Executive Summary: Key Legal and Evidentiary Issues

• Whether an application for leave to appeal from a receivership order under the Bankruptcy and Insolvency Act automatically stays the operation of that order.
• Interpretation of ss. 193 and 195 of the Bankruptcy and Insolvency Act regarding when an appeal lies as of right and when an automatic stay of proceedings is triggered.
• The respondents’ prolonged non-compliance with the Receivership Order, including failure to deliver books, records, and disclose or surrender construction equipment and other assets to the court-appointed receiver.
• The court’s concern with potential abuse of process and delay in insolvency proceedings if mere filing of a leave application could halt a receivership.
• The drawing of adverse inferences from the respondents’ four-month pattern of non-cooperation and their reliance on a frivolous procedural argument instead of seeking a proper stay from the Court of Appeal.
• The appropriateness of granting enforcement powers to the receiver (access to premises, breaking locks, police assistance) and the potential for future contempt proceedings for continued breach of the Receivership Order.

Background and facts of the case

The proceeding arises out of a receivership over the assets and undertaking of 2339366 Ontario Inc., a company engaged in the construction business. Royal Bank of Canada, a secured creditor, had previously obtained a Receivership Order from Miller J. on September 9, 2025, appointing Grant Thornton Limited as receiver over the property of the respondent debtors, namely 2339366 Ontario Inc., Surinder Singh, and Kuldeep Dhaliwal. The Receivership Order required the respondents to cooperate with the receiver, including providing books, records, and information, and making available the company’s assets. Despite this clear order, the respondents failed to provide any books or records and did not disclose the whereabouts of a significant list of equipment, trucks, and other property connected to their construction operations. Four months into the receivership, the receiver remained without access to essential documentation or many of the assets it was tasked with administering.

The motion brought before the court

Given the continued non-cooperation, an application was brought seeking several enforcement measures to allow the receivership to function effectively. The relief requested included an order that the respondents immediately deliver all books, records, and equipment to the receiver, permit the receiver to access the respondents’ business premises, and authorize the receiver to break any locks necessary to gain access. The applicant also sought an authorization for the police to assist the receiver in enforcing these access and seizure rights. In addition, an order was requested approving the First Report of the Receiver dated December 8, 2025. The respondents did not dispute the approval of the First Report, and the court accordingly approved it. The real controversy concerned whether the respondents were entitled to ignore or suspend the Receivership Order based on steps taken in the Court of Appeal.

The respondents’ procedural argument

The respondents advanced a single, narrow procedural argument as their entire answer to the enforcement relief sought. They had filed an application for leave to appeal to the Court of Appeal challenging Miller J.’s decision appointing the receiver. On that basis, they argued that the Receivership Order was automatically stayed by operation of law. According to their position, the filing of the leave application put the receiver’s powers into abeyance and entitled the respondents to refuse cooperation, withhold books and records, and retain control over the equipment and other assets. In essence, they asserted that until the leave application was resolved, they could adopt a stance of deliberate non-compliance with the Receivership Order without consequence.

Statutory framework under the Bankruptcy and Insolvency Act

The court closely examined the appeal provisions under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. Section 193(a)–(d) specifies those situations in which an appeal lies as of right from an order made in bankruptcy or insolvency proceedings. None of those categories applied to the decision appointing the receiver in this case, and counsel for the respondents did not contend otherwise. Instead, the respondents were proceeding under s. 193(e), which provides that an appeal lies when leave has been granted by a judge of the Court of Appeal. At the time of the motion, the respondents’ leave application remained pending and leave had not been granted. Section 195 of the Act explicitly provides that when an appeal is filed, a stay of proceedings is imposed, subject to the power of a judge to vary or cancel that stay if the appeal is not diligently prosecuted or for other proper reasons. This statutory stay, however, is tied to the filing of an appeal, not to the mere filing of an application for leave to appeal.

Interpretive reasoning: no automatic stay for leave applications

Justice Harris applied principles of statutory interpretation, including the maxim expressio unius est exclusio alterius, to conclude there is no automatic stay triggered by filing a leave application. Parliament expressly provided in s. 195 that the filing of an appeal brings about a stay of proceedings, and it carefully circumscribed the circumstances in which an appeal lies as of right under s. 193(a)–(d). There is no corresponding provision stating that the filing of a motion for leave to appeal similarly stays proceedings. In a statutory scheme where appeals are “creatures of statute” and where the consequences of filing an appeal are specifically addressed, the absence of any reference to a stay for leave applications is meaningful; had Parliament intended such an automatic stay, it would have said so directly. The court also referred to appellate authorities emphasizing that the appeal-as-of-right provisions should be strictly construed because an automatic stay can “unduly hinder the progress of the administration of the receivership,” including the receiver’s ability to market and sell property. Those concerns would be even greater if a simple filing of a leave motion could freeze a receivership, thereby magnifying delay and uncertainty in an area where expedition and efficiency are critical.

Policy concerns in insolvency and receivership practice

The decision highlights the broader policy concerns underlying the court’s interpretation. Receiverships and insolvency proceedings are designed to be administered efficiently for the benefit of creditors and stakeholders. Allowing a debtor to trigger an automatic stay simply by filing a leave application—without satisfying any criteria for a stay—would invite strategic delay and manipulation. The court characterized the potential disruption as “enormous,” noting that such a rule would enable debtors to control the receivership process rather than the court. This would undermine the very purpose of appointing a receiver and frustrate the orderly realization and preservation of assets. The court stressed that there is no unfairness to debtors in refusing an automatic stay at the leave stage. An aggrieved debtor can always bring a properly grounded stay application to the Court of Appeal, where it must show an issue of general importance to bankruptcy law and practice, establish some merit in the proposed appeal, and convince the court that granting a stay will not unduly hinder the insolvency or receivership process. This preserves appellate oversight while allowing the Court of Appeal to control its own process, rather than ceding that control to litigants through unmeritorious or dilatory tactics.

Assessment of the respondents’ conduct and breach of the order

In light of the statutory framework and policy considerations, the court concluded that there is no legal basis for treating a leave application as an automatic stay of a Receivership Order. The respondents’ position was therefore rejected as legally unsupported and characterized as a frivolous procedural argument. Compounding this, the respondents had failed for four months to cooperate with the receiver, ignoring their obligations to provide books and records and to disclose the location of equipment and other property. Justice Harris held that this pattern of non-cooperation justified drawing an adverse inference against the respondents: they were clearly engaged in stalling the receivership process. The court expressly found that the respondents were in clear breach of the Receivership Order and signaled that if they continued not to cooperate, contempt proceedings might be appropriate, thereby exposing them to more serious sanctions for defiance of a court order.

Orders made, costs, and overall outcome

Having rejected the respondents’ argument and found a clear breach of the Receivership Order, Justice Harris granted the relief requested by the applicant. The court approved the First Report of the Receiver, directed that the respondents immediately deliver the books, records, and equipment, and authorized the receiver to access the business premises, including breaking any locks necessary to reach the property. The police were also authorized to assist the receiver in enforcing the order, thereby strengthening the receiver’s ability to secure and administer the assets. Justice Harris indicated that he would sign the draft order to give effect to these directions and remained seized of the matter for future issues. On costs, the court did not fix a specific amount. Instead, counsel were directed to attempt to agree on costs, failing which each side could file short written submissions and a bill of costs within set timelines. As no dollar figure was determined in this endorsement, the total monetary award or costs in favour of the successful party cannot be ascertained from this decision. In substance, the successful side is Royal Bank of Canada and the court-appointed receiver, who obtained the enforcement orders they sought, while the respondents’ procedural defence was rejected and their ongoing non-compliance was formally condemned.