Mind Your Appeal Route: Insolvency Rules Likely to Prevail over Provincial Legislation | Bennett Jones LLP

Mind Your Appeal Route: Insolvency Rules Likely to Prevail over Provincial Legislation | Bennett Jones LLP

[co-author: Julien Sicco – Articling Student]

The Court of Appeal for Ontario’s decision in Dal Bianco v Deem Management Services Limited, 2020 ONCA 585 [Dal Bianco] is the most recent pronouncement on resolving procedural conflicts between the Bankruptcy and Insolvency Act, RSC, 1985, c B-3 (BIA) and provincial enactments. It provides an important reminder for those hoping to appeal decisions made in the context of BIA proceedings: insolvency matters are subject to specific—and often more onerous—procedural requirements. Would-be appellants must pay close attention to the unique appeal route created under the BIA and the associated requirements set by the Bankruptcy and Insolvency General Rules, CRC, c.368 (BIA Rules).

In Dal Bianco, the Court of Appeal for Ontario considered whether a decision made in receivership proceedings, which determined the priority of certain construction lien claimants, should be appealed through the BIA or, alternatively, through the Construction Act, RSO 1990, c C.30. Section 71(1) of the Construction Act, which applies to construction lien claims, provides an automatic right of appeal to the Divisional Court. Section 31(1) of the BIA Rules, however, directs appeals to the Court of Appeal for Ontario, and, in some cases, requires appellants to seek prior leave of the Court. While both enactments could potentially have applied in Dal Bianco, the Court of Appeal held that the applicable appeal route was that set out in the BIA. The Court’s decision rested on the conclusion that the order under appeal was granted, at least partly, in reliance on jurisdiction under the BIA. In the Court’s view, even if provincial legislation provides a different appeal route, the principle of federal paramountcy requires the BIA to prevail as a federal enactment.

Parties must be Wary of the BIA’s Exacting Appeal Requirements

The Court of Appeal for Ontario’s approach to procedural conflicts between the BIA and provincial enactments is consistent with decisions by the Courts of Appeal in British Columbia and Alberta. In Industrial Alliance Insurance and Financial Services Inc v Wedgemount Power Limited Partnership, 2018 BCCA 283 [Industrial Alliance], the British Columbia Court of Appeal concluded that the BIA‘s appeal route prevails over the appeal provisions of the Law and Equity Act, RSBC 1996, c 253. And the Alberta Court of Appeal, in Alberta Treasury Branches v Exall Energy Corporation, 2018 ABCA 268 [Exall], similarly concluded that the BIA appeal route prevails over the Alberta Rules of Court, Alta Reg 124/2010. In each of these two cases, applying the BIA meant that the appellants had missed the deadline to appeal, as the BIA Rules impose a 10-day limitation period in place of the 30-day period commonly afforded by provincial legislation.

It follows that there can be severe consequences for failing to adhere to the procedural rules that apply to BIA proceedings. While a court may be willing to extend the time to appeal, or allow leave to be sought retroactively, parties should be prepared to meet the BIA‘s appeal requirements if there is any doubt as to whether they apply.

Determining Whether the BIA Appeal Route Applies

Given the requirements set out in the BIA Rules—which are generally stricter than those set out in provincial enactments—parties must pay close attention to whether an order under appeal arose from BIA proceedings. Moreover, Dal Bianco, Industrial Alliance, and Exall each suggest that courts will take a broad approach to this issue. As the Alberta Court of Appeal stated in Exall, the strict BIA appeal requirements serve to prevent delay, and courts will therefore generally seek to ensure that these rules are adhered to (Exall at para. 12).

In determining whether an order under appeal relates to BIA proceedings, courts may consider, among other things, whether:

  • the BIA authorized the proceeding, which may be mentioned in the order under appeal or the court’s reasons for decision (Dal Bianco and Exall);
  • a receivership order authorized the proceeding (Dal Bianco);
  • the first instance judge relied on jurisdiction conferred by the BIA (Industrial Alliance);
  • the first instance judge referenced BIA provisions, case law relating to insolvency proceedings, or contractual provisions addressing the consequences of insolvency (Industrial Alliance);
  • the submissions at first instance were connected to insolvency matters (Exall); or
  • for some other reason, the appellant knew or ought to have known that the decision was related to BIA proceedings (Exall).

None of these factors are necessarily determinative, and courts will look to the broader context to determine which appeal route applies. Importantly, in Dal Bianco and Industrial Alliance, the courts expressly stated that an order may relate to BIA proceedings even if that conclusion is not apparent from the proceeding’s style of cause.

Takeaway

The latest decision by the Ontario Court of Appeal in Dal Bianco reveals that provincial Courts of Appeal are consistent in determining whether the BIA‘s specific procedural rules govern. If an order under appeal broadly relates to BIA proceedings, then the appropriate appeal route is through the BIA, and the BIA Rules will apply. These rules are strict—allowing only 10 days to file an appeal and, in some instances, requiring leave of the Court. Rather than attempting to remedy the consequences of a missed deadline or requirement, parties seeking to appeal an order ostensibly granted through BIA proceedings are therefore best-suited to err on the side of caution.

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