Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 12, 2025. This was another light week.
In RPG Receivables Purchase Group Inc. v. American Pacific Corporation, the Court held that payments made by an insolvent company to a single creditor cannot rebut the s. 95(2) BIA presumption of preference unless supported by a reasonable business continuation plan benefiting all creditors. The Court found no evidence that the respondent's payments totaling about US$400,000 to a single creditor and critical supplier just a month or so before the bankruptcy was reasonably calculated to avoid insolvency or enhance creditor recovery. The payments were therefore set aside as preferences.
In Arapakota v. Imex Systems Inc., the Court upheld the motion judge's dismissal for delay of an application that had been dormant from 2018 to 2023.
In Cameron Stephens Mortgage Capital Ltd. v. Spotlight on Lawrence Inc., leave to appeal from an approval and vesting order made in a receivership application was denied because the appellants' main argument was that the motion judge did not grant an adjournment and there were no other serious grounds of appeal.
Table of Contents
Civil Decisions
Arapakota v. Imex Systems Inc., 2025 ONCA 367
Keywords: Civil Procedure, Dismissal for Delay, Appeals, Fresh Evidence, Rules of Civil Procedure, Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, Susin v. Baker and Baker, 2004 CanLII 12392 (Ont. C.A.), Convay v. Marsulex Inc., 2002 CanLII 8446 (Ont. C.A.), Gilmour v. Estate of Charles Wayne West, 2018 ONSC 2130, Langenecker v. Sauvé, 2011 ONCA 803, Ali v. Fruci, 2014 ONCA 596, Palmer v. The Queen, [1980] 1 S.C.R. 759, Deutsche Postbank AG v. Kosmayer, 2019 ONSC 6997, Ticchiarelli v. Ticchiarelli, 2017 ONCA 1, Beshay v. Labib, 2024 ONCA 186
Cameron Stephens Mortgage Capital Ltd. v. Spotlight on Lawrence Inc., 2025 ONCA 374
Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeals, Leave, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193(e), Rules of Civil Procedure, r. 61.03.1(1), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, AFC Mortgage Administration Inc. v. Sunrise Acquisitions (Elmvale) Inc., 2024 ONCA 764, Rose-Isli Corp. v. Smith, 2023 ONCA 548, Enroute Imports Inc. (Re), 2016 ONCA 247, Van Decker Estate v. Van Decker, 2022 ONCA 712, Peakhill Capital Inc. v. 1000093910 Ontario Inc., 2024 ONCA 584
RPG Receivables Purchase Group Inc. v. American Pacific Corporation, 2025 ONCA 371
Keywords: Bankruptcy and Insolvency, Reviewable Transactions, Preferences, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 95(1)(a) and (2), Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Housen v. Nikolaisen, 2002 SCC 33, Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, Orion Industries Ltd. (Trustee of) v. Neil's General Contracting Ltd., 2013 ABCA 330, St. Anne-Nackawic Pulp Co. (Trustee of) v. Logistec Stevedoring (Atlantic) Inc., 2005 NBCA 55, Holt Motors Ltd.,(Re) (1966), 57 D.L.R (2d) 180 (Man. Q.B.), Spectrum Interiors (Guelph) Ltd., Re (1979), 29 C.B.R. (N.S.) 218 (Ont. H.C.),Excavation Boyer & Frères inc., Re, [1997] R.J.Q. 866 (Que. C.A.), Keith G. Collins Ltd., as Trustee of the Estate of Dubois-Vandale, a Bankrupt v. MBNA Canada Bank, 2006 MBQB 258, Re Holt Motors Ltd. (1966), 1966 CanLII 437 (MB KB), Andrews (Trustee of) v. Canada (Minister of National Revenue), 2011 MBQB 50, Hudson v. Benallack, [1976] 2 S.C.R. 16, BDO Dunwoody Ltd. v. Canada (Minister of National Revenue), 2011 MBCA 93, Rassell (Re), 1999 ABCA 232, Bankruptcy and Insolvency Law of Canada, loose-leaf (2025-Rel. 2), 4th ed (Toronto: Thomson Reuters, 2009)
Short Civil Decisions
Rajic v. Spivak, 2025 ONCA 363
Keywords: Torts, Professional Negligence, Lawyers, Contract, Settlements, Interpretation, Civil Procedure, Enforcement, Post-Judgment Interest, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 129
Bertsch v. Datastealth Inc., 2025 ONCA 379
Keywords: Contracts, Interpretation, Employment, Termination Clauses, Wrongful Dismissal, Damages, Payment in Lieu of Notice, Civil Procedure, Determination of Question of Law, Employment Standards Act, 2000, S.O. 2000, c. 41, Termination and Severance of Employment, O Reg 288/01, Rules of Civil Procedure, r. 21.01, Amberber v. IBM Canada Ltd., 2018 ONCA 571
CIVIL DECISIONS
Arapakota v. Imex Systems Inc., 2025 ONCA 367
[Trotter, Thorburn and Wilson JJ.A.]
Counsel:
D.A., acting in person for the appellants
Sabourin and S. Kugler, for the respondents K.P., A.L. and I.N.
Evangelista, for the respondent R.S.
Keywords: Civil Procedure, Dismissal for Delay, Appeals, Fresh Evidence, Rules of Civil Procedure, Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, Susin v. Baker and Baker, 2004 CanLII 12392 (Ont. C.A.), Convay v. Marsulex Inc., 2002 CanLII 8446 (Ont. C.A.), Gilmour v. Estate of Charles Wayne West, 2018 ONSC 2130, Langenecker v. Sauvé, 2011 ONCA 803, Ali v. Fruci, 2014 ONCA 596, Palmer v. The Queen, [1980] 1 S.C.R. 759, Deutsche Postbank AG v. Kosmayer, 2019 ONSC 6997, Ticchiarelli v. Ticchiarelli, 2017 ONCA 1, Beshay v. Labib, 2024 ONCA 186
facts:
D.A., one of the appellants, was the founder of Imex Systems Inc. ("Imex") and was the Chief Executive Officer until he resigned on or about February 17, 2018. The respondents were directors and/or shareholders of Imex.
On July 13, 2018, the appellants brought an application claiming that the respondents committed oppressive acts which caused the appellant and his family personal and financial loss. After commencing the application, D.A. became involved in other civil and criminal proceedings not directly related to the application.
No steps were taken to further the application until April 27, 2023, when the appellants served motion materials for a motion to transfer it to the Superior Court of Justice in Hamilton. On August 21, 2023, the respondents brought a motion to dismiss the application for delay.
The lower court granted the respondents' motion and dismissed the application for delay. The appellants appealed this decision and sought to adduce fresh evidence.
issues:
- Did the motion judge err in dismissing the application for delay?
- Should the appellants be permitted to admit fresh evidence?
holding:
Appeal dismissed.
reasoning:
- No.
The motion judge did not err in dismissing the appellants' application for delay. There was inordinate delay that was inexcusable. Further, the presumption of prejudice was not rebutted given the the requirement for evidence not only from the parties, but possibly non-parties as well, which evidence would depend on the recollection of witnesses and the availability of documents. The motion judge arrived at his conclusion recognizing the challenges faced by self-represented litigants as well as the importance of promoting access to justice and equal justice.
- No.
The appellants should not be permitted to admit fresh evidence. The appellants claimed that, if admitted, the fresh evidence would have established that the evidence necessary to conduct a fair hearing was available despite the delay. The appellants sought to prove that the respondents had access to all the documents and emails that would be necessary to dispose of the application. It was unclear why these documents could not have been produced earlier by the exercise of due diligence. Regardless, the fresh evidence would not have impacted the outcome of the motion. It did not rebut the presumption of prejudice, as it was not clear what issues the new documents pertained to, or that they represented all the documents that pertained to each of the issues raised.
Cameron Stephens Mortgage Capital Ltd. v. Spotlight on Lawrence Inc., 2025 ONCA 374
[Dawe J.A. (Motion Judge)]
Counsel:
G. Formosa, P. Cho and P. Wallner, for the moving parties
Larry and D. Rosenbluth, for the Receiver, The Fuller Landau Group Inc.
Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeals, Leave, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 193(e), Rules of Civil Procedure, r. 61.03.1(1), Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, AFC Mortgage Administration Inc. v. Sunrise Acquisitions (Elmvale) Inc., 2024 ONCA 764, Rose-Isli Corp. v. Smith, 2023 ONCA 548, Enroute Imports Inc. (Re), 2016 ONCA 247, Van Decker Estate v. Van Decker, 2022 ONCA 712, Peakhill Capital Inc. v. 1000093910 Ontario Inc., 2024 ONCA 584
facts:
The moving parties were registered owners of a property on Lawrence Ave. West in Toronto ("the property"). The Fuller Landau Group Inc. was appointed receiver over the property, at the instance of the first mortgagee at the time.
There were three mortgages on the property, securing debts well in excess of $30 million. The debt secured by the first mortgage stood at approximately $27.5 million. The Receiver conducted a process to sell the property. The Receiver brought a motion seeking an approval and vesting order that would enable the sale of the property to proceed, as well as various other ancillary orders.
On the scheduled motion date, the moving parties sought an adjournment to enable them to attempt to arrange financing to pay off the debt secured by the first mortgage. The motion judge declined to grant the adjournment and proceeded to make the order that the Receiver had requested.
The moving parties sought leave to appeal to the Court pursuant to s. 193(e) of the BIA and r. 61.03.1(1) of the Rules of Civil Procedure.
issues:
- Should leave to appeal be granted?
holding:
Motion dismissed.
reasoning:
No. Leave to appeal was denied. The test to be applied on leave applications under s. 193(e) of the BIA requires the appeal: 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, and is one that this Court should therefore consider and address; b) is prima facie meritorious, and c) would unduly hinder the progress of the bankruptcy/insolvency proceedings.
The Court assessed the matter through the three-branch test for leave and found that no branch was met.
The motion judge did not err in refusing the adjournment. The moving parties argued they ought to have been given more time to try to raise funds to exercise their equity of redemption, in the hope that that they could continue pursuing their housing development project. The Court was of the view that the fact that the moving parties needed an adjournment to raise the funds did not materially impact the motion judge's finding that they were not in a position to exercise the right of redemption. The moving parties would have a difficult time proving to a panel of the Court that the motion judge erred in exercising his discretion as he did. Finally, the Court agreed with the Receiver's argument that further delay could result in the sale falling through which might negatively impact all shareholders.
The motion judge did deny the moving parties natural justice. The moving parties argued they were denied natural justice because they were not given an opportunity to make submissions about the merits of the Receiver's motion after their adjournment request was denied. The Court held that the moving parties' arguments turned on fact-specific issues of procedural fairness that did not have broader significance beyond the interests of the parties. Additionally, the Court held there was no indication that the moving parties had any substantive submissions to make on the motion, apart from seeking to have it adjourned so they could prepare and submit a competing redemption bid to the first mortgagee.
RPG Receivables Purchase Group Inc. v. American Pacific Corporation, 2025 ONCA 371
[Lauwers, Zarnett and Pomerance JJ.A.]
Counsel:
B. Bissell and J. Turgeon, for the appellant
Brown-Okruhlik and M. Klimek, for the respondent
Keywords: Bankruptcy and Insolvency, Reviewable Transactions, Preferences, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 95(1)(a) and (2), Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Housen v. Nikolaisen, 2002 SCC 33, Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, Orion Industries Ltd. (Trustee of) v. Neil's General Contracting Ltd., 2013 ABCA 330, St. Anne-Nackawic Pulp Co. (Trustee of) v. Logistec Stevedoring (Atlantic) Inc., 2005 NBCA 55, Holt Motors Ltd.,(Re) (1966), 57 D.L.R (2d) 180 (Man. Q.B.), Spectrum Interiors (Guelph) Ltd., Re(1979), 29 C.B.R. (N.S.) 218 (Ont. H.C.), Excavation Boyer & Frères inc., Re, [1997] R.J.Q. 866 (Que. C.A.), Keith G. Collins Ltd., as Trustee of the Estate of Dubois-Vandale, a Bankrupt v. MBNA Canada Bank, 2006 MBQB 258, Re Holt Motors Ltd. (1966), 1966 CanLII 437 (MB KB), Andrews (Trustee of) v. Canada (Minister of National Revenue), 2011 MBQB 50, Hudson v. Benallack, [1976] 2 S.C.R. 16, BDO Dunwoody Ltd. v. Canada (Minister of National Revenue), 2011 MBCA 93, Rassell (Re), 1999 ABCA 232, Bankruptcy and Insolvency Law of Canada, loose-leaf (2025-Rel. 2), 4th ed (Toronto: Thomson Reuters, 2009)
facts:
Specialty Chemical Industries Inc. ("Specialty") made payments totaling US$400,000 to one of its major suppliers, the respondent American Pacific Corporation ("AmPac"), slightly more than a month before Speciality assigned itself into bankruptcy. Specialty was insolvent when it made the payments, and the effect of the payments was to give AmPac a preference over other unpaid creditors.
Specialty's trustee in bankruptcy was unsuccessful in its claim to recover the amount of the payments from AmPac.The bankruptcy judge found that Specialty's intention in making payments of past indebtedness to AmPac while leaving other creditors unpaid was to be able to buy more product from AmPac to supply to its only customer, and thus to preserve that relationship and continue in business. In the bankruptcy judge's view, this rebutted the presumption that the payments were made with a view to giving AmPac a preference over other creditors.
The appellant, as assignee of the trustee's right of action, challenged the bankruptcy judge's conclusion on two bases. First, it argued that the bankruptcy judge improperly considered evidence that Specialty was under pressure to make the payments when the Bankruptcy and Insolvency Act (BIA) says that evidence of pressure is inadmissible to support a transaction. Second, it argued that the bankruptcy judge erred in treating Specialty's intention to preserve a customer relationship and stay in business as sufficient to rebut the presumption, when there was no objectively reasonable basis for Specialty's desire to stay in business.
issues:
- Did the bankruptcy judge improperly rely on evidence of pressure?
- Did the bankruptcy judge err in finding that Specialty's intention rebutted the presumption of preferential payment over other creditors?
holding:
Appeal allowed
reasoning:
Appeal allowed.
- No.
The Court rejected the argument that the bankruptcy judge improperly relied on inadmissible evidence of pressure under s. 95(2) of the BIA. The Court held that while the provision prevents pressure from being used to justify a preferential payment, it does not bar consideration of pressure to provide context when assessing the debtor's true intent. The Court found that the bankruptcy judge properly relied on evidence that the payments were made out of commercial necessity to preserve the debtor's sole customer relationship, not to justify the payments based on pressure. This approach was consistent with the reasoning in Orion, where evidence of demands and financial imperatives was used to assess the debtor's business purpose. The Court concluded that the bankruptcy judge did not misuse the evidence and therefore dismissed this ground of appeal.
- Yes.
The Court held that the bankruptcy judge erred in concluding that Specialty's intent to continue in business rebutted the presumption under s. 95(2) of the BIA that the payments to AmPac were made with a view to giving a preference. The Court agreed with the appellant that the presumption is only rebutted where the debtor's business continuation plan is objectively reasonable in the sense that it is likely to benefit creditors generally. Citing Orion and St. Anne-Nackawic, the Court emphasized that a debtor's dominant intent to benefit creditors through business continuation must be both genuine and reasonable from the standpoint of maximizing returns to all creditors. The Court found that the bankruptcy judge failed to assess whether Specialty's continuation plan met this threshold. The judge had focused on Specialty's hope of maintaining its relationship with its only customer but had not examined whether continued operations would generate net revenues exceeding the preferential payments. The evidence showed that Specialty had historically low margins and significant insolvency issues, undermining the reasonableness of any belief that business continuation would benefit creditors.
The Court concluded that the payments were not justified by a reasonable plan and were therefore void as preferences.
SHORT CIVIL DECISIONS
Rajic v. Spivak, 2025 ONCA 363
[Trotter, Thorburn and Wilson JJ.A.]
Counsel:
Arvai for the Appellant
Nguyen for the Respondents
Keywords: Torts, Professional Negligence, Lawyers, Contract, Settlements, Interpretation, Civil Procedure, Enforcement, Post-Judgment Interest, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 129
Bertsch v. Datastealth Inc., 2025 ONCA 379
[van Rensburg, Sossin and Gomery JJ.A.]
Counsel:
R. White and J. K. Wong, for the appellant
Latner and M. Siek, for the respondent
Keywords: Contracts, Interpretation, Employment, Termination Clauses, Wrongful Dismissal, Damages, Payment in Lieu of Notice, Civil Procedure, Determination of Question of Law, Employment Standards Act, 2000, S.O. 2000, c. 41, Termination and Severance of Employment, O Reg 288/01, Rules of Civil Procedure, r. 21.01, Amberber v. IBM Canada Ltd., 2018 ONCA 571
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.
