Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210528 DOCKET: M52200 (C68999)

Strathy C.J.O., Brown and Miller JJ.A.

BETWEEN

Hillmount Capital Inc. Respondent (Applicant)

and

Celine Brittany Pizale and Richard Stanley Pizale Moving Parties/Appellants (Respondents)

Counsel: Jamie Spotswood and Rachel Migicovsky, for the moving parties/appellants, Celine and Richard Pizale Robert Macdonald and Teodora Prpa, for the receiver, Zeifman Partners Inc. Behn Conroy, for the purchasers, Patricia and David Armstrong Shana Nodel, for second mortgagees, 1713691 Ontario Inc. and Boris Nodel Terry M. Walman, for first mortgagee, Elle Mortgage Corporation

Heard: February 8, 2021 by video conference

BROWN J.A.:

I. OVERVIEW

[1] The appellants, Celine and Richard Pizale, owned a partially-renovated residential property on Lyndhurst Avenue in Toronto (the “Property”). In June 2020 the first mortgagee, Hillmount Capital Inc. (“Hillmount”), applied for an order appointing the respondent, Zeifman Partners Inc., as receiver of the Property (the “Receiver”). Koehnen J. granted such an order on June 19, 2020 (the “Appointment Order”).

[2] The Receiver marketed the Property on an “as is” basis and entered into an agreement of purchase and sale with Patricia and David Armstrong (the “Purchasers”). By orders dated January 8, 2021, Conway J. granted a sale approval and vesting order (the “Approval Order”), together with an administration order approving the Receiver’s activities, as well as increasing its borrowing authority to $250,000.00 (the “Administration Order”).

[3] On January 15, 2021, the Pizales filed a notice of appeal of the Motion Judge’s January 8 orders. Two motions then ensued before the Chambers Judge.

[4] First, the Receiver moved for orders (i) declaring that the Pizales do not have an automatic right of appeal under ss. 193 (a)-(d) of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (the “BIA”), and (ii) denying them leave to appeal the Approval and Administration Orders under BIA s. 193(e).

[5] The Pizales then brought a motion for (i) a declaration that they have a right to appeal to this court from the Approval and Administration Orders under s. 193 (c), which states that an appeal lies to the Court of Appeal “if the property involved in the appeal exceeds in value ten thousand dollars,” or (ii) alternatively, leave to appeal the orders pursuant to s. 193(e) and a stay of the Approval and Administration Orders pending their appeal.

[6] By order dated February 4, 2021 the Chambers Judge declared that the Pizales did not have an automatic right of appeal and denied them leave to appeal (the “Chambers Order”). He ordered that the sale of the Property should proceed.

[7] The Pizales thereupon brought an urgent panel review motion pursuant to s. 7(5) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), to set aside the Chambers Order and, if necessary, stay the Approval and Administration Orders.

[8] The panel heard the motion on February 8, 2021, the day scheduled for the closing of the sale of the Property. At the conclusion of the hearing the panel dismissed the Pizales’ motion, with reasons to follow. These are those reasons.

II. BACKGROUND

The Property and the receivership

[9] The Pizales were in the process of renovating the Property when Hillmount, the first mortgagee, applied for the appointment of a receiver. At the time, there were four mortgages registered against the Property: (i) the first mortgage to Hillmount for approximately $3.35 million, later assigned to Elle Mortgage Corporation (“Elle”); (ii) an $800,000 second mortgage to 1713691 Ontario Inc. and Boris Nodel; (iii) a third mortgage for $569,359 to Harold Wine, Gad Caro, and Marshall Morris; and (iv) a $325,000 fourth mortgage to Weihao Zhang. The Pizales had been in default under the first mortgage for a number of months prior to the Receiver’s appointment.

[10] The Appointment Order authorized the Receiver to take possession of the Property, preserve, market, and sell it. The Receiver was authorized to borrow up to $150,000 from Hillmount. Given the significant costs required to complete the renovation of the Property, the limited borrowing authority given to the Receiver clearly indicated that its mandate under the Appointment Order was to sell the Property on an “as is” basis.

[11] As described by the Motion Judge in her endorsement, the Receiver initially listed the Property for sale at $4.8 million, which was higher than the appraisals it had obtained for a sale on an “as is” basis. Notwithstanding numerous showings of the Property, that listing price did not attract any offers. In mid-September 2020, the Receiver reduced the listing price to $4.15 million. Several offers were received, which the Receiver pursued. The Receiver entered into a Sale Agreement with the Purchasers for a purchase price that was higher than its two “as is” appraisals and any other offers received by the Receiver.

The decision of the Motion Judge

[12] The Receiver moved for court approval of the Sale Agreement. In its Second Report, the Receiver stated that if the Sale Agreement was not approved, it did not believe it would be able to sell the Property for an equal or higher price.

[13] The Pizales opposed the Receiver’s motion. They wanted to regain possession of the Property, complete the renovations, and sell it for an “as complete” or “as renovated” price. The second mortgagees also opposed the sale. Elle, the assignee of the first mortgage, and the third and fourth mortgagees opposed any sale of the Property but supported a discharge of the Receiver. Notwithstanding those positions, no motion to discharge the Receiver was brought before the Motion Judge.

[14] The Motion Judge approved the Sale Agreement, concluding that the evidence showed the proposed sale satisfied the principles set out in Royal Bank v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.). She rejected the submissions made in opposition to the sale stating, at para. 26 of her endorsement:

It was only after the Sale Agreement was entered into that the mortgagees (after making certain arrangements with the Respondents) joined forces to mount a coordinated opposition to the [Approval and Vesting Order]. Their reasons for doing so are not apparent on the face of the record and consist only of a stated opposition. The mortgagees and Respondents failed to engage in the court-authorized receivership and sales process at any time prior to the signing of the Sale Agreement. The Receiver, after conducting a legitimate and proper sales process, entered into an agreement with the Purchasers, which the mortgagees and Respondents are now seeking to have this court reject. They are seeking to prevent the sale altogether. I have considered and weighed the interests of all parties and find that there is no basis for this court to allow the objections of the mortgagees and Respondents to prevent the Receiver from concluding its agreement with the Purchasers.

[15] The Motion Judge also granted the Administration Order, which was unopposed save for the Receiver’s fees and disbursements, for which the Receiver intended to seek approval at a later date.

The decision of the Chambers Judge

[16] The Pizales submitted to the Chambers Judge that their appeal fell within BIA s. 193(c). The Chambers Judge noted that the Pizales accepted the jurisprudence summarized in the chambers decision in 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 347 O.A.C. 226 (“Bending Lake”), [1] that BIA s. 193(c) does not apply to orders that: are procedural in nature; do not bring into play the value of the debtor’s property; or do not result in a loss. The Chambers Judge concluded that the Pizales’ appeal did not fall within BIA s. 193(c) for three reasons: (i) the Pizales’ critiques of the Approval Order all related to the manner in which the Property was sold and therefore concerned matters of procedure that did not give rise to an automatic right of appeal; (ii) the Pizales’ appeal did not bring into play the value of the Property; and (iii) the Approval Order would not result in a loss. The Chambers Judge rejected the Pizales’ argument that an automatic right of appeal lay in respect of the Administration Order for the same reasons he rejected the argument for the Approval Order.

[17] The Chambers Judge then concluded that the Pizales should not be granted leave to appeal under BIA s. 193(e). He did not regard their appeal as raising an issue of general importance to the practice in bankruptcy/insolvency matters or the administration of justice as a whole. Instead, it was “an attempt to relitigate a dispute between the Pizales and the receiver that will have little importance to bankruptcy/insolvency matters beyond the parties.” Nor did the Chambers Judge view the Pizales’ appeal as prima facie meritorious. He found the Motion Judge’s Soundair analysis to be “complete and the grounds do not raise a serious issue to be appealed.” Finally, the Chambers Judge held that granting leave would risk losing the sale to the Purchasers, thereby placing into question the whole integrity of the sales process.

III. THE STANDARD OF REVIEW

[18] On a panel review of the order of a single judge pursuant to CJA s. 7(5), the panel may interfere with the order if the chambers judge failed to identify the applicable principles, erred in principle or reached an unreasonable result: DeMarco v. Nicoletti, 2017 ONCA 417, at para. 3; Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1, at para. 21; Struik v. Dixie Lee Food Systems Ltd., 2018 ONCA 22, at paras. 5-6.

IV. THE ISSUES RAISED BY THE REVIEW MOTION

[19] On this motion to review, the Pizales advance three main arguments to set aside the Chambers Decision.

[20] First, they contend the Chambers Judge erred by applying the legal principles concerning BIA s. 193(c) in a too restrictive or narrow way.

[21] Second, the Pizales submit that the Chambers Judge misconstrued their arguments about why they had an automatic right of appeal under BIA s. 193(c). They were not alleging improvident sale or an improper sale process. Instead, they were alleging that the receivership was “spent” so there was no need to liquidate the Property. In their submission, the purpose of the receivership was achieved when Hillmount, the applicant creditor, was made whole and assigned its first mortgage to Elle. According to the Pizales, given that assignment the Motion Judge should have given more weight to the objections to the sale by the Pizales and remaining creditors. Instead, the Approval Order wrongfully preferred preserving the integrity of the sales process over the substantive interests of the Pizales and their creditor mortgagees.

[22] More specifically, the Pizales submit that the Chambers Judge erred in concluding that:

(i) the Approval and Administration Orders were procedural in nature when the Pizales were arguing that the orders prejudiced their substantive rights;

(ii) the Approval Order did not put the value of the Property in question. The Pizales submit that the appraisals they filed put that value in question;

(iii) the Pizales did not retain an interest in the Property and therefore its value was not in question. The Pizales argue that while the receivership changed the nature of their interest in the Property, it did not extinguish it; and

(iv) the Approval Order did not result in a loss of at least $10,000. According to the Pizales, the Chambers Judge ignored the increase in their exposure to their creditors resulting from the sale of the Property on an “as is” rather than “as complete” basis.

[23] Finally, the Pizales submit the Chambers Judge erred in failing to grant leave to appeal as he misconstrued the bases of the Pizales’ opposition to the Approval Order and their grounds of appeal.

V. FIRST ISSUE: DID THE CHAMBERS JUDGE APPLY THE CASE LAW CONCERNING BIA s. 193(c) TOO NARROWLY?

[24] Section 193 (c) of the BIA states that “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.”

[25] Before the Chambers Judge, the Pizales acknowledged that BIA s. 193(c) does not apply to certain types of orders, specifically those identified in Bending Lake. That decision observed, at para. 53, that the case law holds that BIA s. 193(c) does not apply to orders (i) that are procedural in nature, [2] (ii) that do not bring into play the value of the debtor’s property [3] or (iii) do not result in a loss. [4] The last principle derives from two Supreme Court of Canada cases, Orpen v. Roberts, [1925] S.C.R. 364, at p. 367, and Fallis and Deacon v. United Fuel Investments Ltd., [1962] S.C.R. 771.

[26] Notwithstanding this acknowledgement, the Pizales contend that the Chambers Judge failed to apply those principles in what they style as the less restrictive approach set out in the decision of the Saskatchewan Court of Appeal in MNP Ltd. v. Wilkes, 2020 SKCA 66, 449 D.L.R. (4th) 439 (“Wilkes”).

[27] To deal with that submission, I shall address two issues: (i) the significance, if any, of the “narrow” and “broad” interpretation labels regarding s. 193(c) found in some of the case law; and (ii) the practical difference, if any, of the approach in Wilkes in contrast to that found in the cases summarized in Bending Lake.

The “narrow” and “broad” interpretation dichotomy

[28] Although the Pizales rely on some appellate decisions from other provinces to advocate for a broad interpretation of the automatic rights of appeal in BIA ss. 193(a)-(d), they ignore panel decisions of this court that have expressly taken a narrow approach to the interpretation of those appeal rights due to the broad automatic stay on appeal contained in BIA s. 195. [5]

[29] For example, several weeks after the Bending Lake decision, a panel of this court released reasons in Enroute Imports Inc. (Re), 2016 ONCA 247, 35 C.B.R. (6th) 1. At issue on that appeal was an order concerning the ability to examine a representative of the bankrupt. The panel stated, at para. 5:

The case law considering s. 193(c) from this court makes clear that, given the broad nature of the stay imposed by s. 195 of the BIA, the right of appeal without leave under s. 193 (c) must be narrowly construed. In addition, the appeal must directly involve property exceeding $10,000 in value: Crate Marine Sales Limited (Re), 2016 ONCA 140, Robson Estate v. Robson (2002), 33 C.B.R. (4th) 86 (Ont. C.A.), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, and Ontario Wealth Management Corporation v. Sica Masonry and General Contracting Ltd., 2014 ONCA 500, 17 C.B.R. (6th) 91. (emphasis added)

[30] The panel found that the order at issue did not fall within s. 193(c) for two reasons: the entitlement to conduct an examination was procedural in nature and did not directly involve property, and the appellants’ argument that the motion judge erred in finding that the proposal was reasonable and made in good faith did not put the property directly in issue. The panel also denied leave to appeal.

[31] The next year, a panel in Romspen Investment Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, 47 C.B.R. (6th) 1, leave to appeal refused, [2017] S.C.C.A. No. 238, followed Enroute Imports in holding that the right of appeal under s. 193 (c) must be narrowly construed and limited to cases where the appeal directly involves property exceeding $10,000 in value: at para. 22.

[32] These statements by two panels of this court strike a different analytical stance than the comments by the chambers judge in Wong v. Luu, 2013 BCCA 547, 348 B.C.A.C. 155, at para. 23, that the right of appeal under BIA s. 193 is “broad, generous and wide-reaching.” I would further note that the decisions in Wong and Wilkes did not address the effect of the automatic stay in s. 195 on the interpretation of ss. 193(a)-(d), a factor this court has considered significant for its interpretative approach.

[33] That said, the recent panel decision of this court in Davidson (Re), 2021 ONCA 135, 86 C.B.R. (6th) 1, determined that it was not necessary in that case to engage in a debate over whether BIA s. 193(c) should be given a narrow or broad interpretation: at paras. 9-10. In that case, the panel assumed that s. 193 (c) applied but dismissed the appeal on the merits.

The state of the case law

[34] When one looks past the labels of “narrow” and “broad”, one discovers that a consensus appears to exist in the case law about how to answer s. 193 (c)’s question of whether the property involved in the appeal exceeds $10,000. As I will explain, the Pizales’ submission greatly overstates the differences between the operative principles described in Wilkes and the case law summarized and categorized in Bending Lake.

[35] Wilkes held that a court’s primary task when examining whether an automatic right of appeal exists is to answer the question raised by s. 193 (c) “and determine whether the property involved in the appeal exceeds $10,000.” Writing for the court, Jackson J.A. continued, at para. 61:

Courts have used different ways of giving meaning to s. 193 (c), but it is still the words of the statute that govern. Thus, in Fallis, by its adoption of what the Court had said in Orpen, the test is stated as, What is the loss which the granting or refusing of the right claimed will entail? In Fogel, the Court asked what is “the value in jeopardy” (at para 6). In McNeil, the Chambers judge observed that “[t]he ‘property involved in the appeal’ … may be determined by comparing the order appealed against the remedy sought in the notice of appeal” (at para 13). In Trimor, the Chambers judge added to the Orpen–Fallis test by stating “[t]he focus of the inquiry under s. 193 (c) is the amount of money at stake …” (at para 10). All of these expressions are consistent with the statutory language present in s. 193 (c).

[36] As mentioned above at para. 25, Bending Lake summarized the case law as identifying three types of orders that do not fall within the ambit of BIA s. 193(c). The first type the case law identifies is an order that does not result in a loss, as described in the Orpen and Fallis cases, which were the focus of the court’s analysis in Wilkes. The need for an order to result in a loss to fall within s. 193 (c) was framed slightly differently by the Alberta Court of Appeal in Re Bearcat Exploration Ltd. (Bankrupt), 2003 ABCA 365, 339 A.R. 376, where the court stated, at para. 10, that an appeal under BIA s. 193(c) “must in substance be about the value of the property, not just any claim related to bankruptcy.” Or, as put by panels of this court in Enroute Imports and Courtice Auto Wreckers, the appeal must “directly involve” property exceeding $10,000 in value.

[37] Bending Lake also pointed out that the jurisprudence treated two other types of orders as falling outside of s. 193 (c): those that do not bring into play the value of the debtor’s property; and those that are procedural in nature. Excluding those types of orders from the ambit of s. 193 (c) is consistent with – and indeed flows logically from – the loss principle articulated in the Orpen/Fallis cases.

[38] By its nature the second type of order - one that does not bring into play the value of the debtor’s property - would not result in a loss or put property value in jeopardy. For example, it is well-established in the BIA s. 193(c) jurisprudence that an order appointing a receiver or interim receiver usually does not bring into play the value of the debtor’s property as it simply appoints an officer of the court to preserve and monetize those assets subject to court approval. [6]

[39] The third type of order that the case law places outside of s. 193(c) is a procedural order, which really is a sub-set of orders that do not bring into play the value of the debtor’s property. The case law identifies various procedural orders of this kind: the dismissal of the bankrupt’s motion to strike out the petition against him; [7] the conduct of an examination of the bankrupt; [8] an order declining leave to examine the bankrupt; [9] approval of the trustee’s proposed auction process; [10] directions regarding the conduct of a trial; [11] an appeal process order; [12] an order denying a union leave to apply for certification during receivership; [13] and an order granting an adjournment. [14] In some circumstances, a sale approval order, on analysis, may be merely procedural in nature. [15]

[40] Wilkes acknowledges that “it is solidly established in the jurisprudence that there is no right of appeal under s. 193 (c) from a question involving procedure alone”: at para. 61 (emphasis in original). Indeed, a few months after the release of Wilkes, Jackson J.A., sitting as a chambers judge, concluded in Re Harmon International Industries Inc., 2020 SKCA 95, 81 C.B.R. (6th) 1, that leave was required to appeal a receiver’s sale process order stating, at paras. 34-35:

Thus, what the Court has before it is an Order that authorizes a list price of $3.8 million for the Millar Avenue Building. It does not propose a sale price of $3.8 million. All that the Order does is establish a process for the sale of the property. Any proposed sale must still be confirmed.

At this point, the claim of loss is without any foundation at all. It is, as such, entirely speculative. It assumes that the listing agent will not market the property to its fullest potential or that the receiver will place an improvident sale before the Court of Queen’s Bench to be confirmed and the Court will confirm it. It is possible that Harmon will apply to Elson J. under s. 185(7) of the BIA or wait until it is determined that the property is proposed to be sold for less than what Harmon believes it is worth and place the Brunsdon Appraisal before Elson J. at that time. It is also possible that Harmon will obtain other financing so as to permit it to buy the property at the list price or the property will sell for an amount acceptable to Harmon. In my view, the Order does not directly have an impact on the proprietary or monetary interests of Harmon or crystallize any loss at this time. It concerns a matter of procedure only. It is merely an order as to manner of sale, as was the case in Re Dominion Foundry Co. (1965), 52 D.L.R. (2d) 79 (Man. C.A.). No value is in jeopardy, and no party can claim a loss as a result. In my view, the property involved in the proposed appeal does not exceed in value $10,000 as those words are used in s. 193 (c) of the BIA. Thus, I conclude it was necessary for Harmon to apply for leave to appeal. (Emphasis added.)

[41] However, Wilkes makes an additional point. Merely because the question in issue is procedural does not necessarily mean there is not property value involved in the appeal that exceeds $10,000. Section 193 (c) requires a court to analyze the economic effect of the order sought to be appealed: at paras. 62-63.

[42] I agree. What is required in any consideration of whether the appeal of an order falls within BIA s. 193(c) is a critical examination of the effect of the order sought to be appealed. Such an examination requires scrutinizing the grounds of appeal that are advanced in respect of the order made below, the reasons the lower court gave for the order, and the record that was before it. The inquiry into the effect of the order under appeal therefore is a fact-specific one; it is also an evidence-based inquiry, which involves more than merely accepting any bald allegations asserted in a notice of appeal: Bending Lake, at para. 64. Wilkes concurs on this point, holding, at para. 64, that the loss claimed must be “sufficiently grounded in the evidence to the satisfaction of the Court determining whether there is a right of appeal,” a point repeated in the subsequent chambers decision in Re Harmon International Industries, at para. 32.

[43] While the amendment of the BIA in 1992 to include Part XI dealing with “Secured Creditors and Receivers” increased the practical need for the timely adjudication of appeals launched from orders made under the Act, an approach to the application of s. 193 (c) that requires a fact-specific, evidence-based critical scrutiny of the effect of the order sought to be appealed should foster the remedial objectives of Canada’s insolvency statutes to provide for “timely, efficient and impartial resolution of a debtor’s insolvency”: 9354-9186 Quebec Inc. v. Callidus Capital Corp., 2020 SCC 10, 444 D.L.R. (4th) 373, at para. 40 (emphasis added.)

[44] There will be cases where the effect of an order sought to be appealed is such that an appeal lies as of right under BIA s. 193(c) but the respondent takes the view that the appeal is without merit or the automatic stay under BIA s. 195 would cause undue delay or prejudice in the bankruptcy proceeding. In such cases, it is open to the respondent to move to cancel the automatic stay. A motion to cancel the stay prompts a judicial assessment of the merits of the appeal, the appellant’s litigation conduct, and the relative prejudice that cancelling or maintaining the stay would have on interested persons and the interests of justice generally: Royal Bank of Canada v. Bodanis, 2020 ONCA 185, 78 C.B.R. (6th) 165 (Chambers), at paras. 11-14; After Eight Interiors Inc. v. Glenwood Homes Inc., 2006 ABCA 121, 391 A.R. 202 (Chambers), at para. 6; Pelletier (Re), 2020 ABCA 450, 86 C.B.R. (6th) 108 (Chambers), at para. 45.

Conclusion

[45] The Pizales’ contention that the Chambers Judge erred by applying too restrictive an approach to s. 193 (c) is based on a dichotomy in the case law that is more illusory than real, more semantic than substantive. While the cases under s. 193 (c) have explained the interpretative task using differing language (as is to be expected in a body of jurisprudence under a national statute), at their core the cases share common ground in attempting to discern the operative effect of the order sought to be appealed: does the order result in a loss or gain, or put in jeopardy value of property, in excess of $10,000?

[46] The Chambers Judge identified the applicable legal principles. I see no basis to interfere with his decision on that ground.

VI. SECOND ISSUE: DID THE CHAMBERS JUDGE MISAPPREHEND THE PIZALES’ KEY ARGUMENTS?

[47] I shall now consider the Pizales’ submission that the Chambers Judge misapprehended the key elements of their arguments. The Pizales advance two main arguments:

(i) The Chambers Judge erred in holding that as a result of the Approval Order they had not suffered a loss of greater than $10,000; and

(ii) The Chambers Judge misapprehended their principal ground of appeal, which is not based on allegations of an improvident sale or improper sale process but rather based on a failure of the Motion Judge to properly weigh the interests of the creditors and debtor, favouring process in so doing. As part of this submission the Pizales contend that the receivership was “spent” upon Hillmount’s assignment of its first mortgage to Elle, which meant that there was no need for a sale of the Property.

The “loss” argument

[48] The Pizales are not arguing that since the Property is worth more than $10,000, a “loss” of greater than that amount is established for purposes of BIA s. 193(c). Instead, they submit that appraisals showed they had equity in the Property greater than $10,000 when the Property was valued on an “as complete” basis. The Receiver’s sale jeopardized that equity and approval of the sale would increase their liability exposure to their mortgagees as compared to a sale on an “as complete” basis. As they submitted in their factums: the Approval Order entails a loss of their rights to retain the Property as its value increases and sell it when the renovations are complete if they so choose (Jan. 19 factum, para. 53); what they want to do is retain ownership of the Property (Jan. 25 factum, para. 7).

[49] The Chambers Judge understood the Pizales’ argument. At para. 26 of his reasons he wrote: “As I understand this argument, if the renovations were completed, they could achieve a higher price for the home and the gap between what the receiver is selling the house for and what could be obtained if the Pizales were permitted to finish the renovation would represent the loss.” He rejected the submission that the Approval Order would result in a loss to the Pizales, concluding that the “motion judge made strong findings that the receiver did not act improvidently.”

[50] I do not regard the Chambers Judge’s conclusion as one based on an error in principle or an unreasonable result.

[51] Central to the Pizales’ submission is their assertion that selling the Property in a renovated state would fetch a higher sales price. The evidence before the Motion Judge and Chambers Judge strongly indicated that such would be the case. But, for the purposes of a s. 193 (c) analysis, that is neither here nor there. That is because the parameters of the Receiver’s sale were set, for all practical commercial purposes, by the terms of the Appointment Order made earlier on June 19, 2020.

[52] The Appointment Order was made when the Property was in an unfinished state and a significant expenditure of funds would be required to complete the renovations. The Appointment Order authorized the Receiver to take possession of the Property and market it for sale. It did not authorize the Receiver to complete the renovations the Pizales had started to make. Indeed, para. 19 of the Appointment Order limited the Receiver’s authority to borrow from Hillmount to $150,000, an amount that would not come close to completing the needed renovations.

[53] The Appointment Order had the effect of authorizing a process to market the Property on an “as is” basis or, as put by the Receiver in one of its factums, the Appointment Order “contemplated a liquidation process, not a renovation process.” That order, not the Approval Order, put in jeopardy any difference in value between the sale of the Property on an “as complete” and “as is” basis. Accordingly, the Approval Order did not result in any loss beyond that already worked by the Appointment Order’s authorization of the Receiver to market the Property on an “as is” basis. Put another way, the Pizales’ appeal of the Approval Order seeks to unwind the economic effect of the Appointment Order, which the Pizales did not appeal.

[54] The Pizales advance a supplementary argument, contending that even on an “as is” sale basis the Approval Order resulted in a loss to them because the price fetched by the Receiver was less than one of their “as is” appraisals. They argue that the Chambers Judge exacerbated the Motion Judge’s error in finding that none of the Pizales’ appraisals considered the Property on an “as is” basis.

[55] I am not persuaded by this submission. After the Receiver had entered into the Sale Agreement and moved for approval, the Pizales filed two appraisals of the Property:

(i) a December 30, 2020 appraisal by Heather Markoff, which valued the Property on an “as complete” basis at $6.9 million. The report recorded the land value “as if vacant” at $5 million and estimated the Property’s “as is” market value at $5.955 million, although the author stated that she was unable to locate current sales activity in a partially complete state of construction at time of sale; and

(ii) a January 4, 2021 Colliers appraisal, which estimated the “as complete” value of the Property at $6.075 million.

[56] The Pizales also had obtained a June 2020 appraisal from TM Appraisers Inc., which opined that the fair market value of the Property on an “as if complete” basis was $7.5 million. It listed the land value “as if vacant” at $5 million “by extraction” and contained an “As Is” Addendum that estimated the “as is” value at $6.525 million. According to the Receiver, this appraisal was before Koehnen J. in redacted form but not produced in response to the Sale Agreement.

[57] Although the Motion Judge referred in her reasons to the December 2020 and January 2021 appraisals, she did not make express reference to the “as is” value found in the December 2020 appraisal. I do not view her failure to do so as amounting to an error that somehow brings the “as is” value of the Property into question. As the Motion Judge noted in her reasons: the Receiver listed the Property at $4.8 million, a price higher than the appraisals it had received; 23 showings elicited no offers; the Receiver lowered the listing price, which resulted in its receipt and negotiation of a number of offers but no deal; and, finally the Receiver accepted the early November 2020 offer from the Purchasers, which was higher than its two appraisals and any other offer received. Against those efforts by the Receiver, and the absence of any alternative transaction presented by the Pizales or their creditors, the fact that the Purchaser’s offer was lower than the “as is” appraisals received by the Pizales spoke loudly to the reality of the existing market for the partially completed Property: Pricewaterhousecoopers Inc. v. 1905393 Alberta Ltd, 2019 ABCA 433, 98 Alta. L.R. (6th) 1, at para. 15. In those circumstances, it is no surprise that the Motion Judge did not treat the “as is” estimate as a relevant indicator of market conditions.

[58] Accordingly, I am not persuaded that the Chambers Judge erred in concluding that the Approval Order did not result in a loss greater than $10,000 and, as a result, the Pizales’ appeal did not fall within BIA s. 193(c).

The “spent” receivership argument

[59] Although that is sufficient to dispose of the Pizales’ panel review motion, I wish briefly to address the Pizales’ submission that when Hillmount assigned its first mortgage to Elle, it was “made whole”. They argue that with the original applicant creditor no longer part of the receivership and the remaining mortgagees opposed to the sale, the receivership was “spent,” with the result that there was no need for the Property’s sale.

[60] The Motion Judge’s reasons provide a complete answer to that submission. The Motion Judge spent considerable time in her reasons considering and weighing the interests of the various parties: at paras. 18-26. She wrote that:

(i) The reasons for the mortgagees opposing the sale were not apparent on the face of the record;

(ii) The mortgagees and Pizales failed to engage in the court-authorized receivership and sales process at any time prior to the signing of the Sale Agreement;

(iii) The Receiver conducted a legitimate and proper sales process; and, significantly,

(iv) The mortgagees and Pizales did not put on the table any alternative transaction or bring a motion to discharge the Receiver.

[61] On the last point, in its December 1, 2020 Acknowledgement in favour of the Receiver and Hillmount, Elle specifically acknowledged that it understood “(i) the Receivership is not at an end by virtue of the undersigned accepting the Assignment; and (ii) until terminated by Court order, the Receivership remains in full force and effect.”

[62] In light of those circumstances, the Motion Judge’s conclusion that, having weighed the interests of all parties there was no basis to allow their objections to prevent the Receiver from concluding the agreement, was a reasonable one.

VII. THIRD ISSUE: DID THE CHAMBERS JUDGE ERR IN FAILING TO GRANT LEAVE TO APPEAL PURSUANT TO BIA s. 193(e)?

[63] In seeking to set aside the Chambers Judge’s refusal to grant leave to appeal the Approval Order pursuant to BIA s. 193(e), the Pizales largely repeat the arguments they make in respect of s. 193 (c). I have already dealt with those arguments. I would only add that the Chambers Judge, applying the well-known test for granting leave to appeal set out in Business Development Bank of Canada v. Pine Tree Resorts [16] and the deference appropriate to the discretionary decision of the Motion Judge, [17] concluded that the Pizales’ appeal would have little importance to bankruptcy/insolvency matters beyond the parties, did not raise a serious issue for appeal, and would hinder the receivership and risk losing the sale to the Purchasers. Those conclusions were reasonable ones, anchored as they were in the record. I see no basis to interfere with the Chambers Judge’s refusal to grant the Pizales leave to appeal.

VIII. FOURTH ISSUE: THE ADMINISTRATION ORDER

[64] The Administration Order approved the Receiver’s activities described in its Second Report and First Supplement to the Second Report and increased the Receiver’s borrowing authority from $150,000 to $250,000. Before the Motion Judge, the Pizales did not oppose the issuance of the Administration Order.

[65] The Pizales sought to appeal, or seek leave to appeal, the Administration Order. Before the Chambers Judge they made two arguments: (i) the Administration Order is inextricably linked to the issues regarding the Approval Order, so that if they had a right to appeal the Approval Order or were granted leave to do so, they were entitled to appeal the Administration Order; and (ii) the Administration Order creates a “loss” as it authorizes the Receiver to borrow a further $100,000.

[66] In its Second Report dated December 4, 2020, the Receiver stated that any additional amounts borrowed would be applied to the Receiver’s existing fees and any future fees or expenses leading up to the closing of the sale. Accordingly, the purpose of the further borrowing approved by the Administration Order is to enable the Receiver to complete its efforts to sell the Property on an “as is” basis. The increased borrowing power is ancillary to the exercise of the Receiver’s powers under the Appointment Order and does not result in any further jeopardy of value than that worked by the Appointment Order. Accordingly, for purposes of the s. 193 (c) analysis, the operative effect of the Administration Order is, as the Pizales describe, inextricably linked with the effect of the Approval Order, which the Chambers Judge correctly found did not fall within s. 193 (c).

[67] The Chambers Judge dismissed the Pizales’ motion in respect of the Administration Order for the reasons supporting his dismissal of their motion regarding the Approval Order. That was a reasonable conclusion for him to reach on the record. I see no basis to interfere with it.

IX. DISPOSITION

[68] For the reasons set out above, I would dismiss the Pizales’ panel review motion.

[69] If the parties are unable to agree on the costs of the motion, any party seeking costs of the motion may deliver brief written cost submissions of up to five pages in length within 10 days of the release of the reasons. Any party against whom costs are sought may deliver brief responding cost submissions within 5 days thereafter.

Released: May 28, 2021 “G.R.S.” “David Brown J.A.” “I agree. G.R. Strathy C.J.O.” “I agree. B.W. Miller J.A.”

[1] Application for leave to appeal under BIA s. 193(e) dismissed: 2016 ONCA 485, 37 C.B.R. (6th) 173.

[2] Re Dominion Foundry Co., (1965), 52 D.L.R. (2d) 79 (Man. C.A.); Alternative Fuel Systems Inc. v. EDO (Canada) Ltd. (Trustee of), 1997 ABCA 273, 48 C.B.R. (3d) 171 (Chambers).

[3] Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617 (Chambers), at para. 17.

[4] Trimor Mortgage Investment Corporation v. Fox, 2015 ABCA 44, 26 Alta. L.R. (6th) 291 (Chambers).

[5] Section 195 states, in part, that “all proceedings under an order or judgment appealed from shall be stayed until the appeal is disposed of, but the Court of Appeal or a judge thereof may vary or cancel the stay … if it appears that the appeal is not being prosecuted diligently, or for such other reason as the Court of appeal or a judge thereof may deem proper.”

[6] Simonelli v. Mackin, 2003 ABCA 47, 320 A.R. 330 (Chambers), at paras. 18-20; Re Bearcat Exploration Ltd., at para. 10; Business Development Bank of Canada v. Pine Tree Resorts, at para. 17; 7451190 Manitoba Ltd. v. CWB Maxium Financial Inc. et al., 2019 MBCA 95 (Chambers), at para. 18; Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, 72 C.B.R. (6th) 245, at para. 12; CWB Maxium Financial Inc. v. 2026998 Alberta Ltd., 2020 ABCA 118 (Chambers), at paras. 1-2.

[7] Simonelli, at paras. 26-27.

[8] Enroute Imports Inc. (Re), at para. 6.

[9] Davidson (Re), at para. 6.

[10] IceGen Inc. (Re), 2016 ONCA 902, 42 C.B.R. (6th) 183 (Chambers), at para. 3, leave to appeal under s. 193 (e) dismissed, 2016 ONCA 907, 42 C.B.R. (6th) 175.

[11] 2003945 Alberta Ltd. v. 1951584 Ontario Inc., 2018 ABCA 48, 57 C.B.R. (6th) 272 (Chambers), at para. 21.

[12] Sangha v. Bhamrah, 2017 BCCA 434, 6 B.C.L.R. (6th) 1, at paras. 9-12.

[13] Courtice Auto Wreckers, at para. 22.

[14] ATB Financial v. Coredent Partnership, 2020 ABCA 83, 77 C.B.R. (6th) 190 (Chambers), at para. 6.

[15] Athabasca Workforce Solutions Inc. v. Greenfire Oil & Gas Ltd., 2021 ABCA 66, 87 C.B.R. (6th) 26 (Chambers), at para. 14.

[16] The test set out in Pine Tree Resorts was adopted by a panel of this court in Impact Tool & Mould Inc. v. Impact Tool & Mould Inc. Estate, 2013 ONCA 697, at para. 3.

[17] Reciprocal Opportunities Incorporated v. Sikh Lehar International Organization, 2018 ONCA 713, 426 D.L.R. (4th) 273, where this court stated, at para. 54, that “an appeal court will interfere only where the judge considering the receiver’s motion for approval of a sale has erred in law, seriously misapprehended the evidence, exercised his or her discretion based upon irrelevant or erroneous considerations, or failed to give any or sufficient weight to relevant considerations.”