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Insolvency (BIA) - Appeals (8). Grozelle (Re) [BIA s.193(e)]
In Grozelle (Re) (Ont CA, 2026) the Ontario Court of Appeal dismissed a motion, this seeking "leave to amend their notice of appeal to seek leave to appeal the costs order".
Here the court considers the appellate jurisdiction of BIA s.193(e):ii. Is leave to appeal required under s. 193(e) of the BIA?
[9] I reject the moving parties’ argument that their proposed appeal from the $180,000 costs order is as of right under s. 193(c) of the BIA. It is well-established that s. 193(c) is to be construed narrowly, rejecting an expansive application of the automatic right of appeal contained in that section. The approach to be followed is “alive to and satisfies the needs of modern, ‘real-time’ insolvency litigation” and dictates that: “s. 193(c) does not apply to (i) orders that are procedural in nature, (ii) orders that do not bring into play the value of the debtor's property, or (iii) orders that do not result in a loss”: 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225, 396 D.L.R. (4th) 635, at para. 53.
[10] The essence of the bankruptcy regime is to promote the efficient and expeditious resolution of a bankruptcy, one of the principal objectives of bankruptcy legislation, which necessarily requires the court to control the appeal process in bankruptcy matters: 2403177 Ontario Inc., at para. 47. It would be contrary to the legislative purpose of the bankruptcy regime to allow an automatic right of appeal for costs orders that under any other regime, including the CJA, would require leave to appeal.
[11] The proposed appeal relates to the monies that the appellants have to pay in costs, not the bankrupt’s property or any loss to the bankrupt’s property exceeding $10,000. Rather, the costs order serves to reimburse the trustee for its costs in responding to the unsuccessful cross-motion. The costs order is therefore entirely procedural. As a result, leave to appeal is required under s. 193(e) of the BIA: Osztrovics Estate v. Osztrovics Farms Ltd., 2015 ONCA 463, 27 C.B.R. (6th) 156.
iii. Should leave to appeal the costs order be granted under s. 193(e) of the BIA?
[12] The moving parties submit that the issue of leave to appeal should be left to the appeal panel. There is no justification for doing so. As a single judge of this court, I clearly have jurisdiction to determine the question of leave to appeal under s. 193 of the BIA. Moreover, as this court recently instructed in North House Foods Ltd. (Re), 2025 ONCA 563, 20 C.B.R. (7th) 1, at para. 34: “Motions for leave to appeal under s. 193(e) are to be brought to a single judge in chambers.” Motions for leave to appeal may be put before an appeal panel but it is not mandatory to do so. Further, delaying this issue to the appeal panel would only interfere with the speedy administration of the appeal and simply cause more costs to be incurred in this bankrupt estate.
[13] I turn finally to the question of whether leave to appeal the costs order should be granted. I am not persuaded that it is in the interests of justice to do so, having regard to the well-established criteria set out by this court in Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29, and as followed in subsequent cases of this court:
(1) The proposed appeal does not raise any issue of general importance to the practice in bankruptcy or insolvency matters. The costs order was a run-of-the-mill costs order following an unsuccessful motion.
(2) The proposed appeal is not prima facie meritorious. It is a high hurdle to obtain leave to appeal a costs order because of its discretionary nature and the considerable appellate deference owed to the judge’s exercise of discretion in making it. This deference is only displaced where the costs order is the product of an error in principle or plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.
(3) Finally, the proposed appeal would hinder the progress of the bankruptcy proceedings. If leave to appeal were granted, the trustee would have to use non-existent or scant resources to respond to an appeal that prima facie lacks merit and to delay the reimbursement of its costs expended to respond to the cross-motion.
[14] Leave to appeal the costs order is therefore denied. . Grozelle (Re)
In Grozelle (Re) (Ont CA, 2026) the Ontario Court of Appeal dismissed a motion, this seeking "leave to amend their notice of appeal to seek leave to appeal the costs order".
Here the court considers whether a proposed appeal amendment is subject to BIA s.193(e), or is under the general provisions of the CJA:i. Does s. 193 of the BIA apply?
[6] I disagree with the moving parties’ submissions that the costs order was a freestanding order related to the fraudulent conveyances declaration and should be subject to the appeal provisions of the CJA.
[7] The jurisdiction of the court for the purposes of appeal is governed by the substance of the order made: RREF II BHB IV Portofino, LLC v. Portofino Corporation, 2015 ONCA 906, 33 C.B.R. (6th) 9, at para. 12; Dal Bianco v. Deem Management Services Limited, 2020 ONCA 585, 82 C.B.R. (6th) 161, at para. 11. The costs order followed the moving parties’ unsuccessful cross-motion, which focused on administrative and procedural matters within the bankruptcy. Myers J. made the costs order pursuant to the authority conferred under s. 197(1) of the BIA. That there was authority for the court to make the costs order under the CJA is of no moment. Where the authority to make the order is under the BIA and under provincial legislation in bankruptcy proceedings, the appeal is governed by the BIA as a matter of paramountcy: Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269, 69 C.B.R. (6th) 13, at paras. 5, 66-67; Dal Bianco, at para. 6.
[8] Accordingly, the moving parties’ proposed appeal of the costs order is under s. 193 of the BIA. . Avida 2015 Inc. (Re)
In Avida 2015 Inc. (Re) (Ont CA, 2026) the Ontario Court of Appeal considered a BIA s.193(e) issue:[6] The appellant asserts he has an appeal as of right under s. 193 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, but he has also sought leave to appeal in case it is required. The respondent denies that there is a right to appeal without leave and argues that leave to appeal should not be granted.
[7] We are satisfied that there is no appeal as of right in this case. Accordingly, leave to appeal is required pursuant to s. 193(e).
[8] This is an appropriate case to grant leave. The test set in Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617, at para. 29, is satisfied. Specifically, although it appears to be well established that credit bidding is permitted, whether a creditor may use a credit bid to acquire an asset that does not attach to its security is not well settled. This is a matter of importance beyond this appeal to bankruptcy proceedings more generally. The proposed appeal is prima facie meritorious, and the respondent confirmed that no harm would be caused by hearing the appeal.
[9] Accordingly, leave to appeal is granted. Appeal management is available to assist the parties in having the appeal heard expeditiously and to address any requests for intervention that may be made.
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