North House Foods Ltd. (Re)

North House Foods Ltd. (Re) Collection Decisions of the Court of Appeal Date 2025-07-30 Neutral citation 2025 ONCA 563 Docket numbers COA-24-CV-0751 Judges Tulloch, Michael H.; Pepall, Sarah E.; Pomerance, Renee M. Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: North House Foods Ltd. (Re), 2025 ONCA 563 DATE: 20250730 DOCKET: COA-24-CV-0751 Tulloch C.J.O., Pepall and Pomerance JJ.A. In the Matter of the Proposal of North House Foods Ltd. of the City of Ottawa, in the Province of Ontario David Debenham, for the appellant, Seabrook Bros. Mechanical Ltd. John Siwiec, for the respondent, North House Foods Ltd. E. Patrick Shea, for the respondent Proposal Trustee, Doyle Salewski Inc. Heard: March 19, 2025 On appeal from the order of Regional Senior Justice Calum U. C. MacLeod of the Superior Court of Justice, dated June 20, 2024, with reasons reported at 2024 ONSC 3567, 16 C.B.R. (7th) 166. Pepall J.A.: Introduction [1] The appellant, Seabrook Bros. Mechanical Ltd., appeals from the order dismissing its application under s. 50.1(4) of the Bankruptcy and Insolvency Act R.S.C. 1985, c. B-3 (the “BIA”) to revise the proposed value of its security. That section states: Where a secured creditor is dissatisfied with the proposed assessed value of his security, the secured creditor may apply to the court, within fifteen days after the proposal is sent to the creditors, to have the proposed assessed value revised, and the court may revise the proposed assessed value, in which case the revised value henceforth applies for the purposes of this Part. [2] There are two issues to address. Does this court have jurisdiction under s. 193 of the BIA to address this matter, and if it does, has the appellant established that the motion judge erred in failing to revise the proposed assessed value of the appellant’s security under s. 50.1(4) of the BIA? [3] For the reasons to follow, I conclude that an appeal as of right under ss. 193(a), (b) or (c) of the BIA is unavailable but that leave to appeal pursuant to s. 193(e) of the BIA should be granted. Having granted leave, I would nonetheless dismiss the appeal, having found no basis on which to intervene. The Context [4] Part III, Division I of the BIA governs the general scheme for proposals.[1] The proposal provisions of the BIA are designed in part to help insolvent business entities restructure so that when the proposal is accepted by creditors and approved by the court, the business will be operationally viable: Re Mernick (1994), 24 C.B.R. (3d) 8 (Ont. Gen. Div.), at para. 5. A proposal is made to the debtor’s creditors generally: s. 50(1.2). Between the filing of the notice of intention to make a proposal and the filing of a proposal, the proposal trustee advises the debtor and participates in the preparation of the proposal, including negotiations: s. 50.5. However, the development and substance of the proposal is the responsibility of the debtor. If a proposal includes a proposed assessed value of the security in respect of a secured creditor’s claim, a secured creditor may file with the proposal trustee a proof of secured claim and may vote on questions relating to the proposal in an amount equal to the lesser of the claim and the proposed assessed value of the security: s. 50.1(2); Workgroup Designs Inc. (Re), 2008 ONCA 214, 90 O.R. (3d) 26, at para. 14. If a secured creditor is dissatisfied with the proposed assessed value of its security, it may apply to court under s. 50.1(4) to have the value revised.[2] [5] Under s. 58(d) of the BIA, the proposal trustee is to file a report with the court on the proposal. Among other things, in its report to the court, the proposal trustee will provide an opinion on the reasonableness of the proposal including the valuation of security by the debtor. Background Facts [6] North House Foods Ltd. (“North House”) is a manufacturer, co-packer, and distributor of natural and organic food and beverage products. It operates out of leased premises that it was in the process of renovating as part of a nearly $2 million leasehold improvement to have expanded space. In part due to the COVID-19 pandemic, delays with construction and cost overruns occurred. [7] On March 16, 2023, North House filed a Notice of Intention to Make a Proposal. On May 30, 2023, it filed a Division I Proposal which was accepted by its unsecured creditors on June 23, 2023. North House then filed an Amended Proposal (the “Proposal”) on June 23, 2023 which was accepted by its unsecured creditors on June 28, 2023 and then approved by the court on July 7, 2023. Doyle Salewski Inc. (the “Proposal Trustee”) is the trustee under the Proposal. The creditors and the court were satisfied that there would be a better recovery for the creditors under the Proposal than there would be in a bankruptcy. North House remains in business and hopes to restructure and shed its debt. [8] Under the Proposal, neither related nor equity creditors are entitled to a distribution and secured creditors are excluded. Unsecured creditors owed less than $5,000 or who elect to reduce their claims to $5,000 receive a sum based on a formula, and other unsecured creditors will receive certificates that will be satisfied by North House paying them 25 percent of its net income annually for five years up to 100 percent of their proven claims. It is anticipated that the appellant would fall into this category absent success on this appeal. [9] In its Proposal, North House had listed the estimated realizable value of its assets as $3,658,897.32 and estimated liabilities as $11,439,174. Centurion Financial Trust was the largest secured creditor with claims representing more than half of North House’s total liabilities. North House owes, at a minimum, approximately $1,127,005 to the general contractor, Robert Construction General Contractor Inc. (“Robert Construction”), who had done construction work on the expansion of North House’s leasehold premises. Robert Construction registered and perfected a construction lien against North House’s leasehold interest. Robert Construction made an assignment into bankruptcy in November 2023. [10] The appellant was a sub-contractor of Robert Construction, worked on the leasehold premises, and holds a judgment for $291,467.31 against Robert Construction. The appellant also registered and perfected a construction lien for that amount against North House’s leasehold interest, having obtained a lifting of the stay of proceedings to do so. [11] North House included a proposed assessed value of nil for the appellant’s security—the lien against North House’s leasehold interest. The Proposal Trustee accepted the appellant’s claim in the full amount of $291,467.31 but found the proposed assessed value of nil to be reasonable. In making this determination, the Proposal Trustee considered whether the appellant could recover any value by enforcing its lien by selling the leasehold interest to which its lien attached. The significance of this decision was that the appellant would rank as an unsecured creditor and not as a secured or partially secured creditor for the purposes of the Proposal. [12] Relying on s. 50.1(4) of the BIA, the appellant moved before the motion judge for an order that the proposed assessed value of its security be amended and an order that the appellant be treated as a secured creditor for the full amount of its claim. Reasons of Motion Judge [13] The motion judge dismissed the application. He observed that the application was not an exercise in valuing the debt. Rather, the question to be addressed was whether the security, namely a lien against the leasehold interest, had any value. [14] He noted that the onus was on the appellant to demonstrate that the value of its security should be revised. He commenced his analysis by considering the sale of the lease by the Proposal Trustee to a third party. He stated that assuming that the landlord was prepared to waive the non-assignment provisions of the lease or that a court might override those provisions, it was conceivable that a third party would be interested in taking over the balance of the lease. If that were the case, the value could be determined if and when there was a willing buyer. He reasoned, however, that it was far from certain that there would be any value in the lease even in that scenario. Among other factors, the lease would have to be kept in good standing or brought into good standing; there were other claims against the leasehold interest; another party held security over the equipment; and anyone wanting to repurpose the facility would likely have to remove leasehold improvements or effect repairs. The appellant had no lien judgment and no immediate right to seize and sell the leasehold interest of North House. Moreover, any order for sale pursuant to such a judgment is discretionary. Furthermore, the Proposal Trustee was not going to sell the leasehold interest during the Proposal as the objective of the Proposal was to keep North House operating. As such, the proposed valuation was a theoretical exercise. [15] The motion judge considered the report and cross-examination of the appellant’s expert, John Comba, but noted that Mr. Comba had admitted to having no experience in lease valuations in bankruptcy and that his valuation reflected the value to the tenant, namely North House, rather than the value of the security on a forced sale of the leasehold interest. The motion judge stated that the Proposal Trustee put forward expert evidence supporting a nil assessment for the value of the security, citing a number of impediments to realizing value from a sale of the leasehold interest. These had been described in a letter from Paul Hindo, a commercial real estate executive and investor whom the Proposal Trustee had asked to comment on whether the lease could be assigned, and whom the motion judge described as an expert. [16] The motion judge addressed the fairness concerns raised by the appellant who argued that North House was receiving an unjust and inequitable windfall by obtaining improved premises to the detriment of the trades that did the work. The motion judge stated that if fairness were the primary concern, he would have to consider whether it would be fair to give the appellant priority over the general body of unsecured creditors, many of whom were owed far more than the appellant. He also observed that the Proposal Trustee had noted no misconduct by North House in its Report to the court. Lastly, he stated that lien claimants are not without other remedies, including potential trust claims or a remedy against the landlord. [17] The motion judge concluded that a forced sale of the leasehold interest was extremely unlikely to yield any net value for the appellant. The values suggested by the appellant’s experts were not the value that could be realized on a court supervised sale of the leasehold interest at the end of a lien action. He accordingly declined to revise the proposed assessed value of the security. Discussion (1) Jurisdiction [18] The first issue to address is whether this panel has jurisdiction to hear this appeal. [19] Section 193 of the BIA governs jurisdiction over this appeal, not s. 6 of the Courts of Justice Act, R.S.O. 1990, c. C.43. This is because the order under appeal was made by a judge exercising powers conferred by the BIA: Ting (Re), 2021 ONCA 425, 90 C.B.R. (6th) 32, at para. 5, leave to appeal refused, [2021] S.C.C.A. No. 307; Canada (Superintendent of Bankruptcy) v. 407 ETR Concession Company Ltd., 2012 ONCA 569, 354 D.L.R. (4th) 67, at para. 19. No Appeal as of Right [20] Section 193 of the BIA provides for appeals as of right in four types of cases: 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. [21] This court has taken a narrow approach to the interpretation of appeal rights under ss. 193(a)-(d) due to the broad automatic stay on appeal contained in s. 195[3] of the BIA: Hillmount Capital Inc. v. Pizale, 2021 ONCA 364, 462 D.L.R. (4th) 228, at para. 28. An appeal as of right attracts a stay of proceedings under s. 195 whereas if leave is required, such a stay is not automatic: see e.g., Giardino (Re), 2011 ONCA 312, at para. 12; First National Financial GP Corporation v. Golden Dragon HO 10 Inc., 2019 ONCA 873, 74 C.B.R. (6th) 1, at para. 15. [22] The appellant relies on ss. 193(a), (b), and (c) of the BIA in support of its position that leave to appeal is not required, with particular emphasis on (b) and (c). In the alternative, in oral argument, it sought leave to appeal under s. 193(e). Both the respondents, North House and the Proposal Trustee, are unopposed to the request for leave, the latter submitting that this court’s guidance on s. 50.1(4) of the BIA would be helpful. They also agree that the appeal falls under ss. 193(b) and (c) and that leave is therefore not required. [23] It is well established that “[j]urisdiction is not optional, cannot be conferred by consent, cured by attornment, or assumed voluntarily just because there is an interesting and significant issue to be considered”: J.N. v. Durham Regional Police Service, 2012 ONCA 428, 294 O.A.C. 56, at para. 25. Jurisdiction must be present under one of the provisions under ss. 193(a)-(d) of the BIA, or leave must be sought under s. 193(e). [24] I am not persuaded that this court has jurisdiction to hear the challenge to the motion judge’s order under ss. 193(a), (b) or (c). [25] Future rights under s. 193(a) mean future legal rights. The phrase has been interpreted to mean “rights which could not at the present time be asserted but which will come into existence at a future time”: Ravelston Corp. (Re) (2005), 24 C.B.R. (5th) 256 (Ont. C.A.), at para. 19, quoting Elias v. Hutchison, 1981 ABCA 31, 121 D.L.R. (3d) 95, at para. 28. The question is whether the rights engaged in an appeal are future rights or presently existing rights that are exercisable in the future: Ting, at para. 10; Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 16. Future rights do not include procedural rights or commercial advantages or disadvantages that may accrue from the order challenged on appeal: Ravelston Corp, at para. 18. For example, in Pine Tree Resorts, at para. 16, the appellant’s right to exercise its power of sale remedy and its right to put a mortgage in good standing were not considered future rights because they crystallized before the order under appeal. [26] In this case, the rights engaged by this appeal crystallized before the order under appeal. The appellant had already registered a construction lien against North House’s leasehold interest. The point in issue involves existing rights that are exercisable in the future rather than rights which will come into existence in the future. It follows that the appellant does not have a right of appeal under s. 193(a). [27] Turning to s. 193(b) of the BIA, the order under appeal “must concern ‘real disputes’ likely to affect other cases raising the same or similar issues in the same bankruptcy or receivership proceedings”: 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 369 D.L.R. (4th) 635, at para. 32. The cases must be in the same proceeding. No other cases raising the same or a similar issue in this proceeding were brought to our attention. This court has held that the “argument that the decision will have precedential value for bankruptcy law generally does not bring the proposed appeal within s. 193(b)”: Flight (Re), 2022 ONCA 526, 162 O.R. (3d) 641, at para. 24. Thus, the argument that this appeal will broadly impact lien claimants in bankruptcy proceedings is insufficient to trigger a right of appeal under s. 193(b). Accordingly, s. 193(b) cannot ground this court’s jurisdiction. [28] To qualify as an appeal as of right under s. 193(c) of the BIA, the property involved in the appeal must exceed $10,000 in value. This provision has been interpreted narrowly. It could not have been Parliament’s intention to cast a wide net over the $10,000 qualification, as otherwise most cases would meet that description. The limitations on jurisdiction as of right reflect the need to address bankruptcy proceedings expeditiously wherever possible. Accordingly, to qualify for an appeal as of right under s. 193(c), in addition to the $10,000 statutory threshold, based on applicable case law, an appellant must meet three criteria. The order under appeal must be: (i) more than procedural in nature, (ii) involve the value of the debtor’s property, and (iii) result in a loss to the appellant: Bending Lake, at para. 53. All three criteria must be met. The failure of an appellant to establish any one of them is fatal to characterizing the appeal as one as of right under s. 193(c): Downing Street Financial Inc. v. Harmony Village-Sheppard Inc., 2017 ONCA 611, 49 C.B.R. (6th) 173, at para. 22. A critical examination of the effect of the order sought to be appealed is required: Hillmount, at paras. 41-42. [29] In this case, the appellant cannot establish the third required characteristic: the order under appeal did not result in a loss to the appellant. This alone is fatal to the appellant’s s. 193(c) argument. [30] To determine whether the order resulted in a loss to the appellant, the court looks at the operative effect of the order sought to be appealed and questions whether it resulted in a loss: Comfort Capital Inc. v. Yeretsian, 2023 ONCA 282, 7 C.B.R. (7th) 17, at para. 21. Instead of looking at the total value of the property involved in the dispute, the court looks at the value of the actual loss that resulted from the order under appeal: Cosa Nova Fashions Ltd. v. The Midas Investment Corporation, 2021 ONCA 581, 95 C.B.R. (6th) 240, at para. 31. A fact-specific inquiry is conducted to determine whether there was a loss: Hillmount, at para. 42. The loss must be based on the evidentiary record: Cosa Nova, at para. 31. When considering whether there was a loss, the question is not whether a higher value for the property or interest could be obtained: First National, at para. 18. [31] An application under s. 50.1(4) does not decide the assessed value of a security. An application under 50.1(4) asks the court to review a proposed assessed value and decide whether it should be disturbed. [32] Here, the operative effect of the order under appeal did not result in a loss. The proposed assessed value of the appellant’s security was nil. The motion judge did not disturb the nil valuation, and as such, there was no loss. Request for Leave [33] Having failed to establish the requisite qualifications under s. 193(c), I conclude that the appellant does not have an appeal as of right. I will now turn to the request for leave to appeal under s. 193(e) of the BIA. To be successful, an appellant must address the procedural hurdle presented by Rule 31(2) of the Bankruptcy and Insolvency General Rules, C.R.C, c. 368 (the “BIA Rules”), and satisfy the substantive test for leave. [34] Motions for leave to appeal under s. 193(e) are to be brought to a single judge in chambers. In some unusual but necessary instances, such a motion may be heard by a panel: see e.g., Peakhill Capital Inc. v. 1000093910 Ontario Inc., 2024 ONCA 558, 14 C.B.R. (7th) 209, at paras. 39-40 (where the motion judge directed the interrelated issues of standing and jurisdiction to a panel); KingSett Mortgage Corporation v. 30 Roe Investments Corp., 2022 ONCA 479, 100 C.B.R. (6th) 218, at paras. 1-3 (where a motion for leave was heard at the same time as a motion to quash); and Crown Capital Private Credit Fund v. Mill Street & Co. Inc., 2022 ONCA 194, at para. 5 (where the appellants asserted there was a right of appeal but sought leave in the alternative). In addition, if an appeal is brought under s. 193(e) of the BIA, the notice of appeal must include the application for leave to appeal: r. 31(2) of the BIA Rules. That Rule states: If an appeal is brought under paragraph 193(e) of the Act, the notice of appeal must include the application for leave to appeal. [Emphasis added]. I will return to this issue. [35] As for the substantive test for leave to appeal under s. 193(e), in Pine Tree Resorts, at para. 29, Blair J.A. stated: The court will look to whether the proposed appeal (a) raises an issue that is of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole, and is one that this court should therefore consider and address; (b) is prima facie meritorious; and (c) would unduly hinder the progress of the bankruptcy/insolvency proceedings. These are factors to consider in the exercise of discretion, not hard and fast requirements. Ultimately, granting leave to appeal under s. 193(e) is “discretionary and must be exercised in a flexible and contextual way”: Pine Tree Resorts, at para. 29. [36] In the past, this court has been inclined to grant leave under s. 193(e) where the appeal raised a matter of statutory interpretation of some importance and where it would be helpful for this court, as an appellate court, to resolve the questions raised by the parties: see BCIMC Construction Fund Corporation v. 33 Yorkville Residences Inc., 2023 ONCA 1, 4 C.B.R. (7th) 253, at para. 10. [37] I will now turn to the application of these principles to the facts of this case. [38] Dealing first with the procedural requirements, the appellant did not bring a motion for leave before either a single judge or a panel, and the notice of appeal did not include any such application as required by Rule 31(2) of the BIA Rules. There is little case law on Rule 31(2). In 2003945 Alberta Ltd v. 1951584 Ontario Inc, 2018 ABCA 48, 57 C.B.R. (6th) 272, at paras. 23-24, Greckol J.A. was of the view that Rule 31(2) is mandatory and a notice of appeal is ineffective in the face of a failure to comply. The failure in that case was ultimately not fatal because the appellants, in response to a motion to strike their notice of appeal, brought a cross-application for both an extension of time to file and for leave to appeal, which Greckol J.A. granted. In other words, while the appellants failed to seek leave in their original notice of appeal, they were able to cure the default by bringing a cross-application seeking an extension of time to seek leave and leave itself. [39] In Ontario Wealth Management Corporation v. Sica Masonry and General Contracting Ltd., 2014 ONCA 500, 17 C.B.R. (6th) 91, at para. 39, in obiter, Strathy J.A. (as he then was) noted that in that case, leave to appeal was required, the appellant had not sought leave in its notice of appeal in accordance with Rule 31(2), and leave was not warranted. Accordingly, while he refused to grant an extension of time based on the justice of the case, he stated that he would not have granted leave to appeal even if the notice of appeal had been served on time. [40] In Isabelle v. The Royal Bank of Canada, 2008 NBCA 69, 47 C.B.R. (5th) 159, the respondent argued that the appeal should be quashed because the appellant did not have an appeal as of right and had failed to obtain leave prior to the appeal hearing on the merits. The court agreed that the appellant did not have a right of appeal; however, as he had sought leave in his notice of appeal in the event there was no appeal as of right, the court therefore granted him leave nunc pro tunc: at paras. 22-29. [41] In both Downing Street Financial Inc v. 1000162497 Ontario Inc., 2024 ONCA 639, 49 C.B.R. (6th) 173, at para. 22 and First National, at paras. 35-36, different motion judges declined to address whether leave should be granted under s. 193(e) in the absence of a motion for leave. [42] However, some cases from this court have granted leave under s. 193(e) when an appellant, facing a motion to quash, responds with a motion for leave. For instance, in Romspen Investment Corporation v. Courtice Auto Wreckers Limited, 2017 ONCA 301, 138 O.R. (3d) 373, at para. 24, leave to appeal refused, [2017] S.C.C.A. No. 238, this court held that the appellant had no appeal as of right, but granted leave to appeal under s. 193(e) where the appellant brought a cross-motion seeking leave in response to a motion to quash. Similarly, in Kaiser (Re), 2012 ONCA 838, 113 O.R. (3d) 308, at paras. 12-15, this court granted leave under s. 193(e) after holding there was no automatic right of appeal. The court noted that the trustee had brought a motion to quash, prompting the appellant to serve a notice of motion prior to the hearing seeking leave in the event it was needed. [43] Here, the appellant failed to seek leave to appeal under s. 193(e) before the hearing and only did so at the hearing in response to questions from the panel about whether there was an appeal as of right or whether leave was required. This is not the appropriate procedure. Rule 31(2) of the BIA Rules is mandatory. In general, in these circumstances, leave should be refused. [44] The BIA Rules do not address what happens if a party fails to comply with Rule 31(2). Rule 3 states: In cases not provided for in the [BIA] or these Rules, the courts shall apply, within their respective jurisdictions, their ordinary procedure to the extent that that procedure is not inconsistent with the [BIA] or these Rules. [45] Rule 61.08(3) of the Rules of Civil Procedure, R.R.O. 1990. Reg. 194 provides that, if a party fails to seek relief in its notice of appeal, then it may not seek that relief at the hearing except with leave of the court hearing the appeal. [46] Though reliance on r. 61.08(3) should be rare in a bankruptcy context given the unique procedure associated with bankruptcy, it may be that in some instances it is appropriate to have recourse to the combined operation of Rule 3 of the BIA Rules and r. 61.08(3) of the Rules of Civil Procedure to address the sort of scenario that presents itself in this case.[4] All parties were of the view that there was an appeal as of right from the order of the motion judge and were unopposed or content that this court hear the appeal. As mentioned, this will not be determinative, but is a factor to take into account when coupled with consideration of the substantive test for leave to appeal under s. 193(e). Here, I am of the view that reliance on Rule 3 of the BIA Rules and r. 61.08(3) of the Rules of Civil Procedure is warranted. This case appears to represent the first time that the application of s. 50.1(4) of the BIA has been considered by an appellate court. As submitted by counsel for the Proposal Trustee, the appeal does raise an issue that is of general importance to the practice in bankruptcy. While perhaps not prima facie meritorious, the appeal certainly is arguable and there is no suggestion that hearing it at this stage will unduly hinder the progress of the bankruptcy proceedings. I am satisfied that, in the unique circumstances of this case, an order permitting the appellant to amend its notice of appeal to seek leave nunc pro tunc is appropriate and I would grant leave to appeal under s. 193(e) of the BIA. (2) The Appeal [47] Having said that, I fail to see that the motion judge erred in his interpretation and application of s. 50.1(4) of the BIA. [48] Although there was much overlap in the appellant’s submissions, they may be conveniently distilled into five alleged errors committed by the motion judge: (i) incorrectly placing the onus on the appellant; (ii) failing to apply a broad, liberal interpretation to the Construction Act, R.S.O. 1990 c. C30; (iii) erring in his consideration of the valuation of the leasehold interest; (iv) incorrectly admitting into evidence the letter from Paul Hindo to the Proposal Trustee that was attached to the Report of the Proposal Trustee to the court; and (v) incorrectly admitting into evidence the report of Mark Shore. I will address each of these arguments in turn. [49] First, the appellant submits that the motion judge erred in placing the onus on the appellant to value its security and its underlying collateral. The appellant argues that it needed to simply prove the amount of the debt and the existence of security. [50] Under s. 50.1(4) of the BIA, it is the appellant who must bring the application to challenge the assessed value. It is not enough for the appellant to simply prove the debt and the existence of security. In essence, the appellant has to establish, on a balance of probabilities, that it could realize more money by enforcing its security in comparison with the proposed assessed value set out in the Proposal. At this stage of the proceedings, the Proposal Trustee has already concluded that the Proposal including the debtor’s valuation was reasonable. Both the language and the scheme of the statute suggest that the onus is on the appellant, as the dissatisfied creditor, to show that its security should receive a higher value. This is unlike s. 128(1) of the BIA referenced in St. Anne-Nackawic Pulp Co. (Trustee of) v. New Brunswick (Minister of Business), 2005 NBQB 99, 11 C.B.R. (5th) 296, at para. 35, relied upon by the appellant where the trustee in bankruptcy sought full particulars in support of its request for proof of security. Here, the appellant had provided information on North House’s indebtedness, a valuation has already been made and is now being challenged by the appellant. This is therefore different from s. 128(1). Bankruptcy of Woodland Windows Ltd., 2003 BCSC 497, 43 C.B.R. (4th) 300, also relied on by the appellant, similarly did not involve s. 50.1(4). [51] As illustrated in this court’s decision in Workgroup Designs Inc., at paras. 14-16, a challenge to the assessed value given to security in a proposal must be brought under s. 50.1(4). The onus is then on the appellant to show that the proposed assessed value should be revised. I would not give effect to the appellant’s first submission relating to onus. [52] Second, the appellant submits that the motion judge failed to apply a broad, liberal interpretation to the provisions of the Construction Act. [53] The motion judge considered both provincial and federal legislation, stating: The real problem here is a clash between provincial and federal legislation and the limited protection for lien claimants in the face of an insolvency. Lien claimants are not without other recourse. [54] As the motion judge explained, the appellant had no right to seize and sell the leasehold interest as it had no lien judgment and, in any event, an order for sale pursuant to such a judgment is discretionary in nature. The motion judge also noted that if fairness were the primary concern, the court would have also been required to consider whether it would be fair to give the appellant priority over the general body of unsecured creditors, many of whom were owed far more than the appellant. I would reject this second submission of the appellant. [55] Turning to the appellant’s third submission, it argues that the motion judge’s consideration of North House’s leasehold interest was flawed. [56] As noted by the motion judge, two of the impediments to realizing value on a forced sale of the leasehold interest in this case are that: (a) the lease provides that it may not be assigned without the consent of the landlord who has the sole and unfettered discretion to refuse, and (b) the premises are “cut up” into food preparation sections such that a new tenant would likely have to gut the premises before installing its own leasehold improvements. [57] The appellant submits that the anti-assignment provision in the lease was not a barrier as the court can override such a provision. Neither of the respondents take issue with this proposition and both note that the motion judge did not conclude otherwise. At para. 20 of his reasons, the motion judge accepted that a court may have the right to override. However, he reasoned that “the fact that the lease may not be assigned without either the consent of the landlord or by litigating this question must be taken into account. That is an impediment to realizing any value and the cost of pursuing it would reduce the recovery.” This was a reasonable conclusion and he made no error in his consideration of this issue. [58] As for the cut up nature of the premises, the appellant also submits that the court could order North House to restore the premises back to its original condition as part of selling the leasehold interest. [59] As noted by North House and conceded by the appellant, this issue was not raised before the motion judge and is a new issue argued on appeal. This court generally will not entertain a new issue on appeal. This is because “it is unfair to permit a new argument on appeal in relation to which evidence might have been led at trial had it been known the issue would be raised”: Ontario Energy Savings L.P. v. 767269 Ontario Ltd., 2008 ONCA 350, at para. 3. See also: Frohlich v. Ferraro, 2017 ONCA 978, 85 R.P.R. (5th) 175, at para 5. The burden is on the party raising a new issue to establish that all the necessary facts are before the appellate court as fully as if the issues had been raised before the court of first instance: Kaiman v. Graham, 2009 ONCA 77, 245 O.A.C. 130, at para. 18. As stated in Costanza v. Desjardin Financial Security Life Insurance Company, 2023 ONCA 54 at para. 84: “[a]n appeal is not a forum for a party to advance new arguments not raised below”. Quite apart from the inability of the appellant to compel a sale of the leasehold interest, this issue involves a more comprehensive factual record than is present here. I would decline to entertain this argument. It follows that it is unnecessary to grant leave to the Proposal Trustee to admit a further report of the Proposal Trustee responding to scheduling matters engaged by this new issue advanced by the appellant for the first time on appeal. [60] Lastly, on this issue, it must be recalled that one must be mindful of what is being valued. There is no hard asset standing as security, but just a security interest in a contract, namely the lease. The appellant presented no evidence from any willing buyer or expressions of interest from any potential purchaser of an assignment of the lease even assuming some of the limitations embedded in such a purchase could be overcome. [61] The appellant’s fourth submission is that Mr. Hindo’s letter was inadmissible as an expert report. It complains that an expert report is not rendered admissible because it is attached to a report of the Proposal Trustee. No objection was made to the admission of Mr. Hindo’s letter before the motion judge. [62] The Proposal Trustee states that Mr. Hindo’s letter was not tendered as an expert report on what the appellant could realize were it to enforce its security. [63] The Proposal Trustee was of the view that the proposed assessed value of the appellant’s security at $0 by the debtor was reasonable and continued to be of that view following the appellant’s challenge. It prepared a Report to the court with its opinion that $0 was a reasonable assessment having considered the evidence of the appellant and North House. To validate its opinion, it states that it engaged Mr. Hindo only to provide his views on the viability of assigning the lease and attached the letter to its report to the court. The Proposal Trustee maintains that the letter was not tendered as an expert report but simply to validate the position that the Proposal Trustee continued to maintain that the security had $0 value. [64] To the extent that Mr. Hindo’s letter was described by the motion judge as expert evidence, I agree that it should have been in proper form. That said, for the most part, the shortcomings identified by Mr. Hindo in his letter, which was attached to the second Report of the Proposal Trustee, were readily apparent on the face of the record and did not require expert evidence. This included the requirement for the landlord to consent to an assignment and its sole and unfettered discretion to refuse, and the “cut up” nature of the premises into food preparation sections that would likely require gutting and replacement with new leasehold improvements. Mr. Hindo’s letter added nothing that was not otherwise evident from a reading of the record. Furthermore, it must be recalled that the Proposal Trustee itself is not without expertise. [65] I also note that the evidence of the appellant’s experts, Mr. Morris and Mr. Comba, also suffered from limitations. Mr. Morris was not an appraiser and Mr. Comba ignored the express provision in the lease that permitted the landlord to withhold consent in the event that market rent was higher. In addition, Mr. Comba based his value assessment on the value of the lease to North House, not on the value of the security on a forced sale of the leasehold interest. [66] Standing alone and independent of Mr. Hindo’s letter, the Proposal Trustee’s Report on its opinion was itself admissible and did not need to be in affidavit form. The appellant does not take issue with this proposition. Like a court appointed receiver or a Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 monitor, a proposal trustee is an officer of the court. Like a court appointed receiver or monitor’s report, a report of a proposal trustee is admissible evidence: see e.g., Farber v. Goldfinger, 2011 ONSC 2044, 75 C.B.R. (5th) 170, at paras 13-14, 34-36; Intercity Realty Inc. v. PricewaterhouseCoopers Inc. et al., 2024 ONSC 2400, at paras. 51-52; and Royal Bank of Canada v. Chesswood Group Ltd. et al., 2025 ONSC 1577, at para. 24. [67] Here, the Proposal Trustee filed a report stating that the proposed assessed value of $0 was reasonable and that it was unlikely that the appellant would realize any money should it enforce its lien over the lease. The appellant did not seek to cross-examine the Proposal Trustee, nor did it pose any written questions of the Proposal Trustee on its report. Under the circumstances, it was reasonable for the motion judge to accept that assessment. [68] Lastly, for the sake of completeness, in its factum, but not listed as an issue to be determined, the appellant complains that before the motion judge, it objected to admission of an affidavit and unsworn statements of Mark Shore which supported the assessment valuation of North House. In oral submissions, the appellant conceded that the motion judge placed no reliance on this evidence and the appellant accordingly did not press this argument. Conclusion [69] The motion judge found that the appellant had failed to meet its onus and failed to establish that its security had a value beyond $0 in the event it attempted to enforce its lien against North House’s leasehold interest. I see no basis on which to interfere with this determination. [70] In summary, I conclude that an appeal as of right under ss. 193(a), (b) or (c) of the BIA was unavailable but that leave to appeal pursuant to s. 193(e) of the BIA should be granted. For the reasons given, I would dismiss the appeal with costs to be paid by the appellant in the agreed upon amounts of $7,500 inclusive of disbursements and applicable tax to each of the respondents for a total payment of $15,000. I would also dismiss the Proposal Trustee’s motion to admit a further report. Released: July 30, 2025 “M.T.” “S.E. Pepall J.A.” “I agree. M. Tulloch C.J.O.” “I agree. R. Pomerance J.A.” [1] Division II addresses Consumer Proposals. [2] A secured creditor is defined in s. 2 of the BIA as, among others, “any person holding a … lien on or against the property of the debtor.” [3] Section 195 of the BIA states, in part, that “all proceedings under an order or judgment appealed from shall be stayed until the appeal is disposed of, but the Court of Appeal or a judge thereof may vary or cancel the stay … if it appears that the appeal is not being prosecuted diligently, or for such other reason as the Court of Appeal or a judge thereof may deem proper.” [4] Although this court did not rely on those Rules, in Canadian Western Bank v. Canadian Motor Freight Ltd., 2025 ONCA 263, at para. 3, the panel was prepared to deal with the appeals in the interests of expediting the conduct of the proceedings notwithstanding procedural errors including the failure to bring a motion for leave to appeal under s. 193(e) of the BIA.