Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20231108 DOCKET: COA-23-CV-0202

Doherty, Pepall and Zarnett JJ.A.

BETWEEN

John Hanna Nissan Respondent (Appellant)

and

Gaspare Caruso Applicant (Respondent)

Counsel: Matthew Harris and Yonatan Lipetz, for the appellant Doug LaFramboise, for the respondent

Heard: November 2, 2023

On appeal from the order of Justice Michael G. Emery of the Superior Court of Justice, dated November 15, 2022, and reported at 2022 ONSC 6405.

Reasons for Decision

[1] The motion judge annulled the bankruptcy of 1947755 Ontario Ltd. (“194”) pursuant to s. 181(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3, (“BIA”). He did so on two grounds:

• 194 was not insolvent at the relevant time; and
• The assignment into bankruptcy was done for improper purposes and constituted an abuse of process.

[2] The appellant, John Nissan, and the respondent, Gaspare Caruso, both claim to be the sole director and shareholder of 194. In the words of the motion judge, that dispute has generated “a litigation battlefield”, which now includes the bankruptcy proceedings, which are the subject of this appeal.

[3] The appellant, Mr. Nissan, asks the court to receive fresh evidence on the appeal. He submits that the evidence demonstrates that the trial judge was wrong when he held that 194 was not insolvent. The fresh evidence relates to the value of the sole asset of 194 and, according to the appellant, shows that the value of that asset was significantly overstated before the motion judge.

[4] The appellant also argues that, apart from the fresh evidence, the motion judge made factual errors in his determination that the assignment of 194 into bankruptcy under the direction of the appellant was an abuse of process, justifying the annulment of the bankruptcy order.

[5] The admissibility of the fresh evidence is challenged on several grounds by the respondent. We are satisfied that both the admissibility of the fresh evidence and the ultimate outcome of the appeal can be determined by reference to the abuse of process finding.

[6] The trial judge’s findings of fact underlying his conclusion that the assignment into bankruptcy of 194 constituted an abuse of process are found at paras. 68-74 of the motion judge’s reasons. Those findings address the motivation for the bankruptcy proceeding, and the secretive manner in which the bankruptcy proceeding was brought and prosecuted. The findings are supported by the evidence that was before the motion judge. Those findings justified the motion judge’s conclusion that the bankruptcy proceeding constituted an abuse of process and should be set aside.

[7] The respondent opposes the admission of any of the fresh evidence. Even if that evidence were admitted, it could not affect the motion judge’s finding that the assignment into bankruptcy was an abuse of process. At its very highest, the fresh evidence might cast some doubt on the solvency status of 194. However, the motion judge’s abuse of process finding would stand and with it the annulment of the bankruptcy. In other words, the fresh evidence could not reasonably be expected to have had any impact on the result of the motion.

[8] The appeal is dismissed.

[9] The respondent is entitled to his costs on the fresh evidence motion and on the appeal. We fix those costs in the amount of $10,000 for the appeal, and $3,000 for the motion, yielding a cost order in the amount of $13,000, inclusive of relevant taxes and disbursements.

“Doherty J.A.”

“S.E. Pepall J.A.”

“B. Zarnett J.A.”