CIVIL PROCEDURE - Striking out pleadings or allegations - Grounds

Law360 Canada (April 11, 2023, 9:28 AM EDT) -- Appeal by 994697 Ontario Inc. (Appellants) from the motion judge’s order that struck out various paragraphs of their amended statement of defence. The respondents, Urbancorp Inc., Urbancorp Cumberland 2 GP Inc., Urbancorp Cumberland 2 L.P., Bosvest Inc., Edge on Triangle Park Inc. and Edge Residential Inc. (Urbancorp Companies) were placed under the protection of the Companies' Creditors Arrangement Act, (CCAA) and The Fuller Landau Group Inc. was appointed as their Monitor. The order at issue in this appeal arose in an action (Claim) that was originally commenced by the Monitor in April 2018. On May 9, 2018, Justice Myers authorized the assignment of the Monitor’s claim to the CCAA creditors. The Monitor assigned the claim to Gissin in his capacity as the Foreign Representative of the CCAA creditors of the respondents. In their statement of claim, the respondents sought to set aside or invalidate transfers of condominium units on various bases, including oppression under s. 248 of the Ontario Business Corporations Act (OBCA), transfers at undervalue under s. 96 of the Bankruptcy and Insolvency Act (BIA), fraudulent conveyances under the Fraudulent Conveyances Act, and/or fraudulent preferences under the Assignments and Preferences Act. The respondents brought a pleadings motion to strike allegations in certain paragraphs of the appellants’ amended statement of defence on the basis that they were irrelevant in that they were related to the events connected with the appointment and knowledge of the Foreign Representative. The motion judge agreed and struck certain sections of the amended statement of defence containing the irrelevant allegations and that would indirectly and impermissibly convert the character of the claim. The appellants argued that leave to appeal was not required because the motion judge’s order was not made under the CCAA or in CCAA proceedings but in an independent action, and that the order under appeal related to pleadings and could have been made in any action....
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