Trusts are widely used in commercial transactions. But, as creatures of equity, trusts raise issues that may not be immediately familiar to everyone who relies on them in the commercial world. Indeed, the interrelationship between equitable doctrines and remedies and common law principles and remedies is complicated. Fortunately, the U.K. Supreme Court has revisited the issue in its recent decision in AIB Group (UK) Plc v. Mark Redler & Co Solicitors,  UKSC 58.
In Ontario (Training, Colleges and Universities) v. Two Feathers Forest Products LP, 2013 ONCA 598, the Ontario Court of Appeal granted the appeal of an interim receiver, Pricewaterhousecoopers Inc., from a Superior Court of Justice decision where grant funds that were advanced by the respondent, Ontario’s Minister of Training Colleges and Universities (the “Ministry”), to a First Nations limited partnership in northern Ontario, but not spent before the partnership sought to dissolve and appoint the interim receiver, were held to be subject to a “Quistclose trust” for the benefit of the Ministry.
The doctrine of marshaling has existed for centuries and was developed to address inequitable circumstances in which secured parties were unable to realize on their security. The UK Supreme Court has recently considered the doctrine in a case, Szepietowski (nee Seery) (Appellant) v The National Crime Agency (formerly the Serious Organised Crime Agency) (Respondent), which provides helpful guidance concerning the limits of the doctrine.
Although it arises infrequently, the doctrine does apply in Canada. For that reason, Szepiotwski will be of interest to holders of secured debt (and their lawyers) both for the particular holdings and the court’s general … Continue Reading
The recent decision of the Ontario Court of Appeal in msi Spergel Inc. v. I.F. Propco Holdings (Ontario) 36 Ltd., 2013 ONCA 550 (“msi Spergel”) confirms that the Court will not suspend, extend or otherwise vary the general two-year limitation period under the Limitations Act, 2002 (the “Limitations Act”) unless there is express statutory authority to do so.
In Jetivia SA & Anor v Bilta (UK) Ltd & Ors, the England and Wales Court of Appeal confirmed and clarified the circumstances in which a director’s knowledge of fraudulent conduct will be attributed to the company. In particular, it explained that a director’s knowledge will not be attributable to the company in the context of a claim made by the company against the director and its associates who engaged in unlawful conduct with negative consequences to the company.
This appeal was brought with leave by Jetivia S.A. and Urs Brunchschweiler from an Order of the Chancellor of
It is now easier for Parliament to enact legislation to override judicial decisions that it does not like. The Supreme Court has held that declaratory legislation –i.e. legislation that “clarifies” already existing legislation– can apply retroactively and can circumvent the binding directives of an appellate court. In Régie des rentes du Québec v. Canada Bread Company Ltd., 2013 SCC 46, the majority of the Supreme Court has begun to water down the principles of res judicata.
The appellant, Régies des rentes du Québec (“Régie”), is a government agency responsible for applying Quebec’s Supplemental Pension … Continue Reading
The BC Court of Appeal was recently invited to turn back time, by a mere 7 minutes, for the purpose of saving an appeal. At stake in Temple Consulting Group Ltd. v. Abakhan & Associates Inc., 2013 BCCA 119 was the $500,000 claim of a creditor against the bankrupt estate of Steven Friedland, a B.C. man banned from trading after admitting to illegally raising more than $12 million in an alleged Ponzi scheme.
In declining to turn back the clock, the Court observed that this case “may be an illustration of the adage: what can go wrong, will go … Continue Reading
The Supreme Court has issued its much-anticipated decision in Sun Indalex Finance, LLC v. United Steelworkers.
The Supreme Court has issued its much-anticipated decision in Sun Indalex Finance, LLC v. United Steelworkers (“Indalex”). The decision has significant implications for lenders, employers and pension plan administrators of Ontario-registered defined benefit (“DB”) pension plans. First, it clarifies the scope of the deemed trust obligation arising out of subsection 57(4) of the Pension Benefits Act (Ontario) (“PBA”). Second, it confirms the priority of debtor-in-possession (“DIP”) lenders’ security interests under the Companies’ Creditors Arrangement Act (“CCAA”) over claims by pension … Continue Reading
In the spirit of the season, Canadian Appeals Monitor has decided not only to look back on the key appeals of 2012, but also to make predictions about those Supreme Court of Canada appeals most likely to impact businesses and professionals in 2013. Predicting which appeal judgments are likely to have important and lasting effects before they are even decided involves a high degree of guesswork,
The Supreme Court of Canada released one decision this week of interest to Canadian businesses and professions.
In Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, the majority of the Court held that environmental protection orders issued under provincial legislation, which required an insolvent company to undertake remediation measures but which were not expressed in monetary terms, nonetheless amounted to “claims” under the Companies’ Creditors Arrangement Act (“CCAA“) that could be stayed and subject to a claims procedure order in the context of CCAA proceedings. The Court observed that not all environmental protection orders will … Continue Reading
The Supreme Court of Canada released one decision this week of interest to Canadian businesses and professions.
In Construction Labour Relations v. Driver Iron Inc., 2012 SCC 65, the Court held the Alberta Court of Appeal erred in quashing a decision of the Alberta Labour Relations Board on judicial review. The Court’s brief judgment criticizes the Court of Appeal for taking an overly rigid approach to the Board’s reasons when finding that the Board failed to consider various issues of statutory interpretation under the Alberta Labour Relations Code.
The Supreme Court of Canada has recently granted leave to appeal from the judgment of the British Columbia Court of Appeal in Edward Sumio Nishi v. Rascal Trucking Ltd. This appeal focuses on the test for a resulting trust in the commercial context. The decision will be of interest to a broad range of business enterprises and commercial counsel.
The action arose out of a purchase of land by two business partners. Hans Heringa, a successful civil engineer and owner of Rascal Trucking Ltd. (“Rascal”) developed a property located in Nanaimo, British Columbia, with Cidalia Plavetic, a
Should a commercial contract be interpreted literally, or should a court adopt a non-literal interpretation if necessary to achieve a result that makes commercial sense given the context (the factual matrix) of the agreement? This issue is an enduring one in contractual interpretation, and was recently put to the test in Lomas & Ors v. JFB Firth Rixson Inc. & Ors, a decision of the English Court of Appeal arising from the failure of Lehman Brothers. At issue was whether to imply terms into the Master Agreement of the International Swaps and Derivatives Association Inc. (the “ISDA Master Agreement”),
The Supreme Court has announced it will hear the appeal in the high profile Indalex Ltd., Re. The appeal is of great interest to the commercial litigation, insolvency and pension bar. Its outcome will be closely watched and may have dramatic impact on Canadian corporate reorganizations.
The Indalex decision arose out of the insolvency of Indalex Limited (“Indalex”) and its affiliated companies. Indalex was the Canadian subsidiary of an aluminum products manufacturer. It was a sponsor and administrator of two registered pension plans – one for salaried employees and another for executives. When Indalex obtained protection pursuant to … Continue Reading
In Universal Settlements Inc. v. Duscio, Justice Lederer heard an application to set aside a number of arbitral orders and to replace an arbitrator on grounds of bias.
The underlying proceeding was a shareholder’s dispute and oppression application made pursuant to a shareholders agreement containing an arbitration clause. During the currency of the arbitration, one of the respondents to the arbitration was assigned into bankruptcy. The claimants moved in the arbitration proceeding for an order requiring the immediate return of monies allegedly taken by the respondents. The arbitrator granted the claimants’ motion, and ordered the return of the monies … Continue Reading
On November 16, 2011, the Supreme Court of Canada will hear a case challenging the constitutionality and applicability of several sections of the Companies’ Creditors Arrangement Act (CCAA) to provincial environmental statutes. The province of Newfoundland and Labrador (the “Province”) compels AbitibiBowater Inc. to clean up industrial sites that the company once owned and operated in the province.
The United States Supreme Court has agreed to revisit the issue of whether a statute can override an arbitration clause in a consumer agreement. This time, at issue is the remedial legislation entitled Credit Repair Organization Act (CROA), which provides consumers with “the right to sue a credit repair organization” that violates the Act.
The case arose out of a class action by a number of consumers who applied for and received a card marketed as a tool to “rebuild poor credit” and “improve credit rating.” The consumers alleged that they were charged fees which had not been disclosed in … Continue Reading
The Alberta Court of Appeal will hear the appeal of Transportaction Lease Systems Inc on the issue of whether a previous judge:
- ruled that the appeal in a CCAA matter was not moot; and
- concluded, in any event, that the appeal was not moot.
This confusing issue stems from the lease from Transportaction of vehicles and other equipment to Skyreach under a Master Lease Agreement. Companies leasing equipment will want to follow this appeal closely, as it may ultimately change how Courts will view priority.
In the context of an arrangement plan pursuant to the Companies’ Creditors Arrangement Act, a financial institution was granted a superpriority on all moveable and immoveable debtors’ assets following an additional $2,150,000 loan to the debtor, in order to allow it to complete some construction projects it had already started and for which it already owed $720,000 to construction subcontractors and providers.
The same financial institution was already a creditor for more than $4,000,000 guaranteed by hypothecs on various immoveable properties belonging to the debtor.… Continue Reading
The Court of Appeal will be called upon to determine whether Employment Standards Act obligations, such as termination and severance pay, can be discharged by a Debtor-in-Possession in a CCAA proceeding.
In Windsor Machine, Justice Morawetz heard an application by the union representing the employees of a debtor company. The debtor company had terminated all its employees after being placed into CCAA protection.
The union asserted the statutory rights of the employees to severance and termination pay under the Employment Standards Act (ESA), and argued that the statutory right ought to be discharged out of the assets of the