COURT FILE NO.: 31-2684629

DATE: 20210112

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: IN THE MATTER OF THE NOTICE OF INTENTION TO MAKE A PROPOSAL OF CIM BAYVIEW CREEK

BEFORE: Mr. Justice Cavanagh

COUNSEL: David Ward, Erin Craddock, and Tamie Dolny for CIM Bayview Creek Inc.

John Birch and Jeremy Bornstein, for Grant Thornton Limited, in its capacity as trustee named in the notice of intention to make a proposal of CIM Bayview Creek Inc.

Jonathan Barr, for Debenture Holders

Lawrence Hansen, for DUCA Financial Services Credit Union Ltd.

Robert Choi, for Bryton Capital Corp. GP Ltd. and Bayview Creek Residence Inc.

Lisa S. Corne for Jiubin Feng

HEARD: December 21, 2020

ENDORSEMENT

Introduction

[1] On October 29, 2020, CIM Bayview Creek Inc. (“CIM Bayview”) filed a Notice of Intention to Make a Proposal (“NOI”) under the Bankruptcy and Insolvency Act (“BIA”). In the NOI, CIM Bayview stated its intention to make a proposal and named Grant Thornton Ltd. as the licensed trustee who has consented to act as the trustee under the proposal (“NOI Trustee”).

[2] Prior to the NOI filing, CIM Bayview’s business was the development of real property in Richmond Hill, Ontario for the benefit of Bayview Creek (CIM) LP (“Bayview LP”). The general partner of Bayview LP is 10502715 Canada Inc. I sometimes refer to CIM Bayview, Bayview LP and 1050217 together as the “CIM Group”.

[3] Within the NOI proceedings, CIM Bayview seeks to create a forum for a court supervised sales process to monetize the value of the Property.

[4] Bayview Creek Residences Inc., formerly named Bryton Creek Residences Inc. (“Bryton Creek”)[^1], entered into an Option Agreement with CIM Bayview and Bayview LP (by its general partner, 10502715 Canada Inc.). The Option Agreement was amended by an agreement called Amendment to Option Agreement dated July 1, 2020. The Option Agreement, as amended (the “Amended Option Agreement”) provides that Bayview LP (by its general partner) as beneficial owner of the Property and CIM Bayview, as trustee and registered owner of the Property, grants to Bryton Capital an irrevocable option to purchase the Property for a purchase price of $41,720,000.

[5] I sometimes refer to Bryton Creek and Bryton Capital together as the “Bryton Group”.

[6] There are two motions before me. Both address the validity and enforceability of the Amended Option Agreement

[7] CIM Bayview moves for an order (i) declaring that its notice to disclaim the option in the Amended Option Agreement is valid and effective such that the option is disclaimed, and (ii) in addition or in the alternative, declaring that the option may be vested out in furtherance of a sales process in the NOI insolvency proceeding and that the court do so. CIM Bayview also seeks an order declaring that the Amended Option Agreement violates federal law because it constitutes a criminal rate of interest and because it provides for an increased charge on amounts in arrears under a mortgage loan. CIM Bayview seeks an order removing the Amended Option Agreement as a bar to a sales process through the NOI proceedings under the BIA.

[8] Bryton Capital and Bryton Creek move for relief including (i) an order that the option to purchase under the Amended Option Agreement is not to be disclaimed or resiliated, (ii) a declaration that Bryton Creek not be restrained from exercising the option in the Amended Option Agreement or , in the alternative, an order permitting it to exercise the option to purchase the Property in the Amended Option Agreement; and (iii) an order directing CIM Bayview, Bayview LP and 10502715 to comply with the terms of the Amended Option Agreement and complete the sale of the Property to Bryton Creek.

[9] The NOI Trustee did not bring a motion. In its factum, the NOI Trustee asks for declaratory orders that (i) the Amended Option Agreement (and related agreement of purchase and sale for the Property) be declared void as against the NOI Trustee as a transfer at undervalue, and (ii) payments made by CIM Bayview as a break fee when the Amended Option Agreement was made be declared void as against the NOI Trustee as a preference.

[10] For the following reasons, the much of the relief sought by Bryton Capital and Bryton Creek is granted and, except as otherwise ordered, the motion by CIM Bayview is dismissed.

Background Facts

[11] The following is a summary of the relevant background facts.

Ownership of the Property

[12] Pursuant to a Declaration of Trust made the 21^st day of June 2018 by CIM Bayview, CIM Bayview holds the Property as bare trustee and nominee solely for Bayview LP.

[13] Prior to the NOI filing, CIM Bayview’s business was the development of the Property into a residential subdivision. The common principal of CIM Bayview, Bayview LP, and 10502715 is Jiubin Feng.

[14] The Property is a 9.21 acre medium density residential development site located on the southeast corner of Bayview Avenue and Elgin Mills Road East in Richmond Hill, Ontario.

Bryton Capital Mortgage and Bryton Creek Option to Purchase

[15] Bryton Capital is a real estate developer that acquires and develops real property. Bryton Creek is a separate legal entity. Bryton Capital and Bryton Creek do not have common shareholdings, but Bryan McWatt is an officer and director of both entities.

[16] In 2019, Mr. Feng approached the Bryton Group to inquire whether it would be interested in any of his development projects. It was interested in the development on the Property. At that time, there was a first mortgage on the property securing $20,700,000 in favour of DUCA Financial Services Credit Union Ltd. (“DUCA”) and a second mortgage securing $15 million held by Romspen Investment Corporation (“Romspen”).

[17] The Bayview Creek project involved the development of western and eastern parcels of land which are separated by a natural creek. The parcels could be conveyed separately from one another only after the registration of a plan of subdivision. The CIM Group was responsible for the registration.

[18] The Bryton Group wished to purchase the western parcel of the Property. Bryton Capital also agreed to provide mortgage financing as part of this transaction. The Bryton Group’s intention was to develop the western parcel of land.

[19] The parties agreed to terms and conditions for a loan which were set out in a commitment letter dated May 29, 2019. The purchaser under the First APS and the Second APS, and the optionee, was to be Bryton Creek.

[20] As part of this transaction, pursuant to the terms of the commitment letter, Bryton Capital agreed to provide a mortgage loan to CIM Bayview as bare trustee for Bayview LP, in the principal amount of $20 million for a term of 12 months. The commitment and completion of the loan transaction were subject to conditions that required the borrowers to (i) execute and deliver an agreement of purchase and sale for the western parcel of the Property for a purchase price of $27,650,000 with closing to occur 30 days following registration of the plan of subdivision for the Property (the “First APS”), and (ii) execute and deliver an agreement of purchase and sale giving Bryton Creek the right at its sole option (exercisable between July 31, 2020 and August 14, 2020) to acquire ownership of the entire Property on or before September 1, 2020 where the borrowers (vendors under the First APS) have not successfully completed the First APS for the western parcel and transferred title to the purchaser to the western parcel by July 30, 2020 (the “Second APS”).The purchase price under the Second APS was $40,720,000.

[21] A representative of the Bryton Group, Bryan McWatt, provided evidence that in light of Mr. Feng’s past failed ventures and the CIM Group’s inability to successfully complete other projects, the parties agreed that Bryton Creek would be granted an option to purchase the Property if CIM Bayview failed to close the First APS. The purchase price was negotiated by the parties who were represented by lawyers. CIM Bayview proposed a purchase price of $48 million. Bayview Creek’s solicitor insisted that the purchase price be $40,720,000, an amount equal to the outstanding principal amounts of the DUCA mortgage and the Bryton Capital mortgage. The parties agreed on this price.

[22] The parties entered into an Option Agreement dated June 3, 2019 under which the CIM Group granted to Bryton Creek an irrevocable option to purchase the Property upon the terms of the Second APS. Bryton Creek had the right to exercise the option at any time from the date of termination of the First APS up until August 14, 2020. The purchase option was registered on title to the Property.

Amendments to the agreements

[23] The Bryton Group spent more than $378,777.96 on the site plan application process and also dedicated a project manager for the project in anticipation of the registration of the subdivision agreement and completion of the First APS.

[24] The CIM Group ceased to make interest payments on Bryton Capital’s mortgage after three months and failed to make meaningful progress on the registered plan of subdivision.

[25] On June 10, 2020, DUCA demanded payment of the DUCA Mortgage and issued a notice of intention to enforce security and a notice of sale under the DUCA mortgage.

[26] In late June 2020, the CIM Group sought a mortgage extension and amendment agreement from Bryton Capital. The CIM Group inquired whether the Bryton Group would be prepared to consent to the termination of the First APS so that the CIM Group could attempt to sell the entire Property. By this time, Bryton Capital’s second mortgage was significantly in arrears and the Bryton Group had spent significant time and resources on the site plan application.

[27] On July 1, 2020, the Bryton mortgage was amended to, among other things, increase the principal amount to $22.3 million and extend the maturity date to November 1, 2020. The mortgage amendment required as prefunding conditions that the CIM Group pay $1 million plus HST as a fee in respect of termination of the First APS for the Western Parcel and the amendment to the June Option Agreement and to the Second APS as well as additional legal and real estate broker fees. The parties entered into amending agreements dated July 1, 2020 including the Amended Option Agreement.

[28] The Amended Option Agreement provides that in the event that the second mortgage in favour of Bryton Capital is not repaid in full by October 31, 2020, then Bryton Creek shall have the right to exercise the option between November 1, 2020 and December 31, 2020. The form of the Second APS was amended to increase the purchase price to $41,720,000 and provide for a closing date on the 15^th day following the date of exercise of the option. There were other changes.

[29] As part of the package of amending agreements, the CIM Group executed a Full and Final Release and Acknowledgment in favour of Bryton Creek and Bryton Capital dated July 1, 2020 (“Release”). The Release provides that the CIM Group and Mr. Feng and Dian Yuan Zhang as releasors release the Bryton Group from any claims that have in the past existed or exist up to the date of the Release in consequence of or in any way arising from, incidental to, or in connection with the mortgage loan made pursuant to the commitment letter dated May 29, 2019. The CIM Group and Mr. Feng agreed that the break fee of $1,000,000 plus HST constitutes fair and reasonable compensation to Bayview Creek for (i) its agreement to terminate the First APS and to relinquish its rights and claims thereunder, (ii) its reimbursement in respect to various costs and expenses incurred by Bayview Creek in respect thereof, and (iii) the agreement of Bayview Creek to amend the terms of the Option Agreement for the Property. The CIM Group and Mr. Feng released Bayview Creek from any claims in respect of the break fee.

Mareva Injunction

[30] On September 18, 2020, individuals representing the interests of various debenture holders made an application without notice for injunctive relief against the CIM Group. By order dated September 18, 2020, Schabas J. granted an interim injunction preventing the sale of the Property and preventing anyone with notice of the order from dealing with the assets of the CIM Group or instructing or encouraging any other person to do so or facilitating or participating in any acts the effect of which is to do so (the “Mareva Injunction”). The Mareva Injunction was extended by Schabas J. on September 28, 2020 and further extended by Koehnen J. on October 13, 2020.

Notice of Intention to Make a Proposal

[31] CIM Bayview filed the NOI on October 29, 2020. Mr. Feng has sworn an affidavit for this motion in which he states that the proximate cause and catalyst for the NOI filing was the ex parte motion brought by the individuals representing the debenture holders which resulted in the Mareva Injunction.

Disclaimer of Amended Option Agreement

[32] CIM Bayview issued a BIA s. 65.11 notice to disclaim the Amended Option Agreement on December 7, 2020 (the “Disclaimer”). The NOI Trustee approved the Disclaimer.

Bryton Creek notice to exercise option in Amended Option Agreement

[33] On December 11, 2020, Bryton Creek delivered a Notice that Bryton Creek elects to exercise its option to purchase the Property pursuant to Article 3 of the Amended Option Agreement.

Analysis

[34] CIM Bayview raises the following issues on its motion:

a. Is the Disclaimer valid and effective, such that CIM Bayview is not subject to the option to purchase the Property?

b. If the option cannot be disclaimed, can this Court vest the option off title and extinguish it by way of a vesting order in furtherance of the NOI proceedings through an insolvency sales process and, if so, should this be done?

c. Is the option unenforceable because it operates so as to constitute a criminal rate of interest in contravention of the Criminal Code?

d. Does the Amended Option Agreement violate s. 8(1) of the Interest Act?

[35] Bryton Creek raises the following issues on its motion:

a. Did CIM Bayview engage in an abuse of process by filing the NOI in circumstances where (i) the Mareva Injunction was in effect, and (ii) CIM Bayview has no property to distribute given that trust property is exempt from distribution under s. 67(1)(a) of the BIA? Should the NOI proceeding be terminated?

b. What is the legal effect of Bryton Creek’s exercise of the option to purchase the Property on December 11, 2020?

c. If leave of the court was needed for Bryton Creek to exercise the option, should leave be granted to be effective, nunc pro tunc, as at December 11, 2020 or, in the alternative, as at December 21, 2020?

[36] NOI Trustee did not bring a motion but raises the following issues in its factum:

a. Is the break fee a preference under s. 95 of the BIA which is void as against the NOI Trustee?

b. Is the Amended Option Agreement a transfer at undervalue under section 96 of the BIA which is void as against the NOI Trustee?

c. Is Bryton Creek stayed from exercising the option under the Amended Option Agreement pursuant to section 69 (1) of the BIA?

[37] I first address the issues raised by CIM Bayview.

Is the disclaimer valid and effective, such that CIM Bayview is not subject to the option to purchase the Property?

[38] Section 65.11(1) of the BIA provides that a debtor in respect of whom a notice of intention was filed may - on notice to the other parties to the agreement and the trustee - disclaim or resiliate any agreement to which the debtor is a party on the day on which the notice of intention was filed. A party to the agreement may apply for an order that the agreement is not to be disclaimed or resiliated. In deciding whether to make an order, the court is to consider, among other things,

a. whether the trustee approved the proposed disclaimer or resiliation;

b. whether the disclaimer or resiliation would enhance the prospects of a viable proposal being made in respect of the debtor; and

c. whether the disclaimer or resiliation would likely cause significant hardship to a party to the agreement.

[39] CIM Bayview submits that the Amended Option Agreement is an executory contract which does not create an interest in land and may be disclaimed. In support of this submission, CIM Bayview relies on a decision in the U.S. Bankruptcy Court for the District of North Carolina, In Re Hardie, 892 F. 2d 469 (Bankr. D.N.C. 1989), that held that an unexercised option to purchase land does not give the optionee an interest in the land but only an in rem right to exercise the option. CIM Bayview submits that as at October 29, 2020, Bryton Creek had contractual rights but not specifically enforceable proprietary rights such as would be immune from the Disclaimer.

[40] In 2123201 Ontario Inc. v. Israel Estate, 2016 ONCA 409, the Court of Appeal for Ontario addressed the question of whether a contract providing for an option to purchase land provided for an interest in the land or only a personal contractual right. In Israel Estate, the owner of land sold it to two individuals who bought the land to obtain the gravel, sand, and stone on it. Contemporaneously with the conveyance, the parties signed an agreement giving the original seller the “first option to purchase” the land for $1 once the gravel had been removed from it. The agreement gave the purchasers discretion to state when all the gravel had been removed. The owner at the time of the litigation (not the two individuals) continued to extract gravel from the land. The estate of the original owner registered notices of a claim against the land and demanded that the land be conveyed to it for $1. The then current owner brought an application for an order declaring the option agreement void and deleting it from title on the ground that the agreement gave the original owner an immediate interest in the land and, because the interest had not vested, the agreement was void and unenforceable under the rule against perpetuities. The estate of the original owner contended that the agreement gave a right of first refusal which did not offend the rule against perpetuities.

[41] The application judge in Israel Estate held that the agreement was not an option agreement that created an interest in land. On appeal, Laskin J.A. held, at para. 24, that “the jurisprudence establishes that options to purchase create immediate interests in land” and are specifically enforceable. Laskin J.A. concluded that the purpose of the agreement showed an intention to give the original owner of the land an option to purchase the land, which gave rise to an immediate, equitable interest in the land.

[42] In Re 1565397 Ontario Inc., 2009 CanLII 32257 (ON SC), [2009] O.J. No. 2596, Wilton-Siegel J. held that an undertaking was an agreement that created an enforceable interest in land, and he reviewed the authorities and addressed whether the agreement could be disclaimed under the BIA:

The applicant says it can disclaim the Undertaking even if it creates an interest in land. I understand disclaimer in this sense to be limited to repudiation of the Undertaking leaving the respondents with the right to claim damages for breach of contract against 156 for failure to perform the Undertaking.

I do not think the applicant’s position is correct. I know of no law that permits the court to authorize the receiver to terminate a proprietary interest in land in such manner. The effect of any such extinguishment of an interest in the Property would be the transfer of such interest to 156. Such action amounts to expropriation of the respondents’ assets in favour of subordinate or unsecured creditors of 156.

[43] In Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2018 ONCA 253, the Court of Appeal, at paras. 113-114, cited this passage with approval.

[44] On the authority of Israel Estate, 1565397 and Third Eye, I conclude that the Amended Option Agreement created an immediate interest in the Property. The Disclaimer by CIM Bayview, if effective, would amount to an expropriation of Bryton Creek’s proprietary interest in the Property. I am satisfied that the court is not able to authorize CIM Bayview to disclaim and thereby terminate the interest of Bryton Creek in the Property under the Amended Option Agreement pursuant to s. 65.11 of the BIA.

[45] The Disclaimer of the Amended Option Agreement should not be declared valid and effective.

If the Option cannot be disclaimed, can this Court vest the Amended Option Agreement off title and extinguish it by way of a vesting order in furtherance of the NOI proceedings through an insolvency sales process and, if so, should this be done?

[46] CIM Bayview submits that the Amended Option Agreement may still be vested off title and extinguished by way of a vesting order in furtherance of these proceedings and an insolvency sales process.

[47] CIM Bayview relies on Third Eye Capital Corporation v. Resources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508. In Third Eye, the Court of Appeal considered whether a vesting order could be used to extinguish rights under an agreement providing an interest in land in the nature of a gross overriding royalty (“GOR”). The GORs in question were interests in 20% of royalties of diamonds and 1.5% of royalties of other metals and minerals derived from another party’s mining rights. The GORs depended on the development of the mining claims by the holder of those claims. The issues considered by the Court of Appeal included whether the jurisdiction under s. 243 of the BIA to approve a sale proposed by a receiver extends to the implementation of the sale through the use of a vesting order and held that it does.

[48] The Court of Appeal then addressed the appropriateness of the exercise of this jurisdiction held that the framework for analysis to determine if a third party interest should be extinguished requires the court to adopt a “rigorous cascade analysis”. The Court of Appeal explained, at paras. 109-110:

Thus, in considering whether an interest in land should be extinguished, a court should consider: (1) the nature of the interest in land; and (2) whether the interest holder has consented to the vesting out of their interest either in the insolvency process itself or in the agreements reached prior to the insolvency.

If these factors proved to be ambiguous or inconclusive, the court may then engage in a consideration of the equities to determine if a vesting order is appropriate in the particular circumstances of the case. This would include: consideration of the prejudice, if any to the third party interest holder; whether the third party may be adequately compensated for its interests from the proceeds of disposition or sale; whether, based on the evidence of value, there is any equity in the property; and whether the parties acted in good faith. This is not an exhaustive list and there may be other factors that are relevant to the analysis.

[49] The Court of Appeal resolved the issue before it by considering the nature of the interest in land in question. The Court of Appeal regarded the GORs as, in substance, an interest in an inherent feature of the property itself. The Court of Appeal held that the GOR carves out an overriding entitlement to an amount of the property interest held by the owner of the mining claims. The Court of Appeal held that given the nature of the interest and the absence of any agreement that allows for a competing priority, there was no need to resort to the equities and ordered that the application judge erred in extinguishing the interest in the land in the nature of the GORs.

[50] In 1565397, Wilton-Siegel J., after deciding that the receiver could not disclaim the undertaking which created an interest in the land, addressed whether the receiver could “vest out” the undertaking and sell the property free of the interest of the beneficiary of the undertaking. Wilton-Siegel J. regarded this position as no different than the concept of disclaimer, and he did not accept that the court or the receiver has the power to vest out such an interest except, perhaps, in exceptional circumstances in which it is clear that there is no equity in the interest being “vested out”. See 1565397, at para. 64. Wilton-Siegel J. went on to consider whether the court has authority to vest out the interests in the property with a subsequent hearing to be held to value these interests and concluded that the court did not have the power to vest out the respondents’ interests in the property.

[51] As I have held, the nature of the interest of Bryton Creek under the Amended Option Agreement is an interest in the Property. This interest is as strong as, or stronger than, the interest in the land through the GORs in Third Eye. Bryton Creek has not consented to the vesting out of its interest in the insolvency proceeding or in prior agreements. I am satisfied based on the nature of Bryton Creek’s interest in the Property that it would not be appropriate for a court to vest out this interest. This would have the same effect as allowing the Disclaimer to extinguish the Amended Option Agreement, which would amount to expropriation of the Bryton Creek proprietary interest in the Property. The factors at the first stage of the Third Eye framework are not inconclusive or ambiguous. It is not necessary for me to go further and address the equities at the next stage of the analysis.

Is the Option unenforceable because it operates so as to constitute a criminal rate of interest in contravention of s. 347 of the Criminal Code?

[52] CIM Bayview submits that the Amended Option Agreement, a prefunding condition to the grant of credit by Bryton Capital, provides for a purchase price for the Property below market value and thereby provides a collateral benefit to Bryton Capital which is interest within the meaning of that term in the Criminal Code. CIM Bayview submits that if the Amended Option Agreement is permitted to be exercised, Bryton Capital will receive a criminal rate of interest in contravention of s. 347 of the Criminal Code.

[53] In William E. Thomson Associates v. Carpenter, 1989 CanLII 185 (ON CA), the Court of Appeal, citing S. Waddams, The Law of Contracts, 2^nd ed. (1984), at p. 421, noted that an agreement to receive interest at a criminal rate is prohibited by statute and courts have consistently held that such agreements are void and unenforceable.

[54] CIM Bayview submits that the Amended Option Agreement which, it contends, provides for illegal interest, may be severed from the loan agreement and mortgage which, following severance, would no longer contravene s. 347 of the Criminal Code and would be enforceable.

[55] CIM Bayview submits that the proper period over which interest should be calculated for purposes of s. 347 of the Criminal Code is July 31, 2020 to October 31, 2020 because funds were not advanced to CIM Bayview until July 31, 2020 and were due on October 31, 2020.

[56] The NOI Trustee did calculations of the effective annual rate of interest under three scenarios. Under the first scenario, the NOI Trustee calculated the total principal including the initial advance of $20 million (less legal fees and commitment fees) and the advances on July 31 and September 3, 2020. The total principal as calculated by the NOI Trustee under the first scenario is $20,759,050. Under the first scenario, the NOI Trustee used its estimate of the fair market value of the Property, less the option price, and added this difference as interest. The NOI Trustee calculated total interest during the three month period from July 31, 2020 to October 31, 2020, including interest on the initial advance, and calculated the effective annual rate of interest to be several times higher than the criminal rate of interest under the Criminal Code. CIM Bayview relies on the calculations done by the NOI Trustee under the first scenario.

[57] Under the NOI Trustee’s second scenario, no amount is added for interest based on the difference between the NOI Trustee’s estimate of the fair market value of the Property and the option price. The other amounts are the same as in scenario one. Both scenarios include the break fee of $1 million and HST thereon as interest. The NOI Trustee calculates the effective annual rate of interest under the second scenario to be 41%, lower than the criminal rate.

[58] I first address the assumption implicit in the NOI Trustee’s calculation under the first scenario that the difference between the NOI Trustee’s estimate of fair market value of the Property and the option price is interest within the meaning of s. 347 of the Criminal Code.

[59] The meaning of the term “interest” in s. 347 of the Criminal Code is found in s. 347(2):

“interest” means the aggregate of all charges and expenses, whether in the form of a fee, fine, penalty, commission or other similar charge or expense or in any other form, paid or payable for the advancing of credit under an agreement or arrangement, by or on behalf of the person to whom the credit is or is to be advanced, irrespective of the person to whom any such charges and expenses are or are to be paid or payable, but does not include any repayment of credit advanced or any insurance charge, official fee, overdraft charge, required deposit balance or, in the case of a mortgage transaction, any amount required to be paid on account of property taxes;

[60] In Thomson, the Court of Appeal addressed the meaning of interest in s. 347:

The definition of “interest” in s. 347 is even more comprehensive than that of the “cost of a loan” in the Small Loans Act. In my opinion, it is all-inclusive and covers charges of any kind or in any form paid or payable under an agreement or arrangement for the advancing of credit. The definition covers the “aggregate” of all charges and, in this case, includes not only the interest specified in the agreement but also the facility fee and the lawyers’ fees.

The definition of “interest” includes fees and charges of every kind, however they may be described or disguised. Courts cannot permit any erosion of the protection of the public from usurious charges which Parliament manifestly intended to provide.

[61] In Garland v. Consumers Gas Co., [1993] 3 S.C.R. 112, at paras. 24 and 27, the Supreme Court of Canada observed that the scope of the language in s. 347 is “extremely broad” and that “interest” for the purposes of s. 347 is “an extremely comprehensive term, encompassing many types of fixed payments which would not be considered interest proper at common law or under general accounting principles”. The Supreme Court of Canada in Garland held, at para. 27, that it is the substance, and not merely the form, of a charge or expenses which determines whether it is governed by s. 347. In order to constitute “interest” under s. 347, a charge must be paid or payable for the advancing of credit under an agreement or arrangement.

[62] The difference in the value of the Property used to calculate interest is an estimate. Any estimated difference in value, based upon appraisals or other market information, cannot be precisely calculated, and the difference would likely vary over time because the value of the Property would vary over time. The estimated difference in value cannot be said to be a “fixed” payment, a term used in Garland.

[63] I accept that the term “interest” as used in s. 347 of the Criminal Code is extremely comprehensive. However, the term “interest” does not encompass all valuable benefits of any kind that a party may receive under a contract that is a condition of funding a loan. “Interest” is defined to mean “the aggregate of all charges and expenses … paid or payable for the advancing of credit under an agreement or arrangement”. Under the Amended Option Agreement, Bryton Creek has a contractual right to purchase the Property for an agreed upon price. The Amended Option Agreement does not provide for any payment to be made by CIM Bayview. The estimated difference in the value of the Property between the fair market value and the option price as determined by the NOI Trustee, to the extent that the value difference operates to confer a contractual benefit to Bryton Creek under the Amended Option Agreement, is not a charge or expense paid or payable by CIM Bayview to Bryton Capital. It is not interest within the meaning of s. 347 of the Criminal Code.

[64] The NOI Trustee also did a calculation of the effective annual rate of interest under a third scenario. Under this scenario, the effective rate of interest is calculated over a three month period from July 31, 2020 to October 31, 2020, and the calculation of interest is based only on advances made during this three month period on July 31, 2020 and on September 3, 2020. This calculation also assumes that the $1 million break fee and the additional fee paid on September 3, 2020 of $130,000 (for HST on the break fee) qualify as interest for the purpose of s. 347 of the Criminal Code. Under this calculation, the total principal advanced is a net advance of $1,084,050, as opposed to $20,759,050 under scenarios one and two. The total interest over this three month period is $1,307,367 which includes the break fee, HST thereon, and legal fees (but excludes interest of $400,000 charged on the $20 million initial advance). Under these assumptions, the NOI Trustee calculates the effective annual rate of interest to be 482%.

[65] The Bryton Group provided its own calculation of the effective rate on interest. The Bryton Group assumed that the calculation of interest should be over the sixteen month term of the mortgage. The Bryton Group made its calculations based on principal advances of $20,000,000 on June 11, 2019, $1,950,138,77 on July 31, 2020, and $350,316.22 on August 19, 2020, a total of $22,300,454.99. The Bryton Group calculated interest over the sixteen month term and included the legal fees, commitment fee, and property appraisal fee as additional interest. Total interest (excluding the break fee as interest) was calculated in the amount of $2,633,838.80. The Bryton Group calculated the effective annual interest rate on this basis to be 8.86%. The Bryton Group also provided a separate calculation using the same assumptions but treating the break fee and HST thereon as interest. This calculation produced total interest over the sixteen month term of the mortgage of $3,763,838.80. This produced an effective annual interest rate of 12.66%.

[66] A key difference between the parties in respect of s. 347 of the Criminal Code under the NOI Trustee’s third scenario is whether or not the effective annual rate of interest should be calculated based on inclusion of the initial $20,000,000 advance as part of the principal.

[67] In the Criminal Code, the term “criminal rate” means “an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds 60% on the credit advanced under an agreement or arrangement”.

[68] The July 1, 2020 agreements are amendments to what were then existing agreements and arrangements. They are not stand-alone agreements. During the period after the amending agreements were made, CIM Bayview had the benefit of the almost $20 million initially advanced under the loan and mortgage and it was charged interest on this outstanding principal balance during this three month period. The extension of the term of the mortgage to November 1, 2020 was an essential part of the amending agreements. Although the agreements provide for an amendment of the loan and charge effective from July 1, 2020, the amendments are expressly made “subject to and preserving the priorities established on the date of registration of the charge”.

[69] I conclude that the assumption implicit in the NOI Trustee’s second scenario, that the principal amount used to calculate the effective annual rate of interest for purposes of s. 347 of the Criminal Code should include the initial principal advance, is proper. This assumption was accepted by CIM Bayview when it supported the NOI Trustee’s calculations under the first scenario. I do not need to decide whether the calculation should be done over the sixteen month term of the loan, as Bryton contends, or over the three month term from July 31, 2020 to October 31, 2020, as CIM Bayview contends. Under either calculation, the effective annual rate of interest is less than the criminal rate.

Does the Option Agreement violate s. 8(1) of the Interest Act?

[70] CIM Bayview submits that the Amended Option Agreement, a prefunding condition to the grant of credit by Bryton Capital, is a penalty which violates s. 8 of the Interest Act.

[71] Section 8(1) of the Interest Act provides:

No fine, penalty or rate of interest shall be stipulated for, taken, reserved or exacted on any arrears of principal or interest secured by mortgage on real property … that has the effect of increasing the charge on the arrears beyond the rate of interest payable on principal money not in arrears.

[72] In P.A.R.C.E.L. Inc. v. Acquaviva, 2015 ONCA 331, the Court of Appeal for Ontario cited Reliant Capital Ltd. v. Silverdale Development Corp., 2006 BCCA 226, leave to appeal to S.C.C. refused, [2006] S.C.C.A. No. 265 in which the British Columbia Court of Appeal explained that s. 8 is intended to “protect property owners against abusive lending practices, while recognizing that generally speaking parties are entitled to freedom of contract”. The Court of Appeal for Ontario went on to explain the purpose of s. 8, at paras. 51-52:

Thus, s. 8 creates an exception to the general rule that lenders and borrowers are free to negotiate and agree on any rate of interest on a loan. Section 8 prohibits lenders from levying “fine[s], penalt[ies] or rate[s] of interest” on “any arrears of principal or interest” that are “secured by mortgage on real property”. The Reliant Capital court elaborated, at paras. 51-52:

It is not uncommon now in the commercial world for loan contracts, other than mortgage loans, to require a substantially higher interest rate if the loan becomes in arrears. Common sense suggests that this is recognized as a legitimate and effective way to ensure the prompt or timely repayment of the loan.

The prohibition against extra charges on arrears remains in place for loan secured by a mortgage. Moreover, the additional charge on arrears is prohibited in mortgage loans whether that charge is expressed as such, or whether the interest provision simply has “the effect” of increasing the charge in respect of arrears.

Parliament has singled out mortgages on real estate for special treatment, or at least treatment that differs from loans that are not secured on real property. I infer that at least one legislative purpose was to protect the owners of real estate from interest or other charges that would make it impossible for owners to redeem, or to protect their equity. If an owner were already in default of payment under the interest rate charged on monies not in arrears, a still higher rate, or greater charge on the arrears, would render foreclosure all but inevitable. [Emphasis added]

[73] The argument advanced by CIM Bayview does not depend on its assertion that the option price is below the fair market value of the Property. CIM Bayview contends that regardless of the option exercise price, and even if the price was equal to or exceeded fair market value, the Amended Option Agreement would be a penalty because (i) the option is only exercisable after the due date for payment of principal and interest under the Bryton Capital mortgage passes without payment in full and, as such, it is only effective upon default, and (ii) the effect of the Amended Option Agreement is to foreclose the possibility of the mortgagor redeeming the mortgage.

[74] The first question to be addressed is whether the Amended Option Agreement imposes a “fine” or “penalty” or “rate of interest”. If it does not, then s. 8 of the Interest Act is not engaged: P.A.R.C.E.L., at para. 53.

[75] In 1482241 Ontario Limited (Re), 2018 ONSC 5925, Hainey J. held that an overholding fee of $63,900 equivalent to three months interest that was payable if the mortgage was not renewed on or before the maturity date was a penalty that is contrary to s. 8 of the Interest Act. Hainey J., at para. 16, considered the principles that determine what constitutes a penalty and cited the decision of the House of Lords in Dunlop Pneumatic Tyre Co. v. New Garage & Motor Co., [1915] A.C. 79 at para. 3 which held that the essence of a penalty is “a payment of money stipulated interrorem of the offending party”.

[76] The Amended Option Agreement does not impose a monetary payment for breach of the obligations of the CIM Group under the Bryton Capital mortgage. For this reason, the Amended Option Agreement does not impose a fine or penalty. Section 8 of the Interest Act is not engaged.

[77] I also do not agree that the Amended Option Agreement should be regarded as a penalty because it foreclosed the possibility of CIM Bayview redeeming the Bryton Capital mortgage. In Niagara Resorts Inc. v. 1086868 Ontario Ltd. (1999), 24 R.P.R. (3d) 138 (Ont. Ct. Gen. Div.), Greer J. summarized the law when a mortgagee makes a separate contract as a term of a mortgage advance (from the headnote of G. & C. Kreglinger v. New Patagonia Meat & Cold Storage Co., [1914] 3 All E.R. 970 (U.K.H.L.):

There is now no rule in equity which precludes a mortgagee, whether the mortgage be made upon the occasion of a loan or otherwise, from stipulating for any collateral advantage at the time and as a term of the advance, and in the same document as constitutes the security, provided that such collateral advantage is independent of the mortgage, that the mortgagee has not acted unfairly, oppressively, or unconscionably, that the bargain does not restrict or clog the equity of redemption, and that it is not inconsistent with or repugnant to the contractual and equitable right to redeem.

[78] I consider both the Option Agreement before it was amended, and the Amended Option Agreement, to determine whether they provide for a collateral advantage to the Bryton Group which is impermissible.

[79] The evidence of Mr. McWatt on behalf of the Bryton Group is that the Bryton Group wished to purchase and develop the Western parcel of the property, and the purchase could only be completed when the CIM Group was successful in registering a plan of subdivision. The second mortgage in favour of Bryton Capital and the original Option Agreement in favour of Bryton Creek as purchaser were, in my view, ancillary agreements to the First APS because the primary objective of the Bryton Group was to purchase for development the Western parcel. Mr. McWatt’s evidence is that Bryton Capital provided favourable financial terms to assist with the financing of the project and, given Mr. Feng’s troubled history and his group’s inability to complete projects, the Bryton Group required, and the parties agreed, that Bryton Creek shall have an option to purchase the entire Property, exercisable only if the CIM Group failed to complete the sale of the Western parcel under the First APS.

[80] It is true that the effect of the Option Agreement, if the CIM Group failed to complete the sale of the Western parcel under the first APS by July 30, 2020 (which was also the due date for payment of principal and interest under the Bryton Capital mortgage) and the option were exercised, would be that Bryton Creek would have the contractual right to purchase the Property. But the Option Agreement was freely negotiated as part of the package of agreements. It was open to CIM Bayview to reject the conditions required by Bryton Group and to seek another purchaser for the Western parcel or to seek other mortgage financing. The Option Agreement only becomes effective if the CIM Group fails to complete the sale of the Western Parcel under the First APS. The Option Agreement does not impose any monetary payment for breach of the repayment terms of the Bryton Capital mortgage.

[81] The Amended Option Agreement was made on July 1, 2020, when the last date for closing of the First APS was approaching on July 30, 2020. The CIM Group had been unable to register a plan of subdivision which was a condition of closing under the First APS. Under the Option Agreement, if the First APS did not close by July 30, 2020 (and it was not terminated solely by reason of a default by Bryton Creek), Bryton Creek would have the contractual right to exercise the option and, if it did so, the Second APS would be released from escrow and become a firm and binding agreement. In these circumstances, the Amended Option Agreement was made as part of the package of amending agreements which provided for a break fee, extended the term of the second mortgage, and extended the date for the exercise of the option to purchase the Property. These were accommodations made to Cim Bayview at its request and with its agreement.

[82] In this case, the Amending Option Agreement, although a prefunding condition of the mortgage lender, was a separate contract which provided contractual rights to another company, Bryton Creek. Bryton Capital and Bryton Creek did not act unfairly, oppressively, or unconscionably in negotiating the Option Agreement, or the Amended Option Agreement. The Amended Option Agreement is not inconsistent with or repugnant to the contractual and equitable right on the part of CIM Bayview to redeem the Bryton Capital mortgage.

Does the NOI Trustee have statutory authority to apply for orders under s. 95 and s. 96 of the BIA?

[83] On November 27, 2020, following a hearing on November 26, 2020, I made an order that the motion by the Bryton Group in relation to the Amended Option Agreement be heard on December 21, 2020 and I extended the date for a proposal to be filed to December 22, 2020. I wrote in my endorsement that I regarded as a threshold question whether Bryton Creek has a legally valid option to purchase the Property and I explained that if I did not extend the date for CIM Bayview to file a proposal under the BIA, there would be a deemed bankruptcy and CIM Bayview would lose its opportunity to pursue a sales process under the NOI. I also extended the date for Bryton Creek to exercise the option under the Amended Option Agreement and the date for closing of the purchase of the Property pursuant to the Amended Option Agreement.

[84] As part of this Order, I authorized and empowered CIM Bayview to borrow up to $200,000 from the DIP lender to fund the reasonable fees and disbursements of CIM Bayview’s counsel until the return of the motions on December 21, 2020 and of the NOI Trustee and its counsel for activities which are necessary for the NOI Trustee to fulfill its statutory obligations, bearing in mind that the sales process which CIM Bayview had requested be approved at the hearing on November 26, 2020 had not been approved.

[85] On December 3, 2020, I made an order that any motions or cross-motions relating to whether the Amended Option Agreement is valid and whether the stay of proceedings in respect of CIM Bayview should be lifted to allow for the Amended Option Agreement to be enforced shall also be heard on December 21, 2020.

[86] As I have noted, separate motions were brought by CIM Bayview and by the Bryton Group. No motion was brought by the NOI Trustee.

[87] In the NOI Trustee’s Second Report, the NOI Trustee reported that it intended to investigate whether certain transactions carried out by CIM Bayview constitute preferences or transfers at undervalue. No orders were made determining in advance of the hearing on December 21, 2020 what activities the NOI Trustee needed to engage in to fulfill its statutory obligations. This was left to the judgment of the NOI Trustee as an officer of the court.

[88] The NOI Trustee delivered its Third Report pursuant to s. 50.4(7)(b)(ii) of the BIA on December 17, 2020. The stated purpose of the Third Report is to:

a. report to the Court on the outcome of the Trustee’s investigations to date and make recommendations to the Court on whether certain transactions carried out by CIM Bayview constitute preferences and/or transfers at undervalue under sections 95-101 of the BIA, particularly as it relates to (i) the sale or transfer of the Property pursuant to the Amended Option Agreement; and (ii) the payment of the break fee to Bryton Creek; and

b. report to the Court and provide the Trustee’s views on (i) CIM Bayview’s notice to disclaim the Amended Option Agreement under section 65.11 of the BIA, (ii) Bryton Creek’s attempt to exercise the Amended Option Agreement by delivering a notice on December 11, 2020 in light of the stay of proceedings under section 69(1) of the BIA, (iii) the interest rate charged by Bryton Capital on its mortgage, and (iv) other matters.

[89] The NOI Trustee reported on these matters in its Third Report.

[90] In its factum filed on December 18, 2020, the Friday before the motions were to be heard before me on December 21, 2020, the NOI Trustee asks for a declaration that the following transactions are void as against the NOI Trustee: (a) the Amended Option Agreement, as a transfer at undervalue; and (b) the payment by CIM Bayview of the break fee to Bryton Creek on July 31, 2020 and September 3, 2202 as a preference.

[91] Bryton Capital and Bryton Creek oppose the NOI Trustee’s requested relief on the grounds that (i) the Third Report goes well beyond discharge of the NOI Trustee’s statutory obligations for which funding was authorized in my November 27, 2020 order, and (ii) there is no statutory right for the NOI Trustee to bring an application for remedies under s. 95 or s. 96 of the BIA. The Bryton Group also objects to the requests made by the NOI Trustee in its factum at the late stage at which it was served and without a motion having been brought to which the Bryton Group could properly respond.

[92] CIM Bayview filed its notice of intention to make a proposal under s. 50.4 of the BIA and named the NOI Trustee as the trustee who has consented to act as the trustee under the proposal. A trustee named by an insolvent person who files a notice of intention under s. 50.4 has certain statutory obligations under the BIA including reviewing and reporting on the insolvent person’s projected cash-flow statement and sending to creditors a copy of the notice of intention. Under s. 50.4(7)(a) of the BIA, a trustee shall, for the purpose of monitoring the insolvent person’s business and affairs, have access to and examine the insolvent person’s property, including his premises, books and records and financial documents, to the extent necessary to adequately assess the insolvent person’s business and affairs, from the filing of the notice of intention until a proposal is filed or the insolvent person becomes bankrupt. Section 50.5 provides that a trustee under a notice of intention shall advise on and participate in the preparation of the proposal, including negotiations thereon.

[93] Section 50.7(b)(ii) provides that a trustee shall file a report with the court at or before the hearing by the court of any application under subsection (9) and at any other time that the court may order. The hearing before me on December 21, 2020 included an application by CIM Bayview under s. 50.7(9) for an extension of the time for the filing of a proposal. The NOI Trustee’s Third Report is filed pursuant to s. 50.4(7)(b)(ii) of the BIA.

[94] No proposal has been filed with the official receiver in respect of CIM Bayview. CIM Bayview is not bankrupt and its property has not vested in a trustee named in a bankruptcy order or assignment under s. 71 of the BIA. CIM Bayview, as trustee, remains the legal owner of the Property.

[95] Section 95(1) of the BIA provides that a transfer of property (i) made by an insolvent person in favour of a creditor who is dealing at arm’s length with the insolvent person (ii) with a view to giving that creditor a preference over another creditor is void as against the trustee (iii) if it is made, incurred, taken or suffered during the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date of the bankruptcy.

[96] The NOI Trustee relies on s. 95(1) of the BIA in support of its request for an order declaring that the break fee is a preference which is void as against the NOI Trustee.

[97] Section 96(1) of the BIA provides that on application by the trustee, a court may declare that a transfer at undervalue is void as against the trustee if (a) the transfer was for no consideration to the debtor or the consideration received by the debtor was conspicuously less than the fair market value given by the debtor; (b) the transfer occurred within one year before the date of the initial bankruptcy event; (c) the debtor was insolvent at the time of the transfer or was rendered insolvent by it; and (d) the debtor intended to defraud, defeat or delay a creditor. Section 96(2) provides that in making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor, and the values on which the court makes any finding under this section are, in the absence of evidence to the contrary, the values stated by the trustee.

[98] The NOI Trustee relies on s. 96(1) of the BIA in support of its request for an order declaring that the Amended Option Agreement and the amended APS providing for an increased purchase price of $41.72 million (and which removed any obligation of Bryton Creek to reimburse CIM Bayview for development costs) are void as against the NOI Trustee as a transfer at undervalue.

[99] The NOI Trustee submits that even though no proposal has been made under Division I of Part III of the BIA, I should find that here, where CIM Bayview has filed its NOI under s. 50.4 of the BIA, sections 95 and 96 statutorily authorize the NOI Trustee to seek remedies thereunder. I disagree.

[100] The statutory powers and obligations of a trustee under the BIA differ depending on whether the trustee is named by the insolvent person in a notice of intention filed under s. 50.4, the trustee is one with whom a proposal is filed under s. 50(2) or a trustee named in a notice of intention who files a proposal with the official receiver, or the trustee is the trustee of the estate of a bankrupt in whom the property of the bankrupt vests under s. 71.

[101] Section 101.1(1) of the BIA provides that sections 95 to 101 apply, with any modifications that the circumstances require, to a proposal made under Division I of Part III unless the proposal provides otherwise. It does not provide that sections 95 to 101 apply before a proposal is made.

[102] The NOI Trustee submits that notwithstanding the language of s. 101.1(1), I should read s. 101.1, where it provides that sections 95 to 101 apply (with modifications that the circumstances require) to a proposal, as including within the meaning of “proposal” a notice of intention to make a proposal.

[103] Parliament differentiated in the BIA between an insolvent person who files a notice of intention to make a proposal under s. 50.4(1) and a person (who may be an insolvent person) who makes a proposal under s. 50(1). This is clear from s. 101.1(2) which provides that for the purposes of subsection (1), a reference in sections 95 to 101 to “insolvent person” or “debtor” is to be read as a reference to “debtor in respect of whom the proposal is filed”. Section 50.4 of the BIA provides that an insolvent person may file a notice of intention to make a proposal, but the reference to “insolvent person” in s. 95 must be read as a reference to “debtor in respect of whom the proposal is filed”. CIM Bayview is not such a debtor.

[104] Given the provisions of the BIA to which I have referred, and the fact that no proposal has been filed in respect of CIM Bayview, the NOI Trustee does not have statutory authority to commence an application under s. 96 for a declaration that the Amended Option Agreement is a transfer at undervalue which is void as against the NOI Trustee or to bring a motion or commence an application to seek an order that the payment of the break fee was made with a view to giving Bryton Creek a preference and is void as against the NOI Trustee. In any event, the NOI Trustee did not do so and only asked for this relief in its factum at a time when the Bryton Group was not able to effectively respond.

[105] If a proposal is filed in respect of CIM Bayview, or if CIM Bayview is deemed to have made an assignment of all its property for the general benefit of its creditors, the trustee under the proposal or the trustee in bankruptcy would then have statutory authority to seek orders under s. 95 and s. 96 of the BIA.

[106] Because of my conclusions that the NOI Trustee lacks statutory authority to seek orders under s. 95 and s. 96 of the BIA that the break fee and the Amended Option Agreement are void as against the NOI Trustee as a preference and a transfer at undervalue, respectively, and that no motion or application seeking such relief was properly brought, it is neither necessary nor appropriate for me to address the NOI Trustee’s substantive submissions.

Is Bryton Creek is stayed from exercising the Amended Option Agreement?

[107] Pursuant to section 69(1) of the BIA, upon filing the NOI on October 29, 2020, CIM Bayview became automatically subject to a stay of proceedings. Under the terms of section 69(1), all actions against CIM Bayview or its property by any creditor are stayed until the filing of a proposal or the bankruptcy of CIM Bayview. The time for CIM Bayview to file a proposal was extended to February 5, 2021 and, as a result, any actions taken by a creditor against it or its property are stayed.

[108] The delivery by Bryton Creek on December 11, 2020 of an option exercise notice was done while CIM Bayview was subject to a stay of proceedings. This notice was not effective for Bryton Creek to exercise the option to purchase the Property in the Amended Option Agreement.

Is it equitable for an order to be made lifting the stay under s. 69(1)?

[109] Section 69.4 of the BIA provides that a creditor who is affected by the operation of sections 69 to 69.31 may apply to the court for a declaration that the sections no longer operate in respect of that creditor, and the court may make such a declaration subject to any qualifications the court considers proper, if it is satisfied (a) that the creditor is likely to be materially prejudiced by the continued operation of those sections; or (b) that it is equitable on other grounds to make such a declaration.

[110] I have decided that the challenges by CIM Bayview and by the NOI Trustee to the validity and enforceability of the Amended Option Agreement fail. I am satisfied that the nature of the interest of Bryton Creek under the Amended Option Agreement is such that it is equitable for a declaration to be granted that s. 69(1) of the BIA no longer operates in in respect of Bryton Creek and its contractual rights under the Amended Option Agreement.

Other issues raised by Bryton Capital and Bryton Creek

[111] In support of their motion, Bryton Capital and Bryton Creek rely on a number of other grounds. These included its assertions that (i) CIM Bayview, as a bare trustee, lacks status to bring its motion; (ii) the NOI proceeding is an abuse of process because it was prohibited by the Mareva Injunction, and (iii) the NOI Trustee is not impartial and is aligned with CIM Bayview. Because of the decisions I have reached on the issues addressed in this endorsement, it is not necessary for me to decide the questions raised by the other grounds upon which Bryton Capital and Bryton Creek rely.

Sealing of Confidential Information

[112] The NOI Trustee requests that Confidential Appendix A to the Third Report which contains the NOI Trustee’s opinion on the fair market value of the Property be sealed because it contains commercially sensitive confidential information that would interfere with a sale process or future sale process and harm stakeholders if made public.

[113] CIM Bayview requests an order that the confidential value information containing sensitive commercial information, including appraisals of and offers to purchase the Property should be subject to a sealing order. The NOI Trustee supports this request.

[114] I am satisfied that the test for a sealing order in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 is satisfied, and I grant the requested order which remains in effect until after the Property has been sold.

Disposition

[115] I make the following orders:

a. An order under s. 65.11 of the BIA that the Amended Option Agreement is not to be disclaimed or resiliated.

b. An order that s. 69(1) of the BIA no longer operates in respect of Bryton Creek and its contractual rights under the Amended Option Agreement.

c. A declaration that Bryton Creek is at liberty to exercise its rights under the Amended Option Agreement and varying the Order of Koehnen J. dated October 13, 2020 to the extent necessary for this purpose.

d. An order sealing the documents described as “Confidential Value Information” provided in CIM Bayview’s supplementary brief of confidential exhibits and Confidential Appendix A to the Third Report of the NOI Trustee until the Property has been sold.

e. Other than as otherwise ordered, the motion of CIM Bayview is dismissed.

[116] If the parties are unable to resolve costs, Bryton Capital and Bryton Creek may make written submissions not exceeding 5 pages (excluding costs outline) within 15 days. Any parties against whom costs are sought may make responding submission, (also not exceeding to 5 pages, excluding costs outline) within 15 days thereafter. Bryton Capital and Bryton Creek may make brief reply submissions (not exceeding 3 pages) within 5 days thereafter.

[117] If the parties are unable to settle the formal order, I may be spoken to.

Cavanagh J.

Date: January 12, 2021

[^1]: For ease of reference and to avoid confusion, I refer to this entity as “Bryton Creek”.