Geoffrey B. Morawetz

A secured creditor applied for the appointment of a receiver over a group of integrated technology companies operating in Canada and the United States following defaults under a loan agreement and the expiry of a forbearance arrangement.

The creditor also sought approval of a stalking horse asset purchase agreement and sales process.

The court found the debtors insolvent and concluded that appointing a receiver under s. 243 of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act was just and convenient, particularly to facilitate a cross-border restructuring and prevent fragmented enforcement actions by creditors.

Applying the principles governing receiver sales from Royal Bank of Canada v. Soundair Corporation, the court approved the stalking horse process and sealed confidential commercial appendices containing sensitive information.

Orders appointing the receiver, approving the sales process, and sealing the confidential materials were granted.

Following dismissal of a motion brought by a claimant in insolvency proceedings, the joint official liquidators sought costs on a substantial‑indemnity basis.

The court considered the principles governing costs under Rule 57 and the Court of Appeal’s guidance that costs awards should be fair and reasonable rather than reflective of full indemnity.

Although the motion had been unsuccessful and described by the liquidators as frivolous, the court found the surrounding proceedings involved confusion and unresolved issues concerning entitlement to assets in multiple jurisdictions.

The court therefore declined to award substantial‑indemnity costs and instead ordered partial‑indemnity costs.

The amount claimed was reduced due to the use of two lawyers for a straightforward motion.

Following a successful motion by the moving party in a proceeding under the Business Corporations Act (Ontario), the court addressed the appropriate quantum and scale of costs.

The successful party sought substantial indemnity costs.

The court held that substantial indemnity costs are exceptional and reserved for rare cases involving outrageous litigation conduct, which was not established.

Applying Rule 57 of the Rules of Civil Procedure and the fairness principles articulated by the Court of Appeal, the court reduced the requested amount due to duplication of effort and counsel learning time following a change of lawyers.

In CCAA proceedings, the court issued a supplementary costs endorsement following an earlier costs decision.

The issue concerned whether the full amount of a law firm disbursement account should be added to the cost award.

After reviewing detailed particulars, the court found the discounted account represented fair value for services rendered and that the disbursements were reasonable.

The court approved inclusion of the full amount of the account as a disbursement and revised the total costs award accordingly.

Honeywell brought a motion in Comstock's CCAA proceedings seeking an order directing Comstock to disclaim a subcontract or, alternatively, lifting the stay of proceedings to allow Honeywell to terminate the subcontract.

Comstock had ceased performance on the construction project and stopped paying Honeywell.

The court held it could not force a disclaimer under section 32 of the CCAA without the Monitor's approval.

However, because Comstock was no longer actively involved in the project and it would not form part of the restructuring, the court lifted the stay of proceedings to allow Honeywell to pursue its options.

In CCAA proceedings involving the Nortel group, the joint administrators of certain European, Middle Eastern, and African debtor entities brought a motion under Rule 30.10 of the Rules of Civil Procedure seeking production of documents from a non‑party accounting firm relating to transfer pricing arrangements and intellectual property development.

The court reviewed the governing principles for non‑party production, including the requirement that such orders be granted only in exceptional circumstances and where it would be unfair to require the moving party to proceed to trial without the documents.

The court found that many of the requested documents had already been communicated to the client and were likely produced through existing discovery processes.

For documents not communicated to the client, the moving party failed to demonstrate their importance or any evidentiary gap justifying exceptional production.

The court concluded that proceeding to trial without the requested materials would not be unfair and dismissed the motion with costs.

The debtor company in CCAA proceedings brought a motion seeking a declaration that two Occupational Health and Safety Act prosecutions commenced by the provincial labour ministry were stayed by the CCAA initial order, or alternatively that the proceedings should be stayed under s. 11.1(4) of the Companies’ Creditors Arrangement Act.

The debtor argued that any conviction would result only in monetary fines, rendering the ministry a creditor whose claim should be addressed within the insolvency process.

The court held that regulatory prosecutions are not equivalent to creditor enforcement where no monetary obligation has yet crystallized and the regulator is acting in a prosecutorial capacity.

Applying the Supreme Court’s test for regulatory claims under insolvency legislation, the court concluded that the ministry was not acting as a creditor and that the proceedings remained regulatory in nature.

The motion to declare the prosecutions stayed was therefore dismissed.

The court addressed three motions in a proceeding involving the sale of multi-unit residential buildings by a court-appointed Sales Officer.

The court approved the Sales Officer's activities, receipts, and post-appointment fees, but directed that pre-appointment fees be allocated between the Sales Officer mandate and the applicants who initially sought a broader receivership.

The applicants' motions for production of accounting records and for independent oversight of the interim distribution were largely deferred to a case conference, though the court ordered a $7,500,000 holdback from the distribution to ensure liquidity for future adjustments.

The applicant sought declarations relating to a $2 million bank draft that had been lost after issuance.

It requested that the draft be declared void and that the issuing bank return the funds without requiring an indemnity.

The respondent bank argued that the draft created ongoing risk because it remained a negotiable instrument and could potentially be presented through fraud, mistake, or negligence.

The court held that the transaction should remain risk‑free to the issuing bank and that commercial certainty favours requiring indemnity and security before issuing a replacement instrument.

The application was dismissed, with the bank remaining willing to issue a duplicate draft upon provision of adequate indemnity and security under the Bills of Exchange Act.

A respondent brought a motion to stay or consolidate an application seeking enforcement of a “clawback” provision in a unanimous shareholders’ agreement pending determination of several related proceedings, including a wrongful dismissal action and oppression claims.

The court considered the principles under the Courts of Justice Act and Rule 6.01 of the Rules of Civil Procedure governing consolidation and avoidance of multiplicity of proceedings.

The court found that the issues raised in the clawback application were inextricably intertwined with the issues in the related proceedings, including allegations of oppression, breach of the shareholders’ agreement, and the consequences of changes in employment status.

Separate adjudication would risk duplication of evidence, inconsistent findings, and inefficient use of judicial resources.

The motion was granted and the application was ordered to be heard together with the related proceedings.

The applicant sought a determination that amendments to the Planning Act enacted through the Green Energy and Green Economy Act, 2009 exempted a temporary turbine component storage site from municipal planning controls.

The renewable energy developer had obtained a Renewable Energy Approval from the Ministry of the Environment for a wind power project and leased nearby land zoned for aggregate extraction to store turbine components during construction.

The municipality argued that the temporary storage property was not part of a renewable energy project and therefore required zoning and official plan amendments.

The court interpreted the statutory definitions of “renewable energy undertaking” and “renewable energy project” broadly and concluded that temporary component storage integral to construction formed part of the renewable energy undertaking.

As a result, municipal official plans and zoning bylaws did not apply under s. 62.0.2 of the Planning Act.

Former directors and officers of an insolvent corporation sought an order requiring that an environmental remediation claim filed by the provincial environment ministry be adjudicated within ongoing insolvency proceedings under the Companies’ Creditors Arrangement Act.

They also sought to stay an appeal proceeding before the Environmental Review Tribunal concerning a director’s order requiring remediation of a contaminated site.

The court held that the statutory scheme under the Environmental Protection Act assigns jurisdiction over appeals of director’s environmental orders to the Environmental Review Tribunal.

Given that the insolvency restructuring had effectively concluded and no plan of arrangement would compromise claims against the directors and officers, there was no basis for the insolvency court to assume jurisdiction over the environmental order appeal.

The court rejected arguments based on federal paramountcy and interjurisdictional immunity.

The motion was dismissed and the matter left to the Environmental Review Tribunal.

The applicants sought continuation of insolvency proceedings from a Notice of Intention to make a proposal under the Bankruptcy and Insolvency Act into proceedings under the Companies’ Creditors Arrangement Act.

The court considered whether the statutory requirements for continuation were satisfied and whether interim restructuring relief, including DIP financing, priority charges, and a stay of proceedings, should be granted.

The court found the debtor companies were insolvent and that continuation under the CCAA would stabilize operations, preserve employment, and maximize recovery for stakeholders.

The court approved DIP financing with a super‑priority charge, granted administration and director charges, authorized payment of critical suppliers, and ordered substituted service and sealing of confidential financial information.

The applicant debtor sought an urgent order appointing an interim receiver under s. 47.1 of the Bankruptcy and Insolvency Act during a Notice of Intention to Make a Proposal proceeding.

The motion requested authority for the interim receiver to borrow up to $1.5 million on a super‑priority basis to fund payroll and contractor obligations in order to maintain business operations.

The court held that the appointment was necessary to protect the debtor’s estate and the interests of creditors.

It further concluded that a super‑priority borrowing charge was appropriate despite the absence of explicit statutory authority for such financing in relation to interim receivers, relying on the court’s inherent jurisdiction.

The charges were granted with priority over construction lien and trust claims to avoid operational shutdown and preserve restructuring prospects.

A lender brought a motion seeking judgment under loan guarantees, possession of mortgaged property, and leave to issue a writ of possession following default under a standstill agreement and related loan documents.

The respondents challenged the procedure, service of demand, jurisdiction of the Commercial List, and compliance with notice requirements under the Mortgages Act.

The court found no material facts in dispute and held that proceeding by application was appropriate under Rule 14.05(3)(h) of the Rules of Civil Procedure.

The court determined that the guarantees were enforceable, notice requirements had been satisfied, and the applicant was entitled to possession and related remedies.

Judgment was granted for the indebtedness together with possession, a writ of possession, and costs.

The trustee in bankruptcy of two related entities sought an order authorizing procedural and substantive consolidation of their bankruptcy estates.

The entities consisted of a general partner corporation and a limited partnership that operated within a broader group providing air medical transport services in Ontario.

The court considered the relationship between the entities under the Bankruptcy and Insolvency Act and the Limited Partnerships Act, noting that the general partner’s unlimited liability and s. 85(1) of the Bankruptcy and Insolvency Act resulted in the partnership’s assets vesting in the trustee upon the general partner’s bankruptcy.

The court found that consolidation would improve administrative efficiency, avoid duplication in estate administration, and prevent unnecessary disputes regarding creditor claims and allocation of professional fees.

Concluding that no creditors would be prejudiced, the court granted both substantive and procedural consolidation of the estates.

The defendant brought a motion seeking full-indemnity costs after the plaintiff receiver discontinued an action against him shortly before trial.

The defendant argued that the discontinuance amounted to complete success and that the claim against him had always lacked merit.

The court applied Rule 23.05 and Rule 57.01 of the Rules of Civil Procedure and considered whether the plaintiff had a bona fide cause of action and was justified in commencing and pursuing the proceeding.

The court found that the receiver had reasonable grounds to bring and continue the action based on evidence of a fraudulent financing scheme and tracing of funds connected to the purchase of real property.

Given that the action was justified and the discontinuance resulted from economic considerations following settlement relating to the key asset, the court declined to award costs.

The applicants moved for an order regarding post-closing issues following a court-approved sale of properties.

The respondents sought payout on two mortgages, including compensation for future interest loss, as the mortgages were vested off title prior to maturity.

The applicants objected, arguing the mortgages were self-dealing and should not include an unbargained pre-payment penalty.

The court found that the mortgages did not contain a pre-payment privilege and that the respondents did not breach any fiduciary duty in the refinancing.

The court ruled in favour of the respondents, ordering that they be compensated for future interest loss.

The applicants moved for an order regarding post-closing issues following a court-approved sale of properties.

The respondents sought a payout on two mortgages that included a prepayment penalty for future interest loss.

The applicants argued the mortgages were self-dealing and should not include a prepayment penalty, as the original CMHC mortgages did not.

The court found that the mortgages did not contain a prepayment privilege and that the respondents were entitled to compensation for the loss resulting from the early vesting off title of the mortgages.

The court ruled in favour of the respondents.

In CCAA proceedings involving several related aerospace entities, the court considered a motion by the court-appointed monitor seeking approval of an adjudication process and determinations regarding claims asserted against a directors’ and officers’ charge.

The Ministry of the Environment filed claims for environmental remediation costs arising from pre‑filing contamination and anticipated a future director’s order against former directors and officers.

A law firm representing certain directors and officers also filed contingent contribution and indemnity claims.

The court held that the environmental claims and related indemnity claims did not constitute liabilities incurred by directors and officers after the commencement of the CCAA proceedings within the meaning of s. 11.51 of the Companies’ Creditors Arrangement Act.

Allowing such claims to access the directors’ charge would improperly alter creditor priorities and indirectly elevate unsecured environmental claims over a secured lender.