Williams Moving & Storage (B.C.) Ltd. v. Canada (Minister of National Revenue), 2024 BCCA 160

Craig Dennis K.C. and Owen James were successful in an appeal that clarified the test applicable when the court is asked to correct an order under the Bankruptcy and Insolvency Act [BIA].

In the court below, the appellant had applied to correct an error in a proposal made to its creditors (that years later triggered a tax reassessment).  It applied to rectify the proposal or, alternatively, to have the order approving it amended pursuant to s. 187(5) of the BIA. That application was dismissed, giving rise to the appeal.

In allowing the appeal, the Court of Appeal held that the chambers judge erred in exercising her discretion under s. 187(5).  The Court extracted from cases considering s. 187(5) the following propositions:

a)    Section 187(5) is “unique to insolvency law”, it overrides the principle of finality in bankruptcy proceedings.

b)    The provision provides an expedient means to advance the ends of justice.

c)     Judges have a broad discretion, and no conditions apply before resort can be had to s. 187(5). However, the discretion should be “sparingly exercised”.

d)    A motion under s. 187(5) cannot be brought as a substitute for an appeal, or if its only purpose is to obtain an opportunity to appeal where the time to appeal has elapsed.

e)    For the provision to apply, there must have been a fundamental change in circumstances between the original hearing and the time of the motion to vary, or evidence must have been discovered that was not known at the time of the original hearing and which could have led to a different result.

f)      The discretion must be exercised in a manner consistent with the policies underlying the provisions of the BIA, including specific provisions that set out the circumstances in which a court may suspend or annul an order.

g)    Pragmatism in the application of the provision must yield to a principled approach if prejudice to creditors or third parties may result or if stare decisis so demands.

In the result, and applying those factors, the Court held it was confronted with an appropriate case to exercise the court’s discretion to correct the error and that doing so did not constitute a substantive alteration to the proposal.

Read the full case: Williams Moving & Storage (B.C.) Ltd. v. Canada (Minister of National Revenue), 2024 BCCA 160