Michael A. Penny

This case involved two motions within a bankruptcy proceeding.

The bankrupt, Dennis Wing, sought to lift a freeze direction imposed by the Ontario Securities Commission (OSC) on his registered retirement saving plan (RRSP) and locked-in retirement accounts (LIR), arguing they were exempt assets under the Bankruptcy and Insolvency Act (BIA).

The OSC, in turn, sought a declaration that a monetary penalty and costs ordered against Wing for violating a cease trade order (CTO) were not claims provable in bankruptcy, allowing them to enforce the claims post-discharge.

The court dismissed Wing's motion, finding the freeze direction served a purpose given potential opposition to his discharge.

The court granted the OSC's motion, applying the three-part test from AbitibiBowater and Orphan Well Association, concluding that the OSC was not a creditor, the obligation was not incurred before bankruptcy, and the claim's monetary value was too speculative at the date of bankruptcy.

The court also found that a subsequent settlement agreement superseded an earlier undertaking by the OSC regarding enforcement.

This application concerned the validity of powers of attorney (POAs) for property and personal care signed by Agnes Adler, a 90-year-old woman, in September 2017.

The applicant, Judy Adler, sought to uphold these POAs, which appointed her and her sister, Andrea Gregor, jointly.

Andrea Gregor, a respondent, challenged their validity, arguing Agnes lacked capacity and was subject to undue influence.

The court also considered the validity of 2015 POAs appointing Andrea solely, the status of Agnes's joint bank accounts with Andrea, and a $25,000 gift from Agnes to Andrea.

The court found the 2017 POAs invalid due to Agnes's lack of capacity to appreciate the consequences of appointing joint attorneys given the sisters' acrimonious relationship, and alternatively, due to undue influence by Judy.

The 2015 POAs, appointing Andrea solely, were upheld.

Andrea was ordered to transfer Agnes's joint bank accounts to Agnes's sole ownership and to repay the $25,000 gift.

The court criticized both daughters for misusing capacity assessments in their litigation.

The plaintiffs sued CIBC and Belzberg for breach of contract or negligence after a direct market access (DMA) system malfunctioned, causing significant error trades and the eventual shutdown of their hedge fund.

The court found CIBC prima facie liable, determining that Belzberg employees acted as CIBC's apparent agents when they negligently caused the malfunction.

The court rejected CIBC's broad contractual exclusion of liability for direct damages but upheld the exclusion for lost profits.

The plaintiffs were awarded direct trading losses, with no reduction for mitigation or contributory negligence, and punitive damages were denied.

The plaintiff, 1085372 Ontario Limited, brought an action under the Bankruptcy and Insolvency Act (BIA) and the Fraudulent Conveyances Act (FCA) to set aside a transfer of shares in Linus Entertainment Inc. from Michael Shumak to Geoff Kulawick.

The plaintiff alleged the transfer was at undervalue or a fraudulent conveyance.

The court found that the parties dealt at arm's length, the transaction occurred outside the one-year clawback period under the BIA, and the transfer was not at undervalue.

Furthermore, the court found no fraudulent intent on the part of Shumak and that Kulawick acted in good faith and paid good consideration.

The action was dismissed.

This application sought a determination of contractual rights regarding an early termination provision in pre-construction condominium agreements.

The applicants argued that a 'sole, absolute and unfettered discretion' proviso in a financing condition rendered the entire condition null and void under the Tarion Addendum, leading to a breach of contract claim.

The court found that the proviso did not form part of the early termination condition or, if it did, it was inconsistent with the Addendum's requirement for commercially reasonable steps and was therefore unenforceable.

The court interpreted the condition to require vendors to take all commercially reasonable steps to arrange satisfactory financing, upholding the validity of the termination condition and dismissing the application.

This is an appeal from a Registrar in Bankruptcy's decision to transfer a bankruptcy application from Toronto to Hamilton, based on the debtor's residence.

The Superior Court of Justice found that the Registrar erred in law by concluding the Toronto court lacked jurisdiction.

The court clarified that Hamilton falls under Bankruptcy Division 32, which is administered by the Toronto bankruptcy court, making Toronto the proper jurisdiction for such applications under s. 43(5) of the BIA.

The appeal was allowed, setting aside the Registrar's decision.

The Canadian respondents brought a motion to set aside an ex parte Mareva injunction that froze their assets worldwide.

They argued the injunction should be set aside due to material non-disclosure by the applicants and insufficient evidence of their involvement in the alleged $71.7 million fraud or risk of dissipation.

The court dismissed the motion to set aside, finding no material non-disclosure and sufficient evidence of knowing receipt of misappropriated funds and risk of dissipation.

However, the court varied the order to release funds for the respondents' living and legal expenses.

The court also granted a sealing order over the transcripts of the respondents' compelled examinations to protect their rights against self-incrimination in light of a criminal investigation in Iran.

The respondents' request for security for the applicants' undertaking as to damages was denied.

The applicants brought a motion to set aside a 2015 judgment based on alleged new evidence of fraud and deceit, and sought $500,000 in damages.

The court dismissed the motion, finding that the applicants had already attempted to introduce this evidence before appellate courts on five previous occasions, rendering the matter res judicata and an abuse of process.

The respondents' cross-motion to authorize the Master on an outstanding reference to determine interest rates was granted.

The court awarded substantial indemnity costs of $21,644.02 against the applicants due to their history of bringing hopeless, duplicative proceedings.

The trustee in bankruptcy brought a motion for a declaration that the bankrupt's interest in two properties, held in joint tenancy with his wife, were assets of the estate.

The bankrupt and his wife claimed the properties were held in trust for their children, relying on trust documents allegedly created in 1995 and 2004.

The trustee introduced uncontradicted expert evidence proving the fonts used in the documents did not exist on the dates they were allegedly signed.

The court found the trust documents were backdated and the trusts were shams, or alternatively fraudulent conveyances, designed to defeat creditors.

The declarations sought by the trustee were granted.

The applicant sought to exercise an option under a secondary will to purchase the shares of the deceased's business.

The estate trustee and the applicant disputed the calculation of the purchase price based on an earnings formula, as well as the terms of the purchase.

The court determined the appropriate earnings calculation, rejected the estate trustee's attempt to impose unilateral conditions such as a spousal guarantee and restrictive covenants, and ordered that certain funds withdrawn by the estate be credited against the purchase price.

The applicant was granted 30 days to exercise the option at the determined price.

The plaintiffs and a defendant by counterclaim, Mr. Sauro, brought motions to strike portions of the statement of defence and counterclaim.

The plaintiffs sought to strike paragraphs alleging ulterior motive and financial mismanagement.

The court struck the paragraphs pleading motive as frivolous and vexatious, but retained those pleading causation.

Mr. Sauro sought to strike the counterclaim against him, arguing it was improperly constituted as a counterclaim rather than a third-party claim.

The court agreed, finding Mr. Sauro was not a necessary and proper party to the counterclaim against the plaintiffs, and struck the counterclaim against him.

The Receiver of two insolvent real estate brokerages (TRP and TRP Realty) sought the court's advice and direction on whether approximately $3.7 million in commissions owed to the brokerages' agents were held in trust for the agents or formed part of the general assets available to secured creditors.

The court applied the "three certainties" test for a valid trust, focusing on certainty of intention.

Despite some ambiguous indicators like bank account names and standard form documents, the court found that the agents' contracts and the brokerages' audited financial statements did not objectively demonstrate an intention to create a trust.

Consequently, the commissions were deemed unsecured debts, not trust funds, and thus available to the secured creditors.

The applicants, estate trustees of the deceased, brought a motion for directions after their unopposed application for a Certificate of Appointment of Estate Trustee was rejected.

The initial rejection relied on a previous decision holding that a primary will must satisfy the 'three certainties' of a trust, specifically certainty of subject matter, to be valid.

The court granted the application, explicitly declining to follow the previous decision.

The court held that a will is not a trust and its formal validity for probate does not depend on satisfying the three certainties.

The applicants, minority shareholders of Deciem Beauty Group Inc., brought an urgent oppression application under the Canada Business Corporations Act seeking various interim orders against Deciem, Integridad Inc., Pasquale Cusano, and Brandon Truaxe.

The motion sought to remove Mr. Truaxe from Deciem's board, officer, and employee roles, appoint an interim CEO, define the board composition, prohibit Truaxe's interference with business operations and electronic systems, amend the unanimous shareholders agreement, and appoint PriceWaterhouseCoopers LLP to investigate allegations of criminal activity and Deciem's financial condition.

The court found a triable issue of oppression, irreparable harm to Deciem, and that the balance of convenience favored granting the injunction, given Truaxe's erratic and destructive behavior that brought the company to the brink of disaster.

The plaintiffs moved to enforce an alleged settlement agreement with the defendant Seven Hills Group LLC, while Seven Hills brought a cross-motion for summary judgment to dismiss the negligence claim against it.

The court found no binding settlement agreement existed, as the parties had not agreed on essential terms regarding the scope and indemnity provisions of the release.

The court granted Seven Hills' motion for summary judgment, concluding that Seven Hills owed no duty of care to the plaintiffs, as its engagement letter with Xtreme Labs expressly limited its duties and prohibited reliance by third parties like the plaintiffs for the purpose of a management buyout.

The action against Seven Hills was dismissed, and costs were awarded to Seven Hills.

The applicant (Saad Elias in the main application) sought an order declaring his mother incapable of managing property and appointing his brother as guardian.

The respondent (Daad Abdulwahid in the main application) brought a motion for security for costs against Saad Elias, who resided in California and had no assets in Ontario.

The court found that Saad Elias failed to demonstrate impecuniosity and that his underlying application for guardianship was devoid of merit, particularly regarding the existence of a valid power of attorney and the lack of evidence for misuse of funds.

The motion for security for costs was granted.

The Estate Trustee During Litigation (ETDL) for the estate of Elias Gefen brought a motion seeking payment of his significant fees and disbursements from disputed estate assets, a priority charge on these assets, and permission for interim payments.

The motion was supported by Harry Gefen and the estate of Yehuda Gefen, and opposed by Henia Gefen, Harvey Gefen, and a non-party co-tenant.

The court found that the ETDL was entitled to payment from the 'Property Interest' (disputed assets) and a charge on it, interpreting the original appointment order broadly to include assets with contingent estate interests.

The court denied the ETDL's request to further mortgage the properties to raise funds, citing potential adverse effects on non-parties.

The ETDL was granted the right to make interim payments from available distributions, subject to a final passing of accounts.

Costs were awarded against the opposing parties personally and the balance from the Estate.

The Kraus group of companies, a vertically integrated carpet manufacturer and flooring distributor, applied for an initial order under the Companies’ Creditors Arrangement Act (CCAA) due to significant financial difficulties and insolvency.

The application sought a stay of proceedings, appointment of Deloitte Restructuring Inc. as Monitor, and the granting of an Administration Charge and a Directors’ Charge.

The court granted the initial order, finding that the applicants met the CCAA threshold, a stay was appropriate for the business and its directors/officers, the proposed Monitor was qualified, and both the Administration Charge and Directors’ Charge were justified to secure essential services and ensure continued director involvement.

A sealing order for sensitive commercial information was also granted.

The Crown applied for a review of a bail order releasing the respondent, who was charged with 22 offences including firearms offences and dangerous driving following a shooting and police chase.

The reviewing judge admitted new evidence consisting of the respondent's parole officer's notes, which showed a history of non-compliance.

The judge revoked bail, finding that the respondent's detention was necessary on both the secondary ground (public safety) and the tertiary ground (maintaining public confidence in the administration of justice), given the overwhelming strength of the Crown's case, the gravity of the offences, and the respondent's history of breaching court orders.

The offender, a youthful first-time offender, was convicted by a jury of possession of cocaine and heroin for the purpose of trafficking, and possession of proceeds of crime under $5,000.

The Crown sought a three-year sentence for the heroin charge, while the defence sought two years.

The court sentenced the offender to 28 months for the heroin charge, with concurrent sentences for the other offences.

The court granted standard 1.5:1 credit for pre-sentence custody, plus an additional four months for harsh lockdown conditions and three months for strict house arrest bail conditions, leaving 15 days left to serve.

A two-year probation order and forfeiture of $4,999 were also ordered.