Michael A. Penny

The applicants, operating an aircraft maintenance business in Northern Ontario, sought an initial order under the CCAA due to financial distress exacerbated by the COVID-19 pandemic.

The court granted the initial order, including a 10-day stay of proceedings, approval of a $600,000 DIP loan, an administration charge, and a directors' charge.

The court also appointed MNP as Monitor, permitted payment of pre-filing amounts to critical suppliers, and granted a sealing order for confidential appraisals to preserve value during the restructuring process.

The applicants sought an amended and restated initial order under the CCAA, including approval of a stalking horse sales process, a Key Employee Retention Plan, an increased administration charge, and an extension of the stay of proceedings.

The court granted most of the requested relief, finding it necessary for the restructuring and supported by the Monitor.

However, the court dismissed the applicants' request to stay a creditor's action against three directors on their personal guarantees, ruling that section 11.03(2) of the CCAA expressly prohibits staying actions against directors on guarantees relating to the company's obligations.

The respondents brought a motion to stay the applicant's oppression application, arguing the dispute was subject to arbitration clauses in the parties' unanimous shareholders' agreement and partnership agreement.

The applicant argued the dispute arose solely under a separate control agreement that lacked an arbitration clause.

Applying the competence-competence principle, the court found an arguable case that the dispute fell within the scope of the arbitration agreements and granted the stay, referring the matter to an arbitral tribunal to determine its jurisdiction.

The applicants sought judicial review of the Crown's decision to enact amendments to the Environmental Assessment Act and revoke the Forestry Regulation, arguing these actions breached the Crown's duty to consult under s. 35 of the Constitution Act, 1982.

The Divisional Court dismissed the application.

The majority held that the duty to consult does not apply to the legislative process, relying on Mikisew Cree.

Regarding the revocation of the Forestry Regulation, the majority found no constitutional duty to consult as the revocation did not adversely affect Aboriginal or treaty rights, and even if a duty existed, it was at the low end of the spectrum and the Crown's consultation was adequate.

The applicants sought a declaration that a 2001 easement and restrictive covenant registered on title to a former golf course prohibited the respondent from developing the lands for residential use.

The respondent argued the covenant only protected storm water management access and did not prevent development.

The court applied contract interpretation principles and found the plain language of the restrictive covenant, read in context, constituted a complete prohibition on building structures on the golf course lands.

By operation of the Land Titles Act, the covenant was deemed to expire 40 years after registration, prohibiting residential development until 2041.

The defendants in a franchise dispute moved for security for costs against the plaintiffs, alleging the plaintiffs' parent companies were in financial difficulty.

The court dismissed the motion, finding the defendants failed to meet the initial threshold of showing the specific plaintiff corporations had insufficient assets.

Furthermore, the court declined to exercise its discretion to order security because the defendants' counterclaim was inextricably connected to the main action, and the motion was brought with undue delay shortly before trial.

This application concerned an oppression remedy under the Ontario Business Corporations Act, brought by a daughter (applicant) against her mother (respondent) and related corporations in a closely held family business.

The applicant alleged oppressive conduct by the respondent, specifically a debt conversion and share issue that diverted corporate revenues to the respondent and terminated the applicant's long-standing income stream.

The court applied the two-step test for oppression, finding that the applicant had a reasonable expectation of continued financial support and participation in the residual value of the corporation.

The court determined that the respondent's actions breached these reasonable expectations and constituted oppressive conduct.

Consequently, the debt conversion and share issue were set aside.

The court declined to remove the respondent as director but directed the parties to negotiate a fair resolution for ongoing payments based on their respective needs and available resources, with the option to return to court if an agreement could not be reached.

The applicant sought a declaration that a property transferred by the deceased mother to the respondent son was held in a resulting trust for the estate, and an order requiring the respondent to pass accounts.

The court found that the presumption of resulting trust was rebutted by evidence showing the mother intended to gift the property to the respondent, who had lived with and cared for her.

The request to pass accounts was dismissed as statute-barred and unfair due to an eight-year delay, though the respondent was ordered to provide a sworn statement of the deceased's assets at the time of death.

In a receivership proceeding, a dispute arose between a condominium purchaser and the vendor regarding liability for standard closing adjustments.

The purchaser argued he should be indemnified for borrowing costs, interest, and carrying costs due to the vendor's failure to provide clear title.

The court held that the agreement of purchase and sale expressly precluded any set-off against the purchase price or adjustments.

The purchaser was ordered to pay the closing adjustments, without prejudice to his right to seek indemnity in a separate claim.

This application concerned the interpretation of a dispute resolution clause in a Share Purchase Agreement (SPA) regarding the calculation of a post-closing working capital adjustment.

The core issue was whether the purchaser, Rester Ontario Investments Inc., was permitted to provide narrative written submissions to an independent accountant in response to the vendor's, Elad Canada Operations Inc., dispute notice.

The court determined that the interpretation of the SPA was a matter for the court, not the independent accountant.

It ruled that narrative submissions were permissible, provided they did not alter the original calculations, and set page limits for both Rester's submissions and Elad's reply.

Three lien claimants brought a motion in a receivership proceeding to determine the proper interpretation of s. 78(2) of the Construction Act regarding priority over building mortgages.

The claimants argued they were entitled to priority for the holdback deficiency against each building mortgage individually, effectively multiplying their priority amount.

The court dismissed the motion, holding that the lien claimants' priority is limited to the extent of the single deficiency in the owner's holdback over all building mortgages combined, as multiplying the priority would be contrary to the statutory scheme and unfairly prejudice subsequent encumbrancers.

This endorsement addresses three motions in an oppression action concerning the Paramount Group, a food services business facing shareholder deadlock.

The plaintiffs (Mohamad Fakih et al.) moved to strike portions of the defendants' counterclaim alleging fraudulent misrepresentation and for security for costs.

The defendants (AHM Investments Corporation et al.) moved for compliance with financial disclosure and the appointment of an auditor.

The court partially granted the motion to strike due to insufficient particulars of fraud.

The motion for security for costs was dismissed, as the counterclaim was inextricably linked to the defence and, at its core, an oppression remedy claim, which is exempt from security for costs under the OBCA.

The defendants' motion for financial disclosure and the appointment of an auditor was granted, affirming shareholders' mandatory right to audited financial statements, with the Paramount Group responsible for the audit fees.

This motion, brought by SPay Inc., sought to stay a claim by Mundo Media Ltd.'s court-appointed Receiver, arguing the dispute should proceed via arbitration in New York as per their contracts.

The Receiver claimed SPay owed Mundo $4.1 million, while SPay intended to assert a set-off.

The court declined to follow the British Columbia Court of Appeal's reasoning in Petrowest Corporation v. Peace River Hydro Partners regarding a receiver's ability to disclaim arbitration clauses.

Instead, the court applied the "single proceeding model" in insolvency, finding that SPay was not a "stranger to the bankruptcy" due to the significant receivable and SPay's intention to assert a set-off.

The court held that justice and practicality demanded the claims be resolved within the Ontario receivership proceedings, rendering the arbitration agreement inoperative under Article 8(1) of the UNCITRAL Model Law.

The motion for a stay was dismissed, and costs were awarded to the Receiver.

The court dismissed two motions seeking to consolidate other proceedings with a main action scheduled for trial.

The first motion, brought by the defendants, sought to consolidate the main action with a separate claim against former employees for breach of fiduciary duty (the "Brampton action").

The second motion, brought by 320 Bronte Road Inc., sought to consolidate its newly commenced action (alleging misconduct by the plaintiffs) and the Brampton action with the main proceeding.

The court found that the issues in the various proceedings were distinct, and consolidation would cause significant delays to the fixed trial date.

It concluded that any theoretical benefits of judicial economy or avoiding inconsistent findings were outweighed by the practical concerns of delay and managing unwieldy, disparate claims.

The court also criticized 320 Bronte Road Inc. for failing to follow proper Commercial List scheduling protocols.

This motion concerned an application by two members of a co-operative housing enterprise, Saffia Abdul-Haqq and Masbal Abokar, for an advance payment of $46,000 in legal fees from the co-op's funds.

The purpose of these funds was to oppose a pending motion by the City of Toronto to extend the appointment of an interim receiver over the co-op's business and affairs.

The court dismissed the motion, finding that the applicants failed to satisfy the "highly exceptional" test for advance interim costs, specifically failing to establish a prima facie meritorious case or special circumstances, despite their impecuniosity.

The court found no conflict between the Housing Services Act and the Co-operative Corporations Act regarding receivership, nor any infringement of Charter rights.

The co-op's funds were deemed necessary for essential repairs and financial rehabilitation, not for funding the applicants' opposition.

This motion for directions was brought by the Receiver of Unit 417 in a condominium project to determine whether the purchaser, Gerald Rasmussen, was entitled to clear title despite having prepaid the final balance of his purchase price directly to the developer, Brightstar, rather than into a deposit trust account.

The Guarantee Company of North America (GCNA), a secured creditor, opposed, arguing Rasmussen's payment was not bona fide and its mortgage should prevail.

The court found Rasmussen to be a bona fide purchaser for value, ruling that his payment, though structured as a loan, was the final purchase price payment under the agreement of purchase and sale.

The court determined that the APS did not prohibit direct payment to the vendor for the final balance and that GCNA's mortgage did not take priority over Rasmussen's interest.

The Receiver was directed to close Rasmussen's purchase and vest clear title in his name.

This endorsement provides reasons for granting an initial order under the Companies’ Creditors Arrangement Act (CCAA) to Trinity Ravine Community Inc., a registered charitable organization developing a senior citizens' life lease community project.

The applicant faced insolvency due to escalating construction costs and demands for deposit refunds from purchasers.

The court found the applicant met the CCAA requirements, including insolvency and good faith, and that a CCAA process was appropriate despite it being a real estate development, given its charitable purpose and the potential for maximizing creditor recoveries through a dual-track sale and investment solicitation process (SISP).

An initial administration charge was also granted to secure professional fees.

The applicant, Joshua Dean Nelson, sought to set aside an arbitral award rendered under Chapter 11 of the North American Free Trade Agreement against the Government of the United Mexican States.

The application was brought under Article 34(2)(a)(ii) of the Model Law on International Commercial Arbitration, alleging denial of natural justice and procedural fairness.

Specifically, the applicant claimed the award was based on an unpleaded theory and that the tribunal ignored expert evidence regarding the existence of interconnection rights and the effect of Mexican regulatory decisions.

The court dismissed the application, finding that the tribunal's decision was based on issues that were pleaded, argued, and subject to cross-examination, and that the tribunal adequately considered the expert evidence, even if not explicitly naming the experts.

The appellant, LawPro, appealed a motion judge's order limiting its recovery of judgment enforcement costs to the steps explicitly listed in Rule 60.19(1) of the Rules of Civil Procedure.

The Divisional Court allowed the appeal, holding that section 131(1) of the Courts of Justice Act provides broad jurisdiction to award costs of enforcement, and is not restricted by Rule 60.19(1).

The court awarded LawPro its costs for a related fraudulent conveyances action, finding it was incidental to enforcing the judgment, but declined to award costs for responding to the respondents' consumer proposals.

The court fixed the enforcement costs at $30,000 for reasons of proportionality.

Harte Gold Corp. sought approval of a sale of its mining enterprise to a strategic purchaser via a reverse vesting order (RVO) under the CCAA.

The transaction involved the cancellation of existing shares, the issuance of new shares to the purchaser, and the vesting out of excluded assets and liabilities to newly formed entities.

The court found that it had jurisdiction under section 11 of the CCAA to grant an RVO and applied the section 36(3) factors to assess its appropriateness.

The court approved the transaction, finding it was the best outcome reasonably available, preserved necessary mining licenses and permits, and was overwhelmingly positive for creditors and stakeholders.

The court also granted an extension of the stay of proceedings and expanded the Monitor's powers.