Canada Case Law

First National Financial GP Corporation v. Golden Dragon Ho 10 Inc.

Court

Court of Appeal for Ontario

The trial judge erred by treating FN as having a standalone common law entitlement to accelerated interest divorced from the mortgage contracts and by implying a contractual term inconsistent with express mortgage provisions; a proper contractual construction shows the FN mortgages limited FN on default to principal, accrued interest to date and costs and did not entitle FN to accelerated (yield maintenance) interest in the circumstances; the costs award to the receiver was within judicial discretion and is upheld.

Source excerpt

• Accelerated interest
• Closed mortgage
• Yield maintenance (prepayment penalty)
• Contractual interpretation
• Implied terms
• Anti-deprivation rule

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Richards (Re)

Court

Court of Appeal for Ontario

The mandatory distribution provision in s.5.2.2 vests the Trust property in the beneficiary at the Time of Division notwithstanding s.4.2; therefore the property (and sale proceeds) became property of the bankrupt and vested in the Trustee in Bankruptcy (and by assignment in RBC).

Source excerpt

• Trust interpretation
• Vesting of trust property
• Rights of trustee in bankruptcy
• Anti‑deprivation rule
• Assignment of claims
• S.38 bia

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Urbancorp Toronto Management Inc. (Re)

Court

Court of Appeal for Ontario

Leave to appeal was dismissed because the proposed grounds were not prima facie meritorious; the Supervising Judge correctly applied Chandos by finding the Transfer Provision is triggered by transfer of the lease not insolvency and therefore did not offend the anti-deprivation or pari passu rules; the contractual interpretation awarding $2.049 million to KTNI was within discretion and entitled to deference.

Source excerpt

• Anti-deprivation rule
• Pari passu rule
• Contract interpretation
• Distribution of sale proceeds
• Ccaa s.13 leave to appeal

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Chandos Construction Ltd. v. Deloitte Restructuring Inc.

Court

Supreme Court of Canada

The Supreme Court of Canada held that clause VII Q(d) in the subcontract was void under the anti-deprivation rule because it was triggered by bankruptcy and removed value from the estate.

• Anti-deprivation rule
• Pari passu rule
• Set-off
• Liquidated damages vs penalty
• Ipso facto clauses
• Anti-deprivation-rule

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Hutchingame Growth Capital Corporation v. Independent Electricity System Operator

Court

Court of Appeal for Ontario

The RESOP Contract unambiguously provided for automatic termination on the generator's assignment in bankruptcy; the Waiver and Amending Agreement did not eliminate that automatic termination; the BIA stay and the anti-deprivation rule did not invalidate the termination because the IESO obtained no benefit and executory contracts can be so terminated; HGC failed to avail itself of the contractual revival mechanism in s.9.2(3) and therefore could not validly assign the contract to Truestar; the vesting order could not vest a contract that had already terminated; the IESO did not breach the con…

Source excerpt

• Assignment
• Automatic termination on bankruptcy
• Vesting order
• Revival of contract
• Anti-deprivation rule
• Automatic stay (s.69.3 bia)

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