appropriate number of hard copies of their materials in accordance with the Rules of Civil Procedure, they may file with the court an electronic copy either by email or by USB key. The date of electronic filing will be deemed the date of the filing of the materials with the court.

[75] The parties agreed that the costs of this motion would be reserved to the panel hearing the leave to appeal motion.

“David Brown J.A.”

[^1]: Now, the Winding-up and Restructuring Act, R.S.C. 1985, c. W-11, s. 103. See In re Union Fire Insurance Co. (1886), 13 O.A.R. 268, (C.A.) at pp. 294-295.

[^2]: (1981), 1981 ABCA 31, 14 Alta. L.R. (2d) 268; 121 D.L.R. (3d) 95, [1981] A.J. No. 896 (C.A.).

[^3]: (2005), 2005 63802 (ON CA), 24 C.B.R. (5th) 256 (Ont. C.A.)

[^4]: 2013 ONCA 282, 115 OR (3d) 617.

[^5]: See Ditchburn Boats & Aircraft (1936) Ltd., Re (1938), 19 C.B.R. 240 (Ont. C.A.), at p. 242 quoting with approval In Re Kern Agencies Ltd. (1931), 12 C.B.R. 279 (Sask. C.A.), at p. 281.

[^6]: Wong v. Luu, 2013 BCCA 547, at para. 21.

[^7]: See Wong v. Luu, at para. 21, and the Quebec jurisprudence summarized in Re Norbourg Gestion d’actifs inc., 2006 QCCA 752, 33 C.B.R. (5th) 144 at paras. 9-11.

[^8]: Global Royalties Ltd. v. Brook, 2016 ONCA 50, at para. 19.

[^9]: Perez v. Salvation Army in Canada (1998), 1998 7197 (ON CA), 42 O.R. (3d) 229, 171 D.L.R. (4th) 520 (C.A.), at para. 11.

[^10]: Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at para. 18.

[^11]: 2013 SCC 26, [2013] 2 S.C.R. 227.

[^12]: In its Third Report dated November 30, 2015, the Receiver informed the court that the Debtor’s liabilities totaled approximately $12.4 million consisting of (i) secured loans from the applicant in excess of $3.5 million, (ii) payroll deduction and HST claims by the Canada Revenue Agency of approximately $405,000, and (iii) unsecured liabilities of close to $8.5 million.

[^13]: Rizzo & Rizzo Shoes Ltd., Re (1998), 1998 837 (SCC), 154 D.L.R. (4th) 193 (S.C.C.) at para. 21; Bell ExpressVu Ltd. Partnership v. Rex 2002 SCC 42, 212 D.L.R. (4th) 1 (S.C.C.) at para. 26.

[^14]: (1965), 1965 837 (MB CA), 51 W.W.R. 679.

[^15]: Such as Faillis and Deacon v. United Fuel Investments Ltd, 1962 96 (SCC), [1962] S.C.R. 771, at p. 774.

[^16]: Trimor Mortgage Investment Corporation v. Fox, 2015 ABCA 44, at para. 8; Galaxy Sports Inc. v. Abakhan & Associates Inc., 2003 BCCA 322, 44 C.B.R. (4th) 218 at para. 12; Newfoundland and Labrador Refining Corporation v. IJK Consortium, 20098 NLCA 23, 2009 NLCA 23, 52 C.B.R. (5th) 8 at para. 18.

[^17]: Wong v. Luu, at para. 23; Re Norbourg Gestion d’actifs inc, at para. 9.

[^18]: Wong v. Luu, at para. 23.

[^19]: Re Stelco Inc. (2005), 2005 5394 (ON CA), 8 C.B.R. (5th) 150 (Ont. C.A.), at para. 4.

[^20]: (1991), 1991 2727 (ON CA), 4 O.R. (3d) 1 (C.A.).

[^21]: 1997 ABCA 273, 48 C.B.R. (3d) 171.

[^22]: 2015 ABCA 44.

[^23]: See, for example, Faillis and Deacon v. United Fuel Investments Ltd. where, at pp. 773-774 the Supreme Court of Canada described the specific evidence of loss contained in the record.