Bearcat Exploration Ltd. (Bankrupt), Re, (2003) 339 A.R. 376 (CA)

• Judge: Fruman, Wittmann and Costigan, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: December 01, 2003
• Citations: (2003), 339 A.R. 376 (CA);2003 ABCA 365

Bearcat Exploration Ltd. (Bkpt.), Re (2003), 339 A.R. 376 (CA);

 312 W.A.C. 376

MLB headnote and full text

Temp. Cite: [2004] A.R. TBEd. JA.025

Stampede Oils Inc. and Bearcat Exploration Ltd. (appellants/respondents by cross-appeal) v. Knox L.L.C. (respondent/appellant by cross-appeal)

(0301-0142-AC; 2003 ABCA 365)

Indexed As: Bearcat Exploration Ltd. (Bankrupt), Re

Alberta Court of Appeal

Fruman, Wittmann and Costigan, JJ.A.

December 1, 2003.

Summary:

Knox L.L.C. sought to petition Stampede Oils Inc. and Bearcat Exploration Ltd. into bankruptcy, when they failed to repay loans. Stampede and Bearcat claimed that they were not insolvent and sought to have the loan agreements declared illegal based on usurious interest rates. Just before the judge was about to give his oral decision, Stampede and Bearcat announced they had filed Notices of Intention to Make a Proposal. The judge nevertheless gave an oral judgment granting the receiving orders, staying them pending the outcome of the proposals, and appointing an interim receiver. The judge also made conclusions respecting the legality of the interest rate, the principal amounts owing, etc. The judge later supplemented his oral reasons on the illegality issue with written reasons - see [2003] A.R. Uned. 599. Despite these decisions, no orders were entered with respect to illegality, severance, principal, interest or security. Stampede and Bearcat appealed, arguing that the judge should not have granted the receiving orders or appointed an interim receiver. Knox cross-appealed, arguing that in light of the filing of the Notices of Intention, the decision to grant the receiving orders was moot. Knox also challenged the findings of the trial judge respecting the illegality of the interest rates charged, etc.

The Alberta Court of Appeal dismissed the appeals by Stampede and Bearcat respecting the receiving orders on the ground of mootness (i.e., by issuing the Notices of Intention, Stampede and Bearcat conceded their insolvency). Further they had no appeal as of right from the granting of the receiving orders, nor had they applied for leave to appeal. The court allowed the cross-appeal by Knox only to the extent necessary to clarify that the judge's conclusions about illegality, severance, principal amounts, interest rates and security were obiter and were not binding.

Bankruptcy - Topic 1983

Receiving order - Practice - Jurisdiction - Knox sought to petition Stampede Oils Inc. and Bearcat Exploration Ltd. into bankruptcy, when they failed to repay loans - Stampede and Bearcat claimed that they were not insolvent and sought to have the loan agreements declared illegal based on usurious interest rates - Just before the judge was about to render his decision, Stampede and Bearcat announced they had filed Notices of Intention to Make a Proposal - The judge nevertheless gave judgment granting the receiving orders, staying them pending the outcome of the proposals, and appointing an interim receiver -The judge also made conclusions respecting the legality of the interest rate, the principal amounts owing, etc., but no orders were entered on these latter issues - Knox appealed respecting the judge's conclusions regarding illegality of the interest rate, etc. - The Alberta Court of Appeal allowed the appeal by Knox, holding that the judge's conclusions about illegality, severance, principal amounts, interest rates and security were obiter and were not binding - See paragraphs 12 to 18.

Bankruptcy - Topic 6758

Practice - Jurisdiction - To set aside security held by secured creditors - [See Bankruptcy - Topic 1983 ].

Bankruptcy - Topic 6882

Practice - Appeals - When available - Knox sought to petition Stampede Oils Inc. and Bearcat Exploration Ltd. into bankruptcy, when they failed to repay loans - Stampede and Bearcat claimed that they were not insolvent and sought to have the loan agreements declared illegal based on usurious interest rates - Just before the judge was about to render his decision, Stampede and Bearcat announced they had filed Notices of Intention to Make a Proposal - The judge nevertheless gave judgment granting the receiving orders, staying them pending the outcome of the proposals, and appointing an interim receiver -Stampede and Bearcat appealed, arguing that the judge should not have granted the receiving orders or appointed an interim receiver - The Alberta Court of Appeal dismissed the appeals for mootness (i.e., by issuing the Notices of Intention, Stampede and Bearcat conceded their insolvency) - Further they had no appeal as of right from the granting of the receiving orders (Bankruptcy and Insolvency Act, ss. 193(a) to 193(d)), nor did they seek leave to appeal as required under s. 193(e) - See paragraphs 1 to 11.

Cases Noticed:

Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342; 92 N.R. 110; 75 Sask.R. 82, refd to. [para. 6].

Catalina Exploration & Development Ltd., Re; Elias and Catalina Exploration & Development Ltd. v. Hutchison (1981), 27 A.R. 1; 37 C.B.R.(N.S.) 149 (C.A.), refd to. [para. 9].

Elias v. Hutchison - see Catalina Exploration & Development Ltd., Re; Elias and Catalina Exploration & Development Ltd. v. Hutchison.

Cameron (Bankrupt), Re (2002), 312 A.R. 198; 281 W.A.C. 198 (C.A.), refd to. [para. 9].

Simonelli (Bankrupt), Re (2003), 320 A.R. 330; 288 W.A.C. 330 (C.A.), refd to. [para. 10].

274099 Alberta Ltd. v. West Edmonton Mall Shopping Centre Ltd. et al. (1990), 114 A.R. 57 (C.A.), refd to. [para. 13].

Smoke, Re (1989), 77 C.B.R.(N.S.) 263 (Ont. C.A.), refd to. [para. 13].

Concept Marketing Ltd., Re (1975), 20 C.B.R.(N.S.) 27 (Ont. S.C.), refd to. [para. 15].

Central Coast Carriers Ltd. (Bankrupt), Re, [2002] B.C.T.C. 312; 32 C.B.R.(4th) 200 (S.C.), refd to. [para. 15].

Holley v. Gifford Smith Ltd. and Marshall Children's Foundation (1986), 14 O.A.C. 65; 54 O.R.(2d) 225 (C.A.), refd to. [para. 15].

Holley, Re - see Holley v. Gifford Smith Ltd. and Marshall Children's Foundation.

Reynolds, Re (1928), 10 C.B.R. 127 (Ont. S.C.), affd. (1928), 10 C.B.R. 131 (Ont. C.A.), refd to. [para. 15].

Tawe International Fairs Inc., Re, [1992] B.C.J. No. 2064 (S.C.), refd to. [para. 15].

Jarvie, Re (1986), 62 C.B.R.(N.S.) 75 (Sask. Q.B.), affd. (1987), 65 C.B.R.(N.S.) 157 (Sask. C.A.), refd to. [para. 16].

Counsel:

C.P. Russell, Q.C., and A.N. Moulton, for the appellant/respondent by cross-appeal;

J.G.A. Krüger and D.R. Vermette, for the respondent/appellant by cross-appeal.

This appeal was heard on December 1, 2003, before Fruman, Wittmann, and Costigan, JJ.A., of the Alberta Court of Appeal. The following memorandum of judgment was delivered for the court from the bench by Fruman, J.A., on December 1, 2003, and was filed on December 9, 2003.