Alan B. Merskey

The defendant (plaintiff by counterclaim) brought a motion under Rule 30.06 of the Rules of Civil Procedure to compel the plaintiffs to produce documents related to the top five contracts by bid price for each year between 2006 and 2016.

These documents were sought to compare the bidding, accounting, and results of the "Porsche Agreement" with the "ordinary course of business" and "past practice" of the acquired company, which was central to the plaintiffs' fraud allegations concerning a share purchase agreement.

The court granted the motion for the production of the remaining categories of documents, finding them relevant and proportionate to the issues of "ordinary course" and "past practice."

This endorsement addresses the issue of costs following a motion where the defendants successfully obtained a reduction in the quantum of a lien claim, though the lien itself was not discharged.

Both the plaintiff and the defendants sought costs, claiming success.

The court found that there was divided success on the underlying motion and noted the parties' failure to make bona fide efforts to settle costs.

Considering the proportionality, complexity, and importance of the issues, as well as the excessive hours and rates claimed by both parties, the court determined that a fit and just costs order was for each side to bear its own costs.

This is a construction lien action where the Defendants/Moving Parties sought an order discharging the lien or, in the alternative, reducing the security posted by Greatwise Developments Ltd. The Plaintiff agreed to a reduction of $250,000 due to an overlooked payment.

The court found significant factual disputes regarding whether the contract was fixed-price or cost-plus, and whether the Plaintiff abandoned the project, deeming these triable issues.

However, based on admitted errors and non-lienable items identified by the Defendants, the court ordered a further reduction of the security posted.

The motion to discharge the lien was dismissed, but the security was reduced from an initial $8,058,101.79 to $6,551,681.65.

The moving parties, representing U.S. class action claimants, sought leave to appeal a supervising judge's order in a CCAA proceeding.

The supervising judge had dismissed their motion seeking to be treated as unaffected creditors or to have an expedited adjudication of their claims prior to a creditor vote.

The Court of Appeal denied leave, finding that the proposed appeal was not prima facie meritorious and did not raise issues of significance to the insolvency practice.

The Court emphasized the high level of deference owed to a CCAA supervising judge's discretionary decisions balancing stakeholder interests.

In a CCAA proceeding, the court considered supplementary written submissions regarding the appropriateness of differential consideration offered to unsecured creditors in the proposed Plan.

The court accepted the applicants' submission that the fairness of the differential consideration, which involves providing shares to Term Loan Lenders and cash to General Unsecured Creditors, should be determined at the Sanction Hearing rather than at the Meetings Order stage, given the low threshold for a Meetings Order and the presence of conflicting expert reports.

The Applicants sought an Authorization Order and Meetings Order under the CCAA.

The primary issues in dispute concerned the voting rights and classification of Litigation Claimants, which included uncertified U.S. class actions, a certified Ontario class action, and Texas mass tort claims.

The court held that the Litigation Claimants are creditors entitled to vote, but restricted them to one vote per action to prevent them from overriding other stakeholders on numerosity grounds.

The court also ordered summary proceedings to value their claims rather than accepting the Applicants' proposal to value them at $1.

Finally, the court declined to place the Term Loan Lenders in a separate class from other unsecured creditors, finding sufficient commonality of legal interests.

The moving parties (original respondents) sought a stay of execution of judgments totalling over $33 million, pending their application for leave to appeal to the Supreme Court of Canada.

The judgments were for transfers at undervalue under the BIA and CCAA.

The court applied the three-part test for a stay (serious issue, irreparable harm, balance of convenience).

The motion was dismissed because the moving parties failed to demonstrate irreparable harm, especially given the responding parties' undertaking not to distribute seized assets, and because no security was offered for the judgment.

Zurich, the surety for the insolvent general contractor Bondfield, brought a motion to intervene as a party in a construction lien reference.

Zurich sought to participate in a vetting committee for the distribution of the owner's holdback among the timely lien claimants.

The court granted the motion, finding that Zurich had a direct interest in the holdback because it had made significant holdback advances to the major electrical and mechanical trades and had taken partial assignments of their lien rights.

The court ordered the timely claimants to pay Zurich's costs of $30,000.

The appellants, directing minds and associates of two insolvent construction companies, orchestrated a false invoicing scheme to siphon tens of millions of dollars from the debtors.

The monitor and trustee sought to recover the funds as transfers at undervalue under s. 96 of the Bankruptcy and Insolvency Act.

The appellants argued that the companies were financially healthy at the time of the transfers, and that the directing mind's fraudulent intent could not be attributed to the companies under the common law corporate attribution doctrine.

The Court of Appeal dismissed the appeals, holding that the corporate attribution doctrine should be applied flexibly in the bankruptcy context to impute the directing mind's fraudulent intent to the debtor corporations.

This purposive approach prevents fraudsters from benefiting at the expense of legitimate creditors and fulfills the remedial objectives of the bankruptcy legislation.

This case involved two applications heard together, stemming from a share purchase transaction.

Sudhir Thomas, as Seller Representative, sought the release of an indemnity escrow account.

Accenture Inc. brought a cross-application seeking a declaration that Thomas was responsible to indemnify Accenture for potential damages from a wrongful dismissal claim by Tania Prsa, to be paid from the escrow.

A mini-trial was conducted to determine the characterization of "bonus" payments made to Prsa (as employment income or shareholder profit distributions) and her entitlement to unreimbursed business expenses.

The court found that the "bonus" payments were shareholder profit distributions, not employment compensation, and that Prsa's expense claims were barred by a comprehensive release clause in the Share Purchase Agreement.

Consequently, the Indemnity Escrow Account was ordered released to the Seller Representative.

The Monitor of Bondfield Construction Company Limited and the Trustee in Bankruptcy of Forma-Con Construction brought applications under s. 96 of the Bankruptcy and Insolvency Act to recover tens of millions of dollars transferred out of the debtor companies through a false invoicing scheme and an alleged fund cycling scheme.

The court found that the payments made under the false invoicing scheme were transfers at undervalue made with the intent to defraud, defeat, or delay creditors, and held the participating respondents jointly and severally liable.

The court declined to apply the strict corporate attribution doctrine from Canadian Dredge, instead imputing the directing mind's fraudulent intent to the corporate debtors to fulfill the remedial purpose of s. 96.

The Monitor's claim regarding the fund cycling scheme was dismissed for lack of evidence that the transfers lacked consideration.

This proceeding involved competing applications for the appointment of a receiver and manager under the Bankruptcy and Insolvency Act and the Courts of Justice Act, and an application for protection under the Companies’ Creditors Arrangement Act (CCAA).

The applicants, secured creditors, sought receivership over three residential condominium projects (The Clover, Halo, and 33 Yorkville) due to significant financial irregularities, lack of transparency, and loss of confidence in the debtors' management.

The debtors opposed receivership and sought CCAA protection, proposing a share sale to Concord Group Developments and a plan to disclaim existing purchase agreements.

The court dismissed the CCAA application and granted the receivership application, finding that receivership was the preferable route.

The court emphasized the secured creditors' blocking position, the absence of a concrete CCAA plan, and the debtors' deliberate financial misconduct, which outweighed any potential benefits of a CCAA proceeding.

The appellant appealed a motion judge's decision striking out paragraphs from its statement of defence that pleaded the respondents' ulterior motive in bringing the action.

The respondents alleged breaches of representations and warranties and fraudulent conduct arising from a share purchase agreement for the acquisition of a European auto parts manufacturing business valued at $410 million.

The defendant claimed the respondents' true motive was to obtain an after-the-fact reduction in the purchase price due to their own financial difficulties, rather than to recover genuine damages for genuine wrongs.

The motion judge struck these allegations as irrelevant and frivolous and vexatious under rule 25.11(b) of the Rules of Civil Procedure, and refused leave to amend.

In the context of CCAA proceedings for Sears Canada, the Monitor brought a motion to enforce a settlement agreement with several former landlords regarding the valuation of their claims.

The landlords disputed the Monitor's calculation of their claims under the agreed Landlord Claim Formula and sought disclosure of the underlying calculations.

The court held that the landlords were entitled to the disclosure and could dispute the calculations, but only using the sources permitted by the formula.

Additionally, the court ordered one landlord, Primaris, to repay $10,000 it had unilaterally withheld for legal fees when returning a mistaken payment.

Genstar Development Partnership appealed a Superior Court decision dismissing its application for specific performance to enforce a repurchase option contained in an Agreement of Purchase and Sale dated August 21, 1998, between Imasco Enterprises Inc. and the Roman Catholic Episcopal Corporation of the Diocese of Hamilton.

The repurchase option allowed the vendor to repurchase property if not developed as a church within 10 years.

The application judge found that Genstar had not established it was a successor to Imasco or an equitable assignee of the repurchase option, and that Genstar's tenders were deficient.

The Court of Appeal dismissed the appeal, finding no palpable and overriding error of fact and upholding the application judge's discretionary decisions regarding the admission of supplementary evidence and conversion to an action.

In the context of CCAA proceedings for Sears Canada Inc., the Employee Representative Counsel sought an order for directions regarding the distribution of an approximately $850,000 Deposit Fund Surplus, which resulted from the termination of employee life insurance coverage provided by Sun Life.

The counsel argued that Sears acted as an agent for its employees in remitting insurance premiums, and therefore, the portion of the surplus attributable to employee contributions should be returned to them pro rata.

The Monitor opposed, contending that Sears had a contractual entitlement to the surplus under the financial letter of agreement with Sun Life and that no agency or fiduciary relationship existed.

The court found that an agency relationship was established when employees permitted Sears to deduct and remit premiums on their behalf, preventing Sears from unjustly enriching itself by retaining the surplus.

The court ordered the Monitor to distribute the relevant percentage of the surplus to the participating employees.

The Bondfield Group, a major construction company, sought CCAA protection due to insolvency, over $1 billion in active contracts, and over 200 lawsuits.

The application was unopposed and resulted from extensive stakeholder negotiations.

The court granted an initial order for CCAA protection, including a stay of proceedings, approval of a tailored $8 million Debtor-in-Possession (DIP) facility funded by Zurich Insurance, an Administration Charge for professional fees, and a Directors' Charge for $3 million (excluding John Aquino).

The court emphasized the public interest in completing critical infrastructure projects and the preference for CCAA over receivership to preserve enterprise value.

The plaintiffs and a defendant by counterclaim, Mr. Sauro, brought motions to strike portions of the statement of defence and counterclaim.

The plaintiffs sought to strike paragraphs alleging ulterior motive and financial mismanagement.

The court struck the paragraphs pleading motive as frivolous and vexatious, but retained those pleading causation.

Mr. Sauro sought to strike the counterclaim against him, arguing it was improperly constituted as a counterclaim rather than a third-party claim.

The court agreed, finding Mr. Sauro was not a necessary and proper party to the counterclaim against the plaintiffs, and struck the counterclaim against him.

Oxford Properties Group brought a motion seeking the appointment of a specific arbitrator to determine the current value of the Newmarket Property under an option agreement.

Sears Canada Inc. and its Monitor brought a cross-motion requesting the appointment of a different arbitrator, who was already acting as a Claims Officer in the CCAA proceedings, to determine both the property's value and Oxford's related disputed claims.

The court found the issues to be inextricably linked and that separate proceedings would lead to additional cost and delay.

The court granted the cross-motion, appointing the arbitrator proposed by Sears and the Monitor to resolve all outstanding issues related to the property in a single, consolidated proceeding, thereby dismissing Oxford's motion.

The applicant, Genstar Development Partnership, sought to repurchase a property from the respondent, The Roman Catholic Episcopal Corporation of the Diocese of Hamilton, based on a right defined in an Agreement of Purchase and Sale.

Genstar claimed to be a successor or equitable assignee of the original vendor (Imasco) and sought specific performance.

The court dismissed the application, finding that Genstar failed to prove its status as a successor due to an incomplete evidentiary record.

As an assignee, Genstar failed to provide the statutory notice required by the Conveyancing and Law of Property Act.

Furthermore, the court found no anticipatory breach by the respondent and determined that Genstar's tenders were deficient due to an incorrect purchase price.