Dilollo (Bankrupt), Re, (2013) 310 O.A.C. 282 (CA)

JudgeFeldman, Sharpe and Strathy, JJ.A.
CourtCourt of Appeal (Ontario)
Case DateOctober 02, 2013
JurisdictionOntario
Citations(2013), 310 O.A.C. 282 (CA);2013 ONCA 550

Dilollo (Bankrupt), Re (2013), 310 O.A.C. 282 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. OC.001

In The Matter Of the Bankruptcy of Cosimo Dilollo

msi Spergel Inc., as Trustee of the Estate of Cosimo Dilollo, a Bankrupt (applicant/appellant) v. I.F. Propco Holdings (Ontario) 36 Ltd. (respondent/respondent in appeal)

(C56626; 2013 ONCA 550)

Indexed As: Dilollo (Bankrupt), Re

Ontario Court of Appeal

Feldman, Sharpe and Strathy, JJ.A.

October 2, 2013.

Summary:

A creditor with a default judgment against Dilollo exceeding $22 million applied to petition Dilollo into bankruptcy. In December 2006, the creditor and Dilollo agreed to compromise the judgment for $1.2 million in exchange for dismissal of the bankruptcy application and mutual releases. The bankruptcy application was not dismissed and releases were not exchanged. In 2008, three other creditors were added to the outstanding bankruptcy application. At a June 2009 bankruptcy hearing, Dilollo admitted to settling the creditor's claim. In January 2011, a bankruptcy order was made. Dilollo appealed the bankruptcy order. The appeal was dismissed in September 2010. At the first meeting of creditors in May 2011, a new bankruptcy trustee was appointed. In August 2012, the trustee moved under s. 95 of the Bankruptcy and Insolvency Act to set aside payment of the settlement monies to the creditor as a preference. The creditor claimed that the trustee's preference claim was barred by the two year limitation period. Alternatively, if the claim was not barred, the creditor claimed entitlement to file a proof of claim for the full $22 million default judgment.

The Ontario Superior Court, in a judgment reported [2013] O.T.C. Uned. 578, held that the trustee's claim was statute-barred. The court rejected the trustee's argument that Dilollo's January 2010 appeal, which stayed the bankruptcy order pursuant to s. 195 of the Act, also suspended the limitation period while the stay was in effect. The trustee appealed.

The Ontario Court of Appeal dismissed the appeal. A stay of the bankruptcy order did not suspend the running of the two year limitation period.

Bankruptcy - Topic 6790

Practice - Stay of proceedings - Pending appeal - A creditor with a default judgment against Dilollo exceeding $22 million applied to petition Dilollo into bankruptcy - In December 2006, the creditor and Dilollo agreed to compromise the judgment for $1.2 million in exchange for dismissal of the bankruptcy application and mutual releases - The bankruptcy application was not dismissed and releases were not exchanged - In 2008, three other creditors were added to the outstanding bankruptcy application - At a June 2009 bankruptcy hearing, Dilollo admitted to settling the creditor's claim - In January 2010, a bankruptcy order was made - Dilollo appealed the bankruptcy order - The appeal was dismissed in September 2010 - At the first meeting of creditors in May 2011, a new bankruptcy trustee was appointed - In August 2012, the trustee moved under s. 95 of the Bankruptcy and Insolvency Act to set aside payment of the settlement monies to the creditor as a preference - The creditor claimed that the trustee's preference claim was barred by the two year limitation period - The trial judge held that the trustee's claim was statute-barred - The court rejected the trustee's argument that Dilollo's January 2010 appeal, which stayed the bankruptcy order pursuant to s. 195 of the Act, combined with s. 20 of the Limitations Act, also suspended the limitation period while the stay was in effect - The Ontario Court of Appeal dismissed the trustee's appeal - The court, while disagreeing with a portion of the trial judge's interpretation of s. 20, agreed that s. 20 did not apply and a stay of the bankruptcy order did not suspend the running of the two year limitation period - See paragraphs 30 to 62.

Bankruptcy - Topic 7242

Setting aside transactions prior to bankruptcy - Fraudulent preferences - Limitation of actions - [See Bankruptcy - Topic 6790 ].

Limitation of Actions - Topic 9616

Enlargement of time period - Application for - Special circumstances - Section 20 of the Limitations Act provided that "this Act does not affect the extension, suspension or other variation of a limitation period or other time limit by or under another Act" - The Bankruptcy and Insolvency Act (BIA) provided no limitation period for a trustee seeking to set aside a preference, nor did it provide for an extension, suspension or variation of any limitation period - Accordingly, s. 4 of the Limitations Act provided that a two year limitation period applied - A trustee relied on s. 20 to argue that the automatic stay of proceedings accompanying an appeal of a bankruptcy order (BIA s. 195), stayed the running of the limitation period - The Ontario Court of Appeal affirmed that s. 20 did not apply - The court stated that "s. 20 speaks to two situations: (a) where a statute contains a limitation period or time limit to which the Limitations Act does not apply and a provision for the extension, suspension or variation of that period or time limit; and (b) where a statute simply contains a provision for the extension, suspension or variation of a limitation period or other time limit imposed 'by or under' another statute. ... I therefore agree with the Trustee's submission that an 'extension, suspension or other variation' contained in the BIA would be capable of suspending the operation of the limitation period in the Limitations Act. The question is whether s. 195 of the BIA has that effect. I agree with the motion judge's conclusion that it does not." - See paragraphs 32, 36.

Cases Noticed:

Edwards (Bankrupt), Re, [2011] O.A.C. Uned. 458; 336 D.L.R.(4th) 719; 2011 ONCA 497, refd to. [para. 12].

Gingras v. General Motors Products of Canada Ltd., [1975] 1 S.C.R. 426; 13 N.R. 361, refd to. [para. 12].

Employers' Liability Assurance Corp. v. Ideal Petroleum (1969) Ltd., [1978] 1 S.C.R. 230; 14 N.R. 503, refd to. [para. 12].

Joseph v. Paramount Canada's Wonderland (2008), 241 O.A.C. 29; 90 O.R.(3d) 401; 2011 ONCA 469, refd to. [para. 27].

Guillemette v. Doucet (2007), 230 O.A.C. 202; 88 O.R.(3d) 90; 2007 ONCA 743, refd to. [para. 28].

Coulson v. Citigroup Global Markets Canada Inc. et al. (2012), 288 O.A.C. 355; 16 C.P.C.(7th) 1; 2012 ONCA 108, refd to. [para. 35].

Cohen, Re, [1948] 4 D.L.R. 808 (Ont. C.A.), refd to. [para. 40].

July v. Neal and Home Insurance Co. (1986), 17 O.A.C. 390; 57 O.R.(2d) 129 (C.A.), refd to. [para. 43].

Letang v. Cooper, [1965] 1 Q.B. 232 (C.A.), refd to. [para. 43].

Wilson's Truck Lines Ltd. v. Pilot Insurance Co. (1996), 94 O.A.C. 321; 31 O.R.(3d) 127, supplementary reasons (1997), 98 O.A.C. 329; 33 O.R.(3d) 37 (C.A.), refd to. [para. 43].

Goorbarry v. Bank of Nova Scotia (2011), 286 O.A.C. 282; 109 O.R.(3d) 92; 2011 ONCA 793, refd to. [para. 43].

Lakehead Newsprint (1990) Ltd. et al. v. 893499 Ontario Ltd. et al., [2001] O.T.C. Uned. 1; 23 C.B.R.(4th) 170 (Sup. Ct.), varied (2001), 155 O.A.C. 328 (C.A.), dist. [para. 45].

Canada (Attorney General) v. Fekete (1999), 242 A.R. 193; 1999 ABQB 262, dist. [para. 45].

Toronto-Dominion Bank v. Barry-Kays (2010), 69 C.B.R.(5th) 243; 2010 ONSC 3535, dist. [para. 45].

Toronto-Dominion Bank v. Padamsey Estate et al. (2011), 94 C.B.R.(5th) 77; 2011 ONSC 4259, affd. [2012] O.A.C. Uned. 132; 94 C.B.R.(5th) 135, dist. [para. 45].

Mawji, Re - see Toronto-Dominion Bank v. Padamsey Estate et al.

Fimax Investments Group Ltd. v. Grossman, [2012] O.T.C. Uned. 2436; 2012 ONSC 2436, dist. [para. 45].

Crosley, Re (1887), 35 Ch. D.266, dist. [para. 46].

Westby, Re (ex parte Lancaster Banking Corp.) (1879), 10 Ch. D. 776, refd to. [para. 50].

Benzon, Re, [1914] 2 Ch. 68, refd to. [para. 52].

Sally Creek Environs Corp. (Bankrupt), Re, [2013] O.A.C. Uned. 255; 2013 ONCA 329, refd to. [para. 57].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 95(1)(a) [para. 11]; sect. 195 [para. 17].

Limitations Act, S.O. 2002, c. 24, sect. 20 [para. 16].

Authors and Works Noticed:

Houlden, L.W., Morawetz, G.B., and Sarra, Janis, Bankruptcy and Insolvency Law in Canada (4th Ed. Rev.), vol. 3 (2013 looseleaf update), p. 5-99 [para. 45].

Counsel:

Mervyn D. Abramowitz and Philip Cho, for the appellant;

Harvey Chaiton and Douglas A. Bourassa, for the respondent.

This appeal was heard on June 3, 2013, before Feldman, Sharpe and Strathy, JJ.A., of the Ontario Court of Appeal.

On October 2, 2013, Strathy, J.A., released the following judgment for the Court of Appeal.

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17 practice notes
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    ...[para. 52]. Joseph v. Paramount Canada's Wonderland (2008), 241 O.A.C. 29; 2008 ONCA 469, refd to. [para. 54]. Dilollo (Bankrupt), Re (2013), 310 O.A.C. 282; 117 O.R.(3d) 81; 2013 ONCA 550, refd to. [para. Statutes Noticed: Insurance Act, R.S.O. 1990, c. I-8, sect. 275 [para. 1 et seq.]. Co......
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13 cases
  • Green et al. v. Canadian Imperial Bank of Commerce et al., (2015) 346 O.A.C. 204 (SCC)
    • Canada
    • Canada (Federal) Supreme Court (Canada)
    • December 4, 2015
    ...Markevich v. Minister of National Revenue, [2003] 1 S.C.R. 94; 300 N.R. 321; 2003 SCC 9, refd to. [para. 188]. Dilollo (Bankrupt), Re (2013), 310 O.A.C. 282; 117 O.R.(3d) 81; 2013 ONCA 550, refd to. [para. Markson v. MBNA Canada Bank (2007), 224 O.A.C. 71; 85 O.R.(3d) 321; 2007 ONCA 334, re......
  • Green et al. v. Canadian Imperial Bank of Commerce et al., (2015) 478 N.R. 202 (SCC)
    • Canada
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    ...Markevich v. Minister of National Revenue, [2003] 1 S.C.R. 94; 300 N.R. 321; 2003 SCC 9, refd to. [para. 188]. Dilollo (Bankrupt), Re (2013), 310 O.A.C. 282; 117 O.R.(3d) 81; 2013 ONCA 550, refd to. [para. Markson v. MBNA Canada Bank (2007), 224 O.A.C. 71; 85 O.R.(3d) 321; 2007 ONCA 334, re......
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    ...1 Q.B. 232; Markevich v. Canada, 2003 SCC 9, [2003] 1 S.C.R. 94; Dilollo Estate (Trustee of) v. I.F. Propco Holdings (Ontario) 36 Ltd., 2013 ONCA 550, 117 O.R. (3d) 81; Méthot v. Montreal Transportation Commission, [1972] S.C.R. 387; Theratechnologies inc. v. 121851 Canada inc., 2015 SCC 18......
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