Executive Summary: Key Legal and Evidentiary Issues

• Scope of a single chambers judge’s jurisdiction to strike or stay an appeal under The Court of Appeal Act versus the need for a three-judge panel.
• Whether a closely held corporation (6393927 Manitoba Ltd.) can be represented by a non-lawyer director in the Court of Appeal and what constitutes “exceptional circumstances” to dispense with counsel.
• Validity of the purported director/officer status of Mr. Eros in light of a prior 2022 court order removing him as director and subsequent Companies Office filings showing only Ms Timony as director and officer.
• Proper use of the automatic stay of proceedings under section 195 of the Bankruptcy and Insolvency Act and the test for cancelling that stay in a receivership appeal.
• Assessment of litigation conduct, including delays, non-compliance with court directions and extensive, irrelevant email communications, as an abuse of process affecting the interests of the corporation, its other shareholder and creditors.
• Balancing prejudice and harm to stakeholders, including the impact of lack of fire insurance and mounting receivership and mortgage costs, in deciding whether to allow the receiver to proceed to manage and sell the mortgaged property.

Background and parties

This case arises from enforcement steps taken by Manulife Bank of Canada as secured creditor against 6393927 Manitoba Ltd. (639), a closely held corporation that owns a property at 635 Mulvey Avenue in Winnipeg. 639 had granted Manulife security, including registered mortgages, for two loans that went into default in December 2024 and matured in February 2025. When the defaults were not remedied, Manulife began realizing on its security, including serving a notice of exercising power of sale on the property. Against this backdrop, a long-running and acrimonious dispute between the two shareholders, Scott Eros and Ashley Lauren Timony, affected corporate governance and decision-making within 639. They began cohabiting in 2010, separated in 2021, and have been engaged in litigation since 2018 over both the corporation and their separation.

Corporate governance dispute and prior court order

In April 2022, a court order under The Corporations Act dissolved 639 and immediately removed Mr. Eros as a director of the company. A change was then registered in the Companies Office in June 2022 removing him as a director and officer and leaving Ms Timony as the sole director and officer. A Companies Office search in August 2025 confirmed that she remained the sole director and officer as of that date. Despite this, in October 2025, Mr. Eros caused a further Companies Office filing to show himself as a director and officer again, but he did not provide any evidence that the 2022 court order had been varied or that Ms Timony had consented to his reinstatement. In fact, her own affidavit in August 2025 asserted she was the sole director and officer, supported lifting any stay of the receivership order and supported striking the appeal. She also signed a notice of discontinuance of the appeal. The Court treated this material as raising serious doubts about the validity of any claim by Mr. Eros to be a current director or officer of 639.

Receivership order and appeal

On August 5, 2025, Manulife brought a notice of application in the Court of King’s Bench under section 243(1) of the Bankruptcy and Insolvency Act and section 55 of The Court of King’s Bench Act seeking the appointment of a receiver and manager over the Mulvey Avenue property. The application was heard on August 11, 2025, and the receivership order was signed on August 12, 2025. On August 13, 2025, the day after the receivership order, Mr. Eros filed a notice of appeal in the Court of Appeal, purportedly on behalf of 639, and on August 14, 2025 he also filed, again on behalf of 639, a statement of claim in the Court of King’s Bench against Wawanesa Insurance. By operation of section 195 of the Bankruptcy and Insolvency Act, the filing of the notice of appeal triggered an automatic stay of all proceedings under the receivership order, unless varied or cancelled by the Court of Appeal. Manulife responded by filing a motion on August 18, 2025, seeking to strike the appeal and/or cancel the statutory stay.

Fire, insurance issues and receivership context

In mid-June 2025, a fire damaged the property. 639 made a claim under its fire insurance policy issued by Wawanesa Insurance. Later that month, Wawanesa gave notice that it was cancelling the fire insurance effective August 15, 2025, citing non-cooperation by Mr. Eros/639 with its investigation. According to Mr. Eros, the unresolved claim affected 639’s ability to obtain substitute insurance with another insurer. When the Wawanesa policy was cancelled, Manulife purchased replacement fire insurance to protect its interest as mortgagee. As a result, the Court was faced with a situation where, without the receivership order being fully operational, 639’s equity and the interests of other creditors would be exposed because 639 itself could not secure fire coverage. The procedural focus of this decision, however, is not on substantive insurance policy clauses but on the impact of the cancellation of coverage and the resulting risk profile of the receivership property.

The August and November 2025 hearings

At the first return of Manulife’s motion on August 21, 2025, the Court learned that when Wawanesa’s policy was cancelled on August 15, 2025, Manulife had put its own fire insurance in place. Given that 639 could not itself obtain fire insurance, the Court partially cancelled the statutory stay under section 195 of the Bankruptcy and Insolvency Act to allow the receiver to take control of and manage the property. The Court imposed a condition that the receiver could not seek approval of a sale of the property in the Court of King’s Bench without further order of the Court of Appeal. The motion was then adjourned to November 5, 2025, with detailed directions for steps that Mr. Eros was to take: confirming any valid reinstatement as a director; arranging legal counsel for 639; addressing any requirement for leave to appeal under section 193(e) of the Bankruptcy and Insolvency Act; and filing a brief on the leave to appeal question. By the November hearing, Mr. Eros had produced a Companies Office search showing himself as director and officer, but 639 still had not retained counsel and no brief was filed on the leave or jurisdictional issues. Instead, he focused on his stated intention to refinance and “buy out” Manulife, asking for more time to finalize financing, while failing to deal with the Court’s procedural directions.

Extensive email communications and conduct concerns

Following the November hearing, and particularly from mid-December 2025 onward, Mr. Eros sent numerous lengthy emails to counsel for Manulife, Wawanesa, the receiver and others, as well as forwarding them to the Court’s registry. These emails included threats of legal action “through 639” against counsel, the receiver and other professionals, and legal “demands” to third parties such as telecommunications companies to preserve records. The receiver filed an affidavit attaching both emails sent to the registry and those sent only to the parties and counsel. The Court admitted these materials not for the truth of their contents but as evidence of the fact they were sent and of the allegations being made. The judge found that the volume and character of these communications were largely irrelevant to the issues in the appeal, consumed court and administrative resources and contributed to prejudice against other parties and stakeholders.

Jurisdiction of a single judge in chambers

A central procedural issue was the extent of a single judge’s jurisdiction in chambers, measured against section 7(1) and section 14 of The Court of Appeal Act. Under section 14, matters in the Court of Appeal generally require a panel of at least three judges, while section 7(1) allows a single judge in chambers to decide only matters “incidental” to an appeal that do not amount to deciding the appeal itself. Prior Manitoba case law had already held that a chambers judge cannot strike or quash an appeal or stay it permanently because those steps effectively dispose of the appeal and thus exceed “incidental” jurisdiction. Following this line of authority, the judge held that she did not have jurisdiction to strike the notice of appeal or grant a permanent stay of the appeal. Those matters would have to be determined by a full panel of the Court. However, she did have jurisdiction under section 195 of the Bankruptcy and Insolvency Act to vary or cancel the statutory stay that arose from the filing of the appeal.

Representation of the corporation and the need for legal counsel

Another key issue was whether 639 could appear and be represented in the Court of Appeal by a non-lawyer, specifically by Mr. Eros. Manitoba appellate jurisprudence establishes that the common law rule requiring corporations to be represented by legal counsel applies in appeals, and the rule of the King’s Bench permitting a corporation to appear by an officer does not carry over to the Court of Appeal. The Court may dispense with the counsel requirement only in exceptional circumstances, and the burden lies on the corporation to prove such circumstances with clear evidence. The judge summarized the factors guiding the exercise of this discretion, including the capability and integrity of the lay representative, the complexity of the case, vulnerability and potential harm to the corporation, prejudice to the opposing side, concerns about unauthorized practice of law, demands on judicial resources, access to justice and the need to maintain respect for the administration of justice. Applying these factors, the judge found that the validity of Mr. Eros’s status as a director/officer was doubtful because there was no evidence that the 2022 removal order had been set aside or that Ms Timony had consented to his reinstatement. The Court also emphasized his history of contempt, conduct leading to the cancellation of fire insurance, and failure to follow court directions, all of which raised concerns about whether he would act in the best interests of 639 or his co-shareholder.

Assessment of complexity, harm and prejudice

The Court characterized the matter as relatively complex, involving interpretation and application of the Bankruptcy and Insolvency Act, The Court of Appeal Act and procedural rules around leave to appeal and the automatic stay. With no legal training and an expressed disinterest in litigating the law, Mr. Eros had not shown any intention or ability to advance the legal merits of the appeal. Instead, his focus was singularly on refinancing to redeem the property. The judge concluded that 639 and Ms Timony were vulnerable to harm if he continued to act on behalf of the corporation, given the potential for mounting receivership and mortgage costs to erode equity in the property and the corporation’s value. For the opposing parties and the receiver, the barrage of emails, complaints to the Law Society against all counsel involved and delay in progressing the appeal combined to generate significant legal and administrative costs. Those costs also prejudiced Ms Timony to the extent they were borne by 639. Further, the Court noted that, contrary to typical access-to-justice scenarios, there was no evidence that 639 could not afford counsel. Mr. Eros himself acknowledged that 639 owned other properties, and the failure to retain counsel appeared to be a strategic choice designed to prolong the effect of the statutory stay while refinancing was pursued.

Test for cancelling the section 195 stay and its application

Section 195 of the Bankruptcy and Insolvency Act authorizes the Court of Appeal or a judge of that court to vary or cancel the stay that automatically arises when an appeal is filed, where it appears that the appeal is not being prosecuted diligently or “for such other reason” as the court may deem proper. Although the provision is framed disjunctively, appellate jurisprudence has developed a unified test examining: the appellant’s litigation conduct and diligence in prosecuting the appeal; the merits of the appeal; the relative prejudice and potential irreparable harm to the parties; and the overall balance of convenience, using a framework similar to the RJR-MacDonald injunction test but in a broader, contextual way. Applying this to the facts, the Court found that the stay should be fully cancelled. First, the judge accepted that Mr. Eros had made it clear his goal was not to pursue the legal merits of the receivership appeal but to secure financing to pay out Manulife, and his pattern of repeatedly seeking adjournments without taking required procedural steps illustrated a lack of diligent prosecution. Second, the notice of appeal did not articulate any legal grounds challenging the validity of the receivership order. Instead, the grounds focused on an anticipated payout of Manulife by a credit union, an allegation that Ms Timony intentionally caused the receivership and reference to a Family Property Act hearing, none of which amounted to a coherent challenge to the order appointing the receiver. Third, the Court noted that the main justification for the earlier partial cancellation of the stay in August was the absence of fire insurance available to 639 to protect its equity, a risk that persisted. Without an effective receivership, the equity of 639, the interests of non-Manulife creditors and both shareholders would be at risk because only Manulife, through its own insurance, had adequate coverage. At the same time, continuing the stay blocking a sale meant that receivership and mortgage costs continued to accumulate to everyone’s detriment. Fourth, any issues about how the receiver managed the property were matters for the supervising judge in the Court of King’s Bench when approving any sale and passing the receiver’s accounts, not for the Court of Appeal on this motion.

Final orders, outcome and financial implications

The Court therefore granted Manulife’s motion in part. It ordered that 639 must be represented in the appeal by qualified legal counsel; that Mr. Eros is not permitted to represent 639 or file further material in the Court of Appeal, either personally or claiming to act as director or officer, without further order; and that the appeal of the receivership order is itself stayed until 639 retains counsel. The Court set a deadline of March 16, 2026, for 639 to file and serve proof that it has retained a Manitoba-licensed lawyer, failing which Manulife may seek an order striking or otherwise disposing of the appeal. Crucially for the receivership, the Court fully cancelled the statutory stay under section 195 of the Bankruptcy and Insolvency Act, including the prior restriction on a sale, thereby allowing the receiver to carry out its mandate under the supervision of the Court of King’s Bench, including marketing and selling the property, subject to court approval of any sale and of the receiver’s accounts. The judge directed that costs of the motion are “in the cause,” meaning that no quantified costs or damages were fixed in this decision and any allocation of costs will depend on the ultimate outcome of the appeal or related proceedings. In substance, Manulife Bank of Canada emerged as the successful party on this chambers motion, obtaining the core relief it sought—full cancellation of the statutory stay and confirmation that the corporation must be represented by counsel—while no specific monetary award, damages or precise amount of costs was ordered in its favour at this stage; the exact total in costs, if any, cannot be determined from this decision alone.