Remington Development Corp. v. Alternative Fuel Systems Inc., 2004 ABCA 31

• Judge: The decision of the Court of Appeal was delivered on January 29, 2004, by Paperny, J.A.
• Court: Court of Appeal (Alberta)
• Case Date: Thursday January 29, 2004
• Citations: 2004 ABCA 31;(2004), 346 A.R. 28 (CA)

Remington Dev. v. Alternative Fuel (2004), 346 A.R. 28 (CA);

    320 W.A.C. 28

MLB headnote and full text

Temp. Cite: [2004] A.R. TBEd. FE.028

In The Matter Of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 as amended

And In The Matter Of Alternative Fuels Inc.

Remington Development Corporation (respondent/applicant) v. Alternative Fuel Systems Inc. (appellant/respondent)

(0301-0270-AC; 2004 ABCA 31)

Indexed As: Remington Development Corp. v. Alternative Fuel Systems Inc.

Alberta Court of Appeal

McFadyen and Paperny, JJ.A., and Clark, J.(ad hoc)

January 29, 2004.

Summary:

AFS obtained an order that it was a company to which the Companies' Creditors Arrangement (Can.) (CCAA) applied and that it could file a plan of compromise or arrangement under the CCAA. Remington was the agent of AFS' landlord. Remington applied for a determination of the value of its claim against its tenant AFS. AFS applied for an order requiring Remington's claim to be valued in accordance with the Landlord's Rights on Bankruptcy Act (Alta.) (LRBA) and determining that Remington, as an unsecured creditor, should form part of the unsecured creditor class for purposes of voting on and receiving distributions from AFS pursuant to AFS' proposed plan of compromise or arrangement under the CCAA.

The Alberta Court of Queen's Bench, in a decision reported [2003] A.R. Uned. 653; 2003 ABQB 745, dismissed AFS' application. The court declined AFS' request to fix the amount of Remington's claim at about $100,000. The court ruled that, failing additional submissions by AFS within 30 days after the judgment, Remington's claim as unsecured creditor was set at $4,244,862.35, and the matter of creditor classification was adjourned sine die. AFS appealed.

The Alberta Court of Appeal dismissed the appeal.

Creditors and Debtors - Topic 8596.1

Debtors' relief legislation - Companies' creditors arrangement legislation - Proof of claim (incl. claims bar process) - The Alberta Court of Appeal held that the Landlord's Rights on Bankruptcy Act (Alta.) (LRBA) did not apply to limit or quantify the landlord's claim in proceedings under the Companies' Creditors Arrangement Act (Can.) (CCAA) because: (1) the condition precedent set out in the LRBA for its application (and mirrored in its correlative, Part II of the Bankruptcy and Insolvency Act (Can.) (BIA), which dealt with receiving orders and assignments) was not satisfied when the debtor was not the subject of a receiving order or an assignment, nor did the LRBA fit within the scheme and intent of the CCAA; (2) the interpretation of s. 12 of the CCAA did not direct the importation of all the provisions of the BIA into the CCAA when determining the amount of the claim; and (3) the objects of the BIA and CCAA were distinct and each had to be interpreted with their respective purposes in mind.

Cases Noticed:

Principal Plaza Leaseholds Ltd. v. Principal Group Ltd. (Bankrupt) (1996), 188 A.R. 187 (Q.B.), refd to. [para. 11].

Algoma Steel Corp. v. Royal Bank of Canada et al. (1992), 55 O.A.C. 303; 11 C.B.R.(3d) 11 (C.A.), consd. [para. 19].

Parisian Cleaners and Laundry Ltd. v. Blondin (1938), 20 C.B.R. 452 (Que. C.A.), refd to. [para. 20].

Québec (Sous-ministre du revenu) v. Wynden Canada Inc. (1983), 47 C.B.R.(N.S.) 76 (Que. S.C.), refd to. [para. 20].

Quebec Steel Products (Industries) Ltd. v. James United Steel Ltd., [1969] 2 O.R. 349; 5 D.L.R.(3d) 374 (H.C.), refd to. [para. 20].

Pateman (Bankrupts), Re (1991), 74 Man.R.(2d) 1; 5 C.B.R.(3d) 115 (Q.B.), refd to. [para. 29].

Sumner Co. (1984) Ltd. (Bankrupt), Re (1987), 79 N.B.R.(2d) 191; 201 A.P.R. 191; 64 C.B.R. 218 (Q.B. Bktcy.), refd to. [para. 29].

Allen Theatres Ltd., Re (1922), 3 C.B.R. 145 (Ont. S.C.), refd to. [para. 29].

Woodward's Ltd., Re (1993), 20 C.B.R.(3d) 74 (B.C.S.C.), refd to. [para. 36].

Sklar-Peppler Furniture Corp. v. Bank of Nova Scotia (1991), 86 D.L.R.(4th) 621 (Ont. Gen. Div.), refd to. [para. 37].

Grafton-Fraser Inc. v. Canadian Imperial Bank of Commerce (1992), 90 D.L.R.(4th) 285 (Ont. Gen. Div.), refd to. [para. 37].

Armbro Enterprises Inc., Re (1993), 22 C.B.R.(3d) 80 (Ont. Gen. Div.), refd to. [para. 37].

Smoky River Coal Ltd. et al., Re (1999), 237 A.R. 326; 197 W.A.C. 326; 175 D.L.R.(4th) 703 (C.A.), refd to. [para. 38].

Harvard College v. Commissioner of Patents, [2002] 4 S.C.R. 45; 296 N.R. 1, consd. [para. 46].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1; 36 O.R.(3d) 418, refd to. [para. 46].

Elan Corp. and Nova Metal Products Inc. v. Comiskey (1990), 41 O.A.C. 282; 1 O.R.(3d) 289 (C.A.), consd. [para. 48].

Chef Ready Foods Ltd. v. Hongkong Bank of Canada, [1991] 2 W.W.R. 136 (B.C.C.A.), refd to. [para. 49].

Canadian Airlines Corp., Re, [2000] 10 W.W.R. 269; 265 A.R. 201; 2000 ABQB 442 (Q.B.), affd. [2000] 10 W.W.R. 314; 266 A.R. 131; 228 W.A.C. 131; 2000 ABCA 238, leave to appeal denied [2001] S.C.C.A. No. 60; 275 N.R. 386; 293 A.R. 351; 257 W.A.C. 351 (S.C.C.), refd to. [para. 50].

Lehndorff General Partner Ltd., Re (1993), 17 C.B.R.(3d) 24 (Ont. Gen. Div.), refd to. [para. 50].

Northland Properties Ltd. v. Excelsior Life Insurance Co. of Canada, [1989] 3 W.W.R. 363 (B.C.C.A.), refd to. [para. 50].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 65.2(4) [para. 28]; sect. 121(1), sect. 121(2), sect. 135(1.1) [para. 23]; sect. 136(1)(f), sect. 146 [para. 7].

Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, sect. 12 [para. 6].

Landlord's Rights on Bankruptcy Act, R.S.A. 2000, c. L-5, sect. 1, sect. 2, sect. 3, sect. 4 [para. 8].

Authors and Works Noticed:

Birkness, Re Woodward's Limited - The Contextual Commonality of Interest Approach to Classification of Creditors (1993), 20 C.B.R.(3d) 91, generally [para. 62].

Canada, Standing Senate Committe on Banking, Trade and Commerce Report, Debtors and Creditors Sharing the Burden: A Review of the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act (2003), generally [para. 41]; p. 173 [para. 42].

Hayes, Landlords' Rights on Bankruptcy and in Restructuring Proceedings, in The Failing Smaller Business: Essential Debtor - Creditor Practice (1994), generally [para. 62].

Houlden, L.W., and Morawetz, G.B., The 2003 Annotated Bankruptcy and Insolvency Act (2002), p. 1100 [para. 20].

Johnston and Campbell, Using the CCAA to 'Cram Down Landlords': Sklar-Pepplar Furniture Corporation v. Bank of Nova Scotia and its Aftermath (1992), 1 Nat. Real Property L. Rev.(2d) 181, generally [para. 62].

Kulidjian, Sheldon and Peck, Potential Creditors Under the Companies' Creditors Arrangement Act (1996), 13 National I.R. 4, generally [para. 62].

Marantz, Dealing with Proposals: Acting for the Creditors in CCAA and the New Bankruptcy Act Proposals (1993), generally [para. 62].

Marantz, Retail Revival: The Eaton's Restructuring (1998) 10 Comm. Insol. R. 37, generally [para. 11].

Moffat, Treatment of Landlords in Commercial Re-organizations (1997), 10 Comm. Insol. R. 14, generally [para. 62]; p. 16 [para. 63].

Rotsztain and Kraft, Landlords and Leases in Bankruptcy and Insolvency Act and Companies Creditors Arrangement Act Reorganizations, [1994] ICR 2005, generally [para. 62]; p. 5-31 [para. 66].

Counsel:

B.P. O'Leary, Q.C., and C. Murray, for the appellant;

L.B. Robinson, for the respondent;

R.J. Gilborn, Q.C., for the Monitor.

This appeal was heard on December 2, 2003, by Paperny and McFadyen, JJ.A., and Clark, J.(ad hoc), of the Alberta Court of Appeal.

The decision of the Court of Appeal was delivered on January 29, 2004, by Paperny, J.A.