Royal Bank of Canada v. Soundair Corp. et al.,

• Jurisdiction: Ontario
• Judge: Goodman, McKinlay and Galligan, JJ.A.
• Citation: (1991), 46 O.A.C. 321 (CA),1991 CanLII 2727 (NS CA),1991 CanLII 2727 (ON CA),4 OR (3d) 1,83 DLR (4th) 76,7 CBR (3d) 1,[1991] OJ No 1137 (QL),46 OAC 321
• Court: Court of Appeal (Ontario)
• Date: 03 July 1991

Royal Bk. v. Soundair Corp. (1991), 46 O.A.C. 321 (CA)

MLB headnote and full text

The Royal Bank of Canada (plaintiff/respondent) v. Soundair Corporation, Canadian Pension Capital Limited and Canadian Insurers' Capital Corporation (defendants), (Canadian Pension Capital Limited, and Canadian Insurers' Capital Corporation (collectively "CCFL") - appellants) and (Soundair Corporation - respondent)

(No. 318/91)

Indexed As: Royal Bank of Canada v. Soundair Corp. et al.

Ontario Court of Appeal

Goodman, McKinlay and Galligan, JJ.A.

July 3, 1991.

Summary:

Soundair Corp. was engaged in the air transport business. One of the divisions of Soundair was Air Toronto. The Royal Bank of Canada and CCFL were secured creditors of Soundair. When Soundair had financial difficulties, the bank moved for appointment of a receiver to operate Soundair as a going concern and to sell Air Toronto. The court appointed the receiver. The receiver received two offers to purchase Air Toronto, one from OEL and the other from 922246 Ontario Ltd. The receiver accepted the OEL offer because a condition in the 922246 Ontario Ltd. offer was unacceptable. After the receiver accepted the OEL offer, 922246 Ontario Ltd. made a second offer with the unacceptable condition removed. The receiver refused to change its decision about accepting the OEL offer. The bank commenced court proceedings seeking to have the 922246 Ontario Ltd. offer accepted and the receiver moved to have the sale to OEL approved.

The Ontario Supreme Court, per Rosenberg, J., approved the sale to OEL and dismissed the motion for the acceptance of the other offer. An appeal was launched.

The Ontario Court of Appeal, Goodman, J.A., dissenting, dismissed the appeal.

Receivers - Topic 2881

Property - Sale of property - General - The Ontario Court of Appeal listed the duties a court must perform when deciding whether a receiver who has sold property acted properly - See paragraph 16.

Receivers - Topic 2884

Property - Sale of property - Duties of receivers - [See Receivers - Topic 2881].

Receivers - Topic 2884

Property - Sale of property - Duties of receivers - The Ontario Court of Appeal held that in deciding whether a receiver has acted providently in selling property, the court should examine the conduct of the receiver in light of the information the receiver had when the sale was made - The court should be very cautious before deciding that a receiver's conduct was improvident based on information which came to light after the decision to sell was made - See paragraph 21.

Receivers - Topic 2884

Property - Sale of property - Duties of receivers - A court appointed receiver was ordered to sell an airline (Air Toronto) - The receiver received two offers, and accepted one of them - The court approved the receiver's acceptance of the offer - The secured creditors appealed, arguing that the receiver should have accepted the other offer - The Ontario Court of Appeal dismissed the appeal where the receiver made a sufficient effort to get the best price and acted providently, the interests of all parties were considered by the receiver, and the sale process was fair, reasonable and prudent - See paragraphs 18 to 60.

Receivers - Topic 2884

Property - Sale of property - Duties of receivers - [See Receivers - Topic 2895].

Receivers - Topic 2885

Property - Sale of property - Effect of creditors' views - A court appointed receiver was ordered to sell an airline (Air Toronto) - The receiver received two offers, and accepted one of them - The court approved the receiver's acceptance of the offer - The secured creditors appealed, arguing that the receiver should have accepted the other offer because it was supported by the secured creditors - The Ontario Court of Appeal rejected the creditors' argument, holding that where the receiver acted properly and providently, the views of the creditors should not override the considered judgment of the receiver - See paragraphs 61 to 70.

Receivers - Topic 2895

Property - Sale of property - Revised offers - The Ontario Court of Appeal discussed whether the court, in determining whether a receiver has fulfilled its duty to obtain a fair price for property, should consider an offer received by a receiver after the receiver has agreed to sell the property - See paragraphs 24 to 38.

Cases Noticed:

Crown Trust Co. v. Rosenberg (1986), 60 O.R.(2d) 87, appld. [paras. 16, 21, 26, 39, 40, 45, 47, 58, 72].

Cameron v. Bank of Nova Scotia et al. (1981), 45 N.S.R.(2d) 303; 86 A.P.R. 303; 38 C.B.R.(N.S.) 1 (C.A.), appld. [paras. 22, 40, 79, 85].

Re Selkirk (1986), 58 C.B.R.(N.S.) 245 (Ont. S.C.), refd to. [paras. 27, 39, 40, 43, 84].

Re Beauty Counsellors of Canada Ltd. (1986), 58 C.B.R.(N.S.) 237 (Ont. S.C.), refd to. [paras. 28, 40, 83, 116].

Re Selkirk (1987), 64 C.B.R.(N.S.) 140, refd to. [para. 29].

Salima Investments Ltd. v. Bank of Montreal (1985), 21 D.L.R.(4th) 473 (Alta. C.A.), refd to. [para. 44].

British Columbia Developments Corp. v. Spun Cast Industries Ltd. et al. (1978), 26 C.B.R.(N.S.) 28, refd to. [para. 76].

Counsel:

J.B. Berkow and S.H. Goldman, for the appellants;

J.T. Morin, Q.C., for Air Canada;

L.A.J. Barnes and L.E. Ritchie, for the Royal Bank of Canada;

S.F. Dunphy and G.K. Ketcheson, for Ernst & Young Inc., receiver of Soundair Corp.;

W.G. Horton, for Ontario Express Ltd.;

N.J. Spies, for Frontier Air Limited.

This appeal was heard on June 11, 12, 13 and 14, 1991, before Goodman, McKinlay and Galligan, JJ.A., of the Ontario Court of Appeal. The decision of the court was released on July 3, 1991, including the following opinions:

Galligan, J.A. - see paragraphs 1 to 71;

McKinlay, J.A. - see paragraphs 72, 73;

Goodman, J.A., dissenting - see paragraphs 74 to 125.