Anthony J. O’Brien

In a receivership proceeding, a corporate director sought leave to control litigation commenced by debtor companies against a secured creditor, arguing that the receiver faced a conflict in pursuing claims against the creditor that initiated the receivership.

The court held that the request constituted an impermissible collateral attack on a prior order directing the receiver to conduct a sales process for the litigation asset.

The court further determined that secured creditors may participate as bidders in a receiver’s sales process, including by way of credit bid, and that such participation is consistent with insolvency principles requiring maximization of value for stakeholders.

Applying analogous bankruptcy authorities, the court approved the receiver’s recommendation to sell the action to the secured creditor through a $1 million credit bid and rejected objections regarding valuation and fairness of the process.

The applicant, a secured creditor, applied to appoint a receiver over the assets of the respondent guarantor following a default on commercial loans.

The respondent cross-applied to lift a stay of proceedings to continue a $100 million damages action against the applicant for alleged breach of a forbearance agreement, and sought to have the proceeds from the sale of the primary debtor's assets paid into court.

The court held that the receivership order did not stay the debtor's action, but refused to order the funds paid into court as the respondent had no proprietary claim to the funds that superseded the applicant's first-ranking security.

The court appointed a receiver over the respondent, finding it just and convenient given the unconditional nature of the guarantee.

Following a prior endorsement on costs, the court received further correspondence from counsel seeking clarification regarding the scope of the costs decision.

The court confirmed that the earlier costs ruling applied to all relevant proceedings in the matter.

This included proceedings from an earlier attendance before another judge that had been reserved to the deciding judge.

The endorsement was issued to clarify that those proceedings were encompassed within the original costs determination.

In a supplementary endorsement following earlier reasons, the court addressed issues arising from submissions on costs in a garnishment proceeding.

The parties disputed whether certain payments constituted “wages” under the Wages Act, which would significantly affect the amount of judgment potentially recoverable through garnishment and the proportionality considerations relevant to costs.

The court directed the parties to address whether the characterization issue could be determined by a Master on reference or should be decided immediately by the judge.

Counsel were instructed to confer and advise whether they could agree on the issues or wished to provide written submissions or argue the matter in open court.

A judgment creditor brought a motion seeking payment from a garnishee under a notice of garnishment relating to funds earned by a judgment debtor through sales activities.

The garnishee argued that the debtor did not work for it but rather for a separate corporate entity operating from the same premises.

The court held that the evidence demonstrated the debtor effectively worked for the garnishee by selling its products using its systems and receiving payment for those sales.

As garnishment is an equitable remedy, the court found that the garnishee could not avoid the creditor’s judgment by structuring the relationship through another entity.

Judgment was granted against the garnishee for payments made during the garnishment period, with an accounting ordered to determine the precise amount owing.