Bankruptcy and Insolvency Law - ONCA

The moving party law firm sought an order under Rule 15.04 of the Rules of Civil Procedure to be removed as the lawyer of record for the appellant in a receivership proceeding.

The firm had filed a notice of appeal on behalf of the appellant to prevent the sale of two condominium units, despite intending to have no further involvement.

The Court of Appeal dismissed the motion, finding that the firm had launched a 'zombie appeal' that jeopardized the receivership proceedings and abused its status as an officer of the court.

The firm was ordered to remain on the record until the final disposition of the receiver's motion to quash the appeal, prioritizing the administration of justice over the firm's interests.

The appellant appealed an order varying a default judgment to include a declaration that the judgment debt survives his bankruptcy under s. 178(1)(d) of the Bankruptcy and Insolvency Act.

The appellant argued the motion judge erred by admitting fresh evidence and finding the pleadings sufficiently particularized a claim for misappropriation while acting in a fiduciary capacity.

The Court of Appeal dismissed the appeal, holding that fresh evidence is admissible on a Rule 59.06(2) motion to vary, and the pleadings were sufficient to ground the claim.

The trustee in bankruptcy of a company that operated a Ponzi scheme brought actions against investors to recover usurious interest and commission payments.

The trial judge ordered repayment of preferences and usurious interest, finding the investors knew or ought to have known the returns were too good to be true.

On appeal, the investors argued the claims were statute-barred and that the corporate attribution doctrine should impute the fraudster's knowledge to the company.

The Court of Appeal dismissed the appeal, holding that public policy grounds justified exercising discretion not to apply the corporate attribution doctrine, as doing so would perversely allow fraudsters to benefit at the expense of legitimate creditors.

The trustee's cross-appeal was allowed in part, including findings that referral agreements were illegal contracts at common law and that certain defendants were not entitled to dividends until other creditors were satisfied.

The moving parties, representing U.S. class action claimants, sought leave to appeal a supervising judge's order in a CCAA proceeding.

The supervising judge had dismissed their motion seeking to be treated as unaffected creditors or to have an expedited adjudication of their claims prior to a creditor vote.

The Court of Appeal denied leave, finding that the proposed appeal was not prima facie meritorious and did not raise issues of significance to the insolvency practice.

The Court emphasized the high level of deference owed to a CCAA supervising judge's discretionary decisions balancing stakeholder interests.

The respondent, KingSett Mortgage Corporation, moved to quash an appeal brought by 30 Roe Investments Corp. from an order appointing a receiver over nine condominium units. 30 Roe argued it had an appeal as of right under s. 193(c) of the Bankruptcy and Insolvency Act and alternatively sought leave to appeal under s. 193(e).

The Court of Appeal granted the motion to quash, confirming that no appeal as of right exists from a receivership order under s. 193(c).

The Court also dismissed the motion for leave to appeal, finding the proposed appeal lacked merit, did not raise an issue of general importance, and would unduly hinder the receivership proceedings.

The appellants, directing minds and associates of two insolvent construction companies, orchestrated a false invoicing scheme to siphon tens of millions of dollars from the debtors.

The monitor and trustee sought to recover the funds as transfers at undervalue under s. 96 of the Bankruptcy and Insolvency Act.

The appellants argued that the companies were financially healthy at the time of the transfers, and that the directing mind's fraudulent intent could not be attributed to the companies under the common law corporate attribution doctrine.

The Court of Appeal dismissed the appeals, holding that the corporate attribution doctrine should be applied flexibly in the bankruptcy context to impute the directing mind's fraudulent intent to the debtor corporations.

This purposive approach prevents fraudsters from benefiting at the expense of legitimate creditors and fulfills the remedial objectives of the bankruptcy legislation.

The receiver brought a motion for directions to determine whether an appeal from a priority dispute order in a receivership lies to the Court of Appeal under the Bankruptcy and Insolvency Act or to the Divisional Court under the Construction Act.

The Court of Appeal held that because the motion judge's order was granted in reliance on jurisdiction under the Bankruptcy and Insolvency Act, specifically a receiver's application for directions under s. 249, the appeal route is to the Court of Appeal.

The moving party sought leave to appeal an order requiring it to pay $874,107.08 to the responding party.

The funds had been mistakenly paid to the moving party by a third-party customer of the responding party.

The moving party argued it was entitled to retain the funds as a set-off against debts owed by the responding party, who was under CCAA protection.

The Court of Appeal refused leave to appeal, finding the proposed appeal was not prima facie meritorious because set-off did not constitute a juristic reason to retain mistakenly paid funds under the unjust enrichment framework.

The appellant appealed an order adjudging him bankrupt.

The respondent law firm, to whom the appellant owed debts from matrimonial litigation, had issued an application for a bankruptcy order after the appellant's consumer proposal was rejected.

The bankruptcy judge found the appellant owed debts exceeding one thousand dollars and had committed an act of bankruptcy by failing to meet his liabilities as they became due.

The Court of Appeal found no error in the bankruptcy judge's conclusions and dismissed the appeal.

Traders General Insurance Company moved to review a single judge's decision denying it leave to appeal an order under the Bankruptcy and Insolvency Act.

The underlying dispute involved a bad faith claim assigned to the respondents by a discharged bankruptcy trustee following a motor vehicle accident judgment.

The Court of Appeal held that it had jurisdiction to review the single judge's decision because the judge had mistakenly declined jurisdiction by failing to address the merits of the leave motion.

Applying the Pine Tree Resorts test, the Court granted leave to appeal, finding that the proposed appeal raised prima facie meritorious issues of general importance to bankruptcy practice.

The Receiver brought a motion for directions to determine whether the Court of Appeal or the Divisional Court has jurisdiction over an appeal concerning a priority dispute between registered lien claimants and a registered mortgage in a receivership.

The motions judge held that a single judge of the Court of Appeal lacks jurisdiction to decide whether an appeal lies within the court's jurisdiction, as this must be decided by a three-judge panel.

The motion was adjourned to be heard by a panel.

The appellant, a secured creditor of a bankrupt renewable energy company, appealed the dismissal of its action against the Independent Electricity System Operator (IESO).

The appellant argued that the IESO wrongfully treated a renewable energy contract as terminated upon the debtor's bankruptcy, thwarting the appellant's attempt to assign the contract to a third party.

The Court of Appeal dismissed the appeal, affirming that the contract automatically terminated upon bankruptcy, that this termination did not violate the Bankruptcy and Insolvency Act stay of proceedings or the common law anti-deprivation rule, and that the IESO did not breach its contractual obligations or act negligently.

The commercial tenant made an assignment in bankruptcy and the trustee disclaimed the lease.

The landlord filed a proof of claim for three months' accelerated rent as a preferred claim, and an unsecured claim for the balance of the unexpired term, including unpaid tenant inducements.

The trustee disallowed the unsecured claims.

The Court of Appeal held that under Ontario law, the disclaimer of a commercial lease by a trustee in bankruptcy ends the tenant's obligations, precluding the landlord from claiming damages for the unexpired term.

However, the landlord was entitled to claim the unrecovered balance of its preferred claim for accelerated rent as an unsecured creditor under the Bankruptcy and Insolvency Act.

The appellant appealed an order regarding cross-examination on his affidavit in a bankruptcy proceeding.

The respondent confirmed it would not attempt to cross-examine the appellant before the disposition of the bankruptcy trial, rendering the appeal moot.

The Court of Appeal declined to exercise its discretion to hear the moot appeal and dismissed it, awarding costs to the respondent.

The appellants, whose assets were managed by a court-appointed receiver, were reassessed by the CRA for unpaid taxes arising from shareholder loans.

They sought to sue the receiver for gross negligence in failing to engage in tax planning.

The accounting firm also sought leave to crossclaim against the receiver.

The Court of Appeal upheld the motions judge's decision dismissing the actions, finding that leave was required to sue the receiver and that the appellants failed to establish a prima facie case of gross negligence or wilful misconduct.

The moving party brought a motion to determine whether the appellant required leave to appeal an order dismissing a claim for occupation rent against a receiver.

The Court of Appeal held that the appellant had an automatic right of appeal under s. 193(c) of the Bankruptcy and Insolvency Act because the appeal directly involved property exceeding $10,000 in value.

The motion was dismissed, and the appeal was permitted to proceed without leave.

The moving parties sought directions on whether they required leave to appeal an order made by a CCAA judge dismissing their jurisdictional challenge to a contract dispute motion brought by the responding parties.

The moving parties also sought a stay of the contract dispute motion pending their appeal.

The responding parties brought a cross-motion to expedite the hearing of the leave to appeal motion.

The Court of Appeal held that the CCAA judge's order was 'made under' the CCAA, meaning leave to appeal was required under s. 13.

The Court expedited the leave to appeal motion and granted a stay of the contract dispute motion pending the determination of the leave motion, finding that the balance of convenience favoured a stay.

In a CCAA restructuring proceeding, stakeholders sought disclosure of a settlement agreement between U.S. Steel, its Canadian subsidiary, and the Attorney General of Canada regarding undertakings under the Investment Canada Act.

The CCAA judge held that the agreement was entirely privileged under s. 36 of the ICA.

On appeal, the Court of Appeal found that while s. 36(5) protects the Crown from being compelled to disclose the agreement, this protection does not extend to the private corporations.

The appeal was allowed, and the issue of whether common law settlement privilege barred disclosure was remitted to the CCAA judge.

The appellant, an undischarged bankrupt, sought to appeal an order lifting a stay of proceedings under the Bankruptcy and Insolvency Act that allowed the respondents to pursue claims for pre-bankruptcy breaches of fiduciary duty.

The respondents brought a motion declaring the appellant had no right of appeal under s. 193(b), while the appellant sought leave to appeal under s. 193(e).

The Court of Appeal held that the appellant had no appeal as of right because the order was not likely to affect other cases in the bankruptcy proceeding.

The court also denied leave to appeal, finding that the proposed appeal did not raise an issue of general importance and lacked prima facie merit, as settled law does not require a court to scrutinize the merits of an action when lifting a bankruptcy stay.

The Attorney General appealed a decision discharging the bankrupt, arguing that the bankrupt's personal income tax debt exceeded the threshold under s. 172.1 of the Bankruptcy and Insolvency Act.

At the time of the discharge hearing, the bankrupt had unpaid income tax assessments totalling approximately $4.478 million, of which $4.424 million was subject to outstanding appeals to the Tax Court of Canada.

The Court of Appeal held that assessed amounts of personal income tax under appeal are contingent claims that the trustee can refuse to admit as proven claims.

Therefore, these amounts are not included in calculating the bankrupt's personal income tax debt under s. 172.1(1).

The appeal was dismissed.