COURT OF APPEAL FOR ONTARIO

CITATION: Hillmount Capital Inc. v. Pizale,
    2021 ONCA 364

DATE: 20210528

DOCKET: M52200 (C68999)

Strathy C.J.O., Brown and Miller
    JJ.A.

BETWEEN

Hillmount Capital Inc.

Respondent

(Applicant)

and

Celine Brittany Pizale and
    Richard Stanley Pizale

Moving
    Parties/Appellants

(Respondents)

Jamie Spotswood and Rachel Migicovsky,
    for the moving parties/appellants, Celine and Richard Pizale

Robert Macdonald and Teodora Prpa, for
    the receiver, Zeifman Partners Inc.

Behn Conroy, for the purchasers,
    Patricia and David Armstrong

Shana Nodel, for second mortgagees,
    1713691 Ontario Inc. and Boris Nodel

Terry M. Walman, for first mortgagee,
    Elle Mortgage Corporation

Heard: February 8, 2021 by video conference

BROWN J.A.:

I.        OVERVIEW

[1]

The appellants, Celine and Richard Pizale, owned
    a partially-renovated residential property on Lyndhurst Avenue in Toronto (the
    Property). In June 2020 the first mortgagee, Hillmount Capital Inc.
    (Hillmount), applied for an order appointing the respondent, Zeifman Partners
    Inc., as receiver of the Property (the Receiver). Koehnen J. granted such an
    order on June 19, 2020 (the Appointment Order).

[2]

The Receiver marketed the Property on an as is
    basis and entered into an agreement of purchase and sale with Patricia and
    David Armstrong (the Purchasers). By orders dated January 8, 2021, Conway J.
    granted a sale approval and vesting order (the Approval Order), together with
    an administration order approving the Receivers activities, as well as
    increasing its borrowing authority to $250,000.00 (the Administration Order).

[3]

On January 15, 2021, the Pizales filed a notice
    of appeal of the Motion Judges January 8 orders. Two motions then ensued
    before the Chambers Judge.

[4]

First, the Receiver moved for orders (i)
    declaring that the Pizales do not have an automatic right of appeal under ss.
    193(a)-(d)
of the
Bankruptcy and Insolvency Act
,
    R.S.C., 1985, c. B-3 (the
BIA
),
and (ii) denying them leave to
    appeal the Approval and Administration Orders under
BIA
s. 193(e).

[5]

The Pizales then brought a motion for (i) a
    declaration that they have a right to appeal to this court from the Approval and
    Administration Orders under s. 193(c), which states that an appeal lies to
    the Court of Appeal if the property involved in the appeal exceeds in value
    ten thousand dollars, or (ii) alternatively, leave to appeal the orders
    pursuant to s. 193(e) and a stay of the Approval and Administration Orders
    pending their appeal.

[6]

By order dated February 4, 2021 the Chambers
    Judge declared that the Pizales did not have an automatic right of appeal and
    denied them leave to appeal (the Chambers Order). He ordered that the sale of
    the Property should proceed.

[7]

The Pizales thereupon brought an urgent panel
    review motion pursuant to s. 7(5) of the
Courts of Justice Act
, R.S.O.
    1990, c. C.43 (
CJA
), to set aside the Chambers Order and, if
    necessary, stay the Approval and Administration Orders.

[8]

The panel heard the motion on February 8, 2021,
    the day scheduled for the closing of the sale of the Property. At the
    conclusion of the hearing the panel dismissed the Pizales motion, with reasons
    to follow. These are those reasons.

II.       BACKGROUND

The Property and the receivership

[9]

The Pizales were in the process of renovating
    the Property when Hillmount, the first mortgagee, applied for the appointment
    of a receiver. At the time, there were four mortgages registered against the
    Property: (i) the first mortgage to Hillmount for approximately $3.35 million,
    later assigned to Elle Mortgage Corporation (Elle); (ii) an $800,000 second
    mortgage to 1713691 Ontario Inc. and Boris Nodel; (iii) a third mortgage for
    $569,359 to Harold Wine, Gad Caro, and Marshall Morris; and (iv) a $325,000
    fourth mortgage to Weihao Zhang. The Pizales had been in default under the
    first mortgage for a number of months prior to the Receivers appointment.

[10]

The Appointment Order authorized the Receiver to
    take possession of the Property, preserve, market, and sell it. The Receiver
    was authorized to borrow up to $150,000 from Hillmount. Given the significant
    costs required to complete the renovation of the Property, the limited
    borrowing authority given to the Receiver clearly indicated that its mandate
    under the Appointment Order was to sell the Property on an as is basis.

[11]

As described by the Motion Judge in her
    endorsement, the Receiver initially listed the Property for sale at $4.8
    million, which was higher than the appraisals it had obtained for a sale on an
    as is basis. Notwithstanding numerous showings of the Property, that listing
    price did not attract any offers. In mid-September 2020, the Receiver reduced
    the listing price to $4.15 million. Several offers were received, which the
    Receiver pursued. The Receiver entered into a Sale Agreement with the
    Purchasers for a purchase price that was higher than its two as is appraisals
    and any other offers received by the Receiver.

The decision of the Motion Judge

[12]

The Receiver moved for court approval of the
    Sale Agreement. In its Second Report, the Receiver stated that if the Sale
    Agreement was not approved, it did not believe it would be able to sell the
    Property for an equal or higher price.

[13]

The Pizales opposed the Receivers motion. They
    wanted to regain possession of the Property, complete the renovations, and sell
    it for an as complete or as renovated price. The second mortgagees also
    opposed the sale. Elle, the assignee of the first mortgage, and the third and
    fourth mortgagees opposed any sale of the Property but supported a discharge of
    the Receiver. Notwithstanding those positions, no motion to discharge the
    Receiver was brought before the Motion Judge.

[14]

The Motion Judge approved the Sale Agreement,
    concluding that the evidence showed the proposed sale satisfied the principles
    set out in
Royal Bank v. Soundair Corp.
(1991), 4 O.R. (3d) 1(C.A.).
    She rejected the submissions made in opposition to the sale stating, at para.
    26 of her endorsement:

It was only after the Sale Agreement was
    entered into that the mortgagees (after making certain arrangements with the
    Respondents) joined forces to mount a coordinated opposition to the [Approval
    and Vesting Order]. Their reasons for doing so are not apparent on the face of
    the record and consist only of a stated opposition. The mortgagees and
    Respondents failed to engage in the court-authorized receivership and sales
    process at any time prior to the signing of the Sale Agreement. The Receiver,
    after conducting a legitimate and proper sales process, entered into an
    agreement with the Purchasers, which the mortgagees and Respondents are now seeking
    to have this court reject. They are seeking to prevent the sale altogether. I
    have considered and weighed the interests of all parties and find that there is
    no basis for this court to allow the objections of the mortgagees and
    Respondents to prevent the Receiver from concluding its agreement with the
    Purchasers.

[15]

The Motion Judge also granted the Administration
    Order, which was unopposed save for the Receivers fees and disbursements, for
    which the Receiver intended to seek approval at a later date.

The decision of the Chambers Judge

[16]

The Pizales submitted to the Chambers Judge that
    their appeal fell within
BIA
s. 193(c). The Chambers Judge noted that
    the Pizales accepted the jurisprudence summarized in the chambers decision in
2403177
    Ontario Inc. v. Bending Lake Iron Group Limited
, 2016 ONCA 225, 347 O.A.C.
    226 (
Bending Lake
),
[1]
that
BIA
s. 193(c) does not apply to orders that: are procedural in nature; do not bring
    into play the value of the debtors property; or do not result in a loss. The
    Chambers Judge concluded that the Pizales appeal did not fall within
BIA
s. 193(c) for three reasons: (i) the Pizales critiques of the Approval
    Order all related to the manner in which the Property was sold and therefore
    concerned matters of procedure that did not give rise to an automatic right of
    appeal; (ii) the Pizales appeal did not bring into play the value of the
    Property; and (iii) the Approval Order would not result in a loss. The Chambers
    Judge rejected the Pizales argument that an automatic right of appeal lay in
    respect of the Administration Order for the same reasons he rejected the
    argument for the Approval Order.

[17]

The Chambers Judge then concluded that the
    Pizales should not be granted leave to appeal under
BIA
s. 193(e). He
    did not regard their appeal as raising an issue of general importance to the
    practice in bankruptcy/insolvency matters or the administration of justice as a
    whole. Instead, it was an attempt to relitigate a dispute between the Pizales
    and the receiver that will have little importance to bankruptcy/insolvency
    matters beyond the parties. Nor did the Chambers Judge view the Pizales
    appeal as
prima facie
meritorious. He found the Motion Judges
Soundair
analysis to be complete and the grounds do not raise a serious issue to be
    appealed. Finally, the Chambers Judge held that granting leave would risk
    losing the sale to the Purchasers, thereby placing into question the whole
    integrity of the sales process.

III.      THE STANDARD OF REVIEW

[18]

On a panel review of the order of a single judge
    pursuant to
CJA
s. 7(5), the panel may interfere with the order if the
    chambers judge failed to identify the applicable principles, erred in principle
    or reached an unreasonable result:
DeMarco v. Nicoletti
, 2017 ONCA
    417, at para. 3;
Yaiguaje v. Chevron Corporation
, 2017 ONCA 827, 138
    O.R. (3d) 1, at para. 21;
Struik v. Dixie Lee Food Systems Ltd.
, 2018
    ONCA 22, at paras. 5-6.

IV.     THE ISSUES RAISED BY THE REVIEW
    MOTION

[19]

On this motion to review, the Pizales advance
    three main arguments to set aside the Chambers Decision.

[20]

First, they contend the Chambers Judge erred by
    applying the legal principles concerning
BIA
s. 193(c) in a too
    restrictive or narrow way.

[21]

Second, the Pizales submit that the Chambers
    Judge misconstrued their arguments about why they had an automatic right of
    appeal under
BIA
s. 193(c). They were not alleging improvident sale or
    an improper sale process. Instead, they were alleging that the receivership was
    spent so there was no need to liquidate the Property. In their submission,
    the purpose of the receivership was achieved when Hillmount, the applicant
    creditor, was made whole and assigned its first mortgage to Elle. According to
    the Pizales, given that assignment the Motion Judge should have given more
    weight to the objections to the sale by the Pizales and remaining creditors.
    Instead, the Approval Order wrongfully preferred preserving the integrity of
    the sales process over the substantive interests of the Pizales and their
    creditor mortgagees.

[22]

More specifically, the Pizales submit that the
    Chambers Judge erred in concluding that:

(i)

the Approval and Administration Orders were
    procedural in nature when the Pizales were arguing that the orders prejudiced
    their substantive rights;

(ii)

the Approval Order did not put the value of the
    Property in question. The Pizales submit that the appraisals they filed put
    that value in question;

(iii)

the Pizales did not retain an interest in the
    Property and therefore its value was not in question. The Pizales argue that
    while the receivership changed the nature of their interest in the Property, it
    did not extinguish it; and

(iv)

the Approval Order did not result in a loss of
    at least $10,000. According to the Pizales, the Chambers Judge ignored the
    increase in their exposure to their creditors resulting from the sale of the
    Property on an as is rather than as complete basis.

[23]

Finally, the Pizales submit the Chambers Judge
    erred in failing to grant leave to appeal as he misconstrued the bases of the
    Pizales opposition to the Approval Order and their grounds of appeal.

V.      FIRST ISSUE: DID THE CHAMBERS JUDGE APPLY THE CASE LAW
    CONCERNING
BIA
s. 193(c) TOO NARROWLY?

[24]

Section 193(c) of the
BIA
states that
    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.

[25]

Before the Chambers Judge, the Pizales
    acknowledged that
BIA
s. 193(c) does not apply to certain types of
    orders, specifically those identified in
Bending Lake
. That decision
    observed, at para. 53, that the case law holds that
BIA
s. 193(c)
    does not apply to orders (i) that are procedural in nature,
[2]
(ii) that do not bring into play the value of the debtors property
[3]
or (iii) do not result in a loss.
[4]
The last principle derives from two Supreme Court of Canada cases,
Orpen
    v. Roberts
, [1925] S.C.R. 364, at p. 367, and
Fallis and Deacon v.
    United Fuel Investments Ltd.
, [1962] S.C.R. 771.

[26]

Notwithstanding this acknowledgement, the
    Pizales contend that the Chambers Judge failed to apply those principles in
    what they style as the less restrictive approach set out in the decision of the
    Saskatchewan Court of Appeal in
MNP Ltd. v. Wilkes
, 2020 SKCA 66, 449
    D.L.R. (4th) 439 (
Wilkes
).

[27]

To deal with that submission, I shall address
    two issues: (i) the significance, if any, of the narrow and broad
    interpretation labels regarding s. 193(c) found in some of the case law; and
    (ii) the practical difference, if any, of the approach in
Wilkes
in
    contrast to that found in the cases summarized in
Bending Lake
.

The narrow and broad interpretation
    dichotomy

[28]

Although the Pizales rely on some appellate
    decisions from other provinces to advocate for a broad interpretation of the
    automatic rights of appeal in
BIA
ss. 193(a)-(d), they ignore
    panel decisions of this court that have expressly taken a narrow approach to
    the interpretation of those appeal rights due to the broad automatic stay on
    appeal contained in
BIA
s. 195.
[5]

[29]

For example, several weeks after the
Bending
    Lake
decision, a panel of this court released reasons in
Enroute
    Imports Inc. (Re)
,

2016
    ONCA 247, 35 C.B.R. (6th) 1. At issue on that appeal was an order concerning
    the ability to examine a representative of the bankrupt. The panel stated, at
    para. 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. (emphasis added)

[30]

The panel found that the order at issue did not
    fall within s. 193(c) for two reasons: the entitlement to conduct an examination
    was procedural in nature and did not directly involve property, and the
    appellants argument that the motion judge erred in finding that the proposal
    was reasonable and made in good faith did not put the property directly in
    issue. The panel also denied leave to appeal.

[31]

The next year, a panel in
Romspen Investment
    Corporation v. Courtice Auto Wreckers Limited
, 2017 ONCA 301, 47 C.B.R.
    (6th) 1, leave to appeal refused, [2017] S.C.C.A. No. 238, followed
Enroute
    Imports
in holding that the right of appeal under s. 193(c) must be
    narrowly construed and limited to cases where the appeal directly involves
    property exceeding $10,000 in value: at para. 22.

[32]

These statements by two panels of this court
    strike a different analytical stance than the comments by the chambers judge in
Wong v. Luu
, 2013 BCCA 547, 348 B.C.A.C. 155, at para. 23, that the
    right of appeal under
BIA
s. 193 is broad, generous and
    wide-reaching. I would further note that the decisions in
Wong
and
Wilkes
did not address the effect of the automatic stay in s. 195 on the
    interpretation of ss. 193(a)-(d), a factor this court has considered
    significant for its interpretative approach.

[33]

That said, the recent panel decision of this
    court in
Davidson (Re)
, 2021 ONCA 135, 86 C.B.R. (6th) 1, determined
    that it was not necessary in that case to engage in a debate over whether
BIA
s. 193(c) should be given a narrow or broad interpretation: at paras. 9-10. In
    that case, the panel assumed that s. 193(c) applied but dismissed the appeal on
    the merits.

The state of the case law

[34]

When one looks past the labels of narrow and
    broad, one discovers that a consensus appears to exist in the case law about how
    to answer s. 193(c)s question of whether the property involved in the appeal
    exceeds $10,000. As I will explain, the Pizales submission greatly overstates
    the differences between the operative principles described in
Wilkes
and
    the case law summarized and categorized in
Bending Lake
.

[35]

Wilkes
held
    that a courts primary task when examining whether an automatic right of appeal
    exists is to answer the question raised by s. 193(c) and determine whether the
    property involved in the appeal exceeds $10,000. Writing for the court,
    Jackson J.A. continued, at para. 61:

Courts have used different ways of giving
    meaning to s. 193(c), but it is still the words of the statute that govern.
    Thus, in
Fallis
, by its adoption of what the Court had said in
Orpen
,
    the test is stated as,
What is the loss which the
    granting or refusing of the right claimed will entail?
In
Fogel
,
    the Court asked what is the value in jeopardy (at para 6). In
McNeil
,
    the Chambers judge observed that [t]he property involved in the appeal  may
    be determined by comparing the order appealed against the remedy sought in the
    notice of appeal (at para 13). In
Trimor
, the Chambers judge added to
    the
OrpenFallis
test by stating [t]he focus of the inquiry under s.
    193(c) is the amount of money at stake  (at para 10). All of these
    expressions are consistent with the statutory language present in s. 193(c).

[36]

As mentioned above at para. 25,
Bending Lake
summarized the case law as identifying three types of orders that do not fall
    within the ambit of
BIA
s. 193(c). The first type the case law
    identifies is an order that does not result in a loss, as described in the
Orpen
and
Fallis
cases, which were the focus of the courts analysis in
Wilkes
.
    The need for an order to result in a loss to fall within s. 193(c) was framed
    slightly differently by the Alberta Court of Appeal in
Re Bearcat
    Exploration Ltd. (Bankrupt)
, 2003 ABCA 365, 339 A.R. 376, where the court
    stated, at para. 10, that an appeal under
BIA
s. 193(c) must in
    substance be about the value of the property, not just any claim related to
    bankruptcy. Or, as put by panels of this court in
Enroute Imports
and
Courtice Auto Wreckers
, the appeal must directly involve property
    exceeding $10,000 in value.

[37]

Bending Lake
also pointed out that the jurisprudence treated two other types of orders as
    falling outside of s. 193(c): those that do not bring into play the value of
    the debtors property; and those that are procedural in nature. Excluding those
    types of orders from the ambit of s. 193(c) is consistent with  and indeed
    flows logically from  the loss principle articulated in the
Orpen/Fallis
cases.

[38]

By its nature the second type of order - one that
    does not bring into play the value of the debtors property - would not result
    in a loss or put property value in jeopardy. For example, it is well-established
    in the
BIA
s. 193(c) jurisprudence that an order appointing a receiver
    or interim receiver usually does not bring into play the value of the debtors
    property as it simply appoints an officer of the court to preserve and monetize
    those assets subject to court approval.
[6]

[39]

The third type of order that the case law places
    outside of s. 193(c) is a procedural order, which really is a sub-set of orders
    that do not bring into play the value of the debtors property. The case law
    identifies various procedural orders of this kind: the dismissal of the
    bankrupts motion to strike out the petition against him;
[7]
the conduct of an examination of the bankrupt;
[8]
an order declining leave to examine the bankrupt;
[9]
approval of the trustees proposed auction process;
[10]
directions regarding the conduct of a trial;
[11]
an appeal process order;
[12]
an order denying a union leave to apply for certification during
    receivership;
[13]
and
    an order granting an adjournment.
[14]
In some circumstances, a sale approval order, on analysis, may be
    merely procedural in nature.
[15]

[40]

Wilkes
acknowledges that it is solidly established in the jurisprudence that there is
    no right of appeal under s. 193(c) from a question involving procedure
alone
:
    at para. 61 (emphasis in original). Indeed, a few months after the release of
Wilkes
,
    Jackson J.A., sitting as a chambers judge, concluded in
Re Harmon
    International Industries Inc.
, 2020 SKCA 95, 81 C.B.R. (6th) 1, that leave
    was required to appeal a receivers sale process order stating, at paras.
    34-35:

Thus, what the Court has before it is an Order
    that authorizes a
list price
of $3.8 million for the Millar Avenue
    Building. It does not propose a sale price of $3.8 million.
All that the Order does is establish a process for the sale of
    the property.
Any proposed sale must still be confirmed.

At this point, the claim
    of loss is without any foundation at all. It is, as such, entirely speculative
. It assumes that the listing agent will not market the property to
    its fullest potential or that the receiver will place an improvident sale
    before the Court of Queens Bench to be confirmed and the Court will confirm
    it. It is possible that Harmon will apply to Elson J. under s. 185(7) of the
BIA
or wait until it is determined that the property is proposed to be sold for
    less than what Harmon believes it is worth and place the Brunsdon Appraisal
    before Elson J. at that time. It is also possible that Harmon will obtain other
    financing so as to permit it to buy the property at the list price or the
    property will sell for an amount acceptable to Harmon. In my view,
the Order does not directly have an impact on the proprietary
    or monetary interests of Harmon or crystallize any loss at this time. It
    concerns a matter of procedure only. It is merely an order as to manner of
    sale, as was the case in
Dominion
    Foundry Co. (Re)
(1965), 52 DLR (2d) 79 (Man CA).
No
    value is in jeopardy, and no party can claim a loss as a result.
In my
    view, the property involved in the proposed appeal does not exceed in value
    $10,000 as those words are used in s. 193(c) of the
BIA
. Thus, I
    conclude it was necessary for Harmon to apply for leave to appeal. (Emphasis
    added.)

[41]

However,
Wilkes
makes an additional
    point. Merely because the question in issue is procedural does not necessarily
    mean there is not property value involved in the appeal that exceeds $10,000.
    Section 193(c) requires a court to analyze the economic effect of the order
    sought to be appealed: at paras. 62-63.

[42]

I agree. What is required in any consideration
    of whether the appeal of an order falls within
BIA
s. 193(c) is a
    critical examination of the effect of the order sought to be appealed. Such an
    examination requires scrutinizing the grounds of appeal that are advanced in
    respect of the order made below, the reasons the lower court gave for the
    order, and the record that was before it. The inquiry into the effect of the
    order under appeal therefore is a fact-specific one; it is also an
    evidence-based inquiry, which involves more than merely accepting any bald
    allegations asserted in a notice of appeal:
Bending Lake
, at para. 64.
Wilkes
concurs on this point, holding, at para. 64, that the loss
    claimed must be sufficiently grounded in the evidence to the satisfaction of
    the Court determining whether there is a right of appeal, a point repeated in
    the subsequent chambers decision in
Re Harmon International Industries
,
    at para. 32.

[43]

While the amendment of the
BIA
in 1992
    to include Part XI dealing with Secured Creditors and Receivers increased the
    practical need for the timely adjudication of appeals launched from orders made
    under the Act, an approach to the application of s. 193(c) that requires a
    fact-specific, evidence-based critical scrutiny of the effect of the order
    sought to be appealed should foster the remedial objectives of Canadas
    insolvency statutes to provide for
timely
,
efficient
and
    impartial resolution of a debtors insolvency:
9354-9186 Quebec Inc. v.
    Callidus Capital Corp.
, 2020 SCC 10, 444 D.L.R. (4th) 373, at para. 40
    (emphasis added.)

[44]

There will be cases where the effect of an order
    sought to be appealed is such that an appeal lies as of right under
BIA
s. 193(c) but the respondent takes the view that the appeal is without merit or
    the automatic stay under
BIA
s. 195 would cause undue delay or prejudice
    in the bankruptcy proceeding. In such cases, it is open to the respondent to
    move to cancel the automatic stay. A motion to cancel the stay prompts a
    judicial assessment of the merits of the appeal, the appellants litigation
    conduct, and the relative prejudice that cancelling or maintaining the stay
    would have on interested persons and the interests of justice generally:
Royal
    Bank of Canada v. Bodanis
, 2020 ONCA 185, 78 C.B.R. (6th) 165 (Chambers),
    at paras. 11-14;
After Eight Interiors Inc. v. Glenwood Homes Inc.
,
    2006 ABCA 121, 391 A.R. 202 (Chambers), at para. 6;
Pelletier (Re)
,
    2020 ABCA 450, 86 C.B.R. (6th) 108 (Chambers), at para. 45.

Conclusion

[45]

The Pizales contention that the Chambers Judge
    erred by applying too restrictive an approach to s. 193(c) is based on a
    dichotomy in the case law that is more illusory than real, more semantic than
    substantive. While the cases under s. 193(c) have explained the interpretative
    task using differing language (as is to be expected in a body of jurisprudence
    under a national statute), at their core the cases share common ground in
    attempting to discern the operative effect of the order sought to be appealed:
    does the order result in a loss or gain, or put in jeopardy value of property,
    in excess of $10,000?

[46]

The Chambers Judge identified the applicable
    legal principles. I see no basis to interfere with his decision on that ground.

VI.     SECOND ISSUE: DID THE CHAMBERS JUDGE MISAPPREHEND THE
    PIZALES KEY ARGUMENTS?

[47]

I shall now consider the Pizales submission
    that the Chambers Judge misapprehended the key elements of their arguments. The
    Pizales advance two main arguments:

(i)

The Chambers Judge erred in holding that as a result of the Approval
    Order they had not suffered a loss of greater than $10,000; and

(ii)

The Chambers Judge misapprehended their
    principal ground of appeal, which is not based on allegations of an improvident
    sale or improper sale process but rather based on a failure of the Motion Judge
    to properly weigh the interests of the creditors and debtor, favouring process
    in so doing. As part of this submission the Pizales contend that the
    receivership was spent upon Hillmounts assignment of its first mortgage to
    Elle, which meant that there was no need for a sale of the Property.

The loss argument

[48]

The Pizales are not arguing that since the
    Property is worth more than $10,000, a loss of greater than that amount is
    established for purposes of
BIA
s. 193(c). Instead, they submit
    that appraisals showed they had equity in the Property greater than $10,000 when
    the Property was valued on an as complete basis. The Receivers sale
    jeopardized that equity and approval of the sale would increase their liability
    exposure to their mortgagees as compared to a sale on an as complete basis. As
    they submitted in their factums: the Approval Order entails a loss of their
    rights to retain the Property as its value increases and sell it when the
    renovations are complete if they so choose (Jan. 19 factum, para. 53); what
    they want to do is retain ownership of the Property (Jan. 25 factum, para. 7).

[49]

The Chambers Judge understood the Pizales
    argument. At para. 26 of his reasons he wrote: As I understand this argument,
    if the renovations were completed, they could achieve a higher price for the
    home and the gap between what the receiver is selling the house for and what
    could be obtained if the Pizales were permitted to finish the renovation would
    represent the loss. He rejected the submission that the Approval Order would
    result in a loss to the Pizales, concluding that the motion judge made strong
    findings that the receiver did not act improvidently.

[50]

I do not regard the Chambers Judges conclusion
    as one based on an error in principle or an unreasonable result.

[51]

Central to the Pizales submission is their
    assertion that selling the Property in a renovated state would fetch a higher
    sales price. The evidence before the Motion Judge and Chambers Judge strongly
    indicated that such would be the case. But, for the purposes of a s. 193(c)
    analysis, that is neither here nor there. That is because the parameters of the
    Receivers sale were set, for all practical commercial purposes, by the terms
    of the Appointment Order made earlier on June 19, 2020.

[52]

The Appointment Order was made when the Property
    was in an unfinished state and a significant expenditure of funds would be
    required to complete the renovations. The Appointment Order authorized the Receiver
    to take possession of the Property and market it for sale. It did not authorize
    the Receiver to complete the renovations the Pizales had started to make.
    Indeed, para. 19 of the Appointment Order limited the Receivers authority to
    borrow from Hillmount to $150,000, an amount that would not come close to
    completing the needed renovations.

[53]

The Appointment Order had the effect of
    authorizing a process to market the Property on an as is basis or, as put by
    the Receiver in one of its factums, the Appointment Order contemplated a
    liquidation process, not a renovation process. That order, not the Approval
    Order, put in jeopardy any difference in value between the sale of the Property
    on an as complete and as is basis. Accordingly, the Approval Order did not
    result in any loss beyond that already worked by the Appointment Orders
    authorization of the Receiver to market the Property on an as is basis. Put
    another way, the Pizales appeal of the Approval Order seeks to unwind the
    economic effect of the Appointment Order, which the Pizales did not appeal.

[54]

The Pizales advance a supplementary argument,
    contending that even on an as is sale basis the Approval Order resulted in a
    loss to them because the price fetched by the Receiver was less than one of
    their as is appraisals. They argue that the Chambers Judge exacerbated the Motion
    Judges error in finding that none of the Pizales appraisals considered the
    Property on an as is basis.

[55]

I am not persuaded by this submission. After the
    Receiver had entered into the Sale Agreement and moved for approval, the
    Pizales filed two appraisals of the Property:

(i)

a December 30, 2020 appraisal by Heather Markoff, which valued the
    Property on an as complete basis at $6.9 million. The report recorded the
    land value as if vacant at $5 million and estimated the Propertys as is
    market value at $5.955 million, although the author stated that she was unable
    to locate current sales activity in a partially complete state of construction
    at time of sale; and

(ii)

a January 4, 2021 Colliers appraisal, which estimated the as
    complete value of the Property at $6.075 million.

[56]

The Pizales also had obtained a June 2020
    appraisal from TM Appraisers Inc., which opined that the fair market value of
    the Property on an as if complete basis was $7.5 million. It listed the land
    value as if vacant at $5 million by extraction and contained an As Is
    Addendum that estimated the as is value at $6.525 million. According to the
    Receiver, this appraisal was before Koehnen J. in redacted form but not
    produced in response to the Sale Agreement.

[57]

Although the Motion Judge referred in her
    reasons to the December 2020 and January 2021 appraisals, she did not make
    express reference to the as is value found in the December 2020 appraisal. I
    do not view her failure to do so as amounting to an error that somehow brings
    the as is value of the Property into question. As the Motion Judge noted in
    her reasons: the Receiver listed the Property at $4.8 million, a price higher
    than the appraisals it had received; 23 showings elicited no offers; the
    Receiver lowered the listing price, which resulted in its receipt and
    negotiation of a number of offers but no deal; and, finally the Receiver
    accepted the early November 2020 offer from the Purchasers, which was higher
    than its two appraisals and any other offer received. Against those efforts by
    the Receiver, and the absence of any alternative transaction presented by the
    Pizales or their creditors, the fact that the Purchasers offer was lower than
    the as is appraisals received by the Pizales spoke loudly to the reality of
    the existing market for the partially completed Property:
Pricewaterhousecoopers
    Inc. v. 1905393 Alberta Ltd
, 2019 ABCA 433, 98 Alta. L.R. (6th) 1, at
    para. 15. In those circumstances, it is no surprise that the Motion Judge did
    not treat the as is estimate as a relevant indicator of market conditions.

[58]

Accordingly, I am not persuaded that the
    Chambers Judge erred in concluding that the Approval Order did not result in a
    loss greater than $10,000 and, as a result, the Pizales appeal did not fall within
BIA
s. 193(c).

The spent receivership argument

[59]

Although that is sufficient to dispose of the
    Pizales panel review motion, I wish briefly to address the Pizales submission
    that when Hillmount assigned its first mortgage to Elle, it was made whole.
    They argue that with the original applicant creditor no longer part of the
    receivership and the remaining mortgagees opposed to the sale, the receivership
    was spent, with the result that there was no need for the Propertys sale.

[60]

The Motion Judges reasons provide a complete
    answer to that submission. The Motion Judge spent considerable time in her
    reasons considering and weighing the interests of the various parties: at
    paras. 18-26. She wrote that:

(i)

The reasons for the mortgagees opposing the sale
    were not apparent on the face of the record;

(ii)

The mortgagees and Pizales failed to engage in
    the court-authorized receivership and sales process at any time prior to the
    signing of the Sale Agreement;

(iii)

The Receiver conducted a legitimate and proper
    sales process; and, significantly,

(iv)

The mortgagees and Pizales did not put on the table any alternative
    transaction or bring a motion to discharge the Receiver.

[61]

On the last point, in its December 1, 2020
    Acknowledgement in favour of the Receiver and Hillmount, Elle specifically
    acknowledged that it understood (i) the Receivership is not at an end by
    virtue of the undersigned accepting the Assignment; and (ii) until terminated
    by Court order, the Receivership remains in full force and effect.

[62]

In light of those circumstances, the Motion Judges
    conclusion that, having weighed the interests of all parties there was no basis
    to allow their objections to prevent the Receiver from concluding the
    agreement, was a reasonable one.

VII.    THIRD ISSUE: DID THE CHAMBERS JUDGE ERR IN FAILING TO GRANT
    LEAVE TO APPEAL PURSUANT TO
BIA
s. 193(e)?

[63]

In seeking to set aside the Chambers Judges
    refusal to grant leave to appeal the Approval Order pursuant to
BIA
s.
    193(e), the Pizales largely repeat the arguments they make in respect of s. 193(c).
    I have already dealt with those arguments. I would only add that the Chambers
    Judge, applying the well-known test for granting leave to appeal set out in
Business
    Development Bank of Canada v. Pine Tree Resorts
[16]
and the deference appropriate to the discretionary decision of the Motion
    Judge,
[17]
concluded that the Pizales appeal would have little importance to
    bankruptcy/insolvency matters beyond the parties, did not raise a serious issue
    for appeal, and would hinder the receivership and risk losing the sale to the
    Purchasers. Those conclusions were reasonable ones, anchored as they were in
    the record. I see no basis to interfere with the Chambers Judges refusal to
    grant the Pizales leave to appeal.

VIII.   FOURTH ISSUE: THE ADMINISTRATION
    ORDER

[64]

The Administration Order approved the Receivers
    activities described in its Second Report and First Supplement to the Second
    Report and increased the Receivers borrowing authority from $150,000 to
    $250,000. Before the Motion Judge, the Pizales did not oppose the issuance of
    the Administration Order.

[65]

The Pizales sought to appeal, or seek leave to
    appeal, the Administration Order. Before the Chambers Judge they made two
    arguments: (i) the Administration Order is inextricably linked to the issues
    regarding the Approval Order, so that if they had a right to appeal the
    Approval Order or were granted leave to do so, they were entitled to appeal the
    Administration Order; and (ii) the Administration Order creates a loss as it
    authorizes the Receiver to borrow a further $100,000.

[66]

In its Second Report dated December 4, 2020, the
    Receiver stated that any additional amounts borrowed would be applied to the
    Receivers existing fees and any future fees or expenses leading up to the
    closing of the sale. Accordingly, the purpose of the further borrowing approved
    by the Administration Order is to enable the Receiver to complete its efforts
    to sell the Property on an as is basis. The increased borrowing power is
    ancillary to the exercise of the Receivers powers under the Appointment Order
    and does not result in any further jeopardy of value than that worked by the
    Appointment Order. Accordingly, for purposes of the s. 193(c) analysis, the
    operative effect of the Administration Order is, as the Pizales describe,
    inextricably linked with the effect of the Approval Order, which the Chambers
    Judge correctly found did not fall within s. 193(c).

[67]

The Chambers Judge dismissed the Pizales motion
    in respect of the Administration Order for the reasons supporting his dismissal
    of their motion regarding the Approval Order. That was a reasonable conclusion
    for him to reach on the record. I see no basis to interfere with it.

IX.     DISPOSITION

[68]

For the reasons set out above, I would dismiss
    the Pizales panel review motion.

[69]

If the parties are unable to agree on the costs
    of the motion, any party seeking costs of the motion may deliver brief written
    cost submissions of up to five pages in length within 10 days of the release of
    the reasons. Any party against whom costs are sought may deliver brief
    responding cost submissions within 5 days thereafter.

Released: May 28, 2021 G.R.S.

David Brown
    J.A.

I agree.
    G.R. Strathy C.J.O.

I agree.
    B.W. Miller J.A.

[1]
Application for leave to appeal under
BIA
s. 193(e) dismissed: 2016 ONCA 485, 37 C.B.R. (6th) 173.

[2]

Re Dominion Foundry Co
.
, (1965) 52
    D.L.R. (2d) 79 (Man. C.A.);

Alternative
    Fuel Systems Inc. v. EDO (Canada) Ltd. (Trustee of)
, 1997 ABCA 273, 48
    C.B.R. (3d) 171 (Chambers).

[3]

Business Development Bank of Canada v. Pine Tree
    Resorts Inc
.
, 2013 ONCA 282, 115 O.R. (3d) 617 (Chambers), at
    para. 17.

[4]

Trimor Mortgage Investment Corporation v. Fox
,
    2015 ABCA 44, 26 Alta. L.R. (6th) 291 (Chambers).

[5]
Section 195 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.

[6]

Simonelli v. Mackin
, 2003 ABCA 47, 320
    A.R. 330 (Chambers), at paras. 18-20;
Re
    Bearcat Exploration Ltd
.
, at para. 10;
Business Development Bank of Canada v. Pine Tree
    Resorts
,
at para. 17;
7451190
    Manitoba Ltd. v. CWB Maxium Financial Inc. et al
.
, 2019 MBCA 95
    (Chambers), at para. 18;
Buduchnist Credit
    Union Limited v. 2321197 Ontario Inc
.
, 2019 ONCA 588, 72 C.B.R.
    (6th) 245, at para. 12;
CWB Maxium Financial
    Inc. v. 2026998 Alberta Ltd
.
, 2020 ABCA 118 (Chambers), at paras.
    1-2.

[7]

Simonelli
, at paras. 26-27.

[8]

Enroute Imports Inc. (Re)
, at para. 6.

[9]

Davidson
    (Re)
, at para. 6.

[10]

IceGen
    Inc. (Re)
, 2016 ONCA 902, 42 C.B.R. (6th) 183 (Chambers), at para. 3, leave
    to appeal under s. 193(e) dismissed, 2016 ONCA 907, 42 C.B.R. (6th) 175.

[11]

2003945
    Alberta Ltd. v. 1951584 Ontario Inc.
, 2018 ABCA 48, 57 C.B.R. (6th) 272
    (Chambers), at para. 21.

[12]

Sangha
    v. Bhamrah
, 2017 BCCA 434, 6 B.C.L.R. (6th) 1, at paras. 9-12.

[13]

Courtice Auto Wreckers
, at para. 22.

[14]

ATB
    Financial v. Coredent Partnership
, 2020 ABCA 83, 77 C.B.R. (6th) 190
    (Chambers), at para. 6.

[15]

Athabasca
    Workforce Solutions Inc. v. Greenfire Oil & Gas Ltd.
, 2021 ABCA 66, 87 C.B.R.
    (6th) 26 (Chambers), at para. 14.

[16]
The
    test set out in
Pine Tree Resorts
was adopted by a panel of this court
    in
Impact Tool & Mould Inc. v. Impact
    Tool & Mould Inc. Estate
, 2013 ONCA 697, at para. 3.

[17]

Reciprocal
    Opportunities Incorporated v. Sikh Lehar International Organization
, 2018
    ONCA 713, 426 D.L.R. (4th) 273, where this court stated, at para. 54, that an
    appeal court will interfere only where the judge considering the receivers
    motion for approval of a sale has erred in law, seriously misapprehended the
    evidence, exercised his or her discretion based upon irrelevant or erroneous
    considerations, or failed to give any or sufficient weight to relevant
    considerations.


COURT OF APPEAL FOR ONTARIO

CITATION: Hilson v. Evans, 2021 ONCA 262

DATE: 20210423

DOCKET: C68133

Benotto, Miller and Trotter JJ.A.

BETWEEN

Janet
    Louise Hilson

ppellant
(Plaintiff, Defendant by Counterclaim)

and

Carole Evans

Respondent
(Defendant, Plaintiff by Counterclaim)

Howard W. Reininger, for the appellant

Orie Niedzviecki, for the respondent

Heard and released orally: April 19, 2021 by
    video conference

On
    appeal from the judgment of Justice L. Sheard of the Superior Court of Justice,
    dated February 19, 2020.

REASONS FOR DECISION

[1]

This is an appeal from a judgment of an amount
    less than $50,000. The appeal is properly brought to the Divisional Court.

[2]

The appeal is quashed. Under the circumstances,
    there will be no costs of the appeal.

M.L.
    Benotto J.A.

B.W.
    Miller J.A.

Gary
    Trotter J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hilton v. Hilton, 2021 ONCA 29

DATE: 20210119

DOCKET: C68243

Tulloch, Miller and Paciocco
    JJ.A.

BETWEEN

Marlene
    Dale Hilton

Applicant (Respondent)

and

Charles Mark Hilton

Respondent (Appellant)

Michael J. Stangarone and Stephen P. Kirby,
    for the appellant

Dale A. Turner, for the respondent

Heard: November 18, 2020 by video conference

On
    appeal from the order of Justice Paul Nicholson of the Superior Court of
    Justice, dated February 24, 2020.

REASONS FOR DECISION

Background

[1]

The respondent initiated divorce proceedings in
    September 2018. The appellant had not filed an Answer by the time of the first
    case conference on March 21, 2019. The respondent brought a motion for an order
    for an uncontested trial. At the case conference, Fryer J. noted the appellant
    in default and ordered him to deliver his Answer, disclosure, and financial statements
     including Notices of Assessment  within 30 days. She held the respondents
    motion for an uncontested trial in abeyance until the 30-day period expired. If
    the appellant delivered the materials as required, the noting in default would
    be set aside and the motion for an uncontested trial would be dismissed. If not,
    the uncontested trial would proceed.

[2]

The appellant did not comply with the order. By the
    second case conference on June 19, 2019, he had still not filed an Answer or any
    materials. Accordingly, Fryer J. confirmed the appellants noting in default
    and scheduled the uncontested trial for September 23, 2019. She also ordered the
    partition and sale of the matrimonial home.

[3]

The uncontested trial was ultimately held on
    November 22, 2019 before Fryer J. She made orders providing the respondent with
    exclusive possession of the matrimonial home, facilitating the sale of the
    matrimonial home and the division of the sale proceeds, and granting the
    respondent temporary spousal support. The determination of final spousal support
    and child support were left to a continuation of the uncontested trial. The
    continuation has not yet taken place.

[4]

Thereafter, in February 2020, the appellant
    brought a 14B motion seeking the following relief: setting aside all orders
    made to date; granting leave to serve and file an Answer and financial statements;
    and granting leave to dispense with the requirement to serve and file his
    Notices of Assessment, which he stated were unavailable due to the actions of
    the respondent. The motion was heard in writing by Nicholson J., who dismissed
    the motion. Although Nicholson J.s handwritten endorsement is brief, his reason
    for the dismissal appears to be that the appellant had not appealed any of Fryer
    J.s orders.

[5]

The appellant now appeals Nicholson J.s dismissal
    of the 14B motion and requests this court set aside Nicholson J.s order. The
    appellant also requests that this court set aside all of Fryer J.s previous
    orders, grant the appellant 30 days to file his Answer and financial statements
    without the Notices of Assessment, and order the parties to proceed to another
    case conference on the substantive issues. In the alternative, the appellant
    requests this court order the 14B motion be determined by another judge of the
    Superior Court of Justice via an oral hearing. Finally, he requests costs of
    this appeal. For the reasons set out below, we allow the appeal in part.

Analysis

[6]

The appellant argues that the 14B motion before
    Nicholson J. was brought under r. 25(19) of the
Family Law Rules
, O.
    Reg. 114/99, although he did not specify that rule in the Notice of Motion. He
    makes his argument on the basis that the respondent had committed a fraud on
    the court through misrepresentations and material omissions in her evidence at
    the hearing of the uncontested trial. That is, the appellant argues there were
    things the respondent knew that she did not disclose, and things she said that
    she knew were not true. This resulted, the appellant argues, in an interim
    support order that was too high and an unfair division of the proceeds from the
    sale of the matrimonial home.

[7]

Nicholson J. did not address the substance of
    the motion to dismiss prior orders on the basis of fraud. He dismissed the
    motion on the basis that Fryer J.s November 22, 2019 and previous orders could
    not be set aside because the appellant had not appealed any of those orders.

[8]

The appellant argues that the only route for him
    to challenge the November 22, 2019 order was to bring a motion to change under r.
    25(19). An appeal would have been premature:
Ketelaars v. Ketelaars
, 2011
    ONCA 349, 2 R.F.L. (7th) 296;
Gray v. Gray
, 2017 ONCA 100, 137 O.R.
    (3d) 65. This court held in
Gray
that r. 25(19) provides a more
    effective way to correct orders in its ambit and de-listed an appeal pending a
    decision at the court of first instance.

[9]

We agree with this submission to some extent. However,
    some of the orders the appellant seeks to set aside were made on the basis of
    his own failure to provide required disclosure. Nicholson J. was correct that
    an appeal would be required to set aside those orders. However, to the extent
    that the relief sought by the appellant was on the basis of the respondents
    misrepresentations at trial, those assertions ought to have been decided on the
    merits.

[10]

By failing to comply with the
Family Law Rules
and the orders of Fryer J., the appellant is the author of much of his
    misfortune. When a party does not participate in the process, things tend to not
    go well. Nevertheless, the appellants allegations of the respondents misrepresentations
    and material omissions must still be determined on the merits.

[11]

We allow the appeal in part and direct that the
    allegations of the respondents misrepresentations and material omissions be
    returned to the Superior Court for a determination of the merits under r. 25(19)(a).
    We offer no opinion on the merits of that motion.

[12]

It remains for the trial judge to determine the
    extent of the appellants participatory rights at the continuation of the trial,
    including whether the appellant will be permitted to advance any reliable and
    credible evidence that the respondent is misleading the court.

DISPOSITION

[13]

The appeal is allowed and the matter is returned
    to the Superior Court of Justice for a new hearing of the r. 25(19)(a) motion,
    based on the written record that was before Nicholson J. Costs of the appeal
    are fixed at $15,000 inclusive of HST and disbursements. These costs are to be awarded
    to the party that is successful on the r. 25(19) motion. However, if the
    appellant abandons the r. 25(19) motion, the costs of this appeal will be
    payable to the respondent, subject to any contrary order by the Superior Court
    of Justice.

M.
    Tulloch J.A.

B.W.
    Miller J.A.

David
    M. Paciocco J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hoang v. Mann Engineering Ltd.,
    2021 ONCA 2

DATE: 20210105

DOCKET: C68186

Doherty, Lauwers and Miller
    JJ.A.

BETWEEN

K. Matthew Hoang

Plaintiff (Appellant)

and

Mann Engineering Ltd., Aris
    Building Technologies, Cartwright Management, Mann Enterprises, Wu Ventures,
    Hay Solar Ltd., and Gigajoule Research and Development Ltd. (carrying on
    business as the Mann Group)

Defendants (Respondents)

K. Matthew Hoang, appearing in person

Ted Flett and Daniel Hassell, for the
    respondents

Heard: December 3, 2020 by
    video conference

On appeal from the order of Justice B.
    Glustein of the Superior Court of Justice, dated November 4, 2019, reported at
Hoang
    v. Mann Engineering Ltd.
, 2019 ONSC 6383.

COSTS ENDORSEMENT

[1]

Costs of the
    appeal are awarded to the respondents in the amount of $15,000, inclusive of
    disbursements and all applicable taxes.

Doherty
    J.A.

P.
    Lauwers J.A.

B.W.
    Miller J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hornstein v. Kats, 2021 ONCA 293

DATE: 20210506

DOCKET: C68450

Huscroft, Nordheimer and
    Harvison Young JJ.A.

BETWEEN

Adriana Hornstein

Plaintiff (Appellant)

and

Anatoly Kats and Rachel Higgins

Defendant (Respondents)

Stephen R. Dyment, for the appellant

Mark A. Ross and Sharon A. Sam, for the
    respondent, Anatoly Kats

Rachel Higgins, acting in person

Heard: April 29, 2021 by video
    conference

On appeal from the judgment of Justice Carole
    J. Brown of the Superior Court of Justice, dated May 5, 2020.

REASONS FOR DECISION

[1]

This case arises out of an alleged partnership for
    the purchase of a residential property. The appellants argument that she was
    in a partnership with the respondent Kats was rejected by the trial judge
    following an 18-day trial. The trial judge found that, on an objective view,
    the appellants actions were not consistent with a partnership and that no
    partnership was created. The trial judge also found that the appellant had not
    contributed any monies to the purchase or maintenance of the property and had
    no beneficial interest in the property she alleged was owned by the
    partnership.

[2]

The trial judge found, further, that the
    appellant was not a credible witness, whereas she found that the respondent Kats
    was credible and preferred his evidence. She found that the appellant took
    advantage of Kats, his relative lack of sophistication in dealing with
    properties, and his difficulties with the English language. Among other things,
    the trial judge found that the appellant took out a second mortgage in Kats
    name, secured against his family home, without his knowledge.

[3]

The trial judges findings are entitled to
    deference. The appellant has not succeeded in establishing that the judge made
    any error, let alone a palpable and overriding error, requiring this courts
    intervention.

[4]

The appeal is dismissed as against the
    respondent Kats.

[5]

The trial judge found that the respondent
    Higgins had neither a claim for slander of title nor a claim for damages for
    breach of s. 132 of the
Land Titles Act
, R.S.O. 1990, c. L.5
. Nevertheless, she ordered the
    appellant to pay Higgins punitive damages in the amount of $35,000, citing the
    egregious, unreasonable, and malicious nature of the appellants actions.

[6]

It is well established that there is no basis
    for an award of punitive damages in the absence of an independent actionable
    wrong:
Whiten v Pilot Insurance Co.
,

2002 SCC 18, [2002] 1
    S.C.R. 595
. Punitive damages cannot be awarded simply on the basis
    of a partys misconduct. Given that the trial judge did not identify an
    independent actionable wrong, the award of punitive damages cannot stand.

[7]

Accordingly, the award of punitive damages must
    be set aside. The appeal is allowed only to this extent.

[8]

The respondent Kats is entitled to his costs on
    the appeal, fixed in the agreed amount of $15,000, all-inclusive.

[9]

It is not appropriate to award costs to the
    appellant against the respondent Higgins in this court, and no such costs are
    ordered. The costs order below remains unchanged.

Grant Huscroft
    J.A.

I.V.B. Nordheimer
    J.A.

Harvison
    Young J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Iafolla v. Lasota, 2021 ONCA 245

DATE: 20210420

DOCKET: C68673

Rouleau, Benotto and Miller
    JJ.A.

BETWEEN

Enrico Iafolla

Applicant (Appellant)

and

Jolanta Lasota

Respondent (Respondent)

Payam Ezzatian, for the appellant

Brian P. Pilley, for the respondent

Heard: April 1, 2020

On appeal from the judgment of Justice Paul B. Schabas of the Superior
    Court of Justice, dated September 1, 2020.

Benotto
    J.A.:

[1]

This is an appeal brought by the insurer of the
    named appellant Enrico Iafolla. He appeals the dismissal of an application for a
    declaration that, as a judgment creditor of the ex-husband of the respondent,
    he is entitled to receive the balance of the proceeds of the sale of a
    matrimonial home. Pursuant to the divorce judgment between the respondent and
    her ex-husband, those funds are to be held as security for his support
    obligations.

[2]

As I will explain, the issue here engages the
    courts fundamental duty to satisfy itself that reasonable arrangements have
    been made for the support of children. I would allow the appeal in part and
    direct the matter back to the trial judge to consider whether a variation of
    the Divorce Judgment is appropriate as a result of the material change in
    circumstances.

BACKGROUND

[3]

The respondent Jolanta Lasota and Zlatko Antonov
    were married and have one child. They separated in 2017. It is common ground
    that Antonov has paid no child support, has shown little interest in the child,
    now 11, and did not participate in the divorce proceedings. He made no
    financial disclosure.

[4]

On July 25, 2018, Backhouse J. presided over the
    divorce. Antonov did not appear. She attributed an income to him based on his
    bank deposits and established monthly child and spousal support in the amounts
    of $1,429 and $3,191 respectively. In the Divorce Order, she gave Ms. Lasota
    control over the sale of the jointly held matrimonial home. The net proceeds of
    the sale after paying real estate commissions, legal expenses, tax arrears, and
    the outstanding mortgage were to be divided into two equal shares. From
    Antonovs share, she ordered that the arrears of child and spousal support then
    owing, plus the equalization payment be deducted. The trial judge further
    ordered at paragraph 19:

The remaining balance
    of [Antonovs] share of the net proceeds of the sale of the Matrimonial Home,
    if any, shall be held in trust as security for [Antonovs] future child and
    spousal support obligations.

[5]

The home was sold in November 2018. It appeared on
    closing that there was a writ of execution registered on title to the home on
    November 28, 2017. The writ relates to a judgment against Antonov for $380,071
    plus costs and interest.

[6]

The net proceeds of the sale were $594,273.30. It
    was agreed between the appellant and the respondent that, from these proceeds, various
    fees, tax, and mortgage payments would be paid. In addition, the 8 months of
    spousal and child support arrears were paid to the respondent.  The balance of
    Antonovs share of the proceeds would be placed in trust without prejudice the appellants
    right to bring an application to determine who has priority to those funds. The
    amount in issue now is $180,670.15.

[7]

As mentioned, Antonov has made no support payments,
    including pursuant to the Divorce Order. His arrears would now be over $140,000
    and soon will amount to the entire amount being held back from the sale.

POSITIONS OF THE
    PARTIES

The appellant

[8]

The appellants position is that he is entitled to
    the full amount of $180,670.15 pursuant to his rights under s. 2 of the
Creditors' Relief Act, 2010
, S.O. 2010, c.
    16, Schedule 4 (
CRA
).
    He submits that the Divorce Order should be set aside to the extent that it
    interferes with his rights under the
CRA
.

[9]

Section 2 of the
CRA
states:

2. (1) Except as otherwise provided in
    this Act, there is no priority among creditors by execution or garnishment
    issued by the Superior Court of Justice, the Family Court of the Superior Court
    of Justice and the Ontario Court of Justice.

Exception, support or maintenance
    orders

(3) A support or maintenance order has
    the following priority over other judgment debts, other than debts owing to the
    Crown in right of Canada, regardless of when an enforcement process is issued
    or served:

1. If the maintenance or support
    order requires periodic payments, the order has priority to the extent of all
    arrears owing under the order at the time of seizure or attachment.

2. If
    the support or maintenance order requires the payment of a lump sum, the order
    has priority to the extent of any portion of the lump sum that has not been
    paid.

[10]

The appellant argues that the effect of this section is to give
    priority to lump sum support orders and periodic payments in arrears only.  Following
    the payment which cleared up arrears to that date, he submits that he is
    entitled to collect on his judgment.

[11]

The appellant relies on
Maroukis v.
    Maroukis
(1981), 33 O.R. (2d) 661 (C.A.), affd
    [1984] 2 S.C.R. 137. In that case,
the trial judge ordered
    that the jointly owned matrimonial home vested with the wife retroactive to the
    date of separation. The trial judge declared that any subsequent executions on
    the property did not affect the wifes title. On appeal, this court held that
    the trial judge had no jurisdiction to make a retroactive order since the house
    was held in joint tenancy when the executions were filed and attached to [the
    husbands] interest in it. The Supreme Court of Canada agreed with the Court
    of Appeals conclusion.

[12]

Maroukis
was followed in
Ferguson v. Ferguson
, 116 D.L.R. (4th) 707
    (Ont. Unif. Fam. Ct.), at p. 713, which found that a writ of execution for a
    debt of the husband, filed before the order that the house be sold and proceeds
    divided, has priority over any claim that the wife has to the husband's net
    proceeds of the sale of the matrimonial home.

[13]

Consequently, the appellant seeks a declaration that he has an
    entitlement to the proceeds.

The respondent

[14]

The respondent submits that the Court has no jurisdiction to vary the
    Divorce Order outside the divorce proceedings. The effect of the order sought
    would be to vary the Divorce Order. Further she submits that the writ and the
CRA
create no substantive right to the
    funds for the applicant.

[15]

The respondent relies on
Stevens v. Stevens
(2005)
, 20 R.F.L. (6th) 453 (Ont. S.C.J.),
    affd 214 O.A.C. 201, where the trial judge distinguished
Maroukis
and
Ferguson
as cases determined under provincial family law statutes which did not
    permit retroactive orders, whereas the creation of a trust is based on the
    courts equitable jurisdiction. In
Stevens
a retroactive vesting order was found to prevail over a writ filed by
    a bank. This court agreed that
Maroukis
and
Ferguson
were
    therefore distinguished:
Stevens v. Stevens
(2006),

214 O.A.C.
    201, at paras. 12,15.

DECISION OF THE APPLICATION JUDGE

[16]

The application judge concluded that the trial judge crafted the
    Divorce Order to create a trust to secure the respondents support payments.
    This takes priority over the applicants interest which, in any event, is
    simply that of an execution creditor whose interest is subject to all the
    equities:
Ontario Development Corp. v. Trustee of
    the Estate of I.C. Suatac Construction Ltd.
(1976), 69
    D.L.R. (3d) 353, at p. 359 (Ont. C.A.); see also
1842752
    Ontario Inc. v. Fortress Wismer 3-2011 Ltd
., 2020
    ONCA 250, at para. 37.

[17]

The application judge relied on
Stevens
, where Cronk J.A. expressed concern that the bank was pursuing a
    collateral attack on the original vesting order, stating, at para., 21 that
    the determination of this issue required an evaluation and weighing of the
    equities as between the Bank and Ms. Stevens. The application judge concluded
    that attempts to vary such orders should be addressed in the original
    proceeding, where the Court may consider the equities between the parties,
    including the scope and purposes of support orders made under the
Divorce Act
, R.S.C. 1985, c. 3 (2nd Supp.).

[18]

The application was dismissed.

ANALYSIS

[19]

I have concluded that the application judge erred: (i) in his
    interpretation of the jurisprudence; and (ii) by not addressing the courts
    duty regarding child support. Consequently, the matter should be returned to
    the trial judge to consider the material change in circumstances.

Jurisprudence

[20]

The application judge relied on
Stevens
to establish the priority of the respondents claim to the proceeds of
    sale. There, the trial judge had determined that a constructive trust operated
    as of the date of separation to vest the matrimonial home in the wifes name.
    Therefore, the wife had title to the home before the execution was filed. Here,
    the respondent did not have title in the husbands portion of the sale at the
    time the writ was filed.

[21]

However, I do not agree that
Maroukis,
relied on by the appellant, assists him. There, a writ of execution
    was filed with the sheriff before the trial judge vested property in the name
    of the wife. On an application to the trial judge to clarify the judgment the
    trial judge vested the home in the wifes name as of the date of separation
    which pre-dated the writ of execution. This court confirmed the vesting order
    but not the retrospective effect. The Supreme Court dismissed the appeal
    confirming that, when property is divided on marriage breakdown, it does not
    vest until the order is made and there is no provision to retroactively vest
    property. The wifes title was subject to a pre-existing execution filed with
    the sheriff.

[22]

The situation is different here. The underlying order in
Maroukis
was not, as it is here, for child
    and spousal support. And, as I will explain below, the limits on retroactivity
    do not apply to a variation of child support.

The courts obligation with respect to child
    support

[23]

Child support is the right of the child. The
Divorce Act
establishes a child centered
    approach to divorce orders by giving priority to childrens needs. Children are
    not parties to their parents divorce. Consequently, the presence of a child in
    divorce proceedings engages special duties for the court to ensure that
    arrangements are made for support.  Section 11(1)(b) of the
Divorce Act
provides that:

[I]t is the duty of the court...

(b)  to
    satisfy itself that reasonable arrangements have been made for the support of
    any children of the marriage, having regard to the applicable guidelines, and,
    if such arrangements have not been made, to stay the granting of the divorce
    until such arrangements are made

[24]

The trial judge, in accordance with her duty under s. 11 of the
Divorce Act
, secured the sale proceeds of
    the home for future support including support for the child. There is no
    similar duty on the court for property claims between the spouses or for
    spousal support. The trial judge clearly intended to secure the ex-husbands
    share of the matrimonial home proceeds for the benefit of the child. That is
    why she included paragraph 19 in the Divorce Order.

[25]

The appellant submits that the provisions of paragraph 19 mean that
    only the portion of the proceeds left over after his debt is paid are available
    to secure the support. He relies on the words net proceeds
if any
will be secured. I do not agree
    for two reasons.

[26]

First, paragraph 19 of the Divorce Order must be read with paragraph 16
    which refers to net proceeds as: remaining after paying real estate
    commissions, legal expenses on the sale, tax arrears, if any, [and the] outstanding
    mortgage. There is no mention of outstanding debts or writs.

[27]

Second, the trial judge was clearly not aware of
    the appellants writ. Because the declaration sought by the appellant
    effectively eliminates the security the trial judge put in place, the security
    the trial judge would have ordered had she known of the writ would likely have
    been different. For example, she could have considered s. 2(3)(2) of the
CRA
to comply with her duty under s.11(1)
    of the
Divorce Act.

[28]

The discovery of the writ of execution constitutes
    a material change in circumstances giving rise to a variation application.
The test for a material change, is a change that is substantial,
    continuing and that if known at the time, would likely have resulted in different
    terms:
Willick v. Willick
, [1994] 3 S.C.R. 670, at p. 688;
L.M.P.
    v. L.S
., 2011 SCC 64, at para. 32. Had the appellants writ of execution
    been known at the time of the Divorce Order, it would likely have resulted in a
    different order.

[29]

On a variation application, the
terms of the original order are presumed to comply with the
    objectives of the Divorce Act:
L.M.P.
, at para 33. Once the material
    change is established any variation should reflect that change in accordance
    with the objectives set out in s. 17(4).

[30]

The
Divorce Act
provides:

17 (1) A court of competent
    jurisdiction may make an order varying, rescinding or suspending,
retroactively
or prospectively,

(a) a support order or any
    provision of one, on application by either or both former spouses;

(3)
The court may include in a
    variation order any provision that under this Act could have been included in
    the order in respect of which the variation order is sought, and the court has
    the same powers and obligations that it would have when making that order.

(4)
Before
    the court makes a variation order in respect of a child support order, the
    court shall satisfy itself that a change of circumstances as provided for in
    the applicable guidelines has occurred since the making of the child support
    order or the last variation order made in respect of that order. [Emphasis
    added.]

[31]

I note as well that
the
    security ordered by the trial judge applies to both the spousal and child
    support. It was not apportioned as between the two types of support.  It will
    remain up to the trial judge address this if she considers it appropriate. At
    approximately $17,000/year in child support alone, and given that the child is
    only 11, the child support obligation alone could well exhaust the disputed
    amount.

Power to return matter to trial judge

[32]

The application judge viewed the effect of the
    order sought to be a variance of the Divorce Order. He explained that the
    variation should be done in the divorce proceedings. However, given his
    disposition he did not consider referring the matter to the trial judge to assess
    whether a variation was appropriate to ensure that child support was in compliance
    with the provisions of the
Divorce Act
.

[33]

In the circumstances the application judge ought
    to have referred the matter to the trial judge. That the respondent did not
    move for a variation is not material for several reasons.

[34]

First, s. 11 imposes a duty on
the court
to ensure adequate arrangements for the support of the child.

[35]

Second, the primary objective in the
Family
    Law Rules
is to enable
the court
to deal with cases justly. In
    this regard, r.1(6) provides that the court may impose conditions and give
    directions as appropriate.  Further, the court, pursuant to r. 7(2) and (5) may
    add a party to a variation if the person  not a spouse - is affected.

[36]

Third, a return to the trial judge on a
    variation would eliminate the potential of two conflicting court orders.

[37]

Section 134 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43, provides that this court may, make any order that ought
    to or could have been made by the court appealed from. Because the court below
    should have referred the matter back to the trial judge to revisit her orders
    in light of the writ it is appropriate that this court make that order.

DISPOSITION

[38]

I would allow the appeal in part and order that
    the matter be returned to the trial judge to consider the material change in
    circumstances.

[39]

I would make no order as to costs.

Released: April 20, 2021  P.L.

M.L.
    Benotto J.A.

I
    agree Paul Rouleau J.A.

I
    agree B.W. Miller J.A.