Justin Fogarty

The plaintiff bank brought a motion for summary judgment to enforce personal guarantees signed by the defendants for loans made to a now-bankrupt corporate borrower.

Three of the defendants brought competing summary judgment motions seeking to discharge their guarantees, arguing they lacked independent legal advice and that the bank acted in a commercially unreasonable manner.

The court granted the plaintiff's motion and dismissed the defendants' motions, finding the guarantees valid and enforceable.

The court held that the lack of independent legal advice did not invalidate the guarantees absent unconscionability or misrepresentation, and the express terms of the guarantees precluded the commercially unreasonable realization defence.

The defendants' counterclaims were also dismissed.

The Receiver brought a motion seeking a determination on whether the estates of Redstone Investment Corporation (RIC), Redstone Capital Corporation (RCC), and 1710814 Ontario Inc. o/a Redstone Management Services (RMS) should be substantively consolidated.

RIC and RMS Investors argued for consolidation, while RCC Investors opposed it, citing a General Security Agreement (GSA) granting RCC priority over RIC's assets.

The court found the founder's (Mr. So) evidence unreliable and dismissed subjective investor state of mind as irrelevant to the consolidation analysis.

Applying the Northland factors, the court determined that the elements of consolidation were not present, as assets were segregable, financial statements were separate, and significant prejudice would result to RCC Investors if consolidation were ordered.

The motion for substantive consolidation was denied.

In the context of a receivership, representative counsel for the investors of Redstone Capital Corporation brought a motion for leave to deliver a new affidavit in an ongoing substantive consolidation hearing.

The hearing had already commenced and was adjourned pending this motion.

The court applied the test under Rule 39.02(2) of the Rules of Civil Procedure and found that the proposed evidence, which detailed an individual investor's motivation for investing, was not relevant to the test for substantive consolidation.

The motion for leave was dismissed.

The appellant, a court-appointed interim receiver, filed a proof of claim with the respondent trustee in bankruptcy for its fees and disbursements.

The trustee disallowed the claim, and the application judge dismissed the appellant's appeal of that disallowance.

The Court of Appeal dismissed the appeal, holding that an interim receiver cannot bypass the procedural requirement of passing its accounts by submitting unliquidated and non-approved fees to a trustee in the form of a proof of claim.

Following the dismissal of the Estate's appeal of the Receiver's disallowance of its proof of claim, the successful parties sought costs.

The court awarded costs to the Receiver on a substantial indemnity scale and to the Applicants on a partial indemnity scale.

The court also held the trustee of the Estate personally liable for the costs award, jointly and severally with the Estate, as the trustee initiated the unsuccessful appeal and there was no evidence of estate assets to satisfy the award.

The appellants appealed a summary judgment dismissing their claims against Royal Trust for breach of fiduciary duty and negligence regarding an option agreement.

The Court of Appeal upheld the motion judge's findings that the option agreement was unambiguous and had become null and void after the sale of the business.

The Court also agreed that Royal Trust acted prudently in selling the estate assets and that summary judgment was appropriate under the Hryniak framework.

In a complex receivership and bankruptcy-related proceeding involving a charitable foundation and associated corporations, the applicants brought a motion relating to governance and procedural matters in ongoing litigation.

The court addressed scheduling issues arising after a prior endorsement and dealt with a motion seeking removal of the remaining director of the foundation.

The court directed that the director indicate whether she would consent to removal and scheduled further steps if consent was not provided.

The court also rescheduled examinations and cross-examinations of two individuals in Buffalo, New York, set procedural timelines, and confirmed certain agreed limitations on director liability and additional costs awards.

In an inspection proceeding under the Ontario Business Corporations Act, the court addressed competing motions to approve professional fees incurred during an investigation of several corporations connected to development projects and investment solicitations.

The applicants and the court-appointed inspector sought approval of their accounts and an increase to the existing administrative charge securing payment of investigation costs.

The court assessed the inspector’s fees, legal fees, and applicants’ counsel fees under Rule 57, reducing certain amounts for duplication, clerical work, and excessive rates.

The administrative charge was increased from $200,000 to $399,398 to cover the approved costs.

While the respondents, including a controlling director, were held liable for the costs, the court declined to expand the administrative charge to include the director’s personal assets.

Investors sought the appointment of a receiver over several related corporations and continuation of restraining orders against individuals and entities associated with a charitable foundation alleged to have received investor funds.

The court reviewed the procedural history of inspection, receivership, and bankruptcy proceedings, including interim orders restraining dissipation of assets and permitting limited use of funds for legal and living expenses.

Evidence suggested that investor funds from Ontario real estate projects had been transferred to a charitable foundation and subsequently moved to the United States, including property transactions shortly before asset-freezing motions.

In the absence of opposing materials from several respondent corporations, the court confirmed the appointment of a receiver over certain corporations and extended the interim receivership and restraining orders affecting the foundation and related individuals.

In complex receivership and bankruptcy-related proceedings involving a charitable foundation and associated corporations, the court addressed scheduling and procedural issues arising after prior bankruptcy orders.

Motions concerning the removal of directors and issues involving a third-party entity were adjourned on consent to dates to be set by the trial coordinator.

Examinations of certain responding parties were cancelled due to immigration concerns relating to re-entry into the United States.

The court directed that the examinations proceed in Buffalo, New York under Ontario procedural law, ordered the responding parties to seek necessary U.S. visa permissions, and required advance funding of travel costs for opposing counsel and the receiver.

The endorsement also addressed potential venue issues in a related promissory note action.

Investors and related applicants brought proceedings seeking receivership and related relief against several corporations and individuals connected to a charitable foundation.

Evidence showed the foundation transferred a Florida property to its directors shortly after learning of a pending motion seeking to restrain asset dissipation and appoint a receiver.

The court continued interim restraining and receivership orders and granted a full receivership order against certain corporate respondents other than the foundation.

The issue of whether the property transfer constituted a void transfer under s. 95(2) of the Bankruptcy and Insolvency Act was adjourned to the scheduled bankruptcy trial.

The court also prohibited the release of funds held in a lawyer’s trust account and approved the receiver’s reports.

Investors brought an ex parte motion to amend a prior receivership order and expand the powers of an Interim Receiver in proceedings concerning corporations involved in Ontario real estate development projects.

Evidence from an appointed inspector indicated that investment funds raised for development projects had been diverted, including funds used to renovate a Florida property and transferred through corporate accounts controlled by the directing individual.

Additional evidence suggested asset transfers, movement of funds to foreign accounts, and restructuring of corporate holdings while insolvency proceedings were pending.

Relying on statutory authority under the Courts of Justice Act, the Ontario Business Corporations Act, the Canada Business Corporations Act, the Canada Not-for-profit Corporations Act, and the Bankruptcy and Insolvency Act, the court amended the pleadings to add additional respondents and expanded the interim receiver’s authority to protect assets pending further proceedings.

The applicants sought the appointment of an Inspector to investigate several corporations, including a not-for-profit foundation, under the OBCA and CNPCA.

The respondents moved to strike the appointment regarding the foundation, arguing the applicants lacked standing.

The court found the foundation was an affiliate of the OBCA corporations and that the applicants were debt obligation holders under the CNPCA, dismissing the motion to strike.

The media sought to lift a publication ban on the proceedings and the Inspector's reports.

The court lifted the ban on the proceedings but ordered the Inspector to edit its reports to remove conclusions of wrongdoing before they could be published.

Investors brought an application seeking the appointment and confirmation of an inspector to investigate several corporations involved in investment development projects.

An interim order had already appointed an inspector ex parte and required service of the application on the respondents.

At the return hearing, the inspector sought confirmation of the appointment, expanded investigative authority including examinations of additional individuals, and a non‑publication order for investigative reports.

The respondents requested an adjournment to file responding materials and raised jurisdictional issues concerning whether a charitable foundation governed by federal not‑for‑profit legislation could be subject to the inspection.

The court adjourned the application, continued most provisions of the interim order, authorized examinations of specified individuals, and granted a temporary non‑publication order regarding the inspector’s reports.

Investors and shareholders brought an ex parte application seeking the appointment of an inspector under s. 161 of the Ontario Business Corporations Act and s. 229 of the Canada Business Corporations Act to investigate the affairs of several corporations controlled by the principal respondent.

The applicants alleged that funds invested in real estate developments and investment pools were diverted among affiliated corporations and used for unrelated purposes, including renovations of a Florida property.

The court declined to grant an Anton Piller or preservation order due to insufficient evidence that documents would be destroyed or concealed.

However, the court found a prima facie case that corporate funds had been diverted and that the affairs of certain corporations may have been conducted in a manner oppressive or unfairly prejudicial to security holders.

An interim order was granted appointing an inspector to investigate specific corporations pending the return of the application.

The trustee in bankruptcy appealed the dismissal of its motion to examine the court-appointed interim receiver and to vary a sale approval and vesting order made four years prior.

The Court of Appeal dismissed the appeal, finding that the interim receiver had already provided all necessary information informally, and that the trustee was improperly attempting to use the variation provision to appeal the vesting order out of time.

The appellants sought to lift a stay of proceedings under the CCAA to terminate long-term gas supply contracts with the insolvent respondent.

They argued the contracts were 'eligible financial contracts' (EFCs) under s. 11.1(1) of the CCAA, which would exempt them from the stay.

The Court of Appeal upheld the motion judge's dismissal, finding the contracts lacked the hallmarks of financial risk management required to be EFCs.

Furthermore, the court held that even if the contracts were EFCs, the appellants could not terminate them because the contract terms only allowed termination for non-payment, and the respondent was not in default.

The moving parties sought an order to expedite their motion for leave to appeal a decision finding that certain gas purchase agreements were not 'eligible financial contracts' under the Companies' Creditors Arrangement Act.

The moving parties argued urgency because a U.S. bankruptcy court was scheduled to deal with all matters in the insolvency shortly.

The respondent opposed, arguing the issue was academic.

The Court of Appeal granted the motion to expedite, finding that if there was any benefit to the appeal, it would only assist if determined before the U.S. proceedings.

The appellants, various book publishers, appealed a decision determining that they did not have priority over the Bank of Nova Scotia regarding accounts receivable collected by the distributor, General Distribution Services Inc. (GDS).

The publishers argued that because they retained title to the books, they had priority.

The Court of Appeal dismissed the appeal, finding that the arrangement between the publishers and GDS did not require the segregation of funds, allowing GDS to mingle the proceeds with its own money.

Consequently, the relationship was one of debtor and creditor, not trustee and beneficiary, and the publishers did not hold a priority interest.