COURT OF APPEAL FOR ONTARIO

CITATION: Dal Bianco v. Deem Management Services Limited, 2020 ONCA 585

DATE: 20200918

DOCKET: M51655 (C68214)

Juriansz, Tulloch and Jamal JJ.A.

BETWEEN

Donald Dal Bianco

Applicant (Appellant/Responding Party)

and

Deem Management Services Limited and

The Uptown Inc.

Respondents (Respondents/Responding Parties)

Counsel:

R. Brendan Bissell, for the moving party, the receiver, Crowe Soberman Inc.

David T. Ullmann and Brendan Jones, for the responding party, Donald Dal Bianco

Harold Rosenberg, for the responding party, Deep Foundations Contractors Inc.

Edward L. D’Agostino, for the responding party, Kieswetter Excavating Inc.

No one appearing for OneSpace Unlimited Inc.

Jeffrey A. Armel, for the responding party, EXP Services Inc.

Eric Gionet, for the responding party, Maxion Management Services Inc.

Heard: September 3, 2020 by video conference

REASONS FOR DECISION

[1] This motion seeks directions on whether an appeal lies to this court under s. 193 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, or to the Divisional Court under s. 71(1) of the Construction Act, R.S.O. 1990, c. C.30, from the order of Gilmore J. of the Ontario Superior Court of Justice made on March 10, 2020 in a receivership. Gilmore J. ruled that certain construction lien claimants had priority over a mortgagee in the sale proceeds of a debtor’s property under s. 78 of the Construction Act: see Dal Bianco v. Deem Management Services et al., 2020 ONSC 1500.

[2] The receiver was appointed in respect of the debtor’s property by order of Wilton-Siegel J. of the Ontario Superior Court under s. 243(1) of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The receiver moved before Gilmore J. for directions on whether the lien claimants or the mortgagee had priority to the proceeds of sale of the debtor’s property. The parties agreed to separate this issue from other issues in the receivership and to seek the court’s ruling based on an agreed statement of facts.

[3] If s. 193 of the Bankruptcy and Insolvency Act governs the appeal route from Gilmore J.’s order, then the appeal lies to this court, potentially with leave of a judge of this court:

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:

(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.

[4] But if s. 71(1) of the Construction Act applies, an appeal lies to the Divisional Court as of right:

71(1) Except as otherwise provided in this section, an appeal lies to the Divisional Court from a judgment or an order on a motion to oppose confirmation of a report under this Act.

[5] The question of how to determine the appeal route when a receiver has been appointed under a combination of s. 243(1) of the Bankruptcy and Insolvency Act and provincial legislation was recently addressed by Zarnett J.A. in Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13. At paras. 29-31 of Astoria, Zarnett J.A. agreed with the reasoning of Groberman J.A. in Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283, 61 C.B.R. (6th) 196, at para. 21, that the operative question to determine the appeal route is “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.”

[6] Zarnett J.A. explained that if the Bankruptcy and Insolvency Act is one of the sources of jurisdiction for the order under appeal, “an appeal from an order made under it necessarily implicates a provision sourced in the [Bankruptcy and Insolvency Act]”: at para. 66. The appeal route is then to this court. Even if provincial law is also a source of jurisdiction for the order under appeal and provides for a different appeal route, the principle of federal paramountcy resolves any conflict in favour of the appeal route under the Bankruptcy and Insolvency Act: at para. 67. See also Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, 435 D.L.R. (4th) 416, at paras. 128-131; Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, 72 C.B.R. (6th)245, at paras. 10-11; and Comfort Capital Inc. v. Yeretsian, 2019 ONCA 1017, 75 C.B.R. (6th) 217, at para. 12.

[7] Here, the order of Gilmore J. under appeal was granted at least partly in reliance on jurisdiction under the Bankruptcy and Insolvency Act.

[8] The receiver had authority to seek the court’s directions under s. 249 of the Bankruptcy and Insolvency Act and paragraph 34 of the receivership order. Section 249 of the Bankruptcy and Insolvency Act provides as follows:

249 A receiver may apply to the court for directions in relation to any provision of this Part, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances.

Paragraph 34 of the receivership order provides as follows:

34. THIS COURT ORDERS that the Receiver may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder.

[9] Acting under these sources of authority, the receiver moved before Gilmore J. for directions regarding the discharge of its powers and duties as receiver under the Bankruptcy and Insolvency Act. The agreed statement of facts on the motion stated that the receiver had made certain distributions but “has not been able to distribute [the] remaining funds” from the proceeds of sale of the debtor’s property “as a result of the competing priority claims” between the construction lien claimants and the mortgagee.

[10] Gilmore J. provided the court’s directions on the priority dispute. The order under appeal confirms that the motion was brought partly under the Bankruptcy and Insolvency Act — “to determine competing priorities under … the Construction Act … between certain construction liens and a registered real property mortgage”, in an “APPLICATION UNDER Section 243(1) of the Bankruptcy and Insolvency Act and Section 101 of the Courts of Justice Act”.

[11] We agree that the mere act of styling the motion in the receivership does not give “automatic access to the appeal routes under the [Bankruptcy and Insolvency Act]”, because “[t]he jurisdiction of the court is governed by the substance of the order made”: RREF II BHB IV Portofino, LLC v. Portofino Corporation, 2015 ONCA 906, 33 C.B.R. (6th) 9, at para. 12. Here, however, the order under appeal was not just styled in the receivership. The substance of the order was in proceedings authorized by the Bankruptcy and Insolvency Act — it responded to a motion for the court’s directions brought under s. 249 of the Bankruptcy and Insolvency Act to help the receiver distribute the remaining funds in the receivership.

[12] Section 249 of the Bankruptcy and Insolvency Act was thus a source of jurisdiction for the court’s order. To use the language of Astoria, at para. 29, the order under appeal was “granted in reliance on jurisdiction under the Bankruptcy and Insolvency Act”. This establishes that the appeal route is to this court.

[13] As agreed by the parties, there will be no order as to costs.

“R. G. Juriansz J.A.”

“M. Tulloch J.A. ”

“M. Jamal J.A.”