544553 B.C. Ltd. (Bankrupt), Re

• Jurisdiction: British Columbia
• Court: Court of Appeal (British Columbia)
• Judge: Southin, Finch and Newbury, JJ.A.
• Citation: (2000), 140 B.C.A.C. 36 (CA),2000 BCCA 356
• Date: 31 May 2000

544553 B.C. Ltd. (Bankrupt), Re (2000), 140 B.C.A.C. 36 (CA);

    229 W.A.C. 36

MLB headnote and full text

Temp. Cite: [2000] B.C.A.C. TBEd. SE.011

544553 B.C. Ltd. (appellant) v. Sunshine Coast Mechanical Contractors Inc. (petitioner/respondent)

(CA027043)

Prema Systems Ltd. (appellant) v. Grizzly Project Management Ltd. and T.J. Ward Consulting Group Ltd. (petitioners/respondents)

(CA027044)

No. 289 Taurus Ventures Ltd. (appellant) v. Drysdale Industries Ltd. (petitioner/respondent) (CA027045) (2000 BCCA 356)

Indexed As: 544553 B.C. Ltd. (Bankrupt), Re

British Columbia Court of Appeal

Southin, Finch and Newbury, JJ.A.

May 31, 2000.

Summary:

Three related companies made bankruptcy proposals for the orderly discharge of their unsecured debt. When the proposals went into default, 22 of a large number of the unsecured creditors applied to annul the proposals under s. 63(1) of the Bankruptcy and Insolvency Act. The application was adjourned. See [2000] B.C.T.C. Uned. 85. The companies argued that the creditors would gain nothing in a bankruptcy.

The British Columbia Supreme Court, in a decision reported in [2000] B.C.T.C. 78, held that the companies bore the burden of establishing plainly that the un­secured creditors would gain nothing from the resulting bankruptcy. The court granted an order annulling the proposals, which resulted in the companies being deemed to have made an assignment in bankruptcy. Further, the trustee in bankruptcy was di­rected to pay the companies' solicitors' proper fees incidental to these proceedings, after the trustee was paid, out of the monies held by the trustee. The companies appealed the annulment of their proposals.

The British Columbia Court of Appeal dismissed the appeal.

Bankruptcy - Topic 2426

Proposals - Annulment of - Grounds - Three companies made bankruptcy pro­posals for the orderly discharge of their unsecured debts - There was a complete, absolute and full default in the perfor­mance of the proposals - Unsecured credi­tors sought to annul the proposals - The British Columbia Court of Appeal held that it was not an error for a judge to annul a proposal if there was no prospect of bene­fit to the creditors - The onus was on the applicant to establish one of the pre-con­ditions of an annulment: a default or the appearance that the proposal could not continue without injustice or undue delay, or that the approval of the court was ob­tained by fraud - See paragraphs 5 to 8.

Cases Noticed:

Moon, Re; Ex parte Moon (1887), 19 Q.B.D. 669 (C.A.), refd to. [para. 7].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 63(1) [para. 5].

Counsel:

J.F. Dixon, for the appellants;

H.M.B. Ferris, for the respondents.

This appeal was heard before Southin, Finch and Newbury, JJ.A., of the British Columbia Court of Appeal, at Vancouver, British Columbia, on May 31, 2000, when the following decision was delivered orally for the court by Southin, J.A.