Bankruptcy and Insolvency Law - SCJ

The accused was charged with fraud and BIA offences arising from her voluntary assignment in bankruptcy.

During her trial, she brought an application to exclude statements she made to the Official Receiver during a mandatory examination under s. 161 of the BIA, arguing the Official Receiver was a 'person in authority' and the statements were involuntary.

The court held that the Official Receiver was not a person in authority, as she had no influence or control over any criminal prosecution and was merely fulfilling her regulatory duties.

Furthermore, even if she were a person in authority, the statements were voluntary as there were no threats, promises, or oppressive conduct.

The application to exclude the evidence was dismissed.

The moving parties (third parties in the main action) sought costs against the responding party (defendant/third party plaintiff) after the responding party discontinued the third party claim.

During the litigation, the responding party had made an assignment in bankruptcy.

The trustee in bankruptcy subsequently sold and assigned the third party claim back to the responding party, who then filed a Notice of Discontinuance.

The court held that because no judgment or costs order was made prior to the bankruptcy, the costs were not a provable debt in bankruptcy.

The court further held that the assignment of the claim by the trustee did not change the character of the matter or revive the costs liability.

The motion for costs was dismissed.

During the trial, the plaintiff brought a motion for leave to amend her Statement of Claim after the trial judge noted her pleadings contained irreconcilable theories regarding her interest in two corporations.

The plaintiff sought to amend her claim to assert unjust enrichment and constructive trust arising from a joint family venture with the individual defendant, while abandoning claims of legal ownership.

The court granted leave to amend the pleadings to advance the unjust enrichment and constructive trust claims, finding that such claims may not have vested in her trustee in bankruptcy if they crystallized after her discharge.

However, the court denied leave to amend claims asserting legal or beneficial ownership, as those would have vested in the trustee upon her voluntary assignment in bankruptcy.

The appellant appealed a Notice of Disallowance issued by the trustee in bankruptcy of MF Global Canada Co. The appellant claimed the net positive balance of his futures account either on the day before the bankruptcy or on the date of bankruptcy.

The court dismissed the motion, finding that the decline in the account's value prior to bankruptcy was due to market forces, not a breach by the bankrupt.

Furthermore, the appellant had ignored margin calls exceeding his account balance, and the trustee was entitled to set off the appellant's debt against any amount owed.

Following a trial where the defendant was found liable for assaulting the plaintiff, the court determined costs and a request for a declaration under the Bankruptcy and Insolvency Act.

The court awarded substantial indemnity costs to the plaintiffs pursuant to s. 4(6) of the Victims' Bill of Rights, 1995, finding no reason it would not be in the interests of justice.

The court also granted a declaration that the damages and costs awarded to the assaulted plaintiff survive any future bankruptcy discharge, as the assault constituted bodily harm intentionally inflicted.

The borrowers brought a motion to set aside a consent order terminating a receivership, alleging that the Bank and the court-appointed Receiver made misrepresentations during settlement negotiations.

The Bank and the Receiver brought a motion for summary judgment to dismiss the borrowers' subsequent action for damages.

The court found no evidence of misrepresentation, noting that the borrowers had independent legal advice, received full disclosure, and signed multiple full and final releases.

The court dismissed the motion to set aside the consent order, denied retroactive leave to sue the Receiver, and granted summary judgment dismissing the borrowers' action on the basis of res judicata.

The Administrator of a consumer proposal brought a motion to approve legal fees incurred for registering a restrictive covenant against the debtor's property as security for the proposal.

The Office of the Superintendent of Bankruptcy opposed the fees, arguing they were not prescribed by Rule 129 of the Bankruptcy and Insolvency Act.

The court dismissed the motion, holding that the fees prescribed in Rule 129 are exhaustive for Division II consumer proposals, and any administration requiring additional fees must be pursued as a Division I proposal.

The applicants in CCAA proceedings sought an extension of the Stay Period to April 15, 2016, as they prepared an Amended and Restated Plan of Compromise.

The court found the parties were working in good faith and with due diligence, and granted the extension.

The court also approved an agreement to lift the Co-Tenancy Stay on acceptable terms and extended the Notice of Objection Bar Date.

In the context of CCAA restructuring proceedings, the applicants sought approval of a grievance claims procedure to resolve approximately 3,000 outstanding grievances.

USW Local 2251 opposed the motion, arguing that the CCAA stay did not apply to grievances, that imposing a new procedure impermissibly amended the collective agreement, and that staying the grievance process violated section 2(d) of the Charter.

The court granted the motion, holding that the CCAA permits staying grievance procedures and imposing a claims process, which does not constitute an amendment to the collective agreement.

The court also found no Charter violation and held that under the doctrine of paramountcy, the CCAA stay provisions prevail over the grievance arbitration requirements in the provincial Labour Relations Act.

The applicant, Zochem Inc., applied under Part IV of the CCAA for recognition of First Day Orders made by the U.S. Bankruptcy Court in Chapter 11 proceedings.

The court found that the U.S. proceeding was a foreign main proceeding, as the debtors were managed as an integrated group from the United States, despite Zochem's operations being in Ontario.

The court also recognized the interim financing order and granted a super-priority charge for the DIP lender, noting that the interim advance was necessary to meet payroll and that the directors must act in the best interests of the Canadian corporation.

This is a scheduling endorsement in a complex bankruptcy and receivership proceeding.

The court established timetables on consent for upcoming motions to strike in related Small Claims Court matters, a motion to intervene by a law firm, and an application to appeal an arbitration award.

The court also directed the filing of arbitration transcripts and encouraged the parties to agree on terms for turning over certain rent-to-own properties.

The plaintiff, an unpaid trade creditor on a townhouse development project, brought an action against the director of the corporate owner for breach of trust under the Construction Lien Act.

The corporate owner had sold all units but failed to pay the plaintiff in full, and the director subsequently declared personal bankruptcy.

The court dismissed the action, finding that the corporate owner was not a 'contractor' under section 8 of the Act, and therefore no trust funds existed.

Consequently, the director could not be held personally liable under section 13, and there was no evidence of dishonesty to prevent the release of claims through his bankruptcy discharge.

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.

The debtors filed Notices of Intention to Make a Proposal under the Bankruptcy and Insolvency Act.

They brought a motion seeking administrative consolidation of their proceedings, approval of DIP financing with a super priority charge, administration and D&O charges, approval of a stalking horse sale process, and an extension of time to file a proposal.

The court granted all the requested relief, finding that the DIP financing and charges were necessary for the debtors to continue operations and that the stalking horse sale process was fair, transparent, and the best alternative to maximize value for stakeholders.

The moving party landlord brought a motion within a receivership proceeding seeking an order for the court-appointed receiver to pay $319,016 in occupation rent for the use of a marina.

The court examined whether the receiver's actions, such as changing locks and keeping assets on site, constituted occupation that deprived the landlord of use.

The court found that the receiver did not occupy the premises in the sense necessary to attract liability, noting that the landlord was given a key, found a new tenant, and insisted that third-party boats remain on site.

The motion was dismissed.

In the context of CCAA proceedings, the moving party sought an order requiring the Monitor to disclose all information and documents it considered when reviewing proofs of claim submitted by another creditor group.

The moving party intended to use this information at a claims hearing to argue that the claims officer should apply the same standard of proof used by the Monitor.

The court dismissed the motion, finding that the roles of the Monitor and the claims officer under the claims procedure order were fundamentally different, and the request constituted an impermissible collateral attack on that order.

Furthermore, the court noted that comparing claims would result in an unnecessary trial within a trial and risk disclosing confidential lending practices.

The respondent mother requested an addendum to a costs order to stipulate that the $54,700 costs award is enforceable under the Family Responsibility and Support Arrears Enforcement Act, 1996.

The applicant father opposed the request, arguing that his recent bankruptcy filing extinguished the debt.

The court rejected the father's argument, noting that support debts are not extinguished by bankruptcy and that the costs order related to a trial where spousal and child support were key issues.

The court granted the request, ordering the costs to be treated as a support order enforceable under the Act.

The parties sought clarification on the settlement of an order following a judgment declaring a bulk sale void for non-compliance with the Bulk Sales Act.

The applicant trustee argued that the respondent purchaser's liability to account for the 'value of the stock in bulk' under s. 16(2) of the Act included the HST paid on the transaction.

The court applied the modern principle of statutory interpretation and held that the plain and ordinary meaning of 'value of the stock in bulk' does not include value-added taxes like HST.

The respondent's maximum liability was therefore capped at the purchase price excluding HST, less amounts paid to secured creditors.

The moving parties, construction lien creditors of the Mady Group of Companies, brought a motion seeking to lift a CCAA stay of proceedings, amend their statements of claim, and obtain a Mareva injunction against several individuals and corporations.

The court dismissed the motion, finding that the moving parties failed to make full and fair disclosure, failed to establish a strong prima facie case of fraud or breach of trust, and provided no evidence of a risk of dissipation or removal of assets from the jurisdiction.

The defendant lawyer moved for summary judgment to dismiss a professional negligence action.

The plaintiff alleged the defendant was negligent in failing to appeal the disallowance of its secured claim in a bankruptcy.

The court assumed negligence but found the plaintiff could not prove causation or damages, as it failed to adduce evidence that the bankrupt had any rights in the funds over which the plaintiff claimed a security interest.

Without the bankrupt having rights in the collateral, the security interest could not attach under the Personal Property Security Act.

The action was dismissed with costs awarded to the defendant.