Executive Summary: Key Legal and Evidentiary Issues

• Applicants sought to vary a chambers judge's order that had refused leave to appeal an approval and vesting order (AVO) issued under the Companies' Creditors Arrangement Act (CCAA).
   
• Central to the dispute is whether a triable equitable set-off claim can prevent court approval of a credit bid sale before that claim is adjudicated.
   
• Both the chambers judge and the CCAA judge were alleged to have misapprehended the applicants' equitable set-off argument as a mere "plea" rather than a triable and arguable defence.
   
• Another issue raised was whether the chambers judge conflated equitable set-off with procedural set-off when relying on prior authority.
   
• Deference owed to discretionary CCAA decisions played a significant role in the standard of review applied on the variation application.
   
• Timing concerns were also considered, including whether hearing the appeal would unduly delay the scheduled closing of the property sale.
   

Facts of the case

The underlying CCAA proceedings concern the proposed development of seven residential and commercial towers in Richmond, British Columbia (the "Property"). The developers, Alderbridge Way GP Ltd., Alderbridge Way Limited Partnership, and 0989705 B.C. Ltd. (the "Developers"), had entered a $422 million construction loan agreement (the "CLA") financed by Romspen Investment Corporation ("Romspen"). Several guarantors provided security and guarantees for the loan. A dispute arose in March 2020 over Romspen's funding obligations, and the Developers sought CCAA protection in April 2022. By March 2020, Romspen had advanced $143.6 million under the CLA before refusing further advances. A trial in 2024 found Romspen acted in good faith and had not breached the CLA, but that decision was appealed, and the Court of Appeal allowed the appeal and remitted the matter back to the trial court, with a further 10-day trial set for mid-October to resolve liability. Meanwhile, Justice Fitzpatrick, the assigned CCAA judge, approved an AVO on April 28, 2026, permitting Romspen to acquire the Property through a credit bid under a Purchase and Sale Agreement (PSA), with an assignment contemplated to a third party, RIC (No. 3 Road) Holdings Inc. The Developers opposed the AVO, preferring a cash-only bid, and later sought leave to appeal it. A chambers judge denied that leave in a decision indexed as GEC (Richmond) GP Inc. v. MNP Ltd., 2026 BCCA 240. The applicants then brought this application under section 29 of the Court of Appeal Act to vary the chambers judge's order.

Policy and legislative provisions at issue

The application engaged several CCAA provisions. Section 11 permits a CCAA judge to make any order considered appropriate, subject to statutory restrictions. Section 21 provides that the law of set-off applies to claims against a debtor company in the same manner as if the company were plaintiff or defendant. Section 13 required the applicants to obtain leave before appealing the AVO. Section 20 was invoked by the applicants for the proposition that a credit bid cannot be approved before the amount of the bid is finally determined. The applicants relied on Montréal (City) v. Deloitte Restructuring Inc., 2021 SCC 53, arguing sections 20 and 21 restrict a CCAA judge's ability to approve a transaction that eliminates a set-off claim. They also relied on Cactus Restaurants Ltd. v. Morison, 2010 BCCA 458, for the proposition that equitable set-off operates as a substantive defence to liability, not merely a procedural bar to judgment.

Reasoning and analysis

Justice Winteringham held that the standard of review on a section 29 variation application is highly deferential; it is not a re-hearing, and an applicant must show the chambers judge was wrong in law, wrong in principle, or misconceived the facts. Reviewing the chambers judge's reasons as a whole, along with the underlying RFJ reasons of Justice Fitzpatrick, the court found no misapprehension of the applicants' argument. The chambers judge had expressly acknowledged the applicants distinguished their equitable set-off defence from a procedural set-off claim, and had engaged with the substance of that distinction. On the second alleged error, the court found the chambers judge properly addressed sections 20 and 21 of the CCAA and simply disagreed with the applicants' legal position, consistent with Justice Fitzpatrick's reasoning that equitable set-off does not automatically extinguish cross-demands but instead leaves both claims in existence until judgment. Turning to the remaining Goldman factors, the court agreed the appeal was not significant to the practice, since Justice Fitzpatrick had applied an established CCAA framework, and it was not significant to the action because the equitable set-off defence would survive the AVO. The court also upheld the chambers judge's finding that permitting the appeal would unduly hinder the CCAA proceedings given the imminent closing date, and found no error in his interests-of-justice analysis, which properly deferred to Justice Fitzpatrick's balancing of the parties' respective prejudice.

Ruling and overall outcome

The Court of Appeal dismissed the application to vary the chambers judge's order, with all three justices concurring. The Monitor (MNP Ltd.), Romspen Investment Corporation, and Onni Group Holdings Ltd.—the respondents—succeeded in defeating the applicants' bid for leave to appeal the AVO. The decision does not identify any monetary award, damages, or costs ordered in the applicants' or respondents' favour; the ruling was confined to denying the variation application, leaving the AVO and underlying credit bid arrangement in place.