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ADMINISTRATION OF ESTATE - Sale of property

Friday, July 12, 2019 @ 6:26 AM  


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Appeal by 235 Co. from a decision of a motion judge approving the sale of mining claims of Dianor Resources and granting a vesting order that extinguished the appellant’s Gross Overriding Royalty (GOR) in the mining claims in receivership proceedings. Dianor was an insolvent exploration company. Dianor’s main asset was a group of mining claims. The Receiver accepted the respondent’s bid to acquire Dianor’s mining claims on condition that the GORs be terminated or impaired. The motion judge approved the sale to the respondent and granted a vesting order that purported to extinguish the GORs as required by the agreement of purchase and sale upon payment of $250,000 to the appellant. The appellant never opposed the sale approval. It filed its notice of appeal 29 days after the motion judge’s decision and eight days after the order was signed, issued and entered. On appeal, the court had earlier determined that the GORs did not amount to interests in land.

HELD: Appeal dismissed. Based on a broad, liberal, and purposive interpretation of the Bankruptcy and Insolvency Act, receivership provisions, including s. 243(1)(c), implicitly granted the court jurisdiction to approve a sale proposed by a receiver and courts historically acted on that basis. The jurisdiction under s. 243 extended to the implementation of the sale using a vesting order as being incidental and ancillary to the power to sell. The Receiver had the power under s. 243 of the Act to enter into an agreement to sell Dianor’s property, to seek approval of that sale, and to request a vesting order to give effect to the sale that was approved. Given the nature of the GORs, the motion judge erred in concluding that it was appropriate to extinguish them from title. While the GORs could not be said to be a fee simple interest, they certainly were more than a fixed monetary interest that attached to the property and carved out an overriding entitlement to an amount of the property interest held by the owner of the mining claims. The time to appeal was that prescribed by the Bankruptcy and Insolvency Act. On a strict application of the Bankruptcy Rules, the appeal was out of time. The justice of the case did not warrant an extension of time. The appellant made a tactical decision to take no steps to challenge the motion judge’s decision and took no steps to preserve any rights it had. There was no evidence that the appellant formed an intention to appeal within the applicable appeal period, and there was no explanation for that failure.

Third Eye Capital Corp. v. Dianor Resources Inc., [2019] O.J. No. 3211, Ontario Court of Appeal, S.E. Pepall, P.D. Lauwers and G. Huscroft JJ.A., June 19, 2019. Digest No. TLD-July82019014