Executive Summary: Key Legal and Evidentiary Issues

• The appellant, 2615333 Ontario Inc., asserted a right of appeal under section 193(c) of the Bankruptcy and Insolvency Act, while the Receiver argued that leave was required under section 193(e).
   
• Establishing a loss exceeding $10,000 from the sale-approval order proved central to whether an appeal lay as of right.
   
• Application of the Soundair principles governing receiver-conducted sales processes formed the core of the motion judge's reasoning.
   
• Allegations that the Town of Ajax relied on confidential pricing information from a rejected bidder were raised but found unsupported by the evidence.
   
• Portions of the appellant's argument were characterized as a collateral attack on earlier, unappealed orders made in the receivership.
   
• Granting leave risked delaying the receivership proceedings without evidence that a renewed sales process would produce a better price.
   

Facts of the case

2615333 Ontario Inc. ("261") held a mortgage over properties known as the Harwood Properties, comprising the Phase 1A Lands, Phase 1B Lands, and Utility Lands. 261 applied to have a receiver appointed, and an order appointing a receiver — referred to in the decision as TDB Restructuring Limited [the caption instead identifies this party as "TBD Restructuring Limited"; this inconsistency appears in the source document] — was granted on April 15, 2021. The Phase 1A Lands and Utility Lands were subject to a Development Agreement between the Corporation of the Town of Ajax (the "Town") and Lemine Real Estate Consulting Inc., an entity affiliated with the respondents, which gave the Town purchase rights in the event Lemine defaulted. After determining that the Development Agreement created too much uncertainty for marketing purposes, the Receiver negotiated a New Development Agreement with the Town containing construction timelines and a mechanism allowing the Town to require repurchase, and ultimately purchase, of the properties if a purchaser defaulted. A court-approved sales process launched on June 1, 2023 produced two bids: the first bidder, 1000612843 Ontario Inc. ("First Bidder"), was disqualified for failing to pay a deposit, and a second bidder's request for a $3 million price abatement was not accepted. In March 2024, 261's motion to vary the receivership order and remove the Town's rights under the Development Agreement was dismissed on March 11, 2024. Further negotiations between the Receiver and the Town to modify the New Development Agreement were unsuccessful, after which the Town proposed to purchase the Harwood Properties. The Receiver subsequently entered into an agreement of purchase and sale with the First Bidder, with a back-up agreement with the Town, but the First Bidder later defaulted on closing. The Receiver then brought a motion to approve the sale to the Town, which Justice Peter J. Cavanagh of the Superior Court of Justice granted by order dated March 5, 2025. 261 sought to appeal that order.

Legislative provisions and contractual terms at issue

The underlying application was brought under subsection 243(1) of the Bankruptcy and Insolvency Act ("BIA") and section 101 of the Courts of Justice Act. Section 193 of the BIA governs rights of appeal to the Court of Appeal: subsections (a) through (d) provide a direct right of appeal in enumerated circumstances, while subsection (e) permits appeal only by leave. 261 relied on section 193(c), which allows an appeal as of right where the property involved exceeds $10,000 in value. Section 195 of the BIA imposes an automatic stay on appeals under the Act, which the court noted underlies the narrow interpretation given to section 193(c). On the merits, the Development Agreement's terms giving the Town purchase rights on default, and the New Development Agreement's timelines for obtaining a building permit and completing construction — along with its repurchase mechanism favouring the Town — were central to assessing the fairness and marketability of the sales process.

Reasoning and analysis

The court held that to qualify for an appeal as of right under section 193(c), an appellant must show, beyond the $10,000 threshold, that the order is more than procedural, involves the value of the debtor's property, and results in a loss to the appellant. The court found 261 had not established a loss exceeding $10,000. Arguments based on the restrictions in the New Development Agreement were rejected as an impermissible collateral attack on the receivership order and the earlier dismissed motion to vary, neither of which 261 had appealed. The claim that the Town misused confidential pricing information from the rejected second bidder was also rejected, as the motion judge had found no evidence the Town received information it was not entitled to under the receivership order. Of the two offers the Receiver chose not to pursue, the court found neither supported a finding of loss: one was highly conditional on excluding the New Development Agreement, and the other — a commitment letter from the First Bidder — was undermined by that bidder's history of failing to pay a deposit and failing to close a prior agreement. 261's appraisal evidence was similarly insufficient, given the Receiver's documented difficulty attracting acceptable offers. Having found leave was required, the court applied the three-part test from Business Development Bank of Canada v. Pine Tree Resorts Inc. for leave under section 193(e): whether the appeal raises an issue of general importance, is prima facie meritorious, and would unduly hinder the bankruptcy proceedings. The court concluded the issues raised were essentially factual and idiosyncratic to this receivership, not of general importance; that the appeal lacked merit given the motion judge's proper application of the Soundair factors and the deference owed to his factual findings; and that permitting a further sales process would delay proceedings and prejudice creditors without evidence of a better outcome.

Ruling and overall outcome

The Court of Appeal for Ontario held that it lacked jurisdiction to hear the appeal absent leave under section 193(e) of the BIA, and denied leave to appeal. The Receiver — the respondent seeking to uphold the motion judge's approval of the sale to the Town — was successful in resisting the appeal. The parties agreed that there should be no costs of the appeal, and the court awarded none.