Walter Kravchuk

In a CCAA proceeding, Synaptive Medical Inc. underwent a reverse vesting transaction where its unwanted assets and liabilities, including the employment contracts of 48 terminated employees, were transferred to ResidualCo.

Synaptive and ResidualCo sought a declaration that ResidualCo is a 'former employer' under the Wage Earner Protection Program Act (WEPPA) so the terminated employees could access WEPPA benefits.

The Attorney General opposed, arguing the employees never provided services to ResidualCo.

The court granted the declaration, finding that under the common employer doctrine and the purpose of WEPPA, ResidualCo qualifies as a former employer, and the court has jurisdiction to make this determination for both CCAA and bankruptcy purposes.

The decision addresses motions regarding the appointment of representative counsel for current and former employees and retirees of Hudson’s Bay Company ULC and related entities in ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Court declined to appoint any of the nominated law firms as representative counsel at this stage, instead appointing the Honourable Herman Wilton-Siegel as an independent third party to evaluate proposals and make a recommendation.

The Court also approved amendments to the Sale and Investment Solicitation Process (SISP) to remove the company’s art and artifact collection from the SISP and to appoint Heffel Gallery Limited to conduct a separate auction for the collection, subject to further court approval of procedures.

The reasons review the legal framework for appointing representative counsel and the importance of balancing stakeholder interests in complex insolvency proceedings.

The moving party brought a motion for leave to appeal an earlier order.

The Divisional Court dismissed the motion for leave to appeal and awarded costs to the responding party in the amount of $5,000.

This motion concerned the interpretation of the Wage Earner Protection Program Act (WEPPA) regarding Service Canada's subrogation rights to recover payments made to employees from an insolvent employer's distribution.

Metroland Media Group Ltd. made a proposal to its creditors, entitling unsecured creditors to a 17% distribution.

Service Canada had approved payments to former non-unionized employees under WEPPA for unpaid severance pay.

The issue was whether Service Canada was entitled to recover these payments on a dollar-for-dollar basis from the employees' distribution or only a pro-rata share (17 cents on the dollar) as an unsecured creditor.

The court held that Service Canada is entitled to a dollar-for-dollar recovery, up to the amount of the WEPP payment, from the employee's distribution before the employee receives any balance.

Campbell Drug Stores Ltd. brought a motion to redesignate the Crown's discovery representative, arguing the initially designated representative lacked personal knowledge of key events related to an alleged second contract for surgical gowns.

The Attorney General of Canada opposed, asserting the Crown's primary role in designation and that the representative was not "demonstrably unsatisfactory." The court granted Campbell's motion, redesignating Jeffrey Smallwood as the Crown's representative.

The court found that a fair and meaningful discovery required examining an individual with personal knowledge, especially where credibility was central to the dispute over contract formation, and rejected the argument that the motion was premature.

The Attorney General of Canada applied for a winding-up order for the Canadian business of Silicon Valley Bank (SVB) and the appointment of PricewaterhouseCoopers Inc. as liquidator, pursuant to the Bank Act and the Winding-Up and Restructuring Act.

SVB, a U.S. bank with a Canadian branch, became insolvent in the U.S., leading to its assets being transferred to a bridge bank.

The Superintendent of Financial Institutions had taken control of SVB's Canadian assets.

The court found it just and equitable to grant the winding-up order, noting SVB's insolvency and the need to protect Canadian creditors and stakeholders, as the U.S. bridge bank was not authorized to operate in Canada.

The order provides broad powers to the liquidator while ensuring court supervision and protection for stakeholders.

The defendant appealed an Associate Justice's order dismissing his motion for security for costs.

The defendant argued the Associate Justice erred by not drawing an adverse inference from the plaintiff's failure to respond to a Rule 56.02 demand and by misapprehending evidence regarding the plaintiff's assets and residency.

The Superior Court dismissed the appeal, finding no palpable and overriding error in the Associate Justice's conclusion that the defendant failed to meet the initial burden under Rule 56.01.

The costs award of $8,000 to the plaintiff was also upheld.

The defendant brought a motion for security for costs under Rule 56.01(1) of the Rules of Civil Procedure, arguing the plaintiff corporation had insufficient assets in Ontario, resided outside Ontario, and brought a frivolous action.

The court dismissed the motion, finding the defendant failed to meet the initial onus of showing a good reason to believe the plaintiff lacked sufficient assets or resided outside the province.

The court also found the action was not obviously frivolous, as there was documentary evidence corroborating the plaintiff's claim of an oral profit-splitting agreement.

The appellants appealed a trial judgment enforcing a loan agreement and personal guarantees, arguing they were entitled to a set-off due to the respondent's breach of related investment and commercial agreements.

The appellants sought to introduce fresh evidence of the respondent's sales to prove a breach of the commercial agreement.

The Court of Appeal dismissed the motion to introduce fresh evidence, finding it did not meet the Palmer test.

The court also dismissed the appeal, finding no error in the trial judge's conclusion that the investment agreement had not been orally amended and that the commercial agreement was not a live issue at trial.

The plaintiffs moved for answers to undertakings and questions refused during the examination for discovery of the defendants.

The action concerned a claim for repayment of a loan and monies held for safekeeping.

The court applied the relevance test under Rule 31.06 and proportionality principles under Rules 29.2.03 and 1.04(1.1) of the Rules of Civil Procedure.

The Master ordered the defendants to answer most of the outstanding questions and produce financial documents, including bank statements and tax returns, for specified periods, finding them relevant to the pleadings and credibility.

The motion was substantially successful for the plaintiffs, who were awarded costs.

Honey Bee (Hong Kong) Limited sued VitaSound Audio Inc. and its principals for repayment of a US$500,000 loan and personal guarantees, plus default interest.

VitaSound counterclaimed, alleging Honey Bee breached an investment agreement by failing to supply audio devices and sought equitable set-off for an alleged delivery shortfall.

The court found no enforceable oral amendment to the investment agreement, which required written modifications.

It concluded that VitaSound, not Honey Bee, breached the investment agreement by declining to accept specified PAE-300 units.

Consequently, Honey Bee did not breach its obligations by ceasing supply after VitaSound's default on the loan.

The court dismissed VitaSound's counterclaim and found that equitable set-off was not applicable due to the lack of a clear connection between the claims and VitaSound's prior default.

Judgment was issued in favour of Honey Bee for the loan principal and default interest.

The appellants appealed a Small Claims Court judgment ordering them to pay $16,166.85 plus 24% interest for unpaid medical billing invoices.

The Divisional Court upheld the trial judge's finding of an implied contractual term requiring the appellants to inquire with the Ministry of Health regarding unpaid invoices, as it was necessary for business efficacy.

However, the court allowed the appeal in part regarding the interest rate, finding that the contractual 24% rate did not apply because there was no finding that the appellants had actually received the funds from the Ministry.

The interest rate was varied to the statutory rates under the Courts of Justice Act.

The plaintiff, Louise Talbot, brought a motion for partial summary judgment seeking repayment of $127,843 owed under two promissory notes from the defendants, Jeffrey Nourse and two corporate entities.

The defendants disputed the validity of one $200,000 note, claiming it was an investment, and argued that outstanding undertakings regarding bank statements precluded summary judgment.

The court, applying the framework from Hryniak v. Mauldin, found no genuine issue requiring a trial.

The evidence of a handwriting expert and a witness corroborated the plaintiff's claim regarding the promissory notes.

The court dismissed the defendants' arguments regarding the investment claim and the relevance of outstanding undertakings to the promissory notes.

The court also declined to stay execution of the judgment pending the counterclaim, citing the delay caused by the defendants and the lack of interest on the notes.

Judgment was granted for the plaintiff for $127,843 plus pre- and post-judgment interest.

The plaintiff brought an action for $82,000 based on a promissory note signed by the defendants, his brother and his brother's family.

The funds were advanced to support the defendants' immigration to Canada, which involved an arranged marriage and various financial arrangements.

The defendants pleaded non est factum, claiming they did not understand the document because it was in English and they thought it was an immigration form.

The court rejected this defence, finding the document was explained to them in their native language and they signed it voluntarily.

The court also drew an adverse inference against the primary defendant who attended the trial but failed to testify.

Judgment was granted for the plaintiff with substantial indemnity costs.

Following a simplified procedure trial in a commercial dispute, the court had dismissed both the plaintiff’s claim and the defendants’ counterclaim, except for an order requiring the plaintiff to provide machine access codes to the defendants.

The parties made competing claims for costs, each arguing success and reliance on settlement offers.

The court found the offers irrelevant because neither party achieved a result closer to its offer.

Although both sides were largely unsuccessful and had contributed to the dispute, the court held that the defendants achieved partial success because the ordered delivery of machine codes was critical to operating the equipment.

Costs were therefore awarded to the defendants on a proportional basis.

The applicant sought an order under sections 4 and 11 of the Solicitors Act to refer a solicitor’s account for assessment more than twelve months after it had been rendered and paid.

The applicant argued that he only later became aware of the ability to challenge the account and that the account was excessive after reviewing time dockets.

The court held that the statutory deadline had expired and that the applicant failed to demonstrate “special circumstances” justifying an extension.

For paid accounts, the court emphasized that relief is limited to cases involving fraud or gross misconduct, which were not alleged or supported by the record.

The application was therefore dismissed.