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Insolvency - BIA - Appeals [BIA s.193]
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. Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc.
In Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc. (Ont CA, 2021) the Court of Appeal considered an extension for time to file an appeal. The order exempted the action from a bankruptcy stay [under BIA 69(1)] on the grounds of fraud [BIA 178(1)(e)], but the order exempting the stay was made in the regular action, not any BIA proceedings - and this led to jurisdictional confusion which the court addressed:(1) The governing appeal route
[13] If the motion judge’s order was made under the BIA, the appeal route would be governed by s. 193 of the BIA, which provides for appeals as of right in some cases and requires leave to appeal in others. Section 193 provides as follows:
193 Unless otherwise expressly provided, an appeal lies to the Court of Appeal from any order or decision of a judge of the court in the following cases:
(a) If the point at issue involves future rights;
(b) If the order or decision is likely to affect other cases of a similar nature in the bankruptcy proceedings;
(c) If the property involved in the appeal exceeds in value ten thousand dollars;
(d) From the grant of or refusal to grant a discharge if the aggregate unpaid claims of creditors exceed five hundred dollars; and
(e) In any other case by leave of a judge of the Court of Appeal. [14] The proper appeal route is under s. 193 where the order sought to be appealed is granted in reliance on jurisdiction under the BIA: Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13, at para. 21. If the motion judge’s order was not made in reliance on jurisdiction under the BIA, it would be appealable to this court under s. 6(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.
[15] The question of jurisdiction arises in this case because the motion judge’s order has two components: the declaration under s. 178(1)(e) of the BIA and the lift-stay order. The lift-stay order could only be made under s. 69.4 of the BIA. By contrast, declaratory orders under s. 178(1) do not engage the exercise of a power under the BIA. They are made in the exercise of the court’s general jurisdiction: see e.g. Water Matrix Inc. v. Carnevale, 2018 ONSC 6436, 65 C.B.R. (6th) 109, at para. 22; Beneficial Finance Co. v. Durward (1961), 2 C.B.R. (N.S.) 173 (Ont. Co. Ct.), at para. 14; and Graves v. Hughes, 2001 NSSC 68, 25 C.B.R. (4th) 255, at paras. 3-12. As such, orders declaring that a debt or liability survives a bankruptcy discharge typically are appealed directly to the Court of Appeal, without leave under the BIA: see e.g. Gray (Re), 2014 ONCA 236, 119 O.R. (3d) 710; Korea Data Systems (USA), Inc. v. Aamazing Tehnologies Inc., 2015 ONCA 465, 126 O.R. (3d) 81; H.Y. Louie Co. Limited v. Bowick, 2015 BCCA 256, 25 C.B.R. (6th) 221; and Lawyers’ Professional Indemnity Company v. Rodriguez, 2018 ONCA 171, 139 O.R. (3d) 641, leave to appeal refused, [2018] S.C.C.A. No. 128.
[16] The determination of whether a debt survives bankruptcy can also be made in bankruptcy proceedings and not in a separate civil action, particularly where the moving party also seeks leave to commence or continue an action against the bankrupt: see Re McKee (1997), 1997 CanLII 14966 (AB QB), 47 C.B.R. (3d) 70 (Alta. Bankruptcy Registrar), where such a declaration was made while bankruptcy proceedings were pending, but prior to the discharge hearing. See also Re Mariyanayagam (1998), 10 C.B.R. (4th) 105 (Ont. Gen. Div.), at para. 4; Re Bissonette, 2006 CarswellOnt 7023 (Bankruptcy Registrar), at para. 3; Re Di Paola (2006), 2006 CanLII 37117 (ON CA), 84 O.R. (3d) 554 (C.A., In Chambers), at para. 5; Re Berger, 2010 ONSC 4376, 70 C.B.R. (5th) 225, (Bankruptcy Registrar), at para. 2.
[17] This court has previously considered the question of jurisdiction where the order under appeal was made only partly in reliance on jurisdiction under the BIA. In Dal Bianco v. Deem Management Services Limited, 2020 ONCA 585, 82 C.B.R. (6th) 161, part of the order under appeal (indeed the substantive issue on the appeal) would have been appealable directly to this court under the Construction Act, R.S.O. 1990, c. C.30, but the order was made in an application for directions in a receivership. This court held that the substance of the order was in proceedings authorized by the BIA: “it responded to a motion for the court’s directions brought under s. 249 of the [BIA] to help the receiver distribute the remaining funds in the receivership”. Because the BIA was a source of jurisdiction for the court’s order, the appeal route was under s. 193: at para. 12. See also Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, 70 C.B.R. (6th) 181, at para. 129 (where jurisdiction for an appeal from an order approving a receiver’s sale of assets, of which a vesting order was a component, was under the BIA).
[18] Applying these authorities, I conclude that the appeal route for the motion judge’s order is under s. 193 of the BIA. The order was made on a motion during the currency of Knecht’s bankruptcy, and, as part of the order the motion judge lifted the stay under s. 69(1) of the BIA to permit the Action to continue against the bankrupt. . Dal Bianco v. Deem Management Services Limited
In Dal Bianco v. Deem Management Services Limited (Ont CA, 2020) the Court of Appeal considered the appeal route from orders which involve both a BIA receiver and various provincial statutes (here, the Construction Act - formerly, the Construction Lien Act):[5] The question of how to determine the appeal route when a receiver has been appointed under a combination of s. 243(1) of the Bankruptcy and Insolvency Act and provincial legislation was recently addressed by Zarnett J.A. in Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13. At paras. 29-31 of Astoria, Zarnett J.A. agreed with the reasoning of Groberman J.A. in Industrial Alliance Insurance and Financial Services Inc. v. Wedgemount Power Limited Partnership, 2018 BCCA 283, 61 C.B.R. (6th) 196, at para. 21, that the operative question to determine the appeal route is “whether the order under appeal is one granted in reliance on jurisdiction under the Bankruptcy and Insolvency Act. Where it is, the appeal provisions of that statute are applicable.”
[6] Zarnett J.A. explained that if the Bankruptcy and Insolvency Act is one of the sources of jurisdiction for the order under appeal, “an appeal from an order made under it necessarily implicates a provision sourced in the [Bankruptcy and Insolvency Act]”: at para. 66. The appeal route is then to this court. Even if provincial law is also a source of jurisdiction for the order under appeal and provides for a different appeal route, the principle of federal paramountcy resolves any conflict in favour of the appeal route under the Bankruptcy and Insolvency Act: at para. 67. See also Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, 435 D.L.R. (4th) 416, at paras. 128-131; Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, 72 C.B.R. (6th)245, at paras. 10-11; and Comfort Capital Inc. v. Yeretsian, 2019 ONCA 1017, 75 C.B.R. (6th) 217, at para. 12.
[7] Here, the order of Gilmore J. under appeal was granted at least partly in reliance on jurisdiction under the Bankruptcy and Insolvency Act
[8] The receiver had authority to seek the court’s directions under s. 249 of the Bankruptcy and Insolvency Act and paragraph 34 of the receivership order. Section 249 of the Bankruptcy and Insolvency Act provides as follows:249 A receiver may apply to the court for directions in relation to any provision of this Part, and the court shall give, in writing, such directions, if any, as it considers proper in the circumstances. Paragraph 34 of the receivership order provides as follows:34. THIS COURT ORDERS that the Receiver may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder. [9] Acting under these sources of authority, the receiver moved before Gilmore J. for directions regarding the discharge of its powers and duties as receiver under the Bankruptcy and Insolvency Act. The agreed statement of facts on the motion stated that the receiver had made certain distributions but “has not been able to distribute [the] remaining funds” from the proceeds of sale of the debtor’s property “as a result of the competing priority claims” between the construction lien claimants and the mortgagee.
[10] Gilmore J. provided the court’s directions on the priority dispute. The order under appeal confirms that the motion was brought partly under the Bankruptcy and Insolvency Act — “to determine competing priorities under … the Construction Act … between certain construction liens and a registered real property mortgage”, in an “APPLICATION UNDER Section 243(1) of the Bankruptcy and Insolvency Act and Section 101 of the Courts of Justice Act”.
[11] We agree that the mere act of styling the motion in the receivership does not give “automatic access to the appeal routes under the [Bankruptcy and Insolvency Act]”, because “[t]he jurisdiction of the court is governed by the substance of the order made”: RREF II BHB IV Portofino, LLC v. Portofino Corporation, 2015 ONCA 906, 33 C.B.R. (6th) 9, at para. 12. Here, however, the order under appeal was not just styled in the receivership. The substance of the order was in proceedings authorized by the Bankruptcy and Insolvency Act — it responded to a motion for the court’s directions brought under s. 249 of the Bankruptcy and Insolvency Act to help the receiver distribute the remaining funds in the receivership.
[12] Section 249 of the Bankruptcy and Insolvency Act was thus a source of jurisdiction for the court’s order. To use the language of Astoria, at para. 29, the order under appeal was “granted in reliance on jurisdiction under the Bankruptcy and Insolvency Act”. This establishes that the appeal route is to this court. . Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc.
In Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc. (Ont CA, 2021) the Court of Appeal considered an extension for time to file an appeal. The order exempted the action from a bankruptcy stay [under BIA 69(1)] on the grounds of fraud [BIA 178(1)(e)] (the order exempting the stay was made in the regular action). The issue arose of whether leave was required under BIA 193:(2) Does a right to appeal lie under s. 193?
[20] Knecht submits that he has a right to appeal the motion judge’s order under ss. 193(a), (b) and (c). I agree that the order is appealable under s. 193(c). While it is unnecessary to consider other provisions of s. 193, I suggest that the order is also appealable under s. 193(a).
[21] Section 193(c) provides for a right of appeal “if the property involved in the appeal exceeds in value ten thousand dollars”. I recognize that the scope of that provision is a matter of debate among appellate courts. In 2403177 Ontario Inc. v. Bending Lake Iron Group Ltd., 2016 ONCA 225, 35 C.B.R. (6th) 102 (In Chambers), Brown J.A. construed s. 193(c) narrowly, and held that it would not provide a right of appeal from orders that (i) are procedural in nature; (ii) do not bring into play the value of the debtor’s property; or (iii) do not result in a gain or loss (in the sense of involving some element of a final determination of the economic interests of a claimant in the debtor): at paras. 53, 61. This approach has been followed by a number of decisions of this court, but has been called into question in the decisions of some other appellate courts: see e.g., MNP Ltd. v. Wilkes, 2020 SKCA 66, 80 C.B.R. (6th) 1, interpreting s. 193(c) as applying when, on the evidence, there is at least $10,000 “at stake” in the appeal: at para. 63.
[22] I am satisfied that, irrespective of the approach taken, the motion judge’s order falls within s. 193(c). In the circumstances of this case, I would follow the approach taken by Nordheimer J.A. in Royal Bank of Canada v. Bodanis, 2020 ONCA 185, 78 C.B.R. (6th) 165 (In Chambers). He distinguished cases like Bending Lake that involved proposed appeals of orders made in receivership proceedings, and he determined that an appeal of bankruptcy orders in two proceedings where the debts relied on exceeded $10,000 fell under s. 193(c). Nordheimer J.A. explained that s. 193(c) “clearly applies… where the appellant’s entire property ha[s] been taken out of their control and placed into the hands of a Trustee in Bankruptcy, who has the right to dispose of that property and distribute it among the creditors, without further court intervention”: at para. 9.
[23] Similarly, the debts and liabilities that will survive Knecht’s discharge under the motion judge’s order exceed $10,000. And the effect of the order under appeal is that Knecht’s property exceeding $10,000 in value will be subject to Shaver-Kudell’s enforcement of its judgment in the Action, including the costs order already made, following his discharge from bankruptcy.
[24] In short, the property involved in the appeal of the motion judge’s declaration under s. 178 exceeds in value $10,000. Since the lift-stay provision is part of the motion judge’s order and dependent on that declaration, the entire order is subject to appeal as of right under s. 193(c).
[25] The conclusion that s. 193(c) applies can also be reached by applying the approach in Bending Lake. The motion judge’s order is not procedural in nature, it brings into play the value of Knecht’s property that will or will not be available to satisfy Shaver-Kudell’s claims as his creditor, and it makes a final determination of Shaver-Kudell’s economic interests, resulting in a gain to that party in excess of $10,000.
[26] I am also of the view that the order under appeal falls within the scope of s. 193(a) of the BIA. Section 193(a) provides for a right of appeal “if the point at issue involves future rights”. Future rights have been described as “rights which could not at the present time be asserted but which will come into existence at a future time”: Elias v. Hutchison, 1981 ABCA 31, 121 D.L.R. (3d) 95, at para. 28, cited with approval in Ravelston Corp., Re (2005), 2005 CanLII 63802 (ON CA), 24 C.B.R. (5th) 256, (Ont. C.A.), at para. 19. The pertinent question is whether the rights engaged in the appeal are future rights or presently existing rights that are exercisable in the future: Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617 (In Chambers), at para. 16.
[27] Shaver-Kudell submits that its rights arose as soon as R. Smith J. determined the liability issues in the Action. All of the circumstances were present such that s. 178, by operation of law, would ensure that the debts and liabilities arising therefrom would survive Knecht’s bankruptcy discharge. This is a question of present rights that can be exercised in the future.
[28] I disagree. While s. 178 operates as a matter of law, it is necessary for a creditor to obtain a court declaration that a debt survives bankruptcy: Canada (Attorney General) v. Bourassa (Trustee of), 2002 ABCA 205, 312 A.R. 19, at para. 5. Shaver-Kudell did not obtain the s. 178 declaration until December 2020.
[29] In my view, the motion judge’s order involves the future rights of both parties: Knecht’s right to be discharged from the debts and liabilities arising out of the judgments in the Action and Shaver-Kudell’s right, as a creditor of the bankrupt, to enforce the judgments following his discharge from bankruptcy.
[30] While Shaver-Kudell is able to continue proceedings against Knecht, it does not have a present right to enforce the judgment of R. Smith J. against Knecht. This right is suspended by the bankruptcy and will be eliminated by the discharge, absent the order declaring its survival. In light of the motion judge’s order, this right will arise in the future, upon Knecht’s discharge. As lower courts have noted, “[a] creditor’s right of action for a debt not released by the debtor’s discharge arises upon the discharge of the debtor”: Lang v. Soyatt (1988), 68 C.B.R. (N.S.) 201, (Ont. Sup. Ct.), at para. 13; Re Wilson (1930), 11 C.B.R. 425 (Ont. Sup. Ct.). See also Re Cameron, 2002 ABCA 183, 37 C.B.R. (4th) 78 (In Chambers), at paras. 5-6. . Marchant Realty Partners Inc. v. 2407553 Ontario Inc.
In Marchant Realty Partners Inc. v. 2407553 Ontario Inc. (Ont CA, 2021) the Court of Appeal cited the approach to leave for appeal under s.193(e) of the BIA:The Test for Leave to Appeal Under s. 193(e) of the BIA
[11] The moving parties seek leave to appeal from the motion judge’s orders under s. 193(e) of the BIA. This provision provides that, unless an appeal lies as of right or as otherwise expressly provided, an appeal lies to the Court of Appeal “from any order or decision of a judge of the court … by leave of a judge of the Court of Appeal”.
[12] In deciding whether to grant leave under s. 193(e) of the BIA, this court considers the following principles:
• Granting leave is “discretionary and must be exercised in a flexible and contextual way”: Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29.
• In exercising its discretion, the court should examine whether the proposed appeal: (1) raises an issue of general importance to bankruptcy/insolvency practice or the administration of justice, and is one this court should address; (2) is prima facie meritorious; and (3) would not unduly hinder the progress of the bankruptcy/insolvency proceedings: Pine Tree Resorts, at para. 29; McEwen (Re), 2020 ONCA 511, 452 D.L.R. (4th) 248, at para. 76. . Crown Capital Private Credit Fund v. Mill Street & Co. Inc.
In Crown Capital Private Credit Fund v. Mill Street & Co. Inc. (Ont CA, 2022) the Court of Appeal commented on BIA appeals in the course of a motion to quash:[5] Section 193 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 sets out the jurisdiction for an appeal of an order made in a bankruptcy proceeding. The appellants submit that this court has jurisdiction under s. 193(a) or, in the alternative, that leave to appeal should be granted under s. 193(e).
[6] Section 193(a) grants jurisdiction where “the point at issue involves future rights”. Caselaw has established that present rights altered by the order are not future rights: Ravelston Corp. (Re) (2005), 2005 CanLII 63802 (ON CA), 24 C.B.R. (5th) 256 (Ont. C.A.), at para. 18. The right to compete is a present right. Therefore, there is no right of appeal under s. 193(a).
[7] The three-part test for granting leave to appeal under s. 193(e) was recently restated in James Henry Ting (Re), 2021 ONCA 622, at para. 5: there must be an issue of general importance, that is prima facie meritorious, and the appeal would not unduly hinder the progress of the insolvency proceeding. . KingSett Mortgage Corporation v. 30 Roe Investments Corp.
In KingSett Mortgage Corporation v. 30 Roe Investments Corp. (Ont CA, 2022) the Court of Appeal considered an appeal of a receivership insolvency order:[16] In its jurisprudence regarding the appeals of orders appointing a receiver under BIA s. 243 and CJA s. 101, this court has consistently made two points:(i) Where a receivership order is made pursuant to both BIA s. 243 and CJA s. 101, the more restrictive appeal provisions of BIA s. 193 govern the rights of appeal and appeal routes: Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13, at paras. 66 and 67; Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588, 72 C.B.R. (6th) 245, at paras. 10 and 11;
(ii) No appeal as of right exists under BIA ss. 193(a) or (c) from an order appointing a receiver: Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, 462 D.L.R. (4th) 228, at para. 38; Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at paras. 15-17; and Buduchnist, at para. 12. . Flight (Re)
In Flight (Re) (Ont CA, 2022) the Court of Appeal considered when leave is required (or not) for certain appeals under s.BIA s.193:(1) Is the Appeal as of Right, and if Not, Should Leave to Appeal be Granted?
[21] Appeals to this court from orders made under the BIA are governed by s. 193, which provides:Unless otherwise expressly provided, an appeal lies to the Court of Appeal from any order or decision of a judge of the court in the following cases:
(a) if the point at issue involves future rights;
(b) if the order or decision is likely to affect other cases of a similar nature in the bankruptcy proceedings;
(c) if the property involved in the appeal exceeds in value ten thousand dollars;
(d) from the grant of or refusal to grant a discharge if the aggregate unpaid claims of creditors exceed five hundred dollars; and
(e) in any other case by leave of a judge of the Court of Appeal. [22] The appellants describe their appeal as having two aspects – one concerning the decision of the motion judge about whether s. 215 of the BIA applied to the Action, and the other concerning the failure of the motion judge to address the question of Mr. Flight’s status to commence an action as (at the time) an undischarged bankrupt. As I explain, only the first aspect controls whether the appellants have an appeal as of right.
[23] The appellants argue that the appeal may be brought as of right because either s. 193(b) or s. 193(c) applies to the decision concerning whether permission under s. 215 of the BIA was required. I agree with the respondents that neither is applicable.
[24] Section 193(b) applies only where the order sought to be appealed is likely to affect other cases in the same bankruptcy proceedings: 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 396 D.L.R. (4th) 635, at para. 32. There are no other cases in Mr. Flight’s bankruptcy that would be affected by the decision about the applicability of s. 215. The appellants’ argument that the decision will have precedential value for bankruptcy law generally does not bring the proposed appeal within s. 193(b).
[25] Section 193(c) does not apply to orders that refuse permission to proceed with an action: see Romspen Investment Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, 138 O.R. (3d) 373, at paras. 21-22, leave to appeal refused, [2017] S.C.C.A. No. 238. All the more so, this provision does not apply to an order determining that no permission to sue is required. Such an order does not decide the merits of the proceeding; it simply decides that the BIA screening process is inapplicable, leaving the merits to be determined in the forum in which the action is brought. Orders that are procedural in nature do not come within s. 193(c): Bending Lake, at para. 53.
[26] In oral argument, the appellants submitted that, because an aspect of the appeal concerns the status of an undischarged bankrupt to sue, the decision should be appealable without leave under s. 193(b) because it would impact other proceedings Mr. Flight commenced before his bankruptcy was deemed annulled. I do not accept that this changes the analysis. In the context of a motion for directions in a bankruptcy proceeding, the motion judge could only properly reach the status to sue issue if she decided that s. 215 was applicable and thus had to decide whether the Action had sufficient merit to be granted permission to proceed. If s. 215 was not applicable, then the merits of the Action, including the capacity of a plaintiff to commence it, are matters to be decided according to the procedures governing the Action itself, not as a freestanding bankruptcy court determination.
[27] I would, however, grant leave to appeal under s. 193(e) because the proposed appeal, which relates to the proper scope of s. 215 of the BIA, meets the test for leave to appeal. It (a) raises an issue – the circumstances in which a trustee can be sued without leave of the court – that is of general importance to the practice in bankruptcy/insolvency matters; (b) is prima facie meritorious; and (c) would not unduly hinder the progress of the bankruptcy proceedings: Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29. . BCIMC Construction Fund Corporation v. 33 Yorkville Residences Inc.
In BCIMC Construction Fund Corporation v. 33 Yorkville Residences Inc. (Ont CA, 2023) the Court of Appeal considered the leave to appeal test under under BIA 193(e):[7] The receiver submits that the appellants have no right of appeal under s. 193 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. The respondent further contends that in the circumstances, this court should refuse leave to appeal.
[8] The appellants take the position that they do have a right of appeal under s. 193(c), which provides that an appeal is available:[I]f the property involved in the appeal exceeds in value ten thousand dollars. [9] Alternatively, the appellants submit that this is a case for leave to appeal.
[10] We find it unnecessary to decide whether the appellants have a right of appeal. Assuming without deciding that leave to appeal is necessary, this is an appropriate case for the granting of leave. The appeal raises a matter of statutory interpretation of some importance. The appellants’ position on the merits is arguable. It would be helpful for this court, as the appellate court of the province, to resolve the question of statutory interpretation raised by the parties. Allowing the appeal to proceed would not interfere in any significant way with any ongoing proceeding.
[11] We grant leave to appeal. . Buduchnist Credit Union Limited v. 2321197 Ontario Inc.
In Buduchnist Credit Union Limited v. 2321197 Ontario Inc. (Ont CA, 2022) the Court of Appeal comments on the role of the BIA s.193 appeal provisions:[33] I do not accept TC’s submission that it is entitled to appeal as of right, pursuant to s. 193(c) of the BIA, which permits an appeal as of right “if the property involved in the appeal exceeds in value ten thousand dollars”.
[34] In Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, 426 D.L.R. (4th) 228, at paras. 35-42, Brown J.A. closely analyzed the panel decisions of this court and other relevant authorities before concluding that to determine whether s. 193(c) applies, a court must engage in “a critical evaluation of the effect of the order sought to be appealed”, before making a fact-specific determination of whether the order “directly involves” property exceeding $10,000. An order will not do so unless the order results in a loss to the debtor’s property or brings into play the value of the debtor’s property. In the language employed by the Alberta Court of Appeal in Re Bearcat Exploration Ltd. (Bankrupt), 2003 ABCA 365, 339 A.R. 376, at para. 10, to fall within s. 193(c) the appeal “must in substance be about the value of the property, not just to any claim related to bankruptcy.”
[35] The orders under appeal will not remove property from the proceeds held by the receiver, or in any way diminish or jeopardize the value of property held by the receiver, nor did the motion judge adjudicate the value of the mortgaged property or its proceeds in the orders that are being appealed. Instead, those orders related to the manner in which proceeds of sale of an agreed upon amount would ultimately be distributed. They therefore do not satisfy s. 193(c).
[36] It is helpful in understanding this to bear in mind that s. 193 was enacted to restrict appeals as of right in insolvency matters to ensure that insolvency enforcement proceedings provide “a timely, efficient and impartial resolution of a debtor’s insolvency”: Hillmount Capital Inc., at para. 43 (emphases and citations omitted). Given the automatic stay provision in s. 195 of the BIA, if s. 193(c) is not given a construction in keeping with this purpose of s. 193, s. 193 would be rendered all but meaningless, since “very few insolvency cases would involve property that did not exceed the statutory threshold”: 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 35 C.B.R. (6th) 102, at para. 51. Insolvency proceedings could easily be delayed by unmeritorious appeals. As Strathy J.A. (as he then was) observed in Ontario Wealth Management Corporation v. Sica Masonry and General Contracting Ltd., 2014 ONCA 500, 17 C.B.R. (6th) 91, at para. 42, priority claims are the “daily fare in bankruptcy proceedings.” So, too, are orders that direct the disposition of property, such as the orders that TC proposes to appeal. If either kind of order falls within s. 193(c) without more, the purpose underlying s. 193 as a whole would be defeated.
[37] TC has not pursued arguments claiming it satisfies any of s. 193’s other as‑of‑right exceptions. TC therefore requires leave to appeal pursuant to s. 193(e). ... . Buduchnist Credit Union Limited v. 2321197 Ontario Inc.
In Buduchnist Credit Union Limited v. 2321197 Ontario Inc. (Ont CA, 2022) the Court of Appeal set out a test for BIA leaves to appeal:[38] The decision to grant leave to appeal must be exercised flexibly and contextually. As Strathy C.J.O. recognized in Ontario Wealth, at para. 43, the focus is typically on whether the proposed appeal: (1) raises an issue of general importance to the practice in bankruptcy/insolvency matters and of the administration of justice as a whole; (2) is prima facie meritorious; and (3) would unduly hinder the progress of the bankruptcy/insolvency proceedings. . Conforti Holdings Limited (Re)
In Conforti Holdings Limited (Re) (Ont CA, 2022) the Court of Appeal sets out the test for leave to appeal to the Court of Appeal under the BIA s.193(e):The test for leave to appeal
[7] The moving parties seek leave under s. 193(e) of the BIA.
[8] There is no disagreement as to the applicable test[1] requiring consideration of the following factors:a) Does the appeal raise issues of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole;
b) Is the appeal prima facie meritorious; and
c) Would the appeal unduly hinder the progress of the bankruptcy/insolvency proceedings? [9] A proposed appeal is prima facie meritorious where the decision appears to be contrary to law, amounts to an abuse of judicial power or involves an obvious error causing prejudice for which there is no remedy.[2]
[10] Discretionary decisions by judges in insolvency proceedings, attuned to the particular dynamics of the proceeding, are entitled to considerable deference.[3] . Mundo Media Ltd. (Re)
In Mundo Media Ltd. (Re) (Ont CA, 2022) the Court of Appeal considered a leave to appeal motion under BIA 193(e):THE TEST TO BE MET ON LEAVE TO APPEAL
[28] SPay requires leave of this court to pursue an appeal pursuant to s. 193(e) of the BIA. Sections 193(a)-(d) of the BIA provide that an appeal lies to the Court of Appeal from an order of the court in specified scenarios, barring which there is no automatic right to appeal. Instead, leave to appeal may be granted by a judge of the Court of Appeal “in any other case”, pursuant to s. 193(e) of the BIA. Thus, leave is required in this case and a single judge of this court can determine whether leave should be granted.
[29] On a motion for leave to appeal under s. 193(e) of the BIA, the moving party must satisfy three criteria, as set out by Blair J.A. in Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29.
[30] First, the proposed appeal must be prima facie meritorious; that is, the proposed appeal must raise “legitimately arguable points … so as to create a realistic possibility of success on the appeal”: see Ravelston Corp. (Re) (2005), 2005 CanLII 63802 (ON CA), 24 C.B.R. (5th) 256 (Ont. C.A.), at para. 29. This can include a finding that the decision “(a) appears to be contrary to law, (b) amounts to an abuse of judicial power or (c) involves an obvious error causing prejudice for which there is no remedy”: Pine Tree Resorts, at para. 31. Of course, this assessment needs to be conducted against the backdrop of s. 243 of the BIA, which has been interpreted to give supervising judges a broad mandate to resolve issues in bankruptcy: see Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, 435 D.L.R. (4th) 416, at paras. 57-58. Commercial list judges with experience in insolvency proceedings are alive to the legal and business realities faced by debtors, creditors and the receiver, and substantial deference is therefore owed to their decisions: see Romspen Investment Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, 138 O.R. (3d) 373, at para. 84, leave to appeal refused, [2017] S.C.C.A. No. 238, referring to Royal Crest Lifecare Group Inc. (Re) (2004), 2004 CanLII 19809 (ON CA), 181 O.A.C. 115 (C.A.), at para. 23, leave to appeal refused, [2004] S.C.C.A. No. 104, and Grant Forest Products Inc. v. The Toronto-Dominion Bank, 2015 ONCA 570, 387 D.L.R. (4th) 426, at paras. 97-99.
[31] Second, the proposed appeal must raise an issue or issues of general importance.
[32] Third, the proposed appeal must not unduly delay the progress of the proceedings: Cosa Nova Fashions Ltd. v. The Midas Investment Corporation, 2021 ONCA 581, 95 C.B.R. (6th) 240, at para. 37, citing Marchant Realty Partners Inc. v. 2407553 Ontario Inc., 2021 ONCA 375, 90 C.B.R. (6th) 39, at para. 12, Pine Tree Resorts, at para. 29, and McEwen (Re), 2020 ONCA 511, 452 D.L.R. (4th) 248, at para. 76. The balance of the case [para 33-59] continues to provide a salutory illustration of this test in practice.
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