Rachel Moses

The Royal Bank of Canada (RBC) brought a motion for the appointment of a receiver over the assets of 1731861 Ontario Inc., operating as Plasticap, due to the company's default on credit facilities and failure to comply with reporting obligations.

The company had previously consented to a receivership order and judgment on personal guarantees, held in escrow, contingent on full repayment by a specified date.

Despite partial payments, the final balance of over $1.7 million remained unpaid.

The defendants sought an extension, citing a potential investment, but failed to provide any sworn affidavit evidence to support their claims or demonstrate a reasonable certainty of repayment.

The court found it just and convenient to appoint a receiver, emphasizing the defendants' lack of evidence, their prior consents to the receivership and judgment, and the breach of the agreed-upon terms for adjournment.

The plaintiff bank brought a motion in writing for default judgment against the corporate borrower after it failed to deliver a statement of defence.

The borrower had defaulted on multiple credit facilities, including an operating facility, a Visa facility, and a master lease agreement.

The court reviewed the supporting affidavit and granted default judgment for the outstanding debts totaling over $2.3 million, plus costs.

The Royal Bank of Canada brought companion motions seeking directions in two bankruptcy proceedings.

The motions addressed whether the appellants had an appeal as of right from bankruptcy orders and, alternatively, whether the automatic stay resulting from an appeal as of right should be cancelled.

The court found that the appellants did have an appeal as of right under s. 193(c) of the Bankruptcy and Insolvency Act, as the property involved exceeded $10,000 and the bankruptcy orders directly involved the disposition of assets.

However, the court granted the motion to cancel the automatic stay under s. 195 of the Act, finding that the appeals had low chances of success and that there was no prejudice to the appellants, given their history of delay and improper dealings with property.

The appellants, corporate entities and individual guarantors, appealed summary judgments granted by the motion judge in favour of the respondent bank.

The corporate appellants had entered into franchise agreements to operate restaurants with financing provided by the respondent.

After difficulties arose and the franchisees sought to rescind the franchise agreements, they returned the restaurant operations to the franchisor.

The respondent bank demanded repayment of the outstanding financing, alleging events of default including cessation of business.

The motion judge granted summary judgment finding events of default had occurred.

The appellants argued the motion judge erred in concluding they had ceased to carry on business, contending their business had merely changed to recovering their franchise investments.

The Court of Appeal upheld the motion judge's decision, finding the appellants' position lacked business reality and common sense.

The landlord, INCC Corp., sought a declaration to terminate a lease with its tenant, Oxford Medical Imaging Inc. (OMI), alleging insolvency and liquidation proceedings.

OMI sought to restrain termination and assign the lease to 2617949 Ontario Limited, arguing INCC unreasonably withheld consent.

The court found OMI was not insolvent, no liquidation proceedings were commenced, and INCC unreasonably withheld consent to the lease assignment.

The plaintiff bank brought a motion for summary judgment against a corporate franchisee and its personal guarantors for defaulting on a business loan.

The franchisee had surrendered its restaurant to the franchisor and sought to rescind the franchise agreement.

Relying on the reasons in a companion case involving the same franchisor and one of the same guarantors, the court granted summary judgment for the outstanding loan amounts and awarded full indemnity costs.

The Royal Bank of Canada (RBC) moved for summary judgment against Everest Group Inc. and its guarantors (Yousaf Kahn, Zarmina S. Khan, and Shadid Saleem Khawaja) for outstanding business loans.

Everest Group, a franchisee, ceased operations after attempting to rescind its franchise agreement, which RBC deemed an event of default under the loan and security agreements.

The defendants argued that the cessation was due to exercising statutory rescission rights under the Arthur Wishart (Franchise Disclosure), 2000 Act, and should not constitute a default, and sought adjournment pending a third-party claim against the franchisor.

The court granted summary judgment, finding clear events of default based on the loan agreements' terms, including cessation of business and failure to make payments.

The court rejected the defendants' interpretation of the contracts and their argument for forbearance, stating that RBC was objectively reasonable in enforcing its rights.

The bankrupts moved for an order to schedule their discharge hearing, notwithstanding an ongoing fraudulent conveyance action by the Royal Bank of Canada (RBC) against them.

The court dismissed the motion, exercising its discretion to adjourn the discharge hearing.

The court found that the outcome of the fraudulent conveyance action could bear on the discharge hearing, there was no evidence of delay by RBC, and the interests of all parties, including creditors and the integrity of the system, needed to be balanced.

The bankrupts were granted leave to reapply if delays or other factors changed the circumstances.

A bankrupt individual applied for discharge from personal bankruptcy arising from guarantees given for the debts of a failed company.

A creditor opposed the discharge, alleging the bankrupt had sufficient income and failed to properly account for assets and surplus income.

The court scrutinized the bankrupt’s financial disclosures, including unusually high tax withholdings and payments to a family member serving as a director of the successor corporation, which raised concerns about the accuracy of surplus income calculations and potential funds available to creditors.

Although direct evidence of misconduct was limited, the court found that fairness to creditors and the integrity of the bankruptcy system required a substantial payment as a condition of discharge.

The court ordered a conditional discharge requiring payment of $55,000 to the estate and directed that tax refunds be paid to the trustee.

The defendant brought a motion seeking full-indemnity costs after the plaintiff receiver discontinued an action against him shortly before trial.

The defendant argued that the discontinuance amounted to complete success and that the claim against him had always lacked merit.

The court applied Rule 23.05 and Rule 57.01 of the Rules of Civil Procedure and considered whether the plaintiff had a bona fide cause of action and was justified in commencing and pursuing the proceeding.

The court found that the receiver had reasonable grounds to bring and continue the action based on evidence of a fraudulent financing scheme and tracing of funds connected to the purchase of real property.

Given that the action was justified and the discontinuance resulted from economic considerations following settlement relating to the key asset, the court declined to award costs.

Following the granting of summary judgment dismissing the plaintiffs’ action, the court addressed the issue of costs.

The defendant sought substantial indemnity costs approaching $100,000, arguing that the plaintiffs had advanced unproven allegations of fraud.

The court reaffirmed that substantial indemnity costs may be warranted where serious allegations of fraud or dishonesty are made but not proven.

While agreeing that such elevated costs were justified, the court held the amount claimed was excessive and instead fixed a fair and reasonable amount based on the Rule 57.01 factors.

The court also declined to pierce the corporate veil to impose personal costs liability on a non‑party principal of the plaintiff corporations.