



COURT OF APPEAL FOR ONTARIO

CITATION: Enroute Imports Inc. (Re) 2016
    ONCA 247

DATE: 20160405

DOCKET: C60594

Weiler, Hourigan and Huscroft JJ.A.

BETWEEN

IN THE MATTER OF THE PROPOSAL OF ENROUTE IMPORTS
    INC. of the City of Mississauga in the Province of Ontario

J. Dannial E.S. Baker, for the appellants, unsecured
    creditors, Frank Santaguida and Victor Santaguida

Craig A. Mills, for the respondent Enroute Imports Inc.

R. Graham Phoenix, for the Proposal Trustee

Heard: March 29, 2016

On appeal from the order of Justice Thomas J. McEwen of
    the Superior Court of Justice, dated April 23, 2015.

ENDORSEMENT

[1]

The appellants were awarded a judgment against Enroute Imports
    (Enroute) in 2003 in the amount of $65,000 plus interest and costs. They
    recovered 52.3% of their claim just prior to Enroute filing a notice of
    intention to make a proposal under the
Bankruptcy and Insolvency Act
,
    R.S.C. 1985, c. B-3 (the 
BIA
). The proposal was subsequently filed,
    amended, and accepted by 92% of the creditors representing 87% of the value of
    the outstanding debt more than the required majority of creditors (the Amended
    Proposal).

[2]

The appellants, who are unsecured creditors, objected to the Amended
    Proposal and conducted an out of court examination of Vincent Pileggi, the
    president of Enroute. They sought to adjourn the approval motion to compel
    answers to undertakings, refusals, and questions taken under advisement, and to
    continue the examination of Mr. Pileggi. The motion judge declined to adjourn
    the motion, approved the Amended Proposal, and terminated the appellants
    notices of garnishment.

[3]

In his factum, the appellant raises numerous grounds of appeal related
    to the motion judges refusal to adjourn the approval motion. He further
    submits that as a result of the motion judges refusal to adjourn the approval
    proceedings, he was denied the opportunity to establish that the officers and
    directors of Enroute had engaged in wrongful conduct, a consideration relevant
    to whether the proposal was reasonable and made in good faith and, ultimately,
    to whether approval should be granted.

[4]

A preliminary issue is whether leave to appeal the motion judges order
    is required under s. 193 of the
BIA
. The appellants submit that leave
    is not required, relying on s. 193(c) of the
BIA
, which states: 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: (c) if the
    property involved in the appeal exceeds in value ten thousand dollars. The
    respondent submits that there is no right of appeal because the primary remedy
    sought, continuation of the examination of Mr. Pileggi, is not quantifiable in
    money.

[5]

The case law considering s. 193(c) from this court makes clear that,
    given the broad nature of the stay imposed by s. 195 of the
BIA
, the
    right of appeal without leave under s. 193(c) must be narrowly construed. In
    addition, the appeal must directly involve property exceeding $10,000 in value:
Crate Marine Sales Limited (Re)
, 2016 ONCA 140,
Robson Estate v.
    Robson
(2002)
, 33 C.B.R.
    (4th) 86 (Ont. C.A.),
Business Development Bank of Canada v. Pine Tree
    Resorts Inc.
, 2013 ONCA 282, 115 O.R. (3d) 617, and
Ontario Wealth
    Management Corporation v. Sica Masonry and General Contracting Ltd.
, 2014
    ONCA 500, 17 C.B.R. (6th) 91.

[6]

In our view, the appellants require leave to appeal. The right to
    conduct an examination is procedural and does not directly involve property.
    Similarly, the appellants central argument regarding the correctness of the
    approval order is that the motion judge erred in finding that the proposal was
    reasonable and made in good faith. Again this is not a situation where property
    is directly in issue.

[7]

In considering whether leave to appeal under s. 193 (e) of the
BIA
should be granted, a court will look to whether the proposed appeal: (i) raises
    an issue that is of general importance to the practice in bankruptcy/insolvency
    matters or the administration of justice as a whole; (ii) is
prima facie
meritorious; and (iii) would unduly hinder the progress of the
    bankruptcy/insolvency proceedings:
Business Development Bank of Canada
,
at para. 29.  In our view, the
    appellants have not established that leave to appeal should be granted under s.
    193 of the
BIA
.

[8]

We are not satisfied that the issues raised on the proposed appeal are
    of significance beyond the interests of the parties. The appeal is focused on
    fact-specific issues of procedural fairness and the reasonableness and good
    faith of the Amended Proposal. The discretionary considerations of the motion
    judge do not give rise to any matters of general significance to
    bankruptcy/insolvency matters or to the administration of justice as a whole.

[9]

We are also of the view that there is no merit to the proposed appeal.
    The decision of the motion judge not to grant an adjournment is highly
    discretionary and will not be lightly interfered with by this court. Moreover,
    there were ample grounds to refuse the adjournment, including the timing of the
    request, the fact that the appellants had failed to respond to the proposal
    trustees offers to provide information and access to documents, the
    speculative and disproportionate nature of the ongoing information sought, and
    the fact that any further delay would impact Enroutes ability to operate its
    business.

[10]

The motion judges conclusion that the Amended Proposal was reasonable
    is also unassailable. He carefully reviewed the Amended Proposal and concluded
    that it had the strong support of the creditors and its terms were calculated
    to benefit the general body of creditors. The motion judge also found that the
    proposal trustee had conducted a reasonable review and determined that there
    was no realistic possibility that the unsecured creditors would receive any money
    in a bankruptcy.

[11]

Further, there is no basis to
    interfere with the motion judges finding that the Amended Proposal was made in
    good faith. He considered the appellants concerns regarding the Amended
    Proposal, which were raised both on the approval motion and repeated on appeal,
    and dismissed them, finding that they [were] largely based on speculation and
    ignore[d] the real and legitimate basis for Enroutes difficulties.


[12]

With
    respect to whether the appeal would
unduly hinder the progress
    of the bankruptcy/insolvency proceedings, this is an artificial analysis in the
    circumstances since the appellants did not first move to obtain leave to appeal
    before a single judge of this court. Instead, they took the position that leave
    was not required and argued the issue of leave as part of the appeal.
Thus,
    it cannot be said that granting leave at this stage will unduly delay the
    proceedings.

[13]

Finally,
    we note that the parties filed fresh evidence on consent that Enroute failed to
    disclose prior to the approval of the Amended Proposal a partially subrogated
    lawsuit, in which it and a related company sued various parties as result of an
    olive oil spill. The lawsuit was eventually disclosed to all creditors by the
    proposal trustee. Because Enroute does not have the resources to fund the
    litigation, it offered to assign its claim to any creditor. No creditor
    expressed an interest in participating in the lawsuit. We are of the view that
    the existence of this lawsuit (which was commenced at the behest of Enroute's
    insurer, is unvalued, and has not progressed beyond the pleading stage) does
    not change the analysis above.

[14]

Leave to appeal is denied. Enroute, as the successful
    party, is entitled to its costs of the appeal, fixed at $14,500, inclusive of
    fees, disbursements and applicable taxes. The proposal trustee did not file
    materials or make submissions. In these circumstances, we decline to make a
    cost award in its favour.

K.M.
    Weiler J.A.

C.W.
    Hourigan J.A.

Grant
    Huscroft J.A.


