Court Of Appeal Summaries (October 26 ' October 30, 2020)

• Published date: 04 November 2020
• Subject Matter: Finance and Banking, Insurance, Litigation, Mediation & Arbitration, Real Estate and Construction, Insolvency/Bankruptcy/Re-structuring, Financial Services, Insolvency/Bankruptcy, Insurance Laws and Products, Court Procedure, Trials & Appeals & Compensation, Landlord & Tenant - Leases, Civil Law
• Law Firm: Blaney McMurtry LLP
• Author: Mr John Polyzogopoulos

Please find below our summaries of the civil decisions of the Court of Appeal for the week of October 26, 2020.

The headline decision is 7636156 Canada Inc. (Re). In a 54-page decision, the Court of Appeal canvassed in detail the law relating to letters of credit and the "autonomy" principle, and whether obligations by banks under LC's are affected by a bankruptcy of the underlying debtor. In this case, the underlying debtor that went bankrupt was a commercial tenant. The application judge held that the landlord was only entitled to draw on the LC for its preferred claim of three months' rent after the tenant's trustee in bankruptcy disclaimed the lease. The Court of Appeal disagreed, confirming that under the autonomy principle, the obligation under the LC was independent of the tenant (and trustee's) obligations under the lease, and as between only the landlord and the bank. In coming to its conclusion, the Court had to choose between conflicting lines of decisions. The result of this decisions is that landlords who were successful in obtaining LC's to secure their tenant's obligations under their leases should not be affected by their tenant's bankruptcies up to the amount of the LC (depending, of course, on the terms of the lease and LC). Given the current economic environment, the decision is quite timely.

Other topics covered this week included the right to notice of municipal tax sales, claims made by judgment creditors against insurers of judgment debtors under section 132 of the Insurance Act to the proceeds of insurance, access in the crown wardship context and the lack of standing of parties under disability who are represented by a litigation guardian.

Table of Contents

Civil Decisions

Wilton v. Northern Bruce Peninsula (Municipality) , 2020 ONCA 0674

Keywords: Municipal Law, Taxation, Tax Sales, Notice, Duty of Good Faith, Registry Act, R.S.O. 1990, c. R.20, Municipal Act, 2001, S.O. 2001, c. 25, s. 374, s. 379(1) and s. 381(1), Municipal Tax Sales Act, R.S.O. 1990, c. M-60, Elliott v. Toronto (City) (1999), 171 D.L.R. (4th) 64 (Ont. C.A.), leave to appeal refused, [1999] S.C.C.A. No. 244, Zeitel v. Ellscheid, [1994] 2 S.C.R. 142

7636156 Canada Inc. (Re) , 2020 ONCA 0681

Keywords: Contracts, Real Property, Commercial Leases, Banking Law, Security, Letters of Credit, Autonomy Principle, Bankruptcy and Insolvency, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 136(1)(f), 146, Personal Property Security Act, RSO 1990, c. P10, Commercial Tenancies Act, RSO 1990, c. L.7, s. 38(1), Crystalline Investments Ltd. v. Domgroup Ltd., 2004 SCC 3, Bank of Nova Scotia v. Angelica-Whitewear Ltd., [1987] 1 SCR 59, 430872 B.C. Ltd. v. KPMG Inc., 2004 BCCA 186, Royal Bank v. Gentra Canada Investments Inc. (2001), 147 O.A.C. 96 (C.A.), Cineplex Odeon Corp. v. 100 Bloor West General Partner Inc., [1993] O.J. No. 112 (Gen. Div.), Re Mussens Ltd., [1933] O.W.N. 459 (S.C.), Curriculum Services Canada/Service Des Programmes D'Études Canada (Re), 2020 ONCA 267, Cummer-Yonge Investments Limited v. Fagot, [1965] 2 O.R. 152 (S.C.), Lava Systems Inc...