Court Of Appeal Summaries (June 25 – 29)

The following are our summaries of this week's civil decisions of the Ontario Court of Appeal.

First, I'd like to congratulate our very own Eric Golden on successfully representing the moving party receiver in B&M Handelman Investments Limited v Drotos, 2018 ONCA 58. The case dealt with the limited circumstances under which an appeal can be brought, or leave to appeal could be sought, from a sale approval and vesting Order under the Bankruptcy and Insolvency Act, with a focus on whether there was any duty on the Receiver to consult with fulcrum creditors on its marketing and sale processes relating to various types of real estate properties.

Other topics covered this week included the validity of a will of someone with chronic alcoholism, the Court of Appeal's jurisdiction to hear an appeal from an order dismissing an application for habeas corpus in the immigration law context, zoning bylaw interpretation, easements, summary judgment in the commercial lease context, and family law (termination of support and contempt).

For our readers practicing in criminal law, there were an unusually high number of criminal decisions this week, particularly murder cases.

Table of Contents

B&M Handelman Investments Limited v Drotos, 2018 ONCA 581

Keywords: Bankruptcy and Insolvency, Receiverships, Vesting Orders, Civil Procedure, Appeals, Stay Pending Appeal, Leave to Appeal, Bankruptcy and Insolvency Act, ss 193(b), 193 (c), 193(e), Royal Bank of Canada v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.), 2403177 Ontario Inc. v. Bending Lake Iron Group Ltd., 2016 ONCA 225, Downing Street Financial Inc. v. Harmony Village-Sheppard Inc., 2017 ONCA 611, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Impact Tool & Mould Inc. (Receiver of) v. Impact Tool & Mould Inc. (Trustee of), 2013 ONCA 697, Ravelston Corp. (Re), [2005] O.J. No. 5351 (C.A.), Regal Constellation Hotel Ltd. (Re) (2004), 71 O.R. (3d) 355 (C.A.)

Berg v. Marks, 2018 ONCA 595

Keywords: Real Property, Easements, Civil Procedure, Simplified Procedure, Procedural Fairness, Self-Represented Litigants, Fresh Evidence, Rules of Civil Procedure, Rule 76.03(3)

Hutchinson v. Norfolk (County), 2018 ONCA 592

Keywords: Real Property, Municipal Law, Zoning By-laws, Permitted Uses, Accessory Use, Interpretation

McKinnon v. McKinnon, 2018 ONCA 596

Keywords: Family Law, Spousal Support, Child Support, Variation, Material Change in Circumstances, Spousal Support Advisory Guidelines, Evidence, Admissibility, Settlement Communications,Civil Contempt, Parreira v Parreira, 2013 ONSC 6595, Carey v Laiken, [2015] 2 S.C.R. 79, Family Law Rules, O. Reg. 114/99, Rule 18(8)

Canadian Language Leadership Centre - CLLC Inc. v. 20 Eglinton Commercial Centre Inc., 2018 ONCA 604

Keywords: Real Property, Contracts, Commercial Leases, Interpretation, Standard of Review, Extricable Errors of Law, Civil Procedure, Summary Judgment, Genuine Issues Requiring Trial

Dujardin v Dujardin, 2018 ONCA 597

Keywords: Wills and Estates, Wills, Validity, Testamentary Capacity, Expert Witness, Costs, Succession Law Reform Act, RSO 1990, c S 26, Section 4

Wang v. Canada (Public Safety and Emergency Preparedness), 2018 ONCA 605

Keywords: Immigration Law, Habeas Corpus, Practice and Procedure, Appeals, Jurisdiction, Habeas Corpus Act, s. 8(1), Courts of Justice Act, s. 6(1)(b)

For short civil decisions click here

For criminal, provincial offences, and Ontario Review Board decisions click here

Civil Decisions

B&M Handelman Investments Limited v Drotos, 2018 ONCA 581

[Paciocco, JA (Motion Judge)]

Counsel:

Eric Golden, for the moving party, Rosen Goldberg Inc.

James Zibarras, Leslie Dizgun, and Caitlin Fell, for the responding party World Finance Corporation

David Preger, for the responding party, B&M Handelman Investments Limited

Adam J. Wygodny, for the responding party, Money Gate Investment Corp.

Miranda Spence, for the purchaser, FPK

Keywords: Bankruptcy and Insolvency, Receiverships, Vesting Orders, Civil Procedure, Appeals, Stay Pending Appeal, Leave to Appeal, Bankruptcy and Insolvency Act, ss 193(b), 193 (c), 193(e), Royal Bank of Canada v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.), 2403177 Ontario Inc. v. Bending Lake Iron Group Ltd., 2016 ONCA 225, Downing Street Financial Inc. v. Harmony Village-Sheppard Inc., 2017 ONCA 611, Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Impact Tool & Mould Inc. (Receiver of) v. Impact Tool & Mould Inc. (Trustee of), 2013 ONCA 697, Ravelston Corp. (Re), [2005] O.J. No. 5351 (C.A.), Regal Constellation Hotel Ltd. (Re) (2004), 71 O.R. (3d) 355 (C.A.)

Facts:

In three unrelated proceedings, the Court appointed a Receiver over several debtors that owned several properties, including CD, who held title to a vacant home on Birchmount Road in Toronto. The assets of the various debtors included several different properties, including commercial, industrial, vacant lots, an inn, and residential homes in Picton, on the Bridle Path and on the Scarborough Bluffs (the latter being the CD's property on Birchmount Avenue).

Pursuant to the terms of the Appointment Order (based on the Commercial List Model Order), the Receiver proceeded to list on MLS and sell several of the Properties pursuant to the Appointment Order, including CD's Birchmount property. The properties were all sold at prices over, or in the range, of appraisals the Receiver had commissioned for each property from certified appraisers.

The Appointment Order contains the usual Model Order clauses granting the Receiver the power to engage consultants and appraisers, market the property, and negotiate the terms and conditions of sale. The Appointment Order also permits the Receiver to report to, meet with, and discuss with affected Persons (as defined in the Appointment Order) "as the Receiver deems appropriate" and to share information subject to confidentiality terms. It permits the Receiver to sell the property with court approval and to apply for a vesting order to convey the property to a purchaser free and clear of encumbrances.

With respect to the CD matter, the Receiver was appointed on April 13, 2018. CD's Birchmount property is a 12,900 square foot house on the Scarborough Bluffs that was vacant, in need of repairs and unfit for occupancy. The Receiver's appraisal came is at $3.2 million, and after reviewing various listing proposals the Receiver entered into a 90-day listing agreement with a listing broker on April 30, 2018 at a sale price of $3.8 million. Subject to court approval, the Receiver accepted an offer for $3.45 million made May 8, 2018, which would result in a shortfall to the second mortgagee who was the creditor who moved for the appointment of the receiver. The sale of CD's Birchmount property was scheduled to close on June 11, 2018.

On the Receiver's motion for a sale approval and vesting Order for five of the properties (including CD's Birchmount property), each involving different debtors and mortgagees (other than the mortgagees who moved to appoint the receiver), the same law firm (Brauti Thorning Zibarras, or "BTZ") was representing fulcrum creditors with respect to four of the properties being sold (not including CD's Birchmount property, and was also representing the first mortgagee and third mortgagee (World Finance Corporation) over CD's Birchmount property. BTZ's main position was that the Receiver failed to consult its clients about the sale and marketing process for all five properties, as well as the listing price.

Justice Dunphy issued the requested Order for each property on June 1, 2018 (the "Dunphy Order"), holding that the test in Royal Bank of Canada v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.) had been satisfied.

Justice Dunphy held that the Receiver's business judgment had been applied and informed by the appraisals responsibly sought, and the properties sold for over the appraised value. The Receiver did not act too quickly. The MLS marketing process was designed to obtain offers as soon as reasonably practicable and multiple offers were received. There was no requirement for the Receiver to consult with BTZ's clients on the marketing process and give them a greater degree of input, as the interests of all of the parties is the same. Their interest is in obtaining the highest and best price reasonably available.

On June 7, 2018, World Finance served and filed a Notice of Appeal seeking to appeal the Dunphy Order to a panel of the Court of Appeal, but only relating to CD's Birchmount property, on the basis that it could do so as of right pursuant to subsections 193(b) and 193 (c) of the Bankruptcy and Insolvency Act ("BIA") (and in which case the Dunphy Order would be automatically stayed). If World Finance could not fit its appeal into subsections 193(b) or s. 193(c) of the BIA, it sought as alternate relief in its Notice of Appeal leave to appeal pursuant to s. 193(e) of the BIA, but it did not seek a stay of the Dunphy Order in its Notice of Appeal, or otherwise move for a stay.

World Finance argued that its proposed appeal was prima facie meritorious. It contended that the Receiver failed to consider World Finance's interests, and that the process used was unfair because the Receiver did not consult with World Finance on the marketing process, or the price at which the Birchmount Property would be listed. Dunphy J. misapplied the Soundair principles in finding otherwise and erred in law (i) when finding that the Receiver had considered World Finance's interests by assuming that all parties had the same interest, namely, obtaining a higher sale price and (ii) finding the process to have been fair by considering irrelevant or improper explanations for the Receiver's failure to consult with World Finance about the marketing process and listing price.

World Finance appealed notwithstanding that it stood to not recover anything under its mortgage because the second mortgagee (the moving creditor with...