Executive Summary: Key Legal and Evidentiary Issues

• Sunterra Group entities and their director Ray Price were found liable for fraudulent misrepresentation arising from large-scale cheque kiting between Canadian and US operations.

• Compeer Financial sought to appeal the chambers judge's refusal to hold Debbie Uffelman and Craig Thompson personally liable for fraudulent misrepresentation but conceded it could not meet the CCAA leave test.

• All appeals were determined to fall under s 13 of the CCAA, requiring leave to appeal, as the underlying decisions were "made under" the CCAA proceeding.

• Sunterra and Price's proposed grounds — including alleged errors in burden of proof, credibility findings, and mitigation analysis — were found to lack prima facie merit on appeal.

• Legal principles raised by the applicants, such as director liability for fraud and the burden of proof for fraudulent misrepresentation, were held to be settled law with no precedential value to the practice.

• Both leave to appeal applications were denied, preserving the lower court's findings of fraud against Sunterra and Price and the dismissal of claims against Uffelman and Thompson.

The Sunterra Group and its cross-border cheque kiting scheme

The Sunterra Group comprised interrelated Canadian entities (Sunterra Canada) — including Sunterra Farms Ltd, Sunwold Farms Ltd, and Sunterra Enterprises Inc. — and a group of US entities (Sunterra US). Ray Price served as director and president of Sunterra. Sunterra US' primary lender was Compeer Financial, PCA, while Sunterra Canada's primary lender was National Bank of Canada (NBC). Both lenders extended conditional credit to the Sunterra Group, which allowed it to access the funds from deposited cheques before the cheques had cleared.
The Sunterra Group used cheques as its primary form of fund transfer between Sunterra Canada and Sunterra US. At some point, these cheques ceased to be anchored by sufficient funds in the issuing accounts. Instead, the entity receiving a cheque would rely upon conditional credit to write a cheque back to the account with insufficient funds, thereby covering the shortfall. This cycle continued with a high volume of cheques flowing back and forth between Sunterra Canada and Sunterra US. The chambers judge found that the Sunterra Group's conduct amounted to cheque kiting "on an astonishing scale."

Collapse of the scheme and CCAA proceedings

On February 11, 2025, Compeer terminated the cheque-writing privileges of Sunterra US. With no new cheques from Sunterra US available to deposit into the NBC accounts, those accounts had insufficient funds to cover the earlier cheques issued by Sunterra Canada, and these cheques were dishonoured. By February 28, 2025, the balance of the Sunterra Group's accounts with Compeer fell to negative $35,924,307.05. In April 2025, the Sunterra Group obtained an initial order to commence proceedings under the CCAA. In June 2025, Compeer commenced the King's Bench action that underlies the present appeal (the Compeer Action). The Compeer Action advanced claims of fraudulent misrepresentation against Sunterra, Price, Debbie Uffelman — Sunterra's vice-president of corporate finance — and Craig Thompson, a member of Sunterra's accounting staff. Compeer also sought declarations under ss 19(2)(d) and 5.1(2) of the CCAA that its claims could not be compromised or arranged in the CCAA proceedings without Compeer's consent.

The chambers judge's decision on fraudulent misrepresentation

On July 24, 2025, the chambers judge pronounced a consent order agreed to by the parties. The consent order specified that Compeer's application for declaratory relief and summary judgment would be heard on December 4–5, 2025, and proceed in accordance with a litigation plan appended to the order. At the hearing, the chambers judge dismissed Compeer's summary judgment application against Uffelman and Thompson, finding they were not personally liable for fraudulent misrepresentation. Compeer's claims of fraudulent misrepresentation against Sunterra and Price were successful. The chambers judge also issued declarations under ss 5.1(2) and 19(2)(d) of the CCAA rendering Compeer's claims against Sunterra and Price non-compromisable without Compeer's consent.

Whether leave to appeal was required under s 13 of the CCAA

At the Court of Appeal of Alberta, Justice Michelle Crighton considered two competing applications for leave to appeal. Compeer argued it could appeal as of right regarding the dismissal of its claims against Uffelman and Thompson, contending that its action against them was not part of the CCAA proceedings nor captured by the CCAA stay, given that they were not directors of Sunterra. Sunterra and Price sought leave to appeal the fraud finding against them, alleging several errors of fact and mixed fact and law. The Court applied the purpose-driven analysis from Spartan Delta Corp v Alberta (Energy and Minerals), 2025 ABCA 181 and the non-exhaustive list of indicia from Essar Steel Algoma Inc (Re), 2016 ONCA 138 for determining whether a decision was "made under" the CCAA. Justice Crighton found that both decisions — the one concerning Uffelman and Thompson and the one concerning Sunterra and Price — were "made under" the CCAA. The chambers judge had explicitly stated the determination was in furtherance of the CCAA proceeding — specifically, to determine "the quantum and character of the claims of Sunterra's primary Canadian and U.S. lenders in this CCAA proceeding." Further, the consent order referred to the same action number as the CCAA proceeding, and Compeer had sought declarations under the CCAA that its claims were non-compromisable. The Court emphasized that it is inappropriate for parties to rely on the CCAA jurisdiction for the preservation and determination of their claims but seek to avoid its leave requirements for the purpose of an appeal.

Assessment of the leave to appeal test for Sunterra and Price

Having established that leave was required for all parties, Justice Crighton applied the four-factor test under s 13 of the CCAA. On the first factor — significance to the practice — the Court found that the legal issues raised by Sunterra and Price, including director liability for fraud, burden of proof for fraudulent misrepresentation, and the duty to mitigate, were all settled in appellate authority and therefore lacked precedential value to the practice. This factor weighed against granting leave to appeal. On the second factor — significance to the action — the Court accepted that a successful appeal had the potential to reverse a finding of fraud and reduce the parties' liability for damages. Reversal of the fraud finding may also affect the CCAA proceeding, because it would alter the quantum of non-compromisable claims against Sunterra and Price. This factor weighed in favour of granting leave to appeal. On the critical third factor — prima facie merit — the Court found that the proposed grounds of appeal lacked merit. The chambers judge had not reversed the burden of proof but had properly weighed the evidence, including the absence of evidence, to determine whether the elements of the test for fraudulent misrepresentation were met. Regarding mitigation, the crux of the chambers judge's analysis was that due to the circumstances of fraud underlying the claim, Compeer had no obligation to mitigate through entering a repayment plan with Sunterra. The remaining issues raised were issues of fact or mixed fact and law, and Sunterra and Price failed to demonstrate any error that appeared to be an error in principle or unreasonable exercise of discretion. This factor weighed strongly against granting leave to appeal. The fourth factor — whether the appeal would unduly hinder the CCAA proceedings — did not weigh strongly against permitting the appeal, as further steps could be taken in the CCAA proceedings while the appeal was being determined.

Outcome and ruling

Balancing all four factors, Justice Crighton concluded that although the potential significance of the action to the parties and the underlying proceeding was acknowledged, this could not overcome the lack of significance to the practice and, more importantly, the absence of prima facie merit. The absence of undue delay also could not remedy the absence of merit in the circumstances. Compeer's application for leave to appeal the dismissal of its claims against Uffelman and Thompson was denied, as Compeer acknowledged it did not meet the test for leave to appeal. Sunterra and Price's application for leave to appeal the fraud finding was also denied. The application was heard on April 8, 2026, with reasons filed at Calgary, Alberta on April 21, 2026. As a result, the chambers judge's original decision stands: Sunterra and Price remain liable for fraudulent misrepresentation, while Uffelman and Thompson are not personally liable. The negative balance of $35,924,307.05 in the Sunterra Group's accounts with Compeer reflects the magnitude of the claims at issue; however, no exact damages award was specified in this appellate decision, as it dealt solely with whether the parties could obtain leave to appeal the lower court's findings.