



COURT OF APPEAL FOR ONTARIO

CITATION: 2403177 Ontario Inc. v. Bending Lake Iron Group
    Limited,

2016 ONCA 225

DATE: 20160322

DOCKET: M46061 (C61637)

Brown J.A. (In Chambers)

BETWEEN

2403177 Ontario Inc.

Applicant
    (Respondent/

Responding Party)

and

Bending Lake Iron Group Limited

Respondent (Appellant/

Responding
    Party)

Kenneth Kraft, for the moving party, A. Farber &
    Partners Inc.

Robert MacRae, for the responding party, Bending Lake Iron
    Group Limited

Heard: March 8, 2016

ENDORSEMENT

I.

OVERVIEW

[1]

This motion considers the somewhat awkward and
    anachronistic appeal provisions contained in s. 193 of the
Bankruptcy
    and Insolvency Act
, R.S.C. 1985, c. B-3 (the 
BIA
). A.
    Farber & Partners Inc. was appointed receiver of the property of Bending
    Lake Iron Group Limited (the Debtor) pursuant to s. 243(1) of the
BIA
. The Receiver moves for directions whether the Debtor requires
    leave to appeal under s. 193(e) of the
BIA

from
    the approval and vesting order made by the motion judge on January 8, 2016,
    2016 ONSC 199, transferring all the Debtors property to an unrelated
    purchaser, Legacy Hill Resources Ltd. (Legacy Hill). At the conclusion of the
    hearing, I held that the Debtor did require leave to appeal and set a timetable
    for its leave motion.  These are my reasons for so ordering.


II.

HISTORY OF THE RECEIVERSHIP

[2]

The Debtor went into receivership on September
    11, 2014 on the application of its secured creditor, 2403177 Ontario Inc. (the
    Receivership Order). The Debtors major asset is an undeveloped iron ore mine
    site located northwest of Thunder Bay, Ontario.

[3]

By order dated November 27, 2014, the court
    approved a Sales and Investor Solicitation Process for the Debtors property (the
    SISP Order). Significantly, the Debtor consented to the SISP Order.

[4]

In November 2015, the Receiver moved for court
    approval of an asset purchase agreement it had entered into with Legacy Hill
    for substantially all of the Debtors property (the Sale Agreement).  The
    Debtor opposed the motion and, in turn, brought its own motion seeking a
    variety of relief, including the postponement of the sale of its property.

[5]

The motion judge approved the Sale Agreement
    and ordered the vesting of the Debtors property in Legacy Hill upon the filing
    of a receivers certificate (the Approval and Vesting Order). As well, the
    motion judge dismissed the Debtors motion to postpone the sale and for other
    relief.

[6]

The Debtor filed a notice of appeal dated
    January 13, 2016 seeking to set aside the Approval and Vesting Order. Section
    195 of the
BIA
provides that all proceedings
    under an order appealed from are stayed until the appeal is disposed of.
    However, the Debtor did not perfect its appeal within the time required by the
Rules
    of Civil Procedure
, and this court has issued a notice of
    intention to dismiss the appeal for delay unless it is perfected by March 22,
    2016.

[7]

Legacy Hill is not prepared to close the Sale
    Agreement until the Debtor has exhausted its appeal rights in this court.

[8]

The Receiver moves for a declaration that the
    Debtor requires leave to appeal. Granting such relief would quash the Debtors
    existing notice of appeal.

III.

ISSUE ON THE MOTION

[9]

The central issue on this motion is whether the
    Approval and Vesting Order falls into any of the categories of cases identified
    in s. 193 of the
BIA
in which an appeal lies as of right to this court, or whether the
    Debtor must obtain leave to appeal under s. 193(e). Section 193 of the
BIA
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.

[10]

The Debtor submits that the Approval and Vesting
    Order falls within ss. 193(a), (b), and (c), and therefore an appeal lies as of
    right.  I shall consider the Debtors submissions on each sub-section in turn.

IV.

SECTION 193(a): DOES THE APPROVAL AND VESTING ORDER INVOLVE FUTURE
    RIGHTS?

A.

Positions of the parties

[11]

The Debtor submits the point in issue in its
    appeal involves future rights. The Debtor makes the following submissions in
    its factum:

[T]here remains outstanding a Notice of Motion
    seeking a finding that the Receiver has violated the Crowns fiduciary duty to
    Aboriginal Peoples, as well as the Honour of the Crown, such duties being owed
    by the Receiver as an Officer of the Court.  This motion has not been heard as
    of yet.



The future rights of the affected Aboriginal
    communities will very much be affected by the confirmation of the Vesting
    Order as granted by [the motion judge].

[12]

In order to assess this submission, some review
    is required of the evidence the Debtor placed before the motion judge on the
    sale approval motion about affected Aboriginal communities and of the relief the
    Debtor plans to seek in a further motion before the motion judge.

B.

Debtors evidence concerning affected
    Aboriginal communities

[13]

Mr. Henry Wetelainen, the President and CEO of
    the Debtor, swore an affidavit which was filed in opposition to the Receivers
    motion to approve the Sale Agreement. In it, he deposed that, in early 2015,
    after the Receivership Order had been made, he held discussions with Legacy
    Hill about a possible partnership/co-operative development in rescuing [the
    Debtor] from receivership. He described his discussions with Legacy Hill as
    attempts to attract a financial partner to assist in the refinancing of the
    Debtor in order to terminate the Receivership.

[14]

At various points in his affidavit, Mr.
    Wetelainen stated he had pursued those discussions as part of his continued
    efforts on behalf of [the Debtor] and its creditors, shareholders, stakeholders
    and affected Aboriginal communities. He deposed that the termination of the
    receivership would have a concurrent benefit to [the Debtor], its creditors,
    shareholders, stakeholders and affected Aboriginal communities.

[15]

Despite having pursued discussions with Legacy
    Hill in early 2015, Mr. Wetelainen opposed the Sale Agreement. He took the
    position that Legacy Hill had breached a fiduciary duty owed to the Debtor by
    dealing with the Receiver. Frankly, it is difficult to understand that position
    given that under the Receivership Order and the SISP Order, Mr. Wetelainen, as
    an officer of the Debtor, was not permitted to pursue the discussions he did with
    Legacy Hill without the knowledge and concurrence of the Receiver.

[16]

In any event, Mr. Wetelainens evidence
    disclosed that the main reason he opposed the Sale Agreement was that he wanted
    more time for the Debtor to find financing to take out its secured creditors
    and terminate the receivership. In his affidavit, he explained why the Debtor
    was seeking orders to postpone approval of the Sale Agreement:

The Orders being sought from the Court will
    ensure that all of the creditors, shareholders, stakeholders and affected
    Aboriginal communities be given an appropriate period of time pursuant to Court
    Order to permit [the Debtor] to complete the Corporate requirement for the
    purpose of providing the creditors, shareholders, stakeholders and affected
    Aboriginal communities to invest in Special Shares in [the Debtor] in order to
    retire the debt that [the applicant] has agreed to reduce to the amount as
    reflected in the Assets Purchase Agreement.



The net result of the successful refinancing
    of [the Debtor] will be that all the shareholders will have their share value
    protected and [the Debtor] will be required to deal with unsecured creditors in
    a fair fashion.  At all times during the financing proceedings with [Legacy
    Hill], I anticipated that there would be a compromise with respect to the
    amount of debt owed to the Applicant.

[17]

In Mr. Wetelainens view, the Sale Agreement is
    a disasterous agreement that will wipe out millions of dollars of shareholder
    value, creditor obligations to stakeholders and various Aboriginal
    communities.

[18]

A further reason given by Mr. Wetelainen for his
    opposition to the Receivers sale was that an asset purchase by Legacy Hill ran
    a very substantial risk of [Legacy Hill] alienating all of the affected
    Aboriginal communities as well as the members of the communities where a
    workforce would have been drawn from and whose cooperation would have been
    received. The Aboriginal Employment Preferences Policy identifies these clearly
    articulated goals.

C.

The Debtors pending motion

[19]

The Debtor intends to bring a motion before the
    motion judge at the end of May seeking an order that it be granted leave to
    commence an action against the Receiver for damages as a result of the failure
    of the Receiver to uphold the honour of the Crown and the Crowns fiduciary
    duties to Aboriginal peoples including the Aboriginal communities affected by
    the actions of the Receiver. In its notice of motion, the Debtor asserts it
    had provided continual notice to the Receiver that Aboriginal communities
    were directly affected by the receivership, yet the Receiver failed to maintain
    the honour of the Crown by not notifying affected Aboriginal communities of its
    intention to seek a sale of the Debtors assets.

D.

Analysis

[20]

The concept of future rights as a category of
    cases appealable to this court as of right traces its origins to the late nineteenth
    century federal
Winding-Up Act
.
[1]
The passage of time has not
    improved the clarity of the concept. In
Elias v. Hutchinson
,
[2]
McGillivray C.J.A. commented, at para. 20, that the authorities leave me in a
    state of uncertainty as to what a future right is at all, let alone what there
    is about a future right that would require a treatment of cases involving
    future rights different from cases that do not involve future rights.

[21]

Although the category of future rights increasingly
    seems an anachronistic and confusing basis upon which to ground appeal rights, courts
    have attempted to cloak the term future rights with some practical meaning.
In
Re Ravelston Corp.,
[3]
Doherty J.A. stated, at para. 18:

The meaning of the phrase "future rights" is not
    obvious. Caselaw holds that it refers to future legal rights and not to
    procedural rights or commercial advantages or disadvantages that may accrue
    from the order challenged on appeal  Rights that presently exist, but may be
    exercised in the future or altered by the order under appeal are present rights
    and not future rights [Citations omitted.]

[22]

Doherty J.A. went on to adopt, at para. 19, the view expressed
in
Elias v. Hutchison
, at paras. 100-101,

that s.
    193(a) of the
BIA
must refer to rights which could not at the present
    time be asserted but which will come into existence at a future time.

[23]

More recently, Blair J.A., in
Business Development Bank of Canada v. Pine
    Tree Resorts Inc.
,
[4]
stated, at para. 15:

Future rights are future legal rights, not
    procedural rights or commercial advantages or disadvantages that may accrue
    from the order challenged on appeal. They do not include rights that presently
    exist but that may be exercised in the future.

[24]

The Debtors argument that the Approval and
    Vesting Order involves the future rights of affected Aboriginal communities
    is vague and difficult to follow. Nevertheless, I do not accept it for several
    reasons.

[25]

First, for an order to involve future rights, it
    must involve the future rights of those with an economic interest in the debtor
    company  i.e. its creditors or shareholders.
[5]
On the sale approval motion, the Debtor did not adduce evidence that any
    affected Aboriginal community had such an economic interest in the Debtor,
    nor did any affected Aboriginal community adduce such evidence on the motion.
    The Receiver, in its December 21, 2015 Supplemental Report to its Third Report,
    informed the court that based on its review of the Debtors creditors listing,
    no Aboriginal groups are creditors of [the Debtor].

[26]

Second, at this stage of the process it does not
    lie in the Debtors mouth to contend that the Receiver failed to give proper
    notice to affected Aboriginal communities. The time to raise such an issue
    was when the Receiver sought approval of the SISP Order, yet the Debtor
    consented to that order.

[27]

Third, to the extent that the Approval and
    Vesting Order affects the rights of those with an economic interest in the
    Debtor, it affects the present, existing rights of the Debtors creditors and
    shareholders, not their future rights.

[28]

Finally, it is clear from Mr. Wetelainens
    affidavit that the Debtors real complaint about the effect of the Approval and
    Vesting Order is one concerning the commercial advantages or disadvantages
    that may accrue from the order challenged on appeal. Mr. Wetelainen objected
    to the Sale Agreement because its approval would wipe out shareholder equity
    and preclude efforts by the shareholders to raise financing to pay out the Debtors
    secured creditors. That has nothing to do with future rights within the
    meaning of s. 193(a).

[29]

I conclude that the point in issue in the
    Debtors challenge of the Approval and Vesting Order does not involve future
    rights within the meaning of s. 193(a) of the
BIA
.


V.

SECTION 193(b): WILL THE APPROVAL AND VESTING
    ORDER AFFECT OTHER CASES OF A SIMILAR NATURE IN THIS PROCEEDING?

A.

Positions of the parties

[30]

The Debtor submits that the Approval and Vesting
    Order is likely to affect other cases of a similar nature in the receivership
    proceeding.  In its factum, the Debtor argues that in granting the Approval and
    Vesting Order the motion judge failed to deal with the rights of the affected
    Aboriginal communities, an issue the Debtor wishes to raise on its appeal. The
    Debtor argues that the same issue will lie at the heart of its motion before
    the motion judge later in May seeking leave to sue the Receiver. The Debtor
    contends that because the Approval and Vesting Order likely will affect its
    motion for leave to sue the Receiver, s. 193(b) of the
BIA
applies.

[31]

The Receiver disputes that the issues on appeal
    would impact other issues in the receivership.

B.

Analysis

[32]

The jurisprudence under s. 193(b) of the
BIA
has
    consistently interpreted the section as meaning that a right of appeal will lie
    where the decision in question will likely affect another case raising the
    same or similar issues in the same bankruptcy proceedings.
[6]
The cases have expressed different views on whether the decisions covered by s.
    193(b) can only concern rights asserted against the bankrupt by parties other
    than the bankrupt, or whether the issue may concern rights asserted by multiple
    persons against the bankrupt, rather than one persons rights arising in
    multiple contexts.
[7]
Regardless, s. 193(b) must concern real disputes likely to affect other cases
    raising the same or similar issues in the same bankruptcy or receivership
    proceedings.
[8]

[33]

Section
    193(b) possesses several anachronistic features.  First, while permitting an
    appeal of right on an issue that likely will arise again in an insolvency
    proceeding might appear to foster the efficient conduct of insolvency
    proceedings, in reality any automatic appeal right will slow down insolvency
    proceedings which usually operate on a real-time basis. As well, the language
    of s. 193(b) does not measure the overall significance of the issue to the
    proceeding  minor issues which might arise again are treated in the same
    fashion as major ones. Finally, most contemporary insolvency litigation sees
    one judge assigned to manage the proceeding from its inception to its end.
    Under a one judge model of case management, common or repeat issues tend to
    get grouped together for adjudication at one time, not at different stages of
    the proceeding.

[34]

I do not accept the Debtors submission that the
    Approval and Vesting Order is likely to affect other cases of a similar nature
    in the receivership proceedings.

[35]

The Receiver filed evidence on this motion which
    shows the Debtor did not raise any issue about a receivers constitutional duty
    to consult affected Aboriginal communities either in its materials or during
    its submissions on the sale approval motion. The Debtor does not dispute this
    evidence. Accordingly, the Debtor will be seeking to raise the duty to consult
    issue for the first time on appeal.

[36]

In the normal course, appeals are not the proper
    forum in which to raise brand new issues that significantly expand or alter the
    landscape of the litigation.
[9]
The burden rests on an appellant to persuade the court that all the facts
    necessary to address the point are before the court as fully as if the issue
    had been raised in the court below.
[10]
It is far from clear that the Debtor would succeed in persuading this court that
    the interests of justice require an exception to this normal course of
    litigation. The Debtor faces several high hurdles.

[37]

First, the Debtor consented to the SISP Order
    which authorized the Receiver to proceed with the sales process.  The Debtor
    did not raise the issue of a duty to consult affected Aboriginal communities about
    a sale at that time; it is difficult to conceive how it can do so now.

[38]

Second, it is very doubtful that the Debtor has
    standing to advance on appeal an argument based on the duty to consult. As the
    Supreme Court of Canada explained in
Behn v. Moulton Contracting Ltd.
,
[11]
at para. 30:

The duty to consult exists to protect the collective rights of
    Aboriginal peoples. For this reason, it is owed to the Aboriginal group that
    holds the s. 35 rights, which are collective in nature But an Aboriginal group
    can authorize an individual or an organization to represent it for the purpose
    of asserting its s. 35 rights. [Citations omitted.]

[39]

No evidence was led on this motion to suggest
    that any Aboriginal group had authorized the Debtor to represent it for the
    purpose of asserting rights under s. 35 of the
Constitution Act
,
1982
.

[40]

Third, s. 193(b) of the
BIA
requires
    that the order sought to be appealed is likely to affect other cases of a
    similar nature in the bankruptcy proceedings. Here, the Approval and Vesting
    Order disposed of all the property of the Debtor. Consequently, there will not
    be any other case dealing with the disposition of the Debtors property in this
    receivership.

[41]

The final hurdle is that only after the Debtor
    received the January 8, 2016 reasons of the motion judge granting the Approval
    and Vesting Order did it launch its motion for leave to sue the Receiver for its
    alleged breach of the duty to consult. That sequence of events strongly
    suggests that, having unsuccessfully opposed the Receivers sale, the Debtor
    looked for some procedural device to fit itself into s. 193(b). Its motion for
    leave to sue the Receiver was the result.  In my view, a party cannot create a
    case after the impugned order was made in order to invoke s. 193(b).
    Consequently, the Debtors pending motion for leave to sue does not qualify as
    a case of a similar nature in the receivership.

[42]

For those reasons, the Approval and Vesting
    Order does not fall within s. 193(b) of the
BIA
.

VI.

SECTION 193(c): DOES THE PROPERTY INVOLVED IN
    THE APPEAL EXCEED IN VALUE $10,000?

A.

Positions of the parties

[43]

The Debtor submits that the Approval and Vesting
    Order will transfer property in excess of $10,000 and, therefore, falls within s.
    193(c) of the
BIA
because the property involved in the appeal exceeds in value ten
    thousand dollars.

[44]

While the actual sale price is subject to a
    confidentiality order pending the closing of the transaction, there is no
    dispute that the sale price significantly exceeds $10,000. Nor is there any
    dispute that if the transaction closes, the Debtors secured lenders will
    suffer a significant shortfall.
[12]

[45]

On its part, the Receiver submits that an
    approval and vesting order forms part of the methods a receiver employs to
    dispose of a debtors assets and, as such, is a matter of procedure that does
    not fall within s. 193(c).

B.

Analysis

[46]

The history of the interpretation of s. 193(c)
    is an unusual one. Under the modern approach to statutory interpretation,
the
    words in a statute must be read in their entire context, in their grammatical
    and ordinary sense, and in keeping with the scheme and object of the Act.
[13]
By contrast,
as the Manitoba Court of Appeal observed at para.
    9 in
Re Dominion Foundry Co.,
[14]
the
    interpretation of the phrase the property involved in the appeal found in s.
    193(c) historically has proceeded in a different fashion, drawing heavily upon cases
    interpreting a similar provision in the federal
Winding-Up Act
,
[15]
as well as on the jurisprudence considering former provisions in the
Supreme
    Court of Canada Act
which linked the right to appeal to
    the amount or value of the matter in controversy.
[16]

[47]

Courts
    have observed that the availability under s. 193(e) of a right to seek leave to
    appeal in circumstances falling outside those captured by automatic rights of
    appeal in ss. 193(a) to (d) signals the need for appeal courts to control
    bankruptcy proceedings in order to promote the efficient and expeditious
    resolution of the bankruptcy, one of the principal objectives of bankruptcy
    legislation.
[17]
However, courts across the country tend to part company on whether securing
    those objectives of the
BIA
is fostered by a broad, generous and
    wide-reaching interpretation of the appeal rights contained in
BIA
ss. 193(a) to (d)  with the bar set low to fall within s. 193(c)
[18]
 or by interpretations conducted within the context of the demands of real
    time litigation characteristic of contemporary insolvency and restructuring
    proceedings.
[19]

[48]

In my view, two contextual factors should inform
    any application of the sub-section.

[49]

First, the predecessor section to the modern s.
    193(c) was enacted in 1919, at a time when the then
Bankruptcy Act
did not include the right to seek leave to appeal in the event a
    decision did not fall within one of the categories giving automatic rights of
    appeal. As Doherty J.A. observed in
Re Ravelston Corp.
, the earlier absence in s. 193 of an ability to seek leave to
    appeal prompted courts to give categories of appeals as of right a wide and
    liberal interpretation in order to avoid closing the door on meritorious
    appeals. The 1949 inclusion of the leave to appeal right now found in s. 193(e)
    removes the need for such a broad interpretative approach.

[50]

Second, Canadas other major insolvency statute,
    the
Companies Creditors Arrangement Act
,

R.S.C. 1985, c. C-36 (the 
CCAA
),
contains, in s. 13, an across-the-board requirement to obtain leave
    to appeal from any order made under that Act. The automatic right of appeal
    provisions in ss. 193(a) to (d) of the
BIA
do
    not work harmoniously with the
CCAA
s appeal
    regime.

[51]

For example, if one were to accept the Debtors
    argument that whenever the value of the property transferred by a sales
    approval and vesting order exceeded $10,000 an appeal as of right to this court
    exists, then, as the Manitoba Court of Appeal noted, at para. 7, in
Re
    Dominion Foundry Co.
, an appeal as of right would exist
    in almost every case because very few insolvency cases would involve property that
    did not exceed the statutory threshold. Blair J.A. repeated that concern in
Business Development Bank of Canada v. Pine
    Tree Resorts Inc.
, at para. 17. By contrast, a
    challenge to a sales approval and vesting order obtained by a debtor company
    under the
CCAA
would require obtaining leave
    to appeal under s. 13 of that Act.

[52]

In my view, no principled basis exists to distinguish
    the treatment of a sale by a receiver or trustee, from that by a
CCAA
debtor company. In each case, approval of the sale would require
    consideration of the types of principles articulated in
Royal Bank
    of Canada v. Soundair
.
[20]
A need for the legislative harmonization of appeal rights in insolvencies is
    apparent.

[53]

In
    my view, these contextual factors militate against employing an expansive
    application of the automatic right of appeal contained in s. 193(c) and,
    instead, point to the need for an approach which is alive to and satisfies the
    needs of modern, real-time insolvency litigation. I shall employ such an
    approach in applying the following three principles that have emerged from the jurisprudence:
    s. 193(c) does not apply to (i) orders that are procedural in nature, (ii) orders
    that do not bring into play the value of the debtors property, or (iii) orders
    that do not result in a loss.

Is the order procedural in nature?

[54]

The caselaw holds that s. 193(c) of the
BIA
does not
    apply to decisions or orders that are procedural in nature, including orders
    concerning the methods by which receivers or trustees realize an estates
    assets.

[55]

In
Re Dominion Foundry Co.
, the motion judge
    had dismissed a request to set aside a sale of assets by a trustee in
    bankruptcy on the grounds that the sale was improvident and the trustee had
    acted improperly. The Manitoba Court of Appeal held, at para. 20, that although
    the sale involved assets whose value exceeded the statutory threshold, an order
    concerning the method by which the trustee disposed of assets did not fall
    within s. 193(c). Consequently, where a person seeks to challenge an order on
    appeal by calling into question the methods
employed by a trustee to
    dispose of the assets of the bankrupt, the order involves a matter of procedure
    which does not fall within s. 193(c).

[56]

The Alberta Court of Appeal reached a similar
    result in
Alternative Fuel Systems Inc. v. EDO (Canada) Ltd. (Trustee
    of)
.
[21]
There, the trustee had invited tenders for the purchase of the bankrupts
    equipment. When tenders closed, the trustee determined that Alternatives
    tender was the highest. Once another tenderer, Impco Technologies Inc., found
    out that it was not the highest bidder, it submitted a second tender offering
    substantially more than Alternative.  The trustee sought directions from the
    court.  The bankruptcy judge directed the trustee to accept Impcos second,
    higher tender. Alternative filed a notice of appeal and moved before the
    Alberta Court of Appeal for a determination that it could appeal as of right
    under s. 193(c) because the value of the property involved exceeded the
    statutory threshold.

[57]

OLeary J.A., following
Re Dominion
    Foundry Co.
, held that Alternative had no right of appeal
    under s. 193(c). He reasoned, at para. 12, that the bankruptcy judges order
    was essentially a procedural direction to the trustee in the face of
    Alternatives challenge to the method by which the equipment was sold,
    by-passing the tender process.

[58]

In the present case, the overwhelming majority
    of the Debtors grounds of appeal are process-related, involving issues
    concerning the Debtors dealings with Legacy Hill following the Receivership
    Order, the Receivers disclosure of information about the Sale Agreement, the
    negotiation process it followed with Legacy Hill, its treatment of persons
    affected by the Sale Agreement, and the adequacy of notice it gave to affected
    Aboriginal communities. Those grounds of appeal are procedural in nature and
    do not fall within s. 193(c).

Does the order put into play the value of the
    Debtors property?

[59]

The second principle emerging from the caselaw
    is that s. 193(c) is not engaged where the decision or order does not call into
    play the value of the debtors property. In
Business Development Bank of Canada v. Pine Tree
    Resorts Inc.,
Blair J.A. considered whether an
    order appointing a receiver over assets of debtor corporations that exceeded
    $10,000 in value fell within s. 193(c). He concluded that it did not stating,
    at para. 17, that an order appointing a receiver does not bring into play the
    value of the property; it simply appoints an officer of the court to preserve
    and
monetize those assets
, subject to court approval.

[60]

In the present case, the Approval and Vesting
    Order marked the final step in the Receivers monetization of the Debtors assets.
    The property of the Debtor is to be converted through the Sale Agreement into a
    pool of cash and, as stated in the Approval and Vesting Order, the net
    proceeds from the sale of the Purchased Assets shall stand in the place and
    stead of the Purchased Assets. The ground of appeal advanced by the Debtor to
    the effect that the sale process should be postponed to let shareholders re-finance
    the company does not bring into play the value of the Debtors property, so s.
    193(c) does not apply.

Does the order result in a gain or loss?

[61]

Finally, for s. 193(c) to apply, the order in
    question must contain some element of a final determination of the economic
    interests of a claimant in the debtor. In
Trimor Mortgage Investment Corporation v. Fox
,
[22]
Paperny J.A. described this aspect of s. 193(c) at para. 8:

The test to be applied under this section was
    originally articulated in
Orpen v Roberts
, [1925] SCR 364 at
    367, [1925] 1 DLR 1101, and confirmed in
Fallis and Deacon v
    United Fuel Investments Ltd.
, [1962] SCR 771, 4 CBR (NS) 209,
    which set out that the amount or value of the matter in controversy is the loss
    which the granting or refusal of that right would entail.

[62]

The Approval and Vesting Order did not determine
    the entitlement of any party with an economic interest in the Debtor to the
    sale proceeds.  In that sense, no interested party gained or lost as a result
    of the order.

[63]

However, one ground of appeal set out in the
    Debtors notice of appeal is that the motion judge erred in law in finding that
    the Receiver had not acted improvidently. In its factum, the Debtor contends
    that the Receivers sale of its property is improvident because it would result
    in a loss of $125 million to its shareholders. In support of that ground of
    appeal, on this motion the Debtor relied on a memo prepared by Broad Oak
    Associates dated February 3, 2014, half a year before the Receivership Order
    was made. Using an iron ore pellet price of US$100 per tonne, Board Oak placed
    the value of a fully-developed Bending Lake iron ore project in the range of
    US$100 million to $300 million. This, the Debtor argues, shows that the
    Approval and Vesting Order selling its undeveloped mine site assets resulted in
    a loss to shareholders of an amount exceeding $10,000 in value, giving it a
    right to appeal under s. 193(c).

[64]

I do not accept the Debtors submission. The
    determination of whether the property involved in the appeal exceeds ten
    thousand dollars is a fact-specific one. In order to bring itself within s.
    193(c), the Debtor must do more than make a bald allegation of improvident
    sale.  This is real-time insolvency litigation in which delays in the
    proceeding can prejudice the amounts fetched by a receiver on the realization
    process.  The Debtor must demonstrate some basis in the evidentiary record considered
    by the motion judge that the property involved in the appeal would exceed in
    value $10,000, in the sense that the granting of the Approval and Vesting Order
    resulted in a loss of more than $10,000 because the Receiver could have
    obtained a higher sales price for the Debtors property. Bald assertion is not
    sufficient, otherwise a mere bald allegation of improvident sale in a notice of
    appeal could result in an automatic stay of a sale approval order under
BIA
s. 195 as the appellant pursues its appeal.
[23]

[65]

In the present case, the evidentiary record
    discloses that there were no competing bids for the Debtors property for the
    motion judge to consider; only Legacy Hill expressed a serious enough interest to
    lead to a Sale Agreement with the Receiver.

[66]

Neither the Debtor nor its shareholders put
    before the motion judge a valuation of the Debtor made near in time to the
    execution of the Sale Agreement. Mr. Wetelainen did not attach the pre-receivership
    Broad Oak memo to the affidavit he placed before the motion judge. By contrast,
    the Receiver reported to the motion judge that the market price of iron ore had
    declined to the mid-US$50 per tonne range, making a court sanctioned sales
    process very challenging in the current market conditions. The market price for
    iron ore reported by the Receiver was far below the pre-receivership assumptions
    used by Broad Oak.

[67]

Nor did Mr. Wetelainen depose on the sale
    approval motion that the Debtors property was worth over $100 million.
    Instead, in his affidavit he stressed the need to postpone the sale to allow
    the Debtors shareholders time to negotiate a compromise of the secured debt
    and then pay off the compromised debt.

[68]

Finally, the Debtors secured lenders supported
    the Sale Agreement, notwithstanding that they would suffer a significant
    shortfall on the sale.

[69]

Taken together, those facts do not disclose any
    basis in the evidentiary record for the Debtors assertion that the sale would
    result in a loss of rights greater than $10,000 because the Receiver could have
    obtained a higher price for the Debtors property. Accordingly, I am not
    persuaded that there is any evidentiary basis to the Debtors bald assertion in
    its notice of appeal that the Approval and Vesting Order sanctioned an improvident
    sales transaction which resulted in a loss to the Debtor within the meaning of
    s. 193(c).

[70]

I conclude that the Approval and Vesting Order
    does not fall within s. 193(c) of the
BIA
.


VII.

DISPOSITION

[71]

For these reasons, I granted the Receivers
    motion and ordered that the Debtor requires leave to appeal from the Approval
    and Vesting Order. The Debtors notice of appeal dated January 13, 2016 is
    quashed.

[72]

The parties agreed to the following timetable
    for the filing of materials on the Debtors leave to appeal motion:


(i)

The Debtor would file
    its leave materials by March 28, 2016;


(ii)

The Receiver would file
    any responding materials by April 4, 2016;


(iii)

The Debtor would file
    reply materials, if any, by April 11, 2016.

[73]

I directed that the leave materials be placed
    before a panel for consideration on April 12, 2016. I did so, in part, to
    obviate the need for Debtors counsel to travel down to Toronto for an oral
    Chambers leave motion.

[74]

The parties may serve their leave materials
    electronically.  Although the parties will need to file the appropriate number
    of hard copies of their materials in accordance with the
Rules of Civil Procedure
, they may file with the court an electronic copy either by email or
    by USB key. The date of electronic filing will be deemed the date of the filing
    of the materials with the court.

[75]

The parties agreed that the costs of this motion
    would be reserved to the panel hearing the leave to appeal motion.

David Brown
    J.A.





[1]
Now, the
Winding-up and Restructuring Act
, R.S.C. 1985, c. W-11, s. 103.
    See
In re Union Fire Insurance Co.
(1886), 13 O.A.R. 268, (C.A.) at pp.
    294-295.



[2]
(1981), 14 Alta. L.R. (2d) 268; 121 D.L.R. (3d) 95, [1981] A.J. No. 896 (C.A.).



[3]
(2005), 24 C.B.R. (5th) 256 (Ont. C.A.)



[4]
2013 ONCA 282, 115 OR (3d) 617.



[5]

See
Ditchburn
    Boats & Aircraft (1936) Ltd., Re
(1938), 19 C.B.R. 240 (Ont. C.A.), at
    p. 242 quoting with approval
In Re Kern Agencies Ltd.
(1931), 12 C.B.R.
    279 (Sask. C.A.), at p. 281.



[6]

Wong v. Luu
, 2013 BCCA 547, at para. 21.



[7]

See
Wong v. Luu
, at para. 21, and the
    Quebec jurisprudence summarized in
Re Norbourg Gestion dactifs inc.,
2006 QCCA 752, 33 C.B.R. (5th) 144 at paras. 9-11.



[8]

Global Royalties Ltd. v. Brook
, 2016 ONCA 50, at para. 19.



[9]

Perez
    v. Salvation Army in Canada
(1998), 42 O.R. (3d) 229, 171 D.L.R. (4th) 520 (C.A.), at para. 11.



[10]

Kaiman
    v. Graham
, 2009 ONCA 77, 245
    O.A.C. 130, at para. 18.



[11]
2013 SCC 26, [2013] 2 S.C.R. 227.



[12]
In its Third Report dated November 30, 2015, the Receiver informed the court
    that the Debtors liabilities totaled approximately $12.4 million consisting of
    (i) secured loans from the applicant in excess of $3.5 million, (ii) payroll
    deduction and HST claims by the Canada Revenue Agency of approximately
    $405,000, and (iii) unsecured liabilities of close to $8.5 million.



[13]

Rizzo & Rizzo Shoes Ltd., Re

(1998), 154 D.L.R.
    (4th) 193 (S.C.C.) at para. 21
;

Bell ExpressVu
    Ltd. Partnership v. Rex

2002 SCC 42, 212 D.L.R. (4th) 1 (S.C.C.) at para. 26
.



[14]
(1965), 51 W.W.R. 679.



[15]
Such as
Faillis and Deacon v. United Fuel Investments Ltd
, [1962] S.C.R.
    771, at p. 774.



[16]

Trimor
    Mortgage Investment Corporation v. Fox
, 2015 ABCA 44, at para. 8;
Galaxy Sports Inc. v.
    Abakhan & Associates Inc.
, 2003 BCCA 322, 44 C.B.R. (4th) 218 at para.
    12;
Newfoundland and Labrador Refining Corporation v. IJK Consortium
,
    20098 NLCA 23, 52 C.B.R. (5th) 8 at para.
18.




[17]

Wong v. Luu,
at para. 23;
Re Norbourg Gestion dactifs inc
, at para. 9.



[18]

Wong v. Luu
, at para. 23.



[19]

Re Stelco Inc
. (2005), 8 C.B.R. (5th) 150 (Ont. C.A.), at para. 4.



[20]
(1991), 4 O.R. (3d) 1 (C.A.).



[21]
1997 ABCA 273, 48 C.B.R. (3d) 171.



[22]
2015 ABCA 44.



[23]
See, for example,
Faillis and Deacon v. United Fuel Investments Ltd.
where, at pp. 773-774 the Supreme Court of Canada described the specific
    evidence of loss contained in the record.


