In his decision in Global Royalties Limited v. Brook, Chief
Justice Strathy of the Ontario Court of Appeal explained that the
Bankruptcy and Insolvency Act ("BIA") does not
provide a bankrupt with a right to appeal an order lifting a stay
of proceedings against him. Despite there being a multi-party
bankruptcy, he rejected the submission that "the order or
decision is likely to affect other cases of a similar nature in the
bankruptcy proceedings". He also refused to grant leave to
appeal on the facts of this case.
The plaintiffs-respondents commenced an action alleging that the
bankrupt appellant-defendant, a former employee, had breached his
fiduciary duties owed to them. The appellant submitted that the
proceeding against him was invalid because s. 69.3 of the BIA stays
proceedings against undischarged bankrupts. Justice Penny of the
Superior Court held that the respondents' claims for injunctive
and declaratory relief, as well as their claims for damages from
the appellant's post-bankruptcy conduct, were not stayed
pursuant to s. 69.3 of the BIA because they are not claims provable
in bankruptcy. He further lifted the stay in respect of the claims
for damages arising from the appellant's pre-bankruptcy conduct
because of "sound reasons" for doing so.
No Right to Appeal
Chief Justice Strathy held that the appellant had no right to
appeal the Order pursuant to s. 193(b) of the BIA. The order was
not "likely to affect other cases of a similar nature in the
bankruptcy proceedings" and any potential effects were
 Subsection 193(b) provides that
an appeal lies to this court "if the order or decision is
likely to affect other cases of a similar nature in the bankruptcy
 The governing authorities stress
that s. 193(b) concerns "real disputes" likely to affect
other cases raising the same or similar issues in the same
bankruptcy proceedings: [...]
 Here, the appellant submitted
that the crossclaims against him by the co-defendants raise similar
issues of whether the stay of proceedings under the BIA ought to be
 In my view, this is a matter of
pure speculation. Although counsel for the co-defendants was given
notice of the motion to lift the stay, he did not appear on the
motion and expressly disclaimed any intention to respond.
 In addition, the statement of
defence and crossclaim pleads the relationship between the
co-defendants and the appellant took place after the bankruptcy. It
seems arguable then that the stay would not apply to the crossclaim
in any event.
 Moreover, none of the grounds of
appeal set out in the notice of appeal provide a basis to conclude
that the order below would impact related cases in the
Chief Justice Strathy also refused to grant leave to appeal. He
began by recalling the test for leave to appeal under s. 193(e) of
the BIA (described previously
here), which requires considering whether the proposed
(a) raises an issue that is of
general importance to the practice in bankruptcy/insolvency matters
or to the administration of justice as a whole;
(b) is prima facie
(c) would not unduly hinder the
progress of the bankruptcy/insolvency proceedings.
The appellant argued that the requirement of "sound
reasons" to lift a stay required clarification. Specifically,
he argued that courts should assess the merits of a claim when
considering lifting a stay. Chief Justice Strathy disagreed,
summarizing his conclusion as follows:
 In my view, it has been settled
law in this province, for at least 20 years, that on a motion to
lift the stay the bankruptcy court is not required to look into the
merits of the action [...] As this court noted in Re Ma,
at para. 3, this does not mean that the merits of the action can
never be relevant. If, for example, the defendant wishes to argue
that the action is frivolous, vexatious, or otherwise has little
prospect of success, it may well adduce evidence to that
 I do not find that the proposed
appeal raises an issue of general importance in bankruptcy and
insolvency matters. Nor has the appellant satisfied me that the
proposed appeal is prima facie meritorious. I, therefore,
deny the appellant leave to appeal.
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The Canadian bankruptcy regime was designed with two key purposes in mind – provide options to ‘honest but unfortunate' debtors struggling with an unmanageable financial load and create an orderly means for creditors to recover amounts owed them.
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