Bankruptcy and Insolvency Law - ONCA

The Receiver brought a motion for directions to determine whether the debtor required leave to appeal an Approval and Vesting Order that transferred the debtor's property to a purchaser.

The debtor argued it had an automatic right of appeal under sections 193(a), (b), and (c) of the Bankruptcy and Insolvency Act.

The Court of Appeal held that the order did not involve future rights, would not affect other cases of a similar nature in the proceeding, and did not involve property exceeding $10,000 in value within the meaning of the Act.

The motion was granted, the debtor's notice of appeal was quashed, and a timetable was set for a leave to appeal motion.

The respondent, an undischarged bankrupt, brought an application for a declaration that his professional liability insurer was required to indemnify him for a class action.

The insurer brought a motion to strike the application, arguing the respondent lacked legal capacity.

The motion judge dismissed the motion.

On appeal, the Court of Appeal held that the order was final and that the right to receive an indemnity under an insurance contract is a chose in action that vests in the trustee in bankruptcy.

The appeal was allowed and the application dismissed.

The appellant, an unsecured business creditor, sought a constructive trust over funds held by the Receiver of a bankrupt company, arguing the bankrupt was unjustly enriched by the unauthorized sale of the appellant's shipping containers.

The motion judge dismissed the claim, finding no direct connection between the proceeds of the sales and the funds held by the Receiver.

On appeal, the Court of Appeal upheld the dismissal for the majority of the funds, confirming that a constructive trust requires a direct link between the property and the unjust enrichment.

However, the Court allowed the appeal in part, imposing a constructive trust over $27,244 that was directly traceable to the unauthorized sale of five containers shortly before the receivership.

The appellant, an assignee of a second mortgage, appealed an order on the sole basis that the motion judge erred by refusing to grant an adjournment on the hearing date.

The appellant claimed it had no notice of the hearing and had only retained counsel the day before.

The Court of Appeal dismissed the appeal, holding that the decision to grant or refuse an adjournment is discretionary and entitled to deference, and found no basis to interfere with the motion judge's decision.

The appellant appealed an order declaring that the respondent had priority over any other interest claimed in certain retirement community units, except for valid construction lien claims.

The appellant argued the motion judge erred by determining the priority motion separately from the lien reference and by not giving effect to its security and equity interests.

The Court of Appeal dismissed the appeal, finding that the bifurcation of issues flowed from a previous unappealed court order and that the motion judge's order specifically preserved the construction lien issues.

The moving party, a construction lien claimant, sought an extension of time to appeal an order that granted priority to a mortgagee over the proceeds of sale of a property in receivership.

The notice of appeal was filed 18 days late, after the receiver had already distributed the funds.

The Court of Appeal dismissed the motion, finding no bona fide intention to appeal within the time limit, no adequate explanation for the delay, and no merit to the proposed appeal.

The Court also noted that leave to appeal would have been required under the Bankruptcy and Insolvency Act and would not have been granted.

The Superintendent of Bankruptcy appealed a decision allowing 407 ETR to enforce pre-bankruptcy toll debts against a discharged bankrupt by directing the Registrar of Motor Vehicles to refuse to renew the bankrupt's vehicle permit under s. 22(4) of the Highway 407 Act.

The Court of Appeal found no operational conflict between the provincial legislation and s. 178(2) of the Bankruptcy and Insolvency Act, as dual compliance was possible.

However, the Court held that s. 22(4) of the Highway 407 Act frustrated the federal legislative purpose of providing a discharged bankrupt with a financial 'fresh start'.

Consequently, the doctrine of federal paramountcy applied, rendering s. 22(4) inoperative to the extent that it thwarted the fresh start purpose of the BIA.

The appellants sought to appeal a motion judge's decision, arguing an appeal as of right under s. 193(a) and (b) of the Bankruptcy and Insolvency Act.

The respondent challenged the court's jurisdiction.

The Court of Appeal found no appeal as of right because the motion judge did not make a finding that the respondent was a creditor.

The court also refused leave to appeal, finding the case failed all three components of the applicable test.

The appeal was quashed with costs awarded to the respondent.

The appellant obtained a civil judgment in excess of $1 million against the respondent for an unprovoked assault that caused permanent brain damage.

The respondent subsequently filed for bankruptcy.

The appellant moved for a declaration that the judgment survives bankruptcy under s. 178(1)(a.1) of the Bankruptcy and Insolvency Act as an award for bodily harm intentionally inflicted.

The motion judge dismissed the motion, finding no intent to injure.

The Court of Appeal allowed the appeal, holding that the respondent's act of punching the appellant in the head with a closed fist demonstrated the requisite intent to inflict bodily harm, and the judgment therefore survives the bankruptcy discharge.

The Ministry of the Environment appealed a CCAA judge's decision that environmental remediation orders issued against an insolvent company were subject to a stay of proceedings.

The insolvent company had abandoned a contaminated site after selling its other assets.

Applying the Supreme Court's decision in AbitibiBowater, the Court of Appeal found it was sufficiently certain that the Ministry would perform the remediation work itself, making the regulatory orders in substance a provable monetary claim in the insolvency.

The appeal was dismissed.

The Ministry of the Environment appealed a CCAA judge's order declaring that environmental remediation orders issued against the insolvent respondents were financial in nature and subject to a CCAA stay of proceedings.

Applying the Supreme Court's decision in AbitibiBowater, the Court of Appeal held that ongoing environmental remediation obligations are only provable claims if it is sufficiently certain that the province will perform the work and seek reimbursement.

The Court found it was not sufficiently certain the MOE would perform the remediation for most of the sites, as the orders were also directed at subsequent owners.

The appeal was allowed, and the stay was modified to apply only to the portion of the London property still retained by the respondents.

The trustee in bankruptcy brought a motion under s. 95 of the Bankruptcy and Insolvency Act to set aside a pre-bankruptcy payment as a preference.

The respondent argued the motion was time-barred under the Limitations Act, 2002.

The trustee contended that the limitation period was suspended by the stay of proceedings under s. 195 of the BIA during the bankrupt's appeal of the bankruptcy order.

The Court of Appeal held that s. 195 does not extend, suspend, or vary the limitation period, and dismissed the appeal, confirming the motion was statute-barred.

The Ministry of Training, Colleges and Universities granted funds to a First Nations limited partnership to provide skills training.

The partnership applied to dissolve and an interim receiver was appointed.

The application judge found that the unspent grant moneys were subject to a Quistclose trust for the Ministry's benefit and ordered the receiver to return them.

The Court of Appeal allowed the receiver's appeal, finding that the funding agreement characterized unused funds as a debt, not a trust, and gave the partnership significant discretion to spend the funds.

Therefore, the requirements for a Quistclose trust were not met and the funds were available for distribution in the receivership.

The applicant insurer sought leave to appeal an order requiring it to pay the legal fees of Nortel's executives without reference to a $10 million retention amount or a directors and officers trust fund.

The motion judge had found that the indemnification was a pre-filing claim subject to the CCAA stay, and that allowing access to the trust would improperly elevate the insurer's priority.

The Court of Appeal denied leave, finding the motion judge's conclusions were within his expertise and entitled to deference, and the issues were specific to the case rather than of broader interest.

The Court also declined to consider fresh evidence filed by the applicant because no motion for leave to admit it was brought.

Invesco sought leave to appeal orders sanctioning a Plan of Compromise and Reorganization under the CCAA and approving a settlement that released Ernst & Young LLP from claims arising from its auditing of Sino-Forest Corporation.

The Court of Appeal denied leave, finding that the proposed appeals failed to meet the stringent test for leave in CCAA proceedings.

The appeal of the Sanction Order was moot, and the issues regarding the third-party release in the Settlement Order were governed by the court's prior decision in ATB Financial.

The EMEA Debtors sought leave to appeal an order approving an Allocation Protocol that provided for a joint trial by the Ontario Superior Court of Justice and the US Bankruptcy Court for the District of Delaware to allocate over US$7 billion in proceeds from the sale of Nortel assets.

The moving parties argued the joint trial violated the Ontario court's independence and that the parties had previously agreed to binding arbitration.

The Court of Appeal dismissed the motion for leave to appeal, finding the proposed appeal lacked prima facie merit as the joint trial did not infringe judicial independence and the relevant agreement did not mandate arbitration.

The appellant, a discharged bankrupt, appealed an order striking a designation of matrimonial home she registered on title and prohibiting her from registering another.

The appellant had previously made an assignment in bankruptcy and vacated the home.

Her trustee in bankruptcy settled her equalization claim, including the home, which was approved by the court without her opposition.

The settlement allowed the respondent to alienate the home.

The appellant registered a second designation after the first was ordered removed.

The Court of Appeal dismissed the appeal, finding that the appellant could not rely on her personal right to possession under s. 19 of the Family Law Act to impede a court-approved settlement she did not oppose.

The appellants, creditors of a bankrupt corporation, sought leave under s. 215 of the Bankruptcy and Insolvency Act to commence a negligence action against the Office of the Superintendent of Bankruptcy.

The motion judge dismissed the application, finding the proposed action was statute-barred under the Limitations Act, 2002.

On appeal, the appellants argued that subsequent appeals of a Registrar's decision regarding the trustee's misconduct tolled the limitation period.

The Court of Appeal dismissed the appeal, upholding the motion judge's finding that all material facts were known to the appellants by June 23, 2008, and the subsequent appeals did not affect the limitation period.

The first mortgagee, BDC, successfully applied for the appointment of a receiver over the debtor's assets.

The debtor and the second mortgagee sought to appeal the order, arguing the second mortgagee was entitled to exercise its rights under s. 22 of the Mortgages Act to put the first mortgage in good standing without paying HST arrears.

The Court of Appeal held that there is no automatic right to appeal a receivership order under s. 193 of the Bankruptcy and Insolvency Act.

The Court clarified the test for granting leave to appeal under s. 193(e) and denied leave, finding the proposed appeal was not prima facie meritorious and would unduly hinder the timely sale of the property.

The appellant appealed a motion judge's order dismissing its request to set aside a Notice of Disallowance of its claim in a consumer proposal.

The Court of Appeal agreed the motion should have been brought in Saskatchewan, where the proposal was filed, but found the motion judge erred by failing to consider transferring the proceedings under s. 187(10) of the Bankruptcy and Insolvency Act.

The appeal was allowed, the order set aside, and the motion transferred to the Court of Queen's Bench of Saskatchewan.