Bankruptcy and Insolvency Law - SCJ

SusGlobal Energy Belleville Ltd. brought a motion to reopen a prior motion seeking leave to sue the receiver (BDO) for damages, and to introduce fresh evidence.

The court dismissed the motion, finding that SusGlobal failed to meet the test for introducing fresh evidence as the evidence was available at the original hearing and would not have changed the outcome.

The court also found no miscarriage of justice in refusing to relax the reasonable diligence rule.

This motion addressed whether a joint consumer proposal is annulled when one of the debtors files for bankruptcy.

Nickolas James Crepeau and Sarah Jane Crepeau filed a joint consumer proposal.

Mrs. Crepeau subsequently faced financial difficulties and intended to file for bankruptcy.

The Administrator and Mr. Crepeau sought to continue the proposal for Mr. Crepeau.

The Office of the Superintendent of Bankruptcy (OSB) argued that Mrs. Crepeau's bankruptcy would automatically annul the entire joint proposal.

The court ruled that an assignment in bankruptcy by any debtor in a joint consumer proposal annuls the entire proposal, regardless of the other debtor's ability or desire to continue payments.

The motion brought by the Administrator and Mr. Crepeau was dismissed.

The applicant sought to clarify that an outstanding judgment of $63,538.56, arising from a global settlement in a divorce proceeding, constituted lump sum spousal support, thereby surviving the respondent's assignment in personal bankruptcy.

The respondent sought to terminate garnishment proceedings, asserting the debt was an equalization payment extinguished by bankruptcy.

The court found the outstanding amount to be lump sum spousal support, citing the applicant's entitlement to support in a lengthy marriage, the settlement's intent, the respondent's non-disclosure regarding mortgage refinancing, and the protective intent of bankruptcy legislation for support obligations.

The court dismissed the respondent's attempt to challenge the consent judgment and awarded costs to the applicant.

The creditors sought to lift a stay of proceedings in bankruptcy to continue a civil action against the bankrupt, Thomas G. Assaly, and to annul his bankruptcy.

The court found that the bankrupt had engaged in a pattern of filings (US Chapter 11, consumer proposal, then bankruptcy) to avoid litigation.

While the consumer proposal ceased to exist upon bankruptcy, the court declined to annul the bankruptcy, finding that the bankrupt's liabilities exceeded his assets, distinguishing it from cases where annulment was granted due to solvency or abuse of process.

The court lifted the stay of proceedings to allow the quantification of provable claims for the purpose of filing a proof of claim in bankruptcy, and also allowed non-monetary claims (declaration of vexatious litigant, and an order restricting future proceedings) to proceed as they are not provable in bankruptcy.

The court also ordered the bankrupt to disclose all worldwide creditors and for the trustee to investigate certain assets.

The Debtor appealed a Master's order lifting a stay of proceedings under the Bankruptcy and Insolvency Act (BIA), which had arisen upon the Debtor's filing of a proposal.

The Master found that the Respondent creditor would be materially prejudiced by the continued stay and that it was equitable to lift it, allowing the Respondent's $1 million claim to be quantified in a civil action rather than through the summary procedure under s. 135 of the BIA.

The appeal court upheld the Master's decision, finding no error in concluding that the Respondent had established some chance of success in its civil action and that the civil action was the appropriate forum for determining the complex, credibility-dependent claim against both the Debtor and a co-defendant, thereby avoiding inconsistent findings and prejudice.

The plaintiffs (Ridels) brought a motion for summary judgment against the defendant (Goldberg), relying on findings from a prior action against e3m Investments Inc. and Mr. Cassin.

Goldberg brought a cross-motion for summary judgment, arguing the Ridels' claim was statute-barred by the Limitations Act, 2002.

The court dismissed the Ridels' motion, finding that Justice Pepall's prior findings against e3m did not translate into personal liability for Goldberg, and that Goldberg was not a "privy" to e3m in a way that would bind him.

The court granted Goldberg's motion, finding that the Ridels' action was commenced outside the two-year limitation period, as both the Ridels and e3m (as predecessor) had discovered the claim much earlier than the action's commencement date.

The court rejected the argument that the limitation period was suspended pending the outcome of an appeal in the prior action.

The plaintiff, a shell company representing substantial commercial creditors, conceded it lacked sufficient assets to cover the defendants' costs if unsuccessful in three complex commercial actions seeking over $150 million in damages.

The plaintiff also failed to demonstrate impecuniosity.

The defendants sought over $10 million in security for costs.

The court, finding the merits of the underlying claims neutral for the purpose of the motion, determined it was fair and just for the plaintiff to post security.

An initial aggregate sum of $1.6 million was ordered to be paid into court, staged across the three actions, with further amounts to be determined later.

The applicant landlord sought a declaration that harmonized sales tax (HST) must be added to settlement payments made by the respondent under a settlement agreement.

The agreement, negotiated during Companies' Creditors Arrangement Act (CCAA) proceedings, quantified the landlord's claim after the tenant disclaimed a lease.

The court found the settlement agreement ambiguous regarding the obligation to pay HST.

Applying principles of contractual interpretation, including objective factual matrix, commercial common practice in real estate, and the parties' post-execution conduct, the court determined that the settlement payments were exclusive of HST, and the respondent was required to pay HST in addition.

The Trustee of WF Canada Ltd. applied under s. 96 of the Bankruptcy and Insolvency Act (BIA) to recover $411,000 from Rocky Racca and Jessica Agostino, alleging transfers at undervalue.

The application proceeded as a trial of an issue.

The court found that Racca received $389,000 in transfers at undervalue from WF Canada Ltd. after Liquid Capital became a creditor, and ordered him to repay this amount to the estate.

The court dismissed the application against Agostino, finding she was neither a party nor privy to the transfers, as she was not involved in the loans or the operation of the joint account into which the funds were deposited, and received no benefit.

This corrigendum amends a previous decision regarding the proposal of Innovative Coating Systems Inc. The original decision did not approve the proposal but granted leave for the debtor to file an amended proposal within ten days, specifically removing a deemed release clause.

It also adds a sentence concerning the trustee's costs.

The City of Sault Ste.

Marie moved for immediate payment of Essar Steel Algoma Inc.'s outstanding and future post-filing property tax obligations, totaling approximately $10.8 million post-filing.

The court considered Algoma's precarious financial position, volatility of steel prices, and upcoming capital expenditures, including a significant blast furnace stove replacement.

While dismissing the City's motion for immediate payment of arrears, the court ordered Algoma to pay $350,000 per month for ongoing property taxes, acknowledging the City's difficulties and Algoma's assessment appeal.

The applicant, Nicole Jean St. Dennis, sought a declaration that her student loan debt from her first period of post-secondary study was discharged by her assignment in bankruptcy.

The case required an interpretation of s. 178(1)(g)(ii) of the Bankruptcy and Insolvency Act, specifically determining when an individual "ceased to be a full- or part-time student" for the purpose of the seven-year delay period for student loan discharge.

The applicant advocated for a "multiple date approach," where the seven-year period runs from the cessation of studies related to the specific loan.

The respondent argued for a "single date approach," where the period runs from the last date of any studies.

The court adopted the multiple date approach, finding that the applicant ceased to be a student for the purposes of her student loans in October 2004, thus meeting the seven-year delay requirement before her December 2011 bankruptcy.

The application was granted, and the student loan debt was discharged.

The Liquidator of Maple Bank GmbH's Canadian business sought an interim distribution of surplus funds to the German Insolvency Administrator (GIA) during winding-up proceedings.

The motion was unopposed.

The court approved the interim distribution, finding it appropriate given that adequate reserves were established to cover all proven and potential claims, ensuring no prejudice to Canadian creditors.

The court emphasized a broad, flexible interpretation of insolvency legislation and the policy of assisting foreign insolvency proceedings.

The Attorney General of Ontario (AGO) objected to fee requests from Emmanuel Village Residence Inc. (EVR) and its counsel, and BDO Canada Inc. (the Receiver) and its counsel, for work performed in a receivership and forfeiture proceeding.

The AGO argued that an administration charge should cap fees, that section 5 of the Civil Remedies Act, 2001 (CRA) applied requiring proof of no other funding source, and that hourly rates were too high.

The court dismissed the AGO's objections, finding that the administration charge was not a cap, section 5 of the CRA did not apply, and the hourly rates were reasonable and previously approved.

The court approved the fees and disbursements, emphasizing the complexity caused by the joinder of receivership and forfeiture proceedings.

The moving parties, creditors of a bankrupt company (Acorn), sought to set aside the registrar's dismissal for delay of three actions originally brought by Acorn against the Crown.

The actions were dismissed while subject to an automatic stay due to Acorn's bankruptcy.

The court found that the registrar lacked jurisdiction to dismiss the actions while they were stayed.

Alternatively, applying the Reid factors, the court found the explanation for delay adequate, the motion brought promptly given the circumstances, and no uncompensable prejudice to the Crown, whose own actions contributed to any alleged prejudice.

The dismissals were set aside.

The Monitor of Target Canada Co. and its affiliates, undergoing CCAA proceedings, sought advice and directions from the court regarding the treatment of several late-filed claims.

The court applied the four-part test from *Blue Range Resource Corp. Re*, considering inadvertence, good faith, and prejudice to other creditors.

The court found that five claimants (Fruits & Passion, Lou Pharma, Kulwinder Kaur Rai, Capital Brands Inc., and Mohammad Alam) satisfied the test, allowing their claims against Target Canada Co. However, claims against Target Corporation and Target Brands were barred due to the prejudice caused by disturbing the sanctioned plan and releases, which Target Corporation relied upon for its significant contributions.

The court also provided directions on distributions for allowed late claims and a framework for addressing future unknown late claims, emphasizing the finality of the sanctioned plan.

The defendant moved to set aside a judgment granted without notice, which included a declaration under s. 178 of the Bankruptcy and Insolvency Act that the debt survived bankruptcy due to fraud.

The court found that the plaintiff had no right to seek judgment without notice, as the defendant had not been noted in default, and there were significant credibility issues regarding service and the underlying fraud allegation.

The court emphasized that s. 178 declarations should not be made on default judgment motions or without a proper assessment of the fraud claim.

Applying the test for setting aside default judgments, the court found the defendant moved promptly, had a plausible excuse for default (disputed service), and an arguable defence on the merits (credibility issues regarding fraud and limitations).

The judgment was set aside due to non-disclosure, failure to give notice, and improper use of s. 178 BIA.

The creditors moved to set aside the automatic discharge of the bankrupt, Arash Nashid, which occurred despite their informal notice of opposition to the trustee.

The court found jurisdiction to set aside the discharge where there is injustice or an appearance of injustice.

Considering factors such as the timeliness of the creditors' informal notice, the trustee's prejudicial actions, the bankrupt's awareness of the opposition, the lawyer's inadvertence, lack of prejudice to the bankrupt, and prejudice to the creditors, the court granted the motion.

The automatic discharge was set aside, and the creditors were granted an extension to formally file their notice of opposition.

The bankrupts moved for an order to schedule their discharge hearing, notwithstanding an ongoing fraudulent conveyance action by the Royal Bank of Canada (RBC) against them.

The court dismissed the motion, exercising its discretion to adjourn the discharge hearing.

The court found that the outcome of the fraudulent conveyance action could bear on the discharge hearing, there was no evidence of delay by RBC, and the interests of all parties, including creditors and the integrity of the system, needed to be balanced.

The bankrupts were granted leave to reapply if delays or other factors changed the circumstances.

This case involved a multi-day trial addressing several family law issues following the parties' separation in 2008.

The applicant sought ongoing and retroactive child support, s. 7 expenses, an equalization payment based on the respondent's pension, a trust interest in a property, and pre-trial costs.

The court dismissed the applicant's claims for a trust interest, pre-June 2013 costs, and pension equalization, primarily due to the respondent's parents not being parties to the trust claim, prior cost orders, and the applicant's bankruptcy affecting the equalization claim.

The court awarded retroactive child support from December 2011, calculated based on the respondent's varied income, including RRSP withdrawals and imputed farming income.

Ongoing child support and contributions to s. 7 expenses were also ordered, with an offset calculation applied after one child's custody changed.