D. M. Brown

The estate of a former CEO brought an oppression action under s. 248 of the Ontario Business Corporations Act seeking recovery of a $750,000 loan advanced to finance a corporate break fee.

The loan was structured through a related entity and contained provisions stating that proceeds from certain Irish transactions could be used, at the lender’s discretion, to repay the loan.

After the corporation received nearly $1 million from three of the four transactions, the directors and CFO used the funds for payroll, operating expenses, tax arrears, and to repay their own loans rather than repaying the lender.

The court held the lender had a reasonable expectation that proceeds from the Irish deals would be applied to the loan principal.

While some expenditures were made in good faith to keep the company operating, the repayment of insiders and a later lender constituted conduct that unfairly disregarded the lender’s interests.

Personal monetary orders were made against certain directors and the CFO.

Following a successful motion enforcing a Canadian-recognized foreign judgment obtained against a foreign state and its agencies for terrorism-related conduct, the successful parties sought substantial indemnity costs.

The court considered whether the conduct of the foreign state justified elevated costs.

It held that substantial indemnity costs require reprehensible litigation conduct, not merely objectionable political or international conduct by a foreign state.

Because the defendants did not participate in the proceeding and simply ignored it, their conduct did not meet the threshold for elevated costs.

Partial indemnity costs of $15,456.05 were awarded as fair and reasonable under Rule 57 of the Rules of Civil Procedure.

A law firm sought partial summary judgment seeking a declaration that it was entitled to invoice a bank for commissions relating to debtor payments received after the termination of a debt collection services agreement.

The bank brought a cross‑motion for summary judgment asserting that all amounts owed had already been paid under the agreement’s contingency‑based compensation structure.

The dispute turned on the interpretation of a termination clause allowing the firm to invoice for services performed up to the date of termination.

Applying established principles of contractual interpretation and considering the commercial context and factual matrix, the court held that compensation was limited to commissions on payments actually received before the termination date.

The plaintiff’s interpretation would have radically altered the agreed compensation methodology and was inconsistent with the contractual language and commercial sense.

The plaintiffs brought a motion under Rule 31.10 of the Rules of Civil Procedure seeking leave to examine a representative of the Royal Bank of Canada, a non-party, for discovery.

The action involved allegations that the defendant lender made representations regarding financing arrangements for hotel development projects, including construction financing to be provided by the bank.

The court held that the plaintiffs established that the bank likely possessed information relevant to material issues in the action, particularly regarding the financing proposal process and representations made by the defendant.

The court further found that the plaintiffs could not obtain the information from the defendants and that fairness required allowing the examination prior to trial.

Leave was granted to conduct a limited four-hour examination of the bank’s representative.

The moving party sought directions regarding a motion in writing under Rule 30.10 against a non-party for production of documents.

Although the parties indicated consent to the order sought, the court found that prior directions requiring service of an earlier endorsement had not been complied with.

The motion record failed to include the earlier endorsement and the affidavit of service did not confirm service of that endorsement on the non-party.

The court therefore required proper service of the motion record, the earlier endorsement, and the present endorsement on the non-party before the motion could proceed further.

A hog supplier sought an order terminating the 30‑day period for an insolvent company to file a proposal under s. 50.4(11) of the Bankruptcy and Insolvency Act or, alternatively, the appointment of a receiver over the debtor’s inventory under s. 101 of the Courts of Justice Act.

The moving party argued the debtor acted in bad faith by accepting livestock deliveries shortly before filing a notice of intention to make a proposal and that creditors would be prejudiced because farmers would otherwise be unable to claim the statutory priority for agricultural suppliers under BIA s. 81.2.

The court held the evidence did not establish lack of good faith, inability to make a viable proposal, inability to obtain creditor approval, or material prejudice to creditors as a whole.

The court further held it would be inappropriate to appoint a receiver solely to trigger the statutory farmer priority scheme where Parliament had chosen not to extend that priority to NOI proceedings.

During a Commercial List case conference in complex commercial litigation, the court addressed whether a lengthy upcoming trial should proceed using paper records or an electronic trial format.

The court emphasized the need for the justice system to adapt to modern information technology and criticized resistance within the legal profession to electronic processes.

Considering the scale and document volume of the litigation, the court ordered that the six‑week trial proceed as an electronic trial and directed counsel to prepare and submit a formal e‑trial plan.

The endorsement also addressed discovery scheduling, settlements with certain defendants, and a proposed but abandoned summary judgment motion.

In a will challenge involving a modest estate, the court considered procedural directions and a request for a summary judgment hearing.

The applicants sought to set aside the will alleging lack of testamentary capacity, lack of understanding, and undue influence, and also alleged that joint bank accounts were held on resulting trust for the estate.

The respondent requested a summary judgment motion to dispose of the case.

The court held that summary judgment would be a grossly disproportionate procedure given the modest estate and the presence of significant credibility disputes requiring viva voce evidence.

The court instead limited discovery and directed that the dispute proceed to a short hybrid trial.

The applicant corporation sought court approval of a plan of arrangement under s. 182 of the Ontario Business Corporations Act involving the acquisition of its shares by another corporation.

Applying the framework in BCE Inc. v. 1976 Debentureholders, the court considered whether statutory procedures were followed, whether the application was brought in good faith, and whether the arrangement was fair and reasonable.

The court concluded that the arrangement had a valid business purpose, had been approved overwhelmingly by shareholders, and provided a significant premium to shareholders.

The court declined to rely on a fairness opinion contained in the management proxy circular because it constituted opinion evidence that failed to meet the admissibility requirements under the Rules of Civil Procedure, as it did not disclose the analytical basis for the opinion.

The arrangement was nevertheless approved on the basis of other admissible evidence.

The applicant corporation sought an interim order under s. 192(4) of the Canada Business Corporations Act in connection with a proposed plan of arrangement involving an exchange of securities.

The court was satisfied the proposed transaction constituted an arrangement within the meaning of the statute and that the solvency requirements were met.

The interim order included a quorum provision for the shareholder approval meeting requiring the presence of one person representing at least 5% of the issued and outstanding shares, consistent with the corporation’s by-laws.

The court noted that although such a low quorum may satisfy procedural requirements, it may carry limited evidentiary weight when assessing whether the arrangement is fair and reasonable at the final approval stage.

Following execution of an ex parte Anton Piller order authorizing the seizure of computer hardware and smartphones, the parties disputed the method for returning the seized computers to the respondent.

The applicants alleged the devices contained confidential customer lists and email addresses that had been misappropriated.

They proposed removing the existing hard drives and installing new drives containing only non-confidential information copied by a forensic expert.

The respondent objected to replacing the hard drive on one computer containing business records and applications.

The court approved the applicants’ proposed deletion and hard-drive replacement process, subject to safeguards requiring forensic expert involvement, a report to the court, and restoration of operating systems and applications, and ordered return of the devices by a specified date.

In a will challenge concerning allegations of undue influence over the deceased, the court considered the proper procedural framework for managing the litigation following the Supreme Court of Canada's decision in Hryniak v. Mauldin.

The court held that proportionality principles should guide orders for directions in estate litigation and rejected the routine use of the traditional Estates List standard order for directions.

Instead, the court ordered limited documentary production, permitted written interrogatories in place of oral examinations for discovery, and scheduled a hybrid hearing using affidavit evidence with viva voce cross‑examination.

The court also transferred a related civil action to the Estates List and assumed case management of both proceedings to ensure a timely and cost‑effective resolution.

Growthworks Canadian Fund Ltd. obtained protection under the CCAA.

Allen-Vanguard Corporation (AVC), a contingent creditor claiming $650 million for fraudulent misrepresentation related to a share purchase agreement, moved to lift the CCAA stay of proceedings to continue its civil action against Growthworks in Ottawa.

Growthworks brought a competing motion for a mini-trial within the CCAA proceeding to determine two threshold issues regarding AVC's claim.

The court deferred the disposition of both motions to the forthcoming motion to extend the stay period, directing the parties to file additional evidence regarding the necessity and proportionality of the proposed CCAA claims process versus lifting the stay.

At a Commercial List case conference, the court addressed procedural issues relating to documentary production, privilege waiver, and the scheduling of discoveries.

The plaintiffs had expressed a desire to bring a motion to strike certain counterclaims, while certain defendants contemplated a motion for a further and better affidavit of documents.

The court declined to schedule those motions, directing instead that the matters be addressed through examinations for discovery and cooperative document production.

Counsel were directed to resolve production issues, exchange documents, and establish a protocol for property inspections to facilitate an expert valuation report.

The plaintiffs brought a motion arising from refusals on discovery concerning requests for handwriting specimens.

The action alleged that a life insurance policy conversion application contained a forged signature and that the forgery was prepared by or on behalf of a corporate principal.

The court held that obtaining original signature specimens from the alleged individual involved was relevant to the pleaded forgery allegation and ordered the corporate defendant to produce up to 30 original signature samples for examination by the plaintiffs’ expert.

However, the request for signature specimens from another employee was refused because no pleaded allegation connected that individual to the alleged forgery.

Given the mixed success on the refusals, costs were ordered in the cause.

The plaintiff brought a motion arising from refusals during examinations for discovery in a commercial dispute alleging that the defendants appropriated the plaintiff’s property and profits.

The court addressed several undertakings and refusals from the examinations of individual defendants and ordered that certain refused questions be answered.

It further ordered the corporate defendant to produce financial statements from 2010 onward, finding them relevant to the plaintiff’s disgorgement claim.

The defendants had agreed to answer most refusals but maintained opposition to the production request.

The court ordered production and awarded fixed costs for the refusal.

Majority shareholders sought a stay of an oppression application brought by minority shareholders and related parties, relying on a broad arbitration clause in a shareholders’ agreement.

The court applied the competence‑competence principle under the Arbitration Act, 1991 and held that where it is arguable a dispute falls within the arbitration clause, the matter should be referred to arbitration for determination of jurisdiction.

Most claims, including oppression allegations, employment termination disputes, and share purchase issues, were closely connected to the shareholders’ agreement and therefore subject to arbitration.

Claims against non‑signatories and ancillary allegations were also stayed under the Courts of Justice Act as they depended on the core disputes.

The only exception permitted to proceed in court was a wrongful dismissal action by an employee who was not a party to the shareholders’ agreement.

A secured creditor sought disclosure of financial information under a general security agreement and s. 18 of the Personal Property Security Act after the debtor and another secured party failed to provide requested information.

The proceeding ultimately resolved after undertakings were given during cross‑examination and the disclosure was substantially provided.

On a subsequent costs motion, the court held the respondents had unreasonably resisted disclosure and filed extensive irrelevant evidence to delay the proceeding.

The court found this conduct constituted reprehensible litigation behaviour warranting elevated costs.

Substantial indemnity costs were awarded to the applicant.

Victims of terrorism sought enforcement in Ontario of U.S. judgments against a foreign state and its agencies following recognition of those judgments under the Justice for Victims of Terrorism Act.

The court considered the interaction between the JVTA, the State Immunity Act, and Ontario enforcement procedures.

It held that non‑diplomatic bank accounts and real property beneficially owned by the foreign state in Canada were exigible assets available to satisfy the recognized judgment.

The court ordered financial institutions to pay funds to the sheriff for distribution under provincial execution legislation and directed enforcement against two properties found to be beneficially owned by the foreign state.

The applicant commenced an action and an application following the termination of a services agreement, arguing the arbitration clause did not survive termination.

The respondent moved to stay the proceedings in favour of arbitration.

The court applied the competence-competence principle, finding it was arguable that the dispute fell within the arbitration clause and that the clause survived termination.

The court granted the motion to stay the action against the corporate respondent under the International Commercial Arbitration Act, and stayed the action against the individual defendants under the Courts of Justice Act, leaving the jurisdictional challenges to be determined by the arbitral tribunal.