Court File and Parties

COURT OF APPEAL FOR ONTARIO

DATE: 20220926

DOCKET: M53722 & M53725 (C70898)

Paciocco J.A. (Motion Judge)

BETWEEN

Buduchnist Credit Union Limited Applicant (Respondent/Moving Party/Responding Party)

and

2321197 Ontario Inc., Carlo DeMaria, Sandra DeMaria, 2321198 Ontario Inc., Sasi Mach Limited, Vicar Homes Ltd. and Trade Capital Finance Corp. Respondents (Appellant / Responding Party / Moving Party)

Counsel: Barbara Grossman and Sara-Ann Wilson, for the Moving Party (M53722) and the Responding Party (M53725) Buduchnist Credit Union Limited Peter W.G. Carey, Christopher Lee and Domenico Magisano, for the Moving Party (M53725) and the Responding Party (M53722) Trade Capital Finance Corp.

Heard: September 13, 2022 by video conference

Endorsement

Overview

[1] Trade Capital Finance Corp. (“TC”) and Buduchnist Credit Union Limited (“BCU”) have filed opposing notices of motion relating to a final disposition decision in an insolvency matter. TC has filed motion M53725, and BCU has filed motion M53722. These motions were heard jointly and, since the relief sought in the respective motions addresses the same general issues, these reasons for decision address both motions together.

[2] For the reasons that follow, I have granted TC’s motion for an extension of time to file their appeal under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-43, (the “BIA”); granted TC’s motion for leave to appeal pursuant to s. 193(e) of the BIA; and permitted TC to file an additional supplementary Notice of Appeal and Fresh as Amended Factum. I have denied BCU’s motion to lift the stay pending the disposition of the appeal, as well as BCU’s motion for security for costs.

Material Facts

[3] TC alleges that it was the victim of a sophisticated, multi-million-dollar fraud in which Carlo De Maria participated. With the benefit of Norwich orders, TC traced what it claims to be the proceeds of the fraud into The Cash House Inc. (“Cash House”), a financial institution, and 2242116 Ontario Inc. (“116 Ontario Inc.”), a family corporation, two entities allegedly controlled at the relevant time by Mr. De Maria. TC commenced action against Mr. De Maria, 116 Ontario Inc., and numerous other defendants but that action remains outstanding.

[4] On May 6, 2015, to address the risk that defendants, including Mr. De Maria, would dissipate their assets before TC’s claim could be determined, TC obtained a Mareva Order enjoining those with notice of the Mareva Order from dealing with the assets of a “Mareva Defendant”. Pursuant to an extension clause in the Mareva Order, a Mareva Defendant’s assets are defined to “include any asset which such defendant has the power, directly or indirectly, to dispose of or deal with as if it were the Defendant’s own”.

[5] That same day, May 6, 2015, TC provided notice of the Mareva Order to the BCU, a credit union that had provided mortgage financing to Mr. De Maria and to 2321198 Ontario Inc. (“198 Ontario Inc.”), a corporation wholly owned and controlled by Mr. De Maria. Specifically, as of May 6, 2015, BCU held three relevant mortgage securities on two residential properties that Mr. De Maria owned with his wife: a first and second mortgage on 211 Woodland Acres Crescent (“Woodland Acres”) and a first mortgage on 6216 Fifth Line, Egbert, Ontario (“Cottage property”). BCU also held an additional mortgage on 46 Puccini Drive (“Puccini Drive”), owned by 198 Ontario Inc.

[6] After receiving notice of TC’s Mareva injunction, BCU arranged to use the second mortgage on Woodland Acres and the mortgage on Puccini Drive as security for a post-Mareva debt to BCU that Mr. De Maria incurred. This occurred in the following circumstances:

• Mr. De Maria wrote approximately $6 million in cheques on the TD bank account of a company he controlled, payable to the Cash House, and presented those cheques for deposit to the Cash House account at BCU. BCU credited the Cash House account in the amount of the cheques before the cheques cleared, and those funds were then withdrawn and dissipated under the direction of Mr. De Maria. Subsequently, The TD Bank dishonoured the cheques creating a loss to BCU (the “overdraft debt”).
• BCU took steps to recover as much of its loss as it could by extending loans to Mr. De Maria that were secured using the second mortgage on Woodland Acres and the Puccini Drive mortgage, and then immediately applying the “loaned” funds to retire some of the overdraft debt. Mr. De Maria not only used his exclusive control of 198 Ontario Inc. to arrange to use the Puccini Drive mortgage to assist in paying the overdraft debt, he also used 2321197 Ontario Inc. (“197 Ontario Inc.”), another company he wholly owned and controlled, to obtain additional funds secured by a new mortgage on a property that 197 Ontario Inc. owned at 87 Elm Grove Ave. (“Elm Grove”). This “loan” was also immediately applied in partial satisfaction of the overdraft debt owed to BCU.
• At all material times BCU was aware that Mr. De Maria was the sole owner and director of 197 Ontario Inc. and 198 Ontario Inc.

[7] It is not contested that the five mortgages I have described above went into default and that BCU obtained consent judgments against all of the mortgagers, for breach of their mortgage covenants, now totalling more than $9 million.

[8] On January 17, 2019, BCU, as mortgagee, obtained a Receivership Order over the mortgaged properties, pursuant to s. 243(1) of the BIA, and s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”). All of the properties have now been sold pursuant to that order.

[9] TC objected to the distribution of some of the sale proceeds to BCU that were in the hands of the receiver. It accepted that BCU was entitled to distribution of sale proceeds attributable to advances made by BCU on mortgage loans prior to May 6, 2015, (the “pre-Mareva advances”) but objected to the distribution to BCU of any proceeds of sale attributable to advances made by BCU on the mortgage loans after May 6, 2015 (the “post-Mareva advances”). TC claims that given BCU’s notice of the Mareva Order on May 6, 2015, the post-Mareva advances were made in breach of that order and that this should prevent BCU from receiving proceeds from the post-Mareva advances. The parties managed to agree that some of the proceeds of sale held by the receiver were attributable to the pre-Mareva advances, and those funds have been distributed to BCU pursuant to two consent Interim Distribution Orders. BCU brought a contested distribution motion to resolve what should happen to the remaining net proceeds of sale of approximately $2.3 million. Although the remaining net proceeds of sale constitute an impressive total, they are inadequate to satisfy the entirety of the mortgagors’ remaining debts to BCU.

[10] On June 17, 2022, the motion judge released an Endorsement containing his “Final Disposition Order”, [1] which is the subject of the opposing motions now before me. It is convenient to describe the material findings and orders made by the motion judge, as follows:

(1) The motion judge found that BCU had notice of the Mareva Order and that at all material times Mr. De Maria had control and was exercising control over 197 Ontario Inc. and 198 Ontario Inc. (2) The motion judge held that post-Mareva mortgage loans to Mr. De Maria, 197 Ontario Inc. and 198 Ontario Inc were in breach of the Mareva Order. (3) The motion judge held that as a result of BCU’s breaches of the Mareva Order, BCU’s motion for priority distribution in its capacity as mortgagee of the disputed sale proceeds of the Woodland Acres, Puccini Drive and Elm Grove properties was denied. (4) The motion judge denied TC’s request for an order requiring the receiver to hold the contested proceeds of sale as security for the Mareva Order, because, not having obtained judgment, TC was not an execution creditor. (5) The contested proceeds held by the receiver were ordered to be paid to the sheriff for the benefit of Mr. De Maria’s creditors. (6) The motion judge found BCU to be entitled in its capacity as judgment creditor to execute on its judgment “against all available assets of Mr. De Maria held by the Sheriff” (emphasis added), (the “BCU Execution Entitlement Order”). The motion judge reasoned that TC had not requested an injunction to restrain BCU from doing so. He then addressed whether such an injunction would have been appropriate, saying:

The argument would have to be that, by making post‑Mareva Order advances in breach of the Mareva Order, BCU forfeited any right to ever recover its loans to Mr. De Maria as long as there was the possibility of any other unsecured creditor or claimant also becoming a judgment creditor. No law was cited to me in support of this proposition. Indeed, it seems contrary to the basic principle of creditor enforcement—that all judgment creditors rank equally and have a right, pari passu, to enforcement against available assets. It is also contrary to the principle established by the Court of Appeal in Trade Capital v. Cook [2017 ONSC 1857, 137 O.R. (3d) 685, aff’d 2018 ONCA 27, 56 C.B.R. (6th) 1]. Any judgment creditor is entitled to apply to the Court to enforce a judgment against any available assets. This is indeed contemplated by Justice Conway’s August 2020 judgments in favour of BCU.

[11] On June 30, 2022, TC wrote the motion judge to request clarification of the BCU Execution Entitlement Order, described in the above paragraph. TC took the position that the phrase “against all available assets of Mr. De Maria held by the Sheriff” was ambiguous. TC asked:

When you say BCU is entitled to execute on it’s [sic] judgments “against all available assets” (emphasis by author) of Mr. De Maria do you mean only those monies which were advanced prior to the Mareva Order or do you mean that BCU is entitled to enforce against all monies currently held by the receiver which means that BCU will be able to recover monies it advanced contrary to the Mareva Order.

[12] On July 5, 2022, BCU wrote to the motion judge submitting that what I have called the “BCU Execution Entitlement Order” is clear in describing BCU’s entitlement to enforce its judgment against assets held by the sheriff for the benefit of creditors.

[13] On July 18, 2022, 31 days after the Final Disposition Order was released, TC served and filed what it refers to as a “protective” Notice to Appeal of the Final Disposition Order made by the motion judge (the “NOA”). Specifically, TC gave notice of its appeal of the order allowing BCU “to enforce judgments against monies it obtained in contravention of an existing Mareva Order” and asked for an order that “all monies recovered as a result of [BCU’s] breach of the Mareva Order be held as security for any potential judgment obtained by [TC] or any other legitimate creditor”. TC asserted that the motion judge erred “in deciding that all monies from the receivership would then be paid to the sheriff, where BCU could enforce its default and consent judgments for money advanced contrary to the Mareva Order”.

[14] On August 2, 2022, BCU responded by enclosing a Notice of Cross-Appeal, the terms of which are not material to the motions before me. In the covering letter BCU asserted that TC’s appeal is governed by the BIA and is out of time as it should have been filed within 10 days of the release of the Final Disposition Order, pursuant to s. 31(1) of the Bankruptcy and Insolvency General Rules, C.R.C., c. 368.

[15] On August 3, 2022, the motion judge responded to the opposing letters, saying, “I agree with BCU. The answer to Trade Capital’s question is clearly stated in paras. 86 and 87 of the Reasons”.

[16] On August 18, 2022, 62 days after the release of the Final Disposition Order, TC filed a Supplementary Notice of Appeal (“SNOA”) seeking orders that would address the complications that would arise if their appeal was required to be taken under the BIA, including an order to extend the time to appeal, and either a declaration that TC has an appeal as of right, or in the alternative, an order granting leave to TC to appeal.

[17] The receiver has indicated that it will not make the final distribution until the TC appeal is resolved.

Issues

[18] Both TC and BCU have brought opposing motions before me relating to six general issues, which can be described as follows:

A. Does the BIA or the CJA govern TC’s appeal? B. Is TC’s appeal out of time, and if so, should relief be granted to TC, or should a declaration be made that TC’s appeal is a nullity that does not stay the Final Distribution Order? C. Is TC’s appeal as of right, or is leave required, and if so, should leave be granted? D. Should TC be permitted to file a further supplementary Notice of Appeal and Fresh as Amended Factum, and should an order be made extending the time to perfect the appeal? E. Should a stay pending appeal apply? F. Should an order be made requiring TC to pay security for costs?

Analysis

A. Does the BIA or the CJA govern TC’s Appeal?

[19] The BIA governs this appeal, not the CJA.

[20] This court has repeatedly found that “[w]here a receivership order is made pursuant to both BIA s. 243 and CJA s. 101, the more restrictive appeal provisions of BIA s. 193 govern the rights of appeal and appeal routes”: KingSett Mortgage Corporation v. 30 Roe Investments Corp., 2022 ONCA 479, 100 C.B.R. (6th) 218 at para. 16, citing Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13, at paras. 66 and 67; Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, 72 C.B.R. (6th) 245, at paras. 10 and 11. TC submits that this is generally the case, but where the order appealed from “substantively does not engage a BIA receivership”, the BIA appeal routes do not apply. Relying on RREF II BHB IV Portofino, LLC. v. Portofino Corporation, 2015 ONCA 906, 33 C.B.R. (6th) 9, at paras. 11-12, TC argues that “the jurisdiction of the court is governed by the substance of the order made.”

[21] In Astoria, this court addressed the test to be applied to determine jurisdiction where a receiver has been appointed under s. 243(1) of the BIA and under provincial law. The question is “whether the order under appeal is one granted in reliance on the jurisdiction of the Bankruptcy and Insolvency Act”: Astoria, at para. 29, citing Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283, 61 C.B.R. (6th) 196, at para. 21. Where there is an appeal route under both the BIA and provincial law, the doctrine of paramountcy applies, such that the BIA governs jurisdiction in the case: Dal Bianco v. Deem Management Services Limited, 2020 ONCA 585, 82 C.B.R. (6th) 161, at para. 6.

[22] I am satisfied that jurisdiction to make the orders that are the subject of this appeal is available under the BIA. As I have indicated, TC seeks to appeal the motion judge’s denial of its request to grant an order requiring the receiver to hold the proceeds of sale as security for the Mareva Order, and the motion judge’s direction to the receiver to pay those proceeds to the sheriff. Those orders purport to direct a receiver, appointed pursuant to the authority of the BIA, in the management of the receivership. It is clear that the orders, to use the language employed by TC, “substantively” engage the receivership. The fact that TC’s purported appeal also addresses orders governing creditors’ rights issues relating to the distribution of the proceeds of sale does not change this. The BIA governs.

B. Is TC’s appeal out of time, and if so, should relief be granted to TC, or should a declaration be made that TC’s appeal is a nullity that does not stay the Final Distribution Order?

[23] I do not accept TC’s submission that its appeal period did not begin until it received clarification of the BCU Execution Entitlement Order on August 3, 2022. I take no issue with the proposition that, where “clarification is required because the judgment is uncertain on an issue”, it is reasonable to treat the date of the clarification as the date from which the appeal period begins to run: Fanshawe College of Applied Arts and Technology v. Hitachi Ltd., 2022 ONCA 144, at paras. 25-26. However, I am persuaded that in this case there was no uncertainty about the order that reasonably required clarification. The motion judge, in his reply to TC’s clarification request, did not clarify the order. Quite understandably, he said the answer to TC’s question was “clearly stated in paras. 86 and 87 of the Reasons”. In para. 86 of his reasons the motion judge refers to “the disputed funds”. Context makes clear he was describing the same funds that he also referred to as the “available assets”. In para. 87, he left no doubt that in his view, BCU cannot be enjoined “from enforcing its judgment against Mr. De Maria against funds held by the Sheriff”. Quite simply, there was no air of reality to TC’s contention that the reference to “available assets” could have been intended to limit BCU to the enforcement of pre-Mareva advances. There was no need for clarification that could reasonably extend the appeal period. TC’s appeal was out of time.

[24] Notwithstanding this, I cannot give effect to BCU’s request for a declaration that TC’s appeal is a nullity that does not stay the Final Distribution Order, nor would I be inclined to do so if I could. First, BCU cites no authority for the proposition that a late-filed appeal is a nullity, and as Lauwers J.A. commented in Ilic. v. Ducharme Fox LLP, 2022 ONCA 463, at para. 22, “It is time to put the doctrine of nullity out of its misery in relation to civil procedure because it is “difficult to reconcile with modern principles of civil procedure””, citing Lawrence v. International Brotherhood of Electrical Workers (IBEW) Local 773, 2017 ONCA 321, 138 O.R. (3d) 129, at para. 21, per Sharpe J.A., aff’d, 2018 SCC 11, [2018] 1 S.C.R. 267. The implications of non-compliance with a procedural rule should turn on prejudice and broader interests of justice, and not simply the formality of compliance. In this case, BCU has not experienced material prejudice from TC’s late filing. The final distribution was already long-delayed. The receiver was appointed on November 13, 2018, and the final Receivership Order was made on January 17, 2019. BCU did not move for distribution of the proceeds until March 31, 2022. I understand that there are explanations for that delay. The point is that the delays by TC in filing its NOA and even its SNOA have not played a concerning role in postponing the distribution.

[25] Moreover, I agree with TC that BCU’s request is effectively an application to quash. I do not have jurisdiction as a single judge to quash an appeal: Astoria, fn. 1.

[26] Had there been merit in BCU’s attempt to quash the appeal because of delay, I would have refrained from adjudicating TC’s alternative motion for an extension of time to appeal so as not to prejudice any panel motion to quash that BCU might choose to bring. But as I have explained, BCU has not identified any material prejudice that has arisen from TC’s delay in filing its appeal. I will therefore consider TC’s motion for extension of time to file its appeal.

[27] Whether I grant TC’s motion for an extension to file its appeal depends upon whether the “justice of the case” requires it: Heliotrope Investment Corporation v. 1324789 Ontario Inc., 2021 ONCA 23, at para. 25, citing Chandra v. Canadian Broadcasting Corp., 2016 ONCA 448. In making that determination, I am to consider all relevant circumstances, with attention to: (1) whether TC formed an intention to appeal within the relevant appeal period; (2) the length of, and explanation for the delay; (3) prejudice to BCU; and (4) the merits of the appeal.

[28] I am satisfied that TC formed an intention to appeal within the relevant appeal period. TC has presented evidence, which has not been challenged or contradicted, that TC made its intention to appeal known to its lawyers when they met shortly after the decision, and within the appeal period.

[29] The delay was short. Moreover, TC has explained its failure to comply with the BIA appeal deadline as a lawyer’s error relating to a frequently litigated legal question of which appeal period should apply. It is evident from the timing of the provisional NOA that TC’s lawyers were attempting to comply with the CJA appeal period. TC has submitted that this error should not be rested on the client. There is merit in this submission. [2]

[30] I have already explained in para. 26 above that the delay has not materially prejudiced BCU.

[31] Finally, for reasons I am about to explain, I do not accept BCU’s position that TC’s proposed appeal has so little merit that it should be denied its right of appeal.

[32] I therefore grant TC’s motion for an extension of time to appeal. It is in the interests of justice to do so. The NOA and SNOA are therefore to be treated as having been filed in time.

C. Is TC’s appeal as of right, or is leave required, and if so, should leave be granted?

[33] I do not accept TC’s submission that it is entitled to appeal as of right, pursuant to s. 193(c) of the BIA, which permits an appeal as of right “if the property involved in the appeal exceeds in value ten thousand dollars”.

[34] In Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, 426 D.L.R. (4th) 228, at paras. 35-42, Brown J.A. closely analyzed the panel decisions of this court and other relevant authorities before concluding that to determine whether s. 193(c) applies, a court must engage in “a critical evaluation of the effect of the order sought to be appealed”, before making a fact-specific determination of whether the order “directly involves” property exceeding $10,000. An order will not do so unless the order results in a loss to the debtor’s property or brings into play the value of the debtor’s property. In the language employed by the Alberta Court of Appeal in Re Bearcat Exploration Ltd. (Bankrupt), 2003 ABCA 365, 339 A.R. 376, at para. 10, to fall within s. 193(c) the appeal “must in substance be about the value of the property, not just to any claim related to bankruptcy.”

[35] The orders under appeal will not remove property from the proceeds held by the receiver, or in any way diminish or jeopardize the value of property held by the receiver, nor did the motion judge adjudicate the value of the mortgaged property or its proceeds in the orders that are being appealed. Instead, those orders related to the manner in which proceeds of sale of an agreed upon amount would ultimately be distributed. They therefore do not satisfy s. 193(c).

[36] It is helpful in understanding this to bear in mind that s. 193 was enacted to restrict appeals as of right in insolvency matters to ensure that insolvency enforcement proceedings provide “a timely, efficient and impartial resolution of a debtor’s insolvency”: Hillmount Capital Inc., at para. 43 (emphases and citations omitted). Given the automatic stay provision in s. 195 of the BIA, if s. 193(c) is not given a construction in keeping with this purpose of s. 193, s. 193 would be rendered all but meaningless, since “very few insolvency cases would involve property that did not exceed the statutory threshold”: 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 35 C.B.R. (6th) 102, at para. 51. Insolvency proceedings could easily be delayed by unmeritorious appeals. As Strathy J.A. (as he then was) observed in Ontario Wealth Management Corporation v. Sica Masonry and General Contracting Ltd., 2014 ONCA 500, 17 C.B.R. (6th) 91, at para. 42, priority claims are the “daily fare in bankruptcy proceedings.” So, too, are orders that direct the disposition of property, such as the orders that TC proposes to appeal. If either kind of order falls within s. 193(c) without more, the purpose underlying s. 193 as a whole would be defeated.

[37] TC has not pursued arguments claiming it satisfies any of s. 193’s other as‑of‑right exceptions. TC therefore requires leave to appeal pursuant to s. 193(e). For the following reasons, I am granting TC leave to appeal, notwithstanding that it failed to seek leave until filing its SNOA almost two months after the Final Distribution Order.

[38] The decision to grant leave to appeal must be exercised flexibly and contextually. As Strathy C.J.O. recognized in Ontario Wealth, at para. 43, the focus is typically on whether the proposed appeal: (1) raises an issue of general importance to the practice in bankruptcy/insolvency matters and of the administration of justice as a whole; (2) is prima facie meritorious; and (3) would unduly hinder the progress of the bankruptcy/insolvency proceedings.

[39] With respect to the first consideration, I am persuaded that the appeal TC proposes is of general importance to the practice in bankruptcy/insolvency matters and of the administration of justice as a whole.

[40] The motion judge found that BCU advanced funds on secured loans to Mr. De Maria and to 197 Ontario Inc. and 198 Ontario Inc., knowing both companies where wholly owned and controlled by Mr. De Maria. BCU did so despite notice of a Mareva Order enjoining it from doing so. Moreover, BCU breached the Mareva Orders to enrich itself by obtaining security for a portion of Mr. De Maria’s overdraft debt. Given this, the motion judge accepted that BCU should not benefit from the priority that these mortgage securities would otherwise have provided for the post-Mareva advances. But he held that nothing prevented BCU from enforcing the execution rights it obtained as an ordinary creditor through the covenants on those same mortgages. This scenario raises important legal questions, and the parties before me knew of no authority addressing whether a party may enforce a judgment debt, thereby defeating the purpose of a Mareva order, where that judgment debt arises from a transaction undertaken in breach of a Mareva order. I am satisfied this is an issue of general importance to the practice in bankruptcy/insolvency matters and to the administration of justice as a whole.

[41] I am also satisfied that the proposed appeal is prima facie meritorious. As I have described, the motion judge accepted that BCU should not benefit from the priority that these mortgage securities would otherwise have provided for the post‑Mareva advances but held that nothing prevented BCU from enforcing the execution rights it obtained as an ordinary creditor through the covenants on those same mortgages. There may be merit in the submissions that: (1) these holdings are incongruous and cannot both be correct; (2) r. 60.12 (c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), which provides a court with authority to make “such ... order as is just” where a party has failed to comply with an interlocutory order, may have provided the motion judge with the authority he disclaimed to prevent BCU from enforcing its judgments on the mortgage breaches; (3) Emery J. may have been correct in Trade Capital Finance Corp. v. Cook, 2017 ONSC 1857, 137 O.R. (3d) 685, at para. 43 in observing that to enforce a judgment against assets otherwise subject to a Mareva order, “the creditor and related claim must be legitimate” but, BCU and its claims arguably are not; and (4) although TC did not formally request an injunction to prevent BCU from enforcing its judgments against the receivership assets, by seeking an order that the receiver hold the proceeds as security for creditors, it was arguably, in substance, requesting an order that BCU be prevented from enforcing its securities. I am therefore satisfied that the proposed appeal is prima facie meritorious.

[42] I do not accept BCU’s submission that irrespective of the merits of the legal arguments, the proposed appeal is pointless. BCU bases this position on its submission that TC will receive nothing in the hands of the receiver even if it succeeds in its lawsuit against Mr. De Maria for fraud since it did not sue 197 Ontario Inc. and 198 Ontario Inc., and therefore has no claim on the Elm Property or the Puccini Property proceeds. I disagree. Those companies are wholly owned by Mr. De Maria. If TC succeeds it may execute its judgment against Mr. De Maria’s shares in those companies, and hence the assets of those companies. Moreover, there appear to be proceeds remaining in the hands of the receiver from the sale of Woodland Acres that was owned by Mr. De Maria, whom TC is suing. [3]

[43] Nor do I accept BCU’s submission that TC’s proposed appeal amounts to an abusive attempt to relitigate the outcome of Cook. I need not consider the broader questions of whether Cook applies to the issues TC is appealing. Suffice it to say that, as I have indicated, if an appeal panel is persuaded that BCU is not a legitimate creditor advancing a legitimate claim, there will be nothing inconsistent with the outcome in Cook.

[44] Although I recognize that TC may not have made some of the arguments before the motion judge that were advanced on this motion, it will be for the appeal panel to identify which, if any, of those arguments were not raised below, and if necessary, whether TC should be permitted on appeal to raise these arguments in the interests of justice.

[45] Finally, I am not persuaded that granting leave would unduly limit the progress of the insolvency proceedings. I have been presented with no convincing basis for finding that it would.

[46] I therefore grant TC leave to bring the appeal.

D. Should TC be permitted to file a further supplementary notice of appeal and fresh as amended factum, and SHOULD an order BE made extending the time to perfect the appeaL?

[47] TC has requested that it be permitted to file an additional supplementary Fresh as Amended Factum “to address the law and proceedings under the BIA.” It has also requested that it be permitted to file an additional supplementary Notice of Appeal, for the same purpose, and be granted 30 days to do so. Finally, it has asked for an extension of time to perfect.

[48] The pleadings should reflect the jurisdiction under which the appeal is brought, but 30 days is too long a period for the supplementary Notice of Appeal. Under the BIA, TC’s Notice of Appeal was meant to be filed within 10 days.

[49] TC may file an additional supplementary Notice of Appeal within 10 days of the release of this decision and may file a Fresh as Amended Factum within 15 days of the release of this decision.

[50] TC’s appeal is to be perfected within 15 days of the release of this decision. If TC believes it requires a further extension of time to perfect, I will remain seized of this matter and the motion may be brought before me, in writing.

E. Should a stay pending appeal apply?

[51] The Final Disposition Order is subject to an automatic stay pursuant to s. 195 of the BIA until the appeal is disposed of. BCU brings a motion requesting that the stay be cancelled in whole or part. I dismiss this motion, as I have found the appeal has merit. Lifting the stay would render TC’s appeal moot. The balance of prejudice favours leaving the stay in force.

F. Should an order be made requiring TC to pay security for costs?

[52] BCU moved for an order for security for costs pursuant to r. 61.06(1)(b) of the Rules, in the event that I make the orders I have made. Rule 61.06(1)(b) authorizes me to make an order for security for costs that could be made against an appellant under r. 56.01. I cannot make the order requested. BCU was the applicant in the proceeding in which the order under appeal was made, namely, BCU’s distribution motion. A respondent in an appeal, such as BCU, may only rely upon r. 61.06(1)(b) where it was not the applicant below, but BCU was the applicant below. This limitation is intended to prevent imposing security for costs orders on impecunious parties who were forced into court: Diversitel Communications Inc. v. Glacier Bay Inc. (2004), 181 O.A.C. 6 (C.A.), at para. 8. Although TC became a party because it took the initiative of objecting to the requested distribution order, it was responding to proceedings initiated by BCU. A security for costs order against TC would not be fitting, nor in the interests of justice.

[53] In any event, I would not make the order sought. TC allegedly became insolvent because of the same fraud that it is seeking to remedy through its proposed appeal. It would not be in the interests of justice to rely on the insolvency of a party that arose because of a civil wrong as a basis for imposing a security for costs order that could have the effect of preventing that party from effectively remedying that civil wrong. I appreciate that BCU was not a party to the alleged fraud, but on the evidence before me, it may have participated in financial dealings with a perpetrator of the alleged fraud that have enabled that perpetrator to dissipate his assets, thereby frustrating recovery.

[54] BCU’s motion for security for costs is denied.

Conclusion

[55] I therefore make the following orders:

(1) TC’s motion for an extension of time is granted. The NOA served and filed by TC on July 18, 2021, and the SNOA served and filed on August 18, 2021, are to be treated as having been filed in time. (2) Leave to appeal the final orders arising from the Endorsement of June 17, 2022, ONSC Court File No: CV-18-00608356-00CL (the reasons of which were reported at 2022 ONSC 3414), is granted pursuant to s. 193(e) of the BIA. (3) TC may file an additional supplementary Notice of Appeal within 10 days of the release of this decision and may file a Fresh as Amended Factum within 15 days of the release of this decision. TC’s appeal is to be perfected within 15 days of the release of this decision. If TC believes it requires a further extension of time to perfect, I will remain seized of this matter and the motion may be brought before me, in writing. (4) BCU’s motion to lift the stay of proceedings under s. 195 of the BIA is denied. (5) BCU’s motion for security for costs is denied.

[56] If the parties are unable to agree on the costs in these motions, the parties may file costs submissions not to exceed 5 pages, accompanied by bills of costs. The submissions and bills of costs of TC shall be filed within 15 days of the release of this decision. The submissions and bills of costs of BCU shall be filed within 5 days of receiving TC’s submissions and bill of costs.

“David M. Paciocco J.A.”

Footnotes

[1] The formal order was not yet settled at the time of motion hearing before me. The parties were content to proceed without a formal order, and I am prepared to do so. For convenience, I use the term “Final Distribution Order” to describe the orders made in the Endorsement.

[2] Appropriately, LawPRO was notified and provided support to TC in these motions.

[3] As I read the Final Disposition Order, even if the motion judge’s conclusion that $1,003,510.23 of the proceeds from the sale of Woodland Acres represents pre-Mareva disbursements survives the appeal, there are remaining proceeds of the sale of that property that are attributable to post-Mareva disbursements.