Bankruptcy and Insolvency Law - ONCA

The trustee in bankruptcy moved for an order requiring the responding party to obtain leave to appeal an order approving an auction process.

The responding party argued that leave was not required under s. 193(c) of the Bankruptcy and Insolvency Act because the property involved exceeded $10,000.

The Court of Appeal held that the order was procedural in nature, did not bring into play the value of the debtor's property, and did not determine entitlement to sale proceeds.

Therefore, the responding party requires leave to appeal, which may be sought from the panel scheduled to hear the appeal.

Following a successful appeal of a procedural ruling regarding a contempt motion, the parties neglected to address the costs of the proceeding before the motion judge.

The appellant requested that the Court of Appeal determine those costs, seeking $20,000.

The respondent argued the matter should be remitted to the motion judge or that no costs should be awarded.

The Court of Appeal declined to remit the issue to avoid further delay and expense, and awarded the appellant costs of the motion below fixed at $15,000 all-inclusive.

The appellant appealed an order staying an action against a court-appointed receiver and refusing leave to sue the receiver.

The appellant argued that the receiver had already consented to the action and that the motion judge erred in finding the test for leave was not met.

The Court of Appeal dismissed the appeal, finding that the prior consent did not encompass the new claim for conversion arising from a subsequent agreement of purchase and sale.

The Court also found no error in the motion judge's discretionary refusal to grant leave, as there was no evidence that the appellant suffered damages.

The appellants, judgment creditors of a bankrupt investment dealer, appealed the dismissal of their claim that funds held in an 'Accumulating Account' were held in trust for them.

The account was established pursuant to terms and conditions imposed by the Ontario Securities Commission.

The Court of Appeal upheld the motion judge's finding that while there was certainty of subject matter and object, the appellants failed to prove certainty of intention to create a trust.

The appeal was dismissed.

The appellants appealed an order declaring a family trust invalid and vesting its assets in the respondent Trustee in Bankruptcy.

The respondent moved to dismiss the appeals, and the alleged trustee of the trust brought a cross-motion.

The Court of Appeal found significant irregularities regarding the notice provided for the original hearing, noting that the hearing proceeded in the absence of the undischarged bankrupt and any representative of the trust.

The court set aside the original order and remitted the matter for a new hearing in the Superior Court of Justice to ensure procedural fairness.

The moving party, a debtor company in receivership, sought leave to appeal an order approving the sale of its assets by a court-appointed receiver.

The moving party argued that the receiver acted unfairly, that the debtor's management retained the right to negotiate a restructuring, and that the receiver failed to consult with affected Aboriginal communities.

The Court of Appeal dismissed the application for leave to appeal, finding that the debtor's parallel negotiations contravened the receivership order, the receiver had exclusive authority to market the assets, and the Aboriginal consultation issue was raised too late and lacked an adequate evidentiary record.

The debtor operated a marina on premises owned by the appellant landlord.

After a receivership order was made, the receiver continued to operate the debtor's business at that location until the lease expired.

The receiver changed the locks and restricted the landlord's access.

The landlord brought a motion for occupation rent, which the motion judge dismissed on the basis that the receiver's conduct did not amount to a deprivation of use.

On appeal, the Court of Appeal held that the motion judge erred by conflating deprivation of use in a real property sense with economic detriment.

The receiver took control of the premises to the exclusion of others, constituting occupation.

The appeal was allowed and the receiver was ordered to pay occupation rent.

The appellant sought full indemnity costs for his successful appeal and two underlying motions regarding his bankruptcy discharge and the treatment of a personal injury settlement.

The Court of Appeal declined to award full indemnity costs, finding that the Trustee's conduct was not reprehensible and that Rule 49.10 did not apply to grant a defendant substantial indemnity costs.

The court awarded the appellant partial indemnity costs of $5,000 for the motion before Spence J. and $10,000 for the appeal.

The appellants, holding unsecured crossover bonds, appealed a CCAA judge's decision that the common law 'interest stops' rule applies in CCAA proceedings, preventing them from claiming post-filing interest above their principal debt and pre-petition interest.

The Court of Appeal dismissed the appeal, confirming that the 'interest stops' rule is a fundamental tenet of insolvency law that applies to CCAA proceedings to ensure fair treatment of creditors and orderly administration.

The Court clarified that while creditors cannot legally claim post-filing interest, the rule does not preclude a negotiated CCAA plan from providing for such payments.

The appellant sued its former lawyer for negligence after he failed to appeal a bankruptcy trustee's disallowance of its secured claim.

The motion judge granted summary judgment dismissing the action, finding the bankrupt had no rights in the disputed funds, meaning the appellant's security interest never attached and it suffered no damages.

On appeal, the appellant argued the motion judge erred and raised a new 'loss of chance' argument.

The Court of Appeal dismissed the appeal, upholding the motion judge's findings on attachment and refusing to entertain the new loss of chance argument due to unfairness and lack of evidentiary foundation.

The appellants, who held a first mortgage on a commercial property, appealed the dismissal of their motion to vary a receivership order that granted the receiver-manager super-priority charges over their mortgage.

The Court of Appeal dismissed the appeal, agreeing with the motion judge that the appellants failed to move 'forthwith' under Rule 37.14(1) of the Rules of Civil Procedure.

The court found that the appellants had acquiesced to the manager's appointment and taken the benefit of its work before attempting to vary the order months later.

In an ongoing insolvency proceeding, the DeJong appellants appealed a motion judge's order dismissing their cross-motion for a constructive trust and the cancellation of shares, while granting constructive trusts over certain properties to the Bernstein applicants.

The appellants argued the motions judge failed to adjudicate their requested relief, erred in applying tracing principles for constructive trusts, and failed to apply the correct legal test under the Assignments and Preferences Act regarding a proposed settlement agreement.

The Court of Appeal dismissed the appeal, finding no error in the motions judge's tracing analysis, his refusal to grant the requested relief to avoid preferring the appellants over other creditors, or his conclusion that the proposed settlement agreement constituted an unlawful preference.

The appellant Superintendent of Financial Services appealed a CCAA judge's order lifting a stay of proceedings and ordering the debtor companies into bankruptcy.

The appellant argued that a deemed trust arose under the Pension Benefits Act upon the wind up of two pension plans during the CCAA proceedings, and that this trust should have priority over secured creditors.

The Court of Appeal dismissed the appeal, holding that the CCAA judge reasonably exercised his discretion to transition the proceedings to bankruptcy under the BIA, where provincial deemed trusts are rendered inoperative by the doctrine of federal paramountcy.

The applicants sought an extension of time to file a notice of appeal and leave to appeal from an order refusing to grant a charging order for a solicitor's lien and a salvage lien against a bankrupt's estate.

The Court of Appeal granted the extension of time, finding a bona fide intention to appeal and no prejudice.

The Court also granted leave to appeal under s. 193(e) of the Bankruptcy and Insolvency Act, finding that the proposed appeal raised issues of general importance to bankruptcy practice and was prima facie meritorious.

The appellant husband appealed a trial judgment that awarded his bankrupt wife an equalization payment, lump sum spousal support, and costs.

The wife's former lawyers also appealed an order requiring the assessment of their accounts and a personal costs award against them.

The Court of Appeal allowed the appeal in part, setting aside the equalization payment because the wife lacked capacity to assert the claim after her bankruptcy, and setting aside the assessment of the lawyers' accounts.

However, the Court upheld the lump sum spousal support award and the costs awards, including the personal costs award against the wife's former lawyer for acting in bad faith and running up costs without reasonable cause.

The appellant creditor sought a declaration that the bankrupt's judgment debt survived his discharge from bankruptcy under s. 178(1)(d) of the Bankruptcy and Insolvency Act.

The trial judge dismissed the claim, finding that the bankrupt owed no fiduciary duty to the appellant, even though he had breached a fiduciary duty to a third party.

The Court of Appeal dismissed the appeal, confirming that s. 178(1)(d) applies only if the bankrupt owed a fiduciary duty directly to the creditor seeking the declaration.

The moving parties sought leave to appeal an order requiring a private corporation to disclose documents to a bankruptcy trustee and requiring two directors to submit to oral examinations under the Bankruptcy and Insolvency Act.

The trustee required the information to value the bankrupt's shares in the corporation.

The Court of Appeal dismissed the motion for leave to appeal, finding no prima facie merit to the argument that the trustee's powers under s. 164 did not extend to such disclosure, and concluding that an appeal would unduly hinder the progress of the bankruptcy proceedings.

The appellant, a court-appointed receiver, appealed a motion judge's decision refusing to approve the full amount of legal fees requested on behalf of its counsel.

The motion judge had reduced the fees, finding them disproportionate to the size and complexity of the receivership.

The Court of Appeal dismissed the appeal, holding that the court must ensure compensation is fair and reasonable, focusing on the value provided rather than just the mathematical calculation of hours multiplied by hourly rates.

The motion judge's assessment of the fees as excessive was upheld.

The appellants advanced funds to Cash Store, a payday lending company operating under CCAA protection.

They appealed a motion judge's dismissal of their claim that they were the sole legal and beneficial owners of loan payments and accounts receivable from Cash Store's customers.

The motion judge found that the actual practices of the parties, including the payment of interest and commingling of funds, reflected a debtor-creditor relationship rather than the principal-broker relationship set out in their agreements.

The Court of Appeal dismissed the appeal, finding no error in the motion judge's factual determinations.

The moving parties, a group of affiliated companies, sought leave to appeal a judgment setting aside an ex parte CCAA Initial Order.

The respondents, creditors of a Singapore subsidiary, successfully argued before the application judge that the CCAA court lacked jurisdiction over the subsidiary.

A single judge of the Court of Appeal held he had jurisdiction to hear the leave motion but refused leave, finding no error in the application judge's conclusion that the real debtors were Singapore companies with little connection to Canada and that the evidence did not support the initial ex parte findings of insolvency and intertwined finances.