Court of Appeal for Ontario

Date: 2018-02-26 Docket: C64228

Panel: Feldman, Benotto and Brown JJ.A.

Between

Frank Sturino Applicant (Respondent)

and

Crown Capital Corporation, Canada Investment Corporation and Fenfam Holdings Inc. Respondents (Appellant)

Counsel

• Rick Quance, for the appellant Canada Investment Corporation
• Wojtek Jaskiewicz, for the Court Appointed Receiver MNP Ltd.
• Mauro Marchoni, for the respondent Frank Sturino

Heard and released orally: February 26, 2018

On appeal from: the order of Justice Michael R. Gibson of the Superior Court of Justice, dated February 6, 2017.

Reasons for Decision

[1] Canada Investment Corporation ("CIC") appeals the order of the motion judge approving the recommendation of the receiver, MNP Ltd. (the "Receiver"), that no further distributions be made to CIC in respect of its first mortgage. CIC submits the motion judge erred by failing to find it was entitled to a distribution for the interest due on its mortgage.

[2] We do not agree.

[3] As described in the Receiver's Third Report (paras. 43 and 49) and Supplement to the Third Report (paras. 13 and 14), the Receiver asked CIC for: (i) a breakdown of how the interest was arrived at; and (ii) clarification as to why CIC did not enforce its mortgage from Crown Capital Corporation ("CCC") earlier than February 2014, if interest had not been paid since April 2012. Although Mr. Wilson of CIC provided an affidavit in response to the Receiver's Third Report, CIC did not provide a breakdown of its interest calculation – relying on its discharge statements – nor did it provide the requested clarification.

[4] As a result of its investigation, the Receiver had concerns that CIC and CCC were related companies. The mortgagor, CCC, did not allow the Receiver access to its financial records that would have allowed the Receiver to verify the amount due under the mortgage.

[5] The burden was on CIC to prove its claim.

[6] Given the failure of CIC to provide the information reasonably requested by the Receiver so that it could verify CIC's mortgage interest claim, the Receiver's recommendation that no distribution be made to CIC for mortgage interest was reasonable. We see no reversible error in the motion judge's decision to accept that recommendation, given the state of the evidence concerning CIC's mortgage.

[7] The appeal is dismissed. The court did not accept the receiver's position that it was not asking for costs because its costs would be paid out of the estate. Counsel for the creditor who has an interest in the funds remaining in the estate submitted that costs should be awarded. CIC shall pay costs to the Receiver fixed at $7,500.00, inclusive of disbursements and HST.

"K. Feldman J.A." "M.L. Benotto J.A." "David Brown J.A."