Stephen Brown-Okruhlik

The moving parties (Vendors) sought to lift an automatic stay of an order requiring the responding party (Purchaser) to pay €855,155 pending the hearing of an application regarding an earn-out payment dispute.

The Purchaser had appealed the order, triggering an automatic stay under Rule 63.01(1).

The Court of Appeal granted the motion to lift the stay under Rule 63.01(5), finding that the Purchaser's financial instability created a material risk of non-payment, which constituted financial hardship for the Vendors.

To balance the risk to the Purchaser, the stay was lifted on the condition that the Vendors pay an equivalent amount into court as security pending the appeal.

This decision addresses a corporate dispute involving the sale of shares in Provix Inc. and the terms for a shotgun buy/sell process for NT&T Investment Partners Ltd., the holding company for Stanmech Technologies Inc. The court orders the transfer of shares in Provix to Cruise and TC Provix Holdco Inc. at a specified price, with a portion of the funds held in trust pending further determination.

The court also determines that Cruise and Tyrell Corp. must trigger the shotgun process for NT&T/Stanmech, based on the equities and the parties' conduct.

The decision provides detailed guidance on the implementation of the buy/sell process and addresses requests for further disclosure and ancillary relief.

The Court of Appeal for Ontario allowed the appeal of RPG Receivables Purchase Group Inc., finding that the bankruptcy judge erred in concluding that payments made by Specialty Chemical Industries Inc. to American Pacific Corporation were not void as preferences under section 95 of the Bankruptcy and Insolvency Act.

The Court held that an insolvent debtor’s intention to continue in business can only rebut the statutory presumption of intent to prefer if there is a reasonable basis to believe that the business continuation will benefit creditors generally.

Here, there was no such reasonable basis, and the payments must be repaid.

This decision concerns a corporate dispute between Nelson Penelas and Trevor Cruise regarding control and management of Stanmech Technologies Inc. and Provix Inc. The court addresses whether Cruise’s employment contract with Stanmech, executed while Penelas was improperly ousted, should be set aside, and whether related payments and legal fees should be repaid.

The court finds that Cruise’s conduct was self-dealing and oppressive, sets aside the employment contract, and orders repayment of funds.

The court declines to grant declaratory relief or to vary certain orders, and addresses requests to amend pleadings regarding a shotgun buy/sell process for Provix and Stanmech.

The applicant sought an interlocutory injunction to be restored as a director of a closely held corporation after being unilaterally ousted by his equal partner, the respondent.

The respondent claimed authority to remove the applicant based on his role as president of the holding company and alleged the applicant had abandoned his post.

The court found the applicant established a strong prima facie case that the respondent lacked authority and acted in a conflict of interest.

Finding irreparable harm and a balance of convenience favouring the applicant, the court granted the injunction, reinstating the applicant as a director upon specific terms to level the playing field pending trial.

The moving parties brought a motion for leave to appeal the decision of Centa J. dated May 29, 2024.

The Divisional Court dismissed the motion for leave to appeal and awarded costs to the responding party fixed at $5,000.

The plaintiff brought a consent motion for leave to commence a class action under the Securities Act and for certification under the Class Proceedings Act for settlement purposes.

The action alleged misrepresentations in public statements by the defendants.

The parties reached a proposed settlement of $500,000.

The court granted leave and certified the class for settlement, finding all certification criteria met, albeit with less strict application for settlement purposes.

The court approved the representative plaintiff and the administrator but required revisions to the proposed class notices and further submissions regarding the notice dissemination plan to ensure clarity and proper information for class members.

A putative class action had settled, subject to court approval.

A proposed intervener sought a timetable to bring a motion to intervene and be appointed representative plaintiff.

The existing parties to the action sought a timetable for the certification and settlement approval motions, arguing that the intervention motion should not be scheduled unless settlement approval was denied.

The court determined that the certification and settlement approval motions should be heard first, and the intervention motion would only be scheduled if settlement approval was not granted.

Citibank, N.A. commenced an application seeking the appointment of an investigative receiver for Rodrigo Lebois Mateos' assets, inspection of records for Terralpa Investment Fund I Limited Partnership and Araterra Inversiones, and compliance with the Limited Partnerships Act.

The respondents brought a motion to permanently or temporarily stay the application in favour of ongoing proceedings in the United States District Court for the Southern District of New York.

The court granted a temporary stay of Citibank's application for a receiver, finding a substantial overlap with the U.S. proceedings and potential for duplication of resources.

However, the court ordered Terralpa LP and Araterra Inversiones to comply with the record-keeping and disclosure requirements of the Limited Partnerships Act, as this relief was outside the U.S. court's jurisdiction.

A sealing order was also granted for sensitive financial information to maintain comity with the U.S. proceedings.

The defendants brought a motion under Rule 21.01(1)(b) to strike the plaintiffs' statement of claim for breach of contract, arguing it disclosed no reasonable cause of action.

The defendants sought to introduce evidence, including affidavits and cross-examination transcripts from a prior motion for particulars, which they argued should be treated as particulars.

The court rejected this evidence, holding that Rule 21.01(2)(b) strictly prohibits evidence on a motion to strike and that parties cannot contract out of this rule.

Assuming the pleaded facts to be true, the court found the plaintiffs had adequately pleaded all elements of a breach of contract claim and dismissed the motion.

Following the dismissal of the plaintiff's motion for the production of documents prior to a leave motion under the Securities Act, the successful defendants sought their costs.

The court awarded partial indemnity costs to the corporate defendant and one individual defendant.

The court awarded substantial indemnity costs to the other individual defendant, finding that the plaintiff's conduct in pursuing the motion against him and making unfounded allegations of deliberate misconduct was unreasonable and warranted sanction.

The plaintiff was ordered to pay a total of $36,603.87 in costs.

The plaintiff in a putative class action for secondary market misrepresentation brought a motion for the production of documents referenced in the defendants' affidavits prior to serving his reply record.

Alternatively, the plaintiff sought to strike the portions of the affidavits referencing those documents.

The court dismissed the motion, holding that the plaintiff has no right to documentary discovery at the leave stage under section 138.8 of the Securities Act, and that the proper mechanism for production is through cross-examination after the reply is served.

The court also declined to strike the affidavits, noting that hearsay is permitted on motions.

The applicant, a solar project supplier, sought damages of $1,468,293.40 from the respondent, the Independent Electricity System Operator, alleging ambiguity in the Feed-In-Tariff (FIT) contracts regarding the '120% rule'.

The applicant argued it was permitted to use the Nominal Operating Cell Temperature (NOCT) rating rather than the Standard Test Conditions (STC) rating.

The court dismissed the application, finding no ambiguity in the contracts when read as a whole, and held that STC is the universally accepted standard in the solar industry.

The court also found the applicant was contractually precluded from claiming damages.

The applicant, acting as the foreign representative for the syncreon Group, sought an Initial Recognition Order under Part IV of the CCAA to recognize scheme of arrangement proceedings commenced in the United Kingdom.

The court found that the UK proceedings under Part 26 of the Companies Act constituted 'foreign non-main proceedings' under the CCAA.

The court granted the recognition order, recognized the UK Convening Order, appointed an Information Officer, and dispensed with the statutory publication requirement, finding that a formal cross-border protocol was unnecessary in this case.

The plaintiff, Unlimited Motors Inc., sought to continue a $30 million action for breach of contract and other claims after it had lapsed, requiring a status hearing under Rule 48.14 of the Rules of Civil Procedure.

The court found the plaintiff's explanation for a 2.5-year delay unacceptable, primarily due to a deliberate choice to prioritize another lawsuit.

The plaintiff also failed to provide robust evidence demonstrating an absence of non-compensable prejudice to the defendant or trial fairness, despite the defendant's own inaction on its counterclaim.

The motion to continue the action was dismissed, and the plaintiff was ordered to pay costs.

The individual defendants, former directors and officers of Old Noranco, brought a motion seeking advancement of legal expenses from the plaintiff (successor to Old Noranco and the purchaser) to defend against claims of misrepresentation in financial statements and a crossclaim by BDO Canada LLP.

The court determined that the claims, despite being framed against them as shareholders, implicated their fiduciary capacities, thus triggering indemnification rights.

The plaintiff failed to establish a "strong prima facie" case of bad faith against one defendant, Kelly Clinton, which would have disentitled him to funding.

The court also ruled that the existence of third-party funding did not preclude the individual defendants from recovering their legal expenses.

The motion for advancement of legal expenses was granted.

The applicant sought to appoint a receiver over the respondents and approve a stalking horse sale process for their jointly owned properties.

A third party, NASG, opposed the vesting orders, claiming a constructive trust over the properties due to alleged scrap metal theft.

The court found NASG's contingent claim did not prevent a vesting order, as monetary damages would be adequate and the receiver would hold net sale proceeds.

However, the court refused to approve the stalking horse agreement because the proposed $500,000 break fee and $150,000 overbid fee were excessive and unjustified.

The court appointed the receiver but required the applicant to revise the sale process.

The plaintiff brought a motion for summary judgment on a contractual refund claim after the CRA disallowed SR&ED tax credits prepared by the defendant tax consultants.

The defendants brought a cross-motion for summary judgment dismissing the claim based on the limitation period, and the personal defendant sought to dismiss the claim against him.

The court dismissed all motions, finding that the refund claim was inextricably linked with the defendants' counterclaim for breach of contract, making partial summary judgment inappropriate.

The court also found sufficient evidence to require a trial on the personal claim against the individual defendant.

The defendants brought a motion to set aside a noting in default and default judgment obtained by the plaintiff bank.

The court applied the five-part test from Mountain View Farms and found that the motion was brought promptly, there was a plausible explanation for the default due to ongoing refinancing discussions, and the defendants had an arguable defence regarding alleged errors in the loan amount and term.

The motion was granted and the default judgment was set aside.

The applicant sought recognition of a $22 million arbitral award against the respondent.

The respondent opposed recognition, arguing it would be contrary to Ontario public policy because its counsel in the arbitration had a conflict of interest by providing expert evidence in a separate case that the applicant could indirectly benefit from.

The court rejected this defence, finding that the alleged conflict did not fundamentally offend basic principles of justice and fairness, and granted the order recognizing the award.