B. Morris

The plaintiff subcontractors brought an action against the defendant, an officer of a bankrupt excavation company, claiming she was personally liable for breach of trust under s. 13(1) of the Construction Act.

The defendant handled the company's bookkeeping and finances but argued she was unaware of her status as an officer and merely followed her husband's instructions.

The court found that the defendant knew she was an officer, had effective control of the company's finances, and knew or ought to have known about the breach of trust.

The court held the defendant personally liable and ordered her to pay the outstanding amounts owed to the plaintiffs.

A bankrupt applied for an absolute discharge nearly nine years after being adjudged bankrupt under the Bankruptcy and Insolvency Act.

Creditors and the trustee opposed an unconditional discharge, alleging the bankrupt failed to satisfactorily account for significant pre‑bankruptcy assets and had not fully disclosed financial information.

The court found the bankrupt had not adequately explained the disappearance of substantial assets including cash, RRSPs, securities, and real property, engaging s. 173(1)(d) of the Bankruptcy and Insolvency Act.

The court also found the bankrupt had remained voluntarily unemployed while living comfortably through financial support from family.

While the court concluded the bankruptcy itself arose from circumstances for which the bankrupt was not justly responsible, the failures of disclosure and conduct during bankruptcy warranted a conditional discharge requiring payment to the estate.

The plaintiff brought a motion to amend a statement of claim to seek a declaration of an equitable mortgage over the defendants’ property and to obtain a Certificate of Pending Litigation (CPL).

The defendants opposed the CPL, arguing the claim was raised outside the limitation period and that registering a CPL years after the action commenced would cause prejudice because the property had been used to secure financing for their defence.

The court held that the proposed amendment flowed from the existing pleading and did not constitute a new cause of action, and therefore leave to amend should be granted under Rule 26.01 of the Rules of Civil Procedure.

However, the court declined to issue a CPL, finding that the plaintiff delayed more than three years before seeking the remedy and that granting it would cause significant prejudice to the defendants.

Costs were awarded to the defendants.

During a contested bankruptcy discharge hearing under the Bankruptcy and Insolvency Act, an issue arose regarding whether information held by the bankrupt’s former matrimonial lawyer about the bankrupt’s pre‑bankruptcy assets was protected by solicitor‑client privilege.

An opposing creditor sought production of the lawyer’s file to determine whether the bankrupt had disclosed the existence of a family trust or other assets prior to bankruptcy.

The court reviewed the scope of solicitor‑client privilege in bankruptcy proceedings and the duty of a bankrupt to disclose property under the Act.

It held that while communications seeking legal advice remain privileged, factual information regarding the existence and location of the bankrupt’s property is not protected.

The former solicitor could therefore be compelled to disclose such information and access her file to refresh her memory.

The defendants moved to set aside default judgments entered against them in a construction-related debt collection and breach of trust action.

While the plaintiffs consented to setting aside portions of the judgments against certain defendants and specific claims, they opposed setting aside the remaining portions against the corporate defendants.

The court found that the defendants’ evidence of a defence on the merits was weak and inadequately supported, relying on an affidavit from corporate counsel lacking personal knowledge and providing minimal particulars.

However, considering the timing of service during the holiday period, inconsistent positions taken by the plaintiffs, and potential prejudice, the court exercised its discretion to set aside the remaining default judgment provisions on condition that the corporate defendants pay $300,000 into court as security.

The action was also ordered transferred from the Commercial List to the Toronto Region Civil List.

Following a receivership motion concerning access to business records, the court addressed costs.

The moving party had substantially succeeded in enforcing provisions of an Appointment Order requiring delivery and access to records, including a valuation model and database used in the debtor’s business.

The court held that disputes regarding ownership of those materials were irrelevant to whether they constituted “Records” under the Appointment Order.

The responding corporate entity and an individual who hindered the receiver’s access were held jointly and severally liable for partial indemnity costs.

Costs of $10,682.81 were awarded to the party funding the receivership.

In a receivership proceeding, the receiver sought an order compelling a principal of a related company to provide access to a database and financial valuation model used in the debtor’s solar project business.

The respondents argued that the database and model were owned by an affiliated entity and protected by copyright, and therefore did not need to be delivered to the receiver.

The court held that under the standard Model Receiver Appointment Order, “Records” include any documents or electronic data related to the debtor’s business or affairs, regardless of ownership.

Because the database and valuation model contained information directly related to the debtor’s projects and financial performance, the respondents were required to grant the receiver immediate access and copies.

The motion was granted and the respondents were ordered to comply with the appointment order provisions.