Bart Sarsh

Hazleton Development Corporation, an insolvent company constructing a condominium complex, applied for an initial order under the Companies’ Creditors Arrangement Act (CCAA).

The application sought a stay of proceedings, approval of Grant Thornton Limited as Monitor, permission for pre-filing payments to critical trades, approval of a Debtor-in-Possession (DIP) financing facility, an administration charge, and a directors’ charge.

The court granted the initial order, finding the company met the CCAA's statutory requirements, the stay was appropriate for a 10-day period, the Monitor was qualified, pre-filing payments were beneficial to stakeholders, the DIP facility was essential and reasonably necessary, and both the administration and directors’ charges were warranted.

The order was granted without prejudice to the secured creditors' rights for a subsequent hearing.

The Proposal Trustee brought a motion under s. 65.13 of the Bankruptcy and Insolvency Act to approve the sale of two licensed retirement homes owned by the insolvent debtors.

The second mortgagee opposed the sale, arguing the sales process was flawed, the price was below market value, and it was denied the opportunity to properly value the properties.

The court found the sales process was reasonable given the debtors' insolvency and the imminent expiration of their operating licenses.

The court also found the sale price was fair based on independent appraisals and granted the motion to approve the sale, along with a sealing order over the appraisal exhibits.

This complex appeal arises from a multi-million dollar commercial real estate fraud perpetrated by Norma and Ronauld Walton over several years.

The appellants (DBDC Applicants) and respondents (Schedule C investors) were all victims of the fraud.

The central issue on appeal concerns the priority of claims against proceeds from the sale of properties acquired as part of the fraudulent scheme.

The appellants sought damages against the Listed Schedule C Companies on the basis of knowing assistance in breach of fiduciary duty, while the respondent DeJong sought constructive trusts over certain properties.

The majority allowed the appeal in part, finding the Listed Schedule C Companies jointly and severally liable for $22.6 million in damages for knowing assistance, but set aside the constructive trust awards to DeJong.

The dissent disagreed with the knowing assistance finding, arguing the net transfer analysis was insufficient to establish participation by the Listed Schedule C Companies in the breach of fiduciary duty owed to the appellants.

The plaintiffs sought to maintain a Mareva injunction against the defendant's property after an ex parte order was granted.

The defendant had failed to close an agreement of purchase and sale for the plaintiffs' home, and the plaintiffs alleged a risk of asset flight.

The court conducted a de novo hearing, finding a strong prima facie case for the plaintiffs and a real risk of asset removal due to inconsistencies in the defendant's travel plans and financial explanations.

The Mareva injunction was maintained, allowing the plaintiffs to register a charge against the defendant's property, which could be lifted upon the defendant posting security of $116,324.32.

The plaintiffs brought an ex parte motion for a Mareva injunction to register a charge against the defendant's property.

The defendant had anticipatorily breached an agreement of purchase and sale for the plaintiffs' residential property.

The court found the plaintiffs established a strong prima facie case and met the five-part test for a Mareva injunction, noting the defendant had taken her property off the market and was travelling to India with no return date.

The motion was granted.

The moving parties sought an interlocutory injunction preventing the responding parties from excluding them from jointly operating several addiction-treatment medical clinics and pharmacies following a breakdown in their business relationship.

The applicants also sought directions regarding patient communications, access to clinics, and division of software and other assets.

Applying the test for interlocutory injunctions from R.J.R.-MacDonald Inc. v. Canada (Attorney General), the court held that the applicants failed to demonstrate irreparable harm if access to the clinics was denied.

The court found that the applicants had already established alternative clinic locations and were intending to compete with the respondents.

Instead of granting the injunction, the court ordered a structured disengagement process, including patient choice protections and limited directions regarding software and patient database access.

Following successful motions by the defendants for security for costs under Rule 56.01(1)(d) of the Rules of Civil Procedure, the court addressed the appropriate costs awards for those motions.

The defendants sought costs on a partial indemnity basis exceeding $11,000 and $16,000 respectively.

The plaintiff argued that the requested amounts were excessive for motions of this nature.

Applying the principles under section 131 of the Courts of Justice Act and Rule 57.01, and emphasizing proportionality under Rule 1.04(1.1), the court concluded the requested amounts were excessive given the straightforward issues and the partial success achieved by the defendants.

The court awarded costs of $7,000 inclusive of HST and disbursements to each set of moving defendants.