Court of Appeal for Ontario

Date: April 8, 2019

Docket: M50086 (C65512)

Judges: Feldman, Paciocco and Zarnett JJ.A.

Between

Business Development Bank of Canada Applicant

and

Astoria Organic Matters Ltd. and Astoria Organic Matters Canada LP Respondents

Counsel:

Melvyn L. Solmon, Frank Bennett and Rajiv Joshi, for the moving party SusGlobal Energy Belleville Ltd.

Steven Graff and Miranda Spence, for the responding party BDO Canada Ltd.

Heard: February 15, 2019

On motion to set aside the orders of Justice David Watt of the Court of Appeal for Ontario, dated December 10, 2018.

Zarnett J.A.:

Introduction

[1] A receiver is appointed under both Canada's Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("BIA"), and Ontario's Courts of Justice Act, R.S.O. 1990, c. C.43 ("CJA"). The receivership order contains a "leave to sue provision" under which the receiver cannot be sued without consent or leave of the court. What appeal route is available to a party who has been denied permission to sue? Is the appeal governed by the BIA, which provides for appeals as of right only in some cases, requires leave to appeal in other cases, and sets a short time limit for an appeal or a request for leave to appeal? Or is the appeal governed by the CJA, under which final orders may be appealed as of right to this court within a longer time limit than that in the BIA?

[2] The moving party SusGlobal Energy Belleville Ltd. ("SusGlobal") wishes to appeal orders of the Superior Court that:

a) denied SusGlobal leave to sue the responding party BDO Canada Ltd. ("BDO") in its capacity as court-appointed receiver of Astoria Organic Matters Ltd. and Astoria Organic Matters Canada LP; and,

b) denied SusGlobal's request to re-open its original application for leave so that it could file fresh evidence.

[3] On a motion before a single judge of this court (the "chambers judge"), SusGlobal's attempt to appeal was effectively terminated. The basis of the chambers judge's decision was that the BIA, not the CJA, governed SusGlobal's appeal; the provisions of the BIA providing for appeals as of right were not applicable to the appeal; and no grounds for granting leave to appeal existed.

[4] On this motion, SusGlobal challenges the decision of the chambers judge, raising only the issue of the correctness of the conclusion that the applicable appeal route is under the BIA, not the CJA. It argues that solely the CJA is applicable to its appeal.

[5] I would dismiss SusGlobal's motion. The proper appeal route is the BIA when the order sought to be appealed was made in reliance on jurisdiction under the BIA. That is the case here. The Superior Court dismissed SusGlobal's request to sue the receiver—the dismissal SusGlobal wishes to appeal—in reliance on the leave to sue provision in the receivership order. The court's authority to include that provision in the receivership order flowed by necessary implication from the statutory power to appoint a receiver under s. 243(1) of the BIA. I recognize that the CJA also provided such authority as part of the statutory power in s. 101 to appoint a receiver. But since authority for the leave to sue provision is found both in the BIA and the CJA, and since the receiver was appointed under both statutes, the appeal is governed by the BIA as a matter of paramountcy.

Background

[6] Business Development Bank of Canada was a secured creditor of Astoria Organic Matters Ltd. and Astoria Organic Matters Canada LP ("Astoria"). Upon Astoria's insolvency, the Bank applied for an order under s. 243(1) of the BIA and s. 101 of the CJA appointing BDO as receiver of Astoria. On April 13, 2017, Hainey J. granted that request. The order appointing BDO as receiver ("the receivership order") provided in relevant part as follows:

2. THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section 101 of the CJA, BDO Canada Limited is hereby appointed Receiver, without security, of all of the assets, undertakings and properties of the Debtors acquired for, or used in relation to a business carried on by the Debtors, including all proceeds thereof (the "Property")…

3. THIS COURT ORDERS that the Receiver is hereby empowered…

(l) to sell, convey, transfer, lease or assign the Property or any part or parts thereof out of the ordinary course of business…

8. THIS COURT ORDERS that no proceeding or enforcement process in any court or tribunal (each, a "Proceeding"), shall be commenced or continued against the Receiver except with the written consent of the Receiver or with leave of this Court.

[7] Paragraph 8, which is at the heart of this appeal, is identical to the paragraph of the same number included in the Commercial List of the Superior Court of Justice's Model Receivership Order.

[8] BDO, as court-appointed receiver, sold assets to SusGlobal under an Asset Purchase Agreement dated July 27, 2017. Shortly after closing SusGlobal complained about the amount of raw organic waste accumulated inside one of the facilities it had purchased, and the expenses of about $750,000 it had to incur as a consequence. SusGlobal claimed BDO had breached obligations owed to it and was responsible to compensate SusGlobal for its expenses. BDO denied responsibility on multiple bases, including the "As is Where is" clause in the Asset Purchase Agreement.

[9] SusGlobal brought an application for permission to sue BDO under the leave to sue provision in para. 8 of the receivership order. On May 17, 2018, McEwen J. dismissed the application, finding that SusGlobal's allegations were not supported by evidence disclosing a prima facie case. On November 8, 2018, McEwen J. refused SusGlobal's request to reopen the application to allow SusGlobal to file fresh evidence.

[10] SusGlobal filed appeals from both decisions. Its notices of appeal were timely if the CJA, under which there is a 30-day time limit for commencing an appeal, governed the appeal route. They were late if the BIA, which imposes a 10-day time limit, governed. The notices of appeal alleged various errors in McEwen J.'s decisions. They also asserted that SusGlobal could appeal the decisions as of right to this court under s. 6(1)(b) of the CJA, because they were final orders of a judge of the Superior Court. In the alternative, if the BIA governed the appeal route, SusGlobal asked for an extension of time to comply with the time limits in the BIA and to appeal, or be granted leave to appeal, under it.

[11] The narrow issue before us does not require a review of whether the grounds of appeal SusGlobal wants to raise have merit. All that is in issue on this review motion is the proper appeal route.

The Decisions of the Chambers Judge

[12] SusGlobal moved before the chambers judge for orders:

a) that its notice of appeal had been properly served and filed under s. 6 of the CJA; or,

b) in the alternative, granting it an extension of time of 19 days in order to serve an appeal under s. 193(c) of the BIA; or,

c) in the further alternative, granting it an extension of time of 19 days to seek leave to appeal and granting leave to appeal pursuant to s. 193(e) of the BIA.[1]

[13] In a separate motion, SusGlobal moved before the chambers judge for orders:

a) declaring that the appeal from the application judge's decision denying SusGlobal leave to introduce fresh evidence is governed by s. 193(c) of the BIA, or in the alternative s. 6 of the CJA, such that leave to appeal is not required; or

b) in the alternative, granting leave to appeal pursuant to s. 193(e) of the BIA.

[14] The chambers judge dismissed the motions. He held that the BIA was the governing authority for the appeal, not the CJA; the root authority under which BDO was appointed was s. 243(1) of the BIA; appeals from decisions or orders made in proceedings instituted under the BIA are governed by the BIA, not the CJA; and the reference in the receivership order to the CJA did not have the effect of ousting the BIA as the source of appellate authority, nor could it as a matter of federal paramountcy.

[15] The chambers judge went on to hold that SusGlobal's appeals did not fit within any of the grounds in the BIA that permit appeals to this court as of right, including s. 193(c) of the BIA, cited by SusGlobal. Nor was the chambers judge prepared to exercise his discretion to grant leave to appeal under s. 193(e) of the BIA. Accordingly, he held that in a case where there was no right to appeal under the BIA and where granting leave to appeal under the BIA was not warranted, no extension of time to appeal or seek leave was warranted. He also held that there was no reviewable error in the application judge's discretionary decision not to admit SusGlobal's proposed fresh evidence.

[16] SusGlobal does not challenge the conclusions of the chambers judge referred to in para. 15 above. Instead, it argues that those conclusions are derivative of his conclusion about which statute governs the appeal route. SusGlobal argues that the CJA governs the appeal route. It follows, according to SusGlobal, that it did not require leave to appeal or an extension of time, because its appeal was as of right under the CJA and was filed in time.

The Positions of the Parties

[17] SusGlobal does not contest that the receivership order was properly made and the receiver properly appointed, including under the BIA. It argues that power exists under both the BIA and the CJA to appoint a receiver, and both were explicitly referred to in, and formed the basis for, the receivership order. What is in issue, it argues, is the source of the authority for the leave to sue provision in the receivership order. SusGlobal argues that, since the Supreme Court of Canada held in Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, at paras. 68 and 73, that provincial laws governing receivers were not rendered inoperative by s. 243 of the BIA, a receivership order may properly contain provisions authorized only by provincial law, in addition to provisions authorized by the BIA. As long as there is no operational conflict between the provincial and federal law and the provincial law does not frustrate the federal law's purpose, the provincial law will continue to apply alongside the federal law (here, s. 243): Lemare Lake, at paras. 15-17. The source of authority for a provision in the receivership order determines the proper appeal route from a disposition made under that provision.

[18] SusGlobal argues that the source of the court's power to include the leave to sue provision in the receivership order is not found in the BIA. The BIA extends that kind of protection in s. 215, but the scope of the protection does not include the type of receiver appointed here. Rather it refers to, among other persons, interim receivers who may be appointed under other provisions of the BIA, such as ss. 46(1) and (2). The BIA extends other protections to receivers in s. 251, which are not applicable here. SusGlobal's position is that the sole source of the authority for including the leave provision in the receivership order must therefore be provincial law flowing from s. 101 of the CJA and the related inherent jurisdiction of the court.

[19] It follows, SusGlobal argues, that it is appealing a decision in which the motion judge gave effect to a provision of the receivership order that was made under the CJA, even if other aspects of the receivership order were authorized by the BIA. The appeal from such a decision should be governed by the CJA, and should lie as of right to this court.

[20] BDO argues that the proceedings giving rise to and arising out of the receivership order are BIA proceedings; the reference in the receivership order to the CJA was unnecessary. The BIA and not the CJA appeal provisions should apply to any appeal in such proceedings: Canada (Superintendent of Bankruptcy) v. 407 ETR Concession Company Limited, 2012 ONCA 569, at paras. 19-20. Parliament has constitutional authority over the procedure in all matters relating to bankruptcy: Re Solloway Mills & Co. Ltd., In Liquidation, Ex Parte I.W.C. Solloway (1934), [1935] O.R. 37 (C.A.), at pp. 43, 47. It should not be necessary to parse each provision of the order to determine its source. The appeal provisions of the BIA and CJA are in operational conflict and therefore the BIA provisions prevail under the doctrine of paramountcy. If the appeal provisions do not conflict, it is because it is possible to comply with both schemes. The only way to comply with both schemes is to follow the more restrictive provisions in the BIA appeal route.

[21] BDO further argues that if it is necessary to determine the source of the power to include the leave to sue provision in the receivership order, it is found in the BIA s. 243(1)(c) power to appoint a receiver to "take any other action that the court considers advisable." Alternatively, it is found in s. 215, which includes receivers within the category of "trustees", since s. 243(4) dictates that the only persons who can be appointed as receivers are trustees.

Relevant Statutory Provisions

BIA Provisions

[22] The BIA provides for the appointment of a receiver as a court officer:

243(1) Subject to subsection (1.1), on application by a secured creditor, a court may appoint a receiver to do any or all of the following if it considers it to be just or convenient to do so:

(a) take possession of all or substantially all of the inventory, accounts receivable or other property of an insolvent person or bankrupt that was acquired for or used in relation to a business carried on by the insolvent person or bankrupt;

(b) exercise any control that the court considers advisable over that property and over the insolvent person's or bankrupt's business; or

(c) take any other action that the court considers advisable.

[23] The BIA provides in s. 215 that leave of the court is required for actions against certain persons:

215 Except by leave of the court, no action lies against the Superintendent, an official receiver, an interim receiver or a trustee with respect to any report made under, or any action taken pursuant to, this Act.

[24] The BIA has a specific provision proscribing actions against a receiver in certain circumstances. Section 251 provides:

251 No action lies against a receiver for loss or damage arising from the sending or providing by the receiver of a notice pursuant to section 245 or a statement or report pursuant to section 246, if done in good faith in compliance or intended compliance with those sections.

[25] The BIA provides, as to appeals, as follows:

193 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:

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

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

[26] An appeal or motion for leave to appeal must be commenced within 10 days of the making of the order or decision sought to be appealed: see rr. 31(1), (2), Bankruptcy and Insolvency General Rules, C.R.C., c. 368.

CJA Provisions

[27] The CJA also provides for the appointment of a receiver. Section 101(1) provides that a judge of the Superior Court may, where it appears just or convenient to do so, appoint one by interlocutory order; s. 101(2) permits the court to include terms in such an order that are considered just:

101(1) In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just or convenient to do so.

(2) An order under subsection (1) may include such terms as are considered just.

[28] Section 6(1)(b) of the CJA provides for an appeal to this court from certain final orders of the Superior Court. Such an appeal must be commenced within 30 days of the making of the order appealed from: see r. 61.04(1), Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Analysis

(1) Determining the appeal route requires determining the basis for the leave to sue provision in the receivership order

[29] The question of how one determines the applicable appeal route when a receiver has been appointed under s. 243(1) of the BIA and under provincial law was addressed in Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283. There, a receiver was appointed under both the BIA and British Columbia's Law and Equity Act, R.S.B.C. 1996, c. 253. The receiver applied for a declaration that a third party (BC Hydro) did not have a unilateral right to terminate an agreement with the debtor. The British Columbia Supreme Court refused to stay the receiver's application in favour of arbitration, and ruled that the agreement could not be terminated. BC Hydro sought to appeal. In holding that the BIA appeal route governed, Groberman J.A. stated, at para. 21:

I acknowledge that, in a case such as the present one, where relief is sought under both common law equitable principles and the Law and Equity Act as well as under the Bankruptcy and Insolvency Act, there can be some question as to whether the appeal provisions of the Bankruptcy and Insolvency Act are engaged. In my view, the answer depends on whether the order under appeal is one granted in reliance on jurisdiction under the Bankruptcy and Insolvency Act. Where it is, the appeal provisions of that statute are applicable. [Emphasis added.]

[30] After finding that the orders sought to be appealed were made by a judge "purporting to act pursuant to powers conferred" by the BIA, Groberman J.A. held that the appeal provisions of the BIA applied: at para. 24.

[31] I agree with that approach. Applying it here, the question is whether the leave to sue provision, under which McEwen J. exercised authority to dismiss SusGlobal's application for leave to sue the receiver, was included in the receivership order pursuant to jurisdiction flowing from the BIA.

[32] That question is one of statutory interpretation, informed by the historical understanding of the relationship between a leave to sue provision and a receivership, and by how the authority to include such provisions was understood before s. 243(1) was enacted, when appointments were made solely under provincial law. Before turning to the language of the BIA and the applicable interpretive principles, I discuss those background points.

(2) The relationship between a leave to sue provision and a court-ordered receivership

[33] Provisions of receivership orders that require consent or court permission for a court-appointed receiver to be sued have a long pedigree. Case law dating back almost a century considered it "settled law that a receiver appointed by the Court cannot be sued without leave": Trusts & Guarantee Co. v. Oakwood Clubs (1931), 40 O.W.N. 581 (H.C.J.). Text writers consider the inclusion of such provisions to be "common practice" and "customary", whether the receiver is appointed under the BIA or some other authority: Bennett on Receiverships, 3d ed. (Toronto: Thomson Reuters, 2011) at p. 283; L.W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, Bankruptcy and Insolvency Analysis, 4th ed. (Toronto: Thomson Reuters, 2009), The Bankruptcy and Insolvency Act at L§26; Halsbury's Laws of Canada, Receivers and Other Court Officers (2017 Reissue), at HRC-91, 92. The inclusion of a leave to sue provision in Ontario's Model Receivership Order, British Columbia's Model Receivership Order, the Alberta Template Receivership Order, and Nova Scotia's Receivership Order, among others, illustrates their widespread, practically uniform use.

[34] In Ontario (Ontario Securities Commission) v. Gaudet (1988), 65 O.R. (2d) 424 (H.C.J.), at p. 426, Reid J. described why a leave to sue provision is ubiquitous. It is essential to a court-appointed receivership:

A receiver is an officer of the court. The leave requirement is usual in an order appointing a receiver. For the proper and orderly conduct of a receivership it has traditionally been regarded as essential that the receiver be party to all proceedings against the assets under its care, and that the estate be protected against groundless or unjustified proceedings. For these and other reasons the condition that leave be obtained is commonly included; indeed, I am not aware of any receivership order lacking one. In my view, it is essential. [Emphasis added.]

[35] In Hamilton Wentworth Credit Union Ltd. v. Courtcliffe Parks Ltd. (1995), 23 O.R. (3d) 781 (Gen. Div.), R.A. Blair J. (as he then was) provided further explanation about the essential relationship between leave to sue provisions and receiverships. He stated that a leave to sue provision is required to preserve the integrity of the court's role as supervisor over the preservation and realization of the assets within its administration. The court has an obligation, in ensuring the properly and orderly conduct of the receivership, to protect the estate from groundless or unjustified proceedings: at pp. 787-88. See also Manitoba Securities Commission v. Crocus Investment Fund, 2006 MBQB 192, at para. 14.

[36] The essential and customary nature of a leave to sue provision in court-ordered receiverships informs the analysis of the source of the court's authority to include it.

(3) The authority for leave to sue provisions under provincial law

[37] Before Parliament amended the BIA in 2009 to include s. 243(1), appointments of receivers under provincial legislation included leave to sue provisions. What was the source of the authority for those provisions?

[38] In Hamilton Wentworth, which involved a receivership order made under the CJA, R.A. Blair J. situated the authority to include a leave to sue provision both in the court's inherent jurisdiction and in the statutory authority in the CJA to appoint the receiver. He stated, at p. 787:

An order requiring that leave be obtained before steps are taken that will affect the assets under that administration is therefore, in my view, within the jurisdiction of the court, by virtue of its inherent jurisdiction and by virtue of its statutory jurisdiction respecting the appointment of receivers "where it appears to a judge of the court to be just [or] convenient to do so": the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended. [Emphasis added.]

[39] McCawley J. expressed a similar view in relation to the Manitoba equivalent of s. 101 of the CJA in Crocus Investment, at para. 14:

In Canada, it is common practice in situations where the court has appointed a Receiver to prohibit legal proceedings against the debtor and the Receiver unless leave of the court is first obtained. In addition to the inherent jurisdiction of the court to control its process, the authority to do so in this jurisdiction is found in s. 55 of The Court of Queen's Bench Act, C.C.S.M. c. C280. [Emphasis added.]

[40] I take two main points from these authorities, given that s. 243(1) of the BIA was enacted against the backdrop of already existing provincial legislation authorizing the appointment of receivers.

[41] First, there are similarities among the language of the CJA relied on in Hamilton Wentworth, the language of The Court of Queen's Bench Act discussed in Crocus Investment, and the language of the BIA. They all speak of the court appointing a receiver when it considers it to be just or convenient to do so.

[42] Second, although Hamilton Wentworth Credit Union and Crocus Investment relied on statutory authority and inherent jurisdiction, the Supreme Court of Canada has since clarified that, in the insolvency context, statutory authority is to be considered before inherent jurisdiction (see the discussion below at paras. 62-63). A finding of statutory authority makes any reference to inherent jurisdiction unnecessary.

(4) In light of the principles of interpretation, s. 243(1) includes the authority for a leave to sue provision

[43] Against that backdrop, I turn to s. 243(1) of the BIA. It provides that "a court may appoint a receiver…if it considers it to be just or convenient to do so". The receiver may be appointed to take any action the court considers advisable, including to take possession of property of the insolvent person, exercise control over that property and the insolvent person's business, etc.

[44] The modern approach to statutory interpretation instructs a court to consider the words of a statute "in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament": Belwood Lake Cottagers Association Inc. v. Ontario (Environment and Climate Change), 2019 ONCA 70, at para. 39, citing Montréal (City) v. 2952-1366 Québec Inc., 2005 SCC 62, at paras. 9-12, and Rizzo & Rizzo Shoes Ltd. (Re), at p. 41. While there is a presumption that the plain meaning of a statute's words reflect Parliament's intention, that plain meaning is only one aspect of the modern approach: Belwood Lake, at para. 42. The court must read statutory provisions in their entire context. This involves considering "the history of the provision at issue, its place in the overall scheme of the Act, the object of the Act itself, and Parliament's intent both in enacting the Act as a whole, and in enacting the particular provision at issue": Chieu v. Canada (Minister of Citizenship and Immigration), 2002 SCC 3, at para. 34.

[45] Since the modern approach to statutory interpretation is contextual, the fact that s. 243(1) of the BIA lacks express words to the effect that a court may include a leave to sue provision when appointing a receiver is the beginning, not the end of the analysis. A proper understanding of the section's words in their context and in light of the purpose of the legislation leads to the conclusion that Parliament must be taken, by necessary implication, to have clothed the court with the power to require leave to sue a receiver appointed under s. 243(1).

[46] Parliament enacted s. 243(1) in the context of the legal landscape set out above. It is unlikely that Parliament would have authorized the court to appoint a receiver and at the same time excluded the power to do so with provisions considered to be essential to the court's role in a receivership. Further, Parliament legislated that a receiver should be appointed when just or convenient, using language also found, for example, in the CJA. The terms essential to a receiver's appointment and to the court's role in a receivership inevitably inform a court's assessment of whether it may be just or convenient to appoint a receiver. It is therefore also unlikely that Parliament intended the court to appoint a receiver when just or convenient while depriving the court of the power to include an essential term in the appointment. A leave to sue provision is essential to a receivership; it is required to preserve the integrity of the court's role as supervisor of the receivership.

[47] Reading s. 243(1) as providing the power to include a leave to sue provision accords with Parliament's purpose in enacting s. 243(1), as set out by the Supreme Court in the course of its paramountcy analysis in Lemare Lake Logging. Abella and Gascon JJ., writing for the majority, described the purpose of s. 243 as "the establishment of a regime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver in multiple jurisdictions" and increasing efficiency: Lemare Lake, at paras. 45, 67.

[48] Since Parliament's purpose in enacting the provision was to eliminate the need for a patchwork of receivers appointed under provincial legislation, it follows that the court's power to appoint a national receiver under s. 243(1) of the BIA comprehends the power to include essential receivership terms. At the time that the two bills establishing and amending s. 243 received royal assent (Bill C-55 in 2005 and Bill C-12 in 2007), the court's power to include a leave to sue provision in a receivership order was firmly entrenched – leave to sue provisions were ubiquitous and were considered essential.[2] Parliament is presumed to have known the facts relevant to the "conception and operation" of its legislation: Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Toronto: LexisNexis, 2014) at p. 205.

[49] Further, accepting SusGlobal's position would run counter to the purpose of s. 243(1). On SusGlobal's argument, since a leave to sue provision can only be grounded in provincial authority, and since each province's authority does not normally extend beyond that province, a national receiver appointed under the BIA would have to seek a leave to sue provision from a court in each province. This is exactly the patchwork scenario that s. 243(1) was enacted to avoid.

[50] In my view, the power to include a leave to sue provision in a receivership order is thus necessarily implied by the statutory power to appoint a receiver in s. 243(1). In ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4, at para. 51, Bastarache J. set out the rationale for the doctrine of "jurisdiction by necessary implication":

The mandate of this Court is to determine and apply the intention of the legislature without crossing the line between judicial interpretation and legislative drafting. That being said, this rule allows for the application of the "doctrine of jurisdiction by necessary implication"; the powers conferred by an enabling statute are construed to include not only those expressly granted but also, by implication, all powers which are practically necessary for the accomplishment of the object intended to be secured by the statutory regime created by the legislature. [Emphasis added; citations omitted.]

See also R. v. Cunningham, 2010 SCC 10, at paras. 19-20.

[51] Though ATCO Gas dealt with the enabling statute of an administrative tribunal and Cunningham dealt with a court established by statute, the same reasons for applying the doctrine of necessary implication in those contexts exist here. By expressly empowering a court, in the BIA, to appoint a receiver as a court officer authorized to take a broad range of actions when just or convenient to do so, Parliament must be taken to have clothed the court with the power to make orders that are essential to the functioning of its officer, the court-appointed national receiver, and to the court's role in supervising it.

[52] This view is fortified when one looks at the scope of what a receiver appointed under s. 243(1) of the BIA may be empowered to do. The breadth of that is informed, in part, by what courts considered an interim receiver could be empowered to do under the former s. 47(2) of the BIA. As Moir J. noted in Railside Developments Ltd. (Re), 2010 NSSC 13, at para. 66, Parliament used, in s. 243(1), the general words of the former s. 47(2) that had applied to interim receivers. Prior to its amendment, s. 47(2) read as follows:

(2) The court may direct an interim receiver appointed under subsection (1) to do any or all of the following:

(a) take possession of all or part of the debtor's property mentioned in the appointment;

(b) exercise such control over that property, and over the debtor's business, as the court considers advisable; and

(c) take such other action as the court considers advisable.

[53] In GMAC Commercial Credit Corporation - Canada v. T.C.T. Logistics Inc., 2006 SCC 35, the Supreme Court commented on the breadth of the former s. 47(2), while also cautioning that the section was not open-ended, at para. 45:

These statutory parameters, though sufficiently flexible to authorize a wide range of conduct dealing with the taking, management, and eventual disposition of the debtor's property, are not open-ended. The powers given to the bankruptcy court under s. 47(2) are powers to direct the interim receiver's conduct. That section does not, explicitly or implicitly, confer authority on the bankruptcy court to make unilateral declarations about the rights of third parties affected by other statutory schemes.

[54] Reading s. 243(1) and the court's powers thereunder as sufficiently flexible to authorize a wide range of conduct dealing with the taking, management, and eventual disposition of the debtor's property is consistent with the court having the power to include a leave to sue provision in a receivership order. A receiver directed by the court to take possession and control of property and to sell it, for example, may be subject to claims by those with whom the court has directed or authorized the receiver to deal. This is a central reason for the leave to sue provision's necessity.

[55] Finding that s. 243(1) includes the power to authorize a leave to sue provision by necessary implication does not confer an open-ended power on the court. Though a leave to sue provision affects when third parties may sue the receiver, it does not eliminate the right to sue or involve making unilateral declarations about the rights of third parties affected by other statutory schemes. This is especially so given the low threshold for obtaining permission to sue: see Holmes v. Schonfeld Inc., 2016 ONCA 148, at para. 29, citing GMAC, at para. 59.

(5) Sections 215 and 251 of the BIA do not alter the conclusion that the BIA provides the authority to include a leave provision in a receivership order

[56] SusGlobal argues that Parliament specified, in s. 251, when a receiver is to be protected from suit, and that that contradicts the notion that the BIA authorizes a leave to sue provision. I disagree. Section 251 deals with circumstances under which a receiver cannot be sued at all. It does not displace the right of the court to include an essential term in a receivership order requiring court permission to launch claims for matters falling outside of s. 251.

[57] SusGlobal also relies on the failure to specifically include a receiver in s. 215 to argue that s. 243(1) of the BIA does not authorize a leave to sue provision. In my view, even accepting that s. 215 of the BIA does not specifically include receivers would not change the conclusion that s. 243(1) does authorize such provisions.

[58] Section 215 provides that certain officials cannot be sued without court permission. Some of the enumerated officials, such as the Superintendent or an official receiver, are not appointed by court order (although some, such as official receivers, are deemed to be officers of the court): see ss. 5(1), 12(2). Trustees in bankruptcy can be empowered without a court order: see s. 14. Even interim receivers, who are court-appointed, fill a role that is a creature of the BIA, with specific statutory limits on their activities and powers: see for example s. 47.

[59] Section 243(1) receivers, on the other hand, are court-appointed and take their powers from the court appointment order. And it is those types of receivers who, when appointed under other statutes, were historically clothed with customary and common terms essential to their appointment, such as that found in the receivership order's leave to sue provision. The BIA power of appointment carries with it the power to impose that type of term. It would be anomalous to read s. 215 as providing for the protection of the officials specified in it, while also prohibiting the court from including, in a s. 243(1) BIA appointment, a term essential to the very receivership s. 243(1) contemplates.

[60] I also note, contrary to SusGlobal's argument, that some cases have treated s. 215 as though it applied to receivers appointed under s. 243(1) of the BIA: see Crate Marine Sales Ltd. (Re), 2017 ONSC 178, at paras. 22, 59, and Romspen Investment Corporation v. Courtice Auto Wreckers, 2016 ONSC 1808, at paras. 4, 55-57, rev'd but not on this point 2017 ONCA 301, leave to appeal ref'd [2017] S.C.C.A. No. 238. In Romspen, this court treated an appeal from a refusal to grant permission to sue as governed by the BIA appeal routes. Both Crate Marine and Romspen, however, did not deal with any argument that s. 215, due to its wording, should be taken not to apply to receivers appointed under s. 243(1). They did not address the arguments SusGlobal or BDO make here about that wording and therefore did not decide the issue. Given my conclusion that s. 243(1) authorizes the inclusion of leave to sue provisions in receivership orders, it is unnecessary to further deal with the s. 215 point here. The leave to sue provision can stand as authorized by the BIA without resort to s. 215. It is certainly not prohibited by s. 215.

(6) Resorting to inherent jurisdiction is unnecessary

[61] As noted above, SusGlobal's argument is, in part, that inherent jurisdiction related to the CJA is a source of power for the leave to sue provision, and that this also takes the appeal route outside of the BIA. I do not agree that resort to inherent jurisdiction is necessary or that it would take the appeal route where SusGlobal wants it to go.

[62] In Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, at paras. 64-65, the Supreme Court endorsed the hierarchical approach to interpreting insolvency legislation suggested by Justice Georgina R. Jackson and Dr. Janis Sarra – namely, that courts should first look to statutory authority, exhausting their statutory interpretive function before resorting to inherent jurisdiction: Georgina R. Jackson & J. Sarra, "Selecting the Judicial Tool to get the Job Done: An Examination of Statutory Interpretation, Discretionary Power and Inherent Jurisdiction in Insolvency Matters", in Janis P. Sarra, ed., Annual Review of Insolvency Law 2007 (Toronto: Thomson Reuters, 2008) at p. 42. Although Century Services involved an interpretive issue respecting the Companies Creditors Arrangement Act, R.S.C., 1985 c. C-36, Jackson and Sarra's approach encompasses insolvency legislation more generally.

[63] The Supreme Court endorsed Jackson and Sarra's approach outside of the insolvency context in Endean v. British Columbia, 2016 SCC 42. They cautioned that inherent jurisdiction should be relied upon sparingly, at para. 24:

The courts have recognized that, given the broad and loosely defined nature of these powers, they should be "exercised sparingly and with caution": Caron, at para. 30. It follows that courts should first determine the scope of express grants of statutory powers before dipping into this important but murky pool of residual authority that forms their inherent jurisdiction. As The Honourable Georgina Jackson and Janis Sarra write, "[i]t is only where broad statutory authority is unavailable that inherent jurisdiction needs to be considered as a possible judicial tool to utilize in the circumstances". [Citations omitted.]

[64] Because of my conclusion that s. 243(1) confers power to include a leave to sue provision, considering inherent jurisdiction is unnecessary. I note, however, that s. 183(1) preserves the inherent jurisdiction of the Superior Court sitting in BIA matters: Kingsway General Insurance Company v. Residential Warranty Co. of Canada Inc. (Trustee of), 2006 ABCA 293, at para. 19. Section 183(1) reads:

183(1) The following courts are invested with such jurisdiction at law and in equity as will enable them to exercise original, auxiliary and ancillary jurisdiction in bankruptcy and in other proceedings authorized by this Act during their respective terms, as they are now, or may be hereafter, held, and in vacation and in chambers:

(a) in the Province of Ontario, the Superior Court of Justice.

[65] Accordingly, referring to a power as flowing from inherent jurisdiction does not necessarily take an appeal out of the BIA stream. Because the power in question here is statutory, it is unnecessary to consider that issue further.

(7) The BIA appeal route governs

[66] Since para. 8 of the receivership order, the leave to sue provision, is authorized by the statutory authority to appoint a receiver in s. 243(1) of the BIA, SusGlobal's complaint loses its force. It does not matter that such a provision is or could also be grounded in the CJA power to appoint a receiver. As long as the BIA is one of the sources that authorizes the leave to sue provision, an appeal from an order made under it necessarily implicates a provision sourced in the BIA.

[67] In cases like this, where the court's power may be grounded in the BIA or the CJA, the doctrine of paramountcy would prevent an appellant from resorting to the CJA appeal provisions as they are in operational conflict with those of the BIA in respect of timing and leave requirements. To the question "May one appeal without leave and do so after 10 days have expired?" one enactment says "yes" and the other says "no", meeting the test for operational conflict: see Alberta (Attorney General) v. Moloney, 2015 SCC 51, at para. 19, citing Multiple Access Ltd. v. McCutcheon, at p. 191; see also Lemare Lake, at paras. 18-19. The only manner in which the appeal provisions could be found not to conflict is if it were possible to comply with both schemes. Because the BIA provisions are more restrictive than the CJA provisions, complying with both schemes entails complying with the BIA provisions. Either way, SusGlobal was required to follow the BIA appeal route.

Conclusion

[68] SusGlobal has failed to show an error in the underlying premise of the chambers judge's decisions, namely that the BIA governed SusGlobal's proposed appeals. That premise was correct. The authority that grounded the application judge's refusal to grant SusGlobal leave to sue the receiver is found in both the BIA and CJA. Federal paramountcy dictates that the BIA appeal provisions govern. SusGlobal's motion must therefore be dismissed.

[69] BDO is entitled to its costs of the motion, fixed at $15,000 inclusive of disbursements and HST.

Released: April 8, 2019

"B. Zarnett J.A."

"I agree. K. Feldman J.A."

"I agree. David M. Paciocco J.A."

Footnotes

[1] The requests for an extension of time under the BIA and for leave to appeal under the BIA were brought, respectively, under r. 31(1) of the Bankruptcy and Insolvency General Rules, C.R.C., c. 368, and s. 193(e) of the BIA, which specify that a single judge may grant the requested relief. The parties proceeded on the basis that the availability of that relief was wrapped up with the question of which route governed the appeal; hence the question of whether the appeal was properly under the CJA. BDO did not move to quash the appeal, which is relief only a panel of this court can grant.

[2] Leave to sue provisions were contained in both Ontario and British Columbia's 2004 Model Receivership Order, for instance.