By Kevin Mailloux, Partner; Alex Fernet Brochu, Senior Associate; and Hugo Prévosto, Intern, Borden Ladner Gervais LLP

INTRODUCTION

The applicability of bankruptcy and restructuring statutes across Canada appears evident from section 188 of the BIA¹ as well as sections 16 and 17 of the CCAA², pursuant to which orders made under these statutes by a court anywhere in Canada are enforceable everywhere else in the country “in the same manner in all respects as if the order had been made by the court” required to enforce it, and courts are conceived as auxiliary to each other in all matters provided for in those statutes.

Moreover, the “single proceeding model”, by centralizing proceedings before one court, enhances the efficiency and coherence of insolvency proceedings.³ Under this model, stakeholders are enabled to enforce their rights before a single court and a single judge, thereby avoiding the need to initiate multiple proceedings, even when the debtor’s assets are dispersed across multiple provinces.⁴ The introduction of the national receiver in 2009⁵ complemented this framework by providing an additional tool to further the objectives underlying both the BIA and the CCAA.⁶

In view of this, one may expect insolvency and restructuring proceedings (IRP, for short)⁷ across the country to be fairly uniform. However, Canada’s bijural legal framework and existing civil procedures and practices in the different Canadian provinces led to discrepancies that may directly impact the conduct or outcomes of IRP.

This article aims to identify some of these interprovincial and bijural motivated discrepancies in IRP, so that stakeholders and practitioners are more aware of the challenges and strategic considerations that may shape or impact recourses stretching across more than one jurisdiction.

1. Implied and Constructive Trusts in Canada

Insolvency and restructuring matters, as matters of federal competence⁸, are guided by uniformity, coherence and fairness.⁹ Courts nevertheless preserve provincial statutes where possible, applying the paramountcy doctrine only where a provincial enactment frustrates the purpose of a federal enactment, by “making it impossible to comply with the latter or by some other means”.¹⁰

The Groupe Sutton-Royal Inc. (Syndic de) decision highlights one category of bijural interpretative discrepancies in insolvency. In this decision, the brokers working for the bankrupt, Sutton-Royal Inc. (“Sutton”), claimed that funds segregated by Sutton but not deposited in a formal trust account were commissions earned by them, of which they were the owners, or in the alternative, that those funds were held in trust by Sutton for their benefit. On this alternative argument, the Court of Appeal of Quebec (the “QCCA”) held that although the facts could support the existence of an implied trust as construed in the common law legal framework, no such concept existed under the Civil Code of Quebec.¹¹

The QCCA, agreeing with the Québec Superior Court of Justice’s (the “QCSC”) decision, confirmed that civil law is complementary to the BIA in cases where the federal legislator did not give further directions as to how to define or interpret concepts within the statute. Since “trust” is not defined within the BIA, such interpretation must be found in the civil law of general application.¹²

The QCCA concluded that the result reached by the QCSC was fair in that “the Federal Law – Civil Law Harmonization Act explicitly allows for varying interpretations of rules set forth in federal legislation depending on the province of application”, and warned that fairness and uniformity are two distinct concepts that must not be confused nor conflated when interpreting similar terms in different judicial contexts.¹³

Similarly, the concept of constructive trust was recently considered in the matter of Syndic de JD Euroway Capital Partners, in which the QCSC had to determine whether the bankrupt held the applicant’s funds in a trust for the applicant’s benefit. If so, said funds were to be excluded from the property of the bankrupt divisible among creditors pursuant to section 67(1)(a) of the BIA.¹⁴

Applying the QCCA’s reasoning in Sutton as well as in Investissements D. Vachon inc. c. Ernst & Young inc., the QCSC stated that the concept of trust under the common law differs from the concept of trust under civil law. The QCSC asserted that, when interpreting the concept of trust in Québec, courts must apply the civil law meaning of trust, and therefore could not consider the concept of constructive trust, stating: “Or, la fiducie par interprétation (constructive trust), n’existe pas en droit civil.”¹⁵

Quebec case law on this issue highlights two important considerations. First, where federal legislation does not provide a uniform definition, IRP concepts and remedies must be construed in light of the applicable provincial rules governing their interpretation and application, in accordance with the principle of complementarity.¹⁶ Second, the concept of implied or constructive trust has not been adopted in civil law, a divergence that entails distinct remedial mechanisms and may therefore give rise to different outcomes.

2. Examination and Cross-Examination of Court Officers

As officers of the court, court-appointed trustees, monitors and receivers discharge their duty to inform the court principally through the preparation and filing of reports. Pursuant to section 163(2) of the BIA, a trustee may be examined upon application to the court “and on sufficient cause being shown”. Section 163 of the BIA is supplemented by rules 3 and 14 of the Bankruptcy and Insolvency General Rules¹⁷.

A review of case law from different provinces indicates divergences in allowing parties to examine or cross-examine court officers in the course of IRP. In Ontario¹⁸, Alberta¹⁹, British Columbia²⁰, Saskatchewan²¹ and New Brunswick²², leave to examine or cross-examine a court officer is subject to a high evidentiary threshold. The courts, exercising their judicial discretion, aim to insulate court officers from the adversarial dynamics inherent to IRP.²³ Furthermore, courts have noted that this approach contributes to the preservation of court officers’ impartiality and neutral status.²⁴

In the aforementioned provinces, examination and cross-examination of a court-appointed officer will, therefore, be subject to a party’s ability to demonstrate specific and exceptional circumstances.²⁵ As a general practice, officers will make themselves available through other means, receiving and answering questions in the form of written submissions²⁶, providing for a more informal process immune from the adversarial nature of cross-examination.²⁷ Moreover, as a general rule, a prima facie right to cross-examine a court officer does not appear to be recognized in common law provinces.²⁸

Although no provision analogous to s. 163 directly addresses the examination of receivers²⁹, we note that in Goshen, the Court of King’s Bench for Saskatchewan, in determining whether to grant a request for an order compelling the receiver to submit to cross-examination, indicated that the application should have been brought in reliance on rule 14 of the General Rules, then proceeded to apply the same “exceptional or unusual circumstances” standard.³⁰

In contrast, in Quebec, court-appointed officers are routinely subject to examination and cross-examination with respect to the content of their reports submitted to the court³¹ or, more generally, their duty toward the court as a court officer. In addition, section 35 of the Standard Initial Order Form related to the CCAA provided by the Barreau de Montréal specifically refers to a petitioner’s right to submit written questions to a court-appointed monitor in the course of proceedings.³²

However, where a party seeks authorization from the court to examine a court officer on matters outside of reports filed with the Court, Quebec courts may apply the “exceptional or unusual circumstances” criteria in determining whether to grant such a request.³³

In any event, it is commonly accepted that examination and cross-examination of a court officer should in no way constitute a “fishing expedition” through which a party is looking to assess its strategy or his chances of success without any other concrete objective.³⁴

3. Applicability and Recognition of Extra Provincial Orders and Decisions

Pursuant to section 188 of the BIA, orders made under that act in one province are enforceable elsewhere in Canada in the same manner as if they had been made by the court required to enforce them. It is customary for orders made by the court in IRP to include specific wording echoing section 188 of the BIA, including in matters proceeding pursuant to the CCAA.³⁵ Nevertheless, the decisions and orders rendered by one provincial court have, at times, given rise to debate regarding their recognition and enforceability in other provinces.

In Associated Freezers of Canada Inc. (Faillite de), the QCSC considered whether a decision on the validity of a proof of claim rendered in Ontario fully and finally determined the rights of the creditor having submitted said proof of claim, Engineering Design and Construction Managers Ltd. (“EDCM”). The debtor having been declared bankrupt by the Ontario Court of Justice, EDCM filed a proof of claim for construction work done on a warehouse located in Quebec, which was disallowed by the trustee. The disallowance was appealed by way of a motion presented before the Ontario Court (General Division), but EDCM abandoned the motion before it was heard, as reflected in an order that the appeal be abandoned (the “1996 Order”).³⁶

EDCM also registered a legal hypothec against the Quebec warehouse. The trustee brought proceedings in Quebec for a judgment that the legal hypothec was invalid, and a declaration that the bankrupt was not indebted to EDCM. While this matter had not yet been heard, the trustee brought similar proceedings in Ontario for a declaration that no amounts were owing to EDCM, which was granted by the Ontario Court (General Division)³⁷ (the “1997 Judgment”) and confirmed by the Court of Appeal for Ontario³⁸ (the “ONCA”).

The trustee then brought one more motion, in Quebec, arguing that the question of EDCM’s right to be paid a specific amount by the bankrupt had been definitely decided by the 1996 Order and the 1997 Judgment, and that as the legal hypothec was only an accessory to the obligation it secures, it was extinguished by the extinction of the related obligation.³⁹

The QCSC framed the issue before it in the following terms: “whether the bankruptcy court sits in Ontario or Quebec, is its decision concerning the validity of a proof of claim final and conclusive with respect to the rights of the creditor concerned, or does it settle only the creditor’s right to receive a dividend from the bankrupt estate.”⁴⁰

Applying the rule of res judicata and section 188(2) of the BIA, the Court concluded that it “must not encourage a litigant who is dissatisfied with the judgment in one province to attempt to have the issue tried anew before the court of another province”. Section 188 of the BIA constitutes a clear indication of Parliament’s intention that courts in IRP across the country should “act in such a way that they constitute, in effect, one court.” By not challenging the trustee’s decision following the disallowance of its proof of claim in Ontario, it became final and conclusive and “may not be litigated again in this [Quebec] jurisdiction.”⁴¹

In the context of CCAA proceedings, it was pleaded before the QCSC that an order expanding the powers of the monitor rendered in Quebec could not be enforced in Newfoundland and Labrador. The QCSC notably referred to the initial order granting the monitor “the authorization to apply to any court in Canada for orders which aid and complement this Order and any subsequent orders of this Court.” The QCSC reiterated what was already provided for in the initial order, stating that “[f]or greater certainty, the Court shall restate the same requests in the present Order notwithstanding that the same nevertheless already apply without having to restate all the provisions of the Initial Order herein.”⁴²

Similarly, in Séquestre de 908593 Ontario Limited, the registrar of the QCSC granted a Motion to Obtain an Enforcement Order brought by a court-appointed receiver, with respect to a judgment rendered by the Ontario Superior Court of Justice. While the registrar granted the motion, he highlighted the fact that such an order was superfluous, since an order rendered in any commercial list “is applicable at the national level everywhere in Canada”⁴³.

Circling back to the “single proceeding model”, these cases are illustrative of an intention for centralization of insolvency and restructuring proceedings to promote efficiency and simplicity for creditors.⁴⁴ Nonetheless, it should be noted that in interprovincial matters, the single control model “does not exclude the possibility of transferring files inter-jurisdictionally, if warranted.”⁴⁵ Accordingly, the unified approach of the single proceeding model may be adapted to accommodate the specific facts of proceedings and enhance efficiency. For example, in Yukon Zinc, the Supreme Court of British Columbia (the “BCSC”) considered whether the British Columbia or Yukon court should resolve certain issues relating to lien claims advanced in the CCAA proceedings – the BCSC was ultimately satisfied that the Yukon court was the more appropriate forum to determine the validity of the lien claims, and proceeded to partially lift the stay and to decline jurisdiction to allow for the determination of specific issues relating to those lien claims, while the BCSC retained the “overall jurisdiction” over the proceedings.⁴⁶

Accordingly, the single proceeding model must not be applied with such rigidity that it prevents interprovincial matters from being decided with efficiency and orderliness.

Awarding of Cost

Pursuant to section 197(1) of the BIA, costs are to be awarded by the Court at its sole discretion, subject to relevant dispositions of the BIA and of the General Rules. In Dallas/North Group Inc. (Re), the ONCA set out four principles to guide the courts in exercising their judicial discretion with regard to awarding costs while recognizing “[t]here are no words limiting this section which, on its face, gives the court the widest discretion.”⁴⁷

Resonating with the principles of uniformity and coherence, it was noted by the ONCA in Dallas that section 197 of the BIA must be interpreted within its own parameters and that the court must refrain from interpreting a federal statute through the lens of local rules not necessarily found in other provinces.⁴⁸

Notwithstanding the federal nature of the BIA, the established practices of IRP practitioners speak to the cultural and historical differences in which civil law and common law systems are rooted.⁴⁹ The general rule applicable in civil matters across provinces in Canada is that the losing party will bear, at least to some extent, the winning party’s costs of proceedings.⁵⁰

However, while common law provinces, as a general rule, allow for the costs of proceedings, including legal fees, to be awarded to the successful party, in Quebec the unsuccessful party is generally only liable for court fees and expert fees. Indeed, the reimbursement of a successful party’s legal fees is typically subject to the demonstration of an abuse of right, abuse of process or bad faith⁵¹, and is therefore much more the exception than the rule. While section 197 of the BIA and comments made in Dallas would presumably allow a Quebec party to claim all legal fees incurred by IRP, such a claim may be met with a higher level of scrutiny from the courts given commonly accepted practices.

Conclusion

The objectives of fairness, efficiency and order underpinning BIA and the CCAA proceedings tend to foster a common approach under the single proceeding model. However, Canadian bijural tradition and federalism are fertile grounds for discrepancies in interpreting and applying relevant legislation in IRP. Such differences should be kept in mind by insolvency practitioners, as they shape IRP, strategies and available remedies.

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¹ Bankruptcy and Insolvency Act, RSC 1985, c B-3 [BIA].

² Companies’ Creditors Arrangement Act, RSC 1985, c C-36 [CCAA]

³ Sam Lévy & Associés Inc v Azco Mining Inc, 2001 SCC 92 at paras 26–27 [Sam Lévy]; Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41 at paras 54-55; Mundo Media Ltd. (Re), 2022 ONCA 607 at para 6 [Mundo Media]; Mirror Trading International (Pty) Ltd (Re), 2026 ABKB 293 at para 45.

⁴ Liam Byrne, “Petrowest, Paramountcy, and the Single Proceeding Model” Appeal 30 (2025) at p 54 [Liam Byrne].

⁵ BIA supra note 1 at s 243.

⁶ Liam Byrne supra note 4 at p 60.

⁷ For ease of reference and sake of brevity, the expression “insolvency and restructuring proceedings” will be referred to throughout this article as “IRP”. If not expressly stated otherwise, IRP refers to proceedings being conducted under both the BIA and the CCAA.

⁸ The Constitution Act, 1982, Schedule B to the Canada Act 1982 (UK), 1982, c. 11 at s 91(21).

⁹ Sam Lévy supra note 3 at para 27; Arrangegement relatif à Bloom Lake, 2017 QCCS 284 at paras 29-33.

¹⁰ Rothmans, Benson, & Hedges Inc v. Saskatchewan, 2005 SCC 13 at paras 11-14; Multiple Access Ltd. v. McCutcheon, 1982 CanLII 55 (SCC), p. 191.

¹¹ Groupe Sutton-Royal Inc. (Syndic de), 2015 QCCA 1069., at paras 5, 33, 69, 71 and 74, application for leave to appeal to the Supreme Court dismissed, see Lambros Demos, et al. v. Demers Beaulne inc., 2016 CanLII 24874 (SCC).

¹² Ibid at paras 72, 73 and 88.

¹³ Ibid at paras 88, 89 and 90.

¹⁴ Syndic de JD Euroway Capital Partners, 2025 QCCS 4133 at para 67.

¹⁵ Ibid, at para 70. See also, Investissements D. Vachon inc. c. Ernst & Young inc., 2025 QCCA 476 at paras 23 – 24 (leave to appeal denied in Investissements D. Vachon inc. c. Ernst & Young inc., 2026 CanLII 39139 (CSC)); Syndic de Pharand, 2021 QCCA 1167 at paras 27-29; Location Bristar Idealease Inc. (Syndic de), 2012 QCCS 211 at paras 63-68. The quote in French unofficially translates to, “Yet, constructive trust does not exist in civil law.”

¹⁶ Salaberry-de-Valleyfield (Ville de) c. Lavigne, 2014 QCCA 937 at paras 21-36.

¹⁷ Bankruptcy and Insolvency General Rules, (CRC, c. 368) [General Rules].

¹⁸ Pinnacle Capital Resources Ltd. v. Kraus Inc., 2012 ONSC 6376 at paras 27 and 32-33 [Pinnacle Capital]; Luigi Martellacci, Re, 2014 ONSC 5188 at para 13 [Martellacci]; Bell Canada International Inc., (Re), 2003 CanLII 22640 at paras 8-9. [Bell Canada].

¹⁹ Coast Automotive Group Inc (Re), 2026 ABCA 123 at paras 9-10; Re Big Sky Living Inc. (Bankrupt), 2007 ABQB 326 at paras 31-34 [Big Sky]; Edmonton Region Community Board v. Aboriginal Partners & Youth Society, 2004 ABQB 423 at paras 24-26 and 35 [Aboriginal Partners].

²⁰ Pine Valley Mining Corporation (Re), 2008 BCSC 446 at paras 9-12. [Pine Valley];

²¹ Canadian Western Bank v. Goshen Professional Care Inc, 2025 SKKB 5 at paras 4 and 47 [Goshen].

²² Bank of Nova Scotia v. Atcon Group Inc., 2011 NBQB 100 at paras 80-94.

²³ Pine Valley supra note 26 at para 17; Denis Ferland, “The Evolving Role of the Monitor, Confidential Information and the Monitor’s Cross-examination, a Québec Perspective” (2011) ANNREVINSOLV 17, pp 3-5 [Denis Ferland].

²⁴ Pine Valley supra note 20 at paras 10, 12 and 17.

²⁵ Aboriginal Partners supra note 19 at paras 24-26 and 35; Goshen supra note 21 at paras 4, 39-63.

²⁶ Confectionately Yours Inc., Re, 2001 CanLII 28453 (ON SC) at para 3, overturned on appeal in Confectionately Yours Inc. (Re), 2002 CanLII 45059 (ON CA) for other reasons.

²⁷ Pine Valley supra note 20 at paras 8 and 18; Martellacci supra note 24 at paras 3 and 20-23.

²⁸ Martellacci supra note 18 at para 21; Bell Canada supra note 18 at paras 8-9; Pine Valley supra note 20 at para 9; Denis Ferland supra note 23.

²⁹ Kevin Barr & Danya Owen, “Cross-examining receivers, monitors and trustees in Alberta insolvency proceedings: An exceptional remedy” (July 24, 2026), online (website): <https://www.blg.com/en/insights/2026/07/cross-examining-receivers-monitors-and-trustees-in-alberta-insolvency-proceedings>.

³⁰ Goshen supra note 21 at paras 44-48.

³¹ Arrangement relatif à MedXl Inc., 2024 QCCS 3572 at paras 5-8; Arrangement relatif à Lion Electric Company, 2025 QCCS 4192 at para 184.

³² Barreau de Montréal, “Standard Initial Order Form related to the CCAA (chap. C-36)” (May 2014), online (website): <barreaudemontreal.qc.ca/avocats/outils/avocats-de-litige/cs-comm/>.

³³ Proposition de Société en commandite ACG Kaloom, 2025 QCCS 3897 at paras 6 – 8 [Kaloom].

³⁴ Big Sky supra note 19 at para 29; Pinnacle Capital supra note 18 at paras 27 and 30; Kaloom supra note 33 at para 8.

³⁵ Syndic de Société en commandite FF Soucy WB, 2026 QCCS 951 at para 25; Séquestre de TDJ 2007 inc., 2025 QCCS 3617 at para 21.

³⁶ Associated Freezers of Canada Inc. (Faillite de), 1999 CanLII 11515 (QC CS) at paras 4 – 6 [Freezers].

³⁷ Ibid at paras 8 and 12.

³⁸ Engineering Design & Construction Managers Ltd. v Associated Freezers of Canada Inc. (Trustee of), 1998 CarswellOnt 4690.

³⁹ Freezers supra note 36 at para 12.

⁴⁰ Ibid at para 17.

⁴¹ Ibid at paras 17, 29 and 30.

⁴² Arrangement relatif à Bloom Lake General, 2021 QCCS 2946 at paras 113, 115 and 117.

⁴³ Séquestre de 908593 Ontario Limited, 2022 QCCS 2601 at paras 6 and 7.

⁴⁴ Century Services Inc. v Canada (Attorney General), 2010 SCC 60 at para 22; Mundo Media supra note 3 at paras 40-41; Tron Construction (Re), 2022 SKKB 203 at para 47 referring to Stewart v Lepage, 1916 CanLII 626 (SCC).

⁴⁵ Andre Tardiff Agency Limited v Burlingham Associates Inc, 2015 SKQB 87 at paras 69-70 referring to Sam Levy supra note 3 at para 76. See also, Yukon Zinc Corporation (Re), 2015 BCSC 1961 at paras 64 et seq. [Yukon Zinc].

⁴⁶ Yukon Zinc supra note 45 at paras 1, 65, 70, 71 and 73.

⁴⁷ Dallas/North Group Inc. (Re), 2001 CanLII 3636 (ONCA) at para 11 [Dallas]; Canadian Imperial Bank of Commerce v. 620357 Saskatchewan Ltd., 2007 SKQB 16 at para 14 referring to Dallas. See also, Sensible Capital Corp v Galton Corporation, 2025 MBCA 107 at paras 22-26.

⁴⁸ Dallas supra note 47 at para 11.

⁴⁹ H. Patrick Glenn, “Costs and Fees in Common Law Canada and Quebec”, online (pdf): <https://websites.umich.edu/~purzel/national_reports/Canada.pdf>.

⁵⁰ Quebec Code of Civil Procedure, CQLR, c C-25 at s 340 [CCP]; Ontario Rules of Civil Procedure, RRO 1990, Reg 194 at rule 57; Alberta Rules of Court, Alta Reg 124/2010 at rule 10.29; Rule of Court New Brunswick, NB Reg 82-73 at rules 59.01 and 59.02; British Columbia Supreme Court Civil Rules, B.C. Reg. 31/2026 at rules 14-1(9); Saskatchewan The King’s Bench Rules, Sask Gaz December 27, 2013, 2684 at rule 11-1; Manitoba Court of King's Bench Rules, Man Reg 553/88 at rule 57.01(2); Nova Scotia Civil Procedure Rules, Royal Gaz Nov 19, 2008 at rule 77; St-John’s, Newfoundland and Labrador Rules of the Supreme Court, 1986, SNL 1986, c 42, Sch D at rule 55.

⁵¹ CCP supra note 50 at ss 54, 339 and 341; Turcotte c. Turcotte, 2021 QCCA 567 at paras 79-81, referring to Viel c. Entreprises immobilières du terroir Ltée., 2002 CanLII 41120 (QC CA) and Royal Lepage commercial Inc. c. 109650 Canada Ltd., 2007 QCCA 915.