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The Ontario Court of Appeal (“ONCA”) has confirmed that a party relying on section 193(c) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (“BIA”) must show that the property at issue exceeds ten thousand dollars in value and the appeal relates “to a clear difference in value between the order under appeal and evidence in the record that a debtor could have obtained a higher value”. Otherwise, the proposed appellant requires leave to appeal. The ONCA confirmed these principles in 2615333 Ontario Inc v Central Park Ajax Developments Phase 1 Inc, 2026 ONCA 544 (the “ONCA Decision”).

Background

In April 2021, the appellant (“261”) obtained an order (the “Appointment Order”) appointing RSM Canada Limited (TDB Restructuring Limited effective as at March 1, 2024) as receiver (the “Receiver”)^[1] over development lands in Ajax (the “Properties”) owned by Central Park Ajax Developments Phase 1 Inc. et al (the “Debtor”).

Certain of the Properties were subject to a development agreement between the Debtor and the Town of Ajax (the “Town”), which provided that the Town could repurchase the applicable land upon the Debtor’s default. The Appointment Order was made on consent of the Town and 261. It granted certain rights in favour of the Town, including a prohibition against the sale of certain Properties unless the purchaser entered into a similar development agreement with the Town.

The Receiver conducted a court-approved sale process. Although the sale process generated interest and certain bidders, it did not result in a completed transaction. The requirement to enter into a similar development agreement with the Town was not well received by the market. Given this result, in March 2024, 261 unsuccessfully brought a motion to vary the Appointment Order to remove the Town’s rights described above (2615333 Ontario Inc v Central Park Ajax Developments Phase 1 Inc et al, 2024 ONSC 1484).

Following this motion, the Receiver entered into two agreements of purchase and sale: (a) one with 1000612843 Ontario Inc. (“843”); and (b) a back-up bid with the Town. The Receiver obtained court-approval of the 843 agreement. However, 843 failed to close the transaction.

The Receiver returned to court for approval of the back-up bid with the Town and faced opposition from 261. 261 argued that the Receiver’s efforts to obtain the best price for the Properties were insufficient and that the Receiver was trying to end the receivership without regard to the creditors’ interests. The motion judge rejected these arguments, applied the principles in Royal Bank of Canada v Soundair Corp, (1991), 4 OR (3d) 1 (CA) (“Soundair”), and approved the sale, holding that “the Receiver is entitled to prefer a bird in the hand where it has not been shown that a fresh sales process is likely to produce a better offer than the Town’s agreement of purchase and sale.”^[2]

261 appealed. It argued that the motion judge failed to ensure that the Properties were sold pursuant to an effective process or at fair market value.

The ONCA Decision

The ONCA concluded that 261 did not have an appeal as of right under section 193(c) of the BIA and therefore required leave to appeal under section 193(e) of the BIA, which the ONCA declined to grant.

Section 193 of the BIA provides:

193 Unless otherwise expressly provided, an appeal lies to the Court of Appeal from any order or decision of a judge of the court in the following cases:

[…]

(c) if the property involved in the appeal exceeds in value ten thousand dollars;

[…]

(e) in any other case by leave of a judge of the Court of Appeal.

No Automatic Right of Appeal because No Evidence of Loss

The ONCA emphasized that section 193(c) of the BIA has consistently been interpreted narrowly. Further, (1) the order appealed from must be more than procedural in nature; (2) the order must involve the value of the debtor’s property; and (3) the order must result in a loss to the appellant.

The ONCA found that 261 failed to demonstrate that it suffered a loss. The test is whether, on a critical examination of the order under appeal, there is evidence of loss relating to “a clear difference in value between the order under appeal and evidence in the record that a debtor could have obtained a higher value”.^[3] The question is not simply whether a higher value for the property could be obtained. There must be a “substantive assessment of competing offers”, not a “mere comparison of formal prices”.^[4]

Appraisal evidence of the Properties was not sufficient evidence of a loss in the absence of a competing offer. 261’s argument that the Properties could have obtained a higher price without restrictions in the development agreement were rejected as a collateral attack on earlier orders that 261 had not appealed.

Accordingly, the ONCA found that 261 had shown at most a speculative possibility of obtaining a higher price, not an actual loss exceeding $10,000. Section 193(c) of the BIA was not engaged.

Leave to Appeal was Refused because the Appeal Lacked Prima Facie Merit

The ONCA refused to grant leave to appeal under section 193(e) of the BIA. Citing Business Development Bank of Canada v Pine Tree Resorts Inc, 2013 ONCA 282, the ONCA held that leave requires consideration of (1) whether the appeal raises an issue of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole, (2) is prima facie meritorious, and (3) would unduly hinder the progress of insolvency proceedings.

Leave to appeal was refused because the appeal:

(a) did not raise issues of broader importance in bankruptcy and insolvency law. The grounds of appeal were factual and idiosyncratic to this receivership;

(b) was not prima facie meritorious because it focused on previous orders made that were not appealed. Further, the motion judge’s findings in connection with the application of the Soundair test were factual findings entitled to deference; and

(c) would, if allowed, cause further delay and prejudice. There was no evidence that remarketing the Properties would produce a better price, while continued delay would increase interest owing to 261 and prejudice creditors.

Conclusion

The decision reinforces that success on an appeal relying on section 193(c) of the BIA requires evidence of loss, and leave to appeal will ordinarily be refused where the proposed appeal is primarily factual, seeks to revisit earlier orders, does not identify a clear error by the motion judge, and would delay the insolvency process without evidence of a better outcome.