Alan B. Merskey

The Receiver of a joint venture condominium project brought a motion within the receivership proceeding seeking judgment against the developer and its principal for over $1.5 million.

The claims arose from alleged inflated labour charges under a Construction Management Agreement and unearned fees under a Development Management Agreement.

The court held that the claims were properly brought within the receivership proceeding.

However, the claim for inflated labour charges was dismissed as statute-barred, having been discovered more than two years before the motion was commenced.

The court declined to grant immediate judgment on the unearned fees claim, directing that the developer's defence of set-off be determined following documentary and oral discovery.

The appellant appealed the dismissal of its application to set aside an arbitral award arising from a post-closing earnout dispute in an international commercial arbitration.

It argued that the application judge improperly assessed alleged breaches of natural justice on a reduced procedural fairness standard because the arbitrator was an accountant rather than a legally trained adjudicator.

The Court of Appeal held that the application judge correctly applied the governing principles, made factual findings open on the record, and repeatedly grounded the analysis in the parties' agreed arbitral process.

The appeal was dismissed, and the respondents were awarded all-inclusive partial indemnity costs.

The appellant challenged a bankruptcy order and a related post-judgment Mareva order granted at the request of a court-appointed monitor holding a substantial judgment debt.

The court held the bankruptcy order was appealable as of right under s. 193(c) of the Bankruptcy and Insolvency Act and treated the Mareva order as a final order appealable under s. 6(1)(b) of the Courts of Justice Act in the circumstances.

On the merits, the court found no reversible legal or discretionary error in rejecting objections to the monitor’s authority, rejecting allegations of collateral purpose, and refusing dismissal or adjournment under ss. 43(7) and 43(10) of the Bankruptcy and Insolvency Act.

The court also upheld continuation of the Mareva relief as complementary to bankruptcy administration and dismissed the appeal with agreed costs.

The appellant challenged orders in bankruptcy proceedings including standing rulings, estate consolidation, and treatment of approved claims.

The court found no right of appeal under s. 193(a) or (c) of the BIA, declined leave under s. 193(e), and held the appellant had not timely invoked available statutory claim-challenge mechanisms.

The appeal was dismissed.

The appellant purchased a condominium unit under an agreement of purchase and sale in a building that subsequently entered receivership.

The receiver sought to disclaim the purchase agreement to maximize asset recovery.

The appellant opposed the disclaimer, relying on a supplementary agreement with the developer and its president.

The motion judge found the supplementary agreement unenforceable due to an entire agreement clause in the subsequent purchase agreement and granted the disclaimer order.

The appellant appealed on three grounds: that the motion judge failed to apply the Tercon test for entire agreement clauses, failed to consider public policy, and erred in applying the disclaimer test regarding equities.

The Court of Appeal dismissed the appeal, finding the motion judge properly conducted the Tercon analysis, identified no overriding policy reason to override the contractual terms, and correctly applied the disclaimer test by considering all circumstances and concluding the equities did not support preferring the appellant's claim over other creditors.

The plaintiff, Oslyn Lewis, brought an action against The Hertz Corporation, Hertz Canada Limited, Hertz Canada Vehicles Partnership, and TD Canada Trust after a rental car was seized with his belongings inside.

The court granted summary judgment in favour of Hertz, finding that the parties had previously settled the dispute and Lewis had signed a release covering all claims.

The court found no evidence of breach of settlement or prejudice to the plaintiff, and that all claims—including those about being banned and alleged false statements to TD—were covered by the release.

The court granted the Monitor's application to assign John Aquino into bankruptcy and continued the Mareva order against him.

The decision addresses the requirements for a bankruptcy order under the Bankruptcy and Insolvency Act, the discretion to dismiss or stay such an application, and the standards for continuing a Mareva injunction post-judgment.

The court found that John Aquino had committed an act of bankruptcy, was unable to pay his debts, and that there was no bona fide dispute with the Monitor.

The court also rejected arguments that the application was brought for a collateral purpose and found the continuation of the Mareva order appropriate.

The applicant, Waygar Capital Inc., as agent for Ninepoint Canadian Senior Debt Master Fund LP, sought the appointment of a receiver over the property of the respondents, El Mocambo Entertainment Inc. and related companies, under section 243 of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act.

The court reviewed the legal test and relevant factors for appointing a receiver, including the rights of secured creditors and the conduct of the parties.

Although the respondents did not oppose the application, the court, with the parties' agreement, adjourned the receivership to allow the proposed receiver to act as monitor for a short interim period to explore the possibility of maintaining the business as a going concern.

The application may be brought back on an urgent basis if necessary.

The applicants, a group of real estate development entities (Ashcroft Homes Group), sought to extend an initial Companies' Creditors Arrangement Act (CCAA) stay of proceedings to facilitate a restructuring.

Secured creditors, representing 84% of the total secured debt, opposed the extension and instead moved for the appointment of interim receivers.

The court found the applicants' restructuring plan lacked substance, noted a significant loss of confidence in management due to past conduct and outdated property valuations, and determined that the collaborative receivership approach proposed by the majority of secured creditors was more appropriate.

The motion to extend the CCAA stay was dismissed, and the motions for the appointment of receivers were granted.

The applicant, Johnson Bros.

Corporation, sought leave to appeal from a partial arbitration award and a final arbitration award concerning costs and interest.

The respondent, Soletanche Bachy Canada Inc., opposed the application.

The court dismissed the application, finding that the arbitration agreement, which incorporated CCDC 40 rules and stipulated that disputes would be "finally resolved" and awards "final and binding" precluded any right to appeal.

The court further held that even if a right to appeal existed, the proposed questions of law regarding the reversal of onus, weather-related damages, and COVID-19 impacts were either not pure questions of law or lacked sufficient evidentiary basis for appellate review.

The appellants, including the directing mind of two family-owned construction companies, participated in a false invoicing scheme that drained tens of millions of dollars from the debtor companies prior to insolvency.

The trustee in bankruptcy and monitor applied under s. 96(1)(b)(ii)(B) of the Bankruptcy and Insolvency Act to recover the false invoice payments as transfers at undervalue on the basis that the debtor companies intended to defraud, defeat, or delay creditors.

The Supreme Court held that insolvency is not a prerequisite to establishing fraudulent intent under s. 96(1)(b)(ii)(B), and that the directing mind's fraudulent intent was properly attributed to the debtor corporations.

The Court confirmed that the corporate attribution doctrine must be applied purposively, contextually, and pragmatically, and that the fraud and no benefit exceptions to corporate attribution do not apply in the context of s. 96 of the BIA because applying them would undermine the creditor protection purpose of that provision.

Appeal dismissed.

In a Companies’ Creditors Arrangement Act (CCAA) proceeding, the DIP Lender, Cortland Credit Lending Corporation, sought a case management order to schedule a threshold motion.

The motion aimed to determine the legal priority of Cortland's claims over those of Final Bell Corp., which had amended its claim to seek a constructive trust that could prime the DIP charge.

The CCAA Applicants supported the motion, arguing it would avoid further delays to the Stalking Horse Purchase Agreement approval.

Final Bell Corp. opposed, viewing it as an unfair mid-trial motion for partial summary judgment.

The court, exercising its broad discretion as the supervising CCAA court, granted the motion, directing that the threshold issue of legal priority be determined first to minimize costs and maximize efficiency, finding no prejudice to Final Bell Corp.

In Companies’ Creditors Arrangement Act (CCAA) proceedings, LoyaltyOne, Co. and its Monitor sought a declaration that a Tax Matters Agreement (TMA) was not binding or was void as a transfer at undervalue (TUV), and sought to disclaim the TMA to secure a $96 million tax refund.

Bread Financial Holdings, Inc. (formerly ADS) cross-moved to set aside the disclaimer, asserting its entitlement to the refund under the TMA.

The court ruled that LoyaltyOne was bound by the TMA, the TMA was not void as a TUV, and the disclaimer was not approved.

The court found it premature to determine the specific nature of Bread's rights to the refund.

The respondents brought a motion to stay an application by the applicant to set aside an arbitral award.

The core dispute revolved around whether a forum selection clause in an asset purchase agreement, which designated New York courts, applied to the application to set aside the award, or if Ontario's International Commercial Arbitration Act and the Model Law governed due to the arbitration's "place" being Toronto.

The court found that the arbitration procedure was subject to an exception in the forum selection clause and that Toronto was the agreed or deemed "place" of arbitration.

Consequently, Ontario law and jurisdiction applied for setting aside the award.

The motion to stay was dismissed.

The respondent sought costs on a partial indemnity scale after successfully defending an application to wind up the company.

The applicant argued for no costs or reduced costs, citing the respondent's failure to upload a Bill of Costs in advance and claiming the fees were excessive.

The court found the respondent's claimed costs to be fair and reasonable, noting the application's importance and moderate complexity, and that the applicant's own costs were comparable.

The court fixed costs payable by the applicant to the respondent in the amount of $142,890.01.

This motion concerned the priority of new home purchasers' deposits in the bankruptcy of residential real estate developers (Stateview entities).

Tarion Warranty Corporation sought declaratory relief, arguing that the deposits were subject to express or constructive trusts due to unjust enrichment, which would elevate purchasers' claims.

The court dismissed Tarion's motion, finding that purchasers' agreements contained subordination clauses giving priority to secured lenders.

The court also determined that while express trusts existed for some purchasers with early termination provisions, these were not statutory deemed trusts.

Furthermore, there was no unjust enrichment for purchasers without express trusts, as the operation of the Bankruptcy and Insolvency Act constituted a juristic reason.

The court declined to impose a remedial constructive trust, emphasizing the high bar for such remedies in insolvency proceedings and the lack of a close causal connection between the deposits and the real property proceeds.

In the receivership of the Stateview entities, Tarion Warranty Corporation brought a motion seeking declaratory relief on behalf of purchasers who had paid deposits for pre-construction homes.

Tarion argued that the deposits were subject to an express or constructive trust and sought a remedial constructive trust to elevate the purchasers' priority.

The court dismissed the motion, finding that the purchasers had contractually subordinated their interests to secured lenders.

While an express trust existed for contracts with early termination provisions, the funds were not segregated.

The court declined to impose a remedial constructive trust, as doing so would improperly upset the priority scheme under the Bankruptcy and Insolvency Act.

Tacora Resources Inc. sought an amended and restated initial order (ARIO) and a solicitation order under the Companies’ Creditors Arrangement Act (CCAA) to facilitate its restructuring, including approval for a $75 million debtor-in-possession (DIP) financing facility from Cargill.

An ad hoc group of senior noteholders (AHG) opposed the Cargill DIP facility, alleging a flawed process and material prejudice, and brought a cross-motion for approval of their own competing DIP proposal.

The court found that Tacora's Board exercised reasonable business judgment in selecting the Cargill DIP facility, which was financially superior and less prejudicial to creditors overall than the AHG's proposal.

The court dismissed the AHG's cross-motion, finding no evidence of improper conduct by Cargill or the Board, and granted Tacora's requested ARIO and Solicitation Order, including approval of the Cargill DIP facility, an extended stay period, a Key Employee Retention Plan (KERP), and a sealing order for KERP details.

The moving parties brought a motion for leave to appeal an earlier order.

The Divisional Court dismissed the motion for leave to appeal and ordered the moving parties to pay costs of $10,000 to the responding party.

The defendant (plaintiff by counterclaim) brought a motion under Rule 30.06 of the Rules of Civil Procedure to compel the plaintiffs to produce documents related to the top five contracts by bid price for each year between 2006 and 2016.

These documents were sought to compare the bidding, accounting, and results of the "Porsche Agreement" with the "ordinary course of business" and "past practice" of the acquired company, which was central to the plaintiffs' fraud allegations concerning a share purchase agreement.

The court granted the motion for the production of the remaining categories of documents, finding them relevant and proportionate to the issues of "ordinary course" and "past practice."