561861 Ontario Ltd. v. 1085043 Ontario Inc. et al., (1999) 104 O.T.C. 223 (SC)

• Judge: Chadwick, J.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: July 15, 1999
• Jurisdiction: Ontario
• Citations: (1999), 104 O.T.C. 223 (SC)

561861 Ont. Ltd. v. 1085043 Ont. Inc. (1999), 104 O.T.C. 223 (SC)

MLB headnote and full text

Temp. Cite: [1999] O.T.C. TBEd. AU.001

In The Matter Of the Proposal of 1085043 Ontario Inc., cob The Boundary Golf Club.

(File No. 091528)

In The Matter Of the Construction Lien Act, R.S.O. 1990, c. C-30.

561861 Ontario Ltd., o/s Robert Excavating (plaintiff) v. 1085043 Ontario Inc., Surendra Gera, in trust, 1168696 Ontario Inc., Dorothy Mae O'Byrne, Leo Gauthier and Madeleine Gauthier (defendants)

(File No. 97-CV-138)

Indexed As: 561861 Ontario Ltd. v. 1085043 Ontario Inc. et al.

Court of Ontario

Superior Court of Justice

In Bankruptcy

Chadwick, J.

July 15, 1999.

Summary:

A corporate purchaser bought land to build a golf course and mortgaged the property to finance construction costs. A number of liens were registered for unpaid construction costs. The corporate purchaser made a proposal under the Bankruptcy and Insolvency Act and, with the approval of creditors, the golf course was sold. The lien claimants claimed that they took in priority to the proposal trustee and the proposal trustee's solicitors. The debtor's solicitor claimed priority for a charging order obtained against the debtor's property upon contesting a lien action.

The Ontario Superior Court, in Bankruptcy, held that the lien claimants were secured creditors and took in priority to the proposal trustee and the solicitors for the proposal trustee. The charging order obtained by the solicitors for the debtor ranked equally with the lien claimants and was entitled to share in the "pro rata" distribution with the lien claimants.

Editor's Note: For a related case, see 66 O.T.C. 305.

Bankruptcy - Topic 2773

Trustees - Compensation - Priority of - See paragraphs 19 to 24.

Bankruptcy - Topic 3645

Creditors - General - Priorities - Statutory liens and charges, force and effect of - See paragraphs 17 to 28.

Bankruptcy - Topic 3647

Creditors - General - Priorities - Circumstances when claims ranked equally - See paragraphs 26 to 28.

Bankruptcy - Topic 3924

Secured creditors - What constitutes a secured creditor - Statutory liens - General - See paragraphs 17 to 18.

Bankruptcy - Topic 3931

Secured creditors - What constitutes a secured creditor - Charging order (incl. on matrimonial property) - See paragraphs 26 to 28.

Cases Noticed:

General Fireproofing Co. of Canada, Re, [1936] O.R. 510 (C.A.), refd to. [para. 24].

George and Asmussen Ltd. v. MCM Project Inc. (1992), 9 O.R.(3d) 382 (Gen. Div.), refd to. [para. 27].

Budinsky et al. v. Breakers East Inc. (1993), 15 O.R.(3d) 198 (Gen. Div.), refd to. [para. 27].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 39(2) [para. 22]; sect. 62(2) [para. 20]; sect. 136(1) [para. 23].

Counsel:

P. Roderick Brooks, for BDO Dunwoody Ltd., as interim receiver;

Ronald W. Price, for a number of lien claimants;

Craig M. Bater, for 1085043 Ontario Inc. and Gibson & Augustine.

This motion was heard before Chadwick, J., of the Ontario Superior Court, in Bankruptcy, who released the following judgment at Ottawa, Ontario, on July 15, 1999.