Michael A. Penny

This decision addresses whether Cushman & Wakefield ULC (C&W), as real estate broker, is entitled to a commission in respect of Stelco’s purchase of the Stakeholders’ limited partnership units and other equity in the Legacy Lands LP, under the Companies’ Creditors Arrangement Act proceedings.

The court finds that C&W is not entitled to a commission, as the relevant brokerage agreements had expired or were never executed for the properties in question, and the transaction at issue was not contemplated by the commission provisions.

The court also dismisses C&W’s alternative claim for unjust enrichment.

This decision concerns cross-motions for production in a complex commercial dispute involving Paragon Protection Ltd., Tamstu-Harjon Holdings of Canada Limited, and related parties.

The central issue was the scope of privilege over various documents, including those arising from related estate litigation and legal advice received over several decades.

The court clarified the law on waiver of privilege, settlement privilege, and the production of documents, granting and denying relief in part to both sides.

In a Commercial List dispute arising from a light rail transit project, the applicants sought declaratory relief alleging that the respondents breached a project agreement by entering into an operator agreement with the transit operator on terms inconsistent with the project agreement.

The respondents moved to stay the application based on release and arbitration provisions in earlier Minutes of Settlement, while the applicants moved for production of an unredacted copy of the operator agreement.

Applying the stay framework from Peace River, the court held the respondents failed to show even an arguable case that the dispute was caught by the settlement arbitration clause, because the alleged actionable wrong did not arise until the operator agreement was executed after the settlement effective date.

The court also ordered production of the complete unredacted agreement, finding it central to the issues and that the respondents had adduced no evidence capable of justifying redactions for confidentiality or commercial sensitivity.

Costs of $90,000 partial indemnity were awarded to the applicants.

This application concerned a dispute over an earn-out calculation following a share purchase agreement.

The applicant sought an order compelling the respondents to refer the dispute to KPMG, as stipulated in the agreement.

The respondents argued the applicant's notice of objection was untimely and lacked particularity, and that the objections raised were contractual, not accounting, issues.

The court found the applicant's notice was timely, given the need for additional financial information, and that the objections, properly interpreted, fell within the scope of the expedited dispute resolution process.

The application was allowed, and the dispute was ordered to be submitted to KPMG.

Costs were not awarded to the successful applicant due to her role in protracting the process.

The Trustee in bankruptcy applied under s. 96(1)(b)(ii) of the Bankruptcy and Insolvency Act for a declaration that the bankrupt's 2018 transfer of his interest in a Florida property to his wife was a transfer at undervalue and void.

The court found that the transfer met the preconditions for a transfer at undervalue, including being to a non-arm's length party within five years of bankruptcy, and that the bankrupt intended to defraud, defeat, or delay creditors, as evidenced by "badges of fraud" such as existing lawsuits and inadequate consideration.

The court declared the transfer of the bankrupt's half interest in the property void and ordered the wife to pay half of the net proceeds from her subsequent sale of the property to the Trustee.

The applicant, Canadian Western Bank, sought a contempt order against Abdul Muqeet, the sole officer and director of the respondent companies in receivership, for failing to comply with court orders to provide information and attend examinations.

Justice Black found Muqeet in contempt.

This decision concerns the sentencing phase.

The court considered the principles of civil contempt sentencing, emphasizing coercion and upholding court authority.

Despite Muqeet's eventual, albeit delayed, compliance with most requests, his persistent non-compliance and impecuniosity led the court to impose a five-day jail term, finding a fine inappropriate.

No further costs were awarded due to the unlikelihood of payment.

Mr. Langstaff, a defendant and plaintiff by counterclaim, moved to amend his counterclaim to add three senior managers of the corporate plaintiffs (Senior Management) as parties, increase exemplary damages, and add claims for defamation, unlawful means, and intrusion upon seclusion.

The motion was opposed on the basis that the proposed amendments were out of time due to limitation periods.

The court denied leave to add Senior Management as parties, finding that the material facts supporting their personal liability were known to Mr. Langstaff by January 2018 or September 2019, and thus the limitation period for adding parties had expired.

However, the court granted leave to increase exemplary damages and to add the new causes of action (defamation, unlawful means, intrusion upon seclusion) against the existing defendants, as the material facts for these claims were already pleaded within the limitation period.

Corus Entertainment Inc. sought a declaration that Rogers Communications Inc. could not remove one of Corus's television channels from its existing packages, citing affiliation agreements and regulatory "standstill" provisions under the Broadcasting Distribution Regulations.

Corus also sought an interlocutory injunction to prevent the channel's removal pending a CRTC decision and a sealing order for confidential information.

The court dismissed the application for a declaration, finding that the affiliation agreement granted Rogers the broad right to create and modify television packages, which included the right to remove channels.

The court also dismissed the interlocutory injunction, holding that the CRTC had exclusive jurisdiction over regulatory matters and that Corus failed to demonstrate irreparable harm.

Finally, the sealing order was denied as the information was not deemed confidential under the "open court" principle, and the test for sealing orders was not met.

The applicant, VBI Vaccines Inc., sought court approval for a sale transaction structured as a reverse vesting order (RVO) to its secured lender, K2 HealthVentures, as part of its CCAA insolvency proceedings.

The motion also sought collateral relief, including releases for various parties and the ability to sell residual assets up to $5 million without further court approval.

The court granted the motion, finding that the RVO was necessary and met the stringent Harte Gold factors, as well as the traditional Sound Air factors.

The RVO was deemed essential due to the debtor's highly regulated industry and the non-assignability of its intellectual property and government licenses, making it the only viable option to maximize value compared to a bankruptcy scenario.

The court also approved the releases and the limited authority to sell residual assets, noting the Monitor's support and the lack of opposition from stakeholders.

The applicant, Loop Financial Inc., brought an application for judgment against the respondent, Royal Bank of Canada (RBC), seeking $90,000 for pure economic loss.

Loop alleged that RBC was negligent and breached a duty of care by failing to notify Loop that funds had been fraudulently transferred from an RBC customer's account to a Loop account.

The funds were subsequently withdrawn by the fraudster before the transfer was reversed under Payments Canada Rules.

The court applied the Anns test and held that RBC did not owe a duty of care to Loop, a non-customer, as RBC had not undertaken any responsibility toward Loop and there was no reasonable reliance.

The court further found that even if a duty existed, Loop failed to prove that RBC breached the standard of care.

The application was dismissed, and RBC was awarded $20,000 in partial indemnity costs.

This case involved a shareholder dispute where OneMove Capital Corporation sought to affirm the validity of its proposal under s. 99 of the Ontario Business Corporations Act (OBCA) to remove and replace a director, and to compel Dye & Durham Limited to include this proposal in its information circular.

Dye & Durham brought a counter-application to omit the proposal and sought a declaration that OneMove and Tyler Proud breached a 2020 Investor Rights Agreement (IRA).

The court ruled that a shareholder cannot use the s. 99 proposal mechanism to remove a director, as director removal requires a special meeting requisitioned under s. 105 of the OBCA.

However, the court also found that OneMove's proposal, if permissible, would not fall under the "personal grievance" exception of s. 99(5)(b) or (b.1), as it related significantly to the company's business affairs.

Furthermore, the court determined that the IRA did not prohibit OneMove from seeking to remove its nominee director through proper OBCA channels, and dismissed Dye & Durham's other alleged breaches of the IRA as theoretical.

The applicant, Castle Building Centres Group Ltd., sought bankruptcy orders against Steven D. Parkes and Jeff A. Parkes based on a $2.2 million judgment debt.

The respondents opposed, arguing no debt was owing due to waiver, guarantees being inapplicable to a subsidiary's debt, and valid counterclaims for rebates.

They also claimed the application was for an improper purpose and that Jeff Parkes was medically infirm.

The court found the judgment debt valid and binding, rejecting the respondents' attempts to re-litigate issues already decided by summary judgment, upheld on appeal, and denied leave to appeal by the Supreme Court of Canada.

The court also dismissed arguments of improper purpose and medical infirmity, concluding that the requirements for a bankruptcy order were met and there was no basis to exercise discretion to dismiss the application.

The applicants, beneficiaries of "lost shareholders" of York Downs Golf and Country Club, sought orders to be registered as shareholders and receive distributions after their shares were cancelled under a court-approved plan of arrangement.

They argued the arrangement was unfair/unreasonable under s. 182 OBCA or oppressive under s. 248 OBCA, as they had insufficient time to validate their claims after being located late in the process.

The court dismissed the applications, holding that the prior court approval of the arrangement as fair and reasonable was res judicata and that the arrangement appropriately balanced stakeholder interests.

The court also found no oppression, as the applicants had no reasonable expectation beyond complying with the arrangement's terms, and York Downs had made commercially reasonable efforts to locate shareholders and facilitate claims.

A former solicitor moved for a charging order under s. 34 of the Solicitors Act over a $70,000 cost award made in favour of his former client, AssessNet Inc. The client argued the solicitor was not "instrumental" in recovering the funds due to alleged negligence and that the retainer agreement precluded payment.

The court found the solicitor's efforts were sufficiently instrumental, noting that allegations of negligence are not appropriate for a charging order application.

The court granted the charging order, directing the funds to be held in trust pending a final assessment of the solicitor's fees.

The applicants, Peter and Dorotea Pallotta, sought a declaration under s.178(1)(d) of the Bankruptcy and Insolvency Act (BIA) that the respondent, Licio Edward Cengarle, their former solicitor, was not released from the unpaid balance of a $254,056.89 judgment debt following his bankruptcy discharge.

The debt arose from Cengarle's breach of trust and vicarious liability for his employee's fraudulent mortgage scheme, which involved the misappropriation of the Pallottas' funds from his trust account.

The court found that the debt resulted from misappropriation or defalcation while Cengarle acted in a fiduciary capacity, and the s. 62(2.1) BIA exception for discharge did not apply as the Pallottas did not vote for the proposal.

The court granted the declaration and lifted the statutory stay of proceedings under s. 69.1 of the BIA to allow the Pallottas to enforce their judgment.

The Quality Sterling group of companies (QSG) sought CCAA protection.

Suppliers asserted trust claims under the Construction Act and sought a super-priority Lien and Trust Regularization Order (LTRO).

The DIP Lender, Financial Advisor, and Directors & Officers (D&Os) moved to vary the Initial Order and ARIO to explicitly include "trusts" in the super-priority clause, arguing its omission was an accidental slip.

The court granted the motion to vary, finding the omission was an accidental slip and that the court had not adjudicated on the specific exclusion of trusts from super-priority.

The court held that federal paramountcy dictates that court-ordered CCAA super-priorities prevail over provincial statutory trusts where an operational conflict exists, dismissing the Suppliers' claim for priority over the DIP Lender's, Financial Advisor's, and D&Os' charges.

The applicant, Amsterdam Square Apartments Inc., sought court approval for a plan of arrangement under section 182 of the Business Corporations Act to lower shareholder voting thresholds from 90-100% to a 2/3 majority.

The purpose was to address difficulties in managing the non-profit co-operative due to high approval requirements for actions like share reallocation, sublicensing, share transfers, and capital expenditures.

The respondent opposed, arguing the application was premature and lacked sufficient detail.

The court denied the application, finding it premature because the necessity for sweeping changes was not fully demonstrated, and the plan lacked specific details on how the Board intended to address the underlying issues via bylaw amendments after the thresholds were lowered.

The court emphasized that the specific bylaw proposals should be presented to shareholders and the court as part of the "fair and reasonable" analysis.

Costs were awarded to the respondent.

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 defendants moved to amend their statement of defence to plead issue estoppel and abuse of process based on a prior US arbitration award, and to dismiss the plaintiff's action on those grounds.

The plaintiff cross-moved to add the defendants' parent company as a party.

The court granted the defendants' motion to amend and dismissed the plaintiff's breach of contract and negligence claims, finding they were barred by issue estoppel as the arbitrator had already decided the core factual issues against the plaintiff.

However, the court refused to dismiss the plaintiff's breach of fiduciary duty claims, finding those issues were not determined in the arbitration.

The plaintiff's motion to add the parent company was dismissed as premature and legally untenable.

The plaintiffs brought a motion seeking the appointment of an interim receiver over the shares of one of the defendants in several companies involved in land development projects.

The parties, who are shareholders in these companies, had a significant falling out, leading to defaults on secured loans.

The plaintiffs argued that a receiver was necessary to refinance debt and maximize value.

The court determined that the appropriate test for the interlocutory receiver appointment was the RJR MacDonald test, with an elevated 'strong prima facie case' standard due to the Mareva-like nature of the relief.

The court found that the plaintiffs failed to meet the merits requirement, as they asserted no legal or beneficial interest in the defendant's shares and the memorandum of understanding did not obligate the defendant to contribute further funds.

Furthermore, the court found no irreparable harm and that the balance of convenience did not favor the appointment, concluding that a receivership was not an appropriate remedy for a shareholder dispute where the moving party sought to eliminate the other party's control over their own shares.