Eric Golden

This case conference order addresses procedural and factual disputes in an ongoing insolvency proceeding involving Eureka 93 Inc. and three related companies under the BIA.

The noteholders (Dominion Capital LLC) had postponed creditor votes on proposals, seeking further investigations and information regarding asset valuations and the validity of their claims.

The debtors challenged the noteholders' status as creditors for one proposal.

The court provided directions to resolve the gridlock, ordering the Proposal Trustee to assess and value the noteholders' proofs of claim, setting deadlines for examinations of witnesses, and mandating the completion of votes on the proposals.

The court emphasized the Trustee's role in validating claims and cautioned against allowing peripheral issues to unduly complicate the summary insolvency process.

The debtors, Eureka 93 Inc. and related companies, filed a notice of intention to make a proposal under the BIA.

Two motions were heard: an unopposed motion by the debtors for an interim arrangement order under the Canada Business Corporations Act, which was granted; and an opposed motion by the noteholders (Dominion Capital LLC) seeking an order for document production relevant to an appraisal, cross-examination of Seann Poli, and examination of a representative of the first mortgagee, all in advance of the creditors' meeting to vote on the proposal.

The court dismissed the noteholders' request for examinations as premature, noting that the BIA provides mechanisms for investigation after the trustee's report or by adjourning the creditors' meeting.

However, the court ordered the debtor's appraiser to disclose and produce source documents used for the land appraisals, but declined to order disclosure for a business valuation under the BIA.

The Applicants (Green Growth Brands Inc. et al.) sought an Amended and Restated Initial Order and approval of a Sale and Investment Solicitation Process (SISP) and a Stalking Horse Agreement under the Companies’ Creditors Arrangement Act (CCAA).

Mr. Michael D. Horvitz, an investor, opposed the motion and brought a cross-motion seeking to set aside the Initial Order, adjourn the comeback motion for discovery, and direct the Monitor to investigate certain transactions.

The court dismissed Mr. Horvitz's cross-motion, finding his complaints largely constituted inter-creditor disputes outside the scope of CCAA proceedings.

The court approved the Applicants' requested orders, finding the SISP and Stalking Horse Agreement reasonable and compliant with CCAA criteria, despite Mr. Horvitz's objections regarding fairness, break fees, and the treatment of the GAOC Note.

The Receiver, supported by the Applicant (senior secured lender and stalking horse bidder), sought court approval for a Sale Procedure featuring a stalking horse agreement for the North Barrie Crossing Shopping Centre.

The Respondents opposed, raising concerns about the credit bid valuation, expense reimbursement, deposit requirements, minimum overbid, and the timing of the sale during the COVID-19 crisis.

The court applied the Soundair and CCM Master principles, largely approving the Receiver's plan with minor amendments, including requiring environmental and building condition reports and tenant estoppel certificates, and extending the sale timeline by two weeks to enhance the bidding process.

The applicant debtors brought an unopposed motion to extend the time for making a proposal under the Bankruptcy and Insolvency Act.

The court granted the extension to June 12, 2020, finding that the criteria of good faith, diligence, lack of prejudice, and potential viability were met, with an improved outlook despite COVID-19 closures.

The decision also included observations on the conduct of virtual hearings during the COVID-19 emergency, emphasizing the importance of notice to all parties and upholding the open court principle, even when public interest is low or a sealing order is in place.

The court flagged the need for more robust solutions for public access to virtual hearings in the future.

The receiver of assets in receivership proceedings moved to determine whether an appeal brought by Canada Investment Corporation (CIC) from an order of Penny J. was as of right or required leave under the Bankruptcy and Insolvency Act.

The order had directed that proceeds from the sale of the Caldwell property, otherwise payable to CIC, be paid to the Stanbarr Claimants based on findings in a prior action that CIC was indebted to them.

The motions judge held that the appeal was as of right under section 193(c) of the BIA because the order resulted in a loss to CIC by directing payment of funds otherwise due to it to third parties.

The receiver's motion was dismissed.

In a receivership proceeding, the Receiver conducted a court-ordered claims process to determine entitlement to surplus proceeds from the sale of a property.

The Stanbarr Claimants sought the funds based on a prior judicial finding that the respondent, Canada Investment Corporation, had improperly inflated a mortgage payout statement.

The respondent opposed the Receiver's recommendation to pay the funds to the claimants, arguing the prior judicial finding was not final.

The court upheld the Receiver's recommendation, finding the prior decision was res judicata, and ordered the funds paid to the claimants.

The court-appointed Receiver brought a motion to approve a marketing and sale process by tender for undeveloped commercial property.

The respondent debtor brought a competing motion seeking an order directing the Receiver to accept a specific offer from its financial backer.

The court approved the Receiver's proposed process, finding it fair, transparent, and commercially reasonable, and dismissed the debtor's motion, noting the proposed process would optimize the chances of securing the best possible price for all stakeholders.

The defendants brought motions to strike three related actions commenced by investors who financed movie productions.

The plaintiffs alleged breach of contract, breach of trust, gross negligence, and negligent misrepresentation against various corporate and individual defendants.

The court struck the breach of contract claims against the Nightingale defendants as there was no privity of contract.

The court also struck certain gross negligence and breach of trust claims where insufficient particulars were pleaded.

However, the court upheld the majority of the claims for breach of trust, gross negligence, and negligent misrepresentation against the individual directors, finding they were adequately pleaded.

The plaintiffs were granted leave to amend their pleadings.

The plaintiffs, Falcon Motor Express Ltd. and Jarnail Singh Sidhu, brought a motion for an interim order under s. 248(3) of the Business Corporations Act, seeking to compel the defendant, Arandeep Singh Grewal, to immediately transfer his 50% shares in Falcon to Jarnail or Falcon, without payment or security.

This motion followed an earlier interlocutory order removing Grewal as a director and officer due to oppressive conduct and wrongful competition.

The plaintiffs argued that Falcon could not obtain necessary financing as long as Grewal remained a shareholder, causing irreparable harm.

The court found the plaintiffs established a strong prima facie case of oppression and irreparable harm, and the balance of convenience favored them.

However, the court declined to order the transfer without security, noting that Falcon could not be the purchaser due to solvency requirements and its inability to claim set-off as a "complainant." The court ordered Grewal to transfer his shares to Jarnail, conditional on Jarnail posting $2 million security, to be held until further order.

The applicants, first mortgage holders, sought an order for three months' interest under s. 17 of the Mortgages Act or their mortgage terms, after their mortgaged properties were sold by a court-appointed receiver.

The court dismissed the application, holding that s. 17 does not apply to payments of sale proceeds by a court-appointed receiver to a secured creditor.

A receiver is not a "person entitled to make such payment" under s. 17, nor is it an agent of the debtor or subsequent mortgagee.

The court found no material distinction between private and court-appointed receivers for the purpose of s. 17, emphasizing the provision's historical intent to protect mortgagors seeking relief from forfeiture, not to benefit mortgagees realizing on security.

In a receivership proceeding, the Receiver sought to disclaim an agreement of purchase and sale (Grandview APS) between Horseshoe Valley Lands Ltd. (HVL) and Lotco Limited.

Lotco brought a cross-motion seeking to examine individuals to support its position that Romspen Investment Corporation (the mortgagee) had committed to HVL to grant a partial discharge of the mortgaged lots, and that Romspen's alleged default led to the receivership.

The court denied Lotco's request for examinations, finding that Romspen's alleged default to HVL was not relevant to the Receiver's disclaimer motion, as Romspen owed no direct contractual or other duty to Lotco, and the receivership order did not alter the substantive rights or equities between Lotco and Romspen.

The defendant bank brought a motion seeking a further and better affidavit of documents and leave to amend its statement of defence in an action arising from three vehicle financing loans.

The amendments alleged that the plaintiff engaged in numerous additional vehicle transactions with related dealerships, making those transactions relevant to the issues in the action.

The court held that the plaintiff’s pleadings placed the nature of these additional transactions and relationships in issue, rendering documentary disclosure concerning them relevant.

The court rejected arguments based on proportionality and lack of relevance, emphasizing the significant damages claimed and the scope of the pleadings.

The defendant’s motion for further documentary production was granted and the plaintiff was ordered to produce the documents within 45 days.

Following judgment in a civil action, the court determined the issue of costs.

The plaintiff argued entitlement to enhanced costs on the basis that he had beaten his offer to settle, while the defendant disputed that claim and argued the action should have been brought in Small Claims Court.

The court accepted that the plaintiff had not beaten the offer to settle and found that the proceeding should properly have been brought in Small Claims Court, justifying the exercise of discretion under Rule 57.05 to decline awarding costs to the plaintiff.

However, the court also declined to award costs to the defendant due to misconduct by its agent.

As a result, no costs were awarded to either party.

The plaintiff brought a motion for summary judgment seeking repayment of funds withdrawn from his bank account for an alleged car loan arranged through a dealership acting as the bank’s agent.

The bank asserted that a valid loan agreement existed and relied on signed loan documentation and the plaintiff’s payment history.

The court held that the bank failed to establish that acceptance of the loan application was communicated to the borrower, a required element for contract formation.

Because the bank did not prove that a binding loan agreement existed, it had no legal right to withdraw the funds.

Summary judgment was granted requiring repayment of the withdrawn amount with interest, while additional damage claims were dismissed for lack of evidence.

The defendant mortgagee brought a motion to strike the plaintiffs’ trial record, set aside a registrar’s order that had reinstated the action, and reinstate a dismissal for delay under Rule 48.14 of the Rules of Civil Procedure.

The action concerned a mortgage dispute following default, enforcement proceedings, and a power of sale that generated surplus proceeds.

The court found that the statement of claim had largely been struck in earlier proceedings and had never been properly amended, meaning pleadings had not closed and the action could not be set down for trial.

The registrar’s dismissal for delay was therefore properly issued, and the subsequent setting aside of that dismissal without notice to the defendant was improper.

The court reinstated the dismissal, struck the trial record, removed the matter from the trial list, and awarded the defendant full indemnity costs pursuant to the mortgage terms.

On a summary judgment motion, the moving party sought equitable subrogation to obtain payment priority over second and third mortgagees after its funds had been used to discharge a first mortgage in a failed mortgage transaction.

The court applied the fairness-focused subrogation framework from appellate authority and held the record was sufficient to decide the issue without a trial under the summary judgment test.

The responding parties failed to adduce admissible evidence showing prejudice, detrimental reliance on registration priority, or a genuine issue requiring trial on alleged negligence and fairness.

The court concluded denial of subrogation would create unjust enrichment because the responding mortgagees would be in a better position than if the first mortgage had not been paid out.

Summary judgment was granted, subrogation relief was ordered, and costs were awarded to the successful moving party.

The self-represented defendant brought a motion for leave to appeal a procedural order that referred the matter to a case management master and adjourned the plaintiff's motion for summary judgment.

The defendant argued the referral constituted an unjust bifurcation of proceedings.

The Divisional Court dismissed the motion, finding no conflicting decisions, no reason to doubt the correctness of the discretionary order, and no issues of public importance under Rule 62.02(4) of the Rules of Civil Procedure.

The appellant appealed a summary judgment ordering him to pay $424,343.09 to the respondent bank.

The appeal was heard alongside another case involving the same appellant and raised the same substantive issue: the right to a hearing before a bilingual judge under section 126 of the Courts of Justice Act.

For the reasons given in the companion case, the Court of Appeal allowed the appeal, set aside the summary judgment, and remitted the original motion to a bilingual judge of the Superior Court.

The appellant appealed a motion judge's decision to strike out allegations of the tort of intimidation from its statement of claim for disclosing no reasonable cause of action.

The Court of Appeal dismissed the appeal, confirming that the tort of intimidation requires pleading not only a threat and intent to injure, but also that an act was taken or forgone as a result of the threat, causing damages.

As the appellant only pleaded a threat and intent to injure, the claim was properly struck without leave to amend.