Lou Brzezinski

The applicant sought court sanction of a plan of compromise and arrangement under the Companies’ Creditors Arrangement Act to resolve extensive litigation arising from the audit of Castor Holdings Ltd. The plan involved contributions from partners, insurers, and related entities totaling approximately $220 million and included third‑party releases.

A creditor group opposed the sanction, arguing that the releases violated Quebec civil law and that the claims process was unfair.

The court rejected these objections, finding the expert evidence unreliable, confirming that federal insolvency law permits third‑party releases notwithstanding provincial law, and concluding the plan was fair and reasonable given overwhelming creditor approval.

The plan was sanctioned.

In supplemental reasons following an earlier declaration that a shareholders’ agreement was valid and binding, the court determined the price for a compulsory buyout of a 20% share interest in two corporations holding a commercial property.

The principal issue was whether the minority shareholder’s entitlement should be reduced by the outstanding mortgage and expenses advanced by the majority shareholder after the business venture failed.

Applying contractual interpretation principles and reading the indemnity clause in light of the agreement as a whole, the court held the shares were allocated free and clear of encumbrances and that the majority shareholder had assumed responsibility for the property-related liabilities.

The buyout was therefore fixed at 20% of the agreed $3.2 million property value, or $640,000, with costs to the successful party.

Following a judgment awarding the respondents their costs of the appeal on a partial indemnity scale, the court reviewed the parties' written submissions.

The court fixed the respondents' costs of the appeal at $45,000, inclusive of disbursements and all applicable taxes.

The respondent, a former equity partner of the appellant accounting firm, withdrew from the partnership to join a competitor.

The partnership agreement required a withdrawing partner to pay liquidated damages equal to two times their 'Permanent Capital'.

The appellants argued the permanent capital should be based on the partner's 'Anchor Capital' which included shareholder loans, while the respondent argued it was limited to the $10,000 fixed in his capital account following a capital conversion.

The trial judge agreed with the respondent, fixing liquidated damages at $20,000 and ordering the appellants to repay the respondent's shareholder loan and other entitlements.

The Court of Appeal upheld the trial judge's interpretation of the partnership agreement, finding no palpable and overriding error, but allowed the appeal in part to set aside a small award for management fees that lacked evidentiary support.

The plaintiffs sought a Mareva injunction freezing assets of an individual defendant alleged to have received fraudulent transfers from a corporate defendant.

The court accepted that the plaintiffs had established a strong prima facie case that certain transfers constituted fraudulent conveyances and that judgment in related U.S. proceedings was likely.

However, the evidence failed to demonstrate the existence of assets in Ontario or a current risk of dissipation within the jurisdiction.

The court concluded that a Mareva injunction cannot be used as a tool to investigate whether assets exist.

Because the applicants could not satisfy the jurisdictional asset and dissipation requirements, the motion was dismissed.

The appellant appealed an order declaring that the respondent had priority over any other interest claimed in certain retirement community units, except for valid construction lien claims.

The appellant argued the motion judge erred by determining the priority motion separately from the lien reference and by not giving effect to its security and equity interests.

The Court of Appeal dismissed the appeal, finding that the bifurcation of issues flowed from a previous unappealed court order and that the motion judge's order specifically preserved the construction lien issues.

The appellant, an assignee of a second mortgage, appealed an order on the sole basis that the motion judge erred by refusing to grant an adjournment on the hearing date.

The appellant claimed it had no notice of the hearing and had only retained counsel the day before.

The Court of Appeal dismissed the appeal, holding that the decision to grant or refuse an adjournment is discretionary and entitled to deference, and found no basis to interfere with the motion judge's decision.

The plaintiffs sought a Mareva injunction against the assets of the defendants, specifically a biodiesel plant owned by Great Lakes Biodiesel Inc., alleging that funds were fraudulently conveyed by Verdeo Inc. to the defendants to fund the plant's construction.

In the alternative, the plaintiffs sought interim relief under the oppression provisions of the Business Corporations Act or a certificate of pending litigation.

The court dismissed the motions, finding that the plaintiffs failed to establish a strong prima facie case of a fraudulent conveyance from the intermediary corporations to Great Lakes Biodiesel Inc., and that the balance of convenience did not favour a certificate of pending litigation.

During a Commercial List case conference in complex commercial litigation, the court addressed whether a lengthy upcoming trial should proceed using paper records or an electronic trial format.

The court emphasized the need for the justice system to adapt to modern information technology and criticized resistance within the legal profession to electronic processes.

Considering the scale and document volume of the litigation, the court ordered that the six‑week trial proceed as an electronic trial and directed counsel to prepare and submit a formal e‑trial plan.

The endorsement also addressed discovery scheduling, settlements with certain defendants, and a proposed but abandoned summary judgment motion.

The moving defendants sought to lift restrictions imposed by an earlier order preventing them from disposing of or encumbering property and related equipment pending a motion for a Mareva injunction.

The court characterized the prior order as a consent order reflecting an agreement between the parties, with undertakings that had expired but were subject to extension pending further order.

Applying the RJR‑MacDonald test for injunctive relief, the court found that the plaintiffs had established a serious issue to be tried regarding alleged fraudulent conveyances under the Fraudulent Conveyances Act.

The court also found a real possibility of irreparable harm if the property were encumbered to secure existing liabilities.

The balance of convenience favoured maintaining the restrictions, subject to a limited exception permitting encumbrances for bona fide new financing used in the ordinary course of business.

The plaintiffs moved under Rule 32.01 of the Rules of Civil Procedure for an order permitting inspection of a biofuel production plant owned by a defendant corporation.

The plaintiffs argued the inspection would allow their experts to assess whether the plant was operational in connection with a forthcoming Mareva injunction motion and claims relating to allegedly fraudulent transactions designed to defeat enforcement of anticipated U.S. judgments.

The court held that inspection orders require necessity for the proper determination of an issue in dispute and must reveal something useful or probative for the trier of fact.

Because the operational status of the plant was not relevant to the plaintiffs’ pleaded claim that certain funds were used to acquire the plant, the inspection was not necessary and that part of the motion was dismissed.

However, the court ordered production of written documents referred to in an affidavit pursuant to Rule 30.04(2).

The defendant bank moved to dismiss an action alleging fraudulent and negligent misrepresentation on the basis that the plaintiff breached the deemed undertaking rule under Rule 30.1 of the Rules of Civil Procedure by using documentary productions obtained in related litigation to commence a separate claim.

The court held that the plaintiff had indeed used documents obtained through discovery in the earlier proceeding to inform and support its decision to initiate the new action, thereby breaching the deemed undertaking rule.

However, considering the substantial overlap in parties, issues, and factual matrix between the two proceedings, and the minimal prejudice to the producing party, the court granted retroactive relief from the rule.

The court dismissed the bank’s motion to dismiss or stay the action but allowed the plaintiff limited permission to use the discovery materials in the new action.

Costs were awarded against the plaintiff due to its failure to seek leave before using the materials and its lack of candour in case management proceedings.

Following the dismissal of a plaintiff’s motion for an interlocutory injunction, the court addressed costs.

The successful defendants sought partial indemnity costs up to the date of a settlement offer and substantial indemnity costs thereafter, while the plaintiff argued that costs should be in the cause because the underlying action remained unresolved.

The court held that settlement discussions related to the action as a whole and did not justify substantial indemnity costs for the motion.

Because the motion was self‑contained and dismissed in its entirety, the defendants were entitled to costs on a partial indemnity basis.

The court reduced the defendants’ claimed fees to an amount comparable to the plaintiff’s own costs estimate and awarded a global costs figure.

The plaintiff employer sought an interlocutory injunction against former employees and their new company alleging misappropriation of confidential information, breach of fiduciary duty, and breach of non‑solicitation clauses in employment agreements.

The court considered the test for interlocutory injunctions under RJR‑MacDonald and whether stronger proof was required in employment and restrictive covenant contexts.

The motion failed because the alleged confidential information consisted largely of generic consulting practices and there was no credible evidence that proprietary information had been taken or misused.

The alleged client and employee solicitations were disputed, unclear under the wording of the agreements, and occurred more than a year earlier, with no evidence of ongoing harm.

As the plaintiff failed to demonstrate irreparable harm or a clear breach of enforceable covenants, injunctive relief was denied.

A former equity partner withdrew from an accounting partnership and joined a competing firm, triggering a liquidated damages clause requiring payment equal to two times the partner’s “permanent capital.” The dispute concerned whether shareholder loans made through a related corporation formed part of “permanent capital” under the partnership agreement.

The court interpreted the agreement according to its plain language and held that permanent capital was equivalent to the partner’s capital account in the partnership, which had been equalized to $10,000 and did not include shareholder loans.

The plaintiff was therefore liable for $20,000 in liquidated damages but was entitled to repayment of capital, profit share, shareholder loan amounts, and related payments.

Allegations of fiduciary misconduct and various counterclaims by the partnership, including claims for suppressed work‑in‑progress and loss of opportunity damages, were rejected.

The defendant bank brought a refusals motion seeking to compel answers to questions asked on the cross‑examination of an affiant concerning documents reviewed by counsel when drafting a claim.

The information sought related to whether the plaintiff had used documents produced in another action in alleged breach of the deemed undertaking rule under Rule 30.1 of the Rules of Civil Procedure.

The court held that the requested information constituted solicitor‑client communications and was therefore subject to near‑absolute privilege.

The “future crime and fraud” exception to solicitor‑client privilege did not apply because an alleged breach of the deemed undertaking rule did not approach the level of criminal or fraudulent conduct required to displace privilege.

The motion to compel answers was dismissed.

A creditor brought an application for a bankruptcy order alleging acts of bankruptcy and sought a stay of the proceeding pending the debtor’s criminal fraud trial.

The creditor acknowledged that he could not prove the alleged debt without relying on findings from the criminal prosecution.

The court held that the Bankruptcy and Insolvency Act requires a bona fide allegation of a debt capable of proof at the time a bankruptcy application is commenced.

Applying both that principle and the RJR‑MacDonald stay test, the court found the applicant failed to demonstrate irreparable harm and that the balance of convenience favoured the debtor due to reputational and credit harm caused by an outstanding bankruptcy application.

The motion for a stay was denied and the applicant was granted leave to withdraw the bankruptcy application subject to costs submissions.

Following a summary judgment motion, the court had previously awarded substantial indemnity costs to the defendant.

After the costs endorsement was released, defence counsel disclosed that the defendant’s legal fees had been paid by his employer rather than personally.

The plaintiff argued that this new information warranted reconsideration of the costs award or reduction to partial indemnity.

The court held that the source of payment for the defendant’s legal expenses did not materially alter the reasoning underlying the substantial indemnity award, which was primarily based on the plaintiff’s litigation conduct.

The prior costs award therefore remained unchanged.

Following the granting of summary judgment dismissing the action, the successful defendant sought substantial indemnity costs.

The plaintiff opposed, arguing that the motion judge should not fix costs due to affidavit evidence, that elevated costs were unwarranted, and that costs should be limited to the summary judgment motion rather than the entire action.

The court rejected these submissions, holding that the judge retained discretion to fix costs and that summary judgment terminating the action justifies assessing costs of the entire proceeding.

The court found the litigation was aggressively pursued without evidentiary foundation and contained serious unfounded allegations affecting the defendant’s reputation.

Substantial indemnity costs were awarded.

The moving parties sought reconsideration of case management scheduling orders that set hearing dates for a bankruptcy application and a receiver’s motion to pass accounts on the Commercial List.

They argued the hearings should be adjourned until the Court of Appeal determined a separate appeal relating to a solicitor’s file delivery order.

The court reviewed the procedural history, including prior adjournments, disclosure orders, and repeated failures by the moving parties to comply with deadlines for filing objections and conducting examinations.

Finding that the evidentiary materials had long been available and that no concrete prejudice was demonstrated, the court concluded further delay was unwarranted.

The request to adjourn the scheduled hearings was refused.