An insolvent consulting engineering firm became subject to CCAA proceedings, after which the appellant municipality refused to pay for post-initial order work and sought to effect compensation between amounts owed to the firm and two pre-order fraud-related claims.
The majority held that participation in Quebec's Voluntary Reimbursement Program does not in itself establish that a claim relates to fraudulent misrepresentation under s. 19(2)(d) of the CCAA.
The majority further held that a supervising judge has broad discretion under ss. 11 and 11.02 to stay a creditor's right to pre-post compensation, though the absolute prohibition from the Quebec Court of Appeal was tempered to allow for exceptional cases.
The initial stay order covered the appellant's right to effect pre-post compensation, and no basis was shown to lift the stay on either claim.
Brown J. dissented, arguing the matter should have been remanded to the supervising judge to exercise her discretion.
