Executive Summary: Key Legal and Evidentiary Issues

• Application of Rule 303(1) of the Federal Courts Rules was central to determining whether the Trustee, B. Riley Farber Inc., was "directly affected" by the relief sought in Mr. Grillone's judicial review

• Procedural complications arose when the Associate Judge decided the Rule 303 motion in writing before all parties could respond, compounded by a misstated service date

• The Federal Court ultimately lacked jurisdiction to review the Superintendent of Bankruptcy's decision not to investigate a complaint against a trustee, having regard to section 17(6) of the Federal Courts Act and sections 5, 14.02(5), and 183(1)(a) of the BIA

• Mr. Grillone, a self-represented undischarged bankrupt and former Ontario lawyer declared a vexatious litigant, challenged the Superintendent's refusal to act on his complaint about trustee misconduct

• Distinction between the "directly affected" test under Rule 303 (focused on relief sought) and section 18.1 of the Federal Courts Act (focused on the decision being challenged) was a pivotal legal issue

• The notice of application was struck without leave to amend, and costs of $1,600 were awarded to the Trustee in the second decision, while no costs were awarded in the first decision due to shared procedural responsibility

The complaint and the parties involved

Sergio Grillone, a former practicing lawyer in Ontario who is now an undischarged bankrupt and no longer licenced to practice law, filed a complaint in July 2024 with the Office of the Superintendent of Bankruptcy regarding the conduct of B. Riley Farber Inc., the trustee of his bankruptcy estate. In a decision dated January 31, 2025, the Superintendent found there was no need to take further action in relation to Mr. Grillone's complaint. Dissatisfied with this outcome, Mr. Grillone filed an application for judicial review in the Federal Court, seeking to quash the Superintendent's decision, obtain a declaration that the Superintendent acted unreasonably and breached procedural fairness, and secure a mandamus order directing the Superintendent to investigate the Trustee's alleged improper conduct. Mr. Grillone represented himself throughout the proceedings, and his litigation history in Ontario had previously been described as "concerning," with various matters found to be "frivolous, vexatious and/or an abuse of process."

The Rule 303 dispute and procedural confusion

The first decision, rendered by Madam Justice Sadrehashemi on October 15, 2025 (2025 FC 1696), dealt with a Rule 51 appeal of an Associate Judge's Order. The Attorney General of Canada, acting as the legal representative of the Superintendent, had filed a motion to remove the Superintendent as Respondent and substitute B. Riley Farber Inc. under Rule 303(1) of the Federal Courts Rules, arguing the Trustee was "directly affected by the relief sought in the application." The Associate Judge granted this uncontested motion and ordered costs against Mr. Grillone. However, a series of procedural missteps complicated matters significantly. Although the Attorney General filed a written motion, the parties had been proceeding under the assumption that an oral hearing would be scheduled. Counsel for the Trustee filed a Notice of Appearance signalling intent to respond, while counsel for the Attorney General was coordinating hearing dates. Before those dates were communicated to the Court, the Associate Judge decided the motion based solely on the Attorney General's uncontested written submissions. Further complicating the matter, counsel for the Attorney General had inadvertently misstated the date of service, meaning the Rule 303 Order was rendered one day before the Trustee's deadline to file responding submissions had actually expired.

The appeal of the Rule 303 Order

The Trustee appealed the Associate Judge's Order and sought an extension of time, which Justice Grant granted. On appeal, both the Trustee and the Attorney General requested that Justice Sadrehashemi consider the matter on a de novo basis given the procedural issues. The Court agreed, citing the unusual circumstances: both parties had contributed to the procedural confusion, the Trustee's submissions had not been before the Associate Judge, there was no prejudice to the parties including Mr. Grillone, all issues had been fully argued with sufficient notice, and addressing the issues at this stage would produce the "just, most expeditious and least expensive outcome." Mr. Grillone's primary position was that the Rule 303 Order should be set aside entirely, and alternatively, that the Superintendent should remain a Respondent alongside the Trustee.

The "directly affected" analysis

The core legal question was whether the Trustee was "directly affected" by the relief Mr. Grillone sought. The Trustee argued it was not directly affected because, in its view, the Federal Court had no jurisdiction to hear Mr. Grillone's judicial review in the first place, and the Superintendent's decision to not proceed with an investigation was not justiciable. Justice Sadrehashemi found that these arguments conflated two distinct legal tests. Relying on the Federal Court of Appeal's reasoning in Forest Ethics Advocacy Association v Canada (National Energy Board) and Justice Turley's analysis in Çolakoglu Metalurji A.S. v. Altasteel Inc., the Court clarified that the Rule 303 inquiry focuses on the relief being sought by the applicant, not on whether the underlying decision is amenable to judicial review. Since Mr. Grillone's requested relief — quashing the Superintendent's decision and compelling an investigation into the Trustee's conduct — would directly and prejudicially affect the Trustee, the Court found the Trustee was properly named as a Respondent. The appeal was dismissed, the Associate Judge's Rule 303 Order was upheld, and the matter was referred for special case management.

The motion to strike and jurisdiction challenge

The second decision, rendered by Case Management Judge John C. Cotter on April 13, 2026 (2026 FC 485), addressed the Trustee's motion to strike the notice of application for judicial review on jurisdictional grounds and, alternatively, on the basis that Mr. Grillone had failed to obtain leave under section 215 of the BIA. The Trustee also sought security for costs in the alternative, but that issue was deferred through the case management process. The Court applied the well-established test for striking a notice of application, which requires the application to be "so clearly improper as to be bereft of any possibility of success," describing it as a "show stopper" or "knockout punch." The motion was supported by the Richmon Affidavit, though only Exhibit "W" — the Superintendent's January 31, 2025 letter to Mr. Grillone — was relied upon for the motion to strike.

The Federal Court's lack of jurisdiction

Judge Cotter's analysis turned on section 17(6) of the Federal Courts Act, which provides that the Federal Court has no jurisdiction where an Act of Parliament confers jurisdiction on a provincially constituted court unless the Act expressly also confers jurisdiction on the Federal Court. Reading section 17(6) of the Federal Courts Act together with sections 5, 14.02(5), and 183(1)(a) of the BIA, the Court concluded that the Federal Court did not have jurisdiction to review a decision of the Superintendent not to make or cause an inquiry or investigation into the conduct of a trustee. The Court relied on precedents including Re Fantasy Construction Ltd. (Bankrupt) and Edell v Canada (Revenue Agency) in reaching this conclusion. It was also clear from the facts alleged in the notice of application that subsections 14.02(4) and (5) of the BIA did not apply in this case. Since sections 18 and 18.1 of the Federal Courts Act also did not assist Mr. Grillone, the application was found to be beyond the Federal Court's jurisdiction.

The ruling and outcome

The notice of application was struck out without leave to amend, as the jurisdictional deficiency could not be cured through amendment. The proceeding was dismissed pursuant to Rule 168, and the Court did not need to address the Trustee's alternative argument under section 215 of the BIA. In the first decision (2025 FC 1696), no costs were awarded to either party despite the Attorney General's success, because both the Trustee and the Attorney General shared responsibility for the procedural confusion that necessitated the appeal. In the second decision (2026 FC 485), the Trustee, B. Riley Farber Inc., was the successful party and was awarded fixed costs in the amount of $1,600, payable by Mr. Grillone by no later than May 13, 2026, by way of certified cheque, bank draft, or money order.