Gary D. Graham

The plaintiffs, The Calbot Group Ltd. and 2649106 Ontario Inc. cob Synergy Capital, brought two motions: a Preservation Motion seeking to secure $5 million from land sale proceeds and a Jurisdiction Motion against certain foreign defendants.

The court first addressed the Jurisdiction Motion, finding that the plaintiffs failed to establish a real and substantial connection between the foreign defendants (NSR Canada Development Limited, New Silk Road Culturaltainment Ltd., and Sha Huang aka Sam Huang) and Ontario, as the alleged contract (MOU or verbal agreement) was not genuine and the corporate veil could not be pierced.

Consequently, the action against these foreign defendants and Mr. Huang was stayed.

The Preservation Motion, seeking relief under Rule 45.02, a Certificate of Pending Litigation (CPL), or Mareva injunction, was also dismissed.

The court found that the plaintiffs' claim was for damages, not a specific fund, and they failed to demonstrate a serious prospect of success or meet the stringent requirements for such remedies.

Costs were awarded to the successful defendants.

Whirlpool appealed a decision dismissing its application for a finding of conflict of interest.

Whirlpool had sold contaminated industrial land to Chavila and Outrigger (affiliates of 863) at a reduced price in exchange for an indemnity agreement obligating them to defend Whirlpool against any claims arising from the property's condition.

When CP and Oxford brought contribution and indemnity claims against Whirlpool, Chavila and Outrigger appointed counsel to defend Whirlpool.

Whirlpool argued this created a conflict of interest because the appointed counsel would be taking instructions from entities affiliated with 863, the plaintiff in the main action against CP and Oxford, and would be unable to raise a limitation defence that would benefit Whirlpool but harm 863.

The majority found no conflict existed because Whirlpool's immediate interests were not directly adverse to those of Chavila and Outrigger, and the indemnity agreement contemplated this scenario.

The dissent argued a patent conflict existed and that Whirlpool was entitled to independent counsel free of conflicts.