Impact Tool & Mould Inc. (Re)

Impact Tool & Mould Inc. (Re) Collection Decisions of the Court of Appeal Date 2008-03-14 Neutral citation 2008 ONCA 187 Docket numbers C47464 Judges Feldman, Kathryn N.; Lang, Susan Elizabeth; MacFarland, Jean Louise Subject Civil Decision Content CITATION: Impact Tool & Mould Inc. (Re), 2008 ONCA 187 DATE: 20080314 DOCKET: C47464 COURT OF APPEAL FOR ONTARIO FELDMAN, LANG and MACFARLAND JJ.A. IN THE MATTER OF THE BANKRUPTCY OF IMPACT TOOL & MOULD INC., OF THE CITY OF WINDSOR, COUNTY OF ESSEX AND IN THE MATTER OF THE INTERIM RECEIVERSHIP OF IMPACT TOOL & MOULD INC., CARRYING ON BUSINESS IN THE CITY OF WINDSOR, COUNTY OF ESSEX, PROVINCE OF ONTARIO B E T W E E N BDO DUNWOODY LIMITED, TRUSTEE OF THE ESTATE OF IMPACT TOOL & MOULD INC., A BANKRUPT Applicant (Appellant) and DOYLE SALEWSKI INC., in its capacity as Court-Appointed Interim Receiver of IMPACT TOOL & MOULD INC. Respondent (Respondent) Frank Bennett for the appellant Justin R. Fogarty and Renée Brosseau for the respondent David Moore for the moving party, Windsor Precision Gundrill Inc. Heard: February 27, 2008 On appeal from the order of Justice John H. Brockenshire, of the Superior Court of Justice dated June 26, 2007. ENDORSEMENT [1] This is an appeal by the trustee in bankruptcy from the decision of Brockenshire J., which dismissed the trustee’s motion to examine the court-appointed interim receiver under ss. 163 and 164 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (BIA). The trustee’s motion had also sought to vary the sale approval and vesting order made by Brockenshire J. on April 23, 2003, approving the interim receiver’s sale of the assets of Impact Tool and Mould Inc. The basis for the trustee’s motion was its stated concern regarding the propriety of selling Impact’s assets to a new company formed by two of Impact’s former principals. [2] As a preliminary matter on the appeal, Windsor Precision Gundrill Inc. sought to review the order of LaForme J.A. dated February 13, 2008, which dismissed its motion to intervene in this appeal. Following oral argument, we dismissed the motion for review. We agree with LaForme J.A. that the proposed intervener would add nothing to the argument to be made by the trustee: Pearson v. Inco Ltd. (2005), 195 O.A.C. 77 (C.A.) at para. 6. [3] The trustee also applied to admit fresh evidence. Following oral argument, we dismissed that application because the proposed evidence does not meet the test in R. v. Palmer, [1980] 1 S.C.R. 759. [4] The motion judge dismissed the trustee’s motion to examine the interim receiver for two reasons: first, because four years had passed since the sale was approved and implemented; and second, because the interim receiver had already responded to the trustee’s questions, providing “much more information than unsecured creditors, hoping to receive something from the bankruptcy, could reasonably expect.” The motion judge also took into account the fact that the trustee had succeeded in obtaining confidential information from the National Bank, another of Impact’s secured creditors, so that the trustee “may now know more than the Receiver about Impact.” [5] The three legal issues raised by the trustee on the appeal are: (1) whether a trustee in bankruptcy is entitled to examine a court-appointed receiver as of right under s. 163(1) of the BIA, (2) alternatively, if leave of the court is required for such an examination, whether the unusual circumstances of this sale justify granting leave; and (3) whether paragraph 15 of the sale approval and vesting order should be varied. [6] Dealing with issues (1) and (2) together, we do not need to decide whether there is an absolute right for a trustee to examine a court-appointed receiver, or whether leave is required, because we see no error in the motion judge’s conclusion that, through the informal question and answer process, the interim receiver has provided all the information requested and required by the trustee. As the motion judge said, the trustee was not able to “point to a lack of information or a refusal to provide information which would in any way support his application.” Counsel for the trustee was given the further opportunity to point to any area of deficiency in the interim receiver’s responses on oral argument of the appeal, but was unable to do so. Accordingly, we would dismiss the trustee’s appeal on these issues. [7] Turning to issue (3), paragraph 15 of the sale approval and vesting order reads as follows: THIS COURT ORDERS that, notwithstanding: (a) the pendency of these proceedings; (b) the bankruptcy of Impact Tool & Mould Inc.; and (c) the provisions of any federal or provincial statute, neither the Purchase Agreement and the Transactions nor the vesting provisions of this Order will be void or voidable at the instance of creditors and claimants and do not constitute nor shall they be deemed to be settlements, fraudulent preferences, assignments, fraudulent conveyances or other reviewable transactions under the Bankruptcy and Insolvency Act or any other applicable federal or provincial legislation, and they do not constitute conduct meriting an oppression remedy and shall be binding on the trustee in bankruptcy of the Estate of Impact Tool & Mould Inc. [8] The motion judge refused to vary this paragraph on the basis of delay and because the trustee failed to establish any error or omission in the order. We see no error in the motion judge’s conclusions. Under s. 187(5) of the BIA, a party may move to vary an order. However, that section cannot be used purely for the purpose of bringing an appeal out of time: Re Catalina Exploration & Development Ltd. (1981), 121 D.L.R. (3d) 95 at 102-103 (Alta. C.A.). That is essentially what the trustee was attempting to do in this case. No appeal was taken from the sale approval and vesting order issued on April 23, 2003, although the trustee was appointed within a month of that date. In an earlier matter on this bankruptcy that came before this court in 2006, the court noted that no appeal had been taken from the sale approval and vesting order: (2006), 79 O.R. 241 at para. 19. The trustee is now seeking to appeal the order under the guise of a variation. Eliminating a critical paragraph of a vesting order four or five years after the transaction took place is not a variation, and cannot be accomplished under s. 187(5) of the BIA or the Rules of Civil Procedure. [9] Accordingly, the appeal is dismissed. The interim receiver is entitled to partial indemnity costs as claimed against Gundrill in the amount of $9,498.30, inclusive of disbursements and G.S.T. The interim receiver is entitled to partial indemnity costs of $5,000, inclusive of disbursements and G.S.T., against the trustee for the trustee’s fresh evidence application. The interim receiver is entitled to costs of the appeal in the amount of $15,000, inclusive of disbursements and G.S.T. The costs against the trustee are awarded against the trustee personally because it was acknowledged that this is currently a no-asset bankruptcy. Signed: “K. Feldman J.A.” “S. E. Lang J.A.” “J. MacFarland J.A.”