Geoffrey B. Morawetz

The court addressed three issues regarding the distribution of proceeds from the sale of properties by a court-appointed Sales Officer.

The court approved the Sales Officer's recommendation to reduce the general reserve and distribute funds following the closing of two properties.

The court also directed that future costs of the Sales Officer be allocated to the sole remaining property.

Finally, the court declined to eliminate or reduce a $7.5 million Settlement Liquidity Holdback, maintaining it to ensure liquidity for accounting adjustments and to incentivize the parties to advance the long-standing family litigation.

Applicants sought a preliminary order under s. 192 of the Canada Business Corporations Act to implement a proposed corporate arrangement restructuring significant unsecured note debt.

The restructuring contemplated an amalgamation followed by an exchange of unsecured notes for a combination of cash and new secured notes, forming part of a broader recapitalization of the applicants’ financing structure.

The court considered whether the proposed arrangement met the statutory requirements under the CBCA, including solvency, impracticability of implementing the restructuring through other statutory mechanisms, and good faith.

The court also considered whether it had authority to grant interim relief including a stay of enforcement rights pending negotiation and implementation of the arrangement.

Finding the statutory requirements met and the application brought in good faith, the court granted the requested preliminary order and authorized a temporary stay to maintain the status quo while stakeholders negotiated the restructuring.

The defendants brought a motion seeking reconsideration or rehearing of reasons issued by a motions judge allowing an appeal from a Master's report in a construction lien dispute.

They relied on Rule 59.06 of the Rules of Civil Procedure and s. 123(4) of the Courts of Justice Act, arguing the reasons were incomplete and failed to address several issues before the court.

The court held that the earlier decision constituted a valid decision under the Courts of Justice Act and that s. 123 applies only where a judge is unable to render a decision, not where a party disputes the adequacy of the reasons.

Any alleged legal error was properly the subject of an appeal rather than reconsideration.

The motion was dismissed and the plaintiff was awarded costs of $45,000 inclusive of disbursements and HST.

In CCAA proceedings involving a debtor company whose assets had already been sold and where no plan of arrangement was contemplated, the representative plaintiff in a proposed securities class action moved to lift the stay of proceedings and to amend the claims procedure order after failing to file a proof of claim by the claims bar date.

The directors argued that the claims procedure barred the class action against them and extinguished related claims, including access to insurance proceeds.

The court held that both the stay and the claims bar order are discretionary tools intended to facilitate restructuring or liquidation objectives under the CCAA.

Because the restructuring process had effectively concluded and no plan was forthcoming, using the claims bar order to extinguish the class action would serve no functional purpose under the CCAA.

The court exercised its discretion to lift the stay and modify the claims procedure order to permit the plaintiff to proceed with the class action.

The Minister of Community Safety and Correctional Services applied for judicial review of a decision by the Information and Privacy Commissioner (IPC) ordering the disclosure of dates when DNA samples were collected and reported.

The Divisional Court found that the IPC breached the duty of procedural fairness by failing to give notice of the appeal to the victims or representatives of deceased victims, whose privacy rights were engaged.

The court allowed the application and referred the matter back to the IPC for reconsideration on notice to the affected parties, to allow for a complete balancing of interests.

The Applicants, operating a network of alternative financial services branches across Canada, sought initial protection under the Companies' Creditors Arrangement Act (CCAA) due to a severe liquidity crisis and regulatory challenges.

The court found the Applicants to be insolvent and granted a stay of proceedings to provide breathing space for restructuring.

The court confirmed its jurisdiction to hear the matter in Ontario, as the Applicants' chief place of business is located there.

However, the court deferred the request for a DIP financing charge to allow other stakeholders time to respond.

Companies applied for initial protection under the Companies’ Creditors Arrangement Act in respect of insolvency arising from liquidity issues and substantial unsecured investor debt.

Evidence showed significant unpaid promissory notes and bonds, loan losses, and transfers of company funds to a related management entity.

The court applied the insolvency tests drawn from the Bankruptcy and Insolvency Act and concluded the companies were debtor companies under the CCAA.

A stay of proceedings was granted to permit restructuring or realization of the lending portfolio.

The court also approved an administration charge and a directors’ and officers’ charge to support the restructuring process.

Following earlier motions seeking dismissal of two civil actions for delay, the court had dismissed the motions to dismiss but granted alternative relief compelling compliance with prior court orders, including outstanding undertakings.

The defendants and third party sought costs.

The court found that the plaintiffs had violated multiple court orders and allowed the actions to stagnate for several years, making the motion justified.

Applying Rule 57 and the fairness principles from Boucher, the court held that although the moving parties achieved only partial success, the plaintiffs’ conduct warranted a costs award.

Reduced costs were therefore ordered against the plaintiffs jointly and severally.

Following an appellate ruling that set aside a trial decision and declared a trust declaration void, the court was asked to determine costs after the original trial judge retired.

The successful plaintiff sought substantial indemnity costs exceeding $200,000, relying on findings that the defendant had engaged in fraudulent misrepresentations in connection with a loan transaction and a trust declaration.

The defendants argued that costs should be deferred pending the disposition of a counterclaim and challenged the scale and scope of the claimed costs.

The court held that substantial indemnity costs were justified given the findings of dishonest conduct but deferred determination of most pre‑trial costs because the majority related to the outstanding counterclaim.

The court fixed immediate costs of $20,500 for trial attendance and preparation of cost submissions, payable jointly and severally by the defendants.

The plaintiffs brought an urgent motion for interim and interlocutory injunctive relief to restrain the defendants from completing a share sale pursuant to a unanimous shareholders agreement in the context of a shareholder dispute.

The plaintiffs alleged improper termination of a director and employment relationship and sought to preserve the status quo pending trial.

Applying the test for interlocutory injunctions from RJR‑MacDonald v. Canada (AG), the court accepted that a serious issue to be tried existed but held that the plaintiffs failed to demonstrate irreparable harm.

The court found that the remedies sought, including share valuation and damages, could be adequately compensated monetarily at trial.

As a result, the motion for injunctive relief was dismissed and costs were awarded to the defendants.

In insolvency proceedings under the Bankruptcy and Insolvency Act, the debtor sought approval of a stalking horse sale process, related charges, and an extension to file a proposal.

The court raised concerns that the originally proposed break fee and overbid increments would discourage competing bids.

After revision reducing the break fee and overbid requirements, the court found the revised structure reasonable and approved the stalking horse process, the administration and D&O charges, and the stalking horse charge.

The court also granted a sealing order over commercially sensitive materials applying the Sierra Club test and extended the time for the debtor to file its proposal.

The applicant sought an order directing an assessment of the respondent solicitor’s accounts under the Solicitors Act more than 12 months after the accounts were delivered and paid in full.

The court considered whether “special circumstances” existed to justify permitting a late assessment.

Evidence showed the applicant had signed a retainer agreement setting an hourly rate, received detailed accounts, and paid them without objection at the time.

The applicant failed to identify specific overcharging or explain the delay in seeking an assessment.

The court held that the applicant had not met the burden of establishing special circumstances and dismissed the application with costs.

Application under the Variation of Trusts Act seeking court approval of a variation to a family trust established in 1992.

The proposed variation would permit reorganization and distribution of trust assets to defer a significant capital gains tax liability arising from the Income Tax Act 21‑year deemed disposition rule.

All adult beneficiaries and trustees consented, and the Children’s Lawyer did not oppose the variation subject to a payment protecting contingent interests of minor and unborn beneficiaries.

The court applied the test from Finnell v. Schumacher Estate and related authorities, assessing whether the variation preserved the settlor’s intention and conferred a benefit on minor, unborn, unascertained, and incapable beneficiaries.

The court concluded that the variation preserved trust capital, benefited protected beneficiaries, and would be accepted by a prudent adult acting in self‑interest.

Following the granting of summary judgment dismissing the plaintiff’s action, the court determined the appropriate costs award.

The defendant sought substantial-indemnity costs, arguing that the plaintiff advanced serious but unsubstantiated allegations of theft and misconduct and engaged in conduct that increased litigation costs through numerous emails containing outlandish claims.

The court held that the seriousness and lack of foundation for the allegations justified a substantial‑indemnity approach.

Applying the principles in Boucher v. Public Accountants Council for the Province of Ontario and the factors under Rule 57, the court reduced the claimed amount and awarded a fair and reasonable lump-sum costs award.

The applicant bank sought the appointment of a receiver over two corporate debtors and two residential properties owned by the individual guarantor following defaults on credit facilities.

The debtors opposed the appointment, arguing there was no urgency and that the guarantor was best positioned to sell the properties.

The court found it just and convenient to appoint a receiver over the corporate entities and a vacant residential property due to the ongoing erosion of security and the guarantor's failure to secure refinancing or a sale over two years.

However, the court declined to appoint a receiver over the guarantor's matrimonial home, finding it unnecessarily invasive and noting the bank could pursue other contractual remedies.

The Receiver brought an unopposed motion seeking approval of three asset purchase agreements to sell substantially all of the debtors' assets as a going concern in a 'quick flip' transaction.

The court applied the Soundair principles, finding that the sales process was fair, the market was sufficiently canvassed, and the transaction was the best available option to maximize recovery for the senior secured creditor.

The court also approved the use of a credit bid for partial payment and granted a sealing order for the purchase agreements and valuation reports to protect sensitive commercial information.

Following settlement of the substantive estate dispute, the parties disagreed over the language of a release, resulting in a motion to resolve the wording and determine costs.

The court found the dispute over wording insignificant and concluded the motion was unnecessary and could have been avoided through cooperation between counsel.

The revised release ultimately satisfied both parties.

Applying Rule 57.01 of the Rules of Civil Procedure and the principles governing costs, the court held the responding party's lack of responsiveness warranted cost consequences.

Partial indemnity costs were awarded to the moving parties but reduced to reflect the straightforward nature of the motion.

The defendants moved under Rules 21.01 and 25.11 of the Rules of Civil Procedure to strike portions of a statement of claim alleging participation in a multi‑million dollar investment fraud and civil conspiracy.

They argued the conspiracy allegations were inadequately pleaded and that a paragraph describing the scheme as a “typical bridge loan fraud” known to law enforcement was prejudicial and incapable of being pleaded back to.

The court held that the pleading adequately set out the elements of civil conspiracy, including the alleged agreement, overt acts, unlawful conduct, and resulting damages, and that conspiracy allegations should not be held to an extraordinary level of particularization at early stages.

The impugned paragraph was also relevant to the defendants’ alleged knowledge of the fraudulent scheme and was not vexatious or unduly prejudicial.

The motion to strike was dismissed with costs.

The applicant sought an order appointing Grant Thornton Limited as receiver of the respondents pursuant to section 243 of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act.

The respondents, operating a travel agency business, were insolvent and in default of their credit facilities.

The application was unopposed.

The court found it just and convenient to appoint the receiver to facilitate a going concern sale of the business, preserving consumer confidence and employee jobs.

In proceedings under the Companies’ Creditors Arrangement Act, the court addressed scheduling issues for a complex multi‑party trial involving the allocation of assets among creditor groups.

The parties proposed deferring the trial from April 1, 2014 to April 28, 2014, but disagreement remained regarding whether the later date would be feasible.

The court concluded that maintaining the earlier date risked a chaotic trial and that a rolling start date would create further uncertainty.

To ensure certainty and orderly preparation, the court rescheduled the trial to begin May 12, 2014 for 20 days and set case management and trial management conferences.

The court also required all parties to provide comprehensive fee and disbursement summaries to monitor escalating litigation costs.