Before getting into this week's summaries, my partner, Lea Nebel, and I invite you to our third annual Top Appeals CLE, which has been rescheduled and will now be taking place at the OBA, 20 Toronto Street, Toronto, on Thursday, May 9, 2019. It is a three-hour dinner program beginning at 5 pm, which will also be available by live webcast for those who cannot attend in person. Please join us for what promises to be a very interesting evening.
Civil Decisions
Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269
[Feldman, Paciocco and Zarnett JJ.A.]
Counsel:
M.L. Solmon, F. Bennett and R. Joshi, for the moving party
S. Graff and M. Spence, for the responding party
Keywords: Bankruptcy and Insolvency, Receiverships, Civil Procedure, Appeals, Jurisdiction, Leave to Appeal, Inherent Jurisdiction, Statutory Interpretation, Constitutional Law, Doctrine of Paramountcy, Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 6 and 101, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 183(1), 193, 243(1) and 251, Bankruptcy and Insolvency General Rules, C.R.C., c. 368, r. 31(1), Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, Canada (Superintendent of Bankruptcy) v. 407 ETR Concession Company Limited, 2012 ONCA 569, Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283, Trusts & Guarantee Co. v. Oakwood Clubs (1931), 40 O.W.N. 581 (H.C.J.), Hamilton Wentworth Credit Union Ltd. v. Courtcliffe Parks Ltd. (1995), 23 O.R. (3d) 781 (Gen. Div.), Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, Montréal (City) v. 2952-1366 Québec Inc., 2005 SCC 62, ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4, Kingsway General Insurance Company v. Residential Warranty Co. of Canada Inc. (Trustee of), 2006 ABCA 293
Facts:
Upon the responding party’s insolvency, one of its secured creditors applied for an order under s. 243(1) of the Bankruptcy and Insolvency Act (the “BIA”) and s. 101 of the Courts of Justice Act (the “CJA”) appointing BDO Canada Ltd. as receiver of the responding party (the “Receiver”). The receivership order stated no proceeding or enforcement process could be commenced against the Receiver except with written consent of the Receiver or with leave of the Court.
The Receiver sold assets of the responding party to the moving party under an Asset Purchase Agreement. Shortly thereafter, the moving party complained about the amount of organic waste accumulated inside one of the facilities it had purchased, and the expenses of about $750,000 consequently incurred to clean it up. The moving party claimed the Receiver had breached obligations owed to it and was responsible to compensate the moving party for its expenses. The moving party brought an application for permission to sue the Receiver under the “leave to sue” provision of the receivership order. On May 17, 2018, a Superior Court judge (the “application judge”) dismissed the application, finding that the moving party’s allegations were not supported by evidence disclosing a prima facie case. On November 8, 2018, the application judge refused the moving party’s request to reopen the application to allow the filing of fresh evidence.
The moving party appealed from both decisions. Those appeals were timely if the CJA, under which there is a 30-day limit for commencing an appeal, governed the appeal route. They were late if the BIA, which imposes a 10-day limit, governed. On a motion before a single judge of the Ontario Court of Appeal (the “chambers judge”), the moving party moved for orders a) that its notice of appeal had been properly served and filed under s. 6 of the CJA; b) in the alternative, granting it an extension of time of 19 days in order to appeal under s. 193(c) of the BIA; or c) in the further alternative, granting it an extension of time of 19 days to seek leave to appeal and granting leave to appeal pursuant to s. 193(e) of the BIA. In a separate motion, the moving party moved before the chambers judge for orders a) declaring that the appeal from the application judge’s decision denying leave to introduce fresh evidence was governed by s. 193(c) of the BIA, or in the alternative s. 6 of the CJA, such that leave to appeal was not required; or b) in the alternative, granting leave to appeal pursuant to s. 193(e) of the BIA.
The chambers judge found the BIA governed the moving party’s appeal and dismissed the motions. The reference in the receivership order to the CJA did not have the effect of ousting the BIA as the source of the appellate authority, nor could it as a matter of federal paramountcy. The provisions of the BIA providing for appeals as of right were not applicable to the appeal, and no grounds for granting leave to appeal existed. The chambers judge also held there was no reviewable error in the application judge’s discretionary decision not to admit the moving party’s proposed fresh evidence.
On appeal, the moving party argued that those conclusions were derivative of the chambers judge’s conclusion about which statute governed the appeal route, and argued that the CJA did, meaning the moving party did not require leave to appeal or an extension of time. The moving party submitted that in view of the Supreme Court’s decision in Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd, as long as there was no operational conflict between the provincial and federal law and the provincial law did not frustrate the federal law’s purpose, the provincial law would continue to apply alongside the federal law.
The Receiver argued that the proceedings giving rise to and arising out of the receivership order were BIA proceedings. Parliament had constitutional authority over the procedure in all matters relating to bankruptcy, and since the appeal provisions of the BIA and CJA were in operational conflict, the BIA provisions prevailed. Alternatively, the only way to comply with both schemes was to follow the more restrictive provisions in the BIA appeal route.
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