The case arose from a $230 million financing agreement for the redevelopment of Unity Health Toronto
The Ontario Court of Appeal ruled that the Bank of Montreal (BMO) has no automatic right to appeal a decision lifting a stay of proceedings, allowing Unity Health Toronto to terminate a project agreement.
The dispute in Unity Health Toronto v. 2442931 Ontario Inc., 2025 ONCA 93 stemmed from a $230 million financing agreement to redevelop Unity Health Toronto. The hospital awarded the project to ProjectCo, which secured funding through agreements with lenders, including BMO. Under the agreements, Unity Health Toronto was to make a milestone payment upon achieving a specific construction target, known as the "Tower Interim Completion" (TIC).
In 2018, ProjectCo defaulted after its parent company became insolvent. The lenders, represented by BMO as their administrative agent, chose not to assume ProjectCo's obligations under the agreement. Instead, ProjectCo was placed into receivership, staying all proceedings, including Unity Health Toronto's right to terminate the contract. Zurich Insurance, which had provided performance and labour bonds, initially stepped in to continue the project but withdrew in 2019.
BMO subsequently sought a court order declaring that the TIC milestone had been achieved or compelling Unity Health Toronto to complete the milestone and make the payment. The bank also sought an assignment of ProjectCo's rights to enforce the TIC payment. Unity Health Toronto filed motions to dismiss BMO's applications and lift the stay to terminate the agreement.
The motion judge ruled in Unity Health Toronto's favour, lifting the stay and dismissing BMO's motions. The court found that BMO lacked standing to enforce the TIC payment and that any potential prejudice it faced was outweighed by the significant impact on Unity Health Toronto if the stay remained in place.
BMO appealed, arguing it had an automatic right to appeal under s. 193(c) of the Bankruptcy and Insolvency Act, allowing appeals if the property involved exceeds $10,000 in value. Alternatively, it sought leave to appeal under s. 193(e).
The Court of Appeal rejected BMO's argument, ruling that the order lifting the stay was procedural and did not directly involve property or financial loss as required under s. 193(c). The court emphasized that the order merely removed a legal obstacle, enabling Unity Health Toronto to exercise its contractual right to terminate the agreement.
The court also denied BMO leave to appeal under s. 193(e), finding that the appeal lacked general importance, was unlikely to succeed, and would delay the insolvency proceedings. The court noted that BMO and the other lenders had chosen not to exercise their contractual right to step in and assume ProjectCo's obligations, which could have prevented termination.
The Ontario Court of Appeal dismissed BMO's motion, affirming the lower court's decision. As a result, Unity Health Toronto can terminate the project agreement, blocking BMO's efforts to claim the TIC payment.
