Sam Rappos

This appeal concerned the reasonableness of a motion judge's exercise of enhanced powers under Rule 20 of the Rules of Civil Procedure in granting summary judgment to enforce guarantees.

The appellants argued the motion judge erred in finding no genuine issues requiring a trial, particularly regarding credibility issues arising from new evidence about representations limiting the guarantees.

The Court of Appeal dismissed the appeal, affirming the motion judge's careful application of the Hryniak framework, his findings on credibility, and his interpretation of the agreements, concluding there was no basis to interfere with the summary judgment.

Commercial landlord appealed an order limiting its entitlement to draw on a $2.5 million standby letter of credit posted by a bankrupt tenant as security for a lease.

The motion judge held that, following the trustee’s disclaimer of the lease, the landlord could draw only the statutory preferred claim for three months’ accelerated rent under the Bankruptcy and Insolvency Act.

The Court of Appeal held that the autonomy principle governing letters of credit meant the issuing bank’s obligation to honour complying presentations was independent of the underlying lease and not limited by insolvency law absent fraud.

The court also found the motion judge erred in interpreting the lease to require a reduction in the letter of credit because the tenant had not “promptly” paid rent at all times as required.

The landlord was therefore entitled to draw the full amount of the letter of credit.

The applicant sought a declaration that all intellectual property used by the debtor in its business was the property of the debtor and subject to the applicant's security interest.

The debtor's directing mind claimed the trademarks had been assigned to a related company prior to the receivership.

The court found the directing mind lacked credibility, noting the assignments were not disclosed to lenders, were for nominal consideration, and the debtor continued to use and renew the trademarks.

The court declared the trademarks were the property of the debtor and, in the alternative, that the assignments were void as fraudulent conveyances.

A cross-motion by the related company for disgorgement of funds was dismissed.

The plaintiffs were beneficial owners of a property held in trust by the defendant Bertrand, who was the registered owner.

Bertrand sold the property to 670 without the plaintiffs' consent and signed a false affidavit to clear executions against his name.

The trial judge found the transfer was a 'fraudulent instrument' under the Land Titles Act, declared it void, and ordered rectification of the register.

On appeal, the Divisional Court held that the trial judge erred in law.

Bertrand was not a 'fictitious person' and did not forge the transfer, as he was the true registered owner with legal authority to convey the property.

Furthermore, 670 was a bona fide purchaser for value without notice, protected by s. 62(2) of the Act, which states that describing an owner as a trustee does not constitute notice of a trust.

The appeals by 670 and the Director of Titles were allowed, confirming 670's ownership, while Bertrand's appeal against the findings of fact was dismissed.

The matter was remitted to the trial court to assess damages against Bertrand.

The Court allowed the appeal, adopted the dissenting reasons from the Federal Court of Appeal, and reinstated the Federal Court order answering the stated legal question in the affirmative, with costs throughout in favour of the appellant.

The Court expressly declined to comment on the scope of the deemed trust or liability under s. 222 of the Excise Tax Act before bankruptcy.

The appellant appealed a summary judgment decision and costs order from the Superior Court.

The motion judge had awarded the appellant $118,954.95 in damages for breach of contract arising from the respondents' refusal to close on a property purchase, but awarded no costs.

The appellant challenged both the calculation of the $43,000 property value difference and the denial of costs.

The Court of Appeal dismissed the appeal on damages but allowed the appeal on costs, finding the motion judge erred in principle by depriving the successful party of all costs without exceptional circumstances justifying such a punitive order.

In a priority dispute under the Construction Lien Act, the court determined the relative priorities of several mortgagees and construction lien claimants.

The court held that professional fees incurred by a first mortgagee to protect its security constituted an 'advance' under section 78(6) of the Act, granting it priority.

The court also found that a $10 million advance made jointly to two borrowers under a second mortgage was an advance in respect of that mortgage, giving it priority over the lien claimants.

However, the court ruled that an advance made under a loan agreement to a third party was not an advance in respect of a collateral mortgage given by the developer as guarantor, meaning the lien claimants had priority over the collateral mortgage.

Following a finding of civil contempt against a respondent and his former solicitor for bartering non-compliance with a document production order, the court held a penalty hearing.

The court refused to allow the contemnors to revisit the initial contempt finding.

Finding that the contemnors' actions resulted in the disappearance of highly relevant documents and deprived the applicant of a fair hearing, the court struck the respondents' responding material and granted default judgment.

To denounce and deter the serious misconduct of bartering compliance with a court order for personal advantage, the court sentenced both the respondent and his former solicitor to 90 days of incarceration.

The Ontario Nurses Association (ONA) brought a motion under the CCAA seeking an order to restructure the Victorian Order of Nurses for Canada (VON Canada) pension plan.

The ONA proposed transferring assets and liabilities related to VON Ontario employees into a new pension plan and sought a declaration that VON Ontario was not jointly and severally liable for any pension deficits.

The court dismissed the motion, finding that the ONA's proposal did not advance the CCAA's policy objectives of fostering going concern restructuring and avoiding liquidation.

The court also applied the business judgment rule, deferring to VON Canada's board decision to maintain the status quo, and deemed the request for a declaration on future liabilities premature and speculative.

The applicant brought a motion for contempt against the respondents and a non-party solicitor, alleging they violated a court order requiring the solicitor to make certain documents available for inspection.

The court found that the solicitor intentionally transmitted "highly prejudicial" documents to the respondent, rather than making them available for inspection, and that the respondent subsequently failed to produce these documents to the applicant.

The court found both the respondent and the solicitor guilty of contempt beyond a reasonable doubt, based on the clear terms of the order, their knowledge of it, and their intentional actions.

The court deferred the imposition of penalties and remedies to a separate hearing, noting the seriousness of the affront to the administration of justice.

The appellant appealed an order of a Superior Court judge resolving a priority issue between two mortgages registered under the Land Titles Act.

The Court of Appeal held that it lacked jurisdiction to hear the appeals, as section 27 of the Land Titles Act provides that appeals from orders made under the Act lie to the Divisional Court.

The appeals were transferred to the Divisional Court pursuant to section 110 of the Courts of Justice Act.

Following dismissal of a trustee’s motion seeking directions to terminate certain condominium purchase agreements, the court addressed costs.

The purchasers sought costs against the trustee or alternatively against mortgagees who supported the trustee’s position.

The court held that although the mortgagees were not formal parties to the motion, they actively participated and had a direct financial interest in the outcome, making it appropriate to hold them responsible for costs.

The court also considered principles governing costs for self-represented litigants and limited recovery to proven disbursements where no foregone remunerative activity was demonstrated.

Costs were awarded to the purchasers and made payable jointly and severally by the mortgagees.

Following the dismissal of motions brought by a corporate director in receivership proceedings, the court determined the appropriate quantum of costs payable to the secured creditor and the court‑appointed receiver.

The director argued the creditor’s bill of costs reflected over‑lawyering and that legal research should not be compensable.

The court rejected that submission, emphasizing that legal research is an ordinary and necessary component of litigation and is properly recoverable.

Applying Rule 57.01 of the Rules of Civil Procedure and reasonable expectations of the losing party, the court fixed costs at $6,000 plus HST for the receiver and $27,500 inclusive for the creditor.

The court also refused to order that the costs be paid by a company in receivership rather than personally by the director.

The court-appointed Trustee of an insolvent condominium development brought a motion for advice and directions, seeking permission to terminate pre-sale purchase agreements for buyers who had purchased two parking units, due to a shortage of parking spaces in the building.

The Trustee proposed that these buyers relinquish one parking space for a price reduction, or face termination of their agreements.

The court applied the test of balancing the equitable considerations of all stakeholders.

Finding that the mortgagees had accepted the risk of the parking shortage and that the purchasers would suffer significant financial hardship and loss of equity if their agreements were terminated, the court dismissed the Trustee's motion.

In a receivership proceeding, a corporate director sought leave to control litigation commenced by debtor companies against a secured creditor, arguing that the receiver faced a conflict in pursuing claims against the creditor that initiated the receivership.

The court held that the request constituted an impermissible collateral attack on a prior order directing the receiver to conduct a sales process for the litigation asset.

The court further determined that secured creditors may participate as bidders in a receiver’s sales process, including by way of credit bid, and that such participation is consistent with insolvency principles requiring maximization of value for stakeholders.

Applying analogous bankruptcy authorities, the court approved the receiver’s recommendation to sell the action to the secured creditor through a $1 million credit bid and rejected objections regarding valuation and fairness of the process.

In a Commercial List costs decision arising from competing receivership-related applications and motions, the applicant sought substantial indemnity costs based on contractual costs clauses in loan documentation.

The court held that, although contractual rights to solicitor-and-client-type costs are generally enforced, the unresolved allegation that the applicant breached a forbearance agreement constituted a special circumstance making an immediate substantial indemnity award inappropriate.

Applying the Rule 57.1 factors and rejecting reliance on outdated historical costs guidelines, the court fixed partial indemnity costs at $160,000 inclusive of fees and disbursement.

The request to require the respondent to pay the receiver's fees and disbursements was refused.

Three secured lenders brought competing applications to determine mortgage priorities after a first mortgage was fraudulently discharged from title and later mortgages were advanced in reliance on the register.

The court found the homeowners were responsible for the fraudulent discharge and concealed the prior debt while continuing payments to the original lender to avoid detection.

Applying the deferred indefeasibility framework under the Land Titles Act and the Court of Appeal's decision in Lawrence, the court held the later mortgagees took from fraudsters and were intermediate encumbrancers.

The original mortgage retained first priority, the later bank mortgage ranked second, and the subsequent private mortgage ranked third.

The register was ordered rectified and no costs were awarded.

The applicant, a secured creditor, applied to appoint a receiver over the assets of the respondent guarantor following a default on commercial loans.

The respondent cross-applied to lift a stay of proceedings to continue a $100 million damages action against the applicant for alleged breach of a forbearance agreement, and sought to have the proceeds from the sale of the primary debtor's assets paid into court.

The court held that the receivership order did not stay the debtor's action, but refused to order the funds paid into court as the respondent had no proprietary claim to the funds that superseded the applicant's first-ranking security.

The court appointed a receiver over the respondent, finding it just and convenient given the unconditional nature of the guarantee.

The court-appointed Receiver brought a motion for directions on whether the Auctioneer was entitled to a Buyer's Premium on a private sale of the debtor's assets.

The motion judge denied the premium because the Offer to Purchase contained an entire agreement clause and did not mention the premium.

On appeal, the Court of Appeal reversed the decision, finding that the Auction Service Agreement between the Receiver and the Auctioneer mandated the premium, and denying it would result in commercial absurdity and a windfall to the Receiver.