David M. Brown

A secured lender applied for the appointment of a receiver over two debtor corporations for the limited purpose of completing a sale of substantially all business assets through a pre-packaged transaction.

The debtors did not oppose the application and consented to early enforcement of the lender’s security.

Evidence showed the debt exceeded $2.9 million and that absent a sale the businesses would cease operations and liquidate.

The court found the marketing process fair and comprehensive and that the proposed purchase price exceeded liquidation valuations.

Applying the principles from Royal Bank of Canada v. Soundair, the court approved the receiver’s appointment, authorized the sale agreement, granted a vesting order, and sealed commercially sensitive valuation evidence.

In a complex commercial fraud and negligence action involving multiple defendants, the court issued a case conference memorandum addressing the status of discovery, mediation, expert reports, and pre‑trial procedure.

The court directed timelines for completion of undertakings and remaining examinations for discovery.

It encouraged the parties to consider avoiding refusals motions due to limited judicial resources and proposed an alternative approach allowing trial judges to address refused questions if necessary.

The parties were instructed to advise the court whether they would forego refusals motions or proceed with them.

The court also directed the parties to contact a judge to schedule a lengthy trial and to return for a further case conference if mediation failed.

A purchaser of assets from a bankrupt estate brought a motion to amend a prior court approval order to expressly include intellectual property within the assets conveyed.

The original order had approved the sale of the bankrupt’s residual assets, but the trustee refused to execute a bill of sale including trademarks, asserting uncertainty about whether they formed part of the estate.

The court held that the approval order clearly conveyed all remaining assets and criticized the trustee for failing to deal with the issue promptly and for raising concerns inconsistent with the record.

The court concluded that the motion should not have been necessary and that the trustee’s conduct justified a personal costs award.

Partial indemnity costs were ordered against the trustee.

A former senior banking executive sought recovery of forfeited restricted share units under an employer’s long-term compensation plan after resigning to start a hedge fund.

The plan provided that restricted share units would mature and be paid in cash three years after grant, but would be forfeited if the employee resigned before the maturity date.

The plaintiff argued that the forfeiture-on-resignation provision operated as an unreasonable restraint of trade and was therefore unenforceable.

The court held that the provision merely conditioned entitlement to deferred compensation on continued service and did not restrict the employee’s ability to work elsewhere.

Because the awards had not vested prior to maturity and the forfeiture was triggered solely by resignation rather than post-employment conduct, the clause was valid and enforceable.

The applicant corporation sought a final order approving a plan of arrangement under s. 192 of the Canada Business Corporations Act involving an exchange of interests with another corporation.

The court reviewed the requirements for approving a corporate arrangement as articulated by the Supreme Court of Canada, including whether the arrangement served a valid business purpose, complied with procedural safeguards, and was fair and reasonable to affected stakeholders.

Evidence showed the transaction resulted from arm’s‑length negotiations, received an independent fairness opinion, and was overwhelmingly approved by shareholders with dissent rights available.

The court found the arrangement structure appropriate given the complexity of the multi‑step transaction and determined the statutory “not practicable” requirement was satisfied.

The arrangement was approved as fair and reasonable.

The plaintiffs brought an ex parte motion seeking confirmation that certain bank accounts identified by the federal government as assets of a foreign state fell within the scope of an existing Mareva injunction issued in an action to recognize and enforce a U.S. terrorism judgment.

Relying on information provided by the Department of Foreign Affairs pursuant to s. 12.1 of the State Immunity Act, the plaintiffs argued that the accounts constituted assets of the defendants in Canada and should therefore be frozen under the existing order.

The court held that the plaintiffs had established a strong arguable case that the identified accounts were subject to the Mareva order and confirmed that the injunction applied to those accounts.

However, broader disclosure of full banking records was limited to situations where the accounts were held directly by entities already named in the injunction, with further directions reserved for later proceedings.

The applicants brought a motion to remove the respondents’ solicitor of record on the basis of alleged conflicts of interest and the possibility that the lawyer might be called as a witness.

The court applied the conflict of interest principles from MacDonald Estate v. Martin and Canadian National Railway Co. v. McKercher LLP.

It held that the lawyer had not previously acted for the individual applicant or his trust in a manner giving rise to confidential information relevant to the litigation, and that the earlier retainer for a corporate applicant in unrelated litigation was not sufficiently related to the present oppression dispute.

However, the court found that a conflict arose because the lawyer sought to represent both the respondent corporations and the individual shareholder respondents in oppression litigation where their interests could diverge.

The lawyer was therefore removed as counsel for the corporate respondents but permitted to continue acting for the individual respondents.

Dissident shareholders holding more than 5% of a public corporation sought orders under ss. 143 and 144 of the Canada Business Corporations Act requiring the board to call a shareholders’ meeting to remove and replace directors.

The court held the first requisition invalid because it was made by a beneficial rather than registered shareholder and failed to identify proposed director nominees.

Although a second requisition was valid, the directors were entitled to rely on the statutory exception in CBCA s. 143(3)(a) because a record date had already been fixed for an upcoming annual meeting.

While shareholders may in principle call a meeting under s. 143(4) even where a board relies on s. 143(3), the court declined to permit the proposed meeting in the circumstances due to delay by the applicants, limited prejudice from waiting for the scheduled AGM, and the costs of holding two meetings in close proximity.

The defendant bank brought a refusals motion seeking to compel answers to questions asked on the cross‑examination of an affiant concerning documents reviewed by counsel when drafting a claim.

The information sought related to whether the plaintiff had used documents produced in another action in alleged breach of the deemed undertaking rule under Rule 30.1 of the Rules of Civil Procedure.

The court held that the requested information constituted solicitor‑client communications and was therefore subject to near‑absolute privilege.

The “future crime and fraud” exception to solicitor‑client privilege did not apply because an alleged breach of the deemed undertaking rule did not approach the level of criminal or fraudulent conduct required to displace privilege.

The motion to compel answers was dismissed.

The defendants in a section 38 Bankruptcy and Insolvency Act fraudulent conveyance action brought a motion for leave to amend their Statement of Defence, issue a third party claim, and discharge certificates of pending litigation.

The court granted leave to amend the Statement of Defence in part, allowing unopposed amendments and certain 'state of mind' amendments subject to strict discovery conditions.

The court refused leave for amendments related to limitations and solicitor negligence, finding them irrelevant or already decided.

The motion to issue a third party claim was dismissed as the proposed claims lacked a factual nexus to the main action.

The request to discharge the certificates of pending litigation was also dismissed because the certificates were reinstated by a Court of Appeal order, which the Superior Court lacked jurisdiction to vary.

The defendants in a s. 38 Bankruptcy and Insolvency Act fraudulent conveyance action brought a motion for leave to amend their Statement of Defence, issue a third party claim, and discharge certificates of pending litigation.

The court granted leave to amend the Statement of Defence in part, allowing unopposed amendments and 'state of mind' amendments on strict terms to prevent delay, but refused amendments related to limitations and solicitor's negligence.

The motion to issue a third party claim was dismissed as the proposed claims did not relate to the fraudulent conveyance action.

The motion to discharge the certificates of pending litigation was also dismissed because the certificates were reinstated by a Court of Appeal order, which the Superior Court lacked jurisdiction to vary.

In a Companies’ Creditors Arrangement Act restructuring, the applicants sought court approval of a sale transaction to BlackRock Kelso Capital Corporation, authorization to assign certain store leases and designated contracts, and related relief.

A former employee also moved to be appointed as representative of terminated employees and to appoint representative counsel funded from transaction proceeds to assist with potential Wage Earner Protection Program Act claims.

The court approved the sale transaction and the assignment of leases and contracts under ss. 36 and 11.3 of the CCAA, finding the sale process reasonable and the transaction maximized value while preserving employment and ongoing operations.

The court declined to appoint representative counsel for terminated employees, holding the proceeding lacked the complexity seen in cases such as Nortel and Canwest, and that WEPPA claims could be addressed in the anticipated bankruptcy process by the trustee.

Funding representative counsel from the purchaser’s transaction funds was also found inappropriate.

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.

A court-appointed receiver sought approval of an interim settlement with the judgment debtor and related parties concerning disputed ownership and realization of a cottage property during receivership proceedings.

The moving party, a judgment creditor, opposed the settlement, arguing that stronger litigation prospects justified pursuing a declaration that the debtor solely owned the property.

The court applied the principle that courts generally defer to a receiver’s commercially reasonable business judgment where the receiver has fully analyzed the circumstances and considered stakeholder interests.

Considering litigation risk, potential appeals, mounting receivership costs, lack of estate funding, and the need for timely recovery for creditors, the court found the settlement commercially reasonable.

The settlement was therefore approved.

At a commercial list case conference in complex multi-party litigation involving disputed financial transactions, the court addressed case management issues relating to discovery planning.

The parties agreed to a joint litigation and discovery plan aimed at identifying disputed transactions and clarifying the parties’ positions.

The court ordered that all undertakings arising from examinations for discovery be answered within 60 days and expressed reluctance to schedule refusals motions, noting they often add little value and that adverse inferences may be drawn at trial where proper questions are refused.

The matter was scheduled for a further case conference to assess the potential for mediation and estimate trial length.

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.

The applicant corporation sought an order under s. 133(3) of the Canada Business Corporations Act to extend the time for calling its annual shareholders’ meeting.

The application was brought on an ex parte basis because the meeting was scheduled for the following day and the corporation intended to postpone it while issuing an amended management information circular after regulatory comments.

The court declined to proceed ex parte, finding that shareholders and the Director under the CBCA were persons affected by the requested order and should receive notice.

The court also held that the applicant had failed to disclose a material fact, namely the existence of ongoing plan of arrangement proceedings that would be considered at the same shareholder meeting.

Directions were issued requiring notice to shareholders and the Director and adjourning the application.

A shareholder who successfully obtained a court‑ordered shareholders’ meeting under s. 144(1) of the Canada Business Corporations Act sought reimbursement from the corporation for expenses incurred in requisitioning, calling, and holding the meeting.

The court held that although s. 144 does not expressly address reimbursement, it implicitly authorizes recovery of reasonable expenses analogous to those recoverable under s. 143(6) for requisitioned meetings.

However, only costs directly related to requisitioning, calling, and holding the meeting are recoverable, not broader strategic or governance‑change expenses incurred by dissident shareholders.

Applying that principle, the court allowed reimbursement for certain printing, meeting administration, advisory, and legal costs, but limited recovery to reasonable amounts tied to the meeting itself.

The applicants sought directions regarding the marketing and sale process for several commercial properties previously ordered to be sold following a family dispute.

Disagreements among the parties had stalled execution of the earlier order, including disputes over listing price, bidding procedures, participation of bidding owners, and selection of an environmental assessment firm.

The court approved a two‑stage bidding process, confirmed that bidding owners could not attend the opening of first‑stage bids, and approved the proposed environmental firm.

Finding that persistent family conflict had frustrated the earlier order and would likely continue to delay the sale, the court determined that an independent receiver should be appointed to supervise the marketing and sale of the properties with the assistance of a brokerage firm.

The parties were directed to return with proposals for the appointment of a receiver and the bidding process was ordered to be completed by a specified deadline.

The moving defendants sought an order striking portions of the plaintiffs’ responses to a demand for particulars and requiring further particulars of negligence allegations pleaded in the statement of claim.

The court held that the original pleading of negligence was bald and inadequate, but the plaintiffs’ subsequent responses to the demand for particulars provided sufficient detail to allow the defendants to plead and proceed to discovery.

While the responses used open-ended language that could potentially permit additional allegations, the court found that this risk could be managed through discovery and case management directions.

The court declined to strike the pleading or require further particulars, emphasizing the need to move the long-standing action forward.